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At that time the concurrent administration of equity and common law under the Judicature Acts was quite new; modern company law was in its infancy, and so was the revived study of Eoman law in this country ; colonial, Indian, American, and foreign laws and legislation were little known and sometimes, especially as regards our own colonies, really difficult of access in England. A young writer might well be excused at that time for setting forth with some pains, if not always in the most appropriate places, things of which he had not been able to find an orderly account (at any rate in his own language) anywhere else. Now there has been great change in all these matters. English students may read books in English on Eoman law which they can safely trust, and we have an English Society of Comparative Legislation which publishes an excellent journal. I have endeavoured to bear this in mind in preparing the present edition, and have omitted or abridged much discussion which seemed to be no longer useful. The space thus set free has been claimed partly by new authorities, partly by the results of historical research, and partly by the consideration Vm PREFACE TO THE SEVENTH EDITION. due to the recent arguments on principle of learned writers, both here and in America. But I have also borne in mind that exploded errors may remain a necessary part of the history of the law, and cannot be ignored even by purely practical text- writers so long as any ingenious advocate may by possibility attempt to revive them. The most considerable alterations will be found in the earlier chapters. Besides other additions and amendments in detail, what is said of the doctrine of corporations in general has been recast and condensed, and the historical account of Con- sideration has been wholly rewritten. An excursus on the Roman and medieval law of contracts has been transferred, with some revision, from the text of Chapter III. to the Appendix. In Chapter YII. the rules as to contracts in restraint of trade have been reduced to a much simpler form in consequence of the leading decision of the House of Lords in Nordenfelfs case. F. P. Lincoln's Inn, Hilars/ Term, 1902. ( ix ) ADVERTISEMENT TO THE EIGHTH EDITION. In this edition cases have been noted down to November, 1910. Few recent decisions have affected any point of principle. Perhaps the most remarkable are those known as the coronation cases (p. 440). They strengthen my belief that " Impossible Agreements " is really not a legal category at all. If I could now rewrite the whole book, I should break up the contents of the chapter so named, and assign them partly to the head of Duties under Contract, and partly to a new chapter on Conditional Agreements. I have now ventured (p. 191) to deny plainly that there is any logical reason, or any other reason than convenience, for holding mutual promises to be good consideration for one another. At first sight this may look novel ; but the contrary proposition, unless I am greatly mistaken, can be defended only by arguments which, if they were sound, would lead to far stranger consequences. F. P. 13 Old Square, Lincoln's Inn, Michaelmas Term, 1910. ( xi ) TABLE OF CONTENTS. CHAPTER I. Agreement, Proposal, and Acceptance. Nature of contract Definitions of agreement . . Agreement : nature of consent reejuirei Obligation . . Ways of declaring consent Promise Contract ' . . Void agreements . . Voidable contracts Rules as to pro})Osal and acceptance Express and tacit contracts, and quasi-contract Proposals to unascertained persons (contracts by offer reward, ifcc.) Discussion of cases Difficulties considered Theory of floating obligation inadmissible Other kinds of general proposal. . Acceptance by act when complete Contract by indirect communication Revocation of offer Determination of offer Communication of revocation . . Blehimon v. Dofldx considered . . Can there be double acceptance '/ Communication of acceptance . . Contracts by correspondence Artificial theories on the subject State of English authority Effect of death of proposer Certainty of acceptance . . Agreements in terms where consent not final . Certainty of terms of agreement Illusory promises . . Construction of tacit acceptances Promises by deed may bind witliont acceptance of PAGE 1 2 3 4 5 9 9 11 11 1.1 17 20 21 23 26 26 27 29 80 32 33 34 36 37 39 41 42 45 47 4,S .10 Xll TABLE OF CONTENTS. CHAPTER II. Capacity of Parties. PAGE Variations in personal capacity . . . , . . . . . . oi Artificial persons , . . . . . . . . . . . . . 55 Limitations of capacity . . . . . . . . . . 56 1. Infants. General statement . . . . . . . . . . 56 Contracts voidable, not void . . . . . . . . . . 57 Supposed distinction between void and voidable now exploded 58 Avoidance of infant's contract . . . . . . . . . . 62 Infants' Relief Act, 1874 63 Liability on obligations incident to property . . . . . . 67 On beneficial contract . . . . . . . . . . . . 69 For necessaries . . . . . . . . . . . . . . 71 Sale of Goods Act, 1893, s. 2 71 What are necessaries . . . . . . . . . . . . 72 Certain contracts of infants binding by custom . . . . 77 By statute . , . . . . . . . . . . . . . . 77 Liability of infants on wrongs collateral to contract . . . . 78 In equity, on representations of full age . . . . . . 79 Subsequent contract after full age prevails . . . . . . 82 2. Married Women. Can contract only as to separate property 83 Ills maritl and survivorship . . . . . . . . . . 84 Cannot revive barred debt by aclvnowledgment . . . . 85 Exceptions at common law . . . . . . . . . . 85 Custom of London as to married woman trading alone . . 86 Agreements for separation between husband and wife alone 87 Statutory exceptions : judicial separation, kc. . . . . 88 Equitable doctrine of separate estate . . . . . . . . 89 Married Women's Property Act, 1882 . . 90 3. Lunatics and Drunken Persons. Old law ,. .. .. 95 Modern law : contract not void but voidable . . . . . . 97 4. Convicts, S,-c 100 Extension of capacity . . . . . . . . . . 100 1. Agenoj . . 100 Authority of agent . . . . . . . . . . - . 101 Contracts by authorized agents . , . . . . . . • • 102 When agent known to be such, there is contract with principal 103 If principal named, j;/vwa/«<*/e no contract with agent . , 103 If principal not named, ^/-iwa /acz'e there is contract with agent . . . . . . . . . . . . . . . . 103 These rules subject to evidence of contrary intention . . 105 TABLE OF CONTENTS. xiii When agent not known to be such, there is generally contract with undisclosed principal . . . . . . . . 100 Exceptions to and limits of the rule . . .106 Rights of other contracting party . . . . . . 108 Professed agent not having authority cannot sue on the con- tract if a responsible principal has been named . . . . 110 Nor be sued on it .. .. .. .. .. .. 112 But may be sued on implied warranty of authority . . . . 112 Where no principal named, or one who could not be respon- sible, professed agent is treated as principal ., .. 113 Artificial Persons . . Nature of artificial persons Corporations : common law doctrine . . Capacities of corporations in themselves As limited by positive rules As determined by purposes of incorporation Application of partnership law . . Public policy and interests of the public Decision of House of Lords on Companies Act, 1862 . . . . 134 Corporations cannot bind themselves by negotiable instru- ments : explanations of this . . . . . . . . . . 135 Exceptions . . . . . . . . . . . , . , . . 136 Conflicting theories in U. S. . . . . . . , . . . 137 Corporations bound by estoppel, &c. .. .. .. ..138 CHAPTER in. Form of Contract. 117 117 119 121 126 127 128 131 I. Formality in Early English Law . . . . . . . . HO Modern principles as to requirements of form . . .. .. 140 Position of informal contracts in ancient law. . .. .. 141 Formal and informal contracts in Roman law . . .. 142 Archaic modes of proof . . . . . . . . . . . . 142 The deed in English medieval law . . . . , . . . 143 Remedies on contracts : debt on covenant or simple contract 144 Action of covenant . . . . . . . . . . . . 145 Action of account . . .. .. .. .. .. .. 146 II. Tlie Action of Assumpsit . . .. .. .. .. ..148 Introduction of assumpsit to supply remedy on executory agreements . . . . . . . . . . . . . . 148 XIV TABLE OF CONTENTS. III. Modern Requirements of Form Modern law : requirements of form exceptional Contracts of record Contracts subject to special forms 1. Contracts of Corporations Old law : requirement of seal Modern exceptions Trading corporations : contracts in course of business Non-trading corporations : contracts necessary and incidental to corporate purposes . . Municipal corporations, &c. Appointments of officers . . Executed contracts with corporations . . Statutory forms of contract Summary 2. Negotiable Instruments 3. Statutory Forms . . A. Statute of Frauds Guarantees . . Agreements upon consideration of marriage Interests in land . . Agreements not to be performed within a year Sale of goods The •' note or memorandum " Bills of Sale Acts Transfers of ships and copyright B. Marijifi Insurance C. Transfer of Shares D. Acknowledgment of Barred Debts . . PAGE 151 151 152 152 153 153 155 156 158 159 159 162 162 163 163 16i 164 165 166 167 168 169 169 172 172 173 173 173 CHAPTER IV. CONSll DERATION. Meaning of the term Gratuitous promises Early history of the doctrine Assumpsit . . Causa in Roman law Benefit to promisor Adequacy of consideration Past consideration ineffectual Aclinowledgment of barred debts 175 176 177 179 179 182 184 189 190 TABLE OF CONTENTS. XV Mutual promises . . Promises to perform duties already existing Performance of obligation to third person Consideration for discliarge of contract For variation of contract. , Forbeai'ance to sue Compromises Treatment of gratuitous contracts under seal in equity Imperfect gifts PAGE 191 1!)3 195 200 201 202 203 205 20G CHAPTER V. Persons affected by Contract. Preliminary Definitions and rules Parties must be certain . . Third persons not bound . . Apparent exceptions Novation Third persons not entitled by the contract itself Apparent exceptions Trusts Exception of certain provisions for children . . Statutory exceptions Contract for benefit of thirtl person gives him no right of action at law Authorities in equity Third person cannot be empovi^ered to sue for convenience of parties Negotiable instruments payable to holder of office Assignment of contracts . . Notice to debtor Assignment •' subject to equities " Assignment free from equities by agreement of parties transferable debentures Transferable debentures . . Negotiable instruments . . Rights of honajide holder What instruments may be negotiable . . Negotiability by estoppel . . How instruments may cease to be negotiable 208 209 212 213 211 215 217 217 219 221 221 223 221 227 228 228 232 234 23(5 237 240 241 242 244 244 XVI TABLE OF CONTENTS. Transferable shares Obligations attached to property Covenants running with land Bills of lading Conflict between common law and equity as to burden of covenants running with the land The foundation of the equitable doctrine PAGE 245 247 248 251 252 255 CHAPTER VI. Duties under Contract. Iiderpretation (jeiierally . . Necessity of interpretation Agreements in writing : rule against parol variations Apparent exceptions Extrinsic evidence Customs of the country . . Trade usages. &c. . . Construction : preference of general intention Special rules of construction Order and MiitudHfij of Performance .. Order of performance in executory contracts . . Modern authorities look to general intention of contract Effect of default . . Agreements presumed to be entire Default in first or other rnstalmentx of Bhcontinuoiis Per formance . . vSales for delivery by instalments Effect of default in instalments. . Sale of Goods Act . . 257 257 260 262 264 267 267 268 271 272 272 273 276 278 280 280 280 285 CHAPTER VII. Unlawful Agreements. Of unlawful agreements in general, and their classification A. Contrary to positive law . . Agreements to commit an offence Agreements wrongful against third persons . . Fraud on creditors 287 290 290 292 293 TABLE OF CONTENTS. XVll Dealings between creditor aiul principal tlebtor to prejudice of surety . . Dealings by agent, executor, kc, against his duty Settlements in fraud of marital right . . Married Women's Property Act, 1882 .. Marriages within prohibited degrees Agreements illegal by statute Rules for constiuction of prohibitory statutes. . When agreements may be not void though forbidden, or voi without being illegal . . Wagers B. Agreements contrary to morals or good manners Agreements in consideration of illicit cohabitation . . Validity of separation deeds Agreement for future separation void . . Publication of immoral or seditious works is not merely immoral but an offence . . C. Agreements contrary to public policy Connection of the doctrine with the common law as to wager Modern extent of the doctrine : Uf/erfon v. Broamloio Public policy as to external relations of the State Trading with enemies Effect of war on subsisting contracts . . Negotiable instruments between England and hostile country Hostilities against friendly States Trade with belligerents not unlawful . . Foreign revenue laws Foreign laws as to stamps Public policy as to internal government : attempts to influence legislation, ////««/ .. .. .. 407 Treatment of slave contracts in English courts : iSa?ifos v. Jlliili/e 408 TABLE OF CONTENTS. - XIX Other instances of conflict of laws as to validity of agree- ment considered . . .. .. .. .. .. .. 41U Agreements against interests of the local sovereijjn .. .. 413 Conflict of laws in time : subsequent illegality dissolves con- tract 411 Otherwise validity deterniineil by law at tlate of agreement 415 Rules as to knowledge of parties collected . . . . . . 41G CHAPTliR VIII. Impossible Agreements. 420 420 422 423 424 425 426 427 Performance of agreement may be impossible in itself, by law, or in fact (i.**., by reason of particular state of facts) 418 General statement of law Agreement impossible in itself is void . . Practical impossibility Logical impossibility' Im(iossibility merely relative to promisor no excuse Agreements impossible in law . . Performance becoming impossible by law Piuying one's own property Impossibility in fact no excuse where contract absolute . . 428 Performance forbidden by foreign law . . . . . . . . 431 Obligation to pay rent when premises accidentally destroyed 432 Exceptions in cases of events not contemplated by the contract . . . . . . . . . . . . . . . . 435 Performance tiependent on specific thing existing : Taylor v. CaJilwpll 437 Applphij v. Meijrrs . . . . . . . . . . . . 438 Modern extension of the rule . . . . . . . . . . 439 Impossibility at date of contract from existing state of things not known to the parties . . . . . . . . . . 442 Sale of cargo already lost : Contur'ter y. Ifastie .. .. 443 Covenants to work mines, &c. . . . . . . . . . . 444 Clifford v. Watts . . . . . . . . . . ..444 Construction of express exceptions in certain contracts . . 445 Performance dependent on life or health of promisor . . 41i! BohiiiKoii V. Dari.iUH . . . . . . . . . . . . 447 Anomalous decision on contract to marry in Ifall v. Wriijht 449 Limits of rule as to personal services . . . . . . . . 451 Rights already acquired under contract not discharged by subsequent impossibility .. ,. .. .. .. 451 h 2 XX TA?.LE OF CONTENTS. PAGE Substituted coutiacts 452 Impossibility by default of either party : such default of promisor is equivalent to breach of contract . . . . 452 Default of promisee discharges promisor 453 Alternative contracts where one alternative is or becomes impossible . . ■ • • • • • • • • • • • 455 Conditional contracts . . . . • • . . ■ • • • 4i>6 Impossible conditions in bonds : peculiar treatment of them 4fi0 Indian Contract Act on impossible agreements . . . . 402 CHAPTER IX. Mistake. Part I. — Of Mhtuhe in Geueml. Classification of conditions aflfecting validity of consent in agreement : Mistake, Fraud, &c. . . . . . . . . 463 A. Mistake in general . . . . . . . . . . . . 466 Generally it is in itself inoperative either to avoid civil liabilities . . . . . . . . . . . . . . 406 (Except in certain special cases, and except so far as in the case of purchase for value without notice, ignorance is a conditioii of acquiring rights). . .. .. .. .. 470 Or to take awa\' or alter existing rights . . . . . . 474 Or to alter construction of contract . . . . . . . . 476 Saving as to variation by mutual consent . . . . . . 477 Special cases where mistake important . . . . . . 478 B. Mistake of Fact and of Law 479 Limits of the distinction : where certainly or probably not applicable . . . . . . . . . . . . . . 479 Common mistake and rectification of instruments . . . . 480 Pienunciation of rights . . . . . . . . . . . . 481 Recovering back monej- paid . . . . . . . . . . 483 Part II. — Mixtalip ait exehulhui tnii' Consent. Division of cases under this head . . . . . . . . 486 A. Error as to nature of transaction . . . . . . . . 488 ThorimyhguoiVs case . . . . . . . . . . 488 Foster V. Ma chin no n .. .. .. .. .. 489 Complication with fraud in equity . . . . . . . . 492 TABLE OF CONTENTS. XXI PAGE Total and partial misapprchensiou distinguished . . . . 492 Error as to legal character of transaction . . . . . . 49i B. Error as to the person of the other party . . . . 495 Analogous doctrines : application to deeds . . . . . . 497 Assignment of contracts . . . . . . . . . . , . 498 Satisfaction by stranger . . . . . . . . . . . . 498 Personal contracts not transferable . . . . . . . . 499 Agency . . . . . . . . . . . . . . . . 501 C. Error as to the subject-matter . . . . . . . . 502 With regard to identity of specific thing .. .. .. 504 Inclusion of parcels by mistake on sale of land . . . . 505 Contracts to take shares exceptional . . . . . . . . 509 Error with regard to kind, quantity, &c. . . . . . . 510 Error in price .. .. .. .. .. .. .. 511 Error as to quality inoperative unless material and common to both parties .. .. .. .. .. .. .. 513 Even if error of one party known to, but not caused by, tlm other .. .. .. .. .. .. .. .. 515 Cases distinguished where mistlescriplion of estate on sale entitles purchaser to rescind .. .. .. .. ..517 Error as to existence of subject-matter . . . . . . 518 Purchase or lease of one's own property . . . . . . 522 Herein of ignorance of law : Conper v. Pldhht; . . . . 523 Assignments of leases for lives . . . . . . . . . . 524 Where only one party is ignorant of the material fact . . 525 Where fundamental error jtroduced by fraud or misrepresen- tation . . . . . . . . . . . . . . . . 526 Remedies of party to void agreement . . . . . . . . 527 Election to adopt agreement . . . . . . . . . . 528 Part III. — Mintalir in e.Tjfrcssiiu/ tn/e Con. Correction of mistake in expressing intention 1. Rules of construction common to law and ccpiity Effect given to general intent . . 2. Peculiar rules of construction in equity A. Restriction of general words B. Stipulations as to time Where time of essence of contract . . Indian Contract Act thereon. . C. Relief against penalties 3. Peculiar defences and remedies derived frnm equity A. Defence against specific performance Pjffect of Statute of Frauds herein . . ■>it. 529 530 530 532 533 534 .536 537 537 510 .-,4(1 542 XXli TABLE OF CONTENTS. PAGE B. llcctificatitm oliiistninunits 543 Oral evidence how far admissible . . . . . . . . 545 Real intention must be distinctly proved, and common to all parties . . . . • • • • ■ • • • ■ • 546 Quasi estoppel of one l)arty acting as other's agent in framing instrument . . . . . . . . . • 548 Keformation of settlements . . . . . . . . . . 549 AVho is entitled to have deed rectified 551 Ivcctification as alternative to cancellation . . . . 551 Disentailing deeds . . . . . . • • • • . . 552 Agreement executed by Court cannot be rectified . . 552 IMistake in wills 552 Consent orders . . . . . . • . • . • • • • 553 Unilateral acts 553 CHAPTER X. MiSRErRESEXTATION AND FkATID. Part I. — GencraUij. Of misrepresentation in general . . . . . . . . 554 As to innocent statements . . . . . . . . . . 554 Deceit in relation to contract . . . . . . . . . . 5oo Judicial language as to "constructive fraud" formerly ambiguous . . . . . . . • • • . . • ■ 556 Estoppel . . . . . . . . • • ■ . . . • • 556 Represenlatiun as term of contract . . . . . . . . 557 The tloctrine of " making representations good " .. .. 558 Part II. — Jlisrrjirrsr/ifafion and yi)/i-diwlnx>irc. No general positive duty of disclosure . . . . . . . . 559 But such duties implied in certain contracts . . . . . . 559 Classes of contracts specially treated . . . . . . . . 561 Representations amounting to Warranty or Condition . . 561 Distinctions between warranty and condition on sale of goods . . . . . . . . . . . • . ■ • 5(>;? Cases specially treated : A. Insurance ^Marine Insurance Life Insurance . . Fire Insurance . . Miscellaneous risks 564 56-t 565 566 5(i7 TABLE OF CONTENTS. XXlll PAGE B. Suretyship and Guaranty . . . . . . . . . . 567 Extent of creditor's duty to surety . . . . . . . . 568 C. Sales of land 571 Specific performance and compensation : three classes of cases distinguished . . . . . . . . . . . . 572 Recovery of deposit . . . . . . . . . . . . 578 General duty of vendor to descrihe i)roperty correctly . . 578 Special conditions as to title . . . . . . . . 581 M'ihle V. 6^/i.sv>« considered .. .. .. .. .. 581 D. Family Settlements . . . . . . . . . . . . 581 E. Partnership, contracts to take shares in com[>anies, anfl contracts of promoters . . . . . . . . . . 581 The Companies Act, l!t08 587 Contract to marry not exceptional . . . . . . . . 588 Voluntary gifts 589 Part III, — Fm/fd or Berrit. Fraud generally but not always includes misrepresentation 589 Right of rescission . . . . . . . . . . . . 591 Fraudulent representation or concealment . . . . . . 592 " Active concealment" .. .. .. .. .. .. 592 Fraud as actionable wrong . . . . . . . . . . 593 Reckless ignorance equivalent to knowledge of untruth . . 591 Representation of expectation as present fact . . . . . . 595 Special rule as to sales by auction . . . . . . . . 595 Marriage an exception : not avoided by fraud . . . . 596 But knowledge of nature of ceremony essential . . . . 596 Consent of third person procured by fraud is voidable . . 597 CHAPTER XI. The Right ov Rescission. General rules as to rescission for misrepresentation or fraud 598 The representation relied on must be of fact . . . . . . 599 Not of mere matter of opinion .. .. .. .. . . (iOl The representation must be such as to induce the contract . . 602 Effect of jiarty misled having moans of knowledge . . . . 603 Materiality of representation . . . . . . . . . . 60() Contiacts connected with previous fiaiid .. .. .. 6<'7 Repi'esentation must be l)y a party to the coutiact . . . . (i()8 XXIV TABLE OF CONTENTS. Representations of agents ami liability of principals Statements of directors and promoters Agent always liable for his own wrong . . Representation must be in same transaction .. Rights of party misled : option to rescind Election how to be made Right exerciseable by and against representatives No rescission where the former state of things cannot be restored . . No rescission against innocent purchaseis for value . . Distinction in cases of obtaining goods by fraud where no property passes . . Repudiation of shares Rescission must be within I'easonable time, /.''. a time not sucli as to show acijuiescence . . Special duties of shareholders in companies . . Limitation of period for rescission in French law Result of unfounded charges of fraud . . Cancellation of instruments PAGE 609 611 612 612 615 617 621 622 625 626 627 629 632 633 633 634 CHAPTER XII. Duress a>d Undue Ixfluence. I. Duress at Common Law . . . . . . . . . . 636 Recovery of money paid under compulsion . . . . . . 638 II The equitable doctrine of Undue Influence .. . .. 640 Presumj)tion of influence from confidential relations . . 642 Rules as to burden of proof . . . . . . . . . . 645 Rules as to voluntaiy settlements . . . . . , . . 646 Presumptions against and duties of persons in fiduciary relations . . . . . . . . . . . . . . 647 Family arrangements .. .. .. ■.. .. .. 651 Particular cases where influence presumed : Relations analogous to parent and child . . . . . . 653 To solicitor and client. . .. .. .. .. .. 654 Spiritual influence . . . . . . . . . . . . 655 Undue influence without fiduciary relation . . . . . . 656 Duty of trustees . . . . . . . . . . . . . . 656 Undervalue material only as evidence . . .. .. .. 657 Not in itself a ground for refusing specific performance . . 661 Exceptional protection of expectant heirs and reversioners 6(;3 Old law as to sales of reversions .. .. .. .. 666 TABLE OF CONTENTS. XXV ActoflS67 Rules of equity as to " catching bargains " not affected What are " catching bargains " Burden of proof Terms of relief . . Tlic Mouey-Lenders Act, 1!»00 . . Sales of reversionary interests . . " Surprise " and " impiovidence" not substantive ground relief against contracts, but only evidence of fraud, &c. Right of rescission for undue influence Confirmation and acquiescence Si^ecial fjuestions as to relation of solicitor and client of PAGE 667 (567 66'J (570 671 673 673 675 677 679 680 CHAPTER XllI, Agreements of Imperkect Obligation. Nature of Imperfect Obligations : Right without remedy 1. Keniedy lost. Statutes of Limitation . . Rights of creditor notwitlistanding loss of remedy b^' action Acknowledgment . . What is sutticient acknowledgment Statutes of limitation belong to le.r fori 2. Conditions precedent to remedy not satisfied. A. Statute of Frauds, s. 4 A law of procedure only, not of substance . . Results of informal agreement : Where money paid Where agreement executed . . Part performance in equity . . Informal ante-nuptial agreements, and confirmation by post-nuptial writing Informal agreement as defence Distinction of eipiitable estoppel B. The '• Slip " in marine insurance Recognition of it for collateral jiurposes by muilein deci sions . . Of stamp duties in general . . C. Statutes regulating professions Costs of uncertificated solicitors Medical practitioners . . Medical Act, 1SS6 Apothecaries Act Special (juestions on iMediciil Act 682 683 68.5 686 687 688 690 693 694 695 697 701 701 7n2 702 703 706 707 70S 710 710 711 711 XXVI TABLE UF CONTENTS. No remedy at all. Arbitrators . . Coiinsel's fees As to non-litigious business, or account with solicitor, //?<. Judicial recognition of counsel's fees . . Solicitors' Remuneration Act, 1881 Special agreements between solicitor and client Certain contracts of infants since Infants' llelicf Act Tippling Act Trade Union agreements . . A converse case on repeal of usury laws Treatment of equitable obligations at Common Law Summary of results of tliis chapter PAGE 712 712 713 7L5 716 716 716 717 717 719 720 720 APPENDIX. Note A. Terminology and fundamental conceptions of contract 723 Note B. Authorities on contract by correspcmdence . . . . 724 Note C. History of the equitable doctrine of separate estate . . 729 Note D. Authorities on limits of corporate powers .. .. 73.5 Note E. Classificatioii of contracts in Roman and Medieval Law 743 Note r. Early authoiities on assignments of clioses in action . . 747 Note G. Bracton on fundanu^ntal error .. .. .. .. 750 Note H. Mistake in wills . . . . . . . . . . . . 7.51 Note I. Ou the supposed etiuilable doctrine of " making repre- sentatiims good " . . . . . . . . . . . . 752 Note K. French law ou " iuofticious " gifts and ca/>tafio/t .. 7.39 ( xxvii ) TABLE OF CASES. PAGE Aaron's Reefs r. Twiss ... 628 Abbott r. Doanc 197 Abbott r. Swoider 662 Aberaman Ironworks Co. r. Wickens 578 Ackroyrl r. Smith 253 Adams r. Lindsell 724. 727 Addison r. Cox 283 Agai' V. Athen;eum Life Ass. Soc 740 Aggs r. Nicholson 243 Aguilar r. Agiiilar 734 Ahearne r. Hogan (J43. 654 Aiken r. Short" 484 Ainsworth r. Wilding 469 Albion Steel and Wire Co. /•. Martin 301 Alderson r. Maddison 752, 756 Alexander /•. Crosbie 545 Alexander r. Steinhart Walker &Co 41 Alger r. Thacker 374 Alison, Kr jjt/rfp 520 AUcard r. Skinner ...641, 644, 645, 655, 679, 681 Allcard r. Walker 481 Allcock r. Moorhonse 249 Allen r. Allen 59 Allen r. Bakei' 451 Alliance Bank /•. l^irooni 203 Alliance Bank of Simla r. Carey 689 Allkins /■. Jupe 396 AUsopp r. Wheatcroft 381 Alton r. Midland lly. Co 79 Alvanley r. Kinnaird 508 Alvarez de la llf)sa r. I'rieto ... 711 Anchor Insurance Co. Case ... 483 Anderson's Case 475 Anderson r. I'Mtzgerald 5()6 Anderson r. Kadcliffe 353, 35() Andrews, Jffi 362 TAGE Andrews r. Bclfield 49 Andrews /•. Mockford 614 Andrews r. Salt 363 Angell. itV 715 Angell r. Duke ...167,264, 433,758 Anglo - Egyptian Navigation Co. r. Ilennie 441 Antoine r. Morshead 386 Appleby r. Johnson 43 Appleby i\ Meyers 438, 439 Arbuthnot v. Norton 344 Archer r. Hudson ...643, 648, 653 Ardglasse r. Muschamp 665 Arkansas Smelting Co. r. Bel- den Co 500 Armstrong r. Armstrong 394 Armstrong ?•. I,ewis 394 Armstrongs. Stokes 104, 109 Armstrong /•. Toler 387, 390 Arnold r. Arnold 576 Arnold r. Mayor of Boole... 153, 159 Arthur r. Wynne 451 Arundel's Case 121 Ashbury Ry. Carriage Co. r. Riche... 128, 132, 134,532, 740, 742 Ashley's Ca.se 619 Ashling r. Boon 707 Asiatic Banking Corporation, E.r 2)arte 23, 237 Aspden r. Seddon 250 Athenseum Life Assurance Soc. V. Pooley 239 Atherf old r. Beard 328 Atkinson v. Den by 403, 639 Atkinson v. Ritchie 414, 429 Atlee V. Backhouse 637 Attenborough v. St. Katha- rine's Dock Co 627 Attorncy-(ilener:il /•. Churchill's Vet. Sanatorium 124 Attorney-General r. C. E. Ry. Co. ". 128, 133, 742 XXVIU TABLE OF CASES. PAGE Attorney - General r. Jacobs Smith 221 Attdiney-Cieneial r. London County Council "42 Attorncv-Cieneial '•. Mersey Ry. Co 12S. 742 Attorney-Ccneral r. Ilay .">(;(; Attorney-tieneral r. Sitwell... .")4() Attorneys and Solicitors Act. 7,V ..." H52 Attwood r. Small W2, 601 Austerlierrv r. Corporation of Oldham " 250,251 Austin r. Bethnal Green (Uiardians 154, 160 Austin r. G. W. lly. Co 473 Australian Royal Jlail, kc. Co. r. Marzetti 157 Austria (Emi)eior of) '■. Day and Kossuth 327 Avery r. LanEjford 379 Axford r. Reid It2 Ayers r. South Australian l?ankin;:r Co '>7 Aycrst r. .Jenkins ...318, 31it, 320, 388, 399 Avlcs r. Cox 575 Avlesford ( Earl of) r. Morris .. 663, " CM. 666, (167, (568, 669, 670, 672 Ayr Harbour Trustees r. Oswald 131 Azemar r. Casella 514, 562 Babcock /•. Lawson 625. 626 Bache '". l'>illingham 350 Badische Anilin, &c. Fabrik r. Schott 379 Bagge r. Slade 196 Bagnall r. Carlton 586 Bagot c. Chapman 493 Bagshaw /•. Sej'mour 614 Bagster r. Earl of Poitsmouth 96 Bahia and San Francisco Rv. Co.. Ilr '.. 239 Bailey /•. Harris 312 Bade}' r. I'iper 577 Bailey r. Stephens 253 Baillie's Ca-e 497 Baily'sCase 30 Bailv r. De Crespigny ...424, 426, 435 Bain r. Fothergill 517 Bainbridge r. Firmstone 1S5 Bainbridge /•. Postmaster General 120 PAGE Bainbriggc v. Browne 652 Baines *•. Geary 378 Baines v. Woodfall 45 Baird's Case 129 Baker r. Bradley 652 Baker v. Cartwright 588 Baker r. Hedgecock 378 Baker r. Loatler 654 Baker r. Monk 659, 676 Baker v. Read 651 Balfour r. Ernest 243, 737,738 Ball /•. Storie 544,546 Baratield v. Rogers 589,645 Bankart v. Bowers 274 Bank of Australasia r. Breillat 129, 385 Bank of Australasia r. Palmer 263 Bank of Columbia r. Patterson 155. 156 Bank of England r. Ander- son 309 Bank of Hindustan r. Alison... 520 Bank of Ireland r. Evans' Charities 138, 154 Bank of New Zealand r. Simp- son 265 Bank of United States r. Daniel 480, 484 Bank of United States r. Owens 309 Banks r. Crossland 694 Banner v. Johnstoti 219 Bannerman r. White 514, 516, 560, 578 Barclay r. Pearson 314,401 Barden r. Keverberg 86 Barker r. Cox 574 Barker i: Hodgson 414, 431 Barkworth r. Young 455, 700 Barnard r. Faber 564,567,757 Barnardo v. McHugh 364 Barnes r. Toye 73 Barnctt, Kr jmrtr 497 Barnett r. Howard 90, 94 Barrett r. Hartley 660 Barron r. Willis 650, 680 Barrow r. Isaacs 478 Barrv r. Croskev 608 Bartiett r. Wells 79 P.arton r. Muir 307 P.arton r. Piggott 311 Barwick r. English Joint Stock Bank 610 Baskcomb r. Beckwith 577 Bate r. Hooper 485 Bateman r. ('ountessof Ross... 87 TABLE OF CASES. XXIX PAGE Batuniaii r. Faber 94 Bateniaii r. Miil-Walcs It v. Co '.. 1H7 Bateman v. Finder (>)S(i Bates, Mr parte 82 Bateson r. Gosling 298 Bath (Earl of) and Montague's Case 676 Batson r. Newman 313 Batty r. Chester 319 Baudains r. Richardson t!44 Baxendale r. Seale o08 Baxter r. Earl 90 Beachey c. Brown 417, 588 Beale v. Kyte 507, 552 Beanland r. Bradley 652 Beard r. Webb 87 Beattie v. Lord Ebury ...112, 599 Beauchanip (Earl) r. Winn ... 466 Beaumont r. Dukes 757 Beaumont r. Reeve 318 Beavan r. M' Donnell 98 Bechervaise r. Lewis 299 Bechuanaland Exploration Co. r. London Trading Bank ... 135, 238, 243 Beck V. fierce 95 Beckham r. Drake ...104, 1U6, 107 Bedford r. Bagshaw 614 Bedford (Duke of) r. Trustees of British Museum 256 Beeston v. Beeston 399 Begbie r. Phosphate Sewage Co 398 Behn r. Burness 500, 563 Bellr. Balls 170 Belli'. Reid 333 Bellairs r. Tucker 602 Bellamy v. Debenham 575 Bellamy r. Sabine (!52 Belshaw r. Bush 498 Bence r. Shearman 233 Bennett (Doe d.') v. Hale 713 Bensley r. Bignold 308 Bentley r. Mackay...477, 551, 547, 679 Benlley v. Vilmont 626 Benwell v. Lms 379 Benyou r. Nettlefold 318, 319 Berdoe r. Dawson 679 Berea College r. Kentucky ... 118 Besant, Be 364 Besant c. Wood 322 Beswick r. Swindells 458, 461, 462 ettini r. Gye 277 PAGE Betts r. Burch 540 Belts- Merrell Co. /•. Straus ... 247 Beverley's ('asc 95 Beverley y. Tjiiicolu Gas Co. ... 157 Beynon i'. Cook 664, 668, 671, 672 Bhugwandass r. Netherlands, Boulton r. Jones 490 Boussmaker, ii'r y>«/'/^ 33.5 Bowden r. London, Edinburgh and Olasgow Assurance Co. 5t)6 Bower v. Cooper 249 Bowes r. Shand 26.5, 278 Bojd, £x purte 91 Boyse t: Eossborough 464. 642, 644 Bracewell r. Williams 204 Bradford r. Romney 262 Bradford /•. Koulston 190 Bradford r. Symondson 521 Bradford r. Williams 274 Bradlaugh r. Newdegate...352, 362 Bradshaw, Be H68 Bradsbaw r. Bradshaw 294 Bradshaw r. Lanes, and Yoiks. By. Co 211 Bragg r. Stanner 375 Brahmaputra Tea Co. /•. Scarth 363 Bramah r. Roberts 136 Brampton c. Beddoes 382 Brandao r. Barnett 241 Brandon r. Nesbitt 386 Brandt's Sons k. Co. i: Dunlop Rubber Co 231 Braunstein ^Accidental Death Insurance Co 49 Brayshaw c. Eaton 73 Breton r. Woollven 207 Breit, £■£ jMn-fp 591 Brewer r. Brown 576 Bridger r. Savage 400 Bridgman r. Green 653, 676 Briggs, Uj! parte 617 Briggs '•. Ryan 92 Bright c. Legerton 630 Brisco v. Baillie-Hamilton ... 751 Bristow r. Secqueville 339 Britain r. Rossiter ...691, 697, 698 British and American Tele- graph Co. r. Colson 726, 727 British Linen Co. r.Drummond 688 British S. Africa Co. r. De Beers Consolidated Mines .. 127. 405 British Waggon Co. r. Lea & Co " 211 PAGE Broad r. Jolly fe 375 Broad r. Munton 581 Brockwell r. Bullock 96 Brogden r. Metrop. Ry. Co.. ..36. 46 Bromley <•. Smith 672 Bromley i: Smith ([1909) 2 K.B. 23.5) 71 Brook c. Brook 304, 305 Brookman's Trust, Be 368 Broome r. Speak 49 Brotherhood's Case 741 Broughton i: Hutt 481, 523 Broughton r. Manchester Waterworks Co 135 Broun r. Kennedy 551 Brown c. Brine 347, 654 Brown c. Byers 136 Brown r. Dale 126 Brown r. Dimbleby 90, 94 Brown v. Guarantee Trust Co 284 Brown r. Mayor of London ... 427. 461 Brown r. R(jyal Insurance Co. 429. 456 Browning /•. Wright 531, 533 Brownlie /•. Campbell 557, 759 Brunton's Claim 239 Bryan (Doe d.^ r. Bancks 58 Bryant and Barningham's Contract. Be 501 Bryant r. Flight 49 Bryant v. Herbert 144 Buckland t\ Buckland 91 Bulkley f. Wilford 302 Bult r. Morrel 136 Burchell r. Clark 269 Burge r. Ashley and Smith ... 401 Burgess's Case 629 Burgess v. Eve 299 Burghart c. Hall 74 Burke r. S. E. Ry. Co 51 Burland v. Earle 737 Burn f. Carvalho 232 Burnard r. Hagiris 79 Burrell, L\i- jjarte 294, 600 Burroughes r. Bayne 148 Burrow v. Scammell 577 Burton r. Sturgeon 88 Bute (Marquis of) v. Thomp- son 444 Butler and Baker's Case 53 Butler r. Butler 94 Bwlch-y-Plwm Lead Mining Co. r. Baynes 619 Bvrne r. Van Tienhoven 31 TABLE OF CASES. XXXI PAGE Caballero i». Henty 579 Cahill r. Cahill 88 Caird r. Moss 5o2 Caldecott, E.v j) iHp 346, 398 Calder r. Dobell 101, 1()2, 103 Calverley r. Williams 505 Camberwell and S. London Building Society c.Holloway 575 Cambridge (Mayor of) r. Dennis 297 Cameroti and Wells, lie 221 Campanari /•. Woodburn 42 Campbell's Case 738, 741 CamiihQW, E.I- parte 520 Campbell v. Fleming 618 Campbell /•. French 751 Canham r. Barry 424, 425, 590 Cannara v. Farmer 83 Cannan t\ Bryce 387 Canning v. Farquhar 21, 46 Cargill r. Bower 611 Cargo e.v Argus 306 Carington (Lord) v. Wycombe By. Co 131 Carlill r. Carbolic Smoke Ball Co 15,20, 22, 35 Carlisle r. Salt 578 Carmarthen (Mayor of) c. Lewis 161 Carney v. Plimmer 314 (.!arr r. Jackson 105, 116 Carr v. Lynch 170 Carrington v. Roots 692 Carrol r. Blencovv 86 Carter r. McLaren 468 Cartwright r. Cartvvriglit 325 Cartwright r. Hately 501 Casborne r. Ikirsham 648 Castle r. Wilkinson 574 Catling V. King 170 Cato V. Thompson 262 Caton V. Caton 670, (;99 Catt r. Tourle 380 Caudell v. Shaw 87 Cavendish /•. (Jeaves 236 Central By. Co. of Venezuela V. Kisch 585, 586, 604, 632 Chadwick (\ Manning 754 Challis's Case 509 Chamberlain r. Williamson ... 450 Chambers r. Manchester and Milford By. Co 308 Champion r. Bigby (i80 Chandler/'. Webster 440 Chanter y. Hopkins 562 Chanter r. Leese 227 PAGE Chapiu r. Freeland 701 Chapleo v. Brunswick liuild- ing Society 740 Cha|)man r. Cole 495 Chapman c. County of Douglas 313 Chapman t!. Michaulson 673 Chapman v. Smethurst 105 Chappie r. Cooper 75, 76 Charles worth v. Holt 324 Charter r. Charter 751 Charter r. Trevelyan..300,621, 630 Chasemore v. Turner 687 Chavasse, E.c parie 337 Cheale /•. Kenward 186 Chemin de fer du Dauphint; c. Clet 439 Cherry r. Colonial Bank of Australasia 112 Chen-y r. Heming 1()8, 172 Chesterfield r. Janssen ...663, 664, 665 Chetti '(;. Chetti 305 Chicago and G. E. By. Co. v. Dane 187 Chilton r. Corporation of Lon- don 222 Chinnock /•. Marchioness of Ely 45 Cholmondeley c. Clinton. ..339, 360 Chorley, E.v parte 239 Church r. Imperial Gaslight, &c. Co 153, 157 Citizens' Bank of Louisiana r. First National Bank of New Orleans 702, 756 City Bank, E.( parte. .Vii\, 137, 238 City of Memphis r. Brown ... 394 City of San Juan v. St. John's Uas Co 200 Civil Service Co-operative Society r. Geneial Steam Navigation Co 440 Clack r. Holland 235 Clare /•. Lamb 484 Clark, Be 77 Clark V. Clark 322 Clark r. Girdwood 549 Clark V. Malpas 659 Clarke r. Birley 298 darker. Cobley 80 Clarke r. Cuckfield Union ... 158 Clarke r. Dickson 622, 623 Clarke v. Dunraven (Earl of) 7, 27 Clarke v. G rant 263 Clarkson v. Edge 380 Clay V. Bay 392, 393 XXXll TABLE OF CASES. pa(;k Clayton r. Adams 84 Clayton r. Corby 2r>3 Cleggv. Clegg M'J Clements r. L. k N. W. Ky. Co 70 Clemontson r. Blessig 334 Cleve c. Financial Corporation 187 Clififord r. Watts 412, 419, 444 Clinan r. Cooke r>42 Clinch r. Financial Corpora- tion <;34 Clive V. Beaumont 44 Close r. Close 298 Clough T. L. & N. W. By. Co. o90, 608, 617, 619, 620, 622, 633 Clowes r. Higginson..261, 507, 042 Clubb r. Hutson 345 Clugas r. Penaluna 338 Coaks r. Boswell 579, 580 Coates r. Collins 524 Cobbett r. Brock 678,679 Cochrane r. Willis 521, 522 Cock r. Bichards 367 Cockell r. Taylor 658 Cocker's Case 216 Cocking c. Ward 696 Cogan r. Duffield 550 Cohen r. Kittell 400 Colborne and Strawbridge, E.e vartP. 238 Coldcot r. Hill 533 Cole r. Gibbons 664 Cole?'. Gibson 366 Coles V. Pilklngton 176, 755 Coles r. Trecothick 662 Coles and Baveiishear, i?*" 469 Collen V. Wright 112, 113 Collins r. Blantern 345, 394 Collins r. Locke 350, 373 Collyer v. Fallon 343 Colman v. E. C. By. Co 736 Colyear c. Mulgrave 224 Comfort V. Betts 230 Commissioners of Sewers /•. Beg 437 Commonwealth r. Lane 304 Conquest's Case 216 Consolidated Exploration and Finance Co. r. Musgrave ... 346 Cook r. Field 360 Cook r. Lister 24.5. 498 Cooke V. Cooke (4 H. J. S. 704) 360 Cooke r. Cooke (1.. B. 4 Eq. 77) 348 Cooke r. Eshelby 108 Cooke r. Lamotte 644, 645 Cooke r. Oxley 27. 2S, 34 PAGE Cooke c. Vorley 492 Coombs u. Wilkes 170 Cooper c. Evans 570 Cooper r. Jcel 570 Cooper r. Kendall 687 Cooper r. Phibbs 466. 481, 484, 522 Cooper /•. Simmons 69. 76, 500 Cooper f. Vesey 472, 497 Cope V. Bowlands 308 Cope r. Thames Haven, &;c. Co ; 160 Copper Miners of England /•. Fox 157 Coppock r. Bower 347, 394 Cordingley r. Cheesebrough . . . 573 Cork and Bandon Bj'. Co. r. Cazenove 68 Cork and Youghal By. Co. Re 308 Corley /•. Lord Stafford ...302, 549 Corn r. Matthews 70 Con I foot r. Fowke 609 Cornford v. Carlton Bank 123 Cory /•. Gertcken 80 Cory /•. Patton 704 Cory & Son i\ Harrison 382 Costa Bica By. Co. r. For- wood 302 Cote, Ex pa fie 474 Cottage Street Church /•. Ken- dall 177 County Life Assurance Co., lie '. 738 County of Gloucester Bank r. Budry Merthyr, &c. Co 738 Courtenay r. Williams 685 Coutts V. Acworth 678 Couturier r. Hastie ...443, 519, 751 Coverdale r. Eastwood 755 Cowan t. Milbourn...288, 327, 388, 389 Cowan c. O'Connor 35 Coward and Adam's Purchase, Be 89 Coward r. Hughes 484, 668 Cowdry v. Day 538 Cowen c Truefitt, Ltd 269 Cox v. Prentice 516 Coxhead /•. Mullis 64 Cragoe V. Jones 298 Crampton *•. Bidley 712 Crampton r. Yarna By. Co. ... 160 Crears r. Hunter 203 Creed r. Henderson, Re Hud- son 177 TABLE OF CASES. XXXlll PAGE Ch'ipps '•. HartiKill l(j(i Croft r. Graham (JB? Crofts r. Middlcton 306 Crook r. Corporation of iSea- ford 138 Crookshank r. Rose 717 Cropton r. Davies 289 Crosby r. Wads worth V>d2 Crosfield & Sons r. Manchester Ship Canal Co 350 Crossley r. Maycock 43 Crouch r. Credit Foncier of England 238, 242, 243, 214 Crow r. Robinson 235 CuUen r. Thompson's Trustees and Kerr 612 Cumber ;'. Wane 200 Cumming r. Ince 637 Cundy i'. Lindsay 4t)7, 627 Cunningham c. Dunn 431 Cuno, lie, Manstield v. Mans- field 91 Currie r. Gookl 486 Currie r. Misa 175 Curtice c. London City and Midland Bank 11 Curtis v. Williamson 110 Curzon v. Bel worthy 676 Cutter r. Powell ...." 280 D. C. r. Gallaher 270 Dabowski v. Goldstein 380 Da Costa r. Davis 453 Da Costa v. Jones 332 Dacre r. Gorges 505 Dagenham Dock Co., Me 539 Dale r. Hamilton 698 Dally r. Wonham 651 Dalton /•. Angus 253 Dal ton r. Gib 74 Dalton r. Midland Ry. Co. ... 84 Daniell r. Sinclair .'. 480, 484 Daniel's Settlement 2()9 Darrell v. Tibbitts 566 Dash wood /■. Jerniy n 755 Daubuz r. Morsliead 336 Dauglish r. Tennent 294 Davent)ort r. Bishopp 224 Davenport v. Reg 58 Davey r. Shannon 168, 380 Davies r. Davies (9 Eq.) 62, CA Davies v. Davies (36 Ch. Div.) 378 Davies v. Fitton 545 Davies f. Jenkins 732 PAGE Davies ■/•. London and I'rovin- cial Marine Insurance Co.... 568 Davies r. Makuna 710, 711 Davis V. Duke of Marlborough 344 Davis r. Thomas 539 Dawes v. Harness (519 Dawson r. Ellis 697 Dawson v. Fitzgerald 350 Dawson *'. G. N. and City Ry. Co 230, 357 Deacon r. Gridley 193 Dearie r. Hall 232 De Beil r. Thomson 3(58, 752 Debenham /■. Ox 368 Debtor, A, lie 673 De Bussche v. Alt 300, 631 De Francesco r. Barnum 70 De Hoghton r. Money ...215, 357, 358 De la Bere r. Pearson 185 De Las.salle r. Guildford. ..167, 264, 433, 758 De La Touche's Settlement, I^e 531 DeMattos r. Gibson 247 Dendy I'. Henderson 379 De Nicholls v. Saunders 499 Denn r. Wilford 532 Dennett r. Atherton 253 Denny r. Hancock 508 DentV. Bennett 633, 644, 645, 654, 6.55 Denton r. G. N. Ry. Co. ...17, 20, 21, 24 Denton r. Peters... 242 Deposit Life Assurance Co. r. Ay scough 619 Derry r. Duchess of Mazarine 86 Derry r. Peek 555, 588, 595 Devonshire's (Earl of) Case... 146 Dew {'. Parsons 639, 640 De Wahl ;'. Braune 8(i, 100 Devvar r. Goodman 248 De Wiitz r. Hendricks 337 Diamond Match Co. r. Roeher 380 Dibbins r. Dibbins..-. 102 Dickinson r. Burrell 357 Dickinson r. Uodds 28, 34, 41 Dickinson r. Valjiy 136 Dickson r. Reuter's Telegram Co 224 Dickson /•. Swansea Vale Ry. Co 238 Diggler. Higgs 314,401 Diggle V. London and Black- wall Ry. Co 157 C XXXIV TABLE OF CASES. PAGE Dimniock r. Ifallct 574 Ditcliam r. Worrall tJ-t Dixon, Er parte 108 Dixon r. Boviil 243 Dobell r. Stevens 608 Dodd r. Churton 430 Doe d. Bennett r. Hale 713 Doe d. Bryan r. Bancks 58 Doc d. Garnons v. Knight ...8, 52 Docd. Leach r. Micklem 269 Doe d. Pennington r. Taniere 161 Doed. Williams r. Evans... 359, 360 Don r. Lippinann 689 Donaldson r. P\arvvell 591, 621 Douglas V. Culverwell 539 Dowden and Took /'. Pook..378, 382 Downes r. Jennings 303 Drake r. Beckham 104 Draycott r. Harrison 93 Dresser v. Norwood 103. 108 Drew r. Nunn 42, 97. 99, 102 Driefontein Consolidated Gold Mines r. Janson 333, 334 Druiff r. Lord Parker 262, 544, 516 Drummoud r. Yi^n Ingen 561 Dublin and Wicklow Rv. Co. r. Black ' 68 Duckett r. Cover 737 Dudgeon v. Pembroke 389 Dugdale r. Lovering 13 Duncan r. Cashin 729 Duncan r. Dixon 62, 64 Duncan r. Topham 726 Duncan, Fox & Co. r. N. & S. Wales Bank 299 Dundas r. Dutens 701 Dunlop r. Higgins 726, 727 Dunmore (Countess of) r. Alexander 725 Dunn r. Macdonald 112 Dunnage r. White 658 Dunne r. English r,()'2 Dunston r. Imperial Gas Light Co 160 Durant v. lloberts & Co 107 Durham r. Durham 96 Durham Bios. r. Robertson ... 230 Durham (Earl of) r. Legard... 517, 576 Dutton r. Marsh 243 Button r. Poole 223 Dutton V. Thompson 647 Duvergier r. Fellows 393 Dyer v. Hargrave ...572, 577. 603, 6U4 PAGE Dyer's Case, The 370 Dyson r. Forster 248 Eagle Insurance Co., E.e pnvtr 758 Eaglesfield r. Marquis of Londonderry 480, 503 Earle v. Hop wood 355 Earle r. Oliver 189 East London Waterworks Co. r. Bailey 157 Eastern Counties Ry. Co. c. Hawkes 742 Eastwood r. Kenyon 167, 189 Eaton r. Basker .' 163 Ebbw Vale Co.'s Case 158 Ebsworth and Tidy's Con- tract 579 Ecclesiastical Commissioners r. Merral 161 Edelstein r. Schuler & Co. ... 135. 238, 243 p:den r.Ridsdales.&c. Co 644 Edgcomb r. Dee '. 144, 148, 178 Edgington v. Fitzmaurice 601 Edgware Highwav Board r. Harrow Gas Co." 175, 395 Edmondson r. Render 728 Edmunds v. Bushell 104 Edmunds r. Merchants' De- spatch Transport Co. ...497. 627 Edwards. i?« 362 Edwards r. Aberayron, &c. Society 350 Edwards r. Brown 490 Edwards r. Burt 672 Edwards v. Carter 61, 62 Edwards v. Mevrick 651 Egan r. Guardians of Ken- sington Union 713 Egerton v. Earl of Brownlow... 328, 329, 330, 332 Ehrman r. Bartholomew 382 Elbinger Actien-Gesellschaft r. Claye 104 Eley r. Positive Assurance Co. 169, 226 Eliason v. Henshaw 30 Ellen c. Topp 454 EUiman, Sons & Co. r. Carring- ton & Son 377 Elliot r. luce 98 Elliott r. Crutchley 440 Elliott V. Richardson 347,348 TABLE OF CASES. XXXV PAGE Elliott r. Royal Exchange Assuiauce Cb 850 Ellis r. Barker 640, 679 EUisloii r. Reach 255 Elphinstoue (Lord) v. Mouk- lanrl Iron and Coal Co 540 Eltham v, Kiiigsman 1529 Emmerson's Case 519 Empress Engineering Co 114, 225, 226 Empson's Case 49;i England r. Davidson 194 England r. Downs 30;'> ICnglish and Colonial Produce Co.'s Case (iOS English and Foreign Credit Co. i\ Arduin 45 Eno r. Dunn 326 Equitable Fire and Accident (Office V. The Ching Wo Hong 45 Equitable Insurance Co. r. Hearne 548 Erlaiiger v. New Sombrero Phosphate Co 586, .587, 633, 644 Ernest r. Nicholls 739 Erskine r. Adeane ...167, 264, 423, 758 Espey r. Lake 653 Esposito r. Bowden ...334,335, 414 Evans r. Bicknell 752 Evans v. Brembridge 570 Evans c. Carrington...323,324, 588, .589, 590 Evans r. Edmonds ...590, 593, 594 Evans v. Hoare 170 Evans r. Llewellj'n 675, 67() Evans r. Prothero 707 Evans '•. Smallcombe 740 Evanturel v. Evanturel 331 Evelyn f. Chichester 68 Everet r. Williams 290 Everitt c. Everitt 646 E.xton r. Scott 52 Fairhurst r. Liverpool Adcli)hi Loan Association 83 Fairlie r. Fenton 103 Falck ».'. Williams .505 Falcke v. Gray 662 Fane v. Fane 584 Farewell r. Cokcr 533 PAGE P'arrar i;. Churchill 603 Farrow r. Wilson 211, 447 Faviel r. E. C. Ry. Co 159 Fawcett and Holmes, Be 571 Fawcett v. Whitehousc 585 Feaion r. Earl of Aylesford ... 324 Fellowes r. Lord Gwydyr ... Ill Feltliouse v. Bindley 29, 41 Feltmakers (Co. of) v. Davis... 223 Feret *•. Hill 389, .590 Ferguson r. Carrington ...590, 617 Fergusson r. Norman 311 Ferrand y. Bischoffsheim 107 Fickus, Be 48,559,756 Field ('. Moore 61 Field ■('. Lelean 267 Field wick, Be 92, 7:!2 Fife /•. Clayton 542 Filby t: Hounsell 44, 170 Financial Corporation's Claim 238 Findon r. Parker 362 Finlay ;■. Bristol and Exeter Ry. Co 157, 163 Finlay r. Chirney 211, 450 Firth r. Midland Ry. Co 452 Fischer r. Kamala Naicker ... 360 Fisher & Co. r. Apollinaris Co 346 Fisher /•. Bridges 391, 392, 393 Fisher r. Liverpool Marine In- surance Co 703, 704 Fishmongers' Co. r. Robert- son 152, 161 Fitch r. .Jones 313. 314, 423 Fitz r. Hes 382 Fitzgerald r. Chapman 88 Fitzroy '". Cave 358 Fivaz r. Nicholls 399 Fleet r. Murton 101, 105 Fleet r. Perrins 84 Fleetwood r. Hull 218 Fleming r. Bank of Now Zea- land 102 Fletcher r. Fletcher 52 Flight r. Bolland 62, 65 Flight r. Booth 517, 571 Flight r. Reed 67, 719 Flint r. Woodin 596 Flower r. L. & N. W. Ry. Co. 71 Flureau r. Thornhill 517 Foakes r. Beer 200, 2(»1, 202 Forbes &c Co.'s Claim 567 Forbes /•. Cochrane 409 Forbes r. Watt 477 Ford and Hill, Be 5S3 Ford f. Beech 268 c 2 XXXVI TAl'.I.E OF CASES. PAGE Ford r. Cotesworlh 481 B'ord r. Ncfith 187 Ford r. Oldcii i), (>78 Ford r. Stcir Slid. 6'M\ Ford '•. White l35 Forman it Co. r. Sliip"Liddes- dale" 43!) Foraiaii r. Wright 484, 668 Formbj- r. Barker 251 Forrest r. Manchester, kc. Uy. Co 736 Foster r. Cockerell 232 Foster r. Mackinnon...48l», 41)0, 526 Foster /•. Redgrave 73 P^oster r. Wheeler 2, 50 P'oulkes /■. Metro. Dist. Ky. Co. 473 Foiintaine '■. Carmarthen Ry. Co 737 Fowkes r. Manchester and London Assurance Assoc. ... 259 Fowler r. Fowler 547 Fowler r. HoUins 468 Fowler '■. Monmouthshire Canal Co 708 Fox /■. Nott 252 Franklin --. Miller 277 Franks, E.r parte 86 Fraser r. Hill 394 "Freedom," The 252 Freeman r. Cooke 557 Freeman v. Jeffries 625 Freeth r. Burr ...280, 282, 283. 286 Frend r. Dennett 162 FreshfieWs Trusts, i?f' 232 Frost /■. Knight 21 Fry V. Lane 659, 667, 674 Fuentes r. Montis 251 Fullalove r. Parker 708 Fulton /■. Andrew ...489, 642, 751 Furnival v. Coombes 115 Furtadu /•. Rodgers 334 Gabell r. S. E. Ry. Co 51 Gadd ''. Houghton 105 Gale r. Gale 221 Galloway /•. Mayor of London 131 Gandy r. Macaulay 534 Gardner r. Cazenove 539 (iarland r. Carlisle 469 (iarnons (Doe rf.) r. Knight. ..8, 52 Garrard r. Frankel 506, 552 Gas Light and Coke Co. r. Turner 387, 388 PAGE Genei-al Bill Posting Co. v. Atkinson 278, 369 General Council of the Bar r. Inland Revenue Commis- sioners 715 Geere r. Mare 392 Geipel v. Smith 335, 450 George r. Clagett 107 Gerhard r. Bates 614 Gibbon v. Budd 710, 711 Gibbons r. N. E. Metropolitan Asylum Distiict 44 Gibbons '•. Proctor 22 Gibbs r. Harding 323 Gibson /•. D'Este 581, 582 Gibson c. East India Co 160 Gibson /•. Jeyes 642, 613, 648 Gibson v. Kirk 162 Gidley '■. Lord Palmerston ... 105 G ieve. He 315 Gilbert t). Lewis 634 Gilbert r. Sykes 329 Gilchrist. Ea' parte 91, 95 Giles c. Edwards 453 Gilkes '■. Leonino 27 Glasspoole r. Young 469 Gloucester County Bank r. Rudrv Merthyr & Co 738 Glubb, J?e .589,645 Goddard r. O'Brien 200 Goddard r. Snow 803 Godwin r. Francis 112 Goman /•. Salisbury 261 Goocli's Case 60, 61 Good '•. Cheeseman 201 Good r. Elliott 328 Goode r. Harrison 60 Goodman v. Harvey 242 Goodman r. Savers 485 Goodson r. Grierson 203 Goodwin r. Robarts 243, 244 Gordon r. Gordon 584 Gordon /■. Stieet 503, 607 Gore r. Gibson 97 Gorgier r. Mioville 244 Govett r. Richmond 215 Gozney r. Bristol Trade and Provident Society 373 Giaeme v. Wroughton 392 Graham r. Johnson... 236. 238. 239 Grain's Case 216, 217 Grant's Case 40, .302 Grant r. Gold Exploration, ice. Syndicate of British Columbia 300 Grant v. Maddox 264 TABLE OF CASES. XXXVU PAGE Gravely r. Barnard 187, 37(), 380 Graves t'. Legg 274 Gray r. Fowler tjl7, i'Ax Gray r. Gibson 227 Gray t'. Lewis 155, 73C Gray r. Mathias 318, 311) Gray r. Pearson 227 Gray r. Warner 301 G. N. Ry. Co. r. Palmer 52 G. N. Ry. Co. V. Witham 187 Green *'. P.averstock 59(1 Green i\ Duckett 638 Green r. Sevin 536 Green r. Thompson 70 Green /•. Wynn 298 Greenwood r. Greenwood 269 Gregory r. Williams 224 Grell r. Levy 353, 413 Greslev '•. Mousley ...620, 643, 678, 680 Griffin '•. Deveuille 653 Grirtitii r. Tower Publishing Co .501 Griffith r. Young 695 Griffiths r. Jones 508 Griffiths?'. Robins 653 Gripel i\ Smith 446 Griswold r. Waddington 335 Grosveuor r. Sherratt 650, 653 Guardhouse r. Blackburn. .262, 751 Guest r. Smythe 300 Guild & Co. r. Conrad 165 Guinness r. Land Corporation of Ireland 712 Gunn's Case 3i; Gurney r. Behrend 252 Gurney r. WomersJey 514 Guthing r. Lynn 47 Guy /•. Churchill 353, 357, 362 G Wynne r. Heaton 658 H. v. W 325 Hack r. London Provident Building Society 349 Hadley r. Clarke 335 Haigh r. Brooks 185 Haigh r. North lUerley Union 158 Haines r. Busk 395 Halbot r.Lens 113 Halford v. Cameron's Coal- brook, kc. Co 243 Halhead r. Young 261 PAGE Halifa.x Union Guardians r. Wheelwright 490 Hall, Ee ...^ 715 Hall r. Bainbridge 227 Hall V. Cazenove 424 Hall r. Conder 515 Hall r. Dyson 295 Hall r. Ewin 251, 256 Hall r. Hall (L. R. 1 P. & D. 482) 644 Hall V. Hall (L. R. 8 Ch. 430) 647 Hall r. Mayor of Swansea 162 Hall i: Old Talargoch Lead Mining Co 628 Hall r. Palmer 52, 319 Hal] r. Warren 95 Hall r. Wright 367, 446, 449, 451 Hall-Dare /•. Hall-Dare 552 Hallows r. Fernie 602 Halsey r. Grant 572 Hamilton r. Giaingei- 311 Hamilton r. Hector 363 Hamilton v. Vaughan-Sherrin & Co 63 Hamilton r. Watson 568, 569 Hamlin r. Great Northern Ry. Co 17 Hamlvn i^ Co. r. Talisker Dis- tillery 348,405 Hammersley c. Baron de Beil..368, 752, 753, 754, 755 Hammond r. Messenger 229 Hampden v. Walsh 401 Hanauer r. Doane 337,389 Hancock c. Hancock 91 Hancock r. Peaty 96 Hanington r. Du Chastel 343 Hanley v. Pearson 550 Hanson r. Waller 46S Harben r. Phillips 737 Harburg Imlia Rubber (Jomb Co. V. Martin 165 Harding, In the Goods of 85 Hardman r. Booth 497, 627 Hardy r. Metropolitan Land and Finance Co 474 Hare's Case 509, 62l Harrison r. Guest 6r>8, 660 Harrison r. Harrison (13 P. Div. 180) 93 Harrison r. Harrison ([1900] 1 K. B. 35) 325 Harrison r. Seymour 297 Harse r. Pearl Life Assurance 398, 405 Hart r. Hart 48 Hartr. Miles 185 Hart f. Mills 511 Hartr. Swaine 583 Harter f. Harter 751 Hartley c. Cuminings 384 Hartley r. Ponsonby 194 Hartley r. Rice 367 Harvey r. Facey 44 Harvey v. Gibbons 426 Harvey r. Merritt 315 Harvey r. Mount 653 Hastelow r. Jackson 401, 103 Hastings (Lady). It'e 734 Hatch V. Hatch 643, 652 Havvksworth r. Hawksworth.. 3ti3 Hay's Case 301 Hay craft r. Creasy 602 Haygartli /•. Wearing 580, 583, 675 Haynes r. Doman 378, 381 Haywood r. Brunswick Build- ing Society 251, 254 Head r. Diggon 28 Hcartley r. Nicholson 207 Heath r. Crealock 472 Hebb's Case 34. 726 Heffield r. Meadows 266 "Helen,'^The 337 Helps r. Clayton 76 Hemingway r. Hamilton 590 Henderson r. Australian Pioyal Mail, &c. Co 157 Henderson r. Stevenson 51 Henkel r. I'ape 511 Henkle r. lloyal Exch. Assce. Co 547 Henry r. Armstrong 645 Henthorn r. Eraser... 30. 31. 33,35, ' 38, 40 Hereford and South Wales Waggon and Engineering Co., Jit' 608 PAGE Herman v. Jeuchner 346, 366, 402 Hermauo r. Mildred 104 Heme Bay Steamboat Co. v. Hutton 441 Hesse r. Stevenson 532 Heywood r. Mallalieu 581, 584 Heyworth v. Hutchinson 562 Hick r. Raymond 431 Hickman f. Berens 510 Higgins r. Pitt 295 Higgins V. Samels 605 Higgins f. Scott 685 Higgins c. Senior 103 Higginson r. Clowes 508, 542 Higginson r. Simpson 399 Higgs r. Northern Assam Tea Co 239 Hill r. Boyle 357 Hill ;•. Cooper 89 Hill r. Gray 593 Hill r. Tupper 2.52, 254 Hill /-.Walker 685 Hill V. Wilson 261, 494 Hilliard r. Eiffe 582, 634 Hills /•. Rowland 549 Hills f. Suell 495 Hills I'. Sughrue 419. 429, 445 Hilton r. Eckersley 372 Hindley"s Case 30 Hindley r. Marquis of West- meath 326 Hinclson r. Wetherill 644 Hipwell v. Knight 536 Hirschfield r. London, Brigh- ton and South Coast Ry. Co. 599 Hirst r. Tolson 452 Hislop r. Leckie 254 Hitchcock r. Coker ...371, 376, 377 Hitchcock r. Giddings 520 Hoadly c. McLaine 169 Hoare r. Bremridge 635 Hoare r. Rennie...280,281, 282, 2^3 Hobart V. Butler 712, 713 Hodgson, J}e 732 Hodson's Settlement, Jif 62 Hodson /•. Henland 699 Hoggins V. Gord(m 712, 713 Hoghton r. Hoghlon...489, 645, 6.52 Hoghton r. Money 353 Hole r. Bradbury 501 Holland. ]{(' 701 Holland r. Bennett 728 Holland i: Hall 396 Hollins r. Fowler 468. 497, 627 Holloway Bros. r. Hill 251 TABLE OF CASES. XXXIX PAGE Holman r. Jolinsou 338, 3t)8 Holmanr.Loynes.. 643,1)47,651, 679 Holme t\ Brunskill 297 Holme v. Guppy 454 Holmes r. Blogg 63 Holmes r. Jaquea 228 Homersham /•. Wolverhamp- ton Waterworks Co 157 Honck r. Miiller 281 Honeymaii r. Mariyat 43 Hood of Avalon (Lady) r. Mackinnon 4(54 Hood-Barrs r. Cathcart 90, 93 Hood-Barrs v. Heriot 93, 94 Hoole r. G. W. lly. Co 736 Hope r. Hope 323, 347, 412 Hopkins r. Prescott 343 Hopkiuson v. Foster 733 Home's Case 250 Horrocks r. Uigby 577 Horsfall r. Fauntleroy 109 Horsfall r. Thomas 606 Hort'sCase 216, 217 Hotson r. Browne 261 Hough r. Manzanos 105 Houldsworth c. City of Glas- gow Bank 613 Houldsworth r. Evans 741 Household Fire Insuiauce Co. V. Grant 39, 727 Howard r. Brown hill 720 Howard r. Harris 528 Howard /•. Patent Ivory Manu- facturing Co 138 Howarth r. Brearley 711 Howatson v. Webb... 489, 490, 492, 493 Howden 1!. Haigh 294 Howden (Lord) c. Simpson ... 394 Howes r. Bishop 643 Howell ('. Coupland 442 Howke V. E. Hulton & Co. ... 124 Howley r. Knight 121 Hoyle, Jie 166 Huber r. Steiner 6S9, 691 Huddersfield Banking Co. r. Lister 522, 553 Hudson, i/e, Creeil '•. Henderson 177 Hudson r. Cook 575 Hughe.s, Jle 89, 732 Hughes c. Done 717 Hughes r. Jones 573, 579 Hughes r. Pumj) House Hotel 230 Huguenin r. Baseley 644, 654, 65(;, 678 Hulme/-. Cole.-^ 298 PAGE Hulme V. Tenant 729 Hulse, Ml- parte 538 Humble v. Hunter 106, 496 Hume V. Pocock 605 Humfrey r. Pale 105, 267 Humphreys y. Green 697 Humphries V. Humphries (!91 Humphrys r. Polak 364 Hunt, In the Goods of 491 Hunt K. Hunt ...317, 321, 322, 323, 325 Hunt V. Kousmaniere's Ad- ministrators 481, 547 Hunt /•. Silk 625 Hunt c. Wimbledon Local Board 138, 158, 162 Hunter v. Atkins 678 Hunter ('. Daniel 353,357 Hunter r. Walteis ...490, 492, 493, 497 Hussey c. Home-Payne 43, 46 Hutcheson r. Eaton 105 Hutchinson r. Tatham 101, 105 Hutley r. Hutley 352, 3.")3, 362 Hui ton r. Bulloch 104 Hutton r. Warren 267 Hyams r. Stuart King 315 Hybart /■. Parker 227 Hyde r. Hytle & Woodmansee 408 Hyde «. Wrench 30 Hytlraulic Engineering Co. r. McHaffie .537 Imperial Bank of Canada ;•. Bank of Hamilton 479 Imperial Loan Co. c. Stone ... 95, 97, 99 Ind's Case 509 Ind, Coope & Co. v. Emmerson 472 Inman r. Inman 82 lonides v. Pacific Insurance Co 704 lonides r. Pender 564, 607 Ipswich Tailors' Ca.se 371 Irnham (Lord) r. Child 481 Irvine r. Watson 109 Irwin V. Williar 315 Isberg r. Bowden 107 Jackson and Haden's Case ... 573 Jackson, K.e puvle 310 xl TABLE OF CASES. PAGE Jackson r. Duchaire 293 Jackson r. Union Marine In- surance Co 441) Jacobs r. Credit Lyonuais 414, 431 Jacobs V. Revell o73 Jacobs r. Seward 475 James, U.r pa tie 485 James r. Couchnian 647 James r. Isaacs 498 James r. Kerr 352 James f. Smith (i'Jl Janson r. Uriefontein Con- solidated Mines 333, 334 Jaquess v. Thomas, ii'e Thomas 355 Jared r. Clements 232 Jarratt ;•. Aldhani 681 Jarrett r. Hunter ■• 170 Jee r. Tburlow 322,323 JefEerys r. Gurr 162 Jenkins r. Joues 359 Jenkins /•. Morris 99 Jennings r. Broughtmi 603 Jennings r. Johnson 355 Jennings r. Rundall 78 Jervis r. Berridge 263 Jervis r. Tomkinson 445 Jewitt r. Eckhardt 172 Johnasson r. Bonhote 691 Johnson v. Bragge 546 Johnson /■. Gallagher 731, 733, 734 Johnson r. Lansley 399 Johnson r. Pie 78 John.son r, Raylton 266 Johnston r. Boyes 19 Johnstone v. Marks 73 Joliffe r. Baker 583 Jones, ii./'^j^/r^' (12 Ch. Div.). 732 Jones, Kc parte (18 Ch. Div.). 82 Jones, lir ([1893] 2 Ch.) 62 Jones, lifi 709 Jones r. Backley 274 Jones f. Broadhurst 242, 498 Jones r . Clifford 522 Jones V. Daniel 43 Jones V. (iibboiis 249 Jones r. Gordon 242 Jones V. Harris 730, 734 Jones V. Holm 446 Jones f. Humphreys 230 Jones V. Jones (6 M. ct W.) ... 696 Jones r. Jones (8 Sim.) 233 Jones r. Just 561 Jones r. Lane 242 Jones f. Lees 379 PAGH Jones r. Merionethshire Build- ing Societj' 346 Jones r. North 373, 417 Jones r. Ricketts 667 Jones r. Rimmer 580 Jones r. Robinson 227 Jones r. St. John's College, Oxford 430 Jones r. Victoria Graving Dock 171 Jones V. Waite ...185, 196, 324,386 Jorden r. Money 698, 753, 754, 756 Josephs r. Pebrer 246 Jovce '•. Svvann 44 Karberg's Case 214, 587 Kaufman v. Gerson 346, 409 Kay /■. Smiih 653 Kearley v. Thomson 402 Kearon r. Pearson 429 Kearsley r. Cole 298 Keates r. Earl Cadogan... 583, 593 Keates r. Lyon 251, 254 Kedar Nath Bhattacharji r. Gorie Mahomed 177 Keech v. Sandford 301 Keenan v. Handley 204 Keighley, Maxsted &; Co. r. Durrant 107 Keir v. Leeman 345 Kekewich r. Manning 205 Kelly r. Solari 479 Kelner v. Baxter 114, 115 Kemp r. Baersehuan 230 Kemp V. Falk 474 Kempson r. Ashbee 653,680 Kennedv r. Broun ...712, 713, 714, 715 Kennedy v. Green 492 Kennedy v. Lee 28 Kennedy r. Lyell 359 Kennedy r. Panama, &c. Mail Co 502, 513, 514 Kent v. Freehold Land Co. ... 509, 620 Keppell r. Bailey 254, 256 Kershaw r. Kelsey 334 Kettle r. Eliot 67 Kibble, Ex parte 64 Kidderminster (Maj-or of) v. Hardwick 154, 159, 161 Kins: r. Hamlet 670 TABLE OF CASES. xli PAGE King r. Kemp 412 King r. Victoria Insurance C'o. 231) Kingsford r. Merry ...495, 497, 627 Kingston r. Preston 274 Kingston-upon-HuU (Gover- nors) v. Hull 47 Kintrea, Ux juirtr r)97, 60G Kirchner & Co. r. Gruban 349 Kirk /•. Bromley Union KiO Kirkwood v. Gadd (i 73 Kitchen r. Hawkins 4S3 Knight r. Bowyer 35H, H.'iG, 357 Knight c. Lee 400 Knight r. Majoriljanks (!59 Knight r. Simmons 255 Knox r. Gye 22U, 083 Knye r. Moore 318 Krell r. Henry 440 Kronheim r. Johnson 171 Kunwar Ram Lai r. Nil Kanth 301, 071 Lacey, £.r ])rnifi 300 Lachlan r. Reynokls 579 Lagunas i Nitrate Co. r. Lagunas Syndicate 587 Laidlaw r. Organ 559 Lake, Be 232 Lakeman r. Mountstephen ... 105 Latnare r. Dixon 750, 758 Lamb's Case 425, 461 Lam pet's Case 229 Lann)leigh r. Braithwaite 14, 17(i, 190 Lamprell r. Billericay Union.. 158 haver. Horlock ()67 La!igrish r. Watts 087 Lassence r. Tierney 699 Laughter's Case 455, 460 Laver r. Dennett 552 Lavery r. Pursell 107 Lavery r. Turley 696 Lawes r. Purser 185 Lawford r. Billericay Kural Council 158 Lawrance r. Norreys 634 Lawrence r. Smitli 327 Lazarus r. Cowie 245 Leach (Doc rf.) c. Micklem ... 269 Leach r. MuUett 510 Leak r. Driffield 93 Lcaroyd r. Brook 455 Lcask r. Scott (iOl PAGE Leather Cloth Co. r. Hieroni- mus 171 Leather Cloth Co. r. Lorsont... 374, 377, 380 Lebel r. Tucker 242 Le Brasseur and Oakley, lie... 715 Le Bret t: Papillon 101 Lee, E.f parte 334 Lee V. Bude, &c. Ry. Co 307 Leer. Gaskell 167 Lee V. Jones 568, 509, 593 Leeds r. Cheetham 432, 433 Leeds and Hanley Theatres of Varieties 587 Leetham & Sons r. Johnstone White 379, 382 Legge r. Croker 582 Leggott r. G. N. Ry. Co 211 Lehigh Zinc and Iron Co. r. Bamford 594 Leicester v. Rose 294 Leif child's Case 20() Leman v. Fletcher 711 Leman v. Houseley 311, 711 Lempriere v. Lange 80 Leng (k Co. r. Andrews ... 70, 382 Lennard r. Robinson 105 Lennon v. Napper 530, 538 Leroux r. Brown 092, 093 Leslie r. Fitzpatrick 59, 70 Letchford, Be 77 Lever r. Koffler 170 Levy V. Green 511 Lewis r. Alleyne 67 Lewis r. Brass 47 Lewis r. Bright 312 Lewis r. Browning 41 Lewis c. Jones 599 Lewis r. Nicholson 112 Ley land r. Illingworth ...507, 573 Leyland r. Stewart 172 Lichfield r. Baker 485 Life Association of Scotland r. Siddal 030 Lilesr. Terry 049 Lincoln College Case 58 Lindo r. Lindo 533 Lindsay ;•. Cundy 497 Lindsay Petroleum Co. '•. Hurd OOl, 631 Lindus r. Bradwell 104 Lishman r. Northern Mari- time Insurance Co 704 Lister r. Hodgson 55 1 Lister r. Pickford 474 Litchfic]'c 13t) Peter r. Compton 168 Peters '•. Fleming 72 Pharmaceutical Soc. '".London & Provincial Supply Assoc. 124 Phelps r. Lvle \ 227 Phillips' Trusts 234 Phillips r. Bistolli .505, .529 Phillips r. Caldcleugh ...517, 518, 571, 574 Phillips c. Clagett 533 Phillips r. Foxall 299 Phillips r. Tlonifray 5S0 Phillips r. Hull Alhambra Palace Co 211 Phillips /-.Miller 577 l'iiilli|)S r. i\Inllings 645 Phillips /■. Phillips 470, 472 Phillips r. Probyn 320 Philpott r. -Jones 717 Phipps r. Lovegi'ove 234, 236 Phosphate of Lime Co. v.Green 741 Picard r. Hine 731, 732 Pickard r. Sears 557 Picker r. London and County Banking Co 244 Pickering's Claim 104 PAGE Pickering r. llfracombe Ry.Co. 235, 385 Pickeritig /•. Stephenson 735 Pidcock r. Bishop 569 Piercy r. Young 349 Piggott r. Strati on 698,756 Pigot's Case 385 Pigott r. Thompson 223 Pike r. F'itzgibbon 733 Pike /•. Ongley 105 Pilcher r. Rawlings 470 Pilkington r. Scott 384 Pillans r. Van Mierop 188 Pinchon's Case 148, 213 Pinkett r. Wright 235 PinnePs Case 200 Pisini '•. A.-(;. for Gibraltar... 649 Pittam r. Foster 85 Plant r. Bourne 170 Plating Co. r. Farquharson ... 362 Piatt r. Bromage 484 Playford r. United Kingdom Electric Telegraph Co 224 Pledge /•. Buss '^ 299, 568, 569 Plews r. Baker 348 Polhill r. Walter 595 Police Jury r. Britton 138 Popham r. Brooke 651 Poplett r. Stockdale 292 Pordage r. Cole 275 Port of London Co.'s Case ... 739 Porter's Case 395 Potter r. Sanders 726 Potts r. Bell 334 Poussard r. Spiers and Pond... 448 Powell r. Elliot 574 Powell r. Hemsley 256 Powell r. Powell" 647, 648 Powell r. Smith 477 Powell r. Thomas 699 Power r. Banks 121 Pratt r. Barker 654 Prees /•. Coke 6.59 Prentice /•. London 350 Preston /•. Dania 459, 540 Preston /•. Luck 476 Price /■. Herrington 98 Price /•. Dj'er 261 Price '• Easton 224, 225 Price /•. Hewett 78 Price r. Ley 542, 543 Price '■. Macaulay 604 Pride /■. Bubb 729, 732 Prideaux r. Lonsdale 303, 647 Priestley r. Fernie 109 Prince /•. Haworth 347 TABLE OF CA8E8. xlvii PAGE Prince of Wales Assce. Co. /■. Haidins 740 Flint iiig and Numerical Regis- tering Co. r. Sampson... 333, 380 Pritchard r. Mercliants' Life Insuiance yociety .")21 Proale r. Soady 7.54 Prosser r. Edmonds... 3.51, 353, 357, 358 Proudfoot r. Montcfiore 565 Prugnell r. Gosse 375 Pryse r. Pryse 360 Puckett and Smith's Contract 571 Piilbrook r. Lawes 695 Pulsford r. liichards ()16 Purcell r. Macnamara 657 Pybus r. Gibb 297 I'yke, Ml- jhirfp 315 Pym r. Campbell 262 Quarrier r. Colston HI, 412 Queen- Empress r. Narottam Das Moriram 314 Quincey v. Sharpe (i87 Quinn r. Leathern ...i 293 Iladenhurst y. l>ates 22() Raffles r. Wichelhaus 5()4 Raggett r. Bishop 718 Raggett r. Musgrave 718 Railton r. Matthews 5G7, 570 Rainbow r. Hawkins 19 Rajah Mokham Singh /•. Rajali liup Singh 671 Ram Coomar Coondoo r. (thun- der Canto Mookerjee 361 Ramloll Thackooiseydas.s r. Soojumnull Dhondmull 329 Ramsdcn r. Brcarley S9 Ramsdcn r. Dyson 699 Ramsgate Hotel Co. r. Ciold- smid 30 Ramsgate Hotel Co. r. Monte- fiore .30 Randall /■. Morgan 692 Randcgger /•. Holmes 318 Randell, Saun'2 Richardson /•.Williamson 112 Riche r. Ashhury Ry. Carriat,fe Co... 12S, 1^2, 1S4, 532, 740, 742 Ricketts r. Plnfield Church- wardens 248 Ridgway r. Sneyd 444 Ridgway r. Wharton 46 Rigby /•. Connel 718 Ritchie '". Smith 311 Rivaz r. Gerussi 5(i4 River Wear Commissioners r. Adamson 306 Roberts, Br 482 Roberts '■. Berry 536 Uoberls ''. Brett 276 Roberts r. Bury Commis- sioners 453 Roberts /■. Security Co 45 Roberts /-.Smith 48, 49 Robinson r. Bland ...407, 410, 412 Robinson /•. Davison...211. 447,498 Robiiison r. Mollelt 301 Robinson /•. Nesbitt 235 Robinson /•. Ommanney 367 Robinson /•. Page 261 Robinson /•. Pickering 730, 732 Robinson k Co., Ltd. /■. Heuer 381 Robinson, King& Co. /■. Lynes 92 Robson /•. Dodtls 736 Robson /•. Urummoud 211, 215, 496 Rochefoucauld /•. Boustead ... 632 Roddam /•. Morley 684,688 Roe /■. Tranmarr 532 Rogers /•. Hadley 263 Rogers /•. Hosegood...250, 251, 255 Rogers /•. Ingham 483, 485 Rogers r. Maddocks 381 Rogers r. Parry 375 Roffe /•. Flowe'r 216 Romford Canal Co 738 Rooke /•. Dawson 19 Rooke /■. Lord Kensington. ..532. .547 Roper /■. Doncaster 731, 732 Roper /■. Holland 720 Roscorla /-.Thomas 189 Rose /-. Gould 685 Rosewarne /-. Billing 314 Rosher /-. Williams 193. 660 Rossiter /-. Miller 46, 170 liossiter /-. Walsh 654 PAGE Rothcrham Alum andChemical Co., J?r 226 Rouse /-. Bradford Banking Co. 298 Rousillon /-. Rousillon 380, 381 Rowley /-. Rowley 88 Rownson, I}ft 395,685 Royal British Bank r. Tur- quand 156, 737, 740 Royal Exchange Assurance Corporation /•. Sjorforsak- riiigs Aktiebolaget Vega ... 385 Ruben /-. Great Fingall Con- solidated 138 Ruckmaboye /-. Lulloobhoy ... 688 Rudd r. Lascelles 575 Rudge /-. Bowman 520, 526 Ruffles /". Alston 325 Rumball r. Metropolitan Bank 243 Russell /-. Amalgamated Soc. of Carpenters and Joiners... 373 Russell /-. Da Bandeira 452 Russell /-. Rnssell 349 Russell i: Shoolbred 299 Russell /-. Thornton 34 Russell /-. Wakefield Water- works Co 736 Ryall /-. Rowles 344 Ryder /-. W^ombwell 72, 73, 75 Sackville-West /-. Viscount Holmesdale 550 St. Alban r. Harding 667 St. George r. Wake. 303 St. John /■. St. John 322 St. Leonard's, Shoreditch (Guardians of) /-. Franklin 124 Salter /-. Bradshaw 667 Salton /-. New Beeston Cycle Co 102,113 Salvesen &. Co. v. Rederi Ak- tiebolaget Nordstjernan 113 Samuel /-. Newbold 673 Sanders /-. St. Neot's Union... 158 Sanderson /-. Aston 297, 299 Sanderson /-. Graves 697, 707 San Juan (City of) r. St. John's Gas Co 200 Santos /•. niidge...406, 408, 409.410 '• Satanita," The 7.27 Savage /-. Tyers 269 Savery r. King 648, 652, 679 Savin /-. Hovlakc Rv. Co 316 TABLE OF CASES. xlix PAGE Saxby r. Fulton 412 Saxon Life Assurance Society, Be 482,483 Sayers r. CoUyer 256 Scaltock I'. Hartson 241) Scarf ;•. Jardine 633 Scarpellini v. Atcheson 634 Schmaltz r. Avery 115, 116 Scholefield r. Templer 629, 631 Scholey v. Central Ry. Co, of Venezuela 617 Scliott, In the Goods of 751 Scotson V. Pegg 196, 197 Scott r. Avery 350 Scott v. Corp. of Liverpool ... 350 Scott r. Coulson 521 Scott r. Ebury (Lord) 114 Scott V. Gillmore 717 Soott V. Littledale 507 Scott r. Pilkmgton 24 Scott V. Seabright 588, 636 Scott c. Tyler 400 Scottish Petroleum Co., Me ... 586, 620, 757 Seager v. Aston 685 Seaton r. Burnand ...564, 567, 569, 571 Seaton v. Grant 736 Seaton r. Heath 564, 567, 571 Seaton r. Seaton 77 Seddon i: North Eastern Salt Co. 583 Seear r. Lawson 353, 357 Seligmann v. Le Boutillier ... 348 Selsey (Lord) r. Rhoades 655 Seton r. Slade 536 Sewell *-. Burdick 252 Sewell V. Koyal Exchange As- surance Co 395 Sewers (Commis. of) v. Eeg.... 436 Seymour I". Bridge 400 Shadwell r. Shad well 1 96 Shand v. Du Buisson 733 Shardlovv v. Cotterell 170 Sharington r. Strotton 181 Sharman v. Brandt 116, 300 Sharp V. Leach 653 Sharp V. Taylor 329, 395, 400 Sharpe v. Foy 702 Shurpley r. Louth and East Coast" Ry. Co 617 Shattock r. Shattock 730, 733 Shaw's Claim 316 Shaw I'. Foster 220 Shaw i\ Jeffery 296 P. PAGE Shaw r. Woodcock 639, 694 Sheffield, kc. Building Society, Re 118 Sheffield Nickel Co. y. Unwin 624 Sheffield (Farl of) r. London Joint Stock Bank 244 Sheppard r. Oxenford 400 Shillito r. Hobson 206 Ship's Case 509 Shoolbred r. Roberts 401 Shrewsbury (Earl of) v. N. Staffordshire Ry. Co 342 Shuey v. United States 23, 25 Shulter's Case 488 Sidenham r. Worlington 190 Silber Light Co. r. Silber 737 Sillem (".Thornton 567 Silliman r. United States 637 Simmonds, Mv parte 485 Simons r.G.W.Ry. Co 491 Simons r. Patchett 112 Simpson r. Crippin 281, 282 Simpson v. Denison 735 Simpson v. Egginton 498 Simpson v. Lamb 353, 356 Simpson r. Lord Howden 318, 342 Sims ('. Bond 107 Sismey r. Ely 319 Skeate r. Beale 637 Skeet r. Lindsay 687 Skidmore (•. Bradford 754 Skilbeck v. Hilton 534, 624 Skillet t r. Fletcher 297 Skottowe v. Williams 632 Skyring v. Greenwood 484 Slade's Case 150 Slator V. Brady 59, 82 Slator V. Trimble 63 Sloman v. Walter 539 Smart v. West Ham Union ... 160 Smethurst r. Mitchell 109 Smith's Case (L. R. 2 Ch. 604) 586, 594, 609, 612 Smith's Case (L. R. 4 Ch. 611) 703 Smith r. Bromley 403 Smith V. Brown 601 Smith r. Cartwright 160 Smith V. Chadwick ...602, 6U6, 607 Smith V. Clarke 596 Smith V. Cuff 403 Smith r. Eggington 248 Smith r. Gold Coast and Ashanti Explorers 168 Smith V. Hughes 258, 487, 515, 516, 525, 559, 606 Smith V. Hiffe 550 TABLE OF CASES. PAGE Smith r. Kav ...602, 606, 6-tl, 642, 654, 657 Smith r. King 65 Smith V. Land and House Pro- perty' Corporation 578 Smith V. Lindo 312 Smith V. Lucas 61, 269 Smith r. Mawhood 312 Smith V. Neale 168, 170 Smith r. Webster 44 Smith r. Wheatcroft 4'.t5 Smith r. White 388 Smith r. Wilson 264 Smout r. Ilbery 113 Smurthwaite r. Wilkins 252 Smythe r. Griffin 318 Society of Practical Know- ledge r. Abbott 126 Soltykoff, 7?p, E.V j/arie Mar- grett 76 Somersett's Case 383, 409 Soper r. Arnold 583 Sottomayor r. De Barros 305 Soixch r. Strawbridge 697 Soutli Africa Breweries r. King 416 South Hetton Coal Co. r. Has- well Coal Co. 44 South Hetton Coal Co. r. N.E. News Association 123 South of Ireland Colliery Co. r. Waddle ." 156 South Yorkshire, kc. Co. r. G. N. Ey. Co. 735 Southall r. Rigg 484, 668 Southampton (Lord) r. Brown 104, 222 Southern Development Co. r. Silva 598 Sou they r. Sherwood 327 Southwell r. Bowditch 105 Spackman r. Evans 740, 741 Sparenburgh *•. Bannatyne ... 336 Sparling r. Brereton 709 Spears v. Hartly 685 Spedding r. Nevell 112 Spence r. Chodwick 431 Spencer's Case 247. 248 Spencer r. Harding 15, 19 Spicer r. Martin 251, 255 Spiller r. Paris Skating Rink Co 114 Splidt r. Bowles 247 Sprange r. Lee 94 Sprott r. United States ...337, 389 Sprye r. Porter.. .351, 353, 354,355 PAGE Spurr r. Cass 116, 226 Squire /•. Whitton 212, 569 Stafford (.Mayor of) v. Till ... 166 Stahlschmidt r. Lett 685 Stanley r. Dowdeswell 44 Stanley;-. Jones 353 Stanton v. Tattersall 517, 578 Starkey r. Bank of England.. 112, 113 Stedman r. Hart 96 Steed r. Calley 653 Steele r. Harmer 136 Steele /•. Williams 639 Stephens r. Dudbridge Iron- works Co 70 Stephens r. Venables 236 Sterry /-.Clifton 343 Stevens r. Benning 211, 501 Stevens r. Biller 108 Stevens r. Gourlev 311 Stevenson r. McLean ...28, 31, 34 Stevenson r. Newnham 626 Stewart's Case (Agriculturists' Cattle Ins. Co.) 741 Stewart's Case (Russian Vyk- sounsky Ironworks Co.) 509 Stewart r. Alliston 508 Stewart r. Casey 190 Stewart r. Eddowes 171,529 Stewart r. Kennedy 477 Stewart r. Stewart 482, 522 Stewart /-. Wyoming Ranche Co \ 593 Stikeman r. Dawson 78, 81 Stilwell r. Wilkins 658 Stirling v. Silburn & Pyman... 673 Stockdale r. Onwhyn 326 Stocks r. Dobson 233 Stogdon r. Lee 92, 731 Stone r.Citv and County Bank 627 Stone r. Godfrey 482 Stonor's Trusts" 91 Storey ;-. Waddle 527, 552, 635 Strange r. Brennan 353, 355 Stray r. Russell 425 Street v. Blay 504 Street r. Rigby 348 Stribley r. Imperial Marine Insurance Co 564, 565 Strickland r. Turner 521 Stuart (-. Diplock 382 Stiibbs r. Holywell Ry. Co. ... 451 Studds ;-. Watson 171 Stump r. Gaby 679 Sturge r. Starr 609 Sturge r. Stiirge 60S TABLE OF CASES. li PAGE SLurlyn v. Albany 184 Summers r. Griffiths 658 Sumpter r. Hedges 279 Surcome i: Pinniger 699 Surman r. Wharton 94 Sussex Peerage Case 305, 3015, 308 Sutton's Hospital Case ...119, 127 Sutton V. Grey 167 Swaisland r. Dearsley 576 Swan, Ed' parte 245 Swan r. North British Aus- tralasian Co 241, 490, 491 Swansea Friendly Society, Ex parte 123 Sweet r. Lee 694 Sweet r. Sweet 322, 324 Swift r. Jewsbury 610 Swift r. Kelly 596, 597 Swift f. Swift 364 Swift r. Tyson 241 Swift c. Winterbotham 612 Swindon Waterworks Co. r. Wilts and Berks Canal Navigation Co 131 Swire r. Francis 610 Sydney & Co. r. Bird 587 Sykes r. Chad wick 186 Syraes v. Hughes 402 Taddy & Co. r. Sterions & Co. 247 Taite"r. Gosling 250 Talbot r. Stanif orth 652 Taraplin r. James 506,507,508, 512,661 Tancred r. Delagoa Bay and East Africa Railway Co. ... 230 Tappenden r, Randall 402 Tasker r. Small 215 Tatam v. Reeve 314, 400 Tate r. Williamson ...643, 650, 654 Tayloe v. Merchants' Fire Insurance Co 727 Taylor, Ex pa rte 63 Taylor c. Ashton 593 Taylor r. Bowers 402 Taylfjr r. Brewer 48 Taylor r. Caldwell ...431, 433, 437, 439, 447, 451, 460, 462 Taylor r . Chester 398 Taylor r. Chichester and Mid- hurst Ry. Co 132, 416 PAGE Taylor /■. Crowland Gas Co. ... 311 Taylor r. G. E. Ry. Co 691 Taylor v. Johnston 58, 653 Taylor r. Jones 728 Taylor r. Manners 186 Taylor r. Meads 729 Taylor r. Parry 215 Taylor v. Portington 48 Taylor r. Pugh 303 Taj'lor r. St. Helens (Corpora- tion of) 270 Taylor r. Smith 169 Tenant v. Elliott 399 Tennent r. City of Glasgow Bank 629 Tennent v. Tennents 658 Terry and White's Contract, Be 573 "Teutonia," The 446 Texas r. White 337 Thames Haven, &c. Co. r. Hall 159, 160 Thiedman v. Goldschmidt 242 Thiis r. Byers 429 Thomas, Be, Jaquess c. Thomas 355 Thomas v. Brown 694 Thomas c. Davis 533 Thomas v. Thomas 176, 183 Thompson v. Adams 702 Thompson v. Hickman 545 Thomp-on r. Hudson 539 Thompson r. Powles 337 Thompson v. Universal Sal- vage Co 136 Thompson v. Whitmore ...548, 551 Thomson ;•. Davenport 102 Thomson c. Eastwood 634 Thomson r. Weems 566 Thorn r. Mayor of London ... 430 Thornborow /'. Whitacre 421 Thornton r. Kempster 511 Thoroughgood's Case 488 Thursby r. Plant 248 Tliurstan r. Nottingham Per- manent Benefit Building Soc 67, 69 Tlnvaites r. Coulthwaite 395, 400 Ticliener, Be 231 Tiedmann, Be 102 Tilley r. Thomas 536 Toker r. Toker 645 Tolhurst r. Associated Port- land Cement Manufacturers 210, 230, 496, 499 Tonison '■. Judge <>8I d 2 lii TABLE OF CASES. PAGE Topliam r. Morecraft 720 Toikiiigton r. Magee 230 Torrance r. Bolton ...517, 518, 574, 578, 579 Torre r. Torre 550 To(tenliam r. Emmett 664 Tottenbam v. Green. ..671. 072, 679 Totterdell *■. Farebam Brick Co 738 Toucbe ;•. Metropolitan Ey. Warebousing Co 226 Townsend's Case 727 Townsend r. Crowdy 479 'i'ownsbend r. Stangroom 541. 546 Traill r. Baring ^ 607, 757 Trigger. Lavallee 204 Trimble r. Hill 314. 401 Trist r. Cbild 342 Trueman r. Loder 102 Trumper c. Trumper 301 Trustees r. Tbacker 256 Tucker r. Bennett 549 Tucker r. Linger 2(i7 Tucker r. Yowle.s 254 Tulk r. Moxbay 254 Tullett ;•. Armstrong 731 Turner r. Collins '5.'»1, 643 679 Turner r. Goldsmitb 441 Turner r. Green 5.")9 Turner r. Harvey 526 Turner r. Keynall 711 Turnock c. Sartoris 349 Tvveddell r. Tweddell 652 Tweddle r. Atkinson 223 Twistleton r. Griffith 664 Two Sicilies (King of) /•. Wil- cox 121 Tyler r. Yates (iGH, 669 Udell r. Atberton 591 Underbill r. Horwood 658 Underwood r. Barker 381 Underwood /■. Underwood 201 Ungley i: Ungley 616, 698 Vnity Bank. £,i: jxirti' 82 Universal Life Assurance Co., Ex jJiDiP 239 Universal Stock Exchange r. Stracbau 315, 401 Upperton r. Nickolson 537 Upton /•. Tribilcock 480, 493 Urqnhart /•. Macjjlierson 624 Utermehle r. Xorment 479 PAGE Valentine r. Canali 66 Vallance f. Blagden 319 Van Praagh c. E veridge 505 Vansittart v. Vansittart...87, 322, 363 Varley i-. Wbipp 562 Vauglian r. Vanderstegen...90, 729 Veitcb r. Russell 710, 712 Vernon r. Keys 600,601 Viditz r. O'Hagan 62 Vigers r. Pike 624 Voisey, Ex parte 310 Vorley r. Cooke 492 \V. r. B 404 Wace r. Allen 262 Waddell r. Blockey 624 Wain r. Warlters 109 Waiter. Morland 89 Wake ?•. Harrop 262 Wakefield r. Kewbon 638 Waldv r. Gray 472 Walker, Re 95 Walker r. Armstrong 543 Walker v. Perkins 318 Walker r. Smith 644 Walkers Winser & Hamm and Sliaw. Son & Co 267 Wall's Case 727 Wallace's Case.... 21 Wallace r. Gibson \(>(i Wallace r. Wallace 652 Wallis r. Day 377, 383 Wallis V. Smith 272, 540 Walter r. Everard 75, 77 Ward r. Bank of New Zealand 299 Ward r. Duncombe 232. 234 Warden r. Jones 702 Wariiig's Case 219 Warlow V. Harrison. ..18, 19, 20, 21 Warner, lloutledge 732 Warner r. Texas and Pacific By 168 Warner v. Willington 50 Warrender r. Warrender 322 Warriner v. Rogers 207 Warwick r. Bruce 58, 61 Warwick r. Richardson 293 Wasateh Mining Co. v. Cres- cent Jlining Co 550 Wasdale, Re 234 Wason r. Wareing 484 Waterhouse r. Jamieson 028 TABLE OF CASES. liii PAGE Watford and Rickmansworth Ry. Co. V. L. & N. W. Ry. Co 350 Watkins v. Rymill 51 Watkins r. Nash 263 Watson, £x parte 82 Watson !-.Allcock 299 Watson r. Eailof Chaiiemont 606 Watson r. Marston 541, 661 Watson V. Mid- Wales Ry. Co. 236 Watteau ;•. Fenwick 106 Watts u. Porter 235 Waugh r. Morris 395,415 Way r. East 395 Way r. Hearn 571, 614 Wey mell >: Reed 338 Webb r. Heme Bay Commis- sioners !...13S, 237, 240 Webb r. Hewitt 298 Webbr. Hughes 537 Webb r. Whiffin 246 Webster's Case 509 Webster r. Cecil 512 Webster r. Cook 669 Webster r. De Tastet 365 Weeks c. Propert 112 Weidner r. Hoggett 106 Weir r. Barnett 611 Weir r. Bell 609 Weldon r. Winslow 91 Wells r. Kingston-upon-Hull.. 159, 167 Wells r. Malbon 88 Welman r. Welmau 546 Wenlock (Baroness) r. River Dee Co 127, 128 Wennall r. Adney 189 West London Commercial Bank r. Kitson 115, 599 Western Bank of Scotland r. Addie 610, 613, 623 Western Suburban, &c. Co. '■. Martin 350 Western Wagon and Property Co. r. West 231 Westlake r. Adams 184 Westmeath r. Salisbury... 324, 325. 326 Westmeath (Marquis of) r. Marchioness of Westmeath.. 320, 322, 325 Weston v. Metropolitan Asy- lum District 540 Wharton ?•. Mackenzie 73 Whatman r. Gibson 254 Wheat lev '•. Lane 22S PAGE Wheatley r. Slade 577 Wheeler, Be 92 Wheelton v. Hardisty 565, 609 Whelan v. Palmer 263 Whelpdale's Case 636 Whichcote v. Lawrence 300 Whincup r. Hughes 452 Whitcomb r. Whiting 687 White r. Bhiett 193 White V. Cuddon 575 White V. Garden 550, 626 White r. White 653 Whitechurch, Ltd. r. Cava- riagh 754 Whitehead r. Anderson 475 Whiteman r. Sadler 673 Whiteley's Case 586, 620 Wiiiteley r. Edwards 90 Whiting's Settlement 368 Whittaker, E-r partr 591 Whittaker i\ Kershaw 91, 93 Whittemore r. Whittemore ... 576 Whittington v. Scale Hayne... 621 Widgery r. Tepper 84 Wigglesworth r. Dallison 267 Wiiby V. Elgee 203, 204, 687 Wild r. Harris 113 Wilde r. Gibson 581, 582 Wildes r. Dudlow 166 Wilding V. Sanderson 477, 553 Wilkinson r. Clements 279 Wilkinson r. Gibson 88 Wilkinson r. Loudonsack 416 Willan /•. Willau 530 Wille r. St. John 254 Willesford r. Watson 348,349 WiUiams' Case 597, 606 Williams, E.c parte 310 Williams r. Bayley ...345, 610, 656 Williams v. Byrnes 2.5, 169 Williams v. Carwardine 15, 22 Williams (Doe d.) r. Evans ... 359, 360 Williams r. Glenton 536 Williams i\ Hathaway 115 Williams r. Hedley 403 Williams <•. Jordan 169 Williams r. Moor 62 Williams v. Owen 539 Williams r. Protheroe 358 Williams c. Wentvvorth 94 Williams, app., Wheeler, resp. 693 Williams i\ Williams 652 Williamson r. Gihon 366 Willingale r. Maitland 222 Willison /•. Patteson 336 liv TABLE OF CASES. PAGE Willmott r. Barber 6i»9 Willson r. Lowe 540 Wilson V. Carnley 80") Wilson r. Hart 250 Wilson r. Lloyd 216 Wilson r. Rankin 389 Wilson r. Ray 403 Wilson r. West Hartlepool Ry. Co 138 Wilson r. Wilson 209, 322, 323, 325, 530 Wilton r. Chambers 709 Winilhill Local Board r. Vint 345 Winn r. Bull 46 Wiseman r. Beake 665 Withers r. Reynolds. ..277, 280,283 Witt f. Corcoian 349 Wolfe r. Matthews 718 Wolverhampton Banking Co., Kr jwrfe 340 Wood r. Abrey 6.58, 059, 660 Wood r. Barker 294 Wood c. Downes 353, 355, 350, 361 Wood r. Fenwick 50, 69 Wood r. Griffith 573 Wood r. Scarth 508, 541 Wood r. Tate 161 Woodall v. Clifton 248 Woolf r. Woolf 80 Woolfe c. Home 104 Worrall f. Jacob 322 Worthing Corporation r. Heather 333 Worthiiigton r. Curtis 400 Wright's Case 586, 608 Wright r. Carter 049 Wright /•. Chard 734 PAGE Wright V. Leonard 83 Wright r. Monarch Invest- ment Building Society 849 Wright V. Proud 6.53 Wright c. Snowe 81 Wright i: Tallis 326 Wright r. Vanderplank ...62L 648, 679 Wrisflev r. Swainson 303 Wulff >■. Jav 299 Wyatt >: Hertford 109 Wycombe Ry. Co. r. Donning- ton Hospital 477 Wylson r. Dunn 171 Wvnn r. Shropshire Union, &c. Co 415 Wythes r. Labouchere 493, 508 Xenos /•. Wickham 8, 52, 703 Yarborough r. Bank of Eng- land 162 Yeomans v. Williams 702 Young & Co. r. Mayor of Leamington 162 Yonge r. Toynbee 113 Yzquiardo r. Clydebank En- gineering Co 227 Zoufh r. Parsons 59 ( Iv ) REFEEENCES AND ABBEEVIATIONS. Benjamin on Sale. Fifth edition, 190(5. Finch Sel. Ca. A Selection of Cases on the English Law of Contract by Gerard Brown Finch. Second edition, 189(i. Harvard Law Keview. Cambridge, Mass., 1887 — . Cited by volume and page. I. C. A. means the Indian Contract Act (IX. of 1872) ; ed. Pollock & Mulla, 2d, ed., 1909, and in Dr. Whitley Stokes's Anglo-Indian Codes. L. Q. R. Law Quarterly Review. London, 1885 — . Cited by volume and page. Langdell. A Summary of the Law of Contracts, by C. C. L. Second edition. Boston, Mass., 1880. Law Journal. Always cited by the number of the vol. in the New Series. Law Reports (1875 — 90). The Scotch Appeals to the House of Lords and appeals to the Judicial Committee of the Privy Council reported in the Appeal Cases series, if not expressly mentioned to be such in the context, are distinguished by the additions (Sc.) and (J. C.) respectively. Cases in the Court of Appeal are distinguished by the abbreviation of " Division "' in the form " Div." The current series of Law lieports, 1891 — , is cited thus : Imperial Loan. Cu.v. Stone [1892] 1 Q. B. 599, C. A. Lindley on Partnership, 7th ed., 1905 ; Lindley on Companies, 6th ed., 1902. R. R. The Revised Reports. Saunders' Reports, notes to, by the late Serjeant Williams (Wms. Saund.). Ed. 1871. Cited by the paging of that edition. Savigny, System des heutigen romischen Rechts (Savigny, or Sav. Syst.). Berlin, 1840—1819. Savigny, Das Obligationenrecht (Sav. Obi.). Berlin, 1851 — 3 Sm. T;, C. Smith's Leading Cases. Eleventh edition, 1903, ( Ivii ) YEAR BOOKS CITED, PAGE 22 Ass. 101, pi. 70 167 50 Ass. 323, pi. 3 358 20 & 21 Ed. I., 32l» 62 20 & 21 Ed. I., 456 213 21 & 22 Ed. L, 458 147, 151 21 & 22 P:d. I., 600 145 30 Ed. I., 238 213 33 Ed. I., 3.55 748 17 & 18 Ed. III., 430—434 85 12 E'l. III., 587 145 19 Ed. III., ed. Pike, 1906 ... 147 21 Ed. III., 10, pi. 33 358 25 Ed. III., 83, pi. 9 151 30 ICd. III., 3\b 490 12 Ed. III., 3, pi. 14 250 44 Ed. III., 21, pi. 23 151 45 Ed. III., 24, pi. 30 167 2 Hen. IV., 37y, pi. 9 148 2 Hen. IV., 6, pi. 25 250 3 Hen. IV., 8. pi. 34 747 11 Hen. IV., 33, pi. 60 149 12 Hen. IV., 23, pi. 3 151 14 Hen. IV., 26^/, pi. 33 147 PAGE 2 Hen. V., 5, pi. 26 370 3 Hen. VI., 36, pi. 33 1.50 9 Hen. VI., 64, pi. 17 748 10 Hen. VI., 5, pi. 10 490 14 Hen. VI., 18, pi. 58 150 19 Hen. VI., 49, pi. 5 150 34 Hen. VI., 30, pi. 15 749 37 Hen. VI.. 8, pi. IS. ..145, 167, 184 37 Hen. VI., 13, pi. 3 747, 749 39 Hen. VI.. 26, pi. 36 747 17 Ed. IV., 4, pi. 4 167 20 Ed. IV., 2, pi. 7 121 21 Ed. IV., 6, pi. 17 77 21 Ed. IV., .54, pi. 26 4.52 21 Ed. IV., 84, pi. 38 747 22 Ed. IV., 26 425, 454, 462 2 Hen. VII., 8, pi. 25 747 15 Hen. VII., 2, pi. 3 749 15 Hen. VII. ,10, pi. 17 273 20 Hen. Vll., 10, pi. 20 181 2 Hen. VIII., 11, pi. 3 213 27 Hen. Vlll., 23, pi. 21 213 ( Iviii ) ADDENDUM. Pp. 488 — 494. The doctrine of ThoroiighgoocVs case and Foster v. Mackinnon was very lately considered by the Court of Appeal in Carlisle and Cumherhtnd Banking Co. V. Bragg, Dec. 7, 1910. Here a guaranty was fraudulently produced to the defendant, and signed by hi in, as being an insurance proposal. The person w^ho so obtained his signature forged an attestation and handed the document to his bankers, the plaintiff com- pany. The Court held that the defendant's signature was inoj)erative, and that he was under no duty to the bank (this not being the case of a negotiable instrument) and therefore was not estopped from denying that he signed a guaranty. It was pointed out that no question of estoppel can arise unless the issue of non est factum is decided in the defendant's favour, and then some special duty towards the plaintiff, under the law merchant or otherwise, must be shown to raise an estoppel. Cases of this kind are not confined to the blind and illiterate, see especially per Buckley, L. J. The result is to con- firm the authority of Foster v. Mackinnon as against any supposed weakening of it by Howatson v. Webb. PRINCIPLES OF CONTRACT, CHAPTER T. Agreement, Proposal, and Acceptance. The law of Contract may be described as the endeavour of the State, a more or less imperfect one by the nature of the case, to establish a positive sanction for the expec- tation of good faith which has grown up in the mutual dealings of men of average right-mindedness. Accord- ingly the most popular description of a contract that can be given is also the most exact one, namely that it is a promise or set of promises which the law will enforce. The specific mark of contract is the creation of a right, not to a thing, but to another man's conduct in the future. He who has given the promise is bound to him who accepts it, not merely because he had or expressed a certain intention, but because he so expressed himself as to entitle the other party to rely on his acting in a certain way. This is apt to be obscured in common cases, but is easily seen to be true. Suppose that A. agrees to sell to B. a thing of which not he but C. is the true owner. C. gives the thing to B. Here, though B. has got the thing he wanted, and on better terms than he expected, A. has not kept his promise ; and, if the other requisites of a lawful contract were present as between himself and 11, he has liroken his contract. The primary questions, then, of the law of contract are first, what is a promise ? and next, what promises are enforceable ? p. B AGREEMENT, PROPOSAL, AND ACCKPTANCE. Contract. The importance and difficulty of the first of these questions depend on the fact that men can justly rely on one another's intentions, and courts of justice hold them bound to their fulfilment, only when they have been expressed in a manner that would convey to an indifferent person, reasonable and reasonably competent in the matter in hand, the sense in which the expression is relied on by the party claiming satisfaction. Judges and juries stand in the place of this supposed indifferent person, and have to be convinced that the dealings in the particular case contained or amounted to the promise alleged to have been made and relied upon. Our first business must therefore be to separate and analyse the elements which, generally speaking, must concur in the formation of a contract. A series of state- ments in the form of definitions, though necessarily imperfect, may help to clear the way. 1. Every agreement and promise enforceable by law is a contract. Agi'eement. Expression of consent. Promise and oflfer. 2. An agreement is an act in the law whereby two or more persons declare their consent as to any act or thing to be done or forborne by some or one of those persons for the use of the others or other of them (a). 3. Such declaration may take place by (a) the concurrence of the parties in a spoken or written form of words as expressing their common intention, or (b) an offer made by some or one of them, and accepted by the others or other of them. 4. The declaration of any party to an agreement, so far as relates to anything to be done or forborne on his (a) This statement was adopted (1887) 36 Ch. D. 695, 698, 57 L. J. by Kekewich J. Foster v. mieeler Ch. 149, CONSENT. i part, is called a promise. The expression of a person's willingness to become, according to the terms expressed, a party to an agreement, is called an offer or proposal. An offer may become a promise by acceptance, but is not a promise unless and until it is accepted (b). 5. An agreement which has no legal effect is said to Void agree- be void. An agreement which ceases to have legal effect "^^°'' is said to become void or to be discharged. 6. An agreement is said to be a voidable contract if it Voidable is enforceable by law at the option of one or more of the ^^^ '''*^ * parties thereto but not at the option of the other or others. We proceed to develop and explain these statements, so far as appears convenient at the outset of the work. 1. Definition of Agreement. — The first and most Nature and essential element of an agreement is the consent of the g^°^j_^ ° ^°°" parties. There must be the meeting of two minds in one and the same intention. But in order that their consent may make an agreement of which the law can take notice, other conditions must be fulfilled. The agreement must be, in our old English phrase, an act in the law: that is, it must on the face of the matter be capable of having legal effects. It must be concerned with duties and rights which can be dealt with by a court of justice. And it must be the intention of the parties that the matter in hand shall, if necessary, be so dealt with, or at least they must not have the contrary inten- tion. An appointment between two friends to go out for a walk or to read a book together is not an agreement in the legal sense : for it is not meant to produce, nor does it produce, any new legal duty or right, or any change {b) This does not imply that " proposal " are synonymous terms : every offer is revocable until ac- " proposal" is often convenient as ceptance. How far that is so is a allowing " proposer " to be used as question not of definition but of a correlative term rather than the substantive law. "Offer" and legitimate but clumsy "offeror." B 2 4 AGREEMENT, PROPOSAL, AND ACCEPTANCE. in existing ones (c). Again, there must not only be an act in the law, but an act which determines duties and rights of the parties. A consent or declaration of several persons is not an agreement if it affects only other people's rights, or even if it affects rights or duties of the persons whose consent is expressed without creating any obligation between them. The verdict of a jury or the judgment of a full Court is a concurrent declara- tion of several persons affecting legal rights ; but it is not an agreement, since the rights affected are not those of the judges or jurymen. If a fund is held by the trustees of a will to be paid over to the testator's daughter on her marriage with their consent, and they give their consent to her marrying J. S., this declaration of consent affects the duties of the trustees themselves, for it is one of the elements determining their duty to pay over the fund. Still it is not an agreement, for it concerns no duty to be performed by any one of the trustees towards any other of them. There is a common Obligation. duty to the beneficiary, but no mutual obligation. By obligation we mean the relation that exists between two persons of whom one has a private and peculiar right (that is, not a merely public or official right, or a right incident to ownership or a permanent family relation) {(') Nothing but the ab-ence of right of action ? Only because no intention seems to prevent a con- legal bond was intended by the tract from arising in many cases of parties. It might possibly be said this kind. A. asks B. to dinner. that these are really cases of con- Here is proposal of something to be tract, and that onlj' social usage done by B. at A.'s request, namely, and the trifling amount of pccu- coming at A.'s house at the ap- niary interest involved keep them pointed time. If B. accepts, there out of courts of justice. But 1 is in form a contract by mutual think Savigny's view, which is promises. If acceptance is not here adopted, is the better one. required, the trouble and expense -There is not a contract which it of coming to A.'s house are ample would be ridiculous to enforce, but consideration for A.'s promise to the original proposal is not the provide a dinner. Why is A. not proposal of a contract. One or two legally bound to have meat and modern writers think it enough to drink ready for B., so that if A. tytLv Be witiiniis noti o/nif lej-. But had forgotten his invitation and purely honorary engagements are gone elsewhere B. should have a often of great importance. EXPRESSION OF CONSENT. to control the other's actions hy calling upon him to do or forbear some particular thing (d). An agreement might be defined, indeed, as purporting to create an obligation ; and the mark which distinguishes an obli- gation so created from any other kind of obligation is that its contents are wholly determined by the will of the parties (e). But for the purposes of English law we prefer to say (what is in effect the same) that an agreement contemplates something to be done or for- borne by one or more of the parties for the use of the others or other. The word use (representing the Latin opus through an Anglo-French form oeps, not usus) is familiar in English law-books from early times in such a connexion as this. The common intention of the parties to an agreement Froof of is a fact, or inference of fact, which, like any other fact, '^o"^^"'^- has to be proved according to the general rules of evi- dence. When it is said, therefore, that the true intent of the parties must govern the decision of all matters of contract, this means such an intent as a court of justice can take notice of. If A., being a capable person, so bears himself towards B. that a reasonable man in B.'s place would naturally understand A. to make a promise, and B. does take A.'s words or conduct as a promise, no further question can be made about what was passing in A.'s mind. " Mental acts or acts of the will," it has been well said, " are not the materials out of which promises are made " (/). Under such circumstances, as well as in certain other more special cases, the law does not allow a party to show that his intention was not in truth such as he made or suffered it to appear. But in the common and regular course of things the consent to which the law gives effect is real as well as apparent, (d) Savigny, Syst. i. 338 — 9 ; pretation, not necessarily a will Obi. i. 4, seq. completely expressed on the face (p) That is, their will as ascer- of the transaction, tained by the proper rules of inter (/) Langdell, Summary, § 180. 6 AGREEMENT, PROPOSAL, AND ACCEPTANCE. Proposal and 2. Woys of declaring Consent. — Two distinct modes accei) ancL. ^^ ^j^^ formation of an agreement are here specified. It is possible, however, to analyse and define agreement as constituted in every case by the acceptance of a pro- posal. In fact this is done in the Indian Contract Act. And it is appropriate to most of the contracts which occur in daily life, buying and selling, letting and hiring, in short all transactions which involve striking a bargain. One party proposes his terms ; the other accepts, rejects, or meets them with a counter-proposal: and thus they go on till there is a final refusal and breaking off, or till one of them names terms which the other can accept as they stand. The analysis is pre- sented in a striking form by the solemn question and answer of the Eoraan Stipulation, where the one party asked (specifying fully the matter to be contracted for) : That you will do so and so, do you covenant ? and the other answered with the same operative word : I coven- ant (g). Yet the importance of proposal and acceptance as elements of contract has, until of late years, been much more distinctly brought out in the Common Law than by writers on the modern civil law. Istheanalysis It seems Overstrained to apply this analysis to a case applicable.' in which the consent of the parties is declared in a set form, as where they both execute a deed or sign a written agreement. Some say that, although there is no proposal or acceptance in the final transaction, the terms of the document must have been settled by a process reducible to the acceptance of a proposal ; but this 'hardly suffices : for the formal instrument has a force apart from and beyond that of the negotiation which fixed its terms. iVnd it may well be, and some- ((/) Noiloubt the formula .S/>('«rfr/ed as an alternative, effect; it isr//,sWu//v/^r7. but there is (w) Thus it is defined in the something harsh in saying that it interpretation clause of the Indian becomes void, a term suggestive of Contract Act. COMMUNICATIONS IN GENERAL. 11 Special rules governing proposal and aceeptance. promise thereof, which is offered by one party to an agreement, and accepted ])y the other, as an inducement to that other's act or promise. Proposal and acceptance, though not strictly neces- sary parts of the general concej)tion of Contract, are in practice the normal and most important elements. When agreement has reached the stage of being em- bodied in a form of words adopted by both parties, the contents of the document and the consent of the parties are generally simple and easily proved facts : and the only remaining question (assuming the other requirements of a valid contract to be satisfied) is what the words mean. The acceptance of a proposal might seem at first sight an equally simple fact. But the com- plexity of human affairs, the looseness of common speech, the mutability of circumstances and of men's intentions, and the exchange of communications between parties at a distance, raise questions which have to be provided for in detail. We may have to consider separately whether the offer of a contract was made ; what the terms of that offer were ; whether there was any acceptance of it ; and whether the acceptor was a person to whom the offer was made. Communications in f/eneral. The proposal or acceptance of an agreement may be Proitosal and communicated by words or by conduct, or partly by the g'^x^resT'^r^ one and partly by the other. In so far as a proposal or tacit. acceptance is conveyed by words, it is said to be express. In so far as it is conveyed by conduct, it is said to be tacit (n). (7t) We shall see that coinniuni- cation of an acceptance may be dispensed with in s-orne cases. But the law knows nothing of con- structive coniniuiiication. A docu- ment lying unexamined in a letter- box is not yet communicated, even if the omission to take it out and deal with it be negligent : Cui-tice V. London City and Midland Bank [1908] 1 K. B. 298, 77 L. J. K. B. 341, C. A. 12 AGREEMENT, PROPOSAL, AND ACCEPTANCE. It would be as difficult as it is needless to adduce dis- tinct authority for this statement. Cases are of constant occurrence, and naturally in small matters rather than in great ones, where the proposal, or the acceptance, or both, are signified not by words but by acts. For example, the passenger who steps into a ferry - boat thereby requests the ferryman to take him over for the usual fare, and the ferryman accepts this proposal by putting off. In the case of obtaining a chattel from an automatic machine (where putting in our coin is the acceptance of a standing offer made by the owner of the machine) there is no possibility of accepting in words. Distinction A promise made in this way is often said to ])e fict/t?ou.s^' '" implied : but this tends to obscure the distinction of the promises. real tliough tacit promise in these cases from the ficti- tious promise " implied by law," as we shall imme- diately see, in certain cases where there is no real con- tract at all, but an obligation quasi ex contractu, and in others where definite duties are annexed by rules of law to special kinds of contracts or to relations arising out of them. Sometimes it may be difficult to draw the line. " Where a relation exists between two parties which involves the performance of certain duties by one of them, and the payment of reward to him by the other, the law ivill imply [fictitious contract] or the jury may infer [true contract] a promise by each party to do what is to be done by him " (o). It was held in the case cited that an innkeeper promises in this sense to keep his guests' goods safely. The case of a carrier is analogous. So where A. does at B.'s request something not apparently illegal or wrongful, but which in fact exposes A. to an action at the suit of a third person, it seems to be not a proposition of law, but an inference of 00 Per Cur. .Vimjau v. I?>nri/ (1861) H. i: N. 265, 30 L. J. Ex. 131. QUASI-CONTRACT, 18 fact which a jury may reasonably find, that B. must he taken to have promised to indemnify A. (p). If A. with B.'s knowledge, but without any express request, does work for B. such as people as a rule expect to be paid for, if B. accepts the work or its result, and if there are no special circumstances to show that A. meant to do the work for nothing or that B. honestly believed that such was his intention, there is no diffi- culty in inferring a promise by B. to pay what A.'s labour is worth. And this is a pure inference of fact, the question being whether B.'s conduct has been such that a reasonable man in A.'s position would understand from it that B. meant to treat the work as if done to his express order. The doing of the work with B.'s know- ledge is the proposal of a contract, and B.'s conduct is the acceptance. The like inference cannot be made if the work is done without B.'s knowledge. For by the hypothesis the doing of the work is not a proposal, not being communicated at the time : B. has no opportunity of approving or countermanding it, and cannot be bound to pay for it when he becomes aware of the facts, although he may have derived some benefit from the work; it may be impossible to restore or reject that benefit without giving up his own property (g). If A, of his own motion sends goods to B. on approval, this is an offer which B. accepts by dealing with the goods as owner. If he does not choose to take them, he is not bound to return them ; nor indeed is he bound to take any active care of them till A. reclaims them (r). But it does not follow that because there is no true Duties quasi contract, there may not be cases falling within this ■„ Engifgh'* (7^) Dugdale \. Lorpr'niq {\9.'JT)^ under the doctrine of Considera- I>. II. 10 C. P. 196, 44 L. J. ('. 1'. tion. ^'•^^- (/•) It is prudent, however, to ('?) Cp. dirfa of Pollock (!.1'>. 2r> inform the sender that the goods L. J. Ex. at p. 332. The effect of sent witliout request are at his a subsequent express promise to disposal and risk. pay for work already done comes 14 AGREEMENT, PROPOSAL, AND ACCEPTANCE. Indian Con- tract Act deals with them sepa- rately. Performance of conditions kc as ac- ceptance. general description in which it is just and expedient that an obligation analogous to contract should be imposed upon the person receiving the benefit. In fact there are such cases : and as the forms of our common law did not recognize obligations quasi ex contractu in any distinct manner, these cases were dealt with by the fiction of an imj^lied previous request, which often had to be supplemented (as in the action for money had and received) l)y an equally fictitious promise. The promise, actual or fictitious, was then supposed to relate back to the fictitious request, so that the transaction which was the real foundation of the matter was treated as forming the consideration in a fictitious contract of the regular type. Here, as in many other instances, the law was content to rest in a compromise between the forms of pleading and the convenience of mankind. These fictions have long ceased to appear on the face of our pleadings, but they have become so established in legal language that it is still necessary to understand them (s). The Indian Act provides for matters of this kind more simply in form and more comprehensively in substance than our present law, by a separate chapter, entitled " Of certain Relations resembling those created by Contract " (ss, 68 — 72, cp. s. 73). The term constructive contract might properly be applied to these obligations ; it would be exactly analogous to " constructive possession " and " constructive notice." It is adopted, we believe for the first time, in the com- prehensive work on the Laws of England which bears Lord Halsbury's name. The term Quasi-Contract is now generally recognized. A corollary from the general principle of tacit accept- ance, which in some classes of cases is of considerable (.<) For details see notes to Lamp- leigli V. Brathicait in 1 Sm. L. C., and Onhonie v. Bogers, 1 Wms ^aund. 357. advertise- ment. GENERAL OFFERS. 15 importance, is thus expressed by the Indian Contract Act (s. 8) :— " Performance of the conditions of a proposal, or the acceptance of any consideration for a reci- procal promise which may be offered with a pro- posal, is an acceptance of the proposal." This rule, though it might have been more aptly offers by worded, substantially contains the true legal theory of offers of reward made by public advertisement for the procuring of information, the restoration of lost pro- perty, and the like. On such offers actions have many times been brought with success ,by persons who had done the things required as the condition of obtaining the reward. It appears to have been once held that even after per- formance an offer thus made did not become a binding promise, because " it was not averred nor declared to whom the promise was made " (t). But the established modern doctrine is that there is a contract with any person who performs the condition mentioned in the advertisement (w). That is, the advertisement is a pro- posal which is accepted by performance of the condi- tions. It is an offer to become liable to any person who happens to fulfil the contract of which it is the offer (v). Until some person has done this, it is a proposal and no more. It ripens into a promise only when its con- ditions are fully satisfied. As Sir W. Anson has well put it, " an offer need not be made to an ascertained person, but no contract can arise until it has been accepted by an ascertained person " (x). (0 Noy, 1 1 ; 1 Rolle Ab. 6 M. pi. 1. p. 268, 62 L. J. Ch. 257. («) Williams v. Carwdrdine. (.r) Principles of the English Law (1H33) 4 B. i: Ad. (;21,38 R. K. 328. of Contract, p. 39, 9th ed. We (r) Vox \\\\\Q.^.\.t>j)en('prv. Hard- have no special term of art for a i«*/ (1870) L. K. .5 C. P. 562. See proposal thus made by way of too f'arliU v. Carholie Smoke Ball general request or invitation to all Co. [1893] 1 Q. B. 256, per Lindley men to whose knowledge it comes. L..I. at p. 262, per Bowen L.J. at The Germans call it Audoiung. 16 AGREEMENT, PROPOSAL, AND ACCEPTANCE. Difficulties in working out the principle. Distinction between offer and invita- In the same manner each bidding at a sale by auction is a proposal ; and when a particular bid is accepted by the fall of the hammer (but not before), there is a com- plete contract with the particular bidder to whom the lot is knocked down {y). j^ The principle is sufficiently clear, but its application is not wholly free from difficulties. These are partly re- ducible to questions of fact or of interpretation, but partly arise from decisions which appear to give some countenance to a fallacious theory. First, we have to consider in particular cases whether some act or announcement of one of the parties is really tion of offers, the proposal of a contract, or only an invitation to other persons to make proposals for his consideration (s). This depends on the intention of the parties as collected from their language and the nature of the transaction, and the question is one either of pure fact or of con- struction. Evidently it may be an important one, but due weight has not always been given to it. The proposal of a definite service to be done for reward, which is in fact a request (in the sense of the ordinary English law of contract) for that particular service, though not addressed to any one individually, is quite different in its nature from a declaration to all whom it may concern that one is willing to do business with them in a particular manner. The person who publishes such an invitation does indeed contemplate that people who choose to act on it will do whatever is necessary to put themselves in a position to avail them- selves of it. But acts so done are merely incidental to the real object; they are not elements of a contract but preliminaries. It does not seem reasonable to construe (y) P,n/>ic V. rare (1789) 3 T. R. 148, 1 R." R. G79. Prof. Langdell (Summary, § 19) thouuht it would have been better to hold that every bid constitutes " an actual sale. subject to the condition that no one else shall bid higher." (--) In German this is Aiifforde- rii/iff zii Antrdgen as opposed to Ant rag. PROMISES BY ADVERTISEMENT. 17 such preliminaries into the consideration for a contract which the parties had no intention of making. Yet there are some modern decisions which seem to disregard the distinction between mere invitations or declarations of intention and binding contracts (a). We shall now examine these cases. In Denton v. G. N. Railway Co. (b), the facts were Examination shortly these : The plaintiff had come from London to pentoii r Peterborough, had done his business there, and wanted <>• N. R. to go on to Hull the same night. He had made his arrangements on the faith of the company's current time-tables, and presented himself in due time at the Peterborough station, applied for a ticket to Hull by a train advertised in those tables as running to Hull at 7.20 p.m., and offered to pay the proper fare. The defendant company's clerk refused to issue such a ticket, for the reason that the 7.20 train no longer went to Hull. The fact was that beyond Milford Junction the line to Hull belonged to the North Eastern Railway Company, who formerly ran a train corresponding with the Great Northern train, for which the Great Northern Railway Company issued through tickets by arrange- ment between the two companies. This corresponding train had now been taken off by the N. E. R. Co., but the G. N. R. time - table had not been altered. The plaintiff was unable to go further than Milford Junction that night, and so missed an appointment at Hull and sustained damage. The cause was removed from a County Court into the Queen's Bench, and the question was whether on the facts as stated in a case for the opinion of the Court the plaintiff could recover (c). (it) Compare the judgments in (r) As to the measure of damages, JItirris V. JS'irkcrsun (1873) L. 11. which liere was not in dispute, see 8 Q. 15. 286, 42 L. J. Q. B. 171. JfiDiilni v. G. N. B. Co. (1856) 1 [h) (18.16) 5 K. & B. 860, and H. & N. 408, 26 L. J. Ex. 20, Letter in J", L. J. Q. B. 1 2'J. where 105 K. R, 649 (where a ticket having the case stated is given at lengtli ; been taken there was an unqucs- 105 K. R. 335. tional.le contract). 18 AGREEMENT, PROPOSAL, AND ACCEPTANCE. It was held by Lord Campbell C.J. and Wightman J. that when anyone offered to take a ticket to any of the places to which the train was advertised to carry pas- sengers the company contracted with him to receive him as a passenger to that place according to the advertise- ment. Lord Campbell treated the statement in the time-table as a conditional promise which on the condi- tion being performed became absolute. This proposi- tion, reduced to exact language, amounts to saying that the time - table is a proposal, or part of a proposal, addressed to all intending passengers and sufficiently accepted by tender of the fare at the station in time for the advertised train. Crompton J. (d) did not accept this view, nor was it necessary to the actual decision : for the Court had only to say whether on the given facts the plaintiff could succeed in any form of action, and they were unanimously of opinion that there was a good cause of action in tort for a false representation ; an opinion itself questionable, but not in this place (e). Wariow r. In WaHow V. Harrison (/), a sale by auction was announced as without reserve, the name of the owner not being disclosed. The lot was put up, but in fact bought in by the owner. The plaintiff, who was the highest real bidder, sued the auctioneer as on a contract to complete the sale as the owner's agent. The Court of Queen's Bench held that this was wrong ; the Court of Exchequer Chamber affirmed the judgment on the pleadings as they stood, l)ut thought the facts did show another cause of action. Watson and Martin BB. and Byles J. considered that the auctioneer contracted with the highest bona fide bidder that the sale should ,be without reserve. They said they could not distinguish the case from that of a reward offered by advertisement, (i case [1!)00] 2 see note to J'ro.v,' y.Kiuqlit (1870) Ch. f.71, (;9 L. J. Ch. 777 (appli- L. R. 5 Ex. at p. 387, and pp. 27— 2!», cation f(3r shares under an anitdj^a- below. As to the somewhat ana- mation af,'reenient ])y a shareholder logous suggestion made in that in the old company). case, see s. c. in Ex. Ch. L. K. 7 ((') The Continental docti'iue that Ex. at p. 117. the revocation must be so commuui- 22 AC4REEMENT, PROPOSAL, AND ACCEPTANCE. the prescribed condition. Savigny quite justly held that on this theory the right of action could not be sup- ported : there cannot be a vinculum iiiris with one end loose ; but he strangely missed the true explanation (p). To a certain extent, however, this notion of a floating obligation is countenanced by the language of the judges in the cases above discussed, and also in the much earlier case of IVilliams v. Carwardine (q). There a reward had been offered by the defendant for informa- tion which should lead to the discovery of a murder. A statement which had that effect was made by the plain- tiff, but not (as the jury found) with a view to obtaining the reward ; it does not appear to whom it was made, or whether with any knowledge that a reward had been offered. The Court held, nevertheless, that the plaintiff had a good cause of action, because " there was a con- tract with any person who performed the condition men- tioned in the advertisement," and the motive with which the information was given was immaterial : but on this it must be observed that the question is not of motive but of intention. The decision seems to set up a con- tract without any privity between the parties. Such a doctrine cannot now be received (/•), though the deci- sion may have been right on the facts. There cannot be an acceptance constituting a contract without any communication of the proposal to the acceptor. The question may arise whether the party claiming the reward has in fact performed the required condition according to the terms of the advertisement. In Carlill v. Carbolic Smoke Ball Co. (s), it arose in a curious (/;) Obi. 2. 90. Yet within a few (;•) Cf. Langdell. § .S. The pages he does give the true analysis solitary modern case of Gibbons v. for the not dissimilar case of a sale Proctor (1891) 64 L. T. 594, is bv auction. clearlv not law as reported. \q) (18.S3) 4 P.. & Ad. fi21. s. c. (.s0'[1893] 1 Q. B. 256, 62 L. J. at N. V. 5 C. & P. .JGG, 38 K. K. Q. B. 257, C. A, 328. PROMISES BY ADVERTISEMENT. 28 manner. The advertisement of a remedy for influenza and similar diseases offered a sum of money to any one who should contract such disease " after using " the remedy according to the directions supplied with it, and for a certain time. A buyer who used the remedy as directed, and caught influenza while still using it, was held entitled to the sum offered, notwithstanding the argument strenuously urged for the defendant that the offer was too vague to he taken seriously, and the per- formance could not be verified. The Supreme Court of the United States has held that Revocation of a general proposal made by public announcement may !,\iveiHse- be effectually revoked by an announcement of equal menf- publicity, such as an advertisement in the same news- paper, even as against a person who afterw\ards acts on the proposal not knowing that it has been revoked. For " he should have known," it is said, " that it could be revoked in the manner in which it was made " (i). In other words, the proposal is treated as subject to a tacit condition that it may be revoked by an announcement made by the same means. This may be a convenient rule, and may perhaps be supported as a fair inference of fact from the habits of the newspaper-reading part of mankind : yet it seems a rather strong piece of judicial legislation. Other kinds of general proposals have also been dealt other general with as capable of acceptance by any one to whose hands they might come. In Ex parte Asiatic Bankinrj Corporatioji (n), the fol- lowing letter of credit had l)con given by Agra and Masterman's Bank to Dickson, Tatham and Co. prcposals. Kr piirte Asiatic Banking Corporation. (0 Shvey v. United Sftitrs (IS?.',) 92 U. S. 73. (m) (18(;7) L. R. 2 Ch. 31)1, .3G L. J. Cli. 222. Cp. lihvgwaudasK V. .\et/ieiia)ids,,^-c.Inscr. r'(/.(lS88) 11 App. Ca. (J. C.) 83, decided on the ground that the " open cover " was a proposal of insurance ad- dressed to any one having insur- able interest in the cargo. '24 agrp:kment, proposal, and acceptance. •• No. 394. You are hereby authorized to draw upon this bank at six months" sight, to the extent of £15,000 sterling, and such drafts I under- take duly to honour on presentation. This credit will remain in force for twelve months from this date, and parties negotiating bills under it are requested to indorse particulars on the back hereof. The bills must specify that they are drawn under credit No. 394, of the 31st of October. 1865." The Asiatic Banking Corporation held for vahie bills drawn on the Agra and Masterman's Bank under this letter ; the Bank stopped payment before the bills were presented for acceptance, and Dickson, Tatham and Co. were indebted to the Bank in an amount exceeding what was due on the bills : but the Corporation claimed nevertheless to prove in the winding-up for the amount, one of the grounds being " that the letter shown to the person advancing money constituted, when money was advanced on the faith of it, a contract by the Bank to accept the bills." Cairns L.J. adopted this view, hold- ing that the letter did amount to " a general invitation " to take bills drawn by Dickson, Tatham and Co. on the Agra and Masterman's Bank, on the assurance that the Agra and Masterman's Bank would accept such bills on presentation ; and that the acceptance of the offer in this letter by the Asiatic Banking Corporation consti- tuted a binding legal contract against the Agra and This case free Masterman's Bank (x). The difficulties above discussed from the Jq j^q^ seem to exist in this case. From an open letter diinculty m .... Denton') of Credit (containmg too in this instance an express G. N. R. Co. (.'•) In Scott \.PlUti)ujt(m(\>^C)2) was no room to question its correct- 2 B. & S. 11, 31 L. J. Q. B. 81. on ness in an English court. So far the other hand, an action was as any opinion was expressed by brought on a judgment of the the Court as to what should have Supreme Court of New York, on a been the decision on the same facts very similar state of facts. The in a case governed by the law of decision of the English Courts was England, it was against any right that the law applicable to the case of action at law being acquired b^- was the law of New York and that the bill-holders. This however the judgment having been given was by the way. and as a conces- by a court of competent jurisdic- sion to the defendants, and is tion in a case to which the local therefore no positive authority, jaw was proi)erly applicable, there PROMISES BY GENERAL OFFER. 25 request to persons negotiating bills under it to indorse particulars) there may be inferred without any violence either to law or to common reason a proposal or request by the author of the letter to the mercantile public to advance money on the faith of the undertaking ex- pressed in the letter. This undertaking must then be treated as addressed to any one who shall so advance money : the thing to be performed by way of considera- tion for the undertaking is definite and substantial, and is in fact the main object of the transaction. If any question arose as to a revocation of the proposal, it would be decided by the rules which apply to the revo- cation of proposals made by letter in general (//). The bearing of the Statute of Frauds on these con- S(atutu of tracts made by advertisements or general offers was cout^ractTby discussed incidentally in a case brought before the adveitise- Judicial Committee of the Privy Council on appeal from iu Williams the Supreme Court of New South Wales (s). It is ^••Byrnes, settled that the requirements of the statute in the cases where it applies are generally not satisfied unless the written evidence of the contract shows who both the con- tracting parties are. But it was suggested in the Colonial Court that in the case of a proposal made by advertisement, where the nature of the contract (e.g., a guaranty) was such as to bring it within the statute, the advertisement itself might be a sufficient memoran- dum, the other party being indicated as far as the nature of the transaction would admit (a) . The Judicial Committee, however, showed a strong inclination to think that this view is not tenable, and that in such a case the evidence required by the statute would not be complete without some further writing to show who in particular had accepted the proposal. It was observed 0/) See however S/iKey v. United Moo. P. G. N. S. 154. Statefi, p. 2;?, above. («) Per Stephen C.J. at pp. 107, (0 \VilUaiii.'<\. JSyr)iPs(\m'A)\ 184. 26 AC4REEMENT, PROPOSAL, AND ACCEPTANCE. Acceptance by act when complete. Formation of contract by indirect com- munication, that as a matter of fact the cases on advertisements had been of such a kind that the statute did not apply to them, and it was a mere circumstance that the adver- tisement was in writing (b). We are not aware of the point having arisen in any later case. The speculative question has lately been asked at what point of time acceptance by an act is complete, and it is suggested that A. may request B. to do something, say to move a piece of furniture, for reward which A. names, that B. may do a substantial part of the work, and A. may revoke his offer any time before the work is complete, leaving B. without remedy or at least any remedy on a contract. But surely the acceptance is complete as soon as B. has made an unequivocal begin- ning of the performance requested, a " commencement d'execution," to use the term familiar in French law. Whether anything is payable before the whole of the work is done depends on the terms express or implied of A.'s offer on which B. acts. As a matter of fact A.'s offer will almost always be a conditional offer, and will become, on acceptance, a promise conditional on the work being done within a reasonable time and otherwise competently. Such a conditional promise is still a pro- mise, and wholly different from a revocable offer (c). It is possible for a contract to be formed without any direct communication between the parties or any per- (^) See 1 Moo. P. C. N. S. at p. 198. The language of the head- note is misleading ; there is no suggestion in the judgment of any such proposition of law as that the Statute of Frauds is not ap- plicable to contracts made in this manner. (c) Clarence D. Ashley, in Harv. Law Eev. xxiii. L59, " Oilers calling for a consideration other than a counter promise " : a very in- genious exercise in legal sophistry. The learned author assumes that the act which is sufficient to constitute acceptance must be co-extensive with the whole per- formance requested ; •' until the entire consideration is furnished there is nothing but an offer." Now acceptance is one thing and consideration quite another. A more plausible query is whether the beginning of performance in acceptance of a request implies any promise to complete the per- formance (p. 161). But here note that an action lies for misfeasance in a voluntary undertakingwhether there is a contract or not. REVOCATION. 27 sons who in an ordinary sense are their agents. Where competitors enter for a club race under express rules prescribed or adopted by the managing committee, and those rules declare that any competitor breaking them shall be liable for damages arising therefrom, this is sufficient to create a mutual contract between the com- petitors to be liable for and discharge any such damages (d). Here the secretary of the club who receives the entries may be regarded as an agent to receive, as between the competitors, the offer of every competitor to be bound by the rules, and the acceptance of every other competitor ; and his authority to do so is implied in the nature of the transaction. There may be cases of this kind in which it would be hard, if the question were raised, to determine whether the parties intended to create a legal or a merely honorary obligation. Revocatio7i. An offer may be revoked at any time before accept- Revocation of ance, but not afterwards. ^ ^^' For before acceptance there is no agreement, and therefore the proposer cannot be bound to anything (e). So that even if he purports to give a definite time for acceptance, he is free to withdraw his proposal before that time has elapsed. He is not bound to keep it open unless there is a distinct contract to that effect, founded on a distinct consideration. If in the morning A. offers Cooke v. goods to B. for sale at a certain price, and gives B. till ^■'^^'^•^• four o'clock in the afternoon to ma]i;e up his mind, yet A. may sell the goods to C. at any time before four (d) C'larlie \. Earl of Dnnnivrn tlie entries are completed. Cp. (Jlho. ■■ Satanita ") [1897] A. C. .")<.), p. 7, above. (')<; L. J. I'. 1. The only question (e) The same rule applies to a seriously argued in the H. L. was proposal to vary an existinj? atrree- on the construction of the rules. nicnt : Gllkcs v. Leonlno (1858) 4 It would seem the contracts must C. B. N. S. 485, all be referred to the dale when Dodds. 28 AGREEMENT, PROPOSAL, AND ACCEPTANCE. o'clock, SO long as B. has not accepted his offer (/). But if B. were to say to A. : " At present I do not know, but the refusal of your offer for a definite time is worth something to me ; I will give you so much to keep it open till four o'clock," and A. were to agree to this, then A. would be bound to keep his offer open, not by the offer itself, but by the subsequent indepen- Dickinson dent Contract (g). If A. on Wednesday hands to B. a memorandum offering to sell a house at a certain price, with a postscript stating that the offer is to be " left over " till nine o'clock on Friday morning, A. may nevertheless sell the house to C. at any time before the offer is accepted by B. If B., with notice of A.'s deal- ing with C, tenders a formal acceptance to A., this is inoperative (li). It is different in modern Eoman law. There a promise to keep a proposal open for a definite time is treated as binding, as indeed there appears no reason why it should not be in a system to which the doctrine of consideration is foreign : nay, there is held (/) Admitted in Ccnkr v. O.rley posed that acceptance of an offer (1790) 1 R. E. 783, 3 T. R. (ioS ; made any ai)preciable time before affd. in Ex. Ch., see note : Finch was not complete without a frtsh Sel. Ca. 2nd ed. 85. The decision sign of consent fiom the proposer, goes farther, and has been the C|i. Kenned ij v. Lee (1817) 3 Mer. subject of much criticism. For 441, 17 R. K. 110 ; Head \. DitKinn the conflicting views see Benjamin (1828) 3 M. & R. !>7, showing that on Sale, .5th ed. GU. 117, and Lang- this fallacy was current much later, dell's Summary. § 182. I adhere (//) We find something like this to Langdell's view that it cannot in early Germanic law, where be supported in any sense. If the earnest on a sale was not payment defendant's offer had been revoked on account of a completed contract, before the plaintiff's acceptance, it but the price of the seller's for- was for the defendant to plead and bearance to sell to any other jierson prove it. The decision would have for a limited time. Heusler, Inst, been right if the action had been des D. P. R. ii. 2o6, cp. Glanv. x. on a promise to keep the offer 14, showing the law to be then still open, as seems to be supposed by doubtful in England. Lush J. in Sterrnson v. McLedii (^/i) Dlckinaon v. Dodds (1876) 2 (1880) Q. B. D. at p. 3.-)l. 4'.) L.J. Ch. Div. 463. 4.5 L. J. Ch. 777. Q. [>. 701. But the action was for The case suggests, but does not not delivering goods, as on a com- decide, another question, which plete bargain and sale; and this willbepresentlyconsidered. Contra was insisted upon in the argument. Langdell, Summary', p. 244 ; and The Court may possibly have sup- on principle perhaps rightly. LAPSE OF OFFER. 29 in effect to be in every proposal an implied promise to keep it open for a reasonable time (i). In our own law the effect of naming a definite time in the proposal is simply negative and for the proposer's benefit ; that is, it operates as a warning that an acceptance will not be received after the lapse of the time named, not as an undertaking that if given sooner it shall be (j). In fact, the proposal so limited comes to an end of itself at the end of that time, and there is nothing for the other party to accept. This leads us to the next rule, namely : — Conditions of Offer. The proposer may prescribe a certain time within Determinn- which the proposal is to be accepted, and the manner by"iapse of and form in which it is to be accepted. If no time is prescvibea or prescribed, the acceptance must be communicated to time. him within a reasonable time. In neither case is the acceptor answerable for any delay which is the conse- quence of the proposer's own default. If no manner of form is prescribed, the acceptance may be communi- cated in any reasonable or usual manner or form. This is almost self-evident, standing alone ; we shall see the importance of not losing sight of it in dealing with the difficulties to be presently considered. Note, however, that though the proposer may prescribe a form or time of acceptance, he cannot prescribe a form or time of refusal, so as to fix a contract on the other party if he does not refuse in some particular way or within some particular time (k). Among other conditions, the proposal may prescribe a particular place for acceptance, and if it does so, an ('/) See L. II. ") Ex. 837, ii. contract, or only a standing offer (j) See Off'ord v. Davies (18(i2) so limiteil. 12 C. B. N.'S. 748, Finch Sel. Ca. (/c) Frlt/iot/Mev.Bi/uUn/ {\H(i2)\l 87, where the only arguable ([iies- C. P.. N. S. SOi). 87".. 81 L. .J. C. 1' tiou was whether the (lefendant's 204. guaranty limited in time was a 30 AGREEMENT, PROPOSAL, AND ACCEPTANCE. Revocation of proposal must be communi- cated before .icceptauce. acceptance elsewhere will not do (l). The question in cases of this kind is whether the condition as to time, place, or manner of acceptance was in fact part of the terms of the proposal. There is direct authority for the statement that the proposal must at all events be taken as limited to a reasonable time (vi) ; nor has it ever been openly dis- puted. The rule is obviously required by convenience and justice. It may be that the proposer has no means of making a revocation known (e.r/., if the other party changes his address without notice to him, or goes on a long journey), and he cannot be expected to wait for an unlimited time. Words of present obligation (but not capable of operating to that effect) have been held to constitute an offer with limit of time (??). Limits of Revocation. A proposal is revoked by communication to the other party of the proposer's intention to revoke it, and the revocation can take effect only when that communica- tion is made before acceptance. The communication may be either express or tacit, and notice received in fact, whether from the proposer or from any one in his behalf or otherwise, is a sufficient communication. A person who has made an offer must be considered as continuously making it until he has brought to the knowledge of the person to whom it was made that it is withdrawn (o). But that person's refusal or counter- offer puts an end to the original offer (p). (/) Fliemin V. Hemliaw (1819) (Sup. Ct, U. S.) 4 Wheat. 225, Langdell, Sel. Ca. on Cont. 48, Finch Sel. Ca. 56. (w) Jiiiili/'s CUSP (1868) L. R. 5 Kq. 428, L. R. 3 Ch. 592, 37 L. J. Ch. 255 ; Ramsgate Hotel Co. v. Montetioi-e ; same Co. v. Golchmid (1800) L. R. 1 Ex. 109, 35 L. J. Ex. 90. («) Uhidleifs case [1896] 2 Ch. 121, 65 L. J. Ch. 591, C. A. ((») Lord Herschell. Henthorn v. Fra.^er [1892] 2 Ch.27, 31, 61 L.J. Ch. 373, GiS L. T. 439. {p) Hyde v. Wre/ic/i (1840) 3 Beav. 334, 52 R. R. 144. REVOCATION. 31 The first point under this head is that an express Eevocation revocation communicated after acceptance, though de- ceptauc'e too terminetl upon before the date of the acceptance, is too late. late. This was decided in 1880 in two distinct cases (g). Byrne r. Van lieuhoven. It will suffice to give shortly the facts of the earlier one (r). The defendants at Cardiff wrote to the plain- tiffs at New York on the 1st of October, 1879, offering for sale 1000 boxes of tinplates on certain terms. Their letter was received on the 11th, and on the same day the plaintiffs accepted the offer by telegraph, confirming this by a letter sent on the 15th. Meanwhile the defen- dants on the 8th of October had posted a letter with- drawing their offer of the 1st: this reached the plain- tiffs on the 20th. The plaintiffs insisted on completion of the contract ; the defendants maintained that there was no contract, the offer having been, in their view, withdrawn before the acceptance was either received or despatched. Lindley J. stated as follows the questions to be considered : "1. Whether a withdrawal of an offer has any effect until it is communicated to the person to whom the offer has been sent ? 2. Whether posting a letter of withdrawal is a communication to the person to whom the letter is sent ? " The first he answered in the negative, on the principle " that a state of mind not notified cannot be regarded in dealings between man and man, and that an uncommunicated revocation is for all practical purposes and in jDoint of law no revocation at all." The second he likewise answered in the negative, on grounds of both principle and convenience, and not- withstanding an apparent, but only apparent, inconsis- tency with the rule as to acceptances liy letter which will be presently considered. This doctrine has been () 149 L. J. Ch. 777. One or two imma- U. S. 411, 424. terial details are omitted instating (/) (lS7r,) 2 Ch. Div. 4tJ8. 45 the facts. COMMUNICATION OF REVOCATION. 33 sistent with a continued intention of contracting with B. Knowing this, B. could not by a formal acceptance force a contract on A. (u). It does not appear that the knowledge which B. in fact had was conveyed to him or his agent by or through A., or any one intending to communicate it on A.'s behalf. Yet the Court held that knowledge in point of fact of the proposer's changed intention, however it reaches the other party, will make the proposer's conduct a sufficient revocation. But what if B. had communicated his acceptance to A. with- out knowing anything of A.'s dealings with C. ? This question remains open, and must be considered on principle. Suppose that A. offers to sell one hundred tons of iron to B., not designating any specific lot of iron, and that B. desires time to consider, and A. assents. Then A. meets with C, they talk of the price of iron, and C. offers A. a better price than he has asked from B., and they strike a bargain for a hundred tons. Then B. returns, and in ignorance of A.'s dealings with C. accepts A.'s offer formerly made to him. Here are manifestly two good contracts. A. is bound to deliver 100 tons of iron to B. at one price, and 100 tons to C. at another. And if A. has in fact only 100 tons, and was thinking only of those hundred tons, it makes no difference. He would be equally bound to B. and C. if he had none. He must deliver them iron of the quantity and quality contracted for, or pay damages. How then will the case stand if, other circumstances being the same, the dealing is for specific goods, or for a house ? Here it is impossible that A. should perform his agree - (?/) The head note says: "Seville, that the sale of the property to a third person would of itself amount to a withdrawal of the offer, even altliouj^h the person to whom the oflPer was tii'st made had no know- ledj^e of the sale." But this seems P. unwarranted by the judgments. See the remarks of James L.J. at p. 472, and of Mellish L.J. at p. 475, and per Lord Herschell, Ileiithornw. Fruser [1892] 2 Cli. at 1). ;«. Possibility of double acceptance. 34 . AGREEMENT, PROPOSAL, AND ACCEPTANCE. ment with both B. and C, and therefore they cannot both make him perform it ; but that is no reason why lie should not be answerable to both of them. The one who does not get performance may have damages. It remains to ask which of them shall have the option of claiming performance, if the contract is otherwise such that its performance can be specifically enforced. The most convenient solution would seem to be that he whose acceptance is first in point of time should have the priority : for the preference must be given to some one, and the first acceptance makes the first complete con- tract. There is no reason for making the contract relate back for this purpose to the date of the proposal. This is consistent with everything that was really decided in Dickinson v. Dodds (v). The reasons given for that decision cannot, it is submitted, be relied on. It is right to add that Cooke v. Oxley (w) may be so read as to support the opinion that a tacit revocation need not be communicated at all. But the apparent inference to this effect is expressly rejected in Stevenson V. McLean (x). If Cooke v. Oxley be still authority for anything, it is not authority for that. Limits of Acceptance or of its Revocation. Communica- There is a material distinction, though it is not fully tion of accept- ^-ecognized in the language of our authorities, between Unilateral ^h*^ acceptance of an offer which asks for a promise, and and bilateral of an olfer whicli asks for an act, as the condition of the aKreemeats. . . ,„, , 4. • - oiler becomnig a promise. VVhere the acceptance is to consist of a promise, it must be communicated to the proposer (y). But where the acceptance is to consist (0 2 Ch. Div. 4(>3, 45 L. J. Ch. 653. 777. Note that the suit was for (_.v) (1880)5 Q. E. D. at p. 351, specific jjerformaiice. and cp.Lang- 49 L. J. Q. B. 701. dell, Summary. 24,5-6, and Anson. (y) Mozlei/ v. Tinkler(^l8S'i')l C. 42-44. There was also a claim for M. & K. 61)2, 40 R. R. 675 ; Russell damages, but apparently nothing v. TItomton (1859) 4 H. &; N. 788. was said about it. 798. 804, 29 L. J. Ex. 9 ; irehl/s (w) (1790) 1 11. R. 783, 3 T. 11. case (1867) L. R. 4 Eq. 9. COMMUNICATION OF ACCEPTANCE. S^ of an act — as despatching goods ordered by post — it seems that no further communication of the acceptance is necessary than the performance of the proposed act, or at any rate the proposer may dispense with express communication, and an intention to dispense with it may be somewhat readily inferred from the nature of the transaction (z). In the former case the proposed contract is called bilateral, in the latter unilateral , these terms have long been current in America but are little used in England. In America the presumption in the case of an unilateral contract is against any com- munication being needed beyond the performance of the act requested. Further, even when the acceptance consists of a Means promise, and therefore must be communicated, any authorized by '■ . ' ./ [)roposer. reasonable means of communication prescribed or con- templated by the proposer are deemed sufficient as between the acceptor and himself. If an acceptance by means wholly or partly beyond Post or teie- the sender's control, such as the public post or tele- ^laiiii. graph (rt), is contemplated by the parties, then an acceptance so despatched is complete as against the proposer from the time of its despatch out of the sender's control ; and, what is more, is effectual not- withstanding any miscarriage or delay in its ti-ansiiiis- sion happening after such despatch. The parties are presumed to contemplate acceptance by post or telegraph whenever the circumstances are such as to make such acceptance reasonable in the usual course of business (b). It should seem obvious that an uncommunicated General rule mental assent, since it is neither the communication of of communi- cation. {:) ('avlUl\. ('iirholic Smoke Jhtll the same footing as letter i)Ost, Co. [WXA] 1 Q. B. 250, per Lindley Cowan v. 0' Connor (im^) 20 Q. P.. L J. at jip. 2(i2-:<, F.ovven L.J. at 1). (;40, 57 L. J. Q. B. 401. p. 2(;y. (//) Jlenfhorn v. Fraxrr [18i(2] 2 (7 ; K'nuiMon- W) J^curce. v. Watfs (1875) L. 11. vpon-Hull {UoverHurs 4v.) w.'l'dch 2u K(i. 492, 44 L. J. Ch. 4U2. 47 48 AGREEMENT, ''proposal, Al^D ACCEPTANCE. be specifically enforced (c). A statement by a parent to his daughter's future husband that she will have " a share " of his property cannot be construed as a promise of an equal share (d). On the other hand an agreement to execute a deed of separation containing " usual covenants " is not too vague to be enforced (e). Illusory To this head those cases are perhaps best referred in !"■ '"^ ^- which the promise is illusory, being dependent on a con- dition which in fact reserves an unlimited option to the promisor. " Nulla promissio potest consistere, quae ex voluntate promittentis statum capit " (/). Thus where a committee had resolved that for certain services " such remuneration be made as shall be deemed right," this gave no right of action to the person who had performed the services ; for the committee alone were to judge whether any or what recompense was right (//). More- over a promise of this kind, though it creates no enforce- able contract, is so far effectual as to exclude the promisee from falling back on any contract to pay a reasonable remuneration which would be inferred from the transaction if there were no express agreement at all. In Roberts v. Smith (h) there was an agreement between A. and B. that B. should perform certain ser- vices, and that in one event A. should pay B. a certain salary, but that in another event A. should pay B. what- ever A. might think reasonable. That other event having happened, the Court held there was no contract which B. could enforce. Services had indeed been ren- dered, and of the sort for which people usually are paid and expect to be paid ; so that in the absence of express (f) Taylor v. Porfi/K/tnn (18r.5) 7 670, 684, 50 L. J. Ch. 697. D. M. & G. 328, 109 K. R. 147. (/) D. 45, 1. de verb. obi. 108, This of course did not decide that § 1. an action for damages would not (<7) 2'a i/lor v. Brewer {IS13) I M. lie. & S. 290, 21 R. R. 831. (d) Re Fichus [1900] 1 Ch. 331. (//) (1859) 4 H. & N. 315. 28 L. J. 69 L. J. Ch. 161. Ex. 164, 113 R. R. 462. {e) Hart v. Jhui (1881) 18 Ch. 1). CERTAINTY OF TERMS. 49 agreement there would have been a good cause of action for reasonable reward. But here B, had expressly assented to take whatever A. should think reasonable (which might be nothing), and had thus precluded him- self from claiming to have whatever a Jury should think reasonable. It would not bo safe, however, to infer from this case that under no circumstances whatever can a promise to give what the promisor shall think reasonable amount to a promise io give a reasonable re- ward, or at all events something which can be found as a fact not to be illusory. The circumstances of each case (or in a written instrument the context) must be looked to for the real meaning of the parties ; and " I leave it to you " may well mean in particular circum- stances (as in various small matters it notoriously does), " I expect what is reasonable and usual, and I leave it to you to find out what that is," or, "I expect what is reasonable, and am content to take your estimate (assuming that it will be made in good faith and not illusory) as that of a reasonable man " (i). Again, there may be a good promise conditional on the promisor being satisfied with the work done for him, or with the proof of a fact. This is not an arbitrary power but a discretion to be exercised in good faith (k). Another somewhat curious case of an illusory promise (though mixed up to some extent with other doctrines) is Moorhouse v. Colvin (I). There a testator, having made a will by which he left a considerable legacy to his (/) Such a case (if it can be awarded, supported, see the remarks on it (/t) Andrpws v. Belfidd (1S57) 2 in Rnhrrt^ v. Smith, and per Buck- C. B. N. S. 779, 109 R. R. 885 ley I>.J. in Br oomey. Speak [\^0?>'] (goods); Braunsteln v. Accidental 1 Ch. .-.8f), .599) was Bri/,nit v. J)eat/i I/tsce. Co. (1861) 1 B. & S. Fru//,f d 839) r, M. & W. 1 1 i, where 782 (pi-oof of claim), the majority of the Court lield that (0(18.51) 1.5 Beav. 811, :U8, it was for the jury to ascertain affd. by L.JJ. 21 Iv. ,J. Cli. 782, 92 how much the defendant, acting R. R. 4.52, 458. ho>ui fde, would or ought to have P. E 60 AGREEMENT, PROPOSAL, AND ACCEPTANCE. Promise to make contract with third person. daughter, wrote a letter in which he said, after mention- ing her other expectations, " this is not all: she is and shall be noticed in my will, but to what further amount I cannot precisely say," The legacy was afterwards revoked. It was contended on behalf of the daughter's husband, to whom the letter had with the testator's authority been communicated before the marriage, that there was a contract binding the testator's estate to the extent of the legacy given by the will as it stood at the date of the letter. But it was held that the testator's language expressed nothing more than a vague inten- tion, although it would have been binding had it referred to the specific sum then standing in the will, so as to fix that sum as a minimum to be expected at all events. A promise to enter into a certain kind of agreement with a third person is obviously dependent for its per- formance on the will of that person, but is not thereby rendered so uncertain as not to afford a cause of action as between the parties to it. The consent of a third person is not more uncertain than many other things which parties may and do take on themselves to warrant (m). Tacit accept- ance of con- tract must be unambicrnous. Cases of special con- ditions on tickets. Acceptance by Conduct. Conduct which is relied on as constituting the accept- ance of a contract must (no less than words relied on for the same purpose) be unambiguous and uncondi- tional [n). Where the proposal itself is not express, then it must also be shown that the conduct relied on as conveying the proposal was such as to amount to a communication to the other party of the proposer's intention. Difficult questions may arise on this point, and in particular have (/w) Foster y. Mlieeler {ISm) 38 Ch. Div. l.SO, .57 L. .J. Ch. 149, 871. (?j) Warner Y, Willi ngton (IBb^)) 8 Drew. 523, 533, 25 L. J. Ch. 662, 106 R. R. il6. TACIT ACCEPTANCE. 51 arisen in cases where ])ulilic companies entering into contracts for the carriage or custody of goods have sought to limit their liahility by special conditions printed on a ticket delivered to the passenger or depositor at the time of making the contract. The ten- dency of the earlier cases on the subject is to hold that (apart from the statutory restrictions . of the Eailway and Canal Traffic Act, 1854, which do not apply to con- tracts with steamship companies, nor to contracts with railway companies for the mere custody as distinguished from the carriage of goods) such conditions are binding. A strong opposite tendency is shown in Henderson v. Stevenson (o), where the House of Lords decided that in the case of a passenger travelling by sea with his luggage an indorsement on his ticket stating that the shipowners will not be liable for loss does not prevent him from recovering for loss caused by their negligence, unless it appears either that he knew and assented to the special terms, or at any rate that he knew there were some special terms and was content to accept them with- out examination (p). Since this there have been reported cases arising out of the deposit of goods, for safe custody or otherwise, in exchange for a ticket on which were indorsed conditions limiting the amount of the receiver's liability {q). The result appears to be that it is a question of fact whether the notice given in 00 (187.1) L. R. 2 Sc. & 1). 1 Q. B. D. 515, 45 L. J. Q. B. 729 ; 170. Lurd Chelmsfoicrs and Lord Parlier \. S. E. B. (\>. (1876); Hatheiley's dicta (pp. 477, 479) go Gnhcll v. .S'. E. R. Co. (1877) 2 C. P. farther, and suggest that the con- Div. 410, 46 L. J. C. P. 768, revers- tract is complete before the ticket ing in Parker s case the judgment is delivered at all, so that some of the C. P. Div. 1 C. P. D. 618, 46 other communication of the special L. J. C. P. 768 ; Watklm v. IlifDiill terms would have to be shown. (1883) 10 Q. B. D. 178, 52 L. J. Hut the later cases have not adopted (^,, B. 121, where the former cases this view. are fully reviewed by Stephen J. {p) Followed in Richardscm S^ Compare Burlie v. S. E. R. Co. Co. V. Rowntree [1894] A. C. 217, (1879) 5 C. P. D. 1, 49 L. J. C. P. 63 L. J. Q. B. 283. 107. q) Harris V. G. W. R. C'(*.(1876) E 2 52 AGREEMEJ^T, PROPOSAL, AND ACCEPTANCE. As to promises expressed in deeds. each case was reasonably sufficient to inform the party receiving it at the time of making the contract that the party giving it intended to contract only on special terms. A person who, knowing this (r), enters into the contract, is then deemed to assent to the special terms ; but this, again, is probably subject to an implied condi- tion that the terms are relevant and reasonable. It has already been pointed out that the ordinary rules of proposal and acceptance do not apply to promises embodied in a deed. It is established by a series of authorities which appear to be confirmed by the ratio decidendi of Xenos v. Wickham (s), in the House of Lords, that a promise so made is at once operative with- out any question of acceptance ; and this because it derives its force not from anything passing between the (/■) Knowledge that there are special conditions must lie found as a faf't. It may be inferred from reasonable means of know- ledge ; in deciding whether the means offered are reasonable all the circumstances, such as the class of persons to whom the notice is addressed, are properly taken into account : Ricliardmn <<■ C.>. V. Roicutrep. [ISDt] A. C. 217. 63 L. J. y. B. 2S8. Compare Ulpiari's remarks on a fairly analogous case, D. 14. 3, de inst. act. 11, § 2, 3. De quo palam proscriptura fuerit, ne cum eo contrahatur, is praepositi loco non habetur Proscribere palam sic accii)imus : claris litteris, unde de piano recte legi possit, ante tabernam scilicet, vel ante eum locum, in quo negotiatio exercetur. non in loco remote, sed in evident i .... Certe si quis dicat ignorasse se litteras, vel non observasse quod propositumerat.cummultilegerent. cumque palam esset jn'opositum, non audietur. Formerly the con- ditions printed by railway com- panies on their tickets, and the corresponding notices exhibited by them, were not often, they are still not always, •• claris litteris, unde de piano recte legi possit," or " in loco evidenti." As to conditions on passenger tickets see per Wills and Wright JJ. in G. X. R. Co. v. Palmer [189.5] 1 Q. B. 862. 64 L. .J. Q. B. 316, where the point whether there was sufficient notice of the condition was not open. (x) (1866) L. R. 2 H. L. 296. The previous cases weie Doe d. (TurnoHn V. Knight (1826) 5 B. & C. 671, 29 R. R. 3.5."j (a mortgage) ; Krton V. Scott (1833) 6 Sim. 31. 38 R. R. 72 (the like) ; Hall v. Palmer (1844) 3 Hare, .532. 13 L. J. Cb. 352, 64 R. R. 399 (bond to secuie aniniitv after obligor's death) ; Fletcher v. Fletcher (1844) 4 Hare. 67, 14 L. J. Ch. 66, 67 R. R. 6 (covenant for settlement to be made by executors). Xenos v. Wlchham might have been decided on the ground that the company's execution of the policy was the acceptance of the plaintiffs' pro- posal, and the plaintiffs" broker was their agent to receive commu- nication of the acceptance. But that ground is distinctly not relied upon in the opinions of the Lords : see L. R. 2 H. L. at pp. 320, 323. TACIT ACCEPTANCE. 68 parties, but from the promisor's — or, in the reguhir lan- guage of conveyancing, covenantor's — solemn admission that he is bound. Thus an obligation is created which whenever it comes to the other party's knowledge affords a cause of action without any other signification of his assent, and in the meanwhile is irrevocable. But if the promisee refuses his assent when the promise comes to his knowledge the contract is avoided. " If A. make an obligation to B., and deliver it to C. to the use of B., this is the deed of A. presently; but if C. offers it to B., then B. may refuse it in pais " {i.e., without formality) " and thereby the obligation will lose its force " {t). [t) Butler and Baker'n cune, '6 Qo. older Ijooks, means the special Rep. 26, quoted by Blackburn J. form of deed otherwise, and now L. E. 2 H. L. at p. 312. " Obli- exclusively, called a bond, gation " here, as always in our 54 CHAPTER II. Capacity of Parties. Variations in personal capacity. Disabilities of natural persons : Infancy. Coverture. Insanity, kc. All statements about legal capacities and duties are taken, unless the contrary be expressed, to be made with reference to " lawful men," citizens, that is, who are not in any manner unqualified or disqualified for the full exercise of a citizen's normal rights. There are several ways in which persons may be or become incapable, wholly or partially, of doing acts in the law, and among other things of becoming parties to a binding contract. All persons must attain a certain age before they are admitted to full freedom of action and disposition of their property. This is but a necessary recognition of the actual conditions of man's life. The age of majority, however, has to be fixed at some point of time by positive law. By English law it is fixed at twenty- one years ; and every one under that age is called an infant (Co. Lit. 171 b). Every woman who marries has to sustain, as incident to her new status, technically called coverture, a loss of legal capacity in various respects ; a loss expressed, and once supposed to be sufficiently explained, l)y the fiction that husband and wife are one person. Both men and women may lose their legal capacity, permanently or for a time, by an actual loss of reason. This we call insanity when it is the result of established mental disease, intoxication when it is the transient effect of drink or narcotics. Similar consequences, again, may be attached by provisions of positive law to CAPACITY OF PARTIES : AGENCY. 00 conviction for criminal offences. Deprivation of civil rights also may be, and has been in England in some particular cases, a substantive penalty ; but it is not thus used in any part of our law now in practical operation. On the other hand, the capacity of the " lawful man " Extension of receives a vast extension in its application, while it "^' ^"^^^ . remains unaltered in kind, by the institution of agency. Agency. One man may empower another to perform acts in the law for him and acquire rights and duties on his behalf. By agency the individual's legal personality is multi- plied in space, as by succession it is continued in time. The thing is now so familiar that it is not easy to realize its importance, or the magnitude of the step taken by legal theory and practice in its full recognition. We may be helped to this if we remember that in the classi- cal Eoman system there is no law of agency as we understand it. The slave, who did much of what is now done by free servants and agents, was regarded as a mere instrument of acquisition for his owner, except in the special classes of cases in which either slaves or freemen might be in a position analogous, but not fully equivalent, to that of a modern agent. As between the principal and his agent, agency is a special kind of contract. But it differs from other kinds of con- tract in that its legal consequences are not exhausted by performance. Its object is not merely the doing of specified things, but the creation of new and active legal relations between the principal and third persons. Hence it may fitly have its place among the conditions of contract in general, though the mutual duties of principal and agent belong rather to the treatment of agency as a species of contract. While the individual citizen's powers are thus ex- Ani ficiiil tended ])y agency, a great increase of legal scope and P^'"^""^- 56 CAPACITY OF PARTIES safety is given to the conjoint action of many by their association in a corporate body or artificial person. The development of corporate action presupposes a developed law of agency, since a corporation can execute its inten- tions only through natural persons generally or specially authorized to act on its behalf. And as a corporation, in virtue of its perpetual succession and freedom from all or most of the disabilities which may in fact or in law affect natural persons, has powers ex- ceeding those of a natural person, so those powers have to be defined and limited by sundry rules of law, partly for the protection of the individual members of the cor- poration, partly in the interest of the public. We proceed to deal with these topics in the order indicated : and first of the exceptions to the capacity of natural persons to bind themselves by contract. PART 1. I. Infants. Infants— An infant is not absolutely incapable of binding him- statement of ^^^^' ^^^^ ^^' generally speaking, incapable of absolutely the law. binding himself by contract (a). His acts and contracts are voidable at his option, subject to certain statutory and other exceptions. By the common law a conti-act made by an infant is generally voidable at the infant's option, such option to be exercised either before (b) his attaining his majority or within a reasonable time afterwards. Where the obligation is incident to an interest (or at all events to a beneficial interest) in property, it cannot be avoided while that interest is retained. Some agreements are, exceptionally, not voidable but void. ((/) Stated in this form bv Hayes (^h) As to this see p. (52. below. J. 14 If. C. L. Rep. at p. 356. CONTRACTS OF INFANTS. 67 By the Infants' Relief Act, 1874, loans of money to infants, contracts for the sale to them of goods other than necessaries, and accounts stated with them are absolutely void ; and no action can be brought on a rati- fication of any contract made during infancy. On the other hand an infant is bound to pay a reasonable price for necessaries sold and delivered to him; where "necessaries " mean goods suitable to his condition in life and his actual requirements at the time (c). An infant's express contract may be valid if it appears to the Court to be beneficial to the infant. In certain other cases infants are enabled to make binding contracts by custom or statute. An infant is not liable for a wrong arising out of or immediately connected with his contract, such as a fraudulent representation at the time of making the contract that he is of full age. But an infant who has represented himself as of full age is bound by payments made and acts done at his request and on the faith of such representations, and is liable to restore any advan- tage he has obtained by such representations to the person from whom he has obtained it. 1. 0/ the contracts of infants in general at common Of infants' luw, and as affected by the Act of 1874. .rnemf-'ami It was once commonly said that an agreement made d^Hnctloir'^' by an infant, if such that it cannot be for his benefit, that some are is not merely voidable, but absolutely void ; though in general his contracts are only voidable at his option (d). (/■) Sale of Goods Act, 189H. s. 2. Justices in Nash v. Inman [11)08] This confirms the opinion that 2 K. B. 1, 77 L. J. K. 15. <;2(), and an infant's obligation to pay for note thereon in L. Q. R. xxiv. 237. necessaries is not created" by {d) An infant's deed is generally afitiiH Q18S0) \[) 8, with Gorernors of Magdalen Ch. D. 003, (508. According to Ilugpifal v. Xiiotts (1879) 4 App. the old books it would seem to he Ca. 324, 48 L. J. Ch. 579, in which voidable. case this latitude has at last been (e) Lincoln Cullt-ge's case (1595) restrained. 3 Co. Bej). 59 h ; I)oe d. Bryan v. ((/) WarwicJf v. Bruce. 6 Taunt. Bunchs (1821) 4 P.. & Aid. 401, 23 lis', affg. s. c. 2 M. & S. 205. 14 R. R. 318 ; Maluts v. Freeman R. R. 638. service. CONTRACTS OF INFANTS. 59 of a servant for unlawfully absenting himself from his master's employment: — " Among many objections one appears to ns clearly fatal. He was an infant at the time of entering into the agreement, which authorizes the master to stop his wages when the steam engine is stopped working for any cause. A" agreement to serve for wages may be for the infant's benefit (//); but an agreement which compels him to serve at all times during the term but leaves the master free to stop his work and his wages whenever he chooses to do so cannot be considered as beneficial to the servant. It is inequitable and wholly void. The conviction must be quashed '' (/). But this is mere laxity of language. The Court de- cided only that the agreement was not enforceable against the infant. It cannot have meant to say that if the master had arbitrarily refused to pay wages for the work actually done the infant could not have sued him on the agreement. Again, it is said that a lease made by Leases. an infant, without reservation of any rent (or even not reserving the best rent), is absolutely void. But this opinion was disapproved by Lord Mansfield, whose judgment Lord St. Leonards adopted as good law, though the actual decision was not on this particular point in either case (k). And in a modern Irish case(i) it was expressly decided that at all events a lease made by an infant reserving a substantial rent, whether the (A) It seems that /;/•(■ ;«rt/flc/> it is be avoided by his entry before full so, even if it contains clauses im- age) ; Allen v. Allen (1812) 2 Dr. posing penalties, or giving a power & W. 307, 340. Hi) K. K. 696, 71.'>. of dismissal, In certain events: (I') Slafor v. Unidi/ (liiCtii) li Ir. Wood V. Fenwlch (1812) 10 M. & 0. L. Kep. 61. Tlie Court in- WA\)'>; Ledie\. Fifzp(itrirlt{\>^ll) clined to think that some act of 3 Q. B. D. 22'J, 47 L. J. M. C. 22, notoriety by the lessor would be distinguishing lleij. v. Lord (next required, such as entering, bringing note). ejectment, or demanding possession (i) lleg. V. Z()/yZ(1848) 12 Q. P.. (note that a freehold estate for the 757, 17 L.J. M. C. 181, 76 K.R. 4 IT), life of the lessor or twenty-one where the headnote rightly says years hatl passed by the original " void at/ainsf tlw 'infant " ; 76 lease) ; however there was another K. R. 415. leason, namely, that the second (/:) Xouch V. I'ur.wns (176.5) 3 lease might be construed as only Burr. 1794 (where the decision was creating a future interest to take that the reconveyance of a mort- effect on the determination of the gagee's infant lieir, the mortgage first, being properly paicl off, could nnt 60 CAPACITY OF PARTIES. best rent or not, is not void but voidable ; and further that it is not well avoided by the infant granting another lease of the same property to another person after attaining his full age. There is good English authority for the proposition that if a lease made by an infant is Sale, i:c., of beneficial to him he cannot avoid it at a.\\{m). It appears to be agreed that the sale, purchase (n), or exchange (o) of land by an infant is both as to the con- tract and as to the conveyance only voidable at his option. Partneiship Again, there is no doubt that an infant may be a hoidin'^'^^" partner or shareholder (though in the latter case the company may refuse to accept him) (p) ; and though he cannot be made liable for partnership debts during his infancy, he is bound l)y the partnership accounts as between himself and his partners and cannot claim to share profits without contributing to losses. And if on coming of age he does not expressly disaffirm the part- nership he is considered to affirm it, or at any rate to hold himself out as a partner, and is thereby liable for the debts of the firm contracted since his majority (q). The liability of an infant shareholder who does not repudiate his shares to pay calls on them rests, as far as existing authorities go, on a somewhat different form of the same principle (of which afterwards). As to contribution in the winding up of a company. Lord Lindley (r) " is not aware of any case in which an infant has been put on the list of contributories. Upon principle, however, there does not appear to be any (ill) Maddon v. Wh'dr (I7S7) 2 xiii hiri.i : Gooeh's ease (1872) L. R. T. li. irv.», 1 K. K. 4.-.a. 8 Ch. 2(>(;. 42 L. J. Ch. 381. And in) Co. Lit. 2 Ik Bac. Al). In- see LinJley, 82-84. fancy, I. 3 (4, 360). (v. Wall (1847) 1 Ex. 122, 16 L. J. Ex. 270. foil. In re Hodson's Settlement [1894] 2 Ch. 421. 63 L. .J. Ch. 609. (^) Williams V. Moor (1843) 1 1 M. k. W. 256. 264. 266. 12 L. J. Ex. 253. (/■) Flight V. Bolland (1828) 4 Russ. 298, 28 R. R. 101. ((/) See per Parke B. Xeicri/ and EnnishillenBii. Co. v. Coomhe(\S\9) 3 Ex. 565, 18 L. J. Ex. 325 : per Cur. L. S,- X. W. B. v. M-Jfichael (1850) 5 Ex. 114. 20 L. J. Ex. 97. 82 R. R. 898. As to an infant being bound when he comes of age by an acknowledgment made in a Court of Record, see Y. B. 20 & 21 Ed. I. p. 320. (/O Per Lord Colou.say, L, E. 2 H. L. 375. CONTRACTS OF INFANTS. 63 cannot deprive himself of the right to elect at full age, and only then can his election be conclusively deter- mined (i). If an infant pays a sum of money under a Money paid contract, in consideration of which the contract is contraot'*^''^^^^^ wholly or partly performed by the other party, he can when not • 1 , , ,1 ri 1 1 " • 1 • recoverable, acquire no right to recover the money back by rescinding the contract when he comes of age. Such is the case of a premium paid for a lease (k), or of the price of goods (not being necessaries) sold and delivered to an infant and paid for by him : and so if an infant enters into a partnership and pays a premium, he cannot either before or after his full age recover it back, nor therefore prove for it in the bankruptcy of his partners (I). We must now consider the Act of 1874 (37 & 38 Vict, infants' c. 62) , which enacts as follows :— . ^^^f ^^*'' 1. All contracts whether by specialty or by simple contract henceforth entered into by infants for the repayment of money lent or to be lent, or for goods supplied or to be supplied (other than contracts for necessaries), and all accounts stated with infants, shall be absolutely void : provided always that this enactment shall not invalidate any contract into which an infant may by any existing or future statute or by the rules of common law or equity enter, except such as now by law are voidable. 2. No action shall be brought whereby to charge any person upon any promise made after full age to pay any debt contracted during infancy, or upon any ratification made after full age of any promise or contract made during infancy, whether there shall or shall not be any new con- sideration for such promise or ratification after full age. 3. This Act may be cited as The Infants' Relief Act, 1874. The 2nd section (vi) forbids an action to be brought Ratification on any promise or ratification of a contract made during ^'^^^ operative "" '■ ^ for some (i) L. ,J- X. W. R. x.'WMicharl .3 Ch. .589, 63 L. J. Ch. 79.5. purposes. m])ra, note (g) ; Slafor v. Trinihic (m) The Act of 1871 supersedes (18(51) 14 Ir. C. L. Rep. .342. the Sth section of Lord Tenterden's (I/) IMme.% v. Blo{i)L.1{. Q. B. Div. -160, 45 L. J. Q. B. 10 Ch. 37H. U L. J. Bk. (53. 675. (o) Ciurhead v. MnW>< (1878) 3 C. {pp ) See note (w), p. fi3. P. D. 430, 47 L. J. C. P. 761. It {>[) Dariesv. Bariea {\S70) L. R. is held, however, that in a case 9 Eq. 468. 30 Iv. J. Ch. 343. supra, which would before the Act have p. 62. In Binican v. Dixon (IS^ff) been one of ratification it maybe 44 Ch. D. 211, 59 L. J. Ch. 437, left to the jury to say whether the an attempt was made to bring an conduct of the parties amounts to infant's marriage settlement within anew promise : Z>;Y/"/w;« v.iro^vrt^/ s. 1. on the ground that it must (1880) 5 C. P. D. 410, 49 L.J. C. P. be read as including all contracts 688, by Lindley and Denman JJ., whatever. The Act is not quite diss. Lord Coleridge C.J. so ill-drawn as to admit this con- (^;) Rawley v. Ruwley (1876) 1 struction. RATIFICATION BY INFANT. G5 apply the same rule to the time of his minority as to the time after his full age. Again an infant shareholder who does not disclaim may after his full age, at any rate, be made liable for calls without any express rati- fication ; on the contrary, the burden of proof is on him to show that he repudiated the shares within a reason- able time (r). And as Lord Tenterden's Act did not formerly stand in the way of these consequences of the affirmation or non-repudiation of an infant's contract, so the Act of 1874 will not stand in the way of the same or like con- sequences in the future. In fact the operation of the present Act seems to be to reduce all voidable contracts of infants ratified at full age, whether the ratification be formal or not, to the position of agreements of im- perfect obligation, that is, which cannot be directly en- forced but are valid for all other purposes. Other ex- amples of such agreements and of their legal effect will be found in the chapter specially assigned to that subject. A collateral result of this enactment appears to be that one who has made a contract during his infancy is not now able to obtain specific performance of it after his full age, for the same reason that he cannot and formerly could not do so sooner (s). The proviso as to new consideration meets such cases as that of an attempt to set up as a new contract the compromise of an action brought on the original promise (t). It is reinforced by s. 5 of the Betting and Loans (Infants) Act, 1892, which absolutely avoids all agreements and instruments (even negotiable ones) made for the payment of money representing or con- nected with a loan advanced during infancy (u). (/•) Soe pp. CO, 08. («) FUf//it V. Jiolhtnd (1,S28) 4 Kuss. 298, 21 U. 11. lUl,p. (;2, supra. (0 fiinith v.Kint/ [1892] 2 Q. P.. P. Semhle, no specific per- formance for either party of any con- tract made during infancy. Effect of proviso as to new con- sideration. r>43, (w L. T. 420. («) 55 Vict. c. 4. Tlie rest of the Act is criminal. C)Cl CAPACITY OF PARTIES. Of 9. 1, In the first section of the principal Act, the words tahi wm^racts Concerning the purchase of goods are not free from void. obscurity. If we might construe the Act as if it said " for jyayvient for goods supplied," fcc, it would be clear enough : but it is not so clear what is the precise operation of an enactment that contracts " for goods supplied or to be supplied," other than necessaries, shall be void. It seems to follow that no property will pass to the infant by the attempted contract of sale, and that if he pays the price or any part of it before delivery of the goods he may recover it back ; as indeed he might have done before the Act, for the contract was voidable, and he was free to rescind it within reasonable time. But it does not follow that if the goods are delivered no property passes or that if they are paid for the money may be recovered back. At all events an infant who has paid for goods and received and used them cannot re- cover the money back (v). The contrary construction would be unreasonable, and is not required by the policy of the statute, which is to protect infants from running into debt, not to disable them from making purchases for ready money. It is certain that when a particular class of contracts is simply declared to be unlawful, this does not prevent property from passing by an act competent of itself to pass it, though done in pursu- ance or execution of the forbidden contract (w). More- over it has been held that an infant may be guilty of lar • ceny a-h a bailee though the goods were delivered to him on an agreement void under the Act(^). On the whole it seems that the contract is voidable, but that goods actually delivered can be returned, and the price re- covered back, only so far and so long as complete resti- tution is possible. (f) Valfiitim V. CunaU (1889) 24 548. oSg. 40 L. J. C. P. 22. Q. B. Div. 16(i, 59 L. J. Q. B. 74. (.r) R. v. McDonald (1885) 15 (tt') Ayprs V. Sont/i AvsfniJliin Q. B. D. S23, 52 L. T. 583. Ba>tkin,/'C\>. i\><7l) L. R. 3 P. C. INFANTS RELIEF ACT. 67 It has been suggested that the exception of " con- tracts for necessaries " may include loans of money advanced and in fact used for the purpose of buying necessaries. The point is not known to have been judicially considered. It was an old rule in equity that a person so advancing money was entitled to stand in the legal creditor's place to the extent of what was actually spent on necessaries (y). It is doubtful whether a bond, hill of exchange, or note given by a man of full age, for which the con- sideration was in fact the supply of goods not neces- saries during his infancy, would be void under s. l{z). But s. 2 (which indeed seems altogether more useful than s. 1) would no doubt effectually prevent it from being enforced as between the immediate parties, though perhaps the words are not the most apt for that purpose. The Building Societies Act, 1874, enables an infant to be a member, hut this does not imply any exemption from the disability to mortgage his real estate created by the Infants' Belief Act : for that is not the sole pur- pose or a necessary purpose of membership (a). 2. Of the liability of infants on obligations incident Liability on to interests in perrnanent property. hiddenTto Til ill • • pioperty, and In an old case reported under various names m especially as various books (b), it was decided that an infant lessee *« railway snares. who continues to occupy till he comes of full age is after his full age liable for arrears of rent incurred during his infancy. In like manner a copyholder who was ad- (/y) Mtirloinw.Pif field,] I'. Wnis. 558, and see Lrwig v. Alley nc (1888) 4 Times L. R. r.OO. (r) Cp. iTujht V. Iteed (LS03) 1 H. & C. 703, 32 L. J. Ex. 2(;r,. («) Thurxtmi v. Aotfinff/iaiii, 4't'. JivUdliitj Sor. [1902J 1 Ch. 1, 71 L.J. Ch. 83, [iyu3] A. C. «. (//) AWfle V. I'Jliol (H;i4) Itolle Ab. 1, 731, K., Cro. Jac. 32U, Brovvnlow, 120, 2 Bulst. I contract. Qti. It has been laid down in general terms that if an ruief ''^ ^^*^ agreement be for the benefit of an infant at the time, it shall bind him (;), or even that the contract is bind- ing unless manifestly to the infant's prejudice {k). An infant's contract of apprenticeship (/), or an ordinary contract to work for wages, will, if it be reasonable, be considered binding on the infant, so that he may no less than an adult incur the statutory penalties for unlaw- (/<) L. W. C. Zentj S' Co.y. CXo. 1) (1889) 43 Ch. D. 165. 59 Andreivs [1909] 1 Ch. 7G3. 78 L.J. L. J. Ch. 151. Ch. 80, C. A., where however the re- {p} Be Francesco v. Barman strictive covenant in question was (Mo. 2) (1890) 45 Ch. D. 430, 63 held unenfoiceable apart from L. T. 438. A clause enabling the infancy. As to infant apprentices master to suspend the apprentice's in London, see p. 77. below. wages in an event which may be («) Clements v. L. 4' N. W. Bif. due to the master's own act, say a <^(). [1894] 2Q. B. 482.63L.J.Q. i'.. lock-out. is not reasonable : Corn 837. It seems, though it was not v. J/ufthews [1893] 1 Q. B. 310,62 necessary to decide the point, that L.J. M. C. (il. C. A., dist. Green the princijile of an infant's contract v. 'Jlioinpson [1899] 2 Q. B. 1,68 being valid when the Court is satis- L. J. Q. B. 719, where the excep- fied that it was for his benefit is t ion was of days when the business not confined (as was argued for the should be at a standstill by acci- plaintiff) to contracts of appren- dentt; beyond the control of the ticeship or labour : see especially master. the judgment of Kay. L.J. Note INFANTS : NECESSARIES. 71 fit, or at least not manifestly to his prejudice, to enter into trading contracts, or to buy goods other than neces- saries : one can hardly say for example that it would be manifestly to the disadvantage of a minor of years of discretion to buy goods on credit for re-sale in a rising market ; yet there is no doubt whatever that such a contract would at common law be voidable at his option. A contract whereby an infant agrees with a railway company, in consideration of being allowed to make a certain habitual journey to and fro on special terms, to waive all claims for accident to himself or his pro- perty, is detrimental to the infant and not binding on him (q). Nor has it ever been suggested that an infant partner or shareholder is at liberty to disclaim at full age only in case the adventure has been unprofitable or is obviously likely to become so. However, inasmuch as since the Infants' Relief Act, 1874, an infant's con- tract, if not binding on him from the first, can never be enforced against him at all, it seems quite possible that the Courts may in future be disposed to extend rather than to narrow the description of contracts which are considered binding because for the infant's bene- fit (r). A contract may be for an infant's benefit as a whole though particular terms are bad as being in exces- sive restraint of frade or the like (s). necessaries. 3a. Contracts for necessaries. Liability for By the Sale of Goods Act, 1893, s. 2— ..." Where necessaries are sold and delivered to an infant ... or to a person who by reason of mental (jl) Flower Y.L.Js- N.W. Rii. Co. such tliat it cannot be for the [181»4] 2 Q. B. fiS. fi3 L. J. Q. B. xnimVshmeU: RhodexY. Swithrn- 5-17, C. A. hank (1S89) 22 Q. B. Div. 577, 58 (/•) In an action brouf,'ht by an L. J. Q. B. 287. infant, an undertaking giveri by Qi) Jironileii v. Sinith [19091 2 the infant's next friend is not K. B. 235, 78'L. J. K. B. 745. binding if the circumstances are I'l CAPACITY OF PARTIES. incapacity or drunkenness is incompetent to contract, he must pay a reasonable price therefor. " ' Necessaries ' in this section mean goods suitable to the condition in life of such infant ... or other person, and to his actual requirements at the time of the sale and delivery." This enactment is a legislative declaration of the law as settled by a series of authorities, of which the judg- ment of the Exchequer Chamber in Ryder v. Wombtvell is the chief: — What are necessaries : a question of mixed fact and law. " The general rule of law is clearly established, and is that an infant is generally incapable of binding himself by a contract. To this rale there is an exception introduced, not for the benefit of the tradesman who may trust the infant, but for that of the infant himself. This exception is that he may make a contract for necessaries, and is accurately stated by Parke B. in Peters v. Fleming (^t). 'From the earliest time down to the present the word necessaries is not confined in its strict sense to such articles as were necessary to the support of life, but extended to articles fit to maintain the particular person in the state, degree and station in life in which he is ; and therefore we must not take the word necessaries in its unqualified sense, but with the qualification above pointed out' " (?/). What in any particular case may fairly be called necessary in this extended sense, is what is called a question of mixed fact and law: that is, a question for a jury, subject to the Court being of opinion that there is evidence on which the jury may not unreasonably find for the plaintiff. The station and circumstances of the defendant and the particulars of the claim being first ascertained, it is then for the Court to say whether the things supplied are prima facie such as a jury may reasonably find to be necessaries for a person in the defendant's circum- stances, or " whether the case is such as to cast on the plaintiff the onus of proving that the articles are within (0 (1840) fi M. & W. at p. 46. (?/) (1S68) L. R. 4 Ex. 32.38 ; in the Court below L. R. 3 Ex. 90, 38 L.J. Ex.8. INFANTS : NECESSARIES. 73 the exception [i.e., are necessaries], and then whether there is any sufficient evidence to satisfy that onus." In the latter case the plaintiff must show that although the articles would generally not he necessary for a person in the defendant's position, yet there exist in the case before the Court special circumstances that make them necessary. Thus articles of diet which are prima facie mere luxuries may become necessaries if pre- scribed by medical advice (r). It is said that in general the test of necessity is usefulness, and that nothing can be a necessary which cannot possibly he useful : but the converse does not hold, for a useful thing may be of unreasonably costly fashion or material. It is to be borne in mind that the question is not whether the things are such that a person of the defendant's means may reasonably buy and pay for them, but whether they can be reasonably said to be so necessary for him that, though an infant, he must obtain them on credit rather than go without. For the purpose of deciding this question the Court will take judicial notice of the ordi- nary customs and usages of society (w). If the Court does not hold that there is no evidence on which the supplies in question may reasonably be treated as necessaries, then it is for the jury to say whether they were in fact necessaries for the defendant under all the circumstances of the case. The Act has laid down, in accordance with the Supply from weight of authority (x), that the buyer's actual re- quirements must be considered. If the goods supplied (r) Sec Wharlon v. Macliriizio L. R. 3 Ex. 90, 38 L. J. Ex. 8 (1844) 5 Q. B. r>0(), 13 L. J. Q. B. (the point was left open in Ex. Ch., 130, (54 R. R. r)S4. and per Brani- E. R. 4 Ex. 42); but this was dis- well B., \i. R. 3 Kx. at p. '.Hi. sented from in Jhtviips v. Toye («•) L. R. 4 Ex. at i). 40. (1SH4) 13 Q. B. D. 410, and (by {x) Brayxhaw v. Eaton (1839) 5 members of the C. A. sitting as a Bing. N. 6. 231, 7 Scott, 183, TtO Divisional Court) Johmtom v. R. R. 773 ; Foder v. Ucdqvave. Marka (1887) 19 (.}. B. D. 509, 57 (18(;0) L. R. 4 Ex. 35, n. ; to the con- L. J. Q.^B. 6. trary, Ifi/der v. WumhwcU (18G8) 74 CAPACITY OF PAKTIES. are necessary, the tradesman will not be the less entitled to recover because he made no inquiries as to the infant's existing supplies ; but if the infant is already so well supplied that these goods are in truth not neces- sary, the tradesman's ignorance of that fact will not make them necessary, and he cannot recover. There is no rule of law casting on him a positive duty to make inquiries, but he omits to do so at his peril, and the burden of proof is on him to show that the infant was not sufficiently supplied (y). But the defendant having an income out of which he might keep himself sup- plied with necessaries for ready money is not equiva- lent to his being actually supplied, and does not prevent him from contracting for necessaries on credit (z). Since the Act, at all events, the infant buyer can be liable only for the reasonable price of the goods, and it seems that this was always the law, though before the Infants' Relief Act he could at full age ratify a con- tract for an agreed price, whether for necessaries or not (a). Apparent It woukl be natural for juries, if not warned against ™uver not ^*' ^^ ^^^^ ^^^^ a way of testing the necessary character material. of Supplies, not SO mucli by what the means and position of the buyer actually were, as by what they appeared to be to the seller, and such a view was not altogether with- out countenance from authority (b). It is conceived, however, that the knowledge or belief of the tradesman has nothing to do with the question whether the goods (7/) A«.?/( V. IniiuiH [1908] 2 K. B. anv case. 1, 77 L. J. K. B. ()2(;, C. A. How («) Judgment of Fletcher Moul- the plaintiff is to obtain this ton L.J. [1908] 2 K. B. at p. 8. information does not ajipear. (i) In Dalton v. Gib (1839) 5 (r) linryharty. Hall (1839) 4 M. Bing. N. C. 128, 50 K. R. 758, and & W. 727, .")1 Ii. R. 788. Contra Preface ; 7 Scott, 117, much weight MortdVd V. Hall (1884) 6 Sim. 46."). is given to the apparrnt rank and The doctrine there laid down seems circumstances of the party. This su))erfluous. for the supplies there amounts to supposing that an in- claimed for (such as 209 pairs of fant may be liable, by a kind of gloves in half a year) could not have holding out, for goods which are been reasonably found necessary in not necessary in fact. INFANTS : NECESSARIES. 75 are necessary or not. It may be said that the question for the Court will, as a rule, be whether articles of the general class or description were 'privia jade neces- saries for the defendant, and the question for the jury will be whether, being of a general class or description allowed by the Court as necessary, the particular items were of a kind and quality necessary for the defendant, having regard to his station and circumstances. For instance, it would be for the Court to say whether it was proper for the defendant to buy a watch on credit, and for the jury to say whether the particular watch was such, a one as he could resaonably afford. But this will not hold in extreme cases. In Ryder v. Wombwell (c) the Court of Exchequer Chamber held, reversing the judgment of the majority below on this point, that because a young man must fasten his wrist- bands somehow it does not follow that a jury are at liberty to find a pair of jewelled solitaires at the price of '251. to be necessaries even for a young man of good fortune. Hitherto we have spoken of a tradesman supplying What the goods, this being by far the most common case. But the g^j-j^g •' j^j. '' range of possible contracts for " necessai'ies " is a much eludes, wider one. "It is clearly agreed by all the books that speak of this matter that an infant may bind himself to pay for his necessary meat, drink, apparel, physic [in- cluding, of course, fees for medical attendance, fcc, as well as the mere price of medicines], and such other necessaries and likewise for his good teaching and instruction, whereby he may profit himself after- wards " (d). '^rhiis learning a trade may be necessary, 00 (18!;S) L. 11. 1 Kk. ?.2, ^?, Ex. 28(). 07 R. R. r>SG. AsTo L. J. Ex. 8. iaslriicUoii in trade, &c., Walter (d) Bac. Abr. lufanoy and Ai^e, I. v. Km-rard [IS'Jl] 2 Q. B. iJd'.i, (;0 (4. 83-)). And see (Jhapple v. (!n„im,- L. ,1. Q. B. 7.S8, G. A. (1844) 13 M. & W. 2.52, 13 L. J, 76 CAPACITY OF PARTIES. and on that principle an infant's indenture of appren- ticeship has been said to be ^binding on him (e). The preparation of a settlement containing proper provisions for her benefit has been held a necessary for which a minor about to be married may make a valid contract, apart from any question as to the validity of the settle- ment itself (/). A more remarkable extension of the definition of necessarias is to be found in the case of Chappie v. Cooper ((/), where an infant widow was sued for her husband's funeral expenses. The Court held that decent burial may be considered a necessary for every man, and husband and wife being in law the same person, the decent burial of a deceased husband is therefore a necessary for his widow. It would perhaps have been better to adopt the broader ground that a contract entered into for the purpose of performing a moral and social, if not legal, duty, which it would have been scandalous to omit, is of as necessary a character as any contract for personal service or purchase of goods "for personal use. The liability The Supply of necessarics to an infant creates only a IS on simple liability as on simple contract, and it cannot be made contract onlj'. •' '- ' the ground of any different kind of liability. Coke says : " If he bind himself in an obligation or other writing with a penalty for the payment of any of these, that obligation shall not bind him " (h). Similarly his negotiable instruments are voidable even if given to pay for necessaries (i). A fortiori, a deed given by an infant to secure the repayment of money advanced to buy (e) CuL)i>er v. Sinunoiis (18(;2) 7 0/) (I'^^i-l) 13 M. & W. 252. 13 H. & N. 707, 31 L. J. M. C. 138, L. J. Ex. 2S(!. r.7 R. R. 586. ■''mr, per Martin B. See, however, (A) Co. Lit. 172 a, cp. 4 T. R. p. 70, .iuj/ra. 3G3. (/■) Helj).f V. Clayton (1864) 17 (/) Be Solfi/koff, E.c parte Mar- C. B. N. S. .553, 34 L. J. C. 1'. 1. grett [lSi)I] 1 Q." B. 413, GO L. J. see the pleadings, and the judg- Q. B. 331), C. A. ment of the Court adji/i. INFANTS : NECESSARIES. 77 necessaries is voidable (;"). But in these and similar cases the infant's liability on simple contract, or rather gwasi-contract, is not affected (k). There are some particular contracts of infants valid What con- by custom. By custom incident to the tenure of gavel- ^'■^cts^n J J o infant can kind an infant may sell his land of that tenure at the make by age of fifteen, but the conveyance must be by feoffment, and is subject to other restrictions (I). This, however, is not really a capacity of contracting, for there is no reason to suppose that an action could be brought against the infant for a breach of the contract for sale, or specific performance of it enforced. " Also by the custom of London an infant unmarried and above the age of fourteen, though under twenty-one, may bind himself apprentice to a freeman of London by indenture with proper covenants ; which covenants by the custom of London shall be as binding as if he were of full age," and may be sued upon in the superior courts as well as in the city courts (vi). Infants, or their guardians in their names, are em- — bj- statute. powered by statute (11 Geo. 4 & 1 Wm. 4, c. 65, ss. 16, 17) to grant renewals of leases, and make leases under the direction of the Court of Chancery, and in like manner to surrender leases and accept new leases (s. 12) (?0- And by a later Act (18 & 19 Vict. c. 43) (o), infants may with the sanction of the Court make valid marriage settlements of both real and personal property. (j) Mart in v. Gale (ISTO) i Ch. of leases extend also to manied 1). 428, 4fi L. J. Ch. 84. women.) {k} Walter V. I'rerard [li^'.n] 2 (y) This Act does not affect Q. 15. Hfi'J, 60 L. J. Q. B. 7S.S, C. A. coverture or any disability other (/) Robinson on Gavelldnd, l!l4. than infancy: Seatun v. Seatoti {ill] Bacon, Abr. Infancy, B. 4, (1S88) 1:5 App. Ca. 61, .57 L. J. 340; 21 E. IV. 6, pi. 17. Ch. 661. And qu. whether it («) See Dan. Ch. I'r. 2. 11117; applies to post-nuptial settlements. Jfe Clark (^]>im) T.. K. 1 Cli. 21)2, It does apply to covenants to settle Hi) L. J. Ch. 314 ; Me Lrfr/iford af(er-ac()uired proiierty : Moore v. (1876) 2 Ch. I». 719, 4.'j L. ,J. Ch. Johnson [181)1] 3 Ch. 48, 60 L. J. 5H0. (The provisidHs as to renewals ( 'h. 41tl». 78 CAPACITY OF PARTIES. Infant not liable for wrong where the claim is in substance ex contractu. But liable for wrong apart from contract, though touch- ing the sub- ject-matter of a contract. 4. Of an infantas ivimunity as to wronqs connected with contract. An infant is generally no less liable than an adult for wrongs committed by him, subject only to his being in fact of such age and discretion that he can have a wrongful intention, where such intention is material ; but he cannot be sued for a wrong, when the cause of action is in substance ex contractu, or is so directly connected with the contract that the action would be an indirect way of enforcing the contract — which, as in the analogous case of married women (p), the law does not allow. Thus it was long ago held that an infant inn- keeper could not be made liable in an action on the case for the loss of his guest's goods (g). There is another old case reported in divers books (r), where it was decided that an action of deceit will not lie upon an assertion by a minor that he is of full age. It was said that if such actions were allowed all the infants in England would be ruined, for though not bound by their contracts, they would be made liable as for tort; and it appears in Keble's report that an infant had already been held not liable for representing a false jewel not belonging to him as a diamond and his own. The modern case usually cited for this rule is Jenninr/s v, Rundall (s), where it was sought to recover damages from an infant for overriding a hired mare. But if an infant's wrongful act, though concerned with the subject-matter of a contract, and such that but for the contract there would have been no opportunity of (y^) See p. S'S, utfra. ((/) EoUe Ab. r. 2, Action sur Case. D. 8. (rj Johnson v. Pie (160")) Sid. 2.58, 1 Lev. 1()0, 1 Keb. 913, fully cited by Knight Bruce V.C. in Stikeman v. Bawson (1847) 1 DeG. & Sm. 113, 16 L. J. Ch. 20.5, 75 R. R. 47 ; and see other cases collected ih. at p. 110, where "the case mentioned in Keble '" is that which, as stated in the text, occurs in his report of Johnson v. Pie. is) 8 T. R. H35, 4 R. R. G80. It is also recognized in Price v. Hcicttt (1852) 8 Ex. 146 (not a decision on the point). INFANT .S IMMUNITY FOR WRONGS. 79 committing it, is nevertheless independent of the contract in the sense of not being an act of the kind contemplated by it, then the mfant is liable. The distinction is established and well marked by a modern case where an infant had hired a horse for riding, but not for jumping, the plaintiff refusing to let it for that purpose ; the defendant allowed his companion to use the horse for jumping, whereby it was injured and ultimately died. It was held that using the horse in this manner, being a manner positively forbidden by the contract, was a mere trespass, for which the defen- dant was liable (t). It is doubtful whether an infant can be made liable quasi ex contractu (as for money received), when the real cause of action is a wrong independent of con- in law. tract ; but since the Judicature Acts have abolished the old forms of action, the question seems of little importance (u). Qu. whether liable on con- tract implied 5. Liability in equity on representation of full age. When an infant has induced persons to deal with him by falsely representing himself as of full age, he incurs an obligation in equity, which, however, in the case of a contract is not an obligation to perform the contract, and must be carefully distinguished from it {x). Indeed (0 Bur Hard v. Jftujffis (im'^) H C. B. N. S. 45, 32 L. J. C. P. 189. A bailment at will would have been (ietermiiied, as where a bailee commits theft at common law by " breaking bulk." («) The liability' is affirmed by Leake (|). 470). and disputed by Mr. Dicey (on Parties, 284), who is supported by a dictum of VVilles J. assuming that infancy would be a good jilea to an action for money received, though substantially founded on a wrong. Alfon v. Midland Itij. Co. (18(j5) 19 C. B. N. S. at p. 241, 34 L. J. C. P. at p. 297 (a decision of doubtful authority, see Pollock on Torts, 8th ed. 544). (.?•) Acc.Bartletty. Welh {ISC^i) 1 B. & S. 836, 31 L. J. Q. B. 57. Declaration for goods sold, kc. Plea, infancy. Equitable replica- tion, that the contract was induced by defendant's fraudulent repre- sentation that he was of age. The replication was held bad, as not meeting the defence, but only showing a distinct equitable right collateral to the cause of action sueil upon. In equity liable and bound by his acts, &c., if he represent himself as of full age : but onl^' to the extent of any advantage thereby gained. 80 CAPACITY OF PARTIES. it is not a contractual obligation at all. It is limited to the extent we have stated above (p. 57), and the princi- ple on which it is founded is often expressed in the form: " An infant shall not take advantage of his own fraud." A review of the principal cases will clearly show the correct doctrine. In Clarke v. Cobley (y) the defendant being a minor had given his bond to the plain- tiff for the amount of two promissory notes made by the defendant's wife before the marriage, which notes the plaintiff delivered up. The plaintiff, on discovering the truth, and after the defendant came of age, filed his bill praying that the defendant might either execute a new bond, pay the money, or deliver back the notes. The Court ordered the defendant to give back the notes, and that he should not plead to any action brought on them the Statute of Limitation or any other plea which he could not have pleaded when the bond was given ; but refused to decree payment of the money, holding that it could do no more than take care that the parties were restored to the same situation in which they were at the date of the bond. In Lempriere v. Lange, a quite modern case, it was held that an infant who had obtained the lease of a furnished house by representing himself of fall age could not be made liable for use and occupation, although the lease could be set aside and the infant ordered to pay the costs of the action (z). Cory V. Gertcken (a) shows that when an infant by falsely representing himself to be of full age has induced trustees to pay over a fund to him, neither he nor his representatives can afterwards charge the trustees with a breach of trust and make them pay again. (y) (ITS'J) 2 Cox. 173. 2 K. R. 25. lowed on the question of costs, It must be taken, though it is not Wool/ v. II W/" [1899] 1 Ch. 343, clear by the report, that the defen- 68 L. J. Ch. 82. dant falsely represented himself as (a) (1816) 2 Madd. 40, 17 R. R. of full age. 180. (-) (1879) 12 Ch. 1). 675. Fol- INFANTS : REPRESENTATION OF AGE. 81 Overton v. Banister (b) confirms this : it was there held, however, that the release of an infant cestui que trust in such a case is binding on him only to the extent of the sum actually received by him. The later case of Wright v. Snowe (c) seems not to agree with this, though Overton v. Banister was cited, and apparently no dissent expressed. There a legatee had given a release to the executrix, representing himself to her solicitor as of full age ; afterwards he sued for an account, alleging that he was an infant at the date of the release. The infancy was not sufficiently proved, and the Court would not direct an inquiry, considering that in any event the release could not be disturbed. This appears to go 'the length of holding the doctrine of estoppel appli'* cable to the class of representations in question, and if that be the effect of the decision its correctness may perhaps be doubted. In Stikeman v. Dawson (d) the subject of infant's liability for wrongs in general is discussed in an interesting judgment by Knight Bruce V.-C. and the important point is decided that in order to establish this equitable liability it must be shown that the infant actually represented himself to be of full age ; it is not enough that the other party did not know of his minority. And as there must be an actual false representation, so it has been more lately held that no claim for restitution can be sustained unless the representation actually misled the person to whom it was made. No relief can be given if the party was not in fact deceived, but knew the truth at the time ; and it makes no difference where the business was actually conducted by a solicitor or agent who did not know (e). There must be a positive representa- tion, not mere dissimulation, and the other party must be in fact misled. {!)) (1841) 8 Ha. 503. (r) (1848) 2 De G. & Sm 321. id) (1847) 1 De G. & Sm 90, 16 L. J. Ch. 205, 75 R. R. 47, P. (>') Nelson v. Stoclccr (185!t) 4 De G. & J. 458, 28 L. .1. Ch. 751. As to a married woman's similar fraud, see p. 83, below. 8? CAPACITY OF PARTIES. Proof in bankruptcy. But subse- quent valid contract after full age prevails. A minor cannot be adjudicated a bankrupt in the absence of an express representation to the creditor that he was of full age. The mere fact of trading cannot be taken as a constructive representation (/). But if a minor has held himself out as an adult, and so traded and been made bankrupt, he cannot have the bank- ruptcy annulled on the ground of his infancy (g) ; and a loan obtained on the faith of an express representation that he is of full age is a claim provable in bank- ruptcy (h). A transaction of this kind cannot stand in the way of a subsequent valid contract with another person made by the infant after he has come of age ; and the person who first dealt with him on the strength of his repre- senting himself as of age acquires no right to interfere with the performance of the subsequent contract (i). This is another proof that the infant's false represen- tation gives no additional force to the transaction as a contract. It was also held in the case referred to that, assuming the first agreement to have been only void- able, it was clearly avoided by the act of the party in making another contract inconsistent with it after attaining his full age. But it has been decided in Ireland (as we have seen) that this is not so in the case of a lease granted by an infant ; the making of another lease of the same property to another lessee after the lessor has attained full age is not enough to avoid the first lease (k). The fact that an interest in property and a right of possession has passed by the first lease, though voidable, explains the distinction. (/) Ux parte Jones (1881) 18 Ch. Div. 109, .50 L. J. Ch. f.73, overruling E-c jiiirfe Lynch (1876) 2 Ch. D. 227, 45 L. J. Bk. 48. {g) Ex parte Watson (1809) 16 Ves. 265 ; Ex parte Bates (1841) 2 Mont. D. & D. 337. (J) Ex parte Unity Bank (1858) 3 De G. & J. 63, 27 L. J. Bk. 33 ; see observations of Jessel M.R. thereon, 18 Ch. D. at p. 121. (?) Inmanv. Inman(l87'^) L. R. 15 Eq. 260. (/O Slator v. Brady (1863) 14 Ir. C. L. Rep. 61, supra, p. 59. MARRIED WOMEN ! COMMON LAW. 83 II. Married Women. A married woman is capable of binding herself by a Manied contract only "in respect of and to the extent of her contract only separate property "(/). This limited capacity is created ''jJo*"^^^^''''''''^'^ by a statute founded on the practice of the Court of qj^j common Chancery, which for more than a century had protected law disability married women's separate interests in the manner to be presently mentioned. Except as to separate property the old common law rule still exists, though with greatly diminished importance. That rule is that a married woman cannot bind herself by contract at all. If she attempts to do so "it is altogether void, and no action will lie against her husband or herself for the breach of it " (m). And the same consequence follows as in the case of infants, namely, that although a married woman is answerable for wrongs committed by her during the coverture, including frauds, and may be sued for them jointly with her husband, or separately if she survives him, yet she cannot be sued for a fraud where it is directly connected with a contract with her, and is the means of effecting it and parcel of the same transaction, e.r/., where the wife has obtained advances from the plaintiff for a third party by means of her guaranty, falsely representing herself as sole (vi) ; but it is doubtful whether this extends to all cases of false representation by which credit is obtained (n). For the same reason — that the law will not allow the contract to be indirectly enforced — a married woman is not estopped from pleading coverture by having described herself as sui iuris (o). The fact that a married woman is living and trading (Z) Married Women's Property («) Wrif/hf v. Leo/uird (l^C>\} \] Act, 1882, 4ii & 46 Vict. c. 75, s. 1. C. B. N. S'. 2r)8, 30 L. J. C. P. 3(ir), (w) Per Cur. Fairlinrxf v. Lirer- where the Court was divided. jwul Adelphl Loan A.ssociafinn (r>) Cannain v. Farmer (1849) 3 (1854) 9 Ex. 422, 429, 23 L. J. Ex. Ex. 698. 164. G 2 84 CAPACITY OF PARTIES. apart from her husband does not enable her at common law to contract so as to give a right of action against herself alone (p). Nor does it make any difference if she is living separate from her husband under an expi-ess agreement for separation, as no agreement between husband and wife can change their legal capacities and characters (q). But may But " a married woman, though incapable of making hactual ^"" a contract, is capable of having a chose in action con- rights : for ferred upon her, which will survive to her on the death benefit if he of the husband, unless he shall have interfered by doing exercise them gome act to reduce it into possession " : thus she might, duriu) & tors, Wl sqq. (10th ed. 1!)05), T. E. 60.-,. ■ Wldqeni v. Tepper (1S77) 5 Ch. D. ((/) Marxhall v. Button (ISOO) 8 oK!. 7 Ch. Div. 423, 47 L. .J. Ch. T. R. o4.^, .0 R. R. 448. .5.50. (>•) Per Cur. IMton v. Midland (-0 Fleet v. Pen-in^ (1869) L. E. i?y. Co. (18.-,.3) 13 C. B. 474. 22 3 Q. B. 536, 4 Q. B. 500, 38 L. J. L.' J. C. P. 177. And see 1 "Wms. Q. B. 257. Saund. 222, 223. On the question (f^ Per Lord Westbury, Par^wj^- what amounts to reduction into to>i v. Att.-Gen. (1869) L. R. 4 possession, see Williams on Execu- H. L. 100, 119. MARRIED WOMEN : COMMON LAW. 86 of Probate cannot dispense with the double adminis- tration, even where the same person is the proper repre- sentative of both husband and wife, and is also bene- ficially entitled (u). Inasmuch as according to the view established by Cannot modern decisions a promise to pay a debt barred hy the ^^^^ j-gnew Statute of Limitation operates not by way of post- J'^^gj^J"^/^ dating the original contract so as to " draw down the Limitation. promise " then made, but as a new contract founded on the subsisting consideration, a married woman's general incapacity to contract prevents such a promise, if made by her, from being effectual ; and where before the marriage she became a joint debtor with an(jtlKT person, that person's acknowledgment after the mar- riage is also ineffectual, since to bind one's joint debtor an acknowledgment must be such as would have bound him if made by himself (v). The rules of law concerning a wife's power to bind her husband by contract, either as his actual or osten- sible agent (w) or, in some special circumstances, by a peculiar authority independent of agency, do not fall within the province of this work. Exceptions at common law. — The wife of the King of Exceptions: England may sue and be sued as a fevie sole (Co. Litt. Queen 133 a). This was settled as early as the fourteenth century (x). The wife of a person civilly dead may sue and be sued Wife of alone (lb. 132 b, 133 ft). The cases dwelt on by Coke Sead.'' ''''''^^^ are such as practically cannot occur at this day, and it seems that the only persons who can now be regarded Oi) Jn the GuihU of Hardtnq [1900] A. C. 148, 75 L. J. K. P.. 395. (1872) L. 11. 2 P. & D. 394. (.r) Y. P.. 17 k IS Ed. III.. ((•) Plitam V. FoHter (1823) 1 ed. Pike, 430—434, where Queen B. & C.248, 25 II. R. 385 ; 1 Wnis. Pliilippa sued the Abbot of Ciren- Saund. 172. ccstor and another in a quare (if) See J'aquiii v. Jieaudi'rk iiiijwdit. 86 Capacity of parties. Of alien not r. sident in the kingdom. Custom of London as to married woman trading alone. as civilly dead are persons convicted of felony, and not lawfully at large under any licence {y). An alien enemy, though disabled from suing, is not civilly dead, and his wife cannot sue alone on a contract made with her either before or during coverture; so that while he is an alien enemy neither of them can maintain an action on the contract {z). This decision does not expressly overrule any earlier authority (and there is such authority) {a) for the proposition that she may be sued alone. But it is conceived that such must be the result. It appears to be the result of the authorities that the wife of an alien husband who has never been or at least never resided in England may bind herself by contract if she purports to contract as a feme sole (b). " By the custom of London, if a fe7ne covert, the wife of a freeman, trades by herself in a trade with which her husband does hot intermeddle, she may sue and be sued as a feyne sole, and the husband shall be named (//) Tr.insportation was con- sidered as an abjuration of the realm, which could be determined only by an actual return after the sentence hatl expired : Ctitrol v. mencow (ISOl) -I p:sp. 27. The analogy to Coke's '• Civil Death "' is discussed, arg. in Ex parte Franks (1«31) 7 King. 702. {:) Be Wahl v. Brauni' (18.5(;) 1 H. & N. 1 78, 25 L. J. Ex. 343. It is there surmised that the opera- tion of the Statute of Limitation is not suspended during hostilities ; but this is not even a positive tlictum, and the Supreme Court of the United States has repeatedly held otherwise ; see L. Q. R. xx. 168, 16y. Perhaps it may be doubted whether "civil death" was ever really appropriate as a term of art in English courts except " when a man entereth into religion [/.e. a leligious order in England] and is professed " : in that case he could make a will and appoint executors (wlio might be sued as such for his debts, F. N. B. 121. O). anil if he did not, his goods could be administered (Litt. s. 230, Co. Litt. 131 h). Bracton, however, speaks of outlawry (426 h) as well as religious profession (3nl h) as mora c'lr'dis. A person under the penalties of praemunire, which include being put out of the King's protection, would, 1 su|)pose, be in the same plight as an outlaw. The Rnman mors civilis was a pure legal fiction, introduced not to create disabilities, but to obviate the inconvenient results of dis- abilities otherwise created. (Sav. Syst. 2. 104.) [a) Berri/v. Bucftess of Mazarine (l(j;>7) 1 Ld. Raym. 147. [b) Bar den v. Keierberg (^1836) 2 M. & W. 61, 6 L. J. Ex. ti(j. But the question is now of little interest. MARRIED WOMP]N : COMMON LAW. 87 only for conformity; and if judgment be given against them, she only shall be taken in execution." (Bacon, Abr. Customs of London, ]).) This custom applies only to the city courts (c), and even there the formal joinder of the husband is indispensable. But if acted upon in those courts it may be pleaded as matter of defence in the superior courts (d), though they do not otherwise notice the custom (e). In certain exceptional cases in which the wife has an Contracts adverse interest to the husband she is not incapable of as to separa- contracting with him. Where a wife had instituted a f^"'^' ^^■■^ ™^y " be good. suit for divorce, and she and her husband had agreed to refer the matters in dispute to arbitration, her next friend not being a party to the agreement, the House of Lords held that under the circumstances of the case she might be regarded as a fe?ne sole, that the agreement was not invalid, and that the award was therefore binding (/). The real object of the reference and award in this case having been to fix the terms of a separation, it was later held that the Court would not refuse to enforce an agree- ment to execute a deed of separation merely because it was made between the husband and wife without the intervention of a trustee (g). In the simpler case of an agreement to live apart, with incidental provisions for maintenance, the agreement does not require the inter vention of a trustee, and the wife (apart from the Married Women's Property Act, which does not apply) can sue the husband for arrears of maintenance due (f) Caudell v. Shaw (17i)l) 4 (/) Batemany. Countess uf lluss T. 11. 3()1. (1818) 1 Dow, 235, 14 R. R. 5.5. {(l) Heard v. Webb (isuo) 2 Bos. (( V\\. 384. c. 76. 90 CAPACITY OF PARTIES. tract (p). Some account of this doctrine is given for reference in the Appendix, as being useful, if not neces- sary, for the full understanding of the modern law. It should be observed that restraint on anticipation, being allowed only for the purpose of protecting the fund as capital, does not apply to income of the fund when it reaches the married woman's hands, or the hands of some person from whom she can immediately demand it. The income so paid or payable is ordinary separate property, and therefore on principle not exempt from the subsequent claims, equitable or statu- tory, of the married woman's creditors (q) ; but it cannot be made liable to a previous judgment (r). The Married Women's Property Act. 4r)jfc 46 Vict. The provisions of the Married Women's Property Act, 1882, extended by an amending Act of 1893, are so much wider that they may be described as a new body of law, consolidating and superseding the results of many cases in equity as well as the previous Acts of 1870 and 1874, which this Act repealed. The law, as now declared, is to this effect: Separate property is (i) Property acquired by any married woman after Januai-y 1, 1888, including earnings (s) : (jy) Before the Act of 1882, Barnett v. Howard [1900] 2 Q. B. where a married woman obtained 784, tJ'J L. J. Q. B. 955, which credit by falsely representing her- however has been followed : Brown self as a widow, and a fund was v. JJiiiihleby [1904] 1 K. B. 28, settled on her for her separate use 73 L. J. K. B. 35, C. A. See Mr. for life, with a general power of T. Cyprian Williams's remarks in appointment by will, the creditor L. Q. R. xvii. 4. was held, in the administration of (r) For the effect of this would her estate, to have a good claim on be to make the restraint on antici- that fund as against appointees : pation inoperative : Bolitlio v. Vauyhaii \. Vanderxteiicn (\^o\) 2 GUUey [19U5] A. C. 98,74 Ji. J. Drew. 3G3, 408, 100 R. R. 173, 199. K. B. 43(i, approving WhiteUij v. ((/) See Hood Burrs v. Her'iot Edward, note ((/) ab.sve. [1896] A. C. 174, 65 L. J. Q. B. {s) Ss. 5, 2.5. Property falling 352 ; Wltiteley v. Edwards [1896] into possession since the Act under 2 Q. B. 48, 65 L. J. Q. B. 457, a title acquired before it is not in- C. A. ; this })rinciple seems to have eluded : Reid v. Beid (\^^G) 31 Ch. been overlooked by the C. A. in Div. 402, 55 L. J. Ch. 294. construing the Act of 1893 in MARRIED WOMEN S PROPERTY ACT. 91 (ii) Property belonging at the time of marriage to a woman marrying after January 1, 1883 (t). Special trusts created in favour of a married woman by will, settlement or otherwise, are not affected by the Act (w). Subject to any settlement (v), a married woman can bind herself by contract " in respect of and to the extent of her separate property," and can sue and be sued alone (w). Damages and costs, if recovered by her, become her separate property ; if against her, are payable out of her separate property and not otherwise (x). A married woman trading alone can be made bankrupt in respect of her separate property (^z). A contract made by a married woman otherwise than as agent (z) (i) Is deemed to be made with respect to and to bind (0 s. 2. {it) S. 19, which " prevents the previous enactment from inter- fering with any settlement whicli would have boim 1 the property if the Act had not passed " : Cotton L.J. Hancock v. Jlancoclt (1888) 38 Ch. Div. 78, 90, 57 L. J. Ch. 396. This provision covers bf)th s. 2 and s. ."). See Bucldaml v. liucMaad [1900] 2 Ch. 534, G9 L. J. Ch. 648. (r) See Stomr'a Tnixts (1883) 24 Ch. D. 195, 52 L. J. Ch. 776. (it)) As to the retrospective operation of the Act with regard to power to -sue on a cause inde- pendent of contract, see Weldon v. U7«.v/(w(1884) 13 Q. B. Div. 784, 53 L. J. Q. B. 528. As to liability on causes independent of contract, inUtaker v. Kenhato (1890) 45 Ch. Div. 320, 60 L. J. Ch. 9. The general w-ords of s. 1 (1) ilo not give any greater ])0wer of disposal than is given by the specific words of ss. 2 and 5, with which s. 1 must be read : Hi- Cuno, Mtnts field V. MiiiiHfirld (1SS9) 13 Ch. Div. 12. 02 L. T. 15. (.(■) 8. 1, sub-s. 2. (//) S. 1, snb-s. 5. An unexe- cuted general power of appoint- ment is not "separate proi)erty,'" and a married woman cannot be compelled to execute such a power for the benefit of her creditors : A> parte (r'HrJirinf (1886) 17 Q. B. Div. 5J1, 55 L. J. Q. B. 578. S. 19 does not prevent property to which she is entitled under a settlement, without restraint on anticipation, from passing to the trustee in bankruptcy : IJx parte J](n/d {\SSS) 21 Q. I'.. Div. 264, .57 L.'j. Q. B. 553. (:) These words do not aftect the authority of a married woman living with lier husband to pledge his credit, or the presumi)tion that she deals on his credit alone : Pat/in?i V. Beauclrrk [1906] A. C. 148, 75 D. .1. K. B. 395 ; and the other |)arty's knowledge is imma- terial if there is no misrepresenta- tion : ih. Tlie H. L. was equally divided. 92 CAPACITY OF PAUTIES. her separate property (a), and, if made since 5 Dec, 1893, whether or not she has any separate property at the date of the contract (&) : (ii) If so made and binding, binds lier after-acquired separate property (c), provided as to contracts of earlier date than 5 Dec, 1893, that there was some separate property at the date of the contract (d). A married woman's separate property is liable for her ante-nuptial debts and obligations (e). She is also liable at common law for such debts, and judgment may go against her personally (/). She cannot avoid this liability by settling the property on herself without power of anticipation (^). As to women married before January 1, 1883, such liability applies only to separate property acquiretl by them under the Act (h). The Act contains other provisions as to the effect of the execution of general powers by will by married women (i), the title to stocks and other investments registered in a married woman's name either solely or jointly (;'), the effecting of life assurances by a married woman, or by either husband or wife for the benefit of the family (k), procedure for the protection of separate property (l), and other matters which belong more to the law of Property than to the law of Contract. It is not expressly stated by the principal Act whether («) Formerly there was no such the Act : see Note C. As to the presumption unless she was living Act of IS70, Axford v. Beid (1889) apart from her husband. See 22 Q. B. Div. 548, oS L. J. Q. B. Appendix, Note C. 230. {h) 56 & .57 Vict, c, (i3. A con- (/") Bohinson, King ^' Co. v. tract made before the Act cannot Zyw^.v [1894] 2 Q. ' B. 577, 63 be brought within it b\- subseipient L. J. Q. B. 759. acknowledgment : He Wlieeler (jj) S. 19. [iyu4j 2 Ch. 6(). 78 L. J. Ch. .570. {/i) See note Ql). (^0 56 & 57 Vict. c. 63. ss. 1. 4. (/) E<^ FieJdiolcli [1909J 1 Ch. 1. 00 Stogdun V. Lee [1891 ] 1 Q. B. 78 L. J. Ch. 153, C. A. 061, 00 L." J. Q. B. 669, C. A. (y) Ss. 6-10. if) S. 13. This liability is at ('/.•) S. 11. least doubtful in cases not umler (I) S. 12. MARRIED women's PROPERTY ACT. 93 on the termination of the coverture by the death of the husband, or by divorce, a married woman's debts con- tracted during the coverture with respect to her separate property do or not become her personal debts ; but it has been assumed that they do (vi), and the Act of 1893 expressly makes this the rule for contracts subsequent to its date(?r). If not, the only remedy would be against her separate property which existed as such during the coverture, and was not subject to restraint on anticipa- tion(o), so far as it could still be identified and followed. The Act does not remove the effects of a restraint on anticipation. A married woman's creditor is not enabled to have execution or any incidental remedies against property subject to such restraint (p) ; though this affects only the remedy, not the cause of action (q). But the Act of 1893 gives power to order costs to be paid out of such property (r) in any action or proceeding instituted by or on behalf of a married woman (s). It was settled under the Act of 1882, after some dif- ference of judicial opinions, that income of separate ]iroperty subject to restraint on anticipation is, when paid or accrued due, " free money " and liable to satisfy a judgment not of prior date to the date of such income Qui) Harrixcm \. Ilarrixo/i (\S8^) liable to satisfy a contract. See 13 P. Div. l.SO ; Leak v. Driffield the proviso. (.1889) 24 Q. B. D. 98. (-v) Hood Bans v. Cut In-art (/() 5G & 57 Vict. c. 63, s. 1 (r). [1891] 3 Cli. 376, 63 L. J. Ch. 793, («) Pelton Brox. v. Harrison C. A., apfiroved, Hood Barrx v. [1891] 2 Q. B. 422, 60 L. J. Q. B. Heriot [1897] A. C. 177, i^Q L. J. 71, C. A. Q. B. 356. This does not apply (y;) I)!-ayroft V. Harrison (\Si^C>) to motions, appeals, or other steps 17 Q. B. i). 147. But he may taken in a cause by a married wlien the restraint is removed by woman who is a defendant ; but it the husband's death : Brigqx v. does appjly to a counterclaim by Ih/an [1899] 2Ch.717,68 L.J.Ch. her : Hood Barrsv. Catkcart [\8'Jh] 663— at any rate a trustee in bank- 1 Q. B. 873, 64 L. J. Q. B. 520. niplcy may : ib. The burden is on the married (i/) Whittaker V. Ker.ihair {\H'M)) woman to show why such an order 45 Ch. Div. 320, 327, 60 L. .1. shoukl not be made, but it is not Ch. 9. a matter of course : Paioley v. (?•) 56 & 57 Vict. c. 63, s. 2. Pawley [1905] 1 Ch. 593, 74 L.J. S. 1 does not make such property Cli. 344. 94 CAPACITY OF PARTIES. becoming payable (t). It is now held that s. 1 of the Act of 1893 has the effect of abrogating this rule, and protecting the income actually payable from separate property which was subject to restraint on anticipation at the date of the contract, even if the restraint on the capital has been removed by the cessation of the cover- ture before the date of the judgment. The soundness of this decision appears exceedingly questionable (u), and it is practically certain that the result is in any case foreign to the intention of the Act. A married woman cannot free herself from a restraint on anticipation attached to any property held for her separate use by any act of her own, whether in the nature of admission, estoppel, or otherwise (v). Where the surviving husband of a married woman takes her separate estate iiu-e mariti, he is at once her " legal personal representative " for the purposes of the Act, and liable to her creditors to the extent of that separate estate (w). On the other hand the Act does not exclude such equitable rights and remedies against a marj-ied woman's separate estate as were previously recognized. Where a married woman carries on a separate business, her husband can sue her for advances made during the coverture for the purposes of that business (x), on the general principle that in respect of her separate estate she is treated as a fevie sole. And it may still be pos- sible in some cases not within the Act to enforce a (0 IIooil Biirm X. //(?/vV [1896J restrained property, and the mea- A. C. 174, 65 L. J. Q. B. 3o2. sure of damages in a counterclaim (m) Barmtt v. Howard [1900] 2 on her covenant may be the exact Q. B. 784, 69 L. J. Q. B. 955 ; see sum she would recover on the p. 90, above ; followed, Bnncn v. principal claim : Sprange v. Lee Dimhiebij [1904] 1 K. B. 28, 73 [1908] 1 Ch. 424, 77 L. J. Ch. 274. L. J. K. B. 35, C. A. (m) S. 23 of the principal Act, as (?■) Bateman v. Faher [1898] 1 applied in Surma n v. muirton Ch. 144, 67 L. J. Ch. 130, C. A. [1891] 1 Q. B. 491, 60L. J. Q. B.233. But she can bind her free separate (.?') Butler v. Butler (1885) 16 property by a covenant not to sue Q. B. Div. 374. 55 L. J. Q. B. 55. in respect of dealings with her LUNACY AND DRUNKENNESS. 95 married woman's contract by means of the equitable doctrine of imperfect exercise of a power (?/), With regard to a husband's liabihty for his wife's ante-nuptial debts, the Court of Appeal has decided in a considered judgment that it is distinct, and not merely a joint liability with the wife's separate estate ; but that, for the purposes of the Statute of Limitation, there is not a distinct cause of action accruing against the husband at the date of the marriage (z). III. Lunatics and Drunken Persons. It will be convenient to consider these causes of dis- Drunkenness ability together, since in our modern law drunken men ^"*^ "nacy. (so far as their capacity of contracting is affected at all) are on the same footing as lunatics. The old law as to a lunatic's acts was that he could Lunatics by not be admitted to avoid them himself, though in certain otherwise" °^ cases the Crown, and in other cases his heir could (a). Even the fact of a defendant having been found lunatic by inquisition was not conclusive as against a plaintiff who was not present at the inquisition (b). But a lunatic so found by inquisition cannot deal with his property by deed, even in a lucid interval, while the inquisition is in force (c). A lunatic not so found is capable of contracting (among other acts) during any hicid intervals (d). The raai-riage of a lunatic is void, and the same degree of sanity is required for marriage as for making a will or for any other purpose, though (//) See per Fry L. J. E,v parte Giickrist (1886) 17 Q. B. Div. at p. 532. (z) Beck V. Pierce (1889) 23 Q. B. Div. 316, 58 L. J. Q. B. 510. (a) See the judgment of Fry L. J. in Impfirial Loan Co. v. Stone [1892] 1 Q. B. at p. 601. [b) Hall 7. Warren (1804) 9 Yes. 605, 609, 7 R. R. at p. 308. (c) Re Walher [1905J 1 Ch. 160, 74 L. .J. V\\. 8(i, C. A. Qu. how far Hull V. Warren is consistent with lliis. (flf) Bererleifs cam (1603) 4 Co. Itep. 1236; Hall v. Warren, note (J>) above. 96 CAPACITY OF PARTIES. the burden of proof is on the party alleging insanity (e). Marriage, however, is a peculiar transaction, and the exceptional treatment of it in our law, though perhaps historically due to the influence, in ecclesiastical Courts, of more general rules of civil or canon law, may well be justified on grounds of convenience. Liability for It is equallv settled that a lunatic or his estate may necessaries. i t i i " • « • t i &c. be liable quasi ex contractu tor necessaries supphed to him in good faith (/) ; and this applies to all expenses necessarily incurred for the protection of his person or estate, such as the cost of the proceedings in lunacy {g). A person who supplies necessaries to a lunatic or provides money to be expended in necessaries knowing him to be such can have an action against the lunatic if he incurred the expense with the iniention, at the time, that it should be repaid. The circumstances must be such as to Justify the Court in implying an obligation to repay ; there is no doubt that such an obligation may exist in a proper case (/i). A husband is liable for necessaries supplied to his wife while he is lunatic ; for the wife's authority to pledge his credit for necessaries is not a mere agency, but springs from the relation of husband and wife and is not revoked by the husband's insanity {i). In the same way drunkenness or lunacy would be no answer to an action for money had and received, or for the price of goods furnished to a drunken or insane man and kept by him after he had recovered his reason: in this last case, however, (e) Hancock v. Peatti (1867) EK?-^«w (1885) 10 P. D. 80 does ((jr) Williams v. Wentwortk not conflict on this point. The (1842) 5 Beav. 325 ; Stedmayi v. statute 15 Geo. 2, c. 30. is rep. by Hart (1854) Kay, 607, 23 L. J. Ch. the Stat. Law Revision Act, 1873" 908. 101 R. R. 764. (/) Brochwell v. Bulloch (1889) (A) Re Rhodes (1890) 44 Ch. Div. 22 Q. B. Div. 567 ; Bagster v. Earl 94, 59 L. J. Ch. 298. of Portsmouth (\S-2Q) 5 B. & C. 170, (0 Read v. Legard (1851) 6 Ex. s. c. more fuUv, nom. Baxter v. 636, 20 L. J. Ex.' 309. 86 R. R. 418. LUNACY AND DRUNKENNESS. 97 his conduct in keeping the goods would be evidence of a new contract to pay for them (k). There is also express authority (which one would think hardly necessary) to show that contracts made by a man of sound mind who afterwards becomes lunatic are not invalidated by the lunacy (l). It seems that an agency is determined by the principal becoming insane, except as to persons who deal in good faith with the agent in ignorance of the principal's insanity (vi). The general rule as to the contract of a lunatic (at all events if not so found by inquisition) or drunken man who by reason of lunacy or drunkenness is not capable of understanding its terms or forming a rational judgment of its effect on his interests is that such a contract is voidable at his option, but only if his state is known to the other party. The defendant who sets up his own incapacity as a defence must prove not only that incapacity but the plaintiff's knowledge of it at the date of the contract (n). In Molton v. Ccmiroux the action was brought by administrators to recover the money paid by the in- testate to an assurance and annuity society as the price of two annuities determinable with his life. The intes- tate was of unsound mind at the date of the purchase, but the transactions were fair and in the ordinai-y (/.;) (Jove V. Gibson (1845) 13 M. & W. ()2:5, 14 L. J. Ex. 15J, G? R. R. 762. (I) Owen V. Daries, 1 Ves. Sr. 82. (/«) See Brew v. JVu/i/i (1879) 4 Q. B. Div. (iOl, 48 L.J. Q. B. r>[)l. («) Moltoii V. Camroux, in P]x. nil. (1848) 2 Ex. 487, 4 Ex. 17, l.S L. J. Ex. 08, 356 ; Impenul Lmn Cu. v. ,SV(^m. L. J. Q. B. 852. As to latification [1900] 1 Ch. 43. 69 L. J. Ch. 20. l).y an undisclosed principal, see But the agent may l^e liable on an p. 107, below, implied warranty of his authority, (A) Story on Agency. §§ 279, see p. 112, below. sqq. 288. Thomson v. Davenport (e) Drew V. Nunn (1879) 4 Q. B. (1829) 9 B. & C. 78, 32 R. R. 578 ; Div. 661 : see per Brett I...J. at Calder v. Dohell (1871) L. R. 6 p. 668. C. P. 486. 40 L. J. C. P. 224. CONTRACTS OF AGENTS. 103 And the general rules laid down on the subject furnish only provisional answers, which may be displaced (subject to the rules as to admissibility of evidence) by proof of a contrary intention. A. When the agent is known to be an agent, a contract is made, and knowingly made, by the other party with the principal, on which the principal is th( proper person to sue and be sued. And when the principal is named at the time, then there is prima facie no contract with the agent : but when the principal is not named, then primd facie the agent, though known to be an agent, does bind himself personally, the other party not being presumed to giv(' credit exclusively to an unknown principal (i) . But when the agent would not prima facie be a con tracting party in person he may become so in various ways. Thus he is personally liable if he expressly undertakes to be so (k) : such an undertaking may be inferred from the general construction of a contract in writing, and is always inferred when the agent contracts in his own name without qualification (I), though the principal is not the less also liable, whether named at the time or not (m,), or if he himself has an interest in the subject-matter of the contract, as in the case of an A. Known to be an agent ; contract with principal ah initio. a. Principal named : agent prima, facie does not contract in person. Q. Principal not named : agent prima, facie does contract in person. Evidence of contrary- intention (a). (i) But one who dealt with an agent known to be such cannot set ofE against the principal's claim a debt due to him from the agent. If he has employed an agent on his own part, that agent's know- ledge is for this purpose treated as the employer's own : and this even though the knowledge was not acquired in the course of the par- ticular employment : Dresser v. Mrwood (1801) Ex. Ch. 17 0. B. N. S. 460, M L. J. G. P. 48, revg. s. c. 14 G. B. N. S. 574, 32 L. J. C. P. 201. Cmtra,!. G. A. s. 229. Qu. by design or acfidcnt ? (/t') Story on Agency, § 2fi9, Smith, Merc. Law, 158. (Z) See Fairlie v. Fetdon (1870) L. R. 5 Ex. 169, 39 L. J. Ex. 107 ; Paice V. Walker (1870) L. R. 5 Ex. 173, 39 L. J. Ex. 109. The latter case, however, goes too far ; see note (■•*), p. 105, below. (/«) Hiqqins V. Senior (1841) 8 M. & W. 834, 58 R. R. 884 ; the law there laid down goes to superadd the liability of the agent, not to take away that of the principal : ('alder y'. Dohell (1871) L. R. (! G. P. 486, 40 L. J. G. P. 224. 104 CAPACITY OF PARTIES. auctioneer (71). And when the agent is dealing in goods for a merchant resident abroad, it is held on the ground of mercantile usage and convenience that without evidence of express authority to that effect the commis- sion agent cannot pledge his foreign constituent's credit, Technical and therefore contracts in person (0). When a deed is deed rf^gent. ^^^cuted by an agent as such but purjwrts to be the deed of the agent and not of the principal, then the prin- cipal cannot sue or be sued upon it at law, by reason of the technical rule that those persons only can sue or be sued upon an indenture who are named or described in it as parties (p). And it is also held that a party who takes a deed under seal from an agent in the agent's own name elects to charge the agent alone (q). A similar rule has been supposed to exist as to negotiable instruments : but modern decisions seem to show that when an agent is in a position to accept bills so as to bind his principal, the principal is liable though the agent signs not in the principal's name but in his own, or, it would appear, in any other name. It is the same as if the principal had signed a wrong name with his own hand (r). («) 2 Sm. L. C. 399. As to an L. J. Q. B. 433. In Masjwns y auctioneer's personal liability for Hernimio v. Mildred (1883) 9 Q. B. non-delivery to a purchaser of goods Div. .530. .53 L. J. Q. B. 33, the bought at the auction, Woolfe v. Court of Appeal refused to extend Hume (1877) 2 Q. B. D. 3.55, 4G this doctrine to a case where the Ij. ii. Q.J^.oH: New Zealand ]Mnd commission agent as well as the f'o.\. Watson (1881) 7 Q. B. Div. principal was foreign ; the decision 374, .50 L. .J. Q. B. 433. was affirmed in H. L., 8 App. Ca. {()) Armstrong v. Stolies (1872) 874, but this point not discussed. L. R. 7 Q. B. 598, 605. Ace. Ellinger {p) Lord Suuthampton v. Brown Actlen-GeseUschaftv. f'lai/e{lS'-3) (1827) 6 B. & C. 718. 30 R. K. 511 ; L. R. 8 Q. B. 313. 41 L. J. Q. B. liechham y. I)rnke(\U\)'3^l.k\X. 253 (affirmed on another point. L. at p. 95, affirmed sub nom. Drake R. 9 Q. B. 473, 43 L. J. Q. B. 211). v. Bechham, 11 ih. 315, 12 L. J. Ex. showing that the foreign principal 486. 60 R. R. 691. cannot sue on the contract : jffw^fo/^ (jf) Piehering^s claim (1871) V. Bulloch (1873) L. R. 8 Q. B. L. R. 6 Ch. 525. 331, affirmed in Ex. Ch. L. R. (>•) Lindus v. Bradwell (1848) 5 9 Q. B. 572, that he cannot be C. B..583, 17 L. J. C. P. 123. 75 R. R. sued: New Zealand Land Co. v. 798. Cp. £dmufid.sr.Biishell(lS65) Watson (1881) 7 Q. B. Div. 374, .50 L. R. 1 Q. B. 97, 35 L. J. Q. B. 20. CONTRACTS OF AGENTS. 105 Again, an agent who would otherwise he liahle on Evidence of the contract made by him may exempt himself from inteiuiMi (g). liability by contracting in such a form as makes it appear on the face of the contract that he is contracting as agent only and not for himself as principal (s) : but even then he may be treated as a contracting party and personally bound as well as his principal by the custom of the particular trade in which he is dealing (t). Or he may limit his liability by special stipulations, e.;/., when a charter-party is executed by an agent for an unnamed freighter, and the agent's signature is un- qualified, but the charter-party contains a clause pro- viding that the agent's responsibility shall cease as soon as the cargo is shipped (u). It is also a rule that an agent for a government is not personally a party to a contract made by him on behalf of that government by reason merely of having made the contract in his own name (x). In some cases the agent, though, 'prima facie not a party to the contract as (.S-) Words in the body of a doeu- bind him personally: Chapman v. ment which amount to a personal Smrf/iHrst [1909] 1 K. B. 927, contract by the agent are not de- 78 L. J. K. B. 654, C. A. prived of their effect by a qualified (f} IIuDifrei/ v. Bale (1857) 7 signature: Lennard v. Bohinson E. & B. 266, TS.. B. & E. 1004. 26 (1855) 5 E. & B. 125, 24 L. J. Q. B. L. J. Q. B. 137 : Fleet v. Murtun. 275, lu:^ K. R. 402; Ilidclie.son v. (1871) L. R. 7 Q. B. 126, 129, 41 AW^»/( (1884) 13 Q. B. Div. 861, see L. J. Q. B. 49; Hutclilmon v. per Brett M.R. at p. 865 ; and the Tatham (1873) L. R. 8 C. P. 482, description of him as agent in the 42 L. J. C. P. 260 ; Pilic v. Oiujleu body of the document may under (1887) 18 Q. B. Div. 708, 56 L. J. special circumstances not be enough Q. B. 373. On the general question to make him safe : P«/cev. irc/Z/^er of the construction of contracts (lS7(ijL. U. 5 Ex. 173, 39 L. J. Ex. made by brokers for their prin- 1"9 ; see the remarks on that case cipals, see Southwell v. Boiedltrh in Gadd v. Houghton (1876) 1 Ex. (1876) 1 C. P. Div. 374, 45 L. .J. Div. 357, 46 L. J. Ex. 71, which C. P. 374, 630. decides that a contract "on account («) Ogleshy v. Yf/le.sias (1868) E. of" a named principal conclusively B. & £.930,27 L. J. Q. B. 356; discharges the agent. Paice v. fan- v. JaeJt.son. (]Ho2) 7 Ex. :i82, M'alker is nearly but not ) Watteau v. Femcick [1893] 1 Q. B. 346 ; sed qu., see Lindley, Partnership, 134 »., and L. Q. R. ix. 111. (c) Humble V. Hunter (1848) 12 Q. B. 310. 17 L. J. Q. B. 3.50. 76 R. R. 291. CONTRACTS OF AGENTS. 107 a third person innocently to treat with the agent as principal he cannot afterwards turn round and sue him in his own name " (d). It was long undecided whether an agent for an un- disclosed principal must have authority at the time, or a man might adopt as principal an act not purporting at the time to he done on behalf of any principal, and not then authorized ,by him. A majority of the Court of Appeal held in a late case that such ratification was possible, but this was reversed by the House of Lords as contrary to such authority as there was (with one obscure exception) and to the general reluctance of the Common Law to give effect to alleged intentions which were not disclosed or recorded at the time when, if at all, they were material (e). Again, in the cases to which the rule does apply, the Limitations rights of both the undisclosed principal and the other when it contracting party are qualified as follows : ai)piies. The principal " must take the contract subject to all oAlrincmai. equities in the same way as if the agent were the sole principal " (/). Accordingly if the principal sues on the contract the other party may avail himself of any defence which would have been good against the agent (g) : thus a purchaser of goods through a factor may set off a claim against the factor in an action by the factor's principal for the price of the goods (h). {(l) Fervand v, Blschuffxhelni off a debt clue from the principal (1858) 4 C. B. N. S. 710,"71(i, 27 whom he has in the meantime L. J. C. P. 302. discovered, there being no mutual (e) Durant v. Robpvfs ,^' Co. debt within the statute of set-off ; [1900] 1 Q. B. 629, GU L. J. Q. B. I>) 3 10 B. & C. 755 ; but the principal H. ^V ('. 977, 983, 34 Tj. J. Ex. is not discharged unless he has 173 ; cp. L. 1!. (i C. 1'. 499. 110 CAPACITY OF PARTIES. 2. Professed agent not having authority. Principal named. charge the agent only, does not amount to an election in point of law (cj). 2. We have now to point out the results which follow when a man professes to make a contract as agent, but is in truth not an agent, that is, has no responsible principal. We may put out of consideration all cases in which the professed agent is on the face of the contract personally bound as well as his pretended principal : for his own contract cannot be the less valid because the contract he professed at the same time to make for another has no effect. But when the contract is not by its form or otherwise such as would of itself make the professed agent a party to it there are several distinctions to be observed. First, let us take the cases where a principal is named. The other party prima facie enters into the contract on the faith of that principal's credit. But credit cannot be presumed to be given except to a party who is capable of being bound by the contract : hence it is material whether the alleged principal is one who might authorize or ratify the contract, but does not, or is one who could not possibly do so. o. Who might be respon- sible. Professed agent cannot sue on the contract. X. The more frequent case is where the party named as principal is one who might be responsible. It is settled law that there, subject to the qualifica- tions which will appear, the pretended agent has not either the rights or the liabilities of a principal on the contract. First, as to his rights. In Bickerton v. Burr ell (r) the plaintiff had signed a memorandum of purchase at an auction as agent for a named principal. Afterwards he ((/) Curtis V. M'iUitnnscni (1874) L. K. 10 Q. B. 57, 44 L. J. Q. B. 27. (/■) (1816) 5 M. & S. 383. CONTRACTS OF AGENTS. Ill sued in his own name to recover the deposit then paid from the auctioneer, and offered evidence that he was really a principal in the transaction. But ho was non- suited at the trial, and this was upheld hy the full Court, who laid down that " where a man assigns him- self as agent to a person named, the law will not allow him to shift his position, declaring himself principal and the other a creature of straw. ... A man who has dealt with another as agent (s) is not at liberty to retract that character without notice and to turn round and sue in the character of principal. The plaintiff misled the defendant and was hound to undeceive him .before bringing a,n action." This leaves it doubtful what would have heen the precise effect of the plaintiff giving notice of his real position before suing : but the modern cases seem to show that it would only have put the defendant to his election to treat the contract as a subsisting contract between himself and the plaintiff or to repudiate it at once (t). The doctrine under consideration was further defined Rayner v. in Eayner v. Grate (y). There the plaintiff sued to recover a .balance due upon the sale by him to the defen- dants of a quantity of soda ash according to a .bought note in this form: — "I have this day bought for you the following goods frojn J. & T. Johiison — 50 tons soda ash, . . . . J. H. Eayner." It was proved that the plaintiff was the real owner of the goods, and 13 tons out of the 50 had been delivered to the defendants and accepted ,by them at a time when there was strong (.v) I.e. for a named and respon- v. Grote (see next paragraph). The sible principal. judgments cannot be regarded as (<) Felliiwes v. Lord G'lni/di/r good law, nor can any reason be (1820-9) 1 Sim. 08, 1 Russ. & M. found for a difference between 83, 32 R. R. 148, in which Bicker- common law and equity on the ton V. BurreJl was not cited, can point. be supported, if at all, only on the (y) (1846) 15 M. & W. 359, 10 ground that the facts brouglit the L. .J. Ex. 79, 71 R. R. 709. case within the principle of Rayner Grote. 112 CAPACITY OF PARTIES. Nor can the professed agent be sued on the con- tract. Implied warranty of authority. evidence to show that they knew the plaintiff to be the real principal. The law was stated as follows (z) : — " In many sucii cases \_viz. where the contract is wholly unperformed] such as for instance the case of contracts in which the skill or solvency of the person who is named as the principal may reasonably be considered as a material ingredient in the contract, it is clear that the agent cannot then show himself to be the real principal and sue in his own name : and perhaps it may be fairly urged that this, in all executory contracts, if wholly unperformed, or if partly performed without the knowledge of who is the real princii)al, may be the general rule." But here part performance had been accepted by the defendants with full knowledge that the plaintiff was the real principal, and it was therefore considered that the plaintiff was entitled to recover. Next, as to the pretended agent's liability. It was at one time thought that an agent for a named principal who turned out to have no authority might be sued as a principal on the contract (a). But it has been deter- mined that he is not liable on the contract itself (6). He is liable, however, on an implied warranty of his authority to bind his principal. This was decided in Collen V. IVright (c), and is now finally established by the authority of the House of Lords (d). In the rare (r) Per Cur. 15 M. & W. at p. 365 ; and see the remarks on Blclterttm v. Burrell, ad p'n. (ci) Op. Pothier, Obi. § 75. Q)) Lewis V. MrhohoH (1852) 18 Q. B. 503, 21 L. J. Q. P.. 311. (c) (1857) 7 E. & B. 301. 26 L. J. Q. B. 147 ; in Ex. Ch. 8 E. & B. 647, 27 L. J. Q. B. 215 ; 110 R. R. 602. (^/) lilcluirdson V. William, •ion (1871) L. R. 6 Q. B. 276, 40 L. J. Q. B. 145 ; Chervil v. Colonial Banlt of Amtralaxia (1869) L. R. 3 P. C. 24, 31 ; Starhey v. Bank of Englavd [1903] A. C. 114, 72 L. J. Ch. 402. But the representation of the agent that he has authority must be a representation of matter of fact and not of law : Beattie v. Lord Ehury (1872) L. R. 7 Ch. 777. 7 H. L. 102, 41 L.J. Ch. 804. 44 ib. 20 ; Weeks v. Propert (1873) L. R. 8 C. P. 427, 437, 42 L. J. C. P. 129. And the rule cannot be applied to make a public servant acting on behalf of the Crown per- sonally liable : Dunn v. Macdonald [1897] 1 Q. B. 555, 66 L. J. Q. B. 420, C. A. As to the measure of damages. Simons v. Patchett (1857) 7 E. & B. 568, 26 L. J. Q. B. 195. 110 R. R. 730 ; Spedding v. Xevell (1869) L. R. 4 C. P. 212, 38 L. J. C. P. 133 ; Godwin v. Francis (1870) L. R. 5 C. P. 295, 39 L. J. C. P. 121 ; Ex parte Pa mux re (1883) 24 Ch. Div. 367. The rule CONTRACTS OF AGENTS. 113 case of a person purporting to contract as agent for a named principal, and at the same time expressly dis- claiming any present authority, the implied warranty is excluded, for the other party does not rely on the existence of authority and is not misled, but is content to take the chance of ratification for what it may he worth (e). The pretended agent is also generally liable to an action in tort if he did not believe that he had authority (/). The liahility on implied warranty is not affected hy the supposed agent's good faith where he does so believe, and it is now decided that the rule applies even where a real authority has heen deter- mined, unknown to the agent, by the death or lunacy of the principal (g). jB. The rules last stated are applicable only where the s. Alleged alleged principal was ascertained and existing at the co^ia uot be'*^ time the contract was made, and might have been in fact responsible : 1 professed prmcipal. ^gent treated Here the doctrine of ratification is important. When ^^ principal. a principal is named or described, but is not capable of in Colleii v. WrUjltt is not con- trarfu was to have a remedy fined to cases where the assumed against executors, authority is to enter into a con- For a somewhat similar doctrine tract: Starke}/ -v. Bank of E/tg land, applied to the contract to marry, in C. A. nom. Oliver v. Bank of see Millward v. Littlewood (185U) EiKjland [1902] 1 Oh. at p. 622. .J Ex. n:>, 20 L. J. Ex. 2, 82 See further, Salvesen ^' Co. v. R. R. 871, and Wild v. Harris liederi Aktiebolafjet Nordstjernan (1849) 7 C. B. 999, 18 L. J. C. P. [190.5] A. C. 302,'74 L. J. P. C. 96, 297, 78 R. R. 899. Here however where an attempt to extend the there is not properly a warranty, rule to an agent's report to his for the promisor's undertaking that own principal failed ; an erroneous he is legally capable of marrying report as to the other party's the promisee is a term in the intentions may be a breach of duty, principal contract itself. See but it is not a warranty. Chap. VII. below, ad fin. (e) Halhot^.Lem [1901] 1 Ch. {g) Yonge v. Toijnhee [1910] 1 314, 70 L. J. Ch. 12.5. It would K. B. 215, 79 L. J. K. B, 208, C. A. seem arguable that in such a case This overrules Smout v. llhcnj there is nothing capable of ratifi- (1843) 10 M. & W. 1, 62 R. R. 510, cation. at any rate as a general authority, (/) Randell V. Trlmen{\fi~>C)) 18 and uther cases which followed it, C, B. 786, 25 L. J. C. P. 307, 107 aimh as Salton v. uYeiv Bee-stun Cycle R. R. 516. The main object of Co. [1900] 1 Ch. 43, 69 L. J. Ch. 20. estaVjlishing the liability ex con- 114 CAPACITY OF PARTIES. authorizing the contract so as to be bound by it at the time, there can be no binding ratification: for " ratifi- cation must be by an existing person on whose behalf a contract might have been made at the time " (h). There fall under this head contracts entered into by professed agents on behalf of wholly fictitious persons, or uncertain persons or sets of persons with whom no contract can be made by the description given, persons in existence but incapable of contracting, and lastly (which is in practice the most important case) proposed companies which have not yet acquired a legal exis- tence (i). Now when a principal is named who might have authorized the contract, there is at the time of the contract a possibility of his being bound by subsequent ratification. But when the alleged principal could not have authorized the contract, then it is plain from the beginning that the contract can have no operation at all unless it binds the professed agent. It is construed accordingly ut res iiiagis valeat qiiam pereat, and he is held to have contracted in person (A;). This principle has been carried so far that in a case where certain persons, churchwardens and overseers of a parish, covenanted " for themselves and for their successors, churchwardens and overseers of the parish," and there was an express proviso that the covenant (A) Per WiUes J. and Byles J. Co. (1880) 16 Ch. Div. 12.5, over- Kehier v. Ba.cter (1866) L. R. 2 xnlmg S})illery. Paris Skating Rinh C. P. 174, 18.5. 36 L. J. C. P. 94 ; Co. (1878) 7 Ch. D.368. Companies Scott V. Lord Eburij (1867) L. R. 2 have been held in equity to be C. P. 255, 267, 36 L. J. C. P. 161. bound by the agreements of their When ratification is admitted, the promoters, but on grounds inde- original contract is imputed by a pendent of contract. Action upon fiction of law to the person ratify- such an agreement by the company, ing ; and the fiction is not allowed under the mistaken belief that it is to be extended beyond the bounds binding, cannot be treated as evi- of possibility. dence of a new agreement : Re (i) KelnerY. Baxter (1806) L. R. Xorthumherland Aremte Hotel Co. 2 C. P. 174. and aiithorities there (1886) 33 Ch. Div. 16, 54 L. T. 777. referred to : Scott v. Lord Ebury {k) Kelner v. Baxter (1866) L. R. (1867) ih. 2no;Bmj)ress Engineering 2 C. P. at pp. 183, 185. CONTRACTS OF AGENTS. 115 should not .bind the covenantors personally, but was intended to bind the churchwardens and overseers of the parish for the time being as such churchwardens, fee, but not otherwise, it was held that since the funds of the parish could not be bound by the instrument in the manner intended, the effect of the proviso was to make no one liable on the covenant at all, and therefore the proviso was repugnant and void, and the covenantors were personally liable (I). Accordingly the proper course for the other contract- ing party is to sue the agent as principal on the contract itself, and he need not resort to the doctrine of implied warranty (vi). And as the agent can be sued, so it is apprehended that, in the absence of fraud, he might sue on the contract in his own name. A slightly different case is where a man professes to When pro- contract as agent, but without naming his principal, ni^y^be^l'js^'^ He is then (as said above) prima facie personally liable own unnamed in his character of agent. But even if the contract is ^^^'"'^'P''^ • so framed as to exclude that liability (and therefore any correlative right to sue), he is not precluded from showing that he himself is the principal and suing in that character. This was decided in Schmaltz v. Avery (?i). The action was on a charter-party. The (Z) Funiivall v. Coumhes (1843) 5 M. & Gr. 736, 12 L. J. C. P. 265, 63 R. R. 455. But the doc- trine of this case will certainly never be extended (see WdHanix V. Hathaway (1877) 6 Gh. D. 544) ; and qu. whether it would apply to an instrument not under seal. It is clearly competent to the parties to such an instru- ment to make its operation as a contract conditional on any event they please ; and in such a case as this why may they not agree that nobody shall be bound if the principal cannot be .' In Kehier v. Baxter oral evidence was offered that such was the inten- tion, but was rejected as contrary to the terms of the writing sued upon . (w() Kplnei- V. Ba-vter, note (&), last page. Cp. West London Com- mercial Banli V. Kitson (1884) 12 Q. B. D. 157, where a bill was accepted by directors on behalf of a company which had no power to accept bills ; the liability was put on the ground of deceit in 13 Q. B. Div. 360, 53 L. J. Q. B. 345. («) (1851) 16 Q. B. 655 (the statement of the facts is taken from the judgment of the Court, p. 658), 20 L. J. Q. B. 228, 83 R. R. 653. I 2 116 CAPACITY OF PARTIES. charter-party in terms stated that it was made ,by Schmaltz & Co. (the plaintiffs) as agents for the freighters ; it then stated the terms of the contract, and concluded in these words: "This charter being con- cluded on behalf of another party, it is agreed that all responsibility on the part of G. Schmaltz & Co. shall cease as soon as the cargo is shipped." This clause was not referred to in the declaration, nor was the character of the plaintiff as agent mentioned, but he was treated as principal in the contract. At the trial it was proved that the plaintiff was in point of fact the real freighter. Before the Court in banc the cases of Bickerton v. Burr ell and Rayner v. Grote (o) were relied on for the defence, but it was pointed out that in those cases the agent named a principal on the faith of whose personal credit the other party might have meant to contract. Here " the names of the supposed freighters not being inserted, no inducement to enter into the contract from the supposed solvency of the freighters [could] be sur- mised. . . . The plaintiff might contract as agent for the freighter, whoever the freighter might turn out to be, and might still adopt that character of freighter himself if he chose " (p). And conversely, a man who has con- tracted in this form may nevertheless be sued on the contract as his own undisclosed principal, if the other party can show that he is in truth the principal, but not otherwise (q). In the same manner it is open to one of several persons with whom a contract was nominally made to show that he alone was the real principal, and to sue alone upon the contract accordingly (;•). ((») See pp. 110 — 112, above. Moreover Schmalt: v. Arenj was (^>) lu a later case in the Ex- not cited, chequer Chamber (S/iarnuni v. (ry) Ctn')- v. Jackson (1852) 7 Ex. Braudf (1871) L. R. 6 Q. B. 720, :}82, 21 L. J. Ex. 137, 86 R. R. 40 L. J. Q. B. 312), there are some 699. expressions not very consistent (/•) Sjntrr v. Cans (1870) L. R. with this, but they were by no ."> Q. B. 656, 39 L. J. Q. B. 249. means necessary for the decision. corporamons. 117 II. Artificial Persons. In a complex state of civilization, such as that of the Artificial Eoman Empire, or still more of the modern Western theh-*iia"ture. nations, it constantly happens that legal transactions have to be undertaken, rights acquired and exercised, and duties incurred hy or on behalf of persons who are for the time being charged with offices of a public nature involving the tenure and administration of pro- perty for public purposes, or interested in carrying out a common enterprise or object. This enterprise or object may or may not be of a kind likely to be worked out within a definite time, and may or may not further involve purposes and interests of a public nature. The rights and duties thus created as against the world at large are wholly distinct from the rights and duties of the particular persons immediately concerned in the transactions. Those persons deal with interests beyond their own, though in many cases including or involving them, and it is not to their personal responsibility that third parties dealing with them are accustomed to look. This distinction (the substantial character of which it is important to bear in mind) is conveniently expressed in form by the Eoman invention, adopted and largely developed in modern systems of law, of treating the collective persons who from time to time hold such a position — or, in some cases and according to some opinions, the property or office itself — as a single and continuous artificial person (s) or ideal subject of legal capacities and duties. It is possible to regard the arti- ficial pei-son as a kind of fictitious substance conceived as supporting legal attributes ; and in fact this was, (■v) Fr. riirjjs or if re moral, j)er- the term " moral person," but it Kon7ie morale (but this does not has not been generally adopted by necessarily import capacity to sue English writers. Observe that th'e or be sued in a corporate name) ; English term " artificial " is not derm. ji/ri.sfisi'Iiel'erson ; \t&\.ente the same as " fictitious." morale. Kent, Comm. 2. 2(;.S, uses 118 CAPACITY OP Parties. until lately, the prevailing theory of modern civilians on the Continent (t). But it is equally possible, and it seems not only more philosophical hut more business- like, io hold that what we call the artificial identity of a corporation is within its own sphere and for its own purposes just as real as any other identity (u). The corporation becomes, within the limits assigned to its existence, " a hody distinct from the members com- posing it, and having rights and obligations distinct from those of its members." This is often called a fiction : hut it represents a class of facts not confined to legal usage or legal purposes. In the case of an ordinary partnership the firm is treated hy mercantile usage as an artificial person, though not recognized as such by English law ; and other voluntary and unin- corporated associations are constantly treated as arti- ficial persons in the language and transactions of every- day life. An even more remarkable instance is furnished by the artificial personality which is ascribed to the public journals by literary custom or etiquette, and is so familiar in writing and conversation that its curiosity most commonly escapes attention. The existence of these artificial persons by private convention, if we may so call them, shows that, if indeed there be any fiction in the matter, it is not superfluous or arbitrary (w). {f) See F. ^V. Maitland's Intro- courts to entertain suits between duction to Gierke's Political Theo- citizens of different states. See ries of the Middle Age. Cambridge Mar.tludl v. Baltimore and Ohio 1900 ; further references there, at liaili: Co. (1853) 16 Howard, 314. p. xxvi. The latest exposition is But it is not a citizen for all pur- by Prof. E. Saleilles, of Paris, " De la j)0ses, nor entitled to all the cousti- personnalite juridique," Paris, 1910. tutional immunities of individuals : (?/) -'A corporation is a legal iy/^^/c v. .lAYVm/-// (189S) 172 U. S. j>iv.-i.irc.Co.y. Uufff/x (\S[i9) vidua! ": per Cave J. Up Slirftirld, ih. '>')', Beroa College \. icntu city S,-c. BuildiiKj .SVv//.(1889)22 Q.P.. D. (1908) 211 U. S. 45. In Germany at p. 47(). In the United Statis a the State, as an owner of property, corporation duly created by the is specially personified as "the laws of any state is treated as a Fisc." after Roman precedent, and person dwelling in. and therefore a has not only the rights but the citizen of, that state within the liabilities of any private owner, see meaning of the constitutional pro- L. Q. E. xxiii. 13. vision which enables the Federal (to) "The orthotlox doctrine of CORPORATIONS. 119 In the Common Law no speculative opinion on the Corporations subject has been definitely adopted (x), though it seems n^on^Lavv"^" Hkely that only Coke's incapacity for grasping any general theory, good or bad, saved us from what is now known as the " fiction theory " among Continental publicists (y). In our authorities and practice the necessary marks of legal corporate existence are a recognized collective name (which however jieed not he expressly conferred at the outset), and capacity to sue, be sued, and do other acts in the law, in that name. Perpetual succession, that is, the existence of a body independent of the natural life of any one or more members, and a common seal to authenticate the cor- porate acts, are consequences or incidents of incorpora- tion rather than primary constituents. A corporation legally qualified to act as such can exist only with the sanction of the State, which may be expressed in England by a royal charter (z) or by statute. The statutory sanction may take the form — as in the familiar case of the Companies Acts — of authorizing persons who are so minded to constitute themselves into corporations by fulfilling specified general conditions. In this class of cases, at any rate, it would seem that the operative registration, or other appointed formality, is not pro- perly considered as involving fiction of any kind, but is the official recognition and regulation of substantial matters of fact. With us the official sanction is a matter tlie common law, wliich recognizes eaufl. 10 Co. Rep. fitfo. 29 7>, sne.sests only individuals and corpoi'ations tliat, if any theory had been formu- as entities, undoubtedly lags far lated, it would have been the then behind the ordinary conceptions of received one of the civilians. laymen": Harv. Law llev. xv. (r) The vi^ant of this has to be •ni. supplied in some cases by the (a-) Hobbes gives an admirable fiction of a lost grant : RIackst. exposition of the purely individual- Comm. i. 473. See the whole ist view in the Kith chapter of his chapter (Book 1, ch. 18) for a Leviathan, but of course without literary exposition of the C!onimoii regard to authority. Law doctrine as it stood in the (y) The slight reference to latter part of the 18th century. Roman law in tlie Sutton'ii IIuHjutal, He likens the continuous existence 120 CAPACITY OF PARTIES. of procedure and public convenience. In the Eoman law of the Empire it was an offence to form any kind of association without public authority ; thus the early Christian churches were exposed to penalties by the mere fact of being collegia Ulicita. This principle has largely survived in the modern public law of the Continent; only the faintest signs of any attempt to imitate it occur in ours (a). The holders of ecclesiastical benefices and dignities are said, by an analogy which is of no great antiquity, to be " corporations sole." Little or no useful result seems to be attained, for the alleged corporate character of a parson does not prevent the freehold of the church from being in abeyance when he dies, though a grant to an existing parson and his successors is effectual. By a still more doubtful extension of the analogy, the Crown is said to be a corporation sole (b) ; and the same des- cription has been applied by statute to the holders of a certain number of public offices (c). It may be suffi- cient to observe, so far as the principle is concerned, that for many centuries the Vatican and its contents — to say nothing of the spiritual powers and other former temporal possessions of the Holy See — have been held under an absolutely unique system of succession, but it has never occurred to any one to call the Pope a cor^wra- tion sole. At any rate, the persons whom we have to call corporations sole in England can do very little in their corporate capacity, and in particular cannot bind or even benefit their official successors by contract, of a corporation to that of the (f) See F. W. Maitlaiid, The river Thames. Corporation Sole, L. Q. R. xvi. 335 : (rt) It is said to be an offence to The Crown as Corporation, ib. xvii. "assume to act as a corporation," 131. The notion of a corpora- but this is far short of the Roman tion sole appears to date only prohibition. from the 16th centur}-. As to (Z*) The theory of the King's the Postmaster - Genei-al see per " body politic " is given at some Mathew L.J,, Bambridge v. Post- length in Plowd. 213. It would master-acneral [1906] 1 K. B. at seem to have been a fashionable p. I'.'S. novelty at the time. CORPORATIONS. l21 except in one or two peculiar cases (d). We therefore have nothing to learn in that quarter for the purposes of this work, and we may practically confine our attention to corporations aggregate. We have to ascertain what contracts corporate bodies can make, and how they are to he made. The second of these questions is reserved for the following chapter on the Form of Contracts. The first cannot he adequately treated except in connection with a wider view of the capacities, powers, and liabilities of corporations in general. The capacities of corporations are limited Capcicities (i) By natural possibility, i.e., by the fact that they Xco™'''' are artificial and not natural persons: tion as limited (ii) By legal possibility, i.e., by the restrictions of an artificial which the power creating a corporation may impose on person. the legal existence and action of its creature. First, of the limits set to the powers and liabilities of corporations by the mere fact that they are not natural persons. The requirement of a common seal (of which elsewhere) is sometimes said to spring from the artificial nature of a corporation. The fact that it is not known in Scotland is, however, enough to show that it is a mere positive rule of English law. The correct and compre- hensive proposition is that a corporation can do no (^Z) Generally "bishops, deans, Comm. ii. 431 — 433, who attempts parsons, vicars, and the like cannot to find reasons. A curious recent take obligation to them and their case where a fund of stock was successors, but it will go to the vested in certain rectors and their executors." ArniuJrVs vase. Hob. successors by a private Act is Power t;4; 20 E. IV. 2, pi. 7; IIowUii v. v. Banks [IDUl] 2 Ch. 487, 70 Kniqht (184!)) 1 4 Q. B. 240, 1 !) h. .1 . L. J. Ch. 700. In truth, as Trof. Q. 1?. 3, 80 K. K. 2()2. " Regularly J. 0. Gray says (The Nature and no chattel can go in succession in Sources of the Law, 1909, § 135), a case of a sole cor])oration " : Co. a corporation sole "is simply a Litt. 4() h ; it was otherwise in the series of natural persons, some of case of the heatl of a religious whose I'ights are diiferent and house, as he could not make a devolve in a diiferent way from will, Ko. Abr. 1. 51.'). Sec the old those of natural persons in general." autliorities summed up in iUackst. 122 CAPACITY OF PARTIES. executive act except ,by an agent ; and a corporate seal is only one way of showing that the person entrusted with it is an authorized agent of the corporate body. We say that executive acts of a corporation must be done by an agent. It does not seem necessary or plausible to ex- tend the proposition to deliberative acts and resolutions. When, for example, the assembled Fellows of a College resolve to grant a lease of certain college land, their resolution, whether unanimous or ,by the statutable majority, would seem to be the act not of agents but of the College itself. For if the Fellows voting are agents, who authorized them, and when ? But when they pro- ceed to order the affixing of the College seal to the lease, then the officer of the College who is directed to affix it is an appointed agent, whether he is himself a member of the governing body or not. There seem also to be cases in which the permanent authority of the head or other acting member of a corporation is derived not from any authority specifically conferred on him, but from the original constitution of the corporation. Here, how- ever, the conception of an implied agency is convenient and fairly applicable. Indeed, the Common Law doc- trine of agency is so wide and flexible that we practically tend to regard all acts whatever done in the name of a corporation as derived from some authority, general or special, vested in the natural persons by whom they are done. This may not be a strictly correct view, but it has largely saved us from the speculative questions which have vexed Continental jurists ever since the thirteenth century, and probably also from much more serious errors. A corporation obviously cannot be subjected to death, corporal punishment, or imprisonment, though it can be fined or made to pay damages as easily as a natural person. Further, it is understood that a corporation is incapable of committing the graver kinds of crime, such as treason, felony, perjury, or offences against the CORPORATIONS. 123 person (e), as well as of :bemg punished for them. There can he no real authority to commit such acts. Any or all of the members or officers of a corporation who should commit acts of this kind (e.g., should levy war against the King) under cover of the corporate name and authority would he individually liable to the ordinary consequences. " Offences, certainly offences of commission, are the offences of individuals, not of cor- porations " (/). Nor can a corporation undertake duties which, though it might he strictly possible for a corpora- tion to perform them by its officers or agents, are on the whole of a personal kind (g). On the other hand, it is As to acts subject to the same liabilities as any other employer for " agents. the acts, neglects, and defaults of its agents done in the course of their employment (h) ; and conversely it may sue in its corporate capacity for a libel reflecting on the management of its business (i). And the same principle is extended to make it generally subject to all liabilities (e) Rer/. v.(t. jY. of IJ/ii/. lii/. Co. so odd as it looks, as in Eomau (1846) 9 Q. B. 315,32(5," 16 L. J. law patria potestas and all the M. C. 16, 72 K. R. 262 ; nor, it is family relations arising therefrom said, can it be excommunicated, for might be acquired by adoption, it has no soul : 10 Co. Hep. 32 h ; the (/) Bramwell L.J. f) Q. B. D. at ultimate authority for this was a p. 313. Cp. Mai/ur of Mdncliester decree of Innocent IV. at the v. Williamx [18i)l] 1 Q. B. 94, 60 Council of Lyons in 1245 ; but L. J. Q. B. 23. otherwise as to interdict: Gierke, (9) Ex parte Swunsea Friend! y Deutsche Genossenschaftsrecht, iii. Societi/ (1879) 11 Ch. D. 768, 48 343-9. So a corporation cannot do L. J. Ch. 577. homage: Co. Litt. 66 Z». Nor can (//) Ditliculties, formal and mate- it be subject to the jurisdiction of a rial, which used to be entertained customary court whose process is on this head are now removed, exclusively personal : London. Toint Even malicious prosecution is not btuck Bank v. Mai/or of London now thought to be an exception ; (1875) 1 C. P. D. l' 4''' i^- •'■ t!. r. see Cornford v. Carlton Bank 213, in C. A. chiefiy 011 other [1900] 1 Q. B. 22, 68 L. .1. Q. B. grounds, 5 C. P. Div. 491 ; affirmed 1020, C. A. In the Middle Ages on this point in the House of Lords, the possibility of a corporation 6 App. Ca. 393. We are not aware committing a delict was disputed thatany English writer has tliouglit by the canonists but generally it necessai'y to state in terms that maintained by the civilians : a corporation cannot be married or Gierke, op. cit. 402. have any next of kin. The state- (/') iSoutli lletton Coal Co. v N. ment is to be found in Savigny, /.'. Neirx Amu\ [1894] 1 Q. B. 133, Syst. 3.239 ; but isiii [.ait nol (juite 63 !.. .1. Q. P.. 293, C. A. m some cases. 124 CAPACITY OF PARTIES. incidental to its corporate existence and acts, though the remedy may he in fo)-m ex delicto or even criminal. ludictable Although it cannot commit a real crime, "it may he guilty as a hody corporate of commanding acts to be done to the nuisance of the community at large," and may he indicted for a nuisance produced hy the execu- tion of its works or conduct of its business in an im- proper or unauthorized manner, as for obstructing a highway oi- navigable river {k). A corporation may even be liable by prescription, or by having accepted such an obligation in its charter, to repair highways, fcc, and may be indictable for not doing it (Z). A cor- poration carrying on business may likewise become liable to penalties imposed by any statute regulating that business, unless a contrary intention appears from the language of the Act or the nature of the case (7?i). A steamship company has been held (on the terms of the particular statute, as it seems) to be not indictable under the Foreign Enlistment Act of Geo. 3, and there- fore not entitled to refuse discovery which in the case of a natural person would have exposed him to penalties under the Act {ii). As to the difficulty of imputing fraudulent intention to a corporation, which has been thought to he peculiarly great, it may be remarked that no one has ever doubted that a corporation may be relieved against fraud to the same extent as a natural (/.■) Req. V. G. X of Enq. Eij. Co. C/tiirc/iiU'ti Vet. Saiiatoniim [1910] (1S46) il Q. B. 31n, per Ciir. p'. 326, 2 Ch. 401 ; but this does not K! L. J. M. C. 16, 72 11. K. 2()2, 2(>!». extfiid to making a corporation (l) Sec Grant on Corporations, ])Uiiishable as a rogue and vaga- 277, 283 ; Angell & Ames on Cor- bond, ILiiclie v. E. ITulton c^' porations. §§ W\-l ; Wms. Saund. Co. [1909] 2 K. B. 93. 78 L. J. 1. 614, 2. 473. K. B. 633. A corporation cannot (/«) Pluirmaccutical Socii'fi/ v. sue as a common informer with- London uiul Frorinclal Supply out special statutory authority : Association (18Sn) 5 Ai)p. Ca. )S.J7 ; Guardians of St. Leonard's, Shore- see per Lord Blackburn at p. 869 ; ditr/i v. Franklin (1878) 3 C. P. U. Interpretation Act. 1S89, s. 2, sub-s. 377. 1 ; P«/rA'.v V. ir«;Y/ [1902] 2 K. B. {n) King of Two Sicilies v. 1. 71 L. J. K. B. 656. As to WiUco-v (18.')d) 1 Sim. N. S. 33,5, remedy bv iiijunetion. A.-G. v. 19 L. J. Ch. 4SS. 89 R. R. 104. CORPORATIONS. 125 person. There is exactly the same difficulty in sup- posing a corporation to he deceived as in supposing it to deceive, and it is equally necessary for the purpose of doing Justice in both cases to impute to the corporation a certain mental condition — of intention to produce a belief in the one case, of belief produced in the other — which in fact can exist only in the individual mind of the member or servant of the corporate body who acts in the transaction (o). Lord Langdale found no difficulty in speaking of two railway companies as " guilty of fraud and collusion," though not in an exact sense (p). However, the members of a corporation cannot even by But cannot giving an express authority in the name of the corpora- actso^ereu tion make it responsible, or escape from being indi- all its mem- vidually responsible themselves, for a wrongful act ^ non-cor- which though not a personal wrong is such that if lawful poiate / \ n I • character. it could not have been a corporate act (g). Such is a trespass in removing an obstruction of an alleged high- way. For the right by which the act has to be justified is the personal right to use the highway, and a corpora- tion as such cannot use a highway. Likewise it is not competent to the governing body or the majority, or even to the whole of the members for the time being, of a corporation constituted by a formal act and having defined purposes, to appropriate any part of the cor- porate funds to their private use in a manner not dis- tinctly warranted by the constitution ; for it is not to be supposed that all the 7nenibers of the corporation are equivalent to the corporation so that they can do as they please with corporate property. A corporation («) See per Lord Blackburn, 3 App. Ca. 1264. A company may •■ feel aggrieved," Companies Act, l'J08, s. 242, sub-s. f> (re-enacting a provision of tlie fdrmer Act of of 1880). (yO 12 Beav. 382, 85 II. K. 12'.). (y) Mill V. Haioker (1874) L. R. 9 Ex. 309, 318, 44 L. J. Ex. 49 ; no judgment on this part of the case in Ex. Ch. L. R. 10 Ex. 92. Tt might be, by statute, the right or duty of a cori)oration to remove obstructions, and the real question here was whether a highway board had such a power or duty. 126 CAPACITY OF PARTIES. Limitation of corf orate capacities by does not exist merely for the sake of the members for the time .being. Lord Langdale held on this principle that the original members of a society incorporated by charter, who had bought up the shares of the society by agreement among themselves, were bound to account to the society for the full value of them (r). The fallacy of the assumption that a corix)ration has no rights as against its unanimous members is easily exposed by putting the extreme case of the members of a corpora- tion heing by accident reduced till there is only one left, who thereupon unanimously appropriates the whole corporate property to his own use (s). The powers of a corporation are necessarily limited in some directions by the nature of things. There positive rules, remains the question whether there are any general rules of law limiting them farther and otherwise. If our law had committed itself to the doctrine that the personality of a corporation is a mere fiction of the sovereign power, it might have been held as a natural consequence that a corporation could in no case have any powers except such as were conferred on it, expressly or by necessary implication, by the same act which created it. But this did not happen, and the judicial discussion of the subject has been evoked by the rapid growth of incorporated commercial and in- dustrial societies in modern times, and guided by reasons founded not in the nature of a corporation in itself, but in the need for safeguarding the interests IJartly of the individual members of companies, regarded as substantially partners in a joint undertaking, and (r) Soc'iety of Practical Kiunc- ledge v. Ahbott\\m()) 2 Beav. 559. 567, 50 II. K. 288, 294. Cp. Sav. Syst. 3. 283, 335. But it may be otherwise if the corporation has no definite constitution and no rules prescribing the application of its property. Such cases are some- times met with : Brown v. Bale (1878) 9 Oh. D. 78. (.v) Sav. Syst. 3. 329 sqq. §§ 97- 99. The illustration in our text is given at p. 350, note, with the remark, " Hier ist gewiss Einstim- miiifkeit vorhanden." CORPORATIONS. 127 partly of outside creditors dealing with companies, and looking to their corporate funds and credit, on the faith of apparently authorized acts and promises of their directors or agents. These two classes of interests are to some extent opposed, and the law has not reached the fairly settled condition in which it now stands with- out considerable fluctuations of opinion. On these, however, it is no longer needful to dwell at length. " At common law a corporation created by the King's charter has . . . the power to do with its property all such acts as an ordinary person can do, and to hind itself to such contracts as an ordinary person can bind himself to " (t), (subject to the corporate acts being sufficient in form, which we are not considering in this place). This rests on authority which, though it seems at times to have been forgotten, has never been disputed (w). But when a corporation is created directly by special statute, or indirectly by a statute authorizing the for- mation of a class of corporations on specified conditions, for purposes declared by the statute, or which the founders of the corporation are required to declare, then the question is different. As to powers expressly con- ferred on the corporation, or clearly authorized by general provisions, there can be no doubt ; when farther powers are claimed, it must be considered what was the intention of the Legislature, and only such powers can be attributed to the corporation as are necessary or reasonably incident to the fulfilment of the purposes for which it is established. Members of the company have the right to rely on those purposes not being exceeded ; the public can ascertain them, and have not affiriued (<) Bowen L.J. in Baronrsa Wenluck v. River Dee Co. (1883) 'M) Ch. D. 675, 683, //. Semhle this iipljlied to chartered companies of I he modern politico-commercial lype: Brithh S. Africa, Co. v. Be Beers Consolidated Mines [191U] Powers of statutory corporations determined by purposes of incorpora- tion. 1 Ch.354, 7!) L. J.Ch. 34.-) [1910] 2 Ch. 502, C. A. (w) Sutton's Hospital case., 10 Co. Rep., where it is said (at p. 30 h) that when a corporation is duly created, all other incidents are tacite annexed. 128 CAPACITY OF PARTIES. Reasons for the limitation derived — 1. From partnership law. Rights of dissenting partners. any right to hold the company liable for undertakings outside them. On the whole, "where there is an Act of Parliament creating a corporation for a particular purpose, and giving it powers for that particular pur- pose, what it does not expressly or impliedly authorize is to be taken to be prohibited " (x) — prohibited in the sense not that penalties or disabilities follow on such an act if done, but that the attempt to do it can from the first have no kind of validity as a corporate act. The reasons for this rule, as we have hinted, are derived (1) from the law of partnership; (2) from prin- ciples of public policy. 1. In trading corporations the relation of the members or shareholders to one another is in fact a modified (y) contract of partnership, which in the view of courts of equity is governed by the ordinary rules of partnership law so far as they are not excluded by the constitution of the company. Now it is a well-settled principle of partnership law that no majority of the partners can bind a dissenting minority, or even one dissenting partner, to engage the firm in transactions beyond its original scope. In the case, therefore, of a corporation whose members are as between themselves partners in the business carried on by the corporation, any dissenting member is entitled to restrain the governing body or the majority of the company from attempting to involve the company in an Cp. as to the limited powers of a trade union, which is a peculiar kind of statutory quasi-corporation, Aiiinh/ii mated Socy. of Rij. Servants V. 0.' Moo. P. C. 152, 193, ;9 R. R. 24, 53 ; Faitneiship Act, 1890,88.5 — 8. K 130 CAPACITY OF PARTIES. Assent ot all the members will remove objections on this head. and passed by however great a majority, have of them- selves no more power than the proceedings of individual agents to hind the partnership against the will of any single member to transactions of a kind to which he did not by the contract of partnership agree that it might be bound. Irregularities in the conduct of the internal affairs of the body corporate, even the omission of things which as between shareholders and directors are conditions prece- dent to the exercise of the directors' authority, will not, however, invalidate acts which on the face of them are regular and authorized: third parties dealing in good faith are entitled to assume that internal regulations (the observance of which it may be difficult or impos- sible for them to verify) have in fact been complied with. But it is to be observed that in the ordinary law of partnership there is nothing to prevent the members of a firm, if they are all so minded, from extending or changing its business without limit by their unanimous agreement. As a matter of pure corporation law, the unanimity of the members is of little importance : it may supply the want of a formal act of the governing body in some cases (a), but it can in no case do more. As a matter of mixed corporation and partnership law this unanimity may be all-important as being a ratification by all the partners of that which if any one of them dis- sented would not be the act of the firm : for although the corporate body of which they are members is in many respects different from any ordinary partnership, it is treated, and justly treated, as a partnership for this purpose. It appears, then, that the unanimous assent of the members will remove all objections founded on the principles of partnership, and will so far leave the («) Even this is in strictness hardly consistent with the prin- ciple that if A, B, C kc. are incorporated to them and their successoi's bv the name of X. then A + B -f C + . . . .*^c. are nof = X. CORPORATIONS. 131 corporation in full possession of its common law powers. There are nevertheless many transactions which even the unanimous will of all the members cannot make binding as corporate acts. For the reasons which deter- mine this we must seek farther. 2. Most corporations established in modern times by 2. I'ublic special Acts of Parliament have been established pol^^y : . . powers must expressly for special purposes the fulfilment of which is not be used considered to be for the benefit of the public as well as special pur- of the proprietors of the undertaking, and for this poses of incor- reason they are armed with extraordinary powers and privileges. Whatever a corporation may be capable of doing at common law, there is no doubt that unusual powers given by the Legislature for a special purpose must be employed only for that purpose : if Parliament empowers either natural persons or a corporation to take J. S.'s lands for a railway, J. S. is not bound to let them take it for a factory or to let them take an excessive quantity of land on purjwse to re-sell it at a profit (b). If Parliament confers immunity for the obstruction of a navigable river by building a bridge at a specified place, that will be no excuse for obstructing it in the (b) See GaUowinj v. Mayor of C'y. (1879)11 Ch. D. 611, G22, 48 London (18(J6) L. K. 1 H. L. at L. J. Ch. 258. But a statutory p. 43, 35 L. J. Ch. 477 : Lord corporation acquiring property Carington v. Wyconihe Ry. Co. takes it with all its rights and inci- (1868) L. R. 3 Ch. 377. 381, 37 dents as against strangers, subject L. J. Ch. 213. Nor may a com- only to the duty of e.xercising those pany hold regattas or let out rights in good faith with a view to pleasure-boatsto the inconvenience the objects of incorporation: of the former owner on a piece of Swindon Waterworlts Co. v. Wtltx water acquired by them undeitheir and Berk.^ Canal Xariyation Co. Act for a reservoir: BosforJt. v. (1875) L. R. 7 H. L. fi97, 704, 710. y. Staffordshh-e liij. Co. (185(5) 45 L. J. Ch. (J38 ; Bonner \. G. W. 3 Sm. & G. 283, 2921 25 L. .J. Ch. Ihj. Co. (1883) 24 Ch. Uiv. 1 ; and 325, 90 R. R. 159, in Q.B. on a case a corj)oration cannot bind it.sclf sent by Parker V.C. (1855) 4 nrit to use in the future special E. iV B. 798. 99 R. R. 758. with poweis which have prcsuma>)ly some difference of opinion ; nor been conferred to be used foi' the alienate land similarly acquired jiublic good : Ayr Harhour Trits- except for purposes authorized by ter.s v. Ontcald (1883) 8 App. Ca. the Act : MuUiner v. jVidland By. (i23. K 2 I 132 CAPACITY OF PARTIES. like manner elsewhere. Moreover we cannot stop here. It is impossible to say that an incorporation for special objects and with special powers gives a restricted right of using those powers, but leaves the use of ordinary corporate powers without any restriction. The posses- sion of extraordinary powers puts the corporation for almost all purposes and in almost all transactions in a • wholly different position from that which it would have held without them ; and apart from the actual exercise of them it may do many things which it was otherwise legally competent to do, but which without their exis- tence it could practically never have done. Any sub- stantial departure from the purposes contemplated by the Legislature, whether involving on the face of it a misapplication of special powers or not, would defeat the expectations and objects with which those powers were given. When Parliament, in the public interest and in consideration of a presumed benefit to the public, confers extraordinai-y poAvers, it must be taken in the same interest to forbid the doing of that which will tend to defeat its policy in conferring them ; and to forbid in the sense not only of attaching penal conse- quences to such acts when done, but of making them wholly void if it is attempted to do them. Accordingly contracts of railway companies and corporations of a like public nature which can be seen to import a sub- stantial contravention of the policy of the incorporating Acts are held by the courts to be void, and are often spoken of as mala prohibita, and illegal in the same sense that a contract of a natural person to do anything contrary to the provisions of an Act of Parliament is illegal (c). Others prefer to say that the Legislature, (6') Blackburn J. in Taylor v. L. 11. 9 Ex. at pp. 2fi2. 26ti. iS Chichester Ji' Mldhitrst Ry. Co. L. J. Ex. 177. Lord Hatherley, (1867) L. R. 2 Ex. at p. 379, 39 s. c. nom. Ashhvry Ry. Carriage L. J. Ex. 217; and (Brett and Co. Riche (\ilb') L. R. 7 H. L. at Grove JJ. concun-ing) in Richc v. p. 689. ■Ishhury Ry. Carr'mye Co. (187i") CORPORATIONS. 133 acting indeed on motives of public policy, has simply disabled the corporation from doing acts of this class ; "to regard the case as one of incapacity to contract rather tlian of illegality, and the corporation as if it were non - existent for the purpose of such con- tracts " (d). This appears the sounder, and is now the more generally accepted view (e). There is another consideration of a somewhat similar kind which applies equally to what may be called public companies in a special sense — i.e., such as are invested with special powers for cari-ying out defined objects of public interest — and ordinary joint-stock companies which have no such powers. The provisions for limited liability and for the easy transfer of shares in both sorts of companies must be considered, in their modern form and extent at least, as a statutory privilege. These pro- visions also invest the companies with a certain public character and interest apart from the nature of their particular objects in each case, but derived from the fact that they do professedly exist for particular objects. By far the greater part of their capital represents the money of shareholders who have bought shares in the market without any intention of taking an active part in the management of the concern, but on the faith that they know in what sort of adventure they are investing their money, and that the company's funds are not .being (fl) Aiohibald J., L. R. 9 Ex. 298 ; Lord Cainis, L. R. 7 H. L. !it |>. (i72 ; T.oid .Se]l)orne, ih. 694. And I'ranuvell L.J. ratlicr strongly . flit : and see per Erie J. in Mayor of Novit^'ich v. Xorfolh i?y. Co. (I85"n) 4 E. & B. 397," 24 L. J, Q. B. ion, 99 R. R. olS ; but it is really void as being the promise of a performance impossible in law (Oh. VIII.. beJMw). Interest of the public as investors. Buyers of shares in market and persons giving credit to the company have a right to assume that the company's professed objects are adhered to. 134 CAPACITY OF PARTIES. and will not be applied to other objects than those set forth in its constitution as declared by the act of incor- poration, memorandum of association, or the like. This is not a mere repetition of th3 objections grounded on partnershiiD law ; the incoming shareholder may protect himself for the future, but the mischief may be done or doing at the time of the purchase: moreover persons other than shareholders deal with the company on the faith of its adhering to its defined objects. They are entitled to " know that they are dealing with persons who can only devote their means to a given class of objects, and who are prohibited from devoting their means to any other purpose " (g). The assent of all those who are shareholders at a given time will bind them individually, but it will not bind others (h). If I buy shares in a company which professes to make rail- way plant in England I have a right to assume that its funds are not pledged to pay for making a railway in Spain or Belgium, and it is the same if dealing with it as a stranger I lend money or otherwise give credit to it. Accordingly the provisions of the Companies Act, 1862, are to be considered as having been enacted in the inter- ests of " in the first place, those who might become shareholders in succession to the persons who were shareholders for the time being ; and secondly, the out- side public, and more particularly those who might be creditors of companies of this kind "(i). Accordingly it is settled that a company registered under the Com- panies Act is forbidden to enter, even with the unani- mous assent of the shareholders for the time being, into a contract foreign to its objects as defined in the memor- andum of association (k). ((/) Lord Hatherley, L. R. 7 H. (A') A.thhuni By. Carriage S^- Iron L. at p. 684. Co. v. Riche (1875) L. R. 7 H. L. (A) See L. R. 9 Ex. 270, 291. 653, 44 L. J. Ex. 185. See note (v) Lord Cairns, L. R. 7 H. L. D. in Appendix for some further at p. 667. account of the authorities by which CORPORATIONS. 135 instruments It is not within our scope to discuss the particular inability of contracts which particular corporate hodies have been tomaS'*^°^ held incapable of making. One class of contracts, how- negotiable ever, is in a somewhat peculiar position in this respect, and requires a little separate consideration. We mean the contracts expressed in negotiable instruments and governed by the law merchant. As a general rule a corporation cannot bind itself by a negotiable instru- ment (l). This is not because a corporation cannot be presumed to have power to do so, but, in the first place, because of the general rule of form that the contracts of a corporation must be made under its common seal (vi). It follows from this that a corporation cannot generally be bound by negotiable instruments in the ordinary form. The only comparatively early authority which is really much to the point was argued and partly decided on this footing (w). But the corporate seal may now take the place of signature in bills and notes (o), and transferable debentures under a company's seal have been held to be negotiable (p). Thus the objection of form does not seem of great importance in modern prac- tlie rules were settled in the latter part of the nineteenth century. It is hardly needful to add that the consolidating Act of 19US has made no change in the principles of the law. (0 A different rule prevails in the United States, where it is held that a corporation not expressly prohibited from so doing may give negotiable promissory notes for any of the legitimate purposes of its incorporation. This appears more convenient at the present day. (m) See more as to this in the following chapter. («) Bruvfjitton v. Mancltextpr Wafrnoorks Co. (1819) 3 B. & Aid. 1, 22 R. K. 278. The chief point was on the statutes giving the Hank of England exclusive rights of issuing notes, kc, within certain limits. In Murray v. E. India Co. (1821) .5 B. & Aid. 204, 24 R. R. 82.5, the statutory authority to issue bills was not disputed : a difficulty was raised as to the proper remedy, but disposed of in the course of argument: 5 B. & Aid. 210, 24 R. R. 330. Other cases at first sight like these relate to the autho- rity of particular agents to bind a corporate — or unincorporated — association irrespective of the theory of corporate liabilities. See note {q) next i)age. 00 Bills of P]xchange Act, 1882, s. 91. (/>) Jlcrliuanaland Exploration Co. V. London Tradlnq Banli [1898] 2 Q. B. (i58, 07 L. 'j. Q. B. 987, Edel'94, 17 L. J, C. 128, S4 R. R. .348; Bramah v. Ex. 118: Re Peruvian Rys. Co. Rohert.t (1837) 3 Bing. N. C. 9u3 ; (1867) L. R. 2 Ch. 617. 36 L. J. Ch. Bulf V. Morrel (1840) 12 A. & E. 864 ; cp. JEx parte City Bank 745, .■>4 R. R. 681 ; Broicn v. (1868) L. R. 3 Ch. 7.58. per Sehvyn Byers (1847) 16 M. & W. 252, L.J. The two last cases go rather 16 L. .1. Ex. 112. As to in- far in the direction of implying corporated companies : Steele v. such a power from general words. CORPORATIONS. 137 which regulates such instruments that they should be valid or not according as the consideration between the original parties was good or bad; " and it would be most inconvenient if one had in the case of a corporation to inquire " whether the consideration in respect of which the acceptance is given is sufficiently connected with the purposes for which the acceptors are in- corporated " (r). The result seems to be that in England a corporation can be bound by negotiable instruments only in the following cases : — 1. When the negotiation of bills and notes is itself one of the purposes for which the corporation exists — "within the very scope and object of their incor- poration " (s) — as with the Bank of England and the East India Company, and (it is presumed) financial companies generally, and perhaps even all companies whose business wholly or chiefly consists in buying and selling (s). 2. When the instrument is accepted or made by an agent for the corporation whom its constitution em- powers to accept bills, &c., on its behalf, either by express words or by necessary implication. The extent of these exceptions cannot be said to be very precisely defined, and in framing articles of asso- ciation and similar instruments, it is therefore desirable to insert express and clear provisions on this head. In the United States the Supreme Court has decided American that local authorities having the usual powers of admin- fl^c'sions. istration and local taxation have not any implied power to issue negotial)le securities which will be indisputable (/•) I'of Erie (!.J. Jititfiiian v. forfeiting Uie iioniinal amount of Mill IValm llij. (h. (18<)6) li. II. 1 tlie security : 7 & S \'ict. e. 85. f. I'. 4il'.t, o()'.),':}-, L. J. ('. P. 205. s. lit. llailway companies are expressly (.v) Per Montague Smith J. L. U. forbidden to issue negotiable or 1 (3. P. 512 ; Ew jiarte City Bank assignable instruments without (ISdS) L, 11. ii Cli. 75.S. statutory authority, on pain of 138 CAPACITY OP PARTIES. in the hands of a bona fide holder for value (t), and has been equally divided on the question whether muni- cipal corporations have such power (u). It seems, how- ever that in American Courts a power to borrow money is held to carry with it as an incident the power of issuing negotiable securities (v), and it is held every- where as settled law that in general a cor juration may issue negotiable promissory notes for any of the legitimate purposes for which the company is in- corporated (x). Estoppel and The common law doctrine of estoppel (i/), and the anceappfyTo kindred equitable doctrine of part performance (z), corporations, apply to Corporations as well as to natural persons. Even when the corporate seal has been improperly affixed to a document by a person who has the custody of the seal for other purposes, the corporation may be bound by conduct on the part of its governing body which amounts to an estoppel or ratification, but it will not be bound by anything less (a). The principles applied in such cases are independent of contract, and (t) PiiJice Jiirij V. Bnftoit (1872) must be confined however to cases lo Wallace, oOG, 7>'2. where the corporation is " capable (w) The 3ft/i/<))- V. Bui/ (1873) of being i bound by the written 19 \\'allace. 46(j. "The weight of contract of its directors as an authority is against their having individual is capable of being bound such power" (Prof. Williston's by his own contract in writing : '' note to third American edition per Cotton h. J. Hunt x. Wimhledoti, of this work, 1906). Local Board (1878) 4 C. P. Div. at (»•) Polire Jury v. Br'itton. 1.". p. (52. 48 L. J. C. P. 207. See Wallace, .")6fi. further Hoicard v. Patent Ivory (a-) Prof. Williston's note, op. cif. 3Iannfacturbig Co. (1888) 38 Ch. D. at p. 144. at pp. 162. 163. and cases collected [ij) Webb w. Heme Bay Co III 1)1 is- in Lindhy on Companies, 6th ed. .() See F. W. Maitland's'- Brae- hominibus per feloniam Decisis vel ton and Azo," Selden Society. vulueratis "" : Bracton, fo. 103 ft. 1895. ' (.d) Glanv. x. 12. ((•) '• Actio legis Aquilife de proof. EARLY ENGLISH LAW. 148 Eoman origin, but was adopted by the Germanic nations of the Continent at an early time. Duel and writing are the two normal modes of proof in the King's Court in the twelfth century (e). The charter or deed of medieval English law was not a continuation of the Anglo - Saxon " book," but a Norman importation, representing the Frankish branch of what we may call Eoman conveyancing tradition (/). Now the old Eoman formal contract, the stipulation by question and answer, had been practically transformed into a written contract even before the legislation of Justinian (g) ; and stipu- latio or adstipulatio had long since, in Continental conveyancing, become a name for the signing or execu- tion of a written instrument (h). Thus the charter came to us with all the historical dignity of the most solemn form of obligation known to Eoman law (i) ; and if this was not enough, its authority was completed by the fact that all proof was formal in Germanic law, and was conclusive when once made in due form. " Proof was what satisfied the law, not what satisfied the Court " (k). A deed was, and, subject to grounds of exception admitted only at a later time, still is binding, not because it records this or that kind of transaction, but by the form of the record itself. And, when a promise to pay money was recorded in a (e) Glanv. x. 17. Urkunde. 220 sqq. For an English (/) The English charter of example, see Kemble, C. D. No. 623. feoffment and memorandum of (/) The summary view of the livery of seisin are really the carta Roman classification of contracts and autitia familiar in Continental formerly given in this chapter was practice as early as the ninth written at a time when English century. As to the history of the text-books on Roman law were few evidential value of writing see and trustworthy ones fewer. It is Prof. J. H. Wigmore in Columbia now, perhaps, needless, but is pre- Law Rev. iv. ;i:iS. served in the Appendix (Note E) (//) Brunner, Zur Rechtsgesch. in case it may be sometimes useful der rfimischen und gcrmanischen for immediate reference. L'rkunde, 63 ; Moyle's .Justiinan, (Ji) Salmond, Essays in .Juris- 2nd ed. 498. prudence, &c., p. 16. (/') Brunner, Rom. u. Germ. 144 FORM OF (CONTRACT. deed, the action which the promisee could bring was not an action on the promise. Remedies in The remedy to recover money secured by deed was 13th century. ^]-,g action of debt, which retained, its essential form and covenant. characters through the whole history of common law procedure, so long as the forms of action were pre- served at all. This was a writ of right for chattels, an action, not to enforce a promise, but to get something conceived as already belonging to the plaintiff : it was called an action of property as late as the Restora- tion (/), a conception which lingers even in some of Blackstone's language. A promise, where it was opera- tive at all, operated not by way of obligation, but as a grant of the sum expressed (m). It was a good defence that the party's seal had been lost and affixed by a stranger without his knowledge, at least if the owner had given public notice of the loss (n) : but not if it had been misapplied by a person in whose custody it was ; for then, it was said, it was his own fault for not Debt on having it in better keeping. An action of debt (o) simple con- might also be brought, without proof by deed, for such tract, detinue. ® o ' r i i i , &c. things as money lent, or the price of goods sold and delivered, and an action of detinue (which was but a species of debt) for chattels bailed (p), the cause of (Z) The action of assumpsit was of loss really existed is shown by said by Vaugban C.J. to be "much the example given in Blount's Law inferior and ignobler than the Dictionary, s. v. Sigillum, dated 18 action of debt, which by the Ric. II. In modern law such ques- Register is an action of Property "" : tions. when they occur, come under Edgvoinh v. Dee, Vaugh. at p. lol. the head of estoppel. (in) Harv. Law Rev. vi. 399 ; (y) For fuller statement see •• contracts of debt are reciprocal Pollock k. Maitland, Hist. Eng. L. grants.'" Edgroiiih v. Dee. last ii. 210. note. {p) For the precise difference in (w) Glanvill (L. 10, c. 12) has not the developed forms of pleading see eventhis: Britton, 1, 164, 166,asin jier Maule J. 15 C. B. 303. The the text. " Pur ceo qe il ad conu decision of the C. A. in Brifant v. le fet estre soen en partie, soit Herbert (1.878) 3 C. P. Div. 389, agarde pur leple}mtif;etse purvey e 47 L. J . C. P. 670, that an action autre foiz le defendaunt de meillour for wrongful detention is " founded gardeyn." Cp. Fleta, 1. 6, c. 33, on tort" within the meaning of the § 2 ; c. 34, § 4. That the practice County Court Acts is, and professes of puVjlishing formal notice in case to be. beside the historical question. ENGLISH E^ORMS OF ACTION. 145 action being still not any promise by the defendant but his possession of the plaintiff's money (so it was con- ceived) or goods. The first thing needful to found the action of debt was, as it still is in jurisdictions where the old forms of action persist, that a certain sum of money should be payable by the defendant to the plain- tiff. In debt and detinue the text-writers could profess to recognize the Roman contractus innoininati {do ut des, &c.) which Bracton, carrying out the medieval notion that a promise to pay or deliver is a grant immediate in execution and only suspended in opera- tion, put under the head, strange to us nowadays, of conditional grants (. pi. 9. The full and careful historical dis- cussion of the whole subject by the late Prof. Ames of Harvard in Harv. Law Rev. ii. 1, o3, supersedes all previous researches. Actions of trespass on the case had previously been allowed for malfeasance by the negligent performance of con- tracts (for which it is still held that there is an alternative remedy in contract and in tort), but an action for mere non-feasance was a novelty. An excellent con- tinuous narrative is now given by Dr. Holdsworth, Hist. Eng. Law, iii. 329-349. HISTORY OF ASSUMPSIT. 149 Grimesby assiirapsisset, praedictus tamen T. domos ipsius L. infra tempus praedictum, fee, construere non ciiravit ad dampnum ipsius Laurentii decern libr', &c." The report proceeds to this effect: — " Tirtvit. — Sir, you see well that his count is on a covenant, and he shows no such thing: judgment. Gascoigne. — Seeing that you answer nothing, we ask Judgment and pray for our damages. Tirwit. — This is covenant or nothing (ceo est viere- ment un covenant). Brenchesley J. — It is so: perhaps it would have been otherwise had it been averred that the work was begun and then by negligence left unfinished. (Hankford J. observed that an action on the Statute of Labourers might meet the case.) Rickhill J. — For that you have counted on a covenant and show none, take nothing by your writ but be in mercy." The word fideliter in the writ is significant. It seems to denote a deliberate competition with the jurisdiction of the Courts Christian in matters of field laesio. We will show you, the pleader says in effect, that the King's judges too know what belongs to good faith, and will not let breach of faith go without a remedy. It may also have:been intended to show that there was a bargain and mutual trust {m). This adverse decision was followed by at least one like it (n), ,but early in the reign of Henry VI. an action was .brought against one Watkins for failure to build a mill within the time for which he had promised it, and two out of three judges (Babington C.J. and Cockaine J.) were decidedly in favour of the action being maintainable and called on the defendant's (w) Modern pleatiiii^' woukl re- foi'iiied. quire, of course, :i much more (lis- (w) Micli. 11 H. IV^ 3:5, pi. (lO. tinft averment of consideration : And see Bigelow L.C. on Torts, but tlie doctrine was not vet nx?. 150 FORM OF CONTRACT. Rule that deeds may not be written on wood, kc. counsel to plead over to the merits (o). Martin J. dis- sented, insisting that an action of trespass would not lie for a mere non-feasance: a difficulty by no means frivolous in itself. " If this action is to be maintained on this matter," he said, " one shall have an action of trespass on every agreement that is broken in the world." This, however, was the very thing sought, and so it came to pass in the two following reigns, when the general application of the action of assumpsit was well established. But only in 1596 was it conclusively de- cided that assumpsit was admissible at the plaintiff's choice where debt would also lie (p). The fiction of the action being founded on a tort was abolished by the Common Law Procedure Act. Meanwhile the relation between the parties which was assumed as the foundation of the duty violated by the defendant, and which involved the plaintiff's having in some way changed his position for the worse on the faith of the defendant's undertaking (q), was trans- formed into the modern doctrine of Consideration, coalescing on the way, in fact if not in strict theory, with the existing requirements of the actions of debt and account. Of this we shall speak separately. It is stated in several books of authority {e.g. Shepp. Touchst. 54) that a deed must be written on parchment or paper, not on wood, &c. This seems to refer to the then common use of wooden tallies as records of con- tracts. Fitzherbert in fact says (r) that if such a tally 00 Hil. 3 H. VI. 86, pi. 33. There is some doubt as to the date of this case, ?ce L. Q. K. sxiv. 38i. Xotwithstanding the favour- able view taken by several judges —see further, H H. VI. IS. pi. 58— the point remained ojien for many years, see 19 H. VI. 4!l, pi. .">. (/O ShuJp's cast; 4 Co. Rep. 91 a, in Ex. Ch. It was still later before it was admitted that the sub- stantial cause of action in assump- sit was the contract. 0. W. Holmes, The Common Law, 284- 287. For the earlier history see Ames, Harv. Law Rev. ii. 16, and Holdsworth, nb. siij). (<7) " In all these cases there is an undertaking and matter of fact beyond that which sounds in covenant " : Newton in 14 H. VI. 18. (/•) F. N. B. 122 I. TALLIES. 151 is sealed and delivered by the party it will not be a deed ; and the Year Books afford evidence of attempts to rely on sealed tallies as equivalent to deeds ; and it appears that by the custom of London they were so (s). These tallies were no doubt written upon as well as notched, so that nothing could be laid hold of to refuse them the description of deeds but the fact of their being wooden : the writing is expressly mentioned in one case (t), and the Exchequer tallies used till within recent times were likewise written upon (n). III. Modern requirements of form. We have seen how in the ancient view no conti-act ^ Kequire- was good (as indeed no act in the law was) unless it ments of brought itself within some favoured class by satisfying treateTal the particular conditions of form, or of evidence, or both, exception. The modern view to which the law of England has now long come round is the reverse, namely that no contract need be in any particular form unless it belongs to some class in which a particular form is specially required. (.•s) " Un faille de dette enseale use of them unknown at this day par usage de la citee est auxi fort in England. By the courtesy of come une obligacoun " : Liber Mr. J. B. Matthews, of the Middle Albus 191 a. Temple, formerly of Worcester, (^) Trin. 12 H. IV. 23, pi. 3. I have a specimen of the tallies The Other citations we huve been with which the hop-pickers in able to verify are Pasch. 25 Ed. Herefordshire still keep account III. 83 (wrongly referred to as 40 of the quantities picked. They in the last case and in the margin were used in the Kentish hop of Fitzh.), pi. 9, where the reporter country within living memory, and notes it is said to be otherwise in in Hampshire not very long ago, London ; and Trin. 44 Ed. III. 21, and I am informed that they are pi. 23. For a case where the Court still known in co. Galway. I have was favourable to a merchant's seen them, in a rougher form, in (ally see Middlesex Iter, 22 Ed. I. use in a village baker's shop in I.-jS. Normandy. Sj)ecimens of English (?/.) See account of them in tallies both ancient and recent Penny Cyclop' f'nmpanii v. Bohrrtfoii 164 FORM OF CONTRACT. any member of it, either expressly or impliedly, with authority to bind the whole body by his mere signature or otherwise, then undoubtedly the adding a seal would be matter purely of form and not of substance. Everyone becoming a member of such a corporation knows that he is liable to be bound in his corporate character by such an act ; and persons dealing with the corporation know that by such an act the body will be l)Ound. But in other cases the seal is the only authentic evidence of what the corporation has done or agreed to do. The resolution of a meeting, however numerously attended, is, after all, not the act of the whole bod}'. Every member knows he is bound by what is done under the corporate seal and by nothing else. It is a great mistake, therefore, to speak of the necessity for a seal as a relic of ignorant times. It is no such thing : either a seal or some substitute for a seal, which by law shall be taken as conclusively evidencing the sense of a whole body corporate, is a necessity inherent in the very nature of a corporation "(a). It is, no doubt, a matter of " inherent necessity " that when a natural person acts for a corporation, his authority must be shown in some way ; and the common seal in the agent's custody, when an act in the law pur- ports to be the act of the corporation itself, or his authority under seal, when it purports to ,be the act of an agent for the corporation, is in English law the re- cognized evidence for that purpose. But there is no reason in the nature of things why his authority should not ,be manifested in other ways : nor is the seal of itself conclusive, for an instrument to which it is in fact affixed without authority is not binding on the corpora- tion (6). On the other hand, although it is usual and desirable for the deed of a corporation to be sealed with its proper corporate seal, it is laid down by high authori- ties that any seal will do (c). A company under the 0') M((>ior,>f Linlloivv. Charlton 101 R. R. 218. (1810) h'M. & W. 81.5, 823, 5.-. (r) 10 Co. Rep. 30 h, Shepp. K. E. 794, adopted liy Pollock B. Touchst. 57. Yet the rule is in Jliii/or (if Kiddertiiimter v. doubted, Grant on Corp. .59, but Hdrdaii-h (1873) L. R. 9 Ex. at only on the giound of convenience p. 24, 43 L. J. Ex. 9 ; and see ancl without any authority. The per Keating J. Auxt'in v. Guar- like rule as to sealing by an indi- diiois (if Jief/innl Giv'oi {I H7i)Jj. 11. vidual is quite clear and at least 9 ('. P. at p. 95, 43 L. J. C. P. 100. as old as BractoTi : Non multum (&) Bank of Irehind v. Ernng refert utrum [carta] proprio vel Charifies (1855) 5 H. L. C. 389, alicno sigillosit signata, cumsemel TRADING CORPORATIONS. 155 Companies Act, must have its name engraved in legible characters on its seal, and any director, &c., using as the seal of the company any seal on which the name is not so engraved is subject to a penalty of 501. (d) : but this would not, it is conceived, prevent instruments so executed from binding the company (e). The seal of a building society incorporated undei- the Building Societies Act, 1847 (37 & 38 Vict. c. 42, s. 16, sub-s. 10), " shall in all cases bear the registered name thereof," ,but no penalty or other consequence is annexed to the non-observance of this direction. We now turn to the exceptions. According to the Modem modern authorities it is established that the " principle Rmkof"''' of convenience amounting almost to necessity " will Columbia r. ^ . '' Patterson cover all contracts which can fairly be treated as neces- (Supreme sary and incidental to the purposes for Avhich the cor Court, i . s.). poration exists : and that in the case of a trading cor poration all contracts made in the ordinary course of its .business or for purposes connected therewith fall within this description. The same or even a wider con- clusion was much earlier arrived at in the United States. As long ago as 1813 the law "was thus stated by the Supreme Court: — " It would seem to be a sound rule of law that wherever a corporation is acting within the scope of the legitimate purposes of its institution all parole contracts made by its authorized agents are express promises of the corporation, and all duties imposed on them by law, and all benefits a donatore coram testibus ad hoc vocatis rccognita et concessa fuerit, fo. 38 ft. Cp. Britton, 1. 257. (rf) Consolidation Act, 1908, s. 63, (1) A, (3) = 1862, ss. 41, 42. (r) Notwithstanding the statu- tory penalty, there is a reported instance of the private seal of a director being used when the com- pany had been so recently formed that there had been no time to make a proper seal, ^/v/// v. Lewis (186!)) L. II. S E(|. at p. 531. The like th'rection and penalty are con- tained in the Industrial and Pro- vident Societies Act, 1893, s. (Ui (repeating an earlier enactment). As to execution of deeds abroad ]>y companies under the Acts of 181)2 and 1867, see the Companies (Con- solidation) Act, 1908, ss. 78, 79 ; in Scotland, the Conveyancing (Scot- land) Act, 1874 (37 & 38 Vict. c. 94), s. 5(;. 156 FORM OF CONTRACT. Distinctions in England. Trading cor- porations : Contracts in course of business do not want seal. S. of Ireland Colliery Co. >: Waddle. conferred at their request, raise implied promises for the enforcement of which an action may well lie " (/). In England this rule cannot be so broadly laid down, as there is still a distinction .between trading corpora- tions and corporations created for any other purpose. As to the latter class there was a serious conflict of decisions until a few years ago. As concerns trading corporations the law was settled by the unanimous decisions of the Court of Common Pleas and of the Exchequer Chamber in South of Ireland ColUenj Co. v. Waddle (;/). The action was bj-ought by the company against an engineer for non- delivery of pumping machinery, there being no contract under seal. Bovill C.J. said in the Court below that it was impossible to reconcile all the decisions on the sub- ject: btit the exceptions created by the recent cases were too firmly established to be questioned by the earlier decisions, which if inconsistent with them must be held not to be law : — "These exceptions ap|ily to all contracts by trading corporations entered into fn Wafenvarks v. Baitri/ (1827) i Bing. 283. Action for non-delivery of iron pipes ordered for the com[)any's works. The directors were authorized by the incorporating Act of Parliament to make contracts ; but it was held that this only meant they might affix the seal without calling a meeting. iSee L. R. 3 C. P. 47.5. floviersJMin v. WulcerluiiitptoH Waterivorhx Co. (1851) (i Ex. 1.S7, 20 L. J. Ex. 11)3. Contract under seal for erection of machinery : price of extra work done with approval of the company's engineer and accepted, but not within the terms of the sealed contract, held not recoverable. Bujgle v. Jjandon 4- Blackwall liij. f'y.'(l850) 5 Ex. 442, 19 L. J. Ex. 308. Work (hme on railway in alterations of per- manent way, &c. Flnliiy v. liristol 4- Exeter Itii. Co. (1852) 7 Ex. 40'.», 21 L. J. Ex. 117, 8(5 K. R. 7()4, where it was held that against a corpora- tion tenancy could in no case be inferred from payment of I'ent so as to admit of an action for use and occupation without actual occupa- tion. London. Dock Co. v. Sinn.ott (1857) 8 E. & B. 347, 27 L. J. Q. B. 129, 112 R. R. 593, where a contract for scavenging the com- pany's docks for a year was held to require the seal, as not being of a mercantile nature nor with a customer of the company, can now be of little or no authority beyond its own special circumstances : see per Bovill G..I. L. R. 3 C. P. 471. The following cases are affirmed or not contradicted. Some of them were decided at the time on narrower or more particular grounds, and in one or two the trading character of the corpora- tion seems immaterial : — Bererley V. Lincoln (hix Co. (1837) (i A. i: E. 829, 45 R. R. G2(;. Action against the company for price of gas meters supplied. Clnircli v. Iinjieriiil (tils Co. (1838) (j A. & E. 846, 45 R. R. (538 in Ex. Ch. Action by the company for breach of contract to accept gas. A supposed distinction between the liability of corporations on executed and on executory contracts was ex- jiloded. Coppin- Miners of Enqhinil V. Fo,r (1851) 10 Q. B. 229, 20 L. J. Q. B. 174, 83 R. R. 439. Action (in effect) for non-acceptance of iron, rails ordered from the com- pany. The company had in fact for many years given up copjier mining and traded in iron, but this was not within the scope of its incorporation. Lowe v. L. 4' .V. W. By. Co. (1852) 18 Q. B. (132, 21 L. .J. Q. B. 361, 88 R. R. 72(). The company was held liable in an action for use and occupation when there had been an actual occupation for corporate purposes, partly on the ground that a parol contract for the occupation was within the statutory powers of the directors and might be pre- sumed : cp. the next case. PuiiUnij V. L.c^-y. W. By. a>. (1853) 8 Ex. 867, 23 L. J. Ex. 105, 91 R. R. 807. Sleepers supplied to an order from the engineer's office and accepted : there was no doubt that the con- tract could imder the Companies Clauses Consolidation Act be made by the directors without seal, and it was hold that the acceptance and use were evidence of an actual contract. Henderson w. Australian Boi/al Mail Co. (1855) 5 E. & B. 409, 24 L. J. Q. B. 322, 103 R. R. 538. Action on agreement to pay for bringing home one of the com- pany's ships from Sydney. ^4«.v- tralian Boyal Mail Co. v. Marzetti (18.55) 11 Ex. 228, 24 L. J. Ex. 273. Action by the company on agreement to supply provisions for its passenger ships. lie liter V. Eleetrir Teleijiivpli Co. (1856) 6 E. & B. 341, 2() L. .J. Q. B. 46, 106 1{. R. 625 : wliere the chief 158 FORM OF CONTRACT. Non-trading corporations. " Necessary and inciden- tal " con- tracts. As concerns non-trading corporations, the modern rule is " that where work is done or services rendered at the request of the corporation in respect of matters for the doing of which it was created, and the benefit of the work or services is accepted by the corporation, so that a contract to pay would be implied in the case of a private person, a similar implication should be made in the case of a corporation " (k). So it has been laid down in the Court of Appeal, confirming earlier but not un- contradicted authority to the like effect (I). There still does not seem to be any authority for holding a non- point was as to the ratification by the directors of a contract made originally with the chairman alone, who certainly had no authority to make it. ^bbiv Vtde Company' x case. (1869) L. E. 8 Eq. 14, decides that one who sells to a company goods of the kind used in its business need not ascertain that the company means so to use them, and is not prevented from enforc- ing the contract even if he had notice of an intention to use them otherwise. (Ji) Lawfordv. BiHfir/ctn/ Bnrt/l Council [1903] 1 K. B. 772. 786, per Mathew L.J. (0 Siinderx v. St. Xeotx Union (1846) 8 Q. B. 810, l.j L. J. M. C. 104. 70 R. K. 663. Iron gates for workhouse supplied to order with- out seal and accepted. Paiiip v. Strand Union (1846) 8 Q. B. 326, 1.5 L. J. M. C. 89, 70 R. E. .■■)03. is really the same way. though at first sight contra : the decision being on the ground that making a plan for rating purposes of onf parish within the union was not incidental to the purposes for which the guardians of the union were incorporated : they had nothing to do with either making or collecting rates in the several parishes, nor had they power to act as a corporation in matters confined to any particular parish. Clarlie v. CucMeld Union (1852) 21 L. J. Q. B. 349, 91 R. R. 891 (in the Bail Court, by Wight- man J.). Builders' work done in the workhouse. The former cases are reviewed. Haigh v. North Bierley Union (1858) E. B. & E. 873, 28 L. J. Q. B. 62. An accountant employed to investi- gate the accounts of the union was held entitled to recover for his work as " incidental and necessary to the puiposes for which the corporation was created," by Erie J. , Crompton J. doubting. Nichol- son V. Bradfield Union (1866) L. R. 1 Q. B. 620, 35 L. J. Q. B. 176. In direct opposition to the forego- ing was Lamprell v. Billericay Union (1849)3 Ex.283, 18 L.J. Ex. 282. Building contract under seal, providing for extra works on written directions of the architect. Extra work done and accepted, but without such direction. Held, action would not lie. This appears to be now overruled. Bunt v. Wimbledon Local Board (1878) 4 C. P. Div. 48, 48 L. J. C. P. 207. Whether the preparation of plans for new ofSces for an incorporated local board, which plans were not acted on. is work incidental and necessary to the purposes of the board, quare. The actual decision was on the ground that contracts above the value of 507. were im- peratively required by statute to be under seal. MUNICIPAL CORPORATIONS. 159 trading corporation liable on a parol agreement not yet executed iby the promisee. With regard to municipal corpoi-ations (and it is pre- Municipal sumed other corporations not created for definite public tjo^s'^'^c purposes) the ancient rule seems to he still in force to a Old rule in forc6 great extent. An action will not lie for work done on semble. ' local improvements (m), or on an agreement for the purchase of tolls by auction (n), or for the grant of a lease of corporate property (o), without an agreement under seal. Where a municipal corporation owns a graving dock, a contract to let a ship have the use of it need not be under the corporate seal ; but this was said to fall within the ancient exception of convenience rest- ing on the frequency or urgency pf the transaction. The admission of a ship into the dock is a matter of frequent and ordinary occurrence and sometimes of urgency (p). There has also been little disposition to relax the rule Appoint- in the case of appointments to offices, and it seems at offices by present that such an appointment, if the office is of corporations. any importance, must be under the corporate seal to give the holder a right of action for his salary or other remuneration. This appears by the following instances : — Appointment of attorney : Arnold v. Mayor of Poole {I8i2) i M. k Gr. 860, 12 I.. J. C. P. 97, 61 B. R. 6G4. It is true that the Corporation of London appoints an attorney in court without deed, but that is because it is a matter of record : see 4 M. & Gr. pp. 882, 896. But after an attorney has appeared and acted for a corporation the corporation cannot, as against the other ijarty to the action, dispute his authority on this ground : Faviell V. E. a By. Co. (1848) 2 Ex. 344, 1 7 L. J. Ex. 223, 297, 76 R. R. 615. Nor can the other party dispute it after taking steps in the action : Thames {in^ Mayor of Lndlow v. [1893] 3 Ch. 535, where the corpo- Cliurlton (1840) 6 M. & W. 815. ration sought to enforce the agree- 55 R. R. 794. nient. («) Mayor of Kidderminster v. (y>) WellsY. Kinqston-npon-Hull Hardiciek (1873) L. R. 9 Kx. 13. (1875) L. R. 10 C.'P. 402, 44 L. J. 43 L. J. Ex. 9. C. P. 257. (o) Mayor of Oxford v. Croiv 160 FORM OF CONTRACT. Xo equity to enforce informal agreement against corporation. Right of corporations to sue on contracts executed. Haven, 4r. Co. v. Hall (1843) 5 M. 4: Gr. 274. Cp. Reij. v. Jmticen of Cnmhrrlaiid (IS48) 17 L. J. Q. B. 102, 5 Dowl. & L. 4:51, 79 E. R. 859, n. Grant of military pension by the East India Company in its political capacity : Gibsow v. E. I. Co. (1839) T, Bing. N. C. 2(J2, 50 11. R. 688. Increase of town clerk's salary in lieu of compensation : lirtj. v. Maijor of Stamford (1844) 6 Q. B. 433, 06 R. R. 449. Office with profit annexed (coal meter paid by dues) though held at the pleasure of the corporation : Smith v. Caiiwright (1851) 6 Ex. 927, 20 L. J. Ex. 401. (The action was not against the corporation, but against the person by whom the dues were alleged to be payable. The claim was also wrong on another ground.) Collector of poor rates : SmaH v. West Ham Union (1855) 10 Ex. 867, 24 L. J. Ex. 201 ; but partly on the ground that the guardians had not underf alven to pay at all, the salary being charged on the rates ; and wholly on that ground in Ex. Ch.. 11 Ex. 867. 25 L. .T. Ex. 210. 105 R. R. 834. Clerk to master of workhouse : Auxtin v. Guardians of Bethnal Green (1874) L. R. 9 C. P. 91, 43 L. J. C. W 100. Dnndon v. Imperial Gas Light Co. (1832) 3 B. & Ad. 125, 37 R. R. 352. as to directors' fees voted by a meeting ; but chiefly on the ground that the fees were never intended to be more than a gratuity. Cope V. Thames Haven, ^r. Co. (1849) '5 Ex. 841, 18 L. J. Ex. 345, 77 R. R. 859 ; agent appointed for a special negotiation with another com- pany not allowed to recover for his work, the contract not being under seal nor in the statutory form, vi:., signed by three directors in pursuance of a resolution, although by another section of the special Act the directors had full power to " aj)point and displace ... all such managers, officers, agents ... as they shall think proper." It seems difficult to support the decision ; this was not like an appointment to a continuing office ; and cp. Rey. \. Justices of Cumberland (1848) 17 L. J. Q. B. 102 5 Dowl. «fc L. 431, 79 R. R. 859, n.. where under very similar enabling words an appointment of an attorney by directors without seal was held good as against third parties. It has been decided (as indeed it is obvious in prin- ciple) that inability to enforce an agreement with a corporation at law ,by reason of its not being under the corjxirate seal does not create any jurisdiction to enforce it in equity (q). The rights of corporations to sue upon contracts are somewhat more extensive than their liabilities. When the corporation has performed its own part of the con- {(/) Kirh V. Bromley Union (184f)) ■2 Ph. 640. 78 R. R. 2H2 ; Cramptou V. Varna Ry. Co. (1872) L. K. 7 Ch. 562. 41 L. J. Ch. 817. CONTEACTS OF CORPORATIONS. 161 tract so that the other party has had the .benefit of it, the corporation may sue on the contract though not originally bound (r). For this reason, if possession is given under a demise from a corporation which is invalid for want of the corporate seal, and rent paid and accepted, this will constitute a good yearly tenancy (s) and will enable the corporation to enforce any term of the agreement which is applicable to such a tenancy (t), and a tenant who has occupied and en- joyed corporate lands without any deed may be sued for use and occupation (u). Conversely the pre- sumption of a demise from year to year from payment and acceptance of rent is the same against a corporation as against an individual landlord : " where the corpora- tion have acted as upon an executed contract, it is to be presumed against them that everything has been done that was necessary to make it a binding contract upon both parties, they having had all the advantage they would have had if the contract had been regularly made " (x). And a person by whose permission a cor- poration has occupied lands may sue the corporation for use and occupation (y). In the case of a yearly tenancy the presumption is of an actual contract, but the liability for use and occupation is rather quasi ex con- tractu (z). It is settled that in general a cause of action (?•) Fish mil It (J ers C'o.v. Ih'hert.ion (184:^) 5 M. & CIr. 131, 12 L. J. C. P. 185. The judgment on this point is at pp. 192-6 ; but the dictum contained in the passage " Even if . . . against themselves," pp. 192-3 (extending the right to sue without limit) is now overruled. See Mtii/or of Kidderminster v. Hardwirk (1.S73) L. R. 9 Ex. 13, 21, ^3 L. J. Ex.9. (.v) Wood V. Tatf (180(;) 2 Bos. & P. N. R. 247, 9 R. R. ()4.'3. (0 -Eccles. Coiiiiiirs. v. Merral (1869) L. R. 4 Ex. 162, 38 L. J. Ex. 93. By Kelly C.P.. this is correlative to the tenant's right to enforce the agreement in equity on the ground of part performance, sed qu. (>/) Mayor of Stafford v. Till (1827) 4 Bing." 75, 29 R. R. 511. The like us to tolls, iVai/or of Car- ma rt/ioi V. Lrivis (1834) G C. & P. 608, but see Serj. Manning's note, 2 M. & (Jr. 249. (if) Doed. Peniiingtonv. Taniere (1848) 12 Q. B. 998, 1013, 18 L. .J. Q. H. 49, 76 R. R. 4.50. (y) Tjotve v. L. 4" jSf. W, Rif. Co. (18.52) 18 Q. B. 632, 21 L. J. Q. B. 361, 88 R. R. 726. (;::) The liability existed at com- mon law, and the statute 11 Geo. 2, M Tenancy and occupation. Corpora- tions liable on quasi- contracts generally. 162 FORM OF CONTRACT. on a quasi-contract is as good against a corporation as against a natural person. Thus a corporation may ,be sued in an action for money received on the ground of strict necessity ; "it cannot be expected that a corpora- tion should put their seal to a promise to return moneys which they are wrongfully receiving " (a). It was held much earlier that trover could be maintained a^anist a corporation — a decision which, as pointed out in the case last cited, was analogous in principle though not in form (b). Sometimes it is stated a? a general rule that corporations are liable on informal contracts of which they have in fact had the benefit : but the extent and existence of the supposed rule are doubtful (c). statutory Forms of contracting otherwise than under seal are forms of contract. provide) /'Jfixtiraotl V. Ke>ii/i))i (1,S4(>) 11 A. & E. 4HS. 44(1, 52 R . K. 40n ; r(). (fl) 56 & 57 Vict. c. 71, s. 4. (/^,) Williams v. Jiyrncx (1863) 1 170 FORM OF CONTRACT. but it newl be signed only by the party to be charged, whether under the 4th or the 17th section, and indeed it need not be signed in the common meaning of the word, for the party's name inserted by his authority in the body or at the head of the memorandum may suffice (I). It is no answer to an action on a contract evidenced by the defendant's signature to say that the plaintiff has not signed and therefore could not be sued, and if a written and duly signed proposal is accepted by word of mouth the contract itself is completed by such acceptance and the writing is a sufficient memo- randum of it (?»). It has also been decided that an acknowledgment of a signature previously made by way of proposal, the document having been altered in the meantime and the party having assented to the altera- tions, is equivalent to an actual signature of the docu- ment as finally settled and as the record of the concluded contract. The signature contemplated by the statute is not the mere act of writing, but the writing coupled with the party's assent to it as a signature to the con- tract : and the effect of the parol evidence in such a case is not to alter an agreement made between the parties but to show what the condition of the document was Moo. P. C. N. S. 154: Xeicell v. Cofterell Q881) 20 Ch. Div. 90, 51 Radford (1867) L. R. 3 C. P. 52. 37 L. J. Ch, 353 : Plant v. Bourne. L.J. C.P.I; Williams y. Jordan [1897] 2 Ch. 281, 66 L. J. Ch. (1877) 6 Ch. D. 517, 46 L. J. Ch. 643. C. A. 681 ; and as to sufficiency of de- (/) Eratis v. Iloare [1892] 1 sciijitiou otherwise than by name, Q. B. 593, 61 L. J. Q. B. 470. As to i?(W.v)V*v V. .l////fr (1878)3 App. Ca. th',^ authority of an auctioneer to 1124, 48 L. J. Ch. 10; Catling v. sign as agent for a purchaser, and King (1877) 5 Ch. Div. 66(i', 46 its duration, see Bell v. BalU L. J. Ch. 384 ; Jarrett v. Hunter, [1897] 1 Ch. 663, 66 L. J. Ch. 397. (1886)34 Ch. D. 182; Coomhs v. (^m') Smith y. Xeale (l8oT)2C.B. Wilkes [1891] 3 Ch. 77, 61 L. J. N. S. 67. 26 L. ,J. C. P. 143, 109 Ch.. i2: Filhii Y. HounscU [l^^i^ R. R. 611; Beuss v. Pieksley 2 Ch. 737. 65L. J. Ch. 852 (name (1886) in Ex. Ch. L. R. 1 Ex. of agent for undisclosed vendor 342, 35 L. J. Ex. 218. And where sufficient) : Carr v. LijncJt [1900] alternative offers are made by a 1 Ch. 613, 69 L. J. Ch. 345 (refer- signed writing, parol acceptance ence to payment made by pur- of one alternative has been held chaser without name). As to what sufficient: Lerer \. Ko^Her [\^0\'\ is sufficient description of the pro- 1 Ch. 543, 70 L. J. Ch. 395, perty sold under s, 4, Shardlow v. STATUTORY FORMS. 171 when it became an agreement between them (n). More- over it matters not for what purpose the signature is added, since it is required only as evidence, not as be- longing to the substance of the contract. It is enough that the signature attests the document as that which contains the terms of the contract (o). Nor need the particulars required to make a complete memorandum be all contained in one document: the signed document may incorporate others by reference, but the I'eference must appear from the writing itself and not have to be made out by oral evidence : for in that case there would be no record of a contract in writing, but only disjointed parts of a record pieced out with unwritten evidence (p). The reference, however, need not be in express terms. It is enough if it appears on the documents that they are parts of the same agreement (q). One who is the agent of one party only in the transaction may be also the agent of the other party for the purpose of signature (r). The memorandum must exist at the time of action brought (s). It seems that the Statute of Frauds does not apply to SemUe, deeds J J o- J • J? Ji T Ti i> not within the deeds, bignature is unnecessary lor the validity ot a statute. deed at common law, and it is not likely that the Legis- («) Stetvart v. Eddnwcs (1874) Ch. D. .305 ; Wylt^ony. Dunn (\%^1) L. K. 9 C. P. 311, 4.3 L. J. C. P. 34 Ch. D. 5(J9 ;' Olirer v. Ilunti/iff 204. (1800) 44 Ch. D. 20.5, 59 L. .1 (o) ./(i)ir.t V. Victoria (irariiifj Ch. 255, where the judgment states Dock Co. (1877) 2 Q. B. Div. 314, that the old rule was different ; 32.3, 46 L. J. Q. B. 219. It may rearcp v. Gnrdiiev [1897] 1 Q. B. be doubted whether this view of (188, (j6 L. J. Q. B. 457, C, A. (en- the statute does not tend to thrust vclojie and letter proved to have contracts upon parties b^' sur- been enclosed in it may be taken prise and contrary to their real as one document to identify ad- intention, dressee). (;;) See Peircc v. Corf (1874) (/•) As to this, Murphy y. Boeae L. R. 9 Q. B. 210, 43 L. J.'q. B. 52 ; (187.5) L. R. 10 Ex. 126, 44 L. J. Kronhdm \. Johnson {M^ll) 7 Ch. Ex. 40. D. 60,47 L. J. Ch. 132; Leather (.v) Lums \. 7)/.to« (1889) 22 Q. Cloth Co. V. Ilieroniinn.^ (187.5) B. Div. 357, 58 L. J. Q. B. 161 L. R. 10 Q. P.. 140, 44 L. J. Q. B. (defen.lant's affidavit on interlocu- •T'*- tory i)r()ceedings in the action will (y) .SYm/M* v, n'at.wn (1884) 28 not do). 172 FORM OF CONTRACT. Bills of Sale Acts. Transfers ships and copyright of Sale of horses in market overt. lature meant to requiie signature where the higher solemnity of sealing (as it is in a legal point of view) is already present (t). But as in practice deeds are always signed as well as sealed, and distinctive seals are hardly ever used except by corporations, the absence of a signature would nowadays add considerably to the difficulty of supporting a deed impeached on any other ground. The law as to the sale and disposition of personal chattels is affected, in addition to the Statute of Frauds, by the Bills of Sale Acts, 1878 and 1882, with minor amending Acts of 1890 and 1891; but the subject is too special to be entered on here. Transfers of British ships are required by the Mer- chant Shipping Act, 1894 (s. 24 sqq.) to be in the form thereby prescribed. Assignments of copyright are directly or indirectly required by the various statutes on that subject to be in writing (ii), and in the case of sculpture by deed attested by two witnesses (54 Geo. 3, c. 56, s. 4). But an executory agreement for an assign- ment of copyright apparently need not be in writing. And informal executory agreements for the sale or mortgage of ships seem now to be valid as between the parties, though under earlier Acts it was otherwise, and it is doubtful whether at common law a sale without writing would pass the property (.r). There is "An Act to avoid Horse-stealing" of 31 Eliz. c. 12, which prescribes sundry forms and con- (0 r/ierry v. I/rmuu/ (184'.t) i Ex. 631. 19" L. J. Ex. 6'3. SO K. R. 733. Blackstone (ii. 306, and see note in Stephen's Coram., 1. .510. 6th ed.) assumed signature to be necessaiy. (?/.) LeyUind v. Stewart (187f)) 4 Ch, D. 419. 46 L. J. Ch. 103 ; and as to designs, Jcwitt v. Eckhardt (1878) 8 Ch. D. 404. The con- fusion of our copyright statutes is still a disgrace to I5ritish legislation. (.r) Maude and Pollock > n Mer- chant Shi[)ping, 4th ed. pp. 42. 5.5, "»6. And sec the Merchant Ship- ping Act, 1894, s. 57. ACKNOWLEDGMENT UNDER STATUTE OF LIMITATION. 173 ditions to be observed on sales of horses at fairs and markets: and "every sale gift exchange or other putting away of any horse mare gelding colt or filly, in fair or market not used in all points according to the true meaning aforesaid shall be void " (y). The earlier Act on the same subject, 2 & 3 Phil, & Mary, c. 7, only deprives the buyer of the benefit of the peculiar rule of the common law touching sales in market overt. These Acts are not touched by the Sale of Goods Act, 1893: sees. 22. B. Marine Insurances. Marine By the Marine Insurance Act, 1906, " a contract of insurance. marine insurance is inadmissible in evidence unless it is embodied in a marine policy in accordance with this Act;" it must specify prescribed particulars and be signed by or on behalf of the insurer (z) ; by the Stamp Act, 1891, which the Marine Insurance Act does not affect (a), a contract for sea insurance (with a limited exception) is not valid unless expressed in a policy. C. Transfer of Shares. Transfer of There is no general principle or provision applicable ^•i'^'''^^- to the transfer of shares in all companies. But the general or special Acts of Parliament governing classes of companies or particular companies always or almost always prescribe forms of transfer. An executory con- tract for the sale of ,shai-es need not as a I'ule be in writing. 1). Acknowledgment of barred debts. Promise to The operation of the Statute of Limitation, 21 Jac. 1, jjaned by c. 16, in taking away the remedy for a debt may be statute of ' ^ J J J Limitation. (y) MorauY. I'ltt {\'6T^) i'2 \,.3. which itself superseded earlier Q. B. 47. enactments ; M. L A. s. 1)1. As to {z) Sg. 22-24. the recognition of the "slip" for (a) 54 «fc 55 Vict. c. 39, s. 93, collateral purposes, see {). 702, Ch. superseding 30 Vict. c. 23, s. 7, XIII., bcli>\v. 174 FORM OP CONTRACT. excluded by a subsequent promise to pay it, or an ac- knowledgment from which such promise can be implied. The promise or acknowledgment if express must be in writing and signed by the debtor (9 Geo. 4, c. 14, s. 1) or his agent duly authorized (19 & 20 Vict. c. 97, s. 13). We say more of this under the head of Agreements of Imperfect Obligation, Chap. XIII. below. 175 CHAPTER IV. Consideration. The following description of Consideration was given Considera- by the Exchequer Chamber in 1875: " A valuable con- sideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other " (a). The second branch of this judicial description is really the more important one. Consideration means not so much that one party is profited as that the other abandons some legal right in the present, or limits his legal freedom of action in the future, as an inducement for the promise of the first. It does not matter whether the party accepting the consideration has any apparent benefit thereby or not: it is enough that he accepts it, and that the party giving it does thereby undertake some burden, or lose something which in contemplation of law may be of value. An act or forbearance of the one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable. A consideration, properly speaking, can be given only (a) Curt ie\. Miaa (1875) L. R. 10 Ilu/liway Board v. Harrow Gax Co. Ex. at p. 162, 44 L. J. Ex. 94 ; per (1874) L. R. 10 Q. B. 92, 95, 44 Cur. referring to Com. Dif^. Aetion L. J. Q. B. 1 ; and for the liistorical on the Case, Assumpsit B. 1 — 15. distinction between debt and as- (^p. Evans, Appendix to Pothier sumpsit in this respect, Langdell, on Obligations. No. 2 ; and Edywarp Summary, §§ G4, G5. 176 CONSIDERATION. for a promise. Where performance on both sides is simultaneous, there may be agreement in the wider sense, but there is no obligation and no contract. It may be amusing and not uninstructive to consider the distinctions to be observed in the legal analysis of such common dealings as being ferried across a river and paying on the other side, buying a newspaper on a rail- way platform, obtaining a box of matches from an auto- matic machine. The reader may multiply examples at his pleasure. A consideration which is itself a promise is said to be executory. A consideration which consists in per- formance is said to be executed. It is important to remember that in the former case "it is the counter- promise and not the performance that makes the con- sideration " (b). Consideration is that which is actually given and accepted in return for the promise. Ulterior motives, purposes, or expectations may be present, but in a legal point of view they are indifferent. The party seeking to enforce a promise has to show the actual legal con- sideration for it, and he need not show anything beyond (c). Gratuitous ^^ informal promise made without a considei'ation, promises. however strong may be the motives or even the moral duty on which it is founded, is not enforced by English courts of justice at all. Even a formal promise, that is a promise made by deed, or in the proper technical language a covenant, is deprived, if gratuitous, of some of the most effectual remedies administered by them. A promise to contribute money to chai'itable purposes is a good example of the class of promises which, though (Z() Hobart in Lampleigh v. a bad clerical slip in the original Brathimlt (1616) 1 Sm. L. C. 155. report). In Coles v. Pllkington (r) Thomas v. Thomas (1842) 2 (1874) L. R. 19 Eq. 174, 44 L. J. Q. B. 851, 90 R. R. 903, Finch Sel. Ch. 381, this case was strangely Ca. 263 (see correction at p. 281 of overlooked. doctrine. HISTORY OF CONSIDERATION. 177 they may .be laudable and morally binding, are not contracts (d). The early history of the law of Consideration is still History of the somewhat obscure, but some acquaintance with it is necessary for understanding the fluctuations on certain points which lasted well into the nineteenth century, and one or two anomalies which have survived. The name of Consideration appears only about the beginning of the sixteenth century, and we do not know by what steps it became a settled term of art. The word seems to have gone through the following significations : first, contemplation in general ; then deliberate decision on a disputed question (hence the old form of judgments in the Common Law Courts, " It is considered ") (e) ; then the grounds as well as the act of deliberation ; and lastly, in particular, that which induces a grant or promise. If we wish to form a probable opinion as to the origin or origins of this final modification, we must inquire how far anything like the thing signified was to be found in the old action of debt, or was involved in the necessary elements of the new action of assumpsit. We must also remember that the demand was for an ex- tended remedy on business agreements, and, from the pleader's point of view, for an action which would enable him to rescue an increasing and lucrative branch of practice from the monopoly of ecclesiastical juris- diction in matters of breach of faith (/), and at least to (d) Cottage Street Church v. reason, unless it were that the word Kendall (1877) 121 Mass. 528 ; Be "adjudge" was equally unknown Hudsan, Creed V. Ifenderson(lSS5') to the operative forms of common .'54 L. J. Ch. 811. A contract may law and equity, though it was cur- arise, however, if the subscriber rent with text-writers from the authorizes a definite expenditure sixteenth century onwards, which is incurred in reliance on (/) It is said that the King's his making it good : see Krdar judges had the remedy of prohi- Nath Jihattdcharjl v. Gor'ie Ma- bition in their hands. No doubt homed (1886) I. L. R. 14 Cal. 64 ; the spiritual courts often might r/». if right on tlie facts. have been prohibited, and some- (r) Altered to " adjudged " by times were ; but one has only to the Judicature Act for no obvious look at Hale's Precedents and P. N in action of debt 178 CONSIDERATION. compete on equal terms with the Court of Chancery. Nobody wanted merely fanciful or gratuitous promises to be made binding without form, and there was no need for haste in defining exactly where the line should be drawn. Quid pro quo The action of debt assumed that the defendant had money or chattels (^r) which belonged to the plaintiff ; either because the defendant had actually received so much from the plaintiff, or because he (or, in the later doctrine, a third person at the defendant's request {h) had received from him something — it might be money, goods, or services — admitted to be equivalent to the money or goods claimed. As the buyer of goods had acquired property in the goods, so did a sum of his money measured by the agreed price become, in the medieval view, the property of the seller. There was a change of property by " reciprocal grants '' (i). Thus the debt could not be established without showing that the debtor had received some equivalent or " recom- pense." In the fifteenth century this equivalent was called Quid pro quo, a peculiarly English term (A;). The words bargain and contract, especially the latter, also came to be associated with the action of debt in the fifteenth and sixteenth centuries. In fact contract meant a " real contract," a transaction on which an action of debt might be brought (I). Mere one-sided Proceedings, representing a small reason of the promise, which he part of what went on all over the hath also performed, then in that country, to see that in fact they case he shall have an action for got the business ; and the repeated that thing that was promised, protests of Common Law judges though he that made the promise show that the secular jurisdiction have no worldly profit by it." I failed to check them : Holdsworth, agree with Prof. VinogradofiE, H. E. L. ii. 252. L. Q. R. xxiv. 383, that this relates {//) Harv. Law Rev. viii. 260. to Debt, not Assumpsit. (//) Harv. Law Rev. viii. 262: (;) Edgromb v. Bee, p. Hi, Doct. k, St. ii. 24 : '• after divers above. that be learned in the laws of the (/.■) It is not otherwise known to realm . . . if he to whom the pro- Du Cange or his later editors, mise is made have a charge by (Z) See H. L. R. viii. 253 ; the HISTORY OF CONSIDERATION ; ASSUMPSIT. 179 speech could no more pass property in money than in goods. The action of assumpsit was not to recover anything Detriment to supposed to he the plaintiff's, or for restitution, hut to i~jSi/" recover damages for the hreach of an active duty towards the plaintiff which had heen expressly " assumed " by the defendant, or was attached by law to the exercise of his calling. If the defendant's " assumption " had not induced the plaintiff to incur risk or trouble in some way to his own detriment, there was no wrong done and no ground of action. Here again bare words of promise, as such, would create no duty ; nor could mere disappointment be regarded as actionable damage. It was a considerable time before the fact that assumpsit was in substance an action to enforce contracts was in any way formally recognized ; but this could not be much delayed when it was settled that the existence of a debt was a sufficient ground for an action in assumpsit (m), the defendant not being allowed to admit the existence of a duty to pay the plain- tiff and deny that he had undertaken to fulfil it. Thus we have both in debt and in assumpsit the notion of some kind of value received as an element in the defendant's liability ; in the later application of assump- sit concurrently with debt this element is identical with the quid pro quo of debt (n) ; in the original assumpsit founded on an actual promise it is distinct. Meanwhile the canonists of Europe, in opposition to The canonist the more technical views of the civilians, had been ^ialM^in" ° generalizing the Roman law of contract and breaking Roman law: down its formalities. The causa which made a pact tion"in actionable was no longer one of a limited set of circum- i^'ocjorand '^ Student. stances or ' vestments " applicable, according to their title of Debt in the Abiudgments ; distinct from " special " assumpsit. and even later, Termes de la Ley, (?«) Prof. Ames in Harv. Law «. r. Contract. Rev. ii. 18. (w() This is " indebitatus " as N 2 180 CONSIDERATION. nature, to particular and limited classes of transactions ; it might ,be any reason for making a promise which ap- peared serious enough to be the foundation of a moral duty to fulfil the expectation created. Some English canonists, perhaps, used the word " consideration " with the same or nearly the same meaning as this extended sense of causa before it was familiar to the common lawyers. At any rate St. German, in his well - known Dialogue, first published in English in 1530 (o) puts this word in the mouth not of the Student but of the Doctor. The Student in the laws of England, explain- ing "what is a nude contract or naked promise in the laws of England, and where an action may lie there- upon, and where not " (p) speaks of recompense, of " a nude contract .... where a man maketh a bargain, or a sale of his goods or lands, without any recompense appointed for it," and of "a nude or naked promise .... where a man promiseth another to give him cer- money such a day, or to build an house, or to do him such certain service, and nothing is assigned for the money, for the building, nor for the service ; " in which cases no action lies (q). It is the Doctor of Divinity who takes up the distinct question of what promises are binding in conscience, and distinguishes " promises made to a man upon a certain consideration .... as if A. promise to give B. xx/. because he hath made him (()) The Latin ed. pi\ (1523, re- (*/) It is not manifest whether printed 1528) contained only the the author m^ans to allude to the first Dialogue ; and this also is action of assumpsit or not. I amplified in the English version. think he was more likely to regard On the other hand the Latin text it as a remedy for a wrong inde- has a considerable amount of pendent of contract, and not to scholastic authorities and discus- have it before his mind at all in sion omitted in the English: this place. The action on the case VinogradofI, Reason and Con- for negligence, which was one science in Sixteenth-century Juris- origin of assumpsit, is recognized: prudence, L. Q. II. xxiv. 373. " if I take [goods to keep safely], Cp) Question })ut by the Doctor, and after they be lost or impaired Dial. 2, c. 23, ad tin. The discus- through my negligent keeping, sion follows n c. 21. there an action lieth." " CONSIDERATION " : RELATION TO CAUSA. 181 such a house or hath lent him such a thing " — which is generally .binding — from a promise which is " so naked that there is no manner of consideration why it should be made," and does not even create a moral obligation. Here the language is not technical, but is rather a literary explanation addressed to the Student, who is presumed not to know civil or canon law, and would not understand the Romanist term causa. The word " consideration '" had already been used in English Courts in discussing the validity not of promises but of uses ; there is nothing to show any connection with the learning, civilian or canonist, of causa, but on the contrary " consideration " in this context is rather analogous to the quid pro quo of debt, though wider. On the whole the transitional view of the early sixteenth century seems to have been that a use was ci-eated by the will of the grantor, but his will could not be known by the Court without sufficient proof of his intent ; and such proof might consist in the mutuality of the transaction (including the creation of a tenure as well as actual value received), or in the existence of a natural duty towards the cestui que use. Either kind of reason was called consideration. It is com- mon learning that the mere solemnity of a deed was never held sufficient in this connexion (r). On the whole the Doctor, who represents the canonist half of St. German's extraordinary learning, appears to use " consideration " as a semi-ix)pular word, which will dispense him from going into technical details, and be sufficiently accurate for his purpose. As the book rapidly became well known for its merits as an exposi- tion of the Common Law, it may well be that this very (r) Y. H. 20 H. VII. 10, pi. 20; Sharln(jt, 1. de V. o. 3S, § 17. Bracton seems not to have accepted the Koman doctrine, see Maitlanrl, Bracton and Azo, l.")4-1.55. It is far from cer- tain that causa was really a current term in the early part of the Ifith century among any canonists or civilians from whom Englishmen were likely to borrow. (t) Ulpian in one place, D. 19. ."). de praeser. verbis, 1.5, goes near to a generalization when he says of the promise of a reward for infor- mation of a runaway slave : '' Con- vent io ista non est nuda, ut quis dicat ex pacto actionem non oriri, sed habet in se negotium aliquod." («) Polhier. Obi. § 42 ; Sirey and Gilbert on Code Nap. 1131 ; Demolombe. Cours du Code Nap. XXIV. 329 S(/q. ; Langdell, Sel. Ca. Cont. 169 ; so in Germany from CONSIDERATION : BENEFIT TO PROMISOR. 183 scheme of actions for turning natural into legal obligation (x). We may now trace the characteristic points of the Benefit to English doctrine. It was understood as early as the material.'^'* third quarter of the fifteenth century, with reference to the quid pro quo of Debt, that apparent benefit to the promisor is immaterial. In 1459 we have this case. Debt in the Common Pleas on an agreement between the plaintiff and defendant that plaintiff should marry one Alice, the defendant's daughter, on which marriage defendant would give plaintiff 100 marks. Averment that the marriage had taken place and the defendant refused to pay. Danvers J. said: " The defendant has quid, pro quo : for he was charged with the marriage of his daughter and by the espousals he is discharged, so the plaintiff has done what was to be paid for. So if I tell a man, if he will carry twenty quarters of wheat of my master Prisot's to Gr., he shall have 40s., and there- upon he carry them, he shall have his action of debt against me for the 40s. ; arul yet the thing is not done for me, but only by my command: so here he shows the 17th century onwards, with only theoretical differences as to the reason of the ride : Seuffert, Zur Gesch. der obligator ischen Vertiage, 180 sqq. (./•) The view here given is sub- stantially that of the late Prof. Ames of Harvard (The Histoiy of Assumpsit, Harv. Law Rev. ii. 1, r)3, now reprinted and revised in Select Essays in Anglo-Amer. Legal His- tory, iii. 259), who has put the whole subject on a new footing. Mr. Justice Holmes's ingenious attempt to make the quid jnui quo of tlebt cover the whole ground, and connect it with the functions of the xecta in Anglo-Norman pro- cedure, does not seem acceptable : see Pollock and Maitland, Hist. Eng. Law, ii. 214. As to civilian influence, it is impossible to prove that there was none, but for the reasons in the text I think very little of it reached the minds of practising common lawyers. Mr. Salmond's learned argument (Essays in Jurisprudence and Legal History, No. iv.) fails to reconvert nie to my own former opinion. One may almost say tliat, if there had been any real borrowing, there must have been more misunder- standing. The repetition of the one phrase Ex mulo jjaefo mm oritur actio, caught up from the civilians, was, on the whole, harm- less. As late as 1842 a desperate attempt was made by thi; late E. V. Williams J., when at the bar, to mix up the civilian causa with the doctrine of consideration : TJioinas v. Thomas, p. 17(5, above. 184 CONSIDERATION. that he has performed the espousals, and so a good cause of action has accrued to him: otherwise if he had not performed them " {y). Moyle J. : " If I tell a surgeon, if he will go to one J. who is ill, and give him medicine and make him safe and sound, he shall have lOOs. ; there if the surgeon does cure J. he shall have a good action of debt against me for the 100s., although the thing was done for another and not for the defendant himself ; if there is not quid fro quo, there is what comes to the same" {y). Prisot C.J. and Danby J. thought such an action not maintainable except on a specialty (though Prisot was impressed by Danvers's and Moyle's instances), and an objection was also taken to the jurisdiction on the ground of marriage being a spiritual matter: the case was adjourned and the result is not stated. But the point is quite clearly taken that what a man chooses to bargain for must be conclusively taken to be of some value to him. Adequacy of It is really by a deduction from this that our Courts consideration i • i i • i • i m i n ^ l not inquired have m modern times laid it down as an elementary '■"^0 principle that the law will not enter into an inquiry as to the adequacy of the consideration " {z). The idea is characteristic not only in English positive law but in the English school of theoretical jurisprudence and politics. Hobbes says : " The value of all things contracted for is measured by the appetite of the contractors, and there- fore the just value is that which they be contented to give " (a). And the legal rule is of long standing, and illustrated by many cases. " When a thing is to be done by the plaintiff, be it never so small, this is a suffi- cient consideration to ground an action " {h). "A is possessed of Blackacre, to which B. has no manner of right, and A. desires B. to release him all his right to (V) iM. 37 H. VI. 8. pi. IS. {a) Leviathan, pt. 1, c. 15. (z) Westlulie v. Adams (1858) 5 (Z») Sturli/n v. Albany, Cro. Eliz. V. B. N. S. 248. 265, 27 L. J. C. P. 07, and see'Cro. Car. 70, and mar- 271. per Byles J. ginal references there. ADEQUACY. 185 Blackacre, and promises him in consideration thereof to pay him so much money ; surely this is a good con- sideration and a good promise, for it puts B. to the trouble of making a release " (c). The following are modern examples. If a man who owns two boilers allows another to weigh them, this is a good considera- tion for that other's promise to give them up after such weighing in as good condition as before. " The defen- dant," said Lord Denman, " had some reason for wish- ing to weigh the boilers, and he could do so only by obtaining permission from the plaintiff, which he did obtain by promising to return them in good condition. We need not inquire what benefit he expected to derive " (d). If the owner of a newspaper offers to give advice on financial matters to any one who will send his inquiry to the city editor, writing to the city editor is good consideration for a promise to use reasonable care in giving the advice (e). So parting with the possession of a document, though it had not the value the parties supposed it to have (/), and the execution of a deed (g), though invalid for want of statutory requisites (h), have been held good considerations. In like manner a licence by a patentee to use the patented invention is a good consideration though the patent should turn out to be invalid (*). In the Supreme Court of the United States a release of a supposed right of dower, which the parties (6') Holt C.J. 12 Mod. ir/J. possession of a document to which (rf) Jialnhridije v. Finn at one the promisee is entitled : Mi/rf v. (1838) S A. A: E. 7-13, 53 E. R. 234. Mil^s (1858) 4 C. B. N. S. 371, 27 (<•) iJe la JJere v. Pearmn [ 1 908] L. J. C. P. 218. 1 K. B. 280. C. A., 77 L. J. K. B. (ff) Cp. Jones v. WuUf (1842) 9 380, C. A. But perhaps the cause Cl."& F. 101. of action is better regarded as (A) See note (:), last page. The arising from default in the per- defendant had in fact had the full formance of a voluntary under- benefit of the consideratiou, the taking independent of contract. deed having been acted on. (/) J/iiii/h V. J{roo?i.s (1839-40) (/) Lawes v. Purser (1856) 6 E. CQ. B. and Kx. Ch.), 10 A. & E. & B. 930, 26 L. J. Q. B. 25. 106 309, 320, 334, 50 K. K. 399, 407, K. K. 868. 417. Or letting the promisor retain 186 CONSIDERATION. thought necessary to confirm a title, has been held a good consideration for a promissory note (k). The modern theory of the obligation incurred by a bailee who has no reward is that the bailor's delivery of pos- session is the consideration for the bailee's promise to keep or carry safely. The bailor parts with the present legal control of the goods ; and this is so far a detriment to him, though it may be no benefit to the bailee, and the bailee's taking the goods is for the bailor's use and convenience (l). The determination of a legally indif- ferent ojDlion in a particular way, as voting for a par- ticular candidate for a charity where there is not any duty of voting for the candidate judged fittest, is legal " detriment " enough to be a good consideration (m). It has been held in equity, to the same effect, that a transfer of railway shares on which nothing has been Same rule in paid is a good consideration (n) ; and that if a person equity. indebted to a testator's estate pays the probate and legacy duty on the amount of the debt, this is a good consideration for a release of the debt by the residuary legateas (o) : a strong case, for this view was an after- thought to support a transaction which was in origin and intention certainly gratuitous, and in substance an incomplete voluntary release; the payment was simply by way of indenniity, it being thought not right that the debtor should both take his debt out of the estate and leave the estate to pay duty on it. The consent of (/<■) Sylces V. Cltadtrick (1878) IS at the bailee's request, but requests Wallace. 141. the bailee to take it. One of the (V) O. W. Holmes. The Common necessary elements is therefore Law, 291 sqq. Historicall}', the fictitious. Cp. Langdell, § %S. explanation is that the action («/) Bulton v. Muddeti (1873) sounded in tort until quite niodein L. 11. i) Q. B. 55. times, ih. 19G. The bailor parts («) Cheale \ . Kenward (ISitS) '^ with very little, for, if the bail- De G. & J. 27, 27 L. J. Ch. 784. mentis at will, he as well as the (<^) Taylor v. .Vaw/t,"/'* (186.")) L. bailee can sue a trespasser. Tlie R. 1 Ch. 48, 35 L. J. Ch. 128, by real difficulty, however, is ihat in Turner L.J. duh. Knight Bruce such cases, for the most part, the L.J. bailor does not deliver possession ADEQUACY. 187 liquidators in a voluntary winding-up to a transfer of shares is a good consideration for a guaranty by the transferor for the payment of the calls to become due from the transferee (p). An agreement to continue — ■ i.e., not to determine immediately — an existing service terminable at will, is likewise a good consideration (q). The principle of all these cases may be summed up in the statement made in so many words by the judges in more than one of them, that the promisor has got all that he bargained for. The law will be satisfied that there was a real and lawful bargain, but it leaves parties to measure their bargains for themselves. It has been Contingent , 1 ,, . • -1 • • 1 ;i -1 ,• consideration. suggested that on a snnilar prmciple the consideration for a promise may be contingent, that is, it may consist in the future doing of something by the promisee which he need not do unless he chooses, but which being done by him, the contract is complete and the promise bind- ing. But this cannot be. A consideration must be either a present act or forbearance or a promise. If a tradesman agrees to supply on certain terms such goods as a customer may order during a future period, this is not a promise, but an offer. He cannot sue the customer for not ordering any goods, but if, while the offer stands, the customer does order any, the condition of the offer is fulfilled, and the offer being thus accepted, there is a complete contract which the seller is bound to perform (r). {ji) Clere \. F'tiuiitcial ('orpora- case tender to be carried, any defi- t'wii (1878) L. 11. 1<; K<|. 'M\\\, \\'^^^, nite quantity of goods) did not of 415 L. .]. Ch. 54. itself constitute a contract. Cp. ((/) Grarehi v. Barnard (1S74) R. v. Demers [1900] A. C. 103, 6!» L.R. 18 Eq. .518, 48 L.. J. Ch. (;.'■);). L. J. P. C. 5; under Frencli (/•) G. A. Ry. Co. V. Witham Canadian law, but no difference (1873) L. 11. 9 C P. 16, 43 L. J. in principle is suggested. This C. P. 13. Cp. ChuuigoS,- G. E. lly. seems to have been overlooked in Co. V. Dune (1873) 43 N. V. (4 Ford v. .\rwth [19U1] 1 K. P.. G83. Hand.) 240, where it was rightly 70 L. J. K. P.. 459. Olf'ord v. held that a general assent to an JJavien (1862) 12 C. B. N. S. 748, offer of this kind (not undertaking Finch, Sel. Ca. 37, the case of a to order, or as in the particular guaranty, limited to twelve months, 188 CONSIDERATION. Inadequacy Great inadequacy of consideration may, however, be fraud^&c^*^ ^^ material in cases of fraud and the like, though material as evidence only. This will be dealt with hereafter. Pillans r. Van In the interesting eighteenth - century case of Mierop. Pillans V. Van Mierop (s) the actual decision was on the principle that " any damage to another or suspen- sion or forbearance of his right is a foundation for his undertaking, and will make it binding, though no actual benefit accrues to the party undertaking " (t). But Lord Mansfield threw out the revolutionary suggestion (which Wilmot J. showed himself inclined to follow, though not wholly committing himself to it) that there is no reason why agreements in writing, at all events in commercial affairs, should not be good without any consideration. "A nudum pactum does not exist in the usage and law of merchants. I take it that the ancient notion about the want of consideration was for the sake of evidence only . . . . in commercial cases amongst merchants the want of consideration is not an objection " (u). The anomalous character of this dic- tum was rightly seen at the time, and it has never been followed (x). It was too late to set up a new class of Formal Contracts, which was really the effect of Lord Mansfield's proposal. But if it had occurred a century or two earlier to a judge of anything like Lord Mansfield's authority, the whole course of the English of bills which the plaintifE might bv the laws of England, distin- discount at the request of the de- gnished into agreements by spe- fendants, involves the same prin- cialty and agreements by parol; ciple ; for the so-called guaranty, nor is there any such third class, as explained by the judgment, was as some of the counsel have en- in truth only a standing offer. deavouied to maintain, as contracts (.«) (1765) 3 Burr. l(5t)4. and in writing." Langdell ingeniously Finch Sel. Ca. 2C,{). argued (Summary. §§ 49, 50), that (t) Per Yates J. at p. Ifi74. contracts governed by the law (?/) H Burr. 166it-70. merchant need on principle no (a*) In 1778 it was distinctly consideration : in short, that a contradicted by the opinion of the negotiable instrument is a specialty. judges delivered to the House of It might have been better so. In Lords in Eann v. Hvglipx (177.S) 7 this country one can only say dis T. R. 850, u. : "AH contracts are. alifer vlxuni. PAST CONSIDERATION. 189 law of contract might have been changed, and its prin- ciples might have been substantially assimilated to those of the modern civil law as adopted by the law of Scotland. Another doctrine made current by Lord Mansfield and some of his colleagues with more success (y) was that the existence of a previous moral obligation constituted such a relation between the parties as would support an express promise. The Exchequer Chamber finally de- cided as late as 1840, that " a mere moral obligation arising from a past benefit not conferred at the request of the defendant " is not a good consideration {z). It is still not quite settled whether a past benefit is in any case a good consideration for a subsequent promise. On our modern principles it should not be (a), and it is admitted that it generally is not {h). For the past service was either rendered without the promisor's con- sent at the time, or with his consent but without any intention of claiming a reward as of right, in neither of which cases is there any foundation for a contract (c) ; or it was rendered with the promisor's consent and with an expectation known to him of reward as justly due, in which case there were at once all the elements of an agreement for reasonable reward. It is said, however, that services rendered on request, no definite promise of reward being made at the time, are a good consideration for a subsequent express promise in which the reward is for the first time defined. But there is no satisfactory modern instance of this doctrine, and it would perhaps Promises founded on moral duty. Past con- sideration ineffectual. Supposed exceptions : Lampleigh v. Brathwait. (y) See the note to Wrniiall v. Ad'veii, 3 B. & P. 252, t! R. P. 782, and in Finch Sel. Ca. at p. 358, which is approved by Parke B. in Earlc V. OUver (1848) 2 Ex. 71, at p. 00, and has long l)een regarded as classical on the whole (picstion of past consideration. (j) Eastwood V. KrnijOK (1810) 11 A. i: E. 438, 446, 52 R. R. 400. (tf) Cp. Langdell, o\t. cit. § 91 . (/;) Roxcorla v. Thomas (l^i'I) 3 Q. B. 324, (H R. R. 216, Finch Sel. Ca. 340. (fO "It is not reasonable that one man should do another a kind- ness, and then charge him with a recompense." 1 Wms. Saund. 356. 190 CONSIDERATION. Performance of another's legal dutj'. Ackuow- leclgnient of barred debts. now be held that the subsequent promise is only evidence of what the parties thought the service worth (d). It is also said that the voluntary doing by one party of something which the other was legally bound to do is a good consideration for a subsequent promise of recompense. But the authority for this proposition is likewise found to be unsatisfactory. Not only is it scanty in quantity, but the decisions, so far as they did not proceed on the now exploded ground that moral obligation is a sufficient consideration, appear to rest on facts establishing an actual tacit contract independent of any subsequent promise. Another exceptional or apparently exceptional case which ceiiainly exists is that of a debt barred by the Statute of Limitation, on which the remedy may be restored by a new promise on the debtor's part. It is said that the legal remedy is lost but the debt is not destroyed, and the debt subsisting in this dormant con- dition is a good consideration for a new promise to pay it. This is not logically satisfying, and in fact it be- longs to the now discredited view of past consideration. There is no real equivalent for the new promise, and the only motive that can generally be assigned for it is the feeling that it would be morally wrong not to pay. It (rf) LiiDipleiffJi V. Jirafluoait (1616) Hob. 105, and 1 Sm. L. V. ; see per Erie C.J. 13 V. B. N. S. at p. 740. The Irish case of Bradford V. Rouhtnn (18.58) 8 Ir. C. L. Rep. 468, will, for English lawyers at least, hardh^ outweigh this dictum ; and the doctrine wnuld seem to be open to examination in the C. A., see per Bowen L.J. Stewai-t v. Ccuey [1S92] 1 Ch. at p. 115, 61 L. J. Ch. 61. See Anson, pp. HI — 117, and cp. Clark Hare on Con- tracts, 246—249. At an earlier time it was held that a past con- sideration would not support an action of debt, but was enough for assumpsit, Marsli v. Bainsford (1588) 2 Leon. Ill ; Side?iham v. Wnrlingtim (1595) ih. 224 ; Finch Sel. Ca. 337 : 0. W. Holmes, The Common Law, 286, 297. The theory was still that the breach of promise was an actionable wrong because of an existing relation between the parties which created a special duty, not that an execu- tory contract, as such, created an obligation ; and on that theory there was no reason why the pro- mise and the consideration shoulil be simultaneous. But l^ord Mans- field cannot be supposed to have known anything of this. promises. MUTUAL PROMISES. 191 seems better at this day to say that the law of limitation does not belong to substantive law at all, but is a special rule of procedure made in favour of the debtor, who may waive its protection if he deliberately chooses to do so (e). The most characteristic rule in our law of considera- Mutual tion, and the most important for the business of life, is that mutual promises are sufficient consideration for one another. When the subject was still novel it would not have been difficult, one would think, to frame plausible arguments to the contrary. In fact there is no conclusive reason, other than the convenience of so holding (/), for the rule that a promise and counter- promise will make one another binding : for neither of them, before it is known to be binding in law, is in itself any benefit to the promisee or burden to the promisor. If it be suggested that the mere utterance of words of promise is trouble enough to be a consideration, the answer is that such is not the nature of the busi- ness. Moving of the lips to speak or of the fingers to write is not what the promisor offers or the promisee accepts. However, there is very little trace of dissension in our books. As early as 1555, the validity of reciprocal promises passed without question in a case reported on another point (g). In 1615 it was disputed (we are not told on what grounds), and finally affirmed (h). The promises must be exchanged for one another at the same time (h), and each of them must be binding (<>) See mure on this point in popular custom of giving earnest. Ch. XIII. The stretching of principle is quite (/) The only result of holding analogous to the allowance of mere otherwise would have been to non-feasance as a cause of action impose a nominal executed con- in assumpsit. sideration, such as delivery of a (^) Peclic y. Redman. Dyer, 113. nut, a pin, or a farthing, on the (A) N'lclioUv.llannhri'd, Hoha.it, formation of contracts by mutual 88, Unch Sel. Ca. ;33(>. •' Nichols promises ; this formality would brought an assumpsit against have become inextricably confused Raynbred, declaring that in con- with the archaic but not extinct sideration, that Nichols promised 192 CONSIDERATION. on the face of it, that is, must not be unenforceable for any intrinsic reason. A promise which purports to be merely honorary, or which is invalidated by any rule of general policy or special provision of positive law, is no consideration (i). It is true that the promise itself, not the obligation thereby created, is the con- sideration (k) ; still, the value of a promise does not consist in the act of promising, any more than the value of a negotiable instrument consists in a piece of paper with writing on it, but in the assurance of the per- formance to which the promisor obliges himself, or, at worst, of damages for his default. A promise may be incapable of being sued on(Z), and therefore incapable of being a consideration for a counter - promise, for various reasons which we have examined or shall examine under their proper heads. Such reasons do not form part of the doctrine of Consideration, as is shown to deliver the defendant to his own use a cow, the defendant promised to deliver him rif ty shillings : ad- judged for the plaintiii in both Courts, that the plaintiii need not to aver the delivery of the cow, because it is promise for promise. Note here the promises must be at one instant, for else they will be both HH da pacta.'" See intermediate cases collected by Prof. Ames in Harv. Law Rev. xiii. 32. n. (/) Harr'i.ton v. Ca(jp, 5 Mod. 411 ; Langdell, "Mutual Promises as a Consideration for each other," Harv. Law Eev. xiv. 49(i, 504. Some very learned persons add the further condition that the per- formance of the promise must be such as will or may impose a legal detriment upon the promisor : Prof. Williston's note here in 3rd Amer. edn. Contra, Langdell. Harv. Law Rev. xiv. 50.5, with whom I agree. (^■) Ames. ■■ Two Theories of Consideration," Harv. Law Rev. xiii. 29, 32. But when Prof. Ames suggests, at p. 34, that a promise which is aTid is known to be merely honorary may be a good considera- tion, he seems to overlook the un- disputed authority of Harrison v. Cage (last note). Certainly some men's honorary promises are in fact worth more than some men's legal promises, but the law cannot esti- mate or regard this. Mr. Justice 0. W. Holmes, on the other hand, suggests that every legal promise IS really in the alternative to per- form or to pay damages : which can only be regarded as a brilliant parados. It is inconsistent not only with the existence of equitable remedies, but with the modern common law doctrine that prema- ture refusal to perform may be treated at once as a breach. See IfiS U. S. at p. 600; Harriman, § 552. (/) In many cases a promise may be actionable though not capable, in fact or in law, of performance. PKOMISES TO PERFORM EXISTING DUTY. 193 by the fact that the same or similar reasons exist and are applied in the modern Eoman law and national bodies of law derived from it, where the Common Law rules of Consideration are unknown (m). In many cases a promisor has the option of avoiding his contract for some cause existing at the date of the promise. But in all such cases the contract is valid until rescinded, and the right to rescind it may be lost by events beyond the promisor's control ; so there is no difficulty in treat- ing his promise as a good consideration. Since a promise which is to be a good consideration Gsrtainty for a reciprocal promise must be such as can b( ^^'^^^^^ enforced, it must be not only lawful but reasonably definite. Thus a promise by a son to his father to leave off making complaints of the father's conduct in family affairs is no good consideration to support an accord and satisfaction, for it is too vague to be enforced (n). And upon a conveyance of real estate without any pecuniary consideration a covenant by the grantee to build on the land granted such a dwelling-house as he or his heirs shall think proper is too vague to save the con- veyance from being vokmtary within 27 Eliz. c. 4 (o). Similarly, neither the promise to do a thing nor the Promises of a actual doing of it will be a good consideration if it is a ah'efdy°ound thing which the party is already bound to do either by generally the general law or by a subsisting contract with the promisee other party (/?). It seems obvious that an express ^°^^'^' (w) Thus the question of the consideration that his sun will not performance being possible is bore him a binding contract .'" irrelevant here. In any case the (c) Roslier v. ]\'illiii)H.s (1875) language of 2 Wms. Saund. 430 L. R. 20 Eq. 210, ii L. J. Ch. 419. and of the dicta there relied on is (y>) See Leake, 436 ; and besides much too wide. authorities there given. Deacon v. (w) White V. Bluett (1853) 23 Gridlei/ (1854) I'o C. B. 295, 24 L. J. Ex. 3(i, 98 R. R. 492 ; this L. J. C. P. 17, 100 R. R. 357 ; and seems the ratio dericlendi, though the judgment on the 7th plea in so expressed only by I'arke I')., who Mullalieu v. Iloihjxon (1851) K! asked in the course of argument, Q. B. 689, 20 L. J. Q. B. 339, 83 " Is an agreement by a father in R. R. 679. P. O 194 CONSIDERATION. promise by A. to B. to do something which B. can ah'eady call on him to do can in contemplation of law produce no fresh advantage to B. or detriment to A.(^). But the doing or undertaking of anything beyond what one is already bound to do, though of the same kind and in the same transaction, is a good consideration. A promise of reward to a constable for rendering ser- vices beyond his ordinary duty in the discovery of an offender is binding (r) : so is a promise of extra pay to a ship's crew for continuing a voyage after the number of hands has been so reduced by accident as to make the voyage unsafe, so that the crew are not bound to proceed under their original articles (s). So, it is con- ceived, would be a promise in consideration of the promisee doing at a particular time, or in a particular way, something which otherwise he must do, but has the choice of doing in more than one way, or at any time within certain limits. Again, there will be consideration enough for the promise if an existing right is altered or increased remedies given. Thus an agreement to give a debtor time in consideration of his paying the same interast that the debt already carries is inopera- tive, but an agreement to give time or accept reduced interest in consideration of having some new security would be good and binding. The common proviso in mortgages for reduction of interest on punctual pay- ment — i.e., payment at the very time at which the mort- gagor has covenanted to pay it — seems to be without any consideration, and it is conceived that if not under seal such a proviso could not be enforced (t). Again, (^) Some American courts, how- 110 R. R. 8t57. ever, hold otherwise : Harriman (0 This could be at once pro- on Contracts, § 117. vided against, however, if so (?■) Enijhi/td V. Davidson (184(1) desired, by fixing the time for 11 A. & E. 856, 52 R. R. 522. '• punctual payment " a single day (.?) Hartley T. Ponsonh)/{l8ul) 7 earlier than those named in the E. (!t B. 872, 26 L, J. Q. B. 822. mortgagor's covenant. PROMISES TO PERFORM EXISTING DUTY. 195 the rule does not apply if the promise is in the nature of a compromise, that is, if a reasonable doubt exists at the time whether the thing promised l)e already otherwise due or not, though it should be afterwards ascei*tained that it was so. We shall return to this when we speak of forbearance as a consideration. Difficult questions arise when we have a promise made Performance • 1 ,. » ,, . 1 . ... of subsisting ui consideration ot the promisee doing or promising to obligation to do something which a subsisting contract with a third t^^^'f^ person. person has already bound him to do. Such cases are not frequent, and there has not yet been any full or satisfying judicial discussion of them. It would seem that, being infrequent and of no great importance in current affairs, they should be disposed of by the strict application of settled principles, and that, even if such application should lead to apparently fine distinctions, the principles ought not to be tampered with merely to avoid that result. From this point of view, Andrew's performance of his binding promise to Peter does not appear capable of being a consideration for a new promise by John to Andrew ; not because it cannot be beneficial to John, for this it may very well be, but because in contemplation of law the performance is no new detriment to Andrew, but on the contrary is bene- ficial to him, inasmuch as it discharges him of an existing obligation. Therefore the necessary element of detriment to the promisee is wanting (u). It seems therefore that if a promise is given in exchange merely for the performance of the promisee's duty under an existing contract with a third pei'son, it is not binding. Authority, however, is the other way so far as it goes. (w) In point of fact there may the normal conditions of men's be some, for it may be that he affairs. If eveiy man's word were might have omitted the perform- as good as his bond, or nobody ance with impunity. But this is cared to enf(jree his rights, there like the case of a merely honorary would be no place for any law of promise. The law is made to fit contract at all. 2 196 CONSIDERATION. Performance of this kind appears to have been held a sufficient consideration in three English reported cases (x), one from the early seventeenth and two from the middle part of the nineteenth century. In the first of these {y) the plaintiff and defendant were jointly liable as sureties on a bond, long before the modern equitable doctrine of contribution between co- sureties was established. In consideration of the plain- tiff paying the whole debt, the defendant promised to repay him half. The promise was held binding, but the real difficulty does not appear to have been dealt with {z). In the second case (a) the plaintiff, being engaged to be married, did (on the facts as assumed) proceed with the marriage on the faith of a promise by his uncle, the defendant's testator, to pay him an annuity during the promisor's life. The plaintiff suc- ceeded in an action for arrears of the annuity. To the majority of the Court it appeared sufficient to say that the marriage took place at the testator's request. But this (whether rightly said or not) does not answer the question whether the simple fulfilment of a promise of marriage already binding on him could be any legal detriment to the promisee. The third case {h), in an (*') The point might perhaps itself, of Dodderidge J. : " If the have been considered in Jonts v. consideration puts the other to Waitc (183'J, 1842) y Bing. X. C. charge, though it be no ways at all 341, 9 CI. i: F. S8, 50 R. E. 705. protitable to him who made the 717, but the ai'gument and decision promise, yet this shall be a good were on other grounds. Note that consideration to raise a promise." in both Shadwell y. S/iadivell and (a) Sfiadwell v. Sfuidwell (I860) Scoti, 54 L. J. Q. B. 130, Lord Blackburn all but dissenting. The Indian Contract Act (s. 63. illust. h.) is accordingly careful to express the contrary. The rule in Pinnel'.t case, it may be noted, though paradoxical, is not anomalous. Its numerical logic may be archaic, but it is strictly logical. The Court does not know judicially what a beaver hat may be worth, but it must know that lOZ. are not worth 20/. (/) See the notes to Cumher v. Wane{\l\^) in 1 Sm. L. C. ACCORD AND SATISFACTION. 201 the debtor to take no proceedings on the judgment in consideration of immediate payment of part of the debt and payment of the residue by certain instahnents ; here there was no legal consideration for the creditor's promise, and he was entitled to claim interest on the debt though the whole of the principal was paid accord- ing to the agreement (m). This rule does not touch the ordinary case of a composition between a debtor and several creditors ; for every creditor undertakes to accept the composition in consideration of the like undertaking of the other creditors as well as of the debtor's promise to pay it (n). If it is agreed between creditor and debtor that the The con- duty shall be performed in some particular way differ- variation"of°^ ent from that originally intended, this may well be contracts. binding : for the debtor's undertaking to do something different though only in detail from what he at first undertook to do, or even relinquishing an option of doing it in more ways than one, would be consideration enough, and the Court could not go into the question whether it gave any actual advantage to the creditor. But if the new agreement amounts to saying that the debtor shall at his own option perform the duty as at first agreed upon or in some other way, it cannot be binding without a new consideration : as where an entire sum is due, and there is an agreement to accept payment by instalments, this would be good, it seems, if the debtor undertook not to tender the whole sura; but in the absence of anything to show such an (/«) Foakesv. Ih'rr(\H8i)\K\\)\). tliis was held to be an accoitl and Ca. 605, 44 L. J. Q. B. ISO, foil. satisfaction for everything due, in U/ulfirivoodv. Underwood [18'.t4] and the defendant was not allowed P. 204, 63 L. J. P. 109. P.iit to issue execution for the interest : where the solicitor of a defendant liiddcr v. lirxdqcR (1887) 37 Ch. entitled to taxed costs acce[)ted Div. 406, 'u L. j. Ch. 300. from the plaintiff's solicitor a (?t) Good \. Cherxmdn (J^'Hl) 2 cliwiue for tho amount of costs P>. i: Ad. 328, Kinch Sel. Ca. 343 (nothing beingsaid about interest), 3(5 U. K. .'J74. ^0^2 CONSIDERATION. Loss or for- bearance of rights as con- sideration. Forbearance to sue : must be for definite or ascertain- able time. undertaking, the agreement is a mere voluntary indul- gence, and the creditor remains no less at liberty to demand the whole sum than the debtor is to pay it (o). The loss or abandonment of any right, or the forbear- ance to exercise it for a definite or ascertainable time, is for obvious reasons as good a consideration as actually doing something. In Mather v. Lord Maidstone (p) the loss of collateral rights by the promisee supported a promise notwithstanding that the main part of the consideration failed. The action was on a bill of exchange. This bill was given and endorsed to the plaintiff as in renewal of another l)ill purporting to be accepted by the defendant and endorsed to the plaintiff. The plaintiff gave up the first bill to the defendant ; thirty days afterwards it was discovered that it was not really signed by the defendant: yet it was held that he was liable on the second bill, for the plaintiff had lost his remedy against the other parties to the first bill during the time for which he had parted with the pos- session of it, and that was consideration enough. As to forbearance, the commonest case of this kind of consideration is forbearing to sue. Forbearance for a reasonable time is enough, on the principle of certum reddi pote^it : and terms in themselves vague, such as " forbearing to press for immediate payment," may be construed by help of the circumstances and context as meaning forbearance for a reasonable time. A promise to guarantee a debt if the creditor will give time to the principal debtor is in the first instance an offer ; it becomes a binding promise when the condition of giving the specified time, or a reasonable time, has been per- formed. It is a question of fact what is reasonable (()) .Vt'.mnnix V. BtirJ{ (1S7()) L. K. T) P:.\. (55. ;^9 \j. J. Ex. C"). Cp. FouJ«'it\-. Bt-er, note [k), p. 2U0. {/)) (18.5(i) 18 C. B. 273. 25 L. J. C. P. 310, 107 R. R. 290. COMPROMISE. 203 There must be an actual or bona fide time in a given case (q). Forbearance of proceedings to enforce a " debt of honour '' ))y purely conventional sanctions has moi-e than once I)een held a good con- sideration (r). That which is forborne must also be the exercise or enforcement of some legal or equitable right which is honestly believed to exist. This is simply the converse disputed of a rule already given. As a promise by A. to B. is naught if it is only a promise to do something A. is already bound, either absolutely or as against B., to do, so it is equally worthless if it is a promise not to do something which B. can already, as a matter either of public or of private right, forbid A. to do. So far we assume the existing rights of the parties to be known : but as in practice they often are not known, but depend on questions of law or of fact, or both, which could not be settled without considerable trouble, common sense and convenience require that compromises of doubtful rights should be recognized as binding, and they con- stantly are so recognized. " If an intending litigant bona fide forbears a right to litigate a question of law or fact which it is not vexatious or fi'ivolous to litigate, he does give up something of value " (.s) ; and such forbearance is good consideration for a promise even Why com- promises are bindinar. ((/) Oldemlutw v. Kinq (1S57) (Ex. Ch.) 2 H. & N. 517, 27 L. J. Ex. 120, and see 1 Wms. Saund. 225. In Alliance Banh v. Broom (18fi4) 2 Dr. & Sm. 289, 34 L. J. Ch. 956, actual forbearance at the defendant's request, though not for any specified time, was held suffi- cient. Cp. Wilhy V. Elgei: (1875) L. R. C. P. 497. In Cream v. Hunter {\mi) 19 Q. B. Div. 341, .5(i L. J. Q. B. 518, which has been criticized as ambiguous, L. Q. R. iii. 484, it miist be taken, with the head-note, that the consideration was actual forbearance. The pi'omise being in the form of a promissory note, i.e., essentially unconditional, certainly makes a difficulty, for it would seem there was a complete promise before the consideration, viz. forbearing to sue for a reasonable time, was or could be executed. On the prin- ciple see |)er Bowen L.J. in Miles V. New Znihdul Alford E.^tate Co. (1885-6) 32 Oil. Div. at p. 289. (}•') Ex parte Martingell [1904] 2 k. B. 133, 73 L. J. K. B. 446; GoodKon V. Grier.wn [1908] 1 K. B. 761. 77 L. J. K. B. 507, C. A. (.v) Milex V. Xew Zealand, Alford Estate Co. (1885-6) 32 Ch. Div. 2()6, 1'liweii Iv..I.at p. 291, reviewing previous cases and dicta. 204 CONSIDERATION. Reaction of the general doctrine of Considera- tion on contracts under seal. though the claim is not well founded, provided it is honestly believed in and the promisee does not conceal from the promisor any fact which to his knowledge would affect its validity (t). The real consideration and motive of a compromise, as well in our law as in the civil law and systems derived from it, is not the sacrifice of a right (of which the existence or non-existence is unknown until it has been judicially determined) but the abandonment of a claim (w). The same rule applies in the case where the claim given up is on a disputed promise of marriage (a:). A partial compromise in which the undertaking is not simply to stay or not to commence legal proceedings, but to conduct them in some particular manner or limit them to some particular object, may well be good: but here again the forbearance must relate to something within the proper scope of such proceedings. A promise to conduct proceedings in bankruptcy so as to injure the debtor's credit as little as possible is no considera- tion, for it is in truth merely a promise not to abuse the process of the Court (y). The main end and use of the doctrine of Considera- tion in our modern law is to furnish us with a compre- hensive set of rules which can be applied to all informal contracts without distinction of their character or sub- ject-matter. Formal contracts remain, strictly speak- ing, outside the scope of these rules, which were not made for them, and for whose help they had no need. But it was impossible that so general and so useful a legal conception as that of Consideration should not (0 Cotton L.J. 32 Ch. Div. at Martindale v. Faulhrn- (1846) 2 C. B. at p. 719, 69 R. R. at p. 611, p. 284. («) TrUfqe v. Ldcallee (X'^'oV) 15 Moo. P. C.'27], 292 (a case from Lower Canada, then under old Fr. law). Will)}! v. Elqce (1875) L. R. 10 C. P. 497, 44 L. J. C. P. 254. The remarks of Maule J. in are still profitable. (.») Kfeiuin V. Handle tj (1864) 2 D. J. S. 283. (//) Bmcewellx. WilUams {l^Qf,) L. R. 2 C. P. 196. RULES OF EQUITY. 205 make its way into the treatment of formal contracts, though with a different aspect. The ancient validity of formal contracts could not be amplified, but it might • be restrained : and in fact both the case-law and the legislation of modern times show a marked tendency to cut short if not to abolish their distinctive privileges, and to extend to them as much as possible the free and rational treatment of legal questions which has been developed in modern times by the full recognition of informal transactions. This result is mainly due to the action of the Court Mostcon- of Chancery. A merely gratuitous contract under seal Equity. is enforceable at common law (with some peculiar ex- ceptions) unless it can be shown that behind the apparently gratuitous obligation there is in fact an un- lawful or immoral consideration. Courts of equity did not, in the absence of any special ground of invalidity, interfere with the legal effect of formal instruments : but they would not extend their special protection and their special remedies to agreements, however formal, made without consideration. A voluntary covenant, though under seal, " in equity, where at least the covenantor is living (0), or where specific performance of such a cove- ^^o specific nant is sought . . . stands scarcely, or not at all, on a orvoiuntary better footing than if it were contained in an instrument agreement unsealed " (a). And this restriction is not affected by deed? the union of legal and equitable jurisdiction in the High Court of Justice. The rule that a court of equity will not grant specific performance of a gratuitous agree- ment is so well settled that it is needless to cite further authorities for it : and it is not to be overlooked that (z) We shall see under the head if the donor, or even his representa- of undue influence that a system of tives. choose within any reasonable presumptions has been established time afterwards to dispute it. which makes it difficult in many («) Per Knight Bruce I..J. Kehe- cases for persons claiming under a iricli v. Manning (1851) 1 D. M. G. Toluntary deed to uphold its validity 17(>, 188. IH R. K. jH, 57. 206 CONSIDEEATION. But existi.'iicc of considera- tion may be shown aliunde. Equity will not give effect to imperfect gifts. whereas the other rules that limit the application of this peculiar remedy are of a more or less discretionary kind, and founded on motives of convenience and the practical requirements of procedure rather than on legal principle, this is an unqualified substantive rule. It is the practice of equity, however, at all events when the want of consideration is actively put forward as an objection (and the practice must be the same, it is conceived, when the objection is made by way of defence in an action for specific performance), to admit evidence of an agreement under seal being in fact founded on good consideration, where the deed expresses a nominal consideration (fe) or no consideration at all (c), though (save in a case of fraud or illegality) a consideration actually inconsistent with that expressed in the deed could probably not be shown {h). Closely connected with this in principle is the rule of equity that, although no consideration is required for the validity of a complete declaration of trust {d), or a complete transfer of any legal or equitable interest in property, yet an incomplete voluntary gift creates no right which can be enforced. Thus a voluntary parol gift of an equitable mortgagee's security is not enforce- able ; and, since his interest in the deeds deposited with him, where the mortgage is by deposit, is merely inci- dental to his security, delivery of such deeds by the mortgagee to his donee makes no difference, and does not entitle the donee to retain them against the mort- gagee's representatives (e). Certain modern decisions have indeed shown a tendency to infringe on this rule by (V) LeifckiUVs i-ose (186".) L. R. 1 Eq. 231. (i") Llanelly Ry. and DocU Co. V. L. S- X. W. Bi/'. f'o. (1873) L. E. 8 Ch. 942. (^d) Qu. whether this was origiu- all}- right on principle. (r) ShiWto V. Hohsun (188r>) 30 Ch. Div. 396, u5 L. J. Ch. 741. The delivery over seems to be a wholly unauthorized act deter- mining the bailment at common law, and therefore a trespass against the depositor. RULES OF EQUITY. 207 construing the circimiHtcUices of an incomplete act of bounty into a declaration of trust, notwithstanding that the real intention of the donor was evidently not to make himself a trustee, but io divest himself of all his interest (/). But these have been disapproved in later judgments which seem entitled to more weight (ry). (/■) Rlrhardxnn v. liichanhoii 18 Eq. 11, 48 L. J. Ch. 4r,!) ; 3Ioi>re (18ij7) L. R. 3 P]q. 386, 36 L. J. v. Moore (1874) L. R. 18 Eq. 474, Ch. 6/i3 ; Morgan v. MallexoH 43 L. J. Ch. 617: Ileartley v. (1870) L. R. 10 Eq. 475, 39 L. J. Mc/uiIm»i (1874) L. R. 19 Eii. 233, Ch. 680. 44 L. J. Ch. 277. Cp. Breton v. (/7) Warriner V. Bogers {187 S) ]rwWre«(1881) 17Ch. D. at p. 420, L R. 16 Eq. 340, 42 L. J. Ch. 581 ; 50 L. J. Ch. 369. BirJiards v. Delhridge (1874) L. R. 208 CHAPTER Y. Peksons affected by Contract. General Rules as to Parties. Original type The original and simplest type of contract is an agree- ment creating an obligation between certain persons. The persons are ascertained by their description as individuals, and not by their satisfying any general class description : or, more shortly, they are denoted by proper names and not by class names (a). And the persons who become parties in the obligation created by the agreement are the persons who actually conclude the agreement in the first instance, and those only. The object of this chapter will be to point out the extent to which modern developments of the law of contract have altered this primary' tyj^e either by modifications co-extensive with the whole range of contract or by special classes of exceptions. The fundamental notion from which we must take our departure is one that our own system of law has in common with the Roman system and the modern law of other civilized countries derived therefrom. A wide statement of it may be given in the shape of a maxim thus : Lg„^j effects ^^^^ legal efl'ects of a contract are confined to the confined to contracting parties. parties. ° This, like most, if not all, legal maxims, is a generaliza- tion which can be useful only as a compendious symbol of («) Savigny, Obi. § 5.3 (2. 1(5), generally, ib. §§ 53-70, pp. 17— cp. on the subject of this chapter 186. GENERAL RULES. 209 the particulars from which it is generalized and cannot be understood except l)y reference to those particulars. The This maxim first step towards the necessary development may be given j^vdopa] in a series of more definite but still very general rules, which we shall now endeavour to state, embodying at the same time those qualifications, whether of recent introduc- tion or not, which admit of being stated in an equally general form. It will be convenient to use certain terms in extended Definitions. or special senses. A contract creates an obligation between the contracting parties, consisting of duties on the one part and the right to demand the performance of them on the other. Any party to a contract, so far as he becomes entitled "Creditor" to have anything performed under the contract, is called ^ j^Jj^qj. » the creditor. So far as he becomes bound to perform anything under the contract he is called the debtor. Bepresentatioii, representatives, mean respectively sue- "Represen- cession and the person or persons succeeding to the *^'^^''^"- general rights and liabilities of any person in respect of contracts, whether by reason of the death of that person or otherwise. A third person means any person other '-Third than one of the parties to the contract or his repre- l^*^''*^"- sentatives (/>). Rules. 1. The original parties to a contract must be Rules. persons ascertained at the time when the contract is Parties. made. 2. The creditor can demand performance from the Third persons debtor or his representatives. He cannot demand nor "^'^ *^*^"" ■ can the debtor require him to accej)t performance from any third person : but the debtor or his representatives may perform the duty by an agent. (J)) Contracts for the sale of land parties. But here the obligation is are enforceable in equity by and fr'-atod as attached to the particular against the heirs or devisees of the property. 210 PERSONS AFFECTED BY CONTRACT. Third person not entitled. Assign men t. Notice to debtor. Equities. 3. A third person cannot become entitled by the contract itself to demand the performance of any duty under the contract. This is subject to an exception as to provisions con- tained in a settlement made upon and in consideration of marriage for the benefit of children to be born of the marriage {(■). 4. Persons other than the creditor may become entitled by representation, or by assignment if nothing remains to be done by the assignor under the contract {(J) to stand in the creditor's place and to exercise his rights under the contract. Explanation 1. Title b}^ assignment is not complete as against the debtor without notice to the debtor, and a debtor Avho performs his contract to the original creditor without notice of an}- assignment Iw the creditor is thereby discharged. Explanation 2. The debtor is entitled as against the representatives, and, unless a contrary intention appears by the original contract, as against the assignees of the creditor to the benefit of any defence which he might have had against the creditor himself. Exceptions : Strictly per- sonal duties. The following exceptions given here in order to com- plete the general statement are connected in princi^jle with the cases of a contract for personal services or the exercise of personal skill becoming impossible of perform- ance ])y inevitable accident, of which we speak in Chapter VIII. below. ExcepAion 1. If it appears to have been the intention of the parties that the debtor should perform any duty in person, he cannot perform it by an agent, nor can per- (0 See p. 221, below, (rf) See per Collins M.R. in Tolhurd v. Aniiociated Portland Cenieiit Manitfactwers [1902] 2 K. B. 660, 668, 71 L. J. K. B. 949. sonal rights. GENERAL RULES. 211 formance of it be required from his representatives. Such an intention is presumed in the case of any duty which involves personal confidence between the parties, or the exercise of the debtor's personal skill. Exception 2. If it appears to have been the intention of strictly per- the parties that only the creditor in person should be entitled to have any duty performed, no one can become entitled by representation or assignment to demand the performance of it, nor can such performance be required from the debtor's representatives. Such an intention is presumed if the nature of the transaction involves personal confidence between the parties, or is otherwise such that " personal considera- tions " are of the foundation of the contract (c). Exception 3. The representatives of a deceased person cannot sue for a breach of contract in a case where the breach of contract w'as in itself a merely personal injury, miless special damage to the estate which they represent has resulted from the breach of contract. But where such damage has resulted the representatives may recover compensation for it, notwithstanding that the person whose estate they represent might in his lifetime have brought an action of tort for the personal injury resulting from the same act (/). These propositions are subject to several special qualifi- cations and exceptions. Most of the exceptions are of (e) Cp. Indian Contract Act, Co. v. Lea S; Co. (1880) 5 Q. B. D. 88. 37, 40. See Sterem v. Beniiim/ 149. 1.52, 49 L. J. Q. B. 321, and (18.54) 1 K. & J. 168, 24 L. J. Ch. will not be extended : Phillips v. lo3, 1()(; R. R. 90 ; Farrow y. Wilson Hull Alhavihra Palace Co. [1901 ] (1869) L. R. 4 C. P. 744, 746, 38 1 Q. B. .59, 70 L. J. Q. B. 26. L. J. C. P. 32(; ; RohinsoH v. Pari- (/") See 1 Wnis. Exors. 709, 9th son (1871) L. R. 6 Ex. 269, 40 L. .1. (■d.."and Brad.shau) v. Lancashire S{ Ex. 172 ; Finlaij v. Chirnni (1888) Yorh.shire Bi/. Co. (187.5) L. R. 10 20 Q. B. Div. 494, .57 L. ,J. Q. B. 247 ; C. P. 189, 44' L. .J. C. P. 148 (since Rohson V. Druiniiiond (1831) 2 B. i: questioned in Leqqoit v. (1. N. By. Ad. 303, 36 R. R. .569 ; but this Co. (187(;) 1 Q. B.' D. 599, 45 L. J. case goes very far : British Waz/f/on Q. B. 057). p2 212 PERSONS AFFECTED BY CONTRACT. inodeni origin, and we shall see that since their establish- ment many attempts have been made to extend them. Such attempts have in some departments been successful, while in others exceptions which for some time were admitted have been more recently disallowed. We shall now go through the rules thus stated in order, pointing out under each the limits within which exceptions are admitted in the present state of the law. The decisions which limit the exceptions are (as com- monly happens in our l)ooks) for the most part the chief authorities to show the existence of the rules. Rule ]. Our first rule is that tlic oriijinal parties to a contract Parties • must be persons ascert lined at tJie time when the contract ascertained. '^ made. It is obvious that there cannot be a contract without at least one ascertained party to make it in the first instance ; and it is also an elementary principle of law that a contracting party cannot bind himself by a floating obligation to a person unascertained. The rule has been thus expressed : "A party cannot have an agreement with the whole world ; he must have some person with whom the contract is made " (g). There is no exception to this rule in such cases as those of promises or undertakings addressed to the public at large by advertisements or the like, and sales by auction. For, as we have already seen in Chap. I., the contract formed in any such case is formed between two ascer- tained persons by one of them accepting a proposal made to him by the other, though possibly made to him in common with all other persons to whose knowledge it may come. Effects of Contract as to TJdrd Persons. The affirmative part of our second rule, namely : 'The creditor can demand performance from the debtor or his Q/) Squirt- V. WhittoH (^1848) 1 H. L. C. 333, 358. PARTIES MUST BR ASCERTAINED. 213 irpyesentatirea, is now and lon^ has been, though it was not always elementary (h). The negative part of it states that the creditor cannot Rule 2. demand, nor can the debtor require Idm to accept, iierform- No liability ance from any tliird person. This is subject to the third^p*ersoiis. explanation that the debtor or his representatives may perform the duty by an agent, which again is modified by the exception of strictly personal contracts as mentioned at the end of the rules. On this we need not dwell at present. It is obvious on principle that it is not competent to contracting parties to impose liabilities on other persons without their consent. Every person not subject to any legal incapacity may dispose freely of his actions and property within the limits allowed by the general law. Liability on a con- tract consists in further limitation of this disposing power by a voluntary act of the party which places some definite portion of that power at the command of the other party to the contract. 80 much of the debtor's (A) As to the liability of peisoiial representatives on the contracts of the testator or intestate see 1 Wnis. Saund. 241-2. The old rule that an action of debt on simple contract would not lie against executors where the testator could have wagci-l his law (though it is said the objection could be taken only by demurrer) seems to have been in truth an innovation. Sec the form of writ for or against executors, Fleta 1. 2, c. 02. S 9 ; and cp. F. N. B. 119 M, 121 O (the latter passage is curious : if a man has entered into religion his executors shall be sued for his debt, not tlie abbot who accepteil him into religion : see p. 8(>, n. {:), supra, and V. B. HO Ed. I. p. 238. It is said, how- ever, that " Quia executores non (lossunt facere legem pro defuncto, petens proVjabit talliam suam, vel si habeat sectam secta debet exa- niinari ; et hoc est verum sive sit niercator sive non " : Y. B. 22 Ed. I. p. 4.j(;). For the conflict of opinion as to the remedy by assumpsit, sec Reeves 3. 4U3, Y. B. Mich. 2 H. VI II. 11, pL 3, the strange dictum contra of Fitzherbert, Trin. 27 H. VI n. 23, pL 21, who said there was no remetly at all (appa- rently on the ground that a cause of .action in assumpsit was for a tort, and therefoi'e died with the defendant's person), and Nuraymd V. Head (1557-8) in B. R., I'low. ISO. In Pint'ltDii's rase (l(i]2) in Kx. <'h. !) Co. Rep. 80 b. tiiis dictum was overruled, authorities reviewed and explained, and the common law settled in substance as it now is. Its founda- tion in principle. '214 PERSONS AFFECTED BY CONTRACT. Ageucy : the exception only apparent. "When com- panies held in equity to promoters' agreements ; not ex contract I/. inclividual freedom is taken from bim and made over to the creditor (/)• When there is an obligation indepen- dent of contract, a similar result is produced without regard to the will of the party ; the liability is annexed by law to some wrongful act or default in the case of tort, and in the case of contracts " implied in law " to another class of events which may be roughly described as involving the accession of benefit through the involuntar}' loss of another person; but when an ol)ligation is founded upon a real contract, the assent of a person to be bound is at the root of the matter and is indispensable (A). The ordinary doctrines of agency form no real ex- ception to this. For a contract made by an agent can bind the principal only by force of a previous authority or subsequent ratification ; and that authority or rati- fication is nothing else than the assent of the principal to be bound, and the contract which binds him in his own contract. Under certain conditions there may be a contract binding on the agent also, as we have seen in Chap. II., but with that we are not here concerned. Another less simple apparent exception occurs in the cases in which companies have been held bound by agreements or representations (/) made by their pro- moters before the companies had any legal existence. These cases, however, proceed partly on the ground of a distinct obligation having either been imposed on the company in its original constitution, or assumed by it after its formation (m), j^artly on a ground independent B. the duty of all men to respect the rights of B. instead of A., as owner of that land, is a duty under the contract of sale or tlie conveyance. (Z) Jifl Mfitroj). foal Consumers^ A.titociation, Karherg^x case [1892] 3 Ch. 1,61 L.J. Chi 741, C. A. (;«) Lindley on Companies, 146, 149. (/) Tp. Savigny, Obi. § 2. (/,') It is now settled law that a stranger niaj' be liable in tort for procuring 1 he bieach of a contract : National FhoDoqra pli Co.w Edison- Bell Co. ["1908] 1 Ch. 83.5, 77 L. J. Ch. 218, C. A. But this is not an obligation under the contract, any more than when A. sells his land to NOVATION. 215 of contract and analogous to estoppel, namely, that when any person has on certain terms assisted or abstained from hindering the promoters of a company in obtaining the constitution and the powers sought by them, the company when constituted must not exercise its powers to the prejudice of that person and in violation of those terms. The doctrine as now established probably goes as far as this, but certainly no farther (»). In one case of a suit in equity for specific performance stranger held of an award a third person interested in the subject- 1^^^^"^ j/ matter was made a party, and was held to be bound equity : by the award, though he had not been a party to the '^^ ^"' reference and had in no way assented to it, but simply knew of it and remained passive (o). But it has been held by higher authority (p) that in a suit for the specific performance of a contract third persons claiming an in- terest in the subject-matter are not even proper parties : and even without this it seems obvious that A. and B. have no business to submit C.'s rights to the arbitration of D. It is apprehended accordingly that this exception may be treated as non-existent. Another branch of the same general doctrine is that Novation. the debtor cannot be allowed to substitute another person's liability for his own without the creditor's assent. A contract cannot be made except with the person with whom one intends to contract (q). When a creditor assents at the debtor's request to accept (w) Lindley on Companies, 152. parties to it. As to ratification by companies, see ( /i) Taskcr v. Sniall (1 887) 3 My. p. 114, above. & Cr. 63, 45 R. R. 212, followed in io) Govett V. lUchmoiid (1S34) 7 Do Ho(ihton v. Money (ISOd) L. R. Sim. 1, 40 R. R. 5G, doubted in 2 Ch. Ittl. Martin v. L. C. of D. Uij. Co. (hStJC)) [q) llolmm v. DniiiititiniiJ (1831) L. R. 1 Ch. 501, 507, 35 I.. J. Ch. 2 15. & Ad. 303, 3C. R. R. 561), see 795. In laylor v. Parry (1840) note ('■), p. 211, above. Other cases 1 Man. & Gr. 601, the Court relied bearing on the same point arc con- on positive acts of the parties as sidercd for another pur^iosc in showing that they adopted the Ch. IX. below, reference and were substantially 216 PERSONS AFFECTED BY CONTRACT. another person as his debtor in the place of the first, this is called a novation. Whether there has been a novation in any particular case is a question of fact, but assent to a novation is not to be inferred from conduct unless there has been a distinct and unambiguous re- quest (;•)• Such questions are especially important in ascertaining who is liable for the partnership debts of a firm when there has been a change in the members of the firm, or on contracts made in a business which has been handed over by one firm (whether carried on by a single person, a partnership, or a company) to another. A series of cases which were, or were supposed to be, of this kind arose about 1875 out of successive amalgama- tions of life insurance companies {s). The question may l)e resolved into two parts : Did the new firm assume the debts and liabilities of the old '? and did the creditor, knowing this, consent to accept the liability of the new firm and discharge the original debtor "? it). It would be be3'ond our scope to enter at large on this subject (n). Real excep- There exist, however, exceptions to the genera] rule. In tions to come certain cases a new liability may without novation be under laue 4 . , ,. . . . created in substitution for or ni addition to an existing liability, but where the possibility exists of such an ex- ceptional transfer of liabilities it is bound up with the correlated possibility of an exceptional transfer of rights, and cannot be considered alone. For this reason the exceptions in question will come naturally to our notice (r) Conquetit'x case (187o) 1 Ch. («) See Lindley on Partnership. Div. 3.Si. 341, ■!.■) I,. J. Ch. 3Hi;. 246 xqq., and as to the general (s) It is doubtful whether some principle of novation, see Wihun v. of these were really eases of nova- Uoijd (1873) L. R. l(j Eq. 6U, 74. tion : see Ilorfx rr/.vc and Gni'rns 42 L. J. Ch. 059: for a later caxe (1S75) 1 Ch. D. 307. 322. 4.") instance of true novation. Millers L. J. Ch. 321. case (1876) 3 Ch. Div. 391. The (t) See Bolfe v. Flower (186r)) latest authoritTisPr/vy v.A^f/owf/? L. R. 1 P. C. 27. 44, 3.5 L. J. P. Pror. BiniJt of Ein/land [1910] 1 C. 13. Cli. 464. NOVATION. 217 under Rule 4, when we deal with the peculiar modes in which rights arising out of certain classes of contracts are transferred. Apart from novation in the proper sense, the creditor may bind himself once for all by the original contract to accept a substituted liability at the del)tor's option. Such an arrangement is in the nature of things unlikely to occur in the ordinary dealings of private persons among them- selves. But it was decided in the winding-up of the European Assurance Society that where the deed of settle- ment of an insurance company contained a power to transfer the business and liabilities to another company, a transfer made under this power was binding on the policy- holders and they had no claim against the original com- pany (x). In the case of a policy-holder there is indeed no subsisting debt (x), but he is a creditor in the wider sense above defined (p. 209). Rule 3. .1 tJiird person cannot become entitled hi/ the contract itself to demand the performance of ani/ datji under the contract. Before we consider the possibility of creating arbitrary lude 3. exceptions to this rule in any particular eases, there are ^^"' ligbts . . conferred on some extensive classes of contracts and transactions third persons. analogous to contract which call for attention as offering real or apparent anomalies. A. Contracts made by agents. Here the exception Exceptions. is only apparent. The principal acc^uires rights under a ^.f^^^^^J^^^^ contract which he did not make in person. But the agent is only his instrument to make the contract within the limits of the authority given to him, however exten- sive that autliority may he : and from the lieginning to (jr) Ilort's (Y/,srand Grain x ni.sr Div. 32(1, 4.') L. .J. ('li..3:?2 ; Corhi'v's (187.5) 1 Ch. D. 3U7, 45 L. .1. Ch. rase (1870) 3 Ch. Div. 1, 4.^ L. .1. 321 ; Harman's ra.sfl (187.5) 1 Ch. < 'h. 882. onlv, 218 PERSONS AFFECTED BY CONTRACT. the end of the transaction the real contracting party is the principal. Degrees of Consider the following series of steps from mere agency. service to full discretionary powers : 1. A messenger is charged to convey a proposal, or the acceptance or refusal of one, to a specified person. 2. He IS authorized to vary the terms of the proposal, or to endeavour to obtain a variation on the other party's proposal [i.e., to make the best bargain he can with the particular person), within certain limits. 3. He is not confined to one person, but is authorized to conclude the contract with any one of several specified persons, or generally with an}^ one from whom he can get the best terms. 4. He is not confined to one particular contract, but is authorized generally to make such contracts in a specified line of business or for specified purposes as he may judge best for the principal's interest (y). Agent The fact that in many cases an agent contracts for contracting himself as well as for his principal, and the modifications personally. . , . . which are introduced into the relations between the principal and the other party according as the agent is or is not known to be an agent at the time when the contract is made, do not prevent the acts of the agent within his authority from being for the purposes of the contract the acts of the principal, or the principal from being the real contracting party. Again when the agent is also a contracting party there are two alternative con- tracts with the agent and with the principal respectively. Ratification. As for the subsequent ratification of unauthorized acts, there is no difference for our present purpose between a contract made with authority and one made without authority and sul)sequently ratified. The consent of the principal is referred back to the date of the original act by a beneficent and necessary fiction. (?/) Cp. Savigny, Obi. 2. .57- (iO. TRUSTS. 219 B. There are certain relations created by contract, of Other which that of creditor, principal debtor, and surety may princi>a and be taken as the type, in which the rights or duties of one surety ; terms party may be varied by a new contract between others. hTw^to^'^ ^ But when a surety is discharged by dealings between the original contrfiCt creditor and the principal debtor, this is the result of a condition annexed by law to the surety's original contract. There is accordingly no real anomaly, though there is an apparent exception to the vague maxim that the legal effects of a contract are confined to the contracting parties : and there is not even any verbal inconsistency with any of the more definite rules we have stated. These cases are mentioned only because they have been considered as real exceptions b}^ writers of recognized authority (z). Insolvency and bankruptcy, again, have various conse- Anomalous quences which affect the rights of parties to contracts, but bankruptcy which the general principles of contract are inadequate to ^"'l ^^- 1 • -ITT 11 T i ,1 • ,1 • , solvency. explam. We allude to them m this place only to observe that it is best to regard them not as derived from or inci- dental to contract, but as results of an overriding necessity and beyond the region of contract altogether (a). Even those transactions in bankruptcy and insolvency which have some resemblance to contracts, such as statutory compositions with creditors, are really of a judicial or quasi-judicial character. It is obvious that if these transactions were merely contracts no dissenting creditor could be bound. C. The case of trusts presents a real and important Trusts : a real exception, if a trust is regarded as in its origin a contract t^„st^a con-^ between the author of the trust and the trustee. It is tract between quite possi])le, and may for some purposes be useful so to tnisrand regard it. The Scottish institutional writers (who follow trustee. (c) See ro(lii(>r, 01)1. 5; ,s;». sec per Lord Oairns, Jidnncr v. (a) A striking instance is fur- .Johiidon (1871) L. R. 5 H. L. at nished by the rule in Warimfs case p. 171, 40 L. J. Ch. 7.30. (1815) 19 Ves. 345, 13 R. R. 217; 220 PERSONS AFFECTED BY CONTRACT. So treated by Scottish and American writers : analogy suggested in English books. General analogy to contract. the Roman arrangement in the learning of Obligations as elsewhere) consider trust as a species of real contract coming under the head of depositation (h). Conversely deposits, bailments, and the contract implied by law which is the foundation of the action for money received, are spoken of in English books as analogous to trusts (c). A chapter on the duties of trustees forms part of the best known American text-books on contracts, though no attempt is made, so far as we have ascertained, to explain the logical connection of this with the rest of the subject. By the creation of a trust duties are imposed on and undertaken b}' the trustee which persons not parties to the transaction, nor even not in existence at its date, may afterwards enforce. And the relation of a trustee to his rrstui qui' trxsf is closely analogous to that of a debtor to his creditor, in so far as it has the nature of a personal obligation and is governed by the general rules derived from the personal character of obligations. Thus the transfer of equitable rights of any kind is subject, as regards the perfection of the transferee's title, to precisely the same conditions as the transfer of rights under a contract. And the true way to understand the nature and incidents of equitable ownership is to start with the notion not of a real ownership which is protected only in a court of equity, but of a contract with the legal owner which (in the case of trusts properly so called) cannot be enforced at all, or (in the case of constructive trusts, such as that which arises on a contract for the sale of land) cannot be enforced completely, except in a court of equity (^0- However, although every trust may be said to include a contract, it includes so much more, and the purposes (J) Sir. though no such abstract term is known in Koman law. See Erskine, Inst. Bk. 3, Tit. 1. s. 32. (f) Blackstone. Comni. iii. 432. (r/) See per Lord Westbury, K/iox V. (ii/p (1871 2) L. U. r, H. L. at }.. Cir,. 42 L. .J. Ch. 234 : Sfiaw v. Fo.sfrr (1872) L. K. o H. L. at p. 338 (Lord Cairns) and at p. 356 (Lord Hatherley) : 42 L. J. Ch. 49. MARRIA(^E SETTLEMENTS. 221 for which the machinery of trusts is employed are of so different a land, that trusts are distinct in a marked way not merely from every other species of contract, but from all other contracts as a genus. The complex rela- tions involved in a trust cannot Ije reduced to the ordinary elements of contract. D. Closely connected with the cases covered by the Exception doctrine of trusts, but extending beyond them, we have provisions for the rules of equity by which special favour is extended children. to provisions made by parents for their children. This exception has already been noted in stating the general rule (e). In the ordinary case of a marriage settlement the children of the contemplated marriage itself are said to be " within the consideration of marriage " {/) and may enforce any covenant for their benefit contained in the settlement. Where a settlement made on the marriage of a widow provides for her children by a former marriage, such children, though in the technical language of equity volunteers, or persons having no part in the consideration, have been held entitled to enforce the provisions for their benefit ; but this extension has been doubted in the Court of Appeal (//). E. There is also a class of statutory exceptions (though statutory of decreasing importance) in cases where companies and pow^ifi-sTo^sne public bodies, though not incorporated, are empowered by public to sue and be sued by their public officers or trustees. 00 p. 210, above ; cp. per Cotton Wells (1887) 37 Ch. D. 32, 57 L. J. L. J. lo Ch. D. at p. 242. Ch. 69. The question how far (/) It is even said that con- limitations in a marriage settle- sideration moves, or is assumed to ment to persons other than children move, from them. But it must not can be supported by the considera- be inferred from this that equity tion of marriage, so as not to be regards " la peine de naitre " as a defeasible under 27 Eliz. c. 4, legal detriment. against subsequent purchasers, is a iff) Gale V. Gale (1877) Ch. U. distinct and wider one, not falling 144, 1.52, 46 L. J. Ch. 801), criti- within the scope of the present cized per Lindley L.J. A.-G. v. work. See Gale v. Gale for Jaeohx ;-r/r) Man. & Gr. 42. v. Clydebank Engineerhui Co. (rf) PheJpK v. Lijle (1839) 10 A. k [1902] A. C. 524, 71 L. J. P.' C. 94. q2 228 PERSONS AFFECTED BY CONTRACT. of agents, auctioneers, or factors, these exceptions are in truth more apparent than real. The persons who are suing here are mere agents, managers of an assurance association of which they are not members ; and they are suing for premiums alleged to have become payable by the defendant in respect of policies effected by the plaintiffs for him, and for his share and contributions to losses and damages paid by them to other members of the association whose vessels have been lost or damaged. The bare statement of the facts is enough to show that the action cannot be maintained. ... It is in effect an attempt to substitute a person as a nominal plaintiff in lieu of the persons whose rights have been violated." Notes and bills payable to holder of office. At common law the payee of a negotiable instriuiient must, on the same principle, be a person who can be ascertained at the time of accepting the bill or making the note. But by the Bills of Exchange Act, 1882, s. 7, a bill (and it seems by ss. 73 and 89 also a cheque or a promissory note) may l)e made payable to the holder of an office for the time being (//). Rule i. Transfer of rights under contract. Right to sue on contract not assign- able at common law AssitiiDiieut of Contracts. Rule 4. We now come to the fourth rule, which we have expressed thus : — Prrsojis other than tJic creditor may become entitled by representation or assignment to stand in the creditor's place and to exercise liis rights under tlie contract. We need sa}^ nothing here about the right of personal representatives to enforce the contracts of the person they represent, except that it has been recognized from the earliest period of the history of our present system of law (/;). With regard to assignment, the benefit of a contract cannot be assigned (except by the Crown) at common law so as to enable the assignee to sue in his own ((/) On the former law see Holmes V. Jaqiies (1866) L. R. 1 Q. B. 376, 3.5 L. J. Q. B. 130. (A) SulDJect to some technical exceptions which have now disap- peared : see notes to Wheatley v. Lxue (1667) 1 Wms. Saund. 240 sqq. and for early instances of actions of debt brought by executors, Y. B. 20 & 21 Ed. I. pp. 304, 374. ASSIGNMENT OF CONTRACTS, 229 name (i). The origin of the rule was attributed b}/ Coke probable to the "wisdom and poHcy of the founders of our law" in J^g'' ""^ ^^^ discouraging maintenance and litigation (A) : but it is better explained as a logical consequence of the archaic view of a contract as creating a strictly personal obligation between the creditor and the debtor (/). That same rule is stated by Gains as prevailing in the Roman law (///). Anyhow it has been long established that the proper course at common law is for the assignee to sue in the name of the assignor. It appears from the Year Books that attempts were sometimes made to object to actions of this kind on the ground of maintenance, but without success. In equity the right of the assignee was pretty soon In equity recognised and protected, that is, if the assignor refused sue^if to empower the assignee to sue in his name at law. necessary : Where the assignee had an easy remedy by suing in the name of the assignor, the Court of Chancery would not interfere (»). But equity also regarded the protection of the debtor ; subject to the modern law still does so, and therefore will not ijeino- prejudiced. (() Tci'men (Ir la Le;/, tit. Cliose tur, id efficere possum : scd opus est, in Action. utiubeute nie tu ab eo stipuleris : (A) Lf(Mj)et\-i case (1613) 10 Co. quae res efficit ut a me liberetur et Rep. 18 «. For exposition of the incipiat libit teneri ([uae dicitur rule iu detail, see Dicey on Parties, novatio oblit,'ationis. Sine hac vero 11.5. novatione non poteris tuo nomine (0 Spence, Ecj. Jurisd. of Chy. agere, sed debes ex persona mea 2. 8.50. An examination of the cpiasi cognitor aut procurator mens earlier authorities has been found experiri. In later times the trans- to confirm this view. The rule is feree of a debt was enabled to sue assumed as un(iuestionable, and by iif/li.s actio in his own name, there is no trace of Coke"s reason This seems to have been first intro- for it. The oijjection of mainten- duced only for tlie benefit of the ance was set up, not against the purchaser of an inheritance : D. 2. assignee suing in his own name, 14 de pactis, 16 j"'-, C. -1. 39. de which was never attempted so far hered. vel act. vend. 1, 2, 4 — (! ; as we can find, but against liis and afterwards extended to all suing in the name of the assignor : cases : C. eod. tit. 7, 9. See too see Note F in Appendix. C. 4. 10. de obi. et act. 1, 2, C. 4. (»0 Gai. 2. 38, 'A{). Quod mihi 15. quando fiscus, 5. ab aliquo debetur, id si vclim tibi («) Hammond v. Messemjer deberi, nullo eorum modo qnibus (1H3,S) it Sim. 327, Spence, 2. 8.54. res corporales ad ahum transferun- llarv. Law Kev. i. 6 — 7. 230 PERSONS AFFECTED BY CONTRACT. Legal right of assignee under Judica- ture Act, 1873. In e juity more extensive : how far governed by Statute of Frauds, qu. enforce an assignment by which the debtor's burden is increased {<>) or his remedies diminished {p). The Supreme Court of Judicature Act, 1873 (s. 25, sub-s. 6), creates a legal right to sue in the assignee's own name, but confined to cases where the assignment is absolute () Kemj)\. Barradmati [1906] 2 K. B. (;04, 75 L. J. K. B. 873, C. A., where the assignor had turned his business into a limited company, and part of the original considera- tion on his side was a promise )jy which the company could not be bound. ((/) J'ancred v. Dehigoa Bail und E. Africa Ry. Co. (1889) 23 Q. B. D. 239, 58 L. J. Q. B. 459. An absolute assignment may be subject to a trust in respect of the moneys recovered : Comfort v. Bett.'< [ 1 891 ] 1 Q. B. 737, 60 L. J. Q. B. 656, C. A. Whether the sub-section applies to an assignment of part of an entire debt, quare : Durham Br on. V. RoherUon [1898] 1 Q. B. 765, 774, 67 L. J. Q. B. 484, C. A. At all events an undefined part will not do : Jones v. IIiniij)/irei/.'i [1902] 1 K. B. 10,71L. J. K. B.23. See further as to what amounts to an absolute assignment, Mercaiitllp Bank of London v. Eranx [1899] 2 Q. B. 613, 68 L. J. Q. B. 921, C. A. ; Jfarc/ia/it v. Morton. Doicn Si' Co. [1901] 2 K. B. 829, 70 L. J. K. B. 820 : Iluqhes v. Piimj) House Hotel Co. [1902] 2 K. B. 190, 71 L. J. K. B. 630, C. A. The term " legal chose in action" in a correspond- ing Colonial Act has been held to include a cause of action for negli- gence : King v. Victoria In-^urance Co. [1896] A. C. 250, 65 L. J. P. C. 38 ; and see per Farwell J.. Manchester Brewery Co. v. Coomhts [1901] 2 Ch. 608, 619, 70 L. J. Ch. 814. It includes a claim to com- pensation under s. 68 of the Lands Clauses Act : Dawson v. G. X. 4- Cltq Ry. Co. [1905] 1 K. B. 260, 74 L. J. K. B. 190, C. A. ; and the benefit of a contract for the purchase of a reversion : Torkhig- ton V. Mayee [1902] 2 K. B. 427. 71 L. J. K. B. 712, revd. in C. A. on other grounds [1903] 1 K. H. 644, 72 L.J. K. B. 336. "ASSIGNMENT OF CONTRACTS. 231 action : and it may be argued perhaps that its operation is altogether confined to interests in land by the context in which it occurs. The writer is not aware of any decision upon it (r). It seems that to constitute an equitable assignment there must be at least an order to pay out of a specified fund (.s). As for the notice to the debtor, the rule of equity is that it must be express but need not be in writing {t). There remain, therefore, a great number of cases where the right is purely equitable, although the enlarged jurisdiction of every branch of the Supreme Court makes the distinction less material than formerly. The Judi- cature Act does not in any way impair the efficacy of a transaction which would have been a good equitable assignment before the Act (a). In ordinary cases (.r) rights under a contract derived Limitation by assignment from the original creditor are subject, as ^^.'^^r^"^^^ already stated, to the following limitations : — 1st. Title by assignment is not complete as against the debtor without notice to the debtor, and a debtor who performs his contract to the original creditor with- out notice of any assignment by the creditor is thereby discharged. '2nd. The debtor is entitled as against the representa- tives, and, unless a contrary intention appears by the original contract, as against the assignees of the creditor, (/•) Sec 1 Sanders on Uses, 5th (w) William Brandt's Sons ^S' Co. ed. 343. V. Dunlop Ruhher Co. [1905] A. U. (»■) Perrical M.Dunn (1885) 29 Ch. 454, 74 L. J. K. B. 898. Div. 128, 54 L. J. Ch. 572. An («■) It does not seem useful, at adventurous attempt to extend the this day, to refer here to the various conception of ecjuitable assignment statutes passed in the course of the maybeseenin U>.v//'/-« II «^/(//t rt«r/ nineteenth century which made Property Co. v. We.st [1892J 1 Ch. various lands of securities and 271, (Jl L. J. Ch. 244. things in action speciallv trans- (t) Rp Tirhpnrr {m\ri) 35 Beav. ferable. 317. 232 pp:rsons affected by contract. Eules of equitable assignment in general. Notice to debtor. to the benefit of any defence which he might have had against the creditor himself. 1. As to notice to the debtor. Notice is not necessary to complete the assignee's equitable right as against the original creditor himself, or as against his representatives, including assignees in bankruptcy (y) : but the claims of comj)eting assignees or incumbrancers rank as between tliemselves not according to the order in date of the assign- ments, but according to the dates at which they have respectively given notice to the debtor. This was decided b}" the cases of Dearie v. Hall and Loveridge v. Cooper (z), the principle of which was soon afterwards affirmed by the House of Lords (a). The same rule prevails in the modern civil law (h) and has been adopted from it in the Scottish law (c) ; and the true reason of it, though not made very prominent in the decisions which establish the rule in England, is the protection of the debtor. He has a right to look to the person with whom he made his contract to accept performance of it, and to give him a discharge, unless and until he is distinctly informed that he is to look to some other person. According to the original strict conception of contract (" a ne considerer que la subtilite du droit" as Pothier (d) expressed it), his creditor or his creditor's assignee cannot even require him to do this, any more than in the converse but sub- {,!/) Burn V. Carrallio (1831)) 4 M. & ('r. GllO, 4S R. 11. 218. (.-) (1828-7) 8 Kuss. 1, 38, 48, 27 R. R. 1 . The application of the rule is not modified by considera- tion of the parties' relative merits as to dilia:ence in particular cases : Re Lake' [V^0^ 1 K. B. l.'.l. 72 L. J. K. B. 117. Cp. (though not quite in pari materia') Jarrd v. Clemenfii ri!»03] 1 Ch. 428, 72 L.J. Ch. 291. C. A. {a) Foster v. CocTierell (1835) 3 CI. & F. 4.5fi, 39 R. E. 24. It has only lately been decided that a second assignee who takes his as- signment not from the beneficiary himself, but from his legal personal representative, may equally gain priority by notice : Fres/i field's Trusts (1879) 11 Ch. Div.' 198. The rule is criticized, though allowed to be settled law, in ^yard V. Dunromhc [1893] A. C. 369, per Lord ilacnaghten at pp. 391-3, 62 L. J. Ch. 881. {h) See Pothier, Contrat de Veute, §§ .")()0, .554 sqq. (e) Erskine Inst. Bk. 3, Tit. 5. ((/) Contrat de Vente. § 551. ASSIGNMENT : NOTICE TO DEBTOR. 233 stantially different case a debtor can require his creditor to accept another person's Kabihty, and his assent must be expressed by a novation (e). Such was in fact the old Roman law, as is shown by the passage already cited from Gains. By the modern practice the novation is dispensed with, and the debtor becomes bound to the assignee of whom he has notice. But he cannot be bound by any other assignment, though prior in time, of which he knows nothing. He is free if he has fulfilled his obligation to the original creditor without notice of any assignment ; he is equally free if he fulfils it to the assignee of whose right he is first informed, not knowing either of any prior assignment by the original creditor or of any subsequent assignment by the new creditor {/). It is enough for the completion of the assignee's title " if notice be given to the person b}^ whom payment of the assigned debt is to be made, whether that person is him- self liable or is merely charged with the duty of making the payment" (//), e.g., as an agent entrusted with a particular fund. Notice not given by the assignee may be sufficient, if shown to be such as a reasonable man would act upon (//). All this doctrine of notice has no This does not application to interests in land (i): but, subject to that apply to . . ,. . , 11 11 interests in exception, it applies to rights created by trust as well as land ; but to those created by contract ; the beneficial interest being ^^j^^^.^^ ^|i\. able interests. (e) See p. 215, above. (//) Lloyd v. JJauJ/x (18GS) L. R. (/) See per Willes J., L. K. o 3 Ch. 48.S. C. P. at p. 594. Per Knight Bruce (/) Although the exception is L.J. Sforkx V. IJoh.WH nSoiJ) 4 D. fully established its leasonableness M. G. II, 102 R. R. 1, f), 17, 22 is doubtful. Its effect is that equit- L. J. (Jh. 884. Notice after a able interests in laud stand on a negotiable instrument has been different footing from personal given by the debtor is too late rights : see this relied on as the even if the instrument is still held ground of the exception, Jone.s v. by the original creditor : Bcm-e v. ^ow^.s' (1837-38) 1 Sim. «;33, 42 R. R. Shearman [1898] 2 Gh. 582, 67 249. But on the other hand their L. J. Ch. 513, C. A. liability to be defeated by a pur- 0) Per Lord Selborne C. Addimn. chase of the legal estate for value V. ('i).r (1872) L. R. 8 Ch. IC. 79, 42 without notice shows that they fall L. J. Ch. 291. shoit of real ownershij). 234 PERSONS AFFECTED BY CONTRACT. treated for tliis purpose exactly as if it were a debt due from the trustee. In the case of trusts a difficulty may arise from a change of trustees ; for it may happen that a fund is transferred to a new set of trustees without any notice of an assignment which has been duly notified to their predecessors, and that notice is given to the new trustees of some other assignment. The first assignee prevails if he gave notice to all the trustees in existence at the date of his assignment (k), but the new trustees cannot be made personally liable for having acted on the second assignment (/). If, however, only one trustee has notice of A.'s incumbrance, and dies, and after his death another incuml)raucer B. gives notice lo all the then existing trustees, B. will be preferred {m). The rules as to notice apply to dealings with future or contingent as well as with present and liquidated claims. " An assurance office might lend money upon a policy of insurance to a person who had insured his life, notwith- standing any previous assignment by him of the policy of which no notice had ))een given to them" (h). Assignee 2. As to the debtor's rights against assignees. The rule takes subject ^ -j Jq^^^^ j^ ^l^^, second explanation is often expressed in to equities : J- '- double the maxim " The assignee of an equity is bound by all the tbeTule^ equities aflecting it. " This, however, includes another rule founded on a distinct principle, which is that no transac- tion purporting to give a beneficial interest apart from legal ownership can confer on the person who takes or is intended to take such an interest any better right than (/.') Be Wdsdalr [18S)9] 1 Ch. tees, being the onlj' one who has 164, 08 L. J. Ch. 117. notice of an incumbrance, does not (/) Phijjjjs V. Loregvore (1873) deprive that incumbrance of the L. R. 16 Eq. 80. 42 L*. J. Ch. 892 ; priority it has gained : Ward v. see L. R. 16 Eq. p. 90 as to the Duncomhe [1893] A. C. 369, 62 precautions to be taken by an as- L. J. Ch. 881. signee of an equitable interest who («/") Phillips' Trust. i [1903] 1 wishes to be perfectly safe. The Ch. 183. 72 L. J. Ch. 94. death of one of two or more trus- '//) L. K. 16 Eq. at p. 88. ASSIGNMENT SUBJECT TO EQUITIES. 235 belonged to the person professing to give it him. If A. contracts with B. to give B. something whicli he has ah-eady contracted to give C, then C's claim to have the thing must prevail over B.'s, whether B. knew of the prior contract with C. or not (o). And if B. makes over his right to D., D. will have no better right than B. had (j)) . And this applies not only to absolute but to partial interests (such as equitable charges on property) to the extent to which they may affect the property dealt with. Again, by a slightly different application of the same principle, a creditor of A. who becomes entitled by operation of law to appropriate for the satisfaction of his debt any beneficial interest of A.'s (whether an equitable interest in property or a right of action) can claim nothing more than such interest as A. actually had ; and he can gain no priority by notice to A.'s trustee or debtor even in cases where he might have gained it if A. had made an express and unqualified assignment to him (q). But ^Ye are not con- cerned here with the development of these doctrines, and we return to the other sense of the general maxim. In that sense it is used in such judicial expressions as the following : •■ If there is one rule more perfectly estal)lislied in a court of equity than another, it is this, that whoever takes an assignment of a chose in action takes it subject to all the equities of the person who made the assignment '" (r). " It is a rule and principle of this Court, and of every Court, I believe, that where there is a chose in action, whether it is a debt, or an obliga- tion, or a trust fund, and it is assigned, the person who holds the debt or 00 This is of course consistent Co. (ISCS) L. R. 3 C. P. 235, 37 with B. having his remedy in L. J. C. P. 118, overruling virtually damages. Cp. p. 33, above. Wtiffs v. Porter (1854) 3 E. & B. {]>) See Pikh'tt v. Wriijht (1842) 743, 23 L. J. Q. B. 34.5, 97 R. R. 731, 2 Ha. 120, aifd. nom. ^Ixivniy v. see Croio v. Rooinson, liob'iimui v. Pinhett (1846) 12 CI. & F. 7(i4, (;9 ^^,'^h■,ff (1808) L. R. 3 C. P. 264, 37 R. R. 191 ; Ford v. Whitr (18.-)2) L. J. C. P. 124 : judgment of Erie 10 I'.eav. 120, 90 R. R. :>:> ; Clark J. (rZ/.M.) in Watts v. Porter. v.\JIoUauil(1H'>i) 19 P.eav. 202, 10."> (/•) Lord St. Leonards, Main/lcx R. R. 134. V. Di.vo7i (18r,2) 3 H. L. C. 702, (-/) I'irhcriiKi V. llfraromlH' llij. 731, 88 R. R. 290. 311. 236 PERSONS AFFECTED BY CONTRACT. obligation, or has undertaken to hold the trust fund, has as against the assignee exactly the same equities that he would have as against the assignor "(.y). This is in fact the same principle which is appUed by common law as well as equity jurisdictions for the protec- tion of persons who contract with agents not known to them at the time to be agents (0- What is meant by this special use of the term "equities " will be best shown by illustration. A debt is due from B. to A., but there is also a debt due from A. to B. which B. might set off in an action by A. In this state of things A. assigns the first debt to C. without telling him of the set off. B. is entitled to the set-off against C. (it). Again, B. has con- tracted to pay a sum of money to A., but the contract is voidable on the ground of fraud or misrepresentation, A. assigns the contract to C, who does not know the circumstances that render it voidable. B.may avoid the contract as against C. (/•). Again, in a somewhat less simple case, there is a liquidated debt from B. to A. and a current account between them on which the balance is against A. A. assigns the debt to C, who knows nothing of the account. B. may set off as against C. the balance which is due on the current account when he receives notice of the assignment, but not any l)alance which becomes due afterwards {x). The rule may But it is open to the contracting parties to exclude the by a'^n^eetent Operation of this rule if they think fit by making it of orfginal a term of the original contract that the debtor shall not parUes?'"" set up against an assignee of the contract any counter- C-v) James L.J. (sitting as V.-C.) v. Vrnihles (1862) 30 Beav. 625 ; Phippx V. Loveqrnte {ii'ii) L. R. llV/f.ww v. Mid Wales By. Co. 16 Eq. 80, SS. 42 L. J. Ch. 892. (1867) L. R. 2 C. P. 593, 30 L. J. (0 !^ee pp. 107, ms, above. C. P. 285. («) Cavendhh v. &'mw.? (1857) ('•) Graham v. Johnson (1869) 24 Beav. 163, 173, 27 L. J. Ch. 314, L. U. 8 Eq. 36, 38 L. J. Ch. 374. where the doctrine is fully ex- (.c) farendish v. Gcares. note j)ounded. As to set-oflE accruing (w). after notice of assignment, Stcjjhc/ix ASSIGNMENT FREE FROM EQUITIES. 237 claim which he may have against the original creditor. Asiatic Bank- This is established by the decision of the Court of Appeal S^s SI^" in Chancery in Ex parte Asiatic Bankitig Corpoyation, the facts of which have already been stated for another aspect of the case (//). Two alternative grounds were given for the decision in favour of the claim of the Asiatic Banking Corporation under the letter of credit. One, which we have already noticed, was that the letter was a general proposal, and that there was a complete contract with any one who accepted it by advancing money on the faith of it. The other was that, assuming the original contract to be only with Dickson, Tatham, & Co. to whom the letter was given, yet the takers of bills negotiated under the letter were assignees of the contract, and it appeared to have been the intention of the original parties that the equities which might be available for the bank against Dickson, Tatham, k Co. should not be available against assignees. Lord Cairns, then Lord Justice, thus stated the law : — " Generally speaking a chose in action assignable only in equity must be assigned subject to the equities existing between the original parties to the contract ; but this is a rule which must yield when it appears from the nature or terms of the contract that it must have been intended to be assignable free from ami unaffected by such equities." Where assignees of a chose in action are enabled by statute to sue at law, similar consequences may be pro- duced by way of estoppel {z) ; which really comes to the same thing, the doctrine of estoppel being a mere technical and definite expression of the same principle. The principle thus laid down has been followed out in Subsequent several later decisions on the effect of transferable deben- foj^nfor ' tures issued by companies. The question whether the instrument, (y) (1867) L. R. 2 Ch. 391, 36 siomrx (\9>H\) L. R. .5 Q. B. 612, 3 a market overt for contractual rights. The complete solution of the problem, for which the ordinary law of contract is inadequate, is attained by the law merchant (o) in the following manner : — (i.) The absolute benefit of the contract is attached to the ownership of tlie document which according to ordinary rules would be only evidence of the contract. (ii.) The proof of ownership is then facilitated l)y pre- scribing a mode of transfer which makes the instrument itself an authentic record of the successive transfers : this is the case with instruments transferable by indorsement. (iii.) Finally this proof is dispensed with by presuming the bona fide possessor of the instrument to be the true owner : this is the case with instruments transferable by delivery, which are negotiable in the fullest sense of the word. The result is that the contract is completely embodied (p) for all practical purposes in the instrument which is the symbol of the contract : and both the right under the contract and the property in the instrument are treated in a manner quite at variance with the general principles of contract and ownership. We give references to a few passages where specimens will be found of the positive terms in which the privileges of bona fide holders of nego- tiable instruments have been repeatedly asserted by the highest judicial authority (7). Remedy by special rules of law merchant. Negotiable instruments. Peciiliai- and extensive rights of huna tide holder. (") Extended to promissory notes by statute : 3 & 4 Ann. c. 8 (in Rev. Stat.) ss. 1-8. now superseded and repealed by the Bills of E.xchange Act, 1.S82. As to the earliest forms of bills of exchange, see Jules Val6ry, " Une traito de Philippe le Bel," Paris, 190!); Rev. grii. du droit, .x.xxii. 485 (llt()8). ip) '• V^erk<)r|)Oruiig der OMiga- I ion," Savigiiy. (c[) See per Byles J. Swan v. iV. B. Australasian Co. (18t)3) in Ex. Ch. 2 H. & C. 184, 31 L. J. Ex. 425 : per Lord Campbell, Brandao v. Harnett (184(3) 12 CI. & F. 787, (ii) R. R. 204 ; opinion of Supreme Court, U. S. delivered by Story J. Sa^ift v. 7'yscm (1842) Ifi Peters 1, 15. Tlie following references as to the n:iturc of the contracts undertaken liy Ihc parlies to a, bill of exchange R 242 PERSONS AFFECTED BY CONTEACT. Qualities of negotiable instruments. Limiting rules in Crouch V Crt^dit Foncier. The narrower doctrine which for a time prevailed, re- quiring a certain measure of caution on the part of the holder, is now completely exploded. Nothing short of actual knowledge of the facts affecting his transferor's title or wilful and therefore dishonest avoidance of inquiry (r) will defeat the holder's right (.s). Moreover, there is no discrepance hetween common law and equity in this matter. Equity has interfered in certain cases of forgery and fraud to restrain negotiation ; but at law no title to sue on the instrument can be made through a forgery {t) ; and " the cases of fraud where a bill has been ordered to be given up are confined to those where the possession, but for the fraud, would be that of the plaintiff in equity " («)• The rights of bona fide holders for value are as fully protected in equity as at common law, and against such a holder equity will not interfere {x). The most frequent examples of negotiable instruments are l)ills of exchange (of which cheques are a species) {y) and promissory notes. Their exceptional qualities are concisely stated in Crouch v. Credit Fonder (z). '■ I'ills of exchange and promissory notes, whether payable to order oi to bearer, are bj' the law merchant negotiable in both senses of the word. The person who, by a genuine indorsement, or, where it is payable to bearer, by a delivery, becomes holder, may sue in his own name on the contract, and if he is a hd/iu p'de holder for value he has a good title may be found useful. Acceptor and drawer : jDues v. B roadltv rst (18.")U) i) C. B. 1 7S, 1 81 , 82 R. R. 3:?(; : Lebd V. Tucker (1867) L. R. :< Q. B. 77, 84. H7 L.J. Q. B. ■!(!. Indorser : L. R. S Q. B. 83 ; DentoH v. PetPt-st (1870) L. R. 5 Q. B. 475, 477. (^/•) Lord Blackburn in Joiwx v. Gordon (b*^77) 2 Ajip. Ca. at p. (.v) (ioodiiiaii V. Hiiney (183(;), 4 A. cV E. 870, S7(i. 43 R. R. 507, 501) : EiqjJidid v. JJa/ik of L'/u/hnid (1855) 17 C. B. Kil. 175. 25' L. .1. (J. P. 33, 104 R. R. (;38, (;47 : Bills of Exchange Act, s. HO, and .Sir M. (-'halmeis" note thereon. (0 The //()«« //V/^ holder of an in- strument with a forged indorsement may be exposed to considerable hardship. See Bobbett v. Pinkett (1S7(!) 1 Ex. D. 368, 35 L. J. Ex. 555. («) JoitPx V. Lane (1838-'J) 3 Y. i: C. Ex. Eq. 281. 293. (./■) Tliiedi'inann v. Goldxchmidt (185'.») 1 D. F. J. 4. (//) Bills of Exchange Act, 1882 (45'& 46 Vict. c. 61), s. 73. And they are equally negotiable : M'Loan v. Clydesdale Banhlnq Co. (1888) 9 App. Ca. 95. (-) L. R. 8 Q. B. 374. 42 L. J, Q. B. 183. NEGOTIABLE INSTRUMENTS. 243 notwithstanding any defect of title in the party (^whether indorser or deliverer) from whom he took it." It is doubtful at common law whether the seal of a corporation can be treated as equivalent to signature for the purpose of making a bill or note under it negotiable ; in England the doubt is removed by the Bills of Exchange Act {a). A negotiable instrument must l)e a contract to pay money or to deliver another negotiable security represent- ing money (6) : therefore a promise in writing to deliver 1,000 tons of iron to the bearer is not negotiable and gives no right of action to the possessor (c). Mere private agreement or particular custom cannot be admitted as part of the law merchant so as to introduce new kinds of negotiable instruments. But the fact that a universal mercantile usage is modern is no reason against its being judicially recognized as part of the law merchant. The notion that general usage is insufficient merely be- cause it is not ancient is founded on the erroneous assump- tion that the law merchant is to be treated as fixed and invariable (c/). The negotiability of debentures issued by limited companies has now been recognized on the ground of general though modern mercantile custom {e). («) But the addition of the seal (r) Dhvon v. Jiorill (ISoG) 8 will not prevent an instrument from Mac(|. 1, 106 R. K. 987. Such a being a uood bill or note if it is also contract may however be made signed by an agent or agents for assignable free from equities : the company so that it would be Merchuiit Bankimj Co. of London good witliout the seal ; see Halfovd v. Pluenhr Jiexsein'i-r Steel Co. (1877) V. Cameron's Coalhrook, J)'e. Co. 5 (!h. 1). 20."), 4(i L. ,1. Cii. 418. (18.51) l(i (.1 15. 442, 20 L. J. Q. 1'.. {d} (Joodwin v. Itohiutx, note (b) 160 ; AyyH v. iXicliolaon (18.*)ti) 1 H. xnjira, overruling Crunch v. Crc'dit k N. 1«5, 2o L. J. Ex. 848, li)8 K. K. Fonder on this point : llmnhall v. 508; Balfour v. Emext (18.')ii) r. Met ro/ndi to n Bank {IS77) 2 (} B D C. b. N. S. (;01, 28 L. J. C. P. 170, IIH, 40 L. .). Q. B. 84G. 11(> K. U. 788 ; Dutlon v. Marsh (r) Jieehuanaland Krjdortition (1871) L. R. (i il B. 8t;i, 40 L. J. Co. v. London Trading Bank | l.s;»8j Q. B. 175. See now Bills of E.x- 2 Q. B. 058, (!7 L. J. (,). I',. '.t8t;, change Act, 1882, s. 91, sub-s. 2. followed by Bigham J. hi Edelsteln {h) Goodwin v. Itohurts (1870) v. Schnler' S,- Co. [11)021 2 K B Ex. Ch., L. 1{. 10 Kx. 887, 1 App. 144, 71 r>. .1. K. B. 572. It seems Ca. 470, 45 L. J. K.\. 748. the Court will now take jiulicial 11 2 244 PERSONS AFFECTED BY CONTRACT. Negotiability by estoppel. How insti-u- ments may cease to Ije negotiable. The bonds of foreign governments issued abroad and treated in the EngUsh market as negotiable instruments are recognized as such by law(/). So is the provisional scrip issued in England by the agent of a foreign govern- ment as preparatory to giving definite bonds (g). Such bonds or scrip, and other foreign instruments negotiable by the law of the country where they are made, may be recognized as negotiable by our Courts though they do not satisfy all the conditions of an English negotiable instrument (/<)• From w^hat was said in Goodwin v. Roharts (/) in the House of Lords it seems that where the holder of an instrument purporting on the face of it to be negotiable, and in fact usually dealt w'ith as such, intrusts it to a broker or agent who deals with it in the market where such usage prevails, he is estopped from denying its negotiable quality as against any one who in good faith and for value takes it from the broker or agent. But where a person takes documents of value, negotiable or not, from one whom he knows to be an agent having limited authority, he must at his own peril ascertain what that authority is ; and this whether his knowledge be derived from the principal or not (A). It is also to be observed that an instrument which has been negotiable may cease to be so in various ways, namelj' — notice that such instruments are negotiable. Proof of general usage and recognition in England is enough ; the original reason was that a jury, as -'the country," could have no knowledge of what was usual elsewhere. (/) (Jori/'ier v. Mlrvillp (1824) 3 B. & C. 45, 27 R. R. 290. Negotia- bility in a foreign maiket is not enough : Picker v. London and County Banlnnq Co. (1887) 18 Q. B. Div. ol5. (r/) flood in II V. Roharts (187C>^ L. k. 10 Ex. 7G, atfd. in Ex. t'h. ih. 337, in H. L. 1 App. Oa. 470. 45 L. J. Ex. 748. (/() See Crouch v. Crt'iUt Fonc'icr (1873) L. R. 8 Q. B. at pp. 384-5 : Goodicin V. Buharts, 1 App. Ca. at pp. 494-5. (/) 1 App. Ca 486, 489, 493, 497. (A) I]iirl of Sheffield v. London Joint Stock .S««i'(1888) 13 App. Ca. 333, 57 L. J. Cli. 986. This applies only where there is actual knowledge of the limited autho- rity : London. Joint Stock Hank v. Simmons [1892] A. C. 201. (51 L.J. Ch. 723. TRANSFER OF SHARES. 245 Payment by the person ultimately liable (/). Restrictive indorsement (m). Crossing with the words "not negotiable" (>?). To a certain extent, in the case of liills payable to order, indorsement when overdue, which makes the indorsee's rights subject to what are called equities attaching to the bill itself, e.g., an agreement between the original parties to the bill that in certain events the acceptor shall not be held liable, l)ut not to collateral equities such as set- off (o). We have purposely left to the last the consideration Transfer of of certain important classes of contracts which may be contracts •11 ■ !• p CI- where duties roughly described as mvolvnig the transfer of duties as as well as well as of rights. This happens in the cases rights trans- (A) Of transferable shares in partnerships and com- panies. (B) Of obligations (j^) attached to ownership or in- terests in property. A. The contract of partnership generally involves per- sonal confidence, and is therefore of a strictly personal character. But, "if partners choose to agree that any of them shall be at liberty to introduce any other person into the partnership, there is no reason why they should not : nor why, having so agreed, they should not be bound by the agreement" (q). At common law the number of persons engaged in a contract of partnership does not (/) Lazams v. Cowia (1842) 3 Q. B. 464. As to the possibility of suing on a bill after it has been paid by some other person, see Cook V. Lister (18t;:?) 13 C. B. N. S. 543, 32 L.J. 0. P. 121. (»/) Bills of Kxcliaut^c Act, 1S,S2, ss. 3,5, 36. (70 Bills of E.Kchangc Act, 18S2, s. 77. A person taking a cheque so crossed has not and cannot give a Ijctter title than the person from whom he took it : s. SI. The prac- tice of crossing che(iues is unknown in America. (o) See f'J,r parte i^wan. (18()8) T.. R. 6 Eq. 344, 35!), where the .authorities are discussed. (p) We use the word here in its wide sense so as to denote the benefit or burden of a contract, or both, according to the nature of the case. (^) Lindlcy on Partnership, 368. (A) Part- nerships : iShares in ordinary partnerships and unincor- Ijorated com- panies may be made trans- ferable at commun law. 246 PERSONS AFFECTED BY CONTRACT. But no uncertain contract and no real anomaly in this. Practical difficulties of unincor- porated com- panies would make any difference in the nature or validity of the con- tract ; hence it follows that if in a partnership of two or three the share of a partner may be transferred on terms agreed on by the original partners, there is nothing at common law to prevent the same arrangement from being made in the case of a larger partnership, however numerous the members may be ; in others words, un- incorporated companies with transferable shares are not unlawful at common law. But this, as Lord Lindley observes, is now only of historical interest (r). At first sight this may seem to involve the anomaly of a floating contract betw^een all the members of the partner- ship for the time being, who by the nature of the case are unascertained persons when we look to any future time(.s). But there is no need to assume an}' special exception from the ordinary rules of contract. It Avas pointed out by Lord "Westbury that the transfer of a share in a partner- ship at common law is strictly not the transfer of the out- going partner's contract to the incoming partner, but the formation of a new contract. " By the ordinary law of partnership as it existed previously to " the Companies Acts " a partner could not transfer to another person his share in the partnership. Even if he attempted to do so with the consent of the other partners, it would not be a transfer of his share, it would in effect be the creation of a new partnership " (t). This therefore is to be added to the cases in wdiich we have already found apparent anomalies to vanish on closer examination. Notwithstanding the theoretical legality of unincorpo- rated companies, there does not appear to be any very satisfactory way of enforcing either the claims of such a (/•) Lindiey on Companies, i:5( I — 135. (.<) Cp. per Abbott C.J. in Josephs V. Pebrer (1825) 3 B. & C. 639, ()43. This line of objection however, does not a[)pear to have been distinctly taken in any of the cases where the legality of joint- stock companies was discussed. (0 Wehhx. Whifin (IS1'2)1..'R. 5 H. L. 711, 727, 42 L. J. Ch. 161. OBLIGATIONS ATTACHED TO PROPERTY. 247 company against an individual member (u), or those of remain, even an individual member against the company (x). But comrai™"^ under the modern law of companies questions of this kind provisions of have no practical importance in this country. In like acu'^'^"'^^ manner the transfer of shares in companies as well as their original formation is almost entirely governed by modern statutes. B. Obligations by or in the nature of contract attached (B) Obli- to ownership or interests in property are of several kinds. Attached to With regard to those attached to estates and interest in property. land, which alone offer any great matter for observation, the discussion of them in detail is usually and conveni- ently treated as belonging to the law of real property. There are however matters of general principle to be noted, and misunderstanding to be avoided, as to the respective methods of common law and equity in dealing with burdens imposed on the use of land by contract. A preliminary statement in a summary form may be useful. Obligations attached to ownership and interests in property. I. Goods. A contrai.'t cannot be annexed to goods so as to follow the property in the goods either at common law (y) or in equity (^). By statute 18 & 19 Vict. c. Ill the indorsement of a bill of lading operates as a legal transfer of the contract, if and whenever by the law merchant it operates as a transfer of the property in the goods. General view thereof. (u) We have seen {supra, \y. 227) that they cannot empower an olliccr to sue on behalf of the association. («) See Li/o/t, v. Huijnrs (1,S4:5) ."> M. & Gr. .504. A partner can now sue or be sued by the partnership in the firm-name. See Ord. X 1^ V II I A. rr. 1, 10. (y) 3rd resolution in Sprncer'x cane, 1 Sm. L. C. 65 ; SpUfU v. liowlcii (1808) 10 East, 271), 10 K. R. 2!)6. " In general contracts do not by the law of P]ngland run with goods"' : Blackburn on Sale, 276 ; Taddy Ji' Co. v. Steriom ^- Co. ri904] 1 Oh. 354, 73 L. J. Ch. 191 ; McGrufher v. Pllcher [1904] 2 Ch. 306, 73 I.. .J. Ch. 653, C. A. ; liett.-^- Merrell Co. v. Htrans (1908) 210 U. S. 339. (z) De Maffo.s v. Gibson ^ISoS) 4 De G. & J. 276. 295. 248 PERSONS AFFECTED BY CONTRACT. TT. Land (-7). a. Relations between landlord and tenant on a demise. Bnrden : of lessee's covenants As to an existing thing parcel of the demise, assignees are bound whether named or not. As to something to be newly made on the premises, assignees are bound only if named (ft), of lessor's covenants runs with the reversion. (32 Hen. VIII. c. 34.) Benefit : of lessee's covenants runs with the reversion. (32 Hen. VIIT. c. 34.) The statute of Hen. VIII. apjilies only to demises under seal (c), and includes (by constiuction in Spencer's c/r.se') only such covenants as toucJi and concern the tiring demised (rZ). It applies only to the reversion which the covenantor had at the time of entering into the covenant («). of lessor's covenants runs with the tenancy. See also 44 & 45 Vict. c. 41, ss. 10. 11, 58. A covenant giving the lessee an option of purchasing the reversion at a fixed rate at any time during the term is not within the statute, as it does not concern the tenancy of the land considered as the subject- matter of the lease (/). A covenant with an underlessee to perform a covenant in the superior lease relating to premises not comprised in the underlease is collateral and does not bind assigns (jg"). Note. (i) The lessee may safely pay rent (//) to his lessor so long as he has no notice of any grant over of the reversion : 4 & 5 Anne c. 3 [in (^0 On this generallv see Dart (1889) 23 Q. B. D. 35, 58 L. J. V. & P. 2. 862 sqq. ; 3rd Report of Q. B. 341. R. P. Commission, Dav. Conv. 1. {e) MvUer v. Trn (f'ord []9i)l] 1 122 (4th ed.) ; and above all the Ch. 54, 70 L. J. Ch.'72. notes to SjJcncers c/ise in 1 Sm. (/') Woodall v. Clifton [1905] Iv. C. : and also as to covenants in 2 Ch. 257, 74 L. J. Ch. 555, C. A. leases the notes to Thurshy v. ((/) Dewar v. Goodman [1908] Plant, 1 Wms. Saund. 278—281, 1 K. B. 94, 77 L. J. K. B. 169, C. A.. 299, 305. [1909] A. C. 72, 78 L. J. K. B. 209. (J)') As to this distinction, see See further Z'y.fow v. -Fcr.sY^;- [1909] 1 Sm. L. C. 70 sqq. A. C. 98, 78 L. J. K. B. 246 ; (c) e.g. bmith v. Eifqinqton Micketts \. Enfield Churchwardens (1874) 'L. R. 9 C. P. Yl.-.." 43 [1909] 1 Ch. 544, 553. 78 L. J. Ch. L. J. C. P. 140. 294, L. Q. R. xxv. 117, 280. (jd') For the meaning of this see (//) In the case of the lessee's 1 Sm. L. C. 65 ; Fleetwood v. JIiill covenants other than for payment COVENANTS RUNNINfJ WITH LAND. 249 Rev. Stat. : al 4 Anne c. 16], wliich is in fact a declaration of common law : see per Willes J., L. R. 5 C. P. 594. (ii) The lessee may still be sued on his express covenants (though uncler the old practice he could not be sued in debt for rent) after an assignment of the term (i)- (iii) The doctrine concerning a reversion in a term of years is the same as concerning a freehold reversion (/^.). (iv) Where the statute of Henry VIJI. does not apply, the assignee of the reversion cannot sue an original lessee who has assigned over all his estate, there being neither privity of estate nor privity of contract (Z). (3. Mortgage debts. The transfer of a mortgage security operates in equity as a transfer of the debt (?«). Notice to the mortgagor is not needed to make the assign- ment valid ; but without such notice the assignee is bound hj I he state of the accounts between mortgagor and mortgagee (w). •y. Rent-charges and annuities imposed on land independently of tenancy or occupation (n). An agreement to grant an annuity charged on land implies an agree- ment to give a personal covenant lor payment (;;) ; but by a somewhat curious distinction the bunlen of a covenant to pay a rent-charge does not run with the land aharged, nor does the benefit of it run with the rent (//). 5. Other covenants not between landlord and tenant, relating to land and entered into with the owner of it. The benefit runs with the covenantee's estate so that an assignee can sue at common law. The lessee for years of the covenantee may enforce of rent, an assignee of the reversion 407, 411. 7 R. R. 247; Mattlicws is not bound to give notice of the v. Wallivyn (1798) 4 Ves. 118, \2i\. assignment to the lessee as a con- (c) These must be regarded as dition precedent to enforcing his arising from contract (we do not rights : Scaltoch v. Harden (1875) speak of rents or services incident 1 (!. P. D. 106, 45 L. J. C. r.~ 125. to tenure) ; the treatment of rent- (i) 1 Sm. L. C. 24, 1 Wnis. charges in English law as real Saund. 298. rights or incorptn-eal hereditaments (A) 1 Sm. L. C. 74, 75. seems arbitrary. For a real right (?) Allcoch V. ^foorhoime {\HH2') is the power of exercising some 9 Q. B. Div. .366. limited part of the rights of owner- (/n) This is one of the cases in ship, and is quite distinct from the which the equitable transfer of a liglit to receive a fixed payment debt is not made = a legal transfer without the immediate power of by the Judicature Act, 1.S7I}. In doing any act of ownership on the practice an express assignment of property on which tlie payment is the debt is always added : the old secured. power of attorney however is lunv (/;) Bower v. Cooper (1842) 2 Ha. superfluous. 408. 1 1 L. J. Ch. 287, 62 R. R. 161. («) Jonea v. (Ithhons (180 1) i) \'es. (y) 1 Wms. Saund. 303. 250 PERSONS AFFECTED BY CONTRACT. the covenant as an assign if assigns are named (?•). It is immaterial whether the covenantor was the person who conveyed the land to the covenantee or a stranger («). The usual vendor's covenants for title come under this head. It is doubtful whether a honajide purchaser from a purchaser who obtained his conveyance by fraud can in any circum- stances sue on the former vendor's covenants for title (f). e. The like covenants entered into hy the owner. The burden of such covenauts appears on the whole not to run with the land in any case at common law («)• But where a right or easement affecting land —such as a right to get minerals free from the ordinary duty of not letting down the surface — is granted subject to the duty of paying compensation for damage done to the land by the exercise of the right, there the duly of paying compensation runs at law with the benefit of the gi'ant. Hero, however, the correct view seems to be that the right itself is a qualified one — ri:. to let down the surface, , Ex. Div. 496, .509, 46 L. J. Ex. pl. 25) seem to show only that it 353. was once thought doubtful whether [y) The phrase is not free from the assignee could sue without objection, per Rigby L.J. [1900] 2 beins: also helrot the oridnalcove- Ch. at p. 40L See however Xi^bet nant'ee. See also O. W. Holmes, A'- Potts' contr. [1906] 1 Ch. 386, The Common Law. 395, 404. 403, 405. (0 Onward Budding Society v. (c) Wilson v. Hart (1866) L. E. Smithson [1893] 1 Ch. 1, 15, 62 1 Ch. 463 ; Patman v. Harland L. J. Ch. 138, C. A, (1881) 17 Ch. D. 353, 50 L. J. Ch. (?/) 3rd report of E. I*. Commis- 642. COVENANTS RUNNING WITH LAND, 251 In this case the burden runs with the quasi-servient tenement and the benefit also runs with the quasi-dominant tenement. (2) By a purchaser as to the use of the laud purchased by him, for the benefit of other laml retained or simultaneously sold by the vendor : In this case the burden runs with the quasi-servient tenement, and the benefit man ^'^^ with the (juasi-dominant tenement when such is the intention of the parties, and especially when a [jortion of land is divided into several tenements and dealt with according to a prescribed plan or •' building scheme " («). All these rights and liabilities being jjurcly equitable are Hke all other equitable rights and liabilities subject to the rule that purchase for value without notice is an absolute defence. An assign of a covenantee may be entitled to the benefit of the covenant without having known of it at the (late of his purchase : the ijuestion is whether he acquired it as annexed to the land (ft). Further, this doctrine ajtplies only to restrictive, not to affirmative covenants. Thus it does not apply to a covenant to repair. " Oaly such a covenant as can be complied with without expenditure of money will be enforced against the assignee on the ground of notice " (r). It does not apply to merely personal and collateral covenants C'^). The only points which seem to call for more notice Further here are the doctrines as to bills of lading (I.) and ^sTo bills of restrictive covenants as to the use of land (II. e). lading. As to (I.) it is to be l)orne in mind that bills of lading are not properly negotiable instruments, though they may be called so in a limited sense " as against stoppage in transitu only " (e). As far as the law merchant goes the bill of lading only represents the goods, and does («) Keatesv. Lyim, h. R. 4 Ch. (V;) L'ln/rrs y. /Io.teffood,]a,st note. 218, 38 L. J. Ch. 3.57, and other (>■) Liiidley L..T. Haywood v. cases there considered ; Ifarrisim v. /{rutuirick Bi/ihli/ir/ Society (1881) (9rW (1871) L. R. 11 Eq. 338, 40 8 Q. B. Div. 40.3. 4 li), .51 L.'j. Q. B. L..I. Cli.2I)4 ; Uenahv. Cotdis/iaio 73 ; L. ,*)'• ;S'. W. Ni/. Co. v. Gomin, (1878) !» Ch. D. 12.5, II Ch. Div. 20 Ch. Div. .562, 51 L. J. Ch. 530 ; 860, 48 L. .1. Ch. 830 ; Sp'urr v. Avafpvhcrry v. Corporation, of Martin {IHH8) 14 App. Ca. 12, 58 Oldham, note («), p. 250, above"; L. J. Ch. 309 ; Roger.i v. Ho.scgood Jfall v. Ewin (1887) 37 Ch. Div. [1900] 2 Ch. 388, C!) L. J. Ch. 74,57 L. J. Ch. 9.5. 6.52, C. A. As to the position of a (/T) Formhy v. Barker [1903] 2 lessee of an owner bound by a Ch. .539, 72 L. J. Ch. 710, C. A. restrictive covetiant, Iloltoiraij (e) i'er Willes J. Furnte.t v. Bro.;). But if it be sought to annex such an obligation to the property itself, this is a manifest departure from the ordinary rules of contract. An obligation attached to property in this manner ceases to be only a burden on the freedom of the contracting party's individual action, and becomes practically a burden on the freedom of ownershi]?. Now the extent to Avhich the law will recognize such burdens (/■) Gurney v. lichrend (1854) 3 E. & B. (;22, ('>3-l, 28 L. J. Q. B. 2(;5, 97 R. R. mi, (I'.ir). Ql) Fox V. Nott (18(J1) 6 H. & N. 630, G36, 30 L. J. Ex. 259 ; SmvrtJnoaitev. Wilkhis (1862) 11 C. B. N. S. 842, 850, 31 L. J. C. P. 214. 594, 599. As to indorsement by way of pledge, see tSfirrU. v. Jhn-dick (l.^s-l) 10 App. Ca. 74, 103. (/) inn V. Tnpper (1863) 2 H. & C. 121, 127, 32 L. J. E.x. 217. (7i') It is not unlawful for a land- owner to let all his land lie waste ; but a covenant to do so would (^) Ihe Freedom, L. R. 3 P. C. probably be invalid. COVENANTS PvUNNIN(4 WITH LAND. 253 is already defined. Certain well-known kinds of per- manent burdens are imi)Osed by law, or may ])e imposed by the act of the owner, on the use of land, for the permanent benefit of other land : these, and these only, are recognized as Iteing necessary for the ordinary con- venience of mankind, and new kinds cannot be admitted. And this principle, it may be observed, is not peculiar to the law of England (/). Easements and other real rights in re aliena cannot therefore be extended at the arbitrary discretion of private owners : " it is not competent for an owner of land to render it subject to a new species of burden at his fancy or caprice" ('"). Still less is it allowable to create new kinds of tenure or to attach to property incidents hitherto unknown to the law. But if it is not convenient or allowable that these things should be done directly in the form of easements, neither is it convenient or allowable that they should be done in- directly in the form of obligations created by contract but annexed to ownership. If the burden of restrictive covenants is to run with land, people can practically create new easements and new kinds of tenure to an indefinite extent. Such appears to be the view of legal policy on which the common law doctrine rests (//). (0 Op. Savigny, 0\A. 1. 7 : and created, but not positive ones, but for a siiif^iilar coineidence in detail, this solution does not seem to have U. 8. 8. de serv. praed. rust 5 § 1. ever been definitely proposed, {] pr. = ('laijton v. Corhij (18-t:i!) 5 although the modern doctrine of Q. r.. 11."), 11 L. J. Q. B. 364. equity as set forth in Xishrt 4'- (»0 Per Martin B. Xuttall v. Pottx' (■ontr. [1906] 1 Ch. 38t;, 7r> 7y/v/mw//(lSG6) li. H. 2Ex. 10, 3(> L. J. Ch. 238, C. A. comes very L. .J. Ex. 1 ; for the C. L. principles near it ; and the whole subject of generally, see Arliroijd v. Smith negative easements is still obscure, (1850) IOC. B. 164, 1!) L. J.C. P. 3 15, as is shown by the widely different 84 R. K. 507 ; Baileij v. StcjilLP.ns opinions held in Bcdton v. Angus (1862) 12 G. B. N. S. 91, 31 L. J. (1881) 6 App. Ca. 740, 50 L. J. Q. B. G. P. 226. Rights of this kind are 689. to be carefully distinguished from («) See per Willes .T. delivering those created by grants in gross : see the judgment of the Ex. Ch. in per Willes J. //>. 12 C. B. N. S. 111. Dennett \. Atherton (1872) I,. U. 7 The Courts might have held that Q. B. 31(;. 325. new negative easements might be 254 PERSONS AFFECTED BY CONTRACT. lu eiiiiity. The history of the doctrine in the Court of Chancery- is somewhat curious. Lord Brougham, in an elaborate judgment which seems to have been intended to settle the question (o) , treated what we have called the common law theory as final, and, ignoring the difference between positive and negative covenants, broadly laid down that where a covenant does not ran with the land at law, an assignee cannot be affected by notice of it. But this judgment, though treated as an authority in courts of law {})), has never been followed in courts of equity. After being disregarded in two reported cases (q) it was overruled l)y Lord Cottenham in Tidk v. Moxhay (r), now the leading case on the subject. The most important of the subsequent cases are Keates v. Lyon (s) (where the authorities are collected), Hayirood v. Brunswick Building Society (t), which explicitly decided that the rule applies only to negative covenants, and Nottingham Brick Co. V. Butler (u). When a vendor sells land in building lots and takes restrictive covenants in identical terms from the several purchasers, not entering into any covenant himself, it is a question of fact whether these covenants are meant to operate for the protection of purchasers as between themselves, or as against the vendor in his dealings with parcels retained by him {x). Where such {o} Keppi'Il v. Bii/lri/{lS'M')2 M. For the corresponding Scottish & K. 517, 527, 39 R. R. 2(54, 270: doctru\e,see Hidop v. Leekie {1881) and nee the preface to that volume. (! App. Ca. 560. (yy) Hill v. Tupi>er(\SC)'ii)2 U.k (^.r) Bfi Biniiini/ham and Didricf C. 121. 32 L. J. Ex. 217. I.id Co. v. Alldai/ [1S93] 1 Ch. (,y) Whatman v. Gihxoii (1838) 9 342, ()2 L. J. Ch. 90. As to what Sim. 19(5, 47 R. R. 214; Mann y. is sufficient evidence of a " building Stephens (\8\iV) 1.") Sim. 377, 74 scheme," Tucker v. Vowles [1893J R. R. lul. 1 Ch. 195, 62 L. J.Ch. 172 ; Osborne (/•) (lS48)2Ph.774.78R. R.289. v. Bradley [1903] 2 Ch. 446, 73 See per Fry J. in Luher v. Dennis L. J. Ch. 49, Eeid v. Blckerstujf (1877) 7 Ch. D. 227, at pp. 235, [1909] 2 Ch. 305. 78 L. J. Ch. 753, 230, 47 L. J. Ch. 174. C. A. ; Wllle v. St. John [1910] I (.v) (1869) L. K. 4 Ch. 218, 38 Ch. 32.5, 79 L. J. Ch. 239, C. A. L. J. Ch. 357. The vendor's taking restrictive (0 (1881) 8 Q. P.. Div. 403, 51 covenants and not reserving any L. J.Q. B. 73. part of the property is strong («) (18S(i) 16 Q. 1'.. Div. 778. attinuative evidence, but his RESTRICTIVE COVENANTS AS TO LAND. 255 is the intention, any purchaser can enforce the restriction against any other purchaser, or his assigns having notice, or the vendor as the case may be, nor can the vendor release the covenant to any purchaser or his successors in title without the consent of all the rest Oy). An in- truder who acquires a statutory title by adverse possession is in no better position than a purchaser with notice (z). The result of the equitable doctrine is in practice to Thefounda- enable a ereat number and variety of restrictions to be t'on of the ^ .... equitable imposed on the use of land for an indefinite time, subject doctrine. to the contingency of a purchase for value without notice of the restriction (a). But equity does not profess to enforce a restrictive covenant on a purchaser with notice as being a constructive party to the covenant ; it only restrains him from using the land in a manner which would be unconscientious as depriving the covenantee of his effectual remedy {b). So far as common law remedies go, covenants of this kind can be always or almost always evaded ; if the equitable remedy by injunction were con- fined to the original covenantor, that also could be evaded reservation of part is by no means the transaction which created the conclusive the other way. original equity, and thus, as F. W. (//) See Sjjurr v. Martin (1S8S) Maitland said in one of the latest 12 App. Ca. 12, 23, 58 L. J. Ch. additions made by himself to his 309, per Lord Macnaghten approv- lectures, " a curious class of nega- ing the statement of Hall V.C. in tive easement is here created": Jit')udsv.Coivlits/iaip,{n'h.lJ.\2'>, Maitland, Equity, etc., Camb., 129 ; Elliston v. Reach [1908] 2 1909, p. 170. Nevertheless the Ch. 374, in C. A. ih. 665, 77 L. J. Ch. decision seems inevitable. 619, 78 L. J. (Jh. 87. Note that the («) Where there has once been equitable obligation between dif- such a purchase, a subsequent pur- ferent purchasers is independent of chaser cannot be affected by notice, the dates of their respective pur- Sec per Lindley L.J. 16 Q. 15. Div. chases. As to the effect of a pur- at p. 788. chaser of lots in a building estate (Jj) " I do not think any covenant under a restrictive scheme forming runs with the land in equity. The a" sub-scheme " by re-selling por- equitable doctrine is that a person tions under new conditions, see who takes with notice of acovenant KnUfht V. Simmons [1896J 2 Ch. is bound by it " : Kigby L.J. iZw/mv 294, 65 L. J . Ch. 583, C. A. v Iloxrgood \ 1 900] 2 Ch. 388, 4oi , 69 {z) Mshet and Pottg contr. L. J. Ch. 652; butin A7.s7W c)'-P('^^.v' [1906] 1 Ch. 386, 75 L. J. (;h. 23.S, «<«^'.,note (c)above,litissaidthata C. A. In this case an equitable negativecovenant of this kind docs restriction is enforced against one insomesensebindtheland inequity, who is in no way party or jirivy to see [1906] 1 (;h. at pp. 101, 405. 256 PERSONS AFFECTED BY CONTRACT. by a collusive assignment. On this principle however an assign cannot be and is not made answerable for the active performance of his predecessor's covenant: he can only be expected not to prevent its performance. Hence the decisions to that effect which have been cited (c). The jurisdiction is a strictly personal and restraining one. No rule of the law of contract is violated, for the assign with notice is not liable on the contract but on a distinct equitable obligation in his own person. Lord Brougham fell into the mistake of supposing that the covenant must be operative in equity, if at all, by way of giving effect to an intention to impose permanent burdens unknown to the law. Equity does not trouble itself to assist intentions which have no legal merits, and any such action, Lord Brougham rightly saw, was beyond its proper province. The law laid down in Keppell v. Bailey {d) was erroneous on this point, not from an}' defect of reasoning in the judgment, but because the reasoning proceeded on an erroneous assumption. Change of The true principle is further illustrated by the rule that even with notice an assign is not liable " where an alteration takes place through the acts or permission of the plaintiff" or those under whom he claims, so that his enforcing his covenant becomes unreasonable" (e). Were the liabilit)' really on the covenant, nothing short of release or estoppel would avoid it. (r) Seeanote in L. Q. U.iv. 11!) (1884) 28 Ch. Div. 108, 109, 52 (not by the present writer) on Ilttll L. J. Ch. 770, explaining the limits V. J'Jioui, 36 W. R. 81, 37 Oh. Div. of the rule as originally laid down 74, .")7 L. J. Ch. 9o, where the in I)i/ki' af litdford v. Trustees of doctrine is well explained ; Pou-ell Uritisli Museum (1822) 2 M. A: K. V. Ilrmsley [1909] 2 Ch. 252.78 552. .S9 R. R. 288: Osborne v. L. J. Ch. 741, C. A. Bradley [1903] 2 Ch. 446, 73 L. J. Qd) 2 M. & K. 57, 39 11. R. 264. Ch. 49. In New York this limitation Other reasons with which we are seems not to be recognized : T;v/«/ffs not concerned here were given ; v. Thacher (1882) 87 N. Y. 311, the actual decision was perhaps where, the residential amenity of a also right on the ground that the street having been destroyed by the covenant in question was not merely elevated railway, the Court refused negative : see 39 R. R. 2(54, «. to enforce a covenant against using (e) Fry L.J. in Smjerx v. CoJhjer the house for trade. 257 CHAPTER VI. Duties under Contract. 1. Interpret (I Hon generally. We have now gone through the general and necessary Necessity of elements of a contract, and shall hereafter consider the tion!^ further causes which may annul or restrain its normal effect. This work does not profess to deal fully with the rules of law which govern the construction, performance, and discharge of contracts. But we cannot apply the principles by wdiich disputes as to the validity of an agreement have to he determined without first determin- ing what the substance of the agreement is ; and a dispute as to the original substance and force of a promise may often be resolved into a conflict on the less fundamental question of what is a sufficient performance of a promise admitted to be binding. A summary view of the leading rules of interpretation may therefore be found useful at this stnge. We suppose an agreement formed with all the positive requisites of a good con- tract ; and we proceed to ascertain what are the specific duties created by this agreement. If there be not any special cause of exception, the Measure of promisor must fulfil the obligation which his own act has ixxxty, created. He must perform his promise according to its terms. Here there are two distinct elements of which either or both may be more or less difficult to ascertain : first the terms in which the promise was made, and then the tiur sense and eftect of those terms. The former I'. s '258 DUTIES UNDER CONTRACT. Expectation of promisee. Reasonable effect of promise on promisee. must be determined by proof or admission, the latter by interpretation, which, however, may have to take account of specific facts other than those by which the promise itself is established. We assume the terms to be reduced to a form in which the Court can understand them, as for example by translation from any language of which the Court does not assume judicial knowledge, or by explana- tion of terms of art in sciences other than the law, which is really a kind of translation out of the language of specialists. The nature of a promise is to create an expectation in the person to whom it is made. And, if the promise be a legally binding one, he is entitled to have that expecta- tion fulfilled by the promisor. It has, therefore, to be considered what the promisor did entitle the promisee to expect from him. Every question which can arise on the interpretation of a contract may be brought, in the last resort, under this general form. In order to ascertain what the promisee had a right to expect, we do not look merely to the words used. We must look to the state of things as known to and aflecting the parties at the time of the promise, including their information and competence with regard to the matter in hand, and then see what expectation the promisor's words, as uttered in that state of things, would have created in the mind of a reasonal)le man in the pro- misee's place and with the same means of judgment (a). The reasonable expectation thus determined gives us the legal effect of the promise. Now this measure of the contents of the promise will be found to coincide, in the usual dealings of men of good faith and ordinary competence, both with the actual intention of the promisor and with the actual expectation of the promisee. But this is not a constant («) See per Blackburn J. Smit/i 607, 40 T.. J. Q. B. 221 ; Bhrell v. V. Uiuihes (lS7r) L. R. 6 Q. 15. r.lC. llnjer (1884) 9 App. Ca. 345. INTERPRETATION OF PROMISE. 259 or a necessary coincidence. In exceptional cases a promisor may be bound to perform something which he did not intend to promise, or a promisee may not be entitled to require that performance which he understood to be promised to him. The problem has been dealt with by moralists as well as by lawyers. Paley's solution is well known, and has been quoted by text- writers and in court (]>) : " where the terms of promise admit of more senses than one, the premise is to be performed in that sense in which the promisor appre- hended at the time that the promisee received it." But this does not exactly hit the mark. Reflection shows that without any supposition of fraud, Paley's rule might in peculiar cases (and only for such cases do we need a rule) give the promisee either too nuich or too little. And Archbishop Whately, a writer of great acuteness and precision within the limits he assigned to himself, perceived and corrected the defect : " Paley," he says, " is nearly but not entirely right in the rule he has here laid down .... Every assertion, or promise, or declaration of whatever kind, is to l)e interpreted on the principle that the right meaning of any expression is that which may be fairit/ pi-^'suiiu'd to he understood hy it" (c). And such is tbe rule of judicial interpretation as laid down and used in our Courts. "In all deeds and instru- ments" — and not less, when occasion arises, in the case of spoken words — "the language used by one party is to be construed in the sense in which it would 1)e reasonably understood by the other" (d). All rules of construction (//) J.. U. i\ Q. 1'.. t;00. (;i(). with useless subliltj, that a pro- (r) Paley, Moral Phil. bk. ;{, misoi- who has by iiis own fault pt. 1, c. i) ; Whately thereon in eiaised the promisee to expect more notes to ed. 1859. [ am indebted than was meant is bound " non ex to my learned friend Mr. A. V. vi promissionis sed ex damno per Dicey for callini; my attention to culpani dato." Whately's amendment. Austin's {d) Blackburn .). in Fowkcs v. attempt (Jurisprudence, i. 456, Manckcder and London Assurance ed. ISGD) is nothing to the purpose. A.s.sociation (18(13)3 B. & S. 917, Some modern civilians have said, 929, 32 L. J. Q. B. 153, 159. S 2 variatidiis 260 DUTIES UNDER CONTRACT. may be said to lie more or less direct applications of this principle. Many rules of evidence involve it, and in particular its development in one special direction, extended fi'om words to conduct, constitutes the law of estoppel ill pais, which under somewhat subtle and technical appearances is perhaps the most com- plete example of the power and flexibility of English jurisprudence. Agreements We have already seen that the terms of an offer or wri tin ^^•'^^ rule P^'Oi^i^® ^^^J ^6 expressed in words written or spoken, or against parol conve^'ed partly in words and partly by acts, or signified wholly by acts without any use of words (e). For the purposes of evidence, the most important distinction is not between express and tacit significations of intention, but between writing and all other modes of manifesting one's intent. The purpose of reducing agreements to writing is to declare the intention of the parties in a convenient and permanent form, and to preclude subse- quent disputes as to what the terms of the agreement were. It would be contrary to general convenience, and in the great majority of cases to the actual intention of the parties at the time, if oral evidence were admitted to contradict the terms of a cuntract as expressed in writing by the parties. Interpretation has to deal not with con- jectured but with manifest intent, and a supposed intent which the parties have not included in their chosen and manifest form of expression cannot, save for exceptional causes, be regarded. Our law, therefore, does not admit evidence of an agreement by word of mouth against a written agreement in the same matter. The rule is not a technical one, and is quite independent of the peculiar qualities of a deed. "The law prohibits generally, if not universally, the introduction of parol evidence to add to a written agreement, whether respecting or not respecting (c) 1'. U, above. CONSTRUCTION ; PAROL VARIATIONS. 261 land, or to vary it" (/). "If A. and B. make a contract in writing, evidence is not admissible to show that A. meant something different from what is stated in the contract itself, and that B. at the time assented to it. If that sort of evidence were admitted, every written document would be at the mercy of witnesses that might be called to swear anything" (r/). Under normal conditions the same rule prevails in Rule of equity, and this in actions for specific performance as well ^'^^^ '^'' as in other proceedings, and whether the alleged variation is made by a contemporaneous (h) or a subsequent(/) verbal agreement. " Variations verbally agreed upon . . . are not sufficient to prevent the execution of a written agree- ment, the situation of the parties in all other respects remaining unaltered " (k). Similarly, when a question arises as to the construction of a written instrument as it stands, parol evidence is not admissible (and was always inadmissible in equity as well as at law) to show what was the intention of the parties. (/') JLirfin V. Pi/i-nift (1852) 2 L). M. G. 785, 795, 22 L. J. Cli. •t-t, !)5 R. R. B24, 330. For the earlier history see Wiginore, in Col. Law Rev. iv. 338. 0/) Per Pollock C.B. yirhol v. 6'(»<^^s'(18o4)10Ex. 191, 194, 23 L.J. Ex. 314, 102 R. R. 523, .52li. iiea ako TfotsiDi V. Browne (IHUO) 9 C. B. N. S. 442. 30 L. J. C. P. 10(5 ; Ilalheud V. Yixinq (IS.jfl) 6 E. & B. 312. 25 I,. .1. Q.'P.. 290. lOi; R. R. (;I5. (//) Omei'inl v. Ilanlinan ( 1801 ) 5 \'o.s. 722, 730. Lord St. Leonards (V. k. P. 163) says this cannot be deemed a general rule : but see HUl V. WlUon, L. R. 8 Ch. 888 ; per Mellish L. ,1. at p. 899, 42 L. J. Ch. 817. (/■) Price. V. />yrv (1810) 17 Ves. 35(1. 1 1 R. R. 102 ■; Rohhmm v. Paqe (182(1) 3 Russ. 114, 121, 27 R. Vi. 2(). But a subsequent waiver by parol, if complete and uncon- ditional, may be a good defence ; ih. : Goiuaii v. Sallsburij, 1 Yern. 210 ; and cp. (5 Ves. 337c/, note. Qii. if not also at law, if the con- tract be not under seal : see Dart V. & P. 1096. Nohle v. Ward (1SG7) L. R. 2 E-K. 135, does not prove that a verbal waiver of a written agreement is no defence at law, but only that a new verbal agi'eement intended to supersede an existing contract, but by reason of the Statute of Frauds incapable of being enforced, cannot operate as a mere rescission of the former con- ti'act ; the ground being that there is nothing to show any intention of the parties to rescind tlie first con- tract absolutelv. (/.■) 7V/Ve v."i?ye/-(18l0) 17 Ves. at p. 3(!4, 11 R. i{. 107 ; Vioioes v, ]I\qq]im). " A written contract not under seal is not the contract itself, but only evidence — the record of the ccntract. When the parties have recorded their contract, the rule is that they cannot alter or vary it by parol evidence. They put on paper what is to bind them, and so make the written document conclusive e\idence between them. But it is always open to the parties to show whether or not the written document is the binding record of the contract " (7>). " The rules including parol evidence have no place in any inquiry in which the Court has not got before it some ascertained paper beyond question binding and of full effect" iq). It may even be shown that what appears to (0 Cnhi V. Thompson (1882) 'J Q. B. Div. filG. In such a case the true intention may well be that tlie veniior shall remove the defect. (hO Jimdford v. Bourne!/ (18f>2) 30 Beav. iSi. cp. iier Liad'ley L..). 9 Q. B. Div. ()20. (rt) Pyin V. Camphdi (ISoG) 6 E. & B. 370, 374. 25 L. J. Q. B. 277, 10(3 R. R. 632, 635. 00 Puttie V. llornlhnwh [1897] 1 Ch. 25. 6(; L. J. Ch. 144. (y>) Per Biamwell B. Wake v. Harrop (1861-2) 6 H. & N. at p. 775, 30 L. J. Ex. at p. 277 ; c|). Wave V. Allen (1888) 128 U. S. 590. ((/) Gi/ardhuu.se v. Blackburn (1866) L. R. 1 P. & D. 109, 115, 35 L. J. P. 116. And see per Page Wood V.-C. in Dnilff v. Lard Parker (1868) L. R. 5 Eq. 131, 137, 37 L. J. Ch. 241. construction; extrinsic evidenci5. 263 be a deed was delivered as an escrow, notwithstanding that a deed once fully delivered is conclusive (?•)• Still less does the rule apply to proof of the circumstances in which a document was signed which was not really part of the agreement at all, but only a memorandum made at the same time or immediately after (.s). So in Jcrvin v. Bcnidgc (t) it was held that a document purporting to be a written transfer of a contract for the purchase of lands " was . . . not a contract valid and operative between the parties but omitting (designedly or otherwise) some particular term which had been verbally agreed upon, but was a mere piece of machinery . . . subsidiary to and for the purposes of the verbal and only real agreement." And since the object of the suit was not to enforce the verbal agreement, nor " any hybrid agreement compounded of the written instrument and some terms omitted therefrom," but only to prevent the defendant from using the written document in a manner inconsistent with the real agreement, there was no difficulty raised by the Statute of Frauds, " which does not make any signed instrument a valid contract by reason of the signature, if it is not such according to the good faith and real intention of the parties." If it appears that a document signed by the parties, and apparently being the record of a contract, was not in fact intended to operate as a contract, then " whether the signature is or is not the result of a mistake is immaterial " (ii). Again it has been held, and that by Courts of common Collateral (^■) Sec Watklica v. Xash (1875) this class. L. R. 20 E(i. 2G2; WfipJan v. (u) Per Bramwell B. I,'(u/rr.s v. Palmer (1888) 39 Ch. D. 648, 655, Hadley (1863) 2 H. & C. 227, 2i'J, 57 L. J. Ch. 781. .82 L. J. Ex. 241. In this case Qt) Bank of Auxfralaaia v. there was " a real contract not in Palmer [1897] A. C. 540. 66 L. .7. writing and a paper prepared in r. C. 105, J. ('. order to comply with some form. (0 (1873) L. U. 8 VA\. 351, 351), which was stated at the time to 360, 42 L. J. Ch. 518 : Clarke r. contain a merely nominal price." Grant (1807) 14 Ves. 519, 9 R. R. Ci^. Bank of AustralaMaw. Palmer, 336, appears really to belong to note (.?), above. 264 DUTIES UNDER CONTRACT. parol agreements Evidence to explain particular terms. Not contra- dictory but auxiliary to the writing. law not having equity jurisdiction, that even where there is an agreement by deed a collateral agreement not inconsistent with the written terms may be shown. For such a collateral agreement, moreover, the promisee's execution of the principal writing or deed is consideration enough (a;), in the same way as on a sale of goods no distinct consideration is required for a simultaneous collateral warranty. Another class of cases in which ^'>\ iJan'ieVs Settlement (1875) I {•) Coclvburn CJ. 2 ('. P. Div. at Ch. Div. 375, 45 L. J. Ch. 105; p. 93. In re Bird's Trusts (1876) 3 Ch. D. 270 DUTIES UNDER CONTRACT. in the case in hand, inchiding the practical construction of the contract by the conduct of the parties themselves (a). It will be remembered that a rule which does not jdeld to sufficient evidence of contrary intention is not a rule of construction at all, but a rule of law (h). Again, many rules of construction are in truth more auxiliary than explanatory; their purpose is to supply the guidance required for dealing with events for which the parties have omitted to provide. In the language of Willes J. "disputes arise not as to the terms of the contract, but as to their application to unforeseen questions which arise incidentally' or accidentally in the course of per- formance, and which the contract does not answer in terms, yet which are within the sphere of the relation established therel)y, and cannot be decided as between strangers" (c). The parties may really have taken no thought, and therefore bad no intention at all with respect to those events, and yet something must be done. In such cases any rule not inconsistent with justice is better than uncertainty, and it matters little whether the reasons originally assigned for an established rule be convincing or not. Among rules or maxims of con- struction some are much weaker than others, and are entitled, as it were, only to a casting vote. Such is that which says that words are to be taken, in case of doubt, against the person using them ; a maxim to which Sir G. -lessel denied even a subsidiary value (d), but which is in substance classical (^0 and seems reasonable, and on the whole stands approved on condition of being used to turn the scale where there is real doubt, not to force (rt) See I). C. V. GuUaher (1888) Ilelem (1877) 6 Ch. Div. 264, 270. 124 U. S. 50;"). (c) Papinian in D. 2, 14. de pac- {II) F.V.Hawkins on the Con- tis, 39. Veteribus placet pactionem struction of Wills, Preface. obscuram vel anibiguam venditori. (r) Lloiid V. Gulhert (186;")) (Ex. et qui locavit, nocere, in quorum Ch.) L. K. 1 Q. B. 115, 120, 35 L. fuit potestate legem apertius cou- J. Q. B. 74. scribere. {(l) Taijlor V. <'«rpor(itioii of St. SPECIAL RULES OP CONSTRUCTION. 271 a less natural meaning on words which have a more natural one ( /'). There are artificial rules of construction in particular Artificial cases which stand apaut from the ordinary principles ; orio-iaaiiy they are derived chiefly, but not wholly, from the iuris- paramount to T • I- 1 /-i e /^^ 1 •" 1 • • • TT intention. diction of the Court of Chancery, and m their origin did not profess to be consistent with the expressed intention of the parties. To some extent they went upon a pre- sumed real intention, but the presumption was at least as much of what the Court thought the parties ought to have intended as of what it thought they did intend (g). They were in truth rules of positive restriction, imposed by a policy which was then in the hands of the Judges, but is now held to be in the exclusive competence of the Legislature, and for the purpose of making the substance of the transaction conform to the i-equirements of fair dealing, as understood by the Court. Our Courts have long ceased to dictate to parties of full age and with the means of independent judgment on what terms they shall contract, but certain forms and terms have had an arti- ficial meaning firml}' impressed on them. The modern justification of such rules is that they are well known, and parties using the accustomed forms do in fact know and expect that their words will be construed in that sense which, by the standing practice of the Courts, has become a received and settled technical sense. '' If cases have laid down a rule that in cei'tain events words are to have a particular meaning, and that has become a settled rule, it may be assumed that persons in framing their agreements have had regard to settled law and may have purposely used words which, though on the face of them they may have a different meaning, they (/') Elphinstone, Norton and it in a jijuarded form. Clark, oij. cif. 9H. Lord Selbornc (r/) Cp. Lindley L.J. 21 Cli. Uiv. iu Ae/7Z V. JJuke of Deionsliire at p. 271. (1882) 8 App. Ca. at" p. 119, states 272 DUTIES UNDER CONTRACT. artificial sense know, by reason of the decided cases, must bear a par- ticular or special meaning" (Ji). Parties are Policies of marine insurance are to this day made in a toTdopTthr^^ ^^^"^ which on the face of it is^ clumsy, imperfect, and obscure. But the effect of every clause and almost every word has been settled by a series of decisions, and the common form really implies a whole body of judicial rules, "which originated either in decisions of the Courts upon the construction or on the mode of applj^ng the policy, or in customs proved before the Courts so clearly or so often as to have been long recognized by the Courts without further proof. Since those decisions, and the recognition of those customs, merchants and underwriters have for many years continued to enter into policies in the same form. According to ordinary principle, then, the later l)olicies must be held to have been entered into upon the basis of those decisions and customs. If so, the rules determined by those decisions and customs are part of the contract " (/). The rules applied to restrain the effect of releases in general terms, of stipulations as to time, and of penal clauses, had a different origin, but have been brought round to rest on similar reasons. They are now admitted to be rules of construction which the parties can supersede, if so minded, by the adequate expression of a different intention. Still, they preserve traces of their history, and so lead up to the methods by which equity jurisdiction has dealt, and still deals, with cases of real mistake in expressing an agreement ; and in that connexion we shall find it useful to return to them. '2. Order and Mutiialiti/ of Perform ancr. Order of per- When a contract consists in mutual promises which on ex^c'utTr^'"^ one or both sides are not to l)e completely performed at contracts. (/j) Jessel M.R. WaUis v. Smif/i (0 Our. per Brett L.J. Lo/ire (1882) 21 Ch. Div. 24:1. ^rA. ."2 v. Aitehhon (1878) 3 Q. B. Div. L. J. Ch. 145. 5r)8, 502. ORDER OF PERFORMANCE. 273 one time, and a party who has not performed the whole of his own obHgation complains of a failure on the other side, questions arise which may be of great difficulty. How far is the plaintiff bound to show performance of the contract on his own part, or readiness and willing- ness to perform ? Or, to look at it from the other side, how far will a failure of one party to fulfil some part of his duties under the contract have the effect of discharging the other party from further performance or the offer thereof on his part ? Such cases have been of increasing frequency and importance in recent times, especially with regard to contracts for delivery and payment by instalments. To a certain extent the difficult}^ is one of interpretation, for the modern decisions at any rate endeavour to find a solution in accordance with the true intent of the parties, although the difficulty is much increased by the general want of any specific evidence of that intent. Most contracts are originally made in good faith, and the parties do not necessarily, perhaps they do not usually, expect that all or any of the promises contained in the contract will be broken, or contemplate in any distinct way what will be the consequences of a breach. From Lord Mansfield's time to the present attempts The modern have been made to lay down rules for determining, in the J^ookTo*^^^ absence of express provisions or other clear indication of intention of intent (k), the relation of the one party's obligation to the a whole. ' other as regards the order of performance of mutual pro- mises and the extent to which either is bound to accept performance of part, notwithstanding failure to perform other part. In the earlier decisions the Courts inclined to treat the several terms of a contract, unless expressed to be dependent on the other party's performance (/), as separate and independent promises, paying little regard (/O Cp. Leake, oth ed. -lo?, and generally. the chapter on "The Promise" (Z) 15 H. Vli. 10, pi. 17. P. T terms '274 DUTIES UNDER CONTRACT. to the effect which default in some or one of them might produce in defeating the purpose of the contract as a whole. At this day the tendency is the other way. The Court looks to the purpose and effect of the contract as a whole as a guide to the probable intentions of the parties (m), and the presumption, if any there be, is that breach or default in any material term of a contract between men of business amounts to default in the whole. Common Certain terms which constantly recur in the authorities must be well understood and distinguished. Promises or covenants are said to be iiuhqjt'iident when, although they be mutual, breach of any of them gives the other party a right of action without showing perform- ance on his own part (»). They are said to be dependent where " the performance of one depends on the prior performance of another, and, therefore, till this prior condition is performed, the other party is not liable to an action on his covenant." Where one party cannot sue for breach of the other's promise without showing on his own part performance of some promise made by himself, or at least readiness and willingness to perform it, there, if the performance on his part was due before the other partj^'s, it is said to be a condition precedent to his right of action {<)). If the fulfilment of mutual promises is due at the same time, and so that the party suing must be at least ready and willing to perform his part, it may be said that these are concurrent conditions. " Neither is a condition precedent," but " the performance of each is conditional upon the other's being performed at the same time" {})). (w) Bradford V. W'illiiiws (IS72) 0:1.735. L. R. 7 Ex." 259, 41 L. J. Ex. 259, (o) See Bunkartv. Bouws {I8(i6) see judgment of Martin B. L. R. 1 C. P. 484 ; Norrington t. («) Lord Mansfield in Kin(j.4on Wright (1885) 115 U. S. 189. V. Pirstou (1773) cited in Jonea v. (/>) Langdell, Summarj', § 132. B<(rltleij, Doug. ii89 ; Finch, Sel. dependp:nt and independent promises. 275 A contract which can be fultilled only as a whole, so that failure in any part is failure in the whole, is said to be entire. A contract of which the performance can be separated, so that failure in one part affects the parties' rights as to that part only, is said to be divisible. It must always be understood that questions of tin's kind are possible only where a contract consists of mutual promises. For if performance itself is the consideration for a promise, there is no contract at all without perform- ance. But when there is a contract made by mutual promises, we may have to enquire whether, in addition to each promise or set of promises being the consideration for the other, the performance thereof on the one side is not a condition, precedent or concurrent, of the right to claim performance on the other. There is no logical reason why it should not be so, or why express words should be required to manifest an intention that it should. Each party's promise is the consideration for the promise of the other, not for the performance which is due by reason of the promise. What are the terms and con- ditions of the duty created by the promise is another matter. In an executory contract of sale the promise to deliver is the consideration for the promise to pay ; but this need not be a promise to pay before or without delivery. However, the earlier line of decision was biassed by rules laid down in cases on promises by deed l)efore the law of executory simple contracts was deve- loped ; and for a long time it was supposed that promises which were the consideration for each other must, as a matter of law, be independent (q). Late in the eighteenth century this view was abandoned, and it was held that " whether covenants be or be not independent of each other must depend on the good sense of the case, and on (_q) See Langdell, § 140, and the mises," atul notes to Pordage v. whole title of " Dependent and CoIp, 1 Wms. Saund. TAW Independent Covenants and Pro- T 2 276 DUTIES UNDER CONTRACT. Order of per- formance. Total (.!■ partial default. the order in which the several things are to be done," so that " if one part}^ covenant to do one thing in considera- tion (r) of the other party's doing another, each must be ready to perform his part of the contract at the time he charges the other with non-performance " (s). Generally " the order in which the several things are to })e done" is the test most readily applicable (0 ; accord- in glv it is said that " 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 (or other act) is to be performed, an action may be brought for the money (or for not doing such other act) before performance ' ' (») . But this is really no more than a rule of interpretation ; it " only professes to give the result of the intention of the parties " (.r) ; the reason given for it is that " it appears that the party relied upon his remed}', and did not intend to make the performance a condition precedent." There- fore the rule, like all rules of its kind, must yield to evidence of a different intention, and "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 precedent " {x). Another test often applied is whether the term of the contract in wdiich default has been made " goes to the whole of the consideration," or only to part; in other words, whether the importance of that term with regard to the contract as a whole is or is not such that perform- ance of the residue would be, not a defective performance (r) The word " consideration "' is here used in an elliptical manner, and not quite accurately. The promises are the consideration, and the only consideration, for each other. But if the substance of the promises is that performance shall be exchanged for performance, neither party can demand perform- ance on any other terms. (.v) Morton v. Lami (1797) 7 T. K. 125, 4 R. R. 395, per Lord Keuyon C..J. and Grose J. {t) Cp. Clark Hare on Contracts, .589. (?/) Wms. Saund. 5.51 ; .Tervis CI. in lloherts v. Brett (185(i) 18 C. B. 373, 25 L. J. C. P. 280, 28fj. (.r) Jervis C.J. loc. cit. ORDKR, OF PERFORMANCE. 277 of that which was contracted for, but a total faihire to perform it. Can it be said that the promisee gets what he bargained for, with some shortcoming for which damages will compensate him ? or is the point of failure so vital that his expectation is in substance defeated ? The necessity of dealing with this question as a whole was perhaps obscured to some extent by the requirements of formal pleading 0/), but it has been strongly asserted in all the recent authorities. " Parties may think some matter, apparently of very little importance, essential ; and if they sufficiently express an intention to make the literal fulfilment of such a thing a condition precedent, it will Ije one ; or they may think that the performance of some matter, apparently of essen- tial imjjortance and prima facie a condition precedent, is not really vital, and may be compensated for in damages, and if they sufliciently express such an intention, it will not be a condition precedent. " And in the absence of such an express declaration, A\ e think that we are to look to the whole contract, and applying the rule stated by Parke B. to be acknow- ledged {z), see whether tlie particular stipulation goes to the root of the matter, so that a failure to perform it would render the performance of the rest of the contract by the plaintiff a thing diftereiit in substance from what the defendant has stipulated for ; or whether it merely partially affects it and may be compensated for in damages. Accordingly, as it is one or the other, we think it must 1)0 taken to be or not to l)e intended to be a condition precedent " («). Tlie agreement sued on in the case where the principle (.y) It cannot be said thiit it was {z) In Grores v. Leijij (ISaJ) overlooked: see WifJirrs v. Itn/- i) Ex. at p. 710, 23 L. J. Kx. 228, nuld)i(lHW)2B. & Ad. 882, 3G K. k. iK! R. R. mC 782, Franklin v. Miller (1830) 4 («) Blackburn J. Bettiul v. (h/e A. & E. M9, botli lont,^ before the (187(!) 1 Q. P.. D. 183, 187, 188; Common Law Procedure Act. I''inch Sol. Ca. 742, 74."(. '278 DUTIES UNDER CONTRACT. was thus declared was an opera singer's engagement. The singer, who was plaintiff in the cause, was to sing in concerts as well as operas, and during a period of a year, beginning three months before the active duties of the engagement, he was not to sing out of the theatre in the United Kingdom (in the opera season, or within fifty miles of London) without the defendant's permission. He was nlso to be in London for rehearsals six days before the commencement of the engagement. This last term was not fulfilled, but it was held that, having regard to the whole scope of the agreement, it did not go to the root of the matter so as to j ustify the defendant in determining the engagement and refusing to employ the plain tift'. Matter of excuse was alleged by the plaintiff for his failure to arrive at the time stipulated, but nothing turned upon this. On the other hand wrongful dismissal of an employee is a total repudiation of the contract of service, and discharges him not only from further service but from an undertaking restraining his right to carry on a similar business after the termination of the contract (/>). Agreements If, however, there be any presumption either way in are now pre- ^^i^ modern view of such cases, it is that, in mercantile sunied entire ' rather than contracts at any rate, all express terms are material. " Merchants are not in the habit of placing upon their contracts stipulations to which they do not attach some value and importance " {<■). In a case not mercantile, where the contract before the Court was held on its terms to be divisible, the late Lord Justice Mellish said : — " I quite agree that as a general rule all agreements must be considered as entire. Generally speaking, the consideration for the performance of the whole and each part of an agreement by one part}' to it is the performance (/>) General Billposting Co. v. (^•) Lord Cairns in Hoivex v. AtJiinso/i [1909J A. C. 118, 78 L.J. S/tnnd (1877) 2 App. Ca. 455. 463. Ch. 77. BREACH OF ENTIRE CONTRACT. 279 of the whole of it by the other, and if the Court is not in a position to compel the plaintiff, who comes for specific performance, to perform the whole of it on his part, the Court will not compel the defendant to perform his part or any part of the agreement. As a general rule, there- fore, an agreement is entire. I can also conceive that a court of equity might treat an agreement as entire even in cases where a court of law would say that the per- formance of one part is not a condition precedent to the performance of the other part, because the Court might see that those rules as to conditions precedent, which to a certain extent are technical, might not meet the real justice of the case. But, on the other hand, I do not find it Inid down anywhere that it is impossible for the parties so to frame an agreement that there may be a specific performance of part " {d). The question to what extent, if at all, a party is bound Entire con- to accept performance of less than all that was promised and'tfM«°«l«w him is to be distinguished from the question, not to be meruit. pursued here, of the duty incurred by one who does accept and in fact has some benefit from a partial per- formance. It may be the intention of a contract that the promise of one party shall be conditional on the actual performance of the other's promise, so that nothing less than complete performance shall found any claim to payment. If such is really the parties' intention effect will be given to it ; the condition, if they choose to make it, is good enough, and an imperfect performance, from whatever cause remaining imperfect, affords no ground of action. The express terms are not fulfilled, and a term or new contract to pay what the benefit received is reasonably worth cannot be introduced (//) Wilkinson V. C/rnir/itx (1872) a fresh contract to pay for what he L. li, 8 Ch. 96, 1 10. has actually done : see Suinpter v. (_e) Where performance has been Jfedi/rs [1898] 1 Q. B. G73, (>7 L.J. defective by the plaintiff's own Q. Pi. 545, 0. A. fault, the Inu'den is on him toshow 280 DUTIES UNDER CONTRACT. Questions on sales for deliveiy by instalments. Hoare v Kennie. where the express terms exclude it (e). In its results, though not in its form, such a case resembles that of a reward offered by advertisement to the first person who procures certain information. A person who brings the information, but is not the first to bring it, evidently has no claim on the advertiser, whatever amount of trouble and expense he may have incurred, and although the delay may l)e due to inevitable accident (/). 3. Default in First or other Instalments of Discontinuous Performance. Peculiarly troublesome questions have arisen upon contracts for the sale of goods to be delivered and paid for by instalments. It is not yet settled whether failure to deliver the first or any subsequent instalments is or is not presumed, in the absence of any special indication of the parties' intention, to go to the whole of the con- sideration and entitle the buyer to refuse acceptance of any further deliveries. It seems to be admitted that failure on the buyer's part to pay according to the terms of the contract for the first or any particular instalment as delivered is not of itself a breach of the entire con- tract (//) ; but such default or refusal may by the reason assigned for it, or because of other particular circum- stances, manifest an intention to repudiate the contract as a whole, in which case the seller may justly refuse in his turn to go on with the contract (//)• In Iloare v. liennie (i), a case decided on pleadings, the contract appeared to have been to sell about 667 tons of iron of a specified kind, to be shipped in June, July, (/) See Cutter y. Powell (1795) r> T. K. 320, 3 R. R. 18.^, and notes thereto in 2 Sm. L. C. (//) Mersey Steel and Iron (\nn- 'pu/ii/ V. Xaylor (18S-1) •» App. Ca. 434. 43y. 444, .53 L. J. Q. B. 497 ; Frreth v. Burr (1874) L. R. 9 C. P. 20S. 43 L. J. C. P. 91. {h) Withem V. Beynolds (1831) 2 B. & Ad. 882, 36 R. R. 782 ; Freeth V. Burr (1874) L. R. 9 C. P. 208, 43 L. J. C. P. 91 ; and see per Lord Blackburn, Mer.^ey Steel and Iron Co. V. yaylor, Ben:on S,' Co. (1884) 9 App. Ca. at p. 442. (0 (18.^)9) 5 H. .^ N. 19, 29 L. J. Ex. 73. DEFAULT IN INSTALMENTS. 281 August and September, in about equal portions each month. The action was by the sellers for non-acceptance, and for wrongful repudiation of the contract. The buyers pleaded, in effect, that a June shipment of 21 tons only was offered by the plaintiffs, who were never ready and willing to deliver a proper June shipment according to the contract, and that the defendants there- upon refused to receive the portion shipped and tendered, and gave notice that they would not receive the residue. The plaintiffs demurred, and the pleas were upheld, as showing that the plaintiffs had not been ready and willing to perform the substance of their contract within the appointed time. In the judgments almost exclusive attention is paid to the question whether the defendants were bound to accept the first shipment : in only one of tliem (/.) is it stated in general terms that the defendants were at liberty to rescind the contract, but the decision evidently involves this (/). In Siinpsoii V. Ci'lppin (m) the contract was to supply Simpson v. about 6,000 to 8,000 tons of coal, to be delivered into the ^'^'Pl'^"- buyers' waggons, in " equal montlil}' quantities during the period of twelve months from the 1st of July next." During the first month of the contract the buyers, though pressed by the sellers to send waggons, took only 158 tons. The sellers thereupon gave notice to the buyers that they cancelled the contract. It was held that the breach did not justify rescission, and great doubt was thrown upon Iloarc v. Rennie. In Honck v. Midler (n) the contract was to deliver Honck v. 2,000 tons of iron, "November, 1879, or equally over *^"i'^^- (/O C'hamiell I!. 5 H. & N. at ii. 281 ; and i)er Boweu L.J. in p. 2i). Mrrxeij Steel atul Iron Co. v. Aaylor (0 Much of the language of the (188-lj ii Q. B. Div. at p. 671 ; and judgments would certaiidy have per Jessel M.R. lb. at p. ()58. been more appropriate if the action (w) (1872) L. R. 8 Q. B. 14. had been for non-acceptance of the («) (1881) 7 Q. B. Div. 'J2, 5U first shipment (mlv. Cf. L. Q. It. L. J. y. B. 52'J. 282 DUTIES UNDER CONTRACT. November, December, and January next, at 6t/. per ton extra." The buyer failed to take any of the iron in November, but near the end of the month offered to " take delivery of all in December and January " (o). On December 1 the seller cancelled the contract, and was held by the majority of the Court of iVppeal to have been entitled to do so, even on the supposition that in the circumstances the buyer could and did elect to take delivery in three portions in the three months named. "I think," said Bramwell L.J. "where no part of a con- tract has been performed, and one part}' to it refuses to perform the entirety to be performed by him, the other party has a right to refuse an}' part to be performed by him. I think if a man sells 2,000 tons of iron, he ought not to be bound to deliver 1,333^ only, if it can be avoided " (p). Fieeth c. Meanwhile it had l)een held in Freeth v. Burr (q) that refusal by a buyer to pay for a much delayed delivery of the iirst instalment (under a mistaken claim to set off loss arising from any future default in delivering the residue) did not entitle the seller to rescmd the contract. It was suggested that, " in cases of this sort, where the question is whether the one party is set free by the action of the other, the real matter for consideration is whether the acts or conduct of the one do or do not amount to an intimation of an intention to abandon and altogether to refuse performance of the contract," or, in other words, " evince an intention no longer to be bound by the contract " (r). ((*) See 7 Q. B. Div. at p. !•■! tract had in that case been partly (not one-third in December and performed. Brett L.J. dissented, one-third in January, as stated in thinking Simj/.sou v. Crlppln right, the head-note). and Hoare v, Rennlf wiong ; cp. {p) 7 Q. B. Div. 98. Baggallay his dissenting judgment in Fritter L.J. to the same effect, approving v. Sala (1879) 4 C. P. Div. 239, 48 Hoare v. Rennle, and disapproving L. J. C. P. 492. Simpxun V. Orlppin, which Bram- (oUr,j. and yet cannot conveniently be admitted as the subject- matter of valid contracts, or can be so admitted only under special restrictions. They seem in the main to fall into the following categories : Matters governed by reasons outside the regular scope of municipal law, and touching the relations of the com- monwealth to foreign states : Matters touching the good government of the common- wealth and the administration of justice: Matters affecting particular legal duties of individuals whose performance is of public importance : Things lawful in themselves, but such that individual citizens could not without general inconvenience be allowed to set bounds to their freedom of action with regard to those things in the same manner or to the same extent as they may with regard to other things {c). Agreements falling within this third description are void as being against pnhlic jwlicij. "We have then in the main three sorts of agreements (Z/) Bramwell B. Cowan v. Mil- none other than to set bounds to hourti (1867) L. R. 2 Ex. at p. 236, the party's freedom of action as 36 L. J. Ex. 12i. regards the subject-matter of the (l) 17 Q. P.. G71, 086, 21 L. J. M. C. 81, 8.") II. K. (515 — or to commit a civil wrong by fraud and false pre- tences, Reg. V. Warbvrton (1870) L. R. 1 C. C. R. 274, 40 L. J. M. ('. 22. cp. llci. V. Aqnnall (187(>) 2 Q. B. Div.' at p. .".9, 4G L.J. Jl. C. 14o— is a conspiracy. An agree- ment to commit a simple breach of contract is not a cons|iiracy. See on the whole suljject, Mugul Steam- ship Co. V. McGreiinr. O'ow 4' Co. [IHi (187,-,) 312, 18 L. J. Ex. 488, 80 K. R. oCC. L. K. 20 Eq. 65, 42 L. J. Ch. 2'M\. (rt) Iligr/ins v. Pitt, last note. {d) lilacklork v. Bol/ifl (187(i) 1 (/>) Jfuli V. Dyson (1852) 17 Q. P.. C. P. D. 2(15, 45 L. J. C. P. 498. 785, 21 L. J. Q. B. 22 1. 85 K. W. (;s2, (^0 liankruptcy Act, 1 883, ss. 18, 296 UNLAWFUL AGREEMENTS. Fraud on third parties not to be pre- sumed from mere possi- bilities. 3. Certain cases of analogous uatuie as involving " fraud on third persons." Public policy, therefore, as well as private right, requires that such a proceeding should be conducted "with good faith and that no transaction which interferes with equal justice being done therein should be allowed to stand. The doctrine of fraud on third parties, as it maybe called, is however not to be extended to cases of mere suspicion or conjecture. A possibility that the performance of a contract may injure third persons is no ground for presuming that such was the intention, and on the strength of that presumed intention holding it invalid between the parties themselves. "Where an instrument between two parties has been entered into for a {jurpose which may be considered fraudulent as against some third person, it may yet be binding, according to the true construction of its language, as between themselves." Nor can a supposed fraudulent intention as to third persons (inferred from the general character and circum- stances of a transaction) be allowed to determine what the true construction is (/). 3. There are certain cases analogous enough to the foregoing to call for mention here, though not for any full treatment. Their general type is this : There is a contract giving rise to a continuing relation to which certain duties are incident by law ; and a special sanction is provided for those duties by holding that transactions inconsistent with them avoid the original contract, or are themselves voidable at the option of the party whose rights are infringed. "We have results of this kind from (a) Dealings between a principal debtor and creditor to the prejudice of a suret}' : (b) Dealings by an agent in the business of the agency on his own account : 19. Since this Act there is a notable increase of private compo- sitions independent of the Act, (/) S/uuc V. Jfifferi/ (18G0) 13 Moo. P. C. 432, 4.5.5, DEALINGS TO PREJUDICE OF SURETY. 297 (c) Voluntary settlements before marriage " in fraud of marital rights." In the first case the improper transaction is as a rule valid in itself, ])ut avoids the contract of suretyship. In the second it is voidable as between the principal and the agent. In the third it is (or was) voidable at the suit of the husband. (a) " Any variance made without the surety's consent Dealings in the terms of the contract between the principal debtor cipaiTreiHtoi-' and the creditor discharges the surety as to transactions f^nd debtor to subsequent to the variance " (r/), unless it is evident to surety. the Court "that the alteration is unsubstantial, or that it cannot be otherwise than beneficial to the surety " (h). The surety is not the less discharged " even though the original agreement may notwithstanding such variance be substantially performed " (i). An important applica- tion of this rule is that " where there is a bond of suretyship for an officer, and by the act of the parties or by Act of Parliament the nature of the ofUce is so changed that the duties are materially altered, so as to affect the peril of the sureties, the bond is avoided " (/r). But when the guaranty is for the performance of several and distinct duties, and there is a change in one of them, or if an addition is made to the duties of the princii^al debtor by a distinct contract, the surety remains liable as to those which are unaltered (/). The following rules rest on the same ground : (r/) Indian Contract Act, s. 133. L. .J. Q. B. 383; Pi/hii.f v. (^ihb (/i) Holme V. JinmsJiill (1877) 3 (1846) (J E. & B. y02,'yil, 2C> L. J. Q. B. Div. 495 (diss. Brett L.J.), Q. B. 41 ; Mayor of Camhridtjc v. overruling on this point /Srt«) Cargo e.v Arf/os. &c. (1872-3) 143, (;.5 I!. E. .51, per Tindal C.J. ; L. E. 5 P. C. at pp. 1.32-3. The per Lord Brougham at p. 1.50, (>") doctrine formerly current (in E. 11. 5.5. And see per Knight Bruce accordance with the prevailing L.J. Crofts V. Middlefon (1850) 8 speculative opinion on the Con- D. M. G. at p. 217, 110 E. E. 186 ; tinent), that statutes might be per Lord Blackburn, in 2?/(w lOrtr disregarded if the Courts thought Comiurs. v. Aditmson (1877) 2 A[)[), rROHIBITORY STATUTES. 307 On the other hand the general mtention is to be re- Policy of garded, and may if necessary prevail over particular '' ^ " ^^' expressions, no less than in the interpretation of private instruments. But it must also l)e an intention collected from what the legislature has said, not arrived at by conjectures of what the legislature might or ought to have meant (c). A transaction not in itself immoral is not to be held unlawful on a conjectural view of the policy of a statute {d). The true policy of a statute is for a court of justice neither more nor less than its true construction. The Courts no longer undertake either to cut short or to widen the effect of legislation according to their views of what ought to be the law. " Before we can make out that a contract is illegal under a statute, we must make out distinctly that the statute has pro- vided that it shall be so " (e). The cases in which acts of corporate bodies created for special purposes have been held void as " contrary to the policy of the legislature " and tending to defeat the objects of the incorporation have already been considered in Ch. II. These principles, when applied to the more limited subject-matter of prohibitory statutes, give the following corollaries : (a). When a transaction is forbidden, the grounds of Rules. the prohibition are immaterial. Courts of justice cannot "• Nodiffer- take note of any difference between mala prohUnta {I.e. malum jn-o- things which if not forbidden by positive law would not ^"''''''""'/^ik^i . "^ '■ malum tii se. be unmoral) and mala in se {i.e. things wliich are so forbidden as being immoral). them contrary to reason, common 582, 40 L. J. C. P. 285 ; cp. Journ. right, or natural equity (all Soc. Comp. Leg. for 1900 at p. 42:5. synonymous terms for this pur- (r) Cp. [)p. 2(; parte Jackson (1880) 14 Ch. Div. 72."). Ic must be shown, to vitiate a transaction on this ground, that the provision was inserted in con- templation of bankruptcy and for the purpose of defeating the bank- ruptcvlaw: Ejc parte I'c/^^y (18S2) 21 Ch. Div. 442, 4(51, 52 L. J. Ch. 121. PROHIBITORY STATUTES. 311 Agreement Void. Ritchie Y. Smith (1818) 6 C. B. 4G2, 18 L. J. C. P. 9,77 R. R. HtJl). The owner of a licensed house underlet part of it to another jserson, in order that he might there deal in liquor on his own account under colour of his lessor's licence and without obtaining a separate licence. This agreement was void, its purpose being to enable one of the parties to infringe an Act passed for the protection of public morals : (the licensing Acts are of this nature, and not merely for the benefit of the revenue, for this reason, that licences are not to be had as a matter of right by paying for them). For the same reason and also because there is a specific penalty for each offence against the licensing law, it seems that a sale of liquor in an unlicensed house is void. Hamilton v. Grainger (1859) 5 H. & N. 40. Taylor v. Crowland Gas Co. (18.54) 10 Ex. 293, 23 L. J. Ex. 254, 102 R. R. 58(5. A penalty being Imposed by statute on unqualified persons acting as conveyancers {j}), the Court held that the object was not merely the ga'n to the revenue from the duties on certificates, but the protection of the public from unqualified practitioners ; an unqualified person was therefore not allowed to recover for work of this nature. Cp. Lemau v. Houseley (1874) L. R. 10 Q. B. G6, 44 L. J. Q. B. 22. Fergusson v. Korman (1838) 5 Bing. N. C. 7G, 50 R. R. 613. When a pawnbroker lent money without complying with the require- ments of the statute, the loan was void and he had no lien on the pledge Qi). In Stevens v. Gourley (1859) 7 C. B. N. S. 99, 29 L. J. C. P. 1, a builder was not allowed to recover the price of putting up a wooden shed contrary to the regulations imposed by the Metropolitan Building Act, 18 & 19 Vict. c. 122. The only question in the case was whether rhe structui'e was a building within the Act. But note that here the prohi- bition was for a public purpose, namely, to guard against the risk of fire. Barton v. Piggott (1874) L. R. 10 Q. B. 8G. Bj 5 & G Wm. 4, c. 50, s. 4G, a penalty is imposed on any surveyor of highways who shall have an interest in any contract, or sell materials, &;c. for work on any highway tinder his care unless he first obtain a licence from two justices. The effect of this is that an unlicensed contract by a surveyor to perform work or supply materials for any highway under his care is abso- lutely illegal, and there is no discretion to allow payments in respect of it. (p) Now by 33 & 34 Vict. c. 97, Act by a pawnbroker, not being s. GO. an ofl'ence against any })rovision (q) The present Pawnbrokers Act relating to licences, shall not avoid (1872 ; 35 & 3G Vict. c. 93, s. 51), the contract or deprive him of his enacts that an offence against the lien. 312 UNLA \Vi- UL AGREEMENTS. Contract not Avoided. Bailey v. Harris (1849) 12 Q. B. 905, 18 L. J. Q. B. 115. A contract of sale is not void merely because the goods are liable to seizure and forfeiture to the Crown under the excise laws. Smith V. Mawhovd (1845) 14 M. & W. 452, 15 L. J. Ex. 149, G9 R. R. 724. The sale oi an exciseable article is not avoided by the seller having omitted to paint up his name on the licensed premises as required by G Geo. 4, c. 81, s. 25. Probably this decision would govern the construction of the very similar enactment in the Licensing Act, 1872 (35 & 36 Vict. c. 94, s. 11.) Smith V. Lindo (1858) 4 C. B. N. S. 395, iu Ex. Ch. 5 C. B. N. S. 587, 27 L. J. C. P. 19G, 335. One who acts as a broker in the City of London without being licensed under 6 Ann. c. 68 (Rev. Stat. : al. 16) and 57 Geo. 3, c. Ix. (r) cannot recover any commission, but a purchase of shares made by him in the market is not void : and if he has to pay the purchase- money by the usage of the market, he can recover from his principal the money so paid. And in general an agreement which the law forhids to be made is void if made. But an agreement forbidden by statute may be saved from being void by the statute itself, and on the other hand an agreement made void or not enforceable by statute is not necessarily illegal. An agreement may be forbidden without being void, or void without being forbidden. g. Agreement not void though for- bidden, if statute ex- pressly so provides. (g). Where a statute forbids an agreement, but says that if made it shall not be void, then if made it is a con- tract which the Court must enforce. By 1 & 2 Vict. c. 106, it is unlawful for a sj^iritual person to engage in trade, and the ecclesiastical Court may inflict penalties for it. But by s. 31 a contract is not to be void by reason only of being entered into by a spiritual person contrary to the Act. It was contended without success in Lcicis v. Brujht (s) that this proviso (»•) These Acts are repealed as to the power of the city court to make rules, kc, but not as to the neces- sity of brokers being admitted, by the ^^omewhat obscurely framed London Brokers' Relief Act, 1870, 33 Ic 34 Vict. c. 60. (.v) (1855) 4 E. & B. 917. 24 L. J. Q. B. 191. 99 R. R. 823. WAGERS AND GAMING. 313 could not apply when the other party knew with whom he was dealing. But the Court held that the knowledge of the other party was immaterial ; the legislature meant to provide against the scandal of such a defence being set up. And Erie J. said that one main purpose of the law was to make people j)erform their contracts, and in this case it fortunately could be carried out. (h). Where no penalty is imposed, and the intention of the legislature appears to be simply that the agree- ment is not to be enforced, there neither the agreement itself nor the performance of it is to be treated as un- lawful for any other purpose (t). Modern legislation has produced some very curious results of this kind. In several cases the agreement can- not even be called void, being good and recognizable by the law for some purposes or for every purpose other than that of creating a right of action. These cases are reserved for a special chapter (ii). In the case of wagers the agreement is null and void by 8 & 9 Yict. c. 109, s. 18, and money won upon a wager cannot be recovered either from the loser or from a stakeholder (with a saving as to subscriptions or con- tributions for prizes or money to be awarded " to the winner of any lawful game, sport, pastime, or exercise " : the saving extends only to cases where there is a real competition between two or more persons (.r), and the (/) Adopted by the Su[)reme Court, U. S. Chapman \. County of JJoufiliiH (1882) 107 U. S. 348, 356. [u] See Ch. XIII., On Agree- nieiits of Imperfect Obligation. The distinction between an enact- ment which imposes a penalty without making the transaction void, and one which makes the for- Ijidden transaction void, is ex- pressed in lioman law by the terms mhtux quiim pcrfccta lex and jio'- fecta lej\ Ulp. Reg. 1 § 2, cp. Sav. Syst. 4. :>:,{). A constitution of Theodosins and Valentinian (Cod. 1. 14. de leg. 5) enjoined that all prohibitory enactments were to be construed as avoiding the trans- actions prohibited by them (that is, as leges perfectae) whether it were so expressed or not. (.<•) E.g. a wager that a horse will trot eighteen miles in an hour is not within it, as there can be no winner in the true sense of the clause: /{/it.ioH v. yeiviiutn (187()) 1 C. F. IJiv. 073. Nor a so-calUnl competiliiin where tlie event is //. Agreement may be simply not enforceable, but not otherwise unlawful. Wagers. Void, but not absolutely illegal. Fitch V. Jones. 314 UNLAWFUL ACREEMEXTS. "subscription or contribution" is not money deposited Avith a stake-holder by way of wager) (y). Wagers were not as such unlawful or unenforceable at common law : and since the statute does not create any offence or impose any penalty, a man may still without violating any law make a wager, and if he loses it pay the money or give a note for the amount (^). The consideration for a note so given is in point of law not an illegal considera- tion, but merely no consideration at all. The difference is important to the subsequent holder of such a note. If the transaction between the original parties were fraudulent or in the proper sense illegal, the burden of proof would be on the holder to show that he was in fact a holder for value ; but here the ordinary presumption in favour of the holder of a negotiable instrument is not excluded (a). At common law " if a party loses a wager and requests another to pay it for him, he is liable to the party so paying it for money paid at his request" (b) ; but the Gaming Act, 1892, makes all such payments irre- coverable (e), as also a loan of money to be used for a wager, and to be repaid only if the borrower wms {d}. Attempts have been made to evade the operation of the principal Act in gambling transactions for " differ- ences" in stocks by colourable provisions for the com- jDletion of purchase and delivery or receipt of the stocks. determined by chance or by a choice 455. see judgments of Lord Camp- so arbitrary as to be equivalent to bell C.J. and Eiie J. chance : Bardaij v. I'eavHon (the (Ji) Rosewaine v. Billing (18G8) '•missing word" case) [18'J3] 2 Ch. 15 C. B. N. S. 316, 33 L. J. C. P. 154. 02 L. J. Ch. 630. 55. (y) Digfjlpv. HU/gs (IS77) 2 Ex. (c) 55 Vict. c. 9. Tatam v. Reeie. Div. 422," 46 L. J. Ex. 721 : Trim- [1893] 1 Q. B. 44. 62 L. J. Q. B. hlc V. Hill (1879) (J. C.) 5 App. 30. Ca. 342, 49 L. J. P. C. 49. (^Z) Carney v. PUmmer [1897J 1 (-) As to British India see Qncen- Q. B. 634, 66 L. J. Q. B. 415, C. A. EinpressY. Xaruttani Da-^ Motirain It is doubtful whether the Act (1889) I. L. R. 13 Bom. 6S1, a affects loans of money to be used curious case on the common Indian in betting generally or for paying sport of " rain-gambling." bets already lost : see pp. 387 — 388, («) Fitch V. Jones (1855) 5 E. & below. B. 238, 24 L. J. Q. B. 293, lu3 R. R. WAGERS AND WAGERINC;. 315 Whether the mtention of the parties was really to buy and sell, or to wager on the price of the stocks, is a que tion of fact on which the verdict of a jury will not be disturbed if on the agreement as a whole there is evidence of a gambling intention (c). Nor will provisions of this kind validate an agreement which is otherwise a gambling agreement on the face of it (/). Under another modern statute (5 & 6 Wm. 4, c. 41, s. 1) securities for money won at gaming or betting on games, or lent for gaming or betting, are treated as given for an illegal consideration (). But it by no means follows that the Court will enforce the trusts. It may have to direct the trustees whom to pay, and will then disregard any dis- position which is in fact founded ou an immoral con- sideration (c). Thus a settlement in the form of an ordinary marriage settlement in contemplation of a marriage (as formerly with a deceased wife's sister) not allowed by English law is treated, as regards trusts for the so-called wife, as made on an immoral consideration, and the Court will pronounce such trusts invalid if applied to by the trustees for directions, though it would not set aside the settlement at the instance of the settlor ((Z)- Proviso for Where parties who have been living together in illicit reconciiia- cohabitation separate, and the man covenants to pay an tion in quasi , . . .... separation annuity to the woman, with a proviso that the annuity deed is void, ^i-^.-^^ cease or the deed shall be void if the parties live together again, there the covenant is valid as a simple volnntarj^ covenant to pay an annuity, but the proviso is wholly void. It makes no difference, if the parties, being within the prohibited degrees of affinity, have gone through the form of marriage, and the deed is in the ordinary form of a separation deed between husband and wife (e). When the parties are really married such a proviso is usual but superfluous, for the deed is in any case avoided by the parties afterwards living together (/). This brings us to the second branch of this topic, namely the validity of separation deeds and agreements for separation. (/y) Ai/t^rst V. Jenkins, last note. 9 Ch. 670, 43 L. J. Bk. 121. 1(f) Phillips V. Prohyn [1899] 1 ( /") Westmeath v. Salisluvii or Ch. 811. (58 L. J. Ch. 401. Westmeath (1820-1) 5 Bli. N. S. (rf) Phillips V. Probijn, last 339, 1 Dow & CI. 519, 35 E. K. note. 54. 0) E.V parte Xaden (1871) L. E. SEPARATION DEEDS. ' 321 The history of the subject will l)e found in Lord Separation Westbury's judgment in Hunt v. Hunt (g). From the general. canonical point of view marriage was a sacrament ^""* ''• i^ii"*. creating an indissoluble relation. The duties attaching to that relation were "of the highest possible religious obligation " and paramount to the will of the parties. In ecclesiastical Courts an agreement or provision for a voluntary separation present or future was simply an agreement to commit a continuing breach of duties with which no secular authority could meddle, and therefore was illegal and void. For a long while all causes touching marriage even collaterally were claimed as within the exclusive jurisdic- tion of those courts. The sweeping character and the gradual decay of such claims have already been illus- trated by cases we have had occasion to cite from the Year Books in other places. In later times the ecclesi- astical view of marriage was still upheld, so far as the remaining ecclesiastical jurisdiction could uphold it {Ii), and continued to have much influence on the opinions of civil Courts ; the amount of that influence is indeed some- what understated in Lord Westbury's exposition. But the common law, when once its jurisdiction in such matters was settled, never adopted the ecclesiastical theory to the full extent. A contract providing for and fixing the terms of an immediate separation is treated like any other legal contract, only the ordinary rule that the wife cannot contract with her husband without the inter- vention of a trustee is dispensed with in these cases (?'), Being good and enforceable at law, the contract is also good and enforceable in equity, nor is there any reason for refusing to enforce it by any of the peculiar remedies (r/) (1861-2) 4 D. F. J. 221. Tlic Selboiiio, .s App. Ca. at p. 421. case was taken to the House of (/t) See 4 1). F. J. 235-8. Lords, but tlie proceedings came to («) P. 87, above, McGrer v. an end without any decision by the McGregor (1888) 21 Q. B. Di'v. 424, death of the husband : see per Lord 57 L. J. Q. B, 208. P. Y 322 UNLAWFUL AGREEMENTS. Wilson r. Wilson. Considera- tion for agreements for separa- tion deeds. of equity. In Hunt v. Hunt the husband was restrained from suing in the Divorce Court for restitution of con- jugal rights in violation of his covenant in a separation deed (/), on the authority of the decision of the House of Lords (A) which had already established that the Court may order specific performance of an agreement to execute a separation deed containing such a covenant. The case may be taken as having put the law on a con- sistent and intelligible footing, though not without over- ruling a great number of pretty strong dicta of various judges in the Court of Chancery and even in the House of Lords (l) ; and it has been repeatedly followed (m). But an agreement by the wife not to oppose proceedings for a divorce pending at the suit of the husband is void, l)eing not only in derogation of the marriage contract, but a collusive agreement to evade the due adminis- tration of justice (n). We have seen that when it is sought to obtain the specific performance of a contract the question of con- sideration is always material, even if the instrument is under seal. Generally it is part of the arrangement in these cases that the trustees shall indemnifj' the husband against the wife's debts, and this is an ample considera- tion for a promise on the husband's part to make (j") This covenant could not then be pleaded in the Divorce Court, which held itself bound by the former ecclesiastical practice to take no notice of separation deeds. (A-) Wilwn V. Wilson (1848) 1 H. L. C. 538, 73 R. R. 1.58. (l) la -SY. Jo/in v. St. John (1803-5) 11 Ves. 526. &c., West- meath v. Weatmrnth (1820-1'^ 1 Jac. 142 (Lorfl Eldon) ; Worrall V. Jacob (1816-7) 3 Mer. 268 (Sir W. Grant) : Wurrrndfr v. War- rendrr (1835) 2 CI. & F, .527 (Lord Brougham). 561-2 (Lord Lynd- hiirst\ Most of these are to be found cited in the argument in Wilson V. Wilson. And even since that case Vansittarf v. Yunsittart (1858) 2 De G. & J.at p. 255 (Lord Chelmsford). (w) Besunt v. Wood (1879) 12 Ch. D. at p. 623 ; Sweet v. Sweet [1895] 1 Q. B. 12, 64 L. J. Q. B. 108; Marshall \. 3Iarshall(lS79^ 5 P. D. 19, 48 L. J. P. 49. A like covenant on the wife's behalf by a trustee is binding on her, Clark v. Clark, 10 P. Div. 188. («) Hope V. Hope (1857) 8 D. M. G. 731, 745, 26 L. J. Ch. 417. SEPARATION DEEDS. 323 provision fo]* the wife, and of course also for his under- taking to let her live apart from him, enjoy her property separately, &c. (o). But this particular consideration is by no means necessary. The trustee's undertalving to pay part of the costs of the agreement will do as well. But if the agreement is to execute a separation deed containing all usual and proper clauses, this includes, it seems, the usual covenant for indemnifying the husband, so that the usual consideration is in fact present (p). In the earlier cases, no doubt, it was supposed that the contract was made valid in substance as well as in form only by the distinct covenants between the husband and the trustee as to indemnity and payment, or rather that these were the only valid parts of the contract. But since Wilson v. Wilson (q) and Hunt v. Hunt such a view is no longer tenable : in Lord Westbury's words " the theory of a deed of separation is that it is a contract between the husband and wife through the intervention of a third party, namely the trustees, and the husband's contract for the benefit of the wife is supported by the contract of the trustees on her behalf" (;•). A covenant Minor points not to sue for restitution of coniugal rights cannot be f ^ to f epara- ^ ^ " tion deeds. implied, and in the absence of such a covenant the institution of such a suit does not discharge the other party's obligations under the separation deed (s). Sub- sequent adultery does not of itself avoid a separation deed unless the other party's covenants are expressly qualified to that effect (t). A covenant by the husband to pay jm annuity to trustees for the wife so long as they shall live apart— or, since the Married Women's Property ((') See Dav. Con v. 5, pt. 2, 1079. and by Lord West bury, 4 D. F. J. (/v) 6rif///x V. Hardiiu) (1870) 284. L. K. ') Ch. 336, 3'J L. J. I'h. 374. (/•) 4 O. F. J. 240. iq) On t he effect oi: that case see (.v) Jpe v. 'fhurlow (1824) 2 IS. & the remarks in the House of Lords C. Ml. 26 R. R. 453. in a subsequent appeal as to the (0 If'. ; Eram v. raryingtoii frame of the deed. Wihonv. Wilmn (1860)2 D. F.J. 481 30 L J Ch (1854) b H. L. C. 40, 101 R. R. 2.5 ; 364. Yii 324 UNLAWFUL AGRKEMENTS. Act, to the wife herself — remams in force notwithstanding a subsequent dissohition of the marriage on the ground of the wife's adultery (/() ; bnt it seems it would he void if future adultery were contemplated at the time (,r). The concealment of past misconduct between the marriage and the separation may render the arrangement voidable, and so may sul)8equent misconduct, if the circumstances show that the separation was fraudulently procured with the present intention of obtaining greater facilities for such misconduct (//). A separation, or the terms of a separation, between husband and wife cannot lawfully be the subject of an agreement for pecuniary consideration between the hus- band and a third person. But in the case of Jones v. Waitr {z) it was decided by the Exchequer Chamber and the House of Lords that the husband's execution of a reparation deed already drawn uj) is a good and lawful consideration for a promise l)y a third person. A separation deed, as we have above said, is avoided by subsequent reconciliation and cohabitation (a). If it were not so, but could remain suspended in order to be revived in the event of a renewed separation, it might become equivalent to a contract providing for a contin- o^ent separation at a future time : and such a contract, as will innnediately he seen, is not allowable. However, a substantive and absolute declaration of trust by a («) rinirli'^irorth v. ffolf (IS?:?) Ilu; V.\. Cli. both Lord Abinger ami L. U. 11 Ex. ;5S, -i;} \j. J. Ex. "i.") ; Lnid Denman dissented. Sweet V. Sineet [1S9.")] I Q. I>. 12. {a) See also Westmeath v. Salh- 64 L. .1. Q. B. 108. hnrii (1831) 5 Bli. N. S. 339. Sr, (;r) Fetiron v. E'irl of Ayle.sfnril R. K. J54. Questions may arise (1884) 14 Q. B. Div. 792, 53 L. J. whether particular terms are part Q. B. 410. of the agreement for separation, (?/) Eviinf (*/). 32G UNLAWFUL AGREEMENTS. Reason of the distinction. Immoral pub- lications : Being criminal offences, these are contrary to 'positire law. provide for a future separation (A). Nor can such a deed be supported as a voluntary settlement Q). The distinction rests on the following ground : — An agreement for an immediate separation is made to meet a state of things ^Yhich, however undesirable in itself, has in fact Ijecome inevitable. Still that state of things is al)normal and not to l)e contemplated beforehand. " It is forbidden to provide for the possible dissolution of the marriage contract, which the policy of the law is to pre- serve intact and inviolate " (/n). Or in other words, to allow validity to provisions for a future separation would 1)6 to allow the parties in effect to make the contract of marriage determinable on conditions fixed beforehand by themselves {n). It is a well established rule that no enforceable right can be acquired by a blasphemous, seditious, or indecent publication, whether in words or in writing, or by any contract in relation thereto (o) ; but it does not really belong to the present head. The ground on which the cases proceed is that the publication is or would be a criminal offence ; not merely immoral, but illegal in the strict sense. The criminal law prohibits it as inalutn in .sc, and the civil law takes if from the criminal law as inahdn ]>j-o}iil>iliiin, and refuses to recognize it as the origin of any right (/>). Then the decisions in equity profess simply to follow the law by refusing in a doubtful case to (/.') Ifiiulhii V. Miirqiiis of Wcxt- mcath (1S27)'g B. A: ('. 200, 30 K. U. 2'.tU : coutirined by WeMiiieatli v. SalLslmr,/ (1881) 5 Bli. N. S. 331), 3yr)-7, 35 K. R. 54, 55. (l) Biitdleii V. MiiUonrij (ISG'J) L. K. 7 Eq. 343. («0 3 K. c>c J. 382. 112 K. 11. I!lt5. (w) Agreements between husband and wife contemjilating a future judicial separation (separation tie corps) are void in French law : Sirey «S: Gilbert on Code Nap. art. 1133, no. 55. (()) A somewhat analogous ques- tion is raised by deceptive trade marks and titles. A trade mark likely to deceive the public will not be registered : Eno v. Dunn (1890) 15 App. Ca. 252, 63 L. T. (i. There is no copyright in a work of which the title or description is a fiaud on the public : Wright v. TaUi.s (1845) 1 C. B. 8113, (58 'R. R. 852. (/>) Ej/. Stockdule \. Onichyn (182ti) 5 B. i: C. 173, 2i) R. R. 207. IMMORAL PUBLICATIONS. 327 give the aid of equitable remedies to alleged legal rights until the existence of the legal right is ascertained (r/). It would perhaps be difficult to assert as an abstract proposition that a Court administering civil justice might not conceivably pronounce a writing or discourse immoral which yet could not be the subject of criminal proceedings. But we do not know of such a jurisdiction having ever in fact been exercised ; and considering the very wide scope of the criminal law in this behalf (r), it seems un- likely that there should arise any occasion for it. Some expressions are to be found which look like claims on the part of purely civil Courts to exercise a general moral censorship apart from any reference to the criminal law. But these are overruled by modern authority. At the present day it is not true that " the Court of Chancery has a superintendency over all books, and might in a summary way restrain the printing or i)ublishing any that contained reflections on religion or morality," as was once laid down by Lord Macclesfield ; or that " the Lord Chancellor would grant an injunction against the exhibi- tion of a libellous picture," as was laid down b}^ Lord Ellenborough (s). On the whole it seems that for all practical purposes the civil law is determined by and co- extensive with the criminal law in these matters : the question in a given case is not simply whether the pub- lication be immoral, but whether the criminal law would punish it as immoral. C. Agreements contrari/ to puhlic policy. Before we go through the different classes of agreements of i lu- {q) Smith eij \. HheriLiimd (1817) 80 Jj. J. (!li. (JIK). As to blas[)liem()iis 2 Mcr. 435 ; Laivrence v. Sinith or (iiiasi-l»l;ispheiuous publications (IH22)Jac. 471, 23 R. R. 123. somcthinjj: like the older view seems (r; See Russell on Crimes, l)k. 2, to be involved iu Cnwaa v. Mil- c. 24, and Stephen's Digest of the hourn (18*57) L. R. 2 Ex. 2;i0, 3(J Criminal Law, artt. 91-95, l(jl, L. J. Ex. 124, but see contra the 172. summing up of Lord Coleridge C.J. (.v) Emperor of Andrla V. Dill/ ,^- in /Av/. v. MaM.sey J^- Fuufe, [')Co:i., K,:;x„lh (ISCl) :? I). F. J. 217. 238, C, ('.231, 481, 489. doctrine of 328 UNLAWFUL AGREEMENTS. piiblic policy in general. Its extension by anxiety of Courts to discourage wagers, while wagers as such were valid con- tracts. which are void as being of mischievous tendency in some one of certain different ways, something must be said on the more general question of the judicial meaning of " public policy." That question is, in effect, whether it is at the present time open to courts of justice to hold transactions or dispositions of property void simply because in the judgment of the Court it is against the public good that they should be enforced, although the grounds of that judgment may be novel. The general tendency of modern ideas is no doubt against the continuance of such a jurisdiction. On the other hand there is a good deal of modern and even recent authority which makes it difficult to deny its continued existence. As a matter of history, there seems to be little doubt that the doctrine of public policy, so far as regards its assertion in a general form in modern times, if not its actual origin, arose from wagers being allowed as the foundation of actions at common law. Their validity was assumed without discussion until the judges repented of it too late. Regretting that wagers could be sued on at all (t), they were forced to admit that wagering con- tracts as such were not invalid, but set to work to discourage them so far as they could. This they did by becoming " astute even to an extent bordering upon the ridiculous to find reasons for refusing to enforce them" in particular cases (ti). Thus a wager on the future amount of hop duty was held void, because it might expose to all the world the amount of the pul)lic revenue, and Parliament was the only proper place for the discussion of such matters (x). (0 Guild V. Ellioff (1790) 3 T. K. 093, 1 R. R. 808, where BuUer J. proposed (without success) to hold void all wagers on events in which the ])arties had no interest. (//) Per Parke B. Egertun v. Eavl Brownlow (1853) 4 H. L. C. at p. 124 : per WiUiams J. ib. 11; per Alderson B. ih. 109. (./■) Atlu'vfold V. Beard (1788) 2 T. R. (ilO. 1 R. R. 5.56. PUBLIC POLICY : VVACiERS. 329 Where one proprietor of carriages for hire in a town had made a bet with another that a particnbir person wouhl go to the assembly rooms in his carriage, and not the other's, it was thought that the bet was void, as tending to abridge the freedom of one of the pubHc in choosing his own conveyance, and to expose him to "the incon- venience of being importuned by rival coachmen " ((/). A wager on the duration of the life of Napoleon was void, because it gave the plaintiff an interest in keeping the king's enemy alive, and also because it gave the defendant an interest in compassing his death by means other than lawful warfare (~). This was probabl}' the extreme Later case, and has been remarked on as of doubtful autho- on"tiiese rity («). But the Judicial Committee held in 1848, on decisions. an Indian appeal (the Act 8 & 9 Vict. c. 109, not fir now kw. extending to British India), that a wager on the price of opium at the next Government sale of opium, was not illegal (/>). The common law was thus stated by Lord Campbell in delivering the judgment: — '■ I regret to say that we are l)oinul to consider the common law of England to be that an action may be maintained on a wager, although the parties had no previous interest in the question (m which it is laid, if it be not against the interests or feelings of third persons, and does not lead to indecent evidence, and is not contrary tn public policy. I look with concern and almost with shame on the subterfuges andcontiivances and evasions to which judges in England long resorted in slruggling against this rule " (r). It may surely be thought doubtful whether decisions so produced and so reflected upon can in our own time be entitled to any regard at all. But it has been said that (y) Eltham v. Ki/u/siman (ISIS) K. 11. widuw,iH. Jj.C' 109, iimi Soojuninnll Dhoadmull (1848) (> in the Privy Council in the case Moo. !'. (!. .SOD, 310. 79 R. R. 02. next cited, (i Moo. P. (". 312. 79 63. 380 UNLAWFUL AGREEMENTS. they establish a distinction of importance between cases where the parties " have a real interest in the matter, and an apparent right to deal with it " and where they " have no interest but what they themselves create by the contract;" that in the former case the agreement is void only if " directly opposed to public welfare," but in the latter " any tendency whatever to public mischief " will render it void (d). It is difficult to accept this distinction, or at any rate to see to what class of contracts other than wagers it applies. In the case of a lease for lives (to take an instance often used) the parties "have no interest but what they themselves create by the con- tract " in the lives named in the lease : they have not any " a[)parent right to deal with " the length of the Sovereign's or other illustrious persons' lives as a term of their contract : yet it has never been doubted that the contract is perfectly good. Egerton v. ^I'he most remarkable modern case on the general Browiilow. doctrine of " public policy " is Egerton v. Earl Brown- low (e). By the will of the seventh Earl of Bridgewater a series of life interests (/) were limited, subject to provisoes which were generally called conditions, l)ui were really conditional limitations by wa}' of shifting uses upon the preceding estates (g). The effect of these was that if the possessor for the time being of the estates did not acquire the title of Marquis or Duke of Bridge- water, or did accept any inferior title, the estates were to go over. The House of Lords held by four to one (//), id) {lS-,:i) 4 H. L. C. 148. at i). 82. (<•) 4 H. L. C. 1-250, 94 R. R. 1. (^A) L(3rcls Lyndlmist, Brougham, (/) Xot estates of freehuld witli Trtiio, and St. LeouarJs, against remainder to first and othor .sons in Lord Cranvvorth, who had heard tail in the usual way, but a chattel the case in the first instance as interest for 99 years, if the taker Chancellor, 1 Sim. N. S. 4H4. 94 should so long live, remainder to R. R. 12, n. Lord Crau worth the heirs male of his body. See could not see his way to avoiiling Dav. Conv. 3, pt. 1, 351. this will on the ground of public (lic policy": namely that the tendency of the transaction at the time, not its actual result, must be looked to. It was urged in vain that the will of the seventh Earl of Bridgewater had in fact been in existence for thirty years without producing any visible ill effects (o). Later views : The prevailing modern view is expressed by the follow the doctri will not 1. extended. wiii'lS bf i"- 1-emarks of the late Sir G. Jessel '■ It must iiiit he forgot ten that vdu aie not to extt'iiil arbitrarily those rules which say that a <,Mven contract is void as being against public l)iilicy. because if there is one thing which more than another public piilicy reijuires. it is that men of full age and competent understanding shall have the utuKist liberty of contracting, and that their contracts, when entered into freely and v(jluiitarily, shall be held sacred and shall Ijc enforced by courts of justice. Therefore, you have this paramount ]iublie policy to consider — that you are imt lightly to interfere with this freetlom of contract "( /')• (w) There was a iimfessional eviilence : notwithstanding it did tradition that Loid Eldoii had not appear that the person had known of these dispositions and made any objection, and the cause expressed a private opinion that had in fact been tried without any they could not be sui)ported. indecent evidence. (y) Cp. Da Coda Y. Jo/ira {Ills) (/;) Printing and Numer'ieal Cowp. 721). Wager on sex of til i 1x1 Jiri/ixtcrhuji f'o. y. Sampson (187.5) person void, as oifeusive to that L. it. 19 E(|. 4(>2. H L. J. Ch. person and tending to indecent 70.") TRADING WITH ENEMIES. 333 In the House of Lords itself it has now been distinctly said that no Court can invent a new head of public policy and that " pul)lic policy is alwaj^s an unsafe and treacherous ground for legal decision," "a very unstable and dangerous foundation on which to l)uild until made safe by decision" (q). We may be pretty sure, therefore, that no further attempts in this direction will be made in our time (r). We now proceed to the several heads of the subject. (a.) First, as to matters concerning the commonwealth in its relations with foreign powers. iburqh v. Banna- tync (1797) 1 B. & P. 163, 4 K. R. 772, FOREIGN REVENUP] LAWS. 337 " Tt is contrary to the law of nations, which in all cases of inlernational law is adopted into the municipal code of every civilized country, fur persons in Eiiglaml to enter into engagements to raise money to support the subjects of a government in amity with our own in hostilities against their government, and no right of action can arise out of such a transaction" (/')■ The Supreme Court of the United States has held, however, that an assignment of shares in a company originally formed for a purpose of this kind was so re- motely connected with the original illegality of the loan as not to he invalid between the parties to it (/). It is not a "municipal offence hy the law of nations" Neutral „ . . „ , , , ' I 1 •j_i trade with tor Citizens oi a neutriil country to carry on trade with a belligerents blockaded port — that is, the courts of their own country "^ ^^ "^^^ *^f ^ ' _ _ "^ capture only, cannot be expected to treat it as illegal (though of course not unlawful. it is done at the risk of seizure, of which seizure, if made, the neutral trader or his government c-annot complain) : and agreements having such trade for their object — e.g. a joint adventure in blockade running — are accordingly valid and enforceable in the courts of the neutral state (m). There were decisions on this topic of aiding or trading with enemies in the American Supreme Court in cases arising out of the Civil War (»). It is admitted as a thing required by the comity of Exceptional nations that an agreement to contravene the laws of a foreign foreign country would in general be unlawful. But it is revenue laws. said that revenue laws (in practice the most important (A) Best C.J. IJfi WiUz v. Ifen- Aniericnn authorities there cited; drick.i (1824) 2 Bing. 814, 27 R, K. Kent, Conim. 3, 267. 660. Cp. I'hompxon v. Poiohs {ti) Hee Texan v. ]Vhitr (IS(]H} 7 (1828) 2 Siui. 194, where the Wallace, 700 (where, however, the language seems unnecessarily wide. chief points are of constitutional (/) MeBliiir v. (iihhcs (isr.l) 17 law) ; llaiuiuer y.Doane (1870) 12 Howard, 282. ///. 842 Sprott \. T. -V. (1874) 20 (w) Ej- parte CluivnxHe (1865) Wall. 459, goes beyond anything 1 l>. J. S. ().").5, see Lord Westburv's in our boolvs. and the dissent of judgment : The IIeleH(\»15) L.'u. Firld J. seems well founded. 1 Ad. k Ecc. L 84 L. J. Ad. 2, and l^oS UNf.AWFUL AGREEMENTS. cases) are excepted, and that "no country ever takes notice of the revenue laws of another " (o). As a general proposition, however, this is disapproved by most modern writers as contrary to reason and justice ip). It should be noted that our Courts, so far as they have acted upon it, have done so to the prejudice of our own revenue quite as much as to that of foreign states. Thus a complete sale of goods abroad by a foreign vendor is valid, and the price may be recovered in an English Court, though he knew of the buyer's intention to smuggle the goods into England. " The subject of a foreign country is not bound to pay alle- giance or respect to the revenue laws of this" (q). But it is admitted that an agreement to be performed in England in violation of English revenue laws would be void — as if, for example, the goods were to be smuggled by the seller and so delivered in England. And a subject domiciled in the British dominions (though not in England or within the operation of English revenue laws) cannot recover in an English Court the price of goods sold by him to be smuggled into England (r) ; and even a foreign vendor cannot recover if he has himself actively contributed to the breach of English revenue laws, as b}' packing the goods in a manner suitable and to his knowledge intended for the purpose of smuggling (.«). The cases upholding contracts of this kind, whether as against our own or as against foreign laws, would prob- ably not be now extended beyond the points specifically (<)) Lord Mansfield ill Ilolnnui v. (/•) ('Ivgun v. Penaluna (1791) 4 Johnxoi, (177")) 1 Cowp. 341. T. R. 4G(;, 2 R. R. 442. It seems (p) Kjj. Kent. Comm. 3, 2(53- but it is uot quite certain, from 2(;C : DiceV; Conflict of Laws, 35 //.. this case, that mere knowledge of '>7A-'>'>h. the buyer's intention would dis- {q') Hulman v. Julinnon (1775) 1 entitle dim. Cowp. 341 ; Pellecat v. Angt'll (.v) U'ai/mell v. Heed (1794) 5 (1835) 2 C. M. & R. 311-3,41 R. R. T. R. 599,'2 R. R. 675. 723. per Lord .Al)inger ('.P.. AGREEMKNTS FOR OORltUPT INFLUENCE. 339 decided )iy them, and perhaps not altogether upheld (t). There is one modern case which looks at first sight like an authority for saying that our Courts pay no regard to foreign shipping registration laws : hut it really goes upon a different principle, and, hesides, the law of the United States was not properly hrought before the Court (ii). As to instruments which cannot be used in their own Foreign country for want of a stamp, it is now settled that regard ^"^'^"H' i'^«'s- will be paid by the Courts of other States to the law^ which regulates them, and the only question is as to the real effect of that law. If it is a mere rule of local procedure, requiring the stamp to make the instrument admissible in evidence, a foreign Court, not being bound by such rules of procedure, will not reject the instrument as evidence: it is otherwise if the local law "makes a stamp necessary to the validity of the instrument," i.e., a condition precedent to its having anj^ legal effect at all (.r). (b.) As to matters touching good government and the ^,_ YaUic administration of iustice. policy as touching- It is needless to produce authorities to show that an !,'o\^ermiieat agreement whose object is to induce any officer of the Corrupt or Stite, whether judicial or executive, to act partially or !'"P™pe'" . . , . ... iimuence on corruptly in his office, must in any civilized country be public otticers void. But an agreement which has an apparent ten- "' *'^"' ^ "''^* dency that way, though an intention to use unlawful means be not admitted, or even be nominally disclaimed, will equally be held void. The case of Eficrton v. EarJ {/) It must be rcuietiibered that 801, 78 U. R. 2'.»8, see Liudlcy uu tlic geiienil law as to sale of godds, i'artnership. 1 1."). ki;., which the seller knows will be (.r) See i'icey, (londicl of l^aws. used for an unlawful purpose, was 714 ; Jiridow v. Secqiierillc (^lUTyi)) not fully settled at the .late of these 5 F.n. 275, 19 L. J. E.\. 28'J, 82 authorities. 11. R. (U;). (w) S/icirjj v. '/;////()/•( I S4'.IJ 2 z 2 840 UNLAWFUr> AGREEMENTS. Broiniloir, of which an account has been given a few pages above, was decided on the principle that all trans- actions are void which create contingent interests of a nature to put the pressure of extraneous and improper motives upon the counsels of the Crown or the political conduct of legislators. Marshall r. A decision in the American Supreme Court which kc ^Co'^^'^' happens to l)e of nearly the same date shows that an (Sup. Court agreement is void which contemplates the use of under- U S ) . . . hand means to influence legislation. In Mcoshall v. Bdltiiuore and Ohio Bailroad Co. (i/) the nature of the agreement sued on appeared by a letter from the plaintifi" to the president of the railway board, in which he proposed a plan for obtaining a right of way through Virginia for the company and offered himself as agent for the purpose. The letter pointed (though not iu express terms) to the use of secret influence on par- ticular members of the legislature : and it referred to an accompanying document which explained the nature of the plan in more detail. This document contained the following passage: — "I contemplate the use of no improper means or appliances in the attain- ment of your purpose. My scheme is to surround the legislature with respectable agents, whose per- suasive arguments may influence the members to do 3'ou a naked justice. This is all I require — secrecy from motives of policy alone — l)ecause an open agency would furnish ground of suspicion and unmerited invec- tive, and might weaken the impression we seek to make." The arrangement was to be as secret as practicable : the company was to have but one ostensible agent, who was to choose such and so many sub-agents as he thought proper : and the payment was to be contingent on success. The actual contract was made by a resolution {!/) (18o:?) 18 Howard. 314. AGREEMENTS FOR CORRUPT INFLUENCE. 341 of the directors, according to which agents were to be employed to " superintend and further " the contemplated application to the legislature of Virginia " and to take all proper measures for that purpose ; " and their right to any compensation was to be contingent on the passing of the law. The Supreme Court held, first, that it was sufficiently clear that the contract was in fact made on the footing of the previous communications, and was to be carried out in the manner there proposed ; and secondly, that being so made it was against public policy and void. " It is nn nncioul)te 1 principlo of tlic cominnu law that it will uot lend its aid lo enforce a contiacl to do an act that is illegal, or which is incon- sistent with sound morals or public policy ; or which tends to corrupt or contaminate, by iinprojier influences, the integrity of our social or political institutions. . . . Legislators should act fiom high considerations of public duty. I'ublic policy and sound morality do therefore imperatively require that Courts should put the stamp of their disapprobation on every act and pronounce void everv contract the ultimate [qi'. immediate ]~\ or probable tendency of which would be to sully the purity or mislead the judgments of those lo whom the high trust of legislation is confided." [The judgment then points out that persons interested in the results of pending legislation have a right to urge their claims either in person or by agents, but in the latter case the agency nnist be open and acknow- ledged.] ''Any attempts to deceive persons intrusted with the high functions of legislation by secret combinations, or to create or bring into oiieration undue influences of any kind, have all the effects of a direct fraud on the public " (:). And the result of the previous authorities was stated to be — ■•1st. That all contracts for a contingent comptensation for ol)taining li'giilat i(in, or to use personal or any secret or sinister influence on legis- lators arc («) void by the policy of the law. " 2nd. Secrecy as to the character under which the agent or solicitor acts tends to deception and is immoral and fraudulent, and where the agent contracts to use secret influences, or voluntardy without contract with his principal u.ses such means, he cannot have the assistance of a Court to recover comi)ensation. (-) (18.");j) 16 Howard, at p|). (//) ■• 7.v " by a clerical erior in 331-.^. the report. 342 UNLAWFUJ. AUREEMENTS. ■• .Srd. That what in tlie technical vocabulary of [xililicians is termed ' liig-nilling' (A) is a uii^idemeanour at common law punishable by indictment " (>•)• So in a later case {d) an agreement to prosecute a claim before Congress by means of personal influence and solicitations of the kind known as " lobby service " has been held void. Otherwise of But as it is open to a landowner or other interested person^i'u-'"^ person to defend his interest ))y all lawful means against terested to i)ro[)Osed legislation from which he apprehends injury, (•pposition ; ^'^ it is Open to him to withdraw or compromise his Simpson r. claims on any terms he thinks lit. There is no reason against bargains of this kind any more than against a compromise of disputed civil rights in ordinary litigation. And the lawfulness of such an agreement is not altered if it so happens that the party is himself a member of the legislature. In the absence of anything to show the contrary, he is presumed to make the agreement solely in his character of a person having a valuable interest of his own in the matter, and he is not to be deprived of his rights in that character merely because he is also a legislator {c). " A landowner cannot be restricted of his rights because he hap[)ens to be a member of Parlia- ment " ( /'). This may seem anomalous : but it must be remembered that in practice there is little chance of a conflict between duty and interest, as the legislature generally informs itself on these matters b}' means of committees proceeding in a quasi-judicial manner. Of course it would be improper for a member personally interested to sit on such a committee. (Z/) Arrangements between mem- (f) ShiipxoH v. LoTd Ifowdfin bers for the barter of votes on (lS3i)-l2) 2 P. & D. 714. 10 A. & E. private bills. TDS. 9 CI. & F. 61. 50 R. K. .5.5.5. (c) ir. Howard, SBC). (/') Kinderslev V.-C. in Barl of (d) Tri>iTi)2] Wall. Shreicxbnn/ v. X' SftifordxJiire Ey. 441. See, too. .Un/i/lrr v. Cornniip. Co. (18t).5)'L. R. 1 Eq. 593, 613, 35 (1879) 101 U. S. lOrf. L. J. Ch. 156. SALE OF OFFICES. 343 On similar grounds it is said that the sale of offices Bale of (which is forbidden by statutes extending to almost every common Law. case) is also void at common law(<7). However, there may be a lawful partnership in the emoluments of offices, although a sale uf the offices themselves or a complete assignment of the emoluments would be unlawful (//). The same principles are applied to other appointments which though not exactly public offices are concerned with matters of public interest. " Public policy requii-es that there shall be no money consideration for the appointment to an office in which the public are inter- ested : the public will be better served by having i)ersons best qualitied to till offices appointed to them ; but if money may be given to those who appoint, it may be a temptation to them to appoint improper persons." Therefore the practice which had grown up in the eighteenth century of purchasing commands of ships in the East India Company's service was held unlawful, no less on this ground than because it was against the Company's regulations (i). In like manner a secret agreement to hand over to another person the profits of a contract made for the public service, such as a Post Office contract for the conveyance of mails, is void ( A:). Nevertheless many particular offices, and notably subordinate offices in the courts of justice, were in fact saleable and the suljject of sale by custom or otherwise until quite modern times. But the commission of an officer in the army could not be the subject of a valid pledge even under the old system of purchase (/). For like reasons certain assignments of salaries and Assignments iff) Hatc'mgton v. Bh, Chaxtel B19. (1781) 2 Swarist. 159, «. ; Hopkins (i) Blackford v. Prexhm (17it;») V. PrcHrnlt (1847) 4 C. P.. 578, 16 8 T. K. 89, 93, 4 II. R. 598. L.J. C. r. 2,59,72 11. H. 647, per (i) O.sborne v. ILJ/Z/rtws (1811) Coltman J. 18 Ves. 379, 1 1 R. R. 218. (/() Stern/ v. Clif/o/i (1850) 9 0. (0 ('ollyrr v. Fallo/i (1823) T. ii B, 110, 19 L. J, C. P. 237, 82 R. R. R. 459. of salaries. 344 UNLAWFUL AGREEMENTS. Interference with course of justice. In criminal proceedings. " Stifling prosecutions.' Williams v. Bayley. pensions have been held void, as tending to defeat the public objects for which the original grant was intended. Thus military pay and judicial salaries are not assignable. The rule is that " a pension for past services may be aliened, but a pension for supporting the grantee in the performance of future duties is inalienable " : and there- fore a pension given not only as a reward for past services, but for the support of a dignity created at the same time and for the same reason, is inalienable (m). But an assignment by the holder of a public office of a sum e(|uivalent to a proportionate part of salary, and secured to his legal personal representatives on his death by the terms of his appointment, is not invalid, such a sum being simpty a part of his personal estate like money secured by life insurance (»)• A clergyman having cure of souls is not, as such, a public officer for the purj)ose of this rule (o). A mortgage by an officer of the Customs of his disposable share in the " Customs Annuity and Benevolent Fund " created by a special Act has been unsuccessfully disputed as contrary to the policy of the Act (p). Agreements for the purpose of " stifling a criminal prosecution " are void as tending to obstruct the course of public justice. An agreement made in consideration ostensibly of the giving up of certain promissor}' notes, the notes in fact having forged indorsements upon them, and the real consideration appearing by the circumstances to be the forbearance of the other party to prosecute, was held void on this ground in the House of Lords The principle of the law as there laid down by Lord (w) Da CIS V. Duke of Marl- loruuqh (1818) 1 .Swanst. 74, 79, .58 R.R. 29, 31. Cp. Arhuthmt v. Norton (1846) 5 Moo. P. G. 219. And see authorities collected in the notes to Rijall v. Rowlen (1749) in 2 \Vh. vt T'. L. C. (n) Arhutlinot V. Xorton{\S\&^h Moo. P. C. 219. (()) Re Mirams [1891] 1 Q. B. 594, 60 L. J. Q. B. 397. (/;) Maelean\s trusts (1874) L. R. 19 E|. 274. ir r. Lccman. CJOMPOUNDIN(^ OFFENCES. 345 Westhury is " That you shall not make a trade of a felony " (q). However the principal direct authority must still l)e Ke sought in the earlier case of Kcir v. Leeman (r). The Court of Queen's Bench there said : — '• Tlie principle of law i.s laid down by Wiliiiot CJ. in CuHiux v. Bldiitern (.«) that a contract to vvitluliaw a i)roseciition for pei-jury and consent to give no evidence against the accused is founded on an unlaw- ful consideration and void. On the soundness of this decision no doubt can be entertained, whether the party accused were innocent or guilty of the crime charged. If innocent, the law was abused for the ])urpose of extortion ; if guilty, the law was eluded by a corrupt compromise screening the criminal for a bribe. [The cases are then reviewed.] We shall probably be safe in laying it down that the law will permit a com- promise of all offences, though made the subject of criminal prosecution, for which offences the injured party might sue and recover damages in an action. It is often the only manner in which he can obtain redress. But if the offence is of a public nature no agreement can be valid that is founded on the consideration of stifling a prosecution for it " (/). Accordingly the Court held that an indictment for offences including riot and ohstruction of a public officer in the execution of his duty cannot be legally the subject of a compromise. The judgment of the Exchequer Chamber {a) affirmed this, but showed some dissatis- fiiction even with the limiteil right of compromise admitted in the Court below. The Court of Appeal has since held that the compromise of any public mis- demeanour, from whatever motive, is illegal {x), though where there is a choice of a civil or criminal remedy a i/l) Willianix V. Baijleii (1S()()) truces is an illegal consideration. L. i;. 1 H. L. 200, 220, 35 I.. J. What if there is no real ground for Ch. 717. a prosecution, the supposed offence (/•) (1811)0 Q. B. 308, 13 L.J. being an act not criminally punish- Q. B. 2.V.), ()(5 R. K. 392. in Ex. Ch. able .' See jier Fry J. 8 Ch. I), at 9 Q. B. 371, l.T L. J. Q. B. 3(30, 72 p. 477. It is submitted that the K. R. 298. agreement wovdd l)c void for want (.v) 1 Sm. L. C. 309, 382, (309, of consideration. 373, nth ed.). («) 9 Q. B. at p. 392. (/) Ace. in (]luhh v. Untsuii (,r) WmdliiU Lonil liminl v. (180.5) 18 C.B. N.S. 411, held that VUd (1890) 45 Ch. Div. 351, 59 forbearance to prosecute a charge L. J. Ch. 008. of obtaining money by false pre- 346 UNLAWFUL AGREEMENTS. compromise of criminal as well as civil proceedings may be lawful (i/). It is even held that an agreement to com- pound an offence in a foreign country whose law does not forbid such agreements is not actionable here (z). There need not be an express agreement not to prose- cute. An understanding to that effect, shown by the circumstances to be part of the transaction, will be enough. And, since the liefence of illegality in cases of this kind is allowed on public grounds, it must be allowed even if the Court thinks it discreditable to the party setting it up (a). It is not compounding felony for a person whose name has been forged to a bill to adopt the forged signature and advance money to the forger to enable him to take up the bill. It is doubtful whether a security given by the forger for such advance is valid : but he cannot himself actively dispute it (on the principle potior est conditio defendcntis, of which afterwards), nor can his trustee in bankruptcy, who for this purpose is in no better position than him- self, as there is in any case no offence against the bank- rupt laws(/>). An agreement by an accused person with his bail to indemnify him against liability on his recognizances is illegal, as depriving the public of the security of the bail(c) : and so is the like agreement of a third person {d). 18 Eiiz. c, 5, The compounding of offences under penal statutes is expressly forbidden l)y 18 Eliz. c. 5, s. 5. (//) Fhher ,?' Co. v. ApalliiKirix prosecution : there the trustee can (\i. (1S75) L. U. 10 t'h. 2'.I7. 41 recover it : Ex jxn'te Woh-erlutnip- r.. J. Ch. .',00. ton Banking Co. (188-1) 14 Q. B. 1). (--) lutufnitui V. GerxoH fr.)U4] 32 : Ex parte Caldecott (1x76) 4 1 K. B. 5iil, 73 L. J. K. B. 320, Ch. Div. 150, 46 L. J. Bk. 14. C. A., see L. Q. E. xx. 227. and (r~) Herman v. Jenchner (1885) p. 4U9, below. 1.-. Q. B. Div. 561, 54 L. J. Q. B. (rt) Jones V. Merionetltshire 340. It is an indictable con- Bn'ildlnq Society [\^'.)2]\V\\.\1^, spiracy : R v. Porter [1910] 1 61 L. J. Ch. 138, C. A. K. B. 369, 79 L. J. K. B. 241. (J)) Otherwise where, after au [UMDING OFFKNCES. 347 An election petition, though not a criminal proceeding, Compromise is a proceeding of a public character nnd interest which petition. may have penal consequences ; and an agreement for pecuniary consideration not to proceed with an election petition is void at common law, as its effect would be to deprive the public of the benefit which would result from the investigation {c). In like manner an agreement for the collusive conduct of a divorce suit is void (J), and agreements not to expose immoral conduct (//), and to conduct criminal proceedings against a third person in such a way that the name of a party who was in fact involved in the transaction should not be mentioned (h) have been held void as against public policy. There is nothing illegal in an agreement between parties in a probate action that costs shall come out of the estate whether the Court so order or not ; and a party who makes such an agreement jointly with an infant may be personally liable on it if, by the Court not sanctioning the agreement on the infant's part, it cannot be specifically performed (/). A shai-eholder in a company which was in course of secret agree- compulsory winding-up agreed with other shareholders, •"ent as to r 1 A- -1 .• ,^•■^ conduct oE wno were also creditors, m consideration of being mdem- winding-up : nified by them against all future calls on his shares, that ■5!^'*^"5''- .',.,, Richardson. he would help them to get an expected call postponed and also support their claim ; it was held that " such an agreement amounts to an interference with the course of public justice" : for the clear intention of the Winding-up Acts is that the proceedings should be taken with reason- able speed so that the company's affairs may be settled and the shareholders relieved ; and therefore any secret agreement to delay proceedings to the prejudice of the (e) aippoch V, Jioirrr (18:^8) 4 D. 5, J". L. J. Ex. 129. M. & W. HOI, t>\ II. U. (-,27. (//) Lound v. aHmwade (1888) (/) lIoi)e V. Ifi>iw. (l,S.-,7) S D. M. •{!) Ch. I). 605, 57 L. .1. Ch. 725. G. 731, 26 L. J. Oh. 417, 111 II. U. (i) Prince v. Ifaworth [1905] 2 306. K. B. 768, 75 L. J. K. B. 92. (^) Brown v. Brim (1875) 1 K.x. 348 UNLA \VF U L AC ; R EEMENTS. Agreements for reference to arliitration, how far valid at common law. Practically enforceable under Arbi- tration Act. other shareholders and creditors is void (k). This comes near to the cases of secret agreements with particular creditors in bankruj^tcy or composition : and those cases do in fact rest partly on this ground. But the direct fraud on the other creditors is the chief element in them, and we have therefore spoken of them under an earlier head (p. 293). Agreements to refer disputes to arbitration are, or rather were, to a certain extent regarded as encroachments on the proper authority of courts of justice by the substi- tution of a " domestic forum " of the parties' own making. At common law such an agreement, though so far valid tliat an action can l)e maintained for a breach of it(/), does not "oust the ordinary jurisdiction of the Court " — that is, cannot be set up as a bar to an action brought in the ordinary way to determine the very dispute which it was agreed to refer. Nor could such an agreement be specifically enforced (m), or used as a bar to a suit in equity (»). It is said however " that a special covenant not to sue Dtai/ make a difference " (n). And the law has not been directly altered (») ; but the Common Law Procedure Act, 1854, now superseded bv the Arbitration Act, 1889 (52 & 53 Vict. c. 49), gave the Courts a dis- cretion to stay proceedings in actions or suits on the subject-matter of an agreement to refer, which amounts in practice to enabling them to enforce the agreement : and tliis discretion has as a rule been exercised by Courts both of law (o) and of equity (p) in the absence of special (/.•) E//ion V. Rlvhanlson (187(1) L. R. .5 C. P. 74-t. 74S-!l, per Willes J., 3'J L. J. 0. V. 340. (/) Livingdon v. RaUl (l.S.">.">) .^ E. & B. 182. 24 L. J. Q. B. 2G!). 103 R. R. 40(5. (w) Street v. Righn (1802) (5 Ves. 815, 818. («) Coolte X. Cooke (18r.7) L. R. 4 Eq. 77. 8«-7, 30 L. ,1. Ch. 480. By Scots law a reference excludes the jurisdiction only if it is to named arbitrators, see Hamlijn S( Co. V. TdlisluT DixtUlevy [1894] A. C. 202. (<>) llandegger v. Holmes (1866) L. R. 1 C. P. 679 ; Seligmann v. Le Boutlllier (18(i6) ih. 681. ip) Willesfordv. TlW.w.-t (1873) L. R. 14 Eq. 572, 8 Ch. 473, 42 L. J. Ch. 447 : Plews v. B/il'^-i- (1873) L, R. 16 Eq. 564, 43 L. J. Ch. 212. As to reference to the ARBITRATION HOW FAR ENFORCEABLE. 349 circumstances, such as a case where a charge of fraud is made, and the party charged with it desires the inquiry to be pul)Hc {([), or where the defendant appeals to an arbitration clause not in good faith, but merely for the sake of vexation or delay (v), or is otherwise not really ready and willing to arbitrate (-s). A question whetber on the true construction of an arbitration clause the subject-matter of a particular dispute falls within it is itself to be dealt with by the arbitrator, if it appears from the nature of the case and the terms of the provisions for arbitration that such was the intention of the parties. Otherwise it must be decided by the Court (t). And when the question is whether an agreement con- taining an arbitration clause is or is not determined, that question is not one for arbitration, since the arbitration clause itself must stand or fall with the whole agree- ment (/()• Certain statutory provisions for the reference to arbitra- Special tion of internal disputes in friendly and building societies ■'^'^^tutoiy ■^ '' _ ^ arbitration have been decided (after some conflict) to be compulsory clauses. and to exclude the ordinary jurisdiction of the Courts {x). decision of a fuieign Coiiil, sic -H (_"li. Div. 2Uii, ;">;) L. J. Oil. 520. Kirchiipr <(|- Co. V. (iruhiin [l',>t);i] (.y) See the principle and limits 1 t'h. 413, 78 L. J. Oh. 117. of the exception explained in the {q) Itii-ssell V. y/w.v.srW (ISSO) II O. A.: J'tirn/ v. LirprjxKiJ Malt Oh. D. at p. 47() (Jessel M.R.). f'o. | I'loii] f Q. V,. 33it. c,;) |,. J. (/■) L. R. 14 Eq. 578; Wit/ v. Q. li. Kil. Corconui (1871) L. R. 8 Oh. 47(i. (0 I'irrci/ v. ) oinu/ (187'.t) 14 ■«., L. R. 1(1 Eq. 571. Th;; ena(;t- Oh. Div. L'o'o, JOS, pel' Jessel MM. ment a[)plies only where there is (lualifyin.!;' the api)arent effect of at the time of actiun brought an W'/l/r.s/onf v. W'tit.sou (1873) Tv. R. existing agreement for reference; 8 Oh. 473. which can be carried into ell'ect : («) Per James L.J. in LldiieJltj lliinilcU, Sdunder.i ,$■ Co. v. Tltonij)- Ilij. 4" Boeh Co. v. L. ^f X. W. Itij. WH (1876) 1 Q. R. Div. 748, 15 Co. (1873) L. R. 8 Oh. at p. i)-18. L. J. Q. B. 713. Not where the (•/) WrUjIit v. Monarch Iiired- arbitration clause does not cover nieiit Bitildlng Society (1^11) '> Qh. the wh> le subject-matter : Turnoek 1). 72(j, 41! L. J. Oh. 641) ; Hack v. V. ,SV//7(;/-;.\- (1889) 43 Oh. Div. 1.50, London Prorident Jluildimi Society 62 L. T. 20i). Nor when the (1883) 23 Oh. Div. 103. 52 "L. J. Oh. matter in difference is a (piestion 512 : Mu/tici/Ml /!iiildini/ Societi/ of pure law : Cleyg v. Cle;/;/ (ISiin) v. Kent (1881) 9 App. Oa. 260, 53 350 UN LAW F LT \. AGREE M ENTS. Agreement of parties may make right of action coudltlondl on arbitration. The Eailway Companies Ai-hitration Act, 1859, is also compulsory (?/). Moreover parties may if they choose make arbitration a condition precedent to any right arising at all, and in that case the foregoing rules are inapplicable : as where the contract is to pay such an amount as shall be deter- mined by arbitration or found due by the certificate of a particular person {z). Whether this is in fact the contract, or it is an absolute contract to pay in the first instance, with a collateral provision for reference in case of difi'erence as to the amount, is a question of construc- tion on which there have been more or less confiicting opinions (a). Maintenance and cham- perty. We now come to a class of transactions which are specially discouraged, as tending to pervert the due course of justice in civil suits. These are the dealings which are held void as amount- ing to or being in tbe nature of champerty or mainten- ance. The principle of the law on this head has been defined to be "■ that no encouragement should be given to litigation by the introduction of parties to enforce E. J. (,». T.. 2'.l() ; ]i,i<-he v. Itil/ifit/- hani Ll.si)4J 1 q. 1'.. U)7, (i:{ L. J. JI. C 1, ('.A. (an improper award, otherwise within the Act. caniuit be trealtd as a mere nullity). Not S(i when' the real i]uesti(in is wlicther a party claiming against tlif society is a member of the society at all : J'rcuiiro v. Loiiihnt 0X7;")) L. K. 10 ('. 1'. 671), 44 I.. J. (". r. 80S. S<^e the Building Societies Act, 1S84, 47 & 4S Vict. c. 41, and Wextern Suhurhni, cS'c. Co. V. Martin (188(0 17 (I P.. Div. 609, 55 L. J. Q. B. 882. (7/) Wdtford S)- liickiiian.swortli Ihf. Co. X. L. ,<■ X. W. Rtj. Co. (18611) L. 11. 8 Eq. 231, 38 L. J. Ch. 44t). Similar questions may arise under special and private Acts : Joseph ( 'roxtieJd ,<■ .S'(»wv v. MaiirhcstP)- Sh'ip Canal Co. [1904] 2 Oh. 123, 73 L. J. Ch. 345, C. A. (,-) Scott V. Arrnj (1855-6) 5 11. L. C. Sll. 25 L. J. Ex. 303, 101 K. K. 392, which does not (iverride the former general law on the subject, see the judgments of Brett J. and Kelly C.B.^in Ex. Cii. in Edwardx v. Aberayron, S'C Sociftij (1875-6) 1 Q. B.'D. 563: Scott V. Corporation of Llrcrjiool (1858) 3 De G. & J. 334, 28 L. .1. Vh. 236. Cp. Collins v. Loche (1879) (J. 0.) 4 App. Ca. 674. 689, 4S L. J. P. C. 68. (rt) Elliott V. lioyal Krchangc A.s'.-Hrance Co. (1867) L. U. 2 Ex. 237, 36 L. J. Kx. 129 : Dawson v. Fitzgerald (1876) 1 Ex. Div. 257, revg. s. c. L. R. 9 Ex. 7, 45 L. J. Ex. 893. maintenanop: and champerty. 851 those rights which others are not disposed to enforce "('>)• Maintenance is properly a general term of which cham- perty is a species. Their most usual meanings (together with certain additions and distinctions now obsolete) are thus given by Coke : — " First, to maintain to have part of the land or any- thing out of the land or part of the debt, or any other thing in plea oi' suit ; and this is called canthipartia [^c-hampart, campi partitio], champertie." The second is " when one maintaineth the one side without having any part of the thing in plea or suit " (c). Champerty may accordingly be described as " mainten- ance aggravated by an agreement to have a part of the thing in dispute " {d). Agreements falling distinctly within these descriptions are punishable under certain statutes (r). It has always been considered, however, that champerty and mainten- ance are offences at common law, and that the statutes only declare the common law with additional penalties ( /'). Whether by way of abundant caution or for other Relation of , , 1 • 1 • 1 • -> . i the statutes reasons, the law was m early limes applieci or at any rate to the asserted with extreme and almost absurd severity {(f). common law, , . ' 'i and modern It was even contended, as we had occasion to see m the policy of last chapter, that the absolute beneficial assignment of a ^'^® '''^^^' contract was bad for maintenance. The modern cases, however, proceed not upon the letter of the statutes or of the definitions given by early writers, but upon the real object and policy of the law, which is to repress that which Knight Bruce L.J. spoke of as " the traffic of mer- (h) I'.y Lord Abinger in J'mssrr 25 ; i:5 Kd. 1 (Stat. Westm. 2), c. V. Kdmoiulx (\i^-;>,-i) \ Y. ic C. Kx. 4U ; 28 Kd. 1, .st. 1, c. 11; Stat. 4S1, 497, 41 K. K. 322, :{34. de Conspiratoribus, temp, incert ; (f) Co. J.it. 3G8 h. Every eliam- 2U Ed. 3, c. 4 ; 1 Eic. 2, c. 4 ; 7 perty is maintenance, 2 Ro. Ab. Uic. 2, c. 15 ; and 32 H. 8. c. '.), IH) R. of which more presently. {(I) Rovill,«/v/. in Spnjr v. I'oiirr (f) IWIicIl v. Wiitxon (1841) 8 M. (185(1) 7 K. & B. 58, 20 L. J. g. I!. ^V W. (V.U, 7U(l, 58 R. R. 843, 850, 64. 2 Ro. A)). 114 1). (0 3 Ed. 1 (Stat. Westm. 1), c. (r!,e (1852) ID. 17 Q. B. Div. 504. M. G. at pp. (iSO. (fsCi, 1)1 11. II. (/.■) Pet- Blackburn J. Ilutley v. 245, 249. Ilutlry (1S73) L. R. 8 Q. B. 112. ((■) One is JJr/al ill// (//i v. ,V(mv/^- Champwty is apt to becom(>licated (/all- (1883) 11 Q. H. 1). 1, 52 L. J. with undue influence, see ^/, and James v. Kerr decided that charity is excuse (18Sil) 10 Ch. U. 449. enoughfor maintaining a stranger's (0 Per Jessel M.R. lie Attorney. f action even without reasonable ion/ Solicitors Act (1875) 1 Ch. D. ground. IJ,i/-,ls v. /.'risro (18S(;.) maiNteiKance and champerty. 353 in consideration of a remuneration contingent on success and proportional to or be paid out of the property re- covered is void {»i). (/S) A solicitor cannot purchase the subject-matter of a pending suit from his cHent in that suit(») ; but he may take a security upon it for advances already made and costs already due in the suit (o). (A) Except in the case last mentioned, the purchase of propert}' the title to which is disputed, or which is the subject of a pending suit, or an agreement for such purchase, is not in itself unlawful {})) : but such an agree- ment is unlawful and void if the real object of it is (inly to enable the purchaser to maintain the suit (q). We ])roceed to deal shortly with these propositions in order. a. This rule was laid down in very clear terms by (a) A^reo- Tindal C.J. in Stanleii v. Jones (r), which seems to be the ™ent io fur- ^ nish money hrst of the modern cases at law. or evidence for litigation " A bargain by a man who has evidence in his own possession respect- ^n tr'rms of ing a matter in dispute between third persons and wlio at the same time sharing professes to liave the means of procuring more evidence, lo jjurcliase from in'operty one of the contending ijarties, at the price of the cvidcnre winch he so .' -i ° ' ' IS void. T)?:?, 44 L. J. t'li. 47, where the (<;) Aiidtv-son \. Itadi'lijf'e {\>>m) agreement was to pay thesohcitois (Kx. Cli.) E. V>. l*c E. Sl'.t, 29 J>. J. in the event of success a percentage Q. B. 12S. IIH I!. Jt. {105. of the property recovered ; but pro- (y^) Ilnntpr v. Ihitdel (184r>) 4 bably the real meaning of it was 11a. 42i), (17 R. K. 114 ; Kniylif v. tiiat" the .solicitors should iind the Bnu-iier [l^TyB] 2 De G. & J. 421, funds. Cp. (irrll v. Lrry (1 SB4) 1 (> 444, 27 L. J. Ch. 521 . ('. B.N. S. 7;5. and Strange v. liren- (//«««<•/.) Lord Eldon set purchase aside a purchase bv a solicitor from his client of the res subject- . . . "' . . matter ot the Uthjiosu, partly on the ground of maintenance. But it suit from his is to be noted as to this ground that the agreement for ^']'j^"i\,ig sale was in substitution for a previous agreement which anomalous. clearly amounted, and which the parties had discovered to amount, to maintenance : and the Court appears to have inferred as a fact that it was all one illegal trans- action, and the sale merely colourable {c). The other ground, which alone would have been enough, was the presmnption of undue influence in such a transaction, arising from the fiduciary relation of solicitor and client (of which we shall speak in a subsequent chapter). The (./•) iJarle v. Jfopwood (1861) '.» (/y) (1811) IS Ves. 120. U It. K. •'. B. N. S. 5Gt;, 30 L..J. C. I'. 217. Kjo. (//) Strange v. Brennan (18 KJ) (r) Cj). /Sy^ryc \'. P.'/7c/-, last page. 15 Sim. 340, 2 C P. Cooper (temp. In \\'iml v. Uuir/ws the parties do Cottenhanj), 1, 1.5 L. J. Ch. 38'.i, 71 not seem to have even kept the 11. K. !)1. The agreement was made original and real agreement ott' tlu; with a solicitor in Ireland, not lace of the transaction in its being a solicitor of the English ultimate shape. See 18 Ves. p. 123, Court of Chancery, and the t'liml to 11 11. U. 102. It is to be regretted be recovered was in England. that the reporter did not preserve (-') J{fi 'J'lioma.t, J(i • acquire a of litigat'on. In Other words, the sale of an mterest to 00 (1857) 7 E. & B. 84. 2(; L. J. L. J. Q. P.. :i2. 29 'l>. 128. 1 l.S K. li. Q. B. 121. 110 1;. r.. .".07. 8fnt. [^e) Ql8r.8j E. B. Jc E. 8u0, 28 (/) (.1SJ8) 2 De U. \ J. at p, 44o. PURCHASE OF THIN(;S IN IJTtOATION. 357 which a right to sue is incident is good (u) ; 1)ut the sale mere right of a mere right to sue is bad (h). A claim to compensa- tion under s. 68 of the Lands Clauses Act is not a mere right of htigation but an assignable interest in pro- perty (i). A man who has conveyed property ))y a deed voidable in equity retains an interest not only transmissible by descent or devise, but disposable inter vivos, without such disposition being champerty. But " the right to com- plain of a fraud is not a marketable commodity," and an agreement whose real object is the acquisition of such a right cannot be enforced (k). In like manner, a creditor of a company may well assign his debt, but he cannot sell as incident to it the right to proceed with a winding- up petition (/). The payment of the price being made contingent on the recovery of the property is probably under any circumstances a sufficient, but is by no means a neces- sary, condition of the Court being satisfied that the real object is to traffic in litigation. If the purchase is made while a suit is actually pending, the circumstance of the purchaser indemnifying the vendor against costs may be material but is not alone enough to show that the bargain is in truth for maintenance (in). But the only view (V) Dichinson v. Biirrell (186()) l)r Iloghfon v. Moiieii (18(i6) L. 11. L. R. 1 E(i.337, 342,H:)L..I.C1i.37I. 2 Cli. 164, 169. Q\k Hill v. Boylr {/i) Ih. ; Prosscr v. tJdinondx (1867) L. K. 4 Eq. 260, and qii. (1835) 1 Y. & C. Ex. 481, 41 11. U. whether the right to cut down an 322. Dist. Gil If V. ChnrcItiU (1888) absolute conveyance to a mortgage 40 (Jh. D. 48i, 56 L. J. Ch. 670 ; be saleable: ySWw/' v. X«w./). Ih/. Co. O^'-S) L. p.. 3 Ch. at p. 3.-.3. ' (/O Fitzroy v. Care [lJ>Oo] 2 K. B. 36i. 74 L. J. K. B. 825), C. A. The assignee's ulterior motives are immaterial. iq') 2 Ro. Ab. 113 B. ; Y. B. 21 E. lir., 10. pi. 33 [cited as 52 in Eolle] ; but in 50 Ass. 323, pi. 3. the general opinion of the Serjeants is ronfiri. Cp. 4 Kent, Comm. 44!'. SALES WITHOUT POSSESSION. 859 means ohtain get or have, any pretensed rights or titles, or take promise grant or covenant to have any right or right of any person or persons in or to any manors land tenements or hereditaments, but if such person or persons which shall so bargain sell give grant covenant or promise the same their antecessors or they by whom he or they claim the same have been in possession of the same or of the reversion or remainder thereof, or taken the rents or profits thereof by the space of one whole year next before the said bargain covenant grantor promise made." The penalty is forfeiture of the whole value of the lands (s. 2), saving the right of persons in lawful posses- sion to buy in adverse claims (s. 4). There is no express saving of grants or leases by persons in actual possession who have been so for less thnn a year : but either the condition as to time applies only to receipt of rent or profits without actual })Ossession, or at all events the intention not to touch the acts of owners in possession is obvious {)•). This, like the other statutes against maintenance and champerty is said to be in affirmance of the common law (s). It " is formed on the view that possession should remain undisturbed. Dealings with property by a person out of possession tend to disturb the actual possession to the injury of the public at large" (t). It is immaterial whether the vendor out of possession has in truth a good title or not (.s). An agreement between two persons out of possession of lands, and both claiming title in them, to recover and share the lands, is contrary to the policy of this statute, if not champerty at common law : therefore where co-plaintiffs had in fact conflicting Penalty and saving. Dealings held within the statute. Agreement to recover and divide property. (?•) ]5y Montague C.J. Pm-f- ridf/e V. Strange, Plowd. 88, cited in Doc d. Williams v. Uirni.t (1845) 1 C. B. 717, 14 L. J. C. P. 237, GS B. R. 807, 811, 813. See further Jenkins v./()/tf.s(1882) •) Q. B. Div. 128, r>\ ];. J. Q. B. 488, as to the meaning of " pretensed rights " and the limited application of the statute at the present time. A right or title which is grantablc under H iV: 1) Vict. c. lOG, is not now ''pre- tensed '' merely because the grantor has never been in possession. To enforce a forfeiture under the statute the plaintiff must show that the purchaser knew the title to be "pretensed": Kennedif v. Lyeli (188.->) l.j Q. B. D. 4'.»1, 53 IJ. T. 4(iG. (.S-) See last note. (/) Per Lord Redesdale, ('holmon- (Iclrij V. Clinton (1821) 4 Bligh, at 360 t'N LA WFUL A(^ REEMENTS. Sale of term by administrator out of possession. iScnix sale of nou-litigious expectancy. interests, and it was sought to avoid the resulting diffi- culty as to the frame of the suit by stating an agreement to divide the proj)erty in suit between them, this device (which now would in any case be disallowed on more general grounds) (/') was unavailing ; for such an agree- ment, had it rea'lv existed, would have been unlawful, and would have subjected the parties to the penalties of the statute (,r). Where after the death of a lessee a stranger had entered, and remained many years in possession, a sale of the term by the administrator of the lessee was held void as contrary to the statute, although in terms it only forbids sales of pretended rights, S:c., under penalties, without exj)ressly making them void (//). But the sale of a contingent right or a mere expectancy, not being in the nature of a claim adverse to any existing j^ossession, is not forbidden. The sale of a man's possible interest as the devisee of a living owner, on the terms that he shall return the jjurchase- money if he does not become the devisee, is not bad either at,^common law as creating an unlawful interest in the present owner's death, or as a Inirgain for a pretended title under the statute (c). (>/} Sec Couhe V. Cookr (1S{J4) -1 D. J. 8. 704 ; Pn/sc v. Pi >/.sr (1872) L. K. 15 Eq. 8(;/-J2 L. J. Vh. 253. (,/•) Cltnlmoiidrloi v. CI i /it on (1821) 4 Bligh, 1, 48. S2, per Lord Eldoii and Lord Kedesdale. (y) P(ie d. Willi(t)iiK V. Ivninx (1S45) 1 C. 1!. 717. 14 L. J. C 1*. 237, G8 E. K. 807. ('[i. above as to the construction ol proliibitoi'y statutes iu general, i). iioH. (.-) Cook V. Field (1850) 15 Q. P.. 4r)M, 19 L. J. y. B. 441, 81 It. ii. O'JO. By the civil law, however, such contracts are regardetl as contra honon mores. ''Huiusmodi pactiones odiosae videutxir et plenae tristissimi et perieulusi eventus,'" we read in a rescript of Justinian on an agreement bet ween expectant co-heirs as to the dis- posal of the inheritance. The lescript goes on, quite in the spirit of our own statirle, to forbid in general terms all tlealings " in alieuis rebus contra tloniini volun- tatem ": C. 2. 3, de pact is, 30. ]>y the Code Kapoleon, art. IGoO (fol- lowed by the Italian Civil Code, art. 14(50). ■"On no peut vciidre V.\ succession d'unc personnc vivaute, nieme de son conscntement : ' cp. 7',i 1 . 1130. In lioman law the rule that the inheritance of a living person could not be sold is put onl}^ on the technical ground '• quia in rcrum natura non sit cjuod venierit" : 1>. 18. 4. de hered. vel actionc venditn, I . and see eod tit. 7-11. MAINTENANCE. 361 Proceedings in lunacy seem not to be within the general Proceedings 1 i. 1 L L^ i 1 i^^ J- ill lunacy not rules as to champerty, as they are not analogous to ordi- ^vithj^ tfie nary litigation, and their object is the protection of the i'»les against „,,',. 1 • 1 • • -J IP J 1 champerty. jjerson and property of the lunatic, which is in itselt to be encouraged ; and " this object would in many cases be impeded rather than promoted l)y holding that all agree- ments relative to the costs of the proceedings or the ulti- mate division of the property were void " {a). As to maintenance in general, maintenance in the Maintenance strict and proper sense is understood to mean only the '" ^^^^^^ ■ maintenance of an existing suit, not procuring the com- mencement of a new one. But the distinction is in practice immaterial even in the criminal law (/>). It is of more importance that a transaction cannot be A'oid for champerty or maintenance unless it be " something against good policy and justice, something tending to promote unnecessary litigation, something that in a legal sense is immoral, and to the constitution of which a bad motive in the same sense is necessary " (c). Therefore, for example, a transaction cannot be bad for maintenance whose object is io enable a principal or other person really interested to assert his rights in iiis own name (c). Nor is it maintenance for several (//) Per "The English law of champerty Lord Cottenham. is not in force in India, and docii- 0)) See Woud v. Dowiiea {li^W) mcnts which set up agreements to I« Ves. at p. 12."), Jl K. K. 1(54. sIkuc the subject of litigation, if ((•) Fi.tc/icr V. Kdinnhi Xairhrr recovered, in cousitlcratiou of sup- riHtid) H Moo. Ind. Apii. 1 7n, 1S7. plyin:^' funds to carrying it on, are I'liis is not necessarily a|iplicablc in not in tliemselves opposed to puVjlic iMigland, being saiil with reference policy ; but such documents should lo the law of British India, where be jealously scanned, and, when the English laws against niainte- found to be extortionate and un- riance and (■haniperty are not spe- conscionable, they are inequitable citically in fon-e : sec Jiam CiHimnv- as against tiie party against whom I'oomhm V. Cliiimler Canto Moohcr- lelief is sought, and effect should jce (187r)) 2 Apj). Ca. LSI). 207 1», not be given to them "' : An/nvar and the later judgment cited below. L'rnii Lai v, Xil Kanth (l^n;!) 1/. It. Mut it fairly represents the prin- 20 hid. App. 112, II."). i^iples on wln'ch English judges 30-2 UNLAW F U L AG R EE:MENTS. Certain lelaticjDS will justify main- tenance, but not cham- |ieity. r. Public liolicy as to legal duties of indiviiluals. Agreements as to custody or education oi children. persons to agree to prosecute or defend a suit in the result of which they have, or reasonably believe they have, a common interest (f/). But a bargain to have a share of property to be recovered in a suit in con- sideration of maintaining the suit by the supply of money and evidence is not saved from being champerty by the party's having a mere collateral interest in the result of the suit (e). "Where a person sues for a statu- tory penalty as a common informer, it is maintenance to indemnify him against costs (/). Lineal kinship in the first degree or apparent heir- ship, and to a certain extent, it seems, any degree of kindred or affinity, or the relation of master and servant, may justify acts which as between strangers would be maintenance: but blood relationship will not justify champerty {g). (c.) As to matters touching legal (and possibly moral) duties of individuals in the performance of which the public have an interest. Certain kinds of agreements are or have been con- sidered unlawful and void as providing for or tending to the omission of duties which are indeed duties towards individuals, but such that their performance is of public importance. To this head must be referred the rule of law that a father cannot by contract deprive himself of the right to the custody of his children (/?) or of his discretion as to their education. He " cannot bind him- self conclusivolv bv contract to exercise in all events in (rf) Findon v. Parker (1,^13) 11 M. &"\V. G75, 12 L. J. Ex. \U, (JH E. E. 722: Phdinq Co. v. Far- quharsoii (1881) 17' Cli. Div. i\K C\x 2 Eo. Ab. 115 G. (c) Hutloi V. Hutleij (1873) I>. K. 8 Q. B. 112, 42 L. .J. Q. B. 52. But the interest of a bankrupt's creditors is more than -'collateral " : (r}nj V. rJnirrJiiH (1888) 4(i Cli. 1». 481, 56 L. J. Ch. 670. (f) Bradlauqh v. Xewdegate (1SS3) 11 Q. B. D. 1, 52 L. .J. Q. B. 454. (7) Ilutley V. Hutley. supra. Sec 2 Eo. Ab. 115. 116. (//) Be Andrews (1873) L. E. S Q. B. 153, snh )Mm. Re Edwards. 42 Jy. J. Q. B. 99, and authorities tliere collected. CUSTODY OF CHILDREN. 363 a particular way rights which the law gives him for the benefit of his children and not for his own." And an agreement to that effect — such as an agreement made before mari"iage between a husband and wife of diffei'ent religions that boys shall be educated in the religion of the fathei-, and girls in the religion of ihe mother^ cannot be enforced as a contract (/). After the father's death the Court has a certain di> cretion. The children are indeed to be brought up in his religion, unless it is distinctly shown by special circumstances that it would be contrary to the infant's benefit (k). When such circumstances are in question, however, the Court may inquire " whether the father has so acted that he ought to be held to have waived or abandoned his right to have his children educated in his own religion " ; and in deterjnining this the exist- ence of such an agreement as above mentioned is material (/). The father's conduct in giving up ihe maintenance, coiitrol, or education of his children to others may not only leave the Court free to make after liis death such pi-ovision as seems in itself best ; it may preclude him own from assertiug his rights in his life- time (m). Clauses in separation deeds or agi-eements for separa- in separation tion, purpo]'ting to bind the fathei' to give u]) the general "°'^'^*^- custody of his children or some of them, have for the like* reasons l)een held void; and sjiecific performance of an agreoment to execute a s(>pri ration deed containing such clauses has been refused (//). In one case, how- (/•) A>Nlrrirs v. S,i// (lS7;i) L. H. Jiic. 245, 2.55, 2<;;5. 2H II. R. 38. « Ch. 622, 63(). («) Vdimttart v. Vamiftart (Ji-) nuwlixworth V. rLiirl:. K. band's ri^lit, Hamilton v. Tlrcfor 8 Ch. at p. r,37. (1871) L. R. fi Ch. 701, L. R. 13 (/;() Liimn V. 7?/^;);^/;f (1820-1) K |. r,l 1, 10 I,. .J. Ch. (;!t2. 364 UNLAWFUL AOREEMENTS. 36 & 37 Vict, c. 12, s. 2. Mother of illegitimate child. On thi.-; ground, in part, the doctrines as to sepatation deeds in LTcnend : ever, such a contract can be enforced ; namely, where there has been such misconduct on the father's part that the Court would have interfered to take the custody of the children from him in the exercise of the appro- priate jurisdiction and on grounds independent of con- tract. The general ru]e is only that the custody of children cannot be made a mere matter of bargain, not that the husband can in no circumstances bind himself not to set up his paternal rights (o). The law on this point is now modified liy the Acts 36 & 37 Vict. c. 12, which enacts (s. 2 ) that " No agreement contained in any separation deed between the father and mother of an infant or infants shall be held to be invalid by reason only of its providing that the father of such infant or infants shall give up the custody or control thereof to the mother : Provided always, that no Court shall enforce any such agreement if the Court shall be of opinion that it will not be for the lienefit of ihe infant or infants to give effect thereto.'' This Act does not enable a father to delegate his general rights and powers as regards his infant children (p). The mother of an illegitimate child has parental duties and righis recognized by the law (q) and cannot (le]ii-ive herself of them by contract (;•)• The objections formerly entertained (as we have seen) first against se])aration deeds in general, and afterwards down to qtiite recent times against giving full effect to them in courts of equity, were based in part upon the same sort, of grounds : nnd so are the reasons for which agreements providing for a future separation have always been held invalid. For not the parties alone, ('0 '^''t'/^^ V. Sici/'t (180.-,) i D. F. J. 710, 711, HI L. J. Ch. 201». 394, and see the remarks in L. R. G Ch. 7(1.-,. L. K. 13 E(i. 520. (/;) J,'e Bexaiif (187;0 H Cli. Div. .-,08. .518. 48 L. .1. Ch, 4!t7. (V) Bnrmirdox.McHnqli [1891] A. C. 388. 1)1 L. J. Q. B. 721. (;•) Iliimiilinis V. Pulak [1901] 2 K. B. 38.-,. 70 L. J. K. B. 752. C. A, RESTRICTIVE AGREEMENTS. 365 but society at large is interested in the observance of the duties incident to the marriage contract, as a matter of public example and general welfare. Considerations of the same kind enter into the policy and as to sale of the law with respect to the sale of offices, also spoken °^ °^^^^- of above. Such transactions clearly involve the aban- donment or evasion of distinct legal duties. On similar grounds, again, seamen's wages, or any Insurance remuneration in lieu of such wages, cannot be the ^V^^eT^"'* subject of insurance at common law (s). The reason of this is said to be " that if the title to wages did not] depend upon the earning of freight by the performance of the voyage, seamen would want one great stimulus to exertion in times of difficulty and danger " (t). This reason, however, is removed in England by the Mer- chant Shipping Act, 1894 (57 & 58 Vict. c. 60, s. 157), which makas the right to wages independent of freight being earned. The question has not yet presented itself for decision whether the rule founded upon it is to be considered as removetl also. It has never been decided, but it seems highly pro- Agreements bable, that agreements are void which directly tend to ^^anist ' ° _ '' social duty. discourage the performance of social and moral duties. Such woukli be a; covenant by a landowner to let all his cultivable land lie waste, or a clause in a charter-party prohibiting deviation even to save life (w). (d.) As to agreements unduly limiting the freedom d. Public of individual action. ^^^J^ There are certain points in whicli it is considered that individual the choice and free action of individuals should be as unfettered as possible. As a rule a man may bind him- self to do or omit, or procure another io do or omit, any- (.v) H'ebsfer v. DeTastet {.1797J 7 (u) I'er L'ookburn C.J. a C. P. D. T. U. 1.57, 4 R. R. 40-'. at p. 305. {t) Kent, CouHu. :^, 2Cy. 806 UNLAWFUL AfiRELMENTS. (.( Marriage. '• Marriage brokage " agreements void. Agreement in general restraint uf marriage Yoid. thing which the law does not forbid to be done or left undone. The matters as to which this power is spe- cially limited on grounds of general convenience are: — (a) Marriagej (/3) Testamentai'y dispositions. (y) Trade. (a) Marriage is a thing in itself encouraged by tho law; the marriage contract is moreover that which of all others should be the result of full and free consent. Certain agreements are therefore treated as against public policy either for tending to impede this freedom of consent and introduce unfit and extraneous motives into the contractmg of particular marriages, or for tend- ing to hinder marriage in general. The first class are the agreements to procure or negotiate marriages for reward, which ^ire known as marriage brokage contracts. All such agreements are void (x), whether for the pro- curement of marriage with a specified person or of mar- riage generally (y), and services rendered without re- quest in procuring or forwarding a marriage (at all events a clandestine or improper one) are not merely no consideration, but an illegal consideration, for a sub- sequent promise of reward, which promise, even if under seal, is therefore void {z). The law is said to be comparatively modern on this head: but it has already ceased to be of much practical importance {a). We pass on to the second class, agreements " in re- straint of marriage " as they are called. An agree- ment by a bachelor or spinster not to marry at all is (.<■) I^.g. Cole V. Glbxon (17.j6) 1 Yes. Sr. oOS. See Story, E(i. Jur. §§ 2(50 sqq. ((/) Hermann v. ('/uirle.sworth [iyu.5] 2 K. B. 123, 71 L. J. K. J!. 62), C. A. (2) Williamson v. Gi/iou QlSO".) 2 Sch. & L. 3.") 7. (a) In the Koman law tiiese con- tracts were good apart from special legislation : thej' were limited as to amount (though with an expres- sion of general disapproval) by a constitution preserved only in a tireek epitome: C. .">. 1. de sponsa- libus, iVc. G. The Austrian Code agrees with our law (§ 879). RKSTRAINT OF MAKK1A(;K. 867 clearly void (b) ; so, it seems would be a bare agree- ment not to marry within a particular time (c). In Lowe V. Peers (d) a covenant not to marry any person other than the covenantee was held void, A promise to marry nobody but A. B. cannot be construed as a promise to marry A. B. and is thus in mere restraint of marriage: and even if it could, it was thought doubtful whether an unilateral covenant to marry A. B. would be valid, A. B. not being bound by any reciprocal pro- mise (e). Lord Mansfield threw out the opinion (not without followers in our own time) (/), that even the ordinary contract by mutual promises of marriage is not free from mischievous consequences. The decision was affirmed in the Exchequer Chamber, where it was ob served that:— " Both ladies and gentleiueii . . . freiiueutly are induced to promiso not to marry any other persons but the objects of their present passion ; and If the law siiould not rescind such engagements thoy would become prisoners for life at the will nf most inexorable jailors- -dis- appointed lovers " (tj). A covenant not to revoke a will is nut void as being a Covenant nut covenant not to marry, though the party's subsequent nuirriage would, revoke the Avill by operation of law. As a covenaM not to revoke the will in any other way it is good ; but the party's marriage gives no ground of action as for a breach (h). In the absence of tmy known express decision, it may as to <•,'«- be Katherod from the analogy of the cases on conditions '''^'""1 '" to revoke will. (/;) /.utvev. Peers {17 i]ii)Wihnoi, discharge the promisor on general ;{71 : wlicre it is said that it is a principles, Cp. Cock v. Jiic/ui/uh contract to omit a moral duty, (180.")) 10 Ves. 42!!, 8 K. K. 23. and "tends to depopulation, the (./ ) l I'urr. 2230 ; per Martin ii. greatest of all political sins." Jhill \. \l'ri(//it t^lS'iH) E. B. i: E, ((■) Hartley v. Itiee (1808) 10 at p. 788, 2!»" L. J. Q. B. at p. 49, JOast, 22, 10 K. K. 228 (a wager). 1 i:i B. B. 888. [d) (17G8)4 liurr. 2225, in Ex. (//) Wilni. ;!71. Ch. Wilm. 3G4. (li) Ilohiuxon v. (>iiiij/^ Bvo><. (/;) Note that wrongful dismissal, v. MeasuveK [1910] 1 Ch. 330, 2 being a repudiation of the whole Ch. 248, not put on quite the same contract, cancels a sfijiulation of ground in C. A. this kind: (jeiimil fiill-iiosfiiKj P. B B 870 UNLAWFUL ACUIEEMEXTS. or employer after the termination of the service or em- ployment. Obviously the measure of reasonable re- strictions to protect the buyer, continuing partners, or employer in the case of a business with national or world-wide connections will be larger than in the case of a merely local trade or practice. What is reasonable in the particular case is a question of law for the Court. Examples will be given presently. Meamvhile some- thing must be said of the early history and intermediate forms of the doctrine. Medieval ^ In the middle ages there was a general feeling, ap- ii'iu'"" parently popular and not derived from learned sources, uhandleis against all agreements which tended to monopoly or }-2w -]H(Hi'. keeping up ])rice^. At the end of the thirteenth cen- lury all the chandlers of Norwich were presented by the court leet " pro cjuadara convencione inter eos facta videlicet quod nullus corum venderet libram candele minus quam alter " (q). The D.vci's In the well-known Djier'a cd-se in 2 H. V. 5, ])1. 26, c;i.>o, 141... ^j^^^ action was debt on a bond conditioned that the de- fendant should not use his craft of a dyer in the same town with ilic ])la,intiff for half a year : a contract Avhich would now be clearly good if made upon valuable con- sideration. The defence was that the condition had been performed. To this Hull J. said: " To my mind you might have demurred to him that the obligation is void, because the condition is against the common law; and per Bjcw if the plaintiff were here he should go to prison till he had made fine to the King " (;•)• This was not and could not be more than a dictum, and the parties proceeded to issue on the question whether The Black. the condition had in fact been performed or not. Hull's siDith's case, ir,S7— 1:)88. (,y) Lect Jurisdiction of the City His expletive has been wrongly of Norwich, Seld. Soc. 1892, p. 52. supposed to be unique in the re- (r) This Hill or >Iull, Justice of ports. In the earlier Year Books C. P., is to be distinguished from it is not uncommon. Hul<. who saf in K. B. till ^ H. V. RKSTRAINT OF TRADE. 371 opinion, howevei-, was approved by all the Justices of the C. P. in a blacksmith's case in 29 Eliz., of which we have two reports (.s). It does not appear in either case what was the real occasion or consideration of the con- tract. For aught \h(\ reports show it may ]iave been the ordinary transaction of a sale of goodwill or the like (t). It has been ])lausibly suggested by a learned Ameri- Historical can writer that ihe medieval doctrine is connected with tiie doctrine the rules and customs forbidding a man to exercise any with medieval ° _ •' reyulatioii trade to Avhich he liad not been duly apprenticed and of trade. admitted : so that if he covenanted not to exercise his own trade, he practically covenanted to exercise none — in other words, not to eai"n his living at all (//). Indeed, by the statute 5 Eliz. c. 4, which consolidated earlier Acts of the same kind, not only the common labourer, but the artificer in any one of various trades, was compellable to serve in his trade if unmarried or under the age of 30 years, and Jiot a forty-shilling free- holdei- or copyholder or " worth of his own goods the clear value of ten pounds." An agreement by a })erson within the statute not to exercise his own trade might therefoi-e be deemed, at any rate if im limited, to amount to aji agreement to omit a legal duty. At the same time Absolute absolute freedom of trade is positively asserted as the [l^ade*^a" scried normal state of things always assumed and upheld by by Coke as ,1 , ,, ii-iiT'T old comniou the common law. It was resolved ni the Jpsunck ].,^v. Tailors^ case (x) that at the common law no man could be prohibited from working in mii/ laAvful trade: and it was said that (.v) Moore, 242, pi. :{7!), fuller in (hl'rr. (i"A. & E. at p. 147, 45 R. K. 2 Leo. 210. Moore's report makes at p. .52'.t, are merely conjectural the odd mistake of imlting South attempts to find in the Year Book Mimmsin Surrey. a modern point of view which is (<) The explanations otfored by not there. Lord iMacclestield in Mifclicl v. (//) Parsons on ('ontracts, 2. 2.")r>. Ilrij„i,l(h, 1 Sm. L. r. at p. :?;>;i, and i,r) (ltd:.) 11 Co. l!('p. :>:{ a, .-) I h. Sir W. {■•,,llo(t „r,i. ill ffilrhriirh v. B B 2 372 UNLAWFUL AGREEMENTS. " The statute of 5 Eliz. c. 4, which prohibits every person from using or exercising any craft mystery or occupation, ualess he has been an apprentice by the space of seven years, was not enacted only to the intent that workmen should be skilful, but also that j-outh should not be nourished in idleness, but brought up and educated in lawful sciences and trades ; and thereby it appears, that without an act of parliament (//) none can be prohibite 1 frniii working in any lawful trade." And certain ordinances, by which the tailors of IpswicJi forbade any one to exercise the trade of a tailor there until he had presented himself to the master and wardens and satisfied them of his qualification, were held void, inasmuch as " Onlinauccs for the good order and government of men of trades and mysteries are good. Init not to restrain any one in his lawful mystery." Modern This principle is still in force as regards agreements applications ,^j^^j combinations among members of trades not made Hilton V. ^ Eckeisley. for the protection of purchasers for value, but by way of systematic denial of each contracting party's ordi- nary discretion in managing his affairs. An agreement between several master manufacturers to regulate their wages and hours of work, the suspend- ing of work partially or altogether, and the discipline and management of their establishments, by the deci- sion of a majority of their number, is in general re- straint of trade as depriving each one of them of the control of his own business, and is therefore not en- forceable (z). It makes no difference that the object of the combination is alleged to be mutual defence against a similar combination of workmen. The case decides on the Avhole that neither an agreement for a strike nor an agreement for a. lock-out is enforceable bv (//) So again in the case of Mono- suggest that the agreement would j)oUes (1602) 11 Co. Kep. 87 b. be a criminal offence at common {:) Hilton v. EcJ.-erxh'i/ (1855-6) 6 law, are overruled by Mogul Steain- E. & B. 47, in Exch. Ch. ih. 6(5. 24 .vA/> Co. v. M'Gretjor, Gow Sc Co. L. J. Q. B. 358, 25 y7/. l!)lt. 106 E.R. [1892] A. C. 25,' 61 L. J. Q. B. 507. The dicta there, so far as tlicv 2i'5. rp:stratnt ok thadk. 373 luAV. The Court ol' Excliequt'i; Chaiiiher thus t'X|)i-essed the general principle in the course of their judgment : — " Prima facie it is the privilege of a trader in a free countrj', in all matters not contrary to law, to regulate his own mode of carrying it [Ids trade] on according to his own discretion and clioice. If the law has in any matter regulated or restrained his mode nf duing this, the law uuist be obeyed. But no power sliort of the general law ought to restrain liis free discretion " (a). On like grounds a restrictive agreement between the members of a trade society as to the employment by any one member of ti'avellers and other persons who had left the service of any other has been disallowed {!>). It is not an unlawful restraint of trade for sevei-al persons carrying on the same ])usiness in the same place to agree to divide the business tiniong themselves in such a way as to prevent competition, and provisions rea- sonably necessary for this purpose are not invalid because they may operate in partial restraint of the parties' freedom to exercise their trade. But a provi- sion that if other persons, strangers to the contract, do not employ in particular cases that one of tiie con- tracting parties to whom as between themselves the luisiness is assigned by tbe agreement, then none of tbe otbei's will accept the employment, is bad (c). The reasons for the rule are set forth at large in tbe Reasons for leading case of Mitchel v. Reiinolds (d), and at a more »ot allowing "^ ./ \ / ' unqualihed ((/) t; E. & B. at pp. 74-0, lutj traveller, carman, or outdoor em- restraint. 11. R. ."j22, '>2'.\. Strikes are not ployt', who has left the service of unlawful in themselves ; sec jwr another member, without the con- Fletcher Moulton, L..J., ill 6'oz/n'i/ sent in writing of his late employer, v. Jirixtiil Trade (did Prur'idcnt until after the expiration of tw(j Socki 1/ [\) Jj. 1!. i;» /!i(.s.trll V. AiiutUiaiiKitrd Sue. of K(|. 42(5, 44 L. .T. Ch. 3S8, a case ('(irjjenti-rx and .lo'ini'rs [1910] 1 not free fi'om dirticulties on other K. li. .".00, 7'.» L. .1. K. n. .'joy, C. A. grounds, and apparently not fully (i) Miiit'iutl W'titor Jiottle, tVv. argueil or considered on this point. Sonetij V. Booth (1887) :5(; Ch. Div. (^/) (1711) 1 W Wnis. 181, and in 405. The terms were : ''No mem- 1 Sm. \u ('. ber of the society shall employ any 874 ltnlawful aokerments. Foi- allowing particular restraint. Admission of restrictive covenants on sale of business in 17th eentnrv, recent date (1837) were put more concisely by the Supreme Court of Massachusetts, who held a bond void which was conditioned that the obligor should never carry on or l)e concerned in iron founding: — • I. Such contracts injure the parties making them, because they diminish their means of procuring livelihoods anrl a competency for their families. They tempt improvident ))eisons for the sake of gain to deprive themselves of the power to make future acquisitions. And they expose such persons to imposition and 0|)pression. 2. They tend to deprive the public of the services of men in the employ- ments and capacities in which they may be most useful to thecommunity as well as tliemselves. >^. The_v discourage industry and enterprise, and diuiiuish the products of ingenuity and skill. 4. They prevent comjietitiDn and enhance prices. ■). They expose the public to all the evils of monopoly "' {e). The qualitied admission of restraints has been com- monly spoken of as an exception to the gejieral policy of the law. But it seems better to regard it rather as another ])ranch of it. Pubhc policy requires on the one hand that a man shall not by contract deprive him- self or the state of his labour, skill or talent; and uu the other hand, that he shall be able to preclude himself from competing with particular persons so far as neces- sary to obtain the best price for his business or know- ledge, when he chooses to sell it. Restriction which is reasonable for the protection of the parties in such a case is allowefl by tht> very same policy that forbids re- strictions generally, and for the like I'easons (f). in the early part of tiie seventeenth century the majority of the judges concluded that the policy of the \d\\' ^\'as jiot op[)ose:l to the seller of a business making the sale effectual by iindettakiug jiot to compete with {f) Alj/i'r v. Thachfr (ls:>7) lit (i.iodnow, Trade Combinations at Pick. r.l. ',\. Agreements which Common law, Pol. Sci. Quart, xii. aim at creating a monopoly, or 212. raising the price of either goods or (/) .lames V.-C. Leather Cloth labour, have been constantly held t'o. v. Lorsont (1869) L. R. i) Eq. void ill the ['. S. >ec Frank .1. :!{."i, at p. :-i.')3. i;KSrf!AlNT Oi^^ TRAt)E. 875 the buyer. For that purpose, " for a time certain and in a place certain a man may be well bound and re- strained from using of his trade" (7), provided that it is upon a valuable consideration (h). Eestrictions extending to Newgate Market, in London, and the whole of country towns, such as Basingstoke and Newport (Isle of Wight), were allowed, but it was said that such a })roinise cannot be good " if the restraint be general Ihioughout England " (l). These authorities were con- Mitfiiei *•. firmed in 1711 by Mitchel v. Reynolds (k), the earliest limit in space case usually referred to, and it was settled that if a ^'lo^srht '' . necessary. particular restrictive contract, on the cu'cumstances brought before the Court, "appears to be a just and honest contract," it will be upheld. At that time, how- ever, and long afterwards, it was taken for granted that such a contract could in no case be reasonable unless limited, at any rate, in space. " Where the restraint is general, not to exercise a trade throughout the kingdom," it was thought that it must be bad as matter of law. " What does it signify to a tradesman in London what another does at Newcastle ? " (/). At this day we have no difticulty in seeing that it may Fixed mle of signify very much to a merchant in London what ilei,'/ i,""„'jt- aiiother is doing, not only at Newcastle^ but at Singa- able to , , . . , moclerti jiore or tSan i^ rancisco. 1' ortiniately no positive and fumiitions. direct decision stood in the way of the law being autho- I'itatively declared by the House of Lords in a form suited to the conditions of modei'ii trade and communi- cations. Jjefore the niiddlt! of ihe nineteenth ceiituj-y it was (;/) HiKjerx v. Parry (HiU) 2 f'.J.'s otiseivntinu on the lefjort of r.ulst. VM\. ('oke's opinion adopted Jtotfcrs v. Parnj, 1 Sni. L. C. at ).y the Court. p. 894. (//) To same effect, linuul wJol- (/) I'rinjncU v. 6'(W.sv, Aleyii. (17. ////K ("ro. Jae. 5!l(] : lirmjij v. (/-) 1 i^m. I^- C. Hill. Staiuier. I'ahii. 172, and see f'arkcr (/) 1 Sin. I.. ('. at p[i. :'.'.tl . .■VJ7. 376 DKLAAVFUL Af^REEMENTS. settled that, although a valuable and not merely colour- able consideration there must be, even if the contract is luider seal, the Court will not attempt to estimate the adequacy of the consideration in this more than in any other class of cases (??/). Gradually the question whether the restriction im- posed was on the whole commensurate, in point of law, with the benefit conferred, became the only question seriously discussed. And now the dicta which apparently bound contracts of this kind within hard and fast rules must be taken not as general propositions of law, but as applications of the general principle of reasonableness to conditions of fact which at the time might well seem to be per- manent, but which have passed away. In the leading case before the House of Lords, an inventor and manufacturer of guns and ammunition, doing business with military authorities in various parts of the world, sold his business to a company, and cove- nanted pot to compete with the company in that part of the business for twenty-five years : this was held not too wide in the circumstances, though a distinct covenant not to engage in any business competing with that for the time being carried on by the company was disallowed (n). (»() Hitchcock V. Colter (1837) tl ineiit. to show that the common A. & E. 43S, 45 R. II. 522 (Ex. Ch.) ; law rule in its old form was still in Grareli/ y. Barmird {lS7i)L.B,. li> force, though the exceptions were Eq. 518,43L.J. C'h.GoH. Formerly extended. In the H. L. Lord it was tliought (it would seem from Herschell. thinking this historically some expressions in the earlier correct, concluded on the whole that cases) that where the contract was the old rule had become '• inapplic- by deed the consideration must able to the altered conditions which appear on the face of the deed. now prevail," [1894] A. C. at p. (/() Nordenfelt v. Ma.cim-Xor- 548. Lord Macuaghten thought ileufelt.^-c. Co. [1894] A. C. 535, G3 Lord Bowen's distinctions too re- L. J. Ch. 908. affirming 8. C. noiu. lined, justified the decisions in Maxim-Xordcnfelt, ^-c. Co. \. Xor- equity which Lord Boweu had denfelt [ 1 893] 1 Ch. G8U. 62 L. J. Ch. critic"ized for disregarding the com- 273. In the C. A. Boweu L.J. en- mon law rule, and denied that there deavoured, in an elaborate judg- had ever really been a hard and fast kksthalvt ok tkadk. 877 Meanwhile various relaxations of the supposed fixed Dciuiled rule as to limits had been sanctioned. These are now ^^o,"^ei'jy nothing else than special illustrations of the broader tieatedas principle; but as such they are still useful and instruc- exceptions), tive. A limit of time is not necessary to make an agree- ment in restraint of trade valid, and it is not of itself sufficient (o). It has never been doubted that a partner may bind himself absolutely not to compete with the firm during the partnership: so may a servant in a trade bind himself absolutely n(jt to compete with the master during his time of service (p). A contract not to indulge a trade secret need not be qualified, and a man who enters into such a contract may to the same extent bind himself not to carry on a manufacture wliich would involve disclosure of the process intended to l)e kept secret (q). Indeed it has been said that " sales of secret processes are not within the principle or the mischief of restraints of trade at all " (/•)• An under- taking by a tradesman purchasing goods fjom the manufacturers not to sell them below specified pi'ices, and not to sell to any retail trader without taking a similar agreement from him, is not in i-estraint of tiade ; for the manufacturers, not lieing bound to make or sell their goods at all, or to sell to this or that pei'son, are entitled to sell on their own terms (.s). Whether the restriction contracted for in any ])ai-ti- (u-iifrai least'iiiable- ruleoflaw. Down to a recent time Macna.i^liten. there was a strong presumption in (o) Jliti'licoch v. Colwr (1837j ti fact against a restriction without A. tt E. 43s. 4.") R. R. r.22. Ex. Ch. limit of space being reasonably (;>) WuUix \. D((y {\'t>'?<~i)2 "^l. k. required for tlie protection of the W. 273. 40 R. R. fi02. l)romisee, but tiiere was no decision {q') Leuthev Cloth Co. v. IaiixohI or principle to make that presump- (ISCit) \j. R. i) E([. 1^45. at p. '.\'>\\. tion applicable to the different (r) Bowen L.J. Ma,viiii-.\or(h'n- stateof factsproducedby thenature frit Co. x. ^'ordfufelt [\^\y^] 1 Ch. of modern trade and Iratlic Luid y\'M), CM): but qu. whether this dis- Watson, Lord Ashbourne, and Lord tinctinn be now necessary, ilorris, without precisely con- (.s) Ellhiiun, Sons ^- Co. v. Cur- curring in this, appear to have rinyton cS' Son \\'d0\'\2 Ch. '21'k agreed in substance with Loid ness of ^78 un^lawful A(jRE>iM^::Ntf^. restriction cular cas6 be reasonable is a question not of fact but of cases. ' ''^^^^ (0? ^^ntl evidence of persons in the trade as to wfiat they think reasonable is not a linissible (?/). A cove- nant not to carry on " any business whatsoever," within however narrow limits of time and space, is manifestly unreasonable. Nor will the Court construe it as if limited to the particular business which is really in question (x). But a covenant not to " deal or transact business " with customers of the covenantees or of their successors may be confined by the context to business of the same kind as that carried on by them at the date of the agreement (//). A covenant to retire, without expressed limit in space or time, from a partnership, and " so far as the law allows, from the trade or busi- ness thei'eof in all its branches," is bad for unreason- ableness if the words "'so far as the law allows " are surplusage, and bad for uncertainty if they are not ; the i)arties cannot throw on the Court the task of settling their agreement for them (z). A restrictive clause is not reasonable if it has the effect of making the covenantee the sole judge whether a new business unde)-taken by the covenantor competes with his own or not (d). A lestrictive covenant which contains or may be read as containing distinct undertakings bounded by diffeient limits of space or time, or different in subject-matter, uuiy be good as to part and bad as to part (/)). There is not any such rule as that a cove- nant in restraint of trade is presumed to be bad, and the i^f) A bnltl but hopeless iittenipl 570, tWi L. .1. Cli. a(>2. C. A. was made to dispute this in Doirde/i {-) lJitilt\^ v. J)iirie.s{l^Sl 'Mj Ch. and Pool! V. Pool' [11104] 1 K. H. l»iv. Hoit, r.6 L. J. Cb. I)t)2. 45 7;$ L. J. K. B. :i8, C. A. («) Pcrh v. Sllected : Ma-viiu-XordfufeU Co. v. V. SaalfeUl [1892] 2 Cli. 149, C.l .Vr»r(/pw/W/ [189SJ 1 Ch. tiSO. 02 L. J. L. J. cii. 409, C. A. Ch. 278. C. A. (no further appeal [y) .Milh\.DHnliam{\^'A] 1 Ch. on this point). RESTKAlNT ol-' TkADi'';. 879 party relying on it must justify it. " You are to construe the contract and tlien see whether it is legal " (c). As regards an employee's covenant, the measure of reasonahleness is the protection of the very trade in which he has contracted to serve and in fact serves (d). What amounts of restriction have been held reason- able or not for the circumstances of different kinds of business is best seen in the tabular statement of cases (down to 1854) subjoined to the report of Avert/ v. Lanyforcl (e). It may be convenient to add the later decisions in the same form. Restriction lichl lieasonahle. Name and Date of Case. ISoy. Dfiidjj V. Hen- ihrson (/), 11 Kx. 194, 24 I.. .1. Ex. •3->i, 105 K. K. 4SS. 1866. Joias V. l.ees, 1 H. & N. 180, 26 I,. .). Ex. 9, lOS H. n. -.12. 1S.",7. Ikna-eU v. Ihii3, 24 Beav. ;'.07, 26 L. J. Ch. Oti:;. 1859. Muiafonl v. Cethiny, 7 C. B. N. S. 305,29L. J.C. 1*. 105. Traile or BusiiK Solicitor. Jlanufartiiie or sale of slubbing ami ro\ - iiig frames not titled with 111 a i n t i It's patent inverjtion. Cowkeeper, niilk- Dian, milk-seller, or milk-farrier. Travelling in lace trade lor any house other than plain- tiffs'. Kxtent of Kestric lion in Time. 21 yeais from de- termination of defendant's em- ploy m e n t a s managing' clerk to plaintiff. Continuance of de- fendant's licence from plaintiff to use and sell the patented inven- tion. Continuance of de- fendant's service V ilh plaintiff and 24 months after. Unlimited. ICxtent of Resti-ii: tion in Space. 'J'aljle of cases since Avery /■. l.angford. 21 miles fiom jiarish of Tormohain, ToiTjuay. England-.' (not li- mited in terms). Three uules from Charles .street, Grosvenor Sij. " Any part of the same ground,'' i.e., the di.strict in which defen- dant was e m- ployed as travel- ler for plaintiffs. (<■) Mills\.J)n„luim [ISlll ] 1 Cli. i)7«, "iST.perLiudlov L..i. ; /itnli--!(/ii' Aiiilin, cS-i: F(ihrih\. >r/,on [1S92 | 3 Ch. 447, fil L. .1. Ch. ()its. (rf) It cannot l)c extended la cover the protection of other associatetl employers whom he lias not in fact served, thoiit^h tinder tlie sjjecial contract of service he may be bound to do so if reiniiied : J/. LelhuDi ,S' 'Sons v. Jnh nstune- \\l,Ur\ I'.iUT] 1 Ch.a22, 7r>L.,I.Ch. .■it>4. C. A. 'I'lie real question was on the constructio7i f(f tlie agree- iiicnt. {p) (IS.VI) Kav. t;(;7. 2:\ L. .I.Cii. 8H7, 101 It. R. sOo. (/■) Whether an agreement no( to rexiilr at a given [ilace as well as not to carry on Imsiness be good, qiKPre. 380 LJNLAWKL'L AGREKMKNTS. licslriction held Rrasonahle. Name and Date of Case. 1801. Ha, msw Par- sons, 32 Beav. 328, 32 L. J. Ch. 247. 1S63. ClarksoH v. Kfhie, 33 Beav. 227, 33 L. J. Ch. 443. ISOO. rati v. Toiiih', L. R. 4 Ch. 004, 38 Ij. J. Ch. 005. 180;'. Lath, ■ cloth Co. V. LdiSOlit (i/), L. R. Eq. 34;., ^'.i I;. J. Cli. SO lti74. liivo'lii V. i;a,„a,d, L. i{. is F.([. -.18, 43 L. J. Ch. (,:,'.>. 1875. V,-iiitiiiya,iil Xinnei-kalJ!i'(jist(r- iiKj C,i. V. Sampsui,, L. It. 10 Ei|. 402. 44 I.. ,1. Cli. 70".. 1875. ^fa,| V. O:\eiU, W. N. 179, 44 L. J. Ch. 600. 1S79. Dart, IV. Shun- noil, 4 Ex'. D. S1,4S L. J. Ex. 4j>.> (no objection taken). 1880. RoiisiUoii. V. HousiUi'ii, UCh.D. 3;.l, 4'.i L. J Ch. 33'.'. 1891. Mills v. Dun- ham, [1891] 1 Ch. 570, 00 L. J. Ch. 362, C. A. Trade or Business. Extent of Restric- tion in Time. Extent of Restric- tion in Space. Ilorse-hair nuiniifao- Unlimited. 200 miles from Bir- turer. mingham. Gas meter manu- Ten years. 2fl miles from Great facturer and gas Peter St., West- engineer. minster. Covenant by pur- Unlimitrtl. Any public house chaser of hind that erected on the vendor should have land. exclusive right of < supplying beer. ' Manufacture or sale Unliudted. Europe ; but to be of patent leatlier construed as = r-Iotli. Great Britain, or United Kingdom, nemhle, see 1.. R. 9 r.q. at p. 351 (h). .Surgeon. So long as plaintiff Parish of Newick or his assi gns and ten miles should carry on round, excepting l)usiness. the town of Lewes. Agreement by vemlor Lifetime of ven- Europe (/). of patent to assign dois. to X)urchaser all a f t e r - a c < i u i r e d patent rights of like nature. Solicitor(covenant in Unlimited. London, Middlesex clerk's articles). and Essex ; and unlimited as to acting for clients of plaintiff's lirm, or any one who had been such client during the term of the articles. Outlilter and tailor. Unlinuted (taken Five miles from by the Court as Devonport. for joint lives of plaintiff and de- lendant). Travelling iu cham- Two years a fter Uidimited. pagne trade : setting leaving plaintiff's up or eiiteiing into service as to ra- liartnership in same veiling: ten as to trade. dealing on r account. \vn Travelling in food, Unlimited. Unlimited antiseptic business. (= England am) Wales, see per Lindley L. J. [1891] 1 Ch. 585). ((/) See ]). :{77, above. (/f) (-'p. Diamond Matcli Co. v. Jhifher {18S7) lUOX. Y. 473, Go Am. Rei). 464, where a restriction cover- in;j the whole territory of the United States except Jloutana and Nevada was held m.t tno wide. '• Tho lioundiuies of tlic State.s [i.e. the municipal jurisdictions of New York or other individual States] are not those of trade and commerce, aixl business is restrained within no such limit." {i) See last note. RESTEAINT OF TRADE. licstrictiun held Reasonable. 381 Name and Date of Case. Trade or Business. Extent of Restric- tion in Time. Extent of Restric- tion in Space. 1S92. Ro'icrsy. Mad- Travelling in beer, Two years. 100 miles from Car- docks, [1892] 3 Ch. &c. diff. :S40, 62 L. J. Ch. 210, nr L. T. 32'.', C. A. 1892. NordoifcU v. Mannfacture of guns, 25 years fioui the Unlimited: the Maxim • Nordenfdt gun mountings and incorporation of breach assigned duns and. Ammu- carriage.s, gunpow- the company. was in Belgium. nition Co., [1894] der, explo.sives and A. C. o3"). amnuniition [and, with certain excep- tion.s, any other business carried ou by the company : scmbic, thi.s was too ■\vide]._ 1896. DaboKski v. Dairyujen. Indehnite time : No definition of Goldstein, [1896] 1 continuance of space, but held Q. B. 478, 65 L. J. service and after. limited by context Q. B. 397. to actual locality of business. U9S. W. Robinson Enamelled hollow- Three years from 150 miles from <(: Co., Ltd. V. ware dealers. time of dismissal Wolverhampton. Hencr, [1898] 2 from company's Ch. 451, 67 L. J. service. Ch. 644, C. A. 1899. Undci-tcoodid Hay and straw mer- One year : carrying United Kingdom, .Son V. Barker, chants. on, serving, or France, Belgium, (18991- 1 Ch. 300, being agent in Holland, Canada. 68 L. J. Ch. 201, business. C. A. 1S99. llayties v. Hardware manufac- Unlimited : work- Radius of 25 miles. Doman, [1899] 2 turer. ing or serving in Ch. 13, 68 L. J. some kind of busi- Ch. 419, C. A. ness. 1872. Allsopp \. "Shall not directly During defendant's Unlimited. Whev.taroft, L. K. or indirectly sell, service with plain- 15 Eq. 59, 42 L. .J. jnocure orders for tiffs and two years Ch. 12 (/,). the .sale, or recom- mend, or be in any wise concerned or engaged in the sale or recommendation ... of any Burton ale, iVc, or of any ale, &c., brewed at Burton or offered for sale as such," other than ale, &c., brewed by plaintiffs. after. {!/) This api)ears to be in dii-cct I'oiifiict witli I?(ii).si//(i// V. lloH.siUoN. last paf,^e, wliich swsms to stand '■uiifirnicd liv tin- decisidii nf tlie H. L.in Xnr(lciifel(lt\s cafic,oY \M\QV (the subject-matter being verydil'- feienf) by the reasons given for if. 382 UNLAWFUr. AGREEMENTS. Restriction held Unreasonable. Namp and Date uf Case. 1898. Ehnimn v. Bartholomew, [\?:^is] \ Ch. 671, 07 L. ,T. Cli. 310. 1903. Dov:de n d: Pool- V. Pool-, [iy04] 1 K. U. 45, 73 L. J. K. B. 3S, C. A. 1907. //. Lcctham d: Sons ; see p. 379, above. 1908. Sir W. C. Letiq (C I,'". V. Aixjrevs, [1909] 1 Ch. 7(33, 7S L. J. Ch. ■^i). Trade or Business. Tiaveller fui merchant. Cider merchant S. Devon. Millers in X. of England. Newspaprr reporter. Extent of Restric- tion in time. Terms as to time and place not in question: the undertaking was not to "engage or employ himself in any other busi- ness " during the continuance of the agreement, which was not neces- .sarily coutiued to the continuance of the service. Five years. Five years. Xo limit. Extent of Restric- tion in Space. Unlimited. United Kingdom .(') Radius of twenty miles from Shef- field. Measurement of distances. It i.s now settled, after some little uncertainty, that distances specified in conliacts of this kind are to be measured as the cj-ow flies, i.e., in a straight line on the map, neglecting curvature and inequalities of sur- face. This is only a i-ule of construction, and the parties may prescribe another measurement if they think fit, such as the nearest mode of access (;//). A cei-tain number of recent decisions are only on the construction of Avords deserilu'ng the business to be restricted (//)• (/) The question in dispute was wlielher tlie special contract ex- tended to tlie protection of other associated concerns whose business did practically cover the United Kingdom. (w) J/i»iffef V. Cole (1872) L. R. 7 Ex. 70. in E.k. Ch. 8 Ex. 32, :t2 L. J. Ex. 8. As to what amounts to a bre?ch of covenant not to carrv on husiness within certain liiuils, see Jirtintpton v. JJeddoes (18(53) i;} ('. P.. X. S. .538. (/O i^uch are Sfiiart v. Diplock (18810 43 Ch. Div. 343. 59 L. J. Ch. 142 : Fltz V. lies [1893] 1 Ch. 77. 62 E. .J. Ch. 2.58 ; William Cory S- Siiii V. Harrison [190()] A. C. 274. 7.5 L. .T. Ch. 714 ; and tosome extent //. Leethdiii ,V Sou's rase, above. RESTRAINT OF TRADR. 383 In British India the language of the Contract Act (o) Indian has been literally construed by the Courts so as to make ^'^ntiact the rule much more stringent than in England, and agreements not to compete with former employers, or the like, have been disallowed, notwithstanding that they would certainly have been upheld at connnon law (p). It seems very doubtful whether any such result was contemplated by the framei's of the Act, and amendment seems desirable. It is clear law that a contract to sei've in a particular Contract to business for an indefinite time, or even for life, is not Sln^aiid*!^ void as in restraint of trade or on any other ground of public policy (q). It Avould not hv competent to the parties, however, to attach servile incidents to the con- tract, such as unlimited rights of personal control and correction, or over the sei-vant's pi-()|)erty (/•). It is ini- t'outiact for disputed that an agreement by A. to work for nobody t^xciusive iju-A? i-iji" p 1- 1 ■ service must but n. m A. s particuiai- trade, even tor a Innited tnne, be imitual. would be void in the absence of a reciprocal obligation u])on B. to employ A. (.s). But a jiromise by B. to (Mn))loy A. may be collected from tlie whole tenor of the (ii) ■• Kveij' agieeiucnt by whit-li any one is restrained f lom exercis- ing a lawful profession, trade, or business of any kind is to tliat ex- tent void '■ : s. 27 : express cxcej)- tions follow as to agreements on I lie sale of a goodwill and agree- ments between j)artners. This is one of the Act's unfortunate bor- I'owings from the Dudley J-'icId I 'ode : the New York (h-aftsmcn intended to narrow the law. f /*) .VtifUiub Cliuiitler J'oriiina- ii'trk \. lidjcdODiar Thix (1874) 14 H.L. 11. 76; Srali nui put rii Ti'it Co. y. Scarth (\mh) 1. L. U. 11 Cal. .54.5. (//) WnUix V. Bail (ls:}7) 2^\. i^ W. 27:^, 4(1 U.K. ()02. 'i'he law of SfviJland is ;ipparcii(ly the ■-muic according to the modern authorities. (/■) Sec Margrave's argument in Sonniiersrtf.s ruxf (1771-2) 2, and Rowen L..I. Hi] Ch. Div. at p. 39H. By the French law indefinite contracts of service are not allowed : Cod. Civ. 178U: On nc pent engager ses services (ju' a tcni])s, on |Kjur unc cut reprise di'- terniince : so the Italian Code, lti2S. The Oerman Civil Code recognizes them, s. ()24 : but a contract for personal service for any term over five years may after the first five years l)e determined by the om- ])loyer by six months' notice. (.s) See next note, and cp. the similar doctrine as to promises of mairiage, xii/na. 384 UNLAWFUL AGREEMENTS. D. Rules as to treatment of unlawful agreements- ii seueral. 1. Indepen- dent promises, some lawful and some agreement between them, and so make the agreement good, without any express words to that effect (t). D. The judicial treatment of unlaivjid agreements in general. Thus far of the various specific grounds on which agreements are held unlawful. It remains for us to give as briefly as may be the rules which govern our Courts in dealing with them, and which are ahiiost without exception independent of the particular ground of illegality. The general principle that an unlawful agreement cannot be enforced is not a sufficient guide. We still have to settle more fully Avhat is meant by an unlawful agreement. For an agreement is the com- plex result of distinct elements, and the illegality must attach to one or more of those elements in particular. It is material whether it be found in the promise, the consideration, or the ultimate purpose. There are questions of evidence and procedure for which auxiliary rules are needed within the bounds of purely muni- cipal law. Moreover, when the jurisdictions within which a contract is made, is to be performed, and is sued uYfon, do not coincide, it has to be ascertained by what local law the validity of the contract shall be de- termined, or there may be a " conflict of laws in space " : again, if the law be changed between the time of making the contract and the time of performance there may be " conflict of laws in time." This general division is a rough one, but will serve to guide the arrangement of the following statement. Uiilatvfuliiess of agreement as determined by particular elements. 1. A lawful promise made for a lawful consideration is not invalid by reason only of an unlawful promise (0 Pilkhir/fon V. Scott (1846) 15 M. .t W. fi57. 15 L. J. Ex. 329, 71 ];. i:. 7^1. (p. HartJeii v. Ciim- mhiffs (1847) 5 C. B. 247, 17 L, J. r. P. 84. 7.-) R. R. 722. AGREEMENTS WHEN SEVERABLE. 385 being made at the same time and for the same eon- ^miawfui ; . T . the lawful SlderatlOn. ones can be In Pigot's case (u) it was resolved that if some of enforced, the covenants of an indenture or of the conditions in- dorsed upon a bond are against law, and some good and lawful, the covenants or conditions which are against law are void ab initio a'nd the others stand good. Accordingly " from Pigot's case (x) to the latest autho- rities it has always been held that when there are con- tained in the same instrument distinct engagements by which a party binds himself to do certain acts, some of which are legal and some illegal at common law, the performance of those which are legal may be enforced, though the performance of those which are illegal can- not " (y). And where a transaction partly valid and partly not is deliberately separated by the parties into two agreements, one expressing the valid and the other the invalid part; there a party who is called upon to perform his part of that agreement which is on the face of it valid cannot be heard to say that the transaction as a whole is unlawful and void (z). It was formerly supposed that where a deed is void in part by statute it is void altogether : but this is not so. " Where you cannot sever the illegal from the legal part of a covenant, the contract is altogether void ; but where you can sever them, whether the illegality be created by statute or by the common law, you may reject the bad part and retain the good " (a). 2. If any part of a single consideration for a promise 2. Unlawful consideration («) (Ifiir.) 11 Co. Rep. 27 h. 3[rndel (1878) 8 Ch. Div. 235, 47 (./•) Referred to in the report as t> L. J. Ch. iJO.5. Co. Rep. 20 ; it is really in vul. G, («) I'er Willes J., PlcUerlnq v. ed. 182(i, which contains parts 11, llfmcomhe By. Co. (18r>8) L. R. 3 12, and 13. C. 1'. at ]). 250 ; and see Itoijal E.v- (y) Bank of Ausfrahi.sia v. chdiige Anaurance Corporatioit v. Jiirillat (1847) 6 Moo. P. C. 152, Sjorforaoh-lngs AMiebolaget Vega 201, 79 R. R. 24, 58. [IDOl] 2 K. B. 567, 573, 70 L, J. (;) Odessa Tramways Co. v. K. B. 874. P. C 38() UNLAWFUL AGREEMENTS. or part of consideration avoids the whole agreement. 3. Agreement is void whose immediate object is unlawful. or set of promises is unlawful, the whole agreement is void. This rule assumes the consideration not to be sever- able, and in such a case it is impossible to assign a lawful consideration to the promise or any of the pro- mises induced by it (h). In other words, where inde- pendent promises are in part lawful and in part un- lawful, those which are lawful can be enforced ; but where any part of an entire consideration is unlawful, all promises founded upon it are void. 8. When the immediate object of an agreement is unlawful the agreement is void. This is an elementary proposition, for which it is nevertheless rather difficult to find unexceptionable words. We mean it to cover only those cases where either the agreement could not be performed without doing some act unlawful in itself, or the performance is in itself lawful, but on grounds of public policy is not allowed to be made a matter of contract. The statement is material chiefly for the sake of the con- trasted class of cases under the next rule. 4. Where immediate object not unlawful, unlawful intention of both parties, or of one party known to the other, makes agree- ment void : unlawful intention of one not known at time makes contract void- able at other's option. 4. When the immediate object or consideration of an agreement is not unlawful, but the intention of one or both parties in making it is unlawful, then — If the unlawful intention is at the date of the agree- ment common to both parties, or entertained by one party to the knowledge of the other, the agreement is void. If the unlawful intention of one party is not known to the other at the date of the agreement, there is a con- tract voidable at the option of the innocent party if he discovers that intention at any time before the contract is executed. z (h) See Jonex v. Wuife, .^ Biug. N. C. 341, 356, 50 11. K. at p. 707. GENERAL RULES! UNLAWFUL CONSIDERATION OR OBJECT. 3R7 Here it is necessary to consider what sort of connec- tion of the subject-matter of the agreement with an unlawful plan or purpose is enough to show an unlaw- ful intention that will vitiate the agreement itself. This is not always easy to determine. In the words of the Supreme Court of the United States :~ " Questions upon illegal contracts have arisen very often both in England and in this country; and no principle is better settled than that no action can be maintained on a contract the consideration of which is either wicked in itself or prohibited by law. How far this principle is to affect subsequent or collateral con- tracts, the direct and immediate consideration of which is not immoral or illegal, is a question of considerable intricacy " (c). We have in the first place a well-marked class of transactions where there is an agreement for the trans- fer of property or possession for a lawful consideration, but for the purpose of an unlawful use being made of it. All agreements incident to such a transaction are void ; and it does not matter whether the unlawful pur- pose is in fact carried out or not (d). The later autho- rities show that the agreement is void, not merely if the unlawful use of the subject-matter is part of the bargain, but if the intention of the one party so to use it is known to the other at the time of the agreement (e). Thus money lent to be used in an unlawful manner cannot be recovered (/). It is true that money lent to pay bets could be recovered at common law (g), but What con- stitutes unlawful intention in such cases. Intention to put property purchased, kc, to unlaw- ful use. (r;) Armstroiui v. Tolrr (1826) 11 Wheat, at p. 272. (ri) Gas Llyitt a /id Cuhe Co. v. 7'« ;•««;• (1839) 5 Bing. N. C. (JtJG, in Ex. Ch. 6 ih. 324, 51 K. li. 808. ie) Pearce v. Bruuhs (1866) L. K. 1 E.X. 213, 3.-) L. .1. Ex. 134. (/") Cannaii v. JJnjca (181'.>) 3 B. k Aid. 179, 22 K. R. 342, (ff) See now the Gaming Act, 1892. It is by no means clear that the Act extends beyond invalidat- ing promises to reimburse pay- ments actually made in respect of wagering agreements. There are no words which obviously hit the case of (1) a loan to a person who to the lender's knowledge means to bet and to use the money in paying any bets he loses, or even c c 2 888 UNLAWFUL AGREEMENTS. Option of party innocent in the tirst instance to avoid the contract on discovering such in- tention. But an executed transfer of possession remains good. that was because there is nothing unlawful in either making a bet or paying it if lost, though the payment cannot be enforced. If goods are sold by a vendor who knows that the purchaser means to apply them to an illegal or immoral purpose, he cannot recover the price: it is the same of letting goods on hire (h). If a build- ing is demised in order to be used in a manner forbidden by a Building Act, the lessor cannot recover on any covenant in the lease (i). And in like manner if the lessee of a house which to his knowledge is used by the occupiers for immoral purposes assigns the lease, know- ing that the assignee means to continue the same use, he cannot recover on the assignee's covenant to indem- nify him against the covenants of the original lease (A;). It does not matter whether the seller or lessor does or does not expect to be paid out of the fruits of the illegal use of the property (/). An owner of property who has contracted to sell or let it, but finds afterwards that the other party means to use it for an unlawful purpose, is entitled (if not bound) to rescind the contract ; nor is he bound to give his reason at the time of refusing to perform it. He may justify the refusal afterwards by showing the un- lawful purpose, though he originally gave no reason at all, or even a different reason (m). But a completely executed transfer of property or an interest in property, though made on an unlawful con- sideration, or, it is conceived, for an unlawful purpose known to both parties, is valid, and cannot afterwards be set aside {71). And an innocent party who discovers (2) who to the lender's knowledge means to use the money in paying bets already lost. See A. V. LMcey in L. Q. K. XX. 43*! ; Anson on Contracts, 11th ed. 211. (//) Peai-re v. BnwJis (1866) L. E. 1 Ex. 213. 35 L. J. Ex. 134. (() Gas L'lqht and CaJte Co. v. rnrner (1839) 5 Bing. N. C. 66G, in Ex. Cli. 6 IJ). 324, .54 R. R. 808. (/O Smith V. White (1866) L. R. 1 Eq. 626. 3.5 L J. Ch. 4.54. (0 See note (/(), ante. (w) ('mean v. Milhourn (1867) L. R. 2 Ex. 230, 36 L. J. Ex. 124 ; see per Bramwell B. ad tin. («) Aiierst V. Jp«7.'/;w("l873) L. R. 16 Eq. 275. 42 L. J. Ch. 690. As UNLAWFUL USE OF SUBJECT-MATTER. 389 the unlawful intention of the other after the contract has been executed is not entitled to treat the trans- action as void and resume possession (o). As with contracts voidable on other grounds, this rule applies, it is conceived, only where an interest in possession has been given by conveyance or delivery. The vendor who has sold goods so as to pass the general property, but without delivery, or the lessor who has executed a demise to take effect at a future day, might rescind the contract and stand remitted to his original right of pos- session on learning the unlawful use of the property designed by the purchaser or lessee (p). On the same principle an insurance on a ship or goods insurance is void if the voyage covered by the insurance is to ™!^ where the knowledge of the owner unlawful (which may illegal to happen by the omission of the statutory requirements o°owiier^*^ enacted for the protection of seamen and passengers, as well as in the case of trading with enemies or the like). " Where the object of an Act of Parliament is to prohibit a voyage, the illegality attaching to the illegal voyage attaches also to the policy covering the voyage," if the illegality be known to the assured. But acts of the master or other persons not known to the owner do not vitiate the policy, though they may be such' as to render the voyage illegal (q). to chattels, contra per Martin B. in L. J. Q. B. 220, per Quain J. and Pearcp v. Brooks (1866) L. R. 1 Ex. authorities there referred to. Op, 217 ; but this seems unsupported : further, on the general head of see L. R. 4 Q. B. 811, 315. agreements made with an unlawful ((() Feret v. Hill (1854) 15 C. B. purpose, Hananrr v. Doanc, (1870) 207, 23 L. J. C. P. 185, 100 R. R. 2 Wallace, 842. In Sprott v. U. S. 318, where an interest in realty (1874) 20 ib. 45'.>, it was held that had passed and the re-entry was a buyer of cotton from the Con- fovcible ; but senible, the lease was federate Government, knowing that voidable in equity. the purchase-money would be ap- (f)) C\i. Coiranv. MillH»/r>i {I9,('i7) plied in support of the rebellion, L. R. 2 Ex.230, 36 L. J. Ex. 124. could not be recognized by the (//) Wllaon V. Jlnnhin (18('.5) L. K. U. S. Courts as owner of the cotton : 1 Q. P.. 162. 35 L. J. Q. B. 203 (Kx. diss. Field .T. on the grounds (which ('h.) ; I)iid(jfon v. Prmhrolte (1S74) seem I'ight) that it was a iiucstidii I'. R. I* f^>. P>. 581, at p. 5S5, 43 not of contract but of owncrstiip, UNLAWFUL AGREEMENTS. Agreements connected with but subsequent to an unlawful transaction. Such agree- ment not void unless an integral part of unlawful design. Cases in Supreme Court. U. S. Armstrong v. Tuler, &;c. An agreement may be made void by its connection with an unlawful purpose, though subsequent to the execution of it. To have that effect, however, the connection must be something more than a mere conjunction of circum- stances into which the unlawful transaction enters so that without it there would have been no occasion for the agreement. It must amount to a unity of design and purpose such that the agreement is really part and parcel of one entire unlawful scheme. This is well shown by some cases decided in the Supreme Court of the United States, and spreading over a considerable time. They are the more worth special notice as they are unlike anything in our own books. In Armstrong V. Toler (/•) the point, as put by the Court in a slightly simplified form, was this: " A. during a war contrives a plan for importing goods on his own account from the country of the enemy, and goods are sent to B. by the same vessel, k. at the request of B. becomes surety for the payment of the duties [in fact a com- muted payment in lieu of confiscation of the goods themselves] which accrue on the goods of B., and is compelled to pay them ; can he maintain an action on the promise of B. to return this money ? " The answer is that he can, for the " contract made with the govern- ment for the payment of duties is a substantive inde- pendent contract entirely distinct from the unlawful unportation." But it Avould be otherwise if the goods had been imported on a joint adventure by A. and B. In McBlair v. Gibbes (s) an assignment of shares in a company was held good as between the parties though the company had been originally formed for the un- lawful purpose of supporting the Mexicans against the and that in deciding on title to personal property the de facto government existing at the time and place of the transaction must be regarded. (/•) (1826) 11 Wbeaton. 2.58. 269. (.vO (1854) 17 Howard. 232. TRANSACTION UNIiAWFUL AS WHOLE. 391 Spanish Government before the independence of Mexico was recognised by the United States. In MUtenherger \. Cooke (t) the facts wevo these. In 18G6 a collector of United States revenue in Mississippi took bills in payment when he ought to have taken coin, his reason being that the state of the country made it still unsafe to have much coin in hand. In account with the govern- ment he charged himself and was charged with the amount as if paid in coin. " Then he sued the acceptors on the bills, and it was held there was no such illegality as to prevent him from recovering. If the mode o£ payment was a breach of duty as against the Federal government, it was open to the government alone to take any objection to it. We return to our own Courts for a case where on the Fisher v. other hand the close connection with an illegal design e". cui.^ was established and the agreement held bad. In Fisher V. Bridges {u) the plaintiff sued the defendant on a simple covenant to pay money. The defence was that the covenant was in fact given to secure payment of part of the purchase-money of certain leasehold pro- perty assigned by the plaintiff to the defendant in pur- suance of an unlawful agreement that the land should be resold by lottery contrary to the statute (.r). The Court of Queen's Bench held unanimously that the cove- nant was good, as there was nothing wrong in paying the money, even if the unlawful purpose of the original agreement had in fact been executed: and the case was likened to a bond given in consideration of past cohabitation. But the Court of Exchequer Chamber unanimously reversed this judgment, holding that the covenant was in substance part of an illegal transaction, whether actually given in pursuance of the first agree- (0 (1873) 18 Wallace, 421. H. 042, 23 L. J. Q. 15. 270, i)7 R. R. (w) (1853-4)2 E. & B. US, 22 701. I;. .1. Q. R. 270; in Kx. Ch. ^^ K. & (./•) 12 Geo. 2, c. 28, s. 1. 392 UNLAWFUL AGREEMENTS. Principle of the judgment. ment or not. "It is clear that the covenant was given for payment of the purchase-money. It springs from and is a creature of the illegal agreement ; and as the law would not enforce the original contract, so neither will it allow the parties to enforce a security for the purchase - money which by the original bargain was tainted with illegality." They further jDointed out that the case of a bond given for past cohabitation was not analogous, inasmuch as (past cohalDitation is not an illegal consideration but no consideration at all. But " if an agreement had been made 1:0 pay a sum of money in consideration of future cohabitation, and after cohabitation, the money being unpaid, a bond had been given to secure that money, that would be the same case as this ; and such a bond could not under such cir- cumstances be enforced." Some of the language used may have been "vague in itself and dangerous as a precedent" (y). The decision, however, does not appear to require anything wider than this — that where a claim for the payment of money as on a simple contract would be bad on the ground of illegality, a subsequent security for the same payment, whether given in pursuance of the original agreement or not, is likewise not enforceable : or, more shortly — 5. Security for pay- ments under unlawful agreement is equally void ■n-ith the original ai^reement, 5. Any security for the payment of money under an unlawful agreement is itself void, even if the giving of the security was not part of the original agreement. To this extent at least the principle of Fisher v. Bridges has been repeatedly acted on (z). In Geere V. Mare (z) a policy of assurance was assigned by deed as a further security for the payment of a bill of ex- (2/) 1 Sra. L. C. 391. (c) Gvceme v. Wrouffhton (ISoo) 11 Ex. 146, 2-1 L. J. Ex. 265, 105 K. R. 456 ; Geere v. Jfare (1863) 2 H. & C. 339, 33 L. J. Ex. 50 ; Clay V. Eai/ (1864) 17 C. B. N. S. 188. SECURITIES FOR PAYMENT WHEN VOID. 393 change. The bill itself was given to secure a payment by way of fraudulent preference to a particular cre- ditor, and accepted not by the debtor himself but by a third person. It was held, both on principle and on the authority of Fisher v. Bridges, that the deed could not be enforced. Again in Clay v. Ray (a) two pro- missory notes were ,secretly given by a compounding debtor to a creditor for a sum in excess of the amount of the composition. Judgment was obtained in an action on one of these notes. In consideration of pro- ceedings being stayed and the notes given up a third person gave a guaranty to the creditor for the amount : it was held that on this guaranty no action could be maintained. It seems doubtful whether this principle would apply to a security for money payable under an agreement of which the performance was not unlawful, though the agreement, on grounds of public policy, were not enforceable. This is a convenient place to state a rule of a more special kind which has already been assumed in the discussion of various instances of illegality, and the necessity of which is obvious : namely : — 5a. If the condition of a bond is unlawful, the whole 5^^. Bond bond is void (b). with unlawful condition is Rules of Evidlence and Procedure touching ^^° ^ ^*^^ ' Unlawfid Agreements. 6. Extrinsic evidence is always admissible to show a. illegality that the object or consideration of an agreement is in jn'\>' /Always " "be shown by fact illegal. extrinsic evidence. (a) 17 C. B. N. S. 188. absolute (as if the condition were (J) Co. Lit. 206 ^, Shepp. Touch. merely impossible): but this dis- 372 ; where it is said that if the tinction is now clearly not law : matter of the condition be only sec Di/rrrffier y. Fellnirs {\H'W^ 10 malum jJivhih it inn, the ohUgatum is V>. & C. 826, 34 11. 1!. 578. 394 UNI>A\VFUL AGREEMENTS. 6rt. Where unlawful intention is alleged it must be shown to have existed at date of agreement. Subsequent conduct of parties may be evidence of original unlawful intention. This is an elementary rule established by decisions both at law (c) and in equity (d). Even a document which for want of a stamp would not be available to establish any right is admissible to prove the illegal nature of the transaction to which it belongs (e). But where the immediate object of the agreement (in the sense explained above) is not unlawful, we have to bear in mind a qualifying rule which has been thus stated : Cja. "When it is sought to avoid an agreernent not being in itself unlawful on the ground of its being meant as part of an unlawful scheme or to carry out an unlawful object, it must be shown that such was the intention of the parties at the time of making the agreement " (/). The fact that unlawful means are used in perform- ing an agreement which is 'prima facie lawful and capable of being lawfully performed does not of itself make the agreement unlawful {g). This or other subse- quent conduct of the parties in the matter of the agree- ment may be evidence, but evidence only, that a viola- tion of the law was part of their original intention, and whether it was so is a pure question of fact {h). The omission of statutory requisites in carrying on a part- nership business is consistent with the contract of part- nership itself being lawful ; but if it is shown as a fact that there was from the first a secret agreement to carry on the business in an illegal manner, the whole must be taken as one illegal transaction (i). Again, ((■) C0III11.S V. lllanfrrn (ITtw) 1 8m. L. C. ijl) BojneU V. Sj}n/e il8r,2) I D. M. G. G«0, 672, 21 L. J. Ch. 633. '.tl li. R. -228, 239, per Knight- Bruce L.J. (?) Coppoch V. Bower (1838) 1 M. ct W. 361, .51 R. R. 627. (/) Lird Ifowden v. Simpson (1839) 10 A. & E. 793, 818, 50 R. R. .555, 573. (.17) A subsequent agreement to vary the performance of a contract in a way that would make it un- lawful is merely inoperative, and leaves the original contract in force : Citij of Memphis v. Broioii (187.3) 20 Wallace (Sup. Ct. U. S.) 289. {li) Fraser v. lUll (1853) 1 McQu. 392. (/) Armstrong v. Arinstro7ig (1834) 3 M. & k. 4.5. 64, 13 L. J. Ch. 101, 41 R. R. 10 ; S. C. nam. Armstrong v. Lewis (1834) in Ex. Ch, 2 Cr.&M. 277. 297. EVIDENCE OF UNLAWFUL PURPOSE. 395 it is no answer to a claim for an account of partner- ship profits that there was some collateral breach of the law in the particular transaction in which they were earned (k). Where a duly enrolled deed inte?' vivos purported to create ,a rent-charge for charitable pur- poses, but the deed remained in the grantor's keeping, no payment was made during his lifetime, nor was the existence of the deed communicated to the persons interested, and the conduct of the parties otherwise showed an understanding that the deed should not take effect till after the grantor's death, it was set aside as an evasion of the Mortmain x\ct (/). Again, an agree- ment is not unlawful merely because something remains to be done by one of the parties in order to make the performance of the agreement or of some part of it lawful, such as obtaining a licence from the Crown (m). On the same principle it is not illegal for a highway board to give a licence to a gas company to open a highway within the board's jurisdiction, for it must be taken to mean that they are to do it so as not to create a nuisance (n). In Wangh v. Morris (o) it was agreed by charter- Waugh i-. pai-ty that a ship then at Trouville should go thence jj°["jfj'j^j ^^ with a cargo of hay to London, and all cargo was to be the question brought and taken from the ship alongside. Before' whTtiiei*th^ the date of the charter-party an Order in Council had parties know been made and published under the Contagious Diseases (Animals) Act, 1869, prohibiting the landing of hay from France in this country. The parties did not CO S/inrpv. Taylor (l^iil') 2 I'll. (in) Scivdl v. lioi/al E.rch. A.^- sul, 78 R. R. 2!}8. Still less where sumnce Co. (1S13) 4 Taunt. 85G ; the illegal acts were done by the IFdines v. Bush (181-1) 5 //;. .~)21 ; partner against whom the account cp. Porter\'i case, 1 Co. Rep. 25 a, is sought, without the sanction or the like as to a condition in a knowledge of the other : Thivaifes devise. V. Conllhwalte [ISiXi] 1 Ch. 490, («) Juhpcavc HKihicni/ Boards. 65 L. J. Ch. 238. Harrow Gas Co. (1874) L. K. 10 (0 Way V. East (1853) 2 Drew. Q. B. 92, 44 L. J. Q. B. 1. 44. 23 L. J. Ch. 209, 100 R. R. (o) (1873) L. R. 8 Q. B. 202. 12 21. r. .1. Q. B. 57. 396 UNLAWFUL AGREEiMENTS. Where agreement prima facie unlawful, not enough to show mere possibility of lawful performance. know of this, and the master learnt it for the first time on arriving in the Thames. In the result the charterer took the cargo from alongside the ship in the river into another vessel and exported it, as he lawfully might, but after considerable delay. The shipowner sued him for demurrage, and he contended that the contract was illegal (though it had in fact been lawfully performed), as the parties had intended it to be performed by means which at the time of the contract were unlawful, viz. landing the hay in the port of London. The Court however refused to take this view. It was true that the plaintiff contemplated and expected that the hay would be landed, as that would be the natural course of things. But the landing was no part of the con- tract, and if the j)laintiff had had before him the possi- bility of the landing being forbidden, he would pro- bably have expected the defendant not to break the law ; as in fact he did not, for no attempt was made to land the goods. " We quite agree that where a contract is to do a thing which cannot be performed without a violation of the law it is void, whether the parties knew the law or not. But we think that in order to avoid a contract which can be legally performed on the ground that there was an intention to perform it in an illegal manner, it is necessary to show that there was the wicked intention to break the law ; and if this be so, the knowledge of what the law is becomes of great importance '" (7^). But on the other hand where an agreement is prima facie illegal, it lies on the party seeking to enforce it to show that the intention was not illegal. It is not enough to show a mere possibility of the agreement being lawfully performed in particular contingent events. "If there be on the face of the agreement an illegal intention, the burden lies on the party who uses expressions prima jade importing an illegal purpose to show that the intention was legal " (g). ifi) C187.S) L. R. 8 Q. B. 207-8. (y) Holland v. Hall (1817) 1 B. & Aid. r,8, 18 R. E. 428, per Ab- bott J. ; Allhins v. Jvpe (1877) 2 PAR DELICTUM. 397 We now come to the rule, which we will first state As to • • 11 • IP j^i J. J. recoverin": provisionally in a general torm, that money or property back money paid or delivered under an unlawful agreement cannot or property, be recovered back. This rule (which is subject to exceptions to be pre- sently stated) is the chief part, though not quite the whole, of what is meant by the maxim In pari delicto potior est condicio £j\efenclentis (r). To some extent it coincides with the more general rule that money volun- tarily paid with full knowledge of all material facts cannot be recovered back. However, the principle proper to this class of cases is that persons who have entered into dealings forbidden by the law must not expect any assistance from the law, save so far as the simple refusal to enforce such an agreement is una- voidably beneficial to the party sued upon it. As it is sometimes expressed, the Court is neutral between the parties. The matter is thus put by Lord Mansfield : " The objection, that a contract is immoral orillegal as between plaintiff Lord and defendant, sounds at all times very ill in the mouth of the defendant. Mansfield s It is not for his sake, however, that the objection is ever allowed, but it ^^ ^,,^ ^„i^ is founded in general principles of policy, which defendant has the advantage of contrary to the real justice as between him and the plaintiff, by accident, if I may say so. The principle of public policy is this : ex (lulu mall) non oritur actio. No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If from the plaintiff 's own stating or otherwise the cause of action appears to arise ej; turpi causa, or the transgression of a positive law of this country, there the Court says he has no right to be assisted. It is upon that ground the Court goes ; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to chinge sides, and the defendant was to bring his action against the V,. P. D. 87"), 4(! L. .1. C. P. 82L idem diceiidum est. ([uia statim The same principle is expi'essed in a contra mores sit '" : I). 45, 1 de different form by Paulus: "Item v. o. 3.5 § 1. f[Uod leges fieri prohibent, si per- (/•) Cp. D. 50, 17, de reg. iuris, petuam causam servaturum est, 154, C. 4, 7, de condict. olj turpem cessat obligatio . . . quamquam causam, 2. etiam si non sit perpetua causa . . . of the rule. 398 UNLAWFUL AGREEMENTS. plaintiff, the latter would then have the advantage of it ; for where both are equally in fault, potior ext conditio defendentis " (.!>'). The test for the application of the rule is whether the plaintiff can make out his case otherwise than " through Plaintiff can- not recover where his own unlawful the medium and by the act of an iJlegal transaction to part of his wliich he was himself a party " (i). In an action own case. brought to recover back premiums paid on policies of life insurance alleged to be void for want of insurable interest, it was held that, assuming them to be so, the position of the parties was equal even though the assured had relied on a mistaken statement of the law made in good faith by the insurance company's agent, and the premiums could not be recovered {u). The rule is not confined to the case of actual money pay- ments, though that is the most common. Where the plaintifl: had deposited the half of a bank note with the defendant by way of pledge to secure the repay- ment of money due for wine and suppers supplied by the defendant in a brothel and disorderly house kept by the defendant for the purpose of being consumed there in a debauch, and for money lent for similar pur- poses, it was held that the plaintiff could not recover, as it was necessary to his .case to show the true character of the deposit {x). (.v) Holinan v. Johnson (lllii) Cowp. 311, 313. (0 Taylor v. Chrstor (1 S(!9) L. R. 4 Q. B.'30lt, 311, 38 L. J. Q. B. 225. (ji) Harne v. Pearl Life Assur- ance Co. [1901] 1 K. B. .558. 73 L. J. K. B. 373, C. A. Otherwise if the statement had been fraudulent, see per Collins M.R. [liiol] 1 K. B. at p. 563. (.r) This is a|iparent by the course of the pleadings ; the declaration was on a bailment of the half-note to be re-delivered on request, and in detinue. Pleas, in effect, that it was deposited byway of pledge to secure money due. Replication, the immoral character of the debt as above. The Court inclinetl also to think, but did not decide, that the plaintiff's case must fail on the more general ground that the delivery of the note was an executed contract by which a special property passed, and that such property must remain. Compare E.v parte Caldc- cott (187()) 1 Ch. Div. 150, 16 L.J. Bk. II, p. 331, above ; Jiet/bie v. Phosphate Sewage Co. (187.5) L. R. 19 Q. B. 191, 500, affd. in C. A. 1 Q. B. Div. 679. WHEN PAYMENTS CAN BE RECOVERED. 399 The rule is not even confined to causes of action ex contractu. An action in tort cannot be maintained when the cause of action springs from an illegal trans- action to which the plaintiff was a party, and that trans- action is a necessary part of his case {ij). Independently of the special grounds of this rule, a completely executed transfer of property, though origin- ally made upon an unlawful consideration or in pur- suance of an unlawful agreement, is afterwards valid and irrevocable {z). The rule is not applicable in the following classes of cases, most of which, however, cannot properly be called exceptions. An agent is not discharged from accounting to his principal by reason of past unlawful acts or intentions of the principal collateral to the matter of the agency. If A. pays money to B. for the use of C, B. cannot justify a refusal to pay over to C. by showing that it was paid under an unlawful agreement between A. and C. (a). Again, if A. and B. make bets at a horse- race on a joint account and B. receives the winnings, A. can recover his share of the money or sue on a bill given to him by B. for it: here indeed there is no ille- gality in the proper sense (/>). For the same reason Cv) Flvaz V. Nlcholls (18iG) 2 C. B. 501, 513, 15 L. J. C. P. 125. 69 R. R. 514, a peculiar and appar- ently solitary example. (^z) Aijerst v. Jenlim (1873) L. R. IG Eq. 275, 42 L. J, Ch. G90. Cp. M'Cdllan V. Mortimer (\M2^ (Ex. Ch.) 9 M. k W. G36. (a) Tenant v. EUuift (1797) 1 15. & P. 3, 4 R. R. 755. (V) Ju/msjn v. LtifLshy (IS:>2) 12 C. B. 468, 92 R. R. 7GG. And where B. iise.s moneys of his own and A.'s in betting, on the terms of dividing winnings in certain proportions, A. can sue B. on a cheque given for his share of winnings : Jieedun v. Beeston (1875) 1 Ex. 1). 13, 45 L. .1. Duty of agents ami trustees to account to principals notwith- standing collateral illegality. Ex. 230. Qu(ere whether either of these cases is touched by the Gaming Act, 1892. Cp. and dist. Hi(j(finson v. Simpson (1877) 2 C. P. D. 76, 46 L. J. C. P. 192, where the transaction in question was held to be in substance a mere wager. A fine distinction has been taken in two cases of pur- chase of bank shares through brokers, where the contract note omitted to specify the numbers of the shares as required by Leeman's Act, 30 & 31 Vict. c. 29, s. 1. The brokers, if tliey had not completed the contracts, might have been declared defaulters and expelled from tlie Stock Excliange. In 400 UNLAWFUL AGREEMENTS. an agent employed to bet and collect winnings is bound to account to his principal for what he collects, though the losers could not have been compelled to pay (c). But, by statute, such an agent cannot recover from his principal either any money paid by him in respect of losses or any reward or commission for his services ; nor can one who pays bets at the loser's request recover the money, whether he was employed in making the bets or not (d). In like manner the right to an account of partnership profits is not lost by the parti- cular transaction in which they were earned having involved a breach of the law (e). Nor can a trustee of property refuse to account to his cestui que, trust on grounds of this kind: a trust was enforced where the persons interested were the members of an unincor- porated trading association, though it was doubtful whether the association itself was not illegal (/). So, if A. with B.'s consent effects a policy for his own benefit on the life and in the name of B., having him- self no insurable interest, the policy and the value of it belong, as between them, to A. (g). If a man entrusts Seymour v. Bridge (1885) 14 r\?r\\t\\)hy Ready. Anderson {\SM) Q. B. D. 460. Mathew J. hel i that i:^ Q.B. Div. 779, 53 L. J. Q. B. the principal could not repudiate : 582 ; Jafrt/w v. i?<'e(r [1893] 1 Q. B. in Perry v. Burnett (1885) 15 44, 62 L. J. Q. B. 30. Semlle Q. B. Div. 388, 54 L. J. Q. B. 466. the plaintiff could not recover it was held that, if he did not even if he did not know that the know the usage of the Stock jjayments he made at the defen- Exchange. he could. dant's request were for bets. The (r) Bridger w. Savage (\^M')\b Act is not retrospective : Kniglit x. Q. B. Div. 363, 54 L. J. Q. B. 464 : Lee [1893] 1 Q. B. 41, 62 L. J. Q. B. the contract of agency is not a 28. gaming or wagering contract. This (pard v. Oxen ford (ISoo) Q. B. 241. 1 k. & J. 491. 103 R. R. 203. (. C. 49. Cp. Bardaii v. 8 B. & C. 221, 226, 32 R. E. 3(J9, Pe,imm [18!)3] 2 Ch. 154. This is 373. not afEectec'. by the GamiDg Act, (0 Bone V. Ekless (1860) 5 H. & 1892 : (J Sullivan v. Thomas [1895] N. 925, 29 L. J. Ex. 438. 1 Q. B. 698, 64 L. J. Q. B. 398 ; ill) Dlqrilc V. TTiq(i.H{\Sn) 2 Ex. Shoolhred v. Bohertu [1899] 2 Q. B. Div. 422, 46 L. J. Ex. 721 ; HKmp- 560, 68 L. J. Q. B. 998 ; confirmed deux. IF«Z.s7i(_1876) 1 Q. B. D 189; l)y 0. A. in Burqe v. Ashlrq and 45 L. .J. Q. B. 238, where former South [1900] 1 Q. B. 744, 69' L. J. authorities are collected and con- Q. B. 538. sidered : Tvimhle v. JTdl (1879) (V) Unlxerml StocU E-vchancffi, (J. 0.) on a colonial statute i n the Ld. v. Strachan (No. 1) [1896] A.'C. same terms, 5 App. Ca. 312. 49 KiH, 65Jv. J. Q. B. 428.' P. D I) 402 UNLAWFUL AGREEMENTS. actually criminal or immoral (m). In general, " if money is paid or goods delivered for an illegal purpose, the person who has so paid the money or delivered the goods may recover them back before the illegal pur- pose " — or rather, before any material part of it — (n) " is carried out ; but if he waits till [some material part of] the illegal purpose is carried out, or if he seeks to enforce the illegal transaction, in neither case can he maintain an action " (o). And the action cannot be maintained by a party who has not given previous notice that he repudiates the agreement and claims his money back (p). In Taylor v. Bowers (o) A. had delivered goods to B. under a fictitious assignment for the pur- pose of defrauding A.'s creditors. B. executed a bill of sale of the goods to C, who was privy to the scheme, without A.'s assent. It was held that A. might repu- diate the whole transaction and demand the return of the goods from C. In Symes v. Hughes (q), a case somewhat of the same kind, the plaintiff had assigned certain leasehold property to a trustee with the intention of defeating his creditors ; afterwards under an arrangement with his creditors he sued for the recovery of the property, having undertaken to pay them a com- position in case of success. The Court held that, as the illegal purpose had not been executed, he was entitled to a reconveyance. It will be observed, however, that the plaintiff was in effect suing as a trustee for his creditors, so that the real question was whether the fraud upon the creditors should be continued against the better mind of the debtor himself. The cases above mentioned as to recovermg money from agents or stake- (^m) Tuppoidenv. Randall (1801) ^0 Per Mellish L.J. Taylor v. 2 B. & P. 467, 5 R. R. 6(;2. Jiowers (1876) 1 Q. B. Div. 291, at («) Kearlexj v. Thommn (1890) p. 300. 24 Q. B. Div. 742, 59 L. J. Q. B. (/O Pahjart v. LecMe (1817) 6 288; cp. Herman v. Jeuchner M. & S. 290. 18 R. R. 38L (1885) 15 Q. B. Div. 501, 54 L. J, (-/) (1870) L. R. 9 E'l. 47.5, 39 Q. B. 340. L. J. Ch. 304. WHEN PAYMENTS CAN BE RECOV^ERI^D. 403 holders are also put partly on this ground, which, how- ever, does not seem necessary to them (r). In certain cases the parties are said not to be in pari Parties delicto, particularly where the unlawful agreement and delicto. the payment takes place under circumstances practi- cally amounting to coercion. The chief instances of rurchase this kind in courts of law have been payments made by assent to a debtor by way of fraudulent preference to purchase composition. a particular creditor's assent to his discharge in bank- ruptcy or to a composition. The leading modern case is Atkinsoti v. Denbi/ (s). There the defendant, one of plaintiff's creditors, refused to accept the composi- tion, unless he had something more, and the plaintiff paid him 50/. before he executed the composition deed. It was held that this money could be recovered back. "It is true," said the Court of Exchequer Chamber, " that both are in delicto, because the act is a fraud upon the other creditors, but it is not par delictum, because the one has the power to dictate, the other no alternative but to submit. " On the same ground money paid for compounding a penal action contrary to the statute of Elizabeth may be recovered back {t). But where a bill is given by way of fraudulent preference to purchase a creditor's assent to a composition, and after the composition the debtor chooses to pay the amount of the bill, this is a voluntary payment which cannot be recovered {u). In equity the application of this doctrine has been +he Like doctrine of equity. (/•) Ilastelow v.Jiick,si>>i.{lS2H) 8 audiendus. B. i:C. 221. 32 R. K. 369. J/wr- (,v) (1860) 6 H. i: N. 778, 30 ing V. Hellimis (1845) U M. & W. L. J. Ex. 361, in Ex. Ch. 7 H. & N. 711. \h L. J. Ex. 168, where that 934, 31 L. J. Ex. 362: the chief case was doubted, decides only this: earlier ones are Smith v. Bromlei/ A man cannot sue a stakeholder for (1760) 2 Doug. 695 ; Smith v. Ciif the whole of the sweepstakes he has (1817) 6 M. & S. 160, 18 K. K. won in a lottery, and then reply to 340. the objection of illegality tliat if (0 Williams- v. ircdli'i/ (^ISOl) S the whole thing is illegal he must Ea«t, 378, 9 R. R. 473. at all events recover his own («) H7Z.w?« v. Bui/ (1839) 10 stake. Allegans eontraria non est A. k E. 82, 50 R. R. 311. D D 01 ■i04 UNLAWFUL AGREEMENTS. same in substance, though more varied in its circum- stances. The rule followed by courts of equity was ihus described by Knight Bruce, L.J. : "Where the parties to a contract against public policy or illegal are not in pari delicto (and they are not always so) and where public policy is considered as advanced by allow- ing either, or at least the more excusable of the two, to sue for relief against the transaction, relief is given to him, as we know from various authorities, of which Osborne v. Williams [see below] is one " (x). Special On this principle relief was given and an account of°i-elief decreed in Osborne v. Williams {y), where the unlawful sale of the profits of an office was made by a son to his father after the son had obtained the office in succession to his father and upon his recommendation, so that he was wholly under his father's control in the matter. In Reynell v. Sprye (z) an agreement bad for champerty was set aside at the suit of the party who had been in- duced to enter into it by the other's false representations that it was a usual and proper course among men of business to advance costs and manage litigation on the terms of taking all the risk and sharing the property recovered. In a later case a mortgage to secure a loan of money which in fact was lent upon an immoral con- sideration was set aside at the suit of the borrower on the ground that the interest of others besides parties to the corrupt bargain was involved (a). A wider exception is made, as we have seen above, in the case of agreements of which the consideration is future illicit cohabitation between the parties. Apart from this par- ticular class of cases, it is submitted that the rule and its qualifications may be stated to this effect : statement T. Money paid or property delivered under an un- (.r) Eeynell v. Sprye (lSo2) 1 218. D. M. G. 660. at p. G7;i. !•! 11. K. (.-) 1 D. M. G. 660, 01 R. R. 228. 228. 241. 00 ir. V. B. (1863) 32 Buav. ('/) (1811) 18 Vcs. 379. 11 R. R. .571. CONFLICT OF LAWS. 405 lawful agreement cannot be recovered back, nor the of the rule agreement set aside at the suit of either party — ■ ds qua i et. unless nothing has been done in the execution of the unlawful purpose beyond the payment or delivery itself (and the agreement is not positively criminal or im- moral ?) ; or unless the agreement was made under such circum- stances as between the parties that if otherwise lawful it would be voidable at the option of the party seeking relief (b) ; or, in the case of an action to set aside the agreement, unless in the judgment of the Court the interests of third persons require that it should be set aside. 8. Where a difference of local laws is in question, s. Contiict the lawfulness of a contract is to be determined l)y the °^ '^^'^ ^'^ SpJiCG. law governing the substance of the contract (c). Lex loci Exception 1. — An agreement entered into l:»y a citizen prgyatls"* in violation of a prohibitory law of his own state cannot unless in any case be enforced in any court of that state. prohibftory" Exception 2. — An agreement contrary to common "i^nicipal principles of justice or morality, or to the interests of forum : the state, cannot in any way be enforced. ""^' ""^*?'^s the ' *' •' a.Lfreement is («/) This form of expression ("h. 34:>, affirmed [1910] 2 Ch. 502. seems justitied by Ilarxe v. Pearl C A. — " yet when a contract is Life Assurance Co., p. 898, above. matle in one country, but is whoUy (c) According to our modern or partially to be performed in authorities (see especially Ilamlyn another, then great weight will be ^' Co. V. Tallsltev IJistillerij [1894] given to the law of the place of A. C. 202) the question is leally performance (J.e.v loel solutionis). by what law the parties intended as being probably the proper law the contract to be governed : Dicey, of the contract, in regard, at any Conflict of Laws, .547. The auxi- rate, to acts to be done there" : liary rules for ascertaining that JDicey, op. cit. 5(j.j. The framing intention, and .so fi.King the " projier of a contract in terms exclusively law of the contract," which, how- appropriate to a particular system ever, are presumptions, and not of law is a strong indication oE fixed rules of law, are that "the intention to make that the govern- proper law of a contract is indeed ing law. For American judicial y;/'////a /«("/« the law of the country doctrines, among which tlieie is where it is made (lex loci con- still great divergence, see Prof. tractn.i') " ; — see British S. Africa Joseph H. Beale's articles in Ilarv. Co. V. J)e ISecr.s Consolid. Mines Law. Rev. xxiii. 79, 194. [1910] 1 Ch. 854,:}81,8S2,79 F>. J. 40() U N LAW FUL A( i R EEMENTS. contrary to common justice or interests of the state. As to the first ex- ception. What we here have to do with is in truth a fragment of a much larger suhject, namely, the consideration of the local law governing obligations in general (d). The main proposition is well established, and it would be idle to attempt in this place any abridgment or re- statement of what is said upon it by writers on Private International Law. The first exception is a simple one. The municipal laws of a particular state, especially laws of a prohibitory kind, are as a rule directed only to things done within its jurisdiction. But a particular law may positively forbid the subjects of the state to undertake some particular class of transactions in any pai-t of the world : and where such a law exists, the coui-ts of that state must give effect to it. A foreigner cannot sue in an English court on a contract made with a British subject, and itself lawful at the place where it was made, if it is such that British subjects are for- bidden by Act of Parliament to make it anywhere (e). It may be doubted whether such a contract would be recognized even by the courts of the state where it was made, unless the prohibition were of so hostile or re- strictive a character as between the two states as not to fall within the ordinary principles of comity (e.g., if the rulers of a people skilled in a particular industry should forbid them to exercise or teach that industry abroad). The authorities already cited (pp. 304, 305, above) as to marriages within the prohibited degrees {(]) For the treatment of it in this connexion, see Savigny, Syst. 8. 2G1» ^270 (§ 374 C.) ; Story. Confiict of Laws, §§ 243 sqq., 258 sqq. ; Dicey. op. clt. chaps. 24. 2.5. Mr. "West- lake. Priv. Intern. Law. 3rd ed. 259. 2G0. states the rules thus : Where a contract contemplated the violation of English law, it cannot be enforced here, notwith- standing that it mav have been valid by its proper law. Where a contract conflicts with what are deemed in England to be essential public or moral interests, it cannot be enforced here, notwithstanding that it may have been valid by its proper law. {f) Siintog v. lUidgp (IS60) in Ex. Ch., 8 C. B. N. S." at p. 874, 29 L. J. C. P. at p. 350. per Black- burn J. CONFLICT OF LAWS. 407 contracted abroad by British subjects may also be use- fully consulted as illustrating this topic. The second exception is by no means free from diffi- As to the culties touching its real meaning and extent, (/). There glception is no doubt that an agreement will not necessarily, though it will generally, be enforced if lawful according to its proper local law. The reasons for which the court may nevertheless refuse to enforce it have been variously expressed by judges and text-writers, and sometimes in very wide language. It may be taken for granted that the courts of a Tiausactious civilized state cannot give effect to rights alleged to be conmfo'n ^ valid by some local law, but arising from a transaction principles 1 . T j_ j_ / 1 • , • • • I of civilized plamly repugnant to the ms gentium in its proper nations or sense — the principles of law and morality common to founded on civilized nations. In other words a local law cannot be foreign recognized, though otherwise it would be the proper law ^^^^^ °^ to look to, if it is in derogation of all civilized laws (g). relations, not This indeed seems a fundamental assumption in the recognizee. administration of justice, in whatever forum and by whatever procedure. Likewise it is clear that no court can be bound to enforce rights arising under a system, of law so different from its own, and so unlike anything it is accustomed to, that not only its administrative means, but the legal conceptions which are the founda- tion of its procedure, and its legal habit of mind (h), so to speak, are wholly unfitted to deal with them. For this reason the English Divorce Court cannot entertain (/) " Whether an action can be law of that government — will not supported in England on a contract be enforced in the courts of the which is void by the law of Eng- United States : Oscanyan v. A rms land, but valid by the law of the Cu. 103 U. S. 261, 277; and this country where the matter is trans- not in the interest of the foreign acted, is a great question : " per government, but for the sake of Wilmot J. Uohinson v. Bland morality and the dignity of law at (17(iO) 2 Burr. 1088. home. (//) It has been laid down that (A) In German one might speak contracts to bribe or corruptly in- without any strangeness of the fiuence officers of a foreign gcjvern- Ilechtshewusstneiii of the Court, ment — even if not prohibited by the 408 UNLAWFUL AGREEMENTS. But opposi- tion to vuinic'tjyal principles of law not enough. Contract for sale of slaves enforced in Santos V. Illidsje. a suit founded on a Mormon marriage. Apart from the question whether such marriages would be regarded by our courts as immoral iure gentium (i), the matri- monial law of England is wholly inapplicable to poly- gamy, and the attempt to apply it would lead to mani- fest absurdities (k). Practically these difficulties can hardly arise except as to rights derived from family relations. One can hardly imagine them in the proper region of contracts. Again, judicial observations are to be found which go to the further extent of saying that no court will enforce anything contrary to the particular views of justice, morality or policy whereon its own municipal juris- prudence is founded. And this doctrine is supported by the general acceptance of text-writers, which in this department of law must needs count for more than in any other, owing to its comparative poverty in decisive authorities. But a test question is to be found in the treatment of rights arising out of slavery by the courts of a free country : and for England at least the decision of the Exchequer Chamber in Santos v. Illidge (/) has given such an answer to it as makes the prevailing opinion of the books untenable. Slavery is as re- pugnant to the principles of English law as anything can well be which has been so far admitted by any other civilized system that any serious question of the conflict of laws could arise upon it. There is no doubt that neither the status of slavery nor any personal right of the master or duty of the slave incident thereto can exist in England (m), or within the protection of ((') That is, among Western nations. The recognition of Himlu and Mahometan law in British India (where moreover polygamy is in fact exceptional) stands on wholly different ground. (A-) Ni/dev. II)/dc S' Wdodw/nixre (ISfifi) L. K. ] ■ \\ k T). 13(\ 35 L. J. Mat. 57. (0 (18G0) 8 C. B. K S. 861, 29 L. J. C. P. .348. revg. s. c. in court below, 6 C. B.N. S. 841. 28 L. J. C. P. 317. (//() Somnu'i'sett's case (1771-2 20St. T. 1. CONFLICT Ol' LAWS. -109 English law (n). But it long remained uncertain how an English court would deal with a contract concerning slaves which was lawful in the country where it was made and to be performed. Passing over earlier and indecisive authorities (o), Ave find Lord Mansfield assuming that a contract for the sale of a slave may be good here (p). On the other hand, Best J. thought no action " founded upon a right arising out of slavery " would be maintainable in the municipal courts of this country (5). In Santos v. IlUdge{qq) a Brazilian sued an English firm trading in Brazil for the non-delivery of slaves under a contract for the sale of them in that country, which was valid by Brazilian law. The only question discussed was whether the sale was or was not under the circumstances made illegal by the opera- tion of the statutes against slave trading : and in the result the majority of the Exchequer Chamber held that it was not. It was not even contended that at common law the Court must regard a contract for the sale of slaves as so repugnant to English principles of justice that, wherever .made, it could not be enforced in England. Nor can it be suggested that the point was overlooked, for it appears to have been marked for argument. But in Kaufman v. Gerson (r) the Court of Appeal refused to enforce an agreement for compound- ing a criminal offence made in France between parties domiciled there, and valid by the law of France. The Court went on the ground that the agreement was (/') It:, oil board an English To same effect Story, ^ 25[), in spite sliip of war on tlic high seas or in of American autlioritj' })eing ad- hostile occupation of territorial verse. waters, Fm-hex v. (\irliranc (1.S24) (<■/(/) See note (/) on p. 408. 2 B. & i). 448, 2(; K. K, 402. (r) [1904] 1 K. V,. :>'.){, in L. J. (") They are collected in Har- K. 1!. ;520, and see Dicey, Conflict grave's argument in Somvirrarft'x of Laws, 727. "Are we to believe case. that compounding an offence is (7^) 20 St. Tr. 7y. more obviously contrary to univer- (. B96, C. A. and Cozens-Hanly L.J.) on the See the dissenting judgment of ground that there the action was Fletcher Moulton L. J. and Mr. not on a security but on the Dicey's notes in L. Q. 11. xxiii. original consideration ; and this 2-lii, and Conflict of Laws 582, 54S. ajipcars to be accepted in Saxitj v. lluhlmon V. Bland was not a simi- Fidton (next note), lar case, for there the money lost («) Saxhy v. Fulton [1909] 2 was distinctly stated not to be K. B. 208, 78 L. J. K, B. 781 recoverable in France. On the (Vaughan Williams, Buckle}' and other hand the only report of King Kennedy L.J.L). V. Kemj) (1SG3, coram Willcs J., (h) (1857) 8 D. M. G. 731,11-1 relied on by Fletcher Moulton Pi. K. HOG ; per Knight Biuce L..1. L. J.) 8 L. T. 255, is so meagre as 8 D. M. O. at p. 740 ; per Turner to be hardly intelligible. Quarrier L..J. at p. 743, 114 E. R. pp. 312, Y. Colston is distinguished by the 314. CONFLICT OF LAWS. 413 with the laws and policy of the country where it is sought to he enforced, and he appears to have thought the provision as to the custody of the children was one that an English court must absolutely refuse to enforce, whether to be performed in England or not, and whether by a domiciled British subject or not. But this was not required by the decision and is not confirmed by any later authority. In Grell v. Levy (c) an agreement was made in France between an English attorney and a French' subject that the attorney should recover a debt for the client in England and keep half of it. Our rules against champerty are not known to the French law : but here the agreement was to be performed in England by an officer of an English court {cl). Perhaps, indeed, the English law governing the relations and mutual rights of solicitor and client may be regarded as a law of English procedure ; and in that character, of course, private arrangements cannot acquire any greater power to vary it by being made abroad (e). As for agreements contrary to the public interests As to of the state in whose courts they are sued upon, it is a^ainsr"**^ obvious that the courts must refuse to enforce them public without considering any foreign law. The like rule of state applies to the class of agreements in aid of hostilities against a friendly state of which we have already spoken. In practice, however, an agreement of this kind is more likely than hot to be unlawful everywhere. Thus an agreement made in New York to raise a loan for insurgents in China would not be lawful in England ; but it would also not be lawful in New York, and for the same reason. It might possibly happen, on the other hand, that the United States should recognize such OO (l.S(;i) It; C. 15. N. S. ?:<. (r-) Seu iiKlgincut uf VVilliiuu^ J (r/) Per Erie C.J. at p. 7'.>. 414 UNLAWFUL AGREEMENTS. Conflict of laws in time. {}. Where pejformauce becomes unlawful, contract dissolved. insurgents while they were not recognized by England ; and in that case the courts of New York would regard the contract as lawful, but ours would not. It should be borne in mind that the foregoing discus- sion has nothing to do with the formal validity of con- tracts, which is governed by other rules (expressed in a general way by the maxim locus regit actum) ; and also that all rules as to the conflict of laws depend on practical assumptions as to the conduct to be expected at the hands of civilized legislatures and tribunals. It is in theory perfectly competent to the sovereign power in any particular state to impose any restrictions, how- ever capricious and absurd, on the action of its own municipal courts ; and even to municipal courts, in the absence of any paramount directions, to pay as much or as little regard as they please to any foreign opinion or authority. 9. Where the performance of a contract lawful in its inception is made unlawful by any subsequent event, the contract is thereby dissolved (/). Explanation. — ^ Where the performance is subse- quently forbidden by a foreign law, it is deemed to have become not unlawful but impossible {g). This rule does not call for any discussion. It is admitted as certain in Atkinson v. Ritchie (/), and is sutftciently illustrated by the modern case of Esposito V. Bowden (/), of which some account has already been given. It applies to negative as well as to affirmative promises. " It would be absurd to suppose that an action should lie against parties for doing that which ( /■) AtkiHxoH V. 7^Yr///V(lS09) 10 East, 530, 10 R. R. 372; EspimtoY. Bowden (1857) -t E. & B. !)6H. 24 L. J. Q. B. 210 ; in Ex. Ch. 7 E. ^: B. 763. 27 L. .1. Q. P.. 17. yy. 333. 331. xiipra. {<)) Barher v. Hod(imn (18U) 3 M. ^V: S. 267, 15 R. R. 485 ; Jticob.i V. Credit Lyonnais (1884) 12 Q. B. Div. 589. 53 L. J. Q. B. l.-.(). CONFLICT OF LAWS IN TIME. 415 the legislature has said they shall be obliged to do " (k). To the qualification we shall have to return in the following chapter on Impossibility. 10. Otherwise the validity of a contract is generally lo. other- determined by the law as it existed at the date of the aVdateof contract. agreement This is a wider rule than those we have already stated, as it applies to the form as well as to the sub- stance of the contract, and not only to the question of legality but to the incidents of the contract gener- ally (I). It is needless to seek authority to show that an originally lawful contract cannot become in itself unlawful by a subsequent change in the law. It does r^„. when not seem certain, however, that the converse proposi- agreement ^ ^ made in tion would always hold good. Perhaps the parties ignorance of might be entitled to the benefit of a subsequent change amilfe^-! ^^"^ ' in the law if their actual intention in making the con- formance . . L ^ p ^ afterwards tract was not unlawful. becomes The question may be put as follows on an imaginary lawful, case, which the facts of IVaugh v. Morris (m) show to be quite within the bounds of possibility. A. and B. make an agreement which by reason of a state of things not known to them at the time is not lawful. That state of things ceases to exist before it comes to the knowledge of the parties, and before the agreement is performed, but A. refuses to perform the agreement on the ground that it was unlawful when made. Is this agreement a contract on which B. can sue A. ? Justice and reason seem to call for an affirmative answer, and the analogy of JVaugh v. Morris (m), where the Court looked to the actual knowledge and intention of the parties at the time of the contract, is also in its favour. (70 Wi/n/i V. Shropshire Union (J) Sav. Syst. § 392 (8. 435). liys.S,- Canal Co. (1850) 5 Ex. 420, (/«) (1878) L. K. 8 Q. B. 202, 42 440. L. J. Q. B. 57 ; supra, p. 395. 416 UNLA^^■FUL AGREEMENTS. Contract cou- ditioual on jierformance becoming lawful. '^ General results as to knowledge of parties. Apart from this, a contract which provides for some- thing known to the parties to be not lawful at the time being done in the event, and only in the event, of its being made lawful, is free from objection and valid as a conditional contract (o) : unless, indeed, the thing were of such a kind that its becoming lawful could not be properly or seriously contemplated (j)). It may be useful to collect here in a separate form the results of the foregoing discussion, so far as they show in what circumstances and to what extent the knowledge of the parties is material on the question of illegality. d. If the immediate object of agreement be unlawful, the knowledge of either or both parties is imma- terial (q) : except, perhaps, where the agreement is made in good faith and in ignorance of a state of things making it unlawful : and in this case it is submitted for the reasons above given that the agreement becomes valid if that state of things ceases to exist in time for the agreement to be lawfully performed according to the original intention. /3. A. makes an agreement with B. the execution of which would involve an unlawful act on B.'s part (e.g., a breach of B.'s contract with C). If A. does not know this, there is generally a good i (ii) Tiiijlor V. Chir/icxfer S' Mid- Jn/rst By. Co. (ISfi?) L. R. \ H. L. (328, 610, 645, 39 L. J. Ex. 217; cp. Manor of Xorwicli v. NorfoJli By. Co" (18'55) 4 E. & B. 397, 24 L. J. Q. B. 105. 99 E. E. 518,.v«y;w. p. 290. (j>) Cp. D. 18. 1. lie cont, empt. 34 § 2 (Paulus). Liberum homi- nem scieutes emere non possumus ; sed nee talis emptio aut stipulatio admittenda est : cum semis -sc im- Tlie point that the parties could possibilem. not have })een in earnest was not (7^) In '/'/lornfjordio v. Whit acre made. 422 IMPOSSIBLE AGREEMENTS. Iractcd lo do something which in the present state of scientific knowledge may he utterly impossible, and yet he may have so contracted as to warrant the possibility of its performance by means of some new discovery, or be liable in damages for the non-per- formance, and cannot set up by way of defence that the thing was impossible." Indeed many things have become possible which were long supposed to be impossible ; and this not only in the well-known instances of mechanical invention and the applica- tions of scientific discovery to the arts of life, but in the regions of pure science and mathematics. Formerly it seemed impossible that we should ever have direct evidence of the physical constitution of the sun and fixed stars : we now have much. In the earlier editions of this book the case of an agreement to make a practicable flying machine was propounded with some diffidence. Now several persons are ready, and publicly offer, to sell and warrant such machines. In testing the seriousness and validity of an agree- ment by the presumed intention of the parties, we must remember that they are also presumed to have the ordinary knowledge of reasonable men. Thus the Indian Contract Act (s. 56, illust. o), says that an agreement to discover treasure by magic is void: but it is notorious that in some regions of British India the parties might really believe in the efficacy of magic for the purpose. If a jiromisee believes in the possibility of the i)erformance nominally promised, and the promisor does not, the case will generally l)e I'educed to one of fraud. '• I'racticai If a man may bind himself to do something which is su' Ht " ; e ^^^y ^^^ known to be impossible, much more can he extreme cost bind himself to do something which is known to be not mateiiai. possible, howevcr expensive and troublesome. For some purposes practical impossibility may be treated REPUGNANCY. 423 as equivalent to al)solute impossibility: a ship is said to be totally lost when it is in this sense practically impossible, though not physically impossible, to repair her (I). But this does not apply to the matter now in hand (???). The other conceivable cases of absolute impossibility may be briefly dismissed. Inconsistent or, in the usual technical phrase, repugnant promises contained in the same instrument cannot of course be enforced : this however is rather a case of failure of that cer- tainty which, as we saw in the first chapter, is one of the primary conditions for the formation of a conti-act. There may also be a repugnancy as to date, as if a man promises to do a thing on a day already past. Practically, however, such a repug- nancy can hardly be more than apparent. Either it is mere clerical or verbal error, in which case the Court may correct it by the context (»), or it arises from the terms of the agreement being fixed before and with reference to a certain time but not reduced into writing and executed as a written contract till afterwards. In such a case it must be determined on the circumstances and construction of the contract whether the stipulation as to time is to be treated as having ceased to be part of the contract (in other words, as having been left in the statement of the contract by a common mistake), or as still capable of giving an independent right of action. At all events it cannot be treated as a condition precedent Logical impossibility. Repugnant promises : repugnancy between date and contents of instrument. In most cases only apparent, and does not avoid the contract. (0 3/0.^.1 V. Siiiifit. (1850) !) c. r... 0-1, 103, 10 L. J. C. P. 225, 82 11. P 307. (w) See per Mellor J., L. R. 6 Q. B. 123, per Hanncn J. ib. 127. These dicta seem to go even beyond what is said in the text, but are probably limited in their true effect to what is here called impossibility in fact. (w.) See Fift'h v. Jo/irx (1S55) 5 E. & P. 238, 21 L. J. Q. P. 203, 103 P. P. 455, where a note payable two months afterdate, and made in January, 1855, was dated by mis- take 1854, Ijut across it was written " due the 4th Marcli, 1855." Tlic Court held that this sufhciently corrected the mistake, and miglit be taken as a direction to icad 5 for 4. 424 IMPOSSIBLE AGREEMENTS. Promisor not excused by relatirc impossibility, i.e. not having the means of performance. One may ■warrant acts of tliird persons, or natural evcat in itself possible. SO as to prevent the rest of the contract from l)eing enforced (o). It follows a fortiori from the principle laid down by Willes J. (p. 421, above) that difficulty, incon- venience, or impracticability arising out of circum stances merely relative to the promisor will not excuse him. " Impossibility may consist either in the nature of the action in itself, or in the particular circum- stances of the promisor. It is only the first or objective kind of impossibility that is recognized as such by law. The second, or subjective kind, cannot be relied on by the promisor for any purpose, and does not release him from the ordinary consequences of a wilful non-performance of his contract. On this last point the most obvious example is that of the debtor who owes a sum certain, but has neither money nor credit. There is plenty of money in the world, and it is a matter wholly personal to the debtor if he cannot get the money he has bound him- self to pay " (p). Therefore a man is not excused who chooses to make himself answerable for the acts or conduct of third persons, though beyond his con- trol ; or even, it seems, for a contingent event in itself possible and ordinary but beyond the control of man. It has been said that a covenant that it shall rain to-morrow might be good {q), and that " if a man is bound to another in 20Z. on condition quod pliivia debet plnere eras, there si pluvia non pluit eras the obligor shall forfeit the bond, though thei'o was no default on his part, for he knew not that it would not rain. In like manner if a man is bound («) ILill V. razrnore (1804) i East, 477, 7 P. R. Oil, where the Court agreed to this extent, but differed on the other question. (;0 Savigny. Obi. 1. 384. (c/) V>\' Maule .1. Canluini v. Ban-ij (18.3.5) 1.3 ('. B. at p. Gl'.*, 24 L. .J. C. P. at p. 106, 101 E. R. at ]). .318. Per Cur. Baihi v. Be Cre.^ptgny (1869) L. R. 4 Q. B. at p. 18.3. But qu. would not such a contract be a mere wager in almost any conceivable circum- stances ? IMPOSSIBILITY IN LAW. 425 to me on condition that the Pope shall be here at Westminster to-morrow, then if the Pope comes not there is no default on the defendant's part, and yet he has forfeited the obligation " (r). " Generally if a condition is to be performed by a stranger and ho refuses, the bond is forfeit, for the obligor took upon himself that the stranger should do it " (s). " If the condition be that the oliligor shall ride with I. 8. to Dover such a day, and I. S. does not go thither that day ; in this case it seems the condition is In-oken, and that he must procure I. S, to go thither and ride with him at his peril " (t). Where the con- dition of a bond was to give such a release as l)y the Court should be thought meet, it was held to be the obligor's duty to procure the judge to devise and direct it (u). If a lessee agrees absolutely to assign his lease, the lease containing a covenant not to assign without licence, the contract is binding and he must procure the lessor's consent (x). But on the sale of shares in a company, on the Stock Exchange at all events, the vendor is not bound to ])i-ocure the directors' assent, though it may he required to complete the transfer (//), and it seems at least doubtful whether he is so bound in any case (z). Where an agreement is impossible by law there is Agreement no doubt that it is void: for example, a promise javvirvokl!'^ l)y a servant to discharge a debt due to his master is void, and therefore no consideration for a reciprocal (^■) Per Brian C. J. ]\Iich. 22 (.r) JJo>/tl v. ('n.yx' (ISi:}) 5 Ed. IV. 2G. The whole discussidn Taunt. 24'.), 14 Li. 11. 74 4 ; ep. there is curious, and well worth Canlimif v. Burnj (IS").")) 1.5 C. B. jierusal in the book at large. Note i'DT, 21 L. .1. C. P. 100, 100 II. II. I'rian's change of opinion as to 'A)'.\. the plea in the case at bar, ad pn. (y) S/r/n/ v. 7i'//.w// (18.")'.)) Q. P>. (.s) Ro. Ab. ]. 4.52, L. pi. 0. ' & Kx. Vh. 'l E. & E. 188, 91(1, 28 (0 Shepp. Touchst. .392. L. J. Q. P.. 279, 29 L. J. Q. P.. 11.5. («) La in 1/ s ca.sr, o Co. llii[>.2',i I). (.-) Lindley on Companies, 491. 426 IMPOSSIBLE AC4REEMENTS. When per- formance becomes impossible by law pnmiisor is excuscil. Baily r. De Crespigny. promise (a) ; though, by the rule last stated, a promise to procure his master to discharge it would (in the absence of any fraudulent intention against the master) be good and binding. And when the performance of a contract becomes wholly or in part impossible by law, the contract is to that extent dis- charged. A good instance of this is Baili/ v. De Crespir/n)/ (b). There a lessor covenanted with the lessee that neither he nor his heirs nor his assigns would allow any building (with certain small excep- tions) on a piece of land of the lessor's fronting the demised premises. Afterwards a railway company l^urcliased this piece of land mider the compulsory powers of an Act of Parliament, and built a station upon it. The lessee sued the lessor upon his cove- nant ; but the Court held that he was discharged by the subsequent Act of Parliament, which put it out of his power to perform it. And this was agreeable to the true intention, for the railway company coming in under compulsory powers, "whom he [the cove- nantoi'] could not bind by any stipulation, as he could an assignee chosen by himself," was " a new kind of assign, such as was not in the contemplation of the parties when the contract was entered into." Nor was it material that the company was only empowered by Parliament, not required, to build a station at that particular place (c). As the American phrase concisely puts it, a covenant of warranty does not extend to the State in the exercise of its eminent domain (d). If a subsequent Act of Parliament mak- ing the performance of a contract impossible were a pi'ivate Act obtained ])y the contracting party himself, 00 Ilarve;/ v. Gihhons OGTi) 2 Lev. 161. It is called an illcgul consideration, but such verbal con- fusions are constant in the early reports. (J) (1869) L. R. i Q. B. 180, 38 L. J. Q. B. 98. (O (1869) L. R. 4 Q. B. 186. 0/) See Oxhorn v. Alcholson (1871) 13 Wall, at p. 657. IMPOSSIBILITY IN LAW. 427 he might perhaps remain bound by his contract as if he had made the performance impossible by his own act (of which afterwards) : but where the Act * is a public one, its effect in discharging the contract cannot be altered by showing that it was passed at the instance of the party originally bound (c). The case of a man agi-eeing to l)uy that which is Buying; 111- ■ T xj j-i one's own ali-eady his own is a peculiar one. Here the per- property, formance is impossible in law ; and the agreement may be regarded as void not only for impossibility but for want of consideration. But this class of cases is by its nature strictly limited. No man will knowingly pay for what belongs to him already. If on the other hand the parties are in doul)t or at variance as to what their rights are, any settlement which they come to in good faith, whatever its form, has the character of a compromise. There remain only the cases in which the parties act under a common mistake as to their respective rights. The presence of the mistaken assumption is the central point on which the whole transaction turns, and is decisive in fixing its true nature. Hence it is the most conspicuous element in practice, and these cases arc treated as belonging not to the head of Impos- sibility but to that of Mistake. Under that head we recur to them in the next chapter. It is hardly needful to add that a contract for the sale of some- thing which the seller has not at the time is perfectly good if the thing is capable of private ownership. The effect of the contract is that he binds hiuiself to acquii-o a lawful tiilc to it l)y the time appointed for completing the contract. The general principles al)0ve considered are well Exposition brought together in the Digest, in a passage from p,.i'^ic,"lips in (c) Brown v. jVai/or of Lowlon (!. V. 225, in V.x. Cli. 115 C. B. N. S. J^'»>i'i'i I'^w. (1861) 9 C. B. N. S. 72(;, :50 L. J. 828, :{! L. J. C. 1'. 280. 428 IMPOSSIBLE AGREEMENTS. a work of Venuleius (/) on Stipulations. " Illud in- spiciendum est, an qui centum dari promisit conf estim teneatur, an vero cesset obligatio donee pecuniam con- ficere (g) possit. Quid ergo si neque domi habet neque inveniat creditorem ? Sed haec recedunt ab impedi- mento naturali et respiciunt ad facultatem dandi (h). . . Et generaliter causa difficultatis ad incom- modum promissoris, non ad impedimentum stipulatoris pertinet [i.e. inconvenience short of impossibility is no answer]. . . . Si ab eo stipulatus gim, qui efficere non possit, cum alii possibile sit, iure factam obligationem Sabinus scribit." He goes on to say that a legal impossibility, e.g. the sale of a public l)uilding, is equivalent to a natural impossibility. . . " Xec ad rem pei-tinet quod ius mutari potest et id quod nunc impossibile est postea possibile fieri ; non enim secundum futuri temporis ius sed secundum praesentis aestimari debet stipulatio " (i) : (as if it should be contended that a covenant to create a new manor is not a covenant for a legal impossibility, because peradventure the statute of Quia eviptores may be repealed.) All this is in exact accordance with English law. 2. Per- formance impossible in fact : no excuse where contract is aVjsolute, 2. We now come to the cases where the perform- ance of an agreement is not impossible in its own nature, but impossible in fact by reason of the par- ticular circumstances. It is a rule admitted by all the authorities, and supported by positive decisions, that impossibility of this kind is in itself no excuse for the failure to perform an unconditional (k) con- (/) See Roby's Introduction, p. clxxxiii. (/7) Mommsen's correction for conjerre, which would mean "' pay " or " contribute," not " procure." (li) For the explanation of a not very clear illustration which follows here, and is omitted in our text, see Sav. Obi. 1. 38."). (/■) D. 2.") 1. de V. o. 137. § § 4-(). (/.■) It may be shown, and not necessarih' by the presence of ex- press saving words, that the fact or event was outside the risks PRACTICAL IMPOSSIBILITY. 429 tract, whether it exists at the date of the contract, or arises from events which happen afterwards (I). Thus an absokite contract to load a full cargo of guano at a certain island was not discharged by there not being enough guano there to make a cargo (m) : and where a charter-party required a ship to be loaded with usual despatch, it was held to be no answer to an action for delay in loading that a frost had stopped the navigation of the canal by which the cargo would have been brought to the ship in the ordinary course (n). Still less will unexpected A fortiori difficulty or inconvenience short of impossibility serve iucom-enient as an excuse. Where insured premises were damaged orimprac- by fire and the insurance company, having an option to pay in money or reinstate the building, elected to reinstate, but before they had done so the whole was pulled down by the authority of the Commissioners of Sewers as being in a dangerous condition ; it was held that the company were bound by their election, and the performance of the contract as they had elected to perform it was not excused (o). So again if a man contracts to do work according to orders or specifications given or to be given by the other contracting party, he is bound by his contract, imdeiiaken by the promisor : in («) Kearoii v. Pearson (ISCl) 7 other words that the contract was H. & N. 380, 31 L. J. Ex. 1. So not unconditional. where a given number of days is (Z) Atkinaon v. Ritchie (1809) allowed to tlie charterer for un- 10 East, 530, 10 11. li. 872. loading, he is held to take the risk (m) Hills V. Sughrue (1846) 15 of any ordinary vicissitudes which M. & W. 253, 71 li R. (551. This may cause delay: Thiis v. Jiijers case turned in part on the unusual (1876) 1 Q. B. D. 244, 4.") L. J. incident of the charter-party pro- Q. B. 511. viding that the cargo was to be (<*) Brown v. Itoyal Insurance found by the owner. "He is to Co. (1859) 1 E. & E. 853, 28 *L. J. rt'ceive freight at a high rate, and Q. B. 275, diss. Erie J. wlio thought it looks very much like a contract such a reinstatement as was con- for supplying guano at that price : " templated by the contract (not Parke B. at p. 261. Whether it being an entire rebuilding) had can be reconciled with later aut lid- become impossible by the act of rities or not (see Ausdii, 347) it is the law. too peculiar to be a safe guide. 430 IMPOSSIBLE AGREEMENTS. although it may turn out not to be practicable to do the work in the time or manner prescribed. In Jones V. St. Jo]i)i\s College, Oxford (p) the plaintiffs contracted to erect certain farm buildings according to plans and specifications furnished to them, to- gether with any alterations or additions within specific limits which the defendants might prescribe, and subject to penalties if the work were not finished within a certain time. And they expressly agreed that alterations and additions were to be completed on the same conditions and in the same time as the works under the original contract, unless an exten- sion of time were specially allowed. It was held that the plaintiffs, having contracted in such terms, could not avoid the penalties for non-completion by showing that the delay arose from alterations being oi-dered by the defendants which were so mixed up with the original work that it became impossible to comj)lete the whole within the specified time (q). In Thorn v. Mayor of London (■/•) a contractor undertook to execute works according to specifications prepared by the engineer of the corporation. It turned out that an important part of the works could not be executed in the manner therein described, and after fruitless attempts in which the plaintiff incurred much expense, that part had to be executed in a different way. It was held that no Avarranty could be implied on the part of the corporation that the plans were such as to make the work in fact reasonably practic- able, and that the plaintiff could not recover as on such a warranty the value of the work that had been (/;) (1870) L. R. G Q. B. 115, 124, inferred from ambiguous terms: 40 L. J. Q. B. 80. Dudd v. Churton [1897] 1 Q. B. (y) This case was argued on de- 563, G6 L. J. Q. B. 477, C. A. murrer, so that the agreement was (r) (187(>) L. R. 9 Ex. 163, in admitted as i)leaded. Such an Ex. Ch. lO Ex. 112, affd. in H. L. agreement will not be implied, or 1 App. C'a. 12u, 45 L. J. Ex. 487. PRACTICAL IMPOSSIBILITY. 431 thrown away. The judgments in the House of Lords leave it an open question whether, assuming the extra work thus caused not to have been extra worli of the kind contemplated by the contract itself and to be paid for under it, the plaintiff might not have recovered for it as on a qucmtuvi meruit. In short, (i it is admitted law that generally where there is a positive contract to do a thing not in itself unlawful, the contractor must perform it, or pay damages for not doing it, although in consequence of unforeseen accidents the performance of his contract has become unexpectedly burdensome or even impossible (s). Where the performance of a contract becomes im- Prohibition practicable by reason of its being forbidden by a faw^jnf'* foreign law, it is deemed to have become impossible possibility not in law but in fact. In Barker v. Hodgson (t) intercourse with the port to which a ship was char- tered was prohibited on account of an epidemic pre- vailing there, so that the freighter was prevented from furnishing a cargo ; but it was held that this did not dissolve his obligation. So if the goods are confiscated at a foreign port that is no answer to an action against the shipowner for not delivering them (u). But where the effect of a foreign law is to prevent both parties from performing their respective parts of the contract, both are excused (x). (.s-) Tfnjlor v. Caldwell (1803) 3 (52 L. J. Q. B. 98. B. & S. 82ti, 833, 32 L. J. Q. B. 164, (J) (18U) 3 M. & S. 207, 15 1G6. This rule does not extend, 11. B. 485, cp. Jacoha v. Criilif however, beyond express contracts. Lijonnals (1884) 12 Q. B. Div. 589, An undertalving to be answerable 53 L. J. Q. B. 15(j, where the ex- for delay caused by ■via malor, or portation of the cargo contracted othercausesbej'ond the contractors for was forbidden by local law. control and ajiart from any de- (w) SppnccY. Cho(lwich(\S\l')\0 fault on his part, cannot be made Q. l'>. 517, IG L. J. Q. B. 313, 71 jtart of an implied contract: Ford B. B. 417. V. rW<'«O(»/7/((1870)(Ex. Ch.)L. B. (,/•) Ct/n/ii/x/Juim v, JJu/ui (1878) 5 Q. B. 544, 39 L. J. Q. ]5. 188 ; 3 C. P. Div. 443. //ick V. JtdijiiKiiid [1893] A. C. 22, 432 IMPOSSIBLE AGREEMENTS. Obligation of tenaut to pay rent though demised premises accidentall}"^ destroyed. No impos- sibihtv here Certain cases, of which Paradine v. Jane (y) is the leading one, are often referred to upon this head. The effect of them is that the accidental destruction of a leasehold building, or the tenant's occupation being otherwise interrupted by inevitable accident, does not determine or suspend the obligation to pay rent (z). In these cases, however, the performance of the contract does not really become impossible. There is obviously nothing impossible in the relation of landlord and tenant continuing with its regular incidents. We must be careful not to lose sight of the two distinct characters of a lease as a contract (or assemblage of contracts) and as a conveyance. There is a common misfoi-tune depriving both parties to some extent of the benefit of their respective interests in the property ; not of the benefit of the contract, for so far as it is a matter of contract, neither party is in a legal sense disabled from per- forming any material part of it. The expense of getting housed elsewhere, or the loss of profits from a business carried on upon the premises, may render it difficult or even impracticable for the tenant to go on paying rent. But it does not render the payment of his rent impossible in any other sense than it renders the payment of any other debt to any other creditor impossible (a). It is a personal and relative "causa difficultatis ; " which, as we have seen, is irrelevant in a legal point of view. The lessee's special covenants, if such there be, to paint the walls at stated times or the like, do become impossible of performance by the destruction of their subject- matter, and to that extent, no doubt, are discharged (y) (16i8) Aleyn 2G. (r) Leeds v. C/tet-tham (1827) 1 Sim. 14G, 27 II. R. 181 ; Lotf't v. JJenuis (185y) 1 E. & E. 474, 28 L. J. Q. B. 168, 117 R. R. 292. ((/) See per Lord Blackburn, 2 App. Ca. 770. ditioDal. SUPERVENING ACCIDENT. 433 or suspended as being within the rule in Taylor v. Caldwell, which we shall immediately consider. Only to this limited extent is there any precise resemblance to the wider class of cases where the performance of a contract becomes in fact impossible. The true but a similar analogy is in the nature of the question which the whether 'the ' rule of law has to decide: namely, whether the con-'P'^^^^Ti^'' '' ' IS really tract is in substance and effect as well as in terms uucon- unconditional and without any implied exception of inevitable accident. We shall see that this is always the real question. The answer being here determined by Paradme v. Jane (b), it was held in the later cases (c) (about which difficulties are sometimes felt, but it is submitted without solid reason) that it is not affected by the landlord having protected himself by an insurance, which is a purely collateral con- tract of indemnity. There might indeed be a further collateral agreement between the landlord and tenant that the landlord should apply the insurance moneys to rebuilding the premises. Such an agreement would be good without any new consideration on the tenant's part beyond his acceptance of the lease, and pro- bably without being put into writing (d). On the other hand it is often a term of the lease that the tenant shall keep the premises insured and that in case of fire the insurance moneys shall be applied in reinstatement. There, if the landlord has insured separately without the knowledge of the tenant, so that the damage is apportioned between the two policies, and the amount received by the tenant is (/;) Aleyn 26. Adeane (1873) L. R. 8 Ch. 7:)6, 42 ((-■) Leeds v. Cheetham (1827) 1 L. J. Ch. 885 ; Morqan v. Gvlffith Sim. 146, 27 K. R. 181 ; Lop v. (1871) L. R. 6 Ex. 7U, 40 L. J. Kx. Bciiius (1859) 1 E. & E. 474, 28 46; Aiuicll v. Duke. (1875) L. R. L. J. Q. B. 168, 117 R. R. 292. 10 Q. B. 174, 44 L. J. Q. B. 78 ; {(V) Parol collateral ajjreements I)e Jjixxnlle v. Gnildfovd [1901] 2 have been held good in Ur.s/ilnc v. K. P.. 215, 70 L. J. K. P>. 5:iS, C. A. P. F F 43i IMPOSSIBLE AGREEMENTS. diminished, the tenant is entitled to the benefit of the other policy also (e). Confm the The rule or presumption might have been the other way, as it is by the civil law, where it is an incident of the contract to pay rent that it is suspended by inevitable accident destroying or making useless the thing demised. The particular event on which Paradine v. Jane was decided, eviction by alien enemies (/), is expressly dealt with in this manner. The law of Scotland follows the civil law (g), and the Irish Landlord and Tenant Act of 1860 gives the tenant the option of surrendering on a dwelling- house " or other building constituting the substantial matter of the demise " being by fire or other inevit- able accident destroyed or made incapable of beneficial occupation (h). Either way the rule is subject to any special agreement of the parties ; the only ques- tion of principle is which, in the absence of such agreement, is the better distribution of the hardship that must to some extent fall upon both. It is hard for a tenant, according to the English rule, to pay an occupation rent for a burnt out plot of ground. It is hard for a landlord, according to the Eoman and Scottish rule, to lose the rent as well as (it may be) a material part of the value of the rever- sion. Either party may be insured ; but that, as wo have said, is not of itself relevant as between them. Exceptions So far the general rule. The nature of the excep- in certain (e) Betjnard v. Arnold (1875) veie non fuishet, tamcn non tlebcre L. R. 10 Ch. 386. mercedem ; sed si causa timoris (/) Si incursus hostium fiat, D. iusta non fuisset, nihilominus de- 19. 2. locati cunducti, 15 § 2 ; or here, B. eod. tit. 27 ^ 1. even reasonable fear of it : Si quis (//) Per Lord Campbell, Li\ft v. timoris causa emigrasset . . . re- Dennis (1859) note (c) last page ; spondit, si causa fuisset cur peri- Bell, Principles, § 1208. culum tinieret. quamvis periculum (/') 23 & 24 Vict. c. 154, s. 40. ACCIDENTS NOT CONTEMPLATED BY CONTRACT. 435 tions is thus set forth by the judgment of the Court cases of in Baily v. Be Crespigrnj : — subsequent impossibility. " There can be no doubt that a man may by an absolute contract bind himself to perform things which subsequently become impossible or to pay damages for the non-performance, and this construction is to be put upon an unqualified undertaking, where the event which causes the impossibility was or might have been anticipated and guarded against in the contract, or where the impossibility arises from the act or default of the promisor. " But where the event is of such a character that it cannot reasonably be supposed to have been in the contemplation of the contracting parties when the contract was made, they will not be held bound by general words which, though large enough to include, were not used with refer- ence to the possibility of the particular contingency which afterwards happens. It is on this principle that the act of God is in some cases said to excuse the breach of a contract. This is in fact an inaccurate expres- sion, because, where it is an answer to a complaint of an alleged breach of contract that the thing done or left undone was so by the act of Crod, what is meant is that it was not within the contract " (/). This (as well as the following context, which is too long to quote) well shows the modern tendency to reduce all the rules on this subject to rules of construction. By the modern understanding of the law we are not bound to seek for a general definition of "the act of God" or vis niaior (k), but only to ascertain what kind of events were within the con- templation of the parties, incltiding in the term event an existing but unascertained state of facts. This is yet more apparent if one attempts to frame any definition of the term "act of God." It is said to be generally confined, to events which cannot be foreseen, or which if they can be foreseen cannot be guarded against (I). It does not include every inevit- (/■) (1869) L. R. 4 Q. B.at p. 185. (/i) Both these terms are classi- cal : " Vis maior, quam Graeci 0eov I3'uw appelhiiit." Gains in I), lit. 2. locati 2') § (■). I'i.s vu/ior is sometimes the only appropriate term, as where the idea is applied to acts of a human sovereign power, see Mittclholzev v. Fiilhnioii (1844) (! Q. B. 1)8'.», I0I8. (/) Cave J. in R.\. Comiulxx'innevs of Sciocr.s for L'.ise.c (1885) 14 Q. B. D. 561, 674. F F 2 Events not within the contempla- tion of the contract. 436 IMPOSSIBLE AGREEMENTS. able accident; contrary winds, for example, are not within the meaning of the term in a charter-party. Nor is the reason far to seek ; the risk of contrary winds, tliough inevitable, is one of the ordinary risks which the parties must be understood to have before them and to take upon them in making such a con- tract: therefore it is said that the event must be not merely accidental, but overwhelming (m). But on the other hand the term is not confined to unusual events: death, for example, is an "act of God" as regards contracts of personal service, because in the particular case it is not calculable. Yet the fact that this very event is not only certain to happen, l)ut on a sufficiently large average is calculable, and therefore in one sense can be guarded against, is the foundation of the whole system of life annuities and • life insurance (w). Again, death is inevitable sooner or later, but may be largely prevented as to particular causes and occasions. The effects of tempest or of earthquake may be really inevitable by any precaution whatever. But fire is not inevitable in that sense. Precautions may be taken both against its breaking out and for extinguishing it when it does break out. We cannot arrive, then, at any more distinct concep- tion than this : An event which, as between the parties and for the purpose of the matter in hand, cannot be definitely foreseen or controlled. In other words, we are thrown back upon the nature and construction of the particular contract (o). (-»/■) Per Martin B. Oaklei/ t. to a duty imposed not specially by Porhmouth 4- Ii>ide Stmm Packet contract but by the general la«-^ r., nSo6^ 11 Ex (;i8, 22 L.J. Ex. see Nichols v. Marslami (18. 1. de v. o. 2:5, :5:i. Cp. general intention prevailed over also D. 4G. ;$. de solut. 107. Ver- I'lfni. boruin ol)ligatio ant natnraliter re- (y) That is, understood in fact solvitiir ant civiliter ; iial iiialilci', 438 IxMPOSSIBLE AGREEMENTS. The cases of rights or duties created by a contract of a strictly personal nature which, though the con- tract is not expressly qualified, are by English law not transmissil)le to executors. The admitted rule of English law that where the property in specific chattels to be delivered at a future day has passed by bargain and sale, and the chattels perish meanwhile without the vendor's default, he is excused from performing his contract to deliver ; and the similar rule as to loans of chattels and baihnents. In all these cases, though the promise is in words positive, the exception is allowed " because from the nature of the contract it is apparent that the parties contracted on the basis of the continued existence of the particular person or chattel." Appleby Jn Applebi/ v. Myers {s) the plaintiffs agreed with the defendant to erect an engine and other machinery on his premises, at certain prices for the separate pai'ts of the work, no time being fixed for payment. While the works were proceeding, and befoi-e any part was complete, the premises, together with the uncompleted works and materials upon them, Avere accidentally destroyed by fire. In the Common Pleas it was held that the plaintiffs might recover the value of the work already done as on a term to that effect to l)e implied in the nature of the contract. In the Exchequer Chamber the judgment of the Common Pleas was reversed. It was admitted that the work under the contract could not be done unless the defendant's pi'emises continued in a fit state to receive veluti solutione. aut cum res in (.v) (18G7) L. R. 2 C. P. 651, in st'pulationem deilucta sine ciili)a Ex. Ch. revg. s. c. 1 C. P. 615, 86 piomissoiis in rebus humanis esse L. J. C. P. 331 : ajiplieil in a desiit. Pot hier. Obi. § 14!l,/7;. Part towage case where it was held 3, ch. 6, §§ 64'J, sqq., ani (1871) Q. B. 147, affd. in C. A. 1 Q. B. 13 \Vallace, 654. Div. 2.J8, see per Cleasby B. at p. NON-EXISTENCE OF SUBJECT-MATTER. 448 or both, shall be assigned as the ground on which the agreement is void. And here likewise our authori- ties rightly assign mistake as the preferable ground, for the material question is not whether performance is or remains possible, but what the parties assumed and contemplated as the foundation of their con- tract (g). It it appears that they conceived and dealt with something non-existent as existing, the agree- ment breaks down for want of any real contents. Hence these cases may well be treated as belonging to the head of Mistake; though there is no real need to talk of either impossibility or mistake except as part of the facts to be dealt with. The historical explanation, however, is different. Accident, Fraud, and Mistake were the accustomed descriptions of heads of equity under which the Court of Chancery gave relief. The fiction of this relief being something extraordinary, and as it were supra - legal, was kept up in form long after it had ceased to be either true or useful ; and the terms Fraud and Mistake were extended far beyond any reason- able meaning in order to support the jurisdiction of the Court in a great variety of cases where the pro- cedure and machinery of the common law Courts wei'e inadequate to do justice. We shall now give one or two examples of cases lying on or near the line. In Couturier v. Hastie{h), decided by the House Sale of cargo of Lords in 1856, a bought note had been signed il'.^^j.^'^'"'^ "^ for a cargo of Indian corn described as " of fair average quality when shipped from Salonica." Several days before the sale, but unknown to the parties, ((/) See especially Coulnr'ier v. the knowlcilge or other state of 7/«.s-i/e (18o(;) o H. L. V. (>7;}, 2.j mind of the parties makes no I.. J. Ex. 253, 101 K. 11. ;52i>. difference. It is at least doubtfiil, Savigny (Syst. 3. 303) is decidedly as we shall see later, whether lliis against error being considered the position be true in English law. ground of nullity in these cases: (//) (l.S5()) ij H. L. C. G73, 101 but ehietiy because, as he holds, K. It. 32i). 444 IMPOSSIBLE AGREEMENTS. the cargo, then on the voyage, was found to be so much damaged from heating that the vessel put into Tunis, where the cargo was sold. The only question seriously disputed was what the parties really meant to (leal with, a cargo supposed to exist as such, or a mere expectation of the arrival of a cargo, subject to whatever might have happened since it was shipped. Lord Cranworth in the House of Lords, in accordance with the opinion of nearly all the judges, held that " what the parties contemplated, those who sold and those who bought, was that there was an existing something to be sold and bought." No such thing existing, there was no contract which could be enforced. Covenants to When a lessee under a mining lease covenants in or'to la'ise^^ unqualified terms to pay a fixed minimum rent, he miniinuni jg bound to pay it (i), though the mine may turn out to be not worth working or even unworkable. But it is otherwise with a covenant to work the mine or to raise a minimum amount. Where a coal mine was found to be so interrupted by faults as to be not worth working, it was said that the lessor might be restrained from suing on the covenant to work it on the terms of the lessee paying royalty on the estimated quantity of coal which remained un- worked (k). A similar question was fully dealt with ciififord r. in Clifford v. IFatts (I). The demise was of all the ^'*''^"'*- mines, veins, etc., of clay on certain land. There was no covenant by the lessee to pay any minimum rent, but there was a covenant to dig in every year of the term not less than 1,000 tons nor more than 2,000 tons of pipe or potter's clay. An action was l)i-ought by the lessor for breach of this covenant. (/) Maripitsuf ButewThonipMDi 101 11. Ii. 770. (1844) 13 M. & W. 4.S7. 17 L. J. (/.) L'ifhjway v. Sfwyd.last note. Ex. 95, ()7 R. R. fiSS. So in equity, (/) (187(1) L. R. 5 C. P. 577, llUhiwiiJ V. Snp>jil (1854). Kay, ti27, 40 L. J. C. P. 36. IMPLIED OR EXPRESS EXCEPTIONS. 445 Plea (m), to the effect that there was not at the time of the demise or since so much as 1,000 tons of such chiy under the lands, that the performance of the covenant had always been impossible, and that at the date of the demise the defendant did not know and had no reasonable means of knowing the impos- sibility. The Court held that upon the natural construction of the deed the contract was that the lessee should work out whatever clay there might be under the land, and the covenant sued on was only a subsidiary provision fixing the rate at which it should be worked. The tenant could not be pre- sumed to warrant that clay should be found : and " the result of a decision in favour of the plaintiff would be to give him a fixed minimum rent when he had not covenanted for it " (n). In certain kinds of contracts, notably charter-par- Analogous ties, it is usual to provide by express exceptions for express the kind of events we have been considering. It is exceptions in not within our province to enter upon the questions contracts' of construction which arise in this manner, and which form important special topics of commercial law. However, when the exception of a certain class of risks is once established, either as being implied by law from the nature of the transaction, or by the special agreement of the parties, the treatment is much the same in principle : and a few modern deci- sions may be mentioned as throwing light on the general law. Where the principal part of the con- tract becomes impossible of performance by an (m) It was pleaded as an equit- to get 2,000 tons of rock salt per aVjle plea under the C. L. P. Act, annum, but to pay 6d. a ton for but the Court treated the defence every ton short, and the lessees as a legal one. knew of the state of the mine when («) Per Montague Smith J. L. R. they executed the lease. Hills v. 5 C. P. at p. .")87. C\). and dist. Sughrue, pp. 41!), 42!), above, was Jerr'isv. Tomhhmm {\K>i\) 1 H.&N. decided on its peculiar facts. See 19.5, 26 L. .J. Kx. 41, lOS p. K. niG, L. R. 5 C. P. at pp. 586, .58!). where the covenant was not only •146 IMPOSSIBLE AGREEMENTS. (/3) Where [leiformance depends on life or health of a person. Implied con- dition that the person shall remain alive and well enough for the pur- poses of the contract. excepted risk, the parties are also discharged from performing any other part which remains possible, but is useless without that which has become impos- sible (o). It is a general principle that a contract is not to be treated as having become impossible of performance if by any reasonable construction it is still capable in substance of being performed (p) : but on the other hand special exceptions are not to be laid hold of to keep it in force contrary to the real intention. Thus where the contract is to be pei-formed " with all possible despatch," saving certain impediments, the party for whose benefit the saving is introduced cannot force the other to accept per- formance after a delay unreasonable in itself, though due to an excepted cause, if the manifest general intention of the parties is that the contract shall be performed within a reasonable time, if at all. The saving clause will protect him from liability to an action for the delay, but that is all : the other party cannot treat the contract as broken for the purpose of recovering damages, but he is not prevented from treating it as dissolved (q). j3 . Where the contract is for personal services of which the performance dej^ends on the life or health of the party promising them. " All contracts for personal services which can be performed only during the lifetime of the party contracting are subject to the implied condition that he shall be alive to per- form them ; and should he die, his executor is not liable to an action for the breach of contract occa- sioned by his death '" (r). Conversely, if the master (d) Crrippl V. Smith (1872) L. R. xnrancc Co. (1874) in Ex. Ch. L. R. 7 Q. P.. 404, 411, 41 L. J. Q. B. l.'iS. 10 C. P. 12.5, 144 sqq., 44 L. J. C. P. {p) Ihe Tfuhmia (1872) L. R. 4 27. P. C. 171, 182, 41 L. J. Ad. .~)7. (/■) Pollock C.B. in Hall v. Cp. Jones V. Holm (1867) L. R. 2 IIV/V/AC (1858) E. B. & E.at p. 793. Ex. 33.5. 29 L. J. Q. B. at p. 51, 113 R. R. (y) Jach-ton v. Union Marine In- 891. PERSONAL SERVICES. 447 dies during the service, the servant is thereby dis- charged, and cannot treat the contract as in force against the master's personal representatives (s). The passage now cited goes on to suggest the extension of this principle to the case of the party becoming, without his own default, incapable of fulfilling the contract in his lifetime: "A contract by an author to write a book, or by a painter to paint a picture within a reasonable time, would in my judgment bo deemed subject to the condition that if the author became insane, or the painter paralytic, and so incap- able of performing the contract by the act of God, he would not be liable personally in damages any more than his executors would be if he had been prevented by death." This view, which obviously commends itself in point of reason and convenience, is strongly confirmed by Taylor v. Caldwell {supra, p. 437), where indeed it was recognized as correct, and it has since been established by direct decisions. In Boast v. Firth (t) a master sued the father of Boast r. his apprentice on his covenant in the apprenticeship deed that the apprentice should serve him, the plain- tiff, during all the term. The defence was that the apprentice was prevented from so doing by permanent ilhiess arising after the making of the indenture. The Court held that " it must be taken to have been in the contemplation of the parties when they entci'cd into this covenant that the prevention of performance by the act of God should be an excuse for non-performance " (u), and that the defence was a good one. In Rohhison v. Davison (x) the defen- iiuiMnsdii r. dant's wife, an eminent pianoforte player, was i^''^^''-^""- (a) Ftin-owv. Wilson {\>H)'.t) \j.\i. ('/) Per Moiitai^Hie Smith J. at 4 G. P. 744, 38 L. J. ('. P. :52(;. p. 7. (0 (1868) L. K. 4 (!. P. ], .38 (.>■) C1871) L. 11. (J Ex. '-'i;'.!, 40 L.J. C. P. 1. L. J. Ex. 172. 448 IMPOSSIBLE AGREEMENTS. The contract becomes void, not only voidable at option of party dis- abled. Sem hie, notice should be given to the other party. engaged to play at a concert. When the time came she was disabled by illness. The giver of the enter- tainment sued for the loss he had incurred by putting off the concert, and had a verdict for a small sum under a direction to the effect that the performer's illness was an excuse, but that she was bound to give the plaintiff notice of it within a reasonable time. The sum recovered represented the excess of the plaintiff's expenses about giving notice of the postponement to the public and to persons who had taken tickets beyond what he would have had to pay if notice had been sent him by telegraph instead of by letter. The Court of Exchequer upheld the direc- tion on the main point. The reason was thus shortly put by Bramwell B. " This is a contract to perform a service which no deputy could perform, and which in case of death could not be performed by the executors of the deceased: and I am of opinion that by virtue of the terms of the original bargain in- capacity either of body or mind in the performer, without default on his or her part, is an excuse for non-performance " (?/). The same judge also observed, in effect, that the contract becomes not voidable at the option of the party disabled from performance, but wholly void. Here the player could not have insisted " on performing her engagement, however ineffectually that might have been," when she was really unfit to perform it. The other party's right to rescind has since been established by a direct decision (z). No positive opinion was expressed on the other point as to the duty of giving notice. But it may be taken as correct that it is the duty of the party disabled to give the earliest notice that is reasonably practicable. Probably notice reasonable 0/) (1871) L. R. 6 Ex. at p. 277. (1876) 1 Q. B. D. 410,45 L. J. Q. B. (:) Ponx.sard v. Spiers Sf Pond (;21. PERSO}JAL SERVICES 449 in itself could not he required, for the disabling accident may be sudden and at the last moment, and the duty must be limited to cases where notice can be of some use (n). It further appears from the case that the effect of an omission of this duty is that the contract remains in force for the purpose only of recovering such damage as is directly refer- able to the omission. The decision also shows, if express authority I)e required for it, that it matters not whether the disability be permanent or tem- porary, but only whether it is such as to prevent the fulfilment of the particular contract. In the event of the disabled party having suffered from the breach of contract or negligence of a third person, and being entitled to a remedy against that person, a question of subrogation might possibly arise, but this does not appear to have been judicially con- sidered. In the earlier and very peculiar case of Hall v. Hail r. Wright ( b) the question of substance was thus stated : ^I'S^^t : . . . anomalous "Is it a term in an ordinary agreement to marry, decision oa that if a man from bodily disease cannot marry with- to niaiT\-'^' out danger to his life, and is unfit for marriage from illness im- the cause mentioned at the time appointed, he shall marriage no be excused marrying then? " (c) or in other words: f^^use. " Is the continuance of health, that is, of such a slate of health as makes it not improper to marry," an implied condition of the contract? (rf). The Court of Exchequer Cha,mber decided hj four to three that it is not, the Court of Queen's Bench having been equally divided. The majority of the judges relied upon two reasons : that if the man could not marry (rt) Cp. the doctrine as to giving L. J. Q. B. 34;") ; in Ex. Ch. E. B. & notice of abandonment to under- E. 765, 29 L. J. Q. B. 43, 118 R. K. writers, mmfdn v. Putter (1872-3) 861, 874. L. R. 6 H. L. 83, 121, 157, 42 (r) Per Bramwdl P.. 2'.) L. .J. L. J. C. P. 169. Q. B. 45. (*) (1858) E. B. & E. 740, 27 {>/) Per Pollock C.B. //a 52. P. G G 450 IMPOSSIBLE AGREEMENTS. without danger to his life, that did not show the performance of the contract to be impossible, but at most highly imprudent; and that at any rate the contract could be so far performed as to give the woman the status and social position of a wife. It was not disputed that the contract was voidable at her option (e). As to the first of these reasons, the question is not whether there is or not an absolute impossibility, but what is the true meaning of the contract ; and in this case the contract is of such a kind that one might expect the conditions and excep- tions implied in strictly personal contracts to be extended rather than excluded (/). As to the second reason, it cannot be maintained, except against the common understanding of mankind and the general treatment of marriage by English law, that the acquisition of legal or social position by marriage is a principal or independent object of the contract. Unless it can be so considered, the reason cannot stand with the princij^le affirmed in Geipel v. Sviith (g), that when the main part of a contract has become impossible of performance by an excepted cause, it must be treated as having become impossible altogether. The decision itself can be reviewed only by a coui-t of ultimate appeal ; but it is so much against the tendency of the later cases that it is now (f') "The man, though he may (/) It has long been settled be in a bad state of health, may that the eonliact to many is so nevertheless perform his contract far personal that executors, in the to marry the woman, and so give absence of special damage to the her the benefit of social position personal estate, cannot sue upon so far as in his power, though he it : Chamhcrlain v. Williamson may be unable to fulfil all the (1814) 2 M. & S. 408, 15 R. R. obligations of the marriage state ; 295. And it is now decided that and it rests with the woman to they cannot, except perhaps for say whether she will enforce or special temporal damage, be sued : reriounce the contract." The case Finlaij v. Chinipy (1888) 20 Q. B. is thus explained and distinguished Div. 494, 57 L. J. Q. B. 247. bv Montague Smith J. in lioasff v. {q) (1872) L. R. 7 Q. B. 404, 41 Firth (181^8) L. U. 4 C. P. 8. L. J. Q. B. 153. PERSONAL SERVICES. 451 of little or no authority beyond the point actually decided (h). The rule now before us applies only to contracts Limitation of for actual personal services. A contract of which the rule to ^ ^ contracts for the performance depends less directly on the pro- actual per- misor's health is not presumed to be conditional. If a man covenants to insure his life within a certain time, he is not discharged by his health becoming so bad before the end of that time as to make his life uninsurable (i). It has never been supposed that the current contracts of a manufacturing firm are affected in law by the managing partner being too ill to attend to business, though there are many kinds of business in which the proper execution of an order may depend on the supervision of a par- ticular person. And in general terms it may be said that no contract which may be performed by an agent can be discharged by a cause of this kind, unless the parties have expressly so agreed. As we saw in the case of contracts falling directly Rights within the rule in Tar/lor v. Caldwell, so in the case ■'^^'<^'^.^'y . acquired of contracts for personal services the dissolution of under the the contract by subsequent impossibility does not remain' affect any specific right already acquired under it. Where there is an entire contract of this kind for work to be paid for by instalments at certain tiuies, any instalments which have become due in the con- tractor's lifetime remain due to his estate after the contract is put an end to by his death (k). In like manner where a premium has been paid for appren- ticeship, and the master duly instructs the apprentice (//) In AUe?i r. IJaker (1-S.S2) (/) Arthur v. Wi/niw (1880) 14 8(5 N. C. !)l, the Supreme Court of Ch. D. tj03, 4!i L. J.' ilh. 557. North Carolina expressly declined (/.■) Stahh.i v. Ifnliiivfll Ei/. Co. to follow TIall V. Wriff/d. See (1807) L. K. 2 Ex. ';}11, 3G'L. J. Prof. Williston's note for other Ex. 166. similar rulings. G O 2 452 IMPOSSIBLE AGREEMENTS. Substituted contract becomiufr for a part of the terra and then dies, his executors are not bound to return the premium or any part of it as on a failure of consideration (I). Where an existing contract is varied or superseded liy a subsequent agreement, and the performance of impossible of that agreement becomes impossible (e.g., by the death peiformanoe. ^ ^ v ,y ' J of a person accordmg to whose estimate a sum is to be assessed) so that the parties are no longer bound by it, they will be remitted to the original contract if their intention can thereby be substan- tially carried out. At all events a party for whose benefit the contract was varied, and who but for his own delay might have performed it as varied before it became impossible, cannot afterwards resist the enforcement of the contract in its original form (m). 3. Impossi- bility by default of either partv Default of " promisor is breach of contract. Default of promisee 3. We now come to the case of a contract becom- ing impossible of performance by the default of either party. Where the promisor disables himself by his own default from performing his promise, not only is he not excused (for which indeed authority would be superfluous) but his conduct is equivalent to a breach of the contract, although the time for performance may not have arrived, and even though in contingent circumstances it may again become possible to per- foim it (n). On the other hand, where the promisor is prevented (0 Whinrup v. Hiiahes (1S71) L. R. 6 C. P. 78, iO L. J. C. P. 104, dissenting from the view of the common law on which the decision in Hirst v. Tolson (1850) 2 Mac.&G. \U, 10 L. J. Ch. 441, 8(1 R. R. 4o, purported to be founded. Hirxf X. TkIsoji does not, of course, establish any rule of equity. (w) Firth V. Midland ^Ry. Co. (1 875) L, R. 20 Eq. 100, 44 L. J. Ch. 313. («) 1 Ro. Ab. 448, B., citing 21 E. IV. 54, pi. 26 : '• If you are bound to enfeoff me of the manor of D. before such a feast, and you make a feoffment of that manor to another before the feast, you have forfeited the bond notwithstanding that you have the land back before the feast, having once disabled yourself from making the said feoffment." per Choke J. DEFAULT OF PROMISEE. 453 from performing his contract or any part of it hy tiischarges the default or refusal of the promisee, the perform- and may'be ance is to that extent excused : and moreover default J'^^'^^te*! as ' _ ^ breach, or or refusal is a cause of action on which the promisor makes con- 1 II,- 1 ji 1 / \ tract voidable may recover any loss he has mcurred thereby (o), or ^t his option. he may rescind the contract and recover back any money he has already paid under it {})). Default may consist either in active interruption or interference on the part of the promisee (q), or in the mere omis- sion of something without which the promisor cannot perform his part of the contract (r). The principle, in itself well settled, is illustrated Roberts r. by several modern cases. Where the failure of a m'i'ss^onei"^ building contractor to complete the works by the ^^■ day specified is caused by the failure of the other parties and their architect to supply plans and set out the lands necessary to enable him to commence the works, " the rule of law applies which exonerates one of the two contracting parties from the perform- ance of a contract when the performance of it is prevented and rendered impossible by the wrongful act of the other contracting party " (s), and the other party cannot take advantage of a provision in the contract making it determinable at their option in the event of the contractor failing in the due per- formance of any part of his undertaking (s). So where it is a term of the contract that the contractor shall pay penalties for any delay in the fulfilment of ((') As in the familiar case of an performed only in the obligee's Hction for non-acceptance of goods, presence, his al)sence is an excu>e. for not furnishing a cargo, &,c. ; so 1 Ko. Ah. 457, U. A covenant to with a special contract, r.//., Jhiherfx make within a year such assurance V. Bury ('iimiiiisxid/irrx {ix(\'.f)\j. II. as tiie covenantee's counsel shall 4 C. F. 755, in Ex. Ch. 5 c;. !'. 'MO, devise is discharged if the cove- 39 L. J. C. ]'. 12il. iiantec does not tender an assurance (j>) Gile.f V. Eilwurd.^ (]7'J7) 7 within the year, lb. 44(j, pi. 12. T. U. 181,4 U. K. 414. (.v) Rohe'rl.^ v. /.'«/•// Commh- (t/) 1 Ho. Ab. 45.'}, N. sioiier.i{lHC,\)) I,. K. 5 V.'V. 'MO, 32'.). (/•) Where a condition can Vie 464 IMPOSSIBLE AGREEMENTS. it, no penalty becomes due in respect of any delay caused by the refusal or interference of the other party (t). Where a machine is ordered for doing certain work on the buyer's land, on the terms that it is to be accepted only if it answers a certain test ; there, if the buyer fails to provide a fit place and occasion for trying the machine, and so deals with it as to prevent a fair test from being applied accord- ing to the contract, he is bound to accept and pay for the machine (/()• Cases of Jn Raymond v. Minton [x) it was pleaded to an shlpf" ' action of covenant against a master for not teaching his apprentice that at the time of the alleged breach the apprentice would not be taught, and by his own wilful acts prevented the master from teaching him. This was held a good plea, for " it is evident that the master cannot be liable for not teaching the apprentice if the apprentice will not be taught." An earlier and converse case is Ellen v. Top'p (y), referred to by the reporters. There a master under- took to teach an apprentice several trades ; it was held that on his giving up one of them, and thus making the complete performance of his own part of the contract impossible, the apprentice was no longer bound to serve him in any. " If the master is not ready to teach in the very trade which he has stipu- lated [promised] to teach, the apprentice is not bound to serve." A case of the same sort is put by Choke J. in the Year Book, 22 Ed. IV., 26, in a case from which one passage has already been given. "If I fim 1)1)1111(1 to Catesby [then another judge of the Common Pleas] Q) //((?w*' V. ^'«y//'//(ls:5S) 3 ^r. L. J. Ex. 153. So if a pawn- i: \V. 3S7, -19 Iv. i;. (547 ; Itii.t.sell broker's apprentice is a hal)itiial V. l)a JJaiideini (18(12) 13 C. P. thief: Lc/iroi/d v. JJrook [1891] 1 N. S. H'J, 32 L. J. C. P. (nS. Q. B. 431, 6()"L. J. Q. B. 373. (m) Macltay v. Dlch (1881) in (//) (1851) 6 Ex. 424, 442, 20 H. L. (Se.) t;'Ap(). Ca. 2")!. L. J. Ex. 241. 8(i R. K. 3r)3. (.(■) (18(;c.) L. P. 1 Ex. 241, 35 ALTERNATIVE CONTRACTS. 455 that my son sliall serve him for seven years, and I come with my son to Catesby, and offer my son to him, and he will not take him, there because there is no default on my part I shall not forfeit the bond. In like maimer if he took my son and afterwards within the term sent liim away, it is unreasonable that this should be a forfeiture." Where a contract is in the alternative to do one Alternative of two things at the promisor's option, and one of ^■""^''''^^'*^- ° ^ r ' Where one them is impossible, the promisor is bound to perform thing im- that which is possible (z). We find the rule clearly foSble'one stated in the Digest (r/). Where one of two things must be contracted for in the alternative subsequently becomes where one impossible, it is a question of construction for which becomes no positive rule can be laid down, whether according question of to the true intention of the parties the promisor must construction. perform the alternative which remains possible, or is altogether discharged (b). It was held, indeed, in Laughter'' s case (c) that where the condition of a bond is for either of two things to be done by the obligor, and one of them becomes impossible by the act of God, he is not bound to perform the other. But this is to be accounted for by the peculiar treat- ment of bonds, of which we shall speak presently, the right of election being part of the benefit of the condition, of which the obligor is not to be deprived. And even as to bonds the general proposition has been denied (/>). In the absence of anything to shovv the intention in the particular case, the presumption should surely be the other way, namely, that the pi"omisor should lose his election rather than the promisee lose the whole benefit of the contract. Where either the promisor or the promisee, having the right under a contract to choose which of two things shall (z) Da ('odd v. Uaris (1778) 1 solummodo stipulatus essein. D. v.. ii v. 242, 4 U. R. T.Kk 45. 1. de v. o. 97 pr. (r/) Si ita stipulatus fuero ; te (/;) Jiarhivorth v. Yoinuj (1S.">(;) sixti ; n'mi .ifrfpri.s, Ji/j>jnirr/i/aii 4 Drew. 1, 25, 2('> L. J. Ch. 153, dari? proiiule erit at(iue te sist i (c) 5 Co. Uep. 21 h. 456 IMPOSSIBLE AGREEMENTS. Effects of default. be done, chooses one which becomes impossible after the choice is determined, there (on authority as well as principle) it is the same as if there had been from the first a single unconditional contract to do that thing (d). In Eoman law the presumption seems distinctly in favour of the promisor remaining bound to do what is possible (e) ; otherwise it agrees with ours (/). The exception as to inora in the extract given in the note shows the application here of the general rule as to impossibility caused by acts of the parties. The case put is that the creditor has made his election (to have Stichus, suppose) but has neglected or refused to accept Stichus : now if Stichus dies he cannot demand Pamphilus. It is the same as if there had been a single promise, and the performance made impossible by the pro- misee's default. The same rule is given in another passage (g). Conditional contracts. There is yet something to be said of the treatment of conditional contracts where the condition is or becomes impossible. A condition may be defined for (rf) lii'oun V. lioyal Inxvranpo Cu. (1859) p. A->\), above. (f) Save that in the case of an alternative obligation to deliver specific objects at the promisor's election he still has an eleciion in Kiilutioiie, as it is said, i.e. he may at his option pay the value of that which has perished. (/) Papinian says : SficJnim aiit PtiDi/jJiilinii. vtrum er/o relim. dare .\jH)?ule,t .' altei'o niortuo, qui vivit solus i)etetur, nisi si mora facta sit in eo niortuo, quem petitor elegit ; tunc enim perinde solus ille qui decessit juaebetur ac si solus in obligationem dednctus fuisset. Quod si promissoris fuerit electio, defuncto altero {i.e. before election made), qui sui>erest aeque jieti potest, i). 4tj. 3. de solut. et. lib. 9.5 pr. He proceeds to this curious question : What if one dies by the debtor's default before election made, and afterwards the other dies without his default .' Xo action can be maintained on tlie stipulation, but there is a remedy by diili ariio. ((/) Stipulatns sum Damam aut Erotem servum dari, cum Damam dares, ego quominus acciperem in mora fui ; mortuus est Dama ; an l)utes me ex stipulatu actionem habere '! Respoudit, secundum Massurii Sabini opinionem puto te ex stipulatu agere non posse ; nam is recte existimabat, si per debi- torem mora non esset, quominus id quod debebat solveret, continue eum debito liberari. D. 45, 1. de V. o. lUo. CONDITIONS. 457 the present purpose as an agreement or term of an agreement whereby the existence of a contract is made to depend on a future contingent event assigned l)y the will of the parties (/i). The condition may be either that an event shall or that it shall not happen, and is called positive or negative accordingly. Now the event which is the subject-matter of the condition, instead of being really contingent, may be necessary or impossible, in itself or in law. But the negation of a necessary event is impossible and the negation of an impossible event is necessary. It therefore depends further on the positive or negative character of the contingency whether the condition itself is necessary or impossible. Thus we may have conditional promises with con- in what ways tj. p ju 1 • J . condition ditions 01 these kmds : maybe Necessary: necessary or impossible, ( a) By affirmation of a necessity. As a promise to pay 1001. , " if the sun shall rise to-morrow." (/3) By negation of an impossibility: "If J. S. does not climb to the moon," or " if my executor does not sue for my debt to him." Impossible : (y) By affirmation of an impossibility: "If J. S. shall climb to the moon," or " if J. S. shall create a now manor." (8) By negation of a necessity: "If the sun shall not rise to-morrow," or " if my personal estate shall not be liable to pay my debts " (i). It is obvious that as a matter of logical con- struction the forms («) and (/3) are equivalent to unconditional promises, (y) and (8) to impos,sil)le or nugatory promises. And so we find it dealt with by (//) Savigny, Syst. §11(;(3. 121); (;)Sli.-litlv iiKxh'lie,! fidin Sa- PoUiie-, Obi. § I'J'J. vigiiy, Syst. § 121 (3. \:a\, IT.s). 458 IMl'Ob.SlBLE AGREEMENTS. the Eoman law (k). It is equally obvious that (still as a matter of logical construction) there is nothing to prevent the condition from having its regular effect if the event is or becomes impossible in fact. For example, "if A. shall dig 1,000 tons of clay on B.'s land in every year for the next seven years: " here there may not be so much clay to be dug or A. may die in the first year. But a promise so conditioned is perfectly consistent and intelligible without importing any further qualification into it; and it is obviously more difficult to infer that some fui-ther qualification was intended than in the case of a direct and unconditional contract by A. himself to dig so much clay. Direct covenants or promises dependent on express conditions must be construed with reference to these general principles : beyond this no rule can be given except that effect is to be given so far as possible to the real meaning of the parties (I). Treatment of Practically the discussion in our books of condi- tions and their effect on the legal transactions into which they enter is limited to the following sorts of questions : 1. What contracts are really conditional, or in technical language, what amounts to a condition precedent (I) : 2. The effect of conditions and conditional limita- tiuns in conveyances at common law and under the Statute of Uses, which we have not now to consider; 3. The effect of conditions in bonds. This form of (/t) " Si impossibilis coiitlicio si ita stipuletur : Si digito caelum obligationibusacrtciatur.niliil valet mm attigeio, dare spondes .' pure stipulatio. Impossibilis autem facta obligatioiateliegitur ideoque comlicio habetur, cui mitura im- slatim petere potest." I. 3. 19. de pedimento est quo minus existar, imit. stipul. § 11. veluti si quis ita dixerit : Si digito ^Z) i>>ij)ra. Ch. VI., p. 273. caelum attigero, dare spondes .' At conditions in Eniflish law CONDITIONS IN BONDS. 459 contract is now used only for certain special i)ur- poses, but was formerly of general application, inso- much that almost all the older learning on the construction and performance of contracts is to be found under the head of conditions. Here there are some peculiarities which call for our attention in this place. So far as the form goes, a bond is a contract r.omis. dependent on a negative condition. In the first J,et^^^eenThe instance the obligor professes to be bound to the technical obligee in a sum of a certain amount. Then follows ^^^ y.Q^\ the condition, showing that if a certain event happens meaning (genei'ally something to be done by the obligor) the instiument. bond shall be void, l)ut otherwise it shall remain in force. " The condition is subsequent to the legal obligation ; if the condition be not fulfilled the obli- gation remains " (m). This is in terms a promise, stated in a singularly involved way, to pay a sum of money if the event mentioned in the condition does not happen. But this, as everybody knows, is not the true nature of the contract. The object is to Becure the performance of the condition, and the real meaning of the parties is that the obligor con- tracts to perform it under the conventional sanction of a penal sum. This view is fully reeognii^ed by the modern statutes regulating actions on bonds, by wliich the penalty is treated as a mere security for the performance of the contract or the payment of damages in default (n). On principle, therefore, a bond with an impossible condition, or a conditit)n wliich becomes impossible, should be dealt with just as if it wei'e a direct covenant to perfoi-m that which is or becomes ijnpossible. Jn the foi'iuer case the (/;/) SirW. \V. Follelt, (//v/. Jiex- (//) As to tliese, see Predon \, wick V. Swindells {IH-^:,) :i A. &c K. iJ^i/iifi (1872) L. R. 8 Ex. 19, 42 L. 87:5 oH U. U. 2nu. J. Kx. lili. 460 IMPOSSIBLE AGREEMENTS. Where condition immediately impossible, obligation is absolute, according to the purely formal construction. But sub- sequent im- possibility is a discharge. bond should be void, in the latter the rule in Taylor V. Caldtvcll (o) would determine whether it were avoided or not. We have seen that where the con- dition is illegal our Courts have found no difficulty in considering the bond as what in truth it is : an agreement to do the illegal act. But in the case of impossibility the law has stuck at the merely formal view of a bond as a contract to pay the penal sum, subject to be avoided by the performance of the condition; accordingly if the condition is impos- sible either in itself or in law the obligation remains absolute. "If a man be bound in an obligation, &c., with condition that if the obligor do go from the church of St. Peter in Westminster to the church of St. Peter in Eome within three hours, that then the obligation shall be void. The condition is void and impossible and the obligation standeth good." So, again, if the condition is against a maxim or rule in law, as "if a man be bound with a condition to enfeoff his wife, the condition is void and against law, because it is against the maxim in law, and yet the bond is good." (p). In the same way, "when the condition of an obligation is so insensible and incertain that the meaning cannot be known, there the condition only is void and the obligation good " (q). On the point of subsequent impossibility, however, the strictly formal view is abandoned, and an oppo- site result arrived at, but still in an artificial way. The condition, it is said, is for the benefit of the (io~) (1S0;5) 3 B. & S. 82(;, .v«^nv/, p. 437. (p) Co. Lit. 20G h (some cf the ifcc.'s in Coke's text are omitted). 'J'o the same effect Shepp. Touehst. 372. As to going to Uoaie the more usual phrase in the old hook is three days ; which is now in- a[jplicable, the course of post from liOndon to Rome being less than forty-eight hours. (). Indian Con- The Indian Contract Act, s. 56, is go worded as to make the rule in Taylor v. Caldtvell a rule indepen- dent of the parties' intention and applicable to every kind of contract. This is a wide and (it must he assumed) a deliberate departure from the common law. (r) Per Cur. Bemoickv.SiniidrJh (n') Shepp. Touchst. 382. .392. 3 A. &; E. at p. 883, 53 K. U. 207. (1>^ Brian C. J. 22 Ed. IV. 26. 463 CHAPTER IX. Mistake. Part I. Of Mistake in GENERAb. Hitherto we have been dealing with perfectly general Conditions conditions for the formation or subsistence of a rf^^i^['"oi. valid contract, and as a consequence of this the freedom of rules of law we have had occasion to explain are for the most part collateral or even paramount to the actual intention or belief of the parties. Apparent exceptions occur, but mostly in cases where the rules are found to be reducible to rules of construc- tion. We now come to deal with cases in which the determining conditions are of a different kind, and the consent of the parties is the central point of the inquiry ; the question being how the legal validity of an agreement is affected when the con- sent or apparent consent is determined by certain causes. The existence of consent is ascertained in the first instance by the rules and principles set forth in the fii'st chapter. When the requirements there stated are satisfied by a proposal duly accepted, there is on the face of the matter a good agreement, and the mutual communications of the parties are taken as the expi-ession of a valid consent. But we still require other conditions in order to make the con- sent binding on him who gives it, although their absence is in general not to be assumed, and the party seeking to enforce a contract is not expected to 41U MISTAKE. Classification and legal consenuences of Mistake, Fraud, kc. give affij-mative proof that they have heen satisfied. Not only must there he consent, but the consent must l)e true, full, and free. The reality and completeness of consent may be affected (a) by ignorance, that is, by wrong belief (which may consist in or include oblivion of material facts) (b) or mere absence of information or belief as to some fact material to the agreement. Freedom of consent may be affected by fear or by the con- senting party being, though not in bodily or immediate fear, yet so much under the other's power, or in dependence on him, as not to be in a position to exeixise his own deliberate choice. Now the results ai-e different according as these states of mind are or are not due to the conduct of the other party (or, in certain cases, to a relation between the parties independent of the particular occasion). When they are so, the legal aspect of the case is altogether changed, and we look to that other party's conduct or position rather than to the state of mind induced by it. We speak not of Mistake induced by Fraud, but of Fraud simply, as a ground for avoiding con- tracts, though there can be no Fraud where there is no Mistake. We have then the following combina- tions : A. Ignorance. A. Not caused by act {c) of other party, is re- ferred in law to the head of Caused by act (c) of other party Mistake. (rt) It is quite wrong, as Savigny has shown, to say that a consent determined by mistake, fraud, or coercion is »(' consent. Syst. §§ IH, 115 (3, 98 sqq.). If it were so the agreemout would be absolutely void in all cases : a reducfio n which is no les com- plete for English than for Koman law. See per Lord Cranworth, Bciyse V. Rosshorovnh (1856-7) fi H. L. C. at p. 44, 108 R. K. p. 8, and per Lord Chelmsford, Oakes v. Tur- qiaind (1867) L. R. 2 H. L. at p. 349. (J) Hood of Avalon (^Lady') v. Macltinnon [1909] 1 Ch. 476. 78 L. J. Ch. 300. (f) It will be seen hereafter that omissions are equivalent to acts for this purpose in certain special cases. GENERAL PRINCIPLES. B. without wrongful intentiun. Mlsrepn'-sentntion. C. with wrongful intention. Fraud, B. Fear, or dependencn e.vrlud Ing freedom of act ton. Not caused by acts of other party or rela- tion between the parties. ([mmaterial.) D. Caused by such acts. Duress or Coercion. E. By such relation. Undue inffucncc. The legal consequences of these states of things are exceedingly various. A. Mistake does not of itself affect the validity of contracts at all (d). But mistake may he such as to prevent any real agreement from hcing formed; in which case the agreement is void : or mistake may occur in the expression of a real agreement; in which case, subject to rules of evidence, the mis- take can be rectified. There are also rules in the construction of certain species of contracts which are founded on the assumption that the expressions used do not correspond to the real intention (e). B. Contracts induced by misrepresentation are not void. In many cases, and under conditions depend- ing on the nature of the contract, they are voidable at the option of the party misled. c. Contracts induced by fraud are not void, but voidable at the option of the party deceived. D, E. Contracts entered into under coercion or undue influence are not void, but voidable at the option of the party on whom coercion or undue influence is exercised. It is now seldom, if ever, necessary or useful to consider the former differences between the doctrines of the common law and those of equity. These topics have now to be considered in order. And first of Mistake. ((Z) Just as fear, merely as a Coercion, so is Mistake to Frau . slate of mind in tin; party, is in Sav. Syst. '.i. lltJ. itself iiumalerial. As fear is to (f) I'. :i71, above. P. H H 466 406 MISTAKE. jMislake : The whole to}iic was formerly surrounded with a great deal of con- difficulties fusion in our books, though on the whole of a verbal kind, and more c K con- embarrassing to students than to practitioners. Exactly the same kind lusions o I J attending o^ confusion prevailed in the civil law (whence indeed some of it passed the subject. on to our own) until Savigny cleared it up in the masterly essay which forms the Appendix to the third volume of his System. The principles there established by him have been fully adopted by later writers (/), an:l appear to be in tlic main applicable to the law of England. The difficulties which have arisen as well with us as in the civil law may be accounted for under the following heads : (1.) Confusion of proximate with remote causes of legal consequences : in other words, of cases where mistake has legal results of its own with cases where it determines the presence of some other condition from which legal results follow, or the absence of some other condition from which legal results would follow, or even where it is absolutely irrelevant. (2.) The assertion of propositions as general rules which ought to be taken with reference only to particular effects of mistake in particular classes of cases. Such are the maxim JVon videntur qui pvrant consscntire and other similar expressions, and to some extent the distinction between ignorance of fact and of law(i'/). (3.) Omission to assign an exact meaning to the term " ignorance of law" m those cases' where the distinction between ignorance of law and ignorance of fact is material (the true rule, affirmed for the Roman law by Savigny, and in a slightly different form for English law by Lord Wcstbury [It) being that '■ ignorance of law " means only ignorance of a (jeneral rule of law, not ignorance of a right depending on questions of mixed law and fact, or on the true construction of a particular instrument). It is needless to point out in detail how these influences have operated on our books and even on judicial expressions of the law. We rather proceed to deal with the matter affirmatively on that which appears tons its true footing. A. General A. Mistake in general. Mistake The general rule of private law is that mistake as as such such has no legal effects at all. This may be more ino[)erative : . definitely expressed as follows : (/) Some of his conjectural deal- (c/) See Savigny 's Appendix, ings with specific anomalies in the Nos. VII., VIII. Syst. 3. 342, 3-14. lioman texts are at least daring, (//) CoojH'rx.PJiiJjb.t(lS67)L.B.. but this does not concern English 2 H. L. at p. 170 : to which the students. For the old difficulties, dicta in the later case of IJiirl cp. Grotius De lure B. et P. 1. ii. Beanchamp v. Winn (1873) L. R. c. 11, 6. " De pacto errautis per- 6 H. L. 223, really add little or plexa satis tractatio est." nothing. GENERAL PRINCIPLES. 467 When an act is done under a mistake, the mistake does not either add anything to or take away any- thing from the legal consequences of that act either as regards any right of other persons or any liahility of the person doing it, nor does it produce any special consequences of its own ; Unless knowledge of something which the mistake except prevents from being known, or an intention neces- whereby sarily depending on such knowledge, be from the nature oi: nature of the particular act a condition precedent ?^''^ ^"^^, . , . . . , knowledge is to the arismg of some right or duty under it. a condition Special exceptions to the rule exist, but even these ofwli^*^ are founded on special reasons beside, though con- consequences, nected with, the mistake itself. There are abundant examples to show the truth of this proposition in both its branches. First, mistake is in general inoperative as to the as to tiie legal position or liability of the party doing an act. position of AV + -^1^1 1 % • u the person We must premise that a large class oi cases is alto- acting under gether outside this question, as appears by the ""''take, qualification with which the rule has just been stated; those, namely, where a liability attaches not to the doing of an act in itself, but to the doing of it knowingly. There, if the act is done without know- ledge, the offence or wrong is not committed, and no liability arises. It is not that ignorance is an excuse for the wrongful act, but that there is no wrongful act at all {i). It is certain that ignorance is as a rule no excuse wronc^fui as regards either the liabilities of a quasi-criminal acts: ignorance in general (0 ihe wider question how far Stephen's Digest of Criminal Law, no excuse. and under what conditions ignor- Art.M, Reg.y. Prlnce(\Sla)\j.ll. ance of fact excludes criminal 2 (). C. R. UA, 44 L. ,T. M. C. 122 ; liability is beyond the scope of this and consult 0. \V. Holmes, The work, and too important to be dis- Common Law, pp. 49 sqq. cussed incidentally. See thereon H H 2 468 MISTAKE. kind which arise under penal statutes (;") or such as are purely civil. Thus ignorance of the true owners! ip of property is no defence to an action for its recovery, except for carriers and a few other classes of persons exercising public employments of a like nature, who by the necessity of the case are specially privileged (k). Again, railway companies and other employers have in many cases been held liable for acts of their servants done as in the exer- cise of their regular employment, and without any lawful intention, but in truth unlawful by reason of a mistake on the part of the servant : the act being one which, if the state of circumstances sup- posed by him did exist, would be within the scope of his lawful authority (l). Of course the servant himself is equally liable. Here, indeed, it looks at first sight as if the mistake gave rise to the employer's liability. For the act, if done with knowledge of the facts, and so merely wrongful in intention as well as in effect, would no more charge the employer than if done by a stranger. But it is not that mis- take has any special effect, but that knowledge, where it exists, takes the thing done out of the class of authorized acts. The servant who commits a wilful and gratuitous wrong, or goes out of his way to do something which if the facts were as he thought might be lawful or even laudable, but which he has no charge to do, is no longer about his master's business. Exceptions Eeal exceptions are the following: — An officer of a injudicial court wlio has quasi-judicial duties to perform, such process, but i * l ' limited. (j) That ignorance cannot be (1874-5) L. E. 7 H. L. 757. pleaded in discharge of statutory (/) See Pollock on Torts. 8th ed. penalties, see Carter v. McLaren 89-93. The latest reported decision (1871) L. E. 2 Sc. & D. 125-6. of this class is Hanson v. Waller (Ji) Folder v. IlnUins (1X72) Ex. [lltOl] 1 K. B. 390. 70 L. J. 'v. P.. Ch., L. E. 7 Q. B. 616, affd. in 231. H. L. nom. lloUlns v. Fcivler IGNORANCE NO EXCUSE : EXCEPTIONS. 469 as those of a trustee in bankruptcy, is not personally answerable for money paid by him under an excusable misapprehension of the law (m). Also an officer who in a merely ministerial capacity executes a process apparently regular, and in some cases a person who pays money under compulsion of such process, not knowing the want of jurisdiction, is protected, as it is but reasonable that he should be (n). But this special exception is confined within narrow bounds. Mistake as to extraneous facts, such as the legal character of persons or the ownership of goods, is no excuse. It is "a well-established rule of law that if by process the sheriff is desired to seizie the goods of A., and he takes those of B., he is liable to be sued in trover for them " (o). A sheriff seized under a fi. fa. goods supposed to belong to the debtor by marital right. Afterwards the supposed wife dis- covered that when she went through the ceremony of marriage the man had another wife living: conse- quently she was still the sole owner of the goods when they were seized. Thereupon she brought trover against the sheriff, and he was held liable, though possibly the plaintiff: might have been estopped if she had asserted at the time that she was the wife of the person against whom the writ issued (p). The powers of a Superior Court, under express rules or otherwise, to correct slips in its own proceedings, is on a different footing : but it is not exercised indiscriminately (q). (ill) I'J.r parte Oqlc (1S7:?) L. R. It B. & C. C/JG, 701, I?;? K. K. 291, 8 Cli. 711, 12 L. J.'l5k. 'J!». 2ilS. (rt) ^VAi Mm/or of Ld/ulon V. Cor (q) Aiuxworfhw. ll'ildhit/ [l^'.H',] (1866) L. R. 2 H. L. at p. 2(\'J, 36 1 Cli. 673, 65 L. J. Ch. 432 ; and L. J. Ex. 225. see lie Coles and Raremhear [ 1 907] 00 Lord Tentenlen C.J. Glanx- 1 K. B. 1, 76 L. J. K. B. 27, C. A., poole V. 3'((w«// (1829) 9 B. c& G. 696, as to relieving a party against his 700, 33 R. R. 294, 297 ; cp. Garland own adviser's mistake in matter of V. Carlidr. (1837) 4 ('1. ^: ¥. 693. procedure. (y>) Glangpoolc V. Young (1829) 470 MISTAKE. Ignorance in certain c.ises con- dition of ac'|uiiing rights : (purchase for value without notice). There are certain classes of cases in which it may be said that mistake, or at any rate ignorance, is the condition of acquiring legal or equitable rights. These are the exceptional cases in which an apparent owner having a defective title, or even no title, can give to a purchaser a better right than he has him- self, and which fall partly under the rules of law touching market overt and the transfer of negotiable instruments, partly under the rule of equity that the purchase for valuable consideration without notice of any legal estate, right, or advantage is " an abso- lute, unqualified, unanswerable defence " (r) against any claim to restrict the exercise or enjoyment of the legal rights so acquired (s). These rules depend on special reasons. The two former introduce a positive exception to the ordinary principles of legal ownership, for the protection of purchasers and the convenience of trade. It is natural and necessary that such anomalous privileges should be conferred only on purchasers in good faith. Now good faith on the purchaser's part presupposes ignorance of the facts which negative the vendor's apparent title. It may be doubted on principle, indeed, whether this ignorance should not be free from negligence (in other words, accompanied with " good faith " in the sense of the Indian Codes), in order to entitle him. For some time this was so held in the case of negoti- able instruments, but is so no longer (t). The rule of equity, though in some sort analogous to this, is (/•) Pilcher V. RuwUm (1872) L. R. 7 Ch. 2.->n, 2fi<), 41 L. J. Ch. 4S5, per James Ij.J. ; BlarkwDod V. London Chartered Bitnl: of Aiistraliu (1874) L. R. T, P. C. '.t2, 111, 48 L. J. P. C. 25. (x) This applies not only to purely equitable claims but to all purely equilable remedies iuciileut to legal rights. But it docs not apply to those remedies for the enforcement of legal rights which in a few cases have been administered by courts of equity concurrently with courts of law. Per Lord Westburv, PhdUps V. Phillips (1861) 4 D. F. J. 208, 31 I.. J. Ch. 321. (/) See Cha^). V., p. 241, above. IGNORANCE A8 CONDIllON OF TITLE. 471 not precisely so. A. transfers legal ownership to B., a purchaser for value, by an act effectual for that purpose. If in A.'s hands the legal ownership is fettered by an equitable obligation restraining hiui wholly or pai-tially from the beneficial enjoyment of it, this alone will not impose any restriction upon B. For all equitable rights and duties are, in their origin and proper nature, not m rem ])ut in per- sonam: they confer oldigationes not dominia. But if B. (l)y himself or his agent) knows of the equit- able lial)ility, or if the circumstances are such that with reasonable diligence he would know it, tlien lie makes himself, actively by knowledge, or passively ]iy negligent ignorance, a party to A.'s breach of duty («)• In such case he cannot rely on the legal right derived from A., and disclaim the equitable liability which he knew or ought to have known to attach to it: and the equitable claim is no less enforceable against him than it formerly was against A. To be accurate, therefore, we should say not that an exception against equitable claims is introduced in favour of innocent purchasers, but that the scope of equitable claims is extended against purchasers who are not innocent; not that ignorance is a con- dition of acquiring rights, but that knowledge (or means of knowledge treated as equivalent to actual knowledge) is a condition of being laden with duties which, as the language of equity has it, affect the conscience of the party {v). Even here the force and generality of the main rule Limiisof is shown by the limits set to the exceptions. The [!oii!ii^i4!;ii^s (?<) Thus one who acquires pro- Knupstrr [1!)07] 1 Ch. 378, 8Si), pcrty known to be part of a trust 7() I-. .1. Cli. 228. estate from a vendor known to bo (/•) Observe that on the point of a trustee, and eonveyinjf otherwise negligence the rule of equity differs than under the authority of the from tiie rules of biw : thouortance : Coo/in-v, Tewy(1882) a purchaser for value without 20 Ch. Div. 611, 632, 51 L. J. Ch. notice of anything he had actually 862. Similarly as to discovery: got, e.ff. possession of title deeds : Infl. Coope ^- Co. v. Emmerstm Heath v. Crealuch (1874) L. 11. 10 (1887) 12 App. Ca. 300. Ch. 22, 44 L. J. Ch. l.-)7 : WahJij (y) Mead v. Young (1790) 4 V. Gray (187.5) L. R. 20 Eq. 238, T. K. 28, 2 R. R. 314. 44 L. J. Ch. 394 ; but now that the (r) D. 39. 3. de aqua pluv. 20. Court can adaiinisler both legal contract. WHEN INOPERATIVE. 473 him to be under that age, and there being no fraud on the part of the person in whose care he travels ; the mistake does not exclude the usual duty on tho company's part to carry him safely (a). A person who does not correctly know the nature of his interest in a fund disposes of it to a purchaser for value who has no greater knowledge and deals with him in good faith ; if he afterwards discovers that his interest was in truth greater and more valuable than he supposed it to be, he cannot claim to have the transaction set aside on the ground of this mis- take (b). This, however, is to be taken with caution, for it applies only to cases where the real intention is to deal with the party's interest, whatever it may be. The result would be quite different if the inten- tion of both parties were to deal with it only on tho implied condition that the state of things is not otherwise than it is supposed to be, as we shall find under the head of Fundamental Error. So far, then, mistake as such does not improve the position of the party doing a mistaken act. Neither does it as a rule make it any worse. A mistaken demand which produces no result does not affect a plaintiff's right to make the proper demand after- wai-ds. Where B. holds money as A.'s agent to pay it to C, and appropriates it to his own use, C. may i-ecover from A. notwithstanding a previous mistaken (rt) Auxthi V. (t. ir. it'. Co. a particular business ur uiulcr- (18(i'.0 L. II. 2 Q. B. 4-12, 3(5 L. J. faking, such as was the .t^'rouTul of Q. H. 201. Tho mother of the the action of axaunip.sit in its infant plaintiff took only oneticket original form. See judgment of for lierself ; it seems that the con- Blackburn J. and cp. the remarks tiact opeiated in favoui- of >)oth of Cirovc J. in FnuUipfi v. Metro- (Lush J. L. R. 2 Q. I'., at p. 447). piditan Dixtrirf liij. Co. (ISSO) 4 Hut the case is really cne of those C P. i). at p. 279, 49 L. J. V. W on the border-line of contract and ;{(;i, and the piesent writer's" Law tort, where the breach is not so of Toils," Sth ed. pp. 5:57 ,sy/c/. much of a contractual duty as of (//) Murshall v. Colli'ft {\K\'i) 1 a general duty annexed by law to Y. ^; ('. Ex. 232, 41 II. U. 251. 474 MISTAKP]. (Ipiiiand on B.'s estate, made on the assumption that ]3. would be treated as C.'s own agent (c). Nor does a mistaken repudiation of ownership prevent the true owner of goods from recovering damages afterwards for injury done to them by the negligence of a bailee, whose duty it was to hold them for the true owner at all events (d). This is independent of and quite consistent with the rule that a party who has wholly mistaken his remedy cannot be allowed to proceed by way of amendment in the same action in an entirely different form and on questions of a different character (e). As to existing Noxt, mistake docs not in general alter existing rights of rights. The presence of mistake will not make an act other persons. o '- effectual which is otherwise ineffectual. Many cases which at first sight look like cases of relief against mistake belong in truth to this class, the act being such that for reasons independent of the mistake it is inoperative. Thus a trustee's payment over of rents and profits to a wrong person, whether made wilfully and fraudulently, or ignorantly and in good faith, cannot alter the character of the trustee's pos- session (/). Where the carrier of goods after receiv- ing notice from an unpaid vendor to stop them nevertheless delivers them by mistake to the buyer, this does not defeat the vendor's rights : for the right of possession (_r/) revests in the vendor from the date of the notice, if given at such a time and (f) Ilardij V. MetropoHtdii Lund Beav. .■)7t>, 5S2. c^- Finance Co. (1S72) L. R. 7 Ch. C/) The book has property; but 427, 488, 41 L. J. Ch. 2.57. Cp. the word must here, as often, mean A'angerjw, raiul. 1. 118. only right to possess. It is now (jf) Mitchell V. Lancasli'ire .<(• well understood that stoppage in Yorlishire llii. Co. (187.")) L. R. 10 tramitti does not rescind the con- Q. B. 25«, 2t;'l, 44 L. J. Q. B. 107. tract: Sale of Goods Act, 1893, (e) J/icoh.^ V. Sewtir(J(_li^T2) L. R. s. 48 : Xemj) v. Full/, 7 App. Ca. at 5 H. L. 4(U, 41 L. J. C. 1". 221. p. 581. (/■) Lister V. PicL-ford (186.5) 84 WHEN INOPERATIVE. 476 under such circumstances that the delivery can and ought to be prevented (h), and the subsequent mis- taken delivery has not, as an intentional wrongful dclivei-y would not have, any power to alter it (i). Again, by the rules of the French Post Office the sender of a letter can reclaim it after it is posted and before the despatch of the mail. C, a banker at Lyons, posted a letter containing bills of exchange on England endorsed to D., an English correspondent. These were in return for a bill on Milan sent by D. to C. Before the despatch of the mail, learning fj-om D.'s agent at Lyons that the bill on Milan would not be accepted and D. desired that no remit- tance should be made, C. sent to the post-office to stop the letter. It was put aside from the rest of the mail, but by a mistake of C.'s clerk in not com- pleting the proper forms it was despatched in the ordinary course. It was held that there was no effectual delivery of the bills to D., and that the property remained in C. The mistake of the clerk could not take " the effect of making the property in the bills pass contrary to the intention of both indorser and indorsee '" (A:). Had not the revocation been at the indorsee's request, then indeed the argu- ment would probably have been correct that it was a mere uncompleted intention on C.'s part: for as between C. and the post-office everything had not been done to put an end to the authority of tho post-office to forward the letter in the regular course of post. Anderson's case (l) may possibly be supported on a (/O Whilclirdd, V. Aiidersini Taunt. ICO, 17 R. 11. 4S2. (1.S42) 9 M. & W. 518, 11 L. J. Ex. {h) Ex iHivte Cote (1873) L. U. !) 157, ()() L. J. Ch. 81!) ; Blackburn Ch. 27, 32, 43 L. .1. Bk. 1!». on (Jout. of Sale, 209, 2ih1 ed. by (Z) (ISli!)) \,. R. 8 Eq. 50'). .SVvZ Graham, 384. qu. Lord Ijiudlcy, who was hini- (/■_) L'dt V. Cowli'ij (ISli;) 7 self coiin.st'l in tlie case, cites it (on ■170 MISTAKE. Subsequent conduct of parties founded on mistaken constructiun does not alter the contract : similar ground. It was there held that a transfer of shares sanctioned by the directors and registered in ignorance that calls were due from the transferor might afterwards be cancelled, even by an officer of the company without authority from the directors, on the facts being discovered. It may be that the directors' assent to the transfer is not irrevocable (apart from the question of mistake) until the parties have acted upon it. Again, the legal effect of a transaction cannot 1)6 altei'ed by the subsequent conduct of the parties: and it makes no difference if that conduct is founded on a misapprehension of the original legal effect. A man who acts on a wrong construction of his own duties under a contract he has entered into, does not thereby entitle himself, though the acts so done be for the benefit of the other party, to have the contract performed by the other according to the same construction (7/1). This decision was put to some extent upon the ground that relief cannot be given against mistakes of law. But it is submitted that this is not a case where the distinction is really material. Suppose the party had not construed the contract wrongly, but acted on an erroneous recollec- tion of its actual contents, the mistake would then have been one of fact, but it is obvious that the decision must have been the same. Still less can a paj'ty to a contract resist the performance of it merely ('oui[)anies, H2'J) with the niatLiial quahfication, "if the (ransferee does not object." The case is remarkable for the dictum (which ought never to have been reported) that "fraud or mistake, either of them, is enough to vitiate (i/ii/ tranxfictio/i." (w) Midland (i. W. i?//. of Ireland v. Jolnixoii (1S58) 6 H. L. C. 798, 811, 108 K. R. ;^l.-j, H19. per Lord Chelmsford. On the other hand, one who takes a wider view of his rights under a contract than the other party will admit, is free to waive that dispute and enforce the contract to the extent which the other doesadmit : Prfxtm V. Zwr/i (1884) 27 Ch. Div. 497. OF CONSTRUCTION. 477 on the ground that he misunderstood its legal effect at the time (?i). Every party to an instrument has a right to assume that the others intend it to operate according to the proper sense of its actual expressions (o). It must be remembered, however, that where both unless such parties have acted on a particular construction of from mistake an ambiguous document, that construction, if in itself it would „ . , ™ amount to admissible, will be adopted by the Court [p). io variation this extent its original effect, though it cannot be J^J^jg""/"''^^ altered, may be explained by the conduct of the parties. And moreover, if both parties to a contract act on a common mistake as to the construction of it, this may amount to a variation of the contract by mutual consent (q). And a mistake of one party induced, though innocently, by the other has the same effect as a common mistake (r). This is in truth another illustration of the leading principle. Here the conduct of the parties in performing the contract with variations would show an intention to vary it if the true construction were present to their minds. It might be said that they cannot mean to vary their contract if they do not know what it really is. But the answer is that their true meaning is to perform the contract at all events according to («) Powell V. Smith (1872) L. R. H E(j. 85, 41 L. J. Ch. 731. The dictum in Wycoiuhe Ry. Co. v. Uo>inin{/fo)i Ilo.fpltal (ISGtJ) L. R. 1 Ch. 273, cannot be supported in any sense contrary to this. (<;) Per Knight Bruce I.. .J. Bentley v. Macltetj (1802) 4 D. F. J. 28.5. Cp. Ch. VI., pp. 208, 2(;!), ahove. {]>) Forht'sv. Watt 0872) L. R. 2 Sc. & 1). 214. Evidence of the construction put on an instrument by some of the parties is of course inadmissible : McClean v. Keii- n,ir,1 (\H1 \-) L. R. 9 Ch. 330, 34it, 43 L. J. Ch. 328. And a party who has acted on one of two pos- sible constructions of an obscure agieement cannot afterwards en- force it according to the other : Marshall v. Berridye (1881) 19 Ch. Div. 233, 241, 51 L. J. Ch. 329. 0/) H. L. C. pp. 812-3. In the jiarticular case the appellants were an incorporated company, and therefore it was said could not be thus bound : .led qu. (?•) Wildinq \. Sitndersoa [1897] 2 VAu 534, CO 'L. J. Ch. 084, C. A. ; Stewarl v. Kennrdy (No. 2) (1890) 15 App. Ca. 75, 108. 478 MISTAKE. Forfeiture incurred bj' mistake. Special cases where mis- take is of importance. 1. As ex- cludin.t^ true consent. 2. In ex- j)ressing a true consent. 3. Renun- ciation of rights. 4. Paj'ment of money. their present understanding of it, and thus the mis- take is immaterial. Practically such a mistake is likely to represent a real original intention incorrectly expressed in the contract: so that principle and convenience agree in the result. Again, mistake, in the sense of omission by pure forgetfulness to do something that ought to have been done, is not a ground for a court of equity in its discretion (assuming that it has jurisdiction) to relieve against forfeiture (s). What then are the special classes of cases in which mistake is of importance, and which have given rise to the language formerly current on the subject ? They are believed to be as follows : 1. Where mistake is such as to exclude real con- sent, and so prevent the formation of any contract, there the seeming agreement is void. Of this we shall presently speak at large (Part 2 of this chapter). 2. Where a mistake occurs in expressing the terms of a real consent, the mistalce may be remedied by the equitable jurisdiction of the Court. Of this also we shall speak separately (Part 3). 3. A renunciation of rights in general terms is understood not to include rights of whose actual or possible existence the party was not aware. This is in truth a particular case under No. 2. All these exceptions may be considered as more apj)arent than real. 4. Money paid under a mistake of fact may be recovered back. This is a real exception, and the most important of all. Yet even here the legal foundation of the right is not so much the mistake in itself as the failure of the supposed consideration on which the money (.s) Barruw v. Isaacs [1891] 1 Q. B. 417, 60 L. J. Q. B. 179, C. A. OF FACT AND OF LAW. 479 was paid ; and the question is not of avoiding an existing obligation l)at of creating a now one. B. Mistake of Fact and of Law. Mere ignorance of law will not generally furnish «• Mistake , „ , , AT Pi 1 . 1 of Fact and any excuse or defence (0- As has otten been said, .^f Law. the administration of justice would otherwise be im- possible. Practically the large judicial discretion which can be exercised in criminal law may be trusted to prevent the rule from operating too harshly in particular cases. On the other hand it would lead to hardship and injustice not remediable by any judicial discretion if parties were always to be bound in matters of private law by acts done in ignorance of their civil rights. There is an apparent conflict l)etween these two principles which has given rise to much doubt and discussion (w)- But the conflict, if indeed it be not merely apparent, is much more limited in extent than has been supposed. It is often said that relief is given against mistake How far the of fact but not against mistake of law. But neither f^istinction ^ applicable. (0 For a recent illustration sec English law as now settled on the Utenuelde v. Korment (1904) 197 most important tojjic, viz., recovcr- U. S. 40, 55, 56. As to the current ing back money paid ; for there, so but inaccurate form of statement, long as the ignorance is of fact, see per Maule J., Martindale v. negligence is no bar: means of Fullmer (1846) 2 C. B. at p. 719, knowledge are material only as 69 Pi. II. at p. 611 : "There is no evidence of actual knowledge: presumption in this country that KeUij v. Solari (1841) 9 M. & W. every person knows the law: it 54, il L. J. Ex. 10, 60 11. 11. W}^> ; would be contrary to common 7'(>»w.sy'«^Z v. ^'/w«Zy (1860) 8 C. 15. sense and reason if it were so. . . . N. S. 477, 29 L. J. C. P. 800 ; The rule is that ignorance of the Imperial Bank of Canada v. Banli. law shall not excuse a man, or of Ihiniilton [1903] A. C. 49, 72 relieve him from the consequences L. J. V. C. 1. The only limitation of a crime, or from liability upon is that the party seeking to recover a contract." must not have waived all incjuiry : («) Savigiiy, followed by several per Parke 15. 9 M. & W. 59 ; and per later writers, would have it that Williams J. 8 C. B. N. S. 494. .See mistake, to be a ground of relief, now for full discussion of Anglo- inust lie free from negligence, and American authorities, Mr. M. M. igrmrance of law is presumed, I'igelow's notes to Story's Ec). tlioiii^h not conclusively, to be .Juris]). 13(h ed. ss. 1 11, 140 ; Keener negligent. But tliis will not tit on Quasi-<'ontiacts, C'li. 2. 480 MISTAKE. Where common mistake excludes real agreement, ignorance oi' private right at all events = ignorance of fact. branch of the statement is true without a great deal of limitation and explanation. We have already seen that in most transactions mistake is altogether with- out effect. There such a distinction has no place. Again, there are the many cases where, as we have pointed out above, knowledge or notice is a condition precedent to some legal consequence. By the nature of these cases it generally if not always happens that the subject-matter of such knowledge, or of the ignor- ance which by excluding it excludes its legal con- sequences, is a matter of fact and not of law. The general presumption of knowledge of the law does so far apply, no doubt, that a person having notice of material facts cannot be heard to say that he did not know the legal effect of those facts. All these, however, are not cases of relief against mistake in any correct sense. Then come the apparent exceptions to the general rule, which we have numbered 1, 2 and 3. As to No. (1) it is at least conceivable that a common mistake as to a question of law should go so com- pletely to the root of the matter as to prevent any real agreement from being formed. It is laid down by vei-y high authority " that a mistake or ignorance of the law forms no ground of relief from contracts fairly entered into with a full knowledge of the facts "(r) : but this does not touch the prior question whether there is a contract at all. On cases of this class English decisions go to this extent at all events, that ignorance of particular private rights is equi- (r) Banh of U. S. v. I)a>npl (1838) (Supt. Ct. U. S.) 12 Peters, 32, 56 ; but see Dan'icll v. Sinclair (J. C.) (1881) {) App. Ca. 181, 190. The language of modern American authority persists in the old shar]) distinction : Upton v. Tribilcock (1875) 91 U. S. 45, 50. Connnon mistake as to a collateral matter of law does not of course avoid a contract : Engleitfield v. Marquis of Londonderry (lS7(i) 4 Cli. D. ti'.>3. OF LAW : WHEN REM KDI ABLE, 481 valent to ignorance of fact (tv). As to No. (2) the Rectification of mstru- principle appears to be the same. A. and 13. make mcnts : an agreement and instruct C. to put it into legal ^g^J^^^^^^" form. C. does this so as not to express the real mistake of intention, either by misapprehension of the instruc- ti'ougi™not tions or by ignorance of law. It is obvious that •'igfiii>st a •^ *= .... , deliberate relief should be equally given m either case. In choice of neither is there any reason for holding the parties ti^e parties •^ " ^ as to lonu or to a contract they did not really make. contents of . Authority seems to bear out what is here ad- '"*' ^"'" " ^' vanced (x). A common mistake of parties as to the effect of a particular instrument is sufdcient ground for varying a consent order founded on the mistaken opinion (y). There is clear authority that on the other hand a court of equity will not reform an instrument by inserting in it a clause which the parties deliberately agreed to leave out (a), nor sub- stitute for the form of security the parties have chosen another form which they deliberately con- sidered and rejected (x), although their choice may have been determined by a mistake of law. The reason of these decisions is that in such cases the form of the instrument, by whatever considerations arrived at, is part of a real agreement. The parties have not been deprived by mistake or ignorance of the means of an effective choice of courses, but have made an effective choice which some or one of them afterwards mislikes. As to No. (3), there is quite sufficient authority Renunciation to show that a renunciation of rights under a mis- [ligtinctLn (ir) JihiffJtamv. Bingham (IHH) 13, 14 (and a uniform course of 1 Yes. Sr. 12t) : BrougliUm v. IFutt later decisions in America ; see (1858) 3 De G. & J. 501 : Cooper v. J'rof. Williston's note). Phlhhs (I8C7) L. R. 2 H. L. 149, (//) Alh-anlv. Walher [1896] 2 170 ; of which cases a fuller account Ch. :JC9, (Ja L. J. Ch. (JGO. is given below. (a) Lord Irnliam v. OliUiI (1781) (ar) Hiintw. /{ovsmaniere's Jdni. 1 Bro. C. C. 92. (1828) (Sup. Ct. U. S.) 1 I'cleis, 1, P. I I 482 MISTAKE. as to com- promise or deliberate abandou" ment. take as to particular applications of law is not con- clusive, and some authority to show that it is the same even if the mistake is of a general rule of law. The deliberate renunciation or compromise of doubt- ful rights is of course binding ; it would be absurd to set up ignorance of the law as an objection to the validity of a transaction entered into for the very reason that the law is not accurately known (b). A compromise deliberately entered into under advice, the party's agents and advisers having the question fully before them, cannot be set aside on the ground that a particular point of law was mistaken or over- looked (c), though it may be otherwise if the advice has been misapprehended, or was in fact given with- out regard to the parties' legal rights (d). Conduct equivalent to renunciation of a disputed right is equally binding, at least when the party has the question fairly before him. Thus in Stone v. God- frey (e) the plaintiff had been advised on his title unfavourably indeed, but in such a way as to bring before him the nature of the question and give him a fair opportunity of considering whether he should raise it. Adopting, however, the opinion he had obtained, he acted upon it for a considerable time, and in a manner which amounted to representing to all persons interested that he had determined not to raise the question. It was held that although the mistake as to title might in the absence of such conduct well be a ground of relief, a subsequent dis- covery that the correctness of the former opinion was doubtful did not entitle him to set up his claim (i) Cp. the remarks on compro- mises in Ch. IV., p. 'JO'ii, above. (r) Stewurf v. Stewart (1839) G CI. & F. 911, 49 R. R. 2t;7 ; see the authorities reviewed. CI. & F. pp. 96G-970, 49 R. R. 276-279. (rf) Re Roberts [1905] 1 Ch, 704, 74 L. J. Ch. 483, C. A. (a peculiar case of Welsh-speaking parties). (<>) (18r.4) 5 D. M. U. 7G, 104 R. R. 32. MISTAKEN PAYMENTS. 483 anew. In Rogers v. Ingliam (/) a fund had been divided between two legatees under advice, and the payment agreed to at the time. One of the legatees afterwards sued the executor and the other legatee for repayment, contending that the opinion they had acted upon was erroneous ; it was held tlaat the suit could not be maintained. Similarly where creditors accepted without question payments under a composition deed to which they had not assented, and which, as it was afterwards decided, was for a • technical reason, not binding on non-assenting credi- tors, it was held that they could not afterwards treat the payments as made on account of the whole debt, and sue for the balance. They might have guarded themselves by accepting the payments conditionally, but not having done so they were bound (r/). In Re Saxon Life Assurance Society (h) it was held that a creditor of a company was not bound by a release given in consideration of having the sub- stituted security of another company, which security was a mere nullity, being given in pursuance of an invalid scheme of amalgamation. Here the mistake was obviously not of a general rule of law; and perhaps the case is best put on the ground of total failure of consideration. As to No. (4), the subject of recovering back Money pa kl money paid by mistake does not properly fall within ^^ i"istake our scope. It is here, however, that the distinction only when between mistakes of fact and of law does undoubtedly i^'oM'^ct^ '"^ prevail. While no amount of mere negligence avoids the right to recover back money paid under a mistake of fact (i), money paid under a mistake of law can- (/) (1870) 3 Ch. Div. 351, 40 (A) (18G2) 2 J. i: 11.408,412 (the Ti. J. Ch. 322. Anchor catu'^. {i) Bank of II. S. v. Daniel (1825) 4 K. & C. 281, 28 K. 11. 264 ; (1838) 12 Peters, 32 ; but this was and ci;). Piatt v. Bromage (1854) not the only ground of the decision. 24 L. J. Ex. G3, 101 R. R. 1)03, (o) Southall v. Bigg, Forman v. wliere however the mistake was Wright (\Sa\') 11 C. B. 481, 41)2, not only a mistake of law, but col- 20 L. J. C. P. 145, 87 R. R. 731 ; lateral to the payment, the money Cou-ard v. I[itg]tes (1855) 1 K. & J. being really due; Aiken v. Short 443, 103 R. R. 172. (18.5«) 1 H. & N. 210, 25 L. J. Ex. (/^ Wa.wn v. Wareing (1852) 321, 108 R. R. 526, rests on the same 15 Beav. 151. Whether relief could ground, if the transaction in that be given in any case, unless there , case be regarded as the bare pay- were fraud on the other side, ment of another jierson's debt ; if quare. MISTAKEN PAYMENTS. 485 take of law : but this is no real exception, for it trustee is is not like an ordinary payment between party and comt. party. The trustee is an officer of the Court and OtJieiwisc t- •' P • same rules "is to hold money in his hands upon trust for its in equity equitable distribution among the creditors " (g). In ^satluw. general the rule that a voluntary payment made with full knowledge of the facts cannot be recovered back is no less an equitable than a legal one: "the law on the subject was exactly the same in the old Court of Chancery as in the old Courts of Common Law. There were no more equities affecting the con- science of the person receiving the money in the one Court than in the other Court, for the action for money had and received proceeded upon equitable considerations " (r). Thus a party who has sub- mitted to pay money under an award cannot after- wards impeach the award in equity on the ground of irregularities which were known to him when he so submitted (s). It has also been laid down that in a common administration suit a legatee cannot bo made to refund over-payments voluntarily made by an executor (t) : but the context shows that this was said with reference to the frame of the suit and the relief prayed for rather than to any general prin- ciple of law: moreover it was not the executor, but the persons beneficially interested, who sought to make the legatee liable. But in Bate v. Hooper (u) the point arose distinctly : certain trustees wore lialde to make good to their testator's estate the loss of })rin- (<■/) Kr p/ir/i' Jiiuir.t (1874) L. U. Suprenn! t^ourt. '.) Gil. f)()9, (il4, per James L.J. 43 (/•) Itoijcrs v. Imjlnim (l.S7(;) .'5 li. J. Bk. ]()7. This holds even Ch. IJiv. at p. 1^55, per James I, .J. after the inon(!y paid by mistake (.v) (ioodnian \. Sdiicr^ (1S2(() 2 has been distributed, if the trustee Jac. & W. 24'.», 2(')3, 22 K. K. 112. still has or niay have funr, L. J. Q. l?. 74 -. and it (w) (18.V>) 5 D. JM. G. :«8, 1()4 seems to extrnd to all ollieei's of li. U. 14(). the Court and all bianehes of the 486 MISTAKE. cipal incurred by their omission to convert a fund of Long Annuities : they contended that the tenant for life ought to recoup them the excess of income which she had received : but as she had not been a willing party to any over-payment (x), it was de- cided that she could not be called upon to refund the sums which the trustees voluntarily paid her. Cases to be dealt with in this sub- division. Where no real common intention, each party meaning different thing. Part II. Mistake as excluding true Consent. In the first chapter we saw that no contract can be formed when there is a variance in terms between the proposal and the acceptance. In this case the question whether the parties really meant the same thing cannot arise, for they have not even said the same thing. A court of justice can ascertain a common intention of the parties only from some adequate expression of it, and the mutual communica- tion of different intentions is no such expression. We now have to deal with certain kinds of cases in which on the face of the transaction all the condi- tions of a concluded agreement are satisfied, and yet there is no real common intention and therefore no agreement. First, it may happen that each party meant some- thing, it may be a perfectly well understood and definite thing, but not the same thing which the other meant. Thus their minds never met, as is not uncommonly said, and the forms they have gone through are inoperative. This is quite consistent, as we shall see, with the normal and necessary rule (Ch. VI., pp. 258, 259, above) that a promisor is bound by his promise in that meaning which his expression of it reasonal)ly conveys. (iP) She had in fact desired the compare Cun-iev. Goold (1817)2 trustees to convert the fund : see Madd. 103, 53 R. R. .33. 5 D. M. Cx. 340, 101 K. R. 148 ; and EXCLUDING CONSENT. 487 Next, it may happen that there does exist a common where there intention, which, however, is founded on an assump- }s a common ' . ^ intention but tion made by both parties as to some matter of fact founded on essential to the agreement. In this case the common error""^°'^ intention must stand or fall with the assumption on which it is founded. If that assumption is wi-ong, the intention of the parties is from the outset incap- able of taking effect. But for their common error it would never have been formed, and it is treated as non-existent. Here there is in some sense an agree- ment: but it is nullified in its inception by the nullity of the thing agreed upon. The result is the same as if the parties had made an agreement expressly conditional on the existence at the time of the supposed state of facts : which state of facts not existing, the agreement destroys itself. Indeed there is in most if not all cas&s of this class no difficulty in holding that the contract did include a tacit condition to this effect. In the former class of cases either one party or both may be in error : however, that which prevents any contract from being formed is not the existence of error but the want of true consent. " Two or more persons are said to consent when they agree upon the same thing in the same sense: " this con- sent is essential to the creation of a contract (z), and if it is wanting, and the facts be not otherwise such as to preclude one party from denying that he agreed in the sense of the other (a), it matters not whether its absence is due to the error of one party only 01- of both. In the latter class of cases the error must be common to both parties. They do agree to the same (r) Hanncn J. in Smith v. (r/) Ilanncn J. /.r., I'lacklnirn J. IIuf//ir.s (1871) L. R. 6 Q. 1?. (WU ; at \k mi. Indian Contract Act, 1872, s. 13. 488 MISTAKE. Divisions of fundamental eiTor. thing, and it would })e in the same sense, but that the sense they intend, though possible as far as can be seen from the terms of the agreement, is in fact nugatory. As it is, their consent is idle ; the sense in which they agree is, if one may so speak, insensible. In both sets of cases we may say that the agree- ment is nullified by fundamental error ; a term it may l)e convenient to use in order to mark the broad distinction in principle from those cases where mis- take appears as a ground of special relief. We proceed to examine the different kinds of funda- mental error relating : A. To the nature of the transaction. B. To the person of the other party. C. To the subject-matter of the agreement (b). As to nature of the trans- action. Tliorougli- good's case. A. Krror as to the nature of the transaction. On this the principal early authority is ThoroujjJi- (joocVs case (c). In that case the plaintiff, who was a layman and unlettered, had a deed tendered to him which he was told was a release for arrears of rent only. The deed was not read to him. To this he said, " If it be no otherwise I am content " ; and so delivered the deed. It was in fact a general release of all claims. Under these circumstances it Avas adjudged that the instrument so executed was not tlio plaintiff's deed. The effect of this case is "that if an illiterate man have a deed falsely read over to him, and he then seals and delivers the parch- (/;) Tiie German Civil Code has taken a new and much simplified course on the whole matter. Any kind of '•declaration of intention" is voidable on the grouml of funda- mental error, even if the mistake is unilateral ; but voidable onlv, and subject to thedutj-of compensatinfr any party for damage incurred by relvins on the validity of the act : B.'G. B. ss. 119-122. (c) 2 Co. Eep. D h. Cp. Shulter's case, 12 Co. Rep. 90 (deed falsely read to a blind man). AS TO NATURE OF TRANSACTION. 489 ment, it is nevertheless not his deed " (cZ) ; it was also resolved that "it is all one in law to read it in other words, and to declare the effect thereof in other manner than is contained in the writing:" but that a party executing a deed without requiring it to be read or to have its effect explained would ])o bound (c). Agreeably to this the law is stated in Sheppard's Touchstone, 56. But at present the mere reading over of a deed Avithout an explanation of the contents, to a person incapable of reading it for himself, would hardly be thought sufficient to show that the person executing it understood what he Avas doing (/). The doctrine was expounded and confirmed by tlio Foster r. luminous judgment of the Court of Common Pleas in Foster v. Mackinnon (g). The action was on a bill of exchange against the defendant as indorser. There was evidence that the acceptor had asked the defendant to put his name on the bill, telling him it was a guaranty ; the defendant signed on the faith of this representation and Avithout seeing the face of the bill. The Court held that the signature Avas not binding, on the same principle that a blind ((}) Per Cur. L. R. i C. P. 711. And see the older authorities rc- It had been long before said, in 21 ferred to in note (/'), next page. Hen. VII., that " if I desire a man (r) I.e. to tliis extent, that he to eiifeolf me of an acre of land in coulii not say it was not his deed, Dale, and he tell me to make a deed apart from any ([uestion of fraud for one acre with letter of attorney, or the like. audi make the deed for two acres, (/) Ilonldoii v. ILxjhfon (1852) and read and declare the deed to 1.") Bcav. 278, 311, 'J2 K. K. 121, him as for only one acre, and lie \'^'i. In the case of a will the seal the deed, this deed is utterly execution of it by a testator of void whether the feoffor be lettereil sound mind after having had it or not, because he gave credence to read over to him is evidence, but me and I deceived him." (Keilw. not conclusive evidence, that he 70, h, pi. 6) : but qv. whether this understood and approved its cou- can be accepted to the full extent tents: Fulton v. Andrew (187.5) since Jloiralwn v. Wehh [11)08] 1 L. !!. 7 11. L. 118, 4G0, .sv/iy. 472, Ch. 1, 77 L. .1. Ch. :52. Keilwey is 44 L. .1. W 17. in fact only a comm()M[)lacc book, (//) (I8(;!l) L. R. 4 C. 1'. 704, 711, though it seems generally accui-ate. 38 L. .1. C. 1'. 310. 490 MISTAKE. or illiterate man is not bound by his signature to a document whose nature is wholly misrepresented to him. A signature so obtained " Is invalid not merely on the ground of fraud, where fraud exists, but on the ground that the mind of the signer did not accompany the signa- ture ; in other words, that he never intended to sign, and therefore in contemplation of law never did sign the contract to which his name is appended (//). . . . The position that if a grantor or covenantor be deceived or misled as to the actual content.toi the deed, the deed does not bind him, is supported by many authorities : see Com. Dig. Fait (B. 2) (i), and is recognizelcof estoiipel or a positive rule of tlie law merchant was niucli doubted in Swan v. Xarfh Jirit'ish AudraluHian Land Co. ( 1 HC3) in the Court below, 7 H. & N. (iO;}, 81 L. J, Ex. 425. In the jiresent judgment the Court of C. P. seems to incline to the latter view. («) L. K. 4 C. P. at p. 712. (()) Cp. Simonny. Oirat Wr4rrn 7/7/. (h. (18.57) 2 C. B. N. S. 620, 109 11. R. 806, where tlie plaintiff was held not bound by a paper of special conditions limiting the com- pany's responsibility as carriers, whicli lie had signed without reading it, being in fact unable at the time to read it for want of his glasses, and being assured by the railwaj' clerk that it was a mere form. "The whole question was whetiier the plaintiff signed the re- ceipt knowing what he was about " ; per Cockburn C.J. at p. 624. The clerk's statement distinguishes this from the class of cases cited at PI). 50, 51, above. Where a person intending to execute his will has by mistake executed a wrong docu- ment, that document cannot be admitted to probate even if the real intention would thereby l)e partially carried out : In the goods of ffunfiM^i:,^ L. R. 3 P. & D. 250, 44 L. J. P. 43. 492 MISTAKE. complicated •with circum- stances of fraud. Distinction Letween total and partial lui.sapprc- licnsiou. considered by courts of equity except in connection with questions of fraud from which it is not always practicable to disentangle the previous question whether there was any consenting mind at all : and a just zeal to restrain fraudulent practices has now and then led to the utterance of dicta not wholly according to knowledge (p). Evidently there cannot be such a thing as a peculiar doctrine of equity as to the passing of legal estates or the creation of legcil obligations. Recent authorities do not deny that an instrument may be wholly void as against a party who has executed it under a total misapprehension of its nature, being put off inquiry by fraud or other plausible cause (g) ; but misapprehension of the effect or contents, when the party knows what he is dealing witb, is not enough; and it seems that a man of ordinary education and competence, if he chooses to execute an instrument without informing himself of its general purport and effort, does so at his peril as regards innocent third persons, whatever remedies ho may have against any other party to the trans- action (r). {/)) Kcinicdij V. (irPin (1S34) '5 M. \: K. (•,;i;)/41 W. K. 170 (Lord Brourrhani) : Vovlni v. Coohc (1857) 1 (Jiff. :>3u. 27 L. J. Cli. 185, 114 11. It. 41:3; OiiUne v. Jeitfrrmii (18(50) 2 Gifip'. 353, 29 L. .J. Cli. 905 (Stuart V.-C). Neither of those judges is a safe wariaiitor for speculative exten- ."rions of either legal or equitable doctrine ; but the real ground of all these decisions was constructive notice of the fraud, though in Coolie V. Vorlrij this ajjpears oidy from the Law .lournal rei)ort, which differs materially from (liiraid's. I_.ord Brougliam seems never to have understood that a i)urchaser for valuable consideration without notice asks nothing of a court of Cijuity but to leave him alone. ((/) In Ortcntdl Bank Coriiora- fio/i V. Fleming (1879) I. L. K. 3 Bom. 242, a com})Osilion deed including a release which was not authorized was executed on behalf of creditors ; time was pressing and examination of the deed was waived on the debtor's assurance that all was as agreeil ; the High Court decreed that it was not the deed of the plaintiffs so far as it purported to operate as a release. Fraud was not alleged, but no riglit had been actjuired by any third party on the faith of the release. (/•) Hunter V. Walters (1871) L. R. 7 Ch. 75; Ihncutxon v. II>/;/y [1908] 1 fh. 1. 77L. J.Ch. 32,C.A, AS TO NATURE OF TRANSACTION. 493 ' " When a man knows that he is conveying or doing something with his estate, but does not ask what is the precise effect of the deed, because he is told it is a mere form, and Las such confidence in his solicitor as to execute the deed in ignorance, then a deed so executed, although it may be voidable upon the ground of fraud, is not a void deed " (.«)• Accordingly a man who executes a mortgage con- taining the usual covenants, and knows that he is transferring the property hut assumes that it is an out and out conveyance, is liable on the covenant for payment of principal and interest to a transferee for value (t). A conveyance from A. to B., purporting to grant that which A. has already conveyed by deed, and being obtained by B.'s fraud, is not void as a deed, and may create an estate by estoppel if it contains sufficiently clear averments (u). A contractor must stand by the words of his con- tract, and, if he will not read what he signs, he alone is responsible for his omission (v). And it may be said generally that a man of business who executes " an instrument of a short and intelligible descrip- tion cannot be permitted to allege that he executed it in blind ignorance of its real character " (w), (.v) Jlunter v. Walters (1871) ChnpiiKin [11)07] 2 Ch. 222, 227, 7t; L. K. 7 Ch. 75 ; per Hellish L.J. L. .1. Ch. 528, where the actual at p. 88 ; ep. Nat. Pror. Hunk of decision was on the ground of total Enilland v. Jnrhxon (188()) .SH Ch. misrepresentation : see [IDOS] 1 Ch. Div. 1 : and IAoy(V>< Baith, Ltd. v. at pp. 2, 8 : and qn. theiefoie liulloch [ISDO] "2 Ch. 1!»2, 19fi, Go whether in Onental lianlt Corjioiui- L. J. Ch. ()80. J'hiipsoii's case t ion y. Flfiiiing, noie ((/} above, the (1870) (L. R. 9 Eq. 597, where no sutticient alternative ground of de- authorities appear to have been cision, that the debtor's misrepre- cited) decided only that a false sentation even if innocent made recital of a man being a member the deed voidable, was not the of a building society will not sounder. make him a contributory in its (w) Onward Jiuildinq Soc. v. winding-up. Smit/i.wn [1S98] 1 Ch. 1. 02 L. -L (/) Ifowatfton V. Wet>b, note (/•) Ch. 138, C. A. above. The C. A. did not approve (?;) Upton v. 'IrihUcoch (1 875) of a distinction between the effects 91 U. S. 45, 50. of conveyance and covenant in (»;) I'er Lord Chelmsford C. such circumstances suggested by Wijthcs v. Lnhovchcre (1858-9) 8 Swinfcn Kady J. in Jldijol v. Do G. &; J. 598, (U)]. 494 MISTAKE. Error as to legal character of the transaction. Strictly this may be an inference of fact rather than a rule of law ; but under such conditions the inference is irresistible. It may be observed, however, that a prudent man who has examined and approved the draft of a deed to which he is a party does not, as a rule, insist on verifying with his own eyes the exact correspondence of the engrossment with the draft ; and it would surprise both branches of the pi-ofession in England if it were held to be negligence for a man to trust his solicitor to that extent (x). There may also be a fundamental error affecting not the whole substance of the transaction, but only its legal character. It is apprehended that on prin- ciple a case of this kind must be treated in the same way as those we have already considered ; that is, if the two parties to a transaction contemplate wholly different legal effects, there is no agreement; but this will not prevent an act done by either party from having any other effect which it can have by itself and which it is intended to have by the party doing it. Thus if A. gives money to B. as a gift, and B. takes it as a loan, B. does not thereby become A.'s debtor (?/), but the luoney is not the less effectually delivered to B. (z). So, if a baker who has ordered flour of A.'s receives by a warehouseman's mistake flour of B.'s, (./■) Cp. per Maliiis V. C. (who knew the common course of busi- ness very well, if his law was sometimes adventurous) L. K. 9 Eq, at p. 603. (y) But if B. communicates to A. his intention of treating the money as a loan, and A. assents, then there is a good contract of loan. See Hill v. ^]'il.to/l (1873) L. R. 8 Ch. 888 : per Mellish L.J. at p. 896 ; where it was held that an advance at first intended to be a gift had in this way been turned into a loan, and was a good con- sideration for a promissory note subsequently given for the amount. (-) Savigny, Syst. 3. 269 ; Paulus, D. 44. 7. de. o. et a. 3 § 1. Non satis autem est daiitis esse numos et fieri accipientis, ut obligatio nascatur, sed etiam hoc animo dari et accipi ut obligatio constituatur. Itaijue si quis pecuniam suam donandi causa dederit mihi, quamquam et donantis fuerit, et mea fiat, tamen non obli- gabor ei, quia non hoc inter nos actum est. As to the transfer of the property being effectual (not- withstanding Ulpian's opinion in 2)ert!ona. AS TO PEKSOX. 495 which is more vahiable, and consumes it in good faith, he is not liable to B. for the true value ((/). We have seen however (p. 476), that mistake as to any particular effect of a contract depending on its true construction does not discharge the contracting party or entitle him to act upon his own erroneous construction. B. Error as to the perso7i of the other party. Another kind of fundamental error is that which Error /« relates to the person with whom one is contracting. Where it is material for the one party to know who the other is, this prevents any real agreement from being formed (&). Such knowledge is in fact not material in a great part of the daily transactions of life, as for instance when goods are sold for ready money, or when a railway traveller takes his ticket: and then a mere absence of knowledge caused by complete indifference as to the person of the other party cannot be considered as mistake, and there can be no question of this kind. In principle, how- ever, the intention of a contracting party is to create an obligation between himself and another certain person, and if that intention fails to take its proper effect, it cannot be allowed to take the different effect of involving him without his consent in a contract D. 12. 1. de reb. cred. 18 pr.) cp. («) Ililh v. Sncll (1870) 101 Julianus, D. 41, 1. deacq. rer. dom. Mass. 17;}; cp. the somewhat 36. The reason is that to that ex- similar case put byBramwell B. in tent there is an intention free from Jl. v. Middleton (1873) L. II. 2 error on the one part and an assent C. C. R. at p. ofJ. on the otlier. But a wholly mis- (i) Savigny, Syst 3. 209 ; Po- taken handing over of money or thier, Obi. § 19, adopted by Fry J. goods passes no property : R. v. in Smith v. Wlieatcroft (1878) 9 C'h. Middleton (1873) L. 11. 2 C. C. K. D. at p. 230, 47 L. J. Ch. 745. If 38, 44, 42 L. J. M. C. 73 ; Kings- I take a loan from A. thinking he ford V. Merry (1850) (Ex. Ch.) 1 H. is B.'s agent to lend me the money & N. 503, 20 L. J. Ex. 83, 108 K. K. when he is in truth C.'s there is no 694; and see C'kupmaa v. dde contract of loan, though C. may get (1858) 12 Gray (Mass.) 141 ; It. v. back liis money by condiciiu : D. 12. Ashiodl (1885) 10 Q. B. D. 190, 55 1. de reb. cred. 32. L. J. M. C. 05. 49G MISTAKE. Boulton c. Jones. rersouation. with some one else. In other words, an offer made to one man cannot be accepted by another. Jn Boulton v. Jones (c) an order for goods had been addressed by the defendants to a trader named Brocklehiirst, who without their knowledge had trans- ferred his business to the plaintiff Boulton. The plaintiff supplied the goods without notifying the change, and after the goods had been accepted sent an invoice in his own name, whereupon the defen- dants said they knew nothing of him. It was held that there was no contract, and that he could not recover the price of the goods. Possibly the person for whom the order was meant might have adopted the transaction if he had thought fit. But with the plaintiff there was no express contract, for the defendant's offer was not addressed to him ; nor yet an implied one, for the goods were accepted and used by the defendants on the footing of an express contract with the person to whom their offer was really addressed. The defendants might have had a set-off against the person with whom they intended to contract {cl). Again, if A, means to sell goods to B., and C. obtains delivery of the goods by pretending to be ((•) (18r,7) 2 H. & X. hCA. -21 L. J. Ex. 117, 11.-) 11. K. 69o. And see liosfoH Ice Co. V. Potter (1877) 123 Mass. 28, where Boulton v. Joues was followed in its full extent. But might it not be contended that according to general usage a pro- posal addressed to a trader at his place of business for the supply of goods in the way of that business is, in the absence of anything showing special personal considera- tions, a proposal to whoever is carrying on the same business con- tinuously at the same place and under the same name 1 (tl) Cp. MitcliPll V. Tmixuic n 8] C) i-lolt N. 1'. 2.-.S. 17 R. It. (ilW. a somewhat similar case, where the purchaser, after notice, had treated the contract as subsisting. Anal- ogous in some wa3-s, but really having nothing to do with any rule specially relating to mistake, is the class of cases showing that a subsisting contract cannot be performed by a person with whom it was not made : Rohsonv. Druin- mond (1831) 2 B. & Ad. 303, 3ti 11. R. 569 : Humhle v. Hunter [IMS) 12 Q. B. 310. 17 L. J. Q. B. 350, 76 R. R. 291. See further per Collins M.R. in Tolhvrst y.Assocd. Portland Cement Manvfrs. [1902] 2 K. B. 660, 668, 71 L. J. K. B, 949. AS TO PERSON. 407 B.'s agent to make the contract and receive the goods (e), or if C, who is a man of no means, obtains goods from A. })y writing for them in the name of B., a solvent merchant already known to A., or one only colourably differing from it (/), there is not a voidable contract between A. and C, but no contract at all; no property passes to C, and he can transfer none (save in market overt) even to an innocent purchaser. The pretended sale fails for want of a real buyer. There is only an offer on A.'s part to the person with whom alone he means to deal and thinks he is dealing. Whether any analogous doctrine applies to deeds Trobably is a question on which there does not seem to be cannorbc^^ ^ any clear authority. It might be argued that there extended . ^ , \t . \. e + to deeds, is no reason why the msertion oi a wrong party, if material, should not have the same result as the insertion of wrong parcels ; and that if a man executes a conveyance of Whiteacre to A. as and for a con- veyance of the same estate to B. it is equally not his deed. But the judgment in Hunter v. TV alters (g) is certainly adverse to such a view. (p) Hardmnny. Booth (18(J8) 1 H. & C. 803, 32 L. J. Ex. 105 ; cp. Kitigsford v. Merry (1856) 1 H. & N. 503, 26 L. J. Ex. 83, 1((8 U. K. 6'J4 ; HoUi.nx v. Fnivlcr (1874-5) L. R. 7 H. L. 757, 763, 795. (/) Lindsay v. (hondij, Ciiiiilij V. Lindnaij (1878) 3 App. Ca. ■15'.), 47 L. J. Q B. 481 ; E.i; partp. Barnett (1876) 3 Cli. D. 123, 45 L.J. Bk. 120; Ediiiiinds v. Mrr- chaids' JJenpateh Transport Co., 135 Mass. 283, decides that if A. in person obtains goods by pre- tending to be B., then, as A. is " identified by sight and hearing," property does pass. Sed qu. and 'f. i'othier, Obi. § 19. So, if a man is persuaded to join a new company by fraudulently representing it to be identical with an older company P. of similar name, he does not become a shareholder : BaiUie.s cuHe [1898] 1 Ch. 110, 67 L. J. Ch. 81. (r/) (1871) L. K. 7 Ch. 75 ; xupra, p. 493. On the other hand, " if A. ]iersonating B. executes a deed in the name of B. i)urporting to con- vey B.'s property, no right or in- terest can possibly pass by such an instrument. It is not a deed. It makes no difference in law that A. hnd the same name as B. if the false personation is established ; still the instrument is not a deed, and that plea would be a complete answer by B. or any one claiming through him": Cooper v. Veseij (1882) 20 Ch. Div. 611, 623, 51 L. J. Ch. 8(;2. (Kay J. ; affd. in C. A. 20 Ch. Div. 627.) K K 498 MISTAKE. Satisfaction It is Oil the sauie principle that a party to whom to tliif '^"^^'^ anything is due under a contract is not bound to contract. accept satisfaction from any one except the other contracting party, in person where the nature of the contract requires it (h), or otherwise by himself, his personal representatives, or his authorized agent: and it has even been thought that the acceptance of satisfaction from a third person is not of itself a ]>ar to a subsequent action upon the contract. It seems that the satisfaction must be made in the debtor's name in the first instance and be capable of being ratified by him (i), and that if it is not made with his authority at the time there must be a subsequent ratification, which however need not be made before action (A). But these refinements have not been received without doubt (V) : and it is sub- mitted that the law cannot depart in substance, especially now that merely technical objections are so little favoured, from the old maxim "If I be satisfied it is not reason that I be again satisfied " (m). Assignment So far the rule of common law. The power of assigning contractual rights which has long been recognized in equity, and which since the Judicature Act, 1873 (s. 25, subs. 6) is recognized as effectual in law, does not constitute a direct exception. For (/() See Bolilnxon. v. Dnrixfin meat by a stranger is no payment (1871) L. R. 6. Ex. 2(59, 40 L. J. till assent, as contrary to a well- Ex. 172. known principle of law : the civil ((') Jtimex V. Imarx (18.52) 12 C. B. law being the other way cxj^ressly, 791 , 22 L. .J. C. P. 73, 92 R. R. 883 ; and mercantile law by analogy : at Liiffi.sY. H7Z////MV)«(1856) 1 lI.iJc N. the least assent ought to be pre- 420, 2fi L. J. Ex. 18, 108 R. R. iuiT. sumcd (cp. L. R. 10 Ch. 416). (_/.•) Sinipxon V. Jujf/inf/to/i (18.")()) (w) Fitzh. Ab. tit. Barre, pi. lOEx. 84.5, 24 L. J. 'Ex. 812. 102 16G, repeatedly cited in the modern R. R. 867 (ratification by plea of cases where the doctrine is dis- payment or at the trial may be cussed. See in addition to those good). already referred to. Jones v. Broad- (Z) See per Willes J. in Cooh v. Inirxt (18.50) 9 C. B. 17.3. 82 R. R. Lixfrr (1868) 13 C. B. N. S. 594, 32 336 ; BeUhaw v. Buxh (18.51) 11 L.J. C. P. 121, who considered C. B. 191. 267, 22 L. J. C. P. 24, 87 the doctrine laid down in Jones v. R. R. 639. Broadhurst (next note) that pay- of contracts. AS TO PERSON. 499 we ai'e now concerned only to ascertain the existence or non-existence of a binding contract in the first instance. But on the other hand the limits set to this power (which we have already considered under another aspect) (w) may be again shortly referred to as illustrating the same principle. Generally speaking, the liability on a contract can- not be transferred so as to discharge the person or estate of the original contractor, unless the creditor agrees to accept the liability of another person instead of the first (o). The benefit of a contract can generally be trans- ferred without the other party's consent, yet not so as to put the assignee in any better position than his assignor (oo). Hence the rule that the assignee is bound by all the equities affecting what is assigned. Hence also the " rule of general jurisprudence, not confined to choses in action . . . that if a person enters into a contract, and without notice of any assignment fulfils it to the person with whom he made the contract, he is discharged from his obliga- tion " (p), and the various consequences of its appli- cation in the equitable doctrines as to priority being gained by notice. Again, rights arising out of a contract cannot be Rights ti-ansf erred if they are coupled with liabilities, or if founded on . personal they involve a relation of personal confidence such confidence cannot be pany, is not always bound to re- assi'^ned (ii) Ch. v., aupra, p. 228, sqq. (<») See p. 215, above. The ex- ceptions to this are but partial. Thus the assignor of leaseliolds remains liable on his express cove- nants . 1 Wnis. Saund. 298. A stronger case is the transfer of shares in a company not fully paid up : but the special statutory law governing these transactions has not altogether lost sight of the principles of the general law: for (1) the transferor is not ininie- iliately discharged : (2) the com- gister the transfer. Qw') Or the other party in a worse one than he was before : TdUii/rsf V. A.ixdciatcd Purthinil ('eiiip)tf Maim fact urerft [lilOlJ 2 K. B. 811, 70 L. J. K. B. lOHf! (reversed on grounds not affecting the general principle [1902] 2 K. B.dCO, [1903] A. C. -114, 71 L. J. K. B. 949. 72 L. .J. K. B. 8.^4). (/O I'er Willes J. Be NichoUs v. .SV/^/«^/^/',v(lS70) L. K. 5 C. P. 589 at i>. 594, :39 L. J. C. P. 297. K K 2 500 MISTAKE. that the pai-ty whose agreement conferred those rights must have intended them to he exercised only hy him in whom he actually confided (g). Thus one partner cannot transfer his share so as to force a new partner on the other memhers of the firm with- out their consent : all he can give to an assignee is a i-ight to receive what may he due to the assignor on the balance of the partnership accounts, and if the partnership is at will, the assignment dissolves it ; if not, the other partners may treat it as a ground for dissolution. And a sub-partner has no rights against the principal firm. " At the present day, no doubt, an agreement to pay money, or to deliver goods, may be assigned by the person to whom the money is to be paid or the goods are to be delivered, if there is nothing in the terms of the contract, whether by requiring something to be afterwards done by him, or by some other stipu- lation, which manifests the intention of the parties that it shall not be assignable. But every one has a right to select and determine with whom he will conti-act, and cannot have another person thrust upon him without his consent " (r). In the same way a contract of apprenticeship is pri.Dia facie a strictly personal contract with the master ; this construction may be excluded however by the intention of the parties, e.p. if the master's executors are expressly named (s), or by custom (t). So if an agent appoints a sub-agent without authority, the sub-agent so appointad is not the agent of the principal and cannot be an accounting party (//) This statement was approved 127 U. S. 379, 387. by the Supreme Court of the I'. S. (.v) Cooper v. Simnwns (1862) 7 in Arkfi/isfi.'! iSnieltltifi Co. v. BeUlen H. & X. 7(i7, 31 L. J. M. C. 138. ^'o. (1SS8) 127 U. S.'37y. 388. (t) Bac. Abr. Master and Ser- (;•) Cur. i>er Gray J. Arkanm.t vant, E. S::>elti)i;j Co. v. Befden Co. (1888) RIGHTS FOUNDED ON PERSONAL CONFIDENCE. 501 to him (u). On the same principle it was held in Stevens v. Benning (x) that a publisher's contract with an author was not assignable without the author's consent. The plaintiffs, who sought to restrain the publication of a new edition of a book claimed under instruments of which the author knew nothing, and which purported to assign to them all the copy- rights, &c., therein mentioned (including the copyright of the book in question) and all the agreements with authors, fcc, in which the assignors, with whose firm the author had contracted, were interested. It was decided that the instrument relied on did not operate as an assignment of the copyright, because on the true construction of the original agreement with the publishers the author had not parted with it : also that it did not operate as an assignment of the con- tract, because it was a personal contract, and it could not be indifferent to the author into whose hands his interests under such an engagement were entrusted. In the plaintiffs, however trustworthy, the author had not agreed or intended to place confidence: with them, however respectable, he had not intended to associate himself (?/). Similarly where persons contract to sell land as trustees, and it appears that their power to sell arises only on the death of a tenant for life who is still living, they cannot require the purchaser to take a conveyance from the tenant for life, from whom he never agreed to buy. This would be not merely adding a party to the conveyance, but forcing a wholly new contract on the purchaser (z). The law of agency, which we have already had i',.culiarities in hiw lit (?/) {') dordou V. Strrrt [1899] 2 L. J. Q. B. 200. g. I!. (Wl. 09 L. J. Q. B. l."), C. A. AS TO SUBJECT-MATTER. 503 prospectus was to warrant to the intended share- holders that there really was such a contract as is there represented {d), and not merely to represent that the company bona fide believed it, and that the difference in substance between shares in a com- pany with such a contract and shares in a company whose supposed contract was not binding was a difference in substance in the nature of the thing ; and that the shareholder was entitled to return the shares as soon as he discovered this, quite indepen- dently of fraud, on the ground that he had applied for one thing and got another " (e). The Court allowed it to be good law that if the shares applied for were really different in substance from those allotted, this contention would be right. But it is an important part of the doctrine (/) that the difference in substance must be complete. In the case of a fraud, a fraudulent representation of any fact material to the contract gives a right of rescis- sion ; but the misapprehension which prevents a valid contract from being formed must go to the root of the matter. In this case the misapprehension was not such as to make the shares obtained substantially different from the shares described in the })rospectus and applied for on the faith of that description (//). It was at most like the purchase of a chattel with a collateral warranty, where a breach of the warranty [tl) A contract with the post- aes pro auro veneat, non valet," U master-general of New Zealand on ascribed to Paulus in the report, belialf of the Ciovernment, which (//) So, where new stock of a turned out to be h(!}'ond his autlio- company is issued and pui'chased on rity. the supposition that it will Iiave a («) Per Cur. L. 11. 2 Q. P>. at preference which in fact the com- P- f>8G. I»any had no power to give to it, (/) In Roman law as well as in this does not amount to a generic the Common I.aw, ihid. at p. 588, difference between tiie thing con- citing I). IS. 1. do cont. enipt. 9, 10, traded forand thethiiigpurchascd: 11. I'.y a cl('ri(!al error the state- /■jn/lrstirld v. .}/ti n/i/in of Loiulon- ment of Ulpian (//. t. II) -'Si autem dri-nj (KSTC.) 1 Ch. Div. i'AY.\. 504 MISTAKE. gives an independent right of action, but in the absence of fraud is no ground for rescinding the contract (h). In the pai-ticular case of taking shares in a com- pany the contract is not in any case void, but only voidable at the option of the shareholder if exercised within a reasonable time: this, although in strictness an anomaly, is required for the protection of the company's creditors, who are entitled to rely on the register of shareholders (i). We reserve for the present the question how the legal result is affected when the error is due to a representation made by the other party. The exposi- tion of the general principle, however, is not the less valuable : and we now proceed to give instances of its application in the branches already mentioned. Subdivisions: A. Error as to the specific thing {in cor pore). A corpore. singular modern case of this kind is Raffles v. Ambiguous IFichclhcius (j). The declaration averred an agree- terms. ment for the sale by the plaintiff to the defendants of certain goods, to wit, 1'25 bales of Surat cotton, to arrive ex " Peerless " jrom Bombay, and arrival of the goods by the said ship : Breach, non-accept- ance. Plea, that the defendants meant a ship called the " Peerless," which sailed from Bombay in October, and that the plaintiff offered to deliver, not any cotton which arrived by that ship, but cotton which arrived by a different ship also called the " Peerless," and which sailed from Bombay in December. The plea was held good, for " The defendant only bought that cotton which was to arrive by a particular ship; " and to hold that he bought cotton to arrive in any (/() Street v. Bhu/ (ISSl) 2 P.. & hilra. Ad. 456 ; 3G R. R. (;2f,. "(_/) (1804) 2 H. & C. 90o, 33 (i) See cases cited p. .")UU. I^. J. Ex. llJO. AS TO SPECIFIC THING. 60^ ship of that name would have heen " imposing on the defendant a contract different from that which he entered into " (k). Misunderstanding of an offer made by word of mouth might conceivably have a like effect, but obviously is, and ought to be, difficult to pi'ove (l). Unconditional acceptance of an offer which in fact is ambiguous and has been misunderstood will not make the acceptor liable for not having acted on the proposer's intention ; nor can the acceptor hold the proposer liable on a construction which he did not intend (m). In Matins v. Freeman (n) specific performance was Parcels refused against a purchaser who had bid for and )"[shike ^' bought a lot different from that he intended to buy; but the defendant had acted with considerable negli- gence, and the question was left open whether there was not a valid contract on which damages might be recovered. In a recent similar case of Van Praagh V. Everidge (o) the Court of xlppeal went on the ground that there was no signed memorandum of the contract, owing to a variance from the real date in the printed form which the auctioneer, on the defen- dant refusing to sign, purported to sign as his agent, but at least one member of the Court thought there was no real agreement. In Calveiiey v. Williams (p) the description of an estate sold by auction included {k) Per Pollock C.B. and Martin P. & C. 511, 2(J E,. P. 433. B. 2 H.i: C.at p. 207. The further (^iii) Fah-k v. WilUdms [1900] questions which might have arisen A. C. 17(j, (!9 L. J. P. C. 17, a very on the facts are of course not dealt peculiar case of a code telegram with. Such a case can occur only wrongly construed. where "the ordinary evidence as to (w) (l.S3tJ-7) 2 Keen 25, 44 P. P. the primarymeaningsof the words" 178 ; Daere v. Govijcs (1825) 2 S.i: use(l "shows that the words may St. 454, 25 P. P. 24(1, ajipears to bear more than one meaning, with- belong to the same class. out showing in which of those (c) [1902] 2 Ch. 2011, 71 P. .1. meanings either party used them, Ch. 598, reversed [1903] 1 Cii. 131, S(j that we have a case of equivoca- 72 L. .1. Ch. 2(Jn. lion": Sir 11. \V. Elphinstonc in (;;) (179i)) 1 Ves. jun. 210, 1 L. Q. P. ii. 110. P. P. 118. (0 I'hilUjKs V. lilstolli (1824) 2 Pepperell, kc. 506 MISTAKE. a piece which appeared not to have been in the con- templation of the parties, and the purchaser was held not to be entitled to a conveyance of this part. " It is impossible to say, one shall be forced to give that price for part only, which he intended to give for the whole, or thattheother shall be obliged to sell the whole for what he intended to be the price of part only. .... The question is, does it appear to have been the common purpose of both to have conveyed this part ? " A mistake as to the contents of a lot put up for sale, arising from mere want of attention to the particulars and a plan therein referred to and exhibited in the sale room, is no defence against an action for specific performance (q). There remains a peculiar group of cases where the Court has seen its Harris i\ ^ ^\'uy to a middle course. In Harris v. Pepperell (r) the vendor had actually executed a conveyance in- cluding a piece which he had not intended to sell, but which the defendant maintained he had intended to buy : Lord Eomilly, acting in accordance with his own foiiner decision in Garrard v. Frankel (s), gave the defendant an option " of having the whole con- tract annulled or else of taking it in the form which the plaintiff intended." The converse case occurred in Bloomer v. Spittle (t), where a reservation had been introduced by mistake. The Court, it seems, will not hold the plaintiff bound by the defendant's acceptance of an offer which did not express the plaintiff's real intention, and which the defendant could not in the circumstances have reasonably sup- posed to express it (w) ; nor yet require the defendant (//) 7'uiiijiJin x.Jaiiip.'i (1880) 15 (u) Ibis limitation is material: Ch. Div. L>lo. c)). Pa9 L. j. Ch. H57 ; lilooincr point of mistake (^riz. the vendors of V. Spittle has been said by Neville a specitic cart;o showing the pur- .1. to be unintelligible as repoi'ted, chaser a sample which in fact was though not exactly on this point : of a different bulk) did not go to Jinilf V. Kytr [1!)07] 1 Ch. 5(J4, the essence of the contract : tiie 5(i5, 7() lj. J. Ch. 294. correspondence of the bulk to the (/•) For the principle (whether it sample was only a collateral term actually justifies the particular which the purchaser might waive decisions or not) compai-e Clowes if he chose. The vendors, there- V. J/it///i/ix(>n {niixi note) and Ley- fore, were at all events not entitled l/i)id V. ]Ui/u/iV(irf/i (^\^V>0)2 T).V..J. to rescind the contract uncon- 2o2-:5. McKeiuie v. lleah-th (1 877) ditionally. 7 Ch. I). 675, 47 L. .J. Ch. 2:51, (/r) ^'/o/mv v. 7////y///.sw/ (181:5) 1 well shows the distinction between Vcs. & B. 524, 5:55, 'l2 K. 11. 284. this class of cases and those where (./•) Tampl'm v. Jumen, see note a true contract is carried out (/') last page. 608 lAJISTAKE. the contract executed in the manner in which the defendant is willing to complete it, specific perform- ance cannot be granted (t/). When a purchaser, being naturally misled by the vendor's plan even after a view, supposes a portion of property to be included which is of no consider- able quantity, but such as to enhance the value of the whole, this is a " mistake between the parties as to what the property purchased really consists of " so material that the contract will not be enforced {z). In this class of cases a simple misunderstanding on the buyer's part of the description of the property sold, if such as a reasonable and reasonably diligent man might fall into, may be enough to relieve him from specifically performing the contract, though not from liability in damages {a). A vendor is in the same position if his agent has by ignorance or neglect included in a contract for sale property not intended to be sold {h). But, although the authorities admit the possibility that a mistake to which the vendor did not contribute, and which he could not be expected to perceive, may in circumstances of special hardship be a bar to specific performance {c), it is certain that such cases are rare. One-sided mistake, we repeat only l)y way of abundant caution, will never of itself prevent the formation of a contract on which ^n action for damages will lie. (y) BcLVPiuhtle v. Sp(de (1854) (a) Tampl'ui v. James (1880) 15 11) i'.eav. (101, 24 L. J. Ch. 885, 1()5 Ch. Div. 215. 11. K. 261. Ci). per Lord El.loii, (li) Almnleij s. Kimiunl {XU'i-) Ste.wart v. Allh-tc»i {liiir>) 1 Mer. 2(;. 2 Mac. & G. 1, 8, 86 R. E. 1 C|.. 33, 15 R. R. 81 ; and i>er Sir \V. (irijfitks v. Junes (1873) L. E. 15 (jiaiit. IIii/t/iiiso)i V. Clowes {18U8) Eq. 271), 42 L. J. Ch. 468. 15 Yes. 516, 524. 10 E. E. 112. (c) Wood v. Senrth (1855) 2 (.-) De/rni/ V. Hancock (1870) K. & J. 33, 110 E. R, 88, is the L. R. 6 Ch. 1. 14. Note that here only authority which appears to tiiere was negligent misreprosenta- have actually decided so much : tjii. tioii going, in the opinion of tiie liow far it would now be followeil. Court, to the verge of fraud. AS TO SPECIFIC THING. 509 It was at ono time (d) held that a material variance As to shares : between the objects of a company as described in the prospectus and in the memorandum of associa- tion would entitle a person who had taken shares on the faith of the prospectus to say that the concern actually started was not that in which he agreed to become a partner, and to have his name removed from the register. But these decisions were dis- approved of in the House of Lords on the ground that " persons who have taken shares in a company are bound to make themselves acquainted with the memorandum of association, which is the basis upon which the company is established " (c). It has also been attempted to dispute the validity Error in of a transfer of shares because the transferor had Ingmfmbers not the shares corresponding to the numbers expressed of shares not in the transfer, although he had a sufficient number of other shares in the company ; but it was held that the transferee, who had in substance agreed to take fifty shares in the company, could not set up the mistake as against the company's creditors (/). " The numbers of the shares are simply directory for the purposes (g) of enabling the title of particular persons to be traced ; but one share, an incorporeal po]-tion of the profits of the company, is the same as another, and share No. 1 is not distinguishable (d) S/ii/ix rase (ISC.o) 2 I). J. S. but only voidable at the option of 544, L. K. H H. L. ;U:i ; Wrhxttv-'x the shiireholder. which must be case (1806) L. R. 2 E(|. 711; exercised wiih in a reasonable time. Sffiwart's cij.se {\8GC,) L. l;. ] Ch. So, a person who ajjplics for shnres 574. iu a company not described as (c) Per Lord Chelmsford, Ot/kes limited cannot afterwards be heard V. Turquand (1867) L. K. 2 H. L. to say that he did not mean to take 325, 351, 36 L. J. Ch. 949. See shares in an unlimited company : ace. Kent v. Freehold L'ind Co. Perretfs cme (187.S) Tj. R. 15 Eii, (1868) L. R. 3 Ch. 493 ; //aw'.s' case 250, 42 L. .1. Ch. 305. (1869) L. R. 4 Ch. 503; ChalUxa (/) LuVs caxe (1872) L. R. 7 rase (1870-1) L. R. 6 Ch. 266, 40 Ch. 485, 41 L. J. Ch. 564, L. J. Ch. 431 ; all showing that the (y) Sic in the repurt. contract is in such cases not void, 510 MISTAKE. from share No. 2 in the same way as a grey horse is distinguishable from a black horse " (h). A compromise of an action has been avoided, where by misapprehension of counsel it extended to matters which his client and he thought were not in dispute (i). Error as to B. Error as to kind, quantity, or quality of the thmg. A material error as to the kind, quantity, or quality of a subject-matter which is contracted for by a generic description (whether alone or in addition to an individual description) nay make the agreement void, either because there was never any real con- sent of the parties to the same thing, or because the thing or state of things to which they consented does not exist or cannot be realized. Genus : In Thornton v. Kempster (;') the common broker Kenipstei-.' ^^ "^^^^ parties gave the defendant as buyer a sale note for Riga Rhine hemp, but to the plaintiff as seller a note for St. Petersburg clean hemp. The bought and sold notes were the only evidence of the terms of the sale. The Court held that "the contract must be on the one side to sell and on the other side to accept one and the same thing " : here the parties so far as appeared had never agreed that the one should buy and the other accept the same thing ; consequently there was no agreement sub- sisting between them. In a case of this kind however there is not even an agreement in terms between the offer and the acceptance. (70 Or house No. 2 in a street Ch. 638. CA L. J. Ch. 785, C. A. ; from house No. 4 in the same street. Xeale v. Gm-don Lennox [1902] though of the same description and A. C. 465. 71 L. J. K. B. 939, does not in equally good repair: Leach v. belongto this head, as it was decided MuUetf (1827) 3 Car. & P. 115, 33 on the ground not of mistake but of E. K. 657. want of authority from the client. (»■) Hickman v. Berens [1895] 2 (J) 5 Taunt. 786, 15 R. K. 658. AS TO QUANTITY. 611 A curious case of error in quantity happened in Quantity. Hcnkel v. Pape (k), where hy the mistake of a telegraph clerk an order intended to be for three rifles only was transmitted as an order for fifty. The only point in dispute was whether the defendant Avas bound by the message so transmitted, and it was held that the clerk was his agent only to transmit the message in the terms in which it was delivered to him. The defendant had accepted three of the fifty rifles sent, and paid the price for them into Court: therefore the question whether he was bound to accept any did not arise in this case. It is settled however by former authority that when goods ordered ,are sent together with' goods not ordered, the buyer may refuse to accept any, at all events " if there is any danger or trouble attending the severance of the two " (l). The principle of error in quantity preventing the rricc. foiunation of a contract is applicable to an error as to the price of a thing sold or hired (m). As there cannot be even the appearance of a contract when the acceptance disagrees on the face of it with the proposal, this question can arise only when there is an unqualified acceptance of an erroneously expressed or understood proposal. If the projiosal is misunder- stood by the acceptor, it is for him to show that the misunderstanding was reasonable. " Where there has Uvvn no misrepresentation, and where there is no (A) (1870) L. R. (3 Ex. 7, 40 L. J. but in tliat ca=e tliequalily as well I'-x. 15. as the quantity of the goods sent (/) Lt!Vi/v. Green {I8i>7) 8 Vl-kB. was not in conformity with the .■.75, 112 U. 11. «99, in Ex. Ch. 1 order. E. &E. !i(;9, 27 L. J. Q. B. Ill, («/) D. 19.2. locati, .52. 8idecem 28 /*. 319 ; per Byles J. 1 E. & E. tibi locem fnndum, tu autem exis- at, p. 97(i ; and op. //tirt v. Mill.t tinu^s quiii(]uo te conducere. nihil (IHK;) 15 M. & \V. 85, 15 L. J. ai,ntur. Sed et si ego miiioris nie Ex. 200, 71 R. R. 578, where a locarc scnsero, tu i)luris te cori- iicw contract was implied as to part dncerc, >itit|ne iioii phiris crit con of the goods which was retained; ductio quani quanti ego putavi. 512 MISTAKE ambiguity in the terms of the contract, the defen- dant cannot be allowed to evade the performance of it by the simple statement that he has made a mis- take " (n). A. makes an offer to B. to take a lease of a named farm, specifying as its contents land amounting to 250 acres; B.'s agent, who meant to invite offers for only 200 acres, accepts A.'s offer williout examining its particulars. Here there is a contract binding on B., and A. is entitled to specific performance to the extent of B.'s power to give it, with a proportionate reduction of the rent (o). If, on the other hand, the proposal is by accident wrongly expressed, the proposer must show that the acceptor could not reasonably have supposed it in its actual form to convey the proposer's real inten- tion. This occurred in Webster v. Cecil (p), where the defendant sent a written offer to sell property and wrote 1,100L for 1,2001. by a mistake in a hurried addition of items performed on a separate piece of paper. This paper was kept by him and produced to the Court. On receiving the acceptance he discovered the mistake and at once gave notice of it. It appeared lluil the plaintiff had reason to know the real value of the property. Under the circumstances specific pei-formance was refused. The case is explained by James L.J. as one " where a person snapped at an offer which he must have perfectly well known to be made by mistake " (q). Material But sometimes, even when tlie thing which is the subject-matter of an agreement is specifically ascer- tained, the agreement may be avoided by material error as to some attribute of the thing. For some («) Taniplin v. James (IS^M) 15 Ch. D. 675, 47 L. J. Ch. 231. rh. Div. 215, 217 (Baggallay (;;) (^^^O 30 Beav. 62. L.J.)- (?) lamplin v. James (1880) 15 (r.) M.'KriKk V. TIrslrt/i (1877) 7 Ch. D. at p. 221. af tribute. AS TO ESSENTIAL QUALITY. 513 attribute which the thing in truth has not may be a material part of the description by which the thing was contracted for. If this is so, the thing as it really is, namely, without that quality, is not that to which the common intention of the parties :was directed, and the agreement is void. An error of this kind will not suffice to make the transaction void unless — • (1) It is such that according to the ordinary course Conditions of dealing and use of language the difference made j^ccessary by the absence of the quality wrongly supposed to transaction exist amounts to a difference in kind (r) ; grouud. (2) and the error is also common to both parties. Thus we read " Mensam argento coopertam mihi ignoranti pro solida vendidisti wiprudens ; nulla est emptio, pecuniaque eo nomine data condicetur " (s). Again, " Si aes pro auro veneat, non valet " (t). This, however, is not to be taken too largely. What does pro auro, as and for gold, imply as here used ? It implies that the buyer thinks he is buying, and the seller that he is selling, a golden vessel : and further, that the object present to the minds of both parties as that in which they are trafficking — the object of their common intention — is not merely this specific vessel, but this specific vessel, being golden. Then, and not otherwise the sale is void. If the seller fraudulently represents the vessel as golden, knowing that it is not, the sale is (as between them) not void but voidable at the option of the buyer. For if both parties have been in innocent and equal error it would be unjust to let either gain any advantage: but a party who has been guilty of (/•) Savigny, Syst. § 137 (3. 2K8). adopted by the Court of Q. B. in • (k) D. is, 1. dc cont. enipt. 11 Kennedy \. I'dwinKi, ,^-c. Mail Co., ^ I • p. 502, .%uj)ni. (/) D. cod. tit. 11, cited and P. L L 614 MISTAKE. fraud has no right to complain of having been taken at his word ; and it is conceivable that it might be for the interest of the buyer to affirm the transaction, as if the vessel supposed by the fraudulent seller to be of worthless base metal should turn out to be a precious antique bronze. Probably the results are the same if the buyer's belief is founded even on an innocent representation made by the seller. This seems to be assumed by the language of the Court in Kennedy v. Panama, dc. Mail Company {x). We shall recur to this point presently. Or in an ordinary case the buyer may choose to treat the seller's affirma- tion as a warranty, and so keep the thing and recover the difference in value. Again, if the sale of the specific vessel is made in good faith with a warranty of its quality, the vendor must compensate the purchaser for breach of the warranty, but the sale is not even voidable. Foi' the existence of a separate warranty shows that the matter of the warranty is not a condition or essential part of the contract, but the intention of the parties was to transfer the property in the specific chattel at all events. Whether a particular affirma- tion as to the quality of a specific thing sold be only a warranty, or the sale be " conditional, and to be null if the affirmation is incorrect," is a ques- tion of fact to be determined by the circumstances of each case (?/). (j-) (18fi7> L. R. 2 Q. B. 580, as to a sale with warranty : D. 19. 587, 36 L. J. Q. B. 2m. p. 502, 1 de act. empt. 21 § 2. expld. by sii]}ra. Savigny, Svst. 3. 287. The whofe (y) i'ee per Wightman J. Gur- of Savigny's adm-rable exposition ney v. Womersley (1854) 4 E. & B. of so-called error in substantia in 13'3, 142, 24 L." J. Q. B. 4fi, 99 §§ 137, 138, (3. 276 .?/?^.)- (Reserves E. R. 390, 397 ; Bannernian v. careful study. Of course the con- White (1861) 10 C. B. N. S. 844, elusions in detail are not always 31 L. J. C. P. 28, Einch Sel. Ca. the same as in our law ; and the 531; Ac^iiiar v. Ca.oeJla (1867) fundamental difference in the rules L. R. 2 C. P. 431 . 677, 36 L. J. C. P. as to the actual transfer of property 124. The Roman law is the same in goods sold (as to which, see AS TO QUALITY. ^^ p. Accordingly, when the law is stated to be that "a party is not bound to accept and pay for chattels, be common. unless they are really such as the vendor professed to sell, and the vendee intended to buy " (z), the condition is not alternative but strictly conjunctive. A sale is not void merely because the vendor pro- fessed to sell, or the vendee intended to buy, some- thing of a different kind. It must be shown that the object was in fact neither such as the vendor professed to sell nor such as the vendee intended to buy. And so in the case supposed the sale will not be invalidated by the mistake of the buyer alone, if he thinks he is buying gold ; not even if the seller believes him to think so, and does nothing to remove the mistake, provided his conduct does not go beyond passive acquiescence in the self-deception of the buyer. In a case (a) where the defendant bought a parcel of oats by sample, believing them to be old oats, Hutrhes. and sought to reject them when he found they were new oats, it was held that " a belief on the part of the plaintiff that the defendant was making a con- tract to buy the oats of which he offered him a sample under a mistaken belief that they were old would not relieve the defendant from liability unless his mis- taken belief was induced by some misrepresentation of the plaintiff or concealment by him of a fact which it became his duty to communicate. In order to Blackburn on the ConfracL of Sale, Cockbuiii CJ. L. K. (J Q. H.p. ti03 : Part 2. Ch. 3) must not be over- per Hannen J. p. (ilO. The some- looked. But this does not aiiect what refined distinction here taken the usefulness and im[)ortance of does not seem to exist in the civil the general analogies. law. I). IH. l.de act. einpt. 11 ij ."> : (-) Per Cur. Hall v. Cundci' Savigny, 3. 293, according to whom (18.57) 2 C. B. N. S. 22, 41, 2(; it makes no difference whether L. J. 0. P. 138, 143, 109 R. K. .")'.»(). there lie on the part of the vendor 'KlO. ignoiance, passive knowledge, or ('/) Siiiitli V. //i/i//irx {\>^7\) L. li. even actual fraud: the sale being (j *^. H. ottT. 40 1>. .i. <). !!. 221 : yry wholly void in any case. L li 2 516 MISTAKE. relieve the defendant it was necessary that the jury- should find not merely that the plaintiff believed the defendant to believe that he was buying old oats, but that he believed the defendant to believe that he, the plaintiff, was contracting to sell old oats." " There is no legal obligation on the vendor to inform the purchaser that he is under a mistake not induced by the act of the vendor " (b) ; and therefore the question is whether we have to do merely with a motive operating on the buyer to induce him to buy, or with one of the essential conditions of the con- tract (c). " Videamus, quid inter ementem et ven- dentem actum sit " (d) : " the intention of the par- ties governs in the making and in the construction of all contracts " (e) ; this is the fundamental rule by which all questions, even the most refined, on the existence and nature of a contract must at last come t-o be decided. Cox i: Another curious case of this class is Cox v. Prentice. Prentice (/). The declaration contained a count in assumpsit as on a warranty, and the common money counts. The nature of the material facts will suffi- ciently appear by the following extract from the judgment of Bayley J. :— '■ What did the plaintiffs bargain to buy and the defendants to sell .' They both understand [sic] that the one agreed to buy and the other to sell a bar containing such a quantity of silver as should appear by the assaj'. and the quantity is fixei by the as^ay and paid for; but through some mistake in the assay the bar turns out not to contain the quantity represented but a smaller quantity. The plaintiff therefore may rescind the contract and bring money had and received, having offered to return the bar of silver." (i) Per Blackburn J.. L. R. 6 (e) FevCuT.Bannei-manv. White Q. B. at p. 607. (ISfil) 10 C. B. N. S. 814. 860, 31 (c) Ihid.. per Cockburn, C.J. L. J. C. P. 28, 32. {(I) Julianus in D. 18. 1. dc cont. ( f) (181.5) 3 M. & !?. 344, 16 K. emnt. 41 pr. K. 288. MISDESCRIPTION IN SALE. 517 And by Dampier J. : — " The bargain was for a bar of silver of the quality ascertained by the assay- master, and it is not of that quality. It is a case of mutual error." These judgments went farther than was necessary to the decision {cj), for a verdict had been taken only for the difference in value. It would seem that the sale was good, and the mis- take affected only the fixing of the price ; the contract being to pay for the real quantity of silver, not for the quantity found by a particular assay. It is important to distinguish from the cases above Cases of mis- considered another class where persons who have con- orsaiesof" tracted for the purchase of real property or interests real property therein have been held entitled at law {h) as well as "^'^^"S"^^ in equity (i) to rescind the contract on the ground of a misdescription of the thing sold in some par- ticular materially affecting the title, quantity, or enjoyment of the estate. In some of these cases language is used which, taken alone, might lead one to suppose the agreement absolutely void ; and in one or two {e.g., Torrance v. Bolton) there is some real difficulty in drawing the line. But they properly belong to the head of Misrepresentation, or else (which may be the sounder view where applicable) (;') are (jf) And ceitainly farther than Purchasers, the civil law : see D. 18. 1. de cont. (j) The difference is purely theo- empt. 14. where though a bracelet retical ; for if it be an actual " quae aurea dicebatur " should be breach of contiact the purchaser found "magna ex paitc asnen," can recover only nominal damages : yet " venditionem esse constat ideo, Hai/i v. Futhergill (1873-4) L. R. quia auri aliquid habuit." 7 H. L. 158, 43 L. J. Ex. 243, (//) Flight V. ildoth (1834) 1 confirming Flnrean v. Tliornhill Bing. N. C. 370, 41 R. K. 599 : (177(1) 2 W. Bl. 1078. The ana- Pliillips V. CaUlcleuff/i (^\Sf')8) L. Ji. logy suggested in the text shoukl 4 Q. B. l.")9, 38 L. J. Q. B. t)8, perhaps be confined to cases where ((') Stanton V. Tattersall (1853) the misdescription goes to matter 1 Sm. &. (i. 529 ; Furl of Durham of title. One cannot compare a V. Legurd {XH'i'i) 34 Beav. 011,34 specific sale of land to a non- L. J. Ch. 589 ; Torrance v. Bolton s|)ecific sale of goods : but the (1872) L. R. 8 Ch. 118, 42 L. J. contract is not merely to sell spe- Ch. 177. The details of the subject cific land, but to give a certain belong to the law of Vendors and kind of title. 518 MISTAKK cases where the contract is rather broken than dis- solved. A man is not bound to take a house or land not corresponding to the description by which he bought it any more than he is bound to accept goods of a different denomination from what he ordered, or of a different quality from the sample. Mistake or no mistake, the vendor has failed to perform his contract. The purchaser may say: "You offered to sell me a freehold : that means an unincumbered freehold, and I am not bound to take a title subject to covenants " (k) : or, "You offered to sell an abso- lute reversion in fee simple : I am not to be put off with an equity of redemption and two or three Chan- cery suits (l). I rescind the contract and claim back my deposit." Cases of this kind, therefore, are put aside for the present. Subject- Again, an agreement is void if it relates to a in^xistence. subject-matter (whether a material subject of owner- ship or a particular title or right) contemplated by the parties as existing but which in fact does not exist. Herein, as before, everything depends on the intention of the parties, and the question is whether the existence of the thing contracted for or the state of things contemplated was or was not presupposed as essential to the agreement. Such is presumed to be the understanding in the case of sale (???)• We may conveniently use the illustrations given on this point in the Indian Contract Act (??). Illustrations. a. A. agrees to sell to B. a specific cargo of goods supposed to be on its way from England to Bombay. (?c) Phillips V. ('aldclpugh{lS6S) of Goods Act, ss. 6, 7. L. R. 4 Q. B. 15t». 3.S L. J. Q. P.. («) S. 20 ; the rule is rather OS. widely stated : Where both the (Z) Torrance v. Ihilton (1872) parties to an agreement are under L. R. 8 Ch. 118 ; see at p. 121. a mistake as to a matter of fact (m) Since 18'J3 the common law essential to the agi'eeraent. the is declared in England bv the Sale agreement is void. AS TO EXISTENCE OF SUBJECT-MATTER. 5l9 It turns out that, before the day of the bargain, the ship conveying the cargo had been cast away and the goods lost. Neither party was aware of these facts. The agreement is void. This was assumed in the House of Lords and by Couturier all the judges in Couturier v. Hastie (o), where the '"• ^astie. only question in dispute was on the effect of the special terms of the contract. b. A. agrees to buy from B. a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement is void (p). We may add a like example from the Digest. A. agrees with B. to buy a house belonging to B. The house has been burnt down, but neither A. nor B. knows it. Here there is not a contract for the sale of the land on which the house stood, with compensa- tion or otherwise, but the sale is void (q). In like manner a sale of shares in a company will same prin- not be enforced if at the date of the sale a petition cipie applied . , to sale or for winding-up has been presented of which neither shares. the vendor nor the purchaser knew (r). But the ignorance of the buyer only in similar circumstances does not of itself invalidate the sale. It seems however 00 C1S.'>6) 5 H. L. C. 673, 25 L. J. (y) Paulus in D. IS. 1. de cont. Ex. 2.53, 101 R. K. 329. For a fuller enipt. 57, pr. Domum eml cum account of the case, and the relation eani et ego tt venditor conibustam of this class of cases to the doc- ignoremus ; Nerva, Sabinus, Cas- trine of impossibility of perform- sius, nihil venisse quamvis area ance, see pp. 443, 444, above. maneat, pecuniamque solutam con- {p) Pothier, Coiifrat de I'rnte, dici posse aiunt. Cp. Papinian, § 4, cited .5 H. L. C. 678, says : '• Si eod, tit. 58. Arboribus quoque vento done, ignorant que mon cheval est deiectis vel absumjjtis igne dictum mort, je le vends a quelqu'un, il est emptionem fun(U non videri esse n'y aura pas uii contrat de vente, contractam si contemplatione illa- faute d' line chose qui en soit Fob- rum aiborum,veluti oliveti, fundus jet." Cp. Code Civ. IGOl. "Si coni[)arabatiir, sive sciente sive ig- au moment de la vente la chose norante venditore. vendue etait pc'rie en totalitc, la (?•) J'Jiiinierson's ra.se (\8C)C))Jj. II. vente serait nuUe" : and so Italian 1 Ch. 433, expld. L. K. 3 C'h. 391, Code, 1461. per Page Wood L.J. 520 MISTAKE. To annuities and life interests. that the sale would be voidable on the ground of fraud if the seller knew of the buyer's ignorance, but that such knowledge should be distinctly and completely alleged (.5). An agreement to take new shares in a company which the company has no power to issue is also void, and money paid under it can be recovered back (t). c. A. being entitled to an estate for the life of B. agrees to sell it to C. B. was dead at the time of the agreement, but both parties were ignorant of the fact. The agreement is void. This was so held at law in Strickland v. Turner (u). There, at the date when the sale of a life annuity was completed, the life had dropped unknown to both vendor and purchaser ; it was held that the purchase money might be recovered back as on a total failure of consideration. So in Hitchcock v. Giddings (v) a remainderman in fee expectant on an estate tail had sold his interest, a recovery having been already suffered unknovra to the parties : a bond given to secure the purchase money was set aside. " Here is an estate which if no recovery had been suffered was a good one. Both parties, being equally ignorant that a recovery had been suffered, agree for the sale and purchase of the estate, and the purchaser is content to abide the risk of a recovery being subsequently suffered. He conceives however he is purchasing something, that he is purchasing a (.s) Rud(je Y. Bmcmun (1868) L. K. 3 Q. B. 689, 697. The Roman lawyers seem to have treated the presumption of dolux as absolute if the seller knew the facts. Seethe continuation of the passages above cited. (0 Bank of Hindustan v. Alison (187(1) L. R. 6 C. P. .54. in Ex. Ch. ih. 222. 40 L. J. C. P. ]. 117 ; L'x 2:arfe Alison (_IH74) L. R. 15 Eq. 3U4. 9 Ch. 1, 24 ; IJ.c parte Cavip- hell (1873) L. R. IG Ea. 417, L. K. t) Ch. 1. 12. 42 L. J. Ch. 771. (?/) (18.52) 7 Ex. 208, 22 L. J. Ex. 115, m R. R. 619. The only (juestion in dispute was when the vendor's interest was intended to cease. ((•) (1817) 4 Pri. (Ex. in Eq.) 135, and better in Dan. 1, 18 R. R. 725. AS TO EXISTENCE OF SUBJECT-MATTER. 521 vested interest. He is not aware that such interest has ah'eady been defeated . . . [The defendant] has sold that which he had not — and shall the plaintiff be compelled to pay for that which the defendant had not to give ? " (x). More recently, in Cochrane V. Willis (y), an agreement had been made between a remainderman and the assignee of a tenant for life of a settled estate, founded on the assignee's supposed right to cut the timber. The tenant for life was in fact dead at the date of the agreement. The Court refused to enforce it, as having been entered into on the supposition that the tenant for life was alive, and only intended to take effect on that assumption. So a life insurance cannot be revived by the payment of a premium within the time allowed for that purpose by the original contract, but after the life has dropped unknown to both insurers and assured, although it was in existence when the premium became due, and although the insurers have waived proof of the party's health, which by the terms of renewal they might have re- quired : the waiver applies to the proof of health of a man assumed to be alive, not to the fact of his being alive (0). An agreement to sell a policy on the life of a person supposed to be living, who is in fact dead, is not binding, and the subsequent execu- tion of an assignment in pursuance of the agreement, the fact being still unknown to the vendor, makes no difference (a). The old case of Bingham v. Bingham (b), which Purchase of (*) Dan. at p. 7, IS R. It. 729. date of effecting the policy the risk '^ ''^ •' (y) (186.")) ]j. 11. 1 Ch. 58, 'A'> has been determined without the L. J. Ch. 'M'}. knowledge of the parties, see (r) Prltchard \. MrrchdiitK' Life Jhutdford v. Symontlaon (1881) 7 Assurance Societij (!8.-)8) 3 C. \',. Q. B.'Div. 4.">i;, 50 L.J. Q. B. 582. N. S. 622, 27 L. J. C. P. 161), 111 («) Srott v. C,mLson\\mA] 2 Ch. It. K. 777. For the somewhat 24!), 72 L. J. Ch. 600. t;. A. different treatment of the contract (/>) (1748) 1 Ves. .Sr. I2(;, Belt's of marine insurance, where at the Supp. 79. 5'22 MISTAKE. alreaily one's own. Bingham r. Binc'ham. Agreement to pay rent for one's own property. Cooper r. Phibbs. was relied on in Cochrane v. Willis, belongs to this class. As in Cochrane v. Willis, the substance of the facts was that a purchaser was dealing with his own property, not knowing that it was his. There is therefore no ground for criticizing the decision as having given relief against a mere mistake of law (c). It does not rest on mistake as a ground of special relief at all, but on total failure of the supposed subject-matter of the transaction. The one party could not buy what was his own already, nor could the other (in the words of the judgment as reported) be allowed "to run away with the money in con- sideration of the sale of an estate to which he had no right " {cl). So we find it treated in the Roman law quite apart from any question of mistake, except as to the right of recovering back money paid under the agreement. A stipulation to purchase one's own property is " naturali ratione inutilis " as much as if the thing was destroyed, or not capable of being private property (e). Such an agreement is naught both at law and in equity, without reference to the belief or motive which determined it. Lord Westbury gave the correct rule in a case exactly similar in principle. In Cooper v. Phibbs (/) A. agreed to take a lease of a fishery from B., on the assumption that A. had no estate and B. was tenant in fee. Both parties were mistaken at the time as to the effect of a previous settlement; and in truth A. was tenant for life and B. had no (f) Story, Eci. Jurisp. § 124, took this objection. {(]) The case is considered, among other authorities, and upheld on the true ground, in Stewart v. Stewurt (183'J) M>-antia it is the object of this petition (g) to set aside, the parties dealt with one another under a mutual mis- take as to their respective rights. The petitioner did not suppose that he was, what in truth he was, tenant for life of the fishery. The other parties acted under the impression given to them by their father that he (their father) was the owner of the fishery and that the fishery had descended to them. In such a state of things there can be no doubt of the rule of a court of equity with regard to the dealing with that agreement. It is said ' Ignorantia iuris haud excusat ' ; but in that maxim the word ' ius ' is used in the sense of denoting general law, the ordinary law of the country. But when the word ' ius ' is used in the sense of denoting a private right, that maxim has no application. Private right of ownership is a matter of fact ; it may be the result also of matter of law ; but if parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is that that agreement is liable to be set aside as having proceeded upon a common mistake. Now that was the case with these parties— the respondents believed themselves to be entitled to the property, the petitioner believed that he was a stranger to it, the mistake is discovered, and the agreement cannot stand " (h). The principle here laid down also covers Broughton p,roughton v. V. Hutt (i). There the heir-at-law of a shareholder ^^^*'^* in a company joined with several other shareholders in giving a deed of indemnity to the directors, believ- (^/) A Cause Petition in the Irish (A) L. R. 2 H. L. 170. Court of Chancery. (i) (1858j 3 De G. &; J. 501. 624 MISTAKE. ing that the shares had descended to him as real estate, whereas they were personal estate. The deed was held to be void as against him in equity at all events, and probably at law. " The plaintiff never intended to be bound unless he was a shareholder, and the defendants never intended him to be bound unless he was so." Here the mistake was plainly one of fact within Lord Westbury's definition, namely as to the character of the shares by the constitution of the particular company. It is submitted, however, that an erroneous fundamental assumption made by both parties even as to a general rule of law might well prevent any valid agreement from being formed. Assignment In the same way an agreement to assign a lease of lease for j^j, jj^gg ^Qi^^ifj jjg inoperative if all the lives had lives. ^ dropped unknown to the parties. But the only thing which the parties can here be supposed, in the absence of expressed condition or warranty, to assume as essential is that the lease is subsisting, that is, that at least one of the lives is, not that they all are still in existence. Where the assignor of a lease for the lives of A., B., and C, expressly covenanted with the assignee that the lease was a subsisting lease for the lives of A., B., and C, and the survivors and survivor of them, this was held to be only a covenant that the lease was subsisting, and not that all the lives were in being at the date of the assignment (k). That is, his contract was interpreted, according to the general practice and understanding of conveyancers, as a contract to transfer an existing lease for three lives, not necessarily a lease for three lives all existing. Eesuits where If in any state of things otherwise resembling those only one j^jg^ ^^^^ discussed we find, instead of ignorance of party is *■ ' b (/O Coate.s V. Conin., and 22 Beav, .538, 111 R. R. 471 (con- see note («). tract for a lease of working mines). («) Per Cotton L.J. liciifrr v. («) " It constantly happens that Sala (1879) 4 C. P. Div. at p. 249, an objection is waived by the con- 48 L. J. C. P. 492. duct of the parlies," per James (y) Hydrnvlir. Knci'meerinq Co. L.J. Upperton v. Kichohon (1871) V. Mclldtfic (1K78) 4 Q. P. Uiv. (570, fi Ch. at p. 44.S, 40 L. J. Ch. 401. 673. ' And sec Dart. V, & P. 424. 538 MISTAKE. performance of contracts will not be literally enforced, if the substantial performance of that which was really contemplated can be otherwise secured (b). The most important application of this principle is to mortgages. A court of equity treats the contract as being in substance a security for the repayment of money advanced, and that portion of it which gives the estate to the mortgagee as mere form, " and accordingly, in direct violation of the [form of the] contract," it compels the mortgagee to reconvey on being repaid his principal, interest and costs (c). Here again the original ground on which equity interfered was to carry out the true intention of the parties. But it cannot be said here, as in the case of other stipulations as to time, that every- thing depends on the intention. For the general rule " once a mortgage, and always a mortgage " cannot be superseded by any express agreement so as to make a mortgage absolutely irredeemable (d). However, limited restrictions on the mutual remedies of the mortgagor and mortgagee, as by making the mortgage for a term certain, are allowed and are not uncommon in practice. Also there may be such a thing as an absolute sale with an option of repur- chase on certain conditions ; and if such is really the nature of the transaction, equity will give no (ft) In addition to the authorities (rZ) Howard t. Harris, 1 Vern. cited below, see the later case of ]!)0; Cowdry v. Day (1859) 1 GifiE. Ex parte Uulae (1873) L. R. 8 Ch. 316. see reporter's note at p. 323 ; 1022, 43 L. J. Ch. 2(51. 1 Ch. Ca. Ul, 29 L.J. Ch. 39, lU (r) Per Romilly M.R. Parkin v. R. R. 4(54. The C. A. was divided, Thorold (18.52) 16 Beav. oil, 68, 96 in a peculiar case, as to the applica- R. R. 32, 37 ; and see Lord Redes- tion of this principle : Mar<[ness of dale's jiidj^ment in Lennoti v. Nap- Northampton v. Pollock (1890) 45 per, p. ,53.5, syjrra. As to the old Ch. Div. 190, 59 L. J. Ch. 745 ; theory of an " equity of ledemp- the opinion of the majority was tion" being not an estate but a upheld in H. L. [1892] A. C. 1 merely i)ersonal right, and its conse- 61 L. J. Ch. 49. See now Noakes quences, see Lord Blackburn's ^i;- ^'c. v. i?uY' [1902] A. C. 24, 71 remarks, 6 Apn, Ca. at p. 711. L. J. Ch. 139, IN EXPRESSION : RELIEF AGAINST PENALTIES. 639 relief against the necessity of observing those condi- tions (e). " That this Court will treat a transaction as a mortgage, although it was made so as to hear the appearance of an absolute sale, if it appear that the parties intended it to be a mortgage, is no doubt true; (/) but it is equally clear, that if the parties intended an absolute sale, a contemporaneous agree- ment for a repurchase, not acted upon, will not of itself entitle the vendor to redeem " (g). The manner in which equity deals with mortgage General rule transactions is only an example of a more general rule : — '• Where there is a debt actually clue, and in respect of that debt a security is given, be it by way of mortgage or be it by way of stipula- tion that in case of its not being paid at the time appointed a larger sum shall become payable, and be paid, in either of tliose cases Equity regards the security that has been given as a mere pledge for the debt, and it will not allow either a forfeiture of the property pledged, or any augmenta- tion of the debt as a penal provision, on the ground that Equity regards the contemplated forfeiture which miglrt take place at law with reference to the estate as in the nature of a penal provision, against which Equity will relieve when the object in view, namely, the securing of the debt, is attained, and regarding also the stipulation for the payment of a larger sum of money, if the sum be not paid at the time it is due, as a penalty and a forfeiture against which Equity will relieve " (A)- This applies not only to securities for the payment of money but to all cases " where a penalty is inserted merely to secure the enjoyment of a col- lateral object " (i). In all such cases the penal sum was originally recoverable in full in a court of (e) Davis v. y7a»m«.v: (1S30) 1 303, 306, 12 L. J. Ch. 207, 48 R. E. Kuss. & M. 50(j, 32 R. R. 2r37. 322, 321. (/) See Douf/lfix v. Cvlrerwrll [It) Per Lord Hatherley C. (1862) 31 L. J.' Ch. 543 ; and so T/iomjmn v. Hudson (1869) L. R. also at common law, Gardner v. 4 H. L. 1, 15, 38 L. J. Ch. 431. Cazenore (1856) 1 H. & N. 428, (/) Per Lord Thurlow, ,S7()w«« v. 435,438. 26 L. J. Ex. 17, 1 20, Walter (1784) 1 Bro. C. (1 418. 108 R. li. 659, 665, (;«(;— (;(;7. Jin Baqpuluun. Dock Co. (1873) (,//) I'er Lord Cotlenhani C. II'/V- L. R. 8 Ch. 1022. is a gond motlerii liamsv. Owen (1840) 5 M. & Cr. example. 540 MISTAKE. Defence against specific performance. law, but actions brought to recover penalties stipu- lated for by bonds or other agreements, and land conveyed by way of mortgage, have for a long time been governed by statutes (A;)- It would lead us too far beyond our present object to discuss the cases in which the question, often a very nice one, has arisen, whether a sum agreed to be paid upon a breach of contract is a penalty or liquidated damages. It may be noted however in passing that " the words liquidated damages or penalty are not conclusive as to the character of the sum stipulated to be paid." This must be determined from the matter of the agreement (/). 3. Pecidiar Defences ami Remedies derived from Equity. A, Defence against Specific Performance. When by reason of a mistake {e.g., omitting some terms which were part of the intended agreement) a contract in writing fails to express the real meaning of the parties, the party interested in having the real and original agreement adhered to {e.g. the one for (k) As to common money bonds 4 & 5 Anne, c. If) (S in Kev. Stat.) s. 13. As to other bonds and agreements 8 & 9 Will. III. o. 11, s. 8. The statutes (some of which have been repealed by Statute Law Revision Acts) are collected and re- viewed in Prcxfii/i v. Dunia (1S72) L. R. 8 Ex. 1!). 42 L. J. Ex. :«. A mortgagee suing in ejectment, or on a bond given as collateral security, may be compelled by rule of Court to reconvey on payment of [)rinci- pal, interest, and costs : 7 Geo. II. c. 20. C. L. P. Act 18:.2 (1.5 & IG Vict. c. 76) s. 219. Bonds of the kind last mentioned hardly occur in modern practice. (/) Per Bramwell B. in Betts v. Biirch (1859) 4 H. & N. .506. 511, 28 L. .1. Ex. 267, 271. The later cases on this subject are — Magee v. Larell (1874) L. R. 9 C. P. 107, 43 li. J. C. P. 131 (authorities dis- cussed l)y Jessel M.R.) ; Lord Elphinstone v. Monltland Iron, and Coal Co. (1886) 11 App. Ca. (Sc.) 332; Waliis v. Smith (1882) 21 Ch. Div. 243, 52 L. J. Ch. 145; WdUon y.Lore [1896] 1 Q. B.626, 65 L. J. Q. B. 474, C. A. Cp. Weston V. Metrop. A.iylvm D'mtrict (1882) 9 Q. B. Div. 404, 51 L. J. Q. B. 399, on the similar question of a penal rent. In the Indian Contract Act the knot is cut by abolishing the distinction alto- gether ; see s. 74. IN EXPRESSION : SPECIFIC PERFORMANCE. 541 whose benefit the omitted term was) is in the following position. If the other party sues him for the specific per- formance of the contract as expressed in writing, it will be a good defence if he can show that the written contract does not represent the real agree- ment: and this whether the contract is of a kind required by law to be in writing or not. Thus specific performance has been refused where a clause had been introduced by inadvertence into the con- tract (m). It is sometimes said with reference to cases of this class that the remedy of specific per- formance is discretionary. But this means a judicial and regular, not an arbitrary discretion. The Court " must be satisfied that the agreement would not have been entered into if its true effect had been understood " (n). On the other hand a party cannot, at all events where the contract is required by law to be in writing, come forward as plaintiff to claim the per- , formance of the real agreement which is not com- pletely expressed by the written contract. Thus in the case of Townshend v. Stangroom (o) (referred to by Townshend v. Lord Hatherley when V.-C.\as perhaps the best illus- stangroom. tration of the principle) (p), there were cross suits (q), one for the specific performance of a written agree- ment as varied by an oral agreement, the other for specific performance of the written agreement without variation ; and the fact of the parol variations from the written agreement being established, both suits were dismissed. And the result of a plaintiff attempt- ing to enforce an agreement with alleged parol varia- (»/) Wat-vm V. Miiraion (1853) 4 {i>) Wood v. Scarth (ISr.o) 2 K. D. M. G. 230, 102 R. R. 100. & .1. 33, 42, 110 R. R. 88. («) Ihld. 4 D. M. (i. at p. 240, {q) Under the Judicature Acts 102 11. R. 108. there would be an action and 00 (1801) 6 Ves. 328, 5 R. R. 312. counter-claim. 642 MISTAKE. Relation of this doctrine to Statute of Frauds. tions, if the defendant disproves the variations and chooses to abide by the written agreement, may be a decree for the specific performance of the agree- ment as it stands at the plaintiff's cost (r). But it is open to a plaintiff to admit a parol addition or variation made for the defendant's benefit, and so enforce specific performance, which the de- fendant might have successfully resisted if it had been sought to enforce the written agreement simply. This was settled in Martin v. Py croft (s) : " The decision of the Court of Appeal proceeded on the ground that an agreement by parol to pay 200Z. as a premium for ... a lease [for which there was a complete agreement in writing not mentioning the premium] was no ground for refusing specific performance of the written agreement for the lease, where the plaintiff submitted by his bill to pay the 200Z. That case introduced no new principle as to the admissibility of parol evidence " {t). It is to be observed (though the observation is now familiar) that these doctrines are in principle independent of the Statute of Frauds {u). What the fourth section of the Statute of Frauds says is that in respect of the matters comprised in it no agree- ment not in writing and duly signed shall be sued (r) See ITigqinsuii v. Cloiccx (1808) 15 Ves. 516, 525, 10 R. R. 112; and such appears to be the real eifect of Fife v. Clayton (1807) 13 Ves. 540, 9 R. R. 22(), S. C. more fully given, with the decree, 1 C. 1'. Cooper (temp. Cottenham) H51. In this case Lord Eldon laid hold on the plaintiff's offer in general terms to perform the agreement as amounting to an offer to perform " what the Court, upon hearing all the circumstances, should be of opinion was the agreement." See the notes to the ca>e in 9 R. R. 220. But after a plaintiff has failed to support his own construction of an agreement which the Court thinks ambiguotis, he cannot take advan- tage of such an offer contained in his own pleadings '• to take up the other construction which the de- fendant was at one time willing to have performed " : Cloives v. Hig- ginwH (1813) 1 Ves. &: B. 524, 535, 12 R. R. 284. (.0 (1852) 2 D. M. G. 785, 22 L. J. Ch. 94, 95 R. R. 324. (0 Per Stuart V.-C. Price, v. Ley (1863) 4 Giff. at p. 253. («) See Per Lord Redesdale in CUnan v. Cooke (1802) 1 Sch. & Lef. 22, 33-39, 9 R. R. 3, 7-10. IN EXPRESSION : RECTIFICATION. 543 upon. This in no way prevents either party from showing that the writing on which the other insists does not represent the real agreement ; the statute interferes only when the real agreement cannot be proved by a writing which satisfies its requirements. Then there is nothing which can be enforced at all. The writing cannot, because it is not the real agree- ment ; nor yet the real agreement, because it is not in writing. A good instance of this state of things is Price v. Ley (x). The suit was brought mainly to set aside the written agreement, and so far suc- ceeded. It appears not to have been seriously attempted to insist upon the real agreement which had not been put into writing. B. Rectification of Instruments. When the parties to an agreement have determined to embody their common intention in the appro- priate and conclusive form, and the instrument meant to effect this purpose is by mistake so framed as not to express the real intention which it ought to have expressed, it is possible in many cases to correct the mistake by means of a jurisdiction formerly pecu- liar to courts of equity, and is still reserved, as a matter of procedure, to the Chancery Division. Courts of equity " assume a jurisdiction to reform instruments which, either by the fraud or mistake of the drawer, admit of a construction inconsistent with the true agreement of the parties (y). And of necessity, in the exercise of this jurisdiction, a court of equity receives evidence of the true agreement in (j;) (1803) 4 Giff. 28;"), aHirmeil intention : Walhcr v. Anii.sfronij un appeal. 32 L.J. C'h. 534. (18.5(;) 8 D. M. G. 531, 25 L. .J. (y) The Court need not decide Ch. 738, 114 R. R. 234. The judg- the point of construction: it is ment of Knight Bruce L.J. is euter- enou<;li that serious doubt exists taining as well as profitable, whether the terms express the true 544 MISTAKE. Principles on ■which courty of equity will rectify instruments. Previous agreement in writing not allowed to be varied. contradiction of the written instrument." Belief will not be refused though the party seeking relief him- self drew the instrument; for "every party who comes to be relieved against an agreement which he has signed, by whomsoever drawn, comes to be relieved against his own mistake " {z). The jurisdiction is a substantive and independent one, so that it does not matter whether the party seeking relief would or would not be able to get the benefit of the true inten- tion of the contract by any other form of remedy (a). It would be neither practicable nor desirable to dis- cuss in this place the numerous cases in which this jurisdiction has been exemplified. The most important thing to be known about a discretionary power of this kind is whether there is any settled rule by which its exercise is limited. In this case there are ample authorities to show that there is such a rule, and they expound it so fully that there is very little left to be added by way of comment. The manner in which the Court proceeds is put in a very clear light by the opening of Lord Eomilly's judgment in the case of Murray v. Parker {h): "In matters of mistake, the Court undoubtedly has jurisdiction, and though this jurisdiction is to be exercised with great caution and care, still it is to be exercised in all cases where a deed, as executed, is not according to the real agreement between the parties. In all cases the real agreement must be established by evidence, whether parol or written ; if theie be a previous agreement in writing which is unambiguous, the deed will be reformed accordingly ; if ambiguous, parol evidence may be used to express it, in the same manner as in other cases where parol evidence is admitted to explain ambiguities in a written instrument." In the case of "a previous agreement in writing which is unambiguous " the Court cannot admit parol evidence to rectify the final instrument executed in (-) Ballw Storle(\^2^) I Sim. & St. 210, 219,24 R. R. 170. («) JJruif V. Lord ParJtef (18fi8) L. R. 5 Eq. 131,37 L. J. Ch. 241. (/>) (1854) 19 Beav. 305, 308, 105 R. R. 153. 154. IN EXPRESSION : RECTIFICATION. 545 accordance with such agreement any more than it could allow the party to maintain a suit, while the agreement was yet executory, first to rectify the agreement by parol evidence and then execute it as rectified — which, as we have seen, it will not do. For this would be to " reform [the instrument] by that evidence, which if [the instrument] rested in fieri, would be inadmissible to aid in carrying it into execution " (c). If there be no previous agreement in writing, the Oral evidence modern rule is that a deed may be rectified on oral "i^^ee^m^e^iit evidence of what was the real intention of the parties admissible in , ,, ,. •(•1 1 J. T i. 1 the absence at the time, it clear and uncontradicted. oj; ^^^^ ^^i^^^y. But if the alleged mistake is positively denied by if ^ot con- . . . tradicted. any party to the instrument, parol evidence alone is inadmissible to prove it. The rule is contained in two judgments given by Lord St. Leonards in the Irish Court of Chancery. He said in Alexander v. Crosbie (d) : " In all the cases, perhaps, in which the Court has reformed a settle- ment, there has been something beyond the parol evidence, such, for instance, as the instructions for preparing the conveyance or a note by the attorney, and the mistake properly accounted for ; but the Court w^ould, I think, act where the mistake is clearly established by parol evidence, even though there is nothing in writing to which the parol evidence may attach." What is here meant by " clearly established " is shown by his later statement in Mortimer v. Shortall (e), applying the general rule of equity practice that the Court will not act merely on " oath against oath": "There is no objection to correct a (c) Per Lord St. L(iona,rds. JDavira v. Hickman [1907] 1 Ch. at p. 561. v. FMi'71 (1842) 2 Dr. & War. 22.5, i_d) (1835) LI. & G. temp. Sug- 233, 90 R. R. 885. 889 ; foil, by Far- den, 145. 1.50, -If] R. R. 183, 185. wellJ., May v. Plutt [1900] 1 Ch. Cp. Davies v. FitUm (1842) 2 Dr. 616. 69 L. J.'Ch. 357. These authori- k War. 233, 90 R. R. 889. ticsarecriticizedbut admitted to be («) (1842) 2 Dr. & War. 363, binding by Neville J. in Thoinpxon 374, 5U R. R. 730. P. N N 546 MISTAKE. What must be proved : common intention ex[)resse) 2 K. &. J. 75:5, lU, De G. & J. 250, 264. 25 L. J. Ch. 795, 110 K. E. 45(1. N N 2 548 MISTAKE. more recently by James L.J. when V.-C. in Mackenzie V. Coulson (n). On this principle, as we have already seen, the jurisdiction to rectify instruments does not extend beyond particular expressions. The Court cannot alter that form of instrument which the parties have deliberately chosen (o). The Court therefore cannot act on proof of what was intended by one party only (p). And when an instrument contains a variety of provisions, and some of the clauses may have been passed over without attention, " the single fact of there being no dis- cussion on a particular jwint will not justify the Court in saying that a mistake committed on one side must be taken to be mutual " (g). The Court will not rectify an instrument when the result of doing so would be to affect interests already acquired by third parties on the faith of the instrument as it stood {/■). Without derogation from the above general rules, a contract of insurance is liberally construed for the purpose of reforming the policy founded upon it in accordance with the true intention (s). Posdbie There exists a rare class of cases (we Imow of exception ^^^y two complete instances at present, and none where one *' ^ i i i i Ji. j party acts as in a Court of Appeal) in which the rule that a common mistake must be shown may admit of modifi- cation. This is where one party acts as another's agent in preparing an instrument which concerns them both — (in both the particular cases referred to an intended husband had the marriage settlement prepared in great haste and without any advice being (/O (1869) L. R. 8 Eq. 368, 375. {] 1 1 J. & H. 268, 276. Ch. 742, 64 L. J. Ch. .5o6, affd. (/•) Blachie v. Clarlt (1852) 15 [1895] 2 Ch. 202, C. A. Beav, 595, 92 R. R. 570. (o) See note (Z). P- 547. (.«) Equittiblp I/isiin/nce Company ip) Hills V. Bowland (1853) 4 D. v. ffeanip (1 874) 20 Wallace (Siip. M. G. 430. 436, Ct. U. S.) 494. other's agent. IN EXPRESSION : RECTIFICATION. 649 taken on the wife's part) — and that other gives no definite instructions, but relies on the good faith and competence of the acting party to carry out the true intention. Here the acting party takes on him- self the duty of framing a proper instrument — such an instrument, in fact, as would be sanctioned by the Court if the Court had to execute the agreement. And the instrument actually prepared, and executed by the other party on the assumption that it is properly framed, may be corrected accordingly (t). But cases of this kind would perhaps be better put on the ground that the acting party is estopped by his conduct, having taken on himself a fiduciary relation and duty, from denying that the intention of the other party was in fact the common intention of both. Compare p. 526, above. The most frequent application of the jurisdiction Reformation of equity to rectify instruments is in the case of accord^in'S^"'^ marriage and other family settlements (u), when to previous there is a discrepance between the preliminary memorandum or articles and the settlement as finally executed. As to marriage settlements, the distinc- tion was formerly held that if both the articles and the settlement were ante-nuptial, the settlement should be taken in case of variance as a new agreement superseding the articles, unless expressly mentioned to be made in pursuance of the articles ; but that a post-nuptial settlement would always be reformed in accordance with ante-nuj)tial articles. The modern doctrine of the Court has modified this (0 Clark V. &'hdwoud (1877) 7 G55, 49 L. J. Ch. 809. The Court Ch. Div. 9, 47 L. J. Ch. l]fi,on the of Appeal docs not seem likely to a.uthontyot Corleyx. Lord Sta fiord extend this jurisdiction. See (18r)7) 1 De G. & J. 238, where Tiickrr v. Bennett (1887) 38 Ch. however there was no rectification : Div. 1, .57 L. J. Ch. 507. a later and very similar case is («) See fiirtlier on this subject Loremj \. ,s'/«/7/( (ISSO) 15 Cli. I). I)av. Conv. 3, pt. l.Api)x. No. 3 550 MISTAKE. as follows, so far as regards settlements executed after preliminary articles but before the marriage: Special rules 1. When the settlement purports to be in pur- suance of articles previously entered into, and there is any variance, the variance will be presumed to have arisen from mistake. 2. When the settlement does not refer to the articles, it will not be presumed, but it may be proved, that the settlement was meant to be in con- formity with the articles, and that any variance arose from a mistake. In the first case the Court will act on the jDre- sumption, in the second on clear and satisfactory evidence of the mistake (v). A settlement may be rectified even against previous articles on the settlor's uncontradicted evidence of departure from the real intention, if no further evidence can be obtained (x). The fact that a provision inserted in a settlement {e.g. restraint on anticipation of the income of the wife's property) is in itself usual and is generally considered proper, is not a ground for the Court refusing to strike it out when its insertion is shown to have 'been contrary to the desire of the parties and to the instructions given by them (y). There is how- ever a general presumption, in the absence of distinct or complete evidence of actual intention, that the parties intend a settlement to contain dispositions (*•) Bold V. IIi/trhi»S(in {ISoo) 'i trusts, see Snckville-West v. Vi.t- D. M.G. 558,567, 568. 10411. R.IIM;, couitt Hohnesdale (1870) L. R. 4 202. In reforming a settlement the H. L. 543, 555, 565,39 L. J. Ch. intent lather than the literal words 505. of the articles will be followed : for (.r) Smith v. IViffe (1875) L. R. a modern instance see Cuqan v. 20 Eq. 666, 44 L. J. Ch. 755 ; i>«/ff('W(1876)2Ch. Div.44,45L.J. Ilanley v. Pearson (1879) 13 Ch. Ch. 307. As to the general principles D. 545. on which courts of equity construe (//) Torre v. Torre (185.3) 1 Sm. instruments creating executory &; G. 518, 96 R. R. 464. IN EXPRESSION : RECTIFICATION. 651 and provisions of the kind usual under the circum- stances (z). It is not necessary that a person claiming to have At whose a settlement rectified should be or represent a party fication ^' to the original contract, or be within the considera- be had. tion of it (a). But a deed which is wholly voluntary in its inception cannot be reformed if the grantor contests it, but must stand or fall in its original condition without alteration (h) ; the reason of this has been explained to be that an agreement between parties for the due execution of a voluntary deed is not a contract which the Court can interfere to enforce (c). The Court has power, however, to set aside a voluntary deed in part only at the suit of the grantor if he is content that the rest should stand (d). The Court will exercise caution in rectifying a voluntary settlement at the instance of the settlor alone and on his own evidence (e). may An agreement will not be cancelled at the suit Rectification of one party when he has rejected a proper offer tfveto'cac to rectify it. It was agreed between A. and B. that ceiiation. A. should give B. the exclusive right of using a patent in certain districts : a document was executed which was only a licence from A. to B. Some time after- wards B. complained that this did not carry out the intention, and A., admitting it, offered a rectifica- tion. B. refused this and sued for cancellation. (z) See p. 530, above. (n') Thoni/)!iu)iv.M7tifiiiore(\H&)) 1 J. & H. 208. 273. (by Broun v. Kennedy (18G:?) 33 Beav. at p. 147. (r) Li-ifer V. Hodgmn fl807) T.. R. 4 Eq. at p. 34. (r/) Tvi-nrr v. rollhi.'^ (IS"]) L. R. 7 Ch. 329, 342, 41 L. J. Ch. 5."i8 ; and see per Turner L.J. BentUij V. Marhuj (1S«9) 4 D. F. .). 2Sfi.' {r) Jionhifi'v. rfrn/Irrsnn [189.5] 1 Ch. 742, (14 L. J. Ch. .'"jSO, affd. [189-,] 2 Ch. 202, C. A. 552 MISTAKE. Hold that the relief prayed for could not be granted (/). In certain cases already mentioned for another purpose (g) the plaintiff sought to reform an instru- ment, and satisfied the Court that it did not represent what was his own intention at the time of execution, but failed to establish that the other party's inten- tion was the same ; and the Court gave the defendant his choice of " having the whole contract annulled, or else of taking it in the form which the plaintiff intended " (h). The anomalous character of these cases has already been pointed out. The Court is not prevented by the Fines and Eecoveries Act, ss. 40, 47, from exercising its ordi- nary jurisdiction to rectify the resettling part of a disentailing assurance (i). An agreement cannot be rectified after it has been adjudicated upon by a competent Court and per- formed under the direction of that Court (k). It is sometimes said, but inexactly, that in cer- tain cases wills may be rectified on the ground of mistake (I). Actions for the rectification of instruments must of procedure. ^^ assigned to the Chancery Division ; but where a statement of defence to an action brought in another Division is accompanied by a counterclaim for rectification, this is not a sufficient reason for transferring the action (m). When a conveyance is rectified the order of the Disentail- ing deeds. Agreement executed b}- Court. Mistake in wills. Minor points (/■) Laver v. Bennett (1883) 109 U. S. 90. (g') Supra, pp. .50.5 — 5U7. (/O Jliirns V. Pej)perell (1867) L. R. .5 Eq. 1, 5; Garrard v. Franhel (18G2) 80 Beav. 44.5, 31 L. J. Ch. 604 ; Bloomer v. Spittle (1872) L. R. 13 E(|. 427, 41 L. J. Ch. 369. See May v. Piatt [1900] 1 Ch. 616, 69 L. J. Ch. 3.57 ; Bcale v. Kyte Q. B. Div. 289. [1907] 1 Ch. 564, 76 L. J. Ch. 294. (0 Hall-Bare v. Hall-Bare (18S5) 31 Ch. Div. 251. 55 L. J, Ch. 1.54. (k) Caird T. Moss (1886) 33 Ch. Div. 22, 55 L. J. Ch. 854. (0 On this point, see the Ap pendix. Note H. (w) Storey v. Waddle (1879) 4 IN EXPRESSION : RECTIFICATION. 553 Court is sufficient without a new deed. A copy of the order is indorsed on the deed which is to be rectified (n). A consent order, being founded on agreement of Consent the parties, may be set aside for mistake if the facts would justify setting aside an agreement on any of the grounds considered in the foregoing dis- cussion (o). So where the mistake as to the effect of the order is on one side only, but induced, how- ever innocently, by the act of the other (p). The Court may not only rectify but rescind uni- Unilateral lateral acts, such as appointments under a settlement or will, which have been executed under a misappre- hension of material facts (q). But this is outside the field of contract. (n) IV/iifev. White {\S72)L.'R. (/O Wild! >iff y. Sanderixm [IS97] 15 Eq. 247, 42 L. J. Ch. 288. 2 Cli. 534, 66 L. J. Ch. 684, G. A. (()) Huddersfiehl Banking Co. v. (i/) Ilnod of Aralon {Ladi/) v. Linfer 4- ;%« [1895] 2 Ch. 278, 64 Marltinnon [1909] 1 Ch. 476, 78 L. J. Ch. 523, C. A. L. J. Ch. 300. acts. 554 Misrepresen- tation by frauil or deceit. Innocent statements. CHAPTER X. Misrepresentation and Fraud. Part 1. — Generally. The consent of one party to a contract may be caused by a misrepresentation made by the other of some matter, such that, if he had known the truth concerning it, he would not have entered into the contract. Putting off for a while the closer defini- tion of the term, we see at once that there is a broad distinction between fraudulent and innocent misrepresentation. A statement may be made with knowledge of its falsehood and intent to mislead the other party, or with reckless ignorance as to its truth or falsehood. In either of these cases the making of such a statement is morally wrong and also wrongful in a legal sense, and the conduct of the party making it is called Fraud or Deceit, and may be a substantive wrong giving rise to a claim for redress in damages, independent of any contract. The present writer has endeavoured to discuss this aspect of it elsewhere (a). On the other hand a man is generally safe, for the purpose now being considered, in stating as true that which he believes to be true. Still more is he safe in giving his opinion, as an opinion, for what it may be worth. If he communicates at the same time the grounds on which he formed his opinion, or (i/) III '• The l/d\\ of Torts,'" Cli. viii. CONSTRUCTIVE FRAUD. 555 relation to contract. reasonable means of access to those grounds, he has done all that an honest man can do. Whenever consent to a contract is obtained by Deceit in deceit, the contract is voidable at the option of the party deceived, subject to the conditions to be presently mentioned. The other party cannot take advantage of his own wrong. We shall see that the working of this rule involves careful definition and distinction ; but the substance of the law now rests on fairly broad and simple grounds. A man who makes positive statements to the intent that others should act upon them is bound, at least, to state only what he believes to be true (6). The combination of this principle with the still ConstmctiTe wider principle of responsibility for the acts and ^l^^^'^i defaults of agents in the course of their employ- ment gives rise to difficult questions, and in some cases to consequences of apparent hardship. A man who had no fraudulent intention, or who has not even been personally negligent, may be liable as for fraud. The ground of liability in such cases is technically described as " constructive fraud," or, less aptly, "legal fraud " (c). The word "constructive" nega- tives actual fraud, but affirms that the actual condi- tions will have similar consequences. " Constructive possession " signifies, in the same way, that an owner out of possession has certain advantages originally given only to possessors ; " constructive delivery " is a change of legal possession without change of physical custody; and we speak of "constructive (h) The House of Lords decided statements intended fnr other peo- in Bern/ v. Peek (1S89) 14 App. p!c to act on. Ca. 337, 58 L. J. Ch. 804, that (r) At this day we sehlom if ever there is no general duty to use any liear of " Icijal fraud," and " con- degree whatever of diligence in structive fraud " is not of frciiueiit ascertaining facts, as distinct from occnrreiicc. bare belief, in making positive 656 MISREPRESENTATION AND FRAUD. notice " where the existence of means of knowledge dispenses with the proof of actual knowledge. Former Jt must be remembered that for a long time equity of judicial judges and text writers thought it necessary or prudent language. f^y j-j-^p support of a beneficial jurisdiction to employ the term " Fraud " as nomen generalissinuim (d). " Constructive fraud " was made to include almost every class of cases in which any transaction is dis- allowed, not only on grounds of fair dealing between the parties, but on grounds of public policy (e). This lax and ambiguous usage of the word was confusing in the books and not free from confusion in practice. Plaintiffs were too apt to make unfounded charges of fi-aud in fact, while a defendant who could and did indignantly repel such charges might sometimes divert attention from the real measure of his duties. Cases in which there was actual fraud or culpable recklessness of truth were not sufficiently distin- guished from cases in which there was only a failure to fulfil a special duty. But it seems needless at this day to pursue an obsolete verbal controversy. Estoppel. Innocent representations are not necessarily harm- less to the person making them. They may give rise to liability, or, as it is more exact to say, representa- tions may give rise to liability without any need for determining whether they are innocent or otherwise (a matter sometimes far from easy to determine) (/), in various ways. A statement made on quite reason- {(I) James L.J. L. II. 8 Ch. at which is complained of was occa- p. 124. sioned by intentional fraud or by ((') iSee Story's Eq. Jurisp. ch vii. mere inadvertence or mistake. (/) Cp. Wtimfr/i .Viniiif/ Co. v. Indeed, upon the very same state Crescent Mining Co. (1893) 1421'. S. of facts an intelligent man, acting 293, 298, per Cur.: — " In equitable deliberately, might well be regarded remedies given for fraud, accident as guilty of fraud, and an ignorant or mistake, it is the facts as found and inexperienced person might be that give the right to relief, and it entitled to a more charitable view, is often difficult to say, upon ad- Yet the injury to the complainant mitted facts, whether the error would be the same in either case."" EEPRESENTATION.S AND ESTOPPEL. 557 able grounds may nevertheless be defamatory and actionable; but this is remote from our subject. The rule of estoppel comes nearer to it. " Where one by his words or conduct wilfully causes another to believe the existence of a certain state of things and induces him to act on that belief, so as to alter his own pre- vious position, the former is concluded from averring against the latter a different state of things as exist- ing at the same time" (g). And "whatever a man's real intention may be," he is deemed to act wilfully " if he so conducts himself that a reasonable man would take the representation to be true, and believe that it was meant that he should act upon it " (h). The rule is not a rule of substantive law, in the sense that it does not declare any immediate right or claim. It is a rule of evidence, but capable of having the gravest effects on the substantive rights of parties. Again, the .existence of a certain state of facts, or Representa- the truth of a certain assertion, may be made a con- Ji'^cxintractr dition or term of a contract, apart from any question of good faith, so that if the fact be otherwise the proposed contract may never become binding, or else there may be a non-performance or breach of the contract, with the usual consequences. Such condi- tions or terms are in some important kinds of contracts implied by special rules of law. It will be observed that these possible qualities of Overlapping a representation are not mutually exclusive. One and gro[,',fj"of the same statement may well be a deceit and a breach liability. of contract and capable of operating by estoppel (i). ((/} Pichard v. Seavs (1837) fi A. Caspersz (Calcutta, 1909). The dates &: E. 4(i9, 45 R. R. 538. are those of the current editions. (//) Fireman v. Coohe (1848) 2 (/) See per Lord Blackburn in Ex. (i54, 18 L. J. Ex. 114. Finch Sel. Jinmutlir. v. Campbell (1880) 5 App. Ca. 483, 76 R. R. 711. See further Ca. 925, 953. A hint of this was the modern writers on Estojipel, already given by Parke B. in J^/'Cf- Bij^elow (1886), Ewart (1900), a man v. ( 'ooh e,'\ii^i note: see the very learned and original work, end of the judgment. 558 MISREPRESENTATION AND FRAUD. The exploded doctrine of " making representa- tions good." Representa- tion of the future operates as promise if at all. During a certain time some judges in the Court of Chancery seem to have thought that under certain conditions a representation wliich is not operative as part of a contract, or hy way of estoppel, or as amounting to an actionable wrong, may still be bind- ing on the person making it. But, when these three effects are duly considered, it appears that there is no other way in which it can be binding. To say that a man is answerable for the truth of his statement is to say that it is his legal duty to see that it is borne out or to make compensation for its not being borne out.. We need not here dwell on cases of deceit, or of estoppel independent of con- tract. Then, if the statement is of a fact, and made as an inducement to another person to enter into a contract, the substance of the duty can only be that the person making the statement undertakes that it is true. In that case must not his undertaking be a contract or a term in the contract ? For if not, why should it bind him ? It might peradventure work an estoppel also, but for all practical intents the estoppel is merged in the contract. If, on the other hand, the statement is of some- thing to be performed in the future, it must be a declaration of the party's intention unless it is a mere expression of opinion. But a declaration of intention made to another person in order to be acted on by that person is a promise or nothing. And if the promise is binding, the obligation laid upon its uttercr is an obligation by way of contract and nothing else : promises de futuro, if binding at all, must be binding as contracts (;'). There is no middle term possible. A statement of opinion or expectation creates, as such, no duty. If capable of creating any duty, it is a promise. If the promise is enforceable. (.7) Lord Selhorne, Madd\,-(on v. Althrson (1883) 8 App. Ca. at p. 473. DUTY OF DISCLOSURE. 559 it is a contract. The description of promise or con- tract in a cumbrous and inexact manner will not create a new head of law. " There must be a con- tract in order to entitle the party to obtain any relief" (k). Part 2. — Misrepresentation and Non-disclosure. So far nothing has been said of any affirmative duty No general to tell the whole truth in relation to the matter of Pfi/.i^eduty 01 disdosure. a contract, as distinct from the negative duty of telling nothing but the truth, or at least what one honestly holds for truth. In general one is not bound in law to disclose in the treaty for a contract all known facts which may be material to the other party's judgment, nor even to remove a mistake not induced by one's own act (I). Non-disclosure of a material fact which one was not specially bound to disclose is no defence to an action for specific performance (m). And if one party asks a question which the other is not bound to answer, and it is not answered, he is not entitled to treat the other's silence as a representa- tion (n) ; that is, when there is really nothing beyond silence. A very slight departure from passive acquies- cence might be enough to convert a lawful though scarcely laudable reserve into an actionable deceit. This must in every case be a question of fact. There are several kinds of contracts, however, such But such that the one party must in the ordinary course of (/<;) Per Cozens-Hardy, J. lie may still be peri)lexed by some of Fichi.s[imO]-iCh.-in,m-i:,(\'.)]j.J. these cases. No such doctrine, 1 Ch. 161. Earlier authorities on the understand, has ever become supposed etjuitable doctrine of current in America, "making representations good "are (1} Smithy. //wc///(?.v(1871) L. R. discussed in the Appendix, Note I, 6 Q. B. .597, 40 L.'j. Q. B. 221. which is now preserved not so much (/«) Turner v. Green. [1895] 2 foranyprobable use to practitioners Ch. 205, Gl L. J. Ch. 539. as for the sake of students who (w) Lli'kUkw v. Orgttn (1817) 2 duties are imjdied in certain con- tracts. 5G0 MISREPRESENTATION AND FRAUD. business take from the other, wholly or to a great extent, the description of the subject-matter of the contract. Now the parties may if they please make any part of that description a term or even a pre- liminary condition (o) of the contract. Whether they have done so is a question of construction (p). But therein the nature of the contract, and the extent to which an erroneous description or material omis- sion may deprive either party of the benefit to be reasonably expected, will justly count for much. More than this, fixed rules on this point have been established as to particular classes of contracts, and in some of these they go to the extent of a positive duty of disclosure; not only that all information given shall be true, but that all material information shall be fully as well as truly given. The character and stringency of the duties thus imposed varies according to the specific character and risks of the contract. It will be convenient to take a view of the classes of contracts thus treated before we examine in detail the universal rules as to Deceit. These classes are believed to be the following. It is by no means certain, however, that the same principle may not be applicable in other forms. The develop- ment of modern commerce may bring into prominence new kinds of transactions in which the subject-matter of the contract, or a material part of it, is within the peculiar knowledge of one party, and the other Wheat. 178 : a sale of tobacco : the said that there is not a conditional buyer knew, and the seller '. Holmes, The Common Law, 32!t. O O 2 5U MISREPRESENTATION AND FRAUD. that the use of the word "warrant" or "warranty" is not conclusive, the question being what is the true intention of the contract as a whole (a). We pass on to the contracts above mentioned as being under exceptional rules. Marine insur- ance : duty of disclosure. A. Insurance. Concealment of material facts will avoid a con- tract of insurance of any kind [b). As to marine insurance, not only misrepresenta- tion but concealment (c) of a material fact, " though made without any fraudulent intention, vitiates the policy " (d), that is, makes it voidable at the under- writer's election (e). For this purpose a material fact does not, on the one hand mean only such a fact as is " material to the risks considered in their own nature"; nor on the other hand does it include everything thai might influence the underwriter's judgment : the rule is " that all should be disclosed which would affect the judgment of a rational underwriter governing himself by the principles and calculations on which underwriters do in practice act " (/). The only ex- (a) ^ee Barnard \\ Faber [ISm] 1 Q. B, 340, 02 L. J. Q. B. 159, C. A. " A stipulation may be a condition, though called a warranty in the contract": Sale of Goods Act, 1893. s. 11. {!>) Scafon v. Heath [1899] 1 Q. B. 782, 792, fi8 L. J. Q. B. 6.31, C. A. (revd. in H. L. on facts only, voin. Seaton v. Burnand [1900] A. C. l.So, 69 L. J. Q. B. 409). (c) This is the usual word, but nun-disclosure would be more ac- curate. id) lonldps V. Pender (1874) L. R. 9 Q. B.531,.o37, 43L. J.Q. B. 227, 2 Wms. Saund. 5.55-9. (^) See Morrison v. Universal Marine Insurance Co. (1873) L. R. 8 Ex. 197, 205, 42 L. J. Ex. 115. The settled rules are now codified in the ilarine In.surance Act, 1900. ss. 17—20. (/) Parsons on Insurance, arlojited per cur. lonides v. Pender (1874) L. R. 9 Q. B. at p. 539. What falls within this description is a question of fact : Strihlcy v, Imperial Marine Insurance Co. (1876) 1 Q. B. D. 507, 45 L. J. Q. B. 396. And the jiolicy will be vitiatefl by concealment of a fact material to guide the underwriter's judgment, though not material t the risk insured against in itself : Riraz V. Ger^issi^ (ISSO) 6 Q. B. Div. 222, 50 L. J. Q. B. 176. LIFE INSURANCK 565 ception is that the insured is not bound to com- municate anything which is such matter of general knowledge that he is entitled to assume the imder- writer knows it already {g) : and the obligation extends not only to facts actually within the knowledge of the assured, but to facts which in the ordinary course of business he ought to know, though by the fraud or negligence of his agent he does not know them (/i). As regards life insurance, the assured is bound to Life disclose all material facts within his knowledge affect- ing the life on which the insurance is made {i). But where that life is not his own but some other person's, that person is not his agent, and if " the life " or his referees make false statements which are passed on in good faith by the assured, their falsehood will not of itself avoid the contract {k). Practically life policies are almost always framed with some sort of express reference to the statements made by the assured as to the health and circum- stances of "the life." Not unfrequently it is pro- vided that the declaration of the assured shall be the basis of the contract; and if the declaration thus {g) Morrison v. Universal 3Ii(- v. luipcriitl, Jj-c. Co., note (/), vine Insurance Co. (1873) L. R. 8 supra: but see per Lord Watson, Ex. 40, 42 L. J. Ex. Ho. 12 App. Ca. at p. 540: and qu. (Ji') Primdfuot v. Ilontefiore whether this exceptional rule is (1867) L. R.'2 Q. B. 511, 36 L. J. not abrogated by the Marine In- Q. B. 225. This applies only to surance Act. the agent through whom the in- (0 See^ authorities collected in surance was actually efiected : London Assurance y. Man.sel {\%l'd) Jilackhurn v. Vir/urs (1887) 12 11 Ch. D. 363, 48 L. J. Ch. 331. App. Ca. 531, 57 L. J. Q. B. 114 ; (/.•) W/icelton v. nardisfy {lSr>7) unless there is a continuous nego- 8 E. & B. 232, in Ex. Ch. 285, tiation by more than one agent : 26 L. J. Q. B. 2(;5, 27 ih. 241, Jllaclihurn v. Iluslatn (1888) 21 112 R. R. 535. The judges Q. B. 1). 144, 57 L. .1. Q. B. 47'.). a}>pear to have been inclined to Non-disclosure by an agent of the restrict the view taken before and assured, without traudulent intcn- since of the w?>e/vv';wc/_/7V/r.sgen(. rally tion, has been held to avoid the requiied in this contract, unless policy only to the extent of the the dicta (which in any case decide loss or risk arising from the par- notliing) can be taken as limited ticular facts s(j withheld : Hlrihlcij tn the special case before them. insurance. 5()G MISREPRESENTATION AND FRAUD; macio part of the contract is not confined to the belief of the party, but is positive and unqualified, then the contract is avoided by any part of the statement being in fact untrue (I), though not to the knowledge of the assured (m), or by the conceal- ment of any material fact (n). On the same ground the grant of a life annuity by the Commissioners for the Eeduction of the National Debt was set aside at the suit of the Crown, the age of the life having been mis-stated; not so much on the ground of misrepresentation simply, as because, considering the statutory powers and duties^ of the commissioners, '' it was an essential part of the contract itself that the representation should be true " (o). The principles applicable to insurance against accidents are the same (p). Fire The contract of fire insurance is treated in some- what the same way as that of marine insurance (which it resembles in being a contract of in- demnity) (q), though not to the same extent. The description of the insured premises annexed to a fire (/) It need not be shown that Mellish L.J. expressly comparing the particular mis-statement was the case of a life policy where the material : Anderson v. Fitzgerald representations of the assured are (1853) 4 H. L. C. 484, 94 'R. 1!. made the basis of the contract. 202. Cp. Thomson v. Weenis (1884) (^>) Bdicden v. London, Edin- CSc.) 9 App. Ca. 671. burffh S; Glasgow Assce. Co. [1892] (/«) JJacdonald v. Laiv Union 2 Q. B. 534," 61 L. J. Q. B. 792, Insurance Co. (1874) L. K. Q. B. C. A., a curious example of the 328, 43 L. J. Q. B. 131. insurers being bound by their («) London As-vi ranee V. Ma n.'ii'l agent's knowledge. Cp. Biggar v. (1879) 11 Ch. D. 363. 48 L. J. Ch. Itoek Life Assce. Co. [1902] 1 331. Probably a material fact K. B. 516. 71 L. J. K. B. 79, means for this jnirpose a fact where the applicant allowed the such that its concealment makes company's local agent to fill in the statement actually furnished, a form for him and signed it though literally true, so misleading without examination, and falsity as it stands as to be in eiiect un- in some of the statements so signed true. was held to avoid the policy. 00 A.-G. T. Bay (1874) L. R. 9 [q) DarreJl v. Tibhitts (1880) 5 Ch. 397, 407, 43 L. J. Ch. 321, per Q. B. Div. 560, 50 L. J. Q. B, 33. insurance. SURETYSHIP AND GUARANTY. m policy amounts to a warranty (or rather a condition) that at the date of the policy the premises correspond to the description, or at least have not been altered so as to increase the risk ; and also that during the time specified in the policy the assured will not voluntarily make any alteration in them such as to increase the risk. The description must be the basis of the contract, for the terms of insurance can be calculated only on the supposition that the descrip- tion in the policy shall remain substantially true while the risk is running (r). Where an insurance is expressed to be " on same rate terms and identical interest " as other existing insurances on the same property, this is a condition of the contract (s). The principles applicable to insurance against mis- Miscellaneous cellaneous risks appear to be the same. Only those "^stances. facts need be disclosed which are material to the risk actually undertaken {t). B. Suretyship and Guaranty. Suretyship. The contract of suretyship " is one in which there sentation is no universal obligation to make disclosure " (u) : avoids contrn-ct but it has peculiar incidents after it is formed, which bring it within our present scope. A surety is released from his obligation by any misrepresenta- tion, or concealment amounting to misrepresentation, (;•) Sillem v. Thorntun (1854) 3 E. &; B. 868, 23 L. J. Q. B. 3(;2, 97 R. R. 808 ; where it was hekl accord- ingly that the addition of a third story to a house ilescribed as being of two stories was of a material alteration, and discharged the in- surer ; and see further, as to what amounts to material misdescription, FurhesS,- Cu.'s Claim (1875) L. R. 19 Eq. 485, 44 L. J. Ch. 70) Johns. G(j3 ; Wijthes v. Lahuudtvre (1858-9) 3 De G. & J. 593, 609, approving A'(;?Y// Ih-ifixh In-tnrancc Co. V. Lloi/d (1851) 10 Ex. 523, 24 L. J. Ex. 14, 102 R. E. 68(3. (:) Lee v. Jones (1863) 14 C. B. N. S. 386, in Ex. Ch. 17 C. B. X. S. 482, 503, 34 L. J. C. P. 131, 138, which may be taken as a judi- cial commentary on the rule given in Ilatnilfon v. Wat.fon (1845) 12 CI. & F. 109. 69 E. E. .58. SURETYSHIP AND GUARANTY. 569 actual agreement being alleged or shown that the money should be so applied, and the thing being one which the surety might naturally expect to happen (a). So the creditor is not bound to tell the surety that the proposed guaranty is to be substituted for a previous one given by another person (6). But the surety is not liable if there is a secret agreement or arrangement which substantially varies the nature of the transaction or of the liability to be under- taken: as where the surety guarantees payment for goods to be sold to the principal debtor, but the real bargain, concealed from the surety, is that the debtor shall pay for the goods a nominal price, exceeding the market price, and the excess shall be applied in liquidation of an old debt (c) : or where the loan to be guaranteed is obtained not in the ordinary way, but by an advance of trust funds of which the prin- cipal debtor himself is a trustee (d). In Lee v. Jones (e) there was a continuing guaranty of an agent's liabilities in account with his employers. He was in fact already indebted to them beyond the whole amount guaranteed by the surety's agreement, which was so worded as to cover existing as well as future liabilities. The surety was not informed of this, and the recitals in the g^greement, though not positively false, were of a misleadmg and dissembling character. The majority of the Court of Exchequer Chamber held that there was evidence of " studied effort to conceal the truth " amounting to fraud. (a) Hamilton v. Wutxim (184r,) § H3, iUust. h. 12 CI. & F. 109, OI) li. 11. 58 ; ace. (fl) .'Squire v. HA/V/r-w (1818) 1 H. Pleih/e V. ^M.s-.v(18G()) Johns. My.l li. C. 833, decided however chiefly {h) Aorth IlrUiali IiiKuranrc Co. on tlie bioader ground that there V. L/o!/d(\H'>i) 10 Ex. 523, 21 L. J. cannot be a contract of suretyship Ex. 14, 102 li. 11. (;8(). Cp. Seaton in hlanh, for no creditor was ever V. Bur/iand, note (Jj), p. 5()1, above. named or specified to the suret}'. (c) Pidcoch V. JSiahoj) (1825) 3 (e) (18t;3) 17 0. !'.. N. S. 482, B. & C. GOo, 27 li. K. 430 ; I. C. A. 31 L. J. Ex. 131. 670 MISREPRESENTATION AND FRAUD. And on the whole it appears from this case and Railion V. Mathews (/) that the concealment from the surety of previous defaults of the principal debtor, when there is a continuing guaranty of conduct or solvency, is in itself evidence of fraud. Where a person has become a surety on the faith of the creditor's representation that another will become co-surety, he is not bound if that other person does not join; and in equity it makes no difference that the guaranty was under seal {g). Where a guaranty was given to certain judgment creditors in considera- tion of their postponing a sale under an execution already issued against the principal debtor, but in fact they did not stop the sale, being unable to do so without the consent of other persons interested, it was held that the guaranty was inoperative {h) ; but perhaps this case is best accounted for as one of simple failure of consideration ; for the considera- tion for the guaranty was not merely the credit given to the principal debtor, but the immediate stopping of the sale. Beyond this Tho authorities, taken as a whole, establish that no positive g^g between creditor and surety there is in point of law duty to give . . ... infurmation. no positive duty to give information as to the rela- tions between the creditor and the principal debtor, but the surety is discharged if there is actual mis- representation, and that silence may in a particular case be equivalent to an actual representation, whether it is so being a question of fact {%). So far as (/) (1844) 10 CI. & F. 934, 59 but had executed a separate agree- R. R. 308. inent under seal. {(]) Ricrv. Gordon (1847) 11 Beav. (//) Coopei- v. Joel (1859) 1 D. F. 265, 83 R. R. 153 ; Ecam v. Brem- J. 240. ridge (1850) 2 K. & J. 174, 8 D. M. G. (0 Cp. I. C. A. ss. 142—144. S. 100, 25 L. J. Ch. 334. The rule does 143: "Any guarantee which the not apply if the surety's remedies creditor has obtained Inj means of are not really diminished : Cooper v. keeping silence as to a material cir- Evans (186/) L. R. 4 Eq. 45,36 cumstance is invalid" is probably L. J. Ch. 431, where the principal not intended to go beyond the debtor had not executed the bond, Enslish law. SALES OF LAND. )71 these rules attach special duties to the creditor they do not apply to a mere contract of indemnity (k). C. Sales of Land. Sales of land; contract A misdescription materially affecting the value, voidable for title, or character of the property sold will make description. ' the contract voidable at the purchaser's option, and this notwithstanding special conditions of sale pro- viding that errors of description shall be matter for compensation only. Flight v. Booth (I) is a leading case on this subject. The contract was for the sale of leasehold property, and the lease imposed restric- tions against carrying on several trades, of which the particulars of sale named only a few: it was held that the purchaser might rescind the contract and recover back his deposit. Tindal C.J. put the reason of the case on exactly the same grounds which, as we shall immediately see, have been relied on in like cases by courts of equity. "Where the misdescription, although not proceeding from fraud, is in a material and substantial point, so far affecting the subject-matter of the contract that it may reasonably be supposed that but for such misdescrip- tion the purchaser might never have entered into the contract at all, in such case the contract is avoided altogether, and the purchaser is no^ bound to resort to the clause of compensation. Under such a state of facts the purchaser may be considered as r.ot having purchased the thing which was really the suliject of the sale." The rule so stated has been unanimously approved in the Court of Appeal (m). So in Phillips v. Calclcleugh (n), where the con- (/.) ]]'. J. C'li. 83. ancc with coinpcnsalion. nnd 674 MISREPRESENTATION AND FRAUD. stances (x) ; or the description of the vendor's interest in terms importing that it is free from incumbrances — such as " immediate absolute reversion in fee pimple " — ^where it is in fact subject to undisclosed incumbrances (y). The treatment of this class of cases in equity is analogous to the rules applied at common law to the sale of goods not specifically ascertained by sample or with a warranty: see p. 561, above. Exceptions. The doctrine that a vendor who has less than he undertook to sell is bound to give so much as he can give with an abatement of the price applies, it is to be understood, only where the vendor has contracted to give the purchaser something which he professed to be, and the purchaser thought him to be, capable of giving. Where a husband and wife had agreed to sell the wife's estate (her interest being correctly described and known to the purchaser), and the wife would not convey, the Court refused to compel the husband to convey his own interest alone for an abated price (z). Specific performance with compensation is granted only where the compensation is capable of assess- ment: for example, not where the defect consists of undisclosed restrictive covenants (a). Also the Court will not order vendors who sell as trustees to perform their contract with compensation, on account (./•) Dim mock v IluUett (1866) 2 I'owcll v. ElHot (1875) L. R. 10 Ch. C'h. 21. 315 L. J. Ch. 146. -124. (y) Torrance y. Bolton (\ 87 2) 8 (:) CadJe y. Wilkinson {1870) n Ch. 118, 4-2 L. J. Ch. 177. Of the Ch. .534, 39 L, J. Ch. 843 ; in peculiar character of the non-dis- Barhrr v. Co.r (1876) 4 Ch. D. 464, closure in that case presently. Cp. 46 L. .1. C h. 62, the full purchase- Phillip.i V. Caldcleugh (18 i8) L. R. money had been paid and the facts 4 Q. B. l.J9, p. .5ln. 88 L. J. Q. B. were otherwise peculiar. 68. above. As to the proper mode (a') Rudd v. Lnscellett [1900] 1 of assessing compensation in a case Ch. 815. 69 L. J. Ch. 396. of mis-statement of profits, sec SALES OF LAND : WHERE NO COMPENSATION. 575 of the prejudice to the cestui que trust which might ensue (b). It is now settled (after many conflicting decisions Purchaser and dicta) that a purchaser otherwise entitled to compensltion compensation can recover it after he has taken a •'ifter com- conveyance and paid the purchase-money in full (c). (iii.) But lastly the variance may be so material Where (either in quantity, or as amounting to a variance capabie*^of°'^ in kind) as to avoid the sale altogether and to prevent estimation, not merely the general jurisdiction of the Court as rescind^ to compensation, but even special provisions for that s'^piy- purpose, from having any application. " If a man sells freehold land, and it turns out to be copyhold, that is not a case for compensation (d) ; so if it turns out to be long leasehold, that is not a case for compensation ; so if one sells property to another who is particularly anxious to have the right of sport- ing over it, and it turns out that he cannot have the right of sporting because it belongs to some- body else ... in all those cases the Court simply says it will avoid the contract, and will not allow either party to enforce it unless the person Avho is prejudiced by the error be willing to perform the (b) W/iife V. Cuddoti (1842) 8 CL & F. 7G6, 54 R. R. 17ti. (c) Palmer v. Johnson (1884) 13 Q. B. Div. 351, 53 L. J. Q. B. 348. See the former cases there discussed. (rf) Specific performance refused where the land was enfranchised copyhold and the minerals were reserved to the lord : Bellamy v. Debenham [18'J1] 1 Ch. 412, (>() L.J. Ch. IGfi, C. A. And conversely, a man who buys an estate as copy- hold is not bound to accept it if it is in fact freehold. For " the mo- tives and fancies of mankind are infinite ; ajid it is unnecessary for a man who has contracted to pur- chase one thing to explain why he refuses to accept another " : Ayles V. Co.v (1852) 16 Beav. 23, 9(5 R. R. 13. But on a sale of mixed freehold and copyhold a variance in the re- spective amounts does not avoid the contract : Hudson v. Cook (1872) L. R. 13 Eq. at p. 420. As to lease- holds, it is a settled though perhaps not a rensonable rule that a contract to sell propeity held under a lease is jiriina facie a contract to show tiile to an original lease : Camber- well and S. London Bu\ld\nq Sucictii V. IloUowat/ (IS79) 13 Cli. D. 754, 49 L. J. Ch. 3«I. 576 MISREPRESENTATION AND FRAUD. contract without compensation "(e). A failure of title as to a part of the property sold which, though small in quantity, is important for the enjoyment of the whole, may have the same effect (/). This class of cases agrees with the last in the contract being void- able at the option of the party misled, but it differs from it in this, that if he elects to adopt the contract at all he must adopt it unconditionally, since com- pulsory performance with compensation would here work the same injustice to the one party that com- pulsory performance without compensation would work to the other. Such was the result in the case now cited of the real quantity of the property falling short by nearly one-half of what it had been supposed to be (g). But in a later case where the vendors were found to be entitled only to an undivided moiety of the property which they had professed to sell as an entirety, the Court found no difficulty in ordering specific performance with an abatement of half the price at the suit of the purchaser, as no injustice would be done to the vendors, who would be fully (e) £arl of Durham v. Legard principle as that applied by our (1865) 34 Beav. 611, 34 L. J. Ch. courts of equity. Hanc legem 589. venditionis : Si quid sacri vel reli- (/) Arnolds. Arnuld {l^?<()') \i c/iosi est, eius venit fiifiil, superva- Ch. Div. 270. Where particulars cuam non esse, sed ad modica loca of sale were misleading as to boun- pertinere : ceteruni si omne reli- daries and frontage, the purchaser giosum, vel sacrum, vel publicum was held entitled to rescind uncon- venierit, nullam esse emptionem : ditionally : Bi'dcrrx. Brown {lS8-i) and see rod. fit. 18. 407;/'. In 28 Ch. D. 309, 54 L. J. Ch. 605. Whittemore v. Whittemore (1869) ((/) The price asked had been L. R. 8 Eq. 603, a case of material fixed by reference to the rental deficiency in quantitj', it was held alone. Qu. how the case would that a condition of sale providing have stood could a price proper- generally that errors of description tional to the area have been arrived should be only matter of compen- at. And i^ee Swaidandv. Bearsley sation did apply, but another ex- (1861) 27 Beav. 430 (where it is eluding compensation for errors in left doubtful whether the purchaser quantity did not; so that on the could or could not have enforced whole 1 he purchaser could not re- the contrnct with compensation). scind, but was entitled to compen- Cp. D. 18. l.decont. empt. 22—24, sation. enunciating precisely the same SALES OF LAND : WHERE NO COMPENSATION. 577 paid for all they really had to sell (h). The real question is whether the deficiency is such as to be fairly capable of a money valuation (i). It seems Where it is that where it is in the vendor's power to make good power to the description of the property, but not by way of malcegood money compensation, he can enforce the contract on sentations. condition of doing so, but not otherwise. A lot of building land (part of a larger estate intended to be sold together) was sold under restrictive condi- tions as to building, and in particular that no public- house was to be built ; the purchaser assumed from the plan and particulars of sale, and in the opinion of the Court with good reason, that the whole of the adjoining property would be subject to like re- strictions. One small adjacent plot had in fact been reserved by the vendor out of the estate to be sold, so that it would be free from restrictive covenants ; but this did not sufficiently appear from the plan. The vendor sued for specific performance. It was held that he was entitled to a decree only on the terms of entering into a restrictive covenant including the reserved plot (k). This third class of cases may be compared (though not exactly) to a sale of goods subject to a condi- tion or " warranty in the nature of a condition," so (A) Bailpij Y. Pipcf {A^l-i) Ij.H. as there the purchaser knew or 18 Eq. f)88, 43 L. J. Ch. 704 ; Ilor- ought to have known that a good roc/«' V. 7^/7/% (1878) 9 Ch. D. 180, title could not be made to the 47 L. J. Ch. 800, where the moiety whole. was so incumbered that the vendor (/) See Djiei' v. Ila ir/ rare (ISO f)') in the result got nothing but an 10 Yes. at p. r>07, 8 R. R. at p. 158 ; indernnitv : Wheatley v. Sladc and on the distinction of the (1830) 4' Sim. 126, 33 R. R. 100, different classes of cases generally, is practically overruled by these per Amphlett B. Phillips v. Miller cases. Similarly as to leasehold: (187r)) L. R. 10 C. P. 427-8, 44 Burroio v. Scammell (1881) 19 Ch. L. ,T. C. P. 205. D. 175, 51 L. J. Ch. 296, where (It:) Jiri.wnnhr v. Bfrhrlf/i (]A{;'.)) apparently Jiailpy v. Piper was L. I!. S Iv|. loO. 3S L. J. Ch. f)veilooke(l. Maio\. 'J'upluim {\HTA) .■>3<;, 19 Peav. 576, is distinguishable, P. P P 578 MISREPRESENTATION AND FRAUD. Deposit, &c. recoverable in equity as well as at law. General duly of vendor to give correct description. that the sale is "to be null if the affirmation is incorrect " (l). A purchaser who in a case falling under either of the last two heads exercises his option to rescind the contract may sue in the Chancery Division to have it set aside, and recover back in the same action any deposit and expenses already paid under the contract (vi). And it seems that there is an in- dependent right to sue in equity for the return of the deposit and expenses, at all events if there are any accompanying circumstances to afford ground for equitable jurisdiction, such as securities having been given of which the specific restitution is claimed (n). To return to the more general question, it is the duty of the vendor to give a fair and unambiguous description of his property and title. He is there- fore bound to disclose any material defect in the title or the property which is within his exclusive loiowledge and not likely to be discovered by the purchaser with ordinary care (o). And, notwithstand- ing the current maxim about simplex covime7idatio, language of general commendation — such as a state- ment that the person in possession is a most desir- able tenant — is deemed to include the assertion that the vendor does not know of any fact inconsistent with it. A contract obtained by describing a tenant as " most desirable " who had paid the last quarter's rent in instalments and under pressure has been set aside at the suit of the purchaser (p). If the vendor (/) Baniiermanv. White (1861) 10 C. B. N. S. 844, .31 L. J. C. P. 28. (»0 E.g. Stanton v. Tattermll (18.58) 1 Sm. & G. .529 ; Torrance V. Botton (1872) L. R. 8 Cb. 118, 42 L. J. Cli. 177. (») Aheraman Ironworlis Co. v. Widens (1868) L. R. 4 Ch. 101. where the contract having been rescinded by consent before the suit was held not to deprive the Court of jurisdiction. (p) Such as the existence of an award under a Building Act which imposes a future liability on the owner: CarVw^li v. Salt [1906] 1 Ch. 33.1, 7.5 L.J. Ch. 175. (7;) Smith V. Land and House PropcHy Corporation (1884) 28 Ch, Div'. 7, 51 L. T. 718. SALES OF LAND '. WHERE NO COMPENSATION. 579 does not intend to offer for sale an unqualified estate, the qualifications should appear on the face of the particulars (q). In Torrance v. Bolton (/•) an estate was offered for sale as an immediate reversion in fee simple. At the auction conditions of sale were Concealment , , T „ • L \ i. . , in particulars read aloud from a manuscript, but no copy given to not excused the persons who attended the sale. One of these by correct ^ 1 • J statement in conditions showed that the property was subject to conditions three mortgages. The plaintiff in the suit had bid ^j'the'sateT^ and become the purchaser at the sale, but without Torrance having, as he alleged, distinctly heard the conditions or understood their effect. The Court held that the particulars were misleading ; that the mere reading out of the conditions of sale was not enough to remove their effect and to make it clear to the mind of the purchaser what he was really buying ; and that he was entitled to have the contract rescinded and his deposit returned. Mere silence as to facts capable of influencing a buyer's judgment, but not such as the seller professes or undertakes to communicate, is not of itself any breach of duty (s). A misleading description may be treated as a mis- representation even if it is in terms accurate: for example, where property was described as "in the occupation of A." at a certain rental, and in truth A. held not under the vendor, but under another person's adverse possession (t), or where immediate possession is material to the purchaser, and the tenant holds under an unexpired lease for years which is not disclosed {u). k misleading statement or omis- (^) Hughes v. Jonra (1861) .3 D. Ch. 4C.4. where a genuine question F. J. 307, 31-t, .31 L. J. Ch. 83. As of title was fairly disclosed, to the duty of disclosing restrictive (.s-) Ctxihs v. .Boswrll (188(5) 11 covenants : Ebsworth and Tidi/s App. Ca. 232 — 235. C'.-«/ywf (1889) 42 Ch. Div. 23,47. (/) Larhlau v. Tirijnoldn (18.-,3) .51, .58 L. ,J. Ch. (U;5. Kay 52, 23 L. ,J. Ch. 8. KH 11. 1!. (?■) (1872) L. R. 8 Ch. 118, 42 523. L. J. Ch. 177; di.st. Blaiheni v. (//) ('(iballrro v. Ilontij (1,S74) Kccvcs [190(i] 2 Ch. 175, 75 L. ,J. L. U. <.) Ch. 447, 43 L. J. Cli. G35. I'P 2 580 MISREPEESENTATION AND FRAUD. Duty of purchaser in special cases. sion made l)y mere heedlessness or accident may deprive a vendor of his right to specific performance, even if such that a more careful buyer might not have been misled (v). All this proceeds on the supposition that the vendor's property and title are best known to him- self, as almost always is the case. But the position of the parties may be reversed: a person who has become the owner of a property he knows very little about may sell it to a person well acquainted with it, and in that case a material misrepresentation by the purchaser makes the contract, and even an executed conveyance pursuant to it, voidable at the vendor's option (x). So it is where the purchaser has done acts unknown to the vendor which alter their position and rights with reference to the property : as where there is a coal mine under the land and the purchaser has trespassed upon it and raised coal without the vendor's knowledge ; for here the proposed purchase involves a buying up of rights against the purchaser of which the owner is not aware (y). On a sale under the direction of the Court a person offering to buy is not under any extraordinary duty of disclosure. It is not the law " that, because infor- mation on some material jx)int or points is offered, or is given on request, by a purchaser from the Court, it must therefore be given on all others as to which it is neither offered nor requested, and con- cei-ning which there is no implied representation, positive or negative, direct or indirect, in what is actually stated " (z). (r) Jo/ies V. lilmmer (1880) U Property Act, 1882. s. 5o. Ch. Div. 588. 49 L. J. Ch. "Tk (y) Phillips v. Homfray (1871) (.c) ILuiqarth \ . Wt-aring (1871) L. 1!. C Ch. 770. 779. L. R. 12 'Eq. :320: 40 L. J. Ch. {z) Cooks y. Boswell (1886) 11 77.5. Cp. the Indian Transfer of App. Ca. 232, 440, 55 L. J. Ch. SALES OF LAND ! DUTIES OF VENDOR AND PURCHASER. 581 Vendors of land may, and constantly do in practice, sell under conditions requiring the purchaser to assume particular states of fact and title. But such conditions must not be misleading as to any matter within the vendor's knowledge (a). "The vendor is not at liberty to require the purchaser to assume as the root of his title that which documents within his possession show not to be the fact, even though those documents may show a perfectly good title on another ground:" and if this is done even by a perfectly innocent oversight on the part of the vendor or his advisers, specific performance will not be en- forced (b). A special condition limiting the time for which title is to be shown must be fair and explicit, and " give a jDerfectly fair description of the nature of that which is to form the root of title " (c). The House of Lords decided in Wilde v. Gibson (d) that the vendor's silence as to a right of way over the property, of the existence of which he was not known to be aware, was no ground for setting aside the contract. This reversed the decision of Knight Bruce V.-C. (e), who held that the silence of the particulars taken together with the condition of the property (for the way had been enclosed) amounted to an assertion that no right of way existed. In any view it seems Effect of special con- ditions as to title. Non-dis- closure of defect of title not actuall}' known to vendor : Wilde V. Gibson. 701, revg. s. c. 27 Cli. Div. 424, mainly on the facts. («) Ilcyivood Y.Mallalieu (1883) 25 Ch. D. 357, 53 L. J, Ch. 492 (definite adverse claims known to a vendor must be disclosed even if he thiidvs them unfounded). (/;) Broad v. Munfoti (187^0 12 Ch. Div. 131, per Cotton L.J. at p. 141), 48 L. .J. Ch. 837 : whether this would be sufficient ground for re- scinding the contract, qufpre, per Je.sscl M.U. 12 Ch. Div. at p. 142 ; Nottuu/liaui Br'ifli Co. v. Butler (188fi) 16 Q. B. Div. 778, .55 L. .1. Q. B. 2S0, where the vendor's solicitor erroneously denied the existence of I'estrictive covenants contained in deeds prior to tliose wliich lie had read. Cf. L. Q. R. ii. 414, 415. ((^) Mavfli ami Earl v. Grani-'dlc (1883) 24 Ch. Div. 11, 22, 53 L. J. Ch. 81, where the purchaser was hehl not bound to accept as the corninoncement of title a voluntary deed not stated in the cjntract to be sucli. {(I) (1848) 1 H. L. C. (;05, 73 K. R. li)l, and see note on S. C. below, iiom. {,'ih.son v. D'JJsfc. (iO R. R. 203. (/') S. C. iioiii. Gibxon v. J)' Ede (1843) 2 Y. & C. 542, 60 R. R. 262. 582 MISREPRESENTATION AND FRAUD. an extraordinary, not to say dangerous, doctrine to say that a vendor is not bound to know his own title, so far at least as with ordinary diligence he may know it : and the case was severely criticized by Lord St. Leonards (/). The Irish case relied on by the Lords as a direct authority may be distinguished on the ground that the representation there made by the lessor that there was no right of way was made not merely with an honest belief, but with a reasonable belief in its truth (g). The decision in Wilde v. Gibson was much in- fluenced by the purchaser's case having been rested in the pleadings to a certain extent upon charges of actual fraud, which however were abandoned in argu- ment: the doctrine of constructive notice, it was said, could not be applied in support of an imputa- tion of direct personal fraud. Even so the result in modem jiractice would only be that the plaintiff would have to pay the costs occasioned by the unfounded charges ; he would not lose any relief for which he otherwise showed sufficient grounds (h). And on examining the pleadings it is difficult to find any imputation sufficient to justify the grave rebukes expressed in the judgments (i). It was also said by Lord Campbell that a court of equity will not set aside an executed conveyance on the ground of mis- representation or concealment, but only for actual fraud (k) : this dictum has not been uniformly fol- lowed, but the latest authority (/) does follow it. (/■) Sugd. Law of Property, 614, 7 H. L. 39 : see next chapter. 637, &c. " (0 The bill in Gibson v. D'Estc, (//) Indeed the Court seems to which is to be found in the printed have thought it wax true, notwith- cases of 18-18, has the words standing the adverse result of an •' carefully concealed " in one pas- indictment for stopping the alleged sage : " fraudulently concealed " iu public way : //fic/c/^' V. r'/v'/.'^'' (1811) another may mean, of course, 1 Ball &. B. 500 ; 12 11. R. 49, Sugd. fraudulentlv in a technical sense. op. elt. 6.57. ih) 1 H. L. C. 632. (A) inUiard V. Fiffei^lSli) L. R. (/) Sedilon v. Xorth Eastern Salt SALES OF LAND : DUTIES OF VENDOR AND PURCHASER. 58B There may also be a want of diligence on the pur- chaser's part which, although not such as to deprive him of the right of rescinding the contract before completion, would preclude him from having the sale set aside after conveyance (ni). As a general result of the authorities there seems General rule. to be no doubt that on sales of real property it is the duty of the party acquainted with the property to give substantially correct information at all events to the extent of his own actual knowledge (n), of all facts material to the description or title of the estate offered for sale, but not of extraneous facts affecting its value: the seller, for example, is not bound to tell the buyer what price he himself gave for the property (o). The general rule seems not applicable as between Exception as lessor and lessee, where the letting is for an occupa- |° occupation tion by the lessee himself, and so far as concerns any physical fact which can be discovered by inspec- tion ; for in ordinary circumstances the landlord is entitled to assume that the tenant will go and look at the premises for himself, and therefore is not bound to tell him if they are in bad repair or even ruinous (p). Co. [1905] 1 Ch. 326, 74 L. J. Ch. if any, on the question of contract ; 199, and see per Cotton L.J. in see per A. L. iSmith J. in Palmer Sopery.Anwhl (1887) 37 Ch. Div. \. Johnson (1884) 12 Q. B. D. at 9(5, 102, 57 L. .1. Ch. 14.5 ; Haygiuih p. 37, explaining his own part in v. Wearing (1871) L. 11. 12 Eq. 320, Joliffe v. Baiter. Neither vendors . 40 L. J. Ch. 577 ; Hart v. Swalnc nor their solicitors are bound to (1877) 7 Ch. D. 42, 47 L. J. Ch. 5, answer a general inquiry as to non- are contra. apparent incumbrances : Re Ford {ni) M'Cnlloch v. Grrgoni (185.".) and IIHl (1870) 10 Ch. Div. 3(55. 1 K. & J. 28(;, 24 L. J. Ch. 24(;, 1()3 (o) 3 Api). Ca. 1267. II. II. 86, where a will was mis- (yv) Keates v. Earl Cadoqan stated in the abstract so as to (1851) 10 C. B. 591, 20 L. J. C. P. conceal a defect of title, but the 76, 84 R. R. 715. The general rule purchaser omitted to examine the does apply as to matters of title : originals. Mostyn v. West Moatyn Coal., ^'v. (/»j Sec Ji-//^e V. 7y«7,w (1883) 11 Co. (1876) 1 C. P. ' D. 145, 45 Q. P.. Div. 2.55, 52 L. .1. Q. B. Wi, L. J. C. P. 401. but that case is of little authority. 584 MISREPRESENTATION AND FRAUD. Family settkrnents ; duly of ful] disclosure. I). Family Settlements. In the negotiations for family settlements and com- promises it is the duty of the parties and their pro- fessional agents not .only to abstain from misrepre- sentations, but to communicate to the other parties all material facts within their knowledge affecting the rights to be dealt with. The omission to make such communication, even without any wrong motive, is a ground for setting aside the transaction. " Full and complete communication of all material circum- stances is what the Court must insist on " (g). " Without full disclosure honest intention is not suffi- cient," and it makes no difference if the non -dis- closure is due to an honest but mistaken opinion as to the materiality or accuracy of the information with- held (r). The operation of this rule is not affected by the leaning of equity, as it is called, towards supporting re-settlements and similar arrangements for the sake of peace and quietness in families (s). Part nei ship. Contracts to take shares. E. PartncjsJiij), Contracts to take Shares in Com- panies, and Contracts of Promoters. The contract of partnershij) is always described as one in which the utmost good faith is required. So far as this principle applies to the relations of paitners after the partnership is formed, it belongs to the law of partnership as a special and distinct subject; and in fact the principle is worked out in definite rules to such an extent that it is seldom appealed to in its general form. But it also applies (V/) Gordon v. Gordon (lSl()-9) 3 S\v. 400, 473. 19 R. II. 241, 242. (r) Ih. 477, It) 11. K. 244. How far does tliis go ? It can hardly be a duty to communicate mere gossip on the chance of their being something in it. Probably the test is (as in the case of mnrine insurance, p. .">()4, above) whether the judjzment of a reasonable man would be affected. Cp. Hey wood V. MaUaUeu (1883) 25 Ch. D. 3.57, 53 L. J. Ch. 492. (.•*) Jh.; Fane v. Fane (187.5) L. R. 20 Eq. 698. PARTNERSHIPS AND COMPANIES. 585 to the transactions preceding the formation of a part- nership, or rather its full and apparent constitution. For example, an intending partner must not make a private profit out of a dealing undertaken by him on behalf of the future firm (t). There is little or no direct authority to show that a person inviting another to enter into partnership with him is bound not only to abstain from mis-statement, but to dis- close everything within his knowledge that is material to the prospects of the undertaking. But the exist- ence of such a duty (the precise extent of which must be determined in each case by the relative position and means of knowledge of the parties) is postulated by the stringent rules which have been laid down as binding on the promoters of companies. These are expressed with the more strictness, inasmuch as the public to whom promoters address themselves are for the most part not versed in the particular kind of business proposed, but are simply persons in search of an investment for their money, and with slight means at hand, if any, of verifying the statements made to them, "The public," it is said, "who are invited by a Prospectus prospectus to join in any new adventure, ought to '^^"•[•'j'eil^^nd have the same opportunity of judging of everything negatively which has a material bearing on its true character "^°"^^'^- as the promoters themselves possess " (u) : and those who issue a prospectus inviting people to take shares on the faith of the representations therein contained are bound "not only to abstain from stating as fact that which is not so, but to omit no one fact within (/) Lindley on I'artiiei^liip, :i2.") ; tract of paitneisliii» there wouM he Fawcctf V. Whitchoufin (KS2;)) 1 no duty at all. Russ. & M. 132, 32 R. R. 103. Yet {n) Lord Chelmsford in Cmfnd the duty is incident, not precedent, 7/y. Co. of ]'enp:uch(. v. Kiacli to the contract of partnciship ; for (ISO?) L. "R. 2 H. i.. !»!), 113, 3(; if there were not a complete con- L. J. Oh. 841). 586 MISREPRESENTATION AND FRAUD. their knowledge the existence of which might in any degree affect the nature or extent or quality of the privileges and advantages which the prospectus holds out as an inducement to take shares " (x). There- fore if untrue or misleading representations are made as to the character and value of the property to be acqui]-ed by a company for the purposes of its opera- tions (u), the privileges and position secured to it, the amount of capital (z), or the amount of shares already subscribed for (a), sl person who has agreed to tak-e shares on the faith of such representations, and afterwards discovers the truth, is entitled to rescind the contract and repudiate the shares, if he does so within a reasonable time and before a winding-up has given the company's creditors an indefeasible right to look to him as a contributory. For full information on this subject the reader js referred to Lord Lindley's treatise (b). Duty of There is likewise a fiduciary relation between a promoter to promoter and the company in its corporate capacity, company. '■ i. j r l j j which imposes on the promoter the duty of full and fair disclosure in any transaction with the company, or even with persons provisionally representing the inchoate company before it is actually formed (c). (./■) Kindersley V.-C. Af/ri?;'««.s'- the company is not a sufficient re- w'tck, 4'r. l^'o. V. Jlufffffiridt/i- (1860) pudiation. The shareholder must 1 Dr. & Sm. 3()3, 381. 30 L. J. Ch. do something to alter his status 242, adopted by Lord Chelmsford. as a member : j)er Lindley L.J. I. c. lie Scutthh Petroleum Cu. (1883) 23 (i/) Reex R'lrer Silrer Mining Ch. Div. 435. The critical date is Co. V. Smith (1869) L. K. 4 H. L. that of the petition, not the order, 64, 39 L. J. Ch. 849. affg. s. c. now. in the windinsj-up : Whitelerfs case Smith'n Case (1867) L. R. 2 Ch. [1899] 1 Ch.>70, 68 L. J.Ch. 365. 604. (r) New Sombrero Phosphate Co. (_z) Central liij. Co. of Venezuela v. Krlunger (IS'il) o Ch. Div. 73, V. Kisck, supra. per James L.J. at p. 118, 46 L. J. (a) Wrighfs Case {\^1V) 1j.^. Ch. 425; afiEd. in H. L. nam. 7 Ch. 55, 41 L. J. Ch. 1 ; Moore St Erlanger v. New Sombrero Phos- De la Torres case (1874) L. R. 18 phaie Co. (1878) 3 App. Ca. 1218, Eq. 661 , 43 L. J. Ch. 751. 48 L. J. Ch. 73 : Bagnall v. Carlton (*) Lindley on Companies, 72, (1877) 6 Ch. Div. 371, 47 L. J. Ch. 589, sqq. Mere communication to 30 ; and see the whole subject (the COMPANIES ACT, 1908. 587 Promoters who form a company for the purpose of buying their property are not entitled to deal with that company as a stranger (d). They must either provide it with " a board of directors who can and do exercise an independent and intelligent judgment on the transaction "(e) or give full notice that the directors are not independent ; there may be cases in which all the original members of the company necessarily have such notice (/). " The old familiar principles of the law of agency and of trusteeship have been extended and very properly extended to meet such cases " (g). A shareholder may be entitled to rescind his contract with the company on the ground of a material misrepresentation in a pre- liminary prospectus issued by promoters before the company was formed (h). The Companies (Consolidation) Act, 1908, repeal- companies ing and superseding the Companies Act, 1900, enacts ^<^^ ^^^s, that every company prospectus " must state " a ' number of specified particulars. It would, therefore, seem that any mis-statement or omission, with know- ledge of the facts (i), of any of these particulars will be treated as fraudulent, and that all and every of them are conclusively declared to be material. Any liability under the general law is expressly saved (k), so that the established case-law remains fully appli- cable. It would be useless to enter upon further details here ; nor are we concerned with the question details of which belonof to company (/) Lagunas Nitrate Co. v. La- law) fiiscussed in Lagunas Nitrate gitnan Synd. [1899] 2 Ch. 392, 68 Cu. V. Lagunax Symt. [1899] 2 Ch. L. .J. Ch. 099, C. A. 392, 08 L. J. Ch. 699, C. A. ; Leeds [g) Hgdneg, 4v. Co.v. Bird (1886) and Hanlry Tlieatres of Varieties 33 Ch. Div. 8.5, 94. [1902] 2 Ch. 809, 72 L. .J. Ch. 1, (A) Re Metropolitan Coal Con- C. A. s7imers^ Assn., Karherg's ease [1892] {d) Erlanger v. Neir Soiuhrero 3 Ch. 1, 61 L. J. Ch. 741, C. A. P/iospttafe Co. (1878) 3 App. Ca. at (/') See the exception in s. 81, p. 1268. sub-s. 6. («) lb. at pp. 1229, 1236, 1255. (/O Sub-s. 9, 588 MISREPRESENTATION AND FRAUD. whether a right of action iii tort is given hy implica- tion to persons who may suffer damage from the directions of the Act not being regarded. The Companies (Consolidation) xlct, 1908, s. 84 (I), imposes a sj^ecial responsibility on directors and pro- moters for the accuracy, to the extent of their means of knowledge, of statements made in prospectuses. This however is rather ex delicto than ex contractu. Contract Thus much of the classes of contracts to which to many. special duties of this kind are incident. The absence of any such duty in other cases is strongly exempli- fied by the contract to marry. Here there is no obligation of disclosure, except so far as the woman's chastity is an implied condition. The non-disclosure of a previous and subsisting engagement to another person (m), or of the party's own previous in- sanity (}i), is no answer to an action on the promise. If promises to marry are to give a right of action, one would think the contract should be treated as one requiring the utmost good faith: but such are the decisions. Marriage itself is not avoided even by actual fraud (o), but the reasons for this ai'e obviously of a different kind : nor is a marriage settlement ren- dered voidable by the wife's non-disclosure of previous misconduct (p). {!) lieplaciiig the Directors" Lia- '■ procures the appearance without bility Act, 1890, passed to mitigate tlie reality of consent," per Sir the mischievous consevjuences of F. H.Jeuue. Some of the language Derri/ v. Peek (1889) U App. Ca. used in Scott v. Sebnqht (18S(J) 12 337, 58 L. J. Ch. 864. P. D. 21. 23, a decision on very (w) Beachey v. Jiroirn (1860) peculiar facts held to come within E. B. & E. 796, 29 L. J. Q. 15. lO.j, this last-mentioned category, can- 113 II. R. 892. not be supported. (^li) BuherwCiuiwriiiht (\^i)\)\i) (/j) IJtrins v. CarrhKjton (1860) C. B. N. S. 124, 30 L. J. C. P. 364. 2 D. F. J. 481, 30 L. J. Ch. 3:i4. ((») Muss V. Moss [1897] P. 263, It is there said however that non- 209, 66 L. J. P. 154. Fi'aud is disclosure of adultery would be material only when it is such as enough to avoid a separation deed. FRAUD OR DECEIT. 589 Some recent writers are of opinion that, according Supposed to the modern rule of equity, contracts of every kind 0^^^^'^ are liable to be avoided by innocent misrepresenta- tion of any material fact, whether or not within the knowledge of the party making the representation more than of the other. With unfeigned respect for those learned authors, we have been unable to find any positive authority which goes that length {q). It is conceived however that their wider form of statement would lead to very little difference in practical results. As to voluntary gifts the rule is that a gift obtained Voluntary by a misrepresentation of fact made, however inno- ^^^^^' cently, by the donee, may be recovered back by the donor on the discovery of the mistake. Such gifts must be regarded as conditional on the truth of the representation (r). Part 3. — Fraud or Deceit. Fraud generally includes misrepresentation. Its Fraud specific mark is the presence of a dishonest intention fi^^u^f,^"^ on the part of him by whom the representation is misrepre- made, or of recklessness equivalent to dishonesty. ^^'^ ^ '°^' In this case we have a mistake of one party caused by a representation of the other, which representa- tion is made by deliberate words or conduct with the intention of thereby procuring consent to the contract, and without a belief in its truth. (/y) Anson, pp. 173, 174 : " Inno- cent misrepresentation which brings about a contract is now a ground for setting the contract aside, and this rule applies to con- tracts of every description." But we know of no reported case in which such a rule has l^een applied to a contract outside the special classes dealt witli above, and the dicta cited by Sir W. Anson must be taken as qualified by their subject- matter. Harriman, ji. 27>'l : •' A false representation by one party in regard to a material fact made for the purpose of inducing the other party to enter into a (ron- tract, and actually inducing the latter to enter into the contract, renders the contract voidable : " No authority is given. (/•) lie (Jluhh, Bamficld v. liin/ern [l'.H)0] 1 Ch. 354, 09 'L. J. Ch. 278, C. A. 590 MISREPRESENTATION AND FRAUD. But not always : as when a contract is made with a collateral wrongful or unlawful purpose, or without intention of performing it. There are some instances of fraud, however, in which one can hardly say there is a misrepresenta- tion except by a forced use of hinguage. It is fraudulent to enter into a contract with the design of using it as an instrument of wrong or deceit against the other party. Thus a separation deed is fraudulent if the wife's real object in consenting or pi'ocuring the husband's consent to it is to be the better able to renew a former illicit intercourse which has been concealed from him. " None shall be per- mitted to take advantage of a deed which they have fraudulently induced another to execute that they may commit an injury against morality to the injury and loss of the party by whom the deed is executed " (s). So it is fraud to obtain a contract for the transfer of property or possession by a re- presentation that the property will be used for some lawful purpose when the real intention is to use it for an unlawful purpose (t). It has been said that it is not fraud to make a contract without any intention of performing it, because peradventure the party may think better of it and jjerform it after all : but this was in a case where the question arose wholly on the form of the pleadings, and in a highly tech- nical and now happily impossible manner (w). And both before and since it has repeatedly been con- sidered a fraud in law to buy goods with the intention of not paying for them (r). Here it is obvious that (s) Erans v. Carrinqton (ISliO) 2 D. F.J. 481, 501. .SO L. J. Ch. .364 : cp. Emns v. Edmond.t (18.53) 1.3 C. B. 777, 22 L. ,J. C. P. 211, 98 E. R. 732, where, however, express representation was averied. (7) Feret v. Hill (18.54) 15 C. B. 207,23 L. J. C. P. 185. 100 R. R. 318. concedes this, decidins: only that possession actually given under the contract cannot be treated as a mere trespass by the party defrauded. (?/) Hemingicaii v. Hamilton (1838) 4 M.'& W. 115, 51 R. E. 497. It is by no means clear that the Court really meant to go so far : see Pref. to 51"R. R. (.r) Ferguson \. Carringto)i {\ 829) 9 B. & C. 59 : L'U/d v. Green (1846) 15 M. .V: W. 216. 15 L. J. Ex. 113. 71 E. E. ()27 ; ]]'/iife v. Garden (1851) 10 C. B. 919. 923, 20 L. J. FRAUD OR DECEIT. 691 tlie party would not enter into the contract if he knew of the fraudulent intention : but the fraud is not so much in the concealment as in the character of the intention itself. It would be ridiculous to speak of a duty of disclosure in such cases. Still there is igno]-ance on the one hand and wrongful contrivance on the other, such as to bring these cases within the more general description of fraud given in Ch. IX. p. 464, above. The party defrauded is entitled, and in modern Right of times has always been entitled at law as well as in fraudulent equity, to rescind the contract. " Fraud in all courts contract, and at all stages of the transaction has been held to vitiate all to which it attaches " (?/). We shall now consider the elements of fraud Elements separately : and first the false representation in itself. It does not matter whether the representation is made by express words or by conduct, nor whether it con- sists in the positive assertion or suggestion of that which is false, or in the active concealment of some- thing material to be known to the other party for the purpose of deciding whether he shall enter into the contract. These elementary rules are so com- pletely established, a.nd assumed so to be, in all deci- sions and discussions on the subject that it will suffice to give a few instances. There may be a false statement of specific facts : Examples of this seldom occurs in a perfectly simple form. Canlimn v. Barry {z) is a good example. There the tion. C. F. 166, 84 K. R. 846, 849 ; C/o?/(7/i demeanor under s. 11, sub-s. lit V. L. S) X. ir. By. Co. (1871) L. R. of the Debtors Act, 1869 : E.c parte 7 Ex. 26, 41 L. J. Ex. 17 ; E.r parte Brett (1875) 1 Ch. Div. 151, 45 L. Whlttahev (1875) L. R. 10 Ch. 446. J. Bk. 17. 449, per Hellish L.J. 44 L. J. Bk. (y) Per Wilde B. Udell x. Ather- 91 ; iJonalilmnw. FarweU {\^l(i)^^ ton {\>^ii\) 7 H. & N. at p. 181, 30 U. S. 631. But it is not such I;. J. Ex. 337. a "false representation or other (r) (1855) 15 C. B. 597, 24 L.J. fraud" as to constitute a mis- C. P. 100, 100 R. R. 503. fraudulent represeuta- 692 MISREPRESENTATION AND FRAUD. What is fraudulent coucealment. contract was for the sale of a leasehold. The vendor was under covenant with his lessor not to assign without licence, and had ascertained that licence would not be refused if he could find an eligible tenant. The agreement was made for the purpose of one M. becoming the occupier, and the purchaser and M.' represented to the vendor that M. was a respectable person and could give satisfactory references to the landlords, which was contrary to the fact. This was held to be a fraudulent misrepresentation of a material fact such as to avoid the contract. A more frequent case is where a person is induced to acquire or become a partner in a business by false accounts of its l^osition and profits (a). Or the representation may be of a general state of things : thus it is fraud to induce a person to enter into a particular arrangement by an incorrect and unwarrantable assertion that such is the usual mode of conducting the kind of business in hand (b). How far it must be a representation of existing facts will be specially considered. " iictive concealment" seems to be the appropriate desci'iption for the following sorts of conduct: taking means appropriate to the nature of the case to pre- vent the other party from learning a material fact — such as using contrivances to hide the defects of goods sold: or making a statement true in terms as far as it goes, but keeping silence as to other things which if disclosed would alter the whole effect of the statement, so that what is in fact told is a half truth equivalent to a falsehood (c) : or allowing the (rt) U.ff. MaivJins v. Wichhani (1858) 3 De G. & J. 304, 28 L. J. Ch. 188. The cases where con- tracts to take shares have been held voidable for misrepresentation in the prospectus are of the same kind. QT) Rcynell v. Sprye (1852) 1 D. M. G. at p. 680, 21 L. J. Ch. 633, itl R. R. 244. (<■) Pefh V. Gurneii (1873) L. R. 6 H. L. 302. 403, 43 "L. J. Ch. ID : FRAUD OR DECEIT : KNOWLEDGE OF UNTRUTH. 593 other party to proceed on an erroneous belief to Avhich one's own acts have contributed (d). It is sufficient if it appears that the one party knowingly assisted in inducing the other to enter into the contract by leading him to believe that which was known to be false (e). Thus it is where one party has made an innocent misrepresentation, but on discovering the error does nothing to undeceive the other (/). If, when he has better knowledge, he does not remove the error to which he contributed in excusable ignor- ance, he is no longer excused. In effect he is continu- ing the representation with knowledge of its falsity. That which gives the character of fraud or deceit to a representation untrue in fact is that it is made without positive belief in its truth ; not necessarily with positive knowledge of its falsehood. Where a false representation amounts to an actionable wrong, it is always in the party's choice, as an alternative remedy, to seek rescission of the contract, if any, which has been induced by the fraud: and it is settled that a false representation may be a substan- tive groimd of action for damages though it is not shown that the person making the statement knew it to be false. It is enough to show that he made it as being true within his own Imowledge, with a view to secure some benefit to himself, or to deceive a third person, and without believing it to be true (g). Representa- tion made without belief in its truth : actual know- ledge of falsehood not necessary. Action of deceit. Stewart v. Wyuming Ranche Co. (1888) 128 U. S. 383,388. id) Hill V. Gray (1816) 1 Stark. 434, 18 R. R. 802, as explained in Keates v. Earl Cachiqan (1851) 10 C. B. 5!»1, 600, 20 L. J. C. R. 76, 84 R. R. 715, 718 ; qu. if the explanation docs not really over- rule the particular decision, per Lord Chelmsford, L.R. 6 H.L.3U1. (e) Per Blackljuin J. Lee v. Jones (1863) 17 C. B. N. S. at p. .507, 34 L. J. C. r. at p. 140. (/•) Iteiinell y.Sprije (1852) 1 D. M. G. at p. 709 ; Ihdyravey.Hurcl (1881) 20 Ch. Div. at pp. 12, 13, 51 L. J. Ch. 113, but as to the difference there assumed between equity and common law see per Bowen L.J. in ^i'ewhig) Baulins v. ^^lcJlIlam (1858) 3 De G. & J. at p. 313, Smith's ca.ie(l8&T) 2 Ch. at p. 611. FRAUD OR DECEIT : KNOWLEDGE OF UNTRUTH. 595 is evidence, but only evidence, that it was uttered without any real belief (l). Silence is equivalent to misrepresentation for these purposes if " the withholding of that which is not stated makes that which is stated absolutely false," but not otherwise (m). If a man expects, however honestly, that a certain UMwananted state of things will shortly exist, he is not thereby of mere justified in asserting by words or conduct that it does expectation 1 ••(•11 ^ ^^ present now exist, and any such assertion, if others have acted fact, on the faith of it to their damage, ought to be a ground of action for deceit, and is of course ground for rescinding any contract obtained by its means. A stranger who accepts a bill as agent for the drawee on the chance of his ratifying the acceptance (n) acts at his peril. But we have learnt from the House of Lords that directors of a tramway company may say they have statutory authority to use steam power when they only expect to obtain a consent which the statute requires (I). Eepresentations of this kind, which deliberately discount the future, seem to be of a different kind from statements honestly made on erroneous information of existing facts ; for they are in their nature incompatible with belief in the truth of the assertion which is actually made. This dis- tinction is not always clearly brought out in the authorities. The application of the doctrine of fraud to sales saics by by auction is peculiar. The courts of law held the ''^"'^S'°" '„„. •^ -i employment employment of a puffer to bid on behalf of the vendor of puffer, to be evidence of fraud in the absence of any express condition fixing a reserve price or reserving a right of bidding ; for such a practice is inconsistent with {I) JDerry V. PeeJt(\SS'.)) 11 A[)p. C> U.L.•^7^,■^'M), W.\, VAL. J.Ch. V.K Ca. ■6'A7, 58 L. J. Ch. 8*54. («) IWiiH v. Woltcr (1S:52) 3 (m) Peelt v. Gurncy (1873) L. R. B. & Ad. 114, 37 R. R. 344. Q Q 2 relation to mariiiage 596 MI.Sap:PRESENTATION AND FRAUD. the terms on which a sale by auction is assumed to proceed, namely that the highest bidder is to be thft purchaser, and is a device to put an artificial value on the thing offered for sale (o). There existed, or was supposed to exist {p), in courts of equity the different rule that the employment of one puffer to prevent a sale at an undervalue was justifiable {q), with the extraordinary result that in this particular case a contract might be valid in equity which a court of law would treat as voidable on the ground of fraud. The Sale of Land by Auction Act, 1867 (30 & 31 Vict. c. 48), assimilated the rule of equity to that of law. The Indian Contract Act (s. 123) adopts the rule of the common law (r). Fraud in Marriage is to some extent an exception to the general rule: but marriage, though including a con- tract, is so much more than a contract that the exception is hardly a real one. The English rule is that " unless the party im^wsed upon has been de- ceived as to the person and thus has given no consent at all [or is otherwise incapable of giving an intelli- gent consent], there is no degree of deception which can avail to set aside a contract of marriage know- ingly {s) made " {t). Still less is a marriage rendered invalid by the parties or one of them having practised {i)) Greenv.Buvcrdocl{(\%&T)\i: be inoperative if the woman is C. B. N. S. 204. 32 L. J. C. P. 181. tricked into it by representations ( ])) Doubt was thrown upon it that it is not a marriage but a in Mortimer v. Bell (1865) L. R. 1 betrothal ; though in this country Ch. 10. IG, 3.5 L. J. Ch. 2.5. such a case must obviously be verv {q) Smith V. Clarke (1800) 12 rare: Ford v. Stler [1896] P. 1. Yes. 477, 483, 8 R. R. 359, 363 ; 65 L. .J. P. 13. Here there is no Flint v. Wooditi (1852) 9 Ha. 618. such knowledge as is re:inired for 89 R. R. 602. real consent. (/•) "If at a sale by auction the (/) Sivift v. KMij (183.5) 3 seller makes use of pretended bid- Knapp. 257, 293. 40 it. R. 22, 48 ; ding-5 to raise the price, the sale Moi^k v. Moss [1897] P. 263, 66 is Toidable at the option of the L.J. P. 154. and as to the different buyer." views held in America and else- (.v) A ceremonj'of marriage may where, see [1897] P. 273 sqq. FKAUD IN RELATION TO THIRD PERSONS. 597 a fraud on the persons who performed the ceremony or the authorities of the State in whose jurisdiction it was performed. Where a marriage had been cele- brated in due form by Eoman ecclesiastics at Eome between two Protestants, who had previously made a formal abjuration (the marriage not being otherwise possible by the law of the place as it then was), it was held immaterial whether the abjuration had been sincere or not, though as to the woman there was strong evidence to show that it was not (u). We may observe in this place that when the con- Conseut of sent of a third party is required to give complete effect obtajnetr*^"^ to a transaction between others, that consent may by fraud, be voidable if procured by fraud, and the same rules are applied, so far as applicable, which determine the like questions as between contracting parties. Thus where the approval of the directors is necessary for the transfer of shares in a company, a false de- scription of the transferee's condition, such as naming him " gentleman " when he is a servant or messenger, or a false statement of a consideration paid by him fo]' the shares, when in truth he paid nothing or Avas paid to execute the transfer, is a fraud upon the directors, the object being to mislead them by the false suggestion of a real purchase of the shares by a man of independent position ; and on a wind- ing-up the Court will replace the transferor's name on the register for the purpose of making him a contributory (x). («) Swift V. Krll,/ (1885) :? Knapp, 257, -tO K. K. 22. (x) Expartn K'uitrea (lS(!!t) L. K. o Ch. 95, 89 L. J. Ch. 193 ; Pay>u'\f cu-ic (1S()9) and WiUidiii.s-' caxe (18(;9) L. 11. 9 E(i. 228; Liudlcy on (Jompaiiics. 827. 698 CHAPTER XI. The Eight of Rescission. Examination of questions on rei-cission of voidable contracts. \ Ip li) We have now to examine a class of conditions which apply indifferently, or very nearly so, to cases of simple misrepresentation (that is, where the truth of a representation is in any way of the essence of a contract) and cases of deceit. Some of them, indeed, extend to all contracts which are or have hecome voidable for any cause whatever. The questions to be dealt with may be stated as follows : What must be shown with regard to the representa- tion itself to give a right to relief to the party misled ? What is the extent of that right, and within what bounds can it be exercised ? In 1888 the Supreme Court of the United States (a) thus summed up the points which a plaintiff in an action for the rescission of a contract must estab- lish :— 1. That the defendant has made a representation in I'egard to a material fact ; 2. That such representation is false; 8. That such representation was not actually believed by the defendant (b) to be true; 4, That it was made with intent that it should be acted upon ; (rt) Smitltcrn Deirlopwcnt Co. v. as we have seen Cpp. 59i, 5ft.", Si/rtj. 12.5 U. S. 247, 250. above), lias decided otherwise for (h) The Court adds, on reason- England, able grounds. The House of Lords, REPRESENTATIONS OF FACT OR OTHERWISE. 699 5. That it was acted on by complainant to his damage ; 6. That in so acting on it the complainant was ignorant of its falsity and reasonably believed it to be true. ]. As to the representation itself. A. It must (except, it would seem, in a case of actual fraud) be a representation of fact, as dis- tinguished on the one hand from matter of law, and on the other hand from a matter of mere opinion or intention. As to the first branch of the distinction, there is authority at common law that a misrepresentation of the legal effect of an instrument by one of the parties to it does not enable the other to avoid it (c). And in equity there is no reason to suppose that the rule is otherwise, though the authorities only go to this extent, that no independent liability can arise from a misrepresentation of what is purely matter of law (d). But this probably does not apply to a deliberately fraudulent mis-statement of the law (e). The circumstances and the position of the parties may well be such as to make it not imprudent or un- reasonable for the person to whom the statement was made to rely on the knowledge of the person making it: and it would certainly work injustice if it were held necessary to apply to such a case the maxim that every one is presumed to know the law., The reason of the thing seems lo be that in ordinary As to the representa- tion relied on for rescinding a contract. It must be of matter of fact, not of law (but (jH. as to deliberate fraud). (6-) Lewis V. Jones (1825) 4 B. k C. :10ii, 28 II. R. 360. Not so if the actual contents or nature of the instrument are misrepresented, as we saw in Ch. IX. (d) Rashdall v. Ford (1800) L. R. 2 Eq. 750, 35 L. J. Ch. 7(59 ; Bfldttip V. Lord Ehunj (1872^ L. K. 7 Ch. 777. 802, L. li. 7 H. h. 102, 130,41 L. J. Ch. 804, 44 ///. 20 (the House of Lords held tlierewas no misrepresentation at all). («) Hirsrlifchl V. London, Brii/h- lon, 4'- South Const Ily. (\>. (1876) 2 Q. B. D. 1, 46 L. J. Q. B. 1 ; Bowen L.J. in West lA)n,don Com- iiicrcidl Bank v. Kltson (1884) 13 Q. B. Div. at p. 303. 600 THE RIGHT OF RESCISSION. cases the law is equally accessible to both parties, and statements about it are equally verifiable by both, or else are in the region of mere opinion. But there is no need to extend this to exceptional cases. At all events the rule applies only to pure propositions of law. The existence and actual contents of e.g. a private Act of Parliament are as much matters of fact as any other concrete facts (/). And not of As to the second branch, we may put aside the mere motive c^gpg already mentioned in which the substance of or intention. " the fraud is not misrepresentation, but a wrongful intention going to the whole matter of the contract. Apart from these it appears to be the rule that a false representation of motive or intention, not amounting to or including an assertion of existing facts, is inoperative. "It is always necessary to distinguish, when an alleged ground of false repre- sentation is set up, between a representation of an existing fact which is untrue and a promise to do something in future " {g). On this ground was put the decision in Vernon v. Keys (h), where the defen- dant bought a business on behalf of a partnership firm. The price was fixed at 4,500^. on his statement that his partners would not give more: a statement afterwards shown to be false by the fact that he charged them in accomit with a greater price and kept the resulting difference in their shares of the purchase-money for himself. It was held that the vendor could not maintain an action of deceit, as the statement amomited only to giving a false reason for not offering a higher price. The case also illus- (/) Bowen L.J. uJ/i siq>. to the effect that the buyer's liberty (//) Mellish L.J. -E.v parfp Bur- must be co-extensive with the rcll (1S7()) 1 Ch. Div. at p. .552. seller's, which is to '• tell every (//) (1810) 12 East, t>32, in Ex. falsehood he can to induce a buyer Ch. 4: Taunt. 488, 1 1 R. R. 4!tl). to purchase," is of coui-se not to The language used in the Ex. Ch. be literally accepted. REPRESENTATIONS OF FACT OR OTHERWISE. 601 trates the principle that collateral fraud practised by or against a third person does not avoid a con- tract. Here there was fraud, and of a gross kind, as between the buyer and his partners ; but we must dismiss this from consideration in order to form a correct estimate of the decision as between the buyer and seller. It must be judged of as if the buyer had communicated the whole thing to his partners and charged them only with the price really given. Still the decision can hardly be supported unless on the ground of failure to prove damage. For the buyer was the agent of the firm, and in substance made a wilfully false statement as to the extent of his authority. The Judicial Committee has held that it is clearly fraudulent for A. and B. to combine to sell property in B.'s name, B. not being in truth the owner but only an intermediate agent, and the nominal price not being the real price to be paid to the owner A., but including' a commission to be retained by B. (i). And under particular conditions a statement of inten- tion, such as the purpose to which a proposed loan is intended to be applied, may be a material state- ment of fact (k). On principle A.'s existing inten- tion seems to be as much a fact for B. as anything else. It needs no authority to show that a statement of statements what is merely matter of opinion cannot bind the ^l rniUcr person making it as if he had warranted its correct- (/) Lindxrnj PtiroJetim Co. v. :{7(;. 4(5 L. J. Q. B. HTG, where the Ilurcl (1874) L. R. 5 P. C. 221, 248. C. A. refused to follow the Judicial This no doubt cannot actually Coniniittee, also Smith v. Brown overrule the reasons given for the (1871) L. R. (i Q. B. at p. 73fi, 40 decision in Vernon v. Keys: for L. J. Q. B. 214. decisions of the. Judicial Comnnittee, {k) LVIr/iw/fon v. Fifzmotirice though they carry great weight, are (IK8r,) 2!) ('li. Uiv. 4.")'.l, 48(», 48.S, not binding in English Courts: sec T).") L. J. Cli. (;50. LrrisJi V. &'oft (1877) 2 Q. B. Div. 602 THE EIGHT OF RESCISSION. Ambiguous statements. ness. And it is said that if a man makes assertions, as of matter of fact within his own knowledge, con- cerning that which is by its nature only matter of more or less probable repute and opinion, he is not legally answerable as for a deceit if the assertion turns out to be false (I). But it seems doubtful if this could be upheld at the present day. For surely the affirmation of a thing as withm my own know- ledge implies the affirmation that I have peculiar means of knowledge: and if I have not such means, then my statement is false and I shall justly be held answerable for it, unless indeed the special knowledge thus claimed is of a kind manifestly incredible. Statements which in themselves are ambiguous cannot be treated as fraudulent merely because they are false in some one of their possible senses. In such a case the party who complains of having been misled must satisfy the Court that he understood and acted on the statement in the sense in which it was false (?n). B. The representation muet be such as to induce the contract {dans locum contractui) (n). The repre- sentation the contract. Relief cannot be given on the ground of fraud or No relief to (7) ILiiicraft v. Crenay (ISOl) 2 East, 92, "6 K. R. 3S0. Here the defendant had stated, as a fact within his own knowledge, that a person was solvent who appeared to have ample means, but turned out to be an impostor. The ma- jority of the Court seem to have thought that the {ilaintiii must in the circumstances have known the defendant to be expressing onl}' an opinion founded on that which appeared to all the world. So a statement of confident expectation of profits must be distinguisliei fi'om an assertion as to profits actually made : BcUuirs v. I'uchev (18.S4) 13 Q. B. D. 502. (w) Smith V. Chadivick (1884) 9 App. Ca. 187, .^1 L. J. Ch. .597, see especially per Lord Blackburn at pp. 199 — 201. The language used in IIiiHoici V. Fernie (18t58) L. R. 3 Ch. at p. 476, seems to go too far. Lord Blackburn leaves it as an unsettled question what would happen if the defendant could in turn prove the falsehood or am- biguity to be due to a mere blunder. (n) Loid Bioueham. Atticood v. Small (1835-8) (3 CI. & F. 444, 49 R. R. 137: Lord Wenslevdale, Smith V. Kay (1859) 7 H. "L. C. EFFECT OF MEANS OF KNOWLEDGE. 603 misrepresentation to a party who has in fact not a party who acted on the statements of the other, but has taken oiThis own steps of his own to verify them, and has acted on judgment. the judgment thus formed by himself (o). " The Court must be careful that in its anxiety to correct frauds it does not enable persons who have joined with others in speculations to convert their speculations into certainties at the expense of those with whom they have joined " (p). It is not perfectly free from doubt whether in any, As to means and if in any, in what cases the possession of means f }^^^^\^ '' ' ^ ledge : im- of knowledge which if used would lead to the dis- material covery of the truth will bar the party of his remedy, acttve^ ° In the case of active misrepresentation it is no misrepre- ,. -j^i J- 1 << sentation. answer ni proceedmgs either lor damages or lor setting aside the contract to say that the party com- plaining of the misrepresentation had the means of making inquiries. " In the case of Dobcll v. Stevens (q) . . . which was an action for deceit in falsely representing the amount of the business done in a public-house, the purchaser was held to be entitled to recover damages, although the books were in the house, and he might have had access to them if he had thought proper " (r). The rule was the same in the Court of Chancery. It was said of a purchaser to whom the state of the property ho bought was misrepresented:— " Admitting that he might by minute examination make that discovery, ho was not driven to that examination, the other party having taken upon him to make a representation. . . The purchaser is induced to make a less accurate examination by the representation, which (()) See for a recent example, v. ILirgrnvr (1805) 1(> Ves. 505, Farrar v. f'hnrchill (1890) 135 8 11. R.' 30. U. S. OO'). (q) (1825) 3 B. & C. (;23 ; 27 R. ( /)) Jenn'inqx v. Jlrimqliton R. 441. (1853-4) 5 1)'. M. (I. 12(1, 140. 22 {)•) Per Luvd Chelmsford, L. R. L. J. Ch. 581. !i;i R. R. 13(; ; Ihjrr 2 H. L. 121. 604 THE RIGHT OF RESCISSION. ho had a right to believe " (s). The principle is that " No man can complain that another has too implicitly relied on the truth of what he has himself stated " (t). And it is not enough to show that the party misled did make soiiie examination on his own account ; proof of cursory or ineffectual inquiries will not do (u). In order to bar him of his remedy, it must be shown either that he knew the true state of the facts, or that he did not rely on the facts as represented (x). In 1867 the same principle was affirmed by Lord Chelmsford in the House of Lords (y). The suit was instituted by a shareholder in a railway company to be relieved from his contract on the ground of misrepresentations contained in the prospectus. Here it was contended that the prospectus referred the intending shareholder to other documents, and offered means of further information : besides, the memo- randum and articles of association (and of these at all events he was bound to take notice) sufficiently corrected the errors and omissions of the prospectus. But the objection is thus answered: — " Wheu once it is established that there has been any fraudulent mis- representation or wilful coneealment by which a person has been induced to enter into a contract, it is no answer to his claim to be relieved from it to tell him that he might have known the truth by proper inquiry. He has a right to retort upon his objector, ' You at least, who have stated what is untrue, or have concealed the truth for the purpose of drawiug me into a contract, cannot accuse me of want of caution because I relied implicitly upon your fairness and honesty/" 00 Bycr V. I/arf/rarr (lS(j:>) 10 Ch. Div. 1, 21 (Jessel M.R.). Yes. at p. .-,09, 8 R. R. at p. 39. (y) Cfntral By. Co. of Venezuela (0 Reynell v. Sprye (lsr,2) 1 D. v. Klsch (1867) L. R. *2 H. L. 99. M. G. at p. 710, 91 R. R. 2(;(i : Price 120, .36 L. J. Ch. 849. As to the V. Miicavlay (18.52) 2 D. M. G. 339, earlier and indecisive case of Att- 346, 95 R. R. 129. 134. mwd v. Small (183.5-8) 6 CI. & F. («) Bedyrare v. Hnrd CI 881) 20 232. 49 R. R. 115. .see now Red- Ch. Div. 1. 51 L. J. Ch. 113. f/ntre v Hurd (1881) 20 Ch. Div. (.t) Redymvc v. Hurd (1881) 20 at p. 14. 51 L. J. Ch. 113. EFFECT OF MEANS OF KNO\YLET)OE. 605 This doctrine appears, also on Lord Chelmsford's Otherwise authority, not to apply to the case of mere non- "^errnon- disclosure, without fraudulent intention, of a fact disclosure, which ought to have been disclosed. " When the fact is not misrepresented but con- cealed [or rather not communicated] (z) and there is nothing done to induce the other party not to avail himself of the means of knowledge within his reach, if he neglects to do so he may have no right to complain, because his ignorance of the fact is attributable to his own negligence " («). It appears also not to apply to a mere assertion Mereas- of title by a vendor of land (h). title"'' ''^ In a case before Lord Hatherley, when V.-C, the double question arose of the one party's knowledge that his statement was untrue, and of the other's means of learning the truth. The suit was for specific performance of an agreement to take a lease of a limestone quarry. The plaintiff made a distinct representation as to the quality of the limestone which was in fact untrue: he did not believe it to be false, but he had taken no pains to ascertain, as he might easily have done, whether it was true or not. But then the defendant had not relied exclusively upon this statement, for he went to look at the stone ; still he was not a limeburner by trade, and could not be .supposed to have trusted merely to what he saw, being in fact not competent to judge of the quality of limestone. The result was that the Court refused specific performance, declining to decide whether the contract was otherwise valid or not (c). (z) See L. R. 2 If. L. ',iH\). where however tlie real contract {a} New JininKwirh, S^'c. Co. v. was to buy u[) a particular claim of Cunyhrurc (\m'2) I) JI. L. (!. 711, title, whatever it mit,'ht be worth. 742, 31 I.. ■]. Oil. 2'.>7. 00 Jlii/qina v. Sainch (KS(J2) 2 Qi) ITuvic V. 7'r And contract to the rule that the representation must be the cause i"citi'jntai to ^ _ fraudulent of the other party's contracting. A contract arising transaction directly out of a previous transaction between the Ideated as same parties which was voidable on the ground of fraudulent. fraud is itself in like manner voidable. A. makes a contract with B., with the fraudulent intention of making it impossible by a secret scheme for B. to perform the contract. B, ultimately agrees to pay and does pay to A. a sum of money to be released from the contract : if ho afterwards discovers the {k) Gordon v. Sfirel [18i):»] 2 Q. (m) TniUl v. Barin:{l, 4:! L. .1. <,). P.. p. 196. 227, supra, p. r.(M. 608 THE RIGHT OP RESCISSION. Must be made by a party to the contract. scheme B. can rescind this hist agreement and re- cover the money back (o). " If the promoter of a company procures a company to be formed by improper and fraudulent means, and for the purpose of securing a profit to himself, which, if the company was successful, it would be unjust and inequitable to allow him to retain [in the particular case a secret payment to the promoter out of purchase-money J, and the company proves abor- tive and is ordered to be wound np without doing any business, the promoter cannot be allowed to prove against the company in the winding- up, either in respect of his services in forming the company or in respect of his services as an officer of the company after the company was registered" (//). So ii is where the parties really interested, though not the nominal parties, are the same. Thus where a sale of goods is procured by fraud, and the vendors forward the goods by railway to the purchaser's agent, and afterwards reclaim them, indemnifying the rail- way company, these facts constitute a good defence to an action by the purchaser's agent against the railway company, though the re-delivery to the vendors was before the discovery of the fraud and arose out of an unsuccessful attempt to stop the goods in transitu (q). C. The representation must be made by a party to the contract. This rule in its simple form is elementary. It is obvious that A. cannot be allowed to rescind his contract with B. because he has been induced to enter into it by some fraud of C. to 00 BarrijY. T/mAr// (1861) 2 J. &H. 1. {p) Per Cur. Hereford S)- S. Wales Waggon Jt Engineering Co. (187(5) 2 Cii'. Div. 621, '621!, -lo L. J. Ch. 46]. It must not be assumed that the company would be liable even in the absence of fraud, see English and Colonial Produce Co.'." ea.se [1906] 2 Ch. 43."), 7.j L.J. Ch. 831. 9.-) L. T. 580. C. A. (y) Cloitgh V. L. 4- y. W. F)/. Co. (1871) (Ex. Ch.) L. R. 7 Ex. 26, 41 L. J. Ex. 17, an exceedingly in- structive case : as to the miscon- ceived act being justified by refer- ence to the true ground of rescission afterwards discovered, cp. Wright's ca.^e (1871) L. R. 7 Ch. 55, 41 L. J. Ch. 1. FRAUD OF AGENTS. 609 which B. is no party (r). Thus in Sturge v. Starr (s) a woman joined with her supposed husband in deal- ing with her interest in a fund. The marriage was in fact void, the man having concealed from her a previous marriage. It was held that this did not affect the rights of the purchaser. When we come to deal with contracts made by As to repre- agents the question arises to what extent the repre- j^l^^^g j^"" ^ sentations of the agent are to be considered as the agents. representations of the principal for the purposes of this rule. And this question, though now practically set at rest by recent decisions, is one which has given rise to some difficulty. A false statement made by an agent with his principal's express authority, the principal knowing it to be false, is obviously equiva- lent to a falsehood told by the principal himself ; nor can it make any difference as against the prin- cipal whether the agent knows the statement to be false or not. But we may also have the following cases. The statement may be not expressly authorised by the principal, nor known to be untrue by him, but known to be untrue by the agent ; or conversely, the statement may be not known to the agent to be untrue, and not expressly authorised by the prin- cipal, the true state of the facts being, however, known to the principal. There is no doubt that in the first case the principal is answerable, subject only to the limitation to be presently stated (t).; In the second case there is every reason to believe that the same rule holds good, notwithstanding a much canvassed decision to the contrary (u), which, (?•) See per Lord Cairns, Smith's who profits by the fraud of a sub- case, L. R. 2 Ch. at p. ttlfi. agent employed by him ; Coclcburn (5) (1833) 2 My. & K. 195 ; cp. C.J. in Weir v. Bell (1878) 3 Ex. W/ieeUon v. Hardisty (1857) 8 E. & D. at p. 249. B. 232, 2(5 L. J. Q. B. 265, 27 ib. («) Cornfout v. Fuivke (1810) G 241, 112 K. K. 535. M. & W. 358, 55 K. E. 655. (t) The rule applies to an agent P. R R 010 THE RIGHT OF RESCISSION. The only question is whether the repre- sentation was within the agent's authority. Barwick r. English Joint Stock Bank. Maekay r. Commercial Bank of New Brunswick. if not overruled by the remarks since made upon it (x), has been cut down to a decision on a point of pleading which perhaps cannot, and certainly need not, ever arise again. These distinctions have to be considered only when there is a question of fraud in the strict sense, and then chiefly when it is sought to make the principal liable in damages. Where a non-fraudulent mis- representation suffices to avoid the contract, there it is clear that the only thing to be ascertained is whether the representation was in fact within the scope of the agent's authority. And it is now accepted as the law that this is the only question even in a case of fraud. It was laid down by a considered judgment of the Exchequer Chamber (ij), fully approved by later decisions of the Judicial Committee (s), that "the master is answerable for every such wrong," including fraud, " of the servant or agent as is committed in the course of the service and for the master's benefit, though no express com- mand or privity of the master be proved." Although the master may not have authorized the particular act, yet if " he has put the agent in his place to do that class of acts," he must be answerable for the agent's conduct. It makes no difference whether the principal is a natural person or a corporation (a). In two of the cases just referred to, a banking cor- poration was held to be liable for a false representa- (j-) 2 Sm. L. C. 81, 86 : and see especially per Willes .J. in lidrictclt V. English Joint Stuck B(tnk (18(57) L. E. 2 Ex. 262. [y) Banoick v. Enqlisli Joint Stock Bank (1867) L. li. 2 Ex. 2.")y. 36 L. J. Ex. 147. (z) Machaij \. Commercial Bank of New Brunswick (1874) L. R. 5 V. C. 31*4, 411, 43 L. J. V. C. 31 ; Swire v. Francis (1877) 3 App. Ca. 106, 47 L. J. P. C. 18. [a) L. R. 5 P. C. 413-5, dissent- ing from the dicta on this point in Western Bank of Scotland \. Addie (1867) L. R. 1 Sc. & D. 145, which, though apparently intended to be decisive, have not been followed. Swift V. Jewshury (1874) (Ex. Ch.) L. ii. 9 Q. B. at p. 312, per Lord Coleridge C.J. Cp. I. C. A. § 238. FRAUD OF AGENTS. 611 tion made by one of its officers in the course of the business usually conducted by him on behalf of the bank ; and this involves the proposition that the party misled is entitled to rescind the contract induced by such representation. The directors and other officers of companies, acting Directors and within the functions of their offices, are for this Promoters, purpose agents, and the companies are bound by their acts and conduct. Conversely, where directors employ an agent for the purposes of the company, and that agent commits a fraud in the course of his employment without the personal knowledge or sanc- tion of the directors, the remedy of persons injured by the fraud is not against the directors, who are themselves only agents, but against the company as ultimate principal (h) : and one director is not liable for fraud committed by another director without his authority or concurrence (c)., Eeports made in the first instance to a company by its directors, if after- wards adopted by a meeting and " industriously cir- culated," must be treated as the representations of the company to the public, and as such will bind it (d). Statements in a prospectus issued by pro- moters before the company is in existence cannot indeed be said with accuracy to be made by agents for the company: for one cannot be an agent even by subsequent ratification for a principal not in (J) ICeir V. Barneft (1877) 3 view of the facts. Ex. D. 32, affd. in C. A. ?ium. ]Veir (c) CartfiU v. Bower (1878) 10 V. Bell (1878) ib. 238, 47 L. J. Ex. Ch. D. 502, 47 L. J. Ch. 649. 704. But a director who profited {d) Per Lord VVestbury, A^cw by the fraud after knowledge of it Brun-swirk, ^'v'- Co. v. Conyheare would probably be liable: see (18(;2) 'J H. L. C. 711, 72.5, 31 L. J. judgments of Cockburn C.J. and Ch. 21)7. See further, as to what Brett L.J. And directors who dele- must be shown to bind a company gated their olhce without authority, in respect of misrepresentations so that their delegate did not inducing a person to take shares, become the company's agent, would Liindc v. A nglo-Italiitn Hemp S/)in- be liable : see the dissenting jiulg- nl>i(/ Co. [ISlHi] 1 Ch. 178, (Jr> L. J. uient of Cotton L.J., who took this Ch. 1)6. R R 2 612 THE EIGHT OF RESCISSION. Agent alwajs liable for his owu personal fraud. The repre- sentation must be in the same transaction. existence and capable of ratifying at the time (e). But such statements also, if afterwards expressly or tacitly adopted, become the statements of the company.- It is a principle of general application, by no means confined to these cases, that if A. makes an assertion to B., and B. repeats it to C. in an unqualified manner, intending him to act upon it, and C. does act upon it, B. makes that assertion his own and is answerable for its consequences. If he would guard himself, it is easy for him to say: "This is what A. tells me, and on his authority I repeat it; for my own part I believe it, but if you want any further assurance it is to him you must look " (/). It is to be borne in mind that in a case of actual fraud on the part of an agent the responsibility of the principal does not in any way exclude the re- sponsibility of the agent. " All persons directly con- cerned in the commission of a fraud are to be treated as principals "; and in this sense it is true that an agent or servant cannot be authorized to commit a fraud. He cannot excuse himself on the ground that he acted only as agent or servant (g). D. The representation must be made as part of the same transaction. It is believed that the statement of the rule in this form, though at first sight vague, is really more accurate than that which presents itself as an alter- native, but is in fact included in this — namely, that the representation must be made to the other party or with a view to his acting upon it. The effect of the rule is that the untruth of a representation made (e) p. 114, above. Thomso/i'.s Trustce.tand Krrr{\S&2) (/■) Smith's case (1867) L. E. 2 4 Mac(i. 424. 432 ; Swift v. Whiter- Ch.'G04, 611, p. .-)86, above. botkani (1S73) L. E. 8 Q. B. 244, (ff) Per Lord Westbury. Ci) But qv. whether lime is in itself material : see L. R. 7 Ex. 35, 8 Ex. 205. 616 THE RIGHT OF RESCISSION. Of affirma- tion and rescission in general. Election to avoid or affirm. apply generally when a contract is voidable, either for fraud or on any other ground, at the option of one of the parties ; on a sale of land, for example, it is con- stantly made a condition that the vendor may rescind if the purchaser takes any objection to the title which the vendor is unable to remove ; and then these rules apply so far as the nature of the case admits. A. As to the nature of the right in general, and what is an affirmation or rescission of the contract. " A contract induced by fraud is not void, but voidable only at the option of the party defrauded ; " in other words, valid until rescinded (p). Where the nature of the case admits of it, the party misled may affirm the contract and insist on having the representation made good. If the owner of an estate sells it as unincumbered, concealing from the purchaser the existence of incumbrances, the pur- chaser may if he thinks fit call on him to perform his contract and redeem the incumbrances (q). If promoters of a ;partnership undertaking induce persons to take part in it by untruly representing that a certain amount of capital has been already subscribed for, they will themselves be put on the list of con- tributories for that amount (r). It is to be remembered that the right of election, and the possibility of having the contract performed with compensation, does not exclude the option of having the contract wholly set aside. " It is for the party defrauded to elect whether he will be bound " (s). But if he does affirm the contract, he (/7) OaJu's V. Turquand (18C7) L. K. 2 H. L. 346, 37.^, 87G. {q) Per Komilly M.R. in Puis- ford V. H'lchards (185.'?) 17 Beav. 96, 22 L. J. Ch. .or,9. H!) U. E. 54. Cp. Unglpy v. U-ngUy (1877) 5 Ch. Div. 887, 4 6 L, J, Ch. 854. (;■) Moore and De la Tori-t's case(\%l^~) L. R. 18 Eq. 661, 43 L. J. Ch. 751. (.«) RaivUnsY. TF(>/J(ff/« (1853)3 De G. & J. 304, 322, 28 L. J. Ch. 188. ELECTION TO RESCIND. 617 must affirm it in all its terms. Thus a vendor who has been induced by fraud to sell goods on credit cannot sue on the contract for the price of the goods before the expiration of the credit: the proper course is to rescind the contract and sue in trover (t). When the contract is once affirmed, the election is what shall completely determined ; and for this purpose it is *^!]*;,^°^™jj"*^ not necessary that the affirmation should be express. Any acts or conduct which unequivocally treat the contract as subsisting, after the facts giving the right to rescind have come to the knowledge of the party, will have the same effect (u). Taking steps to enforce the contract is a conclusive election not to rescind on account of anything known at the time (x). A shareholder cannot repudiate his share on the ground of misrepresentations in the prospectus if he has paid a call without protest or received a dividend after he has had in his hands a report showing to a reader of ordinary intelligence that the statements of the prospectus were not true (y), or if after dis- covering the true state of things he has taken an active part in the affairs of the company (z), or has affirmed his ownership of the shares by taking steps to sell them (a) ; and in general a party who volun- tarily acts upon a contract which is voidable at his option, having knowledge of all the facts, cannot after- wards repudiate it if it turns out to his disadvan- (f) FerriusojiY. Carrington {\%'2\)) (y) Sclioley v. Central By. Co. 9 B. & C' r)9. The form or formal of Vniezucla'(\mi -^^ L. R. Eq. cause of action is now inmiaterial 2Gfi, ;/. in most jurisdictions, but the (-r) Sharplcy v. Lovth and East measure of damatres may be dif- T'ort^^ i?//. ^'c. (1876) 2 Oh. Div. 663, ferent. '^ 4r, L. J.'Ch. 259. (?/) Clonqli V. L. Sf N. W. Ihj. Co. (rt) Ex parte BrUjgs (1 86'i) L. R. (1871) (Ex. Ch.) L. R. 7 Ex. at 1 Eq. 483, 35 L. .J. Ch. 320; this p. 31. however was a case not of mis- (./•) Grmi V. Fowler (1873) (Ex. stated facts, but of material Ch.) L. R. 8 Ex. 249, 280, 42 !>. J. departure from the objects of the Ex. 161, companyasstatedintheprospectus. 618 THE RIGHT OF RESCISSION. tage (b). And when the right of repudiation has once been waived by acting upon the contract as subsisting with knowledge of facts establishing a case of fraud, the subsequent discovery of further acts constituting " a new incident in the fraud " cannot revive it (c). The exercise of acts of ownership over property acquired under the contract precludes a subsequent repudiation, but not so much because it is evidence of an affirmative election as because it makes it impossible to replace the parties in their former position ; a point to which we shall come presently. When the acts done are of this kind it seems on principle immaterial whether there is knowledge of the true state of affairs or not, unless there were a continuing active concealment or misrepresentation practised with a view to prevent the party defrauded from discovering the truth and to induce him to act upon the contract; for then the affirmation itself would be as open to repudiation as the original trans- action. Something like this occurs not unfrequently in cases of undue influence, as we shall see in the next chapter. Omission to repudiate within a reasonable time is (evidence, and may be conclusive evidence, of an election to affirm the contract ; and this is in truth the only effect of laj)se of time. Still it will be more convenient to consider this point separately afterwards. Election to If on the other hand the party elects to rescind, he resciiicimust • ^ manifest that election by distinctly communi- be communi- *' •' cated to other eating to the other party his intention to reject the pavty. (F) Orines v. Beadel (ISGO) 2 D. does not apply where a new and F. J. 332, 336, 30 L. J. Ch. 1. distinct cause of rescission arises: (c) Campljell v. Fleming (1834) Grat/ v. Fowler (1873) L. K. 8 Ex. 1 A. & E. 40, 53 R. R. l'J4. This 249, 42 L. J. Ex. 161. ELECTION MUST BE COMMUNICATED. 619 contract and claim no interest under it. One way of doing this is to institute proceedings to have the contract judicially set aside, and in that case the judicial rescission, when obtained, relates back to the date of the commencement of such proceedings (d)^ Or if the other party is the first to sue on the con- tract, the rescission may be set up as a defence, and this is itself a sufficient act of rescission without any prior declaration of an intention to rescind (e). For the purposes of pleading the allegation that a con- tract was procured by fraud has been held to import the allegation that the party on discovering it dis- affirmed the contract (/). Where the rescission is not declared in judicial proceedings, no further rule can be laid down than that there should be " prompt re- pudiation and restitution as far as possible " (g). The communication need not be formal, provided it Wliat com- is a distinct and positive rejection of the contract, "^XdeD^" not a mere request or inquiry, which is not enough (h). But it seems that if notwithstanding an express repudiation the other party persists in treat- ing the contract as in force, then judicial steps should be taken in order to make the rescission complete as against rights of third persons which may subse- quently intervene. Especially this is the case as to repudiating shares in a company. The creditors of a company are entitled to rely on the register of shareholders for the time being, and therefore it is not enough for a shareholder to give notice to the {d) Reese Hirer Silrer Mi/ii/u/ especially Dejw.sif Life Assurance Co. V. Smith (1869) L. R. 4 H. L. f'o. v. Ai/sroi/r/h (1856) 6 E. & 15. 73-5, 89 L. J. Ch. 849. As to 761 , 26 I.. J. Q. B. 29, 106 R. R. 791), shares in companies, see below. are not wholly consistent. (0 riovqh V. L. J)- -V. W. By. Co. (//) Per Bramwell P.. Bwlrh-y- (1871) (Ex. Ch.) L. R. 7 Ex. 36, Pliom Lead Mininq Co. v. Ba.ynes 41 I,. J. Ex. 17. (1867) L. R. 2 Ex. 326, 36 L. J, if) JJaires V. JTarness (187",) Ex.183. L. R. 10 ('.. P. 166, 44 L. .J. V>. \\ (//) See Ashlnfs case (IS70) 191. The earlier cases there cited, L. It. 9 Eq. 263, 39 L. J. Ch. 354. 620 THE RIGHT OF RESCISSION. company that he clanns to repudiate. A stricter rule is applied than would follow from the ordinary rules of contract (i). " The rule is that the repudiat- ing shareholder must not only repudiate, but also get his name removed, or commence proceedings to have it removed, before the winding-up (k) ; but this rule is subject to the qualification that if one re- pudiating shareholder takes proceedings the others will have the benefit of them if, but only if, there is an agreement between them and the company that they shall stand or fall by the result of those pro- ceedings, but not othei-wise " (I). Where the original contract was made with an agent for the other party, communication of the rescission to that agent is sufficient, at all events before the principal is dis- closed (m). And where good grounds for rescission exist, and the contract is rescinded by mutual con- sent on other grounds, those grounds not being such as to give a right of rescission, and the agent's consent being in excess of his authority, yet the rescission stands good. There is nothing more that the party can do, and when he discovers the facts on which he might have sought rescission as a matter of right he is entitled to use them in support of what is already done. In Wright's case (n) the prospectus of a company contained material misrepresentations. (?) Kf/it V. Freehold Land, S'e. review of cases per Baggallav L.J. Co. (1868) L. R. 3 Ch. 493 ; Hare's 23 Ch. D. at p. 433. case (1869) L. R. 4 Ch. .503 ; Be Qk) I.e. before the presentation Scottish Petroleum Co. (1883) 23 of a winding-up petition on which Ch. Div. 413. But if there are an order is made : Whitelei/s case several repudiating shareholders in |"1899] 1 Ch. 770, 68 L. J. Ch. a like position, proceedings taken 3G.5. by one of them and treated by (I) Lindley L.J. 23 Ch. D. at p. agreement with the company as 437. representative will enure for the (??() Maynard v. Eaton (1874) benefit of all : Pawle's case (1867) L. R. 9 Ch. 414. 43 L. J. Ch. 641. L. R. 4 Ch. 497, 38 L. J. Ch. 318 ; («) (1871) L. R. 7 Ch. .55, 41 McKielVs case (1870) L. R. 10 Eq. L. J Ch. 1 ; cp. Clovgh v. L. J(- X. 503, 39 L. J. Ch. 822, apparently IF. By. Co., supra, p. 608. rests only on this ground : see I RESCISSION BY AND AGAINST REPRESENTATIVES. 621 The directors had at a shareholder's request, and on other grounds, professed to cancel the allotment of his shares, which they had no power to do, though they had power to accept a surrender. Afterwards the company was wound up, and then only was the misrepresentation made known to him. But it was held that as there was in fact a sufficient reason for annulling the contract, which the directors knew at the time though he did not, the contract was effectu- ally annulled, and he could not he made a contributory even as a past member (o). Inasmuch as the right of rescinding a voidable con- Right of tract is alternative and co-extensive with the right of exei^^seabie affirming it, it follows that a voidable contract may by aud be avoided by or against the personal representatives representa- of the contracting parties (p). And further, as a t^^^®- contract for the sale of land is enforceable in equity by or against the heirs or devisees of the parties, so it may be avoided by or against them where grounds of avoidance exist (q). A party exercising his option to rescind is entitled to be restored so far as possible to his former posi- tion. This includes a right to be indemnified against obligations incurred under the contract, and in cases of fraud, but in such cases only (r), the right may extend to liabilities which are natural consequences ((») But Wickens V.-C. thought in n-ixt chapter, ad fi?i., and Charter otherwise in the Court below (L. K. v. Trevrlijan (1844) II CI. & F. 714, 12 Eq. 331) and the correctness of where tlie parties on both sides the reversal is doubted by Lord were ultimately representatives, Lindley (on Companies, 777). and as to the defendants through (;>) "including assignees in bank- more than one succession, ruptcy : Load v. Green (ISK!) 15 (;■) U'/ii/finf/fon v. Seale-Ha n ne M. & VV. 21G, 15 L. J. Ex. 113 ; (I'.KJD) ,S2 L. T. 4I», per Earwell J. JJonahhoti v. Farwcll (187(i) 1»3 adopting Bowen L.J.'s opinion in U. S. 631. Aewbif/ffi/if/ v. Adam (\8Sti) 34 Ch. '(] A. 0. (;/;) Which course was accord- 2715, 65 L. J. P. C. 54. ingly taken with success: (UarUe (^i/') E. B. k E. at p. l.")2, 113 V. Dickson (1859) C. B. N. S. 453, R. R. 585. 28 L. J. C. P. 225. These prin- (-) L. R. 1 Sc. & D. 11 5. ciples do not apply where a share- («) It would seem, but it tloes holder, having had his shaies not clearly appear, that in this case forfeited for non-payment of calls, also the misrepresentations were and thereby ceased to be a member not discovered till after the com- of the company, is sued for the meueement of the winding-up. 624 THE RIGHT OF RESCISSION. able by the buyer on the ground of fraud, and before the repudiation their value has materially fallen through some cause unconnected with the fraud, this is such a change in the condition of the thing con- tracted for as to make restitution impossible in Conduct of law (b). The case is simpler where the party misled party misieii. ^^^^ himself chosen to deal with the subject-matter of the contract, by exercising acts of ownership or the like, in such a manner as to make restitution impossible; and it is still plainer if he goes on doing this with knowledge of all the facts ; if the lessee of mines, for example, goes on working out the mines after he has full information of the cir- cumstances on which he relies as entitling him to set aside the lease (c). So a settlement of partner- ship accounts or a release contained in a deed of dissolution (d) cannot be disputed by one of the par- ties if in the meantime the concern has been com- pletely wound up and he has taken possession of and sold the partnership assets made over to him under the arrangement (e) ; and an arrangement between a company and one of its directors which has been acted upon by the company so as to change the director's position cannot afterwards be repudiated by the company (/). So a purchaser cannot after taking possession maintain an action to recover back his deposit (g). The right to recover back money jDaid under an agreement on the ground of mistake, failure of con- (h) Waddell v. BlocliPti (187!)) 4 {f) SheffiM Xickcl Co.v. I'tiwin Q. B. Div. (578, 683, 48 L. J. Q. B. (1877) 2 Q. B. D. 214,40 L.J.Q.B. 517, per Thesiger L.J. 299. {c) Vir/n:^ V. PUie ilSiO-2) 8 C\. ((j) Blacldntrn v. Smith (1848) k F. 502, 0.>(). 2 Ex. 783, 18 L. J. Ex. 187, 70 (^Z) I'rquliart v. Macplterson K. R. 785 ; but it was also held (1878) 3 App. Ca. 831. that apart from this the objection (e) Skllheck v. Hilton (1800) came too late under the conditions L. R. 2 Eq. 587. of sale in the particular case. WHERE RESTITUTION IMPOSSIBLE. 625 sideration, or default of the other party is also sub- ject to the same rule. Thus a lessee who has entered into possession cannot recover back the premium paid by him on the ground of the lessor's default in execut- ing the lease and doing repairs to be done by him under the agreement (h) : nor can a party recover back an excessive payment after his own dealings have made it impossible to ascertain what was really due (i). C. The contract cannot be rescinded after third jWo rescission pei'sons have acquired rights under it for value. ibgamst '■ 10 innocent The present rule is altogether, as the last one is purchasers to some extent, a corollary from the main principle °^ "^ ^^' that a contract induced by fraud or misrepresentation is as such not void but only voidable. The result is that when third persons have acquired rights under the transaction in good faith and for value, those rights are indefeasible. The rule is also stated to be an application of the principle of convenience " that where one of two innocent parties must suffer from the fraud of a third, the loss should fall on the one who enabled the third party to commit the fraud " (k). Thus when a sale of goods is procured by fraud, Fraudulent the property in the goods is transferred by the con- ^^ ^^" tract (l), subject as between the seller and the buyer to be revested by the seller exercising his option to rescind when he discovers the fraud. A purchaser in good faith from the fraudulent buyer acquires an (//) I/unf V. Silk (1804) 5 East 449, 7 R. II. 739. (0 Freeman v. Jeffries (1869) L. R. 4 Ex. 189, 197, 38 L. J. Ex. 110. (/O Jiahcock V. Lawxon (1880) 4 Q. P.. I), at p. 400. (/) Load V. Gr^en (1846) ISM.fc W. 216, 1.5 L. J. Ex. 113, 71 R. R. P. 627, where it was held that a fraudulent buyer becoming bank- rupt had not the goods in his order and disposition with the consent of the tine owner ; for the vendors became the true owners only when they elected to rescind and demanded the goods from the assignees. S S 626 THE RIGHT OF RESCISSION. Distinction where there is no con- tract, but goods are merely obtained by fraudulent pretences. indefeasible title (??i) now confirmed by the Sale of Goods Act, 1893, which abolished a statutory excep- tion (?i). And a person who takes with notice of the fraud is a lawful possessor as against third persons, and as such is entitled to sue them for all injuries to the property, unless and until the party defrauded exercises his right of rescission (o). The same rule holds good as to possession or other partial interests in property. A. sells goods to B., but resumes the possession, by arrangement with B., as a security for the price. Afterwards B. induces A. to re-deliver possession of the goods to him by a fraudulent misrepresentation, and thereupon pledges the goods to C, who advances money upon them in good faith and in ignorance of the fraud. This pledge is valid, and C. is entitled to the possession of the goods as against A. (p). It must be carefully observed that a fraudulent possessor cannot give a better title than he has him- self, even to an innocent purchaser, if the possession has not been obtained under a contract with the true owner, but by mere false pretences as to some matter of fact concerning the true owner's contract with a third person. To put a simple case, A. sells goods to B. and desires B. to send for them. C. obtains («0 Wltite V. Garden (18r,l) 10 C. B. 919, 20 L. J. C. P. ir.(), 8t 11. R. 81(j ; Stflreiiso?/, v. Newnham (1853) (Ex. Ch.) 18 C. B. 28.^, 303, 22 L. J. C. P. 110, 115, 93 R. R. 532, 542 ; cp. 12 App. Ca. at p. 483. (;0 24 & 25 Vict. c. 96, s. 100, extended the re-vesting of property in the true owner upon the thief's conviction to cases of obtaining goods by criminal fraud not amounting to larceny : Benfley v. Vilmont (1887) 12 App. Ca. 471, 57 L. J. Q. 15. 18, overruling Moyce v. XewiiuitoH (1878) 4 Q. B. I). 32, 48 L. J. Q. B. 125 ; the Sale of Goods Act, s. 24, restores the older law. ((') Steremon v. NeionUam, see note {m). ( p) Pease V. Gloahcc (1866) L. R. 1 P. C. 219, 35 L. J. P. C. 66. The dealings were in fact with the bill of lading : but as this com- pletely represented the goods for the purposes of the case the state- ment in the text is simplified in order to bring out the general principle more clearly. A later case of the same kind is Bahcock V. Zamon (1880) 5 Q. B. Div. 284, 49 L. J. Q. B. 408. RIGHTS OF THIRD PERSONS. 627 the goods from A. by falsely representing himself as B.'s servant: now C, acquires neither property nor lawful possession, and cannot make any sale or pledge of the goods which will be valid against A., though the person advancing his money have no notice of the fraud. The result is the same if A. means to sell goods to B. & Co., and C. gets goods from A. by falsely representing himself as a member of the firm and authorized to act for them (q), or if B., a person of no credit, gets goods from A. by trading under a name and address closely resem- bling those of C, who is known to A. as a respectable trader (r)., It is also the same in the less simple case of a third person obtaining delivery of the goods by falsely representing himself as a sub-purchaser ; for here there is no contract between him and the seller which the seller can affirm or disaffirm ; what the seller does is to act on the mistaken notion that the property is already his by transfer from the original buyer. This was in effect the decision of the Exchequer Chamber in Kings ford v. Merry (s), though the case was a little complicated by the special con- sideration of the effect of delivery orders or warrants as " indicia of title." The decision of the House of Lords in Oakes v. shareholder Turquand (t), which settled that a shareholder in a 'i^"f'^ '^l^'^r company cannot repudiate his shares after the com- windiug-up: Oakes r. iq) Ilardmaii v. Booth (18(;3) 1 Tran>tp. Co. 135 Mass. 2S3, which Turquatid. H. & C. 803, 32 L. J. Ex. ]()o ; goes farther. Ifollim V. Fowler (1874-5) L. R. 7 (.v) (1856) 1 H. & N. .503, 26 L. J. H. L. 757, 795. Ex. 83 (see per Erie J. at p. 88), (?•) Cundy v. Liiuhsaii (1878) 3 108 R. R. 694, revg. s. c. in Court App. Ca. 459, 47 L. J. Q. B. 481. below, 11 Ex. 577, 25 L. J. Ex. 166. Otherwise where the fraud stops {€) (1867) L. R. 2 H. L. .325, 36 short of parsonation, and is only a L. J. Ch. 949. This principle false representation of the party's api)lies to a voluntary as well as a condition aiid means: vl/^('rt/yo7v;?/Y7A compulsory winding-up: Htonc v. V. ^'^ Kafliftrinr\^i Dock <"*). (1878) Citii and Conntii Ihinh (1877) 3 3 G. 1'. Div. 450, 47 L. J. Ch. ('. i'. Div. 2S2. 47 L. .1. ('. C. (;,sl. 763; cp. Edownd^ v. Mohtx. Drxp. s s 2 628 THE RIGHT OF RESCISSION. mencement of a winding-up, proceeded to a consider- able extent upon the language of the Companies Act, 1862, in the sections defining who shall be contribu- tories. But the broad principles of the decision, or if we prefer to say so, of the Act as interpreted by it, are these. The rights of the company's creditors and of the shareholders are fixed at the date of the winding-up and are not to be afterwards varied. The creditors are entitled to look for payment in the first instance to all persons who are actually members of the company at the date of the winding-up. And this class includes shareholders who were entitled as against the company to repudiate their shares on the ground of fraud but have not yet done so. For their obligations under their contracts with the company, including the duty to contribute in the winding-up, were valid until rescinded, and the creditors in the winding-up must be considered as being, to the extent of their claims, purchasers for value of the com- pany's rights against its members. They are not entitled to any different or greater rights : no share- holder can be called upon to do more than perform his contract with the company («)• It is now settled law that the same rule applies to joint- stock companies not under the Companies Acts. And the date after which it is too late to repudiate shares may be earlier than the commencement of the winding-up. Probably the actual insolvency of the company fixes this date ; at all events a shareholder cannot repudiate after the directors have convened an extraordinary meeting to consider whether the ()/) ]Viifer/n)Use v. Jamirso>i shareholder after a resolution for (1870) L. R. 2 So. & D. 29. In winding-up but in ignorance of it IJall \. Old TalarffocJi Lead Mi)iin/j was allowed to proceed. Here O). (1876) 3 Ch. D. 749, 45 L. J. however relief was claimed against Ch. 77o. an action for rescission the directors personally as well as and indemnity commenced by a the company. VOLUNTEERS UNDER FRAUDULENT CONTRACTS. 629 company shall be wound up. For thus, " by holding out to the body of creditors the prospect of a volun- tary winding-up," the directors, who are the share- holder's agents as long as he remains a shareholder, stay the hands of the creditors from compulsory pro- ceedmgs (x). And the rule holds even if there are no unpaid creditors. " The doctrine is, that after the company is wound up it ceases to (^xist, and rescission is impossible" (y). On the other hand, persons who have taken any Persons gratuitous benefit under a fraudulent transaction, l^^V.^.f^^l though themselves ignorant of the fraud, are in no under fraudu- better position than the original contriver of it. Thus though iimo-' where a creditor was induced to give a release to a f^^f- ^^ . - 1-11 • • 1 better off surety by a fraud practised on hnn by the prmcipal than original debtor, of which the surety was ignorant, and the defrauder, surety gave no consideration for the release, it was held that this release might be disaffirmed by the creditor on discovering the fraud. But third persons who on the faith of the release being valid had advanced money to the surety to meet other liabilities would be entitled to assert a paramount claim (z). D. The contract must be rescinded within a reason- Rescission able time, that is, before the lapse of a time after the vv^thin reason- true state of things is known, so long that under the able time. circumstances of the particular case the other i)arty may fairly infer that the right of rescission is waived. It is believed that the statement of the rule in Explanation some such form as this will reconcile the substance ti1e'i'|^,',oi.t. (.<•) Ti'iuwnt V. City of Glas(jow 28 L. J. Ch. 452. The Court below //aw/ij (l.S7it) 4 App. Ca. 615. endeavoured to provide for the (y) Jiiov/fs.s's c/ixe (1880) 15 Ch. payment of the third persons in I). 507, 501>, -I'J L. J. Ch. 541 question (Johns. 171), but the Court (Jessel M.H.). of Appeal varied the decree by (z) Schitlnfidd V. Trin/dfr (ISo'J) making it simply without prejudice Johns, 155, 'l05, 4 De G. & J. 42'J, to their riglits : 4 l>e G. & J. 435. auce of time 630 THE RIGHT OF RESCISSION. is not per se, and language of all the leading authorities. On the deic^of^' ^^^ hand it is often said that the election must be acquiescence, made within a reasonable time, while on the other Authorities in ^^j-jj j^ |^g^g several times been explained that lapse equity. _ . -"^ ^ of time as such has no positive effect of its own. The Court is specially cautious in entertaining charges of fraud or misrepresentation brought forward after a long interval of time ; it will anxiously weigh the circumstances, and consider what evidence may have been lost in consequence of the time that has elapsed (a). But time alone is no bar to the right of rescinding a voidable transaction ; and the House of Lords in one case set aside a purchase of a prin- cipal's estate by his agent in another name after the lapse of more than half a century, the facts having remained unknown to the principal and his represen- tatives for thirty-seven years (h). In a later case the Lord Justice Turner stated expressly that " the two propositions of a bar by length of time and by acquiescence are not distinct propositions." Length of time is evidence of acquiescence, but only if there is knowledge of the facts, for a man cannot be said to have acquiesced in what he did not know (c). Lord Campbell slightly qualified this by adding, that although it is for the party relying on acquiescence to prove the facts from .which consent is to be inferred, "it is easy to conceive cases in which, from great lapse of time, such facts might and ought to be presumed " (d). (/i) Cp.£ri///if V. Lrfferto>t (1861) per Alderson B. Load v. Grefiii •2 IJ. F. J. 606, 617. (1846) 15 M. & W. at p. 217, 71 (//) Cliiirtcr V. 'Jreveljian (XSW) K. R. 628 : "■ A. raan c&nnot permit 11 CI. 4: F. 714,740. 6.5 R.il. 30.5. 320. who does not know that he has a ((•) Life Assoc i /if ion of Scotland right to refuse:"' and per Jessel V. Siddal (1861) 3 U. F. J. 58, 72, 74 : M.R. 1 Ch. D. 528. on the point that there cannot be (rf) 3 D. F. J. at p. 77. The case acquiescence without knowledge; was one not of rescinding a contract cp. Lloyd V. Attwood (1858-9) 3 De but of a breach of trust ; but the Ct. & J. 614, 6.50, 29 L. J. Ch. 97 ; principles are the same. ACQUIESCENCE. 631 The rule has been laid down and acted upon by the Judicial Committee in this form: "In order that the remedy should be lost by laches or delay, it is, if not universally, at all events ordinarily . . necessary that there should be sufficient knowledge of the facts constituting the title to relief " (e). To the same effect it has been said in the Supreme Court of the United States: " Acquiescence and waiver are always questions of fact. There can be neither without knowledge." And the knowledge must be actual, not merely possible or potential: "the wrong- doer cannot make extreme vigilance and promptitude conditions of rescission " (/). Acquiescence need not be manifested by any posi- tive act; the question is, whether there is sufficient evidence either from lapse of time or from other cir- cumstances of "a fixed, deliberate and unbiassed determination that the transaction should not be im- peached " (g). In estimating the weight to be given to length of time as evidence of acquiescence the nature of the property concerned is material (/i). And other special circumstances may prevent lapse of time even after everything is known from being evidence of acquiescence ; as when nothing is done for some years because the other party's affairs are in such a condition that proceedings against him would be fruitless (^). " In questions of this kind (e) Lindsay Petroleum Co. v. the only proper meaning of acqui- Jlurd (1874) L. R. 5 P. C. 241. esccnce is quiescence under such (/) Pence v. Langdon (1S78) 99 circumstances that assent may be U. S. at p. 581. reasonably inferred from it : per {g) Per Turner T,.J. Wriifht v. Cur. in Be Bussche v. Alt (1877) Vanderplanh (185.".) 8 D. M. (I. 8 Oh. Div. at p. 314, 47 L. J, Ch. 133, 147, 25 L. J. Ch. 753, 386. 114 R. R. 00. The epithets, (A) 8 D. iVI. G. at p. 150. however, are more specially appro- (/) Scltoleficld v. 7i?/wy;Z) Thus under the old system 7 H. L. 39, 51, 52 ; London Char- of equity pleading a charge of tered Bank of Australia v. Lem- fraud in general terms would not priere (1873) L. R. 1 P. Cat p. 597 ; support a bill on demurrer : (j'dhert Clinch v. Financial Corporation V. Lewis (1862) 1 D. J. S. at p. 49, (1868) L. R. 5 Eq. at p. 483, 38 32 L. J. Ch. 347, per Lord West- L. J. Ch. 1 ; per Lord Cairns, bury; cp. Lawrance v. Xorreys Thonijmm v. Uasf wood {IS77) 2 Apy). (18'JO) 15 App. Ca. 210, 59 L. J. Ch. Ca. at p. 243. 681, as to allegations of concealed (r) Parher v. McKenna (1874) fraud within the Statute of Limita- L. R. 10 Ch. 96, 123, 125, 44 L. J. tions. Ch. 425. ((>, 276. 5 R. R. 205, 303. The like burden of proof is cast upon those who take any benefit under a will which they have themselves been instrumental in preparing or obtaining : Fulton v. Andrew (1875) L. R. 7 H. L. 448. 472. 44 L. J. r. 17. PRESUMPTION FROM CONFIDENTIAL RELATIONS. 643 confidence is abused, or the influence is exerted to obtain an advantage at the expense of the confiding party, the party so availing himself of his position will not be permittetl to retain the advantage, although the transaction could not have been impeached if no such confidential relation had existed " (a). " Nothing can be more important to maintain than the jurisdiction, long asserted and upheld by the Court, in watching over and protecting those who are placed in a situation to require protection as against acts of those who have influence over them, by which acts the person having such influence obtains any benefit to himself. In such cases the Court has always regarded the transaction with jealousy "(b) — a jealousy almost invincible, in Lord Eldon's words (c). " In equity, persons standing in certain relations to one another, such as parent and child (and and wife is not 297, 7 R. R. 195 ; Mai f land v. B-rin(/ within the rule : Hoive.'i v. liixhop (1846) 15 Him. 437, 74 R. R 115. [1909] 2 K. B. 390, 78 L. J. K. \i. (/) Per Lord Penzance, /'ar/itt 796, C. A., see especially per Far- v. Lawless (1872) I,. R. 2 I', .t" I), well L.J. It seems no longer use- 462,468,41 L. ,1. I'. 6S. it is to T T 2 QU DURESS AND UNDUE INFLUENCE. This and all similar specifications are merely illus- trative — " As no Court has ever attempted to define fraud, so no Court has ever attempted to define undue influence, which includes one of its many varie- ties " (k). The cases in which this jurisdiction has been actually exercised are considered as merely in- stances of the application of a principle " applying to all the variety of relations in which dominion may be exercised by one person over another " (l). As to certain well-known relations, indeed, the Court is now bound by authority to presume influence. As to any other relation which the Court judges to be of a confidential kind it is free to presume that an in- fluence founded on the confidence exists, or to require such proof thereof as it may think fit. It has even been said (m) that in every case where " one person obtains, by voluntary donation, a large be noted that this does net aindy to wills, as to which undue influence is never presumed : ///. ; Bvyxe v. Bosxlwrouglt (185ti-7) 6 H. L.' C. 2, 49, followed by Ind. Comm. Bav- dainx V. Bichardson [1906] A. C. 1G9. 75 I,. J. P. C. 57 : Hiiuhon V. Weathe)-ill (1854) 5 D. M. G. 301, ail, 313; though a dis- position by will may be set aside as well as an act inter riro.i when undue influence is actualij' proved : but then, it seems, the influence must be such as to " overpower the volition, without convincing the judgment": Hall y. Hall (1868) L. K. 1 P. & D. 482. 37 L. J. P. 40. See Walker v. Smith (1861) 29 Beav. 394, where between the same parties gifts by will were supported and a gift inter vivos set aside. Lord Penzance added to the list of suspected relatioi.s that of pro- moters of a company to the com- pany which is their creature : Erlanger v. Sew Sombrero Phos- phate Co. (1877) 3 App. Ca. at p. 1230. But is not jjersonal con- fidence essential to make the present doctrine applicable .' And has any case gone the length of casting on a promoter the burden of proving in the first instance that a contract between him and the company was a fair one 1 Cp. Bde/i v. Bidxdale's Bailivay Lamp and Lighting Co. (1889) 23 Q. B. Div. 368, .58 "L. J. Q. B. 579, where the duty is put on the ground of agency. {k) Lindlev L.J. in All'uird v. Skinner (1887) 36 Ch. Div. at p. 183. (/) Sir S. Piomillv. rtr<7. Huqueniti V. Baseley (1807) 14 Ves. 285. 9 R. R. 283 : adopted by Lord Cotten- ham. Dent v. Bennett (1839) 4 My. & Cr. 269, 277, 48 R. R. 94, 102 ; Billage v. Southee (1852) 9 Ha. 534, 540, 89 R. R. 564. Cp. D'Aguesscau ((Euvres, 1.299) " Parceque la raison del'or- donnance est generale, et qu'elle comprend egalement tous ceux qui peuvent avoir quelque empire sur Tesprit des donateurs, vos arrets en ont etendu la disposition aux maitres, aux medecins, aux con- fesseurs.'" So Pothier, Tr. des donations entre-vifs, vol. vii. p. 441, in (Euvres, ed. Dupiu. 1825. (w) By Lord Romillj- in Coohe v. Lamotte (1851) 15 Beav. 234, 240. GIFTS : BURDEN OF PROOF. 645 pecuniary benefit from another," the person taking the benefit is bound to show " that the donor vohm- tarily and deliberately performed the act, knowing its nature and effect;" that for this purpose a volun- tary donation means any transaction in which one person confers a large pecuniary benefit on another, though it may be in form a contract (n) ; and that such is the rule whether there is any confidential relation or not. But these dicta are not law. There is no general presumption against the validity of gifts as such (o). Where grounds of unfavour- able presumption exist, it is easier to set aside a mere gift than a transaction from which the plaintiff has derived some benefit, though not adequate to what was given for it ; and attempts to disguise a gift as a dealing for value are almost always fatal (/)). Beyond this, it is conceived, the law does not go. In the absence of any special relation from which Burden of influence is presumed, the burden of proof is on the l*™"^ ^vhcve ■^ '^ 110 special person impeaching the transaction (q), and he must relation. show affirmatively that pressure or undue influence was employed. Having thus stated the fundamental rules, we may Auxiliary proceed to say something more of — rules and (1.) The auxiliary rules applied by courts of equity special points. to voluntary gifts in general: 21 L. J. Ch. 371, 02 n. 11. 897, 402; (1881) 18 Ch. D. fifiS, wliicli, .and TL)f//ifon v. Hntjliton (1852) 15 tliough a decision of onlv co-ordi- I'.oav. 278, 2!»S ; \Y2 ']{,. R. 121, 43(1 ; nate authority with Lord Koniilly's, cp. per Lord Hatherley in /'//////■/w expresses the clear sense of the V. MiilliiigK (1871) L. U. 7 Ch. 244, Equity Bar ever since the present 246, 41 L. J. Oh. 211. writer can remember it. (/() E.(i. Coohe V. Lamotte (1851) (y;) Also any innocent misrcpre- 15 Bcav. 231, 21 L. J. Ch. 371, sentation by the donee whereby a 92 R. 11. 397; Dent v. Bennett voluntary fjift is obtained is ,y;round (1839) 4 My. k. Cr. 209, 273, 48 in e(|uity for avoiding the gift : K. 11. 94, 99. lie (;hihh, /i>ini field v. nw/er,s[VM}] (o) It there were, tlie elaborate 1 Ch. 354, 09 L. J. Ch. 278, (.'.. A. discussion which took place, r/7. in {i (188:^) 23 («) Iltdl v, Ilall (1878) L. K. S Ch. Div. at p. 281. r)2 L. J. Ch. Ch. 4:30, 42 L. J. Ch. 444, where 661 ; Jaiiim v. Ci)nrhinan (1885) 29 the former cases are reviewed ; and Ch. D. 212, 54 I;. J. Ch. 8:38, So see Puirell v. Powell, last note, common ignorance or mistake of (.r) Per Turner, L.J. Itliodrs v. both parties as to the eflfect of an Jiate (186(;) r>. R. 1 Ch. 252, 257, instrument may sometimes be in- 260, ;35 L. J. Ch. 267 ; Holiiinii v. f erred on the face of it from its X(»//«r.v (1854) 4 D. M. G. 270. 28:3, unreasonable or unusual character : 2'A L. J. Ch. 52i», l(t2 K, U. 127, i:57. ()iy DURESS AND UNDUE INFLUENCE. complete emancipation, so that a free and unfettered judgment may be formed, independent of any sort of control (y). It is obvious that without this extension the rule would be practically meaningless. It is said that as a general rule a year should elapse from the termination of the authority before the judgment can be supposed to be wholly emancipated : this of course does not exclude actual proof of undue influence at any Evidence subsequent time (z). With regard to the evidence to rebutme-" ^® adduced to rebut the presumption in a transaction sumption ui between a father and a son who has recently attained „ ,, " , majority, the father is bound " to show at all events Father and •' "^ son, that the son was really a free agent, that he had adequate independent advice . . . that he per- fectly understood the nature and extent of the sacrifice he was making, and that he was desirous of making it." Si)licitor an!• L. J. Ch. 1(54. favourable to the solicitor. (c) See per Lord Cranworth. 7 [h] Gibson v. Jeyes (1801) 6 A''es. PI. L. C. at p. 772. 266, 278, 5 R. R. 295, 306. As to («) Surer !/ V. Al/u/ {lS6b) r> ILL. solicitor's charges, see Lyddon v. C. at p. 655, 25 L. .j. Ch. 482, 101 .!/().« (1859) 4 De G. &. J. 104. R. R. 317 ; Caxhorne v. Barshani DUTY ATTACHED TO FIDUCIARY RELATIONS. 649 the very nature of things, where the duty exists that he should give his client advice, it should be dis- interested advice ; he cannot properly give that advice when he is purchasing himself without telling his client that he is purchasing " (c). If the client becomes bankrupt, his trustee is entitled to the benefit of this special duty (d). The result of the decisions has been thus suinmed up by the Judicial Committee of the Privy Council. " The Court does not hold that an attorney is incap- able of purchasing from his client ; but watches such a transaction with jealousy, and throws on the attorney the onus of showing that the bargain is, spealdng generally, as good as any that could have been obtained by due diligence from any other pur- chaser " (e). He is not absolutely bound to insist on the intervention of another professional adviser. But if he does not, he must not be surprised at the trans- action being disputed, and may have to pay his own costs even if in the result it is upheld. As to gifts, the rule is that the client must have competent inde- pendent advice (/), and the Court must be satisfied that the influence has in fact ceased (g). The result seems to be that it is all but impossible in law for a gift fiom client to solicitor to be unimpeachable. Generally — Fiduciary relations " The broad principle on which the Court acts in cases of this description is that, wherever there exists such a confidence, of whatever character that confidence may be, as enables the person in whom confidence or trust is reposed to exert influence over the person trust ini^' him, the Court will nut allow any transaction between the parties to stand unless tiiere has been the fullest and fairest explanation and (r) MrPhersoH v. Watt (1877) (1874) T.. R. 5 P. C. niO, 536, 540. (Sc.) ;^ App. Ca. 254, 272. if)Lile!< v. Terry [1895] 2 (rf) Lwhly'H Tnixtre v. rnnil Q. W. (J7'.), r)5 L. J. Q. B. 34, C. A. (188(;) 33 Cii. D. 500. (,/) \Vri0;». on the broader ground that (/) Molonij V. A'i?r««/t (1842) 2 the nature of the transaction was Dr. & W. at p. 3il. not understood. (y) Barron v. IF/Z/w [19001 2 (/,•) Pophnui \. 7?n(«Zr (1828) 5 Ch.' 121, <:<> L. J. Ch. 832, 0. A. ; Russ. 8. r.S R. R. 60. which also shows (if authority be (/) (186(») 28 Beav. O.^O, Cfi3. needed) that a mere suggestion of Tliis is an extreme case : but independent advice, not followed there was some evidence of inde- up, will not validate such a trans- pendent offers being discouraged. DUTY ATTACHED TO FIDUCIARY RELATIONS. 651 better terms could possibly have been obtained ; and as they failed to do this, the lease was set aside. This comes very near to the case of an agent deal- ing on his own account with his principal, when " it must be proved that full information has been im- parted, and that the agreement has been entered into with perfect good faith." Nor is the agent's duty altered though the proposal originally came from the principal and the principal shows himself anxious to complete the transaction as it stands (m). The same rules apply to an executor who himself becomes the purchaser of part of his testator's estate (n). But this obligation of agents and trustees for sale appears (as we have already considered it, pp. 299—300, above) to be incidental to the special nature of their employ- ment, and to be a duty founded on contract rather than one imposed by any rule of law which guards the freedom of contracting parties in general. The duty cast upon a solicitor, or other person in a like position of confidence, who deals on his own account with his client, of disclosing all material cir- cumstances within his knowledge, does not however bind him to communicate a " speculative and con- sequential " possibility which may affect the future value of the subject-matter of the transaction, but which is not more in his own knowledge than in the client's (o). It must not be forgotten that the suspicion with Family which dealings between parents and children presuui- excei)ti(inaiiy ably still under parental influence are regarded by favoured. couits of equity is to a certain extent counteracted by (in) DdUii V. WiiHhiim (ISC.:?) H!? lioav. 154. ■ (//) Jiulirr V. llt'iid (lsr)4) IS I'.eav. 8i»8 ; affd. 3 W. K. 818, 104 11. 11. 484 ; wheic however relief was icfiised on the groiiiul of seventeen years' delay. (o) Kdwav(h V. Mr'i/rirk (1842) 2 Ha. f.O, 74, ()2 \l. \i'. 28 ; Ilolnuin V. Loynr.x (18r,4) 4 D. M. li. at J), 28(i, 102 K. 11. at p. 18."). 652 DURESS AND UNDUE INFLUENCE. the favour with which dispositions of the kind known as family arrangements are treated. In many cases a balance has to be struck between these partly con- flicting presumptions. " Transactions between parent and child may proceed upon arrangements between them for the settlement of property, or of their rights in property in which they are interested. In such cases this Court regards the transactions with favour. Jt does not minutely weigh the considerations on one side or the other. Even ignorance of rights, if equal on both sides, may not avail to impeach the trans- action (p). On the other hand, the transaction may be one of bounty from the child to the parent, soon after the child has attained twenty-one. In such cases this Court views the transaction with jealousy, and anxiously interposes its protection to guard the child from the exercise of parental influence " (q). It must be observed that the rules concerning gifts, or transactions in the form of contract which are sub- stantially gifts, from a son to a father, do not apply to the converse case of a gift from an ancestor to a descendant : there is no presumption against the validity of such a gift, for it may be made in discharge of the necessary duty of providing for descendants (/•). (ji) Perhaps it is safer tosay that Hof/hfon (lSo2) 15 Beav. 278,300, 92 the " almost invincible jealousy" Jt. 11. 421. 481 ; and on the doctrine of the Court is leduced to '"a of fauiily arrangement not applying reasonable degree of jealousy"; when a son without consiileration ep. Lord Eldou's language in //cz/r//, gives up valuable rights to his V. llafrh (18(14) !) Ves. at p. 2!»(i. father: Sareri/ v. Kiv/f (18.56) 5 7 R. K. at p. Ii»7. and Tweddell v. H. L. C. at p. 657, 101 R. R. :U8. A 'Jireddpll (1822) Turn. & R. at p. liJ, sale by a nephew to his [great] uncle 23 Iv. R. 168. On the ([ue.stion of of his reversionary interest in an cotisideration see WlHiiiinx \. Wil- estate of which the uncle is tenant Z/tt/w.v (1866-7) L. R. 2 Ch. 2i»4. 804, for life is not a familv arrange- 36 L. J. Ch. 200. ment : 'lalhot v. Staniforth (1861) (r;) Baherx. nradleji (\9,oh)l \). 1 J. & H. 484, 501." As to the M. G. 597, 620, 109 R. R. 245, 25".!. amount of notice that will affect a See also WidJace v. WaUace (1842) purchaser : Bainhrigfje v. Browne 2 Dr. .t W. 452. 470. 59 R. R. 766 ; (1881) 18Ch. D. 188,50 L.J. Ch. 522. Jirllanni v. Sahlnr (1835) 2 I'h. 425. (/•) Bcatdand v. Bnidleij (1854) 439, 78 R. R. 13.'; Iloqhtoit v. 2 Sm. tV: G. 339. 97 R. R. 228. RELATIONS WHENCE INFLUENCE PRESUMED. G53 3. Eelations between the parties from which in- Relations n 1 ^ -I from which nuence has been presumed. influence It would be useless to attempt an exact classification piesumed. of that which the Court refuses on principle to define or classify : but it may be convenient to follow an order of approximate analogy to the cases of well- known relations in which the presumption is fully established. A. Eelations in which there is a power analogous to Cases that of parent or guardian. pamifancr child. Uncle in loco parentis and niece : Archer v. Hudson (1814) 7 Beav. 551, 13 L. J. Ch. 380, Ci R. R. 152 ; Maitland v. Irchig (1846) 15 Sim. 437, 74 R. R. 115. Step-father in loco parentis and step-daughter: Kempson v. Ashhee (1874) L. R. 10 Ch. 15, 44 L. J. Ch. 195 ; Espey v. Lahe (1852) 10 Ha. 260, 90 R. R. 362. Executor of a will (apparently in a like position) and the testator's daughter : Grosrenor v. Sherratt (18G0) 28 Beav. 659. Husband of a minor's sister with whom the minor had lived for some time before he came of age : Griffin v. DrreuiUe (1781) 3 P. Wms. 131, n. But the mere fact of a minor living with a relative of full age does not raise a presumption of influence ; or the presumption, if any, is rebutted by proof of business-like habits and capacity on the donor's part : Taylor V. Jy/ww/((« (1882) 19 Ch. D. 603, 51 L. J. Ch. 879. Two sisters living together, of whom one was in all respects the head of the house, and might be considered as in loco parentis towards the other, though the other was of mature years : Harrey v. Mount (1845) 8 Beav. 439, 68 R. R. 14(!. Brother and sister, where the sister at the age of 46 executed a voluntary settlement under the brother's advice and for his benefit : Sharp v. Leach (1362) 31 Beav. 491. Husband and wife on the one part, and aged and infirm aunt of the wife on the other : Gri/fiths v. Ilobins (1818) 3 Mad. 191, 53 R. R. 31. Distant relationship by marriage : the donor old, infirm, and his soundness of mind doubtful ; great general confitlence in the donee, who was treated by hiin as a son : Steed v. ('alley (1836) 1 Kee. 620. This rather than the donor's insanity seems the true ground of the case : see p. 644. Keeper of lunatic asylum and recovered patient : Wriyht v. Frond (1806) 13 Ves. 136, 53 R. R. 22. There are also cases of general control obtained by one person over another without any tie of relationship or lawful authority : Bridgnian v. ^»'/re«(1755) 2 N'^es. Sr. (J27, VV^ilm. 58, where a servant obtained complete control over a master of weak understanding : Kay v. Sinilli (1856) 21 054 DURESS AND UNDUE INFLUENCE. Cases analogous to solicitor and client. Beav. 522, affirmed nom. Sndth v. Kay (1859) 7 H. L. C. 750, where an older man living with a minor in a joint course of extravagance induced him immediately on his coming of age to execute securities for bills previously accepted by him to meet the joint expenses. In Lloyd v. Clarh (1843) (5 Beav. 309, 63 R. R. 85, the influence of an officer over his junior in the same regiment was taken into account as increasing the weight of other suspicious circumstances ; but there is nothing in the case to warrant including the position of a superior officer in the general category of " suspected relations." B. Positions analogous to that of solicitor. Certificated conveyancer acting as professional adviser : Rhodes v. Bate (1806) L. R. 1 Ch. 252, 35 L. J. Ch. 267. Counsel and confidential adviser : liruun v. Kennedy (1863) 33 Beav. 133, 148, 4 D. J. S. 217. Confidential agent substituted for solicitors in general management of affairs : Huguenin v. Baseley (1807) 14 Ves. 273, 9 R. R. 276 (s). A person dejiuted by an elder relation, to whom a young man applied for advice and assistance in pecuniary difficulties, to ascertain the state of his affairs and advise on relieving him from his debts : Tate\. WilUammn (1866) L. R. 1 Eq. 528, 2 Ch. 55. The relation of a medical attendant and his patient is treated aa a con- fidential relation analogous to that between solicitor and client : Dent v. Bennett (1839) 4 My. & Cr. 269, 48 R. R. 94 ; Billuge v, Southee (1852) 9 Ha. 534, 89 R. R. 564 ; Ahearne v. Hoyan (1844) Dru. 310 ; though in BlacUe v. Clarh (1852) 15 Beav. 595, 603, 92 R. R. 570, less weight appears to be attached to it. It does not appear in the last case whether the existence of "anything like undue persuasion or coercion " (p. 604) was merely not j)fored or positively disproved : on the supi)Osition that it was disprored there would be no inconsistency with the other authorities. For another unsuccessful attempt to set aside a gift to a medical attendant, see Pratt v. Burlier (1826-28) 1 Sim. 1, 4 Russ. 507, 27 R. R. 136 ; there the donor was advised by his own solicitor, who gave positive evidence that the act was free and deliberate. {s) A fortiori, where characters of steward and attorney are com- bined : Harris v. Trenitnheere (1808) 15 Ves. 34, 10 R. R. 5. A flagrant case is Baker v. Loader (1872) L. R. 16 Eq. 49, 42 L. J. Ch. 113. Cp. Mo.ron v. Payne (1873) L. R. 8 Ch. 881, 43 L. J.Ch. 240, where however the facts are not given in any detail. As to a land agent purchasing or taking a lease from his principal, see also Mohiny v. Kernan (1842) 2 Dr. & W. 31 ; Lord Seise y v. Bhoades (1824-27) 2 Sim. & «t. 41, 1 Bli. 1, 25 R. R. 150, 30 R. R. I. In Rossiter v. Walsh (1843) 4 Dr. & W. 485 ; 65 R. R. 745, where the trans- action was between an agent and a sub-agent of the same principals, the case was put by the bill (4 Dr. & W. p. 487), but "not decided, on the ground of fiduciary relation. See p. 650, above. SPIRITUAL INFLUENCE. 655 c. Spiritual influence. It is said that intiuence would be presumed as between a clere:yman or any person in the habit of imparting religious instruction and another person placing confidence in him : Dent v. Bennett (1835) 7 Sim. at p. o4G, -18 R. R. p. 97. Tiiere have been two remarkable modern cases of spiritual influence in which there wereclaims to spiritual power and extraordinary faculties on the one side, and implicit belief in such claims on the other ; it was not necessary to rely merely on the presumption of influence resulting therefrom, for the evidence which proved the relation of spiritual confidence also went far to prove as a fact in each case that a general influence and control did actually result : Nottldge v. Prince (ISfiO) 2 Giff. 246, 29 L. J. Ch. 857 ; Lyon v. Home (1868) L. R. 6 Eq. 655, 37 L. J. Ch. 674 (f). In the former case at all events there was gross imposture, but the spiritual dominion alone would have been sufficient ground to set aside the gift : for the Court considered the intiuence of a minister of religion over a person under his direct spiritual charge to be stronger than that arising from any other relation («). There seems to have been also in Norton v. lielly (1764) 2 Eden, 286, the earliest reported case of this class, a considerable admixture of actual fiaud and imposition. A peculiar case is Allcard v. Skinner (1887) 36 Ch. Div. 145, .56 L. J. Ch. 1052. The plaintiff, a lady of full age, had joined a religious sister- hood, apparently of her own mere motion and free will. Its rules, known to her before she applied for admission, required the members to abandon all their individual property ; not necessarily to the sisterhood, but the common practice was to give it to the superior for the purposes of the sisterhood. Other rules required strict obedience to the superior, restrained communication with "externs" about the affairs of the convent, and forbade members to "seek advice of any extern without the superior's leave." At various times after entering the sisterhood the plaintiff made transfers of considerable sums of money and stock to the superior, in fact "gave away practically all she could." After some years she left the sisterhood, and after nearly six years more she claimed the return of the funds remaining in the superior's hands. It was held that, having regard to the position of the plaintiff as a member of the sisterhood, and to the rules she had undertaken to obey, especially the rules against communica- tion with "externs," she was not a free agent at the time of making the gifts. But the majority of the Court held that her subsequent conduct amounted to confirmation. A still later case where a weak rich man became a mere puppet in the Spiritual influence : mixed character of the cases. (/) In Lyon v. Home there was some evidence that the gifts in question were not asked for by the defendant l)ut pressed on liim by the plaintiff ; but, given the cir- cumstances, it was quite rightly held that tliis, if it were so, made no diff(;rencc. («) 2 Giff. 269, 270. G56 DURESS AND UNDUE INFLUENCE. hands of an amateur spiritual director, who used his ascendency for the most grossly selfish ends, is Morley v. Loughnan [189'^] 1 Ch. 736, m L.J. Ch. .-)15. Tiie authority of Huguen'ni v. Ba.seleij (1807) 14 Yes. 273, 9 R. E. 276. as to this particular kind of influence, is to be found not in the judgment, which proceeds on the ground of confidential agency, but in Sir S. Romilly's argument in reply, to which repeated judicial approval has given a weight scared v if at all inferior to that of the decision itself. Undue intluence without fidu- ciary relation. Securities obtained by pressure ; Williams v. Bavlev. 4. Circumstances held to amount to proof of undue influence, apart from any continuing relation. In a case where a father gave security for the amount of certain notes believed to have been forged by his son, the holders giving him to understand that otherwise the son would be prosecuted for the felony, the agreement was set aside, as well on the ground that the father acted under undue pressure and was not a free and voluntary agent, as because the agree- ment was in itself illegal, as being substantially an agreement to stifle a criminal prosecution {x). In Ellis V. Barker (ij) the plaintiff's interest under a will M-as practically dependent as to part of its value on his being accepted as tenant of a farm the testator had occupied as yearly tenant. One of the trustees was the landlord's steward, and in order to induce the plaintiff to carry out the testator's sup- posed intentions of providing for the rest of the family he persuaded the landlord not to accept the plaintiff as his tenant unless he would make such an arrange- ment with the rest of the family as the trustees thought right. Under this pressure the arrangement was executed : it was practically a gift, as there was no real question as to the rights of the parties. After- wards the deeds by which it was made were set aside at the suit of the plaintiff, and the trustees (having (,/•) ]\'iin„vis V. Batjlei/ (1806) ((/) (1871) L. R. 7 Ch. 104. 41 L. R. 1 H. L. 200, 3.") L. J. Ch. 717 ; L. J. Ch. 64. cp. p. 345, above. SPECIAL CASES. 657 thus unjustifiably made themselves partisans as between their cestuis que trust) had to pay the costs. These are the most distinct cases we have met with of a t]"ansaetion being set aside on the ground of undue influence specifically proved to have been used to procure the party's consent to that particular trans- action (z). In Smith v. Kay (a) a young man completely under Smith r, Kay, the influence and control of another person and acting under that influence had been induced to execute securities for bills which he had accepted during his minoi'ity without any independent legal advice ; and the securities were set aside. There was in this case evidence of actual fraud ; but it was distinctly affirmed that the decision would have been the same without it, it being incumbent on persons claiming under the securities to give satisfactory evidence of fair dealing (b). This comes very near to the peculiar class of cases on " catching bargains " with which we shall deal presently. Undue influence may be inferred when the benefit other circuai- is such as the taker has no right to demand [i.e. no which undue natural or moral claim! and the grantor no rational influeuce ,...,. inferred. motive to give (c). Inadequacy of the consideration, though in itself As to undcr- not decisive, may be an important element in the conclusion arrived at by a court of equity with respect to a contract of sale. The general rule of equity in this matter has been General rule ; undervalue (z) Cp. Ormes Y. BeruM{\S60) 2 (/^ Pp. 761, 770. The securities ^^i^s of itself Giff. Ififi, .SO L. J. Ch. 1, revd. 2 given were for an amount very "*^ effect. D. F. J. 883, on the ground that much exceeding the whole of the the agreement had afterwards been sums really advanced and the in- voluntarily acted upon with a terest upon them : p. 778. knowledge of all the facts. (r) Piircell v. J/'iYrewwrn (1807) (a) (1851)) 7 H. L. C. 7.50. 11 Ves. f>l, ll.'>. P. U U ()58 DURESS AND UNDUE INFLUENCE. But coupled with other circumstances may be material as evidence that consent, or freedom of consent, was want inc. thus stated by Lord Westbury : " It is true that there is an equity which may be founded upon gross in- adequacy of consideration. But it can only be where the inadequacy is such as to involve the conclusion that the party either did not understand what he was about or was the victim of some imposition " (d). The established doctrine is that mere inadequacy of price is in itself of no more weight in equity than at law (e). It is evidence of fraud, but, standing alone, l)y no means conclusive evidence (/). Even Avhen coupled with an incorrect statement of the considera- tion it will not alone be enough to vitiate a sale in the absence of any fiduciary relation between the parties (g). But if there are other circumstances tending to show that the vendor was not a free and reasonable agent, the fact of the sale having been at an under- value may be a material element in determining the Court to set it aside. Thus it is when one member of a testator's family conveys his interest in the estate to others for an inadequate consideration, and it is doubtful if he fully understood the extent of his rights or the effect of his act (h). If property is bought at an inadequate price from an uneducated {d) Tenncntx. Ten/ieiif.'^ (1870) L. R. 2 Sc. & D. 6, 9. For a modern instance of such a conchision being actually drawn by the Court from a sale at a pross undervalue, see Hire V. Gordon (1817) 11 Beav. 265, 270, 83 R. R. 158 : cp. Undfr- liUl V. Honrnod (1801) 10 Yes. at p. 219; Summers v. Griffiths (18(;6) 35 Beav. 27, 3.3, and the earlier dictum there referred to of Lord Thurlovv in Gtcynne v. Ileatoti (1778) 1 Bro. C. ('. 'l, 9, that "to set aside a conveyance there must be an inequality so strong, gross, and manifest, that it must be im- possible to state it to a man of common sense without producing an exclamation at the inequality of it." {,') Wood V. .47^/ry(18I8)3 Mad. 417, 423. 18 R. R. 264, 268 ; Peacocli V. A>rt«.v(1809) 16 Ves. 512. 517, 10 K. R. 218. 222 ; Stillwell v. WUkhis (1821) Jac. 280, 282. 23 R. R. .56. (/) Cocltell V. Taylor (1851) 15 Beav. 103, 115, 21 L. J. Ch. 545, 92 R. R. 328. 336. (//) Harrison v. Guest (1855) 6 D. M. G. 424, 8 H. L. C. 481, 106 R. R. 129. (//) Stnrff(^ V. Stiirgfi (1849) 12 Beav. 229, 19 L. J. Ch. 17, 85 K. R. 77 : cp. Dunnagp. v. 1T7*/^<^(1818) I Swanst. 137, 150. 18 R. R. 33, 41. UNDERVALUE. 659 man of weak mind (i) or in his last illness (k), who is not protected by independent advice, the burden of proof is on the purchaser to show that the vendor made the bargain deliberately and with knowledge of all the circumstances. Nay, more, when the vendor is infirm and illiterate and employs no separate solicitor, " it lies on the purchaser to show affirma- tively that the price he has given is the value," and if he cannot do this the sale will be set aside at the suit of the vendor (I). In 1871 a case in the Court of Appeal was decided on the ground that "if a solicitor and mortgagee . . . obtains a conveyance [of the mortgaged property] from the mortgagor, and the mortgagor is a man in humble circumstances, without any legal advice, then the onus of justifying the transaction, and showing that it was a right and fair transaction, is thrown upon the mortgagee " (iii). Still more lately the poverty and ignorance of the seller of a reversionary interest have been held enough, without infirmity of body or mind, to throw the burden of proof on the buyer (n). Similarly if a purchase is matle at an inadequate price from vendors in great distress, and without any professional assistance but that of the purchaser's solicitor, " these circumstances are evidence that in this purchase advantage was taken of the distress of the vendors," and the conveyance will be set aside (o). It has even been said that to sustain a oonti-act of •' Equaliiy sale in equity " a reasonable degree of equalitv 'between the ■* " 1 J contracting (/) Liiiir/iiiatf^ V. Lcdffnr (^\8(^0) 2 against a mortgagee buying fiom Giff. 157, 163 (alfimiecl on appeal, his mortgagor : A'liir/ht v. Marjori- see 4 D. F. J. 402). ha/iks (184'.0 2 Mac. & G. 10, 83 (/O ClarJfv. MalpiLs (1862) 31 11. R. 166; and see Ford v. Olden Beav. 80, 4 D. F. J. 401. (1S67) L. R. 3 Eq. 461, 36 f.. J. Ch. {I) Baiter v. Monk ( 1 .S64) 33 iJeav. 6.")] . 419, 4 I). J. S. 388. 3'.)]. (//) Fnj v. Lane (1888) 40 Ch. D. (w) Lord Hatherlev (J. Prerx v. 312, 58 L. J. Ch. 113. CoU (1870-1) L. R. 6 Ch. 615, 64'.» : ^0 Wood v. Ahrei/ (1818) 3 Mad. though in general there is no rule 117, 121, 18 II. R. 264, 261). U U 2 660 DURESS AND UNDUE INFLUENCE. between the contracting parties " is required (p). But such a dictum can be accepted only to this extent : that when there is a very marked inequality between the parties in social position or intelligence, or the transaction arises out of the necessities of one of them and is of such a nature as to put him to some extent in the power of the other, the Court will be inclined to give much more weight to any suspicious circum- stances attending the formation of the contract, and will be much more exacting in its demands for a satisfactory explanation of them, than when the parties are on such a footing as to be presumably of equal competence to understand and protect their re- spective interests in the matter in hand. The true doctrine is well expressed in the Indian Contract Act, s. 25, expl. 2. " An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate ; but the in- adequacy of the consideration may be taken into account l)y the Court in determining the question whethei- the consent of the promisor was freely given." A sale made by a person of inferior station, and foi- an inadequate price, was upheld by the Court of Appeal in Chancery, and ultimately by the House of Lo)ds, when it appeared by the evidence that the vendor had entered into the transaction deliberately, and had deliberately chosen not to take independent professional advice (q). (/>) Loiigiiinte \. Ledger (1860) whether the parties really did meet 2 Oiff. at p. Ifi3, by Stuart V.-C. ; on equal terms ; and if it he found cp. the same judge's remarks In that the renflor was in distressed Barrett v. Hartleij (1866) L. R. 2 eircjimstances, and that advantage Eq. at p. 794. We have already tv/is taken of that distress, it will seen something of the learned Vice- avoid the contract." Chancellor's adventurous doctrines (q) I/arrisnuv. Guest (lS^i>) 6 D. about Mistake. See the more cor- M. G. 424. 8 H. L. C. 481, 106 R. R. rect statement in ^\'ood v. Abrei/.3 129; cy). Bosher v. Williams (1875) Mad. at p. 423, 18 R. R. p. 268. L. R. 20 Eq. 210, 44 L. J. Ch. 419. " A court of equity will inquire UNDERVALUE AND SPECIFIC rERFORMANCE. 001 It was long doubtful whether a degree of inade- Specific quacy of consideration Avhich does not amount to not refused on evidence of fraud may not yet be a sufficient ground the ground of • r. P mi 11 under-value for refusmg specific performance, ihe general rule alone, as to granting specific performance, so far as it bears on this point, is that the Court has a discretion not to direct a specific performance in cases where it would be highly unreasonable to do so : it is also said that one cannot define beforehand what shall be considered unreasonable (r). On principle it seems doubtful whether it should ever be considered un- reasonable to make a man perform that which he has the present means of performing, and which with his eyes open he has bound himself to perform by a contract valid in law. And it is said in IVatsoit v. Marston (r) that the Court " must be satisfied that the agreement would not have been entered into if its true effect had been understood." Perhaps this may be considered to overrule those earlier decisions which furnish authority for refusing a specific per- formance simply on the ground of the apparent hard- ship of the contract. As to the immediate question whether inadequacy of consideration, not being such as to make the validity of the contract doubtful (.s), is regarded as making the performance of it highly unreasonable within the meaning of the above rule, it is now settled by general consent in the negative. (/•) See ll«^sv»« V. J/^/nv/ow (ISRi^) never decided a legal point when 4 U. M. G. 230, 2:V.t, 240, 102 R. U. they could help it. Now that legal 100, 107, and dicta there referred an(i equitable juris. GG6 DURESS AND UxNTDUE INFLUENCE. and remaindermen or reversioners in similar circum- stances, i.e. bargains made in substance on the credit of their expectations, whether the property in expect- ancy or reversion be ostensibly the subject-matter of the transaction or not (/) : The rule of evidence that the burden of proof lies on the other contracting pai'ty to show that the trans- action was a fair one. We use the present tense, for neither the last-mentioned Act nor the repeal of the usury laws, as we shall see presently, has made any change in this respect. Former The part of the doctrine which is abrogated was doctrine as to • , • , , i. i i Ji • • • i i • j.- sales of mtmiately connected both m prniciple and m practice reversionary ^ith that which remains ; and though it seems no longer necessary to go through the authorities in detail, it may still be advisable to give some account of the manner in which it was applied (m). The general rule established by the cases was that the purchaser was bound to give the fair market price, and to preserve abundant evidence of the price having been adequate, however difficult it might be to ascer- tain what the true value was. It was applied to re- versionary interests of every kind, and the vendor was none the less entitled to the benefit of it if he had acted with full deliberation. The presumption origin- ally thought to arise from transactions of this kind had in fact become transformed into an inflexible rule of law, which, consistently carried out, made it well- nigh impossible to deal with reversionary interests at all. The modern cases almost look as if the Court, finding it too late to shake off the doctrine, had sought to call the attention of the legislature to its incon- venience by extreme instances. Sales were set aside (?) Earl of Ai/lr-tford v. Morrin civen in the first two editions (1873) L. R."8 Ch. at p. 497. (p. .5.50, 2nd ed.). (w) A digest of (lie cases was EXPECTANT HEIRS : " CATCHINU BARGAINS. ()G7 Act to amend the law relat- ing to sales of 4, it was enacted reversions, 31 Vict c 4 1) that no purchase (defined by s. 2 to include after the lapse of such a length of time as 19 years, and even 40 years (n). A sub-purchaser who bought at a considerably advanced price was held by this alone to have notice of the first sale having been at an undervalue (o). In one case where the price paid was 2001., and the true value as estimated by the Court 238/., the sale was set aside on the ground of this undervalue, though the question was only inci- dentally raised and the plaintiff's case failed on all other points (p). Finally Parliament found it necessary to interfere, and in 1867, by the '' Act to amend the law relating to sales of reversions," 31 Vict, c (s evei'y contract, &c., by which a beneficial interest in property may be acquired), made bona fide and with- out fraud or unfair dealing of any reversionary in- terest in real or personal estate, should after January 1, 1868 (s. 3), be opened or set aside merely on the ground of undervalue. The Act is carefully limited to its special object of putting an end to the arbitrary rule of equity which was an impediment to fair and reasonable as well as to unconscionable bargains. It leaves undervalue still a material element in cases in which it is not the sole equitable ground for relief (q). It had already been decided (r) that the repeal of General mies the usury laws (s) did not alter the general rules of ^,, ^''^[l^'tc^i*,!,,- the Court of Chancery as to dealings with expectant bargains" unart'ccted. («) St.Alhaii V. Uurdimi (1859) 27 lieav. 11 ; Salfer v. Jiiruhlmw (I,S.-)8) 2(5 Beav. ItH. 00 Af.sbitt V. JierrUhir (I8G:5) 32 Beav. 280. (/;) .Jones V. llich'tts (18(;2) ;{1 Beav. ISO, :51 L. J. (^h. 758. (jl) Eiirl of Ayleafoiul v. Morris (1873) L. II.'S Ch. at p. 4'JO. Sec also (fliorhew. Jioli /if/hroltc {\H77) 2 App. Oa. 814 ; Fry v. Lane (1.S8S) 40 (.'h. 1). 312. 58 U ,J. Uh. 113. (;■) Croft V. (Inihant (lSi;:5) 2 D. J. S. 155. (.y) 17 & 18 Vict. c. 90. But before this complete repeal excep- tions had been made from the usury laws in favour of certain bills of exchange and loans ex- ceeding 10/. not secured on land : 3 & 4 Will. 4, c. 98, s. 7, 2 & 3 Vict. c. 37, s. 1, and comments tliereon in Lane v. Horloek (185(;) 5 II. L. ('. 5.S0, 25 L. J. Cli. 253. 608 DURESS AND UNDUE INFLUENCE. heirs. This decision was followed in Miller v. Cook (t), and adhered to in Tyler v. Yates (u), and lastly in Earl of Aylesford v. Morris (x) and Beyiion V. Cook (y), and in the two latter cases it has been cieai-ly laid down that the rules are in like manner unaffected by the change in the law concerning sales of reversions. And this was confirmed by all the opinions delivered in O'Rorke v. Bolinghroke {z) in the House of Lords, though the particular transaction in dispute was upheld. The effect of these rules is not to lay down any proposition of substantive law, but to make an ex- ception from the ordinary rules of evidence by throw- ing upon the party claiming under a contract the burden of jDroving not merely that the essential re- quisites of a contract, including the other party's consent, existed, but also that the consent was per- Conditions fectly fj-ee. The question is therefore, what are " the throwing conditions which throw the burden of justifving the burden of „ ,i i • ;i " j_ i laoof on righteousness of the bargani upon the party who lender. claims the benefit of it " {a). Now these conditions have never been fixed by any positive authority. We have seen that the Court of Chancery has refused to define fraud, or to limit by any enumeration the (0 (1870) L. R. 10 Eq C-11, 40 (p. ('.71). Cp. on ihis point Coward L. J. t'h. 11. V. Huylua (IS.^.r.) 1 K. & J. 443. 103 (w) (1871) L. R. 11 Eq. 2(;ri. R. R. 172, where a widow who dur- L. R. .5, 40 L. J. Ch. 7(;8. ingher husliand's life had joined as (./■) L. R. 8 Ch. 484 ; this may surety in his prooiis-jory note exe- now be regarded as the leading cuted a new note under the iiupies- case on the subject. It should be sion that she was liable on the old observed that in Tijler v. Yates a, one, and without any new considera- principal and surety made them- tion, and the note was set aside ; see selves liable for a bill which the Sontludl v. I{'ig(j (18.51) and Fur- principal had accepted during his iiianx. Wright (18.')1) 11 C. B. 481, minority, without knowing that 20 L. .1. C. V. 14.5, 87 R. R. 731. there was no existing legal liability (//) (187r)) L. R. 10 Ch. 389. on the bill, and all the subs&iuent (r) (1877) 2 App. Ca. 814. transactions were bound up with («) Earl of Aylesford v. Morriii tliis : and the case was rested on (187.3) L. R. 8 Ch. at p. 492. this ground in the Court of Appeal "CATCHING BARGAINS." 060 standing relations from which influence will he pre- sumed. In like manner there is no definition to he found of what is to he understood hy a " catching hargain." This being so we can only observe the conditions which have in fact been generally present in the bargains against Avhich relief has been given in the exercise of this jurisdiction. These are: — 1. A loan in which the borrower is a })erson having little or no property immediately available, and is trusted in substance on the credit of his expectations. Ohx. It is immaterial whether there is or not any actual dealing with the estate in remainder or expression of the contingency on which the fund for payment of the principal advanced substantially depends. Earl of Aijlesford v. M»;v/.v(1878) L. R. 8 Ch. at p. 497. It is also immaterial whether any particular property is looked to for ultimate payment. A general expectation derived from the position in society of the borrower's family, the lender intending to trade on their probable fear of exposure, may have the same effect. Xerill v. Snell'uig (1880) 15 Ch. D. 679, 702, 49 L. J. Ch. 777 (Denman J.). 2. Terms prima facie oppressive and extortionate {i.e. such that a man of ordinary sense and judgment cannot be supposed likely to give his free consent to them). Ohx. An excessive rate of interest is in itself nothing more than a dis- proportionately large consideration given by the borrower for the loan : and it is not sufficient, standing alone, to invalidate a contract in equity : Webster v. Cook (1867) Ij. K. 2 Ch. .542, wliere a loan at 60 per cent, per annum was upheld. Siuart V.-C. disap[)roved of the case in Tyler v. Yates (1871) L. R. 11 E(j. at p. 276, but on another point. And see Parker v. Biiteher (1867) [.. R. :? Eq. 762, 767, 36 L. J. Ch. .'>52. 3. A considerable excess in the nominal amount of the sums advanced over the amount actually received hy the borrower. Ohx. This appears in all the modern cases in which relief has been given : deductions being made on every advance, according to the common practice of professed money-lenders, under the name of discount, com- mission, and the like. The result is that the rate of interest appearing to 670 DURESS AND UNDUE INFLUENCE. Qu. if lender so situated can in prac- tice ever exonerate himself. be taken does not show anything like the terms on which the loan is in truth made : and this may be considered evidence of fraud so far as it argues a desire on the part of tlie lender to gloze over the real terms of the bargain. A jury could, perhaps, not be directed so to consider it in a trial where fraud was distinctly in issue ; though no doubt such circum- stances, or even an exorbitant rate of interest, would be made matter of oliscrvation. 4. The absence of any real bargaining between the pai'ties, or of any inquiry by the lender into the exact nature or value of the borrower's expectations. Oha. These circumstances are relied on in Earl of Aylesford v. Morris (1878) L. R. 8 Ch. at p. 496, as increasing the difficulty of upholding the transaction : cp. Nerill v. Snelling (1880) 15 Ch. D. at pp. 702-3. This again is the usual practice of the money-lenders who do this kind of business. Their terms are calculated to cover the risk of there being no security at all ; moreover the borrower often wishes the lender not to make any inquiries whicli might end in the matter coming to the know- ledge of the ancestor or other person from whom the expectations are derived. The concealment of the transaction from the ancestor was held by Lord Brougham in King v. Hamlet (188."i) 2 M. & K. 4.50, 39 R. R. 24, 237, to be an indispensable condition of equitable relief ; but this opinion is not now accepted : Earl of Aijlenford v. Morris (1873) L. R. 8 Ch. at p. 491. The decision in Kiiif] v. Hamlet (affirmed in the House of Lords, but without giving any reasons, 3 CI. & F. 218, 39 R. R. 24) can be supported on the ground that the party seeking relief had himself acted on the contract he impeached so as to make restitution impossible. It seems safe to assert that in any case where these conditions concur the burden of proof is thrown on the lender to show that the transaction was a fair one: it seems equally unsafe to assert that they must all concur, or that any one of them (except perhaps the first) is indispensable. It may then be asked, By what sort of evidence is the lender to satisfy the Court that the borrower was not imposed on ? As there is no reported case in which it was considered that the burden of proof lay upon the lender, and yet he did so satisfy the Court, it is impossible to give any certain answer to this question. It is evidently most improbable that in any 671 case where the above-mentioned conditions are present, any satisfactory evidence should be forthcoming to justify the lender (b). Practically the question is whether in the opinion of the Court the transaction was a hard bargain (c) — that is, not merely a bargain in which the consideration is inadequate, but an un- conscionable bargain where one party takes an unfair advantage of the other (d). This jurisdiction is of considerable importance in British India, and espe- cially in the United (formerly North-West) Piovinces, which have furnished an interesting line of cases (e). An account stated for the purpose of a contract of this description is of no more validity than the con- tract itself, and a recital of it in the security does not preclude the borrower from re-opening the account even as against purchasers or sub-mortgagees of the original lender who have notice of the general charac- ter of the transaction. For such notice is equivalent to notice of all the legal consequences (/). The borrower who seeks relief against a contract of Terms on this description must of course repay whatever sums jg i^veir ^^^ have been actually advanced, with reasonable interest (according to the usual practice of the Court, 5 per (/;) " No attempt has been made borrower, to show by any independent evi- (e) See Kunmir Ram Led v. pence {if .such a thiiuj could, he i\'?7 A7//H'/ii, L. R. 20 Ind. App. 112 ; coMelred pomhle) that the terms Rajah Mokliain Singh v. Rajah thus imposed on the plaintiff were R.vp Shigh, ih. 127, and cp. note (c), fair and reasonable," L. R. S Ch. p. 3(il, above, the present writer's 496. Law of Fraud, kc, in British India (c) See the judgment of the (Tagore Law Lectures 1S08-1), M. R. Bcynnn v. Cook (1875) L. R. pp. 77—79, and L C. A. s. Ifi (3) 10 (!h. .S91, «., and Xevill v. and notes thereon in ed. Pollock Sndling (1880) 15 Ch. U. at p. 708. and MuUa. {d) Per.Iessel M.R. in J/'/rM/^/firt (/') Tottenham v. Green (1^^') Y. Rroion (1878) 17 L. J. Ch. 411 , .82 L. .1. Ch. 201 : a case decided C.A. ; Nerill v. Snellui.g (1880) 15 under the old rule as to dealings Ch. D. 679, 49 L. j'. Ch. 777, with reversionary interests, but the where the lender systematically principles seem applicable in all took advantage of a mistaken cases where the burden of pioof over-payment of interest by the is still on the lender. 072 DURESS AND UNDUE INFLUENCE. cent.), and the relief is granted only on those terras. Moreover it is held not unjust that he should obtain it at his own expense, since he calls in the assistance of the Court to undo the consequences of his own folly (r/) : and accordingly the general rule is to give no costs on either side (/i). As to the The rule of evidence casting a special burden of oTthccon-^ proof on the lender being peculiar to equity, there tract. was generally no defence at law to an action brought by him to enforce a contract of this kind. But since the rule of evidence established in equity now prevails in every branch of the High Court, it seems that when a lender of money (not being a money-lender within the Act to be presently mentioned) sues on a special contract, whether the contract be embodied in a negotiable instrument or not, and the borrower l^roves facts which bring the contract within the description of a " catching bargain " as understood by courts of equity, the lender must prove the reason- ableness of the bargain ; and if he fails to do so, he cannot recover on the special contract, but can recover his p]-incipal and reasonable interest as on a common count for money lent. This, however, is now of but little practical imix)rtance ; and the importance of this class of cases is also diminished by the Infants' (ff^ Earl of Aj/Iexford v. Morrix at p, 676, and costs might be given (1873) L. R. 8 Cii. at p. 499. against the defendant as to any (/;) In the cases of sales of rever- transaction in which there had been sions under the former law on that misconduct on his part : Tottenham head the practice was for some time v. Green (1863) 32 L. J. Ch. 201, 206. to treat the suit as a redemption In Xerill v. Snellin// {l8S0).Tiote{d) suit, and give the purchaser his last page, the plaintiff having costs as a mortgagee : but the later offered before action brought to rule was to give no costs on either repay the sums actually advanced side, except that the plaintiff had with interest at 5 per cent., the to bear such as were occasioned by defendant was ordered to pay the any unfounded charges of actual costs: 1.5 Ch. D. at p. 70o, cp. fraud : Edwards v. Burt (18.52) 2 Beipion v. Cook (1875) L. R. 10 Ch. D. M. G. at p. 65, 95 R. R. 17 : at "p. 393. in judgment of Jessel Bromleij v. .Smith (1859) 26 Beav. M.R. MONEY-LENDERS ACT. 673 Belief Act, 1874, which makes loans of money to infants absolutely void and forbids any action to be brought on a promise to pay debts contracted during infancy. See p. 63, supra. The Money-lenders Act, 190U (63 & 64 Vict. c. 51), Money- imposes special burdens on professional money- ^y^^^ ' ' ' lenders (i) by way of registration and otherwise, and enables the Court to set aside any terms which it considers " harsh and unconscionable " witliout being bound by the former practice of courts of equity {k). Excessive interest alone may be a sufficient ground for relief {I). An unregistered money-lender cannot recover at all {m), and a borrower from such a lender who does not seek any special equitable relief is entitled to an unconditional declaration that any security he may have given is void {n) ; but the lender, even an unregistered one, will not be ordered to give up the borrower's securities except on the terms of the actual advances being repaid, according to the practice of the Court in dealing with usurious loans under the old law (o). The same equitable principles apply, so far as they Application are applicable to a transaction of sale as distinguished tosai^rof^^ from loan, to the sale of reversionary interests by reversionary , , . . , , . ... interests l^y persons who are not ni an nidependent position, as persons in dependent (/) As to the persons within this Ch. 740, T") L. J. Ch. 44r,, C. A. As position, description, Litchtield v. Dreiifuit to the name to be registered, see [IDOtJ] 1 K. 6.535, 75 L. J. K. B. t'^firU/ii/ y. Silbiirn,')- Pi/maii[V.)U)] 447. So far as any test can be IK. B. 07, 71) L. J.'K. B. 330; assigned, it is readiness to lend ]\'/iiteiiian v. Sudler [1910] A. C. money in a general way of busi- 514. As to " registered address," ness : occasional loans incidental Klrltivood v. (jadd [1910] A. ('. to another business, or to genuine 422 : details mast be sought in personal acquaintance, do not sjjccial coninicntaries on the Act. make a man a money-lender. (//) Chapman v. Mtchaclsoii (k) lie a Dehtor [1903] 1 K. B. [1909] 1 {!h. 238, 78 L. J. Cli. 272, 705, 72 L. J. K. B. 382, C. A.; 0. A. Samuel v. Neivhuld [1900] A. ('. (ji) Liulqe v. Xat'ional Union 401, 75 L. J. Ch. 705. Jnrcdmeni Co. [1907] 1 Cii. 300, (Z) Samvel v. Newhold, last note. 70 L. J. Ch. 1S7. (///) Bonnard v. Ihtl [1900] 1 X X G74 DURESS AND UNDUE INFLUENCE. when the sale is made by a man only just of age in pursuance of terms settled while he was still an infant. Here the burden is on the purchaser to show the fairness of the transaction. He is not bound to show that the price given was absolutely adequate; but he is l)ound, notwithstanding the Act of 1867 (yi Vict. c. 4, p. 664, above), to show that it wtus such as, upon the facts known to him at the time, he might have reasonably thought adequate. Moreover he ought to see, where practicable, that the seller has independent legal advice. These rules seem to be established by O'Rorke v. Bolingbroke (p), which is remarkable as an almost singular instance of an im- peached transaction with an " expectant heir " being upheld. There a father and son negotiated with a purchaser for the sale of the son's reversionary interest expectant on the death of the father. The sale was completed three weeks after the son came of age. The price was agreed to after some bargain- ing ; it was founded on a statement of value furnished by a third person, and would have been adequate if the father's life had been a good one. The purchaser did not know and had no reason to believe anything to the contrary, but it was in fact a bad life. The young man took no independent advice, being " penni- less, and except for his father friendless " (q). The father died within three months after the sale. Four ycai's later the son sued to have the whole transaction set aside, but failed in the House of Lords after succeeding in the Court of Appeal in Ireland. The majority of the Lords (/•) held that the burden of (y^) (1877) 2 App. On. 814. C'p. OD Lord Blackburn. 2 App. Ca. Fry V, Lane (1888) 40 Ch. D. 312, at i>. 8,^7. 58 L. J. Ch. 113, where the seller (/•) Lord Blackburn, Lord O'Ha- was poor and ignorant, and the sjan, and Lord Gordon, ■. as the typical instance. The plaintiff was a person Lieweiim, of inferior station and education who acquired by descent a title in fee simple to a share in land in which the defendant had a limited interest. His title was first communicated to him by the defendant, who represented to him (as the fact appears to have been) that the circumstances of the family created a moral obligation in the plaintiff not to insist on his strict rights, and offered to purchase his interest for a substantial though not adequate consideration. The defendant suggested to the plaintiff to consult his friends in the matter, which however he did not do. Three days intervened between the first interview and the conclusion of the business by the acceptance of the defendant's offer. It was considered that the plaintiff was under the circumstances not a free agent and not equal to protecting himself, and was taken by surprise, and the sale was set aside (u). The case seems somewhat anomalous, but, according to veiy (s) l/een y. TJe Uern/irdy [ISDfi] misrepresentation. In Ilayqartli 2 Ch. 437. fi.-) L. J. Ch. (JnO. v. ir«iOH cd factum.^ (.(•) Lord St. Leonards in Ciirson ground suggested. V. Beluwthii (18.52) 3 H. L. C. (y) Per turner IjJ. \n Baler v. 742, 88 11. 11. .319 ; there the appel- Monh (18(54) 4 D. J. S. at p. 392. lant relied on express charges of (,-) B rid a man v. Green (17.55) fraud, which were not made out : Wilmot, 58, 61. but Lord St. Leonards thought (r/) (1787) 1 Cox, .338, 1 R. R. 49. he miglit possibly have succeeded (/y) 3 Ch. Ca. 5o. Cp. Story, if he had rested his case on the Eq. Jurisp. § 251. gue s case. "SURPRISE," ETC. 677 " It must be admitted that there was Deliberation, and Consideration and Intention enough proved to make it a good Deed at Law, otherwis-e there would not have been a Verdict for it" : per L. C. J. Treby, ih. at p. 74. The judgment of the Lord Keeper Somers is even more decided, and [wints out clearly the dilTerence hetween an instrument which is void both at law and in equity, and one which is voidable in equity (p. 108) :- " It is true, it is charged in the Bill that this Deed was obtained by Fraud and Surprize. . . But whosoever reads over the Depositions will see that the End they aimed at was to attack the Deeds themselves as false Deeds and not truly executed ; but that being tried at Law, and the Will and Deeds verified by a verdict, the Counsel have attenn)ted to make use of the same Evidence, and read it all, or at least the greatest Part of it, as Evidence of Surprize and Circumvention " Now, for this word (Surprize) it is a Word of a general Signification, so general and so uncertain, that it is impossible to fix it ; a Man is sur- priz'd in every rash and indiscreet Action, or whatsoever is not done with so much Judgment and Consideration as it ought to be : But I suppose the Gentlemen who use that Word in this Case mean such Surprize as is attended and accompanied with Fraud and Circumvention ; such a Sur- prize indeed may be a good ground to set aside a Deed so obtain'd in Equity and hath been so in all times : but any other Surprize never wasi and I hope never will be, because it will introduce such a wild Uncer- tainty in the Decrees and Judgments of the Court, as will be of greater Consequence than the Piclief in any Case will answer for." Moreover the doctrine thus stated is exactly analo- gous to the undoubted law concerning inadequacy of consideration. The value of the subject-matter of a contract, and therefore the adequacy of the considei'a- tion, which depends on it, is in most cases easier to measure than the degree of deliberation or prudence with which the conti'act was entered into. 5. Limits of the right of rescission. :The right of setting aside a contract or transfer of Tiie right of jn-opcrty voidable on the ground of undue influence Hko'iTat"in is analogous to the right of rescinding a transaction cases of 678 DURESS AND UNDUE INFLUENCE. fraud, &ic. and governed by same rules. Examples. Jurisdiction not confined to influence of actual party to the contract. voidable on any other ground, and follows the same rules with some slight modifications in detail. What is said in the last chapter of rescinding con- tracts for fraud or misrepresentation may he taken as generally applicable here. We proceed to give some examples of the special application of the principles. The right to set aside a gift or beneficial contract voidable for undue influence may be exercised by the donor's representatives or successors in title (c) as well as by himself, and against not only the donee but persons claiming through him (d) otherwise than as purchasers for value without notice (e). But the jurisdiction is not exercised at the suit of third per- sons. The Court will not refuse, for example, to pay a fund, at the request of a petitioner entitled thereto, to the trustees of a deed of gift previously executed by the petitioner, because third parties sug- gest that the gift was not freely made (/). On the other hand it is not necessary to the support of a claim to set aside a contract on the ground of undue influence to show that the influence was directly employed by another contracting party. It is enough to show that it was employed by some one who ex- pected to derive benefit from the transaction, and with the knowledge of the other party or under circum- stances sufficient to give him notice of it. The most frequent case is that of an ancestor or other person ill loco parentis inducing a descendant, etc., to give security for a debt of the ancestor. But if the other (c) J-J.f/. Executor : IFunter v. Athlm (1832-4) 3 M. & K. 113. 41 K. II. 30 ; Covtts v.Acirorf/i (18iU») L. R. 8 Eq. .5.58. Assignee in bankruptcy : Ford v. Olden (1S()7) L. R. 3 Eq. 4(il, 36 L. J. Ch. (;.51. Devisee : Grpxley v. MohkIo/ (ISni) 4 l)e (I. .V: J. 78. Heir: Iloliiuin V, Loynes (18.54) 4 D. M. G. 27U, 23 L. J. Ch. 529. 102 R. R. 127. (jl') Huqnenin v. Baseley (1807) 14 Yes. 273, 289. 9 R. R. 27(3. 286. Cp. Mohiivi V. Kcrnan (1842) 2 Dr. & \V. 31, 40. 00 Cohhett V. BrocJi (1855) 20 Beav. 524. 528. (/■) MrtniJfe'x tnid (1864) 2 D. J. S. 122, 33 L. J. Ch. 308. PARTIES : CONFIRiMATION AND ACQUIESCENCE. 679 pai'iy does all he reasonably can to guard against undue influence being exerted (as l)y insisting on the person in a dependent position having independent professional advice), and the precautions he demands are satisfied in a manner he cannot object to at the time, the contract cannot as against him be im- peached (g). It appears to be at least doubtful whether a con- tract can be set aside on the ground of influence exei'ted on one of the parties by a stranger to the contract who did not expect to derive any benefit from it (h) : except where the contract is an arrangement between cestuis que trust claiming under the same disposition, and the trustee puts pressure on one of the parties to make concessions ; the ground in this case being the breach of a trustee's special duty to act impartially (i). The right to set aside a contract or gift originally Confirmation voidable on the ground of undue influence may bo '"^""^^ «' (1855) 8 IJ. M. G. 133. 147, 25 L. J. (1847) 16 Sim. 58; Tottenham v. Ch. 753, 114 11. K. 60; Turnn- v. Orern (1863) 32 L.J. Ch. 201. Collins (1871) L. K. 7 Ch. 320, 41 (//) Jientlt'ii V. Mackay (18(;'.0 31 L. J. Ch. 558 ; Allcard v. Skinner Beav. 143. 151. On principle the (1887) 36 Ch. Div. 145, see especi- answer should cieaily be in the ally per Lirulley L.J. at p. 187. Cp. negative as regards con tracls. With yuttv. /sV/.v^/w [ 1 8fi0 ] 1 Cli .873,68 gifts pure and simple, as to which L. J. Ch. 367, aifd- [I'-'OO] 1 Ch. 2'.), there may be some douljt, wi; arc (!!) li. J. ('Ii. 16. where the plaintiff's not now concerned. case also failed on other grouniis. (0 7s7//.v V. 7y«?'Aer(1871) L. li. (m) Srnrn/ v. A'inr/ (1856) 5 7 Ch. 104, 41 L. J. Ch. 64. H. L. C. at p'. 664, 25 L. J. Ch. 482. (7^ Stnnij) V. (/ahi/ (1852) 2 D. lol 11. It. 323. 080 DURESS AND UNDUE INFLUENCE. has been stiongly stated in the judgment of the Lords Justices in Moxon v. Payne (??) : " Frauds or imposi- tions of the kind practised in this case cannot be condoned ; the right to property acquired by such means cannot be confirmed in this Court unless there bo full knowledge of all the facts, full knowledge of the equitable rights arising out of those facts, and an absolute release from the undue influence by means of AA'bich the frauds were practised. To make a con- firmation or compromise of any value in this Court the parties must be at arm's length, on equal terms, with equal knowledge, and with sufficient advice and protection." And delay which can be accounted for as not unreasonable in all the circumstances is no l)ar to relief (o).. In short, an act "the effect of which is to ratify that which in justice ought never to have taken place " ought to stand only upon the clearest evidence (p). The effect of delay on the pai't of the person seeking relief is also subject to a special limitation. In a case between solicitor and client, or parties standing in any other confidential relation, less weight is given to the lapse of time than is due to it when no such relation subsists {q), and it is of special importance that the confirming party should not only be fully acquainted with his or her rights but have independent advice (r). In the case of a deliberate confirmation after the (/O (l.S7:^) r.. II. 8 Ch. 881, 8S5. Vc«. at p. 874. 8 U. R. at p. 341. 4:U,. J. Ch. 240. And a contirma- (-/) Grrdr,! x. Monaley (\SM) ( lion will not be helped by the DelJ.i: J. 78. 9(5. But even in a presence of an independent adviser case between solicitor and client a of the party confirming, if, in con- delay of eighteen years has been sequence of the continuing infiu- held fatal : Cliampion v. Bighy ence of the other party, his advice (188(t) 1 Russ & M. 539, .31 R. R. is in fact disregarded : ih. 107. (()) A'riiipson v. Ashhcr (1S74) (/•) Bdrron v. Willis [1900] 2 L. R. 10 Ch. 1.-.. 44 L. J. Ch. Ch. 121, 137. 09 L. J. Ch. .-)32. 190. C. A. (in H. L. on broader grounds (yO -V'''^' V. lto;;al (180f)) 12 [ 1 902] A. C. 271, 71 L. J. Ch. 609). PRESUMPTION WHERE BENEFIT .SMALL. 681 relation of influence lias ceased to exist, it need not be shown that the donor knew the gift to be void- able (s) : otherwise where the alleged confirmation is connected with the original transaction and takes place under similar circumstances (t). An adoption of the instrument impeached for a par- ticular purpose (as by the exercise of a power con- tained in it) may operate as an absolute confirmation of the whole (w). It seems that the presumption of influence arising Seinhh', fi-om confidential relations is not to be extended to tionoTuuiUie cases where a merely trifling benefit is conferred {x). influence • wlicrG tllG This is more than a simple application of the maxmi gain is Be minimis non curat lex, for the transaction brought ^''^ing. in question might be in itself of great magnitude and importance, though the advantage gained by one party over the other were not large. Indeed the case to which this principle seems most likely to be applicable is that of a transaction not of a commercial nature, and on such a scale that the parties, dealing fairly and deliberately, might choose not to be curious in weighing a comparatively small balance of profit or loss. (.v) Mitchell V. Homfraii (1881) doubtless a weighty one. 8 Q. H. Div. .587, 50 L. .1. Q. B. (0 See rote 00 on p. fi80. 460. In Tomson v. Judqe (185.5) .'J (7/) Jarratt v. Aldnm (1870) L. R. Drew. 806, 106 R. R. ■562; there was 'J E(i. 468, Sf) L. J. Ch. .34!t. not independent advice, and there (./•) Per Turner T>.J. Ehndcs v. was an attemiit to conceal the j'cal Jhifc (1866) Jy. R. 1 Ch. at p. 258, character of the trans:icliun. P>ut and Lindlcy ]j..L A//c/n-d v. >Skin- the considered opinimi ot Kindcrs- ?H'r. 86 (_'h. Div. at p. 185. ley V.-C. on the general jirinciple is 682 K.'iture of imperfect obligations. How pro- duced. CHAPTER XIIT. Agreements of Imperfect Obligation. Undkr this head wo propose to deal with topics of a miscellaneous kind as regards their subject-matter, and forming anomalies in the general law of contract, but presenting in those anomalies some remarkable uniformities and analogies of their own. Between contracts which can be actively enforced by the persons entitled to the benefit of them, and agreements or promises which are not recognized as having any legal effect at all, there is another class of agreements which though they confer no right of action are recognised by the law for other purposes. These may be called agreements of imperfect obliga- tion. Some writers (as Pothier) speak of imperfect obligations in the sense of purely moral duties which are wholly without the scope of law: and what we here call Imperfect Obligations are in the civil law called Natural Obligations. But this term, the use of which in Roman law is intimately connected wnth the distinction l)etween ius civile and ins gen- tium, (d), would be inappi'opriate in English (b). Whe)-e there is a perfect obligation, there is a right coupled with a remedy, i.e., an appropriate process of law by which the authority of a competent court can be set in motion to enforce the right. (a) Savigny, Obi. 1. 22 S'lq. For a summary statement (if the effects of a natural obligation in Tvoman law see ]\luirhead"s note on Gai. 3. ll'Ja. (I/) The term " covenant en ley de nature "' was applied by Bishop Stillington. C to a parol agree- ment nut to sue : 9 Ed. IV. 41. pi. 2G. DEBTS BARRED BY STATUTE. 683 Where there is an imperfect ohligation, there is a ]ight without a remedy. This is an abnormal state of things, making an exception whenever it occurs to the general law expressed in tlie maxim Ubi ius ibi reviedium. And it can be produced only by the opera- tion of some special rule of positive law. Such rules may operate in the following ways to produce an imperfect obligation : 1. By way of condition subsequent, taking away a remedy which once existed. 2. By imposing special conditions as precedent to f-hcfo the existence of the remedy. 3. By excluding any remedy altogether. fl'^ We shall now endeavour to show what are the effects of an imperfect obligation in these three classes of cases. 1. Under the first head we have to notice the opera- i. Remedy tion of the Statutes of Limitation, so far as it l^{'!j\~utes of illustrates the present subject (c). The Statute of Limitaiiou. Limitation of James L (21 Jac. 1, c. 16, s. 3) enacts that the actions therein enumerated — which, with an * exception since repealed, comprise all actions on simple contracts i^d) — " shall be commenced and sued " within six years after the cause of action, and not after. By the modern statute 3 & 4 Will. 4, c. 42, s. 3 (e), following the presumption of satisfaction (i") Debts contiactcd by an (rf) As to the extent to which infant arc often compared to debts the statute applies to procecdinf,'s barred by the statutes of limita- in e([uity see A'/tcp v. ^^^^^ (1871-2) tion ; a ad the comparison is just L. R. 5 H. L. Go6, 42 L. J. Ch. to this extent, that at common law T^\. they mit,dit be rendered enff)rceable {c) This section is not affected in much the same manner, and by tlic real Property Limitation jjractically the authorities are Act, 187-1, except that proccculings interchangeable on this point. to recover rent or money charged Hut an infant's contract is in its on land now have to be taken inception not of imperfect ubliga- within 12 years: 37 i: 38 Vict. c. tion, but simply voidable. r)7, ss. 1, 8. not Efone. ()84 AGREEMENTS OF IMPERFECT OBLIGATION. after the lapse of twenty years which ah'eady obtained in practice (/), it is enacted that (inter alia) all actions of covenant or debt upon any bond or other speciality " shall be commenced and sued " within twenty years of the cause of action. We need not stop to consider the exceptions for disability, or the miles as to the time from which the statutes begin to ]-iin ; for the object throughout this chapter will not lie to define to what cases and under what conditions Iho laws under consideration apply, when that is abundantly done in other treatises, but to observe the general results which follow when they do apply. The right Now there is nothing in these statutes to extinguish an obligation once created. The party who neglects to enforce his right by action cannot insist upon so enforcing it after a certain time. But the right itself is not gone. It is not correct even to say without qualification that there is no right t-o sue, for the protection given by the statutes is of no avail to a defendant unless he expressly claims it. Serjeant Williams, after noticing the earlier conflicts of opinion , on this point, and some unsatisfactory reasons given at different times for the rule which has prevailed, concludes the true reason to be that " the Statute of Limitations admits the cause or consideration of the action still existing, and merely discharges the defen- dant from the remedy " (g). This alone shows that an imperfect obligation subsists between the parties after the time of limitation has run out. In the case of unliquidated demands that obligation is pi-ac- tically inoperative, since an unliquidated demand can- not be rendered certain except by action or an express (/■) Boddain v. Morlei/ (18.")(;-7) p. 888, on the technical effect of a 1 De G. & J. 17, 26 L. J.' Ch. 4:58. plea of the statute. The rule con- (/7) 2 Wms. Saund. H)8 : cp. tinues under the Judicature Acts, Scarpdlhd v. Atrheson (184.*.) 7 Order XIX. r. 15 [Ko. 211]. Q. B. at p. 878, 11 L. J. i}. B. at DEBTS BARRED BY STATUTE. 685 agreement founded on the relinquishment of an exist- ing remedy. But in the case of a liquidated debt the continued existence of the debt after the loss of the remedy by action may have other important effects. Although the creditor cannot enforce payment by Results. direct process of law, he is not the less entitled to j.jLhts'^of^ use any other means of obtaining it which he might cieditor lawfully have used before. Thus if he has a lien l"^^'-'^^'^- on goods of the debtor for a general account, he may hold the goods for a debt barred by the statute (Ji). And any lien or express security he may have for the particular debt remains valid (i). If the debtor pays money to him without directing appropriation of it to any particular debt, he may appropriate it to satisfy a debt of this kind (k) : much more is he en- titled to keep the money if the debtor pays it on account of the particular debt, but not knowing, j whether by ignorance of fact or of law, that the creditor has lost his remedy. So an executor may retain out of a legacy a barred debt owing from the legatee to the testator (I). He may also retain out of the estate such a debt due from the testator to himself: and he may pay the testator's barred debts to other persons (771,), though not any particular debt which has been judicially declared to be not recover- able from the estate (n) : and this even if the per- sonal estate is insufficient (0). But though a creditor (/() Spnir.s V. Ilarth/ (1800^ 3 (1852) ir> Beav. 189, !)2 R. R. 378. Esp. 81, <; U. R. 814. ■ ' (/«) JliU V. Walkfir (1858) 4 K. (/) IH(/i/iH.0(), .510. .520, 45 L. J. Q. P.. 66. and the later case of 31eiiprIio(f \. Frdhlich (1S78) 3 C. P. D. 388, in C. A., 4 C. P. Div. 63, 48 L. J. C. P. 43, which also show how much difficnlty there may be in detc'rmJMinf^ in a particular case whether thei'C has been an uncon- which governs the substance of CI, & F. 1, 47 R. R. ]. See also 2 the contract. Wmi. Saund. 399. {/) Alliance Bunlt of Simla v. P. Y Y O'JO AGREEMENTS OF IMPERFECT OBLIGATION. sumed that such is not the operation of the law of any civilized state; and the English courts would not put such' a construction on the foreign law unless compelled so to do by very strong evidence (g). We shall presently see that analogous questions concerning the lex fori may arise in other cases of imperfect obligations. 2. Conditions 2. Under the second head fall the cases of par- renLdv. " ticulai' classes of contracts where the law requires particular acts to be done by the parties or one of them (in respect of the form of the contract or other- wise) as conditions precedent to the contract being recognized as enforceable. A statute A. The most important of the enactments thus ,, I, ' ^ " imposing special conditions on contract is the fourth section of the Statute of Frauds (29 Car. 2, c. 3). The fourth section enacts that after the date there mentioned '• no action shall be brought whereby to charge any executor or adminis- trator upon any special promise to answer damages out of his own estate ; or whereby to charge the defendant upon any special promise to answer for the debt, default, or miscarriages of another person ; or to charge any l)erson upon any agreement made upon consideration of maiTiage ; or upon any contract or sale of lands, tenements, or hereditaments, or any interest in or concerning them ; or upon any agreement that is not to be performed within the space of one year from the making thereof ; unless the agreement ujjon which such action shall be brought or some memo- randum or note thereof shall be in writing, and signed by the party to be charged therewith or some other person thereunto by him lawfully aiitliorized." The terms of the 17th section (now superseded in England liy s. 4 of the Sale of Goods Act, 1893) were different, and raised a question whether they did not wholly avoid agreements not satisfying its con- ditions ; yet the better opinion was that the 17th ((/) Iluher V. Steiner (1835) 2 show that by the French law of I?ing. N. C. 202, 42 R. R. 598, prescription the right was abso- where it was in vain attem^ited to lutely extinguished. INFORMAL AGREEMENTS UNDER STATUTE OF FRAUDS. 691 section, like the 4th, was only a law of procedure (h) ; and the Sale of Goods Act has so settled it for the future by using the words " shall not be enforceable by action." And it seems that the statute does not prevent property from passing on an informal sale (i). The cases of part acceptance of the goods or part payment of the price are expressly provided for, either of these having the same effect as a duly made memorandum in writing. We now return to the fourth section. For the sake Effect of s. •! of brevity we shall use the term " informal agi-ee- t'hiie"not ment " to signify any agreement which comes within settled. this section and does not comply with its i-equire- ments. For some time it was not fully settled what was the effect of this enactment on informal agreements. There was some authority for saying it made them void. It was never held necessary in the courts of law for a defendant sued on an informal agreement to plead the statute specially, as in the case of the statutes of limitation: and it has been held (before the C. L. P. Act) that a special plea was not only unnecessary but bad as an " argumentative denial " of the contract declared upon (/). Moreover an action cannot be maintained when, although it is not brought (/O Tiord Blackbuin in J/c/^/r//.svi« cannot alter it by amemlnicnt : V. Aldcr.HOii (1883) 8 Api). Ca. at Jumrs v. Smith [1891] 1 Ch. 'AM, p. 488; Brett L.J. in Britain v. CS L. T. 524, affd. (on other grounds) Rnssiter (1879) 11 Q. B. D. at fio L. T. .544. As to the former p. 127. 48 L. J. Ex. .362. j>ractice in equity, see Johnnxxun. (i) Tallin,- V. G. E. Bij. r-i. \. Bonhatc {\'^-(o) 2 Ch. Div. 298, I 19(11] 1 K. B. 774. 70 L. J. K. B. 4;-) L. J. Ch. 6.51. Once i>n.per]y 499. raised the defence is available (.y) lleaAe v. Lamh (1851) 6 Ex. without further repetition at any 1.30,20 L. J. Ex. 161. Since the subsequent stage of the proceed- Judicature Acts the defence of tlie ings : ib. Conver.sely, a party statute must always be flistinctly who omits to raise it may be raised on the pleadings. Order estoppe/ v. Wad-noorth C. P. 1. 92 R. R. 889 : and see per (1805) 6 East f502. 8 R. R. 56fi. Lord Blackburn in Maddison v. (w) (1805) 12 Ves. at p. 73. 8 .-IWe/vwrt. note (70, last pa^e. Oecision in Leroux r. Brown : agreement INFORMAL ACiREKMENTS UNDER STATUTE OF FRAUDS. national law, did not afi'ect contracts which were made out of England, and Aviiich as to their substance were to be governed by the law of the place where they were made. But for the defendant it was answered that this enactment, like the Statute of Limitation, only affected the remedy, and was therefore a law of the procedure of the English courts, and as such bind- ing on all suitors who might seek to enforce their rights in those courts : the agreement might be good enough for any other purpose, but the plaintiff could not sue on it in England. And this view was adopted by the Court. Jervis C.J. said: ''The statute in this part of it does not say that unless those requisites are complied with the contract shall be void, but merely that no action shall be brought upon it. . . . The fourth section relates only to the procedure and not to the right and validity of the contract itself." It will be observed that the plaintiff was here in the curious position of contending, in order to support his right to recover on a contract made in France, that it would have been absolutely void if made in England (o). If this decision and the reasons given for it are correct, it would seem to follow that a foreign or colonial court ought to enforce an English agreement, notwithstanding that it was informal under s. 4 of the Statute of Frauds, if it had the general requisites of a valid contract in English law, and was not informal according to the local law of pro- cedure. It has even been argued that the words " no action shall bo brought " conhne the operation of the statutes to civil process, so that an informal agreement for {(i) Leroii.r V. Jlruirn, last note, view. Tlie case .liso idok (ulii/i-r) was doubted by Willes .1. in a distinetioii between s. I and ]\"i/rutms;i\)\). W/ieelrr rcn]).(\Htti)') k. 17, wliieli was not generally 8 (J. B. N. S. 29!*, :?n). Savigny. aecepteJ. Syst. 8. 270, also lakes the (ipjiositc 694 AGREEMENTS OF IMPERFECT OBLIGATION. Results of imperfect ol)ligation under s. 4 of Statute of Frauds. As to money paid. service not to be performed within a year might be enforced by criminal process under the Master and Servant Act, 1867. But the Court held that such a construction would be too unreasonable, and the statute must mean that informal agreements are not to be enforced in any way (p). It being established that the informal agreements we are considering are not void, it follows that they give rise to imperfect obligations. We will now in- dicate the results. We have seen that neither the o})ligation itself, nor any right immediately founded on it, can be directly enforced. But it is recognized for the purpose of explaining anything actually done in pursuance of it, and anything so done may in many eases be a good consideration for a new obligation on a subsequent and distinct contract, or a sufficient foundation for a new obligation quasi ex contractu. , A. Money paid under an informal agreement cannot i be recovered back merely on the ground of the agree - • ment not being enforceable. Thus if a responsibility has been assumed and executed under a verbal guaranty, the guarantor cannot recover back the money paid by him (q). So a purchaser cannot re- cover a deposit paid on an informal agreement for the sale of land, the vendor remaining ready and willing to complete (;•). And not only can the one party keep money actually paid to him by the other, but if money is paid by A, to B, in order to be paid over to C. in pursuance of an informal agreement {ji) Jiiad.i V. Cro.t^land (1874^ L. 11. lU Q. P.. 97, 44 L. J. M. C. 8. The Act is now repealed by ilie Employers and Worlimen Act. 1875 (38 & 3!) Vict. c. 90). Qu. whether the decision be applicable to the malicious breaches of contract in particidar cases which are made substantive offences by the Con- spiracy and Protection of Property Act, 1875 (38 & 39 Vict. c. 8(>). ((/) Shaw y. Woodcocli (1827) 7 B. i: C. 73, 83, 84, 31 R. R. 158. Cp. Siceet V. iee (1841) 3 JI. & Gr. 452. ()0 R. R. 546. (/■) rhomu.'< V. Bnnva (1876) 1 Q. P.. 1). 714, 45 L. J. Q. B. 811. MONEY PAID UNDER IiN FORMAL AGREEMENTS. 695 between A. and C. which C. has executed, then C. can recover it as money received to his use. In Griffith V. Young (s) the plaintiff was the defendant's landlord. The defendant wished to assign to one P., which he could not do without the plaintiff's consent. It was verbally agreed that P. should pay the defen- dant 1001. for goodwill, out of which the defendant was to pay 40^. to the plaintiff for his consent to the assignment. P. knowing of this agreement paid the 1001. to the defendant: it was held that the defen- dant was liable to the plaintiff for 40L in an action for money received to his use. Lord Ellenborough said: "If one agree to receive money for the use of another upon consideration executed, however frivo- lous or void the consideration might have been in respect of the person paying the money, if indeed it were not absolutely immoral or illegal, the person so receiving it cannot be permitted to gainsay his having received it for the use of that other." On the same principle, if on the faith of an in- formal agreement money has been paid in advance to a party who afterwards refuses or fails to perform his part of it, or has been expended on his account, it is conceived that proof of the agreement may be admitted to show what was in fact the consideration which has failed (t). But an executor may not pay or retain a debt which by reason of the Statute of Frauds the creditor cannot enforce (u). B. The execution of an informal agreement may be , As to shown as a fact, and the party who has had ■'^uine i"|^'J.^^"'J;" benefit from such execution, so as in fact to get what he bargained for, cannot treat the; bargain as a nullity. \ (,s) (181(1) 12 East .-.i:i, 11 K. It. 1 Q. I'. I>. 2Sl. 45 !>. .1. Q. P.. 17S. 47S. {II) llr lliiinii^on (ISsr>)2'.l Cli. (0 Sec Piilhrook V. Linns (\>^li\) Div. ;{r.S, 51 L. .1. Cli. 1)50. 696 AGREEMENTS OF IMPERFECT OBLIGATION. Thus the delivery of possession under an informal agreement for the sale of land is a good consideration for a promissory note for the balance of the pur- 1 chase-money (x). It was held in the case cited that the bargain was for a future conveyance, and that the defendant, who did not deny the plaintiffs' allegation that they were willing to convey, had got all he bar- gained for. The same holds of an account stated. In Cocking V. Ward (y) there was an oral agreement by an in- coming tenant from year to year to pay lOOZ. to the outgoing tenant : it was held that the agreement was within s. 4 of the statute, and the outgoing tenant could not recover the lOOZ. on the agreement itself, l)ut that on an account stated he could. Again, money due simply under an informal agree- ment from the plaintiff to the defendant cannot of course be set off ; but the performance of an informal agreement l)y the defendant may be good as an accord and satisfaction. In Lavery v. Turley (z) the plain- tiff sued for goods sold, &c. : the defendant pleaded an equitable plea showing that in pursuance of an agreement between the parties (which turned out to be verbal) the defendant had given up to the plaintiff possession of a house and premises in satisfaction of the causes of action sued upon. The plea was held good, and it seems it was good enough at law (per Bramwell and Channell BB.). Pollock C.B. said: "It is pleaded as a fact that the defendant performed the agreement and the plaintiff accepted such per- formance in satisfaction. The objection that the agreement was not in writing is got rid of. The fourth section of the (Statute of Frauds does not (,/■) J«>/es V. JiDir.. (1S1(») (5 M. & C. P. 24r>. C.S Pv. Pv. 831. W. 81. :.:. 11. K. r.21. (^z) (i8r;o) G H. & X. 239, 30 (//) (ISI.-,) 1 ('. p.. S.-.S, ],-, L. J. L. ,1. Ex. 41). PART PERFORMANCE. 697 exclude unwritten proof in the case of executed con- tracts " (a). This of course does not mean that the agreement itself can in any case be sued upon (a). It is admitted that if A. agrees informally with X. to sell land to him, and afterwards agrees in writing to sell the same land to Z., and then conveys to X. in pursuance of the lirst agreement, Z. has no equity as against X. (b). c. It is a well-known doctrine of equity that one As to part 11 ,1 J, 1 • p 1 X (■ performance who has partly performed an iniormal agreement lor -j^ eciuity. the purchase or hiring of land (c) is entitled to and can sue for a specific performance at the hands of the other party, if the acts of part performance have been done on the faith of an existing agreement, and have been of such a kind that the parties cannot be restored to their original position, and if the existence of an agreement is reasonably to be inferred from the acts themselves, or they are " unequivocally referable to the contract " (d). This seems to be the real mean- ing of the distinctions as to Avhat is or is not a sufficient part performance. Payment of money is in itself an equivocal act, and therefore the part pay- ment of purchase-money is not a sufficient part per- formance (e). But payment of mcreased rent by a yearly tenant holding over has been held a sufficient part performance of an agreement for a lease (/). 00 Cp. Souck V. Slrnwln-idiie Cooltc (1SS7) ll") Oh. D. fiSl. (;;)7, (I.S4(;) 2 C. B. 808, 814, 15 L. J. Hf! L. J. Oh. (■>(;2. C. \\ 170, (19 11. R. (515, arrd re- (r/) Maddlmii \. Ahlcrstm (IShl}) marks on the dictnm there in S App. Ca. at p. 47() ; Hell's I'rin- San. ('a. at & W. 524, 21 U. R. 227. p. I7'.t. (r) The doctrine is not extended (./') Xmin v. Fulndit (18G5) to other transactions, JJrUuin v. L. II. 1 Ch. ;?5, w:, L. .J. Ch. 140. Himlter {\^Ti)) 11 Q. P.. Div. 12;{, See explanation oi: that case by i;51, 48 1j. J. Ex. 3(;2. See, how- ]'>ajri,'allay L..I. in llniiiphnys v. ever, per Kay J. MdcManus v. 6'/vvv/ {l.S,S2j 10 Q. !'.. 1 )iv. al p'. i5(; ()0S AGREEMENTS OF IMPERFECT OBLIGATION. Here the part performance consists not in the pay- ment itself, but in a possession which, though con- tinuous in time with the old possession of the plaintiff as yearly tenant, is shown to be in fact referable to some new agreement (g). This doctrine of part per- foi-mance is not in direct contradiction of the Statute of F]-auds. It would be erroneous to say that a court of equity accepts proof of an oral agreement and part performance of a substitute for the evidence required by the statute. The plaintiff's right in the first instance rests not on contract but on a principle akin to estoppel ; the defendant's conduct being equivalent to a continuing statement to some such effect as this : It is true that our agreement is not binding in law, but you are safe as far as I am concerned in acting as if it were. A man cannot be allowed to set up the legal invalidity of an agreement on the faith of Avhich he has induced or allowed the other party to alter his position (h). In the law of Scotland such tacts are said to " raise a personal exception " (i). The same principle of equity is carried out in cases of representation independent of contract (see pp. 701, 70'2, below) and even of mere acquiescence. In equity 52 L. J. Q. P>. 140; r//>.?. BrettL.J. concluded: Hudson v. Ileuland 10 Q. B. Div. p. KiO: and per [189(5] 2 Ch. 428, (>."* L. J. Ch. 7.54. Byrne J. MUler cV Aldworth v. (//) Caton v. Catun (IStJ.J) L. R. Shai-i) [1899] 1 Ch. 622, 024. 1 Ch. at p. 148, 3.5 L. J. Ch. 292 ; (//) On the general theory of Morpliett v. Jones {li^l'ii') I'Aw&nat. possession as constitutinir i)art at p. 181, 18 R. R. p. 54 ; Dale v. performance see per Jessel M.R. IlainUton (^184(5) 5 Ha. at p. 3S1, Ungley v. I'nt/lei/ (1877) 5 Ch. Div. 71 R. R. 136 ; accordingly the cases at p. 89() : "The reason is that on estoppel at law are compared possession by a stranger is evidence by Lord Cranworth in Jorden v. that there was some contract, and Sloney (1854) o H. L. C. 185, 213, is such cogent evidence as to compel 23 L. J. Ch. 865, 101 R. R. 116, the Court to admit evidence of the 130 ; and by Lord Campbell in terms of the contract in order that Pi. M. G. 571, 575, L>2 I.'. J. Cli. 4 I It, US 11. U. 22;), 232. 700 AGREEMENTS OF IMPERFECT OBLIGATION. in fact raised : namely whether an informal ante- nuptial agreement can after the marriage be rendered valid as against the promisor, and whether a post- nuptial settlement can be made to relate back to such an agreement so as to be deemed a settlement made for valuable consideration and thus be rendered valid Good as OS against creditors. The first question is answered agamst j^-^ ^^^^ affirmative by the decision in Barkworth v. promisor : -^ Barkworth Young (n). The case was decided on demurrer, and ^' the facts assumed by the Court on the case made by the plaintiff's bill were to this effect. The testator against whose estate the suit was brought had orally piomised his daughter's husband before and in con- sideration of the marriage that at his death she should have an equal share of his property with his other children. After the marriage the testator made an affidavit in the course of a litigation unconnected with this agreement, in which he incidentally admitted it. It was held that the affidavit was a sufficient note or memorandum of the agreement within the Statute of Frauds, and that as such, although subsequent to the marriage, it rendered the agreement binding on the testator. Bad as The second question is answered in the negative by sfttior's ^^-^^ almost contemporaneous decision in Warden v. creditors: J ones (o). That was a creditor's suit to set aside a Jones. post-nuptial settlement. It was attempted to support the settlement as having been made pursuant to an oral ante-nuptial agreement. This agreement was not referred to in the settlement by any recital (p) or otherwise. It was held both by Eomilly M.E., and (//) (IS.".!]) 4 Drew. 1, 2(5 L. J. cially per Stirling L.J. The hus- C'ii. 153, 113 E. 11. 2i)7. baud's trustee in bankruptcy has ((') (18(57) 23 Beav. 487, 2 De G. no better right than the husband & J. 7(;, 27 L. J. Ch. lilc. This is himself: ih. not inconsistent with Jiarhrorth (y;) As to the effect of reciting a V. Yoiini/, see lie HoUand [l'.t02] previous agreement, see 7^^ /r<»//rt«rf, 2 Ch. 3(50, 71 L. J. Ch. filS. espe- last note. EQUITABLE ESTOPPEL. 701 by Lord Cranworth C. on appeal, that the settlement could not he supported: and Lord Cranworth inclined to think (g) that if the settlement had expi-essly | i-pfon-cd to the agreement it would have mado no difference. On the whole even if the imjiei-fect obligation arising from a.n informal ante-nuj>tial agreement can be Inade perfect and binding as l)etween the parties by a post-nuptial note or memorandum, it appears that the marriage consideration cannot in this way be im- l>orted into a post-nuptial settlement made in pur- suance of the agreement so as to protect it from being treated as a voluntary settlement and subject to the consequent danger of being set aside at the suit of the settlor's creditors. There seems to be no ground in either case for drawing any distinction between promises made by one of the persons to be married and promises made by a third person to either of them. These doctrines appear to be both reasonable in themselves aiid not inconsistent with one another, as the Court of Appeal has now declared them not to be (/•). There is nothing unexampled in a trans- action being valid as regards the parties to it and invalid as regards the rights of other persons. K. It is doubtful how far an informal agreement Informal p , 1 T 1 TO agreement varymg a periect one can be relied on as a defence asdefenrc to an action brought on the original agreement. On principle it would seem that an agreement which will not support an action ought not to support a dc fence (s), and there is good authority to that effect {t), but none of recent date. There is yet another class of cases, not resting on Cases of equitable ((/) Notwitlistanding IJundnx v. (.?) C\). C/i/ipinv.Fj-crla/id {ISSCi) Diifenx flTOO) 1 Ves. jun. 196. 1 112 Mass. 383. K.'R. 112. (0 Xohle V. Ward (ISiiT) T>. H. 2 (;■) Nute 00 above. Ex. 13.5, Ex. Ch. 702 AGREEMENTS OF IMPERFECT OBLKIATION. estoppel contract or agreement at all, in which courts of equity distinguisbeJ. Pjf^ve compelled persons to make good the representa- tions concei-ning existing facts (x) on the faith of which they have induced others to act. The distinc- tion is pointed out by Eomilly M.R. in Warden v. Jones (?/) : and the extension of the doctrine to mai-ried women shows very forcibly that it has nothing to do with contract or capacity for contracting: for a married woman's interest in property, though not settled to her separate use, has repeatedly been held to be bound by this kind of equitable estoppel (z). B." Slip "in B. Another curious and important instance of an aiice'Acts^"^' impcrfect obligation arising out of special conditions requiring imposcd ou the formation of a complete contract is to policy. be found in the case of marine insurance. In prac- tice the agreement is concluded between the parties by a memorandum called a slip, containing the terms of the pi'ojwsed insurance and initialled by the under- writers (a). It is the practice of some insurers always to date the policy as of the date of the slip (6). At common law the slij) would constitute a binding con- li-act. This however is not allowed by the revenue laws. By the Stamp Act, 1891 (54 & 55 Vict. c. 39), s. 93 (c), " A contract for sea insurance (other than (./O Per Lord Selb could not be regarded as having any effect beyond that of a mere proposal (e) : and it was even held that the slip could not be looked at by a court of justice for any purpose whatever (/). The change in the language of the modern statute law, which dates from 1867 (tj), has given the Courts the opjwrtunity of adopting a more liberal construction without actually overruling any former authorities. It has now for many years been judicially recog- Modern recog- nized that the slip is in practice and according to g//,''^" " ^ ^^ the understanding of those engaged in marine in- peiiiilty of ion;, instead of the L. J. Ch. 681. usual 1(1/. for .stamping in Coiii-t. (/) See per Blackburn J. in This Act is not affected by the Fixker v. Llrerpool Marine IiiJinr- Marine Insurance Act, 1906. ance Co. (1873) L. R. 8 Q. B. 469, (^) Now Merchant Shipping Act, 471, 13 L. J. Q. B. 114. 1894, s. 506. (//) 30 & 31 Vict. c. 23, repealed, (e) See per Willes J. in Xenos v. except two sections not here rele- Wickham (1866) L. R. 2 H. L. 296. vant. and on this point substan- 314, 36 l>. J. C. v. 313; Smith's tially re-enacted, by the Stamp case (1869) L. R. 4 Ch. 611, 38 Act, 1891. sup. 704 AGREEMENTS OF IMPERFECT OBLIGATION. sui'ance the complete and final contract between the parties, fixing the terms of the insurance and the pi-ominm, and neither party can without the assent of tlie othoi- deviate from the terms thus agreed on wiiliout a breach of faith. Accordingly, though the contract expressed in the slip is not valid, that is, not onforcoal)le, it may be given in evidence wherever To explain it is, though not valid, material (/i). In the case mteiitioii cif i-(vfpi^.,-(5(] |o the slip was admitted to show whether the parties. . ^ . intention of the parties was to insure goods by a pai'ticiilar named ship only, or by that in which they might bo actually shipped, whatever her name might To fix line be. A still more important application of the same (late of con- principle was made in Cor}/ v. Patton(i), where it tract. ^ ^ ^' ^ / ' was held that the time when the contract is concluded and the risk accepted is the date of the slip, at which time the underwriter becomes bound in honour, though not i,n law, to execute a formal policy ; that the Court, when a duly stamped policy is once before it, may look to the slip to ascertain the real date of the contract ; and therefore that if a material fact comes to the knowledge of the assured after the date of the slip and before the execution of the policy, it is not his duty either in honour or in law to disclose it, and the non-disclosure of it does not vitiate the policy. This holds though after the completion of iho conti-act by the slip a new term be added for the Collateral b(>npfit of the underwriters (k). The same doctrine bearings of has been considered, and allowed, though not directly the doctrine. .... ,, . . , applied, ni other cases. in tislier v. Liver pooi Marine Insurance Co. (l) the slip had been initialled (/() Per Cur. lonidea v. Puritic (Ji) Lixliam v. JVorfJirryi Mari- Tiixuraiice Co. (1871) L. R. C (^'B. time Insurance Co. (187.")) L. R. 8 074, 685. affd. in Ex. Ch. 7 Q. R. C. P. 21(5, affirmed in Ex. Ch. 10 r,17, 41 L. J. Q. B. 33. 190. C. P. 179, 44 L. J. C. P. 185. (0 (1872) L. R. 7 Q. B. 304. see (/) (1874) L. R. 8 Q. B. 469 further s. c. 9 Q. B. 577. 43 L. J. (Blackburn J. dm.^ affd. in Ex. 0. B. 181. Ch. 9 Q. B. 418, 43 L. J. Q. B. 114. UNSTAMPED INSTRUMENTS. 705 but the insurance company had executed no policy. In the case of an insurance with private underwriters it is the duty of the broker of the assured to prepare a properly stamped policy and present it for execu- tion. But in the case of a company the policy is prepared by the company, executed in the company's office, and handed over to the assured or his agent on application.; It was held that there was no under- taking by the company, distinguishable from the con- tract of insurance itself, to do that which it would be the duty of a broker to do in the case of private under- writers ; that the only agreement of the company with the assured was one entire agreement made by the initialling of the slip, and that as this was an agree- ment for sea insurance, the statute applied and made it impossible to maintain any action for a breach of duty with regard to the preparation and execution of a policy. In Morrison v. Universal Marine Insurance Co. (m), the question arose of the effect of delivering without protest a stamped policy pursuant to the slip after the insurers had discovered that at the date of the slip a material fact had been concealed. It was held in the Exchequer Chamber, reversing the judg- ment of the Court below, that the delivery of the policy did not preclude the insurers from relying on the concealment, but that it was a question properly left to the jury whether they had or had not elected to abide by the contract. This implies not only that the rights of the parties are determines! at the date of the slip, but that the execution of the stamped ' policy afterwards has little or no other significance than that of a necessary formality (n). In the case Application of a mutual marine insurance association, a letter by 1" binding up ' •' insurance companies, (w) (1873) L. R. 8 Ex. 40, in P.. in the Court below, L. II. 8 Ex. Ex. Ch. ih. 197, 42 L. J. Ex. 115. at p. 00. («) See the jadgmenl of Cleasby P. Z Z 706 agrkp:ments of imperfect obligation. stamp duties in general. Variation by subsequent unstamped agreement. which the assured undertook to become members of the association was admitted as part of one agreement with the stamped policy, to show that the assured were contributories in the winding-up of the associa- tion (o). In the winding-up of another such asso- ciation a member has been admitted as a creditor for the amount due on his policy, though unstamped, when the liability was admitted by entries in the minute books of the association, which seem to have been considered equivalent to an account stated (p). It has already been observed that the general revenue laws as to stamp duties are on a different footing. However their effects may in one or two cases resemble to some extent those which under the present head we have attempted to exhibit. Thus, if an unstamped document combines two characters (as, for instance, if it purports to show both an account stated and a receipt), and if in one of those characters it requires a stamp, and in the other not, it may be given in evidence in the second character for any purpose unconnected with the first (q). In a case where the parties to an agreement in writing had afterwards varied its terms by a memo- randum in writing, and the memorandum was not stamped, the plaintiff joined in his action a count on the agreement in its original form and another on the agreement as varied: and when it appeared by his own evidence that the memorandum did materially alter the first agreement, but was unavailable for want of a stamp, it was held that he could not fall back on the agreement as it originally stood (r). Neither this decision, nor the earlier authorities on which it ((») £Ii/fh 4- Co.'s cam (1872) L. R. 13 Eq. 529. (;;) Murthix claim (1872) L. E, H Eq. 148. 41 L. J. Cli. (J7l). iq) Matheson. v. Bern (1849) 2 H. L. C. 286, 81 R. R. 153. (/•) Bced V. Deere (1827) 7 B. & C, 2(J1, 31 R. R. 190. UNSTAMPED INSTRUMENTS. 707 rested, were referred to in Noble v. Ward (s). In that case there was a substituted agreement which was unenforceable under sect. 17 of the Statute of F]-auds (t) : and it was held that as the parties had no intention of simply rescinding the former agree- ment, that former agreement remained in force. The two cases, if they can stand together, must do so by reason of the distinction between a contract the record of which is unavailable for want of a stamp, and an agreement which cannot be sued on at all if the defendant pleads the statute. In a much litigated case of Evans v. Prothero (u), Attempt to the question arose whether a document purporting to "/^'^ """ be a receipt for purchase-money on a sale of land, but dociiment in insufficiently stamped for that purpose, can be ad- chVi-j^cte" mitted as evidence to prove the existence of an agree- ment for sale. In a series of motions for new trials, Lord Cottenham and Lord St. Leonards took different views. The judges before whom the applications came in the Court of Chancery in the first instance, and those before whom the issues were tried at Cardiff Assizes, were also divided in opinion. The opinion of Lord St. Leonards, who held the document admissible, has now been recognized as authoritative (x). C. There are also many statutes which impose C. statutory special conditions on the exercise of particular pro- affectinl"pro- fessions, &c. (.v) (1867) L. II. 1 Ex. 117, in l']x. Ch. 2 Ex. 18.T ; but otlicrwihiC where the substituted agreement has been executed in part ; for this shows that the old one is jzone : Sandermn v. Gracea (187")) L. R. 10 Ex. 2U, 44 L. J. Ex. 210. There has been a tendency in some recent cases (not regularly reported) to depart from Xnhle v. Ward. Whether correct or not in law, such a doctrine has nothing to recom- mend it in point of substantial justice. See Mr. Ernest C. C. Firth's article in L. Q. R. ix. ;'.()(>. (/) Now repealed and substan- tially re-enacted by the Sale of Goods Act, 1803, s. i. (w) ( 1 8.52) 2 Mac. & G. 3 1 0, 1 D. M. G.572, 21 L.J. Ch. 772,91 R.R. 175. (.f) Ashling v. Bonn [1891] 1 Ch. 508, (50 L. J. Ch. HOC), where it was held that an insutficiently stami)(>d promissory note could not be admitted as a receipt for the con- sideration money, this being "of the very essence of the promissory note itself." z z 2 708 AGREEMENTS OF IMPERFECT OBLIGATION. fessions and occupations and the sale of particular kinds of goods. Most of these, however, are so framed, or have been so construed, as to have an absolutely prohibitory effect, that is, not merely to take away or suspend the remedy by action, but to render any transaction in which their provisions are disregarded illegal and void. The principles appli- cable to such cases have been considered under the head of Unlawful Agreements. In a few cases, how- ever, there is not anything to prevent a right from being acquired, or to extinguish it when acquired, but only a condition on which the remedy depends. Of this kind are the provisions of the Act 6 & 7 Vict, c. 73, with respect to attorneys and solicitors, and of the Medical Act, 1858 (21 & 22 Vict. c. 90), with respect to medical practitioners. Attorneys and By the 6 & 7 Vict. c. 73, s. 26, extended by 37 & 38 Costs^or'un- Vict. c. 68, it is enacted in substance that an attorney certificated or Solicitor practising in any court without having a ifar allowed, stamped certificate then in force (as provided for by ss. 22—25, and now 23 & 24 Vict. c. 127, ss, 18 — 23) shall not be capable of recovering jhis fees for any business so done by him while uncertifi- cated. This, however, does not make it unlawful for the client to pay such fees if he thinks fit, nor for the solicitor to take and keep them. It has been held that a defeated party in an action who has to pay his adversary's costs is bound by any such pay- ment which has been actually made, and cannot claim to have it disallowed after taxation (//). But, since the Act of 1874 at all events, a successful party whose solicitor was uncertificated cannot recover costs if the objection is made on taxation (z). This appears to (y) FuUalore v. Parker (1862) (;) Fowler v. Monmouthxhire 12 C. B. N. S.2i6, 31 L. J. C.P.23y, (\imil Co. (1879) 4 Q. B. D. 33i, 240. 48 L. J. Q. B. 457. COSTS OF UNCERTIFICATED SOLICITORS. 709 leave untouched an earlier case (a) where it was de- cided that items for business done by a solicitor while uncertificated must be allowed as against the client in a taxation on the client's own application ; for the client submits to pay what shall be found due, not only what the solicitor might have sued for, and the debt is not destroyed. Proceedings taken by a solicitor who has not renewed his certificate cannot be on that account set aside as irregular (b). It has been said that an attorney can have no lien for business done by him while uncertificated (c). But the case cited for this (d) was on the earlier Attorneys Act, 37 Geo. 3, c. 90, by which the admission of an attorney neglecting to obtain his certificate as thereby directed was in express terms made void (s. 31) : it was held that under the special circumstances of the case (which it is unnecessary to mention) there had been a neglect within the meaning of the statute so that the attorney's admission was void, and that he must be regarded as having been off the roll of attorneys. He was therefore, as a necessary consequence, incap- able of acquiring any right whatever as an attorney while thus disqualified. It is submitted that under the modern Act there is no reason for depriving an uncertificated solicitor of his lien, at any rate in the absence of any wrong motive or personal default in the omission to take out the certificate. Apart from this, a solicitor cannot in any case sue As to time of for costs till a month after the bill has been delivered ^"'''" ^°^' costs. (6 & 7 Vict. c. 73, s. 37), unless authorized by n judge to sue sooner on one of certain grounds now (a) lie Jonex (18G9) L. 15. 9 Eq. (r) Chitty's Archbolil's Pr. 09, 03, 39 L. J. Ch. 83. ed. IStiti. {b) Sparlincj v. Brereton (l^W,) {,/) Wilton \. Chamhrrsi^XKM) 7 L. R. 2 Eq. (U, 3.5 L. J. Cli. A. A: K. 521. IGl. 710 AGREEMENTS OF IMPERFECT OBLIGATION. Medical prac- titioneis. Common law as to I'hj-si- ciaiis. Provisions of Medioal Act, issi;. much enlarged by the Legal Practitioners Act, 1875 (38 & 39 Vict. c. 79) (e). The rights of medical practitioners now depend on the Medical Acts, 1858 and 1886, and (in England only) the A^jothecaries Act, 55 Geo. 3, c. 194 (/). Before the Medical Act the state of the law, so far as concerned physicians (but not surgeons or apothe- caries) was this : It was presumed, in accordance with the general usage and understanding, that the services of a physician were honorary, and were not intended to create any legal obligation : hence no contract to pay for them could be implied from his rendering them at the request either of the patient or of a third person. But this was a presumption only, and there was nothing contrary to law in an express contract to pay a physician for his services, which contract would effectually exclude the presump- tion (g). The Medical Act, 1886 (49 & 50 Vict. c. 48), s. 6, enables every registered medical practitioner to re- cover his expenses, charges, and fees, unless restrained by a prohibitory by-law of a college of physicians of which he is a fellow (h). Accordingly there is no longer any presumption of honorary employment (i). It remains competent however for a medical man to attend a patient on the understanding that his attend- (^) As to special agreements between solicitor and client, see p. 71(i, Vjclow. {/) This is still in force subject to certain amendments made in 1874, 37 & 38 Vict. c. 34. see Bariex V. Mdltuna (1885) 29 Ch. Div. r>!)<). 54 L. J. Ch. 1148. (//) Veltch V. Bimell (1842) 3 Q. B. 928, 12 L. J. Q. B. 13. No such presumption exists in the United States ; and qu. how far, if at all, it exists in I'ritish dominions beyond seas. (//) Such bv-laws have been made by the Royal College of Physicians in London, and (though apparently without compulsory force under the Act) the Royal College of Surgeons of England. (0 Gibbon V. Budd (1863) 2 H. & C. 92, 32 L. J. Ex. 182 (on the similar provision of the Act of 1858, which is repealed by the Act of 1880). See judgment of Martin B. MEDICAL PRACTITIONERS. 711 ance shall be gratuitous, and whether such an under- standing exists or not in a disputed case is a question of fact for a jury (k). By the Act 55 Geo. 3, c. 194, s. 21, an apothecary Apothecaries cannot recover his charges without having a certi- a^^^^'^^"-^- ficate from the Apothecaries' Society: and this is not repealed by the Medical Acts (I). It seems that a practitioner must have been regis- tered at the time of rendering the services sued for, not merely at the time of suing (vi), decisively and at all events as to apothecaries : for an unrepealed section of the Apothecaries Act (55 Geo. 3, c. 194, s. 20) expressly forbids unqualified persons to prac- tise: and in the clear opinion of the Court on the construction and intention of the Medical Act also. A qualified practitioner cannot recover for services rendered by an unqualified assistant who in fact acted without his specific direction or advice (/i). Similarly an agreement by a qualified practitioner to assist an unqualified one is bad, though perhaps an unqualified person might lawfully carry on medical business through qualified assistants if he did not act as a practitioner himself (o). 3. We now come to the cases in which some posi- 3. No remedy allowed. (/O Gihhon V. liudd, last note. 22 (notwithstanding Turner v. (0 See decisions on this Act Rrynall (18(53) 14 C. B. N. S. 328, collected 1 Wms. Saund. 513-4. :32 L. J. C. P. 164). S. 31 of the Medical Act of 1858 («) Alrarez de la liosa v. I'rleto enabled a practitioner to sue only (18(!4) IG C. B. N. S. 578, 33 L. J. "according to his (jualitication," V. P. 2(52; Ilowarth v. Brearlcy and a qualitication in one capacity (1887) 19 Q. B. D. 303, 5(5 L. J. did not entitle hnn to sue for ser- Q. B. 543. vices rendered in another: Lcman (<») Duviex v. Mahumi (1885) 29 V. Fletcher (1873) L. R. 8 Q. B. Ch. Div. 59(5, 54 L. J. Oh. 1148. 319, 42 L. .J. (,^ B. 214. But these The decisions on the construction words do not occur in the Act of of tlie various penal sections of 188(), which on the other hand medical and other like Acts directed re, «• civil cause a barrister may not bo (/.) MoKtyn V. Modyn (1870) L. K. instructed directly by the client, 5 (Jh. 457, 451>, 39 L. J. Ch. 780. and throws no light whatever on The cases there referred to in argu- any question of a right to recover ment in favour of the counsel's fees. ' Jfohavf v. liutler was itself claim seem, with the sole excej)tion really a decision against a similar of llolxu-t V. liutler (1859) 9 Ir. claim and on an almost identical V. L. 157, irrelevant, h'or instanci', point. 714 AC4REEMENTS OF IMPERFECT OBLIGATION. used tlu'oughout the judgment, yet the rule is founded not on any technical distinction between one sort of business and another, nor on any mere presumption, but on a principle of general convenience supported by unbroken custom. No doubt it may be said that some of the reasons given for the policy of the law do not apply in their full extent to non-litigious busi- ness (u) ; and it is doubtful whether they apply even to those English colonies where the common law is in force (x). But there is no reason to suppose that English courts of justice are likely to narrow the scope of a decision called by the late Lord Justice Giffard '' a landmark of the law on this subject " (?/). Rights of There is no express authority to show whether a bar- banisteras I'ister caii or canuot contract with his client's solicitor against solicitor; qii. for payment of his fees any more effectually than with the client himself. It is apprehended that, inasmuch as counsel's services are given not to the solicitor but to the client, there would be no consideration to support such a contract unless the solicitor had actually received the fees from the client. In that case it is difficult to see on what ground of principle or policy the barrister should not be legally entitled to them as money received by the solicitor for his use. A barrister has in fact been admitted to prove in bankruptcy against the estate of a firm of solicitors for fees (apparently for conveyancing, not litigious business) which had been actually paid by clients to (//) In addition to Kenneihj v. fees for advocacy, if made before Ih-oun,see Morris y. Hunt (1S19) the commencemeutof thelitigation. 1 Chitty, 544, 550, 554, where the (.<) Reg. v. Doutve (1884) 9App. rule is put on the ground that the Ca. at p. 751. where it was held that remuneration of the counsel ought the case at bar was governed by the to be independent of the result of law of the Province of Quebec : in the cause, and therefore counsel that law there is nothing to prevent should rely on prepayment alone. an advocate from suing for pro- This reason would however be fessional services, equally inapplicable to an express {y) Mostyn \. Moxtyn. note {t), and unconditional contract to pay last page. counsel's fees. 715 the bankrupts before the bankruptcy (z). If this be right, it is also difficult to see why an express promise by the solicitor to pay such fees, or an account stated between the solicitor and the counsel in respect of them, should not be binding. On the other hand the Court of Common Pleas has refused to exercise a summary jurisdiction, on the motion of the client, to compel an attorney to pay to counsel fees alleged to have been paid by the client, or else to return them to the client (a). The case, however, was a peculiar one and goes but a very little way towards answering the general question. It is hardly necessary to add that although coun- Recognition sel's fees cannot be recovered in any way by action, fges'ln^taxa- except possibly in some of the cases which have been tion of costs. mentioned as still doubtful, the propriety of paying such fees is judicially recognized by the constant practice of the courts in the taxation of costs : and the solicitor needs no authority from the client beyond his general retainer to enable him to retain and pay counsel and charge the fees to his client (5). The payment of counsel's fees may in this manner be in- directly enforced either against the client himself or against an unsuccessful adversary who is liable for the taxed costs. Notwithstanding the strong expres- sions used by the Court in Kennedy v. Broun (c), the judicial notice thus taken of the obligation of a client to pay his counsel seems to show that it is in the nature of a legal duty, though not a perfect one, and is on a different footing from a mere moral obligation. {:) lie Hall (^lHaiJ) 2 Jiir. N. S. a counsel's voucher for fees rciiniics 107G. a receipt stamp : (ioieral Council {a) Re Angell (1861) 2'J I>. J. C. of flir Bur v. Inhniil llerrnur Com- V. 227. And see Be Lc lirasxcvr vi'usxionera [1907] 1 K. I'.. ■I(;2. 7<1 and Oakley [1,S%] 2 Ch. 487, 4i)3, L. J. K. B. 212. •I'.lo : "1 doubt whether anything (Z<) See J/r^/v/.v v. Tfviil (isl'.t) I short of a bond wouhl enable Chitty, TA\. counsel to sue a solicitor for his (c) (I.Si;;^) 1:5 C. ]!. N. S. G77. ;{2 ees," Lindley Ij. J. at p. Itl2. I'.ut L. J. (!. 1'. VM. 710 AGREEMENTS OF IMPERFECT OBLIGATION. Solicitors' Remuneration Act, 1881. Speci.al agreenieiits between solicitor and client under Act of 1870. Voidable contracts of infants affirmed at full a^e. The Solicitors' Eemuneration Act, 1881 {d), estab- lishes complete freedom of contract between solicitor and client as to conveyancing and other non- conten- tious business, and to that extent expressly supersedes the earlier Act of 1870. By the Attorneys and Solicitors Act, 1870 (83 k 34 Vict. c. 28), special agreements for remuneration between solicitor and client were made lawful (s. 4) and in a qualified manner enforceable. Agreements under this Act cannot be sued upon as ordinary con- tracts, but the procedure is by motion or petition, when the Court may enforce the agreement if it appears to be in all respects fair and reasonable, or otherwise set it aside. In the last case the Court may direct the costs of the business included in the agreement to be taxed in the regular way (ss. 8, 9). Where there is an agreement to employ a solicitor on certain terms at a future time, this does not prevent the solicitor from suing the client in a court of hiw if the client refuses to let him transact the business at all. The Act applies only to that part of an agreement which fixes the mode of payment for Avork done (e). Since the Infants Belief Act, 1874, any contract of an infant voidable at common law and affirmed by him on attaining his majority must be reckoned as an imperfect obligation of this class, viz. on which there has not been and cannot be any remedy. The special features of this subject have been already considered (/), and there is nothing to add except that the general principles set forth in the present chapter seem to be applicable to these, so far as they still OZ) 44 & 4o Vict. c. 44. {e) Rees\. Wllliamx (lS7r.) L. 11. 10 Ex. 200, 44 L. J. Ex. 116. By the terms of the Act the agreement must be in writing, and it seems it must be signed bv both parties : Ex jmrte Munro (1876) 1 Q. H. D, 724. 45 L. J. Q. B. 810. (/) In Chap. II,, above. TIPPLING ACT. 717 exist, as well as to other agreements of imperfect obligation. There are sundry other cases of a less important other cases kind in which the remedy naturally attached to a con- ^ll^^g^not'^' tract is taken away by statute, without the contract illegal, but itself being forbidden or avoided. away by ^ ^" By the Act 24 Geo. 2, c. 40, s. 12, commonly statute. 1 m- T A 1 1 1 i 1 1 'Small debts known as the Tipplmg Act, no debt can be recovered f,,r spirits by for spirituous liquors supplied in quantities of less ^jl'^!'"^^.,^'^*^' than twenty shillings' worth at one time (ry). The for beer, &c. County Courts Act, 1888, s. 182 (h), similarly enacts c^,S"S, that no action shall be brought in any court for the 1888. price of beer or other specified liquors ejusdevi fieneris consumed on the premises. The Act of Geo. 2 applies whether the person to whom the liquor is supplied be the consumer or not (i). As these enactments do not make the sale illegal, money which has been paid for spirits supplied in small quantities cannot be re- covered back (k). A debt for such supplies was once held to be an illegal consideration for a bill of ex- change (I) : but this decision seems dictated by an excess of zeal to carry out the policy of the Act, and is possibly questionable. In a later case at Nisi Prius (m) Lord Tenterden held that where an account consisted partly of items for spirituous liquors within the Tippling Act, and partly of other items, and pay- ments had been made generally in reduction of the account, the vendor was at liberty to appropriate these payments to the items for liquor, so as to leave (//) By 2.") k 2(i Vict. c. 38. an (/) Hughes v. Done or Doane exception is made in favour of sales (1841) 1 Q. B. 294, 10 L. J. Q. B. 65, of spirituous liquor not to be con- .55 R. R. 258. sumed on the premises, and deli- (A) Philpoff v. Jones (\SHi')2 A. vcred at the purchaser's residence & E. 41, 41 R. R. 371. in quantities of not less than a (0 Scoff v. Gillmorp. (1810) 3 reputed quart. Taunt. 22(5, 12 R. R. 641. (lb) Superseding a similar enact- (?//) Croohsliank v. Rose (1831) riient in the County Courts Act, 5 C. & V. 19, 38 R. R. 788. 1807. 718 AC4REEMKNTS OF IMPERFECT OBLIGATION. a good cause of action for the balance; thus treating these debts, like debts barred by the Statute of Limita- tion of James I., as existing though not recoverable. The writer is not aware of any decision on the modern enactment as to beer, fee, in the County Courts Act. Trade union By the Trade Union Act, 1871 (34 & 35 Vict, under Trade ^- ^1)' s* 4, Certain agreements therein enumerated mV" ^'^^' ^^^ relating to the management and operations of trade unions cannot be sued upon, but it is expressly provided that they are not on that account to be deemed unlawful. In this enumeration are included agreements to pay subscriptions. It has also been decided that a member of a trade union who com- plains of having been wrongfully expelled cannot be reinstated by the Court, though this may be done in the case of a club or other voluntary association hold- ing property for purposes lawful at common law, on the ground of the expelled member being deprived of a right of property (n). Practically trade union sub- scriptions are thus placed on the same footing as subscriptions to any club which is not proprietary (o). Not that, so far as we are aware, there is anything in principle against the payment of subscriptions to a club being legally enforced: the practical difficulty lies in ascertaining who are the proper persons to sue. The same difficulty exists in the case of any nume- rous unincorporated association. But this belongs to another division of our subject (p). Cases of The present place seems on the whole the most fm^ieilect" appropriate one for mentioning a singular case which (//) Biffhi/ V. Conmd (1880) 14 miff f/eff v. BUhnp (IS26) 2 C. k F. Ch. D. 482.' 49 L. J. Ch. 328 ; cp. 343.'31 R. R. 668 ; Raggett \. Mns- Wolfe V. Matthews (1882) 21 Ch. grave (1827) 2 C. & P. 556. The D. 194, 51 L. J. Ch. 833. practical sanction is the power of (o) In the case of a proprietary excluding a member in default, club the proprietor can sue ; see (p) See pp. 227. 246, 247. supra. PECULIAR ANALOGIES. 719 may be regarded as the converse of those we have obligations. been dealing with. A valuable consideration is given j-gpcal of in the course of a transaction which as the law stands "smy laws as at the time is wholly illegal and confers no right of made before, action on either party. Afterwards the law which made the transaction illegal is repealed. Is the con- sideration so received a good foundation for a new express promise on the part of the receiver ? The question came before the Court of Exchequer in 1863, some years after the repeal of the usury laws. The plaintiff sued on bills of exchange drawn and accepted after that repeal, but in renewal of other bills given before the repeal in respect of advances made on terms which under the old law were usurious. The former bills were unquestionably void : but it was held by the majority of the Court that the original advance was a good consideration for the new bills. The question was thus stated in the judgment of the majority: — "Whether an advance of money under such circumstances as to create no legal obligation at the time to repay it can constitute a good con- sideration for an express promise to do so." And the answer was given thus: — "The consideration which would have been sufficient to support the promise if the law had not forbidden the promise to be made originally does not cease to be sufficient when the legal restriction is abrogated. ... A man by ex- press promise may render himself liable to pay back money which he has received as a loan, though some positive rule of law or statute intervened at the time to prevent the transaction from constituting a legal debt " (q). The debt, therefore, which was originally void by the usury laws, seems to have been put in (f/) Fli;//it V. nprd (1863) 1 H. & ground that the bills sued on were C. 703, 715, 716. 32 L. J. Ex, an actual payment of the usurious 265, 269. Langdell (Summary', loan. ff)i/od ahtiluin suhtiliter § 76) supports the case on the dictum ridctiir. 720 AGREEMENTS OF IMPERFECT OBLIGATION. Treatment of equitable obligations at the same position by their repeal as if it had been a debt once enforceable but barred by the Statute of Limitation, But the decision seems wrong, for the consideration was wholly past at the time of the promise. The consideration for accepting a renewed bill of exchange is not the value received which was the consideration of the original h\\\, but the abandon- ment of the right of action thereon. There is one other analogy to which it is worth Avhile to advert, although it was never of much practical common law. importance, and what little it had has in England been taken away by the Judicature Acts. Purely equitable liabilities have to a certain extent been treated by common law courts as imperfect obliga- tions. The mere existence of a liquidated claim on a trust against the trustee confers no legal remedy. But the trustee may make himself legally liable in respect of such a claim by an account stated (r), or by a simple admission that he holds as trustee a cer- tain sum due to the cestui que trust (s). A court of law has also held that a payment made by a debtor without appropriation may be appropriated by the creditor to an equitable debt (t). It may be useful to sum up in a more general form the results which have been obtained in this chapter. An imperfect obligation is an existing obligation which is not directly enforceable. This state of thing:! i-esults from exceptional rules of positive law, and especially from laws limiting the right to enforce contracts by special conditions pre- cedent or subsequent. When an agreement of imperfect obligation is execu- tory a right of possession immediately founded on {r) Tojiham v. Morrcraff (185S) & E. 99. 8 E. & B. 972. 983 ; Howard v. (0 Bomnquet v. Wray (1816) 6 Browiihill (1853) 23 T.. J. Q. B. 23. Taunt. 597, 16 R. K. 677.' (.?) Roper V. Holland (1835) 3 A. Summary of results. GENERAL RESULTS. 721 the obligation can be no more enforced than ;the obligation itself. Acts done in fulfilment of an imperfect obligation are valid, and may be the foundation of new rights and liahilities, by way of consideration for a new contract or otherwise. A party who has a liquidated and unconditional claim under an imperfect obligation may obtain satis- faction thereof by any means other than direct process of law which he might have lawfully em- ployed to obtain it if the obligation had not been imperfect. The laws which give rise to imperfect obligations by imposing special conditions on the enforcement of rights are generally treated as part of the law of procedure of the forum where they prevail (u), and as part of the lex fori they are applicable to a con- tract sued upon in that forum without regard to the law governing the substance of the contract (x) ; but on the other hand they are not regarded in any other forum.j (m) Contra Savigny, Syst. 8. 270, enactments which are merely 273. ancillary to revenue laws, such as (a,-) This (it is conceived) does the provisions relating to marine not apply to revenue laws, and insurances (p. 702, above). P. 3 A 723 APPENDIX. Note A. Terminology and Fundamental Oonceptums oj Contract, In the first two editions I made use of Saviguy's definition of Savigtiy's Vertray (which can only be translated by Agreement, but in a wider definitions of sense than is known to any English writer). It now seems to me oUiqato- out of place in a special treatise on Contract. In the third volume riscJter Ver- of his System Savigny deals in the most general way with the '^' events capable of producing changes in rights and duties in the field of private law. Such events he c&Ws juristische Tliatsachen ; an ex- pression to which oiu' own accustomed "acts in the law " seems well fitted to correspond. (Acts in the law must be carefully distinguished from acts of the law, which are really neither acts nor events, but legal consequences of events. But the terms are not common enough for any serious risk of confusion to arise.) To speak, as some writers do, of "juridical facts," is to use language which is so far from being English that it becomes intelligible only by a mental re-translation into German. We are free to coin the term " event in the law " for jnristische TImtsache in its widest sense ; but, as law has nothing to do with events except so far as they can have legal consequences, this may be superfluous. It seems better for English purposes, at any rate, to reserve " act in the law " for the species which Savigny proceeds to mark off from the genus, namely, freie Uandluny, or better, perhaps, for the further specified kind of voluntary acts which manifest an intention to bring about particular legal consequences. Such an act is called by Savigny WiUen&erlxlariuiy. Specifying yet more, we distinguish the acts in which the will of only one party is expressed from those in which the wills of two or more concur. This last species gives the conception of Vertray. Savigny defines it as the "concurrence of two or more persons in the expression of a common intention, whereby mutual rights and duties of those persons are determined. " Vertrag ist die Vereiniguug Mehrerer zu einer iibereinstimmeudeu 3 A 2 724 APPENDIX. Willenserklarung, wodurcli ihre Rechtsverlialtnisse bestimmt wer- den." (Syst. 3. 309.) This covers a much wider field than that of contract in any proper sense. Every transaction answering this description includes an agreement, but manj' transactions answer to it which include far more : conveyances o^ property, for example, including dispositions inter vivos by way of trust and even gifts, and marriage. A still further specification is needful to arrive at the notion of Contract. A contract, in Savigny's way of approaching it, is an agi-eement which produces or is meant to produce an obligation [ohliyatorischer Vertrcuj). It is thus defined in his Obligationenrecht ,^ 52 (vol. ii. p. 8) : " Vereinigung Mehrerer zu einer iibereinstimmenden WiUenserklarung, wodurch unter ihnen eine Obligation entstehen soil." Now the use of the more general notion of Vertrag, as Savigny himself explains, is not to clear up anything in the learning of contracts. It is to bring out the truth that other transactions which are not contracts, or which are more than contracts, have in common with them the character of consent being an essential ingredient. Moreover we should have to consider, before adopting this terminology, the wider question whether the retention of Obligations as a leading division in a modern sj^stem of law, and especially English law, be necessary or desirable. On the other hand, this definition leaves aside the somewhat important question whether and in what cases a binding obligation can be produced by a merely unilateral declaration. The distinction between the ideas denoted by dominium and ohUijatio is certainly as fundamental in England as anywhere else ; and the habit of using "obligation" as a synonym of "dutj'," though respectable authority may be found for it, is in mj' opinion to be deprecated. But to apply the Eoman terminology to the Common Law would be as violent a proceeding, in any case, as to ignore it in Eoman Law. For these reasons Savigny's definition, admirable as it is for its own purposes and in its own context, and instructive as his work is almost everywhere as an example of scientific method, is now reserved for this note. Note B. (p. 39). Authoiities on Contract hy Correspondence. A-lams V. The first case of any importance is Adams v. Lindsell, 1 B. & Aid. Liudsell. 681 (1S18), Finch Sel. Ca. 102, 19 E. E. 415, Defendants wrote to plaintili's, " We now offer you 800 tods of wether fieeces, &c." CONTRACT BY CORRESPONDENCE. 725 (specifying price and mode of delivery and payment), "receiving your answer in course of post." Here, therefore, the mode and time for acceptance were prescribed. This letter was misdirected, and so arrived late. On receiving it, the plaintiffs wrote and sent by post a letter accepting the proposal, but the defendants, not receiving an answer when they should have received it if their proposal had not been delayed, had in the meantime (between the despatch and the arrival of the reply) sold the wool to another buyer. The jury were directed at the trial that as the delay was occasioned by the neglect of the defendants, they must take it that the answer did come back by course of post. On the argument of a rule for a new trial, it was contended that there was no contract till the answer was received. To this the Court replied : — " If that were so, no contract could ever be completed by the post. For if the defendants were not bound by their offer when accepted by the plaintiffs till the answer was received, then the plaintiffs ought not to be bound till after they had received the noti- fication that the defendants had received their answer and assented to it ; and so it might go on ad infinitum. The defendants must be considered in law as making, during every instant of the time their letter was travelling, the same identical offer to the plaintiffs, and then the contract is completed by the acceptance of it by the latter. Then as to the delay in notifying the acceptance, that arises entirely from the mistake of the defendants, and it therefore must be taken as against them that the plaintiffs' answer was received in course of post." As far as the case goes, it seems to amount to this : An acceptance by letter is complete as against the proposer from the date of post- ing the acceptance if it arrives within the prescribed time, if any, or otherwise within a reasonable time ; but if the communication of the i:)roposal is delayed by the fault of the proposer, and the com- munication of the acceptance is consequently delayed, such delay is not to be reckoned against the acceptor. In the Scotch case of Daiimore v. AlexamJer, 9 Shaw & Dunlop, Dnnmore r. 109, and Finch Sel. Ca. 120 (1830), the defendant wrote to a friend Alexander desiring her to engage a servant on terms which, that friend had C^c.). already informed the writer, would be agreeable to the servant. A letter revoking this was written the next day ; ultimately they were both posted and delivered to the servant at the same time. It was held that no contract was concluded, but it is not clear whether the majority of the Court meant to decide that an acceptance sent through the \wsi is neutralized by a revocation arriving at the same time though posted later, or that the first letter was only a proposal. 726 APPENDIX. Potter r. Sanders. Dunlop ('. Higsiiis. Hebb's case and Reid- path's case. British and American Telegraph Co. V. Colson. Neither is it clear how far and for what purposes they regarded the intermediate jjerson as an agent for either or both of the parties. No distinction was taken between postal and other communications. The French Coiu-t of Cassation had held in 1813 that when an acceptance and the revocation of it arrive together there is no contract. Merlin, Repertoire, Vente, ^l, Art. 3, No. 11 his, Laugdell Sel. Ca. Cont. 155. lu Fottery. Sanders {lSi6) 6 Ha. 1, 77 E.R. 1, the posting of a letter of acceptance is said to be an act which " unless interrupted in its jirogress " concludes the contract as from the date of the posting. This seems to imply that a letter not received at all would not bind the proposer. Then comes Dunlojj v. Hu/yins (1848) 1 H. L. C. 381, 73 E. E. 98, Finch Sel. Ca. 108, a Scotch appeal decided by Lord Cottenham. Here the proposal did not prescribe any time, but the natxu'e of it (an offer to sell iron) implied that the answer must be speedy. The acceptance was posted, not by the earliest possible post, but in business hours on the same day when the proposal was received. The post was then delayed by the state of the roads, so that the acceptance was received at 2 p.m. instead of 8 a.m., the hour at which that post should have arrived. The decision was that the contract was binding on the proposer ; and it might well have been put on the ground that the acceptance in fact reached him within a reasonable time. Lord Cottenham, however, certainly seems to have thought the contract was absolutely concluded by the posting of the acceptance (within the prescribed or a reasonable time), and that it mattered not what became of the letter afterwards. It appears to have been so understood in Duncan v. Topham (1849) 8 C. B. 225, 18 L. J. C. P. 310, 79 E. E. 470, where, however, the decision was on other grounds. The latter cases arose out of applications for shares in companies being made and answered by letter. llehVs case, (1867) L. E. 4 Eq. 9, decides only that an allotment of shares not duly despatched will not make a man a shareholder ; for the letter of allotment was sent to the company's local agent, who did not deliver it to the applicant till after he had withdrawn bis ai^plication. But the same judge (Lord Eomilly) held in Beulpath's case (1870) L.E. 11 Eq. 86, 40 L. J. Ch. 39, that the applicant was not bound if he never received the letter. In British and American Telegraph Company v. Colson (1871) L. E. 6 Ex. 108, 40 L. J. Ex. 97, it was found as a fact that the letter of allotment was never received. The Court (Kelly C. B., Pigott B., and Bramwell B.) held that the defendant was not CONTEACT BY CORllESPONDENCE. 727 bound, and endeavoured to restrict the effect of Dvnlop v. Hui) Pieard v. 7//«c(18()9) L. R. 5 Ch. 274. Oy) JlJai/d V. Field (187C>) 3 Gh. D. 587, 593, 45 L. .J. Vh. tVM, s. v. lioper V. Ooneo.sfer, note (.'■) next page. 732 APPENDIX. for her husband's debt (?•) or joins him in making a promissory note (s). The " engagement " of a married woman differs from a contract, inasmuch as it gives rise to no personal remedy against the married woman, but only to a remedy against her separate property {t). But it creates no specific charge, and therefore the remedy may be lost by her alienation of such property before suit (3 D. F. J. 515, 519, 520-2) {u). On the same principle the exercise by a married woman of a general testamentary power of appointment does not make the appointed fund liable to her engagements, for it is never her separate property (.r). In cases where specific performance would be granted as between parties suiiuris, a married woman maj^ enforce specific performance of a contract made with her where the consideration on her part was an engagement binding on her sej^arate estate according to the above rules ; and the other party may in like manner enforce sjiecific performance against her separate estate (//). A married woman's engagement relating to her separate property will have the same effect as the true contract of an owner sui iuris in creating an obligation which will be binding on the property in the hands of an assignee with notice (2). Effect of ^^ ^ married woman becomes sui iuris bj' the death of the husband, cessation of judicial sejiaration or otherwise, what becomes of the debts of her coverture. (/■) Jfarrell v. Coicaii (1877) (i restrain her from dealing with it. Ch. D. 16(5 (reversed 7 Ch.Div. 151, {.r) Roper v. Doticaster (1888) 47 L. J. Ch. 7:3, but only on the 39 Ch. U. 182, 58 L.J. Ch. 31 : qu. construction of the document), how far consistent with Mayd v. where no attempt was made to Field, note ((y),last page. As to dispute that the guarantj', though the effect of s. 4 of the Married not expressly referring to the Women's Property Act, 1882, see separate estaie, was effectual to now Re Hughes [1898] 1 Ch. 529, bind it. 67 L. J. Ch. 279. C. A. ; Re Hodgaon (-0 Daries v. Jenkins (1877) 6 [1899] 1 Ch. 666, 68 L. J. Ch. Ch. D. 728. 313; Re Fieldwick [1909] 1 Ch. (0 Hence, before the Act of 1882, 1, C.A. the marrietl woman, not being a (y) The cases cited in Sug. V. real debtor, was not subject to the & 1*'. 206, so far as inconsistent bankruptcy law in respect of her with the modern authorities (see separate estate: E.c parfe Jones Plcard -v. Hine (1869) L. R. 5 Ch. (1879) 12 Ch. Div. 484,48 L. J. Bk. 274, where the form of decree 109. against the separate estate is given, («) Ace. Rohinson v. Ph-kering Pride v. Bi/hh (1871) L. R. 7 Ch. (1881) 16 Ch. Div. GCO, 50 L. .J. Cli. 64, 41 L. J. Ch. 105), must be 527, which decided that a creditor considered as overruled, of a married woman on the faith of (r) Per Jessel M.R, Warne v. her separate estate is not thereby Routledge (1874) L. R. 18 Eq. 500, entitled to a charge on her separate 43 L. J. Ch. 604. property, or to an injunction to SEPARATE ESTATE. 733 separate estate? It ai)pears that they do not become legal debts ; for this would be to create a new right and liability quite different from those originally created by the parties ; but that the creditor's right is to follow in the hands of the owner or her representatives the separate estate held by her at the time of contracting the engagement, and still held by her when she became sui iitris, but not any other propertj'. Proj^erty subject to a restraint on anticipation cannot in any case be bound (o). On principle it should seem that a married woman's engagement with respect to her separate estate, while not bound by any peculiar forms, is on the other hand bound in every case by the ordinary forms of contract ; in other words, that no instrument or transaction can take effect as an engagement binding separate estate which could not take effect as a contract if the party were sni inris. That is to say, the creditor must first produce evidence appropriate to the nature of the transaction which would establish a legal debt against a party sui iuris, and then he must show, by proof of presumption as explained above, an intention to make the separate estate the debtor. There is, however, a decision the other way. In McHenry v. Davits [h), a married woman, or rather her separate estate, was sued in equity on a bill of exchange indorsed by her in Paris. It was contended for the defence, among other things, that the bill was a French bill and informal according to French law. Lord Eomilly held that this was immaterial, for all the Court had to be satisfied of was the general intention to make the separate estate liable, of which there was no doubt. This reasoning is quite intelligible on the assumption that engagements bind separate estate only as specific charges ; the fact that the instrument creating the charge simulated more or less successfully a bill of exchange would then be a mere accident (c). The judgment bears obvious marks of this theory ; we have seen indeed that it was expressly adopted by the same judge in an earlier case {d), and we have also seen that it is no longer tenable. In Johnson v. Qallayher How far is a married woman's " engage- ment " bound by the ordi- nary forms of contract ? McHenry T. Davies : qucere. («) Pihe x.FltzglhhoH (1881) 17 Ch. Div. 454, T,0 L. J. Ch. 394, Earlier cases are indecisive. For the view taken in the Court below in Johnso/i v. Gallaghe); wheie the bill was filed after the death of the husband, see 3 D. F. J. 495, and the decree ajjpealed from at p. 497. The Act of 1882 (modified only as to payment of costs by the Act of 1893) gives no power totoucli such property, see p. 93, above. (i) (1870) L. K. 10 Eq. 88. (6') Note, however, that in the case of parties s^d iuris a bill of exchange cannot be treated as an equitable assignment : Sliand v. Du Buissoii (1874) L. R. IS E,i. 283, 43 L. J. Ch. 508. Nor a cheque : Hopliinson v. Foster (1874) L. R. 19 Eq. 74. {(l) Shattoeh v. Shattock (186tj) I.. R. 2 Eq. 182, 35 L. J. Ch. 509, supra, p. 730. 734 APPENDIX. Statute of Limitation. Can the separate estate bo made liable on a quiis'i- contract ? Tendency of modern authority and lesrislation. it is assumed that a married woman's engagements concerning her separate interest in real estate must satisfy the conditions of the Statute of Frauds (e). An engagement which if she were sui iuris would owe its validity as a contract to the law merchant must surely in like manner satisfy the forms and conditions of the law merchant. It is submitted, therefore, that McHenry v. Davies (/) is not law on this point. It is now held that the Statute of Limitation, or rather its analogy, applies to claims against the separate estate {y). It is said that a married woman's separate estate cannot be made liable as on an obligation implied in law, as, for instance, to the repayment of money paid by mistake or on a consideration which has wholly failed {h). But the decisions to this effect belong (with one exception) to what we have called the period of reaction, and are distinctly grounded on the exploded notion that a "general engagement," even if express, is not binding on the separate estate. The exception is the modern case of Wright v. Chard (i), where V.-C. Kindersley held that a married woman's separate estate was not liable to refund rents which had been received by her as her separate property, but to which she was not in fact entitled. But the language of the judgment reduces it to this, that in the still transitional state of the doctrine, and in the absence of any pre- cedent for making the separate estate liable in any case without writing (this was in 1859, Johnson v. Gallagher not till 1861), the V.-C. thought it too much for a court of first instance to take the new step of making it liable " in the absence of all contract " ; and he admitted that " the modern tendency has been to establish the principle that if you put a married woman in the position of a, feme sole in respect of her separate estate, that position must be carried to the full extent, short of making her personally liable." The test of liability would seem on principle to be whether the transac- • tion out of which the demand arises had reference to or was for the benefit of the separate estate. The spirit of the modern authorities is, on the whole, in the du-ectiou of holding that a married woman's " engagement" differs from an ordinary contract only in the remedy being limited to her separate property. Her creditor is in a position like that of a (e) (1861) 3 D. F. J. at p. 514. (/) (1870) L. R. 10 Eq. 88. (y) He Lady Hastings (1887) 35 Ch.'Div. y-l. [h) 3 D. F. J. 512, 514, referring to Duhe of Bolton v. Williams (1793) 2 Ves. .Jr. 138; Jones v. Harris (1804) 9 Ves. 486, 493, 7 R. R. 282, antl Aguilar v. Aguilar (1820) 5 Madd. 414. (/■) (1859) 4 Drew. 673, 685, 29 L. J . Ch. 82 : on appeal, 1 D. F. J. 567, 113 R. R. .501, but not on this point. LIMITS OF CORPORATE POWERS. 735 creditor of trustees for a societjs or the like, who has agreed to look only to a sjjecified fund for payment. And on this view the Married Women's Property Act of 1882 is framed, though it might be wished that the principle had been carried out more thoroughly. Note D. (p. 134 above). Limitation of Carforate Powers hy Doctrines of Partnership and A(jency. A case in which this reason appears most clearly is Simpson v. Denison (1852) 10 Ha. 51, 90 R. E. 276. The suit was instituted by dissentient shareholders to restrain the carrying out of an agree- ment between their company (the Great Northern) and another railway company, by which the Great Northern was to take over the whole of that company's traffic, and also to restrain the appli- cation of the funds of the Great Northern Company for obtaining an Act of Parliament to ratify such agreement. The V.-C. Turner treated it as a pure question of partnership : " How would this case have stood," he says in the first paragraph of the judgment, " if it had been the case of an ordinary limited partnership ? " The Eailways Clauses Consolidation Act became in this view a statutory form of partnership articles, to which every shareholder must be taken to have assented ; and the general ground of the decision was that " no majority can authorize an application of partnership funds to a purpose not warranted by the partnershijj contract." For the purposes of the case before the Court this analogy was perfectly legitimate ; and the dissent expressed by Parke B. (in South Yo7-l-- shire, &c. Co. v. G. N. B. Co. (1853) 9 Ex. 88, 22 L. J. Ex. 315, 90 E. E. 515) must be considered only as a warning against an unquali- fied extension of it to questions between the corporate body and strangers. In Pickering v. Stephenson (1872) L. E. 14 Eq. 322, 340, 41 L. J. Ch. 493, the same rule is thus set forth by Wickens V.-C. — " The principle of jurisprudence which I am asked here to apply is that the governing body of a corporation that is in fact a trading partnership cannot in general use the funds of the community for any purpose other than those for which they were contributed. By the governing body I do not of course mean exclusively either directors or a general council {J), but the ultimate authority within the society itself, which would ordinarily be a majority at a Application of partner- ship law : Simpson v, Denison. Statement of the principle in Piclcering r. Stephenson. (j ) Referring to the peculiar constitution of the company then in question. 736 APPENDIX. general meeting. According to the principle in question the special powers given either to the directors or to a majority by the statutes or other constituent documents of the association, however absolute in terms, are always to be construed as subject to a paramount and inherent restriction that they are to be exercised in subjection to the special purposes of the original bond of association." Nothing is said here on the extent to which a corporation may be bound by the unanimous assent of its members. Rights of Any dissenting shareholder may call for the assistance of the dissenting Court to restrain unconstitutional acts of the governing body, but 1,111-. o«/' s aie 10 c ere. j^^ must do so in his proper capacity and interest as a shareholder and partner. If the Court can see that in fact he represents some other interest, and has no real interest of his own in the action, it will not listen to him ; as when the proceedings are taken by the direction of a rival company in whose hands the nominal plaintiff is a mere puppet, and which indemnifies him against costs : Forrest v. Manchester, dtc. By. Co. (1861) 4 D. F. J. 126: so where the suit was in fact instituted by the plaintiff's solicitor on groujids of personal hostility, Mohson v. JJohhs (1869) L. E. 8 Eq. 301, 38 L. J. Ch. 647. But if he has any real interest and is proceeding at his own risk, he is not disqualified from suing by the fact that he has collateral motives, or is acting on the suggestion of strangers or enemies to the company, or even has acquired his interest for the purpose of instituting the suit: Colman v. E. C. Ry. Co. (1846) 10 Beav. 1, 16 L. J. Ch. 73, 76 E. E. 78 ; Seatcm v. Grant (1867) L. E. 2 Ch. 459, 36 L. J. Ch. 638 ; Blo.mm v. Metrop. Ry. Co. (1868) L. E. 3 Parties to Ch. 337. For full collection of cases, see Lindley on Companies, action. 597. As a rule the plaintiff in actions of this kind sues on behalf of himself and all other shareholders whose interests are identical with his own ; but there seems to be no reason why he should not sue alone in those cases where the act complained of cannot be ratified at all, or can be ratified only by the unanimous assent of the shareholders : Hook v. G. W. Ry. Co. (1867) L. E. 3 Ch. 262. There is another class of cases in which abuse of coi-porate powers or authorities is complained of, but the particular act is within the competence of, and may be affirmed or disaffirmed by, " the ultimate authority within the society itself" (in the words of Wickens V.-C. just now cited), and therefore the corporation itself is prima favie the proper plaintiff. See Lindley on Companies, 574 sqq. ; Gi-ay v. Leu-is (1869) L. E. 8 Ch. 1035, 1051 ; MacdougaUv. Gardiner (1875) L. E. 10 Ch. 606, 1 Ch. D. 13, 21 ; Russell v. Wakefield Waterworks Co. (1875) L. E. 20 Eq. 474, 44 L. J. Ch. 496. " The majority are the only persons who can complain that a thing LIMITS OF CORPORATE POWERS. 737 •whicli they are entitled to do has been done irregularly " (/,•). The exception is when a majority have got the government of the corporation into their own hands, and are using the corporate name and powers to make a profit for themselves at the expense of the minority ; then an action is rightly brought by a shareholder on behalf of himself and others, making the company a defendant : Menier v. Hooper''s Telegrajih Works (1S7-1) L. E. 9 Ch. 350, 43 L. J. Ch. 330; Mason v. Harris (1879) 11 Ch. Div. 97,48 L. J. Ch, 589. We mention these cases only to distinguish them from those with which we are now concerned. With regard to the doctrine of limited agency, and its peculiar importance in the case of companies constituted by public docu- ments, all persons dealing with them being considered to know the contents of those documents and the limits set to the agent's authority by them, it may be useful to give Lord Hatherley's con- cise statement of the law (when V.-C.) in Fonntaine v. Cnrmnrtheti Rij. Go. (1868) L. E. 5 Eq. 316, 322, 37 L. J. Ch. 429. " In the case of a registered joint stock company, all the world of course have notice of the general Act of Parliament and of the special deed which has been registered pursuant to the provisions of the Act, and if there be anything to be done which can only be done by the directors vmder certain limited powers, the person who deals with the directors must see that those limited powers are not being exceeded. If, on the other hand, as in the case of Royal British Bank v. Turqua)id (/), the directors have power and authority to bind the company, but certain preliminaries are re- quired to be gone through on the part of the company before that power can be duly exercised, then the person contracting with the directors is not bound to see that all these preliminaries have been observed. He is entitled to presume that the directors are acting lawfully in what they do. That is the result of Lord Campbell's judgment in Royal British. Bank v. Ttirqnand." For fuller ex- position see Lindley on Companies, 166 sqq. The contrast of the two classes of cases is well shown in Royal British Bank v. Turquand (Z) and Balfour v. Ernest (1859) 5 C. B. N. S. 601, 28 L. J. C. P. 170. In the former case there was (/O Hellish L.J. 1 Ch. D. at p. 2.5. As to a shareholder's right to use the company's name as plaintiff, see Pender v. Liishi/K/tun (1877) 6 Ch. D. 70, 46 L. J.'Ch. ai7 ; Duckett v. Gner (1877) 6 Ch. D. 82, 46 L. .J. Ch. 107 ; Sllher Light Co. V. Silbcr (187;)) 12 Ch. D. P. Limited agency of directors, &c. Royal British Bank r. Turquand, &:c. 717, 48 L. .J. Ch. 385 ; Harhen v. Phillips (1882-3) 23 Ch. D. 14, 29, 38 ; Burland v. Eavle [1902] A. C. 83, 71 L. .J. P. C, I. {I) .5 E. & B. 248, 6 ibid. 237, 24 L. J. Q. B. 327 25 ihid. 327, 103 11. K. 461. 3 B 738 APPENDIX. power for the directors to borrow money if authorized by resolution : and it was held that a creditor taking a bond from the directors under the company's seal was not bound to inquire whether there had been a resolution. Jervis C.J. said in the Exchequer Chamber (the rest of the Court concurring) : — "We may now take for granted that the dealings with these companies are not like dealings with other partnerships, and that the parties dealing with them are bound to read the statute and the deed of settlement. But they are not bound to do more. And the party here on reading the deed of settlement would find not a prohibition from borrowing, but a permission to do so on certain conditions." The same principle has been followed in many later cases {Ex 2>urte Eagle Insurance Co. (1858) 4 K. & J. 549, 27 L. J. Ch. 829 ; Campheirs case&c. (1873) L. E. 9 Ch. 1, 24, 43 L. J. Ch. 1 ; Totterdell V. Fareham Brick Co. (1886) L. E. 1 C. P. 674, 35 L. J. C. P. 278 ; lie County Life Assce. Co. (1870) L. E. 5 Ch. 288, 39 L. J. Ch. 471, a very strong case, for the persons who issued the policy were assuming to carry on business as directors of the company without any authority at all; Romford Canal Co. (1883) 24 Ch. D. 85, 52 L. J. Ch. 729), and it was decisively aflarmed by the House of Lords in Mahony v. East Holyford Mining Co. (1875) L. E. 7 H L. 869. In that case a bank had honoured cheques di'awn by persons acting as directors of the company, but who had never been pro- perly appointed ; and these payments were held to be good as against the liquidator, the dealings having been on the face of them regular, and with de facto officers of the company. Share- holders who allow persons to assume office and conduct the com- pany's business are, as against innocent thii'd persons, no less bound by the acts of these de facto officers than if they had been duly appointed. It is for the shareholders to see that unauthorized persons do not usurp office, and that the business is properly done (m). Similarly where the proper quorum of directors fixed by internal regulations of the company was not present : County of Gloucester Bank v. Budry Merthyr, cbc. Co. [1895] 1 Ch. 629, 64 L. J. Ch. 451. Creditors are entitled to rely on the authority of a managing director puii^orting to exercise powers which under the articles he might have : Biygerstaff v. RowatVs Wharf [1896] 2 Ch. 93, 102, 65 L. J. Ch. 536. In Balfour v. Ernest the action was on a bill given by directors of an insurance company for a claim luider a policy of another (w) Opinion of judges L. E. 7 H. L., at p. 880 ; per Lord Hatherley, at pp. 8'J7-8. LIMITS OF CORPORATE POWERS. 739 company, the two companies having arranged an amalgamation ; this attempted amalgamation, however, had been judicially deter- mined to be void : Ernest v. NichoUs, 6 H. L. C. 401, 108 R. R. 175, revg. S. C. nom. Port ofLondvn Co.'s case (1 854) 5 D. M. G. 465. The directors had power by the deed of settlement to borrow money for the objects and business of the company and to pay claims on policies granted by the company, and they had a power to make and accept bills, &c. which was not restricted in terms as to the objects for which it might be exercised. It was held that, taking this with the other provisions of the deed, they could bind the company by bills of exchange only for its ordinary piu'poses, and not in pursuance of a void scheme of amalgamation, that the plain- tiifs must be taken to have known of theii' want of authority, which might have been ascertained from the deed, and that they therefore could not recover. " This bill is drawn by procuration," said Willes J., " and unless there was authority to draw it the com- pany are not liable {n) . . . this is the bai-e case of one taking a bill from Company A. in respect of a debt due from Company B., there being nothing in the deed (which must be taken to have been known to the plaintiffs) to confer iipon the directors authority to make it." The connection with ordinary partnership law is brought out in the introductory part of Lord Wensleydale's remaks in Ernest v. NichoUs (1857) 6H. L. C. 401, 417, 108 E. E. 175, 182. "The law inordinarj' partnerships, so far as relates to the powers of one partner to bind the others, is a branch of the law of principal and agent. Each member of a complete partnership is liable for himself, and, as agent for the rest, binds them upon all contracts made in the course of the ordinary scope of the partnership business. . . . . Any restrictions upon the authority of each partner, imposed by mutual agreement amongst themselves, could not affect third persons, unless such persons had notice of them ; then they could take nothing by contract [sc. as against the finn] which those restrictions forbade. [The law in this form, i.e., the presumption of every partner being the agent of the firm, being obviously inapplic- able to joint-stock companies]. The legislature then devised the plan of incorporating these companies in a manner unknown to the common law, with special powers of management and liabilities, providing at the same time that all the world should have notice who were the persons authorized to bind all the shareholders by («) In form it was a bill drawn cashier, and sealed with tlic corn- by two directors ou the company's pany's seal, 3 B 2 740 APPENDIX. requiring the copartnersliip deed to be registered . . . and made accessible to all." The continuation of the passage, however, goes too far ; in fact, it disregards the distinction established by Royal British Bank v. Turquand, and the Courts have distinctly declined to adopt it: Agar v. Athenaeum Life Assce. Soc. (1858) 3 C. B. N. S. 725, 27 L. J. C. P. 95, 111 E. E. 817; Prince of Wales Assce. Co. v. Harding (1857) E. B. & E. 183, 27 L. J. Q. B. 297, 113 E. E. 594. See Chapleo v. Brunswick Building Hocietg (1881) 6 Q. B. Div. 696, 50 L. J. Q. B. 372, for an example of the society not being bound by a loan contracted beyond its borrowing powers : the directors, having held themselves out as authorized, were found personally liable. Eatification of irregular transactions by assent of all the share- holders. Spackman v. Evans, ) (18G8). See also L. R. 7 (y) See per Willes J., L. K. 7 f!. P. 51, r>2. and note tlie remark of ('. 1'. CU. Willes J. p. Wi. :M J.. .J. Cli. S21. 742 APPENDIX. Statutory prohibition : Companies Act, 18C2. The action was by the company against past shareholders for a debt, and the defence rested on an accord and satisfaction which had been effected by an irregular forfeitui-e of the defendant's shares, and which in the result was upheld on the ground of the shareholder's acquiescence. It was not necessary to consider the distinction between iiTegiilar acts which can be ratified and acts contrary to the constitution of the company which cannot be ratified in any way, nor was it brought to the attention of the Court (r). With regard to cases in which ratification is impossible by reason of the coi-poration being absolutely disabled fi'om vuidertaking the transaction, the existence of such cases has been recognized almost from the beginning of modern coi'poration law . "A company incor- porated by Act of Parliament for a special piu-pose cannot devote any part of its funds to objects imauthorized by the terms of its incorporation, however desirable such an application may api^ear to be " (s). The application of this principle to companies under the Companies Act, 1862 (the most important class of cases in practice), was fixed by the House of Lords in 1875 in Ashhury, &c. Co. v. IHrhe, pp. 132 — 134, above. The Hoiise decided that, by the frame and intention of the Act as a whole, the memorandum of association is the fundamental constitution of the company, and the company is incompetent to undertake anything outside its objects as thereby defined. As a consequence of this, any provision in the articles for applying the company's capital to a purpose not warranted by the memorandum is itself invalid : Guinness v. Lartd Corporation of Ireland (IS82) 22 Ch. Div. 349. For some time past it has been the practice of conipany draftsmen to frame the memorandxim in the most comprehensive terms, in order to prevent qiiestions of this kind from arising ; but the decisions remain in full force, and the practice and forms in use cannot be adequately understood without reference to them. As to when the Attorney-General is entitled to interfere, see A.-G. v. G. E. Ry. Co. (1880) 11 Ch. Div. 449 ; 49 L. J. Ch. 545; A.-G. v. London Conidy Council [1902] A. C. 165, 71 L. J. Ch. 268 : this case also decides that a county council under the Local Government Act, 18S8, is a purely statutory body and has not the general powers of a corporation at common law ; A.-G. v. Mersey Ry. Co. [1907] 1 Ch. 81, C. A. (revd. on the point of substance in H. L. [1907] A. C. 415, 76 L. J. Ch. 568). (/■) See further on the subject of doctrine by Lord Cranworth in ratitication liv companies. Lindley U. C. Ri/. Co. v. llawltes (ISfj.'i) Tj on Companies. 175-181. " H. L. C." 831. 24 L. J. Ch. GOl, 101 (x) So laid liown as well settled \l. K. 183, CONTRACTS IN ROMAN AND MEDIEVAL LAW. 743 Note E. Classification of Contracts in Roman and Medieval Law. Formal contracts (legitimae couveutiones) gave a right of action The verbal irrespective of their subject-matter. In Justinian's time the only contract, kind of formal contract in use was the Stipulation {t), or verbal contract bj^ question and answer, the question being put by the creditor and answered by the debtor (as Dari spondes ? spondeo : Promittis ? promitto : Facies ? faciam). The origin of the Stipula- tion is believed to have been religious (»), though the precise manner of its adoption into the civil law remains uncertain. In oiu- autho- rities it appears as a foimal contract capable of being applied to any kind of subject-matter at the pleasure of the parties. Its application was in course of time extended by the following steps. 1. The question and answer were not required to be in Latin (;»•). 2. An exact verbal correspondence between them was not neces- sary (^"^f'"" ^^ ■ 11 T -r> i- 11 causa. agreement. This something more was called causa. Fractically the term covers a somewhat wider ground than our modern " con- sideration executed " : but it has no general notion corresponding to it, at least none co-extensive with the notion of contract ; it is simply the mark, whatever that may be in the particular case, which (0 The litterarum. uhligatio (Gai. expect the covenant to be contirnied 3. 128) was obsolete. What appears by an oath, of which Muirhead (on under that title in the Institutes Gai. 3. 92) finds a trace on other (3. 21) is a general rule of evidence grounds in the form j^vomittls? unconnected with the ancient jjromitto. usage : see Moyle's Justinian, Exc. (.«) Gai. 8. 93, 1. 3. l.o, de v. o. § 1. viii. (i/) C. 8. 38. de cont. et comni. (//) Savigny's derivation of the stipul. 10. Stipulation from the nexum. is (--) C. 8. 38. de cont. et counn. abandoned, so far as I know, by stipul. 14, L 3. 19.de iuut. stipul. all recent writers. It seems quite §12. Probably Greek and provin- possible that the earliest type of cial use of written agreements had contract is to be sought in cove- much to do with this, nants made between independent (^0 Paul. Sent. V. 7, § 2. For tribes or families. Cf. Gai. 3. 94 detailed discussion see SeufTert, on the use of tiie word .y/ondro in Zur Geschichte der obligatorischen treaties. If this were so, one would Vertriige, § 3. 744 APPENDIX. What in- formal con- tracts en- forceable. distinguishes any particular class of agreements from the common herd of pacta and makes them actionable. Informal agreements not coming within any of the privileged classes were called nuda pacta and could not be sued on (i). The teiTa nudum pjactum is sometimes used, however, with a special and rather different mean- ing, to express the mle that a contract without delivery will not pass property {c). The further application of this metaphor by speaking of the causa when it exists as the clothing or vestui'e of the agreement is without classical authority but very coinm(jn ; it is adopted to the full extent by oiu" own early writers ((/). The privileged informal contracts were the following : 1 . Reed contracts, where the causa consisted in the delivery of money or goods : namely, mutui datio, commodatum, dej)ositum, pignus, cor- responding to oiu bailments. This class was expanded within historical times to cover the so-called innominate contracts denoted by the fonnula Do ut des, &c. (e), so that there was an enforceable obligation re contracta wherever, as we should saj-, there was a consideration executed : yet the procedure in the different classes of cases was by no means uniform (/). 2. Consensual contracts, being contracts of constant occurrence in daily life in which no causa was required beyond the natvu-e of the transaction itself. Four- such contracts were recognized, the first three of them at all events (y), from the earliest times of which we know anything, namely. Sale, Hii-e, Partnership, and Mandate. (/') They gave rise however to iin]ier£ect or •• natural " obligations which liad other lejral effects. (r) Traditioiiibus et usucapioni- bus douiinia reruni, non niulis pactis, transfeiuiitur. Cod. 2. 8. de pactis, 20. But the context is not preserved, and the particular pae- tiini in question may have been nv(him in tlie general sense too. The contrary rule of the Common Law has not so far been traced to an earlier time than the second quarter of the fifteenth century : see Prof. Ames in P^ssays in Anglo- American Legal Hist. iii. 312, 313. Cp. note (7>). p. 74(». below. (f7) •• Pactum nudum est non vestitum stipulatione vel re vel litteris vel consensu vel contractus cohaerentia " : Azo, Summain Cod. ap. Seuffert op. cit. 41 ; Maitland, P>racton and Azo. 143. •• Obliiia- tio quatuor species habet quibus contrahitur et plura vestimenta,"' Bracton, 99a. '• Obligacioun deit cstre vestue de v. maneres de garnisementz." Britton L L5G. Austin (Jurisprudence, 2. lOlG, 3rd ed.) spoke per Incuriam of the right of action itself, instead of that which gives the right, as being the ■■ clothing." (?) Aut enim do tibi ut des, aut do ut facias, aut facio ut des. aut facio ut facias ; in quibus quaeritur quae obligatio nascatur. D. 19. 5. de praescr. verbis, 5 pr. Black- stone (Comm. ii. 444) took this formula for a classification of all valuable considerations, and his blunder was copied without reflec- tion bv later writers. if) Dig. 1- c. §§ 1-4. (ii') See Muirhead on Gai. 3. 21 G, CONTRACTS IN ROMAN AND MEDIEVAL LAW. 745 (Emptio Venditio, Locatio Conductio, Societas, Mandattim.) To this class great additions were made in later times. Subsidiary contracts (pacta adiecta) entered into at the same time and in con- nexion with contracts of an already enforceable class became likewise enforceable : and divers kinds of informal contracts were specially made actionable bj' the Edict and by imperial constitutions, the most material of these being the constitutiim, covering the English heads of account stated and gtiaranty. Justinian added the pactum (Jonationis, it seems with a special view to gifts to pious uses (//). Even after all these extensions, however, matters stood thus : " The Stipulation, as the only formal agreement existing in Justinian's time, gave a right of action. Certain particular classes of agree- ments also gave a right of action even if iufonnally made. All other informal agreements (inula pacta) gave none. This last proposition, that nuda pacta gave no right of action, may be regarded as the most characteristic principle of the Roman law of Contract" (/). It is desir-able to bear in mind that in Roman, and therefore also in early English law-texts, nudum j'ud am does not mean an agreement made without consideration. Many nuda pacta, according to the classical Roman law, would be quite good in English law, as being made on sufficient consideration ; while in many cases obligations recognized by Roman law as fully binding {e.g. from mandate or negotiorum gestio) would be unenforceable, as being without consideration, in the Common Law. When the Roman theory came to be adopted or revived in Modern Western Christendom, the natiu"al obligation admitted to arise civil law. from an informal agreement was, under the influence of the canonists, gradually raised to full validity, and the difference between j)actum and legitimci conventio ceased to exist (A). The process, however, was not completed until English law had already struck out its own lino. The identification of Stipulation with formal writing, complete on The deed in Continent not later than the 9th century (/), was adopted by our Englisli medieval (/t) C. 8 .54, de donat. 35, § 5. real and not consensual : Gilson, law. The establishaieut of emphyteusis L'etude du droit remain compare as a distinct species of contract is aux autres droits de ranti(iuit6 of minor importance for our present (181)9). \). 217. purpose. (/.') Seuffert op. cit. cp. Harv. ((•) Sav. Obi. 2, 231. Muirhead, Law Kev. vi. 31)0,391. See Esmein, on Gai. 3. 134, says that "amongst P]tudes sur les contrats dans le tres peregrins a nudum, pact urn was ancieu droit fran(;ais, Paris, 1883, creative of action : " which seems for tiie earlier medieval history, to be a slip. Provincial usage, so (I) Details and authorities in far as known, was less .advanced P>runner, Uiim. u. German. Ur- than Uomiin ; thus the contract of kunde. sale was (as in Germuiiic custom) 746 APPENDIX. medieval authors. In Glanvill we find that a man's seal is conclusive against him (m). Bracton, after setting forth almost in the very words of the Institutes how " Verbis contrahitur obligatio per stipulationem," &c. adds : " Et quod per scripturara fieri possit stipulatio et obligatio videtur, quia si scriptum fuerit in instru- mento aliquem promisisse, perinde habetur ac si interrogatione praecedente responsum sit" (h). There is no doubt that he means only a writing under seal, though it is not so expressed : Fleta does say in so many words that a writing unsealed will not do (o). The equivalent for the Eoman Stipulation being thus fixed, the classes of Eeal and Consensual contracts are recognized, in the terms of Eoman law so far as the recognition goes : the Consensual contracts are but meagrely handled for form's sake, as the Eoman rules could not be reconciled with English practice {p). We hear of nothing corresponding to the later Eoman extensions of the validit j' of infomial agreements. Such agreements in general give no right of action : in Glanvill it is expressly said : " Privatas conventiones non solet curia domini regis tueri" ((/) ; the context makes it doubtful whether even agreements under seal were then recognized by the King's Coiu-t unless they had been made before the Court itself. In Bracton too, notwithstanding his elaborate copjTJig of Eoman sources, we read : " ludicialis autem esse poterit stipulatio, vel conventionalis : iudicialis, quae iussu iudicis fit vel praetoris. Couventionalis quae ex conventione utriusque partis concipitur, nee iussu iudicis vel praetoris, et quanmi totidem sunt genera quot paene (?•) reruni contrahendarum, de quihus omnibus omnino curia reer curiam : A. is indebted to B. by bill {i.e., the now obsolete form of bond called a single bill), and B. to C. B. assigns A.'s bill to C. Forbearance on C.'s part for a certain time is no consideration for a promise by A. to pay C. at the end of that time {s. v. contra, ih. 29, pi. 60); for notwithstanding the assignment of the bill, the pro- perty of the debt remains in the assignor. In none of these cases is there a word about maintenance or public policy. On the contrary, it appears to be assumed through- out that the inqiossibility of effectually assigning a chose in action is inherent in the legal nature of things. Finally, in Termes de la Ley, tit. Chose in Action, the rule is briefly and positively stated to this effect : Things in action which are certain the king may grant, and the grantee have an action for them in his own name; but a common person can make no grant of a thing in action, nor the king himself of such as are uncertain. No reascm is given. 748 APPENDIX. The exception in favour of the Crown may perliaps be derived from the universal succession accruing to the Crown on forfeitures. This would natui-ally include rights of action, and it is easy to understand how the practice of assigning over such rights might spring up without much examination of its congruity with the legal principles governing transactions between subjects. Before the expulsion of the Jews under Edward I. the)- were treated as a kind of serfs of the Crown {ijjsi ludaei et omnia sua regis si(7d, Pseudo-L. Edw. Conf. c. 25 ; taylJaUes au Roy come hs soens serfs eta mil autre: Statutes of Jewry, temj). iiicert., dated by Prynue, 3 Ed. I.), and the king accordingly claimed and exercised an arbitrary power of confiscating, releasing, assigning, or licensing them to assign, the debts due to them. Cp. charter of Erederick II. Pet. de Vineis Epist. lib. 6, no. 12: " omnes et singuli ludaei degentes ubique per terras nostrae iurisdictioni subiectas Chris- tianae legis et Imperii praerogativa seivi sunt nostrae Camerae speciales." And see on this subject Y. B. 33 Ed. I. pp. xU. 355, and Prynne's " Short Demurrer to the Jews," &c. (Lond. 1656, a violent jiolemic against their re-admission to England), passim. 2. Cases ^^^ ^^^' ^ ^^^^- ^^I- 64, j^l. 17, Thomas Eothewel sues J. Pewerfor where the maintaining W. H. in an action of detinue against him, Eothewel, right of an f,ji. n „,; i^^^. q^^ charters et mu/iiments." Defence that W. H. assignee to suetn the ^^^ granted to Power a reutcharge, to which the munmieuts in name of the question related, and had also granted to Pewer the box and the assignor was deeds, then being in the possession of Pvothewel to the use of W. H., ^ '' ""■ wherefore Pewer maintained W. H., as he well might. To this Paston, one of the judges, made a curious objection by way of dilemma. It was not averred that W. H. was the owner of the deeds, but only that Eothewel had them to his use ; and so the jjroperty of them might have been in a stranger : " et issiut ceofuit chose en accion et issiiit tout roiiiy The precise meaning of these words is not very clear, but the general di-ift is that, for an}-thing that appeared, W. H. had no assignable interest whatever ; and it looks as if the strong expression tout void was meant to take a higher ground, distinguishing between a transaction impeachable for maintenance and one wholly ineffectual from the beginning. It may have been supposed that an assignment by a person out of possession could have no effect. But if W. H. was the true owner, Paston continued, then the whole property of the deeds, &c. passed to Pewer, who ought to have brought detinue in his own name (s). Babington C.J. and Martyn J., the other judges (.v) Another arguiiieiit juit by the material, is too quaint to be passed plaintiii's counsel, tliough not Aery over: M'hatever interest Pewer ASSIGNMENTS OF CHOSES IN ACTION. 749 present, were of a contrary opinion, holding that any real interest in the matter made it lawful to maintain the suit. The attempt to assign a chose in action is here compared by the counsel for the plaintiff to the grant of a reversion without attornment ; showing that the personal character of the relation was considered the ground of the rule in both cases. In Mich. 34 Hen. VI. 30, pi. 15, Robert Horn sued Stephen Foster for maintaining the administrators of one Francis in an action against him, R. Horn : the circumstances being that Horn was indebted to Francis by bond, and Francis being indel)ted to Stephen in an eqvial sum assigned the debt and delivered the bond to him, authoi'izing him, if necessary, to s\ie on it in his (Francis') name, to which Horn agreed ; and now Francis had died intestate, and Stephen was suing on the bond in the name of the administrators with their consent. And this being pleaded for the defendant, was held good. Prisot, in giving judgment, compared the case of the cestui que use of lands, whether originally or claiming by purchase through him to whose use the feoffment was originally made, taking part in any suit touching the lands. On this Fitzherbert remarks {Mayntenauns, 14) " Nota icy que per ceo ilsemble que un duite jHiit estre assiyne pour satisfaction.'''' So it is said in Hil. 15 Hen. VII. 2, pi. 3, that if one is indebted to me, and deliver to me an obligation in satisfaction of the debt, wherein another is bound to him, I shall sue in my debtor's name, and pay my counsel and all things incident to the suit ; and so may do he to whom the obligation was made, for each of us may lawfully interfere in the matter. Brooke, Abr. 140 h, observes, referring to the last-mentioned case : " Et sic vide que chose in accion poet estre assigne oustre pur loyal cause, comeiust det, mez nemy pur maintenance.'^ This form of expression is worth noting, as showing that assignment of a chose in action meant to the writer nothing else than empowering the assignee to sue in the assignor's name. He was at no pains to explain that he did not mean to say the assignee could sue in his own name ; for he did not think any one could suppose he meant to assert such a plainly impossible proposition. It was long supposed (as is implied in Fitzherbert's and Brooke's language — and seethe case in 37 Hen. VI., cited p. 747 above) that the assignment of a debt by way of sale, as opposed to satisfaction might have ha;l by the grant of the therefore in respect of the box, rent and the deeds relating to it, at all events, there was unlawful yet he had none in the box, and maintenance on his part. 750 APPENDIX. of an existing liability, was maintenance. Even under the Eestora- tion the Oonrt of Chanceiy would not jH-otect the assignment of any chose in action unless in satisfaction of some debt due to the assignee : Freem. C. C. 145, pi. 185, see Prof. Ames in Harv. Law Eev. i. 6, note ; and further on the whole matter, the same learned writer in Essays in Anglo-American Legal History, iii. 580 sqq. Note G. (p. 529). Braclon on Fuwlamental Error. De arqiih-endo rertun dominio, fo. 15 6, 16: "Item non valet donatio, nisi tam dantis quam accipientis concurrat mutuus con- sensus et voluntas, scilicet quod donator habeat animum donandi et donatarius animum recipiendi. Nuda enim donatio (t) et nuda pactio non obligant aliquem nee faciant aliquem debitorem ; ut si dicam. Do tibi talem rem, et non habeam (u) animum donandi nee tradendi nee a traditione incipiam, non valet, ut si dicam, Do tibi istam rem, et iilam nolim (r) tradere vel (x) sustinere quod illam tecum feras vel arborem datam succidas, non valet donatio quia donator plene non consentit. Item oportet quod non sit error in re data, quia si donator senserit de una re et donatarius de alia, non valet donatio propter dissensum : et idem erit si dissentio fiat in gcnere, nuniero et quantitate. . . . [Then follow instances.] Et in fine notandum quod si in corjius quod traditur sit consensum, non nocet, quamvis circa causam dandi atque recipiendi sit dis- sentio : ut si pecuniam numeratam tibi tradam, vel quid tale, et tu cam quasi creditam (y) accipias, constat ad te proprietatem transire." (0 rafio JIS. Hobhouse, Lin- P>iit creditani is the reading of a coin's Inn. majority of good MSS. (Lincoln's (7f) Juihiifiro MH. Hubh. Inn. Camb. Univ., Brit. Mus., P.ibl. (.<:) M8. Hobh. : edd. nohi, et. Nat. Paris) and is evidently required (//) Tnidittim ed. 1.569, followed by the sense. Bracton is quoting without remark by Sir T. Twiss, from the Digest, 41. 1. de acq. rer. 1878, who also gives by a misprint, dom. 36 ; cp. Giiterbock, Henr. de and translates, tall for tale im- Bracton, p. 85. who assumed, with- mediately above. (See on the out cause, as the MSS. now show, general character of this edition that Bracton misiinderstootl the " The Text of Bracton," by Prof, passage. The corruption, however, Paul Vinogradoflf, L. Q. R. i. 189.) is an easy and early one. MISTAKE IN WILLS. 751 Note H. (p. 552). Mistake in. Wills. Propei'ly speaking, there is no jiu-isdiction in any court to rectify a will on the ground of mistake. The Court of Probate may reject words of which the testator is proved to have been ignorant, whether inserted by the fraud or by the mistake of the person who prepared the will (2). But it has no power to insert words {a) or otherwise remedy a mistake " by modifying the language used by the draughtsman and adopted by the testator so as to make it express the supposed intention of the testator. . . . Such a mode of dealing with wills would lead to the most dangerous consequences, for it would convert the Court of Probate into a covu-t of construction of a very peculiar kind, whose duty it would be to shape the will into conformity with the supposed intentions of the testator " (6). Exactly the same rule has been laid down in equity (c). The cases in which it is said that the Court will interfere to correct mistakes in wills may be classified thus : 1. Cases purely of construction according to the general intention collected from the will itself ('/). 2. Cases of equivocal description, of words used in a special habitual sense, or of a wrongly given name which may be cor- rected by a sufficient description (e). 3. Cases of dispositions made on what is called a false cause (/), V,e., on the mistaken assumption of a particular state of facts existing, except on which assumption the disi^osition would not have been made. These are analogous to the cases of contract governed by Couturier v. Hastie {(/) ; and just as in those cases, the expressed intention is treated as having been dependent on a condi- tion which has failed. But the ti'ue view of all these cases appears to be not that the {:) E.q. Morrell v. Morrell, 7 {d) See Hawkins on Construction P. D. 68^ 51 L. J. P. 49, followiug of Wills, Introduction. Fiilion V. Andrew (187.5) L. R. 7 («) Not only an equivocal name H. L. 448, 44 L. J. P. 17; Brisco may be explained, but a name which V. liaillie- Hamilton [1902] P. 234, applies to only one person may be 71 L. J. P. 121 corrected by a description suffi- {(i) In the goods of Schott [1901] ciently showing that another person P. 190, 70 L. .r. P. 46. is intended : Charter v. Charter Qf) HaHer v. Uarter (1873) L. R. (1874) L. R. 7 H. L. 3(i4. 3 P. & D. 11, 21, 44 L. J. P. 1, (/) CumphellY. French (ll'Al) -a following Guardhouse v. Black- Ves. 321, 4 R. R. 5. lurn (1866) L. R. 1 P. & D. 109, (.7) (1856) 5 H. L. C. 673, 25 35 L. J. P. 116. L. J. Ex. 253, 101 R. R. 329. Supra, [e) Xewhurgh v. Xewhurgh (1820) pp. 443, 519. 5 Madd. 364, 21 R. R. 310. 752 APPENDIX. words are corrected, but that the intention when clearly ascertained is carried out notwithstanding the apparent difficulty caused by the particular words. Note I. (p. 559). On the supposed equitable doctrine of ^'making representations good" Original This once frequently alleged head of equity, in so far as it pur- statement in ports to establish any rule or principle apart from the ordinary rules V De Beil ^^ ^^ ^^^ formation of contracts on the one hand, and the principle of estoppel by assertion as to existing facts on the other, is now known to be imaginary. In the principal class of cases the " repre- sentation" is of an intention to make a provision by will for persons about to marry, in reliance on which representation the marriage takes place. The leading authority is Hammersley v. De Biel (/i), decided hy the House of Lords in 1845 on appeal from the Court of Chancery. In the Court below (/) Lord Cottenham had laid down the proposition that ' ' a representation made by one party for the purpose of influencing the conduct of the other party, and acted on by him, will in general be sufficient to entitle him to the assist- ance of the Court for the purpose of realizing such representation." This appears to be the source of all the similar statements which have since been made (A-). Taken with its context, however, it need not mean more than that an exchange of proposals and state- ments by which the conduct of parties is determined may, as con- taining all the requisites of a good agreement, amount to a contract, though not to a formal contract. To Mr. Justice Stephen Lord Cottenham' s words appeared " to mean only that contracts of this nature may be made like other contracts by informal documents, or partly by documents and partly by conduct " (/). And in this sense the rule seems to have been understood in the House of Lords both in the same and in subsequent cases. Lord Brougham and Lord Campbell speak of the transaction in plain terms as a contract. In the RoUs Court it had also been dealt with on that footing [m). Still more pointed is the remark made by Lord St. Leonards in 1854 : — (//) (1845) 12 CI. & F. 45. 69 purpose. See Emm v. Bichnell R. K. 18. (1801) 6 Ves. 174, 5 E. R. 245. (/) 12 01. & F. at p. 62. (0 Alderson v. Maddison (1880) lli) The turn of language is in 5 Ex. D. 293, 299, 50 L. J. Q. B. itself not novel. It seems to be 466. modelled on that which had long (w) Nom. De Beil v. Thomson before been used in cases of a (1841) 3 Beav. 469. diflerent class and for a different REPRESENTATIONS. 758 Lords. " Was it merely a representation in Hainmerdey v. De Bid ?■ Was it Subsequent not a proposal with a condition which, being accepted, was equivalent ex()lai)ation3 to a contract?" (»). In the terms of the Indian Contract Act, it was the case of a proposal accepted by the performance of the con- ditions. The statement " I will leave you 10,000/. by my will, if you marry A.," if made and acted on as a promise, becomes a binding contract (the marriage undertaken on the faith of that promise being the consideration), and so does a statement in less plain language which amounts to the same thing. On the other hand the statement " If you marry A. I think, as at present advised, I shall leave you 10,000?.," is not a promise and cannot become a contract: neither can it act as an estoppel, for it cannot matter to the other party's interest whether the statement of an intention which may be re- voked at any time is at the moment true or false. And the same is true of any less explicit statement which is held on its fair con- struction to amount to this and no more. Such was the result of the case where Lord St. Leonards put the question just cited (o). And in that case the true doctrine was again distinctly affirmed by Lord Cranworth {p). "By what words are you to define whether a party has entered into an engagement as distinct from a contract, but which becomes a contract by another person acting upon it ? Where a man engages to do a particular thing, he must do it ; that is a contract ; but where there are no direct words of contract, the question must be, what has he done ? He has made a contract, or he has not ; in the former case he must fulfil his contract ; in the latter there is nothing that he is bound to fulfil." Again : "There is no middle term, no tertium quid between a representation so made as to be effective for such a pui-pose, and being effective for it, and a contract, they are identical." He proceeded to comment on Hammersley v. Be BieJ, and to express a decided opinion that the language there used by Lord Cottenham was not meant to supp(jrt, and did not support, the notion that words or conduct not amounting to a true contract may create an equitable obligation which has the same effect. " The only distinction I understand is this, that some words which would not amount to a contract in one transaction may possibly be held to do so in another." In the case of Jorden v. Money {q), which 1055-6. 91 K. R. (//) Munnsell v. Hedges (1854) 4 H. I>. C. at p. 1051, 94 R. R. 539 ; cp. 4 H. L. C. p. 1U59, 94 R. R. 544-.5. («) Maunsrll v. Iledyes (Is:,!) \ H. L. C. lu:i9, 94 R. R. 5;jL>. (;;) At pp. 542-3. (jl) (1854) 5 II. L. C. 185, L. J. (!li. 8r,5, 101 R. R. IK), pretly full suiiiniaiy is Lriveu .Stei)lieu J. 5 Kx. D. at ]., :iul. 3 c 754 APPENDIX. came before the House of Lords some months later, it was held, first, that the statement there relied on as binding could not work an estoppel, because it was a statement not of fact but of intention ; secondly, that on the evidence it did not amount to a promise, and therefore could not be binding as a contract. Lord St. Leonards dissented both on the evidence and on the law. His opinion seems on the whole to come to this : " My inference from all the facts is that this statement was a promise ; but if not, I say it is available bj' way of estoppel, for I deny the existence of any nile that eqviit- able estopi^el can be by statement of fact only and not of intention." On this point, however, the opinion of the majority (Lord Cran worth and Lord Brougham) is conclusive (r). A promise de futiu'o cannot be an estoppel (■«). Oases in Ii^ ^ much earlier case of the same class before Lord Eldon (/) Court of the language used is indecisive : "arrangement" and " engage- Lhaiiceij ment" seem preferred to " aja-reement." In two later ones decided Opinion of . ^ . ° . Stuart V.-C. ^y ^^^ John Stuart (»), an informal statement or promise as to a settlement on a daughter's marriage, and an infonnal promise to leave property by will to an attendant as recompense for services, were held to be enforceable. The Vice-Chancellor certainly seems to have adopted the opinion that a " representation" short of con- tract had somehow a binding force. He appears fiu-ther to have held that, inasmuch as these were not properly cases of contract, it was immaterial to consider whether the Statute of Frauds applied to them, and to have thought that the opinion of Lord Cran worth in Jurden v. Money was inconsistent with the decision in Ham- merski/ v. De Biel (f). But these opinions are inconsistent with the (>•) And see Mr. Justice Stephen's a strange and entangled case, no criticism, 5 Ex. D. at p. 30:^. jxiint was made on the Statute of (.v) See per Lord Macnaghten. Frauds. But there it appears to Gfiu.WhitPclnirch.Ld.x.Caranagh liave been established as a fact [lit(i2] A. C. 117, 130. 71 L. .J. that the wife's father represented K. B. 400, and Chadw'ich v. Miinn- to the intemled husband, an ■intj [IIS'JCJ A. C. 231, G5 L. .J. P. C. Englishman, that a certain trust 42, J. C. disposition of Scotch land in the (0 Lydf/s V. Anstcij (171)11) 4 proi)er Scottish form was irre- Ves. .501, 4 R. R. 27t;. vocable. This was, as regards the (m) P/(;?e v. (S'(»«c/// (1859)2 GifiE. person to whom it was made, a 1 ; Loffus V. Maw '(1S()2) 3 Giff. representation of foreign law, and .'51)2 (1862). Ill Lop'n.1 v. JUaw therefore equivalent to a represen- there is a suggestion that the " re- tation of fact. And thus the deci- presentation " affects tlie specitic sion may have been right on the property as an equitable charge. ground of estoppel. But it is far Similar notions occur in some of fi'om easy to discover on what Lord Romilly's judgments. ground it really proceeded. The (x) Lofi'ns v. Maw (18(;2) ?, Giff. case went to the Appeal Court, but at iqi. g63-4. In Frolc v. Soadu, was compri)mised : see L. R. 1 Ch. " REPRESENTATIONS." 755 true meaning and effect of the cases in the House of Lords which have ah-eady been cited : and one of them is now expressly over- ruled (I/). Other judicial expressions are to be found both earlie and later, which in some degree countenance them ; but these have been, without exception, unnecessary for the decision of the cases in which they occurred. It is remarkable that the authoritative explanation of Hammersley v. De Iiiel{z) given in MaunseU v. Hedges (a) was commonly left lumoticed. Coverdale v. Eastivood (1872) (i) was a case of precisely the same Later cases of type as Hamnursleij v. Be Biel. Bacon V.-C. decided it on the same class, ground that the transaction amounted t(j a ccnitract, and so it was expi'essed in the decree. But he also thought that there existed, and was applicable to the case in hand, " this larger principle, that where a man makes a representation to another, in consequence of which that other person contracts engagements, or alters his posi- tion, or is induced to do any other act which either is jiermitted by or sanctioned by the person making the representation, the latter cannot withdraw from the representation, but is bound bj-^ it con- clusively." Later, in Dasliwood v. Jermyn (c) (1879), which was another marriage case, he held that the connexion between the statement relied on as a promise and the marriage alleged to have taken place on the faith of it was not sufficiently made out. He stated the general rule thus: — " If a man makes a i"epresentation on the faith of which another man alters his position, enters into a deed, incurs an obligation, the man making it is bound to perform that representation, no matter what it is, whether it is for present payment or for the continuance of the payment of annuity, or to make a provision by will. That in the eye of a Court of Equity is a contract, an engagement which the man making it is bound to perform." This appears to qualify to some extent the dicta of the same judge in Curerdah v. Eastwoad. Hero we read no longer of two distinct kinds of obligation, by contract and by "representa- tion," but of one kind of obligation, and that a contractual one, arising from the representations made by one party with the intent li.5. The still later case of S/tid- now enough to say that it was more v. Bradford (I8(;9) L. 11. 8 decided by Maliiis V.-C. on the Eq. 134, decided by tlie same judge authority of Lojfiis v. Maiv^ which, was merely a case of contract. if possible, it exceeds in audacity. (//) Loffus V. Maw (18(52) is (,-) (184r.) 12 01. & F. 45, 09 clearly disapproved by Lord Sel- H. 11. 18. borne and Lord O'i lagan in JA(rW/- (c/) (LSot) 4 H. I.. C. lo;50, '.U son V. Alderson (18S:?) 8 App. Ca. 11. K. 532. at pp. 473, 483. Cf. (hli-^ v. l>Uh- {jr) L. 11. 15 K,|. 121. 42 L. J. ingtoii (1874) L. II. 1!) Eq. 174, see Ch. 118. at p. 178, 44 L. J. Ch. 381 ; it is (c) (187;)) 12 Cli. I). 77(;. 3 C 2 IK Ibij APPENDIX. Cases of collateral '• represen- tations" in- ducing contracts. that they should be acted upon, and the conduct of the other who does act upon them. If the learned judge thought that the same fact might amount to a contract in equity and not at law, he was clearly mistaken- In Aldersun v. Muddison (1880) {d) there was an agree- ment to leave property by will as a reward for services. Here Stephen J. set forth the view that it must be a contract or nothing ; and he held that a contract was proved by the facts of the case. The decision was reversed hx the Coiut of Appeal on the ground that, the case being within the Statute of Frauds, there was no sufficient part performance : and the same view was taken by the House of Lords. No encoiu'agement whatever, to say the least, was given to the doctrine of " representation." Finally, in Ee Fichus (e), where a faint attempt was made to revive it, Cozens-Hardy J. summarily dis- posed of it with a reference to the decisions in the House of Lords. So far the authorities as to direct enforcement of " representa- tions." We do not count among them Piyijott v. Stratton (/), decided by the Coiu't of Appeal in 1859, in which Lord Campbell incident- ally took a minimizing view of the effect of Jordtn v. Money {;/). That case, so far as it did not proceed on express covenant, was one of equitable estoppel. Mills v. Fox (1887) (A) was also decided expressly on the ground of estoppel by representation of fact. The representation was not of intention at all, but that a certain state of facts with its legal consequences existed and would continue to exist. But another class of decisions now calls for mention. These lay down , or seem t(j lay down, a rule to the effect that where a contract has been entered into upon the representations of one party that he will do something material to the other party's interest under it, and he does not make good that representation, he cannot enforce specific performance of the contract : and in one case the contract has even been set aside at the suit of the party misled. It is difficult in these cases to see why the so-called representation does not amount to a collateral agreement, or even to a tenn in the principal contract itself. In the first set of cases, where specific performance was refused, a vendor or lessor had represented that he would do some- thing for the pui'chaser's or lessee's benefit, either in the way of repair* or improvement on the property itself (i), or by executing Qd) 5 Ex. D. 293. 7 Q. B. Div. 174. 8 App. Ca 4C7, 50 L. J. Q. B. 4G(;. (0 [1900] 1 Ch. 331, 334, C9 L. J. Ch. 161. (/) 1 D. F.J. 33, 29 L.J. Ch. 1. {g) At p. 51. But Lord Selborne seems to adopt the opinion of Lord Cranworth to its full extent in Citizens' Bank of Louisiana v. First National Banli of JVew Orleans (1873) L. R. 6 H. L. at p. 360, 43 L. J. Ch. 269. (//) 37 Ch. D. 153. 57 L. J. Ch. 56. (0 Laiiiarey. Dixon (1873) L. R. 6 H. L. 114. 43 L. J. Ch. 2U3. " REPRESENTATIONS." 757 works on adjoining property as part of a general plan (A-). In these cases it has been thought immaterial, since the remedy of specific performance is " not matter of absolute right," to consider whether the collateral " independent engagement" could or could not have been sued on as a contract or warranty {I). In the one case which goes farther the contract was a partial re-insurance effected by one insurance society (A.) with another (B.) for one- third of the original risk, the secretary of society A, stating, when he proposed the re- insurance, that one-third was to be re-insured in like manner with another office C, and the remaining one-third retained by A., the first insurers. This last one-third was afterwards re-insured by A. with C. withovit communication with B. It was held that society B. was entitled to set aside the policy of re-insurance given by it on the faith that society A. would retain part of the liability And it was said to make no difference that such an intention was really entertained at the time: for the change of intention ought to have been commimicated. " If a person makes a representation by which he iuduces another to take a particular course, and the circumstances are afterwards altered to the knowledge of the party making the representation, but not to the knowledge of the party to whom the representation is made, and are so altered that the alteration of the circumstances may affect the course of conduct which may be pui'sued by the paity to whom the representation is made, it is the imperative duty of the party who has made the representation to communicate to the party to whom the represen- tation has been made the alteration of those circumstances " (?n). This case, decided by the Lords Justices in 1864, is that whicb gives rise to most difficulty. No reason appears why the retaining of the specified part of the risk by the re-insimng office should not have been deemed a term or condition of the contract («). Indeed it seems to have been an integral part of the proposal, and evidence was offered that by the constant usage of insurance offices it was so understood. The judgments, however, certainly do not proceed on that footing. Possibly it might be said that the representation in this case, being of something to be done not in a more or less distant future, but at the same time with and as part of the proposed trans- action, was in the nature of a representation of fact. It might be (//) Jimnwont v. Bulip^ (1822) (?«) TraiU v. BarvHi (18(;4) i Jac. 122. 23 R. 11. 110 : Mi/ers v. D. J. S. 818, 32!t, per Turner L.J. Watxon (1851) 1 Him. N. S. 523, 8!) api>rovetfixh K. K. 173. Prtrolrum (<>. (1883) 23 Ch. Div. (0 Lord Craiiwortli, 1 Sim. N. S. nt p. 438. 52!); Lord Cairns, L. \i. tl II. L. (//) (^\^. narnardw. Fahcr[\^'i^ 428. 1 (^. B. 340, ()2 L. J. Q. C. 15!t, C. A, 758 APPENDIX. put thus : "We are re-insuring one-third with C. ; one-third of the risk we keeji ; will you, B., take the other third ? " And thus put, it might be regarded as an alternative case of contract or estoppel, in which (for some reason not evident from the report) the Court preferred the less simple course. In the other cases it is by no means clear that the existence of a true collateral agreement or warranty is excluded ; in at least one similar case (o) the question is treated as one of agreement entirely. In Lamare v. Dixon (p), which came before the House of Lords in 1873, the principal agreement was for a lease of cellars to be used as wine vaults. During the negotiations the lessor assured the lessee either that he had already taken, or that he would forthwith take, sufficient measures to keep the cellars dry and fit for a wine merchant's use. It seems most natural to regard this as a warranty : still, so far as it related to anything already done, it might be regarded as a positive statement of fact. ' ' You will find the cellars dry," or any speech to that effect, might mean either: "I under- take to make the cellars dry," or " That has been done which is known by competent experience to be suflBcient to ensure diyness." The line between warranty and estoppel is here a fine one, and perhaps not worth drawing, but still it is possible to draw it: and when Lord Cairns said ' ' I quite agree that this representation is not a guarantie," he may have meant that he preferred to regard it as a statement of fact operative by way of estoppel. There certainly does run through these cases, however, the idea that specific perfoi-mance is so far a discretionary remedy that it may be refused to a party seeking it on grounds which do not affect his legal rights under the contract. But it seems a tenable position that equity judges have taken a needlessly narrow view of what is a binding agreement on the principles of the common law (7). In fact agreements collateral to leases, and not in writing, have of late years been enforced without doubt (r). In all these cases the facts appear undistin- guishable in their character from those which were treated in the (rO rrncoch v. Poison (18-18) 11 L. R. 6 Ex. 70, -10 L. J. Ex. -16 ; Beav. 35o, 83 R. R. 193. Er.sMne v. Adeane (1873) L. R. 8 ())) L. R. 6 H. L. 414. 43 L. J. Ch. 756, 42 L. J. Ch. 835 ; Angell Cli. 203. V. Dnhe (1875) L. R. 10 Q. B. 174, {q) It would be curious to know 44 L. J. Q. B. 78 ; De Lassnlle v. in what proportion of cases under Guildford [1901] 2 K. B. 215. 70 the old practice a party left by the I>. J. K. B. 533, C. A. (warranty of Court of Chancery, as the phrase drains being in good order). The was, to make what he could of it ground taken as to the Statute of at law. derived substantial or any Frauds is that the collateral agree- piofit from 1 hat liberty. mentis not a •• contract or sale (;•) Monjaii v. Gr'itfith (1871) of lands," ko,. : the effect of the " INOFFICIOUS " GIFTS AND CAPTATION. 759 Court of Chancery as establishing a right to relief on the ground of ' ' rejiresentation ." There remains a class of cases in equity in which it has been held Cases where that a statement made to a person intended to act upon it by one '^ ° reprc- sentation. who knows it to be false, or is recklessly ignorant whether it is trvie gives as or false, may create in the person who acts on it to his injury a wrong, a sub- substantive right to compensation. Here the statement is a wrons?, ^'i^^^iy^ right 01 ICLlOll and the remedy is precisely analogous to, and before the Judicatm-e Acts was concurrent with, that which was given at law by the action of deceit, or action on the case in the nature of an action of deceit (s). It is worth remark that not unfrcquently a difficulty occurs in drawing the line between contract or warranty and fraud, as we have already seen that there does between contract and estoppel. "Most of the cases . . . when looked at, if they do not absolutely amount to contract, come uncommonlj' near it. ... If you choose to say, and say without inquiry, ' I warrant that,' that is a contract. If you say, ' I know it,' and if you say that in order to save the trouble of inquiring, that is a false representation — you are saying what is false to induce them to act upon it " {t). Thus cases are possible, as has been mentioned in the text, in which the legal effect of the facts may equally be considered as warranty, estoppel, or duty ex delicto. And since equity judges, dealing with facts and law together, were not bound to distinguish with precision, and often did not distinguish, on which of two or more possible grounds they rested their decisions, it is not surprising that a good deal of ambiguity has gathered round the subjects discussed in this note. Note K. (p. ()62). French law on " iiiofficioiis " (ji/ts (Uid captutidi/. French jurisprudence has sometimes been cited in our Courts jTi-end, as affording useful analogies in cases where it was sought to set authorifies aside gifts on the ground of undue influence, esjieciaUy spii-itual '^^^'foi'e Kevo- influence. (OEuvres d'Aguesseau, 1. 28-4, 5. 514, ed. 1819; Lyonv, Home, L. E. 6 Eq. 571.) Without denying the instructiveness of Statute being as it were exhausted the Law of Torts. by the principal contract ; with (0 Ivord BlacJcburn in liniwiilic which the collateral one must of v. (^anijjhrll (1(S80) (Sc.) ") App, course be consistent. t'a. at p. 1)52 : the whole passage (.v) See for details the section on shouM l)c studie.l. Deceit in Chap. viii. of my work on TOO APPENDIX. the comparison, it may be pointed out that these French cases pro- ceeded on rather different grounds. Charitable bequests in general were unfavourably looked on as being " inofficious " towards the natural successors. This principle is strongly brought out by D'Aguesseau in the case of the Relilo, 575. COPYRIGHT : assignments of, 172. in seditious and immoial imblicaf ions, not iirotecleil, 326. 774 INDEX. COEPOEATION : appointments to offices by, must be under seal, 159, 160. agent, corporation can only act by, 122. this rule does not apply to deliberative acts and resolutions, 122. corporation liable ex delicto for acts of, 124. artificial person, treatment of corporation as, 117, 118. capacitJ^ limitation of, by positive rules, 126. charter, corporation created by, common law powers of, 127. common law has no theory of, 119. contract, executed, liability of corporation on, 160, 161. implied, 163. statutory forms of, 162. summary of law as to, 163. corjioration sole : Crown said to be a, 120. ecclesiastical benefice, holder of, is a, 120 Pope not a, 120. crime, corporation cannot commit, 124. debentures, transferable, of, 135, 237, 238. whether holder of, takes free from equities, 237, 238. deceit, liability of corporation for, 125. estoppel, doctrine of, applicable to, 138. executed contracts, right of corporation to sue on, though not originally bound, 160, 161. form of corporate contracts, summary of law as to, 163, fraud, liability for, 124, 610, 611. indictable for a nuisance, 124. legal corporate existence, necessary marks of, 119. libel, corporation may sue for, 123. malicious prosecution, corporation liable for, 123, n. members, existing, consequences of the distinction of corpora- tion from, 126. members, unanimity of, 130. money received, action for, lies against, 162. municipal contracts of, 159. negligence, corporation liable for, 123. negotial)le instruments, when corporation bound by, 135. 137. may now be under seal, 135. nuisance, corporation may be indicted for, 124. officer, power of, to bind corporation by apparently regular acts, 737, 788. official sanction matter of procedure and convenience, 119, 120. part performance, equitable doctrine of. applicable to, 138. penalties imposed bv statute regulating particular business, liability for, 124. ' personal liabilities, corporation cannot incur strictly, 125. INDEX. 775 CO'RVOB.ATION— confirmed. ■ powers, limited, of statutory corporation, 127. must not be used to defeat purposes of incorporation, 131. of, modern authorities on. Note D., 735. public, interests of, as investors, 133. ratification of irregular transaction by assent of all members, 740. rogue and vagabond, corporation not punishable as, 121, n. Roman law, would not allow formation of, without authority, 120. seal, corporate, contracts formerly required to be under, 153. improper use of, 138. requirement of, a mere positive rule of Eng- lish law, 121. trading contracts, exception «f, 150. transferable debentures under, negotiable, 135, 237, 238, whether equivalent to signature in bills and notes, 135, 243. shareholders, dissenting, rights of, to restrain acts of govern- ing body, 730. statutory, acts of, void outside of statutory powers, 120 — 128, 131, 132. trespass, liability of corporation for, 124. And see Company. CORRESPONDENCE : authorities on. Note B., 724. complete by posting acceptance, 35 — 38. contract by, 80, sqq. COSTS : agreement with client as to, 716. fraud, unfounded charges of, visited with, 582, 033, 034, Solicitors' Remuneration Act as (o, 710. And see SOLICITOR, COUNSEL. See Barulster, COVENANT : power, covenant to exercise by will, whether good, 308, w. real property, relating to, person not party may take benefit of, 222. restrictive, how enforced in equity, 254 — 250. when covenants run with land, 218. .s^/y. CREDITORS : agreomoiits in fraud of, 293. i 776 INDEX. CROWN : said to be a corporation sole, 120. CUSTODY OF CHILDREN : agreements as to, how far valid, 3G2, 412,413. CUSTODY OF INFANTS ACT, 1873 : 3G4. CUSTOM : London, custom of : as to infant apprentice, 77. as to married women trading alone, 8G. modern, may add to the law merchant, 241. of country or trade, terms added to contract liy, 2G7. some contracts of hifants binding by, 77. DAMAGES : distinguished from penalty, 540. DEATH : civil, 8G, n. of principal revocation of agonfs nulhority l)y. bH. revocation of proposal l>y, 41. DEBENTURES : company's seal, under, negotiable, 13."), 237, 238. negotiable instruments, now recognized as, 213. transferable, form of, 238. whether holder takes free from ecpiities, 237, 238. DEBT : .action of, 144, 145. consideration in, 178, 179. trial by battle in, 142. assignment of, 232. not enforced in crpiify where delifoi's burden increased, 229, 230. notice to debtor, 210, 231, 232. DECEIT, ACTION OF : former equity practice analogous to, 759. may lie against corporation, 125. what is ground for, 593. DEED : action on, is on deed itself, not on promise, 113, 144. agent, principal not liable on deed of, 101. cannot l)c written on wood, 150. executed in error as to its contents, not binding, 488. favour of wrong part}', whether void, 497. INDEX. 777 DEE D — conthmed. Frauds, Statute of, docs not apply to, 171. medieval, in Eugland, of Norman origin, 143. promises made by, peculiarity of, 7, 52. , DEPOSIT : recovery of. See JVIoney Paid. DETINUE : action of, 144. DIRECTOES : how far third persons are bound to know whether particular acts are authorized, 737. of public companies, extent of their authority presumed to be known, 129. statements of, when company bound by, Gil. Aiid see Company. DISCLOSUEE : no general positive duty of, 559. but duty implied in special cases, 559, 500. DISENTAILING DEED : may be rectified by the Court, 552. DOCTOE AND STUDENT : "consideration" in, 182. DOMICIL : effect of law of, on validity of marriage, 305. DRUNKENNESS : contract of drunken man voidable, not void, 97, 98. effect of, on capacity of contracting, same as of insanity, 54, 95. DUEESS : recovery of money paid under compulsion, G38. threats, when it consists in, the threat must be of something unlawful, 037. what is, at common law, 030. EASEMENTS : new kinds cannot be created, 253. ECCLESIASTICAL LAW : influence of, on legal view of morality , 310, 317. ELECTION : to adopt agreement void for mistake, 528. to affirm or avoid contract where misrepresenfation, 010. how election .shown, 017, to avoid contract made in infancy, 02, 03. to charge principal or agent, 109. ELECTION I'ETTTTON : compromise of, 317. 778 INDEX. "ENGAGEMENT." See Separate Estate. EQUITY : acquiescence, estoppel by, 698, 699. loss of remedies by, 630. agent's contract, undisclosed principal must take subject to equities, 107. assignment of contract in, 229, sqq. assignee may sue, 229. takes subject to equities, 234. unless rule excluded by special agreement, 236, 237. assignment which increases debtor's burden not enforced, 229, 230. notice to debtor required, 231, 232. auction, sales by, former difference between law and equity, 595, 596. award, whether .stranger bound by, 215. cancellation of instruments, jurisdiction of equity as to, 634. " catching bargains," rules as to, 667, 668. children, custody of, rules of equity as to, 363, 364. consideration, good, what is, in equity, 205, 206. copyright, of seditious or immoral publications, equity will not protect, 326. covenants running with land, doctrine of equity as to, 254. deceit, suits analogous to actions of, in equity, 594, n. doctrine of, as to unlawful agreements where parties not in pari delicto, 403. " equality " between contracting parties, 659, 660. estoppel by acquiescence or representation, 698, 699, 701, 702. evidence, parol, equity does not admit on questions of con- struction, 261. expectant heirs, special protection of, 663. fraud, contracts voidable on ground of, 465, sqq. gifts, imperfect, treatment of, in equity, 206. infant : liability in equity on false representation of full nge, 79. marriage settlement, treatment of, 61. infant's contract, no specific performance of, 62, 65. lunatic, equity adopts rule of law as to acts of, 97, n. " making representations good," supposed former doctrine of, 558. mistake, payment made liy, recovery back, agreement with law, 485. purchase of party's own property by, 522. restricted construction of gener.nl wonls, 533. I .INDEX. 779 EQUITY— continued. negotiable instruments, equity agrees with common law as to, 242. equity restrains negotiation in cases of fraud, 242. obligations, equitable, treatment of, at common law, 720. part performance in equity, 697. penalties, relief against in, 539. purchase for value without notice, rule of equity as to, 470 — • 471. equity will not deprive purchaser of anything lie has already got, 472, n. rectification of instruments in. 543, srjq. representation, estoppel by, 701, 702. sales of land, where parcels included by mistake, decisions in equity, 505. specific performance and compensation on sales of land, 572, sqq. refusal of, on ground of undervalue, fiGl. surety, agreement between law and equity as to creditor's duty to, 570. third persons, right of, to enforce contract in equity, 224. time, when of essence of contract in, 536. undue influence, equitable doctrine of, 640, sqq. voluntary covenants, treatment of, in, 205. settlements generally, 645, 646. how set aside, 645 — 647. ESCROW : writing delivered as, 262, 263. ESTOPPEL : acquiescence, estoppel by, 698, 699. agent, one party acting as, to other party in preparing instru- ment concerning both, 548. corporations bound by, 138. misrepresentation, estoppel of party who has induced funda- mental error by, 526. negligence, estoppel by, whether applicable to deeds, 490, n. of holder of instrument dealing with it as negotia))le, 244. representation, estoppel by, 701, 702. statements binding by way of, 556. EVIDENCE : extrinsic, always admissible to show illegality of agreement, 393. -subsequent, conduct (if iiartics may be evidence of original unlawful intent iun. .■{id. 780 INDEX. EVIDENCE— con//H?ieStatute of). FRAUD AND MISREPRESENTATION : acquiescence, passive, iu self-deception of other party is not fraud, 515. agent, liability of corporation for fraud of, 121, filil, till, auction, sales by, special doctrine as to, 595. company, contract to take shares in ; misstatements ia pros- pectus, 585 — 587. provisions of the Com- panies Act, 1908... 587 concealment, fraudulent, what is, 592. consideration, inadequate, as evidence of fraud, 188, 057, 658. " constructive fraud," what is, 555. contract incidental to a fraud is itself fraudulent, fi07. corporation, liability for fraud of agent, 610, 611. costs, unfounded charges of fraud visited with, 582, 633, 631. creditors, fraud on, in compositions, 293. error, fundamentah produced by misrepresentation, ell'ect of, 512, sqq. estoppel, relation of fraud to, 556. false representation : when an actionable wrong. 559. falsehood, when silence equivalent to, 592, 595. family settlements, misrepresentation in, 581. generally, 551, srjq. gifts, voluntary, 589. goods, delivery to wrong person obtained by fraud, 626, 627. insurance, special rules as to misrepresentation in contracts of, 564, srjq. knowledge, means of, of party misled, 603, nqq. land, sales of ; contract voidable for misdescription, 571. rules of equity as to performance witii com- pensation, 572. vendor's duty to dcscriite property correctly, 578. marriage, not avoided by fraud, 588, 596. 782 INDEX. FRAUD AND MISREPRESENTATION— co7^^i««erf. misrepresentation, non-fraudulent, when affecting validity of contract, 556, 559. how fraud distinguished from, 590. mistake distinguished from fraud, 464, 465. negligent ignorance, equivalent to fraud, 594. non-disclosure, misrepresentation distinguished from, 559. partnership, contract of, misrepresentation in negotiation of, 584, 585. reckless assertions, 594. representation, fraudulent, what is, 593. rights of party misled, 615. settlements in fraud of marital right, 303. silence, when equivalent to falsehood, 593, 595. suretyship : misrepresentation avoids contract, 567. third person, consent of, obtained by fraud, 597. fraud on, makes agreement void, 292, 296. warranty, relation of fraud to, 557. Ajid see Rescission. FRAUDS. STATUTE OF : as to agreements not to be performed within a year, 168, 692. contracts by advertisement not exempt from, 25. deeds, whether statute applicable to, 171. effect of, where writing does not represent the real agree- ment, 542, 543. executor, special promise by, 164. guaranties, 165. informal agreements within s. 4, ettect of, 694, nqq. not void, 692. laud, interests in, contracts as to, 167. leases, 167. marriage, agreements in consideration of, 166. note or memorandum, 169. effect of note signed by one party only, 170. memorandum must exist at time of action brought, 171. I^art performance, equitable doctrine of, relation of statute to, 655. sale of goods, 169. settlement, ante-nuptial agreement for, confirmed by post- nuptial writing, 699. trust, assignment of, 230. FRAUDULENT PREFERENCE : agreements with particular credi- tors by way of, 29.3 — 295. FRIENDLY SOCIETY : statutory reference to arbitration of dis- putes with members, 319. INDEX. 783 GAMING : securities for money won lit, 315. treatment of gaming debts contracted abroad and not unlawful by local law, 410—412. A7id see Wages. GAVELKIND : conveyance by infant tenant in, 77. GENEEAL WOEDS : restrained by context or by intention appear- ing from external evidence, 533. GEEMANIC LAW : proof in, 143. GIFT : acceptance of, as loan, ctfect of, 494. from client to solicitor, how far valid, 649, 680. imperfect, not aided in equity, 206. And see Undue Influence. GOODS : contract cannot run with, 247. delivery of, order for, may be assignable free from equities, but cannot be negotiable, 243, n. to wrong person by mistake or fraud does not pass property, 626, 627. And see Sale of Goods. GUAEANTY : voidable for misrepresentation or dissimulation to surety, 567, 568. within Statute of Frauds, 165. IIOESES : sale of, in market overt, 172, 173. HUSBAND AND WIFE : doctrine of undue infiuencc does not apply to, 613. And see Married Woman ; Separate Estate ; Separa- tion Deed ; Custody of Cuildren. IGNOEANCE : does not in general exclude civil liability, 167, 468. of law, may be material as excluding specilic unlawful inten- tion, 396, 415. but is generally no defence to action in contract, 479. reckless or negligent, carries responsibilities of knowledge, 594. where it is a condition of acquiring rights, 470. See also Mistake. 784 INDEX. IGNOIiANTlA IVRIS : muaniug uf, explaiued by Lurd Wustbury, 523. IMMORAL AGREEMENTS : agreement immoral iuri' (leutium cauuot be justified by any local law, 407. void ; what are such, and what is immoral consideration. 316, 317. And see Unlawful Agreejip:nts. IMMORAL PUBLICATIONS : punishable by criminal law, and therefore no ground of civil rights, 326. IMPOSSIBLE AGREEMENTS : accidents not contemplated _by contract, exception of, 435, sqq. subsequent to contract, effect of : analogy of contract to pay rent, where premises destroyed by fire, 482. agreement impossible in itself void, 420. law void, 425. but impossibility by law excuses promisor, 426. impossibility at date of, from state of things not contemplated by parties, 442. in fact : no excuse in absolute con- tract, 428. alternative conditions in bonds, where one impossible, 461. contracts, where one thing is or becomes impossible, 455. bond, where condition impossible, obligation is absolute, 459, 460. otherwise where condition subsequently becomes impos- sible, 460. cargo lost at date of contract, sale of, 443. commercial contracts, express exceptions in, 445. conditional contracts where the condition is or becomes impos- sible, 456, 457. default of promisee discharges promisor, 452, 453. promisor, impossibilitj' by. equivalent to breach of contract, 452. destruction of subject-matter without fault on either side, 437. foreign law, impossibility by, no excuse, 431. Indian Contract Act on impossible agreements, 462. law as to, general statement of, 419, 420. marriage, contract of, anomalous treatment of, 449. mining leases, covenants in. r instruction of, 444. performance depending on existence of specific thing, 437. life or health of promisor : implied condition that life or health shall continue. 446. INDEX. 785 IMPOSSIBLE AGREEMENTS— contitmed. performauce, meaus of, promisor not having, is not impossi- bility, 422. " practical impossibility " not equivalent to actual impossi- bility, 422. relative impossibility, 424. repugnant promises, 423. warranty of contingent acts or events, 424. INDIAN CONTRACT ACT : acceptance must be unqualified under, 42. performance of condition as, !">. agent, knowledge of, as knowledge of principal, 102, n. consideration, inadequacy of, 660. discharge of contracts, 200, n. impossible agreements, 462. insanity as ground for revocation under, 42. penalty and liquidated damages, distinction between, abolished by, 540, 71. quasi-contracts dealt with separately in, 14. restraint of trade, 383. sales by auction, employment of pufl'er at, 596. time, when of essence of contract, 537. wagers void under, 329, 7i. INFANT : account stated, liability on, 62. age, representation as to, 79, 81, 82. apprenticeship, contract of, 69, 77. by custom of London, 77. bankrupt, infant cannot be made in absence of false repre- sentatiou as to age, 82. building society, infant may be member of, 67. but may not borrow money from society on mortgage, 67. cannot claim to hold land purchased with society's money free from charge for money advanced, 69. contract, avoidance of, time for, 62. beneficial, 69. generally cannot bind himself by, 56. implied in law, 79. of service, 58, 69, 70, 77. of, voidable at common law : no anihorily for holdinj^ it in any case void, 58. custody or education of, agreements between parents as to, 362, custom, what contracts infant can make Iiy, 77. P. 3 E 7 80 INDEX. mF AlsT—cotiiinued. equity, liable in, for rei^reseuting himself as of full age, 79. but not to prejudice of subsequent valid con- tract, 82. false representations, liability for, 57, 79, 82. larceny by, as bailee, 66. leases by, good if beneficial, 59. granted under statute, 77. to, voidable, G9. loans to, 57. marriage of, 61. .settlements, 61, 76, 77. mistake, common, avoiding agreement, 518, 519. money paid under avoided contract, recovery of, 63. necessaries, liability for, 57, 71. liability in simple contract only, 76. deed given to secure repayment of money advanced for, 76, 77. negotiable instrument given for, 76. what are, 72, 75. negotiable instruments, 62, 76. partnership, 60. promise to marry, 61. property, obligations incident to. liability on, 67. sale of goods to, 57. or purchase of land, 60, 77. service, contract of, 58, 69, 70, 77. shareholder, liability for calls on shares, 60, 68. specific performance, infant cannot have, 62, 65. statute, what contracts infants can make by, 77. trading contracts, 58. wrong, liability for, when connected with contract, 78. INFANTS' RELIEF ACT, 1871 : effect of section 1...66. since the Act, of affirming agreement voidable at common law, 716. makes certain agreements of infants void, 63. exception of contracts for necessaries, 67. ratification not wholly inoperative under, 63. INSANITY. See Lunatic. INSTALMENTS : default in delivery or payment of, 280, sqq. INSURANCE : contract of, liberally construed in favour of true intention, 518. INDEX. 787 INSURANCE (FIRE) : contract of insurers to reinstate is unconditional after election made, 429. effect of, as between landlord and tenant, 432. implies condition that property is correctly described, 566, 567. INSURANCE (LIFE) : duty of disclosure by assured, 565. recovery of premiums where policy void for want of insur- able interest, 398. INSURANCE (MARINE) : Marine Insurance Act, 1906... 173. misrepresentation or non-disclosure, material, renders policy voidable, 564. policy, common form, result of series of decisions and of longi recognized customs, 272. delivery of, by underwriters, 705. insurance must be expressed in, 173. stamped, required by statute, 702, 703. seamen's wages not insurable at common law, 365. " slip " recognized for collateral purjioses, 703, 704. rights of parties determined at date of, 704, 705. voyage illegal to knowledge of owner : insurance void, 389. INTERPRETATION : ambiguous terms construed by conduct of parties, 477. general intention prevails over particular terms, 268, 273. mutual promises : interpretation as regards order of per- formance, 275, 276. necessity of, 257. of contracts, rules for, 45. promise in general, 258. terms used in special sense, 264. KNOWLEDGE : how far material on question of unlawfulness of agreement, 416. means of, as affecting right to rescind contrnot for misrepre- sentation, 603. LAND : Frauds, Statute of, as to sale of interest in, 167. what covenants run with, 248, nqi^. And xee Salk op Land. 3 E — 2 788 INDEX. LANDLORD AND TENANT : covenant, no action on, where premises leased for unlawful purpose, 368. covenants running with tenancy on reversion, 248, 249. fire, premises destroyed by, 432. Frauds, Statute of, as to lease, 1(37, 168. infant, lease of, at common law, voidable, 59. statutory powers to make and renew leases, 77. lease for lives, effect of contract for sale of, 524. Frauds, Statute of, as to, 167, 168. of premises for unlawful purpose, no action on cove- nants, 388. lessor not bound to inform of state of premises, 583. possession, whether lessor can resume, on discovering unlawful purpose of lessee, 389. he may rescind contract where possession has not been delivered, semhle, 389. rent payable though premises accidentally destroyed, 432. rescission of contract for lease where possession not actually delivered, 389. LAW MERCHANT : not invariable, 243. peculiarities of, as to negotiable instruments, 241. LEASE. See Landlord and Texant. LEASEHOLDS : non-disclosure of restrictive covenants on sales of, 571. sale of as freehold, voidal)le, 575. LETTER : contract by, 35, sqq. LEX LOCI. See Confuot of Lawp. LICENSED PREMISES : effect of omission to paint seller'.s name on, 312. LICENSING ACTS : attempts to evade, 311. LII\nTATION, STATUTES OF : acknowledgment of bai-red debts, 190, 686. operates as new promise under statute of James I., 686. otherwise if specialty debt under statute of Will. IV., 687, 688. 2'cvives right of action, 686. applied according to lee fori not le.e contractus, 688. INDEX. 789 LIMITATION, STATUTES OF— covtiiined. debts not extinguished, 684. executor may pay barred debt of testator, 685. married woman, promise or acknowledgment by, cannot revive barred debt, 85. ■statute applies to claims against separate estate, 734. payment by debtor without particular directions : appropria- tion to satisfy barred debt, 685. Keal Property Limitation Act bars right as well as remedy, 688. set-off, barred debt cannot be, 685. but statute must be pleaded in reply to defence of, fiSO, n. specialty debt, acknowledgment of, under 3 & 4 Will. IV. must be founded on original obligation alone, 688. LIQUIDATED DAMAGES : distinguished from penalty, 510. LONDON : custom of, as to infant apprentice, 77. as to married women trading alone, 8(5. LUNATIC : champerty, rules as to, proceedings in lunacy nut within, 361. contracts in lucid intervals good, 95. of, in general voidable, not void, 97 — 99. knowledge of other [tarty to contract, 97. prior to lunacy, 97. delusions, partial, compatible with capacity for contracting, 99. equity, adopts rule of law as to acts of, 97, n. marriage of, void, 95. necessaries, liability for, 96. partner : ground for dissolution only, 99. revocation of contract by insanity, 42. MAINTENANCE : definition of, 351. equitable assignment, attempt to u[>pose un ground of, 2L'9. includes champerty, 351. kinship or affinity will justify, 362. shares, purchase of, in order to sue company at one's own risk is not, 358. statute of Hen. 8 against buying pretended titles, 3.")8. what dealings are within the statute, 359. unlawful intention esstMitial (o, 361. what amounts to, 353, 351, 361. 790 INDEX. MAJORITY : abuse of corporate jjowers by, 737. MALUM PROHIBITUM and malum^ in se, 307, 326, MARITAL RIGHT : settlements in fraud of, 303. MARKET : market overt, sale of horses in, 172, 173. MARRIAGE : agreements in consideration of, 166, 221. conditions in restraint of, 367, 368. contract to marry not uberrima; fidei, 588. to procure for reward void, 366. domicil, effect of law of, on validity of, 305. fraud, marriage not avoided by, 588, 596. illness unfitting for, does not avoid contract to marry, 449. infants, of, 61. promise of marriage, infant may sue but is not liable on, 61. informal agreements in consideration of, how far made valid by post-nuptial settlement, 699. invalid by law of party's domicil, whether valid in England', 305. lunatics, marriage of, void, 95. l)olygamous, not recognized by English Divorce Court, 407, 408. prohibited degrees, marriage within, void, 304. promise to marry, whether rescinded by illness unfitting party for marriage, 449. by married man, after wife's death, void, if fact known to promisee, 305. restraint of, agreements in, 366. conditions in, 367, 368. Royal Marriage Act, 305, n. settlement in fraud of marital right, 303. not affected by wife's non-disclosure of previous misconduct, 588. post-nuptial, 699. MARRIED WOMAN : chose in action, acquisition of, 81. contract by, void at common law, 83. debt, barred, renewed promise by married woman cannot re- vive, 85. debts, ante-nuptial, husband's liability for, 95. equitable enforcement of contracts in cases not within Act, 94. estoppel, interests of married women may be bound by, 702. INDEX. 791 MARRIED WOMA:t^~con/i>n/f'd. incapacity, exceptions to : contracts with husband as to separa- tion, 87. Queen Consort, 85. trader, custom of London, 86. effect of Act of 1882 thereon, 87, n. wife of alien not resident in United Kingdom, 86. person civilly dead, 85. statutory exceptions, 88, ,^(/q. Married Women's Property Act, 1882... 90, sqq. restraint on anticipation, 93, 91. sejjarate estate, equitable doctrine of, 89. property, contract made as to, binds after-acquired property, 92. is liable for ante-nuptial debts. 92. married woman may contract and be made bankrupt in respect of, 91. what is, by Act of 1882... 90. settlement of, in fraud of marital right, 303. And see Separate Estate. MASTER AND SERVANT : exclusive service, contract for, nnist be mutual, 383. infant's contract of service, 58, 69, 77. life, contract to serve for, good, if mutual, 383. wrongful dismissal of servant discharges both service and re- strictive agreement against future competition, 278. MAXIMS : expressio unius est exclusio alterius, 532. ignorantia iuris hand excusat, 523. in pari delicto potior est condioio defendeutis, 397. locus regit actum, 414. uon videutur ciui errant conseutire, 4GG. nulla voluntas errantis est, 472. ut res magis valeat quam percat, 114. MEDICAL PRACTITIONERS : conditions precedent to recovering charges, 711. Medical Act, regulations of, as to right of remuneration, 710, presumption of influence in gifts, &c., from patients, 654. MINES : construction of unqualified covenants to work, 444. MISREPRESENTATION. See Fhauu aku :\f I!i. error as to nature and objects of company, 509. specific performance, mistake in expression of contract a bar to, 541. wills, mistake in, 552, 751. MONBY-LENDEES ACT, 1900... 673. grounds of relief against contract with registered money- lender, 673. unregistered money-lender cannot recover, 673. MONEY PAID : bankruptcy, money paid to trustee in, under mistake of law, 484, 485. compulsion, money paid under, recoverable, 638. deposit, money paid as, on purchase of land, when recoverable, 578, 624. infant, money paid by, umler voidable contract, 63. iuformal agreement within sect. 4 of Statute of Frauds, money paid under, not recoverable, 691. lease, premium paid for, when recoverable by lessee, (525. mistake, money paid by, when recoverable back, 483. premiums on life policy, recovery where insurance void for want of interest, 398. Tippling Act, money paid for dol>ts within, not recoverable, 717. unlawful agreement, money paid under, when it can be re- covered back, 397, sqq. wrong person, payment to, 174. 794 INDEX. MONEY RECEIVED : action for, lies against coi'ijoratiou, 162. MORTGAGE : the Court will treat nominal sale as, if such is true inten- tion, 539. treatment of, iu equity, 5.38, 539. NECESSARIES : definition of, iu Sale of Goods Act, 1893. ..71!. infant, apparent means of buyer not material, 71. liability for, 71, sqq. is on simple contract only, 76. sujjply from other sources, 73. what are, confined to goods, 75, 76. question of mixed fact and law, 72. lunatic, lialdlity for, 96. NEGLIGENCE : agent must not profit by his own, 302. of, corporation answerable for as well as natural person, 123. estoppel by, extent of, 490, n. misrepresentation, negligence does not exclude right to rescind for, 593. NEGOTIABLE INSTRUMENT : agent, acceptance by : principal bound though not in prin- cipal's name, 104. bonds, foreign government, treated as negotiable by English law, 244. corporation, when bound by, 135, 137. debentures are, 243. estoppel, negotiability by, 244. how instruments cease to be negotiable, 244, 245. indorsement, forged, holder cannot make title through, 472. in error as to nature of instrument not binding, 489—491. infants', voidal)lc, 62. must be in writing, 163, 164. OiEce, bills or notes may be payable to holder of, 228. peculiar qualities of, 241. promissory note given for wager, treated as without considera- tion, 314. scrip, foreign government, issued in England, is, 244. seal of corporation, whether equivalent to signature, 135, 243. what can be admitted as, 243. And see Bill of Exch.vxge. INDEX. 795 NOTICE : assignee of married woman's separate property with, bound by engagement affecting it, 732. assignment of contract, notice to debtor, 210, 231, 232. purchase for value without, 255, 256, 470. NOVATION : assent to, not presumed unless there be distinct request by debtor, 216. its nature exiikiined, 215. NUDUM PACTUM : change in the meaning of the term in English use, 715. in " Doctor and Student," 180. OFFENCE : agreement to commit, void, 290. compounding of, 314 — 316. OFFEE. See Proposal. OFFICE : appointments to, by corporation must be under seal, 159. bills or notes may be payable to holder of, 228. public, sale of, unlawful, 343. PAR DELICTUM : doctrine of, 397. qualifications of and exceptions to it, 397 — 399, 403. PAKCELS : mistake as to, in sales of land, 505. PAROL VARIATION : of written agreement, rule against, 260, sqq. PART PERFORMANCE : applicable to corporations, 138. equitable doctrine of, 697. PARTIES : to action, on contract made l>y agent. ]()3, .sr/y. to contract, rules as to, 208, gi/q. PARTNERSHIP : company law, rules of, analogous to law of, 128. contract of shareholders a modified contract of, 128. dissolution, deed of, release in, cannot i;e disputed by party after concern completely wound up, 621. 796 INDEX. FARTNERSHlP—conlvnied. infant partner, position of, 60. insanity of partner, 99. misrepresentation in negotiation of, 581, 585. shares in, transferable at common law, 215. PAYMENT : bankruptcy, payment to trustee under mistake of law, 481, 185. to wrong person, 474. under mistake of fact, 478, 483. or law, 483, 484. PENALTY : and liquidated damages, 510. imposition of, by statute, implies prolubitiun, 308. relief in equity against, 538. PENSION : assignment of, 314. PERFOEMANCE of mutual promises. 272, sqq. PERSONAL CONTRACTS : implied condition in, as to life or health of party continuing, 446. not assignable, 499, 500. PERSONATION : effect of. 196, 497. PHYSICIANS : rights of, as to payment for services at common law, 710. under Medical Act, 710. POST : communication of acceptance by, 35. POST OFFICE : whether commou agent of parties in correspon- dence by letter, 38, 475. PRICE : error as to, 511. PRINCIPAL AND AGENT : Ijrincii^al, agent's authority deteniiiiied t>y dcatli of, 101. agent not liable where exclusive credit given to, 109. liability on contracts made by agent, 106, sqq. representations of agent, when answerable for, 609. right to countermand unexecuted authority, 401. undisclosed, rights of, 107. professed agent : when he may declare himself as real prin- cipal, 115. sub-agent not agent of i)rincii)al, 500. And see Agent. INDEX. 797 PRINCIPAL AND SURETY. See Sukety. PROHIBITION : implied, where penalty imposed by statute, 308. PROMISE : as consideration, 176. by advertisement, nature and limits of, 15. by deed, binding without acceptance in English law, 7. definition of, 2, 7. effect and interpretation of, 257, sqq. express, tacit, implied, 11. founded on moral duty, not liinding without valuable con- sideration, 189. illusory, 48. inferred in fact or implied by law, 12. must be certain, 193. mutual, 191. past services rendered on request, promise to pny for, 189. tacit and fictitious, distinction between, 12. to perform existing duty, 193, sqq. i several, whether one can sue on, 22G. See Acceptance ; Agreement. PROMISES : dependent and independent, 27-1. in same instrument, where some lawful and some not, 384, 385. mutual, order of performance, 272, 273. PROMISSORY NOTE. See Bill of Exchange ; Negotiable In- strument. PROMOTERS : agreements of, when binding on company, 214, fiduciary position of, as regards company, 580, G14, n. special responsibility of, under Companies Act, 1908... 588. statements of, may become statements of company, Oil. PROOF : archaic modes of, 142. transition from formal to informal modes in English law, 141. writing, proof by, origin of, 142, 143. PROPOSAL : acceptance will not relate back to date of, 41. addressed to all to whom it comes, 15. conditions of, as to time, &c., 29. express or tacit, 11. generally element of contract, 1, 5. 798 INDEX. FB,OFOiiAh— continued. revocation of, by death of proposer before acceptance (under I.e. A. only if known to other party), 41, 42. must be communicated, 30. when it may be made, 27. PEOSECUTION : agreements to stifle, 344. PUBLIC OFFICE. See Office. PUBLIC POLICY : agreements contrary to, 327, sijq. aiding hostilities against friendly nations, 336. arbitration, agreements for reference to, 348. company : corporate powers must not be used to defeat pur- poses of incorporation, 131. compounding offences, 344, sqq. corrupt or improper influence, agreements for, 339. custody of children, agreements as to, 362. Egerton v. Earl Brownlow, opinions in and effect of, 330, sqq. election petition, compromise of, 347. foreign revenue laws as to, 337 — 339. individual action, agreements limiting freedom of. 305. maintenance and champerty, 350, 361. marriage, agreements in restraint of, 366. promise by married man to marry another woman aft€r wife's death, void, if fact known to pro- misee, 305. salaries, assignment of, 343, 344. sale of ofiices, 343. State, agreements against interests of, void, 333. and where sued upon, cannot be supported l\v any local law, 405—408. " stifling prosecution," 344. testator, agreements to influence, 368. trade, restraint of (which see), 368, sqq. trading with enemies, 333. wagers, doctrine extended in order to discourage, 328. winding-up, secret agreement as to conduct of, 347. PUBLICATIONS : immoral, &;c., cannot be ground of civil rights, 326. PUBLISHER : contract of, with author, not assignable, 501. QUASI-CONTRACT : distinguished from tacit but real contract, 12. fictitious contract in English law, 13, 14. in Indian Contract Act, dealt with separately, 14. term now generally recognized, 14. INDEX. 799 QUID PRO QUO : " consideration " analogous to, 181. in action of debt : ap^iarcnt benefit to promisor not material, 183. medieval use of term, 178. RAILWAY COMPANY : liability of, as to correctness of time- table, 17, RATIFICATION : must be within reasonable time, 102. and by one who might have been originally bound, 114. of act of unauthorized person after expiration of time limited, 102. agent's acts, relates back, 102. infant's contract : effect of Infants' Relief Act, 03, Go. irregular acts by assent of shareholders, 130, 740. RECORD : contracts of, 152. RECTIFICATION OF INSTRUMENTS : actions for, procedure in, 552. common intention of parties different from expressed intention must be shown, 546. proof of one party's intention will not do, 547. possible exception where one party acts as other's agent, 548. conveyance, new, not required, 552, 553. disentailing deeds, 552. draftsman, mistake of, 481. jurisdiction of the Court in, 543, sqq. option to rectify or set aside in certain cases, 551. oral evidence, how far admissible, 545. settlements, at whose suit rectification granted, 551. reformation of, according to previous articles, 549. special rules as to this, 550. voluntary, when rectification sought by settlor alone, 551. wills, no jurisdiction in equity to rectify, 552, 751. RELEASE : in deed of dissolution, cannot be disputed by party after con- cern completely wound up, G24. restricted construction of, in equity, 533. REPRESENTATION : agent : representation of, when principal liable for, 009. representation of authority must he of mattei' of fact, 112. 800 INDEX. EEPEESENTATION— co72/i«Me^7. ambiguous statements, 602. as term of contract, 557. fraudulent, examples of, 592. or innocent, 555. future, representation of the, operates as contract, if at all, 558. inducing contract, G02, sqq. infant : representation of full age, 79 — 82. must be shown to have misled other party, 81. innocent, not necessarily harmless to person making it, 55G. " making representations good," supposed equitable doctrine of, 555. married woman : representation of discoverture by. 83. meaning of the word, 209. must be made by party to contract, 608. and as part of same transaction, 612. opinion, statements of matter of, 601, 602. recission of contract : conditions which plaintiff must satisfy in action for, 598. representation must generally be of matter of fact, 599. not of mere motive or intention, 600. must have, in fact, induced the contract, 602. silence, when equivalent to, 592, 595. warranty and condition, representations amounting to, 561. REPUDIATION OF SHARES. See Shareholder. RESCISSION : acts treating contract as subsisting, 617. conduct of party misled, 621. election to affirm or rescind, how determined, 617. rescind must be communicated, 618, 619. what communication sufficient, 619. fraud, option to affirm or rescind contract for, 615. misrepresentation, rescission of contract for, 598, Sfjq. representation must generally be of fact, 599. not of mere motive or intention, 600. must have, in fact, induced the contract, 602. and must be made as part of same transaction, 612. ownership, acts of, negativing right to rescind, 624. position of parties, change in : no rescission where former position cannot be restored, 622. purchaser for value, rescission not allowed against, 625. recovery back of money paid under agreement, 621. 625. INDEX. 801 HESCISSION— continued. representatives, right of rescission exerciseable by and against^ 621. right of, on discovering unlawful purpose of other contracting party, 388. but a completely executed transfer of property cannot be rescinded, 388. shares, contract to take : shareholder cannot rescind after winding-up, G27, G28. time, reasonable, rescission must be within, 029. undue influence, rescission of contract for, G77, (J78. EESTRAINT OF MARRIAGE. See Marriage. RESTRAINT OF TRADE : combination in restraint of trade, unlawful, 372. , common law favours absolute freedom of trade, 371. competition, covenant making covenantee .sole judge of, void, 378. consideration, adequacy of, not enquired into, 37(5. customers, covenant not to deal with, 378. distances, how measured, 382. exclusive service, contract for, must be mutual, 383. general principles, 368. Indian Contract Act on, 383. life, contract to serve for, good, if mutual, 383. limited restraints admitted, STi, 375. medieval doctrine on restraint of trade, 370—372. monopoly, agreements tending to, feeling against in middle ages, 370. held void in United States, 374. presumption of badness of covenant : no rule as to, 378. price, specified, undertaking not to sell goods below, valid, 377. public policy, restraint in general opposed to, 369. reasonable, cases where restriction has been held, 379, sqq. restriction must be, 369. what is, must be decided on merits of each case, 369. and is a question not of fact, but of law, 378. restriction partly good and partly bad, 378. servant, wrongful dismissal of, discharges both service and restrictive agreement against future competition, 278. society, member of, whose objects are in restraint of trade, cannot sue for money due to him under rules, 373, n. W 3 F 802 INDPLX. EESTKAINT OF TRABE—contintied. space, limit of, old common law rule as to, now modified, 375, sqq. time, limit of, not necessary to validity, 377. trade secret, contract not to disclose, may be unqualified, 377. unqualified restraints void, 373, 374. unreasonable, cases where restriction held to be, 382. REVENUE LAWS : foreign, treatment of, 337—339. And see Stamps. EEVERSION : sale of : when rent or covenants run with, 248. person in dependent position, present rule as to sale by, 673. undervalue, voidable for, under old law, 664. development of the doctrine, 665. its abrogation by 31 Vict. c. 4... 667. REVOCATIOX : communication of, 30. death of proposer, revocation by, 41. insanity as ground for, 42. of general offer, 21, 23. of proposal, when in time, 27, sqq. tacit, 32. ROMAN LAW : causa in, 179, 181. classification of contracts in. Note E., 743. corporations, treatment of, in, 120. influence of, on early English law of contract, 142, sqq. Stipulation in, 143. ROYAL MARRIAGE ACT, 305, 7i. SALE : of future specific product, contract discharged by failure of produce, 441. of mere expectancy, valid by English law, otherwise by civil law, 360. SALE BY AUCTION. See Auction. SALE OF GOODS : delivery obtained by f.also pretences without any contract, 626, 627. Frauds, Statute of, as to, 1(59. INDEX. 803 SALE OF GOODS— continued. fraudulent, effect of, 617, 625. horses, sale of, in market overt, 172, 173. infant, sale of goods to, not necessaries, void by Infants' Relief Act, 63. instalments, default in delivery of, 280, sqq. mistake, how sale affected by, 496, 510, 511. price not recoverable where goods sold for unlawful purpose, 388. purchase by one not meaning to pay is fraud, 590. warranty or condition upon, 514. SALE OF GOODS ACT, 1893 : as to liability of infant for necessaries, 71, sqq. as to note or memorandum, 169. SALE OF LAND : auction, sale by, employment of puffer, 595. Frauds, Statute of, as to, 167. infant, sale by, voidable, 60. lot, mistake as to contents of, due to purchaser's want of attention to particulars and plan, 506. misdescription of thing sold distinguished from fundamental error, 517. on, effect of, 571. option of, or agreement for re-purchase, 538. parcels, mistake as to, 505. price, mistake as to, 511. > purchase of property already one's own, 522. purchaser, duty to give information in special cases, 580. specific performance with comjjensation where misdescription proved, 572. title, efl'ect of special conditions as to, 581. non-disclosure of latent defect in, 581. vendor's duty to give correct description, 578. , ATid see Specific Performance. SALE OF REVERSION. See Reversion. SATISFACTION : by stranger, whether a bar to siiljscipient action on contract, 498. SEAL : building society, seal of, must bear registered name of society, 155. companies required by stat.uto to use their proper seal, 155. 3 r— 2 804 INDEX. SEAL — continued. corporate, equivalent to signature in bills and notes, 135, 243. transferable debentures under, negotiable, 135. necessity of, in contracts by corporations, 153, gqq. director, private seal of, use of, on behalf of company, 155, n. misapplication of, corporate, 138. private, 144. SEAMEX : wages of, not insurable at common law, 305. SEDITIOUS PUBLICATIONS : See Imj[0I!al Publicatioxs. SEPARATE ESTATE : cessation of coverture, effect of, 733. debts contracted before marriage, liability for, 92. " engagement," how far bound by ordinary rules of contract, 733. engagaments, general, rules as to, 731. equitable doctrine of, 89. Limitation, Statute of, analogy of, whether applicable to claims against, 85, 734. origin of separate use, 729. power of binding separate estate, earlier doctrines as to, 729, sqq. quasi-contracts, whether liable on, 734. specific performance against, 732. SEPARATION : judicial ; effect on wife's capacity of contract- ing, 88. SEPARATION DEED : adultery, subsequent, does not of itself avoid deed, 323. unless contemplated at time, 324. agreements for, between husband and wife alone, 87. consideration for, 322. children, custody of, provisions for, 3G3. covenant for payment to wife in event of future separation order, 325. effect of, on special points, 323. future separation, agreement for, void, 325. reconciliation, deed avoided by, 320, 824. proviso for, void when parties not lawfullj' mar- ried, 320. validity of, 321. SERVICE : infant's contract of, 58, 09, 77. SETTLEMENT : deceased wife's sister, settlement in contemplation of marriage with, void, 320. INDEX. 805 SETTLEMENT— conUnued. disclosure, duty of, iu negotiations, 581. infant, settlement by, 61, 76, 77. "in fraud of marital right," 303. not affected by wife's non-disclosure of previous misconduct, 588. post-nuptial, how far supported l>y informal autc-nuptial agreement, 699. reformation of, according to previous articles, 549. And see Infant and Voluntary Deed or Settlement. SHAREHOLDER : infant may be, 60. and is liable for calls if shares not disclaimed, 68, prospectus, only original shareholders entitled to rely on, 611. ratification by assent of, 130. repudiation of shares by, 509, 617, 622, 623, 627, 62S. cannot repudiate after acts of ownership, 617. or after change in constitution of company, 622. or after winding-up, 627, 628. diligence of shareholder essential, 632. rescission of contract by, on ground of misrepresentation, 586. right of, to restrain company from acts not warranted by its constitution, 131. And see Company. SHARES : numbers, error iu, not material, 509. repudiation of, 509, 617, 622, 623, 627, 628. sale of, after winding-up, not enforceable, 519. transfer of, 173, 216. invalid when directors' consent obtained by fraud, 597. A7id see Company, SHIP, transfer of, 172, SLAVERY : contract for sale of slaves iu slave country uot void in England, 408. " SLIP " : in marine insurance, effect of, 173, 702. recognized for collateral purposes, 701. statutory enactments relating to, 703. SOCIAL DUTY : whether agreement against, void, 365. 806 INDEX. SOLICITOK : agreements with client : champerty, 353. client, presumption of influence in contracts with, 6i9. costs, special agreement with client as to, 716. purchase by, from client, 648. of subject-matter of suit by, 355. Solicitors' Eemuneration Act, 1881. ..716. uncertificated, costs of, not recoverable, 708. lien, position as to, 709. SOLICITORS' REMUNERATION ACT, 1881 : as to agreements between solicitor and client, 716. SPECIFIC PERFORMANCE : ambiguous terms of contract, specific performance refused in cases of, 507. collateral " representations " inducing contract : non-fulfilnieut of, 756. compensation with specific performance on sale of land, 572. contract not expressing real agreement of parties, 540. defence against, 506, 540. description of property, when vendor can substantiate his own, 577. infant, specific jjerformance not granted at suit of, 62. nor, since Infants' Relief Act, of any contract made during; infancy, 65. married woman, separate estate, specific performance against, 732. misdcscriptiuu : specific performance at suit of either party where variance not substantial, 572. at purchaser's option where substantial and capable of estimation, 572, 573. where substantial and not capable of estima- tion, option only to rescind or to afiirm unconditionally, 575. paml adLlition to or variation in terms of agreement, 541. purchaser bidding for wrong lot, 505. undervalue, whether specific performance can be refused for, alone, 658. SPIRITUAL INFLUENCE : its relation to undue influence, 655. treatment of, by French law. Note K., 759. STAMPS : foreign laws as to, efl'ect of, 339. / INDEX. 807 STAMPS — continued. promissory note, bearing iusufficiuut stump, iiul admissible as receipt, 707, n. stamp duties in general, 706. unstamped document, when admissible as evidence, 706. variation of contract by subsequent unstamped agreement, 7U6. STATUTE OF FEAUDS. See Frauds, Statute of. STATUTE OF LIMITATION. See Limitation, Statutes of. STATUTES : prohibitory, construction of, 306. policy of, 307. " STIFLING PROSECUTION," 314. STIPULATION : in Koman law, 113. STRANGER : liability in tort for procuring breach of contract, '2,V[, n. satisfaction of contract by, whether it bars action, -lOcS. to contract, cannot sue on it, 223. SURETY : discharge of : by subsequent dealings between creditor and debtor, 297. by misrepresentation or concealment on part of creditor, 567. entitled to benefit of securities, 299. information as to real nature of transaction, 568. but creditor not bound to volunteer informa- tion, 570. " SURPRISE " : whether a ground of relief against contracts, 675. TALLIES : use of, 150, 151. TELEGRAPH : communication of acceptance by, 35. TESTATOR : agreement to influence, void, 368. TUIRD PARTIES : cannot sue on contract, 223. apparent exceptions to this rule, 221, *v///. consent of, obtained by fraud, 597. fraud on, vitiates contract, 292, 296. not presumed, 296. instrument not rectified against interests of, 518. promise to make contract with, 50. 808 INDEX. " THIRD PEESOX "' : meaDing of, 209. TIME : when of essence of contract in equity, 536. may be made so by express agreement, 536, 537. TIME TABLE : effect of statement in, 17. TIPPLIXG ACT : small debts for spirits made not recoverable by, 717. TOET : " founded on contract," infant not liable for, 78. liability of corporations in, 123, 121. TEADE : agreements in restraint of. See Eestraint of Trade. contracts of corporations in course of, need not be under seal, 155. TEADE UXIOXS : agreement for strike not enforceable, 372, 373. but not a criminal offence by the common law, 372. certain agreements of, lawful but not enforceable, 718. TEADIXG WITH ENEMIES : bills of exchange between England and hostile country, posi- tion of, 336. contracts dissolved or suspended by war, 331. neutral trade with belligerents not unlawful, 337. without licence from crown, illegal, 333, 331. TRESPASS : agreement to commit, void, 292. liability of corporation for, 124. TRUST : agreement to commit breach of, void, 292. assignment of, 230. how far in the nature of contract, 219. trustee : must account to cestuis que trust notwithstanding collateral illegality, 400. be impartial as between cestuis que trust, 656, 657. notice of assignment to. 234. UXDERVALUE : does not itself avoid contract, but vaay be evidence of fraud, &c., 658. whether specific performance can be refused for, 661. INDEX. 809 UNDUE INFLUENCE : acquiescence in cases of, 679. age of person conferring benefit not material, Gi7. captati07i, doctrine of, in French law, Note K., 759. " catching bargains," rules of equity as to, 667, 668. confirmation in cases of, 679. delay in cases of, 679. equitable doctrine of, 640, sqq. expectant heirs, protection of, 66.S, sqq. family arrangements, no presumption against, G.")!, 652. father and son, transactions between, presumption of influence, 648. fiduciary relation, duty of persons in, 649. undue influence apart from, 656. gifts, voluntary, 645. husband and wife, doctrine does uot apply to, 643. medical attendant and patient, doctrine applies to, 654. parent and child, relation analogous to, 653. presumption of influence, evidence required to rebut, 648. from certain relations, 642. proof, burden of, 642, 645. rescission of contract for, 677, 678. reversionary interests, sale of, by persons in dependent posi- tion, 673. reversioners, protection of, 663. settlements, voluntary, when set aside, 646. in favour of parent, 647. solicitor and client, relations analogous to, 654. purchase by, from client, 648. spiritual influence, 655. stranger to contract, whether undue influence material if exerted by, 679. " surprise " as evidence of, 675. undervalue, how far material, 657, sqq. voluntary settlements, when set aside, 646. in favour of parent, 647. wills, presumption does not extend to, 643, 644, n. UNLAWFUL AGREEMENTS : agent must account to principal notwithstanding collateral ille- gality, 399. classification of, 289. conflict of laws as to lawfulness, what local law governs, 405. in time, contract dissolved by performance be- coming unlawful, 414. consideralion, unlawful, avoids whole agrccmenf, 385, 386. 810 INDEX. UNLAWFUL AGBEEMEl>iTB~continued. creditors, agreement in fraud of, 293, s^ ( 4 STEVENS AND SOXS, LIMITED. 119 & 120, CHANCERY LANE, LONDON. Chalmers' Digest of the Law of Bills of Exchange. -Ser^;,,th mtwn. By Sir M. D. CHALMERS, K.C.B., C.S.L, Draughtsman of the Bills of Exchange Acts. Dcmij 8ro. 1909. Price 20s. cloth. Spencer's Agricultural Holdings Act, 1908, with the R ""^ ?A'i UT?^"^ f'Z'^V^^^fr}'^}^''^'''''''^ °* Agiiculture. Fourth Editwn, Re-Issue. By AlBHEl J. 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