THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES V c~~y\ -^/V I V THE EGYPTIAN LAW OF OBLIGATIONS. A COMPARATIVE STUDY WITH SPECIAL REFERENCE . . TO THE FRENCH AND THE ENGLISH LAW. . . BY FREDERICK PARKER WALTON, ADVOCATE OF THE SCOTTISH BAR, K.C. (QUEBEC), B.A. (OXON.), LL.B. (EDEN.), LL.D. (ABERDEEN AND MCGILL) ; HON. MEMBER AMERICAN BAR ASSOCIATION ; DIRECTOR OF THE SULTANIA SCHOOL OF LAW, CAIRO; FORMERLY DEAN OF THE LAW FACULTY, MCGILL UNIVERSITY, MONTREAL. AUTHOR OF " Handbook of Husband and Wife according to the Law of Scotland " ; "Scotch Marriages, Eegular and Irregular"; "Historical Introduction to the Roman Law" ; " Scope and Interpretation of the Civil Code of Lower Canada" ; " Workmen's Compensation Act, 1909, of the Province of Quebec, with a Commentary," &c. IN TWO VOLUMES. Vol. II. LONDON : STEVENS AND SONS, LIMITED, 119 & 120, CHANCERY LANE, f ato Publishers. 1920 ( in ) //? TABLE OF CONTENTS. VOLUME II. OHAPTBE I. TAGE EFFECTS OF CONTRACTS 1 — 47 Confusion in the French Code between effects of contracts and effects of obligations 1 Effects of contracts as between the parties 2 Contracts make the law between the parties 2 Modification of charitable foundations 3 Contract changes legal situation of parties 3 Interpretation of contract is question of fact 4 Exceptio non adimpleti contractus 4 Modification of contract by parties 5 Effect of modification or cancellation of contract as between the parties 7 Effect of modification or cancellation as regards third parties ... 7 Renewal of contract 8 Exceptions to rule that contracts can be modified or revoked by parties 9 Certain contracts can be revoked by one party or one party may be released owing to change of circumstances 9 Effect of' contracts as between the parties and as against third parties 11 Who are the parties to a contract? 13 Representation in contract 13 When is an agent a party ? 13 Factors and brokers 14 Involuntary representation 15 Summary 16 Heirs and successors 16 Meaning of Ayants cause 17 Universal and particular Ayants cause 18 Rule that obligations transmit to universal successors only 18 Particular representatives 19 Analogous rule in English law 23 Leases 23 Creditors 23 a 2 iv TABLE OF CONTENTS. CHAPTER I — continued. PAGE Summary Exceptions to the rule that contracts do not benefit or prejudice third parties -° Protection given to third parties -' Rule does not mean that contract may not be proved by third parties as a fact 29 Translatory and non-translatory contracts 30 Effect of contracts in transferring property between the parties... 30 Roman law and old French law as to effect of contract to transfer. 32 Modern Erench law 33 Two conditions of rule 34 Rule that property passes at once is not law of public order 35 Effect of contracts in transferring property as regards third par ties "' Exceptions to the rule that the real right first registered is preferred 39 Effect of alienation of corporeal moveables as against third parties. 43 Incorporeal moveables .* 4b The effect of non-translatory contracts with regard to third parties 4b CHAPTER II. CONTRACT OF PORTE-FORT 48 — 52 Distinction between contract of porte-fort and suretyship 50 Porte- fort promises on his own account 50 If the contract is ambiguous is there a presumption that a party binds himself as a porte-fort? 50 The ratification and its effect 51 Utility of contract of porte-fort 51 English law as to person who professes to be an agent though he has no authority 52 OHAPTEE III. STIPULATIONS FOR THE BENEFIT OF THIRD PARTIES OR THE STIPULATION POUR AUTRUI 53 — 91 History of the stipulation pour autrui 53 Modern applications of the stipulation pour autrui 55 Public subscriptions 58 Many other cases '. °* ight of the third party for whom a benefit is stipulated 60 (1) Theory of the offer 62 (2) Theory of implied assignment 64 TABLE OF CONTENTS. V CHAPTER III— continued. PAGE Eight of the third party for whom 1 a benefit is stipulated— continued. (3) Theory of negotiorum gestio 65 (4) Theory of the droit propre 66 Theory of droit propre accepted in German Code 68 Characteristics of the third party's right 69 2 Effects of assent 72 How may the third party declare his assent ? 73 If the legal representative of the third party is the stipulator himself, can he give the necessary assent for the third party ? ^3 Assent does not need to be intimated to stipulator 74 JWno can be a beneficiary under the stipulation? 75 Determinate persons 75 Indeterminate or future persons 76 Cases where beneficiary is indeterminable at date of contract ... 78 Future persons 80 Matter dealt with in many countries by legislation 86 Eights of creditors in the case of insurance for a third party ... 87 What is the effect of the rescission of a contract in which a benefit was stipulated for a third party who has assented to it? 87 Comparison with English law 89 Common law as to the persons affected by contract 89 American law less rigorous as to relativity of contracts 91 CHAPTER IV. OF THE EXERCISE OF THE DEBTOR'S RIGHTS AND ACTIONS BY HIS CREDITORS -. 92 — 104 Whatever is recovered by the action falls into the patrimony of the debtor 98 Any defence which is good as against the debtor himself is good as against the creditor 99 Can the creditor sue for an amount greater than his own claim against the debtor? 100 What are the rights and actions which creditors can exercise ? ... 100 Eight of creditors of incapable person to bring action on the ground of incapacity 102 Eight to exercise a choice 103 Eights purely personal are exceptional 104 VI TABLE OF CONTENTS. CHAPTER V. PAGE THE PAULIAN ACTION 105—123 History of the Paulian action 106 Conditions of Paulian action 107 The act challenged must have caused prejudice 109 Property alienated must have formed part of debtor's estate 110 Debtor's estate must be diminished Ill Only prior creditors have a right to the Paulian action 112 Proof of fraud in onerous transactions 113 Onerous grantees preferred to gratuitous grantees 114 Is the contract onerous or gratuitous ? 115 Effect of Paulian action as to sub-purchasers 116 Effect of the Paulian action as among the creditors 120 Prescription of Paulian action 123 CHAPTER VI. THE ACTION TO DECLARE A DEED SIMULATE 124 — 139 Different kinds of simulation 124 Rules as to actes deguises 125 Rules of evidence 12' (1) When the action is between the parties to the deed ... 127 (2) When the action is by a third party 128 Effect of simulation as between the parties 129 Effect of simulation as regards third parties 131 Conflict between the ayants-cause of the apparent owner and the creditors of the party who has granted a contre-lettre... 134 Distinction between the action en simulation and the Paulian action 137 Distinction between the action en simulation and the indirect action 1 39 CHAPTER VII. OBLIGATIONS RESULTING FROM AN ACT 140—162 Nul ne doit s'enrichir injustement au prejudice d'autrui 142 Quasi-contracts 142 Criticism of the term quasi-contract 143 German Code avoids term quasi-contract ' 145 Distinction between quasi-contract and implied contract 146 Proof of quasi-contracts 146 Negotiorum gestio or gestion d'affaires 148 Analogy between gestion d'affaires and mandate 149 TABLE OF CONTENTS. VII CHAPTER VII.— continued. PACE Conditions of gestion d'affaires 150 Is gestion confined to the doing of juridical acts ? 151 Is it essential that the gestion shall be unknown to the maitre? ... 152 Egyptian law 153 Knowledge of incapable person is immaterial 153 Must be intention to act on behalf of another and benefit re- sulting 154 Benefit does not need to be subsisting at date of action 155 Who may be sued by third party 155 What is included under reimbursement? 155 Does the maitre need to have contractual capacity? 157 Does the gerant need to have contractual capacity? 158 Examples of negotiorum gestio 159 Assistance to ship in distress 160 Egyptian jurisprudence 162 CHAPTER VIII. ACTIO DE IN REM VERSO 163 — 186 Special applications of principle in French and Egyptian Codes. 166 The name actio de in rem verso 168 Miscellaneous illustrations from the French jurisprudence 169 Improvement on immovable held in indivision 172 Doctrine of general average or avaries communes 172 Is principle of avaries communes confined to maritime law? ... 173 Egyptian jurisprudence 174 Attempt to determine the principles governing the matter 175 Confusion between action de in rem verso and action on gestion d'affaires 176 Theory that source of obligation is delictual 177 Theory that source of obligation is the creation of value 178 Conditions of the action de in rem verso as determined by the French jurisprudence 179 (1) The enrichment 180 (2) The enrichment must be a direct consequence of the prejudice suffered by the plaintiff 181 (3) The defendant must not have a just cause for retaining the enrichment without payment 182 (4) The enrichment must be subsisting 184 The action de in rem verso is a subsidiary action 185 Comparison with other laws 185 Vlll TABLE OF CONTENTS. CHAPTER IX. PAGE THE QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE ...187—200 Repetition when there was no error 188 Payment made in error 189 Destruction of the title • 190 Onus of proof 191 (1) Payment 192 (2) No debt 192 (3) Error 193 English law as to quasi-contracts 196 Theory of implied contract 197 English illustrations of claims not arising from contract 198 Wrongs 200 CHAPTER X. OF OBLIGATIONS RESULTING FROM THE LAW SOLELY ...201 — 205 Alimentary provisions 201 Other obligations arising by law 202 Obligation of alimony in Egyptian codes 203 Analysis of Article 155 203 Comparison with the Mohammedan law 203 Analysis of Article 156 204. Comparison with the Mohammedan law 204 Code speaks only of ascendants, descendants and spouses 205 Egyptian jurisprudence 205 CHAPTER XI. PUTTING IN DEFAULT — MISE EN DEMEURE 206 — 218 Mise en demeure 207 When a date has been fixed for performance 207 Mise en demeure in commercial matters 207 How the debtor is put in default 208 Where no mise en demeure is necessary 210 (a) Performance impossible 211 English law as to this 2^.2 Putting in default presupposes possibility of performance... 2l2 (b) Law may declare mise en demeure unnecessary 213 (c) Stipulation may make mise en demeure unnecessary ... 214 Waiver of right to claim without mise en demeure 214 (d) No mise en demeure necessary when action based on wrong-doing 215 Effects of putting in default 215 Mise en demeure in other codes 217 No mise en demeure required in English law 218 TABLE OF CONTENTS. IX CHAPTER XII. PAGE REMEDIES FOR BREACH OF CONTRACT 219—243 (1) The action for rescission or resolution of the contract 221 The tacit resolutory condition 221 The exceptio non adimpleti contractus 222 Court has discretion to refuse resolution 222 (2) Maintenance of contract partially executed and damages for inexecutei part 224 (3) Substituted performance 224 (4) Specific performance 224 (5) Damages -'-'^ Want of precision of the codes 224 (a) Obligation to pay or to deliver a specific thing 226 (b) Obligation to do or not to do 227 (3) Substituted performance 227 (c) Cases where judgment takes place of performance 227 (4) When can specific performance be claimed 229 Can creditor always insist on demolition of buildings ? 229 Fait personnel cannot be specifically enforced 230 Illustrations of cases where specific performance of the contract may be demanded 231 Specific performance of obligation to grant a servi- tude ■ 232 Specific performance of contract of lease of thing ... 233 Specific performance of promise to grant deed .... 233 In previous cases personal intervention of debtor is not necessary 233 Cases where specific performance cannot be de- manded 234 Astrein tes 2o4 May the court order specific performance subject to payment of a penalty ? 234 Extension by the jurisprudence of the principle of astreintes ... 236 Illustrations from the jurisprudence 238 Criticism of the jurisprudence 241 Astreintes in Egyptian jurisprudence 241 Enforcement of specific performance in other laws 243 CHAPTER XIII. DAMAGES FOR BREACH OF PECUNIARY OBLIGATION ...244—249 Special damages in case of bad faith 246 German and Swiss laws as to this 246 Exceptions to rule that only legal interest is due 247 Compound interest 248 English law as to interest on money-debts 249 TABLE OF CONTENTS. CHAPTER XIV. PAGE DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT NOT BEING A CONTRACT TO PAY A SUM OF MONEY 250 — 260 If the loss sustained is a moral loss only, can the creditor claim damages ? 252 English law 255 Direct and immediate consequence 255 Distinction based on absence of fraud 256 Damages for that which could have been foreseen 257 Illustrations of the rule as to damages which might have been foreseen 258 Distinction in other laws 259 Clause of penalty 260 CHAPTER XV. STIPULATIONS OF EXONERATION FROM LIABILITY ...261—285 Restrictive interpretation 261 Debtor cannot stipulate against his own dol or faute lourde 261 Stipulations of exoneration for fault of prepose 263 Stipulations of immunity for one's own ordinary negligence or the ordinary negligence of one's prepose 264 Concurrence of faute contractuelle and faute delictuelle in other systems of law 266 Is it a universal rule of the French law that a man by contract cannot relieve himself from liability for a quasi-delict ? ... 267 Egyptian cases in contract of carriage 270 Special reasons of public policy in regard to contracts of carriage. 271 Different rule in England as to gratuitous passengers 273 Public policy as to carriage of goods 273 The question ought to be one of reasonableness 274 English law 274 Clauses of exoneration in maritime law 275 Laws of other countries 276 Post-office and telegrams 276 Post-office letters 276 Telegrams sent by private companies 277 Telegrams sent by public service 278 Egyptian law 278 Contracts by which a workman renounces beforehand his right to claim damages for personal injuries 279 Other cases in which advantage has been taken of a position of superiority 280 In other cases freedom of contract should be allowed 280 Tendency of recent French jurisprudence 281 TABLE OF CONTENTS. XI CHAPTER XY.— continued. PAG] Clauses of non-responsibility in other laws 282 (1) English law 282 (2) American law 284 (3) German law 284 (4) Swiss law 285 CHAPTER. XVI. .NON-PERFORMANCE OF CONTRACT WITHOUT FAULT OF DEBTOR 286 — 327 (1) Exceptional cases 286 (a) Express stipulation of warranty 286 (b) Implied warranty 286 (c) Warranty of carrier and hotel-keeper against theft ... 287 (2) General rule that damages are due 287 Supervening impossibility of performance 287 Force majeure in law of responsibility and in law of prescription. 290 Cas fortuit and force majeure include both objective impossibility and subjective impossibility 290 Attempted distinction between the legal effects of force majeure and those of cas fortuit 291 Criticism of new theory : 293 Essential characteristics of fortuitous event 293 Event founded upon as force majeure must not have been brought about by any act of the debtor 294 Event must be impossible to foresee 294 Impossibility must be absolute 296 The impossibility must continue 296 Debtor who foresees the inexecution must do his best to minimise its effects 296 Debtor not bound to take an altogether unusual precaution 297 Force majeure a question of fact 298 Illustrations of force majeure ' 298 (a) Events due to the forces of nature 298 Destruction of specific thing to be delivered 299 Alteration of physical conditions rendering performance impossible 299 Fire as force majeure 299 Presumption against lessee in French law 300 No presumption against lessee in Egyptian law 301 Rule in Egyptian law 301 Sickness or epidemic as force majeure 302 (b) Events caused by the act of man 303 Special rule as to paid depositary 304 Special liability of hotel-keeper not to be extended by analogy 305 Xll TABLE OF CONTENTS. CHAPTER XVI.— continued. PAGE Illustrations of force majeure — continued. War, invasion, &c 306 Fait du prince 306 Force majeure must create an impossibility 307 War as force majeure 307 Criticism of the jurisprudence and proposals to change the law 313 Strikes 314 Onus of proof of fortuitous event 315 Effect of fortuitous event 316 Fortuitous event in contract of lease 317 Right to rebut defence of force majeure may be lost by acquies- cence in non-performance 318 Acquiescence in non-performance 318 Comparison with other laws 318 Swiss Code 318 German Code 318 English law as to impossibility of performance 320 Extension of this principle 321 English law as to supervening incapacity to render personal servi ces 323 Impossibility of performance does not cause the contract to be rescinded ab initio 323 In English law war does not in itself necessarily create impossi- bility of performance 324 Statutory power to avoid contracts 325 Force majeure, compared with "Act of God" 326 CHAPTER XVII. CONDITIONAL OBLIGATIONS 328 — 349 Different kinds of obligations 328 Suspensive condition 329 Resolutive condition 329 (1) Event must not have already occurred 329 (2) Event future but certain 330 (3) Event impossible 331 (4) Event unlawful 331 (5) Event left to free choice of promisor 332 Effects of the condition 335 Conditional right is not mere hope 335 Nothing yet due pending the condition 336 Conditional creditor may do conservatory acts 337 Conditional creditor's right protected if conditional debtor is insolvent .'. 337 Conditional seller mav revindicate if condition fails 338 TABLE OF CONTENT*. Xlll CHAPTER XVII .— continued. PAGE The fulfilment and the failure of conditions 338 Conditions strictly interpreted 339 Condition that act shall be performed by particular person 340 What if no time is fixed for performance ? 340 Fraudulent prevention of fulfilment 341 Comparison with other laws 343 The effects of the failure of the condition 345 The effects of the fulfilment of the condition 345 Discussion as to retroactivity 347 The risk 348 CHAPTER XVIII. OBLIGATIONS WITH A TERM 350—360 Repetition of debt paid before the term arrives 351 Presumption that term is in favour of the debtor 353 Computation of the term 354 The risk during the term 354 Loss of right to claim the term 355 Does the insolvency of a non-trader produce the same effect as the bankruptcy of a trader? 356 How is insolvency to be determined ? 357 Does it need to be declared by a judgment ? 357 Diminution of securities by the debtor 359 ff /I CHAPTER XIX. OBLIGATIONS IN WHICH THERE ARE SEVERAL OBJECTS AND SEVERAL SUBJECTS 361—377 Obligations simple and composite 361 Obligations simple and multiple 362 Alternative obligations 362 Alternative obligation distinguished from conjunctive or facul- tative obligation 363 In an alternative obligation who has the choice? 363 Refusal to exercise the option 364 German Code as to this 365 Can the French or the Egyptian Courts transfer the choice to the other party ? 365 Transmissibility of the option 366 How is the option to be declared ? 366 Does the alternative obligation operate an immediate transfer of the property ? 368 XIV TAHLE OF CONTENTS. CHAPTER XIX.— continued. PAGE Retroactive effect of the choice .' 368 Obligation may appear to be alternative without really being so. 370 Effect of the impossibility of executing one of the alternatives ... 371 (a) When the option belongs to the debtor 373 (b) When the option belongs to the creditor 376 CHAPTER XX. FACULTATIVE OBLIGATIONS 378 — 380 ■Jfr Definition 378 Distinction between the facultative obligation and the alternative obligation 378 Examples of facultative obligations 379 Practical consequences of the distinction between facultative and alternative obligations 379 CHAPTER XXI. OBLIGATIONS WITH A PENAL CLAUSE 381 — 402 Definition 382 Where should this subject be placed? 382 No form prescribed for clause of penalty 382 Purpose of clauses of penalty 383 Clause of penalty strictly construed 383 Clause of penalty cannot defeat legal restrictions on rate of interest 383 Position in the Egyptian Code 384 Obligation with penal clause distinguished from facultative obligation 385 Obligation with penal clause distinguished from conditional obligation , 385 Accessory character of the penal clause 386 (1) Must be valid principal obligation 386 (2) The nullity of the penal clause does not involve the nullity of the principal obligation 388 (3) Creditor may claim performance of principal obligation... 389 (4) The penalty comes in place of the damages 389 Penalty for delay 389 Doubt as to whether penalty is for delay or for non-performance. 390 Penalty not due unless debtor is in fault or in default 391 Can the court fix a delai de grace? 392 Can damages be claimed in excess of the penalty stipulated or can the penalty be reduced if excessive? 392 Cases where amount of penalty may bo varied 394 TABLE OF CONTENTS. XV CHAPTER XXI— continued. PAGE Can the creditor claim the penalty if the debtor prove that no damages have been suffered ? 397 Conflicting opinion "no damages no penalty" 399 Penal clause in other legal systems 401 Indivisibility as applied to obligations with a clause of penalty. 402 CHAPTER XXII. JOINT AND JOINT AND SEVERAL OBLIGATIONS 403—430 (a) Joint and several creditors 404 Release 406 Interruption and suspension of prescription 406 (b) Joint and several debtors 407 Presumption against joint and several liability 409 Does the presumption against joint and several liability apply to commercial matters ? 409 Joint and several liability by law 410 Conventional joint and several liability 413 Effects of joint and several liability among the debtors 414 (a) Effects of principle that each debtor is liable for whole debt 414 (b) Effects of theory that each debtor has mandate 415 Consequences of theory pf mandate 416 Exceptions which a joint and several debtor may plead against the creditor 417 Personal exceptions 417 Exceptions common to all the debtors 418 Exceptions personal to another debtor 418 " Personal exception " does not mean same thing here as in case of surety 418 Confusion 419 Compensation 419 Chose jugee 420 Release 422 What is the effect of the release from the solidarity if one of the co-debtors becomes insolvent? 424 Is the effect of a release from the solidarity to oblige the creditor to deduct the share of the debtor released ? . . . 427 Release of the debt 428 Alleged imperfect solidarity 428 Two debtors may be liable each for the whole debt without any solidarity 429 Effects of joint and several liability as among the co-debtors themselves 429 XVI TABLE OF CONTENTS. CHAPTER XXIII. PAGE DIVISIBLE AND INDIVISIBLE OBLIGATIONS ,431 — 442 (1) Obligations indivisible by nature 432 (2) Obligations indivisible by agreement 434 English law as to this ....(^ 435 Indivisibility on one side only 435 The effects of indivisibility ' 437 Comparison between indivisibility and joint and several liability. 442 CHAPTER XXIV. EXTINCTION OF OBLIGATIONS 443 — 557 (1) Performance or payment 444 By whom performance may be made 445 Person paying must have capacity 448 To whom payment must be made 449 Performance made to the person holding the right to claim execution of the obligation 450 Payment cannot prejudice seizures 451 Performance must be of thing due and cannot be made in part 451 Place of performance 452 Expenses of payment . > 454 Proof of payment 454 Payment with subrogation 455 Special points of difference between Erench and Egyptian laws 457 Conventional subrogation 458 Legal subrogation 460 Purchaser of immoveable who pays price to hypothecary creditors 461 Persons liable with or for the debtor 462 Effects of subrogation 463 Various theories of subrogation 464 Practical consequences of the difference of theory 465 Has Egyptian Code adopted new theory? 466 Imputation of payments 466 Debtor cannot injure rights of creditors 467 Exception to rule that debtor can make imputation 467 Imputation by the creditor 468 Legal imputation 469 Comparison with other laws 470 Effect of the impossibility of finding the creditor in order to pay him or of the refusal by the creditor to take payment ... 470 Tender and payment into court 470 Obligation to pay a sum of money or to deliver a specific corporeal thing 471 Tender at bar of court v 474 Action to have tender declared valid 474 Obligation to do or not to do 474 TABLE OF CONTENTS. XV11 CHAPTER XXIV.— continued, PAGE (1) Performance or payment — continued. Obligation to deliver an immoveable 475 Obligation to deliver an indeterminate thing 475 (2) Dissolution by the performance of the obligation becoming impossible 470 Contract may imply that risk was to be on seller 478 The loss of thing due an instance of impossibility of per- ' formance 478 Application of rule against unjust enrichment 479 Theory of risk in the Egyptian law 480 (3) Novation 482 (1) Simple novation 484 (2) Delegation 484 Expromission 484 (3) Novation by change of creditor 485 Parties to novation must be capable 485 Novation not presumed 486 Must be valid debt to novate 488 New debt must be substituted 488 Effects of novation 488 Transfer of securities to new debt 489 No transfer of securities to property of new debtor 490 Is the old debtor's consent necessary to transfer securities ? ... 490 Protection of third parties 491 Novation in case of joint and several debt or debt secured by a surety 491 Delegation 492 Meaning of express discharge 493 Delegation distinguished from novation 493 Distinction between perfect delegation and imperfect delegation 494 Indication of person to pay or to receive payment 495 Distinction between novation by change of creditor and assignment of a claim 495 (4) Release 496 Release may be tacit 497 (5) Compensation. 499 (a) Legal compensation 500 Can court declare compensation ex officio? 500 Compensation first pleaded in appeal 501 What debts can be compensated 501 (1) The debts must be reciprocal 501 (2) The debts which are compensated must be of the same kind, or be fungible 503 (3) The two debts must both be demandable 504 w. — VOL. II. b XV111 TABLE OF CONTENTS. CHAPTER XXIV.— continued. PAGE (5) Compensation — continued. What debts can be compensated — continued. (4c) The debts must be liquidated 504 Debt uncertain 505 Debt not liquid 505 (5) The debts must be payable in the same place 50(5 Exceptional cases in which legal compensation is not per- mitted 507 Eule not necessary in case of loan for use 500 Debt not liable to seizure 510 Effects of legal compensation 510 Imputation 511 Compensation not to prejudice third parties 511 Assignment 512 Arrestment '. 513 Bankruptcy 513 Eight to renounce compensation 514 (b) Facultative compensation 515 Compensation in other laws 515 (6) Confusion 516 Confusion usually caused by succession 517 No confusion when benefit of inventory 518 Extinction of principal debt by confusion extinguishes acces- sory debt ' 518 French law as to confusion does not apply in the case of Mohammedan successions 520 (7) Prescription 521 Acquisitive prescription and extinctive prescription 521 Law of prescription based upon public policy 522 Full explanation of acquisitive prescription belongs to law of property '522 Rules common to acquisitive and extinctive prescription ... 523 The delays of prescription 523 Long prescription 523 Prescription of five years 524 Restitution of fruits not governed by five years' prescription. 524 The five years* prescription applies to moratory interest .... 525- Prescription of 360 days 527 Debtor must be put upon his oath 528 Difference between French and Egyptian law 528 ferment de credulite 528 Prescription may be pleaded at any stage of the proceedings. 529 The judge cannot ex officio give effect to prescription 530 Calculation of prescriptive period 530 Point of departure of extinctive prescription 532 Conditional debt 532 Action in warranty 533 Debt subject to term 533 TABLE OF CONTENTS. XIX CHAPTER XXIV— continued. PAGE (7) Prescription — confinmed. Prescription does not run till debt is exigible 534 When the debt is divided into fractions or into separate items 534 Doubt with regard to sums due to physicians 536 French law 53fi Egyptian law 530 What rule would apply in the Native Courts 537 Retroactive effect of prescription 538 According to what calendar is the prescriptive period reckoned ? 539 Renunciation of prescription 540 Renunciation in advance is contrary to public policy 541 Is the rule prohibiting renunciation an absolute one? 542 Is an agreement to suspend prescription a renunciation in advance ? 543 Renunciation of acquired prescription 543 Renunciation during the course of prescription 544 Renunciation may be tacit 544 Tacit renunciation must be en connaissance de cause 540 Renunciation of prescription is not an alienation 547 Renunciation of the right to claim acquisitive prescription requires capacity to alienate 548 Capacity for renunciation of extinctive prescription 548 Right of creditors and other third parties to revoke a pre- scription which has been renounced 549 Can parties other than creditors sometimes invoke prescrip- tion which has been renounced ? 550 Interruption of prescription 551 Acts of interruption 551 Acts of acknowledgment 552 Effects of interruption 553 Suspension of prescription 553 Causes of suspension 554 May there be other causes of suspension? 554 Other modes of extinction 556 (1) Expiration of the time limited by the parties for its duration 556 (2) Death of the creditor and debtor in certain cases 550 Concordance 559 Inprx 571 ci/fc. CHAPTER I. EFFECTS OF CONTRACTS. Confusion in the French Code between effects of contracts and effects of obligations. The French Code, after dealing with the interpretation of con- tracts, has a section which is headed Of the effect of contracts in regard to third parties. (C. C. F. 1165.) And the Egyptian codes, following the same order, give articles of a similar nature. (C. C. N. 141 — 143; C. C. M. 202—204.) * But the French Code contains in another place a chapter headed Of the effect of obligations, of which the first article is awkwardly placed. (C. C. F. 1134.) It would have been more natural to put this article in the same section with articles 1165 — 1167. In this respect the Civil Code of Quebec has improved upon the arrangement by having one section, Of the effect of contracts, in which the effects are given as between the parties themselves 1 , and two other sections which discuss the effects of contracts in regard to third persons, including la stipulation pour autrui, the indirect action by creditors, and the Paulian Action. (C. 0. Q. 1022—1040.) The Egyptian Code, meagre as it is, seems to intend to reproduce the French law. (See Halton, I, p. 333.) We must distinguish between the effects of contracts and the effects of obligations. The effect of a contract is to create obligations. The contract brings into existence a legal relation between the parties. If it is a synallagmatic contract it produces obligations on both 6ides, whereas if it is a unilateral contract it produces one obligation only. It must also be remembered that some contracts operate w.— vol. n. 1 2 THE LAW OF OBLIGATIONS. also a transfer of property, as when the owner of a corps certain pells it. (C. C. E. 91/145.) The effect of an obligation is to give the creditor the right to enforce the performance. With this we are not just now 1 concerned. Effects of contracts as between the parties. The French Code says Agreements legally formed take the place of Jaw as between the parties. They cannot be revoked except by their mutual consent or for causes which the law authorises. They must be executed in good (a; lit. (C. C. F. 1134.)^ This article of the French Code is headed Of the effect of obligations, but this is a mistake. The article deals entirely with the effect of contracts. In saying that the agreement takes the place of law between the parties, the Code means merely that the agreement becomes a sort of private law to which the parties have voluntarily subjected themselves, and that when the courts are satisfied that the agreement was legally entered into and is not such an agreement as is prohibited by law the courts must enforce it. (Bufnoir, Propriete et Control, p. 744. Supra, I, p. 361.) The Code of Quebec expresses the law better by saying Con- tracts produce obligations and sometimes have the effect of discharging or modifying other contracts . They have also the effect in some cases of transferring the right of property. They can be set aside only by the mutual consent of the parties or for causes established by law. (C. C. Q. 1022.) Contracts make the law between the parties. Neither the Code of Quebec nor the Egyptian Code has repro- duced this provision of the French Code; probably because it seemed to be too theoretical for a code. The German Code, however, lias a somewhat similar declara- tion. It says: Contracts aire to be interpreted in the manner required by loyalty and reciprocal confidence taken in connection with the usages recognised in business (art. 157). This does not mean that the court can set up an ideal contract and substitute it for the will of the parties. On the con- trary, it is the will x of the parties which must be discovered and to which effect must be given. EFFECTS OF CONTRACTS. 3 But the court is entitled to assume that neither of the parties intended to take advantage of the other, and that each of them Iiad a right to expect that the other would honestly and fairly fulfil his obligation. The broad principle that contracts make the law between the parties and that they are to be executed in good faith, although not stated in the Codes of Quebec or of Egypt, is just as much a part of those laws as it is of the French law. (Of. supra, I, p. 358 and p. 361.) It is a general principle laid down in the Roman law on the subject, and it has been held in France that it applies to contracts anterior to the Code. (Dig. 16. 3. 1. 6; Cass. 6 mars 1876, D. 76. 1. 193.) In saying that a contract makes the law between the parties, we mean (1) that it overrides any general provision of law, not being a law of public order, and (2) that the court is bound to give effect to the contract as it stands and is not entitled to modify it in order to make it more equitable. (Cass. 19 mare 1913, D. 1916. 1. 238; supra, I, p. 358 and p. 361.) Modification of charitable foundations. The interesting and difficult question as to the power of the courts to "vary r ' charitable foundations when a change of cir- cumstances makes it impossible or inexpedient to carry out the original purpose, is a question which can only be noted in this place. (See Demogue, E., in Rev. Trim. 1907, p. 287.) The English courts exercise a power of this kind. It is spoken of as the principle or rule of cy-pres — that is, of carrying out the original purpose as nearly as possible. {Moggi'id-ge v. Thackwell, 1792, 7 Vesey, 36, 2 R. R. 140; Jarman on Wills, 6th ed. 1, p. 233; Halsbury, Laws of England, vo. Charities, n. 333; Snell, Equity, 17th ed. 95.) Contract changes legal situation of parties. Under any system of law which recognises freedom of contract the parties who have made a contract are allowed to modify their legal relations. They make a law for themselves as regards the particular matter with which they are dealing, and this exercise of their free will is permitted by the law. 1 (2) 4 THE LAW OF OBLIGATIONS. But, as Ave have already seen, this is subject to the limitation thai they cannot contract themselves out of a law of public order,, or, in other words, their contract must not be one which is for- bidden. Interpretation of contract is question of fact. The rule that the contract forms the law between the parties does not mean that the interpretation of a contract is a question of law. On the contrary, it is a question of fact; the court has to dis- cover the intention of the parties in each particular case. This is in France an important distinction, because the Cour de Cassation has no power to review a judgment as to facts. It can only correct errors of law into which the lower courts have fallen . In the construction of contracts it is not always easy to say what is fact and what is law, and in France somewhat fine distinctions have been drawn. (B.-L. et Barde, 1, n. 336; Hue, 7, n. 88.) With these we are not concerned, because with us, in civil matters, there is an appeal both as to facts and law. In criminal appeals the Courts of Appeal in Egypt are courts of cassation in the French sense. (C. Crim. Proc. N. art. 229; Code Crim. Invest. M. art. 153. See C. A. Alex. 17 janv. 1906, B. L. J. XVIII, 95.) In saying that agreements are to be performed in good faith the French Code means to declare that it rejects the distinction of the Roman law between actions stricti juris and actions bonce, fidei. (Hue, 7, n. 90; Fand. Frwiq. vo. Oblig.. n. 7915; supra, I, p. 358 and p. 361.) Exceptio non adimpleti contractus. This article might also be used to support the doctrine which, undoubtedly forms a part of the French law, that in every synallagmatic contract the party asking for the execution of the contract will not be entitled to a judgment unless he has performed his own part of the contract or is ready to perform it. (See Planiol, 2, n. 949; Cassin, B,., De I'Exception tiree de Vlnexecu- tion, p. 440; Cass, 1 mai 1889, D. 90. 1. 470.) This rule has been alreadjr explained in discussing the character- of bilateral contracts. (Supra, I, p. 88.) EFFECTS OF CONTRACTS. 5 Modification of contract by parties. It hardly needs to be stated that the parties to a contract may, C\ as a general rule, put an end to it or modify it by a second contract. They were free to make it and they are equally free to unmake it or to change it. So long as the contract which modifies or dis- charges a previous contract between the parties is not contrary to public order or good morals it will receive effect . Nor does the law require in all cases that the consent to modify or discharge a con- tract shall be made in express terms. The parties may show by their conduct that they have so agreed. In other words, the consent to modify may be either tacit or expressed . Thus in a contract for the sale of coal, where the seller intimated to the buyer that, owing to the outbreak of war, and Government regulations in consequence thereof, he could not supply the coal, and to this intimation the buyer made no reply, it was held that he had acquiesced in the resiliation of the contract. (C. A. Alex. 11 avril 1917, B. L. J. XXIX, 358.) In a series of French cases it has been held that clauses of a policy of insurance to the effect that the premium should be portable, that is to say, that it should be the duty of the insured to take the premiums to the company's agent, had been modified by tacit agreement. ••*-> The uniform practice of the agent to call and collect the pre- miums when they fell due had been assented to by the insurer, and by this tacit agreement the premium had become querable, that is, it must be called for, and, accordingly, it was not in arrears until demanded. (Cass. 4 nov. 1891, D. 92. 1. 313; D. N. C. C. IV, p. 875, n. 1113, and p. 910, n. 158.) And there are many cases in which the courts hold that a party who was at first entitled to enforce a certain condition of a contract has by his conduct waived his right to do so. The original con- tract has been modified. (See Cass. 27 juillet 1892, D. 92. 1. 462.) So when the price is to be paid by instalments, it may be stipulated that if any instalment is not paid at the time agreed upon, this shall give the vendor the right s at once to demand pay- ment of the whole balance due. But if a vendor has on two occasions allowed the purchaser to pay an overdue instalment, it may be held that he cannot on the third occasion insist on his right to take nothing but the whole balance. (C. A. 17 April 1912, O. B. XIII, n. 114. For an 6 THE LAW OF OBLIGATIONS. interesting example of a modification of a contract by implied assent to a new condition, see Douai, 9 nov. 1899, D. 1901. 2. 46.) But the renunciation of a right is never presumed, and, though the renunciation of the right to enforce the contract — the waiver, to use the technical term of the English law — -may be implied, it •will not be implied unless the circumstances clearly indicate the imtention not. to insist on the right in question. AyA^ In insurance policies it is not uncommon to find clauses pro- viding how certain conditions may be waived. For example, it may be a condition of a fire policy that the assured must send particulars of the loss within a certain number of days, and it may be provided that this condition is not to be waived except in writing and by the company's manager. An assurance company has a large number of agents scattered over the country, and if they were to be allowed to waive conditions made in favour of the company it would be difficult to carry on the business of insurance at all. Most of these agents are merely agents for canvassing, whose, business it is to persuade people to insure with the company, and to collect and forward the premiums. Such agents do not dictate the form of the contract or its terms, and it would be unreasonable that they should have power to waive conditions which the company has made. Where no such condition is expressed in the policy the assured does not forfeit his rights to the indemnity by failure to make the declaration of the loss within the delay named, if his failure to do so was at the request of the company's agent. Xancy, 8 dec. 1894, D. 95.2. 165.) The rules as to this loss of contractual rights by waiver or acquiescence form an important chapter in the law. It happens frequently that a contract is modified in this way by the conduct of the- parties, and that when one of them attempts to get it en- forced by the courts it is held that he has no title to do so, because he has shown by his conduct his intention not to insist upon his legal rights under the contract, or, it may be, not to insist upon a certain particular right which was thereby given to him. The principle that the conduct of one of the parties may modify the contract is illustrated in the case where the inexecution by one party justifies the other party in refusing to execute the >> ''' "^ contract on his side. (See supra, I, p. 88; Cass. 4 fevr. 1889, D. 90. 1. 121.) As a rule it is perfectly competent for a party to surrender a EFFECTS OF CONTRACTS. 7 right given to him by contract, but we must remember that ho caiiiKj] surrender a right which is given to him by a law of public order; so that, for instance, it could not be maintained that aQp^ husband had by his conduct renounced any of the rights which the law gives to him as a husband, or that a man who was a party to a contract which was contrary to public policy or to good morals had lost by his conduct the right to challenge its validity, for, as has already been explained, it is a fundamental rule of the law that one cannot by a private agreement modify a law of public order and good morals. This rule applies equally to a private agreement made in express terms or to an agreement manifested by the conduct of parties. (C. C. F. 6; C. C. Q. 13; Decree of Reorg. Native Courts, art. 28.) When a contract is contrary to public order the court is bound ex mero motu to refuse all effect to it, and there can bo no question of the party being barred by his conduct from challenging the contract. (Larombiere, art. 1338, nos. 8 and 25; D. N. C. C. art. 1338, n. 31; B.-L. et Barde, 3, n. 1933.) Effect of modification or cancellation of contract as between the parties. When the parties modify their contract either expressly or by implication they may do so in any way which suits them, pro- vided they do not infringe the laws of public order. And, in like maimer, when they agree to cancel their contract, they may deter- mine what rights .each of them is to have. The presumption is that when they cancel the contract they intend the rights to be those existing at the date of the cancella- tion, for till then the contract was in force, and unless the parties have stated that they intended the cancellation to be retroactive, it will not be presumed that they intended it to be so. This has an important consequence in regard to the amount of damages. If the parties have cancelled the contract, reserving their respective right to damages, the presumption is that this means the damages as at the date when the contract was cancelled. "6 Effect of modification or cancellation as regards third parties, p. Although the parties can, as between themselves, determine that their contract shall come to an end, and even that it shall be as if it had never existed, that is, that the cancellation shall be retro- 8 THE LAW OF OBLIGATIONS. active, the}' cannot. modify or extinguish rights which third parties have acquired under the contract while it existed. If the contract produced a transfer of property, the party who by the contract became owner may have granted hypothecs or created servitudes over the property, and the subsequent revocation of the contract cannot affect the parties who have acquired these rights. Moreover, if there are by the fiscal law, dues to be paid on every transfer of property, the contract which revoked the former one is regarded as being a now transfer of property. (Planiol, 2, n. 1166.) This principle will be explained more fully presently in speak- ing of the effect of contracts as regards third parties, for the modification of a contract is, in fact, a new contract. Renewal of contract. When a contract expires the parties are free to renew it upon the same or upon different conditions. For instance, when a lease expires, or a contract of fire insurance terminates at the end of the year for which it was effected, if the parties agree to renew it they do not continue to be subject to the old contract, but they make a new one. But there are some contracts, such as those of life-assurance, or of membership of a club, or of a trades-union, which stand in a different position. So long as the party assured pays the premium when it is due, or so long as the member of the club or of the union pays his dues and satisfies the conditions of membership, he is entitled to the continuance of the old contract, unless, in the membership case, he lias been removed from the list in accordance with the rules to which he submitted himself. The contract in these cases is not renewed annually, it is kept in force. One of the parties is not free to modify it at the end of a year without the consent of the other or without a change in the rules. (See D. Rep. Pratique, Associations, n. 98; Aix, 23 nov. 1904, D. 1905. 2. 121, and note by Planiol; Civ. 23 juin 1860, D. 60. 1. 243; Cass. 19 mars 1901, D. 1903. 1. 329; D. Rep. Prat. Assurances, n. 259.) And it m&y be remarked in passing that the distinction between these two classes of contracts is an impor- tant one in the case where a statute declares that it is not to apply to contracts existing at its date. For a contract of this type continues to exist if it is kept in life in the manner provided. EFFECTS OF CONTRACTS. 9 Exceptions to rule that contracts can be modified or revoked by parties. Although the article in the French Code, now under considera- tion (C. C. F. 1134), which we are taking in connection with C. 0. F. 1165, says in general terms that contracts can be revoked by the mutual consent of the parties, there are, nevertheless, excep- tions to this rule. There are some contracts, though not many, which in the French law cannot be discharged or modified by the parties. Marriage is a contract, or, perhaps, it would be more correct to say, it is entered into by a contract; for by their contract, manifested in the way which the law requires, the parties effect a change in their status. As it has been well expressed, " Marriage is a status of which the gate is a contract." But, although the parties enter into this status by a contract, they cannot by a contract put an end to it, for the French law does not admit divorce by consent, nor can the parties modify the rights of status which the law gives them. So also, the marriage-cove- nants bj r which the patrimonial rights of the consorts are fixed before the marriage, if they do not leave them to be regulated by the general law, become irrevocable at the celebration of the mar- riage, in such a way that the parties cannot surrender any of the rights so given to them, or modify the marriage-covenants in any way after the marriage. (C. C. F. 1395: C. C. Q. 1260.) We do not attempt to explain the Mohammedan law on these points. Certain contracts can be revoked by one party or one party may be released owing to change of circumstances. It is clear that, as a general rule, a contract cannot be set aside by one party only. There would be no virtue in contracts if either party could resile from them at will. As the contract takes two to make it, so it will take two to unmake it. (See the interesting article in Rev. Trim. 1907, p. :245, on Modifications aux oontrats par volonte unilaterale, b}^ M. Rene Demogue.) It can be set aside without such mutual consent for certain causes, viz., fraud, error, violence, and, in some cases, lesion. Or it may be declared to have never existed for want of two consenting minds or for lack of an object or of a lawful cause. The law as to these matters has already been explained. But. when there is a valid contract not tainted with any vice, the rule 10 THE LAW OF OBLIGATIONS. hat it stands good, unless both parties agree to discharge or to vary it. This rule, however, is subject to certain exceptions created by special provisions as to particular contracts. So a mandate may be revoked, or, subject to certain conditions as to damages, it may be renounced. (C. C. X. 52j2j 529; C. C. M. 640, 650; C. C. F. 2003, 2007: C. C. Q. 1755, 1759. Sec B.-L. et Wahl, Mandat, n. 812; Demogue, in Eev. Trim. 1907, p. 271.) So, likewise, the person who has given a thing to a carrier for transport to A may, in some circumstances, forbid the carrier to deliver the thing to A. (Cass. 15 now 1893, D. 94. 1. 273; Lyon-Caen et Renault, Traite de Droit Commercial 3, n. 584; Thaller, Traite EUm. n. 1165; Demogue, in Rev. Trim. 1907, p. 270.) The qualifications and details do not belong here. And a partnership, unless for a fixed period, can be dissolved at the will of any one of the partners, provided this renunciation on his part is in good faith and is not made a contretemps, that is at a moment when the dissolution would be unfair to the other partner or partners. (C. C. E. 445/542; C. C. F. 1865; C. C. Q. 1895: C. A. Alex. 3 dec. 1890. B. L. J. Ill, 43.; So, likewise, a man who ha- let work to another to be done by contract for a fixed price— -memihe a forf ait— or even, in the Egyptian law, for a price settled according to the time occupied or the work done, can at any time cancel the contract if he pays the contractor his expenses' and damages according to the circum- stances of the case. (C. C. E. 407/495; C. C. F. 1794; C. C. Q. 1691; C. A. Alex. 18 mars 1909; B. L. J. XXI, 254.) Such a provision is necessary, for it might easily happen that a man began to build a house, and then found that he had not enough money to finish it, and, this being the reason, it does not seem to make any difference whether the materials are supplied by the owner of the building or by the contractor. (Cass. 5 janv. 1897, D. 97. 1. 89. See Demogue, in Rev. Trim. 1907, p. 267.) But these cases are specially provided for in the code and are exceptions to the rule. The French article also states that a contract may be revoked for causes which the law authorises. This is not at all a happy expression, but it means that there are cases in which owin g to the conduct of the other party, or to some changj of circumstances, the party acquires a right to Be relieved of his contract. This is so when its performance becomes im- possible by a fortuitous event, or when a party gets a contract I dissolved on the ground of the non-fulfilment by the other party of what he had promised. C. C. F. 1184; C. C. Q. 1065.) EFFECTS OF CONTRACTS. 11 Another example is the case of the lender of an article who Bnds he has an urgent need for the article himself. By the French law the lender can put an end to the contract by asking for the return of the thing. (C. C. F. 1889; C. C. Q. 1774.) And probably the Egyptian law is the same, though the code is silent upon the point. (Grandmoulin, Contrats, p. 270. Cf. German Code, art. 605; Stat. Keel. art. 804. It has been suggested that it would be equitable to give the courts a wider power to vary contracts, especially contracts of long duration, when owing to some unexpected change of eircum- ^ stances, their literal performance becomes very burdensome to one party. (See Demogue, R., in Rev. Trim. 1907, p. 247 and p. 309.) It is probable, however, that such a change of the law would do more harm than good, and would encourage undesirable liti- gation. It is highly in the public interest that the security of contracts should be maintained. (See supra, I. pp. 105 and 361.) There is, notwithstanding, one important case in which there is much to be said in favour of giving the courts power to modify a contract. This is when the unexpected outbreak of war makes its performance not impossible but extremely onerous for one of the parties. (See under War as Force majeure, infra, p. 307.) Effect of contracts as between the parties and as against third parties. In considering this subject it is necessary to distinguish con- tracts of which the effect is to transfer property or real rights, that is contracts which are at the 'same time conveyances, from contracts which have not this effect. And it will be convenient to divide the subject thus: (1) the effect of contracts in trans- ferring property between the parties; (2) the effect of contracts in transferring property in regard to third parties; and (3^ the effect of non-translatory contracts with regard to third parties. But before dealing with these questions there are certain pre- liminary matters which have to be disposed of. We have to determine to begin with who are the parties to a contract and who are third parties. LThe broad rule is laid down in the codes that contracts have effect only between the contracting parties. They cannot pre- judice third parties, nor can they benefit them except in cases 12 THE LAW OF OBLIGATIONS. specially provided for. (C. C. N. 141, 142: C. C. M. 202, 203. See C. C. F. 1165; C. C. Q. 1023.) This is the principle sometimes spoken of as that of the rela- tivity of contracts. The articles in the Egyptian Code are as follows: — Agreements cannot enure to the benefit of third persons, other than the creditors of the contracting party, who can, in virtue of the general right which they have over the property of their debtor, exercise, in the name of such debtor, all such rights of action as accrue to him from contracts or from any other source of obligation, save only such rights of action as are purely per- sonal. (C. C. E. 141/202.) Agreements cannot prejudice third persons, as against whom they cannot be set up unless they have a legally established date. (C. C. E. 142/203.) With these articles may be conveniently considered the article of the French Code which declares that a man cannot, in general, bind anybody but himself by a contract, or bind another to a third party by a contract. This is a free translation of the famous rule, On ne pent, en general, s 'engager, ni sti/puier en son propre norm, que pour soi-meme. (C. C. F. 1119.) This broad rule is qualified by the two articles which follow it in the French Code, in which it is declared: (1) that a man can guarantee that a third party shall do something, in this sens© that the promisor binds himself to pay damages if the third party will not take over the obligation; and (2) that a man may stipulate for the benefit of a third party when this is a condition of a stipu- lation which he makes for himself, or of a gift which he makes, and that where he has made such a stipulation for the benefit of a third party, and the third party has declared his intention of taking advantage of it, the stipulation can no longer be revoked. (C. C. F. 1120, 1121; C. C. Q. 1028, 1029. Cf. C. C. E. 137/198.) But, as will be pointed out later, the rule that contracts cannot affect third parties is subject to other exceptions. These two cases which the French Code gives as exceptions to the rule, namely, the contract se porter fort and the stipulation pour autrui, will need to be considered when we have first examined what are the effects of contracts between the parties and as regards third EFFECTS OF CONTRACTS. 13 parties, apart from these two particular cases which are specially provided for. r Who are the parties to a contract? The parties to a contract are, primarily, those who have per- sonally consented to it. But other persons may be parties to the contract although they did not appear in it by themselves. If I give to a man authority to act as my agent, and, in the execution of his functions as agent, he makes a contract in my name, I am a party to the contract just as much as if I had given the consent 'myself. I have, in fact, given the consent myself, although I have given it indirectly by authorising my agent to act for me in the matter. Qui f/ctolt per alium facit per se. (Aubry et Eau, 4th ed. 4, p. 650; Cass. 5 juin 1898, D. 98. 1. 559; D. N. C. ('. art. 1998, n. 1.) Representation in contract. When is an agent a party? When my agent in making the contract declares that he is acting in my behalf he does not bind himself personally at all. Through his instrumentality I acquire a direct right of action against the party with whom my agent made the contract, and this party acquires a direct right of action against me, while the agent himself drops out as soon as the contract is made. (Pothier, Oblig. n. 87; B.-L. et Wahl, Contrats Aleatoires, n. 800.) Nor does the ag^ent bind himself when he has exceeded the authority which I gave him, if he gave the part}- with whom he contracted a sufficient communication of his powers. (C. C. E. 524/643; C. C. F. 1997; C. C. Q. 1717; C. A. Alex. 19 fevr. 1903, B. L. J. XV, 155.) If my agent shows to the other party the written authority which I gave him, or explains the position in which he stands to me, and that he is acting on my behalf, it is for the other party to satisfy himself that the agent is acting within the limits of his authority. He knows that the agent is not adting for himself, and he knows, also, that the agent does not guarantee that he has authority to make the contract, for by communicating the extent of his authoritj*, the agent throws upon the other party the re- sponsibility of judging whether he has power to make this parti- cular contract. (B.-L. et Wahl, Control* Aleatoires, n. 806. A 14 THE LAW OF OBLIGATIONS. It is only when he exceeds his powers and does not disclose the extent of his authority, that the agent binds himself personally, for, in this case, he cannot be acting- as an agent, seeing that what he does is outside the scope of the agency. 'C. A. Alex. 16 nov. 1905, B. L. J. XVIII, 15.) Unless the principal chooses to ratify what the agent who exceeds his authority has done, he is not a party to the contract , or, perhaps a more correct way of expressing the law is to say that the principal, although not a party to the contract when it is made, if the agent exceeded his powers, is given by law the option of coming into the contract afterwards. (C. C. E. 527/648; C. C. F. 1998; C. C. Q. 1720; Aubry et Rau, 4th ed. 4,'p. 651; B.-L. et Wahl, Controls Aleatoires, n. 785; C. A. Alex. 1 fevr. 1899, B. L. J. XI, 116.) When an agent acts in his own name the situation is entirely different. It may be, and generally is, perfectly well understood that he is not contracting on his own behalf. He is really an agent because he is doing business for another . But by acting in his own name, he binds himself personally, and becomes the direct debtor or creditor of the person with whom he contracts, although he still is an agent vis-a-vis of the jjerson on whose behalf he was acting. (B.-L. et Wahl, op. cit. nos. 880, 900; Cass. 3 mai 1893, D. 93. 1. 567; C. C. Q. 1716. See Code Comm. E. 82/86; C. A. Alex. 3 mai 1905, B. L. J. XVII, 235.) Factors and brokers. Certain kinds of agents, such as factors — commissionnaires—or brokers — courtiers — habitually act in this way. Their principals are not named and do not appear in the trans- action. A commissionn-aire or an agent de change always and neces- sarily acts as an intermediary. He cannot, for example, sell his own goods to his clients unless he discloses the fact that they are his. He cannot be the contre- partie as well as the broker. Otherwise the client -can get the sale annulled. (Req. 28 mars 1904, D. 1905. 1. 65; Lyon-Caen et Renault, Traite de Droit Commercial, 3, n. 414; Manuel de Droit Commercial, 11th ed. n. 480, and n. 828.) Stockbrokers are subject to somewhat different rules from other brokers. The courtier, according to Egyptian usage, may sell his EFFECTS OF CONTRACTS. 15 own shares to his client if ho sells them at the market-price. (C. A. Alex. 24 jam. 1906, B. L. J. XVIII, 101; C. A. Alex. 8 mail907, B. L. J. XIX, 239.) The rule is that factors and brokers contract a* principals, and the other party to the contract looks to the eommissionnairt alone or the courtier. He has nothing to do with the person for whom the commissionnaire is acting. If I buy shares on the stock exchange through a stockbroker, the ordinary course of business is for me to buy them from the broker. In order to get the shares for me the broker has to buy them from somebody else, generally from another broker who is acting for the actual holder of the shares. Between me and this actual holder no contractual relation exists. I have an action against the broker on my contract with him, and the shareholder who sells his shares has an action against his own broker, while each of the brokers has rights of action against his client and against the other broker, but the new shareholder and the old shareholder have no action against each other. (Authorities in preceding note; C. A. Alex. 3 mai 1905, B. L. J. XVII, 235.) So much has been said in order to explain that there are numerous cases in which a man is a party to a contract, although he did not personally appear in it. He is a party because he was represented in the contract by his agent. Involuntary representation. Besides this representation to which he has consented there are, however, cases in which a man becomes bound by a contract in which he was represented, though, as a matter of fact, he did not authorise the representation. These are the cases in which there is what may be called an " involuntary representation," or a re- presentation created by law and not by agreement. So, the minor is bound by the contract which his tutor makes on his behalf so long as the tutor is acting within his legal authority . So also, if a man does something for my benefit in such circum- stances as to make him my negotioriom gestor, according to the principles which will be explained more fully later, I become bound by contracts into which my negotiorum gestor entered in my name although I knew nothing about them. And the parties with whom he dealt may, in certain circumstances, have a direct 16 THE LAW OF OBLIGATIONS. action against me. (Laurent, 20, n. 332; Dissertation of M. Planiol, in note to I). 91. 1. 49; infra, p. 155.) Or, to take an example from the commercial law, if a trader has been declared insolvent, and a concordat or scheme of settlement has been agreed to by the majority of the creditors, who repre- sent moreover three-fourths of the debts, and this composition is confirmed by the court, it becomes binding upon all the creditors, even those who were not present at the meeting or those who were present and opposed the scheme. (See C. Com. N. 328; C. Com. M. 338; C. A. Alex. 8 mai 1895, B. L. J. VII, 247.) For the law declares that the majority of the creditors, provided certain other conditions are fulfilled, shall represent the minority. This is another case of involuntary representation. Summary. The parties to a contract include therefore, in addition to those consenting to it in person, (a) those who consented through an agent; and (b) those whom the law binds to the contract because it was made by their legal representatives. Heirs and successors. In most contracts, besides the parties originally entitled or bound, there is a possibility of other persons becoming entitled or bound afterwards, because they succeed to the rights or debts of the original parties. The presumption is that a person who stipulates for something to be paid to him intends that it is to be paid to his heirs if he dies before the contract is executed. And, in like manner, there is a presumption that a man who binds himself to make a payment intends that if he does not pay it in his lifetime it is to be paid by his heirs. As the French Code expresses it: On est cense avoir stipule pour soi et pour ses heritiers et atjants^Qfluse, a moins que le contraire ne soit exprime ou ne resulte de la nature de la conven- tion. (C. C. F. 1122; C. C. Q. 1030. Cf. German Code, art. 1967.^ The Egyptian Code has no article to this effect, but the law is the same. The rule is that obligations transmit both actively and passively, but there are certain exceptions to the rule. For the present purpose it is sufficient to point out that the aycmts EFFECTS OF CONTRACTS. 17 cause who succeed to the rights of a party to a contract arc. not to be considered as third parties. This is not for the reason that they had any part in the contract when it was made, but because they have stepped into the shoes of those who made it. It would be absurd to say that the rule that third parties could neither benefit nor be prejudiced by con- tracts applied to the ayants cause. If I make a contract which my heir has to fulfil, he is just as much prejudiced by it as if he had made it himself. It is not necessary here to discuss the nature and the extent of the liability of heirs and whether, and in what cases, an heir can be liable in excess of the amount to which he has succeeded, or to refer to the difficulties of the Mohammedan law on this subject. (See, on the last matter, VEgypte Contemporaine, 5, p. 14, article by Abd El Hamid Bey Badawi.) Under any system of law the heir cannot be a third party in the sense under consideration. Meaning of "ayants cause." The term ayant cmi&e^ is a more convenient one than any corresponding English expression. It is often translated by the word " representative," but this word suggests too much the idea of agency which is quite a different thing. By ayant cause is meant for our present purpose a person who, without having consented to a contract either personally or through a representative, has succeeded to one of the parties to the contract or to a person who had rights or liabilities under it, or has acquired from another a right under the contract. The person to whom the ayant cause succeeds and in whose place he comes, or the person from whom he acquires the right is called his author. It would not be sufficient for the definition to say that the ayant cause succeeds to one of the parties. This is so in the case of succession to a deceased person when the heir of the creditor, or of the debtor, as the case may be, succeeds to him. But it is possible for a man to succeed as an ayant cause to a right or to a liability under a contract although his author was not himself a party to the contract. This may happen when there is an assignment of a debt. The original creditor may assign the debt, in which case the assignee succeeds to him as a party, but if the assignee in his W.— VOL. II. 2 18 THE LAW OF OBLIGATIONS. turn assigns the debt, the second assignee is the ay ant cause of the first, but he does not succeed directly to either of the parties to the debt. The person who acquires under a contract a right of property, may be correctly said to succeed to the right of property which his author had, but the person in whose favour a hypothec is created does not succeed to his right, for it is created for the first time by the contract. But he is, none the less, the ayant cause of the owner who creates the hypothec, because he derives his right from him. (See B.-L. et Barde, 1, n. 211.) Universal and particular ayants cause. Ayants cause are of two kinds, denoted in the French law by the terms ayants cause a titre universel, and ayants cause a titre particulier. The first are those who succeed to the whole estate of the author, or to an aliquot share of it, such as a half or a quarter. These will, generally, be heirs of a deceased person, because people do not as a rule transmit their estate, or an aliquot part of it, in this way during their lifetime. But a man's creditors are also, in a sense, ayants cause uni- versels, because such rights as they have are over the whole patri- mony of their debtor. The position of creditors is, however, different from that of other ayants cause universels, and I shall consider it separately. The ayants cause a titre particulier are those who succeed to their author in some particular right or acquire some particular right from him. The buyer, for instance, succeeds the seller as owner of the thing bought. A person to whom a thing is left as a legacy succeeds the ancestor as owner of this particular thing. The creditor in whose favour a hypothec is created acquires from the debtor a special and determinate right against the property hypothecated, and so on. (Planiol, 1, n. 303; B.-L. et Barde, 1, n. 211; Bufnoir, Propriefe et Contrat, p. 753.) Rule that obligations transmit to universal successors only. The general rule is that it is only the ayants cause universels who succeed to the rights or to the liabilities of their author, and the presumption is that the ayants came of this class do succeed to both the claims and the debts. There are cases, however, in which the obligation does not pass even to them. For (a) the EFFECTS OF CONTRACTS. 19 contract may provide that the right -o j until the registration of the deed of sale, and, consequently, his creditors may validly seize the immoveable as the property of their debtor. But this opinion does not appear to be sound. ... The creditors are not third parties who have real rights over . . the immoveable. It is this second view which has been followed in Egypt. The details cannot be discussed in this place. (See t C. A.' Alex. 16 juin 1910, B. L. J. XXII, 368; Grandmoulin/ Suretes, dc. n. 874; Bufnoir, Propriete et Cmtrat, p. 113; D. N. C. C. 4, p. 1742, n. 60.) But there is no doubt that a purchaser who has not registered his title may be evicted by a subsequent purchaser from the same vendor whose title gets on the register before his. In like manner, a purchaser who has not registered his title may have to suffer the burden of hypothecs or other real rights agreed to by his author after the alienation to him, but registered before it. So long as both sales are unregistered the earlier in date has the preference. (C. A. Alex. 23 mai 1912, B. L. J. XXIV, 354. Cf. C. A. Alex. 23 mars 1915, B. L. J. XXVII, 235.) Exceptions to the rule that the real right first registered is y preferred. x> { (1) It is only a purchaser by onerous title, and when we say a purchaser we mean the acquirer of a real right as well as a pur- chaser of property, who can secure his right by getting it regis- .>\^t.j tered, and is preferred to a purchaser of earlier date whose right is not registered. When the conflict is between a purchaser by onerous title whose right is not registered and a subsequent pur- 40 THE LAW OF OBLIGATIONS. chaser by gratuitous title whose right is registered, the purchaser by gratuitous title will have to give way, though, according to the Egyptian law, this will be so only when the title of the first ' purchaser had acquired a date certaine before the transcription made bv the purchaser by gratuitous title. (C. C. E. 617/744 ; C. A. Alex. 21 mai 1902, B. L. J. XIV, 303. Cf. 0. C. Q. 2098.) In France, according to the prevailing view, a donee whose right is registered enjoys the same preference as a purchaser by onerous title. (D. N. C. C. vol. 4, p. 1741, n. 49.) But this is not so by the Egyptian law, which in this respect is much more equitable than the French law. And the law of Quebec agrees with the Egyptian law. (2) In order to avail himself of the preference given by first registration, it is certainly essential that the second purchaser shall not have acquired his right by a fraudulent agreement entered into between him and the vendor in order to defeat the right of the. first purchaser — fraus omnia rwmpit. The Court of Cassation founds its decision to this effect on the general idea that fraud 1 X creates an exception to all rules, and that the law of 1855 was • not intended to provide a convenient means for cheating innocent third parties. (Cass. 27 nov. 1893, D. 94. 1. 343; Cass. 21 juill. 1885, S. 1887 1. 175; Pand. Frang. vo. Transcription, u. 944. Contra, Mourlon, Transcription, 2, n. 453.) The same result is reached by some of the writers by another method . The second purchaser has caused damage to the first purchaser by his fault, and is, therefore, liable to make reparation on the general principle of responsibility for fault . If the property which he lias wrongfully acquired is still in his hands the restitution of ' it to the first purchaser will be the appropriate reparation. It only came into his hands by fraud, and lie receives the property subject to the duty of restoring it. (Lyon -Caen in note to S. 94. 1. 343; B.-L. et Barde, 1, n. 396; C. A. Alex. 12 fevrier 1908, B. L. J. XX, 89.) But does the mere knowledge by the second purchaser that the seller to him had already alienated the pro- perty to another, or had agreed to the constitution of a real right over it, without any fraudulent collusion with him, prevent his acquiring the property if his title is first ' registered ? This is a disputed question in France, but it is generally answered in the nes-ative. Neither the toi du 23 mars 1855 nor the Civil Code of Lower Canad,. says that the second purchaser needs to be in good EFFECTS OF CONTRACTS. 4t , faith in order to have his title preferred. C. C. Q. 2080, 2098.) (The French Code, in dealing with deeds by which a gift is made to a person — the greve— subject to a charge of restoring it at his death to a substitute — the appele— prescribes that the deed must be registered to have effect against creditors or third parties; and it goes on to say that these third parties may plead the want «f registration, although they may have had knowledge of the gift. (C. C. F. 1071.) Their private knowledge is not to be equivalent to the official intimation, made to them by registration^ According to the pre- vailing view in France, the principle here laid down applies also to the case under consideration. (Authorities in preceding note; Aubry et Rau, 5th ed. 2, p. 459; Mourlon, Transcription, 2, n. 452; Pandectes Frrnigaises, vo. Transcription, n. 939; and D. N. C. C. 4, p. 1744, n. 121.) It is true that the law of registration is devised to protect the interests of third parties in good faith, but in order to secure this protection a general scheme has been framed which in fact protects all those who in dealing- wit h the transferor find that the forms have not been complied with. In order to make the law effective it has to be general, and. being general, it may occasionally benefit a person not specialh" intended to be covered. -And it may, further, be argued that a third party who has mere private knowledge is not really in bad faith. The law says to him, " You are not bound to know of any alienation which is not registered." (See Eevue Pratique, 31, p. 244; Bufnoir, Propriete et Contrat, p. 122.) Whether the last argument is sound or not, there is nothing in the French loi du 23 mars 1855 to prevent the second purchaser of the immoveable, who has private knowledge of a prior aliena- tion which has not been registered, from registering his own title. and then founding on the want of registration by the first pur- chaser. Such a second purchaser can hardly be described as being " in good faith," but he has complied with the provisions of the law, and the benefit given by the law to the owner whose title is first registered is not restricted to owners who acquire in good faith. The language of the Egyptian Code is different. According to that code it is only as regards third persona irh<> hare aeted in good faith, laho have a just title and who have proiechd their rights by observing the forms prescribed' by lair, that the o\\ ship is transferred by transcription. (270/341.) IHT- 42 THE LAW OF OBLIGATIONS. A proposal to alter the Egyptian law on this point and to bring it into conformity with the French law, was made in the course of the discussion as to the institution of Litres Fonciers in Egypt. A clause was proposed: Le simple connaissance de V existence cCun acte portant sur un des droits mentionnes aux arts. 14 et 15 ne suffit pax pour constituer les tiers en mauvaise foi. But this clause was struck out by the majority and does not appear in the report of the commission. {Rapport du Comite de la Com- mission Internationale de 1904 sur les Livres Fonciers, p. 17, and p. 14 of the Rapport de la Sous-Commission.) The difficulty of maintaining that a person who has acquired an immoveable knowing that his author had previously sold it to another can be held to have acted in good faith is insuperable. But in spite of this the jurisprudence has fluctuated in an extraordinary manner. During the first period the Mixed Court of Appeals held that " o'ood faith'' meant here the absence of simulation; mere know- ledge of a prior alienation would not create bad faith. Qu'anx* termes de Varticle 341 du Code Civil, le creancier qui oppose le defaut de transcription doit etre de bonne foi, metis en ce sens que son litre doit etre sincere et non pas en ce sens qu'il doit avoir ignore V alienation de Vimmeuble. (C. A. Alex. 30 avr. 1890. B. L. J. II, 406. In same sense, C. A. Alex. 19 fevr. 1896, B. L. J. VIII, 121: C. A. Alex. 12 janv. 1898, B. L. J. X, 95.) In 1903 begins a second period during which the jurisprudence gives to good faith its natural interpretation: Qu'evid eminent la bonne foi doit s 'entendre non dans le sens de la fraude qui donne lieu a V action paulienne, mais, conformement an sens stride des termes, du simple fait que le second acquereur connaissait V existence de la premiere vente. Que cette interpretation, deja admise ailleurs legislativeimnt sous Vempire d'une legislation prevoijant li V absence du fraude" (Laurent, XXIX. n. 191), doit etre rationnellement et a fortiori admise sous Vempire du texte plus large de la legislation egyp- tienne. (C. A. Alex. 24 nov. 1903, B. L. J\ XVII, 25.) During a third period the jurisprudence frankly follows the French law, and considers that the second purchaser cannot be in bad faith unless there had been a concert frauduleux between him and the vendor.' (C. A. Alex. 12 fevr. 1908, B. L. J. XX, 89. In same sense. C. A. Alex. 23 mai 1912, B. L. J. XXIV, 354; EFFECTS OF CONTRACTS. 43 C. A. Alex. 6 mai 1913, B. L. J. XXV, 365; ('. A. Alex. 23 avr. 1914, B. L. J. XXVI, 342; C. A. Alex. 2 dec. 1914, B. L. J. XXVII, 42; C. A. Alex. 17 dec. 1914, B. L. J. XXVII, 68; C. A. Alex. 8 fevr. 1917, B. L. J. XXIX, 205.) But during this period the jurisprudence is not uniform, and there are cases in which mere knowledge of the prior alienation has been considered to constitute bad faith. (C. A. Alex. 27 avr. 1915, Gaz. Trib. V, n. 336, p. 129; C. A. Alex. 24 avr. 1917, Gaz. Trib. VII, n. 370, p. 123; C. A. Alex. 4 juin 1918, Gaz. Trib. VIII, p. 296.) Finally a fourth period has begun with the decision of 18 janv. 1919 (R. G. 581^3 A. J. ;, in which the Court of Appeal returns to the view that mere knowledge of a prior alienation puts the second purchaser in bad faith. This result is criticised severely by a recent writer to whose analysis of the jurisprudence I am indebted. From the legislative point of view there is much to be said for not requiring that the purchaser should not be in good faith*. But as the Egyptian codes now stand, it seems to me impossible to arrive at this conclusion in spite of the learned argument of this writer. (See De L'influence de la Mauvaisi Foi en mature de Transcription, par M. Stair os Cademenos* L'Egypte Contcmponune, 1919, p. 388.) Effect of alienation of corporeal moveables as against third parties. It would obviously be impossible to preserve by registration evidence of the ownership of moveables. Moveables have no fixed situation, and their owner can remove them from one place to another or from one country to another. Moreover, the interest of commerce requires that the circulation of moveables shall be as easy and rapid as possible, and to require formalities for their transfer would render business impracticable. Accordingly, the rule in regard to them is that a contract for their alienation trans- fers the property as regards third parties as well as against the parties themselves. If I sell my horse to A, and, afterwards, I sell it over again to B, the second sale will carry nothing to B, for A has already become the owner of the horse. But, although the mere contract to transfer a moveable makes the transferee the owner of it, a transferee who has not obtained the possession is in a very insecure position on account of the operation of another rule of the law. This is the fundamental rule— en fait de meubles 44 THE LAW OF OBLIGATIONS. la possession Witt Hire (C. C. F. 2279.; The Egyptian Code and the Code of Quebec create a presumption of lawful title and of good faith in favour of the possessor of the moveables. (C. E. 608/734; C. C. Q. 2268.) The French law is really the same, for, although the French Code says that possession is equivalent to title, its interpretation has always been in accordance with the traditional view that if the possession is proved to have "begun in bad faith the title fails. La regie " en fait de meubles possession vaut litre " ne p-otege (jae In possession aninio domini, et nan mile qui est precaire ou dont Vorigine est equivoque ou obscure. Cette regie ne peut etre invoquee que par le tiers acquereur ou possesseur de bonne foi. (Nancy, 30 dec. 1891, D. 92. 2. 441. The full discussion of this subject belongs to the law of property. (B.-L. et Tissier, Prescription, 3rd ed. n. 871; Bufnoir, Propriete et Contrat, p. 343; Aubry et Bau, 5th ed. 2, p. 143; D. N. C. C. art. 2279, nos. 54 seq.; Req. ler fevr. 1893, D. 94. 1. 278; Beq. 22 mai 1906, D. 1906. 1. 351: De Hults, vo. Possession, nos. 41 seq.; Halton, 1, p. 216.) The theoretical justification of* the rule is not very easy, and there has been a long controversy about it, but the practical con- siderations in its favour are overwhelming . There would be no security for commerce, if the purchaser in good faith of a corporeal moveable who obtained possession of it was liable to be evicted by some one with a prior title. An honest buyer who obtains delivery ought to know that he is safe. The necessities of commerce have also led to the extension of this rule to negotiable instruments payable to bearer, such as bank-notes, promissory notes, and the like. These arc, strictly speaking, incorporeal moveables, being, in one form or another, promises to pay a sum of money to the bearer, but business requires that thej shall pass freely from hand to hand, and that the actual holder of them shall be able to exact payment independent of the title of his author. (See B.-L. et Tissier. Prescription, 3rd ed. n. 841; Paris, 26 nov. 1886, D. 87. 2. 110: D. X. C. C. art. 2279, n. 258.) The application of the rule in favour of the lawful possessor of a corporeal moveable, including the special class of incorporeal moveables just referred to, is to give to the purchaser who has got delivery of the thing an enormous advantage over the purchaser who has not been put in possession. To return to the previous example, if I sell my horse to A, and subsequently sell it to B, EFFECTS OF CONTRACTS. 4-3 who is unaware of the previous sale, and B obtains delivery of it, B, and not A, will be the owner of the horse. (C. ('. E. 46 688; C. C. F. 1141; C. C. Q. 1027; Aubry et Rau, 5th ed. 2, p. 79; Halton, 1, p. 140.) We have, here, an important exception to the general rule that a man cannot transfer to another any right that he lias not him- self. By my sale of the horse to A, I have devested myself of the property in it, and yet I am able by a subsequent sale to >B to make him the owner. So much does the law favour the honest buyer who obtains delivery, that even if the horse has been stolen or lost, and it is afterwards bought from a horse-dealer or in a public market, the buyer who is called upon to give it up to its real owner is not obliged to do so except upon receiving from him the price which he paid for it. (C. C. F. 2280; C. C. Q. 2268; B.-L. et Tissier, Prescription, 3rd ed. n. 906. This, at any rate, is clear in the French law and in the law of Quebec. The Egyptian codes say, "he can recover the price paid," but they do not say that he has a right of retention till he has received it. (C. C. E. 87/116; see Halton, 1. p. 220. Does the same principle apply to the creditor who has in good faith received an article in pledge and lent money upon it? The prevailing view is that he is to be treated as a possessor in good faith, except in a question with the owner of a thing which has been stolen or lost. Although the thing did not belong to the debtor, the creditor who has got possession is protected up to the amount of the debt. (B.-L. et Barde, 1, n. 415; Aubry et Rau, 5th ed. 2, p. 159; B.-L. et Tissier, Prescription, n. 908, bis; Req. 12 mars 1888, D. 88. 1. 253; C. A. Alex. 17 avr. 1900, B. L. J. XII; 213; D. N. C. C. art. 2279, n. 154.) But accord- ing to the jurisprudence of the Cour de Cassation, the creander- gagiste does not enjoy the advantage given expressly to a buyer by article 2280. The article creating an exception must be restric- tively interpreted. ■ If the thing has been lost or stolen- the creancier-gagiste has no protection. (Cass. 11 mai 1898, S. 98. 1. 481; Aubry et Rau, 5th ed. 2, p. 159, note 36.) This con- clusion is doubted by some authorities. (Note by M. Tissier to S. 98. 1. 481; B.-L. et Tissier, Prescription, n. 908, bis.) 46 THE LAW OF OBLIGATIONS. Incorporeal moveables. The rule that the property of moveables is transferred by eon- tract even against third parties does not apply to incorporeal moveables except negotiable documents. The sale of a debt as against third parties requires certain formalities which cannot here be explained. (See B.-L. et Tissier, Prescription, n. 840; C. C. F. 1690; C. C. Q. 1571; Halton, 2, p. 87; Beudant, Contrats, p. 202.) The effect of non-translatory contracts with regard to third parties. We have now discussed the ways in which those contracts which are at the same time conveyances may benefit or prejudice persons who were not parties to such contracts. We have now to consider the contracts which do not effect any instantaneous change of property, but merely generate obligations^ In such contracts a third party may be introduced either in the character of a debtor or in that of a creditor. Or, at any rate, if these terms are open to criticism, we may say that the intention is that the third party shall, in the one case, subsequently take over a liability under the contract, and in the other case, that the third party shall have the right to take a benefit under it. For, strictly speaking, the parties to a contract cannot make a third party either a debtor or a creditor under it. The French Code states the general rule thus: — On ne peut, en general, s engager ni stipuler en son propre nom, que pour soi-meme. (C. C. F. 1119.) And it then pro- ceeds in the two following articles to state as exceptions to this general rule: (1) that a person may make a contract in his own name for a third party if he does so in the character of a porte- fort, a term to be presently explained; and, (2) that a man may stipulate for the benefit of a third party subject to certain condi- tions. (C. C. F. 1120-1121.) The contract of porte-fort, as will be explained later, is in- correctly treated by the code as an exception to the broad rule that a man can by contract bind no one but himself. But the stipulation pour autrui is in reality so important an exception to the rule that a party to a contract can stipulate only for himself, as completely to overshadow the rule itself. We cannot make the EFFECTS OF CONTRACTS. 47 third party a creditor, but we can stipulate a benefit for him. This is a different thing from making him a creditor, but, never- theless, it makes the rule of little importance. In saying that a person can bind himself only the code means himself and his ayants cause. And the Code of Quebec states the rule with accuracy in this respect, and avoids the error into which the French Code falls of treating the contract of porte-fort as an exception to it, by saying, A person cannot, by a contract m Ms oivn name,, bind any one but himself and his heirs and legal representatives ; but he may contract in his own name that another shall perform an obligation, and in this case he is liable in damages if such obligation be not performed by the person indicated. (C. C. Q. 1028.) 48 THE LAW OF OBLIGATIONS. CHAPTER II. CONTRACT OF PORTE- FORT. The Egyptian codes are entirely silent as to the contract of poi'te- fort, though it is perfectly well recognised by the jurisprudence. (C. A. Alex. 7 juin 1900, B. L. J. XII, 313; C. A. Alex. 13 mai 1908, B. L. J. XX, 214.) On pent se porter fort pour un tiers, <>n promettant le fait de celui-ci. Such a contract is in fact useful and valid, and there is no abso- lute necessity for an article in the code to authorise it in express terms, though it would have been better if the Egyptian Code had contained such an article. The rule that a person cannot by a contract in his own name bind any one but himself must now be explained. In saving " iji hisjrwn name " the French Code intends to exclude the case where the party to the contract acts in the name of another and as representing him, for example, as his agent or his tutor. The rule has no application to such a case in which the third party is bound because he was represented. (Planiol, 2, n. 1019. Supra, p. 13.) Nor does it apply either to the analogous case of gestion d'affaires, where the law regards the negotiorum gestor as, in a sense, the agent for the person for whom he acts, although this person gave him no authority. / Here also the negotiorum gestor does not act in his own name in the sense of intending to bind himself personally. He contracts in the name and on account of the maitre. (See infra, p. 155.) This is so even where he may have been compelled to incur a provisional liability. If you are in Europe, and have left your • house in Egypt empty, and with no one in charge of your affairs, and a wall shows signs of giving way, I, your neighbour, may call in a builder to prevent the collapse. If he agrees to do the necessary work, relying upon your paying him for it, he has an action against you and no action against me. CONTRACT OF PORTE-FORT. 49 (See D. Rep. Obligations, a. 5462; note by M. Plaaiol to I). 91 . 1. 49; and infra, p. 155.) But the builder may refuse to do his work unless I make myself responsible. In this case, according to what seems to be the better opinion, the builder will not have a direct action against you, for it was with me that he contracted, and on my credit that he relied. But I have bound you by my contract with the builder to indemnify me if my. interferenjoe was justifiable, for the contract which I made with the builder was on your behalf, though literally it may have been made in my name. (B.-L. et Barde, 1, n. 129, and 3, nos. 2814 seq.) The rule stated in C. O. F. 1119, does not refer at all to the case of agency or to negotiorum gestio. What is contemplated is a case where A, not being the agent of B, and not acting as a negotiorwm gestor on B's behalf, neverthe- less promises that B shall perform an obligation . This promise is declared to be ineffectual. It cannot bind A, for A, ex hypothesi, did not promise anything on his own account. And it cannot bind B, for the simple reason that he never con- sented to be bound. But nothing prevents A, if he chooses, from binding himself to pay damages if B does not assume liability for the contract, or, in other words, if B does not ratify the engagement which A has made for him. Or, A may go further, and undertake to pay damages if B does not, firstly, assume liability, and, secondly, does not duly execute the contract. The obligation of the porte-fort in the strict sense is limited to this, that he undertakes to procure the ratification of a contract that he makes on behalf of another. If this is the nature of the contract, — and the words se porter fort are not sacramental, — the liability of the promisor is at an end when the third party has ratified. What the porte-fort pro- mised was a rapporter la signature of the third party, without in any way guaranteeing that, when the third party had ratified, he would faithfully fulfil, the contract. If the porte-fort promises this in addition, he is a surety — caution — as well as a porte-fort. (Demolombe. 24. n. 222: B.-L. et Barde, 1, n. 132.) ■ Whether the obligation is of this wider nature, or whether it is limited to that of the porte-fort in the strict sense, is purely a w. — VOL. II. 4 50 THE LAW OF OBLIGATIONS. matter of interpretation. (Aubry et Rau, 5th ed. 4, p. 512; Laurent, L5, n. 544; I). N. C. C. art. 1120, n. 19.) Distinction between contract of porte-fort and suretyship. The contract of the porte-fort must then be carefully distin- guished from that of a surety. The obligation of the latter is an accessory obligation to guarantee the fulfilment of a principal obligation. But the obligation of the porte-fort is a principal obligation, viz., to obtain the ratification of another or to pay damages, and it is fulfilled if the ratification is obtained, although the third party may afterwards fail to fulfil the contract. (B.-L. et Barde, tU sup.; C. A. Alex. 13 dec. 1900, B. L. J. XIII, 41; C. A. Alex. 9 mai 1901, B. L. J. XIII, 292.) Porte-fort promises on his own account. From what has been said already it is clear that the porte-fort binds himself and not another. He binds himself to perform an act, viz., to procure the ratification; not to do his best to procure it, but to procure it. It is not enough for him to prove want of negligence as an excuse for non-fulfilment. He can be excused only by proof of force majeure which prevented him from obtain- ing the ratification. (B.-L. et Barde, 1, n. 132; Aubry et Rau, 5th ed. 4, p. 514, note 14, ter.) In short, the obligation of the porte-fort is simply an illustration of a contract to do. And it is therefore incorrect to treat it, as the French Code does, as being a promise which binds or intends to bind anybody but the promisor. If the contract is ambiguous is there a presumption that a party binds himself as a porte-fort? If the contract is ambiguous, in this sense, that it might mean either, on the one hand, that the promisor promised that a third party would do something, or, on the other hand, that he promised to secure the ratification of the third party, is there any presump- tion in favour of the latter interpretation? This is a point upon which there has been much controversy. According to some writers, we should apply here the rule of interpretation that when a clause is susceptible of two meanings it must be understood in that sense which would make it produce some effect, rather than in that sense which would make it produce no effect at all. (C. C. F. 1157. Supra, I, p. 372.) CONTRACT OF PORTE-FORT. 51 Now the mere promise by A thai. B will do something, if A has no authority to represent B, is entirely worthless, and it is argued', therefore, that the presumption is against the parties having agreed to a contract which was perfectly futile. On the other hand, if we are to presume that in every case where A appears to promise that B will do something A must have meant that he would secure B's ratification or pay damages, what becomes of C. C. F. 1119£ We deny practically all effect to the statement that a person cannot by a contract in his own name bind any one but himself, by saying that in every case where he appears to be seeking to bind another he is really binding himself. The sound view appears to be that a man will not be bound as a porte-fort unless the inten- tion to bind himself in this way sufficiently appears, though such an intention .may be inferred from the circumstances, or from the whole effect of the contract without being expressed in technical language as an obligation se porter fort. (Laurent, 15, n. 533; Aubry et Eau, 5th ed. 4, p. 511; D. N. C. C. art. 1120, n. 6; C. A. Alex. 23 mars 1905, B. L. J. XVII, 173.) For example, if in the sale of a house the seller promises that a neighbour shall cut down certain trees which block the view, it is a fair presump- tion that this means that he undertakes to procure this neighbour's consent . The buyer was not likely to have contented himself with a promise of no value at all. (Bufnoir, Propriete et Contrat, p. 565.) The ratification and its effect. The ratification of the third party does not need to be in any special form and it may be implied. As between the parties, the ratification retroacts to the date of the contract, but as reg v ards third parties the ratification takes effect only from its date, and then only if it has a dale <-crhilne, or, if it is a contract subject to registration, only when this formality has been complied with. (Larombiere, art. 1120, n. 7; B.-L. et Barde, 1, n. 142 (1). See, however, Cass. 18 dec. 1875, D. 76. 1. 97. and the note.) Utility of contract of porte-fort. It is principally where incapable persons, and especially minors, are concerned, that the contract of porte-fort is very convenient. For example, co-heirs desire to sell the property which they hold in undivided ownership, and among them there are minors. In 4 (2) 52 THE LAW OF OBLIGATIONS. order to- avoid the expense and delay of legal proceedings, the- co-heirs who have attained majority sell on their own behalf, and at the same time se portent fort for the minors, that is guarantee that these will ratify the sale when they come of age, or that, if they refuse to do so, the co-heirs will pay the damages. This is the common case, but a person may, if he chooses, undertake to secure the ratification by any third party, whether capable or incapable, of a contract made on behalf of this person. (B.-L. et Barde, 1, n. 134; Planiol, 2, n. 1022.) There is a certain analogy between the position of a porte-fort and that of a person who professes to act as an agent, though he has no authority, or of one who, being an agent, exceeds his authority, without having given to the other party a sufficient knowledge of the limits of his authority. The agent in such a case binds himself. (C. C. E. 524/643; C. C. F. 1997; Douai, 25 janv. 1897, D. 97. 2. 319; C. A. Alex. 16 nov. 1905, B. L. J. XVIII, 15.) It may happen that a person contracts both for himself and also as porte-fort for another. In that case, he has a direct and personal right to sue for execution of the contract, and it is no answer to plead that the third party for whom he contracted had no legal existence, being, for example, an unincorporated society. (Cass. 27 juillet 1903, D. 1904. 1. 36.) And a contract may be made by which A promises that B will do something, or, if B fails to do it, that he will do it himself. (Beaubien v. Ekers, 1902, K. J. Q. 24 S. C. 199.) Such a contract must not be confused with the contract of porte-fort . English law as to person who professes to be an agent though he has no authority. The principle of the English laAv is that if the alleged agent honestly believed that he had authority he is liable on an implied warranty of his authority. (Storkey v. Bank of England, 1903, A. C. 114, 72 L.J. Ch.402.) If he knew he had no authority he is liable for deceit. (Polhill v. Walter, 1832, 3 B. & Ad. 114, 37 R. R. 344; Anson, Contracts,^ 14th ed. 415; Pollock, Contracts, 8th ed. p. 113.) STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 53 CHAPTER III. STIPULATION FOR THE BENEFIT OF THIRD PARTIES, OR THE STIPULATION POUR AUTRUI. We now pass from promises made on behalf of a third party to the converse case of stipulations made for the benefit of a third party. ' We have seen that, without consent, the third party cannot be made a, debtor. In like manner, he cannot be made a creditor, or, at any rate, he cannot be compelled to take a benefit under the •contract, though he may be given an opportunity of doing so. The article in the French Code reads: A party may, in like manner, stipulate for the benefit of a third party, when such a stipulation is the condition of a contract which he makes far himself, or of a gift which he makes to another, and he who makes the stipulation cannot revoke it if the third party have signified his unsh to take the benefit thereof. (C. C. F. 1121.) The Civil Code of Quebec is to the same effect. (C. C. Q. 1029.) The article on this subject in the Egyptian codes is more meagre, but it, no doubt, intends to lay down the same principle: When a person has stipulated on behalf of a third party ivithout his mandate, such third party hm the option of ratifying the con- tract or of refusing to recognise it. (C. C. E. 137/198.) History of the stipulation pour autrui. The article of the French Code states in brief form the law of the subject as given by Pothier. (Oblig. nos. 70—72.) But, to understand it, it is necessary to go back to the Roman law, and to the old French law which was based upon it. The general rule of the Roman law is expressed very roundly thus: Alteri stipidari nemo potest. (Inst. 3. 19. 19.) The reason given for this is that the stipulator has no interest. If I stipulate that you shall pay a certain sum to Paul, I cannot enforce the contract unless I can show an interest. If, however, I have stipulated that, in the event of your failing to pay to Paul 54 THE LAW OF OBLIGATIONS. the sum agreed upon, you shall pay mo a penalty, this removes the difficulty, because then I have an interest. And, in this case, the principal obligation is that you snail pay me a penalty in a certain event. This gets over the objection sometimes urged that the clause of penalty is accessory, and, therefore, if the principal obligation is null the accessory obligation falls Avith it. (Pothicr, Obliq. n. 70. But, even in the Roman law, there were several j> oases in which a stipulation in favour of a third party was held to he effectual, though the stipulator had no pecuniary interest, and though no penalty had been stipulated. The principal one was where a donor in making a donation stipulated that it was subject to the charge that the donee should pay something to a third party. This was called a donatio sub modo. (Code, 8. 55. 1; Dig ^24. 3. 45. SeeGirard, Manuel, 5th eel. p. 946; and, for other less important cases, Windscheid, Pandekten, 2, s. 316.) The glossators, or mediaeval commentators on the Roman law, extended this principle to all cases where something had been delivered to a party, where there had been a dation, whether upon the title of donation or upon any other title such as sale. This was accepted law in Pothier's time, and some of the old French writers before then had gone a step further, in saying that, when- ever in a contract A promised something to B, or delivered some- thing to B on condition that B should confer a benefit on C, the stipulation for C's benefit was valid. (See, for the history, Lam- bert. E., Du Contrat en faveur de Tiers, n. 8 and n. 56; Planiol, 2, nos 1212 seq.) The code adopted this view, for the general principle of the modern law is that mere consent is enough to bind, and it is inconsistent with this principle that any dation or delivery should be required to make the contract complete. Prom this review, it will be seen that the rule that one can stipulate only for oneself becomes of very limited application. If I stipulate merely that you shall give something to A, this is not binding unless I have a pecuniary interest, in which case, in spite of appearances, I am really stipulating for myself as well as for A. But if, in a contract agreed to by you, I promise you any- thing, or give you anything, and I stipulate as a condition that you shall give something to A, this is a valid contract which I, the stipulator, can enforce. And, in this latter case, it is not necessary for me to have a pecuniary interest; it is enough if I have a moral interest, such as the mere desire to confer a favour upon the third party. STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 55 l'-.-L. el Barde, 1, n. 149; Cass. 30 avril 1888, D. 88. 1. 291.) IF a pecuniary interest were require d, the utility of the stipu- lation pour autrui would be greatly dimi nisli«il . If I insure my life for the benefit of a third party I have no pecuniary interest; for nothing- will be paid to me, and the money when it is paid will nol form part of my succession, but my moral interest is sufficient to make the contract valid. (Cass. 6 fevrier 1888, D. 88. 1. 193; Cass. 16 .Janvier 1888, D. 88. 1. 77.) Modern applications of the stipulation pour autrui. In the Roman law, and in the old French law, the stipulation p&ur autrui played a comparatively small part. But in the modern law it forms one of the most important chapters. No principle of the Law has been found to be more flexible, or more capabh of being- applied to new sets of circumstances. It has been employed, as Planiol says, a realiser des operations qui seraienl Impossibles on, tout au moins, plus difficiles avec tous les autres principes du droit. (2, n. 1216.) The whole law of life-insurance, when the capital is to be paid to third parties, and -the law of accident-insurance by an employer for the benefit of his workmen, are two only of the many applica- tions of this principle, and new cases to which it can be applied are continually occurring. (See Lambert, Control en faveur de Tig_the stipulator until it has been assented to by the third party. (C. C. F. 1121: C. C. Q. 1029.) The Egyptian Code is silent upon this important point, but it is safe to assume that the legislator did not mean to depart from the French law on the subject. In France, it is held that the exercise of this right of revocation is not subject to any particular J form and may be implied. It is sufficient that the stipulator has shown his intention to revoke. (B.-L. et Barde, 1, n. 169; Agen, 8 mars 1893, in note to Cass. 10 dec. 1894, D. 1895. 1. 329.) The revocation does not need the consent of the promisor, and 70 THE LAW OF OBLIGATIONS. its effect will usually be that the promisor is bound to make payment to the stipulator instead of to the third party. But this will not be so when the promisor can show that pay- ment to the stipulator would be more onerous to him than payment to the third party. For example, it is clear that if I give you a farm on condition that you pay a life-rent to my father, my revocation of the stipulation in his favour could not oblige you to pay the life-rent to me for any period longer than my father's life. The period must continue to be the length of my father's life and not that of mine. (Aubry et Rau, 5th ed. 4, p. 523; B.-L. et Barde, 1, n. 170; D. N. C. C. art. 1121, n. 66. See Grenoble, 6 avril 1881, D. 82. 2. 9.) fa And cases are conceivable in which the stipulation in favour of a third party is o f so person al a Wind that it could not be rendered to any one else. The substitution of the stipulator for the third party would be clearly contrary to the original intention of the parties. In such a case the revocation by the stipulator simply relieves the promisor from the burden. (Aubry et Rau, 5th cd. 4, p. 523; B.-L. et Barde, 1, n. 170; D. N. C. C. art. 1121, n. 68. See Guerette v. Ouellet, 1905, R. J. Q. 27 S. C. 45.) If the stipulator dies before the third party has intimated his assent, the heirs of the stipulator can exercise his right of re- vocation unless this appears to be contrary to the intention of the parties. The inchoate right of the third party created in his favour without any participation by him can disappear in the same manner and by the same procedure as that by which it came into existence. The right which the stipulator has to revoke the benefit which his will has called into existence is an ordinary personal right, which, on general principles, passes to his heirs. (Aubry et Rau, 5th ed. 4, p. 524; B.-L. et Barde, 1, n. 171; Douai, 10 dec. 1895, D. 96. 2. 417, and note by M. Dupuich; Bordeaux, ler avril 1897, D. 98. 2. 169, and note by M. de Loynes.) Some writers dispute this, and argue that the right of revocation is essentially personal and is to be assimilated to the right to revoke a gift on the ground of ingratitude, which by the French law does not pass to the heirs of the donor. (C. C. F. 957; Lambert, Contrat en faveur de Tiers, n. 90.) But the weight of authority is in the other sense, and there does not appear to be any reason why we should regard this right as essentially personal. As M. Barde says, le Hers doit etre, au STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 71 regard des hSritiers du stipulant, dans la si inn lion ou il se trouvait au regard du stipulant hd-meme; il conserve son droit, main, a defaut d' acceptation, ce droit demeure aussi fragile qu'avant la mort du stipulant. (B.-L. et Barde, 1, n. 171.) This, however, is a question of interpretation. In the case of _*> life-assurance for the benefit of a third party, it is presumably contrary to the intention of the assured that his heirs should have the right to revoke the stipulation. The desire of the assured is that the insurance-money shall not be a part of his succession, and, although he reserves to himself the right to change its destina- tion, he does not intend his heirs to have the same right. By not exercising his right of revocation he has indicated that he does not wish this money to go to his heirs. To allow them to revoke, and in this way to secure for themselves what was meant for others, would be to make the contract produce an effect entirely contrary to what was intended. (B.-L. et Barde, 1, n. 197; Aubry et Kau, 5th. ed. 4, p. 527; Dupuich, Assurance sur la Vie, n. 230; D. N. C. C. 4, p. 928, n. 750.) And although the heirs of the stipulator succeed to the right to revoke the stipulation, except in the case of life-assurance, or > where, in other cases, a contrary intention appears, this will not be so when the stipulator in his will has confirmed the benefit given to the third party, for this amounts to an interdiction of the heirs from revoking the liberality. (Grenoble. 6 avril 1881, D. 1882. 2. 9.) The right to revoke the stipulation is however strictly personal in the sense that if the stipulator does not choose to exercise it, it cannot be exercised for him by his creditors. At any rate, this is so in the case of insurance. The benefit conferred on the third party is presumably conferred from motives of affection or family interest. The parties did not contemplate its revocation on purely pecuniary grounds. It might be revoked for family considera- tions and of these the stipulator was to be the sole judge. (Aubry et Bau. 5th ed. 4, p, 212, note 48, Us; Dupuich, Assurance sur la Vie, n. 212, Paris, 10 mars 1896, D. 96. 2. 465; note to D. 95. 2. 155, column 2, in fine. Contra, Douai, 10 dec. 1895, D. 96. 2. 417.) The application of the rule is sufficiently clear in this case. It may be less clear in other cases, but, although the question is one of intention, it would seem that the right of revocation of a benefit stipulated' for a third party is not as a general rule to be 72 THE LAW OF OBLIGATIONS. considered as being primarily a pecuniary claim or asset of the stipulator's estate, such as his creditors are entitled to collect by an action. (See the note by M. Dupuich to D. 96. 2. 417.) Effects of assent. >• tjf-S O It is generally agreed that the consequence of the assent is to give to the third 'party a direct right of action against the promisor. (Pothier, Oblig. n. 72; Demolombe, 24, n. 255; Aubry et Rau, 5th ed. 4, p. 529; Cass. 24 fevr. 1902, D. 1903. 1. 433; D. N. C. C. ait. 1121, n. 122; C. A. Alex. 14 fevr. 1918. B. L. J. XXX, 221.) This is. after all, a matter of interpretation, and if considera- tion of the contract leads to the conclusion that the parties never intended to give a direct action to the beneficiary, there is no reason why the court should refuse effect to this intention. (B.-L. et Barde, 1, n. 164; Cass. 20 dec. 1898, D. 99. 1. 320.) The German Code leaves it for the court to decide if the third party has a direct right (art. 328), and the Swiss Code says le tiers ou ses ayants droit peuvent aussi reclamer personnellement Vexecution, lorsque telle a ete Vintention des parties ou que tel est Vusage. (Code Fed. des Oblig. art. 112.) The stipulator has also an action to compel the promisor to execute the stipulation in favour of the third party who has assented to it, for it must not be forgotten that the promisor makes a direct contract with the stipulator. (Demolombe, 24. nos. 232, 233: B.-L. et Barde, 1, n. 154; D. N. C. C. art. 1121, n. 144: Cass. 10 avril 1894, D. 99. 1. 270.) It is because the stipulation for the third party is an integral part of the contract that the third party enjoys the benefit of all the guarantees, such as hypothecs, furnished by the promisor. Whether the third party enjoys the privilege of the vendor is a disputed point, which cannot here be adequately discussed. Many writers deny it. But it seems reasonable to say with the editors of the last edition of Aubry et Rau, une pareille charge forme, en effet, partie du prix, dont Vintegralite se trouve gar an tie par le privilege du vendeur, aux droits diiquel le beneficiaire de oette charge se trouve virtuellement subroge. (Aubry et Rau, 5th ed. 4, p. 531, note 30; B.-L. et de Loynes, Nantissement, n. 583; Caen, 24 avril 1902, D. 1904. 2. 425. Contra, B.-L. et Barde, 1, n. 166.) Where an immoveable was sold subject to a price in money and also to payment of an annuity to a : (6 STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 73 third party it was held by the court of Caen that this right to the annuity was protected by the vendor's privilege. (Caen, 24 avril 1902, id su/p.) 'As a rule the stipulator does not bind himself to any performance in favour of the third party. Accord- ingly, the third party will have no action against him unless, in the particular ease, he has specially bound himself. (B.-L. et Barde, 1, n. 159; Cass. 6 juin 1880, D. 89. 1. 55.) How may the third party declare his assent? It is plain that since no form is prescribed, the assent may be expressed or implied, and it is better to avoid the word "accept- ance," though it is used in many of the cases, because it suggests the theory which we have rejected that the third party is in the position of a party to whom an offer is made. The rule that the assent may be implied is supported by all French writers and by many decisions. For instance, in a French case, where a sum was to vest in a daughter either at her marriage, or on her setting up a business, it was held that her assent was shown by her commencing a business. (B.-L. et Barde, 1, n. 172; Cass. 30 juill. 1877, D. 78. 1. 342. Cf. Bordeaux. 1 avril 1897, D. 98. 2. 169; D. N. C. C. art. 1121. n. 94.) In particular, the bringing of an action by the beneficiary in which he claims the execution of the stipulation is a sufficient in- dication of his assent to it. (D. Rep. Oblig. n. 297; D. N. C. C. art. 1121, n. Ill; Dupuich, Assurance sur la Vie, n. 50; C. A. Alex. 18 jam. 1917, B. L. J. XXIX, 163.) f 1 If the legal representative of the third party is the stipulator himself can he give the necessary assent for the third party? If a father insures his life for the benefit of a minor son, can he, as his son's tutor, assent to the' stipulation for the son? Or may we say that the assent is implied in the stipulation itself which the father makes? It is not easy to answer affirmatively. There are conflicting French decisions on this point. The view of the Cow de Cassation is that the father may, in such a case/ assent to the stipulation, but as this is a renunciation by him of his right to revoke, his intention must be unequivocally shown. It will not be implied from the mere fact of his signing the policy in his own name and not on behalf of the son. (Cass. 25' avril 1903, D. 1904. t. 150. But see Besangon, 11 nov. 1898, 74 THE LAW OF OBLIGATIONS. D. 99. 2. 81; note by Labbe, S. 89. 1. 290; B.-L. et Colin, Donations, 1, n. 1293; Laurent, 12, n. 249; D. N. C. C. 4, p. 922, n. 525; Dupuich, Assurance sur la Vie, n. 51; Lefort, Assurance sur la Vie, 2, p. 106.) As M. Lambert says, this- cannot be justified on the theory of the offer. It is, in effect, saying that the acceptance by one of the parties of the offer made by the other is sufficient to create a right not only in favour of the stipulant but in favour of the third party. It is a subtilty to attribute to the beneficiary an assent which really emanates from the stipulator. (Contrat en faveur de Tiers, n. 97.) A Quebec case is a good illustration. A sold a farm to B, subject to a charge of a payment by B to C, who Avas a minor child of A. It was held no other assent was necessary. The person who could have assented would have been A him- self, as tutor for his minor child, and his assent was implied from his making the stipulation. {Dostaler v. Dupont, 8 Quebec Law Reports, 365.) But if the stipulation by the father for the benefit of the 60ii were assimilated to a donation, the father could not be both the offeror and the acceptor. There would be no concourse of two wills. (Laurent. 12, n. 249; B.-L. et Colin, Donations, 1, n. 1293.) And, unless we have the courage to say that in this case no assent is required, it is difficult to justify such decisions. (Lambert, 1. c.) Assent does not need to be intimated to stipulator. It is not necessaiy that the assent of the third party should be intimated to the stipulator, or even to the promisor, in order to render the third party's right irrevocable. (Aubry et Rau, 5th ed. 4, p. 528.) It follows from what has been said that even when the stipula- tion for the benefit of the third party is in effect a gift to him, it does not need to be made or accepted in authentic form. If the stipulation for the third party is the condition of an onerous contract which one makes for oneself, the stipulation is not subject to the formal rules applicable to ordinary gifts. The stipulation for the third party is accessor}- to a contract which does not need to be made in any special form. (B.-L. et Barde, 1, n. 167; Req. 30 juill. 1877, D. 78. 1. 342.) The German Code requires no assent on the part of the > STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 75- beneficiary. Unless he repudiates the benefit the right is acquired (art. 333). And the French jurisprudence is so liberal in admitting the evidence of implied assent as almost to reach the same result. (See Dupuich, Asmrance sur t la Vie, p. 129.) Who can be a beneficiary under the stipulation? There are three possible cases: (1) The third party who is to benefit under the stipulation is a person individually designed and actually living; [2 the stipulation is for the benefit of persons who are living but indeterminate; (3 the stipulation is for the benefit of future persons. Determinate persons. The person to benefit here is either mentioned by name in the contract, or is indicated jii such a way as to leave no doubt as to his identity. In the case of life-assurance, at any rate, it is established in France that when the assured reserves, as he generally does, the right to alter the beneficiary by an avenant or annex to the policy, the position of the third party who is named in this way is just the same as if he had been named in the policy itself . The right of the beneficiary retroacts to the date of the contract. (Cass. 19 nov. 1907, D. 1908. 1. 129, and Dissertation by M. Dupuich; Lefort. Assurance sur la Vie, 2, p. 234.) And, similarly, the beneficiary may be named in the course of the life of the assured by an endorsement of the policy. (Cass. 4 mai 1904, D. 1905. 1. 165; "D. N. C. C. 4, p. 918, nos. 408 seq. and ib. Additions, 1913, p. 231, nos. 398 seq.) Thus, to give an example: A husband insured his life for the benefit of his wife. Subsequently the husband became bankrupt, and a syndic or trustee for his creditors was appointed; thereafter the assured died. The syndic claimed the insurance-money as part of the bankrupt's estate. The Court of Appeal of Paris held: (1) That the Avidow could accept the offer after her husband's death; (2) That her acceptance retroacting to the date of the insurance, she was vested in a personal and direct right against the insurance-company which never formed a part of the estate of the husband, and could only have entered into that estate if he had used the right of revocation; and (3) That this right of revocation, being a right strictly personal to the husband, could 76 THE LAW OF OBLIGATIONS. not be exercised by the syndic in his name. (Paris, 10 mars 1896, D. 96. 2. 465.) And, according to the jurisprudence of the Cour de Cassation, the result would have been precisely the same if the assurance had been originally in favour of the assured and his heirs, and the wife, or any other determinate person, had been substituted by the assured in place of the heirs by an avenant to the policy. (Cass. 7 aout 1888, S. 89. 1. 97, D. 88. 1. 118: B.-L. et Barde, 1, n. 200; Lefort, Assurance sur la Vie, 2, p. 234.) Indeterminate or future persons. Can a stipulation validly be made for the benefit of a person not named, or even of a person not yet in existence? We have seen that the prevailing theory now is that, under a stipulation for the benefit of a third party, a right vests in the third party by the effect of the contract. Practical considerations make it eminently desirable to come to this conclusion. But if the third party is as yet undeter- mined, or does not yet exist, how is it possible to say that any right is inherent in him? Can we conceive of a right which is not inherent in any person, a right, that is to say, which no one is entitled to enforce? In considering this question it is best to distinguish indeterminate persons from future persons. By indeterminate persons we mean those persons who are not actually named or designated in the contract, but who, neverthe- less, can be determined at the date when the contract is to take effect for their benefit. A stipulation for the benefit of persons who are not only indeterminate but indeterminable will certainlv not be valid. But if, at the time when the contract is to take effect, it is possible to make the determination, wlrv should we deny effect to the stipulation? But assuming that the third party is determinable, at the time when payment is demanded, although not determinate at the date of the contract, is it possible to give to this indeterminate person a droit propre from the date of the contract itself? It is generally agreed that a legacy may be made in favour of indeterminate persons if they are capable of being made determinate later. There is, of course, no difficulty when the legacy is made to a determinate person in the first place, subject to the charge that lie shall pay a certain sum to a person whom he shall select out of a class named by the testator. (D. Snpp. vo. Dispositions enfrr vifs, n. 842; D. N. C. C. art. 1002, n. 222.) STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 77 For instance, if a yum is bequeathed to provide a dowry each year for a poor and honest girl of a certain town, the girl' to bo ' selected by the bishop, there is sufficient determination of the legatee. (Caen, 9 juill. 1894, D. 95. 2. 236.) And a legacy directly in favour of chacune des viugl villes de France ayant le plus d'ouvrieres pauvres has been held to be valid because, by inquiry, it could be determined which twenty towns satisfied the condition. (Amiens, 26 fevr. 1879, S. 81. 2. 136; Journal du Palais, 81, p. 708.) If these results are correct, why should a different rule be applied to the stipulation pour autrui? (Lambert, Contrat en favour de Tiers, n. 133; Planiol, 2, n. 1236.) But in the case of a legacy no right vests in the legatee until • the death of the testator, whereas in the case of the stipulation' pour autrui it is desired to find some means by which the right can vest at once in the beneficiary, for, otherwise, it will be exposed to the action of the creditors of the stipulator. Suppose, for example, a man insures his life for the benefit of himself if he survives a certain date, or of his heirs if he predeceases that date. His heirs are not determinate at the date of the assurance, but they will be determinate when he dies. In the meantime, however, does any right vest in them? If it does not it must vest in the assured himself and form part of his patrimony . And if he dies insolvent his creditors will be entitled to take the sum paid by the insurance-company. The French authorities are in favour of the right of the creditors in this case. (Lyons, 9 avril 1878, D. 79. 2. 158; Besangon, 14 mars 1883, D. 83. 2. 129; Cases in note to Paris, 8 juill. 1904, D. 1906. 2. 13, and in D. N. C. C. 4, p. 919, nos. 427 seq. ; Cass. 20 d&6 : . 1876, D. 77. 1. 504; Dupuich, Assurance sur la Vie, n. 194.) Other expressions which have been held to denote personnes indeterminees are mes parents, mes cousins, and even mes enfants nes ou a naitre. (As to the last see infra, p. 82 seq., and Dissertation by M. Dupuich in D. 1906. 2. 13; Lefort, Traite du Contrat d'Assuranae sur la Vie, 2, p. 138.) But why is it necessary to come to this conclusion? It is presumably contrary to the intention of the parties. The assured may be presumed to have intended that the insurance-money should not form part of his succession. At least such a presumption is reasonable when, at the date of the in- surance his heirs are his wife and children, and, in an Egyptian 78 THE LAW OF OBLIGATIONS. case, the Mixed Court of Appeal has held that in this case it is possible to g-ive effect to his intention. En cos de predeces de Vassure, la somme appartient done aux heritiers naturels et ne pent pas etre consideree comme line depend- ance de sa succession soumise a V action des creanciers ; il importe pen que les beneficiaires eventuels de Vassurance n'aient pas ete nommement designes dans le contrat, du moment que tant au moment du contrat qa'a celui du deces, les heritiers naturels de Vassure se trouvaient etre sa femme et ses en f ants tons nes au moment du contrat et v'wants lors du deces. (C. A. Alex. 28 nov. 1901, B.L.J. XIV, 27. Cf . C. A. Alex. 27 avril 1904, B.L.J. XVI, 217. See Cass. 2 juillet 1884, D. 85. 1. 150; and the note to Paris, 8 juillet 1904, D. 1906. 2. 13; and see infra, p. 82.) In the case decided by the Court of Paris the expression in the policy was heritiers directs, and the court held that the assured intended by this phrase to denote his minor children existing at the date of the contract. The Mixed Court in Egypt and the Court of Paris recognise that persons actually existing at the date of the insurance may_ acquire a direct right, though they are not named in the policy,. But can we go further and say that such a direct right can be created in favour of a person actually indeterminate and indeter- minable at the date of the contract? 'There is no doubt that this result would best satisfy the requirements of business, but the difficult}" is to find a satisfactory legal ground upon which to rest it. It is perhaps possible to accept the solution adopted by some French writers. Cases where beneficiary is indeterminable at date of contract. But before stating this- theory it is well to point out that there are several cases in which it is generally admitted that a stipula- tion is valid, though at the date of the contract it is not possible to sslj who the third party is for whom the benefit is stipulated. The jurisprudence in France has in these cases clearly recognised the possibility of a valid stipulation for an indeterminate person. Thus, in marine-insurance, the usual form of policy is pour le compte de qui il appartiendra. The assurer is -bound not only to the present owner of the goods but also to any future owner. L' assurance pour compte de qui il appartiendra cree un lien de droit, non settlement entre les parties demommees au contrat, mais encore entre Vassureur et les pro- prietmres presents et futurs de la chose assuree. ,r ■ STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 79 The person in right of the bill of lading is entitled to claim the benefit of the contract. (Cass. 27 juin 1899, S. 1903. 1. 502; Amiens, 10 juin 1887, D. 89. 2. 177: Cass. 5 mars 1888, D. 88. 1. 366, S. 88. 1. 315; Lyon-Caen et Renault, Trcdie de Droit Commercial, 4th ed. 6, n. 1192. Cf . Arnould on Marine Insurance, 7th ed. 2, s. 1279.) One cannot say at the date of the contract who will have the right of suing the "underwriter," as the marine insurer is called. The English form is that the assured makes the contract " as well in his own name as for and in the name and names of all and every person or persons to whom the same doth, may, or shall appertain." (Arnould on Marine Insurance, 7th ed. 1, s. 12.) Again, before the French loi du 9 avril 1898. which gave to workmen in industrial occupations a right to compensation for death or bodily injury caused by accidents during their work, without proof of fault on the part of the emplo} r er, it was common for the employer to insure his workmen against industrial acci- dents. Such contracts took various forms, but the most usual was the form called in France assurance-collective. Under this form of contract the employer insured his workmen against the pro- fessional risk collectively and without their participation, and made a deduction from their wages towards the payment of the premiums. According to the prevailing jurisprudence in France, this gives to an injured workman or to the representatives of a workman who has been killed by an accident during the work a direct right of action against the insurance-company. (D. N. C. C. 4, p. 935, nos. 82 seq.; Lambert, Du Contrat en fare/ti- de Tiers, n. 280. Cf. Pau, 30 juin 1913, D. 1915. 2. 49.) In many cases this result has been justified upon the ground that the employer acts as negotiorum gestor for the workmen, and that they ratify his acts by agreeing to the deduction from their wages to meet the premiums. It is this which creates the lien de droit between the workmen and the insurance-company. (Paris, 22 juill. 1897, D. 98. 2. 94; Trib. Civ. de Morlaix. 2 juin 1915, D. 1916. 2. 29.) But a more correct view appears to be that this is an example of stipulation pour autrui. The employer continues bound to pay the premiums; he does not intend to contract in the name of the workmen who vary from day to day, and he has no intention to offer to them the right to take over the engagement which he has mad.'. There is no real analogy between this case and that of 80 THE LAW OF OBLIGATIONS. gestion d'affaires. (Lambert, op. M. Lambert says: on ne pent pas ne pas se defter de V exactitude et de la legalite d'un principe qui conduit a de pareils resultats. (Op. c-it. n. 139, in fin. And M. Labbe says: le legislateur doit se hater de modifier ime legislation pen hospitaliere pour une institution aussi morale, aussi bienfaisante que I'o >sn ranee sur la vie, surtout quand elle est contract ee, avec une abnegation genereuse, par une personne au profit direct de ses enfants nes et a uaiire.) (Note to Cass. 2 juill. 1884, S. 85. 1 . 8, in fine. Cf. M. Labbe in note to Douai, 6 dec. 1886, S. 88. ■J. J97. And. lastly. M. Lefort says: It convient, dans rinteret meme du developpement de Vassurance sur la vie, de lutter avee energie pour I 'iw iter les cas ou V attribution devra etre consideree faite en faveur de tiers indetermines. 11 importe d'obtenir que Von an.gmente le cas ou le droit propre pourra etre reconnu, afin de. permetirv pour la farniUe la constitution d'une reserve a Vabri des vicissitudes causees par la mort de son chef. Assurance sur J a Vie, 2. p. 256., This last writer is afraid that it is too late to maintain in France that a stipulation merely in favour of heritiers ou an ants droit should be interpreted as conferring a vested right in the sum promised. The term " heirs " suggests that the assured was think- ing of the beneficiaries in the light of his legal successors wh& continue his personality. It is true he m.ay have been thinking of those persons who when he made the contract happened to be his heirs presumptive, and as events turned out were his heirs and his only heirs at the time of his death. On the other hand, he may have been thinking of the benefi- ciaries as those persons at present unknown to him who at his death would be his heirs. But in either case the result will be the same, for it is precisely in their character of heirs that the beneficiaries will be entitled to claim the insurance money. They will take it jure hcereditario and not jure sub. It seems to me that in the first of the.e two eases M. Lefort admits too 'much. If at the date of the policy the heirs presumptive of the assured were his wife and childrn, and the insurance is for himself if he is living at a certain date, or otherwise for his heirs, is it not a reasonable presumption that when he speaks in the policy of his " heirs " he is thinking of his wife and children as individuals and not of a group of persons who may happen to be his heirs at his death? As we have seen, this view lias been taken by the Mixed Court of Appeal m one ease. ;C. A. Alex. 23 nov. 1901, B. L. J. XIV, 27; supra, p. 77. in fine.) 1 \ * STIPULATION FOB THE BENEFIT OP THIRD PARTIES. 83 But even if we are to admit that whore the stipulation is for the benefit of "heirs"' or ayants cause, no droit propre is created, at any rate, unless there are very special reasons for supposing thai the word "heirs" -was meant to describe particular individuals, it is surely unnecessary to go as far as the French courts have gone in denying the creation of a droit propre when tho stipula- tion is for the benefit of "children. If a father insures his life for the benefit of his children, it is entirely unreasonable to presume that he intended the insurance money to go to his heirs as such, and therefore, possibly, to. his creditors, seeing that the object of the insurance in almost every case is precisely to create a distinct fund for the benefit of the persons named which shall not be a part of his succession and shall be protected from the creditors. If the assured had not intended to create such a fund why should lie insure for the benefit of " children " at all? The result would have been the same if the insurance had been for his own benefit alone. In France the jurisprudence has become so established that some writers think it is vain to contend for the validity of a stipu- lation in favour of future persons. They admit with regret that an insurance for the benefit of enfants a nmtre cannot give these a vested right, because the jurisprudence is quite settled in the contrary sense. All that they fight against is the jurisprudence to the effect that when the stipulation is for the benefit of enfants ties et a naitre it should be invalid as regards the children existing at the date of the contract. (Lefort, Assurance sur la Vie, 2, p. 258.) But in countries, like Egypt, which have a law based upon the French system, but where the courts are not bound to follow the French jurisprudence, we may certainly go further, and maintain that, upon the principles of the French law, there is no impossi- bility in giving a droit propre to a future person. It is necessary, therefore, to examine the grounds upon which the French juris- prudence rests. They appear to be mainly two: (1) A person not yet born or conceived cannot succeed as an heir whether on intestacy or by will, and cannot receive a gift, and the same reasons prevent a future person from taking a benefit in this way under a stipulation. (2) It is impossible to conceive of a right not inherent in any subject. As regards the right of succession the reason why the French 6 (2) 84 THE LAW OF OBLIGATIONS. law excludes future persons is because it accepts the principle laid down as to saisine in the old adage le mort misit le : vii. (Planiol, 3, n. 1931; Colin et Capitant, 3, pp. 444 seq.) There must be an immediate and direct transmission of the succession from the deceased to the heir. We must seek for a man's heirs at the moment when the suc- cession opens, and we cannot admit into the class of heirs any person who is not there at that date. (C. C. F. 725.). As regards the capacity to take a gift, a future person is excluded for the plain reason that a gift is a contract, and that a contract requires two parties. As the future person, ex hypothesi, has no existence ho cannot accept a gift, nor. can any one accept on his behalf . (C. C. F. 906.) But the French law has always admitted that when there was a direct gift to one person subject to a charge in favour of another person, this second person did not need to be in existence at the date of the contract; in fact any other rule would make charitable foundations impossible. (Caen, 15 nov. 1906, D. 1907. 2. 265. See Planiol, 3, nos. 3330 seq.) But by the French law, where there is a direct gift, it must be to some person having capacity, and not to a group of persons not recognised as having legal personality such as, for example, an association like a peace society which has no corporate existence. (Paris, 18 fevr. 1909, D. 1909. 2. 273.) And the whole law of substitutions, so important in France before the Code Napoleon so greatly restricted their use, rests upon the principle that it is not necessary that the substitute should exist at the time of the gift, if he exists and is capable of taking when the substitution opens in his favour. (C. C. F. 896, 1048; Pothier, Traite des Donations entre Vifs, n. 105.) But when, instead of a gift to A for the benefit of B, we have a direct gift to B, and B is a future person, is it possible to say that a right in favour of B is created by the contract? This leads to the consideration of (2) which is the crux of the problem. The French courts which deny this possibility have no doubt been influenced by the theory of the offer. If the stipulation pour autrui is regarded as an offer to the third party, it is essential that the offer shall be to an existing person. (Lambert, Du Contrat en faveur de Tiers, n. 140.) But, rejecting the theory of the offer, is it still impossible to give a right to a non-existing person? Seeing that the assent of the third party is not necessary to create the right why is it neces- STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 85 sary that he should exist in order that the right should be created? The stipulation cannot give the third party before his conception a vested right, but it is not necessary that the contract should produce its effect immediatelj' . The third party finds when he is born an expectancy or eventual right which was only waiting for his birth in order to take shape. The promisor is bound to the beneficiary when he is born, just as in the case of collective insurance the insurance-company is bound to the workman of whose existence it had no knowledge at the date of the contract, or the gas-company, or water-company, in the case of the contracts of public utility, is liable to the house- holder whether he was born or not at the date of the contract. In support of this argument an analogy may be drawn from the law of sale. There can be a valid contract of sale of a future thing though the sale can produce no immediate effect, and will indeed never produce any effect unless the future thing conies into existence . The operation of the contract is suspended until we see if there w.as in fact any object sold, and, if it turns out that there was, the sale is valid. If there can be, as in this case, a valid contract before we know whether there is an object, why can there not be a valid contract before we know whether there is a subject? This analogy was already made by Ranchin who died in 158f3. Et sicuti spes rei qua speratur facit valere stipulationem ; ita spes persona qua speratur facit valere talem donationem. (Sur la question 267 de Guy-Pape.) It has been approved of by many writers. (Lambert, Du Contrat en faveur de Tiers, n. 189; Lefort, Assurance sur la Vie, 2, p. 254; Planiol, 2, n. 1242.) The question is so delicate that I will, at the risk of repetition, quote the language of M. Lambert, which M. Lefort adopts. Assurement la stipulation ne pent pas confer er an tiers avant sa conception un droit defvnitivement acquis ; mms ce tiers trouve, le jour ou il vient au monde un droit eventuel qui nattendait que sa naissance pour prendre corps, ti qui pouvait tenir debout sans son intervention, parceqiCil sortait d'un contrat valablemerit forme entre deux autres personnes. On pent stipuler au profit d'une personne future comme on pent stipuler une chose future. (Lambert, I.e.) Although the merit of simplicity can certainly not be claimed for this theory, and difficult as it is to conceive of a right, which is, 86 THE LAW OF OBLIGATIONS. so to speak, floating in the air until some person comes into existence entitled to claim it, this is, nevertheless, perhaps the only theory upon which the decisions of the courts can be sup- ported. As we have seen, there are quite a number of cases in which the courts have consistently found that a droit propre was created by the contract, although it was impossible at its date to say who the beneficiary was, and, as a matter of fact, the benefi- ciary might not be at that time in existence. In tlu i case of a contract of public utility, such as that between a municipality and a gas-company, the right created in favour of the householders does not seem to depend on their existence at the date of the contract. Many owners of property within the municipality may be children who were born after the date of the contract, but their right to enforce the contract would seem to be as good as that of anv other of the inhabitants. Matter dealt with in many countries by legislation. As regards insurance for the benefit of unborn children there has been in many countries legislation. Thus in England, by the Married Women's Property Act y 1882, the husband or wife may insure for the benefit of his or her children. 45 & 46 Vict. c. 75, s. 11. See Laws of England, vo. Husband and Wife, v. 16, p. 399. Cf. Revised Statutes, Quebec, art. 5581; and, for a note of similar legislation in other countries, see Lefort, Assurance sur la Vie, 2, p. 227; Code Comm. Ital. art. 453; Giorgi, Obbligazioni, 3, p. 577. In the English law such a policy creates a trust in favour of the objects therein named, and so long as any object of the trust remains unperformed, the moneys payable under the policy do not form part of the estate of the insured. The term "wife" includes a second wife, and the term "children" includes the children of a second marriage unless a contrary intention appears in the policy. [Parker's PoUcies, In re, 1906, 1 Ch. 526, 75 L. J. Ch. 297: Griffith's Policy, In re, 1903, 1 Ch. 739, 72 L. J. Ch. 330.) The difficulty at present in the French law arises from the language of the code. If the law were amended by an express provision declaring that a direct right could be given to a third party even though indeterminate or unborn, there would be no further difficultv. This ought to be done. STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 87 Rights of creditors in the case of insurance for a third party. If a third party has acquired a droit pmprc upon the principles which have been explained, the creditors of the assured, even if he dies in a state of insolvency, cannot claim the insurance-money, because, according to the theory, it never formed a part of his estate. (Grenoble, 11 d6c. 1894, D. 96. 2. 97; Cass. 2 aout 1909, D. 1910. 1. 328; Dupuich, Assarai/rr sur la Vie, n. 222. y Nor can the creditors, as a general rule, claim that the third party shall restore to them the amount of the premiums -which the assured paid. They_can do so only when they can show that the payments were in fraud of their rights. C. ('. E. 143 204: C. C.F. 1107. If they can show that the payment of the premiums was a fraudulent alienation of the kind challengeable by the Paulian action, they can claim their return from the beneficiary, but this will not often be the case. So long as the management of his affairs has not been withdrawn from the debtor, he can deal freely with his income, and it is only alienations of capital which his creditors can challenge. [Dissert ait on by M. Boistel, in note to Nancy, 17 janv. 1888, D. 89. 2. 157; Paris. 10 mars 1896, D. 96. 2. 465; Lefort, Assurance sur la Vie, 2, p. 241. Cf. Cass. 2 aout 1909, D. 1910. 1. 328.) What is the effect of the rescission of a contract in which a benefit was stipulated for a third party who has assented to it? If the contract between the stipulator and the promisor was null or is rescinded, does the third party who assented to the benefit lose his right? JWj^ep the contract was null ah initio, there can be little doubt that he does. The right of the third party flows from the contract, although he was not a party to it," and if there was no valid contract from the beginning he could have no right under it. Accordingly, if the contract is declared to be void on account of the want of capacity of the promisor, or on account of defect of form, the right of the third party must fall with it. And, further, if the contract was valid ab initio but is afterwards annulled at the instance of the promisor on the ground of force, or error, or fraud, the third party will likewise lose his right. For example, in a Canadian case, a policy of life-assurance was effected for the benefit of a creditor, of the assured. 88 THE LAW OF OBLIGATIONS. The policy was afterwards declared null and void on the ground that the assured had made false representations as to his state of health. It was held that the nullity could be invoked against the third party who was named as the beneficiary under the policy. (Venner v. Life Insurance Company, 1889, 17 Canadian Supreme Court Reports, 394. See Pmd. Franc, vo. Oblig. n. 7354.) But if the stipulator himself brings an action for the resolution or revocation of the contract and is successful, does this deprive the third party of his droit acquis ? This is a controversial question. Suppose I sell you a. farm for a certain price, and stipulate in addition that you shall pay an annuity to my father. My father assents to the stipulation for his benefit. You fail to pay the price. Under the French and Egyptian codes in the sale of immoveables as well as of moveables the unpaid vendor has the right of action in dissolution of the sale. (C. C. E. 332/413; C. C. F. 1654; Halton, 2, p. 56.) Accordingly, I bring an action for dissolution of the sale and get judgment in my favour. Has my father any claim against me or against you or does his right simply fall to the ground? It is generally agreed that if when you are sued you do not have my father rmsjm^cause, the judgment cannot affect him, according to the rule res inter alios acta aliis non nocet. (Aubry et Rau, 5th ed. 4, p. 531; Demolombe, 24. n. 258; Pond . Franc. Oblig. nos. 7525—7530; Cass. 6 juin 1888, D. 89. 1. 55.) But we will suppose that my father has been made a party to the action. According to the view supported by most of the French writers, even in this case, my father's claim to the annuity is still good. They contend that by his assent to the stipulation in his favour he acquired an irrevocable right of which the stipulator cannot deprive him by obtaining the rescission of the contract. But the French writers do not agree as to whether my father's right in the case supposed would be against me or against you. According to one system when (lie contract is rescinded, you, the promisor, have no further liability, but I, the stipulator, am bound in favour of my father because I allowed him to acquire a vested right. (Aubry et Rau, I.e.) According to another system, you, the promisor, are still bound to my father, but you will have a right of indemnity against me, the stipulator. (B.-L. et Bardc, 1, n. 174.) >^ Another view which has less support is that the effect of the rescission of the contract is to restore the parties to the status i STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 89 in quo ante, and that the right of the third party must fall with the contract out of which it flows. His right is accessory in character, and its existence depends upon the validity of the con- tract. By calling it irrevocable the French Code only means that the stipulator has lost his right to revoke it so long as the prin- cipal contract is still in existence. He cannot maintain the contract for himself, and revoke it as regards the third party. But if the contract itself is rescinded, there is no basis on which the right of the third party can rest. Consequently, neither the promisor nor the stipulator is bound to the third party, and if the promisor has already paid him anything he can claim repeti- tion of it, for otherwise, the restitutio in integrum would not be complete. (Larombiere, art. 1121, n. 10.) This latter view that the third party's right depends on a valid contract has been adopted by the German Code, and it seems to me to be more logical than the opinion which has found greater favour in France. Les moyens de defense resultant du control appartiennent au promettunt egalement a Vencontre du tiers,. (art. 334. See Windscheid, Pandekten, 8th ed. 2, s. 316 a, p. 287.) Comparison with English law. Common law as to the persons affected by contract. Leaving out of sight the relation of principal and agent and the rights and liabilities of heirs and successors, the common law adheres very strictly to the rule that a person who is not a party to a contract cannot either sue or be sued upon it. (Pollock on Contracts, 8th ed. p. 208; Anson on Contracts, 14th ed. p. 272.) A contract between A and B cannot impose a liability upon C except in the sense that if C, out of malice, induces A or B to break the contract he commits a tort. But this is not an obliga- tion under the contract. (See, as to this last point, Quinn v. Leathern, 1901, A. C. 495, 70 L. J. P. C. 76; Boiven v. Hall, 1881, 6 Q. B. D. 333, 50 L. J. Q. B. 305; and cf. in France, Paris, 24 nov. 1904, S. 1905. 2. 284.) Nor can a contract confer a right on a third party to enforce the contract, though the parties expressly declare that it shall do so. {Tweddle v. Atkinson, 1861, 1 B. & S. 393, 30 L. J. Q. B. 265. 124 K. K. 610; Leake on Contracts, 6th ed. p. 296; Pollock on Cmtr acts, 8th ed. p. 222.) 90 THE LAW OF OBLIGATIONS. In the English law there is no exception to these rules, which are regarded as flowing from the mere conception of contract, unless it is correct to regard as an exception the rule of equity by which unborn children may acquire rights under a marriage settle- ment as being, in the language of the English law, ''within the consideration of marriage." (See Gale v. Gale, 1877, 6 Ch. D. 144, 46 L. J. Ch. 809; Be Cameron and Wells, 1887. 37 Ch. D. 32, 57 L. J. Ch. 69. But a marriage settlement has much of the nature of a trust, and, probably in all systems of law, different rules apply to it from those which apply to ordinary contracts. The rigorous doctrine of the common law is to some extent mitigated by certain statutory exceptions, especially by the Married Women's Property Act, 1882, already referred to, which allows a husband or wife to insure for the benefit of children, and gives to the beneficiary a direct action. (45 & 46 Vict. c. 70. s . 11; supra, p . 86 . And the inconveniences of the doctrine are considerably miti- gated by the law of trusts. A trust in the sense of the English law of equity means that one person who is called the trustee has lights which he is bound to exercise upon behalf of another, or for the accomplishment of some particular purpose. When, as is usually the case, the trust is created by an agreement between the truster and the trustee, we have a situation analogous to the stipulation pour autrui. Some English authorities, indeed, are inclined to regard a trust as a real exception to the rule of the relativity of contracts. It is true that the majority of trusts, though not all of them, arise out of a contract between the creator of the trust and the trustee. But the better opinion is that trust and contract are quite distinct things. A contract has for its sole object to create obliga- tions, whereas a trust may have many other objects. (See Mail- land, Equity, p. 53; Snell, Equity, 17th ed. p. 44; Pollock, Contracts, 8th ed. p. 219; Anson. Contracts, 14th ed. p. 272.) The English trust has been described as "perhaps the most distinctive achievement of English lawyers," and it has many peculiarities which distinguish it from a contract. (See Maitland, op. cit. p. 23: Anson, I.e. And, although no formal words are necessary for the creation of a twist, nevertheless, if a trust is to lie created in favour of a third party, it is not enough that one of the parties should promise to STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 91 pay money to a third party, there must be words amounting to a declaration of a trust. An imperfect gift is not a declaration of trust. Cf. Richard* v. DelbrUge, 1874, L. P. 18 Eq. 11, 43 L. J. Ch. 459; Murray v. Flavell 1883, 25 Ch. D. 89. 53 L. J. Ch. 185. See Maitland, op. ait. p. 74.; American law less rigorous as to relativity of contracts. It is interesting to notice that in the United States there is a decided tendencj' to moderate the rigour of the English law as to the relativity of contracts, and to approach more nearly to the French law of stipulation pour autrui. For example, in many States a beneficiary of a life-insurance policy is given a right to- enforce the policy, and that without the aid of any statute, and there are other illustrations of the same tendency which cannot here be referred to. (See the chapter by Mr. S. Williston on " Contracts for the Bonefit of a Third Person in the United States."' in Pollock, Contracts, 3rd American ed. pp. 237 seq.) The English trust has many advantages, and. as Maitland says. "seems to us almost essential to civilization.'" The want in the civil law of anything which answers quite the same purpose appears to English lawyers to be the greatest defect of that system . (See the remarks of F. W. Maitland in 'Collected Papers," in index under "Trust.") $2 THE LAW OF OBLIGATIONS. CHAPTER IV. OF THE EXERCISE OF THE DEBTORS RIGHTS AND ACTIONS BY HIS CREDITORS. The French Code, after laying down the broad rale that agree- ments cannot affect anybody but the parties to them, with the exception of the case where there has been a stipulation pour autrui, proceeds to give, as further exceptions or qualifications of the general rule: (1) That, nevertheless, creditors may exercise all the rights and -actions of their debtor, with the -exception ofmichas are exclusivehj attached to the person ; and (2) That creditors may also in their own name attack the acts executed by their debtor in fraud of their rights. (C. C. F. 1166—1167.) In the first case the creditors bring what is often called the oblique or indirect action, and in the second they bring the direct auction, or, as it is generally called, the Paulian action. As a matter of arrangement this is unsatisfactory. When creditors act in the debtor's place they act in his name and on his account, and cannot, therefore, properly be regarded as third parties. And when they bring the Paulian action and attack their debtor's contract, they are not third parties either, or, at any rate, they are third parties only in a very special sense. It may be said that in attacking their debtor's contract they maintain that by making it the debtor exceeded his powers of administration of an estate in which they have an interest, and that, although, in general, he could diminish his estate to their prejudice, he could not do so fraudulently. They claim, therefore, to be third parties as regards this con- tract, but it is precisely on that account that they attack the contract. And if they succeed in their challenge the result is that the contract does not affect them at all. Neither the oblique action, therefore, nor the Paulian action is a true exception to the OF THE EXERCISE OF THE DEBTOR'S RIGHTS. 93. mile that contracts do not, affect third parties. (Laurent, 16, n. 382; B.-L. et Barde, 1, n. 587; Demolombe, 25, n. 46.) The Egyptian Code falls into the same error of arrangement, so far as the indirect action is concerned, when it says: Agree- ments cannot enure to the benefit of third persons, oilier than the creditors of the contracting 'party., who can, in virtue of the general right which they haoe oyer the property of their debtor, exercise, in the name of such debtor, all such rights of action as aceriu to him from contracts or from any other source of obligation y savesfinly such rights of action as are purely per son ah (141/202. But neither the Egyptian Code nor the Code of Quebec in any way suggests that the Paulian action is looked upon as an excep- tion to the rule that contracts do not affect third persons. They have profited by the criticism to which the French article has- been subjected. All the codes are very scanty as regards the oblique action . The Egyptian Code in the article just cited says that when the creditors exercise a right belonging to their debtor they do so in his name, a point not mentioned by the French Code nor by the Code of Quebec. (C. C. Q. 10310 On the other hand, the Code of Quebec says that Creditors may exercise the rights and actions of their debtor, when to their prejudice he refuses or neglects to do so; with the exception of those rights which are exclusively attached to the person. (C. C. Q. 10310 Neither the French nor the Egyptian Code has anything corre- sponding to the words stating that there must be a refusal or neglect on the part of the debtor to take proceedings himself, but these words correctly express the law of France and Egypt as well as of Quebec. The reason why the action 'by the creditor is called the oblique action or the indirect action is because the creditor represents not himself but the debtor or the debtor's estate (Planiol, 2, n. 2950 As we have said, all the codes are very meagre about it, and leave many questions completely unanswered. Moreover, the history of this right of creditors is somewhat obscure. It is, therefore, not surprising that upon many points there has been great difference of opinion. Even now there is far from being an agreement upon all of them, but most of the important points are pretty well settled in practice. It is generally admitted that the foundation of the creditor's right is the principle that the pro- 94 THE LAW OF OBLIGATIONS. perty of a debtor is the common pledge of his creditors. (C. C. E. 555/679; C. C. F. 2093; C. C. Q. 1981. It is, therefore, not as third parties but as the ayants cause of the debtor, that they are given the right of exercising rights and actions in his name. The debtor's rights of action form a part of his property, and are included under the general right of pledge which his creditors enjoy by law. A debtor who is embarrassed or insolvent may feel indifferent as to his estate, and may not care to take the trouble to prosecute claims which, if successful, will benefit his creditors rather than himself. Accordingly, the creditors, or any one of them, may prosecute such a claim if its success would increase the debtor's estate, and if the debtor refuses or neglects to prosecute it himself. And, in principle, the creditors may exercise in this way any right of action which belongs to their debtor. The French Code saj\s tons les droits et actions, and the Egyptian Code says All such actions as accrue to him from contracts or from any other source of obli- gation, but always subject to the exception that the action must not be one oi-s^-^pm^ly. -personal" kind. C. C. F. 1166: C. C. E. 141/202.) The expression in the French Code and the Code of Quebec droits et actions is a pleonasm; it means only rights of action, and the Egyptian Code is more correct in speaking of "actions" onlv. (Douai, 13 nov. 1852, D. 56. 2. 21; Planiol, 2, n. 232., But it is important to remember that the right given to the creditors is in the most general terms, and that the article ought to be interpreted in a liberal sense, as authorising them to bring any action unless it is strictly personal to the debtor. (Dijon, 17 fevr. 1897, D. 98. 2. 31.) It is for them to decide if they will bring the action or not. (Cass. 26 juin 1912, D. 1914. 1. 307.) What actions are re- garded as strictly personal will .be explained later. If the creditors' right is in virtue of their general pledge over all the property of the debtor it will follow: (1) That the creditors must sue in the debtor's name and not in their own name, as indeed the Egyptian Code expressly states. (B.-L. et Barde, 1. n. 637; Garsonnet et Cezar-Bru, Traite de Procedure Civile, 3rd ed. 1, n. 373.) (2) That the action being really the debtor's, any defence which is good as against him will be good as against the creditors who represent him and sue in his name; and (3) That the effect cf the action if successful is to realise an OF THE EXERCISE OF THE DEBTORS RIGHTS. 95 asset of the debtor's estate. What is recovered does not belong to the individual creditors who bring the action. The right given in this article is to be classed with the other rights which creditors have of preserving the estate of their debtor, such as intervention in suits to which he is a party, executing seizures to preserve rights when this is permitted, or executing arrestments of money due to their debtor in the hands of a third party. (See C. C. P. E. 668/760, 674 764; Anbry et Rau, 5th ed. 4, p. 196.) And it is because this last right of saisiej arret or arrestment is so simple and convenienl when the claim is for a sum of money, that the right given to the creditors in this article is not more often exercised. (C. C. Pro. E. 410/471; Planiol, 2, n. 283.) But there are many actions which are not simple claims for a liquid sum of money, and it is only in these last that arrestment is competent. The debtor may, for instance, have a claim of damages, or a claim to revindicate property, or to exercise a right of redemption, or to challenge, the validity of a will under which he is deprived of a succession which would otherwise come to him by law. And these are merely a few examples out of many which might be given. The right of the creditors to exercise the actions belonging to their debtor is a right which can be traced back to the Roman law, though it has undergone very considerable modification. See. for the history, article by M. Labbe in Revue Critique, 1856, IX, p. 208, references in Garsonnet et Cezar-Bru, Traite dc Pro- cedure Civile, 3rd ed. 1, s. 373; Dig. 42. 5. 14. In the Roman law and in the old French law the creditor who wished to exercise an action belonging to his debtor, had to begin by getting a judgment against the debtor himself. And it has been maintained that this is the modern law also. It is argued that the history of the right shows that the exercise by a creditor of his debtor's action is a sort of execution upon his property. M. Labbe says: "It is laying hands on one of his assets; it is beginning the prosecution or compulsory execution. It is an attack on the freedom which a chirographic creditor is bound to leave to his debtor until he is in fault. It is a way of realising a pledge no less than by seizure and sale." Conse- quently, M. Labbe contends that the creditor must have an executory title, either a notarial deed prepared at the creation of the debt, or a judicial acknowledgment of a private writing, or a judgment. (Op. cit. p. 218.) But this opinion is almost univer- «? i 96 THE LAW OF OBLIGATIONS. sally rejected. (B.-L. et Barde, l,n. 632; D. N-.C. C. art. 1166, n. 223; Cass. 8 juillet 1901, D. 1901. 1. 498.) It is introducing a condition which is not found in the code. The action is not a form of execution, and its immediate effect is to increase the debtor's estate by realising one of his outstanding debts. Still less is it necessary that the creditor should first have obtained a judgment subrogating him in the right of his debtor, although this view formerly prevailed among the French writers. (Labbe, op. cit. n. 21; B.-L. et Barde, 1, n. 634; Garsonnet et Cezar-Bru, Traite de Procedure Civile, 3rd ed. 1, s. 373; Bourges, 7 nov. 1900, D. 1902. 2. 124; D. N. C. C. art. 1166, n. 236;. Dijon, 17 fevr. 1897. D. 98. 2. 31. But see Aubry et Rau, 5th ed. 4, p. 199.) Why should we impose upon the creditor the necessity of bringing one action in order to get judicial authority to bring another? The code does not make any such requirement and we cannot add it. It may be regarded as settled in the jurisprudence that • no judicial subrogation is needed. The effect of the article is that the creditor is by law subrogated in the debtor's rights. Nor is it essential that the debtor shall have been mis en cause though in practice this is almost always done, because if it is omitted the judgment will not be opposable to the debtor. (B.-L. . et Barde, 1, n. 635; Garsonnet, op. cit. n. 374; D. N. C. C. art. 1166, n. 248; C. A. Alex. 20 dec. 1899, B. L. J. XII, 47; C. A. Alex. 25 janv. 1917, B. L. J. XXIX, 179.) Nor is it even essential to the action that the debtor should have been mis en demeure. It is sufficient if the creditor proves that owing to the fraud or negligence of his debtor, there is a risk of his suffering prejudice. We cannot insert conditions which the code does not make. / But, notwithstanding this principle, it is an implied condition of the exercise of the right that the creditor should have an interest, for interest is the measure of actions, and the creditor cannot show this necessary interest if the debtor is acting in his own behalf. It is only when the debtor is refusing or neglecting to exercise his own rights, that there is any justification for the creditor's claim to act in the debtor's name. (Aubry et Rau, 5th ed. 4, p. 196; B.-L. et Barde, 1, n. 628.) Upon this point the Code of Quebec is more explicit than the French or the Egyptian Code, because it says that the creditors may exercise OF THE EXERCISE OF THE DEBTOR'S RIGHTS. 97 the actions of their debtor ivhen to their prejudice he refuses or neglects to do so. (C. C. Q. 1031.) But the law of France and Egypt is the same. A judgment of the Mixed Court of Appeal states the rule thus: L' article 202 C. C. M. ne fait dependre Vexercice de la faculte accordee au creancier de faire valoir les droits et actions de son debiteur ni de la preuve de Vin&olvabiUte du debiteur ni de toute autre condition, mais le creancier ne pent exercer les actions de son debiteur s'il ne justifie pas qu'il a un interet serieux et quit courra.it le risque de voir sa creance compromise s'il ne faisait pas usage de cette faculte. (C. A. Alex. 9 mars 1895, B. L. J. VII. 171.) The creditor has not the necessary interest when the result, if the action were successful, would not be to increase the estate of the debtor. (C. A. Alex. 10 juin 1903, B. L. J. XV. 343.) When the debtor is prosecuting the claim himself, although not very energetically — even mollement — it appears that his creditors cannot act in his name. Their right is limited to intervening in the action by their debtor in order to prevent collusion and to protect their rights. (Garsonnet et Cezar-Bru, 3rd ed. 1, s. 373, note 1; B.-L. et Barde, 1, n. 628; Cass. 30 juillet 1900, D. 1901. 1. 317; D. N. C. C. art. 1166, n. 253.) And if the creditor brings an action and the debtor thereupon proceeds to sue on his own account, it appears that the action raised by the creditor will fall to the ground as having no longer any foundation. (Amiens, 6 aout 1901, D. 1903. 2. 21.) It is, further, an implied condition that the right of the creditor should be exigible. For it is a general rule that a creditor whose right is not due, or is conditional, cannot take any actions except such as are of a merely conservatory nature. (C. C. F. 1180.) The action we are now discussing is, it is true, conservatory, but it is also something more, because it is intended to bring about an increase of the debtor's realised assets. Its object is to realise an unrealised asset. As M. Labbe says, it would be strange if a creditor who could not sue his debtor because the debt was not yet exigible, or if a creditor whose right depended on the fulfilment of a condition, should be entitled to interfere with his debtor's freedom. (Rev. Crit. IX, p. 218; B. r L. et Barde, 1, n. 629; D. N. C. C. art. 1166, n. 220.) As the Mixed Court of Appeal expresses it, the creditor must have w. — VOL. II. 7 98 THE LAW OF OBLIGATIONS. ii-n titre certain et prealablement acquis contre son debiteur. (C. A. Alex. 4 avril 1894, B. L. J. VI, 273.) But it is in no way necessary that the creditor's own claim should be anterior in date to the debt which he is seeking to enforce by the indirect action. A man who contracts debts thereby pledges his whole future estate as well as that which he has at the date when the debt was contracted. Otherwise, when a man became insolvent, there would be inextricable confusion. Eaeh of his creditors would have a preference over that portion of his estate which belonged to him then, and had also belonged to him at the date when the debt to this particular creditor was contracted . It is clear, therefore, that in the application of this right the date of the creditor's claim is immaterial. (B.-L. et Barde, 1, n. 630; Laurent, 16, n. 396; Cass. 4 juillet 1854, D. 54. 1. 403.) From what has been said it is evident that the only con- ditions of the right of the creditors to bring actions are: — (1) That their claims are exigible. (2) That they have an interest in the result of the action. (3) That this interest is imperilled by the inaction of the debtor; and (4) That the action is not strictly personal to the debtor. Whatever is recovered by the action falls into the patrimony of the debtor. The exercise of the action in the debtor's name by a creditor does not confer any privilege upon the creditor who has taken the initiative. The creditor who sues does so for the benefit of his co-creditors as well as on his own behalf. The action being based upon the principle that the debtor's property is the common pledge of his creditors, whatever is gained by it must be likewise their common pledge. The creditor who uses it is exercising a right which belongs to his debtor, and the effect of the action if successful is to bring back what is recovered into the debtor's estate. (Laurent, 16, n. 407; Garsonnet et Cezar-Bru, Trait''; de Pro- cedure Virile, 3rd ed. 1, s. 375; Demolombe, 25, n. 131; B.-L. et Barde, 1, n. 644: D. N. C. C. art. 1166, n. 286; C. A. Alex. 25 janv. 1917, ^B. L. J. XXIX, 179.) But if one creditor sues alone, the other creditors must take OF THE EXERCISE OF THE DEBTOR'S RIGHTS. 99 care of their own rights, either by intervening in the action or otherwise, or else the successful plaintiff who recovers an asset of his debtor's estate may get paid in full, while the other creditors- have to bo content with a dividend. (Planiol, 2, n. 294. ) As the Mixed Court of Appeal has expressed it: Toutefois, l& oon- cours des autres creanciers n'a lieu qu'autant qu'ils montrent eux- mew.es une certaine diligence et qu'ils se presentent en temps utile, faute de quoi le poursuivant etcmt seul en cause, garde pow lui la valeur obtenue a concurrence de ses droits, par application, quant a ce, a I 'action oblique'des princip&s qui regissent la saisier arret. (C A. Alex. 25 janv. 1917, B. L. J. XXIX, 179. Any defence which is good as against the debtor himself is good as against the creditor. It must be kept steadily in view that the action belongs to the A debtor although his creditor is allowed to prosecute it. The defendant must be in the same position as if the action wore being brought by the debtor himself. From this it follows that any defence which would be good against the debtor must likewise be good against the creditor \vho sues in the debtor's name. (Req. 22 juin 1909, D. 1909. 1. 527.) And this is true not only of defences founded upon a causes prior to the raising of the action, but also of such defences as have arisen since the action was introduced. This last point is not always admitted. It is clear, for instance, that if the debtor had an interest in challenging a certain deed, and his creditors bring an action to challenge it, it will be a complete defence that before the raising of the action the debtor had ratified the deed in question. (Cass. 8 mars 1854, D. 54. 1. 191.) But is it equally true that if after the action is raised the defendant has paid the debtor himself, or lias made a compromise with him, this will put an end to the suit by the creditors? This is less obvious, but it would appear to be the sound conclusion. It is not, however, accepted by all authorities. The argument which some of them use is that the action by the creditors is analogous to an arrestment. The creditor who is the plaintiff is in a similar position to a creditor executing a seizure, and the effect of the action is to prevent the debtor dis- posing of the debt in any way which would prejudice the plaintiff. (Demolombe, 25, n. 120; Labbe, in Rev. Crit. IX, p. 221. See Aubry et Rau, 5th ed. 4, p. 201 .) 7 (2) 100 THE LAW OF OBLIGATIONS. But this view is not supported by any satisfactory reason, and it has been rejected by the Cow de Cussatvm.. That Court lias held that the debtor can compromise the action brought by his creditors unless the compromise is fraudulent. (Cass. 23 juin 1903, D. 1903. 1. 454.) The doctrine is now chiefly in the same sense. (B.-L. et Barde, 1, n. 639; Laurent, 16, n. 402; D. N. C. C. art. 1166, n. 269.) So long as there has been no actual seizure of the debtor's) property he can never be deprived of the right of dealing with it according to his own judgment. But if the creditor is afraid of the debtor dealing with the right, during the course of the action, it would appear that he may demand that measures be taken for the conservation of his right, and the court may make an order for that purpose. (Dijon, Id fevr. 1902, D. 1902. 1. 283.) / I ( rUkou" * ■(*■***»■ Can the creditor sue for an amount greater than his own claim against the debtor? Seeing that he is exercising a right of the debtor, and seeking to realise an asset which will be available for all the creditors, there does not seem to be any reason why his action should be incompetent, merely because, if he is successful, the amount re- covered would more than satisfy his own claim. But as the creditor's interest is limited to the amount of his own claim, the defendant can put an end to the action by paying that amount and the costs, for a creditor cannot refuse to take payment of his debt. (Laurent, 16, n. 406; Planiol, 2, n. 292.) What are the rights and actions which creditors can exercise? (1) They must be rights which, if exercised, would increase the debtor's estate to their benefit, for, otherwise, his inaction cannot have been to their prejudice. (See C. A. Alex. 10 juin 1903. B. L. J. XV, 343.) (2) They must not be rights which are purely personal, a- the Egyptian codes express it, or exclusively attached to the person, in the language of the French Code and the Code of Quebec. (C. C. E. 141/202; C. C. F. 1166; C. C. Q. 1031.) It is clear that, seeing that the whole object of the action is to realise an asset belonging to the debtor, and thereby to increase h$s estate in order that his creditors may benefit thereby, they will have no right to sue if the result of the action would not be to OF THE EXERCISE OF THE DEBTOR'S RIGHTS. 101 increase the debtor's estate. So they cannol sue to recover pro- perty, which, if recovered, would be unseizable, for they would have nothing to gain by the success of the aetion. (Grenoble, 30 dec. 1896, D. 97. 2. 238.) Nor can they sue in the debtor's name for an alimentary allow- ance to which he is entitled, or for a right of use or of habitation of a house, rights which by the French law are incapable of being assigned. (Laurent, 16, n. 418; Demolombe, 25, n. 74.) Nor can they bring an action which belongs to their debtor as Nazir of a Wakf. (C. A. Alex. 7 mai 1896, B. L. J. VIII, 270.; Nor can they, as a general rule, bring an action of which the object is to determine or modify status. For instance, the creditors of a husband cannot bring an action of separation or divorce. Nor can the creditors of a husband or of a wife bring an action to annul the marriage on the ground of a relative nullity, such as fraud, want of consent of parents, where that is required, or the like. It is true that in these cases the result of the action might affect the pecuniary position of their debtor, but they are all actions which have primarily a moral rather than a pecuniary foundation. (B.-L. et Barde, 1, n. 593; Aubry et Rau, 5th ed. 4, p. 207.) |5ut when a marriage is absolutely null because the parties were within the prohibited degrees, or because it was not contracted in the forms prescribed by law, the action to declare the nullity may be brought, according to the French Code, by all those who have an interest, and this would include the creditors of one of the parties. (C. C. F. 187, 191; C. C. Q. 155, 156.) But, here, if the creditors bring such an action, they do so in their own right as persons having an interest, and in their own names, and not in the name of and as representing their debtor. (Cass. 30 juill. 1900, D. 1901. 1. 317; Aubry et Rau, 5th ed. 4, p. 207, note 31.) And, on the ground that the interest is moral rather than pecu- niary, if the debtor has made a gift which he is entitled to revoke on account of the ingratitude of the donee, his creditors cannot claim to exercise this right of revocation. A wife may prefer to live with her husband in spite of his faults, or a donor may be willing to overlook the ingratitude of a donee. In both cases there is a moral as well as a pecuniary interest . But the creditors, if they were allowed to sue, would consider the question solely from the pecuniary point of view, and, there- fore, the law considers such actions as purely personal to the 102 THE LAW OF OBLIGATIONS. debtor. Upon the same principle, that when the basis of the action is primarily moral it cannot be brought by the creditors, il is agreed that creditors cannot bring an action for damage wilfully caused to the body or reputation of their debtor. (Sourdat, 5th ed. 1, n. 73, bis; B.-L. et Barde, 1, n. 625.) The question whether creditors can sue for injury caused to the body of their debtor by a quasi-delict belongs to the law of responsibility. Right of creditors of incapable person to bring action on the ground of incapacity. It is generally agreed by the writers that the creditors of an incapable person are entitled to bring, in their debtor's name, an action to annul a contract on the ground of his incapacity. Tin' minor, the interdict, or, in France, the married woman, has the right of challenge, but the other party to the contract has no such right. The incapacity is relative. Although the incapacity may be relative, this does not mean that the right to plead it is strictly personal to the incapable person in the sense under consideration. Tt means only that the other party to the contract cannot take the objection. The right to take the objection belongs solely to the incapable person, but it is a pecuniary right, and, therefore, his creditors should be allowed to exercise it. (B.-L. et Barde, 1, n. 616; Aubry et Rau, 5th ed. 4, p. 211; Laurent, 16, n. 420; D. N. C. C. art. 1166, n. 138; Ball. Supp. vo. Obligations, n. 310.) But in France the jurisprudence is divided. (In favour of creditors having the right: Paris, 14 nov. 1887, D. 88. 2. 225; Bastia, 30 aout 1854, D. Rep. vo. Obligations, n. 930, Ire espece. Against this view, Req. 6 mars 1878, D. 78. 1. 316; Alger, 22 fevr. 1899, 1). 1901. 2. 33. See Cass. 18 oct. 1910, D. 1912. 1. 233.) The argument which has in some cases prevailed with the courts is that the incapable person ought to be allowed to judge whether he will avail himself of the plea of incapacity. If he thinks himself bound in honour and conscience by the contract, are his creditors to be allowed to interfere with his discretion ? But although there is some force in this argument, the better view appears to be that creditors ought to be allowed to found upon such incapacities. The basis of the action is purely pecu- OF THE EXERCISE OF THE DEBTOR'S RIGHTS. 103 niaiv and not moral, and if the incapable person refuses to act, this is presumably because, being insolvent or embarrassed, he feels no interest in the result. What might be gained would go to his creditors and not to him, and he leaves them to sue for it if they think fit to do soi. Right to exercise a choice. When the debtor's right is to make a choice or to exercise a faculty, can this be exercised by his creditors? Some writers answer this (absolutely in the negative. (Laurent, 16, n. 424; Hue, 7,n. 195.) But others make a distinction which seems justifiable. ' When no right has vested in the debtor, but a mere offer has been made to him which he may or may not accept, theroTs no right which his creditors can exercise. If, for example, an offer has been made to him to sell or to give him something, this is a mere pollicitation which may be withdrawn at any time. Nothing has vested in the debtor. On the other hand, when a succession has opened in favour of the debtor, there is a right, and the ques- tion is if his creditors may exercise it. The debtor has the right to renounce the right or to accept it, and his right is founded upon a pecuniary interest. It would seem, therefore, that the creditors should be allowed to exercise the right, but in France the question is controversial. (B.-L. et Barde, 1, n. 601; B.-L. et Wahl, Successions, 3rd ed. 2, n. 995: Aubry et Eau, 5th ed. 4, p. 214.) A similar controversy exists as to the acceptance or repudiation of a legacy which has vested in the debtor. The grounds here for disputing the creditor's right are perhaps stronger. When one accepts a succession he takes what the law gives him and comes under no obligation to any one, but when one accepts a legacy he takes what the testator gives him. Some writers maintain that the legatee may have had conscientious reasons for refusing the legacy and that his conscience ought not to be forced. (B.-L. et Barde, 1, n. 622.) And. others say the creditors cannot exer- cise the right, simply because it is an option. (Laurent, 16, n. 426.): But the more general, and, in our opinion, the more reasonable view is that the creditors may exercise the right in this ease also. (Demolombe, 25, n. 59; Fund. Franc. Oblig. n. 2639.) It is generally agreed that in the ease of a stipulation for the 104 THE LAW OF OBLIGATIONS. benefit of a third party the right of the third party to declare his assent is strictly personal and cannot be exercised by his creditors. He may have conscientious reasons against accepting the benefit. (B.-L. et Barde, 1, n. 623; Aubry et Rau, 5th ed. 4, p. 209, note 39; Dupuich, Assurance sur la Vie, n. 224; Trib. Civ. de Quimper, 2 ma i 1893, D. 95. 1. 156.) Rights purely personal are exceptional. The general principle is that the creditors may exercise the rights of their debtor. To exclude them it is necessary to show that the right is purely personal to the debtor. The Egyptian Code, in speaking of actions purely personal, means the same as the French Code does by the expression " exclu- sively attached to the person." In Egypt it was contended in one case that by " actions purely personal" the code meant all personal and moveable actions. If this contention had prevailed it would have limited the rights of the creditors to a very narrow field, but the argument was rightly rejected. (C. A. Alex. 25 fevr. 1891, B. L. J. Ill, 244.) The classification of those actions which are exclusively attached to the person is not at all easy, but most of the actions of this description have been enumerated. We see that the ground for excluding the creditors is either that the action is not of a pecuniary kind, or that, although it may have a pecuniary element, it involves a moral element also, and that the debtor ought to be left free to decide acr-ording to his conscience. THE PAULIAN ACTION. 105 CHAPTER V. THE PAULIAN ACTION. The action generally called by French writers action Paulienne, from its Roman name Actio Pauliana, is sometimes called the direct action, or the action revocatmre. It is dealt with in the French and in the Egyptian codes in a single article. The French Code, speaking of creditors, says: lis peuvent aussi, en leur nom personnel, attaquer les actes faits par lews debitews en fmudc de lews droits. (C. C. F. 1167.) And the Egyptian Code says: Creditors can always procure the avoidance of acts effected in fraud of their rights, and of gifts and abandonments of rights to their prejudice. (Art. 148/204.) Neither the Egyptian nor the French Code says that the debtor must be insolvent before the act, or be rendered insolvent by the act itself, but this is implied. A solvent debtor can deal with his estate as he chooses. His creditors are not prejudiced if he throws half of it into the Nile, provided that the half which remains is enough to pay his debts. (B.-L. et Barde, 1, n. 650; Aubry et Ran, 5th ed. 4, p. 219; D. N. C. 0. art. 1167, n. 97.) The Code of Quebec is much fuller, and its provisions may be given because upon most points they state the rules which are settled by the French jurisprudence. The only changes which that code makes are in regard to the period of prescription, and as to the effect of a payment by an insolvent debtor to a creditor knowing his insolvency, both points which will be referred to later. Creditors may in their own nmne impeach the acts of their debtors in fraud of their rights, according to the rides provided in this secticm. A contract cannot be avoided unless it is made by the debtor with intent to defraud, and will have the effect of injuring the creditor. A gratuitous contract is deemed to be made with intent to defraud, if the debtor be insolvent at the time of making it. An onerous contract made by an insolvent debtor with a person who Tcnoivs him to be insolvent is deemed to be made with intent to defraud,. . . . 106 THE LAW OF OBLIGATIONS. An onerous contract made with intent to defraud on the part of the debtor, but in good faith on the part of the person with whom he contracts is not voidable; saving the special provisions applicable in cases of insolvency of traders. No contract or pay mad can be avoided by reason of anything contained in this section, at the suit of a subsequent creditor, unless he is subrogated in the rights of an anterior creditor. (C. C. Q. 1032—1039.) History of the Paulian action. The Paulian action was taken over from the Roman law, and the reason the French Code says so little about it is that the rules applying to it were settled by tradition. When the legislator says creditors may attack acts in fraud of their rights he does not explain what acts are to be so considered. The old French writers found the explanation in the Roman law, and the French Code intends to refer to the traditional rules. As Planiol says, the Paulian action thus offers us a remarkable example of the conservation of legal institutions, and, of all those institutions which are in operation in our day, it is perhaps the one which has been best preserved through the centuries. (2, n. 298. Cf. B.-L. et Barde, 1, n. 646; Colin et Capitant, 2, p. 49. See an interesting study of the history of the Paulian action by M. Jean Acher in Rev. Trim, de Droit Civ., 1906, p. So. The Code of Quebec states in explicit terms the rules which are implied in the French and Egyptian codes by this reference to tradition. There is, however, one important difference at least between the Roman action and the modern action, if we adopt the theory commonly accepted in France. In the Roman law the action was brought by the curator bitimrum or syndic for the creditors as a body, and the property recovered fell back into the general estate of the debtor. It Was a collective action. In the modem law it is an individual action brought by any one of the creditors, and the property recovered does not, at least according to the prevailing view in France, full hark into the general mass. (See for the Roman law, Dig. 42. S. and -22. 1. 38; Girard, Manuel, 5th ed. p. 428; Roby, Romm Private Law, 2, 273.) In the French and in the Egyptian law, unfortunately, the creditors have no way of acting collectively except in the case of - -z). THE PAULIAN ACTION. 107 a oomtnergant. When a eornmerqctnt has been declared bankrupt? his creditors can bring a collective action to have gifts and pa} - ments made by him declared void, subjeel to the conditions stated in the Commercial Codes. (C. Com. F. 446; C. Com. E. 227, 228/235, 236.) But in the case of a non-trader there can be no faillite, but only a deconfiture. There is no trustee or syndic, and every creditor preserves his individual freedom of action; the race is to the swift. (See Thaller, Turite Elementaire de Droit Commercial, n. 1709; B.-L. et Barde, ObUg. 1, n. 682.) Conditions of Paulian action. If the act of the debtor which is challenged was gratuitous, the only facts which the creditor has to establish are: — (1) That the debtor was insolvent at the time of the act, or was rendered insolvent by the act itself, subject to what is said later as to this point, and (2) That the act has caused prejudice to the creditor. But as it cannot have caused him prejudice if he had no rights at the time,, the creditor must prove that he was a creditor before the date of the alienation which he challenges. When the act challenged was onerous, there is a further condition, viz.:—' (3) That there was fraudulent collusion between the debtor and the other party to the contract. These points will require a little explanation. (1) The debtor must have been insolvent. It is essentia l that the debtor was insolvent at the time of making the contract or that the effect of the contract itself was to render him insolvent. (Aubry et Rau, 5th ed. 4, p. 219; Cass. 25 juin 1895, D. 1895. 1 . 486; Ohambery, lOjuill. 1911,1). 1914.2.74; C. A.Alex. 14 mai 1903, B. L. J. XV, 297; C. A. Alex. 15 mai 1915, B. L. J. XXVII, 328.) If the insolvency resulted from something which happened after the act challenged, the creditor's action is not well founded. (Ohambery, 10 juill. 1911, D. 1914. 2. 74.) When the act chal- lenged is merely the carrying into execution of an agreement made at a time when the debtor was solvent, there is no fraud and no prejudice. On the other hand, there are cases where a debtor does a series of acts the effect of which taken together is to render him insolvent. If the court is satisfied that all the deeds are part of the same fraudulent scheme they may all be annulled, although 108 THE LAW OF OBLIGATIONS. the first of them may not in itself have rendered the debtor insol- vent. (See C. A. Alex. 29 mai 1917, B. L. J. XXIX, 454.) As rho Roman law expressed it, there must be both consilium fraudis et eventus damni. But when the debtor was insolvent at the time of the act, or was thereby rendered insolvent, the fraudl is presumed in the ease of a gratuitous act, whether the other party av;i> aware of the insolvency or not. And when the act is onerous, fraud is likewise presumed when it is proved that the other party knew of the insolvency if prejudice is caused. This distinction between gratuitous and onerous acts is not expressed in the French Code, though it is in the Code of Quebec and in the Egyptian codes. But the distinction was made by the Roman law, and has always been followed by the jurisprudence in France. (Girard, Manuel, 5th ed. p. 426.) The French writers say that fraud on the part of the debtor must always be proved, but it is sufficient evidence of fraud in the case of gratuitous contracts that the debtor knowingly and volun- tarily caused to his creditors the prejudice of which they complain. The debtor who is insolvent, and knows himself to be so, has no right to give away the assets which ought to go to his creditors, and if he does so this is a fraud upon them. It is not at all necessary to prove that the debtor acted with the motive of injuring his creditors, it is enough that he knew that he was causing them prejudice. (B.-L. et Barde, 1, n. 657; Aubry et Rau, 5th ed. 4, p. 223; D. N. C. C. art. 1167, n. 126.) Fraude au sens de Taction Paulimne, tie signifie que ceci, prejudice came en con- naissance de cause. (Bufnoir, Propriete et Contrat, p. 438.) In the language of the Mixed Court of Appeal in a case as to an onerous alienation: En matiere d'action Paidienne, la fraude ne suppose pas neces- sairement des manoeuvres dohsims, mais consiste essentiellement, ■pour ce qui concerne le debiteur, dans le fait que, le sachant et le voulant, 11 consent un acte qui le rend vnsolvable et porte prejudice a ses creanciers en leur enlevant lew gage, et, pour ce qui concerne le tiers, dans le fait d'awir eu oonnaiswnce de la fraude du debi- teur, et a" avoir neanmoins ooncouru a Vacte. (C. A. Alex. 15 mai 1915, B. L. J. XXVII, 329.) Some illustrations will be given later of what is required by the courts -as amounting to "fraud'' when the act challenged is an onerous act. The Egyptian codes remove any possibility of doubt in the THE PAULIAN ACTION. 109" case of gratuitous alienations by- saying that the creditors may procure the avoidance of gifts and abandonments of rights agreed to by their debtor to their prejudice. The codes do not use the word "fraud'' at all in regard to these gratuitous alienations. (C. C. E. 143/204; C. A. Alex. 12 fevr. 1896, B. L. J. VIII, 116; 0. A. Alex. 20 janv. 1916, B. L. J. XXVIII, 122.) So the constitution of a wakf by an insolvent debtor is a fraud on his creditors, and may be attacked by them after they have discussed his free estate. (0. A. Alex. 20 janv. 1916, B. L. J. XXVIII, 118; C. A. Alex. 25 fevr. 1915,' B. L. J. XXVII, 182.) By the law of Egypt and by the law of Quebec it is absolutely clear that a g-ratuitous contract is in fraud of creditors by the mere fact that the debtor was insolvent at its date, while in the French law it is at least necessary to prove that the debtor was aware of the insolvency. What amounts to insolvency is of course a question of fact; the onus of proving it is on the creditor, and unless the insolvency has been proved, the third party who has profited by the alienation challenged may demand that the other property of the debtor be first discussed. (Aubry et Rau, 5th ed. 4, p. 220.) The act challenged must have caused prejudice. What amounts to prejudice is a question of fact, but in order to annul an act as in fraud of creditors, it is a primordial condition that the creditors have suffered prejudice. (Req. 17 mars 1909, D. 1909. 1. 341; C. A. Alex. 28 dec. 1904, B. L. J. XVII, 47.) It is essential to the action that prejudice should be caused to* the creditor by the very act which is challenged. (Req. 17 mars 1909, D. 1909. 1. 341.) An insolvent person may contract new debts, and the fact that the new creditor knew him to be insolvent is not conclusive proof of fraud. It is so only when the effect of the contract is to cause prejudice to the old creditors. An insolvent debtor must live, and if he buys necessaries and pays a reasonable price for them, this does not cause prejudice to his old creditors. But, even further, by the French and the Egyptian law, a preferential payment, or the grant of a security made by the debtor to one of his creditors, even though this creditor knows of the insolvency, is not challengeable by the Paulian action. In the case of traders such preferential payments, if mado within the periode suspecte, are liable to attack under the HO THE LAW OF OBLIGATIONS. Commercial Codes, but the same rule does not apply to non- traders! (B.-L. et Barde, 1, n. 663; Aubry et Hau, 5th ed. 4, p. 231; Cass. 7 juill. 1896, D. 96. 1. 519. Cf. C. Com. F. 446; • C. Com. N. 227; C. Com. M. 235—238.) As the Mixed Court of Appeal expresses it, un nm-corrwrwf- gant en Stat d'insolvabilite pent donner ses biens en paiement a Vun de ses creanciers par preference a taus les autres, a moins qu'il riexiste un concert frauduleux entre debiteur et creancier dans le but de causey un prejudice illicite aux autres creanciers ; la seule connaissance de Vinsolvabilite du debiteur, dans Vimpossibilite de satisfaire, apres la dation en paiement, les autres creanciers ne suffit pas. (C. A. Alex. 17 avril 1912, B. L. J. XXIV, 287.) The onerous payment cannot be challenged unless there is actual collusion in order to prejudice other creditors, as where, for example, the debtor sells for a price far below the true value, or to persons closely related to or connected with him. (See C. A. Alex. 26 fevr. 1902, B. L. J. XIV, 158; C. A. Alex. 9 mars 1905, B. L. J. XVII, 164.) Upon this matter the Code of Quebec has made an important improvement by placing traders and non-traders upon the same footing. Under that code: Every payment by an insolvent debtor to a creditor knowing his insolvency, is deemed to be made with intent to defraud, and the creditor may be compelled to restore the amount or thing received or the value thereof, for the benefit of the creditors according to their respective rights. (C. C. Q. 1036. See Mignault, Droit Civil Canadien, 5, p. 299, and the jurisprudence cited there.) Property alienated must have formed part of debtor's estate. It is clear that the creditors are not prejudiced when the property never formed part of the estate of their debtor, so as to fall under their gage fiommun. It is on this principle that in the case of life-assurance for the benefit of a third party, it is held that the creditors of the assured cannot challenge a disposition made by the assured of the insurance-money to be realised on his death. This sum never belonged to the debtor's estate if the beneficiary had a droit propre, upon the theory explained in discussing the Stipulation pour autrui, and, therefore, it never formed any part of the common pledge of his creditors. (Cass. 8 fevr. 1888, D. 88. 1. 193. Supra, p. 61.) THE PAULIAN ACTION. Ill And when the assured has reserved the power of altering the name of the beneficiary, the substitution by him of one person in place of another does not prejudice his creditors. Even if he substitutes one of his creditors for a beneficiary originally named in the policy, this causes no prejudice to the other creditors, for the assurance-money did not form a part of their debtor's patrimony. (Cass. 3 mai 1904, Journal cles Assurances, 1904, p. 305. Cf . Peachy v. Riverin, 1895, R. J . Q. 7 S. C. 51.) Debtor's estate must be diminished. There must be a diminution of the debtor's estate. According to the Roman law the Paulian action was not admissible when the debtor had merely neglected to augment his estate; he must have actually diminished it. (Dig. 42. 8. 6. 2; Girard, Manuel, 5th eel. p. 425.) So if the debtor repudiated a succession or refused a legacy, his creditors could not challenge the act, for the heir, unless he was what was called a hceres necessarius, did not become owner until he accepted, and the right of the legatee was not considered to be definitely acquired till the heir's entry upon the succession. (Girard, I.e. and pp. 870, 926.) The French law maintains the same principle that there is no prejudice unless the estate of the debtor has suffered diminution, but there has been an important change in the law of succession. In the modern law the property vests from the date of the deatli in the heir or legatee, subject to the right on his part to renounce it. There is, therefore, a diminution of his estate if he makes the renunciation, and it is, accordingly, quite logical that his creditors should be entitled in these cases to the Paulian action, though by the Roman law they were not. But, under the modern law, as well as under the Roman law, it is probably otherwise with the refusal to accept a gift. If a gift is offered to a debtor it does not belong to him unless he chooses to accept it, and there is no diminution of his estate if he refuses to do so. (B.-L. et Barde, 1, n. 656; Colin et Capitant, 2, p. 55. See, however, Aubry et Ran, 5th ed. 4, p. 222, and note 16.) The Egj'ptian Code is upon the point of renunciations clearer than the other codes, because it says the creditors can challenge abandonments of rights, or, in the French version, renoneiations, to their prejudice. 112 THE LAW OF OBLIGATIONS. Only prior creditors have a right to the Paulian action. In principle, the attack can be made only by a creditor whose debt is anterior to the act challenged. For subsequent creditors could not be prejudiced by an act done before they had any rights at all. (C. A. Alex. 15 mai 1915, B. L. J. XXVII, 328.) The priority, of the debt to the act challenged may be proved by any evidence. (See Bourges, 18 juill. 1892, D. 92. 2. 609.) But the rule that a posterior creditor has no right to the action must not be carried too far. It is sufficient if his debt existed en principr, although it was not liquidated al the date of the act challenged. (Laurent, 16, n. 461; Hue, 7, n. 219; B.-L. et Barde, 1, n. 688; Aubry et Rau, 5th ed. 4, p. 220, note 14.) And the law goes a step further. When the object of the act challenged is to defraud certain determinate future creditors, the existence of whose claims is foreseen by the debtor, the act may- be annulled. But it must appear that the fraud was specially directed against these future creditors; it must, to use the language of the Cow de Cassation, be done pour nuire a Vexercice d'un droit dont V ouvertwe Unit dejd prevue. (Cass. 5 janv. 1891, D. 91. 1. 331. Cf. Paris, 31 mars 1896. D. 96. 2. 280; Req. 30 mai 1905, D. 1905. 1. 408; Alger, 1 mars 1906, D. 1908., 5. 32.) If, for instance, a man, foreseeing that a judgment will be obtained against him, fraudulently sells his property in order to prevent its seizure by the creditor who obtains the judgment, this might be attacked by the creditor. In a French case, a husband, whose wife had left him on account of his cruelty, anticipating that she would bring an action of separation, sold his property to his brother so as not to have any property with which to satisfy the pecuniary condemnation in his wife's favour which he foresaw*. The sale was annulled. (Cass. 5 janv. 1891, D. 91. 1. 331. Cf. Paris, 31 mars 1896, D. 96. 2. 280: Req. 30 mai 1905, D. 1905. 1. 408.) Similarly, where a man who had been arrested on a criminal charge, and foresaw the probability of a pecuniary condemnation in favour of a certain creditor, .made a gift to his children of all his property, the deed was set aside. (Nimes, 2 mai 1892, Pond. Frrmg. Oblig. n. 2789.) And in Egypt the same principle has been applied in a case where a debtor constituted a wdkf in order to put his property beyond the reach of certain definite future creditors— en vue de THE PAULIAN ACTION. U3 Vavenir, et pour nuire a Vexercice de droits dout Vouverture Hait deja preme. (C. A. Alex. 25 mai 1916, B. L. J. XXVIII, 870.) - Proof of fraud in onerous transactions. When the Paulian action is directed against a gratuitous act of the debtor, it is sufficient to prove the insolvency of the debtor and the prejudice caused to the creditor by the act challenged. But when the act challenged is an onerous act, it is not sufficient for the plaintiff to show that it caused him prejudice, and that the debtor was insolvent at its date, or was rendered insolvent by the acte meme, but he must prove in addition that there was a fraudulent conspiracy between the debtor and the other party to the contract to cause him this prejudice. According to the French and Egyptian codes, as we have already seen, the mere fact that a creditor knows his debtor to be insolvent does not make it fraudulent on the part of the creditor to take payment of his debt, or to take a security which gives him an advantage over the other creditors, unless, the debtor is a trader, and the act was in the periode suspecte. 'By the more reasonable rule of the Code of Quebec preferential payments by an. in- solvent debtor, although a non-trader, are considered to be fraudulent if the payee is aware of the insolvene^. But under the other codes it is not so, and there must be proof of the conce rt ira uduleux. So long as the creditor is merely pro- tecting his own rights he is not doing anything fraudulent. (B.-L. et Barde, 1, n. 663; Aubry et Rau, 5th ed. 4, p. 231; Cass. 7 juill. 1896, D. 96. 1. 519; Dijon, 19 dec. 1897, D. 1900. 2. 364; Req. 6 janv. 1913, D. 1914. 1. 40; C. A. Alex. 26 fevr. 1902, B. L. J. XIV, 158; C. A. Alex. 14 mai 1903, B. L. J. XV, 297; C. A. Alex. 30 mai 1895, B. L. J. VII, 316. See Beni-Souef, 22 mai 1900, O. B. 2, p. 31.) But there are many cases of alienation, in which the fact that ' the other party knew of the debtor's insolvency is sufficient to raise a presumption that there was a concert frauduleux . (C. A. Alex. 15 mai 1915, B. L. J. XXVII, 329; C. A. Alex. 27 nor. 1913, B. L. J. XXVI, 60.) If, for instance, the debtor sells his property to a man who knows him to be insolvent, the buyer is bound to inquire if the object of the transaction is not to defeal the creditors. And this will be even more clear when the sale is by the debtor to his wife, or to some person closely connected with him and privy t© his affairs. In this last case it may ver\ w. — vol.. ii. 8 114 THE LAW OF OBLIGATIONS. well be thai the sale was inerelj simulated. See C. A. Alex. 11 Jcv. 1913, B. L. J. XXVI, 87; C. A. Alex. 18 mars 1915, B. L. J. XXVII, 227; Dijon, 4 juill. 1904, D. 1906. 2. 164.; But, even if this be not the case, such a buiyer, thoroughly aware ol* the state of the debtor's affairs, could not say that he was in good faith because he preferred not to inquire what the insolvent debtor was intending to do with the price. (Aubry et Rau,'5th ed. 4, p. 226; B.-L. et Barde, 1, n. 662: C. A. Alex. 11 mars 1897, B. L. J. IX, 309; C. A. Alex. 15 mat 1915, B. L. J. XXVII, 328. What amounts to knowledge of insolvency is of course a ques- tion of fact. It is difficult to prove by direct evidence a person's state of mind, and fraud is never presumed. The mere knowledge by the third party that the debtor is in failing circumstances, or that there are suits pending against him, is not enough to put him upon his inquiry. Many men do not pay their debts who are perfectly solvent. Much depends on the relation between the third party and the debtor and the extent of their business intimacy. If the third party has been doing business with the debtor for years and has an intimate knowledge of his affairs, and knows that, he has failed to meet a number of bills of exchange, this will probably be a sufficient proof of his knowledge of the insolvency. It is always a question of circumstances. Onerous grantees preferred to gratuitous grantees. The distinction which the law makes between onerous acts and gratuitous acts as regards the Paulian action is not made expressly by the French or the Egyptian codes, though it is by the Code of Quebec, but it is thoroughly established in the French law. It is one of those traditional rules which the code intended to keep in force. It is usually supported by the following equitable considerations. Between two parties one of whom is endeavour- ing to make a profit and the other merely to avoid a loss, it is equitable to give the preference to the latter. Suppose that, for instance, the debtor has made a gift of a part of his property, and the creditors challenged the gift, the creditors ccriant de dcmvno mtando, as the old lawyers said, that is, they are seeking to avoid a loss, whereas the donees certant de lucro captondo, that is, they are trying to make a clear gain. We must certainly give the pre- ference to the creditors. On the other hand, suppose the deed challenged is a sale; the debtor has sold part of his property to take it out of 'the common THE PAULIAN ACTION. 115 pledge of his creditors, and the conflict arises between the pur- chaser and the creditor. Here both of them are on an equal footing - , they are both .seeking to avoid a loss- certant de damno vitondo . The purchaser who paid the price in good faith has an equal right with the creditor to the protection of the law. If a preference is to be given to either party it must be upon some other ground. And this other ground is found in tin fad of possession. In pari causa possessor potior haberi debet. B.-L. et Barde, 1, n. 660: Beudant. Contrats et Obligations, n. 532; Aubry et Ran. 5th ed. 4. p. 224. note 18: Halton, 1. p. -'343. Is the contract onerous or gratuitous? As mentioned elsewhere, it is sometimes a delicate question to decide whether a contract is gratuitous or onerous. (Supra, 1, p. 97; add Trib. Civ. de Langres, 15 mars 1900. D. 1900. 2. 422, and the note. - ) . I datum 'if payement is an onerous transaction unless the thing given in payment is worth much more than the sum due for which it is substituted. "(C. A. Alex. 15 juin 1916, B. L. J. XXVIII, 433.) In France there has been much discussion of certain cases, particularly those of provisions made in marriage-contracts. If an insolvent debtor gets married, and makes a provision by the marriage-contract in favour of the wife, it can hardly be contended that this is onerous in a question with his creditors. No doubt marriage is in a sense an onerous contract, because the parties to it incur new responsibilities. But the law does not allow an insolvent debtor to withdraw his estate from his creditors in order to face these responsibilities which he can avoid by abstaining from the marriage. And the good faith of the wife will not avail to make the contract secure from attack. The law does not allow an insolvent person to place his property out of the reach of his creditors, if he has the good fortune to find a woman ignorant of his circumstances who will marry him. (Aubry et Rau, 5th ed. 4, p. 230; B.-L. et Barde, 1, n. 679; D. N. C. C. art. 1167, n. 216. ) < But if, instead of the gift being made by one of the future consorts to the other, it is made hy the father of one of the future consorts, or by a third party, is such a gift onerous or gratuitous? 8 (2 116 THE LAW OF OBLIGATIONS. It is maintained that when a father makes a provision for his daughter in her marriage-contract, the son-in-law undertakes the responsibilities of marriage on the faith of this provision. If he is in good faith, and unaware of the insolvency of his father-in- law, the provision is onerous quoad him, and the bad faith of the daughter will not entitle the creditors to obtain revocation. The French jurisprudence is in this sense. (Paris, 9 juill. 1895, S. 1898. 2. 17; Req. 16 nov. 1910, D. 1911. 1. 500, S. 1912. 1. 101, 2mc. arret. See Colin et Capitant, 2, p. 53; B.-L. et Barde r 1, n. 675.) But this jurisprudence is criticised by most of the writers, and it does not appear to be supported by any sufficient reasons. A father who makes a provision for his daughter on her marriage is not, under the French law, fulfilling a legal obligation, though by the Roman law it was otherwise. And the equitable reasons are so strong against allowing a father to make matrimonial pro- visions for his children instead of paying his creditors, that there appears to be a reaction in France in some of the Courts of Appeal against the jurisprudence of the Court of Cassation, and the authors are almost unanimous against the theory that such, gifts are onerous. (Aubry et Rau, 5th ed. 4, p. 229; B.-L., Le Courtois et Surville, Du Contrat de manage, 1, n. 244; Godefroy, E., De VExercice de V action Paulienne a VEgard des Donations faites par Contrat de Manage, Revue Critique, 1887, p. 731; Orleans, 8 juin 1898, D. 98. 2. 284; and, for a full list of authorities, see the note by M/Sarrut to Cass. 18 doc. 1895, D. 98. 1. 193.) Effect of Paulian action as to sub-purchasers. If a third party has acquired a right of property or some lesser right over property from the creditor will the annulling of the contract as fraudulent affect the third party? A has sold a house to B; B grants a hypothec over the house to C; the creditor succeeds in getting the sale by A to B annulled. Does this affect C's hypothec? It is clear that the judgment cannot affect C unless he has been made a party to the action. It will be res inter alios acta. But if C has been mis en cause will the judgment of nullity affect C as well as B? In the first place it must be admitted that the registration by C of his right will not affect the question. If C's title was bad the registration cannot make it good. Registration by the Egyptian law is merely a means of giving publicity to deeds; it does not cure any vices of title. THE PAULIAN ACTION. 117 La transcription pur elle-meme n' a joule Hen a la vaiidite du droit auquel elle s 'applique: elle sert seulement a eonsolider el a rendre publics dcs droits, a la condition que. ces droits existent et aient ete valablement acquis. (C. A. Alex. 21 fevr. 1901, B. L. J. XIII, 171. See Halt on, 2, p. 340.) It is further true, that by the Egyptian Mixed Civil Code, the fact that a contract which transfers property is void does not affect the rights of registered mortgage creditors when they have acted in good faith. (C. C. M. 197.) There is no similar pro- vision in the Native Code. (See De Hults, Rep. vo. Action en Nullite, nos. 30 seq.) But this article, as interpreted by the Mixed Court of Appeal, refers only to the cases of relative nullity which are dealt with in the articles which precede it. If the title of the owner who ■created the hypothec is challenged on the ground that he acquired the property from a person who was incapable of transferring it, or transferred it under a mistake, or in consequence of duress or fraud, the annulling of his title is not to affect the rights of hypothecary creditors. The contract by which he acquired his title was voidable, not void ah initio. So long as his title was unchallenged he was the true owner and could grant valid rights over the property. (C. A. Alex. 6 nov. 1901, B. L. J. XIV, 3.) In France, even in this case, the nullity affects the third party, upon the general principle that the author could not transmit any better right than he had himself, and that if his right was subject to rescission his successor must be in the same position. (B.-L. • et Barde, 1, n. 126; Bufnoir, Propriete et Contrat, p. 618.) But, in this respect, the Egyptian Mixed Code has undoubtedly amended the French law. The question, however, still remains whether the Paulian action is an action of nullity similar to the action to set aside a contract •on the ground of a vice of consent, or if it stands in a different position. According to earlier judgments of the Mixed Court .of Appeal, the rule stated in C. C. M. 197 does not apply here. If the Paulian action is successful, and a judgment of nullity is pronounced, this affects third parties, even though they may have acted in good faith. L'annidativn de la vente d'un hnmvuble prononcee pour fraude aux droits des creanciers du vendeur, emporte nultite de la revente qui a pu etre faite par Vacquereur ainsi depourvu de litre* ralables, meme en javeur de tiers de bonne foi. ] 18 THE LAW OF OBLIGATIONS. ,('. A. Alex. L3 mai 1908, B. L. J. XV, 292; C. A. Alex. 6 iiov. 1901. B. L. .J. XIV, 3. In the same sense, Haute Cour des Pays Bus (Hollande), 28 mars 1884, S. 85. 4. 9; Laurent, 1G, a. 465. ) Bui a Later decision of the Mixed Court of Appeal is in the opposite sense: Attendu qu'il est generalement admis, tant en doctrine qu'en jurisprudence, que V 'action paulienne ue saurait atteindre un sous-acquereur a litre onereux, a moins qu'il n'ait participe a la fraude. (C. A. Alex. 22 janv.. 1914, B. L. J. XXVI, 170.) In the Native Courts there is a judgment of the tribunal of Beni-Souef in the same sense. (Trib.-App. Beni-Souef, 31 dee. 1899, 0. B. 1, p. 331.) These decisions are in aecordanoe with the traditional theory of the French law, which is accepted as sound in France by a majority of the writers and by the jurisprudence. According to this theory, the question whether third parties are affected by the judgment in the Paulian action must be answered by making the following distinctions: — (1) If the third party was in bad faith the judgment will affect him. (2 If he was in good faith and acquired gratuitously, the judg- ment will likewise affect him, in the sense that he must return the property, or, at least, the amount by which lie is enriched. But ho may keep the fruits which he has percepted as a possessor in good faith. (3) If the third party acquired onerously and in good faith, the judgment will not affect him. In other words, the rule may be stated thus: the Paulian action will be admissible against the sub-purchaser in those cases only in which it would have been admissible against him if ho had been the original purchaser. (B.-L. et Barde, 1, n. 667; Aubry et Rau, 5th ed. 4, p. 226; 1). N. C. C. art. 1167, n. 164 seq. It is true that this appears to be creating an exception to the rule thai a man cannot transfer to another any greater right than he has himself— resoluto jure- dmtis resolmtw jus accipientis, and nemo plus juris transferre potest quam ipse haberet. But the answer is that the Paulian action is not an action of nullity in the full sense of the term. The judgment does not invalidate the contract in its essence; it leaves ii still subsisting as between the parties, and revokes it merely in so far as it is in fraud of the rights of the creditor. THE PAULIAN ACTION. 119 it is, as we shall see presently, a disputed question if the judgment revokes the contract as regards all the creditors, or if its effect is limited to those creditors who bring the action. But, without anticipating this question, it may, at least, be said that the Paulian act ion is not an action to annul the contract altogether. The strongest arguments in favour of these views are: (1) That it is the solution given by the Roman law, and thai the intention of the codes is to accept the traditional theory, as is shown by their disposing of the matter in a single article. (Dig. 42. 8. 9; Girard, Manuel, 5th ed. p. 426.) (2) Following the principle of the Roman law, the courts, us we have seen, have always made the distinction for the purpose of the Paulian action between onerous and gratuitous purchasers. . and have consistently held that an onerous purchaser was not to be deprived of the property unless he had been guilty of fraud. On the other hand, as regards the gratuitous purchaser, no proof of fraud is necessary. There is nothing in the texts of the French or Egyptian codes to create this distinction, but the courts have made it in deference to the traditional view which they believed the codes intended to maintain, and also from considerations of equity. It is the general policy of the law to protect onerous purchaser^ in good faith. But these arguments apply with no less force- to a sub-purchaser than they do to a purchaser. If the sub-purchaser acquired gratuitously, the creditors ought to be preferred to him. for, otherwise, he would be enriched at their expense; he is trying to make a gain — cert at cle lucro captando. But if the sub-pur- chaser acquired onerously, why should he not have the advantage of the rule in pari causa possessor potior haberi debet, that is. that between two persons whose rights are otherwise equal, he is to be preferred who is in possession. And, in the case of immoveables, if we are entitled to look at equitable considerations, there is much to be said in favour of the sub-purchaser. A party dealing for value and in good faith ought to be entitled to rely upon the register. If his vendor or mort- gagor- appears on the register as owner, and there is nothing on the face of his title to show that his ownership is conditional, the other party ought to be able to deal with him safely, and then. as soon as the sale or hypothec is registered, the purchaser s or mortgagee's title will be secure. In Quebec the Court of Appeal lias gone so far as to hold that faJUk 120 THE LAW OF OBLIGATIONS. if an owner of property grants a hypothec in favour of a creditor in good faith, even after an (action has been raised to revoke the grantor's title on the ground of fraud, the hypothecary creditor is protected. La revocation d'une uente faite en fraude des creaneiers du vendeur ne prejudicie pas a Vhypotheque consentie par Vacheteur, mime pendant Vinstance en revocation, en faveur d'un tiers de bonne foi qui lui a avwwe des fonds, le jugemwit sur Vaction pauUenne n'ayant pas Vautorite de chose jugee a Vegard de ce cre.ancier . (Barsalou v. Royal Institution, 1896, R. J. Q. 5 Q. B. 33. But. see, in Egypt, C. A. Alex. 22 janv. 1914, B. L. J. XXVI, 170.) And in France the theory that the Paulian action affects only the author or accomplice in the fraud when the act challenged is an onerous one, and does not affect sub-purchasers who have ac- quired by onerous title in good faith, is thoroughly established. (B.-L. et Barde, 1. n. 667; Aubry et Rau, 5th ed. 4, p. 227; D. N C. C. art. 1167, nos. 164 seq. ; Paris, 9 aout 1898, D. 99. 2. 485.) Effect of the Paulian action as among the creditors. Does the annulling of the act challenged result to the advan- tage of all the creditors, or of those only who bring the Paulian action? This is still a controversial question. According to one view, the effect of the action, if it is success- ful, is to bring back into the estate of the debtor the property which, according to the judgment, he had no right to alienate. This property, being restored, now forms the common pledge of all the creditors, whether their claims are prior to or posterior to the alienation which is annulled. The action is revocatory, and the creditor who brings the action has not on that account a preference. This was the Roman law and the old French law, and, in a matter governed so largely by traditional rules, this is a strong argument in its favour. (Dig. 42. 8. 1. 1; Girard, Manuel, 5th id. p. 428; Domat, Lois Civiles, liv. 2, Tit. 10, s. 1, para. 1, 4, 7; Voet, Comm. Ad. Pand. 42, 8, 11.) The tendency of the jurisprudence in Quebec is in this sense. {Chevalier v. Mart el, 1905, R. J. Q. 27 S. C. 356.) The question is somewhat clearer in Quebec owing to the pro- vision of the code in regard to preferential payments by an in- solvent debtor. THE PAULIAN ACTION. 121 The Civil Code of Quebec says dial the creditor who received such a payment knowing 1 of the insolvency may be compelled to restore it for the benefit of the creditor* according to their respective rights. (C. C. Q. 1036.) These words would certainly cover all the creditors who had rights at the time of the alienation, though, perhaps, they would not cover subsequent creditors. And it is maintained with some plausibility that the rule stated in this article is an illustration of the broader rule that whatever is recovered by the Paulian action goes to all the creditors. (C. C. Q. 1036. See Mignault, Droit Civil Cantadien, 5, p. 296.) On the other hand, the opinion which is now supported by almost all the French authorities, is that the judgment in the Paulian action is merely for the benefit of the creditors who are plaintiffs in it. The other creditors cannot profit by the action to which they wore not parties, and cannot, therefore, seize property which, as a result of the action, is brought back into the debtor's estate, or share with creditors who brought the action in the proceeds of the sale of such property. In fact, as regards them, the alienation made by the debtor is still valid, and the property alienated has passed out of his patri- mony. (B.-L. et Barde, 1, n. 715; Colin et Capitant, 2, p. 59; Aubry et Rau, 5th ed. 4, p. 235; Bordeaux, 2 juill. 1890, D. 92. 2. 440, and authorities in D. N. C. C. art. 1167, n. 367.) The French jurisprudence, though more hesitating, is mostly in the same sense. (See Cass. 30 juin 1903, D. 1904. 1. 623, and the note; Bourges, 18 juill. 1892, D. 92. 2. 609; Lyon, 22 fevr. 1893, D. 94.2.490.) In a recent case the Mixed Court of Appeal has adopted this view : — La nullite qui resulte de faction paulienne n'est pas una nullite absolue : L'acte franduleux n'est annule que dans Vinteret du creancier fraude et reste debout avec toutes ses consequences a, regard de toutes autres personnes. (C. A. Alex. 20 janv. 1916, B. L. J. XXVIII, 122.) This conclusion is supported by the French authorities mainly upon two arguments: — (1) The French Code, in the single article which refers to the Paulian action, does not speak of it as an action of nullity, or use the word " annul," but says creditors may attaquer Us actes faits par lew debit eur. (C. C. F. 1167.) / . 122 THE LAW OF OBLIGATIONS. But, whatever weight may be given to this argument on the interpretation of the French Code, and it does not appear to be very great, it has no application under the Egyptian Code or the Cod. 1 of Quebec. The Code of Quebec speaks of "avoiding" the contract (C. C. (,). 1033), and the Egyptian Code says the creditors can faire annider Irs aetes. (C. C. E. 14:3/204.) '2) A much more substantial argument is that to allow all lli.' creditors to benefit by a judgment pronounced at the instance of one of them is contrary to the elementary principles of law in ivgiird lo the effects of judgments. As to the creditors who did not sue, the judgment is res inter alios acta. As the codes lay down very clearly, the authority of the chose jugee is strictly limited to the parties. (C. C. F. 1351; C. C. Q. 1241; C. C. E. 232/297; Colin et Capitant, 2, p. 60; I). X. C. C. art. 1351, n. 1172. In answer to this, some writers say that tin.' judgment in the Paulian action is not res inter alios acta as regards the creditors who were not parties to it, because the creditors who brought the action must, be considered as suing on behalf of the general body of creditors. The creditors who sue are mandataries or gerants d'affaires for the others. (Colmet de Santerre, V. n. 82, bis, XIV.) . But it is difficult to see how they can be mandataries without any agreement between them and the other creditors, and their position does not resemble that of gerants d'affaires, because they are not interfering to protect the interests of others, but are con- eemed solelj with the preservation of their own rights, and would no doubt prefer to retain the spoil for themselves. In spite, how- ever, of these considerations, and of the great volume of authority in favour of the view that no person can profit by the Paulian action except those who are parties to it, I venture to think that it is not sound. The following arguments appear to me to he decisive: — (1) The Paulian action in the Roman law, ami in the old French law, was regarded as an action of nullity in the sense that if the alienation challenged was set aside, the property alienated returned into the patrimony of the debtor, or, more correctly, was held never to have passed out of it. As Voei puis it, adeoque omnia perinde revocantur restauran- twrque, ac si neque ali<'ii, neque liberatio facta, aut quid aliud gestum esset. (Comm. ad. Pand. 42. 8. 11.) . • | ■ THE PAUUAN ACTION. L23 This means thai there is a complete restoration of things to the position as il was before the deed. The creditor or creditors who bring the action may nol intend to aci or behalf of the other creditors, bu1 they cannot help doing- so. The whole property of the debtor formed the common pledgx for the creditors, and if a creditor succeeds in having an alienation by the debtor set aside, the property of the debtor is thereby increased, or, if we prefer to say so, it is shown that the diminution due to the debtor's aci was only apparent. As Laurent Hays, the creditors who sue represent the other creditors par la nature memc de Vactian, for to demand the annulling of an act which was in fraud' of all the creditors is a demand which interests thorn all. And when the other creditors benefit by the action they do so indirectly . They do not invoke the rule of chose jugee, they simply find in the debtor's estate a thing which forms part of the common pledgx of themselves as of all other creditors. (16. n. 488. But I must admit that even M. Siville, who edits the supplement to Laurent, rejects his argument upon this point. Supp. v. 4, n. 674.) Whatever conclusion we accept upon this point, it is clear that the situation is different when the debtor has been made a bank- rupt . A f aillite presents the indivisibility which mere decovftture lacks, and the action by the syndic is a collective action for the benefit of all the creditors. And even if the action is brought, after the faillite, not by the syndic, but by individual creditors, the benefit of the action goes to the masse. (Req. 29 juill. 1908, D. 1910. 1. 409, note by M. Percerou, S. 1909. 1. 345, note by M. Lyon-Caen.) Prescription of Paulian action. In the French law it is settled that the Paulian action prescribes only by the long period of prescription, which in France is thirty years, there heing no provision of the code fixing a shorter period in this case. (B.-L. et Barde, 1, n. 729; Aubry et Rau, 5th ed. 4, p. 237.) For the same reasons in Egypt the action will be subject to the fifteen years' prescription. (C. C. E. 208/272.) The Code of Quebec, with greater reason, provides that the action' must be brought within one year from the time that the creditor obtains knowledge of the fraud. Or, if the suit be by assignees or representatives of the creditors collectively, it must be brought within a year from the time of their appointment. (C. C. Q 1040.) 124 THE LAW OF OBLIGATIONS. CHAPTER VI. THE ACTION TO DECLARE A DEED SIMULATE. This action is known in the French Law as V action en declaration de simulation. It is generally treated of by the French writers as an appendix to the Paulian action. (B.-L. et Barde, 1, n. 731; Aubry et Rau, 5th ed. 4, p. 239; Colin et Capitant, 2, p. 61.) Like the Paulian action, it may be brought by the creditors of a party to the deed, but, as we shall see later, the action to declare a deed simulate is quite distinct from the Paulian action and is governed by very different rules. It will be well to begin explain- ing the expression a "simulate deed." I will adopt the definition of M. Planiol: "There is simulation when the parties make an ostensible agreement, the effects of which are modified or entirely destroyed by another agreement contemporary with the first and intended to remain secret." (2, n. 1186.) The definition presupposes that there is identity of parties and of objects between the ostensible deed and the secret deed. The secret deed which modifies or contradicts the ostensible deed is called a be preferred in the case under discussion. And this solution ma\ be regarded as settled in the law of Quebec, where the language of the code on this matter is practically identical with the French Code. (Barsaloii v. Royal Institution, 1896. R. J. Q. 5 Q. B. 383; Desmarais v. Leveille, 1905, R. J. Q. 14 K. B. 382; Dorian v. Dorion, 1883, 3 Dorion Q. B. 376.) In Egypt the latest jurisprudence of the Mixed Court of Appeal is in the same sense. La simulation d'un arte d 'acquisition n< reflechit pas forcemeat contre le sous-acquereur de bonne foi qui a traite avec Vacquereur fictif. (C. A. Alex. 20 juin 1918, B. L. J. XXX, 482. Cf. C. A. Alex. 16 mars 1915, B. L. J. XXVII, 219.) That this result is desirable in the interests of security of deal- 1 1 ..,«A». lJjtf THE LAW OF OBLIGATIONS. ing in;i\ be admitted. But it is extremely doubtful if we are entitled to reach it upon a fair interpretation of the Egyptian codes. The latest decision of the Mixed Court does not distin- guish between the Paulian action and the action en simulation. The authorities cited in the judgment support the proposition that the sub-pure ha sol- is protected against the effect of the Paulian action. This has been discussed above. But the question here is different. It is simply whether we can regard the judgment in an action of simulation as anything else than a declaration that the. property in question has always remained in the patrimony of the debtor. It is only by invoking C. C. F. 1321 that some French autho- rities hold that the sub-purchaser can be protected. In the Egyptian codes there is no article corresponding to article 1321 of the French Code, and it is a strong piece of construction to import it. Without an express article the creditors may show that a certain asset of their debtor was never alienated in spite of appearances. But we cannot without an express text of the code introduce an exception to the rule nemo pins juris transferre potest quam itpse habuerit. Whether the Paulian action is an action of nullity in the true sense may be open to question, as we have seen. But in the case of simulation there is hardly room for argument; the judgment is essentially one which finds that the apparent deed had no reality ab initio. As the grantee under it took nothing, there was nothing which he could convey to another. Nor does article 197 in the Mixed Code, protecting in certain cases regis- tered mortgage-creditors, affect the question, because according to the interpretation given to this article by the courts, it protects only creditors whose author's title was voidable and not void. C. A. Alex. 6 nov. 1901, B. L. J. XIV. ■!. And it has recently been held by the Native Court of Appeal that the judgment in an action to declare a deed simulate affects sub-purchasers. A fictitious contract of sale had been entered into between the husband and wife with the object of prejudicing the husband's creditors . The contract was set aside at the instance of the creditors as being simulate, and it was held that the nullity might be enforced by the creditors against a hond-fide purchaser from the wife. His only remedy was an action against her for damages. C. A. 28 mai 1913, O. B. XV, n. 7.)' Jr A^C THE ACTION TO DECLARE A DEED .SIMULATE. 137 1 1 may be remarked in conclusion that even the French autho- rities in favour of protecting sub-purchasers do not go the length of protecting a purchaser by gratuitous title. The judgment finding a deed simulate will always affect sous-acquereurs by gratuitous title, because they could not be allowed to enrich them- selves at the expense Of the creditors of their author. (Aubrv et Ran, 5th ed. 4. p. 242. note 53. Distinction between the action en simulation and the Paulian action. The action to declare a deed simulated has some analogies with the Paulian action, and it is usually treated of by legal writers in connection with that action. But. the rules which apply to the two things are different, though, unfortunately, the two actions have not always been clearly distinguished from one another. This is not surprising, because the two actions are frequently combined. The deed is challenged both as fraudulent and as simulate, but the two things are distinct, and the grounds of action arc alternative. (C. A. Alex. 3 nov. 1910, B. L. J. XXIII, 3: C. A. Alex. 18 avr. 1916, B. L. J. XXVIII, 259; C. A. Alex. 13 juin 1916, B. L. J. XXVIII, 433; C. A. Alex. 6 fevr. 1917, B.' L. J. XXIX, 198.) The rule has been thus laid down: quoique les conditions de Vexercioe de Taction paulienneet de V action en simulation soient differentes, les arguments on motifs a Vappui de Vune ou de V autre out line grande analogie et sont quelquefois identiques, V inter esse se trowvant le phis souvent dans Vimpossibilite de preciser et etant par suite force de proposer les deux actions alternativement. II serait done tres dane/ereux pour la bonne administration de la jmtici de s'inspirer d'un formalisme rigoureux et de s'attadier plufot a la lettre qu'a V esprit des conclusions des creanciers dans la qualification de V action exercee par eux en vac de faire annuler les actcs par lesquels des debiteurs pen scrupuleux se concertent avec des tiers pour les frusirer dans Vexercice de lews droits. (C. A. Alex. 22 juin 1915, Gaz. Trib. V. p. 168.) Pr, as it is expressed in a later ease. Rien riempecheun, creancier de transformer Faction paulienne en action de simula- tion lorsque les elements de la cause etablissent la fictivite de Facte attaquee, Get acte ne pouvant amir aucune force probante par lui-meme. 0. A. Alex. 29 mai 1918. B. L. J. XXIX, 454.) Where the deed is merelv fraudulent, there is a genuine aliena- tion which is intended to remove the property out of the patrimony 138 THE LAW OF OBLIGATIONS. of the grantor in fraud of his creditors. But, where the deed is simulate, there uever was any alienation at all, but merely the pretence of one. The object of the action is to fix the true amount of the debtor's estate, and to show that curtain things belong- to it which the debtor is trying to conceal by pretending that he has parted with them in favour of another. They have not been alienated; he has only made a pretence of alienating them. (C. A. Alex. 22 janv. 1914, B. L. J. XXVI, 170.) The Paulian action is an action solely for the benefit of creditors, wherea s the action en simulation may be brought by one of the parties to the simulate deed, or by any person having an interest. (Aubry et Rau, 5th ed. 1, p. 176; B.-L. et Barde, 1, n. 731; Cass. 25 avr. 1887, D. 87. 1. 397. According to the Egyptian jurisprudence, the parties to the deed must always be mis en cause. Pour juger de la simulation (J 'mi aete, it faut que tons ceux qui y ont participe et qui ont interet a soutenir sa validite soient mis en cause: si toutes les parties ne sont pas assignees, la demande est ir re rex able. (C. A. Alex. 3 mai 1899, B. L. J. XI, 203; C. A. Alex. 22 mars 1900, B. L. J. XII, 172. Contra, in Quebec, Desmarais v. Leveille, 1906, R. J. Q. 14 K. B. 382.) It is, however, in the case where the action en simulation is brought by the creditors of the grantor, that there is a risk of confusing it with the Paulian action. The following are the main points of difference between the two actions: — (1) The creditors do not need to prove that the simulation was , in fraud of their rights, and still less that there was complicity between the debtor and the third party. They need only to show that they have an interest in proving the simulation. It is clear that if the other property of the debtor is insufficient to pay their claims they are entitled to prove that the property in question forms a part of the debtor's assets irrespective of the motive which has induced the debtor to conceal that fact. (Planiol, 2, n. 1203; Cass. 31 juill. 1872, D. 73. 1. 340.; But the creditors do not need to prove the insolvency of the debtor; they simply ask the court to fix what is the estate over which their common pledge exists. And the creditor has a right to choose among the assets of his debtor those which he will seize in execution. (Colin et Capitant. 2, p. 62: B.-L. et Barde, 1, n. 733; Aubry et Rau, 5th ed. 4, p. 240.) 2 In ordf^fo b^ng the. action en simulation it is not neoes- ■ rJL.- THE ACTION TO DECLARE A DEED SIMULATE. 139 sary that the debts due to the creditors should be anterior to the simulate alienation. For, although the debts due to them may have been incurred bj the debtor at a date later than the alienation, nevertheless, but foj the alienation, or rather the pretended alienation, the property in question would have been available for the creditors. (B.-L. et Barde, 1, n. 733; Aubry et Rau, 5th ed. 4. p. 240; Dijon. 4 juillet 1904, D. 1906. 2. 164; C. A. Alex. 8 mars 1899. B. L. J. XI, 150; C. A. Alex. 12 mai 1898, B. L. J. X, 271. (3) It is not necessary to prove that the debtor was insolvent at the date of the deed, except in so far as proof of insolvency may be held to establish its fictitious character. (Aubry et Rau. 5th ed. 4, p. 240; B.-L. et Barde, 1, n. 733; D. N. C. C. art. 1167, n. 446; C. A. Alex. 23 Janvier 1890, B. L. J. II, 106.) __,. According to one view the action en simulation is imprescrip- tible, because an act which is inexistent cannot become existent by any lapse of time. (Colin et Capitant, 2. p. 63. But the prevailing opinion is that this action is subject to the ordinary long prescription which is in France 30 years, and in Egypt 15 years. (Aubry et Rau, 5th ed. 4, p. 458; Limoges. 15 mars 1895, sous Civ. 12 janv. 1897. D. 97. 1. 273. Distinction between action en simulation and the indirect action. Nor must the action en simulation be confounded with the indirect action by creditors in the name of their debtor. Creditors would no doubt be entitled to sue on behalf of their debtor for the restitution of property belonging to him. But that action would be less to their advantage than the action which we are consider- ing. If they were suing on behalf of their debtor, they would have to sue under the conditions which would apply to an action by him. (1) They would have to prove that the secret agreement was the true contract between the parties, and this would mean in most cases the necessity of having a commencement of proof in writing, whereas, when they bring the action en simulation, on the other hand, all methods of proof are open to them. (2) They might be met by any defence which might be made against the debtor himself. (B.-L. et Barde. 1. n. 734: supra, p. 99.) - 140 THE LAW OF OBLIGATIONS. CHAPTER VII. OBLIGATIONS RESULTING FROM AN ACT. We have now concluded our examination of obligations arising from an agreement, and we come to discuss those obligations' which arise not from any agreement but from certain acts. An act which creates an obligation may be: — (1) Benefit-producing; or (2) Causing damage. The first head covers what are called in the French law quasi- contracts, and the second what are called in the French law delicts and quasi-delicts. We shall first deal with the quasi-contracts, or those obligations which result from benefit-producing acts. The French Code explains the law as to two of these: — (1) Negotiorum gestio, and (2) Repetition of a \payment not due. (C. C. F. 1371 seq.; C. C. Q. 1043 seq.) But these are by no means the only benefit-producing acts, and the Egyptian Code, in spite of its brevity, makes it clearer than the French Code that an obligation arises when one party has intentionally procured a benefit for another. The broad prin- ciple underlying the whole matter is nut ne doit s'enrichir injuste- ment au prejudice d'autrui. Both negotiorum gestio and le paie- ment de Vindu are illustrations of this general rule, and there are other applications of it which cannot be brought under either of these, and which Planiol aptly designates as quasi-contrats in- nommes. (2, nos. 813, 933. Cf. Cass. 18 oct. 1904, D. 1905. 1. 119; B.-L. et Barde, 4, n. 2789.) The Egyptian codes state the rule broadly. The single article dealing with unjust enrichment says: the act of one person in- tentionally procuring a benefit for another 'binds that other person to account for any expenses and losses incurred bif the former up tt^M OBLIGATIONS RESULTING FROM AN ACT. 141 to an amount equal to the profit so obtained. (C. 0. E. 144/ 200.! The article in the Egyptian codes probably intends to lay down a general rule which will give a claim to any person who has acted as a negotiorum gestor, though it does not use the expression gestion d'affaires. In the jurisprudence, however, this expression is frequently used in cases in which this article has been interpreted, as where the Mixed Court says, La gestion d'affaires consiste purement et simplement a faire sans mandat V affaire d'autrui et a lui procurer a son insu une utilite directe et von occasionmelle . (C. A. Alex. 9 fevr. 1905, B. L. J. XVII, 118. Cf. C. A. Alex. 17 dee. 1902, B. L. J. XV, 64.) But in other cases the Mixed Court has spoken of the action by the gestor as the action de in rem verso, although in the French law this name is given, as will be explained later, to an action which is distinguished from the action arising from gestion d'affaires. (C. A. Alex. 21 dec. 1892, B. L. J. V, 85.) According to the French jurisprudence, the actio de in rem verso lies in certain eases against a person who has been enriched, although the party claiming reimbursement did not intend to create the benefit. But the Egyptian Code by using the word "intentionally" may be thought to have excluded the claim in such cases. On the other hand, in the French law where there has been a gestion d'affaires, the claim of the gerant is not limited to reimbursement for the profit still subsisting at the date of the action, whereas the Egyptian Code lias been interpreted as limit- ing the claim to this amount. But this decision seems doubtful. It will be referred to later. (C. A. Alex. 13 fevr. 1895, B. L. J. VII, 122. Cf. Pand. Franc, vo. Affaires, Gestion d', n. 317; D. Rep. Oblig. n. 5467. If this decision is correct the Egyptian codes, in attempting to state a broad rule, have somewhat narrowed the French law as to gestion d'affaires, and it is not certain that they have left room for any claim such as is allowed by the modern French law in the oases where there has been an unintentional enrichment. (See infra, pp. 163 seq.) It is probable, however, that the courts will hold that such a claim exists upon general principles of equity, and that the code intends to recognise the broad principle above cited. ;'■■' ] 42 THE LAW OF OBLIGATIONS. Nul ne doit s'enrichir injustement au prejudice d'autrui. This principle receives recognition in a number of articles in the code. (SeeC. ( . E. gp/90; 1:31/191; 344/430. , As regards the quasi-contract of gestion d'affaires, it is pro- bably safe to assume that the Egyptian codes intend to retain the rules established in the French law, except in so far as article 144/205 has made any change. I will, therefore, state the French rules upon this subject, and explain also the actio de in rem verso in the sense of the French writers, though as already stated there is a doubt if, under the Egyptian legislation any such action is available where the enrichment has been unintentionally procured. But before doing so it will be well to explain shortly what is meant in the French law by the term quasi-contract, although the Egyptian Code, perhaps wisely, avoids the use of that term altogether. - Quasi-contracts. The French Code does not give any enumeration of the sources of obligations. But in the arrangement of that work obligations are divided into two groups, viz.: (1) contracts or obligations arising from the agreement of parties which are dealt with in title three of book throe; and (2) obligations which arise without agreement, or as they are styled, engagements, which are dealt with in title 4 of the same book. This is the scheme of Pothier. He devotes two sections to the sources, or, as he calls them, the "causes" of obligations. The first he heads " Of Contracts," and the second " Of the other causes of obligations." The sub-divisions of the second group are quasi-contracts, ■delicts, quasi-delicts, and the operation of the law in certain cases. (Oblig. n. 2.) The Code of Quebec simply enumerates five sources of obliga- tions, contracts, quasi-contracts, offences, quasi-offences and the operation of the law solely. (C. C. Q. 983.) The Egyptian Code, without giving any enumeration, divides obligations into three kinds: — (1) Contracts. (2) Obligations created by an act or event. 3 Obligations created by law. (Title II. chapters II., III.. IV. But the twofold division of the French Code and of Pothier is OBLIGATIONS RESULTING FROM AN ACT. 143 really more philosophical. The fundamental distinction is be- tween obligations which arise from the agreement of parties and those which arise without any such agreement. All non-con- tractual obligations are obligations created by Law. In these the liability was created without consent. It is a liability which the party must bear merely because the law says he must bear it. In a contract on the other hand, the party has surrendered voluntarily a portion of his freedom. He is now bound to pay the debt, or if the contract is of a kind of which the actual performance is not enforced, he will be bound to pay damages, if he does not perform his promise. But when a man is found liable on account of a delict or of a quasi-delict, or on account of a quasi-contract, he has never con- sented to be bound at all. Nay, more, there are certain cases in which the law fixes him with liability although his will has not intervened at all. He has neither done anything nor has he taken a benefit from any act done on his behalf by another. He is liable purely and simply because the law saj^s a man in his position shall be liable. These are the anomalous cases such as the obligation to pay aliment, which the codes describe as obligations resulting from the law. But it is simpler and better to say that all obligations are created by the law. except those which the parties create for themselves by agreement. Criticism of the term quasi-contract. It is to be observed that the term quasi-contract does not belong- to the Roman law. The Roman lawyers said only that in certain circumstances there was an obligation which arose quasi ex con- tractu, but the noun quasi-contr actus was coined by the later civilians. It was used, however, at least as early as 1480. (Gloss, ad Inst. 3. 21.) Prevot de la J amies, a French lawyer whose work was pub- lished in 1750, speaks of quasi-contracts in a way that suggests that it was not in his day a recognised term of the French law. He says, on les nomme qiuasPconirats dans le droit Romain. On pourrait parmi nous Irs appeler conventions presumecs. (Principes de la jurisprudence francaise, 2, p. 354.) But the term quasi-contrat and the analogous term quasi-delit were in familiar use before the compilation of the Code Napoleon. 144 THE LAW OF OBLIGATIONS. / They were adopted in that work and arc constantly employed by French writers. It would be pedantic to take exception to a terminology so long- accepted, were it not that it is really mis- leading-. (Sec Holland, Jurisprudence, 10th ed. p. 238, note 2. ) But the fact is that there is no true analogy between a contract and a so-called quasi-contract. The essence of contract is consent. How can a relation in which the parties are bound without consent bear any resemblance to a contract? The traditional explanation was that in the quasi-contract the consent was pre- sumed by a legal fiction, just as Prevot de la Jannes, in the passage just cited, calls the quasi-contracts conventions presumees. But this is clearly unsound; the law cannot go the length of pre- suming an impossibility. And it surely cannot say that a person is bound upon the fiction that he has consented, when he would not have been bound if he had in fact consented. If the law says, as it does, that a person incapable of giving consent can be bound by the quasi-contract, it is idle to say that the liability arises from presumed contract. If I prop up the house of a lunatic he must reimburse me, though he could not have bound himself by contract to do so. The term quasi-contract, as used in the French law, denotes the eases in which the obligation arises from a lawful and voluntary act. (C. C. F. 1371; C. C. Q. 1041.) Les quasi-contrats sont les faits purement volontaires de Vhom'me, dont il resulte un engagement quelomique envers un tiers, et quelquefois un engagement reciproque des deux parties. (C.C. F. 1371; C. C. Q. 1041.) The French article says it is a voluntary act which creates the obligations. And another article says that there is. in a quasi-contract always a fait personnel. Neither of these statements gives us a satis- factory criterion. (C. C. F. 1370; C. C. E. 144/205.) It is not because the act is voluntary that the obligation arises. Otherwise, how can we explain the fact that in many cases it is not the person who does the voluntary act who is bound, but another person who does nothing at all ? In the quasi-contract of gestion d'affaires the person who inter- venes and does something for th'e benefit of another incurs certain liabilities, and we may say, if we like, that they arise from his voluntary act in interfering in somebody else's business. But wo cannot explain in this way the obligation of the person for whom he has acted. There has been no voluntary act on his part. OBLIGATIONS RESULTING FROM AN ACT. 145 and to say that ho is bound by the voluntary act of another to whom he has given no authority to art for him, is merely to say that the obligation is created by law. (See Planiol, 2, n. 811.; There might be some convenience in the use of the term quasi- contract if it could be made to cover all the obligations which arise without: — (a) agreement, or (b) fault. But it is in fact impossible to make this term cover all the cases, as is shown by the fact that the oodifiers have felt themselves obliged to form an additional group of obligations described as resulting from the law solely. This is unavoidable, because there are cases in which an obliga- tion arises without any fait personnel. The term quasi-contract is not at all a happy one, because it suggests an analogy with contract where no analogy exists, and because it conceals the fact that the liability arising from the so-called quasi-contracts is, after all, created by the law solely. But the term is so firmly established in the French law that it would be pedantry to avoid it, and no serious difficulty can arise, from its use if we bear in mind the foregoing criticism. Although the Egyptian Code does not use the term, the courts employ it, and in this they merely follow the universal usage. (See C. A. Alex. 1 dec. 1902, B. L. J. XV, 64.) German Code avoids term quasi-contract. The German Code, like the Egyptian Code in this respect, does not use the term quasi-contract at all. It gives no express classi- fication of the sources of obligations. But' its plan is to divide obligations into three groups accord- ing as they arise — (a) From contract, or (b) From an unlawful act, or (c) From unjust enrichment and from certain other special causes. (Arts. 305, 823, 812, 122, 307. See Saleilles, Thearie Generate cle VObligation, 3rd ed. p. 449; Schuster, German CivU Law, p. 350.) w. — vol. ii. -^ 146 THE LAW OP OBLIGATIONS. Distinction between quasi-contract and implied contract. A quasi-contracl must not be confounded with an implied con- trad. By an implied or tacit contract is meant a contract in which the consent of one party or of both of them has not been expressed in words, but is inferred from conduct. As we have seen in speaking of the formation of contract, there are many cases in which a party is held to have given his consent, although he has not said so in express terms. In regard to mandate, for instance, such cases are particularly i ommon. If a man stands by, and allows another to do something on his behalf, without making any protest, this implies as a rule that he accepts this other as his agent in that regard, and it would be a fraud upon the public to allow him to turn round and re- pudiate his liability. (See C. A. Alex. 29 dec. 1898, B. L. J. XI, 77.) So in France the husband is held, in the general case, to have given to his wife a mandate to purchase necessaries for the house- hold, because he usually leaves to her the duty of buying things for the family. (Planiol, 3, nos. 1099 seq. ; Colin et Capitant, 1, p. 625; B.-L., Lc Courtois et Surville, Contrat du Manage, 1, n. 078: U. N. C. C. art. 1420, n. 21.) There is not the same presumption among Mohammedans, seeing that the purchasing for the household is commonly done by the husband. But in all such cases where we say that there is an implied contract, the parties have given their consent, and the difference between the implied contract and the express contract is merely a difference as to the manner in which their consent has been manifested. But in' a quasi-contract the obligation does not arise from consent at all. A party may become liable without his knowledge, and even '-without having the capacity to give consent if he had wanted to do so. Proof of quasi-contracts. Tin Egyptian Code does not contain any separate rule as to the proof of quasi-contracts; it merely has the general rule laid down in C. C. E. 215 280. The French Code appears to say that proof by witnesses is always admissible as to obligations arising from quasi-contracts, for the reason that it was impossible for the creditor in such cases to procure proof in writing. (C. C. F. 1348.) OBLIGATIONS RESULTING FROM AN ACT. 147 This article seems at first sight to lay down this rule as appli- cable to every case of obligation arising- from quasi-contract, and, in this respect, to place the proof of quasi-contract in the same position as the proof of quasi-delict or of delict. For it says proof by writing is not to be required when it was impossible to procure it, and then it goes on to say, Cette exception s applique mix obligations qui naissent des quasi-contracts et des delits on qaiisi-cUlits. But it is generally admitted in the French law that the article must not be interpreted to mean that proof by witnesses of an obligation arising from a quasi-contract is competent when the party might have procured proof in writing. It is a question, therefore, of circumstances. Seeing that the obligations here arise simply from facts, it is natural that the facts should be capable of being proved by wit- nesses. In the case of gestion d'affaires, for example, the person whose affairs have been managed cannot obviously be expected to procure proof in writing of the acts done by the geramt, nor can the gerant be expected to have proof in writing of all that he has done. If he has rendered personal services, he can prove these by witnesses, although the amount claimed is above 1,000 P. T. " (C. A. Alex. 23 fevr. 1889, B. L. J. XI, 133- Req. 2 mai 1892, D. 93. 1. 316; B.-L. et Barde, 4, n. 2623.)} On the other hand, when the gerant has dealt with third parties and has paid sums of money to them, or has made contracts with them, there is nothing to prevent him from obtaining receipts and proof in writing of the obligations which he has contracted, and accordingly in such cases he will not be allowed to make proof by witnesses. (Demolombe, 30, n. 156; B.-L. ,et Barde, 4, n. 2624; D. N. C. C. art. 1348, n. 55; Cass. 6 fevr. 1878, D. 78. 1. 167.) This conclusion has been criticised by Canadian writers on the ground that receipts by the third parties with whom the gerant has dealt would not in any case be proof in writing against the' person on whose behalf it is alleged the gestion was made. It would only be proof of payment by the gerant, and would not prove on whose behalf he made it. (Mignault, Droit Civil Canadien, 6, p. 74 in fine.) But this criticism does not appear to be well founded. The receipt or other proof in writing which the gerant might procure does not make complete evidence of the debt due to him by the person for whom he has acted, but it establishes certain fails juridiques which need to be proved as the basis of his claim for 10 (2) 148 THE LAW OF OBLIGATIONS. reimbursement. A.8 lie has not been hindered by circumstances from procuring a writing, the prohibition of proof by witnesses applies to this case. In the case of the quasi-contract arising from a payment not due it is admitted on all hands that proof by witnesses is not competent, for the person paying ought to have got, and could have got. a receipt. (Aubry et Rau, 4th ed. 8. p. 345.) In the Egyptian law the ease is clearer, because the code does not mention quasi-contracts as being an exception to the rule, and says merely that the parties must prove by writing " provided they have not been prevented by circumstances from obtaining a document." (C. C. E. 215/280.) Negotiorum gestio or gestion d'affaires. The French Code explains this quasi-contract in some detail, and it will be best to begin by giving the French articles on the subject, and then to examine how far they have been retained or modified in the Egyptian Code. Lorsque volontairement on gere Vaffaire d'autrui, soit que la proprietaire connaisse la gestion, soit qu'il V ignore, celui qui gere contracte V engagement Incite de continues la gestion qu'il a com- mencee, et n necessaires qu'il a faites. (C. C. F. arts. 1372, 1373. 1374, 1375. Cf. C. C. Q. 1043—1046.) OBLIGATIONS RESULTING FROM AN ACT. 149 The French Code calls the person whose business is managed by the other le maltrc or le pmprietaire, as the Roman law called him the (Umiiiiux ret, because the typical case of gestion d'affaires was that of the man who takes in hand the management of pro- perty belonging to another, and in this way confers a benefit upon its owner. The person who interferes in another's business, and in that way acquires a claim as well as incurring obligations, is called by the French law the gerant, and these terms le maUre and le gerant .are more eonvcni('nt"~than -any corresponding expressions in English. Analogy between gestion d'affaires and mandate. The quasi-contract of gestion d'affaires bears a somewhat close resemblance to the contract of mandate, and is in fact sometimes spoken of as a sort of spontaneous mandate. (Beudant, Controls et Obligations, n. 1127.) The gerant acts without a mandate as if he had 0110; he behaves as an agent, though in fact he has no authority as such. .And the close connection between mandate and gestion d'affaires is shown by the fact that one of them can easily be transformed into the other. If the maitre becomes aware of what is being done on his behalf by the gerant, and approves of it, the gerant becomes from that time forward no longer a gerant but a mandatary. (D. Rep. Oblig. n. 5434; B.-L. et Barde, Obligations, 4, n. 2795; Cass. 25 janv. 1904, D. 1904. 1. 601, note 7.) And, conversely, when a mandatary exceeds the limit of his mandate, or continues to act after the mandate has expired, he will, in many cases, be regarded as a gerant d'affaires, if he acted for the benefit of his principal. (B.-L. et Barde, 4, n. 2797; D. N. C. C. art. 1372, n. 37; C. A. Alex. 15 nov. 1900, B. L. J. XIII, 13.) But in spite of the similarity in many respects between mandate and gestion d'affaires there are, notwithstanding, important, differences between them. The gerant has interfered in some business which did not concern him. He was not selected by the other to act as his agent and, although such interference may be in some eases laudable, this will only be so where there was an urgent need for it, and where, in fact, it resulted in a benefit. 150 THE LAW OF OBLIGATIONS. .Accordingly, the law deals more strictly with the gerant a affaires than with the mandatary in the following respects: — (1) The mandatary can resign the mandate, but the gerant who hafi begun to act must continue his management until the business is completed, or until the maitre can take charge of it himself. (2) The unpaid mandatary is not answerable for his faute legere, according to the Egyptian Code, and, according to the French law his responsibility in regard to faults is less heavy than that of a paid mandatary. (C. C. E. 521/638; C. C. F. 1992.) But the gerant is bound to tons le$ soins (Vun bon pere de fmnille. (3) The mandatary's powers and liabilities are strictly limited to the terms of the mandate, but the gerant is bound to take charge of all the accessory operations — il doit se charger egalement de toutes les dependences de cette meme affaire. (C. C. F. 1372.) There may be matters, not falling strictly within the business, which ho began to do, which are nevertheless to be considered as a necessary complement of it. (See Dall. Sapp. Oblig. n. 2266.) (4) The mandatary may according to the contract be entitled to a salary or to a commission, whereas the gerant has never a right to remuneration, except, perhaps, in the very limited sense which will be explained later. (5) The obligations made by the mandatary in the name of the mandant do not bind the mandatary but bind the mandant, unless- the mandatary exceeded his authority. But the obligations entered into by the gerant bind the maitre only if the business done by the germt was well done — si V affaire a ete bien adminis- tree. (Infra, p. 154.) (6) The mandatary can always recover his expenses from the mandant unless there was fault on his part, whether the business was successful or not. But the right of the gerant to recover his- expenses is limited to the amount by which the maitre was benefited. Conditions of gestion d'affaires. There is a gestion d'affaires whenever one man voluntarily does some business for another without a mandate. The classical case is that of the man who repairs his neighbour's house which is standing empty, there being an urgent need for the interference, .Hid no means of communicating with the owner. But it is not OBLIGATIONS RESULTING FROM AN ACT. 151 necessary to the conception of gestion d'affaires that it should consist in an intervention to protect property abeadj belong ing to the maitre. An interference to acquire a right for the third party, as in the case of stipulation pour autnii, is also a kind of grsfion d'affaires. But it has certain rules peculiar to it which have been already explained. (See B.-L. et Barde, 4, n. 2791: Planiol. 2. n. 2274. Cf. Poitiers, 19 mars 1906, S. 1907. 2. 161: Rev. Trim. 1907, p, 811.) Is gestion confined to the doing of juridical acts? The language of the French Code, and the general principles applicable to the case, indicate clearly that by gestion is meant the administration of some business. M. Planiol says it means always the accomplishment of a juridical act. (2, n. 2273, and see his note to Req. 20 dec. 1910, D. 1911. 1. 377.) But this restriction is not made in the French' Code, and we have no right to make it, nor is there any equitable reason for it . In the Roman law the acte a\e gestion might just as well be a material act, such as the repairing of a wall or the extinction of a fire, as a juridical act, such as paying another's debt or binding oneself to pay for work done on his property. (Girard. Manuel de Droit Boynain, 5th ed. p. 625.) And the French jurisprudence supplies examples of gestion d'affaires consisting in the doing of a material act. For instance, an innkeeper who takes in a workman injured by an accident has a claim as a mgotiorum gestor against the employer if the employer was responsible for the accident. (Req. 28 fevr. 1910. D. 1911. 1. 137, and note by M. Dupuioh.) A person succeeds in securing for an interdicted lunatic a greater degree of material comfort and attention. (Aix, 20 dec. 1888. S. 90. 2, 25, and note by M. Naquet.) A man stops a horse which is running away in the public road and is a danger to the public . In so doing the man suffers an injury. He has an action for indemnity against the owner of the horse. (Trib. comm. Seine, 3 janv. 1900, S. 1902. 2. 217, and note by M. Perreau. In this sense, Colin et Capitant, 2, p. 712. So, likewise, in the German law. Cosack, Lehrbuch, 6th ed. 1, p. 635.) In Egypt there is no room for the contention that gestion 152 THE LAW OF OBLIGATIONS. implies a juridical act. The French Code by speaking of (jest ion and of affaire lends some support to this view, though it ought in my opinion to be rejected in the French law also. But the Egyptian Code does not employ these terms gestion or affaire at all. It says merely "the act of one person." and this must cover material acts as well as juridical acts. Is it essential that the gestion shall be unknown to the maitre? It would seem to be so. This was the theory of the Roman law and of the old French law, and the reasons given are satis- factory. The Roman law said semper qui non prohibet pro se intervenire, mandare creditur, that is to say in every case where. one does not prohibit another from interfering in one's affairs one is taken as having given him a mandate. (D. 50. 17. 60; 17. 1. 6. 2, and the texts collected in Maynz, Court de Droit Romain, 2, p. 476.; Pothier says, il faut pear le quasi-contrat negotiorum gestorum que celui qui a fait I 'affaire de quelqu'un, Vait faite a son insu. Sans cela il u'/j a pas lieu, au quasi-co.ntr.at negotiorum gestorum; oar, lor&que vous avez fait Vaffavre de quelqu'un a son vu ef a son su, ou il Va souffert ou il s'y est oppose. S'il Va souffert, il est cense, en soufframt que vous fissiez pour lui cette affaire, eons. avoir donne im mandat tacite de la faire, et s'est le cas du contrat de mandat et non celui du quasi-contrat negotiorum gestorum. (Du Quasi-contrat, Negotiorum Gestorum, Appendice au contrat de mandat. n. 180.) It is hard to see how it can be otherwise. The Quebec Code expressly follows the old rule: He ivho of his. own accord assumes the management of any business of another, without the knowledge of the latter, etc. (C. C. Q. 1043 The French Code, for very obscure reasons, changed the law by saying: Lorsque volontairement on gere Vaffaire d.autrui, soit que h proprietaire connaisse la gestion, soil qu'il V ignore. (C. C. F. 1372. To justify the innovation thus made by the French Code, the writers are .driven to draw a very fine distinction between knowledge and approval. If the maitre becomes aware of the gestio and has time and opportunity to stop it, but he chooses to let it go on, there is a tacit mandate thereafter. If, however, the facts lead to the conclusion that, though he OBLIGATIONS RESULTING FROM AX ACT. 153 knows of the gestio lie submits to it, rather than approves of it, the operation continues to be gestion d'affaires. (B.-L. et Barde, Oblig. 4, n. 2795; B.-L. et Wahl, Contrats Aleatoires, n. 483; Dissertation by M. Pie, in note to Alger, 6 mai 1896, I). 99. 2. 412. Cf. Laurent, 27, n. 384.) Egyptian law. The Egyptian Codes do not say expressly, as does the Quebec Code, that the gestion must be without the knowledge of the maitre. (C. C. E. 144/205.) On the other hand, they leave out the words of the French Code, soit que le proprietaire connaisse la gestion, soil qu'il Vignore. Looking to the history of the point, and to the want of favour which these words have found in France, it may well be that the Eg yptian legislator omitted them intentionally, and meant to go back to the old law. In a recent case the Mixed Court of Appeal spoke of gestion d'affaires as being always a Vinsu du maitre. (C. A. Alex. 9 fevr.,1905, B. L. J. XVII, 118.) But it was not necessary to decide the point in that case. Knowledge of incapable person is immaterial. There is certainly one case where knowledge is consistent with negotiornm gestio, namely, when the person benefited is incapable of giving the mandate. (Planiol, 2, n. 2273; infra, p. 157.) It is frequently immaterial to decide whether the case is one of negotiorum gestio or of tacit mandate. But it may be material to decide which it is on account of the difference in the rules of evidence. Mandate, unless it is of a commercial nature, is not capable of being proved by witnesses, whereas necpi iontm gestio can be so proved. (Guillouard, Mandat, n. 61; Douai, 11 nov. 1891, D. 92. 2. 352. And there are certain other cases in which the distinction may be important, some of the special rules as to mandate not ap]>lying to negotiorum gestio. The claim of a mandatary against the mandator does not depend on the business being successfully accomplished, as the claim of the gestor does. And, again, the gestor cannot throw up the management of the affair on the death of the person for whom he is acting, whereas the mandatary is only obliged to complete business which is urgent. C. C. F. 1373, 1991; C. C. Q. 1044, 1709.) 154 THE LAW OF OBLIGATIONS. Must be intention to act on behalf of another and benefit resulting. In negotiorum gestio there is always an intentional interference with another's business, the result of which is that the person inter- fering acts and incurs liabilities as if he were an agent, though in fact he has no authority. The man who acts not in order to benefit another but in his own interest, may have a claim against the other by the actio cle in rem tversp, as will be explained later, but he is not a riegotiorum gestor. (Baudry-Lacant. et Barde, Oblig. 4, n. 2794; Paris, 26 avril 1892, D. 93. 2. 175.) It isnot inconsistent, however, with negotiorum gestio that the interference should have been partly for the benefit of the person interfering, and partly for the benefit of the third party. (D. Bep. Oblig. n. 5404; Cass. 20 dec. 1910. D. 1911. 1. 377; C A. Alex. 2 avr. 1903. B. L. J. XV, 227.) .But there is no claim if the alleged gestor at the time of the interference had no intention to seek reimbursement but intended to make a gift. (Baudry-Lacant. et Barde, Oblig. 4, n. 2798; infra, p. 159.) In most respects the gestor is treated as an agent, but in some respects lie is more favourably considered. If his interference was called for by circumstances and was well meant, the fact that, through his want of skill, some loss resulted, will not make it obligatory on the court to find him liable in full damages. (C. C. F. 1374: C. C. Q. 1045.) The whole foundation of the claim by the negotiorum gestor is that the business has been well managed and that the expenses were necessary or useful. This is a condition of the action whether it is brought against the maitre by the gestor or by third parties. (D. Supp. Oblig. n. 2284; B.-L. et Barde, 4, n. 2818.) There must have been some urgency calling for the inter- ference, and the action taken must have been something which the person himself might reasonably have done if he had been on the spot and had acted as a bonus paterfamilias. If the neighbour repairs a house which was not worth repairing, or Avhich the absent owner was intending to pull down, the money has not been usefully spent. OBLIGATIONS RESULTING FROM AN ACT. 155 Benefit does not need to be subsisting at date of action. On the other hand, under the French law, if the money was well spent at the time it makes no difference that the house was burnt down the day afterwards. (Pothier, N,eg. Gest. n. 221 : Larom- biere, art. 1375, n. 9; Planiol, 2, n. 2280.) It is not likely that the Egyptian legislator meant to alter the French law on this point. The French Code allows the gerant to claim for his depenses utiles ou necessaires. And, as we have seen, this is taken to mean utiles or necessaires at the date of the expenditure . The Egyptian Code says the maitre must account to. the gerant for his expenses and losses up to an amount equal to the profit so obtained. (C. C. E. 144/205.) I should be inclined to think this means the profit 'obtained" when the money was ispent. (In this sense, De Hults, Gestion d' Affaires, n. 22.) The contrary decision would tend to prevent gestion d'affaires and the law desires to encourage it . Who may be sued by third party. When the gemnt contracted with the third party in the name of the person benefited, it is this person whom the third party must sue. For it was upon his credit and not upon that of the gerant that the plaintiff relied. (D. Swpp. Oblig. n. 2286; note by Planiol to D. 91. 1. 49; B.-L. et Barde, 4, n. 2814. But when the gerant contracted in his own name, the action is against him, and he has a recourse against the person benefited. (Demolombe, 31, n. 192; Laurent, 20, n. 332; Douai. 9 avr. 1900, D. 1901. 2.1, and note. Cf . in Quebec, Societe de Pompes Funebres v. Lefebiwe, 1908, R. J. Q. 33 S. C. 296. What is included under reimbursement? The person benefited must indemnify the gestor for all the per- sonal liabilities which he has assumed, and must account to him for any expenses and losses incurred by the gestor up to the amount of the profit obtained, in the sense which has been explained above. (C. C. E. 144/205.) Does this include in suitable cases a reason- able remuneration for the gestor' S loss of time? It would appear that his loss of time is a Mpense, and that he is entitled to a reasonable remuneration for it. (Demolombe. 31, n. 174; Baudrv-Laoantinerie et Barde. 4, n. 2821.) 156 THE LAW OF OBLIGATIONS. But we cannot go further. If mandate is presumably gratuitous, this is true a fortiori of gestion d'affaires. A man cannot create a claim for his own remuneration by an interferenee which was purely spontaneous. It has been held in a Quebec case, that the fact that the services rendered by the gestor involved danger to him, did not entitle him to a larger indemnity. In that case armed burglars had broken into a bank, and carried off a thousand pounds in gold. The plaintiff, who was neither a servant of the bank nor a policeman, took part in the pursuit of .the burglars who were captured after a desperate struggle, and eight hundred pounds of the booty was recovered. It was held that the plaintiff had a legal claim only to reasonable compensation for his loss of time, which was valued at one pound. The facts that he risked his life and that his services resulted in a large benefit were irrelevant. (Wark v. People's Bank, 1900, E. J. Q. 13 S. C. 486.) This case also illustrated the rule that the remuneration which the gestor can claim is not to be measured by the value of the benefit procured, except in the sense that he can never claim more than the value of this benefit. If, at a small expense to himself, he renders a great service, he can claim only, to be remunerated for his small expense. If the gerant is killed or injured in rendering the service, is there a claim for reparation against the maitre 1 This is a doubtful question. There is some French authority for the affirmative. M. Boistel says tons les sacrifices faits par le gerant d'affaires sont compris dans le sens general des mots " depenses utiles ou necessaires" d,e Tart. 1375, du moment qu'une repara- tion pecimiaire en est possible. Le devouement aux interets du patron, qui a ete pousse jusqu'au sacrifice de la vie merite a ce point de vue la qualification de depense utile ou necessaire. (Note to Req. 28 oct. 1907. D. 1908. 1. 483, in fin. See B.-L. et Wahl, Con/rats Aleatoires, n. 720.) The victim in that case had been killed by the great volcanic eruption of 1902 in Martinique, where he was acting on behalf of the defendant. The arret iste considers him as a gerant, but he was regarded by the Court as a mandatary. And in several French cases it has been held that a man who stopped a runaway horse and was injured in so doing, had an action against its owner as a negotiorum gestor. (Trib. Comm. de la Seine, 3 janv. 1900, S. 1902. 2. 217, and cases cited in note.) Tin- language of the Egyptian Code, depenses et pertes subies, seems equally wide. (C. C. E. 144/205.) r OBLIGATIONS RESULTING PROM AN ACT. 157 The codes say that the gestor subjects himself to all the obliga- tions which result from an express mandato. (C. ('. F. 1372; C. C. Q. 1043.) They do not say that he has all the rights ol a mandatary. Nevertheless, it would appear that he has a righl of retention, and cannot be compelled to give up property of the person benefited which is in his possession in connection with the gestio, until he has b^en reimbursed. For a right of retention is not restricted to cases in which it is expressly given. It is an equitable right which exists whenever there is a contractual or a quasi-contractual relation between the two parties, and a debt connected with the thing retained has arisen. But there must be a connection between the debt and the thing retained. 1 (Guillouard, Trait e de la Retention, n. 47; Aubry et Rau, 5th ed. 3, p. 189; Orleans, 23 juin 1898, D. 99. 2. 63; Grandmoulin, Suretes Rersormelles, etc., n. 821.' On the other hand, it would appear that the gestor has no privilege, for privileges are stricti juris and not to be extended by analogy. He has no right to sell the thing and pay himself out of the proceeds. (Guillouard, op. cit. n. 25.) Does the maitre need to have contractual capacity? In a quasi-contract the obligation is not based on the consent of the parties. A party may become liable even without his knowledge, as in the case of negotiorum gestio, and, seeing that consent is not necessary, it is immaterial that the party bound had not contractual capacity. When the liability arises from the party having received a benefit at the expense of another, the fact that the party benefited is incapable, is no reason why he should not be bound to pay for the benefit.' The principle against unjust enrichment applies as well to a pupil or a lunatic as to a person of full capacity. A person altogether devoid of reason cannot by his act make himself liable, for reason, at any rate to some extent, is required to commit a delict or a quasi-delict. But a man does need to be fully capable in order to bo liable for delicts or quasi-delicts. A minor below the age of full capa- city may have intelligence enough for this purpose. (Sourdat, Responsabilite, 5th ed. 1, n. 17; Cass. 21 oct. 1901, D. 1901. 1. 524; D. N. C. C. art. 1382, nos. 37 seq.) Nor can an incapable person by his act bind himself towards 158 THE LAW OF OBLIGATIONS. another by becoming a party to a contract, or as being a negotiontm gestor. But when the obligation arises from the act of another the person rendered liable does not need to possess reason. The Code of Quebec expressly states: A person in- capable of contracting may, by the quasi-contract which results from tin art of cmother, be obliged towards him. (C. C. Q. 1042. And though the French and the Egyptian codes do not say so, there is no doubt that the law is the same. (Aubry et Rau, 4th ed 4. s. 441, p. 723; B.-L. et Barde, 4, n. 2800; Guenee, De la capacite de s'obliger dans les quasi-contrats, Rev. Crit. v. 16, 1887. p. 337; Chambery, 13 aout 1891, D. 93. 2. 316; D. N. C. C. art. 1372, n. 93.) The principle of the liability of an incapable person to pay for benefits which he has received without contract will be illus- trated in speaking of the action- in rem verso. Does the gerant need to have contractual capacity? It is maintained by some writers that it is not necessary that the gerant should have capacity to contract. (Guenee, Rev. ( riL. 16, 1887, p. 327 ; Larombiere, on art. 1374, n. 9 ; D. N. C. C. art. 1372, n. 100.; But this opinion does not seem to be sound. A jDerson who cannot bind himself by contract cannot bind himself any more by a quasi-contract resulting from a voluntary act on his part. The gerant is a sort of mandatary without a mandate; if for want of capacity, he could not have accepted a mandate, or have been obliged to execute it, he cannot any the more bind himself by a gestion d'affaires which puts him in the same position as that which would have resulted from the mandate. An incapable person, therefore, who has acted as gerant, is not bound to continue his management. But he will have a claim against the maitre by the actio de in remverso, subject to the conditions to be explained immediately, because this liability arises from the enrichment. And if the gestion has resulted in the gerant receiving money or money's worth, the other party will have an action against him for repetition. Or if in his gestion, the incapable person has committed a delit or a quasi-delit, and he possesses enough in- telligence to be responsible, he will be responsible for his fault;. 'Bufnoir. Proprieteet Con.trat. p. 794: B.-L. et Barde, 4, n. 2799; OBLIGATIONS RESULTING FROM AN ACT. 109 Aubn el Rau, 4th ed. 4, p. 722; Planiol, 2, u. 2278: Colin et Capitant, 2, p. 713; D. N. C. C. art. 1372, n. 104.) Examples of negotiorum gestio. A third party who furnishes necessaries to a person whom another was bound to aliment is &negotiorwm gestor for that other. He pays another's debt, and is entitled to be indemnified. If the furnishing was made without the knowledge of the person primarily liable, the claim is strictly one of negotiorum gestio. If it wa.s made with the other's knowledge, the person benefited, that is, the person legally bound to aliment the other, will be liable upon the theory that the person whom he was bound to aliment was authorised to contract debts for necessaries upon his credit. (See Pand. Frang. vo. Aliments, nos. 586 seq.; Demo- lombe, 4, n. 74; Laurent, 3, n. 54; Dijon, 4 fevr. 1888, D. 89. 2. 243.) But it must be borne in mind that in such cases there is no ground for repetition, if the person who incurred the expenses or furnished the necessaries did so from motives of affection or in- terest, and without any intention of reserving a claim to be repaid. It will be for the court to decide according to the circumstances, whether there was the intention to reserve a claim.- (Pothier, Quasi-Contrat, Neg. Gest. n. 196; Dall. Rep. vo. Oblig. n. 5400; Dall. Supp. Oblig. n. 2257; Fuzier-Herman, Code Civ. Ann. art. 1375, n. 73; C. A. Alex. 24 dec. 1902, B. L. J. XV, 75.) So, where a grandmother who had supported a granddaughter for a number of yea,rs, and had paid for her education, afterwards sued the child's father for repetition of these expenses, it was held that the facts showed that the grandmother had acted from mere affection, and animo danandi, and that she had no claim for repetition either against the father or against the child herself. (Cass. 25 juin 1872, D. 74. 1. 16. Cf. Paris, 26 avr. 1892, D. 93. 2. 175; Baudry-Lacant. et Barde, Oblig. 4, n. 2798; Baudry-Lacant. et Houques-Fourcade, Personnes, 3, n. 2084.) On the same principle, if necessaries have been supplied by a person who with others is under a legal obligation to supply them, the facts may indicate that in supplying the necessaries he did not intend to reserve a right of recourse against the other persons liable, for their shares. (Paris, 26 avr. 1892, D. 93. 2. 175.) Moreover, it must not appear that the goods were supplied on the credic of the person to whom they were actually given, or there will be no recourse. ■ 160 THE LAW OF OBLIGATIONS. Another ease of negotiorum gestio is that where a person pays the i'uneral expenses of another, and claims a recourse against the person legally bound to pay such expenses. Primarily, the succession of \\w deceased was liable. But if tin' succession is unable to defray the expenses, there will be a claim againsl the surviving consort, the parent or the children of the deceased. (Pand. Franc, vo. Aliment*, n. 290. Cf., in England, Bradskaw v. Beard, 1862, 12 C. B. N. S. 344, 133 E . R. 360. See American cases in Keener, Quasi-Contracts, p. 344; Scott's Cases on Quasi-Contracts, pp. 292 seq. ; infra, p. 199.) The following are miscellaneous examples of applications of the principle which have been made by the Mixed Courts in Egypt. The Con sci I Sanitaire et Quarantenaire provided for the re- patriation of certain pilgrims who had been shipwrecked and dis- embarked at the quarantine camp. The Conseil was held entitled to recover its expenses from the owners and charterers of the ship. (C. A. Alex. 25 avril 1900, B. L. J. XII, 217.) ■ The occupant a iitre gratuit ' of an immoveable belonging to the State was held entitled to recover the plus-value arising from the improvements which he had made at his own expense. (C. A. Alex. 2 avril 1903, B. L. J. XV, 227. Cf . C. A. Alex. 13 fevr. 1895, B. L. J. VII, 122; C. A. Alex. 15 mai 1912, B. L. ,J. XXIV, 342, for other illustrations.) Assistance to ship in distress. The important and common case, in which the captain of a ship is called upon to give assistance to a vessel in distress, is dealt with in the French jurisprudence in a manner difficult to reconcile with principles. The French law applies to this case the technical name of assistfmoe. It does not use here fhe term SM Mefyi ge, because the matter of sauvetage is regulated bv art. 27 de VOrdonnance de 1681. This ordormance gives the salvor a right to one-third of the effects salved, but in order to enjoy this right there must have been a salvage in tin Btrid sense of the term. One of the essential conditions is that the vessel must have been found after it had been abandoned by its crew. It has been held that even the presence of one sailor on board is enough to exclude the idea of OBLIGATIONS RESULTING FROM AN ACT. 161 salvage. (Dall. Repertoire Pratique, vo. Droit Maritime, n. 1303.) Assistance is a different case from this. It consists in render- ing aid to a vessel in peril. This aid may be rendered, of course, after an agreement as to the remuneration, and the question whether this remuneration can be reduced if it is extortionate has been discussed under the head of violence. {Supra, I, p. 302., The case with which we are now concerned, however, is where no agreement has been made as to the amount to be paid. If we adopt the view that mandate is not confined to the per- formance of juridical acts, we may say that the captain who gave the assistance is a mandatary if his aid was asked for, or was tacitly agreed to. But, as will be explained presently, it is gene- rally held that mandate implies representation. Where the cir- cumstances do not indicate any agreement, even tacit, we may say that the captain who "assists" is a person who confers a benefit in circumstances such as give him a claim by the actio de in rem verso. But whether the case is one of mandate or of gestion d'affaires he will be entitled to recover his depenses utiles. But this limit of the right does not satisfy the equities of the situation. The rendering of services of this kind is frequently a hazardous opera- tion. It may be necessary to run great risk, and, after all, the operation may be unsuccessful. If it were the law that the salvor could recover only depenses utiles it would give little encourage- ment to captains to render such services, whereas, it 'seems that the law ought to do what it can to encourage them. The French jurisprudence is more liberal in cases of assistance en mer than the strict rules of gestion d'affaires would permit. In the first place, it allows the payment of a remuneration as well as of expenses. Le muveteur qui, a defaut des conditions pre- scrites par Vart. 27 de Vordonnance de 1681, ne peut, conforme- ment a celle-ci, reclamer le tiers des effets sauves, a neanmoin* le droit, s'il a assiste un navire en peril, de reclamer, outre le remboursement de ses depenses, une indemnite pour assistance et perle de temps. (Rennes, '26 juillet 1906, D. 1908. 2. 237.) In the second place, French courts award a remuneration although the assistance may have turned out to be useless, owing to circumstances for which the captain of the salving vessel was not responsible. (Dall. Hep. Pratique, vo. Droit Maritime, n. 1323.) If, for example, the ship had been taken in tow, and had after- w.— VOL. II. 11 162 THE LAW OF OBLIGATIONS. wards broken loose and sunk, it would be hard to see on the prin- ciple of negotiorum gestio that any benefit had been procured. The Convention of Brussels of 23 Sept. 1910, formulated a number of rules upon the subject, and a projet de loi was depose on 26 juillel 1913, to embody these rules in the French law. But this matter does not concern us here. (See Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 6, n. 1066; Dall. Rep. Prat. vo. Droit Maritime, nos. 1317 seq.;. Vermond, Manuel de Droit Maritime, 4th ed. p. 368; and for the closely analogous rules applied in the English law, see Kennedy, Law of Civil Salvage, 2nd ed. p. 31 ; Carver, Carriage of Goods by Sea, 5th ed. s. 333.) But in the English law the rule is "No success, no salvage," unless, in the circumstances, it is possible to imply a promise to pay. (The Benlarig, 1888, 14 P. D. 3, 58 L. J. A dm 24; Kennedy, I.e.; Carver, I.e.) Egyptian jurisprudence. There is very little Egyptian jurisprudence upon the subject, but it appears that so far the courts have applied the letter of the law strictly. En droit mixte, la question du sauvetage et de la prime due au sauveteur, ne pent etre reglee, vu le silence de la loi sur la matiere, que d'apres Vart. 205 du code civil, aux termes duquel le fait d'une persanne qui a procure intentiomiellement un benefice a uup autre personne oblige cette derniere a tenir compte des depmses et pertes subies par la premiere jusqiid concurrence du profit obtenu. (C. A. Alex. 12 mai 1892, B. L. J. IV, 235.) If we can regard the relation between the salvor and the captain of the ship in peril as one of tacit mandate there would be no difficulty. The Egyptian law allows the judge to control the remuneration of a mandatary, and the court has power enough to deal in an equitable way with a case which can be considered as one of mandate. (C. C. E. 514/628.) But the prevailing view in France is that a mandatary is a person who represents another for performing juridical acts only. (B.-L. et Wahl, Contrats Aleatoires, n. 361, and n. 363; Planiol, 2, n. 2231; dissertation of M. Labbe to Req. ler fevr. 1891, S. 1893 1. 497; D. N. C. C. art. 1984, n. 17. Cf., in Egypt, Grandmoulin, Contrats, n. 913.) There is, however, a reaction against this view which makes it impossible to consider certain pro- fessional men such as doctors and architects as being mandataries. (See B.-L. et Wahl, op. cit . n. 363; Colin et Capitant, 2, p. 699; Agen, 4 mars 1889, D. 90. 2. 281, note by M. Glasson.) ACTIO DE IN REM VERSO. 163 CHAPTER VIII. ACTIO DE IN REM VERSO. One of the most famous maxims of the Roman law is Jure naturre cequum est neminem cum alterius detrimento et iniuria fieri locupletiorem. (Dig. 50. 17. 206.) That is to say, it is contrary to the law of nature and equity that one man should be un- justly enriched to the prejudice of another. And this maxim, in its French form: Nul ne doit s'enrichir injustement aux depens d'autrui, is frequently cited toy French writers and French judges as an indisputable principle of the French law. The older writers were content to speak of it as a rule of natural equity which the courts had the power to apply in the absence of another remedy. (See Beaumanoir, Coutumes de Beauvoisis, ed. Salmon, ch. 20, p. 302, and other writers cited by M. Loubers in Rev. Crit. 1912, p. 399.) For example, Pothier, in explaining that a married woman who has contracted a loan without the authorisation of her husband is bound to repay it if it has. turned to her profit, says that, in this case, the contract of loan is null, because in the French law, the material authorisation is indispensable, but that son obliga- tion est done produite par la loi naturelle seule, qui ne permet pas qu( quelqu'un senrichism aux depens d'autrui. (Oblig. n. 123.) And the same writer, in another place, deals with' the difficulty which arises when A has done something for the benefit of B contrary to the formal injunctions of B. In this case, Pothier says that A cannot have an action as a negotiorum gestor, but that, nevertheless, he will have an action for repayment of that which has turned to the profit of B, because in the French law natural equity is in itself sufficient foundation for an action. Or, brsque vous profitmz d'wqe affmp que fai frnte, quoique contre votre demise, pour vous faire du bien malgre vous, requite naturelle, qui ne permet pas de s'enrichir aux depens d'autrui, 11 (2) 164 THE LAW OF OBLIGATIONS. vous oblige a niindonniser de ce qiiil men a coute, jusqu'a con- currence du profit que vous en retirerez. (Pothier, Du Quasi- contrat negotiorum gestorum, n. 182.) Modern authorities, likewise, state the broad rule against unjust enrichment as being a rule of natural equity which must be con- sidered to form part of the French law. (B.-L. et Barde, 4, n. 2849 ; 11; Aubry et Rau, 4th ed. 6, p. 426; Cass. 15 juin 1892, D. 92. 1. 596.) In the case cited the Chambre des Requites stated the principle very broadly indeed. Speaking of the action de in rem verso they said: Attendu que cette action derivant du principe d'equite qui defend de s'enrichir au detriment d'autrui, et n' ay ant ete reglementee par aiicun texte de nos lois, son exercice n'est soumis a aucune condition determinee ; — Qu'il suffit, pour la rendre re- ceivable, que le demandeur attegue et offre d'etablir V existence d'un avantage qu'il await, par un sacrifice ou un fait personnel, pro- cure a celui contre lequel il agit. . ■ But it is undeniable that there are many cases in which one person derives a benefit from the action of another without being thereby placed under any legal obligation to pay for it. If there is in front of my house a neglected piece of vacant land which belongs to me, the dirty and disorderly condition of this land, and the uses made of it by the public, may be a cause of annoyance to my neighbours, although not to such a degree as to give them 1 a right to claim damages against me. And if I should take this land into my garden, so that the windows of my neighbours' houses enjoy a beautiful instead of a disagreeable prospect, the value of their property might be considerably increased. But, even if this were so, I should not have any action against my neighbours to compel them to pay me for the benefit which they had received. If a new railway is constructed in a district which before then was far removed from any market for its produce, the property of the farmers in this district may be doubled in value. But the railway-company cannot make them pay for this benefit. If, in order to prevent inundations, I execute works on the bank or in the bed of a river which borders my property, this may benefit my neighbours as well as myself, but I cannot make them pay their share, unless there is some special law which says so. (Dall. Rep. Oblig. n. 5403.) If a third party does work which improves a property hypothe- cated in favour of A, this increases the value of A's security, but ACTIO DE IN REM VERSCK 165 it does not give the third party an action against A. (So hold in a Quebec case, Wallbridge v. Far well and Ont. Car Ct/., 1890, 18 Canadian Supreme Court Reports, 1.) In the same way, it is not enough for a person who has lent money to show that the loan has indirectly benefited a third person. The lender has dealt only with the borrower, and he has not directly augmented the estate of the third party. (Douai, 9 avril 1900, D. 1901. 2. 1.) A sister keeps her brother's house for 10 years, and thereby saves him the expense of a house-keeper. She had no intention to make a claim for her services. If she changes her mind, and sends in a bill for them, the brother is not legally bound to pay it. (See infra, p. 182.) The lessee of a house makes improvements in it. At the end of the lease the lessor is not bound to pay for the plus-value. A person buys a quantity of wine for which he does not pay. He gives the wine to a third party. The wine-merchant cannot sue the third party. (Trib. Seine, 22 fevr. 1913; Gaz. Pal. 29 mai 1913; Colin et Capitant, 2, p. 409.) Such illustrations might be multiplied, but they are enough to show that we cannot say that every person who has received a benefit from another without contract must pay for it. If it is the rule of the law that he must pay for it in some cases, we must find some criterion for distinguishing these cases from the others. This is by no means an easy thing to do. Many attempts to formulate the principle upon the subject have been made in recent years, both by the doctrine and in the jurisprudence. But numerous points are still controversial. (See, especially, Loubers, H., in Revue Critique, 1912, p. 396, and p. 462; Ripjort et Teis- seire, Essai d'une theorie de V enrichissement sans cause en Droit Francois, Revue trim, de droit civil, 1904, p. 727; Bartin, E., in Aubry et Rau, 5th ed. 9, p. 354, notes 7 seq.; Vergniaud, E., L' enrichissement sans cause, Paris, 1916; and see the bibliography there; B.-L. et Barde, Oblig. 4, nos. 2849, 11 seq.; note of Bourcart, G., to Cass/ 8 fevr. 1909, S. 1911. 1. 313, with the references; Colin et Capitant, 2, p. 403; and the references in Sirey, Table, 1901—1910, vo. Obligations en general, nos. 64 seq.) 166 THE LAW OF OBLIGATIONS. Special applications of principle in French and Egyptian Codes. Neither the French nor the Egyptian Code contains a single- article dealing expressly with the rule against unjust enrichment. But the codes make numerous special applications of the principle. He who receives that which is not due to him is bound to restore it. (C. C. E. 145/206; C. C. F. 1376; infra, p. 187.) If a man builds, with his own materials, upon another's land, and the owner of the land elects to retain the buildings, he must pay for them, subject to certain conditions. (C. C. E. 65/90- C. C. F. 555.) If a debtor pays his debt to a creditor who has not the neces- sary capacity to receive the payment, the debt is extinguished so far as the payment enures to the benefit of the creditor . (C . C . F . 1241. See C. C. E. 166/229.) If a contract is rescinded by an incapable person on the ground of his want of capacity, the incapable person must account for the profit which he has received. (C. C. E. 131/191; C. C. F. 1312; Cass. 23 fevr. 1891, D. 92. 1. 29; Paris, 20 janv. 1904, D. 1906. 2. 25.) One important application of this rule is when a contract made by a moral person is rescinded, because it was outside the powers of the moral person. (See supra, I, p. 350.) A corporation exists only for certain purposes, and it can no more enter into a contract beyond its powers than if it had no existence. Indeed, with respect to such contracts, the corporation may be said to have no existence. This principle is called in the French law the principle of speciality. A. toutes personnes morales la capacite juridique n'est concedee qu'en vue d'une destination precise st dans les limites de la sphere d'action qui lew est assignee par les his, les reglements ou les statuts. (Ducrocq, Droit Administratif, 7th ed. 6. n. 2197; Michoud, Persotmalite Morale, 2, pp. 142 seq., 177. See for the same principle in the English law, Halsbury, Laws of England, Contracts, p. 391; ibid,., Corporations, p. 359; Ashburu Rail way Co. v. Uiche, 1875, L.B.7H.L. 653, 44 L. J. Ex. 185.) But this rule is not intended to enable corporations to cheat the public. The corporation may plead that it is not bound by its contracts, and that the other party had himself to blame and was bound to know the capacity of those with whom he contracted. ACTIO DK IN REM VERSO. 167 But if the corporation repudiates the transaction, it must account for the benefits it has received, or give back what it has obtained from the other party eo far as this is in its hands, or so far as it has been applied for any beneficial purpose for which the cor- poration might have come under liability by contract. This has been applied in cases where a municipality has ordered things without proper authorisation. (Chambery, 13 aout 1891, D. 93. 2. 31.6; D. N. C. C. art. 1372, n. 96; Laurent, 20, n. 339 Cf. Cass. 31 juill. 1895,©. 95. 1. 391; supra, I, p. 352.) The details do not belong to this place. (See in the common law, Keener, Quasi-Contracts, p. 272; and American cases in Pollock, Contracts, 3rd American ed. p. 142.) If a partner in a partnership contracts in his own name with a third person, he does not bind the other partners, but under the Egyptian Code, the third person has a right of action against each of them for the amount of his share in the profits arising from the operation. (C. C. E. 444/541.) Upon this point the French law is different. (C. C. F. 1864; B.-L. et Wahl, Societe, n. 334; D. N. C. C. art. 1864, n. 24.) And, seeing that the other party relied upon the personal credit of the partner, the French rule is reasonable enough. If a partner contracts in the name of the partnership, but without authority to do so, and a benefit_r-esults to the partnership, the otheX-partners are liable each for his share,'to the extent of this profit, to the third person who contracted with the partner. (C. C. E. 444/541: De Hults, Rep. vo. Societe, n. 71; C. C. F. 1864; Cass. 12 mars 1850, S. 1850. 1. 257, D. 1850. 1. 86.) If the depositary has spent money for the preservation of the thing deposited, the depositor must repay him. (C. C. E. 488/596; C. C. F. 1948.) In the mercantile law general average losses are supported by contribution in the manner explained later. (Egyptian Code of Maritime Commerce, 237; C. Com. F. 400; infra, p. 172.) The principle against unjust enrichment is recognised in other articles of the codes, but these will suffice, and, although no general rule is found in the code, it is commonly admitted that the prin- cipl underlying the provisions Jabove cited is a general one, and must be applied by the courts in analogous cases. (Aubry et Ban, 5th ed. 9, p. 355; B.-L. et Barde, Oblig. 4, n. 2849, 11.) It underlies many articles in the codes. For example, we may base upon this principle the right which a sub-contractor has to bring a direct action against the employer of the principal con- 168 THE LAW OF OBLIGATIONS. tractor. (C. C. E. 414/506. See C. A. Alex. 30 mai 1901, P.. L. J XIII, 313: C. A. Alex. 27 mars 1901, B. L. J. XIII, '•2 1*3: Grandmoulin, Controls, n. 634.) The French Code is wider than the Egyptian. (C. C. F. 1798. See Solus, H., L' Action Direete, these, 1914, p. 228, where the case is treated as an example of enrichissement sans cause.) In the Egyptian law, as already mentioned, some difficulty is created by the codes containing only a single article stating a rule which may be interpreted in a sense which does not quite agree either with the rules of the French law as to gestion d'affaires or with those of the action de in rem verso. (C. C. E. 144/205; supra, p. 141.) But, in all probability, the Egyptian legislator did not intend to change the French law as to gestion d'affaires, and in saying nothing about the action de in rem verso, he merely follows the example of the French Code. The name actio de in rem verso. The action by which the plaintiff, whose allegation is that the defendant has been justly enriched at his expense, sues for resti- tution, or, if that be impossible, for payment of the value of that which has passed from him to the defendant, is commonly spoken of in the French law as the action de in rem verso. But the action which goes b} r that name in the French law has a much wider scope than the actio de in rem verso of the Roman law. In the Roman law, the actio de peculio et de in rem verso was the action against a paterfamilias brought by a person who had con- tracted with a filiusfamilias, when the filiusfamilias had acted without authority express or implied. The liability of the pater- familias was limited in this case to the amount of the pecidium, unless the plaintiff could show that the paterfamilias had himself benefited by the contract, in which case he was liable to the extent of this benefit , and this amount which had turned to his profit was spoken of as having been in rem versum. (Dig. 15. 3; Girard, Manuel, 0th ed. p. 669.) But the action in the Roman law which bears the closest analogy to the French action is the remdictio sine causa, and this must certainly be regarded as the source of the French action de in rem verso. See, as to the Roman action, Girard, Manuel, 5th ed. p. 614: Girard, L'histoire de la condictio, d'apres M. Pernice, Nou- ACTIO DE IN REM VERSO, 169 velle Revue Historique, 1895, p. 408. Cf. Colin et Oapitant, 2, p. 404; Aubry et liau, 5th ed. 9, p. 304, note 7.) Miscellaneous illustrations from the French jurisprudence. Seeing that the codes do not help us to define the limits of the action to prevent unjust enrichment, and seeing also that there is so much controversy among recent writers as to the principles which govern the matter, it may be convenient first to give a number of illustrations from the jurisprudence, both of cases in which the claim has been admitted, and of cases in which it has been rejected by the courts. We will afterwards endeavour to extract the principles from them. A married woman by the French law cannot contract a loan without the authorisation of her husband. But if she does so she cannot demand rescission of the contract when the money has turned to her profit, and the creditor can sue her by the actio de in rem verso up to that amount. fCass. 26 avril 1900, S. 1901. 1. 193.) According to the French law, a wife has a tacit mandate to purchase necessaries for the household. But this mandate may be withdrawn by the husband, and according to most French autho- rities, it is withdrawn if the husband gives the wife a regular allowance for the expenses of the household. (B.-L. et Wahl, 'Mcmdat, n. 484, and authorities in Sirey, Table Dec&nnah, 1901 — 1910, s. v. Autorisation de femme mariee, n. 12.) But, assuming that this view is correct, and that the mandate has been withdrawn, either in this way or in another, the husband will still be liable to third parties who have contracted with the wife to the extent to which he has profited by the things which they have supplied. (B.-L. Le Courtois et Surville, Control de Mariage, 3rd ed. 1, n. 502; D. Rep. Control de Manage, n. 1014, note 3; Paris, 30 nov. 1899, D. 1900. 2. 105. See Trib. Seine, 10 dec. 1901, et 6 janv. 1902, D. 1904. 2. 238, and the note.) And the same principle applies in the case where the wife had a tacit mandate but exceeded the mandate by purchasing things which were not necessary. (Aubry et Rau, 4th ed. 5, s. 509, note 55; D. N. C. O. art. 1420, n. 27.) Under recent French legislation, a commune is entitled to charge a rent for the priest's house or presbyter e. And where, after the passing of the law, a priest lived in the house for some time without a lease, it was held that the commune could claim an indemnity 170 THE LAW OF OBLIGATIONS. upon the principle de in rem verso. (Trib. de Besangon, 16 juillet 1908, S. 1909. 2. 1; Siiej . Table, 1901— 1910, s. v. Cultes, nos. 98 seq.) A commune obtains certain goods under a contract which is not valid because it has not been approved by the prefet. The com- mune is liable to the extent of the benefit which it has received. (Conseil d'Etat, 28 juillet 1911, S. 1914. 3. 53. See the exten- sive jurisprudence as to irregular contracts made by communes cited in the note to this case; Hauriou, Droit Administratif , 8th ed. p. 479; and the note by M. Bartin in Aubry et Rau, 5th ed. 9, p. 363, note 13 ter.) A genealogist, who makes it a business to discover heirs and to inform them of their rights to a succession, has a right to bring an action for his expenses iand for remuneration for his services, if the information given by him has resulted in a profit. (Poitiers, 2 dec. 1907, D. 1908. 2. 332.) If the defendant has enjoyed the use of a moveable or of an immoveable which belongs to the plaintiff, and this has not been in virtue of any contract, he must pay for the benefit. (Req. 9 nov. 1904, D^ 1905. 1. 489; Besangon, 9 dec. 1908, S. 1909. 2.1.) If the plaintiff has spent money on the preservation or ameliora- tion of property, moveable or immoveable, belonging to the defen- dant, and this has been done without any contract and was not intended as a gift, the defendant must pay to the extent of the benefit ho has received. (Rouen, 25 juin 1904, D. 1906. 2. 191; Paris, 6 aout 1850, D. 1854. 5. 483; Req. 16 juillet 1890, S. 1894. 1. 19; Bordeaux, 7 aout 1900, D. 1902. 2. 375.) The plaintiff furnished a quantity of chemical manures to a farmer who was a lessee of the defendant, and the farmer did not pay for the manure. Subsequently, the lease was resiliated, and the crop was abandoned by the lessee to his lessor, the defendant in this case; the lessor thus profited by the manure which had pro- duced the crop. This is enough, according to a decision which has been much canvassed, to make him liable to the plaintiff. (Req. 15 juin 1892, D. 92. 1. 596, S. 93. 1. 281.) It is true that the French Code contains an article which does not occur in the Egyptian Code: Les fruits produits par la chose n'appartiennent au proprietaire qu'd la charge de rembourser les frais des labours, travaux et semences faits par des tiers. (C. C. F. 548.) But this article is meant to refer to the case where the owner of ACTIO DE IN REM VERSO. 171 an immoveable rev indicates it from a person who has been in pos- session of it without right. (B.-L. et Chauveau, Biens, n. 291.) The article is not meant to apply to such a case as this one, and the court expressly found that the plaintiff's right did not depend upon this article, but upon the general principle, nul ne pent s'enrichir cm detriment cVautrui. It is difficult to reconcile this decision with a later case decided by the Chambre des RequeUs. A farmer exercised his right under the lease of subletting his farm . Before that time the farmer had managed the farm very badly, and had deteriorated its value. The sub-lessee, on -the other hand, executed useful works which diminished the deteriorations caused by his lessor. The sub-lessee brought an action against the owner of the farm for the value of the ameliorations which he had made. This action was rejected by the court, and the Chambre "des Requites rejected a pourvoi. The reason relied upon in the judgment was that,, after giving credit to the lessee for the improvements made upon the land by the sub-lessee, there was still a sum due by him to the lessor. If the lessee had himself paid for the improvements made by the sub-lessee upon the land, and he had sued the lessor for re- imbursement, the lessor could have pleaded in compensation the claim which he had against him for the deteriorations which had resulted from his bad administration. It was inequitable that the lessor should be deprived of this right by admitting the action of the sub-lessee against him. (Req. 23' nov. 1908, S. 1910. 1. 425. See the Note of M. Naquet.) This case and the preceding one will need to be referred to again. Another interesting group of oases in which the principle de in rem verso has been applied is when, in time of war, the invading army of The enemy has made requisitions upon private individuals for food or other necessaries. It has repeatedly been held that the commune is bound to reimburse the private person upon whom such requisitions have been made. (Req. 23 fevr. 1875, S. 1875. 1. 267, P. 1875. p. 636; Nancy, 22 mars 1873, D. 73. 2. 141. See other cases collected in M. Bartin's note to Aubry et Rau r .. ^ 5th ed. 9, p. 365.) The credit fonder, in paying off a irypothecary creditor before making their loan, neglected to stipulate that they should be sub- rogated in the rights of this creditor. The result was that the hypothec of the credit fonder was postponed to the legal hypothec of certain minors of the same immoveables. The minors thus ■ 172 THE LAW OF OBLIGATIONS. gained a benefit by the action of the credit foncier, but in spite of this, the Cow de "Cassation refused to admit that the credit foncier had a claim based upon the principle de in rem verso. (Cass. 11 juill. 1889, D. 89. 1. 393, and note by M. Petiton, S. 90. 1. 97, and note by M. Labbe.) In a fire-insurance policy there was a clause providing that, in the event of the buildings being damaged or destroyed, the com- pany might, instead of paying the indemnity, have the buildings repaired or rebuilt at its expense. The company having exer- cised this option, claimed from the insured the difference in value between the new buildings and the old. The claim was rejected on the ground that the company a exerce ce droit d'option dans son interet exclusif, a ses risques et perils. (Req. 21 juill. 1903, D. 1904. 1. 181.) Improvement on immoveable held in indivision. One of several owners of an immoveable held in indivision has works executed upon it which enure to the benefit of all the owners. The others are legally bound to contribute, according to their shares, in the cost of these works. (Req. 20 dec. 1910, D. 1911. 1. 377, and dissertation by M. Planiol.) Doctrine of general average or avaries communes. The important doctrine of the commercial law known as con- tribution to general average losses, or the reglement des avaries comwrmnes, rests on the same principle. In the maritime law the matter is dealt with in the codes. (C. Com. P. 400; C. Com. Mar E. 237.) As defined by AIM. Lyon-Caen et Renault: — L'avarie commune est nn dommage materiel cause volontaire- ment par le capitaine, soit au navire, soit a des merchandises de la cargaison, ou une depense extraordinaire faite par iui dans V interet eonvmun du navire et de la cargaison, dommage ou depense qui a eu un resultat utile. (Traite de Droit Commercial, 4th ed. 6, n. 877.) If goods are thrown overboard to lighten the ship, and by this means the vessel itself and the rest of the freight are saved, it would not be fair that the owner of the goods jettisoned should be the only person to suffer. He ought to bear his share, but not ACTIO DE IN REM VERSO. 173 more than his share, of a loss incurred in the interests of the ship- owner and of the cargo-owners generally. So if, without the fault of the captain, the coal of a steamer runs out, and it is necessary in order to feed the fires to hum the wood of one of the cargo-owners, there must he contribution to this as an arvarie commune. (Trib. Superieur hanseatique, 18 juin 1909, D. 1911 2. 28.) Or if legal proceedings have to be taken to liberate a ship which has been seized as a prize, this is a general average loss. (Cass. 18 janv. 1909, D. 1909. 1. 245. For the English law, see Marine Insurance Act, 1906 (6 Edw. 7, c. 41), s. 66; Carver, Carriage of Goods by Sea, oth eel. nos. 361 seq., Stevens, Mercantile Law, 5th ed. p. 438.) And so, also, though there is controversy here, if the captain of a ship which is attacked by an enemy decides to right, and the ship is damaged but escapes, the cargo-owners must contribute. (Lyon-Caen et Eenault, Traite de Droit Commercial 6, n. 926.) Such cases are not examples of gestion d'affaires. It is not a case of a man spending his own money for another's benefit, but of a man, who is an agent for several people, sacrificing the goods of one of them for the benefit of his other principals and for his own benefit. The essential feature is a deliberate sacrifice made in the common interest. (Cf. C. A. Alex. 31 janv. 1906, B. L. J. XVIII, 100., How are we to explain the principle? Some say that it is an implied term of the contract of affreight- ment. But this is a forced explanation, and, if it were the true one, wo could not understand how the owner of the goods sacrificed should have a direct action against the other cargo-owners who have made no contract with him. It is much sounder to say that the obligation to contribute to such avarivs communes is not con- tractual, but quasi-contractual, and rests upon the general rule of equity — nul ne doit s'enrichir injustement, cm prejudice d'autrui. (Lyon-Caen et Renault, Traite de Droit Commercial, 6, n. 870.) Is principle of avarie commune confined to maritime law? This being so, the principle ought to apply on land as well as on sea, and in cases not covered by the commercial codes, though some authorities do not admit this. In a curious case, a diligence was attacked by four masked 174 THE LAW OF OBLIGATIONS. robbers who called on the driver to hand over the money-bags which were visible at his left hand. He threw them two bags, •one of which contained 2,400 francs and the other 1,500 francs, and the robbers made off with their plunder. In another place in the diligence were bags worth 28,000 francs which were saved. The Court of Paris refused to make the owners of the money saved contribute to the loss, and gave as a reason that the doctrine of avaries communes is confined to the maritime law. (Paris, 17 janv. 1862, D. 1862. 2. 30.) MM. Lyon-Caen et Renault approve of the decision, but not upon this ground. They say the saving of the 28,000 francs was not due here to the sacrifice of the other bags, but to the ignorance of the robbers. It was by cas fortuit that the money was saved. (Traite de Droit Commercial, 6, n. 871.) This seems too refined. If the driver had not given up the bags which the robbers could see, they would have ransacked the eoacli and discovered the other bags. I prefer the view that the decision was wrong. It was a true example of avarie commune, and the court has power to apply the principle to cases which happen on land, though, naturally, the maritime cases are more common. Egyptian jurisprudence. The Egyptian jurisprudence in regard to the action de in rem verso is meagre, and sometimes the courts apply the name action de in rem verso to mean the action resulting from gestion d'affaires. (C. A. Alex. 21 dec. 1892, B. L. J. V, 85.) The following are illustrations of the action de in rem verso in the sense which is used in the French jurisprudence: — Where there is a secret partnership, or, as it is called, an asso- ciation en participation, the partnership has no personality, and third parties who contract with a partner have no action against any one of the other partners except upon the principle de in rem verso, and to the extent of the benefit which he has received. (C. A. Alex. 19 fevr. 1903, B. L. J. XV, 157; C. A. Alex. 17 mai 1900, B. L. J. XII, 253. As to the character of association en participation, see Lyon-Caen et Renault, Manuel de Droit Commercial, 11th ed. n. 325.) The purchaser of an immoveable who has been evicted can claim from the owner, by the action de in rem verso, reimbursement of his outlays necessary or beneficial, to the extent which they benefit ACTIO DE IN REM VERSO. 175 the owner. (C. A. Alex. 16 mars 1899, B. L. J. XI, 162. Cf. C. A. Alex. 13 fevr. 1895, B. L. J. VII, 122.) The following cases also illustrate the rule: — The Administra- tion of Ports and Lighthouses made use without consent of a plan of the harbour of Alexandria made by one of their engineers, but made unofficially and in his leisure hours. It was held that the Egyptian Government was liable to him to the extent of the benefit. (C. A. Alex. 26 mai 1910, B. L. J. XXII, 337.) A clandestine pipe was placed in a house in such a manner as to carry water from the pipe of the water-company without affecting their meter. The pipe performed this service for a number of years before it was discovered. The defendant, who occupied the house with his family, was prosecuted at the instance of the water-company for stealing the water, but acquitted for want of proof of his knowledge of the position of the pipe. In a civil action, however, he was held liable to pay L. E. 20 for the water which he had consumed in good faith to the detriment of the company. (C. A. Alex. 21 mars 1900, B. L. J. XII, 170.) Attempt to determine the principles governing the matter. It being admitted that there are many cases in which one person is benefited by the action of another, without being thereby placed under a legal duty to pay for the benefit, while there are, on the other hand, certain cases in which the person 'is bound to pay, is it possible to find a criterion to distinguish the one class of cases from the other? Some of the French writers who enjoy the highest reputation explain the action de in rem v&rsQjis a kind of abnormal gestion d'affaires. It is available in such a case, for example, as when a man, acting in his own interest, and not intending to benefit another, does, nevertheless, confer a benefit upon this other. fraction de in rem verso, quoique se trouvant en dehors des con- ditions du quasi-contrat de gestion d'affaires, nen doit pas moins pourtant etre considSree comwie une action en quelque sorte auxili- aire de V action negotiorum gestorum, lorsque, par une circonstance quelconque, le fait juridique, qui s'est 'produit, ne reunit pas toutes les conditions requises pour constituer le quasi-contrat de gestion d'affaires. Tel a tou jours ete, en effet, son caractere, dapres les traditions les plus andennes ; et cest la, certes, un argument con- siderable dans un sujet qui est entre, tout entier, dans nos lois modernes avec le cortege des regies romaines. (Demolombe, 31, n. 49.) 176 THE LAW OF OBLIGATIONS. Liiuiviit is to the same effect: La jurisprudence confond, en gefZeral, V action de in rem verso avec Vacticm de gestion d'affaires ; ccld n'est pas juridique en un sens, puisque les deux actions dif- ferent ; mats la confusion s'expiique t en ce sens que les deux actions procedent de la meme cause, \et qiielles ne different que quant a I'etiemdm dies obligations du maitre. (Laurent, 20, no. 338. Cf . Larombiere, art. 1375, n. 14.) But if this is the explanation, why is it that the conditions of the two actions are not the same? Why is it that, when the action is upon gestion d'affaires, the gestor can claim reinbursement for his outlays if they were beneficial at the time they were made, whereas, when the action is de in rem verso, the plaintiff can claim only for the benefit existing at the date of the action, or, at any rate, for a profit which the other party has actually received and enjoyed? Is not the essence of gestion d'affaires a voluntary interference for the benefit of another in cases of urgency, whereas, in many of the cases of de in rem verso these elements are entirely lacking? Most French authorities now agree that this explanation, at any rate, must be rejected. (Loubers, in Rev. Crit. 1912, p. 400; Ripert and Teisseire, in Rev. Trim. 1904, p. 741; Bartin, in Aubry et Rau, 5th fed. 9, p. 355, note 9.) In fact it would be much truer to say that, instead of the action de in rem verso being a special and abnormal case of gestion d'affaires, gestion d'affaires itself is a special application of the broad rule that a man is not allowed to enrich himself at the expense of another. (See M. Planiol's note to Req. 16 juill. 1890, D. 1891. 1. 49. Cf. Cass. 18 mai 1873, D. 1874. 1. 269.) Confusion between action de in rem verso and action on gestion d'affaires. In some of the French cases there is an absolute confusion between the action de in rem verso and the action by the negotio- rum gestor. Thus, in one arret of the Cour de Cassation, we read les obligations reciproques qui peuvent resulter d'un quasi-con- trat de gestion d'affaires naissent du fait meme de la gestion et de la loi, et non de Vintention des parties; il importe pen que celui qui a fait Vacte de gestion ait entendu agir tout a la fois dams son interet personnel, et dans V interet d'un tiers, si en realite ce tier* etait interesse a facte de gestion et en a profile. (Cass. 18 juin 1872, D. 72. 1. 471.) ACTIO DE IN REM VERSO. 177 And, in another arret, the Cow de Cassation said: quand un tiers fait vn aMe dont profile un proprietaire, il_gere reellement, quoiquc inroloi/hi/remeut, et a son insu, V affaire de ce proprie- taire. (Cass. 10 juill. 1890, S. 94. 1. 19, 1). 91. 1. 49, and the note of M. Planiol, who draws attention to the confusion. See, for other illustrations in the administrative law of the same confusion, Eipert et Teisseire, in Rev. Trim. 1904, p. 736.) But, by definition, there is not any gestion d'affaires, in the proper sense of the term, unless there is an intentional interference in the business of another, or, as the Egyptian Code expresses it still more clearly, unless it is the act of one person intentionally iprocuring a benefit for another. (C. C. F. 1372; C. C. E. 144/205.) The person who interferes in this way is, in a sense, specially favoured by the law, because he can recover what he has spent if it was expended beneficially at the time, although owing to some fortuitous event, the benefit may have disappeared before the date of action. The right of the plaintiff in the action de in rem verso is more limited, as will be explained later, and it is absolutely necessarv to keep the two actions entirely distinct. Theory that source of obligation is delictual. Another explanation is that of Planiol, that the cause of the obligation to reimburse is delictual. The person benefited has not received the benefit by a fait illicite done by him, but it would be a fait illicite on his part to retain the benefit without paying for it. Planiol, 2, n. 812, and n. 937.) M. Ernest Vergniaud in his excellent monograph accepts the theory of M. Planiol. (L'en- richissement sans cause, p. 162.) But this explanation also appears to be very forced. In many cases the parson benefited has remained entirely passive. There is no act of his which we can regard as fault. To say that he commits an unlawful act if he retains the benefit without paying for it is a statement equivalent merely to saying that the law obliges him to pay for the benefit. It does not afford any reason. We might with equal truth say that the debtor in a contractual obligation commits an unlawful act if he does not pay his debt. But, just as in this case, it is the contract which gene- rates the obligation, so in the case of enrichment, we must look for some legal reason which makes it unlawful for the defendant to retain it without paying for it. The explanation of M. Planiol W.— VOL. II. 12 17S THE LAW OF OBLIGATIONS. explains nothing as to this. And if in spite of these arguments, we are to regard the defendant's obligation as delictual, why are we not to follow the ordinary rule, and make the offender liable for all the loss suffered by the plaintiff? Why is the measure of the offender's liability to be the "amount of the enrichment? (See Ripert et Teisseire, p. 758; Bartin, in Auln\ el Ivan, -3th cd. 9, p. 355, note 9/) One cannot but feel as to M. Planiol's theory, that the eminent writer is carried away by his desire of simplification. Nothing is gained by extending the traditional theory of the nature and consequences of ;i wrong. A fait iUicite renders the wrong-doer responsible for all the damages directly caused thereby to another. But, in this case, even if, by a stretch of language, we were to call the person enriched a wrong-doer, it is manifest that the damage suffered by the person who has procured the enrichment was caused to himself by his own act and not by any act of the. other. Theory that source of obligation is the creation of value. A still bolder attempt to place the action de in rem verso upon a new foundation is that made by MM. Ripert et Teisseire. JEssai d'une theorie de V ' enrichissement sans cause en droit civil francais, Rev. Trim. 1904, p. 727.) These writers, after criticising with much force the theory that the rule against unjust enrichment can he regarded either as an abnormal case of negotiorum gestio, or as being founded upon quasi-delict, proceed to give a theory of their own which may be thus summarised. The traditional theory that responsibility is based upon fault must, they say, be abandoned in favour of the theoiy of objective responsibility, namely, that the person, who for his profit has created a risk, must pay for the damages caused by his act, whether there was fault in the traditional sense or not. (This subject belongs to the law of Responsibility.) Accepting the new doctrine of the risque cree, these writers say there must be a corresponding theory of profit cree : La notion d'une responsabilite da simple fait repose tout entiere suf cette idee qu'il est juste, quit est bon, de faire supporter a chaque act i rite les dommages qu'elle cause. Les memes raisons, les memes considerations doirrnt faire trouver bon et juste que chaque activite puisse revendiquer pour elle les resultats utiles qui sont son muvre. Cette deuxieme proposition est t'exacte contrepartie de la pre- ACTIO DE IN REM VEKSO. 179 miere, elle en est le complement necessaire, et torn les raisonne- ments que Von pent faire valoir a Vappui de Vune doivent pouvoir servir a la justification de V autre. Qui n. ctjl Ip risque, dit-ou. doit le supporter. Qui a cree le profit, doit en beneficier. SHI y a line theorie du risque cree, il faut qu'il y ait une theorie correspondante du profit cree. (Rev. Trim. 1904, p. 756.) But in spite of the ingenuity with which this theory is pre- sented by its authors, it must be rejected without hesitation. The theory of objective responsibility has not been accepted as a general principle of the French law and has, certainly, no place in the Egyptian law. Moreover, if the theory of MM. Ripert et Teisseire were to be accepted, it would lead to results inconsistent . with the jurispru- dence. If the sufficient basis of the plaintiff's claim were, merely, that he had by his act procured an enrichment, it would be im- material whether he had done so without suffering any prejudice himself, or whether the enrichment had ceased to exist at the date of the action. According to the French jurisprudence, on the other hand, the plaintiff has no right unless he has suffered a prejudice, and his claim is limited to the enrichment subsisting at the date of the .action, or, at any rate, to an enrichment of which the defendant has reaped the benefit. (Cass. 18 oct. 1904, D. 1905. 1. 119;, Lyon, 11 janv. 1906, D. 1906. 2. 132; Loubers, Rev. Crit. 1912, p. 413, and p. 474: Aubry et Rau, 5th ed. 9, p. 363. Conditions of the action de in rem verso as determined by the French jurisprudence. The action de in rem verso is not available unless four condi- tions are fulfilled: — (1) The defendant must have been enriched; (2) This enrichment must have been directly caused by a pre- judice suffered by the plaintiff; (3) The enrichment must have been unjust, or, as it is other- wise expressed, the defendant must not have a just cause for retaining the benefit without payment. (4) The enrichment must be still existing at the date of the action, or, at any rate, the defendant must have reaped the full benefit of it. (B.-L. et Barde, 3rd ed. 4, n. 2849. XVI; Colin 12 (2) 180 THE LAW OF OBLIGATIONS. et Capitant, 2, p. 406. Cf . Ripert ct Teisseire, Rev. Trim. 1904 r }). 727 ; Loubers, Rev. Crit. 1912, p. 396; note by Xaquet to Cass. 23 now 1908, S. 1910. 1. 425; Solus, H., L' Action Directe, these, Paris, 1914, p. 242; Bouche-Le Clerc, L' Action de in rem verso en droit prive, these, Paris, 1913.) These conditions require some explanation. (1) The enrichment. It must appear that the patrimony of the defendant has been increased by money or by money's worth. It is not enough, in all cases, that money has passed to the defendant, for this may not have enriched him. If, for instance, money has been paid to a lunatic, and he has, thereupon, thrown it into the Nile, there is no enrichment of his patrimony. (See Cass. 2 janv. 1901, S. 1901. 1. 192; Demolombe, 29, n. 172.) The following is an example of a case which failed for want of proof of enrichment. A company which operated a railway between Aries and Pont- vieille, had a contract with the city of Aries by which the city granted it a subvention. This contract was annulled, and the company sued the city of Aries by the action de in rem verso. The claim was rejected because there had not been any trans- mission de valeur. The property of the city had not been en- riched, although the inhabitants had derived an advantage from the existence of the railway. (Cass. 31 juill. 1895, S. 96. 1. 397, D. 95. 1. 391.) This case has sometimes been misunderstood as laying down a rule that there must in every case be a material transmission of /^value from the plaintiff to the defendant. The claim will lie for personal services rendered by the plaintiff, for example, services of a domestic kind, just as much as for reimbursement of actual money spent. (Poitiers, 2 dec. 1907, D. 1908. 2. 332.) It is enough that there is I'existence d'un (wantage qu'il aurait, par un sacrifice ou un fait personnel, procure a celui contre lequel il agit. (Cass. 15 juin 1892, S. 93. 1. 281, D. 92. 1. 596; Loubers, Rev. Crit. 1912, p. 472.) Nay more, there may have been an actual transmission de valeur from one patrimony to another, and, yet, the court may hold that there has been no enrichment. The court of Amiens refused to consider a partnership as en- riched by a sum of 100,000 francs, which had been lent to one of the partners in his own name, because, although the society had ACTIO DE IN REM VERSO. 181 benefited by the loan, the partner was a debtor bo the firm after making allowance for the sum by which it had profited. (Amiens, 16 fevr. 1901, sous Cass. 26 janv. 1903, D. 1904. 1. 391. CI'. Paris, 21 fevr. 1905, smts Cass. 9 et 10 nov. 1909, D. 1911. 1. 169.) (2) The enrichment must be a direct consequence of the' prejudice suffered by the plaintiff. The rule has been thus formulated by the Cow de Cassation: pour que Taction d)e in rem verso soit recevable, il ne suffit pas que le defendeur ait recueilli un advantage prenant sa source dans un acte du demandeur, il faut que cet uvautage result e d'une depense faite par le second dans Vinteret du premier. Cass. 18 oct. 1904, D. 1905. 1. 119.) It is the application of this rule which excludes the claim when the plaintiff acted in his own interest, and involuntarily shared the benefit with the defendant. This is so when, for example, the plaintiff has improved his immoveable, or has brought about the suppression of a nuisance, and has thus indirectly benefited his neighbours as well as himself. (Loubers, in Revue Critique, 1912, p. 412. See Cass. 31 juill. 1895, S. 96. 1. 397. In some of the cases in which the rule has been applied, there has been in addition another reason for rejecting 1 the claim, namely, that the plaintiff has been guilty of negligence, and that the loss was caused by his own fault. This was so in the case mentioned above, where the credit -fonder paid off a hypothec without taking the precaution of obtaining subrogation. (Req. 11 juill. 1889, S.90. 1. 97, supra, y. 171.) The prejudice suffered by the plaintiff is one measure of his claim. He can never recover more than enough to make up for his loss, and he cannot recover always even so much as this, because part of the benefit may be no longer subsisting at the date of the action. (Lyon, 11 janv. 1906, sous Cass. 18 oct. 1904, S. 1907. 1. 465. Cf. Paris, ler dec. 1910, Gaz. Trib. 1911. 2. 165, D. 1911. 5. 1; Rev. Trim. 1911, p. 434; Aubiy et Ran, 4th ed. 6, p. 246; Loubers, Rev. Crit. 1912, p. 479; Colin et Capitant, 2, p. 409.) The enrichment of the defendant must be the consequence of the impoverishment of the plaintiff. It ,is universally agreed that there must be a connexity between the enrichment of the one and the impoverishment of the other, but some authors deny that there must be a relation of cause and effect between them. (See 182 THE LAW OF OBLIGATIONS. Labbe, note to Req. 11 juill. 1889, S. 90. 1. 97; Vergniaud, E., L'Enriehissement sans cause, p. 201.) M. Bartin prefers to say that, in order to succeed in his claim, the plaintiff must prove an indivisibility of origin between the enrichment of the defendant and his own impoverishment. They are two aspects of the same fact . (Aubry et Ran, 5th ed. 9, p . 358,. note 9, septies.) (3) The defendant must not have a just cause for retaining the enrichment without payment. This is the most difficult point, and the one upon which there is the greatest controversy. When is the defendant in a position to say, " I have a just cause for keeping the enrichment"? (a; Animus donandi. In some cases this defence is easy . If he can show, for example, that the benefit he received from the plaintiff was intended as a gift, he will not have to pay for it because the plaintiff has after- wards changed his mind. (Of. C. A. Alex. 24 dec. 1902, B. L. J. XV, 75.) But the proof in such cases of the plaintiff's state of mind may be difficult. This question arises not infrequently in cases where the claim is for domestic sendees. If a grown-up son has been in the habit of doing certain work for his father, or if a sister has kept her brother's house and saved him the expense of a house- keeper, it may be evident that the defendant has reaped a pecuniary advantage. But if the understanding of the parties was that these services were rendered out of affection, and with no idea of making a pecuniary claim', the action will not lie. And in such a case where the services are rendered by one member of the family to another residing in the same household, the presumption will be that they were meant to be gratuitous. (See Domat, Lois Civiles, liv. 11. titr. IV. s. 2, nos. 9 and 10; Trib. de Paix de Lille, 1895, D. 1897. 2. 187; Ripert et Teisseire, Rev. Trim. 1904, p. 793; and compare many interesting American cases collected in Keener, Quasi-Contracts, p. 315 scq.) (b) Contractual right to take benefit. A lessee makes repairs upon the house let of the kind which by the French law he was bound to make. The lessee does not pay for them. The contractor who has made the repairs cannot claim ACTIO DE IN REM VERSO. 183 from the owner of tin; house the plus-value given to it 1>\ tie repairs, for the lessor gets nothing to which he was not entitled. (C. C. E. 370/453; C. C. E. 378/463; Paris, 26 juin 1899. S. 1901. 2. 167; B.-L. et Barde, 4, n. 2849, XXIV. Contrast such a case as Iieq. 16 juill. 1890, D. 91. 1. 49, where the owner got constructions to which he was not entitled.) So witli other contracts. If the defendant can show that be has a right by contract to take the benefit, it will be the contraot which will determine whether he has any correlative duty to paj . The same principle applies when the claim is against a third party who is enriched as an indirect consequence of the performance of a contract to which he was not a party. A farmer who farms another's land in virtue of a lease, employs labourers for the harvest . They have no action against the owner of the farm for their wages. On ne peut consider er le pro- prietaire qui a regu le prix du fermage ou set part de la recolte conformement aux stipulations du bail, commie s'etant, sans cause legitime, enriohi au detriment de I'ouurier. (Cass. 18 oct. 1898, S. 99. 1. 165, D. 99. 1. 105.) And, in general, when the person enriched, received the benefit in payment of a contract with him, the third party who has indirectly procured the enrichment has no action de in rem verso. There is no direct relation between the person who is prejudiced and the person who is enriched. (See Cass. 8 fevr. 1909, S. 1911. 1. 313, and note of M. Bourcart.) The case which has been above referred to, where the claim was by a man who had supplied manure for a crop which the owner of the land had reaped, has been much debated. By some writers it has been interpreted as affirming the proposition that, when there has been a transmission of value from the plaintiff to the property of the defendant, the action de in rem verso is admis- sible. But this proposition is too wide and its application would lead to results which are inequitable. If it were sound, any person who had done work which had increased the value of premises in the hands of a lessee would have two rights of action, an action on the contract against the lessee, and an action on the quasi- contract against the lessor. And he would enjoy the benefit of the second action although the lessee had failed to pay his rent, or, otherwise, to fulfil his contract with the lessor. There is no reason why, in this case as in others, the creditor 184 THE LAW OF OBLIGATIONS. who has relied upon the credit of his debtor should not take the risk of his debtor's insolvency. In the rase of the supplier of the manure there were special circumstances. The owner of the land had no right to the crop, bill when the lease was resiliated the crop was abandoned to him in part-payment of the rent. A value was put on the crop sur- rendered in this way, and from this value was deducted the price of the manure. The owner of the land had, in effect, taken the crop upon condition that he should pay for the manure. The ease must accordingly be considered as a decision d'espece, and not as laying down any general principle. (Cass. 15 juin 1892, S. 93. 1. 281, D. 92. 1. 596; Aubry et Rau, 5th ed. 9, p. 360;, Ripert et Teisseire, in Rev. Trim. 1904, p. 795. Contrast, Req. 23 nov. 1908, S. 1910. 1. 425, and, specially, the criticism of M. Naquet at the foot of p. 426, col. 2.) (4) The enrichment must be subsisting. It is the generally accepted view that the action de in rem verso, being a kind of action for restitution, the defendant can never have to pay more than the amount by which he is enriched at the date of the action . We have seen in explaining the law of negotiorum gestio, that the measure of the gestor's claim is the benefit he conferred at the time when he incurred the expense. If the gestor had repaired a roof, his claim against the owner of the house would not be destroyed by the fact that the house had been burnt down directly afterwards by a fortuitous event, and that, in consequence, the benefit which he had conferred upon its owner had been lost. But when the conditions of negotiorum gestio are not present, and the claim is under the action de in rem verso, the subsequent loss of the benefit would be fatal. (B.-L. et Barde, Oblig. 4, n. 2849, XXVI; Aubry et Rau, 4th ed. 6, p. 247; 5th ed. 9, p. 363; Lyon, 11 janv. 1906, D. 1906. 2. 132; D. Swpp. Oblig. n. 2287: Laurent, 20, n. 340; D. X. C. C. art. 1375, n. 79. Contra. Ripert et Teisseire, Rev. Trim. 1904, p. 787.) Bui in saying that the defendant cannot be liable for more than his enrichment at the date of the action, it is not intended to exclude his liability to pay for services rendered to him of which he has received the full advantage. If the plaintiff has rendered domestic or professional services to the defendant, and these were ACTIO DE IN KKM VERSO. 185 not intended to be gratuitous, the defendant's liability will not be excluded by the fact that the services had been completed before the date of the action. (Poitiers, 2 dec. 1907, D. 1908. 2. 332.) The action de in rem verso is a subsidiary action. The action de in rem vei'so is an equitable remedy which is not available when the plaintiff has another remedy at his disposal. If he has a remedy by way of an action on contract, he is tied up to this remedy. (Cass. 8 fevr. 1909, S. 1911. 1. 313, and note of M. Bourcart; Loubers, in Rev. Crit. 1912, p. 482.) The remedy is available only when the plaintiff has no other right of action to obtain the restitution or its value either against the person benefited or against the third party, based either upon contract, quasi-contract, delict or quasi-delict. (Aubry et Rau, 5th ed. 9, p. 361.) Comparison with other laws. The principle underlying the action de in rem verso has been formulated in several of the more recent codes. Under the Ger- man Code, Quioonque, par prestation faite par une autre per- sonne ou de toute autre maniere, fait une acquisition sans cause juridique aux depens de cette autre personne, est oblige vis-a-vis d'elle a restitution. Cette obligation existe egalement lorsque la cause juridique disparait ulterieuremxmt cm que le resultat pour- suivi au moyen d'une prestation, tel qu'il ressort du contenu de facte juridique, ne se realise pas. Est egalement consideree comme prestation la reconnaissance contractuelle de Vexistence ou de la non-existence d'un rapport d'' 'obligation (art. 812, where see note by M. Saleillas). The Swiss Code says, Celui qui, sans cause legitime, s'est enrichi aux depens d'autrui, est tenu a restitution. La restitution est due, em particulier, de ce qui a ete recu sans cause valable, en vertu d'une cause qui ne s'est pas realisee ou d'une cause qui a cesse d'exister. (Code Fed. Oblig. art. 62.) And the Morocco Code of Obligations which does not contain any special articles upon gestion d'affaires has the following articles: — Art. 66. — Celui qui a recu ou se trouve pmseder wne chose, 186 THE LAW OF OBLIGATIONS. ou autre wleur appurtenant a autrui, sans une cause qui justifie oet enrichiss&ment, est tenu die la restituer a celui au depens duquel il s'est enridhi. Art. til— Celui qui, de bonne foi, a retfce un profit du travail ou de la chose d'autirui, sans une cause qui justifie ce profit, est tenu d'indemniser celui aux depens duquel il s'est enrichi dans la me sure oil il a profile de son fait mi de sa chose. (For the English law, see infra, p. 197.) QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE. 187 C I JulU- j^n^*- CHAPTER IX. THE QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE. The Egyptian codes deal with this matter in lour articles. lie who receives that which is not due to him is bound to restore it. If he received in bad faith, hie is liable for loss, interest and fruits. Nevertheless, if a payment is voluntarily made in discharge of an obligation, restitution is not due even where such obligation is not enforceable by law. Restitution is not due, if one person has by mistake paid the debt of another to the creditor of such other person, provided that such creditor acts in good faith, and thai the document of tith has been destroyed ; but this provision is without prejudice to the right of recourse which the person who has paid the debt has against the real debtor. (C. C. N. 145—148; C. C. M. 205— 209.) These articles reproduce with slight modifications those of the French Code, omitting however three articles which state rules consequential on those previously given. Except in one. or two points of detail, which will be noticed, there is no doubt the Egyptian legislator intends to preserve the French law on the subject. (C. C. F. 1376-1381; C. C. Q. 1047-1052..) The codes state the conditions attaching to the action called in the French law the action en repetition de Hindu, which is sometimes denoted also by its Roman name conflict io indebiti. If there is no debt to extinguish, the payment has been made without a cause, unless the intention was to make a gift? and a payment made without a cause can be recovered. Such a payment is said to have been made indument. It may be that the debt never existed, or it may be that it existed at one time, but has subse- quently ceased to exist. If the payment has been made by a mandatary, the action of 188 THE LAW OF OBLIGATIONS. repetition may be brought either by him or by the person for whom he made the payment. (Req. 24 avril 1907, D. 1907. 1. 502.) Repetition when there was no error. In three oases proof of error is not required: — (1) The first case is that in which by the Roman law the action •condictio causa data causa non secuta was available. (Girard, Manuel, 5th ed. p. 622.) The payment is made in view of some future consideration which has not been realised. It is. in fact, a conditional payment, and the condition, not having been fulfilled, there is an action for its recovery. For example, a relative of one of the spouses has paid a dowry before the marriage, or made a donation to one of the spouses in the marriage-contract, and the marriage fails to oome off; the money paid can be recovered. (C. C. F. 1088; B.-L. et Barde, 4, n. 2839; B.-L. Le Courtois et SurviUe, Contrat de manage, 1, n. 196.) In oases of this kind there is no necessity to prove error on the part of the person making the payment. The basis of the action is not a payment in mistake. It is a payment made in view of a future cause which has not been realised. (2) The same principle applies when the contract under which the payment was made has been annulled. If the buyer has paid the price and the contract of sale is annulled, he has a right to repetition of the price. For instance, a house which is hypo- thecated is seized and sold by creditors. The purchaser pays the money to the hypothecary creditor, and he is subsequently evicted from the property by a third party who turns out to be the true owner. The purchaser can recover the price from the creditor 1 whom he has paid. The sale to him turns out to have been null, . therefore he paid what was not due. (Planiol, 2, n. 844; Cass. 28 dec. 1885, D. 86. 1. 433; D. N. C. C. art. 1376, n. 64; C. A. Alex. 23 nov. 1899, B. L. J. XII, 27. Cf. C. A. Alex. 17 janv. 1912, B. L. J. XXIV, 92.) (3) Does the same principle apply when the payment was made in discharge of an unlawful or immoral contract? Here, too, it is not a question of error, but simply of money paid for an unlawful cause. The action Avas called in this case in the Roman law condictio oh fur pern causam. (Girard. Manuel, 5th- ed. p. 622.) ' QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE. 18i> The question whether repetition is allowable in this case has- been discussed earlier in speaking- of the nature of cause. {Supra, I, p. 175.) Payment made in error. The articles upon repetition in the Egyptian Code and those in the French Code upon which they are based, are probably not intended to deal with the case where money has been paid for a consideration which has failed, or for an unlawful cause. In the former of these cases the right to repetition undoubtedly exists, but it can be founded upon other provisions of the code and specially upon that which says that an obligation must have a lawful cause. (Cf. C. C. E. 94/148; C. C. F. 1131; B.-L. et Barde, 4, n. 2837; D. N. C. C. art. 1376, n. 1-55. See, however, Colin et Capitant, 2. p. 400.) The articles under consideration have in view the payment made in error where the error is the only cause of the payment. There is a complete absence of any obligation between the person paying who is commonly called the solvens, and the person who receives the payment who is known as the accipiens. The action is available only to the person who has made the payment or to his assignees or persons subrogated to him. (Cass. 17 nov. 1914, D. 1917. 1. 61. The error may take one of three forms: (1) There never was airy obligation between the parties. The person who paid did not owe anything, and there was nothing due to the person who received the payment. For example, a wife, as heir of her husband, pays a bill which she believes to be signed by him, whereas the signature is a forgery. (Cass. 19 janv. 1886, D. 86. 1. 88.) A person pays a tax which he does not owe, because the tax was not imposed according to the law. (Req. 10 nov. 1908, D. 1909. 1. 392; Req. 2 juill. 1908, D. 1909. 1. 175.) (2) There is a debt, but the debtor pays it to a person who- is not the creditor. (3) There is a debt, and it is paid to the creditor but by a person other than the debtor. (B.-L. et Barde, 4, n. 2833.) And, in this last case, we must remember that the law permits one man to pay the debt of another, and that if he does so voluntarily — en connaissance de cause— he has no right to repeti- tion. It is only when he is under the mistaken impression that he is paying his own debt that this right exisl>. C. A. Alex. 190 THE LAW OF OBLIGATIONS. 20 jum 1895, B. L. J. VII, 351; C. A. Alex. 20 avril 1911, B. L. J. XXIII, 274.; 1 1 is not necessary that the accipiens should be in error but it is nece ssary that the solvens should be so. If the accipiens knew he was receiving what was not due to him, his bad faith will cause him to be more severely dealt with. The error of the solvens ad faith and must account for the fruits. The article in the Quebec Code says that he must account for the profits which the sum "ought to have produced from the time of receiving it, or from the time that his bad faith began." (C. C. Q. 1049.) The French Code and the Egyptian Code are silent as to this but the law is the same. This is only according to the principle., (Larombiere, on arts. 1378, 1379, n. 11.) If the receiver is in bad faith the risk of the thing is with him. But, probably, we may apply by analogy the principle stated in C. C. F. 1302. If so, there is one case in which he can escape his liability although he cannot return the thing, and that is if he can show that it would equally have perished if it had been in the possession of the owner. If, for instance, the thing- which he had received was a horse which had died of a disease, it might be easy to prove that it would equally have died if it had remained in its owner's care. (Aubry et Ran, 4th ed. 4, p. 736; B.-L. et Barde, 4, n. 2844. Contra, Planiol, 2, n. 852. See, infra, p. 478. D. N. C. C. art. 1379, n. 13.) If the person who got the thing was in good faith he has no liability for its loss, unless it perished by his fault. 13 2) 196 THE LAW OF OBLIGATIONS. (3) Likewise if he was in good faith, and he alienates the thing 1 while his good faith continues, he is liable, in any event, only for the price. (C. C. F. 1380; Demolombc, 31, n. 401; Aubry et Rau, 4th ed. 4, p. 736; D. N. C. C. art. 1380. n. 19.) (4) According to the general rule, whether the person receiving the thing was in good or in bad faith, he is entitled to repeat the money he has spent for the preservation of the thing, and even those outlays which have increased its value. But as regards the depenses utiles, the owner will be compelled to pay only to the amount by which he is enriched. For if the thing had been in the possession erf his owner, the, neoesisary expenses would have been incurred, and the ameliora- tions would have increased its value, so that, if the possessor could not claim for them, the owner would be enriched at his expense. (B.-L. et Barde, Ohlig. 4, n. 2847; Aubry et Rau, 4th ed. 4, p. 737.) English law as to quasi-contracts. In its treatment of quasi-contracts, the common law takes a narrower view than the civil law. The term quasi-contract is just coming to be recognised in England, and in America it hasl long been familiar. (See Pollock, Contracts, 8th ed. p. 14.) The general principle underlying the doctrine of negotiorum gestjo is not. accepted in the common law. That law does not allow a man by a voluntary rendering of service to make another man liable to him. In the language of Lord Justice Bowen: " The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another does not, by English law, create any lien upon the- pro- perty saved or benefited, nor even, if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will. Thero is an exception to this proposition in the maritime law. With regard to salvage, general average, and contribution, the maritime law differs from the common law. That has been so from the time of the Roman law downwards." (Falcke v. Scottish Imperial Insurance Co., 1886, 34 Ch. D. QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE. 197 249, 56 L. J. Ch. 707, 713. As to conferring- a benefit see infra, p. 447.) And so it has been held that if one tenant-in-common of real property expends money on its repair or improvement, the other tenant is not liable to repay any portion of the money, merely because he enjoys the benefit of the outlay while the tenancy-in- common continues. {Leigh v. Dickeson, 1885, 1-5 Q. B. D. 60, 54 L. J. Q. B. 18.) The rule was stated by Brett, M.R., in that case: " If one pays money voluntarily for another in such circum- stances that the other is at liberty to accept or reject the advantage, then if he adopts and ratifies that which was done for him he becomes liable, although the payment was a voluntary payment. But if the money is voluntarily expended in such circumstances that the other is obliged to reap the advantage of it, the mere fact of his having' accepted that which he was not at liberty to refuse is no evidence of his adoption or ratification of the payment, and the one who has made such voluntary payment must suffer for his generosity." (See the notes to Lampleigh v. Brathivait, in Smith's Leading' Cases, 11th ed. 1, 141.) But although the doctrine of negotioriim gestio is not received in the common law, there are, notwithstanding, certain classes of cases in which a principle is accepted analogous to that which is the basis of the action de in rem verso. In these cases the law admits the right to claim the restoration of a benefit conferred by the claimant but unjustly retained by the defendant, or to claim its pecuniary equivalent. Theory of implied contract. The traditional way of explaining such cases is to say that a contract is implied by law in the circumstances. (Blackstone, Commentaries, III, 161.) The rule applicable when money has been paid for another is stated thus: "Where a person has paid money for another under circumstances and upon occasions which make it just and equitable that it should be repaid; a debt or promise to pay is then implied in law, without any actual agree- ment to that effect." (See, per Maule, J., in Lewis v. Campbell, 1849, 8 C. B. 545, 79 R. R. 623. Cf. cases in Leake on Con- tracts, 6th ed. p. 42.) This introduction of a fictitious promise is artificial and unnecessary, and when incapable persons are concerned the theory breaks down. It is to be hoped that the English law will come 198 THE LAW OF OBLIGATIONS. to accept the term quasi-contract, or will find a better expression to indicate that the obligation is created by law, and will abandon the theory of implied contract in this kind of case. (See Pollock, Contracts, 8th ed. p. 12.) English illustrations of claims not arising from contract. The following- examples ma} r suffice: — In the maritime law one who saves or helps to save a vessel to which he is a stranger from danger at sea is entitled to a reward for his services, and the same rule applies to one who saves cargo or other property, either while it is in the ship which is in peril or after it has been thrown or washed out of her. The reward paid to the salvors is called salvage. (See Gas Float Whit ton. No. 2, 1896, P. 42, 65 L. J. P. 17; Carver, Carriage by Sea, 5th ed. s. 322.) When a ship and cargo are exposed to a common danger of damage or destruction and to avert it part of the cargo of the ship is voluntarily sacrificed, this loss is divided equitably among the owners of the property saved in proportion to the value of their property which is saved. The loss is called a general-average loss. (Whitecross Wire Co. v. Samll, 1882, 8 Q. B. D. 653, 51 L. J. Q. B. 426; Carver, Carriage by Sea, 5th ed. s. 361; Halsbury, Laics of England, vo. Shipping and Navigation, p. 322.) If one person be secondarily and another primarily liable for a debt in respect of property in the enjoyment of the latter, and the former has to pay, he is to be indemnified by the latter. (Per Willes, J., in Roberts v. Crowe, 1872, L. R, 7 C. P. 629, 41 L. J. C. P. 198.) " Where money is paid to another under the influence of a mistake, that is upon the supposition that a specific fact is true which would entitle the other to the money, but which fact is untrue, and the money would not have been paid if it had been known to the payer that the fact was untrue, an action will lie to recover it back." (Kelly v. Solar i, 1841, 9 M. & W. 54, 60 R. ft. 666, per Parke, B.) So also, it would seem that when an obligation is imposed upon a person in the interest of the public and he fails to perform it, another person who perforins the obligation with the expectation of receiving compensation is entitled to recover what he has paid. This has been repeatedly held in claims for repayment of funeral QUASI-CONTRACT RKSULTING FROM A PAYMENT NOT DUE. 199 expenses. So where the defendant who was possessed of a large estate in Jamaica left his wife in England where she died, and her father paid for her funeral expenses, it was held that the father could recover from the husband. {Jenkins v. Tucker, 1 H. Bl. 90. Cf . Bradshm v. Beard, 1862, 12 C. B. N. S. 344, 133 R. R. 360; Keener, Quasi-Contracts, p. 341.) The same principle applies when necessaries are supplied to a person whom the defendant is bound by law to support but neglects to do so, for instance, when necessaries are supplied to defendant's wife who is living apart from her husband from no fault of her own. (Baseley v. Forder, 1868, L. R. 3 Q. B. 559, 37 L. J. Q. B. 237; Johnston v. Sumner, 1858, 3 H. & N. 261, 117 R. R. 679. See Keener, Quasi-Contracts; p. 22.) Another case is when necessaries have been supplied to a person who is incapable of binding himself by contract. The law implies an obligation on the part of a lunatic to pay for necessaries supplied to him. {In re Rhodes, 1890, 44 Ch. D. 94, 59 L. J. Ch. 298.) Cases of claims for services rendered by a housekeeper without contract have been referred to above. (Supra, p. 182.) In some of these cases the facts may point to an implied con- tract, but in others the liability, if it exists at all, is quasi-con- tractual. This must be so at all events when the defendant is a lunatic or is otherwise incapable. (See In re Rhodes, ut supra.) It is not necessary to explain here that peculiar kind of quasi- contract of the common law which arises where there is what is called a " waiver of tort." This happens in cases in which a person has been injured by a tort by the commission of which the wrong- doer has been enriched. In some cases the (plaintiff instead of suing for damages sues to recover the value of that which has been tortiously taken or is being tortiously used by the defendant. He is allowed to "waive the tort," as it is called, and sue in contract instead. But this waiver of a tort is not allowed in every kind of case in which the defendant has by his tort acquired a profit, and the limits of the right to waive the tort are at present ill-defined. (Salmond, Torts, 4th ed. p. 162; and, see, for illustrations, Scott, Cases on Quasi-Contracts, pp. 106 seq. See, generally, on the subject of quasi-contract i in the common law, Keener, Quasi-Contracts, New- York, 1893; Scott, Cases on Quasi-Contracts, New York, 1905; Salmond. Jurisprudence, 5th ed. 432; Encyelopcedia of Laws of 200 THE LAW OF OBLIGATIONS. England, s. v. Quasi-Contracts, ,and s. v. Negotiorum gestio ; Beven, Negligence, 3rd ed. 2, p. 768; R. Campbell, Principles of English Law, p. 408.) Wrongs. The obligations created by -wrongful acts and the remedies provided by the law in cases of delict or quasi-delicts, as well as the discussion upon, the nature of " fault " in the legal sense consti- tute the law of responsibility, which is not covered in these volumes. OF OBLIGATIONS RESULTING FROM THE LAW SOLELY. 201 CHAPTER X. OF OBLIGATIONS RESULTING FROM THE LAW SOLELY. Like the French Code and the Code of Quebec, the Egyptian Code forms a separate class of those obligations which result solely from the operation of the law and independently of the will of either of the parties, and are, moreover, not created by any act or fait personnel. C. C. N. 154-157; C. C. M. 216—219; C. C, F. 1370; C. C. Q. 1057.) In a quasi-contract it is a lawful act which creates the obliga- tion, and in one of them— ne got iorum gestio — we have seen that the lawful act of the gerant creates various obligations by the gerant himself as well as by the maitre or person benefited. In a delict or in a ^quasi-delict there is a personal act,- and it js this fait personnel of the wrong-doer which generates the obliga- tion. But in the case under consideration there is no personal act which can be viewed as the source of the obligation. It is the law, and only the law, which creates the liability. It has been pointed out earlier that this classification of the sources of obliga- tions is eminently unsatisfactory. It is much more scientific to say that all obligations arise either from contract or from some provision of the law. (See supra, p. 142. Planiol, Rev. Critique, 1904, 53, p. 224; B.-L. et Barde, Oblig. 4, n. 2787; Saleilles, Theorie Generate de VObligation, 3rd ed. p. 449.) Alimentary provisions. In the Egyptian codes the only example mentioned of obliga- tions resulting from the law solely is the obligation to pay an alimentary provision to certain persons who are unable to support themselves. This obligation is thrown by law upon certain persons on account of their relationship by blood or by marriage to those in need of the provision. The French Code does not give this example in the general 202 THE LAW OF OBLIGATIONS. article on the .subject, but mentions instead certain obligations of owners of adjoining properties, and the obligations of tutors and other administrators who cannot refuse the office thrust upon them by law. (C. C. F. 1370.) But in the French law, as in the Egyptian, the duty to pay alimony is one of the most important of the obligations resulting from the law solely. (Planiol, 2, n. 828; D. N. C. C. art. 1101, n. 13.) With the special rules of alimony under the French Code we are not here concerned. (See Aubry et Rau, 5th ed. 9, p. 153.) Other obligations arising by law. Before referring to the Egyptian rules on the subject, a word may be said as to the examples given by the French Code of obligations arising from the law solely. If the tutor could choose whether he would accept or not, and he accepted, his liability would be created by his voluntary act of acceptance, but if the law compels him to act we may say that the law makes ^him liable independently of any act of his. The obligations which arise between neighbouring owners indepen- dently of their will are really legal limitations of the powers of an owner. If the law says that a man cannot open a window having a direct view over his neighbour's land within less than a metre of the neighbour's boundary, we may say, if we like, that this is an obligation created by the law, or, " an obligation of vicinity." But in the Egyptian Code these obligations are dealt with under the head of servitudes,, and therefore they do not need to be discussed here. (C. C. N. 30 seq.; C. C. M. 51 seq.) It is not, perhaps, very scientific to call them servitudes, but that is not a question which concerns us just now. Its discussion belongs to the law of property. (See B.-L. et Chauveau, Biens, n. 818; Hue, 8, n. 374; L'Egypte Contemporaine, VII, 184.) All the obligations arising from status also result from the law, because the consequences which flow from the possession of a certain status are determined by the law irrespective of the will of parties. It is true that a man may choose whether he will be married or not, though he cannot choose whether he will be born or not, and we may say that the obligations resulting from mar- riage are not incurred without his will. But he is obliged to take them as he finds them in the law. It is not his will which created the obligations, although it depends on his will whether by getting married he will accept the legal obligations of a married man or not. OF OBLIGATIONS RESULTING FROM THE LA.W SOLELY. 203 Obligation of alimony in Egyptian Codes. As regards the obligations of alimony the articles in the Egyptian codes are very unsatisfactory for two reasons: — (1) They are expressed in very vague language: and, (2) They are on some points in conflict with the Mohammedan law upon the subject, and yet alimony is a matter which must be governed by the personal law. The articles in the codes are as follows:— (/ Descendants and persons connected by marrmge in the degree of descendants, while the marriage lasts, are bound to make alimentary provision for their ascendants or the p ersons connected with them by marriage in the degree of ascendants. C. C. E. 155/217.) The like obligation rests on ascendants as regards their des- cendants or persons connected with them by marriage in the degree of descendants, and on husband and wife as regards one (mother. (C. C. E. 156/218.) The amount of the alimentary provision is to be calculated with regard to the needs of the party entitled and the resources of the party liable. It is payable by the month and in advance. (C. C. E. 157/219-220. Analysis of article 155. Article 155 of the Civil Code. The following conclusions can be drawn from this article: — (1) That the descendants are bound to make alimentary pro- visions for their ascendants; (2) That the descendants are bound to the wives of their ascen- dants ; (3) That the wives of the descendants are bound to their hus- bands' ascendants so long as the marriage lasts; (4) That the descendants' wives are bound to their ascendants' waives . Comparison with the Mohammedan law. (1) This is true in the Mohammedan law. The jurists (Alfokaha) have specified that the descendant is bound to his ascendant on condition that the former be wealthy, without regard to the latter's incapacity to earn his living provided he be poor. (El Ahwal El Shakhssia, art. 408.) 204 THE LAW OF OBLIGATIONS. (2) This is also true in the Mohammedan law. The jurists have stated that the descendant is bound to the wife of his ascen- dant, provided that the ascendant be in a state of illness which necessitates that a wife should look after him. So if the ascendant is connected by marriage with more than one person, the obligation rests on the descendant to only one of his ascendant's wives. {Op. cit. art. 409.) (3) This is contrary to Mohammedan law, no jurist having said that the wife of the descendant is bound to her husband's ascendant. And, likewise, if the descendant be a woman, her husband is not bound to her ascendants, even while, in both cases, the marriage is still subsisting. (4) This, again, is contrary to Mohammedan law. No jurist has ever said that the wife of the descendant is bound to the wife of the ascendant. Analysis of article 156. Article 156 of the Civil Code. The following conclusions can be drawn from this article: — (1) That the ascendants are bound to the descendants; (2) That the ascendants are bound to the descendants' wives; (3) That the wife is bound to her husband; (4) That the husband is bound to his wife. Comparison with the Mohammedan law. (1) This is in accordance with the Mohammedan law. The jurists have said that ascendants are bound to their descendants provided the latter be poor. If the descendant is a man his ascen- dants are bound to him until he is able to earn his living, and, if the descendant is a woman, her ascendants are bound to her until she gets married. But if before the woman marries, she is earn- ing her living by a profession, no like obligation rests on her ascendants. (Op. cit. arts. 395 and 396.) (2) According to Mohammedan law, an ascendant is not bound to his descendant's wife unless the descendant is poor, incapable of earning his living and in a state of illnes6 in which he is in need of assistance. {Op. cit. art. 409.) (3) There is no such rule in the Mohammedan law. "How- ever large the fortune of the woman may be she is not held liable to contribute to the expenses incumbent on the husband." (Kadri Pasha, Mohammedan Personal Law, s. 206.) OF OBLIGATIONS RESULTING FKOM THE LAW SOLELY. 20-5 (4) This is true in the Mohammedan law. The jurists have agreed that a husband is bound to his wife even if she is rich. Among- persons entitled to alimony, the wife alone has a right to it even if she is rich. (Kadri Pasha, s. 160.) Code speaks only of ascendants, descendants, and spouses. In addition to the discrepancies above referred to between the rules given in the civil code as to the obligation to make an alimen- tary provision, and those of the Mohammedan Personal Law, there is in the articles of the code a singular omission. The code speaks only of the obligation as regards ascendants and descen- dants, and husband and wife. But by the Mohammedan Personal Law, Maintenance is due to every relative with whom marriage is prohibited, when he is without means and in need oj receiving charity, from his presumptive heir, even if a minor, in proportion to his share of inheritance. (Kadri Pasha, s. 415.) The meaning of the section is that the duty of maintenance, exists between persons who are within the degrees in which mar- riage is prohibited, whether these persons are of the same sex or of different sexes. And the Mohammedan law lays down precise rules as to the effect upon this obligation of a difference in religion between the relatives, and as to the extent of the duty when there are several relatives in the same prohibited degree. (Sections 416 — 418.) And further, "The distant kindred, with whom marriage is not prohibited, are discharged of the obligation of maintenance when there is a relative with whom marriage is pro- hibited." (Sect. 417.) Upon all this the code is quite silent. (For this comparison with the Mohammedan law I am largely indebted to my colleague Sheikh Mohammed Zeid El Ibiani, Bey.) Egyptian jurisprudence. The conflict between the law stated in the code and the Moham- medan Personal Law creates in practice no difficulty, owing to the fact that the articles in the code are treated as a dead letter. Questions of maintenance where Egyptians are concerned come, before the courts having jurisdiction in matters of personal status, and these courts apply the Mohammedan law without reference to the provisions of the code. 200 THE LAW OF OBLIGATIONS. CHAPTER XI. * PUTTING IN DEFAULT— MISE EN DEMEURE. Before the debtor in a contract is liable in damages three con- ditions must be fulfilled: — (1) The non -performance must have caused prejudice to the creditor, and this prejudice must be an immediate and direct result thereof; (2) The non -performance must be due to the fault of the debtor 1 ; and, (3) The debtor must have been put in default. And under the term' non-performanoe we must include the partial as well as the complete failure to execute the obligation at the proper time. Whether the failure is complete or partial there is non-performanoe in the legal sense. (C. O. E. 119, 120/177, 178; C. C. F. 1146, 1147; C. C. Q. 1067, 1070.) It is with the third of these conditions that we are now con-> cerned. The failure to execute the obligation or the delay in its performance must be established in a legal way. It must be, as the old French writers said, un retard officiellement constate et vmputable an debiteur. (Bourjon, Droit de la France, 2, Liv. 6, Tit. 1, ch. 7, s. 7, p. 445; Saleilles, Theorie Generale de V Obligation, 3rd; ed. p. 24.) The fact that the debtor has failed to fulfil his obligation in due time cannot as a general rule be established until there has been a formal demand made upon him by the creditor to execute his obligation. It is this formal demand which is called " putting him in default " or a mise en demeure. (C. C. E. 120/178 says broadly damages are not recoverable so long as the debtor is not in default.) This broad statement requires, however, as will be seen, consider- able qualification. But, undoubtedly, the general principle of the law is that until the creditor has -put the debtor in default the presumption is that the creditor considers that the delay in per- formance does not cause him any prejudice, and that he consents PUTTING IN DEFAULT— MISE EN DEMEURE. 207 to it. (B.-L. et Bardc, Oblig. 1, n. 408; Planiol, 2, n. 168; Eteq. Ler dec. 1897, D. 98. 1. 289, and note by M. Planiol; 1). N. C. C. art. 1139, n. 1; C. A. Alex. 17 mars 1898, B. L. J. X, 203; C. A. Alex. 15 avril 1906, B. L. J. XVIII, 200.) Mise en demeure. When a date has been fixed for performance. When no time for the performance of the obligation has been fixed expressly or by implication, it is natural to hold that the debtor is not in default. (Colin et Capitant, 2, p. 14.) But even when a date for its performance has been expressly stipulated the mise en demeure is still necessary unless the case falls under one of the exceptions to be presently explained. (B.-L. et Barde, Oblig. 2, n. 1001; Aubry et Rau, 5th ed. 4, p. 150; C. A. Alex. 18 avril 1906, B. L. J. XVIII, 200.) The necessity for a mise en demeure is a traditional rule of the old French law. The old French commentators on the Roman law, notably Cujas and Doneau, believed that the Roman law was to the opposite effect, and that under it when a term for pay- ment had been fixed, the expiration of this term put the debtor in default without any formal demand by the creditor. The glossarists expressed this by saying dies inter pellat pro homine. This does not appear to be a correct interpretation of the Roman texts. In the Roman law the rule was" that a mise en demeure or interpellatio was necessary in this case also, unless upon the interpretation of the contract there was evidence of a contrary intention. (Girard, Manuel, 5th ed. p. 648; B.-L. et Barde, Oblig. 2, n. 1001;- Saleilles, Theorie Generale de V Obligation, p. 24.) Mise en demeure in commercial matters. In the French law and the law of Egypt the rule that the debtor must be put .in default before damages are due applies to com- mercial as well as to civil contracts. But in commercial matters the mise en demeure, as explained later, may be made in a less formal manner. So in Egypt it has been held that demurrage— surestaries — does not begin to run until after there has been a. mise en demeure. Surestaries are the sums to be paid for detain- ing a ship while loading or unloading for a longer period than was specified. (Lyon-Caen et Renault, Manuel de Droit Com- mercial, n. 935; C. A. Alex. 9 mai 1906, B. L. J. XVIII, 237.) 208 THE LAW OF OBLIGATIONS. The same rule that it is necessary to put the debtor in default applies to the sale of merchandise unless the contract can be brought under one of the excepted cases. The law is thus stated in the head-note of a recent decision by the Mixed Court of Appeals: Ce n'est qu'a litre d'exception que le vendeur pent se trouver en demeure par le seid fait de respiration du delai fixe pour la livraison, lorsque les cir Constances de la cause rendent evident e Vintention des parties de faire, de V observation du delai, hme obli- gation essentielle du vendeur: il en est ainsi notamment lorsque le plus leger retard est de nature a causer un prejudice important. Autrement, la regie generate qui impose la necessite d'une mise en demeure reprend son empire, et elle est d'autant plus facile a suivre, en matiere commercials, qu'un simple telegramme suffit pour y satisfaire. (C. A. Alex. 12 fevr. 1913, B. L. J. XXV, 170.) How the debtor is put in default. The Egyptian Code is completely silent as regards the manner of putting the debtor in default; it is, however, settled by the jurisprudence that the French rules on the subject are followed in Egypt. The French Code says that unless there is an agree- ment to the contrary the debtor is put in default soit par un-e sommation ou par autre acte equivalent. (C. C. F. 1139.) And it is a question of fact if the acte addressed to the debtor is expressed in sufficiently formal terms to constitute a mise en demeure. (Cass. 25 avril 1893, D. 93. 1. 350; B.-L. et Barde, Oblig. 1, n. 427.) A writ of summons is such an acte and so is the commande- ment, or monition of execution, by which a creditor having an executory title declares in a formal way his intention to execute a seizure after the legal delay. (Planiol, 2, n. 169. See C. Pro. E. 384/437; Lusena, Procedure Civile, 2, p. 19. Cf. Cass. 6 juill. 1909, D. 1909. 1. 510.) But without the commencement of any legal procedure the creditor can put his debtor in default by a formal demand served upon him by a bailiff calling upon him to execute his obligation. And it is this sommation par exploit d.liuissier which is the con- secrated form of putting a debtor in default. In fact the only safe course is always to begin by an extrajudicial demand, for, if the creditor begins with a judicial demand, and then the debtor at once consents to the performance of the obligation the debtor is PUTTING IN DEFAULT — MISE EN DEMEURE. 209 entitled to payment of the costs of the action. In civil matters, apart from agreement to the contrary, the debtor cannot be put in default by a letter, for a letter cannot be an acte equivalent to a sommation. (B.-L. et Barde, Oblig. 1, n. 427.) There is an arret of the Chambre des Requites in a civil case which refused to find that the judges of the court below had erred in admitting the sufficiency of mise en demeure by a letter. But this judgment has been adversely criticised and remains isolated. (Req. 5 dec. 1883, D. 84. 1. 130; Hue, 7, n. 117; Planiol, 2, n. 169; Colin et Capitant, 2, p. 15.) A fortiori, a verbal demand in a civil matter cannot effect a mise en demeure, (C. A. Alex. 21 dec. 1911, B. L. J. XXIV, 59.) But in commercial matters by usage the French law has greatly relaxed the rule which requires that the mise en demeure shall be by a formal acte. It is settled that in commercial matters the debtor may be put in default by a letter and even by a telegram. (Cass. 28 oct. 1903, S. 1908. 1. 422; Bordeaux, 17 dec. 1895, D. 97. 2. 507; Thaller, Traite Elementaire de Droit Commercial, 4th ed. n. 1052; Lyon-Caen et Renault, Traite de Droit Com- mercial, 4th ed. 3, n. 32.) This may be supported as a matter of construction of the French Code by the argument that in 'commercial matters the parties have agreed to be governed by business usages, so that the mise en demeure, although not made by an acte, is made in a manner contemplated by the parties. Under the Egyptian Code there is no difficulty in admitting this practice, seeing that the code does not prescribe any .form for the mise en demeure. And it is settled by the jurisprudence in Egypt that in commercial matters the debtor may be put in default in this way. (C. A. Alex. 12 fevr. 1913, B. L. J. XXV, 170; C. A. Alex. 13 dec. 1899, B. L. J. XII, 40.) And in commercial matters, according to some French autho- rities, even a verbal demand may be sufficient to put the debtor in default. (Planiol, 2, n. 169.) Probably this may be a matter of usage. In certain businesses a verbal demand may be recog- nised in practice. But unless there is clear proof of such a custom in a particular trade it does not seem that such a manner of putting a debtor in default ought to be recognised by the court. (See Demolombe, 24, n. 525; C. A. Alex. 21 dec. 1911, B. L. J. XXIV, 59; C. A. Alex. 16 mars 1916, B. L. J. XXVIII, 333.) W.— VOL. II. I J 210 THE LAW OF OBLIGATIONS. Iu one important case which frequently occurs, it has been held in Quebec that a party may be put in default by a notice in a newspaper. This is where a notice by a ship's agent is placed in a newspaper published in the port of destination of a ship, signi- fying the arrival of the ship and calling upon the consignees to take delivery within a certain delay of the goods consigned to them. After the lapse of this delay, if the goods have not been re- moved, the contract of carriage is at an end by the default of the consignees to take delivery in due time, and the carrier from that time holds the goods as a warehouseman, and is not liable for their loss by theft, etc. without proof of fault. (Grothe v. Canada Line, 1912, R. J. Q. 42 S. C. 443.) In places where such advertisements are recognised by com- mercial usage this conclusion seems to be in accordance with principle. In the case of a bill of exchange or of a promissory note which has not been paid at maturity, the protest of the bill made by a bailiff is a mise en demeure of the parties liable on the bill if the holder exercises his recourse within the legal delays. (See C. Comm. E. 162/169; Thaller, Trait e Elementaire de Droit Com- mercial, 4th ed. n. 1545.) Where no mise en demeure is necessary. The Egyptian Code throws no light upon this subject. There are, notwithstanding, a number of important cases, in which on the principles of the French law it is clear that no mise en demeure is required. Several of these are stated or implied in articles of the French Code, and there is no doubt that upon this matter the law of Egypt is the same. These cases may be thus classified: — (a) When it is no longer possible to fulfil the obligation. (b) When there is a text of the law which says that the debtor shall be in default without any mise m demeure. (c) When there is a (stipulation express or implied dispensing the creditor from the necessity of putting his debtor in default ., (Planiol, 2, n. 170; B.-L. et Barde, 1, n. 469.) (d) When the obligation has its source in a delict or in a quasi-delict. (Req. 4 fevr. 1868, D. 68. 1. 271; Colin et Capi- tant. 2, p. 16.) > PUTTING IN DEFAULT — MISE EN DEMEUKE. 211 These cases will be considered in order. (a) Performance impossible. (1) In the case of an obligation not to do something it would be futile to require the creditor to call upon the debtor to keep his contract after he had already broken it. This rule is expressly; stated in the French Code. (C. C. F. 1145.) It must be under- stood to be implied in the Egyptian Code. If a man has con- tracted not to build a wall, or not to sing at a theatre, and he has broken his contract, a mise en demeure could serve no purpose. (Demolombe, 24, n. 541; Laurent, 16, n. 240; B.-L. et Barde, Oblig. 1, n. 444; D. N. C. C. art. 1145, n. 2.) (2) When the thing which the debtor was bound to give or to do could only be given or done within a certain time which he has allowed to expire, no mise en demeure is required. (C. C. F. 1146.) Here the mere delay in the execution of the obligation amounts to an impossibility of executing it. (See the note by M. Planiol to Cass. 11 janv. 1892, D. 92. 1. 257.) They are cases in which, as English lawyers express it, " time is of the essence of the contract." Although no time is stipulated the matter is obviously one which can only be done within a certain delay. It is a matter of urgency and this is understood by both parties. If I instruct my advocate to appeal from a judgment, he knows that the appeal must be entered within a certain delay, and if he fails to do so the fulfil- ment of the contract becomes impossible. (Pothier, Oblig. n. 147; B.-L. et Barde, 1, n. 469; Aubry et Rau, 5th ed. 4, p. 151.) If a merchant undertakes to send goods to be shipped by a certain vessel, he cannot fulfil his contract by sending them after the ship has sailed. If a florist undertakes to send flowers for the bridesmaids at a wedding, he cannot fulfil the contract the day after the ceremony. In commercial matters, especially, there are many cases in which a delay in the performance may amount to an impossibility of performing the obligation according to the intention of the parties. We may in these cases explain the rule that no mise en demeure is necessary by saying that there is a tacit agreement dispensing the creditor from the necessity of putting the debtor in default., (Demolombe, 24, nos. 513, 542; Aubry et Rau, 5th ed. 4, p. 151; Planiol, 2, n. 170; Req. 30 janv. 1911, D. 1912. 1. 48; D. N. C. C. art. 1139, n. 45.) 14 2) 212 THE LAW OF OBLIGATIONS. (3) When one of the parties to a contract has repudiated it, and declared that he does not consider himself to be bound by it, it is not necessary for the other party to put him in default... (C. A. Alex. 14 juin 1900, B. L. J. XII, 350.; And in like manner, when a party has intimated to the other party that ho finds it impossible to fulfil his obligation, no mise en demeure is necessary. This has been held recently in a case where the debtor had undertaken to supply a cargo and he intimated that he was unable to do so, and begged the shipowner to procure a cargo elsewhere. (C. A. Alex! 28 janv. 1918, B. L. J. XXX, 168.) (4) It is not necessary to put the debtor in default when he has broken his contract not merely by not having fulfilled it within the time specified, but by having done something which makes its performance impossible. So where the seller of a corps certain notifies the buyer that he has sold and delivered the thing to another there is no need to put him in default. (C. A. Alex. 23 mars 1904, B. L. J. XVI, 167.) And in a Quebec case, where a man had contracted to construct a baker's oven and had performed the -work in an unscientific way and was unable to put it right, it was held in an action of damages for the expense of rebuilding the oven that no mise en demeure was necessary. (Vermette v. Parent, 1910, R. J. Q. 20 K. B. 156.) English law as to this. So, likewise, in the English law, when there is an express- promise to do a thing and the party by his own act makes it impossible that he should perform his promise, there is a breach, of contract from that moment. [Ogdens. Ltd. v. Nelson, 1905, A. C. 109; 74 L. J.. K. B. 433. Putting in default presupposes possibility of performance. The previous cases illustrate the general principle which may be stated thus: — Putting in default presupposes that it is still possible to per- form the obligation. It is a formal demand upon the debtor to perform his contract without further delay accompanied by an intimation that the creditor will hold the debtor responsible for the damage caused by the delay. Such a demand has no meaning when it has already become impossible to perform the contract, and that owing to PUTTING IN DEFAULT — MISE EN DEMEUKE. 213 the fault of the debtor, as, for example, if he has by his negligence permitted the destruction of the thing which he was bound to deliver, or if he has done something which he has bound himself not to do. Where putting in default is required it is because the law pro- ceeds upon the view that until the debtor has received the formal notification he is not in default. But such a position is untenable when there has been an actual fault on the part of the debtor which makes it impossible for him to fulfil his contract. (Baudry- Lacantinerie et Barde, Oblig. 3rd ed. 1, n. 472; Planiol, 2, n. 227.) (b) Law may declare mise en demeure unnecessary. There are a number of cases in which the French Code says that a debtor shall be liable for loss caused even by cas fortuit, or that interest shall run against him from a certain date de plein droit, and in these cases no mise en demeure is necessary. (B.-L. ct Barde, 1, n. 469; Aubry et Rau, 5th ed. 4, p. 151; D. N. C. C. art. 1139, n. 61.) The principal cases are :— (1) When a thing stolen is destroyed in the hands of the thief or of a person who has received it knowing it to have been stolen, the thief or the receiver is liable to restore the value without any mise en demeure. (C. C. P. 1302; C. C. Q. 1200.) The Egyp- tian codes have no similar provision, but, probably, the same rule would be followed. For the obligation is not here contractual, and the policy of the law is to discourage thieves and receivers of stolen goods. ;B.-L. et Barde, 3, n. 192-5. Cf. C. A. Alex. 19 nov. 1896, B. L. J. IX, 18.) (2) Any one who has received in bad faith what is not due to him is responsible for its restitution or for its value if it has been lost, and for the interest and fruits. He cannot say his liability is only from the date of the mise en demeure. (C. C. E. 145, 146/206, 207; C. C. F. 1378; C. A. Alex. 19 nov. 1896, B. L. J. IX, 18.) (3) The mandatary who has employed for his own use money which he has received on account of the mandator owes the interest from the date when this improper use began. (C. C. E. 526/646; C. C. F. 1996.) (4) The borrower who has employed the thing for a use not contemplated by the lender, or for a time longer than was con- templated, is under the French Code liable for the loss of the 214 THE LAW OF OBLIGATIONS. thing even though this is caused by a fortuitous event. (C. C. F. 1881.) No mise en demeure is needed to create this liability. The Egyptian codes do not contain the statement that the bor- rower in such a case bears all the risks, and it is difficult to imply such a provision. (C. C. E. 470/572.) (c) Stipulation may make mise en demeure unnecessary. No misfi en demeure is required when it was stipulated in the contract that the mere failure of the debtor to execute the contract should put him in default. The clause usually runs il sera repute en demeure sans qa'il soit besoin d'acte et par la seule echeance du terme.^ (B.-L. et Barde, Ohlig. 1, n. 469: Aubry et Rau, 5th ed. 4,p. 151; D. N. C. C. art. 1139, n.j33.) But no terms are sacramental, and the court may find that other expressions used by the parties sufficiently indicate their intention to dispense* with any mise en demeure. (B.-L. et Barde, ib.\ Cass. 6 juill. 1908, D. 1909. 1. 510; Req. 18 fevr. 1853. D. 56. 1. 260; C. A. Alex. 6 janv. 1901, B. L. J. XIII, 125.) So, in the sale of merchandise, when a time has been fixed for delivery, and it is stipulated that the buyer shall have the right to refuse any goods not sent en temps utile, no mise en demeure is necessary. (C. A. Alex. 29 mai 1912, B. L. J. XXIV, 368; Gaz. des Trib. 2, p. 193. Cf . C. A. Alex. 30 janv. 1901, B. L 1 . J. XIII, 125.) And where there are no express terms dispensing the creditor from a mise en demeure the court may find that such a stipulation was implied. (B.-L. et Barde, I.e.; D. N. C. C. art. 1139, n. 45.) But the evidence of intention to dispense with the mise en demeure must be plain. When there is a clause in a contract rendering the whole debt immediately payable on failure to pay any one of the instalments, such clause can only be enforced after default resulting from formal demand, unless there is an express provi- sion to the contrary., (Trib. Somm. Kafr el Sheikh, 28 mai 1918,0. B. XX, n. 10.) Waiver of right to insist on mise en demeure. Even when there is an express stipulation in the contract that the debtor shall be put in default by the mere expiration of the term, it may be found that the creditor has by his conduct waived his right to found upon the default. In policies of fire insurance a clause is generally inserted to the following effect: En defaut de PUTTING IN DEFAULT — MISE EN DEMEURE. 215 paiement de la prime dan- !>■ delai fixe, et sans quHl soit besoin d'aucune mise en demeure, V assure n'a droit, an cas de sinistre, a aucune indemnite. In many cases it has been held in France that the infliirajobei- company could not take advantage of this stipulation when they had been in the habit of sending their agent or collector to the domicile of the assured to collect the premiums. In spite of the clause in the policy, there was no default until this demand had been made; because the company had given the assured a right to expect it. (Paris, 2 mars 1893, D. 93. 2. 256; D. N. C. C. IV, p. 875, nos. 1108 seq. But the fact that an insurant - company collected some of its premiums in this way from other persons would not prevent the clause in the policy from producing its effect in the case of an assured who had always taken his premiums to the company. (B.-L. et Barde, Oblig. 2, n. 1511; Cass. 4 nov. 1891, D. 92. 1. 313. (d) No mise en demeure necessary when action based on wrong-doing. It would be unreasonable to allow a person who had eaufi d damage to another by his wrong-doing to be free from liability until he had received a formal demand. His liability is directly created by the law and it exists from the moment of the wrong. .(Aubry et Rau, 5th ed. 4, p. 149. note 1: B.-L. et Bard©, 1, n. 4730 Effects of putting in default. Except in the special cases which have been referred to. the law presumes that although the debtor has not fulfilled his obligation at the proper time the delay does not cause any damage to the creditor. It is presumed that the creditor is allowing the debtor to take his time for performing his obligation. But when the creditor puts the debtor in default this is a clear indication that he considers himself to be suffering prejudice by the delay. The effects of putting the debtor in default are: — (1) Damages become due. The Egyptian codes state clearly that they are not recoverable as long as the debtor is not in default. (C. C. E. 120/178.) The amount of the damages will need to be ascertained or liquidated by the court unless it has been stated by the parties that in case of inexecution a certain fixed amount is to be'paid. In this case the judge cannot modify the amount 216 THE LAW OF OBLIGATIONS. of the damages so stipulated. (C. C. E. 123/181; C. C. F. 1152; C. C. Q. 1076.) But when the damages have not been fixed in this way by the parties, and have to be liquidated by the court, they must be calculated not from the time of the breach of contract, but from the date of the mise en demeure. The creditor is presumed to have waived his right to claim damages suffered before the mise en demeure, and, as M. Barde expresses it, au point de vue legal, le prejudice anterieur a la mise en demeure n'existe pas. (B.-L. et Barde, Oblig. 1, n. 468;, Aubry et Rau, 5th ed. 4, p. 150; Cass. 11 janv. 1892, D. 92. 1. 257; C. A. Alex. 9 mai 1906, B. L. J. XVIII, 237.) Mr. Halton is of opinion that the Egyptian law differs from the French law upon this point. He says of the view that pre- judice anterior to the formal demand in the eyes of the law has no existence: ".It seems to be untenable in Egypt on account of the word employed ' recoverable,' which seems to imply that the right to damages was already in existence." (1, p. 270.) But with all respect, it does not appear that any such stress can fairly be laid upon this word which is used in the English version of C. C. N. 120. No word equivalent to "recoverable" occurs in the Arabic version. The French version simply says les dommages-interet* ne sont dus taut que le debiteur nrtmt pas en dem.eure, and the view that} damages anterior to the mise en demeure can be recovered is inconsistent with general principles. When the object of an obligation is the payment of a sum of money the damages consist of the legal interest unless there is a stipulation to the contrary or some special provision of law. And the damages or interest for the breach of a money obliga- tion are not due even from a mise en demeure. There must be a commencement of legal proceedings — demande en justice. (C. C. E. 124/182.) This question will be considered in speaking of the measure of damages. ' <;2) The second effect of putting in default is that a change takes place in regard to the risk. When the debtor is in default he is in fault, and, if owing to his default, a thing in his care is lost or damaged the liability will fall upon him. Qui in mora est culpa nan meat. For instance, if a man has sold a horse, and is in default in not having delivered it, and the stable is burnt PUTTING IN DEFAULT — MISE EN DEMEUKE. 217 down and the horse killed, the loss will fall on the seller, though if the fire was not due to the negligence of the seller or his sell ants, the loss would in the French law have been on the buyer but for the default. But in such a case, the debtor will escape his liability although he is in default, if he can show that the loss was not due to his default. Thus, in the illustration given, the seller would be excused if his stable adjoined that of the buyer, and both stables had been burnt down in the lire by which the horse perished, so that even if the horse had been delivered at the proper time it would have perished just the same. (C. C. E. 178/241; C. C. F. 1302; C. C. Q. 1200; Pothier, Oblig. n. 664; Vente, n. 58; Hue, 8, n. 182.) Unless this defence is available the seller bears the loss, because he cannot say that the thing sold perished without his fault. (C. C. E. 178/241.) But upon this matter of risk in sale the Egyptian law is, probably, different. It is hard to reconcile the articles of the code on the subject, but the better opinion is that the risk is on the vendor, even though he is not in default. (C. C. E. 266/336; 297/371; Grandmoulin, Contrats, n. 58; De Hults, Rep. vo. Bisques, n. 13; and Vente, n. 118, and n. 133; Halton, 2, p. 27. Infra, 2, p. 481.) If this view is correct, the default does not, in the Egyptian law, change the risk in this case. It does, however, change it in the following case: — When the purchaser has been put in default to take delivery and, thereafter, the thing sold perishes without the fault of the seller the loss falls on the purchaser. The seller can claim the price. (C. C. E. 297/371; C. C. F. 1624; Pothier, Vente, n. 55; Laurent, 16, n. 249.) Mise en demeure in other codes. It is very doubtful whether the French law has done well to retain the rule that when a term of performance is fixed by the contract, and it has expired without the contract being fulfilled, there is still no breach unless the debtor has been put in default. It is significant that most modern codes have dispensed with the necessity for a mise en demeure when the contract has fixed a date of performance. According to the German Code, no mise en demeure is necessary when the time of performance is fixed for 218 THE LAW OF OBLIGATIONS. a certain day according- to the calendar, such as " on the fifth' May 1913 "; "at Christmas, 1913 "; "in November of this year," etc. (art. 284. See Cosack, LehrbucJi d&s Deutseheji burger- lichen Rechts, 6th ed. 1, p. 421.) The Swiss Federal Code of Obligations is to a similar effect (art. 102), and so is the Italian Civil Code (art. 1223). The Code of Quebec distinguishes between civil and commercial con- tracts. In civil contracts there must be a mise en demeure, though it does not need to be by an acte d'huissier, but in all contracts of a commercial nature in which the time of performance is fixed, the debtor is put in default by the mere lapse of such time. (C. C. Q. 1069.) And in commercial cases the courts hold that, though no time has been expressly fixed in the contract for the performance, the law implies that the contract shall be performed in a reasonable time, and if this time has elapsed without performance the debtor is in default. No mise en demeure required in English law. In the English law there is no rule requiring the plaintiff to make a formal demand upon the defendant to perform his contract. The right of action for damages arises directly from the breach of the contract. (See Anson, Contracts, 14th ed. p. 344.) REMEDIES FOR BREACH OF CONTRACT. 219 CHAPTER XII. REMEDIES FOR BREACH OF CONTRACT. The general rules on this subject are thus given in the Egyptian Native Code: — When the debtor refuse* to perform in its entirety whqi he is, bound to perform, the creditor has the choice either of demanding the rescission of the contract together with damages, or of de- manding damages for the unperformed part. Nevertheless, the creditor may, if the cwcumstcmces of the. case permit, obtain leave of the court to execute, at the expense of the debtor, that which such debtor was bound to perform, or to undo that ichitili has been done contrary to the agreement . When, the obligation is to transfer a specific corporeal thing the creditor may have himself put in possession thereof, provided such thing urns owned by the debtor at the time when the obliga- tion came into existence or since that time, and provided that no third person has acquired a real right over it (arts. 117. 118). The Mixed Code is to the same effect, but it contains, in addi- tion, a separate article: The rescission of a contract, whereby the ownership of immoveables is transferred, does not prejudice the rights of registered mortgage er editors. ( (C. C. M. 173 — 176.) With these articles of the Egyptian Code we must compare the corresponding articles of the French Code. These are the follow- ing:— La condition resolutoire est toujours sous-entehdue dans tes controls synallagmatiqaes, pour le cas oil Tune des deux parties ne satisfera point a son engagement. Dans oe cas, le control riest point resolu de plein droit. La partie envers laquelle V engagement na point ete execute, a le cihoix oude forcer Vautye a V execution de la convention lorsqu'elle est possible, ou d'eoi demander la resolution aver dommages et interets. La resolution doit etre demandee en justice, et il pent etre accorde au defendeur un delai selon les circonstanoes (art. 1184). 220 THE LAW OF OBLIGATIONS. Toute obligation de faire ou de ne pa* faire 8e resout en dom- mages et interets, en cm d'inexecution de la part du debiteur. Neanmoins U oreander a le droit de dcmander que ce qui await ete fait par contravention a I 'engagement, soit detruit ; et il pent se faire autoriser a le detruire aux depens du debiteur, sans prejudice des dommages et interets s'il y a lieu. Le creancier pent aussi, en cas aVinexecution, etre autorise a faire executer lui-meme Vobligation aux depens du debiteur (arts. 1142—1144. Cf. C. C. Q. 1065, 10(56). The rules on the subject are traditional and they are not ex- pressed in the codes by any means in a scientific manner. It is clear, however, from perusal of the articles that the right of a creditor, when there has been a breach of the contract, varies according to circumstances. There are a number of remedies, but they are not all available in each case. Every obligation renders the debtor liable to damages in case of a breach of it on his part. In some cases, but not in all, the creditor has, in addition, the right to demand specific performance, and, in some cases, the judgment of the court will place him in the same position as if the debtor had specifically performed the con- tract. When, before the time for the performance arrives, one party absolutely and definitely repudiates the contract, the other party is entitled either to wait till the time of performance arrives and then to bring his action, or he may at once treat the contract as broken and sue for rescission of it and for damages. So, for instance, in a contract of employment, if the employer has wrongf ully dismissed the servant, the servant may please him- self whether he will treat the contract as continuing and tender his services, and sue for the wages as they would become payable, or else, on the other hand, whether he will treat the contract as definitely broken and demand immediate payment of a lump sum for such damages as he can prove. (See Paris, 21 juin 1883, D. 85. 2. 46; Agen, 23 nov. 1903, D. 1907. 2. 48.) The various remedies are: — (1) Rescission; (2) Maintenance of contract partially executed, and damages for inexecuted part; (3) Substituted performance, or judgment having effect of per- formance ; (4) Specific performance; (5) Damages. These various remedies must be explained in more detail. REMEDIES FOR BREACH OF CONTRACT. 221 (1) The action for rescission or resolution of the contract. It is a general rule that where there are reciprocal obligations and one of the parties to the contract has performed or is willing to perform his part, whereas the other party has failed to perform his part, the first party may demand that the contract may be set aside, and this without prejudice to his claim for damages. (Planiol, 2. n. 1307.) The tacit resolutory condition. The traditional rule, ojLtlioJLarW -of- sale that if the price was not paid within the stipulated delay the seller could sue for the dis- solution of the sale was gradually extended in the French law to all synallagmatic contracts. (Planiol, 2, n. 1310; Cassin, De V exception tiree de Vmexecution, p. 162; Picard et Prudhomme, De la resolution judiciaire pour inexecution des obligations, Rev. Trim. 1912, p. 61.) It is commonly spoken of as the tacit resolutory condition. (C. C. F. 1184; B.-L. et Barde, 2, n. 901; Cassin, op. cit. p. 94. See Req. 5 dec. 1906, D. 1907. 1. 249.) The action for resolution of the contract is competent irre- spective of the reasons which may have prevented the other party from performance, and even though he was prevented by force majeure. (Lyon, 10 mars 1908, S. 1910. 2. 49, and note by M. Raynaud; Req. 19 oct. 1897, D. 97. 1. 576.) Nay more, the partial inexecution of the contract, though it was caused by force majeure, may justify the resolution of the contract at the instance of the other party. (Cass. 26 juill. 1909, S. 1910. 1.71.) Tho basis of the claim is the reciprocity of the obligations. The one party performed his part on the implied condition that the other party would make the counter-performance. Obviously, the plaintiff must begin by showing that he is not to blame, that he has done or is ready to do what he promised. He cannot be allowed to break the contract and then to complain of the breach. He is stopped or barred from (invoking his own non-execution of the contract as a ground for its rescission. (Cassin, op. cit. p. 739; Laurent, 17, n. 125; Cass. 26 juin 1912, D. 1914. 1. 307.) But the court has power to rescind the contract although there are faults on both sides. (Req. 22 dec. 1902, D. 1903. 1. 149. Cf. Req. 31 dec. 1900, D. 1901. 1. 135.) 222 THE LAW OF OBLIGATIONS. The Mixed Court of Appeal has expressed the rule thus: — Le droit en tout cas decretee que quand elle est destinee a obtenir du debiteur V execution d'une obligation clef aire. (C. A. Alex. 3 avrill913, B.L. J. XXV, 286.) Judgments imposing astreintes have become common form in actions demanding the rendering of accounts. Where an astreinte has been imposed, and the case has been carried to appeal, the Egyptian courts have held that the appeal suspends the astreinte, contrary to the jurisprudence of the Cour de Cassation which has been referred to above. (C. A. 22 janv. 1907, O. B. VIII, n. 77, p. 58; C. A. 16 janv. 1879, R. O. IV, 97.) Both the Native and the Mixed Courts have found no diffi- culty in considering astreintes as purely comminatory, leaving to the court the power to revise the judgment afterwards, and to modify the astreinte, and even to relieve the defendant altogether from the payment of it if he had a legitimate excuse for the inexe- cution. La condemnation a des dommages-interets a raison de tant par jour de retard dans I'executian nest definitive que s'il est possible an juge de determiner le dommage reel et exact qui resulterait du retard . horsquelle ria que le car act ere d'une tnesure coercitive destinee a assurer Vexecution de la decision, pareii'te condemnation estpure- ment comminatoire et pent etre modifiee ulterieurement. (C. A. 11 jum 1917, O. B. XVIII, n. 114, p. 69; also Mixed Court; C. A. Alex. 12 dec. 1895, B. L. J. VIII, 39; Native Court of Appeal, 12 janv. 1904, Review El-Mahakem, 16, p. 3481; C. A. 16 janv. 1879, R. O. IV, 97; C. A. 10 janv. 1901, R. O. XXVI, 130.) In the last case the principle is clearly stated que par la con- damnation precitee les premiers juges n'ont pas adjuge des dom- mages-interets deja acquis, ou tout an moins des dommages- REMEDIES FOR BREACH OF CONTRACT. 24-3 interets futurs, proportionnes a un prejudice a encourir, qu'ih n'ont fait qu'edicter une peine en rac de donner sanction a leur decision usant de la menace d'une condantnation comme d'un moyen de contrainte. But the Egyptian courts have sometimes failed to carry the principle to its logical conclusion by refusing to enforce the penaltjy even though the debtor remained recalcitrant, and holding that the plaintiff could recover only the actual damage suffered. Que les condemnations de cette sorte ne sont que purement com'mina- ioires, et quelles ne peuveuf sortir a effet que dans la memrr du prejudice reellement smffert. (C. A. 10 janv. 1901, R. O. XXVI, 130; Trib. Ap. Ind. Caire, 8 mai 1906, O. B. VII, n. 115, p. 79.) It is submitted that this view of the matter is erroneous. The court has power to modify the amount of the astreintes, but it has also power to overcome the resistance of the defendant by making him pay a larger sum than the loss which he has actually caused to the plaintiff. A threat which can never be enforced is a bra lam fulmen and not likely to be very efficacious. Enforcement of specific performance in other laws. In Belgium, the courts after some hesitation have accepted the system ,of astreintes as developed by the French jurisprudence. (Gand, 22 juin, 1907, Pasicrisie, 1909, 1, 309; Rev. Trim. 1911, p. 201; C. Cass, de Belgique, 23 juin 1887, D. 88. 2. 311. Contra, Cass, de Belgique, 19 janv. 1882, D. 82. 2. 81.) In England, specific performance is enforced in appropriate v cases by a judgment ordering specific performance or by an injunc- tion, disobedience in either case rendering the defendant liable to imprisonment. (See Halsbury, Laws of Eng. s. v. Injunction, Specific performance . ) In Germany, the matter is regulated by the new Code of Proce- dure. (Civil Prozessordnung, arts. 887,888.) If the act promised can be done by a third party the creditor has the right to a judg- ment authorising him to get it done at the debtor's expense. If it cannot be done by the third party the court may condemn the debtor to fines up to the amount of 1,500 marks, and even to imprisonment; and the creditor may recover damages in addition. 16 (2) 244 THE LAW OF OBLIGATIONS. CHAPTER XIII. DAMAGES FOR BREACH OE A PECUNIARY OBLIGATION. This matter is thus dealt with in the Egyptian Native Code: When the object of an obligation is the payment of a sum of money, interest is due thmeon, but only from the day on- which legal 'proceedings are commenced., unless in particular cases the agreement, commercial custom, or the law provides otherwise. Subject to any agreement $o the contrary, the rate of interest shall be five per cent, 'in civil causes, and seven per cent, in com- mercial causes. The interest fixed by agreement may never exceed nine per oent. Compound interest may never be charged or claimed upon less than one year's interest. Nevertheless, the rate of commercial interest upon current accounts may vary accordiaig to the rate on Exchange, and the interest shall be capitalized in such current accounts in accordance with commercial custom. (C. 'C. N. 124—127.) The Mixed Code is the same in effect . (C . C . M . 182— 187 .) These articles 'are based upon the French Code. (C. C. F. 1153.) They lay down three rules: — (1) The rule that interest is due from the commencement of legal proceedings. This creates an exception to the rule that damages are due from a mise en demeure. Instead of a mise en demeure, in this case, the Egyptian law requires a demande en justice. The French Code was to the same effect until it was amended by the hoi du 7 avril 1900. As the French Code now stands, interest runs from the date of a demand by the creditor — somma- tion de payer. The reason why the old law required a demande en justice in this case and not in others is not very clear. Demolombe said it was because the law desires in the interest of the debtor that the creditor should manifest categorically and energetically his determination to cause interest to run; categorically, that is IWf- DAMAGES FOR BREACH OF A PECUNIARY OBLIGATION. 245 in clear unequivocal language; energetically, that is to say by a document so threatening as to leave the debtor no illusions. (24, n. 625.) But, as Laurent says, why should the debtor be under any illusion, if the creditor, instead of bringing an action, makes a clear and definite extra-judicial demand? (16, n. 319.) Probably, as Hue says, the rule is a survival of the disfavour attaching to usury on account of the facility with which the accu- mulation of interest increases the debt. (7, n. 156; B.-L. et Baa-de, Oblig. 1, n. 511.) The retention of the rule that the demande en justice is neces- sary is explicable in Egypt upon religious grounds. The taking of interest is contrary to the religious belief of Mohammedans, and it is, therefore, not unreasonable that if money has been lent without interest, and the lender wishes to claim interest when payment is not made at the time agreed upon, he should be obliged to declare this determination in a very formal manner. The dies a quo from which the interest is to be calculated is that of the service of a writ of summons. (Cass. 8 juillet 1907, D. 1908Trf452 ; Cass. 21 juill. 1909, D. 1910. 1. 25.) The court is without power to grant damages by way of interest on a money-debt from any earlier period than that of the demande en justice unless there is an agreement to the contrary or the case is one in which interest runs de plein droit. These cases' are referred to later. (See Cass. 21 dec. 1909, D. 1911. 1. 316.) ( w 2) The damages are to consist always of the interest on the money due. They are moratory damages and not compensatory damages ; it is simply the delay in payment which creates the liability. (3) The creditor does not need to prove that he has suffered prejudice. The French Code says expressly ces dommages et interets srnit dus sums quch cremcier soit- term de justifier d-cmcuma perte. (C. C. F. 1153.) The Egyptian Code says simply les interets sont dus. (C. C. E. 124.) But this is sufficient, because the code does not say that any prejudice must have been suffered before the interest can run. The reason for this difference between money-debts and others is doubtless that a person who counts upon getting his money at a certain date may reasonably be presumed to suffer prejudice if it is not duly paid. Under modern conditions, it is taken for granted that the creditor would not have allowed his money to remain idle. On the other hand, it would be difficult for the creditor to prove what use he would have made of the money if fcJW A*" . W4 JU Wv WW 246 THE LAW OF OBLIGATIONS. it had been paid when it was due. It is to cut short all inquiries of this kind that the law says the damages shall be assumed to be the interest at the legal rate unless there is an agreement to the contrary. (See Cass. 10 juill. 1895, D. 96. 1. 119.) When damages are sought merely for delay in the payment of a money-debt it is not competent to award the creditor damages over and above the lawful interest on the ground that being deprived of his money has caused him special damage, except only in the case of bad faith. (Cass. 30 juin 1898, 2e. espece, D. 1900. 2. 300.) And, on the other hand, the court has no power to refuse the creditor the legal interest from the demand, what- ever may have been the original character of the debt, if its execution consists in the payment of a sum of money. (Cass. 10 juill. 1894, D. 96. 1. 119.) Special damage in case of bad faith. According to a settled jurisprudence in France, if the creditor could show that in consequence of the bad faith of the debtor in not paying his debts he had suffered a prejudice over and above that resulting from delay, he was entitled to recover separate damages upon this head. They were not damages for delay in payment but for the fault of the debtor. And it was agreed by the French writers that this jurisprudence was consistent with art. 1153. (B.-L. et Barde, Oblig. 1, n. 507; Aubry et Rau, 5th ed. 4, p. 177, and note 50, ter ; Planiol, 2, n. 270; 1 Req. 15 mars 1881, D. 81. 1. 368, note 2; Cass. 3 mai 1897, S. 97. 1. 319; Cass. 23 nov. 1903, D. 1906. 1. 64.) By the amendment made by the Loi du 7 avril 1900 to art. 1153 of the French Code a clause was added stating the law in the sense of the jurisprudence. Le crea.ncier auquel son debiteitr en retard a came par sa mauvaise foi, un prejudice independent de ce retard, pent obtenir des dommages-interets distincts des interets momtoircs de la creance. (See Cass. 14 fevr. 1911, D. 1911. 1. 216.) This addition to the code merely declared the existing law in France, and the Egyptian law is the same. German and Swiss laws as to this. The German Code goes somewhat further. But this may be partly because the legal rate of interest is only four per cent. The creditor is allowed to claim damages in excess of the interest DAMAGES FOR BREACH OF A PECUNIARY OBLIGATION. 217 on the money if he can show that ho has suffered prejudice by the delay, and he does not need to prove fault or bad faith on the part of the debtor (art. 288). It would be sufficient, for instance, if he showed that by the delay he had lost the opportunity of a good investment at six per cent., in which case the debtor would be bound to pay the difference between four and six per cent, during the delay. (Cosack, Lehrbuch des Deutschen burgerlichen Rechts, 6th ed. 1, p. 423.) The Swiss Federal Code of Obligations also makes the debtor liable to pay supplementary damages if any have been caused, unless he proves that the delay was without his fault (art. 106). Exceptions to rule that only legal interest is due. The French Code says the rule that damages for delay in payment of an obligation of this kind consist only of the legal interest is sanf les regies particulieres cm commerce et cm cauticmnement . (C. C. F. 1153.) The Egyptian Code is silent upon this point but elsewhere two exceptions to the rule are stated. The recognised exceptions in the French law are: (1) The right of the surety who has paid the debt to recover from the principal debtor not only the amount which he has paid and the interest from the date of payment, but also any damages which he may have sustained. (C. C. F. 2028. Cf. C. C. E. 505/617.) It is somewhat surprising that the Egyptian Code should abandon the traditional principle of the French law that a surety who has rendered a service in this way is entitled to complete reimbursement as having acted in the character of a mandatary. (Planiol, 2, n. 2356; B.-L. et Barde, 1, n. 501; D. X. C. C. art. 1153, n. 21.) But in a matter of this kind, the courts are bound to give a strict interpretation to the code. If there were any doubt as to what the code meant it would be interpreted in favour of the debtor. We must, therefore, conclude that in the Egyptian law the surety can claim only what he has paid and the interest upon this amount. (Grandmoulin, SiireUs Personnelles, p. 16; Halton, 1, p. 275.) (2) A partner who fails to pay his contribution to the assets of the firm— his apport — is liable to pay damages as well as interest for the delay. (C. C. F. 1816; C. C. E. 426/518.) <248 THE LAW OF OBLIGATIONS. (3) When a bill of exchange is not paid at maturity the holder may by means of a cross-bill— retraite— recover from the drawer or one of the indorsers not only the principal amount of the bill and the legal interest but also the cost of the re-exchange. C. Cm,,,. F. 177 -186; C. Com. E. 180/187.) Compound interest. The compounding or capitalization of interest— anatoclsme— has always been regarded by the law with great suspicion. The agreement by the debtor that instead of paying the interest on his debt the interest shall be added to the capital is dangerous to society for two reasons: — (a) It is extremely tempting to an impecunious man because he ^ets his money in this way for the time being without having to pay anything for it. (b) It leads to an increase in the principal debt much greater than the debtor is likely to have anticipated. Money lent at five per cent, doubles in about fourteen years. But this fact is as a rule much more clearly present to the mind of the money-lender than it is to that of the borrower. For these reasons, the com- pounding of interest was absolutely forbidden in the later Roman law. 'C. 4. 32. 28.) The prohibition was maintained in the old French law as a part of the policy of preventing usury. (B.-L. et Barde, 1, n. 525; Aubry et Ran, 5th ed. 4, p. 180.) It is forbidden also by the German Code (art. 289), and by the Swiss Code of Obligations (art. 314). It is, however, allowed by the French and Egyptian codes subject to certain conditions. (C. C. F. 1154; C. C. E. 126, 127 186, 187.) 1 By the Egyptian codes the capitalization or adding of the interest to the principal is to be made only at the end of each year, except in the case of current accounts. (2) In regard to current accounts— comptes couremts — the capitalization may be made according to commercial custom. The nature and the legal effect of current accounts are matters which belong to the com- mercial law. (See Thaller, Tralte Elementair e de Droit Com- mercial, nos. 1656 seq.) A common example of such an account is that between the banker and the customer. In that case the capitalization of the interest generally takes place at the end of the year, and interest is due upon every sum advanced from its date, and so, likewise, upon every sum received DAMAGES FOR BREACH OF A PECUNIARY OBLIGATION. 249 to credit. But current accounts are also kept between traders, and it has been held in Egypt that according to the usage of commerce the capitalization was at the end of every three months. (C. A. Alex. 14 mars 1906, B. L. J. XVIII, 147. See Comptes Gourants in Table Decennale, 1898 — 1908.} English law as to interest on money-debts. The old rule of the law was that interest cannot be claimed unless there is evidence of an agreement to pay interest. But there are important statutory exceptions. A jury may allow interest by way of damages when the debt was a fixed sum pay- able by virtue of a written instrument, or if not so payable, when payment had been demanded in writing with notice that interest would be claimed from the date of the demand. And interest may be claimed in an action on a dishonoured bill of exchange. (3 & 4 Will. IV. c. 42, ss. 28, 29; Bills of Exchange Act, 1882, s. 57; Anson on Contracts, 14th ed. p. 366. In the English law the compounding of interest is not prohibited, but the Money- lenders Acts, 1900 and 1911, enable the court to grant relief against harsh and unconscionable contracts of loan. (See Anson, Contracts, 14th ed. p. 220.) 4/ *V*1 Ur kk* /Wr ' ^ 250 THE LAW OF OBLIGATIONS. CHAPTER XIV. DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT NOT BEING A CONTRACT TO PAY A SUM OF MONEY This subject is dealt with in the Egyptian Code in articles which axe substantially identical with the articles in the French Code. (C. C. E. 121—123/179—181; C. C. F. 1149—1153.) After stating that damages are not due unless the non-per- formance or delay is due to the fault of the debtor, and that they are not recoverable so long as .the debtor is not in default, the code proceeds to lay down the rules as to the measure of damages. It is customary to divide damages into two kinds: (1) compen- satory, and (2) moratory. By compensatory damages is meant the value in money of the interest that the creditor had in the execution of the obligation. It is this sum which he is to receive now that the obligation cannot be performed. He gets the money value of the performance instead of the performance itself. By moratory damages is meant the damages which the creditor suffers by delay in the (execution. (B.-L. et Barde, Oblig. 1, n. 470: Aubry et Rau, 5th ed. 4, p. 157, note 19; D. N. C. C. art. 1147, n. 1.) The main importance of this distinction is that when the object of an obligation is the payment of a sum of money the only damages are moratory damages. There is no question of ascer- taining the value of the execution itself for it is always the pay- ment of the sum of money stipulated. And, in consequence of the difficulty of estimating in each particular case the loss caused to the creditor by delay, the law fixes, as we have just explained, a! universal rule for these damages, viz., the legal rate of interest during the delay, and no other damages can be awarded. It is, accordingly, convenient to deal separately as we have done with the case where damages are sought for the breach of an obligation to pay a sum of money. When the obligation is not one of this kind the code says that, apart from the case of agreement to the DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT. 251 contrary, the damages consist in the amount of the loss sus- tained by the creditor and of the profit which la- has failed I" make, provided that the prejudice suffered is the direct and immediate consequence of the non-performance. Nevertheless, in the absence of fraud cm the part of I he debtor } the damages recoverable "re only for that which could reasonably have been foreseen at the time m the contract was mud'. (C. C. E. 121, 122 179, 180. From these articles we see that the general rule is that the creditor can claim damages under two heads: (1) loss suffered — damnum emergens ; and (2) loss of profit — lucrum, cessans. • The French term dommages-interets is often said to allude to these two elements. This is, perhaps, not historically correct, but at any rate the term serves to remind us of the two elements. (Laurent, 16, n. 283; Planiol, 2, n. 247.) But the rule that the creditor can claim for the actual loss and the loss of profit is subject to three clarifications: — (1) Unless there was fraud on the part of the debtor, the creditor can recover only the damages which could reasonably have been foreseen at the date of the contract. (2) In any case, even when there was fraud, the damages comprise only those which are the direct and immediate consequence of the non-perform- ance; and (3) if the parties have fixed beforehand by a penal clause in the contract what the amount of the damages shall be taken to be, this agreement is final. It is for the creditor who claims damages under both these heads to prove his actual lo.-s and also the failure of expected profit. But as the second element is more or less problematical, the court has to estimate it from the evidence before it. If a, public singer breaks his contract with an impresario, the impresario can claim for expenses of the hall hired for the performance, the advertising, and so forth, that is for money actually out of pocket, and also for the loss of the profits which he would have derived from the concert. What these profits would have been it is impossible to determine with mathematical pre- cision, but that is no reason why the court should not do its best to. fix such a sum as will make good the loss. In a commercial sale, at any rate for articles for which there is a regular market, the seller who breaks his contract must make good to the purchaser not only the value of the goods but the profit which he might have made by -a resale. (B.-L. et Barde, 1, n. 475; Pand. Franc, vo. Oblig. n. 2092.) If the vendor fails to deliver and the purchaser has to buy the . 252 THE LAW OF OBLIGATIONS. goods elsewhere at a higher price, the vendor is liable to pay the difference. (Req. 27 fevr. 1894, D. 94. 1. 216.) It may be that the price has gone down instead of up, in which case the purchaser who can buy the goods for less than he promised will have suffered no damages. (See C. A. Alex. 31 janv. 1901, B. L. J. XIII, 134; C. A. Alex. 8 avril 1908, B. L. J. XX, 165; C. A. Alex. 2 fevr. 1916, B. L. J. XXVIII, 135.) The appreciation of the actual loss suffered or the loss of profit and the amount of damages to be awarded must be left to the discretion of the court. (Req. 28 oct. 1903, D. 1904. 1. 14.) If the loss sustained is a moral loss only can the creditor claim damages? This is a very controversial question. Where damages are claimed for delict or quasi-delict they are constantly given in cases where only moral prejudice has been sustained. (C. A. Alex. 28 nov. 1917, B. L. J. XXX, 66.) For instance, the person who has suffered from a libel can claim damages without proof of pecuniary loss. C. A. Alex. 12 juin 1902, B. L. J. XIV, 351.) The father of a child killed by the fault of another person may not have sustained any pecuniary loss by the death of his child, but he can claim for the moral j)rejudice. (C. A. Alex. 17 mai 1905, B L. J. XVII, 280; C. A. Alex. 12 juin 1918, B. L. J. XXX, 469; C. A. 47 mars 1910, O. B. XI, n. Ill, p. 80. Cf. Alger, 22 juin 1900, S. 1902. 2. 128. Does a different rule apply in contracts? The French doctrine is divided. Some writers deny that moral damages can be awarded in any case whether of delict or of contract. (Baudry-Lacantinerie et Barde, Oblig. 1, n. 480; 4, n, 2871.) The principal arguments urged by the writers who support this view are that the code contemplates only the reparation of material loss which can be estimated in money. The use of the words pertes el gains — " loss and -profit " — shows that it was the loss of money only which the legislator had in mind. (C. C. F. 1149; »'. C. E. 12L179.) To make a defendant pay for a loss which w r as not pecuniary, would be in effect to inflict a penalty upon him, and this Cannot be done without an express text. These writers maintain that the French jurisprudence is in this sense. The question seldom presents itself squarely for decision, because in. most cases in which i DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT. 253 moral prejudice has been caused by breach of contract there is pecuniary loss also. For example, if a banker wrongfully refuses to honour a cheque of a customer who has funds at his credit, the loss of reputation caused by the dishonouring' of the cheque nm\ affect the business of the drawer as well as cause him humiliation. (Rouen, 27 mai 1844, D. Rep. Oblig. n. 777.) And, in many cases, as we have seen, the courts compensate th plaintiff for moral prejudice in an indirect manner by imposing an astreinte upon the defendant. But there are, undoubtedly, cases in which the French courte have held that moral prejudice alone is not a ground for damages in cases of breach of contract. In one case where it was the duty of the defendant to deliver to the plaintiff certain family portraits of no intrinsic value, and there was a breach of this obligation, the court refused to award! damages, giving as a reason, that the defendant's breach of contract had not caused to the plaintiff any damage which was appreciable in money. (Paris, 27 mars 1873, sous Req. 17 fevr. 1874, S. 74. 1. 477, D. 74. 1. 360, Journal du Palais, 74, p. 1218.) And the opinion which prevails in the French doctrine is to distinguish between breach of contract and delict or quasi-delict. In the case of delict or quasi-delict, damages may be recovered for moral prejudice, but in the case of breach of contract, the only damages recoverable are for pecuniary loss. (Laurent, 16, n. 281; Hue, 7, n. 147; Aubry et Rau, 5th ed. 4, p. 170, note 39, ter; D. N. C. C. art. 1149, n. 29.) But, although the French jurisprudence is conflicting, the tendency is not to make the distinction for which these writers contend. The most common case in France, in which damages for moral prejudice are awarded, is that of the unjustifiable breach of a promise of marriage. But, seeing that the promise to marry is not enforceable, the French law considers the ground of action here as delictual and not contractual. (Sourclat, Responsabilite, 1, n. 446, bis ; Aubry et Rau, 5th ed. 7, p. 41, note 26; Mantelet, A., La Reparation du Prejudice Moral, These, Paris, p. 165; Cass. 12 nov. 1901, S. 1902. 1. 237; Grenoble, 24 mars 1908, D. 1910. 2. 134, and the note. Cf. the English Law, infra, p. 255.) But there are not a few cases in which damages have been awarded for moral prejudice caused by breach of contract which cannot be explained by saying that the fault is delictual. Thus, in the famous case against the painter Whistler for refus- ing to deliver a portrait which he had contracted to paint, the 254 THE LAW OF OBLIGATIONS. defendant, although he was not compelled to deliver the picture, was ordered to return the price paid and to pay in addition a thousand francs by way of damages. (Paris, 2 dec. 1897, D. 1898. 2. 465. Cf. Paris, 4 juillet 1865, D. 65. 2. 201, S. 65., 2. -233: Journal du Palais, 65, p. 937.) And in cases of wrongous dismissal of an employee, it is quite common to award damages for the moral prejudice as well ls for the pecuniary loss caused by the dismissal. (Req. 22 mars 1904, D. 1904. 1. 449, and note by M. Planiol.) So, likewise, it has been held that if a theatre-manager entrusts a role to an actor, this implies a promise not to withdraw it if the actor plays The part well. Where a. manager withdrew a part capriciously be was held liable in damages for the moral prejudice. (Paris, 1 10 janv. 1863, Pand. Franc, vo. Acteurs, nos. 387, 388.) The sound view appears to be that both in cases of breach of contract and in cases of delict, moral prejudice is an element which the court is entitled to take into account in estimating the damages. It is perfectly settled that in cases of delict or quasi- delict damages may be recovered for moral prejudice, and there is no logical reason for refusing to apply the same rule in cases of breach of contract. The language of the code does not render such an interpretation impossible. There is no difference of nature between that kind of fault which is a breach of contract and the kind of fault which consists in the breach of a legal duty. As M. Planiol says: La nature de V obligation violee reste sans influence sur la laute. (2, n. 877. Cf. Saleilles, Theorie -Generale de V Obligation, 3rd ed. n. 308; C. A. Alex 13 dec 1916, B. L. J. XXIX, 107.) The objection often made, that if this theory is adopted the court will have no sure basis for an estimation of the damages, is by no means conclusive. It applies just as much in cases of delict as in cases of contract, and in the former class of cases the courts have not hesitated to appreciate moral damage. Why may they not do the same in cases of breach of contract? Such an estimate may be rough, but it must be left to the good sense of the courts. In such a case as the one referred to above, where the duty was to restore a family portrait, it is inadmissible to hold that if the obligation arises from a contract, the debtor is entitled to say, " I will throw the picture into the fire and pay you 25 piastres, which is the market value of the picture." If the defendant had destroyed the picture wrongfully, in a case where he was uncon- nected by contract with the other party, he would have had to DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT. 255 pay for the moral prejudice, and there is no valid reason for not coming to the same conclusion when the liability is contractual. (In this sense, Chausse, M., De Vlnteret d" Affection, Rev. Crit. 1890, 430; Planiol, 2, n. 252; Mantelet, A., La Reparation du Prejudice Moral, These, Paris, 1907, p. 103.) English law. Damages for breach of contract cannot by English law include any compensation for loss which is not pecuniary. {Addis v. Gramophone Co., 1909, A. C. 488, 78 L. J. K. B. 1122. But actions for breach of promise form an exception to this rule. Such an action, it has been said, is one which is based on the hypothesis of a broken contract, yet it is attended with some of the special consequences of a personal wrong, and in which damages may be given of a vindictive and uncertain kind, not merely to repay the plaintiff for temporal loss, but to punish the defendant in an exemplary manner. (Pollock, Torts, 10th ed. p. 583. See Finlay v. Chirney, 1888, 20 Q. B. D. 494, 57 L. J. Q. B. 247.) Direct and immediate consequence. In no case are the damages to exceed compensation for such prejudice as is the direct and immediate consequence of the non- performance. (C. C. E. 121/179; C. C. F. 1151.) The article of the French Code upon which this rule is based is undoubtedly founded upon a passage in Pothier, and all the French authorities accept Pothier's discussion of the subject of damages as the best commentary on the French Code. Pothier explains that the line has to be drawn somewhere, and that the debtor cannot be made to pay damages for losses not necessarily connected with his act and which may have other causes. And he gives as an illustration, the sale of a cow infected with a contagious disease and known to be so by the seller. If the purchaser puts the cow with his other cattle and they contract the disease and die, this is a direct consequence of the fraudulent concealment by the seller. But if the purchaser, having no stock left on his farm, neglects to cultivate his land and becomes unable to pay his debts, and his property is seized and sold at a low price by his creditors, and in consequence of his misfortunes he commits suicide, all these things are not the direct and immediate conse- quences. (Oblig. n. 167. Cf . B.-L. et Barde, 1, n. 488; Colmet de Santerre, 5, n. 67 bis.) If a lessor fails to fulfil the pro- 256 THK LAW OF OBLIGATIONS. visions of the lease and the lessee has to remove, the cost of removal is a direct consequence. But if the lessee removes to a house in which there has been smallpox and his child dies of it, this is not a direct consequence of the lessor's fault. If a reaping-machine is damaged in course of carriage, the farmer who had bought it can claim damages from the carrier for being deprived of its use during the time taken in repairing it or in getting another, provided he uses due diligence. But he cannot claim in addition damages for the loss of revenue which he might have derived from the hire of his machine to neighbouring farmers, for this loss is too indirect and problematical. (Cass. 3 mars 1897, D. 98. 1. 118.' If a part of a machine is sent to be repaired and is lost in carriage, its owner cannot wait for months and then claim for the loss he has suffered in having been deprived of the machine during the whole season. He ought to have got a new piece of the machine when he found the one sent to be mended had been lost. (Thwuvilk v. Canadian Express Co., 1908, R. J.Q.33S.C.403.) It is by no means easy in all cases to distinguish between those consequences which are direct and those which are indirect, but it is a matter for the appreciation of the court in the particular case. • One or two illustrations of what the courts regard as damages which could have been foreseen will be given later. A recent writer criticises the law, and maintains that the courts find it impossible to fix a satisfactory criterion for distinguishing between direct and indirect damages. (Pierre Marteau, La Notion de la Causalite, These, Aix, 1914.) Distinction based on absence of fraud. In the absence of fraud the debtor does not necessarily have to pay even for all the loss which is the direct consequence of his act. He needs to pay only for that which could reasonably have been foreseen at the time the contract was made. By " fraud " in this connection the code does not mean the practising of any artifices such as those which vitiate consent; it means merely bad faith. The debtor who wilfully breaks his contract is guilty of fraud in this sense, for he dishonestly cheats the expectation of the creditor. (B.-L. et Barde, Oblig. 1, m 483.) Where the debtor has behaved in this way there is no reason why he should not be made to pay for all the loss directly caused by his voluntary act. wXju^* DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT. 257 Damages for that which could have been foreseen. But when the debtor has behaved honestly his liability is more limited; he must pay damages only for that "which could reasonably have been foreseen." (C. C. E. 122/180.) The Egyptian Code is upon this point clearer than the French. It adds the word "reasonably." And it does not say that the damages must have been capable of being foreseen. The French Code says the debtor is liable only for the damages which were foreseen or which might have been foreseen at the time of the contract. (C. C. F. 1150.) There is a controversy as to the exact meaning of these words. If the damages are due to a cause which might have been foreseen, but they are greater than was to have been expected, then according to one view in, France, the debtor would be liable only for such damages as* might have been expected to result from that cause. Damages of a kind not to be expected though they arise from this cause* are not covered. To hold otherwise, as the editors of the work of MM. Aubry et Rau say, would be to amend the Frendh article and to read it as if it ran: Le debiteitr nest teniu que des dommages-interets dont la cause a ete prevue ou qui a pu Vetre. The other view is that if the cause of the damage was foreseen, or might have been foreseen, loss produced by that cause must be paid for, although this loss could not have been anticipated. For example, if in consequence of the lessor's breach of his contract, the lessee has to remove and to take another house, the lessor would have to pay for the cost of removal, for this is a loss which might have been anticipated. But, if during the occupation of the lessee, there has been an unexpected rise of rents in the locality so that the lessee cannot get a similar house except at a much higher rent, the lessor, according to the first view, would not have to pay for this damage which could not have been anti- cipated. (C. C. F. 1150; Aubry et Rau, 5th ed. 4, p. 171. note 41 . Contra, B.-L . et Bairde, Oblig. 1, n. 486 . Cf . C . C . F. 1633; C. C. E. 307/381. See Pau, 11 aout 1903, D. .1904. 2. 302.) But under the Egyptian Code there will be no difficulty; in making the lessor liable because the damages are to be for that which could reasonably have been foreseen. (C. C. E. 122/180.) And the cause of the damage, namely, the necessity of taking another house, was clearly something which might have been anticipated. Where there has been no fraud, in the sense explained above. 17 W. — VOL. II. 258 THE LAW OF OBLIGATIONS. on the part of the debtor, the question whether damages could or 1 could not have been reasonably foreseen is of course one of fact. But the law desires to excuse a debtor from, having- to pay damages which he could not have contemplated when he made the contract. He is, it is true, in fault or he would not have to pay damages at all. But he has not intended to cause injury to the creditor, and, therefore, the law treats him with a certain indul- gence. He is more favourably regarded than the man who has caused damage by an unlawful act, who has committed a delict or a quasi-delict, as distinguished from a breach of contract. The author of an unlawful act is liable to pay all the damages directly caused by his act whether he could have foreseen these damages or not. He must repair the damage. (C. C. E. 151/212.) This distinction between the measure of damages for breach of contract without "fraud" as opposed to that for wrongful acts is not, perhaps, very logical. It is commonly defended by saying that in the case of a contract each of the parties is presumed to con- template the possible breach of the contract. He has the power to insist on stipulations framed with a view to prevent or diminish the loss which he may suffer by the breach of contract. If he insists on no special stipulation he may be presumed to have trusted to the good faith of the other party. Each of the parties in making his calculations takes into account the possibility of his own breach of the contract, and estimates the amount of damages which he may have to pay for this breach. On the other hand, in the case of wrongs the injured party has not entered into any- voluntary relation with the other, and there is no reason why he should not recover all the damages he has suffered, whether they could reasonably have been anticipated or not. (See Sourdat, Responsabilite, 1, n. 691.) Illustrations of the rule as to damages which might have been foreseen. A, who is bound subject to a penalty to deliver certain goods to B, orders the goodis from C, without informing him of the terms of his contract with B. C breaks his contract. A cannot recover from him the penalty which he has to pay to B. (See Req. 27 fevr. 1894, D. 94. 1. 395.) In consequence of delay on the part of a railway-company, the sender of goods given to them for carriage is unable to fulfil his contract with the consignee, and the contract is resiliated. In DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT. 259 default of proof that the railway-company could have foreseen this result of their delay they are not liable for the loss caused to the sender by the resiliation of the contract. T'ass. 21 now 1910, D. 1911. 1. 208.) A passenger who is intending to ride a horse in a race arrives at his destination too late to do so. He cannot recover from the railway-company the damages which he has suffered by not taking part in the race, at least unless the railway-company knew the object of his journey, and foresaw or might have foreseen the special risk which they were incurring. (Cass. 29 janv. 1908, D. 1910, 1. 280. Cf. Cas. 22 nov. 19U4, L>. 1907. 1. 415; Cons. d'Etat, 20 avril, 1877, D. 77. 3. 73.) A railway-company can foresee that passengers will carry with them in their luggage articles of more or less considerable value. But they are not expected to foresee that a passenger will carry in this way things of quite exceptional value, having regard to the position of the passenger, the object of the voyage and the price of the ticket. They cannot expect that a trunk registered as passenger's luggage contains merchandise worth 16,000 francs. (Cass. 20 dec. 1913, D. 1916. 1. 117.) We may compare a leading English case. Owing to delay in the delivery of a piece of machinery which was in course of transit a mill was kept idle. It was held the carrier was not liable for the damages so caused,. (Hadley v. Baxendale, 1854, 9 Ex. 341, 96 E. B. 742. Cf. Bostock & Co., Ltd. v. Nicholson & Sons, Ltd., 1904, 1 K. B. '725, 73 L. J. K. B. 523; Hammond v. Bussey, 1887, 20 Q. B. D. 79, 57 L. J. Q. B. 58; Anson, Contracts, 14th ed. p. 367; Mayne on Damages, 8th ed. p. 12.) Distinction in other laws. The German Code altogether rejects this distinction and makes the person who is found liable in damages, whether it be for breach of contract or for a wrong, bound to make good the whole loss. He must " restore things to the position in which they would have been if the event which made him liable had not happened*'' (art. 249. See Hindenburg, Eevue Critique, 1901, XXX*, p. 26; Cosack, Lehrbuch des Deutsdhem hiirgerlichen Rechts, 6th ed. 1, p. 373.) And in the English law ,the damages for breach of contract are limited to compensation for such loss as a reasonable man 17 (2) 260 THE LAW OF OBLIGATIONS. might have expected to result from the breach. (Hadley v. Baxen- dale, ut supra.) But in the English law the liability of a defen- dant, even in the case of tort, is similarly restricted. He is not responsible for all the damage which he has caused, but only for (1) damage which he intended, or (2) damage which is the natural or probable consequence of the wrongful act. All other damage is too remote. (See Salmond, Torts, 4th ed. p. 126; Pollock, Torts, 10th ed. p. 30; Halsbury, Laics of England, vo. Damages, p. 313; Mayne on Damages, 8th ed. pp. 54 seq.) This rule of the English law as to the measure of damages for torts is practically identical with the French rule under discussion, for if a loss is the "natural and probable result" it is a loss. "which could reasonably have been foreseen." Clause of penalty. The rules when the amount of the damage is determined by the contract will be explained under Obligations with a Penal Clause. STIPULATIONS OF EXONERATION FROM LIABILITY. 261 CHAPTER XV. STIPULATIONS OF EXONERATION FROM LIABILITY. A contract may contain a clause that, iiiJjia_eveni_i}fJ.ts-jaot- being duly performed by the debtor, he shall not be liable in damages, and that, even though tin- breach of contract shall bo caused by his fault, or by the fault of persons for whom he is normally responsible. Stipulations of this kind arc commonly spoken of in the French law as clauses $ exoneration or clauses de non-responsabilite. To what extent are such stipulations valid if they are clearly expressed? Few questions in the French law have given rise to more dispute, and even now the law can hardly be regarded as settled. (See Boutaud, E., Des Clauses de Non- responsabilite ; Sourdat, Responsabilite, 5th ed. 1, nos. 662, septies; Colin et Capitant, 2, p. 12; Becque, E., in Rev. Trim. 1914, p. 311; Rev. Trim. 1915, p. 176; Thaller, Traite Elemen- tairc de Droit Commercial, 4th ed. p. 604; Josserand, Les Transports, nos. 622 seq. ; Cass. 31 dec. 1900, S. 1901. 1. 401, and note by M. E. Perreau; Req. 9 dec. 1902, D. 1903. 1. Ill; Dissertation by M. Sarrut in note to Cass. 9 mars 1886, D. 90. 1.209.) Restrictive interpretation. Upon general principles of interpretation such clauses must be interpreted restrictively. (Cass. 19 fevr. 1900, D. 1900. 1. 433.) Debtor cannot stipulate against his own dol or faute lourde. It is contrary to elementary notions of good faith to allow a man who binds himself by a contract to stipulate at the same time that if he breaks the contract intentionally he shall not be liable in damages. As the Roman law said: Si convener it, ne dolus prcestatur : hoc enim bonce fidei judicio conlrarium est. (Dig. 50. 17. 23.) And there is a degree of negligence so gross that the law assimilates it to a wilful intention to break the contract. 262 THE LAW OF OBLIGATIONS. If the debtor in the contract shows such negligence as to indicate- complete indifference to the interests of the other party, it would be against public policy to let him escape his liability by pleading that he had stipulated for immunity. Culpa lata dolo equiperatur. (See Dig. 16. 3. 32; Girard, Manuel, 5th ed. p. 654.) These rules taken from the Roman law have always formed a part of the French law. (Sourdat, RespotisabiUte. I.e.; B.-L. et Barde, Oblig. 1, n. 360, and 4, n. 2869; Cass. 15 mars 1876, S. 76. 1. 337, Journal du Palais, 76, p. 833, and note by Labbe; .Req. 27 nov. 1911, D. 1913. 1. Ill: Rev. Trim. 1915, p. 176; Planiol, 2, n. 882.) The Egyptian jurisprudence is in the same sense. (C. A. Alex. 21 dec. 1894, B. L. J. VII, 11; C. A. Alex. 16 nov. 1898, B. L. J. XI, 14; Trib. Mixte, Caire, 11 mai 1907, B. L. J. XX, 131; Trib. Mixte, Alex. 15 juin 1912, Gaz. Trib. 4, n. 273.) Even the donor or the lender in the contract of loan for use is., always liable for his dol or faute lourde, although his obligation is gratuitous. (Baudry-Lacant. et Barde, Oblig. 1, n. 360.) The Cow de Cassation stated the rule in these terms: Aitendu qu.il n'est pas permis, au moyen d'un contrat d'assurance ou de tout autre pacte, de stipuler d'avance Vimmunite de ses fautes lourde s : que Vordre public s' oppose a la validite d'un tel pacte. (Cass. 15 mars 1876, S. 76. 1. 337, D. 76. 1. 449.) Indeed, there would be little virtue in contracts if the parties were allowed to stipulate that they might play fast and loose with them. The reason for the prohibition in this case is in fact the same which underlies the provision of C. C. F. 1174: Toute obligation est nulle lorsqu'elle a etc oontraetee sous une condition potestative, de la part de celui qui s' oblige. (Boutaud, Clauses de non- responsabilite, p. 224.) There are a few French writers who reject the assimilation between dol and faute lourde, and maintain that a stipulation of exoneration for faute lourde is valid, though one of immunity from dol is void. (Boutaud, Des Clauses de non-responsabilitL p. 225; - Sainctelette, Responsabilite et Garcmtie, 17. See Josserarid, Les Transports, n. 624, p. 516.) But this opinion is contrary to the- traditional view, and to the weight of modern French authority. f,UJL hah* ft, >Wl WA wH STIPULATIONS OF EXONERATION FROM LIABILITY. 263 Stipulations of exoneration for fault of prepose. Does the same principle apply when the stipulation is that the debtor shall not be responsible for the fault of his prepose ? The view which prevails in France is in favour of the affirmative. (Sourdat, Responsabilite, 2, n. 796; note by M. Sarrut to Cass. 18 juill. 1900, D. 1903. 1. 17.) If it is against public policy to refuse to allow a man to stipulate that he may break his contract at will or that he may show a negligence so gross as to be equiva- lent to the intention to break the contract, why should he be allowed to do these things by the instrumentality of others? The French jurisprudence is in this sense. In a' recent case the Chambre des Requetes stated the rule thus: Attendu qu'il n'sst pas plus permis de s'exonerer par avanoe par convention des fautes de ses preposes que de ses propres fautes ; que, s'il pent en etre autrement, cest seulement lorsque le prepose echappe en fait, dans Vexeroice de ses fonctions, a Vautorite du preposant et de sa direction. (Req. 27 nov. 1911, D. 1913. 1. 111. Cf. Cass. 31 dec. 1900, S. 1901. 1. 404, D. 1903. 1. 17: Rev. Trim. 1914, p. 315; Rev. Trim. 1915, p. 176.) The principle has been followed in Egyptian jurisprudence. (C. A. Alex. 16 nov. 1898, B. L. J. XI, 14.) The reservation made by the Chambre des Requetes of cases in which the prepose is not in fact subject to the control of the preposant is illustrated by two well recognised exceptions to the rule: — (1 ) It is admitted that a commissionnaire de transport, or " for- warding agent " as he is called in the Egyptian Commercial Code, may, by a clause in the way-bill, exonerate himself for liability for loss caused by the acts of the carrier or intermediate agent to whom he consigns the goods. (C. Comm. F. 98; C. Comm. E. 92/97; Paris, 19 mars 1907, D. 1909. 2. 350; Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 3, n. 624; Jos- serand, Les Transports, n. 736.) (2) In the law of carriage of goods by sea the French juris- prudence appears to be settled that the ship-owner may, by a clause in the bill of lading, exonerate himself from his liability to the shippers of goods for loss caused by. the captain and crew of the ship. (O. Com. F. 216; Cass. 25 oct. 1899, S. 99. 1. 496; Lyon-Caen et Renault, Manuel de Droit Commercial 11th ed. n. 881, Traite de Droit Comm., 4th ed. 5, n. 744; Boutaud, 264 THE LAW OF OBLIGATIONS. Des Clauses de mm-responsabilite, pp. 267,429; Rev. Trim. 1914, p. 314. But in spite of the reasons above given against allowing a com- mettant to stipulate immunity for the faute lourde of his prepose, supported as they arc by the French jurisprudence, it must be admitted that a clause of non-liability for the fault of one's agents stands in a different position from aclause of non-liability for one's own fault. It is contended by some French writers that there is no public policy against a man stipulating that he will not be responsible even for the faute lourde of his prepose. (Boutaud, op. elt. p. 220: Sarrut, in note to Cass. 9 mars 1886, D. 90. 1. 212; Becque, Rev. Trim. 1914, p. 318. See Josserand, Les Transports, n. 624, p. 516.) It will be mentioned presently that this is the tendency in legislation. In assimilating as it does the faute lourde of the prepose with the faute lourde of the preposant himself, the French law goes further than is reasonable. There are cases no doubt in which the faute lourde of the servant or agent involves at the same time the faute lourde of the master or principal. There may have been gross negligence in the choice of a subordinate, or an entire absence of reasonable supervision. But there are other cases in which the faute lourde on the part of the subordinate is consistent. with merely slight fault or no fault at all on the part of the aster or principal. He may have taken every reasonable care in the choice of his subordinate, and he may have exercised every reasonable supervision over his conduct. In cases of this kind, if the other party has been willing to contract that the preposant shall not be liable, upon what reason of public policy must such a stipulation be invalid, at any rate unless the contract is one which involves the public health or safety? It may be reasonable to say that the preposant shall be necessarily liable for the dol of his prepose in order to prevent the possibility of connivance between the'two. But the reasons for extending the same principle to the faute lourde of the prepose are far from conclusive. (See Sarrut, in note to Cass. 9 mars 1886, D. 90. 1. 209; Boutaud, Des Clauses de non-responsabiUte, pp. 226 seq. ; Becque, E., in Rev. Trim. 1914, pp. 316 seq.) Stipulation of immunity for one's own ordinary negligence or the ordinary negligence of one's prepose. According to the prevailing view in the French doctrine and jurisprudence, such stipulations are valid if the debtor's duty to STIPULATIONS OF EXONERATION FROM LIABILITY. 265 exercise care is derived solely from the' contract. The famous distinction is made between faute contractuelh and jaute delic- tuelle. The debtor may validly exonerate himself from his lia- bility created by contract except as regards dol and faute lourde, but he cannot exonerate himself beforehand for a delict or a quasi- delict, for his responsibility in these cases is a matter of public order. (Baudry-Laeant. et Barde, Oblig. 4, n. '28(5!); Sourdat, Responsabilite, 5th ed. 1, n. 662 septies. See Josserand, Les Transports, n. 866; C. A. Alex. 30 dec. 1908, B.L.J. XXr, 93.) Before deciding whether the clause is valid or invalid, we must examine the contract to see if it is one which involves any ques- tion of public order. In some contrasts it is completely indiffe- rent to the state whether the contract is performed or not; the matter is one which interests the parties only. They were free to contract or not to contract as they chose, and they may annex such conditions as they like to the contract which they make. Thus, for example, if a workman undertakes to repair a fragile vase he may make it a condition of the contract that if he breaks it, even negligently, he is not to be responsible. Dig- 9. 2. 27. 29. Or a mandatary or depositary may stipulate that he will not be responsible for any risks to the thing entrusted to him. (Pothier, Mandat, n. 50; Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 3, n. 626 bis; Dall. Supp. vo. Responsa- bilitc, n. 253.) In such cases there was no antecedent duty on the part of the workman, the mandatary, or the depositary. If he chose to undertake the duty he could impose any lawful conditions, and if he fails to keep his contract his failure is a breach of contract, and nothing more. But there are other contracts which stand in a different posi- tion, lor example, an owner of property owes a duty to the public that it shall not be dangerous to them. And if the lessee of the property suffers personal injuries resulting from the giving- way of a portion of the structure leased, the fault of the owner, according to the better opinion, is not contractual, but delictual. (See Dall. Hep. vo. Louage, n. 191; 32 Rev. Prat. pp. 558 seq. ; Laurent, 16, n. 230; Vineberg v. Foster, 1903, R. J. Q. 24 S. C. 258.) An employer has a duty to take care of his workmen, and if one of them is injured by the negligence of the master or of a fellow-w T orkman, the fault of the master is a faute delictudle and not. a, faute contractuelh '. This, at any rate, is the view of the French jurisprudence and of the greater part of the doctrine, though there are important dissentients. (Rcq. 15 juill. 1896, 266 THE LAW OF OBLIGATIONS. D. 98. 1. 141; D. N. C. C. IV, p. 9-34, n. 52. See Boutau,d,,. Des Clauses de non-re$pomabiIiU\ p. 86; Sourdat, Responsabilite, 5th ed. 2, n. 913, quater, and n. 1487; C. A. Alex. 30 dec. 1908, B.L.J. XXI, 93.) A railway -company owes a duty to take care of persons who are, with its permission, in its vehicles or upon its premises wdietlier they have a contract with the' rail way -company or not. ('See Josserand, Les Transports, n. 849. Cf. Toulouse, 4 mai 1900, and Req. 18 mars 1912, S. 1913. 1. 430; Rev. Trim. 1914. p. 500.) These illustrations are sufficient to show that there are many cases in which there is a duty owing to a person by law and at the same time a duty owing to him under a contract. It does not, however, follow that the person to whom the duty was owed may not by his contract have released the other party from both duties if it was competent for him to do so. But, as already stated, the general view in France is that it is not competent for him to release the other from the duty imposed by law apart from any contract. Concurrence of faute contractuelle and faute delictuelle in other systems of law. The principle that an act may be at the same time a breach of contract and a wrong, so that a choice of remedies is presented to the person injured, was admitted by the Roman law and is admitted under the English law. The conditions of the two remedies may be different as regards the period of prescription, the amount of damages which can be recovered, the transmissibility of the right of action to heirs and successors, and so forth, and it is, therefore, an advantage for the victim that he has two strings to his bow. The breach of the duty created by the contract and the breach of the general duty which lies upon every one not to injure another by his fault are clearly two different things . It is not correct to say that when there is a contract between two persons one of them is allowed to do to the other anything which is not forbidden by the contract. In the Roman law there were various reasons which give some importance to this doctrine, but these do not need to be considered here. (See Dig. 44. 7. 34. 2; Dig. 9. 2. 27. 29; Grueber, E., Roman Late of Damage to Property, pp. 24, 100, 210, 230; Vangerow, Pandelien, 7th ed. 3, s. 681, p. 590; Wind- scheid, Pandekten, 8th ed. 2, s. 455, note 12.) In the English law also it is a well-settled rule that the same STIPULATIONS OF EXONERATION FROM LIABILITY. 267 facts may give to A both a remedy in contract and a remedy in. tort against B. " If a common law duty results from the facts the party may be sued in tort for any negligence or misfeasance in the execution of the contract." (Chitty, Pleadings, I, 135; Pollock, Torts, 10th ed. p. 560; Gooiey, Torts, 3rd ed. 1, p. 155.) If the injury would have been a tort if there had been no contract, the contract does not take away the right to sua in tort. The simplest case is that in which a man has bound himself to perform some duty which lies upon him antecedently apart from the contract. A doctor or a dentist who by negligence injures a patient is in this position; his negligence is both a breach of a contract and a tort. {Edwards v. Mallcm, 1908, 1 K. B. 1002, 77 L. J. K. B. 608.) But there are more difficult cases which do not need to be considered here. (See Salmond, Torts, 4th ed. p. 3.) Thus, in a railway case, a mother was travelling with a young child just above the age at which children were entitled to travel free. The mother took a ticket for herself *only . The child was injured by the negligence of the company's servants, and an action of damages was brought by the child. It was held that the com- pany was liable either on an entire contract to carry the mother and the child, or independently of contract, because the child was accepted as a passenger, and this cast a duty on the company to carry him safely. (Austin v. Great Western Railway Co., 1867, L.R.2Q.B. 442, 36 L. J. Q. B. 201.) But, apart from certain special cases which do not need to be mentioned here, the English law sees no difficulty in a man renouncing beforehand by contract his right to claim damages for a tort. (See infra, p. 282.) Is it a universal rule of the French law that a man by contract cannot relieve himself from liability for a quasi-delict? Many writers say* broadly, that all clauses of exoneration from liability for quasi-delicts are null as being against public policy. (Baudry-Lacant. et Barde, Oblig. 4, n. 2869; Sourdat, Responsa- bilite, 1, n. 662, septies ; Dall. Supp. vo. Responsabilite,n. 253; Rand. Frang. vo. Respanmbilite, nos. 2021 seq.) The most recent jurisprudence of the Cour de Cassation appears at first sight, at any rate, to be in this sense. (Cass. 31 dec. 1900, D. 1903. 1. 17, S. 1901. 1. 401; Req. 27 nov. 1911, D. 1913. 1. 111.) But these cases must be taken with reference to their particular facts and will be noticed later. L\ ivf-AMM U fill „ t... 268 THE LAW OF OBLIGATIONS. It does not seem that any considerations of public policy render necessary the acceptance of so broad a principle. On the con- trary, the carrying on of affairs would be difficult if parties were not allowed to relieve themselves from such liability. What public policy is there to prevent a man undertaking to do certain work on condition that he shall not be responsible for damage caused by the negligence of his workmen? Apart from contract, his liability for their negligence would be quasi-delictual, but thai term does not involve any personal fault of his. It may be that there was a want of care on his part, but this is not necessarily the case. The question has been discussed in France mainly in regard to contracts with common carriers by land. Under the commercial codes the carrier is held to warranty against the loss and damage of the goods carried, unless the loss or damage pro- ceed front defects inherent in the thing, from vis major, or from the fault or negligence of the consignor. (C. Comm. E. 97/102; C. Comm. F. 103.) But if the carrier stipulates that he will take the goods on condition that he will not be responsible for loss, what is the effect of such a stipulation? The French law on this subject lias gone through three stages: — 1 From the passing of the codes down to 1874, the courts held that the clause was altogether null. It was contrary to public order because it encouraged negligence and placed the shipper of the goods entirely at the mercy of the carrier. (Thaller, Traite Elementmre de Droit Commercial, 4th ed. n. 1200; Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 3, n. 626; Lyon- Caen et Renault, Manuel de Droit Commercial, 11th ed. n. o24.j (2) After 1874 the courts came to take a different view of the matter. They held that the clause of exoneration was not null but it produced only a restricted effect, namely, that of altering the onus of proof. Apart from stipulation, if the carrier could not produce the goods safely at the end of the transit, it-was for 1 him to prove that they had been lost or damaged without his fault. If, however, the carrier stipulated immunity from his liability, the effect of this was that if he failed to deliver the goods safely to the consignee no damages were due unless it was proved that the loss or damage was caused by the fault of the carrier or his servants. The jurisprudence became absolutely settled in this sense by a long series of decisions. (Cass. 7 juin 1904, D. '06. 1. 17-3; Req. 9 nov. 1898, S. 99. 1. 398. See the cases collected in Aubry et Rau, 5th ed. 5, p. 624, note 10; STIPULATIONS OF EXONERATION FROM LIABILITY. 269 and Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 3, n. 626.) This interpretation of the clause of exoneration was vehemently criticised by the doctrine, and it was indeed entirely arbitrary. It might be logical, though unreasonable, to say thai such stipulations were null, but it was neither logical nor reason- able to pronounce them valid up to a certain point but to give them a meaning which the parties never contemplated. More- over, no great protection was afforded to the public by such an arbitrary method of interpretation. If the owner of the goods lost or damaged has to prove any specific fault on the part of the carrier or his servants, it is seldom that he will be able to do so. As a rule all that he knows is that the goods do not arrive at their destination or arrive in a damaged condition. (3) The third phase of the law was brought about by the hi de 17 mars 1905, called the loi Rubier, which has added to C. Comm. F. 103 an alinea in these terms: — Toute clause contraire inseree dans toute lettre de voiture, tarif, ou autre piece quelconque, est nulle. This law applies to all carriers except carriers by sea, but it does not extend to the carriage of persons, though her.' the reasons of public policy apply a fortiori. (Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 3, n. 715, and 5, n. 743; Caen, 7 juin 1907, Toulouse, 8 avril, 1908, S. 1908. 2. 125 and 144, D. 1909. 2. 124. Cf . Besangon, 27 janv. 1911, D. 1913. 2. 114; Req. 10 dec. 1907, D. 1913. 1. 45; infra, p. 272.) And the law applies only to the loss of the goods or damage caused to them and not to loss caused by delay in their delivery. (Lyon-Caen et Renault, I.e.; Thaller, Traite Elementaire de Droit Commercial, 4th ed. n. 1203 . ) Moreover, the loi Eabier leaves the railway-com- pany or other carrier free to make stipulations limiting the amount of damages to be paid in the event of loss, though the courts might annul such a clause if the damages were so small as to destroy the responsibility of the carrier. (Lyon-Caen et Renault, I.e. The soundness of this conclusion is doubted by M. Thaller, who con- siders that on a correct interpretation of the law it annuls not only clauses of non-responsibility but also clauses limiting the respon- sibility tc a maximum sum (n. 1205). Since the passing of the hi Babjer the railway-company in France can escape its liability for loss of or damage to goods carried, only by proving: (1) That the loss was caused by a defect inherent in the thing, vice propre; or • 270 THE LAW OF OBLIGATIONS. (2; bj force majeure; or (3) by the fault of the consignor. (Thaller, I.e.; Josserand, Les Transports, n. 609; and see the full note by M. Bourcart sous Trib. de Paix de Saint- Vivien, 15 mai 1907, S. 1908. 2. 145.) M;my French writers are of the opinion, in which I agree, that the lm Habier is unreasonably strict and that it would be more in the interest of public order to leave greater freedom to the- parties. Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 3, n. 626 bis; Josserand, Les Transports, n. 636.) Egyptian cases in contract of Carriage. In Egypt the rules of the French jurispruderlce as to the effect of clauses of exoneration have been closely followed. It is agreed that such clause* cannot liberate the carrier from his liability for dolor faute lourde. (C. A. Alex. 31 janv. 1917, Gaz. Trib. 7. p. 73; Trib. Comm. Alex. 8 mai 1911, Gaz. Trib. 1, p. 133; Trib. Somm. Alex. 4 janv. 1919, Gaz. Trib. 9, p. 48.) But clauses exonerating the carrier from his liability for the negligence of his employees, or limiting his liability to a fixed amount in the event of loss, are not regarded as against public policy. Following the French jurisprudence as it was before the passing of the loi Rabier, .the Egyptian courts hold that such 1 clauses have the effect of inverting the onus of proof. In the principal case the law was thus stated: Une pareille clause n'a pas pour effet d'exonerer le voiturier des soins qxCil est term d'apporter, suivant le droit commun, a la garde et a la conserva- tion de la merchandise qui lui a ete confiee; elle tend uniquement a limiter sa responsabilite a une ualeur qui a ete expressement et tacitement fixee par les parties elles-memes, pour le cas ou elles se tmuveraient dans Vimpossibilite de remplir les devoirs d-e preuve qui lew incombent respectivement, en ce qui regarde soit la faute de voiturier (dont it a necessairement a repondre, nonobstant toute convention contraire, des quelle est etablie en fait),smt la foroe majeure qui a pour effet de le decharger de toute responsabilite. (C. A. Alex. 18 janv. 1900, B. L. J. XII, 90. In another case where goods of a very fragile nature Mere sent by train and many of them were broken en route, it was proved that they had been unloaded by mistake at the station of Cairo and reloaded again to send to the station of Abul Ela to whicih they were addressed. The bill of lading contained a clause of non-warranty, and it was proved that the administration offered STIPULATIONS OF EXONERATION FROM LIABILITY. 271 the sender of the goods an option either to send them under this bill of lading with the clcwae de uon-garantie, or to have them sent with a man to look after them, or to insure them foil a small premium. It was held that seeing- that this option was offered to the consignor of the goods the clause of non-warranty could not be considered as unlawful, but that the Railway Administration was liable inasmuch as fault had been proved by the fact of their having unloaded the goods at the wrong station. (C. A. Alex. 16 mai 1900, B. L. J. XII, 251.) In another case part of the goods sent had disappeared en route. There was no reasonable explanation of this except that the goods had been stolen by the servants of the railway or owing to their grave negligence. In these circumstances it was held that the Railway Administration was liable for the full value of the goods stolen and could not rely upon the clause restricting its liability to a certain sum. (Trib. Somm. Alex. 4 janv. 1919, Gaz. Trib. 9, p. 48. Cf. C. A. Alex. 18 fevr. 1914, Gaz. Trib. 4, p 108, n. 273.) In the two cases last cited there was proof of faute lourde, and it was therefore not necessary to decide whether a clause of non-liability would be a complete defence if the fault alleged was ordinary negligence. But in the two cases decided by the Mixed Court of Appeal (B. L. J. XII, 90, and B. L. J. XII, 251) the question was as to ordinary negligence, and the French juris- prudence, according to which the onus of proof is shifted by the clause of exoneration, was followed in these cases. (See article by present writer in Gaz. Trib. 1919, 9, p. 139.) Special reasons of public policy in regard to contracts of carriage. .There are reasons which do not apply to contracts in general why contracts made with common carriers should be regarded with jealousy. (1) Negligence in the carriage of persons is likely to result in loss of life or personal injury, and under modern, conditions of society one can hardly say that persons are free to travel or not as they like. Frequently, also, the carrier to whom they trust the safety of their lives and limbs enjoys a monopoly. It is in the public interest that travelling should be as safe as possible, and any stipulations which tend to relax the diligence of railway companies and other carriers by land in the exercise of their duty to take care of life and limb are against public order. Since the lot Rabier in France it can hardly be doubted that this 272 'i'HE LAW OF OBLIGATIONS. is the French law, for, although that law doos not apply to the carriage of persons, the reason of public policy which underlies the law applies to that case a fgriiori. (2) If the carrier cannot relievo himself from his fault in regard to the carriage of goods, it would be strange indeed if he could do so in regard to the carriage of persons. (3) It is contrary to public policy that one. man should give to another the right to kill or injure him with impunity even though it be without dot or faute lourde. Almost all the French writers agree upon this point. (Sarrut, in note to Cass. 21 nov. 1911, D. 1913. 1. 250; Labbe, in note to Cass. ler juill. 1885, S. 1885. 1. 409; Josserand, L., Les Transports, n. 915; Becque, E., in Rev. Trim. 1914, p. 319.) According to the latest jurisprudence of the Cow d,e Cassation the liability of the carrier of passengers is contractual and not delictual, the contract being to carry the passenger safe and sound to his destination. If the contract is not duly performed the carrier is liable unless he prove that the accident was due to the fault of the victim or to force majeure. (Cass. 21 nov. 1911, S. 1912. 1. 73. Cf. Paris, 2 fevr. 1910, Pond. Frang. Periodi- ques, 1910. 2. 223; Rev. Trim. 1913, p. 432; Rev. Trim. 1915, p. 189.) The Mixed Court of Appeal in one case appears to have accepted this view. (C. A. Alex. 16 juin 1897, B. L. J. IX, 388.) This question belongs to the law of responsibility, and cannot be discussed here. But it may be mentioned here that the history of article 1784 of the French Code, as well as the terms of that article itself, make it very doubtful if the common carrier was intended to be an insurer of passengers. (See Ripert, G., in Rev. Critique, 1913, p. 198; Josserand, Las Transports, n. 879.) * And it is interesting to notice that in the English law the view that he is such an insurer has been definitely rejected. (Gallin v. L. & N. W. By., 1875, L. R. 10 Q, B. 212, 44 L. J. Q. B. 89; Redhead v. Midland By., 1869, L. R. 4 Q. B. 379, 38 L. J. Q. B. 169. See Beven, Negligence, 3rd ed. 2, p. 944; Halsbury, Laws of England, s.v. Carriers, 4, p. 44; Leake, Con- tracts, 6th ed. p. 502; Macnamara, Carriers by Land, 2nd ed. p. 577.) Whether the fault here is contractual or delictual, and whatever may be the correct view with regard to the onus of proof of fault. in cases of accidents to passengers the reasons against allowing STIPULATIONS OF EXONERATION FROM LIABILITY. 273 them to discharge their claims beforehand arc very strong. Nor does it seem that the carrier should be allowed to stipulate a restriction of his liability to a certain sum in the event of injury to the passenger. (Josserand, Les Transports, n. 915. Contra, Lyon-Caen et Renault, Trfiite de Droit Commercial, 4th ed. 3, n. 716.) Nor, as it seems to me, should it make any difference that the carriage is gratuitous. If the carrier has undertaken to carry the passenger at all he is bound to take care of him. (See Trib. Lyon, 13 janv. 1912, S. 1912. Bull, des Sommaires, 2me partie, 43; Lyon, 28 janv. 1913, S. 1913. Bull, des Sommaires, 2me partie, 27; Keq. 18 mars 1912, S. 1913. 1. 430; Rev. Trim. 1914, p. 500.) And when the owner of animals or goods sent by train is allowed to send his servants with them to take care of them during the transit these servants ought to enjoy the protection given to other passengers. Stipulations that they are to travel at their own risk are against public policy. (See, in this sense, in America the judgment of the Supreme Court of the United States, Rail- road Co.x. Rockwood, 1873, 17 Wall. U.S. 357; Beven, Negli- gence, 3rd ed. 2, p. 956.) Different rule in England as to gratuitous passengers. But in England it is held that if a passenger contracts to travel at his own risk the company is not liable if he is injured, even though this be the result of their gross negligence. {McCawley v. Furness Rail. Co., 1872, L. R. 8 Q. B. 57, 42 L. J. Q. B. 4; Gallin v. L. & N. W. Ry. Co., 1875, L. R. 10 Q. B. 212, 44 L. J. Q. B. 89. See Macnamara, Law of Carriers by Land, 2nd ed. p. 588; Halsbury, Laics of England, v. Carriers, p. 55.) But the carrier of passengers is not allowed to limit his liability for negligence by notice, unless he quotes an alternative rate under which the liability is not limited. (See Clarke v. W. Ham Cor- poration, 1909, 2 K. B. 858, 79 L. J. K. B. 56.) Public policy as to carriage of goods. In regard to contracts for the carriage of goods the reasons why supervision is necessary are quite different. Common carriers, and more particularly, railway-companies, generally enjoy a monopoly. They are in a position to impose unfair and un- reasonable conditions upon the sender of goods. The sender w. — VOL. II. 18 274 THE LAW OF OBLIGATIONS. cannot get his goods to the market except through the instrumen- tality of the railway-company, and the railway-company can say to him " we will carry your goods only upon our conditions, and if you do not choose to accept those, the goods can stay where they are." The sender is in fact in a position of economic in- feriority, and he cannot protect himself. It is in the public interest to secure the transport of commodities upon reasonable terms, and if the senders of goods are coerced by the railway-com- panies to agree to unreasonable terms, they will manage to shift the burden on to the shoulders of the consumers. It is for reasons of this kind that the law regards these contracts with a jealous eye. Even some systems of law, such as the English, which, as a general rule allow the utmost freedom to stipulations of non- liability for fault, apply a different principle to contracts with railway-companies. The question ought to be one of reasonableness. The correct view of the matter would seem to be that the ques- tion for the court to determine in the particular case is simply whether the clause of non-liability was reasonable in the circum- stances. It is against public order to allow a railway-company to take advantage of a position of economic superiority, and in this way to force the sender of goods to consent to terms to which he would not otherwise have agreed. But if the railway-company offers to the sender a free choice between sending the goods upon ordinary terms, subject to the liability of the railway-company for negligence, or of sending them at reduced rates at his own risk, so that he will have no claim against the railway-company except by proof of del or fmite lourde, and the sender with his eyes open freely accepts the latter alternative, there is no reason of public policy for holding such a stipulation to be void. (Josserand, Les Transports, n. 631; Lyon-Caen et Benault, Traite de Droit Commercial, 4tih ed. 3, n. 626 bis ; Boutaud, Des Clauses de Non-re^ponsabilite, p. 215 and p. 264 and 297; Becque, in Rev. Trim. 1914, p. 318. Cf. C. A. Alex. 16 nov. 1898, B. L. J. XI, 14.) English law. The English law, as will be explained later, arrives at this result by special legislation. 9 'MA/* -STIPULATIONS OF EXONERATION FROM LIABILITY. 275 Clauses of exoneration in maritime law. The validity of clauses in charter parties and bills of Lading excluding the liability of the shipowner for the faults of the captain and crew lias been the subject of much discussion in the French law. The jurisprudence may be now considered as settled in favour of the validity of such clauses. And this conclusion is approved of by the majority of the writers. (Cass. 5 dec. 1910, "S. 1911. 1. 129, and note by M.' Lyon-Caen; Cass. 11 fevr. 1908, D. 1908. 1. 214; Sarrut in note to Cass. 9 mars 1886, D. 90. 1. 209; Lyon-Caen et Benault, Traite de Droit Com- mercial, 4th ed. 5, n. 744.) The Cour de < 'assation states as the principal reason that the captain and crew of a vessel are, when the vessel is at sea, no longer under the control of the shipowner. (Cass. 14 mars 1877, D. 77. 1. 449.) The validity of the clause of exoneration here, as already stated, applies even to the dot and jaute lourde of the captain and crew, and the Egyptian courts have followed this rule. (Lyon-Caen et Renault, 5, n. 745 bis; C. A. Alex. 2 avr. 1896, B. L. J. .VIII, 198; C. A. Alex. 19 nov. 1902, B. L. J. XV, 7; C. A. Alex. 31 janv. 1917, B. L. J. XXIX, 188; C. A. Alex. 9 avril 1919, B. L. J. XXXI, 236.) The commercial community in France is not satisfied with this state of the law, and there has been a long struggle to make such stipulations unlawful. It has also been proposed to allow the shipowner to exonerate himself from his liability for the f antes nautiques of the captain, i.e., errors of navigation, but not from his liability for fautes commerciales committed by the captain, i.e., faults in loading, stowage, care of cargo and the like. This is the distinction made by the American law and will be referred to later. (Infra, p. 284.) A proposition de loi to that effect was introduced on 10 nov. 1910, by M. Maurice Colin. But ,so far the shipowners have succeeded in preventing an amendment of the law. (See Revue Critique, 1912, p. 124; Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 5, n. 747 bis.) But when the agents of a shipowner are in fact under his control, as, for example, when the ship is in port, and is in charge of the .shipowner or his agent, such clauses of exoneration become in- applicable. (Req. 3 mars 1897, D. 97. 1. 556; Cass. 3 fevr. 1904, D. 1905. 1. 315; Lyon-Caen et Renault, 4th ed. 5, n. 745 bis; C. A. Alex. 19 nov. 1902, B. L. J. XV, 7.) 276 THE LAW OF OBLIGATIONS. And the shipowner cannot stipulate immunity from his own personal fault, and more particularly, he cannot exonerate himself from liability for the unseaworthiness of the ship before its de- parture. (C. A. Alex. 31 janv. 1917, B. L. J. XXIX, 187;. Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 5, n. 747.) Nor are such clauses of exoneration from liability for dol or faute lourde valid in cases of contracts for the carriage of goods by river. The French law and the Egyptian law apply different rules for navigation by sea and by inland waterways. The Code of Maritime Commerce applies only to carriage by sea, and the same is true of Book II. of the French Code of Commerce. Both the French Code of Commerce and the Egyptian Code as- similate the carrier by river to the carrier by land. (See C. Com. F. 107; C. Com E. 101/106: Req. 28 feVr. 1900, D. 1900. 1. 286.) Subject to what has been said above, clauses of exoneration in maritime law are valid in the case of the carriage of persons as well as in the case of the carriage of goods. Laws of other countries. In many other countries the validity of clauses of this kind in charter parties and bills of lading is admitted. (See a list of them in Dall. Rep. Pratique, vo. Droit Maritime, n. 950. The English law is stated later.) Post-office and telegrams. The transmission of letters is managed by a department of the state in Egypt as in imost civilised countries, and, in Egypt, the state likewise conducts the business of sending inland telegrams which in many countries is carried on by private telegraph com- panies. Telegrams from Egypt to foreign countries are sent by private companies. Post-office letters. As regards the post-office the responsibility of the Egyptian state is greatly limited by the special laws upon the subject. (See Decret du 29 mars 1879 and reglement pour V execution du decret du 29 mars 1879, Lamba, Code Administratis 497; Gelat, Rep. 1888, vo. Posies; Trib. civ. Alex. 18 mai 1907, B. L. J. XIX, 255.) When personal fault can be brought home to an agent or servant of the postal administration he is liable for the damage caused by his fault, and cannot shelter himself behind the law which frJAfi.i* f^ STIPULATIONS OF EXONERATION FROM LIABILITY. 277 protects the state from liability. This depends in Egypt upon general principles. In France the distinction is made in the administrative law between fairies cle service and fairies person- nelles, and it is only for the latter that the agent or servant is liable. (See Req. 3 janv. 1876, S. 76. 1. 113, Journal du Palais, 76, p. 267; Trib. des Conflits, 8 juin 1907, S. 1909. 3. 134;- Req. 9 mai 1911, D. 1912. 1. 401; Geny, Lettres Missives, .1, p. 112; Hauriou, Droit Administmtif, 8th ed. p. 495.) Telegrams sent by private companies. The question if a private telegraph-company can validly exone- rate itself from liability does not seem to have arisen in Egypt. It would appear that the same reasons of public policy apply hero as in the case of the common carrier. The company is in a position of economic^ superiority which gives it the power to impose unreasonable conditions. If it offers to the sender of a telegram the choice between sending a repeated message for which the company accepts responsibility, or sending an ordinary message at a lower rate at the sender's own risk, this is reasonable enough. But if it exploits its monopoly by declin- ing to send any message which it undertakes to deliver accurately the court should consider such a condition as against public policy. It has been held in one case in Quebec that where there is evidence of negligence on the part of a telegraph-company or its employees in the transmission of a message, the company is not protected by a printed condition on the telegraph blank form that it will not be responsible for errors in the transmission of an unrepealed telegram. (Great N. W. Tel. Co. v. Laicrence, R. J. Q. 1 Q. B. 1.) In the United States the authorities are con- flicting. In many states such a condition is in the case of an unrepealed telegram valid. Mr. Cooley sums up the decisions thus: " It is customary for telegraph companies to send messages subject to a condition that they shall not be responsible for errors or delays, unless the message is repeated at the sender's cost. Such conditions have frequently been supported as reasonable < But the condition to be available must be brought to the know- ledge of the party interested in the message, sender or receiver, and in the absence of a provision requiring the message to be repeated, it would be void as an attempt by the company to relieve itself of the consequences of its own fault." (Torts, 3rd ed. 2, p. 1484.) It has been held in some cases that a stipulation was 278 THE LAW OF OBLIGATIONS. invalid by which the liability of the telegraph-company wag limited to a fixed sum. See Hunt v. Railroad, 112 U. S. 331, and cases in Bevi a, Negligetice, 3rd ed. p. 1121.) This seems unreasonable. It would appear just to apply the same rules as t<> carriers. If the telegraph-company offers a choice between a cheap message at the sender's risk or a dearer message at the company's risk, what is there in this which is against public policy? Telegrams sent by public service. The situation is different when the service is in the hands of the state itself. In this case there are special laws excluding or defining the liability of the government. It is no longer a question of stipulation. In France by the loi du 29 nov. 1850, VEtat nest soumis a aucune responmhiliU a raison du service de la correspondan privee par la voie telegraphique. (See Panel. Franc, vo. Posies, Telegraphes et Telephones, nos. 1317. 1637. 1640: Geny, Lettres Missives, 1, p. 118.) In Egypt there is a Reglement du Service Telegraphique in terms which will be given later. But it is not by any means too clear that this reglement was competently made. Egyptian law. In the Egyptian law, the question does not seem to have been raised. The State Telegraphs are attached to the Ministry of Public Works, and the Eailway Board is given power to make rules for the management and working of the State Railways and Telegraphs. Loi 25 of 190o, s. 5: Gelat, V. p. 97.) That section gives the board power, in particular, to make rules as to various matters. But these are all of an administratis- character, such as defining the powers of the chief officer of the Telegraph Department, prescribing the manner in which accounts shall be kept, and the like. Upon the principle ejusdem generis, it. might be argued that the board has no power under this section to make rules limiting the responsibility of the administration. There does not appear to be any other loi or decret giving such power. From the Annuaire Statistique of 1914, p. 223, it appears that the documents concerning the administration of telegraphs, previous to 1889, have disappeared from the archives. The Reglement d>< Si Wit • Telegraphique, printed in the Indiccir STIPULATIONS OF EXONERATION FROM LIABILITY. 279 teur des Chemins de Far Egyptiens ,1919;, contain- a clause headed Responmbilite which is in those terms:— L' Administration n'accepte les depeches que sous la condition expres.se qu'aucune responmbilite ne sera encourue par elle pour les re funis dans lew transmission ou lew distribution. Elle n'est non plus responsable de leur non-transmission ou non-distribution ni d'erreurs (Vune nature ou cause quelconque. If the reglement is not competently made, the question has to be considered whether such a condition is against public policy. The state not being protected by special law would be in the sami position as a private company. Upon this basis the clause is unfair and exorbitant. The Egyptian service does not offer the choice to the sender of a telegram either to send a repeated message for which the administration accepts responsibility for errors, or to send an ordinary message at the sender's risk. No such option being offered, and the administration having a monopoly, the clause of exoneration is against public order. Contracts by which a workman renounces beforehand his right to claim damages for personal injuries. It has been maintained above that it is against jmblic order for a railway-company to limit its liability for accidents to pas- sengers. Similar reasons ought to apply in principle to contracts between an employer and his workman. It is against public order to allow a man to deprive himself by contract of his legal right to safety of life and limb. Life, health and physical safety are not things in commercio. Moreover, in this case also, the employer is usually in a position of economic superiority. The workman who has to earn his bread is practically compelled to agree to unfair provisions. It is for these reasons among others that almost all European countries have now passed laws which not only for- bid stipulations of this kind, but also make the employer respon- sible for accidents caused to the workman in the course of the work without proof of fault on the part of the employed-. (See Sachet, Traite de la Legislation sur les Accidents du Travail : Cabouat, Jules, Traite des Accidents du Travail ; Baudry-Lacant. et Wahl, Louage, 3rd eel. 2, n. 1735 seq.; Colin et Capitant, 2. p. 392; Walton, Workmen's Compensation Act of the Province of Quebec; Boutaud, Clauses de Non-responsabilite, p^ 82 and p. 337 . Cf. Josserand, Les Transports, n. 915; Labbo, Rev. Crit. 1886, p. 448; Trib. de St. Etienne, 10 aoiit 1886, S. 87. 2. 48.) UuaXt 280 THE LAW OF OBLIGATIONS. In Egypt where there is no legislation like that of the European states, the jurisprudence is much less favourable to the workman. The jurisprudence both in the Native and the Mixed Courts is settled in the sens.- that the risque professionnel falls upon the workman. C. A. 2 dec. 1913, O. B. XV, n. 23; Trib. Civ. Alex. 7 juin 1913. Gaz. Trib. 3, n. 439; C. A. Alex. 1 mai 1901, B. L. J. XIII, 269; C. A. Alex. 18 avril 1906, B. L. J, XVIII, 203.) The workman cannot succeed without proof of fault on the part of the employer or of some person for whom the employer is Monsible. C. A. Alex. 17 mai 1916, B. L. J. XXVIII, 334.) But a renunciation by the workman beforehand of his right to claim damages is not valid even when the employer undertakes to give the workman rights under a pension scheme. (C. A. Alex. 30 dec. 1908, B. L. J. XXI, 93. Cf. Trib. de Saint- Etienne, 10 aout 1886, S. 87. 2, 48, and the note.) Other cases in which advantage has been taken of a position of superiority. It is possible that the principle followed with regard to con- tracts with carriers may be extended to other cases in which a ' y to the contract has exploited a position of economic superio- rity. According to MM. Colin et Capitant, La clause d'irre- s.ponsabilite est dans certains cas entierement prohibee. wit par la loi, soit par la jurisprudence. Cela a lieu, semble-t-il, lors- qu'il n a entre les cwvtraeUmts une inegalite qui rCa pax permis au creancier pedal nature. > \ In other cases freedom of contract should be allowed. If we eliminate the classes of contracts which have been dis- cussed, in all of which there is a risk of one party abusing a position of superiority, there is no reason of public policy for prohibiting clauses of non-responsibility. It is from this point of view immaterial whether the fault which caused the damage was contractual or delictual. And it would make no difference if .\.' adopted tin- doctrine of the r isque cree and treated the fault as purely objective. See Charmont, Les Transformations du STIPULATIONS OF EXONERATION FROM LIABILITY. 281 'Droit Civil, pp. 233 seq.; Colin et Capitant, 2, p. 356; Josserand, Les Transports, n. 883.) Nor should the concurrence of faute contractuelle and faute delictuelle, if it exists, affect the conclu- sion. For, unless the ease falls within one of the exceptiona l classes which have heen discussed above, there is no public policy to prevent the parties determining beforehand the indemnity which shall be paid in the event of breach of contract. If they have agreed to substitute a contractual liability for the delictual lia- bility which would exist if there had been no contract, why should their agreement not receive effect? If the contract is lawful in itself the parties may fix as they please the responsibility which will result from its inexecution. Volenti non fit injuria. The failure to perforin the contract does not affect public order, it affects merely the pecuniary interests of the creditor, and if he has chosen to take the risk of the inexecution why should the law be more anxious to protect him than he is to protect himself? As Al. Boutaud well says: La responsabilite delictuelle lors- qu'elle prut faire Vobjet cVun tontrat devient par cela rneme con- tractuelle; il est permis aux interesses a" en determiner librement Vet endue. (Des Clauses cle Non-responsabilite, p. 227; in same sense, Josserand, Les Transport*, n. 628; Saleilles, Theorie Generate de V Obligation, n. 16, and n. 332; Becque, in Rev. Trim. 1914, p. 318.) Tendency of recent French jurisprudence. It must be admitted that these conclusions are difficult to re- concile with the most recent jurisprudence in France. In several of the latest cases it is laid down in general terms that a party to a contract cannot exonerate himself beforehand from liability for his own fault or the fault of his subordinates, and no distinction is made between faute legere and faute lourde. But these cases must be taken with reference to their particular facts, and it is doubtful if the courts intend to lay down an absolute rule of so general a kind, and so much in conflict with the law as previously understood. The first of these cases was one in which a munici- pality, on the occasion of an industrial exhibition, had induced the exhibitors to sign contracts by which they released the muni- cipality from all liability in the event of damage to the exhibits from fire, accident, theft, etc. The Cow cle Mont pettier decided that the clause was a valid exoneration as regards f aides legere*, and that as regards fautes lourdes it threw the onus of proof upon the exhibitor. The Cow de Cassation appeared to draw no dis- ; 282 THE LAW OF OBLIGATIONS. tinction between these two classes of faults, and stated the ride in these terms: Attmcki qu'il n'est pas plus permis de s'exonerer (i'lirtii/cr par convention des fautes de ses preposes que de ses propres fautes; que s'il pent m etre autrement cest seidement lorsque le prepose echappe en fait, duns Vcrercice de ses fonctionSj a Vautorite da preposant et a sa direction. (Civ. 31 dee. 1900, D. 1903. 1. 17, S. 1901. 1. 401.;* And the Chambre des Re- quites adopted the same formula in a recent case. (See Rev. Trim. 1912, p. 179. The question there was as to the validity of a clause of exoneration imposed by an information bureau upon its clients. The Agence de Bens&ignements had in that case given information to a client as to the credit and position of a certain individual. This information was highly misleading, and there was gross negligence on the part of the agency in not dis- covering it to be so. The case was undoubtedly one of faute lourde, but the judgment was not rested upon that ground. (Req. 27 nov. 1911, D. 1913. 1. 111. See Rev. Trim. 1912, p. 179, and p. 981.) The exhibition case just mentioned may perhaps be explained by saying that the court regarded it as one in which one of the parties had abused a superior economic position. As MM. Colin et Capitant put it: La solution serait evidemment excessive si on ne Vexpliquait ici par ce fait que cetait, en realite, la ville qui avait fait la loi des contrats passes avee les exposants. {Cows Elementaire, 2, p. 13. See Rev. Trim. 1914, p. 316.) Clauses of non-responsibility in other laws. (1) English law. The broad principle of the English law is that a man cannot, claim damages for an injury to which he has consented— Volenti non fit injuria. Before the Workmen's Compensation Act, 1897, the principle was constantly applied in cases of industrial acci- dents. It was not doubted that the workman might accept the risk. {Smith v. Baker, 1891, A. C. 325, 60 L. J. Q. B. 683 . See Beven, Negligence, 3rd ed. 1, p. 646.) The chief limita- tions upon the rule in the English law are, (a) a man cannot by his consent justify an act which is in itself criminal or " un- warrantably dangerous." (See Pollock, Torts, 10th ed. p. 168, and p. 226.) (b) Workmen engaged in employments to which the Work- men's Compensation Act, 1906, applies cannot relinquish any STIPULATIONS OF EXONERATION FROM LIABILITY. 283 right of compensation from the employer for personal injury arising out of and in the course of the employment, excepl in exchange for a scheme of compensation certified as equally bene- ficial. ,6 Edw. 7, c. 58, s. 3.) (c) A common carrier may exonerate himself by special con- tract from liability for loss or damage to goods. (The Carriers Aet, 1830 (11 Geo. IV. & 1 Will. IV. c. 68;. See Beven, Negli- gence, 3rd eel. 2, p. 1072.) But in the case of railway and canal companies this freedom is restricted. The company can make such conditions only " as shall be adjudged by the court or judge, before whom any question relating thereto shall be heard, to be just and reasonable." (Railway and Canal Traffic Act, 1854 (17 & 18 Vict. c. 31). See Beven, op. tit. 2, p. 925; Macnamara, Can-ins by Land, 2nd ed. p. 152.) The contract must be in writing, and the onus of proof that it is just and reasonable is on the company. {Peek v. North Staffordshire Bij. Co., 1883, 10 H. L. C. 473, 32 L. J. Q.-B.-241.) In considering whether a contract is just and reasonable an important element is if the sender had an alternative option of sending the goods upon ordinary terms or at lower rates subject to special conditions. (31 an nhexter, Sheffield cmd Lincolnshire By. Co. v. Brown, 1883, 8 A pp. Cas. 703, 53 L. J. Q. B. 124; and see cases cited in Beven, Negligence, p. 929; Macnamara, Carriers by Land, 2nd ed. p. 156.) In regard to the carriage of passengers the English law is that a passenger who agrees to travel at his own risk is bound by this stipulation. (Hall v. N. E. By. Co., 1875, L. R. 10 Q. B. 437, 44 L. J. Q. B. 164. Cf. Grand Trunk By. v. Robinson, 1915, A. C. 740, 84 L. J. P. C. 194, for same rule in Canada.) But the Supreme Court of the United States has held such a stipulation void, and for the reasons stated earlier it seems to be against public policy. (See the cases in Beven, op. cit. 2, p. 956.) By the maritime law of England there is nothing to prevent the parties from agreeing that the shipowner shall not be liable even for his own personal fault. An express exception might, for example, relieve the shipowner from his legal duty to provide a seaworthy ship, and that though the unseaworthiness was due to his own negligence. (See Borthwick v. Elderslie Steamship Co., 1904, 1 K. B. 324, 74 L. J. K. B. 338; Beven on Negligence, 3rd ed. 2, p. 1028.) Such clauses are unusual. On the other hand. English bills of lading commonly relieve the shipowner from the responsibility for the negligence of the captain or crew, and, a 284 THE LAW OF OBLIGATIONS. fortiori, this clause is valid. {The Duero, 1869, L. E. 2A.&E. 393, 38 L. J.'Adm. 69; Westport Coal Co. v. McPhail, 1898, 2 Q. B. 130, 67 L. J. Q. B. $74; Carver, Carriage of Goods by Sea, 5th ed. s. 101.) American law is different. Upon this important matter the law of the United States has broken away from the English law. Under the law of the United States by the Federal Act of 1893, commonly known as " The Harter Act," the shipowner is exempted from liability for errors of navigation if he has used due diligence to have the ship sea- worthy and properly equipped. On the other hand, he is not allowed to relieve himself from liability for the negligence of the captain or crew in regard to the loading, stowage, care and delivery of the cargo. (See the Act with a short commentary in Carver, op. tit. n. 103a.) There is legislation on lines closely similar in Australia and Xew Zealand. (See the Acts in Carver, op. til. p. 998.) Limitations of liability must be reasonable, and such a clause - this is considered to be unreasonable. (2) German law. Under the German Code the rule is that the debtor can exonerate himself from any liability except for an intentional act art. 276). As regards his preposes, he can even stipulate that he will not be responsible for intentional acts on their part (art. 278. Cosack, Lehrbuch des Deutschen burgerlichen Rechtsjl, p. 346; Saleilles, Theorie Generate cle V Obligation, 3rd eeT p. 434). But this wide freedom is to some extent restricted by the article which gives power to the courts to annul contracts by which one part}- has obtained an exorbitant advantage by exploiting the needs, thoughtlessness, or want of experience of the other party. I'ntcr Ausbeutung der Soilage, des Leichtsinm oder der Un&r- fahrenheit tines andern, art. 138; Cosack, 1, p. 232: and see supra, p. 30-5.) In the German law the compulsory insurance of workmen against industrial accidents invalidates all stipulations of non- liabilitv. See Boutaud, Des Clauses de A 'on-responsabilite, p. 343.) * In regard to railways the German legislation is somewhat com- plicated. The company may limit its liability by certain stipu- STIPULATIONS OF EXONERATION FROM LIABILITY. 285 lations, but cannot exonerate itself altogether. (See for details, Thaller, Ann-ales de Droit Commercial, 1, p. 37. Cf. Boutaud. op. fit. p. 307.) (3) Swiss law. The Federal Code of Obligations contains two articles which deal carefully with clauses of exoneration, and by special laws railway companies, steamship companies, and manufacturers are not allowed to exonerate themselves even from the ordinary negli- gence — fante legere — of their employees. (See art. 3, Loi federate sur la responsabilite des Chemins de fer et bateaux a vapeur, du ler juillet, 1875; art. 4 du loi federate du 29 mars 1893, sur les transports par chemins de fer et bateaux a vapeur; art. ler, loi federate du 25 juin 1881, sur la responsabilite des fabrieants : Boutaud, Des Clauses de Non-responsabilite, p. 309 and p. 343.) The general articles upon the subject are as follows: — Est nulle toute stipulation tendant a liberer davanoe le debiteur de la responsabilite qu'il encourrait en cas de dot ou de faute grave. Le juge peut, en vertu de son pouvoir d appreciation, tenir pour nulle une clause qui libererait davance le debiteur de toute re- sponsabilite en cas de faute legere, si le creancier, au moment ou il a renonce a rechercher le debiteur, se trouvait a son service, ou si la responsabilite resulte de Vexercice dune Industrie concedee par Vautorite. Les regies partieulieres du contrat d 'assurance de- meurent reservees. (Code Fed. Obi. art. 100.) Under the in- dustries concedees fall raiiwaj^s and steamships, and certain pro- fessions such as those of notary, advocate, innkeeper. Celui qui, meme d'une maniere licite, confie a des auxiliaires, tels que des personnes vivant en metiage avec lui ou des employes, le soin dexecuter une obligation ou d'exercer un droit derivant dune obligation, est responsable envers V autre partie du dommage qu'ils causent dans V accomplissement de lew travail. JJne convention prealable pent exclure en tout ou en partie I ■ responsabilite derivant du fait des auxiliaires. Si le creancier est au service du debiteur, ou si la responsabilite resulte de Vexercice dune Industrie concedee par Vautorite, le debiteur ne peut s'exonerer wnventionnellement que de laresponsa- bilite deemdant dune faute legiere (art. 101. ' See Rossel et Mentha, Droit Civil Suisse. 3. p. 132 286 THE LAW OF OBLIGATIONS. CHAPTER XVI. NON-PERFORMANCE OF CONTRACT WITHOUT FAULT OF DEBTOR. (1) Exceptional cases. (a) Express stipulation of warranty. It may appear from the terms of the contract that the debtor guaranteed its performance, in the sense that he bound himself to pay the damages in the event of non-performance, whether this non-performance was due to his fault or not'. The validity of such a stipulation is recognised in many articles of the French Code. (C. C. F. 1302, al. 2, 1772, 1825; C. C. E. -393/480; Eeq. 31 oct. 1905, D. 1907. 1. 38; Aubry et Ran, 5th (1. 4, p. 169; B.-L. et Barde, Oblig. 1, n. 463; D. X. C. C. art. 1148, nos. 33 seq. ; C. A. Alex. 5 fevr. 1918, B. L. J. XXX, 209.) Such clauses, upon general principles, will be construed in favour of the debtor if their interpretation is doubtful. Conversely, by the contract the debtor may have exonerated himself from his liability for n on -performance even caused by, his fault, unless the case is one in which, upon the principles explained earlier, such a stipulation must be considered as against public policy. (b) Implied warranty. There are cases in which the courts will hold that without any xpress clause to that effect the debtor has undertaken to be re- sponsible for all risks. If, for example, a contract is made at a time 'when a war is on the point of breaking out, it may Veil appear that the parties took this risk into consideration, and that the debtor undertook to perform his contract whether the war broke out or not. Trib. Com. de la Seine, 10 oct. 1894, Journ. Droit International Prive, 1895, p. 108; Wahl, A., in Rev. Trim 1915 p. 384.) . i^Aru NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 287 Some French writers contend that apart from express stipula- tion the debtor can in no case be bound without fault. (B.-L. et Barde, Oblig. 1, n. 463.) But the code does not say so, and there is no reason why in this case, as in others, the court should not give effect to the true intention of the parties. (Planiol, 2, n. 233.) (c) Warranty of carrier and hotel-keeper against theft. Moreover, as will be explained later, the carrier and the hotel- keeper are subject to a special liability in regard to loss by theft of goods entrusted to them. (2) General rule that damages are due. Apart from these classes of cases the rules are — (1) That the. debtor is liable to pay damages for non-perform- ance due to his fault. (2) That the debtor is relieved from his liability to pay damages . if he prove that the non-performance was due to a cause for which he was not responsible. Supervening impossibility of performance. The defence here is that a supervening cause, not imputable to the debtor, which has occurred after the date of the contract has prevented its performance. The case where the performance was impossible ab initio has been explained under the head of the object of obligations. {Supra, I, p. 78.) The Egyptian Code states the rule thus: — 'Damages, as apart from restitution, are not recoverable for entire or partial non-performtmce or for delay in performance, unless such non-performance or delay is due to the fault of the debtor. (C. C. E. 119/177. Cf. C. C. E. 178/241. See C. A. Alex. 13 dec. 1916, B. L. J. XXIX, 107.) The French Code has two articles on the subject: — Le debiteur est condamne, s'il y a lieu, au payement de dorrt- ■mages et interets, soit draison de Vinexecution de V obligation, soil a raison du retard dans I 'execution, toutes les fois qu'il ne justifie pas que V inexecution provient d'une cause etrangere qui ne peut lui etre imputee, encore qu'il ny ait aucune mauvaise foi de sa part. ■■ (i j 288 THE LAW OF OBLIGATIONS. 11 n'y a lieu a aucuns dom mages et interets lorsque, par suite dVune force majeure ou d'un can fortuit, le debit air a ete empeche de donner ou de faire ce a quoi il etait oblige, ou a fait ce qui lui etait interdit (arts. 1147, 1148). The French Code contains no definition of either cas fortuit, or force -majeure, but it is clear, reading the two articles together, that the legislator meant to comprise under these terms collectively all the causes, known and unknown, which have prevented the performance of the obligation without fault on the part of the debtor. Fault and inevitable accident between them embrace every pos- sible cause of innocent non-performance. Where fault ends fortuitous event begins. (Of. Saleilles, Theorie Generate de V Obligation, n. 24.) M. Josserand disputes this. He says, II existe des causes d'iriex edition qui ne sont nullement imputable au debiteur, et qui ne rentrent cependant pas dans la notion de la force majeure ni dans celle du cas fortuit, a savoir, pour le contrat de transport, le vice propre de la marchmdise. et le fait So Vexpediteur ou du destmataire : la force majeure et le cas fortuit nepuisent done pas tout le domaine de la non-re sponsabilite : its ne sont pas, a &ux seuls, toutes les causes d- exoneration . (Les Transports, n. 571.) But this does not appear to be a sound view of the matter. It is a term of the contract of carriage that the carrier is not held to warranty against loss or damage to the goods caused by inherent defects in them, or by the fault or negligence of the consignor/ (See C. Comm. F. 103; C. Comm. E. 97/102; Josserand, op. cit. n. 609.) The carrier never undertook the safe delivery of goods in these circumstances, and there is, therefore, no failure on his part to perform what he has promised. The two expressions, force majeure and cas fortuit, employed in article 1148 are meant to correspond to the single term of article 1147, cause etrangere qui ne pent etre imputee au debiteur. It is not easy to draw any clear line of distinction between cas fortuit and force majeure, but, fortunately, this is not important, because the legal effect is the same whether we consider the case as falling under the one designation or the other. Aubry et Kau, 5th ed. 4, p. 167; B.-L. et Barde, Oblig. 1, n. 455; D. X. C. C. art. 1148, n. 2.) It is important to emphasise this point, because, as will be shown presently, attempts have been made recently to prove that force majeure and cas fortuit do not produce the same leo-al effects. (See Josserand, Les Transports, n. 568, for the £=*•• ■ ■' NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 289 bibliography. Cf. Salcilles, Theorie Generate de V Obligation, n. 24.) Some modern codes express the rule by saying* that the debtor is excused if he proves that the breach of contract is due to< a cause not imputable to him, and they avoid using such terms as force majeure and cas fortuit. (Swiss Federal Code of Obliga- tions, art. 97; German Code, art. 275. See infra, p. 318.) Other codes use these terms and attempt to define them. Thus, the Spanish Code says: — Bors des cas expressement jndiques pur la hi, et de ceux ou V obligation le stipule ainsi, mil ne repondra des evenements qu'il ria pu prevmr, ou qui, bien que prevus, ont ete inevitables (art. 1105). Arid that code, though in several articles it uses the term cas fortuit, does not seem to employ the expression force majeure at all. (See arts. 1096, 1183, 1488, 1575.) The Code of Quebec sometimes speaks of cas fortuit alone, some- times of cas fortuit or force Majeure, and sometimes of force majeure alone, and it is clear that the legislator uses the two terms indifferently. (See arts. 1050, 1072, 1650, 1767, 1768, 1815; Mignault, Droit Civil Canadien, 5, p. 660.) And that code com- bines cas fortuit and force majeure in a common definition. A fortuitous event is one which is unforeseen and caused by superior force which it was impossible to resist (art. 17, n. 24). The latest code, that of Morocco, which came into force on 15 October, 1913, states the French law in a more satisfactory way;. II n'y a lieu a aucuns dommages-interets, lorsque le debiteur juslifie que V inexecution ou le retwd proviennent d'une cause qui ne peut lui etre imputee, telle que la force majeure, le cas fortuit ou la demeure du creamier. La force majeure est tout fait que Vhomme ne peut prevenir, tel que les phenomenes naturels (inondations, secher esses, orages, incendies, sauterelles), V invasion ennemie, le fait du prince, et qui rend impossible V execution de V obligation. N'est point consideree comme force majeure la cause qu'il etait possible d'eviter, si le debiteur ne justifie qu'il a deploy e toute diligence pour s'en premunir. N'est pas egalement consideree comme force majeure la cause qui a ete occasionnee par une faute precedente du debiteur. (Dahir formant Code des Obligations, arts. 268, 269.) The Egyptian Code avoids using either of the terms force majeure or cas fortuit in the general article as to liability for breach of contract. (C. C. E. 119/177.) In other articles it em- w.— VOL. II. 19 290 THE LAW OF OBLIGATIONS. ploys both terms, though force majeure does not occur so often as cas fortnit. (See arts. 342 427, 489/598, for force majeure; and for cas jortuit (arts. 23/42, 218 283, 392/479, 417/509. 544/666, 562/686.) In one article any accidental circumstance— toute circonstance fortuite—is used as equivalent arts. 411/502). In the French and Egyptian codes it is plain that the legislator uses the terms cas jortuit and force majeure as equivalent, and does not attempt to make any distinction between them. (Demo- lombe, 24, n. 553; Baudry-Laeant. et Barde, Oblig. 1, n, 455; Planiol,2, n. 231; D. N. C. 0. art. 1148, n. 3.) And the jurisprudence applies to the same facts sometimes the name of cas jortuit and sometimes that of force majeure. (See Paris, 13 now 1903, D. 1904. 2. 73, and Dissertation by M. Colin.) Some writers consider that as a matter of correct language the term cas jortuit is more appropriate to denote the action of natural forces, such as fire and flood, while force majeure is more properly applied to an act of man which creates an insurmountable obstacle to the performance. fHuc, 7, n. 143.) Other distinctions have been suggested, but there is no great value in them. Force majeure in law of responsibility and in law of prescription. It is not only when the debtor in a contract claims to be exonerated from the consequences of-iiis non-performance that the question arises what amounts to force majeure. The same ques- tion comes up when a defendant in an action of responsibility maintains that the accident was caused by force majeure, and also when a party pleads that his right to sue has not been lost by prescription because he was prevented from suing by force majeure. (Sec infra, p. 555.) Cas fortuit and force majeure include both objective impossibility and subjective impossibility. The impossibility of performance may be either an absolute or objective impossibility, that is to say, it is impossible for any one at all to perform the obligation; or it may be a relative or sub- jective impossibility, that is to say, it is impossible for the debtor .(- perform the obligation, but it might be performed by another.. NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 29] If, for example, the debtor was bound to deliver a ship, and the ship was torpedoed by a submarine and sunk, there would be ail absolute impossibility. If, on the other hand, the debtor's duty was to deliver a diamond, and the diamond was stolen by X, there is a relative impossibility, because, although the debtor cannot perform his obligation, it might be performed by X. The German Code is careful to use different words to denote these two kinds of impossibility. It calls objective impossibility ZJnmoglichkeit, and relative impossibility Unvermpgen des Schuldners zur Leistung. ^German Code. arts. 275, 279; Cosack, Lshrbuch des Deutschen bilrgerlichen Rechts, 6th ed. 1, p. 394; Windscheid, Pandekten, 8th ed. 2, s. 264.) In the French law the impossibility which is created by cas fortuit or force majeure is sometimes objective and sometimes •subjective. Attempted distinction between the legal effects of force majeure and those of cas fortuit. Some modern French writers attempt to make a distinction between the legal effects of force majeure and of cas fortuit re- spectively, more particularly in the contract of carriage of goods. They contend that it is only loss or damage caused by force majeure which the carrier does not have to make good. He is responsible for the loss or damage caused by cas fortuit. [Dissertation by M. A. Colin, in note to Paris, 13 nov. 1903, D. 1904. 2. 73; Thaller, Traite EUmentaire de Droit Commercial, 4th ed. n. 1198; Josserand, Les Transports, nos. 570 seq. Contra, Lyon-Caen et Benault, Traite de Droit Commercial, 4th ed. 3, n. 598; Sarrut, Transport des marchandises, n. 751. See D. N. C. C. Additions, 1913, art. 1148, nos. 1 seq.) The chief arguments advanced in support of the new theory are the following: — (1) The tendency of the law is to abandon more and more the old theory that there is no liability without fault actual or pre- sumed. Liability is now admitted in many cases on the mere ground that the person who for his profit creates a risk is bound by law to compensate those who suffer damage thereby caused. This theory, commonly called la theorie du risque cree, underlies the French legislation for workmen's compensation for accidents (Loi du 9 avril 1898), and it underlies also the jurisprudence 19 (2) 292 THE LAW OF OBLIGATIONS. which makes a man liable without proof of personal fault for the damage caused by an animal or by an inanimate thing which belongs to him. Fault in the legal sense is becoming more and more°an objective fact, for the estimation of which any inquiry into the mind, intention, or moral condition of the author of the wrong is irrelevant. The discussion of this doctrine belongs to. the subject of Responsibility. When the execution of an obligation is prevented by the happen- ing of an event which the debtor was powerless to prevent, and against the occurrence of which he could not have provided, this fact does not in itself liberate him from his duty to pay damages, for the accident may be due to a risk which the debtor has created. If an explosion takes place in a factory, or a railway embank- ment slips. down, or the splitting of a rail causes a train to go off the line, these are accidents inherent in the enterprise. They are fortuitous events, if you will, but that is no reason why the person for whose profit the enterprise is conducted should not pay for them. It is, according to the writers above referred to, only to accidents of this kind arising out of the enterprise carried on for the debtor's profit that the law applies the term cos fort nit. (2) For6e majeure is something quite different; it is always a force operating from without. It is caused by a risk which the debtor has in no way created. The failure by the debtor to per- form his obligation is due to a foreign cause, to what the French Code describes as a cause etrangere qui ne pent lui etre imputee. (C. C. F. 1147.) An earthquake, a flood, or a fire caused by lightning are examples of the operation of the forces of nature which may, according to circumstances, amount to force majeure. They axe not necessarily so, for it may appear from the circum- stances that they ought to have been provided against, and as to fire caused by lightning, the character of the enterprise may have increased the danger from lightning. So, likewise, the act of man, such as an invasion of an enemy, the interference by the sovereign {fait du prince), the theft by a third party of a thing to be delivered, and so on, may be proved to be force majeure. (See infra, pp. 298 seq.) The criterion between cas fort u it and force majeure is found by asking the question, was the accident caused by a risk which was inherent in the enterprise or by a risk which was external to it? (See B.-L. et Barde. Oblig. 4, n. 2972. y, and authorities in pre- NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 293 ceding note. Cf. in the German law, Cosack, Lehrbueh des 'Deutschen biirgerlichen Rechts, 6th ed. 1, p. 291.) Criticism of new theory. From the legislative standpoint there is something to be said for this new theory, but as an interpretation of the codes it is entirely unsound. It has not prevailed in the jurisprudence. (See Req. 31 oct. 1905, D. 1907. 1. 38, note 1.) It is hopeless to attempt to show that the French Code makes a distinction between cm fortuit and force majeure, and the argument based on the expression came etrangere in C. C. F. 1147 is not avail- able in Egypt or in the Province of Quebec, where the codes do not use that expression at all. (C. C. E. 119/177; C. C. Q. 1071.) Accordingly, in the Egyptian law as it stands, this theory must be absolutely rejected. Essential characteristics of fortuitous event. It is convenient to use the term "fortuitous event" to denote the cause sometimes called cas fortuit, sometimes called force majeure, which has prevented the performance of the obligation. If it is to liberate the debtor it must always possess three qualities: (1) It must not be imputable to the debtor; (2) It must have been impossible to foresee; (3) It must have been impossible to prevent. These characteristics indicated by the Roman law have been consistently regarded as the marks of a fortuitous event. Omnem vim cui resisti non potest. (Dig. 19. 2. 15. 2.) Quce fortuitis casibus accidunt, cum prcevideri non potuerant. (Code, 4. 24. 6.) So the Spanish Code says: — Hors des cas expressement indiques par la lot, et de ceux oil V obligation le stipule ainsi, nul ne repondra des evenements qiCil ria pu prevoir, ou qui, bien que prevus, ont ete inevitables. (Code, Espagnol, 1105; B.-L. et Barde, Oblig. 1, n. 455; C. A. Alex. 20 dec. 1890, B. L. J. XII, 51; C. A. Alex. 8 fevr. 1911, B. L. J. XXIII, 159.) >-.- j . j - ■ ■ 294 THE LAW OF OBLIGATIONS. Event founded upon as force majeure must not have been brought about by any act of the debtor. The debtor will not be excused by proof of a fortuitous event unless the fortuitous event was the sole cause of the non-per- formance. If the event itself was due to tlie fault of the debtor he cannot found upon it as an excuse. (B.-L. et Barde, Ohlig. 3, n. 1920, b; Rev. Trim. 1915, p. 184; Josserand, Les Trans- ports, n. 601, 898. Nor can the debtor defend himself successfully by the plea of force majeure if the fact upon which he founds as an excuse was brought about at his own request or by his own act, although that act was not wrongful. (B.-L. et Barde, OlMig. 1, n. 462; Larom- biere, art. 1148, n. 21; D. N. C. C. art. 1148, n. 31.) So it was held that a railway-company could not relieve itself from certain obligations upon the plea that its system had been bought by the state, when the fact was that the railway-company had not been expropriated against its will but had solicited the expropriation and freely consented to it. (Cass. 18 avril 1888, D. 84. 1. 25. Cf. Paris, 8 juin 1899, D. 99. 2. 477.) And so it would appear that an employer of labour cannot found upon a strike as being force majeure, when the strike was brought about by his own fault in not treating his employees fairly. (Req. 28 oot. 1907, D. 1909. 1. 282. See infra, p. 314.) So, bankruptcy is not in itself a fortuitous event, being in fact commonly due to causes over which the victim has some control. In order to excuse himself on this ground from the execution of his contract the debtor would need to prove, not only that he was bankrupt, but also that his bankruptcy was brought about by force majeure, that is to say, by causes which he could not have prevented or avoided. (Alger, 2 dec. 1850, D. 54. 5. 373; Rouen, 27 aout 1873, D. 76. 2. 62; Paris, 17 fevr. 1892, D. 94. 2. 1, and note by M. Boistel; C. A. Alex. 27 dec. 1899, B. L. J. XII. 53.) Event must be impossible to foresee. If the event is one which might have been anticipated and guarded against by taking due precautions,, the debtor who neglects these precautions is not liberated. A French post-office official had charge of securities which were in course of transit. The value of the securities had been declared NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 295 by tin 1 sender, and in this case the French law makes the adminis- tration liable for their loss up to their declared value but not exceeding- 10,000 francs. (Loi da 25 avril 1873, art. 10; Josser and, Les Transports, p. 692.) The intervention of force majeure, however, liberates the administration. In this case the official had received warnings that an attempt to rob him had been concerted, but he took no special precautions, and he was, in fact, robbed of the securities by armed robbers. The Coiir d'Aix held that in these circumstances the robbery by an armed force did not amount to force majeure. (Aix, 20 dec. 1909. See Kev. Trim. 1910, p. 440.) The Cour de Cassation rejected a ponrvoi against this judgment. (Cass. 9 mai 1911, S. 1911. 1. 576, D. 1911. 1. 401; Rev. Trim. 1912, p. 188. Cf. Rev. Trim. 1913, p. 820.) And when the obligation is to pay a sum of money the sudden illness of the debtor is not force majeure. La maladie pouvant et devant etre prevue ne petit constituer mi cas de force majeure en mature de payement. (Req. 15 juin 1911, D. 1912. 1. 181, and infra, p. 302.) For similar reasons, the vendor of an immoveable who suffers an eviction which prevents his execution of the sale cannot escape liability to pay a penalty stipulated for non-execution by plead- ing that, the eviction was force majeure. (C. A. iUex. 14 mai 1908, B. L. J. XX, 220.) A recent French case is a good illustration of the principle. An electric light- and power-company stipulated in its contracts with its customers that it would not be liable for temporary interruption of the current when that was caused by force majeure or by public works. Work was begun by a railway contractor in the immediate proximity of the electric cable belonging to the company. There was a probability that in the course of this work the cable would be cut or damaged, and this in fact happened. It was held that the electric-company in these circumstances was not liberated: — Qucmd ce.s travaux, dont Vexecution etait prevue depuis long- temps, out exige le deplacement du cable de la compagnie, laquelle devait done prevoir les consequences desdits travaux et prendre toutes mesures utiles pour ev'iter les accidents, ce qu'elle n'a pas fait. (Req. 23 avril 1901, D. 1903. 1. 347.) 296 THE LAW OF OBLIGATIONS. Impossibility must be absolute. The debtor cannot liberate himself upon the ground of force majeure unless there is an absolute impossibility in the execution of the obligation. It is not enough that in consequence of the fortuitous event the execution has become more difficult or more onerous, nor is the debtor excused when the impossibility is merely because he miscalculated his own powers and promised to do some- thing which is beyond his strength. B.-L. et Barde, Oblig. 1, n. 408; Planiol, 2, n. 232; B.-L. et Wahl, Louage, 1, n. 376; Req. 3 mai 1909, D. 1909. 1. 315; D. N. C. C. art. 1148, n. 23, and art. 1126, n. 40; Cons. d'Etat, 9 dec. 1887, D. 88. 5. 497; Cass. 16 juin 1900, D. 1905. 1. 336; Req. 27 oct. 1908, D. 1910. 1. 311; Cass. 4 aout 1915, D. 1916. 1. 22; Conseil d'Etat, 30 mars 1916, D. 1916. 3. 25; Taris, 21 dec. 1916, D. 1917. 2. 33, and note by M. Capitant; C. A. Alex. 20 juin 1906, B. L. J. XVIII, 335; C. A. Alex. 8 fevr. 1911, B. L. J. XXIII, 159; C. A. Alex. 7 juin 1916, B. L. J. XXVIII, 416; C. A. Alex. 17 janv. 1917, B. L. J. XXIX, 157. As to the possibility of reducing the damages when there is no absolute impossibility of performance, see infra, War as Force majeure, p. 307.) The impossibility must continue. Force majeure is only an excuse so long as it lasts. If the impediment is merely temporary the execution of the obligation is suspended until the impediment is removed. (Cass. 15 fevr. 1888, D. 88. 1. 203. See infra, under War as force majeure, pp. 307 seq.) Debtor who foresees the inexecution must do his best to minimise its effects. The debtor who wishes to excuse himself on the plea of fortuitous event must show that he did his best to minimise its • fleets and to do the most that was possible in the circumstances. Req. 28 avr. 1901, D. 1903. 1. 347; D. N. C. C. art. 1148, n. 26.) If, after the date of the contract, the debtor foresees that he will be prevented by a fortuitous event from its execution, ho must do his best to cause his creditor as little loss as possible. So, when a man had sold a future crop of cotton' calculated to NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 297 be so many kantars and he saw that the crop, owing to natural causes, was going to be much less, it was held that he was bound to notify his creditor without delay so that the damage to him would be as small as possible. (C. A. Alex. 1 mars 1905, B. L. J. XVII, 138.) So there may be circumstances in which a carrier whose vessel cannot proceed on account of a high flood in a river is bound to send the goods by railway. (See Cass. 6 juin 1900, D. 1905. 1. 336.) Debtor not bound to take an altogether unusual precaution. On the other hand, in saying that the fortuitous event must be something impossible to resist or to provide against, it is not meant that the debtor must take precautions of an altogether unusual kind. He must take all ordinary precautions such as might be expected to be contemplated by the parties. If, after doing so, he is prevented from performing his contract he will be excused. So, for example, where the contract is to supply water or gas by means of pipes, the natural sinking of the ground may cause a breaking of pipes and prevent the fulfilment of a contract, and, if so, the debtor who is thus prevented will be excused if he took ordinary precautions, taking into account the nature of the ground. (Sce.C. A. Alex. 28 fevr. 1896, B. L. J. VIII, 322; C. A. Alex. 28 mars 1901, B. L. J. XIII, 221.) Engineering skill might devise means of preventing such a subsidence, but, if to do so would require measures altogether unusual, the subsidence will be considered to be fortuitous as far as the debtor is concerned. So, where provision is made for such natural events as floods, a flood of an altogether exceptional character may be regarded as a fortuitous event. -Thus in a Canadian case, where a cellar had been flooded owing to the fact that a sewer was not large enough to carry off the water during an altogether exceptional storm of rain, it was held in an action of damages that the loss was caused by a fortuitous event. (Faulkner v. City of Ottawa, 1909, 41 Canadian Supreme Court Reports, 190.) It may be said that even a very unusual storm or a very high flood can be anticipated, because such events do occur at rare intervals, but, though this is true, the debtor will not in most cases be expected to anticipate events so unusual. 298 THE LAW OF OBLIGATIONS. Force majeure a question of fact. The question whether the debtor who pleads that he is liberated by force majeure has made out that defence is eminently one of appreciation. It is for the court to decide it upon considera- tion of the particular facts proved. (B.-L. et Barde, Oblig. 1, n. 456; Aubry et Kau, 5th eel. 4, p. 168, note 35 bis; Req. 22 oct. 1895, D. 96. 1. 72: D. N. C. C. art. 1148, n. 45.) The defence may be pleaded either in an action to enforce the performance of contract or in an action of damages for its non- performance. Illustrations of force majeure, (a) Events due to the forces of nature. Ordinary climatic conditions such as may be expected to occur will not as a general rule be regarded as fortuitous events. It is true that they cannot be prevented, but they can be foreseen and provided against. (See Larombiere, art. 1148, n. 4; Panel. Franc, vo. Oblig. n. 1900.) The parties when they made their contract had these conditions in mind. How far wind, rain, frost, floods, and so forth, are ordinary conditions depends on the particular locality. Frost in Egypt of fifty degrees below- zero Centigrade, if it prevented the performance of a contract, would undoubtedly be force majeure, whereas in certain parts of Canada it would be an event to be expected at some seasons. Floods occur in some rivers with remarkable regularity, whereas in other rivers they are quite exceptional. Earthquakes, light- ning, and shipwreck are events which in many cases may be force majeure, but they are not necessarily to be so considered. The earthquake might be in a place where earthquakes are frequent, as for example in Japan, and it might have been jDOssible by taking precautions to perform the contract in spite of the earthquake . The shipwreck might not have hapj>ened in spite of the storm, but for faulty navigation on the part of the captain for whom the debtor was responsible. (See Pau, 9 juill. 1872, D. 74. 2. 193.) Lightning is generally a fortuitous event, but it may not be so when the defendant has increased the risk of lightning. Electric installation^ of some kind may have attracted the lightning. NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 29f> A fortiori, the rise and fall of many rivers being' a thing to bo calculated upon, precautions might have been taken which would have ensured the performance of the obligation. See Lyon, 22 juin 1855, D. 56. 2. 2; Rev. Trim. 191-3. p. 820. Destruction of specific thing to be delivered. The important case where the performance of the obligation is rendered impossible by the destruction of a specific thing which the debtor was bound to deliver will be explained later in the chapter upon the extinction of obligations. It is true that this is only an illustration of the general rules applying to force majeure, but the French Code deals separately with the perte de la chose due, and it is perhaps more convenient to follow this order. (C. C. F. 1302.) Alteration of physical conditions rendering performance impossible. It may be a part of the contract that the obligation is to be performed in a certain place. From a cause not imputable to the debtor this place is destroyed or put into such a state that performance becomes impossible. For example, a workman is engaged to paint a house and the house falls down or is destroyed by fire before the work begins. In such a ease the other party is liberated. (Dall. Rep. Louage d'Oavrage, n. 69; B.-L. et Wahl, Louage, 3rd ed. 2, n. 2902; D. N. C. C. art. 1780. n. 559. Cf. for same rule in the English law, Taylor v. Caldwell, 1863, 3 B. & S. 826, 32 L. J. Q. B. 164, 129 R. R. 573. See Pollock, Contracts, 8th ed. p. 437, and infra, p. 321, for cases in which the principle of Taylor' v. Caldwell has been extended.) Fire as force majeure. A fire which prevents the execution of an obligation by causing the destruction of the thing to be delivered, or in some other way. is not necessarily a fortuitous event, because the fire may have been caused by the fault of the debtor or that of his servants. It is not enough for the debtor to prove that he was prevented by a fire from fulfilling his obligation; he must prove in addition that the fire was not caused by his fault or that of persons for whom he is responsible. (Baudry-Lacant. et Barde, Oblig. 3. n. 1923: Aubry et Rau, 5th ed. 4. p. 196. note 36.) L'incendie nest pas par lui-meme mi cas de force majeure. 300 THE LAW OF OBLIGATIONS. 11 n'y a force majeure, que si le debiteur n'a commis auciine faute, aucune imprudence ou negligence, s'il rta pu ni prevoir ni conjurer Vevenement. (Cass. 27 et 28 oct. 1913, D. 1916. 1. 85.) The exact nature of the proof which the debtor must make in order to exonerate himself has been the subject of much contro- versy. Does he need to prove positively how the fire originated in order to exclude the idea of his own fault, or is it enough for him to prove that he took all reasonable precautions and that the origin of the fire remains a mystery? In considering this question, there are important differences to be borne in mind between the French Code and the Egyptian Code. Presumption against lessee in French law. Under the French Code the lessee of a house has the duty of restoring it at the end of the lease, and is not released from this duty by proving that it was destroyed or damaged by fire. He must prove in addition that the fire occurred by fortuitous event or irresistible force, or owing to a fault of construction, or that it was communicated from a neighbouring house. (C. C. F. 1733; B.-L. et Wahl, Louage, 3rd ed. 1, n. 972; D. N. C. C. art. 1733, n. 3.) This article creates an exception to the rules of proof and it ought not to be extended by analogy. In particular, the position of the article in the French Code and the terms vice de construc- tion and maison voisine show that it was not meant to apply to the lease of a moveable thing. It is significant that the corre- sponding article in the Civil Code of Quebec is limited to "premises leased" (art. 1629). (Sic. Esmein, Dissertation in note to S. 84. 1. 33; Aubry et Rau, 5th ed. 5, p. 326, and note 28, 3rd ed. But many writers are of the opposite opinion, B.-L. et Wahl, Louage, 1, n. 1004; Guillouard, Louage, 2, n. 680: D. N. C. C. art. 1733, n. 18.) As applied to the lease of a house, the onus of proof is thrown on the lessee, and the jurisprudence and especially the decisions of the Cour de Cassation apply the rule very strictly. The lessee is not exonerated merely if no specific fault is proved against him, nor by proof that he took all reasonable care, and that there are circumstances which make it likely that the fire was caused by a fortuitous event, such as the fault of a stranger. He must prove the precise manner in which the fire originated if ho > W NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 301 is to show that he was free from fault. (Req. 25 oct. 1911, D. 1912. 1. 225.; Even the proof that the fire originated in a neighbouring building is not conclusive, for it may appear that it would not have arisen at all or would not have spread to the house occupied by the lessee but for fault on his part. (Req. 30 janv. 1804, D. 54. 1. 95; Cass. 27 oct. 1913, D. 1916. 1. 84. S. 1914. 1. 332.) An example of the rigour with which the rule is applied is afforded by a case in which it was held that the lessee was not liberated by proof that a fire was caused by a short circuit in his electric wiring. (Toulouse, 19 mai 1912, D. 1914. 2. 166. See Rev. Trim. 1915, p. 182.) Many of the authors approve of this jurisprudence. (Aubry et Rau, 5th ed. 5, p. 318; B.-L. et Wahl, Louage, 1, n. 978; D. N. C C. art. 1733, n. 168.) On the other hand, other authors contend that the lessee may prove that it was impossible for him to prevent the fire although he fails to prove positively by what means it was caused. And there are many arrets in this sense. (Laurent, 25, n. 279; Planiol, 2, n. 1718; Douai, 28 mars 1901, D. 1901. 2. 233; Lyon, 15 janv. 1907, D. 1908. 2. 207; D. N. C. C. art. 1733, n. 151.) No presumption against lessee in Egyptian law. It is not necessary for us to decide between the two sysiernes just stated, because in the Egyptian Code there is no article corresponding with C. C. F. 1733. In the Egyptian law, therefore, the general rules apply, and the lessor cannot recover from the lessee damages for the loss caused by the fire except by proving that the fire was due to the lessee's fault. (C. A. Alex. 27 fevr. 1879, R. O. IV, 157; C. A. Alex. 29 janv. 1880, R. O. V, 125; C. A. Alex. 27 mai 1880, Borelli, art. 463, 4; C. A. Alex. 9 mars 1899, B. L. J. V, 157; C. A. Alex. 1 juin 1904, B. L. J. XVI, 289; De Hults, Rep. vo. Louage, n. 119; Grandmoulin, Contrats, n. 393. Contra, C. A. 21 mars 1901, O. B. Ill, n. 23, p. 27.) Rule in Egyptian law. In the Egyptian law whether the question arises between the lessor and the lessee or between other parties, the court is entitled 302 THE LAW OF OBLIGATIONS. to rely on presumptions. It may well be that the court is satisfied that the defendant has disproved his responsibility for the lire although its precise origin remains obscure. The nature of the proof required varies according to circum- stances. When the defendant is a common carrier it is par- ticularly hard for him to prove that the fire which prevented him from performing his contract originated without his fault, seeing that in such a business there are many possibilities of fire being caused by the fault of employees. (Cass. 27 oct. 1913, D. 1916. 1. 84: Josserand, Les Transport*, n. 585; B.-L. et Wahl. Louage, 3rd ed. 2, n. 3535; Lyon-Caen et Renault, TraiU de Droit Com- mercial, 4th ed. 3, n. 603; Rev. Trim. 1914, p. 131.) Sickness or epidemic as force majeure. The question whether the illness of the debtor, or some infirmity, bodily or mental, supervening after the date of the contract, which prevents him from performing his obligation is to be considered as force majeure, depends upon the nature of the contract and the implied intention of the parties. When the contract is a contract for the hire of personal services the Egyptian Code provides — A contract for the hire of personal services is dissolced by the death of the person employed or any accidental circumstance which prevents him from working. (C. C. E. 411/502.) The French Code has no words corresponding to " any acci- dental circumstance." (C. C. F. 1795.) But it is a settled rule of the French law that when without his fault the servant or workman becomes physically or morally incapable of doing the work promised the contract comes to an end, and no damages are due on either side. (Dall. Rep. Louage d'Ouvrage, n. 66; Beudant, Vente et Louage, n. 676: B.-L. et Wahl, Louage, 3rd ed. 2, n. 2902; D. N. C. C. art. 1780, n. 552. See Cass. 7 juin 1905, D. 1908. 1. 74.) And when the services to be rendered are strictly personal to the master, his illness or infirmity might render the services use- less. In all these contracts for the hire of personal services it is an implied term that the party bound shall be liberated if he cannot perform his obligation owing to an infirmity for which he is not to blame. So, an actor who is prevented by illness from performing is not liable in damages to the manager of the theatre. (Dall. Rep. Theatre, nos. 195 seq.) NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 303 In a recent ease a dramatic author had bound himself to deliver to a theatre-manager the completed manuscript of a play by a fixed date subject to a penalty. Ho was prevented from so doing by trouble with his teeth so severe as to need a surgical operation which rendered intellectual work impossible for him for some weeks. This was considered to be force majeure. (Paris, 7 janv. 1910, D. 1910. 2. 292.) But the illness of the debtor is not force majeure if it was caused by his voluntary act or fault. (See Panel. Franc. Oblig. n. 1783.) And when it is a question not of performing personal services but of paying money, the French law is very strict in refusing to consider illness as force majeure. Where an insurance policy provided that the policy should lapse if the premium was not paid before a certain day, and the assured was struck "with apoplexy on the day of payment, it was held that this was not force; majeure which relieved him from the consequences of the non-performance. The assured might have made provision for payment by another on his behalf in the event of his being prevented by illness or other incapacity from making the payment himself. (Req. 15 juin 1911, D. 1912. 1. 181. Cf. Cass. 16 mars 1864, D. 64. 1. 159.) In some cases the fact that an epidemic exists in a locality may be considered as force majeure. So it has been held that a theatre- manager could not claim damages from an actor w r ho refused to perform because there was an epidemic of typhoid fever in the place. (Trib. Seine, 17 avril 1869, D. 69. 5. 221; D. N. C. C. art. 1148, nos. 69 seq.) (b) Events caused by the act of man. The act of a third party which renders it impossible for the debtor to perform his contract is a cas fortuit unless the third party is a person for whose fault the debtor is responsible, or unless the act is one which might have been foreseen and guarded against. (Aubry et Rau, 5th ed. 4, p. 167; B.-L. et Barde, Oblig. 1, n. 455; P. N. C. C. art. 1148, n. 126; Cass. 27 avril 1898, D. 98. 1. 421; Renncs, 31 dec. 1896, D. 99. 1. 74.) For example, the theft of an article by a third party may liberate a depositary or other person who had charge of the thing from his liability in damages for its non-restitution. So, where a creditor held a diamond necklace in pledge and it was stolen 301 THE LAW OF OBLIGATIONS. by burglars, it was held that he was excused from returning it. (C. A. Alex. 20 mars 1889, B. L. J. I, 83. Cf. Cass. 27 avril 1898, D.98. 1.421.) Special rule as to paid depositary. The theft of an article which is in the hands of a depositary i* not force majeure which discharges him from his liability if the thing was stolen by a person for whom he is responsible. And the presumption is that it was stolen by such a person. The Egyptian codes provide — The depositary, who receives remuneration in respect of the transactions which, have occasioned the deposit, as for instance an innkeeper, carrier, etc., is liable for the loss of the thing deposited, unless he proves that such loss was brought about by vis major. (C. C. E. 489/598.; The Egyptian article is in more general terms than the cor- responding articles in the French Code under which the pre- sumption of fault exists only against the carrier and the hotel- keeper. (C. C. F. 1782, 1953. See Grandmoulin, Cmtrats, n. 898.) The theft from a carrier will not be considered as force majeure, unless he proves that it was committed by a person outside his employment. And a theft from an hotel is not force majeure unless it was committed by burglars or by thieves who got into the hotel without permission. It is probable, at any rate, that the Egyptian legislator intends to maintain the rules of the French law upon these points. Under the French Code, the hotel-keeper is responsible for the loss of the thing if it was stolen by a guest in the hotel. (C. C. F. 1953.) And the probability is that the Egyptian law is the same, though there does not appear to be any; jurisprudence in which this has been determined. (See Grand- moulin, Contrats, n. 902; C. A. Alex. 6 juin 1894, B. L. J. VI, 326; C. A. Alex. 13 mai 1895, B. L. J. VII, 318.) By a recent loi in France, the hotel-keeper's responsibility is limited to 1,000 francs pour Its especes monnayees, les Valeurs, les titres, les bijoux et les objets precieux de toute nature non deposes reellement entre les mains des aubergistes ou hoteliers. {Loi du 8 avril 1911, amending C. C. F. 1953.) The effect of this law is merely to remove the presumption against the hotel -keeper as regards the excess over 1,000 francs. He remains liable to the full amount if fault on his part or on that NON-PERFOKMANCE WITHOUT FAULT OF DEBTOR. 305 of his servant is (proved. (B.-L. etWahl, Societe, 3rd cd. n. 1228; Planiol, 2, n. 2222; Cass. 30 mars 1910, S. 1910. 1. 83.; Hotel-keepers as a rule endeavour to exclude or to limit their liability by putting notices in the rooms used by the guests declaring that they will 1 not be liable for the safety of valuable articles unless deposited in the office. Such notices are considered by a part of the French doctrine as a sufficient limitation in circumstances in which it is reasonable to presume that the guest accepted the accommodation on these conditions. (Planiol, 2, n. 2223; Dall. Supp'vo. Depot, n. 69; B.-L. et Wahl, Socictr, n. 1234.) But the better opinion appears to be that the guest cannot be considered as having assented to such an exclusion or limitation of the hotel-keeper's legal responsibility; L' expression des desirs d'un wantr e d'hotel ne pent equivaloir a un contrat. (Rouen. 18 juillet 1889, sous Aix, 26 oct. 1899, D. 1901. 2. 303; Sourdat, Responsabilite, 2, n. 935; Laurent, 27, n. 145; Gombert, Jules. Des Rapports Juridiques entre Hoteliers, Aubergistes et Voyagews, 1900, these, Lille, p. 151. See Rev. Trim. 1914, p. 313.) The fact that in France it has been necessary to create a limita- tion of the liability by special laws supports this contention. And it is noteworthy that both the German and the Swiss codes, although they limit the hotel-keeper's liability, unless fault is proved, do not allow him to decline his responsibility by putting up notices of this kind. (German Code, art. 701; Swiss Code Oblig. art. 489.) Special liability of hotel-keeper not to be extended by analogy. In France the article which creates the presumption against the hotel-keeper is limited to him, and is strictly interpreted. The special liability of the hotel-keeper for one kind of fortuitous event, that is, for loss caused by thefts committed by a third party, is a traditional rule of the law for which various reasons have been given, but this special liability will not be extended by analogy. (Planiol, 2, n. 2225; D. N. C. C. art. 1952, n. 8.) It does not apply to people who do not supply lodging, nor to those whose lodgers are of a permanent kind. So the liability does not extend to a lodging-house keeper, at anv rate when the lodger has taken the room for a considerable time. w.— VOL. II. 20 MS l AlAJ tS ■ M l 306 THE LAW OF OBLIGATIONS. (Cass. 25 juiii 1913, D. 1914. 1. 243. Contra, B.-L. et Wah'l, Societe, n. 1238; D. N, C. C. art. 1952, n. 22, and n. 82.) Still less does the liability exist in the case of doctors, dentists, or others in regard to coats and similar articles left by patients in the ante-room . If the doctor or dentist prove that he took ordinary care he is discharged of his responsibility. (C. de Cass, de Rome, 13 mai 1913, D. 1914. 2. 65, and note by M. Valery.) But when a want of reasonable care is proved the theft will not be considered as force majeure. (Cass. 6 now 1907, D. 1909. 1. 13.) But the terms of the Egyptian article are wider than those of the French codes. By the Egyptian law any " paid depositary " must prove force majeure if he is to be liberated. No doubt such persons as cafe-keepers and restaurant-keepers will be included under that head if the article was placed in their care. And this means in the case of theft that such a depositary must prove that the article was stolen by a third party in the sense above explained, that is, not by one of the depositary's servants, and, probably, that this third party was there without leave. War, invasion, etc. Such events as war, invasion by an enemy, blockadp, attacks of brigands, riots and other disturbances of the public peace, if they entirely prevent the execution of the obligation will be illustrations. of force majeure. (B.-L. et Barde, Oblig. 1, n. 455; Pand. Franc, vo. Obligations, nos. 1805 seq.: D. N. C. C. art. 1148, nos. 77 seq.) The plea that the debtor was prevented by war from fulfilling his obligation will be more fully discussed later. Fait du prince. The passing of a law or regulation by a constituted authority, or any command or prohibition issued by the public authority to which the debtor is bound by law to submit, may prevent the execution of a contract. When this occurs, it is a cas fortuit. For this kind of fortuitous event the term fait du prince is the consecrated expression in the French law. Acts of very various kinds may present this character. The expropriation of property by the state, or the requisition of supplies by the government, the prohibition of certain industries or of certain exports, the closing of a theatre by tin' public authority, or an order forbidding NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 307 ;a manager of a theatre from allowing a certain actor to perform are examples of fait du prince. (B.-L. et Barde, 1, n. 45-5, 1; Pand. Franc, vo. Obligations, n. 1849 seq.; D. N. C. C. arts. 1148, nos. 113 seq.) If in a contract between a tramway-com- pany and the syndicate of tramway workers certain hours of work are agreed upon, and a law is passed under which it is impossible for the workers to fulfil this contract, this is force majeure. (Req. 26 juill. 1909, S. 1910. 1. 71.) Force majeure must create an impossibility. But such events as war, invasion by an enemy, attacks of brigands, riots, and so forth, do not amount to fortuitous event unless they entirely prevent the execution of the contract. If they merely make its execution more difficult they will not be con- sidered as cas fortuit. (See B.-L. et Wahl, Louage, 3rd ed. 2, n. 2900; Cons. d'Etat, 9 dec. 1887, D. 88. 5. 497; Req. 27 oct. 1908, D. 1910. 1. 311; C. A. Alex. 20 juin 1906, B. L. J. XVIII. 335.) The defence of war as force majeure may be taken as an example. War as force majeure. After the outbreak of the European war of 1914 this matter became one of the greatest importance, but the principles applicable to it have^ been long established. (See Schaffhauser, M., Lois Nouvelles, 1915, pp. 25, 41, 65, and 81; La Guerre consideree comme force majeure dans les ventes de Marchandises, by M. A. Wahl, in Rev. Trim. 1915, pp. 355, 383, 518, 519; Rev. Trim. 1914, pp. 442, 776; and in Louage de services, Rev. Trim. 1917, p. 5; M. S. Serbesco, Effets de la Guerre sur ■ V Execution des Contrats, in Rev. Trim. 1917, p. 349; and the rapidly growing jurisprudence indexed in Dalloz and Sirey under Guerre de 1914; note to S. 1916. 1. 17; D. N. C. C. art. 1148, nos. 77 seq.; Josserand, Les Transports, n. 586, and n. 898.) War does not of itself suspend the operation of the ordinary rules of law. As the Mixed Court of Appeal expressed it in a recent case: En ce qui concerne les relations entre particuUers, les principes superieurs du droit ri'ont pas ete aneantis par la grande guerre. (C. A. Alex. 13 dec. 1916, B. L. J. XXIX, 107.) Or, in the words of the Court of Paris, il n'est pas possible de -dire en principe, que Vetat de guerre constitue par lui-merme la '20 (2) 308 THE LAW OF OBLIGATIONS. force majeure permettant de jaire echec a tous les contrats. (Paris,. 8 juill. 1916, D. 1916. 2, 169, 3me espece. Cf. Caen, 24 fevr. 1915, D. 1916. 2. 22.) But the state of war may be, according to circumstances, force majeure. There are two classes of cases more particularly in which the defence is common that the defendant is excused by war, viz.: (1) actions by citizens against the state claiming indemnity for losses caused to them by fait de guerre, a subject which falls under the head of the responsibility of the state, and (2) the case where a party to a contract pleads that he has been prevented by war from executing his contract. There are many ways in which war may render the performance of a contract impossible. If, in consequence of the invasion of the enemy, shops or places of business have to be closed, the employer cannot be compelled to pay wages to his employees during the period of necessary closing. In France special laws have been passed as to the effect of war upon leases of houses and leases of farms. (Loi du 9 mars 1918, baux a loyer, and lot du 17 aoul 1917, baux ruraux.) With these we are not concerned. The French cases prior to these lois apply the principles of the general law which are followed in Egypt. (Baudry-Lacan- tinerie et Wahl, Louage, 3rd ed. 2, n. 2900; Trib. de la Seine, 20 janv. 1915, S. 1916. 2. 52; Eev. Trim. 1915, p. 519.) If the head of a business is mobilised it may be necessary for him to close his premises at once, and he may be excused from giving notice to his employees. (See Rev. Trim. 1915, p. 520.) So, in the case of the employee. La mobilisation, fait exterieur et independant de la volonte des parties rend impossible a Vouvrier ou employe mobilise V accomplissement de son engagement, et, des lors, constitue un cas de force majeure, tant que cette impossibilite subsiste, mais elle rta pas pour effet la rupture definitive du contrat de travail; elle en entraine seulement la suspension. (Trib. Civ. de la Seine, 2 mars 1915, Trib. Com. de Nancy, 6 dec. 1915, D. 1916. 2. 101. If a theatre is closed by a public authority in consequence of a war the lessee will not be bound to pay the rent. (Trib. Seine, lor mai 1915; Rev. Trim. 1915, p. 517; Guillouard, Louage, 1, n. 391.) In a recent decision the Tribunal de la Seine goes further. A theatre was closed by the public authorities during a certain period, after which it was allowed to open under restrictions. The performances were to be reduced, and so forth. Partly from ■^ ******* . . r ... NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 309 these reasons, and partly owing to the darkness of the streets and the difficulties of transit, there was a great falling off in the receipts of the theatre. In these circumstances, the court held that the lessee was entitled not only to escape payment of rent during the time that the theatre was closed but also to a reduction for the subsequent period. (Trib. Seine, ut sup.) If a city is bombarded and the inhabitants have to leave their houses, they will not have to pay rent for them during this com- pulsory absence. (Trib. de paix de Paris, 27 janv. 1871, D. 71. 3. 6. Cf. Paris, 28 aout 1873, D. 74. 2. 159; Trib. cle la Seine, 20 janv. 1915, S. 1916. 2. 52; Rev. Trim. 1915, p. 355, 1917, p. 153.) An order for the mobilisation and the requisitioning of all the means of transport may relieve a railway-company of many of its obligations to private shippers of goods. (See Montpellier, 15 juill. 1915, and the group of cases in D. 1916. 2. 49.) In a recent Egyptian case of great importance, the defendant had broken several contracts between himself and the plaintiff. The defence was that it was impossible for him to perform the contracts, because he was an enemy subject, and his business had been put into the hands of a liquidator in conformity with the proclamation of the military authority in Egypt. The Mixed Tribunal of Alexandria rejected this defence and sustained the liability of the defendant. The grounds of this decision were that the measures prescribed by the proclamations against enemy subjects were intended to cause prejudice to these enemies and not to give them a defence against actions, and that the orders to liquidate could' not be considered as force majeure, because the military authority avail erige en faute le fait seul d 'appartenir a une nation ennemic. But this judgment was reversed upon appeal and the law was thus laid down: En ce qui conoerne les relations entre particuliers, les principes superieurs du droit n'ont pas ete aneantis par les evenements de la grande guerre. Lorsque les sujets des pays ennemis se defendant devant eux, les tribunaux dowent lew faire V application des dispositions des codes, mais aussi l&Ur en conserver le benefice; par suite le res* sortissant ennemi nest tenu de dommages-interets pour inexecu- tion d'un contrat que s'il a commis une faute. On ne peut retenir commie une faute a sa charge le seul fait ■quil appurtient a une nation ennemie. 310 THE LAW OF OBLIGATIONS. Les actes de Vauforite militaire, tels qn'un ordre de liquider une maison de commerce, dont un sujet ennemi est le premier a soaffrir, peuvent etre im'oques par lui oomme un cos de force majeure. (C. A. Alex. 13 dec. 1916, 13. L. J. XXIX, 107.) Tho Mixed Court of Appeal pointed out that the compulsory liquidation of the business of enemy traders was intended to deal a blow at the general trade of the enemy country, but did not. aim at inflicting a direct injury on individual traders. It is in questions of sale, however, that the defence of war as force majeure has been most frequently raised. It is settled by the jurisprudence that war does not release the debtor from his- liability in damages for his .non-performance, although the war has rendered this performance more difficult and more expensive. (Cass. 19 nov. 1873, D. 74. 1. 200; Trib. Comm. Seine, 9 mars, et 15 juin 1915, D. 1916. 2. 22; Civ. 4 aout 1915, D. 1916. 1. 22, S. 1916. 1. 17; cases in Rev. Trim. 1915, p. 384; C. A. Alex. 29 mai 1912, B.L.J. XXIV, 368.) In an Egyptian case a merchant in Genoa had sold goods to be- transported by sea to Alexandria. He excused his non-perform- ance by alleging the outbreak of the Italian-Turkish war. It was held that this was not force majeure . The war made the performance of the contract more difficult,, but it did not make it impossible. (C. A. Alex. 29 mai 1912, ut supra.) The same principle was applied when a partner pleaded that he could not execute his obligation to make his apport, because, owing to the war, he could not realise certain securities- which he had. This was held not to be an absolute impossibility. (Q. A. Alex. 17 janv. 1917, B. L. J. XXIX, 157.) In France where game-shooting was prohibited during the war,, game multiplied upon lands belonging to the state and caused damage to neighbouring owners. In an action against the state for damage caused in this way by game increasing on domain, lands, the state pleaded, (1) that the shooting was let to a lessee,. and (2) that the interdiction of shooting was force majeure which prevented them from keeping down the head of game. The court repelled both defences. As owner the state was bound to prevent the excessive multiplication of game, and there was no force- majeure, because it was not proved that they could not have obtained authorisation to destroy the game without the use of guns. (Trib. de Rambouillet, 23 mai 1916, Rev. Trim. 1917,. p. 130.) Nor can the debtor excuse himself by pleading war if, in spite NON- PERFORMANCE WITHOUT FAULT OF DEBTOR. 311 of the war, he could have performed his contract before the war began. (Trib. Conmi. Seine, 2 janv. 1871, D. 71. 3. 17. See Wahl, A., in Rev. Trim. 1917, p. 7 for illustrations. Ami, as a general rule, the war does not put an end to the con- tract, but only delays its performance. (See Rev. Trim. 1917, p. 153.) So in the case of a lease of shooting rights, if, during the war, shooting game is prohibited this suspends the lease. Rent is not due during this period. (Paris, 16 oct. 1916, Rev. Trim. 1917, p. 153.") But whether the contract is merely suspended or altogether terminated is largely a matter of circumstances and of interpretation. In many cases of sale, for example, the courts will hold that, according to the intention of the parties, the delivery was to be made within a certain delay or not at all, and they will not compel the buyer to take delivery if it is offered after this delay, though the seller may be without fault. (Req. 7 mai 1872, D. 72. 1. 456; and cases in Rev. Trim. 1915, p. 412.) If a manufacturer has sold goods of his own manufacture, and his factory is destroyed by the enemy, this will be force majeure. But if his contract was to supply goods of a certain kind, but not necessarily made by him, it will be his duty to get them elsewhere. And it is no excuse for non-performance that a seller was reckon- ing on getting the goods from a particular manufacturer, and that this manufacturer, in consequence of the war, is unable to supply them. (C. A. Alex. 7 juin 1916, B. L. J. XXVIII, 416. ) The seller will be excused if, after the sale, the exportation of goods of that kind is prohibited. (Req. 15 nov. 1894, S. 96. 1. 142.) The seller of goods may be excused by the fact that all goods of the kind sold by him have been requisitioned by the military authority, whether of his own state, or of an invading enemy. (Req. 21 fevr. 1876, S. 77. 1. 157, D. 77. 1. 367.) Or an enemy army may have compelled the seller to deliver to them or to a third party the goods promised to the buyer. (Req. 29 oct. 1908, D. 1910. 1. 311.) In a case in Egypt the sale was of Welsh coal. The seller pleaded that the exportation of this coal from Great Britain had been prohibited, and that the military authorities in Egypt had requisitioned all coal of that kind in the depots at Alexandria. The Mixed Court of Appeal held that the plea of force majeure was in these circumstances made out; il zacfit (Tun jail (hi prince tres caracterise. (C. A. Alex. 10 mai 1910, B. L. J. XXVIII. 312 THE LAW OF OBLIGATIONS. 306. Cf. C. A. Alex. 11 avr. 1917, B. L. J. XXIX, 358;, C. A. Alex. 2 mai 1917, B. L. .7. XXIX, 396.) In the case of 11 avril 1917, it was not necessary to decide this question because the court held that the buyer had acquiesced in the request of the seller to treat the contract as being resiliated. The same reasons which justify non -performance will justify delay in the performance; so, for example, a seller may be excused for non-performance at the time promised, by proving that his delay was caused by the railways being taken up with troop-trains. (Trib. Comm. de Perpignan, 5 fevr. 1915, Rev. Trim. 1915, p. 405.) In spite of the weight of authority that war is not to be con- sidered as force majeure when it merely renders the performance of a contract more difficult or more onerous, some French courts have been bold enough to break away from the tradition. Thus, in one case it was held:— Si les engagements contraries doivent etre executes conforme- ment aux termes de la convention, il faut necessairement que cette execution puisse soperer dans les circonstances courantes et in- herentes a la vie economique normale, telle qiielle se deroulait au moment des accords. Par suite, Vetat de guerre actuel, ay ant trouble profondement la vie economique du pays, et cree dans la commerce et V Industrie des situations critiques et difficiles, qui ne permettent pas d'obligeY ceux qui en sont victimes a remplir des engagements ruineux, cette situation doit suspendre les engagements dans certaineS branches commerciales ou faire nuitre entre les parties de nouveaux accords a litre temporaire. Specialement, doit etre deboute de sa demande en paiement, pendant la guerre, des appointements quit touchait auparavant, en vertu de son contrat avec son patron, le coupeur, employe chez un mawhand-tailleur de luxe, s'adressant a une clientele speciale que Vetat de guerre a dispersee et fait disparaitre en grande partie, en paralysanl avnsi V exercice de m profession et en rrndamt muffles les concours dont il setait entoure. But the decision appears to be contrary to principle, and it is unfavourably criticised by the arretiste. (Trib. Comm. de Tou- louse, ler juin 1915, S. 1916. 2. 29. See note to C. A. Alex. 7 juin 1916, B. L. J. XXVIII, 416.) And in another case, the court, without going so far as this, reduced the damages on account of the difficulty of executing the contract. The case was by a lessee of a flat against the lessor NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 313 who had bound himself to heat the apartment Let, and failed to do so owing to the difficulty of procuring coal and to its high price, these being effects of the war. v Trib. de la Seine, 30 nov. 1916, S. 1916, 2. 40. See Rev. Trim. 1917, p. 104.; Such a decision is contrary to all traditional rules on the matter. It has been decided that when the effect of the war is to dimmish the profits of the lessee without depriving him of the possession of the subject leased, this does not entitle him to a reduction of his rent. (Cass. 21 janv. 1874, S. 1874. 1. 125, Journal du Palais, 74, p. 288; Trib. de Cusset, 22 janv. 1915, S. 1916. 2. 53, guests leaving hotel on account of outbreak of war, Trib. de la Seine, 6 dec. 1915, D. 1916. 2. 83.) Criticism of the jurisprudence and proposals to change the law. The law with regard to Avar as force majeure cannot be con- sidered as equitable. It is not in practice possible for the parties to commercial contracts to estimate beforehand the probabilities of an outbreak of war. War, as it is now carried on, interferes in the most violent way even with neutral commerce. The effect of holding that the party must execute his contract, even though it has become more difficult and more expensive owing to the war, may be that this party is ruined, while the other party finds himself unjustly en- riched by obtaining at a low price products which have risen enormously in value. A. recent writer contends ingeniously that without a change in the existing texts of the law the courts are entitled to grant the dissolution of a contract although its performance has not been rendered impossible. He argues that this may be done when a supervening event has rendered the performance more difficult or more onerous, provided that this event combines the following conditions: — (1) It must be an event which the parties could not have fore- seen ; (2) It must have been entirely independent of the will of the debtor; and • (3) It must create such a difficulty in the performance that the party would not have contracted if he had foreseen it. It is maintained that it is an implied term of any contract that the debtor is to be freed by the happening of 'an event of this kind. (Serbesco, M. S., in Rev. Trim. 1917, p. 349.) 314 THE LAW OF OBLIGATIONS. So far this argument has not prevailed in the French courts. But in certain classes of cases the English courts, as will be shown later, have managed to arrive at pretty much the same result as that for which M. Serbesco contends. (Infra, p. 321.) In Italy the decret of 27 mai 1915, n. 739, has remedied this inequity by enacting la guerre est consideree comme force majeure, non settlement, lorsqu'elle rend impossible Vexecution, nun's aussi lorsqu'elle rend Vexecution excessivement onereuse. (See article by M. E. Piola Caselli, La Legislation de Guerre en Italic in L'Egypte Contemporaine, 1917, p. 241.) In France the association of manufacturers and merchants petitioned the Government to pass a law in the same sense. A pro jet de loi of a more general kind was introduced in the French Chamber by M. Faillot on 12 August, 1915. (Journ. Off. Doc. Pari. Chambre, p. 934.) The proposition was that commercial contracts concluded before 1st October, 1914, for the delivery of products or merchandise or for other successive or deferred prestations might be revised, sus- pended, or resiliated, with or without indemnity, if the conditions of execution, in consequence of the war, had undergone changes which the parties could not have contemplated, and such, that if the debtor had foreseen them, he would not have bound himself or would have bound himself only upon different terms. Such questions were to be decided by a court of arbitration, composed of a judge and of two assessors; the procedure was to be in writing and there was to be no appeal. The law was to cease to have effect six months after the sign- ing of peace. (Rev. Trim. 1915, p. 720, 1917, p. 258.) But this law was not carried. Special laws were passed in France in the latter part of the war as to the effect of war upon baux a loger and baux ruraux. (Loi du 9 mars 1918, and Loi du 17 aout 1917.) Strikes. Whether a strike amounts to force majeure excusing the exe- cution of the contract is a question of circumstances. If the strike is general, including all the works of a certain kind, it may make it impossible for the debtor to fulfil his obligation . But in other cases the difficulty may be got over by going elsewhere. If the contract was to deliver a product which is made only by one maker, a strike in his works might be cas fortuity excusing a merchant who had undertaken to supply goods of this manufac- NON-PERFORMANCE WITHOUT FAULT OF DEB LOR. 315 turer. But if the strike occurs in the works of the debtor himself it is not a cas fortuit if it was brought about by his own fault, or if it rests with him to bring- it to an end. II y a lieu dans chaque espece de rechereher si la greve a eu pour origin? une faute grave del' entrepreneur, si elle pouvait etre evitec ou arretee par lui, et si elle a constitue pour ltd un obstacle insurmon table a I 'execution de ses obligations. (Conseil d'Etaf, 3 juill. 1912, D. 191G. 3. 3, lere espece; Req. 22 avr. 1909, D. 1913. 1. 136; Req. 28 oct. 1907, D. 1909. 1. 282; note by M. A. Colin to Paris, 13 nov. 1903, D. 1904. 2. 73; D. N. C. C. art. 1148, nos. 204 seq., and Additions, 1913, art. 1148, nos. 204 seq. ; C. A. Alex. 13 dec. 1899, B. L. J. XII, 39. See Rev. Trim. 1908, p. 613. As to the question whether the workman who strikes commits a breach of the contract which entitles his employer to resiliate the contract of service, see Cass. 18 mars 1902, S. 1903. 1. 465; and Sirey, Table, 1901—1910, vo. Louage de services, n. 105.) Onus of proof of fortuitous event. The debtor who pleads thai the reason why he has not executed his contract is because W was prevented by a fortuitous event has the burden of proof. He must prove the evemt and he must prove also that it occurred without his fault. In some cases the mere proof of the event will exclude the idea of fault. As a general rule a debtor who proves that the inexecution was due to such events as earthquakes, lightning, or floods, does not need to prove positively that he could not prevent these occurrences. If the creditor maintains that, notwithstanding the fortuitous event, there was fault on the part of the debtor, it is for him to prove it. (B.-L. et Barde, Oblig. 1, n. 466; Aubry et Ran, 5th ed. 4, p. 169, note 36.) But there are other events such as fire, or theft committed by a third party, which may have prevented the exe- cution of the obligation, and yet are not necessarily fortuitous so as to excuse the debtor from performance. The fire may have been caused by the fault of the debtor, or the thing may have been stolen by some person for whom he is responsible, or it may have been stolen owing to his negligence. In these cases the debtor must prove not only that the event happened and caused the inexecution, but also that it happened without his fault. (See, as to theft, Cass. 8 nov. 1881, S. 83. 1. 167.) The exact nature of the proof which he must make in the case of fire has been discussed earlier. (Supra, pp. 299 seq.) '''fa 7WK^ 316 THE LAW OF OBLIGATIONS. Effect of fortuitous event. When the fortuitous event which the debtor proves in excuse for the non-execution is of a kind merely to cause delay, and not to prevent the execution altogether, the debtor will be excused only for the damages caused by the delay, and will be bound to execute his obligation when the obstacle is removed. (Cass. 15 fevr. 1888, D. 88. 1. 208; Trib, Civ. de la Seine, 2 mars et 21 avril 1915, Trib. Com. de Nancy, 6 dec. 1915, D. 1916. 2. 101.) But when the effect of the fortuitous event is to make the per- formance of the obligation altogether impossible the obligation is rescinded, and the parties are put back as far as possible into their former position. Tf any payment has been made or anything delivered it must be returned by the debtor who owing to the for- tuitous event cannot fulfil his part of the obligation. But the debtor is not excused by proof of a fortuitous event if the impossi- bility arose after he was in default, or if he had especially under- taken to be responsible for fortuitous events. (B.-L. et Barde, Oblig. 1, n. 461; Planiol, 2, n. 233; D. N. C. C. art. 1148, nos. 32 seq.) The rules on this subject are clearly stated in the Egyptian Code: Obligations are extinguished by dissolution, when, after they have come into existence, performance of them has become impossible. If performance has become impossible through the fault of the debtor, or if the impossibility has ((risen while the debtor is in default as regards execution, he is liable for damages. When an obligation is dissolved in, consequence of impossibility of performance, the correlative obligations are in like manner dissolved, without prejudice to the right to indemnity, if cmy, due from, the respective parties for any benefit acquired without cause. (Arts. 177—179/240—242.) This means that there must be a restitutio in integrum. The debtor' who cannot make the per- formance which he has promised is excused, but he cannot retain what, has been paid to him. (Dall. Rep. Obligations, n. 740; Req. 14 mai 1872, D. 73. 1. 78.) The Egyptian Code in saying the correlative obligations are i)i like manner dissolved clears up a difficulty which arises under the corresponding article of the French Code (art. 1302). That article says that when a corps certain which a debtor was bound to deliver perishes without his fault — Vobiigation est eteinte. It does not say that the corresponding obligations of the creditor tL J'toiAy fid M**> NON-PERFOKMANCE WITHOUT FAULT OF DEBTOR. '517 are likewise extinguished. The French article is concerned only with the obligation to deliver a specific thing and not with the obligation to do or not to do. In regard to the obligation to do or not to do, the French authors agree that if the debtor is prevented by a fortuitous event from the fulfilment of his obligation the obligation of the creditor is likewise extinguished. This rests upon the theory that in the synallagmatic contracts the two obliga- tions are reciprocal; each of them is the cause of the other, and the extinction of one entails the extinction of the' other. (Planiol, 2, n. 621: B.-L. et Barde, Obliy. 1, n. 445: Laurent, 18, n. -509; Aubry et Rau, 5th ed. 4, p. 406.) Article 1302 of the French Code lays down a different rule for the obligation to deliver a specific thing. In this case, the debtor alone is excused by the fortuitous event which makes it impos- sible for him to deliver the thing, but this event does not affect the correlative obligation of the creditor. This is because the French Code in another place, when dealing with the obligation to deliver a specific thing, says that the thing is to be at the risk of the creditor from the date of the contract (art. 1138). But the Egyptian Code has no corresponding article, and, in spite of the difficulty of reconciling the articles in the Egyptian Code upon risk in the contract of sale, it would appear that the Egyptian legislator intends to lay down a universal rule. The fortuitous event which relieves the debtor puts an end to the obligations on both sides, and there must be a restitutio in integrum. In the case of sale if the buyer has paid the price he can get it back again. (C. C. E. 266/336, 297/371 . Contrast, in France, Pothier, Vmte, n. 307; Guillouard, Vente, 1, n. 264.) This point will be more fully explained later in discussing the extinction of an obligation by the loss of the thing due. (Infra, p. 476.) Fortuitous event in contract of lease. In the contract of lease of a thing the code lays down special rules as to the effect of a fortuitous event upon the rights of the lessor and the lessee. The fortuitous event may have altogether destroyed the thing let, and in that case the contract is dissolved for the future, but the rent paid for the period before the fortuitous event does not need to be returned because the lessee has had the use of the subject. (C. C. E. 370/454, 455; C. C. F. 1722. See Pans, 1 avril 1886, D. 68. 2. 85; B.-L. et Wahl, Lottaye, 3rd ed. 1, n. 352.) ■ |fAA«v -W^tvw 318 THE LAW OF OBLIGATIONS. But ii* the fortuitous event lias nor destroyed the subject alto- gether, but has deprived the lessee merely of a part of the thing, the lessee has the option, according; to circumstances, of demand- ing either the dissolution of the lease or a reduction in the rent. Ho cannot oblige the lessor to restore the subject to its former state. (Req. 12 janv. 1910, I). 1911. 1. 375.) The full dis- cussion of this matter belongs to the law of lease. Right to rebut defence of force majeure may be lost by acquiescence in non-performance. Acquiescence in non-performance. Before the execution of the contract an event such as the out- break of war may occur which renders its execution impossible, or, at any rate, very difficult. If, in such a case, the debtor intimates to the creditor that he cannot execute the contract and the creditor makes no reply, the court may infer that he acquiesced in the resiliation of the contract, and it may be unnecessary to decide if there was force majeure, because the creditor by his conduct has lost the right to insist on the performance of the contract by the debtor. (C. A. Alex. 11 avril 1917, B. L. J. XXIX, 358.) Comparison with other laws. Swiss Code. The SAviss Code in its general article on the liability of the debtor for inexecution avoids using the terms cas fortuit or force majeure. It says, Lorsque le orecmcier ne peut obtenir V execution de V obligation, on ne peut Vobtenir qu'imparfaitememt, le debiteur est tenu de r Sparer le dommage en resultant, a m'mns qu'il ne prouve qiCaucune faute ne lui est Imputable. (Code des Obliga- tions, art. 97.) But in other articles the Swiss Code of Obligations speaks of oas fortuit or force majeure indifferently . (Cf . arts. 103, 299, 306, 420, 447, 474, 487, 490. See Rossel et Mentha, Droit Civil Suisse, 3, pp. 128, 154,) German Code. The corresponding article in the German Code is thus ex- pressed: — Le debiteur se trouve liber e de Vobligation. d'effectuer la prestation, des que celle-ci devient impossible par suite d'une ■ . *f NON-PKRFORMANCE WITHOUT FAULT OF DEBTOR. 319 circohstance survenue depuis la naissance du rapport d'obiiga- tion el dont le debitew n'ait pus a repondre. Est assimilee a um im/possibilite survenue depuis la naisscmce du rapport d' obligation Vim/puissance du debiteur, ulterieurement survenue, d'executer la prestation (art. 275). In other articles the German Code uses the term force majeure —hohere Gewalt. (See arts. 203, 212, 215, 701, 1996.) According- to Cosack, the German Code intends to make the distinction referred to above between accidents arising- out of the enterprise, and accidents which are external to it -innerer Zufall and aiiszerer Zufall. (Lehrbuch des Deutschen biirgerlichen Rechts, 6th ed. 1, pp. 291, 317.) The illustration he gives is the special liability of the hotel- keeper, who, under the German Code, is liable for the loss of goods belonging to his guests, unless the damage is caused by the nature of the goods themselves or by forot) mwj&wm (art. 701). In his view, the reason why the hotel-keeper must pay for goods stolen by third parties who are neither his guests nor his servants is because this is a risk which belongs to the enterprise. Other German authorities, however, deny that the criterion of force majeure is that it must be something external. (See note in French translation upon art. 203.) In the German law, as in the French, when the impossibility of performance is caused by an event which happens after the date of the contract it is immaterial whether the impossibility is objective or subjective; the only relevant question is whether the debtor is free from fault. (Windscheid, Pandekten, 8th ed. 2, s. 264, n. 2.) In regard to the contract of carriage it is a significant fact that the German law does not make the carrier's liability turn on whether the accident was caused by a risk foreign to the enterprise. Le voiturier est responsible du dommage resultant de la perte ou de Vavarie survenue, depuis la remise jusqu'a la deliwance de la merchandise, ou du retard dans la delivrance, a moins que la perte, Vavarie ou le retard ne proviennent de circonstances que naurait pu eviter la diligence d'un voiturier prudent. (Code de Commerce Allemand, art. 429.) In the German law ordinary carriers can modify the legal rules as to their liability by special contracts, but the power of railways to do so is restricted in various ways. (Code de Comm. Allemand, art. 471.) 320 THE LAW OF OBLIGATIONS. English law as to impossibility of performance. Tn the English law when the performance of an agreement has become impossible after its elate owing to a change in the law the agreement is void. (Baily v. De Crespigny, 1869, L. R. 4 Q. B. 180, 38 L. J. Q. B. 98; Leiston Gas Co. v. Leiston-cum-Sizewell V. D. C, 1916, 2 K. B. 428, 85 L. J. K. B. 1759.) So, for example, the outbreak of war which makes traffic with the enemy country illegal will excuse the non -performance of contracts which involve such prohibited trading. (Arnhold Kar- bcrcj d': Co. v. Blythe, Green, Jourdain & Co., 1916, 1 K. B. 495, 85 L. J. K. B. 665. See Barker v. Hodgson, 1814, 3 M. & S. 267, 15 R. R. 485; Clapham Steamship Co. v. Nawnlooze Ven- noolschap Vulcacm, 1917, 2 K. B. 639, 86 L. J. K. B. 1439; Baty and Morgan, War, Its Conduct and Legal Results, p. 422;. Page, A., War and Alien Enemies, 2nd ed.; Campbell, H., The Law of War and Contract, p. 64; Mackinnon, F. D., Effect of War on Contract; McNair, A. D., War-Time Impossibility of Performance of Contract, 35 Law Quarterly Review, 84; and supra, I, pp. 123 seq.) When the supervening impossi- bility is not one of law, but of fact, it does not excuse the non-performance of the contract if the contract was an absolute one. The English law does not admit as a general principle that force majeure excuses the non-performance of a contract. So, when a man agreed to deliver a cargo on board in the usual time, and this became impossible owing to the freezing of the canal by which the cargo would have been brought to the ship, it was held he was not excused. (Kearm v. Pearson, 1861, 7 H. & N. 386, 31 L.J. Ex. 1,126R.R. 473.) A nd if a foreign law prevents the performance the impossibility is one of fact which does not excuse the failure. (Barker v. Hodgson, id supra.) The severity of the English law in not admitting force majeure as a defence is, however, greatly mitigated by the fact that the courts treat the question as one of interpretation. In many cases it is held to be an implied term of the contract that the party was to be discharged if the performance became impossible without his fault. This is so when the parties con tract on the basis of the continued existence of a specific person or thing. The leading case is Taylor v. Caldioell. " Where from the nature of the contract it appears that the NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 321 parties must from the beginning have known that it could not be fulfilled unless, whjen the time for the fulfilment of the contract. arrived, some particular specified thing continued to exist, so that when entering into the contract they must, have contemplated such continued existence as the foundation of what was to be done." {Taylor v. Caldwell, 1863, 3 B. & S. 826, 32 L. J. Q. B. 164 T , 129 R. R. 573, where see note of the cases in which this principle has been applied.) In Taylor v. Caldwell the agreement was to let a music-hall for four days, and before the first of those days arrived the music- hall was burnt down. It was held that both parties were excused. In Appleby v. Myers the plaintiffs had contracted to erect certain machinery in the premises of the defendant and to pay a specified sum for the whole work after completion. When the machinery was only partly erected a fire accidentally broke out in the premises, and, without fault by either party, destroyed both the buildings and the machinery then erected thereon. It w r as held that the plaintiffs were not entitled to recover anything for the work done, and that both parties were excused from further performance of the contract. (1867, L. R. 2 C. P. 651, 36 L. J. O. P. 331.) Upon the same principle, when under a contract an agent was entitled to a salary as a remuneration for his services in intro- ducing clients to a stock-broker, and, owing to the war, the stock- exchange was closed for several months, it was held that no re- muneration could be claimed for this period. It was an implied condition of the contract that the stock-exchange should remain open. {Berthoud v. Schweder & Co., 1915, 31 Times Law Re- ports, 404; Mews' Digest, 1911—1915, p. 1578. See Campbell, H., Law of War and Contract, p. 169.) Extension of this principle. In recent cases the principle of Taylor v. Caldwell has been extended. The new rule is thus stated by an eminent, judge: — " When a lawful contract has been made, and there is no de- fault, a court of law has no power to discharge either party from the performance of it unless either the rights of someone else or some Act of Parliament give the necessary jurisdiction. But a court can and ought to examine the contract and the circumstances in which it was made, not of course to vary, but only to explain it, in order to see whether or not from the nature of it the parties AV.— VOL. II. 21 322 THE LAW OF OBLIGATIONS. must have made their bargain on the footing that a particular* thing or state of things would continue to exist; and if they must have done so. then a term to that effect will be implied, although it be not expressed in the contract. In applying this rule it is manifest that such a term can rarely be implied, except where the discontinuance is such as to upset altogether the purpose of the conl ract . Some delay or some change is very common in all human affairs, and it cannot be supposed that any bargain has been made on the tacit condition that such a thing will not happen in any degree." {Per Lord Loreburn, in F. A. Tamplin S. S. Co. v. Anglo- Mexican Petroleum Co., 1916, 2 A. C. 397, 85 L. J. K. B. 1389,1394.) Applying this principle, it was held in the following case that a contract of service was terminated. A British ship was in the port of Hamburg at the outbreak of war and was detained there by the German authorities, and the crew were interned for an indefinite time as prisoners. The plaintiff was the wife of one of the officers of the ship. Her husband's contract with the shipowner was to serve on the ship on a voyage not exceeding two years' duration. He had stipulated that the shipowner should pay part of his wages to his wife. She claimed in this action payment of the proportion of wages earned by her husband after he had been interned as a prisoner. It was held that the shipowner was not liable to pay wages after the date when the crew were interned. [Horlock v. Bed, 1916, 1 A. C. 486, 85 L. J. K. B. 602.) The voyage contemplated in the contract had been brought to an end without fault on the part of the defendant, and there was '"the failure of something which was at the basis of the contract in the mind and intention of the contracting parties." Instead of the destruction of a specific thing, there is " the cessation or non-existence of an express condition or state of things going to the root of the contract." Per Lord Shaw, 85 L. J. K. B. 618.) But even when the parties have contemplated the possibility of the termination of the contract without liability; owing to the operation of certain causes, such as " restraint of princes," this excuse does not avail unless the foundation of the commercial enterprise contemplated by the parties has been destroyed. If a ship has been chartered for five years and it is requisitioned by the Government for use in war, this does not terminate or even suspend the charter-party if it is still possible that the ship may be released so as to be available for use by the NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 323 charterers for some months before the expiration of the five pears. F. A. TampMn S. 8. Co. v. Angh-Meociocm Petroleum Pro- tects Co., 1916, 2 A. C. 397, 85 L. J. K. B. 1389. A recent writer states the result of the cases in these terms: llic conclusion seems to be this: If, subsequently to the forma- tion of a contract, an event of which the effects have not been expressly provided for by the terms of the contract occurs, and causes, or is reasonably likely to cause, such difficulty or delay in performance as amounts to commercial impossibility, or destroys the whole foundation of the contract, either [tarty may claim that it was an implied term of the contract that on the happening of th,' said event the obligations of the contract should be discharged. And the court will assent to such claim if it holds, first, that as a matter of construction the alleged implied term was a term of the contract, and. secondly, that the event is of the nature above stated." Mackinnon, F. D., Effect of War on Contract, p. 23. Cf. article by A. D. McNair in 30 Law Quarterly Review, 84, and, especially, at p. 9! I. English law as to supervening incapacity to render personal services. A contract to render personal services, such as can be performed by the debtor only, is subject to the implied condition that he shall be alive and in a state of health to perform the services. If without his fault the debtor should die, or if he should be disabled from performance by illness, the non-performance of the contract is excused. So where a musician contracted to play at a concert, and, owing to illness, she was unable to fulfil her engagement it was held that the illness was a valid excuse. It is, probably, an implied term of such a contract that, if tho person disabled by illness has an opportunity of so doing, he shall give to the other party to the contract notice of the disability within a reasonable time. {Robinson v. Davison, 1871, L. R. 6 Exoh. 269, 40 L. J. Ex. 172.) Impossibility of performance does not cause the contract to be rescinded ab initio. According to the English law, the supervening impossibility of performance may, upon the principles above explained, put an end to the contract and release both parties from, further per- formance. But there is not, as in the French law, any restitution 21 (2) 324 THE LAW OF OBLIGATIONS. in integrum. The contract is valid up to the date when the impossibility arose. If anything has been paid under the contract it cannot be recovered, and if a legal right to claim a payment has accrued before the date of the impossibility, this payment may be claimed in spite of the impossibility. The plaintiff agreed to let to the defendant a room for the purpose of seeing the procession which was to have taken place on the occasion of the King's Coronation. The procession had to be postponed owing to the King's illness. The price for the use of the room was, under the contract, payable before the date fixed for the procession, and part of the price had been paid before that date. It was held that the defendant was entitled not only to retain the money paid on account but to recover the balance., {Chandler v. Webster, 1904, 1 K. B. 493, 73 L. J. K. B. 401.) But if the price is not payable or the performance is not due until after the time when the impossibility arises, it cannot be claimed. (Kr&ll v. Henry, 1903, 2 K. B. 740, 72 L. J. K. B. 794.) And when the existence of a particular state of things is merely the inducement to one party to enter into the contract but is not the basis of the contract between the two parties the doctrine of Taylor v. Caldwell does not apply. The defendant hired a steamer for the purpose of taking paying passengers to see a Naval Review and for a day's cruise round the Fleet. Owing to the King's illness the Naval Review had to be abandoned, but it was held that this did not excuse the defendant from his liability to pay the price agreed upon for the steamer. (Heme Bay Stmmboat Company v. Hutton, 1903, 2 K. B. 683, 72 L. J. K. B. 879.) It must be admitted that the distinction between this case and such cases as Krell v. Henry is very difficult. (See Anson, Con- tracts, 14th ed. p. 387; Pollock, Contracts, 8th ed. p. 440; Leake, Contracts, 6th ed. p. 500. In English law war does not in itself necessarily create impossibility of performance. Save in cases governed by the principle above stated, the out- break of war is not admitted in English law as an event preventing the performance of a contract unless the war creates an impossi- bility in law, as when trading with the enemy is prohibited, or unless the war renders the carrying out of the contract once for NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 325 all impossible, and from the nature of the contract it appears that the intention of the parties was to make the contract conditional on its performance continuing to be possible in fact. (See Leiston Gas Co. v. Leiston-cum-Sizeivell Urban Council, 1916, 2 K. B. 428, 85 L. J. K. B. 1759; Horlock v. Bed, 1916, A. C. 486, 85 L. J. K. B. 602; supra, p. 322.) But the danger to a ship of capture by the enemy may be an excuse for a deviation, and j)erhaps it might entitle the ship to discharge her cargo in a different port from that named' in the contract. (See The Teidonia, 1872, L. R. 4 P. C. 171, 41 L. J. Adm. 57; Pole v. Cetcovitch, 1860, 9 C. B. N. S. 430, 127 R. R. 705; Carver, Carriage by Sea, 5th ed. s. 290; Baty and Morgan, War, Its Conduct and Legal Results, p. 414.) There have been many English cases since the outbreak of war, and the tendency of the courts is to apply the rule strictly that the outbreak or the continuance of war does not in principle excuse the defendant from performing his contract. Thus, where a residential flat in England had been let before the war for a term of years to an Austrian subject, and after the outbreak of war, he was prohibited by law from residing in that area, it was held that this did not terminate the lease. His per- sonal residence in the flat was not the " foundation of the contract." (London and Northern Estates Co. v. Kish-Schlesinger, 1916, 1 K. B. 20, 85 L. J. K. B. 369.) In what is now the leading case it was necessary to consider the legal effect upon a charter-party of the requisition of the ship hy the Government. A steamer had been chartered for five years from December, 1912, the charterers having liberty to sublet the steamer. She was requisitioned by the British Government in February, 1915, for use as a transport. No one could say how long she would be required. It was held that the charter-party remained in force. (F . A. Tamplin Steamship Co., Ltd. v. Anglo-Mexican Petroleum Products Co., Ltd., 1916, 2 A. C. 397, 85 L. J. K. B. 1389. Supra, p. 323. See the cases to the end of 1916 collected and discussed in Campbell, H., Law of War and Contract; Mackinnon, F. D., Effect of War on Contract.) Statutory power to avoid contracts. In England by a recent amendment to the law, the Board of Trade has power to order that a contract with an enemy shall be cancelled either unconditionally or upon such conditions as the 32(3 THE LAW OF OBLIGATIONS. Board may think fit if the Board considers that the contract is injurious to the public interest. {Trading with the Enemy Amendment Act, 1916 (5 & 6 'Geo. 5, c. 105), s. 2.) # Force majeure compared with " act of God." The liability in the English law of the common carrier of goods whether by land or by sea is wider than that of the French law. In the English law carriers are, in the absence of express stipula- tions to the contrary, when such stipulations are lawful, absolutely responsible for the loss of the goods unless they can prove that it was due to the Kings enemies, or the act of God, or that it was caused by inherent vice or by the negligence of the shipper. (Peek v. North Staffordshire Railway Co., 1863, 10 H. L. C. ,473, 32 L. J. Q. B. 241.) And the "act of God" means that the act must have been caused by the elementary forces of nature as opposed to the act of man. In a leading English case, James, L. J., thus expresses it: " The ' act of God ' is merely a short way of expressing this pro- position: a common carrier is not liable for any accident as to which he can show that it was due to natural causes directly and exclusively, without human intervention, and that it could not have been prevented by any amount of foresight, pains and care reasonably to be expected from him." (Nugent v. Smith, 1876, 1 C. P. D. 423, at p. 444, 45 L. J. C. P. 697. Tho question is not whether the accident could have been pre- vented by any conceivable care, but whether it could have been prevented by such care as was reasonable in the circumstances. (See, for illustrations, Beven, Negligence, 3rd ed. 1, p. 81, and 2, p. 879; Pollock, Torts, 10th ed. p. 513; Salmond, Twts, 4th ed. p. 232.) "Act of God" is a much narrower ' term than cas fort ait, because cas fortuit includes many accidents which are caused either in whole or in part by the agency of man. A loss caused by fir© is not due to the act of God unless the fire was caused by lightning. (See Gatliff v. Bourne, 1838, 4 Bing. N. C. 314, 3 M. & G. 643, 44 R. R. 714.) And loss by theft committed by a third party for whom the carrier is not responsible, or loss caused by the negligence of such ;i third party, is held in the French law to be due to a cas fortuit, but in the English law it would not be regarded as the " act of God." (See on the distinction between "act of God" and cas NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 327 ■fori nil, Nugent v. Smith, ut supra; Carver, Carriage, by Sea, 5th eel. p. 7; Holmes, Common Law, Lecture V, p. 201.) One of the arguments used by the French writers who think that the carrier oug'ht to be responsible for loss caused by accidents such as are inherent in that business is that the English law holds him liable unless the loss was caused by the " act of God." (See Josserand, Les Transports, n. 582.) This may be a good reason for changing the French law, but it cannot affect the interpretation of the code. The English law restricts the freedom of the carrier to limit his liability by contract, but this subject cannot be treated here. The liability of innkeepers for loss or injury to goods belonging to a guest is in England governed by statute. The Act provides that the innkeeper's liability shall be limited to thirty pounds unless the goods have been stolen, lost, or injured through the wilful act or neglect of himself or his servants, or the goods have been deposited with him for safe custody. But the innkeeper does not enjoy the privilege unless he exhibits the Act in a con- spicuous part of the entrance to the inn. (26 & 27 Vict. c. 41. See, for cases, Beven, Negligence, 3rd ed. 2. pp. 856 seq.) 328 THE LAW OF OBLIGATIONS. CHAPTER XVII. CONDITIONAL OBLIGATIONS. Different kinds of obligations. The chief kinds of obligations are conditional obligations, obli- gations with a term, alternative obligations, facultative obliga- tions, joint obligations, joint and several obligations, divisible and indivisible obligations, and obligations with a penal clause. The expression " condition " is sometimes used to describe any term of a contract, as when a charge laid upon a donee is spoken of as a "condition" of the gift. (B.-L. et Barde, Oblig. 2, n. 743; Aubry et Rau, 5th ed. 4, p. 94, note 1.) But when we speak of a conditional obligation the word " con- dition " has a more technical sense. An obligation is conditional when it is made to depend upon an event future and uncertain, either by suspending it until the event happens or by dissolving it according as the event does or does not happen., (C. C. F. 1168; C. C. Q. 1079.) The Egyptian codes vary the language but not the sense, sub- ject to what is said later as to the word " or." They state: An obligation may depend on a future or un- certain event, the occurrence of which shall bring it info existence or confirm it/or shall prevent its coming into existence or extin- guish it. (C. C. E. 103/157.) In the first case the condition is called suspensive, and in the second resolutive. For example, a seller may sell an article subject to the condition that it is not to become the property of the buyer until the price has been paid in full. Here the sale is subject to a suspensive condition. Or he may sell it subject to the condition that he is to have the right of buying it back at the same price within a year. Here the. condition is resolutive. CONDITIONAL OBLIGATIONS. 'Y29 Suspensive condition. When the condition is suspensive it is as yet uncertain whether the person to whom the right is given conditionally will ever be able to enforce it. But, pending the settlement of this question, the possibility of the right emerging alters the situation of the parties, and the eventual right of the creditor is in certain ways protected. Resolutive condition. When the condition is resolutive the right is acquired at the date of the contract, but it is uncertain if the creditor will be entitled to keep it. Thus, if an article is sold on condition that the seller shall have a right of redemption, that is, that the buyer shall be bound to resell the prioperty to the seller if he demands it within a certain delay, there is a resolutive condition. This distinction between the suspensive and the resolutive condition does not go to the root of the matter/ In reality, as Ulpian says, there is always a suspensive con- dition, but the question is whether it prevents the right coming into existence, or allows it to come into existence but may put an end to it afterwards. An obligation with a resolutive condition is in reality an obligation pure and simple which, subject to a certain suspensive condition, may be resolved. D. 18. 2. 2; Baudry-Lacant. et Barde, Oblig. 2, n. 772.) Sale subject to the condition that the property does not pass until payment of the price, is perhaps the most familiar example of the suspensive, condition, and, in this case, the condition is frequently implied. A true condition takes effect only when the obligation depends upon something which has yet to happen, and it has five charac- teristics:—'!) the event must be future; (2) it must be uncer- tain; (3) it must be possible; (4) it must be legal; (5) it must not be destructive of the tie of the obligation. Taking these points in their order. (1) Event must not have already occurred. When an obligation depends on an event which has actually happened, but this fact is unknown to the parties, it is not con- ditional. The obligation takes effect or is defeated from the time at which it is contracted. For example, I sell you on August 1st a cargo of wheat on my steamer provided the ship arrives safely 330 THE LAW OF OBLIGATIONS. in Liverpool. On August 1st the steamer was already in dock at Liverpool, though this fact is unknown to both of us. There is nothing- here to suspend the obligation. It is either an unconditional sale or it is no sale at all. We may possibly not hear for some time on what day the vessel arrived in Liverpool, but as soon as this fact is known, it becomes clear that there was an immediate sale on August 1st, and the risk, according to the French law, passed to you at that date. The Egyptian law differs as regards the passing of the risk. (C. C. E. 297/371. Infra, p. 480.) On the other hand, if, on August 1st, unknown to both of us, the steamer was at the bottom of the Atlantic, there is likewise no condition, because when this fact is ascertained it becomes clear that there never was a sale at all, for at the date of the agreement the object about which the parties were contracting had ceased to exist. This was the Roman law and it has been followed in the French law. (Inst. 3. 15. 6; Pothier, Obliga- tions, n. 202; Aubry et Rau, 5th ed. 4, p. 97. The Egyptian Code, however, does not say, as the French Code does, that the event upon which the obligation depends must be " future and uncertain." (C. C. F. 1168.) It uses the disjunc- tive, and says "future or uncertain." (C. C. E. 103/157.; But, probably, this is by mere inadvertence. An event which has happened cannot make a condition in any ordinary sense. It is the opinion of Fathi Pasha Zaghlool that the Egyptian legis- lator did not intend to change the law. (Commentary, in Arabic, on C. C. E. p. 14.) Mr. Halton suggests that "perhaps the Egyptian legislator wished to employ language which would allow a past but unverified event to be considered as a condition. But the unusual drafting of the Egyptian article may simply be an inadvertence." (1, p. 281.) The Mixed Court seems to take the latter view. (C. A. Alex, ler mai 1907, B.L.J. XIX, 232.) (2) Event future but certain. There is no condition when the future event is certain though the date when it will take place may be uncertain. The obliga- tion in that case is not subject to a condition. It is an obligation, with a term, and its character will be explained later under that head. For example, a policy of life-assurance is not a condi- tional obligation, it is an absolute obligation, because the assured will die sooner or later. It may, however, contain obligations which are truly conditional, such as, to par the sum in the policy CONDITIONAL OBLIGATIONS. 331 if the assured shall attain the age of sixty, because this is an event which is both future and uncertain. (3) Event impossible. The event must be possible. An obligation which is made to depend upon the doing or happening of a thing' which is impos- sible is void. If I say, "I will give you L. E. 5,000 if you will jump ovei the moon," I know that I am not taking any risk, and it is immaterial whether the condition is that I or you or a third party should do the impossible. It is generally agreed that by "impossible," the code means impossible for anybody. A promise made, subject to a condition that the promisor or the promisee or a third party shall not do something which it is impossible for anybody to do, does not annul the obligation, be- cause as it is certain that the condition can never be performed, the promise is really an unconditional one. If I promise you L. E. 1,000 if you do not jump over the moon this is an absolute promise in spite of its form, for it is evident that you cannot perform the condition. The French Code contains an express provision to this effect. (C. C. F. 1173.; But this article is useless, because the obligation is of necessity absolute and the apparent condition is not one in reality, since it lacks the essential quality of being uncertain. (Aub'ry et Rau, 5th ed. 4, p. 97; Colin et Capitant, 2, p. 181; Req. 8 janv. 1894. D. 94. 1. 128.) (4) Event unlawful. The condition must be legal. The French Code says: Every condition contrarij to law, or inconsistent with good morals, is void and renders void the obligation ivhich depend* upon it. (C. C. F. 1172; Cass. 27 avril 1906, D. 1907. 1. 97; Req. 8 janv. 1894, D. 94. 1. 128.) No damages can be recovered for the breach of such a contract. A promise to pay money to a man if he commits a crime or does something illegal or immoral is not binding; and, according to what seems to be the better opinion, a stipulation that a man shall forfeit a certain sum if he does something illegal is likewise null, though some writers think it ought to be supported as encouraging morality. But the sufficient answer to this is that given by Pothier, that it is contrary to good morals to allow a 332 THE LAW OF OBLIGATIONS. man to stipulate for a reward for abstaining from an act from which it is his duty to abstain in any event. (Oblig. n. 204;, B.-L. et Barde, 2, n. 764; supra, I, p. 116.) The various kinds of unlawful contracts have been already discussed in speaking of the cause of obligations. In regard to impossible and unlawful conditions there is an important difference in the French law between wills or donations and onerous contracts. Such condi- tions in a will are considered as not written. The legatee takes the bequest and the condition is read out of the will. (C. C. F. 900.) And the same rule applies to impossible or illegal conditions attached to a gift inter vivos. The French Code allows the donee to take the gift free of the condition, in the same way as a legatee takes a legacy. (C. C. F. 900; Baudry-Lacant. et Colin, Des Donations, 1, n. 65: B.-L. et Barde, 2, n. 753.) But according to the French jurisprudence, this is a question of interpretation. The rule that the condition shall be held pro non scripta, i.e., that the legatee shall take the legacy free of the condition, does not apply when the condition was la cause impul- sive et determimmte cle la liberalite. (Req. 12 mai 1909, D. 1910. 1. 291; Cass. 19 oct. 1910, D. 1911. 1. 463. Cf. Lyon, 28 juill. 1904, D. 1908. 2. 30.) (5) Event left to free choice of promisor. The condition must not be destructive of the tie of the obli- gation. The French Code says: Toute obligation est nulle lorsqu'eMe a ete contractee sons une condition potestative de la part cle cclui qui s' oblige. (C. C. F. 1174.) This means that an obligation conditional on the will purely of the party promising is void. But if the condition consists in the doing or not doing of a certain act, although such act be dependent on his will, the obligation is valid. It is clear that if I say " I will pay you so much if I choose," there is no obligation; I am as free as I was before. On the other hand, if I say " I will pay so much if I do a certain thing, as, for example, if I set up a certain kind of business in a particular locality; or if I promise to pay so much " unless Ldo something," my will is no longer free; I can do or not do the thing in question, but I incur a penalty if I exercise my choice in a certain way. CONDITIONAL OBLIGATIONS. 333 Where the debtor has left himself perfectly free, by saying he is only to be bound if he shall choose, this is called a potestative condition, but it is in truth not a condition at all. It must not be forgotten that in a synallagmatic contract one party may be bound though the other is not bound, because his obligation is purely potestative. (Pand. Frang. Oblig. n. 1113; Cas^. 25 now 1896, D. 97. 1. 34; Reg. v. Dem&rs, 1900, A. C. 10 -J. 69 L. J . P. C. 5.) For instance, in the common case of an option of sale, I promise to sell a thing to you at a certain price within a certain delay if you declare your acceptance. I am bound, subject to the condition, but you are free to take it or not. (Pothier, Vente, n. 478; Pand. Frang. vo. Oblig. n. 1114.) Nor is there anything to prevent an obligation being formed which is dissoluble at the will of one of the parties. This is so, for example, in a sale subject to the right of redemp- tion, or in a lease which, according to its terms, may be broken at certain dates. (Larombiere, on art. 1174, n. 17.) So there is nothing to prevent a clause in a contract with an employee that he may be dismissed at pleasure. The contract is valid till the power of terminating it is exercised, and a clause which permits the power does not make the contract purely potestative. (Limoges, 11 juill. 1898, D. 1901. 2. 380.) For instance, the director of a theatre may reserve to himself the right to resiliate the contract with an actor at the end of a month, though no corresponding right is given to the actor. (Cass. 2 mai 1900, D. 1900. 1. 392.) It is sometimes a difficult question of interpretation to decide whether the condition is purely potestative, that is to say, if it is merely the equivalent of " I bind myself if I choose "—si mlum>. (See Cass. 15 Janvier 1890, D. 91. 1. 30; Trib. Civ. Marseille, 21 nov. 1896, sous Eeq. 9 janv. 1900, D. 1903. 1. 321, and note; C. A. Alex. 3 juin 1896, B. L. J. VIII, 313. Pothier argues that a promise to pay " if I judge it reasonable " is not a potestative condition because my judgment can be controlled by the courts. (Oblig. n. 48.) But this reasoning is rightly rejected. Such a clause would leave me the sole judge of what was reasonable . It would be otherwise if the condition were " if it is reason- able." (Demolombe, 25, n. 318. See Lyon, 10 mars 1864, D. 64. 5. 255.) In a recent French case A sold to B the sole right of manufacturing a certain product in consideration of receiving a certain sum per kilogramme of the product sold. It was eon- 334 THE LAW OF OBLIGATIONS. tended that this was a potestative condition, as the buyer might reduce the manufacture to zero, but the Court of Cassation did not take this view. They hold it was an implied term of tho contract that the buyer should produce as much of the article as was sufficient to supply the demand. (Cass. 5 mai 1905, D. 1906. 1. 360. A condition to pay to an employee in addition to his salary a bonus of a certain percentage, " subject to the recommendation of the management," does not leave them free to give it or not by ii re caprice. If they do not recommend the bonus they must allege good reasons for not doing so. (Gravel Lumber Co. v. ■ ote, 1908. R. J. Q. 17 K. B. 398.) Is a promise to pay "'when I choose" potestative? Pothier held that it was, but the prevailing opinion is that this is not the presumed intention. (Oblig. n. 47.) The debtor means to bind himself, but to reserve liberty to execute his contract any time before his death. But if he dies without executing it, the payment becomes at once exigible from his heirs. (Toullier, 6. n. 498; Larombiere, on art. 1174, n. 4; Pand. Franc. Oblig. n. 1083. See Cass. 21 aout 1850, D. 50. 1. 346.) On similar principles, such conditions as " when I shall have the means," "when I shall sell the property," etc., are generally con- sidered not to be purely potestative. In the first case the court might be called upon to decide whether the debtor was in a posi- tion to fulfil the contract, and in the second case the debtor is bound if he decides to sell, so that .his will is not entirely free. Larombiere, on art. 1174, n. 5 et n. 7; Aubry et Rau, 5th ed. 4, p. 134; B.-L. et Barde, 2, n. 969; Paris, 19 nov. 1912, D. 1913. 2. 126.) The presumption is against the creditor having left the debtor free to perform the obligation or not. (C. A. Alex. 22 fevr. 1900, B. L.J. XII, 126.) A condition is not purely potestative, but is said to be mixed when it depends partly on the will of the parties and partly on tho will of a third party. C. C. F. 1171.) For example, "if you marry my cousin Mary.' In this case you may do your best, but the issue is not wholly within your power. In the Roman law and iii the old French law there was an important distinction between such a condition in a contract and in a legacy. If tho condition was in a legacy it was enough if the legatee did his pari . If it was no fault of his that the condition was not fulfilled he g it. CONDITIONAL OBLIGATIONS. 335 the legacy, whereas if such a condition were in a contract its fulfilment was a sme qua mm. Pothier accepted this distinction. >Ohlig. nos. "213, 214.) But the modern French law has rejected it. If such a condition is imposed, whether it bo in a will or in a contract, it is a pure question of interpretation whether the intention was to make the fulfilment of the condition an absolute sine qua mm, or if the intention was merely to impose upon the party the duty of doing his best to fulfil it. C. C. F. 1175 states that every condition must be fulfilled in the way that the parties probably intended. Even in a contract it may appear that the intention was merely that the parties should do their best. (Paris, 4 fevr. 1891, D. 91. 2. 317.) And in a legacy the courts will be more inclined to give a favourable con- struction, that is, one which will make the legacy effectual, unless the terms of the will show plainly that the testator meant to make the fulfilment of the condition a sine qua non of the payment of the legacy. (Baudry-Lacant. et Barde, Ohlicj. 2, n. 795; Mont- pellier, 26 dec. 1892, D. 94. 2. 284.) There are many cases in which conditions are implied, some- times because this is the presumed intention of the parties, and sometimes because the law says that a condition shall be implied. For instance, in a contract with a photographer it is an implied condition that he shall not sell copies of the photograph without the consent of the sitter. The provisions made in a marriage contract are all conditional on the marriage taking place. In every synallagmatic contract the condition is implied that a party who is himself in breach of the contract cannot call upon the other party to perform his part. Many other illustrations might be given, but this subject belongs rather to the interpretation of contract than to the law of conditional obligations, and has been discussed under that head. (Supra, L, pp. 378 seq.) Effects of the condition. Conditional right is not mere hope. The code deals with the effects of the condition in a somewhat fragmentary manner. The French Code says, indirectly, that pending the condition the obligation is "suspended.'' (0. C. F. 1185.) It might be inferred from this that pending the condition the parties were as before, and that the obligation produced no effect at all until the 336 THE LAW OF OBLIGATIONS. condition either happened or failed. On the other hand, the code gays: // the creditor be dead- before the fulfilment of the con- dition his rights pass to his heir. (C. C. F. 1179.) How can any "rights" exist if the obligation is suspended? Pothier, following the language of Justinian's Institutes, says: " Pending the condition there is nothing as yet due, but there is only a hope that it will be due." (Inst. 3. 15. 4- ObUq n. 218.) But in other passages the Roman lawyers recognise that there is more than a spes, and they use the expression creditor of the party entitled conditionally. (D. 44. 7. 42.; The language of the French Code shows that the codifiers take the view that there is a right and not merely a hope. They use the word "rights." (O. C. F. 1179, 1180.) If we compare a right with a hope the difference is clear. A person who has no legal claim to succeed to a share of another's estate at his death may have a very reasonable expectation of doing so. The other person may have encouraged him in this belief. But such an expectation is a mere spes. It is indeterminate as to amount; it is not an asset which, the expectant heir can deal with in any way, and he cannot take any steps to protect it. In all these respects the " right " of the conditional creditor is different. It is true he may never realise it, for the condition may. fail, but in the meantime it is a deter- minate value which is an asset of his estate and can be dealt with by him. It passes to his heirs, if not assigned inter vivos, and it may be protected by conservatory acts. It is better, therefore, to" speak of it as a conditional " right," or a right which exists in germ. (Laurent, 17, n. 87; Demolombe, 25, n. 356; Baudry- Lacant. et Barde, Oblig. 2, n. 838; Colin et Capitant, 2, p. 183.) Nothing yet due pending the condition. Pending the condition nothing is payable, and, therefore, if the conditional debtor has paid in error he has the action for repetition. (Pothier, Oblig. n. 218; Baudry-Lacant. et Barde, Obliq. 2 r n. 832.) This is not so in the case of obligation with a term. The debtor who has paid a debt which is not yet due under the mistaken impression that it was due cannot repeat it in the French law. (C. C. F. 1186; B.-L. et Barde, Olig. 2, n. 987.) CONDITIONAL OBLIGATIONS. 3,'}7 Conditional creditor may do conservatory acts. Tho conditional creditor may take conservatory measures, and what these may be will depend upon the nature of his conditional debt. Thus he may bring actions to obtain an acknowledgment of his right, or to interrupt prescription, or to preserve evidence. (Baudry-Lacant. et Tissier, De la Prescription, nos. 394 — 397.) He may claim to be present at a partition, and may attack a partition as in fraud of his rights. (Pothier, Oblig. n. 222; Pintd. Franc. Oblig. n. 1252.) But. he cannot bring the Paulian action nor the direct action, for these are more than conservatory measures. (B.-L. et Barde, Oblig. 1, n. 629; Aubry et Rau, 5th ed. 4. p. 216, note 1, bis; D. N. C. C. art. 1167, n. 274.) If the conditional debtor is administering the property in such a manner as to endanger the conditional right, the creditor may apply for an injunction against his so doing and ask that the damages already suffered should be judicially ascertained, though they will only be payable if the condition should be fulfilled. In a strong case the court might even order sequestration of the pro- perty, as, for example, if the object of the obligation was to deliver a wood, and the conditional debtor were to begin cutting it down, or if it was to deliver a house and the conditional debtor was demolishing it. (Demolombe, 25, n. 372; Larombiere, on art. 1180, n. 5.) Conditional creditor's right protected if conditional debtor is insolvent. The conditional creditor cannot do any execution on the goods of the debtor, but if execution is done by other creditors whose claims are unconditional, the conditional creditor must be pro- tected. He cannot claim to take a dividend, for the condition may fail, but his chance must be preserved. This may be done either by consigning the amount and waiting till it is seen if the condi- tion is fulfilled, or by dividing the whole estate, but making the creditors find security to repay the amount which will be due to the conditional creditor if the condition is fulfilled. (Pothier, Oblig. n. 222; Larombiere, on art. 1180, n. 3; Baudry-Lacant. et Barde, Oblig. 2, n. 843.) Pending the condition the conditional creditor may alienate the thing or create real rights over it, but these acts will produce no effect unless the condition should be fulfilled. If, however, this should bo the case they will be effectual w. — vol. ii. 22 338 THE LAW OF OBLIGATIONS. from their date. (CO. F. 2125; C. C. Q. 2038; Demolombe, 25, n. 381.) Conditional seller may revindicate if condition fails. If in a sale subject to a suspensive condition the condition should fail, the seller can claim back the goods. So if goods are sold subject to the condition that they shall not Income the property of the purchaser until the price is paid, the seller can revindicate them if the condition fails, unless the buyer* is protected by the rule possession vwit litre. (O. A. Alex. 4 dec. 1901, B. L. J. XIV, 31.) Where the sale in such cases is for a price payable by instal- ments, and the seller revindicates the thing, he must give back the instalments received, unless there is a stipulation that the instal- ments shall be considered to be the equivalent of rent, and that the seller shall be entitled to retain them, or unless such an intention appears from the term's of the contract. Such a stipulation is, however, generally inserted in these contracts. (See Dall. Supp. Write, n. 16; Req. 21 juill. 1897, D. 98. 1. 269; D. N. O. O. art. 1582, nos. 22 seq. ; Cass. 29 janv. 1902, S. 1902. 1. 168; Cass. 22 dec. 1909, S. 1910. 1. 191.) The rule that the conditional creditor cannot give a better right than he has himself is greatly limited by the provisions of law for the protection of purchasers of moveables in good faith. (C. C. E. 607, 608/733, 734.) If the conditional debtor b©- •eomes insolvent, and the conditional creditor owes him money on another account, he can refuse to pay this until it is seen if the condition will be fulfilled, and this conduct will be regarded as a conservatory act. An owner whose right is subject to a resolutive condition can only give rights subject to the same condition, though, in the case of moveables, the purchaser in good faith may be protected otherwise by the rule possession vaut titre. The fulfilment and the failure of conditions. When an obligation has been contracted subject to the con- dition that an event shall occur within a fixed time, this condition is considered to have failed when the time has expired without the event occurring. If no lime was fixed, the condition may always be fulfill-ed, and it is not considered as having failed until it has become certain that the ere, it will not occur. When ait obligation is contracted subject to the condition CONDITIONAL OBLIGATIONS. 339 that cm event will not happen within a fixed time, such condition is fulfilled by the expiration of the time without th< event hmmig occurred. It is fulfilled equally if, before the time has expired, it becomes certain tJmt the event will not happen. If there be no time fixed, the condition is not deemed to be fulfilled, until it is certain that the event will not happen. (C. C. F. 1176, 1177.) For example I contract an obligation subject to the condition, "If ray daughter docs not get married within two years." If the two years expire without her marrying, or if she dies within that period, the condition is fulfilled. Thus if the condition is " if you marry," you may fulfil it at any time before your death, for it is not certain until then that the condition may not be fulfilled. But if the condition is " if you do not deliver to mo a determinate thing within two years," and two years elapse without your having made delivery, the condition is fulfilled. And, equally so, if within the two years the thing" has perished, for then it is certain that you cannot deliver it. (C. C. F. 1176, 1177; Pothier, Oblig. 209, 210.) The question if a condition has been fulfilled in the manner contemplated by the parties is one for the court to decide according to the circumstances of each par- ticular case. (Eeq. 2 aoiit 1909, D. 1912. 1. 55.) These rules are more obscurely expressed in the Egyptian Code: // the, eiv'ent provided for is or becomes certain and the condi- tion is resolutory, the obligation shall be void or be avoided; if, in the like Cases, the condition is suspensive, such condition shall be considered never to have existed. (C. C. E. 104/158.) Conditions strictly interpreted. Conditions are strictly construed and must be performed in forma specified. Unless there is something in the terms of the contract, taken in connection with the circumstances, which shows that the party who stipulated the condition did not intend that it must be fulfilled literally, the court is not entitled to introduce any equitable extensions or modifications. For instance, if the condi- tion is "if you marry, within two years," you do not fulfil it by m;! irying the day after the term has expired. You cannot plead that you were not put. in default, or that you were in prison, or that you were insane and could not marry within the time. The .simple question is was the condition fulfilled, and tjhe court has no right to consider any possible excuse for non-fulfil- ment. This rigour, be it always understood, will give way when oo •) 340 THE LAW OF OBLIGATIONS. it does not appear to have been intended by the parties. Thus, to take Pothier's very simple illustration, the condition " if you give the 100 gold louis " may very well be fulfilled by your giving their value in other currency, unless there is reason to think special importance was attached to payment in gold. (Oblig. n. 206; Laurent, 17, n. 73; Demolombe, 25, n. 330; B.-L. et Barde, 2,. n. 790.) Condition that act shall be performed by particular person. The same considerations apply to performance by a particular person. If the act is one of a personal character it can only be- performed by the particular person whom the stipulant had in view. The condition "if you paint my portrait," or "if you write a sonnet," can only be fulfilled by you. You cannot sub- stitute another painter or poet, though his skill may be greater- than yours. On the other hand, if the act is one which can be performed in the same manner and equally well by any competent person, the presumption is that the stipulant did not intend to. insist on the other party doing it himself. For instance, " if you cut down a tree on your land which blocks my view " is a type of conditions of this kind. It is not intended that you should cut it down in person, but that you or your heirs should get it cut down. (Pothier, Oblig. n. 207; Pand. Fmng. Oblig. n. 1151; B.-L. et Barde, 2, n. 791.) What if no time is fixed for performance? If no time is fixed by the parties, a time cannot be fixed by the court unless this appears to have been the intention of the parties. Pothier suggests two exceptions to this rule, and there has been some controversy with regard to them: (1) According to Pothier,. when the condition consists in the other party doing something, and no time is fixed for the performance, the court maj r fix a reasonable time, and hold that the condition has failed if the fulfil- ment does not take place within the delay so fixed. Thus, for example, I promise a sum to my neighbour if he cuts down a tree which blocks my view . If he does not cut down the tree within a reasonable time, I may bring an action asking the court to fix a delay within which he must cut down the tree, or, failing his doing so, to declare mo free of my obligation for the future. (Pothier, Oblig. n. 209.) It would seem, in this ease, that this is the implied intention of the parties. I could hardly have in- tended that if at any time, even a hundred years hence, the heirs of" CONDITIONAL OBLIGATIONS. 341 my neighbour cut down the tree, my heirs should be bound to pay the sum which I had promised. Many French writers accept the view of Pothier. (Demo- lombe, 25, n. 348; Colmet de Santerre, 5, n. 96, bis II. In this sense, Grenoble, 7 janv. 1873, D. 73. 2. 108.) But, according to other writers, articles 1176 and 1177 of the French Code must be literally applied, and they do not allow the court power to fix any delay unless there is evidence that this was intended by the parties. (Laurent, 17, n. 75.) MM. Baudry-Lacantinerie et Barde hold that when the condition is a negative potestative con- dition, for example, to pay a sum if I do not cut down a tree, it is implied that I am to do it in a reasonable time. (B.-L. et Barde, •2, n. 800.) Tinder the Egyptian Code there is less difficulty in accepting the view of Pothier, because that code does not contain an express provision like that of C. C. F.'ll76: S'il riy a point de temps fixe, la condition petit toujours etre accomplie. (2) Similarly, if the condition were that my neighbour had promised me a certain sum if he did not cut down the tree, the intention of the parties here is clearly that this shall be done within a reasonable delay. (Pothier, Oblig. n. 211.) But if I promise a sum to a man on condition that he does an act of a personal kind, as, for example, if I promise a sum to a painter on condition that he paints my portrait, it would seem, under the French Code, that he could claim the payment if he painted the portrait at any time before his death. It is possible to suppose that the parties intended to leave the painter free to choose his own time, and there cannot be any question of the liability of heirs. It would seem, therefore, that the article in the French Code must be given its literal effect. (C. C. F. 1176; B.-L. et Barde, 1. c.) Here also, in the silence of the Egyptian Code, it seems possible to reach a better solution by adopting the view advocated by Pothier. Fraudulent prevention of fulfilment. The French Code has an important article: La condition est reputee accomplie lorsque c'est le debiteur, oblige sous cette con- dition, qui en a empeohe V accompUssement . (C. C. F. 1178.) This was borrowed from the Roman law and is obviously equi- table. It might rest on either of two principles: (1) that damage was wrongfully caused by the promisor in depriving the promisee 342 THE LAW OF OBLIGATIONS. of the chance of the condition being fulfilled; or (2) that a party by whose fault the fulfilment of the condition has been prevented cannot take advantage of his own fault, or, in other words, is- estopped from pleading the non-fulfilment for which he is himself to blame. The first explanation is the one. which is traditional in the French law. (See Big-ot-Preameneu, in Locre, 12, n. 63, p. 339; B.-L. et Barde, 2, n. 802.) And, seeing that it is a case of re- paration, the general rule applies that there must be fault to create liability. It is not necessary that there should be an intention to prevent the fulfilment, but there must be, at least, negligence which makes the fulfilment impossible. (Cass. 6 aout 1866, S. 66.' 1. 397, Journal du Palais, 66, p. 1074.) So the principle does not apply when the debtor's obligation is potestative. If he is free to do or not to do a certain thing his not doing it cannot be imputed to him as a fault. (Pothier, 1. c; Laurent, 17, n. 76; B.-L. et Barde, 2, n. 803.) So if I undertake to sell you my house " if I should leave Cairo," my not leaving Cairo is no fault . A party who merely by using his legal right prevents the fulfilment of the condition does not fall under this article. Pothier gives this example: a testator leaves a house to a legatee on condition that within a year the legatee pays a certain sum to B. The heir, who is a creditor of the legatee, seizes his property and prevents his making the payment to B. 'The legatee cannot plead that as against the heir the condition is fulfilled, for the heir is merely doing what he is by law entitled to do. The heir does not execute the seizure in order to prevent the fulfilment of the condition, but in order to enforce in a lawful manner the payment of what is due to him. (Pothier, Oblig. n. 212. : If the interpretation of the contract is doubtful the presump- tion is against the debtor being free to prevent the performance of the condition. (O. A. Alex. 22 fevr. 1900, B.L.J. XII, 126.) There are many illustrations of the rule that if the conditional debtor wrongfully prevents the fulfilment of the condition i!t is treated in a question with him as having been fulfilled. Thus^ where the creditor holds a promissory note, and, as security for the payment of the note, property is pledged to him which he is to return if he collects the amount of the note, then, if it is by his own fault or negligence that he fails to collect the money he must return the property pledged. His fault might be, for ex- CONDITIONAL OBLIGATIONS. 343 ample, thai he had released one of the parties to the note and that the other parties were insolvent. In a French case where certain payments for work done were to be paid only after the work had been approved of, and after examination of certain statements by an official, and it was held proved that the party conditionally liable had maliciously pre- vented the necessary statements from being laid before this official, it was held that the condition must be taken as fulfilled. (Cass. 2 avril 1873, D. 73. 1. 374.) And when a price had to be fixed by two experts, and one of the parties induced an expert to refuse to act, it was held that the court might appoint another expert in his place. (See Larombiere, on art. 1178, n. 11.) And when a man bound himself to pay a certain sum after he had sold an immoveable, and he arbitrarily refused reasonable offers to Jbuy the immoveable, it was held that the condition must be considered as fulfilled. Chambery, 13 dec. 1897, D. 1900. 2. 213.) The converse of C. C. F. 1178 is also true. If the party in whose interest it is that a condition should be fulfilled, wrongfully procures its fulfilment he cannot take the advantage. For example, if you promise me L.E. 100 if you sell goods of any manufaeture except mine, and I fraudulently mingle goods made by others with your stock, so that you. sell them inadvertently, I cannot claim the penalty. Similarly, if one person is to receive an advantage, such as a legacy, or the sum in an insurance policy oil the death of another and he brings about the death, he cannot take the benefit. (B.-L. et Barde, Oblig. 2, n. 808; Larombiere, on art. 1178, n. 1; Poitiers, ler fevr. 1881, S. 82. 2. 27, Journal du Palais, 82, p. 201.) Comparison with other laws. This is one of those general rules of law which are recognised under many systems. The German Code, the Swiss Code of Obligations and .the Morocco Code of Obligations all contain similar articles to C. C. F. 1178. The German Code says: — Lorsque hi realisation de la condition, contre toute loyaute et canfiance reciproque, est empeehee par la partie au detriment d< laquelle elle eut tourne, la condition vaut comme redlisee. Lors- que la realisation de la condition, contre toute loyaute et von fiance reciproque, est produitc par la partie a Vacant cup de laquelle ill, 344 THE LAW OF OBLIGATIONS. doit tourner, cette realisation vaut comme ?ion avenue. (C. C. Allemand, art. 162.) The Swiss Code says: — La condition est reputee accompiie quand Vane des parties en a empeche Vevenement au mepris des regies de la bonne foi. (Code des Obligations, art. 156.) And the Morocco Code says: — La condition est reputee accompiie, lorsque le debiteur, oblige sous condition, en a sans droit empeche Vevenement ou est en demeure de Vaccomplir. La condition accompiie ne produit aucun effet, lorsque Vevenement a eu lieu par le dol de celui qui etait inter esse a ce que la condition s'accomplit. (Code Marocain, arts. 122, 123.) And in the English law, too, if a party prevents the performance of the condition its performance is dispensed with. In a Scotch case in the House of Lords the principle was applied in a contract of sale where payment of the price was conditional on a certain thing being dona by the seller, land the buyer prevented the possibility of the seller fulfilling the condition. Lord Black- burn said: " I think I may safely say as a general rule that where in a written contract it appears that both parties are agreed that something shall be done which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect." (Mackay v. Dick, 1881, 6 A. C. 251, 263. Cf. Re Coleman's Dep. and Life and Health Assoc, 1907, 2 K. B. 798, 78 L. J. K. B. 865; Leake, Contracts, 6th ed. p. 479.) In Mackai/s case the buyer had bought a machine subject to the condition that the seller should show that it could satisfy a certain test. The buyer refused to give the seller an opportunity of making the test, and it was held that he must pay for the machine as if the condition had been fulfilled. Another English case also illustrates this rule. The plaintiff, a broker, was retained by the directors of a company to dispose of the shares. He was to receive £100 clown and £400 more when all the shares had been allotted. By the act of the directors, without any default on the part of the plaintiff, the company was wound up before all the shares had been disposed of. It was hold that the plaintiff was entitled to damages. (Inch- CONDITIONAL OBLIGATIONS. 345 bald v. Western Neilgherry Coffee Co., 1864, 17 C. B. N. S. 733, 142 R. R. 603. See supra, I, p. 359.) These rules are illustrations of the general principle that a man cannot take advantage of his own fault or fraud. The effects of the failure of the condition. In the case of the suspensive condition the effects of failure are easily stated. The contract becomes an absolute nullity and can produce no effects. As the old brocard expresses it, actus conditionalis dejecta conditione nihil est. That which has been promised conditionally cannot be claimed. (Rouen, 3 janv. 1906, D. 1906. 2. 242.) If anything has been paid or delivered it must be restored. (Aubry et Rau, 5th ed. 4, p. Ill; Baudry-Lacant. et Barde, 2, n. 849.) In the case of the failure of a resolutive condition, the risk which hung over the contract has now vanished. The contract now becomes irrevocable and unconditional. For instance, I sell you my house, but stipulate a right of redemption at any time within two years. I allow the two years to expire without exercising 1 my right of redemption. You are absolute owner as from the date of the sale. If you have created any real rights such as hypothecs over the house they stand good. If I have affected to create any such rights they now fall to the ground. They never had more than a contingent existence, and now that the right of redemption upon the exercise of which they depended is at an end they can never become effectual. (Aubry et Rau, 5th ed. 4, p. 123; C. A. Alex. 4 dec. 1901, B. L. J. XIV, 31.) The effects of fulfilment of the condition. The broad principle is stated in the Egyptian Code thus: When the condition, is fulfilled, the obligation and the rights which floiv from it shall be deemed to have been existent or void from the moment when the event was made a condition of the obligation. (C. C. E. 105/159.) Nevertheless, if perform- ance has become impossible before the event, which was to bring the obligation into existence, has taken place, such event shall have no effect. (C. C. E. 106/160.) The French Code says : The fulfilment of the condition has a retroactive effect to the day on which the obligation was contracted. If the creditor be 346 THE LAW OF OBLIGATIONS. dead before the fulfilment of the condition his rights pass to his heir*. .< . ('. F. 1171). Cf. C. C. Q. 1085.) When the condition is fulfilled it becomes clear that the condi- tional right which passed to the heirs or representatives had a substantial value. It is regarded as having been a present asset at the date of the contract. Thus, if the conditional creditor married pending the condition, and in the marriage-contract he excluded from the community tons ses biens presents, this ex- pression will include the property of which he was conditional creditor, provided that the condition is fulfilled during the mar- riage. (Larombiere, on art. 1181, n. 19.) All alienations, hypothecs or dispositions of any kind made by the conditional debtor fly off. They are all subject to the condi- tion which goes to the root of his right. Similarl}-, such rights created by the conditional creditor during the same period now take effect as if he had been owner at the date of the grant. As regards real rights, in questions with third parties, this state- ment is subject to the rules as to registration; third parties in good faith and for value whose rights have been registered being entitled to rely on the register and to plead that rights unregis- tered shall not affect them, and purchasers of moveables being entitled to rely on the protection given them by the application of the rule possession vaut litre. (C. C. E. 611/737, 615. 742, 617/744, 608/734.) The retroactive effect which the law gives to the fulfilment of this condition may be illustrated by the following Quebec cases. If a contract is made for a term of five years with an option in favour of one of the parties to renew it for a further term of five years, the option has the effect of a suspensive condition as regards the second term of five years. And if the option is exercised, the effect is the same as if the contract had been made at the outset for ten years. So a party who agreed to make certain payments till the expiration of the contract is bound to do so for the whole period. (Wolf v. Brook, 1908, R. J. Q. 18 K. B. 17.^ A commercial traveller made a sale of fungibles on condition that his employer signified his approval. The employer wrote signifying approval. The effect is that the contract is made at the place where the traveller made it. The condition retroaets, and the contract becomes pure and simple as from its date. (Gault v. Bertrand, 25 Lower Canada Jurist, 340; Mignault, Droit Civil Canadien, 5, p. 444.) CONDITIONAL OBLIGATIONS. 347 Discussion as to retroactivity. In recent years a long- controversy has taken place, originated by Windscheid, as to whether the principle of retroactivity is fairly to be deduced from the texts of the Roman law or can be supported upon logical grounds. Both propositions are denied by Windscheid and by writers who have followed him. (Pandekten, 8th ed. 1, s. 91; Ginard, Manuel de Droit Romain, 5th ed. p. 477.) It is pointed out that in the French Code, and the same is true of the Egyptian Code, the principle of retroactivity is not carried to its logical conclusion; for, if it were, a sale would not be invalidated by the destruction of the object pending the condition, when this happened without the fault of the debtor. If the object was in existence at the date of the contract that would be sufficient. But the contrary is stated by the code. (C. C. E. 106/160; C. C. F. 1182.) It is also argued that the results attributed to the principle of retroactivity might just as well be assigned to the familiar principle nemo plus juris transferre potest quam ipse haberet. (Dig. 50. 17. 54.) The grants made by the conditional debtor or the conditional creditor are necessarily qualified by the condition which affects his right. (See Baudry-Lacant. et Barde, 2, n. 809; Rev. Trim. 1907, p. 753, art. by M. A. Leloutre; Colin et Capitant, 2, p. 184.) But the question whether retroactivity is the best explanation of the effect of fulfilment of the condition is for us not very material, seeing that the codes expressly accept this theory. (C. C. F. 1179; C. C. E. 105/159.) In these articles the codi- fiers follow Pothier, their habitual guide on this subject. (Oblig. n. 220.) There are some cases in which a special provision pre- vents the principle from being applied. For instance, if an owner sells his property subject to a condition, and, pending the condi- tion, he remains in possession of it, and afterwards grants a lease. and, thereafter, the condition is fulfilled does the lease at once fall to the ground? The sound view seems to be that as the seller remained in possession, the intention of the parties was that he should have the powers of administration. Leases, like other' acts of administration, will stand good if there was good faith. (Aubry et Rau, 5th ed. 4, p. Ill; B.-L. et Barde, 2, n. 823.) This argument receives strong support from the special provision as to the effect of the exercise of a right of redemption. In the 348 THE LAW OF OBLIGATIONS. French Cade where a seller who has a right of redemption exercises the right he is bound to respect leases which have been made without fraud by the buyer. (C. C. F. 1673.) And the Egyptian Code contains a similar provision as to leases not exceeding three years. (C. C. E. 345/431.) There is another controversy as to whether when the condition is fulfilled the party who has, pending the condition, been in pos- session must restore the fruits. It seems plain that we cannot resolve the question by saying that he should be regarded as a possessor in good faith. A possessor in good faith is always a person who is under a mistake as to his true position, whereas here the holder knows the nature of his right. But does it follow, therefore, that the prin- ciple of retroactivity laid down in the code must be carried out and the fruits restored? The question is almost academic, because in most cases the title will indicate the intention of the parties. When there is no such indication it is difficult to avoid applying the principle of retroactivity. (In this sense, Aubry et Rau, 5th ed. 4, p. 116; Hue, 7, n. 277.) The Egyptian Code seems to make this principle govern the whole matter of conditional obli- gations. Under the French Code it is possible to argue from the analogy of other articles that the rule of retroactivity does not apply to this case. (In this sense, B.-L. et Barde, 2, n. 824;' Colin et Capitant, 2, p. 186; Chambery, 28 mars 1899, D. 1901. 2. 300; Cass. 13 mai 1873, D. 73. 1. 417; D. N. C. C. art. 1183, n. 83.) It is noteworthy that the German and the Swiss codes have rejected the fiction of retroactivity. (German Code, art. 158; Cosack, Lehrbuch, 1, p. 226; Code Fed. Oblig. arts. 151- 154.) The risk. The subject of the risk is treated in the French Code as follows: When the obligation has been contracted under a suspensive condition the thing which forms the object of the agreement remains at the risk of the debtor who has bound himself to deliver the thing only upon the fulfilment of the condition. If. without the fault of the debtor, the thing have altogether perished, the obligation is extinguished. If the thing be deteriorated without the fault of the debtor, the creditor has the choice either of dis- solving the obligation, or of receiving the thing in the state in which it is, without diminution of price. If the thing be deterio- rated by the fault of the debtor, the creditor mem cither dissolve CONDITIONAL OBLIGATIONS. ;j49' the obligation or exact the thing in the state in which it is, with damages. (C. C. P. 1182.) When the condition is a resolu- tive one the risk is on the person who owes the thing subject to the condition. (B.-L. et Barde, 2, nos. 882, 892; Demolombo, 25, n. 463; Aubry et Rau, 5th ed. 4, p. 122.) There are three points to be noted: — (1) The loss or deterioration must be pendente emiditione. For if the condition has been fulfilled, the obligation has ceased to be conditional and has become pure and simple. (2) The kind of obligation contemplated is a synallagmatic one. In the case of a unilateral obligation the loss always falls on the creditor unless there is a special stipulation to the contrary. If I promise to give you something subject to a condition, and the condition fails, the loss is entirely yours, unless there is some special stipulation to the contrary. (Larombiere, on art. 1182,, n. 3.) (3) If the thing has altogether perished there is no obligation. The French article says if the thing has entirely perished without the fault of the debtor V obligation est eteinte. This is ambiguous because it might mean that though the debtor's obligation was extinguished, and he was no longer bound to deliver the thing, the obligation of the creditor to make the payment on his side was still subsisting. The prevailing view in France is, however, in favour of the sense that if the thing perishes without fault pending the condition both parties are free. This was the Roman law and it was followed by Pothier. (D. 18. 6. 8; Pothier, Oblig. n. 219; Pand. Franc. Oblig. n. 829; Baudry-Lacant. et Barde, Oblig. 2, n. 853 a; Aubry et Rau, 5th ed. 4, p. 111.) And the Egyptian Code seems to adopt this theory and to apply it even in the case of sale, difficult as it is to reconcile the articles on the subject. (C. C. E. 266/336, 297/371; infra, pp. 476 seq.) 350 THE LAW OF OBLIGATIONS. CHAPTER XVIII. OBLIGATIONS WITH A TERM. An obligation with a term is one in which the debtor binds him- self to pay or to perform something at a future date. The future date may be one which is fixed beforehand, as in the case of a bill of exchange payable three months after date, or it may be one which cannot be determined as yet, as when the debtor binds himself to make a payment on the death of a person living. But, in either case, the term is a period which is certain to arrive, though the time of its arrival may be as yet uncertain. There is not consequently, in this case, as in the case of the conditional obligation, a doubt as to whether the debtor will ever be bound to fulfil what he has promised. He is bound from the beginning, though the time of payment is postponed. In some cases the term is indefinite, as, for example, " to pay when my means permit," and in such cases the French courts do not hesitate to fix a term for the payment if satisfied of the debtor's ability to pay. (Paris, 19 nov. 1912, D. 1913. 2. 126.) The French Code gives a defini- tion of a term which the Egyptian Code omits: A teim differs from a (suspensive) condition inasmuch as it does not suspend the obligation, but only delays the execution of it. (C. C. F. 1185.) The old maxim qui a terme ne doit rien is not literally true; it means only that the debtor is not obliged to pay at present. A term may be created by law, or by a judgment, as when] thef defendant is ordered to make execution within a certain delay, or b} r the agreement of parties. When a delay is fixed by a judg- ment it is called by French writers terme de grace or delai de grace. (See C. C. E. 168/231, 333/415; C. C. F. 1244; Planiol, 2, n. 369.) When the term is conventional it is frequently im- plied. When the performance of the obligation by the debtor necessarily requires some delay, and no time is fixed by the parties for fulfilment, a reasonable delay is implied. And, on the other hand, there are cases in which, though no term has been fixed by OBLIGATIONS WITH A TERM. 351 the parties, the court can infer from the nature of the contract and from the circumstances, that the performance was intended to be made within a certain delay. (Sec supra, I, p. -364.) Pend- ing the arrival of the term the creditor cannot sue for the debt, but he would, no doubt, be entitled to do conservatory acts if he could show that his interests were imperilled. For even a condi- tional creditor has this right, and a fortiori, the creditor whose debtor has the benefit of a term. (Baudry-Lacant. et Barde, Oblig. 2, n. 993; Aubry et Rau, 5th ed. 4, p. 148. It would appear, however, that the creditor whose right is subject to a term is not entitled to bring an action in the name of his debtor. This is more than a conservatory act, it is an act of execution. (Baudry-Lacant. et Barde, Obliff. 1, n. 629; Aubry et Rau, 5th ed. 4, p. 200; supra, p. 97.) And a creditor in a debt subject to a term who is sued by his debtor upon another debt which is due cannot plead compensation, because compensa- tion requires that both debts shall be due. (C. C. E. 194/258; C. C. F. 1291.) Repetition of debt paid before the term arrives. If the debtor pays the debt subject to the term before the time of payment arrives can he bring the action of repetition? The French Code has an article .which expressly answers this question in the negative: ce qui n'est du qiCa tefrrte, ne pent etre exige avant Vecheance du terime ; mais ce qui a ete paye d'avanoe, ne peut etre repete (art. 1186). The article, it is to be observed, does not say anything about error. It states a rule in terms which are quite general. But there are two cases to be considered: (1) The debtor knows the debt is not yet due, but he chooses to pay it. (2) The debtor thinks that the debt is due and pays it under that belief, whereas in reality it is not due. The Egyptian Code has no corresponding article, and the question must therefore be answered jn the Egyptian law by consideration of general principles. There is no difficulty about the case where the debtor voluntarily pays before the term. If he, knowing that ho is entitled to a delay, chooses to pay the debt at once, this is a clear indication that he waives his claim to insist upon the delay. It is true that the law does not presume that a man renounces any of his rights, but, on the other hand, it does 352 THE LAW OF OHLIGATIONS. not lay down any general requirements of form for a renunciation.. A renunciation may be tacit as well as express, and here we have a tacit renunciation which appears merely from the conduct of the debtor. (B.-L. et Barde, Oblig. 2, n. 988; Aubry et Eau, 5th ed. 4, p. 135, note 10; D. N. C. C. art. 1186, n. 37.) But what are we to say of the case when the debtor pays his debt before it is due under the mistaken impression that it is due? There can be no doubt that if this mistake is brought about by the fraud of the other party the debtor can repeat what he has paid. (Demolombe, 25, n. 368.) But apart from this case, does the error of the debtor entitle him to repetition? In France the prevailing opinion is against his having such a right. The argument is that article 1186 is expressed in unqualified terms making no distinction between a payment in the knowledge of the term, and a payment in error, and that we are not entitled to introduce a modification of the plain words of the code. (Larombiere, on art. 1186, n. 34 ;. B.-L. et Barde, 2, n. 988; Aubry et Eau, I.e.; D. N. C. C. art. 1186, n. 41.) Some French writers make a distinction. They say that art. 1186 forbids the repetition of the capital sum of the debt; it does not say anything with regard to the interest. If the debtor pays his debt before it is due the creditor who gets the use of the money so much earlier is enriched without a cause, and the debtor would be entitled to repeat the amount of this enrichment, although the code forbids his repeating the debt itself. (Demo- lombe, 25, n. 637.) But most French authorities rightly reject this distinction. The language of art. 1186 is absolute, and if the legislator had intended the inter murium to be recovered he would have said so. Moreover, the practical difficulties, if the other intei-pretation be adopted, are very serious. How are we to reckon the advantage that the creditor has received? He may not have invested the money at all, or, if it was not money but a corps certain which he had received he may have destroyed it, or have made no use of it. (B.-L. et Barde, Oblig. 2, n. 989; Aubry et Eau, 5th ed. 4, p. 135, note 10.) But these difficulties, perhaps, do not need to trouble us, because the Egyptian Code contains no article corre- sponding to art. 1186. Under the Egyptian law it seems that re- petition of the capital should be allowed. The debtor has simply paid in error what was not due, and according to the general rule the creditor is bound to return it. (C. C. E. 145/206.) OBLIGATIONS WITH A TERM. .353 Presumption that term is in favour of the debtor. It is only when the term is in favour of the debtor that lie is allowed to pay the debt before it is due without the consent of the creditor. But the presumption is thai the term is in favour of the debtor. The Egyptian Code says: When an obligation is subject to a term, the debtor may 'perform the obligation before such term has arrived, provided such performance is not inconsistent with the purpose of the obligation. (C. C. E. 101/155.) The French Code says, more simply: Le terme est toujours presume stipule cu faveur du debiteur, a mains qu'il ne result e de la stipulation, on des cir Constances, qu'il a ete aussi convenu en favtur du creancier. (C. C. F. 1187.) The practical importance of de- ciding whether the term is in favour of the debtor only, is that if this is the case he is free to renounce the term and to make the performance at once. For example, where no interest is stipulated for in a contract of loan of money, the presumption is that the term is fixed solely in favour of the debtor. And, in a voluntary deposit, although it may have been agreed that the depositary should take care of the thing for three months, the depositor can demand it back at any time, because the depositary has no interest to refuse this, and the delay fixed was solely for the benefit of the depositor. (C. C. F. 1944; C. C. Q. 1810. Cf. C. C. E. 482/590. But the terms of the contract, or the circumstances, may dis- place the presumption that the term is solely in favour of the debtor, and show that the term was in favour of the creditor also. (C. C. E. 101/155; C. C. F. 1187; C. C. Q. 1091.) Thus, in the case of a loan of money on interest, or of a deposit of money with a bank, which, although it is called deposit, is really a loan of money on interest, the term is very often for the benefit of both parties. (Baudry-Lacantinerie et Barcle, Oblig. 2, n. 980; Aubry et Ran, 5th eel. 4, p. 142, note 21; Planiol, 2, n. 2215.) And in the Egyptian law the presumption will be that this was so, for we have not any article creating an adverse presumption. But it is a mere presumption of fact. It is a question of the interpretation of the particular contract. It may appear that the loan was not a business transaction, but was an office of friendship, although interest was to be paid. (Baudry-Lacant. et Barde, op. cit . n. 981. See Cass. 21 avril w. — vol. ii. 23 ;j;->4 THE LAW OF OBLIGATIONS. L896, D. 96. 1. 484; note by M. Planiol to Trib. fed. Suisse, ler mars 1890, D. 92. 2. 169; C. A. Alex. 24 dec. 1890, B.L.J. Ill, 90; C. A. Alex. 2 mai 1895, B. L. J. VII, 245.) Although, as a general rule, a creditor is not bound to take payment before the term, yet when such payment is offered a few days before the mat tiling of the obligation, and he refuses to accept it without having any real interest to do so, the court may find that the creditor is in bad faith in refusing payment, and that there has been a valid tender. Computation of the term. In computing a term the dies ad quem is included, and the dies a quo is not included. Thus, if the debtor has bound himself to pay on the first of May he cannot be sued till the second of May, because the whole of May 1st is included in the delay. (Larombiere on art. 1186, n. 17; Pand. Franc. Oblig. n. 1379; B.-L. et Barde, 2, n. 1003; Aubry et Rau, 5th ed. 4, p. 136, note 11.) And when the debtor has bound himself on the 1st of March to pay in ten days, the 1st of March is not reckoned, and the obligation is not due till March 11th, and, seeing that the debtor will not be in delay if he pay on the last moment of March 11th, the action cannot be brought against him till March 12th. When the delay J or an appeal is fixed bylaw and it expires on a legal holiday the delay is extended to the day following. (C. A. Alex. 14 avr. 1914, B. L. J. XXVI, 319.) The risk during the term. II the debtor has bound himself to deliver a specific thing after lain delay, and it lias perished without his fault before the arrival of the term, he is liberated from his obligation to deliver it. But is the other party liberated also? In the case of sale it is a settled principle of the French law that the buyer must still pay the price, though the seller from no fault of his own cannot deli's i ■;• that which he has undertaken to do. (Pothier, Vente, n. 307; Hue, 7, n. 105; Colin et Capitant, 2, p. 128.) This, however, may be explained as an application of the prin- ciple res perit domino. But suppose it has been stipulated that the buyer shall not become owner until delivery, or that, in spite of the delivery, the buyer shall not become owner until the price has been paid, doe- this not affect the liability of the buyer to pay the price? OBLIGATIONS WITH A TERM. 355 We cannot say here that he must, do so upon the ground that -when the thing was lost he was its owner. This is in the French laAv a disputed question. The French Code says: "The obliga- tion to deliver a thing is completed by the mere consent of the parties. " It makes the creditor owner and puts the thing at his risk from the time that it ought to have been delivered." 'C. C. F. 1138.) This lends considerable force to the argument that the risk is on the creditor only when he has become owner of the thing, and this A r iew is supported by some considerable authorities, and appears to be sound. (Baudry-Lacant. et Barde, Oblig. l,n. 424; Colin et Capitant, 2, p. 1"29. Contra, Colmet de Santerre, 5, n. 58, bis ill. In the Egyptian law there is no doubt. If, in spite of the transfer of ownership, the risk is on the seller until delivery, this will be so a fortiori when the obligation to deliver lies upon a debtor who remains the owner of the thing. C. C. E. 297/371.) And in the Egyptian law both parties will be liberated by the destruction of the thing without fault of the party whose duty it was to deliver it. C. C. E. 170 /242." Loss of right to claim the term. An obligation, subject to a term becomes performable imme- diately if the debtor becomes bankrupt, or if lie has by his own conduct impaired the securities for performance. (C. C. E. 102 156; C. C. F. 1188; C. C.Q. 1092.) There is what the French writers call a deehcance du terme. There are two reasons commonly given for this rule as to the effect of bankruptcy upon a debt subject to a term: — 1 Tin creditor gave the debtor a delay because he had con- fidence in him. The basis of this confidence is destroyed if the debtor becomes bankrupt. (2) If such debts were not made exigible by bankruptcy great complications would ensue. It would be impossible to divide the estate of the bankrupt, because provision would need to be made for these claims not yet due, and sums would have to be set aside to meet them. B.-L. et Bardte, Oblig. 2, n. 1007; Aubry et Kan, 5th ed. 4, p. 136.) 23 (2) 356 THE LAW OF OBLIGATIONS. Does the insolvency of a non-trader produce the same effect as the bankruptcy of a trader? In France it is universally agreed that it does. The term "bankruptcy" — faillite — in this article is used in a broad sense. The Code of Quebec,, with greater precision, says the debtor cannot claim the benefit of the term " when he has become a bankrupt or insolvent." (C. C. Q. 1092.) In its strict sense, " bankruptcy " belongs only to the commercial law and is dealt with in the Commercial Code. The Egyptian Commercial Code, like the French, says: Lc jugement declaratif de la faillite rend exigibles a Vegard dn failli les dettes non echues. (C. Com. E. 221/229; C. Com. F. 444.) It is universally agreed that the word faillite in article 1188 of the French Civil Code includes the deconfiture of a non-trader. (B.-L. et Barde, 2, n. 1012; Aubry et Rau, 5th ed. 4, p. 137, note 12; Cass. 12 dec. 1899, D. 1900. 1. 112; Bo urges, 10 mai 1892, D. 92. 2. 445; D. N. C. C. art. 1188, n. 24.) It appears from the Travaux preparatoires that the suggestion to leave out of the French Civil Code the reference to faillite and. to refer for that subject to the Commercial Code was met by the answer that on peat faillir sans etre marchand : a la verite, la faillite alors est appelee deconfiture ; mai* peu importe-la de- nomination lorsque la chose est la meme. (Locre. XII, p. 162, n. 11.) This shows that faillite is bene used in a broad sense. And in the old French law also the deconfiture of a non-trader mad" his debts at once exigible. ( Bo urj on. Droit Commun de la France, liv. VI, tit. VIII, n. 34.) The conclusion that in the Egyptian law " bankruptcy " here includes the insolvency of a non-trader is made almost certain by a comparison of article 102 156 of the Egj ptian Civil Codes with art. 281 '353. The latter article gives the unpaid vendor the right to retain the thing sold and not delivered, if the purchaser has diminished the security accorded by him for the payment of the \ or if he is dans un etat de deconfiture, or, as it is in the English version, " in a state of insolvency which renders imminent the loss of the price to the vendor." And the vendor is to have this right of retention even if the term agreed upon for payment has not arrived, unless security is given him. This is simply a special application of the general principle laid down in C. ( . E. 102 '156,. OBLIGATIONS WITH A TERM. 357 and, ii! a state of insolvency is enough in the one case, it must be enough in the other. And in the English version of the Mixed Commercial Code the word "insolvency" is used instead of "bankruptcy." Chap. III.) The commercial codes contain another illustration of the rule that bankruptcy creates a forfeiture of the term. "Where the maker of a promissory note, the acceptor of a bill of exchange or the drawer of a bill of exchange not accepted, becomes bankrupt, the other parties liable shall be bound to give security for pay- ment at maturity, unless they prefer to pay at once." (O. Com. E. 221/229.) There is every reason to think that in the Egyptian law, as in the French, the insolvency of a non-trader makes all his debts exigible. But it must be a genuine insolvency, an etat de decon- fiiure, or, as it is expressed in a case about the vendor's right of retention, line decemfiture etabUe. (O. A. Alex. 9 nov. 1905, E. L. J. XVIII, 10.) How is insolvency to be determined? Does it need to be declared by a judgment? Where there is bankruptcy in the strict sense of the term there is no difficulty in fixing the date at which it commenced. The trader is a bankrupt from the date of the judgment which de- clares him to be in a condition of insolvency — en etat de fcdMihe. (C. Com. E. 195/202.) The insolvency of the trader prior to the judgment has certain legal effects, but he is not a bankrupt until he has been so declared by a competent court. (See Thaller, Traite Elemmtaire de Droit Commercial, 4th ed. nos. 1714, 1715.) But the codes do not make any rules for determining from what •date a non-trader is to be reputed insolvent. Insolvency is a question of fact. A debtor is insolvent when his assets are not sufficient to meet his apparent liabilities. The fact that, he is in a state of temporary embarrassment and cannot meet a particular payment does not necessarily prove that he is insolvent. And the law does not attempt to give any precise definition of insolvency or decon fit lire. (Demolombe, 25, n. 666; Hue, 7, n. 287; Thaller, Traite EUmentaire de Droit Commercial', 4th 'ed, n. 1709.) Who is then to decide when the debtor is in this condition? 358 THE LAW OF OBLIGATIONS. Must there be a judgment which says that at a certain date the debtor was insolvent? The decision of this question has great practical importance in consequence of the rules of compensation. The point may be made clear by illustration. A owes to B L. E. 1,000. for which he has given him a hill at three months. B buys goods from A to the value of L. E. 1,000. If B has reason to doubt A's solvency, can he say " you are insolvent, and there- fore the bill due according to its terms at three months hence has become payable at once. It is a liquid and exigible debt, equal in amount to the debt which I owe to you for the goods, and the two debts are, therefore, compensated"? If B's argument is sound, and if A is really insolvent, B will get payment of his debt in full, because he has got goods equal to the amount, whereas A's other creditors will have to be content with such a proportional payment of their claims as can be obtained from the realisation of A's assets. On the other hand, if there is no insolvency until a court has declared it, there will not be compensation between the two debts, because B's debt on the bill does not become due until the judgment; and in the mi>antime A's other creditors can execute seizures and take measures to protect themselves. If the insol- vency is merely a matter of fact, then, although it may require to be ascertained by the court, the judgment might find that it existed from some particular date, even prior to the commencement of the action. But the sounder view appears to be that insolvency is a condition which does not exist until it has been judicially declared, and that the judgment which declares it does more than merely find that certain facts exist. The judgment does more than declare: it creates a change in the legal position of the debtor. The court, after appreciation of a combination of various facts, pro- nounces that, in its opinion, the debtor is now in a state of insolvency; the judgment modifies his status. According to the jurisprudence of the Court of Cassation, the insolvency cannot at any rate be placed earlier than the date on which legal proceedings were commenced — the date of the demande en justice. (Cass. 6 fevr. 1907, D. 1908. 1. 408; Cass. 30 mars 1892, D. 92. 1. 281, S. 92. 1. 481, where see the notes by Planiol and Labbe, respectively.) According to most writers, the insolvency cannot commence earlier than the date of the judgment which pronounces it. It was not necessary in the particular cases for the Cour de Cassation to place the date later than the demande en justice, but probably this will be the next step in the jurisprudence, as it appears to be OBLIGATIONS WITH A TERM. 359" the logical result. (Aubry et Rau, 5th ed. 4, p. 379, note 16; B.-L. et Barde, Oblig. 2, n. 1013; Laurent, 18, n. 414.) Diminution of securities by the debtor. The second case in which, by the article under consideration, the debtor loses the benefit of the term is if he has by his pwn conduct impaired the securities for performance. (C. C. E. 102/156.) This means no doubt the same as the French Code, which says the debtor loses the benefit of the term when by his act he, has diminished the securities which he had given by the contract to his creditor. (C. C. F. 1188.) It is only when he is diminish- ing a security specially given that the rule is applicable. It does not apply to a debtor who, by his extravagance or otherwise, is diminishing his estate which forms the general pledge for the security of all his creditors. (B.-L. et Barde, Oblig. 2, n. 1015: Aubry et Rau, 5th ed. 4, p. 138, note 14; Bourges, 10 mai 1892, D. 92. 2. 455; D. N. C. C. art. 1188, n. 55.) What amounts to diminishing the security is of course a ques- tion of fact. If a debtor who has given a hypothec over his house pulls the house down, or if a debtor cuts down a wood on a pro- perty which is hypothecated by him, there can be no doubt that the security is impaired. If the debtor alienates an immoveable which is hypothecated, is this an impairment? This is a very disputed question. If it were not for the rules of the purge the alienation would not seem to affect the creditor. The immoveable is still liable for the debt in the hands of its new owner. And when the alienation is a total alienation it does not seem that the creditor suffers any loss. But a partial alienation may, owing to the •purge, be prejudicial to him, as he would have to look to several debtors for payment instead of to one. (B.-L. et Barde, 2, n. 1023; Demolombe, 25, n. 686; D. N. O. O. art. 1188, n. 102. See C. A. Alex. 18 dec. 1890, B. L. J. Ill, 80, note.) The diminution of the security must be by the debtor's own act; he is not responsible for the diminution caused by a fortuitous event, or by the crime or fault of a third party for whom he is not responsible. B.-L. et Barde, Oblig. 2, n. 1025; Aubry et Rau, 5th ed. 4, p. 137, note 13; D. N. 0. C. art. 1188, no. 78.) • But one important case is dealt with elsewhere in the code. If an immoveable charged with a hypothec perishes or deteriorates by fortuitous event in such a way as to render the security doubtful 360 THE LAW OF OBLIGATIONS. the debtor must, at his option, either offer a sufficient hypothec upon another immoveable or pay the debt before it falls due. (C. C. E. 562/686; C. C. F. 2131; C. A. Alex. 17 nov. 1898, B. L. J. XI, 17; Aubry et Rau, he. cit. and 3, p. 710.) This provision applies only to the case where there has been a material degradation of the particular immoveable. It does not apply to a loss of value due to economic causes. (Aubry et Rau, 5th ed. 3, p. 711; B.-L. et de Loynes, Privileges et Hypotheques, 2, n. 1392. Contra, Guillouard, Privileges et Hypotheques, 3, n. 1618.) Another article of the code provides that a general obligation to furnish a surety, whether contractual or judicial, involves the obligation to procure a new surety, if the first becomes insolvent. (C. C. E. 500/610; C. C. F. 2020.) It would appear that the principle laid down in these articles is a general one, and that whenever there has been an impairment of securities brought about, not by the act of the debtor, but by a fortuitous event, the creditor can call upon the debtor to pay at once, or to restore the value of the securities. (Aubry et Rau, 5th ed. 4, p. 137, note 13; Laurent, 17, n. 203; D. N. C. C. art. 1188, n. 82.) SEVERAL OBJECTS AND SEVERAL SUBJECTS. 361 OHAPTEE XIX. OBLIGATIONS IN WHICH THERE ARE SEVERAL OBJECTS AND SEVERAL SUBJECTS. Obligations simple and composite. Under this head fall to be considered three kinds of obligations, namely:— (1) Alternative; (2) Facultative; (3) Obligations with a penalty. A simple obligation is one in which there is a single debtor and a single creditor, and in which the object of the obligation is a single prestation; for example, I promise to deliver to you my horse. The promise to transfer a group of things regarded col- lectively is, in this sense, a single prestation. If I promise to sell to you my whole stock-in-trade, or my whole crop of cotton, or to pay you a sum of money with interest, this is a simple obliga- tion just as much as if I promised to deliver to you my horse. The various items which compose the stock-in-trade, or the sepa- rate bales of cotton, are not regarded individually, and the obliga- tion to pay the interest upon the capital sum promised is not a separate obligation. The obligation is to pay the capital with the interest as a single sum. (Aubry et Rau, 5th ed. 4, p. 68.) On the other hand, an obligation is said to be composite when there are several distinct prestations due, that is to say, several different objects. And the composite obligation may be (a) conjunctive, or (b) alternative. If, though there are several objects, I have bound myself to pay them all at once, this is a conjunctive obliga- tion. If I promise to deliver to you my horse and my ox, I enter into two separate and distinct obligations, which are only, so to speak, accidentally combined by being created together and by the same title. And if I promise to deliver to you my horse or my ox, seeing that it is at present undetermined upon which the choice shall fall, 1 am bound at first to two prestations, although when the choice is made my obligation will be reduced to a single one. In ,",62 THE LAW OF OBLIGATIONS. this typo of obligation, which is called the alternative obligation, there arc two things due or two objects. C. C. F. 1189.) This will be explained more fully later. In what is called a facultative obligation there is only one thing- due. It is a simple obligation, though its simplicity is disguised. The debtor is bound to one prestation only, but he has the right, if he prefers it, to liberate himself by substituting another prestation. The rather fine dis- tinction between the facultative and the alternative obligation will be dealt with later on. Obligations simple and multiple. When, instead of there being a single creditor and a single debtor, the obligation is in favour of several creditors, or is due by several debtors, the obligation is conveniently called a multiple obligation to distinguish it from a simple obligation. Instead of the obligation having a. plurality of objects it has a plurality; of subjects. The definition of an obligation in the Egyptian Code is somewhat incomplete upon this point. It says the object of an obligation is to procure an advantage for one person by constraining another. The French Code with greater fulness says that in a contract une on plusieurs personnes x'obligent etnvers une ou plusieurs a at res. [C C. E. 90/144; C. C. F. 1101.) And this plurality of debtors or of creditors, as the case may be, is not necessarily found at the date of the creation of the obliga- tion. It may arise, and frequently does arise, subsequently, as. for instance, when a creditor or a debtor dies and is succeeded by several heirs. In this way an obligation which was at first simple becomes afterwards multiple. See, on these distinctions gene- rally, Aubry et Ran. 5th ed. 4, p. 16 and p. 68; Planiol, 2, n. 707 and 714; Panel. Frcmc. vo. Obligations, n. 127.) Alternative obligations. An alternative obligation is one in which the debtor is bound to give or to do one of two things. For example, he binds himself to do a piece of work, or otherwise to pay a sum of money. The obligation is to be extinguished in one of these two ways. He must do either the one thing or the other, but he cannot compel the creditor to accept a part of one of these things and a part of the other. Unless the creditor agrees, the debtor cannot say, "I will pay half the money and do half the work/' This rule is expressly stated in the French Code. C. C.F. 1191. Cf . C. C. Q. 1093. SEVERAL OBJECTS AND SEVERAL SUBJECTS. 363 The Egyptian law is undoubtedly the same although the code is silent upon this poini . Alternative obligation distinguished from conjunctive or facultative obligation. The alternative obligation must be distinguished from two other kinds of obligations which bear a resemblance to it, viz., (a) a conjunctive obligation, and (b a facultative obligation. (a) A conjunctive obligation is one in which the debtor is bound cumulatively to do two or more things, for instance, to pay a sum of money and to do a piece of work. In this case there are two separate obligations, though they may happen to be created by the same title. One of the obligations may bo extinguished, and the other may remain due. As the old lawyers said, there are two things in obligutione. (b) A facultative obligation is one in which the debtor binds himself to do one thing only, but reserves to himself the choice of substituting something else, that is, of liberating himself from his obligation by doing something else than that which he primarily undertook to do. In this kind of obligation there is in principle only one thing due— unum est in obligatione — but when the time of payment arrives the debtor can substitute something else. The distinction between an alternative obligation and a facultative obligation is a somewhat subtle one and will be best considered, after the rules of alternative obligations have been explained. (Infra, p. 378.) In an alternative obligation who has the choice? The Egyptian Code says: When an obligation is alternative, the option, in the absence of any special provision of the law or pi the agreement, belongs to the debtor. (C. C. E. 96/150.) This is in accordance with the French law. (O. O. F. 1190. Cf . O. C. Q. 1094.) It is, in fact, an application of the general rule of interpretation of contracts that in cases of doubt the con- struction shall be in favour of the party who incurs the obligation. (C. C. E. 140/201; C. C. F. 1162; C. C. Q. 1019.) It is not. necessary to use a sacramental form of words in order to displace the presumption that the choice is with the debtor, but the intention of the parties must clearly appear from the terms of the agreement, interpreted in the light of the circum- stances, and sometimes by reference to usage. (Aubry et Jtau, 364 THE LAW OF OBLIGATIONS. oth ed. 4, p. 69, note 3 ter; Demolombe, 26, n. 38.) The Egyptian Code gives as an example of an alternative obligation in which the choice is with the creditor, the case of an obligation with a penal clause. If I undertake to do certain work, or to pay a penalty, my creditor can sue me for performance of the work when that is possible instead of suing for the penalty. (C. C. E. 98/152.) But the obligation with a penal clause is best considered sepa- rately, as it has peculiarities which do not belong to alternative obligations in general. When the debtor has the option, and the creditor sues for performance, he must sue for either of the two things alternatively; he cannot limit his action to one of them, for, otherwise, he would be exercising the option which belongs to the debtor. Pothier, Oblig. n. 248; B.-L. et Barde, 2, n. 1060.) And when no delay is fixed within which the choice is to be made, the debtor can only be deprived of his option by the expiration of a delay fixed by a judgment against him, or by one of the modes of performance becoming impossible. But when the debtor has a choice of doing one of two things within a certain delay, and, failing his doing one of them within the specified time, he is to be bound to do the other, then, if the delay has expired, the creditor can sue for performance of this other thing. For example, a creditor may agree to take a dividend on condition that the debtor pays instalments on fixed dates, on the terms that if the debtor is in arrears with any instalment the creditor's right to sue for pay- ment of the debt in full shall revive. A Quebec case is a good illustration of this rule: It was con- tracted between a newspaper and a trader that the trader should furnish so many lines of advertisement in a year, and in con- sideration of this quantity the rate was to be a specially low one. But the contract provided that the advertiser was to pay by the month, and that if each month's payment was not promptly made the rate for the advertisements should no longer be the special rate, but should be the ordinary rate for casual advertisers. The trader having failed to pay at the time specified, the creditor sued for payment on the higher scale, and it was held that there was here a valid alternative obligation, and that failure to fulfil the condition entitled the creditor to sue for the remaining alternative. (Berthiaulme v. Kent, 1902, R. J. Q. 11 K. B. 312.) Refusal to exercise the option. If the debtor by refusing to exercise the choice prevents the ful- filment of the obligation, the creditor can call upon him by an SEVERAL OBJECTS AND SEVERAL SUBJECTS. 365 action to make his choice, and failing his doing so, ask that the court shall fix a delay within which he is to exercise the choice or, if not, that the court shall make the choice for him. The same rule applies in the case where the choice is given to a creditor, or when by the death of the party entitled to make the choice the right of making it has passed to several heirs and they cannot agree. (Larombiere, art. 1191, n. 7 and n. 11; Demolombe, 26, nos. 39 and 41; B.-L. et Barde, Oblig. 2, nos. 1071—1073; Aubry et Rau, 5th ed. 4, p. 69.) German Code as to this. The German Code contains two new rules upon this matter which are worth noting: Si le debiteur, lorsqiiil a le droit d 'op- tion, ne procede pas au choix avant le commencement de la pro- cedure d'executian forcee, le creamier pent, a son choix, faire porter V execution forcee sur Vune ou V autre des prestations; toutefois, aussi longiemps que le creancier n'a pas regu en tout ou en partie la prestation choisie, le debiteur pent se liber er de son engagement en fournissant Vune des autres prestations. Si le creancier, lorsqiiil a le droit d. option, est en demeure, le de- biteur petit, sous condition de lui fixer un delai convenable, Vin- viter a proceder au choix. A V expiration du delai, si le creancier ii a pas procede an choix. en temps utile, le droit d'option passe au debiteur (art. 264, Official French translation. Of . Code Maroc. Oblig. art. 144). Can the French or Egyptian courts transfer the choice to the other party? The rule accepted by the German Code that if the party entitled to make the choice dioes not do so within the delay fixed, the choice passes to the other party is a very reasonable one. And, accord- ing to several of the French authorities, the French courts have the same power, although there is no such provision in the code. But under the French or Egyptian codes it is very doubtful if this is competent. The court has no power to modify the contract of the parties. The debtor has bound himself to make one of two prestations in his option. If he will not exercise his option, and specific performance of the contract is demanded, the court cannot give an effective judgment without indicating which of the two pres- tations is to be made. The court must, necessarily, have the 366 THE LAW OF OBLIGATIONS. power of exercising the option between the prestations, but in the silence of the texts the court has no implied authority to delegate this power to the plaintiff. (Sic, Aubry et Rau, 5th ed. 4. p. 69; Laurent, 17, n. 239; B.-L. et Barde, Oblig. 2, n. 1071. Contra, Laromhiere, art. 1191, n. 7; Demolombe, 26, n. 39.) Transmissibility of the option. When the parly entitled to exercise the option dies before the delay has expired during which the option was to be made, the right of making the choice passes to his heirs, being a vested right which is an asset of his estate. The right of making the choice is indivisible by its nature. It is necessary that the heirs should come to an agreement as to the manner in which the option is to be exercised. In a French ease A let a laundry to B upon a lease for a number of years. It was stipulated that if B put up additional buildings at the end of the lease, A was to have an option either to take the new buildings at a valuation, or to sell the laundry to B for 1-3,000 francs. B erected new buildings, and, after A's death, it was held that his heirs could exercise the option which he enjoyed of taking over the buildings or else of making the lessee buy the property. (Douai, 12 mars 1891, D. 92. 2. 380.; If it is the debtor who has the option and his heirs cannot agree in which way it is to be exercised, their want of agreement cannot inde- finitely paralyse the right of the creditor. He can ask the courts to fix a delay within which the heirs must make their option, failing which the court will do so for them. If, on the other hand, it is the heirs of the creditor who cannot agree which of the two things they shall choose, this will he as a rule so much the better for the debtor. He cannot be called upon to pay until the creditors make up their minds. But if he wishes to liberate himself from his obligation he will no doubt have the right to apply to the court to put the creditors in default to make their choice within a certain delay, failing which it is to be made by the judge. (Colmet de Santerre, 5, n. 118, bis, 11; B.-L. et Barde, 2, n. 1073. How is the option to be declared? When the option is with the debtor, can he at any time after the date of the contract declare to the creditor that he proposes to exercise the option in a certain way, and, if he makes such a SEVERAL OBJECTS AND SEVERAL SUBJECTS. 367 declaration, does this transform the obligation from an alternative one into a simple one? This is a poinl on which there has been much controversy. If I sell you my black horse or my brown horse at my choice, for a certain price, the option which I reserve of selecting- between the two horses is a clause in my favour. And if I declare to the buyer that I have decided to deliver to him the brown horse has he any legal ground of- complaint? According to the German Code he has not. The party entitled to the option may exercise it by a mere declaration made to the other (art. 263). Some French writers adopt the same view. (Laurent, 17, n. 232; Hue, 7, n. 291.) But this does not appear to be a correct interpretation of the presumed will of the parlies. Although the option belongs to the debtor, the alternative obliga- tion presents distinct advantages to the creditor also. It gives him two strings to his bow. If, without the fault of the debtor, one of the modes of performance becomes impossible, the obligation still subsists. To take the illustration just given, if my brown horse is killed by lightning I have no longer an option, I am bound to deliver my black horse. Can the debtor deprive the creditor of this advantage by a mere declaration of will, or do the parties intend that the creditor shall continue to enjoy this additional chance of payment until delivery is made? The latter appears to be the sounder view. The only way in which the debtor can exercise his option is by making an actual delivery of one of the two things, or, if the creditor refuses to take it, by making a tender, that is, by off res reelles. From the creditor's point of view there would be no virtue in the alternative obligation, if the moment after it was made the debtor could turn it into a, simple obligation by informing the creditor that he meant to exercise the choice in a certain way. B.-L. et Barde, 2, n. 1062; Aubry et Rau, 5th ed. 4, p. 70; Colmet de Santerre, 5, 124, bis, 1.) When the option was left to the creditor there does not seem any reason against his exercising the choice by a mere declaration of will. If he calls upon the debtor to make one of the prestations this should be sufficient. (Colmet de Santerre, I.e.; B.-L. et Barde, Oblig. 2, n. 1067.) If he chooses to deprive himself .of the advantage which the law gives him, and to determine the object of the obligation before the actual delivery, why should he not be allowed to do so? His declaration does not need to be accepted because the debtor has already bound himself to pay- that one of the two things which the creditor should select. Not- 368 THE LAW OF OBLIGATIONS. withstanding this, same French authorities hold that the creditor is not bound by his declaration, unless it is in the form of a demande en justice or has been accepted by the debtor. (Sic. Aubry et Rau, loc. cit.) Does the alternative obligation operate an immediate transfer of the property? So long as it is still uncertain which of the two prestations will be the object of the obligation there can be no transfer of the ownership. Under the Egyptian Code as under the French law, there can be no transfer of ownership except of a determinate object. (C. C. E. 266, 261/336, 328; Laurent, 17, n. 221.) The Egyptian Code is clearer upon this point than the French Code. The latter lays down in general terms that the obligation to deliver a thing is perfect by the mere consent of the contracting parties, and that it rend le creancier proprietaire et met la chose a ses risques des V instant ou elle a du etre livree, encore que la tradition n 'en ait point ete faite. (C. C. F. 1138.) But this article is only intended to apply to the case when the object of the contract is a corps certain. If the object of the contract, for instance, of a contract of sale, is a quantity of fungibles, the transfer of ownership to the purchaser cannot take place until the fungibles have been sufficiently determined. (Beudant, Contrats, n. 338; Planiol, 2, n. 1343.) And, in the general case, this determination or, as it is often called, this in- dividualisation of the object is made by separating the fungibles sold and delivering them to the purchaser. This subject, how- ever, belongs to the law of sale. (See Thaller, Traite Elementaire de Droit Commercial, 4th ed. n. 1008; B.-L. et Barde, OUig. 2, n. 1065.) The Egyptian Code is quite clear as to this, because it says: In the case of the sale of things determinate only as to ~kind r tht ownership passes only, by delivery. (C. C. E. 268/338.) alternative obligation is strictly analogous to this case. If the debtor binds himself to deliver property X or property Y, as he shall choose, there is no determination of the object, and there- fore no transfer of the property can take place until the choice has been made. Retroactive effect of the choice. When the choice is made does it retroact to the date of the contract? This is a controversial question. According to one SEVERAL OBJECTS AND SEVERAL SUBJECTS. 369 view, seeing that the alternative obligation cannot transfer the ownership, but merely gives to the creditor a personal right, the transmission of property can take place only from the date when the choice is made. (Larombierc, art. 1138, n. 18, and art. 1194, n. 2; Laurent, 17, n. 221.) But, according to another view, when the choice is made it retroacts to the date of the contract. Tho position is the same as if the obligation had not been alternative, but had been from the first a simple obligation to perform the prestation upon which the choice has ultimately rested. It is this view which is accepted by the German Code. La prestation choisie est considered eomme m/fmt ete seule due, des VoHgine (art. 263). Many French authorities hold that the French law is the same, but they do not agree in their explanation of the reason why it should be so. According to some of them the alternative obligation conceals a condition. The debtor who promises property X or property Y, in his option, realty promises property X, subject to the condition that he shall choose to deliver that property or else property Y, subject to the same condition. (Colmet de Santerre, 5, n. 115, bis, VI; Demolombc, 26, n. 19.) When the condition is fulfilled it retroacts according to the general rule applicable to conditional obligations. (C. C. F. 1179; C. C. E. 105/159.) I am disposed to think that this is still the simplest and best explanation. Some writers, however, consider it too artificial. They say that an alternative obligation and a conditional obliga- tion are two separate things, and Laurent carries the argument to its logical conclusion by holding that, as there is no condition in the alternative obligation^ it is not possible to admit the retro- active effect of the option. (17, n. 221.) But other writers who wish to retain the doctrine of retro- activity, and are, at the same time, dissatisfied with the old ex- planation of it, justify their conclusion in another way. 'They say that it is an essential principle of the alternative obligation that when one of the two objects promised alternatively is removed from the scene, either because it becomes impossible to perforin it, or because the choice has fallen upon the other one, the obligation becomes a pure and simple one from its date. There is what has been styled a concentration upon the object which remains. (B.-L. et Barde, Oblig. 2, n. 1078; Colin et Capitant, 2, p. 194.) In whatever way the retroactive effect of the choice is to be defended it appears, at any rate, to be the sounder view that the w.— vol. ii. 24 370 THE LAW OF OBLIGATIONS. choice does produce a retroactive effect, and this has important pract ical consequences : — (1) If the debtor who has sold property X or property Y, in his option, afterwards alienates property X to a third party and then exercises his option under the alternative obligation in favour of X, the creditor can revindicate X from the second pur-r chaser, because it now turns out that he was the owner of it from the date of the contract with him. If the choice had no retroactive effect he would only have a right of damages against the vendor. Of course the purchaser may, according to circumstances, be pro- tected if X was a movable thing, by the rule en fait de meubles la possession vaut titre, and if X was an immoveable property, the second purchaser may be able to defend himself if the first pur- chaser has not transcribed his title. (C. C. E. 611/737.) (2) If the debtor who has sold property X or property Y becomes insolvent, the creditor can revindicate whichever of the two properties is chosen. He does not need to content himself with a dividend. (Colmet de Santerre, 5, n. 115, bis, VI; B.-L. et Barde, 2, n. 1077.) Obligation may appear to be alternative without really being so. An obligation may be couched in an alternative form, and yet may not be a true alternative obligation. The French Code says: The obligation is pure and simple, although contracted in an alternative form, if one of the two things promised could not be the subject of the obligation (art. 1192). The use here of the word "subject" is clearly erroneous. It is persons who are the subjects of obligations, and things, or, as the Egyptian Code prefers to say, acts, which are their objects. This mistake is corrected in the Code of Quebec. It says that: An obligation is pure and simple . . . if one of the two things promised could not be the object of the obligation. (C. C. Q. 1095. See Planiol, 2, n. 709.) If one of the alternatives pro- mised is the delivery of an article which is not an object of commerce, or is the doing of an act which is unlawful, the obliga- tion is not null as a whole, but it is not an alternative obligation: it is a pure and simple obligation to do the thing which is lawful and possible. For instance, I promise to sell you either my black horse or my brown horse for a certain price. Unknown to both of us, my black horse was dead at the date of the contract. In SEVERAL OBJECTS AND SEVERAL SUBJECTS. 371 spite of its alternative form, the obligation was in reality a simple obligation from the first to deliver the brown horse. When one of the alternatives is to do something illegal a dis- tinction has to be drawn. If there are two separate things pro- mised, one of which is lawful and the other unlawful, and both the obligations are distinct and .principal obligations, the unlawful obligation can be eliminated without affecting the validity of the remaining obligation to do the thing which is lawful. But parties are not to be allowed to take advantage of the rule stated in* the code in order to give validity to an unlawful obligation. If I promised to commit a crime, or in default to pay you a sum of money, you would not be allowed to sue for the penalty upon the •argument that the obligation to pay the sum of money was per- fectly lawful, though the obligation to commit the crime was unlawful. There are not here two principal obligations; the obligation to pay the penalty is merely accessory to the other. It is the business of the courts to interpret the contract and to dis- cover if, in the intention of the parties, there were two distinct objects, that is, two distinct principal obligations, or if, on the other hand, one of the objects, which is unlawful, was the prin- cipal object of the contract and the other was merely accessory to it. When one of the things promised is actually unlawful, but it might well be that the parties believed it to be lawful, the obliga- tion to perform the other alternative may, very possibly, be a valid principal obligation. But when the unlawful character of ■one of the prestations must have been manifest to the parties, the presumption is that the other prestation was promised to secure the performance of the first. (Demolombe, 26, n. 11; Colmet But if he was found liable, he might, if he chose, instead of paying the damages, hand over the slave to the plaintiff. This was called making a noxal surrender. (Gaius, 4, 75; Dig. 47. 2. 62. See Girard, Manuel, 5th ed. pp. 94, 469, 682.) Examples of facultative obligations. Examples of facultative obligations are to be found in the codes. One illustration is when an immoveable, upon which a hypothec has been created, perishes or deteriorates by a fortuitous event in such a way as to render the security doubtful. Here the debtor must pay the debt although it is not due, but he can liberate himself if he offers a sufficient hypothec upon another immoveable. (C. C. E. 562/686; C. C. F. 2131; Planiol, 2, n. 713.) And the obligation of the third-party holder — tiers detent eur — who is sued by the hypothecary creditor, is likewise facultative. He must give up the immoveable unless he prefers to pay the debt. (C. C. E. 574/697; C. C. F. 2168.) Another illustration can be taken from the commercial law: The drawers and the endorsers of a bill of exchange engage jointly and severally that it shall be accepted and paid at maturity. But if the person upon whom the bill is drawn refuses to accept it, the holder can get the bill protested for non-acceptance. The effect of this is that the drawer and the endorsers become bound to find security for the bill at maturity. But they may, if they prefer it, pay the amount of the bill and expenses at once. (Co mm. C. E. 119, 125. See Com. C. F. 120; B.-L. et Barde, Oblig. 2, n. 1049; Lyon-Caen et Renault, Manuel de Droit Commercial, 11th ed. n. 628.) Facultative obligations are not often created by contract, but they are not infrequently created by wills. A testator may, for example, leave a house to a legatee, but say that if the heir prefers to pay to the legatee a certain sum of money he shall not need to deliver the house. Practical consequences of the distinction between facultative and alternative obligations. (1) In the alternative obligation, if one of the two things promised is an immoveable and the other is a moveable, we cannot say whether the obligation will be moveable or immoveable until the choice is made. But when the obligation is facultative, its character as moveable or immoveable is clear from the first. If the thing promised — the 380 THE LAW OF OBLIGATIONS. thing- in obligation* — is an immoveable, the obligation will be an immoveable one without any regard to the quality of the thing which is in facilitate solutionis. (2) In the facultative obligation, if the thing in obligatione perishes without the fault of the debtor, and before he is in default, the obligation is extinguished, and the debtor is liberated, for he has only promised one thing, and, by no fault of his, it has become impossible to perform it. Whereas, as we have seen, if the obligation had been an alternative one, and one of the things had perished, the debtor would have remained bound to deliver the other. (3) If the thing promised in the facultative obligation could not be the object of an obligation because it was unlawful or impossible, the obligation is null ab initio. It is immaterial that the prestation which was in facilitate solutionis was lawful and possible. This was only a means by which the debtor oould liberate himself from the other prestation, and ho does not, in this case, need any such means of liberation. (4) In an action by the creditor for fulfilment of the obligation, he must sue for the single thing which is due, without mentioning the thing by means of which the debtor can liberate himself, and the defendant can only be condemned to pay the thing which is due. But the debtor can liberate himself either before or after judgment by offering the thing which is in facilitate solutionis. (Douai, 21 mars 1891, D. 92. 2. 549.) In an alternative obli- gation, when the choice is with the debtor, the creditor is bound to sue for either of the two things alternatively, for otherwise he would be exercising the choice which belongs to the debtor. (On these distinctions generally, see Larombiere, art. 1196, n. 3; Laurent, 17, n. 226; Aubry et Rau, 5th ed. 4, p. 72; B.-L. et Barde, Oblig. 2, n. 1051.) OBLIGATIONS WITH A PENAL CLAUSE. 381 CHAPTER XXI. OBLIGATIONS WITH A PENAL CLAUSE. It is very common for the parties to a contract to agree that, if the contract is not fulfilled, or is not fulfilled within a certain time, the debtor shall pay a certain determinate amount by way of penalty . This is called a penal clause, and the obligation to pay the penalty is spoken of in the Egyptian Code as the penal obligation. (0. C. E. 98/152.) Sometimes a testator or a donor inserts a penal clause in the will or the gift in order to compel the heirs or the donee to carry out some purpose which he has in mind. (See Amiens, 26 fevr. 1896, S. 97. 2. 130.) And, besides these cases, the non-performance of an obligation casts upon the debtor the legal duty of performing other obliga- tions, such as to pay the damages for its breach, or, in some cases, to allow the creditor by the authority of the court to execute at the expense of the party who has broken his contract that which he failed to execute himself, or, when his obligation was a negative one, to undo something which he did contrary to his agreement. (Supra, p. 220.) The Egyptian codes regard these obligations prescribed by law as analogous to the penalty which the parties may have fixed by contract. It calls them all penal obligations. (C. C. E. 98/152.) And there is, in fact, this similarity that in all these cases the creditor has a choice between suing for per- formance of the original obligation, if its performance is still possible, or, instead of doing so, of enforcing the other obligation . And in all these cases, also, the debtor may escape the payment of the penal obligation if he performs the principal obligation before he is in default, unless the penalty was provided for mere delay- The Mixed Code is clearer upon this point than the Native Code, but no doubt both intend to preserve the French law. (C. C. E. 98/152; C. C. F. 1230 The means by which con- tracts may be enforced apart from special stipulation of the parly on the subject have been explained earlier, and we are here con- 382 THE LAW OF OBLIGATIONS. cerned solely with the case in which the parties to a contract have agreed upon a clause of penalty to ensure its execution. The French Code deals separately with this kind of penal obligation under the head of Obligations avec Clauses Penales. Definition. The French Code says: La clause penale est celle par laquelle une personne, pour assurer Vexecution dune convention, s 'engage a quelque chose en cas d'inexecution. (C. C. F. 1226.) The Code of Quebec with greater precision says: A penal clause is a secondary obligation by which a person, to assure the perform- ance of the primary obligation, 'binds himself to a "penalty in case of its inexecution. (C.C. Q. 1131.) Where should this subject be placed? The French Code treats of obligations with a clause of penalty as one of the kinds of obligations which are affected by sonne modality, such as conditional obligations, alternative obligations, and the like. The modality here is that the parties to the contract have fixed what the damages for its breach are to be, instead of leaving this to be determined by the court. Most of the French commentators follow the arrangement of the Civil Code. It is of course quite correct to say that an obligation w T ith a clause of penalty is an obligation subject to a certain modality. But the clause of penalty is so closely connected with the sub- ject of damages, and the ways in which they are to be determined, that many writers treat of obligations with a clause of penalty under the head of damages. (This is done by MM. Aubry et Eau, 5th ed. 4, p. 187; by M. Planiol, 2, n. 253; and by MM. Colin et Capitant, 2, p. 23.) No form prescribed for clause of penalty. There are no sacramental words prescribed for the creation of a clause of penalty . The court can infer from the terms of a deed taken as a whole that the intention was to create a penalty. (See Paris, 6 dec. 1877, D. 78. 2. 81; Req. 21 juill. 1885, D. 86. 1. 326; Trib. Comm. Caire, 1 fevr. 1913, Gaz. Trib. 3, n. 160.) Nor is it necessary that the word " penalty " should be used. In a Quebec case, where a deed said that the vendor of a business should not carry on a similar business within a certain radius a moins de payer comme dommages la somme de . . . it was OBLIGATIONS WITH A PENAL CLAUSE. :j83 held that this was a penal clause, and, therefore, that it was not necessary for the plaintiff to prove actual loss if there had been a violation of the contract. (Girardv. Rousseau, 1909, K. J. Q. 36 S. C. 79. Cf. Nancy, 21 oct. 1895, D. 96. 2. 180.) Purpose of clauses of penalty. (1) The great advantage and convenience of a clause of penalty is to prevent litigation by making it unnecessary to ascertain the amount of the damages. The parties agree once for all that if the contract is broken the damages shall be taken to be the amount of the penalty. (2) In the cases of promises and stipulations for a third party when the stipulator has no interest and promised nothing, the clause of penalty serves to give an action to a person, namely, the stipulator, who without it would not have one. But in this case, the clause of penalty is really the principal obligation. (Planiol, 2, n. 254; supra, p. 54.) Clause of penalty strictly construed. According to general principles of interpretation, clauses of penalty will be strictly construed by the courts. It must appear clearly that the event has occurred for which the penalty was provided. In a French case, under a contract of employment, the employee was to be entitled to payment of a year's salary, if, after three years' service, he was dismissed pour un motif quel- conque. The employment came to an end after more than three years owing to the bankruptcy of the employer. It was held that the employee was not entitled to the year's salary. The intention of the parties was to give him a claim to a year's salary as a penalty if he should be dismissed in an arbitrary or capricious way by his employer, but not when the loss of employment was due to such a cause as the employer's bankruptcy. (Req. 2 janv. 1907, D. 1907. 1. 88.) Clause of penalty cannot defeat legal restrictions on rate of interest. When the debt is a money-debt the penalty stipulated for delay in payment will be reduced to the maximum rate of legal interest if it exceeds that amount, otherwise the prohibitions as to usury would be easily evaded. (C. A. Alex. 28 janv. 1914, B. L. J. XXVI, 184.) 384 THE LAW OF OBLIGATIONS. Position in the Egyptian Code. The Egyptian codes contain only two articles on this subject, and they are not placed together. One of them is among the articles dealing with damages. When the amount of the indemnity to be paid in case of non-performance is determined by the contract or by law, the judge may not award a smaller or a larger sum. (C. C. E. 123/181.) In this article the clause of penalty is regarded quite correctly as a conventional liquidation of the damages. The parties agree beforehand that if the contract is broken the damages shall bo taken to be the amount which is stated. The other article is interpolated rather strangely between two articles dealing with alternative obligations. In the case of a determinate obligation laid down by the law or agreed upon as a penalty for the non-performance of another obligation, the creditor, when the debtor is in default, has the option of performance of the principal obligation or of the penal obligation. (C. C. E. 98/152.) The Egyptian legislator appears to have regarded the obligation with a penal clause as a kind of alternative obligation. But it is not correct to regard the obligation with a penal clause as an alternative obligation. The debtor has not the choice between performing his contract or paying the penalty. He can be made to perform his contract if it is possible, unless it is a contract of the kind which is not specifically enforced. And it is not an alternative obligation in which the creditor has the option, because he cannot sue for the penalty unless there has been a failure of performance of the principal obligation. The penalty, as Planiol well expresses it, is only a pis aller which presupposes a definite non -performance of the principal obligation. (2, n. 259.) An alternative obligation has two objects of which the party who has the choice can select one. The objects are on the same footing, they are both principal prestations, and if one of them becomes impossible without the fault of the debtor, the other one is still due. But in an obligation with a clause of penalty thene is only one object: the obligation to pay the penalty is merely accessory. And if the performance of the principal obligation becomes impossible without the fault of the debtor, the accessory obligation to pay the penalty falls to the ground. If I undertake to deliver to you my black horse or my brown horse in your option, the accidental death of my black horse leaves me still. OBLIGATIONS WITH A PENAL CLAUSE. 385 bound to deliver the other. But if I undertake to deliver to you my horse or to pay L. E. 100, the death of my horse without my fault, and before I am in default to deliver it, will free me from all liability. I am not bound to pay the penalty. (Aubry eit Rau, 5th ed 4, p. 190. No doubt the Egyptian legislator intends the same, for, otherwise, he would not speak of the penal obliga- tion as being attached to a ''principal obligation." (C. C. E. 98/152.) In the alternative obligation there is no principal obligation to which another is accessory. Both obligations are principal. Obligation with penal clause distinguished from facultative obligation. Nor must the obligation with a penal clause be confused with the facultative obligation. It resembles that form of obligation in this respect that it has only one object, and that if this becomes impossible, the obligation is extinguished. But in the faculta- tive obligation the debtor is free to choose. He has reserved to himself the right of substituting something in place of the pres- tation promised. But when the debtor has bound himself under a clause of penalty he cannot, as has already been stated, choose to pay the penalty rather than to perform his contract. He must perform his contract if it is possible. (Colmet de Santerre, V, n. 162, Us 11; B.-L. et Barde, 2, n. 1361.) Obligation with penal clause distinguished from conditional obligation. There is one kind of conditional obligation which may easily be confounded with an obligation with a clause of penalty. This is when the debtor promises to pay a sum of money in the event of his not making- a certain prestation. By way of illustration, I promise to pay you L. E. 100 if I sell my house to anybody except you. Observe, I do not promise to sell jo\x my house, and you have, to begin with, no right of action at all. It is only in the event of my selling the house to another that you acquire a right of action, and then it is only the right to claim the hundred pounds. I am quite free to sell my house to another if I sacrifice the hundred pounds. Contrast with this another case. I promise to do a certain work for you. subject to a penalty of L. E. 100 if I do not fulfil nry contract , w.— vol. ii. 25 . 386 THE LAW OP OBLIGATIONS. Here you acquire a vighi from the date of the contract. You can sue me to make .me fulfil my contract, and I cannot say: "I will not do what I have promised, but I will pay the hundred pounds instead," unless, indeed, the contract is one of those the specific performance of which cannot be enforced. (Colmet de Santerre, I.e.; Laurent, 17, n. 431; B.-L. et Barde, Oblig. 2, n. 1362; Cass. 14 juill. 1869, S. 69. 1. 411, D. 69. 1. 346, .Journal du Palais, 69, p. 1072.) Accessory character of the penal clause. The French Code brings out clearly the. fact that the penal clause is a. secondary or accessory obligation. It is "to ensure the execution of a contract." (C. C. F. 1226.) This way of ex- pressing it is perhaps open to criticism. In the Roman law the penal clause was frequently attached to obligations which were noi enforceable by the civil law. (Girard, Manuel, 5th ed. p. 661.) In such a case, it was quite correct to say that the penal clause served to ensure the execution. But in the modern law the principal obligation is obligatory in itself, and its execution can be enforced. The penal clause is not to make it enforceable, except in the sense that it gives an additional motive to the debtor to perform his contract. The principles which apply to obligations with a penal clause are almost all of them consequences which result from its accessory character. (1) Must be valid principal obligation. In the first place, there must be a valid principal obligation, the non-performance of which would render the debtor liable to pay damages. The penalty which the parties have agreed upon is to come in place of these damages. If the principal obligation is null, the penal clause is likewise null. If the principal obliga- tion is rescinded, the penal clause cannot be enforced, for an accessory obligation cannot exist without a principal obligation to support it. If it were not so, it would be easy to evade the laws which prohibit certain contracts. For instance, a promise of marriage is not enforceable, and if a penalty is stipulated in the event of failure to carry out the promise, the penalty cannot be recovered by an action. (Aubry et Rau, 5th cd. 4, p. 188; Colin et Capitant, 2, p. 23; Dijon, 27 mai 1892, D. 93. 2. 183; D. N. C. C. art. 1227, nos. 1 seq.) OBLIGATIONS WITH A PENAL CLAUSE. 387 The French Code has an express article: La nullite de V obli- gation principale entraine celle de la clause penale. ('. C. F. 1227.) To the rule that unless there is a valid principal obligation there cannot be a valid clause of penalty there is no exception. But there are certain cases which are so considered by many authorities. Two of these apparent exceptions belong to the law of stipulations pour autrui. If I promise that A shall perform a certain prestation in your favour, you have no action either against me or A, because A was no party to the contract, and I promise nothing on my own account. But if I promise that A shall do something for you, or, if not, that I shall pay you a penalty, you will have an action against me for the penalty if A fails to make the performance. Conversely, if I stipulate that you shall pay something to A, no right of action is created either in favour of- me or of A. But if I stipulate that you shall pay something to A, or, in default, that you shall pay me a penalty, I shall have a good claim for the penalty in the event of your non-performance. (C. C. F. 1119, and supra, p. 53.) In both these cases, there is apparently a valid penal clause attached to an obligation which is null. There seems to be an exception to the broad rule stated in the French Code, la nullite de V obligation principale entraine celle de l; is entitled to claim the penalty without proof that any actual damage has been caused to him by the non-performance, and it would be no defence on the part of the debtor to prove that no such damage had been sustained. (Aubry et Rau, 5th ed. 4. p. 190; Baudry-Lacantinerie et Barde, Oblig. 2, n. 1373; PlanioL 2, n. 255.) This conclusion seems to follow from the provision of the code that the court has no power to reduce or increase the penalty which the parties have fixed for non-performance. (C. C. E. 123/181: C. C. F. 1152.) 3U8 THE LAW OF OBLIGATIONS. Ii may appear from the facts proved that the damage sustained was insignificant, and yet, if the parties have agreed that a largo penalty should be paid for non-performance, the court is bound to give judgment for this sum, however disproportionate to the damage they may consider it to be. (C. A. Alex. 19 mars 1913, Gaz. Trib. 3, n. 287. J Seeing that this is the law, it is illogical to contend that if no damages have been suffered no penalty can be recovered. It is plain that the law does not consider the penalty as a sum which is to be equivalent, even roughly, to the actual damage. It is the sum which the parties in their discretion have agreed shall be taken as the value to the debtor of the non -per- formance. It may be exorbitant, but the parties have agreed to it. It may be a bad bargain, but it is a bargain. Unless the debtor can succeed in getting his obligation set aside on the ground of a vice of consent such as fraud, or on some other ground for annulling; contracts, he must pay that which he has agreed to pay. Xo doubt such a rule leads to harsh results in some cases. In a, French case, for example, a poor actor was condemned to .pay 3,450 francs as a stipulated penalty for the resiliation of his contract with a theatre manager, though there was no proof of damage. (Nimes, 17 mars 1890, D. 91. 2. 52. Cf. Bordeaux, 19 juin 1903, D. 1906. 5. 29.) In a Quebec case a milk dealer sold his business— ronde de hit — to another, with a covenant that he would not sell milk to any of the customers transferred under a penalty of 25 dollars for each customer. It was proved that the vendor afterwards sold milk to twenty-three of the customers whom he had ceded to the plaintiff, and he was condemned to pay twenty-three times 25 dollars, no proof of actual damage being required. Fortin v. Perms, 1912, R. J. Q. 43 S. C. 313.) Where no damage is alleged or proved it may appear inequit- able to allow a penalty to be recovered. On the other hand, the value of clauses of penalty would be greatly diminished if the rule "no damages no penalty" were adopted. The very purpose of the penal clause is to prevent litigation. The parties agree that, if there is non-performance, a certain sum shall become, instantly payable. They intend to withdraw from the court the power to estimate the damages suffered, and this purpose would be defeated if the debtor who had broken his contract could refuse to pay the penalty on the plea that the breach had caused no damage to the creditor. This view may be regarded as settled in the law of France and of Quebec. The Egyptian jurisprudence both in the Mixed and in the OBLIGATIONS WJTII A PENAL CLAUSE. 399 Native Courts has been extremely inconsistent. The latest decision of the Mixed Court of Appeal adopts the theory just explained, and there is a recent judgment of the Native Court of Appeal in Egypt in this sense, though the same court had pro- nounced a few months earlier a judgment to the opposite effect; and in its latest judgment the court has returned to its earlier view of " no damages no penalty/' a theory which has now to be considered. (C. A. 20 Feb. 1911, O. B. XII, n. 69. Contra, C. A. 29 nov. 1910, O. B. XII, n. 24; C. A. 10 nov. 1915, •0. B. XVII, n. 29.) There is therefore, at present, a conflict between the Mixed Court of Appeal and the Native Court of Appeal upon this point which is considered in the following paragraph. Conflicting opinion " no damages no penalty." In spite of the considerations stated in the preceding paragraph, there is a conflicting view upon this matter which is supported by the following arguments: (1) 'The penalty must be considered as coming in the place of the damages suffered. It is an indemnity or compensation. (See D. Rep. Oblig. n. 1595.) The French Code states expressly that it is the compensation for the damages which the creditor suffers from 'the non-performance of the obligation. (C. C. F. 1229.) If no damages at all have been suffered, how can there be ;ui,\ such thing as compensation or indemnity? It is admitted that the penalty is not exigible when the non-performance was due to a fortuitous event, although the codes are altogether silent as to this. And this conclusion is justified by arguing that the penalty is by its nature not claimable unless there has been a wrongful breach of the obligation. May we not with equal force contend that the notion of a penalty involves the existence of a loss which is to be made good? (2) If the creditor has suffered no damage the obligation to pay the penalty is without a cause. (3) To award a sum of money to a person who has suffered no damage is contrary to the general rule: Nul ne pent s'&wichir sans cause aux depens d'autrui. These arguments have prevailed with the Mixed Court of Appeal in several cases, but in the most recent decision of that court they have been rejected. In one case the rule is thus stated: La clause penale cesse de sortir effet lorsque Vabsence de dommage pour le creancier resulte elaire- ment des elements acquis am proces on de faits que le debitew est 400 THE LAW OF OBLIGATIONS. a meme de prouver. (C. A. Alex. 17 avril 1912, B. L. J. XXIV, 282. Cf. C. A. Alex. 12 avril 1911, B. L. J. XXIII, 254; C. A. Alex. 12 nov. 1908, B. L. J. XXI, 9; C. A. Alex. 1 mars 1900, B. L. J. XII, 140; C. A. Alex. 14 juin 1900, B. L. J. XII, 347; C. A. Alex. 28 fevr. 1907, B. L. J. XIX, 139; C. A. Alex. 5 mars 1913, B. L. J. XXV, 206; Trib. Civ. Alex. 22 fevr. 1913, Gaz. Trib. 3, n. 218; C. A. Alex. 6 jam. 1915, B. L. J. XXVII, 108.) And the latest judgment of the, Native Court of Appeal is in favour of the view " no damages no penalty." (C. A. 10 nov. 1915, O. B. XVII, n. 29.) Even if we adopt this theory, it would seem clear, at any rate, that the onus of proving no prejudice lies upon the debtor. Ho has bound himself to pay a penalty for inexecution, and he has broken his contract. If he wishes to escape his liability he must show the reason. Upon this point it is submitted that the language quoted above from the judgment of the Mixed Court of 17 avril 1912 is more correct than that used in another case when the same court says: il est toujour s necessaire que la partie qui inwque la clause penale justifie de V existence d'un dommage. (C. A. Alex. 5 mars 1913, B. L. J. XXV, 206.) But in a more recent case it was held that la preuve du defaut de tout dommage incombe a la partie qui pretend se soustraire an paiement de la clause penale stipulee. (C. A. Alex. 6 janv. 1915, B. L. J. XXVII, 108.) But it is submitted, for the reasons stated above, that the view that no penalty is recoverable when the absence of damages is proved is a view which is erroneous. The Egyptian Code has no article corresponding to C. C. F. 1229, which says, la clause pen-ale est la compensation des dommages et inter -Us. And in the latest case the Mixed Court of Appeal has rejected its former theory on the subject. Celui qui a stipule line clause penale a son profit n'est pas tenu, pour y avoir droit, de justifier d'une perte quelconque : la clause penale fait la hi des parties, grace a son caractere forfaitaire, sans qu'il y ait lieu de rechercJicr si le creancier souffre on non un dommage par suite de V inexecution de V obligation, la clause penale etant due des que le debit cur est responsable de I 'inexecution . (C. A. Alex. 4 mai 1916, B. L. J. XXVIII, 301.) The argument that if no damage has been in fact caused to the plaintiff, there is no cause for his obligation to pay the penalty, and that to enforce its payment would be to enrich the plaintiff without a cause, must be rejected. OBLIGATIONS WITH A PENAL CLAUSE. 401 When the parties agree to a penalty they enter into a kind of compromise under which whichever of them breaks the contract is to forfeit the penalty. Neither of them knows at the time which, of them will benefit by the clause of penalty. The obligation of each of them to pay the penalty has for its cause the identical obligation of the other party. It is misleading in such a case to speak of unjust enrichment. The equitable claim to restitution arises only when the enrichment is without a cause. But in this case there is a sufficient cause in the contract of the parties. (See B.-L. et Barde, Oblig. 2, n. 1373, note 1.) Penal clause in other legal systems. Under the German Code, and under the Swiss Federal Code of Obligations, the view of the old law that the court may modify penalties has been retained. The courts have the power to give damages in excess of the penalty if the creditor proves that the penalty does not afford him complete reparation, and they have also power to reduce the penalty if th« debtor prove that it is out of proportion to the loss caused to the creditor. (Code Fed. Oblig. arts. 161, 163; German Code, 340, 343.) In England, also, the courts at common law have the power to reduce the sum stipulated as a penalty if it appears unconscionable or extravagant. {Clyde- bank Engineering Co. v. Yzquierdo y Castaneda, 1905, A. C. 6 r 74 L. J. P. C. 1.) But it 'must be a penalty and not liquidated damages. In England, where the parties did not intend to secure performance of the promise by fixing a penalty in excess of the actual loss which was likely to be caused by a breach, but merely intended to estimate beforehand the amount of the damages, the courts will not interfere. This is a case of "liquidated damages" and not of penalty, and "there is nothing illegal or unreasonable in the parties, by their mutual agreement, settling the amount of damages, uncertain in their nature, at any sum upon which they may agree." (Per Tindal, C. J., in Kemble v. Farren, 1829 r 6 Bing. 147, 31 K. R. 366.) The question of intention may be a difficult one. It is not concluded by the fact that the parties used the words "liquidated damages" or "penalty," respectively, (See Magee v. Lavell, 1874, L. R. 9 C. P. 107, 43 L. J. C. P. 131; Willson v. Love, 1896, 1 Q. B. 626, 65 L. J. Q. B. 474; Halsbury, Laws of England, s. v. Damages, p. 329; Leake on Contracts, 6th ed. p. 796; Mayne on Damages, 8th ed. p. 170.) w.— vol. n. 26 40*2 THE LAW OF OBLIGATIONS. Indivisibility as applied to obligations with a clause of penalty. The French Code contains two articles which deal with the difficulty which may arise from the fact that the principal obliga- tion assured by a penal clause was indivisible. (C. C. F. 1232, 1233.) The Egyptian Code is entirely silent upon this point. The consideration of these articles in the French Code will be post- poned until we come to the subject of indivisible obligations. (Infra, p. 441.) JOINT AND JOINT AND SEVERAL OBLIGATIONS. 403 CHAPTER XXII. JOINT AND JOINT AND SEVERAL OBLIGATIONS. Obligations may bo divided into those which are simple, those which are joint, and those which are joint and several. In a simple obligation there is one creditor and one debtor. In a joint obligation there are two or more obligations which are combined together, but each obligation stands on its own legs, and, though there is only one title, there are as many obligations as there are debtors or creditors. If I promise L. E. 100 to A and B jointly, this means that I owe L. E. 50 to A and L. E. 50 to B. These obligations are quite distinct. If I pay A in full, and afterwards I become insolvent, B cannot claim that A shall communicate to him any part of what he has got. The debt to A may be prescribed, whereas B may have interrupted the prescription of the debt to him. Similarly, if A and B promise me jointly L. E. 100, there are two separate debts of L. E. 50 each; and if A is insolvent, I cannot claim from B more than the L. E. 50 which he owes. If one of the obligations is null the loss falls upon me, and so on. (B.-L. et Ba-rde, 2, n. 1107; Aubry et Rau, 5th ed. 4, p. 17.) When an obligation is joint the principle is that each of the joint debtors is liable for an equal share. But this is a question of intention. If three persons buy together a piece of land without making themselves liable jointly and severally for the price, and if their shares in the land are not to be equal, the liability of each is, presumably, intended to be proportionate to his share. (C. A. Alex. 18 juin 1914, B. L. J. XXVI. 447. See Aubry et Rau, 5th ed. 4, p. 17.) When an obligation is joint and several different rules apply. Instead of there being several debts, which for convenience are created by the same title, we nave here only one debt, but it is one debt which is due to several creditors or due by several debtors. There is what French writers call solidarite or, as Pothier and the older writers called it, solidite. The case of solidarity among 26 (2) 404 THE LAW OF OBLIGATIONS. creditors is a much loss common and loss important case than that in which there are several debtors bound jointly and severally. French writers speak of active solidarity to describe the joint and several interest of creditors, and passive solidarity to describe the joint and several liability of debtors. (a) Joint and several creditors. The rules of solidarity among creditors are thus stated in the Egyptian Code: Creditors benefit jointly and severally wider an obligation when the agreement creating the obligation constitutes each of them a mandatary of the others to receive performance; and in such case the rules regarding mandate apply. (C. C. E. 107/161.) Under the Egyptian Code, in this respect differing in expression from the French Code, the creditors are not joint and several, unless, under the obligation, each of them is given a mandate to receive performance. The French Code says the title must give each of them the right to demand payment of the whole debt, and that payment made to one of them liberates the debtor., (C. C. F. 1197.) Neither code intends to make it necessary to use any special form of words. (Dall. Hep. Oblig. n. 1370.) Each creditor may exact performance of the whole obligation and may thereupon discharge the debtor. (See Req. 9 mai 1904, D. 1910. 1. 332.) Unless one of them has instituted a suit, the debtor may pay the whole debt to any one of the creditors. (C. C. F. 1197, 1198.) Any one of the creditors who receives payment may discharge the debtor, but a creditor cannot release tin 1 debtor without payment, except to the extent of his own share of the debt. In the .Roman law and in the old French law each of the creditors might not only take payment of the whole debt but might discharge the debtor of the whole debt without pay- ment. (Dig. 45. 2. 2; 16. 1. 20; Pothier, Oblig. n. 260.) For when there was solidarity, or, to use the Roman expression, cor- reality among the creditors, each creditor was really a 'creditor for the whole amount. It is true that, in most cases, at any rate, if he received paymett of the whole amount, he needed to account to the other co-creditors for their shares, Because he was either their partner or their mandatary, but this necessity to account depended upon the relationship between them and in no way affected the debtor, and there may have been cases in which the JOINT AND JOINT AND SEVERAL OBLIGATIONS. 405 creditor who received payment did not need to account at all. (Girard, Manuel, 5th ed. p. 746.) But the kind of obligation in which there are several creditors, any one of whom can sue for the debt in full, and if he receives payment can keep it all for himself, and in which any one of the creditors can release the debtor without payment and so defeat the interest of the other creditors, is so unpractical a form of obligation that it is difficult to believe it can ever have been of much use. The Code Napoleon which our law follows, proceeds upon the much more probable and natural view that there is an agreement between the creditors under which each creditor may take payment of the whole, but simply as a mandatary for the others to whom he must account for their shares. And he cannot release the debtor without payment except as regards his own share, for if he did so he would be giving away what belongs to his associates. It is plain that the code presumes that in joint and several interest, if one creditor gets payment of the whole he must divide, and the presumption is that the creditors have equal shares, although this is a presumption that may be rebutted. (B.-L.' et Barde, Oblig. 2, n. 1165.) This makes it clear that one creditor cannot novate or settle an action or arbitrate about the whole debt. He can deal only with his share. Can the debtor sued by one of the co-creditors set up in com- pensation a debt due to him by the creditor except to the extent of the share of the creditor? No, for otherwise this would be to allow a debtor to set up in compensation against the mandator a debt which the mandatary owes to him. And the Egyptian Code savs we must follow the rules of mandate. (C. C. E. 107/161. See Dall. Rep. Oblig. n. 2693; Panel. Franc. Oblig. n. 5812.) It would be to prejudice the other creditors. It is not a sufficient answer to argue that seeing that compensation is a kind of pay- ment— compmser rest payer, — the creditor who is suing for the whole debt may be met by the plea of compensation for the whole amount. For the result as regards the other creditors is not neeessarily the same as if he had been paid. This creditor if he could be paid by compensation, may be insolvent, and his co-creditors will not be able to recover their shares from hi*. If he were paid in money they could take conservatory measures at once. In France the question whether compensation to the extent of the whole debt can be pleaded is much disputed. (See B.-L. et Barde, Oblig. 2, n. 1145; Aubry et Rau, 5th ed. 4, p. 22; Laurent, 17, 406 THE LAW OF OBLIGATIONS. n. 268. ) But the language of the Egyptian Code seems to remove the difficulty. Release. The joint creditor has no mandate to release the debtor without payment or to enter into a novation or a compromise of the debt. Such acts can affect only his share of the debt. The debt remains unaffected as to the shares of the other co-creditors. (Laurent, 17, n. 269; Hue, 7, n. 304; B.-L. et Barde, Oblig. 2, nos. 1152 seq.; C. C. F. 1198. See Req. 9 mai 1904, D. 1910. 1. 332.) Interruption and suspension of prescription. The only other provision in regard to joint and several creditors which requires notice is in regard to the interruption or suspen- sion of prescription. The French Code says: Every act which interrupts prescription with regard to one of the joint and several creditors benefits the others. (C. C. F. 1199.) This is quite a natural rule. Each creditor being presumed to have an implied mandate to do the bast for the others, an interruption of prescrip- tion for the benefit of one of the creditors enures to the benefit of all. It is the whole debt which is prevented from prescribing. This principle does not apply to suspension of prescription. If one of the creditors is a minor, prescription will not run against him during the minority, but the shares of the others may be lost by prescription. The theory of implied mandate cannot help us here. It is reasonable to say that each creditor has an implied mandate to interrupt prescription, but he has no mandate to be a minor. The fact that the debt is joint and several is not the same thing as its being indivisible, and there is no reason why a special benefit which the law gives to certain persons who cannot protect their own interests, such as minors, should be extended to creditors who are of full age and in the enjoyment of their rights. This seems to be the better opinion though there are weighty dissentients. (Sic, Baudry-Lacant. et Barde, Oblig. 2 7 n. 1149; Laurent, 17, n. 264; Aubry et Rau, 5th ed. 4, p. 23, note 11. Contra, Larombiere, on art. 1199, n. 3; Demolombe, 26, n. 171. The Egyptian law would appear to be the same as the French upon both these points, though the Egyptian Code is silent. JOINT AND JOINT AND SEVERAL OBLIGATIONS. 407 (b) Joint and several debtors. This case is more common and more important than that of joint and several creditors. It is dealt with in C. C. N. 108—116 and C. C. M. 162—172, with which we may compare C. C. F. 1200-1216 and C. C. Q. 1103—1120. The Egyptian articles are: — Debtors are not each individually bound for the whole of a debt unless joint and several liability has been stipulated in the agreement or pronounced by the law. In such case the debtors are deemed to be reciprocal sureties, each for the others, and also reciprocal mandataries for perform- ance ; the rules regarding the contract of suretyship and of man- date apply. Debtors jointly and severally liable may be sued by the creditor together or separately, except when some of them are liable only at a fixed term or upon condition. Default resulting from formal demand addressed to and pro- ceedings taken against one of several debtors liable jointly and severally take effect against all the rest. No one of several debtors liable jointly and severally can in- crease the obligation of the rest by his own act. Each preserves the right of setting up such exceptions as are personal to himself as well as those which are common to all. One of several debtors liable jointly and severally cannot set up a compensation to which one of his co-debtors is entitled. He can only set up confusion of the obligation in respect of the share of that one of his co-debtors whose joint liability has been extin- guished by confusion. He may not set up a release of the debt for more than the share of that one of Ms co-debtors to whom the release has been granted, unless the release be absolute, which shall not be pre- sumed. One of several co-debtors liable jointly and severally, who has discharged the debt by payment or compensation, shall have a right of recourse against each of the others for their shares. The liability of such of them as are insolvent shall be divided among those who are solvent. The Egyptian Code does not state at the outset the general character of the obligation as the French Code does. There is a joint and several obligation on the part of the co-debtors when they are all obliged to the same thing, in such 408 THE LAW OF OBLIGATIONS. manner that each of them singly may be compelled to the per- formance of the whole obligation, and that the performance made by one only discharges the others towards the creditor. (C. C. F. 1200.) This article brings out two characteristics of the joint and several liability of debtors, viz.: (1) each debtor may be compelled to pay the whole— singuli solidum debent ; and (2) pay- ment by one frees &l\—unum debent omnes. But the article does not bring out a third characteristic, viz.: (3) that each of the co-debtors has an implied mandate to represent the others in all that concerns the performance of their common obligation. Each of them can do anything to improve the position of the others or to protect their interests, but he cannot do anything to make their position worse. (Larombiere, on art. 1200, n. 4; Cass. 16 dec. 1891, D. 92. 1. 177.) The Egyptian Code is more distinct as to the last point. The debtors are deemed to be reciprocal man- dataries for performance ; the rules regarding the contract of suretyship and of mandate apply. (C. C. E. 108/163, 161.) The illustrations of this principle will be given later. In the joint and several obligation there must be the same thing due by all the debtors and upon the same cause.. But it is not one obliga- tion to which several debtors are bound; there is no identite du lien. There are as many obligations as there are debtors. Hence the nullity of one obligation does not affect the others and the obligations do not need to be all identical in character. The French Code says: An obligation may be joint and several, although one of the co-debtors may be obliged differently from the others to the performance of the same thing ; for example, if one be obliged only conditionally while the obligation of the other is pure and simple, or if one has been allowed a term which is not granted to the other. (C. C. F. 1201. See Pothier, Oblig. n. 263; Baudry-Lacant. et Barde, Oblig. 2, n. 1117.) The Egyptian article implies the same thing. (C. C. E. 109/165.) Accordingly, if the debtor who is bound purely and simply pays the debt, he cannot sue in recourse the debtor who is bound only conditionally, or after a term, unless the condition is fulfilled or until the term has arrived. For he can have no higher right than the creditor to whom he is subrogated. So, upon the same principle, there is nothing to prevent two debtors being bound jointly and severally, though the debt of one is for a larger amount than the debt of the other, but in this case the joint and several liability cannot exceed the smaller of the two amounts. For example, by the same title A is bound to C for L. E. 1,000, and JOINT AND JOINT AND SEVERAL OBLIGATIONS. 409 B is bound to C jointly and severally with A for L. E. 500. There is a joint and several obligation between A and B to the extent of L. E. 500. By the same principle also two persons may be bound jointly and severally though the debt of one may be a commercial debt and that of the other a civil debt. So in France, if a trader and a non-trader sign a bill of exchange or a promissory note jointly and severally, the debt of the trader will bo a com- mercial debt and that of the non-trader a civil debt. (Vand. Franc. Oblig. n. 225.) In Egypt, however, bills are commercial unless as against women non-traders, or simple cultivators. (C. Comm. E. 2/2, 109/114; C. A. Alex. 26 avril 1893, B. L. J. V, 188; C. A. Alex. 15 mars 1893, B. L. J. V, 10G.) Presumption against joint and several liability. Joint and several liability is either conventional or legal. There are, as we shall see, a number of cases in which it arises by opera- tion of law. Where it is conventional, there must be a clear indication of the intention to create it. The French Code says: An obligation is not presumed to be joint and several; it must be expressly declared to be so. (C. C. F. 1202. See Cass. 31 mars 1909, D. 1910. 1. 19.) The Egyptian article though less distinct, has the same meaning. The debtors " are not each in- dividually bound for the whole of a debt unless," etc. (C. C. E. 108/162.) Does the presumption against joint and several liability apply to commercial matters? This is a somewhat controversial point. The commercial codes do not say that the presumption of the civil code is inapplicable, or that in commercial matters there is a presumption of solidarity. In Egypt, the Mixed Court of Appeal held in one case: En matiere commerciale comme en matiere civile, la solidarite ne pent residter que d"une disposition de la loi ou des conventions des parties. But according- to the prevailing view in France, when two traders buy goods together for their joint account they are pre- sumed to bind themselves jointly and severally for the price. (Baudry-Lacant. et Barde, Oblig. 2, n. 1175; Thaller, Traite Elerwentaire de Droit Commercial, 4th ed. n. 1054; D. N. C. C. 1202, arts. nos. 37 seq.) And, in another Egyptian case, the Mixed Court of Appeal held that solidarity is presumed when 410 THE LAW OF OBLIGATIONS. commercial operations are entered into by several persons collec- tively and for their joint account. (C. A. Alex. 10 juin 1903, B. L. J. XV, 342.) Many codes now lay down ;as a general rule that in commercial operations the debtors are presumed to intend solidarity. (C. C. Q. 1105; C. Comm. Ital. 40; and other codes referred to in B.-L. et Barde, Oblig. 2, n. 1175.) Joint and several liability by law. Before taking up conventional joint and several liability, let us enumerate the cases in which it is created by law. Passive solidarity by law is imposed in express terms in various cases' falling under all branches of the law, civil, commercial, and penal. But subject to what has just been said as to commercial matters, it does not exist unless there is a provision of law which clearly creates it. It must be "pronounced by the law." This does not mean that the words "joint and several" or solidairement, must be used. (Aubry et Rau, 5th ed. 4, p. 33; B.-L. et Barde, 2, n. 1174.) Examples of passive solidarity in the civil law are: (a) That of the architect and the contractor for the destruction of a building within ten years. (C. C. E. 409/500.) (b) That of the judicial sureties. (C. C. E. 499/609.) (c) That of the joint authors of a wrongful act which causes damage to another. (C. C. E. 150/211.) Upon this last matter the Egyptian Code, like the Code of Quebec, (C. C. Q. 1106) has settled a long-standing con- troversy. The French Penal Code makes the joint authors of a penal delict liable jointly and severally (art. 55), but the Civil Code has no similar provision as to the joint authors of a civil delict or of a quasi-delict. The jurisprudence admits the principle of solidarity in this case, reasoning by analogy from the Code Penal, but the doctrine for the most part refuses to accept the view that there is here solidarity in the full sense. (See Aubry et Rau, 5th ed. 4, p. 33;' Planiol, 2, n. 903; Req. 26 nov. 1907, D. 1908. 1. 139; Cass. 17 mars 1902, D. 1902. 1. 541, and the note; Cass. 16 juill. 1902, D. 1903. 1. 401, dissertation by M. Capitant; D. N. C. C. Additions (1913), art. 1202, n. 54—5°.) It is not necessary for us to enter into this discussion as the Egyptian Code is clear. JOINT AND JOINT AND SEVERAL OBLIGATIONS. 411 It is also clear under the Egyptian codes, that when the damage is caused by a person for whom another is civilly responsible, as r for example, by a servant acting- in the course of his employment, the person civilly responsible can be made jointly and severally liable together with the actual wrongdoer. (C. C. E. 150 — 152/211—214.) The French jurisprudence is in the same sense. (Req. 22 juill. 1891, D. 92. 1. 335; Dijon, 4 juin 1902, D. 1902. 2. 279; Cass. 11 fevr. 1889, D. 89. 1. 316; and the note to Cass. 16 juill. 1902, D. 1903. 1. 401.) The joint and several liability of wrongdoers to the victim does not imply that as among them- selves their liability is equal. The joint and several liability of wrongdoers belongs more naturally to the subject of responsibility. The Egyptian Code does not, like the French Code, make joint- mandators liable jointly and severally to the mandatary (C. C. F. 2002) or make joint-borrowers of an article liable jointly and severally to the lender. (C. C. F. 1887.) In the commercial law the partners in a partnership en nom collectif are liable jointly and severally for all the engagements of the partnership, though only one partner may, have signed the document provided he has done so under the firm-name. (C. Comm. E. 22/28.) And all persons who have drawn, accepted or endorsed a bill of exchange are jointly and severally liable to the holder for payment. (C. Comm. E. 137/144. See C. A. Alex. 22 avril 1914, B. L. J. XXVI, 342.) In the penal law all the persons sentenced for the same felony or same misdemeanour— delit — are jointly and severally liable for the fines, the restitution, the damages and the costs. (C. Pen. M. 24. Cf. C. Pen. N. 44, which is less wide.) Persons who without right use together, and in a common interest, the property of another are liable jointly and severally. (C. A. Alex. 19 mare 1903, B. L. J. XV, 207. Cf. Req. ler mai 1906, D. 1906. 1. 341.) So are the joint owners of a mitoyen wall which falls and brings down a neighbour's house. (C. A. Alex. 28 janv. 1903, B. L. J. XV, 111.) So are the persons who fraudulently conspire to do an act which causes damage. (C. A. Alex. 11 avril 1906, B. L. J. XVIII, 189; C. A. Alex. 17 mai 1905, B. L. J. XVII, 277.) This will be so, for instance, in the case of co-vendors who declare an immoveable free from all charges, when it is to their 412 THE LAW OF OBLIGATIONS. knowledge burdened with a hypothec. (C. A. Alex. 17 mai 1905, B. L. J. XVII, 277.) In many eases it is not possible to determine the share of blame attaching to each of the offenders. They will be liable each for the whole to the victim, and, as among- themselves, in ecpual shares. (See Req. 26 nov. 1907, D. 1908. 1. 139.) When an action is brought against several defendants in which the conclusion is for damages against them jointly and severally, and judgment is rendered against the defendants with costs, does such a judgment imply that the liability for the costs is likewise joint and several? The general answer to this must be in the negative. A joint and several debtor has no mandate to injure the other debtors or to increase their liability. If he wrongously defends the action he is a plaidew imprudent, and the costs which he incurs by so doing cannot be considered as accessory to the debts of the other debtors. (Larombiere, art. 1202, n. 23; Pond. Frang. vo. Oblig. n. 301; D. N. C. C. art. 1202, n. 183; C. A. Alex. 3 mai 1900, B. L. J. XII, 235.) But the court if it gives judgment against the defendants jointly and severally, may, in awarding expenses, say that the expenses are a titre de dommages et interets. (Aubry et Rau, 5th ed. 4, p. 35; Cass. 2 fevr. 1910, D. 1910. 1. 533.) And when the action is brought against persons as being jointly guilty of a delict or quasi-delict, and they are found liable in damages jointly and severally, they may be condemned, likewise, to pay costs jointly and severally, seeing that such a condemnation is merely accessory to the principal judgment. (Req. ler mai 1906, D. 1906. 1. 341; Req. 12 nov. 1907, D. 1908. 1. 87.) The cases of joint and several liability arising by virtue of the law have now been enumerated. They will not be extended by analogy. The presumption against joint and several liability applies both to the case where it is created by some provision of law and to the case where it arises from agreement. Accordingly, it is generally agreed that the joint and several liability of joint- borrower:- under the French Code cannot be extended by analogy to joint-lenders, and that joint-depositaries are not liable jointly and severally, seeing that there is no provision of law to that effect. (Demolombe, 26, nos. 252, 255; Pond. Frang. Oblig. n. 285.) JOINT AND JOINT AND SEVERAL OBLIGATIONS. 413 Conventional joint and several liability. In order to create a joint and several obligation by agreement of parties the Egyptian ( 'ode says: It must be stipulated in the agree- ment (arts. 108/162). In saying that the obligation is not joint and several, unless it is expressly so declared, the code does not mean that the words "joint and several" — solidmrement — are indispen- sable, though it is safer to use them when the intention is to> create solidarity. But the parties may use other -words, such as that " each is to be liable for the whole," or that they " renounce the benefits of division and discussion," and, in such cases, there is a joint and several obligation though this precise term is not used in the agreement. (Baudry-Lacant. et Barde, Oblig. 2 r n. 1174; Aubry et Rau, 5th ed. 4, p. 32.) But there must be no ambiguity about the terms used. (Douai, 20 mars 1882, D. 83. 2. 20; Cass. 15 juill. 1896, D. 97. 1. 109, Journal du Palais, 1830-1831, p. 74: I). N. C. C. art. 1202, n. 20; C. A. Alex. 22 mars 1900, B. L. J. XII, 173.) So the obligation of the co- purchasers of an immoveable to pay the price is not presumed to mean that they are liable jointly and severally. (Cass, ler dec. 1908, D. 1909. 1 . 420.) On the other hand, when co-vendors bind themselves to deliver a thing, this obligation, being in its nature indivisible, implies, or may be held to imply, that they are bound jointly and severally. (See C. A. Alex. 5 avril 1900, B. L. J. XII, 198.) Conversely, even when the words "jointly and severally" are used, it is still possible for the court to find that there is not a joint and several debt, because, on a fair interpretation of the deed as a whole, it may appear that this was not the true intention of the parties. The words "joint and several," or solidmrement T may be controlled by other words which show that the parties did not intend to be bound jointly and severally. Where, for instance, although the word solidairement was used in a contract, it was stipulated that the creditor should not attack one debtor until he had first discussed the other, thus showing that one of the parties intended to be bound only as surety and not as principal, it was held there was no joint and several liability. (Bourges,. 7 mars 1831, D. 31. 2. 158; Cass. 4 dec. 1855, D. 56. 1. 58;. Baudry-Lacant. et Barde, Oblig. 2, n. 1177. Cf. Cass. 15 juill. 1896, D. 97. 1. 109.) 414 THE LAW OF OBLIGATIONS. Effects of joint and several liability among the debtors. (a) Effects of principle that each debtor is liable for whole debt. The articles upon this subject in the Egyptian Code have been already stated. (C. C. E. 109 — 115, 165 — 171.) As against the creditor each of the debtors is a principal, and may be sued for the whole debt. He cannot plead the benefit of division, that is, that the creditor must begin by suing all the co-d.cbtors each for his share. Nor, if the co-debtor" is a surety, can he plead the benefit of discussion, that is, that the creditor must first take proceedings against the principal debtor. Among themselves the debtors may .be liable each only for his share, or the debt may be, as among" themselves, the debt of one only, the others being merely sureties. But from the point of view of the creditor the great virtue of joint and several liability is that he can treat each of the debtors as if he were the only debtor, bound to pay the whole debt. The creditor is not concerned with their relations with each other. (C. C. F. 1203; B.-L. et Barde, Oblig. 2, n. 1203; Aubry et Rau, 5th ed. 4, p. 42.) This right of the creditor to attack any one of the debtors and to call upon him to pay the whole debt, does not, however, exclude the debtor who is sued from the right of calling in the other* debtors as warrantors. He may, by means of a dilatory exception, obtain delay for this purpose. Pothier taught otherwise, though he said that even in his time the debtor was, as matter of favour, always accorded this right. {Oblig. n. 330.) It is obviously equitable that this right should exist; the delay to the creditor is merely of a few days, and the gain to the debtor is great. The practice appears to be settled in this sense in France. (Demo- lombe, 26, n. 316; B.-L. et Barde, Oblig. 2, n. 1204; Aubry et Rau, 5th ed. 4, p. 43. Contra, Laurent, 17, n. 297. See D. N. C. C. art. 1203, n. 11.) And even when the joint and several, liability arises from a delict, as distinguished from a quasi-delict, though the liability is of a penal character, the debtor who is sued has an action in warranty against the co-offenders. For the Egyptian Code makes no distinction. (C. C. E. 115, 150, 171, 211. Cf. C. Pen. E. 44/24.) This is so in France also, though the liability in this ease is not there generally regarded as a joint and several obligation in the full sense. (B.-L. et Barde, Oblig. n. 1305; Aubry et Rau, 5th ed. 4, p. 49, note 36 quater.) And when one of the joint and JOINT AND JOINT AND SEVERAL OBLIGATIONS. 415^ several debtors is sued, the others, even although not called in, have the right to intervene in the action at any time before judgment.. (Baudry-Lacant. et Barde, Oblig. 2, n. 1205; Aubry et Kau, 5th ed. 4, p. 43.) The creditor cannot, without the consent of the co-debtors, divide the debt, and if he sues a co-debtor only for his equal share, and the debtor insists on paying the whole debt, the creditor must receive this payment, and the judgment will have the effect of liberating the other debtors as regards the creditor, and of subro- gating the debtor who has paid in the creditor's rights against them. Laurent disputes this upon the ground that the exclusion of division is wholly in the interest of the creditor, and he may, therefore, waive it. (17, n. 298.) But the other view seems to be settled in France, and is supported by the argument that the effect of the joint and several liability is to place each of the co-debtors in the same position as if he were the only debtor. (Baudry-Lacant. et Barde, Oblig. 2, n. 1209; Aubry et Rau, 5th ed. 4, p. 43; Cass. 25 mars 1896, D. 96. 1. 294.) The creditor may sue one of the joint and several debtors, or all of them together, or some of them only, as he chooses. And if he sue several of them, they may all be brought before the court of the district in which one of them has been summoned. (Baudry-Lacant. et Barde, Oblig. 2, n. 1212.) (b) Effects of theory that each debtor has mandate. The consequences of joint and several liability which have so far been referred to, flow from the principle that the creditor has the right to consider each of the debtors as liable for the whole debt. There are other consequences which flow from the principle that each of the co-debtors has an implied mandate from the others to represent them for certain purposes. The traditional way of stating the extent of this mandate is to say that it extends ad conservandam vel perpetnandam obligationem non ad align i- dam. (Pothier, Oblig. n. 273; Baudry-Lacant. et Barde, Oblig. 2, n. 1213; Agen, 28 oct. 1891, D. 93. 2. 540.) According to a modern decision of the Cow dc Cassation the extent of the implied mandate given to each other by the joint and several debtors is to do anything which ameliorates the condition of all of them, but nothing which can injure the condition of any of 416 THE LAW OF OBLIGATIONS. them, unless there is some exceptional provision of law which allows this. (Cass. 16 dec. 1891, D. 92. 1. 177, S. 93. 1. 81.) The Egyptian Code expresses the rule clearly enough: No one of several debtors liable jointly and severally can increase the obligation of the rest by his own act. (C. C. E. 111/167.) Consequences of theory of mandate. Default resulting from formal demand addressed to and pro- ceedings taken against one of severed debtors liable jointly and severally take effect against all the rest. (C. C. E. 110/166.) When the object of the debt is a specific thing, and it has perished, or can no longer be delivered, owing to the fault of one of the co-debtors, or after he is in default, this does not free the other co-debtors from their liability to pay its value. But the debtor who is in fault is the only person liable to pay damages over and above the value of the thing. For this aggravation of the debt has been caused by him alone, and he had no mandate to increase the liability of the others. If they were all in fault, or in default, they would all be liable in damages as well as for the value; and, conversely, if the thing perished without the fault or default of any of them they would all be free from any liability. (C. C. F. 1205; B.-L. et Barde, 2, n. 1224; Aubry et Eau, 5th ed. 4, p. 47; De Hults, Rep. Obligations, n. 127.) An act which interrupts prescription against one of the joint and several debtors interrupts it with regard to all of them. (C. C. F. 1199.) So, an action brought against one of the debtors interrupts prescription as regards them all, seeing that each of them has a mandate to represent the others. (C. C. F. 1206; Baudry-Lacant. et Barde, Oblig. 2, n. 1214.) An acknowledgment of the debt made by one of the co-debtors, being an act of interruption, affects the other co-debtors as well. (Baudry-Lacant. et Barde, Oblig. 2, n. 1215; Req. 19 mai 1884, D. 84. 1. 286; Agen, 28 oct. 1891, D. 93. 2. 540.) But when one of the joint and several debtors has died, and the act of interruption is in regard to one of his heirs, this does not interrupt prescription as regards the other heirs, and it inter- rupts prescription as regards the other co-debtors no>t for the whole debt but only for the share of this particular heir who has acknow- ledged his liability. This is because if one of the joint and several debtors dies leaving several heirs, each heir is liable only for a share of the debt JOINT AND JOINT AND SEVERAL OBLIGATIONS. 417 proportionate to his share in the succession. (' . ('. F . 2249; B.-L. et Barde, Oblig. 2, n. 1218; Laurent, 17, n. 327. For example, John and William are jointly and severally bound Lo pay L. E. 10,000 to Thomas; John dies, leaving as his heirs in equal shares, his two sons Henry and Robert. Thomas, the creditor, sues Robert, and obtains an acknowL dgment of the debt. This interrupts the prescription as regards Robert, and as regards William also, because William is a co-debtor, but only to tin extent of L. E. 5,000, because Robert as an heir was liable only for half the debt. But it does not interrupt the prescription as regards Henry, for he is not a co-debtor, and though he and Robert are co-heirs, one co-heir has no mandate to represent another. But this will not be the case when the original debt was indivisible as well as joint and several, because in that case it must be kept alive as a whole or extinguished as a whole. (C. C. F. 2249; B.-L. ct Barde, Oblig. 2, n. 1218; B.-L. et Tissier, Prescrip- tion, n. 559.) A demand of interest made against one of the joint and several debtors causes interest to run against them all. (C. 0. P. 1207. See C. C. E. 110/166.) Another consequence of the theory of mutual representation will be noticed later under the head of chose jugec. Exceptions which a joint and several debtor may plead against the creditor. Each of the co-debtors preserves the right of setting up such exceptions as are personal to himself as well as those which are common to all. (C. C. E. 112/168.) The French Code says: Le codebiteur solidaire poursuivi par le creamier peut opposer toutes les exceptions qui resultent de la nature de V obligation , et toutes celles qui lui sont personnelles, ainsi que celles qui sont communes a tous les codebiteurs. II ne pent opposer les exceptions qui sont purement personnelles a qxelqnes-uns des autre* co- debiteurs. (O. C. F. 1208.) Personal exceptions. He may plead such personal exceptions as, for example, his minority or interdiction, or that he was led into the contract by fraud. w.— vol: ii 27 418 THE LAW OF OBLIGATIONS. Exceptions common to all the debtors. Ho may plead any defence which strikes at the root of the whole obligation, such as that the creditor has received payment in full, or that the debt has prescribed. For such a defence is in its nature common to all the debtors. In this class come such exceptions as unlawful cause, defect of form, condition not fulfilled, term not expired, payment, nova- tion, release, prescription. Exceptions personal to another debtor. But he cannot plead that one of the other co-debtors was a minor or had been led into the contract by fraud, or the like. Seeing that he has made himself liable for the payment of the whole debt, it is immaterial, in a question between him and the creditor, that another co-debtor would have a good defence. " Personal exception " does not mean same thing here as in case of surety., The French Code uses the same expression, purement person- nelles, in speaking of the exceptions which a surety is not allowed to oppose to the creditor. Le caution ne pent opposer les excep*- tions qui sont purement personnelles au debiteur. (C. C. F. 2036, 1208.) In spite of this, it is the prevailing view in France that the words purement personnelles used in regard to the case of the debtor and the surety do not mean quite the same thing as the identical words used in the case of co-debtors. It follows from the nature of suretyship that the surety can set up the exceptions which the principal debtor might plead himself when these exceptions are based on vices of consent. He may plead that the principal debtor's consent was vitiated by error, violence, or fraud. And the surety may do so, even though he was bound jointly and severally with the debtor. For his obligation as a surety is an accessory obligation. Whereas, in the case of ordinary co- debtors the situation is different. The vice in the consent of one co-debtor is a defence which this co-debtor alone can take. It is purely personal to him. The obligation of each of the other co-debtors is a principal obligation, and its validity is unaffected by the fact that the consent of a fello-vv debtor was vitiated. JOINT AND JOINT AND SEVERAL OBLIGATIONS. 419 (Baudry-Lacantinerie et Wahl, Contrats Aleatoires, etc. n. 948; Planiol, 2, n. 2331; B.-L. et Barde, Oblig. 2, n. 1243; D. N, O. C. art. 2036, n. 3.) The Egyptian codes adopt this view and use somewhat different terms in order to indicate the distinction. The co-debtor can set up such exceptions as are "personal to himself," whereas the surety "profits by the same exceptions as are open to the debtor, save such as are essentially personal to the latter." (C. C. E. 112/168, 509/622. See Grandmoulin, Suretes, n. 80; Halton, 2, p. 222.) Confusion. The operation of confusion may create a personal exception. The French Code says: When one of the co-debtors becomes the sole heir of the creditor, or when the creditor becomes the sole heir of one of the co-debtors, the confusion extinguishes the joint and several debt only for the 'part and portion of the co-debtor or of the creditor. (C. C. F. 1209.) The Egyptian Code means to express the same rule more shortly: lie can only set up confusion of the obligation in respect of the share of that one of his co-debtors whose joint liability has been extinguished by confusion. (C. C. E. 113/169.) One cannot combine in one's own person the antago- nistic characters of creditor" and debtor. Though the French article speaks only of the " sole heir," the principle applies when the heir succeeds only to a share. In so far as the debt, if it could be conceived of as still existing, would be a debt which one of the co-debtors owed to himself, it is neces- sarily extinguished. For example, John and William borrow L. E. 9,000 from Thomas; John succeeds to Thomas as heir to one-third of his estate. But for the principle of confusion he could sue himself for one-third of L. E. 9,000. By the operation of that principle the debt is extinguished to that extent. The rule applias also when the same person becomes creditor and debtor by the operation of a gift or of an assignment. (B.-L. et Barde, 2, n. 1241; Laurent, 17, n. 337.) Compensation. As regards the defence of compensation it might at first appear that this was not a personal exception but one common to all the co-debtors; for it is often said that compensation is a kind of payment — compenser cest payer — and any one of the co-debtors 27 (2) 420 THE LAW OF OBLIGATIONS. may plead that the debt has been paid. But in this case it is not true that compensation is equivalent to payment. There is a special provision on the subject: One of several debtors liable jointly and severally cannot set up a compensation to which one of his co-debtors is entitled. (C. C. E. 113/169.) This article must be read in connection with a later article: A co-debtor jointly and severally liable with others cannot set up in compen- sation that which is due to his co-debtors, excepting to the extent of the share of the Utter in the liability. (C. C. E. 201/265.} For instance, A, B and C are co-debtors to D for L. E. 900; D then becomes a debtor to B for L. E. 900. If D sues C, C can plead that L. E. 300 is paid by compensation with B. To allow C to plead that the whole L. E. 900 was paid would be to make B advance the L. E. 600 in the first place. It would also be inconvenient to allow one co-debtor to raise a question which would involve looking into accounts between the creditor and another co-debtor beyond the share of such co-debtor. (Larombiere, Oblig. art. 1294, n. 5.) But the Egyptian Code allows the co-debtor to plead compen- sation as to the share of the other co-debtor. And the Code of Quebec is in the same sense. (C. C. Q. 1191.) The French Code does not even give this right. (C. C. F. 1294; B.-L. et Barde, Oblig. 2, n. 1250; Planiol, 2, n. 766; Laurent, 17, n. 339; Colin et Capitant, 2, p. 205; C. Cass', de Belgique, 13 juin 1872, D. 74. 2. 128.) Some French authorities resist this conclusion, but the terms of the French article arc too clear for argument. (See, however, Aubry et Rau, 5th ed. 4, p. 41. text and note 19.) Chose jugee. As regards the plea of chose jugee there has been much con- troversy. If an action is brought against one of the co-debtors, in what cases can he plead that the question has been decided against the creditor in a previous action against another of the co-debtors? It is clear that he cannot do so when the ground upon which the other co-debtor succeeded was a personal ground, such as the minority of that co-debtor, or that the other co-debtor was induced to enter into the contract by fraud. But when the ground of the judgment was common to all the co-debtors, as, for instance, if the defence was sustained that the obligation was for an un- lawful cause, is this judgment res judicata as to the others? The JOINT AND JOINT AND SEVERAL OBLIGATIONS. 421 prevailing view in France is in favour of the affirmative, though some writers dispute its soundness. The great reason in support of the view taken by the French courts, and by most of the writers, is that, seeing that the creditor can sup each of the co-debtors for the whole debt, if he sues any one of them, all questions as to the legal liability created by the obligation are put in issue, and ho is in the same position as if he had sued them all together:. (Baudry-Lacant. et Barde, Oblig. 2, n. 1231; Cass, ler dec. 1885, D. 86. 1. 251; D. N. C. C. art. 1351, nos. 1435 seq.) Upon the same principle it is held that when the joint and several debtors are all sued together, and a judgment is given against them, and one of them takes the case to appeal and succeeds in getting the judgment reversed or modified, this enures to the benefit of the other co-debtors, although they did not join in the appeal. (Baudry-Lacant. et Barde, 2, n. 1235; Caen, 5 mai 1894, D. 95. 2. 329; D. Rep. Appel Civil n. 585.) Conversely, according to the French jurisprudence, if the creditor has sued one of the co-debtors and has obtained a judg- ment in his favour this judgment is opposable to the other co- debtors. Char mi des codebiteurs solidaires doit etre considere ■comme le contradkteur legitime du creancier et le representcmt necessairt de ses eooblig.es. (Cass. 28 dec. 1881, D. 82. 1. 377; Cass. 25 mars 1902, D. 1905. 1. 325.) But there are three qualifications to be made. The creditor cannot enforce his judgment against the co-debtors who were not parties to the action: (1) If they prove that there was collusion betweeen the creditor and the debtor who was sued; (2) if the co-debtor against whom the creditor seeks to oppose the judgment has an exception personal to himself which he can oppose to the creditor; and (3) if the debtor who was sued negli- gently failed to plead an exception, such as prescription, which was common to all co-debtors. These cannot be deprived by the negligence of their co-debtor of a defence available in favour of all of them. (See Req. 25 nov. 1903, S. 1906. 1. 345, and the note; Colin et Capitant, 2, p. 208; B.-L. et Barde, 2, n. 1233.) It is submitted that the Egyptian law is the same as to this matter, and that this is implied in C. C. E. 110/166. Against this opinion, it may be urged that by the terms of the Egyptian Code the co-debtors are reciprocal mandataries only "for performance." There is no mandate to represent each other judicially. (De Hults, Rep. Obligations, n. 128/ And in one case the Mixed Court of Appeal held: Les effets de In 422 THE LAW OF OBLIGATIONS. solidwite nont pas pour consequence de rendre line decision de justice, obtenue contre Vun des co-debiteurs solidaires, executoire contre celui au regard duquel la decision ne renferme aucune con- damnation on disposition quelconque. (C. A. Alex. 28 dec. 1904, B. L. J. XVII, 50.) Release. The Egyptian Code has only one article upon this subject, and it leaves many questions unsettled. The code says of a joint and several debtor: Re may not set up a release of the debt for more than the share of that one of his co-debtors to whom the release has been granted, unless the release be absolute, which shall not be presumed. (C. C. E. 114/170.) This article is dealing with a release of the debt, but it is desirable, before speaking of that subject, to discuss the case of release from the joint and several liability; — remise de la solidarity — as to which the Egyptian Code is quite silent. The creditor may, if he likes, agree that a certain co-debtor,, instead of being liable for the whole debt shall be liable only for his share. Such a form of release given to one of the co-debtors does not affect the joint and several liability of the other debtors. The solidarity was created primarily in the interest of the creditor, and, therefore, he is entitled to renounce it as against one of the debtors. But, as will be shown later, the creditor cannot in this way increase the burden of another co-debtor. There is, of course, nothing to prevent the creditor if he chooses from giving a release to one of the debtors by which he agrees to release themt all from the joint and several liability without releasing them from the debt. This is called absolute release of solidarity as distinguished from the relative release in favour of one of the debtors. But such an absolute renunciation of the solidarity hardly occurs in practice; and is not mentioned by any of the codes. There can be no difficulty about it, for unless the creditor declares in very clear language that this is his intention it will not be presumed . But the relative release is important and common, and it raises somewhat difficult questions. Such a relative release may be express or it may be tacit, and it is, as a matter of fact, very frequently tacit. The French Code states a number of facts from which such a renunciation will be implied. JOINT AND JOINT AND SEVERAL OBLIGATIONS. 423 (1) If the creditor gives a discharge to one of the debtors in which he says that it is in respect of his share— pour sa part— this is held to imply that he releases him from the solidarity. The fact that the creditor has taken payment from one of th,e. co-debtors of his equal share of the amount of the debt and has given him a receipt for it, is not a release from the solidarity.. The creditor may quite well intend to reserve his right of falling back upon this debtor if he cannot get payment from the other debtors. But if he distinctly states in the receipt that he takes the money as the share or portion of the debt which this debtor owes to him, it is quite reasonable to say, as the French Code does, that this is a release from the solidarity. If he wants to make it clear that this is not the case he must say in the receipt that he reserves his rights, by using some such expression asi sans prejudice de la solidmite or sans prejudice de mes droits. These are the solutions of the Roman law and of the old French law which are preserved in the French Code. (Pothier, Oblig. n. 277 ; C. C. F. 1211; B.-L. et Barde, 2, n. 1283; Laurent, 17, n. 348.) There can be no doubt the Egyptian law is the same. The Egyp- tian Code says merely: A release granted to one of several debtors jointly and severally liable is deemed to have been granted for his share and extinguishes the liability as regards such share only. (C. C. E. 182/245. See De Hults, Rep. vo. Obligations, n. 99, seq.) (2) If the creditor makes a demand for payment against one of the co-debtors claiming a certain sum and alleging that it is pour sa part, one might be inclined to suppose that this form of demand was equivalent to a renunciation by the creditor. But, according to the French law, the mere claim in this form is not enough, because the renunciation needs to be accepted before it is binding upon the creditor. If the creditor makes a demand against one of the debtors "for his share," and the debtor offers to pay it, there is a contract, and it will be too late for the creditor to claim any more from that debtor. And if the creditor obtains a judgment in the action against the debtor he will like- wise be bound by it. (C.C.F.1211; B.-L. et Barde, 2, n. 1284; Larombiere, art. 1211, nos. 7, 9, and 10; Aubry et Eau, 5th ed. 4, p. 54.) No doubt the Egyptian law is the same as to these points also. (3) The creditor, who receives from one of the co-debtors his share of arrears or interest of the debt and gives a receipt stating that it is for the share of this debtor, is held to renounce the 424 THE LAW OF OBLIGATIONS. solidarity as regards past arrears or interest. But the discharge does not in any way affect the liability of this debtor as regards the capita] of the debt, or as regards future interest, unless the creditor has gone on for ten consecutive years to receive payment of interest in this way from one of the co-debtors. In that case he is considered to have shown his intention not to claim from this debtor more than his proportionate share of the interest in any future year. This period of ten years stated in the French Code is neces- sarily somewhat arbitrary, and as the Egyptian Code has no similar article the Egyptian courts would not be bound to insist upon payments for ten years. They are entitled to consider in each case upon the particular facts whether the conduct of the creditor sufficiently shows his intention to release the debtor from the solidarity. But, in judging of this question, it is natural that the Egyptian courts should look to the French Code as a guide. (C. C. F. 1211, 1212; B.-L. et Barde, 2, nos. 1285, 1286; Aubry et I\au, 5th ed. 4, p. 55.) What is the effect of the release from the solidarity if one of the co-debtors becomes insolvent? This is a much disputed question. One of the principal objects of joint and several liability, from the point of view of the creditor, is that he can secure full payment of his debt if the, co-debtors have got the money among them. The fact that one of them can pay nothing, or can pay only the half of his share, has the effect of throwing a larger burden upon the others. If of three co-debtors two could pay nothing at all the third co-debtor would still be liable for the whole amount. For the law declares the liability of such of them as are insolvent shall be divided among those who arc *ohe?it. (C . C. E. 115 17-1; C. C. F. 1214.) As anion," the co-debtors themselves, if one of them is insolvent, the sum which he cannot pay to the creditor is divided among the other debtors according to their shares. Now, suppose the creditor releases one of the co-debtors from the solidarity, and, afterwards, one of the other co-debtors be- comes insolvent, who is to bear the loss causxl by this insolvency? Suppose, for example, the creditor has lent L. E. 9,000 to Zaki, Ahmed and Mohammed jointlv and severally. He receives L. E. t'3.000 from Zaki and gives him a receipt specifying that JOINT AND JOINT AND SEVKEAL OBLIGATIONS. 425 it is for his share and without, reserving any rights. The effect of (his is that Zaki is released from the joint and several Liability. If, afterwards, Ahmed becomes insolvent, and his estate can pay only 50 piastres in the pound, there i< a lo3S of L. E. 1.000 which has to be borne by somebody . Is it to be borne by the creditor or by Mohammed? If Zaki had not been released from the solidarity by the creditor, this loss of L. E. 1,500 caused by the insolvency of Ahmed would have been divided between Zaki and Mohammed. And, assuming for (he sake of simplicity, that the shares were equal, Zaki would have had to pay L. E. 750 and Mohammed would have had to pay also L. E. 750. But if the release given by the creditor' to Zaki is to be considered as relieving him of this liability caused by the insolvency of Ahmed, and if Mohammed has to pay the whole sum of L. E. 1,500, the release given by the creditor to Zaki will have caused a dead loss to Mohammed of L. E. 750. This result is inadmissible. As among the co-debtors themselves the joint and several liability is for their mutual protection. They know, when they become jointly and severally bound, that if one of them has to pay to the creditor more than his share of the debt, he will have a right of recourse against his fellow debtors. In entering into the obligation they relied upon the solvency of each other. It would be contrary to the understanding of the parties and to equity to allow the creditor by a contract with one of the co-debtors to cause a prejudice to the others. If we admit this, the conclu- sion must bo either: (1) that the loss of L. E. 750 must fall upon the creditor himself, as it would not have arisen but for his having released Zaki; or (2) that in spite of the creditor having released Zaki, Mohammed will have a recourse against Zaki for L. E. 750, and further, that if Mohammed were himself insolvent the creditor, in spite of the release, could sue Zaki for the whole debt. The French doctrine is- divided upon this point. According to Pothier and to some more modern writers it is the creditor who must bear the loss. (Pothier, Oblig. n. 275, at 4; Larombiero, art. 1215, n. 2; D. N. C. C. art. 1215, n. 2.) Applying the rule of Pothier to our illustration, the result would be that the creditor could sue Mohammed for L. E. 3,750, which, with the L. E. 3,000 he has got from Zaki, and the L. E. 1,500 he has got from Ahmed's insolvent estate, will make L. E. 8,250, leaving the creditor to bear the loss of L. E. 750. 426 THE LAW OF OBLIGATIONS. This solution has been expressly adopted by the Civil Code of Quebec. (C. C. Q. 1119.) The shares of those who are insol- vent are made up by contribution by all the other co-debtors except the one discharged, whose part in the contribution is borne by the creditor. But, unfortunately, the language of the French Code and of the Egyptian Code will not bear this interpretation. The French Code says: Dans les cas ou le creancier a renonce a V action solidaire etnvers Vim des debiteurs, si Vun ou plusieurs des autres codebiteurs deviennent insohables, la portion des in- solvable* sera contributoirement repartie entre tous les debiteurs, meme entre ceux precedemment decharges de la solidarite par le creancier. (C. C. F. 1215.) And the Egyptian Code says that when a co-debtor has been released from his share of the debt the rest of the debtors can recover from him only his contribution to the share of those of them, if any, who are insolvent. (C. C. E. 183/246.) In spite of the release, the creditor can still fall back on the co-debtor for his share of this liability. (B.-L. et Barde, 2, n. 1262; Auhry et Rau, 5th ed. 4, p. 52, note 43; Laurent, 17, n. 363; Req. 7 juin 1882, S. 82. 1. 321, Journal du Palais, 82, p. 774, D. 82. 1. 441.) The French Code is speaking of the case of release from the solidarity, and the Egyptian Code of the case of release of his share. But by the argument a fortiori, we may say that if the co-debtor remains liable to contribute when he has been released from the debt it must be so, still more clearly, when he has beeai released merely from the solidarity. It is a general principle of interpretation that renunciations are to be interpreted restric- tively . The presumption is always against a man giving up a right. If therefore a creditor merely releases his debtor from the soli- darity, and says nothing of what is to happen in case of the future insolvency of one of the other debtors, the presumption is that he does not intend the release to apply to this liability. (See De Hults, Rep. Obligations, n. 103.) The objection is sometimes made that if this is the case the release from the solidarity does not produce any effect at all. But this is not true; the debtor Avho is released from the solidarity gains, at any rate, this advantage, that the creditor cannot pick him out from among the debtors and sue him in the first place for the whole debt. He can at the worst only sue him for his share, and the probability is that if one of the debtors is solvent JOINT AND JOINT AND SEVERAL OBLIGATIONS. 427 the creditor will begin by suing this solvent debtor for the whole debt. (Pond. Frmig. Oblig. n. 513; B.-L. et Barde, Oblig. 2, n. 1262. See the note by M. Aubry to Req. 7 juin 1882, D. 82. 1. 441.) Is the effect of a release from the solidarity to oblige the creditor to deduct the share of the debtor released? This also is a controversial question in the French law. The language of the French Code seems clearly in favour of the affirmative. he creancier qui consent a la division de la dette a Vegard de Vun des codebiteurs conserve son action solidmre contre les autres, mais sous la deduction de la part du debiteur qu'il a decharge de la solidarite. (C. C. F. 1210.) But this article is altogether unreasonable. If the creditor merely wishes to release the debtor from the solidarity why should he not be allowed to do so without at the same time releasing him from his share of the debt? The release from the solidarity does not prejudice the other debtors. Each of them was always liable to be sued for the whole debt, and if one of them paid it he had a recourse against the others for their shares. It is admitted that the creditor cannot deprive them of this right of recourse, but there does not seem any reason why he cannot agree if he chooses to hold one of the debtors liable only for his share and not for the whole debt. This is so obvious that some French authors argue that we cannot take C. C. F. 1210 literally. We must understand it to mean that it is only when the creditor has received payment of a debtor's share, or has chosen to release him from it without' payment, and thus make him a present of it, that he must deduct this share from his claim when he sues the other co-debtors. (Larombiere, art. 1210, n. 7; Aubry et Rau, 5th ed. 4, p. 52.) But however desirable this conclusion may be, it is directly in the teeth of C. C. F. 1210. (Demolombe, 26, n. 463, and n. 464; B.-L. et Barde, 2, n. 1281.) The Egyptian Code, however, has no corresponding article, and we ought accordingly to adopt the more natural and logical view that a creditor who has released a debtor from the solidarity does not thereby abandon his right to sue the other debtors for the whole amount of the debt. This is the solution adopted by the Code of Quebec and by the Italian Code. (C. C. Q. 1114; C. C. Ital. 1195.) We must, however, not forget that the debtor thus 428 THE LAW OF OBLIGATIONS. released from the solidarity remains liable in recourse for the amount of his share to the co-debtor who has been called upon to pay the debt. And the debtor thus released also remains liable to pay his share of the loss which arises from the insolvency of one of the other debtors. Release of the debt. We have now considered the effects of the release from the solidarity, and it remains to speak of the release of the debt itself. Unfortunately, the Egyptian Code is not very satisfactory on this subject. Suppose Zaki, Ahmed and Mohammed owe L. E. 9,000 jointly and severally. The creditor gives to Zaki a release in general terms. Under the Egyptian Code this is taken to mean that he releases Zaki from his share. The release does not affect the liability of Ahmed and Mohammed, except that, from the claim against them, the creditor must deduct Zaki's share which has been paid or released without payment. Zaki, in spite of the release remains liable, as we have seen, for his share of the loss caused by the insolvency of Ahmed or Mohammed. (C. C. E. 114/170, 182, 183/245, 246.) The release here, as in the previous case, may be tacit; it requires acceptance and may be proved by witnesses. The French Code has the very unreasonable rule that a release in general terms given to one of the co-debtors has the effect of liberating them all unless the creditor in the release has expressly reserved his rights. (C. C. F. 1285^ But the Egyptian Code, fortunately, has no such article. (See infra, p. 497.) Alleged imperfect solidarity. Some French writers contend that the provisions of the code as to joint and several liability apply in full only to the joint and several liability which is created by agreement. They call this xnlidaritc parfaite. The position of persons declared by law to be jointly and severally liable apart from agreement is, according to these writers, not quite the same. They describe their position as sniid-arite imparfmte. (Aubry et Rau, 5th ed. 4, p. 30/ The difference between the two cases arises, it is said, from the fact that when there is perfect solidarity the debtors are con- sidered as mandataries one for the other, whereas when the soli- JOINT AND JOINT AND SEVERAL OBLIGATIONS. t29 darity is created by the law we cannot say that they are reciprocal mandataries. It is conceivable that three persons should be held jointly and severally liable for a delict or a quasi-delict, although they did not know each other and had made no agreement. How can we say in such a case that there is anything like a mandate? But, as Planiol says, the answer to this seems to be that the solidarity is created by the law, not because the law presumes the existence of a mandate, but because the debtors have such a common interest that they are in a similar position to joint man- dataries. (2, n. 778.) This distinction between perfect soli- darity and imperfect solidarity does not seem to be gaining ground in France, and has been rejected by the jurisprudence. (Paris. 28 mai 1900, D. 1902. 2. 453. See Colin et Capitant, 2, p. 210. There would be no excuse for introducing the theory into Egypt, because the Egyptian Code declares expressly that the debtors are reciprocal mandataries, and makes no distinction between the case when the joint and several liability arises from agreement and the cases in which it arises from the law. (C. C. E. 108/162. Two debtors may be liable each for the whole debt without any solidarity. It is quite possible for each of the co-defendants to be liable for the whole debt to the plaintiff but upon two distinct and separate titles, in which case there will be no solidarity. (C. A. Alex. 29 juin 1916, B. L. J. XXVIII," 453; C. A. Alex. 15 janv. 1914, B. L. J. XXVI, 156.) Effects of joint and several liability as among the co-debtors themselves. It is only in regard to the creditor that each of the debtors i& bound to pay the whole debt. As among themselves, each is liable only for his share, and, if he is compelled by the creditor to pay more than his share, he has a recourse against the others for the excess. In paying the whole debt, or anything in excess of his share, he gets a right of recourse against each of the others for their shares. (C. C. E. 115/171.) As among the co-debtors themselves, the obligation is not joint and several, but only joint; each is liable only for his own share and portion. What this share is depends on the agreement be- tween them if the solidarity arises from contract, or on their respective culpability if it arises from a wrong. The presumption 430 THE LAW OF OBLIGATIONS. is that the co-debtors arc liable in equal shares, but this presump- tion can be rebutted. (See Liege, 3 mars 1886, D. 88. 2. 71.) There would be a useless circuity of actions if the co-debtor who had paid the whole debt could sue a co-debtor for the whole debt minus the share which the plaintiff had paid, and leave him in his turn to sue another co-debtor for the whole debt minus his share. (Pothier, Oblig. n. 281, al. 2.) But a co-debtor who has paid the whole debt may, in one case, have a claim against a co-debtor for more than an equal share of the debt, though the liability of the co-debtors was originally equal. This is when one of the co-debtors is insolvent. For example, A, B and C are joint and several debtors to D for L. E. 900. D sues A for the whole debt, and A pays it; B becomes insolvent and can pay nothing; A has a recourse against C for L. E. 300, his equal share of the debt, plus L. E. 150, the half of B's share. (C. C. E. 115/171.) As already said, however, it is perfectly possible that, as among themselves, the liability is unequal, and it may be that the debt was contracted solely for one of them. (C. C. F. 1216; B.-L. et Barde, 2, n. 1272; Lyon, 6 fevr. 1890, D. 91. 2. 377.) Thus, in the case of a bill of exchange, the acceptor of the bill is, as a rule, the principal debtor, and the drawer and endorser are accessory debtors. In such a case if the acceptor meets the bill when it is due he has no recourse at all against the drawer and the endorser. As among themselves, he is the only debtor and they are his sureties. As against the holder of the bill they are all principal debtors. (Thaller,' Traite Elemmtaire de Droit Commercial, 4th ed. n. 1527.^1 DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 431 CHAPTER XXIII. DIVISIBLE AND INDIVISIBLE OBLIGATIONS. This difficult subject is treated of, by no means very adequately, in tbe French Code in arts. 1217—1225. It is dismissed sum- marily in a single article in the Egyptian Code: When the per- formance of cm obligation cannot, whether in the nature of things or in view of the purpose of the obligation, be divided, each of the debtors is liable for the whole, subject to his right of recourse against his co-debtors. (C. C. E. 116/172.) Both in [the Eoman and in the French law this has always been considered as one of the most obscure parts of the law. It was dealt with at great length and with much acuteness by the great French commentator Dumoulin, and Pothier does not do much more than condense Dumoulin's views on the subject, while the Code Napoleon in its turn condenses the doctrine of Pothier. (Laurent, 17, n. 503.) Subsequent French writers have done a good deal to place the matter in a clearer light. Toullier went so far as to express the hope that the doctrine of indivisibility, might some day be banished from the code as a piece of useless theory. (6, n. 798.) But Eodiere rightly says that indivisible obligations inevitably occur, and it is useless for the law to try to change that which is founded in the very nature of things. {De la Solidarite et de I'lndivisibilite, n. 389.) Indivisible obliga- tions must be taken account of in every system of law. For example, in the English law, Sir F. Pollock says: "A' contract which can be fulfilled 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." (Pollock on Contracts, 8th ed. p. 275.) And there are many English cases in which the doctrine of an entire or indivisible contract is elaborated. (See e.g., Cutter v. Powell, 1795, 3 E. E. 185, 2 Smith's Leading Cases, 1 : Appleby v. Meyers, 1867, L. E. 2 C. P. 651, 36 L. J. C. P. 331; Sumpter v. Hedges, 1898, 1 432 THE LAW OF OMLIGATIONS. Q. B. 673, 07 L. J. Q. B. 545; Format/ & Co. v. Ship Liddes- dale, 1900, A. C. 190, 69 L. J. P. C. 44.) Indivisibility always means the same thing, viz., that it is impossible for the debtor to perform his obligation in part; he must perform it altogether or not at all. This impossibility may arise in either of two ways: (1) from the nature of things; or (2) from the intention of the parties. (1) Obligations indivisible by nature. In the first case, the object of the obligation is by its nature not susceptible of division either materially or intellectually. Conversely, when the object of the obligation is a thing which in its delivery or performance is susceptible of division, either materially or intellectually, the obligation is divisible. For instance, a debtor who is bound to pay a sum of money, such as L. E. 300, can fulfil his obligation in part if ho pays L. E. 100, and a person who sells a horse can perform his obligation in part if he gives the buyer a half -share in the horse. In this last case, it is true, the division cannot be material, for a section of tho horse would be of no value, but an intellectual division is per- fectly possible and practical. Two persons may be joint-owners of a horse as of other kinds of property. It is true that the law does not allow the debtor in an obligation to divide the performance in this way. He must perform the obligation as if it were indivisible. A debtor cannot eomp 1 his creditor to receive payment of his debt in part. (C. C. E. 168/231: infra, p. 451.) But this is not because the debt is naturally indivisible. On the contrary, it is clearly divisible. The reason why performance cannot be divided is be- en us" the parties to the contract intended an entire performance. A divisible obligation must b\ perfonwed between the creditor. and the debtor as if it were indivisible. (C. C. F. 1220; C. C. Q. 1122.) As between the creditor and the debtor, therefore, there is no importance in knowing whether an obligation is divisible or indivisible. But the distinction becomes important when either the creditor or the debtor dies and is succeeded by several heirs. (Baudry-Lacant. et Barde, Oblig. 2, n. 1312.) In this caso if the debt is divisible the heirs of the debtor will be liable only in proportion to their shares in the succession. (See Cass. 17 dec. 1907, D. 1908. 1. 140; Req. 13 janv. 1908, D. 1909. 1. 179.) And, in like manner, the heirs of the creditor will be entitled DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 433 to claim each of them only his share, corresponding to his share in the creditor's succession. One who is heir of the debtor to the extent of two-thirds will be liable for two-thirds of the debt, one who is heir of the creditor to the extent of two-thirds will be entitled to claim two-thirds of the debt, and so forth. (See C. C. F. 1220; C. C. Q. 1122.) There are even here certain cases which are declared by the code to be exceptions. (C. C. F. 1221; C. C. Q. 1123.) These will be explained later, but the rule is that a divisible obligation divides among the heirs either actively or passively. On the other hand, when the obligation is indivisible by nature no such division among the heirs of the creditor or the heirs of the debtor is conceivable. The obligation must be performed altogether or it must fail altogether. It is impossible to perform one-third of it, or to divide the performance in any way. (Aubry et Rau, 5th ed. 4, p. 76.) To take some familiar examples: If A binds himself to grant a right of way to B, and A dies before the servitude has been created, leaving three heirs, and B sues one of the heirs, this heir cannot plead that he is liable only to the extent of one-third, and that he is willing to grant the servitude to this extent. A right: of way must exist or not exist as a whole. The extent of the use may, of course, vary. A man may use a road every day, or only once a week, and he might, conceivably, have the right to use it only once a week, but that is quite a different thing from a division of the right itself. It is inconceivable that a man should have half a right of way or a quarter of a right of way. He must have the whole of a right of way whatever its extent may be. (Demolombe, 26, n. 524; Aubry et Rau, 5th ed. 4, p. 77; B.-L. et Barde, 2, n. 1314. Cf. Cass. 6 fevr. 1872, D. 72. 1. 101.) Similarly, where a debtor is bound to communicate a title, or to deliver a specific thing, or to render an account, or to perform a juridical act such as enter- ing an appeal, or to register a hypothec, part-performance of such an obligation is inconceivable. (D. Rep. Oblig. n. 1513.) In like manner, an obligation by two dramatic authors to produce an opera by a certain date is naturally indivisible. (Paris, 13 nov. 1888, D. 90. 2. 238.) In such cases as those enumerated the obligation may be described as naturally or necessarily indivi- sible, or, to use Pothier's language, the indivisibility is absolute. In principle, actions are likewise divisible or indivisible accord- ing to the nature of the object sued for. But this belongs to W.— VOL. II. 2° 434 THE LAW OF OBLIGATIONS. the law of procedure. (Cass. 30 dec. 1908, et lor mars 1911, D. 1913. 1. 89; Cass. 29 avril 1895, D. 95. 1. 454.) (2) Obligations indivisible by agreement. The second group of indivisible obligations consists of those in which the indivisibility does not arise from the nature of things; for it would be quite possible to perform the obligation in part, but, nevertheless, the obligation is indivisible, because the parties contemplated and intended that it should be performed as a whole and should not be divided. Here the indivisibility may bo described as conventional. For instance, a builder contracts to build a house, a sculptor to make a statue, a painter to paint a picture. In such cases, and many others, where what is contemplated is the production of an opus or completed work, it may very well be that the intention of the parties was that nothing was to be paid unless the work was completed. The man who contracts to pay L. E. 500 or to deliver 500 bushels of wheat, and pays L. E. 250 or delivers 250 bushels, makes a prestation of definite value, but the heir of a sculptor would not be entitled to say, " my ancestor did one-third of the statue, I am entitled to one-third of the price." An un- finished statue or picture has, very probably, no value at all, and the completion of the work was, or may well have been, con- templated as a condition precedent to the right to sue. And, although half a house may be of some value, yet the obligation to build a house is an indivisible obligation if it was so intended by the parties. (Demolombe, 26, n. 525; Cass. 23 juin 1851, D. 51. 1. 165; Rodiere, De la Solidarite et de Vlndwisibilite, n. 345.) It is a question of intention. The two kinds of indivisibility which have been discussed are those which Dumoulin describes as: (1) the case where the in- divisibility is contractu — an expression not very happily chosen by him to denote the case of the indivisibility of the nature of the object— and (2) the case where the indivisibility is obligatione, that is, where it might be performed in part but the parties have shown their intention that it is to be performed as a whole,. (Pothier, Oblig. nos. 291, 292.) It is better to distinguish these two kinds of indivisibility as natural and conventional. DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 435 English law as to this. The English law offers interesting analogies. The rule, for example, in building contracts is that if payment was to be made upon the completion of the work, and the builder fails to complete, he cannot claim the contract price. Nor can he charge for the value of the work done unless there has been some ratification by the other party which excuses him from completing the work. (Sumpter v. Hedges, 1898, 1 Q. B. 673, 67 L. J. Q. B. 545. See Leake, Contracts, 6th ed. p. 38.) Indivisibility on one side only. Dumoulin, and Pothier following him, give a third case of indivisibility, which they describe as indivisibility merely as regards performance-— solutione tantum. (Pothier, Oblig. n. 294.) The thing due is here perfectly divisible, but the parties have agreed that it shall be performed as a whole. What distinguishes this case from the case of conventional indivisibility is that the parties do not intend the obligation to be indivisible both actively and passively. If the creditor dies, and is succeeded by several heirs, each of these heirs cannot insist upon the whole performance. On the other hand, if the debtor dies and is succeeded by several heirs, one of these heirs, though not always each of them, may be called upon to pay the whole debt. They are in fact cases of conventional indivisibility on one side only. The French Code does not regard these cases as examples of genuine indivisibility, but as cases in which an obligation naturally divisible must, for certain special reasons, be performed as if it were indivisible. The three exceptional cases dealt with in article 1221 of the French Code are the following: — (1) When the object of the obligation is a certain specific thing of which one of the heirs is in possession. In this case, where the debtor has left several heirs that one of them who possesses the thing due may be sued to deliver it. For example, John dies leaving three heirs. In the partition of his succession, a picture which was in his house falls to the share of William, one of these heirs. It turns out afterwards that the picture did- not belong to John at all, but had been left with him as a deposit. Its owner is entitled to sue William to deliver it. Under the old law a more common case was when the debtor had sold a specificl thing, but had not delivered it before his death. In this case 28 '2] 436 THE LAW OF OBLIGATIONS. the buyer could compel the heir into whose share it had fallen to deliver it. Under the modern law he can do so upon a simpler ground, viz., that the specific thing became his property at the time of the agreement, and that he can therefore revindicate it from the holder. The holder will have a recourse against his co-heirs, if in the deed of partition he was not charged with the entire payment of this debt. (C. C. F. 1221; Baudry-Lacant. et Barde, Oblig. 2, n. 1323, b.; Aubry et Rau,. 5th ed. 4, p. 87; Laurent, 17, n. 409.) (2) When one only of the heirs of the debtor is charged by the title with the performance of the obligation. For instance, John leaves his estate equally to William and Thomas, but he charges Thomas to pay a debt of L'. E. 10,000 to Henry. This case presents no difficulty; Thomas can be sued for the whole debt, saving his recourse against William, unless John intended that Thomas was to bear this burden without any recourse as a charge upon his share. (Pothier, Oblig. n. 313; Laurent, 17, n. 416; Aubry et Rau, 5th ed. 4, p. 89; B.-L. et Barde, 1, n. 222. See Civ. 16 fevr. 1858, D. 58. 1. 128.) (3) When it results either from the nature of the contract, or of the thing which is the object of it, or from the end proposed by it, that the intention of the contracting parties was that the obligation should not be performed in part. (C. A. Alex. 18 juin 1914, B. L. J. XXVI, 447.) This differs from the two preceding cases in this respect, that each of the co-heirs may be sued for the whole thing due. On the side of the debtor the obligation is indivisible. But the heir who pays the whole will have a recourse against his co-heirs for what he has paid in excess of his share. The cases contemplated in (3) are such as these:— The debtor has promised a sum of money to the creditor to enable him to meet a bill which is due on a certain date, or to exercise a right of redemption. Nothing is more divisible as a rule than money, and in the case of an ordinary money-debt it would be natural that each of thie heirs of the debtor should be liable only for his share. But in this case the whole sum was required for a particular object which was specified. (B.-L. et Barde, 2, n. 1327, b.; Laurent, 17, n. 41.8; Aubry et Rau, 5th ed. 4, p. 90.) But there are many other cases in which the intention of the parties clearly is that the obligation shall be performed as a whole, although there is no intention to give to each of the heirs of the DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 437 creditor a right to exact the whole of what was due to his ancestor. This is so when the .object of a contract of sale is something which was to be delivered as a whole. For example, if a suite of furniture is bought, it may easily appear that the intention was that the whole suite should be delivered as described, and if the seller substitutes certain other pieces for those which belonged to the suite the buyer can refuse to take delivery. In such a case if the seller dies, each of his heirs could be sued fo,r delivery of the; suite. But if the buyer died each of his heirs would not be liable for the whole of the price. (See Tobey Furniture Co. v. Macmmter, 1902, R. J.Q. 12K.B.34.) The same article of the French Code which gives these three cases in which an obligation is indivisible as regards the heirs of the debtor only, also mentions two other cases: — (1) The hypothecary debt; and (2) an alternative obligation to pay one of two things of which one is indivisible and the other is not when the creditor has the choice. (C. C. F. 1221.) But these are not genuine exceptions. (1) In the -case of a debt secured by a hypothec the debt itself is divided among the heirs of the debtor. It is true that the heir who possesses the immoveable hypothe- cated may be sued for the whole debt. But as to this, he is merely in the position of any third-party holder. He can escape his liability, if he chooses, by paying his share and by surrendering the immoveable. (Planiol, 2, n. 721; Laurent, 17, nos. 407, 413; B.-L. et Barde, 2, n. 1322, a.) (2) In the case of the alternative obligation all that is meant is that the heirs of the debtor cannct, under the pretext that one of the alternative prestations is divisible, prevent the creditor from exercising his contractual right to choose the prestation which is indivisible. (Aubry et Rau, 5th ed. 4, p. 88; B.-L. et Barde, 2, n. 1324, c.) As the Egyptian Code is silent as to these cases we are not embarrassed by the inexactitude of the French Code on these points. The effects of indivisibility. As previously explained, indivisibility makes no difference as between the creditor and the debtor themselves, when there is only one creditor and one debtor. In that case, every obligation may 438 THE LAW OF OBLIGATIONS. be said to be indivisible, because the debtor cannot insist upon making a partial payment. It is when there are several debtors or several creditor- that it becomes important to distinguish between a divisible and an in- divisible debt, and it is generally, though not always, the death of one. of the parties, and his being succeeded by several heirs, which raises the question of indivisibility. The nature and extent of the heir's liability for the debt of his ancestor is a part of the law of succession, and is governed in Egypt by the personal law of the deceased. (C. C. E. 54/77.) The rules of the Mohammedan law are very different from those of the French law. (See C. A. Alex. 14 fevr. 1900, B. L. J. XII, 130.) What follows is a statement of the French law. When the obligation is divisible, and the debtor dies, his person is, as it were, broken up into as many fractions as there are heirs. Each heir is liable only for his share, and is not obliged to take the risk of the dishonesty or insolvency of his co-heirs. (C. C. F. 870; Aubry et Kau, 5th ed. 9, p. 377.) It might seem fair enough that each heir should be liable at least up to the value of what he has received, but the French law does not say so. The creditor has certain ways by which he may protect himself: (1) He may before the partition execute a seizure on the whole or any part of the property of the de cujus. (Aubry et Rau, 5th ed. 9, p. 379, note 8; B.-L. et Wahl, Successions, 3rd ed. 3, n. 3044.) (2) He may claim that the property falling to the heir be kept separate from the heir's other property. This is what is known as la separation des patrimoines . When it has been granted, it gives to the creditor a preference over the property coming from the succession for payment of the debt of the ancestor. The heir's share does not become available for his own creditors until the debts of the ancestor have been paid. (C. C. F. 878; Pothier, Oblig. n. 309; Aubry et Rau, 5th ed. 10, p. 59; D. N. C. C. art. 878, nos. 185, seq. ; Cass. l 29 janv. 1900, D. 1900. 1. 269.) But the general principle is that debts are divided among the heirs in proportion to their share of the succession. That is the governing principle as to all ordinary obligations which can be thus divided. But when the obligation is indivisible this is all different. DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 439 Each of the debtor's heirs is liable for the whole, subject always to the settlement of claims as among - themselves. For we must remember that the articles we are considering treat of the effects of indivisible obligations only as between the creditor and the debtor. As among the debtors themselves, or the creditors themselves, the profit or loss will be divided according- to the relation in which they stand to one another, and it makes no difference from that point of view whether the obligation is divisible or indivisible. But although each of the heirs of the creditor may exact in full the execution of an indivisible obligation, because partial pay- ment of it is impossible, the benefit of the payment does not generally belong entirely to the heir who sues. It belongs to him and to his co-heirs. And he has no right to prejudice their interests. Ho cannot, therefore, release the debt as a whole, nor can he take something instead of the debt. If he does grant such a release, or takes something as an equivalent for payment, this will not prevent another co-heir from suing for the performance of the indivisible obligation. But if the other co-heir does so, he must pay the debtor .the value of the share of the co-heir who made the release or received the equivalent. The following is an illustration: — John and William owe to Thomas and Edward a debt which is indivisible. Thomas releases John from his liability in consideration of receiving L. E. 50. Thomas cannot now sue either John or William. Edward can still sue either John or William for the whole debt as it is indivisible. But as Thomas, but for the release, would have been entitled to his share, and Edward cannot keep this, if Edward exacts th'o whole performance from John he must deduct the L. E. 50 or so much of it as would have fallen to Thomas, and if he exacts- performance from William he must deduct L. E. 50 which John has paid or, at any rate, so much of it as belongs to Thomas. (C. C. F. 1224; B.-L. et Barde, 2, n. 1331; Colmet de Santerre, 5, n. 159, bis II.) When one of the co-heirs is sued for the whole of an indivisible obligation he may demand delay to make the co-heirs parties to the suit, unless the debt is of such a nature that he only can; discharge it. (C. C. F. 1225; C. C. Q. 1130.) 440 THK LAW OF OBLIGATIONS. In the case of the indivisible obligation the defendant's object in demanding that the co-heirs should be mis en cause is that the judgment should find all the co-heirs primarily liable. (Aubry et Ilau, 5th cd. 4, p. 83; Laurent, 17, n. 392; Pand. Franc , Oblig. n. 713.) There are two advantages to be derived from calling in the co-heirs: (1) If the creditor gets a judgment against all the co-heirs, there is a chanoe that he may select another of them for attack, and not the original defendant; and (2) even if the creditor should still attack the original defendant, and he should be condemned in damages for non-performance, this con- demnation in damages is divisible, and, as the co-heirs are all parties, he is liable only for his share, whereas if the others had not been called in he would have been condemned to pay all the damages. (B.-L. et Barde, 2, n. 1336; Laurent, 17, n. 392; Pand. Frang. Oblig. n. 714.) It now remains to consider the case stated as an exception in C. C. F. 1225, viz., that the co-heir sued for the whole debt cannot demand delay to make the other co-heirs parties to the suit if the debt is of such a nature that it can be discharged only by himself. Upon this matter Pothier is the safest guide, and he gives as an example the case where the debtor had promised to create a servitude of passage and had died before the servitude was constituted. In the partition the land over which the right of passage was to exist fell to one of the co-heirs. The creditor can sue this co-heir to grant the servitude. The co-heir in this case cannot claim that his co-heirs should be made parties, for a judgment condemning them to execute the obligation would be ineffectual, seeing that he alone can do so. But, even here, the defendant can get the co-heirs called in, not, it is true, in order that the judgment shall be against them all, but in order that by the same judgment which finds him finally liable they may be condemned to the extent of their liability in warranty to him. As a general rule, in such a case, there is no recourse, and this dilatory exception is not therefore required, because in the partition the burden of the servitude is taken into account in estimating the shares. (Pothier, Oblig. n. 831; Baudry-Lacant. et Barde, Oblig. 2, n. 1335. The cases to be contrasted with this are: (1) When the debt may be discharged indifferently, either by the heir sued or by each of the others, as, for example, if the debtor had contracted to erect a building upon land which belonged to him. Such an obligation would be indivisible, but, so long as the succession is undivided, each of his heirs can equally fulfil it. DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 441 If one of them is sued alone he will be condemned to perform the whole or to pay all the damages, saving- his recourse, unless he avails himself of his right to get the other heirs called in. (C. C. F. 1225; C. C. Q. 1130; Pothier, Ohlig. n. 333; Baudry-Lacanl . et Barde, Ohlig. 2, n. 1337.) (2) The debt may be one which can only be paid by all the heirs jointly. For example, the debtor has contracted to create a servitude of passage on a route to be afterwards fixed. He dies before the servitude is constituted and his heirs are in indivision. It needs the consent of all the co-proprietors to grant the servitude, and if the action is brought against one of thorn he can call the others in. But if he does not do this he will be taken as having assumed liability for all the damages, saving his recourse. (Baudry- Lacant. et Barde, Oblig. 2, n. 1337.) In this kind of case if one of the heirs pleads that he is willing to perform his share of the obligation, but that another of the co-heirs refuses, ought the heir who is willing to pay to be found liable in damages? This is a controversial question. Pothier answered it in the negative upon the ground that the co-heir who offers to pay his share is not en demeure. (Oblig. n. 334.) And this view is taken by many modern authorities. (Baudry-Lacant. et Barde, Oblig. 2, n. 1337.) There are, however, dissentients who argue that the refusal of the co-heir is not either cas fortuit or force majeure, and that nothing else will excuse the performance. But they say that if the defendant pays the damages, he is entitled to recover them from the heir by whose fault it is that the obligation was not executed. (Colmet de Santerre, 5, n. 160, bis IV; Pond. Franc,. Oblig. n. 721; Aubry et Rau, 5th ed. 4, p. 84, note 20.) Pothier's view seems to be preferable. The heirs are each of them liable for the whole, but this is because the debt is indivisible, and not because they have bound themselves to pay the whole. They are not responsible in any way for each other, and if the obligation fails of fulfilment by the fault of one, there does not seem to be any good ground for making the others responsible for this. Indivisibility as applied to obligations with a clause of penalty. The French Code states that when an indivisible obligation is accompanied by a penal 'clause, and one of the co-debtors breaks the contract he alone can be sued for the whole penalty; the other 442 THE LAW OF OBLIGATIONS. oo-debtors are liable only for their shares. But when the principal obligation is divisible, the co-debtor who breaks his contract is liable only for his share of the penalty, and there is no actiom against the debtors who have performed their part. (C. C. F. 1232, 1233; Aubry et Kau, 5th ed. 4, pp. 85, 93; B.-L. et Barde, 2, nos 1374, seq.) The Egyptian law is the same though the code is silent. Comparison between indivisibility and joint and several liability. There are important differences between these two things, and. the French Code and the Code of Quebec declare: The stipula- tion of joint and several liability does not give to an obligation the character of indivisibility. (C. C. F. 1219; C. C. Q, 1125.) The Code of Quebec adds: — Each one of those who have contracted an indivisible obliga- tion is held for the whole, although the obligation have not been contracted jointly and severally. (C. C. Q. 1126.) A joint and several obligation is one which is contracted by several debtors together or one which is in favour of several creditors together. The joint and several liability is on account of the combination of several debtors. But the indivisible obligation is normally an obligation contracted originally by one debtor, which, contrary to the ordinary rule, is not like his other debts divided among his heirs in proportion to their shares. The debt is indivisible not- withstanding the fact that it is due by several heirs. The chief practical differences between solidarity and indivisibility are: (1) Solidarity does not prevent the division of the debt between the heirs of the debtor or the heirs of the creditor, whereas in- divisibility prevents the division of the debt among the heirs of the debtor or of the creditor. (2) Interruption of prescription in favour of one heir of a joint and several creditor or against one heir of a joint and several debtor does not affect the other heirs, but if the debt were indivisible it would do so in both cases. (3) Solidarity implies the existence of a mandate by which each of the co-de'btors represents the others to the extent above ex- plained, whereas no such reciprocal mandate exists among co- debtors jointly bound to the same indivisible prestation. (C. C. F. 2249, 1206; C. C. E. 110/166; B.-L. et Barde, 2, n. 1341; Laurent, 17, n. 404.) EXTINCTION OF OBLIGATIONS. 443 CHAPTER XXIV. EXTINCTION OF OBLIGATIONS. The Egyptian codes enumerate seven modes in which an obliga- tion may become extinct — (1) Performance. (2) Dissolution, [in the sense of extinction by impossibility of performance, j (3) Novation. (4) Release. (5) Compensation. (6) Confusion. (7) Prescription. (C. C. E. 158/221.) The French Code gives nine modes of extinction of obligation. Seven of them coincide with those of the Egyptian Code, except that the French Code uses the expression " la perte de la chose" instead of the term "dissolution" employed by the Egyptian Code. But this is merely a difference of terminology, because, as will be explained afterwards, the French Code means by " la perte de la chose" the same thing that the Egyptian Code means by "dissolution," namely, that the prestation promised has become physically or legally impossible. Besides these seven modes of extinction, the French Code gives two others, " la nullite ou la rescision," and " Veffet de la condition resolutoire." (C. C. F. 1234.) The Quebec Code attempts a more complete enumeration. To the nine modes of extinction given in the French Code it adds: (1) the expiration of the time fixed by law or by the parties for the duration of the obligation; (2) the death of the creditor or of the debtor in certain cases; and (3) special causes applicable to particular contracts. (C. C. Q. 1138.) The effect of the resolu- tory condition has been already considered, and the other modes of extinction which are not mentioned in the Egyptian Code in 444 THE LAW OF OBLIGATIONS. this place are not regular and normal modes, but exceptional ways in which certain obligations may be extinguished. (See B.-L. et Barde, 2, n. .1383.) The hire of personal services, for example, is dissolved by the death of the person employed. (C. C. E. 411/502.) A life-rent or an alimentary provision comes to an end upon the death of the person entitled to it. Mandate may terminate by the mandator revoking the mandate, or by the mandatary renouncing the man- date, subject in both cases to the rules expressly stated in the law. As M. Hue says, the obligation is in such cases extin- guished by a kind of performance. It comes to an end in one of the ways contemplated by the parties. (Hue, 8, n. 2.) There is no need to deal here with these special cases. But there is one important general mode of extinction which might have been mentioned in the enumeration, viz., resiliation of the contract by the mutual consent of the parties. This has been referred to earlier. (Supra, p. 5.) The seven modes of extinction o-iven in the Egyptian Code will now be explained seriatim: — (1) Performance or payment. The first mode of extinction of an obligation is its performance. The French Code uses the word "payment." Payment as a term of the French law means the fulfilment of the obligation whatever it was. It means not only the delivery of a sum of money in satisfaction of an obligation, but the performance of anything to which the parties are respectively obliged. It may, accordingly, consist in giving something or doing something, or in abstaining from doing something. (Aubry et Kau, 5th ed. 4, p. 244; B.-L. et Barde, 2, n. 1384.) "Payment" in popular language is so much associated with the payment of money that it is not such a good word to describe the performance of the obligation as the word "performance" or the term of the Eoman l&w—solutio — which preserves the figure of the untying of the vinculum juris or lien de droit. (Dig. 50. 16. 176.) The Egyptian Code uses "payment" in the narrower sense of payment of money or delivery of fungibles, and employs the term "performance" or, in the French version, V execution, as the general term. (C. C. E. 160/223, 170/233.) The term payment in the sense of performance of any obligation EXTINCTION OF OBLIGATIONS. 445 is, notwithstanding-, so consecrated by usage that it seems pedantic to avoid it. Every payment presupposes a debt. What has been paid where there is no debt may bo recovered. There can be no recovery of what has been paid in voluntary discharge of a natural obligation. (C. C. F. 1235.) The right to sue for repetition of anything which has been paid without being due has been explained under the head of quasi-contract, and the character of natural obligations has also been explained earlier. If a man whose debt has prescribed and who knows that it has prescribed chooses to pay it, he is deemed to have voluntarily paid a natural obligation and, therefore, he cannot recover what has been paid. By whom performance may be made. " An obligation cannot be performed by any one but the debtor if it results from the nature of that obligation that the creditor has an interest that such should be the case." " When performance consists in a payment, it may always be made by a third person, even against the wish of the debtor or the creditor:' (C. C. E. 159, 160/222, 223.) It depends on the nature of the obligation and on the intention of the parties whether the performance must be by the debtor himself. In many cases it is obviously to the interest of the creditor that the debtor should perform the obligation in person. If I contract with a celebrated painter to paint my portrait he cannot perform the obligation by getting another to paint the. picture for him. All contracts in which the creditor relies on the personal knowledge or skill of the debtor are of this nature. No contract, then, in which performance by the particular debtor was stipulated for, or is implied, can be performed by another, unless, of course, the creditor consents to let a third party do so. (See supra, p. 227.) But it is quite otherwise when the contract is to pay a, sum of money, or to deliver go much wheat of a certain quality, or to deliver a particular thing. Here the only interest of the creditor is to get his money, his wheat, or the thing for which he has stipulated. It is immaterial to him where it comes from, that is, assuming that the party from whom it comes can validly make the payment. The right of the third party to pay does not depend on his having any interest in the debt, and he may insist on making the payment as-ainst the will of the creditor and without the knowledge of the 446 THE LAW OF OBLIGATIONS. debtor. If the debtor cannot or will not pay his own debt, the least ho can do is to allow his creditor to take payment where he can get it. But what if both the creditor and the debtor are opposed to the third party making- the payment? If they both prefer to leave things as they are, why should a third party bo allowed to interfere? The German Code expressly says that the stranger to the obligation cannot make payment in this case (art. 267, at. 2). This appears to be the French law also, though the code is not explicit on the point. (Colmet de Santerre, 5, n. 175, bis X; Baudry-Lacant. et Barde, 2, n. 1394; Aubry et Rau, 5th ed. 4, p. 245, note 2. See Req. 6 nov. 1907, D. 1908. 1. 86.) But the Egyptian Code expressly allows it even in this case. The debtor has no interest to object to the payment, because this does not mean that the person who pays the debt which he does' not owe steps into the shoes of the former creditor. The payment extinguished the obligation, and the person paying cannot claim to be subrogated in the rights of the creditor whom he pays except in certain conditions named in the code. (C. C. E. 162/225;, C. C. F. 1236.) He cannot be allowed to make the condition of the debtor worse than it would have been if the debtor had been left to the mercy of the original creditor. If he is not subrogated his claim against the debtor whose debt he has paid will be that of a mandatary if he was authorised to make the payment, and if he had no such authority his action in recoursQ will be, according to circumstances, the action of a negoiiorum gestor or the action de in rem nerso. He can recover only to the extent of the benefit which he has conferred. (Baudry-Lacant. et Barde, 2, n. 1399; Laurent, 17, n. 488.) The Egyptian Code is express upon the point: Such payment made by a third person gives him a right of recourse against the debtor in respect of the benefit obtained by the latter, up to the ammmt of the sum disbursed. (C. C. E. 161/224.) The payer can never make a profit. And the debtor is further protected by C. C. E. 163/226: The debtor has the right, when payment has been made against his wish, to decline to recognise in whole or in part any claim against him by the person, who has made a payment on his behalf, if he shows that he had any interest whatever in refusing pay- ment. (See C. A. Alex. 24 dec. 1902, B. L. J. XV, 75.) This article does not really add anything, but is intended to make it clearer that the claim is only like that of a negoiiorum. EXTINCTION OF OBLIGATIONS. 417 gestor. If the debtor, for instance, had the right to plead com- pensation when another paid his debt, he was not benefited by the payment. And, similarly, if the debt was on a contract which was void, or was voidable at his instance. The third party who pays another's debt may do so by compensation when the condi- tions for this are present. (C. A. Alex. 12 mai 1914, B. L. J. XXVI, 382.) Under the English law the third party who paid the debt, would have no claim at all against the person whose debt he had paid. No man can make himself the creditor of another by paying! that other's debt against his will or without his consent. (Per Willes, J., in Johnston v. Royal Mail Steam Packet Co., 1867, L. R. 3 C. P. 43, 37 L. J. C. P. p. 48. See Leake on Contracts, 6th ed. p. 44; Anson, Contracts, 14th ed. p. 434. Cf. Hirachand Punamchand v. Temple, 1911, 2 K. B. 330, 80 L. J. K. B. 1155; supra, p. 197.) But the French law is different. It may, however, appear that the person who pays the debt of another does so with the intention of making- him a free gift, and not with the view of preserving any right of recourse against him. This is a question of fact, and the presumption is against it, but it maj^, nevertheless, appear from the circumstances that it was so. If the facts indicate that a donation was intended, and it was accepted by the other party, there will be no right of recourse at all. (Baudry-Lacant. et Barcle, Oblig. 2, n. 1399; D. Supp. Oblig. n. 680.) It may also be a question whether if A pays the debt of B he is doing so with his own money., so as to have a recourse against B, or whether he makes the payment with the money of B, the true debtor. According to Larombiere, the presumption is in favour of the second view, but according to Demolombe the presumption is that the person who pays does so with his own money. (Larombiere, on art. 1236, n. 7; Demo- lombe, 2'7, n. 82.) And this is supported by a judgment of the Cow de Cassation. (Cass. 18 fevr. 1901, D. 1901. 1. 303.) In any case it is a mere presumption of fact which may be rebutted by other presumptions. Obviously, if the person making the payment proposes to sue at once for the full amount this cannot be for the advantage of the debtor. He could not have been worse off if he had been left to the original creditor. It is, generally, when the original creditor is threatening to take proceedings, that it may be to his advantage 448 THE LAW OF OBLIGATIONS. for a third party to intervene who is willing to give him time or perhaps to release him. Such a third party is not always at hand, but if he does present himself there seems no good reason why the creditor should not be bound to take payment from him, or why the person making tho payment should not have a claim against the debtor, if it is of an equitable kind such as that of a negotiorum gestor. Person paying must have capacity. The Egyptian Code says: For the payment to he valid, the debtor must have capacity to alienate and the creditor capacity to receive. (C. C. E. 165/228.) And this very obvious state- ment is followed by: Nevertheless, the payment of that which is due by a person not having the necessary capacity extinguishes the obligation, provided that he is not prejudiced by such pay- ment. (C. C. E. 166/229.) The first of these articles is an improvement on the correspond- ing article of the French Code, which says: — Pour payer valablement, il faut etre proprietaire de la chose don-nee en paiement, et capable de Valiener. (C. C. F. 1238.) By the old law it was the payment or delivery of the thing which in general passed the property. The payment was an alienation and, therefore, could not be made except by a person capable of alienating. (Pothier, Oblig. n. 496.) But by the modern law a contract for the alienation of a determinate thing makes the purchaser owner before the delivery. (Supra, p. 30.) So that it is clearly incorrect to say that a valid payment must be made by the owner of the thing paid seeing that the seller has, in the ordinary case* ceased to be the owner before that time. Even when the person paying is a minor or other person incapable of alienation, except subject to conditions which have not been fulfilled, the payment extinguishes the obligation, provided the person paying is not prejudiced by the payment. (C. C. E. 166/229.) The incapable who pays a debt clue by him is not prejudiced. And if he pays fungibles to a person to whom they are due, and that person consumes them in good faith, he will not have a revindication. (C. C. F. 1238.) • EXTINCTION OF OBLIGATIONS. 449 To whom payment must be made. The Egyptian Code says: Performance must be made to the creditor, to his mandatary empowered to this effect, or to the person holding the right to claim execution of the obligation, (C. C. E. 167/230.) The French Code has an article: Payment is not valid if made to a creditor who is incapable by law of receiving it, unless the debtor proves that the thing paid has turned to the benefit of such creditor. (C. C. F. 1241.) There is no corresponding article in the Egyptian Code, but there can be no doubt that the law is the' same. These articles may be considered together. In order to take payment the creditor must have the requisite capa- city . So if a man who owes money to a minor, or to an interdicted lunatic, pays the money to his debtor, he may be compelled to pay it over again to the tutor or curator, according to the rule qui paie mal paie deux fois. But he can escape from this necessity if ha can prove that the payment has enured to the benefit of the creditor, as, for instance, if the creditor had bought a house with the money at a fair price. And if part of the money has been beneficially applied, the debtor will only need to pay the balance over again. But money spent by the incapable person on luxury— en depenses voluptuaires —has not been beneficially applied. (B.-L. et Barde, Oblig. 2, n. 1434; Demolombe, 27, n. 197; Aubry et Rau, 5th ed. 4, p. 256, note 18.) As to payment made to a person having the authority of the creditor, it is to be observed that the authority to take payment may be express or implied. In principle, it is for the deibtor who makes the payment to satisfy himself that the person to whom he pays is authorised to receive the payment. When the contract lays down that payment is to be made to a certain person on behalf of the creditor, but only subject to certain conditions, the debtor must comply strictly with those conditions. (Req. 30, dec. 1912, D. 1915. 1. 53.) A statement in the contract tnat payment is to be made in the office of a certain lawyer or notary does not, in itself, imply that this lawyer or notary has authority to receive payment on behalf of the creditor. (Cass. 19 fevr. 1913, D. 1913. 1. 200; Sirey, Table Becennale, 1901—1910, s. v. Paiement, n. 1.) It is in many cases easy to find that such authority was implied from the position of the parties and the practice of business. And it must be remembered that although w. — vol. ii. 29 - 450 THE LAW OF OBLIGATIONS. an incapable person cannot give an agent a better title to take payment than he has himself, yet there is nothing to prevent a person who is himself capable from giving to a minor authority to take a payment for him. (Laurent, 17, n. 522; Dcmolombe, 27, n. 136.) Thus a merchant may authorise a clerk who is a minor to receive payment of debts due to the merchant, and such an authority may be express or implied. And it is also a rule of the law of agency that, even though the authority may have been revoked, the payment to the agent is a good payment, if the debtor did not know of the revocation and was in perfect good faith. But he will not be considered to have been in perfect good faith, if it appear that by the exercise of ordinary care he would have discovered that he was paying to a man who had noi longer any right to collect the debt. (Larombiere, on art. 1239, n. 21.) The full discussion of this subject belongs to the law of agency. (See C. C. F. 2005; C. C. E. 530/651; B.-L. et Wahl, Contmts Aleatoires, n. 869; Keq. 21 dec. 1897, D. 98. 1. 382, note 4. Cf. C. A. Alex. 22 mai 1902, B. L. J. XIV, 325.) » Performance made to the person holding the right to claim execution of the obligation. This is the phrase used in the Native Code (art. 167). The Mixed Code says: the person possessing the right to the obliga- tion (art. 230). What does the code mean by these words? Mr. Halton interprets them to mean the assignee of the creditor or the creditors of a creditor who has executed an attachment, — saisie-arret . (1, p. 370.) But though payment is valid if made to any one of these, J. think this is not what the aitticle refers to. It is intended to reproduce article 1240 of the French Code: Le paiement fait de bonne foi a celui'qui est en possesion de lacreance, est valable, encore que le possesseur en soit par la suite evince. This does not mean the person who happens to be in possession of the document of debt. It means the apparent or ostensible 1 creditor, the creancier putatif . Such, for example, is a person who takes a succession as the nearest heir, and is afterwards evicted by a nearer heir who has been discovered later. A debtor to the succession who paj r s in good faith to the apparent heir is protected, and his payment extinguishes his debt. (Planiol, 2, n. 416; B.-L. et Barde, 2, n. 1446; Laurent, 17, n. 545;, EXTINCTION OF OBLIGATIONS. 451 Eouen, 28 avril 1874, S. 74. 2. 314; Cass. 10 dec. 1900, S. 1903. 1. 33, and note by M. Perron.) The Egyptian Government made a payment to a person who was designed as the curator of its absent creditor by a consular certificate, and was in possession of the grosse of the judgment finding the government liable. It was held that the payment was liberatory. (C. A. Alex. 30 nov. 1911, B. L. J. XXIV, 23.) Payment cannot prejudice seizures. According to the French Code: — Payment made by a debtor to his creditor, to the prejudice of a seizure or attachment, is not valid against the seizing or attaching creditors, who may, according to their rights, constrain the debtor to pay a second time, saving in such case only his remedy against the creditor so paid. (C. C. F. 1242.) The effect of seizure by garnishment or attachment is to order the garnishee not to pay the debt to the debtor; it sequestrates the debt in his hands. And the Egyptian law is the same. (See C. Proc. E. 410/471.) Of course, the creditors who challenge the payment on the ground that it was in defiance of their saisies- arrets will not succeed if it is found that they were not really entitled to make the seizures, and, further, they cannot recover more than the loss they have suffered through the action of the creditor. So each of the attaching creditors can recover only the proportion of the debt to which he would have been entitled if the seizure had been respected. Performance must be of thing due and cannot be made in part. The performance must be that which the parties contemplated, and must be at the time and place stipulated; it cannot be made in part ; subject, however, to the power of the judges, in excep- tional circumstances, to fix a time or times for performance or to grant a moderate extension of time, provided the creditor is not seriously prejudiced thereby. (C. C. E. 168/231.) The French Code says: A creditor cannot be compelled to receive any other thing than the one due to him, although the thing offered be of equal or greater value. (C. C. F. 1243.) People must be held to their bargains. If I buy a horse, the debtor cannot say, " I will not let you have the horse but you can take an elephant which is worth more." (Cass. 6 mars 1876, D. 76. 29 (2) — "T 452 THtf LAW OF OBLIGATIONS. 1. 193, dissertation by M. Giboulot; Aubry et Rau, 5th ed. 4 r p. 258; B.-L. et Barde, 2, n. 1459. See supra, p. 362.) But it has been held that when an official copy of a document had been lost, it "was permissible to deliver in its place a second copy seeing- that this was of exactly the same legal effect. (Req. 20 mars 1912, D. 1913. 1. 247.) Of course, nothing hinders the creditor from consenting to take something different from the thing for which he had at hYst stipulated. If he does so there is said to be not a payment but a "giving in payment" — dation en paiement. (See Cass. 5 fevr. 1908, D. 1909. 1. 294.) By the French Code: A debtor cannot compel his creditor to receive payment of his debt in part even if the debt is divisible (art. 1244). Under the French law the court has power to grant the debtor a moderate delay for payment. (C. C. F. 1244.) The Egyptian Code in the article under discussion* gives the same power. (C. C. E. 168/231.) According to the Egyptian jurisprudence, it is only when the debtor is prevented from executing his obligation by some exceptional circumstances, or by an event unforeseen and independent of his will, that the court will grant a deled de grace. (C. A. Alex. 5 mars 1902, B. L. J. XIV, 172.) The power is to be exercised with great caution as the French article expressly says. (C. A. Alex. 11 mai 1911, B. L. J. XXIII, 315; supra, p. 365.) 4 Place of performance. The place of performance is, in the absence of agreement to the contrary, the place in which the specific corporeal thing to be delivered is situated. (C. C. E. 169/232.) /;,' the case of cadi ami things determined as to kind, payment is presumed to hare been stipulated to be made at the domicile of tli" debtor. (C. C. E. 170.) These articles are similar to the article of the French Code though with slight differences. The French article is: — Le payement doit etre execute dans le lieu designe par la con- vention. Si 1c lien ii'i/ est pax designe, Je pagrmcuf, lorsqu'U s'agit d'un corps certain et del ermine, doit etre fait dans h lieu ou etait. uu temps de V obligation, la chose qui en fait Vobfpt. Hors ces deux cas, le payement doit etre fait au domicile du debiteur. (C. C. F. 1247. The place of payment depends on the intention of the parties, but this intention may he implied as well as expressed. In the EXTINCTION OF OBLIGATIONS. 453 case of a certain specific thing the law impii is thai il is to be paid at the place where it was when the contract was mad", unless there is a stipulation to the contrary. So it has b son held as to a loan of specific things, la rent Hut ion d'objeU en nature qui ont etc pretes doit, en Vabsence de convention contraire, s'operer au lieu oil Vemprunt a ete realise. (Bordeaux, 29 avr. 1898. I). 98. 2. 228.) And likewise when fungibles had been .sold by a vente a terme it was held the payment was to be at the domicile of the debtor. (Bcsancon, 21 fevr. 1890, D. 91. 2. 140. ) And in an Egyptian case where a contract of life-insurance had been made with an English company through an agent in Egypt it was held that the payment was due in London. (C. A. Alex. 2 dec. 1915, B. L. J. XXVIII, 43.^ There are one or two cases as to which there are special provisions. The rule is that, apart from- stipu- lation, the creditor must seek out the debtor and demand payment at his domicile. (Demolombe, 27. n. 266: Aubry et Ram 5th ed. 4, p. 267; D. N. C. C. art. 1247, n. 31.) A money debt is presumably querable and not portable. So in the case of the lease of a house the landlord must send for his rent. And the fact that the lessee has at the request of the lessor, on several occasions, sent the rent to the lessor's domicile, docs not amount to a renunciation for the future by the lessee of his right to delay payment till it is demanded at his domicile. ;C. A. Alex. 5 janv. 1905, B. L. J. XVII, 60.) The fact that the previous instalments of a debt have been taken by the debtor to the creditor, or paid at a place other than the debtor's domicile, does not amount to a renunciation on his part of his right to have the demand for payment made at his domicile for the future. The renunciation of a right is not pre- sumed. (Baudry-Lacant. et Barde, Oblicj. 2, n. 1510; Demo- lombe, 27, n. 271; Laurent, 17, n. 593.) If the debtor has changed his domicile between the date of the contract and the time of payment it will be at his new domicile that the demand must be made. (Pothier, Oblig. n. 549.) And, even if the change of domicile involves some expense to the creditor in following him to his new address, the better opinion appears to be that he cannot claim this expense from the debtor. The law creates the presumption that payment is to be at the debtor's domicile, and it does not make any reservation of this kind. (B.-L. et Barde, 2, n. 1508; Laurent, 17, n. 592.) Some authorities, however, are of a different opinion as to the right to recover such expenses. (Aubry et Rau, 5th ed. 4, p. 267, note 15.) But if the agreement is that payment is to be made at the 454 THE LAW OF OBLIGATIONS. domicile of the creditor, and the creditor changes his domicile* the debtor is not obliged to follow the creditor to his new domicile unless the agreement so declares. The presumption is that the parties meant the creditor's domicile at the date of the contract. The debtor may demand that the creditor should elect a domicile, in this place to receive the payment. In questions of doubt the law is in favour of the debtor. (Pothier, Ohlig. n. 549; Baudry- Lacant. et Barde, Oblig. 2, n. 1505; Demolombe, 27, n. 273.) Even when the agreement says that the debt shall be portable, as, for example, when a policy of fire-insurance provides that the premiums shall be paid at the office of the company's agent, it may, nevertheless, be found that this right has been waived by the practice of collecting the premiums as they fell due. (Cass, 4 nov.-1891, D. 92. 1. 313; Paris, 2 mars 1893, D. 93. 2. 256; B.-L. et Barde, 2, n. 1511.) Expenses of payment. The expenses of performance must be borne by the debtor. (C. C. E. 171/234.) It is the debtor's business to discharge his debts, and, therefore, it is natural that the cost of doing so should fall on him . The " expenses of payment " include accessory expenses which the payment may entail, such as those of the cancellation of a hypothec which secures the debt. (C. A. Alex. 30 dec. 1915, B. L. J. XXVIII, 85.) In regard to the payment which consists in the delivery of merchandise, it is his business to have it weighed, measured, and packed or prepared in such a manner as to be ready for delivery. Unless it is otherwise stipu- lated, or unless there is a usage to the contrary, the cost of con- veying the thing from the seller to the buyer falls upon the latter. (C. C. E. 283, 284/355, 356; C. C. F. 1608; C. C. Q. 1495. See D. Rep. Vente, n. 273; Cass. 3 juill. 1913, D. 1915. 1. 65.) Proof of payment. The proof of payment is subject to the ordinary rules, and if the debt was a civil and not a commercial debt, and it exceeds P. T. 1,000, its extinction by payment cannot be proved by parole.. (Laurent, 49, n. 457; D. N."'C. €. art. 1341, nos. 97 seq.; Eeq. 31 mars 1874, D. 75. 1. 229; D. N. C. C. art. 1247, n. 47.) But payment of a commercial debt may be proved by parole. (Lyon- Caen et Benault, Traite de Droit Commercial, 3, n. 47; D. Rep. Oblig. n. 4963.) Whether when the debt exceeds P. T. 1,000, a payment on account consisting of a sum less than P. T. 1,000 can be proved by parole has been disputed. Panel. Franc. Oblig. EXTINCTION OF OBLIGATIONS. 455 n. 3644; D. N. C. Cart. 1341, n. 110.) When the object of such, evidence is to interrupt prescription of a debt over P. T. 1,000, proof by witnesses is inadmissible. The article in the Egyptian Code must be interpreted in the -light of the French law. (C. C. E. 215/280; Aubry et Rau, 4th ed. 8, p. 306, n. 20. See C. A. Alex. 9 janv. 1904, B. L. J. XVI, 86.) The delivery of the title of the debt to the debtor affords a strong presumption of pay- ment, but the creditor may still prove that the title was given to the debtor for some other purpose; or that he got possession of it by fraud, etc. (C. C. E. 219, 220/284, 285; C. C. F. 1282, 1283; Aubry et Rau, 5th ed. 4, p. 341. See Cass. 26 fevr. 1901, S. 1901. 1. 493; D. Rep. Oblig. n. 2569; C. A. Alex. 13 fevr. 1896, B.L.J. VIII, 117.) The delivery of a receipt for a later instalment of a debt raises a presumption that earlier instalments have been paid. (D. Rep. Oblig. n. 2592; C. A. Alex. 28 mai 1891, B. L. J. Ill, 360.) The French jurisprudence is very strict in its requirement of proof of payment. Proof that the creditor sent a post-office order for the sum due is not sufficient; nor even proof that the order was cashed in the regular way. Le debiteur ne pent etre libere dans ce cas que par la produc- tion d'un acquit emunant sans contestation possible de son crean- cier. (Trib. Com.de la Seine, 9 fevr. 1912, D. 1914.5.2.) The production by a bank of a cheque drawn upon the bank and payable to bearer is proof that the bank has paid the sum. The indorsement of the person who receives the money is not necessary to prove payment. (C. A. Alex. 15 juin 1916, B.L.J. XXVIII, 431.) Payment with subrogation. When payment is made by the debtor the debt is extinguished, and any accessory obligation which may exist, such as the obliga- tions of sureties, and any real securities, such as hypothecs, fall to the ground at the same time. The extinction of , the principal, debt necessarily involves the extinction of all the accessory debts. And this is the case, also, when the payment of the debt is made not by the debtor, but by a third party, unless the extinction of the accessories is prevented by what is called subrogation. Subro- gation is specially dealt with in the Egyptian Code in two articles. (C. C. E. 162, 164/225, 227.) The former of these articles in speaking of the case of payment of a debt made by a third person says: To such third persons pass, by way of security for the 456 THE LAW OF OBLIGATIONS. new debt so created, the securities which attached to the discharged obligation, but only in the following cases : — (1) When the creditor has agreed, at the time of payment, to transfer such securities to him; (2) When such third person was liable for the debt with or for the debtor ; (3) When such third person has paid a creditor having a privi- lege or hypothec ranking before him, or when, being the pur- chaser of an immoveable, he devotes the price to paging creditors having hypothecs over such immoveable; (4) When the law expressly grants subrogation. The second article deals with the peculiar case of subrogation by the. debtor. It runs: The debtor may also, without the co- operation of the creditor, transfer the securities attaching to the original debt for the benefit of any one who supplies him with that with which payment is intended to be made. The corre- sponding article of the Mixed Code adds, as a restriction, pro- vided the loan and its employment are verified by a legalised document. (C. C. M. 227.) These articles are based upon three articles of the French Code, but differ from them in several points. It will be well to give the French articles in full: La subrogation dans les droits du creancier au profit cVune HerCe personne qui le paie, est ou conventionnelle ou legale. Cette subrogation est conventionnelle : 1°. Lorsque le creancier recevant son payement d'une tierce personne la subroge dans ses droits, actions, privileges ou hypo- theques contre le debiteur : cette subrogation doit etre expresse et faite en meme temps que le payement ; 2°. Lorsque le debiteur emprunte une somme a Veffet de payer sa dette, et de subroger le preteur dans les droits du creancier. II faut, pour que cette subrogation soit valable, que Vacte d'emprunt et la quittance soient passes devant notaires; que dans Vacte d'emprunt il soit declare que la somme a ete empruntee pour faire le payement, et que dans la quittance il soit declare que la paye- ment a ete fait des deniers fournis a cet effet par le nouwau creancier. Cette subrogation sopere sans le concours de la volonte du creancier. La subrogation a lieu de plein droit : 1°. Au profit de celui qui, cfant hd-meme creancier, paie un autre creancier qui lui est preferable a reason de ses privileges ou hypotheques ; EXTINCTION OF OBLIGATIONS. 457 2°. Au profit de Vacquereur d'un immeuble, qui emploie le prix de son acquisition au payement des creanciers anxquels cet heritage etait hypotheque ; 3°. Au profit de celui qui, etant tenu avec aVautres ou pour d'autres au payement de la dette, avait interet de I'acquitter ; 4°. An profit de Vheritier beneficiaire qui a paye de ses deniers les dettes de la succession. (C. C. F. arts. 1249, 1250, 1251.) Special points of difference between French and Egyptian laws. (1) The Egyptian Code speaks of a new debt being created, whereas the French Code implies that the old debt is kept alive. (2) Ths French Code requires an acte authentique when a debtor subrogates a new creditor in room of the old creditor. The Egyptian Native Code does not make this requirement though the Mixed Code does. These jooints will be referred to later. Subrogation, according to the French law, is a fiction in virtue of which a debt which is paid, and, therefore, extinguished quoad the creditor, is nevertheless kept alive against the debtor. It is a means by which a person who pays the debt of another may obtain some security for its repayment to him. We have already seen that even a stranger to a debt who pays it will have a claim against the debtor according to the principles of negotiorum gestio to the extent to which the debtor benefited by the intervention. But in this case all that he has is a personal claim against the debtor whose debt he has discharged. It may be, however, that the creditor holds securities for the payment of the debt, such as hypothecs, or pledges, or bonds of suretyship. In such a case, if the person who pays the debt obtains from the ereditor a transfer of these securities he will be in a much stronger position. In the case of an unsecured debt, the person who pays can have no more than an action against the debtor and subroga- tion will be of no advantage. But where the debt is secured, it is obviously an advantage to the person who pays the debt to get the securities transferred to him. The creditor who gets his money has no further need for the securities, and the sureties who were liable to the original creditor are no worse off than they were before by now becoming liable to the new creditor. Subrogation is, therefore, an advantage all round. Take, for example, such a common case as this. A debt is secured by a hypothec, and being due and unpaid, the hypothecary creditor is threatening to 458 THE LAW OF OBLIGATIONS. seize and sell the debtor's property. A friend of the debtor as willing to advance him the money to pay off the hypothec, but does not wish to lend the money on the personal security of the debtor. If, when he pays the money, the creditor subrogates him in his place in the hypothec, the lender gets the security which he desires, and the debtor is relieved from the necessity of seeing his property sold at what may be an unfavourable moment for him. Subrogation bears some resemblance to the sale of debts and rights of action— transport des creances or cession des creances. (C. C. E. 349/435; C. C, F. 1689; C. C. Q. 1570.) But there are, in fact, essential differences between the two things; the object of subrogation is to come to the aid of the debtor, whereas the object of a person who buys a debt is to make a speculation. It follows from this difference that if the pea-son subrogated got the debt discharged by paying less than the full amount due, his claim against the sureties, etc., will be limited' to what he has actually paid, whereas the person who buys a debt of L. E. 1,000 for L. E. 500 can still sue the debtor for L. E. 1,000. And there are other differences which need not here be explained. (Baudry-Lacant. et Barde, Oblig. 2, n. 1521; Aubry et Eau, 5th ed. 4, p. 283; C. A. Alex. 28 nov. 1901, B. L. J. XIV, 28.) Sometimes it may be a question whether an agreement was of the nature of subrogation or was' intended to be a sale of the debt. If it appears that the payment was made when the debt was not due, the presumption would seem to be that it was a sale of the debt, but if the debt was due, and, especially, if legal pro- ceedings had been threatened or taken, the presumption Avould be that the person who made the payment did so to relieve the debtor and with a view to subrogation. (Aubry et Rau, 5th ed. 4, p. 286; Dijon, 18 juill. 1893, D. 94. 2. 405.) Subrogation is commonly spoken of as being either (1) con- ventional or (2) legal. (C. C. F. 1250, 1251.) But if we use the term " conventional " in this connection, we must remember that it does not imply the consent of both the debtor and the creditor. Conventional subrogation may take place in consequence of an agreement made with a third party either by the creditor or by the debtor. Conventional subrogation. (1) Conventional subrogation occurs by the consent of the creditor, when the creditor on receiving payment from a third person subrogates him in all his rights against the debtor. This EXTINCTION OF OBLIGATIONS. 459' subrogation must be express and made at the same time as .the payment. (2) It takes place by the consent of the debtor when the debtor borrows a sum for the purpose of paying his debt, and of subro- gating the lender in the rights of the creditor. Under the Mixed Code, it is necessary 'to the validity of the subrogation in this case that the act of loan and the employment be verified by a legalised document. (C. C. M. 227.) The Mixed Code probably intends to retain the requirements laid down in the French Code, ;viz., that in the act of loan it be declared that the sum has been bor- rowed for the purpose of paying the debt. The French Code requires also that in the acquittance it be declared that the pay- ment has been made with the moneys furnished by the new creditor for that purpose. The Egyptian Mixed Code does not make this requirement, and we cannot consider it to be implied. (De Hults, Rep. vo. Execution-pay ement, n. 102.) This subrogation takes effect without the consent of the creditor. There is, of course, nothing to prevent the two declarations being made in one and the same deed. The object of requiring a legalised document is to prevent fraud of the following kind: a debtor whose immoveables are charged with several hypothecs, amounting in the whole to more than .their value, pays off the first hypothec. This greatly im- proves the position of the hypothecary creditors who remain. But if, subsequently, the debtor wants to borrow more money, and cannot do so without giving security, he might antedate the deed of loan, and declare in it that the lender had advanced the money to pay off the hypothec already discharged. In this way he would revive the old extinguished hypothec which would again take pre- cedence of the later securities. (Planiol, 2, n. 487.) The Native Code does not require a legalised document and under it the risk of this fraud still occurs. We see that there are two varieties of conventional subrogation: (1) The subrogation which occurs when the creditor consents to subrogate the person who pays him, and (2) That which occurs without the consent of the creditor when the debtor borrows money to pay his debts, and subrogates the new lender in the creditor's rights. In the first case it is for the. creditor to decide whether he will take the payment and subrogate the person paid. He is bound to take payment from a third person, but he is not bound to subrogate him. If he chooses to 460 THE LAW OF OBLIGATIONS. do so, ho must expressly say so, though, as the law does not insisit upon sacramental words, it is not necessary to use the word " sub- rogation." Further, the subrogation must be made at the same time as the payment, for, otherwise, the discharge of the debt by a pure and simple payment would extinguish the debt with all its accessories, and these could not be revived afterwards. The subrogation generally is in all the rights, but this is not essential. The creditor may subrogate the person who pays in some of his rights, but not in all; for example, in a hypothec, but not in a claim against a surety. (See Req. 30 dec. 1903, D. 1904. 1. 127.) Subrogation can in no case give the person subrogated any greater rights than the former creditor had. (Liege, 3 mars 1886, D. 88. 2. 70.) The French law makes no other requirements in this case; the subrogation docs not need to be made by a legalised document; it ma}- be made by private writing or even by a verbal declaration, subject to the difficulties of proof. (Baudry-Lacant. et Barde, Oblig. 2, n. 1525, 1; Demolombe, 27. n. 377.) And the Egyptian Native Code is to the same effect. In practice, however, it is almost always made by a legalised document, and this is much safer because the subrogation contained in a private writing in a question with third parties would have no certain date. The Egyptian Mixed Code requires a legalised document in this case also. (C. C. M. 225.) Legal subrogation. Subrogation takes place by the sole operation of law and without demand: — (1) In favour of a creditor who pays another creditor whose claim is preferable to his by reason of privilege or hypothec; (2) In favour of the purchaser of an immoveable property who pays the price to a creditor to whom the property is hypothecated; (3) In favour of a party who pays a debt for which he is liable with others or for others, when he has an interest in paying it. There are here three cases stated of legal subrogation, and they are the only ones which the code recognises. (As to subrogation in cases of insurance, see Planiol, 2, n. 2164, and n. 2174. note 3; D. N. C. C. IV, p. 893, n. 1711.) The subrogation takes place de piein droit, and the person who pays cannot demand from the creditor any deed declaring him to be subrogated. (C. A. Alex. 14 fevr. 1912, B. L. J. XXIV, 138. See C. A. Alex. 17 avril 1912, B. L. J. XXIV, 286.) EXTINCTION OF OBLIGATIONS. 461 (1) This is what the Roman law calls the jus offerendi. (Girard, Manuel, 5th ed. 785.) The postponed creditor can always pay off the creditor whose claim is prior to his own on account of a privilege or a hypothec. So a creditor who has a hypothec can pay off a creditor who has a privilege, because privileges come before hypothecs. And the holder of a second hypothec can pay off the holder of the first. The advantage of this is that the prior creditor might be going to sell at a time unfavourable for the postponed creditor. The only interest of the prior creditor is to realise enough to pay himself. But the postponed creditor may think that the property may rise in value,, and that, if the sale is delayed, there will be enough to pay both the creditors. The right to legal subrogation exists only when the claim of the prior creditor is preferable by his " having a privilege or hypothec ranking before him." These words are strictly interpreted. A creditor who has a pledge enjoys a pri- vilege. But a creditor who has merely the right of antichresis, that is to say, the right to retain possession of an immoveable, and to take the fruits in lieu of interest, has no privilege in the sense of this article. He has the right to the property of the fruits, but he has no privilege over the immoveable itself. (Larombiere, on art. 1251, n. 9; Baudry-Lacant. et Barde, Ohlig. 2, n. 1546; Couture v. Gregoire, 1912, R. J. Q. 21 K. B. 488.) But it is not necessary that the creditor who pays should have either a privilege or a hypothec. The code makes no distinction, and therefore a chirographic creditor who pays the debt of a privileged or a hypothecary creditor is entitled to subrogation. (B.-L. et Barde, 2, n. 1542, 1; Aubry et Rau, 5th ed. 4, p. 294; Caen, 26 nov. 1870, D. 73. 2. 181.) Upon this point, the Roman law and the old French law were different from the modern law. (Girard, Manuel, 5th ed. 785; Demolombe, 27, n. 458.) Purchaser of immoveable who pays price to hypothecary creditors. (2) This is the following case: John lends L. E. 1,000 to William, who gives him a hypothec over his house, and also finds a security. William sells the house to Thomas. Thomas, wishing to get rid of the hypothec in favour of John, pays him the L. E. 1,000. He will be subrogated in all John's rights, and will , consequently, have a right to sue the surety. Or, again, suppose there are several creditors holding hypothecs 462 THE LAW OF OBLIGATIONS. ■ of different; ranks. The purchaser if he pays the price to the vendor will be liable to be sued by these creditors if the vendor, has not paid them. If the price is enough to pay them all the purchaser instead of paying- the vendor can pay the creditors ■ directly and thus avoid this risk. But if the price is not enough to do this, he can pay off the hypothecs in order of rank so far as the money will go. Suppose die pays off a first and a second hypothec. A third hypothec still remains. The creditor who holds it has the right to seize and sell the immoveable. But, seeing- that, the purchaser is subrogated in the place of the creditors paid off, there will be no advantage to the third creditor in having the immoveable seized and sold, unless it can be sold for a price more than sufficient to pay them. The purchaser can always recover the price. This will generally prevent the creditor from taking action. Subrogation is useful to the purchaser in this way, but he may prefer to adopt a still better method, viz., that of purge, though this is not so common in Egypt as one would expeat.. (C. C. E. 075/698; C. C. Pro. M. 675; Grandmoulin, Suretes,, n. 526; Planiol, 2, n. 498.) "Purchaser" in C. C. E. 162/225, in the French version, acquereur, is not limited to an onerous purchaser . A donee who has paid out of his own pocket the hypothecary creditor, enjoys the benefit of subrogation no less than an onerous purchaser. If there were any doubt about this, it would be removed by the fact that the donee obtains legal subrogation under the next head, seeing that he is bound with others for the debt. (Baudry-Lacant.i et Barde, Oblig. 2, n. 1555; Aubry et Rau, 5th ed. 4, p. 299.) Persons liable with or for the debtor. (3) John lends L. E. 1,000 to William and' Thomas, who bind themselves jointly and severally to repay it. William pays the whole debt. *He is subrogated in all John's rights against Thomas. But there is no legal subrogation unless the party paying was himself bound to pay the debt. It is not enough that he has an interest to pay it. He must be liable with others or for others. (Cass. 5 juin 1896, D. 96. 1. 468.) And there can be no question of subrogation when the debt was not paid by the person who claims to be subrogated. (C. A. Alex. 14 juin 1911, B. L. J. XXIII, 362; C. A. Alex. 8 mars 1917, B. L. J. XXIX, 282.) It is not, however, necessary that the two debtors should be bound in the same way to entitle the one of them who EXTINCTION OF OBLIGATIONS. 463 pays to bo subrogated in the creditor's right against the other. (B.-L. et Barde, 2, n. 1557; Aubry et Rau, 5th ed. 4, p. 300.) A surety who is bound jointly and severally with the debtor and pays the debt enjoys the benefit of subrogation. (Toulouse, 27 dec. 1911, D. 1913. 2. 65, and note by M. Donnedieu de Vabres; C. A. Alex. 8 janv. 1914, B. L. J. XXVI, 134.) Effects of subrogation. Bv C. C. F. 1252; C. C. Q. 1157:' The subrogation declared in the preceding articles takes effect as well against sureties as against principal debtors. It cannot prejudice the rights of the creditor when he has been paid in part only. In such case, he mag enforce his rights for whatever remains due, in preference to him from whom' he has received payment in part. (See Req. 8 dec. 1903, D. 1904. 1. 193.) The Egyptian Code has no similar article, but, no doubt, it intends to preserve the same rule. The principle is laid down in the case of suretyship, and it would seem that it is a general rule. (C.,C. E. '505/617. See C. A. Alex. 25 fevr. 1905, B. L. J. XVII, 110; C. A. Alex. 25 juin 1913, B. L. J. XXV, 468; C. A. Alex. 20 fevr. 1917, B. L. J. XXIX, 235.) The effects of subrogation are the same whether the subroga- tion is conventional or legal. The person subrogated has all the rights and the actions which the creditor had against sureties and others, as well as against the principal debtor. If the creditor had the right to the vendor's action of dissolution of sale for th,e non-payment of the price the subrogate will have the right also, (B.-L. et Barde, Oblig. 2, n. 1567; Aubry et Rau, 5th eel. 4, p. 306; Orleans, 6 nov. 1891, D. 93. 2. 33.) If the tiers- detenteur pays the hypothecary creditor he is subrogated in the hypothec which may cover other immoveables as well as that of which he is the holder. (C. A. Alex. 11 juin 1913, B. L. J). XXV, 440.) But the sureties or other guarantors are securities for the payment of the whole debt, and, therefore, if the third person has paid only a part of the debt, the creditor is still entitled to enforce his rights against the sureties, etc., for the part which remains unpaid in preference to the subrogate. (C. A. Alex. 25 juin 1913, B. L. J. XXV, 468; C. A. Alex. 20 fevr. 1917, B. L. J. XXIX, 235.) If the debt was an unsecured debt, and the third person pays a part of it, the creditor will not enjoy any, preference, because the person who has paid the part of the debt 464 THE LAW OF OBLIGATIONS. will have a claim for reimbursement of it against the debtor, and this is a simple chirographic debt as much as the claim of the creditor. He and the creditor will rank equally if the debtor was insolvent. Neither of them will have any preference, because the person who has paid the part of the debt does not need to claim in his character of subrogate, but simply as a negotiorum gestor. (B.-L. et Barcle, 2, n. 1571; Aubry et Rau, 5th ed. 4, p. 313, note 91.) It is clear that subrogation cannot give to the person subrogated any rights which did not belong to the person to whom he is subrogated. (C. A. Alex. 30 mai 1912, B. L. J. XXIV, 375; C. A. Alex. 10 dec. 1913, B. L. J. XXVI, 85.) And in one case his right is more restricted. The joint and several surety who pays the debt due to a creditor-pledgee cannot sue his fellow- surety for the whole amount though the creditor could have done so. (C. A. Alex. 8 janv. 1914, B. L. J. XXVI, 134.) Various theories of subrogation. It has already been mentioned that the Egyptian Code in speaking of subrogation uses language which is consistent with the French theory on that subject, and this point was reserved for further consideration. The theory which is now almost uni- versally accepted in France is that subrogation, whether legal or conventional, is a legal fiction, according to which the obligation which is extinguished as to the old creditor by the payment made to him by the third party, is, nevertheless, kept alive as regards the person making the payment. The person making the payment is considered, as it were, to be one and the same person with the old creditor. There is a transmission of the debt to him, though it is extinguished as regards the relations between the debtor and the former creditor. There is no new debt but an old debt which is kept alive in spite of the change of creditor. This was the theory of Pothier. (Oblig. n. 559.) And it is clear from the Travaux preparatoires that the French codifiers intended to pre- serve it. The French Code speaks in various places of subroga- tion causing the new creditor to be substituted " in the rights " of the former creditor, and this language can only mean that he succeeds to him in the creance. (Aubry et Rau, 5th ed. 4, p. 277, and note 2; B.-L. et Barde, Oblig. 2, n. 1518; Demolombe, ,27, n. 320; D. N. C. C. art. 1249, n. 5; Cass. 22 nov. 1893, D. 94. 1. 153; C. Cass, de Belgique, 19 janv. 1905, D. 1906. 2. EXTINCTION OF OBLIGATIONS. 465 412.) But, although this theory now holds the field in France, there is another system which is supported by a few writers. They argue that the law calls the operation " payment with sub- rogation." This language implies that there is a genuine pay- ment. Now, if there is a payment the debt must be extinguished, and it can only be the accessories of the debt, — the securities which attached to it — -which pass to the person making the pay- ment. The nature of the operation is the extinction d'une creance avec transport de ses garanties sur la creance nouvelle qui vient la remplacer. (Marcade, sur l'art. 1236, 4, n. 672; D. N. C. C. art. 1249,n. 3.) Another way of treating the matter is to say simply that we must apply the language of the code. Subrogation according to the code is a hybrid operation and we must accept it as such. There is no gain in resorting to legal fictions in order to make the operation more intelligible. (Colin et Capitant, 2, p. 91.) The obvious criticism of the theory of Marcade is that if the debt is paid and extinguished the securities must fall to the ground. As the Mixed Court of Appeal expresses it: cm ne concevrait pas que I'accessoire subsist at apres V extinction du principal. (C. A. Alex. 8 mars 1916, B. L. J. XXVIII, 187.) Notwithstanding the fact that this theory has little in its favour, it has been supposed that it is the theory which is accepted by the Egyptian Code. That code speaks of the "new debt," and says that the securities which attach to the " discharged obligation " pass to the new debt. It is difficult to reconcile this language with the prevailing theory of the French law, viz., that there is no new debt at all. (C. C. E. 162/225; De Hults, Rep. vo. Execu- tion-pay ement, n. 123.) Practical consequences of the difference of theory. If the debt itself is not transferred by the subrogation, the third party who is subrogated cannot make use of an executory title which the former creditor possessed. If he desires to pro- ceed to execution on the property of the debtor he must get judgment. Nor, in strict logic, ought the subrogate to have the benefit of a privilege which attaches to the debt, for a creditor is privileged by reason of the nature of his claim, and this privi- leged character cannot be transferred to another claim. If the claim itself is not transferred to the person subrogated it is difficult to see why he should enjoy the privilege. (B.-L. et w. — VOL. II. 30 466 THE LAW OF OBLIGATIONS. Barde, Oblig. 2, n. 1519.) But there is an Egyptian decision in the contrary sense, and this is in accordance with the intention of the legislator. When the code speaks of paying a creditor " having a privilege or hypothec ranking before him," it means that the subrogate succeeds to this privilege or hypothec. (C. A. Alex. 18 janv. 1894, B. L. J. VI, 194.) But upon the theory of Marcade and others, the subrogate would not succeed to the right of an action to resiliate the contract, for example, the right to demand the dissolution of a sale for non-payment of the price. For this is not a "security attached to the obligation." (De Hults, Rep. vo. Execution, n. 126.) This theory makes sub- rogation very similar to novation by change of the creditor, and yet there are different rules laid down as to the transmission of securities in that case. (C. C. E. 188/252; De Hults, Rep. vo. Execution-pay ement, n. 121.) Has Egyptian Code adopted new theory? M. de Hults maintains that the Egyptian legislator has aban- doned the traditional theory of the legal fiction, and has adopted the theory of Marcade and others that there is a new debt. He says that the Egyptian law considere la creance payee commie definitiv ement eteinte, a Vegard de tout le monde {op. cit. n. 126). But, in spite of the use of the expression "new debt" in the Egyptian codes, the Mixed Court of Appeal holds that the Egyptian law is in accordance with the traditional view: En par- lant de V obligation eteinte le legislateur a voulu dire qu'elle etait eteinte a Vegard du creancier originairepnais il a entendu, evidem- ment, que la dette continue a subsister avec les guaranties consenties par le debiteur au profit de son obligation. (C. A. Alex. 8 mars 1916, E. L J. XXVIII, 187.) Imputation of payments. A debtor who owes several debts to the same creditor can, when he makes a payment, declare to which of the debts the payment is to be imputed. By the Egyptian Code: Payments are im- puted to the debt indicated by the debtor, or, in the absence of indication, to that which' he has the most interest in discharging. (C. C. E. 172/235; C. A. Alex. 27 mai 1908, B. L. J. XX, 258; C. A. Alex. 5 juin 1912, B. L. J. XXIV, 382.) The Egyptian Code is very meagre and, apparently, it intends to state the French law in an abridged form. If this is so, we may apply the French rules, and, according to the French Code, if the debtor EXTINCTION OF OBLIGATIONS. 467 does not make such an imputation it may be made by the creditor, and if neither the debtor nor the creditor makes it, the imputai iop is made by the law. The rules of the French law on the subject are based on the Roman law. (Dig. 46. 3. 1; Girard, Manuel, 5th cd. 690.) As regards several debts equally due, the debtor has a choice which of them he will pay. The creditor cannot without the debtor's consent impute the payment to the earlier of the two debts. And if a debtor has instructed an agent to make a pay- ment for him imputing the payment to a certain debt, the agent cannot alter the imputation. In making the imputation the debtor will naturally want to pay first the debt which is the more onerous. If one of the debts is unsecured, and for the other he is bound together with a surety, it is quite open to him, if he choose, to direct the creditor to impute the payment to the unsecured debt. But the doctrine of imputation of payments implies always that the debtor owes to the same creditor several debts of money or of fungibles of the same kind. A debt of a corps certain cannot be paid by delivering another corps certain. And a debt of wheat cannot be paid by delivery of wine or eoal. (Laurent, 17, n. 601; Aubry et Rau, 5th ed. 4, p. 272; Demolombe, 28, nos. 28—30.) • Debtor cannot injure rights of creditors. In exercising this choice, the debtor cannot affect any right which a creditor has. So if one of the debts is not due, and the term was stipulated in favour of the creditor, the debtor cannot impute the payment to this debt. (B.-L. et Barde, 2, n. 1579; Aubry et Rau, 5th ed. 4, p. 273.) And if the debtor owes two debts which are both due, and they are of unequal amount, one, e.g., for L. E. 1,000, and one for L. E. 500, and he pays a sum equal to the smaller debt, that is L. E. 500, he cannot oblige the creditor to impute this to the debt for L. E. 1,000, for this would be compelling the creditor to take a partial payment of a debt, contrary to C. C. E. 168/231. Exception to rule that debtor can make imputation. An exception to this rule that the debtor can make an imputa- tion at the time of payment is stated in the following article: — Payments shall in the first instance be imputed to cost*, ■interest and instalments, and afterwards to the principal sum 30 (2) 468 THE LAW OF OBLIGATIONS. due (C. C. E. 173/236.) The French Code says: The debtor of a debt which bears interest or produces rent, cannot, without the consent of the creditor, impute any payment which he makes to the discharge of the capital in preference to the arrears of interest or of rent. Any payment made on the capital and interest, /'/if iehich is not entire, is imputed first upon the intej-est . (C. C. F. 1254; Pau, 3 mars 1890, D. 91. 2. 117. See note by M. de Loynes to Req. 8 juin 1901, D. 1907. 1. 473; Civ. 27 oct. 1908, D. 1909. 1. 60.) Interest comes before principal. The rule does not apply to payments made in the course of the pro- cedure of distribution. (C. A. Alex. 31 dec. 1918, B. L. J. XXXI, 91.) Moreover, though the French Code does not ex- pressly say so, it is universally agreed that if the creditor has been put to expense in recovering his money, a partial payment is imputed first to the expenses, second to interest, and third to capital. (Baudry-Lacant. et Barde, Oblig. 2, n. 1580.) The Egyptian Code makes this clear. It may be agreed that payments made before the debt is due shall be imputed to capital. (C. A. Alex. 26 nov. 1908, B. L. J. XXI, 25.) Imputation by the creditor. By C. C. F. 1255: When a debtor of several debts has accepted a receipt by which the creditor has imputed what he has received in discharge specially of one of the debts, the debtor cannot afterwards require the imputation to be made upon a different debt, unless the debtor has been defrauded or taken by surprise by the creditor. The Egyptian law is the same as to this, though the code is silent. (C. A. Alex. 11 janv. 1900, B. L. J. XII, 84.) By taking without objection a receipt from the creditor in which the latter states that he has imputed the payment to a certain debt, the debtor is held to have assented to this imputation, and he cannot challenge it except on such grounds as force, fraud, or error. The French Code says: a moins qu'il n'y ail eu dot on surprise de la part du creancier. And surprise is interpreted as meaning a milder variety of fraud, in which it is not necessary that there should have been artifices, or manoeuvres directed to lead the debtor into error. B.-L. et Barde. 2, n. l-^So; Aubry et Rau, 5th ed. 4, 274. A fortiori, the creditor is bound by the imputation which he has made and which the debtor has accepted. He cannot after- EXTINCTION OF OBLIGATIONS. 469 wards change his mind and seek to make another imputation. (Deniolombe, 28, n. 36; Aubry et RaU, 5th cd. 4, p. 274, note 8; C. A. Alex. 13 jnin 1916, B. h. J. XXVIII, 423.) When other creditors may be prejudiced by the imputation, the creditor who alleges that the imputation was made with the debtor's •consent, must bring satisfactory proof of this fact. (C. A. Alex. '31 dec. 1918, B. L. J. XXXI, 88.) Legal imputation. When the debtor has not made any special imputation of a payment, and has not, by taking a receipt, assented to an imputa- tion made by the creditor, the law makes the imputation for him. By C. C. F. 1256; C. C. Q. 1161: When the receipt makes no special imputation the payment must be imputed in discharge of the debt actually, payable which the debtor had cd the tim,e the greatest interest in paying. If of severed debts one alone be actually payable the payment must be imputed in disci targe of such debt, although it be less burdensome than those which are not actually payable ; if the debts be of like nature, the imputation is made upon the oldest. All things being equal, it is made proportionate 1 y on ca"h. These rules are reasonable, and correspond to the presumed intention of the debtor when he makes the payment, and it is, therefore, to be assumed that the Egyptian legislator meant to retain them, though the Egyptian Code says merely that the payment is imputed to the debt which the debtor has the most interest in discharging. (C. C. E. 172/235. See C. A. Alex. 28 mars 1918, B. L. J. XXX, 319.) It is a question of fact which debt is the most onerous for the debtor. But, in general, a debt secured by a hypothec is more onerous than a chirographic debt. (C. A. Alex. 14 juin 1916, B. L. J. XXVIII, 428.) A debt bearing interest is more onerous than a debt which does not bear interest, a debt for which a surety has been given is more onerous than an unsecured debt, and so on. (Aubry et Rau, 5th ed. 4, p. 275, note 12; B.-L. et Barde, 2, n. 1590.) But a debt in which the debtor is bound jointly and severally with others is generally less onerous than a debt which he owes alone, because in the latter case he has no recourse. (Cass. 8 aoiit 1888, D. 89. 1. 283.) V 470 THE LAW OF OBLIGATIONS. Comparison with other laws. The rule of imputation of payments being founded upon the presumed intention of the debtor, it is natural to find very similar provisions upon the subject in other laws. In the English law the doctrine is called "appropriation of payments." (See Leake, Contracts, 6th ed. p. 667; Halsbury, Laws of England, Con- tracts, p. 449; Benjamin on Sale, 5th ed. p. 796.) The German Code differs from the French law upon one point. If the debtor has made no imputation, and there are several debts due, the payment is imputed by law to the debt which offered the least security for the creditor (art. 366). It is argued that this corresponds best with the presumed intention of the parties. It is presumed that the creditor if he refrains from suing for immediate payment of the other debts does so because the most doubtful debt has been paid. (See Note to the French translation.) The Swiss Code applies this rule only when none of the debts- is due: Si aucune des defies n'est echae, V imputation se fait stir celle qui presente le moins de garanties pour le ereancier. (Code Fed. Oblig. 87.) Effect of the impossibility of finding the creditor in order to pay him, or of the refusal by the creditor to take payment. Tender and payment into court. The creditor may be abroad, or have disappeared and have left no one authorised to take payment. Or it may happen that the creditor refuses to accept the payment that is offered to him. He may say that the thing which was offered was not the thing which was due; he may demand a larger sum than that which is offered: or he may give some other reason for his refusal, or he may give- no reason at all. The impossibility of finding the creditor, or the refusal by the creditor to take the thing due may cause damage to the debtor in a variety of ways. If the debt is a money-debt he wants to put an end to the running of the interest. If he has to deliver moveable things he wants to free himself from the risk of having to take care of them, and, perhaps, to make room in his warehouse for other goods, and the law must provide him with some means of discharging his obligation, even if the creditor refuses to accept the payment. The debtor who is prepared to do his legal duty must not be prejudiced by the fact that the creditor is in fault. The procedure which the law devises for this purpose is what is called Tender, or Tender and Payment into ■\Aj> EXTINCTION OF OBLIGATIONS. 471 Court, and, in French, Offres reelles and Consignation. The full discussion of the subject belongs to the law of procedure, and the details are given in the Codes of Civil Procedure. (N. C. C. P. 685—699; M. C. C. P. 773—787; Garsonnet et Cezar-Bru, Traite de Procedure, 2nd ed. 7, n. 2712; Lusena Boy, Elements de Procedure Civile et Commerciale Egyptienne, 3rd ed. 2, p. 360.) But the articles in the Codes of Procedure deal only with debts of money or moveables. (See Trib. Civ. Lille, 7 juin 1905, D. 1906. 5. 15.) Provision must also be made for the eases of an obligation to perform an act and an obligation to deliver an immoveable. The subject is dealt with in the Egyptian Civil Code in articles 174—176/237—239. I will give first the case of the obligation to pay a sum of money, or a specific thing-, and then the other cases. Obligation to pay a sum of money or to deliver a specific corporeal thing. The Civil Code merely refers to the Code of Procedure: Never- theless, ivhen the performance consists in a payment or in a de- livery of moveables, the debtor is discharged by making a tender in the manner prescribed by the Code of Procedure. (C. C. E. 175/238.) This is the case for which the codes of procedure make careful provision. (C. C. Pro. N. 685 seq.; C. C. Pro. M. 773 seq.) This procedure consists, broadly speaking, in requiring the debtor: (1) To make a formal offer by a bailiff of the sum of money or the thing, the bailiff making a proces verbal of the offer, and of the refusal of the creditor to accept it . A debtor is not liberated by making an informal offer which the creditor refuses to accept. If the creditor sues him and gets a judgment he will be entitled to his costs, even though the debtor had made an informal offer of the same amount as that which he is now condemned to pay. (C. A. Alex. 7 fevr. 1917, B. L. J. XXIX, 202. See the common form of the proces verbal in Formulaire of Bairamoglou et Eizzo, Formule 513.) (2) To make a deposit of the money or the thing at the treasury of the court, or, in certain cases, in the hands of a receiver appointed by the court. In France, the matter is dealt with partly in the Civil Code 472 THE LAW OF OBLIGATIONS. and partly in the Code of Civil Procedure. (C. C. F. 1257 seq.; C. C. P. 812 seq.) The Egyptian Code differs in language from the French Code. The details belong to the law of procedure, but the following points may be noticed: — (1) The procedure consists of two stages: (a) an offer or off res reelles, and (b) a payment into court or consignation. It is essential that the payment should have been preceded by the offer. (C. A. Alex. 6 mai 1914, B. L. J. XXVI, 372; C. A. Alex. 26 nov. 1913, B. L. J. XXVI, 50; Cass. 17 dec. 1894, D. 95. 1.90.) (2) By an offer is meant an actual tender, not a mere promise to deliver, saving what is said later as to tender of a specific thing which is undeliverable at the domicile. (3) When the debt is of money, the tender must be made in coin which is part of the currency, or is, as it is often called, a. "legal tender." (Decree, 14 nov. 1885, Gelat, 3, p. 495.) But this has been changed in Egypt by the Decree of 2 Aug. 1914, which makes notes of the National Bank of Egypt "legal tender."' Silver money is only legal tender up to P. T. 200 and bronze or nickel up to P. T. 10. (4) The tender must be unconditional. A conditional tender is not equivalent to a payment; it is a mere proposal which the creditor can accept or not. (C. A. Alex. 14 fevr. 1895, B. L. J. VII, 136; C. A. Alex. 6 mai 1914, B. L. J. XXVI, 372; C. A. Alex. 10 dec. 1914, B. L. J. XXVII, 58.) A tender is not conditional merely because the debtor declares that the tender is made subject to his getting a discharge. (Req. 20 juin 1899, D. 99. 1. 591; Garsonnet et Cezar-Bru, Traite de Procedwe Civile, 2nd ed. 7, n. 2715.) (5) There are special rules as to the case of specific corporeal things: The tender of a specific corporeal thing which cannot be delivered at the domicile of the creditor can be made by a simple summons to take delivery. The debtor has the right to obtain from the court the appoint- ment of a receiver for the specific corporeal thing tendered. (C. C. Pro. E. 698, 699/786, 787.) The words " cannot be delivered at the domicile of the creditor " cover, no doubt, the case when, although it is not physically impossible to make the delivery, such a delivery would not be a reasonable way of satisfying the obligation. EXTINCTION OF OBLIGATIONS. 473 If the duty of the debtor was to deliver a locomotive engine, or some other article difficult of transport and not intended to be installed in the domicile, the law is not so absurd as to oblige the debtor to convey it to the creditor's domicile. He can call upon the creditor to take delivery of it where it is, and failing- this, can ask the court to appoint a receiver to take charge of it, or apply for authority to get it sold by the bailiff and the price deposited in the caisse. (See C. A. Alex. 4 avr. 1900, B. L. J. XII, 190. Cf. C. C. F. 1264.) (6) A tender followed by the payment into court, and signi- fication to the creditor, if he is absent, liberates the debtor from the date of the consignation when it is established that the tender was rendered necessary by the unjustifiable refusal of the creditor to receive the payment. (See Cass. 3 dec. 1912, D. 1913. 5. 42; Cass. 27 mars 1911, D. 1915. 1. 97, note by M. Cezar-Bru.) (7) But the validity of a tender and payment into court depends upon the following conditions: — The tender must be to a person to whom payment could validly be made, and it must be by a person capable of making a payment, for, otherwise, the creditor who gets payment may be liable to an action in repetition. The tender must be in full, just as payment cannot be in part, and the debt must be due, unless the term is in favour merely of the debtor, in which case he can waive the benefit of the term. If the debt is subject to a condition which has not been fulfilled, the creditor cannot be compelled to take payment, and, therefore, a tender to him is not valid, because if he took payment and the condition afterwards failed, he would be liable in an action for restitution of what he had got. (C. C. F. 1258.) The French Code contains very jn-ecise rules as to the offres reelles. Pour que les offres reelles soient valables, il faut : Qu'elles soient de la totalite de la somme exigible, des arrerages ou interets dus, des frais liquides, et d'une somme pour les fra&s non liquides, sauf a la parfaire. (C. C. F. art. 1258.) The rules must be literally complied with. (See Cass. 17 fevr. 1908, S. 1908. 1. 192; Garsonnet et Cezar-Bru, 2nd ed. 7, n. 2715.) The Egyptian Code is less strict: .4 debtor who wishes to discharge himself shall cause the thing or the sum, which he alleges to be owing jrom him, — la chose ou la somme quit pretend devoir — to be tendered by a 474 THE LAW OF OBLIGATIONS. bailiff, who sJiall draw up a proces-verbal of such tender. (C. C. C. Pr. 685/773.) And it has been held: L'insuffisance tres modique d'un depot ne saurait en detruire Veffet liber atoire, jusqu'a due concurrence. (C. A. Alex. 18 janv. 1893, B. L. J. V, 101.) JJne off re reelle, inferieure d'une somme minime a la somme reellement due, par suite d'une simple omission, ne saurait, par cela seul, perdre son caractere liber atoire. (C. A. Alex. 21 dec. 1893, B. L. J. VI, 77.) The practice is to offer: (1) A sum for the principal; (2) A sum for the interest; (3) A sum for the costs. (See the Formulaire of MM. Baira- moglou et Rizzo, Formule 513.) Tender at bar of court. Tenders may be made at the bar of the court, without further formalitij. The thing or sum tendered shall be handed to the registrar, who shall deposit it, provided it is not withdrawn by the creditor. (C C. Pr. E. 697/785.) The French law is the same, though there is no text. (Gar- sonnet et Cezar-Bru, Traite de Procedure, 7, n. 2716; Aubry et Rau. 5th ed. 4, p. 318, note 9.) Action to have tender declared valid. The debtor who wants to be certain that he has done all that can be required of him, and that all has been regularly done, must bring a claim to have the tender declared valid. (C. C. E. Pro 695/783.) Obligation to do or not to do. The Egyptian Civil Code says: A person under an obliga- tion to perform an act is not discharged ipso facto by a tender of performance, but he has a right of recourse against the creditor for the damage resulting to him from the rejection thereof at the time of tender. (C. C. E. 174/237.) The code does not attempt to indicate in what way a debtor whose obligation is to perform an act may make what is equivalent to a tender. This depends upon the nature of the obligation. If the performance cannot be made without the concurrence of the creditor, the debtor can EXTINCTION OF OBLIGATIONS. 475' call upon him to lend his concurrence at a time and place stated, and, if he does not then appear, the debtor can sue for dissolution of the contract and for damages, unless the creditor prefers to lend his co-operation to the performance. This procedure might be followed, for instance, in such a case as where the contract was to paint a portrait, and the creditor refused to sit for it. (Baudry- Lacant. et Barde, Oblig.. 2, n. 1626; Demolombe, 28, n. 180. See Trib. Civ. Lille, 7 juin 1895, D. 1906. 5. 15.) Obligation to deliver an immoveable. The Civil Code says: A discharge can be obtained from art obligation to deliver cm immoveable by procuring the appoint- ment of a judici-al receiver by a judgment given in a contested suit or in a suit in ivhich the creditor has been sumynmied. (C. C. E. 176/239.) Actual delivery of an immoveable is out of the question and something equivalent has to be found. The appointment of a judicial receiver or sequestrator whose duty it is to take charge of the immoveable, and to receive the revenues for the benefit of the creditor, is a procedure which meets the requirements of the case. The French law is the same, though there is no express provi- sion in the code. (B.-L. et Barde, Oblig. 2, n. 1624; Garsonnet et Cezar-Bru, Traite de Procedure, 2nd ed. 7, n. 2720. See C. C. F. 1961, al.3.) Obligation to deliver an indeterminate thing. Neither the Egyptian nor the French codes deal with this case, and it is not free from difficulty. According to some French authorities, the fact that the codes provide for tender without actual delivery only in the case of specific corporeal things, shows that no such practice is permissible in other cases. If the debt were, for example, to deliver 1,000 bushels of corn or 100 barrels of wine, to be taken in both cases from a 'larger mass, the only way in which the debtor could make a tender would be by carting the goods to the creditor's domicile and back again. For, if the debtor were to separate the goods and then call on the creditor to take delivery he would be changing the character of his debt, and transforming it into an obligation to deliver a specific thing. (B.-L. et Barde, 2, n. 1625; Laurent, 18, n. 191 .) But this seems a needlessly strict interpretation. The code 476 THE LAW OF OBLIGATIONS. is silent, as to the case, but that is no reason why we may not extend by analogy the rule stated as to the specific thing. It would be a valid offer if the debtor called upon the creditor to be present at a stated time and place in order to see th& .separation made and to take delivery. (Garsonnet et Cezar-Bru, Traite de Procedure, 7, n. 2720; Aubry et Rau, 5th ed. 4, p. 325; Demolombe, 28, n. 176.) And, probably, it would be competent to ask the court to appoint an expert to see the individualisation made, failing the debtor's concurrence. (See C. A. Alex, 4 avr. 1900, B. L. J. XII, 190.) (2) Dissolution by the performance of the obligation becoming impossible. This is the second mode of extinction enumerated in the Egyp- tian Code. The general rules upon this subject have been explained under the head of force majeure. (Supra, p. 316.) -The case which remains to consider is that which is dealt with in the French Code under the head de la perte de la chose due. (C. C. F. 1302 seq.) The Egyptian Code has no special article on this point. It treats it as a case falling under the general rule. Obligations are extinguished by dissolution, when, after they have come into existence, performance of them has become impossible. If per- formance has become impossible through the fault of the debtor, or if the impossibility has arisen while the debtor is in default as regards execution, he is liable for damages. (C. C. E. 177, 178 240, 241.) But the only kind of impossibility we are now considering is that which arises from the perishing of a specific thing. The obligation in this case cannot be performed on account of the destruction of the specific thing which the debtor undertook to deliver. An obligation to deliver something in genere, for example, so many bushels of wheat, can hardly be extinguished in this way: Genus nunquam peril. If I sell 1,000 bushels of wheat, and all my wheat is destroyed, I can get other bushels elsewhere. The contract is not to deliver any particular bushels; if those which I had in my warehouse at the time of the contract have perished, I can satisfy the obligation by procuring other bushels. Demolombe, 28, n. 751; Laurent, 18, n. 515: Aubry et Rau, 5th ed. 4, p. 408, note 7; B.-L. et Bardo, 3, n. 1917. See Rev. Trim. 1917, p. 151.) EXTINCTION OF OBLIGATIONS. 477 But, if I undertake to deliver a certain specific thing and it perishes, I can never fulfil the obligation at all. I may deliver something of equal value, but that would not be to fulfil the obligation. If I buy a piano and it perishes before delivery, the seller cannot say to me: " I will give you another piano instead." When the obligation is to deliver a certain specific thing, the law regards this obligation as always made subject to the implied condition that the thing shall be in existence at the time of payment. It might seem just that if the seller from no. fault of his cannot deliver the thing sold, the bargain should be off altogether, and the buyer should not bo bound to pay the price. And the Egyptian law is in this sense, as will be explained later. But this is not the view which the French law takes. The contract is completed by consent, and each party comes under distinct obligations, the seller to make delivery, the buyer to pay the price. The seller is freed from his obligation by the super- vening impossibility of performance, if that impossibility is not due to any fault on his part, and if he was not in default to deliver.. But, though this destruction of the thing extinguishes his obliga- tion, it does not extinguish the entirely separate obligation of the buyer to pay the price. This was the rule of the Roman law and of the old French law, although under them the buyer did not become the owner of the thing by the effect of the contract, but only when it was delivered. (Inst. 3. 23. 3; Girard, Manuel, 5th ed. 547; Pothier, Vente, n. 307.) For, in spite. of this, after the contract the thing lay at the buyer's risk, though he was not its owner. In the modern law the rule that the loss is that of the buyer is more easily justified as an application of the principle r.es petit domino, that is, if a thing perishes its owner must bear the loss. (Guillouard, Vente,. 1, n. 246, 1; Pand. Frang. Oblig. n. 6247; D. N. C. C. art. 1624, nos. 1 seq.) The English law is the same, except when delivery has been delayed by fault. "Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer's risk whether delivery has been made or not." (Sale of Goods Act, 1893 (56 & 57 Vict. c. 71), s. 20; Benjamin on Sale, 5th ed. 404; Williston on Sales of Goods, s. 300.) -478 THE LAW OF OBLIGATIONS. Contract may imply that risk was to be on seller. But under the French law, in the sale of a thing to be delivered : at a future date, the court may find in the circumstances of the contract evidence of the intention to make the sale subject to the implied condition that the thing should be' in existence at that vdate. The courts in France are reluctant to find a buyer liable for the price when the seller cannot deliver the thing, and in recent cases they have been rather astute in reading such implied ■ conditions into the contract. For example, in the sale of a foal to be delivered when weaned, it was held to be an implied con- dition that the foal should be alive at the time fixed for delivery. (Rennes, 24 dec. 1906, S. 1907. 2. 164. Cf . Cass. 8 janv. 1906, . S. 1906. 1. 176; and see Rev. Trim. 1907, 819.) The loss of thing due an instance of impossibility of performance. According to the French Code: When the certain specific thing which is the object of an obligation perishes, or is put extra commerciwn, or is lost in such a way that its existence is abso- lutely unknown, the obligation is extinguished if the thing perished or was lost without the fault of the debtor and before he was in default. It is also extinguished although the debtor be in default if the thing would equally have perished in the posses- sion of the creditor, unless the debtor has expressly bound himself for fortuitous events. The debtor must prove the fortuitous event which he alleges. In whatever way a thing stolen has perished or has been lost, its loss does not discharge him who stole the thing from the obligation to pay its value." (C. C. F. 1302; C. C. Q. 1200; B.-L. et Barde, 3, n. 1916; Req. 20 mars 1912, D. 1913. 1. 247.) All this is correct as a statement of Egyptian law. In the case where the obligation is to deliver a certain number 'or quantity of things it may be specified that they are to be taken from the stock of the seller, or that they are at present lying in his warehouse. In such a case if the whole stock were to perish, the seller might maintain that his obligation was extinguished by the impossibility of performance. But even here the pre- sumption is against him. It is presumed that the statement of the place where the goods were was merely by way of description, and that it was not intended as limiting the oblisration of the EXTINCTION OF OBLIGATIONS. 479 seller to deliver from that stock only. It is a question of inter- pretation. (Pothier, Oblig. n. 659; Baudry-Lacant. et .Barde, Oblig. 3, n. 1917.) It is according to the general rules of evidence that the debtor who pleads that he has been released from his obligation to deliver should be under the necessity of making proof of all that is necessary to support his plea. A fortuitous event by definition is one which it was impossible to resist, and illustrations have been given earlier of the meaning of this term. (Supra, pp. 287 seq.) So, it is not enough for the debtor to allege that the thing which he bound himself to deliver has been destroyed by fire or has been stolen, for it might have been possible for him to prevent its loss in this way. He must prove in addition that he could not prevent the accident. (Req. 9 mai 1911, D. 1912. 1. 401.) But " impossibility ".mustbe taken in a reason- able sense. If all ordinary precautions to prevent the accident were taken, its occurrence will be regarded as one which it was impossible to prevent. This has been held in many cases both as to fire and as to theft. (See Cass. 16 mai 1904, D. 1905. 1. 189, and supra, pp. 297, 299, 303.) A man who leaves L. E. 1,000 in an open bag in his room while he goes to lunch can hardly say, if it disappears, that this was due to a fortuitous event . The last paragraph of the article in the French Code states the rule of exceptional severity based on disfavour to thieves. But the rule is one which follows from general principles. The thief, or the guilty receiver, must pay the value of the thing, although it has disappeared by fortuitous event. He cannot say he was free from fault, because it was through his fault that the thing came into his possession. (Pothier, Oblig. n. 664; B.-L. et Barde, 3, n. 1925.) Application of rule against unjust enrichment. The Egyptian Code says that when the correlative obligations are extinguished this is to be without prejudice to the right of indemnity, if any, due from the respective parties for any benefit acquired without cause. (C. C. E. 179/242.) The Quebec Code is more full: When the performance of an obligation to do has become impossible without any act or fault of the debtor and before he is in default the obligcdion is extinguished and both parties are liberated; but if the obligation be beneficially 4 480 THE LAW OF OBLIGATIONS. performed in port, the creditor is hound to the extent of the benefit actual/// received by him. (C. C. Q. 1202.) This is an important instance of the application of the general principle against allowing an unjust enrichment which has been fully explained earlier. (Supra, pp. 140 seq., 163 seq.) In regard to the obligation to do or not to do, the two parties are considered as having entered into correlative obligations. If the work cannot be done the price does not need to be paid. If a painter undertakes to paint a picture and, before he has done so, he becomes blind, he is not bound to pay damages, and neither is the client bound to pay for the picture. In, some cases an un- finished work may be of value, and, in that case, a proportion of the price must be paid corresponding to the value of the work done. This is upon the general principle against unjust enrich- ment which is explained under the head of quasi-contracts. In the case of the picture if the artist had begun it, and had then become blind, probably nothing would have to be paid, because the unfinished picture would not be of any value. (Supra, p. 317. Baudry-Lacant. et Barde, Oblig. 3, n. 1916.) Theory of risk in the Egyptian law. The Egyptian law is not the same as the French law upon the important matter of the risk in the case of synallagmatic con- tracts. As to unilateral contracts there is no difficulty. There is here only one obligation, and if it is impossible to execute it there is an end of the matter. For instance, if I deposit my box of silver in your care, and it is lost by a fortuitous event,, your obligation to deliver it is extinguished and the contract comes to an end altogether. But in a synallagmatic contract there are correlative obliga- tions, and logically speaking, it is quite possible that one of them should survive the extinction of the other. In the French law we have seen that this is so in the case of sale; the purchaser is still bound to pay the price although the obligation of the seller to deliver the thing has been extinguished by fortuitous event. (Supra, p. 477.) This is stated in C. C. F. 1138. This article is badly expressed and there is controvorsv with regard to its meaning: L' obligation de timer la chose est parfaite par le seul consente- ment des parties contractantes. EJJr rend le creancier proprietaire et met la chose d ses risque? I EXTINCTION OF OBLIGATIONS. 481 des Vinstant ou elle a du etre livree, encore que la tradition rten ait point ete faite, a moins que le debiteur ne soit en demeure de la livrer ; auquel cas la chose reste aux risques de ce dernier. The singular expression — des Vinstant ou elle a dil etre livree — might very naturally mean that if it had been agreed that the thing was not to be delivered for a certain period the risk should not pass to the creditor until this period had arrived, but from the so-called " preliminary works," that is the compilations giving the reports and discussions of the commissions which pre- pared the Code Napoleon, we know that this was not what was meant. The expression means that the thing is at the risk of the creditor from the time at which he acquires an action to sue for its delivery. (Fenet, 14, p. 113; Locre, 14, p. 145, in fine, n. 6; Baudry-Lacantineiie et Barde, Oblig. 1, n. 366.) But suppose the parties have agreed in their contract that the property is not to pass until delivery, who is to bear the risk then? Upon this there is controversy. Demolombe and others say that we should follow the principle of the Roman law under which, the risk passed to the buyer by the contract, though the property did not pass until delivery. (Demolombe, 24, n. 424; B.-L. et Barde, 1, n. 424.) Planiol and others contend" that the French Code means to lay down the principle res per it domino. If, under the contract, the purchaser is not the owner the risk remains with the seller. (2, n. 1347.) Such an agreement is not common and the question is not of much practical importance. In Egyptian law the contract has the effect of transferring the propertj', but the risk does not pass until delivery. This was the theory of the Mohammedan law which the Egyp- tian legislator meant to preserve. (Kadri Pacha, Statut reel, No. 460.) It is clearly stated as regards sale in C. C. E. 297/371: // the thing sold perishes before delivery, even ivithout fault or negligence on the part of the vendor, the sale shall be dissol/cvd and the price, if necessary, refunded, unless the purchaser is in default as regards taking delivery, resulting from formal demand by summons or other equivalent process, or from the terms of the agreement itself. This clear statement must prevail over the more obscure lan- guage of C. C. E. (266/336, which says that sale, "according to circumstances," throws the risk of the thing sold upon the pur- chaser. By "according to circumstances" we must hero under- w. — vol. n. 31 482 THE LAW OF OBLIGATIONS. stand the cases when the purchaser is in default to take delivery, or where under the terms of the contract the risk was to be upon him, or when by its terms the delivery was to be at the same time as the contract. And the Egyptian law applies the same rule as to the risk in the case of the partial loss or deterioration of a thing. (C. C. E. 298/372.) This principle of the Egyptian law of sale is not peculiar to that contract. The code lays down the general rule: When an obligation is dissolved in consequence of impossibility of perform- ance the correlative obligations are in like manner dissolved. (C. C. E. 179/242.) This is the general rule of the French law also, though it does not apply in the case of the obligation to transfer a specific thing, and it is the only rule which is consistent with the theory of synallagmatic contracts. The two obligations depend upon each other. Each of them is conditional upon the fulfilment of the other, and it is inequitable to require the one party to perform when the other party cannot perform on his side. (Planiol, 2, n. 1336. See supra, p. 316.) The difference between the French and Egyptian law is that the French law makes 6ale and the contracts assimilated to sale exceptions to this general rule, whereas the Egyptian law applies the same rule to all synallagmatic contracts. Unfortunately, however, the Egyptian Code is not well drawn, and some articles are inconsistent with the principle which the legislator means to adopt. It is hard to see, for example, why when goods are sold by weight, number, or measure, and they have been weighed, counted, or measured, as the case niay be, the risk should then pass to the purchaser. (C. C. E. 241/307.) The Egyptian legislator seems in this article to have copied C. C. F. 1585 without remembering that he had elsewhere adopted a different principle from that of the French Code. And the; article C. C. E. 424/516 is also inconsistent but does not concern us. (See Grandmoulin, Contrats, n. 58; De Hults, Rep. vo. Risques, n. 12; vo. Vente, n. 117; Halton, 2, p. 26.) (3) Novation. This is the third mode of extinction. The Egyptian Code defines novation thus: Novatio?i extin- guishes an obligation and establishes a new obligation which re- places the former. It results from a contract. (C. C. E. 186/249.) EXTINCTION OF OBLIGATIONS. 483 Novation is the substitution of a new obligation for an old one, and it presupposes that the old debt is extinguished. For this reason novation comes more naturally immediately after payment, as it does in the French Code, than after release, as in the Egyptian Code. (C. C. F. 1234; C. C. E. 158/221.) The substitution of the new debt which is involved in novation is equivalent to a payment of the old debt. And what is called elation en paiement is in fact an example of novation. This means that the creditor voluntarily accepts another prestation in place of that which had been promised. If I owe you L. E. 20, and you agree to accept my camel instead, there has been a new debt created, viz., the debt to pay the camel, though the debt was paid t as soon as it was made by my delivering the camel. (Aubry et Rau, 5th ed. 4, p. 258, note 1; Planiol, 2, n. 523; Demolombe, 27, n. 230.) Novation is subject to five conditions: — (1) The existence of an old debt; (2) The creation of a new debt; (3) A new element, making a difference between the new debt and the old one, so that the new one is not a mere acknowledgment of the old one; (4) The intention to novate, and (5) The capacity of parties. (Baudry-Lacant. et Barde, Oblig. 3, n. 1690; Aubry et Rau, 5th ed. 4, p. 348.) The novation may take three forms: — (1) A change of the object of the debt; (2) A change of the debtor; and (3) A change of the creditor. These three varieties are stated in C. C. E. 187/251. Novation takes place: — (1) When the creditor and the debtor agree to substitute a new obligation for the original obligation which is extinguished, or to change the consideration of the original obligation ; (2) When the creditor and a third person agree that the latter shall become the debtor in place of the original debtor, who is discharged without his consent being necessary, or when the debtor has procured the acceptance by the creditor of a third person as his debtor, such third person consenting to pay in his stead ; (3) When the creditor and the debtor agree that the latter shall perform the obligation for the benefit of a third person umo consents thereto. y^Uwvvo (1 irl 484 THE LAW OF OBLIGATIONS. (1) Simple novation. As an example of the first kind, if I owe yon a hundred bushels of wheat, and we afterwards agree that instead of the wheat I shall owe you a sum of money, there is novation by the change of the object of the debt. This is the simplest kind, and may be called novation simpli- citer. (Pothier, Oblig. n. 582.) It is also frequently called objective novation in contradis- tinction to the kinds of novation in which one Of the parties is changed. These are known as varieties of subjective novation. (Aubry et Ran, 5th ed. 4, p. 346; B.-L. et Barde, 3, n. 1697.) (2) Delegation. The second kind of novation is that in which there is the intervention of a new debtor; I owe you "L. E. 1,000, and I get you to release me and to accept Peter in my place. In this case I am said to delegate Peter, and this variety of novation ia specially called delegation. It cannot be effected, of course, with- out the consent of the creditor and also of the debtor who is delegated, for I cannot make Peter a debtor in a contract against his will. (Dig. 46. 2. 11; Girard, Manuel, 5th ed. 700; Pothier, Oblig. n. 600; C. C. F. 1275. See Douai, 13 nov. 1909, D. 1913. 2. 57.) Delegation will be more fully explained later. Expromission. There is, however, another form of novation which likewise falls under (2") and is known by the name expromissio. This occurs, for example, when I owe you L. E. 1,000, and another person comes forward spontaneously and without my re- questing him to do so, and says to my creditor, "if you will discharge your debtor I will become bound in his place," and the creditor agrees to the substitution. Novation of this kind is specially called expromissio. In this case, my consent is not necessary, as the law makes the natural assumption that a debtor is not likely to object to his debt being paid. (Pothier, Oblig. nos. 583, 598; Aubry et Rail, 5th ed. 4, p. 347; B.-L. et Barde, 3, n. 1715; C. A. Alex. 23 dec. 1915, B. L. J. XXVIII, 72.) Novation by the substitution of a new debtor may be effected EXTINCTION OF OBLIGATIONS. 485 without the concurrence of the former one. Just as a third party can pay a debt without the consent of the debtor, so he may extin- guish the debt of another by novation. (C. C. E. L87 251; C. C. F. 1274.) The effects of delegation will be stated later. (3) Novation by change of creditor. This requires the consent of all three parties; the old creditor, the debtor and the new creditor. As the old creditor has to renounce his claim it is natural that this can be done only by his consent. (Aubry et Rau, 5th ed. 4, p. 351 ; Nancy, 21 fevr. 1877, D. 78. 2. 14.) There must be a clear declaration by the creditor of his intention to renounce. The mere indication by the creditor of a person who is to take payment for him is not novation. Such a person is said to be adjectus solutionis gratia. (Dig. 46. 3. 95. 5. See Cass. 11 janv. 1893, D. 95. 1. 179; B.-L. et Barde, OUig. 3, n. 1725.) As to the consent of the debtor, it is required because he is becoming bound to pay a new debt. He may lose by the change of creditor the benefit of a defence which he had against, the former creditor. (Colin et Capibant, 2, p. 103.) This form of novation is not common in practice. It is generally more con- venient and safer to make an assignment of the debt. (See Laurent, 18, n. 299.) Parties to novation must be capable. The French Code says: — Novation can be effected only between persons capable of contracting. (C. C. F. 1272; C. C. Q. 1170.) Novation extinguishes an obligation and the creditor who agrees to novate renounces his right to sue on the old debt. It is, there- fore, equivalent to an alienation, and can only be effected by a person who has the right to alienate. Accordingly, a joint and several creditor cannot novate a debt due to the creditors jointly and severally except so far as concerns his share. {Supra, p. 406; B.-L. et Barde, 3, n. 1728; 2, n. 1156; Aubry et Rau, 5th ed. 4, p. 352.) A person may be entitled to receive payment of the obligation, and may yet be unable to novate it, for novation is an alienation. (Demolombe, 28, n. 263; B.-L. et Barde, 3, n. 1727.) Further, the person who becomes liable for the new debt which is sub- stituted for the old one must have the capacity to bind himself. 486 THE LAW OF OBLIGATIONS. But if the new obligation is voidable at his instance the novation is good, unless and until he brings an action to have it set aside.. If he does so, then, according -to the view of most authorities, the novation is annulled, and the former obligation revives, because the intention was that it should only be cancelled by the substitu- tion of a second valid obligation. The creditor did not renounce his old claim purely and simply. He made the renunciatiota subject to the implied condition that the new debt should 'be substituted, and if this new debt is annulled, the creditor must be restored to his right to claim the old debt. (Demolombe, 28, n. 252; Baudry-Lacant. et Barde, Oblig. 3, n. 1696; Aubry et Rau, 5th ed. 4, p. 352; D. N. C. C, art. 1271, n. 72.) There are some dissentients. (Larombiere, on art. 1272, n. 2. See D. N. C. C. art. 1271, n. 72.) Novation not presumed. The French Code says expressly: — " Novation is not presumed. The intention to effect novation must result clearly from the act." The Egyptian law is the same, though the code is silent. (C. C. F. 1273; Cass. 8 aoiit 1900, D. 1905. 1. 262; C. A. Alex. 23 nov. 1911, B. L. J. XXIV, 15; C. A. Alex. 23 dec. 1915, B. L. J. XXVIII, 72; C. A. Alex. 19 avril 1916, B. L. J. XXVIII, 259.) When the novation involves a renunciation by the creditor of his claim, this is according to the general rule that there is a presumption against a man renouncing any right which he has. When the novation implies the assumption by a new debtor of the obligation of the old debtor, there is likewise a presumption against this. (Douai, 13 nov. 1909, D. 1913. 2. 57.) So, where the proof is contra- dictory, and the court is not satisfied as to the intention to novate, the decision will be against it. But no sacramental terms are prescribed; and the courts may in civil matters infer the inten- tion to novate from presumptions if there is a commencement of proof in writing. (Req. 27 nov. 1893, D. 94. 1. 60; Cass. 8 aout 1900, S. 1903. 1. 46, and the note; Req. 28 dec. 1908,- D. 1909. 1. 214; Aubry et Rau, 5th ed. 4, p. 354; D. N. C. C. art. 1273, n. 12; C. A. Alex. 22 janv. 1914, B. L. J. XXVI, 167: C. A. Alex. 30 janv. 1913, B. L. J. XXV, 155.^ And in commercial matters no commencement of proof in writing is required. Tin- modification of an existing obligation is not novation. EXTINCTION OF OBLIGATIONS. 487 It must be clear that the intention was to extinguish the old debt. So there is no novation if the creditor merely stipulates that the debtor shall give him a security for a debt previously unsecured, or, on the other hand, if the creditor renounces a security which he already holds. (Limoges, 15 juin 1898, S. 1901. 2. 134. Cf. Cass. 13 janv. 1903, S. 1909. 1. 397; Cass. 28 juin 1904, S. 1909. 1. 194; C. A. Alex. 15 juin 1916, B. L. J. XXVIII, 433; C. A. Alex. 31 janv. 1912, B. L. J. XXIV, 118; C. A. Alex. 26 avril 1911, B. L. J. XXIII, 282; C. A. Alex. 23 mars 1910, B. L. J. XXII, 206.) So in many cases it has been held that where a debtor wh,ose debt is a simple contract debt, subsequently gives to his creditor a bill or a promissory note, this does not effect novation unless there is something which clearly shows that this was intended, (C. A. Alex. 23 nov. 1911, B. L. J. XXIV, 15; C. A. Alex. 28 janv. 1914, B. L. J. XXVI, 187; Req. 5 aout 1878, D. 79. 1. 71; B.-L. et Barde, Oblig. 3, n. 1732.) The importance of this rule is generally in regard to prescrip- tion. If there is no novation the creditor retains his right to sue on the old debt, which may be a debt which prescribes only in fifteen years. The action on the bill prescribes in five years. (C. Comm. E. 194/201.) And, therefore, though the bill or note may have prescribed by five years, the creditor still has his remedy if he can prove the debt, whereas if there had been nova- tion his right of action would have been lost after five years from the date when the bill was due. (C. A. Alex. 22 mars 1893, B. L. J. V, 182; C. A. Alex. 5 mai 1898, B. L. J. X, 264.J Upon similar grounds it is held that the renewal of a bill does not effect novation unless the intention to do so is apparent. (Laurent, 18, n. 292; Toulouse, 8 mai 1888, D. 89. 2. 208.) A fortiori, the granting of a delay for payment or the pro- longation of the term fixed does not import novation. (C. A. Alex. 23 dec. 1915, B. L. J. XXVIII, 72; C. A. Alex. 13 avril 1916, B.L.J. XXVIII, 254; C. A. Alex. 23 mars 1910, B.L.J. XXII, 206.) And the substitution of an official document as proof of the debt in place of a private writing is not inconsistent with the keeping alive of the old debt. (C. A. Alex. 13 avril 1916, B. L. J. XXVIII, 254.) The rule of law that novation is not presumed does not alter the general rules as to proof. So it has been held that proof by testimony is not admissible tending to prove in contradiction of a document the novation of a debt exceeding P. T. 1,000. (C. A. 488 THE LAW OF OBLIGATIONS. Alex. 27 mai 1909, B. L. J. XXI, 364.) Novation of a com- mercial debt may be proved by testimony irrespective of the amount. (Cass. 4 janv. 1888, D. 88. 1. 37; Baudry-Lacant. et Barde, Oblig. 3, n. 1733.) Must be valid debt to novate. There cannot be any novation unless there is a valid debt to begin with. Accordingly, if the original debt was null, for instance, as having an illegal cause, or if it had been extinguished in any way, it cannot be novated. (Pothier, Oblig. nos. 585 — 586.) But there may be a novation of a natural obligation, and it may be turned into a civil one by novation. For novation, like payment, amounts to a voluntary acknowledgment by the debtor of the debt, and may indicate his intention to make it a civil debt. (Baudry-Lacant. et Barde, Oblig. 2, n. 1678.) This question has been considered earlier in speaking of the effects of a natural obligation. (Supra, I, p. 36.) New debt must be substituted. It is indispensable that there is a new debt created to come in place of the old one. For otherwise the payment of the old debt simply puts an end to it, and there is no substitution. (B.-L. et Barde, 3, n. 1695; C. A. Alex. 30 mai 1917, B. L. J. XXIX, 461.) Effects of novation. These are dealt with in the articles C. C. E. 188—191/252, 255. (Cf. C. C. F 1278—1281; C. C. Q. 1176—1180.) The Egyptian Code says: — The new debt is not guaranteed by the securities which guaranteed the discharge of the original debt, unless that is the intention of the parties as resulting from the agreement or the circumstances of the case. Nevertheless the scope of the agreement shall be limited as follows : — hi the first case above mentioned, the debtor and the creditor, may agree that real securities, such as privileges, hijpothecs and right Is of retention, shall be transferred to the new obligation, provided that the burden of such obligation is not increased to the prejudice of third persons. In the second case, the creditor and the third person may agree, EXTINCTION OF OBLIGATIONS. 489 even without the consent of the original debtor, that the real securities shall be continued. In the third case, the three contracting parties may make the like agreement. In each of the above cases, personal securities, such as surety- ship or joint and several liability, shall be transferred only with the consent of the sureties or the co-debtors. The agreement which transfers such securities can have no effect as regards third persons, unless it is made at the same time m the novation and by means of an official instrument. These articles must be considered. Transfer of securities to new debt. The privileges and hypothecs which attach to an old debt do not pass to the one which is substituted for it unless the creditor has expressly reserved them. Seeing that novation extinguishes the old debt, just as payment would extinguish it, it would at the same time put an end to all the accessory obligations such as suretyship or hypothecs, unless means were taken to preserve them. The law distinguishes between real and personal securities. Per- sonal securities such as suretyships can never be transferred in the literal sense of the term. The sureties may consent to guarantee the new debt, but, if so, they make new obligations. They guaranteed the old one in view of the character and circumstances of the debtor. And it is for them to say if they are willing to guarantee the new debt. (B.-L. et Barde, 3, n. 1742; Aubry et Rau, oth ed. 4, p. 370.) The transfer of the real securities to the new debt must be made at the same time as the novation, for otherwise the securities will have been extinguished and they cannot subsequently be revived. Of course the creditor may expressly stipulate that the novation shall be conditional on the sureties or others liable in the old debt consenting to make themselves liable under the new one. If the new debt is larger than the old one the transfer of the securities to the new debt by the novation is not allowed to injure third parties. The code says: provided that the burden of such obligation is not increased to the prejudice of third persons. (C. C. E. 189/253.) If, for example, I owe you L. E. 10.000, which is secured by hypothec, and we agree to increase the debt to L. E. 15,000, the hypothec to remain, this cannot be allowed to prejudice the holder of a hypothec postponed to the one in your 490 THE LAW OF OBLIGATIONS. favour and registered before the novation. (Pothier, Oblig. n. 599; Baudry-Lacant. et Barde, Oblig. 3, n. 1740; Aubrj et Rau, 5th ed. 4, p. 368, note 53.) No transfer of securities to property of new debtor. By C. C. F. 1279, when novation is effected by the substitu- tion of a new debtor the original privileges and hypothecs cannot be transferred to the property of the new debtor. Obviously, the hypothec upon an immoveable of the old debtor cannot be transferred to another immoveable; hypothecs cannot be transferred from one immoveable to another. If an immove- able of the new debtor is to be made liable, that can only be by a new hypothec. If the new debtor consents to this, the hypothec can of course only take effect from its date and registration, and cannot prejudice his creditors who had privileges and hypothecs over this property before. (B.-L. et Barde, 3, n. 1741; Aub'ry et Rau, 5th ed. 4, p. 368, note 54.) Is the old debtor's consent necessary to transfer securities? The Egyptian Code does not require this in novation by change of the debtor. (C. C. E. 187/251.) Why should the old debtor's consent be required seeing that the novation cannot prejudice him or make him liable to pay any larger amount than before? The law stated by Pothier was otherwise, but the reason given is not very convincing. (Oblig. n. 599; B.-L. et Barde, Oblig. 3, n. 1378.) In all cases except expromission the debtor takes part in the transaction, and if" it is his immoveable which is hypothecated it would seem that his consent to the novation is a tacit consent to the ''reserve." C. C. E. 189, jal. 2/253, appears to lay down the same rule for expromission. In France the point is controversial, but this is largely because if C. C. F. 1278 is to be read as not requiring the debtor's consent, this article would be inconsistent with C. C. F. 1280, which says: Lorsque la novation s'opere entre le creancier et Vun des debiteurs solidaires, les privileges el hijpotheques de Vanciemie creance ne peuvent etre reserves que sur les biens de celui qui contracte la nouveUe dette. But as C. C. F. 1280 is not reproduced in the Egyptian Code we are not confronted with this difficulty. (See B.-L. et Barde, Oblig. 3, n. 1738; Aubry et Rau, 5th ed. 4, p. 368, note 54.) EXTINCTION OF OBLIGATIONS. 491 Protection of third parties. The agreement which transfers such securities can have no effect as regards third persons unless it is made at the same time as the novation and by means of an official instrument. (C. C. E. 191/255.) The novation extinguishes the securities unless they are reserved or transferred. And how are third parties to know that they are reserved or transferred except by the register? In the absence of the registration they may acquire rights over the immoveables after the novation, and it would be unjust to allow these rights to be affected by a novation of which they were unaware. Does the code intend to distinguish as to this point between the case when the real security is " reserved," or, as the Egyptian Code calls it, " continued," and the case when the real security is " transferred," a case which, as we have seen earlier, involves the constitution of a new real security. The danger is less serious in the case of a reserve of a hypothec, because the hypothec, being registered, it remains on the register and third parties are protected. If D's debt to C is guaranteed by a hypothec over his immove- able, and X agrees to become debtor in D's place, it may be agreed that the debt shall be secured as before by the hypothec over D's immoveable. D is then a real security. In this case we may say the hypothec is reserved or continued. But suppose, instead of this agreement, it is agreed that the hypothec over D's immove- able shall be extinguished, and in place of it X shall grant .a hypothec over an immoveable which belongs to him. There is here a new hypothec. According to the French law it is only in this case that an acte. authentique is needed. (Demolombe, 28 r n. 354; D. Supp. Oblig. n. 1053; Marcade, on art. 1279, n. 3.) It is possible that the Egyptian Code intends to preserve this distinction, but the language of the code is far from clear. (C. C. E. 191/255.) More probably the word* " transfer " in this article is used to include " reserves " as well as transfers in the strict sense. (See De Hults, Rep. vo. Novation, n. 23; Halton, 1, 386.) Novation in case of joint and several debt or debt secured by a surety. The French Code has two articles upon novation as effecting a joint and several debt, or a debt secured by a surety. 492 THE LAW OF OBLIGATIONS. When novation is effected between the creditor and one of the joint and several debtors, the privileges and hypothecs which attach to the old debt can be reserved only upon the property of the co-debtor u>ho contracts the new debt. Joint and several debtors are discharged by novation effected betweeen the creditor and one of the co-debtors. Novation effected with respect to the principal debtor discharges his sureties. Nevertheless, if the creditor have stipulated in the first case for the accession of the co-debtors or in the second case lor that of the sureties, the old debt subsists if the co-debtors or the sureties refuse to accede to the new contract. (C. C. F. 1280, 1281; C. C. Q. 1178,1179.) The Egyptian Code intends to maintain the same rules, though it states them less fully. (C. C. E. 190/254; De Hults, Rep. Novation, n. 21.) One of the joint and several debtors cannot create a hypothec over the property of his co-debtors without their consent, and this is what it would amount to if he could reserve a hypothec over their property. If the creditor agrees to novation with one of the joint and several debtors, he discharges the other joint and - several debtors from their personal liability, and he discharges their lands from hypothecs, if any there be, unless he takes steps to prevent this result. This he can easily do by making his consent to the novation conditional on the other joint and several debtors giving their adhesion to the contract. The same rule applies to the case of novation effected with respect to a principal debtor, whose sureties will be thereby discharged unless precau- tions are taken. (Pothier, Oblig. n. 599; Aubry et Rau, 5th ed. 4, p. 369; B.-L. et Barde, 2, n. 1739, and n. 1742.) Delegation. It is now necessary to examine in more detail the special caae of delegation. Pothier defined delegation as a kind of novation by which the old debtor, in order to discharge his debt to his creditor, procures a third person who binds himself to the creditor in his plaqe. {Oblig. n. 600.) It is dealt with in C. C. E. 187, al. 2, 251, al.' 2. Il requires, therefore, the concurrence of three persons, the old debtor who finds the substitute and is called in the French law the delcgant, the person substituted or delegated, called the delegue, and the creditor who, in consequence of the new debt Lv>^m U EXTINCTION OF OBLIGATIONS. 49& which the delegue contracts with him, discharges the debtor who makes the delegation. The creditor is known as the delegated™. There can be no question of novation if it does not appear that the delegue undertook to be substituted in place of the old debtor. (C. A. Alex. 30 nov. 1911, B. L. J. XXIV, 25.) And it is equally essential that the delegataire should have consented to accept the delegue. (C. A. Alex. 26 juin 1912, B. L. J. XXIV, 418.) Delegation is a contract formed like other contracts by an offer and an acceptance. When the delegataire accepts the offer he acquires a direct right of action against the delegue. (C. A. Alex. 13 mars 1913, B. L. J. XXV, 232.) Delegation of this kind, which is the only one noticed by Pothier, is now called "perfect delegation," and is distinguished from another form called " imperfect delegation," in which, though a new debtor is found, the old debtor is not discharged. According to the French Code, the presumption is in favour of this imperfect delegation, for the French Code says: — The delegation by which a debtor gives his creditor a new debtor who obliges himself towards the creditor, does not effect novation unless the creditor Ms expressly declared that he intended to discharge his debtor* who has made the delegation. (C. C. F. 1275; Toulouse, 4 avr. 1895, D. 98. 2. 337.) The same pre- sumption exists in Egyptian law. (C. A. Alex. 30 nov. 1911, B. L. J. XXIV, 25; C. A. Alex. 22 janv. 1914, B. L. J. XXVI, 167.) The distinction between perfect and imperfect delegation must be explained. Meaning of express discharge. In saying that the delegation does not discharge the former debtor without an express declaration to that effect, the French Code does not mean that the word "discharge" must be used. But language must be employed which clearly indicates the inten- tion of the creditor to discharge this debtor. (B.-L. et Barde, 3, n. 1744; Aubry et Bau, 5th ed. 4, p. 363; Paris. 14 dec. 1889, D. 90. 2. 189.) Delegation distinguished from novation. Delegation does not necessarily involve novation. It is only that variety of delegation which is called perfect delegation in which there must be novation. Delegation is a special contract analogous to mandate. Its 494 THE LAW OF OBLIGATIONS. -object is the thing which is stipulated from the person delegated. If the delegator was a debtor and his creditor releases him from the debt and accepts the person delegated in his place, there is novation. There can quite well be delegation without any nova- tion. For example: (1) A desires to promise a gift to B. Having no funds avail- able he asks C to promise the gift, and C does so. There is no novation here A will be bound to reimburse C on the principles of mandate. (B.-L- et Barde, 3, n. 1754.) (2) In what is called imperfect delegation there is no novation. Distinction between perfect delegation and imperfect delegation. Delegation is said to be perfect when the creditor declares his intention to liberate the first debtor when he accepts the new one. He has no longer any action against the original debtor. The perfect delegation produces the effect of a novation. (B.-L. et Barde, 3, n. 1744; Aubry et Bau, 5th ed. 4, p. 363; Colin et Capitant, 2, p. 108. See C. A. Alex. 23 dec. 1915, B. L. J. XXVIII, 72; C. A. Alex. 26 janv. 1912, B. L. J. XXIV, 418.) But, on the other hand, when the creditor has not declared his intention to discharge the original debtor there is no novation. The old debt is not extinguished; there is what is called imperfect delegation, by which is meant that the creditor accepts the obliga- tion of the new debtor without abandoning his claim against the old one: (C. A. Alex. 22 janv. 1914, B. L. J. XXVI, 167; C. A. Alex. 17 avril 1913, B. L. J. XXV, 320.) The creditor is in much the same position as if he had accepted a surety for the debt due to him. The two kinds of delegation are clearly distinguished in the Mohammedan law. (Kadri Pacha, Statut Reel, arts. 890—891.) The distinction between perfect delegation and imperfect dele- gation is important if the new debtor turns out to be insolvent. If in this case the delegation was perfect, the creditor has no recourse against the old debtor. Imperfect delegation is there- fore preferable from the point of view of the creditor, and it is in fact much more common than perfect delegation. (Planiol, 2, n. 554; Colin et Capitant, 2, p. 109.) Even when the delegation was perfect, and the delegate was insolvent or bankrupt already at the date of the delegation, the French Code allows the creditor a recourse. For it is reasonable to presume that in this case there must have been fraud or error. EXTINCTION OF OBLIGATIONS. 495 Who would voluntarily accept a bankrupt debtor? (C. C. F. 1276.) The Egyptian law is probably the same. Indication of person to pay or to receive payment. C. C. F. 1277 states two other cases in which there is no novation, though they resemble cases of delegation: The simple indication by the debtor of a person who is. to spay, in his plaoe, or the simple indication by the creditor of a person ivho is to receive in his place, does not effect novation. And the Quebec Code adds a third case: " or the transfer of a debt, with or without the acceptance of the debtor." (C. C. Q. 1174.) The presump- tion is that the person named by the debtor to make the payment is his agent who is to make the payment on his account. The mandate to make the payment can be revoked, and the creditor is certainly not presumed to accept the agent as his debtor and to discharge the principal. (Baudry-Lacant. et Barde, Oblig. 3, nos. 1745, 1754.) In like manner when the creditor names a person to receive payment for him, the presumption is that this is merely as the* creditor's agent. (See C. A. Alex. 13 mars 1913, B. L. J. XXV, 232.) Distinction between novation by change of creditor and assignment of a claim. There is considerable resemblance between novation by change of the creditor and the assignment of a claim. But the two things need to be carefully distinguished. The fundamental differences are: — (1) That novation extinguishes the old debt with its acces- sories, unless it is agreed that the securities shall pass to the new debt, whereas, in the assignment of a claim, the claim is trans- ferred with its accessories to the new creditor. In novation the new debt is not guaranteed by the securities which guaranteed the discharge of the original debt, unless that is the intention of the parties as resulting from the agreement or the circumstances of the case. (2) There is another difference, namely, that novation by change of the creditor requires the consent of the debtor, whereas an assignment of the debt can be made by the French law and, in Egypt, by the Mixed Code, without his consent. (B.-L. et Barde, 3, n. 1722; Demolombe, 28, nos. 272, 330; Colin et Capitant, 2, 496 THE LAW OF OBLIGATIONS. p. '102; Cass. 23 nov. 1898, D. 99. 1. 21; C. C. M. 251, 436; C. A. Alex. 20 mars 1913, B. L. J. XXIV, 203.) Bat under the Native Civil Code this difference between novation and assignment does not exist, because that code, following upon this point the Mohammedan law, requires the consent of the debtor in the case of assignment also. But this is without prejudice to the rules of commerce in regard to the assignment of commercial documents of title and instruments transferable by endorsement. (C. C. N. 349; Grandmoulin, Contrats, n. 240; Halton, 2, p. 87.) (4) Release. This is the fourth mode of extinction. In regard to release, or, as it is called in the French law, remise de la dctte, the modern civil law is much simpler than the Roman law on which it was based. In the Roman law there were many technicalities as to the form of release, but in our law all these subtleties have disappeared, and no special forms are required for release. (See Girard, Manuel, 5th ed. p. 712; Pothier, Oblig. n. 607.) By release is meant the gratuitous renunciation made by a creditor in favour of his debtor of the right to claim the whole or a part of the debt. There is no payment, or giving in payment, or substitution of a new debtor, there is simply an abandonment of the debt. It is true that in novation or compromise there is frequently the release of a debt as a part of the operation. But release, in the sense here intended, means a gratuitous' abandonment by the creditor of his right, and is, in fact, as Pothier calls it, a gift. {Oblig. to. 619.) Consequently, the release requires acceptance either express or J&ciL (B.-L. et Barde, 3, n. 1767; Laurent, 18, n. 337; Aubry et Rau, 5th ed. 4, p. 335. See, however, Larombiere, art. 1285, n. 10. Cf. C. A. Alex. 30 dec. 1913, B. L. J. XXVI, 118, Mohammedan law.) It is perhaps singular that although release is in truth a dona- tion, it is not subject to the conditions as to the formalities of gifts. But the true character of release as a gift is shown by the fact that although the forms of gifts are not required for its validity, it is subject to the rules which apply to gifts as regards the capacity to give and receive. (Baudry-Lacant. et Barde, Oblig. 3, 1769; Aubry et Rau, 5th ed. 4, p. 336; Colin et Capitant, 2, p. 124.) EXTINCTION OF OBLIGATIONS. 497 The articles on release in the Egyptian Code are as follows (C. C. E. 180—185/243—248;:- Au obligation is extinguished by a voluntary release made by the creditor, provided he has capacity to make a gift. A release granted to the debtor discharges his sureties. A release granted to one of several debtors jointly and severally liable is deemed to have been granted for his share and extin- guishes the liability as regards such share only. The rest of the debtors so jointly and severally liable can re- cover against the one to whom the release has been granted only his contribution to the share of those of them, if any, who are insolvent. A release granted to a surety is deemed to be granted in respect of his suretyship. If the undertaking of suretyship entered into by the surety to whom the release has been granted is not subsequent to that of other sureties for the same obligation, he remains liable to the recourse, if any, of such other sureties against him. Most of these articles need no commentary here. The question as to release in the case of the joint and several debt has been fully discussed under that head. (Supra, pp. 422 seq.) The articles upon release in the case of suretyship belong to the contract of suretyship. (See Halton, 2, p. 222; Grandmoulin, Suretes, n. 81.) Release may be tacit. So true is it that by our law no special form is required for the release of a debt that it may be inferred from the conduct of the parties. In the Egyptian Code these rules are given in the chapter on proof of obligations. The delivery to the debtor of the original document of title or of a copy endorsed for execution is proof of discharge. It is, nevertheless, open to the creditor to prove by witnesses that the document of title is in the hands of the debtor for some entirely different reason. (C. C. E. 219, 220/284, 285.) The release of an obligation may be made either expressly or tacitly by persons legally capable of alienating. It is made tacitly when the creditor voluntarily surrenders to his debtor the original title of the obligation unless there is proof of a contrary intention . So if the creditor holds a promissory note for the debt and he gives it back to the debtor without payment there is a presumption that he intends to release the debtor. But this is merely a pre- w. — vol. ii. 32 498 THE LAW OF OBLIGATIONS. sumption which may be rebutted by proof of a contrary intention. It may be proved that the note or other title to the debt had been given to the debtor to copy, or for some other purpose, or had been sent to him by mistake, or that he had got possession of it fraudu- lently. It is only the voluntary surrender by the creditor of the title which raises a presumption of intention to release the debt. By the French Code, if the original title to the debt is a private writing, and it is proved to have been voluntarily handed to the debtor, it is not competent to prove that this was for any other purpose than to extinguish the debt. (C. C. F. 1282.) If the document is found in the debtor's hands he does not need to prove that it came into his hands by the voluntary act of the creditor, for the presumption will be that this was so. It is quite excep- tional that a man should get possession of a document by error or theft, or in any other way than by its being voluntarily given to him. (Planiol, 2, n. 615; Baudry-Laeant. et Barde, Oblig. 3, n. 1781; Cass. 20 oct. 1890, D. 91. 1. 263.) But the creditor may prove by any means of proof that delivery to the debtor was not voluntary in this sense. For instance, when it is proved that the debtor had been the tutor of the creditor, and had after the termination of the tutorship continued to manage the business of the creditor, the fact that he is in possess! ion of the document of debt is easily explained. (Aubry et Rau, 5th ed. 4, p. 340; Req. 6 aout 1894, D. 95. 1. 165.) On the other hand, by the French law, if the original title is a notarial deed, the voluntary handing of the grosse or copy of the title raises a presumption of release, but a presumption which may be rebutted. (C. C. F. 1283; Cass. 7 janv. 1907, D. 1907. 1. 40.) In our law this distinction is not made. By C. C. F. 1286: The surrender of a thing given in pledge does not create a presumption of the release of the debt for which it ivas pledged. The pledge being merely a security, and acces- sory to the principal obligation, it is quite possible that the creditor gave back the pledge because he was satisfied with the personal security of the debtor. The Egyptian law is the same. The code says, a pledge is cancelled if the thing pledged returns into the possession of the pledgor. (C. C. E. 541/663.) But this does not affect the debt secured. By C. C. F. 1284; C. C. Q. 1183, the surrender of the original title of an obligation to one of joint and several debtors is available in favour of his co-debtors. Two reasons may be given for this: (1) That each of the joint and several debtors is the agent EXTINCTION OF OBLIGATIONS. 499 of them all for the purpose of ameliorating their condition, and (2) That by giving up the title of the debt to one of them, the creditor disarms himself as against the others, because he would need the title if he were to sue them. This second reason is so •conclusive that, probably, the presumption of release would exist also where the debtors were not joint and several but merely joint. (Baudry-Lacant. et Barde, Obiig. 3, n. 1800; Aubry et Rau, 5th ed. 4, p. 340.) The Egyptian law is no doubt the same. The tacit release goes further here than express release, because by the Egyptian law, express release is presumed to be only of the debtor's share. (C. C. E. 183/246.) This subject has been discussed fully under the head of joint .and several obligations. (Supra, pp. 422 seq.) (5) Compensation. Compensation is the fifth of the modes in which an obligation may be extinguished. Compensation is the balance struck between two debts which cancel each other either in whole or in part. It takes place when I owe you a sum of money and you owe me another sum. If I borrow L. E. 100 from you on Thursday, and on Saturday you buy from me goods for cash worth L. E. 100, then I no longer owe you the L. E. 100 for the loan. It has been wiped out by the debt which you owe me for the goods which you bought and did not pay for. Where the one debt cancels the other in this way automatically this is what is called legal compensation, and it is this form of compensation which is treated of in the Civil Code: Compensation is a mode of payment which takes place, by effect of law, even without the knowledge of the parties, when each, is both debtor and creditor of the other. Compensation operates up to the \amount of the smaller debt. (C. C. E. 192, 193/256, 257.) The French Code is to the same effect. (C. C. F. 1289, 1290 But, on careful examination, it will be found that there are in fact three varieties of compensation which are called by French writers legal, facultative, and judicial or reconventional. The first is that which takes place ipso jure, as in the illustration just mentioned; the second is that which occurs when there is some- 32 (2) 500 THE LAW OF OBLIGATIONS. thing to prevent legal compensation, but the obstacle is created by law solely in the interest of one party and ho chooses to waivei it, thus allowing the legal compensation to take place; and the third is that which takes place when in a litigation the judge compensates one claim with another, the claims not being of such a nature as to compensate each other without any judicial investi- gation and decision. (B.-L. et Barde, 3, n. 1807; Aubry et Rau, 5th ed. 4, p. 371.) Judicial compensation which occurs when tin' validity of a demande reconventionnelle is sustained belongs to the subject of procedure. (See C. C. Proc. E. 294/335; Lusena Bey, Elements de Procedure Civile et Commerciale, 1, p. 346; C. A. Alex. 9 fevr. 1899, B. L. J. XI, 125.) We need to speak only of legal and of facultative compensation. (a) Legal compensation. This comes into operation only where both obligations are for a liquidated amount, are due, and have for their object a sum of money or any other things of the like nature which, having regard to their kind and value, can be replaced by each other, and which are payable or deliverable in the same place. (C. C. E. 194/258: C. C. F. 1291.) These conditions will be more fully explained later. When the conditions stated exist, and the two debts are of equal amount, they are both extinguished without any agreement of parties or the judgment of a court. If I owe you L. E. 100. of which the payment is due, and, subsequently, you come to owe me L. E. 100, which is likewise payable, the two debts cancel each other and disappear. If we prefer to put it another way the one debt pays the other, for, as French lawyers say, compenser cest payer. And if, in the circumstances stated, my debt to you is of L. E. 100, and your debt to me is of L. E. 50. then my debt becomes automatically one of L. E. 50. Seeing that it is the law which declares that this effect shall be produced, the knowledge of the parties is not necessary, nor is it necessary that they should have capacity to contract. (Laurent, 18, n. 382; Planiol, 2, n. 579.) Can court declare compensation ex officio? In the French law there is a controversy as to whether the court has the duty of declaring ex officio that compensation has taken place. EXTINCTION OF OBLIGATIONS. 501 According to some authorities, the compensation is not allowed if the defendant has not taken the plea. (Aubry et Rau, 5th ed. 4, p. 396.) A recent decision of the Mixed Court of Appeal is in this sense. (C. A. Alex. 12 janv. 1915, B. L. J. XXVII, 109.) Obviously, the court cannot divine for itself that there is compensation. But when it is seized of demands by both parties, the better opinion seems to be that the court may find that compensation has taken place though the plea is not formally taken. (Demolombe, 28, n. 643; B.-L. et Barde, 3, n. 1861; Larombiere, art. 1290, n. 1; D. N. C. C. art. 1290, n. 2.) Compensation first pleaded in appeal. Compensation may be pleaded at any stage of the proceedings, and even on appeal, though the plea was not taken in the court below. (Demolombe, 28, n. 645; Aubry et Rau, 5th eel. 4, p. 396.) But it is only if the debt is truly liquid that it may be for the first time pleaded in compensation upon appeal, the plea not having been taken in the court below. S'il est vrai qiien principe la compensation est un moyen de liberation qui, comme le paiement, p&ut etre propose pour la premiere fois en degre d'appel, il n'est pas moins vrai que, lorsque la compensation implique au prealable la decision d'ime question qui pent, a elle seule, former Vobjet d'une action separee, il nest pas permis a une des parties de gctrder le silence en premier degre, et d'attendre pour la proposer que la cause soit portee devant la Cour, privant ainsi Vadversaire d'une des plus importantes garanties judiciaires. (C. A. Alex. 16 janv. 1916, B. L. J. XXIX, 151. See Cass. 5 nov. 1901, D. 1902. 1. 92.) What debts can be compensated. This legal compensation takes place only in regard to certain debts, and it is these which must now be examined. (1) The debts must be reciprocal. By this is meant that each of the parties must be creditor in one of two obligations, and debtor in the other in his personal character and as a principal. (See C. A. Alex. 4 fevr. 1903, B. L. J. XV, 132; C. A. Alex. 25 nov. 1915, B. L. J. XXVIII, 35; Cass. 5 nov. 1901, D. 1902. 1. 92; Cass. 7 fevr. 1905, D. 1905. 1. 432.) 502 THE LAW OF OBLIGATIONS. If a tutor brings an action in his quality, it cannot be pleaded that the debt is compensated by onie which the tutor owes as an individual. If an heir who has accepted a succession subject to benefit of inventory, sues a creditor of the succession for a debt due to him as an individual, it cannot be pleaded that the debt was compensated by a debt due by the succession to the defendant. (Baudry-Lacant. et Barde, Oblig. 3, n. 1810.) Similarly a debtor cannot set up compensation between the debt which he owes and a debt due by the creditor to a third party on whose behalf the debtor is entitled to act as agent. (C. A. Alex. 25 nov. 1915 y B. L. J. XXVIII, 35.) And, seeing that a partnership has a persona distinct from those of the individual partners, a debt due to the firm cannot be compensated with a debt due by a partner or vice versa. (Cass. 5 nov. 1901, D. 1902. 1. 92; Pand. Franc. Oblig. 5845.) So it has been held, Le creancier personnel d'un associe, meme en nom collectif, ne saw ait opposer une compensation a la societe. (C. A. Alex. 20 avril 1910, B. L. J. XXII, 275.) This principle that reciprocity between the two debts is neces- sary is illustrated in the law of suretyship. The surety may email himself of the compensation which takes place when the creditor owes the principal debtor. (C. C. F. 1294; C. C. E. 509/622; Grandmoulin, Suretes, n. 80. See C. C. E. 198/262.) But a principal debtor cannot set up in compensation that which is due to his surety. (C. C. E. 200/264.) A. co-debtor jointly and severally liable with others cannot set up in compensation that which is due to his co-debtors' ex- cepting to the extent of the share of the latter in the liability. (C. C. E. 201/265; C. C. F. 1294.) Here the first case is perfectly obvious. If the creditor incurs a debt to the principal debtor, the debt due by the principal debtor is to that extent wiped out. It would not be equitable that thereafter the creditor should continue to have a claim against the surety. The surety can say, "you have been paid by the principal debtor whose debt I guaranteed." The second case is a good illustration of the point under discussion. If the creditor incurs a debt to the surety, the principal debtor cannot say that his debt to the creditor has been thereby discharged. The debt which the surety owed to the creditor he did not owe as principal but as surety. His debt was conditional on the failure of the principal debtor to pay, and if compensation were allowed the EXTINCTION OF OBLIGATIONS. 503 effect of this would be to make the surety pay before his time had come, that is before the principal debtor had been tried aud found wanting. (B.-L. et Barde, 3, n. 1813; Demolombe, 28, n. 550.) The third case is that in which there are joint and several debtors. Here, if the creditor incurs a debt to one of the joint and several debtors, this does extinguish the debt to the extent of the share of the joint and several debtor, and this compensation can be pleaded by the other co-debtors. For the. joint and several debtors are, in a question with the creditor, all of them in the position of principal debtors. This case is not mentioned in the French article, and in the French law no compensation takes place even to the extent of the share of the co-debtor. (C. C. F. 1294; Baudry-Lacant. et Barde, Oblig. 2, nos. 1249, 1250. See supra, p. 420.) (2) The debts which are compensated must be of the same kind, or be fungible. The French writers express this by saying that the two debts must possess the character of fungibility. They must be both debts of money, or else both debts of a certain quantity of fungi- bles of the same kind. There can be no compensation between determinate specific things. One cannot set off a debt of a horse against a debt of another horse, or even a debt of a certain quantity of wheat of one quality against a debt of a certain quantity of wheat of a different quality, for these things are not fungible inter se. (See Req. 22 nov. 1899, D. 1900. 1. 14.) If com- pensation were to be allowed in such cases it would be compelling a creditor to receive in payment something different from that which he had stipulated for, and, according to the law, a creditor cannot be compelled to receive any other thing than the one due to him, although the thing offered be of greater value than the thing due. (C. C. F. 1243; C. C. E. 168/231. Supra, p. 451.) Under the French Code there is an exception of a limited kind. Where a debtor has promised to make payments or prestations of a certain quantity of grain or other produce which has a fixed market price officially determined on a certain date, such a debt may be compensated with money. But our law has nothing of this kind, and it is criticised by the French writers. (C. C. F, 1291; Baudry-Lacant. et Barde, Oblig. 3, n. 1828; Pothier, Oblig. n. 626.) 504 THE LAW OF OBLIGATIONS. (3) The two debts must both be demandable. The third requirement for compensation is that the two debts shall both be demandable, which means: (1) that both the debts shall be exigible in their character; and (2) that each of them is a debt which the creditor has the right to sue for at once. As to (1) the English version of the Egyptian codes is not very clear. In saying that the obligations must be "due," the code might mean merely that the date of payment must have arrived. But the French version says the debts must be exigibles. This is the word used in the corresponding article of the French Code. It clearly implies that the debt must be one the payment of which could be demanded by the creditor.. A natural obligation, for example, does not entitle the creditor to demand performance. It is not an exigible debt, though it may be "due," in the sense that the date fixed for payment has arrived. The French doctrine is in this sense. (B.-L. et Barde, 3, n. 1839; Aubry et Bau, 5th ed. 4, p. 377; Demolombe, 28, n. 536, 543.) The Egyptian law is without doubt the same. (De Hults, Rep. vo. Compensa- tion, n. 11.) ► As to (2), if one of the debts is not due for three months, and the other is actually due, compensation cannot take place between them, because this would be depriving the debtor of the benefit of the term or delay to which lie is entitled by the agreement or by law. But the creditor in whose favour the term exists can, if he chooses, waive the benefit of the term, and this will allow compensation to take place. For example, if I owe ypu L. E. 500 payable in three months without interest, and you incur a debt to me of the same amount, which is exigible now, I can insist that compensation shall take place between the two debts, if I choose to waive the delay. This is what is called facultative compensation and will be explained later. (B.-L. et Barde, 3, n. 1883; Cass. 25 nov. 1891, D. 92. 1. 296.) It does not apply where the term is in favour of both parties, in which case it cannot be waived without their joint consent. The term of a bill of exchange, for example, is of this kind'. {Vernier v. Kent, 1902, R. J. Q. 11 K. B. 373.) (4) The debts must be liquidated. The fourth condition of compensation is that the debts shall be liquidated — claires et liquides — and it is with regard to this EXTINCTION OF OBLIGATIONS. 505 matter that most of the difficulty arises. According to the old definition, a debt is liquid when it is certain that it is due and what is its amount — cum cerium est an et quantum debeatur. (Pothier, Oblig. n. 628.) Debt uncertain. Obviously one cannot set up in compensation a claim of which the very existence is disputed. This would be in effect to make the other pay at once a debt which he perhaps did not owe at all. (Pothier, Oblig. n. 628; Aubry et Rau, 5th ed. 4, p. 374; C. A. Alex. 10 dec. 1914, B. L. J. XXVII, 59; C. A. ALex. 16 mai 1918, B. L. J. XXX, 435; C. A. Alex. 20 mars 1913, B. L. J. XXV, 250.) The creditor of a liquid debt against whom there is set up in compensation a debt which, according to him, is subject to rescission, must bring the action for rescission. The plea has the effect of a mise en demeure. (Demolombe, 28, n. 545 ; Aubry et Rau, 5th ed. 4, p. 380. See C. A. Alex. 10 dec. 1914, B. L. J. XXVII, 59.) Debt not liquid. When the amount of the debt is disputed, and it cannot be ascertained without serious investigation, the debt is not liquid. (Cass. 7 fevr. 1905, D. 1905. 1. 432; C. A. Alex. 11 juin 1914, B. L. J. XXVI, 425; C. A. Alex. 17 mai 1916, B. L. J. XXVIII, 338; C. A. Alex. 20 mars 1913, B. L. J. XXV, 381; C. A. Alex. 4 mai 1904, B. L. J. XVI, 233; C. A. Alex. 12 fevr. 1908, B. L. J. XX, 84.) So it has been held that com- pensation ne peut avoir lieu lorsque la fixation dn montant de Vune dcs creances depend du resultat d"une expertise, et qu'en supposant quit appartienne au juge d'evaluer provisoirement ce montant, les elements d 'appreciation lid font df.faut. (C. A. Alex. 11 juin 1914, B. L. J. XXVI, 425.) But the law, at least in France, does not require that for com- pensation the debt should be absolutely determined or liquid. It is enough if it is capable of being liquidated promptly and sum- marily. As Pothier puts it, the party who opposes such a debt in compensation must have la preure a la main. (Oblig. n. 628; B.-L. et Barde, Oblig. 3, n. 1833, 1. See C. A. Alex. 16 janv. 1917, B. L. J. XXIX, 151.) This view is settled in the jurisprudence in France, though it is criticised by some writers as contrary to the text of the code. 506 THE LAW OF OBLIGATIONS. Laurent, for example, says: " The 'moment a liquidation is neces- sary, whether it is easy or not, the claim is not liquid. It will be so only after the liquidation; till then legal compensation is in- conceivable. In effect, to compensate is to pay. Now, how is it conceivable that the debtor should pay without knowing the amount of his debt? Legal compensation is impossible. The compensation can only be judicial, that is, it will come into existence only when the judge has decided what is the amount of the claim;' (18, n. 404.) But although there is a good deal of force in this criticism, the contrary view is settled in practice in France. (5) The debts must be payable in the same place. The Egyptian codes add another condition, viz., that the debts shall be both payable or deliverable in the same place. (C. C. E. 194/258.) This condition is extremely puzzling, and it looks very like a pure mistake. The rule as regards money-debts is that they are payable at the domicile of the debtor. If Zaki living in London owes L. E. 100 to Ahmed in Cairo, and Ahmed incurs a debt of the same amount to Zaki, what reason is there for npt allowing compensation? To apply strictly the words of the article would be to exclude compensation in a great number of cases where upon grounds of equity compensation ought to be allowed. The only possible objection to allowing it is that to pay Ahmed's debt in London instead of at Cairo may put him to some expense or cause him some loss. The French Code has an article in the following terms to provide for this: — When the tiro debts are not payable in the same place, com- pensation cannot be set up without allowing for the expenses of the remittance. (C. C. F. 1296; C. C. Q. 1193.) This is entirely reasonable. Ahmed in the illustration given, bargained to bo paid in Cairo. If he is paid in London he will lose the costs of the exchange between London and Cairo, or, in other words, the expense of sending the money from the one place to the other. But that is not sufficient reason for refusing altogether to allow compensation to operate. It is contended by some writers that the Egyptian legislator means only to reproduce the provi- sions of the French Code as to the payment of the costs of remit- tance. (Halton. 1, p. 387; Do Hults, Rep. vo. Compensation, EXTINCTION OF OBLIGATIONS. 507 11. 14.; If this be so, it must bo admitted that the Egyptian Code is expressed in a singularly unfortunate way. It must be pointed out that this payment of the costs of re- mittance may not always be a complete indemnity. The pari \ who relies on payment in a particular place may have made some arrangement to employ the money there and at once, and this arrangement may be defeated by the payment at another place. The German Code with good reason says that the party who invokes the compensation must make good the damage suffered by the other party (art. 391. See note by M. Saleillos to French Translation). Exceptional cases in which legal compensation is not permitted. When the conditions above explained are fulfilled, compensa- tion takes place whatever be the cause or consideration of the debts, or of either of them, except in the following cases: — (1) The demand in restitution of a thing of which the owner has been unjustly deprived; (2) The demand in restitution of a deposit of a sum of money or of a quantity of fungibles; (3) A debt which has for its object a thing not liable to seizure.. Two of these exceptions are stated in C. C. E. 195/259. Compensation does not operate where ivhat is owed on the one side is not a thing liable to seizure, or is the restitution of a deposit of a sum of money or of things which can be replaced by each other. (Cf. C. C. F. 1293; C. C. Q. 1190; German Code, 393; Swiss Code des Obligations, 125.) (1) The first of these exceptions is an application of the old maxim spoliatus ante omnia restituendus. (Pothier, Oblig. n. 625; Req. 24 avril 1903, D. 1904. 1. 115.) It is contra rv to public policy to allow a man who has a claim of any kind to enforce it by his own hands against opposition except in the casi where he is himself recapturing something which has been taken away from him wrongfully and by force. If he seizes the pro- perty of his debtor without judicial authority he is not allowed to keep it, although his claim may be a good one. He must first give back what he has improperly taken, and then, if he chooses, he may make his claim in a legal manner. And the same rule applies to cases in which the possession has been obtained by fraud or accident. If the thing of which the 508 THE LAW OF OBLIGATIONS. owner has been unjustly deprived is a specific thing — a corps certain — there could not in any case be compensation, because, as we have seen, compensation is only between debts of money or fungibles. And if a bag of money were stolen and the money left intact in the bag, this would still be a corps certain. The kind of case in which there might be compensation, but for the prohibition in this article, is the case where the spoliator had got possession of a sum of money and had consumed it, or mingled it with his own money so that it could no longer be identified. In such a case if he were sued for it he could not plead in compensation that the plaintiff owed him a debt. (Baudry- Lacant. et Barde, -Oblig. 3, n. 1854; Aubry et Rau, 5th ed. 4, p. 388; Demolombe, 28, nos. 588, 590.) The Egyptian Code omits this case, but it can hardly be doubted that the Egyptian law is the same as the French law upon this point. (See, however, De Hults, Rep. vo. Compensation, n. 25.) (2) The second rule, like the first, is a traditional rule of the French law. It is taken from the Roman law. In causa depositi compensation i locus non est, sed res ipsa reddendo, est. (Paul, Sentences, 2, 12. See Girard, Manuel, 5th ed. p. 708.) As Pothier says, it would not be necessary to state the rule in the case of a deposit of a corps certain, such as a box of (silver, or a bag of money sealed up and labelled. In such a case, there could not be compensation under the French law even without this article, upon the general principle that compensation does not apply to specific things. It could only be in the case of irregular deposit, that is, the form of deposit in which the depositary becomes the owner of the thing deposited subject to the obligation of returning an equivalent amount, that the rule here stated would apply. (Pothier, Oblig. n. 625. See Trib. Civ. de Saint-Omer, 6 dec. 1901, D. 1903. 2. 193, note 2; D. X. C. C. art. 1932, nos. 42 seq.) The Egyptian Code is upon this point more accurate than the French Code. The French article speaks of "deposit," generally, though it does not allow compensation between debts of corps certains, whereas the Egyptian article speaks only of a deposit of money or fungibles, that is of " irregular deposit." C. C. E. 195 259; C. C. F. 1293.) According to some French authorities the rule would apply to a deposit with a bank. The bank would not be entitled to com- pensate a debt due by its customer to the bank with a debt due by the bank to him, if the bank's debt is to restore money EXTINCTION OF OBLIGATIONS. 509 deposited by the customer. (Baudry-Lacant. et Barde, Oblig. 3, n. 1856. But the prevailing view seems to be against this, and rightly so. A deposit with a bank, although in popular language it bears the name of deposit, is in reality a kind of loan. The customer lends his money to the bank in order that the bank should make use of it and make it productive, and should return it to him on demand, or subject to certain conditions as to notice, etc. The money deposited becomes for the time being the property of the banker, and the claim of the customer against the banker is not a " demand in restitution," but is a simple claim for so much money. This being the true view of the matter, if the customer owes the banker a debt upon another account, it is obviously equitable that compensation should be allowed between the two debts. (Larombiere, on art. 1293, n. 3; Hue, 8, n. 160; D. N. C. C. art. 1293, n. 32; B.-L. et Wahl, Societe, etc., n. 1097, 1102, 1117; Panel. Franc. Oblig. n. 5911.) An opinion in this sense has been pronounced by the Court of King's Bench of Quebec. {Vernier v. Kent, 1902, R. J. Q. 11 K. B. 373.) Rule not necessary in case of loan for use. The French article adds here to the case of deposit the case of loan for use, and says compensation is not allowed in the case de la demande en restitution dVun depot et du pret a usage. (C. C. F. 1293.) Pothier limited the exception to deposit, and the French eodi- fiers were not well guided in adding loan for use. For loan for use is a loan of specific things and not of fungibles, and compen- sation therefore would be excluded in any case. (Larombiere, on art. 1293, n. 4; Baudry-Lacant. et Barde, Oblig. 3, n. 1856.) In saying that the depositary called upon to return the deposit cannot claim compensation with a debt due to him by the de- positor, it is not, of course, intended to exclude his right to retain the thing deposited until he has been paid the expenses incurred by him on account of the deposit, or any loss which the deposit may have caused to him. (Pothier, Oblig. n. 625; C. C. E. 488/596, 597: C. C. F. 1947, 1948; C. C. Q. 1812.) And as regards such claims as we have seen above, he can plead compensa- tion when the deposit is " irregular deposit." (Pothier, I.e.) 510 THE LAW OF OBLIGATIONS. Debt not liable to seizure. The third exception that compensation does not operate when one of the debts is not liable to seizure is given in the Egyptian Code in more general terms than in the French Code. The French Code speaks only of alimentary allowances. Certain pro- visions are by law alimentary and exempt from seizure. Such are alimentary allowances granted by the court. If this provision in the hands of the debtor is unseizable, the meaning of this is that it is not liable for his ordinary debts, and the object of the rule would be defeated if a creditor could take payment by way of compensation. (See Cass. 3 juill. 1912, D. 1913. 1. 110.) The Egyptian Code. applies the same principle to a "thing liable to seizure." This is an unhappy expression. If it were a specific thing compensation would be excluded by the preceding article. (C. C. E. 194/258.) The rule that compensation is prohibited when one of the debts is unseizable applies to pensions and other debts declared by law to be not subject to arrestment or so subject only up to a certain amount or upon certain conditions. (See C. C. Pro. 434/496; Lusena, Elements de Procedure Civile, 2, p. 73.) Up to the proportion specified by the law and subject to the conditions therein stated compensation is allowed. So, for example, if an Egyptian Government official were in arrears with his land-tax, the Government could not deduct the amount of his tax from his salary. But if the official owed the Government a debt arising out of the exercise of his official duties, they could make a deduction to the extent of one-fourth of his salary. (Decree of Feb. 25, 1890; Gelat, 2, p. 555.) Effects of legal compensation. When compensation takes place the position is the same as if the two debts had been paid. If the debts are of equal amount they are both entirely extinguished with their accessories, and interest ceases to run upon them. If they are of unequal amount the lesser one is extinguished, and it is only the balance of the greater one which remains due. There is one case in which this would do an injustice, viz., if the debts are not payable at the same place. And we have explained earlier how any injustice that might arise from this case is prevented. If we remember the rule compenser cest payer the consequences which follow from EXTINCTION OF OBLIGATIONS. 511 compensation are obvious. (Pothier, Oblig. n. 636; Demolombe, 28, n. 649; B.-L. et Barde, 3, n. 1864.) Imputation. Imputation takes place in the case of compensation in the same way as in the case of ordinary payment. (C. C. E. 196 — 260.) This is very simple. We have to suppose a debtor who owes two debts to the same creditor. The creditor then incurs a debt to him. With which of the twq debts does compensation take place? If John owes William two debts of L. E. 500 each, of which one is secured by a hypothec and bears interest, and the other is for rent or for goods sold, and William becomes debtor to John for L. E. 500, this do/bt will be compensated by pre- ference with the L. E. 500 which John owed on the loan secured by the hypothec, because it is more for his interest that this debt should be extinguished than the other. The French law is the same. (C. C. F. 1297; B.-L. et Barde, 3, n. 1864; Req. 3 mai 1860, D. 61. 1. 104; supra, p. 469.) The question to ask is which debt would have been extinguished, according to the rules of imputation, if John had paid L. E. 500? Compensation not to prejudice third parties. This matter is treated of in the Egyptian Code in these terms: A debtor who has consented to the assignment of a claim against him, which is subject to compensation, may no longer set up compensation as against the assignees; he can only enforce his original claim against the assignor. When a creditor has paid a debt against which he might have set up a claim in compensation, sureties, co-debtors jointly and severally liable, creditors with a privilege or hypothec ranking after the claim, and a third party,, owner of a .thing given in 'pledge to secure it, may always set up compensation, unless the creditor had, when paying the debt, goad grounds for being ignorant of the existence of the claim which he could have set up in compensation. (C. C. E. 197, 198/261, 262; C. C. F. 1295, 1299; C. C. Q. 1196, 1197.) If the debtor who had a right to plead compensation does not avail himself of his right, but pays the debt, the debt is extin- guished and the hypothecs or suretyships by which the debt was guaranteed fall of necessity to the ground. By paying the debt when he might have claimed compensation, the debtor is held 512 THE LAW OF OBLIGATIONS. to have renounced his right to that plea, and to have relied for payment of the debt due to him on the personal security of hie debtor. Kamel owes Zaky L. E. 100, and Zaky, likewise, owes Kamel L. E. 100, for which Ahmed is surety. Zaky demands payment from Kamel, and Kamel instead of pleading compensation, pays the debt. Kamel can now claim his debt from Zaky, but he cannot fall back upon Ahmed if Zaky does not pay. Ahmed can say, "you got payment if you had been sensible enough to take it." But this rule is subject to an equitable exception. That is when the plea of compensation was not taken in consequence of error, and because the debtor who might have taken the plea did not know that his creditor owed a debt to him, and his want of knowledge of this fact was excusable, or when, as the article says, he had good grounds for being ignorant of the existence of the claim . In that case when he sues for the debt due to him he can plead that, the privileges and hypothecs which attach to it are still in force. The classical illustration is this: I pay you a debt and I discover afterwards that you are debtor to a succession to which I have succeeded. At the time of my payment I was not informed that this succession had fallen to me. My ignorance is, therefore, excusable. If your debt to the succession was secured by hypothecs, etc., I am, in such a case, entitled to plead that these securities have not been extinguished by my failure to set up the compensation. (Pothier, Oblig. n. 639; Baudry-Lacant. et Barde, Oblig. 3, nos. 1870 seq. See Aubry et Eau, 5th ed. 4, p. 400, note 5.) Assignment. Another illustration of the rule that compensation is not to be allowed, to cause injustice to third parties who have acquired rights is in the case of assignment. This is stated in C. C. E. 197/261: A debtor who has consented to the assignment of a claim against him. which is subject to compensation, may no longer set up compensation as against the assignees, he can only enforce his original claim against the assignor. (See C. A. Alex. 15 mai 1913, B. L. J. XXV, 379; C. A. Alex. 20 mars 1912, B. L. J. XXIV, 203.) The French Code adds: — An assignment not accepted by the debtor, but of which due notification has been given to him. prevents compensation only EXTINCTION OF OBLIGATIONS. 513 of the debts due by the assignor posterior to such notification., (C. C. F. 1295.) This is another case of tacit renunciation of the right to claim' compensation. By accepting the- transfer purely and simply, that is, without making any reservation of his rights, the debtor agrees to become debtor to the new creditor, and the new creditor ia entitled to look to him for payment. If the debtor is going to claim that he does not owe the debt or some part of it, this is the moment for him to say so. If he does not say so now it will be too late for him afterwards to maintain that he did not owe the debt, because it was compensated with a debt which the old creditor owed to him. But this result is not produced unless there is an express acceptance on his part of the assignation. The mere signification to the debtor of the assignment does not prevent him from pleading that his debt is compensated in whole or in part by one which the old creditor owed to him before the signification. The signification, however, even without accept- ance does, by the Mixed Civil Code as by the French Code, produce this effect, that it prevents the compensation between his debt and a debt which the assignor incurs to him after the signi- fication. (C. C. M. 263.) By the Native Code an assignment always needs the consent of the debtor. (C. C. E. 349/436. See Halton, 2, p. 88.) Arrestment. An arrestment burs a compensation which could not have come into operation until subsequently thereto. (C. C. E. 199/263; C. C. F. 1298.) After the arrestment the tiers-saisi is not entitled to pay the debt to the creditor. He holds it for the arrestor. If he were to compensate it with a debt subsequently incurred by the creditor to him this would be in reality a payment to the creditor. (B.-L. et Barde, 3, n. 1844; Laurent, 18, n. 429.) Bankruptcy. If after the bankruptcy of a trader one of his debtors acquires a .claim against him, there cannot be compensation between these debts. For, after the declaration of bankruptcy, all the creditors of the bankrupt must be treated equally and paid proportionately. To allow one of them to pay himself by compensation would be to give him a preference over the other creditors. Accordingly, the debtor of the bankrupt must pay his debt in full to the syndic, and, as regards his claim against the bankrupt, he must w. — vol. ii. 33 514 THE LAW OF OBLIGATIONS. present it, like other creditors, and take the dividend to which he is entitled. (B.-L. et Barde, 3, n. 1845; Lyon-Caen et Renault, Traite de Droit Commercial, 4eme ed. 7, n. 216; Thaller, Traite Elem. de Droit Commercial, 4th ed. n. 1984; Cass. 22 oct. 1907, D. 1907. 1. 508; C. A. Alex. 26 nov. 1913, Gaz. Trib. IV, p. 38, n. 89; C. A. Alex. 1 mare 1917, B. L. J. XXIX, 267.) But this rule does not apply when the two debts both form part of a current account between the parties. (C. A. Alex. 26 nov. 1913, B. L. J. XXVI, 48. Cf. C. A. Alex. 25 fevr. 1914, B. L. J. XXVI, 253.) The details belong to the commercial law. (See C. A. Alex. 25 fevr. 1914, Gaz. Trib. IV, p. 105, n. 255.) Right to renounce compensation. Where there are no rights of third parties in question it is hardly open to doubt that the parties may, if they choose, renounce a compensation which has taken place, and leave the two debts to be enforced independently the one of the other. Renunciation not being presumed, it will have to be clearly established. But that express renunciation is permissible would seem to be sufficiently clearly shown by the fact that the code itself states, as we have seen, two cases of tacit renunciation, viz., those given in C. C. E. 197, 198/261, 262; C. C. F. 1295, 1299. (Baudry- Lacant. et Barde, Oblig. 3, n. 1867.) The question whether a person may renounce beforehand the right to plead compensation has been doubted, and it has been argued that it was a matter of public order that parties should not deprive themselves of this right. In support of this argument reliance has been placed on the rule that prescription cannot be renounced by anticipation. (C. C. E. 80/108.) But the two things are not really analogous. If it were possible to renounce by anticipation the extinctive prescription of debts, lenders of money would, as a matter of course, insist that their debtors should become bound for ever. This would be extremely against public policy. In the case of compensation it is difficult to see that any public policy is involved. The prevailing opinion is that the right to plead compensation may be renounced by anticipation. (B.-L. et Barde, 3, n. 1881; Aubry et Rau, 5th ed. 4, p. 394; D. N. C. G. art. 1293, n. 87.* Contra, Toullier, 7, n. 393.) EXTINCTION OF OBLIGATIONS. 515 (b) Facultative compensation. When compensation by the sole operation of law is prevented by any cause, the party in whose favour alone the cause of objection exists may demand the compensation. And in such a case the compensation takes place from the time of pleading the exception only. Thus, if John owes William a debt which is not exigible for three months, and William incurs a debt to John of the same amount, the two debts are not compensated by operation of law, because they are not equally liquidated and demandable. But if John chooses to regard the debt which he does not owe for three months as being already due, and if the term which has been fixed is merely a delay in his favour, he is allowed to waive it and compensation can take place. So if the person who has been wrongfully despoiled of his thing, or if the depositor, or the person whose claim is unseizable, chooses to waive his right to prevent compensation there is no reason why he should not 'be allowed to do so. (Demolombe, 28, n. 656; B.-L. et Barde, 3, n. 1883; Aubry et Rau, 5th ed. 4, p. 371.) It would seem that it is only a debtor whose debt is equal to or greater than the debt which is due to him who can set up this kind of compensation. For, otherwise, we should be allowing a debtor to make a part-payment of his debt, which is contrary to the general principle of the law. (C. C. E. 168/231; C. C. F. 1244.) It is true that the law allows this in the case of legal compensation. (O. C. E. 193/257;' C. C. F. 1290.) But this requires an express provision, and no such provision as to facultative compensation is found in the code. (Demolombe, 28, n. 664; B.-L. et Barde, 3, n. 1884. Contra, Larombiere, on art. 1293, n. 14.) Compensation in other laws. The Swiss and the German codes do not admit legal compen- sation operating automatically. There must he a declaration made by the party invoking compensation. And, under both these codes it is not necessary that the debt should be liquidated in order to be set up in a compensation. (Code Fed. Oblig. 120 — 126; German Code, 387—396.) Under the English law there is, likewise, no such tiling as legal compensation. But if a defendant pleads a set-off or counter- claim, the court may take account of the set-off. But the court has discretion on the application of the plaintiff to refuse the 33 (2) 516 THE LAW OF OBLIGATIONS. defendanl permission to plead the set-off. (See Leake, Contracts, 6th ed. 735.) (6) Confusion. Confusion is the sixth mode of extinction of obligations. ( onfusion is the uniting in one and the same person of the two capacities of principal debtor and creditor of the same debt, whereby both capacities become extinguished. Sureties are dis- charged by confusion; co-debtors are only discharged in respect of the contributive share of the debtor in whose person confusion has taken place. (C. C. E. 202, 203/266, 267.) The Quebec Code adds: The confusion which takes place by the concurrence of the qualities of surety and creditor or of surety a)id principal debtor does not extinguish the principal obligation. (C. C. Q. 1199. Cf. C. C. F. 1301.) In these articles of the Egyptian Code there are a few verbal changes, correcting the language of C. C. F. 1300 — 1301, but the French law is the same as ours. The French Code says that when confusion takes place the two debts are extinguished, but this is evidently a mistake. In confusion there is no question of two debts, as in the case of compensation, and, therefore, it is more correct to say, as the Egyptian Code does, that the capacities of the creditor and debtor are extinguished, or, as the Quebec Code says, that confusion extinguishes the obligation, instead of the two obligations. (C. C. Q. 1198; Demolombe, 28, n. 697; B.-L. et Barde, 3, n. 1897. See Paris, 5 nov. 1901, D. 1902. 2. 89.) Every obligation presupposes two parties, a creditor and a debtor. As soon as it comes about in any way that these two parties become one and the Bame person, the obligation comes to an end by confusion, or, at any rate, the right to sue is paralysed. A man cannot sue himself. One cannot be one's own debtor. This principle is of universal application and extends to real as well as to personal rights. The moment a man becomes the owner of a thing in which 'lie had previously a real right of a lesser kind, the lesser right is swallowed up in the greater right of property, or is confused with it. For example, if I hold a watch as a pledge, and I afterwards become the owner of the watch, my previous right of pledge is extinguished. A thing cannot be pledged to its owner. If I have a hypothec over a house, and I become owner cf the house, the hypothec comes to an end, or is paralysed. Aubrv et Ran. 5th ed. ■">. p. 812; B.-L. el de Loynes, Privileges EXTINCTION OF OBLIGATIONS. 517 et Hypotheques, 3, n. 2253; C. A. Alex. 30 nov. 1915, B. L. J . XXVIII, 32.) Likewise, if I have a right of way over a field, and I become owner of the field, the right of way is extinguished:, In regard to servitudes the rule is laid down expressly in the French Code. (C. C. F. 705.) Every servitude is extinguished when the land to which it is due and that which owes it are united in the same person by right of ownership. And the same prin- ciple applies to usufruct, in which case the term consolidation is commonly employed instead of confusion. (C. C. F. 617; B.-L. et Chauveau, Biens, n. 737.) It is the same also with obligations of a personal kind. Che debt is not extinguished in the same sense as it would be by payment, or by compensation, or novation. It would be more correct to say that the obligation is paralysed, for the reason that, while the debtor and creditor are one and the same person, its execution is impossible. But the debt still exists. One conse- quence of this fact will be referred to later in speaking of the case of the surety. (Baudry-Lacant. et Barde, Oblig. 3, n. 1905; Demolombe, 28, n. 715; infra, p. 519.) Confusion usually caused by succession. When confusion of two obligations takes place this is almost invariably due to succession, and to the fact that the creditor becomes the heir or universal legatee of the debtor, or vice versa. And, for this reason, confusion is less important in our law than it is in the French law, because, as will be explained later, when the succession is regulated by Mohammedan law, no confusion takes place. What follows applies only to successions governed by the French law, or by some laAv which agrees with it on this point. For instance, a man makes a gift of an immoveable to his son subject to the payment of certain annual charges. On the death of the son, the father accepts his succession ^impli- cit rr. He succeeds to the immoveable, but the son's widow has the usufruct. The father cannot claim payment of the charges from the widow; they formed a debt due by the son, and the father as the son's heir is liable to pay his debts, and, therefore, he would be both debtor and creditor. It is only to the extent of the impossibility of enforcing payment of the debt that confusion takes place. If my father owes me L. E. 1,000, and he leaves me all his estate, or he dies intestate and I am his sole heir, and I accept his succession without benefit of inventory, the debt is 518 THE LAW OF OBLIGATIONS. extinguished by confusion. If I succeed to half his estate then half the debt, that is, in this case, L. E. 500, is so extinguished, because by taking- half the estate I become liable for half the liabilities. (C. C. F. 873, 1220; Aubry et Rau, 5th ed. 4, p. 405.") But the confusion ceases to exist if, after his acceptance of the succession, the heir is successful in challenging his accept- ance on the ground of fraud, fear, or violence, or if a minor, on the ground of lesion. (C. C. F. 783.) And the confusion is likewise ended if the heir who has accepted it is excluded from the succession as unworthy. (C. C. F. 727—729.) And the same result would folloAv if the will which created the confusion were set aside upon any legal ground. (Bauclry-Lacant. et Barde, Oblig. 3, n. 1914.) In all these cases the rule applies which is stated in C. C. Q. 1198: — In certain cases when confusion ceases to exist its effects cease also. (Planiol, 2, n. 602: B.-L. et Barde, 3, n. 1914; Demolombe, 28, n. 740.) No confusion when benefit of inventory. - Confusion occurs only when the heir accepts purely and simply. The object of benefit of inventory -is precisely to prevent the confusion of the property of the deceased with that of the heir or legatee. The estate of the succession is to be applied 'first in payment of debts. So, if my father dies owing me L. E. 1,000, and I am the sole heir, and I accept, .subject to benefit of inventory, I am entitled to claim payment of the L. E. 1,000 if his estate is solvent. If it is not solvent, I rank equally with other creditors for such a proportionate share as the estate can pay. There is no con- fusion, for I remain always in the same position as a stranger to whom my father owed L. E. 1,000. I never become debtor to myself. (C. C. F. 802: Aubry et Rau, 5th ed. 9, p. 572. and p. 588.) Extinction of principal debt by confusion extinguishes accessory debt. The Egyptian Code says: Sureties are discharged by confu- sion. C. C. E. 203 267/ This is less clear than the French article: La. confusion qui s'opere dans Ja personne du debiteiir EXTINCTION OF OBLIGATIONS. 519 principal, profile a ses cautions; celle qui s'opere dans la personne de la caution, rientraine point V extinction ck Vobligatixm prin- cipal. (C. C. F. 1301.) If the principal debt is extinguished by confusion, the accessory debt of a surety necessarily falls to the ground, for, otherwise, the surety who had paid the debt would have a recourse against the principal debtor, to whom in his new character of creditor the debt has been paid. For example, Kamel owes Zaky L. E. 100, and Ahmed is surety for the debt; Zaky dies and leaves Kamel as his heir. Kamel is now debtor in the L. E. 100 in his individual quality, and creditor for the same amount in his quality as Zaky's heir. If Kamel as heir were to sue Ahmed, Ahmed could plead that the debt was extinguished by confusion. If Ahmed paid Kamel in his quality of heir, he would have an action in recourse against him in his individual quality as- the principal debtor. If the surety succeeds to the principal debtor, or conversely, tho accessory obligation is extinguished, because a man cannot be surety for his own debt. (B.-L. et Barde, 3, n. 1907; Deimo- lombe, 28, n. 724.) But as the French Code states in another place, if the obligation of the surety is itself secured by some one who is the surety of the surety, the confusion which takes place in the person of the principal debtor and the surety does not destroy the action of the creditor against the surety of such surety. (C. C. F. 2035.) This supports the doctrine that the effect of confusion is not actually to extinguish the obligation but merely to paralyse it. If it were extinguished altogether the accessory obligation of the surety would necessarily fall. But it appears by this article that the obligation of the surety is not extinguished; it survives for the purpose of acting as a support for the obligation of the sub- surety. (Baudry-Lacant. et Barde, 06%. 3, n. 1910; Demo- lombe, 28, n. 735.) And another confirmation of this view is found in the article which says, co-debtors are only discharged in respect of the contributive share of the debtor in whose person confusion has taken place. (C. C. E. 203/267 : ; C. C. F. 1301.) When there are joint and several debtors, and confusion takes place between one of them and the creditor, this extinguishes only the part of the debt for which that co-debtor was liable. If confusion were regarded as a complete extinction of the debt, like payment, all the debtors would be liberated. For 520 THE LAW OF OBLIGATIONS. instance, Kamel, Zaky and Ahmed are joint and several debtors to Aly in a debt of L. E. 3,000. Aly dies and Kamel is his heir. Kamel as heir can sue Zaky and Ahmed, but only for L. E. 2,000. If he sued one of them— say Zaky— for L. E. 3,000, and Zaky paid it, Zaky would have a recourse against him for L. E. 1,000, namely, Kamel's share, and, accordingly, the principle applies: Qui doit garcmtir ne peut evincer. (B.-L. et Barde, 3, n. 1908; Demolombe, 28, n. 729.) French law as to confusion does not apply in the case of Mohammedan successions. In regard to the liability of .the heir for the debts of the deceased, there is an important difference between the Mohammedan law and the French law. Seeing that succession is in Egypt governed by the personal statute, the question whether there is confusion between the estate of the heir and the estate of the deceased is a question which must be answered by the personal law applicable. If the succession is to a French national, the French rules as to confusion will apply. And in other cases, if the succession is to a foreigner, not being a Mohammedan, and the heir by his personal statute is personally bound to pay the debts, this per- sonal law will govern the case. But when the succession is to a Mohammedan no confusion takes place. According to the French law, the fundamental rule is that the heir who accepts the succession without benefit of inventory continues the personality of the deceased. (Planiol, 3, n. 1780, bis; Aubry et Rau, 5th ed. 9, p. 373. See, for the history of this rule in the French law and for a criticism of it, articles by M. Saleilles in Bulletin de la Societe d 'etudes legisla- tives, 1910, p. 296, and 1911, p. 56, and the discussions as to reform in the same volume, 1910, p. 69, and 1911, p. 25.) The heir succeeds to the assets and is liable to pay the debts. There is complete confusion between his patrimony and that of the deceased. But the heir can avoid this result by accepting the succession only subject to benefit of inventory. (Planiol, 2, n. 600; Aubry et Rau, 5th ed. 9, p. 588.) In the Mohammedan law all this is different. According to that law, there is complete separation between the estate of the deceased and the estate of the heirs. EXTINCTION OF OBLIGATIONS. 521 Before any division is made of the estate of the deceased it is necessary to pay the debts, and if, owing to creditors not sending in their claims, or otherwise, the distribution takes place while there are debts still outstanding, each heir is liable to each creditor of his ancestor to the extent of the assets which have come into his hands for a share of the debts proportionate to his share of the succession. But the liability of the heir is limited to what he has received. He is by law in the same position as the French heir who has accepted, subject to the benefit of inventory, and, therefore, no confusion takes place. (See Mohammedan Personal Laiv, Kadri Pacha, trans. Sterry and Abcarius, sect. 583, and p. 172; Ibn Abdeen, v. 4, p , 471, in fine ; Statut Reel, sect. 94; Native Code oi£ Appeal, 20 nov. 1906, Mizaan al Eitedaal, 4th year, p. 41; article by Abdel Hamid Badawy, Bey, Du principe qu'en droit Musid- man la succession n'est ouverte qiiapres acquittement des dettes, VEgifpte Contemporaine, 1914, p. 14, 21, 23, 30, and appendice, p. 40; Wilson, Digest of Anglo-Mohammedan Law, 4th ed. p. 224; C. A. Alex. 14fevr. 1900, B. L. J. XII, 130.) • (7) Prescription. Acquisitive prescription and extinctive prescription. This is the seventh and last of the modes of extinction of obligations enumerated in the Egyptian codes. • Prescription in the modern law has two senses which require to be carefully distinguished from -one another. It is either: — (1) A means of acquiring ownership or real rights by posses- sion, provided the possession has certain characters; or (2) A means of extinguishing an obligation by the inaction of the creditor for a certain time fixed by the law . The first is called acquisitive or positive prescription, and the second extinctive or negative prescription. In the French Code these two kinds of prescription are treated of in the same title, and there are some conveniences in this, because there are a number of rules which apply to both kinds of prescription. (Arts. 2219—2281.) The Egyptian Code has a different and more logical arrange- ment. It deals with positive prescription in a section by itself as one of the modes of acquiring ownership and real rights. (C. C. N. 76—87; C. C. M. 102—116.) It has another section devoted to extinctive prescription in the chapter which enumerates and 522 THE LAW OF OBLIGATIONS. explains the various modes of extinction of obligation . (C. C. N. 204—213; C. C. M. 268—277.) Some French authors adopt this arrangement of treating of extinctive prescription in a separate place from acquisitive prescription. (Pothier, Ohlig. n. 678; Aubry et Rau, 5th ed. 2, p. 475; Colin et Capitant, 2, p. 142.) It would greatly conduce to clearness if the term prescription were confined to extinctive prescription, and if some other term, such as usucapion, were used instead of acquisitive prescription. Law of prescription based upon public policy. The rules both of acquisitive and extinctive prescription are founded upon considerations of public j)olicy. The principle that a creditor who fails to bring an action to enforce his right within a certain period fixed by law cannot succeed in his action, if the debtor takes the plea of prescription, is a principle which rests upon the same considerations of public policy as those upon which acquisitive prescription is based. For the sake of the general peace, and to prevent dishonest actions, the law provides that after a certain length of time obligations shall not be enforceable if the objection is taken that the right has prescribed. Documents may be lost, witnesses may be dead, or the recollection of events long past may have become dim. But for the rule of extinctive prescription or, as it is well called in the English law, the rule of " limitation of actions," it would in many cases be impossible to defend oneself against an action laid on facts alleged to have happened long ago. (Pothier, Obli- gations, n. 679; B.-L. et Tissier, Prescription, 3rd ed. n. 27.) It is for these reasons that the law comes to the aid of the debtor by creating a presumption of payment. When the time fixed by law for prescription has expired the obligation is extinguished and a presumption, of discharge created, if the debtor invokes prescription. (C. C. E. 204/268; C. C. F. 2219.) Full explanation of acquisitive prescription belongs to law of property. This is not the place for a full discussion of the law of acquisitive prescription. It has seemed convenient to state in general terms its nature and effects, because it is important to bring out the fact that acquisitive prescription and extinctive prescription rest upon the same foundation of public policy, and many of the rules EXTINCTION OF OBLIGATIONS. 52$ which apply to one of them apply to the other also. They may both be said to illustrate the very broad rule that the law helps those who help themselves, or, as it is expressed in the old broeard,. vigilantibus non dormientibus jura subveniunt. Rules common to acquisitive and extinctive prescription. The Egyptian Code says: The rules of acquisitive prescrip- tion concerning the causes of interruption and suspension are also applicable to extinctive prescription. (C. C. E. 205/269.) But these are not the only rules which are similar in both cases. The rules with regard to renunciation of prescription and to the mode of calculation of the prescriptive period are the same. It may be convenient to consider first these general rules which apply to- both kinds of prescription before taking up extinctive prescrip- tion specially. The delays of prescription. The delays fixed in the Egyptian codes are taken from the Mohammedan law, and are, in general, shorter than those of the French law. Long prescription. Subject to the exceptions hereinafter mentioned, and those specified by the law in particular cases, the term of prescription for obligations is fifteen years. (C. C. E. 208/272.) The maximum delay of prescription is fifteen years, except in regard to ivalcfs and successions, in which cases there is a long? prescription of thirty-three years. (JReglmwnt sur les Mehkemehs of July 3rd, 1910, hi, n. 31, s. 376; Kadri Pacha, Statut Reel r arts. 151 in fine, 152. See C. A. Alex. 23 fevr. 1905, B. L. J. XVII, 123; C. A. Alex. 30 mars 1899, B. L. J. XI, 172; C. A. Alex. 24 dec. 1914, B. L. J. XXVII, 84; C. A. Alex. 17 avril 1913, B. L. J. XXV, 310.) This long prescription in regard to wakfs is for their benefit. It cannot be invoked against them by a creditor. (C. A. Alex. 15 janv. 1914, B. L. J. XXVI, 134.) The fifteen years' prescription of the Egyptian Code corresponds- to the thirty years' prescription of the French Code. It is taken from the Mohammedan law. (Kadri Pacha, Statut Reel, art. 256.) The public policy here is mainly to prevent contests which. arise long after the obligation was formed. The reason for the extinctive prescription is much the same as 521 THE LAW OF OBLIGATIONS. that for the acquisitive prescription. The creditor who has remained inactive for so long a period is regarded as having lost his right. There is a presumption of payment. (C. C. E. 204/268; C. C. F. 2219.) Prescription of five years. The term of prescription for rents, instalments, allowances for maintenance, payments for hire and interest, and, in general, any sums payable by the year or at shorter recurring intervals, is five years, reckoned according to the Arab calendar. (C. C. E. 211/275.) This prescription applies only to regular payments of a fixed sum at periodical intervals. The courts insist on the two qualities of regularity and periodicity. (Laurent, 32, n. 435; B.-L. et Tissier, Prescription, n. 773, and n. 786; Req. 20 fevr. 1911, D. 1913. 1. 364. See Riom, 17 avril 1907, D. 1907. 2. 376.) The prescription is taken from the French law. (C. C. F. 2277.) The motive of public policy which underlies it is not quite the same as in the long prescription. It is based not so much upon the presumption of payment as upon the principle that periodical payments of this kind are expected to be met out of revenue. If the creditor is so negligent as not to sue for them for five years it would not be fair to compel the debtor to pay what might be a large capital sum. It is not so much that the law presumes the creditor has been paid as that it punishes him for his negligence. (B.-L. et Tissier, Prescription, n. 768. See C. A. Alex. 12 dec. 1889, B. L. J. II, 209.) Even a debtor who admits that he has not paid the debt may, nevertheless, invoke this prescription. (B.-L. et Tissier, op. cit. n. 769; Rouen, 11 aout 1890, D. 91. 5. 407; C. A. Alex. 3 janv. 1895, B.L.J. VII, 73.) Restitution of fruits not governed by five years' prescription. The possessor in bad faith called upon to restore the property together with the fruits or revenues which he had received during his possession cannot plead that he is bound only to restore the fruits of the last five years. If his possession has co t ntinued for fifteen years or more he must account for the fruits for fifteen years. Upon this point the Egyptian courts adopt the rule which has been followed in France. (C. A. Alex. 20 mai 1897, B.L.J. EXTINCTION OF OBLIGATIONS. 525 IX, 357; C. A. Alex. 27 janv. 1892, B. L. J. IV, 80; C. A. 27 mars 1912, O. B. XIII, n. 92; B.-L. et Tissier, Prescription, 3rd ed. n. 791; Aubry et Rau, 5th cd. 2, p. 568; Cass. 21 juiu 1897, D. 98. 1. 35; D. N. C. C. art. 2277, nos. 213, 214. Centra, C. A. 22 dec. 1910, 0. B. XII, n. 50.) There is no reason why the possessor in bad faith should be allowed the benefit of the five years' prescription. His obligation to restore the fruits is ancillary to his obligation to restore the property itself. He never ought to have received any of the fruits, and he was aware of this fact. He must restore every piastre which he has received simply because he never ought to have got anything. He must restore the fruits in a lump sum, and it is a mere accident that he has received them annually. There is no analogy between his duty to restore the fruits and the payment of a sum payable by the year, to which alone the five years' prescription applies. Accordingly, the Mixed Court of Appeal has held that the term of prescription for rents is established for the benefit of the lessee, and has no application to a case in which rents have been received by a person who was not entitled to them. (C. A. Alex. 25 mai 1905, B. L. J. XVII, 298.) It is true that in one case the Native Court of Appeal pro- nounced a decision in the contrary sense. The court held that the object of this prescription was to penalise the negligence of the creditor and to prevent the debtor from being unduly im- poverished. They held that the claims for the fruits of property wrongfully detained fell within the application of these principles, and were therefore prescribed after five years. (C. A. 23 dec. 1910, O. B. XII, n. 50.) But this decision must be considered as erroneous, and as overruled by the later decision of the same court. (C. A. 27 mars 1912, O. B. XIII, n. 92, p. 68.) The five years' prescription applies to moratory interest. It is now the generally accepted view in France that moratory interest which the law fixes as the damages for non-performance of a money-debt, is governed no less than conventional interest by this rule and prescribes in five years. (B.-L. et Tissier, Pre- scription, 3rd ed. n. 785; D. N. C. C. art. 2277, n. 96.) The language of the article under discussion in the Egyptian codes is intended to express the same law. In so far as it differs from the words of the French article, it is if anything 1 more 526 THE LAW OF OBLIGATIONS. favourable to the construction which would make it cover mora- tory interest, for the Egyptian Code speaks of " payments for interest " generally, whereas the French article refers only to les interets des sommies pretees. (C. C. E. 211/275.) In France, the point has been disputed, and there are old French decisions in support of the view that moratory interest prescribes only by the long period of prescription. (D. Rep. Prescription Civile, n. 1080.) This view was taken in one case in Egypt by the Mixed Court of Appeal. (C. A. Alex. 7 mai 1890, B. L. J. II, 286.) In favour of this opinion the following arguments are used: — (1) The articles do not refer to moratory interest, and the word "interest" must be construed narrowly as referring only to con- ventional interest. The cases to which the five years' prescription applies are all exceptions to the general rule, and, according to the ordinary canon of interpretation, we must not extend by analogy the number of exceptions. (2) If we say that although the word " interest " does not cover moratory interest this is immaterial, because moratory interest is covered by the subsequent words: "in general any sums payable oy the year or at shorter recurring intervals." The answer is that this is not so. If a defendant is condemned to pay a capital sum, plus the interest for all the years during which he has been in delay, how can we say that this interest is a sum payable by the year? It is paid as a lump sum together with the capital. In fact, moratory interest is seldom paid in any other way than this. (3) Moratory interest is, as a matter of fact, not interest at all in the strict sense of the term. When we say that a man is liable to pay moratory interest, what we actually mean is that he is liable to pay damages which are to be calculated in a certain way prescribed by the law. What is called " interest " is in reality ■damages for the non-execution of the contract. (D. Rep. vo. Prescription Civile, n. 1080; Duranton, 21, n. 434; D. N. C. C. art. 2277, n. 95.) These arguments are not without considerable force, but on the whole the sounder view appears to be that the articles intend to cover moratory interest. The reasons which have prevailed in France are: — (1) The policy of the law in introducing a short prescription for such payments is to prevent the debtor from being ruined by the accumulation of interest added each year to the capital. And EXTINCTION OF OBLIGATIONS. 527 it was also intended to penalise a creditor who negligently or intentionally delayed for a long period to claim payment of his debt. These reasons apply just as fully to moratory interest as to conventional interest. (2) Although in practice moratory interest is generally paid in a lump sum, it is nevertheless true that moratory interest accrues from year to year, and that each year's interest is a separate sum, the right to which is not acquired by the creditor until the end of the year. The creditor would have a perfect right to sue for payment of the moratory interest for each year without suing for the capital. The true rule is that every accessory debt which accrues periodi- cally to the principal debt is subject to this prescription. It seems therefore that the Egyptian courts should follow what is now the prevailing opinion on the subject in the French law. (Rennes, 12 fevr. 1880, D. 80. 2. 221; B.-L. et Tissier, Pre- scription, 3rd ed. n. 785; Colmet de Santerre, 8, n. 385, bis II; Aubry et Rau, 4th ed. 8, p. 436; Colin et Capitant, 2, p. 145; D. N. C. C. art. 2277, n. 96; De Hults, Rep. vo. Prescription, n. 186.) Prescription of 360 days. The term of prescription is three hundred and sixty days for sums due to physicians, advocates and engineers for their fees, to tradesmen far goods supplied to private persons, to teachers and instructors for money owing by their pupils, and to domestic servants for their wages, even though new debts of the same nature have arisen during such three hundred and sixty days. The term of prescription for sums due to bailiffs and registrars far the cost? of legal documents is likewise three hundred and sixty days, running from the termination of the proceedings in which such documents have been prepared, or, if no proceedings have been commenced, from the drawing up of the documents. (C. C. E. 209, 210/273, 274.) This prescription corresponds roughly with some of the short prescriptions of the French Code, but the periods in the French Code are not the same in all these cases. (C. C. F. 2271 — 2272.) The prescription here is based upon presumption of payment. Obligations of this kind are commonly contracted without writ- ing, and, frequently, when they are discharged by payment no receipt is taken, or, if a receipt is taken, it is not preserved. (B.-L. et Tissier, Prescription, n. 741; Aubry et Rau, 4th ed. 528 THE LAW OF OBLIGATIONS. 8, p. 447; Cass. 31 juill. 1899, S. 99. 1. 521.) Some points in regard to the prescription of accounts consisting of a number of items will be referred to later. Debtor must be put upon his oath. In cases ivhere the term of prescription is three hundred and sixty days and under, the party invoking prescription shall only be discharged if he declares upon oath that he is in fact liberated from the debt. (C. C. E. 212/276. See C. A. Alex. 18 mars 1909, B. L. J. XXI, 257.) Difference between French and Egyptian law. In regard to the debtor's oath the Egyptian law is not the same as the French law. Under the French law the creditor may refer the matter to the debtor's oath, but he is not obliged to do so. If the debtor refuses to take the oath he will be condemned. If, however, the creditor does not refer to the debtor's oath, the court is bound to give effect to the plea of prescription. No other proof can be admitted to show that the debt is still owing. (B.-L. et Tissier, Prescription, n. 749; Aubry et Rau, 4th ed. 8, p. 447; Guillouard, Prescription, 2nd ed. 2, n. 782; D. N. C C. art 2275, n. 2; Grenoble, 23 dec. 1898, D. 1903, 5. 572.) Under the Egyptian law it is the debtor who is bound to take the oath if he is to be liberated. It is not enough for him to invoke prescription, he must supplement this plea by declaring on oath that he does not owe the debt. (C. C. E. 212/276; Be Hults, Rep. vo. Prescription, nos. 200 seq.) Accordingly, if the creditor does not refer the matter to the debtor's oath, and if the debtor does not offer to take the oath, but contents himself with pleading prescription, it is the duty of the court to call upon him to take the oath, and, if he fails to do so, the court must condemn him to pay the debt. (Alex. 25 avril 1903, Role general, 3799, XXXIII; Sayour, Rep. n. 838. Cf. ib. nos. 833—837.) Serment de credulite. Widoivs and heirs or their tutors shall declare .upon oath that they do not know whether what is claimed is due. (C. C.-E. 213/277; C. C. F. 2275.) This last case is what is called the serment de credulite. The debtor is dead, and it would not be EXTINCTION OF OBLIGATIONS. 529 fair to call upon his successors to swear that their author had paid the debt, because this fact may very well not be within their knowledge. If the action was brought in the debtors life- time, and in the court of first instance he did not take the plea that the debt had been paid, his heirs cannot upon appeal avail themselves of this plea. (C. A. Alex. 23 juin 1910, B. L. J. XXII, 387.) Prescription may be pleaded at any stage of the proceedings. The French Code contains an article which declares that the plea of prescription may be set up at any stage of the proceedings en tput etat de cause, and may even be pleaded for the first time in the Court of Appeal. (C. C. F. 2224.) There is no corresponding article in the Egyptian codes, but it is clear that the law is the same. As regards the acquisitive prescription, the party who has begun by founding upon some other title of ownership, may at a later stage, and even in appeal, plead that he is by prescription owner of the thing claimed., This is not the introduction of a new demand, which is prohibited in appeal by the Code of Procedure. (N. C. P. 368; C. C. P. M. 412.) The demand is still for the same object, viz., the property, but it is made upon new grounds, and the addition of new ground's is always permissible. (N. C. P. 369; C. C. P. M. 413; C. A. Alex. 13 nov. 1884, Lantz, Rep. General, n. 874; C. A. Alex. 10 mai 1917, B. L. J. XXIX, 414.) And as regards the plea of extinctive prescription, this is in its nature a peremptory exception and can be made at any stage of the proceedings. (C. A. Alex. 15 janv. 1914, B. L. J. XXVI, 154; Do Hults, Rep. vo. Prescription, n. 19.) But a party will not be allowed to plead extinctive prescription when the circum- stances clearly show that he has renounced that plea. And among the circumstances to be considered will be his pleadings in the suit itself. What facts amount to such a tacit renunciation of the right to take the plea of prescription will be explained later in speaking of renunciation. The rule itself is stated in the French Code, and the Egyptian Code, no doubt, intends to retain it. (C. C. F. 2224.) w. — vol. ii. 34 630 THE LAW OF OBLIGATIONS. The judge cannot ex officio give effect to prescription. Seeing that the rules of prescription are based upon public order, it might appear at first sight, that the courts ought to be entitled to find that a right had been acquired or lost by the expiration of the legal period, although this was not pleaded by the party who would benefit by the prescription. But further consideration shows that such a conclusion would be highly in- equitable. The possessor may not choose to take advantage of his right to deprive the owner of his property, or the debtor may not wish to evade paying his debt though he has a legal excuse. The law quite rightly respects these scruples. The French Code says: Les juges ne peuvent pas suppleer d' office le moyen re- sultant de la prescription. (C. C. F. 2223. See Cass. 17 mars 1897, D. 97. 1. 279; Req. 23 janv. 1901, D. 1901. 1. T02.) The Egyptian Code, speaking of extinctive prescription, says that it extinguishes the obligation if the debtor invokes prescrip- tion, as the Native Code expresses it, or in the language of the Mixed Code, when the parti/ bound expressly relies upon it. (C. C. E. 204/268.) There is no doubt that the rule in Egypt is. the same as in France: L' exception de prescription ne peut pas etre soidevee d' office. (C. A. Alex. 14 nov. 1907, B. L. J. XX, 7.) According to the French law it is not necessary that prescrip- tion should be expressly pleaded if the conclusions of the party sufficiently show that he is in effect setting up the plea of pre- scription. (B.-L. et Tissier, Prescription, 3rd ed. n. 42; Cass. 3 aout 1870, S. 71. 1. 72, Journal du Palais, 71, p. 197; D. N. C. C. art. 2223, n. 20.) In Egypt, under the Native Code, this would no doubt be so also, and, probably, the words of the Mixed Code, "When the party bound expressly relies upon it," would not be interpreted so literally as to make it indispensable that the word " prescrip- tion " should be used. Calculation of prescriptive period. Although the Egyptian codes are silent upon the matter, there is no reason to doubt that they intend to retain the traditional principle of the French law that the period of prescription is to be reckoned from the beginning of the first complete day after the day upon which possession has been acquired in the case of EXTINCTION OF OBLIGATIONS. 08 1 acquisitive prescription, or after the day upon which the right of action has accrued in the case of extinctive prescription. See C. A. Alex. 2-4 dec. 1914, B. L. J. XXVII, 84; 0. A. Alex. 7 mars 1901, B. L. J. XIII, 187.) The law reckons tinie by days and not by hours or minutes. It is, as a rule, easy to preserve evidence of the date of the transaction, but if it were necessary to prove the hour of the day, innumerable difficulties would arise from the differences of local time or the variations between time- pieces. The day upon which the right is acquired, whether it be the right of possession or the right of action, is necessarily an incom- plete day. If the right were acquired, for instance, at ten o'clock in the morning, and the prescriptive period were five years, that period would not run out until ten o'clock in the morning on the corresponding day of the month five years thereafter. In order to prevent such troublesome calculations, the Roman law and the French law which was based upon it, laid down the rule that the dies a quo was not to be reckoned in calculating the period of prescription. The period was to begin to run from the first moment of the day after. And it is a further consequence of the rule that time is reckoned by days, that the prescriptive period does not expire until the last moment of the last day of the term. These rules are laid down in two articles of the French Code: La prescription se corrupt e par jours et non par heures. Elle est acquise lorsque le dernier jour du terme est accompli. (C. C. F. 2260, 2261.) Accordingly, if the possession has been begun, or the right of action has been acquired, on the 29th of July, 1914, prescription does not begin to run until the first minute of the 30th of July, and if the prescriptive period is fifteen years, it will not be com- plete until the first minute of the 30th of July, 1929. Official holidays are included in the delay. (Aubry et Rau, 5th ed. 2, p. 480; B.-L. et Tissier, Prescription, n. 583; Guil- louard, Prescription, 1, n. 88.) There is no doubt that the Egyp- tian codes intend to retain these rules. (C. A. Alex. 17 dec. 1908, B. L. J. XXI, 78; C. A. Alex. 30 dec. 1913, B. L. J. XXVI, 113; De Hurts, Rep. vo. Prescription, n. 67; Halton, 1, 203.) 34 (2) 532 THE LAW OF OBLIGATIONS. Point of departure of extinctive prescription. Extinctive prescription depends upon throe conditions: — (1 A right of action accrued, that is, the obligation must be exigible before the action upon it begins to prescribe; (2) No action raised; and (3) The lapse of the period fixed by law without the prescrip- tion being interrupted. (Pothier, Obligations, n. 680; Aubry et Rau, 5th ed. 2, p. 482; B.-L. et Tissier, Prescription, nos. 381, 384; D. N. C. C. art. 2261, n. 3.) So long as the creditor has no right of action it would be unreasonable to infer from his inaction any intention to abandon his right, and, as will be explained later, the same principle applies to the case in which, though the right of action has accrued, the creditor cannot exercise it for a reason which suspends the pre- scription. Accordingly, if the creditor's right is subject to a suspensive condition or to a term, it will not begin to run until the condition has been fulfilled or the term has arrived. These rules are laid down expressly in the French Code: La prescription ne court point : — A Vegard (Tunc creance qui depend d'une conditio)/, jiisqvCa ce que in condition arrive; A Vegard d'une action en garantie, jusqu'd ce que V eviction ait lieu; A Vegard d'une creance a jour fixe, jusqua ce que ce jour soil arrive. (C. C. F. 2257.) The Egyptian Code has no such article, but it is not necessary, as it is a logical consequence from the legal nature of prescription. Pour que la prescription liberatoire puisse courir, it iaut que ^obligation a laquelle elle se refere soil nee et exigible; si elle depend d'une condition, on applique hi regie contra non valentern agere non currit prescriptio; tel est le cas on le paiemeut dVun legs depend du resultat d'un proces. (C. A. Alex. 13 mai 1909, B. L. J. XXI, 342. Cf. C. A. Alex, ler mai 1895, B. L. J. VII, 236; C. A. Alex. 2 mars 1910, B. L. J. XXII, 158; De Hults, Rep. vo. Prescription, n. 160.) The rule is the same in Mohammedan law. (Kadri Pacha. Statut Reel, art. 258, al . 1.) Conditional debt. The expression in the French Code -une creance qui depend d'une condition — obviously refers to a Mi>pensive condition. The EXTINCTION OF OBLIGATIONS. -V!:', creditor who has a right subject to a resolutive condition can claim his right at once, and, therefore, prescription will run againsl him if he does not do so. (B.-L. et Tissier, Prescription, n. 391 : Guillouard, Prescription, 1, n. 132.) Action in warranty. The action in warranty which the French Code specially mentions is merely an illustration of the general principle. The vendor warrants the purchaser against disturbance in his enjoy- ment. But the purchaser has no right of action against the vendor until there has been an eviction, or what the law regards as equivalent thereto. And, therefore, it is riot until this condition has been fulfilled, that prescription begins to run in favour of the vendor. As regards the action in warranty, there is controversy as to what the law means by " eviction." In one view there is an eviction when there is a disturbance of possession. (Aubry et Rau, 5th eel. 2, p. 484; B.-L. et Tissier, Prescription, n. 393.) Accord- ing to what seems the better view, the " eviction " only takes place from the date of the final judgment pronouncing it. (Guillouard, Prescription, 1, n. 135; Cass. 18 juill. 1876. D. 77. 1. 232.) The Mixed Court of Appeal has decided iu this sens.e. C. A. Alex. 24 mai 1910, B. L. J. XXII. 223. Debt subject to term. The same principle applies to the case where the deb: is sus- pended by a term. The creditor cannot act until the term arrives, and, therefore, this inaction cannot deprive him of any right. (See Req. 9 janv. 1899, D. 1900. 1. 103.) Although the French article refers only to a term of which the date is certain — une creance a jour fixe — it is agreed that the same principle applies to a term of which the date is uncertain, such as, for instance, a debt payable when a third party shall die. (B.-L. et Tissier, Prescription, n. 390; Guillouard, Prescription, 1, n. 138; Kadri Pacha, Statat Reel, art. 258, al. 1.) It is even more clear in this case than in that of the fixed date, that the creditor has no right of action till the expiration of the term. But we must not confuse with a debt subject to an uncertain term a debt for the performance of which no time has been fixed, but which is exigible when the creditor chooses to demand pay- ment. (B.-L. et Tissier, Prescription, 1. c; Alex. 27 avril 1907, Savour, Rep. n. 846.) 534 THE LAW OF OBLIGATIONS. It must be remembered that the granting of a term for payment does not need to be made in express terms; it may be made, tacitly, and the court, in many eases, is entitled to infer from the circumstances that a term has been granted. Prescription does not run till debt is exigible. It may be a difficult question of interpretation to determine at what momeni of time according to the intention of the parties the debt became exigible. But this is a question of fact, the solution of which d spends upon the particular circumstances. Proscription docs not begin to run until the debt is exigible. B.-L. et Ti>>kt. Prescription, n. 390; Guillouard, Prescription, 1, n. 137. See supra, p. 350.) When the debt is divided into fractions or into separate items. When it has been agreed that a capital sum is. to be paid Ir- regular instalments of a certain amount, each instalment is. for the purposes of prescription, regarded as a separate debt. If I borrow L. E. 5,000 from you, and it is agreed that I am to •repay you at the rate of L. E. 1,000 a year, your claim to the fifth instalment will not become exigible till the end of the fifth year, and extinctive prescription would not be completed in my favour as regards this instalment until the end of twenty years from the date of the loan. Similarly, where rent is to be paid at so much a month or a year, or according to some other unit of time, or instalments of interest or wages of servants arc to be so paid at stated intervals, each payment is regarded as a separate debt. Pothier, Oblig. n. 679; Aubry et Rail, 5th cd. 2, p. 484; Guillouard, Prescription, 1, n. 76; B.-L. et Tissier, Preservation, n. 382: D. X. C. C. art. 2261, n. 11. The same principle applies according to the Egyptian Nativti ( ode i" sums due to physicians, advocates, and engineers for their fees, In tradesmen lor goods supplied to private persons, to teachers and instructors for money owing by Heir pupils, and to domestic servants for their wages, even though new debts of the same nature have arisen during such three hundred and sixty days, that being in this case the prescriptive period. (C. C. E. 209." The Mixed Code does not mention advocates and engineers. (C. C. M. 273. These nil:- are of great practical importance. EXTINCTION OF OBLIGATIONS. 535 If goods are supplied by a tradesman upon a running account, the receipt of each separate article would, but for such a provision of the law, keep alive the whole debt, and the result would be that customers would have to pay for items of debt alleged to have been incurred years before, the accuracy of which it would be impossible to verify. It is in the public interest that accounts of this nature as well as rents, instalments and wages, should be liable to a short prescription, and that persons should know that if they allow such payments to get into arrears they do so at their own risk. (Guillouard, Prescription, 2, n. 726, and n. 762; B.-L el Tissier, Prescription, n. 722; Alex, ler avril 1905, Sayour, Rep. n. 849.) In France, by recent legislation amending C. C. F. 2272, the period of prescription as 10 sales by marchands to particuliers has been extended to two years. (Loi 26 fevr. 1911.) By "private persons" the Egyptian Code means the same as the French Code means by the words particuliers non marchands in the corresponding article. (C. C. F. 2272.) It means those who buy goods not to sell them again, but to consume them. And by " tradesmen " — marchands— the law means those whose business it is to buy goods in order to sell them again either in the same form or transformed by manufacture. Tradesmen are such people as butchers, bakers, grocers, drapers, confectioners, and the like. (B.-L. et Tissier, Prescription, n. 722; Guillouard, Prescription, 2, n. 730.) A man whose business it is to let out horses and carriages is not a tradesman. (Trib. Civ. Seine, 24 janv. 1905, D. 1905. 5. 11.) Hotel-keepers are not tradesmen. Nor is a building contractor a tradesman, though it may be that he furnishes materials. For this is merely accessory to his business, which is to do certain work. (B.-L. et Tissier, Prescription, n. 724; Guillouard, Prescription, 2, n. 733; Caire, 17 nov. 1913, Sayour, Rep. n. 850.) A manufacturer who has no shop but makes things for orders is not a tradesman. (Caire, 6 avr. 1903, Sayour, Rep. n. 847.) Nor is a barber a tradesman in this sense. He is an artiste, and his claim for the amount due to him— often an abonnement for shaving or hair-cutting— is not subject to this prescription. (Trib. Civ. Bordeaux, 9 nov. 1903, D. 1904. 2. 187.) 536 THE LAW OF OBLIGATIONS. Doubt with regard to sums due to physicians. French law. In France the principle is applied, with a certain difference, to the case of physicians and surgeons. A doctor's account is gene- rally calculated at the rate of so much a visit. If he is called in to attend a patient, is he engaged at so much a visit, in the sense that his fee for each visit forms a distinct separate debt which has an independent period of prescription, just as each parcel of goods sent by a tradesman to a customer creates a separate debt? Or, is the true view that the doctor is called in to take charge of a case, and that his account, when he sends it in, is a single account by which he claims a lump sum for his services from the beginning to the end of the case? The fact that the amount is fixed by adding up the number of visits and assigning a certain fee to each visit is immaterial. This is merely the professional way of arriving at the amount which is considered as a reasonable professional charge. According to custom this view is firmly established in the French jurisprudence, and is in accordance with a long settled tradition. (Chambery, 28 fevr. 1873, D. 73. 2. 153; Pothier, Oblig. n. 715; Planiol, 2, n. 656; B.-L. et Tissier, Prescription, n. 733; Guillouard, Prescript ion, 2, n. 720: D.N. C. C. art. 2272, n. 89.) Prescription does not begin to run against the doctor until the case* is at an end by the patient dying or being cured, or by the doctor being dismissed or giving up the case. If he is called in again to attend the same patient for another illness this creates a new debt. (Caen, 21 avril 1868, D. 71. 2. 180.) Egyptian law. It is more doubtful whether the same result can be reached in Egypt upon the interpretation of the Egyptian Code. There is a difference between the Native Code and the Mixed Code. The Native Code classes together " physicians, advocates and en- gineers,"' while the Mixed Code does not mention advocates and engineers. (C. C. E. 209/273.) It might be argued that there is a good reason for putting advocates and engineers in the same class as doctors, seeing that they are commonly engaged to perform not a single act but a series of acts. If, for purposes of prescrip- tion, we are not to treat each visit of a doctor as creating a separate debt, the same rule should apply to the case of an advocate or an engineer who is called in to carry out a particular piece of EXTINCTION OF OBLIGATIONS. 537 work, such as to conduct a litigation or to construct a bridge. The French Code does in fact apply the same principle to avoues by declaring that their action prescribes in two years a compter du jugement du proces. (C. C. F. 2273.) And the Egyptian Code does the same in regard to bailiffs and registrars, when it says that the term of prescription for sums due -to them for the costs of legal documents is three hundred and sixty days ''running from the termination of the proceedings in which such documents have been prepared." (C. C. E. 210 274.) And it may further be said that the language of the Egyptian codes "for their fees" is more naturally interpreted as meaning a Lump sum than is the language of the French Code — Vaction dcs medccins pour leurs visites. The Mixed Courts would probably follow the rule of the French jurisprudence in the case of physicians. The Mixed Code, as we have seen, fixes the period of prescrip- tion for sums due to physicians at three hundred and sixty days, and is silent with regard to advocates and engineers. (C. C. M. 273.) In the Mixed Courts it would be held, presumably, that pre- scription does not begin to run against a doctor until his services have terminated or until he has sent in an account, unless the usage was to pay the doctor at the time, for each visit. This is not a common practice. It is common for doctors to send in their accounts annually, and it is reasonable to hold that unless the account has been presented or the relation between doctor and patient has terminated, there is no definite debt due. (De Hults, Rep. vo. Prescription, n. 193.) What rule would apply in the Native Courts. Under the Native Code the short prescription of three hundred and sixty days applies to "physicians, advocates and engineers." (C. C. E. 209.) Under this article it does not seem possible to make a distinction between physicians, advocates and engineers; they are evidently classed together. The question therefore comes to be whether we can apply to all these classes of persons the same rule as the French jurisprudence applies in the case of physicians. As already stated, one view is that, just as a physician is engaged to take charge of a case which involves a series of visits, so an advocate may be engaged to con- duct a litigation, or an engineer to do a particular piece of work, 538 THE LAW OF OBLIGATIONS. and that the law regards the series of operations that may be necessary as forming a single transaction. But against this con- struction there are three- arguments : — (1) The physicians, advocates and engineers are mentioned in connection with tradesmen, teachers and domestic servants, and it is said of all of them that the short prescription applies " though new debts of the same nature have arisen during such three hun- dred and sixty days." The intention appears to be that as soon as a definite sum becomes due to any of these persons it is a separate debt which prescribes in three hundred and sixty days. (2) In regard to bailiffs and registrars it is said that the term of prescription for sums due to them for the costs of legal docu- ments is three hundred and sixty days, running from the ter- mination of the proceedings in which such documents have been prepared, or if no proceedings have been commenced, from the drawing up of such documents. (C. C. E. 210/274.) Upon the principle expressio unius est exclusio alterius we cannot extend to the physicians, advocates and engineers, a favour which is given by exception to bailiffs and registrars. (3) The general rule of interpretation that in case of doubt the construction shall be in favour of the debtor applies to this case; and the shorter the prescription the better for the debtar. Notwithstanding these arguments, it rather appears that the courts might apply the French rule as to physicians, and extend it to advocates and engineers when they were not engaged for a single act. There is no "sum due" until the whole business is completed. But the point is by no means free from difficulty. Retroactive effect of prescription. Prescription has a retroactive effect in favour of the person benefited by the expiration of a prescriptive period. In the case of acquisitive prescription, when the possessor has held for the prescriptive period, he is in the same position as if he had been owner during the period of his possession, and therefore he is not obliged to account for the fruits. (Planiol, 1, n. 2708; B.-L. et Tissier, Prescription, n. 103; D. N. C. C. art. 2220, n. 22.) And in the case of extinctive prescription the debtor is not only freed from the obligation to pay the capital sum, but also from that to pay the interest which has been running. The law does not regard prescription as a new title acquired at the expiration of the prescriptive period. It presumes that the debt was dis- charged at the date when the prescription began to run. (B.-L. EXTINCTION OF OBLIGATIONS. 539" et Tissier, Prescription, n. 103; Guillouard, Prescription, 1, n. 51; Laurent, 32, n. 4, and n. 6.) According to what calendar is the prescriptive period reckoned? In Egypt two calendars are in use, the Arab calendar and the Gregorian calendar. When the codes speak of a " year," do they mean a year according to the Arab computation or according to the Gregorian calendar? There has been in the past much doubt upon this point. The codes are entirely silent, and the juris- prudence of the Mixed Court has been very conflicting. In the Native Courts it has always been taken for granted that the Arab calendar is intended. The Mixed Courts, after much hesitation, have come round to the same view. The law may, pro- bably, be regarded as now settled in this sense. (See Ch. Testoud, article entitled Observations sur la mode de Calcul des Annies, reprinted in I'Eyypte Contemporaine, 1916, p. 315; De Hults, Rep. vo. Prescription, n. 68; Halton, 1, p. 203.) In recent cases in which the question has arisen as to extinctive prescription, the Mixed Court of Appeal has held that the Arab calendar was to be applied. (C. A. Alex. 30 nov. 190-1, B. L. J. XVII, 26; C. A. Alex. 27 juin 1917, B. L. J. XXIX. 490.) And the same court has held that in the case of acquisitive prescription the period should be computed according to the Arab calendar, whether the possessor is a foreigner or an Egyptian. (C. A. Alex. 4 avril 1895, B. L. J. VII, 214. See C. A. Alex. 2 fevr. 1893, B. L. J. V, 118; C. A. Alex. 24 fevr. 1892, B. L. J. IV, 212.) But it has been held that the delay of ten years for the re- newal of a hypothecary inscription was to be calculated by the Gregorian calendar. (C. A. Alex. 28 dec. 1898, B. L. J. XI, 69.) The principal arguments in favour of applying the Arab calen- dar are: — (1) The periods of prescription being for the most part bor- rowed from the Mohammedan law, according to which they were of course calculated by the Arab calendar, it is to be presumed that the legislator intended to continue them without change. (2) The codes never mention the Gregorian calendar. The Arab calendar is specially mentioned in regard to the term of prescription for the periodical payments. (C..C. E. 211/275.) It is referred to also in the Code of Criminal Investigation upon 540 THE LAW OF OBLIGATIONS. the question as to the calculation of prescription of a penalty. (C. Crim. Inv. 276/271.) (3) Doubts being interpreted in favour of the debtor, the Arab calendar should be preferred, as under it the year is shorter. (See C. A. Alex. 30 nov. 1904, B. L. J. XVII, 26.) (4) If the legislator had intended to adopt the Gregorian calendar he would have fixed the period for short prescription at three hundred and sixty-five days instead of at three hundred and sixty days, an arbitrary period which does not correspond with either the Arab year or the Gregorian year. (5) Where the Gregorian year is intended by the Egyptian legislator, it is specially named, as in the Decree of 26 March, 1900, article 8, which provides that taxes shall prescribe in three years according to the Gregorian calendar. (C. A. Alex. 17 dec. 1908, B. L. J. XXI, 78.) Before this Decree the jurisprudence held that in this ease the time was calculated by the Arab year. (C. A. Alex. 17 janv. 1895, B. L.J. VII, 89. Cf. Decree of 28 nov. 1904, lot n. 17, art. 64. See Testoud, Observations sur la mode de Calcul des delais an point de vue de la legislation Egyptienne, reprinted in VEgypte Contemporaine, 1916, p. 315; Halton, 1, p. 203.) The only serious argument on the other side is that we should apply the rule cxpressio unius. Seeing that the codes in some instances expressly mention the Arab calendar we must conclude that, when they are silent as to which calendar is to be applied, they must mean the Gregorian calendar. But this argument is not enough to justify the conclusion- when we consider the arguments on the other side. Renunciation of prescription. The French Code contains several articles on this matter which apply both to acquisitive and to extinctive prescription. (C. C. F. 2220 seq.) The Egyptian Code has one article in the section upon acquisitive prescription, stating the main rule, and two articles in the section on extinctive prescription as to renunciation by an insolvent debtor or by a joint and several debtor. No one can renounce by anticipation his right to claim by prescription. A person not subject to incapacity may renounce a right to claim by prescription after it has vested. (C. C. E. 80 L08. < f. C. C. E. 206, 207/270, 271.) The principle which governs this matter is one which applies to extinctive prescription and to acquisitive prescription alike, and though we are concerned here with extinctive prescription only, the principle EXTINCTION OF OBLIGATIONS. 541 will he made clearer by explaining its application in both these cases. The French law deals more fully with the subject, and it is certain that the Egyptian legislator intends to retain the French law. Renunciation in advance is contrary to public policy. In speaking of the nature of prescription in general, it has been explained already, that the rules of proscription are based upon considerations of public policy. It is in the public interest to lix a period within which actions may be brought, and to declare that if no action is brought within the stated period all rights shall then be definitely determined. This purpose of the law would be defeated if persons were allowed to deprive them- selves by agreement of the right to claim the benefit of prescrip- tion . It would become common for creditors to insert conditions that their right of action should not prescribe at all. And what applies to a total renunciation applies to partial renunciation, that is, to a prolongation of the legal period of prescription, such as an agreement that the right of action shall prescribe in twenty years instead of fifteen years. Such renunciations are expressly prohibited by the codes. (B.-L. et Tissier, Prescription, 3rd ed. n. 53, and n. 62; Planiol, 2, n. 649; Guillouard, Prescription, 1, n. 318, and n. 321. Cf., however, Nancy, 16 nov. 1889, S. 91. 2. 161, and note by M. Bourcart.) But although public policy requires that the right of action shall expire within a certain period, it is not equally clear that public policy requires that a creditor shall enjoy a right of action for the normal period. If the creditor chooses to agree that unless he brings his action within a certain period which is shorter than the delay to which he would otherwise be entitled, there is nothing in this which is contrary to public policy. (B.-L. et Tissier, Prescription, n. 96; Guillouard, Prescription, 1, n. 323. Contra, Planiol. 2, n. 648.) The Egyptian law is no doubt the same as the French. Les delais de prescription sont edictes dans un inter et de protection sociale your mettre fin aux contestations, et dans ce sens, Us tiennent a Vordre public; il pent etre loisible aux parties, pur un accord entre elles, de faciliter les conditions de la prescription, mais elles n'ont pas la faculte de les aggraver en stipulant d'avance un delai plus long. (C. A. Alex. 22 fevr. 1905, B. L. J. XVII, 124.) 542 THE LAW OK OBLIGATIONS. The German Code has an express declaration in the same sense (art. 225). But in practice such an abridgment of the usual period of prescription is rarely met with except in the kind of contracts to which French writers give the name of contrats & adhesion. These are those contracts in which there is no dis- cussion of the terms between the parties. One of the parties •dictates the conditions and the other has simply to take them or leave them . See Saleilles, Declaration^ cle Volenti, p . 229 ; Planiol,; 2, n. 972.) For instance, a clause is frequently found in policies of insurance which provides that unless the action is brought within a short period, such as a year from the date of the loss, the right of action shall expire. According to the French jurisprudence such conditions are valid, though there is no doubt that conditions of this kind lend them- selves to abuse. (Cass. 2 fevr. 1898, D. 98. 1. 561; Cass. 4 dec. 1895, D. 96. 1. 241, and note by M. Sarrut; authorities cited by B.-L. et Tissier, Prescription, n. 96, note 1; Colin et Capitant, 2, p. 150.) Is the rule prohibiting renunciation an absolute one? There is considerable French authority for the proposition that in spite of the prohibition of renunciations of prescription, there are, notwithstanding, certain cases in which an agreement to pro- long the prescriptive period will be sustained by the courts. The provisions of the code which lay down the period of the long prescription or fix the quinquennial prescription for periodical payments, are undoubtedly based upon public policy, and no re- nunciation beforehand of the right to take advantage of these provisions can be permitted. But this is by no means equally clear in regard to certain of the short prescriptions of a more . special kind. If the law of sale says that an action on a warranty against latent defects must be brought within eight days of the discovery of the defect, it does not seem that there is any reason of public policy which would exclude an agreement giving the buyer a longer delay. (C. C. E. 324/402; B.-L. et Tissier, Prescription, n. 65; Guillouard, Prescription, 1, n. 322. And it has been held in France by the Conseil d'Etat that an agreement by which the liability of the architect and the contractor was extended, was not contrary to public policy. (Cons. d'Etat, 3 janv. 1881, S. 81. 3. 34, D. 82. 3. 119.) EXTINCTION OF OBLIGATIONS. 543 If the contractor, for instance, agrees that instead of being liable for ten years he will be liable for twenty years for defects in the building, this is surely in the interest of public policy. And it does not appear that an agreement like this is such a renunciation of prescription as the law intends to prohibit. (B.-L. et Tissier, Prescription, n. 65; Aubry et Rau, 5th ed. 5, p. 677, note 30; Guillouard, Prescription, 1, n. 322; D. N. C. C. art. 1792, n. 294.) Is an agreement to suspend prescription a renunciation in advance? The tendency of the French law is to interpret strictly the prohibition on ne peut d'avance renoncer a la prescription. % An agreement by the parties to suspend prescription for a certain period is not a renunciation. If a party binds himself by an agreement not to take advantage of the law of prescription during a certain delay, his agreement does not fall within the prohibition and is not against public policy. If, for example, the parties agree to submit their differences to arbitration, they may naturally and properly agree at the same time that during the arbitration prescription shall be suspended. If an action had been raised prescription would have been suspended during the action, and why should a party who is willing to settle his dispute amicably be discouraged by knowing that prescription is running against him? (Toulouse, 18 mai 1868, S. 71. 1. 156, Journal du Palais, 71, p. 530; C. Cass, de Belgique, 7 oct. 1894, D. 96. 2. 169; B.-L. et Tissier, Prescription, 3rd ed. n. 63; Guillouard, Pre- scription, 1, n. 323.) It is for the courts to say when an agreement to suspend pre- scription amounts to a prohibited renunciation. If there is a sufficient reason in the circumstances for such a step the parties will be allowed to stipulate the suspension. (B.-L. et Tissier, Prescription, n. 63; Guillouard, Prescription, 1, n. 320.) Renunciation of acquired prescription. Public policy does not prohibit a person from renouncing a right to claim the benefit of a prescription which he has acquired. The law guarantees him the right, but when he has acquired it he can dispose of it as of any asset of his estate. The codes state this rule: A person, not subject to incapacity may renounce a right to 544 THE LAW OF OBLIGATIONS. claim by prescription after it has vested. (C. C. E. 80, 108; C. C. F. 2220.) Renunciation during the course of prescription. It is also permissible to renounce the benefit of part of a pre- scriptive period which has elapsed. The Egyptian codes are silent upon this point, but the French law is clear, and it is expressly stated in the Civil Code in Quebec: Prescription cannot be renounced by anticipation. That acquired may be renounced, and so may also the benefit of any time elapsed by which prescription is begun. (C. C. Q. 2184.) A renunciation of this kind during the course of prescription is. in the case of extinctive prescription, equivalent to an acknow- ledgment of the right of the other. It is an interruption of pre- scription. The person who has made the acknowledgment loses the benefit of the time elapsed, but the" prescription begins to run again in his favour. (B.-L. et Tissier, Prescription, n. 93; C. A Alex. 11 janv. 1900, B. L. J. XII, 84. And a tutor or curator who has power to pa}' the debt of the ward may, by giving the creditor an acknowledgment of the debt, prevent prescription being completed against him. (Pothier, Oblig. n. 699; B.-L. et Tissier, Prescription, 3rd ed. n. 94.) This point will be more fully considered under the head of inter- ruption. (Planiol, 2, n.700.) Renunciation may be tacit. The French Code says that renunciation of prescription is either express or tacit, and that la renonciation tacite resulte d'un fait qui suppose V abandon du di-oit acquis. (C. C. F. 2221.) The Egyptian Code has no similar article, but no doubt the intention is to preserve the old law. The law does not prescribe that renunciation shall be made in any particular form, and, therefore, according to general principles, it may be inferred from any conduct on the part of the person entitled to claim prescription which clearly indicates his intention to renounce the benefit of the prescription which has been acquired in his favour. But there is always a presumption of fact against a man gratuitously abandoning a right, and, therefore the court will not be entitled to find that there has been a tacit renunciation unless this is the only reasonable inference which can be drawn from the facts proved. If his conduct, although suggestive of EXTINCTION OF OBLIGATIONS. 545 renunoiation, is, nevertheless, reasonably capable of another ex- planation, he will have the benefit of the doubt. (Aubry et Rau, 4th ed. 8, p. 452; Guillouard, Prescription, 1, n. 334; Cass. 6 dec. 1899, D. 1901. 1. 299.) Among the facts to be considered will be the pleadings in the action, but, as we have seen, the plea of prescription docs not need to be set up at first, and the fact that the defendant first states other defences, such as the non-existence of the debt or its payment, does not in itself amount to a tacit renunciation of the right to plead prescription at a later stage. He may not have known that he was entitled to the plea of prescription, or he may have had conscientious scruples against relying upon a technical rule of law so long as he thought that he might succeed upon other grounds. (Planiol, 2, n. 701; B.-L. et Tissier, Prescription, 3rd ed. nos. 51, 77; Guillouard, Prescription, 1, n. 337; Grenoble, 12 janv. 1904, D. 1907. 2. 289. But see Paris, ler mars 1893, D. 93. 2. 296. C. A. Alex. 19 janv. 1899, B. L. J. XI, 96.) But the conduct of the party in appeal may be such as to point unmistakeably to renunciation. (Req. 5 nov. 1907, D. 1908. 1. 132.) It is not possible to lay down general rules as to what will amount to tacit renunciation. The question is one which depends upon the facts of each particular case. The facts relied upon must be subsequent to the date when prescription was acquired, for, otherwise, they would be unavailing. They might amount to a renunciation of the period of prescription which had already run, but no more. (B.-L. et Tissier, Prescription, n. 70. See Cass, ler mars 1905, D. 1907. 1. 376; Grenoble, 12 janv. 1904, D. 1907. 2. 289.) The following are examples of facts from which tacit renun- ciation may be inferred. The payment of a debt which is pre- scribed raises a strong presumption of renunciation of the pre- scription. According to some writers it is so conclusive that even if the debtor pays under protest, and subject to reservation of all his rights, he will still be considered to have renounced the prescrip- tion. (B.-L. et Tissier, Prescription, 3rd ed. n. 71.) But this appears to be unreasonable. A payment on account is likewise a tacit renunciation of pre- scription of the whole debt, unless the debtor declares at the same time that he only admits liability to the extent of the amount which he pays. w. — vol. ii. 35 546 TUB LAW OF OBLIGATIONS. The payment of interest of a debt or of the arrears of an annuity is a renunciation of prescription as regards the whole liability, unless the debtor has expressly reserved his right. (Poitiers, 30 juill. 1877, D. 78. 2. 60.) An acknowledgment of the liability, a promise to pay the debt, a request to be allowed time, the giving or offering of a security, the claim that the debt has been paid by compensation, the agreement to submit to a compromise, are facts from which renunciation will be inferred unless the debtor reserved his rights. (Guillouard, Prescription, 1, nos. 335 seq.: B.-L. et Tissier, Prescription, 3rd ed. nos. 71 seq.; D. N. C. C. ,art. 2221, nos. 10 seq.- Cass. 3 mars 1885, S. 86. 1. 360; Cass. 6 juin 1896, S. 97. 1. 407; C. A. Alex. 11 janv! 1900, B. L. J. XII, 84; C. A. Alex. 31 janv. 1901, B. L. J. XIII, 132.) On the other hand, the declaration by the debtor that he does not owe the debt, or an offer to pay what he shall be found to owe after an investigation of the accounts does not amount to renunciation. Tacit renunciation must be en connaissance de cause. Renunciation is the voluntary abandonment of a right, and a person cannot renounce a right unless he knows that it exists. Accordingly,* if it appears that although prescription has been acquired the debtor was unaware of this fact, his conduct may not be held to prove renunciation of the right to claim prescription., (Orleans, 16 fevr. 1865, D. 65. 2. 60.) But it does not follow from this that a debtor who has paid a debt against which he might have pleaded prescription, can recover what he has paid by proving that he was ignorant of his right to claim prescription. He has made a voluntary payment in dis- charge of an obligation, and what the creditor has received was legally due to him. The debt was not extinguished ipso jure by the lapse of the prescriptive period; it might have been extin- guished if the debtor had invoked prescription, but as he did not do so, there was a subsisting debt, not a natural debt but a civil debt, and the payment accordingly was not a case of payment of something not due, nor was it a payment in error of a natural obligation. The right of repetition, therefore, does not exist. (B.-L. et Tissier, 3rd ed. n. 71, and n. 104.) The German Code takes this view. (Art. 222; see not^ by M. Saleilles. In this sense, Trib. Suram. Muski, 18 mars 1906, O. B. VII, n. 68. Contra, Guillouard, Prescription, 1, n. 335.) EXTINCTION OF OBLIGATIONS. 547 Renunciation of prescription is not an alienation. It might appear at the first glance that the person who renounces his right to claim a prescription which has run in his favour thereby effects an alienation of property/. But this is not an exact view of the matter. The possessor who has had a sufficient pos- session does not become the owner of the property until he has invoked the prescription. And the debtor whose creditor has remained inactive during the prescriptive period is not liberated from his liability until he has invoked the prescription. Pre- scription does not operate ipso jure. The right in the case of acquisitive prescription is a right to claim by prescription. (C. C. E. 80/108.) And in the case of extinctive prescription the obligation is extinguished if the debtor invokes prescription. (C. C. E. 204/268.) From this principle it follows that the renunciation of the claim does not constitute an alienation. Upon this point the Egyptian Native Code is clearer than the French Code, for the French Code says: — La renonciation tacite resulte d'un fait qui suppose Vabandon 4u droit acquis. (C. C. F. 2221.) And it has been maintained that the expression droit acquis implies a right of property. But it is generally admitted by French writers that this is not so. The droit acquis is not the property but the right to set up the plea of prescription. (Planiol, 1, n. 2714; B.-L. et Tissier, Prescription, n. 82; Guillouard, Prescription, 1, n. 324.) The Mixed Code uses the rather ambiguous phrase renounce a pre- scriptive right. (C. C. M. 108.) But the Native Code with greater precision speaks of the right to claim by prescription. (C*. C. E. 80.) The distinction between a renunciation and an alienation has important practical consequences. The renunciation is a unilateral act which does not need any acceptance. (C. A. Alex. 25 mai 1916, B. L. J. XXVIII, 365.) The possessor who renounces his right to claim an immoveable does not thereby create a new title which requires registration, and a renunciation of acquired pre- scription, whether acquisitive or extinctive, is not a gift, and therefore is not subject to the rules as to gifts. The person who renounces his right to claim prescription does not make a gift which is offered to him by the law. (Bufnoir, Propriete et Con- trat, p. 164; B.-L. et Tissier, Prescription, n. 83. See, however, Cass. 22 juill. 1895, D. 96. 1. 569.) 35 (2) 548 THE LAW OF OBLIGATIONS. Renunciation of the right to claim acquisitive prescription requires capacity to alienate. Although the renunciation is not, strictly speaking, an aliena- tion, it is a dangerous act. If it does not make the person poorer it prevents him from becoming richer, as he would have been if he had availed himself of his right to claim 'the prescription. Accordingly, the right to renounce is given only to persons having capacity to alienate. A person not subject to incapacity may renounce a right to claim by prescription after it has vested. (C. C. E. 80.) Any person, who is sui juris, may renounce a prescriptive right already acquired. (C. C. M. 108.) Celui qui ne peut aliener ne pent renoncer a la prescription acquise, (C. C. F. 2222.) So in the French law minors and interdicted persons, or their tutors acting alone, cannot renounce a prescrip- tion. (B.-L. et Tissier, Prescription, n. 87; D. N. C. C. art. 2222, n. 5.) And in the Mohammedan law such a renunciation, being neces- sarily injurious, would be absolutely null. (Mohammedan Per- sonal Law, Kadri Pacha, s. 484.) Whether a tutor or other administrator may renounce a prescription if he complies with the formalities which would be necessary for an alienation, is a much disputed question in the French law. According to one view, to make a gratuitous aliejnation can never be within the powers of an administrator. (Guillouard, Prescription, 1, n. 327; Aubry et Eau, 5th ed. 1, p. 712; Laurent, 32, n. 202.) But, surely, the minor is sufficiently protected by the formalities re- quired for an alienation. And why in the case of extinctive pre- scription when the tutor knows that the debt has not been paid should be compelled to allow his ward to be unjustly enriched by escaping the necessity of paying it? (B.-L. et Tissier, Prescrip- tion, 3rd ed. n. 87; D. N. C. C. 2222, nos. 12 seq.) Capacity for renunciation of extinctive prescription. The codes are silent upon this point, but it is clear that the debtor who declines to avail himself of the prescription which has run in his favour, does not alienate anything. He simply consents to be liable as he was before. The capacity on his part which is required for such a consent must, accordingly, be the same as the capacity to contract an obligation affected by the prescription. If he has the capacity to make Buch a contract, he has the capacity EXTINCTION OF OBLIGATIONS. 549 to agree to continue to be liable under it. '(B.-L. et Tissier, Prescription, 3rd ed. n. 88; Aubry et Rau, 4th ed. 8, p. 452; Bordeaux, 31 dec. 1895, D. 97. 2. 97, note 2.) Right of creditors and other third parties to revoke a prescription which has been renounced. Extinctive prescription may be invoked by the other creditors of a person bound by an obligation, even when 'the latter has renounced the benefit thereof, if such renunciation has bean made in fraud of their rights. '(0. C. E. 206/270; C. C. F. 2225.) There are two questions which may arise in regard to the right of creditors. If their debtor owes a debt which has prescribed, but he does not take the plea of prescription and remains inactive, can his creditors take the plea for him in virtue of the oblique action? It might be argued that his right to plead prescription is a purely personal right depending upon moral considerations. If he believed himself bound in honour to (pay the debt his creditors could not set up the plea of prescription, according to the general principles which apply to the oblique action. (C. C. E. 141/202. See supra, p. 100.) The article under consideration intends to remove this doubt by declaring that the creditors can act in their debtor's place if he refuses to do so. The right to plead prescription is not a right which is "purely personal" to the debtor. (B.-L. et Tissier, Prescription, 3rd ed. n. 111.) Again, if the debtor has expressly renounced the prescription, or has tacitly renounced it by his conduct, have his creditors the right to set aside the renunciation by the Paulian action? Further, if so, do they need to prove that the renunciation by their debtor was in fraud of their right? Or is it sufficient to prove that the renunciation was to their prejudice? The general rule of the Paulian action is that creditors can procure the avoidance of the abandonment of a right to their prejudice without proof of fraud. (C. C. E. 143/204. See supra, p. 108.) The present article makes it clear that the renunciation of pre- scription is a special kind of abandonment of a right as to which' the creditors must prove both facts, viz., that it was to their prejudice, and that it was in fraud of their rights. If the debtor renounces the benefit in good faith and honestly, his creditors have no remedy. (Halton, 1, p. 394. See, however, De Hults, Rep. vo. Prescription, n. 34.) 550 THE LAW OF OBLIGATIONS. The French article is not clear upon this point, and there is controversy in the French law about it. (B.-L. et Tissier, Pre- scription, n. 114; Guillouard, Prescription, 1, n. 344; Planiol, 1, n. 2716; D. N. C. C. art. 2225, n. 16.) According to most authorities and to the most recent jurisprudence the creditors do not need to prove fraud, but they must prove that the renunciation a cause un prejudice au.r creanciers en creant ou en augm&nicent Vinsolvabilitc de lew debiteur. It will generally be easy for them to prove this. (Cass. 23 juill. 1912, D. 1914. 1. 30.) Can parties other than creditors sometimes invoke prescription which has been renounced? Upon this point the French article says, creditors or any other person having an interest in prescription being acquired maty set up the plea. (C. C-. F. 2225.) A surety, for example, may set up the prescription which his principal has renounced, or a co-debtor the prescription which has been renounced by his fellow- debtor. (B.-L. et Tissier, Prescription, n. 106; Guillouard, Prescription, 1, n. 309. See Cass. 13 fevr. 1911, D. 1911. 1. 391.) The benefit of prescription exists by law in favour of these persons each of whom 1 has a proper right of his own, distinct from the right of the principal debtor or of the co-debtor respectively. So far as these cases are concerned the Egyptian Code is more explicit than the French Code. A renunciation by one of severed persons liable jointly and severally, or by a person liable as principal, does not prejudice the rest of the persons bound jointly with him, or his surety, if they are entitled to set up prescription on their own account. (C. C. E. 207/271.) But it is generally agreed that in the French law these are not the only cases. C. C. F. 2225 applies also to other persons having an interest in setting up prescription. Probably the Egyptian Code in referring specially to the surety and the co-debtor, does not intend to exclude such other persons. An example would be that of a person who has granted a hypothec to secure the debt of another. (De Hults, Rep. vo. Prescription, n. 38.) EXTINCTION OF OBLIGATIONS. 551 Interruption of prescription. A prescription which is in the course of running may be inter- rupted, that is to say, a fact may occur which renders useless for the purposes of prescription, the time which has already expired. In regard to acquisitive prescription this may happen in either of two ways: — (1) If the possessor loses his possession, in which case there is said to be a natural interruption of prescription; or (2) If the owner makes a demand upon the possessor to give up his possession, in which case there is said to be a civil inter- ruption. In regard to extinctive prescription there can be no cmestion of loss of possession, and the only kind of interruption possible is civil interruption. Extinctive prescription is based upon the inaction of the creditor. If this inaction comes to an end by his claiming his right in certain formal ways, the prescription is interrupted, and, further, an acknowledgment on the part of the debtor of the right of the creditor interrupts the prescription. But it is only the creditor whose action interrupts the prescription which is running against him. He cannot claim that the pre- scription was interrupted by some legal proceeding at the instance of a third party. (C. A. Alex. 26 dec. 1912, B. L. J. XXV, 88; C. A. Alex. 3 avril 1912, B. L. J. XXIV, 248.) Acts of interruption. (1) A" citation to appear is a distinct claim by the owner which interrupts prescription, and, according to the Egyptian jurispru- dence, this is so even if the citation is to appear before an incom- petent court. The French article says so in express terms. (C. C. E. 82/111; C. C. F. 2246; C. A. Alex. 23 mars 1911, B. L. J. XXIII, 237; C. A. Alex. 12 janv. 1911, B. L. J. XXIII, 105; C. A. Alex. 30 mai 1895, B. L. J. VII, 314;) C. A. Alex. 11 dec. 1902, B. L. J. XV, 43.) It has also been held in Egypt that a citation interrupts pre- scription, although the citation is null in point of form. (C. A. Alex. 12 janv. 1911, B. L. J. XXIII, 105. Contra, De Hults, Rep. vo. Prescription, n. 99.) The French Code lays down the opposite rule as to this, but this is disapproved of by some writers as being difficult to reconcile with the preceding article, and as 552 THE LAW OF OBLIGATIONS. making the party suffer for -the fault of the huissier. (Planiol, 1, n. 2691. Contra, Aubry ct Ran, 5th ed. 2, p. 507.) A citation null in point of form is just as much a declaration of intention to make the claim as a citation before an incompetent court. As the Egyptian Code is silent there is no reason for npt applying the same rule in both cases. (C. C. F. 2247.) If the action is dismissed, the interruption is as if it had never taken place— k regardee comme non avenue. (C. C. F. 2247; B.-L. et Tissier, Prescription, n. 504; C. A. Alex. 18 mai 1911, B. L. J. XXIII, 330.) But mere declarations or protests do not interrupt pre- scription. (C. A. Alex. 12 mars 1913, B. L. J. XXV, 223.) Nor is prescription interrupted as against X by the fact that in an action by A against B, B reserves all his rights of recourse! against X. (C. A. Alex. 29 oct. 1918, B. L. J. XXXI, 4. (2) A monition of execution in proper form, even though not followed up, likewise interrupts prescription. The jurisprudence applies the same rule to other acts of execution, such as a saisie- arret. (C. A. Alex. 29 fevr. 1889, B. L. J. I, 72; C. A. Alex. 12 janv. 1915, B. L. J. XXVII, 109; Halton, 1, p. 208.) Naturally, if the plaintiff allows his action to be extinguished by peremption it is as if it had never occurred. (C. C. E. 82/111 ;• C. C. F. 2247.) Acts of acknowledgment. An acknowledgment by the debtor that he is liable for the debt interrupts the prescription in his favour, and such an acknow- ledgment may either be express or tacit. Such a tacit acknow- ledgment of the debt is frequently found when the debtor pays a sum on account of the debt or pays interest upon it. (C. C. F. 2248; B.-L. et Tissier, Prescription, n. 529; Guillourd, Pre- scription, 1, n. 245; Planiol, 2, n. 665; C. A. Alex. 5 dec. 1889, B. L. J. II, 59; DeHults, Rep. vo. Prescription, n. 102; Halton, 1, p. 209. See C. A. Alex. 18 mai 1911, B. L. J. XXIII, 330.) Such an acknowledgment is a unilateral act, and is valid with- out any acceptance. A fortiori its validity does not depend upon the presence of the other party. (B.-L. et Tissier, Prescription,- n. 83; Planiol, 1, n. 2713; C. A. Alex. 25 mai 1916, B. L. J. XXVIII, 365.) This is true also in the Mohammedan law. (C. A. Alex. 25 mai 1916, B. L. J. XXVIII, 366.) EXTINCTION OF OBLIGATIONS. 553 Effects of interruption. Interruption applies only to the past, it does not affect the future. It does not hinder a new prescription from beginning to run, and the new prescription will be of the same kind and subject to the same rule as the old one. (B.-L. et Tissier, Pre- scription, n. 551; Aubry et Hau, 5th ed. 2, p. 527.) But there is one important exception to this rule. When the prescription is of three hundred and sixty days for sums due to tradesmen, and the tradesman has got a written acknowledgment stating the amount of the debt, this not only interrupts the pre- scription, but from this time the debt will be prescribed only by fifteen years. This rule that the long prescription is here sub- stituted is laid down in the French Code as to this short pre- scription. (C. C. F. 2274; Cass. 7 mai 1906, D. 1908. 1. 65; B.-L. et Tissier, Prescription, n. 755; Planiol, 2, n. 673.) The reason of this short prescriptive period is that debts of this kind are usually made without writing. If the parties make them in writing, or if the creditor gets a written acknowledgment of the debt, this shows sufficiently that the parties intended to make their contract subject to the ordinary rule of fifteen years' prescription. These reasons apply in the Egyptian law, although the code is silent. (C. A. Alex. 9 mai 1894, B. L. J. VI, 278; De Hults, Rep. vo. Prescription, n. 107.) Suspension of prescription. Prescription is suspended when the law says that owing to certain special circumstances, or in order to protect certain classes of persons, it is not to run during a certain time. The period during which the suspension continues is not counted, but the period before the suspension begins is counted, and so is that which comes after the cause of suspension has been removed. The suspension does not, like interruption, wipe out and annihilate the benefit of a period which has passed. It applies only to the present. It does not, like interruption, originate in the act of a person by his bringing a claim or making an acknowledgment; it is a favour given by the law for reasons of equity. And it is given to certain persons precisely because they are not in a posi- tion to interrupt prescription by themselves. It does not run against minors until majority. (C. A. Alex. 3 juin 1909, B. L. J. XXI, 373.) 554 THE LAW OF OBLIGATIONS. When one of the co-creditors in a joint and several debt is a minor and prescription is suspended in his favour, this does not benefit his co-creditors. (See supra, p. 406.) Causes of suspension. Prescriptions, the terms of which are more than five years, do not run against persons subject to incapacity. (C. C. E. 85/114; C. C. F. 2278; C. A. Alex. 30 dec. 1913, B. L. J. XXVI, 118.) But, prescription against a lunatic is not suspended unless he has been formally interdicted. Although a man is notoriously a lunatic and resides in a lunatic asylum, prescription will run against him if he has not been interdicted. The incapacity must lie ime incapacity legalement constatee. (C. A. Alex. 22 mai 1902, B. L. J. XIV, 325.) This is in accordance with the French law. The suspension is by the terms of the French Code in favour of minors and interdits. (C. C. F. 2252, 2278. See Cass. 31 dec. 1866, S. 67. 1. 153, Journal du Palais, 67, p. 366; B.-L. et Tissier, Prescription, n. 423; Aubry et Rau, 5th ed. 2, p. 497.) The Egyptian law is the same. (C. A. Alex. 30 dec. 1916, B. L. J. XXVI, 118.) May there be other causes of suspension? According to the old French law the court was entitled to find in any particular case that prescription was suspended against a person by reason of special circumstances. If he was able to prove that as a matter of fact it had not been possible for him to claim his right, the court applied the rule contra nan valentem agere non currit prazscriptio . A man who could show that he had been absent from the country, that he was ignorant of his right, and so on, was relieved from the prescription which had run against him. This led to abuses, and the French Code laid down a new rule: Prescription runs against all persons unless they fall within an exception established by laic. (C. C. F. 2251; BrissaucU History of French Private Law, p. 364, note 8; B.-L. et Tissier, Prescription, n. 367; Guillouard, Prescription, 1, n. 153.) But the law did not provide for some cases in which equity was strongly in favour of allowing suspension. If, for example, owing to war, the courts were not sitting and an action could not be brought, it would be very hard to hold that the plaintiff had lost his right. The French jurisprudence, accordingly, has held that EXTINCTION OF OBLIGATIONS. 555 C. C. F. 2251 does not apply to causes of suspension which do not depend upon the capacity of the plaintiff. The rule applied by the courts is la prescription ne court point \contre celui qui est dans V ' impossibilite absolue d'agir, par suite d'un empechement quelconque resultant de la loi, de la convention ou He la force majeure. (Cass. 28 juin 1870, D. 70. 1. 309; Req. 2 mai 1900, D. 1900. 1. 422.) The jurisprudence is disapproved of by almost all the writers. The courts apply the maxim contra non valentem agere non currit prcescriptio as if it were adopted in the French Code, Avhereas the codifiers intended by this article C. C. F. 2251, to limit the application of this rule to the cases expressly specified in the code. (Laurent, 32, n. 38; Planiol, 1, n. 2701; B.-L. et Tissier, Pre- scription, n. 375.) MM. Aubry et Rau contend that prescription is suspended only when there is a legal obstacle to the exercise of the action. When the obstacle is merely one of fact, such as imprisonment, difficulty of communication and the like, there is no suspension of prescription in the true sense of the term. But the judge has poAver to relieve the creditor from the effects of the prescription which has run against him, if the creditor took his action promptly when the obstacle was removed. (5th eel. 2, p. 500. See C. A. Alex. 11 fevr. 1909, B. L. J. XXI, 189; C. A. Alex. 27 avril 1899, B. L. J. XI, 211.) There is much to be said from the legislative point of view for this opinion, but it is impossible to find support for it in the French Code. (Cf . German Code, arts. 203, 215.) The Egyptian Code has no article like C. C. F. 2251, and!, according to the Egyptian jurisprudence, a person who shows that it was absolutely impossible for him to bring an action is relieved from the prescription, and a suspension of this kind applies even to the short prescription of five years. In one case the widow of a soldier killed in the Sudan in 1883 had been kept a prisoner in Khartum till 1898, when that town was retaken. It was held that she was entitled to claim arrears of pension from 1883, and could not be met by the plea of five ylears' prescription applicable to such payments. L'impossibilite absolue d'agir constitue un cas de suspension de toute prescription. (C. A. Alex. 13 dec. 1900, B. L. J. XIII, 53; C. A. Alex. 3 janv. 1895, B. L. J. VII, 72; C. A. Alex. 9 dec. 1896, B. L. J. IX, 53; C. A. Alex. 27 avril 1899, B. L. J. XI, 211; Halton, 1, p. 212; De Hults, Rep. vo. Pre- scription, n. 63.) 556 THE LAW OF OBLIGATIONS. Upon the point whether absence from the country suspends prescription the decisions are not harmonious. It has been so considered. (C. A. Alex. 13 avril 1882, 11. O. VII, p. 140.) On the other hand, it has been held that acquisitive prescription runs against a person .who had been declared an absentee by a judgment of the Mehkema Sharia. (C. A. Caire, 13 dec. 1910, 0. B. XII, n. 35.) In the Mohammedan law absence suspends prescription. (Kadri Pacha, St at ut Reel, art. 256; C. A. Alex. 25 mai 1882, K. O. VII, p. 166.) But the Egyptian Code gives' the benefit of suspension of prescription to persons subject to incapacity. (C. C. E. 85/114.) The Mohammedan law, like the old French law, admits to this benefit any person who can prove a good excuse for his inaction. (Statut Reel, art. 256; C. A. Caire, 13 dec. 1910, 0. B. XII, n. 35.) Other modes of extinction. The seven modes of extinction of obligations which the Egyp- tian codes enumerate have now been explained. It has been mentioned elsewhere that these are the regular and normal modes in which any obligation may be extinguished. A word may be said about two other modes of extinction to which the code does not here refer. (1) Expiration of the time limited by the parties for its duration. An obligation entered into for a certain time naturally ter- minates when that period expires. It has in fact then been paid, and, therefore, it is hardly necessary to add this as a separate mode of extinction of obligations, though this is done in some codes. (C. C. Q. 1138.) For example, if I grant a lease for ten years, at the end of the ten years the lease comes to an end by efflux of time. (2) Death of the creditor and debtor in certain cases. The cases in which an obligation is extinguished by the death of the creditor or of the debtor have been discussed under the head of the representation of a party to a contract by his heirs and successors. (Supra, p. 16.) Some obligations are strictly personal both as to the creditor and the debtor, such as a contract with a barber to shave one for EXTINCTION OF OBLIGATIONS. 557 a certain period, or, a contract with a sick-nurse for her services during an illness. Others are (extinguished by the death of the debtor, but survive the death of the creditor, such as the contract with a clerk or domestic servant, while the majority of debts transmit in favour of the heirs of the creditors and against tho heirs of the debtor. (Pothier, Obligations, nos. 673 — -675.) And in some of the special contracts the code contains a provi- sion on the subject. So, a civil partnership is dissolved by the death of one of the partners, because in this contract one chooses a partner from con- fidence in his integrity and ability, and one has not necessarily the same reliance on his heir or representative. But it may be stipulated that the heir of a deceased partner shall step into his shoes. (C. C. E. 445/542; C. C. F. 1865.) So also mandate terminates by the natural death of the mandator or mandatary. (C. C. E. 529/650; C. C. F. 2003.) ( 559 ) CONCORDANCE OF ARTICLES OF CODES CITED WITH PAGES OF VOLUME II. Egyptian Native Civil Code. Art. page 23 290 30 202 46 34, 45 48 30 54 438 (35 142, 1G6 76 521 80 514, 540, 544, 547, 548 82 551, 552 85 554, 556 87 34, 45, 521 90 .- 362 91 2, 30 92 30, 31 94 189 96 363 97 372, 373 98 364, 381, 384, 385, 389 99 372, 376 100 372, 376 101 353 102 355, 356, 359 103 328, 330 104 339 105 345, 347, 369 106 345, 347 107 404, 405 108 407, 408, 409, 413, 429 109 408, 414 110 416, 417. 421, 442 111 416 112 417, 419 Art. page 113 419, 420 114 422, 428 115 414, 424, 429, 430 116 407, 431 117 219, 227, 230, 234 118 219, 232 119 206, 287, 290, 293 120 206, 215. 216 121 237, 250, 251, 252. 255 122 251. 257, 394 123 215, 250, 384, 393, 397 124 :216. 244. 245 125 394 126 248 127 244, 248 131 142, 166 137 12, 26. 53, 69 140 363 141 ...1, 12, 24, 26. 93. 94, 100, 549 142 12, 27 143 1, 87, 109, 122, 549 144 141, 142, 144, 153, 155, 156, 168, 177 145 166, 187, 213, 352 146 213 147 192, 194 148 187, 190. 191. 194 150 410, 411, 414 151 258 152 411 154 201 560 CONCORDANCE OF ARTICLES OF CODES CITED. Egyptian Native Civil Code — continued. Art. 15-5 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 182 183 185 186 187 187 188 189 189 190 191 192 193 194 195 196 201. 443, 9,9 444. 446, 455, 462, 414, 166. 449. 350, 392, 452, 395, 467, 432, 503, 444, 414, 466, 471, 471, 316. 217. 355 287, 373, 374, 316 479, 423. 426, 428, 9,9, 483, al. 2 ... 466, al 2 488, 499. 351. 500, 506 507 PAGE 203 203 203 483 445 445 446 465 446 455 448 448 450 451, 515 452 452 454 469 468 474 471 475 476 476 482 497 428 499 497 482 490 492 488 489 490 492 491 499 515 510 508 513 Art. 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 215 218 219 220 222 232 241 261 264 265 266. 268 270 279 281 283 284 297 298 307 324 332 333 342 344 PAGE 511, 512, 514 502, 511, 514 513 502 420, 502 516 516, 518, 519 522, 524, 530, 547 523 540, 549 540, 550 123, 523 527, 534, 536, 537 527, 537, 538 414, 524, 526, 539 528 522, 528 146, 148. 192, 455 290 455, 497 455, 497 192 122 482 368 34, 388 388 .32, 217, 317, 349, 368, 481 368 41 222 356 454 454 32, 217, 317, 330, 349, 355, 481 482 257 542 .350, 392 290 142 CONCORDANCE OF ARTICLES OF CODES CITED. 561 Egyptian Native Civ Art. 345 PAGE 348 349 357 458, 496, 513 30 366 55 370 183, 317 378 183 389 23 392 290 393 286 407 10 409 22, 410 411 19, 290, 302, 444 414 168 417 290 424 482 426 247 444 167 445 10; 557 470 214 482 353 488 167, 509 489 290, 304 499 410 500 360 il Code — continued. Art. page 505 247, 463 509 419, 502 514 162 521 150 522 10 524 13, 52 526 213 527 14 529 10, 557 530 450 541 498 544 290 555 94 562 290, 360, 379 574 "379 575 462 607 338 608 44, 338, 346 611 20, 27, 37, 39, 346, 370 613 23 615 20, 133, 346 617 21, 40, 346 652 290 Egyptian Mixed Civil Code. Art. page 42 290 51 202 68 34, 45 70 30 77 438 90 142, 166 102 • 521 108 514, 540, 544, 547, 548 111 551, 552 114 554, 556 116 34, 45, 521 144 362 145 2, 30 146 30, 31 148 189 W. — VOL. II. Art. 150 151 372, 152 364, 381, 384, 385, 153 372, 154 372, 155 156 355, 356, 157 158 159 160 161 .328. .34; 347, 345, 404, 162 407, 409, 413, 163 164 36 PAGE 363 373 389 376 376 353 359 330 339 369 347 405 429 408 408 562 CONX'ORDANCE OF ARTICLES OF CODES CITED. Egyptian Mixed Civ Art. page 165 408 ! 166 416. 417. 421. 442 | 167 416 168 417. 419 169 419. 420 170 422. 428 171 424, 429, 430. 431 172 407 173 219. 227, 230, 234 174 234 175 232 176 219 177 206, 287, 290, 293 178 206, 215 179 237, 250, 251, 252, 255 180 251, 257, 394 181 215, 250, 384, 393, 397 182 216, 244 185 394 186 248 187 244, 248 191 142, 166 197 117, 136 198 ....? 12, 26, 53, 69 201 363 202 ...1, 12, 24, 26, 93, 94, 97, 100, 549 203 12, 27 204 ...1, 87, 105, 109, 122. 549 205 141, 142, 144, 153, 155, 156, 168, 177, 187 206 166, 213, 352 207 213 208 192, 194 209 187, 190 211 410, 411 212 258 214 411 216 201 217 203 218 203 219 201. 203 220 203 il Code — continued. Art. page 221 443, 483 222 445 223 29, 444. 445 224 446 225 446, 455, 460, 462, 465 226 446 227 455, 456, 459 228 448 229 166. 448 230 449. 450 231 350, 392, 395, 432, 451, 452, 467, 503, 515 232 452 233 444 234 454 235 466, 469 236 468 237 471, 474 238 471 239 471, 475 240 316, 476 241 217, 287, 374, 476 242 316, 355, 373, 479, 482 243 497 245 423, 428 246 426, 428, 499 248 497 249 482 251 29, 483, 485, 490 251 ol. 2 492, 496 252 466, 488 253 489, 490 254 492 255 488. 491 256 499 257 499, 515 258 351, 500, 506, 510 259 507, 508 260 511 261 511, 512, 514 262 502, 511, 514 263 513 264 502 CONCORDANCE OF ARTICLES OF CODES CITED. 56:) Egyptian Mixed Civil Code — continued. Art. PAGE Art. PAGE 265 .420. 502 436 496, 513 266 516 449 55 267 516, 518, 519 453 183 268 522, 524, 530, 547 454 317 269 523 455 317 270 .540, 549 463 183 271 .540, 550 474 23 272 .123, 523 479 290 273 527, 534, 536, 537 480 286 274 527, 594 537, 538 526, 539 495 10 275 500 22, 410 276 528 502 ....19, 290, 302, 444 277 .522, 528 506 168 280 146 148, 455 509 290 283 290 516 482 284 .455, 497 518 247 285 .455, 497 541 167 297 122 542 10, 557 307 482 572 214 328 368 590 353 333 ...34, 388 596 167, 509 334 388 597 509 336.. .32, 217, 317 349, 368, 481 598 290, 304 338 368 609 410 341 41 610 360 350 222 617 247, 463 353 356 622 419, 502 355 454 628 162 356 454 638 150 371 32, 217, 317, 330, 349, 640 10 355, 481 643 13, 52 373 482 646 213 380 192 648 14 381 257 650 10, 557 387 192 651 450 402 542 663 498 413 88 666 679 290 415 350, 392 290 ." 94 49,7 686 290, 360, 379 430 142 697 379 431 348 698 462 435 458 733 338 36 (2) 564 CONCORDANCE OF ARTICLES OF CODES CITED. Egyptian Mixed Civil Code — continued. Art. page Art. page 7:54 44. 338, 346 742 20. 133. 346 737 20. 27. 37. 39, 346, 370 744 21. 40. 346 740 23 Egyptian" Native Code of Civil and Commercial Procedure. Art. 291 294 368 369 384 410 434 .95. Art. 126 668 500 674 529 685 529 695 208 697 451 698 510 699 .471. 95 95 474 474 474 472 .471. 472 Egyptian Mixed Code of Civil and Commercial Procedure. Art. page 332 126 335 500 412 529 413 529 437 208 471 95, 184. 451 496 -. 510 675 462 Art. page 760 95 764 95 773 471, 474 783 474 785 474 786 472 787 471. 472 Egyptian Native Commercial Code. Art. 2 22 48 82 92 97 268. 288 101 276 109 409 119 379 125 379 PAGE 409 411 28 14 263 Art. 137 148 162 180 194 195 221 228 :m .356. PAGE 411 105 210 248 487 357 357 107 16 CONCORDANCE OF ARTICLES OF CODES CITED. Egyptian Mixed Commercial Code. 565 Art. 2 ; 28 54 86 97 102 268, 288 106 276 114 409 144 411 PAGE Art. 409 169 411 187 28 201 14 202 26:3 PAGE 210 248 487 357 229 356, 357 235 107, 110 236 107 338 16 French Civil Code. Art. 6 187 191 548 •">•"> ."> 617 705 725 727 72!) 7S3 802 870 873 878 896 900 906 9:38 :....30, 31 957 70 1048 84 1071 41 1088 188 1101 362 1119 12, 46, 49, 51, 387 1120 12, 46 1121 12, 46, 53, 64, 69 1122 16 1126 442 1131 189 .56 PAGE 7 . 101 , 101 . 170 . 166 . 517 . 517 . 84 . 518 . 518 . 518 . 518 . 4:38 . 518 . 438 . 84 . 332 84 Art. 1134 1138. 1139 1141 1142 1143 1144 1145 1146 1147 1148 1149 1150 1151 1152 1153 1154 1157 1162 1165 1166 1167 1168 1171 1172 1173 1174 1175 1176 1177 PAGE 1, 2, 9 .30, 32, 317, 355, 368, 480 208 45 220, 225 230 220 211 206, 211, 392 206, 288, 292, 293 288 250, 252 257, 394 255, 394 215, 393, 397 ....244, 245, 246, 247, 250 248 50 363 1, 9, 12, 26, 66, 67 92, 94, 100 1, 87, 92, 105, 121 328, 330 334 331 331 262, 332 3:35 339 341 339, 341 566 CONCORDANCE OF ARTICLES OF CODE6 CITED. French Civil Code — continued. Art. page 1 178 341, 343 1179 336, 346, 347, 369 1180 97, 336 1182 347, 349 1184 10, 219, 221 1185 335, 350 1186 336, 351, 352 1187 353 1188 355, 356, 359 1189 362 1190 363 1191 362 1192 370 1193 372, 373 1194 372, 376 1195 372 1196 372 1197 404 1198 404, 406 1199 • 406, 416 1200 407, 408 1201 408 1202 409 1203 414 1205 416 1206 416, 442 1207 417 1208 417, 418 1209 419 1210 427 1211 423, 424 1212 424 1214 424 1215 426 1216 407, 430 1217 431 1219 442 1220 432, 433, 518 1221 433, 435, 436, 437 1224 439 1225 431, 439, 440, 441 1226 382, 386 1227 387, 388 Art. page 1228 389' 1229 389, 399, 400 1230 381, 391 1231 395 1232 ...402, 441 1233 402, 441 1234 443, 483- 1235 445 1236 29, 446 1238 195, 448 1240 450 1241 449 1242 451 1243 451, 503 1244 350, 392, 395, 452, 515 1247 452 1249 457 1250 457, 458 1251 457, 458 1252 463. 1254 468 1255 468 1256 469 1257 472 1258 473 1264 473 1272 485 1273 486 1274 29, 485 1275 484, 493 1276 495 1277 495 1278 488, 490 1279 490- 1280 490, 492 1281 488, 492. 1282 455, 498 1283 455. 498 1284 498 1285 428 1286 498 1289 499 1290 499. 515. CONCORDANCE OF ARTICLES OF CODES CITED. 567 French Civil Code — c Art. 1291 1293 1294 1295 1296 1297 1298 1299 1300 1301 1302 1302 1312 1321 1328 1348 1351 1370 1371 1372 1373 1374 1375 1376 1377 1378 1381 1388 1395 1583 1585 1589 1599 1608 1612 1624 1633 1654 1673 1689 1690 PAGE 351, 500, 503 507, 508, 509 420, 502, 503 511, 513, 514 506 511 513 511, 514 516 516, 519 ....195, 213, 217, 299, 316, 317, 476, 478 al. 2 286 166 130, 131, 132, 133, 135, 136 27 146, 192 122 144, 201, 202 140, 144 148, 150, 152, 157, 177 148, 153 148, 154 148, 156 166, 187 190 195, 213 187 196 9 30, 31 482 228 34, 388 454 222 217 257 348 458 46 ontinued. Art. page 1703 31 1717 55 1722 317 1733 300, 301 1743 23 1772 286 1780 394, 397 1782 304 1792 22 1794 10 1795 19, 302 1798 168 1825 286 1846 247 1864 167 1865 10, 557 1881 214 1887 411 1889 11 1944 353 1947 509 1948 167, 509 1953 304 1961 al. 3 475 1991 153 1992 150 1996 213 1997 13, 52 1998 14 2002 411 2003 10, 557 2005 450 2007 10 2020 360 2028 247 2035 519 2036 418 2093 24, 94 2125 135, 338 2131 360, 379 2168 379 2219 521, 522, 524 2220 540, 544 568 CONCORDANCE OF ARTICLES OF CODES CITED. French Civil Code — continued. Art. page 2221 544, 547 2222 548 2223 5,30 2224 529 2225 549, 550 2246 551 2247 552 2248 552 2249 417, 442 2251 554, 555 2252 554 2257 532 PAGE 531 . 531 . 527 Art. 2260 2261 2271 2272 527, 535 2273 537 2274 553 2275 528 2277 524 2278 554 2279 34, 44 2280 34, 45 2281 521 Quebec Civil Code. 13 17 155 156 765 795 838 983 1019 1022 1023 1025 1027 1028 1029 1030 1031 1032 1033 1036 1039 1040 1041 1042 1043 1044 1045 n. 24 / 289 101 101 56 30 56 142 363 1, 2 12 31 37, 45 12, 26, 47 ..12, 53, 64, 66, 69 16 93, 97, 100 106 122 110, 121 106 1, 123 144 158 .140, 148, 152, 157 153 154 1046 1047 1048 1049 1050 1052 1057 148 187 191 195 289 187 201 1065 10, 220 1066 220 1067 206 1069 218 1070 206 1071 1072 1076 1079 1085 1091 1092 1093 1094 1095 1103 1105 1106 1114 1119 293 289 215 318 346 353 .355, 356 362 363 370 407 410 410 427 ...... 426 CONCORDANCE OV ARTICLES OF CODES CITED. i69 Art. page 1120 407 1122 432, 433 1123 433 1125 442 1130 439, 441 1131 382 1132 388 1135 396 1138 443, 556 Quebec Civil Code — continued. Art. 1141 1143 1157 1161 1170 1172 1174 1176 1178 1179 1180 1183 1190 1191 1193 1196 1197 29 195 463 469 485 29 495 488 492 492 488 498 507 420 506 511 511 1198 516, 518 1199 516 1200 213, 217, 478 1202 480 1212 130, 131 1225 27 1241 122 1260 9 1472 30 1476 1487 1495 1570 1571 1596 1604 1638 1650 1663 1688 1691 1692 1709 1716 1717 1720 1755 1759 1767 1768 1774 1810 1812 1815 1895 1981 24, 94 2038 135, 338 2085 41 2098 21, 27, 39, 40, 41, 133 2184 544 2268 44, 45 2359 31 2362 31 PAGE , 228 . 34 . 454 . 458 . 46 . 30 . 289 . 53 . 289 . 23 . 22 . 10 . 19 . 153 . 14 . 13 . 14 . 10 . 10 . 289 . 289 . 11 . 353 . 509 . 289 . 10 ( 571 ) INDEX TO BOTH VOLUMES. ABSENTEE, is prescription suspended against... Vol. II., 556. ACCEPTANCE. See Contract. ACCESSOEY OBLIGATIONS. ..Vol. I., 43, 100. may survive principal obligation... Vol. I., 101. See Penal Clause, Obligations with a. ACQUIESCENCE. See Modification of Contract by Parties. ACT, obligation resulting from an. See Table of Contents, Vol. II., Chapter VII. '"ACT OF GOD "...Vol. II., 326. ACTES BEGUISES. See Simulation. ACTIO BE IN REM VERSO. See Table of Contents, Vol. II., Chapter VIII. against occupant of immoveable without lease... Vol. II., 169, 170. benefit created not enough to give action. ..Vol. II., 164. building on another's land... Vol. II., 166. conditions of... Vol. II., .179 seq. for payment of tilings requisitioned by enemy forces... Vol. II., 171. for payment to incapable person. ..Vol. II., 166. for value added to property of defendant... Vol. II., 170. genealogist, claim by... Vol. II., 170. general average losses fall under... Vol. II., 172. gestion d'affaires, action on, distinguished... Vol. II.. 175. name, origin of. ..Vol. II., 168. partner, contract by, in his own name. ..Vol. II., 167. partner, secret, claim against... Vol. II., 174. payment of another's debt... Vol. II., 446. various theories of. ..Vol. II., 175 seq. See English Law; German Law: Swiss Law. ADVOCATES, prescription of sums due to... Vol. II., 536 seq. AGENCE BE RENSEIGXEMENTS... Vol. II.. 282. 572 INDEX TO BOTH VOLUMES. AGENT. See Mandate. ALEATORY CONTRACT. See Contract; Gaming Contract. ALIMENT. See Gestlon d'affaires. ALIMENTARY PROVISIONS. ..Vol. II., 201. as natural obligations... Vol. I., 26. renunciation of, invalid... Vol. I., 156. rules as to persons bound to furnish, and as to persons en- titled to claim. ..Vol. II., 203. See English Law. ALIMONY. See Alimentary Provisions. ALTERNATIVE OBLIGATION. ..Vol. II., 362. See Table of Contents, Vol. II., Chapter XIX. choice, does it ever pass over to party not originally entitled to it... Vol. II., 365. choice, has it retroactive effect... Vol. II., 368. how declared... Vol. II., 366. right to make... Vol. II., 366. when can Court make. ..Vol. II., 364. when can debtor make... Vol. II., 363. distinguished from conjunctive or facultative... Vol. II., 363. impossibility, supervening, of performing one alternative... Vol. II., 371 seq. no alternative if one of things promised is unlawful or im- possible ab Initio.. .Vol. II., 370. obligation with penal clause is a special kind of... Vol. II., 364, 384. See German Law. AMERICAN LAW, relativity of contract, in. ..Vol. II., 91. stipulation of non-liability by shipowner... Vol. II., 284. ANTICHRESIS, creditor has not a privilege... Vol. II., 461. APPORT. See Partnership. APPROPRIATION OF PAYMENTS. See Imputation of Pay- ments. ARBITRATION. See Compromise. ARCHITECT AND CONTRACTOR, joint and several liability of... Vol. II., 410. liabilitv of, may, by agreement, be for more than ten years ...Vol. II., 542. warranty of, passes to sub-purchaser... Vol. II., 22. ARMY, contract not to serve in. ..Vol. I., 150. INDEX TO BOTH VOLUMES. 573 AETIST. See Painter. ASSIGNMENT OF CLAIM, differs from subrogation... Vol. II., 458. distinguished from novation... Vol. II., 495. its effect on right to plead compensation... Vol. II.. 512. ASSOCIATIONS, are they persons... Vol. I., 342. ASSOCIATION EN PARTICIPATION. See Partnership. ASSURANCE. See Insurance. ASSURANCE COLLECTIVE. See Stipulation pour autrui. ASTREINTES, Court, can it modify... Vol. II., 240, 242. Court, when it may compel performance by... Vol. II.. 234. fait personnel, may be enforced by... Vol. II., 239. whether from date of first judgment or that of judgment in appeal... Vol. II., 239. See English Law; German Law. AUTHOR, nature of contract of, with publisher... Vol. I., 384. AV ARIES COMMUNES. ..Vol. II., 172. See Actio in de rem verso; General Average. AY ANTS CAUSE. ..Vol. II., 17. 19. BANKRUPTCY, compensation, its effect on... Vol. II., 513. term, debt subject to a, becomes instantly exigible... Vol. II., 355. non-trader cannot be bankrupt... Vol. II., 107. BEARER, instruments payable to. See Commercial Law. BET, money paid cannot be repeated... Vol. I., 31, 177. See Gaming Contract. BILATERAL CONTRACT, impossibility of performance, effect of. ..Vol. II.. 316. 333. 476. nature of... Vol. I., 83. resolutory condition implied in. ..Vol. I., 88. BILL OF EXCHANGE, acceptor who pays has not in general any recourse... \ ol. II., 430. 574 INDEX TO BOTH VOLUMES. BILL OF EXCHANGE— continued. accommodation... Vol. I., 50. giving bill does not novate debt. ..Vol. II., 487. protest for non-acceptance creates facultative obligation... Vol. II., 379. BOl'LE DE XEIGE, contract of... Vol. I., 50. BREACH OF CONTRACT, Court not bound to grant rescission for... Vol. II., 222. plaintiff may keep part performance and claim damages... Vol. "II., 224. remedies for. See Table of Contents, Vol. II., Chapter XII. right of rescission for... Vol. II., 221 seq. ■when judgment is equivalent to performance... Vol. II., 227. See Specific Performance; Substituted Performance. BREACH OF PROMISE OF MARRIAGE, damages for... Vol. II., 253. See Marriage. BROTHEL, contracts for lease of. ..Vol. I.. 115, 180. BUILDER. See Architect. BUILDINGS, erected on land of another... Vol. II., 166. CAPACITY. See Table of Contents, Vol. I.. Chapter XVII. .ivil death abolished... Vol. I., 352. incapable person cannot keep unjust enrichment... Vol. I., 355. contract by. ..Vol. I., 212. of moral persons... Vol. I., 342. CARRIER, acceptance of ticket, effect of. ..Vol. I., 196. bound to carry at fixed prices... Vol. I., 164. change of order given to... Vol. II., 10. liability for damages which might have been foreseen... Vol. II., 258. owes dutv to persons in vehicles Avithout tickets... Vol. II., 266. presumption of fault in case of theft. ..Vol. II., 304. shipowner may exonerate himself from liability for fault of captain and crew. ..Vol. II., 263. war as excuse for non-performance of contract... Vol. II., 307. See English Law; Exoneration from Liability, Stipula- tions of; Forwarding Agent. €AS FORTVIT. * explained... Vol. II., 288. See Fortuitous Event. INDEX TO BOTH VOLUMES. 575 CAUSE, compared with motive and object... Vol. I., 104. See Unlawful Contracts, continuing... Vol. I., 49. effects of illegality of... Vol. I., 175. failure of, in bilateral contracts... Vol. I., 48. false, meaning of. ..Vol. I., 52. in bilateral contracts... Vol. I., 60. partial want of. ..Vol. I., 51. presumption of lawful... Vol. I., 48. simulate... Vol. I., 53. theory of. ..Vol. I., 55. unlawful... Vol. I., 45. See Unlawful Contracts, want of. ..Vol. I., 50. € AVE AT EMPTOR...Vo\. I., 272. CERT AT BE DAMNO EVITANBO.. .Vol. II., 21, 114, 119. CERTAT BE LUCRO CAPTANBO...Vo\. II., 114, 119. CESSION BES CREANCES. See Assignment of Claims. CHARITABLE FOUNDATIONS, by gift subject to charge... Vol. II., 84. effected by stipulations pour autrui... Vol. II., 56. modification of.. .Vol. II., 3. CHIROGRAPHIC OBLIGATIONS... Vol. I., 42. See Creditors. CHOSE JUGEE, when defence of, is available to joint and several debtor... Vol. II., 420. CIVIL DEATH. See Capacity. CLAQUE, contract of... Vol. I., 122. CLUB, appeal from rules of. ..Vol. I., 147. nature of contract by member. ..Vol. II., 8. CODES, EGYPTIAN, Arabic version of. ..Vol. I., 316. COFERE-EORT. See Strong-box. COMBINATIONS, of traders, illegal... Vol. I., 171. COMMERCIAL LAW, bankruptcy confined to traders... Vol. II., 107. putting in default, in... Vol. II., 207. 576 INDEX TO BOTH VOLUMES. COMMERCIAL LAW— (' stipulation for payment to third party, or, in default, for payment of penalty to stipulator... Vol. II., 387. in contracts for public works. ..Vol. II.. 56. in contracts of public utility... Vol. II., 57. in insurance... Vol. II., 55. lease, assignment of, is... Vol. II., 55. may beneficiary lie indeterminate or future. ..Vol. II., 76 seq. public subscription may be. ..Vol. II., 58. theories of, discussed... Vol. II., 60 seq. See English Law. STOCKBROKERS. See Factors and Broker-. STOCK EXCHANGE, gambling on... Vol. I., 30. STRIKE, not necessarily valid excuse for non-performance of contract... Vol. II., 314. STRONG-BOX, contract to lease... Vol. I., 184. SUBROGATION, differences between French and Egyptian laws... Vol. II., 457. differs from assignment of claims... Vol. II., 458. effects of.. .Vol. II., 463. is there a new debt... Vol. II., 464 seq. legalised document not required by Native Code... Vol. II., 459. nature of... Vol. II., 455. when legal subrogation occurs... Vol. II.. 460. SUBSCRIPTIONS. See Stipulation pour autrui. SUBSTANCE, difference between mistake as to substance and latent defect... Vol. L, 266. See Mistake. SUBSTITUTED PERFORMANCE, must Court grant, if demanded... Vol. II., 227. when available... Vol. II., 227. SUCCESSION SEARCHERS... Vol. I., 121. SURETY, can he claim damages in excess of interest... Vol. II., 247. can plead compensa f ion with debt due by plaintiff to prin- cipal debtor... Vol. II., 502. • Index to both volumes. 609 SURETY— continued. can secure natural obligation... Vol. I., 100. discharged if debt is extinguished by confusion... Vol. 11.. ,")18. exceptions which he can plead. -..Vol. II., 418. judicial, joint and several liability of... Vol. II., 410. See Release of Debt. SURPRISE, imputation when debtor was "taken by surprise "...Vol. II., 468. SWISS LAW, an actio de in rem verso in... Vol. II., 185. compensation, no automatic, in... Vol. II., 515. completion of contract... Vol. I., 203. condition, effect of preventing fulfilment of... Vol. II., 343. damages for breach of money -debt... Vol. II., 247. damages for mistake in contract... Vol. I., 262. default, putting in... Vol. II., 218. fortuitous event in.. .Vol. II., 318. hotel-keeper's liability for goods of guest... Vol. II., 305. interpretation of contracts... Vol. I., 358. mistake in marriage... Vol. I., 245. mistake in transmission of offer or acceptance... Vol. I., 262, 283. offer, binding effect of... Vol. I., 192. offer, lapse of... Vol. I., 195. penalty, Court may modify. ..Vol. II., 40l. stipulation pour autrui...Vo\. II., 72. stipulations of non-liability... Vol. II., 285. threats by third party.. .Vol. I., 299, 303. SYNALLAGMATIC CONTRACT. See Bilateral Contract. SYNDIC AT. See Trades-Union. TAX, payment of tax illegally imposed... Vol. II., 189, 190. TELEGRAM, damages for mistake in. ..Vol. I., 259. stipulations of non-liability... Vol. II., 277. See English Law; German Law. TELEPHONE. See Contract. TENDER AND PAYMENT, made at bar of Court... Vol. II., 474. of specific corporeal thing... Vol. II., 471 seq. when necessary... Vol. II., 470. when obligation is to do, to deliver an immoveable, or to deliver an indeterminate thing... Vol. II., 474 seq. w. — vol. ii. 39 610 INDEX TO BOTH VOLUMES. TERM, OBLIGATION WITH A. See Table of Contents, Vol! II., Chapter XVIII. cannot be compensated with exigible debt if term is in favour of debtor... Vol. II., 504. definition of. ..Vol. II., 350. diminution of securities by debtor, effect of. ..Vol. II., -350. bow right to claim term may be lost. ..Vol. II., 355 seq. bow term is computed. ..Vol. II., 351. if debtor pays lias be right to repetition... Vol. II., 351. implied in contracts... Vol. I., 363. prescription of... Vol. II., 533. risk during term... Vol. II., 351. what acts can creditor do... Vol. II., 351. when is term presumed to be in favour of debtor... Vol. II., 353. TESTAMENT. See Wills. THEFT, may be fortuitous event. ..Vol. II., 303. See Carrier; Depositary; Hotel-keeper. THIEF, bound to restore without being put in default. ..Vol. II., 213. THIRL) PARTIES. See Contract; Transcription. THREATS. See Duress. TITLE TO DEBT, effect of destruction of, by creditor... Vol. II., 190. TRADE, contracts in restraint of... Vol. I., 163. refusal to trade, when unlawful... Vol. I., 164. See Trading. TRADE SECRET, disclosure of... Vol. I., 360. " TRADESMEN," meaning of term in law of prescription... Vol. II., 535. TRADES-UNION, contract that workman shall not belong to... Vol. I., 167. TRADING, restrictions as to, in sale of business... Vol. I., 166. TRADING WITH ENEMY... Vol. I., 123 seq. See Enemy. TRADITIONIBUS ET USUCAPIONIBUS DOMINI A RERUM, NON NVDIS PACTIS TRANSFERUNTUR...Vo\. II., 32. Index To both volumes. km Transcription, does not cure vice of title... Vol. II., 110. of lease, when necessary... Vol. II., 23. protection of purchaser in good faith. ..Vol. II., 20. protects against contre-lettre not registered... Vol. II., 133. what purchasers are protected by. ..Vol. II., 39. when is purchaser in good faith. ..Vol. II., 41, 42, 43. TRUST. See English Law. TUTORSHIP, law of, cannot be varied by contract... Vol. I., 154. ULTRA VIRES. See English Law. UNDUE INFLUENCE. See English Law. UNJUST ENRICHMENT, incapable person must account for... Vol. I., 355. See Actio de in rem verso; Dissolution of Obligation. UNLAWFUL CONTRACTS. See Table of Contents, Vol. 1., Chapter V. contract against public policy by lex fori not enforceable... Vol. I., 370. contract not unlawful because exorbitant... Vol. I., 105. right to challenge cannot be lost by acquiescence... Vol. II., 7. See Exoneration, Stipulations of; Gaming' Contract. USAGE. See Default, Putting in; Interpretation of Contracts. USURY, laws against... Vol. I., 28. laws as to, cannot be evaded by penal clause... Vol. II., 383, 394. payment of usurious interest, when recoverable... Vol. I., 178. See Damages; Compound Interest. VENTES 2 TEMPJERAMENT ...\o\. II., 30. VERBA CONTRA STIPULATOREM INTERPRET AN DA SUNT. ..Vol. I., 394. VIOLENCE. See Duress. VOLENTI NON FIT INJURIA.. .Vol. II., 281, 282. WAIVER OF TORT. See English Law. WAR, debtor may have taken risk of war into account... Vol. II., 280. See Enemy; Fortuitous Event. 612 INDEX TO BOTH VOLUMES. WIFE. See Married Woman. WILL, contract in restraint of... Vol. I., U>2. damage* for preventing... Vol. I., 289. informal... Vol. I., 27/ WORKMEN'S COMPENSATION ACT. See English Law. WRONGDOERS, when liable jointly and severally... Vol. II., 410. LONDON: PEINTED BY 0. F. ROWORTH, 88, FETTER LANE, E.C. JULY, 1920. A SELECTION OF RECENT LAW WORKS PUBLISHED BY STEVENS & SONS, Limited, 119 & 120, CHANCERY LANE, LONDON, W.C.2. %* A Discount of 20 per cent, off all new Books (except where marked net) for Cash with Order. (Carriage or Postage extra.) Complete Catalogue of New. and Secondhand Law Works post free. ABC GUIDE TO THE PRACTICE OF THE SUPREME COURT, 1920. Net, 7s. 6d. "Of great service to the profession." — Solicitors' Journal. ACCOUNTS.— Hodsoll's Practical Accounts for Execu- tors and Trustees. 1914. Net, 10s. 6d. " Invaluable to law and accountancy students, solicitors and others.'' — Law Times. ADMIRALTY.-Roscoe's Admiralty Practice. Fourth Edition. 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