THE LIBRARY
OF
THE UNIVERSITY
OF CALIFORNIA
LOS ANGELES
SCHOOL OF LAW
A TREATISE
ON THE
LAW OF DAMAGES
EMBEACINQ
AN ELEMENTARY EXPOSITION OF THE LAW
AND ALSO
ITS APPLICATION TO PARTICULAR SUBJECTS OF
CONTRACT AND TORT
BY
J. G. SUTHEELAE"D
Author op a Treatisb on "Statutes and Statutory CoNSTBtronoH"
THIRD EDITION
BY
JOHN E. BERRYMAN
Editor of the Second Edition op this Work; Author of A
"Digest op the Law of Insurance;" One of thb
Kbvisers and Editors of the "Wisconsin
Statutes of 1898," etc., etc.
YOL. I
CHICAGO
CALLAGE AN AND COMPANY
1903
r
Copyright, 1903,
BY
CALLAGHAN AND COMPANY.
STATE JOURNAL PRINTING COMPANY,
Printers and Stereotypers,
madison, wis.
5
PREFACE TO FIRST EDITION.
The law of damages is now, and for many years has been,
in the course of rapid and expansive growth; its former ap-
plications have been subjected to frequent forensic and judi-
cial review, with the advantage of the experience and learning
of the past, and the stimulus as well as the suggestive aid of
new and diversified interests demanding protection, and new
forms of injury invoking redress.
It is therefore desirable that the law be often rewritten to
incorporate in its structure the results of the latest adjudica-
tions, not only for the light they reflect upon the earlier cases,
but to derive the full benefit of these accretions, which embody
the contribution of contemporary jurists and master minds of
the profession.
The administration of justice is committed to so many inde-
pendent tribunals, that it is not surprising their determinations,
especially of questions of first impression, have not proceeded
in a very harmonious current. Differences of judicial opinion,
more or less radical, under such circumstances, are unavoid-
able. These are liable to result in permanent divergencies ;
and to beget local exceptions and peculiarities so numerous
as to greatly mar the symmetry and impair the authority of
our general jurisprudence.
Frequent elementary expositions of the law, embracing a
discussion of the discordant cases with reference to the general
principles which ,all acknowledge, are of great importance ;
for, to the extent that they are influential, they wfll counter-
act this centrifugal tendency.
It is believed that the work now offered will be found use-
ful in these respects, notwithstanding that excellent works on
the same subject are now in general use. It has extended to
three volumes by being made to embrace a wide range of
^doa20
JV PREFACE TO FIRST EDITION.
lopics germane to the general subject, and by an elementary
and a minutely practical treatment of them.
The First Part is elementary, and designed to aid the in-
quiries of the student, and to facilitate the investigations of
the practitioner. In it are stated and illustrated the general
principles upon which damages, recognized under various
names, are allowed by law ; their scope relatively to the in-
jury to be redressed; the principles by which the elements of
damage may be tested, and the amount to be allowed there-
for determined; by which facts may be legitimately weighed
to enhance or mitigate damages ; how they may be juridically
or conventionally liquidated and satisfied; and the pleadings^
evidence and procedure suitable and necessary for their re-
covery.
The Second Part contains a particular discussion of these
principles in their practical application to the subjects of con-
tract and tort, which give rise to actual demands for damages.
The whole is copiously elucidated by decided cases and
apposite quotations ; and the supporting authorities will, it is
believed, be found to embrace all the decisions of any impor-
tance on the subject.
The author submits his work with its faults — for he dare
not hope it wiU be found faultless — to the indulgent judg-
ment and fair criticism of the profession.
J. G. S.
Salt Laxe City, September, 1882.
PREFACE TO SECOND EDITION.
A new edition of this work has been deemed necessary to
incorporate into it the results of the numerous adjudications
during the ten years which have elapsed since the publication
of the first edition. A thorough revision has been made, and
about four hundred pages of new matter added as the fruit of
nearly seven thousand later decisions. By a judicious con-
densation of the old matter and the exclusion of some redun-
dancies, the additions have not so materially increased the
size of the volumes as to make them inconveniently large.
The text has been divided into sections for easier reference ;
but the side-paging will serve to direct the reader to the mat-
ter indicated in the frequent references in judicial opinions
and by text-writers and practitioners to the first edition.
The editors submit their work to the profession with the
assurance that they have spared no pains to make it compre-
hensive and accurate.
J. G. S.
J. B. B.
NoVEMBEE, 1892.
PREFACE TO THIRD EDITION.
This edition of Judge Sutherland's treatise on the Law of
Damages has been prepared with the view of making it ex-
pressive of the law of that subject as it is at the present time.
This has not been done at the expense of the excellent per-
spective that distinguished writer gave of the subject in the
first edition. That part of the work remains undisturbed.
The editor has sought to do for this edition what he endeav-
ored to do, under the direction of the author, in preparing the
second edition : incorporate into it the results of the numerous
adjudications on the various branches of the law of damages
made during the eleven years which have elapsed since the
publication of that edition. That endeavor met the approval
of the author, who desired that this edition should be pre-
pared by the editor of the second edition. The ver}' numer-
ous references in the reported cases and treatises on various
branches of the law to that edition tend to show that it has
been found useful to the bench and bar. The controlling aim
in the preparation of this edition has been to make it as ad-
vantageous as possible in presenting the American and Eng-
lish law of damages as it has been declared by the courts.
The American cases which have been reported in unofficial
series of reports are referred to therein. These references and
the new matter added to the text and notes represent about
eight hundred pages. To make room for so much additional
matter, it has been found necessary to condense somewhat a
portion of the matter which appeared in the former edition.
It is hoped that this has been done without serious detriment
to the value of the work.
Madison, Wis., August, 1903. John K. Bereyman.
TABLE OF CONTENTS
VOL. 1.
PART L— AN ELEMENTARY EXPOSITION OF THE
LAW OF DAMAGES.
CHAPTER L— A GENERAL STATEMENT OF THE RIGHT TO DAM-
AGES, THEIR LEGAL QUALITY AND KINDS.
References are to sections.
General observations. 1
The right to damages; how amount ascertained 2
Damnum absque injuria; injuria sine danino 3
Public wrongs 4
Illegal transactions . 5
Contractual exemption from liability for damages. 6
Nature of the right to damages; its survival ... 7
Injuries to unborn child 8
CHAPTER IL— NOMINAL DAMAGES.
Nature and purpose of nominal damages 9
Illustrations of the right to nominal damages 10
The right a substantial one; new trials 11
CHAPTER IIL— COMPENSATION.
Section 1.— Compensatory Damages.
Award of compensation the object of the law 12
Limitation of liability to natural and proximate consequences 13
Section 2. — Direct Damages.
What these include 14
Section 3. — Consequential Damages fob Torts.
Awarded for probable consequences 1.5
Rule of consequential damages for torts 16
Illustrations of the doctrine of the preceding section 17-19
Consequential damages under fence statutes 20
Nervous shock without impact: the Coultas case and American cases
in harmony with it 21
Same subject; ci'iticism of the Coultas case; nervous shock a phys-
ical in j ury 23
Same subject; an earlier ruling 2.}
iSarae subject; Dulien v. White 23a
Same subject ; miscellaneous cases 24
Anticipation of injury as to persons; illustrations 2.5
Consequential damages in highway cases 26
Imputed negligence ... 27
Vlll TABLE OF CONTENTS.
References are to sections.
Particular injury need not be foreseen 28
The act complained of must be the efficient cause 29-31
Breach of statutory duties 32
Injury through third person 33
Liability as affected by extraordinary circumstances 34
Illustrations of the doctrine of the preceding section 35
Liability of carriers for consequential damages; extraordinary cir-
cumstances 36
Intervening cause .... 87, 38
Act of injured party; fraud and exposure to peril 39
Act of third person 40-42
Wilful or malicious injuries 43, 44
Section 4.— Consequential Damages foe Breach of Contract.
Recoverable only when contemplated by the parties 45
Illustrations of liability under the rule 46
Liability not affected by collateral ventures 47
Distinction between consequential liability in tort and on contract 48
Same subject; criticism of the Hobbs case 49
Liability under special circumstances; Hadley v. Baxendale 50
Same subject; illustrations and discussion of the rule 51
Market value; resale; special circumstances 53
Section 5.— Required Certainty op DAMAOEa
Damages must be certain in their nature and cause 53
Liability for the principal loss extends to details and incidents 54
Only the items which are certain are recoverable 55
Recovery on successive consequences 56-58
Required certainty of anticipated profits ... 59, 60
Warranty of seeds 61
Prospective growth of orchard and of animals. 62
Profits of special contracts 63
Same subject; Masterton v. Mayor , 64
Violation of contract to lease 65
Profits of labor 66
Profits from commercial ventures 67
Profits on dissolution of partnership 68
Commercial agencies 69
Tortious interference with business 70
Chances for prizes and promotions 71
Contingent advantage 73^^
Uncertain mitigation of breach of marriage promise 73
Failure to provide sinking fund 74
Section 6. — The Constituents of Compensation, or Elements
of Damage.
Elementary limitation of damages 75
Damages for non-payment of money 76
Greater damages than interest for failure to pay money 77
Liability for gains and losses 78
What lo-sses elements of damage 79
Same subject; labor and expenditures 80
Same subject: damages for relying on performance 81
Same subject; liabilities to third persons; covenants of indemnity. . 82
Same subject; indemnity to municipalities; counsel fees 83
Same subject; liability for losses and expenses 84
Same subject: bonds and undertakings; damages and costs 85
Same subject; necessity of notice to indemnitor to fix liability 86, 87
Expen.'^es incurred to prevent or lessen damages 88
Same subject; between vendor and vendee 89
Same subject; extent of the duty 90
TABLE OF CONTENTS. IX
References are to sections.
Same subject; employer may finish work at contractor's expense. ... 91
May damages for breach of contract include other than pecuniary
elements? 92
Elements of damage for personal torts 93
Character as affecting damages for personal injuries 94
Jlental suffering 95, 96
Same subject; liability of telegrapii companies 97
Right to compensation not affected by motive 98
Distinction made for bad motive; contracts 99
Motive in tort actions 100
How motive affects consequences of confusion of goods 101
Where property sued for improved by wrong-doer 103, 10;>
Distinctions in the matter of proof 104
Value of property 105
CHAPTER IV.— ENTIRETY OF CAUSES OF ACTION AND DAMAGES.
Section 1. — General Principle&
Cause of action not divisible 106
Present and future damages 107
What is an entire demand ? 108
Entire demand may be severed 109
Contracts to do several things successively or one thing continuously 110
Items of account Ill
Continuing obligations 112
Damages accruing subsequent to the action 1V6
Damage to real property 114-116
Contracts of indemnity 117
Damage to property and injury to person by same act 118
What is not a double remedy 119
Prospective damages 120
Certainty of proof of future damages 121
Action for enticing away apprentice, servant or son 122
Future damages for personal injuries 123
Only present worth of future damages given 124
Continuous breach of contract or infraction of rights not an entirety 125
Continuance of wrong not presumed 126
Necessity of successive actions 127
Section 2. — Parties to Sue and be Sued.
Damages to parties jointly injured entire 128
Actions under statutes ... 121)
Must be recovered by person in whom legal interest vested 180
Not joint when contract apportions legal interest 131
Implied assumpsit follows the ■ consideration 132
Effect of release by or death of one of several entitled to entire dam-
ages 133
Misjoinder of plaintiffs, when a fatal objection 134
Joinder of defendants; effect of non-joinder and misjoinder 135
How joint liability extinguished or severed 136
Principles on which joint right or liability for tort determined 137
Tortious act not an entirety as to parties injured 138
General and special owners 139
Joint and several liability for torts 140-142
CHAPTER v.— LEGAL LIQUIDATIONS AND REDUCTIONS.
Section 1. — Circuity op Action.
Defense of 143
Agreement not to sue 144
Principal operates in favor of plaintiff 145
Damages must be equal 146
Reciprocal obligations 147
X TABLE OF CONTENTS.
References are to sections.
Section 8. — Mutual Credit.
Compensation by mutual demands 148
Section 3. — Mitigation op DAMAOEa
Equitable doctrine of 149
Absence of malice 150
Words as provocation for assault; agreements to fight 151
Provocation in libel and slander 152, 153
Mitigating circumstances in trespass and other actions 154
Plaintiff's acts and negligence • • 155
Measures of prevention: return of property; discharge of plaintiff's
debt 156, 157
No mitigation when benefit not derived from defendant 158
Fuller proof of the res gestae in trespass, negligence, etc 159
Official neglect 160
Same subject; modification of the old rule 161
Plaintiff's consent 162
Injuries to character and feelings 163
Reduction of loss or benefit 164
Pleading in mitigation 165, 166
Payments 167
Section 4.— Recoupment and Counter-claim.
Definition and history of recoupment 168, 169
Nature of defense 170, 171
Constituent features of recoupment. ... 172
Remedy by counter-claim 173
Validity of claim essential 174
Parties 175, 176
Maturity of claim or demand; statute of limitations ... 177
Cross-claim must rest on contract or subject-matter of action. 178
Recoupment for fraud, breach of warranty, negligence, etc 179, 180
What acts may be the basis of recoupment 181
Cross-claims between landlord and tenant 182
Cause of action, connection between and cross-claim 183
Recoupment between vendor and purchaser 184
Liquidated and unliqidated damages may be recouped 185
Affirmative relief not obtainable 186
Election of defendant to file cross-claim or sue upon his demand 187
Burden of proof; measure of damages 188
A cross-claim used in defense cannot be sued upon 189
Notice of cross-claim 190
Section 5. — Marshaling and Distribution.
Definition 191
Sales of incumbered property in parcels to different purchasers . . 192
Sale subject to incumbrance 193
Effect of creditor releasing part 194
Rights where one creditor may resort to two funds and another to
only one 195
Same where the funds belong to two debtors 196
Principles on which priority determined 197
Section 6.— Set-off of Judgments.
Power to direct set-off inherent 198
AVhen it will or will not be granted . 199
Interest of the real parties considered 200
Set off not granted before judgment 201
Assignee must make an absolute purchase 202
Nature of action immaterial 203
Liens of attorneys 204
TABLE OF CONTENTS. Xl
References are to sections.
CHAPTER VI.— PECUNIARY REPRESENTATIVE OF VALUK
Section 1. — Money.
Characteristics of money 205
Payment to be made in money of country of performance 206
Payment in currency 207
Effect of changes in the value of money 208
Value of money at time of contracting 200
The legal tender act 210
Effect of fluctuations in currency 211
Section 2.— Par and Rate of Exchanoe.
Par of exchange 212
Rate of exchange 213
CHAPTER VII.— CONVENTIONAL LIQUIDATIONS AND
DISCHARGES.
Section 1. — Payment.
What is; modes of making 214-216
What is not payment 217
Effect of payment 218
Payment before debt due 219
Payment by devise or legacy 2''0
Payment by gift inter vivos 221
Payment by retainer 222
Payment in counterfeit money, bills of broken banks or forged
notes 223, 224
Payment by note, bill or check 225-227
Collaterals collected or lost by negligence of creditor are payments 228, 229
Who may make payment 230
To whom payment may be made 231
Pleading payment 232
Evidence of payment 233
Section 2.— Application op Payments.
General rule 234
By debtor 235, 236
Same subject; evidence 237
By creditor 238-240
Appropriation by the court 241
When payments applied pro rata 242
General payment applied to oldest debt 243
General payment applied to a debt bearing interest, and first to in-
terest 244
General payment applied to the debt least secured; comments on con-
flicting views of the general subject 245
Section 3.— Accord and Satisfaction.
Definition 246
Consideration , 247
Payment of part of a debt will not support an agreement to dis-
charge the whole 248
Same subject 248a
Any other act or promise which is a new consideration will suffice. . 249
Composition with creditors 250
Compromise of disputed claim 251
Agreement must be executed 252
Jtll • TABLE OF CONTENTS.
■References are to sections.
Section 4. — RELEAsa
Definition 253
Differs from accord and satisfaction 254
Extrinsic evidence and construction 255
Who may execute 256
Effect when executed by or to one of several claiming or liable 257
What will operate as a release 258
Covenant not to sue 259
Section 5. — Tender
Right to make 260
On what demands it may be made 261
When it may be made 262
In what money 263
Bywhom 264
To whom 265
It must be sufficient in amount 266, 267
How made 268
W here to be made 269
Must be unconditional 270
Effect of accepting 271
Must be kept good 272
Waiver and omission of tender on sufficient excuse 273
Tender must be pleaded and money paid into court. 274
Effect of plea of tender 275
Effect of tender when money paid into court 276
Effect of tender on collateral securities 277
Paying money into court 278
Section 6. — Stipulated Damages.
Contracts to liquidate damages valid 279
Damages can be liquidated only by a valid contract 280
Modes of liquidating damages; computation of time 281
Alternative contracts 283
Liquidated damages contradistinguished from penalty 283
The evidence and effect of intention to liquidate 284
Stipulated sum when damages otherwise certain or uncertain 285
Contracts for the payment of money 286, 287
Large sum to secure payment of a smaller 288
Stipulation where damages certain and easily proved 289
Stipulation when damages uncertain 290, 292
Same subject; illustrations 293
Stipulation for payment of a fixed sum for partial or total breach. 294, 295
Effect of part performance accepted where damages liquidated 296
Liquidated damages are in lieu of performance 297
Effect of stipulation upon right of action 298
Waiver of right to stipulated damages 299
VOL. 2.
PAKT I.— CONTINUED.
CHAPTER VIIL— INTEREST.
Definitions and general view 300
Interest by the early common law 301
Interest in England legalized by statute 302
Interest at common law in America 303
Agreements for interest 304
TABLE OF CONTENTS. XIU
References are to sections.
Section 1.— General Promise to Pay Money "With Interest."
Rule of construction 305
Law or custom fixes the rate 306
Legal or stipulated rate applies from date 307
Whether same rate will apply after debt due 308, 309
Section 2. — Agreements for Interest "Until Paid."
Agreements for interest from date until debt paid 310
Agreements for a different rate after debt due 311, 312
Section 3.— Agreements for More than Legal Rate Before Maturity.
Fflfect of usury found 313
Who may take advantage of usury 314
When contracts not void for usury 315
Recoveries under usury statutes 316, 317
Section 4.— Agreements for More than Legal Rate After Maturity.
Not usury, but penalty 318
Same subject; when debtor relieved in Illinois 319
Section 5.— Interest as Compensation.
Scope of section 320
Right not absolute 321
Tacit agreements to pay interest on accounts 322
Interest where payment unreasonably and vexatiously delayed 323
Quantum meruit claim to interest 324
Allowed on money loaned 325
Allowed on money paid 326, 327
Quantum meruit claim to interest between vendor and purchaser. . . . 328
Interest allowed from time when money ought to be paid 329
No interest on penalties or statutory liability for riots. ., 330
When allowed on penalty of bonds 331
Interest against govern ment 332
Judgments bear interest .^ 333, 334
Not allowed on revival of judgment by scire facias 335
Interest in condemnation proceedings 336
Interest on taxes and license fees 337
Infants liable for 338
Allowed on sums due for rent 339
Interest on damages for infringing patents _. 340
Right to interest as affected by the marital relation 341
Interest as between partners 342
Interest on stociiholders' statutory liability 343
Allowed on annuities and legacies 344
Interest on advancements 345
On money due on policy of insurance 346
Not allowed on unliquidated demands 347,348
Interest on accounts 349, 350
When demand necessary 351
When allowed on money had and received 352
When allowed against agents, trustees and ofiBcers 353
On money obtained by extortion or fraud 354
Interest in actions for torts 355
Section 6.— The Law of What Place and Time Governs.
Importance of subject • 356
General rule as to contracts 357
Rule as to notes and bills 358
Bonds to the United States 359
Xiv TABLE OF CONTENTS.
References are to sections.
Between parties in different states 360, 361
"Where usury is involved 362-365
The law v^f what place governs the rate as damages 366
Allegation and proof of foreign law 367
Effect of change in law of place of contract 368-370
Section 7.— Interest as an Incident to the Principal.
Interest due by agreement a debt 371
Interest as damages accessory to principal 373
Section 8.— Interest upon Interest.
Compound interest 373
Instances of interest on interest 374
Interest on instalments of interest 375
Separate agreements for interest 376
Periodical interest after maturity of debt 377
Computation, application and effect of partial payments 378, 379
Section 9.— Suspension op Interest.
Miscellaneous cases 380
Where payments prevented by legal process ... 381
Where war prevents payment 383
Tender stops interest 383
Tender not allowed for unliquidated demands 384
When tender may be made 385, 386
Section 10.— Pleading.
How interest claimed in pleading 387
Section 11.— Interest During Proceedings to Collect a Debt.
Interest on verdict before judgment 388
On judgments pending review 389
CHAPTER IX.— EXEMPLARY DAMAGES.
Compensation for wrongs done with bad motive 390
Exemplary damages; difference of views; when allowed 391-393
Malice in law and malice in fact 394
Restriction and denial of exemplary damages 395
Same subject ; New Hampshire rule 396
Same subject; Massachusetts rule 397
Same subject ; Nebraska rule 398
Same subject; Michigan rule 399
Same subject; the rule in Colorado, West Virginia, Washington and
Connecticut 400
Exemplary damages as compensation and punishment 401
Exemplary damages for penal offenses 403
Exemplary damages as matter of right 403
Enhancement and mitigation of exemplary damages 404, 405
Exemplary damages based on actual damages 406
Motive of one wrong-doer not imputable to others 407
Parties liable : master for servant 408-411
Liability of officers, municipalities and estates 413
CHAPTER X.— PLEADING AND PROCEDURR
Section 1. — Pleading.
Plaintiff must state a case which entitles him to damages 413
The ad damnum 414
Demand of damages in code complaint 415
Effect of not answering allegation of damages 416
TABLE OF CONTENTS. XV
References are to sections.
^d damnum limits recovery; erroneous claim of damages 417
What provable under general allegation of damage 418
Special damages must be alleged 419
Same subject; illustrations 420, 421
Not necessary to allege matter of aggravation 422
Matter of aggravation not traversable 423
Not necessary to itemize damages 42^
Statutory damages must be specially claimed 425
Pleading in actions to recover for death 426
Section 2. — Assessment of Damages.
Writ of inquiry 427
When assessed without a jury 428
What a default or demurrer admits 42!)
Defendant may offer evidence in reduction of damages 480
Not allowed to disprove cause of action 431
Jury tarn quam 433
When new jury may be called 433
Correction of error in assessment 434
Section 3.— Paying Money Into Court,
Admits cause of action to amount paid 435
Payments to plaintiff after suit 430
Section 4. — Evidence.
Must be adapted to damages claimed 437
Burden of proof 438
Intendments against defendant for holding back evidence 4-^9
Same as to plaintiff 440
Plaintiff must prove pecuniary items; opinions 441
Opinions upon subjects of common experience and observation 442
Instances of rejection and admission of opinions 44:>
Opinions as to amount of damages 444
Proof of value 445
Same subject; opinions 446
Same subject; actual sales 447
Same subject ; elements of value 448
Proof of the value of dogs 449
Witnesses to value may be asked grounds of opinions 450
Physical examination of plaintiff 451
Exhibition of injured parts, and means of injury 452
Expressions of sufferer 453
Photographs 454
Life and annuity tables 455
Section 5. — Verdict and Judgment.
Deliberations of the jury; quotient verdicts 456
Rendering and amending verdicts 457, 458
Excessive or insufficient verdicts 459, 460
Verdicts must be certain 461
General verdicts on several counts 463
Where there are several plaintiffs 46;J
Double and treble damages 464
Judgment . . 465
Judgment must follow verdict 466
Judgments must be certain 467
Section 6. — Restitution After Reversal of Judgment.
How made 468
Liability of third parties; restitution of property and compensation
for loss of its use 469
b
XVI TABLE OF CONTENTS.
References are to sections.
PAKT II.— APPLICATION OF THE LAW OF DAM-
AGES TO YAKIOUS CONTRACTS AND WRONGS.
CHAPTER XL— BONDS AND PENAL OBLIGATIONS.
Section 1.— Penalties.
Bonds and penalties 470
Penalties in affirmative agreements 471
Statute of 8 and 9 William III 472
Statute of 4 and 5 Anne 473
American statutes and practice 474
Statutory bonds 475
Impossible condition 476
Penalty limit of recovery except as to interest 477, 478
Section 2. — Bonds of Official Depositaries of Money.
Liability absolute for money received 479
Adjustment of liability betvp^een sets of sureties 480, 481
Neglect of duty by other officers 482
Section 3.— Other Official Bonds.
Scope of section 483
Right of action against officers 484
Construction of bonds 485
Mode of redress for official dereliction 486
What private injuries covered by official bonds 487
]\Ieasure of damages against sureties 488
Measure of damages against officers for neglect of duty 489-492
Section 4. — Probate Bonds.
Bonds for administration of decedents' estates 493
How such bonds made; what recoveries may be had. 494
Actions on bonds as to sureties; liability for executor's debt to estate 495
Guardian's bond; sureties' liabilities 496
Mitigation of damages 497
Liability as between sets of sureties 498
Section 5. — Replevin Bonds.
Their original conditions 499
The condition for return of property 500
The condition required by modern statutes 501
Assessment of damages in suit on bond 503
When sureties not liable for judgment in replevin suit 503
Evidence of the value 504
Damages recoverable : 505
Effect of the judgment in replevin suit 506
What may be shown in defense 507
When plaintiff recovers as special owner; effect of change in statute 508
Bond by defendant to retain the property 509
Section 6. — Attachment and Forthcoming BoNDi
Attachment bonds; when cause of action accrues 510
Who may sue 511
Damages recoverable 513, 513
Exemplai-y damages 514
TABLE OF CONTENTS. XVlw
References are to sections.
What may be shown in defense SIS
Costs and expenses; attorneys' fees; lossoftime 51G
Forthcoming bonds 517
Same subject; measure of damages 518
Conditions to pay the judgment 519
Section 7.— Injunction Bonds.
Scope of obligation . . 520
Power of a court of equity 521
Right of action, when it arises; who may sue 522
Mode of assessing damages . 523
Costs and expenses; attorneys' fees 524, 525
Damages from restraint of injunction 526-528
What facts no defense 529
What facts may be shown in defense 530
Section 8. — Appeal and Supersedeas Bonds.
Their conditions; liability of sureties 581
Supersedeas bonds in federal supreme court 533
Same subject; liability if judgment is in part for money or in rem. . . 533
Liability in state courts if judgment is in part for money or in rem. 534, 535
Instances of liability on more specific conditions 536, 537
Interest and damages awarded on appeal 538, 539
CHAPTER XII.— NOTES AND BILLS.
Promissory notes and bills of exchange 540
Principal sum 541
Want or failure of consideration 542
Partial want of consideration 543
Partial failure of consideration 544-548
Consideration fraudulent or illegal in part 549, 550
Defect of considei-ation sliown by parol evidence 551-554
Liability of drawer and indorser for principal sum 555
Interest on notes and bills . . 556
Interest as damages to be paid by maker or acceptor 557
Liability of drawer or indorser for interest as damages 558
Notes and bills are by definition payable only in money 559
Re-exchange and damages on bills dishonored 560, 561
When re-exchange on damages not recoverable 562
By what law liabilities governed 563
Stipulations for attorney fees and costs 564
Value of notes and bills 565
CHAPTER XIIL— VENDOR AND PURCHASER.
Damages for breach of contracts for sale of realty 566
Section 1.— Vendor against Purchaser.
Seller entitled to purchase price and interest; abatement of price. . . 567
The legal remedy 568
Measure of damages 569, 570
Same subject; where notes are given for the price 571
Seller must convey perfect title; effect of condemnation proceedings 572
Recoupment for defect of title 573
Purchaser cannot assail validity of contract 574
Recovery when contract does not fix price 575
Conveyance in consideration of non-pecuniary covenants 576
Interest on purchase-money 577
Xviii TABLE OF CONTENTS.
References are to sectiona.
Section 2.— Purchaser against Vendor.
Measure of damages in England 578
Conflict of American decisions on measure of damages 579, 580
English rule, when not applied 581
Elements of damages under the milder rule 582
Recovery on parol contract 583
Elements of damage where Fiureau v. Thornhill does not apply 584
Defaulting vendee's rights 585
Same subject; conflict of the cases in this country 586
Adjustment of counter demands on rescission 587
Adjustment of counter equities in specific performance 588, 589
Damages m suits for specific performance 590
Section 3.— Covenants for Title— Of Seizin and Good Right to
Convey.
Their purport; when broken 591, 592
Damages for breach of these covenants 598
Same subject; actual consideration may be proved. 594
Same subject; when not measured by the consideration 595
Same subject; etfect of recovery on a total breach 596
Same subject; only a nominal sum recovered if actual loss not
shown 597-599
Same subject; when covenant runs with land 600
How damages may be prevented or mitigated 601, 602
Section 4.— Covenants of Warranty and for Quiet Enjoyment.
Their scope, and the remedy for a breach 603
What is a breach 604
The rule of damages; remote losses 60a
Same subject; where property is the consideration 606
Same subject; in England and Canada 607
Same subject; rule in some of the older states 608
Same subject; in case of partial breach, and where lien is satisfied. . 609
Same subject; where covenantee has extinguished adverse title 610
Mitigation of damages 611
Where defect is a dower right 612
By and against whom recovery may be had 613
Where covenantee sues remote covenantor 614
Notice of suit to covenantor 615
Interest as an item of damages 616
Expenses, costs and counsel fees as damages 617-619
Section 5.— Covenants against Incumbrances.
What are incumbrances • • • • 620
A covenant in x>resenti; effect of incumbrance on executory contract 621
The rule of damages 622, 623
The Canadian and English rule of damages 624
In some states covenant runs with land 625
Criticism of the rule of damages 626
Damages where incumbrance permanent 627, 628
Liability of remote covenantor 629
Where covenant is connected with that for quiet enjoyment 630
Covenant to pay incumbrances 631
Section 6.— Defenses and Cross-claims against Purchase-money.
Diversity of decisions 632
The New York rule • • • 633
Alabama rule 634
Mississi ppi rule 63)
Rule in various other states 636
TABLE OF CONTENTS. XIX
References are to sections.
South Carolina and Virginia rule 637
Texas and Kentucky rule 638
Pennsylvania rule 639
Defenses under the code 640
Defenses in equity 641
VOL. 3.
CHAPTER XIV.— VENDOR AND VENDEE — PERSONAL PROPERTY.
Section 1. — Vendor against Vendee.
Recovery on executed sales 642-644
Recovery for part of stipulated quantity 645, 646
Liability for not accepting goods 647
Effect of notice by vendee of refusal to accept 648
Rule of damages where articles made to order 649
Vendee's right to return property 650
Section 2.— Vendee against Vendor.
Recovery for non-delivery of property contracted for 651-653
Proof of value 654
Rule in favor of vendor when delivery impossible 655
Damages if purchase price paid 656
Contracts for delivery of stocks 657
Sale of good-will 658
Contracts to pay in or deliver specific articles 659, 660
Same subject; author's view 661
Consequential damages on contracts of sale 663
Same subject; illustrations. 663
Damages for delay in delivering property 664-666
Warranties of quality and title 667, 668
Damages on breach of warranty of title 669
Damages for breach of warranty as to quantity or quality 670-675
Defense to action for purchase-money 676
CHAPTER XV.— CONTRACTS FOR SERVICES.
Scope of chapter 677
Recovery where wages fixed and under statute 678
Recovery on quantum meruit 679
Proof of the value of services 680
A statutory day's work 681
Recovery for attorney's services 683
Recovery for broker's services 683
Various modes of compensating for services 684
Continuation of original contract. . 685
Necessity of full performance of entire contract 686
Same subject; dispensation in case of inability 687-690
Entire and apportionable contracts 691
Liabilit}^ for wrongful dismissal of employee 692-694
Liability of employee for violation of contract; recoupment of dam-
ages '. 695
CHAPTER XVL— CONTRACTS FOR PARTICULAR WORKS.
Section 1. — Employer against Contractor.
Nature of the contract fi96
General rule as to contractor's liability 697, 698
Defects in work must be remedied 699
Liability if accident prevents performance 700
XX TABLE OF CONTENTS.
References are to sections.
Contractor not answerable for defects in plans 701
Liability for non-performance if works contracted for a particular
purpose ~02
Damages for delay 703, 704
Consequential damages for defective work 705
Section 2,— Contractor against Employer.
Contract price ; rights in insurance money 706
Demands for extra work 707
Recovery on part performance of severable contract 709-711
Certificate of architect, engineer, etc 712
Liability of employer for stopping work 713, 714
Section 3.— Salvage.
Requisites of salvage service 715
A specific amount may be fixed by agreement 716
Nature of peril and duty of claimant 717
Property must be saved 718
Amount recoverable 719
Derelict property . . 720-
Forfeiture of right to compensation 721
CHAPTER XVIL— SURETYSHIP.
Section 1.— Creditor against Surety.
The contract of suretyship, questions arising out of 722
Measure of surety's liability 723
Interpretation of surety's contract 724
Contract not to be extended by construction 725
Illustrations of the rule 726, 727
Guaranties, distinguishing characteristics of 728
Measure of guarantor's liability 729
Effect of indorsing negotiable paper 730
Methods which suretyship assumed for negotiable paper 731
Measure of liability of guarantor of payment 732
Guaranty of collectibility; liability for costs; diligence 733
Guarantor's liability where collateral is given 734
Discharge or reduction of surety's responsibility by act of creditor. . 735
Right of subrogation 736
Effect of creditor's failure to realize on securities 737
Same subject: release limited to injury sustained by surety 738
Creditor's duty to acquire liens 739
Value of re leased securities . . ... 740
Surety's right to put creditor in motion 741
Effect of releasing one or more of several parties 742
Surety's right to defend between principals 743'
Surety may set up right of recoupment 744
Section 2. — Surety's Remedies for Indemnity.
Action against principal for money paid 745
Who is the principal 746
When right of action accrues 747
Measure of recovery 748
Surety may compel debtor to pay 749
Payment giving right to reimbursement 750, 751
Liability of principal for surety's costs 752
Principal not liable for consequential damages 1 753
Contribution between co-sureties 754
W^ho are co-sureties 755
Basis of contribution 756
TABLE OF CONTENTS. XXI
References are to sections.
Insolvency of co-surety 757
Indemnification of surety by principal 758
Accrual of right of action; voluntary payments 759
Conclusiveness of judgment 760
Section 3. — Express Indemnities.'
Damage the gist of the action 761
What may be recovered 762, 76.'i
Contribution or indemnity betvpeen wrong-doers 761
Contracts varying from indemnity, but intended as such 765, 766
Etfect of judgment 767
CHAPTER XVIIL— AGENCY.
Section 1.— Principal against Agent.
The reciprocal obligations of principal and agent 768, 769
Agent's particular duties and liabilities 770, 771
Neglect of duty or agreement concerning insurance 772
Disregard of orders for the purchase and shipment of goods 773
Miscellaneous illustrations of agent's liability 774
Defaults in regard to commercial paper 775, 776
Same principles applied to factors 777
Sales at unauthorized price 778, 779
Duty to sell at certain times 780, 781
Terms of sale 782
Guaranty commission 783
Rendering accounts 784
Remitting funds 785
Liability of brokers 786
Damages for acting as agent without or in excess of authority 787
Section 2.— Agent against Principal.
Agent's rights 788
Reimbursement of expenditures 789
Factor's right to reimburse himself by sales 790
Agent may charge for exchange 791
How right of reimbursement affected by mode of doing business 792
Agent's right to indemnity 793
No indemnity for unlawful act 794
Measure of recovery 795
Section 3.— Third Persons against Agent.
When agent liable to third persons 796
Agent liable on implied warranty of authority 797
The measure of damages 798
Recovery of money from agent 799
Agent liable for his torts 800
CHAPTER XIX.— INSURANCE
Growth and importance of insurance contracts 801
Kinds of insurance 802
Section 1.— Marine Insurance.
Cause of damage must be proximate 803
Extent of injury; manner of ascertainment 804
Interpretation of contract 8U5
Valued policies 806
What constitutes a total loss; "wholly destroyed" in the law of fire
insurance 807
XXll TABLE OF CONTENTS.
References are to sectlona
Contract methods for ascertainment of damages 808
When proofs of loss a condition precedent 809
Manner and time of making proofs 810
Preliminary proofs for information only 811
Pleadings 813
Rule of damages on open policies 813, 814
Loss in excess of sum fixed in policy 815
Damages in case of partial loss 816
Losses adjusted on the principle of indemnity 817
General average 818, 819
Section 2.— Fire Insurance.
Nature of contract; how made 820
General rule of damages 831
Contribution if more than one policy 822
Mitigation of liability 823
What jurj"- may consider 824
Proof of damages 835
General average in fire insurance 826
Recoveries in special cases 827
Insurance on commission goods 828
Insurance by mortgagee 829
Contracts to replace or rebuild 880
Section 3. — Life and Accident Insurance.
Definition of life insurance 831
Character of the contract 833, 833
When life insurance a collateral security 834
Accident policies 835
Difference between English and American decisions as to scope of
recovery 836
Restatement of the measure and elements of damages 837
Insurers liability for terminating the contract 838
Refusal to issue paid-up policy 839
Liability of reinsurer 840
CHAPTER XX,— LANDLORD AND TENANT.
Section 1.— Landlord against Tenant.
Action for use and occupation 841
Same subject; measure of recovery 842, 843
Actions for rent; abandonment of lease 844
Same subject; amount as affected by subsequent facts 845
Recovery of rent payable in specific articles or as taxes 846
Termination of lease by lessor 847
Recovery of rent barred by eviction of lessee 848
Apportionment of rent 849, 850
Effect of partial destruction of demised property 851
Effect of entire destruction of demised property 853*
Effect of taking demised premises for public use 853
Lessee's liability for interest 854
Covenants for repairs 855
Measure of liability for not making repairs 856-858
Liability of assignee of lease for repairs 859
Damages for repairs and non-repairs in special cases 860
Covenants not to sublet or assign; liability for breach; proximate
cause of loss 861
Covenants to insure 863
TABLE OF CONTENTS. XX] 11
References are to sections.
Section 2. — Tenant against Landlorix
Lessor's covenant for quiet enjoyment 863
Same subject; the general rule of damages 864
Same subject; special, consequential and exemplary damages 865, 866
Same subject: recovery for damages to business 867-870
Mitigation of damages by lessee 871
Lessor's covenant to repair, etc 873
Lessee's duty concerning repairs 873
Same subject; liability for special and consequential damages 874
Removal of fixtures 875
Recoupment 876
CHAPTER XXL— CARRIERS.
Section 1.— Actions by Carriers.
Breach of contract to furnish goods for shipment 877
Measure of damages on charter-parties 878
Recovery for partial breach 879
Carrier must mitigate his loss 880
Shipper's rights in profits made by carrier 881
Burden of proof 883
Damages for breach of charter to load with enumerated articles 883
Carrier's action for freight charges 884
Freight charges as affected by value of property 885
Discriminations unlawful when conditions are similar 886
When freight due and earned 887, 888
When shipper not liable for freight 889
When pro rata freight due 890
Same subject; transshipment of freight 891
Right to freight when cargo insured 892
Rule for adjusting pro rata freight 893
Charges and expenses if delivery hindered or prevented 894
Freight under charter to load with enumerated articles 895
Recoupment against freight 896
Demurrage 897
Section 2. — Actions against Carriers.
General statement of carrier's liability 89S
When damages for refusal to carry measured by cost of transportation 899
Liability for loss of shipper's profits 900
Increased expenditures: loss of customers 901
Not liable for remote consequences 903
Must respond for negligent delay; proximate cause 903
Limitation of liability by contract 904
Illustrations of liability for delay: unmarketable property 905
Liability for loss of market value, quantity or quality 906
Vmdication of the rule stated 907. 908
Application of the rule to ocean carriage 909
Delay after notice of arrival 910
Increased cost of obtaining property 911
Expense of further ti-ansportation 913
Liability for delay where facts are known 913, 914
Physical and mental suffering as elements of damage 915
Carrier's responsibility in caring for property 916
Burden of proof as to injury or loss 917
Damages if goods have a market value; recovery by bailee 918
Damages for injury or loss of non-marketable property 919
Interest on damages 920
Shipper's efforts to lessen loss 921
When damages less than value of goods at destination 922
Same subject; criticism of the rule stated 923
XXIV TABLE OF CONTENTS.
References are to sections.
Same subject; loss at place of shipment 934
Same subject; shipper's conduct may affect damages 925
Qualification of carrier's liability by notice 9'2G
Liability for partial loss when value limited 927
Apportionment of damage in case of mutual fault 928
Liability not mitigated by insurance 929
Exemplary damages 980
For what losses carrier responsible 931
Damages where there are successive carriers 932
Proof of value 933
Section 8.— Caeriees of Passenqees.
Nature of their obligations 934
Damages for refusing to carry 935^
Same subject; loss of time, expense, exposure, humiliation 936
Same subject; exemplary damages 937
Removal of passenger at wrong place 9o8
Same subject; consequential damages 939
Passenger's indiscreet acts not ground of damage 940
Protection of passengers 941
Damages for physical and mental suffering 942
Mental suffering independently of other wrong 943
Past and prospective damages 944
Proof of damage 945, 940
Recovery for special loss 947
Wrongfully placing passenger in second-class coach. 948
Mitigation of damages 949
Exemplary damages 950
Same subject; rule different in some states 951
Injury to wife, child or servant 953
Excessive verdicts 953-
Loss of or injury to baggage 954
Same subject : measure of damages 955
Liability of sleeping-car companies 956
CHAPTER XXIL— TELEGRAPH COMPANIES.
Nature of their duty 957
Limitation of liability 958
Liability for neglect where message in cipher 959
Same subject; opposing view. . . 960
Liability when object of sender known 961
Same subject; illustrations 962-964
Same subject; loss of claim; physical pain; injury to credit 965
Same subject; liability for expenses 966
Same subject; loss of employment and profits of business 967
When company charged with knowledge of sender's purpose 968
Same subject; details need not be disclosed 969
Same subject ; result of the decisions 970
Same subject; opposing view 971
Form of action ; who may sue 972
Mitigation of damages by injured party 973
Exemplary damages .... 974
Damages for mental suffering 975
Same subject; reasons upon which liability rested 976
Same subject; opposmg authorities 977
Same subject; grounds upon which liability denied 978
Same subject; summary of the authorities 979
Same subject; conclusions of author 980
Same subject; notice to the company . . 981
Same subject ; measure of damages 982
TABLE OF CONTENTS. XXV
References are to sections.
CHAPTER XXIIL— BREACH OF MARRIAGE PROMISE.
Nature of the action ; wlio may sue 983
Seduction as an aggravation , 984
Consequences of seduction 985
Injury to feelings and other elements of damage 986
Same subject; exemplary damages 987
Damages for loss of marriage 988
What will excuse a breach of the contract 989
What may be proved in mitigation 990
CHAPTER XXIV.— EJECTMENT.
Proceedings regulated by statute 991
Section 1. — Mesne Profits.
The remedy for 992
What may be allowed as damages 993
Recovery limited to compensation 994
Proof of rental value 995
What property withheld 996
Interest 997
Compensation on recovery of a term 998
Claims for improvements, taxes, etc. 999
Remedy under the code 1000
Section 2.— Dower.
The right of 1001
It is assignable on a valuation 1002
Damages for detention of dower 1003
Extinguishment of dower right 1004
Reprisals 1005
Dower limited to husband's equitable interest 1008
Dower right subject to incumbrance 1007
VOL. 4.
CHAPTER XXV.— INJURIES TO REAL PROPERTY.
Scope of chapter 1008
Section 1. — Trespass to Real Property.
The gist of the action 1009
Definition of trespass and scope of the remedy 1010
Damages confined to compensation 101 1
Damages where tenant sues 1012
Damages where suit by executor, etc 1013
Damages measured by benefit received . . 1014
Damages for destruction of property 1015
Occupation of land by railroads 1016.
Damages for permanent wrong 1017
Damages where injury remediable 1018
Liability for cutting trees, and mining ores 1019
Same subject; when value computed 1020
Liability for additional injury to land 1021
Damages to unsecured ice; diversion of water 1022
Destruction of and injury to growing crops 1023
Destruction of fences 1024
Injuries to party-walls 102'>
XXVI TABLE OF CONTENTS.
References are to sections.
Interest on the damages 1028
Mitigation of damages 10^7
Aggravations and special damages 1028-103C
Exemplary damages 1031
Same subject; mitigations 1032
Section 3. — Injury to Inheritance.
Injury to the rights of parties not in possession 1033, 1034
Section 3.— Nuisance.
What is a nuisance 1035
General principles of the law of nuisance 1036
Wrong-doer liable for at least nominal damages 1037
Usually a continuing wrong requiring successive actions 1038
What recoverable in the first action 1039
Continuing liability of the person vrho causes it 1040
Damages may include future expenditures 1041
When nuisance not a continuing vv^rong 1042-1045
Same subject; result of tlie cases 1046
Depreciation in value as damages 1047
Other elements of damage 1048
Injuries to crops, trees, etc . . 1049
Liability for remoter consequences 1050, 1051
Exemplary damages 1052
Removal of lateral support to land 1053
1 nterf erence with business 1054
Mitigation of damages 1055
Same subject; deduction for benefits 1056
Damages affected by interest in estate. . 1057
Private remedy for public nuisance 1058
Joint and several liability 1059
Pleading 1060
CHAPTER XXVI.— TAKING PROPERTY FOR PUBLIC USK
The power of eminent domain 1061
Consequential injury to property not taken. 1062
What is just compensation 1063
IMeasure of compensation 1064
Injury to property not taken 1065
Same subject; what facts pertinent 1066-1070
Same subject; remote damages 1071
Same subject; expenditures to lessen loss 1072, 1073
Basis for estimating value of land 1074
Same subject; value for special purpose 1075
Compensation for wrong-doer's improvements 1076
Compensation affected by title and nature of interest condemned;
taking railroad property for street and telegraph uses 1077
Same subject: condemnation of railroad property for railroad uses. . . 1078
Same subject; injury to franchise 1079
Same subject; elevated railroad cases 1080
Same subject: injuries to various interests 1081, 1082
Assessment of damages, time of 1083
Deductions for benefits 1084-1087
What lands considered in assessing benefits and damages 1088
Proof of value and damages 1089
Effect of judgment for compensation — Abandonment of proceedings 1000
Interest 1001
TABLE OF CONTEXTS. XXVll
References are to sections.
CHAPTER XXVIL— TRESPASS TO PERSONAL PROPERTY.
"When damages may exceed compensation 1092
Certainty of damages 109;J
Remedy more comprehensive than trover 1094
Aggravations increase damages 1005
Measure of damages for taking or destroying property 109(5
Same subject ; quantity of interest 1 097
Same subject; market value 1008
Same subject; non-marketable property 1000
Special and consequential damages 1100-1103
Expenses to recover, restore and protect property 1103
Mitigation of damages. . . . • 1104
Same subject: application of property to owner's benefit HO")
Damages against trespasser from the beginning 1106, 1107
CHAPTER XXVIIL— CONVERSION.
The action of trover 1108
The general rule of damages 1109, 1110
Other rules of damages 1111
Time of conversion Ill "3
Proof of value 1113
Same subject; fixtures 1114
Intei-est lUo
Recovery for property subject to sale 1116
Damages if property without market value 1117
Damages if property of fluctuatmg value 1118
Same subject; criticism and modification of the rule 1119
Same subject; conflict in New York cases 1130
Same subject; Pennsylvania rule 1121
Same subject; Massachusetts rule 1122
Same subject; English and Australian cases 1128
Same subject; rule in North Carolina 1124
Departure from the general rule sometimes justifiable 1125
Recovery where value of property enhanced by defendant 1126-1128
Special or consequential damages 1129
Attorney's fees 1130
Exemplary damages 1131
Conversion of money securities 1132
Conversion of insurance policies 1138
Conversion of deeds, etc 1 134
Conversion of shares of stock 1 135
Recovery limited to plaintiff's interest 1136, 1137
Mitigation of damages 1138-1141
Plaintiff's duty to mitigate damages 1142
CHAPTER XXIX— REPLEVIN.
Section 1.— Plaintiff's Case.
Definitions; who may sue 1143
Measure of damages 1 144
Exemplary damages 1145
Special and consequential damages 1146
Recovery if property not returned 1147, 1148
Damages affected by the object of the action 1149
Recovery for use and increase in value 1150
Intermediate injury and depreciation 1151-1153
Increase in value by defendant 1154
XXVIU TABLE OF CONTENTS.
References are to sections.
Section 2. — Defendant's Case.
•Successful defendant's rights 1155
A plaintiff obtaining possession and failing in his suit a wrong-doer 1156
Measure of daraages 1157
Special and consequential damages 1158
Mitigation of damages 1159
Recovery affected by interest in property 1 160
Recoupment 1161
Part of property found for each party 1 162
CHAPTER XXX.— FRAUD.
Scope of the natural and proximate consequences 1163-1165
False representations 1 166
Same subject ; materiality 1 167
Same subject; reliance upon representations 1168
Same subject; defendant's belief in representations 1169
Same subject; representations need not be made to plaintiff 1170
The measure of damages; general rule 1171
Same subject; another rule 1172
Same subject; other elements of damage 1173, 1174
Remote and contingent damages 1175, 1176
Expenses of litigation 1177
Exemplary damages 1178
Parties 1179
Pleading 1180
CHAPTER XXXI.— INFRINGEMENT OF PATENT RIGHTS.
Statutory remedies 1181
Same subject; judicial summary 1182
Damages recoverable at law 1183, 1184
Same subject; profits as damages 1185
Same subject; other measures of damages 1186
Interest on damages 1187
Exemplary damages 1188
Compensation in equity 1189
Same subject; computation of profits 1190, 1191
Computation to what time made 1193
Rule when whole article not patented 1193, 1194
Same subject; ascertainment of profits 1195
Profits recoverable though no license fee established 1196
Interest 1197
CHAPTER XXXII— INFRINGEMENT OF COPYRIGHT.
Copyright is statutory 1198
Compensatory and penal recoveries 1199
CHAPTER XXXIIL— INFRINGEMENT OF TRADE-MARKS.
Nature of the right to a trade-mark and of the wrong of infringement 1200
The measure of damages 1201, 1203
XXXIV.— SLANDER AND LIBEL.
Section 1.— Plaintiff's Case.
Nature of the wrong 1203
Accusations actionable per se 1204
Malice the gist of the action 1205
General damages, how proven 1206, 1207
TARLE OF CONTENTS. XXIX
References are to sections.
■Same subject; aggravation of damages 1208, 1209
Same subject; wealth aud rank of the parties 1210, 1211
Evidence of reputation 1212
Injuries to business 1213
Mental sulfering 12U
Special damages 121 •'J
Examplary damages I'-'l^
Damages in discretion of jury 1217
Special damages when words not actionable per se 1218, 1219
Same subject; injury to feelings 1220
Same subject: natural consequences 1221
Criticism of the doctrine last stated 1222
Slander of title 1223
Section 2.— The Defense.
Failure of plea of justification 1224
Same subject ; effect of statutes ; . . 1225
Evidence in mitigation; plaintiff's bad character. 1226
Same subject; evidence of common reports as to plaintiff's guilt 1227
Same subject; proof of truth of words 1228, 1229
Same subject: effect of statutes 1230
Evidence in mitigation generally 1231-1233
CHAPTER XXXV.— MALICIOUS PROSECUTION.
Nature of the wrong 1234, 1235
Unauthorized suit or appeal 1236
Elements of damage 1237, 1238
Evidence in mitigation 1239, 1240
CHAPTER XXXVL— PERSONAL INJURY.
Elements of damage 1241
Physical and mental pain 1242-1245
Loss of time, injury to business, diminished capacity 1246
Same subject; pleading 1247
Same subject; evidence 1248
Same subject ; measure of recovery 1249
Expenses for surgical and medical aid, etc 1250
But one action maintainable; prospective damages 1251
Husband's and parents' action 1252
Exemplary damages ... 1253
Pecuniary and other circumstances of the parties 1254
Evidence in mitigation 1255
Province of the jury, and instructions thereto 1256
False imprisonment 1257-1258
CHAPTER XXXVIL— DAMAGES RESULTING FROM DEATH.
No action for at common law 1259
Nature of the statutory action 1260
Diversities as to beneticiaries 1261
Only pecuniary losses compensated in England and Canada 1262
Same subject: rule in United States 1263
At least nominal damages recoverable 1264
Recovery by widow 1265
Recovery by husband 1266
Children's loss from death of parent . . 1267
Facts and circumstances to be considered in estimate of damages 1268-1271
Recovery for death of child 1272-1275
XXX TABLE OF CONTENTS.
References are to sections.
Damages recoverable by collateral kindred 1276
Damages to the deceased's estate — 1277
Special damages - _ 1278
Contracts exempting from liability 1279
Where the injury is done in another state 1280
CHAPTER XXXVIIL— SEDUCTION.
The technical not the real gist of the action 1281
Who may maintain the action 1282
Evidence for plaintiff and damages recoverable 1283
Evidence for defendant in mitigation 1284
Criminal conversation and alienation of affections 1285
CHAPTER XXXIX.— DAMAGES FOR TORTS IN ADMIRALTY.
Fundamental difference between liability in admiralty and at com-
mon law 1286
Division of loss in collision cases 1287
Rule applicable to other torts 1288
Liability confined to proximate loss 1289
Total loss; elements of damage 1290
Total loss, what is 1291
Partial loss; elements of damage 1292, 1293
Interest 1294
Mitigation of liability 1295
Recovery by owner of cargo 1296
THE LAW OF DAMAGES.
PART I.
AN ELEMENTARY EXPOSITION OE THE SUBJECT.
CHAPTER I.
A GENERAL STATEMENT OF THE RIGHT TO DAMAGES, THEIR
LEGAL QUALITY AND KINDS.
§ 1. General observations.
2. The right to damages; how amount ascertained.
3. Damnum absque injuria; injuria sine damno.
4. Public wrongs.
5. Illegal transactions.
6. Contractual exemption from liability for damages.
7. Nature of the right to damages; its survival,
8. Injuries to unborn child.
§ 1. General observations. The chief practical value of
any system of law is in its adaptability and efficiency to se-
cure the individual in the full enjoyment of his rights, and in
giving him adequate relief when they are violated. The com-
mon law defines these rights, and professes to afford a remedy
for their every infraction. In the nature of things, this rem-
edy cannot consist in so annulling, by adjudication, an act
which violates a right that the injured party will be restored
to its enjoyment as though there had been no interruption.
The consequences of an act which is an invasion of an-
other's right may be arrested ; in some cases partial restora-
tion is practicable. But unless compensation can be made as
a substitute for that to which a party is entitled, and of which
he has been more or less deprived, there will be an irreparable
Vol. I— 1
2
RIGHT TO DAMAGES.
[§2.
injury, and a corresponding failure of justice. This compensa-
tion the law provides for; and it is the principal object of
legal actions to ascertain what it should be, fix the amount,
and enforce its payment. In some actions the paramount pur-
pose is to compel the defendant to yield up possession of
specific property which the plaintiff claims to own, and inci-
dentally to obtain compensation for its detention, as in eject-
ment and replevin. So in actions on contracts for the direct
payment of money, the effect of recovery is apparently to
compel the defendant to do the very thing he agreed to do;
[2] compensation for the delay in the form of interest is a
subordinate matter.'
§ 2. The right to damages; how amount ascertained. In
contemplation of law, every infraction of a legal right causes
injury; this is practically and legally an incontrovertible prop-
osition. If the infraction is established, the conclusion of
damage inevitably follows.^ This deduction is made though
it actually appears and is recognized in the case that there
1 Radloff V. Haase, 196 111. 365, 63
N. E. Rep. 729, citing this section.
2 Radloff V. Haase, 196 111. 365, 63
N. E. Rep. 739; Hahn v. Cotton, 186
Mo. 216. 37 S. W. Rep. 919; Watson v.
New Milford Water Co., 71 Conn.
442, 42 Atl. Rep. 265; Board of Water
•Commissioners v. Perry, 69 Conn.
461,37'AtL Rep. 1059; Quillen v. Betts,
1 Pennewili, 53, 39 Atl. Rep. 595:
Ross V. Louisville, etc. Co., 70 Miss.
725, 12 So. Rep. 825; New York Rub-
ber Co. V. Rothery, 132 N. Y. 293, 30 N.
E. Rep. 84, 28 Am. St. 575; Green Bay
& M. Canal Co. v. Kaukauna Water
Power Co., 112 Wis. 323, 87 N. W. Rep.
864. See §§ 9, 10.
It is not a sufficient objection to
the recovery of damages that the
action brought for that purpose is
witliout precedent. It was long since
determined that a special action on
the case was introduced because the
law will not suffer an injury and
damage without affording a remedy.
Winsmore v. Greenbank, Willes, 577,
580.
One who is induced by falsehood
and fraud to marry a woman who is
pregnant by the man who is guilty
thereof may recover from him the
damage sustained. Kujek v. Gold-
man, 150 N. Y. 176, 44 N. E. Rep. 773,
55 Am. St. 670, 34 L. R. A. 156.
One who, notwithstanding the hus-
band's protests, persists in selling a
wife drugs knowing that she uses
them constantly and that their use
is destructive to her mental and
physical faculties, and causes her
husband the loss of her companion-
ship and services, is liable to him.
Holleman v. Harward, 119 N. C. 150,
25 S. K Rep. 972, 56 Am. St. 672, 34
L. R. A. 803. See as to the right of
action in favor of a widow for the
mutilation of the body of her de-
ceased husband, Foley v. Phelps, 1
App. Div. 551, 37 N. Y. Supp. 471;
Larson v. Chase, 47 Minn. 307, 50 N.
W. Rep. 238, 28 Am. St. 370, 14 L. R. A.
85.
§ 2.] EIGHT TO DAMAGES. 3
was in fact no injury, but a benefit conferred.^ This legal
conclusion of damage is generally indeterminate as to amount;
it is thnt so?ne damage resulted; if no proof is made of the
actual damage, judgment can be given only for a minimum
■sum — nominal damages. In cases of contract it may occur
that for any breach a large and determinate sum will become
due, for which judgment without proof may be rendered. But
generally, within certain limits, the actual injury is to be es-
tablished by proof as matter of fact. In many cases of tort,
however, the injury complained of is of such a nature that
compensation cannot be awarded by any precise pecuniary
standard, and there is no legal measure of damages, because
the injury does not consist of pecuniary elements, or elements
of which the value can be measured or expressed in money.
The compensation which shall be allowed for an injury of this
character is by the common law referred to the sound discre-
tion and dispassionate judgment of a jury. Where there is a
legal measure of damages the jury must determine the amount
as a fact according to that measure, otherwise the law which
measures the compensation would be of no avail; and whether
they have done so or not in a given case may be proximately
seen by a comparison of the verdict with the evidence.'- Courts
of general jurisdiction have power over verdicts, and may set
them aside when the jury have been influenced by passion or
corruption, or have disregarded the legal measure of compensa-
1 Murphy V. Fond du Lac, 23 Wis. Rep. 797; Cummings v. Riley. 52 N.
365, 99 Am. Dec. 181; Roberts v. H. 368; Chickering v. Lord.67 id. 555,
Glass, 113 Ga. 456, 37 S. E. Rep. 704; 32 Atl. Rep. 773; Fitzgerald v. Dob-
Excelsior Needle Co. v. Smith, 61 son, 78 Me. 559, 7 Atl. Rep. 704: Bar-
Conn. 56, 23 Atl. Rep. 693. Compare rett v. Maiden & M. R. Co., 3 Allen,
Bossu V. New Orleans, etc. R. Co., 49 101; Hoole v. Dorroh, 75 Miss. 257, 22
La. Ann. 1593, 22 So. Rep. 809. So. Rep. 829; Kingsbury v. Missouri,
2 Parke v. Frank, 75 Cal. 364, 17 etc. R. Co., 156 Mo. 379, 57 S. W. Rep.
Pac. Rep. 427, citing the text. 547; Carter v. Current River R. Co.,
In the exercise of its police power 156 Mo. 635, 57 S. W. Rep. 738. Corir
the state may fix a minimum sum as tra, Atchison & N. R. Co. v. Baty, 6
compensatory and exemplary dam- Neb. 37; Grand Island, etc. R. Co. v.
ages for the violation of a statute. Swinbank. 51 Neb. 521, 71 N. W. Rep.
Cramer v. Danielson, 99 Mich. 531, 58 48, the court being influenced, to
N. W. Rep. 476. And may provide some extent, because exemplary
that the damages found by a jury damages are not recoverable under
shall be doubled by the court. Fye the local law.
V. Chapin, 121 Mich. 675, 80 N. W.
4 EIGHT TO DAMAGES. [§ 3.
tion. B}' the course of the current of modern decisions, whether
compensation for the actual injury in actions for torts is subject
to legal measure or not, if the injury was done maliciously,
fraudulently, oppressively or with wanton violence, such meas-
ure, if an}^, while not entirely ignored, ceases to be the limit
of recovery. The jury are at liberty, in the exercise of their
[8] judgment, on finding such malice or other aggravation, to
give additional damages as a solatium to the party so wronged,
and as a punishment to the wrong-doer. The sums so allowed
by law and found by a jury for tortious injuries, or losses
from breach of contract, are damages — the pecuniary redress
which a successful plaintiff obtains by legal action. They are
for the most part compensation for civil injury — exemplary
damages being an exception; therefore, the law relating to
the subject of damages is principally directed to defining and
measuring compensation.^ The civil injur}'- for which dam-
ages may be recovered must be one which is recognized as
such by the law; it must result from the violation in some
form of a legal right. No damages can be recovered for fail-
ure to fulfill a merely moral obligation, nor for any wrong or
injury which consists in a neglect of social amenities.
§ 3. Damnum absque injuria; injuria sine damno. The
right to damages constituting a legal cause of action requires
the concurrence of two things: that the party claiming them
has suffered an injury, and that there is some other person
who is legally answerable for having caused it. If one suf-
fers an injury for which no one is liable it gives no legal claim
for damages: it is damnum absque injuria; so if one does a
wrong from which no legal injury ensues, there is no legal
cause of action : it is injuria sine damno} That no act char-
1 The term " compensatory dam- Acts clone with reasonable care
ages " covers all loss recoverable as pursuant to valid statutes will
matter of right; it is synonymous not render those who perform them
with "actual damages." Pecuniary liable for damages resulting. High-
loss is an actual damage; so is bodily way Com'rs v. Ely, 54 Mich. 173, 19
pain and suffering. Gatzowv. Buen- N. W. Rep. 940; Tate v. Greensboro,
ing, 106 Wis. 1, 19, 81 N. W. Rep. 1003, 114 N. C. 392, 19 S. E. Rep. 767, 24 L.
49 L. R. A. 475, 80 Am. St. 17. R. A. 671; New Haven Steam Saw
2 McAllister v. Clement, 75 Cal. 182, Mill Co. v. New Haven, 72 Conn. 276,
16 Pac. Rep. 775; Wittich v. First 44 Atl. Rep. 229, 609; Transportation
Nat. Bank, 20 Fla. 843, 51 Am. Rep.' Co. v. Chicago, 99 U. S. 635. 640;
631. Rowe V. Granite Bridge Co., 21 Pick.
§ 3.] RIGHT TO DAMAGES. 5
acterized by these negations is actionable is, in the abstract,
a truism. When we say that a person who suffers an injury
whicli does not arise from any other person's fault has no cause
of action, a self-evident proposition is stated ; and equally so
when we say that no person has a cause of action against an-
other for the latter's wrongful act unless he is injured by it.
The former precludes any action for lawful acts lawfully done,
though some actual hurt or loss results to some person there-
from.^ Thus, for example, adjoining land-owners have a mutual
right of lateral support to the soil in its natural state, but not
under the pressure of buildings, unless a prescriptive right to
the support thereof has been acquired.^ When one has so
loaded down his soil near the line, the other still has the right
to make any use he pleases of his premises, and may excavate to
the line, if he does so with due care, upon proper notice to the
other; and if by such excavation the stability of the buildings
[4] of the adjoining proprietor is endangered, or they are in
fact destroyed, it is an injury for which no action lies.^ The
exercise of one's right to dig in his own land may have the
effect of diverting an underground stream of water which is
beneficial to another, or of draining his well, but the act of
digging which causes either result, not being wrongful even
though done with malice, there is no redress for the injury.'' This
344; Darlington v. Mayor, 31 N. Y. 8 Am. Dec. 369; Lasala v. Holbrook,
164; Allegheny County v. Gibson, 90 4 Paige, 169, 25 Am. Dec. 524; Mc-
Pa. 397, 35 Am. Rep. 670. Guire v. Grant, 25 N. J. L. 356; Hay
lid.; De Baker v. Southern Call- v. Cohoes Co., 2 N. Y. 159; Winn v.
fornia R. Co., 106 Cal. 257, 39 Pac. Abeles, 35 Kan. 91, 10 Pac. Rep. 443;
Rep. 610, 46 Am. St. 237; Friend v. White v. Nassau Trust Co.. 168 N. Y.
United States, 30 Ct. of Cls. 94, 107. 149, 61 N. E. Rep. 1135.
2 A'Beckett v. Warburton, 14 Vict. * Acton v. Blundell, 12 M. & W. 324;
L. R. 308. Chasemore v. Richards, 7 H. of L.
3 Bass V. West, 110 Ga. 698, 36 S. E. Cas. 349, 2 H. & N. 168; Mosier v.
Rep. 244; Block v. Haseltine, 3-Ind. Caldwell, 7 Nev. 363; Chase v. Sil-
App. 491, 29 N. E. Rep. 937; Bohrer verstone, 62 Me. 175; Greenleaf v.
V. Dienhart Harness Co., 19 Ind. App. Francis, 18 Pick. 117; Trustees, etc.
489, 49 N. E. Rep. 296; Ulrick v. Da- v. Youmans, 50 Barb. 316; Ellis v.
kota Loan & Trust Co., 2 S. D. 285, Duncan, 11 How. Pr. 515; Lybe's
49 N. W, Rep. 1054; Laycock v. Appeal, 106 Pa. 626; Mayor, etc. of
Parker. 103 Wis. 161, 79 N. W. Rep. Bradford v. Pickles, [189.5] App. Cas.
327; Wyatt v. Harrison, 3 B. & Ad. 587. See, on the question of mo-
875; Thurston v. Hancock, 12 Mass. tive, Fisher v. Feige, 137 Cal. 39, 59
220; Panton v. Holland, 17 Johns. 92, L. R. A. 333, 69 Pac. Rep. 618.
6 RIGHT TO DAMAGES. [§ 3..
principle has limitations. Where a municipal corporation by
the operation of a water system, consisting of wells and pumps
on its own land, taps the subsurface water stored in the land
of an adjacent owner and in all the contiguous territory, and
leads it to its own land, and by merchandizing it prevents
its return, whereby the land of such owner is impaired for
agricultural purposes, he may recover for the wrong done.^
Where the civil law is not in force or its analogies have not
been followed, surface water is regarded as a common enemy,
and every landed proprietor has the right to take all necessary
steps to protect his land from its effects, though in doing so the
water is cast upon the land of a coterminous proprietor to his in-
jury .^ Mr. Gould says this rule prevails in England, Massachu-
setts, Maine, Vermont, JN^ew York, New Hampshire, Ehode
Island, New Jersey, Minnesota, Wisconsin, Nebraska, Wash-
ington, New Mexico, and Texas.* By the civil law interference
with the natural flow of surface water is a nuisance, for which
nominal damages may be recovered without proof of actual
damages. The courts of Pennsylvania, Illinois, North Caro-
lina, Alabama, Kentucky, Tennessee, California and Louisiana
have adopted this rule, and it has been referred to with approval
by the courts of Ohio and Missouri.^
The owner of propert}'^ may thus and otherwise, whilst in
the reasonable exercise of established rights, casuall}'^ cause an
injury which the law regards as a misfortune merely, and for
which the party from whose act it proceeds is liable neither at
law nor in the forum of conscience. No legal liability is in-
curred by the natural and lawful use of his land by the owner
thereof in the absence of malice or negligence.* Thus one
iForbell v. New York, 164 N. Y. 278; O'Connor v. Fond du Lac, etc.
522, 51 K R. A. 695, 79 Am. St. 666, R. Co., 52 Wis. 526, 9 N. W. Rep. 287;
58 N. E. Rep. 644, atBrming 47 App. Johnson v. Chicago, etc. R Co., 80
Div. ari, 61 N. Y. Supp. 1005; Wis. 641, 50 N. W. Rep. 771, 14 L. R.
Willis V. Perry, 92 Iowa. 297, 60 N. A. 495.
W. Rep. 727, 26 L. R A. 124. 3 Gould on Waters (3d ed.), § 265.
2 Edwards v. Charlotte, etc, R. Co., * Id., § 266. See Pfeiffer v. Brown,
39 S. C. 472. 18 S. E. Rep. 58, 22 L. R 165 Pa. 267. 30 AtL Rep. 844, 44 Am.
A. 246; Morrissey v. Chicago, etc. R St. 598.
Co., 38 Neb. 406, 430, 56 N. W. Rep. 8 Pennsylvania Coal Co. v. Sander-
946; Rowe v. St. Paul, etc. R Co., son, 113 Pa. 126, 57 Am. Rep. 445;
41 Minn. 384. 43 N. W. Rep. 76; Long v. Elberton, 109 Ga. 28, 34 S. E.
Cairo, etc. R Co. v. Stevens, 73 Ind. Rep. 333, 41 Am. St. 454, 46 L. R A.
§ 3.] EIGHT TO DAMAGES. 7
opening a coal mine in the ordinary and usual manner may,
■apon bis own land, drain or pump tlie water which percolates
into his mine into a stream which forms the natural drainage
of the basin in which the mine is situate, although the quantity
of the water may thereby be increased and its quality so af-
fected as to render it totally unfit for domestic purposes by the
lower riparian owners.^ In cases of this nature a loss or dam-
age is indeed sustained, but it results from an act, which is
neither unjust nor illegal, done by another free and respon-
sible being.^ The prosecution in good faith of a groundless ac-
tion may give the defendant great annoyance, and cause him
loss of time and money; but the plaintiff in such case is exer-
cising a legal right, and the defendant, according to the weight
of authority, if there has been no interference with his person
or property, is entitled to no compensation for the injury he
suffers beyond the costs which may be taxed in his favor.'
Every man is entitled to come into a court of justice and claim
what he deems to be his right; if he fails he shall be amerced
(according to the old principle) for his false claim; and the de-
fendant is entitled to his costs, and with these he must be con-
tent.* But if the suit be malicious, as well as false or groundless,
428; Barnard v. Sherley, 135 Ind. 547, erty was attached and a new action
34 N. E. Rep. 600, 35 id. 117, ^4 L. R. was brouglit for the same cause of
A. 568, 575, 151 Ind. 160, 47 N. E. Rep. action, the same property being re-
671. attached, the only claim the defend-
1 Pennsylvania Coal Co. v. Sander- ant in those actions could maintain
son, supra. This case has been con- was for the costs for failure to enter
sidered in Robb v. Carnegie, 145 Pa. the first writ; for the malicious suing
324, 22 Atl. Rep. 649, 27 Am. St 694, out of the second attachment he had
14 L. R A. 329; Lentz v. Carnegie, no remedy because no wrong was
145 Pa, 612, 27 Am. St. 717, 23 Atl. done. Johnson v. Reed. 136 Mass. 421.
Rep. 219, and in Drake v. Lady Ens- One cannot maintain an action for
ley Coal, Iron & R. Co., 103 Ala. 501, the malicious prosecution of a pro-
48 Am. St. 77, 14 So. Rep. 749, 24 L. ceeding to which he was not a party.
R. A. 64, the latter favoring a con- Duncan v. Griswold, 92 Ky. 546, 18
trary rule. S. W. Rep. 354; Duncan v. Citizens'
ii Broom's Max. 151. Nat. Bank, 20 Ky. L. Rep. 237, 45 &
3Woodmansie v. Logan, 2 N. J. L. W. Rep. 1127.
67; Canter v. American Ins. Co., 3 *Id-; Henry v. Dufilho, 14 La. 48;
Pet. 307; Muldoon v. Rickey, 103 Pa. Davies v. Jenkins, 11 M. & W. 745;
110; Eberly v. Rupp, 90 id. 259; Boardman v, Marshalltown Grocery
Bishop V. American Preservers Co., Co.. 105 Iowa, 445, 75 N. W. Rep. 343;
105 Fed. Rep. 845. See ch. 35. Porter v. Johnson, 96 Ga. 145, 23 S.
Where there was an intentional E. Rep. 123.
non-entry of an action in which prop-
8 EIGHT TO DAMAGES. [§ 3.
the party bringing it is answerable in an action at law by the
party injured.^ The making, Ijona jide, of defamatory state-
ments, though they are harsh, untrue and injurious, in the as-
sertion of rights, in the performance of a duty, or in fair
criticism upon a matter of public interest, is also damnum ahs-
[5] que injuria} Private houses may be pulled down in the
interest of the public to prevent the spread of fire,' and bul-
warks may be raised on private property as a defense against
a public enemy. So owners of land exposed to the inroads of
the sea, or commissioners having a statutory power to act for
a number of such owners, have a right to erect barriers, though
they are consequentially prejudicial to others.* Owners of
land adjoining streets are often subjected to temporary incon-
venience while work is being done thereon for their improve-
ment, or to change their grade, or by their temporary use for
the deposit of building material or the delivery of merchan-
dise; yet, in the absence of legislation, there is no right to
compensation therefor; no legal injury is recognized.^ The
construction of a new way or the discontinuance of an old one
may very seriously affect the value of property; the same may
result from the removal of a state capital or county seat; but
persons suffering loss from such causes have no legal remedy.®
1 Seech. 35. 233; Griggs v. Foots, 4 Allen, 195;
■-iTodd V. Hawkins, 8 C. & P. 88; Benjamin v. Wheeler, 8 Gray, 409;
Huntley v. Ward, 6 C, B. (N. S.) 514; Macey v. Indianapolis, 17 Ind. 267;
Mackay v. Ford, 5 H. & N. 792; Revis Terre Haute v. Turner, 36 Ind. 522;
V. Smith, 18 C. B. 126; Barnes v. Mc- Radcliflf v. Mayor, etc., 4 N. Y. 195;
Crate, 32 Me. 442; Henderson v. Mills v. Brooklyn, 32 N. Y. 489; Rome
Broomhead, 4 H. & N. 569; White v, v. Omberg, 28 Ga. 46. 73 Am. Dec.
NichoUs, 3 How. 266; Lawson v. 748; Hovey v. Mayo, 43 Me. 322; Den-
Hicks, 38 Ala, 279; Calkins v. Sum- ver v. Bayer, 7 Colo. 113, 2 Pac. Rep.
ner, 13 Wis. 193, 80 Am. Dec, 738; 6; Lake Street Elevated R. Co. v.
Allen V. Crofoot, 2 Wend. 515, 20 Brooks, 90 111. App. 173; Ridge Ave-
Am. Dec. 647; Lawler v. Earle, 5 nue Passenger R. Co. v. Philadelphia,
Allen, 22. 181 Pa. 592, 37 Atl. Rep. 910: Fernan-
3 American Print Works v. Law- dez v. Smith, 43 La. Ann. 708; Pueblo
rence, 23 N. J. L. 9, 21 id. 248; Su- v. Strait, 20 Colo. 13, 24 L. R. A. 392,
rocco V. Geary, 3 Cal. 69; Russell v. 36 Pac. Rep. 789; Talbot v. New York
Mayor, 2 Denio, 461; Field v. Des & H. R, Co.. 151 N. Y. 155, 45 N. E.
Moines. 39 Iowa, 575,18 Am. Rep. 46; Rep. 382; Sanitary District of Cbi-
Aitken v. Wells River, 70 Vt. 308, 40 cago v. McGuirl, 86 111. App. 392.
Atl. Rep. 829, 41 L. R. A. 566. ^ Swartz v. Board of Commission-
* King V. Pagham, 8 B. & C. 355. ers, 158 Ind. 141, 63 N. E. Rep. 31, and
6 Reading v. Kepplemann, 61 Pa. cases cited; Cooley's Const. Li m. 384
§3.]
EIGHT TO DAMAGES.
9
A new business may, by competition, greatly impair the pro-
ductiveness of an old one, but there is no redress for the loss.-
One who accepts a license from a municipality to sell liquors
does so with knowledge that it is revocable at the pleasure of
the officers who issued it, and cannot recover damages for its
revocation though that be done without cause,'- or through
malice.^ Damage by way of increased noise, smoke, cinders,
etc., due to the elevation of a railroad track and changes in
operating the road is da7nnuin absque injuria as to one who
purchased a lot adjoining the road with notice of the existence
of a right of way.* A breach of contract does not afford a
cause of action where its performance is prevented by law."*
Kegardiess of his motive, so long as his acts are not tainted
with fraud,^ a person may sell or offer for sale at any price
goods of which he is not the owner, but which he expects or
hopes to acquire, and may make his price public.'^ The older
See Weeks' Dam. Absque Injuria,
ctu 1; Stout V. Nobles ville & E.
Gravel R. Co., S3 Ind. 466; Hufif v.
Donehoo, 109 Ga. 638, 34 S. E. Rep.
1035; Nichols v. Richmond, 162 Mass.
170, 38 N. E. Rep. 501; Buhl v. Fort
Street Union Depot Co., 98 Mich. 596,
57 N. W. Rep. 829, 23 L. R A. 39-3;
Frost V. Washington County R. Co.,
96 Me. 76, 86, 51 Atl. Rep. 806, and
cases cited.
iMasterson v. Short. 3 Abb. Pr.
<N. S.) 154; Hanger v. Little Rock
Junction R., 53 Ark. 61, 11 S. W. Rep.
965.
2Ison v. 3Iayor of GriflSn, 98 Ga.
623, 25 S. E. Rep. 611.
SRaycroft v. Tayntor, 68 Vt. 219,
33 L. R. A. 225, 35 Atl. Rep. 53; Doc-
ter V. Riedel, 96 Wis. 158, 71 N. W.
Rep. 119, 37 L. R. A. 580.
4Kotz V. Illinois Central R. Co., 188
111. 578, 59 N. E. Rep. 240.
^Malcomson v. Wappoo Mills, 88
Fed. Rep. 680; People v. Globe Mut.
L. lus. Co., 91 N. y. 174. Contra,
Spader v. Mural Decoration Manuf.
Co., 47 N. J. Eq. 18.
"See Richardson v. Silvester, L,
R. 9 Q. B. 34.
7 A jello V. Worslej'. [1898] 1 Ch. Div.
274. For other illustrations see
Southwestern Telegraph & T. Co. v.
Beatty, 63 Ark. 65, 37 S. W. Rep. 570;
Cleveland City R. Co. v. Osborn, 66
Ohio St. 45, 63 N. E. Rep. 604; Ma-
comber V, Nichols, 34 Mich. 212;
Waffle V. Porter, 61 Barb. 130;
Farmer v. Lewis, 1 Bush, 66; Pon-
tiac V. Carter. 32 Mich. 164; Win-
ters' Appeal, 61 Pa. 307; Tinicum
Fishing Co. v. Carter, id. 21; Conger
V. Weaver, 6 Cal. 548; Baker v. Bos-
ton, 12 Pick. 184: Winchester v, Os-
born. 62 Barb. 337; Gould v. Hudson
River R. Co., 6 N. Y. 522; Rood v.
New York, etc. R. Co., 18 Barb. 80;
Tyson V. Commissioners, 28 Md. 510;
Tonawanda R. Co. v. Mungei% 5
Denio, 255; Radcliff v. Mayor, etc., 4
N. Y. 195; Botsford v. Wilson, 75
111. 132; Mitchell v. Harmon}-, 13
How. 135; Cleveland, etc. R Co. v.
Speer, 56 Pa. 325; Snyder v. Penn-
sylvania R. Co., 55 Pa. 340; Hollister
V. Union Co., 9 Conn. 436; Runnels v.
Bullen, 2 N. H. 532.
10 RIGHT TO DAMAGES. . [§ 3.-.
cases, at least to some extent, conditioned the exemption of the
owner of property from liability for damages to another caused
by his lawful use of it upon the motive which actuated such
use, and that qualification has been embodied in several of the .
propositions stated in this section. The better rule doubtless
is that " no use of property which would be legal if due to a
proper motive can become illegal because it is prompted by a
motive which is improper or even malicious." ^
[6] The futility of cases of wrong without injury is illus-
trated by cases in which damages are the gist of the action
and none are shown.^ A statute making it a misdemeanor for
any citizen to assign or transfer a claim for debt against any
other citizen for the purpose of having the same collected out
of the wages or personal earnings of the debtor, in courts out-
side of the state of the parties' residence, was held in Indiana
to be designed merely to promote the public welfare and not
to redress private grievances. The violation of it, though the
consequence is the collection of the debt, is not an injury in a
legal sense to the debtor, though such collection could not
have been enforced under the exemption laws of the state in
which the debtor and creditor resided.* It is not easy to har-
1 Mayor, etc. of Bradford V. Pickles, A statute of similar import is re-
[1895] App. Cas. 587; Fisher v. Feige, pugnant to the fourteenth amend-
137 Cal. 39, 59 L. R. A. 333, 69 Pac. nient to tlie federal constitution. la
Rep. 618. A limitation of the rule is re Flukes, 157 Mo. 125, 57 S. W. Rep.
suggested in the last case, based on 545, 51 L. R A. 176. But not void
the right to use water for irrigating under the constitution of Nebraska,
purposes under the local law. nor under sec. 1, art. 4, federal con-
2 Ford V. Smith, 1 Wend. 48; Kim- stitution. Singer Manuf. Co. v. Flem-
ball V. Connolly, 3 Keyes, 57, 33 How. ing, 39 Neb. 679, 52 N. W. Rep. 226,
Pr. 237; Hutchins v. Hutchins, 7 28 L. R A. 210.
Hill, 104; Pollard v. Lyons. 91 U. S. A debtor is not defrauded by be-
225; Bassll v. Elmore, 65 Barb. 627; ing induced by a false representa-
Kendall v. Stone, 5 N. Y. 14; Swan tion to pay his debt. Brown v. Blunt,
V. Tappan, 5 Gush. 104; Dung v. Par- 73 Me. 415.
ker, 52 N. Y. 494; Cook v. Cook, 100 A creditor who fraudulently in-
Mass. 194; Millard v. Jenkins,9 Wend, duces his creditor to come from the
298; Stark v. Chitwood, 5 Kan. 141; state of his residence into that of
Franklin v. Smith, 21 Wend. 624; the former's domicile, with intent to
Mayer v. Walter, 64 Pa. 283; Birch cause his arrest and compel him to
V. Benton, 26 Mo. 153; Speaker v. pay for his release, commits an ac-
McKenzie, id. 255; Gii-ard v. Moore, tionable fraud. Sweet v. Kimball,
86 Tex. 675, 26 S. W. R*ep. 845. 1G6 Mass. 332, 44 N. E Rep. 243, h'^
^Uppinghouse v. Mundel, 103 Ind. Am. St. 406.
238, 2 N. E. Rep. 719.
§ 4.] EIGHT TO DAMAGES. 11
monize this doctrine Avith that which mves a rii^ht of action
against a creditor who seizes his debtor's exempt property or
garnishes his exempt wages ;^ or with that which enjoins a
citizen from prosecuting an attachment in the courts of an-
other state against a co-citizen for the purpose of enforcing
the payment of a demand out of earnings which are exempt
by the law of the domicile.- In a late case it is held that a
citizen who sues a debtor in another state for the purpose of
evading the exemption laws of the state of which they are
both residents is liable for such damages as may result.^ An-
other such case determines that a creditor who prosecutes an
attachment in a foreign state against a resident of a state a
statute of which forbids such proceedings against a debtor's
exempt property, and in violation of an order of court, is liable
to his debtor after collection of his demand.^
§ 4. Public wrongs. The law does not give a private rem-
edy for anything but a private wrong.^ A public wrong, though
the perpetrator of it may be subject to prosecution by the
public, may also have the nature and consequences of a private
wrong, and be actionable as such in behalf of a person who
sustains an injury differing in kind from that which the public
at large suffers.^ A land-owner who has a right of egress in
^ Albrecht v. Treitschke, 17 Neb. melin v. Coxe, 30 Ala. 318; Lansing
205, 22 N. W. Eep. 418; Haswell v. v. Wiswall, 5 Denio, 213; Lansing v.
Parsons, 15 Cal. 266. Smith, 8 Cow. 146, 4 Wend. 9; Pierce
2 Snook V. Suetzer, 25 Ohio St. 516; v. Dart, 7 Cow. 609; Mills v. Hall, 9
Zimmerman v. Franke, 84 Kan. 650, Wend. 315; Myers v. Malcolm, 6 Hill,
9 Pac. Rep. 747; Stewart v. Thorn- 292; Gates v. Blincoe, 2 Dana. 158;
son, 97 Ky. 575, 31 S. W. Rep. 133, 53 Shulte v. North Pacific Transporta-
Am. St. 431. tion Co.. 50 Cal. 592; Baxter v. Wi-
3 Stark V. Bare, 39 Kan. 100, 17 nooski Turnpike Co., 22 Vt. 114; See-
Pac. Rep. 826. ley v. Bishop, 19 Conn. 128; Stetson
4 Main v. Field, 13 Ind. App. 401, v. Faxon, 19 Pick. 147; Francis v.
40 N. E. Rep. 1103. Schoellkopf, 53 N. Y. 152; Venard v.
5 3 Black. Com. 219. Cross, 8 Kan. 248; Pittsburgh v.
^Chicago V. Union Building Ass'n, Scott, 1 Pa. 309; Runyan v. Bordine,
102 111. 379, 393; Whitsett v. Union 14 N. J. L. 472; Hatch v. Vermont
Depot & R. Co., 10 Colo. 243, 15 Pac. Central R. Co., 28 Vt. 142; Brown v.
Rep. 339; Rose v. Miles, 4 M. & S. 101 ; Watson, 47 Me. 161; Pruning v. New
Greasly v. Codling, 2 Bing. 263; Orleans, etc. Co., 12 La. Ann. 541;
Mayor, etc. v. Henley, 1 Bing. N. C. Clark v. Peckham, 10 R. I. 35: Gor-
222; Goldthorpe v. Hardman, 13 M. don v. Baxter, 74 N. C, 470; Dudley
& W. 377; Wilkes v. Hungerford v, Kennedy, 63 Me. 465; Hamilton v.
Market Co., 2 Bing. N. C. 281; Crom- Mayor, etc., 53 Ga. 435; Baxter v.
12 EIGHT TO DAMAGES. [§ 5.
a given direction by way of a street may have an injunction
to restrain the closing of the street, on the theory that, by
being obliged to take a circuitous route to reach a place or ob-
ject, he suffers special damage.^ On grounds of public policy,
and because judgments cannot be impeached in collateral pro-
ceedings, a party to a suit cannot maintain an action against
his successful adversary for suborning a witness whose false
testimony tended to produce the judgment;^ nor for the ad-
verse party's fraud and false swearing, so long as the judgment
stands.^ For like reasons a defeated suitor cannot maintain an
action for damages against a witness for fasely testifying in
favor of the adverse party.'' "Where a statute prohibited the
sending of animals affected with a contagious disease to mar-
ket, and inflicted penalties on any person so sending them, the
violation of it, with knowledge, was a public offense, but it did
not amount, by implication, to a representation that the ani-
mals sent w^ere sound, and did not raise, as between the par-
ties to a sale of them, any right on the part of the purchaser
to claim damages in respect of an injury he had suffered in
consequence of buying the animals.'^ A citizen cannot recover
damages from a canal company for its failure to reconstruct a
part of its canal because he was thereby prevented from deriv-
ing a profit by the use of his boat on the canal.®
§ 5. Illegal transactions. It may be assumed as an undis-
puted principle that no action will lie to recover a demand, or
Coughlin, 70 Minn. 1, 72 N. W. Rep. Barton, 62 Mich. 196, 28 N. W. Rep.
797; Pueblo v. Strait, 20 Colo. 13, 36 813; Eyres v. Sedgewicke, Cro. Jac.
Pac. Rep. 789, 24 L. R. A. 392. See 601; Young v. Leach, 27 App. Div.
Shaubut V. St. Paul. etc. R. Co., 21 293, 50 N. Y. Supp. 670.
Minn. 502; Proprietors, etc. v. New- 3 Curtis v. Fairbanks, 16 N. H. 542;
comb, 7 Met. 276; Pekin v. Brereton, Lyford v. Denierritt, 32 N. H. 234;
67 111. 477. Damport v. Sympson, Cro. Eliz. 520;
1 Sheedy v. Union Press Brick Revis v. Smith, 18 C. B. 125.
Works, 25 Mo. App. 527; Glasgow v. 4 Stevens v. Rowe, 59 N. H. 578, 47
St. Louis, 15 id. 112, 87 Mo. 678; Cum- Am. Rep. 231.
niings V. St. Louis, 90 Mo. 259, 2 S. & Ward v. Hobbs, L. R. 4 App. Cas.
W. Rep. 180. 13. See Mairs v. Baltimore & O. R.
2Bostwick V. Lewis, 2 Day, 447; Co., 73 App. Div. 265, 76 N. Y. Supp.
Smith V. Lewis, 3 Johns. 157; Ross 838; Midland Ins. Co. v. Smith, 6 Q.
V. Wood, 70 N. Y. 8; United States B. Div. 561: Bradlaugh v. Clarke, L.
V. Throckmorton, 98 U. S. 61; Pico v. R 8 App. Cas. 354.
Cohn, 91 Cal. 129, 25 Pac. Rep. 970, « Saylor v. Pennsylvania Canal Co.,
27 id. 537, 13 L. R. A. 336; Gray v. 183 Pa. 167, 38 AtL Rep. 598.
§ 5.J EIGHT TO DAMAGES. 13
a supposed claim for damages, if, to establish it, the plaintiff
requires aid from an illegal transaction, or is under the neces-
sity of showing and depending in any degree upon an illegal
agreement to which he was a party.^ A bank is not liable for
failure to perform its contract to lend or advance money to be
used in speculating in futures.- The sender of a telegram re-
lating to a gambling contract in stocks cannot invoke such
contract, or the gain or loss resulting from it, to measure the
damages sustained in consequence of its non-delivery.^ This
principle does not extend to a contract which is merely ultra
vires, involves no turpitude, and does not offend against any
express statute.* Neither does it follow that if two persons
are engaged in the same unlawful enterprise, each of them
while so engaged is irresponsible for wilful injuries done to
the property of the other. If, in such a case, the plaintiff can
maintain his action without being obliged to show that he was
unlawfully engaged when his right to bring it accrued he may
recover; his action cannot be defeated because the defendant
makes proof of the illegal act. The latter cannot be relieved
from the consequences of his unlawful conduct by showing
the wrong-doing of the plaintiff and his own participation
therein.^ In Massachusetts, if the injury is sustained on the
Lord's dav and results from the negligence of the defendant,
no element of wilfulness existing, the violation of the statute
1 Welch V. Wesson, 6 Gray, 505; Palace Car Co. v. Central Transpor-
Greggv.Wyman,4Cush.l22; Phalen tation Co.. 171 U. S. 138, 150. 18 Sup.
V. Clark, 19 Conn. 421, 50 Am. Dec. Ct. Rep. 80S; Bishop v. American
253; Simpson v. Bloss, 7 Taunt. 246
Myers v. Meinrath, 101 Mass. 366
Connolly v. Boston, 117 Mass. 64
Gulf, etc. R. Co. V. Johnson, 71 Tex,
619, 9 S. W. Rep. 602, 1 L. R. A. 730
Kitchen v. Greenabaum, 61 Mo. 110
Preservers Co., 105 Fed. Rep. 845;
Meyers v. Merrillion, 118 Cal. 352, 50
Pac. Rep. 662; Edwards v. Randle,
63 Ark. 318, 58 Am. St. 108, 36 L. R.
A. 174, 38 S. W. Rep. 518; Kelly v.
Courter, 1 Okla. 277, 30 Pac. Rep. 372.
The Arrogante Barcelones, 7 Wheat. ^ Moss v. Exchange Bank, 102 Ga.
496; The Clarita and The Clara, 23 808, 30 S. E. Rep. 267, overruling
WalL 1; Meguire v. Corwine, 101 Western U. Tel. Co. v. Blauchard, 68
U. S. 108; Oscanyan v. Winchester Ga. 299.
Arms Co., 103 id. 261; Niagara Falls » Morris v. Western U. Tel. Co., 94
Brewing Co. v. Wall, 98 Mich. 158, Me. 423, 47 Atl. Rep. 926.
57 N. W. Rep. 99; Haggerty v. St. ^Bath Gas Light Co. v. Clafify, 151
Louis Ice Manuf. & Storage Co., 143 N. Y. 24, 45 N. E. Rep. 390, 36 L. R.
Mo. 238, 65 Am. St. 647. 40 L. R. A. A. 664.
151, 44 S. W. Rep. 1114; Pullmans 5 Welch v. Wesson, 6 Gray. 505.
14 EIGHT TO DAMAGES. [§ 6.
concerning the observance of that day is regarded as contrib-
utory negligence, though the plaintiff is otherwise free from
fault.^ As applied to actions which are not based on contract
the rule stated is generally disapproved.^ " The cases may be
summed up," said Dixon, C. J., " and the result stated gener-
ally to be the affirmance of two very just and plain principles
of law as applicable to civil actions of this nature, namely :
first, that one party to the action, when called upon to answer
for the consequences of his own wrongful act done to the
other, cannot allege or reply the separate or distinct wrongful
act of the other, done not to himself nor to his injury, and not
necessarily connected with, or leading to, or causing or pro-
ducing the wrongful act complained of; and secondly, that
the fault, want of due care or negligence on the part of the
plaintiff which will preclude a recovery for the injury com-
plained of as contributing to it must be some act or conduct
of the plaintiff having the relation to that injury of a cause to
the effect produced by it." ' Though an illegal contract will
not be executed, yet when it has been executed by the parties
themselves, and the illegal object has been accomplished, the
money or thing which is the price of it may be a legal consid-
eration between the parties for a promise, express or implied,
and the court will not unravel the transaction to discover its
origin.^
§ 6. Contractual exemption from liability for damages.
The benefit of the rules of law which provide compensation
for injury may, where no question of public policy is involved,
1 Bosworth V. Swansey, 10 Met. 363, Pac. Rep. 397, 50 L. R. A. 783, citing
43 Am. Dec. 441; Jones v. Andover, numerous cases.
10 Allen, 18. An action lies for injury done to
2 Sutton V. Wauwatosa, 29 Wis. 21, property used for gaming purposes
9 Am. Rep. 534; Louisville, etc. R. if it was not so used at the time it
Co. V. Buck, 116 Ind. 566, 2 L. R. A. was damaged. Gulf, etc. R. Co. v.
520, 19 N. E. Rep. 453. 9 Am. St. 883: Johnson, 71 Tex. 619, 9 S. W. Rep. 602,
Same v. Frawley, 110 Ind. 18, 9 N. E. 1 L. R. A. 730.
Rep. 594, 1 L. R. A. 730: Knowlton ^ gutton v. Wauwatosa, supra;
V. Milwaukee City R. Co., 59 Wis. Taylor v. Western U. Tel. Co., 95
278, 18 N. W. Rep. 17; Gulf, etc. R, Iowa, 740, 64 N. W. Rep. 660.
Co. V. Johnson, 71 Tex. 619, 9 S. W. * Planters' Bank v. Union Bank, 16
Rep. 602, and numerous other cases Wall. 483; McBlair v. Gibbes, 17
referred to in the three first cited; How. 232; Kinsman v. Parkhurst.
Kansas City v. Orr, 62 Kan. 61, 61 18 How. 289; Brooks v. Martin, 2
Wall. 70.
C]
BIGHT TO DAMAGES.
be waived or relinquished in whole or in part by contract.^
Thus persons engaged in public employnients out of which
spring duties and responsibilities to patrons may be relieved
to some extent by contract of liabilities imposed by law,
where such waivers or limitations are reasonable and not in-
consistent with sound public policy. The responsibility of a
common carrier as an insurer may be so limited by contract.^
It is settled, however, that a carrier cannot, by any agree-
ment with shippers or patrons, relieve itself from responsibil-
ity for its own negligence, or that of its servants; and this be-
cause such release is unreasonable and contrary to public
policy.* The weight of authority is to the contrary where
injury is sustained by a passenger while riding on a free pass
which stipulates for the release of the carrier's liability for in-
jury sustained through its negligence.*
At common law there was no right to recover damages for
negligence which caused the death of a human being. That
-right, being given by statute, may thereby be abolished or
1 Geiser Manuf. Co. v. Krogman,
111 Iowa, 503, 83 N. W. Rep. 938, cit-
ing the text; Griswold v. Illinois
Central R. Co., 90 Iowa, 265, 57 N. W.
Rep. 843, 24 L. R. A. 647.
2 See Meehem's Hutchinson on Car-
riers, ch. 7; note to Cole v. Goodwin,
32 Am. Dec. 495-506; ch. 21.
3 Bank of Kentucky v. Adams Exp.
Co., 93 U. S. 181; Railway Co. v.
Stevens, 95 id. 655; Chicago, etc. R.
Co. V. Abels, 60 Miss. 1017: Walling-
ford V. Columbia & G. R. Co., 26 S.
C. 258, 30 Am. & Eng. R. Cas. 40, 2 S.
E. Rep. 19; Alabama, etc. R. Co. v.
Little, 71 Ala. 611, 12 Am. & Eng. R.
Cas. 37; American Exp. Co. v. Sands,
55 Pa. 140; United States Exp. Co. v.
Backraan, 28 Ohio St. 144; Judson v.
Western R. Corp., 6 Allen, 486; Ball
V. Wabash, etc. R. Co., 83 Mo. 574;
Christenson v. American Exp. Co.,
15 Minn. 270.
The rule seems to be different in
New York if the intention is clearly
■expressed. Nelson v. Hudson River
R. Co., 48 N. Y. 498; Nicholas v.
New York Central, etc. R. Co., 89 id.
370.
A railway company may contract
as a private carrier for the transpor-
tation of matter for express compa-
nies, and require exemption from lia-
bility as a condition precedent to
carrying. Pittsburgh, etc. R. Co. v.
Mahoney. 148 Ind. 196, 46 N. E. Rep.
917, 40 L. R A. 101. Contra. Voight v.
Baltimore, etc. R. Co., 79 Fed. Rep. 561.
* Payne v. Terre Haute & I. R. Co.,
157 Ind. 616. 62 N. E. Rep. 472; Gris-
wold V. New York, etc. R, Co., 53
Conn. 371, 55 Am. Rep. 115, 4 Atl.
Rep. 261 ; Rogers v. Kennebec Steam-
boat Co., 86 Me. 261, 29 Atl. Rep. 269,
25 L, R. A. 491; Quimby v. Bo-ston
& M. R. Co., 150 Mass. 365, 23 N. E.
Rep. 205, 5 L, R. A. 846; Kinney v.
Central R. Co., 34 N. J. L. 513, 3 Am,
Rep. 265; Wells v. New York, etc. R.
Co., 24 N. Y. 181; Muldoon v. Seattle
City R Co,, 7 Wash. 528, 35 Pac. Rep.
422. 22 L. R. A. 794, 38 Am. St. 901,
10 Wash. 311, 38 Pac. Rep. 995, 45
Am. St. 787.
16 RIGHT TO DAMAGES. [§ &;-
limited. But after the right of unlimited recovery for per-
sonal injur}'' or for death caused by negligence has been de-
clared b}^ the constitution, no statute which purports to fix
limits to the amount recoverable can have effect.^ The value
of the interest of a wife and children in the life of the hus-
band and father, and the amount they may recover in case of his-
death through the negligence of another, cannot be affected by
any contract he may make.^ Neither will the acceptance of
money in pursuance of such a contract, nor the execution of a
release of liability by the widow, affect the administrator's
right of action on behalf of the widow and children.'
It is an open question in nearly all the states whether a con-
tract between persons who sustain the relation of master and
servant to each other, by which the former undertakes to se-
cure immunity beforehand from the liability attaching to hi&
negligence as master, is valid. In Georgia a contract by
v/hich the servant assumes all risks connected with or inci-
dent to his employment, whether resulting from his own neg-
ligence or fault or that of any other person in the master's
service, is valid if any criminal neglect is not waived.* A rail-
road company which is a party to such a contract does not
enter into it as a common carrier; hence the principle which
limits its power to restrict its liability in the latter capacity
does not affect the agreement.^ It is strongly intimated in
Arkansas that a stipulation which relieves the employer from
liability for the negligence of co-servants (he having selected
such as are competent in the first instance, and afterwards
discharged those found careless, vicious or inefficient) might
1 Pennsylvania R. Co. v. Bowers, 1120; Chicago, etc. R. Co. v. Martin,.
124 Pa 183, 6 Atl. Rep. 836, 2 L. R. A. 59 Kan. 437, 53 Pac. Rep. 461. See
621. Oyster v. Burlington Relief Depart-
Where the United States author- ment, — Neb. — , 91 N. W. Rep. 699.
izes a suit to be brought against it 3 id.
and after it has been brought repeals * Western & A. R. Co. v. Bishop, 50
the authorizing act, there cannot be Ga. 465; Galloway v. Western & A.
a recovery for damages sustained R Co., 57 Ga. 512; Cook v. Western
after such repeal Paine Lumber & A. R. Co., 72 Ga. 48; Fulton Bag
Co. V. United States, 55 Fed. Rep. & Cotton Mills v. Wilson, 89 Ga, 318,
854. 15 S. E. Rep. 322.
2 Maney v. Chicago, eta R Co., 49 5 Western & A. R Co. v. Bishopi,
111. App. 105; Chicago, etc. R. Co. v. supra; Little Rock, etc. R v. Ea-
Wymore, 40 Neb. 645, 58 N. W. Rep. banks, 48 Ark. 460, 3 S. W. Rep. 808.
§ G.] EIGHT TO DAMAGES. 17
be sustained as reasonable, notwithstanding the abolishment
of the common-law rule of non-liability for the acts and omis-
sions of fellow-servants.^ This intimation was made with de-
cisions before the court which hold otherwise. The Indiana
supreme court has declared that the employer may not, by a
contract with his employee, put upon the latter the risks aris-
ing from the employers disregard of specific statutory require-
ments for the employee's safety.^
The cases Avhich deny the validity of such contracts do so
upon the ground that they are contrary to public policy.' On
this ground contracts which assume to relieve employers from
liability for neglect to furnish suitable appliances are void.*
It is provided by the statute known as Uhe English employers'
liabilit}'- act, 1880, that where personal injury is caused to a
workman in specified cases he ma}'', or in case death is caused
by the injury his representatives shall, have the same right of
compensation and remedies against the employer as if the
workman had not been in the employer's service. This has
been held to affect the contract so far only as to negative the
implication of an agreement on the workman's part to assume
the risks of the employment. It does not render invalid
his express contract to relieve the employer from liabil-
1 Little Rock, etc. R v. Eubanks, 48 Ark. 460, 3 S. W. Rep. 808; Roesner
supra. V. Hermann, 10 Biss. 486, 8 Fed. Rep.
^ Davis Coal Co. v. PoUand. 158 782; Runt v. Herring, 3 N. Y. Misc.
Ind. 607, 618, 62 N. E. Rep. 492, citing 105, 21 N. Y. Supp. 244 (including be-
Narramore v. Cleveland, etc. R. Co. sides the agreement not to sue, a
96 Fed. Rep. 298, 37 C. C. A. 499, 48 condition not to appear as a witness,
L. R. A. 68; Durant v. Lexington etc.).
Coal Mining Co., 97 Mo. 62, 10 S. W. A contract to vehich an employee
Rep. 484; Greenlee v. Southern R. is not a party cannot affect his right
Co., 122 N. C. 977, 30 S. E. Rep. 115, to recover against his employer.
41 L. R. A. 399. 65 Am. St. 734; Bad- Ominger v. New York Central R. Co.,
deley v. Earl Granville, 19 Q. B. Div. 6 Thomp. & Cook, 498; Kenney v.
423, 17 Eng. Rul. Cas. 212; Groves v. Same, 54 Hun, 143, 7 N. Y. Supp. 255.
Wimborne, [1898] 2 Q. B. 402; Cur- The master's liability is not affected
ran v. Grand Trunk R. Co., 25 Ont. by a rule, which is made part of
App. 407. the contract, requiring that the serv-
3 Railway Co. v. Spangler, 44 Ohio ant shall be responsible for the con-
st. 471; Kansas Pacific R. v. Peavey, dition of the appliances with which
29 Kan. 169, 34 Kan. 472, 8 Pac. Rep. he works. Ford v. Fitchburg R. Co.,
780. 110 Mass. 240, 261.
< Little Rock, etc. R. v. Eubanks,
Vol. 1 — 2
18 EIGHT TO DAMAGES. [§ G.
ity for injuries sustained in the employment; and a contract
which expressly releases all right on behalf of the servant
and his representatives to claim compensation is not void as
against public policy because it affects only the interest of the
emplo3'ed.^ This position, it seems to the writer, is well an-
swered by Smith, J., who said: But surely the state has an in-
terest in the lives and limbs of all its citizens. Laborers for
hire constitute a numerous and meritorious class in every com-
munity. And it is for the welfare of society that their em-
ployers shall not be permitted, under the guise of enforcing
contract rights, to abdicate their duties to them. The conse-
quence would be that every railway company and every
owner of a factory, mill or mine would make it a condition
precedent to the employment of labor that the laborer should
release all right of action for injuries sustained in the course
of the service, whether by the employer's negligence or other-
wise. The natural tendency of this would be to relax the
employer's carefulness in those matters of which he has the
ordering and control, such as the supplying of machinery and
materials, and thus increase the perils of occupations which are
hazardous even when well managed. And the final outcome
would be to fill the country with disabled men and paupers,
whose support would become a charge upon the counties or
upon public charity.^
A contract of membership between a railroad employee
and the voluntary relief department of the railroad, such de-
partment being a beneficial insurance association largely sup-
ported by the employer, which permits the employee, if he
sustains injury, either to sue for damages or accept the benefit
of the relief fund, and which makes such acceptance a release
1 Griffiths V. Earl of Dudley, 9 Q. to accept certain benefits in lieu of
B. Div. 357. The substance of the damages, and the acceptance of the
opinion in this case is given in a note benefits does not bar his right of
in 44 Am. Rep. 633. action. Pittsburgh, etc. R Co. v.
2 Little Rock, etc. R. v. Eubanks, Montgomery, 153 Ind. 1, 49 N. E. Rep.
48 Ark. 460. 468, 3 S. W. Rep. 808. 582. As to what contracts are not
An Indiana statute nullifies con- within a similar statute, see Railway
tracts made by corporations with Co. v. Cox, 55 Ohio St. 497, 45 N. K
their employees releasing the former Rep. 641. Such statutes are void,
from liability to the latter for per- Shaver v. Pennsylvania Co., 71 Fed.
sonal injuries. Such statute includes Rep. 931.
a contract which binds the employee
§T.]
EIGHT TO DAMAGES.
19
and satisfaction of his damages, is not void as against public
policy, and the acceptance of money from such department
b^rs an action for damages,' and estops the employee from
alleging that the contract was ultra vires his employer.^ Such
contracts are clearly distinguishable from those in which the
right of action is bargained away in advance because such
right exists until after the employee has knowledge of all the
facts, and then he elects between his right against the relief
fund and his action for damages.' Such a contract is binding
on an infant if beneficial to him."*
§ 7. Nature of the right to damages; its survival. When
a cause of action arises it has a legal value as a chose in [7]
action; it is a species of property.^ The right to damages vests
when the act or neglect out of which it arises occurs. Even
where there is no legal measure of damages, as in case of
slander or assault, the injured party has an indeterminate right
lEckman v. Chicago, etc. R. Co.,
169 111. 312, 38 L. R. A. 750, 48 N. E.
Rep. 496, affirming 64 111. App. 444;
Chicago, etc. R Co. v. Miller, 22 C. C.
A. 264, 76 Fed. Rep. 439: Maine v.
Chicago, etc. R. Co., 70 N. W. Rep.
630 (Iowa); Chicago, etc. R. Co. v.
Bell, 44 Neb. 44, 62 N. W. Rep. 314;
Lease v. Pennsylvania Co., 10 Ind.
App. 47, 37 N. E. Rep. 423; Pittsburgh,
etc. R. Co. V. Mahoney, 148 Ind. 196,
40 L. R. A. 101. 46 N. E. Rep. 917;
Same v. Moore, 152 Ind. 345, 44 L. R.
A. 638, 53 N. E. Rep. 290; Chicago,
etc. R. Co. V. Curtis, 51 Neb. 442, 71
N. W. Rep. 42; Railway Co. v. Cox.
55 Ohio St. 497, 45 N. E. Rep.
641; Johnson v. Philadelphia &
R. R. Co., 163 Pa. 127, 29 Atl. Rep. 854;
Riugle V. Pennsylvania R., 164 Pa.
529, 30 Atl. Rep. 492; Vickers v.
Chicago, etc. R. Co., 71 Fed. Rep. 139:
Shaver v. Pennsylvania Co., id. 931;
Brown v. Baltimore & O. R. Co., 6
D. C. App. Cas. 237; Spitze v. Same,
75 Md. 162,23 Atl. Rep. 307; Petty v.
Brunswick & W. R. Co., 109 Ga. 666,
35 S. E. Rep. 82; Carter v. Same, 115
Ga. 853, 42 S. E. Rep. 239; Donald v.
Chicago, etc. R. Co.. 93 Iowa, 284, 61
N. W, Rep. 971; Fuller v. Baltimore,
etc. Ass'n, 67 Md. 433, 10 Atl. Rep.
237; Otis v. Pennsylvania Co., 71
Fed. Rep. 136. Contra, Miller v.
Chicago, etc. R. Co., 65 Fed. Rep.
30.5. The South Carolina court was
equally divided on the question
of the validity of such a contract,
Johnson v. Charleston & S. R. Co., 55
S. C. 152, 32 S. E. Rep. 2, 33 id. 174, 44
L. R. A. 645. The doctrine of the
Miller case, supra, is inferentially
disapproved in 76 Fed. Rep. 439, 23
C. C. 264, by the statement that the
authorities were all the other way,
though the reviewing court did not
find it necessary to expressly pass
upon tlie question. See article in 8
Va. Law Reg. 858.
^Eckman v. Chicago, etc. R. Co.,
169 111. 312, 48 N. E. Rep. 496, 38 L.
R A. 750.
3 Railway Co. v. Cox, 55 Ohio St.
497, 45 N. K Rep. 641; Johnson v.
Philadelphia & R. R, Co., 163 Pa. 127,
29 Atl. Rep. 854.
4 Clements v. London, etc. R Co.,
[1894] 2 Q. B. 482.
5 2 Black. Com. 43a
20
EIGHT TO DAMAGES.
[§T.
to compensation the instant be receives the injury. The ver-
dict of the jury and the judgment of the court thereon do not
give, they only define, the right.^ Such right when vested
is to the injured party of the nature of property, and is pro-
tected as property in tangible things is protected. It cannot
be annulled - or changed by legislation,* nor extinguished ex-
cept by satisfaction, release or the operation of statutes of
limitation.^ Trover will lie for its conversion^ or the conver-
sion of paper evidence of it;^ and other actions will lie for
breaches of duty or contract, as well as for other wrongs relat-
ing to it.'' Except when the right of action and to damages
is for a personal tort or breach of a marriage promise, it sur-
vives the death of the injured party and is assignable.^
[8] The general subject embraces the principles and illus-
trative examples by which all legal causes of action may be
tested and their pecuniary value measured or adjudicated.
By these courts determine, first, whether the party complain-
ing has suffered a legal injury, and how the conclusion that he
1 2 Black. Com. 438.
' Cooley on Const. Lim. 449; Streu-
bel V. Milwaukee, etc. R. Co., 12 Wis.
67; Wester velt v. Gregg, 12 N. Y. 211 ;
Dash V. Van Kleeck, 7 Johns. 477;
Thornton V. Turner, 11 Minn. 336; Ter-
rill V. Rankin, 2 Bush, 453, 92 Am.
Dec. 500; Williar v. Baltimore, etc.
Ass'n, 45 Md. 546; Griffin v. Wilcox,
21 Ind. 370.
3 Chicago, etc. R. Co. v. Pounds, 11
Lea, 127.
4 Bowman v. Teall, 23 Wend. 305;
Allaire v. Whitney, 1 Hill, 484; Whit-
ney V. Allaire. 1 N. Y. 305: Christian-
son V. Lin ford, 3 Robert. 215; Baylis
V. Usher, 4 Moore & P. 790; Bayliss v.
Fisher, 7 Bing. 153; Willoughby v.
Backhouse, 4 DowL & Ry. 539, 2 B.
& C. 821; Clark v. Meigs, 10 Bosw.
337.
s Ayres v. French, 41 Conn. 151 ;
Payne v. Elliot, 54 Cal. 341, 342.
« FuUam v. Cummings, 16 Vt. 697;
Archer v. Williams, 2 C. & K. 26;
Comparet v. Burr, 5 Blackf. 419: Hud-
speth V. Wilson, 2 Dev. 372, 21 Am.
Dec. 344; Pierce v. Gilson, 9 Vt. 216;
Moody V. Keener, 7 Port. 218.
7 Terry v. Allis, 20 Wis. 32; Evans
V. Trenton, 24 N. J. L. 764; Allen v.
Suydam, 17 Wend. 368; Walker v.
Bank, 9 N. Y. 582; McNair v. Burns,
9 Watts, 130; Rhinelander v. Bar-
row. 17 Johns. 538.
8 Hullett V. Baker, 101 Tenn. 689,
49 S. W. Rep. 757; Final v. Backus,
18 Mich, 218; Sears v. Conover, 3
Keyes, 113: North v. Turner, 9S. & R.
244; Johnston v. Bennett, 5 Abb. Pr.
(N. S.) 331; Richtmeyer V. Remsen, 38
N. Y. 206; Waldrou v. Willard, 17
N. Y. 466; McKee v. Judd, 12 N. Y.
622; Rice v. Stone, 1 Allen, 566; Mun-
sell V. Lewis, 4 Hill, 635; Jordan v.
Gillen, 44 N. H. 424; Grant v. Lud-
low's AdmT, 8 Ohio St. 1; Taylor v.
Galland, 3 G. Greene, 17; Blakeney
V. Blakeney, 6 Port. 109; Nettles v.
Barnett, 8 Port. 181 ; Hoyt v. Thomp-
son. 5 N. Y. 347; Brig Sarah Ann, 2
Sumn. 211; Meech v. Stoner, 19 N. Y.
20: Linton v. Hurley, 104 Mass. 353.
See Barnard v. Harrington, 3 Mass. 228.
J
§ 8.] EIGHT TO DAMAGES. 21
has shall be expressed in damages; and secondly, they direct
and limit the inquiries for the ascertainment of the amount
which shall be recovered by way of recompense.
§ 8. Injuries to unborn cliild. In 1884 the question was
raised in Massachusetts whether a child prematurely born, and
surviving only a few minutes, in consequence of an injury to
its mother, was a "person" within the meaning of a statute
giving an action for the loss of life against the town whose
defective highway caused the death of any person. The court,
after reviewing, by Holmes, J., the argument in favor of the
administrator of the child, which was based on Lord Coke's
statement to the effect that if a woman is quick with child,
and takes a potion, or if a man beats her and the child is born
alive and dies of the potion or battery, this is murder,' said
that "no case, so far as we know, has ever decided that, if the
infant survived, it could maintain an action for injuries re-
ceived by it while in its mother's womb. Yet that is the test
of the principle relied on by the plaintiff, who can hardly avoid
contending that a pretty large field of litigation has been left
unexplored until the present moment." If the difficulties
stated by the court could be got over, " and if we should as-
sume, irrespective of precedent, that a man might owe a civil
duty and incur a conditional prospective liability in tort to one
not yet in being, and if we should assume also that causing an
infant to be born prematurely stands on the same footing as
wounding or poisoning, we should then be confronted with the
question raised by the defendant, whether an infant dying be-
fore it was able to live separate from its mother could be said
to be a person recognized by the law as capable of having a
locus standi in court, or of being represented there by an ad-
ministrator.2 And this question would not be disposed of by
1 3 Inst 50; 1 Hawk. P. C, c. 31. §16; III. 23, pi. 18; which seems not to
1 Black. Com. 129, 130; 4 id. 198; Beale have been doubted by Fitzherbert or
V. Beale, 1 P. Wms. 244, 246; Burdet Brooke, and which was afterwards
V. Hopegood, id. 486; Rex v. Senior, cited as law by Lord Hale. Fitz.
1 Moody C. C. 346. Abr., " Enditement," pi. 4; '• Corone,"
The court did not consider how far pi. 146; Bro. Abr., " Corone," pi. 146; 1
the statement in the text would be Hale P. C. 433. See note 3, p. 22.
followed by it, if the question were ^ Marsellis v. Thalhimer, 2 Paige,
to be regarded as one at common law, 36; Harper v. Archer, 4 Sm. & M. 99.
but observed that it was opposed to In the first case it was held that
the case in 3 Ass., pi. 2, Y. B. 1 Ed, "an unborn child, after conception.
22 EIGHT TO DAMAGES. [§ 8.
citing those cases where equity has recognized the infant pro-
visionally while still alive en venire} And perhaps not by show-
ing that such an infant was within the protection of the crim-
inal law. . . . Taking all the foregoing considerations
into account, and further, that, as the unborn child was a part
of the mother at the time of the injury, and damage to it which
was not too remote to be recovered for at all was recoverable
by her, we think it clear that the statute sued upon does not
embrace the plaintiff's intestate within its meaning."^ In 1891
the court of queen's bench in Ireland ruled that an infant who
was deformed from its birth by reason of an accident which
happened to its mother while it was en ventre sa mere could not
maintain an action for the permanent injuries thereby inflicted.
The mother was injured while a passenger on a railroad train.
The chief justice said that the statement of claim did not al-
lege that the mother made an}'' contract in reference to the
child — the contract was with the mother in respect of herself
alone. It did not allege that any consideration was received
by the company in respect of the child. It did not allege that
the company, through its servants or otherwise, knew anything
about the child or the condition of the mother. " It is quite
plain, for aught that appears in this statement of claim, that
however the child in the womb may be regarded, whether as
part of the mother or having a distinct personality — whether
an entity or a nonentity, — it was, so far as any actual relation
the company had with it, a nonentity; and therefore, in my
opinion, the existence of the dutv, for the breach of which the
defendants would be liable as carriers of passengers, cannot b©
inferred. To infer the existence of such a duty from the mere
possibility that the mother was with child when she was re-
ceived as a passenger by the defendants would be to act with-
out the sanction of any judicial decision, or, in my opinion, of
any legal principle."* The same judge was anxious to have it
is to be considered tn esse for the pur- 3 Atk. 114, 117. See Musgrave v,
pose of enabling it to take an estate Parry, 2 Vern. 710.
or for any other purpose vvhich is for ^ Dietrich v. Northampton, 138
the benefit of the child, if it should Mass. 14. 53 Am. Rep. 243,
be afterwards born alive." See note ^ Walker v. Great Northern R. Co.,
3, this page. 28 L. R. Ire. 69.
1 Lutterel's Case, stated in Hale v. The arguments for the respective
Hale, Free. Ch. 50; Wallis v. Hodson, parties are thus summarized by the
§8-]
EIGHT TO DAMAGES.
23
understood that he did not go so far as to hold that if a person,
knowing that a woman is enoiente, wilfully inflicts injuries on
her Avith a view to injuring the child, which is born a cripplo
or becomes so subsequently as a result of the injuries, an ac-
chief justice (O'Brien): Counsel for
the company principally rely upon
an undoubted proposition of criminal
law, that under no circumstances is
it held at the present day to be mur-
der to destroy a child whilst in the
womb. In Russell on Crimes, 645,
it is stated on the authority of Lord
Hale " that an infant in its mother's
womb, not being in rerum natura,
is not considered as a person who
can be killed within the description
of murder, and that therefore, if a
woman being quick or great with
child take any potion, or cause an
abortion, or if another give her any
such potion, or cause an abortion, or
if a person strike her whereby the
child within is killed, it is not mur
der or manslaughter." And they
also rely upon what seems clearly
established in the case of descent at
common law, that a child en ventre
sa mere is considered not in exist-
ence; and, referring to Richards v.
Richards, Johns. 754, they show " that
the qualified heir was entitled to the
rents and profits until the posthu-
mous heir was born." Plaintiffs re-
plied that the last point was an ex-
ception to the general rule which
arose from the rigor of the common
law with regard to real estates re-
quiring a tenant to the prcBcipe, as
pointed out in Thellusson v. Wood-
ford, 4 Ves. 335. Mr. Justice Buller
in that case observed in replying to
the contention that a child en ventre
sa mere was a nonentity: Let us
see what this nonentity can do. He
may be vouched in a recovery,
though it is for the purpose of mak-
ing him answer over in value. He
may be even executor. He may take
under the statute of distributions.
He may take by devise. He may be
entitled under a charge for raising
portions. He may have an injunc-
tion, and he may have a guardian.
Some other cases put this beyond all
doubt. In Wallis v. Hodson, 2 Atk.
117, Lord Hardwicke says: The ' prin-
cipal reason I go upon in the ques-
tion is that the plaintiff was en ventre
sa mere at the time of her brother's
death, and consequently a person in
rerum natura, so that, by the rules
of the common and civil law, she was
to all intents and purposes a child as
much as if born in the father's life-
time.' In the same case Lord Hard-
wicke takes notice that the civil law
confines these rules to cases where it
is for the benefit of the child to be
considered as born; but notwith-
standing, he states the rule to be
that such child is to be considered
living to all intents and purposes."
Mr. Justice Buller stated in Thellus-
son v. Woodford, iiU]ira, that the
words " ' that whenever such consid-
eration would be for his benefit, a
child en ventre sa mere shall be con-
sidered actually born ' were used by
me because I found them in tiie book
whence the pasage was taken. Why
should not children en ventre sa mere
be considei'ed generally as in exist-
ence? They are entitled to all the
privileges of other persons." In Rex
V. Senior, 1 Moody C. C. 346, all the
judges except two sitting, it was
unanimously decided that a doctor
who, through culpable ignorance
and want of skill, inflicted a wound
on a child in the act of being born,
and before it was born, and of which
it died afterwards, was properly con-
victed of manslaughter.
2i EIGHT TO DAMAGES. [§ 8.
tion will not lie at the suit of such child. The other judges con-
curred in separate opinions which are very interesting and
instructive. The Massachusetts case and the Irish case have
been followed where an action was brought on behalf of a child
born with serious physical defects because of injuries sustained
by its mother through the negligence of the officers of a hos-
pital where she went for the purpose of being cared for during
confinement.^ An action will not lie to recover for the death
of a child prematurely born, as the result of injuries to the
mother, in consequence of which birth it died.^ It is worthy
of note in this connection that it has been held in England'
that a child en ventre sa mere is a child within the meaning
of Lord Campbell's act, so as to be capable, after its birth, of
maintaining an action in respect of the pecuniary loss sustained
by the death of its father owing to the wrongful act of others
done while it was in the womb.
1 Allaire v. St. Luke's Hospital, 184 Pac, Rep. 1021, 28 Am. St. 72, 16 L. R.
111. 359, 56 N. E. Rep. 638, 75 Am. St. A. 808. See Lathrope v. Flood, 135
176, 48 L. R. A. 225, affirming 76 III Cal. 458, 67 Pac. Rep. 683, 57 L. R. A.
App. 441. 215.
2 Gorman v. Budlong, — R. I. — , ^ The George and Richard, L. R. 3
49 Atl. Rep. 704; Hawkins v. Front Ad. & EccL 466.
Street Cable R. Co., 3 Wash. 592, 28
§ 9.] NOMINAL DAMAGES. 25
CHAPTER 11.
NOMINAL DAMAGEa
§ 9. Nature and purpose of nominal damages.
10. Illustrations of the right to nominal damages.
11. The right a substantial one; new trials.
[9] § 9. Nature and purpose of nominal damages. For
every actionable injury there is an absolute right to damages;
the law recognizes such an injury whenever a legal right is
violated. Rights are legal when recognized and protected by
law. Every invasion of such right threatens the right itself,
^nd to some extent impairs the possessor's enjoyment of it.
The logical sequence of finding an invasion is the legal se-
quence, — a legal injury; this entitles the injured party to
compensation. In abstract principle the law is that the per-
son whose rights have been invaded is entitled to compensa-
tion proportioned in amount to the injury. The extent of the
actual injury, however, is seldom matter of law; and when it
is not, merely showing the wrong or breach of contract which
constitutes the injury, will only authorize the court to judi-
cially declare that the party injured is entitled to some dam-
ages. If there is no inquiry as to actual damages, or none
appear on inquiry, the legal implication of damage remains.
This requires some practical expression as the compensation
for a technical injury; therefore, nominal damages are given,
as six cents, a penny, or a farthing, a sum of money that can
be spoken of, but has no existence in point of quantity. Yer-
<iicts and judgments for damages generally specify a small
sum which may be paid.^ When actual damages are assessed
1 Clay V. Board, 85 Mo. App. 337, ing Club v. Lamoreux, 114 Wis. 44,
citing the text; Quigley v. Birdseye, 58, 89 N. W. Rep. 880, citing the text;
11 Mont. 439, 28 Pac. Rep. 741; Trum- Bourdette v. Sieward, 107 La. 258, 31
bull V. School District, 22 Wash. 631, So. Rep. 630; Beaumont v. Great-
61 Pac. Rep. 714; Greensboro v. Mc- head, 2 C. B. 499; Ashby v. White, 3
Gibboney, 93 Ga. 672, 20 S. E. Rep. Ld. Raym. 938; Parker v. Griswold,
37; Jurnick v. Manhattan Optical 17 Conn. 303: Ripka v. Sergeant, 7
Co., 66 N. J. L. 380, 49 Atl. Rep. 681; W. & S. 9, 42 Am. Dec. 214; McCon-
Douglass V. Railroad Co., 51 W. Va. nel v. Kibbe, 33 III. 175, 85 Am. Dec.
•523, 41 S. E. Rep. 911; Diana Shoot- 265; Pleasants v. North Beach, etc.
26
NOMINAL DAMAGES.
[§9.-
those which are nominal are included and are not separately
added. Where a plaintiff sued in an inferior court for a debt
of oOl., which was the extent of its jurisdiction, and neither
recovered nor sought to recover damages except for the pur-
pose of obtaining costs, it was held that nominal damages for
this purpose did not place the debt beyond the jurisdiction.^
Where judgment by default was taken on a bond in the pen-
alty of $250, conditioned to pay $150, it was held that nom-
inal damages could not be added to the penalty for detention
of the debt to affect costs.^ The theory upon which and the-
purpose for which such damages are awarded do not entitle
R. Co., 34 Cal. 586; Tootle v. Clifton,
22 Ohio, 247, 10 Am. Rep. 732: Pas-
torius V. Fisher, 1 Rawle, 27; Hobson
V. Todd, 4 T. R 71; Clifton v. Hooper,
6 Q. B. 468; Foster v. Elliott. 33 Io%va,
216; Leeds v. Metropolitan Gas L.
Co., 90 N. Y. 26; Anders v. Ellis, 87
N. C. 207; Hill v. Forkner, 76 Ind, 115.
If there is no substantial right in-
volved a judgment awarding $1 as
damages will not be reversed be-
cause some smaller sum would have
been sufficient. Hill v. Forkner, 76
Ind. 115; Moe v. Chesrown, 54 Minn.
118, 55 N. W. Rep. 882; Hogan v.
Peterson, 8 Wyo. 549, 564, 59 Pac.
Rep. 162. Contra, White v. Wood-
rufif, 25 Neb. 797, 806, 41 N. W. Rep.
785.
"Nominal damages mean in law
some small amount sufficient to
cover and carry the costs." Ran-
some V. Christian, 56 Ga. 351; Con-
ley V. Arnold, 93 Ga. 823, 20 S. E. Rep.
762.
An award of $25 as nominal dam-
ages has been sustained (Quigley v.
Birdseye, 11 Mont. 439, 28 Pac. Rep.
741); but it was otherwise when the
instruction was to find $1 or any
nominal sum. Trumbull v. School
District, 22 Wash. 631, 61 Pac. Rep.
714.
In the exercise of equity powers
in an action to recover for the death
of a child, the plaintiU having had
reason to ask judicial investigation
of the facts, the court awai'ded
"nominal damages at $250." Hamil-
ton V. Morgan's L. & T, R & S. Co.,
42 La. Ann. 824, 8 So. Rep. 586.
In Bourdette v. Sieward, 107 La.
258, 31 So. Rep. 630, $500 seems to
have been considered nominal dam-
ages.
There appears to be a tendency
in some states to treat the question
of nominal damages otherwise than
seriously. No doubt there are cases
in which no injustice results from
so doing. As has been observed by
a court of high standing: When we
consider that the doctrine of res
judicata, or even the title to prop-
erty, may rest upon a judgment for
nominal damages, it is evident that
the right to a verdict is not con-
trolled by the incidental question of
the amount of damages to be re-
covered. New Jersey School &
Church Furniture Co. v. Board of
Education, 58 N. J. L. 646, 35 AtL
Rep. 397. See Chicago West Di-
vision R. Co. V. Metropolitan West
Side E. R Co., 152 111. 519, 38 N. E.
Rep. 736; Dady v. Condit, 188 111.
234, 58 N. E. Rep. 900; Stanton v.
New York & E. R Co., 59 Conn. 272»
21 Am. St, 110, 22 Atl. Rep. 300.
1 Joule V. Taylor, 7 Ex. 58.
2 People V. Hallett, 4 Cow. 67.
§ 10.] NOMINAL DAMAGES. 27
the defendant who seeks, under a pleaof recoupment, to reduce
the claim of the plaintiff, arising under a contract, by nom-
inal damages, in consequence of some breach of the same con-
tract by the plaintiff.^
The damages which the law thus infers from the infraction
of a legal right are absolute; they cannot be controverted;
they are the necessary consequent. The act complained of
may produce no actual injury; it may be in fact beneficial, by
adding to the value of property or by averting a loss which
would otherwise have happened; yet it will be equally true,
in law and in fact, that it was in itself injurious if violative of
a legal right. The implied injury is from that circumstance^
the fact that beyond violating a right it was not detrimental,
or was even advantageous, is immaterial to the legal quality
of the act itself.^
§ 10. Illustrations of the right to nominal damages,
A message containing a direction to purchase a specified
quantity of wheat, deliverable at a stated time in the future,
was furnished a telegraph company for transmission. The
message, by negligence of the company's servants, was not de-
iFoote & Davis Co. v. Malony, 115 Wilkinson, 4 Mason, 397; Bealey v.
Ga. 985, 42 S. E. Rep. 413. ' Shaw, 6 East, 208; Blodgett v. Stone,
2 Jewett V. Whitney, 43 Me. 242; 60 N. H. 167: Fuikerson v. Eads, 19
Cook V. Hull, 3 Pick. 269. 15 Am. Mo. App. 623; Adams v. Robinson, 65
Dec. 208; Bolivar Manuf. Co. v. Ne- Ala. 586; Drum v. Harrison, 83 Ala.
ponset Manuf. Co., 16 Pick. 246; 384,3 So. Re] >. 769; Barlow v. Lowder,
Stovvell V. Lincoln, 11 Gray, 434; 85 Ark. 493: Empire Gold Mining Co.
Hathorne v. Stinson, 12 Me. 183, 28 v. Bonanza Gold Mining Co., 67 Cal.
Am. Dec. 167; Pollard v. Porter, 3 406, 7 Pac. Rep. 810; Hancock v. Hub-
Gray, 312; Newcomb v. Wallace, 112 bell, 71 Cal. 537, 12 Pac. Rep. 618;
Mass. 25; Chamberlain v. Parker, 45 Kenney v. Collier, 79 Ga. 743, 8 S. E.
N. Y. 569; Marzetti v. Williams. 1 B. Rep. 58; Brant v. Gallup, 111 111. 487,
& Ad. 415; Kimel v. Kimel, 4 Jones, 53 Am. Rep. 638; Mize v. Glenn, 38
121; Warre v. Calvert, 7 Ad. & El. Mo. App. 98; Jones v. Hannovan, 55
143; Embrey v. Owen, 6 Ex. 353; Mo. 462; Tramraell v. Chambers
Northam v. Hurley, 1 El. & Bl. 665; County, 93 Ala. 388, 9 So. Rep. 815;
Medway Nav. Co. v. Romney, 9 C. B. Treadwell v. Tillis. 108 Ala. 262, 18
(N. S.) 575; McLeod v. Boulton, 3 Up. So. Rep. 886; Patrick v. Colorado
Can. Q. B. 84; Smith v. Whiting, 100 Smelting Co., 20 Colo. 268, 38 Pac.
Mass. 122; McConnelv. Kibbe, 33 111. Rep. 236; New Jersey School &
175, 85 Am. Dec. 265; Barker V.Green, Church Furniture Co. v. Board of
2 Bing. 317; Graver v. Sholl, 42 Pa. 58; Education, 58 N. J. L. 646, 35 Atl. Rep.
Chapman v. Thames Manuf. Co., 13 397. See cases cited in notes 1,2. §2.
Conn. 269, 33 Am. Dec. 401; Tyler v.
28 NOMINAL DAMAGES. [§ 10.
livered. The market price of wheat advanced for two days,
then fluctuated, and was less on the day specified in the mes-
sage than on the day when it should have been delivered, so
that there was not only no damage, but the sender was saved
from the loss which he would have suffered if his message
had been delivered and acted upon. But there was a neglect
of duty, an infraction of the sender's right to have care and
diligence used in the transmission and delivery of his message;
for that he was entitled to nominal damages.^ The plaintiff and
the defendants were riparian proprietors on a water-course,
and had mills thereon; various other mills belonging to third
persons were located on the same stream. In case, the plaint-
iff complained that the defendants heated the water of the
stream by operating steam boilers in their mills, increasing
the evaporation five per cent., which was to that extent an
abstraction of the water; also that they fouled the water by
discharging into it soap suds, etc. But the pollution did no
actual damage to the plaintiff, because the water was already
so polluted by similar acts of other mill owners and dyers
above the defendants' mill that the latter's acts made no ap-
preciable difference; that is, the pollution by the defendants
did not make the stream less applicable to practical purposes
than it was before. It was held, however, that the plaintiff
received damage in point of law from such pollution. It was
an injury to a right; but that the loss of five per cent, would
not give a cause of action if such diminution arose from a
reasonable use of the stream.^ Where a part owner was ex-
pelled from a mill property, and while wrongfully kept out
of possession, the mill, which was old, was replaced by a new
one of greater value, so that when he regained possession the
property was much more valuable, and he was a gainer after
deducting all intermediate lost profits, he was entitled to nom-
inal damages.^
1 Hibbard v. Western U. Tel. Co., 33 U. Tel. Co., 92 Ala. 399, 9 So. Rep.
Wis. 558, 14 Am. Rep. 775. Nominal 200.
damages may be recovered for such ^ Wood v. Waud, 3 Ex. 748; Ul-
negligence though it does not appear bricht v. Eufaula Water Co., 86 Ala.
that anything was paid for sending 587, 11 Am. St. 67, 6 So. Rep. 78, 4 L.
the telegram. Kennon v. Western R. A. 572.
3 Jewett V. Whitney, 48 Me. 243.
§ 1<».] NOMINAL DAMAGES. 29
The principle that for the violation of every legal right nom-
inal damages at least will be allowed applies to all actions,
whether for tort or breach of contract, and whether the right
is personal or relates to property. The offer of violence to a
person is an assault, and the least unjustifiable touching of
him a battery. Where a debtor was arrested on a ca. sa., and
judgment, after an insolvent discharge, which gave him im-
munity from arrest, it was held that the party at whose [12]
instance the writ was issued, as well as the attorney who is-
sued it, were liable for false imprisonment whether they were
previously notified of the discharge or not. Want of notice
might reduce the damages to a nominal sura, but could not be
allowed to absolutely excuse a trespass.^ The death of a child
was caused by the neglect or unskilfulness of defendant's
clerk in substituting morphine for quinine. As the child could
have brought an action for the injury had he survived, it was
held that a liability under a statute of Kew York existed in
favor of the administrator; and because the statute expressly
gave a right of action, at least nominal damages were recov-
erable.^ In actions for libel and slander, wherever there has
been publication of matter in itself libelous or actionable per
se, the law infers some damage.* Every unauthorized entry
upon land of another or intermeddling with his goods is an
actionable trespass, whether there be actual injury or not;
whether the owner suffer much or little, he is entitled to a
verdict for some damages.^ In an action for fishing in the
1 Deyo V. Van Valkenburgh, SHill, tion for a default which occurred
242. See Flint v. Clark, 13 Conn. 361. after commencement of the prior
2Quin V.Moore, 15 N. Y. 432; Mc- action. Shanklin v. Gray, 111 Cal.
Intyre v. New York Central R. Co., 88, 43 Pac. Rep. 399. Where the law
43 Barb. 533; Ihl v. Forty-second gives an action for the doing of an
Street, etc. R. Co., 47 N. Y. 317, 7 act, the doing thereof imports a
Am. Rep. 450. damage. Whittemore v. Cutter, 1
The failure to comply with a stat- Gall. 429, 433. See Enos v. Cole, 53
ute requiring that, at stated times, Wis. 235, 10 N. W. Rep. 377.
the officers of a corporation shall file ^ Ashby v. White, 1 Salk. 19, 2 Ld.
verified accounts necessarily implies Raym. 955; Flint v. Clark, 13 Conn,
an injury to the stockholders thouirh 361: Kelly v. Sherlock, L. R. 1 Q. B.
no actual damages be shown; and 6S6.
neither the recovery of judgment •* Dixon v. Clow, 24 Wend. 188: Mc-
nor the pendency of an action for a Aneuny v. Jewett. 10 Allen, 151;
l)ast default bars a subsequent ac- Carter v. Wallace, 2 Tex. 206; Plum-
50
NOMINAL DAMAGES.
[§11.
plaintiff's several fishery, he was held entitled to nominal dam-
aires thouffh the defendant took no fish and the declaration
did not allege that he caught any.^ One's right of property
is infringed by any unlawful flowage of his land.^ A riparian
owner has a right to the natural flow of water not increased
or diminished in quantity, and unpolluted in quality, and for
[13] any infraction of this right at least nominal damages
may be recovered.^ A fraud by which one is drawn into a
contract is an injury actionable ])er se.* Actual damage is
not necessary to an action. A violation of a right with the
possibility of damage is suflBcient ground.-^
§ 11. The right a substantial one; new trials. The fail-
ure to perform a duty or contract is a legal wrong independ-
ently of actual damage to the party for whose benefit the per-
mer v. Harbut, 5 Iowa, 308; Coe v.
Peacock, 14 Ohio St. 187; Pierce v.
Hosmer, 66 Barb. 345; White v. Grif-
fin, 4 Jones, 139; Watson v. New Mil-
ford Water Co., 71 Conn. 442, 42 Atl
Rep. 265.
1 Patrick v. Gi'eenway, 1 Saund.
346&, note.
2 Amoskeag Manuf. Co. v. Goodale.
46 N. H. 53; McCoy v. Danley. 20 Pa.
89: Tootle v. Clifton. 22 Ohio St. 247,
10 Am. Rep. 732; Kemmerrer v. Ed-
elman, 23 Pa. 143; WaiTen v. Deslip-
pes, 33 Up. Can. Q. B. 59; Plumleigh
V. Dawson, 6 111. 544, 41 Am. Dec.
199; Pastorius v. Fisher, 1 Rawle, 27;
Whipple V. Cumberland Manuf. Co.,
2 Story, 661; Jones v. Hannovan, 55
Mo. 462; Doud v. Guthrie, 13 111. App.
653; Mellor v. Pilgrim, 7 id. 306;
Mize V. Glenn. 38 Mo. App. 98.
3 New York Rubber Co. v. Rothery,
132 N. Y. 293, 28 Am. St. 575, 30 N.
E. Rep. 841; Newhall v. Gilson, 8
Cush. 595; Tillotson v. Smith, 32 N.
H. 90, 64 Am. Dec. 365; Wadsworth
V. Tillotson, 15 Conn. 366, 39 Am.
Dec. 391; Clinton v. Myers. 46 N. Y.
511, 7 Am. Rep. 373; Holsman v.
Boiling Spring B. Co., 14 N. J. Eq.
835; Embrey v. Owen, 6 Ex. 353;
Northam v. Hurley, 1 El. & Bl. 665;
Stockport Water Works Co. v. Pot-
ter, 7 H. & N. 160; Tyler v. Wilkin-
son, 4 Mason, 397; Wood v. Waud, 3
Ex. 748; Tuthill v. Scott, 43 Vt. 525,
5 Am. Rep. 301; Munroe v, Stickney.
48 Me. 462; Mitchell v. Barry, 26 Up.
Can. Q. B. 416; Blanchard v. Baker,
8 Me. 253, 23 Am. Dec. 504; Stein v.
Burden, 24 Ala. 130, 60 Am. Dec.
453.
4 Allaire v. Whitney, 1 Hill, 484;
Ledbetter v. Morris, 3 Jones, 543;
Pontifex v. Bignold, 3 Scott N. R.
390.
5 Id.; National Exchange Bank v.
Sibley, 71 Ga. 726, 734; Ross v.
Thompson, 78 Ind. 90; Hooten v.
Barnard, 137 Mass. 36; Blodgett v.
Stone. 60 N. H. 167; Alabama Min-
eral R. Co. V. Jones, 121 Ala. 113, 25
So. Rep. 814.
Mr. Justice Story observed in Webb
V. Portland Manuf. Co., 3 Sumner,
189, that actual perceptible damage
is not indispensable as the founda-
tion of an action. The law toler-
ates no further inquiry than whether
there has been the violation of a
right. If so, the party is entitled to
maintain his action in vindication of
bis right.
11.]
NOMINAL DAMAGES.
31
formance of such duty or contract is due.^ The omission to
show actual damages and the inference therefrom that none
have been sustained do not necessarily render the case trivial.
The law has regard for the substantial rights of parties though
it may overlook trivial things.- When such a right is violated
the" maxim de minimis non curat lex has no application.' The
court will add nominal damages to the finding of a jury when
necessary to such rights, as to carry costs.* So where [14-16]
judgment should have been given for plaintifT for nominal
damages, but was rendered for defendant, it will be reversed
if such damages will entitle the plaintiff to costs; ^otherwise a
1 Spaflford v. Goodell, 3 McLean, 97;
Runlett V. Bell, 5 N. H. 433; Hagan
V. Riley, 13 Gray, 515: Pond v. Merri-
field, 12 Gush. 181; Bagby v. Harris,
9 Ala. 173; Clinton v. Mercer, 3
Murph. 119; Conger v. Weaver, 20
N. Y. 140; Mecklem v. Blake, 22 Wis.
495; Freese v. Crary, 29 Ind. 525;
Worth V. Edmonds, 52 Barb. 40;
French v. Bent, 43 N. H. 448; John-
son V. Stear, 15 C. B. (N. S.) 380; Steer
V. Crowley, 14 id. 337: Brown v. Em-
erson, 18 Mo. 103; Laflin v. Willard,
16 Pick. 64; Goodnow v. Willard, 5
Met. 517; Browner v. Davis, 15 Cal.
9; Seat v, Moreland, 7 Humph. 575;
Bond V. Hilton, 2 Jones, 149; Craig
V. Chambers, 17 Ohio St. 254; Dow
V. Humbert, 91 U. S. 294; Smith v.
Whiting, 100 Mass. 122; Blot v. Boi-
ceau, 3 N. Y. 78; Hickey v. Baird, 9
Mich. 32; Newcomb v. Wallace, 112
Mass. 25; Chamberlain v. Parker, 45
N. Y. 569; Wilcox v. Executor of
Plummer, 4 Pet. 172; Clark v. Smith,
9 Conn. 379; Barker v. Green. 2Bing.
317; Pollard v. Porter, 3 Gray, 312;
Marzetti v. Williams, 1 B. & Ad. 415;
Jordan v. Gallup, 16 Conn. 536; Coop-
er V. Wolf, 15 Ohio St. 523; Mickles
V. Hart, 1 Denio, 548; Carl v. Granger
Coal Co., 69 Iowa, 519, 29 N. W.
Rep. 437; Rosser v. Timberlake, 78
Ala. 162.
2 Smith V. Gugerty, 4 Barb. 614;
Hathorne v. Stinson, 12 Me. 183;
Stowell V. Lincoln, 11 Gray, 434;
Kimel v. Kimel, 4 Jones, 121; EUi-
cottville, etc. Plank R. Co. v. Buffalo,
etc. R. Co., 20 Barb. 644.
The Georgia court is not aware of
any precedent authorizing a trial
court to deprive a plaintiff of his
right to recover nominal damages.
To so hold would put it in the power
of the court to prevent the recovery
thereof, and render the law author-
izing it inoperative. Addington v.
Western & A. R. Co., 93 Ga. 566, 20
S. E. Rep. 71. Hence if the right to
recover such damages is shown, a
judgment directing a verdict for the
defendant will be reversed. Id. And
so of a judgment sustaining a demur-
rer to the petition, only nominal
damages being recoverable, Kenny
V. Collier, 79 Ga. 743, 8 S. E. Rep. 58;
Sutton V. Southern R. Co.. 101 Ga.
776, 29 S. E. Rep. 53; and a judgment
dismissing the action. Roberts v.
Glass, 112 Ga. 450, 37 S. E. Rep. 704.
3 Wartman v. Swindell, 54 N. J. L.
589, 25 Atl. Rep. 356, 18 L. R. A. 44.
* Von Schoening v. Buchanan, 14
Abb. Pr. 185.
5 Potter v. Mellen, 36 Minn. 122, SO
N. W. Rep. 438; Enos v. Cole, 53 Wis.
235, 10 N. W. Rep. 377; Sayles v.
Bemis, 57 Wis. 315, 15 N. W. Rep.
432; Eaton v. Lyman, 30 Wis. 41.
32
NOMINAL DAMAGES.
[§11-
judgment which is erroneous only because it fails to award
plaintiff nominal damages will not be reversed,' nor will a new
trial be granted.- If the reviewing court recognizes that
substantial damages have been sustained and that the party
entitled to them mistook the basis on which they should be
determined, the denial of his right to nominal damages, to
which he was entitled, will be ground for reversing the judg-
ment.' And if the object of the action is to determine some
question of permanent right, and through error the plaintiff is
deprived of the judgment he is entitled to, the fact that he
can recover onlv nominal damages will not be reason for de-
1 Hickey v. Baird, 9 Mich. 32; Rob-
ertson V. Gentry, 2 Bibb, 542; Watson
V. Van Meter, 43 Iowa, 76; Wire v.
Foster, 62 Iowa, 114, 17 N. W.
Rep. 174; Ely v. Parsons, 55 Conn. 83,
101, 10 Atl. Rep. 499; Platter v. Sey-
mour, 86 Ind. 328; Rhine v. Morris, 96
Ind. 81; Norman v. Winch. 65 Iowa,
263. 21 N. W. Rep. 598; Harris v. Kerr,
37 Minn. 537, 35 N. W. Rep. 379; Hib-
bard v. Western U. Tel. Co., 33 Wis.
558, 14 Am. Rep. 775; Benson v. Wau-
kesha, 74 Wis. 31,41 N. W. Rep. 1017;
Beatty v. Oille, 12 Can. Sup. Ct. 706;
Mears v. Cornwall, 73 Mich. 78, 40 N.
W. Rep. 931; Haven v. Manuf. Co., 40
Mich. 286; McLean v. Charles Wright
Medicine Co., 96 Mich. 479, 56 N. W.
Rep. 68; Thisler v, Hopkins. 85 111.
App. 207; People v. Petrie, 94 id. 652;
Coffin V. State, 144 Ind. 578, 43 N. K
Rep. 654,55 Am. St. 188; Smith v. Par-
ker, 148 Ind. 127, 45 N. E. Rep. 770;
Harwood v. Lee, 85 Iowa, 622, 52 N.
W. Rep. 521; Boardman v. Marshall-
town Grocery Co., 105 Iowa, 445, 75 N.
W. Rep. 343; United States Exp. Co.
V. Koerner, 65 Minn. 540, 68 N.W. Rep.
181, 33 L. R. A. 600; Kenyon v. West-
ern U. Tel. Co., 100 Cal. 454, 35 Pac.
Rep. 75, quoting the text; Phillips v.
Covell. 79 Hun, 210, 29 N. Y. Supp.
613; Roberts v. Minneapolis Thresh-
ing 51. Co., 8 S. D. 579, 67 N. W. Rep.
607; Ternes v. Dunn, 7 Utah, 497. 27
Pac. Rep. 692; Farr v. State Bank, 87
Wis. 223, 58 N. W. Rep. 377,41 Am. St.
40; East Molina Co. v. Weir Plow
Co., 37 C. C. A. 62, 95 Fed. Rep. 250;
Kelly V. Fahrney. 38 C. C. A. 103,
105, 97 Fed. Rep. 176; Scammell v.
Clark, 31 N. B. 250: Glasscock v. Ro-
sengrant, 55 Ark. 376, 18 S. W. Rep.
379; Bunch v. Potts, 57 Ark. 257, 21
S. W. Rep. 437: Hartmann v. Burtis,
65 App. Div. 481, 72 N. Y. Supp. 914;
Briggs V. Cook, 99 Va. 273, 38 S. E>
Rep. 148.
If the judgment is reversed be-
cause of error in the instructions the
appellate court will direct judgment
for a nominal sum for the plaintiff,
it being clear that he is entitled to
nominal damages. Jones v. Tele-
graph Co., 101 Tenn. 442, 47 S. W.
Rep. 699.
2 Id. ; Brantingham v. Fay, 1 Johns.
Cas. 256; Jennings v. Loring, 5 Ind.
250; Watson v. Hamilton, 6 Rich. 75;
Haines v. Dunlap, 33 N. B. 556; Ring-
lehaupt V. Young, 55 Ark. 128, 17 S.
W. Rep. 710.
Costs are not taxed in the court of
claim.s, and it is not in accordance
with the practice of that court to
render a judgment for nominal dam-
ages. Friedenstein v. United States,
35 Ct of Cls. 1, 9.
s Thomson-Houston Electric Co. v.
Durant Land Imp. Co., 144 N. Y. 94,
39 N. E. Rep. 7.
§ 11.] NOMINAL DAMAGES. 33
nying a new trial.^ If the right to such damages is estab-
lished the court cannot ignore it and give the defendant judg-
ment although the jury erroneously find substantial damages
in the plaintiff's favor."^ A cause of action may be so intrin-
sically trivial and vexatious that it would be almost a pardon-
able departure from the technical rule to apply the maxim de
minimis non curat lex and direct a verdict for the defendant.
It was so ruled in a Vermont case. The defendant as an offi-
cer had attached certain hay, straw, etc., and used a pitchfork
belonging to the debtor in removing the same; he did no in-
jury to the fork, and after its use returned it where he found
it. The court held there was no liability.^ It is to be observed
that, though there was a technical wrong, by an unauthorized
intermeddling with another's property, there was no assertion
of an adverse right and no actual injury. The action was not
necessary for the vindication of a right nor to redress a wrong
deserving compensation. It was, however, a case in which,
upon strict principles, nominal damages should have been given ;
for they are always due for the positive and wrongful invasion
of another's property.^ Technical rules and rules as to the
forms of proceedings must be observed without regard to the
consequences which may follow in particular cases; otherwise
the stability of judicial decisions and the certainty of the law
cannot be preserved.^
1 Merrill v. Dibble, 12 111. App. 85; was said that whenever the maxim
Ely V. Parsons, 55 Coun. 83, 101, 10 de viinimis non curat lex is applied
Atl. Rep. 499; Skinner v, Allison, 54 to take away a right of recovery, it
App. Div. 47, 66 N. Y. Supp. 288; has reference to the injury and not
Olson v. Huntimer, 8 S. D. 220, 66 N. to the resulting damage. The opin-
W. Rep. 313; Bungenstock V. Nish- ion of Bennett, J., in that case states
nabotna Drainage District, 163 Mo. the result of several cases on this
198, 64 S. W. Rep. 149. proposition. See Ash by v. White, 2
2 Carl v. Granger Coal Co., 69 Iowa, Ld. Raym. 938; Kidder v. Barker, 18
519, 29 N. W. Rep. 437. Vt. 454; Clifton v. Hooper, 6 Q. B.
3 Paul v. Slason. 22 Vt. 231, 54 Am. 4G8; Barker v. Green, 2 Bing. 317;
Dec. 75; Pronk v. Brooklyn Heights Williams v. Mostyn, 4 M. & W. 145;
R.Co.,68App. Div. 390,74N. Y. Supp. Cady v. Huntington. 1 N. H. 138;
375. Young v. Spencer, 10 B. & C. 145;
< Seneca Road Co. v. Auburn, etc, Emhrey v. Owen, 6 Ex. 353. 372;
R Co.. 5 Hill, 175; Heater v. Pearce, Williams v. Esling, 4 Pa. 486, 45 Am.
59 Neb. 583, 81 N. W. Rep. 615, citing Dec. 710; Glanvill v. Stacey, 6 B. &
the text. C. 543; Seneca Road Co. v. Auburn,
6 Clark V. Swift, 3 Met. 890, 395. etc. R. Co., 5 Hill, 175; Bustamente v.
In Fullam v. Stearns, 30 \t. 443, it Stewart, 55 Cal. 115.
Vol. 1 — 3
84 COMPENSATION. [§ 12.
CHAPTEK III.
COMPENSATION.
Section 1.
compensatory damages.
§ 13. Award of compensation the object of the law.
13. Limitation of liability to natural and proximate consequencegL
Section 3.
direct damages.
14. What these include.
Section 3.
consequential damages for torts.
15. Awarded for probable consequences.
16. Rule of consequential damages for torts.
17-19. Illustrations of the doctrine of the preceding sectioiu
20. Consequential damages under fence statutes.
21. Nervous shock without impact: the Coultas case and American cases
in harmony with it.
22. Same subject; criticism of the Coultas case; nervous shock a phys-
ical injury.
23. Same subject; an earlier ruling.
23a. Same subject; Dulien v. White.
24. Same subject; miscellaneous cases.
25. Anticipation of injury as to persons; illustrations.
26. Consequential damages in highway cases.
27. Imputed negligence.
28. Particular injury need not be foreseen.
29-31. The act complained of must be the efficient cause.
32. Breach of statutory duties.
33. Injury through third person.
34. Liability as affected by extraordinary circumstances.
35. Illustrations of the doctrine of the preceding section.
36. Liability of carriers for consequential damages; extraordinary cir-
cumstances.
37-38. Intervening cause.
39. Act of injured party; fraud and exposure to peril.
40-43. Act of third person.
43-44. Wilful or malicious injuries.
Section 4.
consequential damages for breach of contraot
45. Recoverable only when contemplated by the parties.
46. Illustrations of liability under the rule.
47. Liability not affected by collateral ventures.
§ 12.] COMPENSATION. 35
§ 48. Distinction between consequential liability in tort and on contract.
49. Same subject; criticism of the Hobbs case.
50. Liability under special circumstances; Hadley v. Baxendale.
51. Same subject; illustrations and discussion of the rule.
52. Market value; resale; special circumstances.
Section 5.
required certainty of damages.
53. Damages must be certain in their nature and cause.
54. Liability for the principal loss extends to details and incidents.
55. Onlj' the items which are certain are recoverable.
5G-58. Recovery on successive consequences.
59-60. Required certainty of anticipated profits.
61. Warranty of seeds.
62. Prospective growth of orchard and of animals,
03. Profits of special contracts.
64. Same subject; Masterton v. IMayor.
65. Violation of contract to lease.
66. Profits of labor.
67. Profits from commercial ventures.
68. Profits on dissolution of partnership.
69. Commercial agencies.
70. Tortious interference with business.
71. Chances for prizes and promotions.
73. Contingent advantage.
73. Uncertain mitigation of breach of marriage promise.
74. Failure to provide sinking fund.
Section 6.
THE constituents OF COMPENSATION, OR ELEMENTS OF DAMAGE.
75. Elementary limitation of damages.
76. Damages for non-payment of money.
77. Greater damages than interest for failure to pay money.
78. Liability for gains and losses.
79. What losses elements of damage.
80. Same subject; labor and expenditures.
81. Same subject; damages for relying on performance.
82. Same subject; liabilities to third persons; covenants of indemnity.
83. Same subject; indemnity to municipalities; counsel fees,
84. Same subject; liability for losses and expenses.
85. Same subject; bonds and undertakings; damages and costs.
86-87. Same subject; necessity of notice to indemnitor to fix liability.
88. Expenses incurred to prevent or lessen damages.
89. Same subject; between vendor and vendee.
90. Same subject; extent of the duty.
91. Same subject; employer may finish work at contractor's expensa
92. May damages for breach of contract include other than pecuniary
elements ?
36 COMPENSATION. [§ 12.
§ 93. Elements of damage for personal torts.
94. Character as affecting damages for personal injuries.
95-96. Mental suffering.
97. Same subject; liability of telegraph companies.
98. Right to compensation not affected by motive.
99. Distinction made for bad motive; contracts.
100. Motives in tort actions.
101. How motive affects consequences of confusion of goods.
102-103. Where property sued for improved by wrong-doer.
104. Distinctions in the matter of proof.
105. Value of property.
Section 1.
compensatoky damages.
§ 12. Award of compensation the object of the law.
[17] Actions at law are usually brought to recover compensa-
tion for the wrong complained of. The law which is denomi-
nated the law of damages is principally that which defines,
measures and awards compensation. Such damages as are not
compensatory are either nominal or exceptional. Compensa-
tion is the redress which the law affords to alf persons whose
rights have been invaded ; in the nature of things they must
accept that by way of reparation. Therefore the principles
which underlie this right, so necessary and so frequently in-
voked, and the rules which govern its enforcement, are of the
greatest importance. The law defines very precisely all personal
and property rights so that every person may enjoy his own
with confidence and repose. If they are infringed the extent
of the encroachment is readily seen when the facts appear.
The law defines the scope of responsibility with as much pre-
cision as the nature of the subject will permit, and lays down
a universal measure of recompense for civil injury which the
sufferer is entitled to recover, and the person who is liable is
bound to pay, when the injury has been done without a mo-
tive for which the law subjects him to punishment. The uni-
versal and cardinal principle is that the person injured shall
receive a compensation commensurate with his loss or injury,
and no more; and it is a right of the person who is bound to
pay this compensation not to be compelled to pay more, ex-
cept costs.^ It is not within legislative power to deprive an
1 Rockwood v. Allen, 7 Mass. 254; Ferrer v. Beale, 1 Ld. Raym. 692
Dexter v. Spear, 4 Mason, 115; Allison v. Chandler, 11 Mich. 542
Walker v. Smith, 1 Wash. C. C. 152; Northrup v. McGill, 27 Mich. 234
§ 12.] COMPENSATORY DAMAGES. 3T
individual who has been injured in his person or estate of
redress either in whole or in part. "Nothing less than the
full amount of pecuniary damage which a man suffers from
an injury to him in his lands, goods or person fills the meas-
ure secured to him in the declaration of rights." ^ The prin-
ciple of just compensation is paramount. By it all rules [18]
on the subject of compensatory damages are tested and cor-
rected. They are but aids and means to carry it out; and
when in any instance such rules do not contribute to this end,
but operate to give less or more than just compensation for
actual injury, they are either abandoned as inapplicable or
turned aside by an exception. There are, however, upon cer-
tain subjects some arbitrary rules, or those which have been
adopted from considerations of policy, ostensible on the basis
of compensation, which really fall short of that object in a
conservative deference to possible consequences to the party
who must respond to the demand. With these necesssary or
expedient exceptions, the person who has broken his contract
or caused injury by any tortious act is liable to the other
party to the contract or to the sufferer from such act for such
damages as will place the person so injured in as good condi-
tion as though the contract had been performed or the tort
Bussy V. Donaldson, 4 Dall. 206; Horst v. Roehm, 84 Fed. Rep. 565;
Griffin v. Colver, 16 N. Y. 494; Mil- Alleghany Iron Co. v. Teaford, 96 Va.
waukee, etc. R. Co. v. Arms, 91 U. S. 372, 31 S. E. Rep. 525.
489; Baker v. Drake, 53 N. Y. 216; A charge on the subject of dam-
United States V. Smith, 94 U. S. 214; ages is objectionable if the jury are
Robinson v. Harman, 1 Ex. 850; told that plaintiff is entitled to" full,
Peltz V, Eichele, 62 Mo. 171; Noble complete and ample " compensation.
V. Ames Manuf. Co., 112 Mass. 492; The adjectives should not be used.
Buckley v. Buckley, 12 Nev. 423; Sale v. Eichberg, 105 Tenn. 332, 352,
Suydam v. Jenkins, 3 Sandf. 614; 59 S. W. Rep. 1020.
Parker v. Simonds, 8 Met. 205; Ja- To say to the jury that the plaintiff's
cobson V. Poindexter, 42 Ark. 97; damages may be assessed at such.
Good bar v. Lindsley, 51 Ark, 380, 14 sum as they may think he has sus-
Am. St. 54. 11 S. W. Rep. 577; Mason tained is to give them a "roving
V. Hawes. 52 Conn. 12, 52 Am. Rep. commission " to apply their oven
552; Jones v. People, 19 111. App. 300; measure of damages instead of that
Page V. Sumpter, 53 Wis. 652, UN. defined by the law. Campy, Wabash
W. Rep. 60; Henson-Herzog Supply R. Co., 94 Mo, App. 272. See § 1256.
Co. V, Minnesota Brick Co,, 55 Minn. i Thirteenth & F. St. P. R. v. Boud-
530, 57 N. W. Rep. 129, citing the rou, 92 Pa. 475, 482.
preceding sentence of the text;
38 COMPENSATION. [§ 13.
Lad not been committed. It is not meant b}^ tliis that the
party liable must answer for all consequences which may in-
directly and remotely ensue. The latter are, beyond a certain
point, incapable of being traced ; they combine with the re-
sults of other causes, and any attempt to follow and apportion
them would be abortive, and any conclusion of liability based
upon such consequences would rest on conjecture and lead to
great injustice. If men were held to such a far-reaching re-
sponsibilit}'' they would be timid or reckless; if it were legally
recognized it would be fatal to all activity and enterprise.
§ 13. Liniitatioii of liability to natural and proximate
consequences. As before remarked, the law defines the scope
of responsibility for consequences; beyond that they are sup-
posed to cease or the injured party is presumed to counteract
them by preventive measures. The legal scope is a reasonable
one; in general it extends as far as the moral judgment and
practical sense of mankind recognize responsibility in the do-
main of morals, and in those affairs of life which are not re-
ferred to the courts for regulation or adjustment. The law
[19] defines it generally by the principle which limits the re-
covery of damages to those which naturally and proximately
result from the act complained of; or, in other words, to those
consequences of which the act complained of is the natural
and proximate cause. This limitation is expressed in such
g-eneral terms that the distinction between those damages
which are compensable and those which, because being too re-
mote, are not, is not always very clear. On similar facts dif-
ferent courts have come to diverse conclusions, though equally
acknowledging the principle. It is made more specific, how-
ever, by rules of an elementary character formulated under it,
and by judicial exposition and illustrations which impart to
this legal generality a more precise and determinate import
than is suggested by its words; and it is only by resort ta
them that the principle of this limitation can be definitely
understood, explamed or elucidated. Damages which are re-
coverable may, therefore, be conveniently divided primarily
for this purpose into two classes: first, direct; second, conse-
quential.
§ 14.] dikeot damages. 39
Section 2.
direct damages.
§14, What these include. These include damages for all
such injurious consequences as proceed immediately from the
cause which is the basis of the action; not merely the conse-
quences which invariably or necessarily result and are always
provable under the general allegation of damages in the dec-
laration, but also other direct effects which have in the par-
ticular instance naturally ensued, and must be alleged specially
to be recovered for. The liability of the defendant for these,
if responsible for the cause, is clear. All such damages,
whether for tort or breach of contract, are recoverable with-
out regard to his intention or motive, or any previous actual
contemplation of them. A defendant is conclusively presumed
to have contemplated the damages which result directly and
necessarily or naturally from his breach of contract,' as will
be more particularly illustrated in another place; and in [20]
cases of tort his responsibility to this extent is absolute.^ An
illustration of this rule is found in a case in Yirginia where
an administrator sold a chattel which the intestate had in his
possession when he died, but which in truth belonged to an-
other, and applied the proceeds to the payment of the debts of
the intestate, in due course of administration, without notice of
the right or claim of the owner; he was held personally liable
to such owner for the value of the property.* In a Massachu-
setts case a factor bought goods for his principal residing at
W., and by mistake sent them to a third person at S., who re-
ceived them in good faith and paid the freight; he was held
liable for the goods to the owner, but was allowed a deduction
for the freight paid.*
1 Hadley v. Baxendale, 9 Ex. 341; v. Ayres, 3 Sneed, 677; Bowas v. Pio-
Burrell v. New York, etc. Co., 14 ueer Tow Line, 2 Sawyer, 21; Parley
Mich. 34; Brown v. Foster, 51 Pa. 165; v. Eastern R. Co., 98 Mass. 414; Lane
Collard v. Southeastern R. Co., 7 H. v. Atlantic Works, 111 Mass. 136;
& N. 79; Williams v. Vanderbilt, 28 Martachowski v. Orawitz, 14 Pa.
N. Y. 217, 84 Am. Dec. 333; Smith v. Super. Ct. 175, 186, citing the text.
St. Paul, etc. R. Co., 30 Minn. 169, 14 See chs. 21, 22, 36; Lathers v. Wy-
N, W, Rep. 797; Agius v. Great man, 76 Wis. 616, 45 N. W. Rep. 669.
Western Colliery Co., [1899] 1 Q. B. SNewsum v. Newsum, 1 Leigh, 86,
413; Cole v. Stearns, 20 N. Y. Misc. 19 Am. Dec. 739.
502, 46 N. Y. Supp. 238. * Whitney v. Beckford, 105 Mass.
2 Cogdell V. Yett. 1 Cold. 280; Tally 267; Etea v. Luyster, 60 N. Y. 252;
10 compensation. [§§ 15, 16.
Section 3.
consequential damages for torts.
§ 15. Awarded for probable consequences. Consequential
iamages are those which the cause in question naturally, but in-
jirectly, produced. An example: the defendant was liable for
tilling a mare; the plaintiff suffered injury in the loss of that
(iniraal to the extent of her value, but circumstances gave her
an additional value to him; she had an un weaned colt, and was
suckling the colt of another mare which had died. The direct
consequence of the killing of the mare was her loss — the
necessity of employing other means to raise the colts was con-
sequentiaL' The consequential damages which may be recov-
ered are governed by one consideration when they are claimed
for a tort, and by another when they are sued for as the result
of a breach of contract. The latter will be the subject of the next
section. The question of the remoteness of damage, if the mate-
rial facts are not in dispute, is for the court. Blackburn, J.,
has said that it never ought to be left to a jury; to do that
would be in effect to say that there shall be no rule as to dam-
ages being too remote.^
[21] § 16. Biile of consequential damages for torts. In an
action for a tort, if no improper motive is attributed to the de-
fendant, the injured party is entitled to recover such damages
as will compensate him for the injury received so far as it
might reasonably have been expected to follow from the cir-
cumstances; such as, according to common experience and the
usual course of events, might have been reasonably anticipated.
The damages are not limited or affected, so far as they are com-
Keenan v. Cavanagh, 44 Vt. 288; 724; Goodlander Mill Co. v. Standard
Little V. Boston, etc. R. Co., 66 Me. Oil Co., 63 Fed. Rep. 400, 11 C. C. A.
239; Bowas v. Pioneer Tow Line, 2 253,27 L. R. A. 583; Pennsylvania Co.
Sawyer, 21. v. Whitlock, 99 Ind. 16, 50 Am. Rep.
1 Teagarden v. Hetfield, 11 Ind. 522. 71: Stone v. Boston & A. R. Co., 171
2 Hobbs V. London & S. R., L. R. 10 Mass. 536, 51 N. E. Rep. 1, 41 L. R. A.
Q. B. Ill, 122; Hammond v. Bussey, 794: Deisenrieter v. Kraus-Merkel
20 Q. B. Div. 79, 89; Read v. Nichols, Malting Co., 97 Wis. 279, 72 N. W.
118 N. Y. 224, 23 N. E. Rep. 468, 7 L. Rep. 735; Consolidated Electric Light
R. A. 130: Cuff v. Newark, etc. R Co., & P. Co. v. Koepp, 64 Kan. 735, 67 Pac
35 N. J. L.. 17, 10 Am. Rep. 205; Rep. 608. Contra, Guif, etc. R. Ca
Behling v. Southwest Pipe Lines, 160 v. Hayter, 93 Tex. 239, 54 S. W. Rep.
Pa. 35'J, 28 Atl. Kep. 777, 40 Am. St. 944, 47 L. R. A. 325.
§ IG.] CONSEQUENTIAL DAMAGES FOR TORTS. 41
pensatory, by what was in fact in contemplation by the party
in fault. lie who is responsible for a negligent act must
answer " for all the injurious results which flow therefrom, by
ordinary natural sequence, without the interposition of any
other negligent act or overpowering force. Whether the in-
jurious consequences may have been ' reasonably expected ' to
have followed from the commission of the act is not at all de-
terminative of the liability of the person who committed the
act to respond to the person suffering therefrom. Such reason-
able expectation bears more clearly upon the intent with which
the act was committed than upon the liability of the doer for
the injurious consequences. If he might reasonably have ex-
pected that the injurious consequences which did flow from the
iict would flow from its commission, the prima facie legal pre-
sumption would be that he intended the consequences, and the
action should be trespass rather than case. It is the unex-
pected rather than the expected that happens in the great ma-
jority of the cases of negligence." ' Mr. Wharton sa3^s that a
man may be negligent in a particular matter "a thousand
times without mischief; yet, though the chance of mischief is
only one to a thousand, we would continue to hold that the
mischief, when it occurs, is imjiutable to the negligence. Hence
it has been properly held that it is no defense that a particular
injurious consequence is 'improbable,' and 'not to be reason-
ably expected,' if it really appear that it naturally followed
from the negligence under examination." - Continuing, the
1 Stevens v. Dudley, 56 Vt. 158, 166. what a prudent man might reason-
" When negligence is established it ably have anticipated, but when neg-
im poses liability for all the injurious ligence is once established, that con-
consequences that flow therefrom, sideration is entirely immaterial on
whatever they ai"e, until the inter- the question of how far that negli-
vention of some diverting force that gence imposes liability." Isham v.
makes the injury its own. or until Dow's Estate. 70 Vt. 588, 41 Atl. Eep.
the force set in motion by the negli- 585, 67 Am. St. 691, 45 L. R. A. 87.
gent act has so far spent itself as to Compare Renner v. Canfield. 36
be too small for the law's notice. Minn. 90, 30 N. W. Rep. 435.
But in administering this rule care '^ Wharton on Neg.. § 77, referring
must be taken to distinguish be- to Higgins v. Dewey, 107 Mass. 494,
tween what is negligence and what 9 Am. Rep. 63; AVhite v. Ballou, 8
tlie liability for its injurious con.se- Allen, 408; Luce v. Dorchester Ins.
quences. On the question of what is Co., 105 Mass. 297, 7 Am. Rep. 522;
negligence, it is material to consider Lewis v. Smith, 107 Mass. 334, and
42
COMPENSATION.
[§ 16-
same author says : " Nor, when we scrutinize the cases in which
the test of 'reasonable expectation ' is applied, do we find that
the ' expectation ' spoken of is anything more than an expec-
tation that some such disaster as that under investigation will
occur on the long run from a series of such negligences as those
with which the defendant is charged." ^ This doctrine is fully
approved by the supreme court of Vermont,^ and is logically
sustained by other recent adjudications in this country, some
of which are cited in the preceding note; others will be re-
ferred to in the pages devoted to this branch of the law of
damages.
The correct doctrine, as we conceive, is that if the act or
neglect complained of was wrongful, and the injury sustained
resulted in the natural order of cause and effect, the person,
injured thereby is entitled to recover. There need not be in
the mind of the individual whose act or omission has wrought
the injury the least contemplation of the probable conse-
quences of his conduct; he is responsible therefor because the
result proximately follows his wrongful act or non-action. All
several English cases. See, also, Ste-
vens V. Dudley, 56 Vt. 158: Brown v,
Chicago, etc. k Co., 54 Wis. 342, 11
N. W. Rep. 356, 911; Terre Haute &
L E. Co. V. Buck, 96 Ind. 346, 49
Am. Rep. 168; Winkler v. St. Louis,
etc. R. Co., 21 Mo. App. 99; Evans v.
Same, 11 id. 463; Baltimore City P.
R. V. Kemp, 61 Md. 74; Hoadley v.
Northern Transp. Co., 115 Mass. 304,
15 Am. Rep. 106; Ehrgott v. Mayor,
96 N. Y. 264, 281, 48 Am. Rep. 623;
Milwaukee, etc. R. Co. v. Kellogg, 94
U. S. 469; Wygant v. Crouse, 127 Mich.
158, 86 N. W. Rep. 527, 53 L. Pu A.
626.
Where there was a fraudulent in-
crease of the mortgage indebtedness
of a corporation which had issued
stock to the amount of $21,000,000
from $2,579,149 to $4,299,000 and the
value of the stock was depreciated
$6,580,000, it was held that such re-
sult was not to have been expected.
Rockefeller v. 3Ierritt, 22 C. C. A.
608, 76 Fed. Rep. 909, 35 L. R. A. 633.
The test applied seems to indicate
that the wrong-doer, even in a case
of fraud, must anticipate, approxi-
mately at least, the extent of the in-
jury his act may do. Such a rule
would add another large element of
uncertainty as to what constitutes
proximate cause. It ought to be
enough to make the wrong-doer
liable for all the financial loss result-
ing from a fraudulent transaction if
it appears that such loss, to any con-
siderable extent, would be reason-
ably sure to follow.
The fact that the licensee of a barn
which was torn down was obliged to
sell his horses is not the natural and
proximate result of the tortious act,
but of his financial situation. Chand-
ler V. Smith, 70 111. App. 658, citing
the first edition of this work.
i§78.
2 Stevens v. Dudley, 56 Vt. 158.
§1G.J
CONSEQUENTIAL DAMAGES FOR TOUTS.
persons are imperatively required to foresee what will be the
natural consequences of their acts and omissions according to
the usual course of nature and the general experience. The
lavrfulness of their acts and the degree of care required of
them depend upon this foresight.^ An apt illustration of this
principle is afforded by the rule of law which compels a per-
son who is insane, unless his condition was caused by the un-
lawful violence of the plaintiff,' to make recompense for his
iWitham v. Cohen, 100 Ga. 670,
676, 28 S. E. Rep. 505, citing tlie text;
Murtlock V. Walker, 43 III. App. 590;
Chicago, etc. R. Co. v. Mochell, 96 id.
178; Coy v. Indianapolis Gas Co., 146
Ind. 655, 663, 46 N. E. Rep. 17, 36 L.
R. A. 535, quoting the major portion
of the section; Licking Rolling Mill
Co. V. Fischer, 8 Ky. L. Rep. 89, 95
(Ky, Super. Ct.); Hughes v. Austin,
12 Tex. Civ. App. 178, 184-5, 38 S. W.
Rep. 607, citing the text; Hardaker
V. Idle District Council, [1896] 1 Q.
B. 335; McHugh v. Schlosser, 159 Pa.
480, 28 Atl. Rep. 291, 39 Am. St. 699,
23 L. R. A. 574; McPeek v. Western
U. Tel. Co., 107 Iowa, 356, 78 N. W.
Rep. 63. 70 Am. St. 205. 43 L. R, A. 214;
Bradshaw v. Frazier, 113 Iowa, 579,
85 N. W. Rep. 752, 55 L. R. A. 258;
Wallin V. Eastern R. Co., 83 Minn.
149, 86 N. W. Rep. 76. See McGowan
V. Chicago, etc. R. Co., 91 Wis. 147,
154, 64 N. W. Rep. 891.
A person who places a man whom
He has made helplessly drunk in
charge of a horse is presumed to
know that Injury may result, be-
cause horses require management by
persons who are possessed of mental
and physical capacities. Dunlap v.
Wagner, 85 Ind. 529, 44 Am. Rep. 42;
Mead v. Stratton, 87 N. Y. 493, 41
Am. Rep. 386; Bertholf v. O'Reilly, 8
Hun, 16, 74 N. Y. 509, 30 Am. Rep.
323; Aldrich v. Sager, 9 Hun. 537;
Mulcahey v. Givens, 115 Ind. 286, 17
N. E. Rep. 598; Brink v. Kansas City,
etc. R. Co., 17 Mo. App. 177, 199. See
Smith V. Bolles, 132 U. S. 125, 10 Sup.
Ct. Rep. 39.
A man who is engaged to be mar-
ried and who is examined by a phy-
sician employed by the father of his
fiancee for the purpose of ascertain-
ing whether he is diseased or not
may maintain an action against the
physician for a negligent diagnosis;
the breaking of the marriage en-
gagement is not too remote a dam-
age. Harriott v. Plimpton, 166 Mass.
585, 44 N. E. Rep. 992.
One who negligently causes a fire
which endangers pi'operty is bound
to know that the owner of the prop-
erty may take means to preserve it,
and if, in doing so, he is personally
injured, without negligence on his
part, may recover for his injury.
Berg V. Great Northern R. Co., 70
Minn. 272, 73 N. W. Rep. 648, 68 Am.
St. 524.
A wife who endeavors to preserve
her husband's property from a fire
so set is not a mere volunteer, and
the damage she sustains in so doing
is not too remote to be recovered.
Edwards v. Melbourne & M. Board
of Works, 19 Vict. L. R. 432.
This measure of liability may be
limited by statute, as under the In-
dian Depredation Act of 1891, which
provided for the recovery of prop-
erty "taken or destroyed;" claims
for consequential damages were not
recoverable. Price v. United States,
33 Ct. of Cls. 106.
2 Jenkins v. Hankins, 98 Tenn. 545,
557, 41 S. W. Rep. 1028.
44 COMPENSATION. [§ 16.
torts. This is rested, it is true, on grounds of public policy;^
and the liability of all persons may be rested there as well as
on the principles of natural justice. The injurj'^, however,
must proceed from and be caused by the wrongful act of the
defendant; but the causation is not to be tested metaphysically
or by any occult principles of science, but rather as persons of
ordinary intelligence apprehend cause and effect. The law is
practical, and courts do not indulge refinements and subtleties
as to causation if they tend to defeat the claims of natural
justice. They rather adopt the practical rule that the efficient
and predominating cause in producing a given effect or result,
though subordinate and dependent causes may have operated,
must be looked to in determining the rights and liabilities of
the parties.^ Hence if the defendant's negligence greatly
multiplied the chances of accident, and was of a character
naturally leading to its occurrence, the possibility that it might
have happened without such negligence is not sufficient to
break the chain of cause and effect.^ An act of negligence
will be regarded as the cause of an injury which results unless
the consequences were so unnatural and unusual that they
could not have been foreseen and prevented by the highest
practicable care.''
It is competent for the legislature to change the rule of the
common law, which looks only to the proximate cause of the
mischief so far as legal responsibility is concerned, and allow
a recovery to be had against those whose acts contributed, al-
though remotely, to produce the wrong.^ This is the effect of
statutes in several states making the vendor of intoxicants, who
sells them contrary to the terms of the law, liable to any per-
1 Williams v. Hays, 143 N. Y. 442, Co.. 171 Mass. 536, 51 N. E. Rep. 1, 41
47 Am. St. 748, 38 N. E. Rep. 449, 36 L. R. A. 794.
L. R. A. 153; Donaghy v. Brennan, 19 3 Reyuolds v. Texas & P. R. Co., 37
N. Z. L. R. 289; Mclntyre v. Sholty, La. Ann. 694; Windeler v. Rush
121 111. 600, 2 Am. St, 140, 13 N. E. County Fair Ass'n, 27 Ind. App. 92,
Rep. 239; Krom v. Schoonmaker, 3 59 N. E. Rep. 209, 60 id. 954.
Barb. 647; Behrens v. McKenzie, 23 * Louisville, etc. R. Co. v. Lucas,
Iowa, 333, 92 Am. Dec. 428: Ward v. 119 Ind. 583, 21 N. E. Rep. 968, 6 L. R.
Conatser, 4 Baxter, 04; Cross v. Kent, A. 193.
32 Md. 581; In re Heller, 3 Paige. 199. 5 Bertholf v. O'Reilley, 74 N. Y. 509,
See § 394. 30 Am. Rep. 323; Beers v. Walhizer,
2 Baltimore & P. R. Co. v. Reaney, 43 Hun, 254; Homire v. Halfman,
42 Md. 117, 136; Stone V. Boston & A. R. 156 Ind. 470. 60 N. K Rep. 154.
§ 10.] CONSEQUENTIAL DAMAGES FOli TORTS. 45
son who shall sustain any injury or damage to person, prop-
erty or means of support by reason of such violation. Such a
statute includes both direct and consequential injuries and
creates a right of action unknown to the common law.^ The
rule is laid down in many cases that an action may be main-
tained under similar statutes for loss of means of support, when
occasioned in whole or in part by such sales. If the means of
support are lessened, and this result can be traced to the sale
of intoxicants, there is a right of recovery for such loss, as
in case of lessened ability to labor, and loss of attention to
business.- So, where sickness or insanity is the result of in-
toxication,^ and wliere expenses are incurred for care and
medical attention.^ Where the husband was robbed while in-
toxicated the wife was allowed to sue.* And, so, where the
husband spent his wife's money for drink.® And a mother was
allowed to recover where her son overdrove her horse because
he was intoxicated.'^ The mere spending by the husband of
his own money, it has been said, will give a right of action by
the wife.- And so a widow, dependent on her son, may maintain
an action for the sale' of liquors to him if injury results to her
means of support,'' and a father, if dependent.^" Where a husband
became so crazed by liquor that he committed murder and was
sent to the penitentiary, his wife had a cause of action against
the person who sold the liquor to hira.^^ But if the statute does
not give a wife an action for an injury to the person or property
of her husband, she cannot recover because he has been impris-
oned for a crime committed while under the influence of liquor
unlawfully sold to him. His imprisonment is not the proxi-
1 Volans V. Owen, 74 N. Y. 528, 30 6 McEvoy v. Humphrey, 77 111. 388.
Am. Rep. 337; Meade v. Stratton, 87 ^Bertholf v. O'Reilly, 8 Hun, 16.
N. Y. 493, 41 Am. Rep. 386; Homire 8Quain v. Russell, 8 Hun, 319; Mul-
V. Halfman, supra; Neu v. McKech- ford v. Clewell, supra; Woolheather
nie, 95 N. Y. 633, 47 Am. Rep. 89. v. Risley, 38 Iowa, 486; Hackett \.
2 Wightman v. Devere, 33 Wis. 570; Smelsley, 77 111. 109.
Hutchinson v. Hubbard, 21 Neb. 33, mcClay v. Worrall, 18 Neb. 44, 24
31 N. W. Rep. 245; Volans v. Owen, N. W. Rep. 429.
supra; Schneider v. Hosier, 21 Ohio lo Stevens v. Cheney, 36 Hun, 1;
St. 98. Volans v. Owen, Bertholf v. O'Reilly,
3 Mulford V. Clewell, 21 Ohio St. 191. supra.
4 Wightman v. Devere, supra. ii Homire v. Halfman, supra; Beers
•'' Franklin v, Schermerhorn, 8 Hun, v. Walhizer, 43 Hun, 254
112.
46 COMPENSATION. [§ 17.
mate consequence of the dealer's unlawful act, out is the act
of the law, the direct result of the intervention of an independ-
ent agency.^ The Pennsylvania act provides that any person
furnishing liquor to another in violation of law shall be civilly
responsible for any injury to person or property in consequence
thereof, and that any person aggrieved may recover full dam-
ages. This does not extend the common-law rule as to prox-
imate cause, and there was no liabilitj'^ for the death of a man
to whom liquors were sold while intoxicated where death re-
sulted in an an attempt to evade arrest for violating the law
after deceased left the place where the liquors were sold him.-
Under a statute providing that if a person is injured in his
person or property by collision with the engines or cars of a
railroad corporation at a crossing, and it appears that the cor-
poration neglected to give the signals required, and that such
neglect contributed to the injury, the corporation shall be lia-
ble for all damages caused by the collision, unless the person
injured, etc., was guilty of gross or wilful negligence, the lia-
bility of the company does not depend upon whether its neg-
ligence was the proximate or efficient cause of the injury.''
§17. Illustrations of the doctrine of the preceding sec-
tion. It is a misfeasance to go through a militia drill in the
public squares and business resorts of towns or villages; the
officer under whose command it is done is responsible for con-
sequential damages; if a team hitched to a wagon and stand-
ing in the usual place takes fright at the exercises, the dis-
charge of small arms, and the " pomp and circumstance " of
mimic war, and runs away, and one of the horses is thereby
killed, the officer is responsible for its value.* This case is a
fair exemplification of the rule under consideration. Drilling
the militia was lawful, but doing it in an improper manner or
in an unsuitable place was a legal wrong to any person who
in consequence thereof received injury. In ordering it to take
place in a public square, the officer may not have considered
1 Bradford v. Boley, 167 Pa. 506, 31 105, 25 S. K Rep. 76, 58 Am. St. 870, 33
Atl. Rep. 751, disapproving Beers v. L. R. A. 191; Chattanooga Rapid
Walhizer, supra. Transit Co. v. Walton, 105 Tenn. 415,
2 Roach V. Kelly, 194 Pa. 24, 44 Atl. 58 S. W. Rep. 737.
Rep. 1090, 75 Am. St. 685. ■* Childress v. Yourie, Meigs. 561 ;
3 Wragge v. Railroad Co., 47 S. C. Forney v. Geldmacher, 75 Mo. 113.
§ IT.] CONSEQUENTIAL DAMAGES FOR TORTS. 47
the effect of frightening horses, but such an effect was natural ;
horses have to be trained to witness such a spectacle witliout
being frightened; tliey were to be expected where the drill
was appointed to take place, and if one or a team, with or
without a driver or attendant, got frightened, it would natu-
rally run away, and in running away the usual collisions and
casualties might occur. The officer who gave the command
was bound to consider all these probabilities. Giving the com-
mand, w^hich no subordinate could decline to obey, made the
drill at the place appointed the act of the officer, whether he
was present or not; the frightening of the horses which en-
sued was probable from their known characteristics, and from
their being where horses were likely to be; their break- [22]
ing loose and running off in a state of fright, wnth or without
a driver, made the usual collisions and casualties a natural se-
quence. Here were a series of acts so concatenated that the
final damage from killing a horse was a result Avhich the ofii-
cer was bound to consider as likely to ensue; all the effects of
the drill were an entirety, and therefore proceeded naturally
and proximately from his act.
In a Massachusetts case this subject was well illustrated and
explained. By careless driving the defendant's sled was
caused to strike against the sleigh of one Baker with such
violence as to break it in pieces, throwing Baker out, frighten-
ing his horse, and causing the animal to escape from the con-
trol of his driver, and to run violently along Fremont street,
round a corner near by into Eliot street, where he ran over
the plaintiff and his sleigh, breaking that in pieces and dash-
ing him on the ground. " Upon this statement," says Fos-
ter, J,, delivering the opinion, "indisputably the defendant
would be liable for the injuries received by Baker and his
horse and sleigh. Why is he not also responsible for the mis-
chief done by Baker's horse in its flight? If he had struck
that animal with his whip, and so made it run away, would he
not be liable for an injury like the present? By the fault and
direct agency of his servant the defendant started the horse in
uncontrollable flight through the streets. As a natural conse-
quence it was obviously probable that the animal might run
over and injure persons traveling in the vicinity. Every one
<5an plainly see that the accident to the plaintiff" was one very
48 COMPENSATION. [§ 17.
likely to ensue from the careless act. We are not, therefore,
dealing with remote or unexpected consequences, not easily
foreseen, nor ordinarily unlikely to occur; and the plaintiff's
case falls clearly within the rule already stated as to the lia-
bilit}^ of one guilty of negligence for the consequential dam-
ages resulting therefrom. . . . Here the defendant is al-
leged to have been guilty of culpable negligence. And his
liability depends, not upon any contract or statute obligation,
but upon the duty of due care which every man owes to the
community, expressed by the maxim sic utere tuo ut alienum
[23] non Icsdas. Where a right or duty is created wholly by
contract it can only be enforced between the contracting par-
ties. But where the defendant has violated a law it seems,
just and reasonable that he should be held liable to every per-
son injured, whose injury is the natural and probable conse-
quence of the misconduct. In our opinion this is the well
established and ancient doctrine of the common law; and such
a liability extends to consequential injuries by whomsoever
sustained, so long as they are of a character likely to follow
and which might reasonably have been anticipated as the
natural and probable result under ordinary circumstances of
the wrongful act. The damage is not too remote if, according-
to the usual experience of mankind, the result was to be ex-
pected. This is not an impracticable or unlimited sphere of
accountability extending indefinitely to all possible contingent
consequences. An action can be maintained only where there
is shown to be, first, a misfeasance or negligence in some par-
ticular as to which there was a duty towards the party injured
or the community generally; and secondly, where it is ap-
parent that the harm to the person or property of another
which has actually ensued was reasonably likely to ensue
from the act or omission complained of. . . . It is clear
from numerous authorities that the mere circumstance that
there have intervened between the wrongful cause and the in-
jurious consequence acts produced by the volition of animals
or of human beings does not necessarily make the result so re-
mote that no action can be maintained. The test is to be
found, not in the number of intervening events or agents, but
in their character and in the natural and probable connection
between the wrong done and the injurious consequence. So
§ 18.] CONSEQUENTIAL DAMAGES FOE TORTS. 49
long as it affirmatively appears that the mischief is attribu-
table to the negligence as a result which might reasonably
have been foreseen as probable the legal liability continues.
There can be no doubt that the negligent management of
horses in the public street of a city is so far a culpable act that
any party injured thereby is entitled to redress. Whoever
drives a horse in a thoroughfare owes the duty of due care to
the community or to all persons whom his negligence [24]
may expose to injury. Nor is it open to question that the
master in such a case is responsible for the misconduct of his
servant.'"
§ 18. Further illustrations. Where a teamster's wagon,
while being loaded at a depot, was injured by a train of cars,
it was held he was entitled to recover for damage done thereto,
for the loss of the trip in which he was engaged and for the
loss of the use of the wagon until it could be repaired.^ A
similar measure is applied in cases of collision of boats; a rea-
sonable sum for the damage the injured boat has received ; the
expense of raising it, if sunk, and of repairing it, and compen-
sation for the loss of the use during the time it is being refitted,
with interest on such items.* In an action of trespass by for-
cibly invading a plantation, carrying off some slaves and
frightening others away, it was held proper for the plaintiff to
give in evidence the consequential damages which resulted to
his wood and crops — to the former for want of the assistance
of the slaves to preserve it from a subsequent flood, and to the
latter to protect them against animals.^ The wrong included
leaving a plantation Avith growing crops and other property
' McDonald v. Snelling, 14 Allen, - Shelby ville, etc. R. Co. v. Lewark,
292; Weick v. Lander, 75 111. 93; 4 Ind. 471.
Clowdis V. Fresno Flume & Irriga- * Mailler v. Express Propeller Line,
tion Co., 118 Cal. 315, 63 Am. St. 238, 61 N. Y. 313; Brown v. Beatty, 35 Up.
50 Pac. Rep. 373; Clark v. Chambers, Can. Q. B. 338; Steamboat Co. v.
3 Q. B. Div. 337, 7 Cent. L. J. 11. Whilldin, 4 Harr. 238; New Haven.
In the last case defendant was etc. Co. v. Vanderbilt, 16 Conn. 420;
held liable for an injury caused by a Williamson v. Barrett, 13 How. 101.
dangerous thing put by him in a See ch. 39.
carriage way, although it was after- ^ McAfee v. Crofford, 13 How. 447;
wards removed to a footpath by a Hobbs v. Davis, 30 Ga. 423; Johnson
third person, and was there when v. Courts, 3 Har. & McHen. 510;
the plaintiff was injured. Crane v. Patton, 57 Ark. 340, 346, 21
S. W. Rep. 466.
Vol I — 4
60 COMPENSATION. [§ 18.
exposed to injury from any cause which might arise; there
being no force of kiborers to meet any exigency, the wrong-
doer was bound to take notice at his peril of any exposure to
injury thus created by flood, marauding cattle or otherwise;
whether an action would lie against the owner of trespassing
cattle or not for the damage done by them was held immate-
rial.' The owner of sheep which had a contagious disease
suffered them to trespass on another's land and to mingle with
his sheep, to which the disease was communicated, causing the
death of many of the latter. He was held liable for the breach
of the close, also for the loss of the sheep that so died.^ A
[25] railroad company's servant left bars down between the
plaintiff's field and the railroad track; horses escaped through
the opening to the railroad and were killed by the engine; the
company was held liable.' Plaintiff's horses escaped into the
defendant's close by reason of the latter not keeping his fence
in repair, and were there killed by the falling of a hay stack;
he was held responsible.* The defendant's cow escaped from
his enclosure without fault on his part, passed to the plaintiff's
premises and entered his barn; her weight broke the sleepers
and floor at a point over a cistern and she fell into it. Soon
after this the plaintiff went to his barn and fell into the cistern
through the hole made by the cow. It was conceded that the
defendant was liable for the trespass by the cow,^ but the dam-
ages resulting to the plaintiff from his fall were too remote.®
The proximate cause of a personal injury produced by the run-
ning away of a horse which left a race track through an open-
1 Where a dog went onto plaintiff's Rep. 982, affirmed, sub nom. Grayson
land and barked at his horse grazing v. Lynch, 163 U. S. 468, 16 Sup. Ct.
in an enclosed field, and the horse Rep. 1064.
ran. tried to leap a fence, and fell » White v. McNett, 33 N. Y. 371;
and broke its neck, the owner of the Henly v. Neal 2 Humph. 551.
dog was liable. Doyle v. Vance, 6 * Powell v. Salisbury. 2 Y.& J. 391;
Vict. L. R. (law) 87. Gilbertson v. Richardson, 5 C. B. 502;
2 Baruum v. Vandusen, 16 Conn. Lawrence v. Jenkins, L. R. 8 Q. B.
200; Fultz V. Wycoff, 25 Ind. 331. See 274; Couch v. Steel, 3 El. & B. 402;
Gilman v. Noyes, 57 N. H. 627. See, Lee v. Riley, 18 C. B. (N. S.) 722.
as to liability under the act of con- & Dickson v. McCoy, 39 N. Y. 400,
gress of 1884, 23 Stats. 31, Croff v. « Hollenbeck v. Johnson, 79 Hun,
Cresse, 7 Okl. 408, 54 Pac. Rep. 558; 499, 29 N. Y. Supp. 945.
Lynch v. Grayson, 5 N. M. 487. 25 Pac.
I 18.] CONSEQUENTIAL DAMAGES FOR TORTS. 51
ing in the fence surroimding the same, is not the running
away of the horse but the opening.'
The lessee of a wharf was guilty of negligence in not keep-
ing it in repair; he suffered the railing to become dilapidated,
and in consequence a horse backed into the river with a wagon,
and both were lost. This loss was held to be the natural and
proximate effect of the negligence.^ A gas company, having
contracted to supply plaintiff with a service pipe from its main
to the meter on his premises, laid a defective pipe from which
the gas escaped. A workman, in the employ of a gas-fitter
engaged by the plaintiff to lay pipes leading from the meter
over his premises, negligently took a lighted candle for the
purpose of finding out where the gas escaped. An explosion
took place damaging the plaintiff's premises; he brought an
action against the gas company and it was held that the dam-
ao^es were not too remote.^ The failure of a natural-ijas com-
pany to supply gas to a consumer in accordance with its con-
tract is a tort, the agreement being a mere statement of the
reasonable conditions under which the company's duty was to
be performed. If there is a failure to supply gas during cold
winter weather and the company has been notified of its cus-
tomer's inability to procure fuel elsewhere, and of the sickness
of his children, and as a result of such failure the sick children
take a relapse and die, the company is responsible for their
death.* In consequence of the negligence of a contractor for
a public body in constructing a sewer a gas main was broken,
and the gas escaped from it by percolation into the plaintiffs'
house, and an explosion followed which injured one of them
1 Windeler v. Rush County Fair sale of plants injured by escaping
Ass'n, 27 Ind. App, 92, 97, 59 N. E. gas and which were sold as sound.
Rep. 209, 60 id. 954. but were not, is too remote. Dow v.
2 Radway v. Briggs, 37 N. Y. 256, Winnipesaukee Gas & Electric Co.,
35 How. Pr. 422. 69 N. H. 312, 41 Atl. Rep. 288, 42 L.
3 Burrows v. March Gas Co.. 39 L. R. A. 569.
J. (Ex.) 33, L. R. 5 Ex. 67; Lannen v. ^ Coy v. Indianapolis Gas Co., 146
Albany Gas L. Co., 44 N. Y. 459; Louis- Ind. 655, 46 N. E. Rep. 17, 36 L. R. A.
ville Gas Co. v. Gutenkuntz, 82 Ky. 535; Hoehle v. Allegheny Heating
432; Koelsch v. Philadelphia Co., 152 Co., 5 Pa. Super. Ct. 21. In the latter
Pa. 355, 25 Atl. Rep. 522, 34 Am. St. case the defendant had no knowl-
653, 18 L. R. A. 759. edge of the illness of the person who
The injury resulting to the busi- died,
ness reputation of a florist from the
52 COMPENSATION. [§ 18.
and damaged the furniture of the other. The damaf^es were
not too remote, and the contractor's negligence was that of
the public body because he failed to do what it was its duty
to do.^ A railroad company by wrongfully excavating in a
public street destroyed the lateral support of the soil to the
foundation of a house, and thereby plaintiff's adjoining house,
depending on the other for support, was injured; it was held
that the company was liable for the injury.^ By the weight
of authority a person who negligently sets a fire is not only
liable for the first building consumed, but for all subsequently
destroyed by the same continuous conflagration, without re-
gard to the distance the fire runs or the time it is in progress.^
In Kew York the liability is much more restricted on the
ground that the loss of the first building which is negligently
set on fire was to be anticipated ; its destruction was the ordi-
nary and natural result of its being fired. But this does not
hold good as to subsequent buildings or other property which
became ignited from the first building; that the fire should
spread and other buildings be consumed is not a necessary or
the usual result. That result depends, not upon any necessity
of a further communication of the fire, but upon a concurrence
of accidental circumstances, such as the degree of the heat, the
state of the atmosphere, the condition and materials of the ad-
joining structures, and the direction of the wind. These are
said to be accidental and varying circumstances over which
the party responsible for the loss of the first building has no
1 Hardaker v. Idle District Council, Rep. 63; Pennsylvania R Co. v. Hope,
[1896] 1 Q. B. 335. 80 Pa. 373. 21 Am. Rep. 100; St. Jo-
2 Baltimore, etc. R. Co. v. Reaney, seph, etc. R Co. v. Chase, 11 Kan. 47;
42 Md. 118. Atchison, etc. R. Co. v. Stanford, 12
3 Atkinson v. Goodrich Transpor- Kan. 354, 15 Am. Rep. 362; Atchison,
tation Co., 60 Wis. 141, 50 Am. Rep. etc. R. Co. v. Bales, 16 Kan. 252;
352, 18 N. W. Rep 764; Adams v. Dougherty v. Smith, 5 N. Z. (Supreme
Young, 44 Ohio St. 80, 4 N. E. Rep. Ct.) 374; Chicago & E. R. Co. v. Lud-
599; Small v. C, R. I. & P. R. Co., 55 dington. 10 Ind. App. 636, 38 N. E.
Iowa, 582, 7 N. W. Rep. 398; Kellogg Rep. 342; Chicago, etc. R. Co. v, Will-
V. Chicago, etc. R. Co., 26 Wis. 223, iams, 131 Ind. 30, 30 N. E. Rep. 596;
7 Am. Rep. 69; Hart v. Western R. Louisville, etc. R. Co. v. Nitsche, 126
Co., 13 Met. 99; Milwaukee, etc. R. Ind. 229, 26 N. E. Rep. 51, 9 L. R. A.
Co. v. Kellogg, 94 U. S. 469; Perley 750; Wyant v. Crouse, 127 Mich. 158,
V. Eastern R. Co., 98 Mass. 414; Hig- 86 N. W. Rep. 527, 53 L. R. A. 626.
gins v. Dewey, 107 Mass. 494, 9 Am.
§ 18.] CONSEQUENTIAL DAMAGES FOR TORTS. 53
control, and is not liable for their effects.' The same rule has
been applied where two buildings owned by one person were
burned — the recovery was limited to the one to which the fire
was directly carried from the engine.^ The same rule applies
to fires on woodlands as to fires in villages or cities.' This
restriction seems very arbitrary, and to be out of harmony
with the general principle of the law governing proximate
cause. It has not become the rule in New York without
vigorous dissent from individual members of the court of ap-
peals, extending to the latest case cited. The burning of
property is not the natural and proximate result of an engineer
running a train of oil-tanks into a mass of earth which had
come on the track as a result of a landslide, the obstruction
being unexpected and an engine having passed over a clear track
only ten minutes before the accident. He was not bound to
anticipate the bursting of the tanks, the taking fire of the oil,
the burning oil being carried down the stream into which the
tanks rolled, the sudden rise of the water, and the setting fire
of property on the bank of the stream.*
The fall of a negligently constructed tower, the overturning
of a lighted lamp and the consequent death of a person are
the proximate result of the negligent construction.^ The
maintenance of a culvert in a condition to hold a large pool of
water in close proximity to the street and sidewalk is the
cause of the death of a child who falls therein while playing
along the edge thereof.^ The negligent operation of a defect-
ive locomotive which emits sparks is the proximate cause of
the death of an infant asleep in the house of its parents when
the fire occurs from such sparks.^ If a train is stopped on a
mountain side, and the engineer leaves his engine, and during
1 Ryan v. New York Central R. Co., 55 N. E. Rep. 401, 73 Am. St. 715, 46
35 N. Y. 210, 91 Am. Dec. 49: Webb v. L. R. A. 672.
Rome & O. R. Co., 49 N. Y. 420, 10 Am. 4 Hoag v. Lake Shore, etc. R. Co.,
Rep. 389. See Lowery v. Manhattan 85 Pa. 293, 27 Am. Rep. 653.
R. Co., 99 N. Y. 158, 1 N. E. Rep. ^Rigdon v. Temple Water- works
608. Co., 11 Tex. Civ. App. 542, 32 S. W.
2Frace v. New York. etc. R. Co., Rep. 828.
143 N. Y. 182, 88 N. E. Rep. 102; Read «Elwood v. Addison, 26 Ind. App.
V. Nichols, 118 N. Y. 224, 23 N. E. 28,59 N. E. Rep. 47.
Rep. 468, 7 L. R. A. 130. ^ Gulf, etc. R. Co. v. Johnson, 51
3 Hoffman v. King. 160 N. Y. 618, S. W. Rep. 531 (Tex. Civ. App.).
54 COMPENSATION. [§ 19,
bis absence the fireman, accidentally or otherwise, sets the
engine in motion and the train moves downward, the violation
of the rules of the company by the engineer will authorize a
finding that his act was the proximate cause of the injury to
the conductor, who was thrown off the train.^
[26] § 19. Further illustrations. The owner of a horse
and cart who leaves them unattended in a public street is lia-
ble for any damage to children resorting there and meddling
with either.^ The owner of a loaded gun, who puts it into the
hands of a child, by whose indiscretion it is discharged, is lia-
ble for the damage occasioned thereby.^ It is negligence for
a dealer to sell, contrary to law, dangerous explosives to chil-
dren. "When this is done with knowledge that the purchasers
are not familiar with their use the vendor is held to know that
the probable consequences will be injury to them or to their
associates; and he is liable to the party injured although the
injuries were the result of the natural conduct of a child who
did not purchase the article which produced them.* But the
mere fact that the law forbids the sale of fire-arms to a minor
does not make the vendor liable for the consequences unless
he knew that the purchaser was ignorant of their character,
inexperienced in the use of them, or that there was something
in his character or disposition which rendered it unsafe for him
to have thera.-^ Leaving an iron truck with a hot iron casting
upon it in a street where children are accustomed to go and in
a condition to do injury by slight interference is negligence,
which will be regarded as the proximate cause of any injury
to a child which may result therefrom.*' The rule is the same
when lumber is so carelessly piled on an unfenced lot abutting
1 Mexican National R. Co. v. Mus- ^Binford v. Johnston, 82 Ind. 426,
sette, 86 Tex. 708, 24 L. R. A. 642, 26 S. 42 Am. Rep. 508.
W. Rep. 1075, 7 Tex. Civ. App. 169, 5 Poland v. Earhart, 70 Iowa, 285,
24 S. W. Rep. 520. 30 N. W. Rep. 637; Meyer v. King, 73
2 Lynch v. Nurdin. 1 Q. B. 29; II- Miss. 1, 7, 16 So. Rep. 245, 35 L. R.
lidge V. Goodwin, 5 C. & P. 190; A. 474, citing the text, and disapprov-
Dickson v. McCoy, 39 N. Y. 400; ing a criticism of the Iowa case in
Millsv.Bunke,59App.Div.39,69N.Y. 36 Am. St. 807,817. See Harris v.
Supp. 96: Mahoney v. Dwyer, 84 Hun, Cameron, 81 Wis. 239, 29 Am. St. 891,
34, 32 N. Y. Supp. 346. 51 N. W. Rep. 437.
3 Dixon V. Bell, 5 M. & S. 198; Meers ^ Lane v. Atlantic Works, 107 Mass.
V. McDowell, 23 Ky. L. Rep. 461, 62 104; Osake v. Larkin, 40 Kan. 206, 2
S. W. Rep. 1013, 53 L. R. A. 789. L. R. A. 56, 19 Pac. Rep. 65S; Mc-
§ 19.] CONSEQUENTIAL DAMAGES FOR TORTS. 55
upon a street as to fall upon children playing near it.^ The
defendant's servant left a truci^ standing near a sidewalk in a
public street, with the shafts shored up by a plank in the usual
way. Another truckman temporarily left his loaded truck di-
rectly opposite on the other side of the same street; after
which a third person tried to drive his truck between those two.
In attempting to do so with due care he hit the defendant's
truck in such a manner as to whirl its shafts round on the side-
walk so that they struck the phiintiff, who was walking by,
and broke her leg. For this injury she was allowed to main-
tain her action, the only fault imputable to the defendant be-
ing the careless position in which the truck was left by his
servant on the street. This was treated as the sole cause of
the plaintiff's injury, and was deemed sufficiently proximate
to render the defendant responsible.- He was liable for the
act of his servant, for the latter was engaged in his master's
work; it was nefflio^ence to leave the truck in the street when
not in use ; it was considered that the driver of the truck, who
was the immediate agent of the force which injured the plaint-
iff, had a right to attempt to pass between the two trucks, if
he conducted himself with due care, and exercised a sound dis-
cretion in determining whether the attempt could be [27]
made with safety to persons lawfully using the street. And
as the jury found that in the exercise of such care, prudence
and discretion he made the attempt which resulted in the in-
jury sustained by the plaintiff, the defendant was liable inas-
much as his truck was unlawfully in the street, and that
should be regarded as the natural and proximate cause of the
injury. The decision imports that a danger not apparent
enough to deter the driver from attempting to pass the truck
of the defendant could legally be apparent enough to render
the injury proximate to the illegal use of the street by leaving
the truck there.
The jury may find that the injury was probable, although
brought about by a new agency, when heavy articles left near
Dowall V. Great Western R. Co., iBransom's Adm'r v. Labrot, 81
[1902] 1 K. B. 618; Travail v. Banner- Ky. 638.
man, 71 App. Div. 439, 75 N. Y. Supp. '^ Powell v. Deveney, 3 Cush. 300,
866. 50 Am. Dec. 738.
56 COMPENSATION. [§ 19.
an opening in the floor of an unfinished building or in the deck
of a vessel were accidentally jostled so that they fell upon
persons below.^
A man who negligently sets and keeps a fire on his own
land is liable for any injury done by its direct communication
to his neighbor's land, whether through the air or along the
ground, and whether or not he might reasonably have antici-
pated the particular manner and direction in which it was
communicated."^ The defendants moored their boats in the
channel and entrance to the locks at a dam across a river so
that the boats of others were stopped outside and exposed to
the current, then rapidly rising, until by its force such boats
were carried over the dam and lost without any fault of the
owners. It was held that the defendants negligently or wan-
tonly caused this injury and were liable for it.* The plaintiff's
boat had anchored at a wharf when the water was low. The
river rose afterwards, covering certain piles of pig iron negli-
gently left by the defendant on the wharf about a foot above
low-water mark. To avoid these piles the boat was compelled
to back out into the stream, where she was struck by some
floating body, stove and sunk. The defendant was held liable
for the loss of the boat.'* The defendant broke and entered
the plaintiff's close adjacent to a river and carried away gravel
from a bank, near to a dam across the river, in consequence of
which a flood in the river three weeks afterward swept away
a portion of the close and a cider mill. It was held that the
[28] whole damage might be recovered.^ A harbor company
which had been in the habit of keeping a light on the end of
one of its piers to enable vessels to safely enter the harbor at
night discontinued the light without public notice. A vessel
was afterwards lost in attempting to enter in the absence of
the light. It was held that the harbor company was liable for
iMcCauley v. Norcross. 155 Mass. Hesters, 90 Ga. 11, 15 S. E. Rep. 828.
584, 30 N. E. Rep. 464; The Joseph B. See ^ 18.
Thomas, 81 Fed. Rep. 578, 30 C. C. A. 3 gcott v. Hunter, 46 Pa. 193.
33, 46 L. R. A. 58. * Pittsburgh v. Grier, 22 Pa. 54, 60
- Higgins V. Dewey, 107 Mass. 494, Am. Dec. 65.
9 Am. Rep. 63; Martin v. New York, 5 Dickinson v. Boyle, 17 Pick, 78, 28
etc. R. Co., 63 Conn. 331, 25 All. Rep. Am. Dec. 281
239; East Tennessee, etc. R. Co. v.
§ 19.] CONSEQUENTIAL DAMAGES FOR TORTS. 57
the value of the vessel lost and also for certain moneys ex-
pended in good faith, with a reasonable expectation of success,
m attempting to raise her.' One who maliciously causes the
arrest of an engineer while he is engaged in running a train
is liable to his employer for the damage resulting from the
delay.^
It cannot be affirmed that it is not the natural and reason-
able consequence of the sale of liquors to an intoxicated per-
son between whose home and the place where the sale is made
there are railroad tracks that such person should in a dark
night meet with injury or death from a train of cars.* If
weeds or brush are allowed to grow upon the right of way of
a railroad company to such a height as to obstruct the view of
a highway crossing and animals are injured by a train the
company will be liable;'' and so if cattle concealed in such
weeds or brush cause the wrecking of a train and the injury
of a person thereon.^ If the unlawful speed of a train upon
station grounds stampedes animals at large there and they run
upon the track, either by breaking down fences or otherwise,
•and are killed by the negligent running of the train, such speed
is the direct cause of the killing.^ It is not the natural con-
sequence of the intoxication of a man to whom liquors are
sold in violation of law that his wife, while following him in
the street for the purpose of ascertaining where he procures
liquor, shall fall and injure herself, and the seller is not liable
for such in jury.'' The neglect to fence a railroad and track is
not the proximate cause of an injury to an animal sustained
by putting its foot into a small hole while running along the
track; such an occurrence is so unusual as not to be expected
by a reasonable man.^ There is no connection between the
failure of a railroad company to provide separate accommoda-
tions for white and colored passengers, where that is required,
and an assault made upon one of the latter, by a fellow pas-
1 Sweeney v. Port Burwell Harbor s Eames v. T. & N. O, E, Co., 63 Tex.
Co.. 17 Up. Can. C. P. 574. 660.
^St. Johnsbury, etc. R. Co. v. Hunt, '''Story v. Chicago, etc. R. Co., 79
55 Vt. 570, 45 Am. Rep. 639. Iowa, 402, 44 N. W. Rep. 690.
'■^Schroeder v. Crawford, 94 111. "^Johnson v. Drummond, 16 IlL
357. App. 641.
* Indianapolis, etc. R. Co. v. Smith, « Nelson v. Chicago, etc. R. Co., 30
.78 111. 112. Minn. 74, 14 N. W. Rep. 360.
58 COMPENSATION, [§ 20.-
senger, without the knowledge or consent of the company's-
servants, after the removal of the passenger assaulted from the
ladies' car to a smoking car;^ nor between the act of a mort
gagee who takes possession of property under his mortgage
before default and injury to crops because a mule needed to
work them was taken ;2 nor between threats made to arrest a
debtor and a miscarriage b}'^ his Avife, no physical violence
being used;^ nor between a like result and the false imprison-
ment of a husband;* nor as a result of the wrongful finding
of an indictment against him.-^ One who invites a person to
drink liquor with him is not responsible for an assault made
by the person who accepts such invitation upon a third indi-
vidual, although the liquor so drank made him intoxicated,®
§ 20. Consequential damages under fence statutes. When
a new right is conferred by statute and a corresponding duty
is thereby enjoined, the liability of the defaulting party to the-
other is confined to the limits prescribed by the statute. Hence,
when a statute concerning division fences provides that the
party who shall neglect to maintain such fences shall be liable
to the party injured by his default for " such damages as shall
accrue to his lands, crops, fruit-trees, shrubbery and fixtures,"
there is no liability for injuries which may be sustained by
animals while trespassing on the lands of the party who has
failed to maintain his fence.^ It has been attempted, in order
to restrict the liability of railroad companies for neglect to
fence their tracks, to apply this principle. The duty is for the
protection of the public as well as for the benefit of persons
who stand in other relations to the party upon whom it is en-
joined, and the neglect of the duty entitles the party who is-
thereby injured to all the relief due him in either or both re-
lations.^ But this view is not accepted in some jurisdictions,
or at least the strict construction given such statutes is not in
harmony with it, though the question in the aspect stated is
* Royston V. Illinois Central R. Co., sjjampton v. Jones, 58 Iowa, 317,
67 Miss. 376, 7 So. Rep. 320. 12 N. W. Rep. 276.
2 Jackson v. Hall, 84 N. C. 489. eswinfin v. Lowry, 37 Minn. 345,
sWulstein v. Mohlman, 57 N. Y. 34 N. W. Rep. 22.
Super. Ct. 50, 5 N. Y. Supp. 569. ^Crandall v. Eldridge, 46 Hun, 411.
* Ellis V. Cleveland, 55 Vt. 358; 8 Graham v. President, etc., 46 Hun^
Huxley v. Berg, 1 Starkie, 98. 386; Crandall v. Eldridge, id. 411.
§ 20.] CONSEQUENTIAL DAMAGES FOE TORTS. 59
not considered. Under a statute requiring railroad companies
to fence and declaring them liable for all damages resulting
from their neglect to do so which may be done by their " agents,
engines or cars," liability does not extend to consequential in-
juries to an animal which gets upon the track by reason of the
failure to fence, as wh6re it is injured, after being frightened
by an approaching train, either b}'- jumping a cattle-guard or
by coming in contact with a wire fence, or both, no wilful
misconduct being charged against the train-men.' The injuries
contemplated by such language are only those which result
from a direct or actual collision of the engines or cars with
the animal injured.^ The same conclusion has been reached
from language which imposed liability if animals "shall be
killed or injured by the cars, or locomotive, or other carriages," '
Where it is provided that railroad companies shall be liable
for animals killed or injured by their negligence, and that a
" failure to build and maintain fences shall be deemed an act
of negligence," such a construction as was given in the above
cases is unwarranted.'* Under a statute which provides that
on neglect to fence the road the company shall be liable for
all damages sustained by any person in consequence, damages
may be recovered for injury done to a farm by rendering it
less fit for pasturage because of such neglect.^ The same lia-
bility has been declared to exist under a statute which employs
the words "shall be liable for all damages which shall be done
by their agents or engines to cattle, horses or other animals; "^
^Schertz v. Indianapolis, etc. R. struck by the train ; both were killed.
Co., 107 111. 577; Knight v. New York, A recovery was allowed for but one.
etc. R Co., 99 N. Y. 25, 1 N. E. Rep. The construction given the Mis-
108, reversing 30 Hun, 415, dis- souri statute is forcibly criticised in
tinguished in Leggett v. Rome, etc. 25 Am. L. Rev. 114, 264.
R. Co., 41 Hun, 80. * Nelson v. Chicago, etc. R. Co., 30
2 Ibid.; LaflFerty v. Hannibal, etc. Minn. 74, 14 N. W. Rep. 360.
R Co., 44 Mo. 291; Foster v. St. Louis, ^ Emmons v. Minneapolis, etc. R.
etc. R Co., 90 Mo. 116, 2 S. W. Rep. Co., 35 Mmn. 503, 29 N. W. Rep. 202;
138, and other Missouri cases cited Nelson v. Same, 41 Minn. 131, 42 N.
therein. W. Rep. 788.
3 Peru & I. R Co. v. Hasket. 10 Ind. « Leggett v. Rome. etc. R Co., 41
409, 71 Am. Dec. 335; Jeflfersonville, Hun, 80. It is doubtful whether
etc. R. Co. V. Downey, 61 Ind. 287. this case is in harmonj' with Knight
In the last case one of two ani- v. New York, etc. R Co., 99 N. Y. 25,
mals, which were tied together, was 1 N. E. Rep. 108.
60
COMPENSATIOX.
[§21.
and under that statute a railroad company has been held liable
where a horse fell into a cut raade by the company along a
pasture, which cut was not fenced.^
§ 21. Nervous shock without impact; the Coultas case
and American eases in liarmony with it. In 1888 the ques-
tion whether damages for a nervous shock or injury caused by
the defendant's negligence in permitting the plaintiff to cross
its track when it was dangerous to do so, and its servant had
knowledge of the danger, came before the English privy coun-
cil on appeal from the supreme court of Victoria. The latter
court was of the opinion that the damages were not tooremote.'-
Its judgment was reversed, and the rule declared to be that
damages arising from mere sudden terror, unaccompanied by
actual ph3^sical injury, cannot be considered a consequence
which, in the ordinary course of things, would flow from such
nealiirence.^ The court observed that it was remarkable that
1 Graham v. President, etc., 46 Hun,
386.
2 Coultas V. Victorian Ry. Commis-
sioners. 12 Vict. L. R, 895.
"Victorian Ry. Commissioners v.
Coultas, 13 App. Cas. 222. The facts
are stated in the next section.
The doctrine of the Coultas case,
though repeatedly dissented from in
England (see § 23a) and denied in
Ireland, has been declared by several
American courts. Braun v. Craven,
175 111. 401, 51 N. E. Rep. 657, 42 L.
R. A. 199, afBrming Craven v. Braun,
73 III. App. 401; Mitchell v. Roches-
ter R. Co., 151 N. Y. 101, 45 N. E. Rep.
354, 34 L. R. A. 781, 56 Am. St. 604,
reversing 77 Hun, 607; Gulf. etc. R.
Co. V. Trott, 86 Tex. 412. 25 S. W.
Rep. 419, 40 Am. St. 866; San Anto-
nio, etc. R. Co. V. Corley,87 Tex. 432.
29 S, W. Rep. 231 (see ^ 24 for Texas
cases allowing recovery, under some
circumstances, for nervous injury);
Gatzow v. Buening, 106 Wis. 1, 20, 81
N. W. Rep. 1003, 49 L. R A. 475, 80
Am. St. 17; Denver, etc. R. Co. v.
Roller, 41 C. C. A. 22, 100 Fed. Rep.
738, 49 L. R. A. 77; Spade v. Lynn &
B. R. Co., 172 Mass. 488, 52 N. E. Rep.
747, 70 Am. St. 298, 168 Mass. 285, 47
N. E. Rep. 88, 60 Am. St. 393, 38 L.
R. A. 512; Evring v. Pittsburgh, etc.
R. Co.. 147 Pa. 40. 23 Atl. Rep. 340, 14
L. R. A. 666. 30 Am. St. 709; Wyraan
V. Leavitt, 71 Me. 227; Haile v. Texas
& P. R. Co., 60 Fed. Rep. 557, 9 C. C.
A. 134, 23 L. R A. 774; Kalen v.
Terre Haute & I. R. Co., 18 Ind. App.
202, 47 N. E. Rep. 694; Gaskins v.
Runkle, 25 Ind. App. 548. 58 N. E.
Rep. 740: Lee v. Burlington, 113
Iowa, 356, 85 N. W. Rep. 618, 86 Am,
St. 379: Nelson v. Crawford. 123
Mich. 466, 80 Am. St. 577, 81 N. W.
Rep. 335; Johnson v. Wells, Fargo &
Co., 6 Nev. 224, 3 Am. Rep. 245; At-
chison, etc. R, Co. V. McGinnis, 46
Kan. 109, 26 Pac. Rep. 453; St. Louis,
etc. R. Co. V. Bragg, 69 Ark. 402, 64
S. W. Rep. 226, 86 Am. St. 206. And
is recognized as binding in Ontario
(Henderson v. Canada Atlantic R.
Co., 25 Ont. App. 437), as it doubtless
is in all the other British colonies.
It has been said of it in New South
Wales that it is binding there, "and
when we are called upon to decide a
21.]
CONSEQUENTIAL DAMAGES FOR TORTS.
61
no precedent was cited of a similar action having been main-
tained or even instituted.^ It has since come to the knowl-
edge of the legal world that such an action had been main-
tained before that time. In 1890 substantially the same
case in whicli the facts are identi-
cal, we sliall be compelled to follow
it. But I," said the chief justice,
"do not feel inclined to extend the
principle of the decision in any way."
Rea V. Balmain New Ferry Co., 17
N. S. W. (law) 92. See Pelmothe v.
Phillips, 20 id. 61, and 1 Beven on
Neg. (2d ed.), p. 76 et seq.
The American cases which deny
redress for nervous shock and its re-
sults do not all rest upon the same
ground, though most of them take
the view that the damages are too
remote. It is said in Massachusetts:
"The logical vindication of this rule
is, that it is unreasonable to hold
persons who are merely negligent
bound to anticipate and guard
against friglit and the consequences
of fi'ight; and that this would open
a wide door for unjust claims, which
could not successfully be met." The
rule is thus limited there: "It is
hardly necessary to add that this de-
cision does not reach those classes of
actions where an intention to cause
mental distress or to hurt the feel-
ings is shown, or is reasonably to be
inferred, as, for example, in cases of
seduction, slander, malicious prose-
cution, or arrest, and some others.
Nor do we include cases of acts done
with gross carelessness or reckless-
ness, showing utter indifference to
such consequences, when they must
have been on the actor's mind."
Spade V. Lynn & B. R. Co., 168 Mass.
28.-), 47 N. E. Rep. 88, 60 Am. St. 393,
38 L. R. A. 512. See Homans v. Boston
E. R. Co., 180 Mass. 4.-36, 57 L. R. A.
291, 62 N. E. Rep. 737, stated in last
paragraph of § 22.
In a Wisconsin case the rule was
applied under conditions which
make it particularly noticeable, and
lead to some doubt as to wliether
the decision is right if damages for
nervous shock are recoverable at all.
A combination of liverymen was
formed to limit their services to per-
sons patronizing them exclusively
and to monopolize the livery busi-
ness in Milwaukee, including service
for funerals. Such combination, the
court held, was unlawful, and any
member of it who acted in accord-
ance with the regulations was lia-
ble for compensatory damages to a
person specially injured by an overt
act. A member of such association
let a hearse and carriage to the
plaintiff" for the funeral of his child,
but, upon learning that the person
in charge was an undertaker and
liveryman doing an independent
business, joined with the association
in sending the vehicles away from
the plaintiff's house just as they were
about to be used. Here, then, is an
unlawful combination, doing or
causing the doing of an act wilfully,
with knowledge that the natural re-
sult will be to cause plaintiff' mental
distress or nervous shock. It is said
in the opinion: "There was no phy-
sical injury to plaintiff, and no per-
sonal injury to him of any kind save
to his feelings. The case does not
fall within the few exceptions to the
rule, — which prevails in this state
and in most jurisdictions, — that men-
tal disti-ess alone is too remote and
difficult of measurement to be the
subject of an assessment of dam-
ages. The true idea is that, under
1 But see y 23.
<)2
COMPENSATION.
[§21.
question came, for tlie second time, before the courts of Ire-
land, and they reached a conclusion squarely opposite to that
arrived at by the privy council, and one which is supported by
better reasoning and is more in harmony with justice. The
the general principle applicable to
tort actions that recoverable dam-
ages are limited to such as are the
natural and proximate result of the
act complained of, some physical in-
jury is necessary to a definite causal
connection between the wrongful
act and the mental condition, to ren-
der the former, in a legal sense, tlie
cause of the latter, and such condi-
tion, with its immediate cause, suffi-
ciently significant to be compre-
hended and measured in a money
standard by average human wisdom
with a reasonable degree of cer-
tainty." Gatzow V. Buening, 100 Wis.
1, 20, 81 N. W. Rep. 1003, 49 L. R. A.
475, 80 Am. St. 17.
In the New York case plaintiff was
standing upon a crosswalk awaiting
an opportunity to board one of the
defendant's cars which had stopped
there. While there, and as she was
about to step upon the car, a horse
of the defendant came down the
street, and as the team attached to
it drew near it turned and came so
close to the plaintiff that she stood
between the horses' heads when they
were stopped. The fright and excite-
ment rendered her unconscious, and
there was a miscarriage and conse-
quent illness. Because there could
be no recovery for the fright, there
could be none for the illness conse-
quent upon it. The miscarriage was
not the proximate result of the de-
fendant's negligence, but the result
of an accidental or unusual combina-
tion of circumstances which could
not have been reasonably antici-
pated. Another reason for denying
the right of action was that a flood
■of litigation might be anticipated,
•with a wide field opened for fictitious
or speculative claims. Mitchell v.
Rochester R. Co., 151 N. Y. 107, 56
Am. St. 604, 45 N. E. Rep. 854, 34 L.
R. A. 781.
See 15 Harvard L. Rev. 304, for an
answer to some of the foregoing ob-
jections to recovery in such cases.
The Minnesota cases on this ques-
tion are reviewed in Sanderson v.
Northern Pacific R. Co., 92 N. W.
Rep. 542. In that case the plaintiff
sought to recover for personal in-
juries, due solely to fright and grief,
because an attempt was made to put
her children off the car, she not
having been interfered with, nor
having been put in fear of any
physical injury or personal violence.
The rule was declared to be that
there can be no recovery for fright
which results in physical injuries, in
the absence of contemporaneous in-
jury to the plaintiff, unless the fright
is the pi'oxiraate result of a legal
wrong against the plaintiff by the
defendant. See Bucknam v. Great
Northern R. Co., 76 Minn. 373, 79
N. W. Rep. 98.
Purcell v. St. Paul City R. Co., 48
Minn. 184, 50 N. W. Rep. 1034, 16 L.
R, 203, is an illustration of what con-
stitutes a legal wrong so as to afford
a basis for the recovery of damages
resulting from mental disturbance.
The plaintiff, who was pregnant,
was a passenger on one of the de-
fendant's cars. By its negligence in
tlieir management a collision seemed
inevitable, and the plaintiff was put
in a position of such peril as to cause
fright, which produced a miscarriage.
Though there was no collision and
no impact, the negligence was the
cause of the plaintiff's injury, and
entitled her to recover.
§ 21.] CONSEQUENTIAL DAMAGES FOR TORTS. G3
action was brought by a husband and his wife, and arose out
of tlie following facts: The female plaintiff was a passenger
in an excursion train on the defendant's railway. The train
was too heavy to be drawn up an incline, and was divided,
the car in which the plaintiff was remaining attached to the
engine. The rear part of the train descended the incline with
great velocity; the engine was thereafter reversed and with
the car the plaintiff occupied followed at a high rate of speed,
until stopped witl) a violent jerk. The proof showed that A.
was put in great fright by the occurrence, and suffered from
nervous shock in consequence ; that she was incapacitated from
performing her ordinary avocations; medical witnesses ex-
pressed the opinion that paralysis might result. The jury
were charged that if great fright was, in their opinion, a
reasonable and natural consequence of the circumstances in
which the defendant had placed the plaintiff, and she was
actually put in great fright by the circumstances, and if in-
jury to her health was, in their opinion, a reasonable and nat-
ural consequence of such fright, and was actually occasioned
thereby, damages for such injury would not be too remote.
The material facts were found in the plaintiff's favor. In con-
sidering the objections to the refusal of the court to charge, as
requested by the defendant, that if damages or injury were
the result of, or arose from, mere fright, not accompanied by
actual physical injury, even though there might be a nervous
or mental shock occasioned by the fright, such damages would
be too remote, Palles, C. B., said : " This objection presupposes
that the plaintiff sustained, by reason of the defendant's negli-
gence, ' injury ' of the class left to the consideration of the
jury by the summing-up, i. e., injury to health, which is bodily
or physical injury; and the proposition presented is that dam-
ages for such injury are not recoverable if two circumstances
occur: (1) if the only connection between the negligence and
this bodily injury is that the former caused fright, which
caused nervous or mental shock, which shock caused the bodily
injury complained of; and (2) that this so-called bodily injury
did not accompany the fright, which I suppose means that the
injury, although in part occasioned by the fright, assumed the
character of bodily injury subsequently to, and not at, the
time of the neorlisence or friijht. To sustain this contention,
64 COMPENSATION. [§21.
it must be true whether the shock which it assumed to have
been caused was either mental or nervous; and as the intro-
duction of the word 'mental' may cause obscurity, by involv-
ing matter of a wholly different nature, unnecessary to be
taken into consideration here, I eliminate it from the question.
If there be a distinction between mental shock and nervous
shock, then the objection cannot be sustained. It is then to
be observed: (1) that the negligence is a cause of the injury,
at least in the sense of a causa sine qua non; (2) that no inter-
vening independent cause of the injury is suggested ; (3) that
jurors, having regard to their experience of life, may hold
fright to be a natural and reasonable consequence of such neg-
ligence as occurred in the present case. If, then, such bodily
injury as we have here may be a natural consequence of fright^
the chain of reasoning is complete. But the medical evidence
here is such that the jury might from it reasonably arrive at
the conclusion that the injury, similar to that which actually
^suited to the plaintiff from the fright, might reasonably
nave resulted to any person who had been placed in a similar
position. It has not been suggested that there was anything
special in the nervous organization of the plaintiff which
might render the effect of the negligence or fright upon her
different in character from that which it would have produced
in any other individual. I do not myself think that . proof
that the plaintiff was of an unusually nervous disposition
Avould have been material to the question; for persons, whether
nervous or strong-minded, are entitled to be carried by rail-
way companies without unreasonable risk of danger; and my
only reason for referring to the circumstance is to show that,
in this particular case, the jury might have arrived at the con-
clusion that the injury which did in fact ensue was a natural
and reasonable consequence of the negligence which actually
caused it.
" Again, it is admitted that, as the negligence caused fright,
if the fright contemporaneously caused physical injur}'^, the
damage would not be too remote. The distinction insisted
upon is one of time only. The proposition is that, although,
if an act of negligence produces such an effect upon particular
structures of the body as at the moment to afford palpable
evidence of physical injury, the relation of proximate cause
§ 22.] CONSEQUENTIAL DAMAGES FOE TOKTS. G5
and effect exists between such negligence and the injury, yet
such relation cannot in law exist in the case of a similar act
producing upon the same structures an effect which, at a sub-
sequent time — say a week, a fortnight, or a month — must
result, without any intervening cause, in the same physical
injury. As well might it be said that a death caused by poi-
son is not to be attributed to the person who administered it
because the mortal effect is not produced contemporaneously
with its administration. This train of reasoning; mi^ht be
pursued much farther; but in consequence of the decision to
which I shall hereafter refer, I deem it unnecessary to do so."
§ 22. Same subject; criticism of the Couitas case; nerv-
ous shock a physical injury. The chief baron then proceeded
to review the English case cited in the opening paragraph of
the previous section: "In support of their contention the de-
fendants relied upon the Victorian Railway Commissioners v.
Couitas. That was a remarkable case. The statement of
claim alleged that through the negligence of the servants of
the defendants, in charge of a railway gate at a level cross-
ing, the plaintiffs, while driving over it, were placed in immi-
nent peril of being killed by a train, and by reason thereof
the plaintiff, Mary, received a shock and suffered personal
injuries. It appeared that the female plaintiff, whilst re-
turning with her husband and brother in the evening, from
Melbourne to Hawthorn, in a buggy, had to cross the defend-
ant's line of railway at a level crossing. When they came to
it the gates were closed ; the gate-keeper opened the gates
nearest to the plaintiffs, and then went across the line to those on
the opposite side. The plaintiffs followed him, and were partly
onto the up-line (the further one), when the train was seen ap-
proaching on it. The gate-keeper directed them to go back,
but James Couitas, who was driving, shouted to him to open
the opposite gate, and went on. He succeeded in getting the
buggy across the line, so that the train, which was going at a
rapid speed, did not touch it, although it passed close at
the back of it. As the train approached the plaintiff, Mary,
fainted. The medical evidence showed that she received a severe
nervous shock from the fright, and that the illness from which
she afterward suffered (and which is stated in Mr. Beven's book
Vol. 1 — 5
t)() COMPENSATION. [§ 22.
on ISTeirlijrence to have included a miscarriasre) was the conse-
quonce of the fright. One of the plaintiffs' witnesses said she
was suffering from profound impression on the nervous sys-
tem — nervous shock; and that the shock from which she suf-
fered would be a natural consequence of the fright. Another
said he w^as unable to detect any physical damage; he put
down her symptoms to nervotis shock. It is to be observed
from this evidence the jury might have inferred that physical
injury was sustained by the female plaintiff at the time of the
occurrence in question. Although one witness spoke of nerv-
ous shock as contradistinguished from physical damage, the
question would still have been open for the jury whether the
nervous shock was not — as in the generality of, if not indeed
all, cases it necessarily must be — physical injury. The jury
found for the plaintiffs. Upon an appeal the privy council,
without deciding that an Impact was necessary to sustain the ac-
tion, not only set aside the verdict, but entered judgment for
the defendants. In delivering judgment Sir R. Couch says:
* Her fright was caused from seeing the train approaching,
and thinking she was going to be killed. Damages arising
from mere sudden terror, unaccompanied by any actual phys-
ical, injury, but occasioning a nervous or mental shock, cannot,
under such circumstances (their lordships think), be considered
a consequence w^hich, in the ordinary course of things, would
flow from the negligence of the gate-keeper.'
" Amongst the reasons stated in the judgment in support of
this conclusion are: 1, that a contrary doctrine would involve
damages on account of mejital injury being given in every case
where the accident caused by the negligence had given the
person a severe nervous shock; 2, that no decision of an En-
glish court had been produced in which, upon such facts, dam-
ages were recovered ; 3, that a decision of the supreme court
of New York (Vandenburgh v. Truax)^ which was relied upon,
was distinguishable as being a case oi palpable injury. Of these
reasons, the first seems to involve that injuries other than men-
tal cannot result from nervous shock; and the third implies
that injuries resulting from such a shock cannot be ' palpable.'
I am unable (I say it with deference) to follow this reasoning;
1 4 Denio, 464
g 22.] CONSEQUENTIAL DAMAGES FOR TORTS. 67
and further, it seems to me that even were the proposition of
law upon which the judgment is based sustainable, the privy-
council were not warranted in assuming as a fact, against the
verdict of the jury, and without any special finding in regard
to it, that the fright was, in that particular case, unaccompanied
b}'' any actual physical injury. Further, the judgment assumes,
as a matter of law, that nervous shock is something which
affects merely the mental functions, and is not in itself a pecul-
iar physical state of the body. This error pervades the entire
judgment. Mr. Beven states in his recent work on Negligence,^
and I entirely concur with him, that ' the starting point of the
reasoninir there is that nervous shock and mental shock are
identical; and that they are opposed to actual physical in-
jury.' "
This view is in accord with that favored by the California
court, which has thus expressed itself in case in which there
was a nervous shock without physical impact: "The interde-
pendence of the mind and body is in many respects so close
that it is impossible to distinguish their respective influence
upon each other. It must be conceded that a nervous shock
or paroxysm, or a disturbance of the nervous system, is distinct
from mental anguish, and falls within the physiological, rather
than the psychological, branch of the human organism. It is
a matter of general knowledge that an attack of sudden fright
or an exposure to imminent peril has produced in individuals
a complete change in their nervous system, and rendered one
who was physically strong and vigorous weak and timid. Such
a result must be regarded as an injury to the body rather than
to the mind, even though the mind be injuriously affected.
Whatever may be the influence by which the nervous system
is affected, its action under that infiuence is entirely distinct
from the mental process which is set in motion by the brain.
The nerves and nerve centers of the body are a part of the
physical system, and are not only susceptible of lesion from
external causes, but are also liable to be weakened and de-
stroyed from causes primarily acting upon the mind. If these
nerves or the entire nervous system is thus affected there is a
physical injury thereby produced, and if the primal cause of
1 P. 67 (1st ed.).
G8 COMPENSATION. [§ 22.
this injury is tortious, it is irnmaterial whether it is direct, as
by a blow, or indirect through some action upon the mind."^
The Massachusetts court has reached the point where the
distinction between the doctrine announced by it in the cases
heretofore noticed^ and that of the California court is almost
imperceptible. The action was for a recovery for personal in-
juries received by the plaintiff on one of the defendant's cars,
in consequence of a collision for which the latter was to blame.
The plaintiff afterwards had a good deal of suffering of a hys-
terical nature. The effort of the defendant was to require the
plaintiff to prove that the nervous shock was the consequence
of the injury; the trial court permitted a recovery for the
shock if it resulted from a jar to the nervous system which ac-
companied the personal injury, both being due to the same
cause and to the fault of the defendant. Such action was sus-
tained, the supreme court using this language: We are of opin-
ion that the judge was right, and that further refining would
be wrong. As has been explained repeatedly, it is an arbi-
trary exception, based upon a notion of what is practicable,
that prevents a recovery for visible illness resulting from nerv-
ous shock alone. But when there has been a battery and the
nervous shock results ft-om the same wrongful management
as the battery, it is at least equally impracticable to go further
and to inquire whether the shock comes through the battery
or along with it. Even were it otherwise, recognizing as we
must the logic in favor of the plaintiff when a remedy is denied
because the only immediate wrong was a shock to the nerves,
we think that when the reality of the cause is guaranteed by
proof of a substantial battery of the person there is no occasion
to press further the exception to general rules.*
1 Sloane v. Southern California R. sickness resulting from nervousness
Co., Ill Cal. 668, 680, 44 Pac. Rep. 320, occasioned by the verbal abuse of her
32 L. R. A. 193. To the same effect, bj' her husband while intoxicated,
Rea V. Balmain New Ferry Co., 17 the liquor which caused him to be so
N. S. W. (law) 92; Hickey v. Welch, having been sold him by the defend-
91 Mo. App. 4, 10; Watkins v. Kaolin, ant in violation of law. Kear v, Gar-
Manuf. Co., 131 N. C. 586, 42 S. E. Rep. rison, 13 Ohio Ct. Ct. 447.
983; Mack v. South Bound R. Co., 53 2g 21, note.
S. C. 323, 29 S. E. Rep. 905, 40 L. R. A. SHomaus v. Boston E. R. Co., 180
679. See 1 Beveo on Neg. (2d ed.), Mass. 456, 57 L. R, A. 291, 62 N. E.
p. 76 et seq. Rep. 737.
A wife may recover damages for
§ 23.] CONSEQUENTIAL DAMAGES FOR TOKTS. 69
§ '23. Same subject; an earlier ruling. Continuing the
discussion in the case in the Irish court, the chief baron said:
" Possibly, were there no decision the other way, I should from
courtesy defer my opinion to that of the privy council, and
leave it to the plaintiff to test our decision upon appeal. The
very point, however, had been, four 3'^ears before the decision of
the privy council in the Yictorian Eailway Commissioners v.
Coultas, decided in this country, first in the common pleas
division, then presided over by the present Lord Morris, and
afterwards in the court of appeal, in the judgment delivered
by the late Sir Edward Sullivan; and it is a sad commentary
upon our present system of reporting that a decision so im-
portant and so novel has never found its way into our law
reports. The case I refer to is Byrne v. Great Southern and
Western Eailway Company. It was tried before me on the
6th and 6th of December, 1882; and a motion to enter a ver-
dict for the defendants was heard in 1883 by the common
pleas division; and by the court of appeal in February, 1884.
It was an action by the superintendent of the telegraph office
at the Limerick Junction station of the defendant's railway.
His office consisted of a small building at the end of one of
the defendant's sidings, between which and the office there
was a permanent buffer strongly fixed. On the 7th December,
1881, through some railway points having been negligently
left open, a train entered this siding, broke down the perma-
nent buffer and the wall of the telegraph office. The plaint-
iff's case was that by hearing the noise, and seeing the wall
falling, he sustained a nervous shock which resulted in certain
injuries to his health. ... A verdict having been found
for the plaintiff with £325 damages, a motion to set it aside,
and enter a verdict for the defendant, on the ground that
there was no evidence of injury sufficient to sustain the action,
was refused by the common pleas division ; and this refusal
was aflBrmed by the court of appeal. That case goes much
further than is necessary to sustain the direction here, as in
it there was nothing in the nature of impact. As between it,
by which we are bound, and the decision of the privy council,
by which we are not, I must prefer the former. I desire,
however, to add that I entirely concur in the decision in
Eryne v. Great Southern and Western Eailway, and that I
70 COMPENSATION. [§ 23«.
should have been prepared to have arrived at the same con-
clusion, even without its high authority, ... In conclu-
sion, then, I am of opinion that, as the relation between fright
and injury to the nerve and brain structures of the body is a
matter which depends entirely upon scientific and medical
testimony, it is impossible for any court to lay down, as a
matter of law, that if negligence cause fright, and such fright,
in its turn, so affects such structures as to cause injury ta
health, such injury cannot be a consequence which, in the
ordinary course of things, would flow from the negligence,
unless such injury 'accompany such negligence in point of
time.' " '
§ 23a. Same subject ; Dulien v. White. In 1901 practically
the same question came before Kennedy and Phillimore, justices
of the king's bench division, and was decided in accordance
with the rule of the Irish case. The plaintiff's case was that
when she was behind the bar of her husband's publichouse,
being then pregnant, the defendant's servant negligently drove
a van into the publichouse; that plaintiff in consequence sus-
tained a severe shock and was seriously ill, and at a later time
gave premature birth to a child, which, in consequence of the
shock sustained by plaintiff, was born an idiot. This last claim
was abandoned as a ground for damages because untenable.
The action was held sustainable, the result being reached by
somewhat different courses of reasoning. Kennedy said, in
part: This is an action on the case for negligence, that is to
say, for a breach on the part of defendant's servant of the duty
to use reasonable and proper care and skill. In order to suc-
ceed the plaintiff has to prove resulting damage to herself, and
a natural and continuous sequence uninterruptedly connecting
the breach of duty with the damage as cause and effect. In re-
1 Bell V. Great Northern E, Co., 26 patrick v. Great Western R Co., 12
L. R Ire. 428 (1890). The opinion of Up. Can. Q. B. 645; Sloane v. Soutl>-
the chief baron was concurred in by ern California R Co., Ill Cal. 668, 32
Andrews and Murpliy, JJ. L. R A. 193, 44 Pac. Rep. 320; Hickey
The general doctrine of the Irish v. Welch, 91 Mo. App. 4, 10; Wat-
court is recognized in Mack v. South kins v. Kaolin Manuf. Co., 131 N. C.
Bound R Co., 52 S. C. 323, 29 S. E. 536, 42 S. E. Rep. 083; Cooper v. Cal-
Rep. 905, 40 L. R A. 679; Purcell v. edonian R Co., 9 Scotch L. T. Rep.
St. Paul City R Co., 48 Minn. 134, 50 S73, 10 id. 104.
N. W. Rep. 1034, 16 L. R A. 203 Fitz-
§ 23«.] CONSEQUENTIAL DAMAGES FOR TORTS. 71
gard to the existence of the duty here, there can, I think, be no
question. The driver of a van and horses in a highway owes
a duty to use reasonable and proper care and skill so as not to
injure persons lawfully using the highway, or property adjoin-
ing the highway, or persons who, like the plaintiff, are law-
fully occupying that property. . . . Theonly question here
is whether there is an actionable breach of those obligations
if the man in either case is made ill in body by negligent driv-
ing which does not break his ribs, but shocks his nerves. As
•regards the facts we must, for the purposes of this argument,
assume all that, consistentlv with the allegations of the state-
ment of claim, can be assumed in plaintiff's favor. Now, what
are defendant's arguments against her right to recover dam-
ages in this action? First of all, it is argued, fright caused by
negligence is not itself a cause of action; ergo^ none of its con-
sequences can give a cause of action -^ Mitchell v. Rochester R.
Co.^ With all respect to the learned judges who decided that
case, I feel a difficulty in following their reasoning. No doubt
damage is an essential element in a right of action for negli-
gence. "Fear taken alone" — as Sir Frederick Pollock has
stated in his work on Torts - — " falls short of being actual dam-
age, not because it is a remote or unlikely consequence, but
because it can be proved and measured only by physical effects."
That fright, where physical injury is directly produced by it,
cannot be a ground of action merely because of the absence of
any accompanying impact appears to me to be unreasonable
and contrary to the authorities. We have, as reported, decis-
ions which go far, at any rate in my judgment, to negative the
correctness of any such contentions.^ Further, we have directly
1151 N. Y. 107,45 N. E. Rep. 354, turned over. Also to Harris v. Mobbs
34 L. R. A. 781, 56 Am. St. 604. 3 Ex. Div. 268. The facts were that
^ 6th ed., p. 51. a house-van attached to a steam-plow
* Referring to Jones v. Boyce, 1 was left for the night on the side of
Stark. 493, where it was ruled that a highway, four or five feet from the
if through the fault of a coach pro- metaled part. During the evening
prietor in neglecting to provide plaintiff's testator drove his horse
proper means of conveyance, a pas- attached to a cart along the metaled
senger be placed in so perilous a situ- road; the horse was a kicker, but he
ation as to render it prudent for did not know it. Passing the van
him to leap from the coach, whereby he shied at it, kicked, and galloped
his leg is broken, the proprietor will kicking for 140 yards, got one leg
be liable although the coach was not over the shaft, fell and kicked the
72 COMPENSATION. [§ 23a.
in point the decision of the court of appeal and common pleas
division in Ireland in the unreported case of Byrne v. Great
Southern & "Western E.. Co.,^ approved of in Bell v. Great
]N"orthern R. Co.^ In Yictorian By. Commissioners v. Coultas,'
which was much relied upon by defendants in the argument
before us, the privy council expressly declined to decide that
" impact " was necessary. It is not to be taken that, in my
view, every nervous shock occasioned by negligence and pro-
ducing physical injury to the sufferer gives a cause of action.
There is, I think, one important limitation. The shock, in order
to give a cause of action, must be one which arises from a rea-
sonable fear of immediate personal injuries to the plaintiff.
This limitation was applied by Bruce and Wright, JJ., in the
unreported case of Smith v. Johnson & Co., where a man was
killed negligently by the defendant in the sight of the plaint-
iff, and the plaintiff became ill, not from the shock produced
by fear of harm to himself, but from the shock of seeing an-
other person killed. The court held that this harm was too
remote a consequence of the negligence.* ... It remains
to consider the second form in which defendant's counsel put
his objection to the right of the plaintiff to maintain this ac-
tion. He contends that the damages are too remote, and relies
upon the decision of the privy council in Yictorian Ry. Com-
missioners v. Coultas. The principal ground of their judgment
is formulated in the following sentence: " Damages arising
driver as he rolled out of the cart; are to be explained on a different
he died from the effects of the kick, ground, namely, that the damage
A verdict having been found in favor which immediately resulted from the
of the executor of the deceased on act of the passenger or of the horse
the question of defendant's negli- was really the result, not of that act,
gence, it was ruled that such use of but of a fright which rendered that
the highway was the proximate cause act involuntary, and which therefore
of the injury. The third case referred ought to be regarded as itself the di-
to is Wilkinsv. Day, 12 Q. B. Div. 110, rect and immediate cause of the
the facts being quite similar to those damage,
in Harris v. Mobbs, and the ruling in ' § 23.
accordance with that therein. ^ ^g 21, 23.
These cases are referred to in Wil- ^ ggg g 21.
kinson v. Downton, [1897] 2 Q. B. 6, by * To the same effect, Cleveland, etc.
Wright, J., in respect to their being R. Co. v. Stewart, 24 Ind. App. 374
inconsistent with the Coultas case. 56 N. K Rep. 917,
He said : But I think that those cases
§ 23a.] Ct)NSEQUE]SITIAL DAMAGES FOR TOKTS. 73
from mere sudden terror, unaccompanied by any actual physical
in jur3% but occasioning a mental or nervous shock, cannot under
such circumstances, their lordships think, be considered a con-
sequence which in the ordinary course of things would flow
from the negligence of the gatekeeper." A judgment of the
privy council ought, of course, to be treated by this court as
entitled to very great weight indeed ; but it is not binding
upon us; and in venturing, most respectfully, not to follow it
in the present case I am fortified by the fact that its correct-
ness was treated by Lord Esher, M. E., in his judgment in
Pugh V. London, etc. R. Co.^ as open to question ; that it was
disapproved of in Bell v. Great Northern R. Co. ... I
prefer the decisions of the Irish courts; they seem to me strong
and clear authorities for the plaintiff's contention. It is sug-
gested on the part of the defendants that the applicability of
the judgment in Bell v. Great Northern E.. Co. is impaired by
the fact that the female plaintiff in that action was a passenger
on the defendants' railway and as such had contractual rights.
It appears to me that this fact makes no practical difference
whatever. There was no special contract; no notice to the
railway when they accepted her as a passenger that she was
particularly delicate or liable to fright.'
Before Dulien v. White was decided a different conclusion
from that reached therein was arrived at in Massachusetts
upon a state of facts less favorable to the defendant than ex-
isted in the English case. The declared purpose of the defend-
ant was to damage a house in which the plaintiff was, though
it was not her house. In her presence he threw a large stone
against the house, after which the plaintiff went into the front
room of the house with her little child, and thereafter the de-
fendant wilfully threw a large stone at the house which passed
throush one of the blinds coverins: a window in that room and
A [1896] 2 Q. B. 248. In this case ous shock which incapacitated him
the plaintiff, while discharging his from employment. It was held that
duty as a signalman in the defend- he had been incapacitated by"acci-
aot's employment, endeavored to dent " within the meaning of a policy
prevent an accident to a train by of accident insurance,
signaling to the driver, and the ex- - Dulien v. White, [1901] 2KB.
citement and fright arising from the 669.
danger to the train produced a nerv-
74 COMPENSATION. [§ 24
greatly friglitenod the plaintiff, who was not touched or struck.
The defendant was not liable for the fright or the consequent
injury to the plaintiff's health because he had no intention to-
injure her or her property, did not know of her delicate con-
dition, or that she was in that room.' As between these cases
the better reason lies with the English case. The Massachu-
setts case seems a departure from the established principle re-
specting remote and proximate cause. A later case favors the
right of a pupil unlawfully excluded from the public schools
to recover for his suffering from the disgrace inflicted upon
him.^
§ 24. Same subject; miseellaiieous cases. Though deny-
ing the right of recovery for mere fright, neither attended nor
followed by any other injury,^ the supreme court of Texas has
sustained a recovery where a miscarriage was caused by a
mental shock unaccompanied by any physical violence what
ever to the person of the injured woman.^ In a later case it
was alleged by the plaintiff that as the result of a nervous
shock or physical injury, or both, caused by the collision of
two trains there was developed a nervous affection known as
traumatic neurasthenia; as a matter of fact plaintiff was not
physically damaged by the collision in the sense that he sus-
tained visible bodily injury. The conclusion reached was that
where a physical injury results from a fright or other mental
shock, caused by the wrongful act or omission of another,
the injured party is entitled to recover his damages, provided
the act or omission is the proximate cause of the injury in the
light of all the circumstances, to have been foreseen as a nat-
ural and probable consequence thereof, which questions are for
the jury.'^ Proof that a woman was negligently carried be-
yond her destination and thereby suffered from fright and
want of food warrants a finding that the occurrence was the
proximate cause of a sickness which immediately followed.^
1 White V. Sander, 168 Mass. 296, 47 Corley, 87 Tpx. 432, 29 S. W. Rep.
N. E. Rep. 90. 281.
2 Morrison v. Lawrence, 181 Mass. * Hill v. Kimball, 76 Tex. 210, 13
127, 63 N. E. Rep. 400. See the last S. W. Rep. 59, 7 L. R A, 618.
paragraph of § 22. 5 Gulf, etc. R. Co. v. Hayter, 93 Tex.
3 Gulf, etc. Co. V. Trott, 86 Tex. 239, 54 S. W. Rep. 944, 47 L. R. A. 325.
412, 25 S. W. Rep. 419, 40 Am. St. « Texas & Pacific R. v. Gott, 20-
806; San Antonio, etc. R. Co. v. Tex. Civ. App. 335, 50 S. W. Rep. 193..
§ 21.] CONSEQUENTIAL DAMAGES FOK TORTS. 75
Where the defendant, executing what he thought was a prac-
tical joke, said to the plaintiff that her husband had met with
an accident, and that his legs were broken, such statement
being made with intent that it should be believed, and it was
believed, and the plaintiff became ill in consequence of the re-
sulting nervous shock, and not because of previous ill-health,
weakness of constitution, predisposition to nervous shock or
any other idiosyncrasy, the injury was not too remote.^ The
rule of the New York court of appeals that no recovery can be
had for injuries due solely to fright and excitement, unaccom-
panied by actual, immediate, personal injury, does not apply
to cases of wilful tort.- If the act or default which causes a
nervous shock produces physical injuries, and other such in-
juries result from the nervous shock, there ma}' be a recovery
for the latter injuries as well as the others.' In Massachusetts
a different view was taken where a passenger upon a street car
suffered physical injury from fright caused by the removal of
a drunken man, and a slight, unintentional battery of the per-
son resulted. The court said of an instruction to the effect that
if there was a fright which operated to the injury of the plaint-
iff in body or mind and also a ph3'sical injury, the jury
might take all that happened as one whole, that the defend-
ant was not liable for all the consequences, but only for those
of its wrong, which began with the battery, and the conse-
quences thereof were all for which a recovery could be had.
This was said with recognition of the difficulty of discriminat-
iniT.'* A miscarriage resultino; from threats to arrest a debtor
husband,* b}' the unlawful imprisonment of a husband,^ or by
wrongfully procuring him to be indicted, is not the reason-
1 Wilkinson v. Downton, [1S97] 2 3 Rea v. Balmain New Ferry Co.,
Q. B. 57. The case was admitted to 17 N. S. W. (law) 9:3.
be without precedent, and was dis- * Spade v. Lynn & B. R Co., 172
tinguished from Victorian Ry. Com- Mass. 488, 52 N. E. Rep. 747, 43 L. R.
missioners v. Coultas on the ground A. 833. See Gatzovv^ v. Buening. lOG
that therein was no element of wil- AVi.s. 1, 81 N. W. Rep. 1003, 49 L. R.
ful wrong, "nor perhaps was the ill- A. 475, 80 Am. St. 17.
ness so direct and natural a conse- * Wulstein v. Wohlman, 57 N, Y.
quence of the defendant's conduct Super. Ct. 50, 5 N. Y. Supp. 569.
as in this case." *>E[iis v. Cleveland, 55 Vt 358. See
- Preiser v. Wielandt, 48 App. Div. Huxley v. Berg, 1 Starkie, 98.
569, 62 N. Y. Supp. 890. See ^ 43.
Y6 COMPENSATION. [§ 24.
able or natural result of such acts.^ One who en2:ao^es in a
quarrel with the husband of a woman who \se7iciente, the quar-
rel being carried on in her hearing without knowledge of her
presence or condition, is not liable for a miscarriage.^ It has
recently been ruled in Pennsylvania that a complaint which
alleges that in a collision on the defendant's railroad the cars
were thrown off the track and fell on plaintiff's premises and
against her dwelling, whereby plaintiff was subjected to great
fright, nervous excitement and distress, and her life endan-
gered, does not state a cause of action.' An inexperienced
youth, without money through defendant's neglect to deliver
a message, and compelled to remain penniless among stran-
gers for a week, cannot recover for the anxiety and mortifica-
tion endured because of his belief that he was looked upon
with suspicion.''
In a recent Xorth Carolina case* it was ruled: We are of
the opinion that an action will lie iov physical injury or dis-
ease resulting from fright or nervous shocks caused by negli-
gent acts. From common experience we know that serious
consequences frequently follow violent nervous shocks caused
by fright, often resulting in spells of sickness, and sometimes
in sudden death. Whether the physical injury was the natural
and proximate result of the fright or shock is a question to be
determined by the jury upon the evidence, showing the con-
ditions, circumstances, occurrences, etc. But it must also ap-
pear that the defendant could or should have known that such
negligent acts would, with reasonable certainty, cause such re-
sult, or that the injury resulted from gross carelessness or reck-
lessness, showing utter indifference to the consequences when
they should have been contemplated by the party doing such
acts. As a condition precedent to recovery in such cases it
must appear that the defendant must or ought to have known
' Hampton v. Jones, 58 Iowa, 817, ^ Ewing v. Pittsburgh, etc, R. Co.,
12 N. W. Rep. 276. 147 Pa. 40, 14 L. R A. 666, 23 AtL
2 Phillips V. Dickerson, So 111. 11, Rep. 340.
2S Am. Rep. 607; Gaskins v. Runkle, * Voegler v. Western U. TeL Co., 10
25 Ind. A pp. 584, 58 N. E. Rep. 740 Tex. Civ. App. 229, 30 S. W. Rep.
(though defendant knew plaintiff 1107.
was in delicate health and easily ^Watkins v. Kaolin Manuf. Co.,
excited). See Cliicago & N. Pu Co. 131 N. C. 536, 540, 42 S. K Rep. 983.
V. Hunerberg. IG III. App. 387.
§ 25.] CONSEQUENTIAL DAMAGES FOR TORTS. 77
of the plaintiff's perilous position or condition against which
he should have to exercise care. It has been ruled in a Texas
case that a mother who has been separated from her children
because not allowed time to board a train on which they were
placed may recover for her mental anguish, and that such lia-
bility was not dependent upon the knowledge of the defend-
ant's agent as to the degree of relationship existing between
the plaintiff and the children, he knowing that they were in
her custody and that she had bought tickets for thera.^
§25. Anticipation of injury as to persons; illustrations.
It has alread}^ been stated that though consequential damages
to be recovered must be the natural and probable effect of the
act complained of, yet it is not requisite that the wrong-doer
should be able to anticipate who the sufferer will be. If his
act has a tendency to injure some person, or many persons,
and finally does in the manner which was beforehand probable
cause such injury, it is proximate. This is cogently illustrated
by the case of a spring gun set so as to be unwittingly dis-
charged by the first comer.- A dealer in drugs, for negli-
gently bottling a poisonous drug and putting it in market la-
beled as a harmless medicine, is liable to all persons who, with-
out their fault, are injured by using it, though it may have been
the subject of many intermediate sales.^ So a person who,
knowing another to be a retailer of illuminating fluids, and that
naphtha is explosive and dangerous to life for such use, sells
that article to him to be retailed to his customers, he being
ignorant of its dangerous properties, is liable to any person
buying it of such retailer if injured by its explosion or ignition.*
• International, etc. R. Co. v. An- Carter v. Towne, 98 Mass. 567, 9G Am.
chonda, 68 S. \V. Rep. 743 (Texas Ct. Dec. 683. 103 Mass. 507.
of Civil Appeals). The sale of an article in itself
^ Jay V. Whitfield, 4 Bing. 644; Bird harmless, and which becomes dan-
V. Holbrook. 4 Bing, 628; Forney v. gerous only by being used in combi-
Gel'imacher, 75 Mo. 113. See § 17. nation with some other substance,
3 Thomas v. Winchester, 6 N. Y. withoutanyknowledgebythe vendoi
397; Langridge v. Levy, 3 M. & W. that it is to be used in such combi-
519; Levy v. Langridge, 4 id. 337; nation, does not render him liable to
Norton v. Sewall, 106 Mass, 143; an action by one who pui'chases the
George v. Skivington, L. R. 5 Ex. 1. article from the original vendee, and
* Wellington v. Downer K. O. Co., who is injured while using it in a
104 Mass. 64, 8 Am. Rep. 298. See dangerous combination with another
78 COMPENSATION. [§ 25,
[:?0] One who knowingly delivers an apparently harmless pack-
age containing a dangerous and explosive substance to a com-
mon carrier for transportation without giving him notice of its
contents is liable for damages caused by its explosion while the
carrier is transporting it without knowledge thereof, with
such care as is adapted to its apparent nature.^ The act of
keeping a large quantity of gunpowder in a wooden building
insufficiently secured, and situate near other buildings, thereby
endangering the lives of persons in the vicinity, will subject
the person so doing to damages for injuries suffered by any
person from its explosion though the fire which causes the ex-
[30] plosion is accidental or results from the negligence of a
third person." So a person who by public false representations
causes another reasonably to act upon them as true in a mat-
ter of business is liable to make good any loss the latter may
sustain from their falsity.^ The servants of a railroad com-
pany ran its cars, after due warning, over a hose being used to
convey water to a burning building, thereby severing it and
preventing the extinguishment of the fire. It was held that
the company was liable though the hose did not belong to the
plaintiffs, and the men in charge of it were not their servants —
that the severing of the hose was the proximate cause of the
loss.* The plaintiff engaged with the defendant to serve on
article, although by mistake the ar- hill v. Walter, 3 B. & Ad. 114. See
tide actually sold is different from Chester v. Dickerson, 52 Barb. 349.
that which was intended to be sold. * Metallic, etc. Co. v. Fitchburg R.
Davidson v, Nichols, 11 Allen, 514 Co.. 109 Mass. 277, 12 Am. Rep. 689;
See Loop v. Litchfield, 42 N. Y. 351, Atkinson v. Newcastle, etc. Co., L.
1 Am. Rep. 543; Longmeid V, HoUi- R. 6 Ex. 404. But .see Mott v. Hudson
day, 6 Ex. 761; Langridge v. Levy, 2 River R. Co., 1 Robert. 593.
M. & W. 519; Levy v. Langridge, 4 There is no connection betw^een the
id. 337. wrongful occupation of the bank of
1 Boston, etc. R. Co. v. Shanly, 107 a river and a fire, although such oc-
Mass. 568; Farrant v. Barnes, 11 C. B. cupation may render it impossible
(N. S.) 553. for the fire department to obtain
2 Myers v. Malcolm, 6 Hill, 292; water with which to subdue the fire.
Kinney v. Koopman, 116 Ala. 310, 37 Bosch v. Burlington, etc. R. Co., 44
L, R. A. 497, 22 So. Rep. 593; Rudder Iowa, 402, 25 Am. Rep. 754. See
V. Koopman, 116 Ala. 332, 22 So. Rep. Brown v. Wabash, etc. R. Co., 20 Mo.
601, 37 L. R. A. 489. App. 222; Jackson v. Nashville, etc.
3 Morse v. Swits, 19 How. Pr, 275; R Co., 13 Lea, 491, 49 Am. Rep. 663;
Gerhard v. Bates, 2 El. & B. 476; Pol- Railway Co. v. Staley, 41 Ohio St.
118, 52 Am. Rep. 754.
§ 25.] CONSEQUENTIAL DAMAGES FOR TORTS. 79
board the hitter's vessel as a common seaman on a specified
voyage; breach, that defendant neglected to suppl}' and keep
on board a proper supply of medicines as required by a statute,
whereby plaintiff's health suffered ; held a good cause of action.^
The sale of a saltpetre cave was rescinded on the ground of the
vendor's fraud; the vendee claimed compensation for erections
•on the premises, for their improvement and use made prior to
the discovery of the^fraud. The court held that these expendi-
tures were not a loss naturally and proximately resulting from
the fraud; that they were not j)art of the contract, but were
made by the complainant of his own choice in consequence
of the bargain; that damages could not be given upon the
first consequence, and then upon successive subsequent conse-
quences.^ But it is obvious that the expenditures were a [31]
proper item of damages for the fraud, if, as a fact, they were
expenditures likely to be made by a purchaser; for then they
were a loss which was the natural and proximate consequence
of the wrong done.* In a late case in Illinois the defendant
contracted, without authority as agent, to sell land belonging
to the plaintiff, and the latter had been put to the expense of
defending an unsuccessful suit on that contract for specific per-
1 Couch V. steel, 3 El. & B. 403. In ware peddler wlio intended by the
this case it was contended that as sale and profits to become a merchant
the act of parliament imposing the and then a nobleman of the first
duly to keep a proper supply of med- order, and afterwards to marry the
ioine provided a penalty for neglect princess." SeeBishop v. Williamson,
of that duty, and that it might be 11 Me. 495, where it was held that a
sued for arid collected by a common postmaster was liable to an action
informer, no action at common law for refusing to deliver a letter ao
would lie for damages resulting from cording to its address, but delivering
the breach of the statutory duty; but it to another, it containing a list of
the court sustained the action, lottery prizes or statement of the
Rowning v. Goodchild, 2 W. Bl. 906. drawing; and it appearing that the
2 Peyton v. Butler, 3 Haywood, 141. person receiving the letter, availing
3 In Peyton v. Butler, supra, the himself of the information contained
court say: "The failui'e of a post- therein, purchased of the plaintiff,
master to deliver a letter giving lib- who was a vendor of lottery tickets, a
erty by a certain day to pay for a ticket that had drawn a prize; the
lottery ticket, price one dollar, would injury was held to be the immediate
make him liable for $20,000 should consequence of the unlawful with-
the ticket afterward turn out to be holding of the letter, and the proper
a prize of $20,000. In short, the ab- measure of damages the net amount
surdity of such damages is well elu- of the priza
■cidaled by the story of the crockery-
80 COMPENSATION. [§ 26.
formance. It was held that he was entitled to recover as dam-
ages for his trouble and the expense in making such defense.^
Where a horse was driven from the stable of its owner and
passed from a highway to a vacant lot adjoining the premises
of its owner, and there killed one of a number of children at
play, the owner of the horse was liable.^
§ 26. Consequential damages in highway cases. The gen-
eral rule is that municipal corporations are bound to keep
their streets in a reasonably safe condition for travel. But
^■^^a.sz-municipal corporations, such as counties, townships and
JSTew England tow^ns, are not under such obligation unless it is
imposed b}^ statute,^ and clearly expressed therein.* Such stat-
utes are strictly construed in some states and the right of re-
covery is denied, especially in Maine and Massachusetts, under
circumstances which do not prevent a recovery in other juris-
dictions.^ This, it is probable, has been the result of the lan-
guage employed in the statutes of those states, which are
construed to relieve from liability if the accident was not
directly and solely the effect of the insufficiency of the high-
way.** It is said " that "some portion of the harness or carriage
may be defective and unsafe, and the accident may be the
iPhilpot V. Taylor, 75 111. 309, 20 ^ jTarble v. Worcester, 4 Gray, 395;
Am. Rep. 241. Aldrich v. Gorham,77 Me. 287;Moul-
2 Mills V. Bunke, 59 App. Div. 39, ton v. Sanford, 51 Me. 127; Davis v.
69 N. Y. Supp. 96. Dudley, 4 Allen, 557.
3 2 Dillon, Mun. Corp., §996. Liability is limited to the direct
* Barnett v. Contra Costa County, and immediate results of the injury,
67 Cal. 77, 7 Pac. Rep. 177. and the common-law rule that a re-
5 The construction given the stat- covery may be had for the natural
utes in those states is approved in a and proximate result does not apply,
recent Connecticut case, it being Hence where an injury resulted from
held that the consequence of the a defect in a highway, and the per-
failure of a town to keep its highway son injured sustained a subsequent
in repair is to impose upon it the injury by undertaking to use the
statutory penalty, and that the right limb injured on the highwa)', such
to recover it may be defeated by any later injury could not be recovered
concurring wrong of a third person for. Raymond v. Haverhill, 168
and a defect in the way. In such a Mass. 382, 47 N. E. Rep. 101. The
case the injury is not caused by the contrary has been held in Wiscon-
defect. Bartram V. Sharon, 71 Conn. sin. Wieting v. Millston, 77 Wis. 523,
686. 13 Atl. Rep. 143, 71 Am. St. 225, 46 N. W. Rep. 879. The Massachu-
46 L. R- A 144. Contra, Ouverson v. setts court refused to follow this
Grafton, 5 N. D. 281, 65 N. W. case.
Rep. 676. " Aldrich v. Gorham, 77 Me. 287.
§ 20.] CONSEQUENTIAL DAMAGES FOR TOKTS. 81
combined result of the defect in the harness or carriage and
the defect in the way; in such case there is an efficient co-
operating cause, in connection with the defect in the way, that
produces the injury, and the town is not liable.^ The same
principle applies where a horse, becoming frightened at an
object for which the town is not responsible, breaks away
from his driver and escapes from all control, while traveling
on the way, and afterwards, while thus free from the man-
agement and control of the driver, meets with an injury
through a defect in the way.^ . . . But whether the fright
or misconduct of the horse is such as to be regarded as the
true and proximate cause of the injury, in any given case, is
to be governed by the extent of such misconduct. It may in
some remote degree even bear upon or influence, though not
in any legal sense be said to cause it. ' Everything which in-
duces or influences an accident does not necessarily and legally
cause it." And not only is it the doctrine of the court in our
own state, but also in Massachusetts, that if a horse, well
broken and adapted to the road, while being properly driven,
suddenly swerves or shies from the direct course, he is not in
any just sense to be considered as escaping from the control
of the driver or becoming unmanageable, if he is in fact only
momentarily not controlled; and that if, while thus momen-
tarily swerving or shying, he is brought in contact with a de-
fect in the road and an injury is thereby sustained, such conduct
of the horse will not be considered as the proximate cause of
the accident, though it may be one of the agencies or mediums
through which it was produced, and a recovery may be had
for such injury."* This is also the rule in Wisconsin ^ and in
other states.^ The Wisconsin case first cited appears to go
1 Contra, Vogel v. West Plains, 73 ston, 100 Mass. 55; Bemis v. Ailing-
Mo. A pp. 5H8, citing Bassett v. St. ton, 114 Mass. 508; Wright v. Tern-
Joseph, 53 Mo. 300; Brennan v. St. pleton, 133 Mass. 50; Morsman v.
Louis, 92 Mo. 483; Vogelgesang V.St. Rockland, 91 Me. 264,39 AtL Rep.
Louis, 40 S. W. Rep. 653, 139 Mo. 127. 995.
2 Davis V. Dudley, 4 Allen, 557; & Olson v. Chippewa Falls, 71 Wis.
Moulton v. Sanford, 51 Me. 127; Mar- 558. 37 N. W. Rep. 575; Houfe v. Ful-
ble V. Worcester, 4 Gray, 395. ton, 29 Wis. 296, 9 Am. Rep. 568,
3 Spaulding v. Winslow, 74 Me. 534. « Rockford v. Russell, 9 111. App. 229 ;
< Id.; Titus V. Northbridge, 97 Masa Joliet v. Verley, 35 111. 58; Denver v.
258, 93 Am. Dec. 91; Stone V.Hubbard- Johnson, 8 Colo. App. 384, 46 Paa
Vol. 1 — 6
82
COMPENSATION.
[§26.
beyond the cases in Maine and Massachusetts. The fright of
the horses was caused by something not in the highway, and
for Avhicli the city autliorities were not responsible. Never-
theless the absence of a railing to a bridge was held the prox-
imate cause of the accident. The distinction made in Maine
and Massaclmsetts as to the duration of the loss of control of
a horse by its driver does not appear to be taken in many
states,' nor in Ontario.^ The rule in these jurisdictions is that
when an accident happens from a defect existing in a highway
as the result of negligence, the fact that the horse was at the
time uncontrollable or running away is not a defense to an
action to recover for the injury. The Connecticut court say :
" The failure of a traveler to be continually present with his
team up to the time and place of injury, when that failure
proceeds from some cause entirely beyond his control, and not
from any negligence on his part, ought not to impose upon
him the loss from such injury, particularly when the direct
cause of the same is the negligence of some other party; the
loss should be charged upon the party guilty of the first and
Rep. 621; Kennedy v. New York, 73
N. Y. 365, 29 Am. Rep. 169; Burns v.
Yonkers, 83 Hun, 211, 31 N. Y. Supp.
757 (the horse balked and backed
the vehicle off the highway down a
steep and unguarded bank); Dillon
V. Raleigh. 124 N. C. 184, 32 S. E.
Rep. 548; Chacey v. Fargo, 5 N. D.
173. 64 N. W. Rep. 932; Ouverson v.
Grafton, 5 N. D. 281, 65 N. W. Rep.
676; Cage v. Franklin, 8 Pa. Super.
Ct. 89; Yoders v. Amwell, 172 Pa. 447,
51 Am. St. 750, 33 Atl. Rep. 1017;
Davis V. Snyder, 196 Pa. 273, 46 Atl.
Rep. 301; Stone v. Pendleton, 21 R.
I. 332, 43 Atl. Rep. 643; Rohrbough
V. Barbour County Court, 39 W. Va.
472, 20 S. E. Rep. 565, 45 Am. St. 925;
Knouff V. Logansport, 26 Ind. App.
202, 59 N. E. Rep. 347. Contra, Brown
V. Laurens County, 38 S. C. 282, 17 S.
E. Rep. 21.
Where the plaintiff was driving
over a defective bridge and, without
his fault, his horse broke through the
bridge, and plaintitf, in trying to ex-
tricate him, was injured by a blow
from the horse, the defect was the
proximate cause of the injury. Page
V. Bucksport, 64 Me. 51. 18 Am. Rep.
239; Stickney v. Maidstone, 30 Vt.
378, 73 Am. Dec. 312; McKelvin v.
Loudon, 22 Ont. 70.
1 Baltimore & H. Turnpike Co. v.
Bateman, 68 Md. 389, 13 AtL Rep. 54,
6 Am. St. 449; Ring v. Cohoes, 77 N.
Y. 83, 33 Am. Rep. 574; Putman v.
New York, etc. R Co., 47 Hun. 439,
442; Baldwin v. Greenwoods Turn-
pike Co., 40 Conn. 238, 16 Am. Rep.
33; Hull V. Kansas, 54 Mo. 598, 14
Am. Rep. 487; Hunt v. Pownal, 9 Vt.
411; Winship v. Enfield, 42 N. H. 197;
Hey V. Philadelphia. 81 Pa. 44, 22
Am. Rep. 733; Byerly v. Anamosa,
79 Iowa, 204, 44 N, W. Rep. 359; Man-
derschid v. Dubuque, 25 Iowa, 108;
Ward V. North Haven, 43 Conn. 148;
Campbell v. Stillwater, 32 Minn. 308,
20 N. W. Rep. 320.
2 Sherwood v. Hamilton, 37 Up.
Can. Q. B. 410.
§ 26.] CONSEQUENTIAL DAMAGES FOR TORTS. 83
only negligence. If the plaintiff is in the exercise of ordinarj'-
care and prudence and the injury is attributable to the negli-
gence of the defendants, combined with some accidental cause
to which the plaintiff has not negligently contributed, the de-
fendants are liable." Kor will the fact that the horse of the
plaintiff Avas uncontrollable for some distance before arriving
at the place of injury affect the liability of the defendant.^
But this principle is not to be extended to a case in which the
horse is left tied to a post, breaks away therefrom and goes
over an unguarded bank, where he would not have been driven
by a prudent driver.^ It ma}', however, apply where the
first cause leading to the injury happened outside of the de-
fendant's road, as where the horse became uncontrollable
through fright upon a road for which the defendants were not
responsible and ran from there upon private property, thence
to the original road, and finally and without a driver upon the
defendants' turnpike.* In a Wisconsin case* the injured horse
took fright and escaped from his driver while in a field and
ran from thence to the highway, which was out of repair.
The court very properly held that towns are not bound to pro-
vide roads for runaway horses; but if the highway is so de-
fective as to cause a team to become frightened the town is
liable.' If a traveler, while using due care, is exposed to im-
minent danger by a defect in the highway, and to avoid the
probable consequences of coming in contact with the defect
and as a reasonable precaution turns his horse, whereby his
vehicle- is brought into collision with another vehicle, which
would not have happened if the horse had not been turned,
the defect may be regarded as the sole cause of the injury.^
1 Baldwin V. Greenwoods Turnpike ^Kelleyv. Fond du Lac, 31 Wis.
Co., 40 Conn. 238, 16 Am. Rep. 33, 179; Hodge v. Bennington, 43 Vt. 451.
approved in Ring v. Cohoes, 77 N. Y. « Flagg v. Hudson, 143 Mass. 280, 56
83, 88, 33 Am. Rep. 574; Joliet v. Shu- Am. Rep. 674, 8 N. E. Rep. 42.
feldt, 144 111. 403, 33 N. E. Rep. 969, 18 It is difficult to harmonize the
Lfc R. A. 750. Massachusetts cases on the question
- Moss V. Burlington, 60 Iowa, 438, of consequential damages for inju-
46 Am. Rep. 83, 15 N. W. Rep. 267. ries on highways. It was ruled in
3 Baldwin v. Greenwoods Turnpike Palmer v. Andover, 2 Cush. 600. that
Co., supra. a town was liable where the primary
* Jackson v. Bellevieu, 30 Wis. 350; cause of the injury was a pure acci-
Schillinger v. Verona, 96 Wis. 456,71 dent: a nut getting loose and drop-
N. W. Rep. 8S8. ping from a bolt, the horses were
84:
COMPENSATION.
26.
If there is negligence in failing to erect a barrier for the pro-
tection of pedestrians, one injured may recover though the
primary cause of his injury was the sudden going out of the
detached from a carriage while de-
scending a hill, at the foot of which
the road abruptly turned to the right
on the bank of a mill pond, into
w'hich, by going straight on, the car-
riage plunged, on account of the
absence of any railing. The court
say: "The . . question . . .
whether, in case of an injury re-
ceived while traveling upon a public
way. shown to be detective, but
where the accident or injury is at-
tributable in part to a defect in the
carriage or harness, but occurring
under such circumstances as show
that the plaintiff was chargeable
with no fault or negligence in the
matter, the town is liable for the
damage, is one not free from diffi-
culty. Against maintaining such
action, it is strongly urged that the
injury is not fairly imputable to the
defect in the highway; and inas-
much as it resulted, at least in part,
from causes for which the town was
not responsible, and over which it
had no control, the town should not
be chargeable with damages there-
for. If the objection was that the
injury was caused by the combined
effect of an obstruction or want of
repair in the road, and the want of
ordinary care, diligence or skill on
the part of the plaintiff in reference
to his harness, his horses or his car-
riage, or the use of the road, it
would be very clear that the plaint-
iff could not recover. He must be
without fault in this respect; and if
not so, although the highway be out
of repair, the town is not liable. But
is the like effect to follow when there
is a defect in the road, but the ac-
cident or injury is attributable in
part to a defect in the carriage or
harness, which defect was unknown
to the plaintiff, and which was of
such a character that it might have
existed, and yet no fault or negli-
gence be chargeable by reason thereof
to the plaintiff? We should be slow
to adopt or sanction any principles
in reference to this class of actions
that would in so many cases render
the statute nugatory. If the circum-
stance that some accident or casu-
alty occurred, as the primaiy cause,
and which by reason of a defect in the
road, and through their combined
operation, caused the damage to the
plaintiff, would deprive the party of
recovering damages, the protection
to the traveler would be very much
restricted. It is the ordinary course
of events, and consistent with a rea-
sonable degree of prudence on the
part of the traveler, that accidents
will occur; horses maybe frightened,
the harness may break, a bolt or
screw may be dropped. To guard
against damage by such accidents the
law requires suitable railings and
barriers, a proper width of the road,
and whatever may be reasonably re-
quired for the safety of the traveler.
It seems to us that when the loss is
the combined result of an accident
and of a defect in the road, and the
damage would not have been sus-
tained but for the defect, although the
primary cause be a pure accident,
yet, if there be no fault or negligence
on the part of the plaintiff, if the acci-
dent be one which common prudence
and sagacity could not have fore-
seen and provided against, the town
is liable." In Davis v. Dudley, 4
Allen, 557 (decided seven years after
Palmer v. Andover, supra), a town
was held not to be responsible in
damages if a horse on becoming ac-
cidentally frightened breaks away
'li.
CONSEQUENTAL DAMAGES FOK TORTS.
85
lights in the street lamps.' It is not a defense to a city that
another contributed, either before or after its default, or con-
currently therewith, in producing the damage.^
§ 27. Imputed negligence. It was formerly judicially de-
clared to be the law in England that the negligence of the
driver of a public conveyance was imputable to a passenger
therein, although the latter exercised no control over the
former,* This doctrine was not authoritatively disapproved
of, although it was much commented on and shaken, until
1SS8, when it came before the house of lords in Mills v. Arm-
strong,'* with the result that the whole foundation on which
it rested was removed. The theory has but little support in
the American cases: except in Wisconsin ^ all the recent ad-
from his driver, and afterwards,
while running at large, meets with
an injury through a defect in the
highway. It is declared that this
case does not conflict with the other,
Merrick, J., saying: "The facts in
the present case are widely difl'erent,
and afford no occasion for the appli-
cation of the doctrine by which, in
the decision of that case, the court
were influenced and controlled.
Here the accident and injury were
not coincident, but were separate
and produced by separate causes.
The effect of the accident as procur-
ing cause was complete when the
horse, frightened by the falling of
the cross-bar and thills upon his
heels, became detached from the
sleigh and had escaped from the con-
trol of the driver. The blind violence
of the animal, acting without guid-
ance or direction, became, in the
course and order of incidents which
ensued, the supervening and prox-
imate cause of the injury inflicted
by his running against a wood-pile,
which constituted an unlawful ob-
struction and defect in the highway.
In this succession of events, it hap-
pens that the accident placed the
owner in a situation where it was
out of his power to exercise due care
over the horse while this new cause
was in operation, and until it had
contributed to produce the disaster
by which his leg was broken." These
cases and others in Massachusetts
are criticised and contrasted in an in-
teresting manner in Toms v. Whitby,
35 Up. Can. Q. B. 195, where a differ-
ent rule prevailed. The substance
of the opinion in the case referred
to is given in the first edition of this
woi-k, vol. 1, pp. 38-47.
iClay Centre v. Jevons, 2 Kan.
App. 568, 44 Pac. Rep. 745.
Where a team was being driven
along a road and the tugs became
loosened and fell from the whiffle-
trees, the pole fell to the ground,
the horses ran away, and the wagon
went down an unguarded slope, the
primary cause of the resulting in-
jury was the detaching of the tugs,
and not the absence of a barrier.
Card V. Columbia, 191 Pa. 254, 43
Atl. Rep. 217.
2 McClure v. Sparta, 84 Wis. 269, 54
N. W. Rep. 387, 36 Am. St. 924. See
Hayes v. Hyde Park, 153 Mass. 514,
27 N. E. Rep. 522, 12 L. R. A. 249.
3 Thorogood v. Bryan, 8 G B. 115
(1849).
4 13 App. Cas. 1.
sPrideaux v. Mineral Point, 43
Wis. 513; Otis v. Janesville, 47 id.
422, 2 N. W. Rep. 783.
SG
COMPENSATION.
[§27
judications arc hostile to it.^ The- principle dedacible from
these decisions, say the supreme court of Indiana, is that one
who sustains an injury without any fault or negligence of his
own, or of some one subject to his control or direction, or with
whom he is so identified in a common enterprise as to become
responsible for the consequences of his negligent conduct, may
look to any other person for compensation whose neglect of
duty occasioned the injury, even though the negligence of
some third person with whom the injured person was not
identified may have contributed thereto.' But this is not the
rule if the person who is riding with another knows of and ac-
quiesces in the other's purpose to commit a wrong against a
third party. In such a case, in the absence of exculpatory
evidence, the passenger will be presumed to be co-operating
with the driver.' It is said, arguendo^ in Vermont, and is held
in some states that the rule does not apply to an action for the
benefit of a parent, to recover for the death of a child, the
1 Little V. Hackett, 116 U. S. mQ, 6
Slip. Ct. Rep. 891: Wabash, etc. R
Co. V. Shacklet, 105 111. 364, 44 Am.
Rep. 791; Carlisle v. Brisbane, 113
Pa. 544, 6 At). Rep. 372; Railway Co.
V. Eadie, 43 Ohio St. 91, 54 Am. Rep,
803, 1 N. E, Rep. 519; Philadelphia,
etc. R. Co. V. Hogeland, 66 Md. 149,
59 Am. Rep. 159, 7 Atl. Rep. 105;
Cuddy V. Horn, 46 Mich. 596, 10 N.
W. Rep. 32, 41 Am. Rep. 178; New
York, etc R. Co. v. Steinbrenner, 47
N. J. L. 161; Nesbit v. Garner, 75
Iowa, 314, 9 Am. St. 486, 39 N. W.
Rep. 516; Masterson v. New York C.
etc. R. Co., 84 N. Y. 247; Knights-
town V. Musgrove, 116 Ind. 121, 9
Am. St. 827, 18 N. E. Rep. 452, 1 L. R.
A. 152; Sheffield v. Central U. Tele-
phone Co., 36 Fed. Rep. 164; Strauss
V. Newburgh Electric R. Co., 6 A pp.
Div. 264, 39 N. Y. Supp. 998; Hennes-
sey V. Brooklyn City R Co.. 6 App.
Div. 206, 39 N. Y. Supp. 805; Zimmer-
man V. Union R Co., 28 Api'. Div. 445,
51 N. Y. Supp. 1; Ouverson v. Grafton,
5 N. D. 281. 65 N. W. Rep. 676; Faust
v.Philadelphia&R. RCo.,19lPa.420,
43 Atl. Rep. 329; Bamberger v. Citi-
zens' Street R Co., 95 Tenn. 18, 28 L,
R A. 486, 49 Am. St. 909. 31 S. W.
Rep. 163; Missouri, etc. R. Co. v.
Rogers, 91 Tex. 52, 40 S. W. Rep. 956:
Ploof V, Burlington Traction Co., 70
Vt. 509, 41 Atl. Rep. 1017, 43 L. R A.
108; Norfolk & W. R Co. v. Grose-
close, 88 Va. 267, 29 Am. St. 718, 13
S. K Rep. 454; Atlantic & D. R Co.
V. Ironmonger, 95 Va. 625, 29 S. E,
Rep. 319; Roth v. Union Depot Co.,
13 Wash. 525, 31 L. R. A. 855, 43 Pac.
Rep. 641, 44 id. 253; Turnpike Co. v.
Yates, 108 Tenn. 428, 438, 67 S. W.
Rep. 69; Union Pacific R. Co. v. Lap
sley, 51 Fed. Rep. 174, 2 C. C. A. 149,
16 L. R A. 800. See Jones v. Scul-
lard, [1898] 2 Q. B. 565, for the rule
where the servant of one person is
hired by another.
2 Knightstovvn v. Musgrove, 116
Ind. 121, 9 Am. St. 827, 18 N. E. Rep.
452.
3Brannen v. Kokomo, etc. Co., 115
Ind. 115, 7 Am. St. 411. 17 N. K Rep
202.
§ 28.] CONSEQUENTAL DAMAGES FOK TORTS. 87
statute providing for the* recovery of such damages as are
just.^ Other courts hold the contrary view where the action
for the death of the child is brought by his personal representa-
tive.^ The Connecticut court has refused to apply the rule in
an action to recover for injuries sustained by a defective high-
w^ay, the statute authorizing a recovery in such a case by any
person injured by means of a defect in the highway. It is
said that the liability is penal in its nature, and does not ex-
tend to a case in which the injuries resulted to a traveler from
the defect and the culpable negligence of a fellow traveler.'
There is probably no dissent from the doctrine that one who
is bound to care for and protect a child cannot profit because
of the neglect of his duty.*
§ 28, Particular injury need not 1)6 foreseen. It will [47]
appear from a perusal of the cases in which consequential
damages have been allowed and from the principle on which
they are recovered, that at the time the wrongful act is done
it need not be certain that such damages will ensue. It is
only essential that the act have a tendency and be likely to
cause such damages, not that they be certain to follow; in this
respect they are generally contingent, and by possibility may
not happen.^ If one remove or destroy a fence inclosing a
J Ploof V. Burlington Traction Co., N. E. Rep. 391: Brown v. Chicago,
70 Vt. 509, 41 Atl. Rep. 1017, 43 L. R. etc. R. Co., 54 Wis. 342, 11 N. W. Rep.
A. 108; Tucker V. Draper, 62 Neb. 66, 356, 911; Hill v. Winsor, 118 Mass.
d6 N. W. Rep. 917; Atlanta & C. Air 251; Barbee v. Reese, 60 Miss. 906;
Line R. Co. v. Gravitt, 93 Ga. 369, Christiansen v. Chicago, etc. R. Co.,
20 S. E. Rep. 550. 26 L. R. A. 553. 67 Minn. 94, 69 N. W. Rep. 640; Rea
2 Norfolk & W. R. Co. v. Grose- v. Bailmain New Ferry Co., 17 N. S.
close, 88 Va. 267. 13 S. E. Rep. 454, 29 W. (law) 92; Henderson v. O'Halo-
Am. St. 718; Wymore v. Mahaska ran, Ky. — , 24 Ky. L. Rep. 995,
County, 78 Iowa, 396. 16 Am. St. 449, 20 S. W. Rep. 662.
43 N. W. Rep. 264. In Sneesby v. Lancashire & Y. R.
3 Bartram v. Sharon, 71 Conn. 686, Co., 1 Q. B. Div. 42, a herd of plaint-
71 Am. St. 225, 46 L. R. A. 144, 43 ifl's cattle were being driven along
Atl. Rep. 143. See Ouverson v. Graf- an occupation road to some fields,
ton, 5 N. D. 281, 65 N. W. Rep. 676. The road crossed a siding of defend-
* xltlanta & C. Air Line R. Co. v. ant's railway on a level, and when
Gravitt, supra, and cases cited. the cattle were crossing the siding
* Louisville, etc. R. Co. v. VV^ood, the defendant's servants negligently
113 lud. 544, 565, 14 N. E. Rep. 572, sent some trucks down the siding
16 id. 197; Wabash, etc. R. Co. v. amongst them, which separated
Locke, 112 Ind. 404, 2 Am. St. 193, 14 them from the drovers and so fright-
CIMPENSATION.
[§28.
field, or open a gap in it, there is a possibility that animals
confined there may not escape so as to encounter danger out-
side ^ or subject the owner to expense in recovering them;*
and it is possible that other cattle will not trespass upon such
field to destroy a crop there,' or to do injury to an animal
there,* or to receive injury;^ but the wrong done in opening
such inclosure is so likely to lead to these injurious results
that they are proximate if they occur. Opening the fence
does not cause an animal to pass through it; it offers the op-
portunity, exposes to injury property within or property out-
side of it, or both. It is in this manner that the primary and
efficient cause generally produces consequential damages.
The party injured in his person or property is by the wrong-
ful act of another or his culpable negligence exposed or left in
exposure from some cause imminent and fairly obvious in ex-
ened them that a few rushed away
from the control of the drovers, fled
along the occupation road to a gar-
den some distance off, got into the
garden through a defective fence,
and thence on to another track of
the defendant's railway and were
killed. The result was not too re-
mote. The court said that the re-
sult of the negligence was twofold:
first, that the trucks separated the
cattle, and second, that the cattle
were frightened and became infuri-
ated and were driven to act as they
would not have done in their natu-
ral state: that everything that oc-
curred or was done after that must
be taken to have occurred or been
done continuously; and that it was
no answer to say that the fence was
Imperfect, for the question would
have been the same had there been
no fence there. Compare West Ma-
hanoy v. Watson, 116 Pa. 344, 9 Atl.
Rep. 430, 2 Am. St. 804. See Rucker
V. Freeman, 50 N. H. 420, 9 Am. Rep.
207; Alabama, etc. R. Co. v. Chap-
man, 80 Ala. 615, 2 So. Rep. 738;
Isham V. Dow's Estate, 70 Vt. 588, 41
Atl. Rep. 585, 45 L. 11. A. 87.
1 Powell V. Salisbury, 2 Y. & J. 391;
White V. McNett, 33 N. Y. 371 ; Welch
V. Piercy, 7 Ired. 365; Halestrap v.
Gregory, [1895] 1 Q. B. 501.
The act of opening a fence which
incloses a pasture in which horses
are kept is tlie proximate cause of
injury to them, if they escape and
come in contact with a barbed-
wire fence, such material being
largely used for fencing in the ad-
jacent country. West v. Ward, 77
Iowa. 323, 14 Am, St. 284, 43 N. W.
Rep. 309.
2 Bennett v. Lockwood, 20 Wend.
223. 32 Am. Dec. 532.
3 Scott V. Kenton, 81 111. 96.
Injury done by trespassing ani-
mals owned by a third person is not
the direct result of the destruction
of the fence which inclosed the
crops damaged. Berry v. San Fran-
cisco, etc. R. Co., 50 Cal. 435, ap-
proved in Durgin v, Neal, 82 CaL 595,
23 Pac. Rep. 133.
4 Lee V. Riley, 18 C. B. (N. S.)
722.
° Lawrence v. Jenkins, L. R. 8 Q.
B. 274.
§ 20.] CONSEQUENTAL DAMAGES FOE TOKTS. 89
isting circumstances or otlierwise, and through such exposure
the injury ultimately and proximately reaches him. The [48]
wrongful act is the cause of the injury in the natural and
probable course of events by subjecting the party injured un-
lawfully to other and dependent causes from which the injury
directly proceeds. In this way at least the relation of cause
and effect must be established between the wrongful act and
the injurious consequence.^ The owner of a vessel employed
in building a sea wall was given by the owner of the wall the
exclusive right to its use as a place of safety for his vessel.
The master of another vessel, without permission, placed her
behind the wall and refused to move her when requested, the
former desiring to put his there as a place of safety against a
storm. This vessel was sunk by the storm while thus excluded
from that position. The sinking was held to be the proximate
consequence of being denied the shelter of the wall.- It is not
required that the damages be foreseen, as consequential dam-
ages from a breach of contract must be contemplated by the
parties when they enter into it.* Nor, on the other hand, will
the wrong-doer be liable for every possible damage which
may indirectly ensue from his misconduct.*
§ 29. The act complained of must be the efficient cause.
The defendant's misconduct must be the efficient cause and
the injury which follows must be such as ought to have been
foreseen as a probable consequence in the light of surrounding
circumstances. There is generally another and more imme-
diate cause of the injury; the primary cause, to be deemed re-
sponsible and efficient for the purpose of recovering damages,
'Olmsted v. Brown, 12 Barb. 657; over a platform upon which the
Schumaker v. St. Paul & D. R. Co., goods he was inspecting were dis-
46 Minn. 39, 48 N. W. Rep. 559, 12 L. played, they being near the shaft.
R. A. 257; Christianson v. Chicago, Rosenbaum v. Shoffner, 98 Tenn,
etc. R. Co., 67 Minn. 94, 69 N. W. Rep. 624, 40 S. W. Rep. 1086.
640; Beopple v. Railroad, 104 Tenn. 2 Derry v. Flitner, 118 Mass. 131;
420, 58 S. W. Rep. 231; Gilman v. Tinsman v. Belvidere D. R. Co., 26
Noyes, 57 N. H. 627. N. J. L. 148, 69 Am. Dec. 565.
The negligence of the proprietor 3 Bowas v. Pioneer Tow Line, 2
of a store in failing to guard an ele- Sawyer, 21.
vator shaft, and not the stumbling * Beach v. Ranney. 2 Hill, 314;
of a customer, is the proximate Central R. Co. v. Dorsey, — Ga. — ,
cause of the latter's death from fall- 42 S. E. Rep. 1024.
ing into the shaft after stumbling
90 COMPENSATION. [§ 29:
must have directly set in motion an intervening and more im-
mediate agency or be directly in fault for the exposure of the
injured party to its injurious influence. The wrongful refusal
of a corporation to register among its members one who has
purchased shares of its stock on the ground that there was a
debt due it from the original owner does not make it liable to
such owner for a decline in their value occurring between the
times when the transfer oucrht to have been registered and
when in fact it was reo:istered, such decline damag'ino: the
transferror because of the terms of the contract between him
and the transferee, of which the company had no notice.
There is no connection between the market price of the shares
and the act of the corporation.^ A bridge erected over a
slough of a river and a part of the highway from the business
part of a citj'- to a levee on the river became impassable for
[19] want of repairs, by reason of which the owner of a lot of
wood which had been collected at the levee for transportation
over the bridge was unable to so transport it. While l3'ing
there under these circumstances it was washed away by a
freshet. The damages were held too remote to be the conse-
quence of the neglect to repair the bridge.^ The defendant's-
negligence did not consequentially cause the loss of the wood,
if it could be moved to a place of safety in another direction;
nor was the loss by freshet proximate unless, according to the
general experience, it was a probable occurrence. The loss of
an office as the result of an assault and battery has been held
too remote, and too much the result of other and independent
causes to be taken into consideration.' So where the de-
fendant libeled a concert singer who, in consequence, refused
to sing at the plaintiff's oratorio for fear of being badly re-
ceived, it was held that this damage to the plaintiff was not
sufficiently connected with the act of the defendant. The re-
1 Skinner v. London Marine Ins. 3 gj-own v. Cumraings, 7 Allen, 507;
Co.. 14 Q. B, Div. 883. See Bourdette Boyce v. Bayliffe, 1 Camp. 58; Hoey
V. Sieward, 107 La, 258, 31 So. Rep. 630, v. Felton, 11 C. B. (N. S.) 142; Burton
holding a similar rule where inspec- v. Pinkerton, L. R. 2 Ex. 340; Smitha
tion of corporate books was denied v. Gentry, 20 Ky. L. Rep. 171, 45 S.
a stockholder. W. Rep. 515, 42 L. R. A. 302, citing
2 Dubuque, etc. Ass'n v. Dubuque, the text.
30 Iowa, 17&
§20.]
CONSEQUENTIAL DAMAGES FOE TORTS.
91
fusal to sing might have proceeded from groundless apprehen-
sion or caprice, or some other cause altogether different than
that alleged.'
It is not the natural result of enticing a minor daughter
1 Ashley v. Harrison, 1 Esp. 48. In
Taylor v. Neri, id. 386, it appeared
that the defendant beat an actorand
thereby disabled and prevented him
from performing his engagement
with the plaintiff. It was held that
the injury to the manager was too
remote.
These two cases came under criti-
cism in Lumley v. Gye. 2 El. & B. 21G,
which was an action by the manager
of a theatre against the manager of
a rival theatre for procuring a singer
to break her engagement. The cir-
cumstance that the plaintiff had an
action against the singer herself
upon her agreement was overruled,
and the plaintiff recovered on the
principle that the defendant incurred
tiie same liability for interfering
with such a servant as anj- other.
Wightman, J., said: " In the present
case there is the malicious procure-
ment of Miss W. to break her con-
tra't, and the consequent loss to the
plaintiff. Why, then, may not the
plaintiff maintain an action on the
case? Because, as it is said, the loss
or damage is not the natural or legal
consequence of the acts of the de-
fendant. There is the injuria and
the damnum; but it is contended
that the damnum is neither the nat-
ural nor legal consequence of the in-
juria, and that, consequently, the
action is not maintainable, as the
breaking of her contract was the
spontaneous act of Miss W. herself,
who was under no obligation to yield
to the persuasion or procurement of
the defendant. Another case of Vi-
cars v. Wilcocks, 8 East, 1, which,
though it has been brought into ques-
tion, has never been directly over-
ruled, was relied upon as an author-
ity upon this point for the defendant.
That case, however, is clearly dis-
tinguishable from the present upon
the ground suggested by Lord Chief
Justice Tindal in Ward v. Weeks, 7
Bing. 211, 215, that the damage in
that case, as well as in Vicars v. Wil-
cocks, was not the necessary conse-
quence of the original slander ut-
tered by the defendants, but the
result of spontaneous and unauthor-
ized communications made by those
to whom the words were uttered by
the defendants. The distinction is
taken in Green v. Button. 2 Cr.. M. &
R 707, in which it was held the ac-
tion was maintainable against the
defendant for maliciously and wrong-
fully causing certain persons to re-
fuse to deliver goods to the plaintiff
by asserting that he had a lien upon
then\ and ordering these persons to
retain the goods until further orders
from him. It was urged for the de-
fendant in that case that as the per-
sons in whose custody the goods were,
were under no legal oWigation ta
obey the orders of the defendant, it
was a mere spontaneous act of these
persons which occasioned the dam-
age to the plaintitf: but the court
held the notion maintainable tiiough
the defendant did make the claim
as of right, he having done so mali-
ciously, and without any reasonable
cause, and the damage accruing
thereby."
The doctrine of Vicars v, Wilcocks
and cases of that class does not ex-
clude responsibility when the dam-
age results to the party injured
through the intervention of the legal
and innocent acts of third parties, for
92 COMPENSATION. [§ 29.
from her home, against her father's objections, and employing
lier to work in defendant's home, that she should be seduced
by the latter's son.^ The killing of plaintiff's son, without
wilful intent to injure plaintiff, does not give the latter a cause
of action for the breach of a contract on the son's part to sup-
port his father.^ There is no connection between defamatory
statements made respecting one who desires employment and
is required to give a bond to his employer and the refusal of a
company to give such bond because of such statements; be-
tween defendant's wrong and plaintiff's damage the voluntary
act of a third party intervened, and such act was the proxi-
mate cause of the loss of employment.' A claim of damages
for goods frozen because defendant had taken a false and
spurious deed of land, thereby preventing the digging of a
cellar in which to put the goods, cannot be allowed.* Defend-
ant negligently stored oil on a wooden platform of its freight
house in a town, and had done so for such a length of time
that the platform and the ground beneath it had become satu-
rated with oil. A fire was caused by throwing a match upon
the ground under the platform by a person not connected
with the defendant, but who was rightfully on the premises.
It was ruled that the defendant was not liable for the loss of
buildings near the freight house as the result of the fire.^ But
the rule is otherwise if the substance negligently exposed is
liable to ignite spontaneously and produce damage.^
in such instances damage is regarded 87, 60 S. W. Rep. 105S, 83 Am. St 459;
as occasioned by the wrongful cause Gregory v. Brooks, 35 Conn. 437, 95
and not by those which ai'e not Am. Dec. 278; Connecticut Mut. L.
wrongful; as where one who desires Ins. Co. v. New York, etc. R. Co., 25
to make the customer of another be- Conn. 265, 65 Am. Dec. 571.
lieve that the work done for him is 3 McDonald v. Edwards, 20 N. Y.
badly done, and to accomplish that Misc. 523. 46 N. Y. Supp. 672; Pickett
end loosens a shoe put on the custom- v. Wilmington & W. R Co., 117 N. C.
er's horse. In such case the person 616. 23 S. E. Rep. 264, 53 Am. St. 611,
who defames the horseshoer is re- 30 L. R. A. 257.
sponsible to him for the loss of the ^ Cormier v. Bourque, 32 N. B. 283.
patronage which may result from ^ Stone v. Boston & A. R. Co., 171
his act. Hughes v. McDonough, 43 Mass. 536, 51 N. E. Rep. 1, 41 L. R A.
N. J. L. 459, 39 Am. Rep. 603. 794.
1 Stewart v. Strong, 20 Ind. App. ^ Vaughan v. Menlove, 8 Bing. N. CL
44, 50 N. E. Rep. 95. 468.
2 Brink v. Wabash R Co., 160 Mo.
§ 30.] CONSEQUENTIAL DAMAGES FOR TORTS. 93
§ 30. Same subject, A lease of a canal was made by [50]
commissioners of navigation under a statute providing that if
the lessee should permit the work to be out of repair the com-
missioners should give him notice to repair, and on his neglect-
ing to make the repairs they might make them and pay the
expenses out of the tolls. A lock forming part of the canal
fell and detained a barge. In an action for that detention
against the commissioners for neglecting to give notice to the
lessee to repair, it was held that the action would not lie be-
cause the detention was not a damage naturally flowing from
the alleged neglect, it not being shown that if such notice had
been given the lessee would have repaired or that the commis-
sioners would have done so. Pollock, C. B. : "To say that
the damage could be the consequence of the wrongful act or
omission is, in our judgment, to assert a false proposition of
law. The surmise is, — if the notice had been given the repairs
would have been done and the lock would not have fallen in,
and so not giving notice caused the lock to fall in. As we
have said, this is not proved ; but it is not the proximate, nec-
essary or natural result of not giving notice. The not giving
notice is not sufficient to bring about the result; the giving of
it would not be sufficient to hinder it.'" Here the immediate
cause of the detention was the obstruction and want of repair
of the canal ; the alleged wrong of the defendant did not [51]
put the canal out of repair, and as the commissioners were not
absolutely required to do anything but give notice, as a step
towards repair, it could not be assumed as matter of law that
doing so would have caused the repair to be made. The rela-
tion of cause and effect between the wrongful act and the
alleged injurious consequence was not established. It is indis-
pensable that the plaintiff should show not only that he has
sustained ^amftf/e, and that the defendant has committed ?itort,
but that the damage is the clear and necessary consequence of
the tort, and that it can be clearly defined and ascertained.^
1 Walker v. Goe, 3 H. & N. 395. 20 Ky. L. Rep. 171, 45 S. W. Rep. 515,
2 Lamb V. Stone, 11 Pick. 527; Ver- 43 L. R. A. 302, citing the text;
non V, Keys, 12 East, 632; Morgan v. Johnson v. Western U. Tel. Co., 79
Bliss, 2 Mass. Ill; Harrison v. Red- Miss. 58, 29 So. Rep. 787. See Mitch-
den, 53 Kan. 265, 30 Pac. Rep. 325, ell v. Western U. Tel. Co., 12 Tex.
citing the text; Smitha v. Gentry, Civ. App. 262, 33 S. W. Rep. 1016.
94 COMPENSATION. [§30.
An action on the case was brought by a creditor against his
debtor and another for confederating together to prevent the
plaintiff from obtaining security for the payment of his debt;
they were charged with having accomplished that wrong by
removing the debtor's propert}^ from his possession to that of
his confederate, who secured it or its proceeds, and thus pre-
vented its attachment. The plaintiff had obtained judgment,
and the debtor had relieved himself from the execution against
his body by taking the poor debtor's oath, and the debt re-
mained wholly unpaid. The case was proved except the con-
spiracy. It was held that the action could not be maintained.
Among other reasons for this conclusion was the uncertainty
of the plaintiff's damage. Metcalf, J., said : " How could this
plaintiff prove that he suffered any damage from the acts of
the defendant which are averred in the declaration? How
could he prove that he would have secured his debt by attach-
ing the property of his debtor if the defendant had not inter-
meddled with it? Other creditors might have attached it be-
fore him, or it might have been stolen or destroyed while in
the debtor's possession. The fact that the plaintiff has suffered
actual damage from the defendant's conduct is not capable of
legal proof, because it is not within the compass of human
knowledge, and therefore cannot be shown by human testi-
mony. It depends on numberless unknown contingencies
and can be nothing more than a matter of conjecture." ^
The causation between a fire neg- a power of sale contained in a mort-
ligently started and which is sup- gage without a notice to him; he
posed to have been extinguished, but was afterwards induced by the false-
which starts up again, is not severed hood of tlie defendants to assign the
by the non-action of a third person mortgage to one M. for tlieir bene-
af ter the second fire starts. Although fit, and then caused such foreclosure
such failure to act is culpable, it to take place in a manner to avoid
neither adds to the original force notice reaching the plaintiff, who
nor gives it new direction, and hence was compelled to pay $500 to get a
in tracing back the line of causa- deed of the property. The case was
tion it will not be noticed as a potent determined on demurrer against the
agency. Wiley v. West Jersey E. plaintiff. The promise of the mort-
Co., 44 N. J. L. 247. ga-gee was gratuitous, and therefore
1 Wellington v. Small. 3 Cush. 145. neither he nor an assignee would do
In Randall v. Hazelton, 12 Allen, any legal wrong by foreclosing ac-
412, a mortgagee voluntarily prom- cording to the power in the mort-
ised the mortgagor not to act under gage. The damage was held to re-
§31.]
CONSEQUENTIAL DAMAGES FOK TORTS.
95
§ 31. Same subject. A demurrer was sustained to a [52]
declaration which stated that the defendant and a confederate
conspired to and did obtain possession of a portion of the
plaintiff's premises by falsely pretending that it was wanted
suit from the foreclosure and not
from the alleged wrong. " Damages,"
say the court, '"can never be recov-
ered where they result from the
lawful act of the defendant." The
benefit of that gratuitous promise
was not a matter of legal right, and
though it would have been kept but
for the defendant's fraudulent con-
tract, and the plaintiff saved from
the loss which resulted from the
sale, yet that fraud was not action-
able because it did not affect any
legal right; it could not be said to
be an invasion of such a right " to
deprive the plaintiff even by false-
hood of the benefit of this gratuitous
undertaking." The court say: "In
theTunbridge-Wells Dippers' case. 3
Wils. 414, while the court remark
that there was a real damage in de-
priving the plaintiff of some gratuity,
they also say in the same sentence
that the injury was by disturbing
the dippers in the exercise of their
right or employment, which it seems
by some statutes they were entitled
to." Hutchins v. Hutchins, 7 Hill,
104; Burton v. Henry, 90 Ala. 281,
7 So. Rep. 925.
In Bradley v. Fuller, 118 Mass.
239, the court stated the material
allegations of the declaration, which
was held, on demurrer, not to state
a cause of action, to be that the de-
fendant orally represented to the
plamtiff that a corporation of which
he was treasurer, and whose overdue
note the plaintiff then held, owed no
other debts, and had no attachments
upon its property; that the represen-
tation was fraudulently and falsely
made for the purpose of inducing
the plaintiff not to commence suit
■upon his note until the corporate
property could be placed beyond the
reach of attachment by the plaintiff;
that all the property of the company
was afterwards attached and sold on
execution upon another debt; and
that the plaintiff, induced by the
representations not to enforce his
claim by suit, lost his debt against
the company. In one count the
plaintiff .stated that he " was induced
to forbear securing payment of his
note by an attachmant of said prop-
erty, as he might and would have
done but for said false representa-
tion." The court say: "Under the
law as laid down by this court, the
facts stated in these counts do not
show a legal cause of action, or that
the plaintiff has suffered any legal
damage. There is no attachment or
attempt to attach, on the part of the
plaintiff, alleged; it does not appear
that by reason of the alleged repre-
sentation he lost anything which he
ever had. Taking these counts in
the most favorable sense for the
plaintiff, they simply charge that the
plaintiff, induced by the falsehood
alleged, refrained from carrying into
effect an intention to attach; and
that another creditor did attach and
apply the company's property to the
payment of his debt. It must neces-
sarily be uncertain whether the
plaintiff would have attached the
property and applied it to the pay-
ment of his debt if the alleged rep-
resentation had not been made."
It seemed to the author of this
work that this case was erroneously
decided. The law recognizes the
value of the preference which one
creditor by diligence may obtain by
a first attachment of the property
of an insolvent debtor. Its practical
96 COMPENSATION. [§ 31.
for a lawful trade, and tlien set up an illicit still there; that by
falsely pretending, and by divers false and fraudulent means
and devices, they made it appear and be believed that it was
[53] the plaintiff who set up such still and was the proprietor
thereof; that thereby he was convicted of keeping illicit stills.
It was held that the damage was not the natural and proximate
consequence of the defendant's act.^ "Where a trespassing
horse kicked a child, it was held that the injury was not the
natural consequence of the trespass in the absence of evidence
that the defendant knew that the horse was vicious. The
court said to entitle the plaintiff to maintain an action it is
necessary to show a breach of some legal duty due from the
defendant to the plaintiff. And if there was negligence on
the part of the owner of the horse in permitting him to be at
large, it did not appear to be connected with the damage of
which the plaintiff complains. " The owner of a horse must be
taken to know that the animal will stray if not properly se-
cured, and may find its way into his neighbor's corn or pasture.
For a trespass of that kind the owner is, of course, responsible.
[51] But if the horse does something which is quite contrary
to his ordinary nature, something which his owner had no
reason to expect him to do, he has the same sort of protection
that the owner of a dog has, and everybody knows that it is
not at all the ordinary habit of a horse to kick a child on a
highway. It was assumed that the injury to the plaintiff was
caused by the horse having viciously kicked him, as a horse of
ordinary temper would not have done; therefore the plaintiff
was bound to show, and did not, that the defendant knew that
value was illustrated by that case, of law, that no damages can be re-
The debtor was liable to attachment, covered on the basis of frustrating
and had property. The plaintiff al- an intention, the carrying out of
leged that he might and would have which, in the future, is lawful, and
attached it but for the fraudulent rep- would secure an advantage or pre-
resentations. Thecourt, on demurrer, vent a loss. That it maybe proved
held it "necessarily uncertain" that that an intention will be carried out
this purpose would be executed; and where the party has the ability, and
so much so, that the law will not his interest requires it to be executed,
accept the allegation as stating a is legally assumed in a multitude of
provable fact, and it is therefore not cases.
admitted by a demurrer. It certainly i Barber v. Lesiter, 7 C. B. (N. S.)
cannot be maintained, as a matter 175.
§31.]
CONSEQUENTIAL DAMAGES FOR TORTS.
97
the horse was subject to that infirmity of temper." ' In a sub-
sequent case a mare strayed into the plaintiff's pasture and
there, from some unexplained cause, kicked the plaintilFs
horse and broke his leg, and he was necessarily killed. Erie,
C. J.: "The contest at the trial seems to have been whether or
not the mare was of a ferocious or vicious disposition, and
whether the defendant knew it. But I think it was not neces-
sarj' to go into that question, because the act, which upon the
evidence must be presumed to have caused the injury, was not
one which was characteristic of vice or ferocity in the mare in
the ordinary sense. The animal had strayed from its own
pasture, and it was impossible that her owner could know how
she would act when coming suddenly in the night-time into a
field among strange horses. That constitutes the difference
between this case and those relied on by the defendant, and
supports the summing up of the judge when he said it was not
a question of vice or scienter in the ordinary sense." The de-
Expenses incurred by one whose
property has been wrongfully levied
on in trying to find buyers for it are
too remote. Fatheree v. Williams,
13 Tex. Civ. App. 430, 35 S. W. Rep.
324.
1 Cox V. Burbridge, 13 C. B. (N. S.)
480; Jackson v, Smithson, 15 M. & W.
563; Hudson v. Roberts, 6 Ex. 697.
In Dickson v. McCoy, 39 N. Y. 400.
a child of ten years was passing de-
fendant's stable upon the sidewalk
of a populous street, when the de-
fendant's horse came out of the
stable, being loose and unattended,
and, in passing, kicked the boy. The
complaint alleged that the horse was
of a malicious and mischievous dis-
position, and accustomed to attack
and injure mankind, but of this no
proof was made. It was held that
this was not material, that " it is not
necessary that a horse should be
vicious to make the owner respon-
sible for injury done by him through
the owner's negligence. The vice of
Vou 1 — 7
the animal is an essential fact only
when, but for it, the conduct of the
owner would be free from fault," as,
for instance, in the case of a horse,
properly fastened in the highway,
which should kick or bite a passer-by.
In such a case the owner would be
liable only if he had knowledge of
the vicious disposition of the animal,
but where a horse is allowed to run
in the streets of a populous city it is
obviously dangerous to the public,
and the danger is none the less be-
cause the running and kickmg of
the horse are done in a playful mood,
than if prompted by a vicious dis-
position. Mills V. Bunke, 59 App.
Div. 39, 69 N. Y. Supp. 96.
In the absence of the owner of
land his wife directed her child to
drive off a horse trespassing thereon ;
while domg so the hoi"se kicked the
child. The court distinguisiied Cox
V. Burbridge, supra, and sustained a
recovery. Waugh v. Montgomery, 8
Vict. L. R. (law) 290.
98 COMPENSATION. [§ 32.
fendant was held responsible for the mare's trespass, the dam-
asfe not beinij: remote.^
Upon the trial of an action for the enticement of servants
from the employment of another, it was held erroneous to
permit evidence of consequential damages to the effect that
the servants plaintiff first employed had provisions and those
he subso(juently employed to take their places had not, by
which he was compelled to furnish provisions, and, making a
poor crop, such persons were unable to pay him for the pro-
visions furnished out of their share of the crop, by which he
was damaged.^
[55] § 32. Breach of statutory duties. Whenever an ac-
tion is brought for breach of duty imposed by statute the
party bringing it must show that he had an interest in the
performance of the duty and that the duty was imposed for
his benefit. But where the duty was created or imposed for
the benefit of another and the advantage to be derived to the
party complaining of its breach from its performance is merely
incidental and no part of the design of the statute, no such
right is created as forms the subject of an action. A private
pei'son might make a profit by the performance of the duty,
but the breach of that duty, while it would naturally deprive
him of that benefit, is not a wrong to him. The loss of such
a benefit is not in a legal sense an injury. Though actual,
it is not a legal consequence of the delinquency. Thus, a post-
master bound by an act of congress to advertise uncalled-for
1 Lee V. Riley, 18 C. B. (N. S.) 722; curing otlier labor, the damages re-
Barnes V. Chapin, 4 Allen, 444, 81 suiting to crops from delay in plant-
Am. Dec. 710; Dunckle v. Kocker. ing, or, if planted, from failure to
11 Barb. 387; Lyons v. Merrick, 105 work them, and such kindred dam-
Mass. 71. ages as plaintiff could not have pre-
2 Salter v. Howard, 43 Ga. 601. vented by reasonable diligence and
Under a statute which makes the which are attributable to the de-
person who contracts with, decoys fendant's act. McCutchin v. Taylor,
or entices away any person in the 11 Lea, 259.
employ of another who was entitled The damages which may be recov-
to the services of the person enticed ered for enticing away the servant
liable for all such damages as the of another include the profits of the
original employer may reasonably servant'slabor. and the loss sustained
sustain by the loss of the labor of by the plaintiff's inability to improve
such employee, it is competent to his property in consequence. Smith
consider the reasonable cost of pro- v. Goodman, 75 Ga. 198.
^§ 33.] CONSEQUENTIAL DAMAGES FOR TOKTS, 99
letters in a newspaper of a particular description commits no
legal wrong- to the proprietor of such a paper when he omits
such publication or gives the business to a paper of a different
description.^ If the non- performance of a duty results in
injury to a third person the delinquent party is responsible to
him. Thus, where the owner of a water channel or cut, made
pursuant to authority of the state and open for the use of all
vessels whose owners complied with the prescribed conditions,
refused to allow to a tug, necessarily employed to tow a vessel
through it, access to the vessel, he was responsible to her owner
for damage resulting from the discharge of her cargo by light-
ers.- It is the natural result of locating a pest-house within a
forbidden distance of a residence that the disease affecting
patients in the pest-house will be communicated to persons liv-
inof or visiting in the neighborhood.^ " Whenever an act is en-
joined or prohibited by law, and the violation of the statute is
made a misdemeanor, any injury to the person of another,
caused by such violation, is the subject of an action; and it is
sufficient to allege the violation of the law as the basis of the
right to recover, and as constituting the negligence complained
of,"^ One who violates a statute by carrying a revolver is lia-
ble to any person injured by him therewith, though such per-
son consented to the other's carrying and use of the revolver.*
The defendant while violently beating a horse slipped and un-
intentionally injured the plaintiff. Because the beating was
■contrary to a statute forbidding cruelty to animals, there was
liabilitj'' to the plaintiff.^
§ 33. Injury through third person. "Where the plaintiff
is injured by the defendant's conduct to a third person it is
too remote, if he sustains no other than a contract relation to
such third person, oris under contract obligation on his account,
and the injury consists only in impairing the ability or incli-
1 Strong V. Campbell, 11 Barb. 145 (Ky.). See McKay v. Henderson,
135. 71 S. W. Rep. 625 (Ky.).
2 Buffalo Bayou Ship Canal Co. v. ^ Messenger v. Pate, 43 Iowa, 443.
Mil by, 63 Tex. 492, 51 Am, Rep. 608. See § 4.
3 Henderson v. O'Haloran, — Ky. 5 Evans v. Waite, 83 Wis. 286, 53
. 24 Ky. L. Rep. 995, 20 S. W. Rep. N. W. Rep. 445.
662; Clayton v. Henderson, 44 S. W. 6 Qsborne v. Van Dyke, IIB Iowa,
Rep. 667, 44 L. R A. 474; Henderson 557, 85 N. W. Rep. 784, 54 L. R. A.
V. Clayton, 57 S. W. Rep. 1, 53 L. R. A. 367.
100 COMPENSATION. [§ 33.
nation of such third person to perform his part, or in increas-
ing the plaintiff's expense or labor of fulfilling such contract,
unless the wrongful act is wilful for that purpose.^ A., who
had ao-reed with a town to support for a specific time and for
a fixed sum all the town paupers, in sickness and in health,
was held to have no cause of action against S. for assaulting
and beating one of the paupers, whereby A. was put to in-
creased expense. The damage was too remote and indirect.-
A stockholder in a bank cannot maintain an action against its
directors for their negligence in so conducting its affairs that
its whole capital stock is lost and the shares therein rendered
worthless, nor for the malfeasance of the directors in delegat-
ing the whole control of the affairs of the bank to the presi-
dent and cashier, who wasted and lost the whole capital.^ The
[56] direct injury is to the corporation, and only remotely to
the stockholders. The latter have a remedy, in theory, though
often inadequate, in the power of the corporation as such to
obtain redress for injuries done to the common property by
the recovery of damages.* A party who by contract was, he
furnishing the raw material, to have all the articles to be
manufactured by an incorporated company, was held not en-
titled to maintain an action against a wrong-doer who by tres-
pass stoi)ped the company's machinery so that it was prevented
from furnishing, under that contract, manufactured goods to
so great an extent as it otherwise would have done.^ A cred-
itor can maintain no action against one who has forged a note
by which the dividends from an estate were diminished.^ An
insurance company cannot recover from a wrong-doer who
causes the loss insured against the money paid to satisfy such
loss.' A man drafted into the military service deserted, and
1 Brink v. Wabash R. Co., 160 Mo. < Id.
87, 60 S. W. Rep. 1058, 83 Am. St. 459; 5 Dale v. Grant, 34 N. J. L. 143.
Gregory v. Brooks, 35 Conn. 437, 95 *• Cunningham v. Brown, 18 Vt.
Am. Dec. 278; Lumley v. Gye, 2 EI. & 123, 46 Am. Dec. 140.
Bl. 216; McKay v. Henderson, 71 S. "^ Rockingham Ins. Co. v. Bosher,
W. Rep. 625 (Ky.). 39 Me. 253, 63 Am. Dec. 618: Connec-
2 Anthony v. Slaid, 11 Met. 290. ticut, etc. Ins. Co. v. New York, etc.
3 Smith V. Hurd, 12 Met. 371, 46 R. Co.. 25 Conn. 26.5, 65 Am. Dec. 571.
Am. Dec. 690. See Bloom v. National See PacificPine Lumber Co. v. West-
United Benefit Savings & L. Co., ern U. Tel. Co., 123 Cal. 428, 56 Paa
152 N. Y. 114, 46 N. E. Rep. 166. Rep. 103.
§ 34.] CONSEQUENTIAL DAMAGES FOK TORTS. 101
another who had been drawn as an alternate to serve in such
a contingency, and was consequently obliged to and did serve,
was held to have no legal claim against the deserter for the
loss and injury of doing so.' But where a tradesman or me-
chanic is defamed in his business or avocation by a false and
fraudulent device practiced upon one of his customers, the per-
son who is guilty of such fraud is responsible for a loss of
patronage flowing therefrom, although the customer was also
wronged.^ The exception indicated in the opening sentence of
the section is illustrated by a case in which the defendant
falsely claimed and represented himself to be a superintendent
of wharves and harbor-master, and as such to have issued an
order directing the captain of a vessel moored at the plaintiff's
wharf to remove therefrom. At the time the order was given
the captain was discharging, and the plaintiff was receiving, a
cargo from the vessel. The plaintiff owned and kept such
wharf for the purpose of letting it for hire. By means of
such acts the captain w^as induced to remove from the plaint-
iff's wharf and discharge his cargo at another wharf. The
right to recover was adjudged if the defendant acted with a
malicious and fraudulent design to injure the plaintiff.^
§ 31. Liability as affected by extraordinary circumstances.
There must not only be a legal connection between the injury
and the act complained of, but such nearness in the order of
events and closeness in the relation of cause and effect that the
influence oi the injurious act may predominate over that of
other causes, and concur to produce the consequence or be
traced to thotje causes.* To a sound judgment must be left
each particular case. The connection is usually, but not always,
enfeebled and the influence of the injurious act controlled, where
the wrongful act of a third person intervenes, or where any
new agent, introduced by accident or design, becomes more
powerful in producing the consequence than the first injurious
act. The requirement that the consequences to be answered
for should be natural and proximate is not that they should [57]
1 Jemmison v. Gray, 29 Iowa, o37. 3 Gregory v. Brooks, 35 Conn. 437,
2 Hughes V. McDonough, 43 N. J. 95 Am. Dec. 278.
L. 459, 39 Am. Rep. 603. ^Coyle v. Baum, 3 Okla. 695, 716,
41 Pac. Rep. 389, quoting the text.
102 COMPENSATION". [§ 35.
be such as upon a calculation of chances would be found likely
to occur, nor such as extreme prudence would anticipate, but
only that they should be such as have actually ensued one from
another, without the occurrence of any such extraordinary con-
juncture of circumstances, or the intervention of such an extraor-
dinary result as that the usual course of nature should seem
to have been departed frora.^ The general rule is that a de-
fendant is not answerable for anything beyond the natural,
ordinary and reasonable consequences of his conduct.^ We are
not to link together as cause and effect events having no prob-
able connection in the mind, and which could not, by prudent
circumspection and ordinary thoughtfulness, be foreseen a&
likely to happen in consequence of the act in which we are en-
gaged. It may be true that the injury would not have occurred
without the concurrence of our act with the event which im-
mediately caused the injury, but we are not justly called to
suffer for it unless the other event was the effect of our act, or
was within the probable range of ordinary circumspection. If
one's fault happens to concur with something extraordinary
and therefore not likely to be foreseen he will not be answer-
able for such unexpected result.''
§35. Illustrations of tlie doctrine of the preceding sec-
tion. An injury by negligence was done to wool by wetting
it, rendering it necessary to take it out of the original packages
1 Harrison v, Berkley, 1 Strobh. 525, Grew v. Stone, s^ipra; Fairbanks v.
549, 47 Am. Dec. 578. This case is Kerr, 70 Pa. 86, 10 Am. Rep. 664;
criticised in a note on p. 830, 36 Am. People v. Mayor, 5 Lans. 524; Lee v.
St., which criticism is approved in Burlington, 113 Iowa, 356, 86 Am. St.
Meyer v. King, 72 Miss. 1, 12, 16 So. 379, 85 N. W. Rep. 618; Nelson v.
Rep. 245, 35 L. R A. 474. Crawford, 122 Mich. 466, 81 N. W.
2 Bennett v. Lockwood. 20 Wend. Rep. 335, 80 Am. St. 577; Deisenrieter
223, 32 Am. Dec. 532; Grain v. Petrie, v. Kraus-Merkel Malting Co., 97 Wis.
6 Hill, 523, 41 Am. Dec. 765; McGrew 279, 286, 72 N. W. Rep. 735; Mil-
V. Stone, 53 Pa. 436; Big Goose & waukee. etc. R Co. v. Kellogg, 94
Beaver Ditch Co. v. Morrow, 8 Wyo. U. S. 469. 475: Consolidated Electric
537, 547, 59 Paa Rep. 159, 80 Am. St Light & P. Co. v. Koepp, 64 Kan. 735,
955, citing the text. 67 Pac. Rep. 608.
'Stone V. Boston & A. R Co., 171 Some of the cases which deny the
Mass. 536, 51 N. E. Repu 1, 41 L. R. A. right to recover for mental suflfering
7)4; Meyer v. King, 72 Miss. 1, 8, 16 or nervous shock do so on the ground
So. Rep. 245, 35 L. R. A. 474, citing that the injury is too remote. See
the text; Roach v. Kelly, 194 Pa. 24, § 21 et seq.
44 AtL Rep. 1090. 75 Am. St. 685; Mc-
§ o5.] CONSEQUENTIAL DAMAGES FOR TOKTS. 103
in which it had been imported. A few weeks afterwards an
act of congress was passed under which, if the wool had re-
mained in the original packages, the plaintiff would have been
entitled to a return of duties. It was held that the loss of the
right to claim a return thereof was not recoverable as a proxi-
mate consequence of the negligence. It was remarked that if
the market value of the wool in the original packages had been
higher by reason of its being entitled to debenture under the
laws existing at the time when the injury was done, the plaintiff
would have had a right to an increase of damages in con- [58]
sequence of being obliged to break the packages; so if the
market value had been enhanced at that time by reason of a
general expectation that an act of congress would be passed
allowing a return of duties.' In trespass for taking two
horses, a wagon and double harness, the declaration stated as
special damage occasioned thereby that when it occurred the
plaintiff was moving with his family and household goods to
another state, and was employing his horses, wagon and har-
ness for that purpose; that he was thereby prevented from
pursuing his journey, and put to great expense for the support
of himself and family; that when the property was taken the
roads were frozen and the traveling good ; but while it was
detained the frost left the ground and the roads became so
muddy that it was quite impossible for the plaintiff to prose-
cute his journey, by reason whereof he was detained with his
family and prevented from putting in his crops in the state to
which he was moving. It was held erroneous to admit evi-
dence of these various circumstances. The court recognized
the rule that to be recovered the damages must be the natural
and proximate consequence of the act complained of; but it
was said " no case can be found where a mere accident or event
not resulting naturally from the act done by the defendant has
been held sufficient to constitute a valid claim for damages."^
The law is correctly stated, but in other cases there has been
recovery for some of the damages here denied. In the plaintiff's
1 Stone V. Coflman, 15 Pick. 297. consequence it is damaged in excess
2 Vedder v. Hildreth, 2 Wis. 4'27. of the value of the horses, he may
If the owner of horses illegally recover for the injury to the crop.
seized is unable to procure other Steel v. Metcalf. 4Tex. Civ. App. 813,
means to cultivate his crop, and in 23 S. W. Rep. 474.
104 COMPENSATION, [§ 35.
predicament increased expenses and loss of time were necessary
r(.>sults of the taking of the property. In an English case ^ the
plaintiff took passage to Australia in the defendant's vessel,
but he was not allowed to sail on account of a mistaken belief
that he had not paid his entire fare. The error was found out
immediately and he was offered a passage in a ship which sailed
in a week after the first. Instead of going by it, however, he
remained in England to a later time to sue the defendant. It
was held that the expense of his keep till trial could not be
allowed as damages, since he might have gone earlier if he had
wished. The suicide of one who was injured on a railway
train eight months after the injuries were sustained, though
they disordered his mind and body, is not a result which might
naturally and reasonably be expected to follow. The court say:
" The argument is not sound which seeks to trace this imme-
diate cause of the death through the previous stages of mental
aberration, physical suffering and eight months' disease and
medical treatment to the original accident on the railroad.
Such a course of possible or even logical argument would lead
back to that ' great first cause least understood ' in which the
train of all causation ends." ^ The fact that a passenger train
three-fourths of an hour behind its schedule time was blown
over by a windstorm which struck a portion of the track on
which the train would not have been but for the delay, does
not make the company liable for an injury thereby sustained
by a passe nger.'*
A convict, aged thirty-seven years, had been in the peniten-
tiary twelve years, and had escaped therefrom five times. lie
was in vigorous health, immoral, of vicious habits, violent
passions and prone to desire for sexual intercourse, all of
which facts his custodians knew. While at large, through
their fault, the convict committed rape. Such act, it was
ruled, was not one which the custodians ought to have fore-
1 An.sett V. Marshall, 22 L. J. (Q. B.) the wrong done him, the jury may
118. determine whether the injury w-as
2 Scheffer V. Railroad Co., 105 TJ. S. the proximate cause of death. Tur-
249. See § 36. ner v. Nassau Electric R. Co., 41 App.
If the injury which a deceased per- Div. 218, 58 N. Y. Supp. 490.
son received precipitated a malady ^ ]\icClary v. Sioux City & P. R. Ca,
and he would not have had it but for 3 Neb. 44, 19 Am. Rep. 631.
§ 36.] CONSEQUENTIAL DAMAGES FOR TORTS. 105
seen as reasonably probable, and they were not liable for it.^
Because of the icy condition of a chute used for loading stock
an animal thereon slipped and fell, knocking down a second,
which fell upon and injured plaintiff. It was no defense that
this connected series of causes produced the injury.- Though
a snow storm causes animals to travel toward and into a dan-
gerous excavation, the existence of the latter and the neglect
of the person responsible therefor are the proximate cause of
the loss of the animals.' Making an assault on a woman wait-
ing in a railroad station at night in consequence of which her
child of seven years becomes frightened, runs out on the
tracks, and is killed by a train, is the proximate cause of the
death.* While standing on a platform waiting for a train, the
plaintiff was injured by being struck by the dead body of a
person who was killed while attempting to cross the tracks of
the railroad near where the plaintiff was. Assuming that neg-
ligence on the part of the railroad company was shown, there
was no liability.^ The Georgia court reached a different con-
clusion where the company's engineer acted recklessly and
wantonly.®
§ 36. Liability of carriers for consequential damages;
extraordinary circumstances. The recent leading Ameri-
can case on the liability of carriers of passengers for conse-
quential damages was decided in 1882.^ Although the de-
cision was not unanimous it has had a noticeable influence in
courts which have since been called upon to consider similar
questions. The principal facts involved are not essentiall}''
different from those in an English case decided in 1875;^ but
the rules of law applied are in strong contrast. This is in part
accounted for by the fact that in the Wisconsin case the action
1 Henderson v. Dade Coal Co., 100 5 Wood v. Pennsylvania R. Co., 177
Ga. 568, 28 S. E. Rep. 251. 40 L. R. A. Pa. 806, 35 Atl. Rep. 699, 35 L. R. A.
95: Hullinger v. Worrell, 83 111. 220. 199, 55 Am. St. 728, followed in Ev-
2Kincaid v. Kansas City, etc. R. ansville. etc. R, Co. v. Welch, 25 Ind.
Co., 62 Mo. App. 365. App. 308, 58 N. E. Rep. 88.
» Big Goose & Beaver Ditch Co. v. « Western & R. Co. v. Bailey, 105 Ga.
Morrow, 8 Wyo. 537, 59 Pac. Rep. 159, 100, 31 S. E. Rep. 547.
80 Am. St. 955. " Brown v. Chicago, etc. R. Co., 54
*McGehee v. McCarley, 33 C. C. A. Wis. 342, 11 N. W. Rep. 356, 911.
29, 91 Fed. Rep. 462. 8Hobbs v. London, eta R. Co., L.
R 10 Q. B. la
lOG
COMPENSATION.
[§36.
was held to be in tort, while the English case was considered
as one for broach of the contract. In the former the plaintiffs
were husband and wife. They had been the defendant's pas-
sengers, and were directed to leave its train at a point three
miles from M., their destination, being told that that place
was reached. When they disembarked it was dark; a freight
train stood on a side-track; there were no lights visible, and no
platform on which to alight. There was a station-house near,
but it was hid from their view by the freight train. The
plaintiffs did not know their location, but supposed that they
were one mile nearer M. than the}'' were; they started thither
expecting to find a house in which they might remain, but did
not find one until they were within one mile of M., when they
concluded to go on rather than to seek shelter at the house, it
being a considerable distance from the track. It was late at
night when they reached M. and Mrs. B. was quite exhausted.
She was pregnant at the time, and during that night suffered
severe pains which continued for more than two months, when
a miscarriage resulted and inflammation set in. The jury
found that her sickness was caused by the walk, that the
plaintiffs were not negligent in taking that walk, but were
compelled to take it as the result of the defendant's wrongful
act. The first question determined was that the action was in
tort for the negligence and not upon the contract to carry,
notwithstanding the complaint recited that the relation be-
tween the parties was a contract relation, and that the defend-
ant " wholly disregarded its duty in the premises, and its con-
tract and obligations to and with the plaintiffs." ^ The court,
1 This view of the nature of the ac-
tion is different from that entertained
in Hobbs v. London, etc. R. Co., L. R.
10 Q. B. Ill (compare McMahon v.
Field, 7 Q. B. Div. 591), where it was
held that an action resting on facts
■which are quite like those in the
principal case was upon contract, and
that damages resulting from the
walk taken by the plaintiff to reach
his home and .sickness consequent
thereupon could not be reco%ered.
Tlie ca.se referred to is disapproved
in Evans v. St. Louis, etc. R Co., 11
Mo. App. 463, 472; Cincinnati, etc. R.
Co. V. Eaton, 94 Ind. 474, 48 Am. Rep.
179.
The rule declared in the Wisconsin
case as to the form of the action is
in harmony with Sloane v. Southern
California R. Co., Ill Cal. 668, '62 L.
R A. 193, 44 Pac. Rep. 320; Head v.
Georgia, etc. R. Co., 79 Ga. 538. 11
Am. St. 454, 7 S. E. Rep. 217; Seals v.
Augusta Southern R Co., 102 Ga, 817.
29 S. E. Rep. 116; Carsten v. Northern
Pacific R Co., 44 Minn. 454. 20 Am.-
St. 589, 47 N. W. Rep. 49. 9 L. R A..
§ 30.] CONSEQUENTIAL DAMAGES FOR TOETS. 107
Taylor, J., writing the opinion, said that the doctrine is clearly
established that one who commits a trespass or other wrong i&
liable for all the damage which legitimately flows directly
therefrom, whether such damages might have been foreseen
by the wrong-doer or not. Had the defendant wrongfully
placed the plaintiffs off the train in the open country, where
there was no shelter, in a cold and stormy night, and on ac-
count of the state of health of the parties, in their attempts ta
find shelter, they had become exhausted and perished, it would
seem quite clear that the defendant ought to be liable. Its
wrongful act would be the natural and direct cause of their
deaths, and it would be a lame excuse for the defendant that
if the plaintiffs had been of more robust health they would not
have perished or have suffered any material injury. It was
no excuse that the female plaintiff's condition was not known
to the railroad employees.^ By wrongfully placing the parties
in the position in which they were the defendant was also
liable for the resulting injury, whether it was the immediate
result of its act or of theirs in endeavoring to escape there-
from. The case was within the rule that where an efficient
adequate cause is found it must be considered the true cause
unless some other cause independent of it is shown to have in-
tervened between it and the result.^ In strong contrast with
688; Coy v. Indianapolis Gas Co., 146 Cincinnati, etc. R. Co. v. Eaton, 94
Ind. 655, 46 N. E. Rep. 17, 36 L. R. A. Ind. 474, 48 Am. Rep. 179. To the
535; Chicago, etc. R. Co. v. Spirk, 51 same effect are Winkler v. St. Louis.
Neb. 167, 70 N. W. Rep. 926; L. & N. etc. R. Co., 21 Mo. A pp. 99; Augusta
R. Co. V. Storms, 15 Ky. L. Rep. 333 & S. R. Co. v. Randall, 79 Ga. 304, 4
(Ky. Super. Ct.); Alabama & V. R, S. E. Rep. 764; Evans v. St. Louis,
Co. V. Hanes, 69 Miss. 160, 13 So. etc. R. Co., 11 Mo. App. 463; Fitz
Rep. 246; Toronto R. Co. v. Grinsted, patrick v. Great Western R. Co., 12
24 Can. Sup. Ct. 570. Up. Can. Q. B. 645; Baltimore City
1 Sloans V. Southern California R. P. R. v. Kemp, 61 Md. 74; Davis v.
Co., supra; Mann v. Boudoir Car Co., Standard Nat. Bank, 50 App. Div.
4 C. C. A. 540, 54 Fed. Rep. 646, 21 L. 210, 63 N. Y. Supp. 764; Ehrgott v.
R. A. 289; East Tennessee, etc. R. Co. Mayor, 96 N. Y. 264, 48 Am. Rep. 622;
V. Lockhart, 79 Ala. 315. Toronto R. Co. v. Grinsted, 24 Can.
2 Brown v. R. Co., supra, has been Sup. Ct. 570; Yazoo, etc. R. Co. v.
approved, as to the substantial point Aden, 77 Miss. 382, 27 So. Rep. 385.
in it, in Sloane v. R. Co.; Coy v. Gas See Smith v. British, etc. Co., 86 N. Y.
Co.; Chicago, etc. R. Co. v. Spirk, 408; Putnam v. Nevp^ York, etc. R.
supra; Terre Haute & I. R. Co. v. Co., 47 Hun, 439; g?< 48. 49.
Buck, 96 Ind. 346, 49 Am. Rep. 168; An agent viho wrongly informs a
108
COMPENSATION.
[§36.
the case stated is one decided in 1873/ in which it is held that
a female passenger who suffers injuries through a carrier's
neo'lio'ence cannot recover for such as are the result of the
plij^sical condition she is in, as where illness follows arrested
menstruation, although the negligence produces that con-
dition. It is well observed concerning this case that it is un-
sustained by authority and is supported by neither the prin-
ciples of law nor humanity .^ If a passenger wrongfully put
off a train at a flag-station, when it is dark and a storm is
raging, and at a great distance from his starting point and
destination, is injured by falling through a cattle-guard while
on his way to the nearest station, the jury may decide whether
the result is attributable to such wrong.^
If a shock or injury to the nervous system is occasioned by
the wrongful ejection of a passenger from a car it will be re-
garded as a physical injury, and the act which caused the
shock will be taken to be the proximate cause of the injury if
bodily suffering is the result of the shock.* If a passenger who
informs a conductor when she boards his train that friends will
meet her at her destination is carried beyond it and obliged to
sit up all night in a car into which cold is admitted, and to
change cars during the night and leave the train at an early
hour in the morning, the jury may well find that the carrier
is responsible for her subsequent sickness.'^ One who has
bought a ticket and is waiting in a station to take a train is a
passenger,^ and if the carrier's gateman, knowing that such
passenger that a train she is about to
take will make close connections
with the train of another road at a
designated place is not bound to
foresee that she would procure a con-
veyance, and, in the face of a storm,
in a delicate state of health, drive
over a rough road to her father's
house, and that a miscarriage would
result. Fowlkes v. Southern R Co.,
96 Va. 743, 33 S. E. Rep. 464.
1 Pullman Palace Car Co. v. Barker,
4 Colo. 344, 34 Am. Rep. 89.
- Brown v. Chicago, etc. R. Co.,
Terre Haute & I. R. Co. v. Buck,
Ehrgott v. Mayor, siipra.
3 Evans V. St. Louis, etc. R. Co., 11
Mo. App. 463; Winkler v. Same, 21
id. 99. See Patten v. Chicago & N.
R. Co., 32 Wis. 524; and compare
Lewis V. Flint, etc. R. Co., 54 Mich.
55, 19 N. W. Rep. 744.
*Sloane v. California Southern R
Co., Ill Cal. 668, 33 L. R. A. 193, 44
Pac. Rep. 330.
5 Missouri, etc. R. Co. v. Hennesey,
20 Tex. Civ. App. 316, 49 S. W. Rep.
917; Grimsted v. Toronto R. Co., 21
Ont. App. 578.
•'Grimes v. Pennsylvania Co., 36
Fed. Rep. 73; Warren v. Fitchburg
R. Co., 8 Allen, 227; Wells v. New
§ 3G.] CONSEQUENTIAL DAMAGES FOR TOETS. 109
person is ill, is so waiting, and has bought his ticket, fails to
comply with his request to notify him of the arrival of his
train, and after the train has gone directs a policeman to eject
such person from the station, saying that " he was not in a con-
dition of mind to go on any train," and such person, after being
ejected, and while wandering about the tracks near the station,
is run over by a train and killed, the carrier is responsible,' If
the agent of an express company receives a package for trans-
portation with notice that it contains medicine for a sick per-
son, and that it is important that it be sent at once, the carrier
is liable for the physical and mental injury which its delay in
forwarding the medicine may occasion to the sick person; but
not for the mental suffering of the husband on account of his
wife's condition. 2 Where a carrier had left a locked car
marked "powder" near its warehouse, in which a fire broke
out, and the cit}'' fire department refrained from making efforts
to put out the fire through reasonable fear of the explosion of
the powder supposed to be in the car, notwithstanding the car
was empty, the negligence in so leaving the car is the proxi-
mate cause of the loss of property in the warehouse, it being
reasonably certain that the fire would have been controlled
but for the apprehension of the firemen.^ On the other hand,
a carrier is not presumed to contemplate that an accident may
produce insanity in one of its passengers, no bodily harm being
sustained.* To recover consequential damages, resulting from
being ejected from a train, the plaintiff must show that his
subsequent conduct in attempting to reach his destination was
reasonable.* The failure to stop a train at a proper place does
not justify a passenger in leaping off, unless he is invited to do
so by the carrier's agent and the attempt was not obviously
dangerous.^ In the absence of notice that a passenger whom
a conductor has promised to awaken was to be met at a sta-
York Central, etc. R. Co., 25 App. L. R. A. 774; Scheffer v. Railroad Co.,
Div. 365, 49 N. Y. Supp. 510. 105 U. S. 249; St. Louis, etc. R. Co. v.
1 Wells V. R. Co., supra. Bragg, 69 Ark. 402, 86 Am. St. 206,
2 Pacific Exp. Co. v. Black, 8 Tex. 64 S. W. Rep. 226.
Civ. App. 363, 27 S. W. Rep. 830. 5 Chicago, etc. R. Co. v. Spirk, 51
SHardman v. Montana Union R. Neb. 167, 70 N. W. Rep. 926.
Co , 27 C. C. A. 407, 83 Fed. Rep. 88. « Burgin v. Richmond & D. R. Co.,
* Haile v. Texas & Pacific R. Co.. 115 N. C. 673, 20 S. E. Rep. 473.
9 C, C. A. 134, 60 Fed. Rep. 557, 23
110
COMPENSATION.
[§37.
tion on another road by her father and carried thence to her
sister's, where her sick child would receive medical treatment,
there is no liability for her mental suffering caused by failure
to meet her father and anxiety respecting the child though the
^conductor failed to keep his promise.^
If the negligence of a carrier results in an injury to a pas-
senger by which his system is rendered susceptible to disease
and less able to resist it when he is attacked by it, and death
results, the injury is the proximate cause thereof, although the
disease is to be regarded as an intervening agency, and the
malady which attacked him was prevalent in the community.^
The court observe that if it " were to undertake to declare any
other rule we should be involved in inextricable confusion, for
it is clear that the passenger who suffers injuries of a serious
character is entitled to some damages, and it is impossible for
any one to pronounce, as a matter of law, at what point the
injury flowing from the wrong terminated. The only possible
practicable rule is that the wrongdoer whose act is the mediate
cause of the injury shall be held liable for all the resulting
damages, and that the question of whether his wrong was the
mediate cause is one for the jury."^
[50] § 37. Intervening cause. Goods carried in a canal
boat were injured by the wrecking of the boat, caused by an
extraordinary flood which would not have been encountered
1 Chicago, etc. R. Co. v. Boyles, 11
Tex. Civ. A pp. 522, 33 S. W. Rep. 247.
This case is of doubtful authority.
Compare it with Missouri, etc. R. Co.
V. Hennesey. 20 Tex. Civ. App. 316,
49 S. W. Rep. 917.
2 McCoy V. Indianapolis Gas Co.,
146 Ind. 655, 667, 46 N. E. Rep. 17, 36
L. R A. 535, quoting the text.
3 Bradshaw v. Lancashire, etc. R.
Co., L. R. 10 C. P. 109: Baltimore
Passenger R. Co. v. Kemp, 61 Md. 619,
48 Am. Rep. 134: Oliver v. La Valle,
36 Wis. 592; Sloan v. Edwards, 61
Md. 89; Delie v. Chicago, etc. R. Co.,
51 Wis. 400, 8 N. W. Rep. 265: Beau-
champ v. Saginaw Mining Co., 50
Mich. 163, 45 Am. Rep. 30, 15 N. W.
Rep. 65; Baltimore & P. R. Co. v.
Reaney, 42 Md. 117; Lyons v. Second
Avenue R. Co., 89 Hun, 374. 35 N. Y.
Supp. 372, affirmed without opinion,
115 N. Y. 654; Purcell v. Lauer, 14
App. Div. 33, 43 N. Y. Supp. 988;
Keegan v. Minneapolis, etc. R. Co.,
76 Minn. 90, 78 N. W. Rep. 965; Terra
Haute &; L R. Co. v. Buck, 96 Ind.
346, 49 Am. Rep. 168. The opinion in
the last case reviews a large number
of cases, including Ginna v. Second
Avenue R. Co., 8 Hun, 494. affirmed
67 N. Y. 596; Brown v. Chicago, etc.
R. Co., 54 Wis. 342, 11 N. W. Rep.
356, 911: Sauter v. New York, etc. R.
Co., 66 N. Y. 50, 23 Am. Rep. 18.
Compare Scheffer v. Railroad Co.,
105 U. S. 249, and other cases cited
in n. 4, p. 109.
§ 37.] CONSEQUENTIAL DAMAGES FOK TOKTS. Ill
bat for a retarded passaf^e in consequence of the carrier em-
ploying a lame horse. This fact was so unlikely to conduce
to such an event that the defendant was not liable.^ A carrier
was guilty of a negligent delay of six days in transporting wool
which, while in his depot at the place of destination a few days
after, was submerged by a sudden and violent flood. The
flood was the proximate cause of the injury and the delay the
remote cause.^ The same rule has been applied where there
was negligent delay in dispatching goods and they were lost
while in the carrier's hands by flood, sudden storm or other im-
mediate cause; the damage occurring without his fault, he
was not responsible.' In similar cases in I^ew York and other
states a different conclusion has been reached. In one it was
held that when a carrier is intrusted with goods for transpor-
tation, and they are injured or lost in transit, the law holds
him responsible. Pie is only exempted by showing that the
injury was caused b}'" an act of God or the public enemy; and
to avail himself of such exemption he must show that he was
himself free from fault. His act or neglect must not concur
and contribute to the injury. If he departs from the line of
his duty and violates his contract, and while thus in fault, and
in consequence of that fault, the goods are injured by the act
of God, which would not otherwise have caused the injury, he
is not protected,'' There was unreasonable delay on the part
of the carrier in forwarding goods, and while they were in a
railroad depot at an intermediate point they were injured by
an extraordinary flood; the carrier was liable because the
goods were exposed to the flood by his fault.^ These cases re-
1 Morrison v. Davis, 20 Pa. 171; Mc- 5 Read v. Spaulding, 30 N. Y. 630,
Clary v. Sioux City & P. R. Co., 3 86 Am. Dec. 426: Wald v. Pittsburg,
Neb. 44, 19 Am. Rep. 631. etc. R. Co., 162 111. 545, 44 N. E. Rep.
2 Denny v. New York Central R. 888, 53 Am. St. 332, 35 L. R. A. 356,
Co., 13 Gray, 481, 74 Am. Dec. 645. citing McGraw v. Baltimore & O. R.
3 Railroad Co. v. Reeves, 10 Wall- Co.. 18 W. Va. 361, 41 Am. Rep. 696;
166; Daniels v. Ballentine, 23 Ohio Dening v. Grand Trunk R. Co., 48
St. 532, 13 Am. Rep. 264; Hoadley v. N, H. 455, 2 Am. Rep. 267; Read v.
Northern Transportation Co., 115 St. Louis, etc. R. Co., 60 Mo. 199;
Mass. 304, 15 Am. Rep. 106. Williams v. Grant, 1 Conn. 487, 7 Am.
^See McAlister v. Chicago, etc. R. Dec. 235; Davis v. Garrett, 6 Bing.
Co., 74 Mo. 351, 4 Am. & Eng. R Cas. 617; Crosby v. Fitch, 12 Conn, 410, 31
'210. Am. Dec. 745; Rodgers v. Central
112
COMPENSATION.
[§
lating to carriers or others held to an absolute responsibility,
[GO] except as relieved by showing that the injury was caused
by the act of God, are not wholly controlled by the considera-
tion of the nearness of the injury to the fault. Davies, J.,
said: "It is to be observed that the foundation of this exemp-
tion is that the party claiming the benefit and application of
it must be without fault on his part." He refers to several
cases.^ "These cases," he continues, "clearly establish the
rule that the carrier cannot avail himself of the exception
to his liability which the law has created, unless he has been
free from negligence or fault himself. The policy of the law
is to hold him to a strict liability; and this policy, for wise
and just purposes, ought not to be departed from. But when
the injury occurs from a cause which the carrier could not
guard against nor protect himself from, from such an event the
[61] law excuses him, but it only does it when he himself is not
in fault and is free from all negligence."- It has been held
Pacific R. Co., 67 Cal. 606. 8 Pac. Rep.
377; Higgins v. Dewey, 107 Mass.
494, 9 Am. Rep. 63; Philadelphia &
R. R. Co. V. Anderson, 94 Pa. 360.
1 Davis V. Garrett, 6 Bing. 716. In
this case the plaintiff put on board
the defendant's barge lime to be
conveyed from M. to L. The master
of the barge deviated unnecessarily
from the usual course, and during
the deviation a tempest wetted the
lime, and the barge thereby taking
fire the whole was lost, and he was
held liable. Tindal, C. J., observed
that no wrong-doer can be allowed
to apportion or qualify his own
wrong, and that as a loss had act-
ually happened whilst his wrongful
act was in operation and force, and
which was attributable to such act,
he could not set up as an answer to
tiie action the bare possibility of a
loss if the act had never been done.
It miglit admit of a different con-
struction if he could show not only
that the same loss might have hap-
pened, but that it must have hap-
pened, if the act complained of bad
cot been dona Charleston Steam-
boat Co. v. Bason, 1 Harp. 262; Camp-
bell V. Morse, id. 468; Bell v. Reed, 4
Bin. 127. 5 Am. Dec. 398; Hart v.
Allen, 2 Watts, 114; Hand v. Baynes.
4 Whart. 204: Williams v. Grant,
Crosby v. Fitch, supra.
2 In Read v. Spaulding, 30 N. Y.
630. 639, 86 Am. Dec. 426.
See last section. In Parmalee v.
Wilks, 22 Barb. 539, the plaintiff, the
owner of a raft of saw logs lying at
Port Maitland, Canada, made a con-
tract with the defendants, the own-
ers of a steamboat, by which it was
agreed that they would come to Port
Maitland on the next Tuesday morn-
ing with the steamboat, and proceed
up the river about five miles t > D.,
and there land her passengers, and
immediately return to Port Maitland
and take the plaintiff's raft in tow,
and tow it to Black Kock, a distance
of about forty miles, which the
steamboat could traverse in about
fourteen hours with the raft in tow.
The usuhI time for the arrival of the
steamboat at Port Maitland, upon her
§37.]
CONSEQUENTIAL DAilAGES FOR TORTS.
113
that if an administrator deposits money of an estate in a bank
and allows it to remain after the time when it should, by punct-
ual performance of his duty, have been distributed and in the
hands of those entitled to it, and the bank fails and the money
is lost, he and his sureties are liable therefor, and the sum so
lost is the measure of damages.^
It is immaterial what is the intermediate cause between the
act complained of and the injurious consequence, if such act
is the eificient and proximate cause, and the consequence was
the probable result. There may be intervening operations of
nature, acts produced by the volition of animals or of human
beings, innocent acts of the injured party or of third persons,
and even tortious acts of the latter, and the chain of cause and
effect not be necessarily broken, or the result rendered remote.
The test is not to be found in any arbitrary number of inter-
vening events or agents, but in their character, and in the nat-
ural and probable connection between the w^rong done and the
trip up, was 3 o'clock in the morn-
ing, and it generally took about
two hours to proceed to D., land her
passengers and return to Port Mait-
land. On Tuesday morning the
weather was fair, and the lake and
river were calm, and so continued
through the day. But the boat failed
to call for the raft according to the
agreement. In the evening, about
sunset, she returned, and took the
raft in tow for Black Rock. During
the night a storm arose, and the raft
went to pieces and was scattered
along the shore. Held, that had the
defendants entered upon the per-
formance of the contract at the time
specified, and used proper diligence
in attempting to perform it, the
plaintiff would have taken all the
risk of storms or other casualties.
But as they delayed for some four-
teen hours to enter uj)on its perform-
ance, and as such delay resulted in
the raft being overtaken by the
storm, they were responsible for tbe
consequences; that when they took
ihe raft in tow in the evening instead
Vol. 1 — 8
of the morning, as agreed, they took
the risk of any storm that should
arise after a suflHcient time had
elapsed for towing the raft to Black
Rock, if they had commenced the
towing in the morning. The plaint-
iff had a right to fix the time in the
contract, and make it an essential
part of it, considering the dangers of
navigation upon the lake, and the
peculiar nature and condition of his
property; he might determine when
the voyage should commence, and
make a special agreement to that
effect. And upon the non-perform-
ance of the agreement, at the time
specified, the party in default was
liable for the damages resulting from
causes which would not have arisen
had the agreement been performed.
Michaels v. New Yorli Central R. Co.,
30 N. Y. 564, 86 Am, Dec. 415; Maghee
V. Camden & A. R. Co., 45 N. Y. 514,
6 Am. Rep. 134; Condict v. Grand
Trunk R. Co., 54 N. Y. 500; Rawson
V. Holland, 59 N. Y. 611, 17 Am. Rep.
394.
1 McNabb v. Wixom. 7 Nev. 16a
114
COMPENSATION.
injur^^' In entering a slip a ferryboat, through negligence,
struck the side of the rack with such violence as to cause the
passengers to sway, in consequence of which one of their num-
ber fell and was injured. The producing cause was negligence,
and there was no interruption thereof by what the injured
person did after his fall.^ One who builds a back lire to save
his property from a fire negligently caused by another does
only what he ought to do, and if the fire he started ruins the
property it was designed to save there is no break in the chain
of cause and effect as to the wrong-doer, if it is clear that the
property would have been burned, had the second fire not
been set.* Allowing a long ladder to rest outside a sidewalk
in a village street and against a building was the proximate
cause of an injury sustained by a passer-by through its fall in
consequence of an unusual wind.*
[62] § 38. Same subject. The primary cause may be the
proximate cause of a disaster though it may operate through
successive instruments, as an article at the end of a chain may
be moved by a force applied at the other end, that force being
the proximate cause of the movement. The question always
is, was there an unbroken connection between the wrongful
act and the injury, a continuous operation ? Did the facts con-
stitute a continuous succession of events, so linked together as
to make a natural whole; or was there some new and inde-
pendent cause, disconnected from the primary fault and self-
operating, which produced the injury? The inquiry must be
answered in accordance with common understanding.* The
1 McDonald v. Snelling, 14 Allen,
296; Vandenburgh v. Truax, 4 Denio,
464; Kellogg v. Chicago, etc. R. Co.,
26 Wis. 223. 7 Am. Rep. 69; Murdock
V. Walker, 43 III. App. 590; Northern
Pacific R. Co. V. Lewis, 2 C. C. A.
446, 51 Fed. Rep. 658.
2 Cash V. New York Central, etc.
R Co., 56 App. Div. 473, 67 N. Y.
Supp. 823.
3 McKenna v. Baessler, 86 Iowa,
197, 53 N. W. Rep. 103, 17 L. R A.
310; Owen v. Cook, 9 N. D. 184, 81 N.
W. Rep. 285, 47 L. R A. 646.
* Moore v. Townsend. 76 Minn. 64,
78 N. W. Rep. 880. See Parmenter v.
Marion, 113 Iowa, 297, 85 N. W. Rep.
90; Trapp v. McCiellan, 68 App. Div.
362, 74 N. Y. Supp. 130.
s Milwaukee, etc. R, Co. v. Kellogg,
94 U. S. 469.
In Lowery v. Manhattan R Co., 99
N. Y. 158, 1 N. E. Rep. 608. 52 Am.
Rep. 12, 12 Daly, 431, fire fell from a
locomotive on an elevated road upon
a horse and its driver. The horse
ran, and, resisting an attempt to get
him against a curbstone, ran over it
and injured the plaintiff, who was
on the sidewalk. The driver's effort
§ 38.]
CONSEQUENTIAL DAMAGES FOR TORTS.
115
act of giving or selling liquor to a man in a stupidly drunken
condition, with knowledge thereof, no duress, deception or
persuasion being used,* although a statutory misdemeanor, is
only the remote cause of his death; his act in drinking it is
the proximate and intervening cause.^ The voluntary intoxica-
tion of a person who has attained the age of discretion, but for
which the injury resulting from the sale of chloroform to him
in violation of law would not have happened, breaks the chain
of cause and effect.^ The sale of poison without the label re-
quired b}^ statute docs not make the vendor liable for the death
of a man who took it while intoxicated. His acts in buyino-
and taking it were thc'proximate cause of his death; they were
independent acts, which intervened and broke all connection
to stop the horse by turning him
from the course he was taking was,
whether prudent or not, a continu-
ation of the result of the defendant's
negligence, and its natural and prob-
able consequence, as was the injury
inflicted upon the plaintiff.
A fire started by defendant's neg-
ligence, after spreading one mile and
a quarter to the northeast, near the
plaintiff's property, met a fire, having
no responsible origin, coming from
the northwest. After the union,
fire swept on from the northwest to
and into plaintiff's property, causing
its destruction. Either fire, if the
other had not existed, would have
reached the propertj' and caused its
destruction at the same time. Held,
that the rule of liability in case of
joint wrong- doers does not apply;
that the independent fire from the
northwest became a superseding
cause, so that the destruction of the
property could not, with reasonable
certainty, be attributed in whole or
in part to the fire having a responsi-
ble origin; that the chain of respon-
sible causation was so broken by the
fire from the northwest that the
negligent fire, if it reached the prop-
erty at all, was a remote and not the
proximate cause of the loss. After
the fire swept everything of a com-
bustible character clean on both
sides of defendant's right of way,
plaintiff's horses, that were running
at large,went upon the railway track
and were killed by a passing train
without negligence on the part of
the train men. The right of way had
never been fenced as required by
law. Held, that the rule of absolute
liability, under the statute requiring
railway companies to fence their
tracks, applies only where the loss
is produced, in whole or in part, by
reason of the failure to fence; that
in the circumstances stated the chain
of causation reaching from the fail-
ure to fence was broken by the fire
that would unquestionably have de-
stroyed the fence if it had existed,
so that the failure to fence cannot
be said to have contributed to the
entry of the horses upon the railway
track. Cook v. Minneapolis, etc. R.
Co., 98 Wis. 624, 74 N. W. Rep. 561,
40 L. R. A, 457 (as stated in the sylla-
bus by Marshall, J.).
1 See McCue v. Klein, 60 Tex. 168,
48 Am. Rep. 260.
2 King V. Henkie, 80 Ala. 505, 60
Am. Rep. 119.
3 Meyer v. King, 72 Miss. 1, 16 So.
Rep. 245, 35 L. R. A. 474.
116 COMPENSATION. [§ 39.
between the omission to label and the death.' The owner of a
ferryboat must foresee that horses thereon may take fright at
the sound of whistles from other boats, and guard against such
horses backing into the water, and if he fails to provide a suf-
ficient rail to prevent that result his neglect is the efficient
cause of the loss of the horses.^ One whose private way over
the land of another is obstructed by a fence built under a claim
of right, and who proceeds to have such way laid out as a
public way, cannot recover the expense of so doing in a suit
for the obstruction of the way.' Any wrongful act which ex-
poses one to injury from rain, heat, frost, fire, water, disease,
the instinctive or known vicious disposition or habits of animals,
or any other natural cause, under circumstances which render
it probable that such an injury will occur, is a primary, efficient
and proximate cause if harm ensues."* Many such cases have
been referred to in the preceding pages. Persons who dam
water-courses are presumed to have knowledge of the fact that
natural causes operate to fill up their beds and cause water to
overflow adjacent lands; they cannot avoid liability for the
resultant consequences because of such fact.-^ If a positive tort
is committed by unnecessarily leaving an obstruction in the
bed of a natural water-course the parties who commit the
wronff must take notice of the violence of rainfalls in that
locality.^
§ 39. Acts of injured party; fraud and exposure to peril.
The act of the injured party may be the more immediate
cause of his injury; yet, if that be an act which was as to him
reasonably induced by the prior misconduct of the defendant,
and without any concurring fault of the sufferer, that miscon-
duct will be treated as the responsible and efficient cause of
the damage. Cases of fraud where, by some artifice or false
representation, the plaintiff has been induced to incur obliga-
iRonkerv. St.John, 2lOhioCt Ct. Ala. 453, 3 So. Rep. 813; Vogel v.
39. McAuliflfe, 18 R. L 79, 31 Atl. Rep. 1.
2Sturgis V. Kountz, 165 Pa. 358, 30 5 Mississippi & T. R. Co. v, Archi-
Atl. Rep. 976, 27 L. R A. 390. bald, 67 Miss. 38, 7 So. Rep. 212; El-
3 Holmes v. Fuller, 68 Vt. 207, 34 der v. Lykens Valley Coal Co., 157
Atl. Rep. 699. Pa. 490, 27 Atl. Rep. 545, 37 Am. St.
< Western & A. R, Co. v, Bailey, 742.
105 Ga. 100, 31 S. E. Rep. 547: Ala- « Brink v. Kansas City, etc. R. Co.,
bama, etc. R, Co. v. Chapman, 83 17 Mo. App. 177, '~02.
I
§ 39.] CONSEQUENTIAL DAMAGES FOR TORTS. 117
tions, part with his property, or place himself in any predica-
ment by which he suffers loss, are apt illustrations. The act
by which he binds himself, pays money or alters his situation
is his own, but superinduced by the superior vicious will of
the defrauding party; and the latter is responsible for all the
loss which ensues. A single instance will suffice. W. obtained
goods from the plaintiff on credit, upon the representation of
R. that "W. was responsible and worthy of credit and owed
very little if anything. At the time of the sale and delivery
of the goods W. was insolvent and R, knew it. R. himself
had a judgment agamst W. for a considerable amount dock-
eted only a month previous to the sale. On this judgment R.
caused an execution to be issued and levied upon the [63]
goods so obtained from the plaintiff before they reached W.
It was held that for these representations R. was liable to the
plaintiff for the value of the goods sold to W.^
If the plaintiff is placed in a situation of danger to person
or property by the defendant's misconduct and is injured in
a reasonable endeavor to extricate himself, such misconduct
is the proximate cause of the injury, though it proceed more
immediately, and it may be exclusively, from the plaintiff's
own act. Thus, if through the default of a coach proprietor
in neglecting to provide proper means of conveyance a pas-
senger be placed in so perilous a situation as to render it pru-
dent for him to leap from the coach, whereby his leg is
broken, the proprietor will be responsible in damages, al-
though the coach was not actually overturned,^ Nor is a person
iBean v. Wells, 28 Barb. 466. N. Y. 158; Filer v. New York Cen-
2 Jones V. Boyce, 1 Stark. 493; In- tral R. Co., 49 N. Y. 47, 10 Am. Rep.
galls V. Bills, 9 Met. 1; McKinney v. 337; Smith v. St. Paul, etc. R. Co., 30
Neil, 1 McLean, 540; Frink v. Potter, Minn. 169, 14 N. W. Rep. 797; Dim-
17 111. 406; Buel v. New York, etc. mitt v. Hannibal, etc. R Co., 40 Mo.
R Co., 31 N. Y. 314, 88 Am. Dec. 271; App. 654; Knowlton v. Milwaukee
McPeak v. Missouri Pacific R. Co., City R. Co., 59 Wis. 278, 18 N. W.
128 Mo. 617, 30 S. W. Rep. 170; Ep- Rep. 17; Knapp v. Sioux City & P.
land V. Missouri Pacific R. Co., 57 R. Co., 65 Iowa, 91, 21 N, W. Rep. 198,
Mo. App. 147; Southwestern R Ca 54 Am. Rep. 1, 71 Iowa, 41, 32 N. W.
V. Paulk, 24 Ga. 356; Wilson v. Rep. 18; Schumaker v. St. Paul & D.
Northern Pacific R Co., 26 Minn. R Co., 46 Minn. 39, 48 N, W. Rep.
278, 3 N. W. Rep. 33o, 37 Am. Rep. 559, 12 L. R A. 257; Budd v. United
410; Oliver v. La Valle, 36 Wis. 592; Carriage Co., 25 Ore. 314, 35 Pac.
Twomley v. Central, etc R Co., 69 Rep. 660, 27 L. R A. 279; Nichols-
118 COMPENSATION. [§ 39.
chargeable with contributoiy negligence — that is, with mak-
ing his own act in part the efficient cause — for acting erro-
neously in a position of sudden danger in which he is placed by
the negligence or fault of another. If, therefore, a stage-coach
is upset by the negligence of the driver, and a passenger therein,
under the impulse of fear, acts in a manner which results in
an injury to himself, where, had he remained calm and kept
his place, he would have escaped harm, he will not thereby
be precluded from recovering damages of the carrier.^ A case
arose in Massachusetts in which the immediate cause of the
injury was the act of the plaintiff, and yet a defect in a high-
w^ay was held to be the proximate and efficient cause thereof,
thou":h other circumstances contributed. The allesred defect
was a culvert extending across the highway and a hole at one
end of the culvert. As the plaintiffs (husband and wife) were
driving together in their wagon along the traveled part of the
[64] highway between the hours of eight and nine in the even-
ing, a band of musicians, a little way in advance, commenced
to pla3% by which the horse was alarmed; this happened near
the alleged defect in the highway. In the course of the inci-
dent the wife was taken up from the ground at or near the
culvert, seriously injured; but the precise manner in which
she came to the ground, whether by being forcibly thrown
from the wagon, by leaping from it, or by the two actions
concurring, and whether the wagon did or did not come into
contact with the hole, were questions of fact. There was a
variance between the proof and the declaration for which the
judgment was reversed, but this instruction was approved:
" When a party is traveling on a highway and there is a defect
burg V. Second Avenue R. Co., 11 N. Co., 151 Mass. 463, 24 N. K Rep. 402, 7
Y. Misc. 433, 32 N. Y. Supp. 130; L. R. A. 843; Connell v. Prescott, 20
Baker v. North East Borough, 151 Ont, App. 49; EUick v. Wilson, 58
Pa. 234, 21 At!. Rep. 1079; Hookey v. Neb. 584, 79 N. W. Rep. 152; Galves-
Oakdale, 5 Pa. Super. Ct. 404; Vallo ton, etc. R. Co. v. Zantzinger, 92
V. United States Exp. Co., 147 Pa. Tex. 365, 44 L. R. A. 553, 48 S. W.
404, 14 L. R. A. 743, 23 Atl. Rep. 594, Rep. 563; Postal Tel. Cable Co. v.
30 Am. St 741; Quinn v. Shamokin, Hulsey, 132 Ala. 444, 453, 31 So. Rep.
etc. R. Co., 7 Pa. Super. Ct. 19; Wash- 537; Texas & P. R. Ca v. Watkins.
ington, etc. R. Co. v. Hickey, 5 D. C. 26 S. W. Rep. 760 (Tex. Civil Ap-
App. Cas. 430; South Covington & peals). See § 23a.
C. R. Co. V. Ware, 84 Ky. 267, 1 S. W. i Id. ; Stokes v. Saltoustall, 13 Pet.
Rep. 493; Cody v. New York, etc. R. 181.
§ 40.] CONSEQUENTIAL DAMAGES FOR TORTS. 119
in it, and the party, under apprehensions of an imminent peril,
by the near approach of his carriage to the defect in the high-
way, but without or previous to actual contact with the de-
fect, leaps from his carriage and is injured thereby, then the
rule of law is this: it is an element of reasonable care on the
part of the plaintiff. If the plaintiff be placed, by reason of
the defect in the highway and his approach thereto, in such a
situation as obliges him to adopt the alternative of a danger-
ous leap, or to remain at a certain peril, and he leaps and is
injured, then, all the conditions of liability being fulfilled, he
may recover damages of the party responsible for the repair
of the highway." ' A lad aged ten years was forcibly put on
a freight train and carried five miles. After being released
he ran most of the distance to his home, was afterward taken
sick and became permanently crippled. The jury found that
this was the result of the trespass; a majority of the court re-
fused to interfere with the verdict.^ It is a rule of general
application that the concurrence of an infant plaintiff's nat-
ural indiscretion with the defendant's negligence will not re-
lieve the latter from responsibility for an act which results in
injury to the former.'
§ 40. Act of third person. The innocent or culpable act
of a third person may be the immediate cause of the injury,
and still an earlier wrongful act may have contributed so ef-
fectually to it as to be regarded as the efficient, or at least con-
current and responsible, cause.^ The noted squib case is [65]
iLund V. Tyngsboro, 11 Cush. 563; Atterton, L. R. 1 Ex. 239; Lynch v.
Flagg V. Hudson, 142 Mass. 280, 56 Nurdin, 1 Q. B. 29.
Am. Rep. 674, 8 N. E. Rep. 42. See < Burrows v. March, etc. Gas Co.,
§26. K R 5 Ex. 67; Lannen v. Albany
2 Drake V. Kiely, 93 Pa. 492. Gas Co., 44 N. Y. 459; Guille v.
'Pittsburg, etc. R. Co. v. Caldwell, Swan, 19 Johns. 381, 10 Am. Dec. 234;
74 Pa, 421; East Saginaw City R. Co. Scholes v. North London R. Co., 21
V. Bohn, 27 Mich. 503; Holly v. Bos- L. T. (N. S.) 835; Pastene v. Adams, 49
ton Gas Co., 8 Gray, 133, 69 Am. Dec. Cal. 87; Vandenburgh v. Truax, 4
233; Stillson v. Hannibal, etc. R Co., Denio, 464, 47 Am. Dec. 268; Lowery
67 Mo. 671; Lane v. Atlantic Works, v. Manhattan R Co., 99 N. Y. 158, 53
111 Mass. 136; Sheridan v. Brooklyn Am. Rep. 12, 1 N. E. Rep. 608, 12 Daly.
& N. R Co., 36 N. Y. 39, 93 Am. Dec. 431; Lewis v. Terry, 111 Cal. 39, 43
490. See Singleton v. Eastern Coun- Pac. Rep. 398, 52 Am. St. 146, 31 L.
ties R, Co., 7 C. B. (N. S.) 287; Hughes R A. 220; Grimes v. Bowerman, 93
V. Macfle, 2 H. & C. 744; Nangan v. Mich. 258, 52 N. W. Rep. 751, quoting
120 COMPENSATION. [§ 40.
an example.' The defendant threw a squib into the market-
house where it first fell; a person, to save himself, threw it off,
and where it then fell it was again thrown for like reason, and
struck and injured the plaintiff. It was held that the defend-
ant's act so directly caused the injury that trespass would lie.
A defendant stopped his team, and negligently left it in a
business street without being hitched or otherwise secured. It
started and ran violently along the street and collided with
another team, which, though properly hitched at the side of
the street, was frightened, broke from its fastenings and ran
across the street against a horse and sleigh belonging to the
plaintiff, injuring the former. It appeared that while the
defendant's horses were running and before they had collided
with the other horses, a crowd of persons came into the street,
hallooed and raised their hats for the purpose of stopping the
horses, which caused them to swerve from the course they were
taking, and in this manner they came in contact with the sec-
ond team. The law was said to be well settled that when the
plaintiff has been injured in his person or property by the
wrongful act or omission of the defendant or through his
culpable negligence, the fact that a third party by his wrong
or negligence contributed to the injury does not relieve him
the text; Chicago City R. Co. v. the purpose of getting off the car the
Cooney, 95 Hi. App. 471; Postal Tel. child was pushed therefrom. Such
Cable Co. v. Zopfi, 93 Tenn. 369, conduct was not a justification to the
24 S. W. Rep. 633; Choctaw, etc. R. defendant for its negligence in plac-
Co. V. Halloway, 114 Fed. Rep. 458, ing the child on the platform.
52 C. C. A. 260, and cases cited; Cole- In Macer v. Third Avenue R. Co.,
man v. Bennett, — Tenn- — , 69 S. 47 N. Y. Super. Ct. 461. the plaintiff's
W. Rep. 734. injuries were increased by an effort
The connection between the sale made by the defendant's servant to
of unlabeled poison and the death of prevent them. The original negli-
a child who takes it is not broken gence was held to be the proximate
because its mother left the poison cause.
within the infant's reach, she not A workman who is injured by a
knowing it to be poison, nor by the defective instrument used by a fellow
infant's act in taking it. Wise v. workman has a cause of action
Morgan, 101 Tenn. 273, 48 S. W. Rep. against the master. Ryan v. Miller,
971, 44 L. R. A. 548. 12 Daly, 177.
In Sheridan v. Brooklyn & N. R. i Scott v. Shepherd, 2 W. Bl. 892;
Co., 36 N. Y. 39, 93 Am. Dec. 490, a Owen v. Cook. 9 N. D. 134, 81 N. W.
child was on the platform of a car Rep. 285, 47 L. R A. 640; Bradley v.
by direction of the conductor. By Andrews, 51 Vt. 530.
the rusliing of another passenger for
§ 40.] CONSEQUENTIAL DAMAGES FOR TOKTS. 121
from liability. Ileferrinp^ to the facts, it was observed: "The
running away, from the starting of the defendant's team till
the collision, was a single transaction; and whatever influence
the interposition of the crowd had in occasioning the collision,
it was not the sole cause; the running away, which occurred
through the defendant's negligence, was, in part at least, the
occasion of it; both causes, therefore, in the most favorable
view for the defendant, must have contributed to it; and as
the defendant is responsible through his negligence for one of
the agencies through which the collision occurred, under the
rule we have stated, he is liable." Again: "All the conse-
quences wiiich actually resulted in this case from the running
away of the defendant's team might, we think, reasonably
have been expected to occur from the running away of any
team under similar circumstances in the principal business
street of a town; and the running away of the defendant's
team was the efficient cause of the injury to the plaintiff's [66]
horse because it put in operation the force which was the im-
mediate and direct cause of the injury." ^ In another case a
team of horses, attached to a truck and unattended in a street,
were stopped, after going a few yards, by a stranger, who, in
trying to drive them to where they had been left, drove the
truck against a push cart standing in the street, overturned
the cart and injured the plaintiff. The negligence of the person
who had charge of the horses was the proximate cause of the
injury. They should not have been left in the middle of the
•carriage way obstructing travel, besides subjecting other trav-
elers to danger. The condition which authorized the by-
stander to stop the horses also authorized him to drive them
to a position where they would cease to be an obstruction and
a menace to travel. A danger to be fairly anticipated from
leaving horses unattended in a public street is that, if they
start to run off, the persons who attempt to stop them may be
careless or ignorant of the management of horses and thus
jeopardize the safety of people on the highway. In such cases
so leaving the horses is the proximate cause of the accident.^
1 Griggs V. Fleckenstein, 14 Minn. E. D. Smith, 413; Pearl v, Macauley,
81, 100 Am. Dec. 199; Billman v. In- 6 A pp. Div. 70, 39 N. Y. Supp. 472.
dianapolis, etc. R. Co., 76 Ind. 166, 40 -^Williams v. Koehler, 41 App. Div.
Am. Rep. 230; McDonald v. Snelling, 426, 58 N. Y. Supp. 863.
14 Allen, 292; McCahill v. Kipp, 2
122 COMPENSATION. [§ 40.-
An assessor of a town altered an assessment after it had been
perfected and lodged with another officer, and after his power
over it had ceased; he altered it in such a manner that the
property of the plaintiff was rated at a higher sura. The se-
lectmen made out a rate-bill by which the plaintiff was charged
with an increased amount and procured a tax warrant which
they placed in the hands of the collector. The plaintiff refus-
ing to pay the illegal portion of the tax, the selectmen, with a
full knowledge of all the facts, directed the collector to levy and
collect it. The levy was made, the plaintiff then paid the tax
and afterwards brought an action on the case against the
assessor for the injury. The jury were rightly instructed that
the action of the selectmen in directing the levy, although it
might make them liable, would not affect the right of the plaint-
iff to recover against the defendant for the wrono^ful altera-
tion and he was entitled to recover for the injury resulting
from the levy.^ x\n officer who makes a false return of non est
to a summons is not relieved from liability because an order for
service by publication intervened between his act and a judg-
ment by default. Such order was the natural result of such re-
turn, and the further action of the court was the legitimate
consequence of it.^ It is negligence to leave a railroad turn-
table in such condition that it may be revolved by children;^
and the negligence continues so as to render the owner liable
for an injury caused to a child by the revolving of the table by
other children.* A person who has the management and con-
trol of a public place of amusement, which he invites the pub-
lic, on payment of an admission fee, to attend and at which he
sells to his customers intoxicating liquors, who sells to one in
attendance there liquor in such quantity as to make him drunk
and disorderly, well knowing that when in that condition he
is likely to commit assaults upon others, without provocation
or cause, is bound to exercise reasonable care to protect his other
1 Bristol Manuf. Co. v. Gridley, 28 * Nagel v. Missouri Pacific R. Co.,
Conn. 201, 27 id, 221, 71 Am. Dec. 56. 75 Mo. 653: Boggs v. Same, 18 Mo.
estate V. Finn, 87 Mo. 310, revers- App. 274; Morrison v, Kansas City,
ing 11 Mo, App. 400. etc. R. Co., 27 id. 418; Gulf, etc. Ry.
3Koons V. St. Louis, etc, R. Co., 65 Co. v. McWhirter, 77 Tex. 356, 19 Am.
Mo. 592. St, 755, 14 S, W. Rep. 26.
§ 4 ] CONSEQUENTIAL DAMAGES FOR TORTS. 123
patrons from the assaults and insults of such person, and for a
failure to so do is liable to a person assaulted by him.^
§ 41. Same subject. The subject under consideration is
well illustrated by those cases in which a party has suffered
a special injury at the hands of third persons in consequence
of the speaking of slanderous words. "Where the injurious act
of the third person is shown with the requisite certainty to
have been the consequence of the defendant's speaking such
words the action has been sustained.^ In case for slanderous
Avords by reason of which the plaintiff was turned out of her
lodgings and employment, it appeared that the defendant com-
plained to E., the mistress of the house and his tenant, that
her lodgers, of whom the plaintiff was one, behaved improp-
erly at the windows; and he added that no moral person would
like to have such people in his house. E. stated in her evi-
dence that she dismissed the plaintiff in consequence of the
words, not because she believed them, but because she [67]
was afraid it would offend her landlord if the plaintiff re-
mained. The action was held maintainable, the special dam-
ages, which were its gist, being the consequence of the slan-
derous words used. The witness' statement that she did not
dismiss the plaintiff because she believed the words spoken
was not allowed to defeat the action. Lord Denman, C. J.,
said: "It would be speculating too finely on motives, and such
a disposition in the court would too often put it in the power
of the unwilling witness to determine a cause against the
plaintiff. The proper question is whether the injury was sus-
tained in consequence of the slanderous words having been
used by the defendant."^ But the injury must be the natural
and proximate consequence. Damage caused by the repeti-
tion of the words by a third person who heard them uttered
by the defendant is too remote,'' unless the latter authorized or
suggested their repetition, or there was some duty on the hearer
to repeat them.^ Such a spontaneous and unauthorized cora-
1 Mastad v. Swedish Brethren, 83 7 Bing. 211; Batetnan v. Lyall, 7 C.
Minn. 40, 85 N. W. Rep. 913; Romnel B. (N. S.) 638; Williams v. Hill, 19
V. Schambacher, 120 Pa. 579, 11 Atl. Wend. 305.
Rep. 779. 3 Knight v. Gibbs, 1 Ad. & E. 43.
- Fuller V. Fenner, 16 Barb. 833; * Ward v. Weeks, 7 Bing. 211.
Hallock V. Miller. 3 Barb. 630; Moody 5 Adams v. Kelly, Ry. & Moo. 157;
V. Baker, 5 Cow. 351; Ward V. AVeeks, Parkes v. Prescott, L. R. 4 Ex. 169*
124:
COMPENSATION.
[§41.
munication, it is said, cannot be considered as tbe necessary
consequence of the original uttering of the words.^
If the injury inflicted is not the reasonable and natural result
of a wrongful act of the defendant, but was caused by such
act of a third person, though it was remotely induced by de-
fendant's conduct, he is not liable.^ Thus, in an action by one
engaged in the business of butchering for selling diseased sheep
as sound and healthy, it appeared that the plaintiff had en-
gaged one G. to take some of the mutton which might be on
hand and sell it; Init in consequence of a report that the plaint-
iff had purchased the defendant's diseased sheep, G. refused to
perform his contract. It was held that the defendant was not
[68] liable for G.'s refusal, nor for damages suffered by the
plaintiff in consequence of his customers refusing to deal with
him by reason of that report.* In an action against several per-
sons, some of whom had sold the plaintiff's husband liquors on
the day of his death and others of whom had done so previously,
and were charged with having caused him to become an habit-
ual drunkard, death was held to be the result of the sales last
made; and the fact that the liquor last obtained was drank be-
cause he was an habitual drunkard did not make those who
had antecedently sold him liquor jointly liable with the other
defendants, because the latter's intervening acts were inde-
pendent and the proximate cause of the wrong.* This prin-
ciple does not apply where the intervening act of a third per-
son is not direct, wilful or criminal, as where a person who is
intoxicated is run over by a train while lying on a track situ-
ated between his home and the place where he procured the
liquor which produced that condition."* If there intervenes
Kendillon v. Maltby, Car. & M. 403;
Deny v. Handley, 16 L. T. (N. S.) 263:
Schoepflin v. Coffey, 163 N. Y. 13,
56 N. E. Rep. 502, and cases cited;
Hastings v. Stetson, 126 Mass. 329,
30 Am. Rep. 683; Elmer v. Fessenden,
131 Mass. 359, 5 L. R A. 724, 24 N. E.
Rep. 208; Haehl v. Wabash R Co.,
119 Mo. 325, 24 S. W. Rep. 737.
1 Id. See Riding v. Smith, 1 Ex.
Div. 91; Kelly v. Partington, 5 B. &
Ad. 645; Morris v. Langdale, 2 B. &
P. 284; Ashley V. Harrison, 1 Esp.48;
Pilmore v. Hood, 5 Bing. N. C. 97;
Allsop V. Allsop, 5H. & N. 534; Bent-
ley V. Reynolds, 1 McMull. 16, 36 Am.
Dec. 251; Underhill v. Welton, 33
Vt. 40; cb. 24.
a Ward V. Weeks, 7 Bing. 211.
sCrain v. Petrie, 6 Hill, 522, 41 Am.
Dec. 765; Butler v. Kent, 19 Johns.
223, 10 Am. Dec. 219.
^Tetzner v. Naughton, 12 111. App.
148. See Shugart v. Egan, 83 IlL 56.
5 Schroeder v. Crawford, 94 111. 357;
Emory v. Addis, 71 111. 273.
§ 4-2.] CONSEQUENTIAL DAMAGES FOR TORTS. 125
between defendant's act or omission a wilful, malicious and
criminal act committed by a third person, which act defendant
had no reason to apprehend, the connection between the orig-
inal wrong and the result is broken.^
§ 4:2. Same subject. "Where the immediate cause of the
injury is the wrongful act of a third person, the injured party
has, of course, an action against hira; and this, in some early
cases, was thought to bar an action against any antecedent
actor more remotely responsible; but it now seems to be set-
tled that the liability of the more immediate party does not
relieve any other party whose act can properly be treated as
the efficient and proximate or concurrent cause. A vendor of
property, who had been paid for it, was induced by the de-
fendant's false and malicious representation that he had a lien
on it and was entitled to control its custody, to refuse to de-
liver it, whereby the purchaser suffered injury ; he was held
entitled to his action although he had a remedy on his con-
tract against the vendor. Knowingly making a false claim of
lien was the gravamen of the action, and the special damage
alleged, namely, the non-delivery of the property, was suffi-
ciently connected with the wrongful act to support the action.^
In one case it appeared that the defendant, being about to sell
a public house, falsely represented to B., who had agreed to
purchase it, that the receipts were £180 a month; B. having,
to the knowledge of the defendant, communicated this repre-
sentation to the plaintiff, who became the purchaser instead of
B., it was held that an action would lie for the circuitous deceit
practiced.'
The Indiana court announced a St. 685; White v. Conly, 14 Lea. 51.
rule contrary to that stated in the In the last case W. and C. quarreled
text in Krach v. Heilman, 53 Ind. and fought; during the fight W.'s
517; Collier v. Early, 54 Ind. 559. But son stabbed C. and caused his death,
these cases are much restricted by This was done without the knowl-
Dunlap V. Wagner, 85 Ind. 529, 44 edge of W.
Am. Rep. 42. and are in effect over- 2 Green v. Button, 2 Cr., M. & R.
ruled by Terre Haute & I. R. Co. v. 707.
Buck, 96 Ind. 346, 355, 49 Am. Rep. 3 Piimore v. Hood, 5 Bing. N. C. 97.
168. Bosanquet, J., thus stated the facts
iShugart v. Egan, 83 III. 56; Mars and the grounds of the defendant's
V. Delaware & H. Canal Co., 54 Hun, liability: "It appears that the de-
625, 8N. Y. Supp. 107; Roach v. Kelly, fendant entered into a contract of
194 Pa. 24, 44 AtL Rep. 1090, 75 Am. sale of a public house with a person
126
COMPENSATION.
[§42.
[69] A stage-coach by the negligence of the driver was pre-
cipitated into a dry canal; the lock-keeper thereafter negli-
gently opened the gates of the canal and a passenger was
drowned therein. Under Lord Campbell's act ^ the Irish
court of queen's bench held that the death of the passenger
was "caused" by the negligence of the driver. O'Brien, J.,
said : " The precipitation of the omnibus into the lock was cer-
tainly one cause of her death, inasmuch as she would not have
drowned but for such precipitation. It is true that the subse-
quent letting of the water into the lock was the other and
more proximate cause of her death, and that she would not
have lost her life but for such subsequent act, which was not
the necessary consequence of the previous precipitation by the
neo-ljoence of the defendant's servant. But in mv opinion the
[70j defendant is not relieved from liability for his primary
neglect by showing that but for such subsequent act the death
of the name of B. ; that when the
agreement was entered into he repre-
sented to B. that the public house
was of a certain value in respect of
its trade, and that representation he
knew to be false at the time he made
it. After this agreement had been
entered into withB., B., finding him-
self unable to complete the contract,
entered into a negotiation with the
plaintiff, P., and informed him what
representation he had received of
the value of this public house from
the defendant; and taking it accord-
ing to the plea, that B. had not any-
particular authority from the de-
fendant to make such communica-
tion to P., the defendant had notice
that the information had been given
to P., and it is averred that both at
the time of the original agreement
with B., as also at the time of the
agreement which subsequently took
place with P., the defendant knew
that the information was false. Then
having notice that that communica-
tion had been made, and knowing at
the time that it was false, he enters
into a new agreement with P. and B.
that P. shall stand in the place of B.
in the purchase of this public house.
The record further states that P.,
confiding in that representation,
paid money to the defendant. I
think it is impossible, on the state-
ment of these facts, not to see that
the defendant when he entered into
that contract with B., having thus
himself made the fraudulent repre-
sentation, and knowing it to have
been communicated to the person
with whom he was about to contract
a second time, then withholding an
explanation or denial of his author-
ity for communication, and suffer-
ing tlie plaintiff, on the faith of the
communication, to enter into a con-
tract, was as much guilty of a deceit
on the plaintiff as if he had in terms
repeated the statement himself. On
these grounds, without entering
further into the case, I think this
action may be maintained. " See
Langridge v. Levy, 2 M. & W. 519;
Levy V. Langridge, 4 id. 337; Rich-
ardson V. Dunn, 8 C. B. (N. S.) 655;
§ 1170.
1 9 and 10 Vict, ch. 93.
§ 42.] CONSEQUENTIAL DAMAGES FOE TORTS. 127
would not have ensued." ^ A railroad company placed a pusb-
car in the hands of a foreman to be used for specific purposes;
he loaned it for another purpose, and while the borrower was
using it plaintiff was injured through the negligence of the
borrower. The company was liable tliough such injury oc-
curred at a time when there was no relation between it and
the man who ran the car.^
Cases may be stated where the wrongful conduct of one per-
son affords the opportunity or occasion for the illegal acts of
another or for an injury from other causes; as where a street-
car driver permits boys to ride on the platform without paying
fare, and on their being ordered to get off one of them pushes
another, who is injured. In such cases the injury is too re-
mote,* unless it was such as would probably result; and the
same rule applies where inaction offers an opportunity for in-
jury. The neglect of duty by bailees and agents renders them
liable for losses resulting, in co-operation with such neglect, by
the torts of third persons.* The cases collected in the note
following will give the reader an insight into various branches
of the subject of consequential damages.*
1 Byrne v. Wilson, 15 Irish C. L. * Adams v. Lancashire, etc. R. Co.,
(N. S.) 332-342, Thompson's Car. Pass. L. R 4 C. P. 739; Smith v. Dobson, 3
290; Eaton v. Boston, etc. R. Co., 11 M. & Gr. 59; Rigby v. Hewitt, 5 Ex.
Allen, 500, 87 Am. Dec. 730; Spooner 240; Greenland v. Chaplin, id. 243;
V. Brooklyn City R. Co., 54 N. Y. 230, Barnes v. Ward, 9 C. B. 392; Collins
13 Am. Rep. 570. v. Middle L. Com'rs, L. R. 4 C. P. 279;
2 Erie R. Co. v. Salisbury, 66 N. J. Harrison v. Great Northern R. Co., 3
L. 233, 50 Atl. Rep. 117. The court H. & C. 231; Butterfield v. Forrester,
was divided, 6 to 5. 11 East, 60; Martin v. Great Northern
SLott V. New Orleans, etc. R. Co., R. Co., 16 C. B. 179; General Steam
37 La. Ann. 337, 55 Am. Rep. 500; Nav. Co. v. Mann, 14C. B. 127; Holden
Cuff V. Newark, etc. R, Co., 35 N. J. L. v. Liverpool Gas Co., 3 C. B. 1 ; Cot-
30, 10 Am. Rep. 205; Scholes v. North ton v. Wood. 8 C. B. (N. S.) 568;
London R. Co., 21 L. T. (N. S.) 835; Flower v. Adam, 2 Taunt. 314; Ellis
Marks v. Rochester R. Co., 41 App. v. London, etc. R, Co., 2 H. & N. 424;
Div. OG, 58 N. Y. Supp. 210. Singleton v. Williamson, 7 H. & N.
*Norcross v. Norcross, 53 Me. 163; 410; Skelton v. London, etc. R. Co.,
Mason v. Thompson, 9 Pick. 280, 20 L. R. 2 C. P. 631; Thompson v. North-
Am. Dec. 471; Shaw v. Berry, 31 Me. eastern R. Co., 2 B. & S. 106; Bridge
478. 52 Am. Dec. 628; Sibley v. Aid- v. Grand Junction R. Co., 3 M. & W„
rich, 33 N. H. 553, 66 Am. Dec. 745; 244: Glover v. London, etc. R Co., 3
Sasseen v. Clark, 37 Ga. 242; Clute v. Q, B. 25; The Flying Fish. 34 L. J.
Wiggins, 14 Johns. 175; McDaniels v. (Adm.) 113; Everard v. Hopkins, 1
Hobinson, 26 Vt. 316. Bulst. 332; Hughes v. Quentin, 8 C.
128
COMPENSATION.
[§4S.
§ 43. Wilful or malicious injuries. The authorities are
[71] not agreed as to whether in cases of wilful or malicious
injuries, injuries caused by reckless or illegal acts, or by posi-
tive fraud, the damages are so strictly confined to proximate
consequences as when none of these elements is present. On
principle, at least where exemplary damages are allowed, it is
not readily seen why the doctrine of proximate cause should
be varied because of the presence or absence of facts which
characterize the wrong. In Indiana the existence of any such
reason is denied;* in some other states, as will be seen in the
& P. 703; Peacock v. Young, 21 L. T.
(N. S.) 527; Priestley v. Maclean. 2 F.
& F. 288; Sneesby v. Lancashire R.
Co., L. R. 9 Q. B. 263; Smith v. Con-
dry, 1 How. 35; Loker v. Damon, 17
Pick. 284; State v. Thomas, 19 Mo.
613; Oil Creek, etc. R. Co. v. Keigh-
ron, 74 Pa. 316; Tarleton v. McGaw-
ley, Peake, 270; Carrington v. Taylor,
11 East, 571; Keeble v. Hickeringill,
id. 574; Herring v. Skaggs, 62 Ala. 180,
34 Am. Rep. 4; Hanover R. Co. v.
Coyle, 55 Pa. 396; Baldwin v. United
States Tel. Co., 45 N. Y. 744, 6 Am.
Rep. 165; Bartlett v. Hooksett, 48 N.
H. 18; Ayer v. Norwich. 39 Conn. 376,
12 Am. Rep. 396; Dimock v. Suffield,
30 Conn. 129; Foshay v. Glen Haven,
25 Wis. 288, 3 Am. Rei?. 73; Morse v.
Richmond, 41 Vt. 435, 98 Am. Dec. 600;
Howard v. North Bridgewater, 16
Pick. 189; Kingsbury v. Dedham, 13
Allen, 186, 90 Am. Dec 191; Tisdale
V. Norton, 8 Met. 388; Page v. Bucks-
port, 64 Me. 51, 18 Am. Rep. 239;
Bigelow V. Reed, 51 Me. 325; Lake v.
Milliken, 62 Me. 240, 16 Am. Rep. 456;
Cobb V. Standish, 14 Me. 198; Merrill
V. Hampden, 26 Me. 234; Lawrence
V. Mt. Vernon, 35 Me. 100; Davis v.
Bangor, 42 Me. 522; Jewett v. Gage,
55 Me. 538, 92 Am. Dec. 615; Cook v.
Cliarlestown, 98 Mass. 80; Card v.
Ellsworth, 65 Me. 547, 20 Am. Rep.
722; Chicago v. Hoy, 75 111. 530;
Pittsburgh, etc. R Co. v. Iddings. 28
Ind. App. 504, 62 N. E. Rep. 112;
Wallin v. Eastern R. Co., 83 Minn.
149, 86 N. W. Rep. 76, 54 L. R A. 481;
Butler-Ryan Co. v. Williams, 84
Minn. 447, 88 N. W. Rep. 3; Fezler v.
Willmar, etc. R. Co., 85 Minn. 252, 88
N. W. Rep. 746; Schreiner v. Great
Northern R Co., 86 Minn. 245, 90 N.
W. Rep. 400; Illinois Central R Co.
V. Seamans, 79 Miss. 106, 31 So. Rep.
546; Leeds v. New York Telephone
Co., 64 App. Div. 484, 72 N. Y. Supp.
250; Harrison v. Weir, 71 App. Div.
248, 75 N. Y. Supp. 909; Koch v. Fox,
71 App. Div. 288, 75 N. Y. Supp. 913,
Chambers v. Carroll, 199 Pa. 371, 4&
Atl. Rep. 128; Forrow v. Arnold, 22
R I. 305, 47 Atl. Rep. 693; Butts v.
Cleveland, etc. R. Co., 110 Fed. Rep.
329, 49 C. C. A. 69; Reynolds v. Pier-
son. — Ind. App. — , 64 N. E. Rep.
484; Simonson v. Minneapolis, etc. R
Co., — Minn. , 92 N. W. Rep. 459.
1 " There is, in truth, no case that
has been recognized as sound, that
holds that the rule as to the respon-
sibility of the wrong-doer is different
in cases of actionable negligence
from that which prevails in cases of
wilful or malicious torts. There is a
difference as to the measure of dam-
ages, for where the tort is malicious
exemplary damages may be recov-
ered, but such damages cannot be
recovered in cases of negligenca
This consideration has, however, no
influence upon the question of a
negligent wrong-doer's responsibility
^ 43.] CONSEQUENTIAL DAMAGES FOE TORTS. 129
next section, such distinction is recognized. The elements
stated are aggravations which juries are apt to regard in de-
termining their verdicts, and which courts consider in passing
on them.^ It was said by Baldwin, J. i^ ""When a trespass is
committed in a wanton, rude and aggravated manner, indi-
cating malice or a desire to injure, the jury ought to be liberal
in compensating the party injured in all he has lost in prop-
erty, in expenses for the assertion of his rights, in feeling or
reputation," and to superadd to such compensation a sum for
punishment. In a case of wilful negligence the trial court in-
structed the jury that they might take into consideration all
the circumstances, and see whether there was anything to
satisfy them that the defendant had behaved in an improper
and unjustifiable manner; and if so, they need not give dam-
ages strictly, but might give them with a liberal hand. This
instruction was approved. Pollock, C. B., in giving judgment,
said: "It is universally felt by all persons who have had oc-
casion to consider the question of compensation, that there is a
difference between an injury which is the mere result of such
negligence as amounts to little more than an accident, and an
injury, wilful or negligent, which is accompanied with expres-
sions of insolence. I do not say that in actions of negligence
there should be vindictive damages, such as are some- [72]
times given in actions of trespass; but the measure of damage
should be different according to the nature of the injury and
the circumstances with which it is accompanied. . . . The
for the consequences resulting from be a natural and direct result, the
his act." Indianapolis, etc. R. Co. v. only exceptions being where a wil-
Pitzer, 109 Ind. 179, 189, 58 Am. Rep. ful tort consists in the unlawful as-
387, 6 N. E. Rep. 310, 10 id. 70. Com- sumption of dominion over another's
pare Kline v. Kline, 158 Ind. 602, 64 property, and where a carrier devi-
N. E. Rep. 9. See Gatzow v. Buen- ates from its route,
ing, 106 Wis. 1, 81 N. W. Rep. 1003, i Merest v. Harvey. 5 Taunt. 442;
49 L. R A. 475, 80 Am. ;St. 17; note Wright v. Gray, 2 Bay, 464; McDan-
to Gilson V. Delaware, etc. Canal Co., iel v. Emanuel, 2 Rich. 455; Detroit
36 Am. St. 821, in which numerous Daily Post v. McArthur, 16 Mich,
cases are summarized and the con- 447; West v. Forrest, 22 Mo. 344:
elusion is reached that there is no Huckle v. Money, 2 Wils. 205; McAfee
essential difference between the v. Crofford, 13 How. 447.
measure of liability for wilful and 2 Pacific Ins. Co, v. Conard, Bald-
negligent torts, and that in both win, 142.
cases the injury complained of must
Vol. 1 — 9
130 COMPENSATION. [§ 43.
courts have always recognized the distinction between damages
given with a liberal and a sparing hand."^ For this reason
all the circumstances of the injurious act are provable and to
be considered by the jury.'^ In an action of tort for a wilful
injury to the person the manner and manifest motive of the
wrongful act ma}'' be given in evidence as affecting the ques-
tion of damages; for when the mere physical injury is the
same it may be more aggravated in its effects upon the mind
if it is done in wanton disregard of the rights and feelings of
the plaintiff than if it is the result of mere carelessness.* The
same view is expressed by another court: "The common sense
of mankind has never failed to see that the damage done by a
wilful wrong to person or reputation, and, in some cases, to
property, is not measured by the consequent loss of money.
A person assaulted may not be disabled or even disturbed in
his business, and may not be put to any outlay in repairs or
medical services. He may not be made poorer in money di-
rectly or consequentially. He may incur no pecuniary dam-
age whatever. . . . When the law gives an action for a
wilful wrong it does it on the ground that the injured person,
ought to receive pecuniary amends from the wrong-doer. It
assumes that every such wrong brings damage upon the suf-
ferer, and that the principal damage is mental and not phys-
ical. And it assumes further, that this is actual and not meta-
physical damage, and deserves compensation. When this is
once recognized it is just as clear that the wilfulness and
wickedness of the act must constitute an important element in
the computation, for the plain reason that we all feel our in-
dignation excited in direct proportion with the malice of the
offender, and that the wrong is aggravated by it."*
lEmblen v. Myers, 6 H. & N, 54; 4 Welch v. Ware, 32 Mich. 77; Davis
Bixby V. Dunlap, 56 N. H. 463. v. Standard Nat. Bank, 50 App. Div.
2 Bracegirdle v. Orford, 2 M. & S. 210, 63 N. Y. Supp. 764; De Leon v.
79; Snively v. Fahnestock, 18 Md. McKernan, 25 N. Y. Misc. 182, 54 N.
391; Treat v. Barber, 7 Conn. 279; Ed- Y. Supp. 167; Rigney v. Monette, 47
wards V. Beach, 3 Day, 447; Churchill La, Ann. 648, 17 So. Rep. 211; Taylor
V. Watson, 5 Day, 140, 5 Am. Dec. v. Howard. 110 Ala. 468, 18 So. Rep.
130; Post V. Munn, 4 N. J. L. 61, 7 311; Railway Co. v. Beard. 56 Ark.
Am. Dec. 570. 309, 19 S. W. Rep. 923; Watson v.
3 Hawes v. Knowles, 114 Mass, 518, Dilts, Iowa, — , 89 N. W. Rep. 1068,
19 Am. Rep. 383. 57 L. R A. 559. See ^§ 1038, 1029.
§ 44.] CONSEQUENTIAL DAMAGES FOR TORTS. 131
§ 44-. Same subject. There are, however, authorities -which
go to the extent of holding that where a wrong is done wil-
fully and with knowledge of all the facts which make the doing
of it an aggravation, the scope of the natural and proximate
consequence of such wrong is thereby enlarged. Where a ten-
ant, whose wife was sick at the expiration of the lease, was de-
nied a reasonable time in which to vacate the premises without
out unnecessary risk to her, and the landlord, knowing that
she was pregnant and confined to her bed by heart disease,
began tearing down the house, thereby making a noise and
causing adust, which aggravated the wife's illness, who, though
removed from the premises the next day, died a week later,
after having had a miscarriage, it was decided that the rule of
the court of final appeal^ denying a recover}^ for injuries due
solely to fright and excitement, unaccompanied by actual, im-
mediate, personal injury, had no application. "In that case it
was held that no recovery could be had for mere fright occa-
sioned by negligence ; and as no action would lie for the fright
alone, it necessarily followed that none could be maintained
merely because the fright was followed by serious consequences.
If the act complained of was not in itself actionable the grav-
ity of the consequences would not make it so. In this case,
however, the act of the defendants was in itself wrongful. It
was a wilful and violent trespass upon the plaintiff's house for
which an action will lie; and if the death of the plaintiff's wife
can be clearly and directly traced to it as a natural and neces-
sary consequence which they might, or should, have reason-
ably anticipated, the defendants are liable even although no
actual blow was struck in the course of the destruction of the
building. The defendants knew her condition and the risk
which was involved in their contemplated act, and it would be
ridiculous to say that, without the shadow of a right, they
could tear the house down from over her head with no liabil-
ity for the consequences unless she chanced to be hit by a fall-
ing beam."^ Substantially the same rule was applied where the
1 Mitchell V. Rochester R. Co., 151 UnderhilK 63 App. Div. 223, 71 N. Y.
N. Y. 107, 45 N. E. Rep. 354, 56 Am. Supp. 291. See quotation from Spade
St. 604,34 L. R. A. 781. See §§ 21-24. v. Lynn & B. R. Co., 168 Mass. 285,
^Preiser v. Wielandt, 48 App. Div. 47 N. E. Rep. 88, 38 L. R. A. 513, in
569, 62 N. Y. Supp. 890; Williams v. note to § 21.
132
COMPENSATION.
[§44.
defendant, intending- to have a practical joke, represented to a
married woman, who was in an ordinary state of health and
mind, that her husband had met with a fearful accident; the
statement was made with intent that it should be believed, and
it was believed; in consequence a violent nervous shock was
produced which rendered plaintiff ill. Her right to maintain
an action was vindicated, and judgment rendered on a verdict
for £100 on account of the injury caused by the shock.' In an
action for maliciously and wilfully making false statements
respecting the plaintiff in his capacity as an apprentice to the
defendant, and which had the effect to deprive the plaintiff of
the employment on which he relied for support, there may be
a recovery for injury to feelings. Such an accusation would
naturally cause the plaintiff mental suffering and anxiety in
reference not only to the estimation in which he would be
likely to be held by his employer, or by others to whom the fact
of his discharge might become known, but also as to its effect
upon his income, through the loss of his situation.- In Yer-
mont it is not necessary that an act be wanton in order that
liability for all the injurious consequences result from it. If
it is voluntary and not obligatory it is enough. Thus where
1 Wilkinson v. Downton, [1897] 2
Q. B. 57. After referring to cases
which are discussed in ^§ 31-24, and
admitting that the case was without
precedent, the court said: A more
serious difficulty is the decision in
AUsop V. Allsop. 5 H. & N. 534, which
was approved by the house of lords
in Lynch v. Knight, 9 H. of L. Cas.
577. In that case it was held by Pol-
lock, C. B., Martin, Bramwell, and
Wilde. BB., that illness caused by
a slanderous imputation of unchas-
tity in the case of a married woman
did not constitute such special dam-
ages as would sustain an action for
such slander. That case, however, ai>
pears to have been decided on the
ground that in all the innumerable
actions for slander there were no
precedents for alleging illness to be
sufficient special damage and that it
would be of evil consequence to treat
it as sufficient, because such a rule
might lead to an infinity of trump-
ery or groundless actions. Neither
of these reasons is applicable to the
present case. Nor could such a rule
be adopted as of general application
without results which it would be
difficult or impossible to defend.
Suppose that a person is in a preca-
rious and dangerous condition, and
another person tells him that his
physician has said that he has but a
day to live. In such a case, if death
ensued from the shock caused by the
false statement, I cannot doubt that
at this day the case might be one of
criminal homicide, or that if a seri-
ous aggravation of illness ensued
damages might be recovered. See
Nelson v. Crawford, 122 Mich. 466, 81
N. W. Rep 335, 80 Am. St. 577.
2 Lombard v. Lennox, 155 Mass. 70,
28 N. E. Rep. 1125, 31 Am. St. 528.
§ 44.] CONSEQUENTIAL DAMAGES FOR TORTS. 133
defendant shot at a fox that the plaintiff's dog had driven to
cover, and accidentally hit the dog, he was liable.' Where a
dog was wantonly and maliciously shot at, with intent to kill
it, and was set wildly in motion, and that motion continued,
without the interruption of any other agency, until the dog
got into its owner's house and there knocked down and injured
his wife, the defendant was liable for her injury.'^ In a case
in which recovery for injury to business was sought the court
said: The defendant's conduct was so lawless and malicious
that on that ground alone he might properly be held respon-
sible for damages more indefinite than in ordinary instances
where elements of malice and oppression are lacking.' In an-
other case it was observed: We have no doubt that where the
act charged was wilfully, wantonly or maliciously done, and
especially where its obvious purpose was to wound, humiliate
or oppress another, substantial damages may be given for the
mental suffering it entailed.*
The effect of fraud in causing a loss on the amount re- [73]
coverable beyond the measure of damages in analogous cases
of breach of contract and tort is manifest in many particulars.
A difference is made on this ground when there is a breach of
the contract to sell and convey lands, and where there is a con-
fusion of goods. Where one sells a chattel and delivers pos-
session, so that he is taken to have warranted the title, his ven-
dee cannot recover damages until he is dispossessed by the true
owner; but if he sells property with a false and fraudulent rep-
resentation of ownership, his vendee may recover damages for
the deceit before he is disturbed in his possession and according
to the measure of damages applicable to a breach of warranty.^
It was held by Lord Kenyon that an action lay for firing on
negroes on the coast of Africa, and thereby deterring them
from trading with the plaintiff, and that damages might be re-
1 Wright V. Clark, 50 Vt. 130 28, 14; Cooper v. Hopkins, 70 N. H. 271,
Am. Rep. 496. 279. 48 Atl. Rep. 100; Kimball v.
2 Ishara V. Dow's Estate, 70 Vt 588, Holmes, 60 N. H. 163; Kline v. Kline,
41 Atl. Rep. 585, 67 Am. St. 691, 45 158 Ind. 603, 64 N. E. Rep. 9, 58 L. R.
L. R. A. 87. A. 397.
3 Gildersleeve v. Overstolz, 90 Mo. » Case v. Hall, 24 Wend. 103, 35 Am.
App. 518, 530. Dec. 605.
* Hickey v. Welch, 91 Mo. App. i.
134: COMPENSATION. [§ 45.
covered for loss of their trade.^ "Where a dealer in drugs and
medicines carelessl}'' labels a deadly poison and sends it so la-
beled into market, he will be held liable to all persons who,
without fault, are injured by using it as such medicine as it
purports to be.^ So, a party who fraudulently sold a gun falsely
representing it to have been made by a particular maker and
to be well made, was held liable to the purchaser whose son
was injured by its explosion.^ "Without regard to the question
of warranty, a vendor of disinfectant powder put up in a tin
can who knows that it was likely to cause injury to a person
who might open it, unless special care is taken in doing so, the
danger not being such as presumably would be known to or
appreciable by the purchaser, unless warned of it, is bound to
give such warning or answer for the consequences of his neg-
lect to the purchaser.* In several states the expenses of the
suit, above taxable costs, to obtain redress for such wrongs,
are allowed to be considered by the jury.* But in some states
it is otherwise.^
Section 4.
consequential damages foe breach of conteact.
§ 45, Recoverable only when contemplated by the parties.
[74] In an action founded upon a contract only such damages
can be recovered as are the natural and proximate consequence
of its breach ; such as the law supposes the parties to it would
have apprehended as following from its violation if at the
time they made it they had bestowed proper attention upon
the subject and had full knowledge of all the facts.'' As other-
wise expressed, the damages which are recoverable must be
1 Tarletoa v. McGawley, Peake, Seeman v. Feeney, 19Minn. 79; Titus
205. V. Corkins, 21 Kan. 722; Marshall v.
2 Thomas v. Winchester, 6 N. Y. Betner, 17 Ala. 832; Thompson v.
397. Povvning, 15 Nev. 210; New Orleans,
3 Langridge v. Levy, 2 M. & W. etc. R. Co. v. Albritton, 38 Miss. 243,
519; Levy v. Langridge, 4 id. 337. 75 Am. Dec. 98.
SeeRose V. Beattie, 2N. &McC. 538; «'Earle v. Tupper, 45 Vt. 274;
Fultz V. Wycoff, 25 Ind. 321. Howell v. Scoggins, 48 CaL 355.
* Clarke v. Army & Navy Co-opera- "^ Leonard v. New York, etc. Tel.
tive Society, [1903] 1KB. 155, in the Co., 41 N. Y. 544, 567, 1 Am. Rep. 446;
court of appeal. Meyer v. Haven, 70 App. Div. 529,
5 Dibble v. Morris, 26 Conn. 416; 535, 75 N. Y. Supp. 261; Smith v.
Roberts v. Mason, 10 Ohio St. 278; Western U. TeL Co., 83 Ky. 104
§ 45.] CONSEQUENTIAL DAMAGES FOE BREACH OF CONTRACT. 135
incidental to the contract and be caused by its breach ; such
as may reasonably be supposed to have been in the contempla-
tion of the parties at the time the contract was entered into.*
Direct damages are always recoverable, and consequential
losses must be compensated if it can be determined that the
parties contracted with them in view.- It is not in the least
essential to the existence of this liability that an actual breach
of the agreement should have been in the minds of the parties
or either of them. For anything which amounts to a breach
of contract, whether foreseen or unforeseen, the party who is
responsible therefor must answer.' Here an important dis-
tinction is to be noticed between the extent of responsibility
for a tort and that for breach of contract. The wrong-doer is
answerable for all the injurious consequences of his tortious
act which, according to the usual course of events and general
experience, were likely to ensue, and which, therefore, when
the act was committed, he may reasonably be supposed to
have foreseen and anticipated.* But for breaches of contracts
the parties are not chargeable with damages on this principle.
"Whatever foresight, at the time of the breach, the defaulting
party may have of the probable consequences, he is not gener-
ally held for that reason to any greater responsibility; he is
liable only for the direct consequences of the breach, such as
usually occur from the infraction of like contracts, and w^ere
within the contemplation of the parties when the contract was
entered into as likely to result from its non-performance.^
1 Williams v. Barton, 13 La. 404; ^Hadley v. Baxendale, 9 Ex.341;
Jones V. George. 61 Tex. 345, 354, 48 Can dee v. Western U. Tel. Co., 34
Am. Rep. 280; Howe v. North, 69 Wis. 479, 17 Am. Rep. 452; Pacific
Mich. 272, 281, 37 N. W. Rep. 213. Exp. Co. v. Darnell, 63 Tex. 639;
2 Rhodes v Baird, 16 Ohio St. 581; Thomas, etc. Manuf. Co. v. Wabash,
Brayton v. Chase, 3 Wis. 456; Bridges etc. R. Co., 62 Wis. 642, 51 Am. Rep.
V. Stickney, 38 Me. 361; Paducah 725, 22 N. W. Rep. 827; Jones v.
Lumber Co. v, Paducah Water Nathrop, 7 Colo. 1, 1 Pac. Rep. 435;
Supply Co.,. 89 Ky. 340, 25 Am. St. Smith v. Osborn, 143 Mass. 185, 9 N.
536, 12 S. W. Rep. 454, 13 id. 249, 7 E. Rep. 558; Froheich v. Gammon,
L. R. A. 77; Meyer v. Haven, supra. 28 Minn. 476, 11 N. W. Rep. 88; West-
3 Wilson V. Dunville, 6 L. R. Ira ern U. Tel. Co. v. Hall, 124 U. S.
210; Hamilton v.Magill, 12 id. 186,203. 444, 8 Sup. Ct Rep. 577; Detroit
* Grimes v. Bowerman, 92 Mich. White Lead Works v. Knaszak,
258, 53 N. W. Rep. 751, quoting the 13 N. Y. Misc. 619, U. N. Y. Supp.
text. 924; Simpson Brick -Press Co. v.
136
COMPENSATION.
[§45.
Those damages which arise upon the direct, necessary and im-
mediate effects are always recoverable, because every person
is supposed to foresee and intend the direct and natural re-
Marshall, 5 S. D. 528, 59 N. W. Rep.
728, citing the text; Guetzkow v.
Andrews, 92 Wis. 214, 66 N. W. Rep.
119, 53 Am. St. 909; Dwyer v. Ad-
ministrators, 47 La. Ann. 1232, 17 So.
Rep. 796; Carnegie v. Holt, 99 Mich.
606. 58 N. W. Rep. 623; North v.
Johnson, 58 Minn. 242, 59 N. W. Rep.
1012; Sloggy v. Crescent Creamery-
Co., 72 Minn. 316, 75 N. W. Rep. 225;
McConaghy v. Pemberton, 168 Pa.
121, 31 Atl. Rep. 996; Rockefeller v.
Merritt, 22 C. C. A. 617, 76 Fed. Rep.
909, 35 L. R. A. 633; Central Trust
Co. V. Clark, 34 C. C. A. 354, 93 Fed.
Rep. 293; Krebs Manuf. Co. v. Brown,
108 Ala. 508, 18 So. Rep. 659, 54 Am.
St. 188; Slaughter v. Denmead, 88
Va, 1019, 14 S. E. Kep. 833; Skirm v.
Hilliker. 66 N. J. L. 410, 49 Atl. Rep.
679; Witherbee v. Meyer, 155 N. Y.
449, 50 N. E. Rep. 58; De Ford v.
Maryland Steel Co., 113 Fed. Rep. 72,
51 C. C. A. 59.
The rule was very strictly applied
in a case in which it was held that
the vendor of diseased sheep who
sold them without knowledge of
their condition was not responsible
for damages resulting to the vendee
from their being placed with cattle,
the vendor not being informed that
this would be done. Weaver v.
Penny, 17 III. App. 628. The last
reason given is of doubtful cogency.
See Packard v. Slack, 32 Vt. 9;
Smith V. Green, 1 C. P. Div. 92, where
it IS said that one who sells diseased
sheep may be charged witli knowl-
edge that the purchaser intends, or
is almost certain, to put them with
other sheep. See, also, ch. 14.
An employee who quits the service
of his employer in violation of his
contract is not liable for the loss of
property following his act through
the inability of the master to pro-
cure other help. Riech v. Bolch, 68
Iowa, 526, 27 N. W. Rep. 507.
A carrier who has not contracted to
transport cattle received from a con-
necting carrier in the cars in which
they came to his care and who has
no notice that they are of a kind
which it is unlawful to unload in the
state in which they are received is
not liable to the shipper because they
were seized and sold to pay a fine for
such unloading, although the shipper
protested against it. McAlister v.
Chicago, etc. R. Co., 74 Mo. 351.
Barges were not returned to their
owner at the time agreed, and on ac-
count of the delay were swept from
their moorings by an extraordinary
ice gorge and lost. "All that the
defendants could foresee by ordinary
forecast as a result of the breach of
their contract to return the boats
would be the expense to the plaintiff
in taking them himself. They are
liable for damages, the primary and
immediate result of the breach of
their contract, and not for those
which arise from a conjunction of
this fault with other circumstances
that are of an extraordinary nature."
Jones V. Gilmore, 91 Pa. 310. See
Parmalee v. Wilks, 22 Barb. 539,
stated in § 37.
For the breach of a contract to re-
pair a tool, the loss of the material
on hand when it ought to have been
repaii'ed may be recovered for; but
not the profits which might have
been made by working up such ma-
terial with the tool, they being un-
usual, considering the value of the
implement, and notice not having
been given him who was to repair it.
Sitton V. Macdonald, 25 S. C. 68.
The immediate result of the breach
§ 45.] CONSEQUENTIAL DAIIAGES FOE BREACH OF CONTRACT. 137
suits of his acts; those which ensue in the ordinary course of
things, considering the particular nature and subject-matter
of a contract not to engage in the
hotel business within the limits of a
designated city during the time the
plaintiff was the proprietor of a cer-
tain hotel therein, the agreement
being part of the consideration for
its purchase, is the diversion of pa-
tronage therefrom; depreciation in
the value of the hotel property is
secondary: this last cannot be recov-
ered for unless specially claimed.
Lashus V. Chamberlam, 5 Utah, 140,
13 Pac. Rep. 361. Compare Burck-
hardt v. Burckhardt, 42 Ohio St. 474,
51 Am. Rep. 842, in which it was
held that one who purchased the real
estate, personal property, firm name
and good-will of a partnership busi-
ness might prove as an element of
his damage the value of the property
with and without the good-will and
trade-mark, and the difference in
«uch value might, in the absence of
more specific proof, be taken as the
measure of damages. The Utah court
remark of this case that it appears
to stand alone.
The code of Georgia, expressing
the rule deduced from the decisions
of the court therein (Coweta Falls
Manuf. Co. v. Rogers, 19 Ga, 417, 65
Am. Dec. 602; Cooper v. Young, 22
Ga. 269. 68 Am. Dec. 502; Red v. Au-
gusta, 25 Ga, 386), provides that " re-
mote or consequential damages are
not allowed, unless they can be traced
solely to the breach of the contract
or are capable of exact computation,
such as the profits which are the
immediate fruit of the contract and
are independent of any collateral en-
terprise entered into in contempla-
tion of the contract." Sec. 2944.
Under this provision it has been held
that the purchaser of a saw-mill and
outfit cannot recover against his
vendor, who furnished machinery of
a quality inferior to that called for
by the contract, damages sustained
from abandoning the business in
which he had been engaged and in
getting ready to use the mill, im-
provements made to carry on the
business of running the mill, loss of
profits, purchase of material, pay-
ments made for help, nor for his per-
sonal services. The measure of his
damages was the difference between
the value of the machinery con-
tracted for and the value of that in
fact delivered at the time of delivery,
or such difference as ascertained by
a resale within a reasonable time
thereafter. Willingham v. Hooven,
74 Ga. 233, 248, 58 Am. Rep. 435.
Damages from injury to grain be-
cause of the failure of a warranted
machine to work to the capacity
specified, and which was sold with
the understanding that it was to be
used in securing a large crop, were
held not recoverable; they could not
be fairly considered such as would
naturally arise from the breach of
the contract or to have been contem-
plated by the parties as a probable
result. Wilson v. Reedy, 32 Minn.
256, 20 N. W. Rep. 153; Osborne v.
Poket, 33 Minn. 10, 21 N. W. Rep. 752;
Brayton v. Chase, 3 Wis. 456. These
cases carry the rule to the extreme.
The Wisconsin case is probably over-
ruled by cases referred to in Thomas,
etc. Manuf. Co. v. Wabash, etc. R.
Co., 63 Wis. 642, 650, 22 N. W. Rep.
827, 51 Am. Rep. 725. Contra, Smeed
V. Foord, 1 E. & E. 602. See ch. 14.
The breacli of a contract to furnish
articles to be used in completing a
building does not make the con-
tractor liable for the loss of the rent,
no extrinsic facts being alleged. LiU
jengren Furniture & L. Co. v. Mead,
42 Minn. 420, 44 N. W. Rep. 306.
138
COMPENSATION.
[§ 45..
of the contract.' It is conclusively presumed that a party vio-
lating his contract contemplates the damages which directly
ensue from the breach,^ There are fixed rules for measurin"-
[76] damages of a pecuniary nature, which apply to all persons
Though the breach of a contract to
furnish guards for the shops and
work-houses in a prison enables an
incendiary toset fire to the building,
and the loss resulting is the direct
and immediate consequence of the
fire, it was not, in legal contempla-
tion, of the failure to provide a
watch. Tennessee v. Ward, 9 Heisk.
100, 133. This ruling is open to ques-
tion. The agreement to mamtain a
guard, considered as a precaution
contracted for to insure the safety
of the plaintiff's property, was such
as was apparently intended to pre-'
vent, among other things, the loss
which occurred, and hence that loss
may properly be considered as within
the contemplation of the parties
when they contracted as a conse-
quence of a breach. Paducah Lum-
ber Co. V. Paducah Water Supply
Co., 89 Ky. 340, 25 Am. St. 536, 13 S.
W. Rep. 554, 13 id. 249, 7 L. R. A. 77.
A warehouseman who agrees to
store goods at a particular place is
liable to the bailor for the loss of
those intrusted to him and which
are stored in another place and de-
stroyed by fire, tlie latter having in-
sured them at the place where the
contract provided they were to be
stored. If the destruction of the
goods must have inevitably taken
l)iace in the event they had been
stored as agreed, the bailee might
have been released. Lilley v. Double-
day, 7 Q. B. Div. 510.
A warehouseman who neglects to
ship one bale of cotton out of a
larger quantity is not liable for the
cost of insurance for one day on the
whole lot nor for the interest on
money which was borrowed because
of his refusal to so do, no notice hav-
ing been given him of the liability of
the owner for these expenses. Swift
V. Eastern Warehouse Co., 86 Ala.
294, 5 So. Rep. 505.
1 Booth V. Spuyten Dnyvil Rolling
Mill Co., 60 N. Y. 487; Hadley v.
Baxendale, 9 Ex. 341.
One who agrees to procure an as-
signment of a mortgage being fore-
closed and then to forbear for a
specified time to enable the promisee
to enforce it, and who, after procur-
ing such assignment, sells it to one
who immediately proceeds to a sale
and thereby extinguishes the prom-
isee's interest in the mortgaged prem-
ises before the expiration of the
agreed period of forbearance, is lia-
ble for the net value of the prom-
isee's interest. Gallup v. Miller, 25
Hun. 298.
=^ Whether the parties who entered
into a contract had in mind the dam-
ages which might follow its breach
or not does not in the least vary the
question of their liability or the
measure of recovery, under ordinary
circumstances: this is governed by
the injury proximately resulting.
Collins V. Stephens, 58 Ala. 543:-
Dougherty v. American U. Tel. Co.,
75 Ala. 168, 177. 51 Am. Rep. 435:
Cohn V. Norton, 57 Conn. 480, 492, 5
L. R. A. 572, 18 At). Rep. 595; Belt v.
Washington Water Power Co., 24
Wash. 387, 64 Pac. Rep. 525; Farmers'
Loan & Trust Co. v. Eaton, 114 Fed.
Rep. 14, 51 C. C. A. 640; Eckington
& S. H. R. Co. V. McDevitt, 18 D. C.
App. Cas. 497.
A railroad company which violates
its contract to fence its track laid
through a farm is supposed to have
contemplated that animals on the-
farm would be exposed to injury
§ -iC] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 139
without regard to their actual foresight of the particular ele-
ments. And this is also true of the direct damages from torts.'
§ 46. Illustrations of liability under the rule. In an ac-
tion to recover damages for the breach of a contract to har-
vest oats, where the petition stated that by reason of such
breach the oats were entirely lost, the verdict given for their
value was retained, the court having refused to instruct the
jur}^ that they were to be guided by the general rule of dam-
ages, namely, the difference between the contract price and
what the labor would have cost, and having instructed that
the plaintiff was entitled to recover the value if he took all
reasonable precaution to prevent such loss.^ Where ^ a party
contracted with a manufacturer of bar iron to furnish pig iron
in prescribed quantities at specified times, and made default,
in consequence of which the manufacturer was obliged to get
and use an inferior quality of iron in order to carry on his busi-
ness, and thereby suffered loss with his customers, it was said :
" When the vendor fails to comply with his contract the gen-
eral rule for the measure of damages undoubtedly is the differ-
ence between the contract and the market price of the article
at the time of the breach.* This is for the evident reason that
the vendee can go into the market and obtain the article con-
tracted for at that price. But when the circumstances of the
case are such that the vendee cannot thus supply himself the
rule does not apply, for the reason of it ceases.* . . . If an
article of the same quality cannot be procured in the market
its market price cannot be ascertained and we are without the
necessary data for the application of the general rule. This is
from its trains; that damage would The text is cited in Anderson Elec-
be done by trespassing animals and trie Co. v. Cleburne Water, Ice & L.
pasturage injured. Louisville, etc. Co., 23 Tex. Civ. App. 328, 337, 57 S.
R. Co. V. Sumner, 106 Ind. 55, 55 Am. W. Rep. 575.
Rep. 719, 5 N. E. Rep. 404; Same v. » McHose v. Fulmer, 73 Pa. 865.
Power, 119 Ind. 269, 21 N. E. Rep. 751 ; ^ Browning v. Simons, 17 Ind. App.
Lake Erie & W. R. Co. v. Power, 15 45, 46 N. E. Rep. 86, citing the text.
Ind. App. 179, 43 N. E. Rep. 959. 5 Bank of Montgomery v. Reese, 26
lEten V. Luyster, 60 N. Y. 252; Pa. 143; Laporte Imp. Co. v. Brock,
Lovvenstein v. Chappell, 30 Barb. 99 Iowa, 485, 61 Am. St. 245. 68 N. W.
241; Horner v. Wood, 16 Barb. 389; Rep. 810, citing the text; Chalice v.
§ 13. Witte, 81 Mo. App. 84, also citing the
^ Houser v. Pearce, 13 Kan. 104. text.
See Prosser v. Jones, 41 Iowa, 674.
140 COMPENSATION [§ 46.
a contingency which must be considered to have been within
the contemplation of the parties, for they must be presumed
to know whether such articles are of limited production or
not. In such a case the true measure is the actual loss which
the vendee sustains in his own manufacture by having to use
[70] an inferior article, or not receiving the advance on his
contract price upon any contracts which he himself had made
in reliance upon the fulfillment of the contract by the vendor.
We do not mean to say that if he undertakes to fill his own
contracts with an inferior article, and, in consequence, such
article is returned on his hands, he can recover of his vendor,
besides the loss sustained on his contracts, all the extraordi-
nary loss incurred by his attempting what was clearly an un-
warrantable experiment. His legitimate loss is the diff'erence
between the contract price he was to pay his vendor and the
price he was to receive. This is a loss which springs directly
from the non-fulfillment of the contract."
The rule under consideration was comprehensively stated in
an early case.^ In general the delinquent party is holden to
make good the loss occasioned by his delinquency. His lia-
bilit}'^ is limited to direct damages, which, according to the
nature of the subject, may be contemplated or presumed to
result from his failure. Remote or speculative damages, al-
though susceptible of proof and deducible from the non-per-
formance, are not allowed. It was agreed between the owner
of a rice mill and a planter that if the latter would bring his
rice to the former's mill it should have priority in being beaten.
Rice so brought was not so beaten, but was kept to await an-
other turn, and before it was beaten the mill and the rice
were consumed by an accidental fire. It was held that dam-
ages for the loss could not be assessed as the consequence of
the breach of the contract.^ The damages for a breach of con-
tract must be such as the party suffers in respect to the par-
ticular thing which is the subject of the contract, and not
such as has been accidentally occasioned or supposed to be
occasioned in his business or affairs.^ The defendant agreed
1 Miller v. Mariner's Church, 7 Me. 72 Am. Dec. 552. Contra, Lilley v.
55, 20 Am, Dec. 341. Doubleday, 7 Q. B. Div. 510.
2 Ashe V. De Rossett, 5 Jones, 299, 3 Batchelder v. Sturgis, 3 Cusli. 201;
§ 4G.] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 141
to rent to the plaintiff a store for a year, to commence some
weeks in the future. Eelying upon this agreement the plaint-
iff sold his lease of a store he then occupied to M., agreeing to
give possession about the time he would be entitled to [77]
occupy the store rented of the defendant, M. allowing the
plaintiff to occupy a part of the store in the meantime. The
defendant refused to give the lease in accordance with his
agreement. The plaintiff's goods were packed by him to put
them in the space they were permitted to occupy in M.'s store,
and suffered some damage therefrom. It was held that this
damage was not the result of the defendant's breach of con-
tract; nor was he entitled to interest on the value of his stock
of goods, which, by the defendant's refusal to fulfill his con-
tract, the plaintiff had been obliged to keep elsewhere, and
was prevented from exposing for sale for the period of fifteen
days, as the defendant's act did not necessarily prevent a sale
of the stock for that length of time.^ In a similar case the
lessor was not liable to the lessee for money paid for clerk
hire nor for losses resulting from the purchase of goods.
"While the former may have supposed that the latter would
make preparations to occupy the store he could not know
what it would be necessary for him to do.^ One merchant
agreed with another that he would not enter judgment on a
bond given him except on a contingency named. The con-
tract was violated, and as a result the fact that judgment was
entered was published in a commercial journal known as the
"Black List," with the effect of injuring the plaintiff's credit.
Such publication was an event the parties could have foreseen.'*
A case of first impression came before one of the appellate
courts of Illinois not long since. The vendor of a safe war-
Hay den V. Cabot, 17 Mass. 169; State 2Cohn v. Norton, 57 Conn. 480, 492,
V. Thomas, 19 Mo. 613, 61 Am. Dec. 5 L. R. A, 572, 18 Atl. Rep. 595;
580; Webster v. Woolford, 81 Md. Friedland v. Myers, 139 N. Y. 482, 34
339, 32 Atl. Rep. 319; Clark v. Moore, N. E. Rep. 1058.
3 Mich. 55; Johnson v. Matthews, 5 Loss of profits is too remote to
Kan. 118; Doud v. Duluth Milling be considered where there is a breach
Co., 55 Minn. 53, 56 N. W. Rep, 463; of such a contract, Alexander v.
Florida Central & P, R. Co. v. Bucki, Bishop, 59 Iowa, 572, 13 N. W. Rei>.
16 C. C. A. 42, 68 Fed. Rep. 864. 714.
1 Lowenstein v. Chappell, 30 Barb. 3 Blair v. Kinch, 10 L. R. Ire. 234.
241.
142 COMPENSATION. [§ 46.
ranted it to be burglar proof if directions given for locking it
were observed; these were incomplete and the safe was opened
bj burglars without the use of force, and money therein was
taken. It was said in the opinion: It seems to be no undue
stretch of the well-established rule that if the damages suffered
be such as may reasonably be supposed to have been in the
contemplation of both parties at the time of the contract as the
probable result of its breach, to hold that the very intervention
of the burglar was the essential element that both parties con-
templated as being the thing to be guarded against, and con-
cerning which the warranty was interposed. If so, then the
consequence that followed was the natural and proximate
result of the breach, and the recovery was right.^ A vendor
of powder broke his contract to furnish the plaintijff with the
papers necessary to lawfully land the powder, knowing that
the failure to do so would make plaintiff liable for the viola-
tion of law in attempting to import an interdicted article. The
defendant was liable for the fine paid by the plaintiff .^ A cor-
poration which deducts a part of the wages of an employee to
pay a physician employed under a contract to provide compe-
tent medical service to him and his family is liable for the death
of the child of the employee caused by the breach of the con-
tract.' Where there was a delay of four months in delivering a
wheel and pinion to a street railway company, in consequence
of which its earning power was largely reduced, the defendant,
not having been apprised of the facts, was not liable for the
losses.* The breach of a contract between two railroad com-
panies which confers a license upon one of them to run its
trains over the track of the other does not make the party
guilty thereof liable to the other for damage sustained to prop-
erty which it was unable to carry because of such violation
and which it was obliged to unload from its cars at a place
iDeanev. Michigan Stove Co., 69 ing an employer liable to an em-
IlL A pp. 106. ployee for tlie malpractice of its
2Hecla Powder Co. v. Sigua Iron hospital surgeon, money being de-
Co., 157 N. Y. 437, 52 N. E. Rep. 650. ducted from the wages of employees
3 American Tin-Plate Co. v. Guy, for the support of the hospital.
25 Ind. App. 558, 58 N. E. Rep. 738, ^ Central Trust Co. v. Clark, 34 C.
following Wabash R. Co. v. Kelly, C. A. 354, 93 Fed. Rep. 293.
153 Ind. 119, 25 N. E. Rep. 152, hold-
^ 4G.] CONSEQUENTIAL DAMAGES FOE BREACH OF CONTKACT. 143
where it was exposed to rain and mud.' The damages result-
ing from the foreclosure of a mortgage are not proximately
caused by the breach of a contract to loan the mortgagor
raoney.^ The lessor of personalty must deliver it in a condi-
tion for its safe use by the lessee; failing to do so, he is liable
for any damages resulting from defects therein.' It is the
proximate cause of the refusal of the purchaser of shares of
stock to accept the same that the vendor shall become liable
for assessments thereon.* If poor seed is sold in lieu of good,
a crop of inferior quality and of less value is the natural re-
sult.^
"Where the defendant contracted to make and deliver dies
to be used in the manufacture of lanterns, in which business
the plaintiff's assignor proposed to engage when, so far as ap-
peared, the dies were furnished, it was not contemplated that
he would rent premises and employ men in preparation for
carrying on the business to be established , the natural and
obvious consequence of the breach would be to compel him to
obtain dies elsewhere; the assignee of the contract, of whose
connection with it defendant had no notice, could only re-
cover such damages as were contemplated when the contract
was made.^ Pursuant to a contract of bailment the defendant
delivered to the plaintiff, without warranty, seed which he
believed to be clean, which was to be sown on the plaintiff's
land, the produce thereof to be returned and delivered to and
paid for by the defendant at a fixed price. Such seed was not
pure, and the plants grown from the foreign seed, having be-
come scattered on the ground during the harvesting, came up
the following year. The damage thus caused was too remote.^
1 Railway Co. v. Neel, 56 Ark. 279, ^ Stewart v. Scultborp, 25 Ont. 544.
19 S. W. Rep. 963. But in McMullen v. Free, 13 Ont.
2 Savings Bank v. Asbury, 117 Cal. 57, tlie vendor of seed grain, which
96, 48 Pac. Rep. 1081. was impure by reason of the pres-
3 Moriarty v. Porter, 23 N. Y. Misc. ence of the seed of noxious weeds,
536, 49 N. Y. Supp. 1107. was held liable to a farmer to wliom
* Gay v. Dare, 103 CaL 454, 37 Pac. he sold such seed for the damage
Rep. 466. done to his farm by reason of the
5 Hoopes v. East, 19 Tex. Civ. App. growth of such weeds, though the
53, 48 S. W. Rep. 764. crop raised from the seed of the
<» Rochester Lantern Co. v. Stiles grain was not injured. See § 670 et
& Parker Press Co., 135 N. Y. 209, 31 seq.
N. E. Rep. 1018.
14-i COMPENSATION. [§ 4T^
But it is otherwise where there is a breach by a landlord of
his contract to furnish his tenant with fertilizer.^
§ 47, Liability not affected by eollaterjil ventures. Par-
ties, when they enter into contracts, may well be presumed to
contemplate the ordinary and natural incidents and conse-
quences of performance or non-performance; but they are not
supposed to know the condition of each other's affairs, nor to
take into consideration any existing or contemplated transac-
tions, not communicated nor known, with other persons.^ Few
persons would enter into contracts of any considerable extent
as to subject-matter or time if they should thereby incident-
ally assume the responsibility of carrying out, or be held le-
gally affected by, other arrangements over which they have
no control and the existence of which are unknown to them.
In awarding damages for the non-performance of an existing
contract the gains or profits of collateral enterprises in which
the party claiming them has been induced to engage by rely-
ing upon the performance of such a contract, and of which
no notice has been given the other party, cannot be included.
In an action for breach of a warranty of a horse the plaintiff
cannot recover as special damage the loss of a bargain for its
resale at a profit, though the contract for such resale had act-
ually been completed before the unsoundness was discovered.*
1 Herring v. Armwood, 130 N. C. Supp. 924; Scaramanga v. English,
177, 41 S. E. Rep. 96. 1 Commercial Cas. 99; Brauer v.
2 Horner v. Wood, 16 Barb. 386; Oceanic Steam Navigation Co., 66
Cuddy V.Major, 13 Mich. 368; Mas- App. Div. 605, 73 N. Y. Supp. 291;
terton v. Mayor, 7 Hill, 61 ; Story v. Witherbee v. Meyer, 155 N. Y. 446. 50
New York R. Co., 6 N. Y. 85; Bridges N. E. Rep. 58; Dean Pump Works v.
V. Stickney, 38 Me. 361 ; Barnard v. Astoria Iron Works, 40 Ore. 83, 66
Poor, 21 Pick. 378; Fox v. Harding, Pac. Rep. 605.
7 Cush. 516; Brauer v. Oceanic Steam The text is quoted with approval
Navigation Co., 34 N. Y. Misc. 127, 69 in Mitchell v. Clarke. 71 Cal. 163, 11
N. Y. Supp. 465; Hay v. Williams, 8 Pac. Rep. 882, 60 Am. Rep. 529. which
Ky. L. Rep. 434 (Ky. Super. Ct.). was an action for the breach of a
3 Clare v. Maynard, 6 Ad. & EL contract to pay the plaintiff's cred-
519; Walker v. Moore, 10 B. & C. 416; itor a sum of money intrusted to the
Lawrence v. Ward well, 6 Barb. 423; defendant for that purpose. Dam-
Williams V. Reynolds, 6 B. & S. 495; ages resulting to the plaintiff by
Harper v. Miller, 27 Ind. 277; Jones reason of his creditor's attaching
V. National Printing Co., 13 Daly, 92; and selling h's property were not
Detroit White Lead Works v. suchas were the natural consequence
Knazak, 13 N. Y. Misc. 619, 34 N. Y. of tlie bread.. To the same effect
§ 4S.] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 145
§ 48. Distinction between consequential liability in tort
and on contract. The distinction between the liability for [78]
consequential damages resulting from a tort and the damages
recoverable for a breach of contract is forcibly illustrated by
comparing an English case ^ with two Wisconsin cases.^ In the
first case a carrier negligently induced the plaintiff and his
wife and child to leave the train in the night at a wrong station ;
no conveyance could be had, and they were obliged to take a
long walk through the rain to reach their destination. In con-
sequence of the exposure and fatigue the wife was taken sick.
The action to recover damages was considered as being brought
on the contract for carriage, and they were held too remote.
In the earlier of the Wisconsin cases the action was upon a
contract to convey the plaintiff and about eighty others from
one station to a given place and back on a named day by a
special train, which was to leave on the return trip at a stated
hour. It was alleged that they were convej^ed to the place
designated, but no cars were furnished to convey them back,
and the breach was charged to be wilful and fraudulent; that
b\^ reason thereof the plaintiff was greatly injured in bodily
health, suffered great pain and anxiety of mind, lost much time
from business and was subjected to indignities and insults from
employees of the carrier. It was held, the action being upon
contract, that the trial court erred in charging that, if the de-
fendant's conduct was wilful and malicious, the jury might
award full compensatory, though not punitive, damages, " em-
bracing such loss of time, such injury to health, such annoy-
ance and vexation of mind, and such mental distress and sense
of wrong as the jury might find was the immediate result of
the defendant's misconduct, and must necessarily and reason-
are Wallace v. Ah Sam, 71 Cal. 197, ^ Hobbs v. London, etc. R Co., L.
13 Pac. Rep. 46, 60 Am. Rep. 534; R, 10 Q. B. 111.
Cohn V. Norton, 57 Conn. 480, 493, 18 2 Walsh v. Chicago, etc. R. Co., 43
Atl. Rep. 595; Wetmore v. Pattison, Wis. 23, 24 Am. Rep. 376; Brown v.
45 Mich. 439, 8 N. W. Rep. 67; Hunt Same, 54 Wis. 342, 11 N. W. Rep. 356,
V. Oregon Pacific R. Co., 36 Fed. Rep. 911. The Walsh case is cited approv-
481 ; Illinois Central R. Co. v. United ingly in North German Lloyd Steam-
States, 16 Ct. of Cls. 312, 334; Cates ship Co. v. Wood, 18 Pa. Super. Ct.
V. Sparkman, 73 Tex. 619, 11 S. W. 488, 493.
Rep. 846; Houston, etc. R Co. v. Hill,
63 Tex. 384, 51 Am. Rep. 642.
Vol. I — 10
14G COMPENSATIO:l [§ 40.
ably have been expected to arise therefrom to the plaintiff."
Such damages were held too remote; they could not have been
in contemplation when the contract was made. The court
quoted and adopted the reasoning of the several judges in the
English case. The other "Wisconsin case was an action for
[71)J negligence, and the facts were nearly like those in the
Ilobbs case. Recovery was allowed for the sickness caused
by the necessary walk of the female plaintiff to her destina-
tion.'
§49. Same subject; criticism of the Hobbs case. The doc-
trine of the Hobbs case which is stated in the preceding sec-
tion made some impression upon the law in similar cases in a
few states; its influence is most seen in cases ruled soon after
the opinions of the judges who decided it were received in this
country.^ As has been stated elsewhere * the tendency of Amer-
ican authority is in opposition to the view promulgated therein.*
In addition to the cases cited in the previous discussion atten-
tion is directed to a Texas decision in which the English case
and those which have followed it are said to be rested upon
too narrow ground,^ and which holds that a railway company
which has violated its contract by carrying a passenger beyond
his destination is liable to him for the discomfort, inconven-
ience, sickness, expenses, costs and charges which are the direct,
natural and proximate result. The Hobbs case stands but little
better in England than it does in this country; indeed, it is
practically overruled there. The court of appeal, queen's bench
division, has unanimously held that it is a probable result of
turning horses which have been transported on a railway out
of a stable in which it had been contracted that they should
1 This case has been discussed in is no connection between the agree-
g 30, where other cases on the sub- nient and the arrest of the passenger
ject are collected. by the conductor of tlie train, who
^See Walsh v. Chicago, etc. R. Co., was a police officer, and who wrong-
42 Wis. 23, 24 Am. Rep. 376; Indian- fully refused to receive the ticket
apolis, etc. R Co. v. Birney, 71 III. tendered, and delivered the passen-
391. ger to another police officer by wlioni
8§ 36. he was confined in a cell with the re-
* Massachusetts may be an excep- suit that illness followed. Murdock
tion to the rule, it being held there v. Boston & A. R. Co., 133 Mass. 15.
that in an action for the breach of a & I. & G. N. R. Co. v. Terry, 62 Tex.
contract to carry on a railroad there 380.
§ 40.] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 147
be sheltered that some of them would take cold while their
owner was finding room for them elsewhere, and that dam-
ages resulting might be recovered.^ In the case last cited
Bramwell, L. J., said, referring to the ITobbs case, " I do not
see why a passenger who, by default of the railway company,
was obliged to walk home in the dark might not recover in
respect of such damage, it being an event which might not
unreasonably be expected to occur." Brett, L. J., observed,
" Why was the damage to the wife too remote? There was no
accommodation or conveyance to be obtained wiiere the par-
ties were put off the train, so that it was not only reasonable
that the}'- should walk, but they were obliged to do so. Why
was it that which happened was not the natural consequence
of the breach of contract ? Suppose a man let lodgings to a
woman and then turned her out in the middle of the night
with only her night clothes on, would it not be a natural con-
sequence that she would take a cold? . . . It is not, how-
ever, necessary for me to say more than that I am not contented
with it, for there is a difference between such a case and the
present one. People do not get out of a train and walk home
at night without catching cold, and it is not nearly so inevi-
table a consequence that a person getting out of a train under
such circumstances as in the Hobbs case should catch cold as
that horses turned out as these were in this case should suffer.
There is, therefore, a difference, though I own I do not see
much between this case and that." The question has also been
passed upon in Canada, and the view there taken is rested on
a basis which is entirely satisfactory. In that case a passenger
was ejected from a street car after an altercation with the con-
ductor which put him in a state of perspiration; he took cold
and suffered from rheumatism and bronchitis. The defendant
contended that the right interfered with was one of contract,
and that, as the illness was not reasonably contemplated at the
time the contract was made, there was no liability on account
of it. The recbvery of damages on account of the illness was
sustained by the divisional court and the court of appeal. It
was said in the opinion of the supreme court that when one,
whether in performance of a contract or not, takes charge of
iMcMahon v. Field, 7 Q. B. Div. 591.
148 COMPENSATION. [§ 50.
the person or property of another, there arises a duty of rea-
sonable care; and if by his own act he creates circumstances
of danger and subjects the person or propert}'' to risk without
exercising reasonable care to guard against injury or damage,
he is responsible for such injury and damage as arises as the
direct or natural and probable consequence of the wrongful
act. The writer of the opinion shared in the doubts expressed
by the court of appeal in England respecting the conclusive-
ness of the reasoning in the Hobbs case, but thought the case
in hand was independent of it. A dissenting judge approved
of the Hobbs case, and thought it governed the one before the
court.'
§ 50. Liability under special circumstances; Hartley v.
Baxendale. The leading English case'-^ on the scope of recov-
ery for the breach of a contract established two propositions
which have been very generally accepted : " Where two parties
have made a contract which one of them has broken, the dam-
ages which the other ought to receive in respect to such breach
of contract should be such as may fairly and reasonably be
considered either as arising naturally — that is, according to
the usual course of things — from such breach of contract it-
self, or such as may reasonably be supposed to have been in the
contemplation of both parties at the time they made the con-
tract as the probable result of a breach of it. Now, if the
special circumstances under which the contract was actually
made were communicated by the plaintiff to the defendant,
and thus known to both parties, the damages resulting from
the breach of such contract, which they would reasonably con-
template, would be the amount of injury w^hich would ordina-
rily follow from a breach of contract under the special circum-
stances so known and communicated. But, on the other hand,
if these special circumstances were wholly unknown to the
party breaking the contract, he, at the most, could only be
supposed to have had in contemplation the amount of injury
which would arise generally, and in the great multitude of
cases, not affected by any special circumstances, from such a
breach of contract.'"' The first of these rules has been consid-
1 Toronto R Co. V. Grinsted, 24 Can. s Griffin v. Colver, 16 N. Y, 489;
Sup. Ct. 570. Rochester Lantern Co. v. Stiles &
^ Hadley v. Baxendale, 9 Ex. 353. Parker Press Co., 135 N. Y. 209, 31 N.
I 50.] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 149
ered in the preceding sections. It is to be remembered that
there is no relaxation of the rule confining the recovery to the
damages naturally and proximately resulting from the breach
in cases where there are such known special circumstances.
Indeed, the same strictness exists to confine the recovery to
the immediate consequences. The general principle of com-
pensation is that it should be equal to the injury. It is a rule
based on that principle that the amount of the benefit which a
party to a contract would derive from its performance is the
measure of his damages if it be broken.^ It is a rule of inter-
pretation, too, that the intention of the parties is to be ascer-
tained from the whole contract, considered in connection with
the surrounding circumstances known to them. If it appear
by such circumstances that the contract was entered into, [80]
and known by both parties to be entered into, to enable one of
them to serve or accomplish a particular purpose, whether to
S3cure special gain or to avoid an anticipated loss, the liability
of the other for its violation will be determined and the amount
of damages fixed with reference to the effect of the breach in
hindering or defeating that object. The proof of such circum-
stances makes it manifest that such damages were within the
contemplation of the parties. Looking alone at a contract of
this character, silent as to the circumstances which were in
view, such damages are consequential and sometimes appear
to arise very remotely and collaterally to the undertaking vio-
lated. But when the contract is considered in connection with
the extrinsic facts there is established a natural and proximate
relation of cause and effect between its breach and the injury
to be compensated.^ If all such facts as are admissible to jus-
E. Rep. 1018. Criticisms upon the i Alder v. Keighley, 15M. & W. 117;
language used in the extract quoted Guetzkow v. Andrews, 92 Wis. 214,66
in the text have been made by N. W. Rep. 119, 53 Am, St. 909;
various judges and writers; but the Blagen v. Thompson, 23 Oreg. 239, 31
principles enunciated therein have Pac. Rep. 647, 18 L. R. A. 315.
received general approval. Occa- 2 Machine Co. v. Compress Co., 105
sionally a judge intimates that the Tenn. 187, 204, 58 S. W. Rep. 270,
conditions of business have so quoting the text,
changed since that case was decided In Fox v. Everson, 27 Hun, 335, the
that it is no longer applicable in its defendant sold the plaintiff clover
entirety. See Daugherty v. Ameri- seed with which was mixed plain tain
can U. Tel. Co., 75 Ala. 168, 178, 51 seed. A recovery was allowed for
Am. Rep. 435. the difference between the value of
150
COMPENSATION.
[§ 50.
tify the proof of consequential damages were recited in the
contract as the law connects them with it when known, or if
the legal obligation which the law imposes by reason of them
had been expressed in words by the parties, such damages
would be direct and not consequential.
In a case in Wisconsin the plaintiff was a butcher, and the
defendant agreed to furnish him with what ice he might re-
quire for a season, knowing that the plaintiff needed it to pre-
serve fresh meat. About the hist of July the defendant stopped
supplying ice and refused to furnish any more, in consequence
of which plaintiff lost considerable meat. This loss the plaint-
iff recovered. The court say: "As the defendant was ac-
quainted with all the special circumstances in respect to this
contract — knew for what purpose the ice agreed to be fur-
nished by him was to be used, — he should fully indemnify the
plaintiff for the loss he sustained by the non-delivery of the ice;
and he was therefore justly chargeable in damages for the
meat spoiled in consequence of the inability of the plaintiff to
procure ice elsewhere."^ This case was not one of simple con-
pure seed and that actually sown
and for the depreciation in value
of the farm on account of the
plaintain seed. It was contended
that there was no liability for the
last item because it was not proven
that the defendant knew the seed
was bought for the purpose of being
sown. The contention was overruled
because that is the purpose for wliich
such seed is usually purchased. But
the vendor was not apprised of the
fact that the seed sold was to be
mixed with timothy seed, and hence
was not liable for the loss of the
latter.
1 Hammer v. Schoenf elder, 47 Wis.
455, 2 N. W. Rep. 1129. See Manning
V. Fitch, 138 Mass. 273; Beeman v.
Banta. 118 N. Y. 538, 16 Am. St. 779,
23 N. E. Rep. 887.
The text is cited in New Orleans &
N. E. R. Co. V. Meridian Water- works
Co., 18 C. C. A. 519, 72 Fed. Rep. 227,
where it was alleged that the de-
fendant had failed to perform its
contract to furnish at the plaintiff's
shops the required pressure of water,
which it had contracted to furnish
for all purposes for which it might
be desired or used; that one of such
purposes was the extinguishment of
fires in the plaintiff's shops, of which
the defendant had knowledge; that
at the time the fire which burned
the shops broke out there was less
than half the required pressure, and
that, in consequence, the shops were
burned. A good cause of action was
stated.
In Jones v. George, 61 Tex. 345, 48
Am. Rep. 280 (see s. c, 56 Tex. 149,
42 Am. Rep. 689), the plaintiff ap-
plied to the defendant, a druggist,
for a quantity of Paris green; by
mistake he was supplied with chrome
green, a substance similar in appear-
ance but not possessing the same
properties. The vendor knew that
the article called for was desired to
§ 50.] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 151
tract of sale. The special circumstances, known to botii [81]
parties, made it more than that in its aims and consequences,
although the terms in which it was made, considered alone,
imported only a contract of sale. The vendor, knowing the
purpose for which the ice was wanted, was held, by implica-
tion, to undertake to deliver it as agreed in order that tho
vendee should not suffer loss on his fresh meat from his inabil-
ity to preserve it for want of ice. Such being the contract,
the loss which occurred from its breach was the direct conse-
quence thereof. It is to be observed that the implication from
the vendor's knowledge of the special circumstances required
performance of no additional act to fulfill the contract. It
merely enjoined on him the duty to perform it in view of more
serious consequences than those which usually follow a ven-
dor's default. The principle that the injured party is entitled
to compensation proportioned to the actual injury is para-
mount, and overrides any rule not adapted to measure com-
pensation in such a special case. The vendor is thus admon-
ished that if he fails to deliver the property as agreed he can-
not satisfy the injury to the vendee by paying the difference
of a higher market price unless the article can be obtained in
prevent the destruction of the plaint- pears that the contract was made for
iff's cotton crop by the cotton worm, the express purpose of avoiding a loss
which had for years been very de- likely to occur from a known natural
structive. Without knowing the cause, which could be controlled and
mistake the chrome green was ap- avoided; that this was known to the
plied to the cotton, and failed to pro- contracting parties, and that com-
duce the desired result. Evidence pliance with the contract would
was given to show that Paris green have prevented the injury by de-
would have had a beneficial effect, stroymg the thing which immedi-
It was ruled that there was not a ately inflicts it, then it is believed
technical warranty that Paris green that the breach of such a contract
was delivered, but an implied con- must be said, within the meaning of
tract that such was the fact. In an- the law, to be the direct cause of the
swer to the contention that it is not injury. In such case there is 'an
enough to entitle a party to recover immediate and natural relation be-
daniages lor breach of contract to tween tlie act complained of and the
show that without the breach relied injury without the intervention of
on the injury would not have been other and independent cause; ' for a
received when it results from an un- cause which is subject to control
foreseen or unexpected cause, or and contemplated by the parties to
from a cause which no reasonable a contract, looking to its avoidance
human exertion could counteract, or control, cannot be said to be an
the court observed, "but if it ap- 'independent cause.'"
152 COMPENSATION. [| 51.
market; that the loss will be the value of the property which
the ice was needed to preserve.^ Where a vendor broke his
contract to supply ice to a local dealer for the entire season at
a fixed price, the latter was entitled to recover the increased
price he was obliged to pay for ice bought from other parties,
and for the loss of profits which he would have realized
from his business from the time he was compelled to suspend
the same because of inability to procure ice from any source.^
§51. Same subject; illustrations and discussion of the
rule. In a case ^ in which the plaintiff had contracted to sell
a large quantity of bullets of a certain quality and at a fixed
price, he made a contract with the defendant by which the
latter agreed to manufacture and deliver to him the same
quantit}^ and quality of bullets; at the time of making it he
informed the defendant of his arrangement and that he was
contracting with him for the bullets in order to fulfill that
agreement. The contract between these parties was in writ-
ing, but did not contain any allusion to the special object of
making it. It was held, notwithstanding, that it was compe-
tent to prove such antecedent contract and parol proof was
admissible to establish that the defendant was informed that
[82] the plaintiff made the contract in question with a view to
performing the other; and that the proper measure of dam-
ages was the difference between the price at which the defend-
ant was to furnish the bullets and that the plaintiff was to
receive. It appeared that the market price advanced so that
the bullets could not be obtained below the latter price; the
market price was considerably higher, but the recovery was
1 The contract in suit provided that Am. St. 899, 7 S. E. Eep. 644; Dennis
the manufacturer should furnish, de- v. Stoughton, 55 Vt. 371; Goodloe v.
liver and put in running order by a Rogers, 10 La. Ann. 631; Lobdell v.
specified day machinery for a cot- Parker, 3 La. 328. Compare Brayton
ton-seed oil mill. By reason of a v. Chase, 3 Wis. 456, which is incon-
breach a quantity of seed purchased sistent with Hammer v. Schoen-
for grinding was damaged. Parol f elder, 47 id. 455, 2 N. W. Rep. 1129,
evidence was received to show that stated supra.
time was of the essence of the con- 2 Border City Ice & Coal Co. v.
tract, and that the purchase of seed Adams, 69 Ark. 219, 62 S. W. Rep.
in advance of the period fixed for the 591.
completion of the mill was within * Messmore v. New York Shot & L.
the contemplation of the parties. Co., 40 N. Y. 422.
Van Winkle v. Wilkins, 81 Ga. 93, 12
§ 51.] CONSEQUENTIAL DAMAGES FOE BREACH OF CONTRACT. 153
limited as above stated, for that gave the plaintiff compensa-
tion for his actual loss, and that was the loss which was in.
oontemplation by the parties when the contract was made.
Where the contract relates to commodities commonly pur-
chasable in the market the purchaser is made whole when he
recovers the difference between the contract price and the
value of the article in the market at the time and place of de-
livery, because he can supply himself with this article by going
into market and making his purchase at such price, and these
are all the damages he is ordinarily entitled to recover, for
nothing beyond this was within the contemplation of the
parties when they contracted. If, however, the vendor knows
that the purchaser has an existing contract for a resale at an
advanced price, and that the purchase is made to fulfill such a
contract, the profits on such resale are those contemplated by
the parties. In other words, on the ordinary contract of sale
the damages contemplated are those which would result with
reference to market value if the subject of the contract have
such a value; otherwise, on the basis of its actual value, as it
may be ascertained by proof or for the use to which the prop-
erty is commonly applied, whether known or not.^ But if the
contract of purchase is made with a view to a known resale
already contracted or any known special use, the damages
which are contemplated to result from the vendor's breach are
those which would naturally follow on the basis of the contract
for resale or other special use, known to the vendor when the
contract was made. The contemplation of damages will in-
clude such as ordinarily arise according to the intrinsic nature
of the contract and the surrounding facts and circumstances
made known to the parties at the making of it.^
1 Rhodes v. Baird, 16 Ohio St. 573; v. New York, etc. Tel. Co., 41 N. Y.
Borries v. Hutchinson, 18 C. B. (N. 544, 1 Am. Rep. 446; Hexter v. Knox,
S.)465. 63 N. Y. 561; True v. International
2 Davis V. Talcott, 14 Barb. 611; Tel. Co., 60 Me. 9; Fletcher v. Tay-
Cobb V. I. C. R. Co., 38 Iowa, 601; leur, 17 C. B. 21; Squire v. Western
Haven v. Wakefield, 39 111. 509; Illi- U. Tel. Co., 98 Mass. 232, 93 Am. Dec.
nois Central R. Co. v. Cobb, 64 111. 157; Cory v. Thames Iron Works Co.,
128; Winne v. Kelley, 34 Iowa, 339; L. R. 3 Q. B. 181: Borradaiie v. Brun-
Van Arsdale v. Rundel, 82 111. 63; ton, 8 Taunt 535; In re Trent & H.
Rogers v. Bemus, 69 Pa. 432; Hinck- Co., L. R. 6 Eq. 396; Dobbins v. Du-
ley V. Beck with, 13 Wis. 31; Leonard quid, 65 111. 464; Richardson v. Ciiy-
154
COMrE^'SATION.
[§ 51.
This is illustrated by several recent cases. Plaintiff was a
coal merchant and had contracted to supply coal to steamers;
he had also contracted for coal with the defendant, who knew
the purpose for which the coal was wanted. The defendant
noweth, 26 Wis. G56; Wolcott v.
Mount, 36 N. J. L. 262, 18 Am. Rep.
438; Benton v. Fay, 64 111. 417; Grin-
die V. Eastern Exp. Co., 67 Me. 317,
24 Am. Rep. 31; Hamilton v. Magiil,
12 L. R. Ira 186, 204: Kramer v.
Messner, 101 Iowa, 88, 69 N. W. Rep.
1142; Guetzkow v. Andrews, 92 Wis.
214. 53 Am. St. 909, 66 N. W. Rep. 119;
Agius V. Great Western Colliery Co.,
[1897] 1 Q. B. 413; Chalice v. Witte,
81 Mo. App. 84; Uhlig v. Barnum, 43
Neb. 584, 61 N. W. Rep. 749; Waco
Artesian Water Co. v. Cauble, 19
Tex. Civ. App. 417, 47 S. W. Rep. 588;
Drug Co. V. Byrd, 92 Fed. Rep. 290,
34 C. C. A. 351; Central Trust Co. v.
Clark, id. 354, 92 Fed. Rep.' 293;
Liman v. Pennsylvania R. Co., 4 N.
Y. Misc. 539, 24 N. Y. Supp. 824, cit-
ing the text; Blagen v. Thompson, 23
Or& 239, 31 Pac. Rep. 647, 18 L. R. A.
315; Machine Co. v. Compress Co.,
105 Tenn. 187, 58 S. W. Rep. 270;
M'Neill V. Richards, [1899] 1 Ire. 79;
Hirschhorn v. Bradley, Iowa, ,
90 N. W. Rep. 592; Trigg v. Clay, 88
Va. 330, 335, 13 S. E. Rep. 434, 29 Am.
St. 723.
In Borries v. Hutchinson, 18 C. B.
(N. S.) 445, the defendant contracted
to sell to the plaintiff seventy-five
tons of caustic soda, an article not
ordinarily procurable in the market,
at a given price, to be delivered on
the rails at Liverpool for Hull,
twenty-Sve tons in June, twenty-five
tons in July and twenty-five tons in
August; but he failed to deliver any
until the 16th of September, between
which day and the 26th of October
he delivered twenty-six tons in all.
At the time of entering into the
contract the defendant was aware
that the plaintiffs were buying the
soda for a foreign correspondent, but
did not know until the end of Au-
gust tiiat it was designed for St. Pe-
tersburg. The plaintiffs had, in fact,
contracted to sell the soda to Heit-
mann.a merchant at St. Petersburg,
at an advanced price, and he had
contracted to sell it to one Heinbur-
ger, a soap manufacturer of tiiat
place, for a still further advance. In
consequence of the late delivery of
the twenty-six tons, the plaintiffs
were compelled to pay a higher rate
of freight and insurance. This
amounted to 40^. 17«. For their fail-
ure to deliver the remainder to Heit-
mann they were called upon to pay
and actually paid 159Z., which he
claimed as the compensation he bad
been obliged to pay Heinburger for
the failure to perform his subcon-
tract with him. In this action by
the plaintiffs to recover from the de-
fendant for the breach of his con-
tract with them, it was conceded
that they were entitled to recover
the difference between the price (on
the forty-nine tons undelivered) at
which he had sold the caustic soda
to them, and the price at which they
had contracted to sell it to Heit-
mann, in other words, the loss of the
profit on the resale; and it was held
that they were also entitled to re-
cover the 40Z. 17s., the excess of
freight and insurance, which was
the necessary result of the defend-
ant's breach of contract, butth^t the
defendant was not chargeable with
the 1597. which the plaintiff had paid
to Heitmann to compensate Hein-
burger for the loss of his bargain;
this was held too remote. As to the
latter item, Erie, C. J.: "He (the de-
fendant) had no notice cf the subse-
f
§ 51.] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 155
broke its contract by failing to furnish coal as fast as it Avas
needed ; in consequence a steamer was delayed, a claim made
on the plaintiff for damages and a suit was brought to enforce
that claim. The defendant refused to defend such suit, which
was defended by the plaintiff, who satisfied the judgment
therein, and then sued the defendant for reimbursement. His
right to recover was held to be within the rule of Hadley v.
Baxendale.^ In another case^ the defendant supplied a de-
fective chain to a firm of stevedores for use in discharo-infj: a
cargo from a vessel owned by a third party. He was taken to
have known that such firm would employ men to do the un-
loading, and was liable for the injury received by a man so
employed, through a defect in the chain, notwithstanding such
defect might have been discovered by the employer in the ex-
ercise of reasonable care. Such injury was the natural conse-
quence of the defect. The defendant's agent guaranteed
that a theater troupe to whom he sold tickets should arrive
at their destination by a stated time, which they did not do.
A recovery was allowed of the damages sustained by missing
engagements on account of the delay, but not for missing other
engagements because of the breaking up of the troupe through
failure to pay its members, which failure resulted from the loss
of the money which would have been received from keeping
the first-mentioned engagements; that result could have been
avoided by a like sum of money realized from any other
source.* The defendant contracted with the owner of a vessel
to tow her to a designated point, where she was to be loaded,
and to keep a tug there for the removal of the vessel. No tug
was kept there in pursuance of the contract, and none was
available for service there. The defendant failed to move the
quent resale; and it is not to be as- Co., [1899] 1 Q. B. 418, approving Ham-
sumed that the parties contemplated mond v. Bussey, 20 Q. B. Div. 79, and
that he was to be held responsible doubting Baxendale v. London, etc.
for the failure of any number of sub- R. Co., L. E. 10 Ex. 35, and Fisher v.
sales. These could not in any sense Val de Travers Asphalte Co., 1 C. P.
be considered as the direct, natural Div. 511; Scott v. Foley, 5 Commer-
or necessary consequence of the cial Cas. 53.
breach of the contract he was enter- ^ Mowbray v. Merry weather, [1895]
inginto." Hinde v. Liddell, L. R. 10 1 Q. B. 857, [1895] 2 id. G40.
Q. B. 265. 3 Foster v. Cleveland, etc. R. Co., 5G
1 Aguis v. Great Western Colliery Fed. Rep. 431. See note to J^ 52.
156 COMPENSATION. [§ 52.
vessel to a place of safety, and in consequence of a storm she
was greatly damaged and was sunk. The liability of the de-
fendant was co-extensive with the loss suffered by the plaintiff.^
The breach of a contract for building a motor railway, entered
into for the purpose of securing by performance the enhance-
ment of the value of land, renders the party in default liable
for the loss of the profits the purchaser of such land would
have made if the road had been built.^ But this rule does not
apply as a defense to an action by a railroad company upon a
subsidy contract."'' One who has broken his contract with the
stockholders of a corporation to loan it money is not bound to
foresee that they would give their notes to another as a bonus
to obtain a loan, and is not liable for the value of their shares.*
[83] §52. Same subject; market value; resale; special
circumstances. — "Where an article had been bargained for
for a particular and exceptional purpose, unknown to the seller,
[84] and had no market value, it was held that the vendor was
liable for the damages which would have been sustained if it
had been used for the purpose for which he supposed it would
be used.^ If the vendor has notice that bis vendees have con-
tracted to resell the article he will be held liable for loss of
profits by such resale if he fails to fulfill his contract, though
he was not informed of the price in the contract to resell,
unless there is a market value for the article or the resell-
ing price is of an unusual or exceptional character.^ Since the
decision of Hadley v. Baxendale,'' the rule first stated in that
case for ascertaining damages which are recoverable for
breach of contract, namely, that they be such as arise " natu-
rally, i. e., according to the usual course of things from such
breach of contract itself," has been universally assented to;
1 Loud & Sons' Lumber Co. v. Peter, ^ Cory v. Thames Iron Works Co.,
20 Ohio Ct. Ct. 73; Boutin v. Rudd, L. R. 3 Q. B. 181.
27 C. C. A. 526, 82 Fed. Rep. 685. <* Booth v. Spuyten Duy vil Rolling
-'Blagen v. Thompson, 23 Ore. 239, Mill Co., 60 N. Y. 487; Home v. Mid-
18 L. R. A. 315, 31 Pac. Rep. 647; Belt land R Co., L. R. 8 C. P. 131; Lewis
V. Washington Water Power Co., 24 v. Rountree, 79 N. C. 122; Guetzkow
Wash. 387, 64 Pac. Rep. 525. v. Andrews, 92 Wis. 214, 53 Am. St.
3 Coos Bay R. Co. v. Nosier, 30 Ore. 909, 66 N. W. Rep. 119; Snell v. Cot-
547, 48 Pac. Rep. 361. tingham, 76 111. 161.
4 Kelly V. Fahrney, 38 C. C. A. 103, ^ 9 Ex. 341.
97 Fed. Rep. 176.
§ 52.] CONSEQUENTIAL DAMAGES FOE BREACH OF CONTRACT. 157
as also what is said in the opinion of Alderson, B., to the
effect that if a contract be made under special circumstances,
which arc unknown to the party breaking- it, they cannot be
taken into consideration for the purpose of enhancing the
damages; that such a defaulting part}'', at the most, can only be
supposed to have had in his contemplation the amount of in-
jury which would arise from such a breach generally in the great
multitude of cases unaffected by special circumstances.^ His
observations, however, in favor of a more extended liability,
embracing damages brought within the contemplation of the
parties at the time of contracting by communication of special
circumstances, have been the subject of some criticism and
conflict of opinion. In England, however, the cases have
been uniformly decided in conformity to the doctrine of that
case;^ but there have been dicta in several of a contrary tend-
ency, especially with reference to its application to carriers,
who were supposed to have no option to refuse to accept goods
offered for transportation, in view of enlarged responsi- [85]
bility on account of special circumstances, unless an increased
compensation be paid.^ The tendency of the decisions there
1 GrifBn v. Colver, 16 N. Y. 490; and there is no market for the goods.
Western U. Tel. Co. v. Graham, 1 the latter may recover as damages
Colo. 230; Sanders v. Stuart, 1 C. P. for the breach the profit he would
Div. 326; Great Western R. Co, v. have made had he been able to sup-
Redmayne, L. R. 1 C. P. 329; Master- ply his customer, and also damages
ton V. Mayor, 7 Hill, 61; Cuddy v. recovered against him by the latter
Major, 13 Mich. 368; Johnson v. for the resulting breach. In esti-
Mathews, 5 Kan. 118; Lawrence v. mating such last-mentioned dam-
Wardwell, 6 Barb. 423; Portman ages the judgment of a foreign
V. Middleton, 4 C. B. (N. S.) 322; court will be regarded as establish-
Gee V. Lancashire, etc. R. Co., 6 H. ing a reasonable sum for their com-
& N. 211; Hales v. London, etc. R. putation. The liability of the pur-
Co., 4 B. & S. 66; Travis v. Duflfau, 20 chaser to his customer for a penalty
Tex. 49; Fox v. Harding, 7 Cush. 516. if he failed to keep his contract with
2 Agius v. Great Western Colliery him must have been known to the
Co., [1899] 1 Q. B. 413. original vendor. Grebert-Borgnis v.
If the goods contracted for are of Nugent, 15 Q. B. Div. 85.
a particular shape and description, 3 gee g§ 900, 913, 914. In Borries v.
and the party who is to furnish Hutchinson, 18 C. B. (N. S.) 445, and
them knows that the contract is in Smeed v. Foord, 1 E. & E. 602, the
substantially like one the purchaser damages were larger and the recov-
has made with a customer of his, ery sustained by reason of the de-
aud that it is made to enable the fendant having notice of the purpose
purchaser to fulfill such contract, of the other party in making the
158
COMPENSATION.
[§ 52.
[86] appears to be to require the special purpose of the con-
tract to be so far in view when the contract is made that it is
reasonable to infer a tacit acceptance of it as made for the ac-
complishment of that object, and a tacit consent to be bound
contract. Hobbs v. London, etc. R.
Co.. L. R, 10 Q. B. Ill; Smith v.
Green, 1 C. P. Div. 92; Simpson v.
London, etc. R. Co., 1 Q. B. Div. 274;
Wilson V. General Iron S. Co., 47 L.
J. (N. S.) (Q. B.) 239.
In Britipli Columbia Saw Mill Co.
V. Nettleship, L. R. 3 C. P. 499, the
plaintiffs delivered to the defendant
for carriage to Vancouver's Island
several cases of machinery intended
for the erection of a saw mill. The
defendant knew generally that the
cases contained machinery. On the
arrival of the vessel at her destina-
tion, one of the cases which con-
tained parts of the macliinery was
missing, and without these parts the
mill could not be completed. The
plaintiffs were obliged to replace
these parts from England at a cost,
including freight, of 353/. 17s. M.,
and suffer a delay of twelvemonths.
A fair rate of hire of the machinery,
applied to the purposes for which it
was required by the plaintiffs, would
have been for twelve months 2,646Z.
2s. 3d., and the plaintiffs sought to
recover that amount, but it was held
not recoverable, because the defend-
ant did not know that the missing
case contained portions of the ma-
chinery which could not be replaced
at Vancouver's Island, and without
which the rest could not be put to-
gether. Willes, J., said: "The con-
clusion at which we are invited to
arrive would fix upon the ship-owner,
beyond the value of the thing lost
and the freight, the further liability
to account to the intended mill-own-
ers, in the event of a portion of the
machinery not arriving at all or ar-
riving too late through accident or
his default, for the full profits they
might have made by the use of the
mill, if the trade were successful and
without a rival. If that had been
presented to the mind of the shii>
owner at the time of making the con-
tract, as the basis upon which he was
contracting, he would at once have
rejected it. And though he knew
from the shippers the use they in-
tended to make of the articles, it
could not be contended that the mere
fact of knowledge, without more,
would be a reason for imposing upon
him a greater degree of liability than
would otherwise have been cast upon
him. To my mind that leads to the
inevitable conclusion that the mere
fact of knowledge cannot increase
the liability. The knowledge must
be brought home to the party sought
to be charged, under such circum-
stances that he must know that the
person he contracts with reasonably
believes that he accepts the contract
with the special condition attached
to it. Several circumstances occur
to one's mind in this case to show
that there was no such knowledge
on the defendant's part that would
warrant the conclusion contended for
by the plaintiffs. In the first place
the carrier did not know that the
whole of the machinery would be
useless if any portion of it failed to
ai'rive, or what that particular part
was. And that suggests another con-
sideration. He did not know that
the part which was lost could not be
replaced without sending to England.
And applying what I have before
suggested, if he did know this, he did
not know it under such circum-
stances as could reasonably lead to
§ 52.] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 159
to more than the ordinary damages, in case of default, on that
account; otherwise tiie damages in respect to that object [87]
are not deemed to have been within the contemphition of the
parties. This is probably also the doctrine of the American
the conclusion that it was contem-
plated at the time of the contract
that he would be liable for all these
consequences in the event of a
breach. Knowledge on the part of
the carrier is only important if it
forms part of the contract. It may-
be that the knowledge is acquired
casually from a stranger, the person
to whom the goods belong not know-
ing or caring whether he had such
knowledge or not. Knowledge, in
effect, can only be evidence of fraud
or of an understanding by both par-
ties that the contract is based upon
the circumstances which are com-
municated."
In the subsequent case of Home v.
Midland R. Co., L. R. 7 C. P. 583, the
defendant, as a carrier, was guilty
of a negligent delay in the transpor-
tation of goods consigned to fill a
special contract at an exceptionally
high price. The carrier had notice
that the goods were for a purchaser
who would not take them unless
they were offered on time, but the
carrier was not informed of the con-
tract price. It was considered that
the notice was not sufiBcient to
chai'ge the defaulting carrier with
damages computed on the basis of
the loss of the bargain for such an
unusual and exceptional price. It
was also held that the notice must
be such as leads to the inference that
the carrier accepts the goods assent-
ing to the increased responsibility
as part of the contract. Kelly, C. B.,
said on appeal (L. R. 8 C. P. 136):
" The goods with which we have to
deal are not the subject of any ex-
press statutory enactment; the case
in regard to them depends on the
common law, taken in connection
witii the acts relating to the defend-
ant's railway company. Now it is
clear, in the first place, that a rail-
way company is bound, in general,
to accept goods sucli as these and
carry them as directed to the place
of delivery, and there deliver them.
But suppose that an intimation is
made to the railway company, not
merely that if the goods are not de-
livered by a certain date they will
be thrown on the consignor's hands,
but in express terms stating that
they have entered into such and
such a contract, and will lose so
many pounds if they cannot fulfill
it; what is then the position of the
company? Are they the less bound
to receive the goods? I apprehend
not. If then they are bound to re-
ceive and so do without more, what
is the effect of the notice? Can it
be to impose on them a liability to
damages to any amount, however
large, in respect of goods which they
have no option but to receive? I
cannot find any authority for the
proposition that the notice, witiiout
more, could have any such effect.
It does not appear to me that the
railway company has any power
such as was suggested to decline to
receive the goods after such a notice,
unless an extraordinary rate of car-
riage be paid. Of course, they may
enter into a contract, if they will, to
pay any amount of damages for the
non-pei'formance of their contract,
in consideration of an increased rate
of carriage, if the consignors are
willing to pay it; but in the absence
of any such contract expressly en-
tered into, there being no power on
160
COMPENSATION.
[§52.
courts.^ The parties are not supposed to actually intend to
pay damages oy any other than a legal standard, unless they
[88] formally liquidate them, whether there are special cir-
cumstances or not. They know the legal principle of com-
the part of the company to refuse to
accept the goods or to compel pay-
ment of an extraordinary rate of
carriage by tlie consignor, it does
not appear to me that any contract
to be liable to more than the ordi-
nary amount of damages can be im-
plied from mere receipt of the goods
after such a notice as before men-
tioned."
In Elbinger Actien-Gesellschaftv.
Armstrong, L. R. 9 Q. B. 473 (ap-
proved in Grebert-Borgnis v. Nugent,
lo Q. B. Div. 85), the plaintiff con-
tracted for the purchase of six hun-
dx-ed and sixty -six sets of wheels and
axles, which he designed to use in
the manufacture of wagons; and the
wagons he had contracted to sell and
deliver to a Russian company by a
certain day, or forfeit two roubles a
wagon per day. The defendant, who
contracted to sell the wheels and
axles, was informed of the other con-
tract, but not of tlie amount of the
penalties. Some delay occurred in
the plaintiff's deliveries, by the de-
fendant's fault, and in consequence
the plaintiff had to pay lOOZ. in pen-
alties; and the action was brought
to recover that sum of the defendant.
There was no market in which the
goods could be obtained, and it was
therefore contended in behalf of the
defendant that only nominal dam-
ages could be recovered. The court
held the defendant liable for sub-
stantial damages, not for the penal-
ties the plaintiff had been obliged
to pay, the defendant having no
notice of them, but the reasonable
value of the use of the wagons dur-
ing the delay. A verdict of 1007.
was sustained. But the court, by
Blackburn, J., remarked: "If we
thought that this amount could only
be come at by laying down as a prop-
osition of law that the plaintiffs
were entitled to recover the penal-
ties actually paid to the Russian com-
pany, we should pause before we al-
lowed the verdict to stand." After
referring to Hadley v. Baxendale he
continued: "But an inference has
been drawn from the language of
the judgment, that whenever there
1 Notice to a carrier, after goods
have been shipped, of circumstances
w'hich render special damages a prob-
able consequence of delay does not
affect the original contract so as to
render the carrier liable for such
damages although the subsequent
delay is unreasonable. Bradley v.
Ciiicago. etc. R. Co., 94 Wis. 44, 68 N.
W. Rep. 410; Missouri, etc. R. Co. v.
Belcher, 35 S. W. Rep. 6 (Tex. Sup.
Ctl
If the bill of lading is silent as to
the time goods are to be delivered
the fact that notice was given the
carrier that unusual loss would re-
sult if there was delay in delivery
may be shown by parol. Central
Trust Co. V. Savannah, etc. R. Co., 69
Fed. Rep. 683.
" In the absence of a definite con-
tract for carriage to a given point
by a given time, with such reasons
for its making as would naturally
lead the agent of the carrier to con-
template the profits the passenger
expected to realize, it is clear that the
damage claimed for the failure to
realize such profits is too uncertain
and remote." Southern R. Co. v.
Myers, 32 C. C. A. 19, 87 Fed. Repu
149.
§ 52.] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 161
pensation and the rules subsidiary to it; and when they do not
liquidate the damages they are content to enter into the con-
tract and leave the measure of liability to be decided b}'' law;
they know that the law will require them to make com- [89]
has been notice, at the time of the
contract, that some unusual conse-
quence is likely to ensue, if the con-
tract is broken the damages must in-
clude th.at consequence; but this is
not, as yet, at least, established law.
In Mayne on Damages (p. 10, 2d ed.
by Lumley Smith), in commenting
on Hadley v. Baxendale, it is said:
'The principle laid down in the
above judgment, that a party can
only be held responsible for such con-
sequences as may be reasonably sup-
posed to have been in the contempla-
tion of both parties at the time of
making the contract, and that no
consequence which is not the neces-
sary result of a breach can be sup-
posed to have been so contemplated,
unless it was communicated to the
other party, are, of course, clearly
just. But, it may be asked, with
great deference, whether the mere
fact of such consequences being com-
municated to the other party will be
sufficient, without going on to show
that he was told that he would be
answerable for them, and consented
to undertake such a liability. . . .
The law says that every one who
breaks a contract shall pay for its
natural consequences; and, in most
cases, states what those consequen-
ces are. Can the other party, by
merely acquainting him with a num-
ber of further consequences, which
the law would not have implied, en-
large his responsibility, without any
contract to that effect ? ' We are
not aware of any case in which Had-
ley V. Baxendale has been acted upon
in any such way as to afford an an-
swer to the learned author's doubts;
and, in Home v. Midland R. Co., L.
Vol. I — 11
R. 8 C. P. 131, much that fell from
the judges in the exchequer cham-
ber tends to confirm those doubts."
In this case the court held that the
plaintiff was not entitled to damages
for the delay, exceeding the penalty
he was bound for and had paid to
his vendee.
In Hinde v. Liddell, L. R. 10 Q. B,
265, the defendant contracted to sup-
ply the plaintiff two thousand pieces
of grey shirtings, to be delivered on
the 20th of October, certain, at so
much per piece, the. defendant being
informed that they were for ship-
ment. Shortly before the 20th of
October the defendant informed the
plaintiff that he would be unable to
complete his contract by the time
specified; and, thereupon, the plaint-
iff endeavored to get the shirtings
elsewhere, but, there being no market
in England for it, that kind of shirt-
ings could only be procured by a
pi-evious order to manufacture it.
The plaintiff, therefore, in order to
ship according to his contract with
his sub-vendee, procured two thou-
sand pieces of other shirtings, of a
somewhat superior quality, at an in-
crease of price, which the sub-vendee
accepted, but paid no advance in
price to the plaintiff. The plaintiff
recovered against the defendant this
excess over the contract price. It is
manifest that the plaintiff suffered
damage to that amount, by reason of
delivering the substituted article to
his vendee, without realizing any-
thing for having procured an article
of superior quality. Is it possible
that if there had been no subcontract
which necessitated this loss, and the
plaintiff had the article on hand.
1G2
COMPENSATION.
[§ 52.
pensation in case of a breach for damages which directly arise
therefrom in view of the intrinsic nature of the contract, and
of the special circumstances known to them when it was made
that he could have recovered dam-
ages by that standard? It would
have been said that no loss could
be inferred from such a purchase.
Borries v. Hutchinson was approved
and said to be directly in point, and
tlie same judge, Blackburn, J., said,
in giving judgment: " In the present
case the goods are for a foreign
market; and it was admitted that
the only reasonable thing the plaint-
iff could do was to put himself in the
same position as if the defendants
had fulfilled their contract, by ob-
taining a somewhat dearer article.
1 do not see on what principle it can
be said that the plaintiff is not en-
titled to recover this difference in
price. We do not decide anything as
to what the effect of a notice of the
plaintiff's subcontract might have
been. Under the circumstances, the
value of the goods contracted to be
supplied by the defendants, at the
time of their breach of contract, was
the price the plaintiff had to give
for the substituted article."
In Grebert-Borgnis v. Nugent, 15
Q. B. Div. (1885) 85, it is said that a
vendor who contracts with a pur-
chaser knowing that the latter has
a foreign customer for the articles
contracted for must understand that
if such purchaser fails to fulfill his
contract he will be liable to his cus-
tomer for damages; and while the
judgment of a foreign court will not
be held binding as to the amount of
damages, it will be assumed that the
sum fixed thereby is reasonable.
In Simpson v. London, etc. R, Co.,
1 Q. B. Div. 274, the plaintiff, who
was a manufacturer of cattle food,
was in the habit of sending samples
of his goods to cattle sliows, with a
show tent and banners, and attend-
ing there himself to attract custom.
He intended to exhibit some of these
samples at the Newcastle show, and
delivered them for transmission to
the defendants. The contract was
made with the defendants' agent at
a cattle show at Bedford, where the
plaintiff had been exhibiting his
samples, and where the defendants
had an agent and office on the show
ground for the purpose of seeking
traffic. The evidence as to the terms
of the contract was that a consign-
ment note was filled up by the plaint-
iff's son consigning the goods as
"boxes of sundries" to "Simpson &
Co., the sliow ground, Newcastle on
Tyne," and that he indorsed the note
•' must be at Newcastle on Monday
certain," meaning the next Monday,
the 20th July. Nothing was expressly
said as to the plaintiff's intention to
exhibit the goods at Newcastle, nor
as to the goods being samples. They
did not arrive until several days after
time, and when the show was over.
It was found that the plaintiff ob-
tained custom by exhibiting his
samples at shows, but no evidence
was given as to his prospects with
regard to the Newcastle show in par-
ticular. A verdict by consent was
entered for 20/. bej'ond a sum which
had been paid in, with leave to move
to enter the verdict for the defend-
ants, if the court should be of opinion
that the plaintiff was not entitled to
recover for either loss of time in
waiting for the goods or loss of profits.
It was held that the plaintiff was en-
titled to the verdict. Cockburn, C. J.,
said: " The law, as it is to be found
in the reported cases, has fluctuated;
but the principle is now settled that,
whenever either the object of the
sender is specially brought to the no-
§ 52.] CONSEQUENTIAL DAMAGES FOB BREACH OF CONTRACT. 1G3
which disclose some particular ol)ject different from or [90]
beyond that which would be suggested by the mere words of
the contract.^
tice of tlie carrier, or circumstances
are known to the carrier from which
the object ought in reason to be in-
ferred, so that the object may be
taken to have been within the con-
templation of both parties, damages
may be recovered for the natural
consequences of the failure of that
object." See Kennedy v. American
Exp. Co., 22 Ont. App. 278.
In Jameson v. Midland R. Co., 50
L. T. Rep. 42G, tlie plaintiff delivered
a parcel at the defendant's office ad-
dressed to M.. Stand 23, Show Ground,
etc.; nothing was said by him. The
label so addressed was sufificient no-
tice that the parcel was being sent
to a show, and the defendant was
liable for the loss of profits and ex-
penses resulting from its delay.
In Mayne on Dam. (6th ed.), p. 41,
the author says: "In the present
state of the authorities, therefore, I
would suggest that in place of the
third rule supposed to be laid down
by Hadley v. Baxendale, the law may
perhaps be as follows:
"First — Where there are special
circumstances connected with a con-
tract, which may cause special dam-
ages to follow if it is broken, mere
notice of such circumstances given
to one party will not render him lia-
ble for the special damage, unless it
can be inferred from the whole trans-
action that he consented to become
liable for such special damage.
"Secondly — Where a person who
has knowledge or notice of such
special circumstances might refuse
to enter into the contract at all, or
might demand a higher remunera-
tion for entering into it, the fact that
he accepts the contract without re-
quiring any higher rate will be evi-
dence, tliough not conclusive evi-
dence, from which it may be inferred
that he has accepted the additional
risk in case of breach.
"Thirdly — Where the defendant
has no option of refusing the contract
and is not at liberty to require a
higlier rate of remuneration, the fact
that he proceeded in the contract
after knowledge or notice of such
special circumstances is not a fact
from which an undertaking to incur
a liability for special damages can
be inferred.
" Fourthly .— Even if there were
an express contract by the defend-
ant to pay for special damages, under
the circumstances last supposed, it
might be questioned whether such a
contract would not be void for want
of consideration. Take the case of
a railway passenger who buys his
ticket, informing the clerk of some
particular loss which would arise
upon his being late. Suppose the
clerk were to undertake that the
company should be answerable for
the loss, and that such xmdertaking
should be held to be within the
sphere of his duty. Would it not be
purely gratuitous? The considera-
tion for any promise by the com-
pany, arising from the payment of
the fare, would be exhausted by
their carrying the passenger to his
destination or paying the ordinary
damages for failui-e to do so. What
would there be left to support the
special undertaking to pay an excep-
tional penalty? Of course, it would
be different if a special payment
were made by way of premium for
incurring the inci'eased risk." But
see Foster v. Cleveland, etc. R. Co.,
56 Fed. Rep. 434, stated in g 51, as to
the last suggestion.
1 Booth v. Spuyten Duyvil Rolling
164
COMPENSATION.
[§52.
Doubtless it is essential, in order to bring within the contem-
plation of the parties damages different from and larger in
amount than those which usually ensue, that the special cir-
cumstances out of which they naturally proceed shall have
Mill Co., 60 N. y. 487. In this case
Churoli, C. J., said, referring to the
English cases: "Some of the judges
in commenting upon it (the doctrine
under consideration) have held that
a bare notice of special circum-
stances which might result from a
breach of the contract, unless under
such circumstances as to imply that
it formed the basis of the agreement,
would not be sufficient. I concur
with the view expressed in tiiese
cases, and I do not think that the
court in Hadley v. Baxendale in-
tended to lay down any different
doctrine." But the defendant in this
case was held to be liable for the loss
sustained on a contract which the
plaintiffs had with the New York
Central Railroad Co., by reason of
the defendant's'breach. and that loss
was held to be brought within the
contemplation of the parties by mere
notice, generally, that there was a
contract depending on the defend-
ant's performance.
In Liman v. Pennsylvania R. Co.,
4 N. Y. Misc. 539, 24 N. Y. Supp. 824,
the plaintiff was under contract to
exhibit one R. in Chicago for two
weeks, and four days before the
time fixed therefor applied to the
defendant at its office in New York
and stated the circumstances; the
defendant agreed to deliver to R, a
railroad ticket to Chicago, but failed
to do .so. Judgment in favor of the
plaintiff for the sum paid for the
ticket and profits on R.'s engage-
ment was affirmed. The court did
not interpret Booth v. Spuyten Duy-
vii Rolling Mill Co., swpra, as intend-
ing that a contracting party may,
notwithstanding that he has been
sufficiently informed of the exist-
ence of a certain other contract, the
performance of which is dependent
upon performance of the proposed
contract with him, to put him upon
reasonable inquiry in respect thereto,
shield himself against consequential
damages by wilfully or deliberately
abstaining from the inquiry. If,
under such circumstances, a party
refrains from inquiry he cannot set
up his ignorance to limit his liability.
A manufacturer contracted to fur-
nish machinery and make essential
repairs upon the plant of a compress
company by a fixed date, which was
known by both parties to be the be-
ginning of the season for the opera-
tion of the plant, which could only
be operated during a part of the
year; both parties also knew that it
was the intention to have the plant
in readiness for the opening of the
season. The notice to the defendant
was sufficient to make it liable for
special damages resulting from its
delay. Machine Co. v. Compress Co.,
105 Tenn. 187, 53 S. W. Rep. 270; Neal
V. Pender-Hyman Hardware Co.,
122 N. C. 104, 29 S. E. Rep. 96, 65 Am.
St. 697.
In Snell v. Cottingham, 72 111. 161,
it was held that a contractor who
fails to finish a railroad by the time
limited in his contract cannot be
held for the loss occasioned to the
owner of the road by reason of an-
other contract between him and a
third party, for the use of the road
after the time it should have been
completed, even though he may have
known of the existence and the terms
of such other contract at the time of
entering into his own, unless he ex-
pressl}' agrees to such a rate of dam-
ages. A similar doctrine is laid down
§ 52.] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 1G5
been known to the party sought to be made liable in such
manner, at the time of contracting, as to make it manifest to
him that if compensation in case of a breach on his part is ac-
corded for actual loss it must be for a loss resulting from that
special state of things which those circumstances portended.
Damages are not the primary purpose of contracts, but are
given by law in place of and as a compensation and equiva-
lent for something else which had been agreed to be done and
has not been done. What the damages would ordinarily [91]
be on such a default is immaterial if the contracting party as-
sume the obligation which he has broken with a knowledge of
a peculiar state of facts connected with the contract which in-
dicated that other damages would result from a breach, and
the latter are claimed. To confine the injured party's recov-
ery in such case to the lighter damages which usually follow
such a breach, where no such known special facts exist, and.
exclude those which were thus brought within the contempla-
tion of the parties, would be to sacrifice substantial rights to
arbitrary rule; to set aside the principle which entitles a party
to compensation commensurate with his injury to give effect
to a rule formulated to render that principle effectual; it
would be to apply a subordinate rule where it has no applica-
tion instead of the principle, which is paramount and always
applicable. What are the usual damages which result from
the breach of a contract? There is certainly no customary
amount, nor is there any rule of damages which is universal
in Bridges v. Stickney, 38 Me. 369; days would be most disastrous. Tiie
Huut V. Oregon Pacific R. Co., 36 damages insisted upon exceed $44,000,
Fed. Rep. 481. See Clark v. Moore, a sum enormously out of all propor-
3 Mich. 55. tion to the amount to be paid for the
The Illinois case is, probably, not entire work. The same distinction
to be taken as declaring a general is made in other cases. Thus, it is
principle. The decision was doubt- said in Booth v. Spuyten Duy vil Roll-
less influenced by the damages ing Mill Co., 60 N. Y. 487, 495: It is
which would have been recovered if sufficient to hold, what appears to
the rule had been applied. It is said me to be clearly just, that he is
in the opinion: Had it been known, bound by the price unless it is shown
that it was expected appellees would that the price is extravagant, or of
be held responsible for such extraor- an unusual or exceptional character,
dinary damages, it is hardly prob- See Guetzkow v. Andrews, 92 Wis.
able that they would have entered 214, 53 Am. St 909, 66 N. W. R«p.
into the contract, for the conse- 119.
quences of a failure for only a few
166
COMPENSATION,
[§52.
like the principle for allowance of due compensation. If it is
a contract of sale and the vendor refuses to complete it, one
rule is to ascertain that compensation by the difference be-
tween the contract price and the market value, because if the
article which is the subject of the contract can be obtained in
market at a market price the vendee is thereby enabled to
supply him without loss unless the market price has increased.
That rule goes no further, but the principle does. Where the
vendee cannot obtain the article in the market, nor at all if
the vendor refuses to perform his contract, that rule is not ap-
[92] plicable, and then resort must be had to other elements
of value; and recourse is had to the principle to determine the
measure of redress; even a contract of resale made by the ven-
dee and of which the vendor had no notice may be considered.^
1 France v. Gaudet, L. R. 6 Q. B,
199; McHose v. Fulmer, 73 Pa. 365;
Carroll-Porter Boiler & Tank Co. v.
Columbus Machine Co., 5 C. C. A. 190,
55 Fed. Rep. 451; Hockersmith v.
Han ley, 29 Ore. 27, 44 Pac. Rep. 497,
citing the text.
France v. Gaudet, supra, was an
action for the conversion of the prop-
erty sold, and hence is not to be con-
sidered as authority to the full extent
of the pro|)Osition to which it is cited.
If the article the vendor has con-
tracted to supply or an article of the
same quality cannot be procured in
the market, it is presumed that such
fact was within the contemplation
of the parties to the contract. McHose
V. Fulmer, supra. But this rule is
denied in an English case (Thol v.
Henderson, 8 Q. B. Div. 457). There
was a contract to deliver goods which
were not obtainable in the market;
the purchaser had entered into a con-
tract for their sale. The vendor had
DO knowledge of the particular con-
tract, but was aware that the goods
were ordered for the purpose of re-
selling them. Such knowledge was
held not to bring the case within the
rule of Hadley v. Baxendale, so as to
allow the recovery of profits which
would have been made if there had
not been a breach of the contract.
This is too strict an application of tlie
rule, because it was immaterial to the
vendor who his purchaser's customer
was; the former had knowledge suf-
ficient to act as an incentive to the
prompt fulfillment of his contract,
and to apprise him of the fact that
its breach would esi>ecially damage
the vendee. See Loescher v. Dister-
berg, 26 111. App. 520, which is in har-
mony with McHose v. Fulmer, supra.
In Hamilton v. Magill, 13 L. R.
Ire. 186, one of the points especially
relied upon by the defendant was
that at the time the contract in suit
was made the plaintiff had not actu-
ally completed his contract for the
sale of the property purchased, and
that the case should be treated as if
the defendant had no other notice
than that it was bought for resale
generally. The answer of the court
was that it appears "illogical and con-
trary to principle that a person who,
having an offer, enters into a contract
with another, which if carried out
would enable him to accept that offer,
but refrains from actually accepting
it until he has entered into the con-
tract, should be in a worse position
i
§ 52.] CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. 167
And if the goods were not bought for resale and had no mar-
ket value, but were intended for some special use, the dam-
ages would be computed according to the value for the use to
which the property was most obviously adapted unless the
vendor know of the intention to apply them to a different one.^
Their delivery in the case where a contract of resale existed
would have enabled the vendee to obtain the reselling price,
and in the other to avoid the loss which has otherwise resulted
from being deprived of the property. Such recoveries are not
unusual. It may be said that sales are generallj'' made of arti-
cles having a market value. True. But there is no uniform
relativeness between the contract and market prices. The de-
faulting vendor will pay nominal damages when the market
price is less than the contract price, and substantial damages,
accordino' to the excess of the former at the time the oroods
should have been delivered. When the vendor refused to de-
liver ice according to his contract, knowing when he made the
agreement that it was wanted as a means of preserving fresh
meat in the prosecution of the vendee's business, and the ice
could not be obtained in market, what should be deemed the
usual damages for a breach of the contract ? Certainly not
what had been the market price when ice was plenty and
could be had from other sources; but its value when it should,
according to the contract, have been delivered and when the
vendor, as the fact probably may be, alone could supply it,
and when the vendee must have it or lose a certain amount of
meat, or suspend business, notwithstanding his best endeavors
by other means to preserve the meat or continue his business.^
If the contract is made to serve a particular purpose, not
communicated and known to both parties, nor indicated by
the subject-matter of the contract, and the loss in respect to
that purpose is so exceptional as neither to be within the con-
templation of the parties at the making of the contract, nor
than one who makes a contract for i Cory v. Thames Iron Works Co.,
sale on the chance of afterwards pur- L. R. 3 Q. B. 181; Machine Co. v.
chasing from another the goods which Compress Co., 105 Tenn. 187, 58 S.
he has previously contracted to sell. W. Rep. 270.
To establish such a distinction would 2 Hammer v. Schoenfelder, 47 Wis.
place the speculator in a more ad- 455, 2 N. W. Rep. 1129; Border City
vantageous position than the prudent Ice & Coal Co. v. Adams, 69 Ark. 219,
merchant." ' 62 S. W. Rep. 591.
168 COMPENSATION. [§ 52.
[93] within the first branch of the rule laid down in Hadley v.
Baxendale, it cannot be recovered; but where the injury is
within the contemplation of the parties, if they give the
subject consideration when the contract is made, they are
admonished by the prevalence of the principle of compensa-
tion in the law that, if they do not perform, the alternative of
making reparation on the scale of equivalence to the actual
injury will be compulsorj'^; and there is no need of an}'" agree-
ment to submit to such a legal consequence. The law as laid
down in Hadley v. Baxendale has been generally accepted in
this country ; it includes all such damages as may reasonably
be supposed to have been in the contemplation of both parties
at the time the}'' made the contract as the probable result of
the breach of it.^ And in accordance with the doctrine of
that case, it is sufficient if the special circumstances under
which the contract was actually made were communicated to
the party sought to be charged, and the damages resulting
from the breach are such as both parties would reasonably
contemplate would be the amount of the injury which would
ordinarily follow from a breach under those circumstances.
As said by Selden, J. : " The broad general rule ... is
that the party injured is entitled to recover all his damages,
including gains prevented as well as losses sustained; and this
rule is subject to but two conditions. The damages must be
such as may fairly be supposed to have entered into the con-
templation of the parties when they made the contract ; that
is, must be such as might naturally be expected to follow its
violation; and they must be certain both in their nature and
in respect to the cause from which they proceed." ^ And this
leads naturally to the consideration of the certainty which is
necessary to warrant the recovery of damages.
1 9 Ex. 358. tended for the rule that not only
^GrifiSn v. Colver, 16 N. Y. 494; must the parties have notice of the
Savannah, etc. R Co. v. Pritchard, 77 contract for the furtherance of
Ga. 412, 418, 4 Am. St. 92, 1 S. E. Rep. wliich the plaintiff made the con-
261; Benjamin v. Puget Sound Com- tract in suit, but there must be sorae-
mercial Co., 12 Wash. 476. 41 Pac. thing in the terms of the latter, read
Rep. 166, quoting the text; Collins v. in the light of surrounding circum-
Lavelle, 19 R L 45, 31 Atl. Rep. 434, stances, which shows an intention
citing the text. on the part of the vendor to assume
In a late case the defendant con- a larger engagement, a wider re-
§53.]
KEQUIKED CEKTAINTY OF DAMAGES.
169
Section 5.
kequired certainty of damages.
§ 53. Must be certain in their nature and cause. [94]
Damages must be certain both in their nature and in respect
to the cause from which they proceed. Judge Selden said that
the requisite that the damages must not be the remote, but the
proximate, consequence is in part an element of the required
certainty.^ In the preceding pages the requirement that the
damages be the natural and proximate result of the act com-
plained of has been discussed; but mainly with reference to
the consequences as a whole. Now it remains to consider the
certainty necessary not only in regard to the consequences as a
whole but also in detail. A fatal uncertainty may infect a case
where an injury is easily provable, but the alleged responsible
•cause cannot be sufficiently established as to the whole or some
part of that injury.- So it may exist where a known and
sponsibility, than is assumed in ordi-
nary contracts for the sale and deliv-
ery of merchandise. The answer
was that where notice is brought
home to the vendor that the goods
are purchased to be put to a partic-
ular use, he is chargeable with the
consequences of a failure to perform,
and with the results which such no-
tice fairly apprised him would fol-
low upon his default. Industrial
Works V. Mitchell, 114 Mich. 29, 72
N. W. Rep. 25, citing Booth v. Spuy-
ten Duyvil Rolling Mill Co., 60 N. Y.
487; Richardson v. Chynoweth, 26
Wis. 656; Illinois Central R. Co. v.
Cobb,64 111. 128; True v. International
Tel. Co., 60 Me. 9. 11 Am. Rep. 156.
1 Griffin v. Colver. 16 N. Y. 494.
2 See Beiser v. Grever & Twaite Co.,
11 Ohio Dec. 444.
As where there was a breach of a
contract to elect one president of a
bank for a term of years and at an
agreed annual salary, when the elec-
tion, if there had been no breach,
could have been for only one year,
to which time the recovery of the
salary was limited. There could be
no recovery for any of the subse-
quent years within the contract term
because the damages would be too
remote and uncertain. Witham v.
Cohen, 100 Ga. 670, 28 S. E. Rep. 505;
Kenyon v. Western U. Tel. Co., 100
Cal. 454, 35 Pac. Rep. 75.
Another example is afforded by a
contract so vague and indefinite that
it does not furnish a safe, satisfac-
tory or proper basis for computing
the damages caused by its breach.
Hart V. Georgia R. Co., 101 Ga, 188, 28
a E. Rep. 637. See Fletcher v. Jacob
Dold Packing Co., 41 App. Div. 30,
58 N. Y. Supp. 612.
If, in an action of tort, it be impos-
sible to distinguish between the
damage arising from the actionable
injury and the damage which has
anotlier origin, the jury must make
the best estimate in their power, and
award compensation for the action-
able injury. Jenkins v. Pennsylva-
nia R Co., 67 N. J. L. 331. 51 Atl.
170
COMPENSATION.
[§53.
provable wrong or violation of contract appears, but the alleged
loss or injury as a i^esult of it cannot be certainly shown.^
Many of the illustrations already given apply to the first, as
where the injury is not the natural or proximate result of the
act complained of; then the relation of cause and effect does
not exist between the alleged cause and the alleged injury.
This uncertainty may be further illustrated by the case of one
who complained tliat the defendant had taken his flat from
bis ferr}^ and that being obliged to go in search of it in order
to cross the river he left his horses attached to a wagon stand-
ing on the bank, and while he was gone they ran into the river
and were drowned,- Their loss was not a natural consequence
of the taking of the flat which the defendant could foresee as a
probable result of his wrongful act; there was a more im-
[95] mediate cause in the negligence of the owner; and after
the event it cannot be ascribed with the requisite certainty to
the defendant's act although it was the beginning of the series
of facts which culminated in that loss.* A grantee of land
cannot recover damages for the breach of the grantor's cove-
nant against incumbrances because of an existing inchoate right
of dower in the premises, a sum paid by himself to an auction-
Rep. 704. See Ogden v. Lucas, 48
111. 492: Harrison v. Adamson, 86
Iowa, 693, 58 N. W. Rep. 334; Wash-
burn V. Gil man, 64 Me. 163, 18 Am.
Rep. 246; Chicago & N. R. Co. v.
Hoag. 90 111. 339; Mark v. Hudson
River Bridge Co., 103 N. Y. 28, 8 N.
E. Rep. 243.
1 As where there has been a breach
of contract by a water company to
supply water to a municipality for
extinguishing fires. Pothinger v.
Owensboro Water Co., 6 Ky. L. Rep.
453. See Pacific Pine Lumber Co. v.
Western U. Tel. Co., 123 Cal. 428, 56
Pac. Rep. 103; Kenyon v. Same, 100
Cal. 454, 35 Pac. Rep. 75.
The pecuniary interest which a
husband has in the chance that an
embryo not quickened into life
would become a living child is so
absolutely uncertain that the loss of
that chance cannot be recovered for.
Butler V. Manhattan R. Co., 143 N.
Y. 417, 38 N. E. Rep. 454, 42 Am. St.
738, 26 L. R. A. 46.
2 Gorden v. Butts. 2 N. J. L. 334.
3 See Walker v. Goe, 3 H. & N. 395,
4 id. 350; Dubuque Ass'n v. Du-
buque, 30 Iowa, 176; Hofnagle v.
I^ew York, etc. R., 55 N. Y. 608; Da-
vis V. Fish, 1 G. Greene, 406, 48 Am.
Dec. 387; Lewis v. Lee, 15 Ind, 499;
Ashley v. Harrison, 1 Esp. 49; Barber
V. Lesiter, 7 C. B. (N. S.) 175; Collins v.
Cave, 4 H. & N. 225: Everard v.
Hopkins, 2 Bulst. 332: Walker v.
Moore. 10 B. & C. 416; Hayden v. Ca-
bot, 17 Mass. 169; Green v. Mann, 11
111. 613; Hargous v. Ablon, 3 Denio,
406, 45 Am. Dec. 481; Brayton v.
Chase, 3 Wis. 456; Chatter ton v. Fox^
5 Duer, 64.
§ 53.1 EEQUIRED CERTAINTY OF DAMAGES. 171
eer for selling tbom to a person who refuses to complete the
purchase on discovering the incumbrance.^
In an action for the wronfrful revocation of an agreement
to subfhit a controversy to arbitration the plaintiff is not en-
titled to recover damages for the trouble and expense incurred
in making the agreement; but he can recover for his loss of
time, and for his trouble and necessary expenses in preparing
for a hearing, such as employing counsel, taking depositions,
paying witnesses and arbitrators, so far as such preparations
are not available for a subsequent trial in court,^ "Where it
was agreed that a pending action between the parties should
be discontinued and submitted to arbitration, and one of them
subsequently revoked the submission, the other recovered the
costs and expenses he incurred in the discontinued suit.* And
•where one of the parties had released a cause of action against
a third person upon the agreement of the other to pay such a
sum as should be awarded, the one who revoked the submis-
sion w^as liable for the costs of the other incurred in the arbi-
tration, and also for the amount of his claim for the loss of his
cause of action.* The Yermont cases cited are distinguished
from one in which the contract to arbitrate was wholly exec-
utory when the breach occurred. "Where nothing has been
done in partial execution of the covenant, and the covenant
does not fix anything b3'' way of penalty or liquidated dam-
ages, the loss arising from a refusal to fulfill is usually wholly
conjectural because it is impossible to prove that the party
would have profited by the arbitration.^
A defendant chartered the plaintiff's vessel from Liverpool
to Puerto Cabello at a stipulated freight; a clause was after-
1 Harrington v. Murphy, 109 Mass. ment, a pledge has been deposited
299. to secure the paj^ment of the award,
2 Pond V. Harris, 113 Mass. 114. it may be foreclosed to the extent of
3 Hawley v. Dodge, 7 Vt. 237. the damages fixed by statute for the
*Day V. Essex County Bank, 13 revocation of a submission. The
Vt. 97. damages so fixed for preparing for
*Munson v. Straits of Dover S. S. and conducting the arbitration may
Co., 43 C. C. A. 57, 103 Fed. Eep. 926. be recovered notwithstanding the
When a party to a submission submission provides that the fees of
agreement has covenanted therein arbitrators and witnesses shall be
to pay the award by revoking the paid equally by the parties. Union
submission he breaches the cove- Ins. Co. v. Central Trust Co.. 157 N.
nant, and if, pursuant to the agree- Y. 633, 52 N. K Rep. 671.
172 COMPENSATION. [§ 54.
wards added to the charter-party allowing the defendant to
send on a part of the cargo to jNIaracaibo, with a proviso that
any expense incurred by so doing sliould be borne by the char-
terer. Under pretense of an attempt by the master to evade
the customs on the part so shipped, the custom-house authori-
ties at Puerto Cabello Avrongl'uUy imposed a line of $500 on
him, and detained the vessel for several months; but would
have allowed her to depart if the fine had been paid, which
the master had not the means to pay and did not. The gov-
ernment agreed afterwards to pay the master |5,000 for the
wrongful detention, but did not. It was held that the owner
of the vessel could recover from the charterer neither the loss
[96] sustained by the detention nor the expense incurred in
repairing the damage to the ship in consequence thereof, nor
for the costs of legal proceedings taken by him in respect to
the ship, nor for the fine.^ "Where the object of a bonus con-
tract providing for the erection of a mill was to enhance the
value of the property in the place in which the mill was to be,
the damao'es resulting' from the sale of the mill without re-
quiring the vendee to bind himself to fulfill the conditions of
the original contract, as it stipulated for if a sale should be
made, and the burning of the mill, without any obligation on
the vendee's part to rebuild and operate it for the period re-
quired, are not clearly ascertainable in their nature and origin,
but are speculative.- One named as a director of a proposed
corporation persuaded others so named and others who ex-
pected to become members of it not to do so. For the mis-
representations made to accomplish such result the person
making them was not liable to those who were proposed as
directors for the loss of the profits resulting from the failure
to organize the corporation.^
§ 54. Liability for the principal loss extends to details
and incidents. Where the alleged wrong or breach of con-
tract is shown with the requisite certainty to be the cause of
the injur}'^ in question it is also to be deemed the cause of all
its concomitant and incidental details which are constituent
1 Sully V. Duranty, 33 L. J. (Ex.) 3 Martin v. Deetz, 102 Cal. 55, 86
319. Pac. Rep. 368, 41 Am. St. 151.
2 Hudson V. Archer, 9 S. D. 240, 68
N. W. Rep. 54]
§ 5i.l REQUIRED CERTAINTY OF DAMAGES. 173
parts of the injury, including necessary and judicious expend-
itures made to stay or efface the wrong or limit its conse-
quences.' A riparian owner brought an action for polluting
the waters of a stream running through his farm. He recov-
ered for the loss of an opportunity of renting his grist-mill,
the diminution in the rental value of his farm, and the incon-
veniences he was put to in the use of the same, resulting di-
rectly from the conduct of the defendant.- A plaintiff's house
was injured by the partial falling in of the partition wall be-
tween it and the defendant's house, which was caused by dig-
ging too near the wall for the purpose of deepening the cellar
under it. Xo notice was given by the defendant of his inten-
tion to deepen his cellar, and evidence was offered to show
that the excavation was done in a careless and negligent man-
ner, and also to show that the business of the plaintiff, who
kept an ice-cream saloon and made cakes and other articles in
that line, was interrupted for several days. The court held
that the plaintiff was entitled to such damages as would be
sufficient to reinstate the wall and the house in as good con-
dition as they were prior to the injury, and to compensate
him for the loss consequent upon the interruption of his busi-
ness; and to show the latter, he might prove its usual profits
prior to the wrong.^ If a collision between vessels results in
1 McDaniel v. Crabtree, 21 Ark. the water to flow back upon the
431; Smith v. Condry, 1 How. 35; mill, and rendering it incapable of
Loker v. Damon, 17 Pick. 384; Chalice being used. The plaintiffs were held
V. Witte, 80 Mo. App. 84, 95, quoting entitled to recover the value of the
the text. See § 26. use of their mill during the time
2 Gladfelter v. Walker, 40 Md. 3. they were necessarily deprived of its
3 Brown v. Werner, 40 Md. 15; use, and the amount which it was
White V. Moseley, 8 Pick. 356; Sim- permanently diminished in value by
mons V. Brown, 5 R. I. 299, 73 Am. the erection of the dam; but could
Dec. 66; Allison v. Chandler, 11 not recover the amount of a loss
Mich. 543; Collins v. Lavelle, 19 R. I. upon saw logs on hand at the time
45, 31 Atl. Rep. 434, citing the text, of the injury, sustained either in
See § 70. consequence of a deterioration in
Walrath v. Redfield, 11 Barb. 368 their value or by a depression in the
(see s. C, 18 N. Y. 457), was an action market price. The damages in re-
on the case for damages to the spect to the logs were too speculative,
plaintiffs' saw-mill and other prop- uncertain, remote and contingent to
erty, occasioned by the defendant be allowed even upon proof that the
in constructing a dam and dike be- plaintiffs could not, by the use of or-
low such mill, and thereby causing dinary diligence, have procured the
174
COMPENSATIOX.
[§5i.
clisablino- one of them so that her owners cannot use her for a
voyage for which she has been engaged, though no regular
charter-party has been entered into, the damages resulting
from the loss of the profits of such vo3'^age are the result of the
collision.^ If logs are deliberately stored in a stream, which
is navigable for their transportation, so as to prev^ent the entry
of logs owned by another, and in a stream which empties into
the one so blocked, the person who is responsible therefor is
liable to the other for the wages and board of the latter's men
while waiting a reasonable time to get his logs out, for the ex-
pense of moving one crew of men out and another in, for the
increased cost of driving the logs the next season, and for in-
terest on the contract price for making the drive during such
time as the payment thereof was delayed; but not for the loss
of supplies left in the woods.-
logs to be sawed elsewhere, and could
not have disposed of them before
sawing. In actions of tort, where
there has been no wilful injury, the
plaintiff can only recover the dam-
ages necessarily resultmg from the
act complained of, and he cannot
conduct himself in such a manner as
to make them unnecessarily burden-
some.
A more reasonable rule and one
in better accord with the principle
of holding a wrong-doer liable for
such consequences as would natu-
rally and in the usual course of
things result from his conduct was
laid down in McTavish v. Carroll, 17
Md, 1, an action for damages for ob-
structing a right of way for repairing
a mill-race. The declaration alleged
that the obstruction prevented the
repair of the race, whereby the mill
became idle and could not be worked,
and the plaintiff lost the custom and
trade thereof, " and the use of the
same for grinding his own grain, and
was, therefore, at great expense,
obliged to carry it to other mills."
Held, that under this declaration,
evidence that the plaintiff was owner
of a large body of land around his
mill, and was accustomed to grind
the grain raised thereon at this mill
for his cattle, horses, hands and
family, and in consequence of its
stoppage had been compelled to carry
his grain to another mill, at a greater
distance, is admissible. Hinckley v.
Beckwith, 13 Wis. 31.
But in such a case there can be no
recovery for diminished profits aris-
ing from the manufacture of flour.
Todd V. Minneapolis, etc. R Co., 39
Minn. 186, 39 N. W. Rep. 818.
A more satisfactory rule is sus-
tained by Terre Haute v. Hudnut,
113 Ind. 542, 13 N. E. Rep. 686, where
the operations of a mill which had
an established business were sus-
pended by an overflow, and machin-
ery in it was damaged to such an
extent as to make repairs necessary.
The net earnings of the past and
present were proven as a basis of
estimating the damages.
1 Owners of The Gracie v. Owners
of The Argentiuo, 14 App. Cas. 519;
affirming The Argentine, 13 Prob.
Div. 191.
'^ McPheters v. Moose River Log
Driving Co., 78 Ma 329, 5 AtL Rep.
270.
^ 55.] KEQUIRED CKKTAINTY OF DAMAGES. 175
§ 55. Only tlie items which are certain rccoverahle. [97]
The charterer of a vessel who was suhjectod to expense in get-
ting- her off from a gas pipe which wasanunhiwful obstruction
to the navigation of a river, and upon which she caught in
passing while navigating with due care, may maintain an ac-
tion against those who laid the pipe to recover for such expense,
hut for not for any delay in his business or other consequential
damages.' "Where the defendant was enjoined from removing
his negroes, and upon an order of seizure they were taken out
of his possession and a decree subsequently rendered in his
favor, it w^as held bis damages would, ordinarily, be what their
labor would have been worth had they continued in his posses-
sion. But he would also be entitled to damages for any [98]
loss that was the direct, proximate and natural consequence of
the removal of the negroes out of his possession, which were
not remote and speculative, involving inquiries collateral to
the consideration of the wrongful act. And so he could not
recover as damages counsel fees incurred in defending the suit
nor expenses involved in employing an agent to attend to his
other business whilst he was engaged in such defense; nor
what would or might have been the profits of his business had
not his possession of the negroes been interrupted.^ The plaint-
iff's oxen were stolen in Yermont and taken to the defendant,
and being found in his possession in New York were demanded
and refused. The plaintiff then resorted to legal process to
gain possession, and succeeded, but incurred expense therein.
He was held not entitled to recover such expense as part of his
damages for the conversion, in a subsequent action.^ These
expenses were not rejected because a remote or uncertain in-
cident of the wrong, but because they were costs of a judicial
proceedmg in which such allowable expenses are collectible,
and if not thus compensated cannot be recovered. The ex-
pense of regaining property tortiously taken is a part of the
injury and recoverable.* "Where goods wrongfully seized are
taken from the wrong-doer by another, their owner may, in an
action against the former, recover the amount paid the other
wrong-doer to get them back.* In an action upon an attach-
1 Benson v. Walden, etc. Gas L. * Bennett v. Lockwood, 20 Wend.
€o.. G Allen, 149. 223, 32 Am. Dec. 532.
^ McDaniel v, Crabtree, 21 Ark. 431. * Keene v. Dilke, 4 Ex. 388.
3 Harris v. Eldred, 42 Vt. 39.
1T6 COMPENSATION. [§ 56.
ment bond the rule restricting the recovery to the natural and
proximate damages Avill exclude any claim for injuries to credit
and business,^ and for mental suffering.^ But where a party
took a lease of a ferry, and covenanted to maintain and keep
the same in good order, but instead of doing so diverted trav-
elers from the usual landing to another landing owned by him-
self, by means whereof a tavern-stand belonging to the
plaintiff situate on the first landing was so reduced in business
[1)0] as to become tenantless, it was held in an action by the
landlord for breach of the contract that he might assign, and
was entitled to recover as damages, the loss of rent on the
tavern-stand.^ Where a negro was hired to make a crop and
was taken away by the owner in the middle of the year,
whereby the crop was entirely lost, it was held that the proper
measure of damages was the hire of the negro paid in advance,
the rent of the land and the expenses incurred for the purpose
of making the crop.*
§ 56. Recovery for successive consequences. Where the
injury to be recovered for consists of several items, variously
related consequentially to the alleged cause, the right to each
must be decided upon the same principles as where only one
inseparable injurious effect is in question. It may happen that
such items are successive, and the first may in some sort oper-
ate as cause in respect to later effects. When this is the case
a recovery for items subsequent to the first will depend on
whether the act complained of is the efiicient cause of the en-
tire damage as represented by all such items, and whether
they are consequences which ought reasonably to have been
contemplated to ensue, or, in case of contract, whether they
may fairly be supposed to have been within the contemplation
of the parties at the time of contracting. This is well illus-
trated by an English case. The defendant contracted to de-
liver a threshing machine to the plaintiff, a farmer, within
three weeks. It was the latter's practice, known to the de-
1 State V. Thomas, 19 Mo. 613, 61 69 Ala. 373, 44 Am. Rep. 519. See ch.
Am. Dec. 580; Weeks v. Prescott, 53 25.
Vt. 57, 74; Braunsdorf v. Fellner, 76 2TisdaIe v. Major, 106 Iowa, 1, 75
Wis. 1, 45 N. W. Rep. 97; Anderson N. W. Rep. 663, citing this section.
V. Sloane, 73 Wis. 566, 78 Am. St. 885, 3 Dewint v. Wiltse. 9 Wend. 325.
40 N. W. Rep. 214; Pollock v. Gautt, ^Hobbs v. Davis, 30 Ga. 423.
§ 57.] REQUIRED CERTAINTY OF DAMAGES. 177
fenclant, to thresh his wheat in the field and send it thence
direct to market. At the end of three weeks plaintiff's wheat
was ready in the field for threshing, and, on his remonstrating
at the delay in the delivery of the machine, the defendant
several times assured him it should be sent forthwith. The
plaintiff, having unsuccessfully tried to hire another machine,
was obliged to carry home and stack the wheat, which, while
so stacked, was damaged by rain. The machine was afterwards
delivered and the contract price paid. The wheat was then
threshed, and it was found necessary, owing to its deterioration
by rain, to kiln-dry it. When dried and sent to market it sold
for a less price than it would have fetched had it been threshed
at the time fixed by the contract for the delivery of the ma-
chine, and then sold, the market price of wheat having mean-
while fallen. It was held, in an action for the non- [100]
delivery of the machine, that the plaintiff was entitled to re-
cover for the expense of stacking the wheat, the loss from the
deterioration by the rain and the expense of kiln-drying it,
but not for the loss by the fall in the market, the latter being
too uncertain to have been contemplated and not the natural
result of the breach.^ There is much reason for holding that
the latter loss was also recoverable.^ The case referred to is
much more satisfactory than a number of American cases
which hold that a farmer cannot recover damages resulting to
his crops from delayed delivery or the failure to work as war-
ranted of a harvesting machine which was sold with knowledge
that it was to be used in securing the purchaser's grain.*
§ 57. Illustrations of the rule of the preceding section.
In an action for negligent driving, whereby the plaintiff's
horse was injured, it appeared that the horse was sent to a
iSmeed v. Foord, 1 E. & E. 603. 3 Fuller v, Curtis, 100 Ind. 237, 50
2Wardv. New York Central R. Co., Am. Eep. 786; Prosser v. Jones, 41
47 N. Y. 29; Sturgess v. Bissell, 46 Iowa, 674; Wilson v. Reedy, 32 Minn.
N. Y. 462; Scott v. Boston, etc. Co., 256, 20 N. W. Rep. 153; Osborne v.
106 Mass. 468; Sisson v. Cleveland, Poket, 33 Minn. 10, 21 N. W. Rep,
etc. R. Co., 14 Mich. 489; Collard v. 752; Brayton v. Chase, 3 Wis. 456,
Southeastern R, Co., 7 H. & N. 79; probably overruled by cases referred
Weston V. Grand Trunk R Co., 54 to in Thomas, etc. Manuf. Co. v. Wa-
Me. 376, 92 Am. Dec. 552; Peet v. bash, etc. R. Co., 62 id. 642, 650, 51
Chicago, etc. R Co., 20 Wis. 594, 91 Am. Rep. 725, 23 N. W. Rep. 827.
Am. Dec. 446.
Vol. 1 — 13
178 COMPENSATION. [§ 57
farrier for six weeks for the purpose of being cured, and at the
end of that time it was ascertained that it was damaged to the
extent of 201. It was held that the plaintiff was entitled to
recover for the keep of the horse at the farrier's, the amount
of the farrier's charges, and the difference in its value at the
time of the accident and at the end of the six weeks, but not
for the hire of another horse during that period.^ Had a claim
been made for the loss of the use of the injured horse during
his treatment at the farrier's it would have been a proper item
of damages.^ If a horse and vehicle are injured through a
defect in a highway and in consequence thereof the horse be-
comes frightened and unmanageable, continues to be a kicker
and becomes spoiled for driving, there may be a recovery for
the depreciation in his value as well as for the damage done
the vehicle by the kicking and by the defect.^ A tradesman
took a ticket to go from L. to H. On arriving at an inter-
mediate station he found no train ready to take him to H. the
same night, as there should have been according to the pub-
lished time-bill. He slept at that place and in the morning
paid Is. 4:d. fare to H. In consequence of the delay he failed
to keep appointments with his customers, and was detained for
many days. The latter was deemed within the contemplation
of the parties. The court told the jury that the plaintiff would
[101] have been entitled to charge the company with the ex-
pense of getting to H., but he had no right to cast upon it the
remote consequences of remaining the night at the intermediate
place. He was entitled to the fare thence to H., and perhaps
the 2s. for his bed and refreshments. A motion for a new trial
on the ground of misdirection was refused. Pollock, C. B.,
said : " In actions for breach of contract the damages must be
such as are capable of being appreciated or estimated. Mr.
Wilde was invited at the trial to state what were the damages
1 Hughes V. Quentin, 8 C. & P. 703; 3 English v. Missouri Pacific R. Co.,
Glare v. Maynard, 7 C. & P. 741. 73 Mo. App. 232. See § 26.
2 Albert v. Bleecker Street, etc. R, One of the New York county-
Co., 3 Daly, 393; Bennett v. Lock- courts has denied the right to recover
wood, 20 Wend. 223, 33 Am. Dec. 532; for the depreciation in the value of
Walrath v. Redfield, 11 Barb. 368; a horse caused by fright. Nason v.
Gillett V. Western R, Co., 8 Allen, West, 31 N, Y. Misc, 583, 65 N, Y.
560; The Glaucus, 1 Lowell, 366; Supp. 651.
Sweeney v. Port Bur well Harbor
o„ 17 Up. Can. C. P. 574.
§ 57.] REQUIRED CERTAINTY OF DAMAGES. 179
to which the plaintiff was entitled. lie said general damages.
The plaintiff is entitled to nominal damages at all events, and
such other damages of a pecuniary kind as he may have really
sustained as a direct consequence of the breach of the contract.
Each case of this description must be decided with reference
to the circumstances peculiar to it; but it may be laid down
as a rule that, generally, in actions upon contracts no damages
can be given which cannot be stated specifically, and that the
plaintiff is entitled to recover whatever damages naturally re-
sult from the breach of contract, but not damages for the disap-
pointment of mind occasioned by the breach of contract." ^ A
subsequent English case was decided by the queen's bench in
1S75 on this state of facts: The plaintiff, wife and two chil-
dren of five and seven years old respectively, took tickets on
the defendant's railway from W. to H. by the midnight train.
They got into the train but it did not go to H., but along an-
other branch to E. where the party were compelled to get out.
It being late at night the plaintiff was unable to get a convey-
ance or accommodation at an inn; and the party walked to his
house, a distance of between four and five miles, where they
arrived at about three o'clock in the morning. It was a drizzling
night and the wife caught cold and was laid up for some time,
and unable to assist her husband in his business as before, and
expenses were incurred for medical attendance.^ Three items
of loss and injury came under consideration: first, the incon-
venience, as it was called, of having to walk home; second,
the expense of the wife's sickness; and third, the loss of her
services. The last two items being coincident in time [102]
and relation to the defendant's breach of contract were con-
sidered together. Only the first was allowed. It was remarked
that the plaintiffs did their best to diminish the inconvenience
to themselves, and they had no alternative but to w^alk; that
it was not to be doubted that the inconvenience was the im-
mediate and necessary consequence of the breach of the de-
fendant's contract to convey them to H. Cockburn, C. J., said :
"I am at a loss to see why that inconvenience should not be
1 Hamlin v. Great Northern R.Co., 2 jjobbs v. London, etc. R. Co., L.
3 H- & N. 40a See Denton v. Same, R 10 Q. B. 111.
5 El. & BL 860.
180 COMPENSATION. [§ ^7
compensated by damages in such an action as this. ... If
the jury are satisfied that in the particular instance personal
inconvenience or suffering has been occasioned, and that it has
been occasioned as the immediate effect of the breach of con-
tract, I can see no reasonable principle why it should not be
compensated for." And again: " So far as the inconvenience
of the walk is concerned, that must be taken to be reasonably
within the contemplation of the parties; because if a carrier
engages to put a person down at a given place and does not
put him down there but puts him down somewhere else, it
must be in the contemplation of everybody that the passen-
ger put down at the wrong place must go to the place of his
destination somehow or other. If there are means of convey-
ance for getting there he may take those means and make the
company responsible for the expense; but if there are no means
I take it to be law that the carrier must compensate him for the
personal inconvenience which the absence of those means has
necessitated. That flows out of the breach of contract so im-
mediately that the damage must be admitted to be a fair sub-
ject-matter of damages. But in this case the wife's cold and
its consequences cannot stand upon the same footing as the
personal inconvenience arising from the additional distance
which the plaintiffs had to go. It is an effect of the breach of
contract in a certain sense, but removed one stage; it is not
the primary but the secondary consequence of it." The ob-
jection to what is termed the " secondary consequence " is
that it is not a consequence so certain to occur as to be among
those to be anticipated from such a breach, it happening from
other than the usual state of the weather; but it was not any
more a secondary consequence than is the burning of a second
building by a continuous fire, or the injury to the grain by
[103] rain in Smeed v. Foord. It is said in the same opinion
already quoted from that " the nearest approach to anything
like a fixed rule is this: That to entitle a person to damages
by reason of a breach of contract, the injury for which com-
pensation is asked should be one that may fairly be taken to
have been contemplated by the parties as the possible result
of the breach of contract. Therefore you must have something
immediately flowing out of the breach of contract complained
of, something immediately connected with it, and not merely
§57.]
KEQUIEED CERTAINTY OF DAMAGES.
181
connected with it through a series of causes intervening be-
tween the immediate consequence of the breach of contract
and the damage or injury complained of. To illustrate that I
cannot take a better case than the one now before us: Suppose
that a passenger is put out at a wrong station on a wet night
and obliged to walk a considerable distance in the rain, catch-
ing a violent cold which ends in a fever, and the passenger is
laid up for a couple of months, and loses through this illness
the offer of an employment which would have brought him a
handsome salary^. No one I think who understood the law
would say that the loss so occasioned is so connected with the
breach of contract as that the carrier breaking the contract
could be held liable." True, there the sickness would be the
cause of an accidental loss, but in the case under discussion the
question was not of such a loss. On the contrary it was the
expense and loss of time incident to the sickness itself. AVas
not that " a result of the breach " which was natural and proxi-
mate, and to be contemplated under the other circumstances
of the breach for which the defendant was held responsible ? ^
1 Blackburn, J. : " It is a contract
by which the railway company had
undertaken to carry four persons to
Hampton Court, and in fact that
contract was broken when they
landed the passengers at Esher in-
stead of Hampton Court. The con-
tract was to supply a conveyance to
Hampton Court, and it was not sup-
I)lied. Where there is a contract to
supply a thing and it is not supplied,
the damages are the difference be-
tween that which ought to have been
supplied and that which you have to
pay for, if it be equally good; or, if
the thing is not obtainable, the dam-
ages would be the difference between
the thing which you ought to have
had and the best substitute you
can get upon the occasion for
the purpose. . . . When he is
not able to get a conveyance at
all, but has to make the jour-
ney on foot, I do not see how you can
have a better rule than that which
the learned judge gave to the jury
here, namely, that the jury were to
see what was the inconvenience to
the plaintiffs in having to walk, as
they could not get a carriage." As
to damages being recoverable for the
illness of his wife, he said: **I think
they are not, because they are too re-
mote. On the principle of what is
too remote, it is clear enough that a
person is to recover in the case of a
breach of contract the damages di-
rectly proceeding from that breach
of contract and not too remotely.
Although Lord Bacon had, long ago,
referred to this question of remote-
ness, it has been left in very great
vagueness as to what constitutes the
limitation, and therefore I agree with
what my lord has said to-day, that
you make it a little more definite by
saying such damages are recover-
able as a man, when making a con-
tract, would contemplate would flow
from a breach of it. For my own
182
COMPENSATION.
[§ 5S.
One who has been injured may recover for the injury though
in his care of himself thereafter, he may have misjudged as to
the proper treatment. In such an event he is not a volunteer
in the case of his ailment; that was caused by the defendant,
and the plaintiff's honest misjudgmentis not negligence. The
negligence of the defendant began a sequence of harmful effects ;
an intervening innocently misjudged act of the injured person
aggravated them; but the latter act would have been harmless
if the original wrong were not still operative. It continues to
operate more harshly, and it is from such operation that the
plaintiff suffers. The original cause continues, and accom-
plishes the whole result.^
[lOi] § 58. Same subject. In an action under the code it
appeared that the defendant delivered tickets to the plaintiff
about the 1st of March, 1S52, for transportation from XewYork
to San Francisco; one entitled him to a passage to Graytown,
at the mouth of Nicaragua river, in a specified ship which was
to sail on the 5th of that month; another entitled him to a
passage up that river and through the lake of that name to
San Juan del Sur, on the Pacific ocean ; and the other from
the latter place to his destination, on a steamer named, which
part, I do not feel that I can go
further than that. It is a vague rule,
and as Bramwell, B., said, it is some-
thing like laaving to draw a line be-
tween night and day; there is a
great duration of twilight when it
is neither night or day; but on the
question now before the court,
though you cannot draw the precise
line, you can say on which side the
line the case is." Mellor, J.: "I
quite agree . . . that for the
mere inconvenience, such as annoy-
ance and loss of temper or vexation,
or for being disappointed in a par-
ticular thing which you have set
your mind upon, without real phys-
ical inconvenience resulting, you
cannot have damages. That is surely
sentimental, and not a case where
the word inconvenience, as I here
use it, would apply. But I must say,
if it is a fact that vou arrived at a
place where you did not intend to go
to, where you are placed by reason
of the breach of contract of the car-
riers at a considerable distance from
your destination, the case may be
otherwise. It is admitted that if
there be a carriage you may hire it
and ride home, and charge expenses
to the defendant. The reason why
you may hire a carriage and charge
the expense to the company is with
a view simply of mitigating the in-
convenience to which you would
otherwise be subject; so that where
the inconvenience is real and sub-
stantial, arising from being obliged
to walk home, I cannot see why that
should not be capable of being as-
sessed as damages in respect of in-
convenienca"
i Hope V. Troy & L. R. Co., 40 Hun,
438, affirmed without opinion, 110
N. Y. 64a
§ 58.] EEQUIKED CERTAINTY OF DAMAGES. 183
was advertised to leave about fifteen days after th? plaintiff
would arrive at the starting port according to the usual course
of conveyances. The plaintiff was carried on his first [105]
ticket, and arrived at Graytown March 15th, where he was de-
tained eleven days. He then started for San Juan del Sur.
He arrived at a place on the way on the 31st of March when
he was taken sick. There he received news that the steamer
on which he was entitled to take passage under his third ticket
was lost on the 27th of the previous month, but the fact was
not known to the defendant at the time of selling the tickets
nor until about the 20th of ApTil. The plaintiff arrived at San
Juan del Sur on the 4:th of April and remained there until the
9th of May, endeavoring, but unsuccessfully, to procure a pas-
sage to San Francisco. He then returned to New York, and
remained sick, until long after he returned home, with a fever
peculiar to the climate of Nicaragua. It was held that the
time he lost by reason of his detention on the isthmus, his ex-
penses there, and of his return to New York, the time he lost
by reason of his sickness after he returned home and the ex-
penses of such sickness, so far as the same were occasioned by
the defendant's negligence and breach of duty, as well as the
amount originally paid for his passage, were damages which
the plaintiff was entitled to recover.^
The damages which are recoverable for breach of contract
are limited to the direct and immediate consequences ; but the
right to indemnity is not satisfied by compensation for the
first item of loss if there are others so identified with it that
the injury as a whole naturally comprehends all and they to-
gether constitute the immediate consequence. A party whose
breach of contract leaves the other party in such a situation
that sickness is its natural, immediate and probable conse-
quence causes by the same act the direct pecuniary losses which
are its usual and natural concomitants, as loss of time and the
expense of medical and other. attendance. If by reason of the
sickness some extraordinary or unusual loss occurs for want of
ability on his part to attend to his affairs it is a loss which can-
1 Williams v. Vanderbilt, 28 N. Y. v. Pacific Mail S. S. Co., 1 Cal. 353;
217, 84 Am. Dec. 333; Heirn v. Mc- Pearson v. Duane, 4 Wall 605; The
Caughan, 32 Miss. 17 ; Porter v. Steam- Zenobia, 1 Abb. Adm. 80; The Cana-
boat New England, 17 Mo. 290; Yonge dian, 1 Brown Adm. 11.
184
COMPENSATION.
[§58.
not be considered as having entered into the contemplation of
[100] the parties; and the same must be the conclusion, if the
sickness were not the natural and probable consequence of the
act complained of, but the result of some other or secondar}''
cause. Where sickness is the direct or proximate consequence
of a wrongful act, the pain and suffering are also elements of
the injury for which compensation may be recovered.^
The earlier cases, especially in jurisdictions in which exem-
plary damages are recoverable, generally held that the person
whose breach of contract, fraud or other wrongful act causes
another to be sued, under such circumstances that the suit is
an injurious consequence for which he is liable, is bound to re-
spond in damages for the expenses which are the necessary
and legal incidenits of the suit.^ But not in the absence of
such circumstances.^ As given in a late case, the reason for
denying counsel fees where the circumstances do not warrant
the imposition of exemplary damages is that the law prescribes
what costs shall be taxed and what shall be therein in-
1 Fillebrown v. Hoar, 124 Mass. 580;
Meagher v. Driscoll, 99 Mass. 281;
Pennsylvania R. Co. v. Books, 57 Pa.
339, 98 Am. Dec. 229; Ward v. Van-
derbilt, 4 Abb. App. Dec. 521; In-
dianapolis, etc. R. Co. v. Birney, 71
111. 391; Klein v. Jewett, 26 N. J. Eq.
474; Ransom v. New York, etc. R.
Co., 15 N. Y. 415; Ohio, etc. R. Co. v.
Dickerson, 59 Ind. 317; Whalen v.
St. Louis, etc. R. Co., 60 Mo. 323;
Pittsburg, etc. R. Co. v. Andrews, 89
Md. 329; Johnson v. Wells, eta Co.,
6 Nev. 224, 3 Am. Rep. 245. See
§§ 1242-1245.
2Philpot V. Taylor, 75 IlL 309, 20
Am. Rep. 241 ; Dixon v. Fawcus, 3 El.
6 El. 537; Collen v. Wright, 7 El. &
B. 301; Randell v. Trimen, 18 C. B.
786; Anderson v. Sloane, 72 Wis. 566,
7 Am. Sfc. 885, 40 N. W. Rep. 214;
Stevens v. Handley, Wright, 121;
Roberts v. Mason, 10 Ohio St. 277;
Peckham Iron Co. v. Harper, 41 Ohio
St 100: Parsons v. Harper, 16 Gratt.
64; Marshall v. Betner, 17 Ala. 832;
Lawrence v. Hagerman, 56 IlL 68; 8
Am. Rep. 674; Ziegler v. Powell, 54
Ind. 173; Closson v. Staples, 42 Vt.
209, 1 Am. Rep. 316; Eastin v. Bank
of Stockton, 66 CaL 123, 56 Am. Rep.
77, 4 Pac. Rep. 1106; Magmer v. Renk,
65 Wis. 364, 27 N. W. Rep. 26; Greg-
ory v. Chambers, 78 Mo. 294; Bolton
v. Vellines, 94 Va. 793, 26 S. E. Rep.
847; First Nat. Bank v. Williams, 63
Kan. 431, 63 Pac.Rep. 744; Stevenson
V. Whitesell, 10 Pa. Super. Ct. 306;
Winkler v. Roeder, 23 Neb. 706, 37 N.
W. Rep. 607, 8 Am. St. 155.
3 Burruss v. Hines, 94 Va, 413, 26 S.
E. Rep. 875; St. Peter's Church v.
Beach, 26 Conn. 355; Henry v. Davis,
123 Mass. 345; Warren v. Cole, 15
Mich. 265; Young v. Courtney, 13 La.
Ann. 193; Flanders v. Tweed, 15 WalL
450; Oelrichs v. Spain, 13 How. 363;
Yarbrougb v. Weaver, 7 Tex. Civ.
App. 215, 25 S. W. Rep. 468; Landa
v. Obert, 45 Tex. 542; Winstead v.
Hulme, 32 Kan. 568, 4 Pac. Rep. 994;
Bull V. Keenan, 100 Iowa, 144, 69 N.
W. Rep. 433; Gibney v. Lewis, 6!»
Conn. 392, 36 Atl. Rep. 799.
§ 58.] EEQUIKED CERTAINTY OF DAMAGES. 185
eluded as the fee of the successful party. In such case no
greater fee should be allowed to be recovered. The litigants
should be placed on an equality. If the defendant should be
successful it is clear that he cannot recover from the plaintiff,
in addition to the taxable costs, the fee paid by him to his at-
torney; nor should the plaintiff, if successful, recover from the
defendant the fee he may have paid or become liable for to
his attorney.^ Counsel fees paid in the conduct of an unsuc-
cessful suit against lot-owners to recover the amount of an as-
sessment assigned by a city to such party in payment for the
construction of a sewer, which suit failed because the assess-
ment was invalid, are not recoverable in an action subsequently
brought against the city for damages for the violation of its •
contract though the city had stipulated that the assessment
should be valid.^ The weight of authority is to the effect that
counsel fees and court costs made necessary in the prosecution
or defense of suits occasioned by the breach of contracts are
not recoverable in actions ex contractu. There are some excep-
tions, such as actions on injunction,' and attachment bonds,''
and the like, and actions on covenants of warranty or of
seizin,^ where there has been an eviction reasonably resisted
by the grantee. "Expenditures of this class, though growing
1 Buriuss V. Hines, 94 Va. 413, 26 S. One •who has succeeded in an
E. Rep. 875. action cannot recover in a subse-
A recovery of attorney's fees has quent action the expense of the first,
been denied in an action by a stock- Lowell v. House of Good Shepherd,
holder to compel the officers of a cor- 14 Wash. 211, 44 Pac. Rep. 253; Mar-
poration to allov? an inspection of its vin v. Prentice, 94 N. Y. 295.
books. Clason v. Nassau Ferry Co., Where provision is made by statute
20 N. Y. Misc. 315,45 N. Y. Supp. 675. for a reasonable attorney's fee to be
And in an action against an execu- fixed by the court, and the court
tor de son tort for wrongfully with- makes an allowance, it is error to
holding property and resisting pro- allow in addition the statutory fee
ceedings to punish him for contempt, provided for the successful party as
Bishop V. Hendrick, 83 Hun, 323, 31 part of the costs. Montesano v.
N. Y. Supp. 502, 146 N. Y. 398, 42 N. E. Blair, 13 Wash. 188, 40 Pac. Rep.
Rep. 542, And against the usurper 731.
of an oflSoe. Palmer v. Darby, 3 2 Gates v. Toledo, 57 Ohio St. 105,
Ohio, N. P. 416, 1 Ohio Dec. 48. 48 N. E. Rep. 500.
A plaintiff can recover attorney's ^ See § 524.
fees as damages only when permitted * See § 512.
by statute. Spencer v. Murphy, 6 6 See ^§ 617-619; also §§83, 84.
Colo. App. 453, 41 Pac, Rep. 841.
186 COMPENSATION. [§ 59
out of the alleged breach, in the sense that bad there been no
breach the occasion for them would not have arisen, are yet
too remote to have been in the contemplation of the parties,
and hence do not constitute an element of legal damage when
the suit is on the contract, though the rule might be otherwise
were it in case, setting out the contract as inducement merely.^
If one's property is taken, injured or put in jeopardy by an-
other's neglect of duty imposed by contract, or by his wrong-
ful act, any necessary expense incurred for its recovery, repair
or protection is an element of the injury. It is often the legal
duty of the injured party to incur such expense to prevent or
limit the damages ; and if it is judicious and made in good faith,
it is recoverable though abortive.^
§ 59. Required certainty of anticipated profits. In an-
other class of cases the question of the certainty of damages is
more distinctly involved. They are cases in which the act
complained of is plainly actionable and easy of proof, and the
actual injury occasioned thereby consists in destroying or im-
pairmg arrangements from which it is alleged that pecuniary
advantages would have resulted. Such effects may be pr©-
[107] duced by the refusal of a party to fulfill his contract, or
by tortious acts by which some business scheme is frustrated.
The pecuniary advantages which would have been realized
but for the defendant's act must often be ascertained without
the aid which their actual existence would afford. The plaint-
iff's right to recover for such a loss depends on his proving
with sufficient certainty^ that such advantages would have re-
i.Burton v. Henry, 90 Ala. 281, 7 So. lin v. Great Northern R. Co., 1 H. &
Rep. 925: Marvin v. Prentice, 94 N. Y. N. 408; Mailler v. Express Propeller
295; Copeland v. Cunningham, 63 Line, 61 N, Y. 312; Smeed v. Foord.
Ala. 394. IE. &E. 602; Clark v. Russell, 110
2Nading v. Dennison, 32 Tex. Civ. Mass. 133; James v. Hodsden, 47 Vt.
App. 173, 54 S. W. Rep. 412, quoting 127; First Nat. Bank v. Williams, 62
the text; Nashville v. Sutherland, Kan. 431, 63 Pac. Rep. 744, quoting
94Tenn. 356, 29S. W. Rep. 228; Wat- the text. See § 88.
son v. Lisbon Bridge, 14 Me. 201; 3 "The rule that damages which
Hughes V. Quentin, 8 C. & P. 703; are uncertain or contingent cannot
Gillet V. Western R Co., 8 Allen, 580; be recovered does not embrace an
Emery v. Lowell, 109 Mass. 197; uncertainty as to the value of the
Hoffman v. Union Ferry Co., 68 N. benefit or gain to be derived from
Y. 385; Jutte v. Hughes, 67 N. Y. 268; the performance of the contract, but
Loker v. Damon, 17 Pick. 284; Ham- an uncertainty or contingency as tO'
§ 59.] REQDIEED CERTAINTY OF DAMAGES. 187
suited, and, therefore, that the act complained of prevented
them.'
The grounds upon which is founded the general rule of ex-
cluding profits in estimating damages are, (1) that in the greater
number of cases such profits are too dependent upon numerous
and changing contingencies to constitute a definite and trust-
worthy measure of damages; (2) because such loss of profits is
ordinarily remote and not the direct and immediate >result of
a non-fulfillment of the contract; (3) the engagement to pay
such loss of profits, in cases of default in performance, does
not form a part of the contract, nor can it be said, from its
nature and terms, that it was within the contemplation of the
parties. Cases arise, however, in which loss of profits is said
to be clearly within the contemplation of the parties, although
not provided for by the terms of the contract, and where such
profits are not open to the objection of uncertainty or remote-
ness. An instance of the latter kind is where the contract is
entered into for the purpose, in part at least, of enabling the
party to fulfill a collateral agreement from which profits would
arise, of the existence of which he informed the other party
prior to the making of the contract. In such cases the loss of
profits from the collateral agreement is clearly within the con-
templation of the parties, and is not remote or speculative.'^
whether such gain or benefit would injured from giving attention totlie
be derived at all. It only applies to business in which he is engaged, it is
such damages as are not the certain error to receive testimony of the
result of the breach, and not to such average profits made therein as a
as are the certain result but uncer- basis for estimating damages. Bier-
tain in amount." In the latter case bach v. Goodyear Rubber Co., 54
the law will adopt that mode of es- Wis. 208, 41 Am. Rep. 19, 11 N. W.
timating the damages which is most Rep. 514; Masterton v. Mount Ver-
certain and definite. Blagen v. non, 58 N. Y. 391; Blair v. Mil wau-
Thompson, 23 Ore. 239, 254, 18 L. R. kee, etc. R. Co., 20 Wis. 262. This
A. 315, 31 Pac. Rep. 647. rule is disapproved of in Terre Haute
" Certainty " means reasonable cer- v. Hudnut, 112 Ind. 542, 552, 13 N. E.
tainty. Baltimore & O. R Co. v. Rep. 686, and the New York case
Stewart, 79 Md. 487, 29 Atl. Rep. 964; cited pronounced not in harmony
Stewart v. Patton, 65 Mo. App. 21. with later cases in that state. See
1 Myerle v. United States, 33 Ct. of Wakeman v. Wheeler & W. Co., 101
Cls. 1, 26, quoting the text; Fell v. N. Y. 205, 54 Am. Rep. 676, 4 N. E.
Newberry, 106 Mich. 542, 64 N. W. Rep. 264; § 1246.
Rep. 474. See § 78. 2 Per Parker, Ch. J., in Witherbee
In actions to recover for personal v. Meyer, 155 N. Y. 446, 453, 50 N. E.
injuries which disqualify the person Rep. 85.
188
COMPENSATION.
[§59.
If a vendor fails to deliver property pursuant to his contract,
the vendee, having paid for it, is deprived of such benefit as
such sale completed would have conferred, which is a loss
equal to the value of the property at the time it should have
been delivered, with interest from that time. This value can
generally be proved with certainty. If the property has not
been paid for, the compensation is still adjusted with reference
to the value, and is the difference between the contract price
and the value. Thus, the vendee is entitled to recover accord-
ing to the advantage he would have derived from performance
of the contract, namely, the profit he could have made by the
bargain. He is entitled to such sum as would enable him to
obtain the property if it is obtainable.^ On the other hand,
where a vendee breaks his contract, the property is left on the
[108] vendor's hands; his loss is equal to the difference be-
tween the contract price and any less sum the property is
worth when the vendee was bound to take and pay for it. The
loss he suffers is the profit he would have made by the com-
pletion of the sale.2
1 In Haskell v. Hunter, 23 Mich.
305, an action was brought for dam-
ages for breach of a contract to sell
and deliver lumber, and it appeared
that a portion of the lumber had
been delivered to the plaintiffs at a.
place other than that specified in the
contract, and subject to a heavy bill
of freight in consequence thereof.
In the absence of any proof that the
plaintiffs had accepted the same in
satisfaction to that extent of the
contract, or had waived their right
to compensation to that extent for
the breach thereof.it was not proper
to deduct the amount so delivered
from the whole amount to be de-
livered. An instruction to the jury
that the proper measure of damages
is the difference between the con-
tract price of the lumber not deliv-
ered and the wholesale price at the
place of delivery was held to be
erroneous. The true measure is the
difference between the contract
price and what it would have cost
the plaintiffs to procure, at the place
of delivery, and at the time or times
when it was reasonable and proper
for them to supply themselves with
lumber of the kind and quality they
were to receive on the contract: and
if it were impracticable to supply
themselves, except at retail rates,
they were entitled to demand those
rates of the defendants.
2 Gordon v. Norris, 49 N. R 376;
Haines v. Tucker, 50 N. H. 307; Col-
lins V. Delaporte, 115 Mass. 159;
Ullmanv. Kent, 60111. 271; Sanborn
V. Benedict, 78 IlL 310; Camp v.
Hamlin, 55 Ga. 259; McCracken v.
Webb, 36 Iowa, 551; Dustan v. Mc-
Andrew, 44 N. Y. 72; Hay den v.
Demets, 53 N. Y, 426; Beardsley v.
Smith, 61 111. App. 340.
The loss of profits based upon the
sale of town lots at prices beyond
their value and which are dependent
upon the working up of a boom can-
§ 60.] KEQUIEED CERTAINTY OF DAMAGES. 189
§ 60. Same subject. In many cases the sum which shall
represent the value to a vendee who has been disappointed in
the receipt of property bargained for cannot be ascertained
from proof of a market value, either because the article is not
obtainable in market or because it is contracted for and must
be obtained from the vendor to answer a particular purpose,
and not for resale. Then, in applying the general rule that
the damages for breach of contract are to be measured by the
benefits which would have been received if the contract had
been performed, resort must be had to the known or custom-
ary use of the property and such practical elements of value
as the case presents. If the sale is made with a warranty, ex-
press or implied, that the article is of a particular description
or suitable for a designated use, on a breach by the vendor the
damages are properly computed according to the actual loss
in respect to that object. The ascertainment of the damages
may involve an inquiry into the advantages derivable from
the delivery of articles of the required description or suitable
for the contemplated use, and of losses occasioned by the
breach with reference to the particular purpose of the contract
as known to the parties. In such cases the same degree of
certainty is not always attainable and there is much conflict
of authority as to the proper scope of inquiry. The same con-
siderations apply to the question of the proper mode of arriv-
ing at the amount of damage whatever be the nature of the
contract. The injured party is entitled to gains prevented
and losses sustained if he can prove them with sufficient cer-
tainty.^ In Fletcher v. Tayleur^ the action was brought
not be recovered. Carbondale In- A. R. Co., 128 Mo. 224, 27 S. W. Rep.
vestment Co. v. Burdick, 58 Kan. 517, 568; Stewart v. Patton, 65 Mo. App.
50 Pac. Rep. 442. 21; Wittenberg v. Mollyneaux, 60
iHoge V. Norton, 22 Kan. 374; Neb. 583, 83 N. W. Rep. 842, 59 Neb.
Brown v. Had ley, 43 Kan. 267, 23 203, 80 N. W. Rep. 824; Lakeside
Pac. Rep. 493; Arkansas Valley Town Paper Co. v. State, 45 App. Div.
& Land Co. v. Lincoln, 56 Kan. 145, 112, 60 N. Y. Supp. 1081; Burruss v.
43 Pac. Rep. 706; New Market Co. v. Hines, 94 Va. 413, 26 S. E. Rep. 875;
Embry, 20 Ky. L. Rep. 1130, 48 S. W. Carroll-Porter Boiler & Tank Co. v.
Rep. 980; Washington County Water Columbus Machine Co., 5 C. C. A.
Co. V. Garver, 91 Md. 398, 46 Atl. Rep. 190, 55 Fed. Rep. 451 ; Hitchcock v.
979; Wiggins Ferry Co. v. Chicago & Anthony, 28 C. C. A. 80, 83 Fed. Rep.
217 C. B.21.
190
COMPENSATION.
[§60.
af^amst a ship-builder to recover damages for non-delivery of
an iron ship at the time appointed in the contract. The ship
[109] was intended by the plaintiffs and from the nature of her
fitting's the defendant must have known she was intended for
779; Safety Insulated Wire & Cable
Co. V. Mayor, 13 C. C. A. 375, 66 Fed.
Eep. 140; Fontaine v. Baxley, 90 Ga.
41G, 17 S. E. Rep. 1015; Border City
Ice & Coal Co. v. Adams, 69 Ark. 219,
62 S. W. Rep. 591.
In an action brought to recover
the price of nine and one-half tons
of fertilizer the defendant set up that
the plaintiff agreed to sell and deliver
to him twenty tons of fertilizer at a
stipulated price, with notice that it
was intended for use on the defend-
ant's cotton crop. The defendant
was unable to buy the remaining
quantity elsewhere, and the plaintiff
refused to deliver it. The land upon
which the fertilizer was designed to
be used was cultivated in a farmer-
like manner. Upon a portion the
fertilizer delivered was used. This
portion produced between three hun-
dred and four hundred pounds of
seed cotton per acre more than that
adjoining, which was also planted in
cotton — the quality and cultivation
of each part being precisely the same.
The court say: "The true rule seems
to be that [the loss of] 'profits which
have been sustained as the natural
consequence of the breach or the
wrongful act complained of are re-
coverable unless they are objection-
able either on the ground of remote-
ness or of uncertainty. Those profits
are usually considered too remote,
among many others, which are not
the immediate fruits of the princi-
pal contract, but are dependent upon
collateral engagements and enter-
prises not brought to the notice of
the contracting parties, and not
therefore brought within their con-
templation or that of the law. Those
are considered uncertain which are
purely speculative in their nature,
and depend upon so many incalcula-
ble contingencies as to make it im-
practicable to determine them defi-
nitely by any trustworthy mode of
computation. We would not be
willing to say that the damages here
claimed by the defendant by waj^ of
lost profits would have been recover-
able if their ascertainment had been
left to mere conjecture. The amount
of cotton or other crops which land
produces is dependent upon so many
varying contingencies as to render
it very indeterminata It will vary
with the seasons, the adaptation of
soil and climate, and its compara-
tive exemption from the ravages of
worms or other destructive insects.
Speculative opinions of witnesses as
to the probable influences of these
operative causes would be a poor
criterion for the measure of values.
In this case, however, these diflicul-
ties are entirely removed. The char-
acter of the season is absolutely
known. So is the precise effect of
the fertilizer used during this par-
ticular season. No speculation is
needed as to how much rain and
how much sunshine were requisite
to produce a given amount of crops
to the acre, nor as to the probable
effect of the fertilizer upon the differ-
ent kinds of soil, or even the propor-
tion of it best suited to the land, and,
therefore, what would necessarily
have been produced on the remain-
der, which is shown to have been in
precisely the same state of cultiva-
tion, and similar in quality of soil."
Bell V. Reynolds, 73 Ala. 511. See
Goodsell V. Western U. Tel. Co., 53
K Y. Super. Ct 46, 58 id. 26, 9 N- Y.
Supp. 425.
g GO.] KEQUIKED CEKTAINTY OF DAMAGES. 191
a passenger ship in the Australian trade. The witnesses called
on the part of the plaintiff stated that the vessel would, in all
probability, have obtained, if completed by the time men-
tioned in the contract, at the then current rates, an outward
freight of about 7,000^., and a gross freight home of about
9,500^., and that, allowing for the necessary outlay and ex-
penses, the profits would in all probability have been a sum
somewhat exceeding 7,000^. The amount of freight received
by the plaintiffs when the ship sailed was 4,280^. The court
submitted the case to the jury, to be decided by the rule laid
down in Hadley v. Baxendale, and the jury returned a verdict
in favor of the plaintiffs for 2,7501., which was sustained.
Under the particular circumstances it is to be inferred that
the data for ascertaining what the ship would have earned if
she had been finished at the proper time were not purely con-
jectural, but were nearly as reliable as is the proof of market
values.
But while this case on its facts is quite satisfactory and no
doubtful principles are announced in it, the damages were ar-
rived at in a manner which the courts in this country have gen-
erally refused to adopt; that is, where there is any other and
more certain method of ascertaining the damages they will
not generally attempt to ascertain what profits could be real-
ized by conducting a business.^ In actions for damages for
not fulfilling in time contracts for particular works to be com-
pleted at a stipulated date, the plaintiff cannot recover dam-
ages estimated on the value of profits which would have been
realized by the use of the works if the contract had been per-
formed. The value of such use for general purposes to which
they are adapted or some known use for which they were in-
tended, during the delay, with any expenses which have to be
1 Taylor V. Maguire, 12 Ma 313; Rep. 799; Douglas v. Railroad Co., 51
Blanchard v. Ely, 21 Wend. 342; W. Va. 523, 41 S. E. Rep. 911; Central
Walker v. Ellis, 1 Sneed, 515; Porter Coal & Coke Co. v. Hartman, 111
V. Woods, 3 Humph. 56, 39 Am. Dec. Fed. Rep. 96, 49 C.C. A. 244; Armistead
153; Singer v. Farnsworth, 2 Ind. 597; v. Shreveport, etc. R. Co., — La. — ,
Glidden v. Pooler, 50 111. App. 36; 32 So. Rep. 456; Asher v. Staoey, 23
Lanahan v. Heaver, 79 Md. 413, 29 Ky. L. Rep. 1586, 65 S. W. Rep. 603;
Atl. Rep. 1036; Delp v. Edlis, 190 Pa. Silurian Mineral Spring Co. v. Kuhn,
25, 42 Atl. Rep. 462; Sharpe v. South- — Neb. — , 91 N. W. Rep. 508.
ern R. Co., 130 N. C. 613. 41 S. E.
192 COMPENSATION. [g 60.
incurred in the meantime, is usually the measure of damages.^
Where the plaintiff took possession of a store under a contract
of purchase and carried on a profitable business in it for sev-
eral months and was then ejected by the defendant and kept
out of possession, the latter was liable for the value of the
business lost, which was provable by evidence of the profits
made.^ On the breach of a contract for the loan of money to
be used in erecting houses, none of which were built until
three years after its breach, there cannot be a recovery for the
loss of their rental value. The fact that the plaintiff was un-
able during that time to borrow the money from any other
source on the same security offered the defendant, and which
he did not impair, was taken as evidence of the uncertainty
and speculative character of the anticipated profits.'
[110] In particular cases there may be losses in outlays
made by the injured party in anticipation of the performance
by the other party, and actual loss of wages of men kept idle,
and various other like items which are easily proved ; these,
with the rental value of the agreed structure, enable the court
to ascertain the damages with more certainty than by con-
sideration of profits to be made in conducting a business where
nearly all the factors in the calculation are supposititious.* But
1 Griffin v. Colver, 16 N. Y. 489; ham, 14 Neb. 369,45 Am. Rep. 121,
Taylor V. Bradley, 39 N. Y. 129; Mcv 15 N. W. Rep. 704; Witherbee v.
Boyle V. Reeder, 1 Ired. 607; Benton Meyer, 155 N. Y. 446, 50 N. E. Rep.
V. Fay, 64 III 417; Green v. Mann, 85; Rogers v. Bemus, 69 Pa. 432;
11 IlL 614; Priestly v. Northern I. & Pennypacker v. Jones, 106 Pa. 237;
C. R Co., 26 111. 207, 71 Am. Dec. Finnegan v. Allen. 60 111. App. 354;
369; Strawn v. Coggswell, 23 111. 461; Paola Gas Co. v. Paola Glass Co., 56
Fleming v. Beck, 48 Pa. 309; Lewis Kan. 614, 54 Am. St. 598, 44Pac. Rep.
V. Atlas Mut. L. Ins. Co., 61 Mo. 534; 621; Williams v. Island City Milling
Green v. Williams, 45 111. 206; Dean Co., 25 Ore. 573, 37 Pac. Rep. 49, cit-
V. White, 5 Iowa, 266; Rogers v. ing the text; Watson v. Kirby, 112
Beard, 36 Barb. 31; Snell v. Cotting- Ala. 436, 20 So. Rep. 624; Atlantic &
ham, 72 111. 161; Cassidy v. Le Fevre, D. R. Co. v. Delaware Construction
45 N. Y. 562; Parker v. Gilliam, 1 Co., 98 Va. 503, 37 S. E. Rep. 13;
Ired. 545; Lecroy v. Wiggins, 31 Ala. Sharpe v. Southern R. Co., 130 N. C.
13; Pettee v. Tennessee Manuf. Co., 1 613, 41 S. E. Rep. 799.
Sneed. 381; Heard v. Holman, 19 C. 2 Collins v. Lavelle, 19 R. L 45, 31
B. (N. S.) 1; Davis V. Cincinnati, etc. Atl. Rep. 434.
R. Co., 1 Disney, 23; Blair v. Kilpat- 3 j^yinski v. Middlesex Banking
rick, 40Ind. 312; Thompson v. Shat- Co., 34 C. C. A. 452, 92 Fed. Rep. 449.
tuck. 2 Met 615; Corbet v. Johnson, < Gates v. Northern Pacific R. Co.,
10 Ont. App. 564; Bridges v. Lan- 64 Wis. 64, 24 N. W. Rep. 494; United
§ CO.] REQUIRED CERTAINTY OF DAMAGES. 193
where there is not such a certain mode of estimating damages,
the court will not dismiss the injured party with nominal dam-
ages, unless the case is such there is no certainty that he has
suffered actual injury. In a suit by an agent against a life
insurance company for damages resulting from hrs discharge
during the term of his engagement, his measure of damages is
the amount he has lost in consequence. And testimony of
actuaries as to the probable value of renewals for the remain-
der of his term on policies already obtained is competent to
assist in arriving at the result.^ J3ut an estimate of the prob-
able earnings thereafter, derived from proof of the amount of
his collections and commissions before the breach, without
other proof relating thereto, was held too speculative to be
admissible.-
In estimating the damages sustained bj' a company for the
laying out of a highway across its railroad or for permitting
another railroad to cross it at grade, the jury have no right to
take into consideration any supposed future damage to it, from
a probable increase in the expense of doing business in conse-
quence of the establishment of the new highway or crossing;
and evidence of payments of money on account of accidents at
the several crossings, and of the comparative profit of travel
over the railroad between different stations, is inadmissible; it
is too uncertain and contingent.^ The conjectural or pos- [111]
sible profits of a whaling or other voyage cannot be taken into
consideration in estimating the damage against a master for
running away with the vessel and abandoning the voyage.*
states V. Behan, 110 IT. S. 338, 4 Sup. 2 Lewis v. Atlas Mut L. Ins. Co.,
Ct. Rep. 81; Taylor Manuf, Co. v. 61 Mo. 534.
Hatcher Manuf. Co., 39 Fed. Rep. 3 Boston, etc. R. Co. v. Middlesex, 1
440; Mandia v. McMahon, 17 Ont. Allen, 324; Portland & R. R. Co. v.
App. 34; cases cited in n. 1, p. 192. Deering, 78 Me. 61, 57 Am. Rep. 784,
The right to be reimbursed for out- 2 Atl. Rep. 670; Massachusetts, etc.
lay and expenses does not depend R. Co. v. Boston, etc. R. Co., 121
upon proof of the right to recover Mass. 124; Chicago & A. R. Co. v.
profits. United States v. Behan, Joliet, etc. R. Co., 105 111. 388, 44 Am.
Taylor Manuf. Co. V. Hatcher Manuf. Rep. 799; Boston & M. R Co. v.
Co., supra. County Com'rs, 79 Me. 386, 10 Atl.
i^tna L. Ins. Co. v. Nexsen, 84 Rep. 113. See § 1077 ei seg.
Ind. 347: Lewis v. Atlas Mut. L. Ins. * Brown v. Smith, 12 Cush. 366;
Co., 61 Mo. 534; Tilles v. Mutual L. Schooner Lively, 1 Gall. 314; Boyd v.
Ins. Co., 1 Mart. Ch. Dec. 313. See §69. Brown, 17 Pick. 453; The Anna Maria,
Vou I — 13
194: COMPENSATION. [§ 60.
Where there was a breach of a contract to give a theatrical
performance on one occasion only, proof of the leading actor's
repute and popularity, that during the previous year he had
played to a large house in the same place, the inhabitants of
which largely patronized such performances, and the testimony
of the plaintiff, based upon experience in the management of
the theater in which the play was to have been rendered, of
the cash receipts of similar plays given there, as to what the
receipts might have been if the play had been given, was in-
sufficient to sustain a judgment for substantial damages.^ And
where the breach was of a theatrical " sharing terms " agree-
ment, which contemplated a considerable period for its execu-
tion, the loss of profits was not shown by the previous receipts
of the plaintiff's theater and by proof of the success of the play,
which was to have been given therein, in other cities.- The
damages which will result from a contemplated advance in the
price of real estate because of the proposed erection and opera-
tion of a factory on adjoining land cannot be recovered in an
action for the breach of a contract for the erection and opera-
tion thereof.^ But if lands are exchanged with an agreement
as part of the consideration by one of the parties that he will
make valuable improvements upon the tract conveyed by him,
the damages resulting from his breach are not too uncertain if
the complaint alleges the difference between the value of the
tracts at the time the exchange was made.* In a Wisconsin
case there was a breach of contract to purchase and work a
stone quarry, of which the plaintiff was to have one-half of the
net profits so long as it could be profitably worked. The de-
fendant refused to perform before any profits were realized. It
was proven that the quarry had been worked at a profit for
three years preceding the trial, and an estimate was made of
profits based in part on earnings for another year. The court
considered the loss of profits sufficiently established, and held
2 Wheat. 337; Del Col v. Arnold, 3 Cutting v. Miner, 30 App. Div. 457,52
Dall. 333. N. Y. Supp. 288, which see.
1 Todd V. Keene, 167 Mass. 157, 45 3 DuUea v. Taylor, 35 Up. Can. Q. B.
N. E. Rep. 81. 395; Rock ford, etc. R. Co. v. Becke-
2 Moss V.Tompkins, 69 Hun, 288, 23 meier, 72 111. 267; Waterson v. Alle-
N. Y. Supp. 623, aflfiirnied without ghany Valley R. Co., 74 Pa. 208.
opinion, 144 N. Y. 659; approved in ■* Wilson v. Yocum, 77 Iowa, 569,42
N. W. Rep. 446.
§ 61.] EEQUIKED CERTAINTY OF DAMAGES. 195
that the time during which a recovery might be had therefor
■was for the jury.'
§ 61. Warranties of seeds and breeding quality of animals,
etc. Where a vendor falsely warranted that seed sold would
produce Bristol cabbages the damages recoverable were the
value of a crop of Bristol cabbages such as would ordinarily
have been produced that year, deducting the expense of rais-
ing it and the value of the crop actually raised.- What would
have been produced from other seed and of the kind warranted,
of course, could not be proved directly, and it was not at-
tempted; but the regularity of production under usual condi-
tions is such that a judicial conclusion may be based upon it as
sufficiently certain. Mere speculative profits, such as might
be conjectured would be the probable result of an adventure
xlefeated by the breach of contract, the gains from which are
entirely conjectural and with respect to which no means exist
of ascertaining even approximately the probable results, cannot
under any circumstances be brought within the range of damages
recoverable. In Georgia the rule is that for the breach of an im-
plied warranty of the merchantable quality of seed for planting
the damages are limited to the purchase-money with interest
thereon and expenses incurred in planting and preparing for
the planting of the seed.^ In Tennessee only the difference in
value between the seed purchased and that delivered can be re-
covered.* The cardinal rule in relation to the damages to be
compensated on the breach of a contract is that the plaintiff
must establish the quantum of his loss by evidence from which
the jury will be able to estimate the extent of his injury; this
will exclude all such elements of damage as are incapable of
being ascertained by the usual rules of evidence to a reason-
1 Treat v. Hiles, 81 Wis. 280, 50 N. Pavey, 8 C. & P. 769; Randall v.
W. Rep. 896, approved in Hitchcock Raper, 96 Eng. C. L. 82: Flick v,
V. Supreme Tent Knights of Macca- Weatheibee, 20 Wis. 392; Wagstaff
bees, 100 Mich. 40, 58 N. W. Rep. 640, v. Short Horn Dairy Co., 1 Cab. & E.
and in Schumaker v. Heinemann, 99 324; Phelps v. Eyria Milling Co., 13
Wis. 251, 74 N. W. Rep. 785. Ohio Dec. 692, quoting the text. See
2 Piissinger v. Tiiorburn, 34 N. Y. Reiger v. Worth, 127 N. C. 230, 37 S.
634; Wolcott v. Mount, 36 N. J. L. E. Rep. 217, 52 L. R A. 362.
262. 13 Am. Rep. 438; Van Wyck v. 3 Butler v. Moore, 68 Ga. 780, 45
Allen, 69 N. Y. 61, 25 Am. Rep. 136; Am. Rep. 508.
White V, Miller, 71 N. Y. 133; Ferris * Hurley v. Buchi, 10 Lea, 346.
V. Comstock, 33 Conn. 513; Page v.
196
COMPENSATION.
[§61.
1112] able degree of certainty.^ Instances of such uncertain
damages are profits expected from a whaling voyage and the
gains which depend in a great measure upon chance; they arQ
too purely conjectural to be capable of entering into compen-
sation for non-performance of a contract.- For a similar rea-
son the loss of the value of a crop for which seed had been
sown, the yield of which would depend upon the contingencies
of weather and season, would be excluded as incapable of esti-
mation with the degree of certainty which the law exacts in
the proof of damages.^ The loss of profits following the
breach of a contract to publish an advertisement have been
held to be incapable of being estimated;* a conclusion which
has been denied in a recent English case.^ The damages re-
1 Wolcott V. Mount. 36 N. J. L. 271,
13 Am. Rep. 438; Brigham v. Carlisle,
78 Ala, 243, 56 Am. Rep. 28, quoting
the text; Hair v. Barnes, 26 111. App.
580.
2 Wolcott V. Mount, supra.
3 Injuries done to growing crops
must be estimated with reference to
their condition at the time they are
inflicted. Their value cannot be
proven by showing the worth of sim-
ilar crops which matured. Drake v.
Chicago, etc. R. Co., 63 Iowa, 302, 50
Am. Rep. 746, 19 N. W. Rep. 215; Sa-
bine, etc. R. Co. V. Joaciiim. 58 Tex.
456; Texas, etc. R. Co. v. Young, 60
id. 201; G., C. & S. F. R. v. HoUiday.
65 id. 512: Jones v. George, 61 id. 345,
48 Am. Rep. 280, 56 Tex. 149; Gres-
ham V. Taylor, 51 Ala, 505. Contra,
Payne v. Railroad, etc. Co.. 38 La.
Ann. 164. 168, 58 Am. Rep. 174.
And on account of the uncertainty
involved in the maturing of crops
the damage sustained by injuries
done thereto cannot be reduced by
efforts to show what might have
been realized if another crop had
been planted on the land on which
that injured was growing. G., C. &
S. F. R. V. HoUiday, supra.
* Tribune Co. v. Bradshaw, 20 111.
App. 1.
The damages for the breach of an
agreement to advertise certain rem-
edies over the name of a druggist
who gives an order for such remedies
are too speculative to permit of a
recovery. Stevens v. Gale, 113 Mich.
680, 72 N. W. Rep. 5.
^ The plaintiff, on beginning busi-
ness as a ladies' tailor, made a con-
tract with the defendant for the
insertion of an advertisement in a
special place in a newspaper. The
publication was made for only a
part of the stipulated time. The
jury was instructed as to the meas-
ure of damages according to the rule
of Hadley v. Baxendale, and returned
a verdict for substantial damages.
Kennedy, J., said: The defendant
knew the object of the advertise-
ment. If it be material, I think he
ought to be taken to have known at
the time that if he broke the con-
tract the result would be, as a nat-
ural consequence, loss to the plaint-
iff in his business. The plaintiff
said he suffered loss to the extent of
£100, which he attributed to the loss
of the advertisement. No sugges-
tion was made by the defendant as
to any other cause for the loss of
business. The defendant knew that
the plaintiff could not get the adver-
§ 62.] REQUIRED CERTAINTY OF DAMAGES. 197
suiting from the breach of a warranty of the breeding qualities
of an animal are too contingent and uncertain to support a re-
covery when compensation for the services he renders is to be
paid only when the animals served actually foal.^ The same
is true of the reduction of the number of members in a given
class in a mutual benefit society, the effect being that the
amount realized by the beneficiary under a certificate is thereby
lessened. What the result would have been if the chanere
which brought about such reduction had not been made is a
mere matter of speculation.^ But if a vessel is under charter
or engaged in a trade the earnings of which can be ascertained
by reference to the usual schedule of freights in the market,
or if a crop has been sown and the ground prepared for culti-
vation, and the complaint is that because of the inferior qual-
ity of the seed a crop of less value is produced, by these cir-
cumstances the means would be furnished to enable the jury
to make a proper estimate of the injury resulting from the
loss of profits of this character.'
§ 62. Prospective growth of orchard aiul of animals. An
instructive case arose in Ohio involving this question of un-
certainty.* The action was on a contract by which the de-
tisement inserted in a journal of 3 Wolcott v. Mount, 36 N. J. L. 271,
such unique position in such a place 13 Am. Rep. 438; Owners of The Gra-
ss he had contracted to give him. I cie v. Owners of The Argentino, 14
am of opinion that the evidence of App. Cas. 519, affirming The Argen-
loss of business was proper for the tino, 13 Prob. Div. 191; Bell v. Rev-
consideration of the jury in assess- nolds, 78 Ala. 511, 56 Am. Rep. 52,
ing tlie damages. Marcus v. Myers, quoted from in note to preceding
11 T. L. Rep. 327 (1895). section.
Where there was a breach of a * Rhodes v. Baird, 16 Ohio, 573. 'It
contract to permit a party to put is said of this case that if it goes so
up signs at drinking stations on far as to hold that deprivation of
the grounds of the Columbia expo- future profits cannot be ground for
sition advertising a water filter, damages, it is not in accord with
testimony of qualified witnesses giv- the current of authority. See § 107.
ing opinions as to the value of the The case in which this observation
right under that contract was ad- was made ruled that evidence of the
niissible. World's Columbian Expo- value of an orchard at the time of
sition Co. v. Pasteur-Chamberland trial, in the prospective profits of
Filter Co., 82 III. App. 94. which the plaintiff was interested,
^ Connoble v. Clark, 38 Mo. App. was admissible, and it was not to be
476. presumed in favor of a wrong-doer
2 Supreme Lodge Knights of Pyth- that such value will become less.
ias V. Knight, 117 ind. 489, 500, 20 Slioemaker v. Acker, 110 Cal. 239, 4a
N. E. Rep. 479, 3 L. R. A. 409. Pac. Rep. 62.
19S COMPENSATION. [§ G2.
fendant agreed to make a lease to the plaintiff for the term of
ten years of certain lands on which to plant and cultivate a
peach orchard. The breach consisted in the failure to make
a lease and in defendant causing the plaintiff, within two years
from his taking possession, and after the peach trees were
planted, to be evicted from the premises. On the trial the
plaintiff was permitted to give evidence of the probable profits
that might in the future be realized from the orchard, judging
from the number of crops and the prices of peaches in th&
county for the last ten or fifteen years. This testimony was
held by the appellate court to be incompetent, because too un-
certain and speculative: "To the extent that the damages de-
pended on the loss of the use of the propertj', its market value
at the time of the eviction, subject to the performance of the
contract on the part of the plaintiff, furnished the standard
for assessing the damages. If it had no general market value
its value should have been ascertained from the witnesses
[113] whose skill and experience enabled them to testify di-
rectly to such value in view of the hazards and chances of the
business to which the land was to be devoted.^ This would
only be applying the same principle for ascertaining the value
of property which, by reason of its limited use, had no mar-
ket value, which is adopted with reference to proving the
present worth of the future use of property which, by reason
of its being in greater demand, has a market value. In the
case of property of the former description, the range for ob-
taining testimony as to the value is, of course, more circum-
scribed than it is in the case of property of the latter descrip-
tion. But in either case the proving of the value of the
property by witnesses having competent knowledge of the
subject is more certain and direct than to undertake to do so
by submitting to the jury, as grounds on which to make up
their verdict, the supposed future profits. The profits testified
to . . . were remote and contingent, depending on the
character of the future seasons and markets, and a variety of
other causes of no certain and uniform operation." Where
the plaintiff sought to recover the value of his stock in a
1 Gritfin v. Colver, 16 N. Y. 489; Giles v. O'Toole, 4 Barb. 261; Newbrough
V. Walker. 8 Gratt. 16, 56 Am. Dec. 127.
§ 03.] KEQUIRED CERTAINTY OF DAMAGES. 199
green-house, which was damaged or destroyed by a defective
heating apparatus, he was permitted to show the value of the
plants by testifying as to the number of flowers cut from them
the year previous, he having had long experience in cultivat-
ing plants by artificial heat and knowing how many flowers
could be produced from a plant.' The damages resulting
from the failure to furnish an agreed number of steers to be
cared for and sold at a profit, the plaintiff to be compensated
for his services by a share of the profits resulting from their
improvement in condition, are not too uncertain. In the ab-
sence of any agreement as to the weight or age of the steers it
was assumed that they were such as were ordinarily purchased
for feeding purposes in the community.^
g 63. Profits of special contracts. The liability for the
profits which w^ould have resulted from the performance of a
contract is co-extensive with the power to contract; and the
government is liable therefor to the same extent as an indi-
vidual.^ The right of a party to recover the profits he would
have made in fulfilling a contract depends solely upon the fault
of the other party to it, and plaintiff's ability to show that
the profits claimed were reasonably certain to have been real-
ized but for the wrongful act complained of.* It is not an in-
superable objection to their recovery that they cannot be
directly and absolutely proved. The general uncertainty at-
tending human life and the special contingencies as to its du-
ration on account of the physical condition of an individual
whose rights are involved do not prevent the recovery of
damages for causing his death or injuring his person. An
agreement by one person to support another during life is an
entire continuing contract upon the total breach of which the
obligor is liable for full and final damages estimated to the
1 Laufer v. Boynton Furnace Co., 81 Wis. 280, 50 N. W. Rep. 896; Amer-
84 Hun, 311, 32 N. Y. Supp. 363. icau Contract Co. v. Bullen Bridge
2 Rule V. McGregor, Iowa, — , Co., 29 Ore. 549, 561, 46 Pac. Rep. 138,
90 N. W. Rep. 811; Schrandt v. citing the text; Rule v. McGregor,
Young, 89 N. W. Rep. 607 (Neb.). Iowa, , 90 N. W. Rep. 811;
3 Danolds v. State, 89 N. Y. 36, 42 Schrandt v. Young, 89 N. W. Rep. 607
Am. Rep. 277. (Neb.): Farmers' Loan & Trust Ca
* Schumaker v. Heinemann, 99 Wis. v. Eaton, 114 Fed. Rep. 14, 51 C. C. A.
251, 74 N. W. Rep. 785; Treat v. Hiles, 640.
200
COMPENSATION.
[§63.
time the person who was to bo supported would probably die.'
It is the constant practice to so assess damages in actions to
recover for personal injuries. In the nature of things where
performance has been prevented the proof of profits cannot
be direct and absolute. The injured party must, however, in-
troduce evidence legally tending to establish damage and suf-
ficient to warrant a jury in coming to the conclusion that the
damages they find have been sustained; but no greater degree
of certainty in this proof is required than of any other fact
which is essential to be established in a civil action. If there
is no more certain method of arriving at the amount the in-
jured party is entitled to submit to the jury the particular
facts which have transpired and to show the whole situation
which is the foundation of the claim and expectation of profit,
so far as any detail offered has a legal tendency to support
such claim.^ The law does not require that the party seeking
iSchell V. Plumb, 55 N. Y. 592;
First Nat. Bank v. St. Cloud, 73 Minn.
219, 75 N. W. Rep. 1054; Ironton
Land Co. v. Butchart, 73 Minn. 39,
75 N. W. Rep. 749; Morrison v. Mc-
Atee, 23 Ore. 530, 32 Pac. Rep. 400;
Freeman v. Fogg. 82 Me. 408, 19 Atl.
Rep. 907.
2 Griffin v. Colver, 16 N. Y. 489;
Giles V. O'Toole, 4 Barb. 261; New-
brough V. Walker, 8 Gratt. 16, 56
Am. Dec. 127; Taylor Manuf. Co. v.
Hatcher Manuf. Co.. 39 Fed. Rep. 440,
446, 3 L. R. A. 587, quoting the text;
Brewing Co. v. McCann, 118 Pa. 314,
12 Atl. Rep. 445; Dart v. Laimbeer,
107 N. Y. 664, 14 N. E. Rep. 291;
Wakeman v. Wheeler & W. Manuf.
Co., 101 N. Y. 205, 217, 54 Am. Rep.
676, 4 N. E. Rep. 264, quoting the text;
Shoemaker v. Acker, 116 Cal. 239, 48
Pac. Rep. 62; Lavens v. Lieb, 12 App.
Div. 487. 42 N. Y. Supp. 901 ; Dickinson
V. Hart, 1 42 N. Y. 183, 36 N. E. Rep. 801 ;
United States Trust Co. v. O'Brien,
143 N. Y. 284, 38 N. E. Rep. 266; Skin-
ner v. Shew. [1894] 2 Ch. 581.
The difficulty of fairly estimating
the injury done an unknown author
by the breach of a contract to pub-
lish his first book is not necessarily
insuperable. Gale v. Leckie, 2 Stark.
107; Bean v. Carleton, 51 Hun, 318,
4 N. Y. Supp. 61. Compare Bean v.
Carleton, 12 N. Y. Supp. 519. Nor the
net proceeds which might have been
derived from the sale of tickets to
hear a noted lecturer. Savery v. In-
gersoll, 46 Hun, 176. This is a very
doubtful proposition in the absence
of proof of an advance sale of tickets.
See Bernstein v. Meech, 130 N. Y. 354,
29 N. E. Rep. 255, and § 60. Nor the
damages resulting to a hotel from
the violation of a contract to main-
tain a depot at a certain point. Hous-
ton, etc. R. V. Molloy, 64 Tex. 607.
But it is otherwise with the breach
of a contract to furnish a mule for
the cultivation of laud; in such case
the damage resulting to crops is too
uncertain. Harper v. Weeks, 89 Ala.
577, 8 So. Rep. 39; Luce v. Hoising-
ton, 56 Vt. 436.
The damages following the breach
of a contract to issue an annual rail-
way pass during the life of a party
are not too uncertain to be recovered.
Curry v. Kansas, etc. R. Co., 58 Kan.
6, 48 Pac. Rep. 579.
^G3.]
KEQUIRED CERTAINTY OF DAMAGES.
201
to recover for gains prevented shcill furnish data from which
they can be mathematically computed. " When one breaks a
contract which the other party has partly performed, and the
violator then performs the work himself, from which he reaps
the profits which the (fther party might have made, he cannot
escape liability for damages if such other party can show the
profits made while he was executing it, and the benefits re-
ceived from its subsequent completion.^
' Hitchcock V. Supreme Tent
Knights of Maccabees, 100 Mich. 40,
58 N. W. Rep. C40.
Where the plaintiff was permitted
to sink but one of five wells which
he had contracted to sink not less
than two hundreJ feet in depth and
five hundred feet if practicable and
jiossible in the defendant's judg-
ment, it was sufficient to show as a
basis for damages what profit was
made in sinking other wells in the
vicinity of an average depth of four
hundred feet. Sanford v. East River-
side Irrigation District, 101 Cal. 275,
o5 Pac. Rep. 805.
If the trial does not occur until
long after the cause of action
arose and the contract contemplated
a long period for its performance,
the plaintiff may show the facts as
they then exist. Shoemaker v. Acker,
1 1(5 Cal. 239, 48 Pac. Rep. 62. See § 107.
There are some cases in Michigan
which are not in harmony with the
principle stated in the text nor with
tlie current of modern authority. In
McKiunon v. McEwan, 48 Mich. 106,
there was a breach of a contract to
furnish boilers at the time agreed
upon. The purchaser alleged that
the boilers were to be used in his
steam mill and salt block for running
and operating the same; that they
were the only boilers he would have
to furnish steam; that the capacity
of his salt block was two hundred
barrels per day; that without the
boilers he could not manufacture any
salt, — all of which facts were known
to the vendor. The purchaser sought
to recoup, as damages resulting from
inability to prosecute his business,
what he might have made from the
use of the boilers. The court, by
Marston, J., said: "In the present
case the contract is silent as to the
particular business which was to be
carried on in the use of these boilers.
That, it is said, was well known to
both the contracting parties. But ad-
mitting all this, would not the profits
to be made in the manufacture of salt
be dependent upon many other things
besides the performance of this con-
tract — a necessary supply of fuel,
which the defendant claims to have
had, of brine, of machinery for pump-
ing the same, of proper vats, of grain-
ers, pipes and other things necessary
to carry on successfully and profit-
ably the manufacture of that com-
modity, the certainty or probability
even, even if all these things did exist
and were in proper order, of their re-
maining in like condition? But sup-
posing the party had completed the
boilers and had put them in place,
but liad failed to make all the neces-
sary connections; no use could be
made of the boilers in such a con-
dition; would the damages be the
same ? In other words, • where the
chattel was itself only part of some-
thing else, which* was rendered use-
less for want of it, should the profit
of the entire chattel be recovered?
If a vessel were delayed in port for
want of a bowsprit, should a loss of
freight, to the amount perhaps of
202
COMPENSATION.
[§64.
§ 61. Same subject; Masterton v. Mayor. In the leading
[114] case inNew York,^ which has been extensively cited and
approved, the plaintiffs agreed to furnish and deliver marble
wrought in a particular manner, from a designated quarry, for
thousands of pounds, be obtained in
damages?' Very many questions
similar to this might be put, and if
the I'ule contended for by plaintiff
in error were to prevail, in many
cases the breach of a very simple
contract, or failure in some part,
might bring ruin upon the parties
failing, where no such loss was con-
templated. The adoption of such a
rule would be extremely dangerous.
If such consequences are to follow,
it is much better that the parties,
when contracting, expressly provide
for such enlarged responsibility.
Where the damages claimed, as in
this case, largely exceed the contract
price of the materials and labor to
be furnished and performed by the
party in default, we may well ques-
tion the justice of such a conclusion
in the absence of a clear showing
that such a result was anticipated
by the parties."
In AUis V. McLean, 48 Mich. 428,
12 N. W. Rep. 640 (cited approvingly
in Williams v. Island City Milling
Co., 25 Ore. 573. 590, 37 Pac. Rep. 49),
the vendor sold machinery for use
in connection with a saw-mill. When
the contract was made he was noti-
fied that one condition of the pur-
chase was that the machinery was
to be received on a day certain, and
notice was given that for every day's
delay the purchaser would be dam-
aged $150. Cooley, J., speaking for
the court, said: "The profits of run-
ning a saw-mill are proverbially un-
certain, indefinite and contingent.
They depend upon many circum-
stances, among which are capital,
skill,supplyof logs, supply and steadi-
ness of labor; and one man may fail
while another prospers, and the same
man may fail at one time and pros-
per at another, though the prospect-
ive outlook seems equally favorable
at both times. Estimates of profits
seldom take all contingencies into
the account, and are therefore sel-
dom realized; and if damages for
breach of contract were to be de-
termined on estimates of probable
profits, no man could know in ad-
vance the extent of his responsibil-
it}'. It is therefore very properly
held, in cases like the present, that
the party complaining of a breach of
contract must point out elements of
damage more certain and more di-
rectly traceable to the injury than
prospective profits can be. Fleming
V. Beck, 48 Pa. 309; Pittsburg Coal
Co. V. Foster, 59 id. 365; Strawn v.
Coggswell, 28 111. 457; Frazer v.
Smith, 60 id. 145; Howe Machine Co.
V. Bryson, 44 Iowa, 159. But this
case is thought to be different be-
cause here the fair rental value of
the mill is proved, and it is said that
this was certainly lost. But we do
not know that that was the case. If
tlie mill had been in condition to
rent at that time, there may have
been no customer for it on terms the
owner would have consented to
grant; and if customers were abun-
dant and satisfactory, it cannot be
assumed that the whole rental value
1 Masterton v. Mayor, 7 Hill, 61.
See Jones v. Judd, 4 N. Y. 411; Dan-
olds v. State, 89 id. 36, 42 Am. Rep.
277; Taft v. Tiede, 55 Iowa, 370, 7 N.
W. Rep. 617; Bernstein v. Meech, 130
N. Y. 354, 29 N. E. Rep. 255; James H.
Rice Co. v. Penn Plate Glass Co., 88
111. App. 407.
§C4.J
EEQUIKED CERTAINTY OF DAMAGES.
2Uc
a public building. The quantity necessary to fill their contract
was eighty-eight thousand eight hundred and nineteen feet, for
which they were to be paid a specified price. They afterwards
contracted with the proprietors of that quarry for the marble.
is lost when a mill stands idle. The
vveai" and tear of machinery and
buildings in use is something, and it
is not improbable that the landlord
would take this among other things
into account in determining what
should be the rent. But in this case
it does not appear that rent was lost
or could have been lost, for it is not
shown that defendants desired to
rent or would have consented to do
so if a customer had offered." To
the same effect are Talcott v. Crip-
pen, 52 Mich. 633, 18 N. W. Rep. 392;
Petrie v. Lane, 67 Mich. 454, 35 N. W.
Rep. 70. Talcott v. Crippen, supra,
is limited in Leonard v. Beaudry, 68
Mich. 318, 36 N. W. Rep. 88; Fell v.
Newberry. 106 Mich. 542,64 N. W. Rep.
474; and Barrett v. Grand Rapids
Veneer Works, 110 Mich. 6, 67 N. W.
976. See First Nat. Bank v. Thurman,
69 Iowa, 693, 25 N. W. Rep. 909. Allis
V. McLean, supra, is approved in
Moulthrop V. Hyett, 105 Ala. 493, 17
So. Rep. 32, and followed in John
Hutchinson Manuf. Co. v. Pinch, 91
Mich. 156, 51 N. W. Rep. 930. The
latter modifies Allis v. McLean as to
the recovery of rental value.
It is conceded by the writer of the
opinion in McKinnon v. McEwan,
supra, that profits vphich would
arise as the direct result of work
done at the contract price may be
recovered, and that they may be re-
covered in cases of torts. Both these
propositions are established in Mich-
igan. Burrell v. New York, etc.
Salt Co., 14 Mich. 39: Allison v.
Chandler, 11 id. 558; Mueller v.
Bethesda Spring Co., 88 Mich. 390, 50
N. W. Rep. 319; Oliver v. Perkins,
92 Mich. 304, 52 N. W. Rep. 609. ^It is
also admitted that there is another
class of cases, within which the case
before the court came, where the
authorities differ as to the right of
the injured party to recover such
profits as were claimed. The infer-
ence from these statements is that
the court did not intend to hold that
profits are never recoverable. This
is made more clear by the observa-
tions of Cooley, J., in Ailis v. McLean,
supra. But it is not clear from both
cases that their result is not to estab-
lish the rule that profits are not re-
coverable for the breach of a con tract,
unless it is so stipulated therein or
the article which is the subject of
the contract is one which "at all
times finds a ready sale at a current
market price," or unless contracts
are dependent one upon another, in
which case, if the second contract
is broken, "the loss of definite and
fixed profits under the other is a
necessary and immediate conse-
quence." Allis V. McLean, supra.
See Industrial Works V.Mitchell, 114
Mich. 29, 72 N. W. Rep. 25.
In McKinnon v. McEwan, Mars-
ton, J., said that in Hadley v. Baxen-
dale "the court held the loss of
profits while the mill was kept idle
could not be recovered, because it
did not appear the carrier knew that
the want of the shaft was the only
thing which was keeping the mill
idle. The court also intimated that
a different rule might have pre-
vailed had the facts been fully
known to the carrier. Of course, no
such question was before the court
in that case, and intimations given
upon facts tliat may perhaps appear
in some future case are not usually
relied upon." The opinion lays stress
on the fact that the contract was
204
COMPENSATION.
[§ 64.
When the plaintiffs had delivered fourteen thousand seven
hundred and seventy-nine feet and had on hand at the quarry
three thousand three hundred and eight feet ready for deliv-
ery, the defendants suspended the performance of the con-
tract without any fault of the plaintiffs. They sought to re-
cover the profits of the contract and also the damages to
which they were subjected for the consequent violation of
silent as to the business to be carried
on with the boilers which were to be
furnished, and the knowledge of the
parties was not regarded as material.
It is conceded by Cooley, J., in Allis
V. McLean, that the machinery was
purchased with a view to the profits
which its use was expected to pro-
duce, and that "the contract" to
furnish it "would not be entered
into if the profits were not expected
and counted upon." It necessarily
results, according to the general rule
established by the authorities, that
whei'e the vendor has knowledge of
the use to which the article he sells
is to be put, though the written con-
tract is silent, that he contemplates
the injury which the vendee will
sustain from his failure to comply
with his agreement. The test which
Judge Marston lays down that "the
profits to be recovered must not be
conjectural or speculative in their
nature or dependent upon the
chances of business or other contin-
gencies, and must have reference to
the nature of the contract and breach
complained of," is as to the second
alternative too latitudinarian, and,
strictly applied, is not consistent
with the recoveiy of profits in any
case. Profits are the result of busi-
ness; the desire for them is the cause
of business. It is true that profits
will not be recoverable as a measure
nor as an element of damages if
they are purely conjectural, nor if
they are .speculative in th'^ sense of
depending on contingencies whicli
are possible and not probable. The
chances of business include many
things, both sufficiently certain as a
basis for the administration of jus-
tice and too uncertain therefor. The
authorities cited in the discussion
devoted to this subject, and espe-
cially the more recent ones, are op-
posed to the view taken by the
Michigan court in both the cases
considered. The uncertainty con-
nected with the profits claimed was
magnified. Damages resulting from
the discontinuance or interruption
of an established business are proved
with sufficient certainty by showing
what the profits of the business
have been. See Oliver v. Perkins, 92
Mich. 304, 53 N. W. Rep. 609. Of
course, if there has been a change in
the conditions it is taken into ac-
count. Cases in which damages are
allowed for the breach of partner-
ship agreements are an example.
There are three recent and well con-
sidered cases in Wisconsin which
are in harmony with the writer's
view of the law, and which are not
materially difl'erent in their facts
from the Michigan cases considered.
Jones V. Foster, 67 Wis. 296, 30 N. W.
Rep. 697; Cameron v. White, 74 Wis.
425, 43 N. W. Rep. 155, 5 L. R. A. 493;
Treat v. Hiles. 81 Wis. 280, 50 N. W.
Rep. 896.
The profits lost to a mill owner be-
cause of the non-delivery of logs as
contracted for, to be manufactured
into lumber at a fixed price, are not
too speculative. Barrett v. Grand
Rapids Veneer Works, 110 Mich. 6,
67 N. W. Rep. 976.
§ Gi.] KEQUIKED CEKTAIXTY OF DAMAGES. 205
their subcontract for the marble at the quarry, Kelson, C. J.,
said: " It is not to be denied that there are profits or gains
derivable from a contract which are uniformly rejected as too
contingent and speculative in their nature and too dependent
upon the fluctuation of the markets and chances of business
to enter into a safe or reasonable estimate of damages. Thus
any supposed successful operation the party might have made
if he had not been prevented from realizing the proceeds of
the contract at the time stipulated is a consideration not to
be taken into the estimate. Besides the uncertain and con-
tingent issue of such an operation in itself considered it has
no legal or necessary connection with the stipulations between
the parties and cannot, therefore, be presumed to have en-
tered into their consideration at the time of contracting. It
has accordingly been held that the loss of any speculation or
enterprise in which a party may have embarked, relying on
the proceeds to be derived from the fulfillment of an existing
contract, constitutes no part of the damages to be recovered
in case of breach.^ So, a good bargain made by a vendor, in
anticipation of the price of the article sold ; or an advantageous
contract of resale made by a vendee confiding in the vendor's
promise to deliver the article, are considerations excluded
as too remote and contingent to affect the question of dam-
ages. . . . When the books and cases speak of the profits
anticipated from a good bargain as matters too remote and
uncertain to be taken into account in ascertaining the true
measure of damages they usually have reference to de- [115]
pendent and collateral engagements entered into on the faith
and in expectation of the performance of the principal con-
tract. The performance or non-performance of the latter may,
and doubtless often does, exert a material influence upon the
collateral enterprises of the party; and the same may be said
as to his general affairs and business transactions. But the in-
fluence is altogether too remote and subtle to be reached by
legal proof or judicial investigation. And besides, the conse-
quences, when injurious, are as often, perhaps, attributable to
the indiscretion and fault of the party himself as to the con-
duct of the delinquent contractor. His condition, in respect
1 Shoemaker v. Acker, 116 Cal. 239, 245, 48 Pac Rep. 62. See § 47.
•20G COMPENSATION. [§ 64.
to the measure of damages, ought not to be worse for having
failed in his engagement to a person whose affairs are embar-
rassed than if it had been made with one in prosperous or af-
fluent circumstances.^ But profits or advantages which are the
direct and immediate fruits of the contract entered into be-
tween the parties stand upon a different footing. These are
part and parcel of the contract itself, entering into and con-
stituting a portion of its very elements ; something stipulated
for, the right to the enjo3'ment of which is just as clear and
plain as to the fulfillment of any other stipulation. They are
presumed to have been taken into consideration and deliberated
upon before the contract was made, and formed, perhaps, the
only inducement to the arrangement.^ The parties may have
entertained different opinions concerning the advantages of
the bargain, each supposing and believing that he had the best
of it ; but this is mere matter of judgment, going to the for-
mation of the contract, for which each has shown himself will-
ing to take the responsibility, and must, therefore, abide the
hazard." Applying these principles to the case the learned
judge said: " The plaintiffs' claim is substantially one for not
accepting goods bargained and sold ; as much so as if the sub-
ject-matter of the contract had been bricks, rough stones or
other article of commerce used in the process of building. The
only difficulty or embarrassment in applying the general rule
grows out of the fact that the article in question does not ap-
pear to have any well-ascertained market value. But this can-
not change the principle which must govern, but only [116]
the mode of ascertaining the actual value, or rather the cost to
the party producing it. AVhere the article has no market
value an investigation into the constituent elements of the
cost to the party who has to furnish it become necessary, and
that, compared with the contract price, will afford the meas-
1 Dom., B. 3, tit. 5, § 2, art. 4. Treat v. Hiles, 81 Wis. 280, 50 N. W.
2 Shoemaker v. Ackei", supra,qnot- Rep. 896; Anvil Mining Co. v. Burn-
ing the text; Goldhammer v. Dyer, ble, 153 U. S. 540, 14 Sup. Ct. Rep.
7 Colo. App. 29, 42 Pac. Rep. 177; 876; Farmers' Loan & Trust Co. v.
Paola Gas Co. v. Paola Glass Co., 56 Eaton, 114 Fed. Rep. 14, 51 C. C. A.
Kan. 614, 633, 44 Pao. Rep. 631, 54 640; Owensboro-Harrison Telephone
Am. St. 598; Hirschhorn v. Bradley, Co. v. Wisdom, 23 Ky. L. Rep. 97, 63
Iowa, — , 90 N. W. Rep. 592; S. W. Rep. 529.
§ 64.] EEQUIRED CERTAINTY OF DAMAGES. 207
ure of damages. The jury will be able to settle this upon evi-
dence of the outlays, trouble, risk, etc., which enter into and
make up the cost of the article in the condition required by the
■contract at the place of delivery. ... It has been ar-
gued that, inasmuch as the furnishing of the marble would
have run through a period of five years — of which about one
year and a half only had expired at the time of the suspension —
the benefits which the party might have realized from the ex-
ecution of the contract must necessarily be speculative and con-
jectural ; the court and jury having no certain data upon which
•to make the estimate. If it were necessary to make the esti-
mate upon any such basis the argument woukl be decisive of
the present claim. But in my judgment no such necessity ex-
ists. When the contract, as in this case, is broken before the
arrival of the time for full performance, and the opposite party
elects to consider it in that light, the market price on the day
of the breach is to govern in the assessment of damages. In
other words, the damages are to be settled and ascertained ac-
cording to the existing state of the market at the time the
cause of action arose and not at the time fixed for full per-
formance. ... It will be seen that we have laid alto-
gether out of view the subcontract . . . and all others that
may have been entered into by the plaintiffs as preparatory
and subsidiary to the fulfillment of the principal one with the
defendants. Indeed, I am unable to comprehend how these
can be taken into the account, or become the subject-matter
p\ consideration at all in settling the amount of damages to be
recovered for a breach of the principal contract. The defend-
ants had no control over or participation in the making of the
subcontracts, and are certainly not to be compelled to assume
them if improvidently entered into. On the other hand, if
they were made so as to secure great advantages to the plaint-
iffs, surely the defendants are not entitled to the gains which
might be realized from them. In any aspect, therefore, [117]
these subcontracts present a most unfit as well as unsatisfac-
tory basis upon which to estimate the real damages and loss
occasioned by the default of the defendants. . . . And yet,
the fact that these subcontracts must ordinarily be entered
into preparatory to the fulfillment of the principal one shows
-the injustice of restricting the damages m cases like the pres-
208 COMPENSATION. [§ G5.
ent to compensation for the work actually done, and the item
of the materials on hand. AYe should thus throw the whole
loss and damage that ^vould or might arise out of contracts
for further materials, etc., entirely upon the party not in de-
fault. If there was a market value of the article in this case,
the question would be a simple one. As there is none, how-
ever, the parties will be obliged to go into an inquiry as to the
actual cost of furnishing the article at the place of delivery;
and the court and iurv should see that in estimatinfj this
amount it be made upon a substantial basis, and not left to
rest upon loose and speculative opinions of witnesses. The
constituent elements of the cost should be ascertained from
sound and reliable sources; from practical men, having experi-
ence in the particular department of labor to which the con-
tract relates. It is a very easy matter to figure out large
profits upon paper; but it will be found that these, in a great
majority of the cases, become seriously reduced when sub-
jected to the contingencies and hazards incident to actual per-
formance. A jury should scrutinize with care and watchful-
ness any speculative or conjectured account of the cost of
furnishing the article that would result in a very unequal bar-
gain between the parties, by which the gains and benefits, or,
in other words, the measure of damages against the defend-
ants, are unreasonably enhanced. They should not overlook
the risks and contingencies which are almost inseparable from
the execution of contracts like the one in question, and which
increase the expense independently of the outlay in labor and
capital."
§ 65. Tiolation of contract to lease. The plaintifi' agreed
with the defendant to take a lease of premises belonging to
the latter for the purpose, as he knew, of carrying on a trade
wdiich plaintiff was about to commence. The defendant wil-
fully refused to carry out his agreement, and plaintiff was
unable for fifteen weeks to commence business. Specific per-
formance of the agreement was decreed and damages were
awarded for loss of profit.^ The damages resulting from the
1 Jaques v. Millar, 6 Ch. Div. 153. 36 Ark. 518; Beidler v. Fish, 14 111.
Alexander v. Bishop, 59 Iowa, 572, 13 App. 623, are not in accord with the
N. W. Rep. 714; Brock way v. Thomas, English case.
I CO.] KEQUIEED CERTAINTY OF DAMAGES. 209
failure to perform a contract to rent premises is tlie difference
between what they were worth and the rent agreed upon.^
Where the lease of a farm which was to be worked on shares
for several years stipulated that if the owner exercised his re-
served right to sell the farm during the term he should pay
any damages which the lessee sustained by giving up posses"
sion, the latter's rights are the same as they would have been
if the sale had been made wrongfully; he was entitled to re-
cover the value of his contract — what the privilege of occu-
pying and working the farm was worth, subject to the terms
of the contract and under all the contingencies liable to affect
the result.^ But time spent by the person who was to be the
lessee in securing other premises is not an element of the dam-
ages.' If the lessee of business premises is evicted and his
business broken up he may recover the prospective profits
thereof for the remainder of the term.^ If the lessor of busi-
ness property fails to keep it in repair as he agreed to do the
lessee may recoup for the loss of custom and the profits he
might have made but for the breach; and it will be enough
for him to show facts which enable the jury to approximate
his losses.* A lessee who violates covenants in the lease as to
posting a notice " to let " and allowing the premises to be
shown will be liable for the loss of rent resulting.*^
§ 66. Profits of labor. Where a party has contracted to
perform labor from which a profit is to spring as a direct re-
sult of the work done at the contract price, and is prevented
from earning this profit by the wrongful act of another party,
its loss is a direct and natural result which the law will pre-
sume to follow the breach of the contract; and he is en- [118]
1 Eastman v. Mayor, 152 N. Y, 468, Trust Co. v. Eaton, 114 Fed. Rep. 14,
46 N. E. Rep, 461. 51 C. C. A. 640, applying the rule to
- Depew V. Ketchum, 75 Hun, 227, the termination of tlie lease of a
27 N. Y. Supp. 8; Taylor v. Bradley, railroad executed by a receiver;
39 N, Y. 129; Shoemaker v. Craw- Owensboro-Harrison Telephone Co.
ford, 82 Mo. App. 487; Cilley v. v. Wisdom, 23 Ky. L. Rep. 97, 62 S.
Hawkins, 48 111. 808; North Chicago W. Rep. 529 (violation of lease for
Street R. Co. v. Le Grand Co., 95 111. use of telephone).
App. 435. 5 Stewart v. Lanier House Co., 75
3 Schultz V. Brenner, 24 N. Y. Misc. Ga, 582.
522, 53 N. Y. Supp. 972. 6 United States Trust Co. v.
^Snow V. Pulitzer. 142 N. Y. 263, 36 O'Brien, 143 N. Y. 284, 38 N. E. Rep.
N. E. Rep. 1059; Farmers' Loan & 266. See ch. 20.
Vol. 1 — 14
210 COMPENSATION. [§ 67.
titled to recover it without special allegations in his declara-
tion. The amount of damage may be established by showing
how much less than the contract price it will cost to do the
work or perform the contract.^ Actual damages clearly in-
clude the direct and actual loss which a plaintiff sustains j^^ro/;-
ter rem ipsam non habitam. And in case of such contracts the
loss of profits, among other things, is the difference between
the cost of doing the work and the price to be paid for it.
This difference is the inducement and real consideration which
causes the contractor to enter into the contract. For this he
expends his time, exerts his skill, uses his capital and assumes
the risks which attend the enterprise. Where profits are ad-
visedly spoken of as not a subject of damages it will be found
that something contingent upon future bargains, or specu-
lations, or state of the market is referred to, and not the dif-
ference between an agreed price of something contracted for
and its ascertainable value or cost.^
§ 67. Profits from coniniercial ventures. The success of busi-
ness ventures is not antecedently certain in an absolute sense;
they are generally undertaken in reliance upon probabilities
1 Leonard v. Beaudry, 68 Mich. 310, 10 Bush, 185: Wallace v. Tumlin, 42
13 Am. St. 344, 36 N. W. Rep. 88; Ga. 462; United States v. Smith, 94
Mississippi & Rum River Boom Co. U. S. 214; Somers v. Wright, 115
V. Prince, 34 Mich. 71, 24 N. W. Rep. Mass. 292; Richmond v. D. & S. C.
344; Oldham v. Kerchner, 79 N. C. R. Co., 40 Iowa, 264; Fail v. McRee,
106; Jolly v. Single, 16 Wis. 280; 36 Ala. 61; Goldman v. Wolff. 6 Mo.
Kinney v. Crocker, 18 id. 74; Hinck- App. 490; Dennis v. Maxfield, 10
ley V. Beckwith, 13 Wis. 31; McAn- Allen, 138; Skagit R. & L. Co. v.
drews v. Tippett, 39 N. J. L. 105; Cole, 2 Wash. 57, 25 Pac. Rep. 1077;
United States v. Speed, 8 Wall. 77; Fell v. Newberry, 106 Mich. 542, 64
Doolittle V. McCullough. 12 Ohio St. N. W. Rep. 474: O'Connor v. Smith,
360; Middekauff v. Smith, 1 Md. 343; 84 Tex. 232, 19 S. W. Rep. 168; Bar-
Clark V. Mayor, 4 N. Y. 338. 53 Am. ret v. Grand Rapids Veneer Works,
Dec. 379; Cook v. Commissioners of 110 Mich. 6, 67 N. W. Rep. 976; Ram-
Hamilton, 6 McLean, 612; Frye v. sey v. Holmes Electric Protective
Maine, etc. R. Co., 67 Me. 414; Lentz Co., 85 Wis. 174, 55 N. W. Rep. 391;
V. Choteau, 42 Pa. 435; James v. Equitable Mortgage Co. v. Wedding-
Adams, 8 W. Va. 568; Cramer v. ton, 2 Tex. Civ. App. 373, 21 S. W.
Metz, 57 N. Y. 659; Devlin v. Mayor, Rep. 576. See ch. 15.
63 N. Y. 8; Hoy v. Gronoble, 34 Pa. 2 Philadelphia, etc. R. Co. v. How-
9, 75 Am. Dec 628; Thompson v. ard, 13 How. 344; O'Connor v. Smith,
Jackson, 14 B. Mon. 114; Fox v. Hard- 84 Tex. 232, 19 S. W. Rep. 168; Hirsch-
ing, 7 Cusli. 516; Milburn v. Belloni, horn v. Bradley, — Iowa, — , 90 N.
39 N. Y. 53, 100 Am. Dec. 403; Eliza- W. Rep. 592.
bethtown, etc. R Co. v. Pottiuger,
^ 67.] EEQUIEED CERTAINTY OF DAMAGES. 211
based upon the law of demand and supply. Though specula-
tive in their inception, by anticipating future values, they are
generally retrospectively examined when they become subjects
of judicial investigation, and then such values are capable of
proof. If the business, the profits from which are in ques-
tion, is a trading business they must depend on a succession of
purchases of stock of some sort for sale, or the emj)loyment of
labor or material to be purchased for its production, and a
succession of sales to prospective customers. Where the [110]
injury complained of is an interruption or prevention of such
a business, or causes a diminution of it, it is scarcely pocsible
to establish damages to a very high degree of certaint3^^ In
many cases the best conclusion will be merely a probable one.
The rule of law is the same in all cases that the damages be
proved with certainty ; but a greater degree of certainty being
attainable in some cases than is possible when the result sought
depends on the chances of future bargains, the law will not
permit the proof which is certain to be neglected, and resort
be made to that which is less satisfactory; though the latter,
in other cases, is the best the nature of the case admits of, and
must be received as the only guide to the proper amount of
compensation, and is then available.^ The damages resulting
from the breach of an agreement to furnish the plaintiff facil-
ities for carrying on his business in a store during a fixed term
were sufficiently shown by proof of the gross receipts made
1 See Paola Gas Co. v. Paola Glass Dr. Harter Medicine Co. v. Hopkins,
Co., 56 Kan. 614. 623, 44 Pac. Rep. 83 Wis. 309, 53 N. W. Rep. 501.
621, 54 Am. St. 598. In an action to recover for mis-
■"i Fairchild v. Rogers, 33 Minn. 269, representations concerning liis busi-
20 N. W. Rep. 191; Alexander v. ness the plaintiff alleged injury to
Breeden, 14 B. Mon. 154; Houston, his credit, whereby he was unable
etc. R. Co. V. Hill, 70 Tex. 51, 7 S. W. to obtain goods to sell, and that lie
Rep. 659: Same v. MoUoy, 64 Tex. therefore lost profits. The damage
607; Kelly v. Miles, 58 N. Y. Super, claimed under the latter head was
Ct. 495, 12 N. Y. Supp. 915: Oliver v. too remote. Bradstreet Co. v. Os-
Perkins, 53 N. W. Rep. 609. 92 Mich, wald, 90 Ga. 396, 23 S. E. Rep. 423.
304; Treat v. Hiles. 81 Wis. 280, 50 One cannot recover the loss of the
N. W. Rep. 896; World's Columbian prospective profits of a business
Exposition Co. v. Pasteur-Chamber- which is illegal, and which he dis-
land Filter Co., 82111. App. 94; Eraser continued because of threats. Prude
V, Echo Mining & Smelting Co., 9 v. Sebastian, 107 La. 64, 31 So. Rep.
Tex. Civ. App. 210, 28 S. W. Rep. 714; 764»
212 COMPENSATION. [§ 68.
during the two years business was done there, the net profits,
the income obtained elsewhere during the succeeding year,
and what plaintiff was able to earn after his business in the
store was broken up.^
§ 68. Profits on dissolution of partnership. One partner
may maintain an action at law against another for a breach
of the copartnership articles in dissolving before the time lim-
ited therefor, and may do so before the expiration of the period
for which the partnership was to continue. The damages are
the profits which would have accrued to the plaintifi: from the
continuation of the partnership business, and which are lost by
its unauthorized dissolution.- The only legitimate beneficial
consequence of continuing a partnership is the making of profits.
The most direct and legitimate injurious consequence which
can follow upon an unauthorized dissolution of a partnership
is the loss thereof. Unless that loss can be made up to the in-
jured party it is idle to say that any obligation is imposed by
a contract to continue a partnership for a fixed period.^ It is
safe to say that such profits cannot be proved except to a rea-
sonable probability. The profits immediately before the dis-
solution may be shown as a competent fact for the considera-
1 Dickinson v. Hart, 143 N. Y. 183, and having the means to buy? As
36 N. E. Rep. 801. illustrating this question the actual
2 Bagley v. Smith, 10 N. Y. 489, state and condition of the property,
61 Am. Dec. 756; Treat v. Hiles, 81 business and assets of the firm at the
Wis. 280, 50 N. W. Rep. 896. time, together with proof of actual
'Bagley v. Smith, supra; McNeill results accomplished, whether of
V. Reid. 9 Bing. 68; Gale v. Leckie, profit or loss or both, in the past,
2 Stark. 107; Mitchell v. Read, 84 would be competent evidence. Be-
N. Y. 556; Burckhardt v. Burck- yond this, at least so far as conjec-
hardt, 4J Ohio St. 474, 498, 58 Am. tural profits in the future are con-
Rep. 842, citing the text and apply- cerned, it would not be .safe to go."
ing the principle to the breach of a Where one partner rendered serv-
contract for the sale of the good-will ices and the otlier furnished the cap-
of a business. ital, there being no time fixed for the
In Reiter v. Morton, 96 Pa, 229, 242, duration of the partnership, the dam-
the measure of damages for the ages recoverable by the former for
wrongful dissolution of a manufac- its wrongful dissolution were tha
turing partnership was held to be the value of his services, skill, etc., in
actual money value of the plaintiffs conducting the partnership business,
interest in the firm at the time of and not his share of profits for any
the breach. "What would the inter- specific time. Ball v. Britton, 58
est sell for to a person willing to buy Tex. 57.
§ GS.] EEQUIKED CEETAINTY OF DAMAGES. 213
tion of the jury. In Bagley v. Smith ' Judge Johnson said:
"It seems to me quite obvious that outside of a court of [120]
justice no man would undertake to form an opinion as to pros-
pective profits of a business without in the first place inform-
ing himself as to its past profits, if that fact were accessible.
As it is a fact in its nature entirely capable of accurate ascer-
tainment and proof, I can see no more reason why it should be
excluded from the consideration of the tribunal called upon to
determine conjecturally the amount of prospective profits than
proof of the nature of the business, or any other circumstances
connected with its transaction. It is very true that there is
great difficulty in making an accurate estimate of future profits,
even with the aid of knowing the amount of past profits. This
difficulty is inherent in the nature of the inquiry. We shall
not lessen it b}^ shutting our ej^^es to the light which the pre-
vious transactions of the partnership throw upon it. Kor are
we more inclined to refuse to make the inquiry, by reason of
its difficulty, when we remember that it is the misconduct of
the defendants which has rendered it necessary." In a subse-
quent case, where the business in the past had been a losing
one, it was held error to charge, as the plaintiff requested, that
the jury were not confined in estimating damages to the rate
of profits at the time of dissolution, but might consider and
give damages for profits that would probably have been made
by the higher prices; and might consider the present and prob-
able future rate during the balance of the partnership, though
the court added: " It requires some care. You are not to guess
about this matter. If you can rationally see through this that
the profits would have been greater in the future, and are
greater at the present time than at the time of the dissolution,
and you believe that the present increased profits, if such there
would be, are likely to continue and increase, and you can sat-
isfy yourselves of this in your own mind, then you have the right
to look through the remainder of the time of the partnership,
making a very careful estimate in regard to what the profits
might probably be." The supreme court regarded the instruc-
tion to give damages for profits that would prohdbly have been
made by the higher prices, and authorizing the jury to consider
1 10 N. Y. 489, 61 Am. Dec. 756.
214 COMPENSATION. [§ 60.
the present and probable future rate, as going beyond any pre-
vious case in favor of speculative and contingent profits; the
former case was referred to as adhering to the rule of certainty.
The court say, also, " The case at bar differs from that case,
[121] and the cases cited therein, inasmuch as in those cases
where the court was submitting the question of damages to the
jury they were no longer prospective; but at the time of the
trial in those cases respectively, the time had expired up to
which the profits in question were to be estimated. In such
cases all the data for ascertaining what profits might have been
obtained from the business could be furnished by witnesses
and there was no need of resorting to conjecture." ^ This case
insists on a more rigid rule than the former one. It was, how-
ever, a case in which there was very little data for finding even
a probable profit.^ If one partner fails to pay in a portion of
his share of the capital and the copartner continues in the firm
until it is dissolved by mutual consent, there cannot be a re-
covery of profits which might have been made if such share
had been fully paid; the payment of interest will adjust the
parties' rights.'' Where a copartner to whom a premium has
been paid wrongfully brings an action to dissolve the partner-
ship the premium may be apportioned and an equitable part of
it be adjudged in such action to be returned.^
§ 69. Commercial agencies. The contracts between com-
mercial agents and their principals embody as many elements
of uncertainty as are usually found in combination; among
others (at least where the compensation is based upon com-
missions) the state of trade, quality and price of the goods of-
fered, the skill, energy and industry with which the business
is prosecuted, the credit of the parties to whom the sales are
made, and the acceptance of the agent's orders by his princi-
pal, are all considerations which tend to make the damages
1 Van Ness v. Fisher, 5 Lans. 236. Iowa, 423; Satchwell v. Williams, 40
2See Dobbins V. Duquid, 66 111.464; Conn. 371; Schile v. Brokhahus, 80
Park V. C. & S. W. R Co., 43 Iowa, N. Y. 614; Treat v. Hiles, 81 Wis. 280,
636; Smith v, Wunderlich,70Ill. 426; 50 N. W. Rep. 896.
Sewall's Falls Bridge v. Fisk. 28 N. H. ^Delp v. Edlis, 190 Pa. 25, 43 Atl.
171; Shafer v. Wilson, 44 Md. 268; Rep. 463.
Lacour v. Mayor, 3 Duer, 406; St. * Corcoran v. Sumption, 79 Minn.
John V. Mayor, 13 How. Pr. 527; 108, 81 N. W. Rep. 761.
Richmond v. Dubuque, etc. R. Co., 33
§ C9.J REQUIRED CERTAINTY OF DAMAGES. 215
sustained by an agent by reason of the wrongful revocation of
his agency so uncertain as to be diificult, if not impossible, of
ascertainment.^ Past sales do not afford a safe basis for esti-
mating future profits because the conditions may not remain
as they were,- and also because the time and service of the
salesman, which have been given to the making of them, will
be his, on the termination of the employment, to use other-
wise.^ The damages in cases of this class are not speculative
or remote, and the difficulty in ascertaining them does not
deter courts from awarding such compensation for their
breach as the evidence shows with reasonable certainty the
wronged party is entitled to. It would be a reproach to the
law if he could not recover all the damages sustained.* Where
an agent selling on commission was discharged three months
before the expiration of his contract the court said it could
see no great difficulty in proving facts that would enable a
jury to determine approximately the amount of goods the
plaintiff would have sold during that time. He had been a
traveling salesman for the defendant during the two preced-
ing years, and his sales during the corresponding months of
those 3^ears could have been shown, as might the state of the
markets, the number of his regular customers, etc.^ If the agent,
at the time of the revocation of his authority, had agreements
for sales which he could have consummated but for the wrong:-
ful act of his principal he is entitled to his commissions on
them, if it is clear that they would have been made. Mere
expectations, doubtful offers or other vague or indefinite as-
surances of intention to purchase are speculative.^ The loss
of employment is an element of damage, but no standard can
be fixed for ascertaining the extent of it.^ If the principal
1 Union Refining Co. v. Barton, 77 ^ Baldwin v. Marqueze, 91 Ga. 404,
Ala. 148; Brigliam v. Carlisle, 78 id. 18 S. E. Rep. 309.
243, 56 Am. Rep. 28; Stern v. Rosen- ^Cranmer v. Kohn, 7 S. D. 247, 64
heim, 67 Md. 503, 10 Atl. Rep. 221, N. W. Rep. 125.
307. See Noble v. Hand, 163 Mass. ^See Dowagiac Manuf. Co. v. Cor-
289, 39 N. E. Rep. 1020. bit, 127 Mich. 473, 86 N. W. Rep.
2 Id.; Washburn v. Hubbard, 6 954, 87 id. 886.
Lans. 11; Hair v. Barnes, 26 111. App. ' Beck v. West, 87 Ala. 213, 6 So.
580. Rep. 70.
3 Ray V. Lewis, 67 Minn. 365, 69 N.
W. Rep. 1100.
216 COMPENSATION. [§ 69.
has accepted orders from his agent and refused to fill them
the commission thereon may be recovered ; ^ but not damages
which resulted to the business of the agent otherwise.'^ A
more liberal rule has been held in a case which has been often
cited.^ The contract sued upon provided that if the plaintiff
should sell fifty of defendant's machines to one firm in Mexico
for every such sale he should have the exclusive agency of the
machines in that locality, they to be furnished by the defendant
at the lowest price, and the plaintifl" to receive a commission.
Two such sales were made, the order for one of which was
filled; the other order was not filled; the contract was repu-
diated. Agencies were established by the plaintiff at the
places where these sales were made. The court observed
that these agencies were to be exclusive, and to have some
permanency. They were valuable to the plaintiff, and though
there was diSiculty in ascertaining the damages he sustained,
it was not greater than existed in other cases where profits
had been recovered. There were some facts upon which a jury
could base a judgment, not certain nor strictly accurate, but
sufficiently so for the administration of justice; such as the
fact that sales had been made before the breach and after-
wards; the qualifications of the agent and those who operated
under him to make sales; the facilities for carrying on busi-
ness, and like facts would have warranted a verdict which
would have approached as near the proper measure of justice
as the nature of the case and the infirmity which attaches to
the administration of the law will allow.'' In another case
1 Taylor Manuf. Co. v. Hatcher 476, 95 Fed. Eep. 222, 53 L. R. A.
Manuf. Co., 39 Fed. Rep. 440, 3 L. R 33, approving the Wakeman case,
A. 587. supra; Hitchcock v. Supreme Tent
2 Id. Knights of Maccabees, 100 Mich. 40,
3 Wakeman v. Wheeler & W. 58 N. W. Rep. 640, 43 Am. St. 423;
Manuf. Co., 101 N. Y. 205, 54 Am. Hirschhorn v. Bradley, Iowa,
Rep. 671, 4 N. E. Rep. 264; Bannatyne 90 N. W. Rep. 592. See Meylert v. Gas
V. Florence Milling & Mining Co.. 77 Consumers' Benefit Co.. 26 Abb. N.
Hun, 289, 28 N. Y. Supp. 334, apply- C. 262, 14 N. Y. Supp. 148; ^ 62, and
ing the rule in the Wakeman case, Mechanics' & Traders' Ins. Co. v. Mc-
supra; Crittenden v. Johnston, 7 Lain, 48 La. Ann. 109, 20 So. Rep. 278.
App. Div. 258, 40 N. Y. Supp. 87; < In Howe Machine Co. v. Bryson,
More V. Knox, 52 App. Div. 145, 44 Iowa, 159, 24 Am. Rep. 735, a ma-
64 N. Y. Supp. 1101; Wells v. jority of the court held that an
National L. Ass'n, 39 C. C. A. agent could not recover as damages
§ G9.] KEQUIKED CERTAINTY OF DAMAGES. 217
there was an unauthorized revocation of the sole agency for
the sale of an article. The agent's recovery was measured by
the profits he might have realized if there had been no breach
of the principal's contract. In order to determine what they
would have been, proof of the actual sales of the article made
by the agent's successor during the term the former was enti-
tled to the agency was admissible.^ On the revocation of the
sole agency for the sale of an article in prescribed territory
evidence of the sales made by the agent after the breach and
up to the time of the trial is competent to establish his claim
for the loss of profits.-
The breach of a contract giving the plaintiff a general
■agency for a term of years, within a specified territory, of a
life insurance company, he to have sole charge of such terri-
tory, establish sub-agencies and receive as compensation com-
missions on the first and subsequent premiums paid, gives a
cause of action for loss of commissions on premiums to be-
come due afterward. It was said : " It is evident that all the
schemes of insurance referred to in the contract to be offered
to the public contemplated the keeping of the policies alive
by payments made from time to time subsequent to the first
year's premium. Between the parties to the contract, the
presumption is that the policies would be kept alive, and these
subsequent payments — renewal premiums as they are called —
would be received by the defendant companj'-. The conduct
of that company in breaking the contract entitles the plaintiff
to this presumption and puts upon the defendant the burden
for the breach of a contract to fur- view, see Wells v. National L. Ass'n,
nish him machines to sell on com- 39 C. C. A. 476, 95 Fed. Rep. 222, 53
mission the proiits which might have L. R. A. 33.
been realized if the contract had i Mueller v. Bethesda Mineral
been performed. The New York Spring Co.. 88 Mich. 390, 50 N. W.
court in the case considered in the Rep. 319, approved in Cranmer v.
text concurs with the two Iowa Kohn, 7 S. D. 347. 64 N. W. Rep. 125;
judges who dissented. It is said in Hirschhorn v. Bradley, — Iowa, — ,
Hirschhornv. Bradley, SMpra; If the 90 N. W. Rep. 592. Schumaker v.
question considered in Machine Co. Heinemann, 99 Wis. 251, 74 N. W.
v. Bryson, supra, were now before Rep. 785, is in harmonj- with the
us for the first time, we might, in cases sustaining the right to recover
view of the later authorities, incline profits.
to the view expressed in the dissent- - Hirschhorn v. Bradlej', supi^a.
ing opinion. As supporting that
218 COMPENSATION. [§ 69..
of showing the contrary, if it exists, and the extent to which
it does exist. So all uncertainty is eliminated from this branch
of the plaintiff's claim for loss of profits. As to the other
branch, assuming, as we must for the present do, that the de-
fendant breached the contract as alleged in the petition, en-
tered the territory allotted to the plaintiff, and has through
other agents and agencies, since the date of the breach, writ-
ten a large amount of other insurance, such as the contract
between the parties contemplated would be obtained by and
through the action of the plaintiff and his sub-agents, the
amount of such insurance so taken and carried by the defend-
ant up to the time of the trial may be exactly shown by the
testimony of the managing agents of the defendant, or by its
books, or by both. . . . There can be, therefore, no substan-
tial difficulty in arriving at this amount, at least with substan-
tial accuracy. . . . Whether he could, and with reason-
able probability would, have done all or a definite portion of
this work, had the defendant not breached the contract, is a
proper subject for the finding of a jury on the proof that may
be offered as to the means which the plaintiff had organized
and was using for the efficient prosecution of this work,
compared with the means and effort which the defendant has
used in its accomplishment of the work so done by it in the
territory allotted to the plaintiff. He is not necessarily or
even probably entitled to receive the full specified rate of per
cent, on the first year's and subsequent premiums paid and to
be paid on policies so issued by defendant through its other
agents and agencies, for some deduction must necessarily be
made on account of the fact that he could incur no current
expenses, nor render any personal services in the procurement
of this insurance thus obtained by the defendant through its
other agents and a2:encies. The condition of the business " in
the territory assigned to the plaintiff " at the time of the breach ;
the means that had been used and were being used by the
plaintiff to work the territory allotted to him; the machinery
which he had organized for the purpose of that work; the
reasonable cost of its continued operation; the extent of the
territory allotted to him ; the number of persons therein who
were fit subjects for such insurance as the defendant proposed
to write; the reasonable relative proportion of cost for th&
§ 70.] KEQUIRED CERTAINTY OF DAMAGES. 219
first year of organizing the business and putting it in opera-
tion to the cost of continuing its conduct during the subse-
quent years; the machinery actually used by the defendant
after it entered the territory allotted to the plaintiff, and its
success, through the use of this machinery, and the agencies
it established, in obtaining applicants for insurance and hold-
ers for its policies, should all be given to the jury." ' A manu-
facturer of a particular style of hats who gives a local dealer
the exclusive agency for their sale cannot, upon withdrawing
the agency, refuse to fill orders sent by the agent and accepted
prior to the termination of the agency; and where such agency
is transferred to another dealer in the same city, so that it
was impossible for the deposed agent to buy the hats at whole-
sale, he may prove the retail price charged by the new agent
as tending to show the market value of the hats called for by
such orders, and as establishing the measure of recovery for
the profits lost. The plaintiff's right to such profits was not
affected because he sold other hats as valuable as those made
by the defendant, nor though he sold as many of such as he
would formerly have sold of those furnished by the defend-
ant.^ In ascertaining the value of such an agency no account
is to be taken of the stock in the hands of the agent which he
has paid for, the principal not having bound himself to take
it from the agent.*
§ 70. Tortious interference with business. In actions for
torts injurious to business the extent of the loss is provable by
the same testimony as in actions to recover for the loss of profits
caused by the breach of contracts, and recovery may be had for
1 Wells V. National L. Ass'n, 39 C. the goods so bought within a certain
C. A. 476, 489, 99 Fed. Rep. 222, 58 L. territory, in which the vendor has a
R A. 33; Hitchcock v. Supreme Tent monopoly, and he, violating his con-
Knights of Maccabees, 100 Mich. 40, tract, sells goods to other persons
58 N. W. Rep. 640, 43 Am. St. 423. within such territory, he is liable to
See Lewis v. Atlas Mut. L. Ins. Co., the first person for the profits he
61 Mo. 534; Pellett v. Manufacturers' may show, with reasonable certainty,
& Merchants' Ins. Co., 43 C. C. A. would have been his if there had
669, 104 Fed. Rep. 502. not been a breach of the contract.
2 More V. Knox, 52 App. Div. 145, Russell v. Horn, etc. Manuf. Co., 41
64 N. Y. Supp. 1101. Neb. 567, 59 N. W. Rep. 901.
Where a person has the exclusive 3 Vosburg v. Mallory, 70 App. Div.
right to buy from another and resell 247, 75 N. Y. Supp. 480.
220 COMPENSATION. [§ 70.
such as is proved with reasonable certainty; it is enough to show
what the profits would probabl}^ have been.^ Certainty is very
desirable in estimating damages in all cases; and where from
the nature and circumstances of the case a rule can be discov-
ered by which adequate compensation can be accurately meas-
ured, it should be applied to actions of tort as well as to those
upon contract. The law, however, does not require impossi-
bilities; and cannot, therefore, demand a higher degree of cer-
tainty than the nature of the case admits. If a regular and
established business is wrongfully interrupted the damage
thereto can be shown by proving the usual profits for a reason-
able time anterior to the wrong complained of.^ But it is other-
wise where the business is subject to the contingencies of
weather, breakages, delays, etc." There is no good reason for
requiring any higher degree of certaintj^ in respect to the
amount of damages than in respect to any other branch of a
cause. Juries are allowed to act upon probable and inferential
as well as direct and positive proof. And when from the nat-
ure of the case the amount of the damages cannot be estimated
with certainty, or only a part of them can be so estimated, no
1 Allison V. Chandler, 11 Midi- 543; 661, 26 N. W. Rep. 524: Schriver v.
Dennery v. Bisa. 6 La. Ann. 365; Johnstown. 71 Hun, 232, 24 N. Y.
Shepard v. Milwaukee G. L. Co., 15 Supp. 1083, affirmed without opin-
Wis. 318, 82 Am. Dec. 679: SewalPs ion, 148 N. Y. 758; Langan v. Potter,
Falls Bridge v. Fisk, 23 N. H. 171; 8 N. Y. Misc. 541, 28 N. Y. Supp. 752;
Schile V. Brokhahus, 80 N. Y. 614; Williams v. Island City Milling Co.,
Oliver v. Perkins, 92 Mich. 304, 52 N. 25 Ore. 573, 589, 37 Pac. Rep. 49, cit-
W. Rep. 609: Jackson v. Stanfield, ing the text; Paul v. Cragnaz, 25
137 Ind. 592, 36 N. E. Rep. 345; White Nev. 293, 320, 47 L. R. A. 540, 59 Pac.
V. Moseley, 8 Pick. 356; French v. Rep. 57. 60 id. 982; Exchange Tel.
Connecticut River Lumber Co., 145 Co. v. Gregory, [1896] 1 Q. B. 147;
Mass. 261, 14 N. E. Rep. 113; Terre Hartman v. Pittsburgh Incline Co.,
Haute V. Hudnut, 112 Ind. 542, 13 N. 159 Pa. 442. 28 Atl. Rep. 145; Leach
E. Rep. 686; National Fibre Board v. New York, etc. R Co., 89 Hun. 377,
Co. V. Lewiston & A. Electric Light 35 N. Y. Supp. 305; Butler v. Man-
Co., 95 Me. 318, 49 Atl. Rep. 1095; hattan R. Co., 143 N. Y. 417, 38 N. E.
Paul E. Wolff Shirt Co. v. Franken- Rep. 454, 42 Am. St. 738. 26 L. R A.
thai, 70 S. W. Rep. 378, — Mo. App. 46; Goebel v. Hough, 26 Minn. 252,
; Pacific Steam Whaling Co. v. 2 N. W. Rep. 847: Terre Haute v.
Alaska Packers' Assn, — Cal. — , Hudnut, 112 Ind. 542, 13 N. E. Rep.
72 Pac. Rep. 161. 686; National Fibre Board Co. v.
li Willis v. Perry, 92 Iowa, 297, 306, Lewiston & A. Electric Light Co.,
60 N. W. Rep. 727, 26 L. R. A. 124; 95 Me. 318, 49 AtL Rep. 1095.
Kyd V. Cook, 56 Neb. 71, 71 Am. St. •■* Cushing v. Seymour, 30 Minn. 301,
§T0.]
EEQUIRED CERTAINTY OF DAMAGES.
221
objection is perceived to placing before the jury all the facts
and circumstances of the case having any tendency to [122]
show damages or their probable amount, so as to enable them
to make the most intelligible and accurate estimate which the
nature of the case will permit. This should, of course, be done
with such instructions and advice from the court as the circum-
stances may require, and as may tend to prevent the allowance
of such damages as may be merely possible, or too remote or
fanciful in their character to be safely considered as the result
of the injury.^ If the business interfered with was conducted
15 N. W. Rep. 209. In this case
plaintiff had entered into contracts
for threshing grain before the con-
version of the machine which he
was to use in executing them.
In Jones v. Call, 96 N. C. 337, 60
Am. Rep. 416, 2 S. E. Rep 647, a
manufacturer of machines, unlaw-
fully prevented from carrjdng on his
business, recovered damages to the
extent that the machines then con-
tracted for would have yielded him
a profit. The estimated profits be-
yond that point were considered too
speculative and remote. See Clem-
ents V. State, 77 N. C. 143, doubted in
the preceding case.
1 Allison V. Chandler, supra. In
this case Christiancy, J., said: " Since,
from the nature of the case (one of
injury to business), the damages can-
not be estimated with certainty, and
there is risk of giving by one course
of trial less, and by the other more,
than a fair compensation — to say
nothing of justice — does not sound
policy require that the risk should
be thrown upon the wrong-doer in-
stead of the injured party? However
tliis question may be answered, we
cannot resist the conclusion that it
is better to run a slight risk of giving
somewhat more than actual compen-
sation than to adopt a rule which,
under the circumstances of the case,
will, in all reasonable probability, pre-
clude the injured party from the re-
covery of a large proportion of the
damages he has actually sustained
from the injury, though the amount
thus excluded cannot be estimated
with accuracy by a fixed and certain
rule." Gilbert v.Kennedy,22Mich.l29.
See Jenkins v. Pennsylvania R. Co.,
67 N. J. L. 331, 51 AtL Rep 704; Cos-
griff V. Miller, — Wyo. — , 68 Pac.
Rep. 206, 215.
In Hoi den v. Lake Co., 53 N. H.
552, the action was case for so inter-
fering with the natural flow of the
river, on which the plaintiffs had a
mill for the manufacture of woolen
goods, as to diminish its production.
Upon the question of damages one
of the plaintiffs was permitted to
state that the cost of the raw ma-
terial manufactured at their mill in
producing a yard of cloth was about
one-half the value of a yard of cloth
when finished. There was no evi-
dence as to the cost of manufactur-
ing a yard of cloth, nor the number
of yards manufactured, either
monthly or otherwise, but only the
aggregate amount of business in dol-
lars annuall}'; and the falling off in
the aggregate business during the
dry months of summer, when the
plaintiffs claim they were injured,
as compared with the average of the
other months of the year. The court
say: " It is difficult to see what other
rule could have been applied to show
what the effect of the alteration
222
COMPENSATION.
[i'To.
under a license granted by public officers and the issue of a new
license depends upon their discretion, profits which might have
been realized for a time beyond the existence of the license in
was, than by showing the facts before
and after the change, and how the
change affected the stream and the
plaintiffs' rights. . . . The cost of
the cloth would be made up of tlie
cost of raw materials and of the labor
expended in the manufacture. The
profits, if anything, would be ascer-
tained by deducting from the market
value, first, the cost of material, and
then the expense of manufacture.
But it seems that the expense was
not ascertamed in that way, nor the
profits. When the mill-owner keeps
his whole force through the year on
full pay, then the amount he manu-
factures less than the full amount
for the year would be so much dead
loss, without regard to the profits on
a single yard; and the value of the
■work lost by lack of water would be
found by deducting the cost of raw
material from the value of the cloth
that would have been made with a
full supply of water."
In Richmond v. Dubuque, etc. R.
Co., 33 Iowa, 422, the railroad com-
pany and an elevator company at
Dubuque entered into an agreement
containing these stipulations: tiiat
the latter would erect a building suit-
able " for receiving, storing, deliver-
ing and handling all grain that shall
be i-eceived by the cars of said rail-
road company not otherwise con-
signed." In a supplement to this
contract it was further provided that
the elevator company "should re-
ceive and discharge for the said rail-
road company all through grain at
one cent a bushel," etc., and that the
elevator should have the handling
of all through grain at that price
per bushel. It was also provided
that in case the grain was held in
store for the railroad company more
than ten days, then the elevator
company should have a certain per
cent, per bushel. The contract, by
its terms, extended for a period of
fifteen years, and at the option of
the railroad company it was to be
extended fifteen years more, but no
times of payment were provided for
therein. In an action against the
railroad company for refusing to
give the elevator company the hand-
ling of grain according to the con-
tract, the court held that in the
estimate of damages the plaintiffs
were entitled to recover not only
loss of profits which would have re-
sulted to them had the " through
grain " been delivered as per con-
tract, but also the loss of profits re-
sulting from the plaintiffs being
deprived of the storage of the grain
as stipulated. There was allowed
$57,750 for the prospective profits of
handling through grain at one cent
per bushel during the period of the
contract, and .$11,250 for prospective
profits on storage of grain. The
court say, in reference to the last
item: " There is not entire certainty
as to the amount that ought to be
allowed, but this is no reason why
none should be given. The law is
satisfied with a just and true approx-
imation to the true amount." See
Howe Machine Co. v. Bryson, 44
Iowa, 159, 24 Am. Rep. 735; Fultz v.
Wycoff, 25 Ind. 321; Flick v. Weth-
erbee, 20 Wis. 392: Heard v. Holman,
19 C. B. (N. S.) 1; Simmons v. Brown,
5 R. I. 299, 73 Am. Dec. 66; Mc-
Knight v. Ratcliff, 44 Pa. 156: The
Narragansett, Olcott, 388; Douty v.
Bird, 60 Pa. 48; Hanover R. Co. v.
Coyle, 55 Pa. 396; Chapman v. Kirby,
49 111. 211; Ludlow v. Yonkers, 43
Barb. 493; Todd v. Minneapolis, etc.
.^ 71.] EEQUIKED CERTAINXr OF DAMAGES. 22S
force when the wrong was done cannot be recovered.^ A per-
son who has been forcibly prevented from fishing in public
waters may show the quantity of fish he might have caught,
the value of the same, and the probable profits he would have
made. As an aid in determining these questions, he may prove
the quantity of fish caught in the waters from which he was
excluded by the defendant.^
§ 71, Chances for prizes and promotions. In an [123]
action against a carrier for negligently delaying the transpor-
tation of models made to compete for a prize until the award
was made, the judges differed as to the measure of damages,
and it was left undecided whether they should be given for
the labor and materials used in making the models, or whether
the chance for the prize might be taken into consideration.
Patteson, J., favored the latter: "The goods were made for a
specific purpose, which had been defeated by the negligence
of the defendant, and they have become useless." Erie, J.,
said: "I have great doubts whether that chance was [124]
not too remote and contingent to be the subject of damages."*
In a similar case the plaintiff had delivered to the defend-
ants, who were carriers, a box containing plans and specifica-
tions to be forwarded to a committee at a distant place,
who had offered a premium of 8500 to the successful com-
petitor for the best plans for a public building. In conse-
quence of the defendants' negligence they were not delivered
at their destination until after the premium had been awarded.
There was no evidence on the part of the plaintiff to show
that there was any probability that his plans would have been
adopted, and there was some evidence to the contrary. On
this ground it was held that the plaintiff was entitled to only
nominal damages. But it Avas held that such proof was ad-
missible to show the value of his opportunity to compete, and
R Co., 39 Minn. 186, 39 N. W. Rep. i Porter v. Johnson, 96 Ga, 154, 23
318; Swain v. Schiefielin, 134 N. Y. S. E. Rep. 123.
471, 31 N. E. Rep. 1025, 18 L. R. A. 2 Pacific Steam Whaling Co. v.
385; Dickinson v. Hart, 142 N. Y. Alaska Packers* Ass'u, — Cal. — ,72
183, 36 N. E. Rep. 801; Malone v. Pac. Rep. 161.
Weill, 67 App. Div. 169, 73 N. Y. » Watson v. Ambergate R. Ca, 15
Supp. 700; Ingram v. Lawson, 6 Bing. Jur. 448.
N. C. 212; Savery v. Ingersoll, 46
Hun, 176.
22-i COMPENSATION. [§ 71.
that the loss of this was the direct and immediate effect of the
neo-lio-ence complained of.^ "It is doubtless true that in all
actions for breach of contract the loss or injury must be a
proximate consequence of the breach. A remote or possible
loss is not sufficient for compensation. There is no measure
for those losses which have no direct and necessary connection
with the stipulations of the contract, or which are dependent
upon contingencies other than the performance of the con-
tract, and which are, therefore, incapable of being estimated.
"With no certainty can it be said that such losses are attribu-
table to the wrongful act or omission of him who has violated
his engagement. But, on the other hand, the loss of profits
or advantages which must have resulted from a fulfillment of
the contract may be compensated in damages when they are
the direct and immediate fruits of the contract, and. must^
therefore, have been in the contemplation of the parties when
it was made. Applying this rule to the present case, why was.
not the loss of the opportunity to compete for the premium
(whatever may have been its value) an immediate consequence
of the breach of the contract ? The company undertook to
transport the box to the committee appointed to award the
[125] premium. The purpose of the contract was to secure tO'
the plaintiff the privilege of competition. Certainly, he must
have had that in contemplation, and, if the company was in-
formed of the object of the transmission, the loss of this privi-
lege was in view of both parties at the time they entered into
the contract. But whether known or not by the compan}^
the loss was an immediate consequence of the negligent breach.
We do not now stop to inquire whether the defendants can be
held liable for every consequence, even though immediate,
which cannot reasonably be supposed to have been in the con-
templation of both parties at the time they made the contract
as the probable result of the breach of it. Perhaps if the
special circumstances under which the contract was made, and
which occasioned special and unusual injury to attend its
breach, were unknown to the party which broke it, they could
not be held to make compensation for more than the amount
of injury which generally results from the breach of such con-
1 Adams Exp. Co. v. Egbert. 36 Pa, 360, 72 Am. Dec. 882.
§ Tl.] EEQUIKED CERTAINTY OF DAMAGES. 225
tracts in cases unattended by any special circumstances. . . .
Suppose the engagement of the company had been directly to
afford to the plaintiff an opportunity to compete for the pre-
mium offered, could he, for the breach of such an agreement,
recover more than nominal damages without any proof that
any actual injury had resulted from the breach ? We think
not. To entitle a plaintiff in an action founded on a contract
to recover more than nominal damages for its breach, there
must always be evidence that an actual, substantial loss or in-
jury has been sustained, unless the contract itself furnishes a
guide to the measurement of the damages; and even when
there is some such proof and the amount is uncertain, courts
have sometimes directed the jury to allow the smallest sum
which would satisfy the proof.^ A plaintiff claims compensa-
tion. The amount of that compensation is a part of his case.
Whether, in the present case, the plaintiff sustained any actual
injury depended upon the degree of probability there was that
he would be a successful competitor if the contract had not
been broken. If his plans were entirely defeated ... it
cannot be claimed that he was damaged. He introduced, how-
ever, no evidence to show there was the least probability that
the premium would have been awarded to him had his plans
been submitted to the committee in time." [126]
Damages cannot be recovered against a telegraph company
because the inaccurate transmission of a message prevented a
horse from being entered in competition for a purse.^ The
fact that an injured person was in the line of promotion from
the position of fireman to engineer cannot be considered in
awarding him damages.^ A person who, in connection with
others, has arranged for the capture of one accused of crime
and for whose arrest a reward has been offered, may recover
the amount of the reward from a telegraph company which
has negligently failed to deliver a message relating to the cap-
^ Lawton v. Sweeney, 8 Jur. 964; Eep. 334 Contra, Gulf, etc. R. Co. v.
Clunnes v. Pezzey, 1 Camp. 8. John, 9 Tex, Civ. App. 343, 29 S. W.
2 Western U. Tel. Co. v. Crall, 39 Rep. 558.
Kan. 580, 18 Pac. Rep. 719; Hessee v. 3 Brown v. Chicago, etc. R Co., 64
Columbus, etc. R. Co., 58 Ohio St. 167, Iowa, 652, 21 N. W. Rep. 193. But
50 N. E. Rep. 354; Bonnet v. Galvea- see ch. 36.
ton, etc. R. Co., 89 Tex. 72, 33 S. W.
Vol. 1—15
220 COMPENSATION. [§§ 72-7^.
ture if the jury find that the arrest would have been made but
for the negligence.^ The defendant failed to deliver to plaintiff
a message sent him by the comptroller of the currency : " Would
you accept receivership of a bank named? Bond |35,000;
compensation $200 per month, subject to future modification."
Because there would have been no binding obligation, if the
message had been received and an affirmative answer sent, to
make the appointment there could not be a recovery.- The
defeat of a candidate for office because of a slander is a dam-
age too remote, uncertain and speculative to justify a re-
covery.'
§ 72. Contingent advantage. The fact that the value of a
contract or the advantage to be derived from it is contingent —
that is, that the expected advantage depends on the concur-
rence of circumstances subsequently to transpire, and which
may by possibility not happen — is not an insuperable objec-
tion to recovering damages for its loss. The chance, so to
speak, of obtaining that advantage by performance of the con-
tract and the conjunction of the necessary subsequent facts
may be valuable. The nature of the contingency must be
considered. If it is purely conjectural and cannot be reason-
ably anticipated to happen in the usual course of things it is
too uncertain. There must be proof legally tending to show
and sufiicient to satisfy the jury that it would happen. The
chance that a father would pay a son's debt to procure his re-
lease from custody has been held capable of estimation.''
§ 73. Uncertain mitigation of breach of marriage prom-
ise. In assessing damages for the breach of a promise of mar-
riage it would not be a legitimate subject for the jury to con-
sider the consequences to the plaintiff, in mitigation of dam-
ages, of marrying the defendant and thereby forming an
unhappy alliance, by reason of a want of that love and affection
that a husband should bear his wife.^
§ 74. Failure to provide sinking fund. The damages to a
creditor for the failure of a municipal corporation to fulfill its
iMcPeek v. Western U. Tel. Co., s Field v. Colson. 93 Ky. 347, 20 S.
107 Iowa, 356, 78 N. W. Rep. 63, 70 W. Rep. 264.
Am. St. 205, 43 L. R. A. 214. * Macrae v. Clarke, L. R 1 C. P.
2Walser v. Western U. TeL Co., 403. See § 71.
114 N. C. 440, 19 S. R Rep. 366. s Piper v. Kingsbury, 48 Vt 480.
§ 75.] ELEMENTS OF DAMAGE. 227
contract to provide a sinking fund as security for the debt
have been held not capable in their nature of legal computa-
tion; there is no legal standard by which they can be fixed;
they are shadowy, uncertain and speculative.'
Section 6.
THE constituents OF COMPENSATION, OR ELEMENTS OF DAMAGE.
§75. Elementary limitation of damages. The ele- [127]
mentary limitation of recovery to a just indemnity for actual
iujury, estimated upon the natural and proximate consequences
of the injurious act, fixes a logical boundary of redress in the
form of compensation and furnishes a general test by which
any particulars may be included or rejected. Kecovery beyond
nominal damages requires that actual injury be shown except
in those cases where there are no pecuniary elements or meas-
ure, and the amount of the recovery is necessarily left to the
discretion of the jury, as in cases of personal injury or defama-
tion of character.- What are the elements of injury which may
be compensated ? This inquiry is a legal one and must be de-
termined by the court; where the details are capable of pe-
cuniary valuation the law affords some standard for measuring
compensation for them. The elements of damage are always
correlative to the right violated by the act complained of; and
the amount of compensation, whether measured by legal rules
or referred to the discretion of the jury, must depend on the
nature of the right and the mode, incidents and consequences
of the violative act.' Each party to a contract has a legal right
1 Memphis v. Brown, 20 Wall. 289. prentice had suffered by the master's
2 In Scott V. Williams, 1 Dev. 376, improper treatment; but it did not
an action for assault and battery and appear to what extent it had been
false imprisonment, its object being injured. It was ruled not to be
to determine whether the plaintiff error to instruct the jury that they
who was held as a slave was not a might determine if there was dam-
freeman, more than nominal dam- age from that cause and fix the
ages were given, though there seems amount.
to have been no proof of the actual ^ if land is injured by a wrongful
damages. act or taken under the power of emi-
In Creech v. Creech, 98 N. C. 155, nent domain the owner may have
3 S. E. Rep. 814, an action upon an his damages fixed with regard to its
apprentice bond, evidence was given adaptabilitj' to any use to which it
to show that the health of the ap- may be applied; he is not restricted
228 COMPENSATION. [§ 76.
to performance by the other according to its legal import and
effect. Any default is a violation of that right. The injured
[l;2SJ party is entitled to a measure of compensation which will
place him in as good condition as if the contract had been ful-
filled. In other words, all the natural and proximate results
of the act complained of will be considered with a view to giv-
ing him compensation for all gains prevented and all losses
sustained. The particular stipulations of the contract and the
alleged breach will circumscribe the inquiry, and the facts
establishing the breach and its consequences will constitute its
subjects.
§ 76. Damages for non-payment of money. On a contract
for the mere payment of money the unpaid principal, together
with the stipulated, or after maturity the lawful, rate of inter-
est is the measure of damages. It is the invariable measure
of recovery in a creditor's action against his debtor.^ The
failure to pay a debt when due may disappoint the creditor
and embarrass him in his affairs and collateral undertakings;
he may consequentially suffer losses for which interest is a
very inadequate compensation; but they are remote and do
not result alone from the default of his debtor. Money, like
the staples of commerce, is, in legal contemplation, always in
market and procurable at the lawful rate of interest; and the
same principle which limits a disappointed vendee's recovery
against his defaulting vendor to the market value of the com-
to such damages as it sustained for der v. Fromberger, 4 Dall. 436; Lou-
the purpose it was used when the don v. Taxing District, 104 U. S. 771 ;
injury was done or it was taken. Hoblit v. Bloomington, 71 111. App.
Boom Co. V. Patterson, 98 U. S. 403; 204: Greene v. Goddard, 9 Met. 212,
Fort Worth, etc. R. Co. v. Wallace, 232; Ladies' Building Ass'n v. Rob-
74 Tex. 581. 12 S. W. Rep. 227; Same bins, 1 Mart. Ch. 134, 152; Western
V. Hogsett, 67 Tex. 685, 4 S. W. Rep. Wagon & Property Co. v. West,
365. See ch. 26. [1892] 1 Ch. 271, 277; South African
The damages for the loss of a grove Territories v. Wallington, [1898]
wholly situated upon a part of a App. Cas. 309; Henderson v. Bank of
farm which is separated from the Hamilton, 25 Ont. 641; Bethel v.
larger tract included in it by a rail- Salem Imp. Co.. 93 Va. 354, 25 S. E.
road are to be awarded with regard Rep. 304, 33 L. R. A. 602; Arnott v.
to its usefulness to the whole farm. Spokane, 6 Wash. 442, 33 Pac. Rep.
Brooks V. Chicago, etc. R Co., 73 1033; Blue v. Capital Nat. Bank, 145
Iowa, 179, 34 N. W. Rep. 805. Ind. 518, 45 N. E. Rep. 655; Morrill v.
1 Fletcher v. Tayleur, 17 C. B. 21; Weeks. 70 N. H. 178, 180, 46 AtL
Short V. Skipwith, 1 Brock. 103; Ben- Rep. 32.
§ 77.] ELEMENTS OF DAMAGE. 229
raodity which is the subject of his contract restricts the cred-
itor to the principal and interest. The practical difficulty to
a creditor of borrowing the money, where the .debtor is with-
holding the sum he owes and which is wanted, and that of a
vendee in making a new purchase, after he has paid the de-
faulting vendor for the goods needed, is the same. No party's
condition, in respect to the measure of damages, should be
worse for having failed in his engagement to a person whose
affairs are embarrassed than if the same result had occurred
with one in prosperous or affluent circumstances.^
§ 77. Greater damages than interest for failure to pay
money. Where the obligation to pay money is special and
has reference to other objects than the mere discharge of a
debt, as w^here it is agreed to be done to facilitate trade, and
to maintain the credit of the promisee in a foreign coun- [129]
try, to take up commercial paper, pay taxes, discharge liens,
relieve sureties, or for any other supposable ulterior object,
damages beyond interest for delay of payment, according to
the actual injury, may be recovered. The contract implied
between a bank and its depositors is that the former will hold
the funds and pay them out on the order of the latter; for
failing so to do the bank is liable either in tort or upon con-
tract.^ If the action be brought on the contract and the fail-
ure to pay was not wilful, and no special damages are proved,
and the check has been paid, only nominal damages can be re-
covered.' If the depositor is not a trader and has made his
deposit subject to special terms, on the wrongful refusal to pay
him in person he can recover only interest on the amount.*
He cannot recover for injury to his credit because no public-
ity is given to the refusal to pay.* In the absence of proof of
1 Domat, B. 3, tit. 5, § 3, art. 4; Mas- 2 Citizens' Nat. Bank v. Importers'
terton v. Mayor, 7 Hill, 61; Lowe v. & Traders' Bank, 119 N. Y. 195, 23 N.
Turpie, 147 Ind. 653, 677, 44 N. E. Rep. E. Rep. 540; Burroughs v. Trades-
25, 37 L. R. A. 333, quoting the text; men's Nat. Bank, 87 Hun, 6, 33 N. Y.
Smith V. Parker, 148 Ind. 127, 45 N. Supp. 864, affirmed without opinion,
R Rep. 770; Fox v. Poor Ridge & 156 N. Y. 663.
Sugar Creek Turnpike Road Co., 8 ^ Burroughs v. Tradesmen's Nat.
Ky. L. Rep. 437 (Ky. Super. Ct.); Hob- Bank, supra.
lit V. Bloomington, 71 111. App. 204; * Henderson v. Bank of Hamilton,
McGee v. Wineholt, 23 Wash. 748, 63 25 Ont. 641.
Pac Rep. 571. ^ Hanna v. Drovers' Nat Bank, 92
111. App. 611.
230
COMPENSATION.
[§77.
special damage a farmer whose check is not honored can re-
cover only a nominal sura.^ But a depositor who proves special
damage to himself as a stock and share-broker and stock-iob-
bar may recover Yery substantial damages, though he is not
a trader.^ One who breaks his contract to lend money at a
less rate than is fixed by law is liable to the other party if he
borrows elsewhere and pays a rate in excess of that fixed by
such contract for the difference between such rates inside the
legal rate.' Under various circumstances an enlarged liability
results from the failure to pay checks of customers who have
provided funds to meet them; in such cases the business stand-
ing and especially the credit of the drawers may be impaired.'*
In one such case for refusal to pay a check of 48Z. the jury
gave a verdict of 500^. damages, and there was no evidence
that special damage had been sustained. This was deemed
excessive and was reduced by consent to 2001.^ The rule of
\
1 Bank of New South Wales v. Mil-
Tain, 10 Vict. L. R (law) 3.
2 Dean v. Melbourne Stock Ex-
change Agency & Banking Corpora-
tion, 16 Vict. L. R. 403. In this case
the plaintiff was rendered unable to
meet his business engagements and
was suspended by a stock exchange
of which he was a member, and suf-
fered damage to his reputation. A
judgment for 2,900/, was sustained.
3 Gooden v. Moses, 99 Ala. 230, 13
So. Rep. 765; Thorp v. Bradley, 75
Iowa, 50, 39 N. W. Rep. 177; Luce v.
Hoisington, 56 Vt. ^436.
A bank agreed to advance money
to a customer with knowledge of the
use he designed to make of it, and
subsequently refused to do so. He
was unable to procure the money
elsewhere and was obliged to aban-
don his enterprise. There was a re-
covery of the actual damages sus-
tained. Manchester & O. Bank v.
Cook, 49 L. T. Rep. 674 (1883).
^Svendsen v. State Bank, 64 Minn.
40, 58 Am. St. 532, 31 L. R. A. 552, 65
N. W. Rep. 1086, citing the text: Bank
of Commerce v. Goos, 39 Neb. 437, 58
N. W. Rep. 84, 23 L. R A. 90; Patter-
son V. Marine Nat. Bank, 130 Pa. 419,
18 Atl. Rep. 632, 17 Am. St. 779; First
Nat. Bank v. Railsback, 58 Neb. 248,
78 N. W. Rep. 512; Marzetti v. Will-
iams, 1 B. & Ad. 415; Birchall v.
Third Nat. Bank, 17 Phila, 139; J. M.
James Co. v. Continental Nat. Bank,.
105 Tenn. 1, 58 S. W. Rep. 261, 51 L.
R. A. 255; Fleming v. Bank of New
Zealand, [1900] App. Cas. 577.
SRolin V. Steward, 14 C. B. 595;
Boyd V. Fitt, 14 Ir. C. L. (N. S.) 43;
Larios v. Gurety, L. R. 5 P. C. 346;
Prehn v. Royal Bank, L. R 5 Ex. 92:
Patterson v. Marine Nat. Bank, 130
Pa. 419, 17 Am. St. 779, 18 Atl. Rep.
632.
In Schaflfner v. Ehrman, 139 111. 109,
28 N. E. Rep. 917, a verdict for $400
was sustained for a mistaken refusal
to cash checks amounting to $900.
In the absence of proof of special
damage a bank which failed to pay
a check sent it by mail, solely through
the negligent mistake of an em-
ployee, was liable for "temperate
damages;" judgment for $200 was
affirmed. Atlanta Nat. Bank v,
Davis, 96 Ga. 334, 23 S. E. Rep. 190,
51 Am. St. 139.
§ 77.] ELEMENTS OF DAMAGE. 231
Hadley v. Baxendale is applied to such cases.^ Bankers at
Liverpool by letter of credit delivered to a customer undertook
to accept drafts drawn abroad to be paid with his money de-
posited for that purpose. Before maturity they gave notice
that they would be unable to pay the drafts at maturity and
the customer was put to the expense of a commission to an-
other party to take up the bills, of protesting them and of tel-
egrams. These were held proper elements of damage.^ In
another case the defendant's failure to meet the plaintiff's
drafts caused a suspension of the latter's business at one place,
injured it at another, and caused the loss of a valuable agency;
all resulting losses were recoverable.^ The elements of dam-
age for the non-payment of a check include time lost, expense
incurred, and loss of business sustained ; but punitive damages
should not be allowed in the absence of proof showing actual
malice, oppression or bad motive. The fact that the drawer
of an unpaid check had a nervous chill in consequence of its
non-payment is too remote to be considered.* The arrest and
imprisonment of the drawer of a check is not a result which
may be considered in awarding him compensation for the non-
payment of his check.^ If the plaintiff pleads and proves that
On the dishonor of a note because a bank to pay a note for $517 which
of the breach of an agreement to re- was payable there out of a deposit of
new it, although pecuniary loss was $611 should result in the entry of
notshown, a judgment for the plaint- judgment for over $8,000, and the
iflf's expenses and 150Z. for general seizure of the business of the maker
damages was sustained; but a re- of the note. Brooke v. Tradesmen's
covery of lOl. for attorney's expenses Nat. Bank, 69 Hun, 202, 23 N. Y. Supp.
was disallowed. Dowling v. Jones, 802.
2 N. S. W. 359. Where a check has been dishon-
1 Parker v. Cunningham, 5 Vict. L. ored the plaintiff may show, as evi-
R. (law) 202, and cases cited supra, dence of damage to his business repu-
except Boyd v. Fitt, 14 Ir. C. L. (N. tation, the loss of a partnership; but
S.) 43, in which it is suggested that such loss is too remote to be regarded
it is for the jury to find whether the as special damage. Dyson v. Union
damages are the natural and proxi- Bank of Australia, 8 Vict. L. R. (law)
mate consequence of the breach of 106.
contract. * American Nat Bank v. Morey,
2Prehn v. Royal Bank, supra; Ur- 24 Ky. L. Rep. 658, 69 S. W. Rep. 759,
quhart v. Mclver. 4 Johns. 103; Riggs 58 L. R. A. 956.
V. Lindsay, 7 Cranch, 500. 5 Bank of Commerce v. Goos, 39
» Boyd V. Fitt, supra. Neb. 437, 58 N. W. Rep. 84, 23 L. R, A.
It is not according to the usual 90.
course of events that the refusal of
232 COMPENSATION. [§ 77.
he is a trader he may show a general impairment of his credit
as the result of dishonoring his checks without alleging special
damage;^ but if loss of custom and credit from particular
persons is relied upon it must be specially pleaded.^
"Where a depositor's checks had been refused payment four
times in close succession, with knowledge that his deposit was
sufficient to pay them, the plaintiff recovered damages for his
actual money loss because of the notice of protest and expend-
itures made in arranging matters after he knew of the dis-
honor of his checks, substantial damages for the impairment
of his credit, notwithstanding he was not a trader. On this
feature of the recovery it was said that plaintiff was engaged
in actual business, and that it was in the course of that business
that the checks had been drawn. Ordinarily, an honest man
draws checks only on a bank where he has an account, and
though sometimes by mistake he may draw checks when he
has overdrawn his account, yet, if he does that repeatedly,
any one knowing it would be sure to conceive an unfavorable
opinion, not only as to his honesty, but also as to his credit; so
that the act of a bank in refusing to pay its customer's checks
is something more than a mere nominal breach of the contract
to be paid for by requiring the bank to make good the money
which its act has cost him. From these repeated refusals the jury
might infer that the credit of the plaintiff was impaired thereby.
A further recovery was sustained for injured feelings and
mental anxiety over the matter; so far as these resulted di-
rectly and proximately from the defendant's acts if these were
committed maliciously through wrongful and improper mo-
tives. As to this head the court said: As we have seen, when
the animus is a question for the jury, they are at liberty, when
they find that damages are suffered because of the tort, not
only to award the actual money damages sustained, but dam-
ages for the mental suffering and anxiety which accompany
the material damages resulting from the wrongful act. . . .
If it can be fairly inferred that, as the result of the act, the
plaintiff, who was a prosperous business man in good standing,
ij. M. James Co. v. Continental 2 Fleming v. Bank of New Zealand,
Nat. Bank, 105 Tenn. 1, 58 S. W. Rep. [1900] App. Cas. 577.
261, 51 L. R. A. 255.
^ 77.] ELEMENTS OF DAMAGE. 233
has suffered damage to his credit, so that his status in that re-
gard has been changed, and that has taken place because of
the wrongful and intentional act of the defendant, it is not too
much to infer that, as a result of that act, and the damages
caused by it, the plaintiff has suffered anxiety and the feeling
of humiliation which would necessarily follow the consciousness
of a loss of one's business reputation. The case is quite analo-
gous to an action of slander. It is quite true that in such a
case as this the bank says nothing which can be laid hold of
as the basis of the action, but hy its act it affirms that the per-
son who has drawn checks upon it has made an effort to obtain
money from the bank and to impose his checks upon his neigh-
bors with w^hom he deals, knowing that they would not be
honored when presented; and that is substantially saying that
in respect to that matter his dealing is dishonest, and neces-
sarily impairs his credit as an honest man. The jury were,
therefore, justified in considering that an act of the bank which
raised an inference that the plaintiff was not an honest man,
necessarily inflicted upon him that humiliation and mental
iinxiety which follows upon the knowledge by a man that he
has been accused of the dishonest act, which the action of the
bank has given rise to.^ The rule which supports a recovery
i-ov the loss of credit where a bank refuses to pay a depositor's
check has no application in the case of unintentional delay in
the delivery of money by a telegraph company whereby the
plaintiff's note was protested, unless he shows a pecuniary loss
because of the protest,^ Where the plaintiff gave up certain
claims against the defendant as a consideration for the supply
of funds by the latter for specified purposes and for a fixed
time, and at the expiration of three-fourths of that time the
defendant broke his contract, the plaintiff was not entitled to
recover the value of such claims, the failure of consideration
not being total; he did recover the expenses directly entailed
upon him by the breach, a liberal sum in respect to loss and
embarrassment, to avoid which he surrendered those claims,
which loss and embarrassment were in the contemplation of
the parties when they contracted. The first head of damage
1 Davis V. Standard Nat. Bank, 50 . 2 Smith v. Western U. Tel. Co., 150
App. Div. 210, 63 N. Y. Supp. 764. Pa. 561, 24 AtL Rep. 1049.
234 coMrE.\sATio::T, [§ 7T..
consisted of the expense of transferring the loan, and it was
allowed notwithstanding the transfer would necessarily have
been made three months later.'
In order that the liability for the breach of a contract to
loan money to pay an incumbrance shall exceed a nominal sum
it must appear that the contract was made with knowledge of
the purpose for which the money was to be used, the necessity
for its use, and also that the land was lost to the owner because
of the incumbrance, and without his knowledge and solely
through the fault of him who was to make the loan ; or, if the
other person had notice of the neglect or refusal to make the
loan, it came at a time when he was deprived of the opportu-
nity to procure the money elsewhere and pay the incumbrance
or redeem the land if it had been sold.- The breach of a con-
tract to advance money and supplies to carry on a logging
business, the contract having been made with knowledge that
the obligee could not procure these elsewhere, renders the party
guilty thereof liable for the profits which could have been made
by putting logs in the market.^ The general rule that a person.
can recover only nominal damages because of the refusal of
another to advance money of w^hich he may immediately de-
mand the repayment,^ does not apply where the circumstances
indicate that the parties did not intend the transaction to
be a demand loan though it was such in terms; in such a case
the plaintiff may prove the damages he has sustained because
of the breach of contract.^
Where one person furnishes money to another to discharge
an incumbrance upon the land of the person furnishing the
money, and the person undertaking to discharge it neglects to
1 Parker v. Cunningham, 5 Vict. L. ^ Lowe v. Turpie, 147 Ind. 652, 675,
R. (law) 203. 44 N. E. Rep. 25, 37 L. R. A. 233.
On the breach of a contract to ex- " Graham v. McCoy, 17 Wash. 63,
tend a loan the only damages recov- 48 Pac. Rep. 780, 49 id. 235.
erable are those represented by the * Bradford, etc. R. Co. v. New York,
difference in the rate of interest to etc. R. Co., 123 N. Y. 316, 25 N. E. Rep.
be paid, unless the plaintiff shows 499, 11 L. R. A. 116.
his inability to obtain the money 5 Goldsmith v. Holland Trust Co.,
from other sources to discharge the 5 App. Div. 104, 38 N. Y. Supp. 1032.
debt which, by his default in the pay- See Bank of Commerce v. Bright, 23-
ment of interesr, has matured. West- C. C. A. 586, 77 Fed. Rep. 949.
em U. Tel. Co. v. Hearne, 7 Texi
Civ. App. 67, 73, 26 S. W. Rep. 478.
§ 78.] ELEMENTS OF DAMAGE. 235
do SO, and the land is lost to the owner by reason of the neg
lect, the measure of damages may be the money furnished
with interest, or the value of the land lost, according to cir-
cumstances.^ If the land-owner has knowledge of the agent's
failure in time to redeem the land himself his damages [130]
will be the money furnished with interest. But if the land-
owner justly relies upon his agent to whom he has furnished
money to discharge the incumbrance, and the land is lost with-
out his knowledge, and solely through the fault of the agent,
the latter will be liable for the value of the land at the time it
is lost.^
§ 78. Liability for gains and losses. For the breach of
other contracts than to pay money the injured party is entitled
to compensation for gains prevented ^ and losses sustained. The
gains prevented are those which would accrue to the contract-
ing parties from the mutual performance of the contract. The
damages for the total breach of a contract should include the
value of it to the injured party. This is generally the meas-
ure. There are some exceptions, as in case of contracts for
the sale of land where title unexpectedly cannot be made, and
generally on covenants for title in conveyances of real estate.*
1 In actions upon covenants against himself the amount thus advanced,
incumbrances or covenants to pay and where, after receiving the deed,
off specific incumbrances, the dam- he refuses to make the advance-
ages are the diminution in value of ments. The liability of such person
the estate by reason of the incum- is not for the value of the land nor
brances, and where the contract the sum which was to be advanced,
broken was to pay off a specific lien but for the actual damages sustained
the owner may recover the whole by the other party. Turpie v. Lowe,
amount of it, although no damage 114 Ind. 37, 54, 15 N. E. Rep. 834;
has been proved- Lethbridge v. Myt- Stanley v. Nye, 51 Mich. 232, 16 N.
ton, 2 B. & Ad. 772; Carr v. Roberts, W. Rep. 387.
5 id. 78; Loosemore v. Radford, 9 ^ See ^% 59 et seq.
M. & W. 657; Hodgson v. Wood, 2 * Flureau v. Thornhill, 2 W. BL
H. & C. 649. See Paro v. St. Mar- 1078; Worthington v. Warrington,
tin, 180 Mass. 29. 61 N. E. Rep. 268. 8 C. B. 134; Buckley v. Dawson, 4 Ir.
2 Blood V. Wilkins, 43 Iowa, 565; C. L. (N. S.) 211; Sikes v. Wild, 1 B.
Gallup V. Miller, 25 Hun, 298. & S. 594; Bain v. Fothergill, L. R, 6
The rule stated in the text does not Ex. 59, L. R 7 Eng. & Irish App. 158;
apply where an individual accepts a Baldwin v. Munn, 2 Wend. 399, 20
deed for the land of another, and Am. Dec. 627; Conger v. Weaver, 20
agrees with him to advance money N. Y. 140; Pumpelly v. Phelps, 40 id.
to pay his debts, and to sell the land 60; Sweem v. Steele, 5 Iowa, 352;
to raise money with which to repay Drake v. Baker, 34 N. J. L. 358; Vio-
236
COMPENSATION.
[§78.
By this general rule the party thus injured by a total breach
is entitled to recover the profits of the particular contract
which he shows, with sufficient certainty, would have accrued
if the other party had performed. He is entitled to recover
proportionately for a partial breach. And to ascertain these
profits the nature and the special purpose of the contract, a
subcontract, or other subsidiary and dependent arrangement,
within the contemplation of the parties at the time of con-
tracting, may be taken into consideration.^ The objection
let V. Rose, 39 Neb. 661, 58 N. W. Rep.
216. See ch. 13.
1 Mason v. Alabama Iron Co., 73
Ala. 270; Jones v. Foster, 67 Wis.
296, 30 N. W. Rep. 697; Cameron v.
White, 74 Wis. 425, 43 N. W. Rep.
1.55, 5 L. R A. 493; Treat v. Hiles. 81
Wis. 280, 50 N. W. Rep. 896; Oliver v.
Perkins, 92 Mich. 304, 52 N. W. Rep.
609; Morgan v. Hefler, 68 Ma 131;
Hadley V. Baxendale, 9 Ex. 341; Mc-
Hose V. Fulmer, 73 Pa. 305; Van
Arsdale v. Rundel, 82 111. 63; True v.
International Tel. Co., 60 Me. 9;
Booth V. Spuyten Duyvil Rolling
Mill Co., 60 N. Y. 487; Cassidy v. Le
Fevre, 45 id. 562; Hexter v. Knox,
63 id. 561; Frye v. Maine Central R,
Co., 67 Me. 414; Fultz v. Wycoff, 25
Ind. 321; Holden v. Lake Co., 53 N.
H. 552; Coweta Falls Manuf. Co. v.
Rogers, 19 Ga, 416, 65 Am. Dec. 602;
Fox V. Harding, 7 Cash. 516: Fletcher
V. Tayleur. 17 C. B. 21; Masterton v.
Mayor, 7 Hill, 61; Wolcott v. Mount,
86 N. J. L. 262, 13 Am. Rep. 438; Pas-
singer V. Thorburn, 34 N. Y. 634;
Smith V. Chicago, etc. R. Co., 38
Iowa. 518; Van Wyck v. Allen, 69 N.
Y. 61, 25 Am. Rep. 136; Ferris v.
Comstock, 33 Conn. 513; France v.
Gaudet, L. R. 6 Q. B. 199; Richmond
T. D. & S. C. R Co., 40 Iowa, 264;
Sisson V. Cleveland, etc. R. Co., 14
Mich. 489; Burrell v. New York, etc.
Co., 14 Mich. 34; Maynard v. Pease,
99 Mass. 555; Bell v. Cunningham, 3
Pet. 69; Farwell v. Price, 30 Mo. 587;
James H. Rice Co. v. Penn Plate
Glass Co., 88 IlL App. 407, citing the
text; Smith v. Los Angeles & P. R
Co., 98 CaL 210, 33 Pac. Rep. 53;
Post V. Davis, 7 Kan. App. 217, 52
Pac. Rep. 903; McNeill v. Richards,
[1899] 1 Irish, 79; Consolidated Coal
Co. v. Schneider, 93 111. App. 88, cit-
ing the text; Curry v. Kansas, etc. R
Co., 58 Kan. 6, 48 Pac. Rep. 579. 61
Kan. 541, 60 Paa Rep. 325; Watson
V. Needham, 161 Mass. 404, 37 N. E.
Rep. 204, 24 L. R A. 287; Knowles v.
Steele, 59 Minn. 452, 61 N. W. Rep.
557; Farr v. Griffith, 9 Utah, 416. 35
Pac. Rep. 506, citing the text; Ken-
dall Bank Note Co. v. Commissioners
of Sinking Fund, 79 Va. 563; Bratt
V. Swift, 99 Wis. 579, 75 N. W. Rep.
411; Crosby Lumber Co. v. Smith, 2
C. C. A. 97, 51 Fed. Rep. 63; Tinsley
V. Jemison, 20 C. C. A. 371, 74 Fed,
Rep. 177; Lindsay v. Stevenson, 17
Vict. L. R 112; Marcus v. Myers, 11
T. L. Rep. 327.
In Pell V. Shearman, 10 Ex. 766,
the defendant covenanted with the
plaintiff that if he would surrender
to his lessor a certain lease they
would, within two years or such
period as should be agreed in a new
lease, which the lessor had agreed to
grant them, sink upon the demised
premises a pit to the depth of one
hundred and thirty yards for the
purpose of finding coal, and, in case
a marketable vein of coal should be
reached, pay the plaintiff 2,500i,
§ 79.] ELEMENTS OF DAMAGE. 237
that the nature of the business to which the contract has
reference and in which profits might have been earned fur-
nishes no reasonable basis upon which to malce an estimate of
loss is not controlling where the contract sued upon, or the
collateral contract, if, in the latter case, the defendant is re-
sponsible for its breach, consists of an undertaking to do specific
work for a specified price, although in the performance of that
work machinery as well as labor may be employed and the
weather may affect the profits by interfering with the work.^
§ 79. What losses elements of damage. Losses, aside from
gains prevented, may be sustained in various ways in conse-
quence of the breach of a contract. First, a loss may consist
of money, property or valuable rights which may be directly
taken from the injured party by the breach,'^ A servant im-
properly discharged before the period of his engagement has
expired and unable to find any other employment, or one
equally remunerative, is thereby deprived of the right to earn
the stipulated wages. By that breach of contract he loses the
whole or a part of what he was entitled to earn during the
term he was engaged for, and he is entitled to recover accord-
ingly.* An agent or bailee who, by breach of duty, converts
There was a breach of the contract, 56 Kan. 614, 44 Pac. Eep. 621, 54 Am.
and evidence showing a reasonable St. 598; Hughes v. Robinson, 60 Mo.
probability that if the pit had been App. 194; Athletic Baseball Ass'n v.
sunk such coal would have been dis- St. Louis Sportsman's P. & C. Ass'n,
covered. Plaintiffs measure of dam- 67 Mo. App. 653; Hutt v. Hickey, 67
age was the amount of his loss by N. H. 411, 29 Atl. Rep. 456; Friedland
being deprived of the opportunity to v, Myers, 139 N. Y. 432, 34 N. K Rep.
find coal. 1055: Cutting v. Miner, 30 App. Div.
Machinery put into a mill failed 457, 52 N. Y. Supp. 288; Wells v.
to possess the capacity as to the National L. Ass'n, 39 C. C. A. 476, 99
quantity and quality of flour it was Fed. Rep. 222; Sutherland v. Wyer,
warranted to produce. The damages 67 Me. 64; Gifford v. Waters, 67 N. Y.
were measured by the amount paid 80; Gillis v. Space, 63 Barb. 177; Em-
upon it. the loss by reason of its de- erson v. Howland. 1 Mason, 45; Howe
fects, and the cost incurred in re- Machine Co. v. Bryson, 44 Iowa, 159,
pairing the mill and putting it in 24 Am. Rep. 735; Williams v. Ander-
condition to produce the quantity son, 9 Minn. 50; Williams v. Chicago
and quality of flour stipulated for. Coal Co., 60 111. 149; Smith v. Thomp-
Pennypacker v. Jones, 106 Pa. 237. son, 8 C. B. 44.
1 Industrial Works v. Mitchell, 114 The measure of damages recover-
Mich. 29, 72 N. W. Rep. 25. able from the usurper of an office is
- Smith V. Los Angeles & P. R. Co., the salary or emoluments received.
98 Cal. 210, 33 Pac. Rep. 53. Palmer v. Darby, 64 Ohio St. 520, 60
3Paola Gas Co. v. Paola Glass Co., N. K Rep. 626.
238
COMPENSATION.
[§79.
his principal's property, or by neglect suffers it to be lost or
destroyed, or by failure to assert his rights or by doing it in a
careless or inefficient manner subjects him to loss, must re-
spond in damages according to the injury thus occasioned.^
In some cases such losses are the measure of recovery, as
where there is a breach of contract by one person to adopt
another and make him his heir. The value of the services
rendered or outlay incurred on the faith of the promise, and
not the value of the promised share of the estate, measures the
recovery.^ And when a lessee occupies premises for the entire
term, but is compelled to pay more rent than was stipulated
for, he may recover the excess.'^ The same rule applies in tort
actions, as where egress and ingress is cut off from adjacent
lands or water is caused to run or stand on them, the recovery
is measured by the expense of remedying the wrong.^ One
who breaches his contract to permit the owner of mortgaged
lands to redeem them after foreclosure and sale by selling the
same to innocent purchasers is liable for the value of the lands
in excess of the mortgage debt, including foreclosure costs; if
but a small part of the lands were sold at the time suit was begun,
the remainder not being thereby depreciated in value, he is
liable for the value of those sold and the plaintiff may recover
those unsold upon payment of the mortgage debt and charges ;
if the defendant continued to sell the remaining lands after
suit was begun he is responsible for their value, unless the
plaintiff elected to proceed against the purchasers, who were
not entitled to the rights of innocent holders.*
I White V. Smith, 54 N. Y. 523;
Dodge V. Perkins, 9 Pick. 368; Clark
V. Moody, 17 Mass. 145; Frothingham
V. Everton, 12 N. H. 239; Webster v.
De Tastet, 7 T. R 157: Blot v. Boiceau,
3 N. Y. 78; Maynard v. Pease, 99
Mass. 555; Stearine, etc. Co. v.
Heintzmaun, 17 C. B. (N. S.) 56;
Allen V. Suydam, 20 Wend. 331, 33
Am. Dec. 555; Mallough v. Barber, 4
Camp. 150; Nickerson v. Soesman, 98
Mass. 364; Trinidad Nat. Bank v.
Denver Nat. Bank, 4 Dill. 290; De
Tastet V. Crousillat, 2 Wash. C. C.
133; Lilley v. Doubleday, 7 Q. B. Div.
510.
2Sandham v. Grounds, 36 C. C. A.
103, 94 Fed. Rep. 83; Graham v.
Graham, 34 Pa. 475, overruling Jack
V, McKee, 9 Pa. 240; Kauss v. Rohner,
173 Pa. 481, 33 AtL Rep. 1016, 51 Am.
St. 763.
3 Myers Tailoring Co. v. Keeley, 58
Mo. App. 491.
4 Louisville & N. R, Co. v. Finley, 7
Ky. L. Rep. 139 (Ky. Super. Ct).
5 Silliman v. Gano, 90 Tex. 637, 39
S. W. Rep. 559.
§ 80.] ELEMENTS OF DAMAGE. 239
§80. Same subject; labor and expenditures. Second,
losses sustained may consist of labor or expenditures prudently
incurred in preparation to perform or in part performance of
the contract on the part of the plaintiff. Where a contract is
partly performed by one party and, without his being in any
default, the other stops him and prevents further performance,
such part performance, in addition to the profits which could
be made by completing the contract, will enter into the esti-
mate of damages for such breach. Should a vendor who had
received part payment for goods bargained and sold refuse to
go on with the contract the vendee would be entitled to [132]
recover, in addition to the profits — the excess of the value of
the goods above the contract price — the amount which he
had paid towards the latter, for the same reason which sup-
ports his claim where he has paid the whole purchase price for
the value of the property.^ If a contract for particular work
is partly performed and the employer then puts an end to the
undertaking recovery may be had against him, not only for
the profits the contractor could have made by performing the
contract, but compensation also for so much as he has done
towards performance.^ Preparations for performance, which
were a necessary preliminary to performance or within the
contemplation of the parties as necessary in the particular case,
rest upon the same principle.^ Maintaining a shop and waiting
1 Copper Co. v. Copper Mining Co., (quoting the two preceding proposi-
33 Vt. 92; Woodbury v. Jones, 44 N. tions, but allowing profits only under
H. 206; Owen V. Routh, 14 C. B. 327; the circumstances); Bernstein v.
Bush V. Canfield, 2 Conn. 485; Loder Meech, 130 N. Y. 354, 29 N. E. Rep.
V. Kekule, 3 C. B. (N. S.) 128; Smith 255; Friedland v. Myers, 139 N. Y.
V. Berry, 18 Me. 122; Berry v.Dwinel, 433, 34 N. E. Rep. 1055; Nelson v.
44 Me. 255; Wyman v. American Hatch, 70 App. Div. 206, 75 N. Y.
Powder Co., 8 Cush. 168; Pinkerton Supp. 389; Grififin v. Sprague Electric
V. Manchester & L. R., 42 N. H. 424. Co., 116 Fed. Rep. 749; Masterton v,
2 McCuUough V. Baker, 47 Mo. 401 ; Mayor, 7 Hill, 61. In the last case
Jones V. Woodbury, 11 B. Mon. 167; the marble at the quarry was taken
Derby V. Johnson, 21 Vt. 17; Cham- into account in the estimate of dani-
berlin v. Scott, 33 Vt. 80; Friedlander ages.
V. Pugh, 43 Miss. Ill; Polsley v. An- In Nurse v. Barnes, T. Raym. 77,
derson, 7 W. Va. 202, 23 Am. Rep. 613; the defendant, in consideration of
Danforth v. Walker, 37 Vt. 239. lOZ., promised to demise a mill to the
'United States v. Behan, 110 U. S. plaintiff, who laid in a large stock
338, 4 Sup. Ct. Rep. 81 ; Hale v. Hess, to employ it, which he lost, because
30 Neb. 42, 58, 46 N. W. Rep. 261 the defendant refused to give him
240
COMPENSATION.
[§80.
for orders which are dae under a contract is the equivalent of
an expenditure under this principle.^ If, by partial perform-
ance of the contract, a contractor has enjoyed a part of the
benefits of his expenditure for full performance, the damages
he is entitled to are proportionately lessened.^
possession. A verdict of 500Z. was
approved. The stock so procured
may more properly be classed as an
expenditure on the faith of perform-
ance by the other party. See § 81.
But the allowance of a loss for such
expenditures rests on a similar prin-
ciple.
In Skinner v. Tinker, 34 Barb. 333,
an action was brought to recover
damages for the breach of a contract
for a partnership. The plaintiff, a den-
tist of Brooklyn, and the defendant,
a dentist of Havana, Cuba, entered
into an agreement, in writing, at the
latter place, in March, 1858, by which
they were to do a joint business as
dentists at Havana, to begin in Octo-
ber or November following, if the
plaintiff should present himself. The
agreement was silent as to the dura-
tion of the partnership. Thereupon
the plaintiff sold his business at
Brooklyn and entered into bonds not
to resume practice there, and made
ail preparations for carrying out his
agreement. In May he received a
letter from the defendant, declining
to carry out the agreement on his
part On the trial the plaintiff
proved these facts, and his readiness
and an offer to fulfill, and recovered
a verdict for $4,000. On appeal In-
graham, J., said: "Performance on
the part of the plaintiff by appearing
in Havana, in October or November,
as stated in the contract, was unnec-
essary because the defendant had
given notice of his determination not
to form a partnership. The plaintiff
was then entitled to damages, if
any were sustained, up to that time,,
but not to prospective damages."
Johnson v. Arnold, 2 Gush. 46, was
an action to recover damages for the
breach of a special contract by which,
upon certain terms, the defendant
agreed to furnish and keep the plaint-
iff supplied with a stock of goods for
carrying on business in the defend-
ant's store in another state, and the
plaintiff undertook to carry it on for
a share of the profits for a given
term. It was held that in estimat-
ing the damages it was competent to
allow the plaintiff compensation for
the loss of his time and for the ex-
penses of removing his.family to and
from the place where the business
was to be carried on.
Noble V. Ames Manuf. Co., 112
Mass. 492. is apparently not consist-
ent with the principle stated. The
defendant, doing business in Massa-
chusetts, wrote the plaintiff in the
Sandwich Islands: "I am ready to
offer you a foreman's situation at
these works as soon as you may get
here; pay, $1,500 a year." The plaint-
iff accepted the proposition and came^
but the defendant refused to employ
him. The court rejected the claim oJ
compensation for the time and ex-
penses in coming from the Sandwich
Islands onthe ground thatthose items
preceded the takingeffect of the con-
tract, and were not in part perform-
ance. Morton, J., said: "All the
plaintiff can claim is that he should
be placed in as good condition as he
would have been in if the contract
had been performed. But the ruling
1 Speirs v. Union Drop Forge Co.,
180 Mass. 87, 90, 61 N. E. Rep. 825.
- O'Connell v. Rosso, 56 Ark. 603, 20
S. W. Rep. 531.
§81.]
ELEMENTS OF DAMAGE.
241
§81. Same subject; damages by relying on performance.
Third, such losses may consist of expenditures made by [1*^3]
one party to a contract and damages from his own acts done
on the faith of its being performed by the other, in further-
ance of the object for which the contract purports to be [l-J-i]
made, or the object which was in the contemplation of the
parties at the time of contracting.^ Such losses cannot be re-
(allowing these items) puts him in a
better condition." On the trial those
were the only items claimed. It was
stated by the plaintiffs counsel that
no claim was made for business sacri-
fices in leaving the Islands and com-
ing to the defendant to perform the
contract, and none for any loss of
time or other loss or damage after
the refusal of the defendant to em-
ploy him.
The contrary view is expressed in
Moore v. Mountcastle, 73 Mo. 605,
where plaintiff was allowed to re-
cover for loss of time and expense
in going to perform a contract. The
expense incurred in taking another
person with him to assist in the work
he was to do was disallowed. His
personal expenses and the loss of his
time were "such damages as may be
presumed necessarily to ha ve resulted
from the breach of the contract," and
hence did not need to be specially
pleaded.
In Smith v. Sherman, 4 Gush. 408,
it was held that loss of time and ex-
penses incurred in preparation for
marriage are directly incidental to
the breach of the marriage promisa
In Durkee v. Mott, 8 Barb. 423. on
a contract to pay a certain price for
rafting logs which the defendant put
an end to before the labor began, it
was held the plaintiff might recover
the immediate loss in preparing to
perform the contract by providing
men for that purpose.
Woodbury v. Jones, 44 N. H. 206,
afiSrms the same doctrina There the
defendant proposed to the plaintiff,
Vol. 1—16
who was then living in Minnesota,
that if he would come back to N. B.
he might move into the defendant's
house, and he would give the plaintiff
and his wife a years board, and he
might carry on the defendant's farm
on any terms he might elect, lie ac-
cepted, and came back; defendant
failed to make his offer good; the
court held that it was competent for
the jury to take into consideration in
assessing the damages the expenses
of removing to N. B.
In an action against the proprietor
of a school for the breach of a contract
to employ the plaintiff as a teacher,
made for her by her father during
her absence in Europe, the plaintiff
was held not entitled to recover as
part of her damages the expenses of
her journey home, it not appearing
that they were incurred in conse-
quence of the contract, or were in the
contemplation of the parties when it
was made. Benziger v. Miller, 50 Ala.
206. See Williams v. Oliphant, 3 Ind,
271; Bulkley v. United States, 19
Wall. 37: Dillon v. Anderson, 43 N.
Y. 231; Hosraer v. Wilson, 7 Mich.
294, 74 Am. Dec. 416.
1 Wolters V. Schultz, 1 N. Y. Misc.
196, 21 N. Y. Supp. 768; Gordon v.
Constantino Hydraulic Co., 117 Mich.
620, 76 N. W. Rep. 142; Cole v. Stearns,
23 App. Div. 446, 48 N. Y. Supp. 318;
People's Building, Loan & Savings
Ass'n V. Pickerell, 21 Ky. L. Rep.
1386, 55 S. W. Rep. 194; Kelly v. Da-
vis. 9 Ky. L. Rep. 647 (Ky. Super. Ct.);
Dean v. White, 5 Iowa, 266; Grand
Tower Co. v. Phillips, 23 Wall. 471;
242
COMPENSATION.
[§82.
covered if incurred after notice of the refusal of the other
party to perform the contract.^
§ 82. Same subject ; liability to third persons ; covenants
of indemnity. Fourth, such losses may consist of sums neces-
sarily paid to third persons, or of suras recovered and expenses
incurred in actions brought by third persons in consequence
of the defendant's breach of contract. They are those losses
[135] which may result from suretyship or the breach of any
duty or obligation of indemnity.'-' In such cases the practical
question will always be what the plaintiff was obliged or au-
thorized to pay both in respect to the principal and incidental
costs or expenses. If there has been a voluntary payment by
the indemnified party or a compulsory payment resulting from
Driggs V. Dwight, 17 Wend. 71. 31
Am. Dec. 283; Bunney v. Hopkinson,
1 L. T. (N. S.) 53; Smith v. Green, 1
C. P. Div. 92; Randall v. Newson, 2
Q. B. Div. 102; Leffingwell v. Elliott,
10 Pick. 204; Milburn v. Belloni, 39
N. Y. 53, 100 Am. Dec. 403; Thomas
V. Dingley, 70 Me. 100, 35 Am. Rep.
aiO; Randall v. Raper, E. B. & E. 84
Borradaile v. Bruntou, 8 Taunt. 535
Brown v. Edgington, 2 M. & G. 279
French v. Vining, 102 Mass. 132, 3
Am. Rep. 440; Johnson v. Meyer's
Ex'r, 34 Mo. 255; Rowland's Adm'r
V. Shelton, 25 Ala. 217; Ferris v.
Comstock, 33 Conn. 513; ZuUer v.
Rogers, 7 Hun, 540; Fisk v. Tank, 12
Wis. 276, 78 Am. Dec. 737; Reggio v.
Braggiotti, 7 Gush. 166; Jeter v.
Glenn, 9 Rich. 374; Skagit R. & L.
Co. V. Cole, 2 Wash. 57, 25 Pac. Rep.
1077: Bernstein v. Meech, 130 N. Y.
354, 29 N. E. Rep. 255. See Mason v.
Alabama Iron Co., 73 Ala. 270.
1 James H. Rice Co. v. Penn Plate
Glass Co., 88 111. App. 407.
2 Rogers v. Riverside Land & Irri-
gating Co., 132 Cal. 9, 64 Pac. Rep.
95; Mowbray V. Merry weather, [1895J
1 Q. B. 57, [1895J 2 id. 640; French v.
Parish, 14 N. H, 496: Newburgh v.
Galatian, 4 Cow. 340; Holdgate v.
Clark, 10 Wend. 215; Lincoln v.
Blanchard, 17 Vt. 464; Chamberlain
v. Godfrey, 36 Vt. 380, 84 Am. Dec.
690; Westervelt v. Smith, 2 Duer,
449; lilies v. Fitzgerald, 11 Tex. 417;
Braman v. Dowse, 12 Cush. 227;
Spear v. Stacy, 26 Vt. 61; Howard v.
Lovegrove, L. R. 6 Ex. 43; Fiuckh v.
Evers, 25 Ohio St. 82; Webb v. Pond,
19 Wend. 423; Rockfeller v. Don-
nelly, 8 Cow. 623; Warwick v. Rich-
ardson, 10 M. & W. 284; Gerrish v.
Smyth, 10 Allen, 303; Ray v. Clemens,
6 Leigh, 600; Kip v. Brigham, 6
Johns. 158: Colter v. Morgan's Adm'r,
12 B. Mon. 278; Lowell v. Boston, etc.
R. Co., 23 Pick. 24; Baynard v. Har-
rity, 1 Houst. 200; Robbins v. Chi-
cago, 4 Wall. 657; Crawford v. Turk,
24 Gratt. 176; Duxbury v. Vermont,
etc. R Co., 26 Vt. 751: Annett v.
Terry, 35 N. Y. 256: Spalding v.
Cakes, 42 Vt. 343; Chamberlain v.
Beller, 18 N. Y. 115; Bridgeport Ins.
Co. V. Wilson, 34 N. Y. 275; Propri-
etors of L. & C. V. Lowell Horse R
Co., 109 Mass. 221; Briggs v. Boyd,
37 Vt. 534; Colburn v. Pomeroy, 44
N. H. 19; Thomas v. Beck man, 1 B.
Mon. 31; Robertson v. Morgan's
Adm'r, 3 id. 309; Littleton v. Rich-
ardson, 32 N. H. 59; Gibson v. Love,
2 Fla. 598.
§ 82.] ELEMENTS OF DAMAGE. 243
a suit by which the indemnitor is not bound by his contract
or in consequence of the lack of notice to defend, the question
of the liability of the indemified party to make such payment
is, according to some authorities, open in his action for in-
demnity.^
In a recent case -a contractor for machinery supplied an
article made for him by the defendant. It was defectively
constructed and in consequence the plaintiff was subjected to
a judgment for damages resulting from the breaking of that
article, such judgment being rendered in Canada. No offer of
the defense of the action on which such judgment was rendered
was made to the plaintiff. The conclusion of the court was
that where a subvendee or a subcontractor has a legal claim
for indemnification, and has, under fear of the consequences,
made an adjustment or been compelled to yield to a judgment
under circumstances indicating good faith and a reasonable
amount of resistance, the amount thus determined, either by
the adjustment or by the litigation, becomes evidence of the
amount of damages to be awarded against the principal con-
tractor.^ This conclusion was aside from the question whether
the judgment should stand as of conclusive effect or only
^rima facie evidence as to the measure of damages. If there
is an express indemnity against the result of a particular suit,
whether the indemnitor is a party or not, the judgment binds
him for the purposes of that contract.^ But under a general
covenant of indemnity against suits the covenantor has a right
to defend either in the action against the indemnified party or
in the latter's action upon the covenant of indemnity. There
is a marked distinction between covenants which stipulate
against the consequences of a suit and those which contain no
such undertaking. In the latter class the judgment is res inter
alios acta^ and proves nothing except rem ijjsam against the
1 Douglas V. Howland, 24 Wend. ^ citing Smith v, ComiDton, 3 B. &
35; Lee v. Clark, 1 Hill, 56; Duffield Ad. 407, and the text.
V.Scott, 3 T. R. 374; Aberdeen v. 4 Patton v. Caldwell, 1 Dall. 419;
Blackmar, 6 Hill, 324; Rapelye v. Rapelye v. Prince. 4 Hill, 119, 40 Am.
Prince, 4 Hill, 119, 40 Am. Dec. 267. Dec. 267; Thomas v. Hubbeli, 15 N.
2 Nashua Iron & Steel Co. v. Brush, Y. 405, 69 Am, Dec. 619: Chamberlain
33 C. C. A. 456, 91 Fed. Rep. 213. . v. Godfrey, 36 Vt. 380, 84 Am. Dec.
690.
244: COMPENSATION. [§ 82.
indemnitor, unless he has had notice and an opportunity to
defend. The want of notice does not go to the cause of action ;
the judgment is prima facie evidence only against the indem-
nitor and he is at liberty to defend against the demand on
which it is founded.' If notice is expressly stipulated for the
want of it will defeat the action.^
[130] As to the right to costs and expenses of defending a
former suit brought to enforce a liability, against which there
is an agreement or duty to indemnify, there is some conflict
of decision. If a surety for a liquidated debt is sued upon it
he io not bound to pay it to save costs; and he may recover
of the principal the costs which he is compelled to pay as in-
cident to a default judgment, and, in addition, the sum he is
obliged to pay of the debt.* And where the action is founded
on a disputable liability or an unliquidated demand the rule
in England, and generally in this country, allows the surety
or indemnified party to give notice of the suit to the party
ultimately liable and abide his directions; if he gives none, to
make no defense; or if the facts are such as to render some
defense reasonable and judicious and there is a probability of
success, he is at liberty to defend ; and such costs and expenses
as are reasonable and incurred in good faith he will be entitled
to recover as part of his indemnity. He may recover not only
the costs taxed against him by the prevailing adverse party,
but the costs of his defense.* A man has no right, merely be-
1 Bridgeport Ins. Co. v. Wilson, 34 Weed, 24 Barb. 546; Wynn v. Brooke,
N. Y. 275; Smith v. Compton, 2 B. & 5 Rawle, lOG; McKee v. Campbell, 27
Ad. 407; Reggie V. Braggiotti, 7Cush. Mich. 497; Wright v. Whiting, 40
166; Marlatt v. Clary, 20 Ark, 251; Barb. 240; Wallace v. Gilchrist, 24
Boyd V. Whitfield, 19 Ark. 447; Col- Up. Can. C. P. 40; Craig v. Craig, 5
lingwoodv. Irwin, 3 Watts, 306: Paul Rawle, 91; Robertson v. Morgan's
V. Witman, 3 W. & S. 407: Pitkin v, Adm'r, 3 B. Hon. 307; Colter v. Same,
Leavitt, 13 Vt. 379; Train v. Gold, 5 12 id. 278. See Pierce v. Williams.
Pick. 380; Baynard v. Harrity, 1 23 L. J. (Ex.) 322.
Houst. 200. 4 Duxbury v. Vermont Central R.
2 Bridgeport Ins. Co. v. Wilson, 34 Co., 26 Vt. 751; Smith v. Compton, 3
N. Y. 275. B. & Ad. 407; Pitkin v. Leavitt, 13
3Hulett V. Soullard, 26 Vt. 295; Vt. 379; Hayden v. Cabot, 17 Mass.
Kemp V. Finden, 12 M. & W. 421; 169; Wynn v. Brooke, 5 Rawle, 106;
Ex parte Marshall, 1 Atk. 262; Baker New Haven & N. Co. v. Hayden, 117
V. Martin, 3 Barb. 634; Elwood v. Mass. 433; Bonney v. Seely, 2 Wend.
Deifendorf, 5 Barb. 412; Bleaden v. 481; Howard v. Lovegrove, L. R 6
Charles, 7 Bing. 246; Holmes v. Ex. 43; Ottumwa v. Parks, 43 Iowa,
§ 83.] ELEMENTS OF DAMAGE. 245
cause he has an indemnity, to defend a hopeless action and put
the person guarantying to useless expense.' The rule formerly
laid down was that if the defendant in the first action placed
the facts before the person whom he sought ultimately to
charge, and that person declined to intervene and left him to
take his own course, it would be a question for the jury
whether it was reasonable to defend or whether the de- [137]
fense was conducted in a fair manner; in deciding that ques-
tion the jury would have to consider whether it was more pru-
dent to settle the matter by compromise, pay the money into
court, or let judgment go by default.^ And this is still prob-
ably the law. An agent, surety, or one expressly indemnified
in respect to the liability sought by action to be fixed on him,
who relies on the indemnit}' for security against loss, has no
personal interest to defend where he can connect the indem-
nitor with that action so as to conclude him. But where no-
tice cannot be given or for any reason is omitted, the defend-
ant who depends on another for indemnity must necessarily
so far defend the action as to obtain the best practicable assur-
ance that the amount which he pays he will have a legal right
to have reimbursed.
§83. Same subject; indemnity to municipalities ; counsel
fees. Municipal corporations charged with the duty of keep-
ing public ways in repair have a right of indemnity against
parties contracting to perform this duty if they fail to fulfill;
and against parties who, by abuse of license or tortiously, put
such ways out of repair, when such corporations have been com-
pelled to pay damages to some person injured in consequence
of such defect or want of repair.* The corporation, not being
119; Baxendale v. London, etc. R. the judgment was rendered. Nashua
Co., L. R. 10 Ex. 35; CoUen v. Wright, Iron & Steel Co. v. Brush, 33 C. C. A.
7 El. & Bl. 301; Westfield v. Mayo, 456, 91 Fed. Rep. 213.
122 Mass. 100,23 Am. Rep. 292; Aguis i Wrightup v. Chamberlain, 7
V. Great Western Colliery Co., [1899] Scott, 598; Kiddle v. Lovett, IG Q.
1 Q. B. 413. B. Div. 605; Gillett v. Rippon, Moody
But if the action is to enforce an & M. 406.
unliquidated demand and the person 2 M^yne on Dam., 6th ed., p. 95;
against whom the judgment has Mors-le-Blanch v. Wilson, L. R 8 C.
been rendered has had no opportu- P. 227.
nity to defend it, he is not liable for ^ Rochester v. Montgomery, 72 N.
the costs and expenses of the defense Y. 65; Port Jervis v. First Nat Bank,
made by the person against whom 96 id. 550; Chicago v. Robbins, 2
246 COMPENSATION. [§ 83.
injpari delicto^ is not subject to the principle which excludes
contribution or indemnity between wrong-doers, and has aright
of recovery over against the party by whose fault the injury
was suffered. Where notice has been given to the person pri-
marily at fault to take upon himself the defense, he is bound by
the judgment as to the damages paid and costs.' In such cases
[138] the demands for damages are unliquidated and gener-
ally disputable, and a defense would be proper and judicious,
whether the party ultimately liable has notice and assumes it
or not. The costs taxed against the corporation, where a rea-
sonable defense is made, in case of recovery, and the expense
of the defense, including counsel fees, are proper items of dam-
age for which it may claim indemnity. They are among the
direct consequences of the defendant's fault and the breach of
the implied promise or duty to save harmless.
In a Massachusetts case^ Lord, J., said: "The diflRculty is
not in stating the rule of damages, but in determining whether
in the particular case the damages claimed are within the rule.
Natural and necessary consequences are subjects of damages^
remote, uncertain and contingent consequences are not.
Whether counsel fees are natural or necessary, or remote and
contingent, in a particular case, we think may be determined
upon satisfactory principles; and, as a general rule, when a
party is called upon to defend a suit founded upon a wrong for
which he is held responsible in law without misfeasance on his
part, but because of the wrongful act of another against whom
he had a remedy over, counsel fees are the natural and reason-
Black, 418; Eobbins v. Chicago, 4 i Id.; Mayor r. Brady, 151 N. Y. 611,
Wall. 657; Woburn v. Henshaw, 101 45 N. E. Rep. 1122.
Mass. 193, 3 Am. Rep. 833; Stoughton In Ottumwa v. Parks, 43 Iowa,
V. Porter, 13 Allen, 191; Boston v. 119, where the party sought to be
Worthington, 10 Gray, 496, 71 Am. made liable to the city assumed the
Dec. 678; Lowell v. Boston, etc. R. defense of the action against it, the
Co., 23 Pick. 24; Brooklyn v. Brook- taxable costs of that action were al-
lyn City R, Co., 47 N. Y. 475, 7 Am. lowed so far as they were paid by
Rep. 469; Ottumwa v. Parks, 43 Iowa, the city; but the costs of an appeal
119; Duxbury v. Vermont Central were disallowed, there being no evi-
R. Co., 26 Vt. 751; Littleton v. Rich- dence that the appeal was taken at
irdson, 32 N. H. 59; Proprietors of L. the defendant's request.
& C. V. Lowell H. R. Co., 109 Mass. 2 Westfield v. Mayo, 122 Mass. 100,
221; Corsicana v. Tobin, 23 Tex. Civ. 23 Am. Rep. 292.
App. 492, 57 S. W. Rep. 319.
§83.]
ELEMENTS OF DAMAGE.
24^
ably necessary consequence of the wrongful act of the other, if
he has notified the other to appear and defend the suit. When,
however, the claim against him is upon his own contract or for
his own misfeasance, though he may have a remedy against
another, and the damages recoverable may be the same as the
amount of the judgment recovered against himself, counsel
fees paid in defense of the suit against himself are not recov-
erable." ^ It appears to the writer that such expenses being rec-
ognized as not remote and contingent, the test here given for
their allowance or rejection is not sound. They were allowed
in that case, the plaintiff, a municipal corporation, having de-
fended a suit for damages brought against it for a defect in
a sidewalk caused by the defendant; but by the rule laid down,
an innocent agent who does at the request of his principal a
wrongful and injurious act, on being sued therefor would have
no recourse for fees of counsel employed to defend that action.^
1 In Chase v. Bennett. 59 N. H. 394,
an action for neglect of a clerk to
indexamortgage,whereby the plaint-
iff was induced to take a mortgage
of tlie property supposing it to be
unincumbered, it was held that
counsel fees paid in defending a suit
by the prior mortgagee for the proi>
erty were not damages for which
the defendant was liable because
they were not the natural and rea-
sonable consequence of his neglect,
and because he was not notified to
defend that suit.
Such fees are not recoverable
against the person liable over for a
defect in a highway. Corsicana v.
Tobin. 23 Tex. Civ. App. 492, 500, 57
a W. Rep. 319.
2 See Howe V. Buffalo, etc. R. Co.,
37 N. Y. 297.
Ill Reggio V. Braggiotti, 7 Cush.
166, the defendant sold to the plaint-
iff an article which he warranted
to be one known in commerce as
opium, with a view of its being sold
as such; but it was not opium, or of
any value; the plaintiff having sold
with like warranty, relying on the
defendant's warranty, had been sued
by his vendee and compelled to pay
damages and costs; he gave the de-
fendant notice of that suit and re-
quested him to defend it, and in-
curred large expense in and about
it. Shaw, C. J., said: "As they (the
plaintiffs) gave notice to the defend-
ants of the pendency of the first ac-
tion, they are entitled to recover
their taxable costs. See Coolidge v.
Brigham, 5 Met. 68. But the counsel
fees cannot be allowed. They are
expenses incurred by the party for
his own satisfaction, and they vary
so much with the character and dis-
tinction of the counsel that it would
be dangerous to permit him to im-
pose such a charge upon an oppo-
nent; and the law measures the
expenses incurred in the manage-
ment of a suit by the taxable costs."
Counsel fees are here treated as in
some sense uncertain in amount, and
for this reason the party having a
right of recovery over should not
impose such a charge; but it is not
correct to say that such services are
so uncertain iq value as to be inca-
24:8 COMPENSATION. [§ 84.
And yet in this opinion the learned judge says: " Within this
[139] rule a master who is immediately responsible for the
wrongful acts of a servant, though there is no misfeasance on
his part, might recover against such servant not only the
amount of the judgment recovered against him, but his reason-
able expenses, including counsel fees, if notified to defend the
suit." Where there is an implied or express indemnity which
covers the consequences of being sued and having to defend
an action, all the usual concomitants of such a situation are
necessarily within the contemplation of the parties; and if
there is no objection of improvidence or bad faith the expense
of counsel is obviously as proper to be allowed as the fees of
witnesses, the clerk of the court or the sheriff. Davis, J.,^ said,
speaking generally: " All the cases recognize fully the liability
of the principal where the relation of master and servant or
principal and agent exists; but there is a conflict of authority
in fixing the proper degree of responsibility where an inde-
pendent contractor mtervenes." ^
§ 84. Same subject; liability for losses and expenses. In
cases of express indemnity or where there is a duty of that
[14:0] nature springing from those relations the obligation is
pable of being estimated. Nor is it Pennell v. Woodburn, 7 C. & P. 117;
satisfactory reasoning that because Penley v. Watts, 7 M. & W. 601;
the charges of counsel vary no allow- Jones v. Williams, id. 493; Walker v.
ance whatever should be made for Hatton, 10 id. 249; Smith v. Howell,
such an expense when it is among 6 Ex. 730.
the natural and proximate conse- In Kiddle v. Lovett, 16 Q. B. Div.
quences of the breach of contract. 605, a platform put up, under con-
It was obviously as natural and prox- tract, for the plaintiff by the defend-
imate a consequence as the other ex- ant, to enable the former to paint a
pensesof the suit. house, fell because of defective con-
1 Chicago V. Robbins, 2 Black, 418. struction and hurt a workman in the
2See Randell v, Trimen, 18 C. B. plaintiff's employ. The latter settled
786; Moule v. Garrett, L. R 7 Ex. 101; an action brought by his employee,
Baxendale v. London, etc. R., L. R. and then sued defendant. The latter
10 Ex. 85; Fisher v. Val de Travers was held liable for nominal damages
Asphalte Co., 1 C. P. Div. 511; Mors- for the breach of his contract: but
le-Blanch v. Wilson, L. R. 8 C. P. inasmuch as the plaintiff had era-
227; Randall v. Raper, 96 Eng. C. L. ployed a competent contractor to
84; Richardson v. Dunn, 8 C. B. (N. build the platform and was free from
S.) 655; Ronneberg v. Falkland Isl- negligence, he was not liable to the
ands Co., 17 id. 1; Brown v. Haven, injured man and the amount paid
37 Vt. 439; Neale v. Wyllie, 3 B. & C. him could not be recovered from the
533; Lewis v. Peake, 7 Taunt. 153: defendant.
I
§ 84:.] ELEMENTS OF DAMAGE. 249
directly to reimburse expenses and losses; they are the im-
mediate subjects of the contract or duty rather than the dam-
Ages for the breach of either. But in many other cases suits
against one person or party may result from the tort or breach
of contract of another; and then, whether damages therefor,
including the cost and expenses, may be recovered for such
wrong or breach of contract will depend on whether such
suits, with the consequences and incidents in question, were
the natural and proximate result of the act complained of or
were within the contemplation of the parties.^ Where a per-
son falsely profess'^sto act as an agent there is an implied war-
ranty that he is such. If he have no authority and his pre-
tense is false, either the party whom he assumed to represent^
or the party dealing with him on the faith of his being an
agent ^ may hold him answerable for all damages resulting from
his unauthorized contracts ; and among other things for costs of
actions brought or defended in consequence of such contracts.
So a party who sells property with an express or implied war-
ranty of title is liable for the costs of a successful action, as
well as damages recovered therein against his vendee, by which
such title is overthrown and the vendee dispossessed or com-
pelled to pay for the property to another person.^
The right of a party who has bought ])roperty with a war-
ranty of title to defend a suit brought against him based upon
an adverse claim, after he has given notice to the vendor [111]
and requested him to assume the defense, and his failure to
reply or refusal to defend, stands upon somewhat different
considerations from those which apply to sureties and others
in similar situations. A vendee has a right to the property
1 Agius V. Great Western Colliery Am. Eep. 480; Boyd v. "Whitfield, 19
Co., [1899] 1 Q. B. 413. Ark. 447; Ryerson v. Chapamn, 66
ijPhilpot V. Taylor, 75 111. 309, 20 Me. 557; Williamson v. Williamson,
Am. Rep. 241. 71 Me. 442; Brewster v. Countryman,
sCoUen v. Wright, 7 El. & B. 301; 12 Wend. 446: Marlattv. Clar3% 20
Hughes V. Graeme, 33 L. J. (Q. B.) Ark. 251; Giffert v. West, 33 Wis.
335. 617; Eaton v. Lyman, 24 Wis. 438;
4Staatsv. Ten Eyck,3 Caines, 111; Stewart v. Drake, 9 N. J. L. 139;
Pitcher v. Livingston, 4 Johns. 1, 4 Holmes v. Sinnickson, 15 id. 313, 29
Am. Dec. 229; Rickert v. Snyder, 9 Am. Dec. 687; Monis v. Rowan, 17
Wend. 416; Bennet v. Jenkins, 13 N. J. L. 304; Coleman v. Clark, 80
Johns. 50; Harding v. Larkin, 41 111. Mo. App. 339, citing the text.
-113; Crisfield v. Storr. 86 Md. 129, 11
250 COMPENSATION. [§ Si.
which he has purchased, as between him and the vendor; and
unless he is made aware that the vendor's title was defective,
or that the suit of a third person for the property cannot for-
some reason be defended, he has a right to defend in reliance
upon the warrant}'' to the end that he may have and enjoy the
fruit of his purchase. So if there is a warranty of kind or-
quality the purchaser has a right to act upon the assumption
that such warranty is true, and sell with like warranty, and
defend suits for its breach.^ But if he has notice that his-
title is bad or that the warranty cannot be maintained he is-
under the same restrictions as all other parties who have a
right of recovery over against unnecessary expense or an un-
righteous resistance of an action which cannot be defended.^
In an action on a warranty of the soundness of a horse which
had been sold with like warranty, and in which the plaintiff
had been beaten in a suit against him on his warranty, it was
held he was not entitled to recover as special damage the cost
incurred by him in the defense of the former action, for the
jury found that by reasonable examination of the horse he
might have discovered that it was unsound at the time he sold
it.' An examiner and guarantor of titles to real estate em-
ployed to conduct the purchase of a house procured from its
owner, who also owned the adjoining house, a deed which
through its negligence covered the wrong house; the grantee
procured the reformation of such deed and, on obtaining pos-
session of the house he desired, found it incumbered by a mort-
gage not disclosed to him by the examiner. After eviction
by foreclosure, the grantor being insolvent, he recovered from
the examiner the money paid on the purchase price, that being
less than the amount of the undisclosed mortgage.*
1 Hammond v. Bussey, 20 Q. B. * Ehmer v. Title Guarantee & Trust
Div. 79, stated in note to § 87; Clare Co., 156 N. Y. 10, 50 N. E. Rep. 420.
V. Maynard, 7 C. & P. 741; Curtis v. Moneys paid by a corporation to
Hannay, 3 Esp. 82; Sweet v. Patrick, establish the business in which it is
12 Me. 9; Ryerson v. Chapman, 66 engaged cannot be recovered by the
Me. 561. shareholders in an action against
2 Sliort V. Kalloway, 11 A. & E. the directors for negligence. Bloom
28; Wrightup v. Chamberlain, 7 v. National United Benefit Savings
Scott, 598; Lunt v. Wrenn, 113 111. & Loan Co., 152 N. Y. 114, 46 N. E..
168. Rep. 166.
' Wrightup v. Chamberlain, supra.
§85.]
ELEMENTS OF DAMAGE.
251
§85. Same subject; bonds and undertakings ; damages
and costs. Upon statutory bonds and undertakings to pay
damages and costs resulting from the issue of certain writs, as
an injunction, sequestration or attachment, incase it shall be
decided that the party obtaining it was not entitled to it, the
recovery depends mainly upon the terms of the instrument;
but " damages and costs " include, among other things, the costs
incident to the particular writ and of the proceedings to procure
its discharge, including counsel fees, except in the fed- [142]
eral courts.^ On principle and the weight of authority, where
the prosecution or defense of suits is rendered naturally and
proximately necessary by a breach of contract or any wrong-
ful act, the costs of that litigation, reasonably and judiciously
conducted, paid or incurred, including reasonable counsel fees,
are recoverable as part of the damages.^
1 Corcoran v. Judson, 24 N. Y. 106;
Hovey v. Rubber Tip Pencil Co., 50
N. Y. 335; Groat v. Gillespie, 25
Wend. 383; Edwards v. Bodine, 11
Paige, 223; Rose v. Post, 56 N. Y.603;
Rosser v. Timberlake. .78 Ala. 162;
Pettit V, Mercer, 8 B. Mon. 51 ; Meshke
V. Van Doren, 16 Wis. 319; An-
drews V. Glenville Woolen Co., 50 N.
Y. 282; Gear v. Shaw, 1 Pin. 608;
Barton v. Fisk, 30 N. Y. 171; Tama-
roa V. Southern Illinois University,
54 111. 334; Elder v. Sabin, 66 111. 126;
Wilson V. McEvoy, 25 Cal. 170; Cum-
mings V. Burleson, 78 111. 281; Prader
V. Grim, 13 Cal. 585; Guild v. Guild,
2 Met. 22'J; Brown v. Jones, 5 Nev.
874; Baggett v. Beard, 43 Miss. 120;
Raupman v. Evansville, 44 Ind. 392;
Alexander v. Colcord, 85 111. 323;
Steele v. Thatcher, 56 111. 257; Miller
V. Garrett, 35 Ala. 96; Holmes v.
Weaver, 52 id. 516; Noble v. Arnold,
23 Ohio St. 264; Riddle v. Cheadle,
25 id. 278; McRae v. Brown, 12 La,
Ann. 181; Campbell v. Metcalf, 1
Mont. 378; Derry Bank v. Heath, 45
N. H. 524; Langworthy v. McKelvy,
25 Iowa, 48; Behrens v. McKenzie,
23 Iowa, 333, 92 Am. Dec. 428: Wal-
lace V. York, 45 Iowa, 81 ; Bonner v.
Copley, 15 La. Ann. 504; Sandback
V. Thomas, 1 Stark. 306; Pritchet v.
Boevey, 1 Cr. & M. 775; Holloway v.
Turner, 6 Q. B. 928. See Day v. Wood-
worth, 13 How. 363; Oelrichs v. Spain,
15 Wall 211: §§512. 524.
Attorney fees not allowed in an
action for infringement of a patent.
Teese v. Huntingdon, 23 How. 2.
Counsel fees for services rendered
in the supreme court on appeal may
be recovered for. Boiling v. Tate,
65 Ala. 417, overruling earlier cases,
2 Hughes v. Graeme, 33 L. J. (Q. B.)
335'; Ziegler v. Powell, 54 Ind. 173;
Lawrence v. Hagerman, 56 111. 68, 8
Am. Rep. 674; Krug v. Ward, 77 111.
603; Westfield v. Mayo, 122 Mass. 100,
23 Am. Rep. 292; New Haven & N.
Co. V. Hayden, 117 Mass. 433; Noyes
V. Ward, 19 Conn. 2)0; Pond v. Har-
ris, 113 Mass. 114; White v. Madison,
26 N. Y. 117; Henderson v. Squire,
L. R. 4 Q. B. 170; Webber v. Nicholas,
4 Bing. 16; Noble v. Arnold, 23 Ohio
St. 264; Alexander v. Jacoby, id. 358;
Godwin v. Francis. L. R. 5 C. P. 295;
Ryerson v. Chapman, 66 Me. 557; Du-
bois V. Hermance, 56 N. Y. 673; Call
V. Hagar, 69 Me. 521; Bonesteel v.
Bonesteel, 30 Wis. 511; Ah Thaie v.
252 COMPENSATION. [§ 86.
§ 8G. Same subject; necessity of notice to indemnitor to
fix liability. Where a judgment recovered may, by notice
to one ultimately liable, fix the amount which the latter is
liable to pay to the party against whom the judgment is ob-
tained, in some states notice is required in order to entitle the
party sued to the ulterior recourse for the costs of defending;
because the defense is to be made or not solely in the interest
[143] of the party who must in the end be chargeable with the
proper consequences of the liability upon which the judgment
is founded; therefore, he is entitled to be consulted, and to
have no expenses incurred and charged to him except at his
request or with his sanction. Confined to cases covered b}'^ an
obligation of indemnity and those where there is no right of
the immediate defendant or party to the suit peculiar to him-
self to be asserted in the action, the rule is a wholesome one
and rests upon sound principles. Of this class are actions
against an agent, servant or surety for acts of which the mas-
ter or principal must bear the whole responsibility; suits
against which there is an express indemnity and those in
which the party proceeded against is sought to be made liable
without actual misfeasance for the acts of another who must
respond for the consequences of that liability.^ The object of
the notice is not to give a ground of action. If a demand be
sued which the person indemnifying is bound to pay, and no-
tice be given to him and he refuse to defend the action, in
consequence of which the person to be indemnified is obliged
to pay the demand, the other party is estopped after such no-
tice from disputing it or from claiming that the party sued
was not bound to pay it.^ Its effect is to let in the party who
Quan Wan, 3 Cal. 216 ;Henay V.Hand, 79; Murrell v. Fysh, 1 Cab. & E. 80;
36 Ora 492, 59 Pac. Rep. 330, citing § 58.
the text See Barnard v. Poor, 21 i Lowell v. Boston, etc. R. Co., 23
Pick. 878; Rice v. Austin, 17 Mass. Pick. 24; Proprietors of L. & C. v.
197; Guild v. Guild, 2 Met. 229; Ar- Lowell H. R. Co., 109 Mass. 221; Ot-
canibel v. Wiseman, 3 Dall. 306; tuniwa v. Parks, 43 Iowa, 119; Apgar
Gould V. Barratt, 2 Mood. & Rob. v. Hiler, 24N. J. L. 812; Beckley v.
171; Maiden v. Fyson. 11 Q. B. 292; Munson, 22 Conn. 299; Holmes v.
In re United Service Co., L. R. 6 Ch. Weed, 24 Barb. 546; Fisher v. Fal-
212; Tindall v. Bell, 11 M. & W. 228; lows, 5 Esp. 171; Brooklyn v. Brook-
Dixon V. Fawcas, 3 E. & E. 537; lyn City R. Co., 57 Barb. 497; Finckh
Hammond v. Bussey, 20 Q. B. Div. v. Evers, 25 Ohio St. 82.
2 Duffield V. Scott, 3 T. R 374
§ 87.] ELEMENTS OF DAMAGE. 253
is bound to indemnify to defend the suit against the indemni-
fied party and to preclude the former from showing, when
sued for such indemnity, that the phiintiff has no claim for the
alleged loss, or not to the amount alleged; that he made an
improvident bargain, and that the defendant might have ob-
tained better terms if the opportunity had been given to him.'
It is not necessary to the production of this result that the
indemnitor should have notice in writing, or even express no-
tice, of the action; notice may be implied from his knowledge
of the action and participation in its defense.^ A formal re-
quest that he assume the defense of the action is not essential.'
In such actions two questions arise: first, has the plaintiff a
legal cause of action; second, to what extent has he been dam-
nified? The indemnifying party is entitled to his day in court
on these questions. If he has notice to defend a suit brought
against another who has a right of recovery over against him,
that opportunity is offered him; and the right to defend [144]
at his expense will depend on his answer, and he cannot be
charged with costs of an improvident defense or one made con-
trary to his expressed will.'* If notice cannot be given it is
reasonable that the indemnified party should exercise some
judgment whether to defend or not, where the amount is un-
liquidated or the demand disputable. AVhere he does so with-
out notice and judgment is recovered against him it is res inter
alios acta as to the first of these questions, and jprivia facie
evidence on the second, though the contract of indemnity is
general.
§ 87. Same subject. There are not the same reasons for
notice to the party ultimately liable, though there are reasons
for notice, where the action, the costs of which are claimed, is
brought on some independent contract, or is the alleged result
of a tortious act of such party; and where the party claiming
for the costs of defending such action defended it to maintain
1 Smith V. Compton, 3 B. & Ad. Y. 614; Port Jervis v. First Nat.
407; French v. Parish, 14 N. H. 496; Bank, 96 id. 550.
Port Jervis v. First Nat. Bank, 96 N. 3 jjeiser v. Hatch, svpra; Nashua
Y. 550. Iron & Steel Co. v. Brush, 33 C. C. A.
2 Barney v. Dewey, 13 Johns. 224, 456, 91 Fed. Rep. 213.
7 Am. Dec. 372; Beers v. Pinney, 12 * See New York State M. Ins. Co.
Wend. 309; Heiser v. Hatch, 86 N. t. Protection Ins. Co., 1 Story, 458.
254: COMPENSATION. [§ 87.
his own legal rights derived from that party, and does not
make the defense in his interest, he may still have his recourse
to him for indemnity. A vendee, having a warranty of title,
may defend a suit brought by a third person for the property
without consulting his vendor. He has a right, as between
himself and the latter, to retain the property and maintain,
if he can, the title warranted to him; he is not obliged to con-
tent himself with a remedy on his warranty and acquiesce in
any adverse claim that may be set up unless the circumstances
show that it cannot be contested ; he may defend a suit brought
on his own warranty made to his vendee on the faith of the
warranty of his vendor. A person purchasing from another
who falsely pretends to be an agent may sue the supposed
principal on that contract to enforce it. In case of defeat the
expenses of such litigation are the natural and proximate re-
sult of the breach of contract and, if not improvidently in-
curred, are recoverable on the same principle as expenses
incurred in other ways after a breach in furtherance of the
object of a contract, or to lessen the damages which would
otherwise result from its infraction.^ And such items will
presently be considered as a distinct topic-
[145] The authorities are in conflict on the necessity of no-
tice, and no clear rule or principle can be deduced from them;
but the foregoing views appear to be those supported by the
best considered cases and most in harmony with the principles
applied in other analogous cases. Under certain conditions a
notice may make the judgment conclusive evidence against
the party notified in favor of one giving the notice and having
a right of recovery over against him. This is the case where
notice is given to a vendor by his vendee of proceedings founded
upon an adverse title which becomes paramount.^ So in case
of other warranties, where the warrantee has acted upon them
in such manner as was within the contemplation of the parties
[146] at the time of contracting, as by giving like warranty and
iSee Nashua Iron & Steel Co. v. 3 Thurston v, Spratt, 52 Me. 202;
Brush. 33 C. C. A. 456, 91 Fed. Rep. Boyd v. Whitfield, 19 Ark. 447; Mar-
218; Chase v. Bennett, 59 N. H. 394. latt v. Clary, 20 Ark. 251; Harding
2 Hughes V. Graeme, 39 L. J. (Q. B.) v. Larkin. 41 111. 413; Castleton v.
335;Ryersonv. Chapman, 66 Me. 561; Miner, 8 Vt. 209; Crisfield v. Storr,
§ 88. 36 Md. 129, 11 Am. Rep. 480.
■-§ ST.]
ELEMENTS OF DAMAGE.
255
has been sued upon it.' It is a part of the contract of war-
ranty that the warrantor shall defend the title; and by the
warrantee giving notice when the title is attacked two objects
are attained: first, it gives the defendant the advantage of the
iReggio V. Braggiotti, 7 Cush. 166;
CoUen V. Wriglit, 8 El. & B. 647;
Randell v. Trimen, 18 C. B. 786;
Brown v. Haven, 37 Vt. 439; Moule
V. Garrett, L. R. 7 Ex. 101; Mors-le-
Blanch v. Wilson, L. R. 8 C. P. 227.
In Baxendale v. London, etc. R
Co., L. R. 10 Ex. 35, tiie case was
•that H. having contracted with the
plaintiffs who were carriers for the
carriage of two pictures from Lon-
don to Paris, the plaintiffs contracted
with the defendants for the carriage
by them of the pictures over a part
■of the distance. The pictures were
damaged on the journey by the de-
fendants' negligence. H. thereupon
brought an action against the plaint-
iffs, who gave notice of it to the de-
fendants and requested them to de-
fend it. They refused and told the
plaintiffs to take their own course.
The latter defended the action
brought against them by BL without
success, and then sued the defend-
ants to recover not only the dam-
ages found by the jury to have been
sustained by H., but also the costs of
the unsuccessful defense. The court
held that the costs were not recover-
able, inasmuch as they could not be
regarded as the natural consequence
of the defendants' default, the con-
ti'acts between H. and the plaintiffs,
and between the plaintiffs and the
defendants, being separate and inde-
pendent. The decision of the court
of exchequer was in favor of recov-
ery for these costs. Cleasby, B., said :
"Now, in the first instance, the
plaintiffs could obtain very little in-
formation to guide them either in
defending the action or in settling it.
They could not pay money into
'Court, for the damage done by the
water to the pictures was diflScult to
ascertain without a regular inquiry
by persons con)petent to deal with
the matter. Having regard to the
nature of the claim, we certainly
think they could not be expected
either to settle the claim before ac-
tion or to pay money into court; and
we think it was the necessary con-
sequence of the defendants' neglect
that the plamtiffs should be put to
the expense of ascertaining in a
proper way the amount of their lia-
bility to Harding, in order that they
might recover over against the de-
fendants. . . . Clearly the plaint-
iffs were entitled to some costs.
. . . The plaintiffs are entitled to
recover from the defendants all costs
incurred in having the amount of
their liability ascertamed. . . .
They are not entitled to the costs of
any defense peculiar to themselves,
such as that they were mere for-
warding agents and not carriers."
But a different view was taken in
the exchequer chamber. Coleridge,
C. J., said: " The defense was not, in
my judgment, a reasonable defensa
It was without any foundation in
law, and there was no authority from
the defendants, either express or im-
plied, to set it up. This, however,
does not dispose of the whole of the
plaintiffs' claim. For it may be said,
•True, the defense was ill-advised
and unauthorized; still tlie plaintiffs
were obliged to do something to as-
certain their liability, and they at
least are entitled to such an amount
of costs as they would have incurred
had they allowed judgment to go by
default upon a writ of inquiry.' But
I think this contention fails also be-
cause it seems to me that the whole
256
COMPENSATION.
[§87
better information which the warrantor is supposed to possess
in relation to the title; and second, saves the necessity of try-
[147] ing the same title again in an action against the war-
rantor. The notice to the latter makes him privy to the rec-
ord, and he is bound by it to the extent to which his rights
have been tried and adjudged; and, in an action against him
at the suit of the warrantee, in addition to the record, all that
is necessary to be shown is that his title was in issue, and judg-
ment given upon it.' The warrantor is at liberty to show any
other fact not involved in that adjudication which will be bene-
ficial to his defense, as that the defect of title arose after he sold
the property, and, therefore, that he had no interest in the
determination of the question tried.^
of the costs were incurred for the
plaintiff's own benefit, and were not
in any sense the natural or proxi-
mate result of the defendants' breach
of duty." Keating. Quain and Lush,
JJ., were of the same opinion, and
tliought the damages too remote.
The case of Mors-le-Blanch v. Wilson,
supra, was overruled.
The latest exposition of English
law upon this question is given in
Hammond v, Bussey, 20 Q. B. Div.
(1887), 79, where Baxendale v. London,
etc. R. Co., supra, is distinguished.
The question decided is thus stated
by the reporter: "The defendant con-
tracted for the sale of coal of a par-
ticular description to the plaintiffs,
knowing that they were buying such
coal for the purpose of reselling it as
coal of the same description. The
plaintiffs did so resell the coal. The
coal delivered by the defendant to
the plaintiffs under the contract and
by them delivered to their sub-ven-
dees did not answer such description,
but this could not be ascertained by
inspection of the coal, and only be-
came apparent upon its use by the
sub-vendees. The sub- vendees there-
upon brought an action for breach
of contract against the plaintiffs.
The plaintiffs gave notice of the ac-
tion to the defendant, who, however,
repudiated all liability, insisting that
the coal was according to contract.
The plaintiffs defended the action
against them, but at the trial the
verdict was that the coal was not
according to contract, and the sub-
vendees accordingly recovered dam-
ages from the plaintiffs. The plaint-
iffs thereupon sued the defendant for
breach of contract, claiming as dam-
ages the amount of the damages re-
covered from them in the action by
their sub-vendees, and the costs
wliich had been incurred in such ac-
tion." Liability for costs was de-
nied. Held, that the defense of the
previous action being, under the cir-
cumstances, reasonable, the costs
incurred by the plaintiffs as defend-
ants in such action were recoverable
under the rule in Hadley v. Baxen-
dale as being damages which might
reasonably be supposed to have been
in the contemplation of the parties,
at the time when they made the con-
tract, as the probable result of a
breach of it.
1 Davis V. Wilbourne, 1 Hill (S. C),
27, 26 Am. Dec. 154; Miner v. Clark,
15 Wend. 425; Barney v. Dewey, 13
Johns. 225, 7 Am. Dec. 372; Pickett
V. Ford, 4 How. (Miss.) 246: Col burn
v. Pomeroy, 44 N. H. 19; Shelby v.
Missouri Pacific R. Co., 77 Mo. App.
205, citing the text.
■i Thurston v. Spratt, 52 Me. 202.
§88.]
ELEMENTS OF DAMAGE.
25:
§ 88. Expenses incurred to prevent or lessen damages.
Fifth, such losses may consist of labor done and expenses [148]
incurred to prevent or lessen damages which would otherwise ■
result from the defendant's default or misconduct. The law
imposes upon a party injured by another's breach of contract
or tort the active duty of using all ordinary care and making
all reasonable exertions to render the injury as light as pos-
sible. If by his negligence or wilfulness he allows the dam-
ages to be unnecessarily enhanced, the increased loss, that which
was avoidable by the performance of his duty, falls upon him.*
This is a practical obligation under a great variety of circum-
stances, and as the damages which are suffered by a failure to
perform it are not recoverable it is of much importance. Where
it exists the labor or expense which its performance involves
1 Ohio & M. R. Co. V. McGehee, 47
111. App. 348; Hartford Deposit Co. v.
Calkins, 18G III. 104, 57 N. E. Rep. 863,
quoting the text; Southern R. Co. v.
Ward, 110 Ga. 793, 36 S. E. Rep. 78;
McCarty v. Boise City Canal Co., 2
Idaho, 225, 10 Pac. Rep. 623; Factors'
& Traders' Ins. Co. v. Werlein, 42 La.
Ann. 1046, 8 So. Rep. 435, 11 L. R. A.
361; Gniadck v. Northwestern Imp.
& Boom Co., 73 Minn. 87, 75 N. W.
Rep. 894; Sweeney v. Montana Cen-
tral R. Co., 19 Mont. 163, 47 Pac. Rep.
791; Loomer v. Thomas, 38 Neb. 277,
56 N. W. Rep. 973, quoting the text;
Gulf, etc. R. Co. V. Simonton, 2 Tex.
Civ. App. 558, 22 S. W. Rep. 285;
Southern Kansas R. Co. v. Isaacs, 20
Tex. Civ. App. 466, 49 S. W. Rep. 690;
Austin V. Chicago, etc. R. Co., 93
Wis. 496, 67 N. W. Rep. 1129; Culler-
ton V. Miller, 26 Ont. 36, 45, quoting
the text; FuUerton v. Fordyce, 144
Mo. 519, 44 S. W. Rep. 1053: Sherman
Center Town Co. v. Leonard, 46 Kan.
854, 26 Pac. Rep. 717, 26 Am. St. 101;
Fowle V. Park, 48 Fed. Rep. 789;
Pennsylvania R. Co. v. Washburn, 50
id. 335; Hamilton v. McPherson, 28
N. Y. 72, 8 1 Am. Dec. 380-, Rexter v.
Starin, 73 N. Y. 601; Costigan v. Mo-
hawk, etc. R. Co., 2 Denio, 609; Tay-
VOL. 1 — 17
lor V. Read, 4 Paige, 572; Dillon v.
Anderson, 43 N. Y. 231; Dorwiu v.
Potter, 5 Denio, 306; Hochster v. De
la Tour, 2 El. & B. 678; Loker v.
Damon, 17 Pick. 284; French v. Vin-
ing, 102 Mass. 132, 3 Am. Rep. 440;
Cherry v. Thompson, L. R. 7 Q. B.
573; Driver v. Maxwell, 56 Ga. 11;
Roper V. Johnson, L. R. 8 C. P. 167;
Simpson v. Keokuk, 34 Iowa, 568;
Beymer v. McBride, 37 Iowa, 114;
Frost V. Knight, L. R. 7 Ex. Ill;
Hecksher v. McCrea, 24 Wend. 304;
Davis V. Fish, 1 G. Greene, 406, 48
Am. Dec. 387; Allender v. C. K. I. &
P. R. Co., 37 Iowa, 264; Dobbins v.
Duquid, 65 111. 464; Chamberlain v.
Morgan, 68 Pa. 168; New Orleans, etc.
Co. V. Echols, 54 Miss. 264; Hathorn
V. Richmond, 48 Vt. 557; Pinuey v.
Andrus, 41 Vt. 631; Bradley v. Den-
ton, 3 Wis. 557; Gordon v. Brewster,
7 Wis. 355; Fitzpatrick v. Boston &
M. R., 84 Me. 33, 24 Atl. Rep. 432;
Williams v. Yoe, 19 Tex. Civ. App.
281, 46 S. W. Rep. 659; Dietrich v.
Hannibal, etc. R. Co., 89 Mo. App. 36;
Webb V. Metropolitan Street R. Co.,
id. 604; Warren v. Stoddart, 105 U. S.
224; William E. Peck & Co. v. Kansas
City Metal Roofing & C. Co., — Mo.
App. — , 70 S. W. Rep. 169.
258
COMPENSATION.
II
is chnt'geable to the party liable for the injury thus mitigated;
in other words, the reasonable cost of the measures which the
injured party is bound to take to lessen the damages, whether
adopted or not, will measure the compensation the party in-
jured can recover for the injury or the part of it that such
measures have or would have prevented,^ This is on the prin-
ciple that if the efforts made are successful the defendant will
have the benefit of them ; if they prove abortive it is but just
that the expense attending them shall be borne by him.^
» Id. ; Monroe v. Lattin, 25 Kan. 351;
Board of Com'rs v. Arnett, 116 Ind.
438, 19 N. E. Rep. 299; Texas & P. R.
Co. V. Levi, 59 Tex. 674; Long v.
Clapp. 15 Neb. 417. 19 N. W. Rep. 467,
quoting the text; Travis v. Pierson,
48 Hi. App. 579; Hewson-Herzog Suj)-
ply Co. V. Minnesota Brick Co., 55
Minn. 530, 57 N. W. Rep. 129; Monroe
V. Connecticut River Lumber Co., 68
N. H. 89, 39 AtL Rep. 1019; Hughes
V. Austin. 12 Tex. Civ. App. 178, 33
S. W. Rep. 607, citing the text; Nad-
ing V. Deuisou & P. R. Co., 22 Tex.
Civ. App. 173, 54 S. W. Rep. 412,
quoting the text; Nelson v. St. Louis,
etc. R. Co., 49 Kan. 165, 30 Pac. Rep.
178; Uhlig v. Barnum, 43 Neb. 584,
594, 61 N. W. Rep. 749, quoting the
text; Galbreath v. Carnes, 91 Mo.
App. 512, quoting the text; Armi-
Btead V. Shreveport, etc. R. Co., —
La. — , 32 So. Rep. 456, citing the
text.
"Legal expenses are recoverable
as damages when incurred in pro-
ceedings taken by the injured party
to prevent or reduce the damage
which he would incur by the con-
tinuance of the wrong which he has
abated by resort to such proceed-
ings." Clason V. Nassau Ferry Co..
20 N. Y. Misc. 315, 45 N. Y. Supp. 675,
citing this section.
In an action to punish defendants
for contempt in violating an injunc-
tion the expense of a second injunc-
tion was included in the fine im-
posed on them, it being considered
that such expense was incurred in
an action brought expressly to re-
strain a continuance of the damaga
Jewelers' Mercantile Agency v.
Rothschild, 6 App. Div. 499, 39 N. Y.
Supp. 700.
A corporation which wrongfully
refuses to register shares in the
name of a purchaser must respond
to him for the value of other shares
he bought to lessen the responsibility
he was under to his vendee. Balkis
Consolidated Co. v. Tomkinson, [1893]
App. Cas. 396; Tomkinson v. Balkis
Consolidated Co., [1891] 2 Q. B. 614
2 Watson V. Proprietors Lisbon
Bridge, 14 Me. 201, 31 Am. Dec. 49;
Summers v. Tarney, 123 Ind. 560, 24
N. K Rep. 678. See § 693.
In Miller v. Mariner's Church, 7
Ma 51, 20 Am. Dec. 341, is a sound
exposition of this dutj'. Weston, J.,
said: '■ If the party injured has it in
his power '.to take measures by which
his loss may be less aggravated this
will be expected of him. Thus in a
contract of assurance, where the as-
sured may be entitled to recover for
a total loss, he, or the master em-
ployed by him, becomes the agent of
the assurer to save and turn to the
best account such of the property as-
sured as can be preserved. The pur-
chaser of perishable goods at auction
fails to complete his contract. What
shall be done ? Shall the auctioneer
leave the goods to perish and throw
§8S.]
ELEMENTS OF DAMAGE.
259
"When, after a contract has been entered into, notice is [140]
given by one of the parties that it is rescinded on his part, he
is only liable for such damages and loss as the other has suf-
fered by reason of such rescinding; and it is the duty [150]
of the latter, upon receiving such notice, to save the former,
as far as it is in his power, all further damages though to do so
may call for affirmative action.^ If a person hired for service
for a given term is wrongfully dismissed he is entitled to the
stipulated wages for the terra of his engagement if that is his
loss. It is prima facie his loss; but the law imposes on him
the wliole loss upon the purchaser ?
That would be to aggravate it un-
reasonably and unnecessarily. It is
his duty to sell them a second time,
and if they bring less he may recover
the difference, with commissions, and
other expenses of resale, from the
first purchaser. If the party entitled
to the benefit of a contract can pro-
tect himself from a loss arising from
a breach at a trifling expense or with
reasonable exertions, he fails in social
duty if he omits to do so, regardless
of the increased amount of damages
for which he may intend to hold the
other contracting party liable. Qui
non proJiibet, cuvi proliibere possit,
mbet. And he who has it in his
power to prevent an injury to his
neighbor and does not exercise it is
often in a moral, if not in a legal,
point of view, accountable for it. The
law will not not permit him to throw
a loss, resulting from a damage to
himself, upon another, arising from
causes for which the latter ma}' be re-
sponsible, which the party sustaining
the damage might by common pru-
dence have prevented. For example,
a party contracts for a quantity of
bricks to build a bouse, to be deliv-
ered at a given time; and engages
masons and carpenters to go on with
the work. The bricks are not de-
livered. If other bricks of an equal
qualitj' and for tlie stipulated price
■can be at once purchased on the spot
it would be unreasonable, by neglect-
ing to make the purchase, to claim
and receive of the delinquent party
damages for the workmen, and the
amount of rent whicli might be ob-
tained for the house if it had been
built. The party vvlio is not charge-
able with a violation of his contract
should do the best he can in such
cases; and for any unavoidable loss
occasioned by the failure of the other
he is justly entitled to a liberal and
complete indemnity."
In Hogle V. New York, etc. R. Co.,
28 Hun, 363. the trial court refused
to charge that when plaintiff discov-
ered a fire on his premises he could
not recover for subsequent damages
if he neglected to use reasonable
practicable means to suppress it, on
the ground that the fire was not at-
tributable to his fault. This was
considered as not being far from say-
ing that he might do what he could
to increase it. He was bound to use
all reasonable efforts in his power to
stop the fire. Bevier v. D. & H. C.
Co., 13 Hun, 254; Milton v. Hudson
River S. Co., 37 N. Y. 214. See O'Neill
v. New York, etc. R. Co., 45 Hun,
458, as to an excuse for non-perform-
ance of duty.
1 Hewson-Herzog Supply Co. v.
Minnesota Brick Co., 55 Minn. 530,
57 N. W. Rep. 129, quoting the text;
Dillon V. Anderson, 43 N. Y. 231.
2G0 COMPENSATION. [§ 88.
the duty to seek other employment; and to the extent that he
obtains it and earns wages, or might have done so, his dam-
ages will be reduced.^ The rule as stated was deemed appli-
cable where the owner of water lots upon a lake front, subject
to the reservation of free passage thereon, refused to allow the
plaintiff to haul ice cut from the lake over such lots, when
frozen, to the wharf from which the plaintiff desired to ship
the ice for the purposes of his business, unless he paid toll,
which he refused to do; the defendant having acted without
malice and under a honafide mistake as to his rights, the plaint-
iff ought to have paid the toll under protest, and because he
did not, he could not recover for the loss of his business conse-
quent on the failure to ship ice.^ In an action for damages re-
sulting from alleged defects in the construction of a building
so that the roof leaked and injured the interior work or prop-
erty therein,^ or for breach of a contract to repair a building
from which similar injuries ensued,'' or for injury to crops
through default of the defendant in not building or repairing
a fence, or his tortious opening of the same,^ where the party
suffering from the injury is aware of the fact and the cause
and that by a little timely labor and expense the damage could
be avoided, the law imposes the duty on him to stay the in-
jury, when he is in a favorable situation to do it, and enforces
the duty by confining his redress for the injury thus avoid-
able to compensation for the necessary and proper means
of prevention.^ The duty in such cases is not arbitrarily im-
posed on the injured party and exacted of him in all cases, to
do or amend the work of the other party, or to finish it; but
1 Borden Mining Co. v. Barry, 17 Cook v. Soule, 56 N. Y. 420; Thomp-
Md. 419; Sutherland v. Wyer,67 Me. ^on v. Shattuck, 2 Met. 615.
64; Gillis v. S|jace, 63 Barb. 177; 5 Andrews v. Jones, 36 Tex. 149;
Heavilon v. Ki-amer, 31 Ind. 241; Campbell v. Miltenberger, 20 La.
Heilbrouer v. Hancock, 83 Tex. 714; Ann. 72; Loker v. Damon, 17 Pick.
Howard V. Daly, 61 N. Y. 362, 19 Am. 284; Fisher v. Goebel, 40 Mo. 475;
Rep. 285; Williams v. Chicago Coal Waters v. Brown, 44 Mo. 302; St.
Co., 60 111. 149; Raleigh v. Clark, 71 Louis, etc. R. Co. v. Ritz. 33 Kan. 404;
S. W. Rep. 857, Ky. , quoting Same v. Sharp. 27 id. 134; Smith v.
the text. C. C. & D. R. Co., 38 Iowa, 518.
2CuUerton v. Miller, 26 On t. 36. egherman Center Town Co. v.
3 Mather v. Butler County, 28 Iowa, Leonard, 46 Kan. 354, 26 Am. St. 101.
253; Haysler v. Owen, 61 Mo. 270. 26 Pac. Rt^p. 717.
4 Dor win v. Potter, 5 Denio, 306;
§ 89.] ELEMENTS OF DAMAGE. 261
only when in view of all the circumstances of the particular
case it is a reasonable duty which he ought to perform instead
of passively allowing a greater damage.^ AVhere the party
whose duty it is primarily to do the work necessary to fulfill
the contract and to prevent damage from past failure or to stay
injuries resulting from his negligence or other wrong is [151]
in possession or has equal knowledge and opportunity, he alone
may be looked to to fulfill that duty, and it will not avail him
to say the injured party might have lessened the damages by
performing the duty for him.^
§ 89. Same subject; between Tendor and vendee. If the
party claiming damages is a purchaser he can recover no more
than it would cost him, with reasonable diligence, to supply him-
self with the same property by resort to the market ' or other
source or means of supply.* So where property is sold with a
warranty of fitness for a particular purpose, if it be of such a
nature that its defects can be readily, and in fact are, ascer-
tained, yet the purchaser persists in using it, whereby losses
and expenses are incurred, they come of his own Avrong and
he cannot recover damages for them as consequences of the
breach of warranty .•"* A. sold toB. a quantity of pork in bar-
rels with a warranty that the barrels would not leak; B. stored
it in a suitable place, but found afterwards that some of the
barrels were leaking. In order to preserve the pork he filled
1 Armistead v. Shreveport, etc. R. Mackie, 71 Tex. 491, 10 Am. St. 766,
Co., — La. ,32 So. Rep. 456, 459,quot. 9 S. W. Rep. 451, 1 L. R. A. 667.
ing the text; Raleigh v. Clark, — » Parsons v. Sutton, 66 N. Y. 92;
Ky. , 71 S. W. Rep. 857, quoting McHose v. Fulmer. 73 Pa. 365;Gains-
the text. ford v. Carroll, 2 B. & C. 624; Barrow
2 Myers v. Burns, 35 N. Y. 269; t. Arnaud, 8 Q. B. 604; Hassard-
Hexter v. Knox. 63 id. 561; Schwin- Short v. Hardison, 114 N. C. 483, 19
ger V. Raymond, 83 id. 192, 38 Am. S. E. Rep. 728; Creve Couer Lake Ice
Rep. 415; Keys v. Western Vermont Co. v. Tamm, 90 Mo. App. 189; Law-
Slate Co., 34 Vt. 81; Haysler v. rence v. Porter, 63 Fed. Rep. 62.
Owen, 61 Mo. 270; Fisher v. Goebel, * Benton v. Fay, 64 III. 417; Bey-
40 Mo. 475; Green v. Mann, 11 111. mer v. McBride. 37 Iowa, 114; Grand
613; Waters v. Brown, 44 Mo. 302; Tower Co. v. Phillips, 23 Wall. 471;
Smith V. Chicago, etc. R. Co., 38 Iowa, Hinde v. Liddell, L. R. 10 Q. B. 265.
518; Chicago, etc. R. Co. v. Ward, 16 * Draper v. Sweet, 66 Barb. 145;
111. 522; Flynn v. Trask, 11 Allen, Maynard v. Maynard, 49 Vt. 297;
550; Priest V. Nichols, 116 Mass. 401; Frick Co. v. Falk, 50 Kan. 644,33
Gardner v. Smith, 7 Mich. 410, 74 Am. Pac. Rep. 360.
Dec. 722; St. Louis, etc. R. Co. v.
2()2 COMPENSATION. [§ 90.
the leakinir barrels from time to time with new brine; but
they continued to leak and a considerable quantity of the
pork was spoiled. B. did not give notice to A. of the condi-
tion of the barrels, nor offer to return the pork. It was the
established practice among persons dealing in pork, of which
B. was presumed to be cognizant, where the leaking of the
barrels continued after they had been filled with new brine, to
take out the pork and repack it in new barrels. In a suit
brought by A. for the price of the pork, B. claimed a deduc-
tion of the damages for breach of the warranty; it was held
that the only deduction he was entitled to w^as the sum which
[152] he would have been compelled to pay for new barrels in
the place of the leaky ones, and for the repacking of the pork
in them. If B., without knowledge that the barrels were
leaky, and without care in informing himself of their condi.
tion, had suffered the pork to remain in them for a reasonable
time, and it had thereby become spoiled, he could have recov-
ered in an action on the warranty the value of the pork spoiled.
But as he knew that the barrels were leaky and might have
prevented the injury to the pork by procuring new ones and
repacking it, the loss of the pork should be regarded as attrib-
utable to his own want of care rather than to the defect of
the barrels.^
§90. Same subject; extent of the duty. The principle
that the injured party must reasonably exert himself to pre-
vent damage applies alike to cases of contract and tort.^ He
is not required to commit a tort to prevent damages;' nor to
anticipate and provide against a threatened trespass.* The
plaintiff had a lease of a grazing farm, which he had occasion
to use to its capacity in grazing his cattle intended for sale;
the defendant wrongfully turned other cattle of bis own upon
the farm and persisted, against the plaintiff's remonstrance, in
keeping them there; in consequence the plaintiff suffered seri-
1 Hitchcock V. Hunt, 28 Conn. 343. Meigs, 50 N. Y. 480. See Wing Chung
2 Factors' & Traders' Ins. Co. v. v, Los Angeles. 47 Cal. 531.
Werlein, 43 La. Ann. 1046, 1053, 8 So. * Plummer v. Penobscot Lumber-
Eep. 435, 11 L. R. A. 361, quoting the ing Ass'n, 67 Me. 363; Reynolds v.
text: Sutherland v. Wyer, 67 Me. 64. Chandler River Co., 43 Me. 513. See
^ Wolf V. St. Louis Independent Driver v. Western Union R. Co., 32
Water Co., 15 Cal. 319; Hubbell v. Wis. 569, 14 Am. Rep. 726.
00.1
ELEMENTS OF DAMAGE.
2G:
ous loss to his stock for want of suflBcient pasturage. It was
held not to be the duty of the plaintiff under such circum-
stances to provide other pasturage for his cattle to lessen
The measure of
damages in exoneration of the defendant,^
iGilbert v. Kennedy, 22 Mich. 117.
Compare Hughes v. Austin, 12 Tex.
Civ. App. 17S, 33 S. W. Rep. 607.
In tlie Michigan case the duty in
question is recognized, but Christ-
iancy, J., said: " Whether it is appli-
cable at all to the facts of the present
case is only important, so far as it
bears on the duty of the plaintiff,
when the defendant's cattle were
wrongfully turned in, to remove his
own cattle from the pasture before
they should be injuriously affected
by the overfeeding of the defend-
ant's cattle; or to prevent at any par-
ticular time further injury from this
cause. . . . The rule in question
(if based upon the supposed duty) is
simply one of good faith and fair
dealing. If a man tortiously injures
the roof of my dwelling, and I obsti-
nately leave it in that condition, and,
having the opportunity, refuse or neg-
lect to repair until the furniture and
the bedding in the house are injured
or destroyed by the rains, I cannot
recover of him for this injury to my
furniture and bedding, which I
might have avoided by timely re-
pairs. And if a man come to my
field, where my cattle are grazing,
turn them out into the street, and
turn his own cattle in, thus ousting
me from the possession, and claim-
ing and holding exclusive possession
against me, I cannot leave my cattle
in the street to starve, and then
charge him with their full value, if
it be practicable by reasonable effort
on my part to procure other pasture
or feed for them; but I can recover
only such damages as I have suffered
beyond what I might have avoided
by reasonable diligence. But, if h<j
come to the same field, and wronj^-
fully turn his cattle in with mine,
neither taking nor claiming any ex-
clusive possession, and, as often as I
turn his cattle out, he persists in
turning them in again till I find it
impracticable to keep them out with-
out coming to blows, and cease to
attempt it. and my cattle from this
cause are depri%'ed of necessary feed,
and I resort to a suit as my only rem-
edy, which is substantially the pres-
ent case, at wliat particular point
in this series of tortious conduct does
good faith to him require me to turn
my own cattle from my own field
and find pasture for them elsewhere
to save him from liability for their
further injury from his repeated or
continuous wrongs? Have I not a
better right to insist that he shall,
and to presume that he will, relent,
and cease the continuance of his tor-
tious acts than he has to claim that I
shall remove my cattle from my own
field and leave it to him? Is it not
rather his duty to cease the continu-
ance of his wrongs than mine to give
up my acknowledged right? The
damages, in such a case, are in no
proper sense increased by any actor
negligence of mine, but by the con-
tinuance of his own tortious con-
duct. As to the question of duty, as
well might it be said if he had re-
peatedly assaulted and beaten me
and my family in my own house, and
declared his intention of repeating
the process as long as we should re-
main there, it would be my duty to
remove myself and family from the
house to avoid increasing the dam-
ages which might otherwise accrue
from his further continuance or
repetition of the like conduct.
264
COMPENSATION.
[§ 90,
the duty is such care and diligence as a man of ordinary pru-
dence would use under the circumstances. One may not have
done the very thing nor used the very means that should have
oeen used, as developed by subsequent information, and yet
not be in fault. One is not bound to inquire as to the means
of e'cttinfi- what his vendor has deprived him of unless he knew
such facts as would put a prudent man upon inquiry.^ A les-
see is not bound to go to an expenditure of $300 in construct-
ino" a ditch to protect his property from injury resulting from
neo-liffence in the construction of a railroad.^ The efforts made
to reduce the effects of the wrong must be confined to such as
are reasonable and made in good faith.* The expense result-
ing from them can be recovered only to the extent that it is
within the loss which would otherwise have been sustained.*
" There was no duty resting upon
the plaintiff at any time to remove
liis cattle and procure pasturage for
them elsewhere if this could have
been done. In perfect good faith, the
plaintiff had a right to keep his cattle
there, and to hold the defendant lia-
ble for the continuous injury arising
from his continuous wrong. But if
the plaintiff chose to take any of his
cattle out to prevent further injury,
it would then, as to such cattle, be-
come his duty to make a reasonable
effort to procure other food or past-
urage for them, in the most prudent
way he reasonably could." See Law-
son V. Price, 45 J\Id. 123.
1 Waco Artesian Water Co. v. Cau-
ble, 19 Tex. Civ. App. 417, 47 S. W.
Rep. 538.
2 Galveston, etc. R. Co. v. Borsky,
2 Tex. Civ. App. 545, 21 S. W. Rep.
1011.
3 Murphy v. McGraw, 74 Mich. 318,
41 N. W. Rep. 917; Ellis v. Hilton, 78
Mich. 150, 43 N. W. Rep. 1048, 18
Am. St. 438, 6 L, R. A. 454; Mt. Ster-
ling V. Crummy, 73 111. App. 572.
Expenses incurred by a party to a
contract in apprehension of damage,
if based upon mere rumors, are not
recoverable. Holt v. Silver, 169 Mass.
435, 45G, 48 N. E. Rep. 837.
4 Murphy v. McGraw, Ellis v. Hil-
ton, SMj3ra; Keyes v. Minneapolis, etc.
R. Co., 36 Minn. 290, 30 N. W. Rep. 888;
St. Louis, etc. R. Co. v. Ritz, 33 Kan.
404. Contra, Gulf. etc. R. Co. v. Keith,
74 Tex. 287, 11 S. W. Rep. 1117.
In an action against a railroad
company wJiich had failed to con-
struct cattle-guards, as required by
statute, the plaintiff was entitled to
recover for services in herding his
cattle up to, but only up to, the value
of the things belonging to himself
and others which might have been
injured by the cattle if they had
been permitted to run at large, and
which things the plaintiff had tiie
right to protect, or which he was
imder obligation to protect from the
depredations of his cattle. In answer
to the contention that the defendant
was liable for the value of the herd-
ing only up to the amount of the
damages which the cattle would
have committed if they had been
permitted to run at large, it was said
that it would be in a degree correct
if it could be ascertained with any
degree of certainty just the amount
of the damage which would have re-
sulted in that event. But it was not
shown how much or how little dam-
age, or how much or how little injury
§ 90.] ELEMENTS OF DAMAGE. 265
If the courts can protect the rights of the injured party he
must resort to them instead of using his individual efforts to
counteract the wrong being done.^
A surety is not bound to pay his principal's debt as a [153]
duty to prevent the costs incident to a suit for its collection.'^
Any loss or expense occasioned by an attempt to avoid pay-
ment of an obligation cannot be contemplated by the parties
as a subject of indemnity, the true meaning of the contract
being tliat if the surety pays voluntarily he shall be re- [154-]
imbursed; if he is compelled by suit to pay he shall also be in-
demnified for his costs and expenses. Flight to avoid payment
of the debt is an accident wholly unforeseen, and its conse-
quences cannot be considered as provided for. The principal
had a right to calculate upon the surety's ability to pay, and
did not stipulate to save him harmless from anything but the
payment of money. If the suretj' were put in prison or if his
goods were sold at a sacrifice, these would not be legal grounds
of suit for indemnity because they might be avoided by pay-
ment, which he must be considered as stipulating he could
make.'
If work is improperly done or is not done within the agreed
time, but is of use to and appropriated by the employer, the
quantum meruit claim for it is reducible by allowance of the
damages for failure to perform the contract in manner and
time; but in such a case if the emplo3'er can protect himself
from damage by reason of the defective or dilatory work at a
moderate expense, or by ordinary and reasonable efforts, he is
bound to do so, and he can charge the delinquent party
the cattle might have done if they trouble and expense in hunting for
had been permitted to run at large, and recovering his cattle? Chicago,
Besides, if the plaintiff is to recover etc. R. Co. v. Behney, 48 Kan. 47, 28
for the herding only up to the Pac. Rep. 9S0. In so far as it is inti-
amount of the damages which the mated that a recovery might be had
cattle might have done if they had for possible loss, the language used
been permitted to run at large, then is contrary to the fundamental idea
how is the plaintiff to obtain com- governing the law of compensation,
pensation for the loss of his pasture i Fowle v. Park, 48 Fed. Rep. 789.
and the possible loss of his cattle Contra, Cole v. Stearns. 20 N. Y.
and the possible shrinkage in their Misc. 502, 505, 46 N. Y. Supp. 23S.
value because of a possible loss of 2]\icKee v. Campbell, 27 Mich. 497;
proper food, and how is he to obtain Holmes v. Weed, 24 Barb. 546.
compensation for his time and 3 jjayden v. Cabot, 17 Mass. 1G9.
260
COMPENSATION.
[§ 530.
therefor, and with the damages which could not be thus
avoided.^
In case of wrongful injury to per.-on or property the injured
party is required to use reasonable exertion to lessen or mod-
erate the resulting damage.^ Land adjacent to a railroad was
flooded by water turned on to it by the construction of the
road; it got into the cellar of the house thereon and injured
the walls. It was held that the owner was bound to use rea-
sonable care, skill and diligence adapted to the occasion to pre-
vent this consequence, notwithstanding the wrongful agency
of the railroad company in turning the water upon the prem-
ises.^ Eecovery cannot be had against a notary for negligent
omission to give notice of protest to an indorser where the
holder could, but would not, resort to other grounds for charg-
ing the latter."* Persons whose goods are destroyed by a riot-
[155] ous mob in a city are not entitled to recover from the
city the value of the goods destroj^ed unless such persons, if
they had knowledge of the impending peril, use reasonable
diligence to notify the mayor or sheriff of the threatened riot
and the apprehended danger to their property.^ The owner
of land on which a personalty tax has been irregularly charged
by a tax collector will be denied any remedy against him
therefor if it is in the power of the former with very little
trouble and expense to appear before the board or tribunal
having authority in the premises and procure a correction.^
A party interested in a decree for a fund invested can claim
no indemnity for depreciation of the fund during his delay to
enforce the decree, it being his duty to apply seasonably to the
court for its enforcement.^ A claimant of damages is bound
to accept reasonable offers of the other party or a third person
i Davis V. Fish, 1 G. Greene, 406, 48
Am. Dec 387; Mather v. Butler
County, 28 Iowa, 259.
2 French v, Vining, 102 Mass. 132,
3 Am. Rep. 440; AUender v. C., R. I.
& P. R Co., 37 Iowa, 264; The Balti-
more, 8 Wall. 377; Little v. McGuire,
43 Iowa, 447; Fullerton v. Fordyce,
144 Mo. 519. 44 S. W. Rep. 1053; Webb
V. Metropolitan Street R Co., 89 Mo.
App. 604. See ch. 36.
3 Chase v. New York Central R Co.,.
24 Barb. 273; Louisville & N, R. Co.
V. Goodin, 14 Ky. L. Rep. 622; Same
V. Finley, 7 id. 129.
4 Franklin v. Smith, 21 Wend. 6-,M.
5 AVmg Chung v. Los Angeles, 47
Cal. 531.
estate v. Powell, 44 Mo. 436:
Wright V. Keith, 24 Me. 158,
7 Carson's Ex'r v. Jennings, 1 Wasli^
C. C. 129.
§ 00.] ELEMENTS OF DAMAGE. 267
having direct reference to the subject of the loss which would
have the effect of reducing or preventing damage.' Where
damages can be thus saved by timely preventive measures by
the injured party it is his duty to exert himself for that pur-
pose; but he has a correlative right in similar cases to employ
other means to attain the object of the contract broken which
was within the contemplation of the parties at the time of con-
tracting, or to extricate himself from any predicament in which
the wrong complaine'd of may have placed him.*
In an action to recover for personal injuries the defendant
insisted that the plaintiff should submit to a surgical opera-
tion, the testimony as to the certainty of a cure in that event
being that it would probably be effected. The court said:
"While the person who inflicts the damage has the right to say
that sure and safe means to diminish the evil results of the
accident must be used, that is the extent of his right. Whether
further means should be resorted to is for the plaintiff to de-
termine. In making that determination the plaintiff has
the right to consider the nature of the means used to ef-
fect a cure, and the possible or probable effect upon himself.
In any given case it may be that the treatment which is given
to the plaintiff is not the best that could be devised, but he is not
the less entitled to his damages on that account if, in taking
that treatment, he has consulted such a physician as a reason-
ably prudent man would consult. Having done that, he is en-
titled to his damages. If he did not, and the jury can say
that some other treatment would have brought about a cure,
and that treatment was one that a reasonably prudent man
would have submitted to, then they must say that he has not
used the care which he ought to have used, and must take that
into consideration in reaching their verdict.^ An injured per-
son is not affected by the mistake of the physician chosen by
1 Dobbins v. Duquid, 65 IlL 464: 2 Hoffman v. Union Ferry, 68 N. Y.
Parsons v. Sutton. 66 N. Y. 92; Bey- 385; Kelsey v. Remer, 43 Conn. 129,
mer v. McBride. 37 Iowa, 114; Bisher 21 Am. Rep. 638; Williams v. Van-
V. Richards, 9 Ohio St 495; Ashley derbiit, 28 N. Y. 217, 84 Am. Dec. 333;
V. Rocky Mountain Bell Telephone James v. Hodsden, 47 Vt. 127.
Co., 25 Mont. 286, 296, 64 Pac Rep. 3 Blate v. Third Avenue R. Ca, 44
765, quoting the text; Lawrence v. App. Div. 163, 60 N. Y. Supp. 232.
Porter, 63 Fed. Rep. 62, 11 C. C. A.
27, 26 L. R. A. 167.
2GS COMPENSATION. [§ 91.
liim in the exercise of ordinary care*/ and the question of good
faith in rejecting the advice of a physician is for the jury."
Inability to secure the best medical attendance will not bar a
recovery.'
§ 91. Same subject; employer may finish work at con-
tractor's expense. On the failure of a contractor to finish
his contract the employer may cause it to be done by others,
and the reasonable sum required to be paid therefor may be
recovered of the delinquent party.* One who has contracted
[156] for the shipment of goods, or to be carried as a passen-
ger, may employ other reasonable means of transportation if
the carrier fails to fulfill his contract, and recover the excess
of cost as well as other damages.^ The question whether the
expense of the substituted mode of conveyance, as, indeed,
whether any expense for a substituted performance or to coun-
teract the injurious effect of the act complained of may be
recovered, will depend on whether the act done for which such
expense was incurred was a reasonable thing to do, consider-
ing all the circumstances. A party to a contract which has
been broken by the other has a right to fulfill it for himself,
as nearly as may be, but he must not do this unreasonably as
regards the other party, nor extravagantly;* but he may ex-
1 Lyons v. Erie R. Ck)., 57 N. Y. 489; ing lands of the plaintiff was not
Sauter v. New York, etc. R Co., 66 N. diminished by the non-observance of
Y. 50, 23 Am. Rep. 18 ; Caven v. Troy, the covenant to anything like the
15 App. Div. 163. 44 N. Y. Supp. 244. sum which it would have cost to
2 Sullivan v. Tioga R. Co.. 112 N. Y. build the wall The measure of dam-
Y. 643, 8 Am. St. T93, 20 N. E. Rep. ages was held to be the difference
569: Hope v. Troy & L. R. Ca, 40 between the plaintiff 's position with
Hun, 438. and without the wall, and the cost
3 Alberti v. New York, etc. R. Co., of building it was not the correct
118 N. Y. 77, 23 N. K Rep. 35, 6 L. R. standard to be applied.
A. 765. * Hamlin v. Great Northern R. Co.,
4 Clark V. Russell, 110 Mass. 133; 1 H. & N. 408; Denton v. Same, 5 El.
Smeed v. Foord, 1 R «fe E. 602: Paine & B. 860; Cranston v. Marshall, 5 Ex.
V. Sherwood, 21 Minn. 225; Hinde v. 395; Ogden v. Marshall, 8 N. Y. 349;
Liddel, L. R. 10 Q. R 265. Collins v. Baumgardner, 52 Pa. 461;
In Wigseli v. School for the Indi- Le Blanche v. London, etc. R Co., 1
gent Blind, 8 Q. B. Div. 357, the C. P. Div. 286; Ward's Central & P.
grantee of land covenanted with his Lake Co. v. Elkins, 34 Mich. 439, 22
grantor that the land should be and Am. Rep. 544; Williams v. Vander-
be kept inclosed with a brick wall, bilt, 38 N. Y. 217, 84 Am. Dec. 333.
In an action to recover damages for •'Le Blanche v. London, etc. R Co.,
tiie breach of this covenant it was 1 C. P. Div. 286.
shown that the value of the adjoin-
§ 92.] ELEMENTS OF DAMAGE. 269
pend such sum as Avill give him what he was entitled to under
his contract though that be more than the price for which the
contractor was to have done the work.^ On breach of a con-
tract to carry by vessel an ordinary article of merchandise,
the shipper will not be justified in procuring shipment by rail
if the railroad prices would render it unprofitable. A person
has no right to put others to an expense of such a nature as
he would not, as a reasonable man, incur on his own account.^
§ 92. May damages for breach of contract include other
than pecuniary elements? In actions upon contract the losses
sustained do not, by reason of the nature of the transactions
which they involve, ordinarily embrace any other than pecun-
iary elements. There is, however, no reason why other natural
and direct injuries may not justify and require compensation.
Contracts are not often made for a purpose the defeat or im-
pairment of which can, in a legal sense, inflict a direct and
natural injury to the feelings of the wronged party. A breach
of promise of marriage is an instance of such a contract, in
which such considerations enter into the estimate of the dam-
ages.* The action for such a cause is often referred to as an
exceptional one. In a certain sense it is so; but only in [157]
the particular under consideration. It is an action upon con-
tract; the damages allowed are such as will adequately com-
pensate the person injured, the nature and benefits of the thing
promised being considered. Being of a personal nature the
damages cannot be wholly measured by a pecuniary standard;
the cause of action, for the same reason, dies with the person,
as all demands for personal injuries do. The damages are re-
coverable by the injured party because they proceed directly
and naturally from the breach. Other actions upon contract
may embrace like damages.* Blackburn, J.,^ said: "Where
1 Spink V. Mueller, 77 Mo. App. 85, Dec. 547; Wilbur v. Johnson, 58 Mo.
citing the text; Wright v. Sander- 600; Wadsworth v. Western U. Tel.
son, 20 Mo. App. 524; Haysler v. Co., 86 Tenn. 695, 6 Am. St. 864, 8 S.
Owen, 61 Mo. 276; Hirt v. Hahn, 61 W, Rep. 574. quoting the text.
Mo. 496; 2 Sedgwick on Dam., sec. ^Hale v. Bonner, 83 Tex. 33, 27
617. Am. St. 850, 17 S. W. Rep. 605, 14 L.
2 Ward's Central & P. Lake Co. v. R. A. 336; Western U. Tel. Co. v.
Elkins, 34 Mich. 439, 22 Am. Rep. Simpson, 73 Tex. 422, 11 S. W. Rept
544. 385. See ch. 22,
swells V. Padgett, 8 Barb. 323; ^In Hobbs v. London, etc. R. Ca,
Tobin V. Shaw, 45 Me. 331, 71 Am. L. R. 10 Q. B. 111.
•270 COMPENSATION. [§ 92.
tliere is a contract to supply a thing, and it is not supplied,
the damages are the difference between that which ought to
have been supplied and that which you have to pay for it, if it
be equall}' good ; or if the thing is not obtainable, the damages
would be the difference between the thing which you ought to
have had and the best substitute you can get upon the occasion
for the purpose. It was urged that though, when the plaintiff
was . . , (left by a carrier short of his destination), . . .
if he had been able to hire a fly or obtain a carriage, and paid
money for it, it was admitted he could recover that money, —
yet inasmuch as he could get no carriage, and was compelled
to walk under penalty of staying where he was all night, he
was not entitled to get anything. . . . Now, as 1 have said,
what the passenger is entitled to recover is the difference be-
tween what he ought to have had and what he did have; and
when he is not able to get a conveyance at all, but has to make
the journey on foot, I do not see how you can have a better
rule than that . . . the jury were to see what was the incon-
venience to the plaintiffs in having to walk, as they could not
get a carriage." While it is true that if the breach causes no
actual injury beyond vexation and annoyance, as all breaches
of contract do more or less, they are not subjects of compen-
sation unless to the extent that the contract was made spe-
cially to procure exemption from them, nevertheless to the ex-
tent that a contract is made to secure relief from a particular
inconvenience or annoyance or to confer a special enjoyment,
[158] the breach, so far as it disappoints in respect of that
purpose, may give a right to damages appropriate to the objects
of the contract. Inconvenience, in the case quoted from, was
a prominent element of damage; that consisted in a disagree-
able walk of three miles when the contract entitled the injured
party to be carried in a railway car a greater portion of the
distance. It was a rainy night, and he had with him his wife
and small children. Sickness ensued to som-e of them from
taking cold; damages for this were excluded by perhaps too
rigid an application of the rule that they must be the natural
and proximate consequence of the breach ; ^ but a verdict alio w-
1 See §§ 48, 49.
§ 92.] ELEMENTS OF DAMAGE. 271
ing lOl. damages for the inconvenience was sustained.' In an
action for breach of a contract to convey the plaintiff on a
steamship from London to Sheerness, where the breach con-
sisted in putting the plaintiff off, without just cause and with
circumstances of aggravation, short of his destination, it was
held proper to show these circumstances, and Parke, B., thus
remarked upon their admissibility: " Suppose, instead of a man
landed eft Gravesend from a steamboat, this had been the case
■of a passenger in a ship bound to the West Indies, and he were
put ashore on a desert island, without food, and exposed to the
burning sun and danger of wild beasts, or even landed among
savages, would not evidence be receivable to show the state of
the island where he was left and the circumstances attending
the violation of the contract?^
The views expressed in the opening part of this section have
found acceptance in a well-considered case sustaining the right
to recover damages for mental suffering resulting from delay
in delivering a telegram announcing the time of holding the
funeral of the plaintiff's mother, and determining that there
might be a recovery either ex contractu or ex delicto: We find
a well-recognized exception to the general rule that damages
cannot be had for mental anguish in cases of breach of con-
tract, in the action for breach of promise of marriage, and the
reason for this exception is quite applicable here. In such
cases the defendant, in making his contract, is dealing with
the feelings and emotions. The contract relates almost wholly
to the affections, and one is not allowed to so trifle with an-
other's feelings. He knows at the time he makes the contract
that if he breaks it the other will suffer great mental pain, and
the courts, without exception, have allowed recovery in such
a case.^ In another and similar case the text is quoted, and it
iSee Ward v. Smith, 11 Price, 19; consider the outrage to the feelings
Williams v. Vanderbilt, 28 N. Y. 217, of the plaintiff, although the acts
84 Am. Dec. 333; Jones v. Steamship done were not directed against him
Cortes, 17 Cal. 487, 79 Am. Dec. 143; in person, but against his son and
Wadsworth v. Western U. Tel. Co.. employees. Enders v. Skannal, 35
86 Tenn. 695, 6 Am. St. 864, 8 S. W. La. Ann. 1000.
Rep. 574, quoting the text. 2 Coppin v. Braithwalte,8 Jur. 875.
If a contract is broken in a way See Rose v. Beattie, 2 N. & McC. 538.
and by such acts as constitute an of- 3 Mentzer v. Western U. Tel. Co.,
^fense against the law, the jury may 93 Iowa, 752, 762, 62 N. W. Rep. 1. 57
272
COMPENSATION.
[§ 93.
is said that it serves the purpose of showing that in the ordi-
nary contract only pecuniary benefits are contemplated and
that therefore the damages resulting from the breach of such
a contract must be measured by pecuniary standards, and that
where other than pecuniary benefits are contracted for, other
than pecuniary standards will be applied in the ascertainment
of the damages flowing from the breach. The case before us
(so far as it is an action for breach of contract) is subject tO'
the same general rule, and the defendant is answerable in dam-
ages for the breach according to the nature of the contract,
and the character and extent of the injury suffered by reason
of its non-performance.^
§ 93. Elements of damage for personal torts. In actions
for torts and personal injuries damages to relative rights are
frequently in question; then every particular and phase of
the injury may enter into the consideration of the jury in es-
timating compensation,- loss of time, with reference to the in-
jured party's condition and ability to earn money in his busi-
[159] ness or calling;^ his loss from permanent impairment
of faculties, mental and physical pain and suffering, disfigure-
ment and expenses.* Where injury to a young girl results in
her permanent disfigurement the jury may consider what the
Am. St. 294, 28 L. R. A. 72. citing
HoUoway v. Griffith, 32 Iowa. 409;
Royal V. Smith, 40 Iowa, 615, and
saying that the distinction pointed
out is well stated in the text.
iWadsworth v. Western U. Tel.
Co.,' 86 Tenn. 695, 8 S. W. Rep. 574, 6
Am. St. 864. See §§ 77, 915.
2 Grimes v. Bowerman, 92 Mich.
258, 52 N. W. Rep. 751, quoting the
text.
3 Welch V. Ware, 32 Mich. 77;
Whalen v. St. Louis R. Co., 60 Mo.
323; Pennsylvania R. Co. v. Books,
57 Pa, 339, 98 Am. Dec. 229; Ward
V. Vanderbilt, 4 Abb. App. Dec. 521;
Walker v. Erie R. Co., 63 Barb. 260;
McKinley v. Chicago, etc. R. Co., 44
Iowa. 314, 24 Am. Rep. 748; Pittsburg,
etc. R Co. V. Andrews, 39 Md. 329, 17
Am. Rep. 568: Toledo, etc. R. Co. v.
Baddeley, 54 IlL 19, 5 Am. Rep. 71;
Southern R. Co. v. Myers, 32 C. C. A.
19, 87 Fed. Rep. 149. See ch. 36.
4 Id. ; Memphis & C. R. Co. v. Whit-
field, 44 Miss. 466: Johnson v. Weils,
etc. Co., 6 Nev. 224, 3 Am. Rep. 245;
Muldowney v. Illinois, etc. R. Co., 36
Ipwa, 462: Mason v. Ellsworth, 32 Me.
271; Morse v. Auburn, etc. R. Co., 10
Barb. 621; Lucas v. Flinn, 35 Iowa, 9;
Stewart v. Ripon, 38 Wis. 584; West
V. Forrest, 22 Mo. 344; Filer v. New
York Central R. Co., 49 N. Y. 42
Donnell v. Sandford, 11 La. Ann. 645
Lynch v. Knight, 9 H. of L. Cas. 577
Sterner v. Moran, 2 Mo. App. 47: Ash-
craft V. Chapman. 38 Conn. 230; Seger
V. Barkhamsted, 22 Conn. 290: Penn-
sylvania & O. C. Co. V. Graham, 63
Pa. 290, 3 Am. Rep. 549; Smith v.
Overby, 30 Ga. 241; Smith v. Hol-
comb, 99 Mass. 552; Ford v. Jones, 62
Barb. 484; Hamilton v. Third Avenue
I 94.] ELEMENTS OF DAMAGE. 273
effect will probably be on the prospects of her marriage when
she reaches the age of womanhood, and how far the money
value of her life may be damaged by that circumstance. Such
an element of damages is not speculative because it is difhcult
to estimate, nor in any other sense than almost every element
of damages is speculative where the ascertainment depends on
what the jury or other trior of the fact shall deem fair and
just, and where, being uncertain and indefinite, the damages
are not capable of adjustment with precision and accuracy. In
such a case there may be a recovery on account of that loss
without a special allegation of damage, the loss being a gen-
eral prospect and not a particular one.^
§ 94. Cliaracter as affecting damages for personal inju-
ries. In an action to recover for personal injuries sustained
while traveling as a passenger on a railroad the question
arose as to the effect of the plaintiff's character for chastity
upon the measure of damages. The trial court charged that
the fact that the plaintiff is an unchaste woman, or has more
than one husband, has nothing to do with the damages; that
she is entitled to recover the same damages for injuries re-
ceived as a chaste woman, or a woman who has only one hus-
band. The appellate court, Cole, C. J., writing the opinion,
says it thinks the charge had a tendency to mislead the jury :
" We do not wish to intimate that an unchaste woman who
is maimed and disabled by an accident on the railroad may
not suffer as much pain of body or anxiety of mind as a vir-
tuous woman would from a like injury; but still, when it
comes to a question of awarding damages, it may be that a
jury would not give — perhaps ought not to give — the sa7ne
damages for injuries to an unchaste woman that they would
R Co., 53 N. Y. 25; Holyoke v. Grand 209, 9 So. Rep. 363; Gibney v. Lewis,
Trunk R. Co., 48 N. H. 541; Ripon v. 68 Conn. 392, 36 Atl. Rep. 799; Louis-
Bittel, 30 Wis. 614; Moore v. Central ville & N. R. Co. v. Logsdon, 71 S. W,
R., 47 Iowa, 688; Ballou v. Farnum, Rep. 905 (Ky.); Newbury v. Getchell
II Allen, 73; Nones v. Northouse, 46 & Martin Lumber & Manuf. Co.,
Vt. 587; Johnson v. Holyoke, 105 100 Iowa. 441. 457, 69 N. W. Rep. 743,
Mass. 80; Blackman v. Gardiner 63 Am. St. 582, citing the text. See
Bridge, 75 Me. 214; Bovee v. Dan- ch. 36.
ville, 53 Vt. 183; Mayor, etc. v. Lewis, i Smith v. Pittsburgh & W. R Co.,
92 Ala. 352,9 So. Rep. 243; Montgom- 90 Fed. Rep. 78a
ery & E. R Co. v. Mallette, 92 Ala.
Vol. 1 — 18
274 COMPENSATION". [§ 94.
allow a virtuous, intelligent, and industrious woman, who
could command good wages or take care of a family. The
fact of chastity, as well as other personal virtues and business
qualifications, would be proper matters for a jury to consider
in making up their verdict as to what damages should be
given as a compensation for the injury received, in view of
all the facts." • The opposing view is expressed by Judge
Deady in a case^ where it might have been omitted (if the
Wisconsin case announces the law under any circumstances)
with more propriety than in the case stated. He charged
that compensatory damages for physical pain and mental
anguish are not to be diminished by the fact that the plaintiff
is an obscure man, that he is a bartender, a professional gam-
bler or even a vagrant. In another case, brought by the next
of kin to recover damages for the negligent killing of the de-
ceased, Shiras and Brewer, JJ., held that proof of the good
or bad reputation of the plaintiffs could not be received.' We
think that a carrier cannot refuse to transport a person who
presents himself as a passenger and who is properly dressed
and whose conduct is not such as to enhance the risk of car-
rying him or endanger the comfort or safety of his fellow
passengers, on the ground that he is immoral or vicious in.
some of the relations of life. The right to be carried exist-
ing, a necessary result of it is that the rights and obligations
of passenger and carrier attach. These cannot be affected
by the character of the passenger so long as his conduct as
such is correct. The law does not discriminate as to the
rights of persons to redress for wrongs to their physical being
or their property. If bad character should be ground for re-
ducing damages, good character would be reason for increas-
ing them. Rights given by statute are not denied because of
1 Abbot V. Tolliver, 71 Wis. 64, 36 In Brown v. Memphis & C. R. Co.,
N. W. Rep. 622. It is to be observed 7 Fed. Rep. 51, 5 id. 499, Hammond,
of this case that it would doubtless J., ruled, after full consideration,
have been decided as it was independ- that the presence of an alleged pres-
ently of this proposition. titute in a ladies' car, no misconduct
- Boyle V. Case, 18 Fed. Rep. 880. being indulged in there, and the im-
3 Johnson v. Wells, etc. Co., 6 Nev. morality being confined to the pri-
224, 240, 3 Am. Rep. 245; Hardy v. vate life of the passenger, was not
Minneapolis, etc. R. Co., 36 Fed. Rep. sufficient ground for excluding her
657. therefrom.
§95.]
ELEMENTS OF DAMAGE.
275
the character of the citizen if there is no exception made by
the legislature. A homestead right is not lost because the
owner uses the property for an immoral and unlawful pur-
pose.^ Another reason for disapproving the Wisconsin case
is that the introduction of such a question opens up too wide a
field for the consideration of courts and juries, and adds vast
elements of uncertainty to verdicts. So far as we have been
able to ascertain, the character of a plaintiff is not material
when he seeks to recover for an injury to his person or
property, unless it contributed to provoke the wrong com-
plained of.^
§ 95. Mental suffering. There has been a marked devel-
opment of the law concerning liability for mental anguish or
pain since the publication of the first edition of this work. It
was then well settled that such pain, when it resulted from
physical injury, was an element of damages. There was origi-
nally a little hesitancy on the part of some courts in reaching
1 Prince v. Hake, 75 Wis. 638, 44 N.
W. Rep. 825,
2 Where the plaintiff was unem-
ployed when injured and the testi-
mony tended to show that his habits
were dissolute, that he kept a house
of doubtful character and had, before
his injury, been discharged from
several employments, it was con-
tended that the defendant had the
right to lay before the jury any facts
concerning the plaintiff's conduct,
habits, character or repute which
might throw light on the probability
of his securing employment, and the
character and continuity of the same.
Th® answer was that the doctrine
could not be carried to that extent.
The defendant undoubtedly had the
right to lay before the jury any facts
concerning the plaintiff's habits or
conduct which might throw light on
the probability of his securing em-
ployment, and the character and
continuity of the same, but we know
of no rule which would permit the
defendant to go into proof of the
plaintiff's character or repute. Kings-
ton V. Fort Wayne & E. R. Co., 113
Micii. 40, 40 L. R. A. 131, 74 N. W.
Rep. 230.
It may be shown that the plaintiff
was a sober and industrious man, his
earning power being an element of
damages. Metropolitan St. R. Co. v.
Kennedy, 82 Fed. Rep. 158.
If the injuries for which a recovery
is sought were the result of a life of
dissipation, or commonly follow such
a life, the fact may be shown. State
V. Detroit, 113 Mich. 643, 72 N. W.
Rep. 8.
In a civil action for an assault with
intent to ravish, the defendant may
show in mitigation of actual dam-
ages that the plaintiff was vulgar
and obscene in conduct and lan-
guage. Parker v. Coture, 63 Vt. 155,
21 AtU Rep. 494, 25 Am. St. 750. But
in such an action the general good
character of the defendant cannot
be shown, nor can the general repu-
tation of the defendant as to chastity.
Sayen v. Ryan, 9 Ohio Ct. Ct. 631.
See ch. 36.
276 COMPENSATION. [§ 85.
that conclusion,' but there is now no dissent from it.^ The
mental suffering which can thus be recovered for must pro-
ceed from and be caused by the act or neglect which pro-
duced the physical injury.' The bodily hurt which gives a
right of recovery for the resulting mental suffering may be
very small ; if it is a ground of action it is enough.^ In ac-
tions for assault and battery the jury may consider, not only
the mental distress which accompanies and is a part of the
bodily pain, but that other condition of the mind of the in-
jured person which is caused by the insult of the blows he re-
ceived.* The same state of mind is an element of damage
when an assault has been maliciously made,^ though no actual
physical harm was done.'' Thus one who assaults a woman
with criminal intent, " though her body be not touched, except
by his foul breath and speech, should respond in damages for
an outrage to her feelings which proceeds so directly from his
concurrent criminal purpose and act." ^ In an action of tort
for a wilful injury to the person the manner and manifest mo-
tive of the act may be given in evidence as affecting the ques-
tion of damages, for when the mere physical injury is the same
it may be more aggravated in its effects upon the mind if it is
done in wanton disreo:ard of the rights and feelino-s of the
1 Johnson v. Wells, etc. Co., 6 Nev. * Curtis v. Sioux City, etc. R Co., 87
224. 3 Am. Rep. 245. Iowa, 622, 54 N. W. Rep. 339; Birming-
2 Bovee v. Danville, 53 Vt. 183; Fer- ham R. & E. Co. v. Ward, 124 Ala. 409,
guson V. Davis County, 57 Iowa, 601, 27 So. Rep. 471; Canning v. Williams-
10 N. W. Rep. 906; Porter v. Hanni- town, 1 Cush. 452, 48 Am. Dec. 613.
bal, etc. R. Co., 71 Mo. 66, 36 Am. Rep. 5 Prentiss v. Shaw, 56 Me. 427. 96
454; Indianapolis, etc. R. Co. v. Sta- Am. Dec. 475; Wadsworth v. Treat,
bles, 63 111. 313; Saiina v. Trosper, 27 43 Me. 163; Smith v. Holcomb, 99
Kan. 544. See ch. 36. Mass. 552; Birmingham R & E. Co.
3 Bovee v. Danville, supra; Chicago v. Ward, supra.
City R Co. v. Taylor, 170 111. 49, 48 « McKinley v. C. & N. W. R Co., 44
N. E. Rep. 831. Iowa, 314, 24 Am. Rep. 748.
If injury done to the person results ' Ford v. Jones, 62 Barb. 484; God-
in a miscarriage the physical and dard v. Grand Trunk R, 57 Me. 202;
mental suffering connected there- Beach v. Hancock, 27 N. H. 223, 59
with is to be considered; but injured Am. Dec. 373; Craker v. Chicago &
feelings following the miscarriage N. R. Co., 36 Wis. 657, 17 Am. Rep. 504;
and not part of the pain naturally at- Cooper v. Hopkins, 70 N. H. 271, 48
tending it are too remote. Western U. Atl. Rep. 100.
Tel. Co. V. Cooper, 71 Tex. 507, 9 S. 8 Leach v. Leach, 11 Tex. Civ. App.
W. Rep. 598, 1 L. R A. 728. 699, 33 S. W. Rep. 703.
§ 95.] ELEMENTS OF DAMAGE. 277
plaintiff than if it is the result of mere carelessness.^ Mental
suffering is an element of damage in suits for malicious prose-
cution, independent of other injury,'^ for false imprisonment,'
and in some jurisdictions for the illegal issuance of an attach-
ment against property.* A husband may recover exemplary
damages for injury to his feelings in an action against one
who has had criminal conversation with his wife. His right
grows out of the marital relation and is independent of her
right to recover damages for the same wrong in an action by
her.* A parent may recover for mental suffering resulting
from the abduction,^ seduction,"' or the harboring and secreting
of a minor daughter.® These actions are brought upon the
legal principle or fiction which imports the loss of service as
the ground upon which a recover}^ is had. The damages
awarded in them, however, are largely given as compensation
for wounds inflicted on the mind. Such actions are distin-
guishable from another class in which mental distress is an ele-
ment of damage, because the facts out of which they arise af-
fect the social and business standing of the parties plaintiff,
and in many ways tend to harass and annoy and even degrade
them in the eyes of the community. To some extent this is
the effect of various indignities which are suffered; and be-
cause of it a passenger who is wrongfully and publicly ejected
from a train may recover for the effect of the insult and in-
dignity to his feelings, though the case does not warrant the
imposition of punitory damages.' In Texas mental suffering
1 Hawes v. Knowles, 114 Mas& 518, ^Magee v. Holland, 27 N. J. L. 86,
19 Am. Rep. 383. 73 Am. Dec. 341.
2Parkhurst v. Masteller, 57 Iowa, ^ Lunt v. Philbrick. 59 N. H. 59;
474, 10 N. W. Rep. 864; Fisher v. Barbour v. Stephenson, 32 Fed. Rep.
Hamilton, 49 Ind. 341. 66; Stevenson v. Belknap, 6 Iowa, 97.
3 Stewart v. Maddox, 63 Ind. 51; sgtowe v. Hey wood, 7 Allen, 118.
Gibney v. Lewis, 68 Conn. 392, 86 Atl. 9 Smith v. Pittsburgh, etc. R Co.,
Rep. 799. 23 Ohio St 10; Lake Erie, etc. R. Co.
* Byrne v. Gardner, 33 La. Ann. 6; v. Fix, 88 Ind. 381, 45 Am. Rep. 464;
City Nat. Bank v. Jeffries, 73 Ala, 183. Quigley v. Central Pacific R. Co., 11
Contra, Tisdale v. Major, 106 Iowa, Nev. 350, 21 Am. Rep. 757; Hays v.
1, 75 N. W. Rep. 663, 68 Am. St. 263; Houston, etc. R, Co., 46 Tex. 272;
Travick v. Martin-Brown Co., 79 Tex. Smith v. Leo, 92 Hun, 242. 36 N. Y.
640, 14 S. W. Rep. 564 Supp. 949; Mabry v. City Electric R.
5 Johnston v. Disbrow, 47 Midi. 59, Co., — Ga. — , 42 S. E. Rep. 1025, 59
10 N. W. Rep. 79. L. R. A, 590; Curtis v. Sioux City, etc.
278 COMPENSATION. [§ 95.
is an element of damage where it results from the breach of
a carrier's contract.^ The authorities generally do not go so
far as to allow damages for the disappointment, annoyance and
vexation which result from the breach of such a contract."^
A bank which maliciously and wilfully refuses to honor its
depositor's checks is liable, in addition to actual money dam-
ages, for " such substantial damages for the impairment of his
credit and for his feelings and mental anxiety over the matter
as directly and proximately resulted from " its acts.'
Injured feelings are not to be regarded in awarding dam-
ages for wrongs done to property through gross carelessness,
no act or word of insult or contumely or any intentional vio-
lation of plaintiff's rights being shown.* Thus in an action
growing out of negligence in blasting rocks and throwing
them upon the plaintiff's land and buildings, his mental anxiety
concerning his personal safety or that of his family, no harm
being done to his or their persons, is not an element of damage.
The court was unable to find any case which held that mental
suffering alone, caused by simple actionable negligence, can
sustain an action.^ But if property is injured in wilful disre-
gard of the rights of its owner, injuries to his feelings may be
compensated ; as where the remains of a deceased child are re-
moved from a burial lot in which they are rightfully interred,^
or the right to inter a dead body is denied after all prepara-
R Co., 87 Iowa, 622, 54 N. W. Rep. his baggage was $90; a verdict for
339. $500 was sustained. See § 953.
In the last case a girl was ejected 2 Walsh v. Chicago, etc. R Co., 42
in the presence of her schoolmates Wis. 23, 24 Am. Eep. 376; Hamlin v.
and other acquaintances without Great Northern R Co., 1 H. & N. 408.
malice or unnecessary rudeness, not- See ch. 21,
withstanding there was both indig- '■^ Davis v. Standard Nat. Bank, 50
nity and insult in the sense that the App. Div. 210, 63 N. Y. Supp. 764.
wrong was done in a humiliating and * White v. Dresser, 135 Mass. 150,
offensive manner; the mental pain 46 Am. Rep. 454.
resulting was a proper element of ^ Wyman v. Leavitt, 71 Ma 227;
compensatory damages. Contra, Illi- Trigg v. St. Louis, eta R Co., 74 Ma
nois R Co. V. Sutton, 53 111. 397, in 147; Ewing v. Pittsburgh, etc. R Co.,
the absence of wilfulness or malice. 147 Pa. 40, 23 Atl. Rep. 340, 14 L. R
See § 943. A. 66a
1 St. Louis, etc. R v. Berry, 15 S. « Meagher v. Driscoll, 99 Mass. 281,
W. Rep. 48. The extra expense in- 96 Am. Dec. 759; Jacobus v. Children
curred by the plaintiff on account of of Israel, 107 Ga. 522, 33 S. E. Rep.
his delay and the failure to receive 853, 73 Am. St. 141.
§ 96.] ELEMENTS OF DAMAGE. . 279
tioas for the burial have been made.' ]Vrental pain cannot bo
compensated for in an action for forcible entry and detainer,-
nor in an action to recover for adding to the height of a divis-
ion fence and refusing to remove it.' Inconvenience, unaccom-
panied by pecuniary loss, is not an element of damage for
being deprived of the use of property.* Annoyance and vexa-
tion, though accompanied by the expenditure of money in
consequence of the wrongful issue of a distress warrant, are
not ground for compensatory damages;' and so where they
result from the invasion of a privilege, though such invasion
was accompanied by pecuniary loss."
§ OG. Same subject. In some jurisdictions mental suffer-
ing which occurs independently of physical harm, as the re-
sult of mere negligence, is too remote to be the ground of an
action.' This rule extends to sickness resulting from the purely
internal operation of fright though the latter is caused by
gross negligence and the defendant ought to have known that
the result which ensued would follow his act. The question
whether, if the result was actually foreseen and intended, the
rule would be otherwise, is undecided.^ The rule of non-lia-
1 Wright V. Hollywood Cemetery Tex, 412, 40 Am. St. 866, 25 S. W. Rep.
Corporation, 113 Ga, 884, 38 S, E. 419; Lynch v. Knight, 9 H. of L. Cas.
Rep. 94, 53 L. R. A. 631. 577; Ewing v. Pittsburgh, etc. R. Co.,
2 Anderson v. Taylor, 56 Cal. 131, 147 Pa. 40, 14 L. R. A, 666, 30 Am.
38 Am. Rep. 53. St. 709, 23 Atl. Rep, 340; Mitchell v.
sWolf V. Stewart, 48 La. Ann, Rochester R. Co., 151 N.Y. 107, 34 L.R.
1431, 20 So. Rep. 908, A. 783, 56 Am. St, 605, 45 N. E. Rep,
* Detroit Gas Co. v. Moreton Truck 354; Washington & G. R, Co, v. Dash-
& Storage Co., Ill Mich. 401, 69 N. iell, 7 D. C. App. Cas. 507; Rock v.
W. Rep, 659; Williams v. Yoe, 19 Denis, 4 Montreal L. R, (Super, Ct.)
Tex. Civ. App. 281, 46 S. W. Rep. 659. 356; Russell v. Western U. Tel. Co.,
5 Smith V. Jones, 11 Tex. Civ. App. 3 Dak. 315, 19 N. W. Rep. 408; Dor-
18. 31 S. W. Rep. 306. rah v. Ilhnois Central R. Co., 65 Miss.
« Mason v. Dewis, 71 S. W. Rep. 14, 3 So. Rep. 36, 7 Am. St. 629; Sa-
434 (Ky.). lina v. Trosper, 27 Kan. 544; West v.
7 Spade V. Lynn & B. R. Co., 168 Western U. Tel. Co., 39 id. 93, 17 Pac.
Mass. 285, 38 L, R. A. 512, 60 Am. St. Rep. 807, 7 Am. St. 530; Canning v.
393, 47 N. E. Rep. 88; White v. Sander, Williamstown, 1 Cush. 452; Johnson
168 Mass. 296. 47 N. E. Rep. 90, 60 v. Wells, etc. Co., 6 Nev. 224, 3 Am.
Am. St. 390 (the last case was one of Rep. 245; The Queen, 40 Fed. Rep.
a wilful attempt to injure property, 694. See §§ 21-23a,
and the claim for damages for men- 8 Smith v. Postal Tel. Cable Ca,
tal suffering grew out of such at- 174 Masa 576, 55 N. E. Rep. 380, 75
tempt); Gulf, etc. R. Co. v. Trott, 86 Am. St. 374, 47 L. R, A. 323; Atch-
280 COMPENSATION. [§ 96.
bility has been applied where the defendant, without malice
or evil intent, dressed himself in a woman's clothes and went
at dusk to the plaintiff's home with the result that she was
frightened and, later, had a miscarriage;^ and where the de-
fendant, the landlord of plaintiff's sister, went to the house to
collect rent, found the door ajar, opened it, walked up stairs,
went inside the bedroom door, saw plaintiff in the room, asked
what she was doing, waved his arms, and in a loud and ap-
parently angry voice said: " I forbid you moving. If you at-
tempt to move I will have a constable here in five minutes. I
refuse to take possession of these premises." As a result of the
plaintiff's excitement and fright St. Vitus dance was produced.
The opinion contains this language : Under the pleadings mere
words and gestures are sought to be made actionable because
of the nervous temperament of the plaintiff, without which
such words and gestures would not be actionable. This would
introduce and incorporate in the law a new element of dam-
age — a new cause of action — by which a recovery might be
had for an injury resulting to one of a peculiarly nervous tem-
perament, while no injury would result to another in identi-
cally the same position. Of such a cause of action and liability
for damage a dangerous use could be made. ]S^o such recovery
is authorized under the common law and no statute gives it/
A different view has been taken where the defendant, know-
ing that one of the plaintiffs was well advanced in pregnancy,
came to their house and in their yard, in the presence of such
plaintiff, assaulted two negroes in a boisterous and violent
manner, using profane language, the assault being accompa-
nied by the drawing of blood, and causing the fright of the
female plaintiff which was followed by a miscarriage and im-
pairment of health. These facts gave the plaintiffs a cause of
action, though it was recognized that the case was a novel
one.*
On many questions respecting the recovery of damages for
mental suffering or nervous shock the law is in a very unsatis-
ison, etc. R. Co. v. McGinnis,46Kan. 2Braun v. Craven, 175 111. 401, 42
109, 26 Pac. Rep. 453. But see §§ 21 L. R. A. 199, 51 N. E. Rep. 657.
et seq. s Hill v. Kimball, 76 Tex. 210, 13 S.
1 Nelson v. Crawford, 122 Mich. 466, W. Rep. 59, 7 L. R. A, 6ia
81 N. W. Rep. 335, 80 Am. St. 577.
§ 96.] ELEMENTS OF DAMAGE. 281
factory state, it being impossible to harmonize the decisions or
formulate any rule based on them. Many of the objections to
recovery are devoid of real weight, assuming that the suffering
or shock is the natural and proximate result of the wrong done,
as it clearly was in some of the cases noted in this section — no-
tably the Michigan case and the Illinois case. The objection
that an action for such a purpose is without precedent might
have been urged to defeat many causes of action which are
now recognized; such an objection, generally acquiesced in,
would have prevented the development of the law and denied
protection to many of the most valued rights which are now
protected. Occasionally a court assorts that the recognition
of the right of recovery in cases of this class would crowd cal-
endars and open the door to fraud. It may not be asserted
with much confidence that such results have been experienced
in jurisdictions in which the right is recognized. But if the
first result should follow, it may be pertinent to inquire what
are the reasons for establishing and maintaining the judicial es-
tablishments? Are they not intended to protect the rights of
citizens, and to redress their wrongs? And citizens of all
classes have the right to resort to them for such purposes.
There is as good reason for denying redress to a citizen with a
weak body which has been tortiously injured as there is in
denying it to one with a weak nervous organization whose
rights have been denied. The effects of physical injury on
different persons, though the injury may be the same so far as
external appearances go, vary greatly. But no court has re-
fused redress for that reason. Mental suffering is an element
of damages in many classes of actions, and it has not been
seriously contended that the common sense of jurors has erred
grievously, if at all, in awarding compensation for it. The
field of uncertainty is not wider in cases of this class than in
some others, and the corrective control which the courts exer-
cise over verdicts can be relied upon to prevent the fraud con-
cerning which such serious apprehensions are seemingly enter-
tained in some tribunals.
The courts are almost agreed in denying redress for sym-
pathetic mental suffering.^ Thus a father cannot recover for
1 See SS 21-34.
282 COMPENSATION. [§ 96..
grief and anxiety on account of mere physical injuries sustained
by a child,' nor because of solicitude for his own and his child's
personal safety.* Without proof of substantial harm, incapacity
to pursue his ordinary employment, or some expense incurred, a
seaman thrown from a boat into the water in case of a collision
can recover no damages for the resulting fright.* As long ago-
as 1808 Lord Ellenborough charged a jury in an action brought
by a husband to recover for the loss of the comfort, fellowship
and assistance of his wife and the grief, vexation and anguish
of mind he had undergone by reason of her injuries and sub-
sequent death that they could only take into consideration the
bruises which he had himself sustained, and the loss of his-
wife's society, and the distress of mind he had suffered on her
account from the time of the accident till the moment of her
dissolution.* In an action brought by a husband to recover
for mental suffering resulting from surgical malpractice in
the performance of an operation upon his wife, the difficul-
ties in the way of the rule suggested were considered by
Christiancy, J.^ The chief cause of plaintiff's distress of mind
must have been the death of his wife in which the injury re-
sulted rather than the pain she suffered during the operation,
and prior to her death; and it would be very difficult for a
jury to apportion his mental agony or to determine how much of
it was attributable to one of these causes and how much to the
other. If the plaintiff has a right of action on account of
his wife's suffering, why may not another of her relatives who
may have sustained as much mental agony on the same ac^
count as the husband? These considerations, it is said, show
the propriety and good sense of the rule which restricts the
right of action for mental suffering to the person who has re-
ceived the physical injury. Had the wife survived, this right
of action would have been hers, and neither the husband in
^Flemington v. Smithers. 3 C. & zwyman v. Leavitt, 71 Me. 227;
P. (1826), 293; Black v. Carrollton R. Keyes v. Minneapolis, etc. R Co., 36
Co., 10 La. Ann. 33; Pennsylvania K. Minn. 290, 30 N. W. Rep. 888; Texas
Co. V. Kelly, 31 Pa. 373, 73. Am. Dec. Mexican R Co. v. Douglass, 69 Tex.
745; Cowden v. Wright, 34 Wend. 694, 7 S. W. Rep. 77.
439, 35 Am. Dec. 633. Contra, Trim- 3 The Queen. 40 Fed. Rep. 694.
ble V. Spiller, 7 Mon. (Ky.) 394. 18 Am. * Baker v. Bolton, 1 Camp. 493.
Dec. 189. SeeOwen V. Brockschmidt, » Hyatt v. Adams, 16 Mich. 180,.
54 Mo. 285. 197.
§ 97.] ELEMENTS OF DAMAGE. 283
his own right, nor any other person, could have sustained an
action for it; her death does not transfer it to him. Damages
for such sufifering in actions for malpractice are not favored ;
when allowed they are to be based upon a consideration by
the jury of all the facts and circumstances and not upon state-
ments made by witnesses as to their amount.^
The rule in England and in most of the American courts is
that only compensation for the pecuniary loss which has been
sustained by the death of a husband, father, child or other rel-
ative can be recovered against the wrong-doer.- The Scotch
law allows a recovery for wounded feelings.' In some states,
owing to the language of the statutes, other than pecuniary
loss may be recovered for, as where it is expressed that the
jury may award such damages "as to it may seem fair and
just." * The mental and physical pain of the deceased is not
to be considered by the jury in finding the injury which results
from his death to the family.^ But it is otherwise where the
right of action of the person who dies survives to his repre-
sentatives.® There must, however, be proof that mental suf-
fering was endured by the deceased.^
§ 97. Same subject; liability of telegraph companies.
During the period between 1883 and 1893 there was a marked
development of judicial sentiment in the direction of holding
telegraph companies liable for mental suffering caused by neg-
ligent delay in delivering messages announcing the serious ill-
ness, death or burial of a near relative of the sender or ad-
dressee of such a message. Since 1893 the trend of judicial
sentiment has changed, largely because the highest court of
1 Stone V. Evans, 32 Minn. 243, 20 id. 240, 18 Pac. Rep. 269. See Munro
N. W. Rep. 149. v. Dredging, etc. Co., 84 Cal. 515, 525,
2 Blake v. Midland R. Co.. 18 Q. B, 18 Am. St. 248, 24 Pac. Rep. 303.
93; Railroad V. Wy rick, 99 Tenn. 500, s Cotton Press Co. v. Bradley, 52
511, 42 S. W. Rep. 434, quoting the Tex. 587, 601; Donaldson v. Missis-
text. See ch. 37. sippi & M. R. Co., 18 Iowa, 280, 87
sPaterson v. Wallace, 1 Macq. 748. Am. Dec. 391.
* Matthews v. Warner, 29 Gratt. « Nashville & C. R Co. v. Prince, 2
570, 26 Am. Rep. 396; Baltimore & O. Heisk. 580; Same v. Smith, 6 id. 174;
R Co. V. Noell, 32 Gratt. 394; Beeson Collins v. East Tennessee, etc. R. Co.,
V. Green Mountain Gold Mining Co., 9 id. 841.
57 Cal. 20 (ruled by a divided court); ^ Kennedy v. Standard Sugar Re-
McKeever v. Market Street R Co., finery, 125 Mass. 90, 28 Am. Rep. 214;
59 id. 294; Cieary v. City R Co., 76 Moran v. Hollings, 125 Mass. 93.
284 COMPENSATION. [§ 97.
'New York, the circuit courts of appeals of the United States
and some other eminent courts have denied such liability. The
courts (with the exception of that of Indiana) which declared
the existence of the liability have adhered to that doctrine;
but most of those which have considered it for the first time
in the last ten years have ranged themselves in opposition to
it. The Iowa court is an exception.^ According to the view
of the courts holding in accordance with the latter, if a mes-
sage delivered to a telegraph companj'^ apprises the agent
who receives it, or if he is otherwise informed, that it is of
immediate importance to the party to whom it is addressed
and relates to the illness, death or burial of some near mem-
ber of his family, the negligent failure to deliver it makes
the company liable to him for such mental distress as he
may sustain in consequence, or to the sender as may be en-
dured by him if the person who is summoned by it fails to
duly arrive by reason of neglect to deliver it to him. A hus-
band may recover for such suffering as he bears as the result
of the non-delivery of a message summoning a physician to at-
tend his sick wife;^ and there may be a recovery for the in-
creased physical and mental suffering the wife endures on
account of the non-attendance of a physician,^ or the absence
of her husband;* and for the husband's disappointment and
suffering in being kept away from the bedside of his sick wife; ^
for a sister's grief at being prevented from attending a brother
in his last illness and arranging for his burial.^ Formerly, in
Indiana, a husband who telegraphed his brother-in-law that
his wife was not expected to live could recover for his mental
suffering arising from the fact that the person to whom the
message was sent failed to come.^ Other cases in harmony
1 Mentzer v. Western U. Tel. Co., 39 Fed. Rep. 181; Young v. Same, 107
93 Iowa, 752, 62 N. W. Rep. 1, 57 Am. N. C. 370, 11 S. E. Rep. 1044, 9 L. R.
St. 294, 28 L. R. A. 72. A. 669, 22 Am. St. 883.
2 Western U. Tel. Co. v. Henderson, ^ Wadsworth v. Western U. TeL
89 Ala. 510, 18 Am. St. 148, 7 So. Rep. Co., 86 Tenn. 695, 8 Am. St. 864, 8 S.
419. W. Rep. 574.
3 Western U. Tel. Co. v. Cooper, 71 ^ Reese v. Western U. TeL Co., 123
Tex. 507, 9 S. W. Rep. 598, 1 L. R. A. Ind. 294, 24 N. E. Rep. 163, 7 L. R. A.
728, 10 Am. St. 772. 583; overruled in Western U. Tel.
4 Thompson v. Western U. Tel. Co., Co. v. Ferguson, 157 Ind. 64, 60 N. E.
107 N. C. 449, 12 S. E. Rep. 427. Rep. 674, 1080. See § 977.
sBeasley v. Western U. TeL Ca,
§ 97.]
ELEMENTS OF DAMAGE.
285
with those considered are' cited in the note,' as also some which
arc opposed.2 If anxiety or distress exists because of knowl-
edge of the illness of a relative, its continuance as the result
of the negligent failure to deliver a message which would re-
move or alleviate it is not an element of damage.' Neither is
mental distress which has its origin in alarm at and sympathy
for another's sufferings.* If a telegraph company undertakes
to transmit money, with knowledge that a failure to do so
with promptness will cause mental distress, it is liable for its
neglect to be prompt.*
In order that a company shall be liable to the addressee of
a message for mental suffering occasioned by negligent failure
to transmit or deliver the announcement of the illness or death
of the person who may be named therein, it must be shown
that the message disclosed, or that the operator was informed
of, the relation of the parties or the importance of promptness
in its delivery.^ It is enough to establish such liability if the
language of the message is reasonabl}'- sufficient to put the
1 So Relle v. Western U. Tel. Co.,
55 Tex. 310, 40 Am. Rep. 805; Stuart
V. Same, 66 Tex. 580, 59 Am. Rep. 633,
18 S. W. Rep. 351; Gulf, etc. R. Co.
V. Levy, 59 Tex. 543, 46 Am. Rep. 269;
Western U. Tel. Co. v. Wilson, 69
Tex. 739; Same v. Adams, 75 id. 531,
16 Am. St. 920, 12 S. W. Rep. 857. 6
L. R. A. 844; Same v. Feegles, 75 Tex.
537, 12 S. W. Rep. 860; Chapman v.
Western U. Tel. Co., 90 Ky. 265, 13 S.
W. Rep. 880; Western U. Tel. Co. v.
Broesche, 72 Tex. 654, 13 Am. St. 843,
10 S. W. Rep. 734. See ch. 22.
2 West V. Western U. Tel. Co., 39
Kan. 93, 17 Pac. Rep. 807, 7 Am. St.
530; Russell v. Same, 3 Dak. 315, 19
N. W. Rep. 408. See ch. 22.
3 Rovvell V. Western U. Tel. Co., 75
Tex. 26, 12 S. W. Rep. 534.
4 Western U. Tel. Co. v. Cooper, 71
Tex. 507, 9 S. W. Rep. 598, 1 L. R A.
728, 10 Am. St. 772.
■'■> Western U. Tel. Co. v. Simpson,
73 Tex. 422, 11 S. W. Rep. 385. A
telegram was received at G., Texas,
by the agent of a woman who sent
it from L., California, informing him
that her husband had died at L., and
that she would leave there the next
day, and requesting him to send her
$200. When received at G. the mes-
sage purported to have been sent
from S. It was not repeated. The
woman's agent expressed to the com-
pany's agent his belief that the mes-
sage was sent from L., but after
being assured that there was no mis-
take in this respect applied for the
transfer of the money to S., which
was done, without any effort on de-
fendant's part to ascertain whether
an error had been made. The money
did not reach the applicant. The
company was held liable for her
mental suffering.
6 Russell V. Western U. Tel. Co., 3
Dak. 315, 19 N. W. Rep. 408; Western
U. Tel. Co. V. Brown, 71 Tex. 723, 3
L. R. A. 766, 10 S. W. Rep. 323; West-
ern U. Tel. Co. V. Kirkpatrick, 76
Tex. 217, 18 Am. St. 37, 13 S. W. Rep.
70.
286 COMPENSATION. [| 98.
company upon inquiry as to the relationship, and inform it
that its object is to afford the person to whom it is addressed
an opportunity to attend upon his relative in his last sickness,
or to be present at the funeral in case of death.^ A different
view is taken in Indiana. The message delivered read " my
tvife is very ill, not expected to live." In an action by the
sender to recover for mental suffering it was ruled that the
language was not a hinderance thereto. The court say: It
is true there was nothing in the telegram to indicate the kin-
ship that existed between the appellant and the person to
whom it was addressed; nor did it request his presence at the
bedside of the sick person; but this affords no excuse to the
appellee for its failure to deliver the telegram. It was bound
to know that the message pertained in some way to the serious
illness of the appellant's wife, and therefore that prompt com-
munication with the person to whom the message was ad-
dressed was much desired, and was bound to know that mental
anguish might and most probably would come to some person
in case it failed to act promptly in transmitting and delivering
the dispatch; and therefore such a result was contemplated
when the message was delivered to its agent. Whether such
mental suffering would be caused by the failure of a brother-
in-law and his wife to go at once to the bedside of a dying sis-
ter-in-law or from the failure of a physician to reach his patient
while there was still hope that something might be done to
bring relief, and possibly a restoration to health, or for some
other cause, is unimportant. It was not the particular cause
but the effect which might be produced that was contemplated
by the parties, and which is to be looked to in determining the
question of liability.^
§ 98. Right to compensation not affected by motive. So
far as pecuniary elements of damage and full compensation
for injury are concerned, either in actions of tort or for breach
of contract, the right of recovery is wholly independent of the
motive which induced the act or omission which constitutes
1 Western U. Tel. Co. v. Moore, 76 844; Same v. Feegles, 75 Tex. 537, 13
Tex. G6, 18 Am. St. 25, 12 S. W. Rep. S. W. Rep. 860.
949; Same v. Adams, 75 Tex. 531, 16 - Reese v. Western U. Tel. Co., 123
Am. St. 920, 12 S. W. 857, 6 L. R. A. Ind. 294, 300, 24 N. E. Rep. 163, 7 L.
R. A. 58a
§ 99.] ELEMENTS OF DAMAGE. 287
the cause of action.* In tort the motive may increase the in-
jury and give a right to greater compensation; but in actions
upon contract this can seldom occur, because contracts are not
often made for such objects that a breach can be committed in
such manner as to involve other than pecuniary consequences.'
In cases of tort, if the defendant's motive does not enhance the
actual injury, it cannot necessitate the allowance of larger
damages to compensate it; though, by possibility, it may afford
cause for imposing exemplary damages.
§ 90. Distinction made for bad motive ; contracts. Im-
portant distinctions, however, are made against parties who
break their contracts as well as against wrong-doers, where
the cause of action originates in a bad motive. On executory
contracts for the sale of land the vendor who wilfully breaks
his contract or is unable to fulfill for causes known to him
when he entered into it will be subject to damages for the loss
of the bargain; ' while a vendor who, in good faith and [IGO]
without fault, finds himself unexpectedly unable to fulfill is
only liable to refund the consideration with interest and ex-
penses.* The general rule undoubtedly is that in actions upon
contracts the motives which induce breaches of them cannot
be considered in awarding damages. In addition to the cases
above stated and those indicated in the next paragraph of this
section, as coming within the exception to this rule, actions
for breach of marriage promise may be added.* There is a
1 Krom V. Schoonmaker, 3 Barb, nin, 21 Mich. 374, 4 Am. Rep. 490;
647; Bridgewater Gas Co. v. Home Foley v. McKeegan, 4Iowa. 1, 66 Am.
Gas Fuel Co., 7 C. C. A. 652, 59 Fed. Dec. 107: Engel v. Fitch, 9 K &S. 85,
Rep. 40; Bromfield v. Jones, 4 B. & C. 10 id. 738. See § 581.
380. See J< 43. * Flureau v. Thornhill, 2 W. Bl.
2 In Endersv. Skannal, 35 La. Ann. 1078; Walker v. Moore, 10 B. & C.
1000, it is ruled that if a breach of 416; Sikes v. Wild, 1 B. & S. 587, 4
contract is made in a way and ac- id. 421; Bain v. Fothergill, L. R. 6
companied by acts which constitute Ex, 59, L. R 7 H. of L. 158; McNair
an offense against the law, the dam- v. Compton. 35 Pa. 23; Conger v.
ages are not limited to the actual Weaver, 20 N. Y. 140. See § 578,
pecuniary loss. See § 77. ^Duche v. Wilson, 37 Hun, 519;
sPumpelly v. Phelps, 40 N. Y. 59; Houston, etc. R. Co. v. Shirley, 54
Bush V. Cole, 28 id. 261, 84 Am. Dec. Tex. 125, 142, 148.
343; Drake v. Baker, 34 N. J. L. 358; The standard writer on the law of
Plummer v. Rigdon, 78 111. 222, 20 damages in England says: "With
Am. Rep. 261; Stephenson v, Harri- the single exception of actions for
son, 3 Litt 170; Hammond v. Han- breach of promise of marriage I am
288 COMPENSATION. [§ 99.
probability that, owing to the complete obliteration of the dis-
tinction formerly existing as to the forms of actions, some mis-
understanding may arise on this question. The rule prevails
in some states that where the injuries complained of grew out
of a contract, though a tort was connected with it, if the claims
for both wrongs are so related that they may be conveniently
and appropriately tried together, this may be done.^ An action
so tried cannot be said, with any regard to legal accuracy, to
be an action upon contract. It is an action brought upon the
theory that legal rights growing out of a contract have been
violated or legal duties resting thereon neglected. As applied
to a carrier, the contract it makes with a passenger gives him
the right to be carried safely and put down at the place he has
designated; the failure to do either is a tort. The carrier is
engaged in an employment which devolves a duty upon him ;
an action on the case will lie for a breach of that duty, al-
though it may consist in doing something contrary to an agree-
ment made in the course of such employment by the party
upon whom the duty is cast.^ A distinction may very properly
be made as to the measure of damages for the breach of a con-
tract where the manner of the party in the wrong is offensive
or such as to cause reasonable apprehension of danger to the
other.'
A quantum meruit claim for services which were rendered
in part performance of a special contract has been made in some
jurisdictions to depend on the motive of the servant or con-
tractor in his abandonment of the contract; and compensation
for such performance has been allowed only to the laborer or
contractor who has acted in good faith ; has broken his con-
not aware of any cases in which it id. 542, 46 Am. Rep. 269; New Or-
has been held in England that the leans, etc. R. Co. v. Hurst, 36 Miss,
motives or conduct of a party break- 660; Wadsworth v. Western U. Tel.
ing a contract, or any injurious cir- Co., 86Tenn. 695, 6 Am. St. 864, 8 S.
cumstance not flowing fn-m the W. Rep. 574: Mentzer v. Western U.
breach itself, could be considered in Tel. Co., 93 Iowa, 752, 62 N. W. Rep.
damages where the action is on the 1, 57 Am. St. 294, 28 L. R. A. 72.
contract." Mayne's Dam. (6th ed.) 2jarvis, C. J., in Courtenay v.
p. 43, Earle, 10 C. B. 73, 83, interpreting
1 Houston, etc. R Co. v. Shirley, 54 Brown v. Boorman, 11 CI. & F. 1.
Tex. 125, 148; Ball v. Britton, 58 id. ^Enders v. Skannal, 35 La. Ann.
57; G., G & S. F. R. Ca v. Levy, 59 1000.
§ 100.] ELEMENTS OF DAMAGE. 2S0
tract through inability or mistake; and has been denied to the
party who has wilfully and selfishly abandoned it.' Other
cases may be cited where a more liberal scope is allowed in
estimating damages for a fraudulent or wanton violation of
contract than is ordinarily given in the absence of the element
of fraud.^
§ 100. Motive in tort actions. The motive with which a
wrong is done in some cases affects the rule by which compen-
sation is measured or losses estimated. Where there is [101]
fraud or other intentional wrong compensatory damages are
given with a more liberal hand b}'^ juries and their verdicts in
such cases are less closely scanned by courts than in cases
where that element is absent. There is a tendency, too, to be
less strict in the exclusion of remote and uncertain damages,
though for this there is doubtful warrant.' Where the damaj^es
are certain, as for the taking or destruction of property having
a well-known and provable value, the rule of compensation is
generally the same, whether the loss is by tort or by breach
of contract and whether the wrong was wilful or not. But
there is a more liberal allowance of damages where the tort is
an aggressive one, and the entire damages or some part of
them are not capable of measurement by some standard of
1 Yeats V. Ballentine, 56 Mo. 530; 2 W. Va. 104; Gleason v. Smith, 9
Keliy V, Bradford, 33 Vt. 35; Austin Cush. 484, 57 Am. Dec. 62; Tliorntoa
V. Austin, 47 Vt. 311; Britton v. v. Place. 1 M. & R. 218; Newman v.
Turner, 6 N. H. 495; Sinclair v. Tall- McGregor, 5 Ohio, 349, 24 Am. Dec.
madge, 35 Barb. 602; Hay ward v. 293; Carroll v. Welch, 26 Tex. 147;
Leonard, 7 Pick. 181: Atkins v. Barn- Hillyard v. Crabtree, 11 Tex. 264, 62
stable. 97 Mass. 428; Snow v. Ware, Am. Dec. 475; Dermott v. Jones, 23
18 Met. 42; McKinney v. Springer, 3 How. 220; Norris v. School District,
Ind. 59; Porter v. Woods, 3 Humph. 12 Me. 293, 28 Am. Dec. 182.
56, 39 Am. Dec. 153; McDonald v. 2 Dewint v. Wiltse, 9 Wend. 325;
Montague, 30 Vt. 357; Cullen v. Jeffrey v. Bigelow, 13 id. 518, 28 Am.
Sears, 112 Mass, 299; Cardell v. Dec. 476; Chitty on Conts. 684;
Bridge, 9 Allen. 355; Walker v. Or- Sondes v. Fletcher, 5 B. & Aid. 835;
ange, 16 Gray, 193; Patnote v. San- Rose v. Beattie, 2 Nott & McC. 538;
ders, 41 Vt. 66, 98 Am. Dec. 564; Nurse v. Barns, T. Raym. 77; Stuarfc
Veazie V. Bangor, 51 Me. 509; Laton v. Wilkins, 1 Doug. 18; Williamson
V. King, 19 N. H. 280; Bertrand v. v. Allison, 2 East, 446; Ferrand v.
Byrd, 5 Ark. 651; Wilson v. Wagar. Bouchell, Harp. 83; Muilett v. Mason,
26 Mich. 452; Horn v. Batchelder, 41 L. R. 1 C. P. 559; Smith v. Thomp-
N. H. 86; Tait v. Sherman, 10 Iowa, son, 8 C. B. 44. See § 77.
60; Baltimore & O. R Co. t. Lafferty, » See § 43.
Vou 1 — 19
290 COMPENSATION. [§ 100.
value or definite rule.^ This is justified not only on the
ground that the wrong was wilful or malicious, but on certain
considerations which emphasize the distinction between un-
certain damages caused by torts and by breaches of contracts
generally. Contracts are made only by the mutual consent
of the respective parties; and each party for a consideration
thereby consents that the other shall have certain rights as
against him which he would not otherwise possess. In enter-
ing into the contract the parties are supposed to understand
its legal effect, and consequently the limitations which the law
for the sake of certainty has fixed for the recovery of dam-
ages for its breach. If not satisfied with the risk which these
rules impose the parties may decline to contract or may fix
their own rule of damages, when in their nature the amount
must be uncertain. Hence when suit is brought upon such
contract and it is found that the entire damages actually sus-
tained cannot be recovered without a violation of such rules,
the deficiency is a loss the risk of which the party voluntarily
assumed on entering into the contract for the chance of bene-
fit or advantage which it would have given him in case of
performance. His position is one in which he has voluntarily
placed himself and in which, but for his own consent, he
could not have been placed by the wrongful act of the oppo-
* A husband who properly demeans ing person was pure, and the appear-
himself is entitled to the society and ances seemed to indicate necessity
assistance of his wife against all the for interference, there can be no re*
world. Whoever deprives him tliereof covery, though nooccasion for inter-
is liable to an action. In estimating ference really existed. Much will
damages each case must be deter- be forgiven the parents of a wife
mined by the circumstances attend- who honestly interfere in her behalf,
ing it, and the motive of the inter- though the interference was wholly
vening person must be ever kept in unnecessary and may have been det-
view. The cases may properly be rimental to her interest and happi-
divided into two classes: One, where ness as well as that of her husband;
a villain interferes for the purpose of still, where the motive is not protec-
seduction, or the sole ground of in- tion of the wife, but hatred and
terference is malice; the other, where ill-will of the husband, it is no an-
f riends, usually parents, interfere for swer to his action for such interfer-
the protection of the wife and the ence that the offenders were his
offsprii.g, if any. In the first class, wife's parents. Holtz v. Dick, 42
the husband, if without fault, is al- Ohio St. 23, 51 Am. Rep. 791, per
ways entitled to damages: in the Okey, J.
latter, if the motive of the interven-
§ 100.] elem2;nts of damage. 291
site party alone. Again, in a majority of cases upon contract
there is little dilficulty from the nature of the subject in find-
ing a rule by which substantial compensation may be readily
estimated; and it is only in those cases where this cannot be
done and where, from the nature of the stipuhitions or the sub-
ject-matter, the actual damages resulting from a breach are
more or less uncertain in their nature or dillicult to be [1G-]
shown with accuracy by the evidence under any definite rule,
that there can be any great failure of justice by adhering to
such rule as will most nearly approximate to the desired result.
And it is precisely in these classes of cases that the parties
have it in their power to protect themselves against any loss
to arise from such uncertainty by estimating their own dam-
ages in the contract itself, and providing for themselves the
rules by which the amount shall be measured in case of a
breach; and if they neglect this they may be presumed to have
assented to such damages as may be measured by the rules
which the law, for the sake of certainty, has adopted. None
of these considerations have any bearing in an action purely
of tort. The injured party has consented to enter into no re-
lation to the wrong-doer by which any hazard of loss should
be incurred; nor has he received any consideration or chance
of benefit or advantage for the assumption of such hazard;
nor has the wrong-doer given any consideration or assumed
any risk in consequence of any act or consent of his. The in-
jured party has had no opportunity to protect himself by con-
tract against any uncertainty in the estimate of damages; no
act of his has contributed to the injury; he has yielded noth-
ing by consent; and, least of all, has he consented that the
wrong-doer might take or injure his property or deprive him
of his right for such sum as, by the strict rules which the law
has established for the measurement of damages in actions
upon contract, he may be able to show with certainty he has
sustained by such taking or injury. Especially would it be
unjust to presume such consent and to hold him to the recov-
ery of such damages only as may be measured with certainty
by fixed and definite rules when the case is one which, from
its ver}'^ nature, affords no elements of certainty by which the
loss he has actually suffered can be shown with accuracy by
any evidence of which the case is susceptible. Nor is he to
292 COMPENSATION. [§ 101.
blame because the case happens to be one of this character,
lie has had no choice, no selection. The nature of the case is
sucli as the wrong-doer has chosen to make it; and upon every
consideration of justice he is the party who should be made
to sustain all the risk of loss which may arise from the uncer-
tainty pertaining to the nature of the case and the difficulty
[163] of accurately estimating the results of his own wrongful
act.'
§101. How motive aifects conseiiuences of confusion of
goods. In case of a wrongful confusion of goods, that is, where
one fraudulentl}'^ or wrongfully intermixes his money, corn or
hay with that of another man, without his approbation or
knowledge, or casts gold in like manner into another's melting
pot or crucible, the law, to guard against fraud, allowed no
remedy in such case according to the older authorities, but
gave the entire property without any account to him whose
original domain was invaded.^ There is a tendency in the later
adjudications, however, to confine the forfeiture to cases where
otherwise the innocent owner of property so mixed cannot be
adequately protected. It accords with the preceding views to
charge the party whose fraudulent or tortious act caused the
confusion with the duty of separating and identifying his own
and with any loss resulting from his inability to do so.' And
greater loss cannot properly be charged to him for the purpose
of compensation. A person is not damnified by mixing his
property in a mass, if from it he can withdraw what will be
substantially and to all intents and purposes identical with it;
and where a man can obtain all that he is entitled to, in order
to be in full enjoyment of his own, the law should not bestow
[164] on him the property of another.^ A reasonable rule,
1 Per Christiancy, J., in Allison v. 433; Claflin v. Continental Jersey
Chandler, 11 Mich. 552; Sharon v. Works, 85 Ga. 27, 11 S. E. Rep. 721;
Mosher, 17 Barb. 518; Guille v. Swan, First Nat. Bank v. Schween, 127 III.
19 Johns. 381, 10 Am. Dec. 234; Cats 573, 11 Am. St. 174, 20 N. E. Rep. 681;
V. Gate, 50 N. H. 144, 9 Am. Rep. 179. Franklin v. Gumersell, 9 Mo. App. 84
2 2 Black. Com. 404; Warde v. Eyre, SHolloway Seed Co. v. City Nat.
2 Bulst. 323; Ryder v. Hathaway, 21 Bank. 92 Tex. 187, 47 S. W. Rep. 95.
Pick. 298; Willard v. Rice, 11 Met. < Per Campbell, J., in Stephenson v.
493, 45 Am. Dec. 296; Hesseltine v. Little, supra: Hart v. Ten Eyck, 2
Stockwell, 30 Me. 237, 50 Am. Dec. Johns. Ch. 62; Roth v. Wells, 29 N.
637; Stephenson v. Little, 10 Mich. Y. 486; Nowlen v. Colt, 6 Hill, 461,
§ 101.]
ELEMENTS OF DAMAGE.
293
which has much authority to support it, is that one who has
confused his own property with that of other persons shall lose
it when there is a concurrence of these two things: first, that
he has fraudulently caused the confusion; and second, that the
rights of the other party after the confusion are not capable
otherwise of complete protection.^ But the principle of for-
feiture, except when necessary to save the rights of the inno-
cent owner, if there has been a fraudulent admixture, cannot
be said to be eliminated from our jurisprudence.^ It is a doc-
41 Am. Dec. 756; Samson v. Rose, 65
N. Y. 411; Brackenridge V. Holland,
2 Blackf. 377, 20 Am. Dec. 123; King-
gold V. Ringgold, 1 Har. & Gill, 11,
18 Am, Dec. 250; Bryant v. Ware, 30
Me. 295; Stearns v. Raymond, 26
Wis. 74; Single v. Barnard, 29 id.
463; Scliulenburg v. Harriman, 2
Dill. 398, 21 Wall. 44; The Distilled
Spirits. 11 Wall. 356; Robinson v.
Holt, 39 N. H. 557, 75 Am. Dec. 233;
Stuart V. Phelps, 39 Iowa, 14; Moore
V. Bowman, 47 N. H. 494; Goodenow
V. Snyder, 8 G. Greene, 599; Wood v.
Fales. 24 Pa. 246, 64 Am. Dec. 655;
Wooley V. Campbell, 37 N. J. L. 163;
Bond V. Ward, 7 Mass. 123, 5 Am.
Dec. 23; Smith v. Sanborn, 6 Gray,
134; Armstrong v. McAlpin, 18 Oliio
St. 184; Holbrook v. Hyde, 1 Vt. 286;
Treat v. Barber, 7 Conn. 274; Tufts
V. McClintock, 28 Me. 424, 48 Am.
Dec. 501; Colwill v. Reeves, 2 Camp.
575; Albee v. Webster, 16 N. H. 362;
Weil V. Silverstone, 6 Bush, 698;
Wellington v. Sedgwick, 12 Cal. 469;
Shumway v. Rutter, 8 Pick. 443, 19
Am. Dec. 340; Ames v. Mississippi
Boom Co., 8 Minn. 467; Bartlett v.
Hamilton, 46 Me. 435: Leonard v.
Belknap, 47 Vt. 602; Wyly v. Bur-
nett, 43 Ga. 438; Griffith v. Bogardus,
14 Cal. 410; Frey v. Deraarest, 16 N.
J. Eq. 236; Elmer v. Loper, 25 id.
475; Alley v. Adams, 44 Ala 609;
Adams v. Wildes, 107 Mass. 123;
Cochran v. Flint, 57 N. H. 514; Gray
V. Parker, 38 Mo. 160; Fowler v. Hoff-
man, 31 Mich. 215; Fellows v.Mitchel,
1 P. Wms. 81; Taylor v. Plumer, 3
M. & S. 562; 2 Kent's Com. 365; Reed
V. King, 11 Ky. L. Rep. 615, 12 S. W.
Rep. 772; Stone v. Quaal,36 Minn. 46,
29 N. W, Rep. 326; Osborn v. Cargill
Elevator Co., 62 Minn. 400, 64 N. W.
Rep. 1135; Blodgett v. Seals, 78 Miss.
522, 29 So. Rep. 852; Clark v. William
Munroe Co., 127 Mich. 300, 86 N. W.
Rep. 816.
lid.; Wright v. Skinner. 34 Fla.
453, 16 So. Rep. 335, citing the text;
Claflin V. Beaver, 55 Fed. Rep. 576.
2 Osborne v. Cargill Elevator Co.,
62 Minn. 400, 64 N. W. Rep. 1135; Hal-
loway Seed Co. v. City Nat. Bank, 93
Tex. 187, 47 S. W. Rep. 95; Ryder v.
Hathaway, 21 Pick. 298; The Idaho,
93 U. S. 575; Jenkins v. Steanka, 19
Wis. 126, 18 Am. Dec. 675; Root v.
Bonnema. 22 Wis. 539; Ste|iheuson v.
Little, 10 Mich. 433; Johnson v. Bal-
lon, 25 Mich. 460; Willard v. Rice. 11
Met. 493,45 Am. Dec. 226; Lupton v.
White, 15 Ves. 442; Wingate v.
Smith, 20 Me. 287; Dole v. Olmstead,
36 111. 150, 85 Am. Dec. 397; Loomis
V. Greer, 7 Me. 386; McDowell v. Ris-
sell, 37 Pa. 164; Beach v. Schmultz,
20 111. 185; Jewett v. Dringer, 30 N.
J. Eq. 291; Wooley v. Campbell, 37
N, J. L. 163; Claflin v. Continental
Jersey Works, 85 Ga. 27, 11 S. E. Rep.
721; First Nat. Bank v. Schween, 127
111. 573, 11 Am. St. 174, 20 N. E. Rep.
681; Franklin v. Gumersell, 9 Mo.
A pp. 84.
^Oi COMrENSATION. [§ 102.
trine to prevent fraud.^ The general rule which favors the in-
nocent when there has been a confusion of property so that it
cannot be separated according to ownership should not be ap-
plied to the prejudice of the rights of third parties if full
protection can be given to the innocent person whose goods
have been thus wrongfuU}'- used.^
§ 102. Where property sued for improved by Tvrong-doer.
In another class of cases, closely analogous to those relating
to confusion of goods, where a tortious taker of property has
by his labor enhanced its value, the owner's title not being
divested, the latter may retake the same, subject to certain
limitations, in its improved condition.^ He is precluded from
[1G5] exercising this right when property so taken has lost its
identity. But the change which will be deemed to destroy
identity where the wrong-doer took the property in good faith,
supposing it to be his own, or through some other mistake or
inadvertence, will not so destroy it as to determine the owner's
title and put him to his action for damages, if the taking was
an intentional wrong. While the authorities are in great con-
fusion on this subject, there is a manifest discrimination against
the wilful wrong-doer. By the civil law and the common law
alike the owner of the original materials is precluded from fol-
lowing and reclaiming the property after it has undergone a
transmutation which converts it into an article substantially
different,'' as by making wine out of another's grapes, oil from
his olives, or bread from his wheat; but the product belongs
to the new operator, who is only to make satisfaction to the
former proprietor for the materials converted.^ And a very
large increase in the value of the property by labor has been
1 Wooley V. Campbell, 37 N. J. L. Cal. 574, 76 Am. Dec. 551 ; Moody v.
163. Whitney, 34 Me. 563; Chandler v.
2 National Park Bank v. Goddard, Edson, 9 Johns. 362; Riddle v. Driver,
9 N. Y. Misc. 626, 30 N. Y. Supp. 417. 12 Ala. 590; Hyde v. Cookson, 21
See Hall V. Hagardine-McKittrick Barb. 92; Dunn v. Oneal, 1 Sneed, 106,
Dry Goods Co., 23 Tex. Civ. App. 149, 60 Am. Dec. 140; Silsbury v. McCoon,
55 S. W. Rep. 747. 3 N. Y. 379, 53 Am. Dec. 753.
3 Final v. Backus, 18 Mich. 218; < 2 Bl. Com. 404.
Brown v. Sax, 7 Cow. 95; Bennett v. ^jfj, ; Wether bee v. Green, 22 Mich.
Thompson, 13 Ired. 146; Smith v. 311, 7 Am. Rep. 653; Forsyth v.
Gonder, 22 Ga. 353; Curtis v. Groat, Wells, 41 Pa. 291, SO Am. Dec. 617;
6 Johns. 168; Halleck v. Mixer, 16 Swift v. Barnum, 23 Conn. 523.
§ 102.]
ELEMENTS OF DAMAGE.
29:
held to have the same effect in favor of such an involuntary
wronf^-doer.' The law allows liim in such cases to make title
by his own wrong, it not being- wilful, to prevent his suffering
the loss of his labor, and not because of the supposed impossi-
bility of tracing the original materials into the more valuable
property made therol'roui. The authorities, however, are so
much in conflict that no test can be deduced from them by
by which it can be determined what change will suffice to
destroy the identity of property so as to prevent the owner
from retaking it. It is not enough that trees are converted
into saw-logs or timber,' into rails or posts,^ into railroad [160]
ties, staves, fire wood,* or shingles;^ that saw-logs are made into
boards,^ fire wood,'' or coal.^
• Wetherbee v. Green, supra.
2PieiTepont v. Barnard, 5 Barb.
364; Synies v. Oliver, 13 Mich. 9;
Grant v. Smith, 26 id. 201; Gates v.
Rifle Boom Co., 70 id. 309, 38 N. W.
Rep. 245; Arpin v. Burch, 68 Wis. 619,
32 N. W. Rep. 681.
3 Snyder v. Vaux, 2 Rawle, 423, 21
Am. Dec. 466; Millar v. Humphries,
2 A. K. Marsh. 446.
4 Smith V. Gonder, 22 Ga. 353;
Heard v. James, 49 Miss. 236; Brewer
V. Fleming, 51 Pa. 102; Moody v.
Whitney, 34 Me. 563.
5 Betts V. Lee, 5 Johns. 348; Chand-
ler V. Edson, 9 id. 362.
<> Brown v. Sax, 7 Cow. 95; Baker
V. Wheeler, 8 Wend. 505; Davis v.
Easley, 13 111. 192.
"' Eastman v, Harris, 4 La. Ann. 193.
8 Riddle v. Driver, 12 Ala, 590; Cur-
tis V. Groat, 6 Johns. 168.
In Silsbury v. McCoon. 3 N. Y. 386,
53 Am. Dec. 753, it is said: "In one
case (5 Hen. 7, fol. 15) it is said that the
owner may reclaim the goods so long
as they may be known, or, in other
words, ascertained by inspection.
But this, in many cases, is by no
means the best evidence of identity;
and the examples put by way of il-
lustration serve rather to disprove
than to establish the rule. The court
say that if grain be made into malt
it cannot be reclaimed by the owner
because it cannot be known. But if
cloth be made into a coat, a tree into
squared timber, or iron into a tool, it
may. Now, as to the cases of the
coat and the timber, they may or may
not be capable of identification by
the senses merely; and the rule is
entirely uncertain in its application;
and as to the iron tool, it certainly
cannot be identified as made of the
original material, without other evi-
dence. This illustration, therefore,
contradicts the rule. In another case
(Moore's Rep. 20) trees were made
into timber, and it was adjudged
that the owner of the trees might re-
claim the timber, 'because the greater
part of the substance remained.' But
if this were the true criterion it
would embrace the cases of wheat
made into bread, milk into cheese,
grain into malt, and others which are
put into the books as examples of a
change of identity. Other writers
say that when the thing issochanged
that it cannot be reduced from its
new form to its former state its iden-
tity is gone. But this would include
many cases in which it has been said
by the courts that the identity is not
gone; as the cases of leatlier made
206
COMPENSATION.
[§ 103.
[167] § 103. Same subject. There is not the same difficulty
under the authorities in determining when the identity of the
property is lost where the tortious taking and conversion
were fraudulent. In such a case it is well settled in New Tork
into a garment, logs rcade into lum-
ber or boards, cloth into a coat, etc.
There is therefore no definite settled
rule on this question. . . . There
is no satisfactory reason why the
wrongful conversion of the original
materials into an article of a differ-
ent name or a different species should
work a transfer of the title from the
true owner to the trespasser, pro-
vided the real identity of the thing
can be traced by evidence. The dif-
ficulty of providing the identity is not
a good reason. It relates merely to
the convenience of the remedy, and
not at all to the right. There is no
more difficulty or uncertainty in
proving that the whisky in question
was made of Wood's corn than there
would have been in proving that the
plaintiff had made a cup of his gold,
or a tool of his iron; and yet, in those
instances, according to the English
cases, the proof would have been un-
objectionable. In all cases where the
new product cannot be identified by
mere inspection the original mate-
rials must be traced by the testimony
of witnesses from hand to hand
through the process of transforma-
tion."
Cooley, J., in Wetherbee v. Green,
23 Mich. 311, 7 Am. Rep. 6o3, said of
making out the identity by the senses,
that it is obviously a verj' unsatis-
factory test, and in many cases would
wholly defeat the purpose which the
law has in view in recognizing a
change of title in any of these cases.
That purpose is not to establish any
arbitrary distinctions, based upon
mere physical reasons, but to adjust
the redress afforded to the one party,
and the penalty inflicted upon the
other, as near as circumstances will
permit, to the rules of substantial
justice. It may often happen that
no difficulty may be experienced in
determining the identity of a piece
of timber which has been taken and
built into a house; but no one dis-
putes that the right of the original
owner is gone in such a case. A par-
ticular piece of wood might perhaps
be traced without trouble into a
church organ or other equally val-
uable article: but no one would de-
fend a rule of law which, because the
identity could be determined by the
senses, would permit the owner of
the wood to appropriate a musical
instrument, a hundred or a thou^nd
times the value of the original ma-
terials, when the party who, under
like circumstances, has doubled the
value of another man's corn by con-
verting it into malt is permitted to
retain it and held liable for the orij-
inal value only. Such distinctions in
the law would be without reason and
could not be tolerated. When the
right to the improved article is the
point m issue, the question, how
much the property or labor of each
has contributed to make it what it
is, must always be one of first im-
portance. The owner of a beam built
into the house of another loses his
property in it because the beam is
insignificant in value or importance
as compared to that to which it has
become attached, and the musical
instrument belongs to the maker
rather than to the man whose timber
was used in making it, — not because
the timber cannot be identified, but
because in bringing it to its present
condition the value of the labor has
swallowed up and rendered insignifi-
cant the value of the original mate-
§ 100.]
ELEMENTS OF DAMAGE.
297
that the wrong-doer is not permitted to acquire property in
the goods of another by any change wrought in them by bis
labor or skill, however great the change may be, provided it
can be proven that the improved article was made from [168]
the original material.^ The action was trover in which this
doctrine was first lield, and the value of whisky was recov-
ered by the owner of the corn from which it was made. There
is a general inclination elsewhere to find some middle ground
upon which the rights of the owner may be maintained, and
yet moderate and adjust the consequences of even a wilful
trespass more nearly to the standard of compensation, espe-
cially where there is not an actual taking of the property and
the owner by choice or otherwise seeks to recover the value
in damages.'^ And if an actual retaking is impossible or [109]
rials. The labor, in the case of the
musical instrument, is just as much
the principal thing as the house is in
the other case instanced; the timber
a Impropriated is in each case compar-
atively unimportant. No test which
satisfies the reason of the law can be
applied in the adjustment of the
question of title to chattels by ac-
cession, unless it keeps in view the
circumstance of relative values.
When we bear in mind the fact that
what the law aims at is the accom-
plishment of substantial equity, we
shall readily perceive that the fact
of the value of the materials having
been increased a hundred fold is of
more importance in the adjustment
tlian any chemical change or me-
chanical transformation which, how-
ever radical, neither is expensive to
the party making it nor adds mate-
rially to the value." See Silsbury v.
McCoon. 4 Denio, 332; Herdic v.
Young, 55 Pa. 176, 93 Am. Dec. 739;
Single V. Schneider, 30 Wis. 570.
' Silsbury v. McCoon, sttpra; Baker
V. Hart, 52 Hun, 363, 5 N. Y. Supp.
345; Guckenheimer v. Angevine, 81
N. Y. 394. See Silsbury v. McCoon,
(> Hill, 425, 41 Am. Dec. 753, 4 Denio,
•332; Hyde v. Cookson, 21 Barb. 92.
2 In Single v. Schneider, 24 Wis.
301, Paine, J., said: "There is proof
tending to show a mistake as to a
part (of the timber tortiousiy cut by
defendants on the plaintiff's land).
. . . They are not to be regarded,
therefore, as wilful trespassers. Upon
these facts it seems contrary to the
dictates of natural justice that the
plaintiff should be allowed to wait
quietly until the defendants had
manufactured tlie logs into lumber,
enhancing their value four or five
fold, and then recover against them
that entire value. True, it is gener-
ally i-ecognized that a wrong-doer
cannot by the change of another's
property change the title. The
owner may pursue it and reclaim it
specifically by whatever remedy the
law gives him for that purpose. If
he gets it, it is his. But the appar-
ent injustice of allowing one to avail
himself of the labor and money of
another, in cases similar to this, has
led to a modification of this strin-
gent rule of ownership, wherever the
question is resolved into one of mere
comjiensation in money for what-
ever injury the party may have
br.lfered." This case came before the
court again (30 Wis. 570), when it
29S
COMrENSATION,
[§ 103.
does not take place, and the question is one of mere compeK'
sation for the property, the law is not quite settled that the
improved value may be recovered even of the party who in-
tentionally converted it.^ In such actions the question whether
the property has so changed as to be no longer capable of
appeared and was found by the jury
that a part of the logs sued for in the
action, which was replevin, were
cut wilfully, and Cole, J., said:
"The counsel for the defendant con-
tends that, so far as the measure of
damages is concerned, it is quite im-
material whether the logs were cut
intentionally or through mistake;
that the damages given in law as
compensation for an injuiy should
be precisely commensurate with the
injury, neither more nor less; and
that the plaintiff is not entitled to
recover the value of the property in
its improved state under the circum-
stances of this case. He concedes
that if there was anything tending
to show that the trespass was wan-
ton or malicious, committed under
circumstances of insult or aggrava-
tion, then, upon the authorities, ex-
emplai-y damages might be allowed
in the discretion of the jury, which
might exceed or fall below the value
of the property enhanced by the
labor of the defendants. But he
claims that when a person, though
intentionally, cuts pine logs upon
the wild, unoccupied land of another,
to say as a matter of right the owner
shall recover the enhanced value of
the property manufactured into
lumber or into the most expensive
furniture is a rule contrary to the
principles of natural justice, and not
in accordance with the doctrine of
the common law. We are inclined
to adopt this view of the matter, al-
though we are aware that by so doing
we lay down a rule in conflict with
some adjudications which may be
found. But it seems to us that if the
owner is entirely indemnified for the
injury he has sustained, it is quite
immaterial whether the logs were
cut by mistake or intentionally, un-
less in the latter case the trespass
was of such a character as to make
the doctrine of exemplary damages
applicable. This was the view ex-
pressed by Mr. Justice Paine in Wey-
mouth V. Chicago & N. R. Co., 17
Wis. .550-555, 84 Am. Dec. 763, and it
seems to us that it is consonant with
sound principle and natural justice.
It is true that was an action of trover
and this is an action of replevin.
But here the defendants gave the
undertaking under the statute and
retained possession of tlie property.
The judgment was in the alternative
for the delivery of the property to the
plaintiff, in case delivery could be
had, or for its value. The plaintiff
does not really expect to recover the
specific property, and therefore there
is no valid reason for a distinction
between this case and that of trover,
as regards the rule of damages; it
should be the same in both cases."
He restates with approbation the
views of Bronson, C. J., in Silsbury
V. McCoon, 4 Denio, 833. Herdic v.
Young. 55 Pa. 176, 93 Am. Dec. 739.
lid.; Moody v. Whitney, 34 Me.
563; Reid v. Fairbanks, 14 C. B. 729;
Cushing V. Longfellow, 26 Me. 306.,
If the owner brings trespass or
trover instead of replevin he elects-
to take damages according to the
measure awarded in such actions —
a just and fair compensation for
his property as it was before the
ti'espass. Gates v. Rifle Boom Co.,.
70 Mich. 309, 38 N. W. Rep. 24.5.
§ 103.]
ELEMENTS OF DAMAGE.
299
identification is not important. The wrong-doer who has taken
and converted another's property through mistake is charge-
able with its value at the time of conversion; and the wilful
wrong-doer by that standard, or the value at some intermedi-
ate point, or the final value of the improved article, according
to the views of the particular court.^ The liability of the in-
nocent purchaser of property from a wilful trespasser whose
labor has improved it is the value of the property when it was
taken from the original owner. The defendant in such a case
is not the proper subject of punishment; the plaintiff's loss is
no greater than it would have been if the tresj)asser had been
free from intentional wrong; nor is the defendant's culpability
increased thereby .^ To allow the owner of the original mate-
rials to recover the value increased by the subsequent [170]
labor of the wrong-doer is to antagonize two fundamental
rights: the right of property, and the right to due compensa-
tion for injury. The law gives its sanction to the former by
1 ajartin v. Porter. 5 M. & W. 351;
MorgMii V. Powell, 3 Q. B. 278; Llynvi
Co. V. Brogden, L. R. 11 Eq. 188; Maye
T. Tappan, 23 Cal. 306; GoUer v. Fett,
30 Cal. 481 : Nesbitt v. St. Paul L. Co.,
21 Minn. 491; Foote v. Merrill, 54 N.
H. 490. 20 Am. Rep. 151; Adams v.
Blodgett, 47 N. H. 219; Dresser Manuf.
Co. V. Waterston, 3 Met. 9; Stock-
bridge Iron Co. V. Cone Iron W^orks,
103 Mass. 80; Winchester v. Craig, 33
Mich. 205; Bennett v. Thompson, 13
Ired. 14fi: Smitii v. Gonder, 22 Ga.
353; Wood v. More wood, 3 Q. B. 440.
note; Hyde v. Cookson, 21 Barb. 92;
Heard v. James. 49 Miss. 289; Riddle
V. Driver. 12 Ala. 590; Greeley v. Stil-
son, 27 Mich. 153. See Isle Royale
M. C. Co. V. Horton, 37 Mich. 332.
2 Railroad Co. v. Hutchins, 37 Ohio
St. 282, 32 id. 571.
And if he purchases part only of
the property converted his liability
is limited to the value of such part.
Moody V. Whitney, 34 Me. 563.
Where minerals are mined fraud-
ulently the trespasser is liable for
their value after they are severed
from the earth, without any deduc-
tion for the expense of mining.
Martin v. Porter, 5 M. & W. 351;
Barton Coal Co. v. Cox, 39 Md. 1, 17
Am. Rep. 525; Coleman's Appeal, 62
Pa. 252; Ege v. Kille, 84 id. 333: the
last two cases are distinguished and
limited in Fulmer's Appeal, 128 id.
24, 15 Am. St. 662, 18 Atl. Rep. 493.
If the mining is done inadvertently
or under a boi^a fide belief of right
the damages are the fair value of
the mineral as if tiie mine had been
purchased. Wood v. Morewood, 3
Q. B. 440, note; Hilton v. Woods. L.
R. 4 Eq. 433; Forsyth v. Wells, 41 Pa.
291. 80 Am. Dec. 617. In an action
between tenants in common, plaint-
iff being out of, and defendant in,
possession, the damages for working
an opened and developed mine are
the fair marketable value of the
mineral in place — the royalty due
for the privilege of removing and
manufacturing it in view of all the
special circumstances. Fulmer's Ap-
peal, supra; Neel's Appeal, 3 Penny.
(Pa.) 66.
300 COMPENSATION. [§ 103.
allowing the owner to retake his property by his own act or
by the legal process of replevin if it still exists and can be
found. Certain changes made in it or its annexation to some-
thing else which the law regards as the principal, as to certain
wrong-doers at least, have been accepted as putting an end to
the owner's right to retake the property though it may in fact
exist, or what was obtained from or for it is still in the hands
of the wrong-doer and ascertainable by testimony. There is no
more necessity for severe consequences to discourage trespass
or tortious conversion of propert}' which the wrong-doer im-
proves than where he destroys it or retains it in the same con-
dition. The owner is entitled to no greater measure of repa-
ration in the one case than in the other. The wrong-doer is no
more culpable when he improves the property than when he
does not. Therefore, since there is a recognized though in-
definite limit to the owner's right to reclaim his property with
any accession, and this limit is short of the ultimate point to
which testimony would enable him to trace it, there is no
more violation of the fundamental right of property by fixing
that limit at the point of the first change than at any subse-
quent one. But when the redress which is given to the owner
in his suit is the value or damages to compensate him for the
wrong of depriving him of his property, the question is not
one of allowing him to retake it, but solely of compensation
for the loss of it. What is due compensation in such a case is
to be ascertained on the same principles as in all other cases:
the injured party is to be made good for the loss he has sus-
tained. If his corn has been taken he is to be compensated
for corn; he is no more entitled to have its value estimated by
the amount of whisky which has been, than by the amount of
whisky that can be, made from it, with no deduction for the
manufacture, or than the amount the defendant has subse-
[171] quently sold it for in consequence of the general appre-
ciation of the commodity.^
1 Railroad Co. v. Hutchins, 37 Ohio judgment. He says: "The question
St. 282, 294 is not, as it lias been sometimes art-
The language of Bronson, C. J., in fully put, whether the common law
the reverred case in New York (Sils- will allow the owner to be unjustly
bury V. McCoon, 4 Denio, 336, 337 1, is dej^rived of his property, or will give
replete with good sense and sound encouragement to a wilful tres-
f
§ 104.]
ELEMENTS OF DAMAGE.
301
§ lOi. Distinetious in the matter of proof. In [172]
cases of tort the principles governing the measurement oi
compensation are not, as a general thing, different from those
which apply in actions upon contract if the tort be not wilful ;
there are, as we have just seen, some exceptions; and in cer-
tain cases within the influence of considerations mcntionetl in
a preceding section,^ where the injury is of such a nature or
committed under such circumstances that the damaires, or
some part of them, cannot be ascertained by any definite or
certain proof, the investigation is conducted by such rules in
respect to the quantity, quality and burden of proof that the
injured party may suffer no irreparable loss from the stealth,
secrecy or complexity of the wrong. The purpose of the law
is thus facilitated. Lord Brougham interrogatively expressed
it:^ "When did a court of justice, whether administered ac-
passer. It will do neither. But in
protecting the owner and punishing
the wrong-doer, our law gives such
rules as are capable of practical ap-
plication, and are best calculated to
render exact justice to both parties.
Tiie proper inquiry is, in what man-
ner, and to what extent, should the
trespasser be punished; and what
should be the kind and measure of
redress to the injured party. A
trespasser who takes iron ore and
converts it into watch springs should
not be hanged; nor should he lose
the whole of the new product.
Either punishment would be too
great. Nor should the owner of the
ore have the watch springs; for it
would be more than a just measure
of redress. Our law has, therefore,
wisely provided other remedies and
punishments. The owner may retake
his ore, either with or without pro-
cess, so long as its identity remains;
and may also recover damages for
the tortious taking. Or, without re-
possessing himself of the property,
he may have an action of trespass in
which the jury will not fail to give
the proper damages. But the law
will not allow the owner to wa:t
until the ore has been converted into
different species of property and then
seize the new product, either with or
without process. Nor is the value
of the new product the measure of
damages, if he bring an action of
trespass or trover. Although there
will not be many cases where the
difference between the value of the
rude material and the new product
will be so striking as in the case
which has been mentioned, yet, in
almost every instance where the
chattel has been converted into a
different species of property, the
value of tiie new product will be
more than the trespasser ought to
pay or the owner of the chattel ought
to receive. . . . As an original ques-
tion. 1 think the owner should either
reclaim the property before the new
possessor has greatly increased its
value, either by bestowing his labor
and skill upon it. or by joining it to
other materials of his own; or else
that he should be restricted to a
remedy by action for the damages
which he ha< sustained."
i§100.
2 In Docker v. Somes, 2 Myl. & K.
674,
302 COMPENSATION. [§ 105.
cording to the rules of equity or law, ever listen to a wrong-
doer's argument to stay the arm of justice grounded on the
steps he himself had successfully taken to prevent his iniquity
from being traced? Rather, let me ask, when did any wrong-
doer ever yet possess the hardihood to plead in aid of his es-
cape from justice the extreme difficulties he had contrived to
throw in the way of pursuit and detection, saying, you had
better not make the attempt, for you will find I have made the
search very troublesome. The answer is, 'the court will try.' "
The intrinsic nature of many wrongs precludes any estimate
by witnesses of damages upon the items which a jury may
consider, such as bodily or mental pain, disfigurement or im-
paired faculties; but the jury in many cases involving ele-
ments of this nature may be aided by proof of extrinsic facts
showing the status of the injured part3^ Either a tort or a
breach of contract which destroys or injures anything of a
lawful nature belonging to another is a wrong and injury for
which, in some reasonable and practicable manner, the law
will enable the injured party to measure and recover adequate
compensation. An}'- such act which directly and injuriously
affects an established business, as by destruction of the build-
[173] ing in which it is conducted, obstructing the approaches
necessary to it, fraudulently diverting custom where there
was a duty to maintain the good will, by enticing away serv-
ants, or by slander or the breach of any agreement of which
the profits of a business are the consideration or inducement,
may require the estimate of a very uncertain loss; but the
party whose misconduct or default has necessitated the in-
quir}'' cannot object to it on the ground of the uncertainty,
though a court will, in such a case, proceed with caution and
will not award damages upon mere conjecture.^
§ 105. Yaliie of property. The value of property consti-
tutes the measure or an element of damages in a great variety
of cases both of tort and of contract, and where there are no
such aggravations as call for or justify exemplary damages, in
actions in which such damages are recoverable, the value is
ascertained and adopted as the measure of compensation for
being deprived of the property the same in actions of tort as
1 Shoemaker V. Acker, IIG Cal. 239, 48 Pac. Rep. 63.
§ l^'^-]
ELEMENTS OF DAMAGE.
303
in those upon contract. In both cases the value is the legal
and fixed measure of damages, and there is no discretion with
the jury. It is so between vendor and vendee on the failure
of either to fulfill a contract of sale and purchase; between
emploj'er and employee on a contract for the manufacture of
specific articles; where there is a departure from instructions
by an agent or a loss thr;mgh his negligence or misconduct,
or that of a bailee or trustee, as well as where there is a
tortious taking or conversion by one standing in no contract
relation to the owner. And, moreover, the value is fixed in
each instance on similar considerations at the time when, by
the defendant's fault, the loss culminates.^ And a party [174]
1 Watson V. Loughran, 112 Ga. 837,
38 S. E. Rep. 82; Western Union Cold
Storage Ck). v. Ermeling, 73 111. App.
394; Sanderson v. Read. 75 id. 190,
quoting the text; Bank of Montgom-
ery V. Reese, 26 Pa. 148; Owen v.
Routh, 14 C. B. 327: Day v. Perkins,
3 Sandf. Ch. 359; Shaw v. Holland, 15
M. & W. 136; Rand v. White Mts. R,
Co., 40 N. H. 79; Piukerton v. Man-
chester & L. R. Co.. 42 N. H. 424: Bull
V. Douglass, 4 Munf. 303, 6 Am. Dec.
518: Enders v. Board of Public Works,
1 Gratt. 364; Dana v. Fiedler, 12 N.
Y. 48, 62 Am. Dec. 130; Clement &
H. Manuf. Co. v. Meserole. 107 Mass.
362;'Danforth v. Walker, 37 Vt. 239;
Girard v. Taggart, 5 S. & R, 19, 5 S.
& R. 539, 9 Am. Dec. 327; Ganson v.
Madigan, 13 Wis. 67; Hale v. Trout,
35 Cal. 229; Springer v. Berry, 47 Me.
330; Dustan v. Mc Andrew, 44 N. Y.
72; Marshall v. Piles, 3 Bush, 249;
Camp V. Hamlin, 55 Ga. 259; Boze-
man v. Rose. 40 Ala. 212; Grand
Tower Co. v. Phillips, 23 Wall. 471;
Underhill v. Galf, 48 111. 198; Bick-
nall V. Waterman, 5 R. I. 43; West v.
Pritchard, 19 Conn. 212; Gregg v.
Fitzhugh. 36 Tex, 127; Bush v.
Holmes, 53 Ma 417; Rider v. Kelley,
•SI Vt. 268. 76 Am. Dec. 176; Kribs v.
Jones, 44 Md. 396; Moorehead v. Hyde,
38 Iowa, 382; WJiitesett v. Forehand,
79 N. C. 230; Bell v. Cunningham, 3
Pet. 69: Farwell v. Price, 30 Mo. 587;
Schmertz v. Dwyer, 53 Pa. 335; Hein-
nemann v. Heard, 50 N. Y. 27; Han-
cock V. Gomez, id. 668; Parsons v.
Martin, 11 Gray. Ill: Scott v. Rogers,
31 N. Y. 076; Stearin e, etc. Co. v.
Heintzmann, 17 C. B, (N. S.) 56;
Hutchings v. Ladd, 16 Mich. 494;
Suydam v. Jenkins, 3 Sandf. 641;
Kennedy v. Whitwell, 4 Pick. 466;
Adams v. Sullivan, 100 Ind. 8.
In Ingram v. Rankin, 47 Wis. 406,
32 Am. Rep. 762, 2 N. W. Rep. 755,
the court say: "The rule fixing the
measure of damages in actions for
breaches of contract for the delivery
of chattels, and in all actions for the
wrongful and unlawful taking of
chattels, whether such as would
formerly have been denominated
trespass de bonis or trover, at the
value of the chattels at the time
when delivery ought to have been
made, or at the taking or conversion,
with interest, is certainly founded
upon principle. It harmonizes with
the rule which restricts the plaintiff
to compensation for his loss, and is
as ]ust and equitable as any other
general rule which tiie courts have
been able to prescribe, and lias
greatly the advantage of certainty
over all others."
304 COMPENSATION. [§ 105.
who is entitled to recover and must accept its value in place
of the property itself should always be allowed interest on
that value from the date at which the property was lost or
destroyed or converted. Whether he recovers the value for
the failure of a vendor or bailee to deliver, or by reason of
the destruction, asportation or conversion of the property by
a wrong-doer, interest is as necessary to a complete indemnity
as the value itself.^ The injured party ought to be put in the
same condition, so far as money can do it, in which he would
have been if the contract had been fulfilled or the tort had
not been committed, or the loss had been instantly repaired
when compensation was due.^
1 Watson V. Loughran, 112 Ga. 837, v. Pennsylvania Central R. Co., 49 N.
88 S. E, Rep. 82; Sanderson v. Read, Y. 303; Hamerv. Hathaway, 38 Cal.
75 111. App. 190, quoting the text; 117; Arpin v. Burch, 68 Wis. 619, 32
Chapman v. Chicago, etc. R Co., 26 N. W. Rep. 681.
Wis. 295, 7 Am. Rep. 81 ; McCormick 2 Suydam v. Jenkins, 3 Sandf. 620.
ENTIRETY OF DAMAGES. 305
CHAPTER lY.
ENTIRETY OF CAUSES OF ACTION AND DAMAGES.
Section 1.
general principles.
§ 106. Cause of action not divisibla
107. Present and future damages.
108. What is an entire demand?
109. Entire demand may be severed.
110. Contracts to do several tilings successively or one thing continuously.
111. Items of account.
112. Continuing obligations.
113. Damages accruing subsequent to the action.
114-116. Damage to real property.)
117. Contracts of indemnity.
118. Damage to property and injury to person by same act.
119. What is not a double remedy.
120. Prospective damages.
121. Certainty of proof of future damages.
123. Action for enticing away apprentice, servant or son.
123. Future damages for personal injuries.
124 Only present worth of future damages given.
125. Continuous breach of contract or infraction of rights not an entirety.
126. Continuance of wrong not presumed.
127. Necessity of successive actions.
Section 2.
PARTIES TO sue AND BE SUED,
128. Damages to parties jointly injured entire.
129. Actions under statutes.
130. Must be recovered by person in whom legal interest vested.
181. Not joint when contract apportions legal interest.
132. Implied assumpsit follows the consideration.
133. Effect of release by or death of one of several entitled to entire dam-
ages.
134. Misjoinder of plaintiffs, when a fatal objection.
135. Joinder of defendants; effect of non-joinder and misjoinder.
136. How joint liability extinguished or severed,
137. Principles on which joint right or liability for tort determined.
138. Tortious act not an entirety as to parties injured.
139. General and special owners.
140-142. Joint and several liability for torts.
Vol. I — 20
306
ENTIKETY OF DAMAGES.
[§ 106.
Section 1.
GENERAL PKINCIPLES.
[175] § 106. Cause of action not divisible. A cause of ac-
tion and the damages recoverable therefor are an entirety.
The party injured must be plaintiff, and must demand all the
damages he has suffered or which he will suffer from the in-
jury, grievance or cause of action of which he complains. He
cannot split a cause of action and bring successive suits for
parts because he may not be able at first to prove all the items
of the demand, or because all the damages have not been suf-
fered. If he attempt to do so a recovery in the first suit,
though for less than his whole demand, will be a bar to a sec-
ond action.^ The failure of a party to recover because he has
Pierce v. Tennessee Coal, Iron &
R Co., 173 U. S. 1, 19 Sup. Ct. Rep.
335; Trabing v. California Naviga-
tion & Imp. Co., 121 Cal. 137, 53 Pac.
Rep. 644; Sloane v. Southern Cali-
fornia R. Co., Ill Cal. 685, 44 Pac.
Rep. 320, 33 Lu R. A. 193; Kapischki v.
Kocli, 180 111. 44, 54 N. E. Rep. 179;
Teel V. Miles, 51 Neb. 542, 71 N. W.
Rep. 296; Wadleigh v. Buckingham,
80 Wis, 230,49 N. W. Rep. 745; Wells
V. National L. Ass'n, 39 C. C. A. 476,
99 Fed. Rep. 222; Alie v, Nadeau, 93
Me. 282, 44 At!. Rep. 891, 74 Am. St.
346; Reynolds v. Jones, 63 Ark. 259,
38 S. W. Rep. 151; Thisler v. Miller,
53 Kan. 515, 42 Am. St. 302, 36 Pac,
Rep. 1060; Cockley v. Brucker, 54
Ohio St. 214, 44 N. E. Rep. 590; Porter
V. Mack, 50 W. Va. 581. 592, 40 S. E.
Rep. 459; North British & Mercantile
Ins. Co. V, Cohn, 17 Ohio Ct. Ct,
185; State v. Morrison, 60 Miss. 74;
Walton V. Ruggles, 180 Mass. 24, 61
N, E. Rep. 267; Deering v. Johnson,
86 Minn. 172, 90 N. W. Rep. 363;
Macdougall v. Knight, 25 Q. B. Div.
1; Commerce Exchange Nat, Bank
V, Blye. 123 N. Y. 132, 25 N. E. Rep.
208; Bracken v. Atlantic Trust Co.,
167 N. Y. 510, 60 N, E. Rep. 772; Baird
V. United States, 96 U. S. 430; Zirker
V. Hughes, 77 Cal, 235, 19 Pac. Rep.
235; Colvin v. Corwin, 15 Wend. 557;
Wagner v. Jacoby, 26 Mo, 532; Smith
V. Jones, 15 Johns. 229; Butler v.
Wright, -2 Wend. 369; Cornell v.
Cook, 7 Cow. 310: Ross v. Weber, 26
111. 221: Logan v. Caffrey,30 Pa. 196;
Mason v. Alabama Iron Co., 73 Ala.
270; Howard College v. Turner, 71
id. 429, 46 Am. Rep. 326; Richardson
V. Eagle Machine Works, 78 Ind. 422,
41 Am, Rep. 584; Nortli Vernon v.
Voegler, 103 Ind. 314, 2 N. E. Rep.
821, quoting the text; Wichita & W.
R. Co. V. Beebe, 39 Kan. 465, 18 Pac.
Rep. 502.
A statute providing that "succes-
sive actions may be maintained upon
the conti'act or transaction when-
ever, after the former action, a new
cause of action has arisen thereon,"
does not apply to actions for addi-
tional damages happening or dis-
covered because of some particular
breach of a contract. Russell v. Polk
County Abstract Co., 87 Iowa, 233,
54 N. W. Rep. 212, 43 Am. St, 381,
Various tests have been suggested
for determining whether the judg-
ment recovered in one action is a bar
to a subsequent action. " The princi-
pal consideration is whether it be
§ IOC]
GENEEAL PKINCIPLES.
301
mistaken his remedy does not preclude him from asserting his
rights in a proper proceeding. Thus, the failure of a mortgagee
of chattels to recover them by replevin from an officer by
whom they were seized under execution, because the law pro-
vided a different remedy, does not bar a proper proceeding.'
Nor is a judgment for the defendant in replevin, because of
the statute of limitations, a bar to an action in trover not af-
fected by that statute.'^ Where a sheriff recovers the value of
goods taken from him in replevin, because it was not the
proper remedy, the owner may recover their value in trover.'
If one fails to replevy a chattel because the defendant is only
a tenant in common that does not affect his title.'' A judg-
ment against the plaintiff in replevin, rendered because he
failed to prove a demand, does not bar a subsequent action of
that kind.^ The principle forbidding the splitting of causes of
action does not prevent one whose property is taken by a sin-
gle trespass from maintaining replevin for so much of it as
was his, and trover for the remainder, of which he was a joint
owner.*
precisely the same cause of action
in both, appearing by proper aver-
ments in a plea, or by proper facts
stated in a special verdict or a spe-
cial case. And one great criterion
of this identity is that the same evi-
dence will maintain both actions."
Kitchen v. Campbell, 3 W. Bl. 837;
Martin v. Kennedy. 3 B. & P. 69, 71;
Brunsden v. Humphrey, 14: Q. B.
Div. 141.
"The question is not whether the
sum demanded might have been re-
covered in the former action, the only
inquiry is whether tiie same cause
of action lias been litigated and con-
sidered in the former action." Sed-
don V. Tutop, 6 T. R. 607.
'• Though a declaration contain
counts under which the plaintiff's
whole claim might have been recov-
ered, yet if no attempt was made to
give evidence upon some of the
claims, they might be recovered in
another action." Thorpe v. Cooper,
5 Bing. 129.
" It is evident, therefore, that the
application of the rule depends, not
upon any technical consideration of
the identity of the forms of action,
but upon matter of substanca"
Brunsden v. Humphrey, 14 Q. B.
Div. 141.
" It is not a test of the right of a
plaintiff to maintain separate actions
that all the claims miglit have been
prosecuted in a single action.'" Perry
V. Dickerson, 85 N. Y. 345. 350, 39
Am. Rep. 663.
If different allegations are required
in the pleading and different evi-
dence on the hearing, the cause of
action is not split. Stark v. Starr, 94
U. S. 477, 485.
1 Conn V. Bernheimer, 67 Miss. 498,
7 So. Rep. 345.
2 Johnson v. White, 31 Miss. 584.
8 Kittredge v. Holt, 58 N. H. 191.
4 Gaar v. Hurd, 93 111. 315.
5 Roberts v. Norris, 67 Ind. 386.
6 Huffman v. Knight, 36 Ore. 581,
60 Pac. Rep. 307.
308 ENTIRETY OF DAMAGES. [§ 107.
§ 107. Present and fntnre damages. If one party to a
contract prevents the other from performing and thereby earn-
ing wages or realizing profits, the latter in an action brought
[176] at once after the breach may recover damages which
will compensate him for his loss.^ Although by performance
the benefits of the contract would accrue at a future time, yet,
upon a breach by which such future advantages will be pre-
vented, the injured party maj'^ immediateh'' thereafter recover
damages equivalent to the loss, so far as he can prove it. And
to facilitate the proof the court will not oblige him to antici-
pate the future state of the market, but will give the plaintiff
the benefit of market rates at the time of the breach. Thus,
in the leading case in New York ^ it was argued that inasmuch
as the furnishing of the marble would run through a period of
five years, of which only about one year and a half had ex-
pired at the time of the breach, the benefits which the con-
tractor might have realized from the execution of the contract
must be speculative and conjectural, the court and jury having
no certain data upon which to make the estimate. The court
say: "Where the contract . . . is broken before the ar-
rival of the time for full performance, and the opposite party
elects to consider it in that light, the market price on the day
of the breach is to govern in the assessment of damages. In
other words, the damages are to be settled and ascertained
according to the existing state of the market at the time
the cause of action arose and not at the time fixed for full
performance." ^ But the parties are entitled to the benefit
of any facts transpiring subsequently to the bringing of the
1 Standard Oil Co. v. Denton, 24 v. Hemenway, 64Me. 373; Richnaond
Ky. L. Rep. 906, 70 S. W. Rep. 282, v. Dubuque, etc. R. Co., 40 Iowa, 264;
quoting text, Tippin v. Ward, 5 Ore. 450; Howard
^ Masterton v. Mayor, 7 Hill, 61, 71. v. Daly, 61 N. Y. 363, 19 Am. Rep.
3 Wolcott V. Mount, 36 N. J. L. 262, 285; Gifford v. Waters, 67 N. Y. 80;
13 Am. Rep. 438; McAndrews v. Tip- Crabtree v. Hagenbaugh, 25 111. 233,
pett, 39 N. J. L. 105; Burrell v. New 79 Am. Dec. 324; James v. Allen
York & S. Solar Salt Co., 14 Mich. County, 44 Ohio St. 226, 6 N. E. Rep.
34; Roper v. Johnson, K R 8 C. P. 246; Eastern Tennessee, etc. R. Co.
167; Frost v. Knight. L. R. 5 Ex. 325; v. Siaub, 7 Lea, 397; Litchenstein v.
Sutherland v. Wyer, 67 Me. 64; Du- Brooks, 75 Tex. 196, 12 S. W. Rep.
gan V. Anderson, 36 Md. 567, 11 Am, 975; Kahn v. Kahn, 24 Neb. 209. 'lO
Rep. 509; Schell v. Plumb, 55 N. Y. N. W. Rep. 135. See McEvoy v.
592; Sibley v. Rider, 54 Me. 463; Fales Bock, 37 Minn. 402, 34 N. W. Rep. 740.
§ 108.] GENERAL PEINCIPLES. 309
action which show more clearly the gains prevented by the
breach of contract complained of, or the damages sustained
from such a cause of action, or any other, the injurious effects
of which extend into the future. This point will receive fur-
ther elucidation when we come to speak of prospective damages.
§ 108. AVhat is an entire demand ? The reader's attention
is now directed to what constitutes an entire demand or cause
of action. Whether a contract be single and entire or [177]
apportionable, if there is a total abandonment or breach by
one party the other has a single cause of action upon the en-
tire contract if he think proper to act upon the breach as a
total one; the better opinion is that he is obliged to do so. A
party has a right to break his contract on condition of being
liable for the damages which will accrue therefrom at the
time he elects to do so. And it is the duty of the other party
Avhen notified thereof to exert himself to make the damaires
as light as possible.^ What default a party may treat as a
total breach of a contract is not always an easy question, and
its solution should be looked for in works upon contracts rather
than damages, for it depends upon interpretation. Like most
other questions of construction it rests upon the intention of
the parties and must be discovered in each case by considering
the language and the subject-matter of the contract.^ If it is
single and entire, or to the extent that it is so, it can be the
subject of but one action against the defaulting party and the
plaintiff must have performed all precedent conditions to
place the other in default.* After the renunciation of a con-
^Kalkhofl V. Nelson, 60 Minn. 284, and entire the contract is so though
Q2 N. W. Rep. 332; Parker v. Rus- the subject of it consists of two or
sell, 133 Mass. 74; Dillon v. Anderson, more distinct and independent items.
43 N. Y. 231; Hartland v. General Cockley v. Brucker, 54 Ohio St. 214,
Exchange Bank, 14 L. T. (N. S.) 863; 44 N. R Rep. 590; Miner v. Bradley,
Willoughby v. Thomas, 24 Gratt 522. 22 Pick. 457; Fish v. FoUey, 6 Hill, 54.
2Pars. on Cont. 517. Ud.. pp. 517-527; Shinn v. Bodine,
Demands resting on contracts 60 Pa. 182, 100 Am. Dec. 5C0; With-
with separate parties, though the ers v. Reynolds. 2 B. & Ad. 882;
party liable for part of them has as- Shaw v. Turnpike Co., 2 P. & W. 454;
j^umed liability for the others, are Davis v. Maxwell, 12 Met 286; Harris
not entire. Gottlieb v. Fred. W. v. Ligget, 1 W. & S. 301; Hopf v.
Wolf Co., 75 Md. 126, 23 Atl. Rep. Meyers, 42 Barb. 270; Crips v. Tal-
198. vande, 4 McCord, 20; Herriter v. Por-
\V/ien the consideration is single ter, 23 Cal. 385; Brown v. Smith, 13
310
ENTIRETY OF DAMAGES.
[§ 109-
tinuing agreement by one of the parties the other may con-
sider himself absolved from its obligations and may sue for
damages; his recovery will be based on what he would have
lost by the continued breach down to such time as the con-
tract would be fully performed, less any benefit resulting to
the other party b}'' advantages the plaintiff may reasonably
enjoy by reason of his release from performance. The latter
may defer his action for the breach until the expiration of the
time for the full performance of the contract.'
g 109. Entire demand may be severed. A contract origi-
nally entire may be severed afterwards by the parties so as ta
[178] give a right of action for a part performance.^ This
was the case where there was an entire contract for the deliv-
ery of logs, and on delivery of a part the purchaser paid there-
for partly in money and gave notes for the residue delivered.
Cush. 366; Messiok v. Dawson, 2
Harr. 50; Folsom v. Clemence, 119
Mass. 473; Brannenburg v. Indian-
apolis, etc. R. Co., 13 Ind. 103, 74 Am.
Dec. 250; Hutchinson v. Wetniorv^, 2
Cal. 310, 56 Am. Dec. 327; Camp v.
Morgan, 21 111. 255; Morgan v. Mc-
Kee, 77Pa. 228; Cassel berry v. For-
quer, 27 111. 170; Larkin v. Buck, 11
Ohio St. 561; Hall v. Clagett, 2 Md.
Ch. 151; White v. Brown, 2 Jones,
403; Wagner v. Jacoby, 26 Mo. 532;
Walter v. Richardson, 11 Rich. 466;
Quigley v. De Haas, 82 Pa. 267;
Sweeny v. Daugherty, 23 Iowa, 291;
Stevens v. Lockwood, 13 Wend. 644;
Blakeney v. Ferguson, 18 Ark. 347;
Pinney v. Barnes, 17 Conn. 420; Far-
rington v. Payne, 15 Johns. 432;
Phillips V. Berick, 16 Jolins, 136, 8
Am. Dec. 299; Cunningham v. Jones,
20 N. Y. 486; James v. Lawrence, 7
Harr. & J. 73; Shaflfer v. Lee, 8 Barb.
412: Campbell v. Hatchett, 55 Ala.
548; Parker V. Russell, 133 Mass. 74;
Norris v. Harris, 15 Cal. 226, 256, 76
Am. Dec. 480; McGrath v. Cannon,
55 Minn. 457, 57 N. W. Rep. 150; Rey-
nolds V. Jones, 63 Ark. 259, 38 S. W.
Rep. 151.
1 Roehm v. Horst, 178 U. S. 1, 20 Sup.
Ct. Rep. 780 (1899), following the
rule of Hochster v. De la Tour, 2 El.
& Bl. 678. Contra, Clark v. National
Benefit & Casualty Co, 67 Fed. Rep.
222 (1895); Daniels v. Newton, 44
Mass. 530, 19 Am, Rep. 384. The
argument in the latter case is said to
have been well and sufficiently an-
swered by Judge Lowell in Dingley
V. Oler, 11 Fed. Rep. 372, where the
question is examined and cases cited.
To the same effect as Roehm v. Horst,
supra, are several cases in the fed-
eral courts earlier than the decision
therein : Dingley v. Oler, supra; Foss-
Schneider Brewing Co. v. Bullock, 8
C. C. A. 14.59 Fed. Rep. 83; Edward
Hines Lumber Co. v. Alley, 19 C. C.
A. 599, 73 Fed. Rep. 603; Horst v.
Roehm, 84 Fed. Rep. 565. Speirs v.
Union Drop Forge Co.. 180 Mass. 87,
91, 61 N. E. Rep. 825, is in harmony
with Roehm v. Horst.
2 0'Beirne v. Lloyd, 43 N. Y. 251;
Lee V. Kendall, 56 Hun, 610, 11 N. Y.
Supp. 131; Fourth Nat, Bank v. Noo-
nan, 88 Mo. 372: Ryallv. Prince, 82
Ala. 264. 2 So. Rep. 319.
§ 110.] GENEEAL PKIN0IPLE8. 311
It was held that the notes could be collected notwithstanding
any default in the deliver}^ of other logs to fulfill the contract,
but subject to recoupment of the damages for such breach.^
Under an agreement that if the creditor would forbear suinir
upon the whole of his demand and sue upon a part of it only,
and in case of a recovery upon that part the debtor would pay
the balance, it was held that such agreement was a waiver of
the rule in his favor concerning the division of actions, and
that the recovery upon the part sued upon was not a bar to an
action upon the balance of the claim.^ So a quantum meruit
claim may arise for a part performance on account of the ben-
efit derived from it.' A city splits up a demand against it by
drawing warrants on account of it in different amounts, and
cannot defend an action on one of them on the ground that it
had previously been sued on another.^ " In such cases the
rights of the plaintiff as assignee serve as the consideration for
the new contract, which becomes the ground of the action.
The action is on the defendant's promise to the plaintiff, and
not upon the assignment or upon any right growing out of it."*
While a general assignment for the benefit of creditors does
not usually effect a rescission or termination of an executory
contract of the assignor,^ it may be otherwise where the sub-
ject-matter of the contract establishes a relation of confidence
between the parties, and the exercise of peculiar skill or knowl-
edge is required. In such a case the plaintiff should not be
compensated for what he cannot perform.''
§ 110. Contracts to do several things successively or one
thing continuously. A contract to do several things at dif-
ferent times is divisible in its nature, and an action will lie
1 Fessler v. Love, 43 Pa. 313. * Little v. Portland, supra; Getch-
'-i Mills V. Garrison, 3 Keyes, 40; ell v. Maney, 69 Me. 442; James v.
Mandeville v. Welch, 5 Wheat. 277, Newton, 143 Mass. 36G, 56 Am. Rep.
288; Secor v. Sturgis, 16 N. Y. 548. 692, 8 N. E. Rep. 122.
See Bliss v. New York Central, etc ''New England Iron Co. v. Gilbert
R, Co.. 160 Mass. 447, 36 N. E. Rep. 65. E. R. Co., 91 N. Y. 153; Vandegrift v.
» See §90. Cowles Engineering Co., 161 N. Y.
< Little V. Portland, 26 Ore. 235, 37 435, 55 N. R Rep. 941, 48 L. R A.
Pacs. Rep. 911; Grain v. Aldrich, 38 685.
Cal. 514, 99 Am. Dec. 423; National "' United Press v. Abell Co., 79 App.
Exchange Bank v. McLoon, 73 Ma Div. 550, 80 N. Y. Supp. 454, 461.
498, 40 Am. Rep. 38a
312
ENTIRETY OF DAMAGES.
[§ 110.
upon each default.^ The defendant, being the keeper of an office
for procuring crews of vessels, in consideration of the plaintiff's
agreement to furnish such supplies and advances as might be
necessary in the business, promised to pay the latter a certain
sum for each man shipped and to repay the advances; the de-
fendant's undertaking was several.^ But when a party has dis-
tinct demands or existing causes of action growing out of the
same contract or resting in matter of account, which may be
joined and sued for in the same action, they must be joined ; they
constitute an entire cause of action or demand; and if they be
split up and a suit brought for a part only, and subsequently a
second suit for the residue, the first action, if determined on the
merits, will be a bar.^ This is not to be carried so far as to bar
an action on the contract because judgment has been obtained
against the party who failed to perform for a tort resulting
from the breach. Claims for a wrongful dismissal from em-
ployment and to recover wages earned prior thereto are sep-
arate and distinct causes of action. The right to wages is the
result of the contract; the right to damages grows out of the
wrongful termination of it. The amount due under the con-
tract was definite or ascertainable at the time of its breach, and
was then payable; the damages were incapable of exact ascer-
tainment until the period covered by the contract expired, as
they might be mitigated by the acts of the plaintiff.'* But if
a servant performs no laborafter his discharge he can maintain
but one action for the breach of the contract.* "Where an em-
ployee who was permanently disabled in the service of his em-
1 Badger v. Titcomb, 15 Pick, 409;
Easier v. Nichols, 8 lud. 260; Terry
V. Beatrice Starch Co., 43 Neb. 866,
63 N. W. Rep. 255; Coleman v. Hud-
son, 2 Sneed, 465.
'^ Badger v. Titcomb, supra.
3 Bendernagle v. Cocks, 19 Wend.
207; James v. Lawrence, 7 Harr. &
J. 73; Atwood v. Norton, 27 Barb.
638; Cassel berry v. Forquer, 27 111.
170; Geiser Threshing Machine Co. v.
Farmer, 37 Minn. 438, 8 N. W. Rep.
141; Bowe v. Minnesota Milk Co., 44
Minn. 460. 47 N. W. Rep. 151; Hodge
V. Shaw, 85 Iowa. 137. 52 N. W. Rep.
8, 29 Am. St. 290; Gilbert v. Boak
Fish Co., 86 Minn. 365. 90 N. W. Rep.
767; Olmstead v. Bach. 78 Md. 132,
37 Atl. Rep. 501, 33 L. R. A. 74, 44 Am.
St. 373. Compare Williams v. Luck-
ett, 77 Miss. 394, 26 So. Rep. 967.
* Perry v. Dickerson, 85 N. Y. 345,
39 Am. Rep. 663.
5 Waldron v. Hendrickson, 40 App.
Div. 7, 57 N. Y. Supp. 561; Barnes v.
Coal Co., 101 Tenn. 354, 47 S. W. Rep.
498; Olmstead v. Bach, 78 Md. 142,
44 Am. St. 273, 27 Atl. Rep. 501,
23 L. R. A. 74; Wright v. Turner, 1
Stew. 29, 18 Am. Dec. 35.
§ 110.] GENERAL PRINCIPLES. 313
ployer compromised his claim for damages in consideration of
an agreement that he should receive certain wages monthly
and be furnished with specified supplies so long as his ability
to work should continue, and the plaintiff, on his part, was to
do for the defendant such work as he was able to do and re-
lease the defendant from liability for damages, and the defend-
ant denied its obligation to pay the stipulated wages and en-
tirely abandoned the contract, the plaintiff was entitled to con-
sider the contract as entirely broken, and recover all that was
due him when the action was brought and all that mio-lit be-
come due under it, which would be its value to him at the time
of the breach.^ A contract to issue or procure the issuance of
an annual railroad pass to be renewed from year to year during
the pleasure of the promisee is divisible.^
In an action on a lease which contained distinct cove- [179]
nants to pay for manure and for work and labor, the defend-
ant pleaded in abatement that a prior action brought for the
breach of certain of the covenants was still pending. The plaint-
iff replied that the covenants upon which that suit was brought
were distinct and different from those involved in the pending
action. The defendant's demurrer to this replication was sus-
tained and he obtained judgment.^ It is observed of this ruling
tliat if it is subject to any criticism it is because of its applica-
tion to the facts involved. It may be inferred from the opin-
ion of Judge Cowen that all the covenants in the lease were for
the payment of different amounts of money by the lessee to
the lessor; and he seemed to regard it like the case of a con-
tract to pay money in instalments, and in this way reached
the conclusion that the different breaches constituted a sino:le
■cause of action.* But it is now established in JSTew York that
the breach of an agreement to pay money in instalments is not
1 Pierce v. Tennessee Coal, Iron & 207. See Badger v. Titcomb, 15 Pick.
R Co., 173 U. S 1, 19 Sup. Ct. Rep. 409; Mcintosh v. Lawn, 47 Barb. 550.
335; Eastern Tennessee, etc. R. Co. V. The recovery of past-due instal-
Staub. 7 Lea, 397. ments of rent which accrued under
2Kans;is, etc. R Co. v. Curry, 6 a lease for a term at a fixed monthly
Kan. App. 561, 51 Pac. Rep. 576; rental does not bar another action
Curry v. Kansas, etc. R. Co., 58 Kan. for instalments which became due
•6, 48 Pac. Rep. 579. subsequently. Barnes v. Coal Co.,
3 Bendernagle v. Cocks, 19 Wend. 101 Tenn. 354, 47 S. W. Rep. 498.
•* Perry v. Dickerson, supra.
314 ENTIRETY OF DAMAGES. [§ 110.
a breach of the entire contract, and will not permit a recovery
of all the damages in advance.^ " There seems to be a distinc-
tion, whether well grounded in principle or not, between a con-
tract for the payment of money in future instalments and a
contract for the delivery of goods in future instalments ^ as
well as a contract for future employment and service.'"* A
contract which, for an entire consideration, stipulates for the
performance of several acts for the benefit of the same person
at the same time is entire.*
[180] The principle is settled beyond dispute that a judg-
ment concludes the rights of the parties in respect to the cause
of action stated in the pleadings on which it is rendered,
whether the suit embraces the whole or only a part of the
demand constituting the cause of action. It results from this
principle, and the rule is fully established, that an entire claim
[181] arising either upon a contract or from a wrong cannot
be divided and made the subject of several suits ;^ and if sev-
eral suits be brought for different parts of such a claim the
pendency of the first may be pleaded in abatement of the
others, and a judgment upon the merits of either will be avail-
able as a bar in the others. But it is entire claims only which
[182] cannot be divided within this rule: those which are single
and indivisible in their nature. The cause of action in the dif-
ferent suits must be the same. The rule does not prevent, nor
is there any principle which precludes, the prosecution of sev-
eral actions upon distinct causes of action. The holder of a
[183] number of promissory notes may maintain an action on
each; a party upon whose person or property successive and
distinct trespasses have been committed may bring a separate
suit for every trespass, and all demands of whatever nature aris-
ing out of independent transactions may be sued upon sepa-
rately. It makes no difference that the causes of action might
1 Wharton v. Winch, 140 N. Y. 287, 390, 54 N. Y. Supp. 773 (contract for
35 N. E. Rep. 589; McCready v. Lin- publication of advertisement in des-
denborn, 173 N. Y. 400, 408, 65 N. E. ignated newspapers at stated inter-
Rep. 208. vals for a gross sum); Indianapolis,
2 Nichols V, Scranton Steel Co., 137 etc. R. Co. v. Koons, 105 Ind. 507, 5
N. Y. 471, 33 N. E. Rep. 561. N. E. Rep. 549.
3 Howard v. Daly, 61 N. Y. 362,19 » Standard Oil Co. v. Denton, 24
Am. Rep. 285. Ky. L. Rep. 966, 7 S. W. Rep. 283,..
* Ailing V. Trevor, 25 N. Y. Misc. quoting the text.
§ no.]
GENERAL PRINCIPLES.
315
be united in a single suit; the right of the party in whose favor
they exist to separate suits is not affected by that circumstance.'
The true distinction between demands or rights of action which
are single and entire, and those which are several and distinct,
is that the former immediately arise out of one and the same
act or contract, and the latter out of different acts or contracts.-
Perhaps as simple and safe a test as the subject admits of
by which to determine whether the case belongs to one class
or the other is by inquiring whether it rests upon one or sev-
eral acts or agreements. In the case of torts each trespass,
conversion or fraud gives a cause of action, and but a single
iSecor V. Sturgis, 16 N. Y. 554,
overruling Colvinv.Corwin, 15 Wend.
557, and disapproving the reasoning
in Guernsey v. Carver, 8 id. 492. See
Perry v. Dickerson, 85 N. Y. 345. 39
Am. Rep. 663.
2 Thisler v. Miller, 53 Kan. 515. 36
Pac. liep. 1060.
Where the grade of a street has
been established and the plaintiff
has made improvements upon prop-
erty abutting thereon in conformity
with such grade, and subsequently
the city provides by ordinance for
changing the grade, and in fact alters
it from curb to curb, and afterwards
adapts the sidewalk to the grade
as finally established, an action for
changing the sidewalk cannot be
maintained after a recovery has been
had for cutting down the grade from
curb to curb. Hempstead v. Des
Moines, 63 Iowa, 36, 18 N. W. Rep.
676; Stickford v. St. Louis, 7 Mo.
App. 217 (injury to fee of one lot and
to leasehold interest with rent of ad-
joining lot).
If goods are sold on credit at vari-
ous times each sale is separate and
distinct, and an independent cause
of action arises on the expiration of
the agreed period of credit and as
the several amounts become due.
Zimmerman v. Erhard, 83 N. Y. 74,
38 Am. Rep. 396.
Where property is purchased in
several quantities at different times
in the execution of a conspiracj-, tlie
damage done to tiie vendor is the
gist of tiie action, and the cause of
it is not single and entire; each pur-
chase is a distinct and .several fraud
for which a separate action lies. Lee
V. Kendall, 56 Hun, 610, 11 N. Y.
Supp. 131.
Where a train was in motion and
a mare and colt veere running on the
track in front of it, and the colt was
struck and killed, and the train after
running on five hundred feet struck
and killed the mare, the killings were
sepai-ate and independent acts;
causes of action based upon tl.em
were necessarily composed of differ-
ent elements, because, while the kill-
ing of the colt might have been pre-
vented by the prompt exercise of
ordinary care, the last killing was
the result of gross negligence. Mis-
souri Pacific R. Co. V. Scammon, 41
Kan. 521, 21 Pac. Rep. 590. See
Bricker v. Missouri Pacific R. Co., 83
Mo. 391; Pucket v. St. Louis, etc. R.
Co., 25 Mo. App. 650.
The seizure on the same day and
under the same writ of two distinct
lots of animals in different places,
though they are owned by the same
person, constitutes distinct tres-
passes. Millikin v. Sinoot, 71 Tex.
759, 10 Am. St. 814, 12 S. W. Rep. 59.
316
ENTIRETY OF DAMAGES.
[§ 110.
[184] one;Mn respect to contracts, express or implied, each
affords one and only one cause of action.^ The case of a con-
tract containing several stipulations to be performed at dif-
ferent times is no exception; although an action may be main-
tained upon each stipuhition as it is broken before the time
for the performance of the others, the ground of action is the
stipulation which is in the nature of a several contract.^ The
1 Munro v. Pacific Coast Dredging
& R. Co., 84 Cal. 515, 24 Pac. Rep. 303,
18 Am. St. 248; Lee v. Kendall, 56
Hun, 610,11 N. Y. Supp. 131; Secor
V. Sturgis, 16 N. Y. 554; Binicker v.
Hannibal, etc. R. Co., 83 Mo. 660;
Steiglider v. Missouri Pacific R. Co.,
38 Mo. App. 511; Knowlton v. New
York. etc. R. Co., 147 Mass. 606, 18 N.
E. Rep. 580, 1 L. R. A. 625; Brannen-
burg V. Indianapolis, etc. R. Co., 13
Ind. 103, 74 Am. Dec. 250; Hicenbo-
them V. Lowenbein, 6 Robert. 557;
Marble v. Keyes, 9 Gray, 221; East-
man V. Cooper, 15 Pick. 276; Bennett
V. Hood, 1 Allen, 47, 79 Am. Dec. 705;
Traok v. Hartford, etc. R. Co., 2 Allen,
331; Doty v. Brown, 4 N. Y. 71.
But one cause of action arises from
the conversion of various chattels at
the same time; after judgment for
the plaintiff for some of those con-
verted an action cannot be main-
tained for the others, although he
was unable to include them in the
first action because of the defend-
ant's fraudulent conduct (McCaffrey
V. Carter, 125 Mass. 330); or because
of the accidental failure to sue for
them in the first action. Folsom v.
Clemence, 119 Mass. 473; Herriter v.
Porter, 23 Cal. 385; Farrington v.
Payne, 15 Johns. 432; Funk v. Funk,
35 Mo. App. 246. See Bowker Fer-
tilizer Co. V. Cox, 106 N. Y. 555, 13
N. E. Rep. 94.3. This is the rule, al-
though part of the property taken
was held by the plaintiff as a trustee
and part in his own right. O'Neal
V. Brown. 21 Ala. 482. A tenant who
sues for damage to his crops may re-
cover for the whole injury done.
Texas & P. R. Co. v. Bayliss, 62 Tex.
570. Injuries done to distinct pieces
of property owned by the same per-
son, by a single act, must be sued
for together. Beronio v. Southern
Pacific R. Co., 86 Cal. 415, 21 Am. St.
57, 24 Pac. Rep. 1093.
If the plaintiff has interests in pos-
session and reversion he may recover
in tiie same action for an injury af-
fectmg both. Irving v. Media, 10
Pa. Super. Ct. 132, aflSrmed without
opinion, 104 Pa. 648.
2 Shires v. O'Connor, 4 Pa. Super.
Ct. 465: Huyett & Smith Manuf. Co.
V. Chicago Edison Co., 167 111. 233, 59
Am. St. 272, 47 N. E. Rep. 384; Sam-
uel V. Fidelity & Casualty Co., 76
Hun, 308, 27 N. Y. Supp. 741.
^Alkire Grocer Co. v. Tagart, 60
Mo. App. 389; Gentles v. Finck, 23
N. Y. Misc. 153, 50 N. Y. Supp. 726;
Secor V. Sturgis, 16 N. Y. 554; Ryall
V. Prince, 82 Ala. 264, 2 So. Rep. 319;
Wilkinson v. Black, 80 Ala. 329;
Strauss v. Meerteif, 64 id. 299: Wil-
cox V. Plummer, 4 Pet. 172; Moore v.
Juvenal, 92 Pa. 484; Reformed, etc.
Church V. Brown, 54 Barb. 191;
Campbell v. Hatchett, 55 Ala. 548;
O'Beirne v. Lloyd, 43 N. Y. 248; Pin-
ney v. Barnes, 17 Conn. 420; Rudder
v. Price, 1 H. Black. 550: Cobb v. L
C. R., 38 Iowa. 601; Clayes v. White,
83 111. 540; Blakeney v. Ferguson,
18 Ark. 347; Kendall v. Stokes, 3
How. 87.
In Mcintosh v. Lown, 49 Barb. 550,
it was held that the lease in question
contained seven distinct and inde-
§ 111.] GENEKAL PEINCIPLE8. 317
same rule governs in torts arising from contracts and those
which have their origin in ollicial misfeasance. The cause of
action arises when the breach of duty occurred, not on the dis-
covery of the effects thereof.^
§ 111. Items of account. Where there is an account for
goods sold or labor performed, where money has been lent to
or paid for the use of a party at different times, or several
items of claim springing in any way from contract, whether
one or separate rights of action exist will, in each case, depend
on whether the case is covered by one or by several or sep-
arate contracts. The several items may have their origin in
one contract, as an agreement to sell and deliver goods, per-
form work, or advance money ; and usuali}^, in case of a run-
ning account, it may be fairly implied that it is in pursuance
of an agreement that an account may be opened and continued
either for a definite period or at the pleasure of one or both of
the parties. But there must be either an express contract or
the circumstances must be such as to raise an implied contract
embracing all the items to make them, where they arise [185]
at different times, a single or entire demand or cause of action.^
pendent covenants, the tbird of which torney are usually rendered pursuant
was to keep the buildings and fences to some general contract, and what-
in repair, and the seventh to build, ever is due therefor at the termina-
during the continuance of the lease, tion of the service or employment
one hundred and twenty-five rods of must be recovered in one action,
fence. It was held that a former ac- Hughes v. Dundee Mortgage Trust
tion by the lessor upon the covenant Investment Co., 26 Fed. Rep. 831.
for not building the fence was not ^ Owen v. Western Saving Fund,
a bar to an action subsequently 97 Pa. 47, o9 Am. Rep. 794.
brought upon the covenant to repair; ^Secor v. Sturgis. 16 N. Y. 554;
that the two covenants were distinct Borngesser v. Harrison, 13 Wis. 544;
and had no connection with each Walter v. Richardson, 11 Rich. 466;
other, except that they were con- Magruder v. Randolph, 77 N. C. 79;
tained in the same instrument; that American Button-hole & S. M. Co. v.
the former action must have been to Thornton, 28 Minn. 418, 10 N. W.
recover for the same identical cause Rep. 425; Oliver v. Holt, 11 Ala. 574,
of action, or for some part thereof, as 46 Am. Dec. 228; Buck v. Wilson,
tiie plaintilf seeks to recover in the 113 Pa. 423, 6 Atl. Rep. 97; Wren v.
second in order to be a bar. See Winter, 6 Ohio Dec. 176.
Warner v. Bacon, 8 Gray, 497, 69 The Pennsylvania case cited holds
Am. Dec. 253; Clark v. Baker, 5 Met. that if several notes are given for
452. the amount of an entire book ac-
The services of a regularly ap- count, without being taken as an
pointed or permanently employed at- extinguishment of the debt or as
318 ENTIEETY OF DAMAGES. [§ 111,
The very fact that there is a running account imports that the
parties have not been accustomed to treat every separate mat-
ter of charge as a distinct debt, but on the contrary to enter
it in the account to become a part thereof and going to make
up the debt which consists of the entire balance due.^ A cred-
itor cannot bring an action for an amount admittedly due upon
an account resulting from a single contract, the whole debt
being mature, enforce payment of that amount, and maintain
a second action for a sum alleged to be due on the same ac-
count in excess of that first sued for; the fact that the peti-
tion in the first case recited that the right to bring such sec-
ond action was reserved was immaterial.^ If bills are payable
a,t the end of every month an action, brought after two months,
to recover the sum due at the end of the first month, does not
bar an action to recover the amount due at the end of the sec-
ond month.' The business of ship carpenters was carried on
in one part of a building under the direction of two of the
partners in a firm, and the business of ship chandlers in an-
other part of the same building under the direction of the third
partner. Separate books of account were kept by difi'erent
clerks in the two branches of business, and the partners con-
fined themselves respective!}^ to the management of one of the
branches without personally taking part in the other. Work
was done and materials furnished from the carpentry branch
in the repairing and equipping of a brig, upon the order of
her captain, to the amount of $139, and immediatel}'^ there-
after goods and articles of ship chandlery to the value of $521
were furnished to the same brig, on the order of the same
<;aptain, at different times through a period of a month. The
consideration for an extension of ' Memmer v. Carey, 30 Minn. 458,
time, that a suit brought upon the 15 N. W. Rep. 877; Borngesser v.
account after some of the notes be- Harrison, 12 Wis. 544; Avery v. Fitch,
came due, in which judgment for 4 Conn. 362; Lane v. Cook, 3 Day,
the amount of those due was given, 255. See note to § 110.
bars a subsequent suit upon the 2 Atlanta Elevator Co. v. Fulton
same account for the amount of the Bag & Cotton Mills. 106 Ga. 427, 32
notes wliich became due after the S. E. Rep. 541; Bolen Coal Co. v.
suit was brought. Contra, Badger Whittaker Brick Co., 52 Kan. 747, 35
V. Titcomb. 15 Pick. 409, 26 Am. Dec. Pac. Rep. 810.
(511; Cummington v. Wareham 8 3 Beck v, Devereaux, 9 Neb. 109. 2
Cash. 590. N. W. Rep. 365.
§ 112.] GENERAL PRINCIPLES. 319
two accounts did not constitute an entire claim. ^ In an action
for money had and received it appeared that the defendant, as
-steward of the plaintifl", had, between April and November,
1822, received large sums of money for timber sold, and in
December, 1821, 4GZ. for rents. In a former action a judg-
ment had been taken by default for all that the plaintiff's
agent thought the defendant could pay, but afterwards it
was ascertained for the first time that the steward had
received the said amount for rents. All the sums which
the plaintiff knew the defendant had received at the time
when he commenced the former action were considered as
included in and constituting one entire cause of action, and
the recovery was confined in the last action to the 46Z., [186]
though the defendant's actual receipts for timber were very
much greater than the default judgment.-
"Where the captain of a steamboat hired a barge and exe-
cuted to the owner a contract to pay $10 per day until returned
in good order as received, but fixed no time when it should be
returned or the money paid, it was held that the barge was to
be returned in a reasonable time considering the circumstances
of the service for which it was hired, the stipulated rent or
hire would then be payable, the contract was entire and not
divisible, and an action brought thereon after the expiration
of such reasonable time for the amount then due for the hire
of the barge at the rate specified in the contract was a bar to
a subsequent action on the same contract for hire accruing
after the period embraced in the judgment recovered in the
former action.' " If the barge were not returned upon demand
in a reasonable time it would be a breach of the contract for
the return. The right of the party in such a case is not to ex-
act the $10 a day perpetually, but to charge at that rate for a
reasonable time, and then to collect the value of the barge,
and by suing . . (in the former action) . . he in effect
averred that the reasonable time had expired and the whole
became due."*
§ 112. Continuing obligations. Where the defendant had
■covenanted, in 1822, that the plaintiff should have a con-
•Secor V. Sturgis, 16 N. Y. 554. 3 stein v. Steamboat Prairie Rose,
2 Bagot V. Williams, 3 B. & C. 235; 17 Ohio St. 472, 93 Am. Dec. 631.
Hisley v. Squire, 53 Barb. 280. < See Bradley v. Washington, etc
Co., 9 Pet 107.
320 ENTIRETY OF DAMAGES. [§ 112.
tinual supply of water for a mill from his dam, and totally
failed to perform after 1826, and in 1835 the plaintiff brought
an action for the breach and recovered damages sustained by
him up to that time, it was held a bar to a second action aris-
ing from a subsequent failure to perform.^ "It is true the cov-
enant stipulated for a continued supply of water to the plaint-
iff's mill, and in this respect it may be appropriately styled a
continuing contract. Yet, like any other entire contract, a total
breach put an end to it, and gave the plaintiff the right to sue
[187] for an equivalent in damages. He obtained that equiv-
alent, or should have obtained it, in the former suit." The
principle has been applied to an action to recover rent under a
lease for a term of years where a suit was brought to recover
the rent for one month which was due when another suit was
instituted ;^ and to an action to recover the expense of support-
ing a non-resident pauper, such expense accruing after the re-
covery in a former suit of the amount due when the trial was
had.* An agreement by one party to support another during
life is a similar continuing, entire contract,* if it is uncondi-
tional.'^ A separate action may be maintained whenever there
is a new cause of action, whether it arises at the same time as
another cause or at a different time; but it must exist and be
complete before the action is brought." "Where the contract is
indefinite as to time and negative in its character successive
actions may be brought for its violation, as where one who has
sold his interest in a business violates bis contract not to re-
engage in business in that place.''
1 Fish V. Folley, 6 Hill, 54 See Pa. 114; Carpenter v. Carpenter, 66
Amerman v. Deane, 133 N. Y. 355, Hun, 177; Sbover v. Myrick. 4 Ind.
28 Am. St. 584. 30 N. E. Rep. 741. App. 7, 30 N. E. Rep. 207. See Fer-
2 Burritt v. Belfy, 47 Conn. 323; guson v. Ferguson, 2 N. Y. 360.
Reynolds v. Jones, 63 Ark. 259, 38 S. & Fay v. Guynon, 131 Mass. 31.
W. Rep. 151. See § 110, particularly « Howell v. Young, 5 B. & C. 267;
the late New York cases cited. Warner v. Bacon, 8 Gray, 397, G9 Am.
3 Marlborough v. Sisson, 31 Conn. Dec. 253; Prince v. Moulton, 1 Ld.
383. SeePinney V. Barnes, 17 id. 420. Raym. 248; Harbin v. Green, Hob.
* Parker v. Russell, 133 Mass. 74; 189; Coggeshall v. Coggeshall, 2
Amos V. Oakley, 131 id. 413; Schell Strobb. 51. See State Bank v. Fox,
V. Plumb, 55 N. Y. 592; Sibley v. 3 Blatchf. 431.
Rider, 54 Me. 466; Fales v. Hemen- i Just v. Greve, 13 111. App. 302-
way, 64 Me. 373; Miller v. Wilson, 24 Pierce v. Woodward, 6 Pick. 206.
§ 113.] GENERAL P1.INCIPLES. 321
§ 113. Damages accruing subsequent to the action. It is
not essential, however, that all the injurious effects of the act
which constitutes the cause of action should have been devel-
oped and suffered before suit; it is immaterial to the right to
recover for them when the effects manifest themselves with
reference to the time of bringing the suit. Eut it is practi-
cally material to the plaintiff that the effects be so manifest,
before and at the time of the trial, as to be susceptible of proof.
The actual effects down to the time of the trial are provable;
and whether those which may ensue later may be taken into ac-
count will depend on whether they are imminent and suffi-
ciently certain.^ Interest which is the accessory of the prin-
cipal does not stop at the commencement of the action, but
may always be computed down to the verdict.^ But whether
continuing damages may be computed after the commence-
ment of the suit will depend on whether they, proceed from
the act complained of in that suit as the cause of action, or
from some later act constituting a fresh cause of action.' [188]
A judgment creditor in lieu of her judgment agreed to accept
the bond of another conditioned for her maintenance during
life, or to pay her if she preferred it $150 per annum; the
bond to be secured by a mortgage on the land of the obligor.
The defendant was employed to prepare the instrument and
to have the mortgage entered of record; he withheld it from
1 Bryson v. McCone, 121 Cal. 153, Am. Rep. 451 (violation of contract
53 Pac. Rep. 637; Samuel v. Fidelity to pass plaintiff and his family dur-
& Casualty Co., 76 Hun, 308, 27 N. ing their lives over defendant's
Y. Supp. 741; Salzgeber v. Miclvel, 37 road).
Ore. 216, 60 Pac. Rep. 1009; Conlon 2 Robinson v. Bland. 2 Burr. 1077;
V. McGraw, 66 Mich. 194, 33 N. W, Hovey v. Newton, 11 Pick. 421; Dun-
Rep. 388: Coles v. Thompson, 7 Tex. can v. Markeley, Harp. 276.
Civ. App. 666, 21 S. W. Rep. 46; Cook 3 Eastern Tennessee, etc. R. Co. v.
V. Redman, 45 Mo. App. 397, citing Staub, 7 Lea, 397; Pierce v. Tennes-
the text: Galveston, etc. R. Co. v. see Coal, Iron & R. Co., 173 U. S. 1,
Borsky, 2 Tex. Civ. App. 545, 21 S. W. 19 Sup. Ct. Rep. 335; Haskell County
Rep. 1011; Filer v. New York Cen- Bank v. Bank of Santa Fe, 51 Kan.
tral R. Co., 49 N. Y. 42; Hayden v. 39, 32 Pac. Rep. 624; Troy v. Cheshire
Albee, 20 Minn. 159; Hagan v. Riley, R. Co., 23 N. H. 102; Hicks v. Her-
13 Gray, 515; Spear v. Stacy, 26 Vt. ring, 16 Cal. 566; Phillips v. Terry. 3
61; Fort v. Union Pacific R. Co., 2 Keyes,313;Cosgriff v. Miller, — Wyo.
Dill. 259; Mobile & M. R. Co. v. Gil- — ", 68 Pac. Rep. 206, 216, quoting the
mer, 85 Ala. 422, 5 So. Rep. 138; Erie text.
& P. R. Co. V. Douthet, 88 Pa. 243, 32
Vol. 1 — 21
322
ENTIRETY OF DAMAGES.
[§ 113.
record until the property became otherwise incumbered by
claims to an amount beyond its value and the debtor in-
solvent. It was held in an action on the case that the injured
party could recover all that she had lost or was likely to
lose by the default; all that the mortgage if duly recorded
would have been worth to her.^ Where the defendant under-
1 Miller v. Wilson, 24 Pa. 114
Black, C. J., said: ''The argument
is made that the plaintiff has not yet
suffered any loss from the defend-
ant's violation of duty, and that she
can recover from Miller only in case
Carson (the obligor in the bond)
makes default, because the mortgage
being but a security for the bond
there is nothing due on the former
until the condition of the latter is
broken. But we hold it clear law
that Miller did not merely substitute
his personal responsibility in place of
the mortgage; that he did not be-
come Carson's surety in the bond;
but that he subjected himself to an
immediate action in which the
plaintiff may recover compensation
for all she has lost and all she is
likely to lose through his miscon-
duct." (See Walton v. Ruggles, 180
Mass. 24, 61 N. E. Rep. 267; Paro v.
St. Martin, 180 Mass. 29, 61 N. E.
Rep. 268.)
"On a contract to pay money at
stipulated periods there may be as
many suits as there are instalments;
for every failure to pay is a fresh
breach of the contract, and there can
be no recovery except for what is due
at the tiiue of suit brought. But on
a tort, or on a duty or promise which
has already been violated as grossly
as it ever can be, there is but one
action, and in that the injured party
must have full justice. When, in
the language of Chief Justice Best (2
Bing. 229), the thing has but one
neck, and that is cut ofif by the act of
tlie defendant, it would be mischiev-
ous to drive the plaintiff to a second,
third or fourth action as the sticces-
sive consequences of the wrong m^y
arise. It is not true, even as a gen-
eral rule, that courts will not antici-
pate a loss in futuro. If a man de-
stroys my orchard I may demand full
reparation at once, and I am not com-
pelled to sue every year for each crop
of fruit I lose. In slander the dam-
ages are swelled by all the sufferings
which the want of a good name may
occasion subsequently. In an action
for batter}- the plaintiff shall recover
for all the injuries likely to result
from the wounds inflicted by his ad-
versary (1 Ld. Raym. 339). He who
sues for the loss of an office or em-
ployment is entitled to a verdict at
once for the whole value of it with-
out waiting until the profits would
have reached his pocket (2 Bing,
229). But we need not resort to analo-
gies. A case directly in point is that
of Howell V. Young, 5 B. & C. 259.
There an attorney was employed to
ascertain whether certain mortgages
were a sufficient security for a loan
of £3.000, and falsely informed his
client that they were. It was held
that in an action againi-t the attor-
ney the client might recover for all
the probable loss he was likely to sus-
tain from the invalidity of the secu-
rity. The right of action in such cases
accrues at the time when the con-
tract or duty of the defendant is vio-
lated, and if suit be not brought
within six years afterwards the stat-
ute of limitations is a flat bar, no
matter when the consequential loss
may have happened.
'• The defendant has deprived the
§ 113.]
GENERAL PRINCIPLES.
323
took with the plaintiff to be suret}'^ for another if the [IS^]
plaintiff would let to hira a specified house at a rent stated,
and wotdd execute an agreement to that effect, but did not, it
was held that the defendant's undertaking was entire, not to
pay the rent as it became due from time to time, but to execute
an obligation to do so, and that only one action could [190]
be brouiiht on his contract.^
plaintiff of what she relied on for a
living; and this judgment is less
than it ought to be if it does not
place her in as good a condition,
present and prospective, as he
would have left her in by doing his
duty. It is vain to say she has suf-
fered no real loss. A debt worth to
her $1,800 has been converted into a
thing of no value. The defendant
found her in possession of what her
frugal habits taught her to think
sufficient; he left her 'as poor as
winter.' If he had taken the sum
out of her pocket in money, she
must, according to his reasoning, suf-
fer the extremity of the consequences
before she has a right of action; and
therefore she can bring no suit until
she starves. But human nature will
not endure such logic. The law is
made for practical uses. It listens
to no metaphysical subtleties; and
will not consent on any terms to call
that right which every sound heart
feels to be wrong. The value of
wealth, beyond what is barely neces-
sary for the present hour, consists
in the consciousness of liaving it,
and the comfortable security it af-
fords the possessor against fviture
want. A cautious providence for
the uime of need, which may come
hereafter, is one of the attributes
which distinguish the race of man
from the lower animals. The fear of
becoming de^stitute is a sentiment as
universal as it is necessary for the
well-being of the world. When that
fear is grounded on the absence of
any accumulation which may serve
as a support, it is poverty, — a real,
substantial, and sore evil, from
which every well constituted person
who feels will seek relie'f by the ut-
most exertion of mind and body.
Here was a woman who consented
to give up all she had in considera-
tion that $150 per annum for the
term of her life should be secured to
her beyond the reach of accidents
by a mortgage. That mortgage was
everything in the world that lay be-
tween her and the poor-house. By
withholding it from the record the
defendant left her to meet the ad-
versities of life unarmed, naked, de-
fenseless, and ' steeped in poverty to
the very lips.' Her counsel would
send her to Carson for support — to
Carson who has no means of keeping
the wolf from his own dooi*. Why
did they not tell her that she might
possibly be fed and clothed by public
charity ? She must be made whole
now or never — in this action or in
none. That can be done by allowing
her to recover all that the security
she lost was worth — what a prudent
person in her circumstances would
be willing to give it up for — the dif-
ference in value between her debt
made absolutely safe by a mortgage,
and the same debt with no security
except the personal responsibility of
an insolvent man. How much is
that ? The court fairly and carefully
put this question to the jury, and
their verdict is the answer."
1 Waterbury v. Graham, 4 Sandf.
215.
324 ENTIEETY OF DAMAGES. [§ 114.
"Where a personal injury is committed by a single tortious
act, that act is a cause of action, and all the consequences for
which compensation may be recovered are an entirety; recov-
ery therefor may be had once for all in one action, and only
in one, which may be brought any time after the act is com-
mitted.^ So of any act done or default made which is a
breach of any stipulation in a contract; it is a single and en-
tire cause of action, embracing all ensuing consequences for
which compensation is allowed; and however multifarious
may be the stipulations in it any act which amounts to a
total breach constitutes but a single cause of action;^ unless
perhaps where the stipulations are so distinct and relate to
subjects so disconnected as to have no relation or unity but
such as results from being made at the same time or contained
in one instrument.' Kor can an entire claim be severed by
partial assignments so as to become the foundation of several
suits instead of one unless the debtor consents thereto.*
§ 114. Damage to real property. Actions for single and
continuing nuisances and acts which are wrongful only when
they result in damage may be successively brought; the dam-
ages recoverable are ordinarily confined to those which accrued
prior to the time each action was begun.^ In an action for
1 Bower v. The Water Witch, 19 76 id. 488; Chicago & A. R. Co. v.
How. Pr. 241; Curtis v. Rochester, Maher, 91 III. 312.
etc. R Co., 18 N. Y. 584; Drew v. 5 Blunt v. McCormick, 3 Denio, 283;
Sixth Avenue R Co., 26 N. Y. 49; Fet- Cumberland & O, Canal Co. v. Hitch-
ter V. Beale, 1 Salk. 11; Hochster v. ings, 65 Me. 140: Thayer v. Brooks. 17
De la Tour, 2 El. & B. 678; Miller v. Ohio, 489; Loweth v. Smith, 12 M. &
Wilson, 24 Pa. 114; Veghte v. Hoag- W. 582; Beach v. Crain, 2 N. Y. 86;
land, 29 N. J. L. 125; Thompson v. St. Louis, etc. R. Co. v. Biggs, 52 Ark.
Ellsworth, 39 Mich. 719; Dailey v. 240,12 S. W. Rep. 331, 6 L. R. A. 804;
Dismal Swamp C. Co., 2 Ired. 222; Cobb v. Smith, 38 Wis. 21; Hazeltine
Chicago & E. R. Co. v. Kern. 9 Ind. v. Case, 46 id. 301, 32 Am. Rep. 715;
App. 505, 36 N. E. Rep. 381. See ch. Burnett v. Nicholson, 86 N. C. 99;
36. McConnel v. Kibbe, 29 111. 482, 33 id.
2 Jacobs V. Davis, 34 Md. 204; Wa- 175, 85 Am. Dec. 265; Holmes v. Wil-
terbury v. Graham, 4 Sandf. 215; son, 10 A. & E. 503; Kinnaird v.
Bancroft v. Winspear, 44 Barb. 209; Standard Oil Co., 89 Ky. 468, 25 Am.
Spear v. Stacy, 26 Vt. 61. St. 545, 7 L. R. A. 451, 12 S. W. Rep.
3 Mcintosh v. Lown, 47 Barb. 550. 937; Illinois Central R, Co. v. Wil-
* Chicago, etc. R. Co. V. Nichols, 57 bourn, 74 Miss. 284, 21 So. Rep. 1;
111.464; Fourth Nat. Bank v. Noo- Lamm v. Chicago, etc. R. Co., 45 Minn,
nan, 88 Mo. 372; Loomis v. Robinson, 71, 47 N. W. Rep. 455, 10 L. R. A. 268.
§ 114.] GENEBAL PEINCIPLES. 325
damages occasioned by flooding land a recover}' was allowed
for killing growing trees though they did not in fact die until
after the action was commenced.^ In an equity suit to obtain
damages for acts done and to restrain their continuance, if a
temporary injunction is disregarded a supplemental bill will
lie to recover damages accruing after the bringing of the orig-
inal bill.2 In Minnesota the abatement of a nuisance and re-
covery of damages predicated thereon and incident thereto
constitute but one cause of action : and where suit was brouo-ht
to abate a nuisance the judgment therein barred a subsequent
proceeding for damages based upon the same facts, notwith-
standing the pleading in that case would not sustain an award
of damages and none were recovered.'
Until recently it has been regarded as established by the
English decisions that, where injuries to the land of one per-
son result from digging, mining or building upon the property
of another, all the damages, past and prospective, were recover-
able in one suit brought upon the original cause of action.*
Late adjudications have established another rule. In 1861
the house of lords passed upon a question based upon the fol-
lowing facts: A. B. was the owner of a house; C. D. was the
owner of a mine under the house and under the surroundino-
o
land; C. D. worked the mine, and in so doing left insufficient
support to the house, which was not damaged nor the enjoy-
ment of it prejudiced until sometime after the workings had
ceased. The question submitted by the lord chancellor to the
lords was: "Can A. B. bring an action at any time within
six years after the mischief happened, or must he bring it
within six years after the working rendered the support in-
sufficient?" The opinion was that the action was not barred
if brought within six years from the time the mischief was
done.^ In an earlier case® an excavation had been made and
a subsidence had resulted, the injury from which had been sat-
iHayden v. Albee, 20 Minn. 159; 3 Gilbert v. Boak Fish Co., 86 Minn.
Clark V. Nevada Land & Mining Co., 365, 90 N. W. Rep. 767.
6 Nev. 202; Baltimore v. Merry naan, * Mayne's Dam. 138.
86 Md. 584, 39 Atl. Rep. 9a See Crab- » Backhouse v. Bonomi, 9 H. of L.
tree v. Hagenbaugh, 25 IlL 214, 76 Cas. 503: Bonomi v. Backhouse, El.
Am. Dec. 793. B. & E. 622, 654.
'■J Waterman v. Buck, 63 Vt. 544, 23 CNicklin v. Williams, 10 Ex. 259
Atl. Rep. 15. (1854).
32G ENTIRETY OF DAMAGES. [§ 114.
isfied. Subsequently another subsidence from the same exca-
vation caused additional injury. In an action to recover lor
the latter the defense was that the cause of action in respect
to the subsidence had been satisfied. The plaintiff pleaded
that he was not suing for that cause of action, but for a new
and different cause, the subsequent subsidence. The defendant
contended that the pleading was bad because it was only a
new assiornment of damao:e which was the result of the former
cause of action; with this contention the court agreed. In an-
other case' the trustees of a turnpike road made a covered
drain by the side of the highway; it was so made that it col-
lected water in it, and the water was caused to flow into the
plaintiff's mines, and could not go elsewhere. It was answered
that the action was barred; but it appeared that the plaintiff
had been injured within the time constituting the limitation.
The court said the causa cavsans of the injury to the property
was a continuing cause; but that cause alone gave to the mine-
owner no right of action: it was a cause which if thereby any
damage was occasioned to the mine-owner's property would
immediately give him a cause of action; it had given him a
cause of action sometime ago, but since that the trustees con-
tinued it; they might have stopped it; the continuing causa
causans remained and remained in the power of the trustees,
and that caused a new injury to the mine-owner's property,
that was a new right of action because it was an injury to his
property in each case. In a case ^ later than any referred to it
was held by a majority of the court, Cockburn, C. J., dissent-
ing, that, where land and buildings are injured by the removal
of lateral support through mining operations carried on by the
defendant on his own land, future damages are recoverable.
Up to this point it seems clear that these cases are in conflict;
AVhitehouse v. Fellowes not being harmonizable with Nicklin
V. Williams, and the latter being in antagonism with Back-
house V. Bonomi. This is the view of the court of appeal in a
case decided in 1884,' and in which the conclusion of the dis-
senting member of the court in Lamb v. Walker was adopted
iWhitehouse v. Fellowes, 10 C. B. ^ Mitchell v. Darley Main Colliery
(N. S.) 765 (1861). Co., 14 Q. B. Div. 125.
2 Lamb v. Walker, 3 Q. B. Div. 389
(1878).
§ 114.] GENERAL PRINCIPLES. 327
as a correct exposition of the law, and as being in harmony
with the decision of the house of lords in Backhouse v. Bonomi.
As stated by the master of the rolls in ]\Iitchell v. Darley
Main Colliery Co. the views of the chief justice in Lamb v.
Walker were that where an excavation had been made and a
subsidence had taken place, it may be true that for all the ef-
fects, both existing and prospective, of that subsidence, the
person injured ought to sue at once. But what is to be done
as to a new subsidence ? The mine-owner has excavated in
his own property; he knows that he has caused a subsidence
to his neighbor's property, and he knows that that neighbor is
entitled to damages for it; will he run the risk of allowing
that excavation to continue, the effects of which he may ob-
viate by immediately putting in a wall or propping up his own
property? There is nothing to prevent him; will he allow
that to continue or will he not? If he does nothing, he is not
counteracting the effects on his neighbor's property of some-
thing which he has done on his own; he is not counteracting
that mischief to his neighbor by doing something on his own
property; and if there is a new subsidence that will give his
neighbor a new cause of action. It is diflBcult to conceive
that the jury which is to give damages for the first subsidence
that is existing ought to give damages for a prospective new
subsidence which the defendant has the option and right to
prevent; so that, although before the verdict of the first jury
is given, or although at the time that that verdict is given, the
mine-owner is doing that which will prevent any future dam-
age, nevertheless the jury in the first action ought to take into
consideration the prospective injury which might be thought
likely to occur at the time when the action was brought. Ex-
pressing his own views, the master of the rolls continued :
" That seems to me a proposition which, when it is well sifted
out and examined, cannot stand, and therefore the chief jus-
tice's reasoning, of itself, and without reference to Backhouse
v. Bonomi, is conclusive to show that each subsidence is a fresh
cause of action. Besides that, it seems to me to be in accord-
ance with what was decided in Backhouse v. Bonomi, and to
be the logical result of Backhouse v. Bonomi. . . . There-
fore, I agree with the lord chief justice's view that each sub-
sidence is a new cause of action, although the causa causaus of
528
ENTIEETY OF DAMAGES.
[§ 115.
each subsidence may be the same. Jt may be argued that the
causa causans is not the same. The causa causans of the first
is the excavation, the causa causans of the second is, as a mat-
ter of fact, the excavation unremedied, or the combining of
the excavation and of its remaining unremedied." A similar
rule has been applied where the ^icts complained of were not
continuous, as where temporary flash-boards were erected on
a dam from time to time or the gates thereof were opened at
intervals; ^ and where the wate^ in a stream has been diverted
by placing obstructions therein,^ The cases in the state courts
are generally in accord with the existing English doctrine.'
In Pennsylvania the rule is otherwise.*
§ 115. Same subject. W/iere injuries result from a tem-
porary trespass upon land all the damage done must be re-
covered for in a single action. If there has been a recovery
for the injury inflicted upon a special part of a tract a subse-
quent action cannot be maintained to recover for that done
to another portion of it at the same time and by the same act. -^
1 Noyes v. Stillman, 24 C/^nn. 15.
2Beckwith v, Griswold, 29 Barb.
294. See Williams v. Missouri Fur-
nace Co., 13 Mo. App. 70.
3 Smith V. Seattle, 18 Wash. 484,51
Pac. Eep. 1057; St. Louis, etc. R. Co. v.
Biggs, 52 Ark. 240, 12 S. W. Rep. 331,
6 L. R. A. 804; Church of Holy Com-
munion V. Paterson Kxtension R. Co.,
66 N. J. L. 218, 49 Atl. Rep. 1030;
Bank of Hartford County v. Water-
man, 26 Conn. 324.
4 Noonan v. Pa -dee, 200 Pa. 474, 50
Atl. Rep. 255, 55 L. R. A. 410, 86 Am.
St. 722, approved in Guarantee Trust
& Safe Deposit Co. v. Farmers' &
Mechanics' Nat. Bank, 202 Pa. 94, 100,
51 Atl. Rep. 765. See Pantall v.
Rochester & P. Coal & Iron Co., 18
Pa. Super. Ct. 341, 53 Atl. Rep. 751, —
Pa. — , which is to the same effect.
6 Pierro v. St. Paul, etc. R. Co., 39
Minn. 451, 40 N. W. Rep. 530, 12 Am.
St. 673; Child v. Boston & F. L Works,
19 Fed. Rep. 258; Williams v. Pome-
roy Coal Co., 37 Ohio St 583; Jack-
son V. Emmons, 19 D. C. App.jCas. 250;
Dick V. Webster, 6 Wis. 481; Mar-
shall V. Ulleswater Steam Nav. Co.,
L. R. 7 Q. B. 166; Lord Oakley v. Ken-
sington Canal Co., 5 B. & Aid. 138;
Clegg V. Dearden, 12 Q. B. 575; Ved-
der V. Vedder, 1 Denio. 257; Beronio
V. Soutliern Pacific R. Co., 86 Cal. 415,
21 Am. St. 57, 24 Pac. Rep. 1093;
Hoffman v. Mill Creek Coal Co., 16
Pa. Super. Ct. 631. See Pantall v.
Rochester & P. Coal & Iron Co., 18
id. 341, — Pa. — , 53 Atl. Rep. 751.
Where damage was done to crops
by animals which got access to them
through a defective fence from
June to December, a recovery for
the whole damage alleged in one
count was proper. Darby v. Mis-
souri, etc. R, Co., 156 Mo. 391, 57 S. W.
Rep. 550; Cook v. Redman, 45 Mo.
App. 397.
A recovery by a cotenant for dam-
age to land inclosed and used by
him does not bar a subsequent ac-
tion by another cotenant for damage
§ 115.]
GENEEAL PKI^OIPLES.
329
Where the trespass is continuing or is repeated each repeti-
tion or the continuation after suit broufjht is a fresh wrong
and affords ground for a new action. So where the plaintiff
was seized of an ancient house with liofhts therein, and the de-
done by the same act. Gillum v. St.
Louis, eto, R. Co.. 4 Tex. Civ. App. 62-',
2a S. W. Rep. 716.
In Kansas Pacific R Co. v. Mihl-
man, 17 Kan. 224, Brewer, J., dis-
cussed this question in an interest-
ing way. It was there ruled that
where A. enters upon the land of B.
-and digs a ditcli thereon, there is a
direct invasion of the riglits of B., a
completed trespass, and the cause of
action for all injuries resulting
therefrom commences to run at the
time of the trespass; the fact that
A. does not re-enter B.'s land and fill
up the ditch does not make him a
continuous wrong-doer and liable to
repeated actions as long as the ditch
remains unfilled; no one can be
charged as a continuing wrong-doer
who has not the right, and who is
not under the duty, of terminating
that which causes the injury; a
party who has dug a ditch upon the
land of another has no right to re-
enter and fill it up; though unfore-
seen injury results from a completed
act there does not arise a new cause
•of action for which a recovery may
be had after the original wrong has
been satisfied.
Clegg V. Dearden, 13 Q. B. 576, is
interesting upon the same distinc-
tion. There the owner of a coal
mine excavated as far as the bound-
ary (which he was by custom en
titled to do), and continued the ex-
cavation wrongfully into the neigh-
boring mine, leaving an aperture in
the coal of that mine, through which
water passed into it and did damage.
It was held that the party so exca-
vating was liable in trespass for
4L)reaking into the neighboring mine,
but not in an action on the case for
omitting to close up the aperture on
his neighbor's soil, though a contin-
uing damage resulted from its being
unclosed. It was also held that a
new action could not be maintained
for damages occasioned by the flow
of water in consequence of the aper-
ture remaining unclosed after an ac-
tion on the case had already been
brought for making the aperture
and letting in the water, which ac-
tion was referred to arbitration, and
the plaintiff being made a party to
the reference in respect of any in-
jury to him by any of the matters
alleged in the declaration in such
action, had had damages awarded
and paid for such injury, although
the damage last complained of was
subsequent to the award and pay-
ment. Lord Den man, C. J., said:
" The gist of the action as stated in
the declaration is the keeping open
and unfilled of an aperture and ex-
cavation made by the defendant
into the plaintiff's mine. By the
custom the defendant was entitled
to excavate up to the boundary of his
mine without leaving any barrier;
and the cause of action, therefore,
is the not filling up the excavation
made by him on the plaintiff's side
of the boundary and within his
mine. It is not, as in the case of
Holmes v. Wilson, 10 A. & E. 503, a
continuing of something wrongfully
placed by the defendant upon the
premises of the plaintiff; nor is it a
continuing of something placed
upon the land of a third person to
the nuisance of the plaintiff, as in
the case of Thompson v. Gibson, 7
M. & W, 456. There is a legal obii-
330 ENTIKETY OF DAMAGES, [§ 115.
fendant erected a building whereby the former's lights wore
estopped, a recovery for the erection did not bar an action for
its continuance.^ In another case there had been an action of
trespass for placing stumps and stakes on the plaintiff's land,
which action had been satisfied ; a subsequent action for leav-
in**- them there was sustained on the ground that a new tres-
pass was thereby committed.^ In Holmes v. Wilson* trespass
was brought against a turnpike company for continuing but-
tresses on the plaintiff's land to support its road. He had re-
covered compensation in a former action. After refusing to-
remove the buttresses on request another action of trespass
was brouo^ht. It was arfjued for the defendant that the dam-
ages given in the first action were to be regarded as full com-
pensation for all injuries and were to be taken as the full esti-
mated value of the land occupied by the buttresses; that the
judgment operated as a purchase of the land. In reply Pat-
terson, J., said : " How can you convert a recovery and pay-
ment of damages for the trespass into a purchase ? A recov-
ery of damages for a nuisance to land will not prevent an-
other action for continuing it. As to the supposed effect of
the judgment in changing the property of the land, the con-
sequence of that doctrine would be that a person who wants
his neighbor's land might always buy it against his will, pay-
ing only such purchase-money as a jury might assess for dam-
ages up to the time of the action. If the property was changed
when did it pass ? Suppose the plaintiff had brought eject-
ment for the part occupied by the defendant's buttresses,
would the recovery of damages in trespass be a defense ? There
gation to discontinue a trespass or such an omission is neither a con-
remove a nuisance; but no such ob- tinuation of a trespass nor of a nui-
ligation upon a trespasser to replace sance; nor is it the breach of any
what he has pulled down or de- legal duty." Cumberland & O. Canal
stroyed upon the land of another, Co. v. Hitchings, 65 Me. 140.
though he is liable to an action of Successive actions lie for the un-
trespass to compensate in damages lawful diversion of water. Irving v.
for the loss sustained. The defend- Media, 10 Pa. Super. Ct. 132, affirmed
ant having made an excavation and without opinion, 194 Pa, 648.
aperture in the plaintiff's land was ^ Rosewell v. Prior, 2 Salk. 459.
liable to an action of trespass; but 2 Bowyer v. Cook, 4 M, G, & S. 236.
no cause of action arises from his Compare Kansas Pacific R. Co. v..
omitting to re-enter the plaintiff's Mihlnian, 17 Kan. 224.
land and fill up the excavation; s lo A. & E. 503.
§ 110.] GENERAL PKINCIPLES. 331
is no case to show that when hind is vested in a party and
fresh injuries are done upon it fresh actions will not lie."
Where the defendant dug holes in and deepened the bed of a
stream in order to increase its water supply, with the result
that the water flowed more rapidly past the land of the plaint-
iff and was of less depth, so that such land was liable to be
trespassed on by cattle, the plaintiff was entitled to bring suc-
cessive actions for separate acts of trespass.' These cases may
be distinguishable from the Kansas decision- on the irround
that the request to remove the things complained of may be
considered as a license to enter for that purpose; but other-
wise it is difficult to harmonize them with it. It may be that
the true ground of distmction is stated in a ]\[aine case:'
"When something has been unlawfully placed upon the land
of another, which can and ought to be removed, then, inas-
much as successive actions may be maintained until the wrong-
doer is compelled to remove it, the damages in such suit must
be limited to the past and cannot embrace the future."
§ 116. Same subject. The authorities are not agreed as to
the right to bring successive actions where the result of a tort
to real property is to create a permanent appropriation of it
to the public use, as for railroads, streets, sewers and the like;
or to change its condition so as to adapt it to the grade of
streets. Where property is taken for public use under the
statutes which provide therefor prospective damages as well
as others are assessed; they are an entirety, and all such as
proceed from the appropriation of it to the use for which it
is taken are presumed to have been anticipated.'* If land is
1 Clarke v. Midland Great West- Schoick v. Delaware Canal, 20 N. J.
ern R. Co.. [1895] 2 Irish, 294. L. 249; Water Co. v. Chambers, 13
2 Kansas Pacific R. Co. v. Mihl- N. J. Eq. 199; Waterman v. Connee-
man, supra. ticut R. Co., 80 Vt. 610, 73 Am. Dec.
3 Cumberland & O. Canal Co. v, 326; Chesapeake Canal v. Grove, 11
Hitchings. 65 Me. 140. Gill & J. 398; Furniss v. Hudson
* White V. Chicago, etc. R. Co., 122 River R. Co.. 5 Sandf. 551; Baltimore
Ind. 317, 23 N. E. Rep. 782, 7 L. R. A. R. Co. v. Magruder, 34 Md. 79, 6 Am.
257; Perley v. B., C. & M. R. Co., 57 Rep. 310; Missouri R. Co. v. Haines,
N. H. 212; Sawyer v. Keene, 47 id. 10 Kan. 439; La Fayette R. Co. v. New
173; Aldrich v. Cheshire R. Co., 21 Albany, 13 Ind. 90, 74 Am. Dec. 246;
id. 359, 53 Am. Dec. 212; Fowle v. Montmorency R. Co. v. Stockton, 43
New Haven & N. Co., 107 Mass. 352, Ind. 328; Evans v. Haefner, 29 Mo.
112 id. 334, 17 Am. Rep. 106; Van 141; Baker v. Johnson, 2 Hill, 342;
332
ENTIKETY OF DAMAGES.
[§ 116.
damao-ed by a permanent structure lawfully erected, which,
without any further act except to keep it in repair, must con.
tinue to cause the result which is complained of, the owner
may recover in one action for damages sustained and those
which will fall upon him. The judgment in the action first
brouo-ht will bar another like action for subsequent injuries
from the same cause.^ A recovery of prospective damages in
such a case will bar an action for subsequent damages though
caused by an unusual event.- In some cases this principle has
been extended to the unlawful entry upon land by railroads
and the building of tracks thereon,^ and in others to the right-
ful improvement of a street, though the work was negligently
done, and the negligence was the cause of the action.* These
decisions are rested on the principle that the parties have
elected to consider the trespass as permanent, and they apply
the rule applicable in condemnation proceedings which requires
a final adjustment of the liability of the party condemning.
Call V. Middlesex, 2 Gray, 232;
Veghte V. Hoagland, 29 N. J. L. 125;
Gait V. Chicago, etc R. Co., 157 111.
125, 140, 41 N. E. Eep. 648, citing the
text. But see Lancashire R. Co. v.
Evans, 15 Beav. 322.
It is said in North Vernon v. Voeg-
ler, 103 Ind. 314, 3 N. K Rep. 821,
that the construction of works of a
public character by municipal of-
ficers is clearly analogous to the seiz-
ure of land under the right of emi-
nent domain, and that all the dam-
ages occasioned thereby must be
assessed in one action. But this posi-
tion is controverted by a case con-
sidered in the text of this section.
1 Fowle V. New Haven & N. Co., 107
Mass. 352; Troy v. Cheshire R Co.,
23 N. H. 83; Chicago & A. R. Co. v.
Maher, 91 111. 312; Same v. Schaffer.
2G 111. App. 280: Same v. Loeb, 118
111. 203, 8 N. E. Rep. 460; Swantz v.
MuUer, 27 111. App. 320; Elizabeth-
town, etc. R. Co. V. Combs, 10 Bush,
382, 19 Am. Rep. 67; Jeffersonville,
etc. R. Co. v. Esterle, 13 Bush, 667;
North Vernon v. Voegler, 103 Ind.
314, 2 N. E. Rep. 821; Central Branch
Union Pacific R. Co. v. Andrews, 26
Kan. 702; Ohio & M. R. Co. v. Wach-
ter. 123 111. 440, 15 N. E. Rep. 279;
Bizer v. Ottumwa Hydraulic Co., 70
Iowa, 145, 30 N. W. Rep. 172; Powers
V. Council Bluffs, 45 Iowa, 652, 24
Am. Rep. 792; Indiana, etc. R. Co. v.
Eberle, 110 Ind. 542, 59 Am. Rep. 225,
11 N. E. Rep. 467; Lafayette v. Nagle,
113 Ind. 425, 15 N. E. Rep. 1; Frankle
V. Jackson, 33 Fed. Rep. 371.
2 Fowle v. New Haven & N. Co., 113
Mass. 334, 17 Am. Rep. 106.
3 Chesapeake & O. R. Co. v. Moats,
20 Ky. L. Rep. 1757, 50 S. W. Rep. 31;
International, etc. R. Co. v. Giesel-
man, 13 Tex. Civ. App. 133, 34 S. W.
Rep. 658: Frankle v. Jackson, 33
Fed. Rep. 371; Central Branch Union
Pacific R. Co. v. Andrews, 26 Kan.
702; Indiana, etc. R Co. v. Eberle,
supra; Baldwin v. Chicago, etc. R.
Co., 35 Minn. 354, 29 N. W. Rep. 5.
* North Vernon v. Voegler, 103 Ind.
314, 2 N. E. Rep. 831; Powers v, Coun-
oil Bluffs, supra.
§ IIG.] GENERAL PKINCIPLES. 333
As will appear there are strong objections and weighty au-
thorities in opposition. Some of the courts which entertain
this view hold that if the gist of the complaint is not the un-
lawful entr}^ and occupation, but the improper use, that the
wrong may be redressed in successive actions.^
For damages resulting from the negligent erection or con-
struction of a building or culvert which is erected or con-
structed pursuant to law, successive actions may be brought.'^
Damage to crops by the annual overflow of water is suscep-
tible of apportionment, and compensation therefor may be re-
covered in successive actions.^ In a New York case, which
was fully considered,* it is held that, if a railroad is constructed
upon or over a highway in which or in the soil of which in-
dividuals have private rights, unless the public right is obtained
and private rights are lawfull}' acquired the builders thereof
are trespassers; and an adjacent owner may recover only the
damages he has sustained up to the commencement of the action ;
for damages thereafter resulting successive actions may be
brought.^ There is no presumption that the trespass will be
continued, and title to land cannot be acquired otherwise than
by purchase or condemnation proceedings.® Criticising the rule
held by some courts to the effect that where the character of
the injury is permanent, and the complaint recognizes the de-
fendant's right to continue in the use of the property, and to
acquire as the result of the suit the owner's right thereto, in pur-
suance of which the damages are assessed on the basis of the
permanent depreciation of the property, and with special ref-
erence to a case which holds that damages may be so assessed
^ Lindquest v. Union Pacific R. Co., New York. New York Nat. Bank v.
33 Fed. Rep. 372. Metropolitan E. R. Co., 108 N. Y. 660,
^ Ohio & M. R. Co. V. Wachter, 123 15 N. E. Rep. 445 : Pond v. Same, 112 N.
111. 440. 15 N. E. Rep. 279; Chicago, Y. 186, 8 Am. St. 734, 19 N. E. Rep. 487.
etc. R. Co. V. Schaffer, 26 111. App. 280, See Lahr v. Same. 104 N. Y. 270, 10 N.
124 III. 112, 16 N. E. Rep. 239. E. Rep. 528; Henderson v. New York
3 Oldfield V. Wabash, etc. R. Co., 22 Central R. Co., 78 N. Y. 423; Schell
Mo. App. 607; Van Hoozier v. Han- v. Plumb, 55 id. 592.
nibal, etc. R. Co., 70 Mo. 145; Dick- 6 Carl v. Sheboygan, etc. R. Co., 46
son V. Chicago, etc. R. Co., 71 id. 575. Wis. 625, 1 N. W. Rep. 295; Blesch v.
<Uline V. New York, etc. R. Co., Chicago, etc. R Co., 43 Wis. 183-
101 N. Y. 98, 54 Am. Rep. 601, 4 N. E. Russell v. Brown, 63 Me. 203; Cum-
Rep. 536. berland & O. Canal Co. v. Hitchings,
5 This rule is well established in 65 id. 140.
334
ENTIRETY OF DAMAGES.
[§ li6.
for negligence in making a lawful improvement in a street/
Earl, J., saj's that in his opinion that decision is clearly unsound
as to the precise question adjudged. "What right was there
to assume that the street would be left permanently in a neg-
ligent condition, and then hold that the plaintitf could recover
damages upon the theory that the carelessness would forever
continue? " The municipality " may cease to be careless, or
remedy the effects of its carelessness, and it may apply the;;
requisite skill to its embankment, and this it may do after its
carelessness and unskilful ness and the consequent damages
have been established by a recovery in an action. The moment
an action has been commenced, shall the defendant in such a
case be precluded from remedying its wrong ? Shall it be so
precluded after a recovery against it? Does it establish the
right to continue to be a wrong-doer forever by the payment
of the recovery against it? Shall it have no benefit by discon-
tinuing the wrong, and shall it not be left the option to dis-
continue it? And shall the plaintiff be obliged to anticipate
his damages with prophetic ken and foresee them long before,
it may be many years before, they actually occur, and recover
them all in his first action ? I think it is quite absurd and il-
logical to assume that a wrong of any kind will forever be con-
tinued and that the wrong-doer will not discontinue or remedy
it, and that the convenient and just rule, sanctioned by all the
authorities in this state, and by the great weight of authority
elsewhere, is to permit recoveries in such cases by successive
actions until the wrong or nuisance shall be terminated or
abated." ^ In Pennsylvania if the damage from the taking and
1 North Vernon v. Voegier, 103 Ind.
314, 2 N. E. Rep. 831.
2 The writer of the opinion cited
Rose well v. Prior, 2 Salk, 460; Bow-
yer v. Cook, 4 M., G. & S. 236; Holmes
V. Wilson, 10 A. & E. 503: Thompson
V. Gibson, 8 M. & W. 281; Mitchell
V. Darlej- Main Colliery Co., 14 Q. B.
Div. 125; Whitehouse v. Fellowes, 10
C. B. (N. S.) 765; Esty v. Baker, 48
Me. 495; Russell v. Brown, 63 id. 203;
Cumberland & O. Canal Co. v. Hitch-
ings, 65 id. 140; Bare v. Hoffman, 79
Pa. 71, 21 Am. Rep. 42; Thompson v.
Morris Canal & B. Co., 17 N. J. L, 480:
Thayer v. Brooks, 17 Ohio. 489; An-
derson, etc. R. Co. V. Kernodle, 54
Ind. 314; Harrington v. St. Paul, etc.
R. Co., 17 Minn. 215; Adams v. Hast-
ings & D. R. Co., 18 id. 260; Ford v.
Chicago & N. R. Co., 14 Wis. 609, 80
Am. Dec. 791; Carl v. Sheboygan,
etc. R. Co., 46 Wis. 625, 1 N. W. Rep.
295; Biesch v. Chicago & N. R. Co.,
43 Wis. 183; Green v. New York, etc.
R. Co., 65 How. Pr. 154; Taylor v.
Metropolitan E. R. Co., 50 N. Y.
Super. Ct. 311; Duryea v. Mayor, etc..
§^ 117, 118.] GENERAL PEINCIPLES. 335
from the change of grade arises at the same time the compen-
sation awarded or recovered for the taking embraces the dam-
ages resulting from the change of grade,' but if the latter is
made subsequent to the taking an action to recover the dam-
ages done thereby will lie.^
§ 117. Contracts of indemnity. Upon contracts of indem-
nity, if there has been a breach before suit brought, any actual
damage subsequently resulting therefrom, or payments made
by the indemnified party covered by the agreement after as
well as before the commencement of suit and down to the
time of the trial, may be included in the recovery.' So [101]
if the defendant's breach of any contract or his wrongful act has
involved the injured party in a legal liability to pay money,
or he has incurred indebtedness to a third person, or expenses
to relieve against the effects of the act which constitutes the
cause of action, such liability, indebtedness or expenses, paid
or not, constitutes an element of damage without regard to
the time when it was actually incurred or discharged.*
§ lis. Damage to property and injury to person by same
act. The question has arisen whether damage inflicted upon
property and injury resulting to the person from one act
of negligence will give cause for independent actions. Through
the negligence of the defendant's servant the plaintiff's cab
was damaged and his person injured. An action to recover
for the damage done to the cab was successful. Subsequently
.an action to recover for the personal injuries was instituted. It
was held that inasmuch as the damages therefor might have
been claimed in the other action, the judgment recovered in
it barred the second suit,* It was considered that there was
but one wrong though there were two consequences. The
court of appeal reversed this judgment, Coleridge, C. J., dis-
senting. The majority of the court were of the opinion that
26 Hun, 120, and other cases in New 3 Spear v. Stacy, 26 Vt 61.
York. 4 Id.; Dixon v. Bell, 1 Stark. 287;
1 Righter v. Philadelphia, 161 Pa. Hagan v. Riley, 13 Gray, 515; Smith
73, 38 Atl. Rep. 1015. v. Howell, 6 Ex. 730; Kenyon v.
2 Clark V. Philadelphia, 171 Pa. 30, Woodruff, 33 Mich. 310.
33 AtL Rep. 124, 50 Am. St. 790; Rod- & Brunsden v. Humphrey, 11 Q. B.
gers V. Philadelphia, 181 Pa. 243, 37 Div. 712 (1883), per Pollock, R, and
Atl. Rep. 339. Lopes, J.
336 ENTIRETY OF DAMAGES. [§ 118.
" two separate kinds of injury were in fact inflicted, and two
wrongs done. The mere negligent driving. in itself, if
accompanied b}'- no injury to the plaintiff, was not ac-
tionable at all, for it was not a wrongful act at all till a wrong
arose out of the damage which it caused. One wrong was
done as soon as the plaintiff's enjoyment of his property was
substantially interfered with. A further wrong arose as soon
as the driving also caused injury to the plaintiff's person. Both
causes of action in one sense may be said to be founded upon
one act of the defendant's servant, but they are not on that
account identical causes of action."^ This distinction im-
presses the writer as being too metaphysical for practical
purposes, and as out of harmony with the analogies of the
law. Our assent is compelled to the opposite view by the
reason given by the chief justice in his dissenting opinion:
"It appears to me that whether the negligence of the servant
or the impact of the vehicle which the servant drove be the
technical cause of action, equally the cause is one and the
same; that the injury done to the plaintiff is injury done to
him at one and the same moment by one and the same act in
respect of different rights, i. e., his person and his goods, I do
not in the least deny; but it seems to me a subtlety not war-
ranted by law to hold that a man cannot bring two actions if
he is injured in his arm and in his leg, but can bring two if
besides his arm and leg being injured his trousers which con-
tains his leg and his coat sleeve which contains his arm have
been torn." The rule which prevails in the state courts gen-
erally is in harmony with the views of the dissenting opinion
quoted frora.^ In New York, however, the English doctrine
1 Id. ; 14 Q. B. Div. 141 (1884). See ken v. Avery Manuf. Co., — N. D. — ,
Rose V. Buckett, [1901] 2 K. B. 449. 92 N. W. Rep. 487; Von Fragstein v.
2 Pittsburgh, etc. R Co. v. Carlson, Windier, 2 Mo. App. 598; Lamb v.
24 Ind App. 559, 566, 56 N. E. Rep. St. Louis, etc. R. Co., 33 id. 489.
251; Wesley V. Chicago, etc. R. Co., Under the California code, which
84 Iowa, 441. 51 N. W. Rep. 163; is to the effect that the plaintiff may
Owensboro & BL Gravel Road Co. unite several causes of action in the
V. Coons, 20 Ky. L. Rep. 1678, 49 S. W. same complaint when they all arise
Rep. 966; Braithwaite v. Hall, 168 out of injuries to character, in-
Masa 38, 46 N. E. Rep. 966; Bliss v. juries to person, injuries to prop-
New York Centi'al, etc. R. Co., 160 erty, a complaint seeking a re-
Mass. 447, 455, 36 N. E. Rep. 65; Nok- covery for damages to property.
§ 110.] GENERAL PKIXCIPLES. SZ1
is favored. The ground upon which the court of appoala
rested its ruling is that there is such an essential difference
between an injury to the person and an in jury to property that
makes it impracticable, or, at least, very inconvenient in the
administration of justice to blend the two. Different periods
of limitation apply, and the law governing the assignment of
the two causes of action varies.' One of the Texas courts of
civil appeals also favors the English rule.^
§ 110. What is not a double remedy. In an attachment
in equity against B. and A. the property of A. was taken as
the property of B., and, being perishable, was sold under an
order of the court, and afterwards the court decreed that the
sheriff pay the proceeds of sale to A. The sheriff failing lo
pay, A. moved against him and his sureties, and judgment was
entered for the penalty of his bond, to be discharged by the
payment of the proceeds, which they paid. Previous to the
decision of the court in favor of A. he brought an action on
the bond of the sheriff, against him and his sureties, for the
trespass in taking his goods; the former judgment and [1*V2]
its pa3'ment were set up in defense but it was held that the
action was not thereby barred , but A. might recover the dif-
ference between the value of the goods at the time they were
taken under the attachment and the amount of the proceeds
of sale paid him.'' If the mast-sr of a whaling vessel [103]
abandons the voyage and wrongfully sells the property of the
owner on board, the subsequent collection of a part of the pro-
ceeds of such sale is no bar to an action against him for break-
ing up the voyage and disposing of the property, but it re-
duces the damage.* One whose goods were maliciously at-
tached upon a writ against a third party and who recovered
judgment in replevin against the attaching officer was not
thereby barred of his action against the original plaintiff for
wrongfully directing the levy. The original attachment was,
injury to character and impairment Texas Civ. App. 144, 27 S. W. Rep.
of health is bad. Lamb v. Har- 924. See Stickford v. St. Louis, 7
baugh, 105 Cal. 680, 39 Pac. Rep. 56. Mo. App. 317.
' Reilly v. Sicilian Asphalt Paving 3 Sangster v. Commonwealth, 17
Co., 170 N. Y. 40, 62 N. E. Rep. 772, Gratt. 124.
88 Am. St. 636. < Brown v. Smith, 12 Cush. 366.
2 Watson V. Texas & P. R. Co., 8
VOKl — 22
338 ENTIRETY OF DAMAGES. [§ 120.
on the part of the present defendant, a malicious abuse of
legal process. Against the officer no malice or improper mo-
tive was charged. He could therefore be held to answer in
damages only to the extent required to compensate the plaint-
iff in replevin for the actual pecuniary loss necessarily in-
volved. The plaintiff in the attachment, on the other hand,
may be liable for consequential, and, perhaps, for vindictive,
damages. The causes of action were different and distinct.^
§ 120. Prospective damages. In the application of the
rule that all the damages which pertain to a cause of action,
without reference to the time when they actually accrue, are
entire and cannot be recovered piecemeal by successive actions,
it is frequently necessary to take into consideration damages
which have not been actually suffered either at the commence-
ment of the suit or its trial; for otherwise there would be a
[lt>4] very inconvenient postponement of that class of actions
or a renunciation of a large part of the compensation due to
the injured party When a cause of action accrues there is a
right, as of that date, to all the consequent damages which will
ever ensue.^ They are recoverable in one action if they can
be proved, and only one can be maintained; it may be brought
at any time after the accrual of the right. The question is a
practical and legal one in each case whether the cause of ac-
tion IS of such a nature that the injurious consequences of the
wrong complained of can reach into the future or whether
any subsequent damages will be owing to a continuous fault
which may be the foundation of a new action. So is the ques-
tion whether any offered evidence tends to prove future dam-
ages which are the legal result of the wrong which constitutes
the cause of action, and whether the sum of the evidence in
1 V:ncent v. McNamara, 70 Conn. Milk Co., 47 Minn. 460, 46 N. W. Rep.
332, -69 Ati. Rep. 444. 142; Erie & P. R. Co. v. Douthet, 88
^ Empie v. Empie, 35 App. Div. 51, Pa. 243, 32 Am, Rep. 451: Commerce
.•^4 N. Y. Supp. 402; Morrison v. Mc- Excliange Nat. Bank v. Blye, 123 N.
Atee, 23 Ore. 530, 32 Pac. Rep. 400; Y. 132. 25 N. E. Rep. 208; Bracken v.
Fales V. Hemenway, 64 Me. 373; Atlantic Trust Co., 167 N. Y. 510, 60
Paige V. Barrett, 151 Mass. 67, 23 N. N. E. Rep. 772, 82 Am. St. 731; Am-
E. Rep. 725; Cook v. Redman, 45 Mo. erman v. Deane, 132 N. Y. 355, 30 N.
App. 397, citing the text; Ennis v. E. Rep. 741. SeeDrummond v. Crane,
Buckeye Pub. Co.. 44 Minn. 105, 46 159 Mass. 577, 35 N. E. Rep. 90,38 Am.
N. W. Rep. 814; Bowe v. Minnesota St. 460, 23 L. R. A. 707.
■§ 120.] GENERAL PRINCIPLES. 339
the particular case is sufficient for the consideration of the
If a growing crop is destroyed it can, of course, never be
shown with absolute certainty that but for its destruction it
would have matured; nor that one party who is stopped by
the other in the performance of a special contract would other-
wise have proceeded to a complete execution of it so as to en-
title himself to its full benefits. Nor is it matter of law that
the jury shall assume that the crop would have matured, or
that the contract would have been fulfilled. The jury may
estimate, with the aid of testimony, the value of the crop at
the time of its destruction, in view of all the circumstances
existing at any time before the trial, favoring or rendering
doubtful the conclusion that it would attain to a more valuable
condition, and all the hazards and expenses incident to the
process of supposed growth or appreciation;^ and so of the in-
crease of a flock of sheep and the growth of the wool thereof.^
The same uncertainties and a greater surface of them are en-
countered in actions upon warranties that seeds sold for plant-
ing are of particular varieties.'
In actions upon contracts which contemplate a series [195]
•of acts and a considerable period of time for performance a
party complaining of a total breach by the other sufficiently
maintains his right to recover if he has performed without
default up to the time of the breach and is ready to proceed,
though his right to the value of the contract depends on his
ability and inclination to prosecute the performance on his
part to completion. He is entitled to recover the profits which
iShoemakerv. Acker, 116 Cal. 239, 62 Tex. 570; Chicago, etc. R. Co. v.
48 Pac. Rep. 62, citing the text; Slioe- Schaffer, 26 111. App. 280.
maker v. Crawford, 82 Mo. App. 487; 2 Schrandt v. Young, 89 N. W. Rep.
Railway Co. v. Yarborough, 56 Ark. 607 (Neb.), citing the text; Rule v.
012. 619, 20 S. W. Rep. 515, quoting McGregor, Iowa, — , 90 N. W.
the text; Railway Co. v. Lyman, 57 Rep. 811.
Ark. 512, 22 S. W. Rep. 170: Taylor 3 Randall v. Raper. El, B. & E. 84;
V. Bradley, 39 N. Y. 129; People's Ice Passinger v. Thorburn. 34 N. Y. 634;
Co. V. Steamer Excelsior, 44 Mich. 229, White v. Miller, 7 Hun, 427, 71 N. Y.
6 N. W. Rep. 686; Smith v. Chicago, 118, 27 Am. Rep. 13; Van Wyck v.
etc. R. Co., 38 Iowa, 518; Richardson Allen, 69 N. Y. 61, 25 Am. Rep. 136;
V. Northrup. 66 Barb, 85; Folsom v. Wolcott v. Mount, 36 N. J. L. 262, 13
Apple River Log Driving Co., 41 Wis. Am. Rep. 438; Ferris v. Comstock,
602; Texas Pacific R. Co. v. Bayliss, 33 Conn. 513.
"40 ENTIRETY OF DAMAGES. [§ 121.
he would have made, — the contract price less what he would
have to do or expend to earn or otherwise entitle himself to
it. This deduction may be the price of labor or the value of
property at a future day. The action for damages recoverable
for such a breach may be brought and tried before that day
arrives. If so, the prices prevailing at the time of the breach
may be acted upon as the test of values at the times mentioned
in the contract;^ but if the trial be delayed until the date
fixed for performance the parties may show the prices actually
prevailing then or any other conditions, favorable or other-
wise, affecting the cost of fulfilling the contract,^
§ 121. Certainty of proof of future damages. The con-
servatism pervading the law is opposed to allowing compen-
sation for probable loss. It manifests itself more particularly
in respect to those damages which might be proved with cer-
tainty if they were real; and, if not fanciful and imaginary,
are past damages: not such as are contemplated to arise in
the future from such causes as, according to general experience,
produce them. The decided cases which relate to prospective
damages w^arrant the statement that the injured party is en-
titled to recover compensation for such elements of damage
as are likely to occur; the jury may proceed upon reasonable
probabilities, and accept as sufficiently proved those results
which, under like circumstances, generally come to pass.' It is
[196] not, however, to be hence inferred that prospective dam-
1 Masterton v. Mayor, 7 Hill, 61. Mo. 534 (disapproved in Pellet v.
2 Burrell v. New York & S. Solar Manufacturers' & Merchants' Ins.
Salt Co., 14 Mich. 34; People's Ice Co., 104 Fed. Rep. 503, 43 C. C. A. 669);
Co. V. Steamer Excelsior, 44 Mich. Howell v. Young, 5 B. &C. 259; Mac-
229, 6 N. W. Rep. 636; Chicago v. rae v. Clarke, L. R. 1 C. P. 403; Frye
Greer, 9 Wall. 726; Hochster v. De v. Maine Central R. Co.. 67 Me. 414;
laTour,2 Ei. & B. 678; Frost v.Knight, Richmond v. Dubuque, etc. R. Co., 40
L. R. 5 Ex. 323, 7 id. Ill; Taylor v. Iowa, 264; Schell v. Plumb, 55 N. Y.
Bradley. 39 N. Y. 129; Howard v. 592; Missouri, etc. R. Co. v. Fort Scott,
Daly, 61 id. 362, 19 Am. Rep. 385; 15 Kan. 435; Roper v. Johnson, L. R.
Richmond v. Dubuque, etc. R. Co., 40 8 C. P. 167; Peltz v. Eichele, 63 Mo.
Iowa, 264; Jacobs v. Davis, 34 Md. 171; Sutherland v. Wyer, 67 Me. 65;
204; Grover v. Buck, 34 Mich. 519; Gifford v. Waters. 67 N. Y. 80; Rich.
Shoemaker v. Acker, supra. ardson v. Mellish, 2 Bing. 229; Wil-
3 James v. Kibler, 94 Va. 165, 26 S. sou v. Northampton, etc. R Co., L
R Rep. 417, citing the text; Treat v. R. 9 Ch. 379, quoted from in i? 590.
Hiles, 81 Wis. 278, 50 N. W. Rep. 896; See ch. 36.
Lewis V. Atlas Mut. L. Ins. Co., 61
§ 122.] GENERAL PRINCIPLES. 341
ages may be recovered on every plausible anticipation, nor
that no allowance is to be made for the uncertainties which
affect all conclusions depending on future events; it is only
intended that such uncertainties, where the damages are shown
by evidence reasonably certain, do not exclude them wholly
from consideration. The price of an average colt cannot be
fixed by deducting the cost of its keep from the value of an
average horse, for there is not a certainty of exemption from
accidents and disease. All the damaores from a single tor-
tious act are an entirety, and must be assessed and recovered
once for all.' Successive actions cannot be maintained for their
recovery as they may accrue from time to time. The injured
party is entitled to recover in one action compensation for all
the damages resulting from the injury, whether present or
prospective. And in respect to the latter, the rule is that ho
can recover for such as it is shown with reasonable certainty
will result from the wrongful act complained of.^
§ 122. Action for enticing away apprentice, servant or
son. In an action for enticing away an apprentice damages
cannot include the loss of his services for the residue of his
term, for he may return.^ Where an action on the case was
brought to recover for the defendant's enticement of the
plaintiff's minor son from his service and inducing him to en-
list in the army for three years, it was held that the plaintiff
could only recover damages for the loss of service up to [197]
the time of the commencement of the action, or at most up to
the time of trial.''
1 § 120; Galligan v. Sun Printing & pp. 187, 193-198 of the text of the 1st
Publishing Ass'n, 25 N. Y. Misc. 355, ed.; Grotenkemper v. Harris, 25 Ohio
54 N. Y. Supp. 471. St. 514: Hamilton v. Great Falls
2 Filer v. New York Central R. Co., Street R. Co., 17 Mont. 334, 352, 43
49 N. Y. 42; Miller v. Wilson, 24 Pa. Pac. Rep. 860, 43 id. 713, citing tlie
114; Fetter V. Beale.l Salk. 11; Hod- text. See ^ 1251.
soil V. Stallebrass, 11 A. & K 301 ; ^Fay v. Guynon, 131 Mass. 31;
Short V. McCarthy, 3 B. & Aid. 620; Hambleton v. Veere, 2 Saund. 170;
Ilowell V. Young, 5 B. & C. 259; In- Moore v. Love, 3 Jones, 215; Hodsoll
gram v. Lawson, 8 Scott, 471; Clegg v. Stallebrass, 11 A. & E. 301; Trigg
V. Dearden, 12 Q. B. 576; Stroyan v. v. Northcut, Litt Sel. Cas. 4l4, Lewis
Knowles, 6 H. & N. 454; East Jersey v. Peachey, 1 H. & C. 518; Drew v.
Water Co. v. Bigelow, 60 N. J. L. 201, Sixth Avenue R. Co., 26 N. Y. 49.
3S Atl. Rep. 631; Smith v. Pittsburgh See McKay v. Bryson. 5 Ired. 216.
& W. R. Co., 90 Fed. Rep. 783, citing * Covert v. Gray, 34 How. Pr. 450.
'A2
ENTIRETY OF DAMAGES.
[§ 123.
§ 123. Future damages for personal injuries. In ascer-
taining the amount of damages resulting from a personal in-
jury the jury may consider the bodily pain and mental suffer-
ing which have occurred and are likely to occur in the future
In this case there were numerous
contingencies with elements of prob-
ability in each: the enlisted man
might be discharged by reason of
sickness or wounds: his enlistment
being illegal, it was the duty of the
war department to discharge him;
there was no presumption that the
war would continue for three years.
In Moore v. Love, 3 Jones, 215,
Battle, J., thus discusses the distinc-
tion between cases u iiere the cause
of action is an entirety and those
which admit of a succession of suits:
"It is clearly stated bj' Lord Mans-
field, in the case of Robinson v. Bland,
2 Burr. 1077, 'When a new action
may be brought and satisfaction ob-
tained thereupon for any duties or
demands which may have arisen
since the commencement of the de-
pending suit, that duty or demand
shall not be included in the judg-
ment u|ion the former action. As in
covenant for the non-payment of
rent, or of an annuity payable at
diflferent times, you may bring a new
action toties quoties as often as the
respective sums become due and pay-
able. So in trespass and in tort, new
actions may be brought as often as
new injuries ana wrongs are re-
peated; and therefore damages shall
be assessed only up to the time of the
wrong complained of. But where a
man brings an action of assumpsit
for principal and interest upon a con-
tract obliging the defendant to pay
such principal money, with interest
froni such a time, he complains of
the non-payment of both; the inter-
est is an accessory to the principal,
tvnd he cannot bring a new action
for any interetst grown duo between
the commencement of his action and
the judgment in it.' What is here so
well said about the interest being the
accessory to the principal money,
and therefore recoverable down to
the time of the trial, applies with
equal force to the case of trespass
and tort where the wrong done is not
repeated or continued, though the
damage resulting from it may not
cease being developed until after the
time when the writ was issued. In
the latter case the plaintiff is not
limited solely to the consequential
damage which has actually occurred
up to the trial of the cause, but he
may go on to claim relief for the
prospective damages which can then
be estimated as reasonably certain
to occur.
" This brings us to the considera-
tion of tlie case of McKay v. Bryson,
5 Ired. 216, which may seem at first
view to militate against the distinc-
tion by which we have endeavored
to reconcile the decisions which have
been made upon the subject of pros-
pective damages. It was an action
on the case brought to recover dam-
ages for enticing the plaintiff's ap-
prentice from his service and convey-
ing him out of the state. The testi-
mony showed that the boy was bound
apprentice to learn the business of a
tailor, and that he continued in the
service of his master until he was
carried away by the defendant, and
when last heard from he was in Ten-
nessee. The suit was brought some
time before the expiration of the
term of service, and the jury were in-
structed that they might give dam-
ages as for a total loss of service
during the whole period of appren-
§ 123]
GENERAL PRINCIPLES.
343
in consequence thereof, as well as the loss of time, expense [198]
of medical and other attendance and the diminution of ability
to earn money. ^ The inquiry cannot bo extended to cover the
merely possible consequences of the injury, as by the possible
ticeship, subject to a deduction on ac-
count of the plaintiff's chance of re-
gaining the boy. Tiie charge given
to the jury in the court below was
approved in this court upon the au-
thority of the case of Hodsoll v. Stal-
lebrass, 11 A. & E. 301. No other case
appears to have been cited and the
court do not advert to the fact that
in Hodsoll v. Stallebrass the injury
from which the loss accrued to the
plaintiff was a single act of wrong;
but they do advert to and state the
fact that the loss caused l)y the tort
of the defendant was in effect a total
loss of the plaintiffs apprentice. The
onl^- wrong alleged in the declaration
or proved on the trial was that of
carrying the apprentice beyond the
limits of the state, which caused a
total loss of his services to his master.
In this view the case may well be
sustained upon the principle appli-
cable to the second class of cases to
which we have referred. That the
removal of the apprentice out of the
state may be regarded in the same
light as if a permanent injury had
been inflicted upon him, we have
the strong analogy of the case of
trover by one tenant in common
against another for the destruction of
the article held in common. If the
article be sent off by the defendant
to a place unknown to the plaintiff,
so that, as to him, it is totally lost, it
is equivalent to its destruction. Lucas
V. Wasson, 3 Dev. 398. 24 Am. Dec.
266. The circumstances of the present
case are very different from those in
McKay v. Bryson. The apprentices
were carried by the defendant to his
residence in an adjoining county,
only twenty-five miles distant from
the plaintiff. They were not con-
cealed from him ; and it appears from
the proof that he knew where they
were. The continued detention of
them by the defendant was a suc-
cession of torts for which he might
bring new actions from time to time;
and hence his case falls into the class
with Hambleton v. Veere, and all
those on which damages can be given
for the loss of service up to the com-
mencement of the suit only." '
The true distinction is undoubtedly
pointed out in the foregoing opinion,
that the damages in an action can-
not include those arising after suit is
brought if a new action could be
brought for them; but it may admit
of a doubt if the case was properly
disposed of upon that test. A tres-
passer who takes personal property
and retains it may be said to commit
a succession of torts while he retains
the property; but in an action for
such a taking the injured party would
undoubtedly be obliged to make his
full claim of damages. He would not
be entitled to a succession of actions.
In cases where apprentices have been
enticed away, and the enticer has
not, by the injury or otherwise, made
it reasonably certain that the appren-
tice will not return, prospective dam-
ages are not denied because a new
action may be brought for them but
because they are not susceptible of
proof: they are not certain. But if
the defendant has control, and will
have it in the future, he may be
charged with depriving the master
of the services of an apprentice for
the whole term for the same reason
that he might be charged with the
full value of a horse tortiously taken.
See Herriter v. Porter, 23 Cal. 3S5.
1 Swift V. Raleigh, 54 IIL App. 44;
S44
EXTIKETY OF DAMAGES.
[§§ 12i, 125.
outbreak of a new disease or other sufferings having their cause
in the original wrong done the plaintiff; in such a case there is
a double speculation — one that the result may possibly occur,
and the other that if it does it will be a product of the original
injury instead of some other new and, perhaps, unknown cause.*
§ 124. Only present worth of future damages given. An
award on account of prospective damages is like payment in
advance, and in fixing the same that fact may be taken into
consideration and the amount may properly be reduced to its
present worth.^
§ 125. Continuous breach of contracts or infraction of
rights not an entirety. A continuous breach of contract or
infraction of a right is not an entirety. It is at any time sev-
erable for the purpose of redress in damages for the injury
already suffered. This is the case whenever a continuous duty
imposed by law or by contract is uninterruptedly neglected,
whether such departure from the line of duty be by positive
acts or by culpable inaction.^ There is a legal obligation to
Griswold v. New York Central, etc.
R. Co., 115 N. Y. 61, 12 Am. St. 775,
21 N. E. Rep. 726; Hamilton v. Great
Falls Street R, Co., 17 Mont. 834, 353,
42 Pac. Rep. 860, 43 id. 713, citing
the text; Ayres v. Delaware, etc. R.
Co., 158 N. Y. 254, 53 N. K Rep. 22;
Denver Consolidated Tramway Co. v.
Riley, 14 Colo. App. 132, 59 Pac. Rep.
476; Bay Shore R. Co. v. Harri.s, 67
Ala. 6; Curtiss v. Rochester, etc. R.
Co., 20 Barb, 282; Atchison v. King,
9 Kan. 550; Welch v. Ware, 32 Mich.
77: Birchard v. Booth, 4 Wis. 67;
Merely v. Dunbar, 24 Wis. 183; Wil-
son V. Young, 31 Wis. 574; Goodno
V. Oshkosh, 28 Wis. 300; Spicer v.
Chicago, etc. R Co., 29 Wis. 580;
Karasich v. Hasbrouck, 28 Wis. 569;
Pennsylvania R. Co. v. Dale, 76 P*
47; Tomlinson v. Derby, 43 Conn. 562;
Fulsome v. Concord, 46 Vt. 135;
Nones v. Northouse. id. 587; Metcalf
V. Baker, 56 N. Y. 662; New Jersey
Exp. Co. V. Nichols, 33 N. J. L. 434,
97 Am. Dec. 722; Walker v. Erie R.
Co., 63 Barb. 260; Bradshaw v. Lan-
cashire R. Co.. L. R, 10 C. P. 189; Col-
lins V. Council Bluffs, 32 Iowa. 324;
Russ V. Steamboat War Eagle, 14
Iowa, 363; Dixon v. Bell, 1 Stark. 287;
McLain v. St Louis & S. R. Co., —
JVIo. App. — , 73 S. W. Rep. 909. 912,
citing the text. See ch. 36.
1 Strohm v. New York, etc. R. Co.,
96 N. Y. 305; Toser v. New York Cen-
tral, etc. R Co., 105 N. Y. 659, 11 N.
E. Rep. 369; Turner v. Newburgh, 109
N. Y. 301, 16 N. E. Rep. 344; Ayres v.
Delaware, etc. R Co., 158 N. Y. 254,
53 N. E. Rep. 22.
2 Pickett V. Wilmington & W. R.
Co., 117 N. C. 616, 23 S. E. Rep. 264,
53 Am. St. 611, 30 L. R. A. 257; Good-
hart V. Pennsylvania R Co., 177 Pa.
1, 35 Atl. Rep. 191, 50 Am. St. 787;
Morrisey v. Hughes, 65 Vt 553, 27
Atl. Rep. 205; Alabama G. S. R Co.
V. Carroll, 28 C. C. A. 207, 84 Fed.
Rep. 772: Morrison v. McAtee, 23 Ore.
530, 32 Pac. Rep. 400; Fulsome v. Con-
cord, 46 Vt 135. See §§ 1251. 1265.
3 Lake Shore, etc. R. Co. v. Rich-
ards. 152 IlL 59, 38 N. E. Rep. 773, 30
120.]
GENERAL PKIXCIPLES.
345
discontinue a trespass or to remove a nuisance.^ So a covenant
to keep certain premises in repair for a specified period im-
poses a continuous duty, and when neglected gives a continuous
■cause of action.^ AVhen an action is brought the injury to that
time is segregated and the recovery is confined to such dam-
ages as result from the breach or wrong continued to the com-
mencement of the action.'
§ 126. Continuance of wrong not presumed. [199-201]
The law will not presume the continuance of a wrong, nor al-
low a license to continue it, or a transfer of title to result from
the recovery of damages for prospective misconduct.* But in
■equity the owner of real property upon which a trespass has
been committed may restrain the continuance of the wrong
and thus prevent a multiplicity of actions at law to recover
•damages. In such an action the court may determine the
amount of damages the owner would sustain if the trespass
were permanently continued, and decree that upon their pay-
ment the plaintiff shall give a deed or convey the right to the
defendant.*
L. R. A. 33; Van Keurenv. Miller, 78
Hun, 173, 28 N. Y. Supp. 971; Con-
nolly V. Coon, 23 Ont. App. 87;
Powers V. Wai'e, 4 Pick. 106; Pierce
V. Woodward, 6 Pick. 206; McConnel
V. Kibbe, 33 111. 175, 85 Am. Dec. 265.
See Drummond v. Craue, 159 Mass.
577, 35 N. E. Rep. 90, 38 Am. St. 460,
2:3 L. R. A. 707; Wilson v. Sullivan,
17 Utah, 341, 53 Pac. Rep. 994.
iPer Lord Denman in Clegg v.
Dearden, 12 Q. B. 601; Savannah, etc.
.R. Co. V. Davis, 25 Fla. 917, 7 So. Rep.
•29; Adams v. Hastings & D. R. Co.,
18 Minn. 260.
2 Cooke V. England, 27 Md. 14;
Beacli V. Crain, 2 N. Y. 86; Bleecker
V. Smith, 13 Wend. 530; Phelps v.
New Haven, etc. Co., 43 Conn. 453;
Keith v. Hinkston, 9 Bush, 283.
8 Id. ; Sackrider v. Beers, 10 Johns.
241; Shaw v. Etheridge, 3 Jones, 301;
Brastield v. Lee, 1 Ld. Raym. 329;
Whitehouse v. Fellowes, 10 C. B. (N.
S.) 765; Mahon v. New York Central
11. Co., 24 N. Y. 658; Phillips v. Terry,
3 Keyes, 313; Hayden v. Albee, 20
Minn. 159; Thompson v. Gibson, 7 M.
& W. 456; Beck with v. Griswold, 29
Barb. 291: Bi-adiey v. Amis, 2 Hayw.
890; Caruthers v. Tillman, 1 id. 501;
Duncan v. Markley, Harp. 276; Moore
v. Love, 3 Jones, 215; Cole v. Sprowl,
35 Me. 101, 56 Am. Dec. 696; Hudson
V. Nicholson, 5 M. & W. 437.
* Adams v. Hastings & D. R. Co.,
18 Minn. 260; Ford v. Chicago, etc.
R. Co., 14 Wis. 609. 80 Am. Dec. 791;
Uline V. New York, etc. R. Co., 101 N.
Y. 98, 54 Am. Rep. 661, 4 N. E. Rep.
536; Savannah & O. Canal Co. v. Bour-
quin, 51 Ga. 378; Hanover Water Co.
v. Ashland Iron Co., 84 Pa. 279;
Whitmore v. Bischoff, 5 Hun, 176;
Sherman v. Milwaukee, etc. R. Co.,
40 Wis. 645; Russell v. Brown, 63 Me.
203: Bowyer v. Cook, 4 C. B. 236;
Holmes v. Wilson, 10 A. & E. 503;
Battishill v. Reed, 18 C. B. 696; Cum-
berland & O. Canal Co. v. Hitchings,
65 Me. 140.
6 Pappenheim v. Metropolitan E.
346 ENTIRETY OF DAMAGES. [§ 127.
[202] § 127. Necessity of successive actions. The neces-
sity and advantage of successive actions to recover, damages
which proceed from a continuous and still operating cause are
very obvious; for, besides the considerations which have al-
ready been mentioned, the injurious effects so blend together
that in most instances it would be wholly impracticable to ac-
curately apportion them. Therefore, the right to recover for
all damages which have been suffered to the time of bringing
the first action, in the next, all damages which have been suf-
fered from that time to that of commencing such second ac-
tion, and so on while the cause continues, is the most conven-
ient course for practical redress that can be devised.^ In cases
of contracts imposing a continuous duty, or a duty the con-
tinued neglect of which is an uninterrupted breach, from
which results a steady accretion of damage, the injured party
may bring a succession of actions or treat defaults having that
significance as a total breach,^ and recover damages accord-
ingly. Of this nature was the contract in Grain v. Beach,^
where the plaintiff had granted to the defendants a perpetual
right of way over his land and covenanted to erect agate of a
specified description at the terminus, to which the defendants
covenanted in the same instrument to make all necessary re-
[203] pairs. The plaintiff erected the gate, which was subse-
quently removed by some unknown person. It was held that
the defendants were bound to replace it; the covenant was
continuing; an action brought thereon after the removal of
the gate for damages occasioned by cattle coming on the
plaintiff's land in consequence of there being no gate, and a
recovery therein, were no bar to another action on the same
covenant for damages accruing after the commencement of
the first suit. The defendants' default was not a total breach,
nor declared and recovered on as such, and hence they were
R. Co., 128 N. Y. 436, 28 N. E. Rep. 518, Dusen, 29 Mich. 431; Royalton v.
13 L. R. A. 401; Amerman v. Deane, Royalton & W, Turnpike Co. 14 Vt.
133 N. Y. 355, 28 Am. St. 584, 30 N. 311; Withers v. Reynolds, 2 B. & Ad.
K Rep. 741. 882; Fish v. Folley, 6 Hill, 54, ex-
1 Ulinev. New York Central R. Co., plained in Crain v. Beach, 2 Barb.
101 N. Y. 88, 54 Am. Rep. 661, 4 N. 124; Keck v. Bieber, 148 Pa. 645, 24.
E. Rep. 536; Mitchell v. Darley Main Atl. Rep. 170.
Colliery Co., 14 Q. B. Div. 125. 3 2 N. Y. 86, 2 Barb. 120.
2 Grand Rapids, etc. R. Co. v. Van
§ 12S.] PARTIES TO SUE AND BE SUED. 34:7
not thereby relieved of the continuing obligation of the cov-
enant. If it were an entire contract, however, any breach
would be or might be treated as a total breach.^ Covenants
for support and maintenance during life are entire, and any
breach entitles the injured party to recover entire damages for
a total breach,^ but as they impose a continuous duty the in-
jured party may have a succession of actions treating any acts
of breach as partial only.'
Section 2.
parties to sue and be sued.
§ 128. Damages to parties jointly injured entire. Before
leaving the subject of the entirety of causes of action and
damages it is proper to notice some points relative to parties.
At common law all the parties who are jointly injured by a
tort or breach of contract may sue jointly for damages; in ac-
tions ex contractu the rule is imperative. All the parties [204]
with whom the violated contract was made must join as plaint-
iffs unless their interests are severed in the contract, so that
upon a breach a distinct cause of action accrues to each or less
than all.* Actions for personal injuries to a married woman
must be in the names of the husband and wife;^ except where
1 Fish V. Folley, 6 Hill, 54. 3 Woodb. & M. 277; Little v. Hobbs,
•-iSchell V. Plumb, 55 N. Y. 592; 8 Jones, 179, 78 Am. Dec. 275; Grid-
Dresser V. Dresser, 35 Barb. 573; ley v. Starr, 1 Root, 281; Farmer v.
Shaffer v. Lee, 8 id. 412; Trustees of Stewart, 2 N. H. 97; Eastman v.
Howard College v. Turner, 71 Ala. Ramsey. 3 Ind. 419; Millard v. Bald-
439, 46 Am. Rep. 326; Carpenter v. win, 3 Gray, 484; Dow v. Clark, 7
Carpenter, 66 Hun, 177, 20 N. Y. Supp, Gray, 198; Weathers v. Ray, 4 Dana,
928; Empie v. Empie, 35 App. Div. 474; Frankem v. Trimble, 5 Pa. 520;
51, 54 N. Y. Supp. 402. See Wriglit Ross v. Milne, 12 Leigh, 204, 37 Am.
V. Wriglit, 49 Mich. 624, 14 N. W. Dec. 646; Thompson v. Page, 1 Met.
Rep. 571. 566; The Ship Potomac, 2 Black, 581;
3 Id.; Fiske v. Fiske, 20 Pick. 499; Archer v. Bogue, 4 111. 526; Robert-
Berry V. Harris, 43 N. H. 376; Fergu- son v. Reed, 47 Pa. 115; Sawyer v.
son V. Ferguson, 2 N. Y. 360; Turner Steele, 4 Wash. 227; Newcomb v.
V. Hadden, 62 Barb. 480. Clark, 1 Denio, 226; Law v. Cross, 1
< Bigelow V. Reynolds, 68 Mich. 344, Black, 533; Beetle v. Anderson, 98
36 N. W. Rep. 95; Hall v. Leigh, 8 Wis. 6, 73 N. W. Rep. 560.
Cranch, 50; Fugurev. Mutual Society ^Larnb v. Harbaugh. 105 Cal. 680,
of St. Joseph, 46 Vt. 362; Cleaves v. 39 Pac. Rep. 56; White v. Vicks-
Lord, 3 Gray, 66; Jewett v. Cunard, burg, etc. R Co., 42 La. Ann. 990, 8 So.
348 ENTIRETY OF DAMAGES. [§ 129.
statutes have so enlarged the property rights of married
women as to enable them to maintain such actions in their
own names.^ In an action for malicious prosecution of hus-
band and wife each has a separate right of action, and they
cannot join their causes of action; but the husband is a neces-
sary co-plaintiff with the wife in her action.- If the duty of
supporting a child devolves upon the father and he is alive
when the mother sues for an injury to the child she cannot
maintain the action, notwithstanding she has been divorced
and the care and custod}^ of the child were awarded her.^
§ 129. Actions under statutes. In actions brought under
statutes which create a liability where none existed at com-
mon law, the parties who sue thereunder must bring them-
selves clearly within the language used by the legislature.
Such statutes will not be extended or enlarged by construc-
tion.^ The relief or remedy is not available to any person
who is not included therein.-^ If the right to sue for an injury
which has resulted in death is given to a "child," an illegiti-
mate child cannot recover for its mother's death in England,^
nor in Canada;^ but it is otherwise in Ohio under a statute
Rep. 475; Gallagher V.Bowie, 66 Tex. v. Pope, 122 Cal. 253, 54 Pac. Rep.
265, 17 S. W. Rep. 407; Ezell v. Dod- 847. See ch. 38.
son, 60 Tex. 331; Tell v. Gibson. 66 Cal. ^ Williams v. Casebeer, 126 Cal. 77,
247, 5 Pac. Rep. 223; King v. Thorn p- 58 Pac. Rep. 380.
son, 87 Pa. 365, 30 Am. Rep. 364; » Keller v. St. Louis, 152 Mo. 596,
Northern Central R. Co. v. Mills, 61 54 S. W. Rep. 438, 47 L. R A. 391.
Md. 355: Blair v. Chicago & A. R. ''Sutherland, Const, of Stats., g 371.
Co., 89 Mo. 384. Compare Bennett v. sid.; McNamara v. Slavens, 76
Bennett, 116 N. Y. 584, 23 N. K Rep. Mo. 330; Gibbs v. Hannibal, 82 id.
17, 6 L. Pu A. 553. 143; Warren v. Englehart. 13 Neb.
1 Chicago, etc. R. Co. v. Dunn, 52 283. 13 N. W. Rep. 401; Woodward v.
111. 260; Mussel man v. Galligiier. 33 Chicago & N. R, Co., 23 Wis. 400;
Iowa, 383: Chadron v. Glover, 43 Dickins v. New York Central R. Co.,
Neb. 733, 63 N. W. Rep. 63. 23 N. Y. 158: Tennessee Coal, Iron &
A wife may maintain an action in R. Co. v. Herndon, 100 Ala. 451, 14
her own name against a woman who So. Rep. 287; Woodward Iron Co. v.
has alienated from her the affection Cook, 124 Ala. 349, 27 So. Rep. 455;
and deprived her of the society of Maule Coal Co. v. Partenheimer, 155
her husband, although they live to- Ind. 100. 109, 55 N. E. Rep. 751.
gether as husband and wife. Foot v. ^ Dickinson v. Northeastern R Co.,
Card, 58 Conn. 1, 18 Am. St. 258, 18 2 H. & C. 735.
Atl. Rep. 1027, 6 L. R A. 839; Ben- ^ Gibson v. Midland R. Co., 2 Ont.
nett v. Bennett, 116 N. Y. 584, 24 N. 658, 15 Am. & Eng. R R Cas. 507.
E. Rep. 17, 6 L. R. A. 553; Humphrey
§ 130.] PARTIES TO SUE AND BE SUED. 3i9
which uses the words "next of Icin."^ "Where an action is
given for the benefit of the widow and next of kin it may be
brought, though there be no widow, if there are next of kin,
and vice ve?'sa.- Kor are the " next of kin " required to be so
nearly related to the person whose death is sued for as to re-
quire any duty of sustenance, support or education.'
§ 130. Must be recovered by person in whom legal inter-
est is vested. The suit must be brought in the name of the
party in whom is vested the legal interest though the equitable
interest be in another person.* The funds of a voluntary as-
sociation were put under the control and management of
trustees who took a note payable to themselves on lending the
funds to some other members. It was held that the trustees
in their individual names were entitled to maintain an action
on the note, as it was payable to them, though the defendants
as well as themselves were members of the association bene-
ficiall}'' interested in the collection." One who pays the con-
sideration for a privilege or benefit which he may confer upon
another may sue for the denial of it.® A trustee who has sold
trust property without assigning a claim for damages resulting
from a wrong done thereto prior to the sale may bring suit to
recover therefor.' In an action by a firm the name of a
dormant partner need not and ought not to be used® unless
iMuhl V. Michigan Southern R, Ball, Hempst 541; Lord v. Carnes. 98
Co., 10 Ohio, 272. See ch. 37. Mass. 308; Hart v. Stone, 30 Conn. 94;
2 Sutherland. Const, of Stat^, g 371, Pierce v. Robie, 39 Me. 205, G3 Am.
citing McMahon v. Mayor, 33 N. Y. Dec. 614; Yeager v. Wallace. 44 Pa,
642, 647. 94; Morton v. Webb, 7 Vt. 123;
3Tilley v. Hudson River R Co., 24 Boardman v. Keeler, 2 Vt. 65; Clark-
N. Y. 474; Galveston, etc. R. Co. v. son v. Carter. 3 Cow. 84; Mitchell v.
Kutac, 72 Tex. 643, 37 Am. & Eng. Dall, 2 H. & G. 159; Lord v. Bald-
R R Cas. 470, 11 S. W. Rep. 127; win, 6 Pick. 352; Wilson v. Wallace.
Petrie v. Columbia, etc. R Co.. 29 S. 8 S. & R 55; Warner v. Griswold. 8
C. 303, 7 S. E. Rep. 515; Railroad Co. Wend. 666; Clark v. Miller, 4 Wend.
V. Barron, 5 Wall. 90; Baltimore, etc. 628.
R Co. v. Hauer. 60 Md. 449, 12 Am. * Pierce v, Robie, 89 Me. 205, 63 Am.
& Eng. R. R Cas. 149. 155. Dec. 614.
nChitty PI. 2-6; Treat V. Stanton, « Trustees of Howard College v.
14 Conn. 445; Denton v. Denton. 17 Turner, 71 Ala. 429, 46 Am. Rep. 326.
Md. 403; Sunapee v. Eastman, 32 N. "Lancaster v. Connecticut Mut. L.
H. 470; Pike v. Pike, 24 N. H. 384; Ins. Co., 92 Mo. 460, 1 Am. St. 739. 5
Phillips V. Pennywit. 1 Ark. 59; Lap- S. W. Rep. 23.
ham V. Green, 9 Vt 407; Governor v. 8 Clark v. Miller, 4 Wend. 628.
350
ENTIRETY OF DAMAGES.
[§ 131.
he is one of the parties disclosed in the contract.^ The parties
to a contract are the persons in whom the legal interest in the
subject of it is deemed to be vested, and who therefore must
be the parties to the action which is instituted for the purpose
of enforcing it or recovering damages for its violation.^ An
agent who has sold property on credit, pursuant to authority
from and for his principal, may sue the purchaser in his own
name if he is bound to account to the owner or if he has ac-
counted to him for it.*' An undisclosed principal may sue on
a contract made for his benefit by an agent.* An agreement
to relinquish a business and not to carry it on thereafter in a
designated place, no limit being specified as to time, and a bond
conditioned for the observance thereof, are not so personal
to the obligee that he cannot sue thereon for a breach of the
agreement after he has transferred the property and busi-
ness for the benefit of his vendee. There seems no doubt, upon
the authorities, that the agreement could be transferred with
and as an incident of the property, the purchase being made
with knowledge of the condition of the bond.^ The contrary
doctrine is held in Oregon.^ The English cases referred to in
the note are not considered in that case; and the California
case cited is distinguished because the word " heirs " was used
in the contract there passed upon while it was not employed
in the one before the court. The breach of a covenant which
runs with land gives the widow who occupies it as a home-
stead a right of action though she was not to pay for it.^
[205] § 131. Not joint when contract apportions the legal
interests. Where the contract separates and apportions the
legal interests, the injury in case of a breach is correspondingly
1 Clark V. Carter, 2 Cow. 84: Lord
V. Baldwin, 6 Pick. 353.
2 Treat v. Stanton, 14 Conn. 445;
Dauglierty v. American U. Tel. Co.,
75 Ala. 168, 51 Ana. Rep. 435.
3 Fuller V. Curtis. 100 Ind. 237, 50
Am. Rep. 786; Jackson v. Mott, 76
Iowa, 263, 41 N. W. Rep. 12.
4 Bell V. Lee, 78 Ala. 511, 56 Am.
Rep. 52.
5 Webster v. Buss, 61 N. H. 40, 6
Am. Rep. 317; Guerand v. Bandelet,
32 Md. 562, 3 Am. Rep. 164; Cali-
fornia Steam Nav, Co. v. Wright, 6
Cal. 258, 8 id. 585; Pemberton v.
Vaughan, 10 Q. B. 87; Hastings v.
Whitley, 2 Ex. 611. It was held in
the last case that a suit might be
brought by the executors of the ob-
ligee for a breach arising after his
death.
6 Hillman v. Shannahau, 4 Ore. 163,
18 Am. Rep. 281.
7 St. L.. L M. & S. R. V. O'Baugh,
49 Ark. 418, 5 S. W. Rep. 71L
§§ 132, lo3.] PARTIES TO SUE AND BE SUED. 351
separate and distinct. Thus a promise to pay the respective
owners of land taken for a road such sums as a referee named
shall award gives each a separate action lor the amount awarded
him.' A contract between a fruit company and a number of
fruit growers to receive, dry, and market their crops, at speci-
fied rates per pound, that delivered by each person being
weighed and dried separately, and then weighed out to the
■owner and mingled with other fruit, a receipt being given each
owner, is several.-
§ 132. Implied assumpsit follows the consideration. Where
the assumpsit is implied it will follow the consideration.' A
committee appointed by a school district to repair a school-
house took the job among themselves, each performing work
and furnishing a separate portion of materials. Each had a
distinct cause of action.^ B}" the failure of 1. to fulfill a prom-
ise made to G. and S. to enter satisfaction of a judgment against
them the judgment was collected entirely out of the property
•of G. ; he could recover in an action by himself alone for money
paid.* If money is deposited with a stakeholder on the event
oi a wager by one who acts as an agent for several others, each
■of the latter may bring a separate action to recover the money
deposited for him, though the stakeholder was ignorant of the
principals on whose account the deposit was made.^ Several
plaintiffs claiming distinct rights cannot join in the same action.''
§ 133. Effect of release by or death of one of several en-
titled to entire damages. Where a cause of action ex con-
tractu accrues to several jointly it is an entirety; they must
all join in an action upon it; no others can, except where as-
signments are sanctioned by statute as a transfer of the legal
right of action, or unless that right devolves upon others by
operation of law as in case of death or marriage. It cannot
be severed by partial assignment,* nor by the giving of a re-
1 Farmer v. Stewart, 3 N. H. 97; » Taylor v. Gould, 57 Pa. 152.
Jewett V. Cunard. 3 Woodb. & M. 277; « Yates v. Foot, 12 Johns. 1.
State Ins. Co. v. Belford, 2 Kan. A pp. ^ Barry v. Rogers, 2 Bibb, 314;
280, 43 Pac. Rep. 409. Hinchman v. Paterson R, Co., 17 N.
2 Arnold v. Producers' Fruit Co., J. Eq. 75, 86 Am. Dec. 252; Chambers
.128 Cal. G37, 61 Pac. Rep. 283. v. Hunt, 18 N. J. L. 339.
8 Lee V. Gibbons, 14 S. & R. 110. sciiicago, etc. R. Co. v. Nichols, 57
* Geer v. School Disti ict, 6 Vt. 76. Ill 404.
352
ENTIRETY OF DAMAGES.
[§ 134.
[206] lease by one of several jointly entitled to sue. Such a
release would operate to extinguish the right of action at law;
for if, for such a reason, all to whom the right of action ac-
crued cannot join in a suit upon it no action can be main-
tained.^ But one of several joint creditors between whom no
partnership exists cannot release the common debtor so as
wholly to conclude his co-creditors who do not assent. He
may defeat an action at law, but they will be entitled to as-
sert their rights in equity. It is a general rule that joint
creditors cannot, by a division of their claim between them-
selves, acquire a separate right of action against their debtor,
either at law or in equity; but when a debtor procures a re-
lease from a part of them he cannot object to the others pro-
ceeding against him in equity.- On the death of one of two-
persons who have a joint right of action upon contract, it sur-
vives, and the survivor alone is entitled to sue. The personal
representatives of the deceased cannot be joined with him.^
By consent a joint demand may be severed so that several
suits may be brought.* So an assignee of the whole or a part
may sue in his own name, if the debtor promise to pay him/
but not otherwise.®
§ 134:. Misjoinder of plaintiffs, when a fatal objection. In
such action it is a fatal objection, available on the trial, that
there is a misjoinder of plaintiffs.'^ It is equally so in actions
ex delicto? And in actions ex contracUib the non-joinder of all
the parties in whom the right of action is vested is fatal, and
[207] the objection may be taken on the trial.® But in ac-
iHall V. Gray, 54 Me. 230; Kim-
ball V. Wilson, 3 N. H. 96; My rick v.
Dame, 9 Cush. 248, 69 Am. Dec. 284;
Tuckerman v. Newhall. 17 Mass. 581;
Eaton V. Lincoln, 13 Mass. 424. See
Eisenhart v. Slaymaker, 14 S. & R
154.
2 Upjohn V. Ewing, 2 Ohio St. 13;
Hosack V. Rogers, 8 Paige, 229; Car-
rington v. Crocker, 37 N. Y. 386.
3 Jackson v. People, 6 Mich. 154;
Smith V. Franklin, 1 Mass. 480;
Walker v. Maxwell, id. 113; Morri-
son V. Winn, Hardin, 480; Beebe v.
Miller, Minor, 364; Brown v. King,
1 Bibb, 462: Clark v. Parish, id. 547;
Chandler v. Hill, 2 Hen. & Mun. 124.
4 Parker v. Bryant, 40 Vt. 291; Car-
rington v. Crocker, 37 N. Y. 836.
5 Page V. Danforth. 58 Me. 174.
6 Hay V. Green, 12 Cush. 282.
7 Brent v. Tivebaugh, 12 B. Mon.
87; Blakey v. Blakey, 2 Dana, 460:
Doremus v. Selden, 19 Johns. 213;
Waldsmith v. Waldsmith, 2 Ohio,
338, 15 Am. Dec. 547; Robinson v.
Scull, 3 N. J. L. 817.
8 Glover v. Hunnewell, 6 Pick. 222;
Ainsworth v. Allen, Kirby, 145.
9 Dob V. Halsey, 16 Johns. 34; Ehle
§ 135.] PARTIES TO SUE AXD BE SUED. 353
tions of tort the non-joinder of a party who ought to join as
co-plaintiff can only be taken advantage of by plea in abate-
ment or upon the trial by an apportionment of damages.^
§ 135. Joinder of defendants ; etfect of non-joinder and
misjoinder. By the common law all joint promisors should
be joined as defendants; and all should be sued, or only one,
on a joint and several contract.- On a joint and several jirom-
issory note made by a firm in the firm name and l>y another
person in his individual character, a suit may be maintain( d
against the members of the firm without joining the other
maker, they, for this purpose, being considered but one person,
the non-joinder of the other being no ground of objection.^
Where, some weeks after the execution of a lease of real estate,
a third person, by writing obligatory, became surety for the
lessee they were not jointly liable and could not be joined as
defendants.* Two or more persons cannot be sued jointly un-
less a joint liability is proved.^ On the death of one joint
promisor the liability survives at law against the remaining or
surviving promisor, and the personal representative of the de-
ceased cannot be joined as co-defendant.® Many persons may
join in one instrument without making themselves jointly
bound. AVhether they have done so or not is a question [208]
of intention to be determined by the construction of the entire
contract. The undertaking of each may be several, as is usual
in subscriptions for some common purpose, and sometimes in
V. Purdy, 6 Wend. 629; Hansel v. Merrick v. Trustees of Bank, 8 Gill,
Morris, 1 Blackf. 307; Mcintosh v. 59; Minor v. Mechanics' Bank, 1 Pet.
Long, 2 N. J. L. 274; Hilliker v. 73; Bangor Bank v. Treat. 6 Me. 207,
Loop. 5 Vt. 116, 26 Am. Dec. 286; 19 Am. Dec. 210; Fielden v. Lahens,
Ellis V. McLemoor, 1 Bailey, 13; Cof- 9 Bosvr. 436; Claremont Bank v.
fee V. Eastland, Cooke, 159; Swei- Wood, 12 Vt. 252; Keller v. Biasdel,
gart V. Berk, 8 S. & R. 308; Morse v. 1 Nev. 491.
Chase, 4 Watts, 456; Connolly v. ^ Van Tine v. Crane, 1 Wend. 524.
Cottle, Breese, 364; Beach v. Hotch- ^Tourtelott v. Junkin, 4 Blackf.
kiss, 2 Conn. 697; Baker v. Jewell, 6 483.
Mass. 460, 4 Am. Dec. 162; Halliday 5 Rowan v. Rowan, 29 Pa. 181.
V. Doggett, 6 Pick. 359; Gordon v. « Sigler v. Interest, 3 N. J. L. 724;
Goodwin, 2 N. & McC. 70, 10 Am. Gillin v. Pence. 4 T. B. Mon. 304;
Dec. 573. Murphy v. Branch Bank. 5 Ala. 421;
1 Wright V. Bennett, 2 Barb. 451; Poole v. McLeod, 1 Sm. & IL 391;
White V. Webb, 15 Conn. 302. Union Bank v. Mott, 27 N. Y. 633;
- Damron v. Sweetser, 16 III. App. Voorhis v. Childs' Ex'r, 17 id. 354.
339; Deloach v. Dixon, Hempst. 428;
Vol. 1 — 23
354
ENTIRETY OF DAMAGES.
[§ 136.
other promises to pay.^ Joining too many persons as defend-
ants in an action upon contract is a fatal objection and may
be taken advantage of on the trial ;'^ but if less than all those
jointly liable are sued the objection of the non-joinder of
others can only be taken advantage of by plea in abatement
unless it appears on the face of the declaration.'
§ 136. Mow joint liability extinguislied or severed. If
one jointly or jointly and severally liable is released by a satis-
faction, all are discharged.* So a specialty taken from one
merges any simple contract liability, not only of the person
giving the specialty, but of others who were jointly liable
with him.' Thus where a mercantile business was carried on
in a sino-le name and the merchant in whose name it was con-
ducted bought goods and executed a specialty for the price,
the vendor, though ignorant at the time that such purchaser
had a dormant partner, but who discovered that fact after the
death of the purchaser who executed the specialty, was held
not entitled to maintain assumjjsit on the simple contract against
the dormant partner because that contract was extinguished.^
According to some authorities the satisfaction and discharge
of one who was not in fact liable to the person injured does
iLarkin v. Butterfield, 29 Mich.
254.
2Tuttle V. Cooper, 10 Pick. 281;
Walcott V. Canfield, 3 Coun. 194;
Livingston v. Tremper, 11 Johns. 101;
Erwin v. Devine, 2 T. B. Mon. 124;
Jenkins v. Hart, 2 Rand. 446.
3 Bragg V. Wetzell. 5 Blackf. 95;
Burgess v. Abbott, 6 Hill, 135; Nash
V. Skinner, 12 Vt. 219, 36 Am. Dec.
338; Hicks v. Cram, 17 Vt. 449;
Means v. Milliken, 33 Pa. 517; Douglas
V. Cliapin, 26 Conn. 76.
* Chetwood v. California Nat. Bank,
113 Cal. 414, 45 Pac. Rep. 704; Donald-
son V. Carmichael, 102 Ga. 40, 29 S.
E. Rep. 135; Lord v. Tiffany, 98 N.
Y. 412, 50 Am. Rep. 689; Ellis v.
Esson, 50 Wis. 138, 36 Am. Rep. 830,
6 N. W. Rep. 518; Gross v. Pennsyl-
vania, etc. R. Co., 65 Hun, 191, 20 N.
Y. Supp. 28; Blackman v. Simpson,
120 MiclL 377, 79 N. W. Rep. 573;
State V, Watson, 44 Mo. 305; Heck-
man V. Manning, 4 Colo. 543; Gunther
V. Lee, 45 Md. 60, 24 Am. Rep. 504;
Line v. Nelson, 38 N. J. L. 358; Bon-
ney v. Bonney, 29 Iowa, 448; Prince
V. Lynch, 38 Cal. 528.
Where judgment was rendered
against two defendants upon a ver-
dict which apportioned their liabil-
ity, a motion to vacate it and dismiss
the action as to one was denied oa
the ground that it might operate as
a discharge of both. McCool v. Ma-
honey, 54 Cal. 491. See Minor v.
]\Iechanics' Bank. 1 Pet. 46, 87.
A similar verdict was considered
as being against one defendant, and
a finding in favor of the other against
whom the smaller sum was charged.
Clissold V. Machell, 25 Up. Can. Q. B.
80, 26 id. 422.
5 Ward V. Motter, 2 Rob. (Va.) 53a
6 Id.
§ 130.] partip:s to sue and be sued. 355
not affect the rights of the latter against those who are liable; ^
several courts take the opposing view.'^ Joint tort-feasors may
be sued jointly in the same action or in separate actions, and
several judgments may be rendered in either action; these do
not affect the liability of any of tiie parties unless satisfaction
in some form is made.^ But the issue of an execution or the
granting of an order for issuance seems to be considered a
satisfaction in Indiana."* The satisfaction of a judgment
against a builder for the substitution of inferior material and
for doing work in an unworkmanlike manner bars an action
by the same plaintiff against the architect who made the plans
for the building and contracted to supervise its erection in ac-
cordance therewith. It is said the former suit ae:ainst the
builder was based on his violation of the building contract,
while this suit appears to have been brought for the purpose
not only of recovering damages from the defendant for his al-
leged neglect as an architect, but also to recover damages aris-
ing in consequence of the omissions, negligence, unfaithfulness
and wrongdoing of the builder. It is true that the acts of the
builder which formed the basis for the damages awarded in
the suit against him are now alleged to have been allowed to
occur by reason of the architect's negligence in the perform-
ance of his duty. But whether the wrongdoing complained
of in the former case be the joint act of the builder and the
defendant, or the several tort of each, can make no difference
in determining the validity ot" the plea or the admissibility of
the record in evidence in this case. If the defendant and the
1 Missouri, etc. R. Co, v. McWher- Rep. 8?.8; Tompkins v. Clay Street
ter, 59 Kan. 345, 53 Pac. Rep. 135, R. Co.. 66 Cal. 163; Miller v. Beck,
citing Turner v. Hitclicock, :20 Iowa, lOS Iowa, 575, 79 N. W. Rep. 344;
310; Bloss V. Plymale, 3 W. Va. 393, Butler v. Ashworth, 110 Cal. 614, 43
100 Am. Dec. 752; Wilson v. Reed, 3 Pac. Rep. 380.
Johns. 175; Wardell v. McConnell, ^ Grundel v. Union Iron Works. 127
25 Neb. 558, 41 N. W. Rep. 548; Snow Cal. 438, 59 Pac. Rep. 826, 78 Am.
V. Chandler, 10 N, H. 92,34 Am. Dec. St. 75, 47 L. R. A. 407; Vincent v.
140; Bell v. Perry, 48 Iowa, 368; Owen McNamara. 70 Conn. 332, 39 Atl. Rep.
V. Brockschmidt, 54 Mo. 285;Pogel V. 444; Lovejoy v. Murray. 3 Wall. 1;
Meilke, 60 Wis. 248, 18 N. W. Rep. Norfolk Lumber Co. v. Simmons, 3
927. • Marvel, 317, 43 Atl. Rep. 163. See
2 Leddy v. Barney, 139 Mass. 394, 3 g 216.
N. E, Rep. 107; Leither v. Philadel- ^Ashcraft v. Knoblock, 146 Ind.
phia Traction Co., 125 Pa. 397, 17 Atl. 169, 45 N. E. Rep. 69.
356
ENTIRETY OF DAMAGES.
[§ 137.
builder had both been sued in the first case for the injury
there alleged, there could have been but one recovery. And
it would seem to be very clear reason, and authority as well,
that the same result must follow when the same injury is
caused by the independent acts of several wrong-doers. The
reason of this rule is apparent. It is neither just nor lawful
that there should be more than one satisfaction for the same
injury whether that injury be done by one or more.'
§ 137. Principles on which joint right or liability for
tort determined. Whether actions in tort are joint as to the
[209] parties injured or as to those liable depends on very
plain principles. The injury is joint where it at once affects
property or interests jointly owned ; in other words, there must
be a community of interest between the parties injured in that
which the injury affects. And to render wrong-doers jointly
liable there must be concert or a common purpose between
them.2 Persons w^ho are jointly interested in the damages re-
coverable for an injury to property may unite in a suit for
their recovery although they are not joint owners of the prop-
erty itself. Thus two persons in possession of land carrying
on business in a mill which belongs to one of them only may
unite in an action for damages for a negligent burning of it.*
1 Berkley v. Wilson, 87 Md. 219. 39
Atl. Rep. 503, citing Cleveland v.
Bangor, 87 Me. 264, 32 Atl. Rep. 892;
Brown v. Cambridge, 3 Allen, 474;
Lovejoy v. Murray, 3 Wall. 1; Gun-
ther V. Lee, 45 Md. 67, 24 Am. Rep. 504.
2 If one or more persons conspire
with another to commit, or two or
more persons combine together to ef-
fect, the violation of a contract, and
their object be effected to the dam-
age of a third person, the latter may
recover against him who broke the
contract, and against those so con-
nected with the wrong. Martens v.
Reilly, 109 Wis. 464, 84 N. W. Rep.
840. See Quinn v. Leathem, [1901]
App. Cas. 495.
Where the complaint alleged that
each of two defendants was negli-
gent in not having a sufficient wall
to sustain his building, by reason
whereof both buildings fell upon and
destroyed the plaintiff's building, at
the same time and on the whole of
said building and both of which be-
came an undistinguishable mass, as
was the building on which they fell,
so that it could not be said which
produced the greater damage, and it
could not be determined as to the ex-
tent of the damage either did, both
defendants were liable for the whole
damage and neither could complain
that both were sued jointly. If the
evidence showed that either was not
negligent he would not be liable, in
which case the others would have
no reason to complain of the mis-
joinder. Johnson v. Chapman, 43
W. Va. 639, 28 S. E. Rep. 744.
3 Cleveland v. Grand Trunk R. Co.,
42 Vt. 449; Rhoads v. Booth, 14 Iowa,
575.
§ 13S.J PARTIES TO SUE AND BE SUED. 357
If injuiy is done both to the possession and the freehold,
and the interests of both owners are affected, though in dif-
ferent degrees, the life tenant and the remainder-man may-
join in case for the recovery of the damages.' All joint own-
ers of personal property are rightly joined in actions for tor-
tious injuries thereto.^ At common law the rule was that
" when two or more persons are jointly entitled, or have a
joint legal interest in the property affected, they must, in gen-
eral, join in the action or the defendant may plead in abate-
ment.'" As to tenants in common who briny: actions asrainst
third parties a distinction existed between real and personal
actions. " When the action is in the realty they must sue sep-
arately;* when in the personalty they must join."^ This rule
must give way if the effect of enforcing it will be to deny a
remedy. The remedy for it — to protect defendants from a
multiplicity of suits — is good; but if adherence to it will cause
a failure of justice the reason for departing from the rule is
stronger than that for applying it because there is a possibility
that no other suit will be brought on the cause of action; while
there is a certainty that adherence to it will work the loss of
a remedy. These considerations induced the Minnesota court
to permit one tenant in common of personalt}'' to maintain an
action against a stranger for a ^vrong done to it, the co-tenants
refusing to join as plaintiffs; and being non-residents they
could not be made defendants.^
§ 138. Tortious act not an entirety as to parties injured.
A tortious act is not an entirety as to the persons affected by
1 McTntire v. Westmoreland Coal elude parol proof that the purchase
Co., 118 Pa. 108, 11 Atl. Rep. 808. of each machine was made by one of
2 Glover v. Austin, 6 Pick. 209; them as agent for the other and on
Pickering v. Pickering, 11 N. H. 141. their joint account; such evidence
But in California one joint owner will sustain a joint action for breach
can recover but one-half the damages of warranty of the machines. Fox
for the injury done to the joint prop- v. Stockton Harvester, etc. Works,
erty. Loveland v. Gardner, 79 Cal. 83 Cal. 333, 23 Pac. Rep. 295.
317, 21 Pac. Rep. 766, 4 L. R. A. 395. » 1 Chitty Plead. 64.
If two machines are bought on * Carley v. Parton, 75 Tex. 98, 12 S.
joint account and paid for out of W. Rep. 950.
joint funds the fact tliat the purchas- ^ Hill v. Gibbs, 5 Hill, 56; Rowland
ers entered into a separate contract v. Murphy, 66 Tex. 534, 1 S. W. Rep.
for each machine and that each con- 658.
tract was signed by one of them only ^Peck v. McLean, 36 Minn. 228, 1
in his individual name does not pre- Am. St. 605, 30 N, W. Rep. 754.
358
ENTIRETY OF DAMAGES.
[§ 139.
it; it mav affect many persons and do a several injury to each.
A single trespass upon real estate, injurious to the possession
and to the inheritance, will be an entire cause of action if one
person has the whole title and is in possession. But if one
person has the possession and another a reversionary title a
distinct wrong is done to each, for which each may bring a
separate and independent action,* One having a special in-
terest in real estate injured by the tortious act of another may
recover damages therefor wliether the wrong-doer is a stranger
or has another interest in the same premises.^ The purchaser
of a crop of growing grass is entitled to the exclusive enjoy-
ment of the crop standing on the land during the proper pe-
riod of its full growth and removal, and may maintain tres-
pass qiiare clausum fregit against a stranger who during that
time wrongfully enters and cuts and carries away the grass.'
[210] He could maintain a like action against the general owner
of the land for such a trespass.*
§ 139. General and special owners. In such case the dam-
ages will be according to the tenure b}'' which the plaintiff
holds and such as result from the injury he has suffered. He
must show that his title gives him an interest in the damages
he claims, and can recover none except such as affect his right.*
In actions against a stranger for taking or converting personal
property, a bailee, mortgagee or other special property man is-
entitled to recover its full value, but must account to the gen-
eral owner for the surplus recovered beyond the value of his
own interest; but against the general owner, or one in privity
1 Wood V. Williamsburgh, 46 Barb.
601; Gilbert v. Kennedy, 22 Mich. 5;
Files V. Magoon, 41 Me. 104: Stevens
V. Adams. 1 Thomp. & C. 587; Stoner
V. Hunsicker, 47 Pa. 514; Adams v.
Emerson, 6 Pick. 57; Robbins v. Bor-
man, 1 Pick. 122; Jordan v. Ben-
wood, 42 W. Va. 312, 26 S. E. Rep.
266, 36 L. R. A. 519; Yeager v. Fair-
mont, 43 W. Va. 259, 27 S. E. Rep. 234.
In Pennsylvania a joint action may
be maintained. Mclntire v. West-
moreland Coal Ca, 118 Pa. 108, 11
Atl. Rep. 808.
2 Hasbrouck v. AVinkler, 48 N. J. L.
4:^1, 6 Atl. Rep. 22; Luse v. Jones, 39
N. J. L. 707; Turnpike Co. v. Fry, 88
Tenn. 296, 12 S. W. Rep. 720.
3 Dolloflf V. Danforth, 43 N. H. 219;
Howard v. Lincoln, 13 Me. 122; Aus-
tin V. Hudson River R Co., 25 N. Y.
334.
•* Clap V. Draper, 4 Mass. 266, 8 Am.
Dec. 215; Caldwell v. Julian, 2 Mills,
294.
5 Gilbert v. Kennedy, 22 Mich. 5.
One who has borrowed property
cannot maintain an action for its
loss. Lock hart v. Western & A. R.
Co.. 73 Ga. 472, 44 Am. Rep. 883.
§ 139.] PARTIES TO SUE AND BE SUED. 359
with him, only the value of the special property.' "Where goods
assigned to a creditor in trust to pa}'^ himself and other cred-
itors were attached at the suit of some of the creditors as prop-
erty of the assignor before the assignment was assented to by
any creditor but the assignee, and the value of the goods ex-
ceeded the amount of the latter's demand, in an action of tres-
pass brought by the assignee against the attaching officer, the
measure of damages was the amount of the plaintiff's demand
against the assignor and not the value of the goods.^ An offi-
cer, with an execution against one of two partners, who makes
himself a trespasser ab initio by levying on the entire property
of the concern, still represents the interest of the execution
debtor, and the owner of the other interest can recover against
him only the value thereof.'
Several persons having separate and distinct interests in a
chattel cannot unite in replevin for it;* two persons cannot
join in suing for an injury done to one of them.^ Where [211]
two constables levy on the same goods by virtue of separate
executions they cannot join in an action against one who takes
away the goods.^ One of several joint debtors whose separate
goods are taken on execution and wasted must sue alone for
redress; and so if the officer extorsively demand and receive
of the debtors illegal fees.'' Actions for torts connected with
the matter of a contract, where the tort consists in the mere
omission of a contract duty, must be brought by the party in-
1 Denver, etc. R, Co. v. Frame, 6 Fed. Rep. 662; The Mercedes, 108
Colo. 382; White v. Webb, 15 Conn. Fed. Rep. 559.
302; Seaman v. Luce, 23 Barb. 240; A recent English case holds that a
Chad wick v. Lamb, 29 Barb. 518; bailee wlio is under no liability to
Rhoads V. Woods, 41 Barb. 471;Sher- his bailor cannot recover for an in-
nian v. Fall River Iron Co.. 5 Allen, jury to the property held by him.
213; Bartlett V.Kidder, 14 Gray, 449; Claridge v. South Staffordshire
Russell v. Butterfield, 21 Wend. 300; Tramway Co., [1892] 1 Q. B. 422.
Fallon V. Manning, 35 Mo. 271; Chaf- 2 Boyden v. Moore, 11 Pick. 362;
fee V. Sherman, 26 Vt. 237; Soule v. Mantonya v. Martin Emerich Out-
White, 14 Me. 436; Mead v. Thomp- fitting Co., 172 111. 92, 49 N. E. Rep.
son. 78 111. 62; Guttner v. Pacific 721, citing the text.
Steam Whaling Co., 96 Fed. Rep. 617, 3 Berry v. Kelly. 4 Robert. 106.
citing the text; Armory v. Dela- * Chambers v. Hunt, 18 N. J. L. 339.
mire, 1 Str. 505; The Jersey City, 2 ^ Winans v. Denman, 3 N.J. L. 124.
C. C, A. 365, 51 Fed. Rep. 527; Knight « Warne v. Rose, 5 N. J. L, 809.
V. Carriage Co., 18 C. C. A. 287, 71 ''uimer v. Cunningham, 2 Me. 117.
3G0
ENTIRETY OF DAMAGES.
[§ lio.
jured.* In one suit the court will not take cognizance of dis-
tinct and separate claims of different persons. "Where the
damage as well as the interest is several each party must sue
separately.^ "Whether the plaintiffs in a joint action are co-
partners or not is immaterial so long as their cause of action is
shown to be joint.'
§ 140. Joint and several liability for torts. If injuries or
damage are sustained through the affirmative acts or negli-
gence of several persons an action may be brought against all
or any of them.* If separate judgments are obtained the
1 Fairmount R Co. v. Stutler, 54
Pa. 375, 93 Am. Dec. 714.
The assignment by one member of
a firm of all his right, title and in-
terest in and to the partnership as-
sets gives the assignee such an inter-
est in a claim secured by a mortgage
on crops as makes him a proper co-
plaiutitf with the other partner in
an action for the conversion of the
crops or a special action on the case
in tiie nature of trover for damages
thereto. Keith v. Ham, 89 Ala. 590,
7 So. Rep. 234.
2 Hufnagel v. Mt. Vernon, 49 Hun,
286, 1 N. Y. Supp. 787; Governor v.
Hicks, 12 Ga. 189; Rhoads v. Booth,
14 Iowa, 575; Schaeffer v. Marien-
thal, 17 Ohio St. 183.
3 Wood V. Fithian, 24 N. J. L. 33.
4 Williams v. Sheldon, 10 Wend.
<554; Merryweather v. Nixan, 8 T. R.
186; Wheeler v. Worcester, 10 Allen,
591; Murphy v. Wilson, 44 Mo. 313,
100 Am. Dec. 390; Moore v. Appleton,
26 Ala. 633.
Some authorities state the rule
thus: If injuries or damage are sus-
tained through the affirmative acts
or negligence of several persons act-
ing jointly, or, if contributed to by
each, in pursuance of a joint purpose,
an action may be brought agamst all
or any of them. Others, and the
weight of authority favors the rule
as stated in the text, ignore the ne-
cessity for joint action or the exist-
ence of a common purpose; as where,
by the separate, but concurrent, neg-
ligence of two carriers a passenger
is injured by a collision, or a person
is simultaneously arrested on two
warrants issued at the instance of
two persons. Colgrove v. New York,
etc. R. Co., 20 N. Y. 492, 75 Am. Dec.
419; Slater v. Mersereau, 64 N. Y. 147;
Boyd V. Watt, 27 Ohio St. 268; City
Electric St. R. Co. v. Conery, 61 Ark.
381, 54 Am. St. 262, 31 L. R. A. 570;
33 S. W. Rep. 426; Pine Blufif Water
& Light Co. V. McCain, 62 Ark. 118,
35 S. W. Rep. 227; Klauber v. Mc-
Grath, 35 Pa. 118, 78 Am. Dec. 329;
Peckham v. Burlington, Brayton,134;
Allison V. Hobbs, 96 Me. 26, 51 Atl.
Rep. 245: Boston & A. R. Co. v.
Shanly, 107 Mass. 568; Newman v.
Fowler, 37 N J. L. 89: Lake Erie &
W. R. Co. V. Middlecoff, 150 III 27, 37
N. E. Rep. 600; Kansas City v. Slang-
strom, 53 Kan. 431, 36 Pac. Rep. 706:
Pugh v. Chesapeake & O. R. Co., 101
Ky. 77, 72 Am. St. 392, 39 S. W. Rep.
695; Stone v. Dickson, 5 Allen, 29, 81
Am. Dec. 727; Cuddy v. Horn, 46
Mich. 603, 10 N. W. Rep. 32; Flaherty
V. Minneapolis, etc. R. Co., 39 Minn.,
328, 40 N. W. Rep. 160, 12 Am. St. 654;
Grand Trunk R. Co. v. Cummings, 106
U. S. 700, 1 Sup. Ct. Rep. 493; Brown v.
Coxe. 75 Fed. Rep. 689. See § 141
and note. But this doctrine has been
doubted. Lull v. Fox & Wisconsin
Imp. Co., 19 Wis. 100; Trowbridge v.
§ 140.]
PARTIES TO SUE AND BE SUED.
301
plaintifif may enforce the one which is for the largest sum.*
The rule concerning the bringing of actions applies in ecjuity
as well as at law."^ Such persons may participate so as to be
thus liable by preconcert to do tlie wrong complained of, or to
Forepaugh, 14 Minn. 133; Larkins v.
Eckwurzel. 43 Ala. 822, 94 Am. Dec.
651; Powell v. Thompson, 80 Ala, 51.
It has been said, arguendo, of a
compkunt which set up the separate
and distinct wrongs of the respective
defendants and sought to enforce a
joint liability for acts which were
not joint in themselves nor bound
together by the tie of a common pur-
pose, that this cannot be done; the
wrong done must be jointly done in
fact by the defendants, or if con-
tributed to by each, a joint purpose
must be imputable to them before
they can be said to be joint tort-fea-
sors, and responsible jointly and sev-
•erally for the resulting injury. It
will not suffice, as a general propo-
sition at least, that the separate
wrongful acts or omissions of two
persons, having no connection with
-each other, the motive of each being
foreign to that of the othei", have in
their unintended coalescence and co-
action produced an injury. Rich-
mond & D. R. Co. V. Greenwood, 99
Ala. 501, 14 So. Rep. 495; Ensley
Lumber Co. v. Lewis, 121 Ala. 100, 25
So. Rep. 729.
This appears to be in conformity
with the rule in England. In a re-
cent case the plaintiff brought an
action for negligently excavating
near his house, whereby it was dam-
aged; the defendant attributed the
damage, wholly or in part, to the
negligence of a water company
in leaving a main insufficiently
stopped. The court declined to join
such company as a defendant be-
cause the torts were separate, though
the resulting damage was the same
in each case. Thompson v. London
•County Council, [1897J 1 Q. B. 84.
In an earlier case against two de-
fendants it was alleged that each of
them, by their several acts, and that
they by their combined acts, ob-
structed the plaintiffs access to his
premises, and an injunction and
damages were prayed against each
of them; it was determined that the
action could not be maintained; that
one of the defendants must be struck
out. Sadler v. Great Western R. Co.,
[1896] App. Cas. 450, affirming [1895]
2 Q. B. 088.
Wliere a municipality is bound to
see that its streets and sidewalks are
kept in proper condition, it cannot
be joined as a defendant with a resi-
dent property owner whose duty it
is to see that the walk adjoining his
premises is in good repair for an in-
jury resulting from his neglect.
Their co-operation is not of a nature
which makes them joint wrong-
doers. Button v. Lansdowne, 198 Pa.
563, 48 Atl. Rep. 494. See Wiest v.
Electric Traction Co., 200 Pa. 148, 49
Atl. Rep. 891.
1 Roodhouse v. Christian, 55 111.
App. 107; Kansas City v. Slangstrom,
53 Kan. 431, 36 Pac. Rep. 706; Pugh
V. Chesapeake & O. R. Co., 101 Ky.
77, 72 Am. St. 392, 39 S. W. Rep. 695;
Blackman v. Simpson, 120 Mich. 377,
79 N. W. Rep. 573; Berkson v. Kansas
City Cable R. Co., 144 Mo. 211, 45 S.
W. Rep. 1119; Burk v. Howley, 179
Pa. 539. 36 Atl. Rep. 327, 57 Am. St.
607; Koch v. Peters, 97 Wis. 492. 73
N. W. Rep. 25.
2 Hopkins v. Oxley Stave Co., 28 C.
C. A. 99, 103, 83 Fed. Rep. 912, citing
Cunningham v. Pell. 5 Paige, 607;
Wall V. Thomas, 41 Fed. Rep. 620.
362
ENTIRETY OF DAMAGKa
[§ 1^0.
procure it to be done, as well as by jointly taking part in it,
or b}' subsequently adopting the act done or neglect suffered
as principals.^ The extent of individual participation in, or of
expected benefit from, a joint tort is immaterial; each and all
of the tort-feasors are liable for the entire damage.^ The law
[212] is thus accurately and comprehensively laid down in a
Nev/ York case: " To entitle the plaintiff to a verdict against
all the defendants as joint trespassers it must appear that they
acted in concert in committing the trespass complained of; if
some aided and assisted the others to commit the trespass or
assented to the trespass committed by others, having an inter-
est therein, they are all jointly guilty ; ... it would not
be material if they had unequal interests in the avails of the
trespass; for those who confederate to do an unlawful act are
deemed guilty of the whole although their share in the profits
may be small. But if any of the defendants are not guilty at
all, or if any of them, though guilty, were acting separately
and for themselves alone without any concert with the others,
they ought to be acquitted and those only found guilty who
Avere acting jointly."^ The fact that one who orders an act
done, which results in injury to a third person, gave such order
as the officer of a municipal or private corporation does not
1 Northern Trust Co. v. Palmer,
171 111. 383, 49 N. E. Rep. 553; Dono-
van V. Consolidated Coal Co., 187 111.
28. 58 N. E. Rep. 290, 88 111. App. 589;
Lewis V. Read. 13 M. & W. 834;
Davis V. Newkirk, 5 Denio, 92; Cook
V. Hopper, 23 Mich. 511; Bonn el v.
Dunn, 28 N. J. L. 153; Ford v. Will-
iams, 13 N. Y. 584; Ball v, Loomis, 29
N. Y. 412; Hyde v. Cooper, 26 Vt.
552; Lewis v. Johns, 34 Cal. 629;
Adams v. Freeman, 9 Johns. 118;
Guille V. Swan, 19 Johns. 381, 10 Am.
Dec. 234; Hume v. Oldacre, 1 Stark.
351; Stewart v. Wells, 6 Barb. 81;
Wheeler v. Worcester, 10 Allen, 591,
-McCool v. Mahoney, 54 Cal. 491;
Learned v. Castle, 73 id. 454, 18 Pac.
Rep. 872, 21 id. 11; McCalla v, Shaw,
72 Ga. 458; Everroad v. Gabbert, 83
Ind. 489; Westbrook v. Mize, 35 Kan.
299, 10 Pac. Rep. 881; Sharpe v. Will-
iams, 41 Kan. 56; Boaz v. Tate. 43 Ind.
60; Breedlove v. Bundy, 96 id. 319;.
Page V. Freeman, 19 Mo. 421; Wright
v. Lathrop, 2 Ohio, 275; Knicker-
backer v. Colver, 8 Cow. Ill; Turner
V. Hitchcock, 20 Iowa, 310; Nelson v.
Cook, 17 111. 443; McMannus v. Lee,
43 Mo. 206, 97 Am. Dec. 386; Brown
V. Perkins, 1 Allen, 89; Barden v.
Felch, 109 Mass. 154; Williams v.
Sheldon, 10 Wend. 654; Currier v.
Swan, 63 Me. 323; Mason v. Sieglitz,
22 Colo. 320. 44 Pac. Rep. 588; Hunter
v. Wakefield, 97 Ga. 543, 25 S. E.
Rep. 347; Sternfels v. Metropolitan
Street R. Co., 73 App. Div. 494, 77 N.
Y. Supp. 309; Hill v. Ninth Avenue
R. Co., 109 N. Y. 239, 16 N. E. Rep. 61.
3 Williams v. Sheldon, 10 Wend. 6-54 ;
Howard v. Daj^ton Coal & Iron Co.,.
94 Ga. 416, 20 S. E. Rep. 336.
§ 140.] PARTIES TO SUE AND BE SUED. 303
absolve him from liability for the consequences.' The rule is
that two or more persons cannot be held jointly liable for verbal
slander.2 While admitting this it is said in a recent case in
which slander of title was the ground of the action, that under
circumstances where all the defendants are jointly concerned
and interested and participate in the general purpose, their
concert and co-operation may be shown although the false and
malicious statements may have been made b\' one alone.'
Where a master is liable for the tort of his servant, a principal
for that of his agent or deputy, they are jointly liable.* If an
officer takes property of a wrong person on process he, as well
as the party or attorney who directs it and even the sureties
who execute a bond of indemnity to the officer covering that
tort, may be held jointh'^ liable.^ An action for deceit in the
nature of a conspiracy cannot be sustamed against a principal
for the unauthorized fraudulent acts and representations of the
agent alone.^ According to the Iowa court if one joint wrong-
doer was actuated by malice his condition of mind will be at-
tributed to the others, and each will be liable for all the dam-
ages, actual and exemplary, resulting from the wrong.'' But
this we regard as a very doubtful proposition. In Kentucky
a cause of action under the common law^ against one party for
compensatory damages cannot be joined with an action against
another party for punitive damages, the right thereto resting
on a statute, although both causes of action arose out of the
same transaction.^
1 Jenne V. Sutton, 43 N. J. L. 257, & M. 278; Armstrong v. Dubois, 4
39 Am. Eep. 578; Myers v. Dauben- Keyes, 291.
biss, 84 Cal. 1, 23 Pac. Rep. 1027. & Murray v, Lovejoy, 2 Cliff. 191;
2 Blake v. Smith, 19 R. I. 476. 34 Lovejoy v. Murray, 3 Wall. 1; Lewis
Atl. Rep. 995. See State v. Marlier, v. Johns. 34 Cal. 629; Knight v. Nel-
46 Mo. App. 233; Butts v. Long, 94 id. son, 117 Mass. 458; Ball v. Loomis, 29
687, 692. N. Y. 412; Herring v. Hoppock, 15
3 Chesebro v. Powers, 78 Mich. 472, N. Y. 409; Root v. Chandler, 10 Wend.
44 N. W. Rep. 290. See Thomas v. 110, 35 Am. Dec. 540; Vincent v.
Rumsey, 6 Johns.' 26. McNamara, 70 Conn. 332, 39 Atl. Rep.
4Balme v. Button, 9 Bing. 471; 444.
Waterbury v. Westervelt, 9 N. Y. 6 Page v. Parker, 40 N. H. 47.
598; Morgan v. Chester. 4 Conn. 387; 7 Reizenstem v. Clark, 104 Iowa,
Barker v. Braham, 3 Wils. 368; Bates 287, 292, 73 N. W. Rep. 588, citing this
V. Pilling, 6 B. & C. 38; Newberry v. section. See ch. 9.
Lee, 3 Hill, 523; Crook v. Wright, R. » Clayton v. Henderson, 103 Ky.
228, 44 S. W. Rep. 667, 44 L R. A. 474.
JGi
ENTIKETY OF DAMAGES.
[§ 141.
§ 141. Same subject. In an action for diverting water from
a natural water-course so as to flood the plaintiff's land it ap-
peared that the defendant did it by walling the banks on his
[213,214] own land to preserve them. A third person, by cer-
tain acts wholly independent of defendant's and without con-
cert with him, increased the volume of water that flowed
upon such land. The defendant was only liable for the flood-
ing caused b}' him, and not for that part of the plaintiff's dam-
ages resulting from the increased volume of water caused by
such third person.^ But where nine different creditors, act-
ing without concert and without knowing that they were em-
ploying a common agent, wrongfully caused their debtor to
be arrested by the same officer on their several writs, service
being made simultaneously, and by virtue thereof committed
the debtor to jail where he was confined upon all of the writs
at the same time, they were deemed joint trespassers, and full
satisfaction recovered by the debtor from one of them was
held a bar to an action against the others.- It is not possible to
1 Wallace v. Drew. 59 Barb. 413.
2 Stone V. Dickinson, 5 Allen, 29,
81 Am. Dec. 727; Allison v. Hobbs,
96 Me. 26, 51 Atl. Rep. 245. Bigelow,
J., said in the Massachusetts case:
As a matter of iirst impression, it
might seem that the legal inference
from . . . (the fact that the de-
fendants acted separately and inde-
pendently of each other without any
appai'ent concert among themselves)
, . . is that the plaintiflf might
hold each of them liable for his tor-
tious act, but that they could not
be regarded as co-trespassers, in the
absence of proof of any intention to
act together, or of knowledge that
they were engaged in a common
enterprise or undertaking. But a
careful consideration of the nature
of the action, and of the injury done
to the plaintiff, for which he seeks
redress in damages, will disclose the
fallacy of this view of the case.
The plaintiff alleges in his declara-
tion that he was unlawfully arrested
and imprisoned. This is the wrong
which constitutes the gist of the ac-
tion, and for which he is entitled to
indemnity. But it is only one
wrong, for which in law he can re-
ceive but one compensation. He has
not in fact suffered nine separate
arrests, or undergone nine separate
terms of imprisonment. The writs
against him were all served simul-
taneously, by the same officer, acting
for all the creditors, and the confine-
ment was enforced by the jailor on
all the processes, contemporaneously,
during the entire period of his im-
prisonment. The alleged trespasses
on tlie person of the plaintiff were,
therefore, simultaneous and contem-
poraneous acts, committed on him by
the same person, acting at the same
time for each and all of the plaintiffs
in the nine writs upon which he was
arrested and imprisoned. It is, then,
the common case of a wrongful or
unlawful act, committed by a com-
mon agent, acting for several and
distinct principals.
Ul.]
PARTIES TO SUE AND BE SUED.
3G5
harmonize the cases on the extent of the co-operation -which
makes parties jointly liable. It seems perfectly })roper that
an unlawful act done by one person, though it be in further-
ance of a hiwful purpose in the accomplishment of which
others are engaged, should not make the latter liable if it is
done without their concurrence, and no benefit is received by
them from it.^ Where the effects of the independent acts of two.
"It does not in any way change or
affect the injury done to the phiintiff,
or enhance in any degree the dam-
ages wliich he has suffered, that the
immediate trespassers, by whom the
tortious act was done, were the agents
of several different plaintiffs, who
without preconcert had sued out
separate writs against him. The
measure of his indemnity cannot be
made to depend on the number of
principals who employed the officers
to arrest and imprison him. We
know of no rule of law by which a
single act of trespass committed by
an agent can be multiplied by the
number of principals who procured it
to be done, so as to entitle the party
injured toa compensation graduated,
not according to the damages actu-
ally sustained, but bj' the number of
persons through whose instrumental-
ity the injury was inflicted. The
error of tlie plaintiff consists in sup-
posing that the several parties who
sued out writs against him, and
caused him to be arrested and im-
prisoned, cannot be regarded as co-
trespassers, because it does not ap-
pear that they acted in concert, or
knowingly employed a common
agent. Such preconcert or knowl-
edge is not essential to the commis-
sion of a joint trespass. It is the
fact that they all united in the wrong-
ful act, or set on foot or put in mo-
tion the agency by which it was
committed, that renders them jointly
liable to the party injured. Whether
the act was done b}' the procure-
ment of one person or of many, and,
if by many, whether they acted from
a common purpose and design in
which they all sliared, or from sep-
arate and distinct motives, and with-
out any knowledge of the intentions
of each other, the nature of the in-
jury is not in any degree changed,
or the damages increased which the
party injured has a right to recover.
He may, it is true, have a good
cause of action against several per-
sons for tlie same wrongful act, and
a right to recover damages against
each and all tlierefor, with the priv-
ilege of electing to take his satisfac-
tion de melioribus damnis. But
there is no rule of law by which he
can claim to convert a joint into a
several trespass, or to recover more
than one satisfaction for his dam-
ages, when it appears that lie has suf-
fered the consequences of a single
tortious act only." See Wehle v.
Butler, 12 Abb. Pr. (N. S.) 139.
1 Wert v. Potts. 76 Iowa, 612, 14
Am. St. 252, 41 N. W. Rep. 374.
One does not become a partici-
pator in an assault and battery by
witnessing and mentally approving
it, no word or sign being used. Lis-
ter v. McKee, 79 111. A pp. 210.
After mortgaged goods were
wrongfully attached by creditors of
the mortgagor other creditors placed
their writs in the officer's hands and
he indorsed returns of a levy upon
the same goods, subject to the first
levy. It appears to have been the
opinion of the court that if such
subsequent attaching creditors did
nothing further they might not have
Z66
ENTIRETY OF DAMAGES.
[§ 1^1.
persons on opposite sides of a street united in causing injury,
there being no concert of action, they were held not jointly
liable.^ So where a dam was filled with deposits of coal dirt
from different mines on the stream above the dam, worked by
persons having no connection with each other, it was held that
they were not jointly liable for the combined results of throw-
ing coal dirt into the river by all the workers of the mines;
that the ground of action was not the deposit of dirt in the
dam by the stream but the negligent act above. Throwing
the dirt into the stream was the tort; the deposit in the dam
only the consequence. The tort of each was several when
committed and did not become joint because its consequences
united with other consequences.^ Agnew, J., referring to the
[216] instructions of the trial court asserting a joint liability
or the liability of each for the combined results, said : " The
doctrine of the learned judge is somewhat novel, though the
case itself is new; but if correct is well calculated to alarm all
riparian owners who may find themselves by slight negli-
gence overwhelmed by others in gigantic ruin. It is imma-
terial what may be the nature of their several acts or how
small their share in the ultimate injury. If instead of coal
dirt others were felling trees and suffering their tops and
branches to float down the stream finally finding a lodgment
in the dam with the coal dirt, he who threw in the coal dirt
and he who felled the trees would each be responsible for the
been liable jointly with the officer
and the original attaching creditor,
in the absence of proof showing con-
cert of action (Sparkman v. Swift,
81 Ala. 231, 8 So. Rep. 160; Lee v.
Maxwell, 98 Mich. 496, 57 N. W. Rep.
581); but they afterward joined to-
gether in directing and assisting
the officer in selling the goods, and
in bringing a suit in equity to set
aside the mortgage as fraudulent,
and to enjoin a sale of the property
by the mortgagee, in consequence of
which acts they and the indemnitors
of the officer became jointly liable
with the officer and the first attach-
ing creditors. Koch v. Peters, 97
Wis. 492, 73 N. W. Rep. 25, citing
Lovejoy v. Murray, 3 Wall. 1.
Where creditors employed the
same attorney and separate attacli-
ments were levied on the property
of their debtor, neither creditor
being in any way interested in the
claim of any other creditor or its
prosecution, the creditors were not
joint tort-feasors. Miller v. Beck,
108 Iowa. 575, 79 N. W. Rep. 344.
1 De Donato v. Morrison, 160 Mo.
581, 61 S. W. Rep. 641: Bard v. Yohn,
26 Pa. 482; Leidig v. Bucher, 74 Pa.
67; Wiest v. Electric Traction Co.,
200 Pa. 148, 49 Atl. Rep. 891.
2 Little Schuylkill, etc. Co. v. Rich-
ards. 57 Pa. 142, 98 Am. Dec. 209.
§ 141.]
PARTIES TO SUE AND BE SUED,
367
acts of the other. In the same manner separate trespassers
who should haul their rubbish upon a city lot and throw it
upon the same pile would each be liable for the whole if the
final result be the only criterion of liability," The court re-
jected this view and held as above. The judge further said:
" True, it may be dillicult to determine how much dirt came
from each colliery, but the relative proportions thrown in by
each may form some guide, and a jury in a case of such diffi-
culty caused by the party himself would measure the injury
of each with a liberal hand. But the dilKculty of separating
the injury of each from the others would be no reason that
one man should be held to be liable for the torts of others
without concert. It would be simply to say because the
plaintiff fails to prove the injury one man does him he may
therefore recover from that one all the injury that others do.
This is bad logic and hard law. Without concert of action no
joint suit could be brought against the owners of all the col-
lieries, and clearly this must be the test."^
1 In Hillman v. Newington, 56 Cal.
57, the plaintiff was entitled to four
hundred inches of the water in a
creek; the defendants severally and
without concert of action diverted
water ro such an extent that he did
not receive that quantity. In pass-
ing upon the question of misjoinder
of parties defendant the court said:
"It is not at all improbable that no
one of the defendants deprives the
plaintiff of the amount to which he
is entitled. If not, upon what ground
could he maintain an action against
any one of them ? If he were en-
titled to all the water of the creek,
then every person who diverted any
of it would be liable to him in an
action. But he is only entitled to a
certain specific amount of it, and if
it is only by the joint action of the
defendants that he is deprived of
that amount, it seems to us that tlie
wrong is committed by them jointly
because no one of them alone is
guilty of any wrong. Each of them
Ji verts some of the water; and the
aggregate reduces the volume below
the amount to which the plaintiff is
entitled, although the amount di-
verted by any one would not. It is
quite evident, therefore, that with-
out unity or concert of action no
wrong could be committed, and we
think that in such a case all who act
must be held to act jointly. If there
be a surplus [of water] tlie defend-
ants can settle the priority of right
to it among themselves. That can
in no way affect the plaintiff's right
to the amount to which he is enti-
tled. It does not seem to us that the
defendants' answer that each one of
them is acting independently of
every other one shows that the
wrong complained of is not the re-
sult of their joint action; and if it
does not the answer in that respect
is in.sufficient to constitute a de-
fense. The case so far as we are ad-
vised is sill generis. No parallel case
is cited by either side." See § 142.
As to the measure of co-operation
necessary to make persons joint
3C8 ENTIKETY OF DAMAGES. [§ 141.
Separate owners are not jointly liable for injuries jointly
committed by their respective animals though the latter hap-
pen to unite in a single transaction. Each owner is liable
only for the injury committed by his own animal; and his
liability is based on his duty to restrain it and his neglect in
allowing it to go at large where, in pursuing its known nat-
ural inclination, it may do damage.^ If, however, separate
owners keep animals in common and by a concurring negli-
gence or design suffer them to run at large as one herd, they
are jointly liable for all damages by the united trespass of all
or any of them.^ Where three persons, on returning from a
horseback ride, opened a gate leading to a vacant lot in which
was a horse owned by a fourth person, and turned their horses
into such lot, and one of these three horses injured such other
horse, each of those persons was liable as a joint tort-feasor
for such injury, regardless of whether they owned the horses
they turned in or knew that they were vicious.^ Two railroad
companies used the same track by joint arrangement, gov-
erned by common rules; their trains collided owing to mutual
and concurring negligence and caused a single injury. They
were held jointly liable.* The same rule applies to adjoining
wrong-doers in a conspiracy to ruin every owner or keeper of a dog en-
the Vjusiness of another, see Doreraus engaged in doing damage to sheep,
V. Hennessy, 176 111. 608, 53 N. E. lambs, or other domestic animals
Rep. 924, 68 Am. St. 203, 43 L. R. A. shall be liable in an action of tort to
797; Martens v. Reiliy, 109 Wis. 464, the county for all damages so done,
84 N. W. Rep. 840: State v. Huegin, the liability is for all the damages
110 Wis. 189, 89 N. W. Rep. 1046. in the doing of which the dog en-
1 Dyer v. Hutchins, 87 Tenn. 198, gages. Worcester County v. Ash-
10 S." W. Rep. 194; Auchmuty v. worth, 160 Mass. 186, 35 N. E. Rep.
Ham, 1 Denio, 49.'); Wilbur v. Hub- 773; Nelson v. Nugent, 106 Wis. 477,
bard. 35 Barb. 303; Partenheimer v. 82 N. W. Rep. 287. The same con-
"Van Order, 20 id. 479; Russell v. elusion has been reached under a
Toralin.son, 2 Conn. 206; Adams v. statute less general in its language.
Hall, 2 Vt. 9 (the rule in Vermont Kerr v. O'Connor. 63 Pa. 341.
has been changed by statute. Rem- 2 jack v. Hudnall, 25 Ohio St. 255,
ele V. Donohue, 54 Vt. 555; Fairchild 18 Am, Rep. 298.
V. Rich, 68 Vt. 202, 34 Atl. Rep. 692); 3 Martin v. Farrell, 66 App. Div.
Van Steinburgh v. Tobias, 17 Wend. 177, 77 N. Y. Supp. 934. See § 140,
562; Buddington v. Shearer, 20 Pick. note.
477; Nierenberg v. Wood, 59 N. J. L, < Colegrove v. New York, etc. R.
112, 35 Atl. Rep. 654. Co., 20 N. Y. 493, 75 Am. Dec 4ia
Under a statute expressing that See § 140, note.
§ liJ:2.] . PARTIES TO SUE AND BE SUED. 369
land-owners by whose concurring negligence an insecure party-
wall is maintained.'
§ 142. Same subject. A statute giving a joint action to
any person who shall be injured in his means of support by
any intoxicated person, or in consequence of the intoxication,
habitual or otherwise, against any person or persons who shall,
b}' selling or giving intoxicating liquors, have caused the in-
toxication in whole or in part of such person or persons, gives
a right of action against all such persons who participate in
causing a particular or several particnhar intoxications of a
person; if damages result therefrom the person injured may
sue such persons jointly or severally; and also all persons
who, only by the sale of liquor to any person, materially con-
tribute to make him a habitual drunkard may be sued jointly
by the person injured in consequence. But the two classes
cannot be sued jointly, and those who alone contributed to
cause habitual intoxication made responsible jointly with those
who only contributed to the particular intoxication and the
reverse.^ Under the Iowa statute concerning liability for the
results of the sale of liquors, whoever contributes to a single
act of intoxication, though by sales of liquor made in sepa-
rate places, whereby distinct damages are caused, is a joint
wrong-doer.' But there is no joint liability unless the persons
made defendants contributed to a specific act or acts of intox-
ication.* In an earlier case the court say: "A joint liabil-
1 Klauder v. McGrath, 35 Pa 128, so continuoJ until his death in 18G9.
78 Am. Dec. 329. of which the defendant had notice;
'Tetzner V, Naughton, 12 111. App. that during that period and at sun-
148. dry and divers times the defendant
3 Kearney v. Fitzgerald, 43 Iowa, sold him in quantities of from one
580. pint to a quart intoxicating liquors,
* Richmond v. Shickler, 57 Iowa, causing said Watt to become intoxi-
486, 10 N. W. Rep. 882. cated and an habitual drunkard ; and
Boyd V. Watt, 27 Ohio St. 259, is a by reason thereof during said period,
novel and interesting case. The and resulting therefrom, he became
widow of Dr. Watt brought an ac- incapable of attending to his usual
tion; the complaint alleged that he business, and squandered his estate,
was a physician with an extensive and so deprived her of her means of
practice, from the profits of which support. Johnson, J., speaking for a
he was able to furnish her comfort- majority of the court, said: "The
able means of support; that about statute gives the action against 'any
April, 1865, he became and was in person who shall . . . have caused
the habit of getting intoxicated, and the intoxication.' This intoxication
Vol. 1 — 24
370
ENTIRETY OF DAMAGES.
[§ I'iS.
ity arises where an immediate act is done by the co-operation
or joint act of two or more persons. Mere successive wrongs,
being the independent acts of the persons doing them, will
not create a joint liability although the wrongs may be corn-
may be 'habitual or otherwise.' A
right of action is given for damages
resulting from single cases of intoxi-
cation or from habitual intoxication.
Under the code several distinct
causes of action may be joined in
one action for damages growing out
of distinct cases of intoxication,
where each cause of action is sep-
arate and distinct, and is between the
same parties; but if on trial it ap-
pears that some of the acts of intox-
ication were caused by others, no re-
covery as to them could be had. In
such case the causes of action are
separate, and the damages resulting
from each are distinct and discon-
nected; and the causes of action
should be separately stated and num-
bered.
" In such a case the question would
be as to each case of intoxication,
who caused it, and what damages
resulted from it. What would con-
stitute a causing of a single act under
thestatuteto render one liable would
then arise. That question is not
made in this case. The charge is of
causing habitual intoxication for a
series of years. The damages alleged
are not the proximate results from
distinct cases, but the ultimate re-
sult of habitual intoxication. This
continuedhabitof drinking is alleged
to have rendered the husband inca-
pable of attendmg to his business, and
caused him to squander his estate.
This final result deprived the plaint-
iff of her means of support. It is a
charge of repeated illegal acts, pro-
ducing by their united effects an ul-
timate sfaie or condition ot Dr. Watt,
out of which the damages arise. The
plaintiff asks to recover the dam-
ages resulting from this stateov con-
dition of her husband, caused by
repeated illegal sales for a series of
years, and not the damages from a
single case of intoxication, nor of a
series of distinct cases at different
times, caused by separate and dis-
tinct illegal sales. The means used
were sales in quantity by the pint
and quart. To a person of Dr. Watt's
habits, frequent sales in such quan-
tity were calculated to produce the
result complained of. Every person
is presumed to have intended the
natural and probable consequences
of his acts. The defendant was, in
violation of law, using means calcu-
lated to produce the alleged injury.
If the jury found that this was so,
and that the means so employed were
so continued as to produce the con-
dition of the husband alleged, then
they had the right to presume he in-
tended the result which followed,
though others, with or without pre-
concert, contributed to cause it. The
intent with which the act or acts are
done is alwaj's an important element
in the case. In this case it is pecul-
iarly so. The means used, the force
or agency employed, are to be con-
sidered in ascertaining that intent.
If, as seems to be claimed, a defend-
ant can only be liable, except in cases
of conspiracy or agreement, when he
is the sole cause of the habitual in-
toxication, and no recovery can be
had unless the damages can be sep-
arated (an impossibility in most cases
of this class), then this part of the
statute is virtually a dead letter.
" Why should the defendant be
exonerated from the injury he has
caused by his habitual wrongs for a
series of years by showing that
others, without his knowledge, have
§ 1^2.]
PAKTIES TO SUE AND BE SDED.
71
mitted against the same person. There must be concurrent
action, co-operation or a consent or approval in the accom-
plishment by the wrong-doers of the particuhir wrong in order
also contributed by like means to
this result? He was using adequate
means to produce the result, and
may, therefore, fairly be presumed
to have intended it. True, he may
not have enjoyed a monopoly in the
profits accruing, by reason of the
competition of others in a common
business; but that certainly is no
reason why he should not be liable
for the injuries he was intentionally
engaged in causing. If such is the
law, then he could take advantage
of his own wrong by showing that
during this four years another or
others had also contributed. Such
is not the law in criminal cases at
common law, as will be shown here-
after; and we know no reason for
greater strictness under this statute
than in cases of the highest crimes
known to the law. This section of
tlie statute, we take it, is to be con-
strued by ordinary canons of con-
struction."
The foregoing views of the court
presuppose that the defendant in-
sisted on complete exemption from
responsibility because other persons
made sales to Dr. Watt. But the case
as reported does not disclose that any
sueli position was taken. The de-
fendant asked the court to charge
the jury "that the defendant was
only liable for damages to the plaint-
iff occasioned by intoxication pro-
duced by the intoxicating liquor
which the defendant himself had
sold to said Dr. Watt, and that the
defendant was not liable for any
damages produced by the intoxica-
tion of said Dr. Watt, occasioned by
intoxicating liquors sold to him dur-
ing said period by other persons;"
which charge the court refused to
give except with the following qual-
ifications: "Siiould you find tliatthe
defendant sold intoxicating licjuor to
Joseph Watt in violation of law
within the time charged in the peti-
tion, and that the plaintiff sustained
damages by reason of the intoxica-
tion of said Watt, caused tliereby
to her person, property or means of
support, the fact that other persons
also sold liquor to said Watt, in vio-
lation of law, within that period, and
which liquor may have contributed
to increase the intoxication, and con-
sequently to enhance the injury re-
sulting to the plaintiff therefrom;
such facts, if they be shown to have
existed, will not exonerate tiie de-
fendant from the consequence of his
wrongful acts; but, on the contrary,
he will still be responsible for all the
injury resulting to the plaintiff from
the intoxication of Joseph Watt,
caused by his illegal sale of liquor to
him. If yoii can separate the dam-
ages resulting from the intoxication
caused by illegal sales to Watt by de-
fendant from the damages resulting
from sales by others, you must do so;
but if such separation cannot be
made you will render your verdict
against the defendant for all the act-
ual pecuniary damages residting to
the plaintiff in person, property or
means of support by reason of the
intoxication of the said Joseph Wait,
to ichich intoxication the illegal sales
of intoxicating liquor by the defend-
ant contributed."
The judgment for the plaintiff was
afiirmed. And upon the state of facts
supposed by the defendant's request,
the appellate court treat the defend-
ant and all other persons wiio sold
liquor to Dr. Watt as jointly and sev-
erally liable — as joint tort-feasors.
On that point the learned judge who
372
ENTIRETY OF DAMAGES.
[§ 142.
to make them jointly liable."^ But where it is provided that
the person who furnishes the liquor which causes the intoxica-
tion "in whole or in part," habitual or otherwise, shall be
liable, the damages cannot be apportioned; full recovery may
be had against any one who contributed to the result com-
plained of.^
delivered the majority opinion states
the defendant's position and the an-
swer as follows: "Counsel properly
admit that where two or more act by
concert in an unlawful design each
is liable for all damages, but claim if
each acts independently, or without
the knowledge of the other, then he
is only liable for his own acts. In
the former case the acts of others co-
operating are his acts, because they
are only in furtherance of a com-
mon unlawful design. If there is no
common intent there can be no joint
liability, but each is responsible for
his own act. If there is a common
intent, or one without such intent
aids one with it in doing an unlaw-
ful act, the latter is nevertheless
guilty, though not the sole cause.
They claim this principle is limited
to cases of conspiracy or concerted
action. In this we think they mis-
take the authorities. We hold that
this common intent, which is suffi-
cient to create mutual liability, may
exist without previous agreement or
a common understanding to do the
unlawful act, and that it may be pre-
sumed to exist when the means em-
ployed create that presumption as
well as by proving an express agree-
ment."
This " common intent which is suf-
ficient to create mutual liability " is,
further on in the opinion, thus eluci-
dated: "If the defendant was usmg
the means calculated to produce the
injury, the law presumes that he in-
tended to produce it If others, with
or without concert, were concur-
rently co-operating with him, using
like means, they were acting with
the same common design, and if the
injury resulted each is liable, though
each was acting without the knowl-
edge of whattheotherwas doing. So
if the defendant alone was using such
means as created this presumption
of intent to do the act and another,
without concert, free from such in-
tent, was contributing to the injury,
the former is liable for all damages,
notwithstanding the other also con-
tributed."
The majority of the court came to
the conclusion that vendors of intox-
icating liquors who separately sell
to a man, who, by thus imbibing, in
a period of several years, becomes an
habitual drunkard, are in law jointly
and severally liable for that re-
sult, though they have no concert
in the sense of communicating with
each other on the subject; though
they do not act together, that is. no
two of them join in any one sale,
and each may be unacquainted with
the others, and perhaps may not
even know that there are others;
though the only circumstance that is
supposed to join and unify them is
they are engaged in the same kind
of business and each is doing such a
business as has a tendency to make
drunkards, and in a particular case
they have thus made one.
1 La France v. Krayer, 43 Iowa,
143; Hitchner v. Ehlers, 44 id. 40;
Faivre v. Manderscheid, Iowa, — ,
90 N. W. Rep. 76.
2 Neuerberg v. Gaulter, 4 111. App.
348: Bryant v. Tidgewill, 133 Mass.
86; Werner v. Edmiston, 24 Kan.
§ 142.]
PARTIES TO SUE AND BE SUED.
573
Each partner is an agent of the firm of which he is a mem-
ber for the purpose of carrying on its business in the way it is
usually prosecuted; hence an ordinary partnership is liable for
the results of the negligence of any one of its members in con-
ducting its affairs in the usual way.^ Such liability extends to
the fraudulent or malicious conduct of one partner though the
others had no knowledge of it, if the act was done for the
benefit of the firm and was within the scope of the partner-
ship.2 j^^^ [^ (jQgg not embrace acts done beyond such scope,'
unless they are authorized or adopted by the firm.'* A part-
nership is also responsible for the negligence of its servants
subject to the same limitations.*
147; Rantz v. Barnes, 40 Ohio St. 43;
Aldrich v. Parnell, 147 Mass. 409, 18
N. E Rep. 170.
TJiis is the rule applied in Michi-
gan, although the statute does not
contain the words " in whole or in
part." Steele v. Thompson, 43 Mich.
596, 4 N. W. Rep. 536. See Suther-
land's Stat. Const, § 377.
1 Lindley's Part. (2d Am. ed.) *149;
Linton v. Hurley, 14 Gray. 191;
Buckie v. Cone. 25 Fla. 1, 6 So. Rep.
160; Mode v. Penland. 93 N. C. 292;
Gerhardt v. Swaty, 57 Wis. 24, 14 N.
W. Rep. 851; Robinson v. Goings, 63
Miss. 500; Wiley v. Stewart, 122 111.
545. 14 N. E. Rep. 835; Hall v. Younts,
87 N. C. 285; Hyrne v. Erwin, 23 S.
C. 226; Stroher v. Elting, 97 N. Y.
102, 49 Am. Rep. 515.
2Lothropv. Adams, 133 Mass. 471,
43 Am. Rep. 528; Locke v. Stearns,
1 Met 560, 35 Am. Dec. 382; Durant
V. Rogers, 87 111. 508; Chester v. Dick-
erson, 54 N. Y. 1, 13 Am. Rep. 550;
Guillou V. Peterson, 89 Pa. 163; Rob-
inson V. Goings, 63 Miss. 500. But
see Gilbert v. Emmons, 43 111. 143, 89
Am. Dec. 412; Grund v. Van VIeck,
69 111. 478; Rosen krans v. Barker,
115 id. 331, 56 Am. Rep. 169, 3 N. E.
Rep. 93.
3 Gwynn v. DufEeld. 66 Iowa, 708,
55 Am. Rep. 286, 24 N. W. Rep. 523;
Schwabacker v. Riddle, 84 111. 517.
< Graham v. Meyer, 4 Blatch. 129;
Heirn v. McCaughan, 32 Miss. 17;
Taylor v. Jones, 42 N. H. 25; Ernst-
man V. Black, 14 111. App. 381; Wood-
ling V. Knickerbocker, 31 Minn. 268,
17 N. W. Rep. 387.
6 Roberts v. Johnson, 58 N. Y. 613;
Stables v. Eley, 1 C. & P. 614; Brent
V. Davis, 9 Md. 217; Linton v. Hur-
ley, 14 Gray, 191.
374 LEGAL LIQUIDATIONS AND KEDUOTIONS.
CHAPTER Y.
LEGAL LIQUIDATIONS AND REDUCTIONS.
Section 1.
circuity of action.
143. Defense of.
144. Agreement not to sue.
145. Principle operates in favor of plaintiff.
146. Damages must be equal
147. Reciprocal obligations.
Section 2.
mutual credit.
148. Compensation by mutual demands.
Section 3.
mitigation of damagea
149. Equitable doctrine of.
150. Abseuce of malice.
151. Words as provocation for assault; agreements to fights
153, 153. Provocation in libel and slander.
154. Mitigating circumstances in trespass and other actions.
155. Plaintiff's acts and negligence.
156, 157. Measures of prevention; return of property; discharge of plaint-
iff's debt.
158. No mitigation when benefit not derived from defendant.
159. Fuller proof of the res gestce in trespass, negligence, etc.
160. Official neglect.
161. Same subject; modification of the old rule.
162. Plaintiff's consent.
163. Injuries to character and feelings.
164. Reduction of loss or benefit.
165. 166. Pleading in mitigation.
167. Payments.
Section 4.
recoupment and counter-claim;
168, 189. Definition and history of recoupment.
170, 171. Nature of defensa
172. Constituent features of recoupment.
173. Remedy by counter-claim.
174. Validity of claim essential.
175. 176. Parties.
177. Maturity of claim or demand; statute of limftations.
178. Cross-claim must rest on contract or subject-matter of action.
179. 180. Recoupment for fraud, breach of warranty, negligence, etc.
§ 143.] CIRCUITY OF ACTION. 375
§ 181. What acts may be the basis of recoupment.
183. Cross-claims between landlord and tenant.
183. Cause of action, connection between and cross-claim.
184. Recoupment between vendor and purchaser.
185. Liquidated and unliquidated damages may be recouped.
186. Affirmative relief not obtainable.
187. Election of defendant to file cross-claim or sue upon his demand.
188. Burden of proof; measure of damages.
189. A cross-claim used in defense cannot be sued upon.
190. Notice of cross-claim.
Section 5.
marshaling and distribution.
191. Definition.
192. Sales of incumbered property in parcels to different purchasers.
193. Sale subject to incumbrance.
194. Effect of creditor releasing part.
195. Rights where one creditor may resort to two funds and another to
only one.
196. Same where the funds belong to two debtora
197. Principles on which priority determined.
Section 6.
set-off of judgments.
198. Power to direct set-off inherent.
199. When it will or will not be granted.
200. Interest of the real parties considered.
201. Set-otf not granted before judgment.
203. Assignee must make an absolute purchasa
203. Nature of action immaterial.
804. Liens of attorneys.
Section 1.
circuity of action".
§ 143. Defense of. The defense of circuity of action [220]
is available where the parties stand in such legal relation ta
each other that if the plaintiff recovers against the defendant
the latter, thereupon and by reason thereof, has a cause of
action against the former for the very sum so recovered. The-
plaintiff's demand is then neutralized by his liability, conse-
quent upon recovery, to pay back such sum; by a legal equa-
tion the plaintiff has no cause of action. This defense ac-
complishes the same result as would the circuity of action.
Thus in an action against the surviving partner upon the prom-
issory note of a partnership an indenture by which the plaintiff
and others had covenanted to indemnify the defendant against
376
LEGAL LIQUIDATIONS AND REDUCTIONS.
SS 144, 145.
all debts due from the partnership and against all actions
brought against him by reason of such debts was a bar to the
action.^ Under a statute which imposes a personal liability
upon stockholders for the debts of a corporation, a creditor,
who is himself a stockholder, cannot maintain an action to en-
force such liability against a co-stockholder.^ One who is a
surety upon an official bond can not recover from his fellow-
sureties the full amount of damages he has sustained by its
breach.'
§ 144. Agreements not to sue. On this principle if a cred-
itor makes a valid agreement never to sue his debtor upon a
specified demand it operates to extinguish the debt like a re-
lease.* But when the covenant is that a demand shall not be
put in suit within a limited time a breach thereof cannot be
[221] pleaded in bar of that demand. The reason is that the
damacjes for the breach of the latter covenant being uncertain
and not determinable by the amount of the demand, the prin-
ciple of circuity of action is not applicable.
§ 145. Principle operates in favor of plaintiff. The prin-
ciple of avoiding circuity of action will sometimes operate
in favor of the plaintiff. A town was compelled to pay dam-
ages for an injury resulting from a defect in a highway occa-
sioned by the want of repair of a cellar way constructed in a
sidewalk and leading to an adjoining building occupied by a
' Whitaker v. Salisbury, 15 Pick.
534; Austin v. Cummings, 10 Vt. 26.
2 Gray v. Coffin, 9 Gush. 193, 206;
Bailey v. Bancker, 3 Hill, 188. 38 Am.
Dec. 625.
3 Alderson v. Mendes, 16 Nev. 298.
The plaintiff declared on a note
made by C. and payable to the plaint-
iff or his order, and afterwards in-
dorsed by him to the defendant, who
re-indorsed it to the plaintiff. After
verdict for the latter the ju igment
was arrested. Bishop v. Hayward,
4 T. R 470. But if it appears that
the plaintiff's name was originally
used for form only, and tliat it was
understood by all the parties to the
instrument that the note, though
nominally made payable to the
plaintiff, was substantially to be paid
to the defendant, and the declaration
so alleges, the defense of circuity of
action is not good. Id.; Wilders v.
Stevens, 15M. &W. 208.
* Robinson v. Godfrey, 2 Mich. 408;
Cuyler v. Cuyler, 2 Johns. 186;
Phelps V. Johnson, 8 id. 54; Lane
V. O wings, 3 Bibb, 247; Millett v.
Hayford, 1 Wis. 401; Pveed v. Shaw,
1 Blackf. 245; McNeal v. Blackburn,
7 Dana, 170; Jackson v. Stackhouse,
1 Cow. 122, 13 Am. Dec. 514; Sewall
V. Sparrow, 16 Mass. 24; Gibson v.
Gibson, 15 id. 106, 8 Am. Dec. 94;
Jones V. Quiunipiack Bank, 29 Conn.
25; Clark v. Bush, 3 Cow. 151; Dear-
born V. Cross, 7 id. 48.
§ 140.] CIRCUITY OF ACTION. 377
tenant; it was held that the occupant, and not the owner,
was liable to the town for such damages, and vfixs, prima facie
liable to third persons suffering injury from any such defect;
but if there be an express agreement between the landlord
and tenant that the former shall keep the premises in repair,
so that in case of a recovery against the tenant he would have
his remedy over, then the party injured, to avoid circuity,
may bring his suit in the first instance against the landlord.'
§ 146. Damages must be equal. If a deed contains recip-
rocal covenants which are governed by the same rule of dam-
ages one covenant may be pleaded in bar to another to avoid
circuity of action. But where the covenants are distinct and
independent they cannot be so pleaded, for the damages may
not be commensurate and each party must recover against the
■other separate damages according to the justice of the case.^
This defense has been termed a setting off of one right of ac-
tion against another.* It is available though the damages be
unliquidated, but the damages on the two causes of action must
be the same in amount as matter of law, and must so appear
by ttie pleadings.^ In other words, a good plea in avoidance
•of circuity of action must show that the sum which the de-
fendant is entitled to recover from the plaintiff is necessarily
the same as that in respect of which the plaintiff is suing. [222]
The rigid severity and precision of this test are illustrated in
the following case. By a charter-party it was agreed between
the master and the charterers that one-third of the stipulated
freight should be paid before the sailing of the vessel, the same
to be returned if the cargo was not delivered at the port of
destination, the charterers to insure the amount at the owners
expense, and deduct the cost of doing so from the first payment
of freight. The charterers paid the one-third freight, deduct-
ing the premium for insurance. The vessel and cargo did not
■reach their destination. In an action by the charterers to re-
1 Lowell V. Spaulding, 4 Gush. 277; 3 Mayne on Dam. (6th ed.X p. 130.
Payne v. Rogers, 2 H. Bl. 349. * Id. ; Turner v. Thomas, L. R. 6 C.
-'Gibson v. Gibson, 15 Mass. 106, P. 610; De Mattos v. Saunders, 7 id.
112, 8 Am. Dec. 94; Guard v. White- 570: Walmesley v. Cooper, 11 A. &
side, 13I1L 7; Millett v. Hay ford, 1 E. 216; Carr v. Stepliens. 9 B. & C.
Wis. 401; Thurston v. James, 6 R. L 759; Connop v. Levy, 11 Q. B. 769.
103; Hovvland v. Marvin, 5 Cal. 501;
Bac. Abr. Gov. L.
878 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 146..
cover the freight so paid, the owner pleadod that the loss of
the part of the freight to be returned was such a loss as was
by the charter-party to be insured against b}^ the charterers at
the owners expense, and such insurance, if effected, would have
indemnified the defendant against the loss of the freight stip-
ulated to be returned ; that although the plaintiffs might, with
the use of reasonable care and diligence, have effected an in-
surance, whereby the defendant and the owner of the ship
Avould have been fully indemnified against the loss of the one-
third freight so to be returned, yet the plaintiffs effected the
insurance so negligently and in such disregard of the usual
course of business that the same became of no use or value, and
the defendant, by reason of such improper conduct, had sus-
tained damages to the amount of the said third freight so in-
sured, and the plaintiffs thereby became liable to the defendant
for the same, and liable to make good to him such amount as
he should have to return to the plaintiffs under the charter-
party, and any sum paid or returned by the defendant to the
plaintiffs in respect of the freight would be the damage sus-
tained by the defendant by reason of such improper conduct
and deviation, and he would be damnified to that extent. The
court held that the plea was bad inasmuch as the conclusion
it drew was not warranted by the facts stated, for the liability
of the plaintiffs in respect of their negligence in effecting the
insurance was a liability for damages which were not neces-
sarily identical in amount with the claim set up by them in
their action. Jervis, C. J.: " It is not denied that the rule in
question is plain and well ascertained, viz. : that to justify a de-
fendant in setting up a demand in avoidance of circuity of
[2'23] action he must show that the sura which he claims to be
entitled to recover back is of necessity the identical sum which
the plaintiff is suing for. The only difficulty arises from the
application of the rule. I was somewhat struck by a difficulty
arising from the allegation in the plea that, by and through
the negligent and improper conduct of the plaintiffs in effecting
the insurance, the insurance became of no use or value and the
defendant thereby sustained damage to the amount of one-third
of the freight so insured; and that the plaintiffs thereby be-
came liable to the defendant for the same, . . . and liable
to make good to the defendant such amount as he should have-
§ 146.] CIRCUITY OF ACTION. 379
to return to the plaintiffs under the charter-party; and that
the sum paid by the defendant to the plaintiffs, or received by
them, . . . would be the damages sustained by the de-
fendant by reason of such improper conduct. But I think my
brother Channell has relieved me from that difficulty by sug-
gesting that it is a mere conclusion drawn from the previous
allegations, — not a conclusion of law necessarily resulting from
such previous allegations, one which a jury might or might
not arrive at. I think that unless the judge would be
bound to tell the jury that the amount which the defendant
claims by his plea is necessarily the same amount as the plaint-
iffs claim by their declaration the plea does not bring the case
within the rule as to circuity of action. The case differs ma-
terially from those which were cited, ... in which the
defendant was bound to a liquidated and ascertained sum
on the failure of the plaintiff to perform a duty. This is a
matter which sounds in damages. The plaintiffs had under-
taken to effect an insurance for the defendant with third per-
sons; and it may be that in the result the defendant will be
entitled to recover from the plaintiffs precisely the same
amount of damages that the plaintiffs will recover in this ac-
tion; but there are various circumstances which might by pos-
sibility arise to reduce the damages in that action to a lesser
or even to a nominal amount; and unless the defendant could
negative all these possible circumstances, he could not make
this a good plea." ^
1 Charles v. Altin, 15 C. B. 46. these plaintiffs recover back the one-
Crowder, J., doubted in this case. He third freight to-day and the defend-
said: " I have entertained consider- ant were to bring a cross-action
able doubts during the argument, against them, and to allege and prove
and I must confess that these doubts what is stated in this plea, the jury
are not altogether removed; and would be directed to give damages
although my lord and my two learned to precisely the same amount." After
brothers think otherwise, it is with quoting the language of Mr. Justice
considerable reluctance that I should Washington in Morris v. Summerl, 3
come to the conclusion that the plea Wash. C. C. 203, he continued: "It
is no answer to the declaration. The is not said that, as a positive matter
rule as to the avoidance of circuity of law, he is responsible to that ex-
of action is in my opinion a just and tent. It probably amounts to this,
valuable one, and it is important that that the loss would be the reasonable
a case should be brought within it if measure of damages. The learned
possible. In point of fact and com- judge is referring to a course of deal-
mon sense nobody can doubt that, if ing. The case before us arises upon
380 LEGAL LIQUIDATIONS AND KEDUCTIONS. [§§ 147, 148.
[224] § 147. Reciprocal obligations. The reciprocal obliga-
tions of the parties may be such that the action of one may
be barred by a counter covenant which is not only a good de-
fense on the ground of avoiding circuity of action, but also
as a release. Of this nature is a covenant never to sue.^ To
sustain a bar in that form, however, the contract must be
technically such as to amount to a release. But the defense of
circuity of action does not depend on the principle of a re-
lease, but on the policy of the law against unnecessary litiga-
tion and the convenience of admitting a party to his ultimate
right by the shortest and most direct process.
Section 2.
MUTUAL credit.
§148. Compensation by mutual demand. Mutual debts or
credits do not compensate each other except when pleaded
[225] under statutes of set-off, unless they are so connected
that the parties have reciprocally the right to retain out of
the moneys they owe the amount they are creditors for. Then
the accounts are reciprocal payments, and no demand exists
upon either side except for the net balance. This is the case
w^here the demands of both parties are, with their mutual con-
sent, brought into one account as debit and credit;- and also
wherever a party has a lien on moneys in his hands or which
he holds for the satisfaction of a cross-demand in favor of
himself, as in the case of factors, brokers and others. In an
a contract to insure the amount, — Johnson v. Carre. 1 Lev. 152; Harvey
the precise amount, — which the v. Harvey, 3 Ind. 473; Reed v. Shaw,
plaintiffs are claiming under the 1 Blackf. 245; Jackson v. Stackhouse,
charter-party to have returned to 1 Cow. 122, 13 Am. Dec. 514; Phelps
them; and the question is whether v. Johnson, 8 Johns. 54; Jones v.
the breach of the engagement to in- Quinnipiack Bank, 29 Conn. 25;
sure does not so clearly entitle the Walker v. McCuUoch, 4 Me. 421;
defendant to recover from the plaint- Lane v. Owings, 3 Bibb, 247; Hast-
iffs the precise sum which they by ings v. Dickinson, 7 Mass. 153, 5 Am.
their action are seeking to recover Dec. 341; Shed v. Pierce, 17 Mass. 623.
from him, as to warrant the plea. If See § 6.
this had been a contract of indem- ^pond y, Clark, 47 Vt. 565; McNeil
nitj-, there could have been no v. Garland, 27 Ark. 343; Sanfora v.
doubt." Alston v. Herring, 11 Ex. Clark, 29 Conn. 457; Myers v. Davis,
822. 26 Barb. 367; Ang. on Lim., g 138.
1 Smith V. Mapleback, 1 T. R. 441;
§ 148.] MUTUAL CKEDIT. 381
early case a ship broker rocovered for his principal a sum of
money for damages done to his ship by collision; the broker
paid over all but his charges for services, and it was held in a
suit by the principal for the reasonable sum so retained that
the defendant had a right to it. The action was for money
had and received, and it was said the plaintiff should not re-
ceive more than he was in equity entitled to, and this could
not be more than what remained after deducting all just allow-
ances which the defendant was entitled to out of the very sum
demanded; it was not in the nature of a cross-demand or mut-
ual debt, but a charge which makes the sum received for the
plaintiff's use so much less.^
In conformity to a natural equity that one debt shall com-
pensate another, and for the convenience of commerce, the
courts favor liens and recognize them, first, where there is
an express contract; second, where one may be implied from
the usage of trade; third, where it may be implied from the
manner of dealing between the parties in the particular case;
fourth, where the defendant has acted in the capacity of a
factor.^ Where it was part of the contract between a servant
and his master that the former should pay out of his wages
the value of his master's goods lost by his negligence it [226]
was an agreement that the wages were to be paid only after
deducting the value of the things lost, and their loss was
provable under the general issue. ^ So where by the custom of
the hat trade the amount of injury done to hats in dyeing was
to be deducted from the dyer's wages, evidence of injury from
this cause was admitted in reduction of damages.''
iDale V. Sollet, 4 Burr. 2133; 1 ^Le Loir v. Bristow, 4 Camp. 134;
Chitty's PI. 563; Rawson v. Samuel, Cleworth v. Pickford, 7 M. & W. 314.
Cr. & Ph. 161; Green v. Farmer, 4 ^Bamford v. Harris, 1 Stark. 343.
Burr. 2214; Patrick v. Hazen, 10 Vt. See Alder v. Keighley, 15 M. & W.
183: Saltus v. Everett, 20 Wend. 267; 119. In this case the bankrupt had
MuUer v. Pondir, 55 N. Y. 325; Dres- given tlie defendant a bill drawn by
ser Manuf. Co. v. Waterson, 3 Met. himself for 600Z., which the defend-
9; Turpin v, Reynolds, 14 La, 473; ant agreed to discount, retaining lOOZ.
Holbrook v. Receivers, 6 Paige, 220. and the discount. He never paid the
See Taft V. Aylwin, 14 Pick. 33G; bankrupt anything. The action was
Schermerhorn v. Anderson, 2 Barb, brought by the assignees for breach
584; Citizens' Bank v. Carson, 32 Mo. of the agreement. The jurj' gave a
191. verdict for 495/., being the amount
- Id. of the bill, minus the lOOZ. and dis-
382 legal liquidations and reductions. [§§ 149, 150.
Section 3.
mitigation of damages.
§ 149. Equitable doctrine of. Mitigation of damages is
what the expression imports, a reduction of their amount; not
by proof of facts which are a bar to a part of the plaintiff's
cause of action, or a justification, nor of facts which constitute
a cause of action in favor of the defendant; but rather of facts i|
which show that the phiintiff's conceded cause of action does
not entitle him to so large an amount as the showing on his
side would otherwise justify the jury in allowing him. Facts
[227] for mitigation are addressed to the equity of the law,
and are admitted to assist in the application of the paramount
rule that damages should not exceed just compensation unless
the case calls for severity in the form of exemplary damages.
But if a wrong is wilfully done courts are not inclined to allow
the resulting damages to be mitigated by taking into account
lawful acts of the wrong-doer which have benefited the other
party.^ There are, however, few, if any, exceptions to the rule
that any circumstance competent as evidence to reduce the
damages may be proven on the trial for that purpose although
it may not have been effective until after the suit was begun.^
§ 150. Absence of malice. Matters may be proved in miti-
gation which tend to excuse or justify the act complained of,
though they are not a full excuse or justification. Thus, where
the plaintiff was taken into custody for an offense not justify-
ing an arrest, evidence of the offense was allowed to be given,
for it was in the nature of an apology for the defendant's con-
count. This was held correct, though of the bill, minus lOOZ. and discount,
the bill had become worthless on ac- The bankrupt would have to receive
count of the bankruptcy. Pollock, that sum, and his assignees are en-
C. B., said: "If this had been an titled to recover the same amount
action of trover for the bill, no doubt which he would be entitled to re-
it would have been altogether a ques- ceive, had he continued solvent, by
tion for the jury as to the amount of reason of the breach of contract."
damages. So, also, if it had been an ^ Whorton v. Webster, 56 Wis. 356,
accommodation bill, or the bank- 14 N. W. Rep. 280. See Ji 155.
rupt's own bill. But this is not an - Marsh v. McPherson. 105 U. S. 709,
action of trover, but of breach of 716; Gabay v. Doane, 77 App. Div.
contract. The defendant promised 413, 79 N. Y. Supp. 312.
to deliver to the bankrupt the amount
§ 151.]
MITIGATION OF DAMAGES.
383
duct.' In trespass for false imprisonment the void warrant of
arrest and proceedings had under it are admissible in evidence
to disprove malice and prevent the recovery of exemplary dam-
ages,^ but not to mitigate those which are compensatory.^
§ 151. Words as provocation for assault ; agreements to
fight. Although it is well settled that no words of provoca-
tion whatever will justify the offended party in inflicting a
blow upon the offender,* they generally constitute an excuse
which will mitigate the damages, and may be proved for that
purpose.^ But such provocation must be so recent as to induce
the presumption that the violence was committed under the
immediate influence of the passion thus excited.^ The lan-
guage of the parties is often so immediately associated and
identified with the transaction that it is impracticable to sup-
press it in giving evidence of their conduct; and, indeed, the
1 Linford v. Lake, 3 H. & N. 276;
Warwick v. Foulkes. 12 M. & W. 507;
Wells V. Jackson, 3 Munf. 458; Paine
V. Farr, 118 Mass. 74
^ Woodall V. McMillan, 38 Ala. 622;
Wells V. Jackson, 3 Munf. 458.
3 Lewis V. Lewis, 9 Ind. 105. See
§.:; 1257, 1258.
* Willey V. Carpenter, 64 Vt 212,
23 Atl. Rep. 630, 15 L. R. A. 853.
5 Prindle v. Haight. 83 Wis. 50, 52
N. W. Rep. 1134; Burke v. Melviii,
45 Conn. 243; Kiff v. Youmans, 86 N.
Y. 324, 50 Am. Rep. 543: Bonino v.
Caledonio. 144 Mass. 299, 11 N. E. Rep.
98: Frazer v. Berkeley, 7 C. & P. 789;
Perkins v. Vaughan, 5 Scott N. R.
681; Thrall v. Knapp, 17 Iowa. 468;
Lund V. Tyler, 115 Iowa, 236, 88 N. W.
Rep. 333; Cushman v. Ryan, 1 Story,
91: Avery v. Ray, 1 Mass. 12; Lee v.
Woolsey, 19 Johns. 319, 10 Am. Dec.
230; Maynard v. Beardsiey, 7 Wend.
560. 22 Am. Dec. 595; Genung v. Bald-
wm, 77 App. Div. 584, 79 N. Y. Supp.
569; Rochester v. Anderson, 1 Bibb,
428; Mc Alexander v. Harris, 6 Munf.
465;McBridev. McLaughlin, 5 Watts.
375; Waters v. Brown, 3 A. K. Marsh.
557; Corning v. Corning, 6 N. Y. 97;
Currier v. Swan, 63 Me. 323; Mat-
thews V. Terry, 10 Conn. 455; Dele-
van V. Bates, 1 Mich. 97; Saltus v.
Kipp, 12 How. Pr. 342. See g§ 162,
1255.
6 Corning v. Corning. Rochester v.
Anderson, supra; Ellsworth v,
Thompson, 13 Wend. 658.
A provocation in the morning does
not mitigate an assault made in the
afternoon of the same day. Kei-ser
V. Smith, 71 Ala. 48, 46 Am. Rep. 342.
And so with an assault made one
day after the alleged cause. Gronan
V. Kuckkuck, 59 Iowa, 18, 12 N. W.
Rep. 748; Carson v. Singleton, 23
Ky. L. Rep. 1626. 65 S. W. Rep. 821.
In Brooks v. Carter, 34 Fed. Rep.
505, the defendant gave the plaintiff
thirty minutes in which to retract
statements made by him, and on his
declining to do so made an assault.
There was too much deliberation to
allow the facts to mitigate the dam-
ages.
In Irwin v. Porter, 1 Hawaiia, 159,
a provocation given on Saturday
was allowed to be proven in mitiga-
tion of damages for an assault com-
mitted the following Monday.
3Si LEGAL LIQUIDATIO^'S AND EEDUCTIONS. [§ 151.
suppression of it, if practicable, would only tend to exhibit
the transaction in false and deceitful colors.^ The law mer-
cifully makes this concession to the weakness and infirmities
of human nature, which subject it to uncontrollable influences
[228] when under great and maddening excitement, superin-
duced by insult and threats. But it wholly discountenances
the cruel disposition which for a long time broods over hastily
and unguardedly spoken words, and seeks, when opportunity
offers, to make them an excuse for brutal behavior. "With
such a temper it has no sympathy.^ The mitigating effect of
a provocation in words is spent when there has been time for
reflection, and for the passion excited by it to cool. Other
antecedent facts, however, may be proved in mitigation,
where they are connected with the acts complained of, and
afford an explanation of the motives and conduct of the
defendant, and show him less culpable than he would other-
wise appear. Thus where the injury is inflicted in an attempt
to prevent the execution of previous threats, the defendant
may prove such threats in mitigation of damages, as conduc-
ing to show that an excusable motive governed him, as well
as the motives with which the other acted in the rencounter.^
In a case in Maine ^ there was an affray between the plaintiff
and one of the defendants in the afternoon. In the evening
of the same day the defendant assaulted the plaintiff at his
own house. It was held that the defendants might show the
fact of the affray in the afternoon, but not its details, in miti-
gation of damages for the last assault. " It was to show the
object and purpose of the second assault, or the state of mind
with which it was done. Otherwise there would have been
been nothing to indicate to the jury but that the house was
entered for the purpose of robbery and plunder, or something
of the kind. The fact of the previous affray might have some
weight on the question of the amount of damages recoverable,
1 Cases cited in notes 5 and 6, p. 383. rent of decisions in this country for
2 Carson v. Singleton, 23 Ky. L. the past three-quarters of a century.
Rep. 1626, 65 S. W. Rep. 821, quoting Gaither v. Blowers, 11 Md. 536.
the text In Keiser v. Smith. 71 Ala. ^ Waters v. Brown, 3 A. K. Marsh.
481, 46 Am. Rep. 342, the text is 557; Rhodes v. Bunch, 3 McCord, 66;
quoted, and the rules stated are said McKenzie v. Allen, 3 Strobh. 546.
to be sustained by the uniform cur- * Currier v. Swan, 63 Me. 323.
§ 151.] MITIGATION OF DAMAGES. 385
and might legitimately be regarded as part of the transaction
to be investigated in this suit." And in a case in Wisconsin^
it was held in an action for an injury to the person, committed
in an affray, that evidence offered should have been received
that the plaintiff for several years had frequently tried to pro-
voke a quarrel with the defendant, and on various occasions
tlireatened his life, some of these being made to the de- [229]
fendant, and all of them brought to his knowledge before the
occasion in question.
The defendant may show that the parties fought by agree-
ment;* but, the fighting being unlawful, the consent of the
plaintiff does not defeat a recovery,' Where a battery pro-
ceeds from a dispute in which the parties impugn each other's
veracity courts have differed as to whether the defendant may
prove in mitigation that his statement in the altercation was
true. Such jjroof has been excluded in Indiana,* but in Mary-
land where the parties disputed and blows ensued from ques-
tioning each other's veracity the defendant was allowed to
show that he told the truth.^ Proof by the plaintiff in aggra-
vation of damages that the defendant threatened to beat him
because he had circulated slanderous words concerning the
defendant does not entitle the latter to give evidence that the
plaintiff had in fact circulated the slander.^ Some question
has been raised as to the extent to which damages may be
mitigated by proof of provocation in words. Judge Story
said they might be reduced to nominal when the words were
1 Fairbanks v. Witter, 18 Wis. 287, » Shay v. Thompson, 59 Wis. 540, 18
86 Am. Dec. 765. N. W. Rep. iT3, 48 Am. Rep. 538; Bell
Where there lias been a persistent v. Hansley, 8 Jones, 131; Stout v.
continuation and repetition of insults Wren, 1 Hawks, 420, 9 Am. Dec. 653;
for the sole purpose of exciting and Lund v. Tyler, 115 Iowa. 236, 88 N.
irritating another, and these have W. Rep. 333; McCue v. Klein, 60 Tex.
been repeated from day to day, the 168, 48 Am. Rep. 260; State v. Burn-
case is not to be controlled or limited ham, 56 Vt. 445, 48 Am. Rep. 801.
by a few hours or a single day. Compare Galbraith v. Fleming, 60
Dolan V. Fagan, 63 Barb. 73. Mich. 408, 27 N. W. Rep. 583; Smith
-i Willey V. Carpenter, 64 Vt. 212, v. Simon, 69 Mich. 481, 37 N. W. Rep.
23 AtL Rep. 630, 15 L. R. A. 853; 518.
Adams v. Waggoner, 33 Ind. 531, 5 * Butt v. Gould, 34 Ind. 552.
Am. Rep. 230; Logan v. Austin, 1 5 Marker v. Miller, 9 Md. 338.
Stew. 476; Barholtv. Wright, 45 Ohio *> Rochester v. Anderson, 1 Bibb,
SL 177, 4 Am St. 535, 12 N. E. Rep. 428.
185.
Vol. 1 — 25
3SG LEGAL LIQUIDATIONS AND KEDDCTIONS. [§ 151.
"very gross and reprc4iensible and calculated from the cir-
cumstances to draw forth strong resentment." ^ This has been
doubted,- but it seems to be supported by authority. When
the wrong is done under circumstances arising without the
plaintiff's fault, and these furnish a reasonable excuse for
the violation of public order, considering the infirmities of
human temper, there is no foundation for exemplary damages,
but the plaintiff is entitled to compensation. But where there
is a reasonable excuse for the violation of public order arising
from the provocation or fault of the plaintiff, but not sufficient
to entirely justify the wrong done, there can be no exemplary
damages and the circumstances of mitigation must be applied to
the actual damages.* Dixon, C. J.,^ said : " This seems to fol-
low as the necessary and logical result of the rule which per-
[2»iO] mits exemplary damages to be recovered. Where
motive constitutes a basis for increasing the damages of the
plaintiff above those actually sustained, there it should, under
proper circumstances, constitute the basis for reducing them
below the same standard. If the malice of the defendant is to be
punished by the imposition of additional damages or smart
money, then malice on the part of the plaintiff, by which he
provoked the injury complained of, should be subject to like
punishment, which, in his case, can only be inflicted by with-
holding the damages to which he would otherwise be entitled.
The law is not so one-sided as to scrutinize the motives and
punish one party to the transaction for bis malicious conduct
and not punish the other for the same thing; nor so unwise as
not to make an allowance for the infirmities of men when
smarting under the sting of gross and immediate provocation.
If it were, then, as has been well said, it would frequently hap-
pen that the plaintiff would get full compensation for damages
occasioned by himself, — a result which would be contrary to
every principle of reason and justice. And so I find the un-
interrupted course of decision both in England and this
country." ^ In opposition to this view there are several dis-
1 Cushman V. Ryan, 1 Story. 100. v. Baldwin, 77 App. Div. 584, 79
2 Birchard v. Booth, 4 Wis. 67. N. Y. Supp. 569; Irwin v. Porter, 1
SRobison v. Rupert, 33 Pa. 523; Hawaiia, 159.
Reed v. Bias, 8 W, & S. 189; Ellsworth * Moreley v. Dunbar, 24 Wis. 183.
V. Thompson, 18 Wend. 663; Genung ^ Citing Robison v. Rupert, 23 Pa.
§ 151.]
MITIGATION OF DAMAGES.
387
sents including the supreme court of Wisconsin and other
courts of high repute. The argument of Judge Dixon seems
to the editor to be fully answered by the court of Vermont*
which, like the other courts that deny that words of provoca-
tion may mitigate compensatory damages, grant that they
533; Fraser v. Berkeley, 7 C. & P.
621; Millard v. Brown, 35 N. Y. 297;
Finnerty v. Tipper, 2 Camp. 72;
Avery v. Rae, 1 Mass. 11; Cushman
-v. Ryan, 1 Story, 100; Gaither v.
Blowers, 11 Md. 551, 552; Child v.
Homer, 13 Pick. 503; Keyes v. Dev-
lin, 3 E. D. Smith, 518; Rochester v.
Anderson, 1 Bibb, 428; Lee v. Wool-
sey, 19 Johns. 319, 10 Am. Dec. 230;
Ireland v. Elliott, 5 Iowa. 478,68 Am.
Dec. 715; Mayuard v. Beardsley, 7
Wend. 560, 22 Am. Dec. 595: Waters
V. Brown, 3 A. K. Marsh. 557; Pren-
tiss V. Shaw, 56 Me. 427, 96 Am. Dec.
475; Rhodes v. Bunch, 3 McCord, 65;
McKenzie v. Allen, 3 Strobh. 546;
Matthews v. Terry, 10 Conn. 459;
Coxe V. Whitney, 9 Mo. 531 ; Collins
V. Todd, 17 Mo. 539; Corning v. Corn-
ing, 6 N. Y. 103; Willis v. Forrest, 2
Duer, 310; Tyson v. Booth, 100 Mass.
258; Marker v. Miller. 9 Md. 338;
Bingham v. Garnault, Buller's N. P.
17.
In Wilson v. Young, 31 Wis. 574,
the subject was again under discus-
sion, and a majoi'ity of the court
held to a middle ground between the
doctrine of Birchard v. Booth and
Morely v. Dunbar — that in an action
for assault and battery compensa-
tory, as distinguished from punitive,
damages are of two kinds: 1. Those
wliich may be recovered for the
actual personal or pecuniary Injury
and loss, the elements of which are
loss of time, bodily suffering, im-
paired physical or mental powers,
mutilation and disfigurement, ex-
penses of surgical and other attend-
ance and the like. 2. Those which
may be recovered for injuries to the
feelings arising from the insult or
indignity, the public exposure and
contumely, and the like. That com-
pensatory damages of the first kind
are to be determined without refer-
ence to the question whether the de-
fendant was influenced by malicious
motives in the act complained of;
and, on the other hand, evidence of
threatening or aggravating langiiage
or malicious conduct on the plaint-
iff's part, not constituting a legal
justification of the defendant's acts,
cannot be considered in mitigation
of such damages. That compensa-
tory damages of the second kind de-
pend entirely upon the malice of the
defendant; and as evidence of such
malice may be given to increase that
kind of damages, so evidence of
threatening and malicious words or
acts on the plaintiff's part, just pre-
vious to the assault, though not con-
stituting a legal justification, should
be admitted to mitigate or even de-
feat such damages. The distinction
above made between the kinds of
compensatory damages is disap-
proved of in Craker v. Chicago, etc.
R. Co., 36 Wis. 657, 17 Am. Rep. 504.
There are other Wisconsin cases
which declare that " personal abuse
which may have had something to
do with inducing and bringing
upon another an assault may be con-
sidered by a jury in mitigation of
damages. But a man commencing
an assault and battery under such
circumstances is liable for the actual
damages which result. " Fenelon v.
Butts, 53 Wis. 344, 10 N. W. Rep.
501; Corcoran v. Harran, 55 Wis. 120,
12 N. W. Rep. 468. See Yates v. New
York, etc. R. Co., 67 N. Y. 100.
388 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 151.
mitigate exemplary damages. " If provocative words may
mitigate, it follows that they may reduce the damages to a
mere nominal sum and thus practically justify an assault and
battery. But why, under this rule, may they not fully justify ?
If in one case the provocation is so great that the jury may
award onl}'' nominal damages, why, in another in which the
provocation is far greater, should they not be permitted to
acquit the defendant and thus overturn the well settled rule of
law that words cannot justify an assault. On the other hand,
if words cannot justify they should not mitigate. A defendant
should not be heard to say that the plaintiff was first in the
wrong by abusing him with insulting words, and therefore,
though he struck and injured the plaintiff, he was only partly
in the wrong and should pay only part of the actual damages.
If the right of the plaintiff to recover actual damages were in
any degree dependent on the defendant's intent, then the
plaintiff's provocation to the defendant to commit the assault
upon him would be legitimate evidence bearing upon that ques-
tion, but it is not. Even lunatics and idiots are liable for
actual damages done b}'' them to the property or person of
another,^ and certainly a person in the full possession of his
faculties should be held liable for his actual injuries to another
unless done in self-defense or under reasonable apprehension
that the plaintiff was about to do him bodily harm. The law
is that a person is liable in an action of trespass for an assault
and battery, although the plaintiff made the first assault, if the
defendant used more force than was necessary for his protec-
tion, and the symmetry of the law is better preserved by hold-
ing that the defendant's liability for actual damages begins
with the beginning of his own wrongful act."^
The fact that the offending person in an action for assault
and battery has been subjected to fine in a criminal prosecu-
1 See § 16. McBride v. McLaughlin, 5 Watts. 375;
•-« Goldsmith v. Joy, 61 Vt. 488, 499, Donnelly v. Harris, 41 111. 126; Gizler
17 Atl. Rep. 1010, 4 L. R A. 500, 15 v. Witzel, 82 111. 322; Johnson v.
Am. St 923; Grace v. Dempsey, 75 McKee, 27 Mich. 471; Prentiss v.
Wis. 813, 43 N. W. Rep. 1127; Prmdle Shaw, 56 Me. 712; Mangold v. Oft, 63
V. Haight, 83 Wis. 50, 52 N. W. Rep. Neb. 397, 88 N. W. Rep. 507; Arm-
1134; Jacobs v. Hoover, 9 Minn. 204; strong v. Rhoades (Del.), 53 AtL Rep.
Cushman v. Waddell, 1 Baldwin, 57; 435,
§ 152.] MITIGATION OF DAMAGES. 3S0
tion does not bar or mitigcate his liability to exemplary* or
compensatory - damages in a civil action. This question will
be more fully considered in the chapter on exemplary damages.'
The character of the party assaulted cannot affect the damages
which he is entitled to recover;^ nor can proof be made of the
generally peaceable character of the defendant to rebut malice
or mitigate the damages.*
Immediately after the civil war the plaintiff, having [231]
publicly and indecently exulted over the assassination of
President Lincoln, was arrested, pursuant to a general order of
the defendant as commander of a military department. The
order w^as illegal but was issued without malice and was in-
tended as a means of preserving the public peace. The plaint-
iff was held not entitled to exemplary damages for his arrest
and imprisonment, but, having been manacled and compelled
to labor with other prisoners during the time he was held in
custody, these circumstances were held to be good ground for
enhancement of the damages.®
§ 152. Provocation in libel and slander. In actions for
libel or verbal slander it may be proved in mitigation that
tbere was an immediate provocation in the acts and declara-
tions of the plaintiff.' The defendant cannot, however, prove
such acts and declarations done or made at a different time or
any antecedent facts which are not fairly to be considered part
of the same transaction, however irritating and provoking they
may be.^ It has been held that a criminatory retort made
iHoodley v. Watson, 45 Vt. 289, ^Reddin v. Gates, 52 Iowa, 210,3
12 Am. Rep. 197; Cook v. Ellis, 6 N. W. Rep. 1079.
Hill, 406. 41 Am. Dec. 757; McWill- CMcCall v. McDowell, Deady, 233;
iams V. Bragg, 3 Wis. 424; Brown v. Roth v. Smith, 54 111. 431.
S%vineford, 44 id. 282, 28 Am. Rep. •? Miles v. Harrington, 8 Kan. 425;
582; Wilson v. Middleton, 2 Cal. 54; Jauch v. Jauch, 50 Ind. 135; Beards-
Corwin v. Walton, 18 Mo. 71, 59 Am. ley v. Maynard, 4 Wend. 33G; Moore
Dec. 285. Contra, Smithwick v. v. Clay, 24 Ala. 235, 60 Am. Dec. 461
Ward, 7 Jones, 64, 75 Am. Dec. 453. Powers v. Presgroves, 38 Miss. 227
See § 402 and ch. 26. McClintock v. Crick, 4 Iowa, 453
-Id.; Reddin V.Gates, 52 Iowa, 210, Duncan v. Brown, 15 B. Mon. 186
2 N. W. Rep. 1079. Ranger v. Goodrich, 17 Wis. 78; Free-
3 Ch. 9. man v. Tinsley, 50 111. 497; Mousler v.
-• Corning v. Corning, 6 N. Y. 97, Harding, 33 Ind. 176, 5 Am. Rep. 195.
104: Smithwick V.Ward, 7 Jones, 64; 8 Hamilton v. Eno, 81 N. Y. 116;
Ward V. State, 28 Ala. 53. See § 94. Lee v. Woolsey, 19 Johns. 319, 10 Am-
Dec. 230.
390 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 152.
after three days is not part of the same transaction, nor when
it has no relation to the previous publication and there is no
[232] perceptible connection between them.^ It has also been
held that where a party is sued for republishing a libelous
article in a newspaper, and the republication is accompanied
by remarks tending to a justification of the article, but not
amounting to it, the defendant is not permitted to prove the
truth of the remarks in mitigation of damages because the evi-
dence would tend to prove the charge well founded; that evi-
dence in mitigation must be such as admits the charge to be
false.^ The defendant may show that he was drunk or insane
when he spoke the words.*
Upon common principles the general issue in an action on
the case for slander would put in issue, not only the speaking
of the slanderous words, but their alleged falsity and the
malice. The early adjudications were in harmony with this
view, but upon consultation of the judges in England about
one hundred and seventy years ago it was resolved that in the
future, if the defendant intend to justify, he shall plead his
justification that the plaintiff may know what he has to meet.*
The rule then promulgated has ever since prevailed in Eng-
land and has been followed in this country.^ It has also ensued
that, under the general issue in such actions, the defendant
cannot prove the truth of the words spoken either to rebut
malice or mitigate damages.^ It has been deemed as import-
ant that the plaintifif should have notice that the truth of the
iBeardsley v. Maynard, 4 Wend, lor v, Robinson, 29 Me. 323; Kay v.
336. See Graves V. State, 9 Ala. 448: Fredrigal, 3 Pa. 221; Jarnigan v.
Maynard v. Beardsley, 7 Wend. 560; Fleming, 43 Mis& 710; Douge v.
Lister v. Wright, 2 Hill, 320; Under- Pearce. 13 Ala. 127; Henson v. Veatch,
hill V. Taylor, 2 Barb. 348; Richard- 1 Blackf. 369; Gilman v. Lowell, 8
son V. Northrup, 56 Barb. 105. Wend. 573; Wagstaff v. Ashton. 1
2 Cooper V. Barber, 24 Wend. 105. Harr. 503; Snyder v. Andrews, 6
3 Howell V. Howell, 10 Ired. 84; Barb. 43; Shirley v. Keathy, 4 Cold.
Gates V. Meredith, 7 Ind. 440; Jones 29; Barns v. Webb, 1 Tyler, 17; Up-
V. Townsend, 21 Fla. 431, 57 Am. degrove v. Zimmerman, 13 Pa. 619;
Rep. 171. Contra, Mix v. McCoy, 22 Root v. King, 7 Cow. 613; Swift v.
Mo. App. 488. Dickerman, 31 Conn. 285.
* Underwood v. Parker, 2 Strange, « Knight v. Foster, 39 N. H. 576;
1200. Bailey v. Hyde, 3 Conn. 463; Swift
5 Bod well V. Swan, 3 Pick. 376; v. Dickerman, 31 Conn. 291; Shepard
Knight V. Foster, 39 N. H. 576; Tay- v. Merrill, 13 Johns. 475.
§ 152.] MITIGATION OF DAMAGES. 391
words is intended to be proved when the purpose is mitigation
of damages, as when the proof is intended for any other ob-
ject.i In some jurisdictions, therefore, the defendant has been
precluded from all proof under the general issue which [tJ33]
implies the truth of the charge or tends to prove it.^ To get
the opportunity to adduce any such proof he was required to
plead the truth of the words as a justification; then if he suc-
ceeded he was exonerated from all liability; but if he failed,
the plea, being a repetition of the defamatory words, aggra-
vated the damages, for malice was conclusively presumed.'
In New York by such an unsustained plea the defendant was
held to admit the malice on his part, and he could not resort
to any defense based on its absence.* While he had technic-
ally a right to introduce evidence in mitigation, still without
a plea of justification he could establish no fact which would
show that he had good reason to believe the charge to be true
when the words were spoken, and if he put in the only plea
which would give him a right to introduce such proof he lost
the benefit of it by the stubborn presumption of malice unless
his proof was sufficient to establish the truth of the charge.
There was therefore very little scope for mitigation in that
class of actions.* The injustice of such a rule induced the
courts in some of the states, as well as in England, to admit
proof of facts and circumstances tending to show the truth
of the words spoken, but falling short of proving it; in other
words, the defendant might show that he had reason to believe
1 Wolcott V. Hall, 6 Mass. 514, 4 an inference of express malice the
Am. Dec. 173; Jarnigan v. Fleming, defendant may rebut that inference
43 Miss. 710; Treat v. Browning, 4 by explanatory evidenca Reiley v.
Conn. 408, 10 Am. Dec. 156. Timme. 53 Wis. 63, 10 N. W. Rep. 5.
2 Oilman v. Lowell, 8 Wend. 573; Md.; Gorman v. Sutton, 32 Pa.
Knight V.Foster. 39 N. H. 576; Moyer 247; Lamed v. Buffinton, 3 Mass.
V. Pine, 4 Mich. 409; Regnier v. Cabot, 546,3 Am. Dec. 185; Robinson v. Drum-
7 111. 34; McAlexander v. Harris, 6 mond, 24 Ala, 174: Pool v. Devers,
Munf. 465; Porter v. Botkins, 59 Pa. 30 Ala. 672; Downing v. Brown, 3
484; Chamberlin v. Vance, 51 Cal. Colo. 571; Cavanaugh v, Austin, 42
75; Pease v. Shippen, 80 Pa. 513, 21 Vt 576.
Am. Rep. 116; Wormouth v. Cramer, < Oilman v. Lowell, 8 Wend. 573;
3 Wend. 395, 20 Am. Dec. 706; Mc- Purple v. Horton, 13 id. 9, 27 Am.
Gee V. Sodusky, 5 J. J. Marsh. 185, 20 Dec. 167; Fero v. Ruscoe. 4 N. Y. 162.
Am. Dec. 251. 5 See Bush v. Prosser, 11 N. Y. 347;
If the plaintiff puts in evidence a Bisbey v. Shaw, 12 id. 67.
fact not pleaded tending to create
392
LEGAL LIQUIDATIONS AND EEDUCTIONS.
[§ 152.
■when he uttered the words that they were true.' Under this
rule it has been allowed to be proved that there were reports
[234] in the neighborhood that the plaintiff had been guilty
of practices similar to those imputed to him,^ or that general
reports that he was guilty of the very offense were, previouslj''
to the speaking of the words, in circulation.'^ But the defend-
ant to mitigate damages and repel the presumption of malice
cannot give in evidence facts of which he was ignorant at the
time of uttering the words complained of.* The fact that re-
ports were in circulation prior to the uttering of the words,
to the effect that plaintiff was guilty of the offense imputed
to him cannot generally be proven in mitigation in courts
which admit pi'oof which is not full justification but which
tends to show the truth of the words spoken.-^ The general
character of the plaintiff at the time the defamatory words
were spoken is uniformly deemed in issue, for it is the foun-
dation of his claim for damages, and he is at all times, with-
1 Knobell v. Fuller, Norris' Peake
Add. Cas. 32; v. Moor, 1 M. &
S. 285; Leicester v. Walter, 2 Camp.
251; East v. Chapman, 2 C. & P. 570;
Bailey v, Hyde, 3 Conn. 463, 8 Am.
Dec. 202; Bridgman v. Hopkins. 34
Vt. 532; Williams v. Miner, 18 Conn.
464; Haywood v. Foster, 16 Ohio, 88;
Wagner v. Holbrunner, 7 Gill, 296;
Huson V. Dale, 19 Mich. 17, 2 Am.
Rep. 66; Rigden v. Wolcott, 6 Gill &
J. 413; Morris v. Barker, 4 Harr. 520:
Galloway v. Courtney, 10 Rich. 414;
Williams v. Cawley, 18 Ala. 206;
Brown v. Brooks, 3 Ind. 518; Wilson
V. Apple, 3 Ohio, 270; Minesinger v.
Kerr, 9 Pa. 312; Van Derveer v. Sut-
phin, 5 Ohio St, 293; Farr v. Rasco,
9 Mich. 353, 80 Am. Dec. 88.
2 V. Moor, 1 M. & S. 285. See
oh. 34.
3 Calloway v. Middleton, 3 A. K
Marsh. 372, 12 Am. Dec. 409; Ken-
nedy V. Gregory, 1 Bin, 85; Treat v.
Browning, 4 Conn. 408, 10 Am. Dec.
156; Case v. Marks, 20 Conn. 248;
Bndgman v. Hopkins, 34 VL 532;
Blickenstafif v. Perrin, 27 Ind. 527;
Morris v. Barker, 4 Harr. 520: Hen-
son V. Veatch, 1 Blackf. 369; Church
V. Bridgman, 6 Mo. 190; Easter wood
V. Quin, 2 Brev. 64, 3 Am. Dec. 700:
Shilling V. Carson, 27 Md, 175, 92
Am. Dec. 632; Cook v. Barkley, 2 N.
J. L. 169, 2 Am. Dec. 343; Wetherbee
V. Marsh, 20 N. H. 561, 51 Am. Dec.
244; Bowen v. Hall, 20 Vt. 232;
Fletcher v. Burroughs, 10 Iowa. 557;
Sheahan v. Collins, 20 111. 325, 71 Am.
Dec. 271; Kimball v. Fernandez, 41
Wis. 329. See ch. 34.
4 Bailey v. Hyde, 3 Conn. 463, 8
Am. Dec. 202; Hatfield v. Lasher, 81
N. Y. 246; Willower v. Hill, 72 id.
36; Barkly v. Copeland, 74 Cal. 1, 15
Pac. Rep. 307,5 Am. St. 413; Whit-
ney V. Janesville Gazette, 5 Biss. 330;
Edwards v. Kansas City Times Co.,
32 Fed. Rep. 813.
5 Anthony v. Stephens, 1 Mo. 254;
Fisher v. Patterson, 14 Ohio. 418;
Wilson V. Fitch, 41 CaL 363; Bush v.
Prosser, 11 N. Y. 347, 361. See Bowen
V. Hall, 20 Vt. 232.
§ 153.] MITIGATION OF DAMAGES. 393
out special notice in the pleadings, supposed to be prepared to
sustain it against any attack.^
153. Samo subject. It is held in Michigan that where only
the general issue is pleaded and evidence is offered in mitiga-
tion tending to show the truth of the words spoken, the offer
conclusively admits that the charge was false though at the
time the defendant made it he believed it to be true. [235]
Such an offer, under such pleadings, should be treated as in-
volving a disclaimer of the truth of the words and a conclu-
sive admission that they were not true; but not as inconsistent
with the idea that the defendant at the time he uttered them
may have believed them to be true. He therefore has a right
to introduce any facts and circumstances tending to show
grounds for such belief at the time of the speaking of the words.^
The same doctrine is held in Ohio. The whole reason of the
rule for admitting such evidence is to relieve the defendant
from the consequences which attach to malice in the speaking
of the words. He may show particular acts of the plaintiff
which, unexplained, gave him a just reason to believe the truth
of the declarations which he uttered; but which, when ex-
plained and understood, may be found to be compatible with
the plaintiff's innocence. This is permitted upon the ground
that the proof when introduced may serve to show that the
defendant was mistaken in making the charge, that he miscon-
strued the act or conduct of the party by supposing it to be
criminal, while in fact it was not. When the testimony can
have no other effect than to make apparent the plaintiff's guilt
and prove the truth of the words spoken, its introduction to
the jur}" must tend to justify the speaking; not to mitigate
damages by showing the absence of malice. To be competent
for the former purpose the facts relied on must be pleaded spe-
1 Buford V. McLuny, 1 N. & McC. well v. Swan, 3 id. 376; McNutt v.
2f)S; Sawyer v. Eifert, 2 id. 511, 10 Young, 8 Leigh, 543; Dewit v. Green-
Am. Dec, 633; Douglass v. Tousey, 3 field, 5 Oliio, 225; Fitzgerald v. Stew-
Wend. 353; Haraer v. McFarlin, 4 art. 53 Pa. 343; Powers v. Presgroves,
Denio, 509; Pallet v. Sargent, 36 N. 38 Miss. 227; Warner v. Lockerby.
H. 490; Sanders v. Johnson, 6 Blackf. 31 Minn. 421, 18 N. W. Rep. 145, 821;
53; Rhodes v. Ijams, 7 Ala. 574; Wol Maxwell v. Kennedy, 50 Wis. 645, 7
cott V. Hall, 6 Mass. 514, 4 Am. Dec. N. W. Rep. 657.
173; Moyer v. Moyer, 49 Pa. 310; ^Huson v. Dale, 19 Mich. 17, 2 Am.
Alderman v. French, 1 Pick. 1; Bod- Rep. 06.
394 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 153.
daily and cannot be given in evidence under the general
issue.^
The rule has been far from universal that an unsustained
plea of justification shall in all cases be deemed proof of malice
or have the effect to exclude evidence of the absence thereof.
Where a plea of justification is interposed without any expecta-
tion of sustaining it, there is no reason why such deliberate rep-
etition of the slander should not be taken into consideration in
the assessment of damages. But it has not been deemed just
to hamper a bona fide defense with the hazard of such a con-
sequence as matter of law. Perley, C. J., said : " If he believed
when he spoke the words that they were true, and makes a
honafide defense to the action under the plea of justification,
[236] we do not see why he should make it under the penalty
of being punished by increased damages if he should fail to
satisfy the jury of the fact any more than in other cases where
a defendant does not succeed in a honafide defense. We think
it should be left to the jury to decide the weight and character
of the evidence introduced in support of the plea and the man-
ner and spirit in which the defense is conducted ; whether the
real object of the plea and evidence was to defend the action
with reasonable expectation of success or to repeat the orig-
inal slander." ^
These principles have now been established by statute in
iriany states where the harsher rule formerly prevailed. In
liTew York, as well as in many other jurisdictions having codes,
it is provided that the defendant may allege both the truth
of the matter charged as defamatory and any mitigating cir-
cumstances to reduce the amount of damages, and whether he
prove the justification or not he may give evidence of such
circumstances. This statute does not mean that he must con-
nect them together, that he cannot allege one without the
other ; but that he should not be prohibited from alleging either ;
1 Reynolds v. Tucker, 6 Ohio St. Am. Dea 212; Chalmers v. Shackell,
516, 67 Am. Dec 353; Wilson v. 6 C. & P. 475; Sanders v. Johnson, 6
Apple, 3 Ohio, 270; Dewit v. Green- Blackf. 50, 36 Am. Dec. 564: Thomas
field, 5 Ohio, 225; Haywood v. Foster, v. Dunaway,30 111. 373; Cummerford
16 Ohio, 88. V. McAvoy, 12 111. 311; Corbley v,
2 Pallet V. Sargent, 36 N. H. 496; Wilson, 71 111. 209, 22 Am. Rep. 98;.
Byrkett v. Mouobon, 7 Blackf. 88, 41 Rayner v. Kinney, 14 Ohio St. 283.
§ 154.] MITIGATION OF DAMAGES. 395
accordingly the defendant, without pleading the truth of the
words spoken, may allege facts tending to establish their truth
and prove such facts in mitigation.^ If a pica of justification
or in mitigation is interposed in bad faith, and for the purpose
of injuring the plaintiff's reputation, the fact may be consid-
ered by the jury.^
§ 154. Mitigating circumstances in trespass and other
actions. In trespass for levying on the plaintiff's proporty
under an execution against a third party the defendant may
show in mitigation of damages on a writ of inquiry, after judg-
ment by default, that at and prior to the levy the property was
in his possession, or that the plaintiff was not the owner; but he
is estopped by the judgment from showing that the plaintiff
had not such interest as would entitle him to maintain the suit.'
Where a building was blown up without authority to [237]
stay the progress of a conflagration, the fact was allowed to be
shown; and the jury in estimating the damages, it was held,
should consider the circumstances under which the buildintr
and its contents were and their chance of being saved, even
though not at the time on fire, and should determine the dam-
ages with reference to the peril to which they were exposed.*
So if a landlord enters to make repairs which are necessary
and which the tenant ought to have made, but neglected to
make, or if he enters to make repairs which he is bound to
make, but which the tenant forbids him to make, the damages
will be estimated with reference to these circumstances and
will be less than if the entry were made without color of ex-
cuse.* A person sued for entering and cutting down trees
may show in mitigation a verbal license from the plaintiff,^ or,
when sued for breach of a contract, that performance would
have been useless.'' In actions for false imprisonment or ma-
iBush V. Prosser, 11 N. Y. 347; Bis- Am, Dec. 506; Lowell v. Parker, 10
bey V. Shaw, 12 N. Y. 67. Met. 309, 43 Am. Dec. 436.
2Cruikshank v. Gordon, 118 N. Y. ^parsons v. Pettingell, 11 Allen,
178, 23 N. E. Rep. 457; Distin v. Rose, 507; Reed v. Bias, 8 W. & S. 189.
69 N. Y. 122; Bennett v. Matthews, See Workman v. Great Northern R.
64 Barb. 410. See Doe v. Roe, 33 Co.. 32 L. J. (Q. B.) 279,
Hun, 62a 5 Reeder v. Purdy, 41 IlL 279.
3Sterrett v. Kaster, 37 Ala. 366; 6 Wallace v. Goodall, 18 N. H. 439.
Squire v. Hollenbeck, 9 Pick. 551, 20 ^ Louisville & P. Canal Co. v.
Rowan, 4 Dana, 606.
396 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 155.
licious prosecution the fact that the defendant acted under in-
structions of his employer will not mitigate damages.^ The ad-
vice of counsel, if given lonajide, is a circumstance which may
be considered to disprove malice and mitigate exemplary dam-
ages,^ if it was given on a full disclosure of the facts.' The
damages recoverable for the breach of a marriage promise are
not lessened because the defendant withdrew his affections
from the plaintiff without cause."* Any act done, no matter
by whom, by which the injury resulting from a trespass is put
an end to or mitigated may be proved.^
§ 155. Plaintiff's acts and negligence. The acts and neg-
ligences of the plaintiff which have enhanced the injury re-
sulting from the defendant's act or neglect may be shown in
mitigation of damacjes. The defendant is liable for the nat-
ural and proximate consequences of his violations of contract
and of his unlawful acts; but if the plaintiff has rendered these
consequences more severe to himself by some voluntary act
from which it w^as his duty to refrain, or if by his neglect to
exert himself reasonably to limit the injury and prevent dam-
age, in the cases in which the law imposes that duty, and
thereby he suffers additional injury from the defendant's act,
evidence is admissible in mitigation to ascertain to what extent
the damages claimed are to be attributed to such acts or omis-
sions of the plaintiff.^ If he omit to use his opportunities and
['i3S] does not reasonably exert himself to lessen the damages
which may result from such act he is not entitled to compensation
for the injury which he might and ought to have prevented, ex-
cept to the extent of proper compensation for such measures
or acts of prevention as the case required and were within his
knowledge and power.'^ The measure of his duty in this regard
1 Josselyn v. McAllister, 22 Mich. Co., 118 Mo. 328, 23 S. W. Rep. 159,
300. quoting the text.
2 Fox V. Davis, 55 Ga. 298; Bohm nd.; Dietrich v. Hannibal & St.
V. Dunphy, 1 Mont. 333. J. E. Co., 89 Mo. App. 36; Kumberger
3 Shores v. Brooks, 81 Ga. 468,13 v. Congress Spring Co., 158 N. Y.
Am. St. 332, 8 S. E. Rep. 429. See ch. 339, 345, 53 N. E. Rep. 3; Warren v.
25. Stoddart, 105 U. S. 224; Goshen v.
4 Richmond v. Roberts, 98 III. 472. England, 119 Ind. 368, 21 N. E. Rep.
5 Alabama Midland R. Co. v. Cos- 977, 5L. K A. 253; Louisville, etc. R
kry, 92 Ala. 254, 9 So. Rep. 202. Co. v. Jones, 108 Ind. 551, 9 N. E. Rep.
•i Boggess V. Metropolitan Street R. 476; Sherman Center Town Co. v.
§ 155.]
MITIGATION OF DAMAGES.
)[)7
is ordinary care and diligence.' " To require one who has been
injured to take "proper and immediate steps to prevent future
consequences is demanding of him a degree of care and an in-
fallibility of judgment which the most skilful physician does
not possess."^ " An injured person who, from the circumstances,
might reasonably believe that her injury was of a character
that rest alone would afford a speedy recovery from, should
not be required to incur the heavy expenses of nursing and
medical attendance as a condition to her right of recovery of
adequate damages."' If an injured person selects and uses all
reasonably accessible means to cure his hurt and, for a time
upon his own judgment and without medical advice, adopts
and pursues such treatment as a physician of ordinary care,
prudence and skill uses in treating a similar injury, his duty is
fully discharged, though it appears that a more skilful treat-
ment might have produced a more favorable result.* The rule
which requires reasonable conduct on the part of one whose
Leonard, 46 Kan. 354, 26 Am. St. 101,
26 Pac. Rep. 717; Miller v. Mariners'
Cliurch, 7 Me. 51,20 Am. Dec. 341;
Mather v. Butler County, 28 Iowa,
253; Maynard v. Maynard, 49 Vt. 297;
Arden v. Goodacre, 11 C. B. 371;
Howard v. Daly, 61 N. Y. 362, 19 Am.
Rep. 285; Sutherland v. Wyer,67 Me.
64; V^illiams v. Chicago Coal Co., 60
111. 149: Benziger v. Miller, 50 Ala.
206; Dunn v, Johnson, 33 Ind. 54, 5
Am. Rep. 177; Keyesv. Western Ver-
mont Slate Co., 34 Vt. 81; Cook v.
Soule, 56 N. Y. 420; Campbell v.
Miltenberger, 26 La. Ann. 72; Par-
sons V. Sutton, 66 N. Y. 92; Bisher v.
Ri(;hards. 9 Ohio St. 495; Dobbins v.
Duquid, 65 111. 464; Hayden v. Cabot,
17 Mass. 169; Emery v. Lowell, 109
Mass. 197; True v. International Tel.
Co., GO Me. 9; Grindle v. Eastern
Exp. Co., 67 Me. 317, 24 Am. Rep. 31;
Luse V. Jones, 39 N.J. L. 707; United
States V. Smith, 94 U. S. 214; Bey-
mer v, McBride, 37 Iowa, 114; Le
Blanche v. London, etc. R. Co., 1 C.
P. Div. 286; Hamlin v. Great North-
ern R Co., 1 H. «& N. 408; Smeed v.
Foord, 1 E. & E. 602; Fullerton v.
Fordyce, 144 Mo. 519, 44 S. W. Rep.
1053; Uhlig v. Barnum, 43 Neb. 584,
01 N. W. Rep.749;Loomer v.Thomas,
38 Neb. 277, 56 N. W. Rep. 973;
Packet Co. v. Hobbs, 105 Tenn. 29,
45, 58 S. W. Rep. 278: Nashua Iron
& Steel Co. V. Brush, 33 C. C. A. 456,
91 Fed. Rep. 213, citing the test;
Friedenstein v. United States, 35
Ct. of Cls. 1; Bickham v. Hutchin-
son, 50 La. Ann. 765, 23 So. Rep. 902;
Gooden v. Moses, 99 Ala. 230, 13 So.
Rep. 765; Raymond v. Haverhill,
168 Mass. 382. 47 N. E. Rep. 101. Com-
pare Wieting v. Millston, 77 Wis.
523, 46 N. W. Rep. 879, which is dis-
approved in the Massachusetts case.
1 Louisville, etc. R Co. v. Falve}',
104 Ind. 409, 4 N. E. Rep. 908.
2 Fullerton v. Fordyce, 144 Mo. 519,
533, 44 S. W. Rep. 1053.
3 Kennedy v. Busse, 60 111. App.
440. See Williams v. Brooklyn, 33
App. Div. 539, 53 N. Y. Supp. 1007.
4 Packet Co. v. Hobbs, 105 Tenn.
29, 44, 58 S. W. Rep. 278.
59S LEGAL LIQUIDATIONS AND KEDUCTIONS. [§ 155.
legal rights have been violated should not be invoked by a de-
fendant as a basis for a critical examination of the conduct of
the injured party, or merely for the purpose of showing that
the injured person might have taken steps which were wiser
or more advantageous to the defendant. Reasonably prudent
action is required; not that action which the defendant, upon
afterthought, may be able to show would have been more ad-
vantageous to him.'
In some states contributory negligence to a certain extent is
not a defense if the defendant was also at fault. There such
negligence diminishes the damages which the plaintiff may re-
cover,^ except where the defendant has been responsible for a
positive, continuous tort.^ In Tennessee the plaintiff's negli-
gence may be considered in mitigation whether the defendant's
conduct has been merely negligent or reckless and wanton.^
The rule requiring the wronged party to lessen the damage
done has been held not to apply to a case of wilful injury.
" Since one who has committed an assault and battery upon
another cannot urge in his defense that the plaintiff might, by
the use of due care, have avoided the battery, we think
where the injury is intentional he should not be permitted to
say in reduction of damages that the plaintiff might have pre-
vented them at least in part by careful conduct on his part.
If negligence contributing to the injury cannot be set up to
defeat the action when the act of the defendant was wilful, by
a parity of reasoning, the defendant in such a case should not
ba permitted to say that, but for the negligence of the defend-
ant in failing to avoid the consequences of the wrong, he would
have suffered no damage, or only a part of the damages for
which he claims a recovery." *
1 The Thomas P. Sheldon, 113 Fed. ^Satterfield v. Rowan, 83 Ga. 187,
Eep. 779, 781. 9 S. E. Rep. 677.
2 Atlanta, etc. R. Co. v. Wyly, 65 * Railway Co. v. Wallace, 90 Tenn.
Ga. 120; Hardin v. Ledbetter, 103 N. 52, 62, 15 S. W. Rep. 921.
C. 90. 9 S. E. Rep. 641; East Tennes- * Galveston, etc. R. Co. v. Zant-
see. etc. R. Co. v. Fain, 12 Lea, 35; zinger, 92 Tex. 365, 44 L. R. A. 553,
Louis%nlle & N. R. Co. v. Conner, 2 48 S, W. Rep. 563, 71 Am. St. 859.
Bax. 38'2; East Tennessee, etc. R. Co. The general subject of mitigation,
V. Thompson, 12 Lea. 200; Railway or preventable damages, has been
Co. V. Howard, 90 Tenn. 144, 19 S. considered in §§ 88-90.
W. Rep. 116.
§ 15G.] MITIGATION OF DAMAGES. 399
§ 156. Measures of prevention; return of property; dis-
charge of plaintiff's debt. Acts of the plaintifl" or the defend-
ant, and in some cases of third persons, by which the jtyr/witi
facie loss or injury from the act complained of has been re-
duced or partially compensated may be shown in reduction of
damages. Measures of prevention taken by the plaintiff to
prevent loss or to avert some of the consequences of the wrong
complained of, and which have had an ameliorating effect, may
be proved: and the damages will be mitigated, according to
the particular facts, to the actual loss. Where goods have
been taken from the owner, and sold by an officer who cannot
justify for want of a plea or because his writ would not avail
for that purpose, such officer or any person liable for his tort
may show that the plaintiff bought the goods at the tortious
sale for less than their value.'
Whenever the owner recovers his property after any [239]
wrongful taking or detention the expense of procuring its re-
turn is the measure of damages, in the absence of special dam-
age, if the property itself has not been injured or diminished
in value. In other words, the wrong-doer is jprima facie liable
for the value of property at the time he tortiously took or
converted it, with interest; but if it has been returned and
accepted by the owner its value then, or, if he has incurred ex-
pense to recover it, then its value less such expense, will be
deducted by way of mitigation from the amount which would
otherwise be the measure of damages.^ Where one recovers
1 Forsyth v. Palmer, 14 Pa. 96, 53 Pick. 356; Lucas v. Trumbull, 15
Am. Dec. 519; Murray v. Burling, 10 Gray, 306; Perkins v. Freeman, 26
Johns. 175; Baker v. Freeman, 9 111. 477; Hallett v. Novion, 14 Johns.
"Wend. 36, 24 Am. Dec. 117; Ford v. 273; Delano v. Curtis, 7 Allen. 470;
Williams, 24 N. Y. 359; Baldwin v. Cook v. Hartle, 8 C. & P. 568; Ben-
Porter, 12 Conn. 473; Hurlburt v. nett v. Lockwood, 20 Wend. 223, 32
Green, 41 Vt. 490; Mclnroy v. Dyer, Am. Dec 532; Burn v. Morris, 2
47 Pa. 118; Tamvaco v. Simpson, H. Cromp. & M. 579; Doolittle v. Mc-
& R. 374; Kaley v. Shed, 10 Met. Cullough, 7 Ohio St. 299; Wheelock
317; Sprague v. Brown, 40 Wis. 612; v. Wheelwright, 5 Mass. 104; Cook v.
Reynolds v. Shuler. 5 Cow. 323. Loomis, 26 Conn. 483; Hepburn v.
'-i Leonard v. Maginnis, 34 Minn. Sewell, 5 Har. & J. 211, 9 Am. Deo.
506, 26 N. W. Rep. 733; Dailey v. 512; Sprague v. Brown, 40 Wis. (il 2:
Crowley, 5 Lans. 301; Greenfield Ewing v. Blount, 20 Ala. 694; Hurl-
Bank V. Leavitt, 17 Pick. 1, 28 Am. burt v. Green, 41 Vt. 490; Johannes-
JDeo. 268; Pierce v. Benjamin, 14 son v. Borschenius, 35 Wis. 131;
400
LEGAL LIQUIDATIONS AND KEDUCTIONS.
[§ 156.
property which had been unlawfully taken he is considered as
having accepted it in mitigation of damages upon the principle
that he has thereby received partial compensation for the in-
jury suffered.^ In an action of trespass for goods taken and
carried away it appeared that the plaintiff, before suing, had
demanded their return, and the defendant had promised to
return them, but while preparing to do so they were attached
on a writ against the plaintiff; it was held that the measure
of damages was the same as though the defendant had re-
turned them.- If restoration is obtained by the offer and pay-
ment of a reasonable reward this amount, with interest from
the time of payment, is to be deducted from the value of the
property returned.^ Trouble and loss of time may be taken
into consideration as part of the expense of obtaining restora-
tion.* Where there is a diminution in value from any cause
[2-1:0] intermediate the taking or conversion and return, the
loss falls on the wrong-doer, and will lessen the mitigation to
which he is entitled because of the return of the property.^ A
mere offer to return will not lessen the damages ;'' nor will
the tender of part of the value by an officer who has sold
under a void process." A court may in a proper case, if the
action is trover or trespass de honis, order the plaintiff to ac-
cept the property in mitigation of damages, which will then
be reduced to those actually sustained by the taking, with in-
tervening: costs and losses.^ In an action for damages for
Blewett V. Miller, 131 Cal. 149, 63
Pac. Rep. 157, quoting the text;
First Nat. Bank v. Rush, 29 C. C. A.
333, 85 Fed- Rep. 539, citing the
text.
1 Muenster v. Fields, 89 Tex. 102,
33 S. W. Rep. 852, affirming Fields
V. Muenster, 32 S. W. Rep. 417, quot-
ing the text; Kline v. McCandless,
139 Pa. 223, 20 Atl. Rep. 1045; Fields
T. Williams, 91 Ala. 502, 8 So. Rep.
808; Dodson v. Cooper, 37 Kan. 346,
15 Pac. Rep. 200, quoting the text;
Sgrague v. Brown, 40 Wis. 612;
Lazarus v. Ely, 45 Conn. 504; First
Nat. Bank v. Rush, 29 C. C. A. 333,
85 Fed. Rep. 539, citing the text; Mer-
rill V. How, 24 Me. 126.
2 Kaley v. Shed, 10 Met 317; Low-
ell V. Parker, id. 309, 43 Am. Dec. 436.
3 Greenfield Bank v. Leavitt, 17
Pick. 1, 28 Am. Dec. 268.
* Johannesson v. Borschenius, 35
Wis. 131.
5 Lucas V. Trumbull, 15 Gray, 306;
Perham v. Coney, 117 Mass. 102; Bar-
relett v. Bellgard, 71 IlL 280; First
Nat. Bank v. Rush. 29 C. C. A. 333,
85 Fed. Rep. 539.
•> Norman v. Rogers, 29 Ark. 365;
Stickney v. Allen, 10 Gray, 352. See
Worman v. Kramer, 73 Pa. 378; Dow
V. Humbert, 91 U. S. 294.
7 Clark V. Hallock, 16 Wend. 607.
8 Yale V. Saunders, 16 Vt. 243.
§ 157.] MITIGATION OF DAMAGES. 401
withhoUling or not conveying property, a tender of it or a
part of it or a conve3'^ance of the whole or a portion of it may
be allowed at the trial in mitigation, if under the circum-
stances such a course is reasonable.^ But this cannot be done
in actions of assumpsit for breach of contract.- By a wrongful
conversion of property a cause of action arises which cannot
be discharged except by the owner's act.^ And his acceptance
of a return of it is in general required to relieve the wrong-
doer of any part of his liability for the value; but as damages
in trover are assessed on equitable principles, as is the allow-
ance of mitigations generally, if property wrongfully taken
or its proceeds have been applied to the payment of the plaint-
iff's debts, or otherwise to his use, though without his direc-
tion or consent, such application may, under certain circum-
stances, be received in mitigation. An executor de son tort
may show that he has applied the proceeds of the property
with which he intermeddled in payment of the debts of the
deceased.*
§ 157. Same subject. Where a guardian, having no power
to commit waste by cutting and removing timber, unauthor-
izedly gave a license to another to commit such waste, and the
latter, with the former's assent, applied the proceeds of the
timber to the payment of taxes upon or debts against the in-
fant's estate, such payments were allowed to be shown by hira
in mitigation.* But it has been held that a voluntary pur-
chaser from an executor de son tort, when sued in trover by
the rightful representative, cannot show in mitigation of dam-
ages that since his purchase the executor de son tort has paid
debts which the administrator was bound to pay in due course of
administration.^ A defendant in an action of trespass de honis
1 Towle V. Lawrence, 59 N. H. 501. » Probate Court v. Bates, 10 Vt.
2 Colby V. Reed, 99 TJ. S. 560. 285: Torry v. Black, 58 N. Y. 185.
3 Livernaore v. Northrup, 44 N. Y. ^ Carpenter v. Going, 20 Ala. 587.
107; Franke v. Eby, 50 Mo. App. 579; In this case Dargan, C. J., said: "But
Clark V. Brott, 71 Mo. 475. the question is, can the purchaser
* Mountford V. Gibson, 4 East, 441; from the executor de son tort be
Saam v. Saam, 4 Watts, 432; Hostler substituted to this equitable defense
V. Scott, 2 Haywood, 179; Cook v. that the executor de son tort might
Sanders, 15 Rich. 63, 94 Am. Dec. himself make? We think he cannot,
136; Hanson v. Herrick, 100 Mass. at least in a court of law. We do
323; Perry v. Chandler, 2 Cush. 237. not intend to deny the common say-
VOL. 1 — 26
402
LEGAL LIQUIDATIONS AND EEDUCTIONS.
[§ 157.
asportatis who is a mere trespasser cannot take any benefit
from the application to the plaintiff's use of property seized
by him without the latter's express or implied authority or
consent, although a lien held by a third party thereon is sat-
isfied.^ "One who has wrongfully taken property cannot
mitigate the damages by showing that he has himself applied
the property to the owner's use without his consent; but when
the property has been so applied by the act of a third person
and the operation of law, that fact should be taken into the
account in estimating the plaintiff's damages."^ In trover by
the mortgagee of crops against a purchaser with notice, or in
a special action for damages in the nature of trover, the un-
authorized sale and conversion being admitted, the defendant
cannot prove in mitigation of damages that a part of the pro-
ceeds of the sale received by the mortgagor was applied by
him to the discharge of a lien for rent which was superior to
the mortgage.^
\
ing that trover is an equitable action
and that the plaintiff can recover
damages only to the extent of the
injury actually sustained; as if the
mortgagee bring trover against the
mortgagor he can recover only the
amount of the debt; or if the goods
be sold illegally to discharge a lien
the owner can recover of the pur-
chaser only the value of the goods,
deducting the value of the lien. But
we hold that this equity or right
must be personal to the defendant
himself; that is, it must have existed
in him at the time he became liable
to the action: or if acquired after-
wards it must have been acquired by
his own act; for at law he cannot be
subrogated to the equities of an-
other which have sprung up after
the liability of the defendant has be-
come perfect."
iBird V. Womaclc. 69 Ala. 390;
McMichael v. Mason, 13 Pa. 214
(wrongful levy by sheriff); Dallam
v. Fitler, G W. & S. ;323; Hundley v.
Chadick, 109 Ala. 575. 584. 19 So. Rep.
845, citingthe text, and disapproving
a statement in City Nat. Bank v.
Jeffries, 73 Ala. 123, to the effect that
if it be shown that the property at-
tached has yielded its full value, this
may be considered in mitigation of
damages.
2 Higgins v. Whitney, 24 Wend.
379.
3 Keith V. Ham, 89 Ala, 590, 7 So.
Eep. 234. The court say: Had this
action been against the mortgagor,
there would have been more force in
the position that the damages should
be mitigated, for it was his dut}- to
discharge the landlord's lien for
rent; or had the case involved the
general ownership of the property,
and it appeared that the fruits of
the conversion had been applied by
the consent, express or implied^ of
the plaintiff, or through legal pro-
ceedings, had at the instance of a
third person, to the payment of his
debt, or in relieving his property
from a lien, the damages recoverable
by him in trover might be mitigated
by the amount thus paid. Bird v.
Womack, 69 Ala. 392; Street v. Sin-
§ 157.]
MITIGATION OF DAMAGES.
40J
Where a tax collector became a purchaser at a sale [2-tl]
made by him the sale was declared voidable in trover against
him; but as the proceeds were applied to pay the plaintiff's
tax the amount so paid was deducted from the damages. ^ So
a sale by a sheriff without giving notice has been held a con-
version, but the damages should be only the diminution of
price caused by such omission.- If goods are tortiously taken
and a creditor of the owner afterwards attaches and disposes
of them according to law, and applies the proceeds in satis-
faction of a judgment against the owner, such proceeding may
be shown, not as a justification of the taking but in mitigation
of damages. This is because it would be palpably unjust for
the owner to receive the full value of his goods in their appli-
cation to the payment of his debts, and afterwards recover
clair. 71 id. 110. Or, had a recovery
been had in favor of the landlord
against tlie defendant, it may be that
evidence of that fact naiglit go in re-
duction of the mortgagee's damages.
But here, even concetling that the
payment was in some sort to the ad-
vantage of the plaintiff, we cannot
conceive how that fact will avail tlie
defendant in this action, the grav-
amen of which is the wrongful pur-
chase and possession. The wrong
was fully consummated, the injury
resulting from it had been sustained,
and the plaintiff's right to sue had
attached before the alleged payment
to the landlord. The payment was
not made by the defendant, but by
the mortgagor. To hold that he is
entitled to a credit for the amount
would be to subrogate him to an
equity created, if it exists at all, by
an act with which he had no connec-
tion and to give him the benefit of
a payment which he has not made.
If personal property is sold under
a condition that the title shall be and
remain in the vendor until a note
given for the purchase price of it is
fully paid, a purchaser of a part of
such property who is chargeable
with notice of the Contract is liable
to the original vendor for the value
of the property purchased, and can-
not claim a mitigation of the dam-
ages because the money he paid his
vendor was by him paid to the owner
and indorsement thereof made on
the note he held. The person in
whom was the title had a right to
the whole security until his demand
was fully paid. That was not affected
by the diminution of the debt by
payments. Defendant's vendor had
no right to dispose of the property
in order to make a payment. The
wrong to the plaintiff, resulting from
the sale and conversion, was to di-
minish his security. If the proceeds
of the property sold had paid the
whole debt, there would be good rea-
son for mitigating the damages, al-
though the sale took place before the
debt was paid; but under the facts
the mitigation would not benefit the
plaintiff because, though the debt
due him was lessened, he had lost an
equivalent amount of property. Mor-
gan v. Kidder, 55 Vt. 3G7.
1 Pierce v. Benjamin. 14 Pick. 356.
^Wright v. Spencer, 1 Stewart, 576,
18 Am. Dec. 76.
404
LEGAL LIQUIDATIONS AKD REDUCTIONS.
[§ 157.
that value from another who has derived no substantial benefit
from his property. This rule is not only in conformity with
justice, but has the sanction of authority.^ It is not the fact
[242] of the seizure that gives the defense, but that it has been
seized under such circumstances that the owner has had or
1 Scanlan v. Gulling, 63 Ark. 540,
39 S. W. Rep, 713; Curtis v. Ward, 20
Conn. 204
In the last case Ward, an attaching
creditor, and the officer who exe-
cuted the writ, were defendants.
Ward sued out an attachment and
attached property, after which that
writ was abandoned and the in-
dorsement of service erased. Sub-
sequently a new attachment was
sued out, followed by judgment and
execution, on which the goods were
sold. The defendant in the execution
brought trover for the original tak-
ing. As the defendants could not
justify that taking by any return
vipon the first attachment they suf-
fered judgment by default, but they
were allowed to show the subse-
quent disposition of the property in
mitigation, on the authority of pre-
vious cases cited. Baldwin v. Por-
ter, 12 Conn. 473; Clark v. Whitaker,
19 id. 330. Referring to the cases in
New York denying the benefit of
such mitigation to the wrong-doer
when the sale is made upon process
sued out by his agency or for his
benefit, Waite, J., said: "We are un-
able to yield our assent to the cor-
rectness of that doctrine as applied
to a case like the present, where
there has been a legal appropriation
of the property. Ward, the defend-
ant, had a legal right to attach the
goods in question; and as they were
subsequently legally appropriated to
the payment of the plaintiff's debt,
he has in that way received the full
value of his property. The defend-
ants admit that they have commit-
ted a trespass in taking the goods;
and that they are liable to pay the
plaintiff all the damage he has sus-
tained thereby, and no more. These
are for the original taking and de-
tention until the second attachment.
Beyond this they have done him no
wi"ong. He has no more right to
complain of a second attachment
than he would if made by any other
creditor, or if there had been no
previous taking of the property.
When the goods were attached the
second time the copy left in service
with him showed their situation.
It was then at his option to regain
the possession either by writ of re-
plevin or by the payment of the debt
upon which they were attached, or
suffer them to be applied in satisfac-
tion of that debt. Had he obtained
his goods in either of the former
modes it would hardly be claimed
that he could afterwards recover
their value of the defendant. The
same result ought to follow if he suf-
fered them to be applied in due form
of law to the payment of his debt."
See Wehle v. Butler, 61 N. Y. 245,
which was apparently a similar case,
in which the New York doctrine
was applied and mitigation denied.
See Bates v. Courtwright, 36 111. 518;
Wannamaker v. Bowes. 36 Md. 42;
Squire v. Hollenbeck, 9 Pick. 551,
20 Am. Dec. 506.
The defendant in trespass for the
wrongful levy of an attachment may
show in mitigation that the property
which he wrongfully took from the
plaintiff has been applied for the
benefit or advantage of the owner
thereof, and it is immaterial that
such defendant was not the plaintiff
in the attachment suit. Grisham v.
Bod man, 111 Ala. 194, 20 So. Rep.
I 157.] MITIGATION- OF DAMAGES. 405
could have the benefit of it.^ But in Xew York, as the law is
settled, to protect the wrong-doer or to entitle him to prove
such sale and application of proceeds in mitigation the seizure
must be at the instance of a third person and not at the in-
stance of the wrong-doer or upon process in his favor.^ Where
the wrong-doer is not thus excluded by the policy of the law
in reprobation of his tort from the benefit of such mitigation
it is generally available to him.^
If animals are killed through negligence it is the duty of
their owner, if their carcasses are of any appreciable value for
any purpose, to use such measure of diligence, as is reasonable
considering the circumstances, to realize for them all they are
worth. If he fails to do so their net value must be estimated
and deducted from the damages claimed.*
Where two ships were injured in a collision, the liability of
one for the damage being admitted, and the injured ship was
dry docked for repairs, and while in dock had her bottom
cleaned and painted, and her bilge keels fitted, things the
doing of which had been contemplated, but not decided upon,
before the collision, and the doing of which in no way delayed
or otherwise interfered with the making of the repairs, the
wrong-doer was not entitled to a reduction of the dock charges
because of these facts.'* There is no principle of law which
requires a person to contribute to an outlay merely because he
had derived a material benefit from it." Nor is one who has
been injured in his right of property to receive less than com-
pensation because he did not contemplate the full use of the
property, as where water at a dam was appropriated.''
514, citing Squire v. Hollenbeck, 9 <Case v. St. Louis R. Co., 75 Mo.
Pick. 551; Perry V. Chandler, 2 Cush. 668; Dean v. Chicago & N. R. Co.,
037. 43 Wis. 305; Georgia Pacific R Co. v.
iBall V. Liney, 48 N. Y. 6, 8 Am. Fullerton, 79 Ala. 298; Illinois Cen-
Rep. 511. tral R. Co. V. Finnegan. 21 111. 646;
2 Id.; Otis V. Jones, 31 Wend. 394; Roberts v. Richmond & D. R Co., 88
Lyon V. Yates, 52 Barb. 237; Peak v. N. C. 560; Harrison v. Missouri Pa-
Lemon, 1 Lans. 295; Higgins v. Whit- cific R. Co., 88 Mo. 625.
ney, 24 Wend. 379; Sherry V. Schuy- » The Acanthus, 112 L. T. 153,
ler. 2 Hill, 204: Wehle v." Butler, 61 [1903] Prob. 17.
N. Y. 245. " Ruabon Steamship Co. v. London
3 Howard v. Cooper, 45 N. H. 339; Assurance, [1900] App. Cas. 6.
Doolittle V. McCuUough, 7 Ohio St. 'Green Bay. etc. Canal Co. v. Kau-
299; Montgomery v. Wilson, 48 Vt. kauna Water Power Co., 112 Wis.
€16. 323, 87 N. W. Rep. 864; Patterson v.
4:06
LEGAL LIQUIDATIONS AND REDUCTIONS.
[§ 158,
§ 158. No niitigation when benefit not derived from de-
fendant. Generally there can be no abatement of damages on
the principle of partial compensation received for the injury
where it comes from a collateral source, wholly independent of
the defendant, and is as to him res inter alios acta} As where a
man whose wife was killed remarries; the pecuniary value of
the services rendered by the wife of the second marriage can-
not avail the party who is responsible for the death of the first
[24:3] wife.^ A man who was working for a salary was injured
by the negligence of the carrier; the fact that the employer
did not stop the salary of the injured party during the
time he was disabled was held not available to the defendant
sued for such injury in mitigation;' nor does the gratuitous
care and nursing of an injured plaintiff relieve the party who
caused the injury from liability for their worth.* Nor will
proof of money paid to the injured party by an insurer or
other third person by reason of the loss or injury be admis-
sible to reduce damages in favor of the party by whose fault
such injury was done.^ The payment of such mone3^s not
Mississippi Boom Co., 98 U. S. 403;
Jegon V. Vivian, L. R. 6 Ch. A pp.
742.
1 In an action against a railroad com-
pany and the construction company
wliich built its road to recover for
damage to adjacent property by ex-
cavations in the streets, it was com-
petent to prove that the damage had
been repaired by the city soon after
it vs^as done. Alabama Midland R.
Co. v. Coskry, 92 Ala. 254, 9 So. Rep.
202.
2 Davis V. Guarniere, 45 Ohio St.
470, 4 Am. St 548, 15 N. E, Rep. 350.
3 Ohio, etc. R. Co. v. Dickerson, 59
Ind. 317. But see ch. 36.
* Penn.sylvania Co. v. Marion, 104
Ind. 239, 3 N. E Rep. 874. In some
jurisdictions neither of the two pre-
ceding rules is recognized. See ch.
36.
5 Cunningham v. Evansville, etc.
R. Co.. 102 Ind. 478, 1 N. E. Rep. 800,
52 Am. Rep. 683; Hammond v. Schiff,
100 N. C. 161, 6 S. E Rep. 753: Balti-
more & O. R, Co. V. Wightman, 29
Gratt. 431, 26 Am. Rep. 384: Pitts-
burg, etc. R Co. v. Thompson, 56 111.
138; Texas & P. R Co. v. Levi, 59
Tex. 674: Hay ward v. Cain, 105 Mass.
213; Clark v. Wilson, 103 id. 219, 4
Am. Rep. 532; Propeller Monticello
v. MoUison, 17 How. 152:TheYeager,
20 Fed. Rep. 653; Owens v. Baltimore
& O. R. Co., 35 id. 715; Weber v.
Morris, eta R Co., 36 N. J. L. 213;
Carpenter v. Eastern Transportation
Co., 71 N. Y. 574: Briggs v. New York,
etc. R Co., 72 N. Y. 26; Perrott v.
Shearer, 17 Mich. 48; Yates v. Whyte,
4 Bing. N. C. 272; Kingsbury v. West-
fall, 61 N. Y. 356; Althorf v. Wolfe,
22 N. Y. 355; Port Glasgow & New-
ark Sailcloth Co. v. Caledonia R Co.,
19 Rettie. 608; Lake Erie & W. R.
Co. V. Griffin, 8 Ind. App. 47, 35 N. E.
Rep. 396, 52 Am. St. 465; Allen v.
Barrett, 100 Iowa, 16, 69 N. W. Rep.
272; Mathews v. St. Louis, etc. R.
§ 158.] MITIGATION OF DAMAGES. 407
being procured by the defendant, and they not having been
either paid or received to satisfy in whole or in part his lia-
bility, he can derive no advantage therefrom in mitigation of
damages for which he is liable. As has been said by another,
to permit a reduction of damages on such a ground would be
to allow the wrong-doer to pay nothing and take all the bene-
fit of a policy of insurance without paying the premium,^ The
same principle has been applied to life insurance in recent
cases.- In the English case cited in the note the writer of the
opinion of the house of lords said that money provisions made
by a husband for the maintenance of his widow, in whatever
form, are matters proper to be considered by the jury in
estimating her loss by the death of her husband, but the
extent, if any, to which these ought to be imputed in reduc-
tion of damages must depend upon the nature of the provis-
ion and the position and means of the deceased. When the
deceased did not earn his own living, but had an annual in-
come from property, one-half of which has been settled upon
his widow, a jury might reasonably come to the conclusion
that, to the extent of that half, the widow was not a loser by
his death, and might confine their estimate of her loss to
the interest which she might probably have had in the other
half. Very different considerations occur when the widow's
provision takes the shape of a policy on his own life effected
by a man in the position of the deceased, whose earnings were
|75 a month, and who left no estate. " The pecuniar}"^ ben'efit
121 Mo. 29S, 336, 24 S. W. Rep. 591,25 ing the whole paragraph of the text
L. R. A. 161, quoting the text; Rolfe as it stood in tlie first edition.
V. Boston & M. R Co., 69 N. H. 476, 45 2 Coulter v. Pine Township, 164 Pa.
Atl Rep. 251 ; Lake Erie & W. R. Co. 543, 30 Atl. Rep. 490; Harding v.
V. Falk.6iOhioSt. 297, 56 N. E. Rep. Townshend, 43 Vt. 536, 5 Am. Rej).
1020; Lindsay v. Bridgewater Gas 308; Althorf v. Wolfe, 23 N. Y. 355;
Co., 3 Pa. Dist. Rep. 716, citing the Terry v. Jewett, 17 Hun, 395; Sher-
text; Anderson V. Miller, 96Tenn. 35, lock v. Ailing, 44 Ind. 184; Western
33 wS. W. Rep. 615, 54 Am. St. 812, 31. & A. R. Co. v. Meigs, 74 Ga. 857;
L. R. A. 604; Brown v. McRae, 17 Grand Trunk R. v. Beckett, 16 Can.
Ont. 712; Chicago, etc. R. Co. v. Pull- Sup. Ct. 713, 13 Ont. App. 174; Grand
man Southern Car Co., 139 U. S. 79, Trunk R. Co. v. Jennings, 13 App.
11 Sup. Ct. Rep. 490. Cas. (1888), 800; Clune v. Ristine, 94
iMayne on Uam. (6th ed.), p. 115; Fed. Rep. 745, 36 C. C. A. 450, citing
Dillon V. Hunt. 105 Mo. 154, 163, 24 the te.\t. See § 1265.
Am. St. 374, 16 S. W. Rep. 516, quot
408 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 158.
which accrued to the respondent from his premature death
consisted in the accelerated receipt of a sum of money, the
consideration for which had already been paid by him out of
his earnings. In such a case the extent of the benefit may
fairly be taken to be represented by the use or interest of the
money during the period of acceleration; and it was upon that
footing that Lord Campbell^ suggested to the jury that, in
estimating the widow's loss, the benefit which she derived from
acceleration might be compensated by deducting from their
estimate of the future earnings of the deceased the amount of
premiums which, if he had lived, he would have had to pay
out of his earnings for the maintenance of the policy." On
the same principle it would be no defense in an action by an
annuitant or any other creditor that the value of the annuity
had been recovered against the plaintiff's attorney in an action
for negligence in its negotiation, or that the sheriff had been
forced to pay the debt in an action for an escape.^ And where
a number of plaintiffs sued for damages resulting from delay-
ing their ship it was no ground for reducing the amount that
some of these plaintiffs had been benefited by getting an in-
crease of passengers in another ship; the result would have
been the same if there had been only one plaintiff who owned
both ships.' So general benefits resulting to the plaintiff from
the erection and proximity to his property of the defendant's
mill are no ground for a reduction of the damages the plaintiff
suffers by the overflowing of his land from the defendant's
[244-] dam.* And in an action by the master for seduction of
his servant evidence that the defendant offered to marry the
girl is not admissible in mitigation.*^ In an action against one
1 In Hicks v. Newport, etc. R. Co., ^Mayne on Dam. (6th ed.), p. 115;
4 B. & S. 403, n. Jebsen v. East & W. India Dock Co..
For a consideration of the au- L. R. 10 C. P. 300.
thority of this case see Harding v. * See Francis v. Schoelkopf, 53 N.
Townshend, 43 Vt. 536, 541, 5 Am. Y. 152; Marcy v. Fries, 18 Kan. 853.
Rep. 308. A contrary conclusion has °Ingersoll v. Jones, 5 Barb. 661;
been arrived at under a statute sim- First Nat. Bank v. Rush, 29 C. C.
ilar to that under which the English A. 333, 85 Fed. Rep. 539, citing the
case was ruled. Althorp v. Wolfe, text. See White v. Murtland, 71 111
22 N. Y. 355. 250, 22 Am. Rep. 100.
2 Mayne on Dam. (6th ed.), p. 115;
Hunter v. King, 4 B. & Aid. 209.
§ 159.] MITIGATION OF DAMAGES. 409
of several co-trespassers evidence of payments by any one of
them, though not received in full satisfaction, is admissible;
they are payments made on account of the injury by those
primarily liable; full satisfaction from either would discharge
all and partial compensation should have this e&ect pro tanto}
An offer by a wrong-doer to purchase property which has been,
injured at a price put upon it by a third person cannot be
proven.^ In a suit to recover for the breach of a contract to
furnish employment the defendant may show that wages liave
been obtained from other parties.*
§ 159. Fuller proof of the res gestae in trespass, iiegli-
geucc, etc. Mitigation of damages frequently results from
fuller proof of the res gestce, or the disclosure of some peculiar
or exceptional feature pertaining to the particular case, mak-
ing it apparent that the plaintiff's injury is less than it would
otherwise appear to be, or that the defendant is less culpable.
A defendant in mitigation of damages for assault and battery
may rely on the rcs gestce although if pleaded it would amount
to a justification and require a special plea.'' In an action for
breach of a marriage promise it may be shown that the defend-
ant's family disapproved of the match on the ground that this
would diminish the happiness of the union,^ and that the de-
fendant was afflicted with an incurable disease at the time of
the breach;^ but the jury cannot consider in mitigation the
possible consequences of marrying the defendant arismg from
a want of that love and affection which a husband should have
for his wife.''
In trespass, under a plea of not guilty, the defendant has
been permitted to show title in himself to confine the plaintiff's
recovery to the quantity of his interest,^ and in an action to re-
cover for damages done by cattle it may be shown that the
animals got upon the plaintiff's land by Reason of the defect-
1 Chamberlin v. Murphy, 41 Vt. 110. « Sprague v. Craig, 51 111. 586.
-Mayor v. Harris, 75 Ga. 761. ^ Piper v. Kingsbury, 48 Vt. 480.
3 Owen V. Union Match Co., 48 ^ Ballard v. Leavell, 5 Call, 531.
Mich. 348, 13 N. W. Rep. 175. In trespass for killing a dog evi-
*Byers v. Horner, 47 Md. 83; Rus- dence of his bad habits, other than
sell V. Barrow, 7 Port. 106. But see such as are pleaded in justification,
Watson V. Christie, 2 Bos. & P. 224. may be proven in mitigation. Rey-
5 Irving V.Greenwood, 1 C. & P. nolds v. Phillips, 13 111. App. 557;
•!50. Dunlap v. Snyder, 17 Barb. 561.
410 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 159.
iveness of his fence,^ An officer against wLom an action is-
brought for entering the plaintiff's house and assaulting him
may show in mitigation, but not to prove the entry lawful,
that he entered for the purpose of making, and did in fact
make, service under an attachment, although the attachment
[245] was unlawful by reason of the writ not having been re-
turned into court.^ Where, in consequence of the defendant's
embankment, the flood waters of a river were pent up and
flowed over the plaintiff's land, and it appeared that had the
embankment not been constructed the waters would have
flowed a different way but would have reached his land and
done damage to a lesser extent, the measure of damages was
the difference between the two amounts;' and in an action for
a nuisance in erecting mills and maintaining a steam-engine
and furnaces in the vicinity of the plaintiff's dwelling the de-
fendant was entitled to show the general character of the
neighborhood, the various kinds of business carried on there,
and the class of tenants by whom the dwelling-houses were in
general occupied, and also the probable disadvantage and loss
to the plaintiff from an inability to rent his houses, if, in con-
sequence of the destruction or removal of the defendant's mills,
there were no longer workmen to whom they could be leased.^
The concurrence of other causes with the defendant's acts in
creating a nuisance may also be shown in mitigation.^
On an assessment of damages after a default in an action for
negligence, the defendant for mitigation and to reduce them
to a nominal sum may show that there was no negligence;
for this purpose it is immaterial whether the charge is of in-
jury to person or property or that the damages are entire and
indivisible.^ A total or partial want or failui-e of consideration,
on the same principle, may be shown in an action upon con-
tract,^ or any defense arising out of the plaintiff's cause of ac-
tion itself, as where the action is for the price of labor or of a
1 Young V. Hoover, 4 Cranch C. C. ^ siierman v. Fall River Iron
187. Works, 5 Allen, 213.
2 Paine v. Farr, 118 Mass. 74. " Batchelder v. Bartholomew, 44
3 Workman v. Great Northern R Conn. 494.
Co., 32 L. J. (Q. B.) 279. ' Darnell v. Williams, 2 Stark. lOG:
< Call V. Allen, 1 Allen, 137. See Simpson v. Clarke. 2 Cr.. M. & li.
Francis v. Schoellkopf, 53 N. Y. 152. 342.
§ 160.]
MITIGATION OF DAMAGES.
411
comniotlity and defects are proved.* And in many English
cases this defense is recognized where, according to the gen- [240]
eral course of American decisions, the broader defense of re-
coupment would be allowed.2
§ IGO. Otficial neglect. In actions for neglect of duty or
misconduct of ministerial officers affecting parties entitled to
call on them for service, or for whom such officers are re-
quired by law to perform duties, as well as in like actions by
employers against agents and attorneys, the general rule is
that the injured party is entitled to compensation commen-
surate with his actual loss.' Where such neg-lect or miscon-
duct results in a failure to collect a debt or impairs an existing
security, and the prima facie loss is the amount of the debt,
ordinarily any evidence is properly defensive or receivable in
mitigation which negatives that loss either wholly or in part.*
A sheriff in an action for escape or any neglect in respect to
an execution may show that the execution debtor was wholly
or partially insolvent, that if due diligence had been used
the whole judgment or some part would have remained unsat-
isfied.*
1 Crookshank v. Mallory, 3 Greene,
257; Basten v. Butter, 7 East. 479;
Farnsworth v. Garrard, 1 Camp. 38;
Denew v. Daverell, 3 Camp. 451;
Baillie v. Kell, 4 Bing. N. C. 638; Cut-
ler V. Close, 5 C. & P. 337; Sinclair
V. Bowles, 9 B. & C. 92; Thornton v.
Place, 1 M. & Rob. 218: Kelly v.
Bradford, 33 Vt 35; McKinney v.
Springer, 3 Ind. 59; Allen v. McKib-
bm, 5 Mich. 449; Wood v. Sohettler,
23 Wis. 501.
2 Street v. Blay, 3 B. & Ad. 456;
Parson v. Sexton, 4 C. B. 899; Poul-
ton V. Lattimore, 9 B. & C. 259; Mon-
del V. Steel, 8 M. & W. 858; Dawson
V. Coll is, 10 C. B. 533.
3 Amy V. Supervisors, 11 Wall. 136;
Swan V. Bridgeport, 70 Conn. 143, 30
AtL Rep. 110; Harris v. Murfree, 54
Ala. 161; Mechem on Public Officers,
§766.
*Van Wart v. Woolley, 3 B. & G
439; Allen v. Suydam, 20 Wend. 321,
32 Am. Dec. 555; Russell v. Turner,
7 Johns. 189, 5 Am. Dec. 254; Russell
V. Palmer, 2 Wils. 325; Stowe v.
Bank of Cape Fear, 3 Dev. 408; Swan
V. Bridgeport, supra; Townseud v.
Libbey, 70 Me. 163; Wilson v. Stro-
bach, 59 Ala. 488; Mechem on Public
Officers, § 766. In § 759 of Mechem
it is said that if the escape is volun-
tary the officer is liable for the whole
amount of the debt whether the
debtor be solvent or insolvent (State
V. Hamilton, 33 Ind. 503), while if the
escape is the result of negligence,
though the whole judgment ispri?na
facie the measure of the damages,
the officer may show in mitigation
that the debtor had no property with
which he could have paid or secured
the debt in whole or in part. State
V. Mullen, 50 Ind. 598.
s Kellogg V. Manro, 9 Johns. 300;
Patterson v. Westervelt, 17 Wend.
543; Hootman v. Shriner, 15 Ohio
413 LEGAL LIQUIDATIONS AND KEDUCTIONS. [§ IGO.
There is an apparent exception to the general proposition
that the party injured shall only recover his actual loss in the
case of ministerial officers through whose diligent action the
party interested must realize a debt or come into possession of
a right. Where a sheriff suffers an escape on final process or
fails to collect and return an execution, or to perform a per-
emptor}'- duty to levy a tax or the like, the fact that the debt
is still safe and collectible by a repetition of the resort to the
[247] defendant officially is no defense;^ otherwise, as "Wat-
son, J., said:'^ "If the officer is sued for a neglect of duty he
can say the defendant had no property out of which he could
collect the mone}^, and that, it is conceded, is a good defense;
or he can say he has property out of which you can still col-
lect it, and therefore nothing but nominal damages can be re-
covered. The second execution issued upon the same judg-
ment would admit of the same defense, and so on as often as
they might be issued, provided the judgment debtor did not
in the meantime get rid of his property."' In an action
against a supervisor of a town who was required by law to as-
sess the damages which had been allowed the plaintiff for
property taken for public use, and who had omitted to do so,
the supervisor was personally liable for the whole amount
which the plaintiff had been unable to obtain by reason of the
refusal to perform his duty.* "It cannot be assumed that the
defendant would be taught by the result of one action and
proceed to do his duty, and thus avoid another. The plaintiff
is not to be thus put off. The defendant's misconduct has de-
prived him of obtaining his money, and the defendant must
St. 43; Ledyard v. Jones, 7 N. Y. 550; logg v. Manro, 9 Johns. 300; Arden
Brooks V. Hoyt, 6 Pick. 468; Shack- v. Goodacre, 11 C. B. 371; Moore v.
ford V. Goodwin, 13 Mass. 187; Lush Moore, 25 Beav. 8; Hemming v. Hale,
V. Falls, 63 N. C. 188; West v. Rice, 7 C. B. (N. S.) 487; Macrae v. Clarke,
9 Met. 564; State v. Baden, 11 Md. L. R. 1 C. P. 403; Goodrich v. Starr,
317; State v. Mullen, 50 Ind. 598; Coe IS Vt 227; State v. Hamilton, 33 Ind.
V. Peacock, 14 Ohio St. 187; Cooper 502; Hodson v. Wilkins. 7 Me. 113, 20
V. Wolf, 15 id. 523; Bank of Rome v. Am. Dec. 347; Weld v. Bartlett, 10
Curtiss. 1 Hill, 275; Pardee v. Rob- Mass. 470.
ertson, 6 id. 550; Dunphy v. Whipple, 2 Ledyard v. Jones, 7 N. Y. 550.
25 Mich. 10. * But see Tempest v. Linley, Clay-
1 Ledyard v. Jones, 7 N. Y. 550; ton, 34; Norris' Peake, 608; Stevens
Bank of Rome v. Curtiss, 1 Hill, 275; v. Rowe, 3 Denio, 327.
Pardee v. Robertson, 6 id. 550; Kel- * Clark v. Miller, 54 N. Y. 52&
§ 160.]
MITIGATION OF DAMAGES.
413
answer to the whole injury which he has occasioned."* This
rigorous severity is exceptional and based on considera- ['-2-48]
tions of policy to insure the active diligence of such officers;
it is in fact punitive in its nature and object. In the case next
1 In the overruled case of Stevens
V. Rowe, 3 Denio, 337, wliich was an
action against a sheriff for neglect-
ing to return an e.xecution, Beardsley,
J., said: "At common law no action
Jay for such violation of duty, al-
though the sheriff might be attached
and punished for it. I admit, how-
ever, that under thfl statute an ac-
tion may be maintained for such
misconduct, and in which the party
aggrieved is entitled to recover ' for
the damages sustained by him' (2 R.
S. 440, § 77; Pardee v. Robertson, 6
Hill, 550). Tiie amount to be recov-
ered is thvis prescribed by the statute,
which is 'the damage sustained ' by
such violation of duty, whatever the
amount may be. The full amount
to be levied and made on the execu-
tion is not necessarily recoverable,
although prima facie that may be
the just measure of reparation where
nothing is shown to induce a belief
that the real loss of the aggrieved
party is less than that amount."
After referring to the point decided
in Pardee v. Robertson, supra, and
in Bank of Rome v. Curtiss, 1 Hill,
275, he continued: "I must say that
I should find great difficulty in fol-
lowing either of these cases as au-
thority, even where the facts and
circumstances were identically the
same; and I am by no means dis-
posed to extend them as authority
to cases which admit of a plain dis-
tinction in matter of fact. The de-
cision in The Bank of Rome v. Curtiss
was said to be in accordance with
the rule laid down in two cases ad-
judged in Massachusetts; but as I
read those cases they have no appli-
cation to such a state of facts as was
shown to exist in The Bank of Rome
v. Curtiss. In that case it appeared
that the debt had not been lost, al-
though its collection had been de-
layed by the neglect of the sheriff;
for the proof shows that the debt
was still safe and collectible. Yet
the court held that the sheriff was
liable for the full amount of the exe-
(lution in his hands. I am unable to
see any such rule laid down in either
of the Massachusetts cases. In the
first of these cases in order of time
(Weld V. Bartlett, 10 Mass. 474),
ParUer, J., said that where an officer
had neglected to do his duty, so that
the effect of thejudgiuent appears to
he lost, the judgment in the suit so
rendered ineffectual is prima facie
evidence of the measure of injury
which the plaintiff has sustained;
but it may be met by evidence of
the inability of the debtor to pay.'
The other case (Young v, Hosmer, 11
Mass. 89) is equally explicit, and
makes the sheriff liable for the en-
tire debt; because 'the benefit of the
judgment to the whole amount of it
is to be presumed lost by the negli-
gence of the officer.' This principle
can surely have no bearing on a case
in which it appears that the judg-
ment had not been lost, but was still
safe and collectible. In Kellogg v.
Manro, 9 Johns. 300, which was also
cited as sustaining The Bank of
Rome V. Curtiss, the rule is stated as
in the Massachusetts cases. It was
said to be too plain for discussion
that the plaintiff might recover be-
yond nominal damages. * He is en-
titled,' say the court, 'prima facie^
to recover his whole debt, which is
presumed to be lost by the escape.' I
make no objection to this rule in any
action brought against an officer for
414
LEGAL LIQUIDATIONS AND REDUCTIONS.
[§ 160.
referred to, however, the rule was applied to an officer who,
by an error of judgment, omitted to assess a tax for a sum due.
He omitted to do it because he believed the law requiring it
was unconstitutional. The court say honest ignorance does
[249] not excuse a public officer for disobeying the law.^ It
will exempt him from punitive damages. In a case for escape
Jarvis, C. J., said: "The rule might be supposed to operate
unjustly towards the sheriff where the execution debtor has
the means of paying the debt at the moment of the escape
and still continues notoriously in solvent circumstances. In
this case the value of the custody was the amount of the debt,
and the plaintiff will be entitled to recover substantial dam-
the violation of such a duty. Prima
facie it may well be taken that the
whole debt has been lost by the neg-
ligence of the officer; and if such be
the fact, it is most just that he should
pay the full amount. But when the
proof shows that the debt has not
been lost, although the collection has
been delayed, and that it is still safe
and collectible, it seems to me en-
tirely clear that the rule laid down
in the Massachusetts cases and in
Kellogg V. Manro is wholly inap-
plicable. ... In Pardee v. Rob-
ertson it was proved that the sher-
iff had actually collected the full
amount of the execution; the money
still remainmg in his hands. But in
the case now to be decided the fact
was otherwise. The jiroof showed
that the money had not been col-
lected; although, if the judgment was
a lien on real estate in the county of
Oswego, as the plaintiff offered to
show, the sheriff might have made
the amount as required by the exe-
cution. ... If the sheriff should
be compelled to pay the full amount
of the execution, for the reason that
the judgment was a lien on real
estate out of which the money might
have been collected, as was offered
to be proved on the part of the plaint-
iffs, he would be entirely remediless.
He could not enforce the judgment
and execution for his own indemnity,
but must stand the entire loss. This
would be too severe where the debt
is still safe and the only injury sus-
tained has resulted from mere delay.
It is just that the sheriff should
make the party good by paying all
the damages sustained by him; and
so is the statute on which the action
is founded; but to go beyond this
seems to me quite too rigorous.
Prima facie the sheriff is liable for
the full amount of the execution
debt, as it is presumed to have been
lost by his neglect. This, in my esti-
mation, is not a very violent pre-
sumption, but still may be just in
regard to the ofBcer who is in de-
fault. But when it is shown that
the debt has not been lost, there is
no room for presumption, and the
prima facie case no longer exists. By
the statute the measure of recovery
is the "damages sustained,' which,
presumptively, I admit is the full
amount of the execution. But the
sheriff may mitigate the amount not
simply by showing his inability to
collect the money, but by proof that
the debt is still safe and collectible."
1 Clark v. Miller, 54 N. Y. 528. See
Dow V. Humbert, stated in the text
of § 161.
§ 101.] MITIGATION OF DAMAGES. 415
■ages. It is true that the recovery of such damages will not
satisfy the execution, and the debtor may be retaken by the
plaintiff; for the debtor cannot take advantage of his own
wrong and avail himself of the recovery against the sheriff.
On the other hand, the sheriff is not damnified, for he may re-
take the debtor or recover against him by action the amount
he has been compelled to pay." ^ Where the officer fails to
collect an execution from a debtor who is " notoriously in
solvent circumstances," and continues so, there is no wrong
done the execution debtor, as in an escape, to give the sheriff
any action against hira ; nor do the authorities in this class of
actions proceed on the theory that such a recovery against the
sheriff transfers the judgment debt to him. Hence the re-
covery of the full amount of the judgment or other demand
against an officer who has neglected to do some act which [250]
would have enabled the party interested to realize at once,
the debtor being still solvent, or the debt not being wholly
lost by the default, is not a measure of damages which is
strictly compensatory. To the extent of the actual value of
the debt in respect to which the negligence occurred at the
time of the recovery against the officer, the plaintiff is over-
compensated when he has recovered from the officer the full
amount. Exclusion of proof of that value in mitigation can-
not rest on the argument that its reception and consideration
would deprive the creditor of any compensation for actual
loss.
§ 161. Same subject; modification of the old rule. The
supreme court of the United States- has limited the applica-
tion of this rigorous rule against officers. The action was for
neglect of duty by the defendants as supervisors in refusing to
place upon the tax list as required by a statute the amount of
two judgments recovered by the plaintiff. The debtor being
a township, it was presumed that its taxable property con-
tinued the same as when the levy should have been made.
Miller, J., said: "The single question presented is whether
these officers, by the mere failure to place on the tax list when
it was their duty to do so, the judgment recovered by the
plaintiff against the town, became thereby personally liable to
■I Ardea v. Goodacre. 11 C. B. 371. 2 Dow v. Humbert, 91 U. S. 294
416 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 162.
the plaintiff for the whole amount of said judgment without
producing any other evidence of loss or damage growing out
of such failure. It is not easy to see upon what principle of
justice the plaintiff can recover from the defendants more than
he has been injured by their misconduct. If it were an action
of trespass there is much authority for saying that the plaintiff
would be limited to actual and compensatory damages unless
the act were accompanied with malice or other aggravating
circumstances. How much more reasonable that for a failure
to perform an act of official duty, through mistake of what
that duty is, that the plaintiff should be limited in his recovery
to his actual loss, injury or damage. Indeed, where such is the
almost universal rule for measuring damages before a jury
[251] there must be some special reason for a departure from
it. . . . The expense and cost of the vain effort to have
the judgment placed on the tax list, the loss of the debt, if it
had been lost, any impairment of the efficiency of the tax levy,
if such there had been, in short, any conceivable actual dam-
age, — the court would have allowed if proved. But plaintiff,
resting solely on his proposition that defendants by failing to
make the levy had become his debtors for the amount of his
judgment, asked for that, and would accept no less." The court
reached the conclusion "that in the absence of any proof of
actual damage . . the defendants were liable to nominal
damages and to costs, and no more." In a later case, which
Avas very aggravated, the defendants having refused to obey a
mandamus to collect the amount of a judgment by adding it
to the tax roll, the court allowed the plaintiff his counsel fees
and costs.^
[252] § 162, Plaintiff's consent. The previous consent of
the plaintiff to the act which he complains of, though not
given in a form to bar him or support a plea of justification,
ma}' yet be proved in mitigation of damages. Thus in tres-
pass for an alleged injury to the plaintiff's wall by inserting
joists in it, evidence that the wall was so used by the defend-
ant in the erection of an adjoining building under an express
[253] parol agreement with the plaintiff is admissible under the
1 Newark Savings Inst. v. Panhorst, 7 Biss. 99. See Branch v. Davis, 29 Fed.
Rep. 888.
R 1G3.1 MITIGATION OF DAMAGES. 417
general issue in mitigation.' So it may be proved that the
injury in question was inflicted in a fight by mutual consent.^
In a suit by several heirs at law, who are cotenants, to recover
forinjury to their interests by cutting timber on the estate, the
consent of one of them is a good defense; all suing in the same
riirht, they must all be entitled to recover or none can.'
§ 1G3. Injuries to character and feelings. Any exceptional
conduct or character of the plaintiff which impairs his title to
compensation or diminishes the injury in question is provable
in mitigation. In those actions where the wrong complained
of involves injury to character the defendant may show, in
order to reduce damages, the general bad character of the
plaintiff.^ The weight of New York authority favors the
proposition that in an action by a female for an indecent
assault, the injury to her feelings being an element of dam-
ages, specific acts of lewdness with others than the defendant
may be shown in mitigation without being specially pleaded.'^
Evidence that the plaintiff's marriage with his reputed [254]
wife was void is admissible in an action for seduction of his
reputed daughter to rebut the presumption of actual service
by showing that the plaintiff was not legally entitled thereto
and in mitigation of damages.^ In an action for criminal conver-
sation it may be shown that the plaintiff was wanting in affec-
tion for his wife to support the inference that his loss was
trifling,'^ or that there was but slight intercourse between
them;^ and in an action for breach of promise of marriage
that the plaintiff was utterly unHt to appreciate the person to
1 Hamilton v. Windolf, 36 Md. 301, Evans v. Waite, 83 Wis. 286, 53 N.
11 Am. Rep. 491. W. Rep. 445. See § 151.
2 Adams v. Waggoner, 33 Ind. 531, 3 Lowery v. Rowland, 104 Ala. 420,
5 Am. Rep. 230; g 151; Cooley on 16 So. Rep. 88.
Torts (2d ed.), pp. 187, 188. Compare * Fitzgibbon v. Brown, 43 Me. 169.
Bishop on Non-Contract Law, § 196. See § 152.
For cases holding that consent bars '^Guilerette v. McKinley, 27 Hun.
an action for a tort, see Goldnamer 320. reviewing the cases in New
V. O'Brien, 98 Ky. 569, 33 S. W. Rep. York; Young v. Johnson, 46 Hun,
831, 56 Am. St. 378, 36 L. R. A. 715; 164.
Courtney v. Clinton, 18 Ind. App. ^ Howland v. Howland, 114 Mass.
620, 48 N. E. Rep. 799. The only 517, 19 Am. Rep. 381.
effect of consent is to confine the ■? Bromley v. Wallace, 4 Esp. 237.
recovery to compensatory damages. » Calcraft v. Harborough, 4 C. &
P. 499.
Vol. 1 — 27
413 LEGAL LIQUIDATIONS AND EEDDCTIONS. [§ 164.
whom he engaged himself.^ Declarations by the plaintiff,
pending the action, that she would not marry the defendant
except for his money have been admitted.^ The fact of a
female plaintiff having had an illegitimate child, though
known to the defendant at the time of the promise, may be
proved,' and her intercourse with another man before and
after the promise.* In actions for seduction proof of the
plaintiff's careless indifference to the defendant's opportunities
for criminal intercourse with her daughter may be shown in
mitigation; ^ actual connivance by the plaintiff would be a bar.®
§ 164. Reduction of loss or benefit. Whatever diminishes
the loss of the injured party, or where the recovery is influ-
enced by the amount of benefit derived from the act com-
plained of by the defendant, whatever decreases the value of
that benefit may be proved in mitigation, where the matter
diminishing the loss in the former case, or impairing the bene-
fit in the other, is part of the transaction. Thus in an action
against a contractor for failing to fulfill his contract he may
show that the agreed price has not been paid.^ And where A.
took wrongful possession of premises on the 2d of June, and
[255] a sum of money became due for ground rent on the 24th
for the month ending on that day, which A. paid, it was held
in an action for mesne profits that he was entitled to deduct
the money so paid from the damages. In that case the pay-
ment of the ground rent diminished the value of the occupa-
tion to the defendant, and having paid what the plaintiff
must otherwise have paid, his injury, for which mesne profits
were compensation, was, to the amount paid, mitigated.^ So
a tenant has a right to deduct from rent all expenses or taxes
which he has been compelled to pay for the lessor.^ If a
mortgagee who has brought an action for damage done to the
1 Leeds v. Cook, 4 Esp. 256. 106; Smith v. Hasten, 15 Wend. 270;
2 Miller v. Rosier, 31 Mich. 475. Sherwood v. Titraan, 55 Pa. 77.
Contra, Miller v. Hayes, 34 Iowa, ■? Reedy v. Tuskaloosa, 6 Ala. 327;
496, 11 Am. Rep. 154. Gabay v. Doane, 77 App. Div. 413,
3 Denslow v. Van Horn, 16 Iowa, 79 N. Y. Supp. 312.
476. 8 Doe v. Hare, 2 Cr. & M. 145.
4 Burnett v. Simpkins, 24 111. 264. » Sapsford v. Fletcher, 4 T. R 511;
sZerfing v. Mourer, 2 Greene, 520; Taylor v. Zamira, 6 Taunt 534; Car-
Parker V. Elliott, 6 Munf. 587. ter v. Carter, 5 Bing. 40&
6 Bunnell v. Greathead, 49 Barb.
§ 1G5.] MITIGATION OF DAMAGES. 419
mortgaged premises by a removnl of fixtures has sold the
premises intermediate the injury and the action for more
than enough to pay his debt and all prior incumbrances, this
fact may be proven in mitigation of damages.'
The immediate landlord is bound to protect his tenant from
all paramount claims, and when, therefore, the tenant is com-
pelled, in order to protect himself in the enjoyment of the
land in respect to which the rent is payable, to make payments
which ought, as between himself and his landlord, to have
been made by the latter, he is considered as having been au-
thorized by the landlord so to apply his rent due or accruing
due.- Of this nature are not only payments of ground rent
to the superior landlord, but interest due upon a mortgage
prior to the lease,^ an annuity charged upon the land,* and
rates and taxes.'^ But where the payment of the ground rent
or other like charge gives no right of action against the party
suino- for the rent, this ri<rht of deduction does not exist.®
§ 165. Pleading in mitigation. It has sometimes been
held as a general rule that matters which would have gone in
bar of the action cannot be given in evidence to reduce dam-
ages unless pleaded. Lord Abinger, C. B., said : ^ " It is a
principle as old as my recollection of Westminster Hall that
matter of justification cannot be given in evidence in an action
in order to mitisi'ate damag'es." The case was an action for
wrongfully discharging the plaintiff from the defendant's
service; the latter pleaded only payment of money into
court. It was contended in his favor that he should be al-
lowed to show in mitigation that the discharge was for mis-
conduct, as under this issue there was merely an inquiry of
damages; that the same evidence was admissible as [256]
upon a writ of inquiry after a judgment by default. It was
held properly rejected. Alderson B., said: "The question is
whether it is competent to the defendant in mitigation of
damages to ffive evidence to contradict a fact admitted on the
record. If it were the grossest injustice might be done, be-
cause the other party does not, of course, come prepared to
1 King V. Bangs, 120 Mass. 514. ^ Baker v. Davis, 3 Camp. 474; An-
2 Graham v. Allsopp, 3 Ex. 186. drew v. Hancock, 1 B. & B. 37.
s Johnson v. Jones, 9 A. & E. 809. « Graham v. Allsopp, stqira.
* Taylor v. Zamira, 6 Taunt. 524. 7 Speck v. Phillips, 5 M. <& W. 279.
420 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 165.
prove the fact so admitted." And Maule, B., said: "ISTo
question was made that the plaintiff was wrongfully dis-
charged; and 1 think it was not competent to the defendant
to give evidence to negative that which is admitted by the
plea. If it were, the consequence would follow that no de-
fendant would ever plead specially; he would pay a shilling
into court and set up as many defenses as he pleased, and suc-
ceeding in an}'- one of them, would get a verdict and his costs.
This would be setting aside not only the new rules, but all the
old rules which required special pleadings in actions of this
nature." ^
In trespass against a constable for arresting the plaintiff and
imprisoning him, the declaration stated it to have been without
reasonable or probable cause; the court said a constable may
justify an arrest for reasonable cause on suspicion alone ; and
in this respect he stands on more favorable ground than a pri-
[257] vate person, who must show, in addition to such cause,
that a felony was actuall}'' committed; that the difficulty was
to determine whether circumstances of suspicion which might
have been pleaded in justification were competent to go to the
jury under the general issue in mitigation. They say the ob-
jection rests on the rule which requires matter of justification
1 In Watson v. Christie, 2 B. & P. it on any ground ; that much evil
224, tried before Lord Eldon, C. J., beyond tiie mere act had been actu-
the action was for assault and bat- ally suffered, which evil had been
tery, and not guilty pleaded. It was occasioned by a cause which the de-
offered to be shown that the beating fendant admitted he could not jus-
was given by way of punishment for tify; that in his lordship's judg-
rnisbehavior on shipboard. The jury ment, therefore, the evil actually
were directed that the only questions suffered in consequence of what
for their consideration were whether was not justified ought to be com-
the defendant was guilty of the beat- pensated for in damages; that the
ing, and what damages the plaintiff jury should give damages to the ex-
had sustained in consequence of it ; tent of the evil suffered without les-
that although the beating in ques- sening them on account of the cir-
tiou, however severe, might possibly cumstances under which it was in-
be justified on the ground of the fiicted; that if they gave damages
necessity of maintaining discipline beyond compensation for the injury
on board the ship, yet such a de- actually sustained they would give
fense could not be resorted to unless too much; but if they gave less they
put upon the record in the shape of would not give enough. See Pujo-
a special justification; that the de- las v. Holland, 3 Irish C. L. 533; Gel-
fendant had not said on the record ston v. Hoyt, 13 Johns. 561.
that this was discipline, or justified
§ 160.] MITIGATIOX OF DAMAGES. 421
to be pleaded specially. At the first blush one woukl not
perceive a reason to preclude a party who had waived the
benefit of a full defense from showing the purity of his mo-
tives to shield him from exemplary damages; and there is in
truth none except that the plaintiff is not apprised by the
pleadings of the defendant's intention. Yet where the de-
fendant is not at liberty to apprise him by pleading in justifica-
tion the matter is for that very reason allowed to be given in
evidence. But whatever inconsistency there may seem to be
in point of principle the defendant when charged with making
an arrest without probable cause may rebut the charge.^
§ IGG. Same subject. In actions for slander this rule was
adopted long ago and has since been generally adhered to for
special reasons. These have more or less force in other ac-
tions where the matter sought to be proved in mitigation
would be a serious surprise to the plaintiff if introduced at the
trial without any notice in the pleadings. Under the common-
law system matter of mitigation which could not be used in
bar of the plaintiff's cause of action, nor of any severable part
of it, was for that reason provable without being pleaded. But
under this rule matter which could have been made available
in bar by plea was not necessarily admissible in mitigation.
The admission of such defense was not within the reason and
necessity of that rule. Courts may therefore properly exer-
cise a discretion to require notice of some sort as they do of
defenses by way of recoupment. It is believed, however, not
to be a general rule, at least in this country, except in actions
for libel and slander, that matter which might be set up in
bar and is not so pleaded cannot be proved in mitigation. The
existence of such rule has been denied in New York.- Judge
Selden said: "It was never any objection to evidence in miti-
gation that under a different state of the pleadings it [258]
would amount to a full defense." And again: "It seems to
have been supposed that there was some sound legal objection
to admitting proof of facts under the general issue in mitiga-
tion merely which, if specially pleaded, would amount to a full
defense. But there is not, and never was, any such objection.*
1 Russell V. Shuster, 8 W. & S. 398. » In McKyring v. Bull, 16 N. Y. 297,
2 Bush V. Prosser, 11 N. Y. 347,362, 304, the same judge said: "As the
365. code contains no express rule on the
422 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 1G6.
In Yermont it has been held in trover, after a default, that
matter which shows that the plaintiff had no right to recover,
and which might have been given in evidence under the gen-
eral issue, may avail in mitigation of damages.^ In a case in
Connecticut, in a hearing for the ascertainment of damages
after a default in an action for negligence in setting a fire by
which property of the plaintiff was injured to the amount of
$400, the defendants wore allowed to introduce evidence, for
the purpose of reducing the damages to a nominal sum, that
they were guilty of no negligence whatever. The plaintiff
objected to the reception of the evidence on the ground that
the defendants by their neglect to traverse the declaration and
by suffering a default conclusively admitted that they were
guilty of negligence sufficient for the plaintiff to maintain hi^
action, and that, in a case of damage to property incapable of
division, the least sum the court could assess as damages, con-
sistent with the declaration, was the actual damage done. The
court said: "From a time early in the history of the jurispru-
dence of this state the law has been that where, in an action on
the case for the recovery of unliquidated damages, the defend-
[259] ant has suffered a default, that is, has omitted to make
any answer, the assessment of damages has been made by the
court without the intervention of a jury ; also that by his omission
to deny them the defendant is held to have admitted the truth of
all well-pleaded material allegations in the declaration, and the
consequent right of the plaintiff to a judgment for a limited
sum for nominal damages and costs, without the introduction
of evidence. The defendant standing silent, the law imputes
the admission to him; but it does it with this limitation upon
its meaning and effect, it does it for this special purpose and
subject of mitigation, except in a the plaintiff had in truth no claina
single class of actions, this question whatever. It was not necessarily an
cannot be properly determined with- objection to matter offered in miti-
out a recurrence to the principles of gation that if properly pleaded it
the common law. By those princi- would have constituted a complete
pies defendants in actions sounding defense." See Smithies v. Harrison,
in damages were permitted to give 1 Ld. Raym. 727; Abbot v. Chapman,
In evidence in mitigation, not only 2 Lev. 81; NichoU v. Williams, 2 M.
matters having a tendency to reduce & W. 758.
the amount of the plaintiff's claim, ^ Collins v. Smith, 16 Vt. 9.
but in many cases facts showing that
§ 160.] MITIGATION OF DAMAGES. 423
no other; and our courts have repeatedlj' explained that the
admission founded on a default is not an admission of which
the writers upon the law of evidence treat. The silent defend-
ant, having been subjected to a judgment for nominal damages
from which no proof can relieve him, the default has practi-
cally exhausted its effect upon the case; for if the plaintiff is
unwilling to accept this judgment, evidence is received on his
part to raise the damages above and on the part of the defend-
ant to keep them down to that immovable base of departure,
the nominal point, precisely as if the general issue had been
pleaded; and although the evidence introduced by the latter
has so much force that it would have reduced them to nothing-
but for the barrier interposed by the default, it cannot avail
to deprive the plaintiff of his judgment; in keeping that the
law perceives that he has all that the truth entitles him to and
therefore refuses to hear any objection from him. . . .
The plaintiff argues that his case differs from ... all
others which have gone before it, in that his damages are en-
tire and indivisible and arise from a single act of the defend-
ants. But the destruction of a life would seem to be an entire
and indivisible wrong ^ in as complete a sense as the destruc-
tion of the plaintiff's grass, fence and wood; a single blow
killed the man, a single spark fired the grass. The rule can-
not be at all affected by the question as to whether the injury
is inflicted upon person or property. In either case, at the
outset, the damages are uncertain; in both they are made cer-
tain by the same tribunal, governed by the same rules, informed
by evidence of the same character, received in the same order.
An injury to the person may be the breaking of a finger or the
tearing of both arms from the body; an injury to prop- [260]
erty may be the destruction of a tree or of a forest. It is of
course a much more difficult and delicate task to reduce to the
standard of coin the value of a leg or an arm than to deter-
mine the market price for a cord of wood, or for a standing
tree of given dimensions; nevertheless, probably in every week,
some one of the numerous courts of the country find for some
plaintiff, presumably the money value of a lost limb. The
1 Carey v. Day, 36 Conn. 152.
424 LEGAL LIQUIDATIONS AND REDUCTIONS. [§§ 167, 168.
judicial sj^stera has but one balance; in this is weighed every loss,
even that of life." '
In IVfarjland it has been held in trespass for an injury to the
plaintiff's wall by inserting joists into it that evidence was ad-
missible under the general issue of a previous license in miti-
gation, which would have been a bar if specially pleaded;*
also, that a defendant in mitigation for assault and battery
may rely on the res gestm, although if pleaded it would amount
to a justification and require a special plea.' In Virginia, in
trespass for taking a slave from the plaintiff's close, on a plea
of not guilty evidence was received in mitigation that the title
to the slave was in the defendant/
§ 167. Payments. Payments made either before or after
suit brought may be proved in mitigation, but not in bar with-
out plea nor under the general issue.'* And the same rule is
held in California under the code.^ If full payment is made
[261] after suit brought and is accepted for the debt and costs,
the defendant will be entitled to a verdicf It is necessary
that the payment be made to cover the costs which have ac-
crued,* and it should be pleaded to the further maintenance of
the action.^
Section 4.
recoupment and countee-claim.
§ 168. Definition and history of recoupment. The term
recoupment^ derived from the French word recoujjer^ to cut
again, signifies in the law a cutting off and keeping back a
1 Batchelder v. Bartholomew, 44 after a verdict for the plaintiff in
Conn. 494; Saltus v. Kipp, 12 How. trover, the goods were seized in the
Pr. 343. hands of the defendant for rent
2 Hamilton v, Windolf, 36 Md. 301, which the plaintiff was liable to
11 Am. Rep. 491. P^y; t.he defendant having paid the
3 Byers v. Horner, 47 Md. 28. rent, the court allowed him to de-
i Bullard v. Lea veil, 5 Call, 531. duct the amount from the verdict.
See Moore v. McNairy, 1 Dev. 319. But see Buell v. Flower, 39 Conn.
5 Dana v. Sessions, 46 N. H. 509
Shirley v. Jacobs, 2 Bing. N. C. 88
Lediard v. Boucher, 7 C. & P. 1
462, 12 Am. Rep. 414.
•> Wetmore v. San Francisco, 44
Cat 294, 300.
Britton v. Bishop, 11 Vt. 70; Bischof 7 Thame v. Boast. 12 Q. B. 808;
v. Lucas, 6 Ind. 26; Moore v. Mc- Beudit v. Annesley, 27 How. Pr. 184.
Nairy, 1 Dev. 319; NichoU v. Will- 8 Belknap v. Godfrey, 23 Vt. 28a
lams, 2 M, & W. 758. See McKyring ^ Thame v. Boast, supra; Dana v.
V. Bull, 16 N. Y. 297. Sessions, 46 N. R 509; Bank v.
In Plevin v. Henshall, 10 Bing. 24, Brackett, 4 id. 558.
II
§ 1G8.] KKCOUPMKNT AND COUNTER-CLAIM. 425
part of the plaintiff's claim in satisfaction, by set-off, of cross-
demands of the defendant growing out of the same contract
or transaction on which the claim is founded. The same
thing is meant by defalcation and discount. Literally under-
stood, recoupment would include mere mitigation of damages,
and the instances of this defense in the old books are mostly
•of that nature.^ In the endeavor to reduce the controversy
to a single point or issue very little scope was given by the
early common law to defenses which rested on the principle
of allowing cross-claims in favor of the defendant.
At one time it was doubted that in an action on a quantum
meruit for services the defendant was entitled to reduce the
damages by showing that the work had not been well done.^
The allowance of such defenses was the result of a con- [262]
sultation of the judges in England. In an action of that char-
acter Lord Ellenborough said: " This is an action founded on
a claim for meritorious services. The. plaintiff is to receive
what he deserves. It is therefore to be considered how much
he deserves, or if he deserves anything. If the defendant has
derived no benefit from his services he deserves nothin":, and
there must be a verdict against him. There was formerly con-
siderable doubt on this point. Mr. Justice BuUer thought
(and I, in deference to so great an authority, have at times
ruled the same way) that in cases of this kind a cross-action
for the negligence was necessary; but that if the work be
done the plaintiff must recover for it. I have since had a con-
ference with the judges on the subject, and now I consider
this as the correct rule: that if there has been no beneficial
service there shall be no pay; but if some benefit has been
derived, though not to the extent expected, this shall go to
the extent of the plaintiff's demand, leaving the defendant to
1 Dyer, 2; 8 Vin. Abr. 556-7; proof under the general issue of mit-
Croke's Eliz. 631; Taylor v. Beal, igating circumstances connected
Croke's Eliz. 222; Shetelworth v. with or growing out of the transac-
Neville, 1 T. R. 454. tion upon which the plaintiff's claim
The Illinois court must have had is based, showing that it would be
in mind the older meaning of the contrary to equity and good con-
word when it said that " recoup- science to suffer the plaintiff to re-
nieut, in its strict common-law cover the full amount of his claim."
sense, is a mere reduction of the Wadhams v. Swan, 109 111. 46. 62.
-damages claimed by the plaintiff by ^farnsworth v.Garrard.l Camp.38.
42G LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 108..
his action for the negligence.'" He also remarked that where
a specific sum has been agreed to be paid by the defendant
" the phxintiff may have some ground to complain of surprise
if evidence be admitted to show that the work and materials
provided were not worth so much as was contracted to be
paid because he may only come prepared to prove the agree-
ment for the specified sum and the work done, unless notice
be given to him that the payment be disputed on the ground
of the inadequacy of the work done. But where the plaintiff
comes into court upon a quantum raeridt he must come pre-
pared to show that the work done was worth so much, and
therefore there can be no injustice in sufi'ering the defense to
be entered into even \vithout notice." ^ The right to make
such defenses is no longer in question; the plaintiff must show
his performance of a condition precedent as a basis of the re-
covery either of an agreed sum or on a quantum Tneruit, and
there is included in the mere right to make a defense the right
to rebut the evidence of performance, and where the value
is not fixed by agreement the amount reasonably due for such
performance. In such cases, to the extent that the plaintiff's
[263] recovery proceeds on proof of performance or its rea-
sonable value, the defendant, if he dispute either as shown by
the plaintiff, must defend, or lose all right to contest the con-
clusions so arrived at or to redress for the deficiencies of the
performance.^ The direct defense by negativing the facts
which the plaintiff assumes to prove to measure his compensa-
tion, or those which, on the theory of his action, enter into
the price and fix the amount of damages, is not recoupment,*
nor is a defense which consists of a denial of facts which the
plaintiff must prove to maintain his action, as the perform-
ance of a condition precedent.^ The defense which is al-
1 Basten v. Butter, 7 East, 479. Ass'n, 68 N. H. 437, 36 Atl. Rep. 13,
"The doctrine of recoupment is in 73 Am. St. 610.
general applicable whenever in the ^ Basten v. Butter, supra.
trial of the plaintiff's action an in- 3 Xellogg v. Denslow, 14 Conn. 411;
vestigation of the facts on which the Davis v. Tallcot, 12 N. Y. 184
claim of the defendant depends is * Steamboat Wellsville v. Geisse, 8
necessary. The law does not com- Ohio St. 333.
pel parties to bring two actions ^ Thompson v. Richards, 14 Mich,
when, with equal convenience, their 178; Stoddard v. Tread well, 26 Cal.
rights can be settled in one." John- 294
son V. White Mountain Creamery
§ 161).] RECOUPMENT AND COUNTEE-CLAIM. 427
lowed under the name of recoupment is not a keeping back a
part of the \>lamt\ff's2J?'i}nufacie damage on the case he seeks
to establish by evidence of the character explained under the
title " mitigation of damages," but a reduction of the plaint-
iff's recovery by the allowance against him in his action of
damages due the defendant on a substantive cause of action in
his favor, growing out of the same transaction on which the
plaintiff's claim or demand arises.
§ IGl). Same subject. Until near the close of the eight-
eenth century the strict rules of the common law as to the in-
dependency of covenants and the entiret}' of conditions were
rigidly enforced. A defendant sustaining damages from the
breach of any counter or reciprocal obligation in the contract
sued upon was put to his cross-action, unless he had made the
performance of such obligation strictly a condition precedent
to iiis undertaking to the plaintiff.^ These rules were often at-
tended with hardship, as where the plaintiff was insolvent and
unable to respond afterwards or in a separate action. Thus,
in an action for breach of a covenant to recover unliquidated
damages the defendant pleaded set-off of like damages for the
plaintiff's breach of his covenants in the same instrument.
This defense was urged on grounds which now support recoup-
ment. It, however, was rejected without any allusion to the
right of recoupment because the statute of set-offs only applied
to mutual debts, which did not include demands for un- [264]
liquidated damages.^ Until this species of defense had become
firmly established the severe adherence to the old practice was
in no cases more marked than in actions between landlord and
tenant; — the former was allowed to collect his rent, notwith-
standing his covenant to repair remained unperformed, even if
he was himself insolvent.' The doctrine of recoupment has
attained its growth since the revolution; but the courts of this
country and of England have not given it the same expansion ;
nor has it made the same progress in all the states of the
Union.*
In New York the defense was at first admitted in mitiga-
17 Am. L. Review, 392. *See Johnson v. White Mountain
2 Howlet V. Strickland, 1 Cowp. 56. Creamery Ass'n, 68 N. H. 437, 36 AtL
s Taylor's Landlord & T., g 373; 7 Rep. 13, 73 Am. st 610.
Am. L. Review, 393.
428 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 170.
tion of damages where there was fraud in respect to the con-
sideration ; ^ next where there was breach of warranty with-
out fraud.2 At this time it elicited increased discussion and
received more emphatic judicial recognition. Marcy, J., said:
" From an examination of the cases I am satisfied that in those
where the damages arising from a breach of warranty in the
sale of chattels have been allowed to be given in evidence by
the defendant to reduce the amount of recovery below the
stipulated price, the decisions of the court have not proceeded
upon the ground that the express contracts were void by rea-
son of fraud, and a recovery had upon a quantum meruit or
quantum valehat upon implied contract; but upon a principle
somewhat different from those adverted to in this case in the
court below; upon a principle which has of late years been
gaining favor with courts and extending the range of its opera-
tions. Such a defense is admitted to avoid circuity of ac-
tion." Hence he insisted, and the court decided, that dam-
ages arising from breach of warranty should be allowed to
reduce the recovery as well where there was no fraud as where
there was. So true was it that this new principle of avoiding
circuity of action " was gaining favor with the courts and ex-
tending the range of its operations," that the discrepancies at
any given time to be noticed between the decisions of courts
['i65] of different states have indicated a relative progress
rather than a permanent disagreement.'
§ 170. Nature of defense. This defense is founded on the
natural equity that mutual demands growing out of the same
transaction should compensate each other by deducting the
less from the greater and treating the difference as the sum
justly due.* It is also founded on the policy and convenience
of settling an entire controversy in one action where it can be
justly done, thus saving needless delay and litigation. By
proper pleading, in the application of the doctrine of recoup-
1 Becker v. Vrooman, 13 Johns, is now universally in force either
303. by statute or otherwise: though in
2 Spalding v. Vanclercook, 2 Wend, some states, in controversies at law
431; McAllister v. Reab, 4 Wend. 483. where title to real estate is involved,
3 The principle of recoupment, un- the doctrine is not applied.
der various names, has been adopted * Green v. Farmer, 4 Burr. 2214,
in the general jurisprudence of this 2320; Reab v. McAlister, 8 Wend. 109,
country. And it is believed that it 115; Myers v. Estell, 47 Miss. 4, 17-21.
A
§ ITO.] RECOUPMENT AND COUNTER-CLAIM. 429
mcnt, the court may look through the whole contract, treating
it as an entirety, and the things done and stipulated to be
done on each side as the consideration for the thinirs done
and stipulated to be done on the other. "When either party
seeks redress for the breach of stipulations in his favor
the grievances on each side are summed up, instead of
those only on the plaintid's side; a balance is struck, and
the plaintiff can recover only when that balance is in
his favor.' Some confusion has arisen from treatinir this
defense as one of failure of consideration.' In an Ala-
bama case^ the plaintiff sued on a note which had been given
for a clock sold by him to the defendant with warranty that
it would keep good time. The clock was shown to be worth-
less as a time-piece; but the case alone was worth more than a
nominal sum, and it was held that the plaintiff might claim
an abatement on the note to the amount of damage that he
had sustained. Having kept the clock, however, judgment
must go against him for what it was actually worth. [200]
By this decision the breach of warranty avoided the special
contract and recovery proceeded on a quantum meruit.^ This
1 Lixf burrow v. Henderson, 30 Ga. the consideration for the defendant's
482; Myers v. Estell, 47 Miss. 4. promise." Keegan v. Kinnare, 123
2 The courts of Illinois indorse the 111. 280. 14 N. E. Rep. 14; Lyon v.
view of Mr. Freeman as expressed in Bryant, 54 111. App. 331. See Wat-
his note to Van Epps v. Harrison, 40 kins v. Hopkins, 13Gratt. 743. Corn-
Am. Dec. 323: "In its modern appli- pare Perley v. Balch, 23 Pick. 283, 34
cation the foundation of recoupment Am. Dec. 56; Comparet v. Johnson,
is failure of consideration. The de- 6 Blackf. 59; Herbert v. Ford, 29 Me.
fendant in effect admits his failure 546; Drew v. Towle, 27 N. H. 412, 59
to perform the contract upon which Am, Dec. 380; V^heat v. Dotson, 12
he issued, and seeks to extenuate Ark. 699; Van Buren v. Dig<^es, 11
his default by showing that the How. 461; Van Epps v. Harrison, 5
plaintiff iias failed in some particu- Hill, 63; Withers v. Greene. 9 How.
lar to do that which was the consid- 213; Wynn v. Hiday, 2 Blackf. 123:
eration of the defendant's promise, Elminger v. Drew, 4 McLean, 388;
and to tliat extent, therefore, the Washburn v. Picot, 3 Dev. 390; Pul-
plaintiff has no right to hold the de- sifer v. Hotchkiss, 12 Conn. 234;
fendant liable; hence it is essential Avery v. Brown, 31 Conn. 398; Peden
that the wrong of which the defend- v. Moore, 1 Stew. & Port. 71.
ant complains should in some way 3 Davis v. Dickey, 23 Ala. 848;
impair the consideration of his con- Grisham v. Bodman, 111 Ala. 104, 20
tract — in other words, it must ap- So. Rep. 514.
pear that the express or implied ^ Harman v. Sanderson, 6 Sm. & M.
promise broken by the plaintiff was 41, 45 Am. Dec. 272,
430 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 170.
is in accordance with the English rule; the damages are re-
duced b}' showing how much less the article is worth by rea-
son of the breach of warranty; in other words, the plaintiff
having failed to perform the agreement which was the con-
sideration of the defendant's promise, the judicial inquiry is
what is the property or service which the defendant has re-
ceived worth. Thus, A. sold 13., for 95^., two pictures, repre-
senting them to be "a couple of ponsins; " they were in fact
not originals, but very excellent copies. B. did not offer to
return them, and it was held that if the jury thought that he
believed from the representation of A. that they were origi-
nals, he was not bound to pay the price agreed; but that, as he
kept them, he was liable to pay such sum as the jury might
consider to be their value.^ In an English case ^ Parke, B.,
said : " Formerly it was the practice where an action was
brought for an agreed price of a specific chattel sold with a
warranty, or of work which was to be performed according to
contract, to allow the plaintiff to recover the stipulated sura,
leaving the defendant to a cross-action for breach of the war-
ranty or contract; in which action, as well the difference be-
tween the price contracted for and the real value of the arti-
cle or of the work done, as any consequential damage, might
have been recovered; and this course was simple and consist-
ent. In the one case, the performance of the warranty not
being a condition precedent to the payment of the price, the
defendant who received the chattel warranted has thereby the
property vested in him indefeasibly, and is incapable of re-
turning it back; he has all he stipulated for as the condition
of pajnng the price, and therefore it was held that he ought to
pay it and seek his remedy on the plaintifif's contract of war-
ranty. In the other case the law appears to have construed
the contract as not importing that the performance of every
portion of the work should be a condition precedent to the
[267] payment of the stipulated price, otherwise, the least de-
viation would have deprived the plaintiff of the whole price;
and therefore the defendant is obliged to pay it, and recover
for any breach of contract on the other side. But after the
iLomi V. Tucker, 4 C. & P. 15; De 259; Street v. Blay, 3 B. & Ad. 456;
Sewhanbery v. Buchanan, 5 C. & P. Mondel v. Steel, 8 M. & W. 858.
343; Poulton v. Lattimore, 9 B. & C. ^ Mondel v. Steel, supra.
§ 170.] KECOUPMEXT AND COUNTER-CLAIM. 431
■case of Basten v. Butter,' a different practice, which had been
partially adopted before in the case of King v. Boston,- began
to prevail, and being attended with much practical conven-
ience has been since generally followed; and the defendant is
now permitted to show that the chattel, by reason of the non-
compliance with the warranty in the one case, and the work
in consequence of the non-performance of the contract in the
•other, were diminished in value.' The same practice has not,
however, extended to all cases of work and labor, as for in-
stance that of an attorney,^ unless no benefit whatever has
been derived from it; nor in an action for freight.* It is not
so easy to reconcile these deviations from the ancient practice
with principle in those particular cases above mentioned as it
is in those where an executory contract, such as this, is made
for a chattel to be manufactured in a particular manner or
goods to be delivered according to a sample;® where the party
may refuse to receive or may return in a reasonable time if the
article is not such as bargained for; for in these cases the ac-
ceptance or non-return affords evidence of a new contract
on a quantum valebat; whereas, in a case of delivery with a
warranty of a specific chattel there is no power of returning
and consequently no ground to imply a new contract; and in
some cases of work performed there is difficulty in finding a
reason for such presumption. It must, however, be consid-
ered that in all these cases of goods sold and delivered with a
warranty, and work and labor, as well as the case of goods
agreed to be supplied according to a contract, the rule which
has been found so convenient is established; and that it is com-
petent for the defendant in all of these not to set off, by a
proceeding in the nature of a cross-action, the amount of dam-
ages which he has sustained by breach of the contract, but
simply to defend himself by showing how much less the sub-
ject-matter of the action was worth by reason of the breach
of contract; and to the extent that he obtains or is ca- [268]
pable of obtaining an abatement of price on that account he
must be considered as having received satisfaction for the
1 7 East, 479. * Templer v. McLachlan, 2 N. IL 136.
27 East. 481, nota sSheels v. Davies. 4 Camp. 119.
3 Kist V. Atkinson, 3 Camp. 63; 6 Germaine v. Burton, 3 Stark. 32.
Tliornton v. Place, 2 M. & Rob. 218.
432
LEGAL LIQTJIDATIONS AND REDUCTIONS.
[§ 170.
contract and is precluded from recovering in another action
to that extent, but no more." The defendant was not entitled
to show damages resulting from such breach nor the breach
of any other stipulation.^
1 Francis v. Baker, 10 Ad. & E. 642;
Bartlett v. Holmes, 13 C. B. 630; Da-
vis V. Hedges, I^ R. 6 Q. B. 687.
In McAllister v. Eeab, i Wend. 490,
the theory of recoupment is thus dis-
cussed by Marcy, J.: "Upon what
principle are the damages for the
breach of warranty allowed in a case
where there is fraud to be given in
evidence to reduce the recovery be-
low the stipulated price? Not on the
ground of (statutory) set off, because
these damages are unliquidated. Is
it upon the ground that the contract
is destroyed by the fraud ? If it is
rendered void, upon what principle
can the vendor recover at all? I
know it has been said he recovers
upon a quantum ineruit or qiiantutn
valebat; but if there was no contract
by reason of his fraud, there was no
sale: no passing of title. Can an im-
plied sale be set up in lieu of the ex-
press one ? This, I think, may well
be doubted, although the express
contract may be void. Tlie case of
Beecker v. Vrooman (13 Johns. 302)
seems to have been put on the ground
that the sale is valid. The language
of the court does not countenance
the idea that the question in that
case was the mere value of the horse.
It is there intimated that a different
rule now prevails from what for-
merly governed, which ^commends
itself to the court, because it is cal-
culated to do final and complete jus-
tice between the parties, most expe-
ditiously and least expensively: but
if the parties were proceeding with-
out regard to the express contract
upon an implied one, and were only
establishing the true value of the
horse, there was no new rule, and
the language of the court was not
very appropriate to the question be-
fore them. In the case of Leggett
V. Cooper (2 Starkie N. P. 103), where
the counsel for the defendant re-
sisted the recovery on the contract
for the sale of hops on account of
fraud, Lord Ellenborough said, 'if
there is no contract for the sale of
the goods at the stipulated price,
there is no contract upon the quan-
tum meruit for goods sold and de-
livered.' The action in the case of
Frisbee v. Hoffnagle (11 Johns. 50)
was on a note for the consideration
of a deed with warranty for land. The
defense was that the vendor had no
title, and it was allowed to prevail,
not upon the ground that the con-
tract of sale was invalid by reason
of fraud, but for the purpose of
avoiding circuity of action. The
decision in the case of Spalding v.
Vandercook (2 Wend. 431) does not,
I apprehend, proceed on the ground
of fraud alone. The consideration
of the note was the fulfillment of the
contract to deliver barrels. If the
whole contract was cut up by the
fraudulent conduct of the plaintiff,
the note was entirely without con-
sideration; but it was not so con-
sidered. So in the case of Burton v.
Stewart (3 Wend. 236, 20 Am. Dec.
692), there was fraud in the sale of
the horse, yet the note given on the
sale was not adjudged to be without
consideration. The contract was
broken, but it had a valid existence;
and the court entertained no doubt
in that case that if there had been a
proper notice the amount of recov-
ery would have been greatly abated
by the proof of what was offered; it
was, however, rejected for the want
of such notice." He concludes that
d
?§ 171, 172.] RECOUPMENT AND COUNTER-CLAIM. 433
§ 171. Same subject. It is true that the plaintiff's [2G0]
breach of stipulations in favor of the defendant impairs the
consideration of his agreement in favor of the plaintiff; but the
defense of recoupment is not based on the principle of treating
the defendant as relieved from his obligation to perform [270]
his undertaking because the consideration is impaired. On the
contrary, it is based on the opposite principle, namely, the en-
forcement of the contract on both sides, and that the damages
which the plaintiff has sustained from the breach of the en-
gagements in his favor shall, in whole or in part, be [271]
compensation, by allowance in favor of the defendant, and
application thereto of such damages as he has suffered from
the infraction of the correlative duties and stipulations of the
plaintiff which were the consideration. The law will [272]
cut off so much of the plaintiff's claim as the cross-damages
may come to.^ Wherever recoupment, strictly such, is allowed,
distinct causes of action are set off against each other.^ It is
not a bar to the plaintiff's action like the technical plea in
avoidance of circuity of action, but in pursuance of the same
policy of the law it seeks to satisfy and discharge the whole or
a part of the plaintiff's claim with damages for which he is
liable in respect of the same transaction.^
§ 172. Constituent features of recoupment. For the pur-
pose of discussing the principal constituent features of recoup-
ment the following propositions are sufficiently comprehensive:
1. The claim or demand for which the defendant seeks to re-
coup must be a valid cause of action upon which a separate
suit might be maintained against the party beneficially inter-
ested in the plaintiff's action, or his assignor. 2. It must arise
from the same subject-matter or spring out of the same contract
or transaction on which the plaintiff relies to maintain his
action. 3. It is immaterial whether it be in itself or is set up
the recovery of the plaintiff is based 483; Reab v. McAlister, 8 Wend. 109;
on the express contract, and the Batterman v. Pierce, 3 Hill, 171.
amount of it reduced by the allow- 2 Minnaugh v. Partlin, 67 Mich,
ance of damages on the defendant's 391, 34 N. W. Rep. 717; Grant v.
cross-claim to save a multiplicity of Button, 14 Johns. 377; Gilleypie v.
actions, and as a substitute for a Torrance, 25 N. Y. 306, 309, 82 Am.
cross-action by the defendant. Dec. 355; Price's Ex'rs v. Reynolds,
1 Ives V. Van Epps, 22 Wend. 155, 39 N. J. L. 171.
15t>; McAllister v. Reab, 4 Wend. » McCullough v. Cox, 6 Barb. 387.
Vol. 1 — 28
434 LEGAL LIQUIDATIONS AND KEDUCTIONS. [§§ 173, 174.
as a defense against a claim for liquidated or unliquidated
damages. Nor is it necessary that the claims on both sides be
of the same nature. 4. Generally it is available onh^ as defense,
for, except by statute, it can have no further effect than to
answer the plaintiff's damages in whole or in part; the defend-
ant cannot recover any balance or excess.' 5. A defendant has
an election to use such a cross-demand as a defense or bring a
separate action upon it; but he will not have the election to set
up his claim by way of recoupment unless it would be just and
practicable to adjust it in the plaintiff's action. 6. When made
the subject of recoupment the defendant assumes the burden of
proof in respect to it, and the same rule or measure of damages
applies, subject 'to the limitation just stated, as would be
applicable if the defendant had brought a separate action.
7. When submitted as a subject of recoupment the judgment
will be a bar to any other suit or recoupment upon it.
[273] § 173. Remedy by counter-claim. The counter-claim
of the code includes recoupment and is more comprehensive;
and the remedy by both has been made more useful and com-
plete by statutory provision against voluntary discontinuance
of the action by the plaintiff without the defendant's consent
after this defense has been interposed, and for judgment on
the adverse claim, if any amount is established after satisfying
the plaintiff's claim, or where no claim in favor of the plaintiff
is adjudged.
§ 174. Talidity of claim essential. The claim or demand
to be recouped must be a valid cause of action for which a
separate suit could be maintained.^ Hence it is essential that
1 An exceptional view is held in Fuller, 80 N. Y. 312; Lennon v.
New Hampshire, the defendant being Smith, 124 N. Y. 578,27 N. E. Rep.
permitted to recover an affirmative 243; Peck v. McCormick Harvesting
judgment against the plaintiff if he Machine Co., 94 111. App. 586. 196 liL
sliowsthat he is entitled to it. John- 295, 63 N. E. Rep. 731; Osgood v.
son V. White Mountain Creamery Bauder, 82 Iowa, 171, 47 N. W. Rep.
Ass'n, 68N. H. 437, 36 AtL Rep. 13, 1001: Howell v. Dimock, 15 App.
73 Am. St. 610. This is perfectly Div. 102, 44 N. Y. Supp. 271; Cincin-
logical on the theory of avoiding nati Daily Tribune Co. v. Brack, 61
circuity of action. Ohio St. 489, 76 Am. St. 433, 56 N. K
2Reilly v. Lee, 85 Hun, 315, 32 Rep. 198; Harper v. Moffat Cycle Co..
N. Y. Supp. 967, affirmed without 151 111. 84, 100, 37 N. E. Rep. 656;
opinion, 155 N. Y. 691; Walker v. George H. Hess Co. v. Dawson, 149 III.
Millard, 29 N. Y. 375; Woodward v. 138, 36 N. E. Rep. 557; Davidson v.
d
§ 174.] EECOCPMENT AND COUNTER-CLAni, 4:35
the subject of it be such as the court in whicli it is pleaded
has jurisdictioQ of;^ that the damages set up were not incurred
through the defendant's fault or negligence;- that the contract
sued upon and out of which the claim arises is valid;' that the
plaintiff is a party subject to suit;^ that the allowance of the
counter-claim will not deprive the plaintiff of the exemptions
given him by statute.^
Keduction of damages may often be claimed upon facts
which do not constitute a cause of action in favor of the de-
fendant. Of this class and nature are those provable in mit-
igation of damages. The distinction is important; for it is
necessary to use the latter in defense; the benefit of such
facts will be lost if they are not then introduced. But if the
defense consists of a substantive cause of action it will not be
lost or barred by the defendant failing to put it forward when
there is an opportunity to make it available. The fact that
the defendant has the option to avail himself of matter of re-
coupment or bring a cross-suit upon it necessarily implies
that such matter constitutes a cause of action.^ In an action
to recover for labor, if the benefit of the labor is lost by
causes for which the plaintiff would be answerable in a cross-
action, the same matter which would support a cross-action
may be given in evidence in defense of the suit to recover
Rountree, 69 Wis. 655, 34 N. W. A defendant cannot plead a
Rep. 906; Sj'lte v. Nelson, 26 Minn, counter-claim against the state
105, 1 N. W. Rep. 811; Rhymney R. without its consent. State v. Brad-
Co. V. Rhymney Iron Co., 25 Q. B. ley, 87 La. Ann. 623; People v. Den-
Div. 146; Barnes v. McMullins, 78 nison, 84 N. Y. 272; Battle v. Tliomp-
Mo. 260; Widrig v. Taggart, 51 Mich, son, 65 N. C. 406.
103, 16 N. W. Rep. 251, and cases A set-off cannot be maintained or
cited to this section. a debt contracted by the plaintiff
1 Cragin v. Lovell, 88 N. Y. 258. during infancy and not ratified by
2 Provenzano v. Tlaayer Manuf. him after becoming of full age.
Co., 9 Daly, 90. Rawley v. Ravvley. 1 Q. B. Div. 460;
3 Ryan v. Dumphy, 4 Mont. 342, Widrig v. Taggart, 51 Midi. 103, 16
354. N. W. Rep. 251.
* A tax is not a debt or obligation * Bauer v. Teasdale, 25 Mo. App. 25;
to pay money founded upon con- Curlee v. Thomas, 74 N. C. 51; Wil-
tractand cannot be counter-claimed son v. McElroy. 32 Pa. 82.
against. Gatling v. Commissioners, ^ Brown v. Gallaudet, 80 N. Y. 413;
92 N. C. 536, 53 Am. Rep. 432; Cobb Gillespie v. Torrance, 25 id. 309. See
V. Elizabeth City, 75 N. C. 1; Finne- Houston v. Young, 7 Ind. 200; Clark
gan V. Fernandina, 15 Fla. 379. v. Wiidridge, 5 id. 176.
436 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 175.
payment.^ " That doctrine (of recoupment) does not rest on
the nature of the right which the plaintiff has in the contract
which he seeks to enforce, nor on the fact that his interest in
it is the same at the time of suit brought as when it was origi-
nally entered into. The essential elements on which its appli-
cation depends are two only. The first is that the damages
wiiich the defendant seeks to set off shall have arisen from the
same subject-matter or sprung out of the same contract or
transaction as that on which the plaintiff relies to maintain
[274] his action. The other is that the claim for damages
shall be against the plaintiff, so that their allowance by way
of set-off, or defense to the contract declared on, shall operate
to avoid circuity of action, and as a substitute for a distinct
action against the plaintiff to recover the same damages as
those relied on to defeat the action." ^
§ 175, Parties. The cause of action set up for recoupment
must be one against the party beneficially interested in the
plaintiff's action; a claim against the nominal plaintiff person-
ally, when he sues in a fiduciary capacity or for the benefit of
another, is not available. Thus, where property attached by
an officer upon 'mesne process was replevied from him, and
on the failure of the plaintiff in that suit to comply with the
judgment for return of the property suit was brought on the
bond by the officer, the other party could not recoup the dam-
ages adjudged in his favor against such officer for false return
on the process upon which he originally attached the property
because the damages recovered by the officer on the bond
would be held in trust for the benefit of the attaching creditor
and his debtor, and the damages sought to be recouped were
assessed against him personallj'' for a wrong committed by
him.^ So in action by executors, as such, for the recovery of
purchase-money of land sold by them, the purchaser, making
no offer or attempt to rescind the contract, cannot avail him-
self of false and fraudulent representations made by them at
the time of the sale in respect to the subject-matter either as a
defense or by way of recoupment or counter-claim. His rem-
edy, if he has any, is against the executors personally.*
» Austin V. Foster, 9 Pick. 341. * Westfall v. Dungan, 14 Ohio St
^ Sau-yer v. Wiswell, 9 Allen, 39, 276; Cumberland Island Co. v. Bunk-
sWriglit V. Quirk, 105 Mass, 44, ley, 108 Ga. 756, 83 S, E. Rep. 183.
See Beokraan V. Maulove, 18 Cal, 388. A plaintiff who sues an assignee
§ 175.] KECOUPMENT AND COUNTER-CLAIM. 437
It is not essential to the exercise of the right of recoupment
that the suit in which the right is asserted should be brought
in the name of the part}'- who is lial)le for the cross-claim,
nor need it be against the party who is entitled to the benefit
of such claim. It is enough that the suit is substantially be-
tween them; that the claim sued on is subject to this defense,
or that the proceeding be of such a nature that the mutual
claims can be adjusted in it; that whatever is recovered is en-
forcible against the property of the party seeking to re- [275]
coup, and whatever is deducted upon the cross-claim properly
inures to his benefit.^ By the water-craft law of some states
demands of certain descriptions are liens upon and enforcible
against the water-craft, which may be discharged by bond or
some form of undertaking in behalf of the owners conditioned
for the payment of amounts found to be liens. In actions
upon such security, or against the water-craft not bonded, any
matter of recoupment in respect to the demand alleged to be
a lien may be set up.- The surety of a principal entitled to re-
coupment may, as a general rule, avail himself of that defense
because of the natural equity that mutual debts and liabilities
growing out of the same transaction shall compensate each
for the benefit of creditors to recover recoupment was allowed. Baltimore
the price of goods is not subject to a United Oil Co. v. Barber, 2 Mackey
counter-claim for damages resulting (D. C), 4
from the malicious prosecution by If, contemporaneously with the ex-
him of a former suit for the same ecution of notes for the purchase-
cause of action unless it is shown money of land, the parties agree in
tliat his cestuis que trust participated writing that the vendor sliall furnish
in or approved his wrongful act. the vendee a complete chain of title
Gelshenen v. Harris, 26 Fed. Rep. 680. to the land purcliased, for the per-
If the beneficial interest in a claim formance of which it is stipulated
or demand remains in the assignor that the notes shall be bound, the
the assignee cannot set it off against damages resulting from the non-per-
the debtor. Olmstead v. Scutt, 55 formance of such agreement may
Conn. 125, 10 Atl. Rep. 519. be recouped against the notes al-
Un an action by A. against B. and though the latter were, at the ven-
C. they sought to recoup his de- dor's request, made payable to a
mand. It appeared that D., who third party, no consideration moving
was not a party to the record, was from him. Hooper v. Armstrong, 69
a partner of the defendants in the Ala. 'M3. See last note,
original contract, was interested in 2 steamboat Wellsville v. Geisse, 3
the reduction of A.'s claim and Ohio St. 333: Ward v. Wilison, 3
suffered in common with them the Mich. 1.
damages sought to be recouped. A
438 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 175.
other.^ In Xevv York, however, this application of recoup-
ment is refused ; ^ and so under a Tennessee statute unless the
principal gives consent.' The prevailing view is that a coun-
ter-claim or cross-claim must be against all the plaintiffs and
them only and in favor of all the defendants and no others.*
In an action upon a contract a balance due the defendant upon
an unsettled partnership account between the parties, the firm
having been dissolved prior to the commencement of the ac-
tion, is a proper counter-claim.^ If some of the defendants set
up that the contract sued upon was made with them they may
plead a counter-claim though the other defendants have no in-
terest in it.^ Where the plaintiff's conduct indicates that he
considered the defendants as the parties with whom he was
dealing and he has sued them both he cannot controvert their
right to establish a counter-claim.'' In an action brought by an
executor or administrator upon a contract made by him after
the death of his testator or intestate or to recover assets be-
longing to the estate in the hands of a third person a claim
due from the deceased to the defendant cannot be counter-
claimed. "The reason of the rule is that in all such cases
the allowance of such set-off or counter-claim would neces-
sarily destroy the equal and just distribution of the assets be-
1 Reeves v. Chambers, 67 Iowa, 81, Crow, 13 Colo. 397, 22 Pac. Rep. 779;
24 N. W. Rep. 602; McHardy v. Roberts v. Donovan, 70 CaL 108, 9
Wadsworth, 8 Mich. 349; Waterman Pac. Rep. 180, 11 id. 599; City Coun-
V. Clark, 76 111. 428. See Hobbs v. oil of Montgomery v. Montgomery
Duff, 23 Cal. 596. Water-works, 79 Ala. 233; Copeland
2 Lasher v. Williamson, 55 N. Y. v. Young, 21 S. C. 275; Casey v. Han -
619; Gillespie v. Torrance, 25 id. 306. rick, 69 Tex. 44, 6 S. W. Rep. 405;
3 Phoenix Iron Works Co. v. Rhea, King v. Wise, 43 Cal. 628.
98 Tenn. 461, 40 S. W. Rep. 482. An individual demand cannot be
* Brown v. Morris. 83 N. C. 221; used as a counter-claim to a joint in-
Sloteman v. Thomas & W. Manuf. debtedness unless the insolvency of
Co., 69 Wis. 499, 34 N. W. Rep. 225; the plaintiff is shown. Collier v. Er
Chase v. Evoy, 58 Cal. 348; Jenkins win, 3 Mont. 142; Kemp v. McCor
V. Barrows, 73 Iowa, 438, 35 N. W. mick. 1 id. 420.
Rep. 510; Hopkins v. Lane, 81 N. Y. 5 Waddell v. Darling. 51 N. Y. 327
501; McCulloch V. Vibbard, 51 Hun, See Pen dergast v. Greenfield, 40 Hu a
227, 4 N. Y. Supp. 202; Tomlinson v. 494.
Nelson, 49 Wis. 679, 6 N. W. Rep. « Clegg v. Cramer. 32 Hun, 162.
366; Kirby V. Spiller, 83 Ala- 481, 3 So. 'Drew v. Edmunds, 60 Vt. 401, 6
Rep. 700: Wood v. Brush, 72 Cal. Am. St, 122, 15 AtL Rep. 100.
224, 13 Pac. Rep. 627; Thalheimer v.
§ 170.] EECOUPMENT AND COUNTEK-OLAIM. 439
longing to the estate among the creditors in every case where
the assets were insufficient to pay all the debts of the de-
ceased." ^ x\n administrator who is sued upon a personal claim
cannot counter-claim a debt which is due from the plaintiff to
him in his representative capacity.- Under a statute which
provides that in an action brought by an executor or adminis-
trator in his representative capacity a demand against the de-
cedent belonging at the time of his death to the defendant may
be set up as a counter-claim, the wrongful acts of an executor
cannot give the defendant a right to counter-claim against a
demand owing to the testator in his life-time.'
§ 176. Same subject. The question arose in Newfoundland
V. Newfoundland R. Co.* whether a rio-ht of set-off existing:
in favor of the government was available against such of the
plaintiffs as were assignees of the original corporation. The
facts were that the plaintiff was incorporated for the pur-
pose of constructing and working a railway in pursuance of a
contract with the government, for which the latter was to
pay a subsidy and grant lands. The assignees took what-
ever right the company had to the subsidy and the grants of
land in respect to a particular portion of the road. The con-
tention of the plaintiff was that the government was bound
to pay a certain amount of subsidy and to make grants of
land for a completed portion of the road, though it was not
finished as a whole. This was disputed, but if such liability
existed it was asserted that the government could set up
counter-claims against the company for its breach of contract
in not completing the road. It was held by the privy council
that the counter-claim was good as against the assignees of
the company, it and the claim having their origin in the same
1 Per Taylor, J., in McLaughlin v. 543: Wrout v. Dawes, 25 id. 369;
Winner. 03 Wis. 120, 124, 53 Am. Rep. Root v. Taylor. 20 Johns. 137; Steel
273, 23 N. W. Rep. 402, citing Al- v. Steel, 12 Pa. 64; Shipman v.
drich V. Campbell, 4 Gray, 284; Smith Thompson, Willes, 103. Thompson v.
V. Boyer, 2 Watts, 173; Aiken v. Whitmarsh, 100 N. Y. 36, 2N. E. Rep.
Bridgman, 37 Vt. 249; Woodward v. 173, is to the same effect.
McGaugh, 8Mo. 161; Newhall v. Tur- ^ Qouriey v. Walker, 69 Iowa, 80,
ney. 14 111. 338; Patterson v. Patter- 28 N. W. Rep. 444.
son, 59 N. Y. 574, 17 Am. Rep. 384; sWakeman v. Everett, 41 Hun,
Lawrence v. Vilas, 20 Wis. 381, 389- 278.
391; Lombarde v. Older, 17 Beav. < 12 App. Cas. 199.
440 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 177.
portion of the contract and the obligations which gave rise to
them being closely intertwined. "The claim of the govern-
ment does not arise from any fresh transaction freely entered
into by it after notice of assignment by the company. It was
utterl}'' powerless to prevent the company from inflicting in-
jury on it by breaking the contract. It would be a lamentable
thing if it were found to be the law that a party to a contract
may assign a portion of it, perhaps a beneficial portion, so that
the assignee shall take the benefit, wholly discharged of an}''
counter-claim by the other party in respect of the rest of the
contract, which may be burdensome. There is no universal
rule that claims arising out of the same contract may be set
against one another in all circumstances. But their lordships
have no hesitation in saying that in this contract the claims for
subsidy and for non-construction ought to be set against one
another." ^ "Where the plaintiff sues an assignee and is not
entitled to protection as a hona fide holder of negotiable paper,
his action is subject to any defense by way of recoupment
which would be good against the party to whom the plaintiff's
demand accrued.^ AVhere a note for the price of property sold
was made payable to the vendor's wife, and no portion of the
consideration moved from her, the note was subject to the
same defense by way of recoupment for the vendor's fraud in
the sale as if it had been made payable to himself.^
§ 177. Maturity of claim or demaiid ; statute of limita-
tions. Must the matter of recoupment be a mature cause of
action at the time of the commencement of the plaintiff's
action, or Avill it be sufficient that it is such at the time of
pleading? Campbell, J.,'' said : "The purpose of recoupment
[276] would be defeated if the party cannot be allowed to
plead what he might, at the time of pleading, have declared
upon. The object of this practice is to diminish litigation by
consolidating controversies into one action. The whole doctrine
ilf the party who agrees to per- 2 Wood v. Brush, 72 Cal. 224, 13
form makes an assignment of tlie Pac. Rep. 627; McKnightv. Devlin,
entire contract before anj' money is 52 N. Y. 399, 11 Am. Rep. 715; Hins-
due under it the other party may re- dell v. Weed, 5 Denio, 172; Rockwell
coup his damages for a breach there- v. Daniels, 4 Wis. 432.
of by the assignors. Smith v. Wall, ^ Kelly v. Pember, 35 Vt. 183.
12 Colo. 363, 21 Pac. Rep. 42. * In Piatt v. Brand, 26 Mich. lib.
^ 177.] EECOUPMENT AND COUNTER-CLAIM:. 44:1
is one of the equitable outgrowths of the improvement of legal
practice, and no obstacle should be thrown in the wa}-- of its
encouragement. Our legislation has indicated this design by
enlarging the defense and permitting defendants to recover
damages be^^ond the plaintiff's claim. We do not feel disposed
to accept any technical doctrines which would prevent its full
efficacy unless compelled by a weight of authority which we
do not find here." But it was said by Jarvis, C. J.,* "It seems
to me we should carry the doctrine respecting the avoidino- of
circuity of action very much further than any case has yet
carried it if we were to hold that the damages may be reduced
by showing a breach of the contract on the plaintiff's part
subsequently to the commencement of the plaintiff's action.
There are many cases where circumstances existing before
action brought have been allowed to be given in evidence to
mitigate or reduce the damages; but none that I am aware of
where matters arising after action brought have been so re-
ceived." Under the English judicature act of 1873 ^ relief
can be given on a counter-claim in respect of a cause of action
accrued to the defendant subsequently to the issue of the writ
in the original suit.^ It had previously been ruled otherwise.*
The later case is rested on the generality of the language of
the statute, the orders made pursuant thereto and the nature
of a counter-claim which had been before spoken of as being
an wholly independent suit from the claim.^ It is now settled
in England that a counter-claim must be treated as if it were
a proceeding in an action, though it is not the latter because it
is not commenced by a writ or summons, and that the plaintiff
cannot after a counter-claim has been delivered discontinue his
1 In Bartlett v. Holmes, 13 C. B. ing, and as the said courts I'espect-
G30. ively, or any judge thereof, might
2 Sec. 24, subsec. 3: "The said have granted in any suit instituted
courts respectively, and every judge for that purpose by the same de-
thereof, shall also have the power to fendant against the same plaintiff or
grant to anj' defendant in respect of petitioner."
any equitable estate or right, or * Beddall v. Maitland, 17 Ch. Div.
otiier matter of equity, and also in 174.
respect of any legal estate, right or * Original Hartlepool Collieries Co.
title claimed or asserted by him, all v. Gibb, 5 Ch. Div. 713.
such relief against any plaintiff or ■'' Winterfield v. Bradnum, 3 Q. B.
petitioner as such defendant shall Div. 324; Stooke v. Taylor, 5 id. j09.
■have properly claimed by his plead-
442 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 177-
action so as to prevent the defendant from enforcing his cause
of action.^ The weight of authority in America is that a de-
mand which is not due at the time the action was brought
cannot be counter-claimed or set off.- The codes of some states
express that the right to counter-claim must exist at the com-
mencement of the action.' This means that it must then exist
in the hands of those who plead it.^ In New York in an action
for rent the tenant cannot recoup his damages for a breach of
covenant on the part of the plaintiff after the commencement
of the suit.* But in a later case the court of appeals affirmed
a judgment on a counter-claim for conversion of property after
the commencement of the action." The court say: "Strictly
speaking, the act of the plaintiff in procuring and serving the
injunction would, ordinarily, be an act at or after the com-
mencement of the action, and therefore one the damages for
which could not be set up as a counter-claim in a pleading
which is presumed to state the claims of the parties as existing
at the time of bringing the suit; but as the act of the plaintiff'
related to the very property which was the subject of the
action and materially affected the defendant's rights and de-
fense therein, I do not see why it could not have been set up in
a subsequent or supplemental answer and have thus been ren-
dered effectual to the defendant."
The connection betw^een a plaintiff's cause of action and a
defendant's cross-claim is so close that until the former is
barred by the statute of limitations the latter is available.^
" Not only does the bringing of an action stop the operation
of the statute as to a proper matter of set-off, but it also seems
that it revives a claim which is actually barred out, which is
the proper subject of recoupment in the action, as damage
1 McGowan v. Middleton, 11 Q. B. s Davis v. Frederick, 6 Mont. 300,
Div. 464. overruling Vavasseur v. 12 Pac. Rep. 664
Krupp, 15 Ch. Div. 474. * Mayo v. Davidge, 44 Hun, 342.
2 Ellis V. Cothran, 117 III 458, 3 N. 5 Harger v. Edmonds, 4 Barb. 256.
E, Rep, 411; Orton v. Noonan, 29 ^ Ashley v. Marshall, 29 N. Y. 494.
Wis. 541; Simpson v, Jennings, 15 ^ Beecher v. Baldwin, 55 Conn^
Neb. 671, 19 N. W. Rep. 473; Tessier 419, 12 Atl. Rep. 401, 3 Am. St. 57;
V. Bnglehart, 18 Neb. 167, 24 N. W. Brumble v. Brown, 71 N. C. 513;
Rep. 734; Hogan v. Kirkland, 64 N. Stillwell v. Bertrand, 22 Ark. 375;.
C. 250; Lee v. Eure, 93 id. 5, 9. Eve v. Louis, 91 Ind. 457; Walker v..
Clements, 15 Q. B. 1046.
§ 178.] RECOUPMENT AND COUNTEE-CLAIII, 443.
growing out of the same transaction. Thus, in an action to
recover the price of goods sold, unsoundness may be set up b}'
way of defense although an action to recover damages is
barred."' In an action on a note a total failure of consider-
ation and a parol warranty of the property for which the ob-
ligation was given were pleaded in defense, and the latter was
sustained, although the period for bringing an action upon the
parol agreement had passed.- If a contract is not satisfacto-
rily performed, the right to recover under it is qualified. To
the extent that the contractee has been injured by the method
of the contractor's performance or by his neglect to perform
he may defeat the latters demand. If the statute of limita"
tions does not bar the contractor the other part}'' may plead a
counter-claim. The statute is tolled by the coraraenceraent of
an action, and though the counter-claim is not pleaded until
more than the statutory period fixed for bringing an action
on the contract has gone by, it is in time if it is pleaded within
the period fixed for answering the complaint.^ In Pennsylva-
nia the running of the statute is not stopped until the defend-
ant pleads his set-olf or gives the plaintiff notice of it.*
§ 178. Cross-claim must rest on contract or subject-mat-
ter of action. It must arise from the same subject- [-77]
matter, or spring out of the same contract or transaction on
which the plaintiff relies to maintain his action.'* The same
thing is substantially necessary to constitute one branch of
the counter-claim of the modern codes in which it is required
that it arise out of the same transaction set forth in the com-
plaint as the foundation of the plaintiff's claim or be con-
nected with the subject of the action.''
1 Wood's Lim., § 282; Riddle v. 73 Me. 214; Washington v. Timber-
Kreimbricht, 12 La. Ann. 297; La- lake, 74 Ala. 259; Keegan v. Kinnare,
strapes v. Rocquet, 23 id. 68. 123 111. 280, 14 N. E. Rep. 14; Forrest
morrow V. Hanson, 9 Ga. 398, 54 v. Johnson, 100 Mich. 321, 58 N. W.
Am. Dec. 34G. Rep. 1005.
3 Herbert v. Dey, 15 Abb. N. C. ^Xenia Branch Bank v. Lee, 7
(N. Y.) 172. Abb. Pr. 372; Epperly v. Bailey, 3
* Gilmore v. Reed, 76 Pa. 462. Ind. 72; Slayback v. Jones, 9 Ind.
s Sawyer v. Wiswell, 9 Allen, 39; 472; Barhyte v. Hughes, 33 Barb.
Logie V. Black, 24 W. Va. 1, 20; Bo- 320; Bazemore v. Bridgers, 105 N. C.
zartb V. Dudley, 44 N. J. L. 304, 43 191, 10 S. E. Rep. 888; Demartin v.
Am. Rep. 373; Gilchrist v. Partridge, Albert. 68 Cal. 277, 9 Pac. Rep. 157;
444:
LEGAL LIQUIDATIONS AND REDUCTIONS.
[§ no.
§ 179. Recoupment for fraud, breach of warranty, neg-
ligence, etc. If a party in negotiating a contract commits an
actionable fraud upon the other contracting party touching
the subject of their negotiation the latter, though he has not
exercised his privilege to repudiate the contract on the dis-
covery of the fraud, may recoup his damages therefor in any
action brought by the guilty part}-- upon the contract. Such
a cross-claim docs not grow out of the contract, but it is part
of the same transaction and is connected vrith the subject of
the action.^ A. executed in February a memorandum under
Allen V. Coates, 29 Minn. 46. 11 N.
W. Rep. 132; Schmidt v. Bickeubacli,
29 Mian. 122, 12 N. W. Rep. 349;
Standley v. Northwestern Mut. L.
Ins. Co., 95 Ind. 254; Lee v. Eure,
93 N. C. 5; Wilkerson v. Farnham,
82 Mo. 673; Clark's Cove Guano Co.
V. Appling, 33 W. Va. 470, 10 S. K
Rep. 809; Logie v. Black, 24 W. Va.
1; Wigmore v. Buell, 116 Cal. 24, 47
Pac. Rep. 927.
If the plaintiff fails to prove the
contract upon which he sues the
defendant cannot prove another and
different contract and recoup dam-
ages for the breach thereof. Hal de-
man V. Berry, 74 Mich. 424, 42 N. W.
Rep. 57; Morehouse v. Baker, 48
Mich. 335, 12 N. W. Rep. 170; Holland
V. Rea, 48 Mich. 218, 12 N. W. Rep.
1(57; Brighton Bank v. Sawyer, 132
Mass. 185; Bozarth v. Dudley, 44 N.
J. L. 304. 43 Am. Rep. 373; The Zou-
ave. 29 Fed. Rep. 296; Tlie C. B. San-
ford, 22 id. 863.
1 Barbour v. Flick, 126 Cal. 628, 59
Pac. Rep. 122; Bell v. Sheridan, 21
D. C. 370; Johnson v. St. Louis
Butchers' Supply Co., 60 Ark. 387,
30 S. W. Rep. 429; Walker v. France,
112 Pa. 203, 5 Atl. Rep. 208; Dow-
agiac Manuf. Co. v. Gibson, 73 Iowa,
525, 6 Am. St. 697,35 N. W. Rep. 603;
Birdsey v. Butterfield, 34 Wis. 52;
Van Epps v. Harrison, 5 Hill, 63;
Myers v. Estell, 47 IMiss. 4, 17, 21;
Estell V. Myers, 54 id. 174, 56 id. 800;
Kelly V. Pember, 35 Vt. 183; Ken-
nedy V. Crandall, 3 Lans. 1; Rotan
V. Nichols, 22 Ark. 244; Perley v.
Balch, 23 Pick. 283, 34 Am. Dec. 56;
Timmons v. Dunn, 4 Ohio St. 680;
Avery v. Brown, 31 Conn. 398; Cald-
well V. Sawyer, 30 Ala. 283; Cage v.
Phelps, 38 Ala. 383; Moberly v. Alex-
ander, 19 Iowa, 162; Johnson v.
Miln, 14 Wend. 195; President, etc.
V. Wadleigh, 7 Blackf. 102, 41 Am.
Dec. 214; Light v. Stoever, 12 S. & R
431; Haynes v. Harper, 25 Ark. 541;
Warden v. Fosdick, 13 Johns. 325. 78
Am. Dec. 383; Brown v. Tuttle, 66
Barb. 169; Hogg v. Card well, 4
Sneed, 151; Nelson v. Johnson, 25
Mo. 430; Withers v. Greene, 9 How.
213; Estep v. Fenton, 66 111. 467;
Saw3'er v. Wiswell, 9 Allen, 39;
Bradley v. Rea, 14 id. 20; Mixer v.
Coburn, 11 Met. 561, 45 Am. Dec.
230; Westcott v. Nims, 4 Cush. 215;
Cook V. Castner, 9 Cush. 266; Har-
rington v. Stratton, 22 Pick. 510;
Hall V. Clark, 21 Mo. 415; Rawley v.
Woodruff, 2 Lans. 419; More v. Rand,
60 N. Y. 208; Price v. Lewis, 17 Pa.
51, 55 Am. Dec. 536; Graham v. Wil-
son, 6 Kan. 489; Allen v. Shackelton,
15 Ohio St. 145; Sumpter v. Welsh, 2
Bay. 558: Wheat v. Dotson. 12 Ark.
699; Tunno v. Fludd, 1 McCord, 121
Abercrombie v. O wings, 2 Rich. 127
Adams v. Wylie, 1 Nott & McC. 78
McFarland v. Carver, 34 Mo. 195
Christy v. Ogle, 33 III 295; Reynolds
§ 179.] KECOUPMENT ANT) COUNTER-CLAIM, 445
seal stating- that he had hired of W. a certain lot for one [278]
year from the 1st of May following, at a rent of $1,000. He
was induced to make the contract by the fraudulent represen-
tations of W. that the lot embraced a certain other parcel of
land which belonged to the corporation. A. discovered the
fraud before the 1st of May, and on that day, having obtained
a lease of the parcel owned by the corporation, took posses-
sion of the whole and occupied it during the year. It was
held in an action by "W. for the rent that A. was entitled to a de-
duction by reason of the fraud of at least what he wasobli^-ed
in good faith to pay for the corporation Icase.^ And in action
for fraudulent representations made on the exchange of prop-
erty the defendant was allowed to recoup his damages result-
ing therefrom.^ Where an action was brought to recover a
balance due on a contract of sale of two separate patented
processes, described and contracted for in a single written
agreement for an entire sum payable in instalments, tlie ven-
dee was entitled to set off damages arising out of the vendor's
fraudulent representations as to one of the processes, althouo-h
the other proved to be more valuable than the amount paid
for both.'' If several distinct purchases are made at the same
time, though by different instruments, they will be regarded
for the purposes of recoupment as being connected.* So, in
actions for the price of property sold, damages for breach of
any warranty made b}^ the vendor of the property, whether
it be express or implied, may be recouped,^ so far as he is not
V. Cox, 11 Ind. 262; Cox v. Reynolds, Holton v. Noble, 83 Cal. 7, 23 Pac,
7 id. 257; House v. Marshall, 18 Mo. Rep. 58.
369; Shute v. Taylor, 5 Met 61; 2 Carey v. Guillow, 105 Mass. 18, 7
Owens V. Rector, 44 Mo. 389; James Am. Rep. 494; Chandler v. Childs, 42
V. Lawrenceburgh Ins. Co., 6 Blackf. Mich. 128, 3 N. W. Rep. 297.
525; Burton v. Stewart, 3 Wend. 236; 3 Rawley v. Woodruff, 2 Lans. 419.
20 Am. Dec. 692; Hammatt v. Emer- * Benjamin v. Richards, 51 Mich.
son, 27 Me. 308, 46 Am. Dec. 598
White V. Sutherland. 64 111. 181
Gibson v. Marquis, 29 Ala. 668
Isham V. Davidson, 52 N. Y. 237
110, 16 N. W. Rep. 255.
5 Wilson V. Hughes, 94 N. C. 182;
Bitting V. Thaxton, 72 id. 541; Walsh
V. Hall, 66 id. 233: Hurst v. Everett,
Simmons v. Cutreer, 12 Sm. & M. 91 id. 399; Dushane v. Benedict. 120
584; Holton v. Noble, 83 Cal. 7, 23 U. S. 630. 7 Sup. Ct. Rep. 690; Si)ald-
Pac. Rep. 58. ing v. Vandercook. 2 Wend. 431;
'Allaire v. Whitney, 1 Hill, 484; Hoover v. Peters, 18 Mich. 51; Mc-
Whitney v. Allaire, 1 N. Y. 305; AUister v, Reab, 4 Wend. 483; Reab
446
LEGAL LIQUIDATIONS AND REDUCTIONS.
[§ 1T9.
otherwise reimbursed for bis loss, as by insurance paid in con-
sequence of the destruction of the property.^
If there is a sale and delivery of property in presenti which
is expressly warranted and the warranty is not true, the ven-
dee does not lose his right to recoup the damages by receiving
and using the property." In JSTew York, where the contract
V. McAlister, 8 Wend. 109; Herbert
V, Ford, 29 Me. 546; Kellof?g v. Dens-
low, 14 Conn. 411; Hitchcock v.
Hunt, 28 Conn. 343; Mercer v. Hall,
2 Tex. 284: Hears v. Nichols, 41 111.
207, 89 Am. Dec. 381; Miller v. Smith,
1 Mason, 437; Love v. Oldham, 22
Ind. 51; Getty v. Rountree, 2 Pin.
379; McAlpin v. Lee, 12 Conn. 129,
30 Am. Dec. 609; Withers v. Greene,
9 How. 214; Van Buren v. Digges, 11
id. 461; Fisk v. Tank, 12 Wis. 276, 78
Am. Dec. 737; Deen v. Herrold. 37
Pa. 150; Ketchum v. Wells, 19 Wis.
25; Steigleman v. Jeffries, 1 S. & R.
477, 7 Am. Dec. 626; Murphy v. Gay,
37 Mo. 535; Barth v. Burt, 43 Barb.
628; Brown v. Tuttle. 66 Barb. 169;
Westcott V. Nims, 4 Cush. 215; Miller
V. Gaither, 3 Bush, 152; Culver v.
Blake, 6 B. Mon. 528; McMillion v.
Pigg, 3 Stew, 165; Lemon v. Trull,
13 How. Pr. 248; Plant v. Condit, 22
Ark. 454: Jemison v. Woodruff, 34
Ala. 143; Hoe v. Sanborn, 3 Abb. Pr.
(N. S.) 189; Harman v. Sanderson, 6
Sm. & M. 41, 45 Am. Dec. 272; Rum-
sey v. Sargent, 21 N. H. .397; Will-
iams T. Miller, 21 Ark. 469; Goodwin
V. Morse, 9 Met. 278; Harrington v.
Stratton, 22 Pick. 510: Flint v, Lyon,
4 Cal. 17; Dennis v. Belt, 30 Cal. 247;
Hodgkins v. Moulton, 100 Mass. 309;
Burnett v. Smith, 4 Gray, 50; Allen
V. Furbish, id. 504. 64 Am. Dec. 87;
Stacy V. Kemp, 97 Mas-s. 166; Darnell
V. Williams, 2 Stark. 166; Parish v.
Stone, 14 Pick. 198; Judd v. Denni-
son, 10 Wend. 513; Murray v. Carlin,
07 111. 286: Owens v. Sturge.s, id. 366;
Nixon V. Carson, 38 Iowa, 338: Walker
V. Hoisington, 43 Vt. 608; Parker v.
Pringle, 2 Strobli, 242; Babcock v.
Trice, 18 III. 420.
If several suits are brought in an
inferior court on notes given for
property which is not of the quality
bargained for, the defendant may set
up the breach of warranty in each
suit until the damages are neutral-
ized, and on appeal and consoli-
dation of the actions the whole dam-
age suffered may bei'ecouped. Hurst
V. Everett, 91 N. C. 399.
1 Eureka Fertilizer Co. v. Balti-
more Copper Smelting & Rolling Co.,
78 Md. 179, 27 Atl. Rep. 1035.
2 Getty v. Rountree, 2 Pin. 379; Fisk
V. Tank, 12 Wis. 276, 78 Am. Dec.
737: Dailey v. Green, 10 Pa. 118; Pol-
hemus v. Heiman, 45 Cal. 573; War-
der v. Fisher, 48 Wis. 334, 4 N. W.
Rep. 470; Vincent v. Lelaud, 100
Mass. 432; Lewis v. Rountree, 78 N.
C. 323; Gurney v. Atlantic, etc. R.
Co., 58 N. y. 358: Day v. Pool, 52 id.
416, 11 Am. Rep. 719.
In Locke v. Williamson, 40 Wis.
377, the property was accepted with
knowledge that it was not such as
the contract called for. The buyer
set up the defect in the quality and
the court said: "We have concluded
to hold this rule in respect to an ex-
ecutory contract, that when the de-
fects in the goods are patent and
obvious to the senses, when the pur-
chaser has a full opportunity for
examination and knows of such de-
fects, he must, either when he re-
ceives the goods or within a reason-
able time thereafter, notify the seller
that the goods are not accepted as
fulfilling the warrantv, otherwise
§ 180.] KEOOUPMENT AND COUNTER-CLAni. 4-i7
of sale is oxecutoiy and a time is agreed upon for making a
test of the property which is the subject of the contract, the
acceptance and use of it after the test has been made waives
the right to claim a breach of the warranty.' This is not the
rule in Illinois.'^ If goods are warranted the purchaser may,
after he has admitted that they correspond with the contract
and promised to pay the purchase price, recoup any damages
resulting from a breach of the warranty, or he may, after
paying the price, recover such damages in a separate suit.'
Giving a renewal note after knowledge of the breach of a war-
ranty is presumptive, but not conclusive, evidence of a waiver
of the claim for damages.* In suits for labor or goods the
warranty of either is not a matter altogether collateral; [279]
it forms an essential portion of the consideration for the de-
fendant's undertaking, and therefore the breach of it is proper
to be shown in reduction of the stipulated price.* When dam-
ages for the breach of a warranty as to the quality of a chat-
tel are established they are to be applied in reduction of
plaintiff's recovery as of the date of the contract.^
§180. Same subject. Whatever the nature of the contract,
however numerous or varied its stipulations, and whether they
are all written and embodied in one or several instruments, or
only partly written or partly implied, if they are connected, so
that what is undertaken to be done on one side altogether is
the consideration, or part of the consideration, either in prora-
tlie defects will be deemed waived." Ruff v. Jarrett, 94 111. 474; Shackel-
See Nye v. Iowa City Alcohol Works, ton v. Lawrence, 65 id. 175; Reed v.
51 Iowa, 129. 3;J Am. Rep. 121, 50 N. Hastings, 61 id. 266.
W. Rep. 988; Reed V. Randall, 29 N. * Aultman v. Wheeler, 49 Iowa,
Y. 358; McCormick v. Sarson. 45 id. 647; Can trait v. Fawcett, 2 111. App.
256; Gaylord Manuf. Co. v. Allen, 53 571.
id. 515. Compare these New York » Allen v. Hooker, 25 Vt. 137; Cole
cases with the two cited above. v. Colburn, 61 N. H. 499; Hoeruer
iMcParlin v. Boynton, 8 Hun, 449; v. Giles, 53 111. App. 540; McCormick
aflSrmed by a majority of one and Harvesting Machine Co. v. Robin-
without opinion, 71 N. Y. 604. son, 60 111. App. 253; Zimmerman v.
-! Underwood v. Wolf, 131 III. 425, Druecker, 15 Ind. App. 512, 44 N. E.
19 Am. St. 40, 23 N. E. Rep. 598, cit- Rep. 557; National Oak Leather Co.
ing and discussing previous decis- v. Armour-Cudahy Packing Co., 99
ions m that state. Ky. 667, 37 S. W. Rep. 81.
3 Bretz v. Fawcett, 29 111. App. 319; « Wilson v. Reedy, 33 Minn. 503, 24
Harrington v. Stratton, 22 Pick. 510; N. W. Rep. 191.
Hodgkins v. Moultou, 100 Mass. 30'J;
448
LEGAL LIQUIDATIONS AND KEDCCTIONS.
[§ ISO,
ise or performance, for what is engaged to be done on the other,
the range of the right of recoupment is co-extensive with tho
duties and obligations of the parties, respectively, both to da
and to forbear, — as well those imposed at first by the language
of the contract as those which subsequently arise out of it in
the course of its performance.^ It extends to damages result-
[280] ing from negligence where care, activity and diligence
are required;^ where damages accrue from excess of action, as
1 Green v. Batson, 71 Wis. 54, 36 N.
W. Rep. 849; Bross v. Cairo & V. R.
Co., 9 111. App. 363; Wilson v. Greens-
boro, 54 Vt. 533; Babbitt v. Moore, 51
N. J. L. 229, 17 Atl. Rep. 99; Deitz v.
Leete, 28 5Io. App. 540; Logie v.
Blaok. 24 W. Va. 1, 19; Brigham v.
Hawley, 17 111. 38; Lee v, Clements,
48 Ga. 128; Satchwell v. Williams,
40 Conn. 371; Fowler v. Payne, 49
Miss. 32; Branch v. Wilson, 12 Fla,
543; Mell v. Moony, 30 Ga. 413;
Rogers v. Humphrey, 39 Me. 382;
Winder v. Caldwell, 14 How. 434;
Cherry v. Sutton, 30 Ga, 875; Bowker
V. Hoyt, 18 Pick. 555; Fabbricotti v.
Launitz, 3 Sandf. 743; Van Buren v.
Digges, 11 How. 461; Dennis v. Belt,
30 Cal. 247; Logan v. Tibbott, 4
Greene, 389; Heaston v. Colgrove, 3
Ind. 265; Keyesv. Western Vermont
Slate Co. 34 Vt. 81; Wildey v. Frac-
tional School Dist., 25 Mich. 419;
Elliot V. Heath, 14 N. H. 131; Blood-
good v. Ingoldsby, 1 Hilt. 388; Walker
V. Millard, 29 N. Y. 375; Guthman v.
Castleberry, 49 Ga. 272; Mack v.
Patchin, 42 N. Y. 167, 1 Am. Rep.
506; Eldred v. Leahy, 31 Wis. 546;
Whitney v. Meyers. 1 Duer, 267;
Peden v. Moore. 1 Stew, & Port. 71,
21 Ard. Dec. 649: Wilder v. Boynton,
63 Barb. 547; Cook v. Soule, 56 N. Y".
420, 45 How. Pr. 340; Holzworth v.
Koch, 26 Ohio St. 33; Myers v.
Burns, 33 Barb. 401, 35 N. Y. 269;
Ives V. Van Epps, 22 Wend. 155;
Warfield v. Booth, 33 Md. 63; Mayor
V. Mabie, 13 N. Y. 151, 64 Am. Deo.
538; Rogers v. Ostrom, 35 Barb. 523;
Westlake v. De Graw, 25 Wend. 669:
Goodwin v. Morse, 9 Met. 278; Sanger
V. Fincher, 27 111. 346: Bee Printing
Co. V. Hichborn, 4 Allen, 63; Turner
V. Gibbs, 50 Mo. 556; Dermott v.
Jones, 2 Wall. 1; Overton v. Phelan,
•2 Head, 445; Bloom v. Lehman, 27
Ark. 489; Berry v. Diamond, 19 Ark.
262; Desha's Ex'r v. Robinson's
Adm'r, 17 Ark. 228; Springdale
Ass'n V. Smith, 32 111. 252; Porter v.
Woods, 3 Humph, 56, 39 Am. Dec.
153; Crouch v. Miller. 5 Humph. 586:
Fisk V. Tank, 12 Wis. 276, 78 Am.
Dec. 737: Luf burrow v. Henderson.
30 Ga. 482; Molby v. Johnson, 17
Mich, 382; Stow v. Yarwood. 14 111.
424; Stewart v. Bock, 3 Abb Pr. 118;
Hoopes v. Meyer, 1 Nev. 433; Cald-
well v. Pennington, 3 Gratt. 91; Bur-
roughs V. Clancey, 53 111. 30; Lunn v.
Gage, 37 111. 19; Evans v. Hughey,
76 111. 115; Hubbard v. Rogers, 64 III.
434: Eckles v. Carter. 26 Ala. 563;
Ewart V. Kerr, 2 McMull. 141; Moore
v. Carutiiers, 17 B. Mon. 669; Whit-
beck V. Skinner, 7 Hill, 53; Ciiatter-
ton V. Fox, 5 Duer, 64; Hill v. South-
wick, 9 R. L 299, 11 Am. Rep. 250;
Fitchburg, etc. R. Co. v. Hanna, 6
Gray. 539, 66 Am. Dec. 427; Allen v.
McKibbin, 5 Mich. 449; Key v. Hen-
son, 17 Ark. 254: Hutt v. Bruckman,
55 111.441; McDowell v. Milroy, 69
111. 498; Latham v. Sumner, 89 111.
233; Cooke v. Preble, 80 111. 381;
Bishop v. Price, 24 Wis. 4S0.
2 Sinker v. Diggins, 76 Mich. 557,
§ ISO.]
KECOUrMENT AND COUNTER-CLAIM.
449
where it injuriously transcends the limits of duty or authority ; ^
from ignorance, where knowledge and skill are due; ^ and hon-
esty and good faith, being always obligations upon contract-
ing parties, all damages which result from any covinous prac-
tice or tort within the scope of the transaction which the
plaintilFs action involves may be the subject of recoupment.
Thus money paid to contractors by government officers with-
out authority, or in violation, of law may be recovered on a
counter-claim in a suit on the contract under which such pay-
ment was made.' An employer may recoup against a serv-
ant's wages not only the damages arising from his negligence
and want of skill and knowledge, but for any fraudulent or
tortious waste, conversion or destruction of property intrusted
to him or placed in his care in the course of his employment.*
If a servant lives in the family of his employer and while
there seduces the latter's daughter, the damages resulting may
43 N. W. Rep. 674; Macgowan v.
Whiting, 9 Daly, 86: Whitellegge v,
De Witt, 13 Daly, 319; Lee v. Clem-
ents, 48 Ga. 128; Fowler v. Payne, 49
Miss. 32: Phelps v. Paris, 39 Vt. 511;
Still V. Hall, 20 Wend. 51; Briggs v.
Montgomery, 3 Heisk. 673; Denevv v.
Daverell, 3 Camp. 451; Grant v. But-
ton, 14 Johns. 377; Shipman v. State,
43 Wis. 381; Garfield v. Huls, 54 111.
427; Forman v. Miller, 5 McLean,
218; Doan v. Warren, 11 Up. Can. C.
P. 423; McCracken v. Hair, 2 Speer,
256; Marshall v. Hann, 17 N. J. L.
425: Eaton v. Woolly, 28 Wis. 628;
Cloyd V. Steiger, 139 111. 41, 28 N. E.
Rep 987; Hattin v. Chase, 88 Me.
237, 33 Atl. Rep. 989, quoting the
text.
1 JIcEwen v. Kerfoot, 37 111. 530.
'-'De Witt V. CuUings, 33 Wis. 298;
Stoddard v. Tread well, 26 Cal, 294;
Goslin V. Hodson, 24 Vt. 140; Hunt
V. Pierpont, 27 Conn. 301; Shipman
V. State, 43 Wis. 381; Robinson v.
Mace, 16 Ark. 97; Hopping v. Quin,
13 Wend. 517; Gleason v. Clark, 9
Cow. 57; Hill v. Featherstonehaugh,
T.Bing. 569; Cardell v. Bridge, 9
Vol. 1 — 29
Allen, 355; Eaton v. Woolly, 28 Wis.
628; Whitesell v. Hill, 101 Iowa. 629,
70 N. W. Rep 750, 37 L. R A. 830.
3 Barnes v. District of Columbia,
22 Ct. of Cls. 366; McElrath v. United
States, 102 U. S. 426, 440.
4 Johnson v. White Mountain
Creamery Ass'n, 68 N. H. 437, 36
Atl. Rep. 13, 73 Am. St. 610; Bar-
retts, etc. Dyeing Establishment v.
Wharton, 101 N. Y. 631, 4 N. E. Rep.
344; Gibson v. Carlin, 13 Lea, 440;
Heck V. Shener, 4 S. & R. 249, 8 Am.
Dec. 700; Allaire Works v. Guion, 10
Barb. 55; Coit v. Ste%vart, 50 N. Y.
17; Hatchett v. Gibson, 13 Ala. 587;
Pierce v. Hoffman, 4 Wis. 277: Brig-
ham V. Hawley, 17 III. 38; Brady v.
Price, 19 Tex. 285, See Ward v.
Willson, 3 Mich. 1, where it was held
that proof that the plaintiff, while
employed as a cook on board a boat,
wilfully destroyed the hose belong-
ing to the boat should be excluded
in an action to enforce the payment
of his wages, the tort not appearing
to have any connection with his
duties as cook. Nashville R Ca v.
Chumlej', 6 Heisk. 325.
450
LEGAL LIQUIDATIONS AND EEDCCTIONS.
[§ 180.
be recouped in an action to recover wages.^ The same remedy
is available where the employee quits the service without giv-
ing the notice required by his contract; - and against a pledgee
suing for the debt secured by the pledge where he has con-
verted it. ' So in an action by the pledgor against the pledgee
for conversion of the pledge the latter may recoup the amount
of the debt secured thereby.* Where a carrier injures or loses
goods, or any of them, or incurs a liability for negligent delay
in transportation and delivery, the damage therefor may be
recouped in an action for freight;^ damages for the culpable
negligence of a physician who carries infection from patients
having small-pox to the defendant's family, when called to
prescribe for other diseases, may be recouped against his
charges for services.^ The remedy extends to the vendor of
1 Bixby V. Parsons, 49 Conn. 483.
2Stockwell V. Williams, 40 Conn.
371.
SBulkeley v. Welch, 31 Conn. 339;
Ainsworth v. Bo wen, 9 Wis. 348;
Harrell v. Citizens' Banking Co., Ill
Ga. 846, 36 S. E. Rep. 460; Waring v.
Gaskill, 95 Ga. 731, 22 S. E. Rep. 659.
Where the defendant deposited a
bond as collateral security for the
payment of his note, and the bond
was stolen after the note became due
and before it was paid, the value of
the bond could not be recouped in a
suit on the note. To make the de-
fense of recoupment available some
stipulation in the contract sued upon
mu-t have been violated by the plaint-
iff. The deposit of the bond was per-
haps a part of the transaction of giv-
ing the note, but it was not the same
transaction. The note was a contract
independently of the pledging of the
bond in itself. Winthrop Bank v.
Jackson, 67 Me. 570, 24 Am. Rep. 56.
The same rule was applied where
the pledgee sold notes given him to
secure the payment of the note in
suit, which made no reference to the
collateral. Fletclier v. Harmon, 78
Me. 465, 7 Atl. Rep. 271.
* Belden v. Perkins, 78 IIL 449; Jar-
vis v. Rogers, 15 Mass. 389; Stearns
v. Marsh, 4 Denio, 227, 47 Am. Dec.
^248; Fowler v. Gilman, 13 Met. 267;
Work v. Bennett, 70 Pa. 484; Brown
V. Phillips, 3 Bush, 656.
The right to recoup does not rest
upon the principle of lien; it exists
after the lien has been destroyed by
a tortious act of the party in whose
favor it was originally obtained.
Ludden v. Buffalo Batting Co., 22
IIL App. 415.
5 Empire Transportation Co. v. Bog-
giano, 52 Mo. 294; Ewart v. Kerr, 2
McMull. 141; Sears v. Wingate, 3
Allen, 103; Boggs v. Martin, 13 B.
Mon. 239; The Nathaniel Hooper, 3
Sumn. 542; Jordan v. Warren Ins.
Co., 1 Story, 352; Bradstreet v. Heron,
1 Abb. Adm. 209: Fitchburg, etc. Co.
V. Hanna, 6 Gray, 539, 66 Am. Dec.
427; Davis v. Pattison, 24 N. Y. 317;
Edwards v. Todd, 2 111. 463; Leech v.
Baldwin. 5 Watts. 446; Humphrey v.
Reed, 6 Whart. 435; Hinsdell v. Weed,
5 Denio, 172. But see Bornman v.
Tooke, 1 Camp. 377, and Sheels v.
Davies, 4 Camp. 119; Mayneon Dam.
70.
6 Piper v. Menifee, 12 B. Mon. 465,
54 Am. Dec. 547.
§ iSl.] RKOOUPMENT AND COUNTICR-CLAIM- 451
rags sold as clean and free from infection and fit to be manu-
factured into paper if in fact they are infected with small-pox
and cause that disease to break out in the paper mill of the
vendee, whereby some of his workmen lose their lives and
others are disabled, causing a loss of business and increase of
expense to the purchaser of the rags.^ A borrower sued by
the lender for conspiracy in failing to satisfy certain prior
mortgages with the borrow^ed funds may set up that the lender
had sohl his note before due and that his agent converted the
borrowed money before its delivery to the borrower, and that
the lender is indebted to the borrower to the extent of the value
of the note converted.^
§ 181. What acts may be the basis of recoupment. If the
contract has been executed on the part of the plaintiff and,
therefore, the defendant's contract sued on is based upon an
executed consideration, then any tortious act of the former
subsequently impairing, in fact, that consideration has been
deemed an independent tort, and not a part of the transaction,
or not connected with the subject of the action for breach of
the defendant's undertaking.^ Thus, it has been held to be no
defense to an action on a bill of exchange given for the price
of goods sold that two months after their delivery to the
vendee the vendor forcibly retook possession.^ But where
a note was given for a judgment assigned, proof that [282]
the assignor afterwards collected part of the judgment was
held a defense jpro tanto to the note.' In an action for the
price of specific articles bargained and sold, but not delivered,
the defendant may set up by way of recoupment any injury
to such articles occasioned by the fault or negligence of the
vendor subsequent to the sale and j)rior to the time of de-
1 Dushane v. Benedict, 120 U. S. consideration of the contract sued
630, 7 Sup. Ct. Rep. 693. on. Nolle v. Thompson, 3 Met. (Ky.)
^ Bowman v. Lickey, 86 Mo. App. 47. 1'31. Nor for slander in an action by
* In an action for wages the em- the indorsee before maturity of a
plover cannot recoup damages for an note. Lyon v. Bryant, 54 111. App. 331.
injury done by the plaintiff beyond * Stephens v. Wilkinson, 2B. & Ad.
the .scope of his employment. Nash- 320, Huelet v. Reyns, 1 Abb. Pr.
ville R. Co. V. Chumley, 6 Heisk. 327. (N. S.) 27; Slayback v. Jones, 9 Ind.
Damages for maliciously suing out 472. See Martin v. Brown. 75 Ala.
an attachment are not to be recouped 442; Gerding v. Adams, 65 Ga. 79.
in the same suit because the wrong & Harper v. Columbus Factory, 35
was in no way connected with the Ala. 127.
452 LEGAL LIQUIDATIONS AND KEDUCTI0N8. [§ 181.
liverj;^ for the vendor's duty was to keep the articles sold
with ordinary care, and he is responsible for the want of such
care or of good faith.^ So a vendee, when sued for the price
of land sold, may recoup for the vendor's tort which dimin-
ishes the value of the property purchased,^ or which consists
of carrying away crops or fixtures before the sale is consum-
mated by deed and delivery of possession.* Where suit was
brought on a note given for wood the maker recouped against
the note the amount of his loss because the plaintiff refused to
permit him to convert the wood into charcoal on the land on
which it was when it was sold, it was not necessary that the
wood should be returned, it having been removed and coaled
elsewhere.'' A tenant in common, in control of the premises
held in common for the purpose of renting them, when sued
by his co-tenant for his share of the rents may counter-claim
the damages sustained by the plaintiff's wrongful acts in in-
ducing lessees to leave the premises before their leases ex-
pired,^
"Where a contract for particular works has been entered into,
or for service, or for the sale and delivery of property, and
there has been a part performance for which an action in
general assujnjjsit is maintainable, the special contract is a
part of the transaction in question. Although the plaintiff
does not bring his action upon it, it is connected with the sub-
ject thereof.^ Though the performance of the plaintiff's part
of the contract may at first have been a condition, yet the de-
fendant may waive the right to forfeit the contract for non-
performance, and retain his right to damages. These he may
recoup in an action on a quantum meruit or a quantum valebat,
or in an action upon the contract.^ In such cases if the de-
1 Barrow v. Window. 71 111. 214. « Dale v. Hall, 64 Ark. 221, 41 S. W.
2McCandlish ^' Newman, 25 Pa. Rep. 761.
460; Chinery v. Viall, 5 H. & N. 288. i Twitty v. McGuire, 3 Murphy, 501;
^Streeter v, Streeter, 43 111. 155. Grannis v. Linton. 30 Ga. 330; Steam-
•« Gordon V Bruner, 49 Mo. 570; boat Wellsville v. Geisse, 3 Ohio St.
Grand Lodge v Knox, 20 Mo. 433; 333; Bishop v Price, 24 Wis. 480:
Patterson v. Hulings, 10 Pa. 506; Hay ward v. Leonard, 7 Pick. 181,
Owens V. Rector, 44 Mo. 389. But Bowker v. Hoy t, 18 Pick. 555; Barber
see Slayback v. Jones, 9 Ind. 472. v. Rose, 5 Hill, 76.
5 Harraan v. Bannon, 71 Md. 429, 8 Woodrow v. Hawving, 105 Ala.
18 Atl. Rep. 862. 240, 16 So. Rep. 720; Madison v. Dan-
§ 1«1-]
RECOUPMENT AND COUNTER-CLAIM.
453
fendant thinks proper to present his cross-claim by way of re-
coupment the court will consider the whole contract [283]
under which the plaintiff's demand arose, and direct a deduc-
tion, from what he would otherwise be entitled to recover, of
all damages sustained by the defendant in consequence of the
plaintiff's failure to fulfill any or all of the stipulations on his
side.^
On the sale of a quantity of standing wood the vendor
agreed to indemnify the vendees against any damage that
might happen to the wood in consequence of the burning of
an adjoining fallow. The latter gave their notes for the
price; and, afterwards, the fallow being burned over, the
wood in question was destro3^ed by the fire; and it was held,
in an action by the vendor upon the note, that the vendees
might recoup their damages arising from the loss of the wood.'
ville Mining Co., 64 Mo. App. 564;
Wiley V Athol, 150 Mass. 426, 23 N. E.
Hep. 311, 6 L. R. A. 342; Reynolds v.
Bell, 34 Ala. 496, 4 So. Rep. 703; Bell
V. Reynolds, 78 Ala. 511, 56 Am.
Rep. 52; Sciiweickhart v. Stuewe, 71
Wis. 1. 5 Am. St. 190, 36 N. W. Rep.
605; Fabbricotti v. Launitz, 3 Sandf.
743; Vanderbilt v. Eagle Iron "Works,
25 Wend. 665; Van Buren v. Digges,
11 How. 461; Polhemus v. Heiman,
45 Cal. 573; Wbeelock v Pacific,
Pneumatic Gas Co., 51 Cal. 223;
Upton V. Julian, 7 Ohio St. 95; Har-
ris V. Rathbun, 2 Keyes, 312; Hay-
ward v. Leonard, 7 Pick. 181; Allen
V. McKibben, 5 Mich. 449; McKinney
V. Springer, 3 Ind. 59.
' Id. Loinax v. Bailey, 7 Blackf.
599; HoUinsead v. Mactier, 13 Wend.
275; Adams v. Hill, 16 Me. 215; Koon
V. Greenman, 7 Wend. 121; Ladue v.
Seymour, 24 id. 60; Brewer v. Tyring-
ham, 13 Pick. 547: Coe v. Smith, 4
Ind. 79; Major v. McLester, id. 591,
Milnes v Vanhorn, 8 Blackf. 198;
Fenton v. Clark, 11 Vt. 557; Britton
V. Turner, 6 N. H. 481, 26 Am. Dec.
713; Seaver v. Morse, 20 Vt. 620;
Epperly v. Bailey, 3 Ind. 72; Good-
win V Morse, 9 Met. 278; Wilkinson
V. Ferree, 24 Pa. 190: Higgins v. Lee,
16 111. 495; Van Deusen v. Blum, 18
Pick. 329, 29 Am. Dec. 582; Lee v.
Ashbrook, 14 Mo. 378, 55 Am. Dec.
110; White v. Oliver, 36 Me. 92;
Merrow v. Huntoon, 25 Vt. 9; Blood
V. Enos, 13 Vt. 625, 36 Am. Dec. 36:5;
Preston v. Finney, 2 W. & S. 53;
Ligget V. Smith, 3 Watts, 331, 27
Am. Deo. 358; Danville Bridge Co. v.
Pomroy, 15 Pa 151: Allen v. Robin-
son, 3 Barb. 341, Rogers v. Hum-
phreys, 39 Me. 383.
2 Batterman v Pierce, 3 Hill, 171.
This was an early and leading case
on the subject of recoupment, and
Bronson, J., comprehensively stated
the doctrine underlying and govern-
ing it. He said: "When the de-
mands of both parties spring out of
the same contract or transaction,
the defendant may recoup, although
the damages on both sides are un-
liquidated. . . It was formerly
supposed that there could only be a
recoupment where some fraud was
imputable to the plaintiff in relation
to the contract on which the action
is founded; but it is now well settled
4o4:
LEGAL LIQUIDATIONS AND KEDUCTIONS.
181.
[284] The plaintiff in one agreement stipulated to deliver forth-
with a quantity of dressed pork to the defendant for a certain
price, and also to sell him, upon their arrival, at a different
price, a number of live hogs then on the way and expected m
that the doctrine is also applicable
when the defendant imputes no
fraud and only complains that there
has been a breacli of the contract on
the part of the plaintiff. For the
purpose of avoiding a circuity or
the multiplication of actions, and
doing complete justice to botii par-
ties, they are allowed and compelled,
if the defendant so elect, to adjust
all their claims growing out of the
same contract in one action. It was
well remarked by Chancellor Wal-
worth, in Reab v. McAlister,8 Wend.
109, that ' there is a natural equity,
especially as to claims arising out of
the same transaction, that one claim
should compensate the other, and
that the balance only should be re-
covered.' The defendant has the
election whether he will set up his
claim in answer to the plaintiff's de-
mand, or resort to a cross-action;
and whatever may be the anaount of
his damages, he can only set them
up by way of abatement, either in
whole or in part of the plaintiff's
demand. He cannot, as in case of
set-off, go beyond that, and have a
balance certified in his favor. It is
no objection to the defense that the
plaintiff is not suing upon the origi-
nal contract of sale, but upon a note
given for the purchase-money. The
promise of the defendants to pay
the purchase-money has undergone
the slight modification of being put
into the form of a written obliga-
tion, and on that the action is
founded; but still the plaintiff is in
effect seeking to enforce the original
contract of sale, and the question
must be settled in the same manner
as though the action was, in form,
upon that contract. But the objec-
tion still remains, and it has been
strenuously urged against the de-
fense, that the damages claimed by
the defendants do not spring out of
the contract of sale, but arise under
the collateral agreement of the
plaintiff to indemnify against fire. It
is undoubtedly true that there can
be no recoupment by setting up the
breach of an independent contract
on the part of the plaintiff. But
that is not this case. Here there
were mutual stipulations between
the parties, all made at the same
time, and relating to the same sub-
ject-matter; and there can be no
difference, in principle, whether the
whole transaction is embodied in
one written instrument setting forth
the cross-obligations of both parties,
or whether it takes the form of a
separate and distinct undertaking by
each party. The plaintiff proposed
to sell his wood at auction, and as an
inducement to obtain a better price
he stipulated with the bidders that
they should have two winters and
one summer to get away the wood,
and that in the meantime he would
insure them against the consequence
of setting fire to his adjoining fallow
grounds. Upon these terms the pur-
chase was made by the defendant.
, . . The nature of the transaction
cannot be changed by putting the
several stipulations of the parties
into distinct written contracts; nor
can it make any substantial differ-
ence that the undertaking of one
party has been reduced to writing,
while the engagement of the other
party remains in parol. In substance
it is still the case of mutual stipula-
§ 181.] KECOUPMENT AND COUNTEE-CLAIM. 455
a few clays, no stipulation being made as to the time of [285]
payment for either. It was held that the plaintilf was entitled
to recover the sum stipulated for the dressed pork, notwith-
standing that, after it became due, a breach of the stipulation
in respect to the live hogs had accrued, but subject to recoup-
ment of the defendant's damages for such breach.'
In an action to recover damages for the conversion of a note
made by the plaintiff and also of certain collaterals, the de-
fendant may plead a counter-claim setting up the note and
its non-payment at maturity and asking to recover the sum
due with interest, although, after the note became due, the
plaintiff had tendered to the defendant the sum due on it, and
demanded the note with the collaterals, which the defendant
refused to surrender. The court agreed that it is not enouirh
that the claims set forth in the complaint and alleged in the
counter-claim had a common origin and were coincident in
the time of their creation. They must be so related that the
counter-claim properly tends to diminish or defeat the plaint-
iff's recovery. But the case was such. The plaintiff at-
tempted to meet this by saying that upon his tender of the
amount due upon the note, the defendant's lien upon the col-
laterals was discharged and his right to the latter became ab-
solute. This, however, did not solve the question. We must
still go back to the transaction set forth in the complaint.
"What is that transaction ? The plaintiff limits it to the tech-
nical conversion ; that is, to the legal formula of his action. But
that is not the entire transaction set forth in the complaint as
the foundation of the plaintiff's claim. It is what that trans-
action comes to when reduced to the concrete charge. But
the transaction itself — that is the entire transaction — consists
of all the facts averred in the complaint; the making and de-
tions between the same parties, several, or whether some have been
made at the same time and relating put upon paper wliile others rest in
to the same subject-matter. The parol, the reason still remains for al-
forms which the parties may have lowing the claims of both parties
adopted for the purpose of manifest- growing out of the same transaction
ing their agreement cannot affect to be adjusted in one action."
their rights so far as this question i Tipton v. Feitner, 20 N. Y. 423;
is concerned. Whether all the mut- Prairie Farmer Co. v. Taylor, 69 III
ual undertakings have been embod- 440, 18 Am. Dec. G21; Cherry v. Sut-
ied in one written instrument, or in ton, 30 Ga. 875.
456
LEGAL LIQUIDATIONS AND REDUCTIONS.
[§ 181.
liverj of the note; the giving of the collaterals, the tender of
the amount due and the refusal thereupon to surrender the se-
curities. The note is a part of the transaction thus set forth.
It is interwoven with it. The facts with regard to it are in
part the foundation of the plaintiff's claim. If the plaintiff is
entitled to the value of his securities, the defendant is equally
entitled to the amount of his note. It is entirely just that the
plaintiff's claim should be diminished by the amount of the
latter debt.' On the other hand, the defendant in an action
for the value of goods sold and for services rendered cannot
recoup damages resulting from an abuse of the writ of attach-
ment issued by the plaintiff, there being no connection be-
tween these and the subject of the action.- The same is true
of a claim for storage asserted in an action brought for the
conversion of property stored.^ Where accounts containing
usurious interest have been closed and settled by note, and an
action is brought on the note, the defendant cannot counter-
claim for double the usury.*
These are instances of cross-claims arising from the same
contract or transaction. Stipulations are parts of the same
contract for the purpose of this defense though they relate to
distinct subjects, and a different time of performance, and a
distinct and severable compensation is provided for each; so
any implied or express warranty or guaranty which forms
part of the consideration of the defendant's undertaking,
which is the foundation of the plaintiff's action, is part of the
same contract; and all damages to which the defendant is en-
titled thereon may be recouped in such action. Many exam-
ples have been given.^ In England the damages which may
1 Empire Dairy Feed Co. v. Chat-
ham Nat. Bank, 30 App. Div. 476, 52
N. Y. Supp. 387.
2 Jones V. Swank, 54 Minn. 259, 55
N. W. Rep. 1126.
3 Schaeffer v. Empire Lithograph-
ing Co., 28 App. Div. 469, 51 N. Y.
Supp. 104, See Bernheimer v. Hart-
mayer, 50 App. Div. 816, 63 N. Y.
Supp. 978.
i Witte V. Weinberg. 37 S. C. 579,
17 S. E. Rep. 681.
5 In an action upon one of several
notes given for a chattel, a breach of
warranty being alleged, the defend-
ant may interpose a counter-claim
for his entire damage. GeiserThresh-
ing Machine Co. v. Farmer, 27 Minn.
428.8 N. W. Rep. 141; Minneapolis,
Harvester Works v. Bonnallie, 29
Minn. 373, 13 N. W. Rep. 149. Contra,
Aultman & T. Co. v. Hetherington
42 Wis, 622; Same v. Jett, ii 48a
§ 182.]
EEOOUPMENT AND COUNTER-CLAIM,
457
be recouped are limited to those which directly result from the
character of the property or the work done; consequential
damages must bo recovered in a separate action.' "But in
this country the courts, in order to avoid circuity of action,
have gone further and have allowed the defendant to recoup
damages suffered by him from any fraud, breach of warranty
or negligence of the plaintiff growing out of or relating to
the transaction in question." ^
§ 182. Cross-claims between landlord and tenant. In ac-
tions between landlord and tenant they have each the right to
recoup damages in the other's action brought on the covenants
in the lease, or those which are implied from the relation.
Although there be a written lease or even an indenture con-
taining express stipulations and covenants, if others are im-
plied, the latter belong to and are parts of the same contract.'
1 Mondel V. Steel, 8 M. & W. 858;
Davis V. Hedges, L. R. 6 Q. B. 637.
liDushane v. Benedict, 120 U. S.
030, 7 Sup. Ct. Rep. 696; Harrington
V. Stratton, 23 Pick. 510: Withers v.
Greene, 9 How. 218; Van Buren v.
Digges, 11 id. 661; Winder v. Cald-
well, 14 id. 434; Lyon v. Bertram, 20
id. 149; Railroad Co. v. Smith, 21
Wall. 255; Marsh v. McPherson, 105
U. S. 709.
» Harmony Co. v. Ranch, 62 111.
App. 97; Culver v. Hill. 68 Ala. 68, 44
Am. Rep. 134; Vandegrift v. Abbott,
7o Ala, 487; Jones v. Horn, 51 Ark. 19,
14 Am. St. 17, 9 S. W. Rep. 309;
Gocio v. Day, 51 Ark. 46; Lewis v.
Chisholm, 68 Ga. 46; Stewart v.
Lanier House Co., 75 Ga. 582, 598;
Howdyshell v. Gary, 21 III App. 288;
Burroughs v. Clancey, 53 111. 30;
Dodds V. Toner, 3 Ind. 427; Blair v.
Claxton, 18 N. Y. 529; Caldwell v.
Pennington, 3 Gratt. 91; Vining v.
Leeman, 45 111. 248; Hobein v. Drew-
ell, 20 Mo. 450; Lynch v. Baldwin, 69
III. 210: Whitbeck v. Skinner, 7 Hill,
53; Mack v. Patchin, 42 N. Y. 167,
1 Am. Rep. 505; Mayor v. Mabie, 13
V Y. 151, 64 Am. Dec. 538; Lmdley
v. Miller, 67 111. 244; Westlake v. De
Graw, 25 Wend. 669; Lunn v. Gage,
37 111. 19; Guthman v. Castleberry,
49 Ga. 272; Tone v. Brace, 8 Paige,
597; Graves v. Berdan, 26 N. Y. 498;
Vernam v. Smith, 15 N. Y. 328;
Myers v. Burns, 35 N. Y. 269; Hexter
v. Knox, 63 N. Y. 561; Eldred v.
Leahy, 31 Wis. 546; Morgan v. Smith,
5 Hun, 220; Commonwealth v. Todd,
9 Bush, 708; Holbrook v. Young, 108
Mass. 83.
If the landlord does not furnish
the quantity of land or the number
of animals he agrees to, the tenant
may recoup his damages in an action
brought to recover advances mada
Horton v. Miller, 84 Ala. 537, 4 Sa
Rep. 370.
If the tenant makes special inquiry
as to the condition of water on the
premises he leases, and it is in fact
unfit for use, and the landlord,
knowing it, fails to remove the cause,
the tenant is justified in regardi:ig
the condition of the water as an
eviction from the premises, and in an
action to recover rent may recoup
the expenses of sickne.s.->, including
physician's fees, resulting from lii«
458
LEGAL LIQUIDATIONS AND EEDUCTIONS.
[§ 182.
The landlord, impliedly, in the absence of an express agree-
ment defining his obligation in that regard, undertakes for
the quiet enjoyinent of the premises by his tenant as against
any hostile assertion of a paramount title, and that, so far as
[286] he is concerned, he will do no act to interrupt the ten-
ant's free and peaceable possession during the term granted.^
For any violation or breach of this obligation the tenant may
recoup his damages in any action by the landlord against him
based on his liabilities as a tenant.^ But for mere tortious
acts of interference by the landlord with the demised prem-
ises, not done in the assertion of a right nor amounting to an
eviction, damages by wa}'' of recoupment have been denied.^
They have been denied for the malicious prosecution of suits-
for unlawful detainer because they do not arise out of the con-
tract and are not connected with the subject-matter of the suit>
Where a cross-claim exists in favor of the tenant he may avail
himself of it not only in an action against him by the land-
lord on the contract, but also in replevin of property dis-
trained for rent;* but not in a summary proceeding for pos-
use of such water. Maywood v.
Logan, 78 Mich. 185, 18 Am. St. 431,
43 N. W. Rep. 1052.
In a statutory contest between
landlord and tenant as to the
amount of rent due, the former may
meet violation of the lease with vio-
lation, damages with damages, have
a full reckoning, and uphold his
warrant to the extent of the sum
due him for rent after a settlement
of the damage account. Johnston
V. Patterson, 91 Ga. 531, 18 S. E. Rep.
350.
1 Keating v. Springer, 146 111. 481,
34 N. E. Rep. 805, 37 Am. St. 175, 22 L.
R. A. 544; Mayor v. Mabie, 13 N. Y.
151, 64 Am. Dec. 538; Dexter v. Man-
ley, 4 Cush. 14; Bradley v. Cart-
wright, 36 L. J. (C. P.) 218; Maule v.
Ashmead, 20 Pa. 482; Hart v. Smith,
2 A. K Marsh. 301; Young v. Har-
grave, 7 Ohio, 394.
2McAlester v. Landers, 70 Cal. 79,
11 Pac. Rep. 505; Kelsey v. Ward, 38
N. Y. 83; Mayor v. Mabie, supra;
Wade V. Halligan, 16 111. 507; Lynch
v. Baldwin, 69 111. 210; Rogers v.
Ostram, 35 Barb. 523; Chatterton v.
Fox, 5 Duer, 64.
The fact that the lessee has paid
the rent for the greater part of the
term will not deprive him of the
right to counter-claim his damages
for the entire term. McAlester v.
Landers, supra.
^Edgerton v. Page, 20 N. Y. 281;
Hulme V. Biown, 3 Heisk. 679; Bart-
lett V. Farrington, 120 Mass. 284;
Campbell v. Shields, 11 How. Pr.
565; Drake v. Cockroft, 10 id. 377;
Walker v. Shoemaker, 4 Hun, 579;
Lounsbery v. Snyder, 31 N. Y. 514;
Ogilvie V. Hull, 5 Hill, 52; Vatel v.
Herner, 1 Hilt. 149; Cram v. Dres-
ser, 2 Sandf. 120; Crowe v. Kell, 7
Ind. App. 683, 35 N. K Rep. 186. But
see Kamerick v. Castleman, 23 Mo.
App. 481.
4 Dietrich v. Ely, 11 C. C. A. 266,
63 Fed. Rep. 413.
5 Nichols V. Dusenbury, 2 N. Y.
§ 183.]
EECOUPMENT AND COUNTEK-CLAIM,
450
session based on the determination of the lease by forfeiture.*
In an action for rent the defendant may show that the plaint-
iff agreed to build a fence, or make certain repairs or other
improvements, and has neglected to perform the agreement.^
§ 183. Cause of action, connection between and cross-
claim. Where the basis of the transaction between the [2.S7]
parties is a contract and its breach amounts to a trespass or
entitles the injured party to an action for negligence or fraud
or to any action ex delicto^ he is not deprived of his right to
set off such a claim, nor the other party to set off a claim aris-
ing upon the contract against such a cause of action. In all
such cases, there being a contract in fact, the party in default
is not allowed to deprive the injured party of the right to take
advantage of such default by way of recoupment or counter-
claim by alleging that the contract was tortiously violated.'
288; Fowler v. Payne, 49 Miss. 32;
Breese v. McCann, 52 Vt. 498; Fair-
man V. Fluck, 5 Watts, 516; Giith-
man v. Castleberry, 49 Ga. 272; Phil-
lips V. Mouges, 4 Whart. 225; Hat-
field V. Fullerton, 24 111. 278; Lind-
ley V. Miller, 67 111. 244.
Where the board of supervisors
allowed a claim for repairing a
bridge, and issued a warrant there-
for, and afterwards the claimant
committed a breach of his contract
by failing to keep it in repair pur-
suant to his bond, and he and his
sureties became insolvent, held, that
the board, in an action of mandamus
to compel payment of the warrant,
could recoup the breach, occurring
before notice of assignment, against
the assignee of the warrant. Jeffer-
son County V. Arrghi, 51 Miss. 668.
iMcSloy V. Ryan, 27 Mich. 110;
D'Armond v. Pullen, 13 La. Ann.
137: Johnson v. Hoffman, 53 Mo. 504.
■''Miller v. Gaither, 8 Bush, 152;
Myers v. Burns, 35 N. Y. 269; Hexter
V. Knox, 63 N. Y. 561; Guthman v.
Castleberry, 49 Ga. 272; Fairman v.
Fluck, 5 Watts, 516; Lunn v. Gage,
87 111. 19; Kimball v. Doggett, 62 111.
A pp. 528; Baker v. Fawcett, 69 id.
300.
The tenant may rely upon his
landlord to repair according to his
agreement, and is not barred of the
right to recoup because he might
have made the repairs at small cost.
Culver v. Hill, 68 Ala. 66, 44 Am.
Rep. 134.
3 Davidson v. Wheeler, 17 R I. 433,
22 Atl. Rep. 1022; Cole v. Colburn, 01
N. H. 499; Morrison v. Love joy, 6
Minn. 319; Hatchett v. Gibson, 13
Ala. 587; Williams v. Schmidt, 54 111.
205; Chamboret v. Cagney, 2 Sweeny,
378, 41 How. Pr. 125; Starbird v. Bar-
rens, 43 N. Y. 200; Wadley v. Davis,
63 Barb. 500; Griffin v. Moore, 52 Ind.
295; Mc Arthur v. Green Bay, etc. Co ,
34 Wis. 139; Bitting v. Thaxton, 72
N. C. 541 ; Price v. Lewis, 17 Pa. St.
51, 55 Am. Dec. 536; Scott v. Kenton,
81 111. 96. See Scheuuert v. Kaebler,
23 Wis. 523.
In all cases in which the parties
have entered into an express con-
tract and in which a tort has been
suffered, which the sufferer may
waive and sue in assumpsit, a coun-
ter-claim may be made under the
460
LEGAL LIQUIDATIONS AND REDUCTIONS.
[§ 183.
Where there was an exchange of chattels the court said : Here
are mutual and adverse claims for damages growing out of one
transaction. Each party sold to the other a chattel and took
another chattel in payment. For misrepresentations of the
contract. Bai'nes v. McMullins, 78
Mo. i?60. And where tlie actor elects
to sue in tort lor a wrong originating
in or growing out of a contract
wliicli he pleads as an inducement,
the defendant may counter-claim
for damage sustained by the breach
of the contract. Kamerick v. Castle-
man, 23 Mo. App. 481.
The I'uie in Pennsylvania is that,
independently of statute, any matter
eitiier of contract or of tort, imme-
diately connected with the plaintiff's
cause of action, may be set up by
way of defense to the action and in
abatement of the plaintiff's damages
only; any matter of contract may be
set up by way of counter-claim under
the statute, not only to defeat the
action but for the purpose of estab-
lisliing a liability of the plaintiff to
the defendant in excess of the latter's
demand. No mere matter of tort
can be availed of by the defendant
under the statute. Dushane v. Bene-
dict, 120 U. a 630, 644, 7 Sup. Ct. Rep.
696, citing many Pennsylvania cases.
In Conner v. Winton, 7 Ind. 523, the
court defined a counter-claim to be
that which might have arisen out of,
or could have had some connection
with, the original transaction in the
view of the parties, and which at the
time the contract was made they
could have intended might in some
event give one a claim against the
other for compliance or non-compli-
ance with its provisions.
In Slay back v. Jones, 9 Ind. 472,
the court, referring to recoupment
and counter-claim, said: "They re-
late more especially to damages for
breach of contract which may be
recouped in a suit for what may have
been done or rendered in part per-
formance of a contract. In such
cases the cause of action and defense
are part of the same transaction."
In Love joy v. Robinson, 8 Ind. 399;
Terre Haute & I. R. Co. v. Pierce, 95
Ind. 496, the court say that trespasses
cannot be made to compensate each
other.
In Minnesota independent torts
cannot be counter-claimed. Allen v.
Coates, 29 Minn. 46, 11 N. W. Rep. 132.
In Barhyte v. Hughes, 33 Barb.
320, and Loewenberg v. Rosenthal,
18 Ora 178. 23Pac. Rep. 601, the word
"transaction" was construed to re-
fer to business dealings, and did not
include torts. Macdougall v. Ma-
guire, 35 Cal. 274, 95 Am. Dec. 98.
A counter-claim founded on con-
tract cannot be interposed in an ac-
tion based on fraud. People v. Den-
nison, 84 N. Y. 272; Davis v. Frederick,
6 Mont. 300; Humbert v. Brisbane,
25 S. C. 506; Copeland v. Young, 21
id. 275.
Where there is no contract rela-
tion between the parties touching
the subject in question, mutual torts
committed at the same tiiue or in
such succession or sequence as would
make them parts of the res gestce
cannot be made the basis of recoup-
ment or counter-claim. In an action
for assault and battery the defend-
ant cannot counter-claim or recoup
for a battery committed at the same
affray by the plaintiff on the defend-
ant (Schnaderbeck v. Worth, 8 Abb.
Pr. 37); nor can the defendant in an
action for slander counter-claim for
slanderous words uttered by the
plaintiff. Kemp v. Amacker, 13 La.
65.
§ 183.]
KECOUPMENT AND COUNTER-CLAIM.
4G1
character alleged each party may generally sue in contract or
tort. If the plaintiff had declared in contract, alleging that
the defendant agreed that his horse was sound as far as he
knew, knowing him to be unsound, it cannot be doubted that
In Askins v, Hearns, 3 Abb. Pr. 1S4,
Justice Emott thought a counter-
claim could not be sustained upon
the following facts: The plaintiff
sued for damages for convei'sion of a
ring. The defendant alleged an ex-
change of rings, each to be kept
until the other should be returned,
and averred a tender of the one and
demand of the other, and asked
judgment for his ring. Such a coun-
ter-claim would now be allowed with-
out hesitation. Hoffman, J., said of
this case, that "a distinction may be
suggested, that where the ground of
each claim is really a contract, al-
though the form of action under the
old system would be for a wrong,
then, when the transaction that
gives rise to each is the same, the
code is broad enough to include a
counter-claim. The exchange alleged
of the rings was in fact a mutual
agreement." Xenia Branch Bank v.
Lee. 7 Abb. Pr. 377. In this case Wood-
ruff, J., said: "The great question
in controversy is, in an action in the
nature of trover by a plaintiff who
has indorsed notes or bills of ex-
change, brought to recover the value
thereof from a defendant in whose
possession they are, and who claims
title thereto through the plaintiff's
indorsement, can the defendant set
up title in himself, demand of pay-
ment, protest and notice, and ask by
way of counter-claim a judgment
against the plaintiff as indorser?"
It was decided in the affirmative.
After quoting subdivisions 1 and 2
of section 150 of the New York code,
the judge said: "This division of
the section shows that there may be
a counter-claim when the action
itself does not arise on contract; for
the second clause is expressly con-
fined to actions upon contract ami
allows counter-claims in such casek
of any other cause of action alst
arising on contract; and thig maj
embrace probably all cases hereto
fore denominated 'set-off,' legal or
equitable, and any other legal or
equitable demand, liquidated or un-
liquidated, whether within the proper
definition of set-oflf or not if it arise
on contract. Gleason v, Moen, 2
Duer, 639. The first subdivision
would therefore be unmeaning as a
separate definition if it neither con-
templated cases in which the action
was not brought on the contract it-
self in the sense in which these words
are ordinarily used, nor counter-
claims which did not themselves
arise on contract. The first subdi-
vision by its terms assumes that the
plaintiff's complaint may set forth,
as the foundation of the action, a
contract or a transaction. The legis-
lature in using both words must be
assumed to have designed that each
should have a meaning; and in our
judgment this construction should
be according to the natural and ordi-
nary signification of the terms. In
this sense every contract may be said
to be a transaction, but every trans-
action is not a contract. Again, the
second subdivision having provided
for all counter-claims arising on con-
tract — in all actions arising on con-
tract — no cases can be supposed to
which the first subdivision can be
applied unless it be one of three
classe.s, viz. : 1st. In actions in which
a contract is stated as the plaintiff's
claim — counter-claims which arise
462
LEGAL LIQUIDATIONS AND REDUCTIONS.
[§ 183.
the defendant may recoup his damages. The fact that the de-
fendant sues in tort does not complicate the matter. It is not
more difficult, or less desirable, in such an action to have the
whole litigation adjusted in a single suit.*
out of the same contract; or, 2d. In
actions in which some transaction,
not being a contract, is set forth as
the foundation of the plaintiff's
claim —counter-claims which arise
out of the same transaction; or, 3d.
In actions in which either a contract,
or a transat'tion which is not a con-
tract, is set forth as the foundation
of the plaintiff's claim — counter-
claims which neither arise out of the
same contract, nor out of the same
transaction, but which are connected
with the subject of the action."
In Glen & Hall M. Co. v. Hall. 61
N. Y. 226, 19 Am. Rep. 278. an ac-
tion was brought to restrain the de-
fendant from using the plaintiff's
trade-mark; the defendant claimed
it was his, and asked damages for
plaintiff's use of it by way of coun-
ter-claim, and it was held to be
proper.
A claim on the part of the defend-
ant for the price and value of the
Identical goods which are the sub-
ject of the action is a cause of action
arising out of the same transaction
alleged as the foundation of the
plaintiff's claim, or is at least con-
nected with the subject of the ac-
tion. Thompson v. Kessel, 30 N. Y.
383; Brown v. Buckingham, 11 Abb.
Pr. 387.
The words "subject of the action "
refer to the origin and ground of the
plaintiff's right to recover rather
than to the thing itself in contro-
versy. Collier v. Erwin, 3 Mont. 142.
In an action for assault and bat-
tery the injury which provoked the
defendant to commit the wrong is
not connected with the subject of
the action. "Ward v. Blackwood, 48
Ark. 396, 3 S. W. Rep. 624.
The debaucheryof the defendant's
daughter is not ground for a counter-
claim in an action brought by him
guilty thereof to recover money ob-
tained by duress. Heckman v.
Swartz, 55 Wis. 173, 12 N. W. Rep.
439.
In an action against a judgment
creditor for the unlawful seizure of
exempt property the defendant can-
not set up the judgment under which
the seizure was made as a counter-
claim. Elder v. Frevert, 18 Nev. 446,
3 Pac. Rep. 237.
The "subject of the action " is the
facts constituting the plaintiff's
cause of action. The mere fact that
the defendant sets up acts on the
part of the plaintiff which are pre-
judicial to his rights, and alleges
that these acts on his part give the
reason the defendant conducted
himself as complained of by the
plaintiff, does not show such a con-
nection as is necessary to constitute
such acts a counter-claim. IMulber-
ger V. Koenig, 63 Wis. 558, 22 N. W.
Rep. 745. The word " connected "
may have a narrow or broad sig-
nification, according to the facts of
the case.
"The counter-claim must have
such relation to and connection with
the subject of the action that it will
be just and equitable that the con-
troversy between the parties as to
the matters alleged in the complaint
and the counter-claim should be set-
tled in one action by one litigation :
and that the claim of the one should
be offset against or applied upon the
1 Carey v. Guillow, 105 Mass. 18, 7 Am. Rep. 494.
183.]
KECOUPMENT AND COUNTER-CLAIM.
403
If the buyer of goods brings an action against the seller for
not completing the contract the latter may counter- [288, 280]
claim or recoup for the goods already delivered. • And so in
an action by the vendor to recover the price of goods sold and
only delivered in part the purchaser may recoup any damao-es
sustained by him by reason of the failure or refusal to deliver
the residue;^ and in replevin for goods sold with reservation
of title until payment, for failure to deliver at the time fixed ; '
and generally for failure to deliver as agreed although the
contract is severable and part delivery has been accepted;*
and in an action by the seller for the price the buyer may
recoup for any deficiency in quantity, delay in delivery or
breach of warranty.^ So in an action on a note given for the
good will of a business the defendant may recoup his dama«"es
resulting from the plaintiff's resumption of that business;^ and
claim of the other." This rule in-
cludes a ease where a second mort-
gagee in possession of land commit-
ted waste for the alleged purpose of
depriving the defendant, the first
mortgagee, of his security. In an
action for the conversion of wood
cut by the second mortgagee the
damage sustained by the prior in-
cumbrancer was connected with the
subject of the action. Carpenter v.
Manhattan L. Ins. Co., 93 N. Y. 552.
See Thomson v. Sanders, 118 id. 252,
23 N. E. Rep. 874.
In an equitable action to cancel
an insurance policy a counter-claim
alleging a cause of action on the pol-
icy for the loss of property insui-ed
is connected with the subject of the
action. Revere F. Ins. Co. v. Cham-
berlin. 56 Iowa, 508, 8 N. W. Rep.
338. 9 id. 386.
The penalty imposed upon a na-
tional bank for taking an unlawful
rate of interest cannot be counter-
claimed in an action upon the instru-
ment discounted by it. Barnet v.
Nat. Bank, 98 U. S. 555. See, gener-
ally, Keegan v. Kinnare, 123 111. 280,
14 N. E. Rep. 14; Evans v. Hughey,
76 111. 115; Nolle v. Thompson, 3
Met. (Ky.) 121; Kingman v. Draper,
14 111. App. 577; Cow Run Co. v.
Lehmer, 41 Ohio St. 384; Tarwater
V. Hannibal, etc. R. Co., 42 Mo. 193;
McArthur v. Green Bay, etc. Co., 34
Wis. 139; Walsh v. Hall, 66 N. C.
233; Walker v. Johnson, 28 Minn.
147, 9 N, W. Rep. 632; Poston v. Rose,
87 N. C. 279; Whitlock v. Ledford, 82
Ky. 390; Cornelius v. Kessel, 58 Wis.
237, 16 N. W. Rep. 550.
1 Leavenworth v. Packer, 52 Barb.
132.
2Harrolson v. Stein, 50 Ala. 347:
Piatt V. Brand. 26 Mich. 178; Bowker
V. Hoyt, 18 Pick. 555.
3 Ames Iron Works v. Rea, 56 Ark.
450, 19 S. W. Rep. 1063,
^Gomer v. McPhee, 2 Colo. App.
287, 31 Pac. Rep. 119; Booth v. Ty-
son, 15 Vt. 515; Evans v. Chicago,
etc. R. Co., 20 111. 189.
5 Cooke V. Preble, 80 111. 318; Hitch-
cock V. Hunt, 28 Conn. 843; Stiegle-
man v. Jeffries, 1 S. & R. 477, 7 Am.
Dec. 626.
eWarfield v. Booth, 33 Md. 63;
Herbert v. Ford, 29 Me. 546; Burk-
hardt v. Burkhardt. 36 Oiiio St. 261.
464 LEGAL LIQUIDATIONS AND EEDUOTIONS. [§ 184.
in an action on an agreement not to set up business in a cer-
tain place the defendant may recoup the amount agreed to be
paid for the good will.' A contract which gives the sole right
to sell an article in a specified place is not so disconnected with
a note executed at the same time for the purchase-money of
the article to be sold as that the damages resultmg from the
breach of the former cannot be recouped in a suit on the
latter.-
§ 184, Recoupment between vendor and purchaser. On
the same principles recoupment is reciprocally available be-
tween vendor and purchaser of real estate as well as of per-
sonal property. Eecoupment may be had against the vendor
for false representations affecting the identity and value of
the land.* The purchaser's right to do so is not affected by
the fact that the sale included both personal and real property,
and that the misrepresentation related to only one class, if the
transaction and the consideration were an entirety.* If tenants
in common make partition to each other by quitclaim deeds
the law implies a warranty that each will make good to the
other any loss resulting from a superior title ; ^ hence a counter-
claim may be maintained by the tenant who is evicted, on that
account, against his co-tenant.^ In debt on a bond given for
real estate or other action for the price the defendant may re-
coup his damages for the plaintiff's breach of an agreement to
give possession, as well as for injury to the premises,'^ or for the
violation of an agreement to dig a well on the premises sold.*
So a vendee's action to recover the purchase-money is subject
to recoupment for his negligent destruction of the subject of
the purchase.^ Recoupment has been allowed, in a suit for
1 Baker v. Connell, 1 Daly, 469. « Huntley v. Cline, 93 N. C. 458.
2Andre v. Morrow, 65 Miss. 315, 7 7 Patterson v. Hulings, 10 Pa. 506;
Am. St. 658, 3 So. Rep. 659. Owens v. Rector, 44 Mo. 389; Gordon
3 James v. Elliot, 44 Ga. 237; Estell v. Bruner, 49 Mo. 570; Grand Lodge
V. Myers, 56 Miss. 800; Warvelle on v. Knox, 20 Mo. 433; Streeter v.
Vendors (2d ed.), § 962; Mulvey v. Streeter, 43 111. 155; Fetternecht v.
King, 39 Ohio St. 491. McKay, 47 N. Y. 426; Abrahamson
* Baughman v. Gould, 45 Mich. 481, v. Lamberson, 72 Minn. 308, 75 N. W.
8 N. W. Rep. 73. Rep. 226.
5 Nixon V. Lindsay, 2 Jones' Eq. « Maguire v. Howard, 40 Pa. 391.
230; Rogers v. Turley, 4 Bibb, 355; 9 Hatchett v. Gibson, 13 Ala. 587.
Morris v. Harris, 9 Gill, 26.
§ 184.] KECOUPMENT AND COUNTER-CLAIM. 405
purchase-money, for damages done to the premises by an [290]
adverse claimant, pending a litigation with the vendor, in
which the latter's title was maintained; because, as plaintiff,
he could have indemnified himself against the spoliator by the
recovery of rnestie profits.^
It is well settled that when a deed has been made and ac-
cepted, and possession taken under it, defects in the title will
not enable the purchaser to resist the payment of the purchase-
money, or recover more than nominal damages on his cove-
nants for title, except in some states on the covenant of seizin,
while he retains the deed and possession, and has been sub-
jected to no inconvenience or expense on account of the de-
fect.^ Though if no title or possession passed by the deed it
would seem that any undertaking for payment of the purchase-
money would be void for want of consideration notwithstand-
ino- the covenants in the deed.'
A vendee is authorized to extinguish an incumbrance or to
remedy a defect of title after a breach of thp covenant of war-
ranty, without a special request from or the consent of the
vendor, and may recoup the amount reasonably paid for that
purpose in an action for purchase-money, where there are cove-
nants for title and against incumbrances.* So the vendee may
iWeakland V. HofEman, 50 Pa. 513, 17 Ark. 254; Tillotson v. Grapes, 4
88 Am. Dec. 560. N. H. 444.
2Whislerv. Hicks, 5 Blackf. 100, ^ Delavergne v. Norris, 7 Johns.
33 Am. Dec. 454; Delavergne v. 358, 5 Am. Dec. 281; Stanard v. Eld-
Norris, 7 Johns. 358, 5 Am. Dec. 281; ridge, 16 Johns. 254; Johnson v.
Stanard v. Eldridge, 16 Johns. 254; Collins, 116 Mass. 393; Leffingwell v.
Stephens v. Evans, 30 Ind. 39; Brandt Elliott, 10 Pick. 204; Brooks v. Moody,
V. Foster, 5 Iowa, 287; McCaslin v. 20 Pi'-^k. 474; Norton v. Babcock, 2
State, 44 Ind. 151; Edwards v. Bo- Met. 510; Doremus v. Bond, 8 Blackf.
dine, 26 Wend. 109; Abbott v. Allen, 368; Baker v. Railsback, 4 Ind. 533;
2 Johns. Ch. 519; Bumpus v. Platner, Brandt v. Foster, 5 Iowa, 287; Mc-
1 id. 213; Farnham v. Hotchkiss, 2 Daniel v. Grace, 15 Ark. 465; Lamer-
Keyes, 9; Warvelle on Vendors (2d son v. Marvin, 8 Barb. 11; Detroit &
ed.), t; 862. But see Walker v. Wil- M. R. Co. v. Griggs, 12 Mich. 45; Still-
son, 13 Wis. 522; Hall v. Gale, 14 well v. Chappell, 30 Ind. 72; Brown
Wis. 54; Akerly v. Vilas, 21 Wis. 88; v. Crowley. 39 Ga. 376, 99 Am. Dec.
Lowry v. Hurd, 7 Minn. 356; Scant- 462; Deen v, Herrold, 37 Pa. 150; Key
lin V. Allison, 12 Kan. 85; Tarpley v. v. Henson, 17 Ark. 254; Brown v.
Poage, 2 Tex. 139. Starke, 3 Dana, 316; Burk v. Clem-
3 Dickinson v. Hall, 14 Pick. 217; ents, 16 Ind. 132; Schuchmann v.
Rice v. Goddard, id. 293; Trask v. Knoebei, 27111. 175; Christy v. Ogle,
Vinson, 20 id. 105; Key v. Henson, 33 111. 295; Kent v. Cantrall, 44 Ind.
Vol. I — 30
4:Q6 LEGAL LIQUIDATIONS AND KEDUCTIONS. [§ 184.
[291] recoup his damages on the covenant of warranty after
the title has failed and there has been an eviction, or what is
equal thereto.^ In some states, however, the defense for par-
tial failure of title to real estate is not allowed at law in actions
for the price.^ Generally no difference is made as to the exer-
cise of the right of recoupment whether the plaintiff's action
is brought on the original contract, or on a note or other
security given for the price, and the latter under seal.' Such
a distinction, however, seems to be recognized in New Jersey *
and in England. In an action on a bill of exchange for goods
supplied, which were " to be of good quality and moderate
price," and to be estimated at about 400^., bills having been
given for that amount, it was no defense that the goods turned
out to be worth much less than the estimated price. Lord
Tenterden said: "The cases cited by the plaintiffs have com-
pletely established the distinction between an action for the
price of the goods and an action on the security given for
them. In the forriier, only the value can be recovered; in the
latter, I take it to have been settled by these cases, and acted
upon ever since as law, that a party holding bills given for
[2\)2'] the price of goods supplied can recover upon them unless
there has been a total failure of consideration. If the consid-
452; Robinius v. Lister, 30 Ind. 143, 63; Judd v. Dennison, 10 Wend. 512;
95 Am. Dec. 674; Davis v. Bean, 114 Payne v. Cutler, 13 Wend. GOo; Good-
Mass. 358; Scantlin v. Allison, 13 win v. Morse, 9 Met. 278; Purkett v.
Kan. 85; McKee v. Bain, 11 Kan. 569. Gregory, 3 111. 44; Christy v. Ogle, 33
iMcDaniel v. Grace, 15 Ark. 487; 111. 295; Hitchcock v. Hunt, 28 Conn.
Tallmadge v. Wallis, 25 Wend. 107; 343; Mears v. Nichols. 41 111. 207, 89
Sargeant v. Kellogg. 10 III. 273: Wil- Am. Dec. 381; Kellogg v. Denslow,
son V. Burgess, 34 id. 494; Coster v. 14 Conn. 411; Wilmot v. Hurd, 11
Monroe Manuf. Co., 2 N. J. Eq. 467; Wend. 585: Dailey v. Green, 15 Pa.
Tone V. Wilson, 81 111. 529; McDowell 118; Ward v. Reynolds, 32 Ala. 384;
V. Milroy, 69 id. 498. Key v. Henson, 17 Ark. 254.
2 CuUum V. Bank of Mobile, 4 Ala. In an action by the vendee upon
21, 37 Am. Dec. 725; Starke v. Hill, the covenants in his deed the vendor
6 Ala. 785: Tankersly v. Graham, 8 may recoup the unpaid purchase-
id. 247; Helvenstein v. Higgason. 35 money or notes given to represent
Ala. 259; Morrison v. Jewell, 34 Me. the same. Beecher v. Baldwin, 55
146; Thompson v. Mansfield, 43 Me. Conn. 419, 12 Atl. Rep. 401, 3 Am.
490; Wheat v. Dotson, 12 Ark. 699; St. 57.
Bowley v. Holway, 124 Mass. 395. * Price v. Reynolds, 39 N. J. L. 171;
3 Harrington v. Stratton, 22 Pick. Hunter v. Reiley, 43 id. 480.
510; Van Epps v. Harrison, 5 Hill,
§ 1S5.] kecoupme:nt and cou>;TEii-cLAiM. 467
cration fails partially, as by the inferiority of the article fur-
nished to that ordered, the buyer must seek liis remedy bv
cross-action. The warranty relied on in this action makes no
difference." ^
In Wisconsin it has been held that where notes are given
for the contract price they are not payment unless so agreed ;
and in a suit upon one of several such notes it will be pre-
sumed, in the absence of evidence, that those not yet due are
still in the vendor's hands, and that it is error to render jud fo-
ment for the defendant on a counter-claim for the excess of
his damages for breach of warranty over the note in suit.^ It
was held to be unjust to allow the defendants full damages for
breach of warranty, the same as though they had paid for the
property, when these damages largely exceed the amount
sued for. In Minnesota the decisions are to the contrary and
rest upon the principle that the defendant's cause of action is
one and indivisible; that a recovery of a part of the damages
would bar a subsequent counter-claim to recover for the
remainder.*
§ 185. Liquidated and unliquidated damages may be
recouped. It is immaterial whether the damages which a de-
fendant seeks to recoup or counter-claim are liquidated or un-
liquidated; nor is it material whether the plaintiff's demand is
liquidated or not.^ The theory of this defense being the set-
ting off of the damages on one cause of action against those
recoverable on another to avoid the necessity of other suits,
1 Obbard v. Betham, Moo. & M. 483; Lierz v. Morris, 19 id. 73; Weaver v.
Morgan v. Richardson,! Canip. 40, Penny. 17111. App. 628: Batterman v.
n.; Day v. Nix. 9 Moore, 159; Trickey Pierce, 3 Hill, 171; Ward v. Fellers,
V. Larne, 6 M. & W. 278; Gascoynev. 3 Mich. 281; Winder v. Caldwell, 14
Smith, McC. & Y. 338; Warwich v. How. 434; Van Buren v. Digges, 11
Nairn, 10 Ex. 762. id. 461; McLure v. Rush, 9 Dana, 64;
'^ Aultman & T. Co. v. Hethering- Bayne v. Fox, 18 La. 80; Stoddard v.
ton, 42Wis. 022; Aultman&T. Co. V. Treadwell, 26 Cal. 294; Keyes v.
Jett, id. 488. Western Vermont Slate Co., 34 Vt
3 Geiser Threshing Machine Co. v. 81: Hubbard v, Fisher, 25 Vt, 539;
Farmer. 27 Minn. 428, 8 N, W. Rep. Dennis v. Belt, 30 Cal. 247; Kaskas-
141; Minneapolis Harvester Works kia Bridge Co. v. Shannon, 6 111. 15;
V. Bonnallie, 29 Minn. 373, 13 N. W. Schubert v. Harteau, 34 Barb. 447;
Rei>. 149. Speers v. Sterrett, 29 Pa. 192; Hayne
* North German Lloyd Steamship v. Prothro, 10 Rich. 218.
Co. v. Wood, 18 Pa. Super. Ct 488;
468 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 186.
where both arise out of the same transaction, the defendant
puts forward a substantive cause of action, becomes an actor
to assert and prove it, with no other hampering conditions
than would apply to him as plaintiff in a separate action upon
his claim. When it appears to be so connected with the sub-
ject of the plaintiff's action as to be available as a counter-
[293] claim or b}'^ way of recoupment, it must be pleaded and
proved according to the same rules as when it is made the
basis of an action; the damages, if of such nature as to be
submitted to the consideration of a jury in a suit brought for
their recovery, are equally subject to determination by a jury
for the purpose of redress in favor of a defendant. The policy
of admitting this defense to avoid circuity of action obviously
embraces all cases where the rights of the parties are of such
a character as to be susceptible of adjustment in one action.
Accordingly, where the defense has the necessary connection
with the subject of the plaintiff's action and the rights of both
parties may be finallj^ and justly settled b}'^ one adjudication,
it is not essential that the damages on either side should be
liquidated, nor of the same nature; — they may be liquidated
on one side and unliquidated on the other ; on one side they
may be claimed strictly for violation of contract, and on the
other for fraud,^ or negligence,'^ or other tort/ or for tort on
both sides.*
§ 186. Affirmative relief not obtainable. Eecoupment is
generally available only as a defense; for, except by statute,
it can have no further effect than to answer the plaintiff's
damages in whole or in part; the defendant cannot recover any
balance or excess,^ It is not necessary that it be a full de-
fense;® it cuts off so much of the plaintiff's damages as the
cross-claim comes to,^ and when sufficient in amount may, of
course, satisfy his claim entirely,^ The verdict will then be
1 See § 179. ^ Hay v. Short, 49 Mo. 139; Ward v.
2 § 180, Fellers, 3 Mich, 281 ; Estell v. Myers,
3 §180. 54 Miss, 174; Fowler v, Payne. 52
* Carey v. Guillow. 105 Mass. 18; Miss. 210. Contra, Johnson v. White
Estell V. Myers, 54 Miss. 174; Deagan Mountain Creamery Ass'n. 68 N. H,
V, Weeks, 67 App. Div. 410, 73 N. Y, 437, 36 Atl. Rep. 13, 73 Am. St. 610.
Supp. 641; Pelton v. Powell, 96 Wis. 6 Ross v, Longrauir, 15 Abb. Pr. 32a
473, 71 N, W. Rep. 887. Contra, Terre ^ ives v. Van Epps, 22 Wend. 155,
Haute & I. R, Co. v. Pierce, 95 Ind, 8 Deagan v. Weeks, 67 App. Div.
496. 410, 73 N. Y. Supp. 641.
§ 186.] KECOUPMENT AND COUNTER-CLAIM. 469
for the defendant. In this respect it is different from mere
mitigation, for damages can never be mitigated below a nom-
inal sum. But however large the damages assessable in respect
of the defendant's cross-claim set up by way of recoupment, if
it exceed the plaintiff's damages only so much is taken into
account as is required to annul his demand; the excess is lost.'
This limitation has been obviated by the defendant brino^ino-a
cross-suit as well as setting up the claim by way of re- [ii94]
coupment and having the actions consolidated or tried to-
gether.^ If two cross-actions are so tried, one for the price of
property sold and the other for fraud in the vendor, the jury,
if they find the fraud and that the damages equaled or ex-
ceeded the purchase-mone}^ may render a verdict for the de-
fendant in the first action and for the plaintiff in the second
for the excess, if any, of such damages.' But in such case a party
who defends by recoupment and brings a cross-suit, on the
trial of both together is not entitled to have damages assessed
in both actions for the same breach of contract, nor to divide
his claim for damages as he sees fit between the two. Both
actions being tried together, however, his entire damages for
breaches of the contract, or in respect of his cross-demand,
must be assessed and applied first, to cancel in whole or in
part the damages of the plaintiff in the first action; then, if
there be an excess, it should be returned in a verdict for the
plaintiff in the cross-action.* Very generally in this country
authority has been given to render judgment in favor of the
defendant for any excess of damages after satisfying the de-
mand against which his cross-claim is preferred. But when
the plaintiff sues as assignee of the demand, the defendant
having a cross-claim against the assignor can onl}" use it for
defense; to that extent it is available the same as though tho
suit were in the name of the assignor.*
1 Brunson v. Martin, 17 Ark, 270; 2 Cook v. Castner, 9 Cush.266; Star
Burlingame v. Davis, 13 111. App. 602; Glass Co. v. Morey, 108 Mass. 570.
Kingman v. Draper, 14 id. 577; Wa- ^Cook v. Castner, supra.
terman v. Clark, 76 111. 428; Stow v. * Star Glass Co. v. Morey, supra,
Yarwood, 14 id. 424; Charles City ^See § 176; Desha's Ex'r v. Robin-
Plow & Manuf. Co. v. Jones, 71 Iowa, son, 17 Ark. 228.
234, 32 N. W. Rep. 280.
470 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 187,
§ 187. Election of defendant to file cross-claim or sue
npon his demand. A defendant has an election to use such
cross-demand as a defense by way of recoupment or to bring
a separate action upon it; but he will not have an election to
set up his claim by way of recoupment unless it would be jist
and equitable, and it is practicable to adjust and allow it in the
plaintiff's action. The omission to take advantage of matter
of recoupment or counter-claim as a defense is no bar to a
[295] cross or separate action upon it; so that, though the
cross-claim be admissible by way of defense, the defendant has
an option to avail himself of it in that form or to sue upon it
in another action.* The reason for allowing the defendant an
option is that it w^ould greatly diminish the benefit to which
he is entitled and in some cases wholly neutralize it, because,
while the right of action exists, the extent to which the breach
of warranty or of contract may afford a defense is usually un-
certain, it may require sometime for the development of all
the injury which will result from the plaintiff's misconduct or
default. It is unreasonable, therefore, that he should have the
right to fix the time at which the money value of his wrong-
doino; or neMigent omission shall be ascertained.^
But the defendant will be denied the right of recoupment
w^hen it cannot be justly and equitably allowed.* It is a de-
fense on principles borrowed from equity, and if a superior
equity intervene it will be denied; and when any equitable
barrier exists and the whole controversy cannot be settled in
the plaintiff's action a separate suit must be brought. On this
ground, in several states, defenses of this kind in suits for the
purchase-money of land based on breaches of covenants for
title will not be allowed in actions at law.* The owner of a
lot entered into a contract with others for the latter to build
1 Barth v. Burt, 43 Barb. 628; Mim- so. Hitchcock v. TurnbuU, 44 Minn,
naugh V. Partlin, 67 Mich. 391, 34 N. 475, 47 N. W. Rep. 153.
W. Rep. 717. Where notes are given on a settle-
2 Davis V. Hedges, L. R. 6 Q. B. G87. ment for a balance found due after
3 Judgment may be ordered for the all the grounds for claiming a recoup-
plaintiff on the pleadings if the ment are known to their maker he
answer states a counter-claim for is estopped from urging any such
merely nominal damages and the matters in defense to an action upon
costs will not be affected by doing them. Hill v. Parsons, 110 111. 107.
♦See S 184.
§ 187.] KECOUPMENT AND COUNTEK-CLAIM. 471
a warehouse u])on it for a specified sum. The contract also
contained a lease to this party for thirteen years from the date
fixed for its completion at a stated yearly rent. After the
building had been erected the builders and lessees entered a
mechanic's lien for the work and materials, and two years
afterwards the property was sold, and it had to be determined
how the fund should be distributed. The lessees had occupied
for two years without paying any rent, and during that time
the lessor became indebted to them on account to an amount
nearly equal to the rent for that period. The court below ex-
cluded the lessee's account as a set-off against the rent, and
set off the rent against the lien debt because these latter were
part of one transaction. This decision was the subject of re-
view. Thompson, J., said: "There are undoubtedly cases in
which the transaction is so entirely a unit that it is most just
and proper when litigation arises that matters arising directly
out of it should be determined in one suit. These cases are
not parallel with this. Here the same paper, it is true, con-
tains the contract out of which the lien arises as well as that
out of which the rent accrued; but they are as distinct and
separate covenants as if written on separate sheets of paper.
There is a complete contract for building, describing the kind
of structure, and the time when to be completed and paid for.
Then follows a complete lease of the building for a long term,
to commence shortly before its completion and to con- [296]
tinue for thirteen years. The former, the building contract,
was to be finished in about eight months, and to be then paid
for. The first year's rent would not fall due for near a year
after. These things show the distinctiveness of the covenants
as contracts. Now the lien might have been reduced under
the principle invoked by showing defectiveness in the work
and the like, and so might the rent if the landlord had been
suing for it on account of interference with the tenant's pos-
session, not amounting to eviction, but acts against quiet
enjoyment. These would be instances of claims arising in the
same transaction being allowed to be given in evidence to ex-
tinguish the claim by a liberal construction of our defalcation
act. ... It was impossible to settle the entire covenants
in one action. They were of different and distinct natures,
and to be performed at different and distinct periods. In ap-
472 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 188.
plying the rent, therefore, to the extinguishment of the lien, on
this principle alone, when the plaintiffs had other claims en-
titled to its application on equitable principles, was of course
error in the absence of appropriation by the debtor and cred-
itor. They, therefore, should have been allowed to put in
evidence their book account; if it was unpaid and unsecured,
and no appropriation by the parties of the rent, equity would
apply it to the book account in preference to the old debt
secured by the lien. This is the well settled rule. " '
In an action on a note against the executor of an accom-
modation indorser, it appeared that the note was made, in-
dorsed and transferred to the plaintiff in payment of, or as
collateral security for, an antecedent debt of a firm of which
the maker was a member; that afterwards the firm made an
assignment to the plaintiff for the benefit of the creditors, pre-
ferring the plaintiff and the defendant's testator. The answer
setting up these facts alleged also that the assets were more
than sufficient to pay in full all the preferred creditors. But
as these facts could not be established without an accounting,
and the plaintiff was entitled, when compelled to account, to
do so entirely, which could not occur in that action for the
want of necessary parties, all evidence touching the counter-
claim was properly rejected.^
§ 188. Burden of proof; measure of damages. When a
defendant sets up a cross-claim by way of recoupment he as-
sumes, like a plaintiff, the burden of proof in respect to it; and
the same rule or measure of damages applies as would be ap-
plicable in a separate suit upon such claim; subject, however,
to the limitation already mentioned, that there can be no re-
covery by a defendant for any balance found in his favor be-
j'ond the damages established on the part of the plaintiff, in
the absence of a statute authorizing it. The burden of proof
rests upon him because he asserts a claim or right, and must
therefore produce the proof necessary to make good his con-
tention.^ That the same rule of damages applies has been
1 McQuaide v. Stewart, 48 Pa. 198. 3 Mendel v. Fink, 8 III App. 378; 1
See Howe Machine Co. v. Hickox, Wliart. Ev., § 356.
106 111. 461. The defendant has the burden of
2 Bailey v. Bergen, 67 N. Y. 346. establishing all the elements of a
See Duncan v. Stanton, 30 Barb. 533. cause of action (Heedstrom v. Baker,
§ ISO.]
RECOUPMENT AND COUNTER-CLAIM.
473
repeatedly held;^ and it is universally assumed by actually
applying it.^ But the rule is the rule of compensator}'- dam-
ages — no recovery on a claim set up for recoupment can be
had for malice or any aggravation in the form of exemplary
damages.' The consideration that this defense is to avoid cir-
cuity of action, and when resorted to is a substitute, ['298]
renders it desirable and necessary to its usefulness that the
defendant, to the extent of full defense, should have the bene-
fit of the rule of damages to which he would be entitled if he
elected to bring a separate action.
§ 189. A cross-claim used in defense cannot be sued upon.
When a cross-claim is submitted as a defense by way of re-
13 IIL App. 104): and must plead
them, Rawson v. Pratt, 91 Ind. 9.
•Goodwin v. Morse, 9 Met. 278;
Myers v. Estell, 47 Miss. 4; Hitch-
cock V. Hunt, 28 Conn. 343; Tim-
mons V. Dunn, 4 Ohio St. 680.
2 Blanchard v. Ely, 21 Wend. 342
Tinsley v. Tinsley, 15 B. Mon. 454
Rogers v. Ostram, 35 Barb. 523
Stoddard v. Treadwell, 26 Cal. 294
Satchwell v. Williams, 40 Conn. 371
Cook V. Soule. 56 N. Y. 420; War field
V. Booth, 33 Md. 63; Bradley v. Rea.
14 Allen, 20; Harralson v. Stein, 50
Ala. 347; Haven v. Wakefield. 39 111.
509; Bounce v. Dow, 57 N. Y. 16;
Aultman & T. Co. v. Hetherington,
42 Wis. 622; Van Epps v. Harrison, 5
Hill, 63; Overton v. Phelan, 2 Head,
445; Timmons v. Dunn, 4 Ohio St.
680; Rotan v. Nichols, 22 Ark. 244;
Harris v. Rathbun, 2 Keyes, 312;
Railroad Co. v. Smith, 21 Wall. 255.
3 Allaire Works v. Guion, 10 Barb.
55. This case has sometimes been
cited as holding that special dam-
ages are not the subject of recoup-
ment (Benkard v. Babcock, 2 Robert.
175); and Dorwin v. Potter, 5 Denio,
306, has also been cited as holding
the same. Neither case advances
any such doctrine. In the latter
case a landlord's action for rent was
defended by way of recoupment for
his neglect to put the barns on the
demised premises in that state of re-
pair required by his agreement. The
court say, Whittlesey, J.: "The ma-
terial question here is as to the
proper rule of damages for such
neglect to repair. We do not know
what the referees adopted, but the
questions put to the witnesses after
objection would only be admissible
upon the ground that the defendant
was entitled to all the damages
which he might have sustained by
the injuries to the cows and young
cattle, the increase of food required,
and the decrease of produce by rea-
son of the state of the barns in ques-
tion. It strikes me that such dam-
ages are altogether too remote and
contingent, and that the true rule of
damages is the sum necessary to
place the barns in that state of re-
pair in which they were to be put
according to the agreement, with
interest thereon, if the referees
thought proper to allow interest."
There is no hint that this rule
was adopted because the plaintiff's
breach of contract was set up by
way of recoupment; but it is laid
down as " the proper rule of dam-
ages for such neglect to repair;" on
that subject see Myers v. Burns, 35
N. Y. 269; Hexter v. Knox, 63 N. Y.
561.
I
474 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 189.
coupment the judgment will be a bar to another action or
recoupment. A defendant has an election to avail himself of
a cross-claim by way of recoupment, or under the code as a
counter-claim, or to bring an action upon it. This choice,
however, is only final when submitted for adjudication, and is
so to prevent a second recovery. Neither pleading it in de-
fense nor bringing an action upon it will determine the elec-
tion.^ 'Where it appeared in a suit in which a cross-claim was
set up by way of recoupment that the defendants had previ-
ously brought an action for the same damages, which was still
pending, and the trial court had rejected the defense, the
appellate court said: "The court [below] seemed to have re-
garded the pendency of the other action as a sort of abate-
ment of the defendants' plea, or to have deemed the bringing
of the suit (by the defendants) ... as a conclusive elec-
tion to prosecute a cross-action, and not to recoup or use the
claim as a defense under any circumstances while that action
should continue. There is in this holding a misapprehension
of the defendants' position. They are not prosecuting two
actions, one of which abates the other. In an endeavor to re-
cover their damages they find themselves prosecuted by their
adversary. They may defend by setting up any matter which
[299] the law recognizes as a defense, whether it be a cause
of action, or whether it be a judgment actually recovered
therein — the only difiference being that after judgment it
must be used as a judgment and by way of set-off. The elec-
tion made by the defendants was not an election not to recoup.
At that time it was an election between prosecuting to estab-
lish their claim, or suffering the injury without seeking any
redress. And when the plaintiff forced them into court, . . .
their opportunity to use their claim by way of defense first
arose, and they had a right to embrace it. Until judgment in
one of the suits, the right to press the claim in the other con-
tinued."^ But after a judgment in a separate action upon the
1 McDonald v. Christie, 42 Barb. 36; 2 Naylor v. Schenck, 3RD. Smithy
Fabbricotti v. Launitz, 3 Sandf. 743; 135; Lindsay v. Stewart, 72 Cal. 540,
Eankin v. Barnes, 5 Bush, 20; Gil- 14 Pac. Rep. 516.
more v. Reed, 76 Pa. 462. See Cook If the matter pleaded in recoup-
V. Castner, 9 Cush. 266; Miller v. ment can be set up in defense to a
Freeborn, 4 Robert. 608. suit upon the contract out of which
I
§ ISO.]
RECOUPMENT AND COUNTER-CLAIM.
ii>
claim it is merged in the judgment; or, if rejected, barred; if
the issue embraces it, the judgment is conclusive.^
In an action for breach of warrant}'- in the sale of per- [300]
sonal property these facts appeared: A note given for the
it arose and which is pending it will
not be proper to plead it in another
suit in the same court. Jeffei'son
Lumber Co. v. Williams, 68 Tex. 656,
5 S. W. Rep. 67.
A plaintiff is not estopped from
prosecuting a suit for work and labor
by reason of the payment of a judg-
ment recovered against him by the
defendant pending such suit for
damages for the improper perform-
ance of the work and labor sued for;
the claim is not res judicata because
one suit sounded in tort and the
other in assumpait. Mimnaugh v.
Partlin, 67 Mich. 391, 34 N. W. Rep.
717.
1 Davis V. Tallcot, 13 N. Y. 184;
Kane v. Fisher, 3 Watts, S4G; Grant
V. Button, 14 Johns. 377; O'Connor
V. Varney, 10 Gray, 331; Burnett v.
Smith, 4 Gray, 50; Salem India R.
Co. V. Adams, 23 Pick. 256; Stevens
V. Miller, 13 Gray, 283; Huff v.
Broyles, 26Gratt. 283: Beall v. Pearre,
12 Md. 550; McLane v. Mdler. 10 Ala.
856; Britton v. Turner, 6 N. H. 481,
495, 26 Am. Dec. 713.
In Davis v. Tallcot, suj)ra, it was
held that a recovery in a suit upon
an agreement, wherein the right to
recover depended by the pleadings
upon the truth of the allegations
made in the complaint and denied
by the answer, that the plaintiff had
fully performed the agreement, is a
bar to an action brought subse-
quently by the defendant in the
tirst suit against the plaintiff therein
to recover damages for the alleged
non-performance of the same agree-
ment. The record of the recovery
estops the defendant from contro-
verting that the plaintiff thertjin
fully performed the contract. The
rule is not otherwise, although in
the first suit the defendant, in addi-
tion to the allegation of perform-
ance, alleged breaclies by the plaint-
iff, and claimed to recoup damages,
and at the trial expressly withdrew
the claim for damages, gave no evi-
dence touching the alleged breaches,
and the second suit was to recover
damages for such breaches.
Gardiner. C. J., said: "The defend-
ants in that (the former) action, the
present plaintiffs, insisted upon the
non-performance of the agreement
upon the part of Tallcot and Can-
field, the manufacturers of the m.i-
chineiy, for two purposes entirely
distinct in their nature and objects.
First, as a complete defense to the
action, by a denial of that which the
makers of the machinery had averred
and must prove before they could
recover anything. Second, as a
foundation for a claim in the nature
of a cross action for dama;.'es to be
deducted from the amount which
the then plaintiff might otherwise
recover. It is obvious that, by with-
drawing their claim to damages, the
then defendants did not waive the
right to insist upon their defense.
The plaintiffs, notwithstanding, must
have established their title to the
price stipulated, by proof that the
machinery was made within the
time and in the manner called for
by the agreement; and the vendees
were at liberty to meet and combat
these proofs by counter evidence on
their part. Now, this was precisely
what was done, or rather the neces-
sity for introducing evidence to sus-
tain the action was superseded by
476
LEGAL LIQUIDATIONS AND KEDUCTIONS.
[§ 189.
purchase-money bad been collected by suit; to that the now
plaintiff had pleaded non assum,psit^ and it was agreed that
under that plea he might offer the special matter in evidence
as fully as if he had specially pleaded the same or given notice
thereof; the breach of warranty now sued for the then defend-
ant offered to prove as a defense, but it was rejected by the
court because it did not tend to show a total failure of consid-
eration. On these facts the judgment in the former action
the admission of the then defend-
ants in open court 'that they were
indebted to the manufacturers for
tlie causes of action mentioned in
their complaint.' As the cause of ac-
tion and the indebtedness of the de-
fendants were by the complaint
made dependent upon a full per-
formance of the contract by the
parties who instituted the suit, the
concession of the defendants was
equivalent to an admission on the
record to that effect; and the report
of the referee followed by the judg-
ment of the court consequently
estops the parties to that suit from
ever after questioning that fact in
any controversy upon the same agree-
ment (2 Cow. & H. N. 843; 10 Wend.
80, 3 Comst 173). In the suit now
pending, however, the vendees bring
their suit upon the same conti'act
against the manufacturers, and aver
a non-performance by the defend-
ants as the sole cause of action.
They have succeeded in the court
below, notwithstanding the ob-
jection we have considered; and
there are, consequently, two records
in the same court between the same
parties, each importing absolute
verity, one of which affirms that the
manufacturers faithfully performed
said agreement 'in every respect on
or before the 7th of June, 1850; the
other, that they did not perform it
in any respect at any time.' This
flat contradiction is attempted to be
reconciled by the assertion that the
record in the firstsuit only shows that
this point might have been, not that
it was, litigated. The answer is that
the record in that case proves that
that question of performance was
directly in issue and must have been
litigated; that a recovery without
establishing the fact of performance
was a legal impossibility. Again,
the parol evidence, if admissible,
only proves that the vendees did not
rely upon a breach of the contract
upon the part of the makers of the
machinery to support their claim to
recoup. This is the course they
would naturally adopt if their dam-
ages, in their opinion, exceeded the
sum to be paid for the machinery.
Their only remedy for the excess
would depend upon defeating the
action then pending, and subse-
quently suing on the agreement.
That this was really the object of
their legal adviser is evidenced by
the fact that while the manufact-
urers recovered in their suit less
than $650, the present plaintiffs have
obtained judgment in the case un-
der review for upwards of $900.
The withdrawal of their claim to
recoup was therefore not only con-
sistent with the determination to in-
sist upon a breach of the contract on
the part of the manufacturers in or-
der to defeat the suit then pending,
but this was indispensable to the ulti-
mate recovery of their full damages
in a subsequent action." See Merriam
V. Woodcock, 104 Mass. 326.
§ 190.] RECOUPMENT AND COUNTER-CLAIM. 477
[301] was held to be a bar.^ The defense being admissible in
the former action and erroneously rejected, the judgment had
the same effect as though the claim had been admitted. The
error of its rejection should have been corrected by proceed-
ings taken in that case; therefore the exclusion of the defense
by the court had the same effect as a disallowance by a jury.-
"VVhere, notwithstanding the cross-claim is pleaded, the judg-
ment is afterwards taken by default by the plaintiff, and so
appears by the record, such claim is not barred.' The fact
that the judgment was upon default makes it as certain that
the counter-claim was not passed upon by an actual adjudica-
tion as though the plea had been formally withdrawn. If sev-
eral notes have been given for a chattel and they become due
at different times, and the defendant in an action upon the
one which matures first counter-claims for damaires arisino-
from the breach of the warranty, judgment in his favor estops
him from pleading such defense in an action subsequently
brought upon the other notes.'*
§ 190. Notice of cross-claim. This defense being a substi-
tute for an action and to avoid the necessity of another suit,
some pleading must be adopted by which the defendant evinces
his election to insist on his cross-claim as a defense. It must
make the necessary allegations and inform the plaintiff so that
he may not be taken by surprise. And it must be set up in
the answer under the code.^ The defendant is as much con-
cluded b}'" the amount of damages he claims in his counter-
claim as the plaintiff is by his complaint.^ Kecoupment can-
1 Beall V. Pearre, 13 Md. 550. Hardman, 4 E. D. Smith, 448: Lam-
2 Grant v. Button, 14 Johns. 377; son & Goodnow M. Co. v. Russell. 112
Smith V. Whiting, 11 Mass. 445. Mass. 387; Lansing v. Van Alstyne, 2
3 Bascom v. Manning. 52 N. H. 132; Wend. 561 ; Steamboat Welisville v.
Bodurtha V. Phelon, 13 Gray, 413. Geisse, 8 Ohio St. 333; Young v.
* Geiser Threshing Machine Co. v. Plumeau, Harp. 543; Maverick v.
Farmer, 27 Minn. 428, 8 N. W. Rep. Gibbs,3McCord,315;McLure v.Hart,
141; Minneapolis Harvester Works 19 Ark. 119; Hill v. Austin, id. 230;
V. Bonnallie, 29 Minn. 373, 13 N. W. Spink v. Mueller, 77 Mo. App. 85;
Rep. 149. Compare Aultman & T. Rawson v. Pratt, 91 Ind. 9.
Co. V. Hetherington, 42 Wis. 622; « Annis v. Upton, 66 Barb. 370;
Aultman & T. Co. v. Jett, id. 488. Taylor v. Butters & Peters Salt &
s Trowbridge v. Mayor, 7 Hill, 429; Lumber Co., 103 Mich. 1, 61 N. W.
Burton v. Stewart, 3 Wend. 236; Rep. 5.
Barber v. Rose, 5 Hill, 76; Crane v.
478 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 191.
not extend beyond the specific matters sued upon unless the
notice or pleading informs the plaintiff that the defendant will
go into others.^ The notice must be sufficiently certain to ap-
prise the plaintiff of the nature of the defendant's claim, and
in case of a suit upon contract it must specify the breach com-
plained of.- An averment in a cross-bill claiming a recoup-
ment of special damages for the breach of a contract, the gen-
eral damages for which appear to be only nominal, should be
special; if it only alleges tliat the defendant has been damnified
to a specified amount it is insufficient.^ A reduction of dam-
ages by way of recoupment cannot be shown under a special
plea in bar, but may be obtained under the general issue.*
Statutes concerning notice will be liberally construed; the rules
in relation to a variance between the pleadings and the proof
will not be applied to the notice, which is good if it states the
ground and substance of the defense, though it is defective in
matters of form.-^ The only way to make the objection that a
cause of action pleaded as a counter-claim is not such in the
particular case because it is in no way connected with the sub-
ject of plaintiff's action is by demurrer. If there is no demurrer
on that ground and issue is taken on the facts alleged, the right
to object is waived.^
Section 5.
marshaling and distribution.
§ 101. Definition. Marshaling is the setting of debts
[302] or assets in a certain order; distribution is the applica-
tion of funds to the paj^ment of debts marshaled. There are
therefore two kinds of marshaling, one of assets, the other of
debts. Marshaling is resorted to whenever it becomes neces-
sary practically to answer either the question in what order
certain distinct funds or properties shall bear the burden of
paying or contributing to pay a debt which is directly or indi-
1 McKevitte v. Feige, 57 Mich. 374, McCormick Harvesting Machine Co.
24 N. W. Rep. 109. v. Robinson, 60 id. 253.
a Sinker v. Diggins, 76 Mich. 557, 43 & Merrill v. Everett, 38 Conn. 40.
N. W. Rep. 674. ^Ayres v. O'Farrell, 10 Bosw. 143;
3 Hooper V. Armstrong, 69 Ala. 343. Hammond v. Terry, 3 Lans. 186;
nVadhams v. Swan, 109 III. 46; Walker v. Johnson, 28 Minn. 147,9
Hoerner v. Giles, 53 III App. 540; N. W. Rep. 632.
§ 192.] MAKSHALING AND DISTRIBUTION. 479
rcctly a charge upon all ; or, secondly, when there are several
debts directly or indirectly charged upon one fund or prop-
erty which is insufficient to pay them in full, to determine in
what order such fund shall be applied as far as it will go. In
answering the first, the court settles the order of liability
among the funds that must pay; the second, the priorities of
the claims to be paid. Under the first inquiry two classes of
persons are liable to be afi'ected: those having proprietary
interests in the fund or property marshaled, and creditors
having liens thereon.
§ 192. Sales of incumbered property iii parcels to differ-
ent purchasers. For the protection of purchasers this rule
obtains: if the creditor's lien be upon several parcels of land
for the payment of the same debt, and some of those parcels
belong to the person who in equity and justice owes, or ought
to pay, the debt, and other parcels have been transferred by
him to third persons, his part, as between himself and them,
shall be primarily chargeable with the debt.^ And if [303]
there have been successive alienations by him of parts of the
incumbered property, and the portion retained is insufficient
to discharge the entire incumbrance, the parcels transferred
will be subject to sale in the inverse order of alienation.^ The
' 2 Story's Eq., § 1233; Clowes v. have satisfied the judgment; or, if
Dickenson, 5 Johns. Ch. 285, 9 Cow. not.torestoreoraccount for the value
403; Cowden's Estate, 1 Pa. 267, 274; beyond what would, with the other,
Mason v. Payne, Walk. Ch. 459; have satisfied the judgment. That
Cooper V. Biglj% 13 Mich. 463; such alienee, having stood by and
Barnes' Appeal, 46 Pa. 350; Ammer- allowed the legal estate to pass from
man v. Jennings, 12 B. Mon. 135. liim, shall not be allowed the land
In Clowes v. Dickenson, 9 Cow. itself, with improvements made sub-
403, it was held that if the creditor sequent to the execution sale and
or any other person having control before he asserted his claim. The
of his judgment cause a sale of the true value of the aliened estate iu
aliened part before resorting to that market at the time of the execution
•retained by the judgment debtor, the sale, not the price bid for it, is the
latter part being sufficient to pay measure of compensation.
his debt, though no order or decree ^ Id.; Wieting v. Bellinger, 50 Hun,
be obtained directing the remaining 324, 3 N. Y. Supp. 361; Gage v. Mc-
portion to be first sold, such creditor Gregor, 61 N. H. 47; Vogle v. Brown,
will be required to restore the real 120 111. 338, 11 N. E. Rep. 327, 12 id.
estate so sold; or, if sold to a bona 252; Gill v. Lyon, 1 Johns. Ch. 447;
fide purchaser, to account to the Stevens v. Cooper, id. 425; James v.
alienee for the value of the real as- Hubbard, 1 Paige, 228; Gouverneur
tate so sold, if the other part would v. Lynch, 2 id. 300; Guiou v. Knapp,
480
LEGAL LIQUIDATIONS AND REDUCTIONS.
[§ 193.
operation of this rule may be waived, limited or modified bj''
the instrument executed to the earlier grantee, which will
bind all who claim under him.'
[304] § 193. Sale subject to incumbrance. If a portion
of the land covered by a mortgage is conveyed subject to the
payment of the entire mortgage by the grantee the subse-
quent purchaser of another parcel,^ or the mortgagor,' has a
right to insist that the parcel so conveyed shall be first sold to
satisfy the mortgage. The lot so sold becomes, as to the par-
ties to the conveyance, the primary fund for the payment of
the mortgage,* and the grantee thereby becomes the party
who in justice ought to pay the debt. The mortgagor becomes
then a quasi-surety, and has the right to insist upon the col-
lection of the debt first out of the land.*
6 id. 35; Skeel v. Spraker, 8 id. 182;
Patty V. Pease, id. 277, 35 Am. Dec.
683; Schryver v. Teller, 9 Paige, 173;
New York Life, etc. Co. v. Cutler, 3
Saudf. Ch. 176; Commercial Bank v.
Western Reserve Bank, 11 Ohio, 444,
38 Am. Dec. 739; Green v. Ramage,
18 Ohio, 428. 51 Am. Dec. 458; Stuy-
vesant v. Hone, 1 Sandf. Ch. 419;
Stuyvesant v. Hall, 2 Barb. Ch. 151;
Averall v. Wade, Lloyd & Gould, 252;
Lyman v. Lyman, 33 Vt. 79, 76 Am.
Dec. 151; Hurd v. Eaton, 28 111. 122;
Carter v. Neal, 24 Ga. 346, 71 Am.
Dec. 136; Root v. Collins, 34 Vt. 173;
Brown v. Simons, 44 N. H. 475;
Jenkins v. Freyer, 4 Paige, 53;
Howard Ins. Co. v. Halsey, 4 Sandf.
565; La Farge Ins. Co. v. Bell, 22
Barb. 54: Gates v. Adams, 24 Vt. 71
Chase v. Woodbury, 6 Cush. 143
Black V. Morse, 7 N. J. Eq. 509
Shannon v. Marselis, 1 id. 412; Henkle
V. AUstadt, 4 Gratt. 284; Jones v.
Myrick, 8 Gratt. 179: Britton v. Up-
dike, 3 N. J. Eq. 125: Wikoff v. Davis,
4 id. 224.
Judge Story (2 Story's Eq., § 12336)
doubts whether this last position is
maintainable upon principle; for as
between the subsequent purchasers
or incumbrancers, each trusting to
his own security upon the separate
estates mortgaged to him, it is diffi-
cult to perceive that either has, in
consequence thereof, any superiority
of right or equity over the other.
On the contrary, there seems strong
ground to contend that the original
incumbrance or lien ought to be
borne ratably between them, accord-
ing to the relative value of the es-
tates. And so the doctrine has been
asserted in the ancient as well as
modern English cases on the subject
(Harbert's Case, 3 Co. 12; Barnes v.
Racster, 1 Y. & C. New Caa 401;
Lanoy v. Duchess of Athol, 2 Atk.
448; Aldrich v. Cooper, 8 Ves. 391;
Averall v. Wade, Lloyd & Gould,
252; Bugden v. Bignold, 2 Y. & C.
New Caa 377; Green v. Ramage, 18
Ohio, 428, 51 Am. Dec. 458); and the
law is so settled in Kentucky. Dickey
V. Thompson, 8 B. Mon. 312; Morrison
V. Beck with, 4 T. B. Mon. 76: Hughes
V. Graves, 1 Litt. 319; Burk v.
Chrisman, 3 B. Mon. 50.
1 Vogel V. Shurtliflf, 28 111. App.
516; Briscoe v. Powers, 47 111. 447.
2 Caruthers v. Hall. 10 Mich. 40.
3 Mason v. Payne, Walker's Ch.
461.
4 Cox V. Wheeler, 7 Paige, 248;
Jumei V. Jumel, id. 591.
5 Harris v. Jex, 66 Barb. 233.
§ 103.] MARSHALING AND DISTRIBUTION. 481
The rule being intended for the benefit of parties having
separate interests in the property or fund on which the debt
is a lien, their relation between themselves is considered in
determining whether the burden rests upon them equally, or
if unequally, in what order their several i)roperties may bo
resorted to for payment. Where there are several heirs, or
where several persons join in a recognizance, one heir, or one
conusor, should not be charged exclusively, for their relations
and duties are equal. ^ And the same principle would apply
between several purchasers of the same date. But the prop-
erty of the party who is in equity bound to pay the debt, as
between him and the owner of other property bound for the
same debt, is the primary fund; and the court will establish
the order, between any number of persons whose property is
subject to the debt, in which resort may be had to properties
so separated in ownership. Thus, in an action of foreclosure
against G. and L. as mortgagors, where it appears that G. is
possessed of a portion of the premises in his own right, and L.
of another portion, and that a third portion is held jointly,
and it also appears that L. personally owes the mortgage debt,
or is equitably bound to pay it, the judgment should be so
entered that the interest of L. be first sold; secondly, the joint
interest; and lastly, the interest of G.-
But these equities between co-debtors, by which one [305]
part of incumbered premises becomes the primary fund for the
payment of the mortgage, may be defeated by the honajide
purchase of that part by one without notice of the facts which
raise these equities. Where A. and B., owning lands in sev-
eralty, joined in mortgaging them to secure the payment of a
joint debt, and A. afterwards executed a bond of indemnity
to B. agreeing to pay the whole mortgage debt, but subse-
quently executed on his lands other mortgages for a valuable
consideration, to parties who had no notice of the bond or agree-
ment between him and B., it was held on the foreclosure of the
mortgage that B. could not, as against the subsequent mort-
gagees, compel the collection of the whole of the original
1 Harvey v. Woodhouse, Select 2 0gden v. Glidden, 9 Wis. 46;
Cas. in Ch. 80. See Clowes v. Dick- Warren v. Boynton, 5 Barb. 13; Cor-
enson, 5 Johns. Ch. 235, 241. nell v. Prescott, id. 16.
Vol. 1 — 31
482
LEGAL LIQUIDATION'S AND EEDUCTIONS. [§§ 194, 195.
mortgage debt from the land of A. to their prejudice, and that
half of it was collectible from B.'s land.^
§ 194. Effect of creditor releasing part. A creditor, hav-
ing notice of such equities between several parties owning
property subject to his debt, cannot defeat them by releasing
the property first liable. A release by the mortgagee of a
portion of the land mortgaged, with knowledge of a prior sale
of another portion, will operate as to such prior purchaser as a
discharge yro tanto of the mortgage debt.* But a release with-
out such knowledge will not be a discharge.'
§ 195. Rights where one creditor may resort to two funds
and another to only one. A rule for the protection of cred-
itors having junior liens exists. If one creditor can resort to
two funds and another to but one of those funds, the former
will be compelled to seek satisfaction out of the fund which
the other cannot reach, if adequate,* and it can be done
[306] without prejudice to such double fund creditor.' The
rule is founded in social duty and is never enforced to the
prejudice of such creditor;^ nor where it will work injustice
1 Hoyt V, Dougherty, 4 Sandf. 462;
Root V. Collins. 34 Vt. 173.
2 Brown v. Simons. 44 N. H. 475;
Guion V. Knapp, 6 Paige, 43; Patty
V. Pease, 8 id. 277; La Farge Ins. Co.
V. Bell, 22 Barb. 54; Taylor v. Maris,
5 Rawle, 51. See Cooper v. Bigly, 13
Mich. 463; James v. Brown, 11 Mich.
35; Howard Ins. Co. v. Halsey, 4
Sandf. 565; Union Nat. Bank v.
Moiine, eta Co., 7 N. D. 201, 73 N. W.
Rep. 527.
3 Id.
4 Ball V. Setzer, 33 W. Va. 444, 10
S. R Rep. 798; Hall v. Stevenson, 19
Ore. 153, 23 Pac. Rep. 887; Glass v.
Fallen, 6 Bush, 346; Wise v. Shep-
herd. 13 111. 41; Marshall v. Moore, 36
IlL 321: Hurd v. Eaton, 28 111. 122;
Evertson v. Booth, 19 Johns. 492;
Hayes v. Ward, 4 Johns. Ch. 132;
Dodds V. Snyder, 44 IlL 53; Goss v.
Lester, 1 Wis. 43; Worth v. Hill, 14
Wis. 559; Ogden v. Glidden, 9 Wis.
46; Lloyd v. Galbraith, 32 Pa. 103;
Nailer v. Stanley, 10 S. & R. 450;
Cowden's Estate, 1 Pa. 267; Bank of
Kentucky v. Vance's Adm'r, 5 Litt.
168. See Union Nat. Bank v. Moiine,
etc. Co., 7 N. D. 201, 73 N. W. Rep.
527.
s Logan v. Anderson, 18 B. Mon.
114; Jervis v. Smith. 7 Abb. Pr. (N. S.)
217; Wise v. Shepherd, 13 111. 41;
Cannon v. Hudson, 5 Del. Ch. 112;
Hudkins v. Ward, 30 W. Va. 204, 8
Am. St. 22, 5 S. E. Rep. 600; Leib v.
Stribling, 51 Md. 285; Marr v. Lewis,
81 Ark. 203, 25 Am. Rep. 553; Mc-
Arthur v. Martin, 23 Minn. 75; Gil-
liman v. McCormack, 85 Tenn. 597,
4 S. W. Rep. 521.
«Id. In Worth v. Hill, 14 Wis.
559, the mortgage being foreclosed
covered two distmct tracts in differ-
ent towns. The defendant Buck, who
was the appellant, held a mortgage
next to this in point of time, cover-
ing one of the tracts contained in
this mortgage, and other land not
■.^ ul
§ 105.]
MAESHALING AND DISTKIBUTION.
483
to other parties. Thus where a firm creditor has security [307]
on the separate property of one of its members, such creditor
is not for that reason to be excluded from sliaring in the pro-
ceeds of the company assets until he has exliausted his security,
covered by this, in the same town.
Defendant Mowry held a mortgage
next to Buck's in point of time, but
upon tlie land in the other town cov-
ered by the mortgage, and also upon
another tract. Hence the Mowry
mortgage did not cover any of the
land mortgaged to Bunk, but their
interests conflicted by reason of the
mortgage which was being fore-
closed, and which was prior to both,
covering a part of the land contained
in each of them. It further ap-
jieared that there was a mortgage
prior to all of these, covering tlie
tract m the Buck mortgage, and the
parcel in the Mowry mortgage
which was not contained in the
mortgage being foreclosed; that that
mortgage had been foreclosed, and
that part which was covered by the
Mowry mortgage adjudged to be
sold before the part covered by
Buck's. It was further proved that
the other tract covered by Buck's
mortgage was ample security for the
amount of the debt secured by that
mortgage. Upon this state of facts
it had been decreed below that the
portion covered by Buck's mort-
gage should be sold in this fore-
closure before that covered by
Mowry's, and from that part of the
decree Buck appealed.
Referring to the equitable rule that
in foreclosure cases where the land
has been subsequently conveyed by
the mortgagor it shall be sold in the
inverse order of alienation. Paine, J.,
says: "The justice of this rule has
been sometimes questioned, but we
regard it as not only well settled, but
correct upon principle, and have re-
peatedly enforced it. But at the same
time we think it may be controlled
by other established equitable prin-
ciples, where the facts render them
applicable; and such we think was
the case here. It is a familiar prin-
ciple that where one creditor has
security upon two funds, and another
has security upon one of them only,
the latter may compel the former to
resort first to that fund which he
cannot reach. And although this is
nota direct proceeding to accomplish
that object,yet it is substantially that,
inasmuch as Mowry sets up these
facts to rebut the equity Buck would
otherwise have as against him. For
the result, if the judgment had been
otherwise, would have deprived
Mowry of his security entirely. The
one tract covered by his mortgage
having already been adjudged to be
sold first for Bucks benefit, now if
the other should be adjudged to be
sold first, he would have nothing
left. Whereas it appears by the tes-
timony that upon the decree as ren-
dered Mowry is protected and Buck
left with amplesecurity for his debt.
Suppose A. mortgages a tract to B.,
then gives a second mortgage on
a part of it to C, which mortgage
also covers other tracts, and then
gives a mortgage on another part to
D. On a foreclosure of B.'s mort-
gage, the ordinary rule, based merely
on the order of alienation, would be
to sell D.'s part first. But suppose
D. could show that the other tracts
covered by C.'s mortgage were an
ample security for his debt; would
not that raise an equity suflficient to
overcome the ordinary rule, and re-
quire as between C. and D. that C.'s
part should be first sold? I think so;
484
LEGAL LIQUIDATIONS AND EEDrCTIONS.
[§ 196.
for that would be a detriment to such creditor where it
involved delay, and unjust to the creditors of the separate
estate which furnished the security,' Where the rule would
[308] bo applied in favor of a creditor having a right to resort
to but one fund or property, it will be equally available to
one claiming through a sale under his lien.^
§ 196. Same when the funds belong to two debtors. The
rule, however, does not apply when one of the creditors has
a lien for his debt upon two funds belonging to two separate
debtors, and the other has a lien upon a fund belonging to one
of them, so as to compel the first creditor to make his claim
wholly out of that debtor whom the other cannot reach, un-
and that is substantially the relation
which these defendants hold to each
other in the present case. I can see
no reason why the principle requir-
ing the creditor having two funds
to resort first to the one which the
other cannot reach is not applicable
to such a case. It is true that ordi-
narily the adequacy of the first fund
might be tested by an actual sale, and
the creditor who was compelled first
to resort to that might still be in a
position to resort to the other to sup-
ply any deficiency; and here B. may
not be left in such a position. I think
that is good reason why such a decree
as the one made in this case should
be made only upon clear proof of the
entire adequacy of the remaining se-
curity. But I am not prepared to
say that courts should not act upon
such proof, or that a party so situated
has any absolute right to have the
adequacy of his remaining security
tested in all cases by an actual sale.
It is obvious that such a test could
not be had in a case like this, and con-
sequently, if that rule was adopted, it
would lead to the injustice of cut-
ting off the last mortgagee entirely,
though it might not be necessary lor
the protection of the second. Courts
are constantly adjudicating upon
the most important rights of parties
upon the theory that human testi-
mony can establish facts with suffi-
cient certainty to justify such adju-
dication, and I think the question of
the adequacy or inadequacy of a se-
curity should form no exception."
In Miller v. Jacobs, 3 Watts, 477, it
was held that one lien creditor can
invoke no security taken by another
which had not become a lien when
he procured his own; hence, a subse-
quent mortgagee, having taken bonds
but without a warrant to confess
judgment, has no equity to call on a
prior mortgagee to enter up a judg-
ment on a bond which accompanied
his mortgage in order to throw him
on another fund; nor can the subse-
quent mortgagee object to the vaca-
tion of judgments subsequently con-
fessed on those bonds, though pur-
posely withdrawn to make way for
other judgment creditors whose lien
funds are consequently posterior in
date to his lien on the mortgaged
premises.
1 Bell V. Hepworth, 51 Hun, 616. 4
N. Y. Supp. 823; Morrison v. Kurtz,
15 III. 193. See Berry v. Powell, 18
111. 98; White v. Dougherty, Mart.&
Yerg. 309, 17 Am. Dec. 802; Breed-
love v. Stump, 3 Yerg. 257.
2 Marshall v. Moore, 36 III 821. See
Dodds v. Synder, 44 111. 53; McCor-
mick's Appeal, 55 Pa. 252.
§ IDG.] MARSHALING AND DISTRIBUTION. 485
less there be some peculiar relations between these debtors
which would make it equitable that the debtor having but
one creditor should pay the whole demand against him and
his co-debtor.^ A creditor who has a double security, or a right
to go upon more than one fund for payment, may go on all or
either one of them for his whole debt. His interest under
each is several and independent of the other, and cannot bo
diminished by reference to the value of the other.- A cred-
itor who has several securities, neither one of which is sufficient
for the payment of his debt, has a right to look to each one of
them for its payment in the same manner and to the same
extent that he could do if he had no other. It is only when it
may happen that a creditor who has no more securities than
one may not require for the payment of his debt the entire
proceeds of all his securities that any marshaling of them can
take place for the benefit of other creditors who are only sub-
sequently entitled to a lien on a part of the same fund or
property.' If, for example, property sufficient for the pay-
ment of fifty cents on the dollar be mortgaged to two or more
creditors, and the mortgagor afterwards mortgages other
property to the same and other creditors to secure the pay-
ment of the same debts, and also the debts due to the other
creditors, and the fund arising from the last mortgage is [309]
also sufficient to pay fifty cents on the dollar of all the debts
therein named, the creditors in the first mortgage have a right
to their full proportion thereof on the whole amount of their
debts without regard to what has been or may be received by
them on the first mortgage. The two securities are sufficient
for the payment of those creditors who are entitled to the
benefit of both ; and yet, if the other creditors in the second
mortgage have a right to reduce their debts by applying as a
credit thereon the amount of their dividend under the first
mortgage, and to restrict them to a jpro rata of the proceeds
of the last mortgage on the balance of their debt, when thus
reduced, one-fourth part of it would still remain unpaid, al-
1 Wise V. Shepherd, 13 111. 41; Dorr 2 Gwynne v. Edwards, 2 Russ. 289.
V. Shaw, 4 Johns. Ch. 17, 20; 1 Story's See Kendall v. New England Carpet
Eq., § 642; Ebenhardt's Appeal, 8 W. Co., 18 Conn. 38a
& S. 327. See Ex parte Kendall, 17 ' Logan v. Anderson, 18 B. Mon.
Ves. 520. 114.
4S6
LEGAL LIQUIDATIONS AND REDUCTIONS.
[§ lOT.
though either security taken separately was sulEcient for the
payment of one-half of the clebt.^ Whenever, then, a mort-
gage or assignment is executed to secure the payment of cer-
tain specified debts and it contains nothing to show that it
was intended only to secure the payment of a part of the
debt of some of the creditors, and not the whole amount
thereof, the mortgagees or beneficiaries under the assignment
have each a right to a full ratable share of the fund on the
whole amount of their respective debts. This share cannot
be diminished by the existence of another security, where
both securities are necessary for the payment of the debt.
Equity refuses to interfere or to marshal the securities to the
prejudice of the creditor entitled to a double fund. And it
makes no difference in such a case whether the benefit of one
of the funds has been realized or still remains as a mere
security for the payment of the debt.^
[310] § 197. Principle on wliich priority determined.
The principle is believed to be universal that a prior lien
gives a prior claim which is entitled to prior satisfaction out
of the subject which it binds unless the lien be intrinsically
1 Logan V. Anderson, supra.
2 Id,; Morris v, Olwine, 22 Pa. 441;
Kittera's Estate, 17 id, 416; Miller's
Appeal, 35 id. 481; Jervis v. Smith, 7
Abb. Pr. (N. S.) 217; GraeflE's Appeal,
79 Pa. 146: Patten's Appeal, 45 Pa.
152, 84 Am. Dec. 479: Hess' Estate, 69
Pa. 272; Brough's Estate, 71 Pa. 460.
In Patten's Appeal, supra, it was
held that the detention by vendors
of goods sold, on the insolvency and
assignment for the benefit of cred-
itors by the vendees, does not rescind
the conti'actof sale; and the vendors
are entitled to a pro rata distribu-
tion out of the assigned estate; and
that where a part of the goods had
been delivered and tlie balance which
had been detained was sold by the
vendors, who applied the proceeds to
the payment of the notes given upon
the sale, leaving a balance still due,
they were entitled to a dividend upon
tlie whole amount of their claim at
the date of the assignment. See
Midgeley v. Slocomb, 2 Abb. Pr. (N.
S.) 275.
In Bridendecker v. Lowell, 32 Barb.
9, it was held that where an ar-
rangement was made between debt-
or and creditor, by which the former
gives a new security upon property
exceeding in value the amount of
the debt, and receives back the evi-
dence of his indebtedness, there
being at the time a general fund or
security by mortgage ufon real
estate embracing all the debts of
the debtor, but insufficient to pay
the whole, the effect of such an ar-
rangement was to make the specified
security the primary fund for the
payment of the debt specifically
secured by it, and to postpone the
right of that creditor to participate
in the general fund until the specific
fund had been exhausted.
§ 198.] SET-OFF OF JUDGMENTS. 487
defective or be displaced by some act of the party holdino- it
which should postpone him in a court of hiw or equity to a
subsequent claimant.' Where surplus moneys arose upon the
foreclosure of several mortgages and were thus claimed : by
judgment creditors having the first lien upon two such funds;
by a mortgage creditor having a later lien on only one such
fund, and by other judgment creditors having still later liens
upon all, the prior judgment was ordered paid out of the fund
not subject to the mortgage, but if it were not sufficient, any
deficiency was to be paid prior to the mortgage out of the
fund on which the mortgage was a lien; then the mortgage
was to be paid out of the surplus on which it was a lien, and
the subsequent creditors were entitled to payment only after
satisfaction in this manner of the prior judgment and mortgage
creditors.^
Section 6.
set-off of judgments.
§ 198. Power to direct set-olF inherent. Courts of [311]
law or equity have power to order mutual judgments to be
set off against each other on motion made for that purpose.
1 Rankin v. Scott, 13 Wheat. 177; ment and defeat by subsequently
Broom's Max. 236; 9 Paige, 61, note; acquired liens upon the funds. The
Weaver v. Toogood, 1 Barb. 238; Em- facts were that the owner of three
bree v. Hanna, 5 Johns. 101, 9 Am. lots gave six mortgages tliereon to
Dec. 274; Muir v. Schenck, 3 Hill, different persons at various dates;
228, 38 Am. Dec. 633: Watson v. Le the first mortgage covered the en-
Eow, 6 Barb. 481; Lynch v. Utica tire property, and the subsequent
Ins. Co., 18 Wend. 236; Poillon v. ones parcels thereof less than the
Martin, 1 Sandf. Ch. 569; Berry v. whole. All the lots were sold, and
Mutual Ins. Co.. 2 Johns. Ch. 603. their proceeds were insufficient to
It is iield in Gilliam v. McCormack, ■ pay all the mortgage debts. A con-
85 Tenn. 597, 4 S. W. Rep. 521, that troversy arose among the junior
marshaling is a pure equity and does mortgagees as to the application of
not rest at all upon contract. The the proceeds of the sale after the
equity to marshal assets is not one senior mortgages were discharged,
which fastens itself upon the situa- It was held that the several mort-
tion at tlie time the successive secu- gages should be paid pro rata in the
rities are taken, but is to be deter- order of their priority out of the
mined at the time the marshaling is amount realized from the parcel or
invoked. The equity does not be- parcels covered by each,
cornea fixed right until the proper ^jsjew York L. Ins. & F. Co. v.
steps are taken to have it enforced; Vanderbilt, 12 Abb. Pr. 458.
until then it is subject to displace-
488 LEGAL LIQUIDATIONS AND KEDUCTIONS. [§ 199.
Such power is not derived from or exercised in pursuance of
tile statutes wLiicli allow parties to set off mutual debts. It
follows the general jurisdiction of a court over its suitors: it is
an equitable part of such jurisdiction and has been frequently
exercised.^ Courts proceed upon the equity of the statute of
set-offs ; but as their power consists in the authority they have
over their suitors, rather than any express or delegated author-
ity, their action in such cases has been termed the exertion of
the law of the court. Suitors may ask their interference in
effecting such set-off, not ex dehito JustiticB, but only ex gratia
curicB.^
§ 199. When it will or will not be granted. One judg-
ment will not be ordered to be set off against another, on mo-
tion, unless it is a judgment which is conclusive on the party
against whom it is rendered, and which the party recovering
and claiming the right to offset has a clear right to enforce;
it must have been rendered by a court which had jurisdiction'
and must be final; this right of set-off cannot be asserted
pending an appeal from the judgment* An appeal, however,
[31*2] only suspends the right to set-off, and the court may stay
proceedings on the other judgment for the protection of that
1 Chase v. Woodward, 61 N. H. 79; 444, 54 N. E. Eep. 11, 70 Am. St. 570;
Hovey v. Morrill, id. 9, 60 Am. Rep. Brown v. Hendrickson, 39 N. J. L.
315; Brown v. Hendrickson, 39 N. J. 239; Davidson v. Geoghagan, 3 Bibb,
L. 239;Matson V. Oberne, 25 IlL App. 233; Makepeace v. Coates, 8 Mass.
213; Alexander V. Durkee, 112 N. Y. 451; Simson v. Hart, 14 Johns. 63,
655, 19 N. R Rep. 514; Mitchell v. 757.
Oldfield, 4 T. R. 123; Williams v. 3 Harris v. Palmer, 5 Barb. 105.
Evans, 2 McCord, 203; Tolbert v. < pjerce v, Tuttle, 51 How. Pr. 193;
Harrison, 1 Bailey, 599; Herrick v. Hardt v. Schulting, 24 Hun, 345; De
Bean, 20 Me. 51; Temple v. Scott, 3 Figaniere v. Young, 2 Robert. 670;
Minn. 419; Makepeace v. Coates, 8 Zerbe v. Missouri, etc. R. Co.. 80 Mo.
Mass. 451; Greene v. Hatch, 12 id. App. 414; Spencer v. Johnston, 58
195; Ames v. Bates, 119 id. 397; Neb. 44, 78 N. W. Rep. 482; De Camp
Mason v. Knowlson, 1 Hill, 218; Har- v. Thomson, 159 N. Y. 444, 54 N. E.
ris V. Palmer, 5 Barb. 105; Noble v. Rep. 11, 70 Am. St. 570.
Howard's Ex'r, 2 Hayw. 14; Holmes If a writ of error does not operate
V. Robinson, 4 Ohio, 90; Meadow v. an a. supersedeas an intention to ob-
Rhyne, 11 Rich. 631; Benjamin v. tain a review of a judgment will
Benjamin, 17 Conn. 110; Cooper v. not interfere with the allowance of
Bigalow. 1 Cow. 296. See Zogbaum a set-off. Sowles v. Witters, 40 Fed.
V. Parker. 55 N. Y. 120. Rep. 413. See Haskins v. Jordan, 123
2De Camp v. Thomson, 159 N. Y. Cal. 157, 55 Pac. Rep. 786.
§ 10'.'.]
SET-OFF OF JUDGMENTS.
4S9
right until the appeal is determined. ^ In the exercise of this
jurisdiction courts will act upon the equitable as well as le^-al
interests and relations of the parties. Applications for such
set-off, not being founded on any statute or governed by any
fixed or arbitrary rule, are addressed to the discretion of the
court, and its discretion will be so exercised as to do equity and
not to sanction fraud - or oppression.' The fact that a piaintilT
1 Pierce v. Tuttle, supra; Terry v.
Roberts, 15 How. Pr. 65.
In Irvine v. Myers, 6 Minn. 562, it
was held that where the right of set-
off was suspended by appeal after a
motion made, it might remain unde-
cided until the final determination
of the appeal.
In Blackburn v. Reilly, 48 N. J. L.
82,2 Atl. Rep. 817, it is held that
after the affirmance of a judgment
by tiie appellate court and the return
of the record to the trial court, the
latter may stay the execution of such
judgment for the purpose of setting
it olf against a counter judgment.
^Tolbert v. Harrison, 1 Bailey, 599;
Meador v. Rhyne, 11 Rich. 631.
3 Williams v. Evans, 2 McCord, 203.
W. had obtained judgment against
E. for $188; subsequently E. obtained
a judgment in trover against W. for
$240. W.. instead of moving to have
his judgment set off against the
larger one which had been recov-
ered against him, issued a ca, sa.
against E. and then assigned his
judgment to a third person for
value. E. was imprisoned on the
ca. sa., and so remained until he
died. At the next term, W., who
seems to have repossessed himself
of the judgment recovered by him,
moved to have it set off against
that obtained by E. On a motion
to rescind an order allowing such
set-off, Nott, J., said: "There is no
doubt but that the court has the
power to order mutual judgments
to be set off against each other.
This is a common-law power, and is
not derived from the act authoriz-
ing parties to set off mutual debts.
. . . If it constitute a part of the
equitable jurisdiction of the court,
it ought to be so exercised as to do
equity and not to sanction fraud;
and a person who wishes to have
the benefit of it ought to avail him-
self of the earliest opportunity to
make his application, and not to
delay until the interests of third
persons have become involved. If
the party in this case had made his
application at the court when his
judgment was obtained, it ought to
have been granted. He had three
methods of proceeding: one. that
which he is now endeavoring to
pursue: another by fi. fa. against
the goods of the defendant; and the
third by taking his body in execu-
tion. He chose the latter, and after
having made his election (and par-
ticularly under the circumstances
of this case), he ought to be bound
by it; at least he can have no high
claim to the assistance of the court
to relieve him from the difficulty of
his own voluntary creation. It is
true a judgment is not a negotiable
instrument; nevertheless, an assign-
ment conveys an equitable interest
to the assignee, such as a court of
law will notice and respect in all
cases of appeal to its discretion.
Newman v. Crocker, 1 Bay, 246. A
bond is not negotiable, and yet tiiis
court would so far respect the as-
signee of one as not to permit a
judgment recovered upon it to be
set off against one recovered by tlie
490
LEGAL LIQUIDATIONS AND EEDLCTIONS.
[§ l'^9
against whom a judgment for costs has been rendered has
begun another action against the defendant for a larger
amount will not prevent said judgment being offset against a
judgment in favor of the defendant, since the latter judgment
would be a proper set-off or counter claim against such demand
us the plaintiff holds against the defendant.^ The discretion
of a court in acting upon a motion to set off judgments will
not be reviewed if the motion is denied.^ In exercising their
power courts will consider the rights of persons who are not
parties to the action.^ If a party who is entitled to a set-off
has a special fund which is primarily applicable to the satis-
faction of his judgment or decree he will not be permitted to
avail himself of his right against the holder of an opposing
judgment or decree until such fund is exhausted, and then
only for any balance of his demand which is unsatisfied.* A
set-off of judgments will not be allowed if it will result in
depriving a debtor of property which is exempt from execu-
tion.^ Were it otherwise A. might get judgment against B.,
obligee. The plaintiff, by taking the
body of the defendant, had volun-
tarily relinquished every other claim
upon him; and the claim which he
now has upon his property is revived
only by the accidental circum-
stance of his death. Suppose the
assignee of this judgment had en-
forced an execution against W. in
the life-time of E. and during the
time he had his body in execution,
could W. have required that money,
while in the hands of the sheriff, to
be paid over to him? Certainly not;
because, having taken the body in
execution, he must have been con-
tented with it; he could not have
double satisfaction. A release of E.
from custody would have been a re-
lease of the debt. He had a mild
and easy method of enforcing the
payment of his debt, if he had chosen
to make use of it. Instead of which
he resorted to the most rigorous and
unfeeling known to the law; like an-
other Shylock, he would have noth-
ing short of his flesh; and having no
longer the means of gratifying his
vengeance, he now comes and asks
this court to take from a humane
and merciful creditor a vested right,
to satisfy a debt which he had it in
his power to receive, and which he
voluntarily relinquished to gratify
a vindictive passion. The motion
must be granted." See Cooper v.
Bigalow, 1 Cow. 206.
1 Welsher v. Libby, 107 Wis. 47, 82
N. W. Eep. 693.
'^ Chipman v. Fowle, 130 Mass. 352.
sMeador v. Rhyne, 11 Rich. 631:
Simmons v. Reid, 31 S. C. 389, 17
Am. St. 36, 9 S. E. Rep. 1058.
4 Nuzum V. Morris, 25 W. Va. 559.
See Payne v. Webb, 29 id. 627, 2 S.
E. Rep. 330.
5 Butner v. Bowser, 104 Ind. 255, 3
N. E. Rep. 889; Puett v. Beard, 86
Ind, 172, 44 Am. Rep. 280; Junker v.
Hustes, 113 Ind. 524; Beckman v.
Manlove, 18 Cal. 388; Duff v. Wells,
7 Heisk. 17; Collett v. Jones, 7 B.
Men. 586; Johnson v. Hall, 84 Mo.
210. Contra, Temple v. Scott. :?•
§ 200.] SET-OFF OF JUDGMENTS. 491
seize and sell his exempt horse and obtain partial satisfaction
of the judgment from the proceeds of such sale. If B. should
then recover a judgment for damages against A. the latter
might set off the unsatisfied portion of his judgment a^-ainst
it. Thus B. would lose his horse, and A., by a violation of tho
law, would collect a portion of his judgment against an insolv-
ent debtor. B.'s judgment ought to take the place of his
horse. But this exemption from liability to set-off is not to
be extended to judgments in favor of the owner of exempt
property for damages for its wrongful taking in attachment
proceedings, the property being in bis possession.' A court of
equity may set off judgments when courts of law cannot because
they are not between the same parties. But this will not bo
done unless the moving party shows equitable ground for it;
he must make it appear that his rights are superior to any-
equitable right in favor of the other party.^
g 200. Interest of the real parties considered. The [313]
parties beneficially interested may assert their right, and a
set-off between the nominal parties will be refused where it
would be prejudicial to those having equitable interests.'
Thus, a court will not order a judgment against an executor in
his own right to be set off against a judgment in his favor on
a promissory note taken for goods of his testator, sold by him,
if it appear that the creditors or legatees of the testator will
be thereby prejudiced.* A debtor to the estate of a decedent,
Minn. 419, ruled by a divided court, ^ Daniel v. Bush, 80 Ga. 218,4 S. E.
and on the theory that exemption Rep. 271.
statutes are to be strictly construed; * Tolbert v. Harrison, 1 Bailey, 599.
a rule opposed to the great weight In this case the court say: "The
of authority. Sutherland's Stat, note given to the executor for a con-
Const., §§ 420-422. See Mallory v. tract made with him must be treated
Morton, 21 Barb. 424. and considered as his own. In a le-
1 Johnson v. Hall, 84 Mo. 210. gal pomt of view it was the note of
2 Howe Maclune Co. v. Hickox, Sterling Harrison to Jos. S. Tolbert.
lOfi 111. 461. It is, however, unquestionable that
The Rhode Island statute govern- in fact it was a part of the assets of
ing the right to setoff judgments the estate of his testator; and the ex-
and executions applies only to cases ecutor might and ought to have
in which the parties are reversed treated it as such. He. on the pres-
and sue and are sued in the same ent occasion, claims that it sliould be
ri!;ht; the suits must also be pend- considered as the assets of the estate,
ing at the same time. Hopkins v. This is the equity of the case: and the
Drowne, 21 R. L 80, 51 AtL Rep. 1010. court of equity, in the exercise of the
492
LEGAL LIQUIDATIONS AND REDUCTIONS.
[§ 200.
against whom a judgment has been obtained by the adminis-
trator in favor of such estate, is entitled to set off against
such judgment claims proved against the estate, and which
existed in the debtor's favor prior to the death of the de-
jurisdiction which legitimately be-
longs to it over trustees, will follow
a note of hand as the property of an
estate if really taken for assets of the
estate sold by the administrator,
though the note be taken in the pri-
vate name of the administrator.
Glass V. Baxter, 4 Desaus. 153. The
question is whether this court is
bound by legal rules to set off judg-
ments in all cases where they are in
the same right. It is clear that it is
not."
In Ames v. Bates, 119 Mass. 397,
W. purchased of A. a claim against
K pending an action by A. upon the
claim. B. had previously purchased
a claim against A. and had given no-
tice thereof to A. Suit was brought
thereon by B. in which W. appeared
as adverse claimant of funds in the
hands of R summoned as trustee.
At the time of his purchase of the
first claim W. had no knowledge of
the claim against A. Held, that
judgment for the plaintiff in the sec-
ond action could not be set off against
judgment for the plaintiff in the first
action. The court say: "While there
is no express statute authority for
setting off judgments where the
creditor in one action is the debtor
in another, except in a limited num-
ber of cases (Gen. Stats., ch. 126. g.^ 2,
3, 5), yet this power has been fre-
quently exercised by courts of law,
and rests upon their jurisdiction over
suitors in them and their general su-
perintendence of proceedings before
them. Makepeace v. Coates, 8 Mass,
4'31; Greene v. Hatch, 13 Mass. 195.
Such a power is only to be exercised
upon careful consideration of all the
circumstances of the transactions out
of which the judgments arise, and
in order to protect the just rights of
parties. In the present case the
nominal parties to the judgments
are not the same, nor is the equita-
ble owner of the judgment recov-
ered in the name of Ames the de-
fendant in the suit of which Bates
is the equitable owner. But even if
Ames had continued to be the owner
of the judgment recovered in his
name, it might well be questioned
whether Bates should be permitted
to set off against it the judgment re-
covered by him in the name of Free-
man and another, when he could not
have set off the claim upon which
the judgment was founded. The rea-
son why a party is not permitted by
the statute to set off such claims may
fairly be presumed to be, that it is
not just that one should be encour-
aged, instead of paying his own debt,
to seek out claims against his cred-
itor in order thus to change the posi-
tion of parties pendente lite; and this
reason is equally applicable to judg-
ments which may afterwards be ob-
tained upon such claims. However
this might be as to Ames himself, it
is clear that as to the assignee of
Ames. Bates should not be allowed
to effect this change. When the
equitable rights of third parties
would be affected by an offset of this
character it is not to be made to the
injury of intervening rights honestly
acquired. Greene v. Hatch, iibi
supra; Zogbaum v. Parker, 55 N. Y.
120; Gay v. Gay, 10 Paige, 369;
Ramsey's Appeal, 2 Watts, 22a''
In Carter v. Compton, 79 Ind. 37,
T. obtained judgment against the es-
tate of S. on a note. The executors
of S. held a note of a later date
against T., which was executed to
§ 20U.]
SET-OFF OF JUDGMENTS.
493
cedent, but not claims assigned to him after his death. As to
these last it was said the rights of the administrators and
the creditors had become fixed by the decedent's death;
the claim against the assignee had become assets of the es-
tate, in which its creditors and the administrators had an in-
terest.^ Set-off will not be allowed in favor of the [.'{14]
nominal judgment creditor where it appears that before the
judgment was obtained the cause of action had been as- [315]
signed to a third person.^ But if the right exists at the time
of the assignment of a judgment, the assignee will stand only
in the shoes of the assignor.^ The assignee of a judgment is
not affected by equities which arise between the parties to it
subsequent to the assignment.* Xor is the assignee of all
them in their representative capac-
ity. Judgment upon it was set off
against the first mentioned judg-
ment.
1 Wikel V. Garrison, 82 Iowa, 453, 48
N. W. Rep. 803.
2 Swift V. Prouty, 64 N. Y. 545;
Perry v. Chester, 53 N. Y. 240;
Mackey v. Mackey, 43 Barb, 58;
Turner v. Satterlee, 7 Cow. 480;
Nash V. Hamilton, 3 Abb. Pr. 35.
It is held in Williams v. Taylor, 69
Ind. 48, that if at the time a judg-
ment is pleaded in set-off the equita-
ble title to it is in one person and the
legal title in another, the latter will
prevail.
3 Skinker v. Smith, 48 Mo. App. 91 ;
Irvine v, Myers, 6 Minn. 502; Jaeger
V. Koenig, 32 N. Y. Misc. 244, 65 N,
Y. Supp. 795; Lammers v. Goode-
man, 09 Ind. 76; McBride v. Fallon,
63 CaL 301, 4 Pac. Rep. 17; Peirce v.
Bent, 69 Ma 381; Wells v. Clarkson,
5 Mont. 336, 5 Pac Rep. 894; Brown
V. Hendnckson, 39 N. J. L. 239;
Chamberlin v. Day, 3 Cow. 353;
Ferguson r. Bassett, 4 How. Pr. 168;
Noxon V. Gregory, 5 id. 339; Cooper
V. Bigalow, 1 Cow. 56, 206; Turner v.
Crawford, 14 Kan. 499. See Duncan
V. Bl(X)mstock, 2 McCord. 318; Ram-
sey's Appeal, 2 Watts, 228.
"Cases often occur in which the
set-off of one judgment against an-
other is allowed regardless of a prior
assignment of one to a tliird person.
Such cases are, where the assignee
has taken the judgment charged
with notice of the right of set-off as
an existing defense (Rowe v. Lang-
ley, 49 N. H. 395); where, through in-
solvency of the assignor at the time
of the assignment, the party claim-
ing the right of set-off bad no other
means of collecting his debt (Gay v.
Gay, 10 Paige, 369, 375); and where,
in anticipation of an application to
make the set-off, the assignment wa.s
made for the purpose of defeating
the right. Duncan v. Bloomstot^k, 2
McCord, 318. In all cases where the
assignment is without consideration,
not in good faith, or fraudulently
made to defeat the application, the
court will direct the set-off to be
mada Cross v. Brown, 51 N. H. 486;
Hurst V. Sheets, 14 Iowa, 322; Rus-
sell V. Conway, 11 Cal. 93; Morris v.
Hollis, 2 Harr. 4: Duncan v. Bloom
stock, supra." Hovey v. Morrill. 61
N. H. 9, 60 Am. Rep. 315.
* Wyvell V. Barwise, 43 Minn. 171,
45 N. W. Rep. IL
I
494 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 201.
ri2:hts and demands under a contract charr!:ed with notice of
such of its stipulations as are wholl}'- distinct from that portion
of it which he is concerned with; as where an instrument pro-
vides for closing up an existing, and also for carrying on a
new, business. The subject-matters are so disassociated that
they are several contracts. Hence the assignee of rights un-
der the clause relating to prosecuting a new business is not
charged with knowlege of the existence of a judgment against
his assignor on account of a breach of the other provision, and
such judgment cannot be set off against one subsequently ren-
dered in his favor.^ As between two persons who hold judg-
ments by assignments, the one prior in time has the right to be
paid first by the judgment he holds, and such judgment is not
subject to set-off by the assignor of it who subsequently pur-
chased an assignment of a judgment against the holder.^ The
assignee of a judgment which was bought without notice of
any offsets thereto cannot be denied the right to enforce it by
injunction proceedings because the defendant seeks to offset
against it a judgment recently rendered against the plaintiff
upon demands bought by him before the transfer of the judg-
ment for the purpose of being used in offset, notwithstanding
the plaintiff is insolvent.' The valid assignment of a judg-
ment does not affect the judgment debtor's right to thereafter
have a judgment in his favor against the assignor rendered in
another action, before the assignment was made, setoff against
the judgment assigned.*
§ 201. Set-off not granted before judgment. The right
does not attach on the recovery of a verdict merely, and if that
be assigned before judgment thereon is rendered it is not sub-
ject to a set-off of a judgment against the assignor.^ But this
1 Howe Machine Co. v. Hickox, 106 * Benson v. Haywood, 86 Iowa, 107,
111, 461. 53 N. W. Rep. 85, 23 L. R. A, 335.
^McAdamsv. Randolph, 42 N. J. * Graves v, Woodbury, 4 Hill. 559.
L. 332; Gauche v. Milbrath, 105 Wis. 40 Am. Dec. 298; Bagg v. Jefferson
355, 81 N. W. Rep. 487; Wright v. C. P., 10 Wend. 615; People v. Judges,
AVright, 70 N. Y. 96; Terney v, Wil- etc., 6 Cow. 598; Garrick v. Jones, 3
son, 45 N. J. L. 282. Dowl. P. C. 157; Wood v, Merritt, 45
3 Button V. Mason, 21 Tex. Civ. How. Pr. 471; Spencer v. Johnston,
App. 389, 52 S. W. Rep. 651. See 2 58 Neb. 44, 78 N. W. Rep. 4Sa See
Freeman on Judgments, §427; Lund- Mc Adams v. Randolph, 42 N. J. L.
green v. Stratton, 79 Wis. 227, 48 N. 332; Patterson v. Ward, 8 N. D. 87,
W. Rep. 426. 76 N. W. Rep. 1046.
§ 2.I2.J 8ET-0FF OF JUDGMENTS. 495
rule is not to be applied with technical strictness. In a late
-case it was said: The defendant in tliis action has recovered a
verdict against this plaintiff in a suit growing out of the same
transaction. The case came to the law court upon a motion
for a new trial, which has been overruled, and judgment will
be ordered upon the verdict — the announcement of the de-
cision being made simultaneously with this. The counsel for
the plaintiff in these cases has moved that the judgments, when
recovered, both amounting to a less sum than the judgment
that will be recovered by this defendant, be set off against the
judgment in favor of this defendant, jpro tanto. This sliould bo
done, but not so as to affect the attorney's lien upon the tax-
able costs in each casc.^
§ 202. Assignee must malie an absolute purchase. The
assignee of a judgment, to be entitled to assert this right of
set-off, must acquire the judgment absolutely.- If the purchase
is made on the condition that the motion for set-off is success-
ful, and otherwise to be Toid, the ownership is not acquired
with sufficient absoluteness to enable the assignee to use it as
a set-off.' An assignment upon condition of a rescission of the
transfer in case the assignee cannot avoid a set-off is not suflS-
ciently absolute.'' iScr will an assignment of a judgment to
be collected for the assignor, less compensation for collecting,
confer the requisite ownership.^ A party seeking to set oif a
judgment in his favor against one recovered against him should
be the owner of the judgment in his own right,^ The [316]
mutual judgments should be in the same right.^ It is imma-
iHowe V. Klein, 89 Me. 376, 36 AtL out of proceedings instituted before
Hep. 620. the assignment, if properly com-
2 Jones V. Chalfant, 55 Cal. 505. menced. Such proceedings may have
s Butler V. Niles, 26 How. Pr. 61, 35 been legitimate and necessary cou-
ld. 329. sequences of the judgment when
< Oilman v. Van Slyck, 7 Cow. 469. taken; and he has no right to take
8 Porter ^. Davis, 2 How. Pr. 30. away the foundation of such pro-
It was held in Butler v. Niles, supra, oeeding, if still pending, by satisfying
that even if a plaintiff, in an action the judgment with those held by
to procure a set-off of a judgment, be him. It is not equivalent to pay-
entitled to set off the judgment as- ment and acceptance in satisfaction
signed to him against one recovered pendente lite,
against- himself, he cannot make use ''Mason v. Knowlson, 1 Hill, 218.
of such assigned judgment to defeat " Holmes v. Robinson, 4 Ohio, 90.
the incident claims for costs growing Although where one of the parties
400
LEGAL LIQUIDATIONS AND KEDUCTIONS.
[§ 203.
terial in whose names they were respectively recovered; the
right of set-off exists between the several beneficial owners
and is confined to them. It is no objection that the mutual
judgments are not norainallj' due to and from the same num-
ber of persons; ^ if the equitable claims of many become vested
in one, the}^ may be set off against separate demands, and vice
versa}
§ 203. Nature of action immaterial. Nor is it material
what was the original cause of action, whether in tort or con-
tract; when a final judgment is obtained the original cause is
merged, the judgment becomes technically a contract of rec-
ord, and on motion it may be made to mutually compensate
and satisfy another.' Nor is it necessary that both judgments
should be recovered in the same court.^ The motion should
in two cross-actions has assigned his
interest to a third party there may-
be no right to set off the judgments,
yet, where the assignee, being the
real plaintiff in one action, is also the
real defendant in the other, there is
such right of set-off. Standeven v.
Murgatroyd, 27 L. J. (Ex.) 425.
1 Id. : Simson v. Hart. 14 Johns. 63,
75; Peirce v. Bent, 69 Me. 381, holding
that a judgment in favor of a prin-
cipal alone may be applied in satis-
faction of one against him and his
sureties.
In Brown v. Hendrickson, 39 N. J.
L. 239, it is said that in testing the
right to a set-off it is not necessary
that the judgments should be in the
same right; it is enough if the judg-
ment prayed to be set off may be
enforced at law against the party re-
covering the judgment to be satisfied
by the set-off, provided it is not in
a representative capacity. To the
same effect, Skinker v. Smith, 48 Mo.
App. 91.
Under the Missouri statute a judg-
ment in favor of the attachment
plaintiff on the cause of action
counted on in the attachment suit
may be set off against the damages
recovered by the attachment defend-
ant for the improper attachment, al-
though such judgment is against the
relator and another who was not a
party in the attachment proceeding,
since the judgment plaintiff has a
right to receive satisfaction of his
judgment from one of his two judg-
ment debtors. State v. Hudson, 86
Mo. App. 501.
2 Id.: Buller's Nisi Prius, 336.
3 Puett V. Beard, 86 Ind. 172, 44 Am.
Rep. 280; Langston v. Roby, 68 Ga.
406; Sowlesv. Witters, 40 Fed. Rep.
413, holding that a decree in equity
may be set off against a judgment at
law; Howell v. Shands, 35 Ga. 66;
King V. Hoare, 13 M. & W. 494, 504.
4 How V. Klein, 89 Me. 376, 36 Atl.
Rep. 620: Skinker v. Smith. 48 Mo.
App. 91; Aldrich v. Blatchford, 175
Mass. 396. 56 N. E. Rep. 700, 78 Am.
St. 503; Robinson V. Kunkleman,117
Mich. 193, 75 N. W. Rep. 451 ; Taylor
V. Williams, 14 Wis. 155; Kimball v.
Munger, 2 Hill, 304; Barker v. Bra-
ham, 2 W. Black. 869; Hall v. Ody,
2 B. & P. 29; Bridges v. Smyth, 8
Bing. 29; Bristowe v. Needham, 7 M.
& G. 648; Coxe v. State Bank, 8 N, J.
L. 472; Noble v. Howard's Ex'r, 2
Hayw. 14; Ewen v. Terry, 8 Cow.
126; Ross v. Hicks, 11 Barb. 481; Ir-
§ 204.] BET-OFF OF JUDGMENTS. 497
be made in the court where the judgment against the moving
party was obtained.^ And the moving papers should be enti-
tled in all the causes, whether in the same court or not.^ In
some states the motion may be made in the court in which one
or both of the actions are pending.' If the judgments are in
different courts all difficulty in accomplishing the practical re-
sult is obviated, if the party desiring the set-off makes his ap-
plication in the court where the judgment exists against him,
for the court can then make its action in satisfying, either in
whole or in part, its own judgment conditioned upon such ap-
plicant making reciprocal satisfaction of the judgment in his
favor standing in another court/
§ 204. Liens of attorneys. In England for a long time
there were two conflicting rules as to the right of a judgment
debtor to set off a judgment in disregard of the lien of his at-
torney. Such right was denied by the court of king's bench
if the exercise of it affected the attorney's lien for costs.' The
common pleas courts held that the equitable rights of the par-
ties were superior to the attorney's lien.^ In 1853 the rules
adopted made the practice in the king's bench applicable to
all the courts, while the judicature act of 1873 adopted the
other rule. The rule of the common pleas has been adopted
in many jurisdictions in this country;'^ while others follow
vine V. Myers, 6 Minn. 563, Contra, » Mitchell v. Oldfield, 4 T. R. 133.
Tenant V. Marmaduke, 5 B. Mon. 76. "Schoole v. Noble, 1 H. Black. 23.
In Schautz v. Kearney. 47 N. J. L. "Benjamin v. Benjamin, 17 Conn.
56, a decree in admiralty rendered 110; Turner v. Crawford, 14 Kan.
by a federal court was set off against 499; Sanders v. Giliett, 8 Daly, 183;
ajudgmentrecoveredinastatecourt. NicoU v. NicoU, 16 Wend. 446; Rob-
1 Brookfield V. Hnghson, 44 N. J. L. erts v. Carter, 24 How. Pr. 44;
285; Taylor v. Williams, 14 Wis. 155; Brooks v. Hanford, 15 Abb. Pr. 342;
Dunkin v. Vandenbergh, 1 Paige, Hayden v. McDermott, 9 id. 14; Peo-
622; Cooke v. Smith, 7 Hill, 186; pie v. New York C. P. C, 13 Wend.
Ross V. Hicks, 11 Barb. 481; Russell 649; Hovey v. Rubber Tip Pencil
V. Conway, 11 Cal. 93. Co., 14 Abb. Pr. (N. S.) 66; Watson v.
2Aleott V. Davison, 2 How. Pr. 44. Smith, 63 Iowa, 228, 18 N. W. Rep.
In North Carolina the practice has 916; Mosely v. Norman, 74 Ala. 422;
been to set oflF judgment by sdre Wright v. Tread well, 43 Md. 212;
facias. Noble v. Howard's Ex'r, 3 Fairbanks v. Devereux. 58 Vt. 359, 3
Hayw. 14. Atl. Rep. 500; Bosworth v. Tallman,
» Peirce v. Bent, 69 Me. 381. 66 Wis. 533, 29 N. W. Rep. 542.
* Welsher v. Libby, 107 Wis. 47, 82 In New York, since the enactment
N. W. Rep. 693. of 1879, no set-off is allowed as
Vol. 1 — 33
498 LEGAL LIQUIDATIONS AND REDUCTIONS. [§ 204.
that of the king's bench. ^ But where the equitable power of
a court is invoked by motion the statute of set-off is not the
[317] obligatory guide, and the court, proceeding upon its own
discretion, will sustain the attorney's lien and give it prefer-
ence.'^ An attorney has a lien for his costs upon money re-
covered by his client or awarded him in a cause in which the
attorney was employed, in case the money has come into his
hands; or he may stop it in transitu by giving notice to the
opposite party not to pay it until his claim for costs is satisfied,
and then moving the court to have the amount thereof paid to
him in the first instance. And if, notwithstanding such notice,
the other party pay the money to the client, he is still liable
to the attorney for the amount of his lien; and the latter in
such case will not be prejudiced by any collusive release given
by his client. But unless such notice is given the client may
compromise with the opposite party, and give him a release
without the intervention of his attorney; and he in that event
can afterwards look to his client only for payment.^ This lien
has sometimes been supposed to be confined to some fixed and
certain amount allowed to an attorney by statute, and that it
does not extend to a quantum meruit claim for his services.*
against the lien of an attorney. En- Kanouse, 17 id. 146; De Figaniere v.
nis V. Curry, 22 Hun, 584; Naylor v. Young, 2 Robert. 670; Hovey v. Rub-
Lane, 66 How. Pr. 400, 18 J. & S. 97. ber Tip Pencil Co., 14 Abb. Pr. (N. S.)
1 Howe V. Klein, 89 Me. 376, 36 Atl. 66; Bishop v. Garcia, id. 69.
Rep. 620; Currier v. Boston & M. R. 3 Graham Pr. 61; Ex parte Kyle, 1
Co., 37 N. H. 223; Stratton v. Hussey, CaL 332; Mansfield v. Borland, 2 Cal.
63 Ma 286; Puett v. Beard, 86 Ind. 507: Russell v, Conway, 11 Cal. 93;
172, 44 Am. Rep. 280; Dunklee v. Wilkins v. Batterman, 4 Barb. 47;
Locke, 13 Mass. 525; Boyer v. Clark, Ten Broeck v. De Witt, 10 Wend.
3 Neb. 161; Robertson v, Shutt, 9 617; Bradt v. Koon, 4 Cow. 416; Mar-
Bush, 659: Carter v. Davis, 8 Fla. tin v. Hawks, 15 Johns. 405; Chap-
183; Caudle v. Rice, 78 Ga. 81. See man v. Haw, 1 Taunt. 341; Omerod
Langston v. Roby, 68 id. 406. v. Tate. 1 East, 464: Turwin v. Gib-
2 Simmons v. Reid, 31 S. C. 389, 17 son, 3 Atk. 720; Read v. Dupper, 6
Am. St 36, 9 S. K Rep. 1058; Diehl T. R. 361; Wilkins v. Carmichael, 1
V. Friester, 37 OhioSt. 473; Ward v. Doug. 101; Schoole v. Noble, 1 H.
Wordsworth, 1 E. D. Smith, 598; Black. 23; Ackerman v. Ackerman,
Haight V. Holcomb, 16 How. Pr. 163; 14 Abb. Pr. 229; Bishop v. Garcia, 14
Peckham v. Barcalow, Lalor's Supp. Abb. Pr. (N. S.).69.
112; Smith v. Lowden, 1 Sandf. 696; < Ex parte Kyle, 1 Cal. 332; Daven-
Gihon V. Fryatt, 2 id. 638; Sweet v. port v. Ludlow, 4 How. Pr. 337; Ben-
Bartlett, 4 id. 661: Roberts V. Carter, edict v. Harlow, 5 id. 347. But a
17 How. Pr. 341, 24 id. 44; Martin v. more reasonable view, in the writer's
§ 204.] SET-OFF OF JUDGMENTS. 499
A distinction has been made as to the right of set-off when the
judgments are in the same action, or in actions growing out
of the same subject-matter, and where the judgments are in
actions having no connection with each other. In the former
class of cases the right is generally deemed superior to the
claim of the attorney in either action for his services and dis-
bursements;^ in the latter the equitable right of the attorney
Avho has rendered services and incurred expenses in obtaining
one of such judgments, to be paid out of it, is deemed superior
to the right of the judgment debtor to have that judgment
paid by applying upon it the judgment owned b}^ him against
his judgment creditor, the assignment being made lona jide
before the right of set-off attaches.^
judgment, is to be found in the able fected the right of the attorney to
opinion of Daly, J., in Ward v. his lien.
Wordsworth, 1 E. D. Smith, 598, i Yorton v. Milwaukee, etc R. Co.,
where it is held that the abolition by 62 Wis. 367, 21 N. W. Rep. 516, 23 id.
the code of all statutes regulating 401.
the fees of attorneys, and of all rules 2 Gauche v. Milbrath, 105 Wis. 355,
or provisions of law preventing an 81 N. W. Rep. 487; Benjamin v. Ben-
attorney from agreeing with his jamin, 17 Conn. 110; Diehl v. Fries-
client for his compensation, and ter, 37 Ohio St. 473; Wells v. Elsani.
leaving the measure thereof to the 40 Mich. 218; Kinney v. Robison, 52
contract of the parties, has not af- Mich. 389, 18 N. W. Rep. 120.
500 PEOUNIAEY EEPJSESENTATIVE OF VALUE. [§ 205.
CHAPTEK YL
PECUNIARY REPRESENTATIVE OF VALUK
Section L
MONEY.
§ 205. Characteristics of money.
206. Payment to be made in money of country of performance
207. Payment in currency.
208. Effect of changes in the value of money.
209. Value of money at time of contracting.
210. The legal tender act.
81 L Effect of fluctuations in currency.
Section 2L
par and rate of exchange.
212, Par of exchanga
213. Rate of exchange.
Section 1.
MONEY.
[318] § 205. Characteristics of money. All civilized na-
tions have some method or system of pecuniary remuneration,
based upon an arbitrary unit of value sanctioned by law. By
it accounts are kept, the amounts of debts and judgments ex-
pressed, and wealth computed. They have, also, gold and
silver coins, either representing that unit or some multiple of
it, or other value estimated with reference to it. These are
of intrinsic value, and being made and issued by the sovereign
power are acceptable to everybody and therefore have uni-
versal currency as a convenient and necessary medium of ex-
change and payment. They are money in the strict sense.
[319] All pecuniary obligations are measured by and expressed
in the value they represent, and are solvable by them. Nor
can such obligations be otherwise liquidated or paid, except
by agreement, unless the state which has the power to coin
money prescribes some other form of legal money. The
precious metals, being valued according to a uniform and fixed
§ 206.] MONET. 501
standard, are the only proper measure of value. Their value
is determined by weight and purity, and the impress on the
coins is a certificate so generally relied upon that the pieces
readily pass for their nominal value by count.
Money is cosmopolitan. A contract which is a money con-
tract where it is entered into and to be performed is a money
contract everywhere. To this extent the money of one na-
tion is treated as money by another, as distinguished from a
mere chattel or a commodity. Thus, money lent in India in
2?agodas, and sued for in England as money lent, was held re-
coverable in that form. It w^as contended that the averment
that the defendant was indebted for " lawful money of Great
Britain" was not supported; but Gibbs, J., said, "the doc-
trine contended for has been exploded these thirty [320]
vears."^ The real meaning of such a count was afterwards
explained to be that the defendant is indebted for money of
such a value or amount in English money.^ So a contract
made and to be performed in the same country, for the pay-
ment of what is money at the time of contracting, will be
held a money contract after that currency has been abolished
and another entirely different has been substituted.
§ 206. Payment to be made in money of country of per-
formance. Contracts for the payment of money are deemed
payable in the legal money of the country where payment is
to be made, unless a contrary intention appears; that [321]
is, a contract for the payment within the United States of
dollars is presumptively payable in dollars of our decimal cur-
rency. If a contract be made here, and even not within the
law merchant, and between citizens of the United States, and
to be performed here, for the payment of a sum stated in the
denominations of a foreign currency, it is undoubtedly to be
treated as a money contract, the same as if made and to be
performed in the country where such currency is the legal
money.' Debts have no situs; they are payable everywhere;
1 Harrington v.Macmorris, 5 Taunt. Sneed, 2; Sheehan v. Dalrymple, 19
228. Mich. 239.
2 Ehrensperger v. Anderson, 3 Ex. » See Mervine v. Sailor, 52 Pa. 18;
148. But see McLaohlan v, Evans, Christ Church Hospital v. Fuechsel,
1 Y. & J. 3S0; Pollock v. Colglazure, 54 id. 71; Mather v. Kinike, 51 id.
4^5; Sears V. Dewing, 14 Allen, 413.
502 rECUNIAKY KEPBESENTATIVE OF VALUE. [§ 207.
and in every country where payment may be either tendered
or demanded, they are strictly payable in the legal currency
or money of that country, and in no other currency unless
strictly at maturity. A sterling debt contracted or incurred
in England, a debt payable in francs incurred in France, or a
contract payable in pistoles entered into in Spain, when sought
to be enforced or paid in the United States, is a contract for
an equivalent amount payable only in the lawful money of the
United States. The very currency in which the contract by
its terms was payable, if tendered in this country after matu-
rity, would be no legal offer of payment; it would not be a
tender which would stop interest. Contracts made abroad,
or payable in foreign currency, are treated as money con-
tracts; but the money specified therein, if not tendered when
due, is no longer the money in which the damages due would
be computed, except within the jurisdiction where such money
is the lawful currency.
§ 207. Payment in currency. Bank bills and other paper
currency circulate as money. It is not strictly such, for no
debtor has a legal right to discharge a money obligation with
such currency unless it is made legal tender by law; the cred-
itor may refuse to receive it; but when it is paid and received,
it is paid and received as money. The receipt of bank bills,
dollar for dollar, upon a debt, is not conditional payment, de-
pending on diligence of the payee in presenting the bills to
[322] the bank and obtaining legal-tender funds, nor is it ac-
cord and satisfaction.^ A contract payable in currency or in
1 Solomon v. Bank of England, 13 InMaynard v, Newman, 1 Nev. 271,
East, 135; Pickard v. Bankes, id. 20; Beatty, J., said: "Money means any-
Corbitv. Bank of Smyrna, 2 Harr. 235, thing which passes current as the
30 Am. Dec. 635; Ware v. Street, 2 common medium of exchange and
Head, 609; Magee v. Carmack, 13 measure of value for other articles,
111. 289: Lightbody v. Ontario Bank, whether it be the bills of private or
11 Wend. 1; Ontario Bank v. Light- incorporated banks, government bills
body, 13 id. 101; Wainwright v. Web- of credit, treasury notes or pieces of
star, 11 Vt. 576, 34 Am. Dec. 707; Fogg coined metal. Money is anything
V. Sawyer, 9 N. H. 865; Frontier Bank which by law, usage or common con-
V. Morse, 22 Me. 88, 38 Am. Dec. 284; sent becomes a general medium by
Westfall V, Braley, 10 Ohio St. 188, 75 whichthevalueofothercommodities
Am. Dec. 509; Harley v. Thornton, 2 is measured and denominated. Paper
Hill (S. C), 509, n. See Keating v. money is distinguishable from other
People, 160 111. 480, 486, 43 N. E. Rep. negotiable paper, such as notes, bills
724. of exchange, etc., because it is always,
§ 207.J
MONEY.
503
funds, qualified by any term which imports money, is a money
contract. A check for "current funds" calls for current money —
par funds, money circulating without discount.^ This term, as
after once put in circulation, payable
to bearer, not to order: because it
is made to represent convenient
amounts for the ordinary transaction
of business, is printed and written on
paper not easily worn out, and there-
fore capable of being passed from
hand to hand for a long time without
destruction. By general consent it
is used and treated as money and not
as negotiable paper. If one indorses
his name on such a note he does not
thereby become responsible for the
insolvency of the bank, but merely
guarantees that the note is not a
counterfeit. Neither the courts of
law, nor the community, treat such
paper as negotiable securities, but as
money, something which is used as a
general representative and measure
of values." Woodruff v. Mississippi,
06 Miss. 298, 6 So. Rep. 335.
A genuine silver coin worn smooth
by use, notappreciably diminished in
weight and identifiable, is a legal
tender. Jersey City & B. P. Co. v.
Morgan, 52 N. J. L. 60, 21 Atl. Rep. 783.
See United States v. Lissner, 12 Fed.
Rep. 840.
A genuine sil ver coin of the United
States, distinguishable as such,
tliough somewhat rare and diflfei'ing
in appearance from other coins of
that government of like denomina-
tion and of later dates, is a legal ten-
der. Atlanta Con. Street R. Co. v.
Keeny, 99 Ga. 266, 25 S. E. Rep. 629,
33 K R. A. 824.
A statute requiring an officer to
pay out the same moneys received
and held by him by virtue of his
office does not include only coin and
currency in circulation as money.
Money, it was said, is a generic term,
and may mean not only legal tender
coin and currency, but also any
other circulating medium or any in-
strument or token in general use in
the commercial world as the repre-
sentatives of value. It includes
whatever is lawfully and actually
current in commercial transactions
as the equivalent of legal tender
coin and currency. Certificates of
deposit or other vouchers for money
deposited in solvent banks payable
on demand are a most convenient
medium of exchange and are exten-
sively used in commercial and finan-
cial transactions to represent the
money thus deposited. State v. Mc-
Fetridge, 84 Wis. 473, 54 N. W. Rep.
1, 998, 20 L. R. A. 223; State v. Hill,
47 Neb. 456, 537, 66 N. W. Rep. 541.
1 Klauber V. Biggerstaff,47 Wis. 551,
3 N. W. Rep. 357, 32 Am. Rep. 773;
Marc V. Kupfer, 34 IlL 286. Contra,
Huse V. Hamblin, 29 Iowa, 501, 4 Am.
Rep. 244.
That term was held to have a spe-
cific, legal and well known meaning
which cannot be contradicted or ex-
plained by parol. See Moore v. Mor-
ris, 20 111. 255.
In Phoenix Ins. Co. v. Allen, 11
Mich. 501, 83 Am. Dec. 756, it was
held that a note payable in " cur-
rent funds," in the absence of all
evidence showing that anything else
is current at the place of payment,
must be regarded as payable only in
such funds as are current by law.
"Current money" means "cur-
rency of the country," vphatever is
intended to and does actually circu-
late as money; every species of coin
or currency; the specification of dol-
lars in connection with those words
serves only to measure the quantity
of the notes or currency, not their
value, which may be ascertained by
proof. There is no distinction be-
504 PECUNIAKY KEPKESENTATIVE OF VALUE. [§ 208.
well as " currency," excludes depreciated paper money.^ A note
payable in " current Florida money " is payable in good funds.^
" Canada currency " is equivalent to lawful money of Can-
ada.^
§ 208. Effect of changes iu the value of money. The
amount due by contract is sometimes subject to question by
[323] reason of fluctuations in the value of the money in
which the contract was made payable. These fluctuations
may be caused by the state debasing the coins which repre-
sented that mone}'', or by arbitrary changes in the value of
existing denominations of the legal currency ; and so the value
of paper money will rise and fall with the fluctuations in the
credit of its maker. Suppose a contract for the payment of
$100 made while the present decimal system is in force; and
while that contract is pending congress revises that system
and retains a dollar as a unit of value representing only fift}'"
cents. Uninfluenced by any provision that the new dollar
shall be a legal tender for all debts at their nominal value,
would a hundred of these dollars discharge the principal of
the debt under the supposed contract? The injustice of hold-
ing the affirmative is apparent. The new dollars would not
be those of the contract; by paying a hundred of them the
promisor does not pay the value which he undertook to pay,
and which was expressed by the contract. He, of course,
would be entitled to pay in the money which was lawful and
current when the contract required payment to be made; but
as the word " dollar " is but a representative of value, that value
should be ascertained by the legal sense of the term when the
contract was made. Though the parties contracted with a
knowledge of the power of congress to make the subsequent
changes, it does not follow that they impliedly agreed that
the value stipulated to be paid, as -fitly expressed in the con-
tract, should be modified by an arbitrary change in the mean-
ing of the terras which had been employed to express their in-
tween a note for so many dollars in i Springfield M. & F. Ins. Co. v.
currency and one for so many dol- Tincher, 30111. 399; Webster v. Pierce,
lars" payable in currency." Miller v. 35 111.158.
McKinney, 5 Lea, 93; Commissioners ^ Williams v. Moseley, 2 Fla. 304.
V. McCorinick, 4 Mont. 115, 133, 5 Pac. » Black v. Ward, 27 Mich. 191.
Rep. 287.
I
§ 209.]
MONEY.
505
tention. This view is so obviously just that it is a matter of
surprise it should ever have been questioned.'
§209. Talueof money at time of contracting. When [324]
a bill is drawn in one country payable in and in the coin of
1 See 2 Daniel on Neg. Inst., § 1214;
Stoiy's Contl. Laws, §?; 813, 313a.
The case of Mixed Moneys, Davis,
28, rests on a contrary view. A bond
was given for "£100 sterling current
and lawful money of England," to
be paid in Dublin, Ireland. Between
the time of making the bond and its
becoming due, Queen Elizabeth re-
called the existing currency in Ire-
land and issued a new debased coin-
age called mixed money, declaring
it to be lawful currency in Ireland.
Of this debased coin a tender was
made in Dublin, and it was held
good. In a note to g 313a of Story's
Confl. Laws, it is said: "The court
do not seem to have considered that
the true value of the English current
money might, if that was required by
the bond, have been paid in Irish
currency, though debased, by adding
so much more as would bring it to
the par. And it is extremely diffi-
cult to conceive how a payment of
■current lawful money of England
could be interpreted to mean current
or lawful money of Ireland, when the
currency of each kingdom was dif-
ferent, and tKe royal proclamation
made a distinction between them,
the mixed money being declared the
lawful currency of Ireland only.
Perhaps the desire to yield to the
royal prerogative of the queen a sub-
missive obedience as to all payments
in Ireland may account for a de-
cision so little consonant with the
principles of law in modern times.
Sir William Grant, quoting Vinnius,
in Pilkington v. Commissioner for
Claims, 2 Knapp, 18 to 21, affirms
the better doctrine. 'He (Vinnius)
takes the distinction, that if, between
the time of conti-acting the debt and
the time of its payment, the cur-
rency of the country is depreciated
by the state, that is to say, lowered
in its intrinsic goodness, as if there
wei'e a greater proportion of alloy
put into a guinea or a shilling, the
debtor should not liberate himself
by paying the nominal amount of
his debt in the debased money; that
is, he may pay in the debased money,
being the current coin, but he must
pay so much more as will make it
equal to the sum he borrowed.' But
he says (and this seems contradictory
of the foregoing), if the nominal
value of the currency, leaving it un-
adulterated, were to be increased, as
if they were to make the guinea
pass for 30s., the debtor may liberate
himself from a debt of £1 10s. by
paying a guinea, although he bor-
rowed the guinea when it was but
21s." And the case of Reynolds v.
Lyne's Ex'r, 3 Bibb, 340, is in accord
with that principle. A contract was
made when a dollar was 5s. 9d for
the payment of a sum at a future
day on the performance of a con-
current act of the payee. Before
the money became payable, the state
where the contract was made en-
hanced the value of the dollar to 6s.
Subsequently payments were made
and a dispute arose whether the
money paid should be estimated at
the rate of currency when the money
was paid, or when the contract vvas
made. Finally, the obligation in
question was given for a balance of
the original debt remaining by esti-
mating the payment according to
the value of a dollar at the date of
the contract, viz., 5s. dd., for which
judgment at law had been rendered.
The question arose on a bill in equity
506 PECCNIAliY REPKESENTATIVE OF VALUE, [§ 209.
[335] another, the value of which, intermediate the drawing
and payment, is reduced by the government, it has been held
that payment should be made according to the value of the-
money at the time the bill was drawn. ^ The common law
cannot be deemed settled on this point; nor are the writers on
the civil law in accord upon it. The opposite view is apparently
based on the assumption that in money we do not regard the
coins which constitute it, but only the value which the sov-
ereignty has been pleased that they shall signify.'^ But coins
have, in the world's exchanges, an intrinsic value which no
sovereignty can affect by arbitrary regulation. And if by a
regulation concurrently adopted by all nations, the coins of
each were uniformly either debased or enhanced in value
without a corresponding change of their intrinsic value, the
change would be immediately followed by an equal advance
or decline in the price of property. If the change were made
in the value of the coins of one country only, it would be at
once succeeded .by a fluctuation in prices of property measured
by it, showing that their purchasing power had undergone no
essential modification; and the same conclusion would result
from a comparison of the value of such coins with the coined
for relief on the ground of mistake on Bills, *399. See Anonymous, 1
against that obligation and the judg- Hayw. (by Batt.) 354.
ment founded upon it. Judge Ows- A will speaks from the time of the
ley said: "When the original obli- testator's death, and a legacy of a
gation . . . was made the legis- certain number of dollars is payable
lature of Virginia had the power to in such dollars as were then standard,
regulate the currency of their coin Graveley v. Graveley, 25 S. C 1, 60,
within the limits of that state; and Am. Rep. 478.
as the contract . . . was made If at the time a contract which
within the limits of that state, the provides for its discharge in lawful
promise ... to pay in current silver money is made silver coins of
money of Virginia must have been all denominations are legal tender,
agreed on with a knowledge of the the fact that subsequently such coins
state sovereignty, and subject to its are a legal tender for only a small
control in regulating the currency, proportion of the amount due does
We are of the opinion, therefoi-e, not prevent the payment of the obli-
that the original obligation . . . gation in the manner stipulated,
might have been satisfied by pay- Parisli v. Kohler, 11 Phila. 346.
ment in current money at its value Damages are assessable in the
when Lyne became entitled to de- same kind of money as the contract
mand paj'ment;" and that relief calls for. Martin v. Evans, 14 PhiUu
was granted against the judgment. 122.
1 Du Costa v. Cole, Skin. 272; Chitty 2 See Story Conf. Laws, g 313^.
§ 210.J MONEY. 507
money of other nations. When a contract is made for the
payment at a future day of a given amount of money in speci-
fied legal denominations, having at the date of the contract a
fixed legal value, are not the intention and legal obligation of
the parties to be ascertained by the import at that time of the
terms used? Undoubtedly a debt created by contract which
can be paid with money can be satisfied by whatever medium
of payment is legal tender at the time it is due and payable/
if paid then ; and it may be added, that at all times afterwards
it will be solvable in any money wdiich for the time being is
legal tender at the place where payment may be demanded or
tendered, whether it be the place of contract or elsewhere.^
The legal currency which may be applicable at the place of
contract when the debt becomes due and is actually demanded,
or sought by tender to be paid, may be as unlike that [326]
mentioned in the contract as though the demand of payment
or tender were made in another country. Upon general prin-
ciples and legal analogies the value should be ascertained by
the legal reading of the contract at the time it was made, and
this is payable in any currency which is legal tender when
payment is actually made.^ If w^hen and where payment is
made the currency consists of coins of the same or a different
name, and represent different values from those named in the
contract, or the same values, but have been either debased or
the contrary, the par should be ascertained of the money of
the contract, and that par should be the measure of the
amount due. This question may be precluded by the new
currency, or that which is offered in payment being made a
lawful tender for the particular debt at the nominal value of
such currency. Under such legislation, these general views
have but a subordinate influence; the practical question then
being what is the effect of the statute.
§ 210. The legal tender act. Under the legal tender law
of 1862 the value of the dollar was not changed, but a new legal
representative of it was introduced as a medium of payment.
Paper money in the form of the government's promise to pay
was issued and declared to be legal tender for all debts, pub-
1 Higgins V. Bear River & A. Water 2 Downman v. Downman, 1 "Wash.
& M. Co., 27 Cal. 153; Wilson v. (Va.) 26.
Morgan, 4 Robert. 58. 3 Bronson v. Rodes, 7 Wall. 229.
508 PECUNIARY EEPKESENTATIVE OF VALUE. [§ 210.
lie and private, with certain exceptions of the former. The
coinage, which had previously been the exclusive legal tender,
was, however, still retained as money. During the first years
after the issue of this paper currency, owing to the situation of
the country, and doubtless to the circumstance that no time was
fixed for its redemption in specie, it became depreciated; that
is, gold and silver money was largely at a premium. As
greenbacks were a legal tender for all debts payable in money
generally they became, of course, the ordinary currency, and
were thereby made the legal, as they were the nominal, equiv-
alent, dollar for dollar, for the payment not only of all subse-
[327] quent but also all antecedent debts.^ The difference in
market value could not be recognized when the paper dollar
was offered in payment of any debts to which it was applica-
ble by law. The court said: "A court cannot say judicially
that one kind of money made a legal tender is of greater or
less value than another; nor can evidence be received to prove
a difference." - The legal equivalence in value of coined money
and greenbacks is more absolutely asserted by the early than
by the later decisions.^ In an action for specific performance
1 Legal Tender Cases, 12 Wall. 457; parties waiving its provisions, and
Dooley v. Smith, 13 id. 604; Bigler v. requiring a debt to be paid in gold,
Waller, 14 id. 297; Bowen v. Clark, is illegal, and cannot be sustained.
46 Ind. 405; Reynolds v. Bank, etc., See Linn v. Minor, 4 Nev. 462 (1868).
18 id. 467; Thayer v. Hedges, 23 id. In Kimpton v. Bronson, 45 Barb.
141: Brown v. Welch, 26 id. 116; 618, Daniels, J., said: "The law has
Bank v. Burton, 27 id. 426; Mclnhill impressed them (treasury notes) with
V. Odell, 62 111. 169; Black v. Lusk, a legal value precisely equal to that
69 id. 70; Morrow v. Rainey, 58 id. of gold and silver of the same de-
357: Chamblin v. Blair, id. 385; Long- nominations for the purpose of pay-
vi'orth v. Mitchell, 26 Ohio St. 334; ing individual debts with them, and
Belloc V. Davis, 38 Cal. 243. it cannot permit a discrimination
^Carpentier v. Atherton, 25 Cal. against them in favor of gold and
564; Reese v. Stearns. 29 id. 273; silver, without allowing its authority
Spencer v. Prindle, 28 id. 276; Poett to be substantially annulled. How-
V. Stearnes, 31 id. 78. ever the fact may be as to their
3 In Buchegger v. Shultz. 13 Mich, value as a mere commodity, for the
420 (1865), it was held that the act purpose of paying individual debts
of congress making treasury notes a treasury note is as completely a
a legal tender in payment of private legal dollar as a piece of metal of a
debts was not designed to confer a certain weight and quality, im-
personal privilege upon debtors, but pressed as the law directs, is a legal
was based upon principles of state dollar. The one is no more so than
liolicy; and an agreement between the other for those purposes that the
§ 210.] MONEY. 509
the plaintiff had a verdict; and in September, 18G0, deposited
the purchase-money in court in gold to be taken out by the
defendant on filing his deed. The prothonotary deposited the
money with reliable bankers to his own credit. They em-
ployed the money as they did other deposits, without profit
as coin; it was always subject to the prothonotary's draft.
The defendant filed his deed after the passage of the legal-
tender law, and the prothonotary offered to pay him the money
in court in legal tenders, which he refused and brought [328]
trover for the gold; held, that he could not recover.'
The earlier cases proceeded on the construction that "«7^
debts'''' in the legal tender law of 1862 included all pecuniary
liabilities, whether originating in contracts expressly to pay in
gold and silver, or in "dollars" generally. But the subject re-
ceived a different treatment when it came to be considered in
the national supreme court. That court said congress must
have had in contemplation debts originating in contract, or de-
mands carried into judgment, and only debts of this character.
And the term did not include taxes levied under state laws;^
nor obligations payable expressly in coined money. Referring
to a tender of United States notes in 1865 on a debt contracted
in 1851, payable by the language of the contract in gold and
silver coin. Chase, C. J., said there were two descriptions of
money in use at the time the tender was made, both authorized
by law, and both made legal tender in payments. The statute
denomination of both descriptions was dollars; but they were
laws have declared them to be of generalcurrent of decisions; namely,
equal value. Where these laws are that all debts, whether payable in
supreme, that value must be ob- terms in gold and silver as money,
served and secured by courts of jus- or in dollars generally, were solvable
tice. If the obligation in this case in greenbacks. Shollenberger v.
had been such as required the de- Brinton, 53 Pa. 1; Appel v. Wolt-
livery of one thousand eight hundred mann, 38 Mo. 194; Riddlesbarger v.
gold dollars, and not as it was, one McDaniel, id. 138; Wilson v. Morgan,
thousand eight hundred dollars in 4 Robert. 58, 1 Abb. Pr. (N. S.) 174, 30
gold or silver coin, its construction How. Pr. 3S6; Murray v. Gale, 5 Abb,
must have been different. Further, Pr. (N. S.) 236, 52 Barb. 427; Whet-
it would have been in no sense a debt stone V. CoUey, 36 111. 328: Hum-
within the contemplation of these phrey v. Clement, 44111. 299; Galliano
statutes, and could not be affected v. Pierre, 18 La. Ann. 10,89 Am. Dec.
by their provisions declaring treas- 643; Munter v. Rogers, 50 Ala. 283.
ury notes a lawful tender for the ^ Aurentz v. Porter, 50 Pa. 115.
payment of debts." Such was the '- Lane County v. Oregon, 7 Wall. 71.
510
PECUNIARY KEPKESENTATIVE OF VALUE.
[§ 210.
essentially unlike in nature. The coined dollar was a piece of
gold or silver of a prescribetl degree of purity, weighing a pre-
scribed number of grains. The note dollar was a promise to
pay a coined dollar; but it was not a promise to pay on demand,
nor at any fixed time, nor was it in fact convertible into a coined
dollar. It was impossible, in the nature of things, that these two
dollars should be actual equivalents of each other, nor was there
anything in the currency acts purporting to make them such.^
iBronson v. Rodes, 7 Wall 229;
Legal Tender Cases, 12 Wall 457.
In The Vaughan and Telegraph, 14
Wall. 258, which was a collision case,
there was a right to recover for the
loss of property according to its value
at the time and place of shipment.
The place of shipment being in Can-
ada, the value in dollars was stated
in the currency of Canada, which
was equivalent to the gold currency
of the United states, but being stated
in dollars, the district court refused
to recognize any difference between
the value of a dollar of that currency
and the dollar of the currency in
which the judgment of the court
would be payable; in other words,
would allow nothing to be added to
the amount stated in the dollars of
Canada currency, to give the equiv-
alent when paid in legal tender
notes — holding that the loss in this
way was an incident of the suit in
the forum where it was brought, and
was unavoidable. In the circuit
court the same rule of damages was
applied, but the decree gave the
value of the Canada currency in
legal tender notes. "These notes,"
said Swayne, J., " have since largely
appreciated, so that while the libel-
ants would, under the decree of the
district court, if it had been paid
when rendered, have received much
less than the estimated value of the
barley, they will now, if the circuit
court be afiSrmed, receive much
more. . . . Upon the rule of dam-
ages applied by both courts as re-
spects the kind of currency in which
the value of the barley was esti-
mated, the libelants were entitled,
on the plainest principles of justice,
to be paid in specie or its equivalent.
The hardship arising fi-om the decree
before us is due entirely to the delay
in its payment which has since oc-
curred, and the change which time
and circumstances have wrought in
the value of the legal tender cur-
rency. The decree was right when
rendered, and being so, cannot now
be disturbed," A minority of the
court dissented, on the ground that
the original decree should have been
rendered for the Canada value in
gold to avoid the loss incident to the
fluctuations in the value of green-
backs. See Edmondson v. Hyde, 2
Sawyer, 205; Kellogg v. Sweeney, 46
N. Y. 291, 7 Am. Rep. 333.
In Simpkins v. Low, 54 N. Y. 179,
it was held that the legal tender acts
of congress relate to the effect of the
notes issued thereunder as a tender
in the payment of debts arising on
contract; they do not forbid the rec-
ognition in other relations of the dif-
ference between coin and currency.
The action was brought for the con-
version of certain bonds issued by a
California company, and though not
in terms payable in gold, still as they
were by the custom of business
treated as such, recovery was permit-
ted on a gold basis.
In Lulingv. Atlantic Mut. Ins. Co.,
30 How. Pr. 69. it was held that where
there is a specific agreement made
■§ 210.]
MONEY.
ill
Except for the payment of debts, in the sense of [329-333]
the legal tender law, there was no conclusive presumption that
the two currencies were of equal value. Parties may by their
contracts recognize not only the actual, but any estimated, dif-
between any policy-holders of a mut-
ual insurance company and thecojM-
pany that the premiums of the for-
mer shall be paid in gold and the
losses shall be paid by the latter in
gold, the company on declaring its
dividends are bound to allow such
policy-holders a certificate of their
share of the profits in accordance
with a gold standard as compared
with currency. A notice issued by
the company to the effect that the
dealers making insurances payable
in gold wei'e to participate with
others in the earnings, and that these
would be computed and made pay-
able in currency, and the delivery by
the company and acceptance of the
certificates of such earnings by such
policy-holders under said notice does
not affect the legal bearing of the
contract, nor make the certificates a
bar to an action by the policy-holders
against the company to correct the
account upon which these were
based and for a proper readjustment.
The certificates were good to the ex-
tent which the}'' provided for only.
Baltimore & O. R Co. v. State, 36
Md. 519; Bank of Prince Edward
Island V. TurnbuU, 35 How. Pr. 8;
Lanev. Gluckauf, 28Cal. 288; Vilhac
V. Biven, id. 410; Rankin v. Demott,
€1 Pa. 263.
A debt payable "in gold or its
equivalent in lawful money of the
U. S.'* requires payment to be made
at the commercial value of gold when
due. Baker's Appeal, 59 Pa. 313.
The defendants in 1866 bought goods
from plam tiffs, "Liverpool tests.
monthly shipments from Liverpool
to Philadelphia, ... at three
and one-fourth cents per pound,
cash, gold coin, on vessel at Philadel-
phia;" held to be payable in gold
or its equivalent. Parties could take
themselves out of the operation of
the legal tender law after its passage
by contracting for payment in coin
alone. Frank v. CoHioun, 59 Pa. 381.
See Governor, Opinion in Response
to. 49 Mo. 216; The Emily B. Souder,
8 Blatchf. 337.
In Glass v. Abbott. 6 Bush. 622, it
was held that the difference in value
between gold and greenbacks is
sufficient to make usury, where
there would be none if no such differ-
ence existed. But see Reinback v.
Crabtree, 77 III 182.
Money had and received main-
tainable for proceeds of a gold bond
sold, and recovery may be had of
such proceeds at its value in paper
money. Hancock v. Franklin Ins.
Co., 114 Mass. 155.
In Carpenter v. Atherton, 28 How.
Pr. 303, a California contract pay-
able in gold was in question; being
such as under the statutes of that
state, called the specific contract act,
would be there enforced by requir-
ing payment in gold, it was held
proper to decree in New York that
it be specifically performed, and a
tender of greenbacks was held no
defense. This remedy was afforded
while the courts of the latter state
held that legal tender notes were
applicable to debts payable ex-
pressly in coined money. But in
Massachusetts the courts held that
the benefits of the California specific
contract act could not be allowed.
Tufts V. Plymouth Gold Mining Ca,
14 Allen, 407.
In Cooke v. Davis, 53 N. Y. 318, it
was held that a contract to deliver
or receive either of the two recog-
512
PECUNIAKY EEPKESENTATIVE OF VALUE.
[§ 211.
ference, incur obligations on the basis of it as a consideration; ^
obtain damages for torts in respect to it, or recover for the loss
of it as an element of damage;^ and by that standard where
there have been dealings on a gold basis resulting in an in-
debtedness,* or an indebtedness payable in a foreign coin cur-
rency.* And to insure the full benefit of the gold value of the
debt or liability, judgment in coined money is authorized and
required to be rendered.®
§ 211. Effect of fluctuations in currency. Where there are
fluctuations in the value of the money of account, or of the
currency in which the commercial business of a country is
nized kinds of currency at a price
expressed in dollars and fractions of
a dollar, or at a specified percentage,
is to be construed as meaning that
the price is payable in the other cur-
rency. The defendant contracted to
deliver to the plaintiff's assignor
" $10,000 current funds of the United
States " at fifteen cents on the dollar
ten months after date. It was held
that the contract was to deliver
$10,000 legal tender notes for $1,500
in coin; that it was valid, and for a
breach thereof the defendant was
liable. The contract was so con-
strued, because otherwise it would
be meaningless. The court below
construed the promise of fifteen per
cent, as payable also in legal tenders,
and nonsuited the plaintiff on the
ground that the contract was void
for want of consideration. See Smith
V. McKinney, 22 Ohio St. 200; also,
Caldwell V. Craig, 22 Gratt. 340; Tur-
pin V. Sledd's Ex'r, 23 id. 238.
The subject of the comparative
value of treasury notes and coin is
discussed in a practical way by
Beatty, C. J., in State v. Knitt-
schnett, 4 Nev. 178 (1868). See Fabbri
V. Kalbfleisch, 52 N. Y. 28; Kupfer
V. Bank of Galena. 34 111. 328, 85 Am.
Dec. 309; Trebilcock v. Wilson, 12
Wall. 687; People v. Cook, 44 Cal. 638.
1 Cooke v. Davis, 53 N. Y. 318:
Smith v. McKinney, 22 Ohio St. 200;
Luling V. Atlantic Mut. Ins. Co., 30
How. Pr. 69.
2Simpkins v. Low, 54 N. Y. 179:
Kellogg V. Sweeney, 46 id. 291, 7
Am. Rep. 333; The Vaughan and
Telegraph, 14 Wall. 258; Fabbri v.
Kalbfleisch, 52 N. Y. 28.
3 Hancock v. Franklin Ins. Co., 114
Mass. 155. But see Wright v. Jacobs,
61 Mo. 19.
* Christ Church Hospital v. Fuech-
sel, 54 Pa. 71; Mather v. Kinike, 51
id. 425; The Emily B. Souder, 8
Blatchf. 337, 17 Wall. 666; Sheehan
V. Dalrymple, 19 Mich. 239; Colton
V. Dunham, 2 Paige, 267; Black v.
Ward, 27 Mich. 191; Oliver v. Shoe-
maker, 35 Mich. 464.
5Bronson v. Rodes, 7 Wall. 229
The Emily B. Souder, 17 id. 666
Trebilcock v. Wilson, 12 id. 687
Dewing v. Sears, 11 id. 379: Quinn
V. Lloyd, 1 Sweeny, 253; Currier v.
Davis, 111 Mass. 480; Independent
Ins. Co. V. Thomas, 104 id, 192;
Chisholm v. Arrington, 43 Ala. 610;
Kellogg V. Sweeney, 46 N. Y. 291, 7
Am. Rep. 333; Phillips v. Dugan, 21
Ohio St. 466, 8 Am. Rep. 66: Chesa-
peake Bank v. Swain, 29 Md. 483;
Atkinson v. Clark, 69 Ga. 460. See
Gist V. Alexander. 15 Rich. 50;
Townsend v. Jennison, 44 Vt. 815;
Grund v. Pendergast, 58 Barb. 216.
§ 211.] MONEY. 513
transacted, allowances have sometimes been made. These
fluctuations have been very great, and are always liable to
occur when the currency is paper. A promisor has a right to
pay in the currency of the contract at par, although [334]
depreciated, if he pays when it is due; but if he does not, and
that currency is mone}', is the subsequent depreciation an item
of legal damages to the creditor; or if it subsequently appreci-
ates, is the increase of value an item for which allowance can
be made against him? In an early case in North Carolina the
court say: "Where the currency in which the judgment is to
be given is equal, sum for sum to the money mentioned in the
bond, the jury assess damages usually for the detention to the
amount of the interest accrued, but they are not obliged to
assess damages to that amount only. If upon inquiry, for in-
stance, they find that one pound of the present currency of
this country is not equal to one pound of the money payable
by the obligation, whether this inequality be occasioned by
depreciation or any other cause, and though the money men-
tioned in the obligation be not foreign money, they may, in
the assessment of damages, increase them beyond the amount
of the interest so as to make the damages and principal equal
in value to the principal and interest mentioned in the bond." ^
But whatever may be the rule in respect to a mere conven-
tional money, a debt or liability payable in a legal tender
currency may always be discharged in that currency at par,
and no allowance is made for fluctuations in its value.'^
More than once in the history of this country there has been
a conventional and fluctuating paper currency in general use as
a substitute for and purporting to represent the denominations
1 Anonymous, 1 Hay w. (by Batt.) the contract was made, and one dol-
354. In a note to this case it is lar now being equal to ten shillings,
stated that there were at the same See Taliaferro v. Minor, 1 Call, 456:
term several cases of assumpsit for Massachusetts Hospital v. Provincial
currency more depreciated at the Ins. Co., 2.o Up. Can. Q. B. 613.
time of the contract than it is now, 2 gee Faw v. Marsteller, 2 Cranch,
and according to the direction of the 10, 29; Downman v. Downman, 1
court the plaintiff recovered only Wash. (Va.) 26; Higgins v. Bear
the real value in the present cur- River & A. Water & M. Co., 27 CaL
rency, the sum demanded being 153; Metropolitan Bank v. Van Dyck,
reduced one-sixth, — twelve shillings 27 N. Y. 400.
having been equal to one dollar when
Vol. I — 33
51J: PECUNIARY REPRESENTATIVE OF VALUE. [§ 211.
of an otherwise ideal legal money. During the prevalence of
such currency values have been estimated and dealt with as
though this depreciated money were their legal standard and
measure. Questions of amount have arisen out of such trans-
[335] actions after this vicious currency had passed away, and
sums agreed to be paid while it w^as the general medium of ex-
change, and magnified in consequence of its depreciation, have
been demanded when payment could be exacted in the pure,
legal currency. Scaling laws have then been enacted as the
only relief against the injustice and inequality of interpreting
the inflated language of value which a depreciated currency
had popularized by the actual legal standard subsequently
brought into practical use. This mode of relief was resorted
to in the late insurgent states after the rebellion where the
notes of the confederacy had necessarily been the only circulat-
ing medium; and until the subject was considered in the su-
preme court of the United States scaling acts were, by the
decisions of several of the state courts, regarded as essential
to protect debtors from the enforcement of contracts made
with reference to the depreciated currency from liability to
pay an equal sum in the lawful currency of the United States.'
1 In Omohundro v. Crump, 18 say the least, whether parol evidence
Gratt. 703, Jaynes, J., said, in respect of the actual understanding and
to notes made in Virginia in Novem- agreement of the parties as to the
ber, 1861, payable in one, two and kind of currency in which a con-
three years: "The act of March 3, tract is to be fulfilled, which is ex-
1866, provides that in any action pressed to be payable in ' dollars *
founded on any contract, express or generally, would be admissible, in-
implied, made and entered into be- dependently of the provisions of that
tween the 1st day of January, 1862, act. The word ' dollars ' has a
and the 10th day of April, 1865, it definite signification fixed bj- law,
shall be lawful for either party to and it is laid down that 'when the
show by parol or other relevant evi- words have a known legal meaning,
dence what was the true understand- such for example as measures of
ing and agreement of the parties, quantity fixed by statute, parol
either expressed or to be implied, as evidence that the parties intended
to the kind of currency in which it to use them in a sense different from
was to be fulfilled or performed, or their meaning, though it was still
in reference to which as a standard the customary and popular meaning,
of value it was made and entered is not admissible.' 1 Greenleaf Ev.,
into. This case does not come with- § 280. See also Smith v. Walker. 1
in the provisions of that act, because Call, 24; Comraonwealtli v. Beau-
the note was made before the 1st day marchais, 8 Call, 107. We need not
of January, 1862. It is doubtful, to decide whether such evidence could
§ 211.]
MONEY.
515
In 1868 a case from Alabama brought this subject [33G]
before the federal court of last resort. The question was,
" Whether evidence can be received to prove that a promise,
made in one of the insurgent states, and expressed to be for
the payment of dollars, without qualifying words, was in fact
made for the payment of an}'- other than lawful dollars of the
United States?" "It is quite clear," said Chase, C. J., deliv-
ering the opinion of the court, " that a contract to pay dollars,
made between citizens of any state of the Union, while main-
taining its constitutional relations with the national govern-
ment, is a contract to pay lawful money of the United States,
and cannot be modified or explained by parol evidence. But
it is equally clear, if in any other country, coins or notes de-
nominated dollars should be authorized of different value from
the coins or notes which are current here under that name,
that, in a suit upon a contract to pay dollars, made in that
have been received in this case,
because it is expressly stated in the
facts agreed that there was no
actual agreement.
"It is contended, however, that
the law will imply an agreement
under the circumstances of this case
to accept confederate money in pay-
ment of the note on which the ac-
tion is founded. The argument is
that the note, having been made
after the establishment of the con-
fedei'ate states, must be considered
as made with reference to the actual
currency of those states; and that as
confederate notes were the actual
currency in those states at the time
the note became jaayable it was pay-
able in that currency. It must be
remembered, however, that confed-
erate notes were never made a legal
tender. They were never the lawful
money of the country, but only a
substitute for money like bank notes.
Gold and silver were the lawful
money of the confederate states at
the time this note was made, and
also at the time it became payable,
according to the provisions of the act
of the congress of the United States,
expressly adopted by the congress of
the confederate states. The prin-
ciple of public law relied on by
the counsel for the appellant, and
quoted from Story, Confl., § 242. pre-
sumes, in the absence of evidence
to the contrary, that every contract
is made with refei-enceto the lawful
currency of the country in which ifc
is entered into. It does not presume
it to be made with reference to any
substitute for any currency which
may happen to circulate. A con-
tract made in Eichmond before the
war for the payment of so many
dollars would not have been deemed
payable in bank notes, though bank
notes were then the common and
practically the exclusive currency.
And so in this case, if we apply to
the confederate states the principle
relied on, the note must be deemed
payable in specie, which was the
lawful money of the confederate
states at the time it became pay-
able." Boulware V. Newton, 18 Gratt.
70S; Hansbrough v. Utz, 75 Va. 959.
516 PECUNIAKY KEPRESENTATITE OF VALUE, [§ 211.
country, evidence would be admitted to prove wliat kind of
dollars were intended; and, if it should turn out that foreign
dollars were meant, to prove their equivalent value in lawful
[337] money of the United States. Such evidence does not
alter or modify the contract. It simply explains an ambiguity,
which, under the general rules of evidence, may be removed
by parol evidence. We have already seen that the people in
the insurgent states, under the confederate government, were,
in legal contemplation, substantially in the same condition as
inhabitants of districts of a country occupied and controlled
bv an invading belligerent. The rules which would apply in
the former case would apply in the latter; and as, in the former
case, the people would be regarded as subjects of a foreign
power, and contracts among them be interpreted and enforced
with reference to the conditions imposed by the conqueror, so
in the latter case, the inhabitants must be regarded as under
the authority of the insurgent belligerent power actually es-
tablished as the government of the country, and contracts
made with them must be interpreted and enforced with refer-
ence to the condition of things created by the acts of the gov-
erning power. It is said, indeed, that under the insurgent
government the word 'dollar' had the same meaning as under
the government of the United States; that the confederate
notes were never made a legal tender; and, therefore, that no
evidence can be received to show an}^ other meaning of the
word when used in a contract. But, it must be remembered
that the whole condition of things in the insurgent states was
matter of fact rather than matter of law, and as matter of
fact, these notes, payable at a future and contingent day,
which has not arrived and can never arrive, were forced into
circulation as dollars, if not directly by the legislation, yet in-
directly and quite as effectually by the acts of the insurgent
government. Considered in themselves, and in the light of
subsequent events, these notes had no real value, but they
were made current as dollars by irresistible force. They were
the only measure of value which the people had, and their use
was a matter of almost absolute necessity. And this gave
them a sort of value, insignificant and precarious enough, it is
true, but always having a sufficiently definite relation to gold
and silver, the universal measures of value, so that it was
^211.] MONEY. 517
always easy to ascertain how much gold and silver was
the real equivalent of a sum expressed in this currency. In
the light of these facts, it seems hardly less than absurd to say
that these dollars must be regarded as identical in kind [338]
and value with the dollars which constitute the money of the
United States. "We cannot shut our eyes to the fact that they
were essentially different in both respects; and it seems to us
that no rule of evidence properly understood requires us to
refuse, under the circumstances, to admit proof of the sense in
which the word ' dollar ' is used in the contract before us." '
The presumption from the promise to pay dollars was [330]
that dollars of lawful money were meant.^ But this presump-
tion was reversed by the provisions of the scaling laws enacted
in some states. Payments actually received by the creditor
in confederate notes were held valid.* But it was held in some
of the southern states that payments received by an agent or
trustee in such currency would not have effect as such.'* In
Tennessee, North Carolina and Georgia, however, it was held
that a sheriff is authorized to receive, in the absence of instruc-
tions to the contrary, whatever kind of money is passing cur-
rently in the payment of debts of the same character as that
1 Thorington v. Smith, 8 Wall. 1. Whitley v. Moseley, 46 Ala. 480. See
See Hanauer V. Woodruff. 15 id. 448; Williams v. Campbell, 46 Miss. 57;
Confederate Note Case, 10 id. 548; Powell v. Knighton, 43 Ala. 626;
Gavinzel v. Crump, 33 id. 308; Ef- Fretz v. Stover, 23 Wall. 198; also
finger v. Kenney, 115 U. S. 566, 9 Robinson v. International L. Assur.
Sup. Ct. Rep. 179, and cases cited; Society, etc., 42 N. Y. 54, 1 Am. Rep.
Bailey v. Stroud, 26 W. Va. 614; 490; Bank of Old Dominion v. Mc-
Chalmers v. Jones, 23 S. C. 463. Veigh, 30 Gratt. 457; Alley v. Rog-
If payment is made in a depreci- ers, 19 id. 366.
ated currency which is not legal Executors or administrators and
tender a promise to make good the other trustees who were clothed with
depreciatiou is founded on a valua- the legal title to claims due the es-
ble consideration; but it is otherwise tates they represented discharged
where payment is made in what the debtors thereto by receiving payment
law designates as money. McElderry in confederate currency in the ab-
V. Jones. 67 Ala. 303. sence of fraud or collusion. Trustees
2 Id. ; Wilcoxen v. Reynolds. 46 Ala. of Howard College v. Turner, 71 Ala.
539; Taunton v. Mclnnish, id. 619; 439, and -cases cited; Hyatt v. Mc-
Neeley v. McFadden, 2 S. G 169; Burney, 18 S. C. 199. But it was not
Williamson v. Smith, 1 Cold. 1,78 so in the case of one whose authority
Am. Dec. 478. was special, as an agent or attorney.
3 Ponder v. Scott, 44 Ala. 241. Ferguson v. Morris, 67 Ala, 389. See
* Scruggs V. Luster, 1 Heisk. 150; next note.
51 S
PECUNIARY KEPRESENTATIVE OF VALUE.
[§ 212.,
which he has to collect, subject to the limitation that he would
not be warranted in receiving any currency so depreciated as
to amount to notice that the creditor would not accept it.'
Section 2.
par and rate of exchange.
§ 212. Par of exchange. There is no common or interna-
tional unit of value; hence the business and commerce of the
world are conducted in many kinds of money. It often becomes
necessary, therefore, to enforce the collection of debts incurred or
1 Atkin V. Mooney, Phil. (N. C. L.)
32; Emerson v. Mallett, Phil. Eq. 236;
Turner v. Collier, 4 Heisk. 89; Boyd
V. Sales, 39 Ga. 74; King v. King, 37
id. 205; Campbell v. Miller, 38 id. 304,
95 Am. Dec, 389; Hutchins v. Hull-
man. 34 Ga. 346; Neely v. Wood-
ward, 7 Heisk. 495. See Van Vacter
V. Brewster, 1 Sm. & M. 490.
" No court since the war has held,
so far as we know, that confederate
treasury notes were issued by lawful
authority; but money has been rec-
ognized generally by the courts as a
generic term, covering anything that
by common consent is made to rep-
resent property and pass as such in
current business transactions, and
that when a judgment or debt has
been paid in confederate money and
accepted, the transaction cannot be
opened. Several decisions go to the
extent that if at the time and place
of payment confederate money was
generally received in business trans-
actions and was in fact the current
money of the country, the agent's
authority to receive such money, in
the absence of directions to the con-
trary, may be presumed. This rule
has been applied not only when the
creditor and debtor were within the
same state, but when the creditor
resided in a state not a member of
the confederacy, and the debtor was
witliin the confederate lines. King
v. King, 37 Ga. 205; Westbrook v.
Davis, 48 Ga. 471; Rodgers v. Bass,
46 Tex. 505; Burford v. Memphis
Bulletin Co., 9 Heisk. 691; Pidgeon v.
Williams, 21 Gratt. 251; Hale v. Wall,
22 Gratt. 224; Robinson v. Interna-
tional L. Assui-. Society, 42 N. Y. 54,,
1 Am. Rep. 490; Glasgow v. Lipse,
117 U. S. 327, 6 Sup. Ct. Rep. 757;.
Martin's Adm'r v. United States, 2
T. B. Mon. 89, 15 Am. Dec. 129. Other
decisions hold that the rule should
not be applied where the creditor
was within the fedei'al lines, with
communication between him and
his agent in the confederacy de-
stroyed. In such a case it has been
held that no implied authority to
receive confederate money existed,
and that payment to the agent or
attorney did not discharge the debt.
Harper v. Harvey, 4 W. Va. 539;
Alley V.Rogers, 19 Gratt. 366; Water-
house V. Citizens' Bank, 25 La. Ann.
77; Fretz v. Stover, 22 Wall. 198."
Hendry v. Benlisa, 37 Fla. 609, 20 So.
Rep. 800, 34 L. R. A. 283. The last
case holds that if at the time and
place of payment in confederate
money it was generally received in
business transactions, and was the
current money of the country, an
agent's authority to receive it, in the
absence of directions to the contrary
from a resident principal, will be
presumed.
i
§ 212.]
PAR AND RATE OF EXCHANGE.
519
contracted in one currency by resort to courts whose judgments
are rendered in another; and the gold and silver coins of one
country often circulate as money in other countries and are
current at their value, which is capable of equivalent ex- [340]
pression in the local currency. Whatever the coinage, a like
amount of these precious metals will, in all forms of coined
money, be of like intrinsic value, depending for its equality on
weight and fineness. An amount stated in one currency
which is an equivalent for the same value expressed in another
is the par of exchange; it is a literal translation of the lan-
o-uao-e of value in one country or currency into that of equal
value in another. The true par of exchange between two
countries is the equivalent of a certain amount of the currency
of one in the currency of the other, supposing the currency of
both to be at the precise weight and purity fixed by their re-
spective mints ;^ or in other words, it is the amount which the
standard coin of either country would produce when coined at
the mint of the other.^
1 McCuUoch's Com. Die, tit. Par of
Exchange.
2 Commonwealth v, Haupt, 10 Al-
len, 38. In Daniel on Negotiable In-
struments the par of exchange is
thus explained, vol. 2, §§ 1443, 1443:
" By the par of exchange is meant
the precise equality of any given sum
of money in the coin or currency of
one country and the like sum in the
coin or currency of another country
into vphich it is to be exchanged, re-
gard being had to the fineness and
weight of the coins as fixed by the
mint standard of the respective
countries. Cunningham on Bills, 417;
Story on Bills, § 30. Marius says:
*Pair,' as the French call it, 'is to
equalize, match or make even the
money of exchange from one place
with that of another place; when I
take up so much money for exchange
in one place to pay the just value
thereof in another kind of money in
another place, without having respect
to the current of exchange for the
same, but only to what the monej-s
are worth.' Marius on Bills, 4. It is
necessary to this purpose to ascer-
tain the intrinsic values of the dif-
ferent coins; and then it is a matter
of arithmetical computation to ar-
rive at the amount of one which
will be the exact equivalent of a
certain amount of the other, into
which it is to be exchanged. When
this has been accomplished, and the
exact equivalent of a certain amount
in one currency has been ascertained
in another, should it be desired to
transmit such amount from one
country to another, the rate of ex-
change between the countries will
be added to or subtracted from such
amount, accordingly as the course
of exchange is in favor of the one
country or the other. So the par
of exchange is the equivalency of
amounts in different currencies,
while the rate of exchange is the
difference between the amounts at
different places. Gilbert remarks
on this subject, in his Treatise on
Banking: 'The real par of exchange
520
PECUNIAKY EEPRESENTATIVE OF VALUE.
[§21$
[341] The par of exchange is the measure of damages only
when the sum for which it is substituted as an equivalent
would be such if judgment could be taken in the same cur-
rency as that in which the debt exists. It is the measure
where there is no question of the rate of exchange, and the only
inquiry is what is the equivalent amount in our currency to
that found due in a foreign currency.
The nominal par based on the equality in value of gold or
silver, whether in foreign or domestic coins, by the universal
standard, may not be the real par if the money of the former
be not gold and silver of the standard value, or if it be some
depreciated substitute. Then it may be a question whether
the creditor is entitled to judgment for an equivalent accord-
ing to the real par, or whether he must accept as an equiva-
lent the nominal par. Judge Story says, " if a note were made
in England for £100 sterling, payable in Boston, if a suit
between two countries is that by
which an ounce of gold in one coun-
try can be replaced by an ounce of
gold of equal fineness in the other
country. In England gold is the
legal tender, and its price is fixed at
£3 17s. lOid. per ounce. In France,
silver is the currency, and gold, like
other commodities, fluctuates in price
according to supply and demand.
Usually it bears a premium or agio.'
In the above quotation the premium
is stated to be 7 per viille; that is, it
would require 1,007 francs in silver
to purchase 1,000 francs in gold. At
this price the natural exchange, or
that at which an ounce of gold in
England would purchase an ounce
of gold in France, is 25.3U. But the
commercial exchange — that is, the
price at which bills on London would
sell on the Paris exchange — is 25
francs, 25 cents, showing that gold
is 0.30 per cent, dearer in Paris than
in London. Tables have been con-
structed to show the results of each
fluctuation in the premium of gold
in Paris and Amsterdam (Gilbert on
Banking, 424). And in Cunningham
on Bills it is said: By the par of
exchange is meant the precise equal-
ity between any sum or quantity
of English money, and the money
of a foreign country into which it
is to be exchanged, regard being had
to the fineness as well as to the
weight of each. When Sir Isaac
Newton had the inspection of the
English mint he made, by order of
council, assays of a great number of
foreign coins to know their intrinsic
values and to calculate thereby the
par of exchange between England
and other countries, of which a table
is given by Dr. Arbuthnot. And
he says you may thereby judge the
balance of trade, as well as the dis-
temper of a patient by the pulse.
And this, it seems, induced Mons.
Dutot, in a late book, entitled. Re-
flections Politique sur les Finances,
to follow the same path in calculat-
ing the par of exchange, and to say
that the balance of trade may be
thereby as well judged of as the
weather by a barometer." Gilbert
on Banking, 417.
§ 213.] PAR AND RATE OF EXCHANGE. 521
were brought in Massachusetts, the party would be entitled to
recover . . . the established jiar of exchange by [342]
our laws. But if our currency had become depreciated by a
debasement of our coinage, then the depreciation ought to be
allowed for, so as to bring the sura to the real par, instead of
the nominal par." ^ And for the same reason, if the money
in which the debt was incurred were depreciated, an allowance
by way of deduction should be made in ascertaining the
equivalent in a currency of gold and silver of standard value.
There being no statute fixing for general purposes a legal par
of exchange, the rule which is established by the best author-
> ities is that in rendering judgment in a different currency it
should be given for such sum as approximates most nearly to
the value of the amount contracted for.-'
§ 213. Kate of exchange. Where the debt is not only pay-
able in the currency of a foreign country, but is expressl}'' or
by implication also payable there, and not having been paid
is sued in this country, the creditor is entitled to the money
of the forum to a sum equal to the value of the debt at the
place where it should have been paid. Where the creditor
sues the law ought to give him just as much as he would have
had if the contract had been performed, just what he must
pay to remit the amount of the debt to the countrj' where it
was payable. Hence he is entitled to recover according to
the rate of exchange between the two countries at the time of
the trial.*
1 Story's Conf, Laws, § 310. Am. Dec. 84: Watson v. Brewster,
2 Benners v. Clemens, 58 Pa. 24; 1 Pa. 381 ; Hawes v. Woolcock, 26
Robinson v. Hall, 28 How. Pr. 342; Wis. 629; AUshouse v. Ramsay, 6
Pollock V. Colglazure, Sneed, 2; Whart. 331, 87 Am. Dec. 417; Jelison
€omstock V. Smith, 20 Mich. 338; v. Lee, 3 Woodb. & M. 368; Nicker-
Reiser v. Parker, 1 Lowell, 262; son v. Soesman, 98 Mass. 364; Capron
Hawes v. Woolcock, 26 Wis. 629; v. Adams, 28 Md. 529; Cushing v.
Jelison v. Lee, 3 Woodb. & IL 368; Wells, 98 Mass. 550; Smith v. Shaw,
■Gary v. Courtenay, 103 Mass. 316, 2Wash. CO. 167; Stringer v. Coombs,
4 Am. Rep. 559; Swanson v. Cooke, 62 Me. 160, 16 Am. Rep. 414; Grant
30 How. Pr. 385. 45 Barb. 574: 3 v. Healey, 3 Suran. 523; Benners v.
Kent's Com. 116, note: TheVaughan Clemens, 58 Pa. 24; WoodhuU v.
and Telegraph, 14 Wall. 258; Story's W^agner, 1 Bald. 296; Wood v. Wat-
ConfL Laws, §§ 310, 311; Scott v. son, 53 Me. 300; Delegal v. Nay lor. 7
Bevan, 2 B. & Ad. 78. Bing. 460; Cash v. Kennion, 11 Ves.
3 Marburg v. Marburg. 26 Md. 8, 90 314; Lee v. Wilcocks, 5 S. & R 48;
522
rjiCUNIARY REPRESENTATIVE OF VALUE.
[§ 213.
Scott V. Bevan, 3 B. & Ad. 78, and
note; Ekins v. East India Co., 1 P.
Wm& 395; Lanusse v. Barker, 3
Wheat. 101.
[345J] The opinion in Grant v. Healey,
supra, places the law on this subject
in a clear light, and answers with
great force the contrary decisions in
Massachusetts and New York which
are cited in the discussion. "I take
the general doctrine to be clear,''
said the learned judge, "that when-
ever a debt is made payable in one
country, and is afterwards sued for
in another country, the creditor is
entitled to receive the full sum nec-
essary to replace the money in the
country where it ought to have been
paid, with interest for the delay; for
then and then only is he fully in-
demnified for the violation of the
contract. In every such case the
plaintiff is therefore entitled to have
the debt due to him first ascertained
at the par of exchange between the
two countries, and then to have the
rate of exchange between these
countries added to or subtracted
from the amount, as the case may re-
quire, in order to replace the money
in the country where it ought to be
paid. It seems to me that this doc-
trine is founded on the true princi-
ples of reciprocal justice. The ques-
tion, therefore, in all cases of this
sort, where there is not a known and
settled commei'cial usage to govern
them, seems to me to be rather a
question of fact than of law. In cases
of accounts and of advances, the ob-
ject is to ascertain where, according
to the intention of the parties, the
balance is to be repaid — in the coun-
try of the creditor or of the debtor.
In Lanusse v. Baker, 3 Wheat. 101,
147, the supreme court of the United
States seem to have thought that
where money is advanced for a per-
son in another state, the implied
undertaking is to replace it in the
country where it is advanced, unless
that conclusion is repelled by the
agreement of the parties or by other
controlling circumstances. . .
In relation to mere balances of ac-
count between a foreign factor and
a home merchant, there may be
nioredifficulty in ascertaining where
the balance is reimbursable, whether
where the creditor resides or where
the debtor resides. Perhaps it will
be found, in the absence of all con-
trolling circumstances, the truest
rule and the easiest in its applica-
tion is that advances ought to be
deemed reimbursable at the place
where they are made, and sales of
goods accounted for at the place
where they are made or authorized
to be made. . . . (Consequa v.
Fanning, 3 Johns. Ch. 587, 610, 17
Johns. 511, 8 Am. Dec. 442.) . . .
I am aware that a different rule, in
respect to balances of account and
debts due and payable in a foreign
country, was laid down in Martin v.
Franklin, 4 Johns. 125, and Scofield
V. Day, 20 Johns. 102, and that it has
been followed by the supreme court
of Massachusetts in Adams v. Cordis,
8 Pick. 260. It is with unaffected
diffidence that I venture to express
a doubt as to the correctness of the
decisions of these learned courts upon
this point. It appears to me that the
reasoning in the 4 Johns. 125, which
constitutes the basis of the other de-
cisions, is far from being satisfac-
tory. It states very properly that the
court have nothing to do with in-
quiries into the disposition which the
creditor may make of his debt after
the money has reached his hands;
and the court are not to award dam-
ages upon such uncertain calcula-
tions as to the future disposition of
it. But that is not, it is respectfully
submitted, the point in controversy.
The question is whether, if a man
has undertaken to pay a debt in one
country, and the creditor is com-
pelled to sue him for it in another
§ 213.]
PAR AND KATE OF EXCHANGE.
523
[344] country, where the money is of
less value, the loss is to be borne by
the creditor, who is in no fault, or by
the debtor, who by the breach of his
contract has occasioned the loss. The
loss of which we here speak is not a
future contingent loss. It is posi-
tive, direct, immediate. The very
rate of exchange shows that the very
sum of money paid in one country is
not an indemnity or equivalent for
it when paid in another country, to
which by tlie default of the debtor
the creditor is bound to resort. Sup-
pose a man undertakes to pay an-
other $10,000 in China, and violates
his contract, and then he is sued
therefor in Boston, when the money
if duly paid in China would be worth
at the very moment twenty per cent,
more than it is in Boston; what com-
pensation is it to the creditor to pay
him the $10,000 at par in Boston ?
Indeed I do not perceive any just
foundation for the rule that interest
is payable according to the law of
the place where the contract is to be
performed, except it be the very same
on which a like claim may be made
as to the principal, viz., that the
debtor undertakes to pay there, and
therefore is bound to put the cred-
itor in the same situation as if he had
punctually complied with his con-
tract there. It is suggested that the
case of bills of exchange stands upon
a distinct ground, that of usage, and
is an exception from the general
doctrine. I think otherwise. The
usage has done nothing more than
ascertain what should be the rate of
damages for a violation of the con-
tract generally, a matter of conven-
ience and daily occurrence in busi-
ness, rather than to have a fl uct uating
standard dependent upon the daily
rates of exchange; exactly for the
same reason that the rule of deduct-
ing one-third new for old is applied
to cases of repairs of ships, and the
deduction of one-third from the gross
freight is applied in cases of gen-
eral averaga It cuts off all minute
calculations and inquiries into evi-
dence. But in cases of bills of ex-
change drawn between countries
where no such fixed rate of dam-
ages exists, the doctrine of damages
applied to the contract is precisely
that which is sought to be applied to
the case of a common debt due and
paj-able in another country; that is
to say, to pay the creditor the exact
sum which he ought to have received
in that country. That is sufficiently
clear from the case of Mellish v.
Simeon, 2 H. Black. 378, and the
whole theory of re-exchange." See
Lodge V. Spooner, 8 Gray, 166; Hus-
sey V. Farlow, 9 Allen, 263; Bush v.
Baldrey, 11 id. 367; Weed v. Miller,
1 McLean, 423; Grutacup v. Woul-
luise, 2 id. 581.
524: CONVENTIONAL LIQUIDATIONS AND DISCHAKGES.
CHAPTER yil.
CONVENTIONAL LIQUIDATIONS AND DISCHARGEa
Section L
PAYMENT.
§ 214-216. What is; modes of making,
217. What is not payment.
218. Eflfect of payment.
219. Payment before debt due.
220. Payment by devise or legacy.
221. Payment by gift inter vwos.
222. Payment by retainer.
223. 224. Payment in counterfeit money, bills of broken banks or forged
notes.
225-227. Payment by note, bill or check.
228, 229. Collaterals collected or lost by negligence of creditor are pay-
ments.
230. Who may make payment.
231. To whom payment may be mada
233. Pleading payment.
233. Evidence of payment
Section 2.
application of payments,
234. General rule.
235. 236. By debtor.
237. Same subject; evidence.
238-240. By creditor.
241. Appropriation by the court.
242. When payments applied pro rafa.
243. General payment applied to oldest debt.
244. General payment applied to a debt bearing interest, and first to in-
terest.
245. General payment applied to the debt least secured; comments on
conflicting views of the general subject.
Section 3.
accord and satisfaction.
246. Definition.
247. Consideration.
248. Payment of part of a debt will not support an agreement to discharge
the whole.
248a. Same subject.
249. Any other act or promise which is a new consideration will suffice.
CONVENTIONAL LIQUIDATIONS AND DISCHAEGES, 525
§ 250. Composition witli creditors.
251. Compromise of disputed claim.
253. Agreement must be executed.
Section 4
RELEASE.
§ 253. Definition.
254. Differs from accord and satisfaction.
255. Extrinsic evidence and construction.
256. Who may execute.
257. Effect when executed by or to one of several olaiming or liable.
258. What will operate as a releasa
259. Covenant not to sue.
Section 5.
TENDER.
260. Right to make.
261. On what demands it may be made.
363. When it may be mada
263. In what money.
264 By whom.
265. To whom.
266, 267. It must be sufficient in amount,
268. How made.
269. Where to be made.
270. Must be unconditional
271. Effect of accepting.
272. Must be kept good.
273. Waiver and omission of tender on sufficient excuse
274. Tender must be pleaded and money paid into court
275. Effect of plea of tender.
276. Effect of tender when money paid into court.
277. Effect of tender on collateral securities.
278. Paying money into court
Section 6.
stipulated damages.
279. Contracts to liquidate damages valid-
280. Damages can be liquidated only by a valid contract.
281. Modes of liquidating damages; computation of time,
282. Alternative contracts.
283. Liquidated damages contradistinguished from penalty.
284 The evidence and effect of intention to liquidate.
285. Stipulated sum when damages otherwise certain or unc^taii?
386, 287. Contracts for the payment of money.
288. Large sum to secure payment of a smaller.
289. Stipulation where damages certain and easily proved.
290. 292. Stipulation when damages uncertain.
52G
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 214.
§ 293. Same subject; illustrations.
294, 295. Stipulation for payment of a fixed sum for partial or total breach.
296. Effect of part performance accepted where damages liquidated.
297. Liquidated damages are in lieu of performance.
298. Eifect of stipulation upon right of action,
299. Waiver of right to stipulated damages.
Section 1.
PAYMENT.
[345] §214. What is; modes of making. Payment is the
actual performance of an agreement or duty to pay money.^
It is distinguishable from accord and satisfaction, and from
release ; it is strict performance in respect to a debt, accord-
ing to the literal and substantial import of the contract by
virtue of which it was incurred; accord and satisfaction is the
adoption, by mutual consent and the doing, of some other act
as a substitute; release is a renunciation of the contract or lia-
bility, whereby performance is waived. But accord and sat-
isfaction is a payment suh modo; and a release, as it must be
founded on an actual consideration, shown or implied, is to the
extent of such consideration a payment or satisfaction.^
Payment includes the transfer by the debtor to the creditor
and the receipt by the latter of money or something else of
value accepted by him as representing money. Ordinarily
1 City Savings Bank v. Stevens, 59
N. Y. Super. Ct. 549, 15 N. Y. Supp.
139.
A payment on Sunday discharges
the debt. Jameson v. Carpenter, 68
N. H. 62, 36 Atl. Rep. 554.
Under an agreement to pay bills
daily for goods delivered the pur-
chaser has the whole of the day in
which bills are presented to pay
them. Anglo-American Provision
Co. V. Prentiss, 157 111. 506, 42 N. E.
Rep. 157.
Punctual payment means pay-
ment on the day fixed; nine days
thereafter is too late. Leeds & Han-
ley Theater v. Broadbent, [1898] 1
Ch. 343.
"Originally payment was the per-
formance of a promise to pay money
at the time and in the manner re-
quired by the term? of the contract;
but it has been extended to include
the delivery of money in satisfac-
tion of a debt after a default has
been made in pajnnent according to
the terms of the contract." Ulsch v.
Muller, 143 Mass. 379, 9 N. E. Rep.
736.
A cross-demand is not payment
and cannot be treated as such unless
by agreement of the parties. Mc-
Curdy v. Middleton, 82 Ala. 131, 2
So. Rep. 721; Wharton v. King, 69
Ala. 365.
2 See Bottomley v. Nuttall, 5 C. K
(N. S.) 122, 134, 135.
§ 214.] PAYMENT. 527
the debtor must seek the creditor to pay him.' Eut if a lease
is silent as to the place where rent is to be paid the landlord
must make a demand of payment on the land before he can
declare a forfeiture, notwithstanding the tenant has thereto-
fore sought him for the purpose of making payment.^ If there is
no agreement on the subject the purchase price of property is
payable at the office of the vendors, to their agents or to them
in person.' But if the place of payment is designated and the
presence of the payee is necessary, he must attend ; and it
-either of two places is agreed upon he must select, and there
is no default until he has done so.* If the creditor refuses to
receive payment at the place appointed by him and does not
inform his debtor of a purpose to require it to be made else-
where, he waives the right to payment at another than the
designated place and cannot reap any benefit from his act.'
The duty of the debtor to seek his creditor does not require
that he should do so beyond the limits of the state or country
in which the debt was contracted, and by implication or ex-
press agreement was to be paid.^ But as nothing but actual
payment w^ill discharge the debt, this dutv of seeking the cred-
itor will more properly be considered in connection with the
subject of tender.'^ It may, however, be added here that if
the debtor is a municipality, county, state or government the
obligation is not dischargeable at any other place than its
treasur}^,^ unless some other place be designated. A county
iCranley v. Hillary, 2 M. & S. 120; tell v. Nichols' Adm'r, Hardin, 66;
Soward v. Palmer, 2 Moore, 276; Galloway v. Standard F. Ins. Co., 45
Galloway v. Standard F. Ins. Co., W. Va. 237, 31 S. E. Rep. 969.
45 W. Va. 237, 31 S. K Rep. 969. •? g§ 260-270.
2Rea V. Eagle Transfer Co., 201 Pa. 8 Pekin v. Reynold*, 31 111. 529, 83
273, 50 Atl. Rep. 764. Am. Dec. 244; Boyle s Lunacy, 20 Pa,
3 Greenawalt V. Este, 40 Kan. 418, Super. Ct. 1; People v. Tazewell
19 Pac. Rep. 803; Baker v. Holt, 56 County. 22 111. 147; Johnson v. Stark
Wis. 100, 14 N. W. Rep. 8; North- County, 24 id. 75; South Park Convrs
western Iron Co. v. Meade, 21 Wis. v. Dunlevy, 91 id. 49; Friend v. Pitts-
480. burgh, 131 Pa. 305. 6 L. R. A. 636, 17
* Thorn v. City Rice Mills, 40 Ch, Am. St. 811, 18 Atl. Rep. 1060; Sibley
Div. 357. V. Pine County, 31 Mmn. 201, 17 N.
5 Union Mut. L. Ins. Co. v. Union W. Rep. 337; Monteith v. Parker. 36
Mills Plaster Co., 37 Fed. Rep. 286, Ore. 170. 59 Pac. Rep. 192: William-
4-{ L. R A. 90. son County v. Farson, 101 III. App.
6 King V. Finch, 60 Ind. 423; Lit- 328, 199 111. 71, 64 N. K Rep. 1086.
528
CONVENTIO:S^AL LIQUIDATIOXS AND DISCHARGES. [§ 214.
which issued bonds containinfi: a reservation of the ri^ht to
pay them after a certain date, prior to their maturity, was not
bound to seek the holders of them and give notice of its elec-
tion to pay them after a date duly fixed by the authorities. Its
duty was discharged by giving ample notice through news-
papers of the exercise of its option that the bonds would be
paid at the place named therein. By placing the funds there
the debtor discharged its duty to the bondholders and was
not liable to them for interest thereafter.^
If a debtor is directed by his creditor to remit money by
mail, or if that be the usual mode of remitting it, and the re-
[346] mittance be lost, the creditor must sustain the loss.'^ In
such case compliance with the direction in respect to the mode
of remittance fulfills all the requisites of payment — tender and
acceptance, — both of which are essential. To constitute a
payment, money or some other valuable thing must be deliv-
ered by the debtor to the creditor for the purpose of extinguish-
ing the debt, and the creditor must receive it for that purpose.^
1 Stewart v. Henry County, 66 Fed.
Rep. 127; Ward v. Smith, 7 Wall
450. See Williamson County v. Far-
son, supra.
2 Colvin V. United States Mut. Ac-
cident Ass'n, 66 Hun, 543, 21 N. Y.
Supp. 734; Primeau v. National L.
Ass'n, 77 Hun, 418, 28 N. Y. Supp.
794; McCluskey v. Same, 77 Hun,
566. 28 N. Y. Supp. 931, affirmed
without opinion, 149 N. Y. 616; Guil-
foyle V. National L. Ass'n, 36 App.
Div. 343, 55 N. Y. Supp. 236; Jung v.
Second Ward Savings Bank. 55 Wis.
364. 42 Am. Rep. 719, 13 N. W. Rep.
235; Warwicke v. Noakes. Peake, 67.
See Parker v, Gordon, 7 East, 385.
Compare State v. Insurance Co., 106
Tenn. 2S2, 61 S. W. Rep. 75.
If no mode of remitting is indi-
cated by the creditor a remittance
made in the way a prudent man
would do if he was paying his own
debt relieves an agent from responsi-
bility. Underwriters' Wrecking Co.
V. Board of Underwriters, 35 La.
Ann. 803.
In the absence of an express direc-
tion to remit by mail or a usage or
course of dealing from which au-
thority to so remit may be inferred,
a remittance of money so made is
at the risk of the party mailing it.
Burr V. Sickles, 17 Ark. 428, 65 Am.
Dec. 437.
There is no evidence of payment
when the instrument remitted de-
scribes the payee by a wrong chris-
tian name, though he keeps it and
might have obtained the money by
signing it in the name used. Gordon
V. Strange, 1 Ex. 477.
3 Slaughter v. Slaughter, 7 Houst
482, 32 Atl. Rep. 857; Lofland v. Mc-
Daniel, 1 Pennewill, 416, 41 Atl. Rep.
882; Holdsworth v. De Belaunzaran,
106 N. Y. 119, 12 N. E. Rep. 615;
Robinson v. Robinson, 20 S. C. 567;
Steiner v. Erie Dime Savings & L.
Co., 98 Pa. 591; Ryan v. O'Neil, 49
Mich. 281, 13 N. W. Rep. 591; Kings-
ton Bank v. Gay, 19 Barb. 459. See
Collins V. Adams, 53 Vt. 433.
A promise by a creditor to cover a
§ 214.]
PAYMENT,
529
It is, however, competent for parties to agree that payments
shall be made in something else of value than money, ^ If an
employer and employee stipulate that advances made to the
latter should be repaid by services, the former is bound to ac-
cept payment in that mode, and if he permits the employee to
be involuntarily driven from the service by a co-employee the
debt is extinguished.^ A note payable in property may bo
satisfied by the payment of money; ^ b^'' failing to pay in prop-
check signed by a third person in
favor of the debtor does not prevent
the check, on its transfer to the cred-
itor and appropriation by him, from
operating as payment. Tiddy v. Har-
ris, 101 N. C. 589, 8 S. E. Rep. 227.
Payment implies a voluntary act
of the debtor looking to tlie satisfac-
tion, in whole or in part, of the de-
mand against him. A creditor can-
not lawiully pay himself with the
debtor's money without the latter's
consent, express or implied; and
when the debtor delivers him money
for a purpose which negatives the
idea of payment the creditor's con-
trol of it is limited to the purpose
declared. Detroit, etc. R. Co. v.
Smith, 50 Mich. 112, 15 N, W. Rep. 39.
Monthly payments made on a chat-
tel mortgage in consideration, as
stated in receipts therefor, of the ex-
tension of the time for payment of
the mortgage debt from month to
month will be applied in extinguish-
ment of such debt. Bateman v.
Blake, 81 Mich. 227, 45 N. W. Rep.
831.
If money paid unconditionally is
retained its acceptance cannot be
made conditional unless notice to
that effect is in fact given the payor.
Shea V. Massachusetts Ben. Ass'n, 160
Mass. 289, 85 N. E. Rep. 855, 39 Am.
St. 475.
1 United Water Works Co. v.
Farmers' Loan & Trust Co., 11
Colo. App. 225, 240, 53 Pac. Rep. 511;
Webb V. Vermillion, 13 Ky. L. Rep.
367 (Ky. Super. Ct); Rider v. Culp,
Vol. 1 — 34
68 Mo. App. 527; Pinson v. Puckett,
35 S. C. 178, 14 S. E. Rep. 393; Van
Werden v. Equitable L. Assur. So-
ciety, 99 Iowa, 621, 68 N. W. Rep.
892; Bixby v. Grand Lodge Ancient
Order United Workmen, 105 Iowa,
505, 70 N. W. Rep. 737; Stirna v.
Beebe, 11 App. Div. 206, 42 N. Y.
Supp. 614; Weir v. Hudnut, 115 Ind.
525, 18 N. E. Rep. 24; Sharp v. Car-
roll, 66 Wis. 62, 27 N. ^^•. Rep. 832;
Phillips V. Ocmulgee Mills, 55 Ga.
633. See § 215.
Payment is made "at the time,"
within the meaning of the statute of
frauds, w^here the vendor accepts as
payment a check which is then good
and which is subsequently paid,
though the time of payment is not
shown. Hunter v. Wetsell, 84 N. Y.
549, 38 Am. Rep. 544; Elwell v. Jack-
son, 1 Cab. & Ellis, 362.
The "good will " of a business has
a market value so that it may be ac-
cepted in payment of a subscription
for stock. Beebe v. Hatfield, 67 Mo.
App. 609.
2 Hanlin v. Walters, 3 Colo. App.
519, 34 Pac. Rep. 686.
' Leapald v. McCartney, 14 Colo.
App. 442, 60 Pac. Rep. 640, citing
Pinney v. Gleason, 5 Wend. 394, 21
Am. Dec. 223; Brooks v. Hubbard, 3
Conn. 58, 8 Am. Dec. 154; Hise v.
Foster, 17 Iowa, 23; Ferguson v.
Hogan, 25 Minn. 135: Heywood v.
Hey wood, 42 Mp. 229, 66 Am. Dec.
277: White v. Tompkins, 52 Pa. 30:!;
Trowbridge v. Holcomb, 4 Ohio St.
38.
530
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 214:.
erty on the stipulated day the debtor forfeits his election to pay
either in that mode or in inonej^ and the creditor may demand
money. ^ If a contract may be satisfied by delivery of a com-
modity as ordered by the payee, the failure to fill an order ren-
ders the balance due payable in money, and the acceptance
of another order in the course of business does not reinstate the
clause of the contract as to the mode of payment.^
The defendants forwarded to the plaintiffs sufficient funds to
pay a note held by the latter against the former, but they re-
fused to receive it, and informed the defendants that the money
was subject to their order. There was no payment; if the de-
fendants would protect themselves against costs they should
have withdrawn the deposit and made a tender.^ The weight
of authority is, as will be seen in the section on accord and sat-
isfaction, that the payment of a less sum than is due does not
discharge a liquidated demand unless a sealed acquittal is
given as evidence of the fact.* But this principle does not
apply if something else of value than money is received, though
the security accepted is of inferior rank to that which it is re-
ceived in lieu of,^ or is less in amount," if the parties agree that
^ Growl V. Goodenberger, 112
Mich. G83, 71 N. W. Rep. 485; Wy-
man v. Winsiow, 11 Me. 898, 26 Am.
Dec. 542; Robbins v. Luce, 4 Mass.
474; Caldwell v. Button, 20 Tex. Civ.
App. 369, 49 S. W. Rep. 723; Brashear
V. Davidson, 31 Tex. 191; Haskins v.
Dern, 19 Utah, 89, 56 Pac. Rep. 953;
Texas & P. R, Co. v. Marlor, 123 U. S.
687, 8 Sup. Ct. Rep. oil; Pearson v.
Williams, 24 Wend. 244; Roberts v.
Beatty, 2 P. & W. 63, 21 Am. Dec,
410: Ren wick v. Goldstone, 48 Cal.
554; Smith v. Coolidge, 68 Vt. 516, 35
Atl. Rep. 432, 54 Am. St. 902.
2 Smith v. Coolidge, supra.
s Kingston Bank v. Gay, 19 Barb.
459; Greenough v. Walker, 5 Mass.
214; Clark v. Wells, 5 Gray. 69.
After the commencement of an
action upon a note by the indorsee
against the maker its payment by the
payee and indorser does not consti-
tute a defense so as to affect the
costs. Concord Granite Co. v. French
12 Daly, 228.
An answer by a surety alleged
that the plaintiff had been fully paid
by money received from the princi-
pal debtor's estate and with the ad-
ministrator's consent; held to show-
that the latter agreed that the money
so received should be payment. John-
son V. Breedlove, 104 Ind. 521, 6 N.
K Rep. 906.
^Grinnell v. Spink, 128 Mass. 25;
Tuttle V. Tuttle, 12 Met. 551, 46 Am.
Dec. 701; Harriman v. Harriman, 12
Gray, 341; Baldwin v. United States,
15 Ct. of Cls. 297; Bostwick v. Same,
94 U. S. 53.
5 Peters v. Barnhill, 1 Hill (S. C),
237; Dogan v. Ashbey, 1 Rich. 36.
6Fensler v. Prather, 43 Ind. 119;
Wells v. Morrison, 91 id. 51; Sibree v.
Tripp, 14 M. & W. 23; Thomas v.
Heathorn, 2 B. & C. 477; Bush v.
Abraham, 25 Ore. 336, 35 Pac. Rep.
§ 215.] PAYMENT. 531
it sliall be payment. There are well considered cases by courts
of good standing to the effect that "if one owing a sum of
money, the amount of which is not ascertained and fixed, offers
his creditor a certain sum, declaring that it is in full for all that
is owing him, which sum is accepted by the creditor, such ac-
ceptance is in full discharge of the demand." ^ If a debtor
mails to his creditor a statement of the account between them
and sends the balance which he admits to be due, requesting a
receipt in full, the claim will be satisfied if the creditor retains
the money.^ " When one gets his due ignorantly, if he is not
hurt by his ignorance, it is the same as if he acted with knowl-
edge. Thus, where a negotiable note was transferred before
maturity as collateral, and was afterwards paid off in property,
not to the holder but to the payee, who collected without au-
thority, and who, after converting the property into money,
transmitted the proceeds to the holder as his own money, and
the holder applied the same to the secured debt only, not
applying it also to the collateral, and not knowing that he was
dealing with a fund derived from the collateral, this was a
discharge of the collateral debt, notwithstanding such igno-
rance on the part of the holder." *
§ 215. Same subject. The creditor may assent in advance
to a mode of payment which reserves no subsequent election
by excluding an}^ concurrent act on his part in accomplishing
it, or by making any such act obligatory. Thus, an award
made against a party in pursuance of a submission in which
he agreed to indorse it on a note is a payment jpro tanto.^ So
money paid by a debtor to a third person on the prior request
of the creditor is a payment,^ and so is the transfer of a credit
if all the parties are agreed.^ The acceptance by a debtor of
1066; Bolt V. Dawkins, 16 S. C. 198, ^ Coleman v. Jenkins, 78 Ga, 607,
214. 3 S. E. Rep. 444; Butts v. Whitney,
1 American Manganese Co. v. Vir- 96 Ga. 445. 23 S. E. Rep. 397.
ginia Manganese Co., 91 Va. 272, 284, * Flint v. Clark, 12 Johns. 374.
21 S. E. Rep. 466, citing Donohue v. » Brady v, Durbrow, 2E. D. Smith,
Woodbury, 6 Gush. 148; McDaniels 78; Storey v. Menzies, 3 Pin. 329.
V. Lapham, 21 Vt. 232; McDaniels v. « Eyles v. Ellis, 4 Bing. 112: Sliryer
Bank of Rutland. 29 Vt. 230, 70 Am. v. Morgan, 77 Ind. 479; Beach v.
Dec. 406. Wakefield, 107 Iowa, 567, 76 N. W,
niunisey V. Barber, 78 III. App. 88, Rep. 688, 78 id. 197; Daniel v. St.
citing Ostrander v. Scott, 161 111, Louis Nat. Bank, 67 Ark. 223, 54 S.
339, 43 N. E. Rep. 1089. W. Rep. 214.
532 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 215
a written order of his creditor to pay money to a third person
entitles the former to a credit to the extent of the sum called
for by the order, although payment was not then made, if the
debtor was solvent and his liabilit}'' fixed,^ and it is immaterial
that the debtor thought he had not accepted the order, and
paid it only after judgment was rendered against him.^ The
tender of bonds, etc., of a banking association to them in pay-
ment of a debt, in pursuance of their agreement to receive
them in payment,^ or work done for the payee of a note by the
maker under an agreement that the proceeds are to be applied
to discharge the note, is a payment.* Where it is agreed
between debtor and creditor that the former shall do some col-
lateral act for a stipulated price or a price which may be made
certain, and that such act shall be deemed a payment or part
payment of the debt, the amount so stipulated becomes at
[34:7] once a payment when the act has been performed.
In case of mutual connected debts it is not necessary that
the formality should be gone through of each party handing
the amount he owes over to the other, whether the sums they
are mutually entitled to be equal or not. If they are equal
they wholly cancel each other; if not equal the lesser is to be
deducted from the greater. These compensations, when they
fairly and properly occur, are reciprocal payments.^ An agree-
If an insurance agent gives credit liet, 8 W. & S. 311, 42 Am. Dec. 297;
for the premium due on a policy and Woodruflf v, Trapnall, 12 Ark. 811, 10
insurer charges hiin with the How. 190; Exchange Bank v. Knox,
amount, the transaction is equiva- 19 Gratt. 739; Mann v. Curtis, 6
lent to payment. Wythevillelns. & Robert. 128.
Banking Co. v. Teiger, 90 Va. 277, -« Moore v. Stadden, Wright. 88;
18 S. E. Rep. 195; Miller v. Life Ins. Hall v. Holmes, 4 Pa. 251.
Co., 12 Wall. 285; White v. Con- 5 Rutherford v. Schattman, 119 N.
necticut Ins. Co., 120 Mass. 330; Y. 604, 23 N. E. Rep. 440; Iron Cliffs
Train v. Holland Purchase Ins. Co., Co. v. Gingrass, 42 Mich. 30, 3 N. W.
62 N. Y. 598; Bang v. Farmville Ins. Rep. 238; Roberts v. Wilkinson, 34
Co., 1 Hughes, 290; Griffith v. New Mich. 129; Connecticut Mut. Ins. Co.
York L. Ins. Co., 101 Cal. 627, 36 Pac. v. State Treasurer, 31 Mich. 6;
Rep. 613, 40 Am. St. 96. Phoenix Ins. Co. v. Meier, 28 Neb. 124,
iMerwin v. Austin, 58 Conn. 22, 18 44 N. W. Rep. 97; McKeon v. Bying-
Atl. Rep. 1029, 7 L. R A. 84. ton, 70 Conn. 429, 39 Atl. Rep. 853.
2CarrolIv. Weaver, 05 Conn. 76,31 See Sword v. Keith, 31 Mich. 247;
Atl. Rep. 489. Jewett v. Winship, 42 Vt. 205; S!as-
^Leavitt v. Beers, Hill & Denio, son v. Davis, 1 Aik. 73; Strong v.
221. See Northampton Bank V. Bal- McConnell, 10 Vt. 231; Chellis v.
§ 215.]
PAYMENT,
533
ment between parties having mutual demands to set off one
against the other would seem on principle and the weight of
authorit^'^ to take effect also as reciprocal payments, and the
same result follows in all cases of connected accounts.^ Thus,
Woods, 11 Vt. 4GG; Robinson v. Hurl-
burt, 34 Vt. 115; Bronson v. Rugg,
89 Vt. 241; Downer v. Sinclair, 15
Vt. 495; Huff mans v. Walker, 26
Gratt. 314; Eaves v. Henderson, 17
Wend. 190.
1 In Davis v. Spencer, 24 N. Y. 386,
it was held that an agreement be-
tween the payee of a note and the
maker, made with the assent of the
Jatter's partner, to apply the indebt-
edness of the payee to such maker
and his partner in payment of the
note, operates in presenti as a satis-
faction of the note pro tanto. Allen,
J., said: " Formerly there appears to
have been a doubt whether an agree-
ment to set off precedent debts op-
erated as payment, satisfaction or
extinguishment. An accord that
each of the parties should be quit of
actions against the other was said
not to be good because it was not
any satisfaction. Bac. Abr., Accord,
A. But there is no difference in
principle between an agreement con-
cerning debts, one of which is to be
contracted in the future, as in Eaves
V. Henderson, 17 Wend. 190, and an
agreement concerning debts already
existing; and it has been decided
that an agreement to discontinue
and a discontinuance of ci-oss-ac-
tions for false imprisonment consti-
tute an accord and satisfaction, and
bar another action by either. Foster
V. Trull, 12 Johns. 456. Whenever a
valid new contract is substituted in
the place of the old, ... an ac-
tion will not lie on the old contract,
but the remedy of the parties is on
the new or substituted agreement
although the transaction may not
amount to a technical accord and
.satisfaction. Good v. Cheesman, 2
B. & Ad. 328. Where t%vo brothers,
A. and B., principal and surety in an
annuity, had, in an agreement be-
tween them and a third brother for
the settlement of their affairs, de-
clared that the bond was the debt of
B., the surety, it was held that this
agreement, whether subsequently
acted upon or not, was a binding ac-
cord between A. and B. Cartwright
V. Cooke, 3 B. & Ad. 701. Hills v.
Mesnard, 10 Q. B. 266, is in principle
not unlike Eaves v. Henderson,
supra. The action was by payees
against acceptors of a bill. The de-
fendants became acceptors for the
accommodation of one Hundle, and
the plaintiffs, the payees, agreed to
appropriate certain moneys which
they expected to receive in discharge
of the bill. They subsequently re-
ceived the money, and the court held
it a payment of the bill pro tanto.
Lord Denman, C. J., says: It was
competent for the parties to agree
beforehand that the money should
be specifically applied to the dis-
charge of the liability on the bill pro
tanto. ' And it seems to be the good
sense of the transaction to treat it as
so much money paid to the plaintiffs
by Hundle on their account and as
their agent.' Gardiner v. Callender,
12 Pick. 374, is in point, and decides
that when E. H. R., one of the exec-
utors of A. S., gave to the executors
of W. P. a memorandum as follows:
' It is agreed that the sum $3,235, due
from E. H. R. to the estate of W. P.,
shall be applied on a certain note of
$6,000 now held by the representa-
tives of A. S.,' the memorandum
amounted to a payment on the note
and was not merely an executor's
agreement. The fact that a memo-
534
CONVENTIONAL LIQUIDATIONS AND DISCHARGES.
215.
[348] if A. has a valid and subsisting demand against B. for
goods, services or cash, constituting proper items of an ac-
count upon which he has a present right of action, and before
commencing suit thereon credits on such account a demand B.
has against him for services at their fair and full value, such
credit by A. so far operates as payment that B. cannot main"
tain an action for his demand brought while such other suit
[fM9] is pending.' But where A. owes B. by promissory note
payable in instalments, and at the same time holds a note
against B. for a larger amount, on which he indorses as part
payment the amount of the instalments of his own note as
they fall due, but without B.'s consent, this is not a payment
of the instalments.^ A payment by credit occurs where a
bank receives a check drawn on itself and credits the holder
the amount,' or where the bank is the creditor and receives
randum in writing was made of the
agreement does not vary its legal ef-
fect It was not required by law to
be m writing. The court, as in Hills
V. Mesnard. sought the good sense of
the transaction, and to give effect to
the sensible arrangement of the par-
ties, holding that it could not be
necessary, in order to connect the
one debt with the other by an agree-
ment in 'presenti, that there should
be the vain formality of passing the
mone}^ from one party to the other
and returning it again to the party
from whom it just came, or that a
formal release or receipt should be
executed. This case is not cited by
counsel or alluded to by the court in
the subsequent case of Gary v. Ban-
croft, 14 Pick. 315, but the latter was
decided upon a ground which dis-
tinguished it from the former case;
the court holding that in the case
last cited the agreement was execu-
tory and not executed, requiring
some further act to be done before
the one note would operate as pay-
ment or extinguishment p?'o tantoot
the other. Dehon v. Stetson, 9 Met.
341, followed Gary v. Bancroft, and
was decided ujjon the same ground.
Another point was in the case, to
wit: tliat one of the parties inter-
ested in the debt which it was sought
to apply in payment as the individ-
ual debt of one of his partners had
not been consulted, and had no knowl-
edge of the contemplated arrange-
ment." See Peabody v. Peters. 5
Pick. 1; Dudley V. Stiles, 33 Wis. 371;
Ely V. McNight, 30 How. Pr. 97;
Hawkes v. Dodge Gounty Mut. Ins.
Go., 11 Wis. 183; Shinklev. First Nat.
Bank, 22 Ohio St. 516; Heaton v.
Angier, 7 N. H. 897, 28 Am. Dec. 353;
Fatlock v. Harris, 4 D. & E. 180; Wil-
son V. Coupland, 5 B. & Aid. 228;
Wharton v. Walker, 4 B. & G. 163;
Cuxon V. Chadley, 3 B. & C. 591.
1 Briggs V. Richmond, 10 Pick. 391,
20 Am. Dec. 526; Allen v. Garman, 1
E. D. Smith, 693; Means v. Smith,
Tappan, 60.
- Greenough v. Walker, 5 Mass. 214.
See Glark v. Wells, 5 Gray, 69.
A payment to a vendor on his own
obligations is a payment in cash.
Hand v. Gas Engine & Power Go.,
167 N. y. 142, 60 N. E. Rep. 425;
Foley v. Mason, 6 Md. 37.
■■*Addie V. National Gity Bank, 45
N. Y. 735, 6 Am. Rep. 160; Bank v.
§ 215.] PAYMENT.
boJ
the debtor's check drawn on itself.^ There is a distinction
between the acceptance by a creditor from his debtor of a
new security for an old debt, and the acceptance by a bank ot
a check drawn upon itself in payment of a note. The former
is a mere substitution of one executory agreement to pay for
another, or a commutation of securities; there is no extin-
guishment of the precedent debt unless there is an agreement
to accept the new obligation or security as a satisfaction of
the old. But when a bank receives upon a debt a check drawn
upon itself by one of its customers and charges it in account,
it thereby admits that it has funds of the drawer sufficient to
meet the check, and the acceptance is per se an appropriation
of the funds to pay it. The transaction operates directly as
a payment of the debt.'^ If the dividends on a policy of life
insurance equal the premiums and have, in the immediately
preceding years, at the request of the insured or his benefi-
ciary, been applied to the payment of the premiums as they
became due, the latter are paid as fast as they become due so»
long as the conditions stated exist.' So long as money ille-
gally exacted from a member of a benefit society remains in
its treasury and is sufficient to meet assessments made upon
him he is not in default.*
By a valid new agreement the debtor may obtain the right
to pay otherwise than in money ; and the acceptance by the
Burkhardt, 100 U. S. 688; American App, 41. See Shipp v. Stacker, 8 Mo.
Excliange Nat. Bank v. Gregg, 138 145.
111. 596, 33 Am. St. 171, 28 N. E. Rep. ^U.; Commercial Bank v. Union
839 (although the bank may fail to Bank, 11 N. Y. 203.
charge the drawer with the amount); If a sight draft is indorsed for col-
Watkins v. Parsons, 13 Kan. 426; lection to the debtor's bankers and
Weedsport Bank v. Park Bank, 2 by his direction the amount it calls
Keyes, 561. for is charged against him, the
'Pratt V. Foote, 9 N. Y. 463; Rozet banker drawing his check for the
V. McClellan, 48 111. 345, 95 Am. Dec. amount to the order of the creditor
551. and transmitting it to him, the debt
If the guarantor of a note owned is paid, although the bank which so
and held by a bank has on deposit draws fails and its check is made
in it a sum nearly equal to the valueless. Welge v. Batty, 11 III.
amount called for by the note, a App. 461.
tender of his check for such sum and 3 Matlock v. Mutual L. Ins. Co., 180
the necessary amount of cash to the Pa. 360, 36 Atl. Rep. 1082.
assignee of the bank satisfies the ■• Knight v. Supreme Court Order
note. Lionberger v. Kinealy, 13 Mo. of Chosen Friends, 2 Silvernail, 453,
6 N. Y. Supp. 427.
636
CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 216.
creditor of any chose in action or property will operate as
payment,^ The receipt b}"^ the creditor of bank bills or treas-
ury notes in payment of a gold debt, although under protest
and with an express reservation of a claim for the difference,
will be payment dollar for dollar.^ So gold dollars, if applied
[350] towards the payment of a debt without any special con-
tract as to the value at which they are to be taken, cannot be
treated as having any greater value than any other currency
which is a legal tender for the payment of debts.' The com-
mon-law rule that marriage has the legal effect of paying or
extinguishing a debt the husband might owe the wife, or the
wife the husband at the time of marriage, is in force in Ken-
tucky.*
§ 216. Same subject. On the foreclosure of a mortgage on
real estate by entry the land inures as payment to the extent
of its value.^ So taking possession of chattels mortgaged or
forfeited is also payment to the amount of their value;® and
the proceeds of sale realized by foreclosure are pro tanto pay-
ment.'' Taking the debtor's body is a satisfaction unless he
escape.^ It has this effect though the creditor consented to
his being set at liberty under an agreement which the debtor
has failed to perform;* or on his giving a warrant of attorney
which turned out to be void for informality.^" It is not, how-
ever, an absolute satisfaction like payment, for it will not dis-
charge a guarantor," nor prevent the creditor from pursuing
his remedy against other parties.^'^
1 Inman v. Griswold, 1 Cow. 199;
Sword V. Keith, 31 Mich. 247; Block
V. Dorman, 51 Mo. 31; Casey v. Har-
ris, 2 Litt. 173; Allegheny R. Co. v.
Case^', 79 Pa. 84; Eaves v. Hender-
son, 17 Wend. 190; Perkins v. Cady,
111 Mass. 318; Locke v. Andres, 7
Ired. 159; Perit v. Pittfield, 5 Rawle,
166; Cramer v. Willetts, 61 111. 481;
Brown v. Feeter, 7 Wend. 801 ; Bur-
chard V. Frazer, 23 Mich. 224.
2 Gilman v. Douglas County, 3 Nev.
27, 3 Am. Rep. 237.
3 Bush V. Baldrey, 11 Allen, 367.
4 Farley v. Farley, 91 Ky. 497, 16 S.
W. Rep. 129.
& Hedge V. Holmes, 10 Pick. 381;
Briggs V. Richmond, id. 391, 20 Am.
Dec. 526.
«Case V. Boughton, 11 Wend. 106;
Charter v. Stevens, 3 Denio, 33.
' Lansing v. Goelet, 9 Cow. 346;
Globe Ins. Co. v. Lansing, 5 id. 380,
15 Am. Dec. 474.
sjaques v. Witby, 1 T. R. 557;
Williams v. Evans, 2 McCord, 203.
"Vigers v. Aldrich, 4 Burr. 2482;
Blackburn v. Stupart, 2 East, 243;
Tanner v. Hague, 7 T. R. 420.
10 Jaques v. Witby, supra; Loomis
V. Storrs, 4 Conn. 440. S.ee Sheldon
V. Kibbe, 3 Conn. 214, 8 Am. Dec. 176.
11 Terrell v. Smith, 8 Conn. 426.
1- Porter v. Ingraham, 10 Mass. 88.
f 216.] PAYMENT. 537
A levy on sufficient personal property by execution is pre-
sumably a satisfaction of the debt; it is a means of payment,
and requires only the performance of a ministerial duty by an
officer to accomplish it. The levy is not of itself satisfaction,
and anything which subsequently, without the fault of the
■officer or creditor, prevents actual satisfaction, as if the debtor
has not been deprived of property levied upon, will destroy
its effect as evidence of that result.^ So long as the [351]
property remains in legal custody the other remedies of
the creditor will be suspended, lie cannot have a new exe-
<;ution against the person or property of the debtor, nor main-
tain an action on the judgment, nor use it for the purpose of
becoming a redeeming creditor.- The levy does not divest
title; it only creates a lien on the property. It often happens
that the levy is overreached by some other lien, is aban-
doned for the benefit of the debtor or defeated by his mis-
conduct. In such cases there is no color for saying that the
judgment is gone. The judgment is satisfied when the execu-
tion has been so used as to change the title or in some other
way to deprive the debtor of his property. This includes the
case of a levy and sale, and also of a loss or destruction of
the goods after they have been taken out of the debtor's pos-
session by virtue of the process.' In admiralty, where a res
is seized by a judicial process for a debt which carries with it
•A jus in re, as between debtor and creditor, the maxim domino
perrit res means that the destruction of the seized property,
without fault of the debtor, works a payment of the debt to
the extent of its value. Where third parties voluntarily join
the seizing creditor in his proceeding and unite, so to speak,
'Starr v. Moore, 3 McLean, 354; ams, 3 Ohio, 323; Webb v. Bumpass,
•Clerk V. Withers, 2 Lcl. Raym. 1073, 9 Port. 201, 23 Am. Dec. 310; Green
1 Salk. 323, 6 Mod. 290; Mountney v. v. Burke, 23 Wend. 490; Browning v.
Andrews, Cro. Eliz. 237; Atkinson v. Hanford, 5 Hill, 588; Duncan v. Har-
Atkinson, id. 391; Ladd v. Blunt, 4 ris. 17 S. & R. 436; Farmers' & M.
East, 402; Bay ley v. French, 2 Pick. Bank v. Kingley, 2 Doug. (Mich.) 379;
590; Denton v. Livingston, 9 Johns. Churchill v. Warren, 2 N. H. 298;
98; Hoyt v. Hudson, 12 id. 207; Ordinary v. Spann, 1 Rich. 429; Por-
Troup V. Wood, 4 Johns. Ch. 228; Ex ter v. Boone, 1 W. & S. 25J; Ex parte
parte Lawrence, 4 Cow. 417, 15 Am. King. 2 Dev. 341, 21 Am. Dec. 335;
Dec. 386; Jackson v. Bowen, 7 Cow. Binford v. Alston, 4 Dev. 354.
13, 21, Cornell v. Cook, id. 312; Wood 2 People v. Hopson, 1 Denio, 577.
V. Torrey, 6 Wend. 562; Cass v. Ad- 3 Id.
538 CONVENTIONAL LIQUIDATIONS AND DISCUAKGES, [§217.
in the seizure, also asserting claims which carry with them'
liens, the destruction of the property, without fault of the
debtor, works a payment of their respective claims, to the ex-
tent of the value of the propert}'' destroyed, in the order
of the priority of their claims, and operates as a payment up
to its value precisely as would its sale and the application of
its proceeds.^
A sufficient tender, made and kept good by bringing the
money into court, is equivalent to a payment, and is such of
the date of the tender to prevent costs and interest. The
debtor pleading it cannot withdraw the money whatever may
be the verdict; the money must be paid to the plaintiff.^
§ 217. What is not payment. The deposit of money in a
bank where a note is payable is not of itself a payment, but
simply a tender,'' unless in some way appropriated to the note; ■*
nor is the surrender of a check at the clearing-house.* A note
held by an administrator and payable to him is not paid be-
cause he charges himself with the amount it represents in
settling his accounts with the estate.^ So charging a note
supposing the maker had funds in bank, when in fact he had
not, the charge being canceled the next day on discovery of
the mistake, will not amount to payments And where the
president of a bank, having his notes lying therein under pro-
test, indorsed for his accommodation, procured the cashier to
make a new note, which the president indorsed and exchanged
for those protested, delivering the latter to the cashier for his
security, the original notes were not thereby paid, although
the president entered them as paid and all new notes as dis-
[352] counted.^ A clerk of a bank stole from the drawer o^
another clerk bills belonging to the bank, which he delivered
to the cashier, and which the latter, not knowing them to have
been thus stolen, accepted in discharge of the balance due
from such clerk to the bank ; the transaction did not work a
1 Per Billings, D. J., in Gill v. Pack- 5 Merchants' Nat. Bank v. Procter,
ard, 4 Woods, 270. 1 Cin. Super. Ct. 1.
2 Reed v. Armstrong, 18 Ind. 446; « Robinson v. Robinson, 20 S. C. 567.
Taylor v. Brooklyn E. R. Co., 119 N. ' Troy City Bank v. Grant, Hill &
Y. 561. 23 N. a Rep. 1106. Denio, 119.
3 Hill V. Place, 36 How. Pr. 26. 8 Highland Bank v. Dubois, 5-
* See Sutherland v. First Nat. Bank, Denio, 558.
31 Mich. 230.
§ 2 17. J PAYMENT. 53^
payment.' The mutilation of a note by a stranger to it, with
intent to cancel and extinguish it, raises no presumption of its
payment.- The receipt of part of the amount clue is not a
waiver of the right to recover the balance, nor doos it work an
estoppel.' A note is not paid because its maker placed in the
hands of the payee's attorney, who had the note for collection,
notes and accounts to be collected, on which certain sums
were paid the attorney, but not credited or applied on such
note, the payee of which had not concurred in such arrange-
ment. The attorney was agent for the debtor in making col-
lections, and money paid him was the pro{)erty of the latter.
Until applied or appropriated it could not become a payment
on the note* Surrendering a city warrant calling for the pay-
ment of a large sum for others amounting in all to the same sum,
these being dated and indorsed as was the original, is a mere
exchange.'^ An insurance assessment is not paid by depositing
the necessary sum in the mail in the absence of anything in the
dealings between the parties giving such deposit that effect.^
If money which reaches insurer after it is due is tendered in-
sured within a reasonable time it is not payment.'' An insurer
owing an insured employee money is not bound to apply any
part of its indebtedness on the payment of an assessment due
from him." An insurance premium is not paid by a confession
of judgment for the amount of premium notes held by insurer."
Thus it appears that unless there is an actual payment and
receipt of money, or something else accepted in its place as
1 State Bank v. Wells, 3 Pick. 394. * Hatch v. Hutchinson, 64 Ark. 119,
2 Whitlock V. Manciet, 10 Ore. 166. 40 S. W. Rep. 578; Moore v. Norman,
The destruction of a note held by 53 Minn. 83, 53 N. W. Kep. 809, 38
a wife against her husband, under Am. St. 526, 18 L. R. A. 359.
the influence of feelings caused by ^ Monteith v. Parker, 36 Ora 170,
his cruel treatment of her, is not a 59 Pac. Rep. 192.
satisfaction of the debt. Schlemmer •• Rice v. Grand Lodge Ancient Or-
V. Schendorf, 20 Ind. App. 447, 49 N. der United Workmen, 103 Iowa, 643,
E. Rep. 968. 72 N. W. Rep. 770.
» Hodges V, Tennessee Implement "> S. C, 92 Iowa, 417, 60 N. W. Rep.
Co., 123 Ala. 573, 26 So. Rep. 490; 726.
Greer v. Laws, 56 Ark. 37, 18 S. W. » Pister v. Keystone Mut. Ben.
Rep. 1038; Clark v. Equitable L. Ass'n, 3 Pa. Super. Ct. 50.
Assur. Society, 76 Miss. 23, 23 So. Rep. " Proebstel v. State Ins. Co., 14
453; Whiting v. Plumas County, 64 Wash. 669, 45 Pac. Rep. 308.
Cal. 65, 28 Pac. Rep. 445.
540
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 218.
payment, a debt is not satisfied; any ceremony by which pay-
ment is nominall}'^ made or acknowledged may be avoided for
mistake or fraud, and so where the actual or authorized assent
of the creditor is wanting.^
§ 218. Effect of payment, "Whether a payment made by a
guarantor or surety or a volunteer will operate as a purchase
or as an extinguishment depends on the intention with which
it is made.^ But a debtor cannot himself become the owner,'
nor pay his debt without discharging it, though he may wish
and intend to keep it on foot;'' and any assignment to a third
person with a view to keeping it alive will be void.* A pay-
1 Hay den v. Lauffen burger, 157 Mo.
88, 57 S. W. Rep. 721.
2 Fogartj V. Wilson, 30 Minn. 289,
15 N. W. Rep. 175; Swope v. Leffing-
well, 72 Mo. 848; Lucas v. Wilkinson,
1 Hurl. & N. 423; Morris v. Oakford,
9 Pa. 498; Kinley v. Hill, 4 W. & S.
426; Elkinton v. Newman, 20 Pa.
281; Carter v. Jones, 5 Ired. Eq. 196,
49 Am. Dec. 425; Matliews v. Aiken,
1 N. Y. 595; 1 Lead. Cas. in Eq. 88;
id. pt. 1, 167 (2d Am. ed.); Low v.
Blodgett, 21 N. H. 121; Ex parte
Balch, 2 Low. 440; Harbeck v. Van-
derbilt, 20 N. Y. 395; Mechanics'
Bank v. Hazard, 13 Johns. 353. See
Gillett V. Gillett, 9 Wis. 194.
In Louisiana the payment of a note
secured by a mortgage by one not
bound for it, and who had no interest
in discharging it, will not subrogate
him to the rights of the party to
whom he paid, but will extinguish
the debt and the mortgage securing
it, and the claim for reimbursement
will constitute the party who paid
an ordinary creditor of him for
whose benefit the payment was
made. NichoUs v. His Creditors, 9
Rob. 476; Weil v. Enterprise Ginnery
& Manuf. Co., 42 La. Ann. 492, 7 So.
Rep. 622.
3 Kingsley v. Purdom, 53 Kan. 56,
35 Pac. Rep. 811; Gordon v. Wansey,
21 Cal. 77.
* Livermore v. Truesdell, 9 Colo.
App. 332, 48 Pac. Rep. 276; Champney
V. Coope, 34 Barb. 539; Collins v.
Adams, 53 Vt. 433; Hammatt v. Wy-
man, 9 Mass. 138; Brackett v. Wins-
low, 17 id. 153; Adams v. Drake, 11
Cush. 504; Tuckerman v. Newhall,
17 Mass. 581; Chapman v. Collins, 12
C' sh. 163; Pray v. Maine, 7 id. 253;
Harbeck v. Vanderbilt. 20 N. Y. 395,
398. See Shaw v. Clark, 6 Vt 507, 27
Am. Dec. 578.
If payment is made at the request
of the maker the obligation is extin-
guished and an indorsement of it
subsequently made by the payee is
ineffectual. Moran v. Abbey, 63
Cal. 56; Pearce v. Bryant Coal Co.,
121 III 590, 13 N. E. Rep. 561.
5 Id. ; Moran v. Abbey, 58 Cal. 167;
Gordon v. Wansey, 21 id. 78; Citi-
zens' Bank v. Lay, 80 Va. 436; Rolf
V. Wooster, 58 N. H. 526.
It makes no difference that an at-
tempt to transfer was made at the
time of payment, and as a part of
that transaction. Wright v. Mix, 76
Cal. 465, 18 Pac. Rep. 645.
If a note is deposited in a bank for
collection a payment made by a
guarantor, surety or the maker will
discharge it. Citizens' Bank v. Lay,
80 Va. 436; Lancey v. Clark, 64 N. Y.
209, 21 Am. Rep. 604; Eastman v.
Palmer, 32 N. Y. 238; Dooley v.
Virginia F. & M. Ins. Co., 3 Hughes,
221.
§ 218.] PAYMENT. 54;
ment actually made upon a debt, whether of the whole or a
part, is a total or partial discharge, and cannot afterwards be
changed except by mutual consent, and if other parties are
interested, by their consent also.' Where marriage extin-
guishes a debt due from the wife to the husband it also dis-
charges any lien by which the debt was secured, and the debt
is not revived by a divorce.^ As will more fully appear in
another connection,^ the payment of a debt due after suit
brought will prevent the recovery of interest as damages,*
though it would be otherwise if there had been a contract to
pay interest.^
After a judgment recovered upon a paid debt, or without
deducting payments, the sura paid cannot be recovered; pay-
ment in a strict sense is a defense, and if not used as such is
lost.^ The payments must be strictly such or definitely ap-
propriated to the debt to have that efifect.'' Where a sum of
money was delivered by the obligor to the obligee to be [353]
credited by the latter upon the bond as part payment, and the
obligee neglected to indorse or apply it and obtained judgment
for the whole amount of the bond, the obligor was allowed to
recover the money paid.^ There was a special trust re- [354]
posed in the defendant to credit the money on the bond and
he had violated it. Where, however, there is a direct pay-
ment on a debt which is not evidenced by note, bond or writ-
ing of any kind; where no act beyond payment and receipt of
it is necessary or contemplated to give effect to the payment,
and the money is passed from the debtor to the creditor as
payment at once, and not simply to become such on the doing
of some act to evidence it, it is strict payment and cannot be
1 Mead v. York, 6 N. Y. 449, 57 Am. 6 Loring v. Mansfield, 17 Mass. 394;
Dec. 467; Marvin v. Vedder, 5 Cow, Maniot v. Hampton, 7 T. R, 269; De
671; Hawkins V. Stark, 19 Jolins. 305; Sylva v. Henry, 3 Port. 182; Eggles-
Frost V. Martin, 26 N. H. 423, 59 Am. ton v, Knickerbacker, 6 Barb. 458;
Dec. 353; Miller v. Montgomery, 31 Adams v. Barnes, 17 Mass. 365;
111. 350. Job V, Collier. 11 Ohio, 422; Seymour
2 Farley v. Farley, 91 Ky. 497, 16 v. Lewis, 19 Wend. 512.
S. W. Rep. 129. •^See Hazen v. Reed, 30 Mich. 331;
3 Ch. 8. Judd V. Littlejohn, 11 Wis. 176.
^ Davis V. Harrington, 160 Mass. 8 Woodward v. Hill, 6 Wis. 147;
278, 35 N. E. Rep. 771. Fowler v. Shearer, 7 Mass. 14. See
5 Andover Savings Bank v. Adams, Wheeler v. Harrison, 28 Mich. 265.
1 Allen, 28.
-542 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§§ 219, 220.
recovered, though the debt is afterwards sued upon and judg-
ment rendered for it without deducting the sum paid.^ If
payment has been made for a consideration which is subse-
quently withdrawn or withheld, the money maybe recovered.^
" It is undoubtedly the rule that one partner may not appro-
priate the property or money of the firm to the payment of
his own debt without the consent of his copartners, and that
if he does so the property misapplied may be followed and re-
covered until it reaches the hands of a honafide purchaser for
value. But I think it is equally well settled that the payment
of money to a creditor, who receives it in discharge of an ex-
isting debt innocently and without knowledge or means of
knowledge that the debtor paying had no rightful ownership
of the fund, is good and effectual, and does not subject the re-
cipient to a recovery by the true owner."*
§219. Payment before debt due. The creditor is not obliged
to receive a part payment,* but if he does it has the effect of
partial satisfaction. Payment before the money is due is a
payment at maturity.^ If a creditor, however, receives money
before it is due on a demand drawing interest such payment,
in the absence of an agreement to the contrary, should be ap-
plied to the extinguishment of the principal.^ And even when
received upon the understanding that it was not to draw interest
until the balance of the debt should be paid because the cred-
itor used the money as his own it was held that it should be
applied at the date of payment.^ The holder of a note enti-
tled to grace cannot be compelled to accept payment until the
last day, to which interest should be computed.*
§ 220. Payment by devise or legacy. A devise or legacy
will operate as payment when it is intended by the testator
and accepted by the creditor as such.^ A legacy to a creditor
iDriscoU V. Damp, 17 Wis. 419; 5 Patten v. Fullerton, 27 Me. 58;
Bronson v. Rugg, 39 Vt. 241. Holmes v. Broket, Cro. Jac. 434.
- Mechanics & Traders' Ins. Co. v. See Roberts v. Wilkinson, 34 Mich.
McLain, 48 La. Ann. 1091, 20 So. Rep. 129.
278. ** Starr v. Richmond 30 111. 276.
3 Newhall v. Wyatt, 139 N. Y. 452, 7 Toll v. Hiller, 11 Paige, 228.
36 Am. St. 712, 34 N. E. Rep. 1045; 8 Smith v. Merchants' & Farmers'
Stepliens v. Board of Education, 79 Bank, 14 Ohio Ct. Ct. 199.
N. Y. 187, 35 Am. Rep. 511. 9Scheerer v. Scheerer, 109 111. 11;
* Jennings v. Shriver, 5 Blackf. 37. Rose v. Rose, 7 Barb. 174; Clarke v.
% 220.]
PAYMENT.
543
which is equal to or greater than his debt, and which is not
contingent or uncertain, is presumed to be a satisfaction of the
debt.^ Courts, however, have given effect to slight circum-
stances, appearing on the face of the will or otherwise, by way
of repelling the presumption of satisfaction.- And the rule is
not allowed to prevail where the legacy is of less amount [355]
than the debt; even as a satisfaction j!?;'o tanto; nor where there
is a difference in the time of payment of the debt and the
legacy; nor where they are of different natures as to subject-
matter; nor where there is an express direction in the will for
the payment of debts.^ When a legacy is made by a creditor
to a debtor and the debt is less in amount than the legacy,
the legatee is considered as having so much of the assets in his
hands as the debt amounts to and consequently to be satisfied
pro tanto; and Avhen the debt exceeds the legacy, the execu-
tors of the testator are entitled to retain the legacy in part
discharge of the debt.* There is no presumption that a legacy
given a creditor is in satisfaction of the debt if the testator is
Bogardus, 13 Wend. 67; Mulheran's
Ex'r V. Gillespie, id. 349; Courtenay
V. Williams, 3 Hare, 539; Voorhees
V. Voorhees, 18 N. J. Eq. 227; Brokaw
V. Hudson. 27 id. 135; Blair v.
White, 61 Vt. 110, 17 Atl. Rep.
49; Brunn v. Schuett, 59 Wis. 260, 18
N. W. Rep. 260.
1 Wescoe's Appeal, 52 Pa. 195;
Eaton V. Benton, 2 Hill. 576; Cloud
V. Clinkinbeard, 8 B. Mon. 398, 48
Am. Dec. 397: Strong v. Williams,
12 Mass. 392, 7 Am. Dec. 81 ; Williams
V. Crary, 5 Cow. 368; 2 Story's Eq.,
g 1100; Fetrow v. Krause, 61 111.
App. 238.
2 Id. See Story's Eq., ^§ 1100,
1101; Strong v. Williams, 13 Mass.
392; Willis v. Dun, Wright. 133;
Byrne v. Byrne, 3 S. & R. 54, 8 Am.
Dec. 641; 1 Pom. Eq., ^ 527. "There
is no doubt the rule still nominally
exists; but the tendency of the more
recent decisions is to consider the
bequest a bounty and not the dis-
charge of an obligation. And the
courts now lay hold of any circum-
stances, however trifling, for the
purpose of repelling the presumption
that the legacy was intended as a
satisfaction of the debt." Crouch
V. Davis, 23 Gratt. 62, 93. In another
case it was observed: Inasmuch as
the presumption is arbitrary and
often in conflict with the real mo-
tives and wishes of the testator, and
seemingly harsh, courts have been
prompt to seize upon every circum-
stance to counteract and overcome
it. Gilliam v. Brown, 43 Miss. 641.
Both these cases are approved in
Patten v. Glover, 1 D. C. App. Cas
406, 480.
^Fetrow v. Krause, 61 111. App.
238; Van Riper v. Van Riper, 2 N.
J. Eq. 1; Lisle v. Tribble. 92 Ky. 304,
12 S. W. Rep. 742; Gibbons v. Wood-
ward, 3 Walker (Pa. Sup. Ct.), 303:
Cloud V. Clinkinbeard, 8 B. Mon.
398,48 Am. Dec 397; Fort v. Good-
ing, 9 Barb. 371.
♦Tinkham v. Smith, 56 Vt 187;
Clarke v. Bogardus, 12 Wend. 67.
See Close v. Van Husen, 19 Barb. 505.
54:4 CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 221
a joint debtor, or if the legacy is contingent.^ Though no
general rule was laid down a legacy has been declared not to
be a satisfaction of a debt incurred after the will was made.^
A bequest by a mother, indebted to her children as adminis-
tratrix of the estate of their father and as their guardian, of a
portion of her own estate, which is more than the amount of
the indebtedness, is not to be regarded as a satisfaction of her
indebtedness to them. But this rule does not apply to an ad-
vancement made by a father or other person in loco jparentis
to a child to whom he is indebted.*
§ 221. Payment by gift inter vivos. A creditor may ex-
tinguish a debt gratuitously by such acts as are equivalent to
a gift consummated. Thus, indorsements made in consider-
ation of kindness, by direction and in the presence of a mort-
gagee, of part payments upon a mortgage against his grand-
daughter and her husband, with whom he was living at the
time, and which were to accord with his deliberate and ex-
pressed intention to make a gift or donation of his property
to her, have been sustained as an extinguishment or forgiving
of the mortgage debt to that extent. It was objected that,
this being a gift inter vivos, delivery and acceptance were es-
sential to its validity, and as there was in such a case no de-
livery it could not take effect. Christiancy, J., said : " Doubt-
less such is the rule where the gift consists of tangible per-
sonal property which admits of actual delivery; and the same
rale would probably apply where the note or bond of a third
person is the subject of the gift. Whether if the whole of the
mortgage debt in the present case had been the subject, de-
livery of the note and mortgage, or one of them, would not
have been essential we need not inquire. In the present case
it was but a part of the sum secured by the note and mort-
gage; and the attempted donation was to the debtors them-
[356] selves. And it is difficult to conceive how any delivery
could have been made. But it is said that there must have
been a delivery of the papers or of a release or receipt for the
portion of the debt intended to be given; because without
1 Gibbons v. Woodward, supra. ^ Patten v. Glover, 1 D. C. App.
2 Sullivan v. Latimer, 38 S. C. 158, Gas. 4G6; Plunkett v. Lewis, 3 Hare,
17 S. E. Rep. 701. 316; 1 Pom. Eq., § 540.
§ '2-21.] PAYMENT. 545
something of this kind it would have been in the power of the
donor to retract, and this he might doubtless have done if this
had been an executory agreement or undertaking to make this
gift. But here the purpose and intention of making the gift
was fully executed, and by one of the donees actually accepted
at the time; and the acceptance by the other of the extino-uish-
ment of a part of the debt against himself may be very safely
presumed. And if it remained in the power of the donor to
retract, it would have been equally so, if purely a gift, had a
receipt been given, and equally so, for aught we can discover,
had a release been given, there being no consideration and
untler our statute ^ which makes the seal no more than prima
facie evidence of a consideration. The want of consideration
could, therefore, in either case, have been shown. As the debt
which was the subject of the gift, when considered with ref-
erence to the fact that the donee was the debtor, and that
only part of the debt was attempted to be given, did not admit
of actual delivery, and as all was done that could well be done
under the circumstances to make the gift effectual, we do not
think the act and intention of the donor should be defeated
merely because the subject did not admit of an actual or tech-
nical delivery." ^
A delivery is so essential to the validity of a gift that its
place cannot be supplied by a formal declaration of the donor's
executory intention, although in writing.^ The intention to
discharge b}'' gift a debt in the form of a note, bond or the like
should be executed by an actual surrender of the instrument or
by a release delivered to the donee.* The delivery of a note
bv the holder to the maker, with the intention of transferrintr
iComp. L. of Mich. 1871, § 5947. R. 312; Whitehill v. Wilson, 3 P. &
2 Green v. Langdon, 28 Mich. 221
' Plumstead's Appeal, 4 S. & R
545; Wheat ley v. Abbott, 32 Miss.
343; Hunter v. Hunter, 19 Barb. 631
Noble V. Smith, 2 Johns. 52, 3 Am,
Dec. 399; Cook v. Husted, 12 Johns.
188; Davis v, Boyd, 6 Jones, 249
Brunn v. Schuett, 59 Wis. 260, 18 N.
W. Rep. 260.
* Kidder v. Kidder, 33 Pa. 268
W. 405; Duffield v. Elwes, 1 Bligh
(N. S.), 497; Duffield v. Hicks, 1 Dow
& Clark, 11; Licey v. Licey, 7 Pa. 251,
47 Am. Dec. 513; 1 Smith's Lead. Cas.
1st pt. *469.
In Campbell's Estate, supra, Gib-
son, C. J., said that "the gift of a
bond, note or other chattel cannot be
made by words in /u^wro or in words
in presently unaccompanied by such
Campbell's Estate, 7 id. 100, 47 Am. delivery of the possession as makes
Dec. 503; Wentz v. Dehaven, 1 S. & the disposal of the thing irrevocabla"
Vol. 1 — 35
54G CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 222.
to him the title thereto, is an extinguishmentof the note and a
discharge of the obligation to pay it.'
[357] §222. Payment by retainer. Payment or satisfaction
of a debt may result as the legal effect of the debtor having
conferred on him in some character the duty or right to re-
ceive payment. This conclusion rests upon the ground that
when the same hand is to pay and receive the money, that
which the law requires to be done shall be deemed to be done;
and, therefore, that such debt, when due from an administrator,
for instance, shall be assets de facto to be accounted for in the
probate account.^ But the principle only applies where it is
shown that the personal representative had sufficient personal
assets for the payment of his debt which he could have applied
for that purpose.^ When a testator makes his debtor executor
it is a release at law, but the former may reserve the debt, and
payment be enforced by the party to whom it is bequeathed
under the fiction of a promise to him.* Such appointment
does not extinguish the debt, nor a mortgage security for it,*
but it becomes assets in his hands,^ especially if there is a de-
ficiency, to pay debts.'' An executor or other trustee for the
distribution of moneys to pay debts, legacies, etc., may retain
for a debt owing him from the trust funds, and may also re-
tain for the benefit of the trust any sum due from a benefi-
ciary. A personal representative may retain for his debt by
withholding within the period allowed by the statute of lim-
Brunn v. Schuett, 59 Wis. 260, 18 N. Taylor v. Deblois, 4 Mason, 131; Bry-
W. Rep. 260. aut v. Smith, 10 Cush. 169; Hunt v.
1 Slade V. Mutrie, 156 Mass. 19, 30 Nevers, 15 Pick. 500, 26 Am. Dec. 616,
N. E. Rep. 168; Stewart v. Hidden, 15 Pick. 54, 1 Allen, 153. See Ilsley
13 Minn. 43; Ellsworth v. Fogg, 35 v. Jewett. 2 Met. 168; Wilson v. Wil-
Vt. 355; Vanderbeck v. Vanderbeck, son, 17 Ohio St. 150, 91 Am. Dea 125.
30 N, J. Eq. 265; Jaffray v. Davis, 124 3 Jordan v. Hardie, 131 Ala. 72. 31
. N. Y. 164, 170, 26 N. E. Rep. 351, 11 So. Rep. 504; Miller v. Irby, 63 Ala.
L. R. A. 710; Patten v. Glover, 1 D. 485.
C. App. Gas. 466, 481. •• Fishel v. Fishel, 7 Watts, 44.
2 Ipswich Manuf. Go. v. Story, 5 ^gacon v. Fairraan. 6 Gonn. 121;
Met. 310; Stevens v. Gaylord, 11 Gollard v. Donaldson, 17 Ohio, 264.
Mass. 255; Kinney v. Ensign, 18 See Pratt v, Northam, 5 Mason, 95;
Pick. 2;J2; Winship v. Bass, 12 Mass. Miller v. Irby, G3 Ala. 477.
199; Wankford v. Wankford, 1 Salk. « Winship v. Bass, 12 Mass. 198.
299; Gheetham v. Ward, 1 B. & P. ^ Marvin v. Stone, 2 Gow. 781.
630; Freakley v. Fox, 9 B. & G. 130;
§ 223.] PAYMENT. 547
itations a sufficient amount from the moneys coming to his
hamls, and is entitled to due credit therefor in the settlement
of his accounts,^ on such proof as would authorize a recovery
upon it.2 And such retainer will be presumed from sufficient
assets coming into his hands which were susceptible of con-
version into money.'' His debt, however, will not be deemed
extinguished by the receipt of assets sufficient to dis- [358]
charge it, but which he fails to reduce to money and turn over
to his successor.* The right of retainer, and the legal inci-
dents thereof, applies to debts due the personal representative
as trustee, or as executor or administrator of another person."
An executor de son tort cannot retain for his own debt.®
Sureties in a bond who pay it off after the death of the
principal are entitled to rank as his specialty creditors, and if
they be administrators of his estate may retain whatever they
pay on account of such suretyship out of assets that come to
their hands as administrators against other specialty creditors.'^
A retainer may either be pleaded or given in evidence under
the plea oi plene administravit?
§ 223. Payment in counterfeit money, bills of brolien
banks or forged notes. It accords with principles governing
in like cases, and certainly with the decided weight of author-
ity, to hold that the party paying by legal implication war-
rants the genuineness of what he pays as money,^ unless the
character of the transaction or the accompanying circum-
stances show a different intention.^ This rule is now recoo--
O
1 Batson v. Murrell, 10 Humph. 301, & Russ. 224; Jones v. Davids, 4 Russ.
51 Am. Dec. 707; Hamner v. Ham- 277.
ner, 3 Head, 398; Harrison v. Hen- « Evans v. Norris, Hayw. (by Batt.)
derson, 7 Heisk. 315. 473.
2 Kirksey v. Kirksey, 41 Ala. 636. 9 Watson v. Cresap, 1 B. Mon. 195,
3 Glenn v. Glenn. 41 Ala. 571. 36 Am. Dec. 572; Edmunds v. Digges,
* Harrison v. Henderson, 7 Heisk. 1 Gratt. 359, 42 Am. Dec. 561; Har-
315; Ross v. Wharton, 10 Yerg. 190. grave v. Dusenbury, 2 Hawks, 326;
^Miller V. Irby.63 Ala. 477;Thomp- Fogg v. Sawyer, 9 N. H. 305; Buck
son V. Cooper, 1 Call, 861, 1 Am. Dec. v. Doyle. 4 Gill. 478, 45 Am. Dec. 176;
509; Thomas v. Thompson, 2 Johns. Goodrich v. Tracy, 43 Vt. 314, 5 Am.
471; Hosack v. Rogers, 6 Paige, 415; Rep. 281.
Morrow v. Payton, 8 Leigh, 54. i See Dakin v. Anderson, 18 Ind. 52.
« Turner v. Child, 1 Dev. 331. In Orchard v. Hughes, 1 Wall. 73,
''Powell's Ex'r v. White, 11 Leigh, it was held to be no defense to a suit
309. See Copis v. Middleton, 1 Turn, for ilebt tliatthe debt arose from the
54:8
CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 223.
nized as an exception to that of caveat emptor^ but it is evident
it was not always so.^ This warranty of genuineness, how-
[359] ever, is not absolute; but the general current of author-
ity is that the payer warrants the quality to such an extent
that he is bound to made it good, if found bad, and is returned
within a proper time.^ It is a special warranty, requiring the
return of the thing warranted and involving an obligation of
the debtor to pay the amount again in good money; but leav-
ing the creditor, of course, the option, on returning the spuri-
ous money, to proceed on the statu q\io as upon a rescission.
The payment in either case, to the extent of the counterfeit
money, is treated as a nullity when it has been restored.'
The same principle applies to the notes of individuals. If
receipt of the bills of a bank char-
tered illegally, and lor fraudulent
purposes, and that the bills were void
in law, and finally proved worthless
in fact; they themselves having been
actually current at the time the de-
fendant received them, and not hav-
ing proved worthless in his hands,
and he not being bound to take them
back from the person to whom he
paid them,
1 In Wade's Case, 5 Coke, 114a, it
was said: "It was adjudged between
Vare and Studley that when the les-
sor demanded rent of the lessee, ac-
cording to the condition of re-entry,
and the lessee payeth the rent to his
lessor, and he received it and put it
in his purse, and afterwards in look-
ing it over again at the same time
he found amongst the money that
he had received some counterfeit
pieces and thereupon refused to carry
away the money, but re-entered for
the condition broken, it was ad-
judged the entry was not lawful;
for when the lessor had accepted the
money it was at his peril, and upon
that allowance he shall not take ex-
ception to any part of it." And it is
Baid in Shepherd's Touchstone, 140,
in respect to mortgages: " If the pay-
ment be made, part of it with coun-
terfeit coin, and tlie part}^ accept and
put it up, this is a good payment, anil
consequently a good performance of
the condition."
2 Atwood v. Cornwall, 28 Mich. 336,
15 Am. Rep. 219; Wingate v. Neid-
linger, 50 Ind. 520; Samuels v. King,
id. 527; Stebbins v. Stebbins, 51 Ind.
595. See Alexander v. Byers, 19 Ind.
801.
3 Id.; Markle v. Hatfield, 2 Johns.
453; Gilman v. Peck, 14 Vt. 516;
Thomas v. Todd, 6 Hill, 340; Torrey
V. Baxter. 13 Vt. 452; Pindall's Ex'r
v. Northwestern Bank, 7 Leigh, 617;
Raymond v. Baar, 13 S. & R. 318, 15
Am. Dec. 603; Bank of St. Albans v.
Farmers' & M. Bank, 10 Vt. 141, 33
Am. Dec. 188.
In Watson v. Cresap, 1 B. Mon. 195,
36 Am. Dec. 572, Judge Ewing said:
*"It must be presumed that he who
passes a bill as money passes it as
genuine, and the law implies an as-
sumpsit or warranty that it is so (2
Johns. 458, 15 Johns. 241); and if the
bill should be counterfeit and worth-
less, this implied promise is immedi-
ately, upon passing the bill, broken,
and an action lies for its breach; nor
does it matter whether he who
passes it knows that it is counter-
feit or not. 2 Johns., s?<pra. The ac-
tion is not an action for fraud, but
for breach of promise implied by
§ 223.]
PAYMENT.
549
they are forged, in whole or in part, or are void because of the
incapacity of their makers, the paper does not discharge the
debt it was accepted in payment of.' A contract to receive
payment in certificates of indebtedness issued by public officers
contemplates that the instruments shall be enforceable; that
they shall rest upon antecedent proceedings which o-ave the
otficers jurisdiction to issue thera.^
law. And to sustain this form of
declaring it would certainly be un-
necessary to prove that the note was
tendered back, as it goes for breach
of promise, and not for restitution
of the consideration upon a disaf-
firmance of the contract of pay-
ment. As the first count in the
case under consideration is a count
on the implied promise, the proof
justified the recovery without any
evidence that the bill was tendered
back to the defendants before suit
brought. We are also satisfied that
if money or other bills which pass
and are received as money be the
consideration given for a counter-
feit bill, that it may be recovered
back on an indebitatus count for so
mucli money had and received. Pay-
ment for such a bill must be re-
garded as a payment by mistake for
a thing of no value, but which was,
at the time it was received, believed
to be, and imported on its face to be,
of intrinsic worth. 2 Johns. 458.
"But this form of declaring pro-
ceeds on the ground of a disaffirm-
ance of the contract and a restitu-
tion of the thing given in exchange.
It is an equitable remedy, and to en-
title the plaintilf to recovery, if
anything of value has been received,
it must be shown that it was ten-
dered back before the action was
brought. A counterfeit bill is cer-
tainly of no intrinsic value; it would
be as worthless in the hands of the
defendants as that of the plaintiffs,
and according to the rule laid down,
it would seem unnecessary to show
that it was tendered back, even in
this form of declaring. But whether
it was or not it is not now necessary
to determine, as the recovery was
proper on the first count."
This case, it is respectfully sug-
gested, would not now be regarded
as ctAp^tly decided, for it proceeds
upon;fjigfound fundamentally erro-
neous; namely, that a counterfeit
bill " would be as worthless in the
band of the defendants as in that
of the plaintiffs." An absolute war-
ranty of genuineness is assumed
doubtless on that theory. The con-
sideration appears to have been
overlooked that where a counterfeit
bill has been innocently paid and
received, the prompt return of it
will enable the party who had paid
it to restore it to the person from
whom he received it, and thus ob-
tain its nominal amount in good
money. The implied warranty re-
quires such restitution.
1 Godfrey v. Crisler, 121 Ind. 203,
22 N. E. Rep. 999; First Nat. Bank v.
Buchanan, 87 Tenn. 32, 2 S. W. Rep.
202, 10 Am. St. 617; School Town of
Monticello v. Grant, 104 Ind. 168, 1
N. E. Rep. 302; Gerwig v. Sitterlj%56
N. Y. 214; Stratton v. McMakin, 84
Ky. 641, 4 Am. St. 215; Ritter v.
Singmaster, 73 Pa. 400; Graham's
Estate, 14 Phila. 280; Emeric v.
O'Brien, 36 Ohio St. 491; Guichard
V. Brande, 57 Wis. 534, 15 N. W. Rep.
764; Sandy River Nat. Bank v. Mil-
ler, 8-2 Me. 137, 19 Atl. Rep. 109.
2Catliu v. Munn, 37 Hun, 23.
550 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 224..
[3G0] The tendency of modern decisions is to require reason-
able vigilance in the receipt and prompt diligence in the re-
turn of counterfeits, or in giving notice to the payer that he
may protect himself against prior parties. What is diligence
is determined with reference to the facts of each case, but
upon analogies drawn from the law of commercial paper. A
delay of months or even a few days may be fatal to the right
of recourse to the payee.^ Any unnecessary delay beyond
such reasonable time as would enable the taker to inform him-
self as to its genuineness operates as a fraud on the payer, and
prevents a recovery.^
[301] § 224. Same subject. When payment is made in the
bills of insolvent banks or in other depreciated conventional
currency, the question of who should bear the loss may arise
[362] under various circumstances. If both parties deal in
thecurrency in question as uncurrent money it is like dealing
in a commodity. And if a debtor pays as money bank notes^
[363] knowing the bank to be insolvent, and conceals it from
the creditor or payee, it will be deemed a fraud.' But there
are various aspects in which an innocent payment of depre-
ciated or worthless currency may be viewed; that is, though
both the payer and receiver take for granted it is good, and
may be equally ignorant of any fact tending to lessen its value:
first, the bank may be in fact insolvent, but had not stopped
payment; second, it may have stopped payment, but a knowl-
edge of it not have reached the neighborhood where the pay-
ment was made, and the bills may have continued there actually
current; third, the currency used may be wholly worthless or
1 Raymond V. Baar, 13 S. & R. 318: Bank v. Gloucester Bank, 17 id. 1,
Samuels v. King, 50 Ind. 527; Thomas 28, 9 Am. Dec. 111.
V. Todd, 6 Hill. 340; Lawrenceburgh 2 Atwood v. Cornwall, 28 Mich.
Nat. Bank v. Stevenson, 51 Ind. 594; 3-36, 15 Am. Rep. 219. This case is
Corn Exchange Nat. Bank v. Na- Valuable because of the ability and
tional Bank, 78 Pa. 233; Kenny v. learning with which Judge Camp-
First Nat. Bank, 50 Barb. 112; Cam- bell discusses the legal relations
idge V. AUenby, 6 B. & C. 373; Bank between the payer and receiver of
of St. Albans V. Farmers' & M. Bank, counterfeit money. See First Nat.
10 Vt. 141; Pindall's Ext v. North- Bank v. Ricker. 71 111. 439, 22 Am.
western Bank, 7 Leigh, 617; Union Rep. 104; Simms v, Clark, 11 111. 137;
Bank v. Baldenwick, 45 111. 375; United States Bank v. Bank of
Pumphrey v. Eyre, Tappan, 283. See Georgia, 10 Wheat. 333.
Young V. Adams, 6 Masa 187; Salem » Story on Prom. Notes, § 118.
§ 224.]
PAYMENT.
551
only depreciated. Mr. Chitty says: "It should seem that if
in discounting a note or bill the promissory note of country
bankers be delivered, after they have stopped payment, but
unknown to the parties, the person taking, unless guilty of
laches, might recover the amount of the discounter because it
must be implied that at the time of the transfer the notes were
capable of being received if duly presented for payment." ^
And Mr. Story says of a payment in bills of an insolvent bank,
where both parties are equally innocent, and alike ignorant
that the bank had become insolvent, that the weight of reason-
ing and of authority seems to be in favor of the payer bearing
the loss. The decisions in New York,^ Wisconsin,* Vermont,*
New Hampshire,^ Illinois," Maine,^ South Carolina,® and Ohio'
are in accord with that doctrine. But in Pennsylvania,' Ten-
nessee,^ and Alabama,^ it has been held that such loss should
be borne by the receiver.*
The failure of a bank has the effect of depriving its bills of
the distinctive character of money; it becomes insolvent when
1 Chitty on Bills, 247.
2 Lightbody v. Ontario Bank, 11
Wend. 9, affirmed, 13 id. 101; Hough-
ton V. Adams, 18 Barb. 545.
3Townsends v. Bank of Racine, 7
Wis. 185.
* Gilman v. Peck, 11 Vt. 516, 34 Am.
Dec. 703; Wainwright v. Webster, 11
Vt. 576, 34 Am. Dec. 707.
* Fogg V. Sawyer, 9 N. H. 365, 25
Am. Dec. 462.
6 Magee v, Carmack, 13 111. 289.
7 Frontier Bank v. Morse, 22 Me.
88, 38 Am. Dec. 284.
SHarleyv. Thornton, 2 Hill, 509.
sWestfall V. Braley, 10 Ohio St.
188, 75 Am. Dec. 509. But see Im-
bush V. Mechanics' Bank, 1 West. L.
J. 49.
1 Bayard v. Shunk, 1 W. & S. 94,
37 Am. Dec. 441.
2 Scruggs V. Gass. 8 Yerg. 175, 29
Am. Dec. 114. But see Ware v.
Street, 2 Head, 609, 75 Am. Dec. 755.
3 Lowrey v. Murrell, 2 Port. 282, 27
Am. Dec. 651.
* See Young v. Adams, 6 Mass. 182;
Edmunds v. Digges, 1 Gratt. 329;
Phillips V. Blake. 1 Met. 156; Cam-
idge V. Allen by, 6 B. & C. 373; Owen-
son V. Morse, 7 T. R. 64; Ex parte
Blackburne, 10 Ves. 204; Emly v. Lye,
15 East, 7.
In Corbit v. Bank of Smyrna, 2 Harr.
235, 30 Am. Dec. 635, it was held that
the receipt by a bank for deposit as
money of the bills of a bank that had
just suspended, but before either the
bank or the depositor was informed
of the failure, was at the risk of the
bank receiving them. And a distinc-
tion was taken between the receipt
of bank bills for a contemporaneous
debt or consideration and receiving
them for a precedent debt. In the
former case the bills are supposed to
be the thing bargained for, and there-
fore at the risk of the receiver; but
when received for a precedent debt
it is not discharged unless the bills
are of solvent banks when received.
552 CONVENTIONAL LIQUIDATIONS AND DISCnAEGES. [§ 224.
it ceases to redeem them with legal tender money .^ Bank notes
are the representative of money, and circulate as such by gen-
eral consent and usage. But this consent and usage are based
upon the convertibility of such notes into coin at the pleasure
of the holder, upon their presentation to the bank for redemp-
tion. This fact is the vital principle which sustains their char-
acter as money. So long as they are in fact what they purport
to be, payable on demand, common consent gives them the at-
tributes of money. But upon the failure of the bank by which
they were issued, when its doors are closed and the inability to
redeem its bills is openly averred, they instantly lose that char-
[365] acter, their circulation as currency ceases with the usage
and consent upon which it rested, and the notes become the mere
dishonored and depreciated evidences of debt. When this change
in their character takes place the loss must necessarily fall upon
him who is the owner of them at the time; and this, too,
whether he is aware or unaware of the fact. His ignorance
can give him no right to throw the loss he has already incurred
upon an innocent third party.^ Therefore, if such bills, after
failure of the bank, are paid out and received as money by per-
sons ignorant of the fact, the receiver is entitled to return them
and require their amount in good money on the ground of mis-
take.'' The very time when a bank announces its failure, by
closing its doors and ceasing to redeem, is that at which its
failure is deemed to occur, without reference to its antecedent
real condition, between parties having no cause to anticipate
that event.* The doctrine that the loss falls upon him in whose
1 Townsends v. Bank of Racine, 7 pension was resolved upon that same
Wis. 185; Lightbody v. Ontario Bank, evening, but was not announced un-
11 Wend. 9, 13 id. 101. til tlie next day. The court say:
2 Westfail v. Braley, 10 Ohio St. 188, " The loss must fall upon one of two
75 Ana. Dec. 509. innocent men, and the law must con-
oid. ; Frontier Bank v. Morse, 22 trol it. At the time the payment
Me. 88, 38 Am. Dec. 284; Roberts v. was made the notes were circulating
Fisher, 43 N. Y. 159, 3 Am. Rep. 680; as currency and considered good by
Leger v. Bonnaffe, 2 Barb. 475; Bald- the community. But they were in
will v. Van Deusen, 37 N. Y. 487. fact of no value at the hour they
* Ware v. Street, 2 Head, 609, 75 were paid out, although a few hours
Am. Dec. 755. In this case a pay- before they were convertible into
raent in bank bills was made on the specie. . . . The supposed com-
12th of July, 1858, late in the evening mercial interest of our country and
and was held good, although the sus- the general convenience of the
ii
§ 22i.]
PAYMENT.
iJJo
hands the bills are at the time of the failure necessarily [3(50]
involves an implied guaranty in every payment of bank bills
that at that time the bank has not suspended or failed, unless
^ contrary intention is manifested.
On the contrary, in Pennsylvania and some other states, as
bofore stated, where a payment in bank bills is made in good
faith their acceptance is not deemed to be upon the faith of
any such guaranty, but is governed by the rule of caveat
emptor, and the maxim of melior est conditio defendentis}
people have produced a course of
legislation by which bank paper has
become the circulating medium and
the standard of value instead of
specie. True, it has not been made
a lawful tender and cannot be with-
out a change of the constitution.
But by almost universal consent it has
become the medium of exchange and
the representative of property. It
lias taken the place of the precious
metals and is regarded as money.
This, however, is by consent and not
bylaw. No man is hound to receive
it in payment of debts or for property.
But if it gets into his hands by con-
sent, and a loss comes by failure of
the bank, the misfortune must and
should be his in whose hands it hap-
pens to be at the time. The risk
must follow the paper and not the
i"ormer owners. It passes from hand
to hand without recourse except in
cases of fraud or concealment."'
1 In Bayard v. Shunk, 1 W. & S. 92,
37 Am. Dec. 441, Gibson, C. J., ex-
pounds and enforces this view with
great vigor of language and logic.
He says: "Cases in which the bills
and notes of a third party were
transferred for a debt are not to the
])urpose; and most of those which
have been cited are of that stamp.
Where the parties to such a trans-
action are silent in respect to the
terms of it, the rules of interpreta-
tion are few and simple. If the se-
curities are transferred for a debt
contracted at the time, the presump-
tion is that they were received in
satisfaction of it; but if lor a prece-
dent debt, it is that they are received
as collateral security for it; and in
either case it may be rebutted by
direct or circumstantial evidence.
But by the conventional rules of
business, a transfer of bank notes,
though the}' are of the same mould
and obligation betwixt the original
parties, is regulated by i)eculiar
principles, and stands on a different
footing. They are lent bj' the banks
as cash; they are paid away as cash;
and the language of Lord Mansfield
in Miller v. Race, 1 Burr. 452, was
not too strong when he said, 'they
are treated as money, as cash, in the
ordinary course and transaction of
business by the general consent of
mankind, which gives them the
credit an d currency of money to al 1 in-
tents and purposes: they are as much
money as guineas themselves are, or
any other coin that is used in com-
mon payments is money or cash.' If
such were their legal character in
England, where there was but one
bank, how emphatically must it be
so here where they have sui)planted
coin for every purpose but that of
small change, and where they have
excluded it from circulation almost
entirelj-. It is true, as was remarked
in Young v. Adams, 6 Mass. 182, that
our bank notes are private contracts
witiiout a public sanction like that
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 22J:.
[367] Where recourse is allowed to the party who paid out
the bills it does not depend on their being worthless. Parker,
C. J., said: "The case of a payment in bills of a broken bank
cannot be distinguished in principle from a payment in coun-
which gives operation to the lawful
money of the country; but it is also
true that they pass for cash, both
here and in England, not by force
of any such sanction, but by the
legislation of general consent, in-
duced by their great convenience, if
not the absolute necessities of man-
kind. Miller v. Race is a leading
case which has never been doubted
in England, or, except in a case pres-
ently to be noticed, in America; and
it goes very far to rule the point be-
fore us; for if the wheel of commerce
is to be stopped or turned backwards
in order to repair accidents to it
from impurities in the medium
which keeps it in motion, except
those which, few and far between,
are occasioned by forgery, bank
notes must cease to be a part of the
currency, or the business of the
world must stand still. The weight
of authority bearing directly on the
point is (1841) decisively in favor of
the position that bo7in fide payment
in the notes of a broken bank dis-
charges the debt. . . . Camidge
V. Allen by, 6 B. & C. 373; Scruggs v.
Gass, 8 Yerg. 175, 29 Am. Dec. 114;
Young V. Adams, 6 Mass. 182; against
Lightbody v. Ontario Bank, 11 Wend.
9, affirmed, 13 id. 101. . . .
"To assume that the solvency of
the bank at the time of the transfer
is an inherent condition of it is to
assume the whole ground of the ar-
gument. The conclusion concurred
in by all, however, was that the me-
dium must turn out to have been
what the debtor offered it for at the
time of ])ayment. How does that
consist with the equitable principle
that there must be, in every case, a
motive for the interference of the
law, but that it must be stronger
than any to be found on the other
side; else the equity being equal, and
the balance inclining to neither side,
things must be left to stand as they
are (Fonb. B. 1, ch. V, § 3; id. oh. IV,
§ 25); in other words, that the law
interferes not to shift a loss from one
innocent man to another equally
innocent, and a stranger to the cause
of it. The self-evident justice of this
would be proof, were it necessary,
that it is a principle of the common
law. But we need go no further in
search of authority for it than Miller
V. Race, in which one who had re-
ceived a stolen bank note for full
consideration in the course of his
business was not compelled to restore
it. It was intimated in the Ontario
Bank v. Lightbody that there was a
preponderance of equity in that case,
not on the side of him who had lost
the note, but of him who had last
given value for it. Why last? The
maxim, prior in tempore potior in
jure, prevails between prior and sub-
sequent purchasers indifferently of a
legal or an equitable title. It is for
that reason the owner of a stolen
horse can reclaim him of a purchaser
from the thief; and were not the field
of commerce market overt for every-
thing which performs the office of
money in it, the owner of a stolen
note might follow it into the hands
of a bona fide holder of it. But gen-
eral convenience requires that he
should not; and it was that principle,
not any consideration of the equities
betwixt the parties, which ruled the
case of Sliller v. Race. But a more
forcible illustration of the principle,
were the case indisputably law, might
be had in Levy v. Bank of the United.
§ 224.]
PAYMENT.
i)0o
terfeit money. From the time of the failure of the bank they
cease to be the proper representatives of money, whether
they are at the time near to or at a distance from the [3G8]
bank. They may have a greater value tlmn counterfeit bills,
States, 4 Ball. 234, 1 Bin. 27, in which
the placing even a forged check to
the credit of a depositor as cash — a
transaction really not within any
principle of conventional law - was
lield to conclude the bank; and to
this may be added tiie entire range
of cases in which the purchaser of
an article from a dealer has been
bound to bear a loss from a defect in
the quality of it. And for the same
reason that the law refuses to inter-
fere between parties mutually inno-
cent, it refuses to interfere between
those who are mutually culpable; as
in the case of an action for negli-
gence. What is there, then, in the
case before us to take it out of this
great principle of the common law?
The position taken by the courts of
New York isthat every one who parts
with his property is entitled to ex-
pect the value of it in coin. Doubt-
less he is. He may exact payment
in precious stones, if such is the bar-
gain. But where he has accepted
without reserve what the conven-
tional laws of the country declare to
be cash, his claim to anything else is
it an end. Bills of exchange and
promissory notes enter not into the
transactions of commerce as money:
but it impresses even tliese with
qualities which do not belong to
ordinary securities. The holder of
one of them, who has taken it in
the ordinar}' course, can recover on
it, whether there was a considera-
tion between the original parties or
not. . . .
"The assertion that it is always an
original and subsisting part of the
agreement that a bank note shall
turn out to have been good when it
was paid away can be conceded no
farther than regards its genuineness.
That genuine notes are supposed to
be equal to coin is disproved by daily
experience, which shows that they
circulate by the consent of whole
communities at their nominal value
when notoriously below it. But why
hold the payer responsible for the
failure of the bank only when it
has been ascertained at the time of
the payment, and not for insolvency
ending in an ascertained failure
afterwards? As the bank may have
been actually insolvent before it
closed to let the world know it, we
must carry his responsibility back
beyond the time when it ceased to
redeem its notes, if we carry it back
at all. Were it not for the conven-
tional principle that the purchaser
of a chattel takes it with its defects,
the purchaser of a horse with the
seeds of mortal disease in him might
refuse to pay for him though his
vigor and usefulness were yet unim-
paired; and if we strip a payment
in bank notes of the analogous cash
principle, why not treat it as a nul-
lity, by showing that the bank was
actually, though not ostensibly, in-
solvent at the time of the transac-
tion. It is no answer that the note
of an unbroken bank may be in-
stantly converted into coin by pre-
senting it at the counter. To do
that may require a journey from
Boston to New Orleans, or between
places still further apart, and the
bank may have stopped in the mean-
time, or it may stop at the instant of
presentation when situated where
the holder resides. And it may do
so when it is not insolvent at alU
but perfectly able eventually to pay
the last shilling. This distinction
556
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 224.
but in neither case has the party received what in the con-
templation of both parties he was entitled to receive, if the
contract was to pay a certain sum. In neither case has he
received money or its representative. The sum contracted to
[360] be paid has not been paid in money or anything which
by usage passes as money, or which was entitled at the time
to represent it; and the party has therefore failed to pay
between previous and subsequent
failure evinced by stopping before
the time of the transaction or after
it is an arbitrary and impracticable
one. To such a payment we must
apply the cash principle entire, or
we must treat It as a transfer of ne-
gotiable pai)er, imposing on the
transferee no more than the ordi-
naiy inercantile responsibility in re-
gard to presentation and notice of
dishonor. There is no middle ground.
. . . The case of a counterfeit
bank note is entirely different. Tlie
laws of trade extend to it only to
prohibit the circulation of it. They
leave it in all beside to what is the
rule both of the common and the
civil law, which requires a thing
parted with for a price to have an
actual or at least a potential exist-
ence (2 Kent, 468), and a forged
note, destitute as it is of the quality
of legitimate being, is a nonentity.
It is no more a bank note than a
dead horse is a living one; and it is
an elementary principle, that what
has no existence cannot be the sub-
ject of a contract. But it cannot be
said that the genuine note of an in-
solvent bank has not an actual and
a legitimate existence, though it be
little worth; or that the receiver of
it has not got the thing he expected.
It ceases not to be genuine by the
bank's insolvency: its legal obliga-
tion as a contract is undissolved, and
it remains a promise to pay, though
the promisor's ability to perform it
be impaired or destroyed. . . .
The difference between forgery and
insolvency in relation to a bank
note is as distinctly marked as the
difference between title and quality
in relation to the sale of a chattel.
" What then becomes of the
boasted principle that a man shall
not have parted with his property
until he shall have had value, or
rather .what he expected for it ? Like
many others of the same school, it
would be too refined for our times,
even did a semblance of justice lie
at the root of it. But nothing de-
vised by human sagacity can do
equal and exact justice in the appre-
hension of all men. The best that
can be done, in any case, is no more
than an approximation to it; and
when the incidental risks of a busi-
ness are so disposed of as to consist
with the general convenience, no in-
justice will in the end be done to
those by whom they are borne.
Commerce is a system of dealing in
which risk, as well as labor and cap-
ital, is to be compensated. But
nothing can be more exactly bal-
anced than the equities of parties to
a payment in regard to the risk of
the medium when its worthlessness
was unsuspected by either of them.
The difference between them is not
the tithe of a hair or any other in-
finitesimal quantity that can be im-
agined; and in such a case the com-
mon law allows a loss from mutual
mistake to rest where it has fallen,
rather than to remove it from the
shoulders of one innocent man to
the shoulders of another equally so."
d
§ 225.] PAYMENT. 557
what be contracted to pay. Counterfeit coin may contain a
portion of good metal and thus have some value, but this
would not make it a good medium of payment. Entire worth-
lessness, or not, is not, therefore, the criterion." ^ A [370]
return of such paper by the receiver is required as a condi-
tion of the right to recover from the payer; and the necessity
of returning it arises from the same considerations in the case
of counterfeit money, to enable the party paying to secure
himself with prior parties. But whether the rule requiring
return within a reasonable time is confined to cases in which
the payer has recourse does not appear to be decided. If the
failure occurred while he was the owner of the bills he has
no recourse; and if they are not returned why may not the
party receiving and retaining them be charged with their
value and the recovery be limited to the depreciation?^
§ 225. Payment by note, bill or check. A creditor maj'^
receive anything of value as payment.'^ A debtor, by agree-
ment with his creditor, may pay his contemporaneous or ante-
cedent debt in a note or bill against a third person; but there
must be a mutual agreement that it shall be transferred and
received as final satisfaction without recourse or condition of
being productive.* Where goods are sold for a particular [371]
iFogg V, Sawyer, 9 N. H. 365; for the jury to be determined from
Frontier Bank v. Morse, 22 Me. 88, all the circumstances."
38 Am. Dec. 284; Magee v. Carmack, 3 Louden v. Birt, 4 Ind. 566: Reed
13 IlL 289. V. Bartlett, 19 Pick. 273; Tilford v.
^Townsends v. Bank of Racine, 7 Roberts, 8 Ind. 254.
Wis. 185; Ontario Bank v. Light- * st. John v. Purdy, 1 Sandf. 9;
body, 13 Wend. 104. New York State Bank v. Fletclier, 5
In Magee v. Carmack. 13 111. 289, Wend. 85; Conkling v. King, ION. Y.
the court remark as to the question 440, affirming 10 Barb. 372; Roberts
of what is a reasonable time: "When v. Fisher, 53 Barb. 69; Wright v.
from the nature of the subject a First Crockery Ware Co., 1 N. H.
general rule can be applied to all 281, 8 Am. Dec. 68; JafTrey v. Cor-
cases, then what constitutes reason- nish, 10 N. H. 505; Elliot v. Sleeper,
able notice may be a question of law 2 id. 527; Randlet v. Herren, 20 id.
for the court, as notice to the indorser 102; Brewer v. Branch Bank, 24 Ala,
of a bill or note. But when, as in this 440; Hutchins v. Olcutt, 4 Vt. 549,
case, the question of what would 24 Am. Dec. 634; Hart v. Boiler, 15
constitute a reasonable time must S. & R. 162, 16 Am. Dec. 536; Citi-
depend upon the peculiar circum- zens' Bank v. Carson, 32 Mo. 191:
stances of each case, and cannot Smith v. Owens, 21 Cal. 11; Graves
reasonably be subjected to any gen- v. Friend, 5 Sandf. 568.
eral rule, then it is a question of fact
i)Ob
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 225.
note it is an exchange or barter, and the note has the effecc
of payment.' In some states the rule is that the note of the
vendee is presumed to have been taken by the vendor in pay-
ment of a contemporaneous debt unless the contrary be shown
or the note be void or there has been fraud or misrepresenta-
tion respecting it;^ but it is otherwise as to an antecedent
debt.' And when the note of a third person is taken without
recourse, by indorsement or otherwise, for goods sold at the
time, the presumption is it is taken in payment.* There is no
dissent from the proposition that an agent who has no author-
ity to sell property and receive payment for his principal is
not presumed to be empowered to take anything but money
in payment therefor;^ and this is true of an agent who is ap-
pointed to receive and collect demands due his principal.'* This
1 Ferdon v. Jones, 2 E. D. Smith,
106; Whitbeck v. Van Ness, 11 Johns.
409, 6 Am. Dec. 383; Breed v. Cook,
15 Johns. 241; Rew v. Barber, 3 Cow.
272.
A creditor who accepts from his
debtor notes of third persons which
were to be received as payment if
the former approves them is bound
to determine whether they are to be
so received or not within a reason-
able time and to give his debtor no-
tice of his decision. If he delays
for forty days it is for the jury to
find whether he has accepted them
as payment. Acme Harvester Co.
V. Axtell, 5 N. D. 315, 65 N. W, Rep.
680.
2 Ford V. Mitchell, 15 Wis. 308;
Challoner v. Boyington, 83 Wis. 399,
58 N. W. Rep. 694.
3 Willow River Lumber Co. v.
Luger Furniture Co., 102 Wis. 636,
78 N. W. Rep. 762.
4 Challoner v. Boyington, supra;
Hall v. Stevens, 116 N. Y. 201, 22 N.
E. Rep. 374, 5 L. R. A. 802, reversing
40 Hun, 578; Gibson v. Tobey, 46 N.
Y. 637, 7 Am. Rep. 397; Cor bit v.
Bank of Smyrna, 2 Harr. 235, 239,
50 Am. Dec. 635; Torry v. Hadley, 27
Barb. 192; Whitbeck v. Van Ness, 11
Johns. 409, 6 Am. Dec. 383; Noel v.
Murray, 13 N. Y. 167; Rew v. Barber,
3 Cow. 272; Breed v. Cook, 15 Johns.
241; Bank of England v. Newman, 1
Ld. Raym. 442; Bayard v. Shunk, 1
W. & S. 92, 37 Am' Dec. 441 ; Fydell
V. Clark, 1 Esp. 447; Clark v. Mun-
dall, 1 Salk. 124. But see Darnall v.
Morehouse, 36 How. Pr. 511; Turner
V. Bank of Fox Lake, 3 Keyes, 425;
Youngs V. Stahelin, 34 N. Y. 258;
Owenson v. Morse. 7 T. R. 64; Bur-
rows V. Bangs, 34 Mich. 304; Gardner
V. Gorham, 1 Doug. (Mich.) 507; Van
Cleef V. Therasson, 3 Pick. 12; Car-
roll V. Holmes, 24 111. App. 453, and a
dictum in Morrison v. Smith, 81 111.
221.
5Runyon v. Snell, 116 Ind. 164, 18
N. E. Rep, 522, 9 Am. St. 839; Stew-
art V. Woodward, 50 Vt. 78, 28 Am.
Rep. 488; Victor Sewing Machine
Co. V. Heller, 44 Wis. 265; Quinn v.
Sewell, 50 Ark. 380, 8 S. W. Rep. 132.
If the principal ships goods sold
by the agent for other than a cash
consideration the contract of sale is
ratified. Billings v. Mason, 80 Me.
496, 15 Atl. Rep. 59.
« Scott V, Gilkey, 153 111. 168, 39 N.
E. Rep. 265; Cooney v. United States
Wringer Co., 101 III. App. 468; Mor-
1 ^1^0.J
PAYMENT.
view is qualified in Kentucky as to banks which are intrusted
with collections if their usaf^e is to accept checks in payment
of claims, whether the customer has knowledge of the usage
or not, if he has not given directions as to the mode of pay-
ment.^ But this view is denied in ^Missouri.- A irovernment
revenue collector has no authority to receive in payment for
stamps anything but money.^
Whether the receipt by the creditor of the debtor's note, or
the note of one of several debtors, with the agreement that it
is received at the risk of the creditor and as full satisfaction,
will have the effect to extinguish the debt, is not universally
agreed. In New York it has been several times held, and per-
haps the doctrine there may be deemed settled, that a debtor's
note, although expressly received as satisfaction, cannot ex-
tinguish his precedent debt>
ris V. Eufaula Nat. Bank, 106 Ala.
383, 18 So. Rep. 11; McCormick Har-
vesting Machine Co. v. Breen, 61 111.
App. 528; National Bank v. Grimm,
109 N. C. 93, 13 S. E. Rep. 867: Bank
of Commerce v. Hart, 37 Neb. 197,
40 Am. St. 479, 20 L. R. A. 780, 55 N. ■
W. Rep. 631; Sandy River Bank v.
Merchants & Mechanics' Bank, 1
Biss. 146; Western Brass Manuf. Co.
V. Maverick, 4 Tex. Civ. App. 535, 23
S. W. Rep. 728: Everts v. Lavvther,
165 111. 487, 46 N. E. Rep. 233; Law-
ther v. Everts, 63 111. App. 432;
Scully V. Dodge, 40 Kan. 395, 19 Pac.
Rep. 807; McCormick v. Peters, 24
Neb. 70. 37 N. W. Rep. 927; Nichol-
son v. Pease, 61 Vt. 534, 17 Atl. Rep.
720; Lochenmeyer v. Fogart3', 112
111. 572; Wilcox & W. Organ Co. v.
Lasley, 40 Kan. 521, 20 Pac. Rep. 228;
Deatherage v. Henderson, 43 Kan.
684, 23 Pac. Rep. 1052; Mitchell v.
Printup, 68 Ga. 675.
If the agent of a mortgagee ac-
cepts a certificate of deposit in pay-
ment of a mortgage and deposits it
in the bank which issued it to the
credit of his own account, the pay-
ment is of cash. Harrison v. Legore,
109 Iowa, 618, 80 N. W. Rep. 670;
Hare v. Bailey, 73 Minn. 409, 76 N.
W. Rep. 213.
It seems that an attorney, acting
in good faith, has broader powers
than other agents. It has been ruled
where an attorney, under his em-
ployment, obtained judgment and
presented a certified transcript of it
to the defendant, demanding pay-
ment, which was made in confeder-
ate funds in 1862, that such payment
was binding, and that payment in
such funds, they being current, to
clerks, sheriflfs and other officers
authorized to collect money, was
binding on the creditor, while it was
otherwise as to payments so made to
private agents. East Tennessee, etc.
R. Co. V. Williams, 8 Tenn. Cas. 8.
See § 211.
1 Farmers' Bank & Trust Co. v.
Newland, 97 Ky. 464.31 S. W. Rep.
38; Morse on Banks & Banking, sec.
221.
2 National Bank of Commerce v.
American Exchange Bank, 151 Mo.
320, 52 S. W. Rep. 26.5, 74 Am. St. 527.
S.American Brewing Co. v. United
States, 33 Ct of Cls. 349; Miltenber-
ger V. Cooke, 18 Wall. 421.
4 Cole V. Sackett, 1 Hill, 5ia In
560
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 225,
[372] III England, and generally in this country, it is be-
lieved that the debtor's negotiable note or bill of a third per-
son, when received by mutual agreement of the parties as
satisfaction, has that effect; and the rule applies equally
whether the debt be antecedent or contemporaneous.^ Where
this case Cowen, J., said: "It may
be considered at present as entirely
settled that to operate as a satisfac-
tion the promise must be of some
tiiird person; in other words, some-
thing over and above the original
debt. A promise by note is a secu-
rity of no higlier degree than an im-
plied promise; and tlie logic of these
pleas is no more than saying: 'Your
precedent debt is discharged because
I promised to pay it in another form,
and you accepted tlie latter promise
as a satisfaction.' What considera-
tion is tliere for such an acceptance ?
The new promise to do a thing which
the debtor was bound to do before —
a thing which he now refuses to do,
because he had promised again and
again to do it! In these promising
times, there are, I apprehend, few
debts which on such a theory are
not in danger of being barred much
short of the statutes of limitations;
for creditors, however unwilling,
are many times obliged to accept
promises as the only satisfaction
they can obtain for the present. It
is entirely settled that a promissory
note in no way affects or impairs the
original debt unless it be paid."
Notwithstanding the argument,
from want of consideration, in the
foregoing opinion. Judge Cowen
conceded to negotiable notes taken
for an account some additional value
to the creditor in Myers v. Welles, 5
Hill, 463: "Being negotiable, they
might be used more beneficially than
the account. Besides, they operate
to liquidate the plaintiff's claim.
These advantages constituted suffl,-
dent consideration for the suspen-
sion." See Frisbie v. Larned, 21
Wend. 450; Putnam v. Lewis, 8
Johns. 389; Hawley v. Foote, 19
Wend. 516.
On principle, it might well be
claimed that where the new note is
supported by sufficient consideration
for forbearance, that consideration
is sufficient for a discharge of the
original debt.
1 Kirkpatrick v. Puryear, 93 Tenn.
409, 24 S. W. Rep. 1130, 22 L. R. A.
785; Thum v. Wolstenholme, 21
Utah, 446, 61 Pac. Rep. 537; Holmes
V. Laraway, 64 Vt. 175, 23 Atl. Rep.
763; Mulligan v. Hollingsworth, 99
Fed. Rep. 216; Kell v. Larkin,72 Ala.
493;Dryden v. Stephens, 19 W. Va. 1:
Mayer v. Mordecai, 1 S. C. 398; Smith
V. Hobleman, 12 Neb. 502, 11 N. W.
Rep. 753; Sard v. Rhodes, 1 M. & W.
153; Sibree v. Tripp, 15 id. 23; 2 Am.
Lead. Cas. (5th ed.) 273; 1 Smith
Lead. Cas. pt. 1 (7th Am. ed.) *456;
Yates V. Valentine, 71 Hi. 643; Chitty
on Bills, 289 et seq. and p. 119; Story
on Prom. Notes, § 389, note 3, g 405;
Seltzer v. Coleman, 32 Pa. 493;
Smith's Merc. L. 542; Cornwall v.
Gould, 4 Pick. 444; Huse v. Alexan-
der, 2 Met. 157; Sheehy v. Mandeville,
6 Cranch, 253; Mailiard v. Duke of
Argyle, 6 M. & G, 40; Hart v. Boiler,
15 S. & R. 162, 16 Am. Dec. 536; Jones
V. Shawan, 4 W. & S. 257; Sutton v.
The Albatross, 2 Wall. C. C. 327;
Keough V. McNitt, 6 Minn. 513. See
Goenen v. Schroeder, 18 id. 66; Bank
V. Bobo, 11 Rich. 597; Haven v. Foley,
19 Mo. 636; Dougal v. Cowles, 5 Day,
511: Bonnell v. Chaniberlin, 26 Conn.
487; McMurray V. Taylor, 30 Mo. 263,
77 Am. Dec. 611; Foster v. Hill, 36
N. H. 526; Moody v. Leavitt, 2 N. H.
171; Costelo v. Cave, 2 Hill (S. C),
§ 225.]
PAYMENT.
561
any person is obligated to pay money, a payment made in any
mode, eitlier property, his negotiable paper, or other securi-
ties, if such payment is received as a full satisfaction of the
demand, it is equivalent for the purpose of payment to cash.'
Though the general rule is otherwise, in Massachusetts,- Maine,^
528, 27 Am. Dec. 404; Drake v. Mitch-
ell, 3 East. 251; Foster v. Allanson, 3
D. & E. 479; Moravia v. Levy, id. 483,
n.: Watsou v. Owens, 1 Rich. Ill;
The Kimball, 3 Wall. 37; Brown v.
Olmsted, 50 Cal. 162; Alley v. Rogers,
19 Gratt. 366; Burrows v. Bangs, 34
Mich. 304.
1 O'Bryan v. Jones, 38 Mo. App. 90;
Rice V. Dudley, 34 id. 383; Dryden v.
Stephens. 19 W. Va. 1; Ralston v.
Wood, 15 111. 159, 58 Am. Dec. 604;
Gillilan v. Nixon, 26 111. 52; Cox v.
Reed, 27 id. 434; Wilkinson v. Stew-
art, 30 id. 48; Leake v. Brown. 43 id.
376; Tinsley V. Ryon,9Tex. 405; Rob-
son V. Watts. 11 Tex. 764; Van Mid-
dlesworth v. Van Middlesworth, 32
Mich. 183; Wright v. Lawton, 37
Conn. 107: Gage v. Lewis. 68 111. 004;
Doolittle V. Dwight. 2 Met. 561 ; With-
erby v. Mann, 11 Johns. 518; McLel-
lan V. Crofton, 6 Me. 304; Randall v.
Rich, 11 Mass. 494; Pearson v. Par-
ker, 3 N. H. 366; Atkinson v. Stew-
art, 2 B. Mon. 348; Howe v. BufTalo,
etc. R. Co., 37 N. Y. 297; Keller v.
Boatman. 49 Ind. 104.
In Pitzer v. Harmon, 8 Blackf. 112,
44 Am. Dec. 738, a negotiable note
was given by the surety and was
taken in discharge and satisfaction;
held not such a payment as would
warrant a recovery against the prin-
cipal for money paid. See Bennett
V. Buchanan, 3 Ind. 47.
If a check given for a pre-existing
debt is ultimately paid there is no
"debt owing or accruing" to the
creditor between the times of the
delivery of the check and its pay-
ment so as to make the debtor who
drew it subject to garnishment. El-
Vou 1 — 36
well v. Jackson. 1 Cab. & Ellis, 302;
Thompson v. Peck, 115 Ind. 512, 18
N. E. Rep. 16. 1 L. R. A. 201: Hunter
V. Wetsell, 84 N. Y. 549. 38 Am. Rei).
544.
As to the payment of costs by
check in order to be entitled to ap-
peal, see Burns v. Smith, 180 Pa. 006.
37 Atl. Rep. 105.
-Melledge v. Boston Iron Co., 5
Cush. 158, 51 Am. Dec. 59; Thatcher
V. Dinsmore. 5 Mass. 299, 4 Am. Dec.
61; Goodenow v. Tyler, 7 Mass. 30, 5
Am. Dec. 22; Maneely v. McGee, 6
Mass. 143, 4 Am. Dec. 105; Chapman
V. Durant, 10 Mass. 47; .lohnson v.
Johnson, 11 id. 361; Whitcomb v.
Williams, 4 Pick. 288; Fowler v.
Bush. 21 id. 230; Wood v. Bodwell,
12 id. 268; Scott v. Ray, 18 id. 268;
French v. Price, 24 id. 13; Brewer
Lumber Co. v. Boston & A. R. Co.,
179 Mass. 228. 60 N. E. Rep. 548.
3 Dole V. Hayden, 1 Me. 152; Wise
v. Hilton, 4 id. 435; Homes v. Smith,
16 id. 181: Gilmore v. Bussey, 12 id.
418; Trustees, etc. v. Kendrick, id.
381; Comstock v. Smith, 23 id. 20,';
Bunker v. Barron, 79 id. 62, 1 Am.
St. 282. 8 Atl. Rep. 253;.Varner v.
Nobleborough, 2 Me. 121, 11 Am.
Dec. 48.
In Dole v. Hayden, supra, upon a
settlement of mutual accounts a
promissory note was given for the
balance supposed to be due, but by
a mistake in computation the note
was made for $20 more than in
truth was due; it was held that the
debtor might recover this sum from
the creditor although the note still
remained unpaid. The court treated
the mistake as substantially an
562
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 225.
Indiana,^ Louisiana^ and Vermont,' it is thoroughly settled that
when a creditor receives a negotiable note of the debtor, either
for an antecedent or a contemporaneous simple contract debt, it
[373] is presumed to be received as absolute and not conditional
pa3''raent. This is a presumption of fact onl}^ liable to be
controlled by evidence that such was not the intention of the
parties/ In Wisconsin the taking of a bill of exchange on a
previous indebtedness of the drawer to the payee is prima
facie payment of the debt;^
This presumption rests upon the theory that when a note is
given for goods it is equally convenient for the creditor, and
generally more so, to sue on it than on the original promise;
and so there is no reason for considering the original simple
contract as still subsisting and in force; therefore, it is pre-
omission to allow $20 of the plaint-
iff's account, and the action as
brought for it.
1 " It is settled by the decisions of
this court that the giving of a prom-
issory note, governed by the law
merchant, for a pre-existing indebt-
edness of the maker to the payee
will discharge such debt unless it is
shown that the parties did not intend
it to have that effect. And the giv-
ing of a promissory note not gov-
erned by the law merchant does not
operate as a payment thereof unless
it is so agreed between the parties. "
Sutton v. Baldwin, 146 Ind. 361, 45
N. E. Rep. 518.
Where a debtor gave his creditor
notes payable to his wife the court
refused to hold that they were given
and accepted as payment, although
they were payable in bank, because
the creditor could not use them as
commercial paper unless the wife
indorsed them. Bradway v. Groen-
endyke, 153 Ind. 508, 55 N. E. Rep.
434.
The presumption of payment aris-
ing from the acceptance of bills of
exchange is not difficult to overcome,
and parol evidence may be received
for that purpose. Keck v. State, 12
Ind. App. 119, 39 N. E. Rep. 899.
^Hunt V. Boyd, 2 La. 109.
3 Hodges V. Fox, 3G Vt 74; Street
V. Hall, 29 id. 165.
But if the creditor takes a note
under a misapprehension as to the
facts, he supposing that parties are
bound by it who are not, the pre-
sumed intention to treat the note as
payment is rebutted, and there may
be a recovery upon the original debt.
Wait V. Brewster, 31 Vt. 516, 527.
« Butman v. Howell, 144 Mass. 66,
10 N. E. Rep. 504; Green v. Russell,
132 Mass. 536; Fowler v. Ludwig. 34
Me. 460; Dodge v. Emerson, 131 Mass.
467; Melledge v. Boston Iron Co., 5
Gush. 158, 51 Am. Dec. 59; Maneely
V. McGee, 6 Mass. 143, 4 Am. Dec.
105; Watkins v. Hill. 8 Pick. 522;
Howland v. Coffin, 9 id. 54; Reed v.
Upton, 10 id. 525; Butts v. Dean, 2
Met. 76, 35 Am. Dec. 389; Brewer
Lumber Co. v. Boston & A. R. Co., 179
Mass. 228. 60 N. E. Rep. 548, and
cases cited in notes to the next par-
agraph.
SMehlbergv. Tisher, 24 Wis. 607;
Schierl v. Baumel, 75 id. 69, 43 N. W.
Rep. 724.
■§ 225.]
PAYMENT.
suraed that it was intended by the parties that the note
should be deemed a satisfaction.' The presumption, however,
is founded on the negotiable character of the note, and does
not apply to other instruments.'- The same presumption
arises in Massachusetts when payment is made by the note of
a thinl person, unless there is an agreement to the contrary,
or equivalent circumstances;' but it is otherwise in Indiana,*
unless the creditor surrenders the debtor's notes and sues upon
the note of the third person.* The presumption that a note is
taken as satisfaction is affected by circumstances. Thus, where
the note given is not the obligation of all the parties who are
liable for the simple contract debt, and, a fortiori^ when [37-4]
the note given is that of a third person, and if held to be in
satisfaction would wholly discharge the liability of other par-
ties previously liable, the presumption, if it exists at all, is of
much less weight.^ The fact that such presumption would de-
prive the party who takes the note of a substantial benefit has
a strong tendency to show that it was not so intended; as
where it would imply the discharge of a mortgage,^ or the
1 Curtis V. Hubbard, 9 Met. 328.
See Brewer Lumber Co. v. Boston &
A. R. Co., 179 Mass. 228, 234, 60 N. E.
Rep. 548, for other reasons.
2Alford V. Baker, 53 Ind. 279;
Trustees v. Kendrick, 13 Me. 381;
Chapman v. Coffin, 14 Gray, 454;
Greenwood v. Curtis, 6 Mass. 358, 4
Am. Dec. 145; Wade v. Curtis, 96
Me. 309, 52 Atl. Rep. 762.
3 Wiseman v. Lyman, 7 Mass. 286.
Taking the negotiable note of a
third person and entering it on the
books as payment is not conclusive
that it is such. Brighara v. Lally,
130 Mass. 485.
* Godfrey v. Crisler, 121 Ind. 203. 23
N. E. Rep. 999; Bristol Manuf. Co. v.
Probasco, 64 Ind. 406.
5 Dick V. Flanagan, 123 Ind. 277, 23
N. E. Rep. 765. See Hooker v. Hub-
bard, 97 Mass. 175; Dewey v. Bell, 5
Allen, 165.
« Paine v. Dwinel, 53 Me. 52, 87
Am. Dec. 533; Kidder v. Knox, 48
Me. 555; Strang v. Hir.st, 61 id. 15;
Melledge v. Boston Iron Co., 5 Cush.
158, 51 Am. Dec. 59; Maneely v. Mc-
Gee, 6 Mass. 143, 4 Am. Dec. 105;
Emerson v. Providence Hat Manuf.
Co., 12 Mass. 237, 7 Am. Dec. 60;
French v. Price, 24 Pick. 13; Bar-
nard V. Graves, 16 id. 41; Curtis v.
Hubbard, 9 Met. 328.
'Taft V. Boyd, 13 Allen, 86; Bun-
ker V. Barron, 79 ]\Ie. 62, 1 Am. St
282, 8 Atl. Rep. 253; Watkins v. Hill.
8 Pick. 522; Pornroy v. Rice, 16 id.
22; Zerrano v. Wilson, 8 Cush. 424.
See Fowler v. Bush, 21 Pick. 230.
In Weddigen v. Boston, etc. Co.,
100 Mas& 422, a buyer sent the seller
a third person's check to pay for a
bill of goods; the seller sent a re-
ceipt for the amount as received in
settlement of the bill. At the time
of sending the check the buyer sup-
posed it to be good, but it was sea-
sonably presented and dishonored;
held not a payment or accord and
satisfaction.
Where a debtor gave his negoti-
564 CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 226.
lien of a vendor, including the right of stoppage in transitu}
The taking of a note is to be regarded as payment only when
the security of the creditor is not thereby impaired.^ In some
states, and upon very good reasons, a distinction is made as to
the eilect to be given to security executed by the debtor. If
it is not of higher rank than the evidence of indebtedness held
by tiie creditor it is not presumed to be accepted in payment,
but if he takes a higher security or a better assurance of pay-
ment than he was before possessed of the presumption is to
the contrary.' Where the debtor executes a note in which he
waives his right to claim exemptions and gives it to his cred-
itor, it is presumed to be taken by him in payment of a book
account.* The general distinction was made by Judge Story;
he thought, however, that it ought not to be extended to se-
curity given by a third person.-^ Whether a note is to have
the effect of payment or to be considered as collateral only is
to be determined by the law of the state in which it was made
and is payable, though the creditor resides in another state
and the indebtedness which was the consideration for the note
was incurred there.®
§ 226. Same subject. The rule in the states above named
is exceptional. It is held generally in this country, as well as
able note for the amount of his debt, ceived in full for the goods. Van-
and included more than lawful in- cleef v. Therasson, '6 Pick. 12.
terest in consideration of further de- i Brewer Lumber Co. v. Boston &
lay of payment, the note being void A. R. Co., 179 Mass. 228, 60 N. E. Rep.
for usury, held the original debt was 548.
not discharged and might still be ^Paine v. Dwinel, 53 Me. 52, 87
recovered, though a receipt was Am. Dec. 533; Lovell v. Williams,
given at the time the note was taken. 125 Mass. 442; Walker v. Mayo, 143
Johnson v. Johnson, 11 Mass. 359; id. 42, 8 N. E. Rep. 873; Vallier v.
Stebbins V. Smith, 4 Pick. 97: Rams- Ditson, 74 Me. 553; Hercules Iron
dell V. Soule, 12 Pick. 126; Meshke v. Works v. Hummer, 4 111. App. 598.
Van Doren, 16 Wis. 319; Lee v. Peck- 3 Chalmers v. Turnipseed, 21 S. C.
ham, 17 id. 383. See Webster v. Stad- 126; Pelzer v. Steadman, 22 id. 279;
den, 14 id. 277. Gardner v. Hust, 2 Rich. 608.
A negotiable note given in New ^Lee v. Green, 83 Ala. 491, 3 So.
York for goods sold there by a citi- Rep. 785.
zen of that state is no satisfaction of * United States v. Lyman, 1 Mason,
the original debt, so as to bar an ac- 482, 505.
tion in Massachusetts for the same, ^Gilman v. Stevens, 63 N. H. 342;
although the note was lost and the Thomson-Houston Electric Co. v.
vendor had given the vendee a re- Palmer, 52 Minn. 174, 53 N. W. Rep.
ceipt stating that the note was re- 1137, 38 Am. St. 536.
§ 220.]
PAYMENT.
565
in England, that a note, bill or check of the debtor or of a
third person, given and received on account of a previous debt
or one contemporaneously contracted,^ is not absolute, but con-
ditional, payment, unless it is accepted as such, or unless it pro-
duces payment.'- The principle is applicable to a check which
1 Wisconsin is apparently another
exception so far as contemporaneous
debts are concerned. Challoner v.
Boyington, 83 Wis. 399, 53 N. W.
Rep. G9i; but not as to antecedent
debts. Willow River Lumber Co. v.
Luger Furniture Co., 102 Wis. 636, 78
N. W. Rep. 763.
-The cases which expressly hold
the doctrine stated in the text are
very numerous: a few only are cited
here; those which will be cited in
the subsequent discussion of the va-
rious branches of the subject under
consideration are in harmony with
those here collected, except the de-
cisions in Massachusetts, Maine,
Indiana, Louisiana and Vermont,
and in Wisconsin as to bills of ex-
change and some cases there and
elsewhere which make a distinction
between the obligations of the
debtor and third persons where
they are given for a contempora-
neous debt. See first paragraph of
last section. Hunter v. Moul, 98 Pa.
13, 42 Am. Rep. 610; White v. Boone,
71 Tex. 712, 12 S. W. Rep. 51 ; Caldwell
V. Hall, 49 Ark. 508. 1 S. W. Rep. 62;
Comptoir D'Escompte v. Dresbach,
78 Cal. 15, 20 Pac. Rep. 28: Thomas
V. Westchester County, 115 N. Y. 47,
4 L. R. A. 477. 21 N. E. Rep. 634; Fry
V. Patterson, 49 N. J. L. 612, 10 Atl.
Rep. 390; Brabazon v. Seymour, 42
Conn. 554; Bank of Monroe v. Gif-
ford, 79 Iowa, 300. 44 N. W. Rep. 558;
Bradley v. Harwi, 43 Kan. 314, 23
Pac. Rep. 566; Levan v. Wilten, 135
Pa. 61, 19 Atl. Rep. 145; Whitcherv.
Dexter, 61 N. H. 91; Holmes v.
Briggs, 131 Pa. 233, 18 Atl. Rep. 928
(these last two cases qualify the
proposition by the condition that the
creditor must not so improperly con-
duct himself with respect to the note
as to injure the debtor); Selby v.
McCuI lough, 26 Mo. A pp. 66; Knox
V. Gerhauser, 3 Mont. 267; Salomon
V. Pioneer Co-operative Co., 21 Fla.
374, 58 Am. Rep. 667; Fleig v. Sleet,
43 Ohio St. 53, 54 Am. Rep. 800, 1 N.
E. Rep. 24; First Nat. Bank v. Case,
63 Wis. 504. 22 N. W. Rep. 833 (the
rule is otherwise where a bill of ex-
change is accepted; see last para-
graph); Wood burn v. Woodburn,
115 111. 427. 5 N. E. Rep. 82: Heath
v. White, 3 Utah, 474, 24 Pac. Rep.
762; Wiles v. Robinson, 80 Mo. 47;
Hunt V. Higman, 70 Iowa, 406, 30 N.
W. Rep. 769; Hess v, Dille, 23 W. Va.
90: Keel v. Larkin, 72 Ala, 493;
Ciieltenham Stone & G. Co. v. Gates
Iron Works, 23 111. App. 635, 134 111.
623, 16 N. E. Rep. 923; Walsh v.
Lennon, 98 III. 27, 38 Am. Rep. 75;
Wilhelm v. Schmidt, 84 111. 183;
Pritchard v. Smith, 77 Ga. 463; Cos-
telo V. Cave, 2 Hill (S. C), 207; Slo-
comb V. Lurty, Hempst. C. C. 431;
People V. Howell, 4 Johns. 296; Bates
V. Rosekrans, 37 N. Y. 409; Webster
V. Stadden, 14 Wi.s. 277; Burrows v.
Bangs, 34 Mich. 304; Peter v. Beverly,
10 Pet. 532; Owensou v. Morse, 7 T.
R, 64; Chastain v. Johnson, 3 Bailey,
574: Alley v. Rogers, 19 Gratt. 368;
The Kimball, 3 Wall. 37; Newell v.
Nixon, 4 id. 573; Lee v. Tinges, 7
Md. 215; Harris v. Jolmston, 9
Cranch, 311; Good v. Cheesman, 2 B.
& Ad. 328; Winslow v. Hardin's
Ex'r, 3 Dana, 543; Adger v. Pringle,
11 S. C. 527; Johnson V. Clarke, laid.
72; Scott V. Gilkey, 153 111. 168, 39 N.
5G6
CONVENTIONAL LIQUIDATIONS AND DISCUAKGES. [§ 22G..
is certified before its delivery to the creditor. Tlie only effect
of the certificate is to increase the currency of the check by
addin<j to the liability of the drawer that of the bank. The
creditor does not assume the risk of the solvency of the lat-
[376] ter.' Renewal of a note is not always considered to be
a payment/ and will not discharge a mortgage security.' But
E. Rep. 265; Dellapiazza v. Foley,
112 Cal. 380, 44 Pac. Rep. 727; Angus
V. Chicago Trust & Savings Bank,
170 111. 398, 48 N. E. Rep. 946; Her-
cules Iron Worlis v. Hummer, 49 111.
App. 598; Schumacher v. Edward P.
Allis Co., 70 id. 556; Bradford v. Neil
& Mahnke Construction Co., 76 III.
App. 488; Stone v. Evangelical Luth-
eran St. Paul's Church, 92 111. App.
77; Topeka Capital Co. v. Merriam,
60 Kan. 397, 56 Pac. Rep. 757; Kirk-
patrick v. Bessalo, 116 Mich. 657, 74
N. W, Rep. 1042; London & San
Francisco Bank v. Parrott, 125 Cal.
472, 58 Pac. Rep. 164. 73 Am. St. 64;
Woodward v. Holmes, 67 N. H. 494,
41 AtL Rep. 72; Acme Harvester Co.
V. Axtell, 5 N. D. 315, 65 N. W. Rep.
680; Carroll v. Sweet, 128 N. Y. 19,
13 L. R A. 43, 27 N. E. Rep. 763;
Willow River Lumber Co. v. Luger
Furniture Co. 102 Wis. 636, 78 N.
W. Rep. 762 (previous debt); Sutton
V. Baldwin. 146 Ind. 361, 45 N. E.
Rep. 518; Blair v. Wilson, 28 Gratt.
165; Holland v. Rongey, 168 Mo. 16,
76 S. W. Rep. 568; Nason v. Fowler,
70 N. H. 291. 47 Atl. Rep. 203.
1 Born V. First Nat. Bank, 123 Ind.
78, 7 L. R, A. 442, 18 Am. St. 312, 24
N. E. Rep. 173; Bickford v. Same, 42
111. 238; Larsen v. Breene, 12 Colo.
480, 21 Pac. Rep. 498; Andrews v.
German Nat. Bank, 9 Heisk. 211, 24
Am. Rep. 300; Mutual Nat. Bank v.
Rotge, 28 La. Ann. 933, 25 Am. Rep.
126.
2 Adams v. Squires, 61 111. App.
513; Chisholm v. Williams, 128 111.
115, 21 N. E. Rep. 215; Tyler v. Hyde,
80 III. App. 123; Kemmerer's Appeal,
102 Pa. 558: Graham's Estate. 14
Piiila. 280; National Bank v. Bigler,
83 N. Y. 51; Kibbey v. Jones, 7 Bush,
243; Jagger Iron Co. v. Walker, 76
N. Y. 521.
"The question whether renewal
notes extinguish the debt is a vexed
one, and is usually one of fact, and
the courts have differed somewhat
upon the presumptions which arise
from the bare fact of renewal by
note bearing the signature of other
SReeder v. Nay, 95 Ind. 164; Will-
iams V. Starr, 5 Wi.s. 534; Eastman
v. Porter, 14 Wis. 39; Flower v. El-
wood, 66 111. 438; Coles v. Withers,
33 Gratt. 180; Fowler v. Bush, 21
Pick. 230.
In the last case a mortgage was
given as security for a debt pay-
able in instalments; after the
first instalment became due the
mortgagee called on the mortgagor
for payment, saying he could sell
the note and mortgage if such in-
Ktalment were paid. The mortgagor
thereupon gave a negotiable note
for such instalment, payable in four
month.s. upon which the mortgagee
proposed to raise the money at a
bank; and the following indorse-
ment was made on the original
note: "Received the fii'st instalment
on the within. $402.78." The mort-
gagee subsequently sold the note
and mortgage. It was held that
this was a payment of such instal-
ment and not a mere change of se-
curity for the same debt; that the
mortgage was discharged pro tanio.
22G.]
PAYMENT,
50 ;
it seems where renewal is a discount of the new note, and
there is a payment of the old note out of the avails, it is a dis-
charge of the old debt.^ Courts are in the habit of saying that
when such paper is given for a debt it is not to be deemed a
satisfaction unless there is an express agreement to that efToct.'^
It is probably not necessar}^ that the proof should be just in
that form; but it is doubtless essential that there be an express
agreement or circumstances of approximately equal force to
show that intention.^ There is such a lack of harmony [377]
parties. Tlie subject was discussed
in the case of Nif?htinj2;ale v. Chafee,
11 R. L 609. 23 Am. Rep. 531, where
it was held that aa agreement to dis-
charge a retiring partner will not be
inferre 1 from the acceptance of the
note of the continuing partners.
Whatever may be the rule in other
cases, we concur with Prof. Parsons
in the opinion that, unless there is
evidence of a contrary intention, re-
newals at bank ought always to be
regarded as payment because the
banks themselves so regard them.
See 2 Pars. Notes & B. (2d ed.), p. 203.
In commenting on the opinion, the
court in the Rhode Island case says:
'He does not tell us how he knows
they so I'egard them.' This opinion
of Prof. Parsons is not to be brushed
away by a question. The practices
of banks are well known, and from
them their understanding may be
inferred. Certainly, since the pas-
sage of the federal banking law, tbe
whole course of national banks has
been at variance with the idea that
the original debt continued, and that
successive renewals were additional
and collateral security to the first
obligation. The policy of the law is
to require the banks to confine their
loans to short-time paper, generally
secured by indorsers, who may vary
from time to time as the notes are
renewed. We think it would be a
surprise to those who indorse paper
to be told that their obligation re-
mains after the note has been taken
up and canceled by .several renewals,
and each in its turn taken up and
canceled." Childs v. Pellett, 102 Jlich.
558, 506, 61 N. W. Rep. 54.
•Fislier V. Marvin, 47 Barb. 159;
Castleman v. Holmes, 4 J. J. Marsh.
1. Contra, Jagger Iron Co. v.
Walker, 76 N. Y. 521.
2 The Kimball, 3 Wall. 37; Segrist
v. Crabtree. 131 U. S. 287, 9 Sup. Ct.
Rep. 687; Pritchard v. Smith, 77 Ga.
463; Comptoir D'Escompte v. Dres-
bach, 78 Cal. 15, 20 Pac Rep. 28;
Willow River Lumber Co. v. Luger
Furniture Co., 102 Wis. 636. 78 N.
W. Rep. 762. See Case Manuf. Co.
V. Sox man, 138 U. S. 431, 11 Sup. Ct.
Rep. 360.
3Randlet v. Herren, 20 N. H. 102;
Johnson v. Cleaves, 15 id. 332; Slo-
comb V. Lurty, Hemp. C. C. 431;
Youngs v. Stahelin, 34 N. Y. 258;
Yates v. Valentine, 71 111. 643.
In Eastman v. Porter, 14 Wis. 39,
it is said that where, in connection
with the fact that negotiable paper
is taken on account of a debt, it is
alleged or acknowledged to have
been received " as payment," or " in
full," or " in full of all demands,"
these expressions must be considered
with that fact, and interpreted as
meaning conditional payment.
In La Fayette County Monument
Corp. v. Magoon, 73 Wis. 627, 42 N.
W. Rep. 17, 3 L. R. A. 761, the com-
munications between the parties
56S
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 226.
in the adjudications that it is unsafe to attempt to formulate a
rule from thera. There is a marked tendency in the later cases
to lessen the old rule which required an express agreement in
were to the effect that M. hereby
subscribes and hands to the treas-
urer of said corporation $1,000 in
money to be used, etc. In acknowl-
edging the receipt of this and the
accompanying check it was said, " re-
ceived from iL the sum of $1,000 ac-
cording to the foregoing letter."
Held, that the check was received
as money. Glenn v. Smith, 2 Gill &
J. 493. 20 Am. Dec. 542; Johnson v.
Weed, 9 Johns. 310. 6 Am. Dec. 279;
Tobey v. Barber.o Johns.6S,4 Am.Dec.
326; Putnam v. Lewis, 8 Johns. 389;
Bateman v. Bailey. 5 T. R. 512; Puck-
ford V. Maxwell, 6 id. 52; Bradford
V. Fox, 38 N. Y. 289; Comptoir D'Es-
compte V. Dresbach, 78 Cal. 15, 20
Pac. Rep. 28.
In Connecticut, as evidence that
a new note is received in payment
of an account, peculiar importance
is attached to a receipt which ex-
presses that the note is given in full
payment. It is there held that such
a receipt is a discharge unless it is
executed under circumstances of
mistake, accident or surprise, or is
founded in fraud. Bonnell v. Cham-
berlin, 26 Conn. 487: Fuller v. Crit-
tenden, 9 id. 401, 23 Am. Dec. 364;
Tucker v. Baldwin. 13 Conn. 136, 33
Am. Dec. 384; Hurd v. Blackman, 19
Conn. 177. See Bishop v. Perkins,
id. 300; Beam v. Barnum, 21 id. 202.
An effort to collect acceptances
given by a debtor, when they were
not received in payment, is not such
an appropriation of them as satisfies
the debt. Olyphant v. St. Louis Ore
& S. Co., 28 Fed. Rep. 729.
Entering the amount of the nego-
tiable note of a third person upon
the creditor's books to the debtor's
credit without making any other ap-
propriation of it does not conclusively
show that it was taken in payment.
Brighton v. Lally, 130 Mass. 485. Nor
does the subsequent rendering of
monthly statements showing such
credit. Cheltenham Stone & G. Co.
V. Gates Iron Works, 23 111. App. 35,
124 III. 623, 16 N. E. Rep. 123.
If the check of a third person is
taken the creditor's neglect to give
the debtor prompt notice of its dis-
honor, his retention of it and collect-
ing a dividend out of the drawer's
estate do not raise a presumption
that it was taken as absolute pay-
ment; these facts are exclusively for
the jury. Holmes v. Briggs, 131 Pa.
233, 18 Atl. Rep. 92S.
The English law is thus stated:
"The debt may be considered as act-
ually paid if the creditor at the time
of receiving the note has agreed to
take it in payment of the debt, and
to take upon himself the risk of the
note being paid, or if, from the con-
duct of the creditor or the special cir-
cumstances of the case, such an
agreement is legally to be implied.
But in the absence of any special
circumstances throwing the risk of
the note upon the creditor, his re-
ceiving the note in lieu of the present
payment of the debt is no more than
giving an extended credit, or giving
time for paj^ment on a future day,
in consideration of receiving this
species of security. Whilst the time
runs payment cannot legally be en-
forced, but the debt continues till
payment is actually made: and if
payment be not made when the time
has run out, payment of the debt
may be enforced as if the note had
not been given." Per Langdale. M.
R., in Sayer v. Wagstaff, 5 Beav. 415,
423. If the creditor is olfered cash
but voluntarily takes a bill he is paid
i 226.]
PAYMENT.
5G9
order that payment should follow the taking of security,' and
to regard the surrender or retention of the original security as
•decisive of the intention of the parties,- because if the cred-
itor intends to resort to security he already holds he will not
and cannot resort to his debtor if the
bill is dishonored. Marsh v. Pedder,
4 Camp. 257; Strong v. Hart, 6 B. &
•C. 160; Smith v. Ferrand, 7 id. 19:
Anderson v. Hillies. 13 C. B. 499. But
unless the creditor had an oppor-
tunity to receive money a bill if
taken will be presumed to have been
accepted as conditional payment.
Robinson v. Read, 9 B. & C. 449.
Under a contract for the sale of goods
to be paid for by tiie bu3"er's accept-
ances or other like forms of credit,
the payment is conditional only, and
upon dishonor of the bills the seller
may sue upon the original conti'act
for the price of the goods; upon a re-
fusal to give the bills the remedy of
the seller is for that breach of con-
tract, and he cannot sue for tlie con-
tract price until the expiration of the
stipulated credit. Leake's Contracts,
894; Paul v. Dod, 2 C. B. 800; Helfs v.
Winterbottom, 2 B. & Ad. 431 ; Gunn
v. Bolckovv, L. R. 10 Ch. 500.
1 An express agreement to receive
payment in sometliing else than
money need not be proved; it may
be implied from the facts and cir-
cumstances. Griffin v. Petty, 101
N. C. 380, 7 S. K Rep 729; Adams v.
Squires, 61 111. App. 513; Chisholm v.
Williams, 128 111. 115, 21 N. E. Rep.
215.
A debtor proposed by letter to
■remit a draft '• in payment of bill in
full;" the creditor acknowledged the
receipt of the di-aft in full payment.
There was no cause of action against
the debtor on the account; his liabil-
ity rested upon his indorsement. Day
v. Thompson, 65 Ala. 269.
Au express agreement is not nec-
essary to make the check, note or
bill payment. Riverside Iron Works
V. Hall, 64 Mich. 165, 31 N. W. Rep.
152; Brown v. Dunckel, 46 Midi. 32,
18 N. W. Rep. 537; Keel v. Larkin,
72 Ala. 493; Morris v. Harveys, 75
Va. 726; Hall v. Stevens, 116 N. Y.
201, 22 N. E. Rep. 374. 5 L. IL A. S02
(contemporaneous debt).
The intention to receive a note and
collaterals in payment is inferable
from an entry in the creditor's books
to the effect that they were received
in settlement of balance, and a re-
ceipt expressing that they were in
settlement of the above account-
Williams, Ex parte, 17 S. C. 396.
In Griffin v. Anderson, 3 S. C. 105,
the words "settled in full" in tlie
bond of a commissioner were con-
sidered sufficient to indicate that a
note was taken in payment of a
balance due from him. See In re
Hurst, 1 Flip. 462.
If notes secured by a mortgage
nearly equal in amount to the debt
are given and tlie balance is paid in
cash, and part of the notes are used
by the creditor, the debt is extin-
guished. Quidnuck Co. v. Chafee, 13
R. I. 438.
2 Riverside Iron Works v. Hall, 64
Mich. 165, 31 N. W. Rep. 152; Brown
V. Dunckel, 46 IMich. 32, 18 N. W. Rep.
537; Morris v. Harveys, 75 Va. 726;
Fidelity Ins., etc. Ca v. Shenandoah
Valley R. Co., 86 id. 1, 19 Am. St. 858,
9 S. K Rep. 759; Burchard v. Frazer,
23 Mich. 224; Kirkpatrick v. Pur-
year, 93 Tenn. 409, 24 S. W. Rep. 11 30,
22 L. R. A. 785.
A creditor cannot insist that a note
taken by him does not discharge his
claim unless he offers to surrender
it. Davis & Ranking Buikling &:
Manuf. Co. v. Montro.se Butter &
Cheese Co., 59 III. App. 573.
570
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 220.
surrender it. In the absence of an agreement or acts of the
parties indicative of a contract, a negotiable note or bill of ex-
change taken as conditional payment will have the effect to
suspend the right of action until it matures.^ And then it will
[378] not be presumed in favor of the creditor that it remains
unpaid; he must account for it; and so if he receives a check.
Such paper, unless it has been lost, must be produced at the
trial of an action on the original consideration that it may be
surrendered or canceled.^
Where the new note is made by a
third person the surrender of the old
will be, prima facie, a discharge of
it and a release of its maker from
personal liability; but not if the
holder of the old note had a specific
lien on land as security for the debt
and the result of giving the new note
is to make the person liable on it the
owner of the land, part of the con-
sideration being the new nota Hess
V. Dille. 23 W. Va. 90; Merchants'
Nat. Bank v. Good, 21 id. 455.
Walker, C. J., in Strong v. King, 35
111. 9, 19, said: "The bare reception of
a check from the drawer for the
amountof the bill will not. ordinarily,
be considered as payment, but only
as a means of payment; and this is
the rule whether the bill is surren-
dered to the drawer at the time of
receiving the check or is retained by
the holder until the payment is con-
summated. It may be imprudent to
surrender the bill before actual pay-
ment is made, but such improvi-
dence does not change the rule."
In Flower v. Elwood, 66 111. 438,
444, the same judge said: "And al-
though the surrender of the notes
by the mortgagee to the maker is
prima facie evidence of their pay-
ment, still such presumption may be
rebutted."
In Yates v. Valentine, 71 111. 643,
his associate, apparently delivering
the unanimous opinion of the court,
said: "We can conceive of no act
showing more decisively that it was
intended by the parties that the note
was satisfied and should be canceled.
It was intended that the defendant
should thereafter be bound by the
terms of the notes then given, and
the old note was given him that it
might cease to exist as an evidence
of indebtedness against him." Chas-
tain v. Johnson, 2 Bailey, 574; East-
man V. Porter, 14 Wis. 39; Smith v.
Miller, 43 N. Y. 171, 3 Am. Rep. 690.
Ordinarily the surrender by a cred-
itor to the debtor of the promissory
note of the latter on the acceptance
of the note of a third person for that
amount is pm«a/acie evidence that
it is taken in satisfaction of the note
so surrendered. Youngs v. Lee, 12
N. Y. 551; Pratt v. Coman, 37 id. 440;
Phoenix Ins. Co. v. Church, 81 id. 218,
225, 37 Am. Rep. 494. But whether
the original debt is in fact discharged
depends upon the parties' intention.
Noel V. Murray, 13 N. Y. 167.
A note given by executors does
not discharge an indebtedness due
from the estate of their testator
whose note was surrendered to them
unless such was the understanding
of the parties. Glenn v. Burrows, 37
Hun, 602.
iThe Kimball, 3 Wall. 37; Phoenix
Ins. Co. V. Allen, 11 Mich. 501, 83
Am. Dec. 756; Griffith v. Grogan, 12
Cal. 317; Putnam v. Lewis, 8 Johns.
389; Brewster v. Bours, 8 Cal. 501;
Lee V. Tinges, 7 Md. 215; Smith v.
Owens, 21 Cal. 11.
•■i Stevens v. Bradley, 22 111. 224;,
§ 227.]
PAYMENT.
571
§ 227. Same subject. By accepting the note, bill or check,
either of the debtor or of a third person, as conditional pay-
ment the creditor assumes the duty of doinir anything in re-
spect to it which is necessary not only to obtain payment by
due presentment, but also by protest and notice to fix the lia-
bility of the parties. And the onus is upon him to show that
he has performed that duty.' If there are other parties to
such paper to which the holder could resort in case of its dis-
honor any want of diligence on the part of the creditor re-
ceiving it, by which such parties are discharged, will preclude
such creditor from returning it and suing upon the original
debt.2
There is not the same arbitrary strictness in the rule of dili-
gence and in respect to consequences of neglect where a check
is received as a means of payment, or even as payment, that
prevails in regard to notes and bills. The drawer is in no
case discharged from his responsibility to pay the check unless
he has suffered some loss or injury by the omission or neglect
to make presentment, and then only p7'o tanto?
Heartt v. Rhodes, 66 id. 851; Carroll
V. Holmes, 24 111. App. 453; O'Bryan
V. Jones, 38 Mo. App. 90; McMurray
V. Taylor, 30 Mo. 263, 77 Am. Dec. 611;
Salomon v. Pioneer Co-operative Co.,
21 Fla. 374, 58 Am. Rep. 667; MoCon-
nell V. Stettinius, 7 111. 707; Danger-
field V. Wilby, 4 Esp. 159; Hadwen
V. Mendizabel, 10 Moore, 477; Jaffrey
V. Cornish, 10 N. H. 505; Mehlberg v.
Tisher. 24 Wis. 607; Dayton v. Trull,
23 Wend. 345; Burdick v. Green, 15
Johns. 247; Smith v. Rogers, 17 id.
340: Huglies v. Wheeler, 8 Cow. 78;
Eastman v. Porter, 14 Wis. 39; Plant's
Manuf. Co. v. Falvey, 20 Wis. 200;
Cromwell v. Lovett, 1 Hall, 56; Tay-
lor V. Allen, 36 Barb. 294.
1 Kil Patrick v. Home Building &
L. Ass'n, 119 Pa. 30, 12 Atl. Rep. 754;
Phoenix Ins. Co. v. Allen. 11 Mich.
501, 83 Am. Dec. 756; Dayton v. Trull,
23 Wend. 345; Cooper v, Powell, An-
thon, 49: Little v. Phenix Bank, 2
Hill, 425, 7 id. 359; Jeunison v. Parker,
7 Mich. 355; Heartt v. Rhodes, 66
111. 351; Bradford v. Fox. 39 Barb.
203, 16 Abb. Pr. 51, 38 N. Y. 2«9:
Story on Prom. Notes, § 498; Roberts
V. Thompson, 14 Ohio St. 1, 82 Am.
Dec. 465; Schierl v. Baumel, 75 Wis.
69, 43 N. W. Rep. 724; Corbett v.
Clark, 45 Wis. 406; Allan v. Eldred.
50 id. 135, 6 N. W. Rep. 565; Chicago,
etc. R. Co. V. Wisconsin, etc. R Co.,
76 Iowa, 615, 41 N. W. Rep. 375.
The drawer does not waive any-
thing by a subsequent promise to pay
unless he made it with knowledge of
the fad!?, which the holder has the
burden of proving. Schierl v. Bau-
mel, supra.
2 Id.; Sandy River Nat. Bank v.
Miller, 82 Me. 137, 19 Atl. Rep. 109.
3 McWilliams v. Phillips, 71 Ala.
80; Hunter v. Moul, 98 Pa. 13, 42 Am.
Rep. 010; Gibbs v. Cannon, 9 S. & R.
201; Overton v. Tracey, 14 id. 311;
Holmes v. Briggs. 131 Pa. 233, IS Atl.
Rep. 928; Story on Prom. Notes,
572
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 227.
"Where the debtor is an indorserof the check he delivers to
his creditor the latter must present it for payment within the
time limited for so doing by the law merchant, otherwise, if
the bank upon which the check is drawn fails and there was
money to the credit of the drawer to meet the check if it had
been presented without undue delay, the debtor's liability for
the original indebtedness will be extinguished. The creditor
has the onus of showing that the indorser was not injured by
the delay, the latter having proved that the check was not
duly presented, and this rule prevails whether the suit is on
the check or on the indebtedness to pay which the check was
indorsed and transferred.' In an earlier case in the same state
a debtor indorsed to his creditor a draft on a third party due
in thirty days, the proceeds of which were to be credited to
the debtor's account. The draft was not presented at maturity,
and soon thereafter the drawee became insolvent. The cred-
itor had no redress either upon the draft or the original in-
^ 497; Kent's Com., Lee. 44; Cruger
V. Armstrong, 3 Johns, Cas. 5; Con-
roy V. Warren, id. 259; Murray v.
Judab, 6 Cow. 484: Commercial Bank
V. Hughes, 17 Wend. 94; Harbeck v.
Craft. 4 Duer, 122; Mohawk Bank v.
Broderick, 10 Wend. 304; Little
V. Phenix Bank, 2 Hill, 425; Serle v.
Norton, 2 Mood. & Rob. 401; Hill
V. Beebe, 13 N. Y. 556.
In Bradford v. Fox, 38 N. Y. 289,
the defendant averred payment, and
it was held that, though made by a
check, tlie onus of proving that the
check resulted in payment was on
him. Grover, J., said; "To effect
this, proof of the deli very and receipt
of the check by the plaintiff not being
sufficient, tlie defendant was bound
to go further and show that by the
laches of the plaintiff a loss had
been incurred, to be borne by some
one; and when this appeared, the
law would cast the loss upon the
plaintiff, and would work out such
result by making the check operate
as payment of the debt."
It is believed, however, that after
delivery of a check to a creditor as a
means of payment, the weight of
authority puts the burden of proof
on him to show that the check was
unproductive; and if there has been
a want of diligence, that no loss or
injury has resulted to the debtor.
Murray v. Judah, 6 Cow. 484; Syra-
cuse, etc. R. Co. V. Collins, 3 Lans. 29.
The drawer of a check has his
remedy against the agent who ac-
cepted it for collection if harm re-
sulted from his negligence. Morris
V. Eufaula Nat. Bank, 106 Ala. 383,
389, 18 So. Rep. 11; Smith v. Miller,
43 N. Y. 171, 3 Am. Rep. 690, 52 N. Y.
546; Chouteau v. Rowse, 56 Mo. 65;
Clarke v. Gates, 67 Mo. 139.
As to the measure of diligence re-
quired in the case of a bank which
has received a local check for collec-
tion, see Morris v. Eufaula Nat.
Bank, 122 Ala. 580, 25 So. Rep. 499,
overruling s. c, 106 Ala. 383, 18 So.
Rep. 11.
1 Kirkpatrick v. Puryear, 93 Tenn.
409, 22 L. R A. 785, 24 S. W. Rep. 1130.
§ 227.] PAYMENT. 573
debtedness.^ "If the creditor had received of his debtor a
check and failed to present it, the principle would have been
the same precisely. If he had received part or all the money
on the draft and failed to credit it^ beyond question such re-
ceipt would have been a good defense jyro tardo or in whole to
the collection of the debt due by the account; so we think, on
sound principle, a failure to receive when he ought to have re-
ceived, such failure being the result of his own negligence or
the party to whom he had indorsed it, should equally work the
same result. He fails to account in either case for the col-
lateral. He has had the benefit of it as a security for his debt
and took it as a means of payment, thus depriving the original
holder of the right to control and putting himself in his place.
He cannot impose upon him the entire loss when it results
from his own neglect, while controlling or having the right to
control the paper." A chose in action in any form re- [379J
ceived as conditional payment or as collateral security, to the
extent collected or paid, or of the loss by the creditor's negli-
gence, or when transferred by him to a third person, unless
taken back, is payment on account of the debt for which it
was received.^ So if the creditor take from his debtor an
order or note payable to a third person.^
1 Betterton v. Roope, 3 Lea, 215, iJl place where the bank on wliich it
Am. Rep. 683. was drawn was located, to apply
In Carroll V. Sweet, 138 N. Y. 19,13 upon the indebtedness in suit. \V.
L. R. A. 43, 27 N. E. Rep. 763, the de- requested the plaintiff to hold the
fense to an action to recover a claim check for a few days, stating that if
was payment. The facts as stated the plaintiff would let him know
by the reporter were that W. gave when he wished to use the check he
his check to the defendant for the would then provide for it. W. testi-
amount of a loan. The defendant, lied on the trial that he had then
the same day, indorsed and delivered money enough to pay the check and
the check to the plaintiff, at the would have paid it had payment
2 Life Ins. Clearing Co. v. Altschu- &C. 19; Harris v. Johnston, 3 Cranch,
ler, 5") Neb. 341, 75 N. W. Rep. 862; 311; John v. John, Wright, 584; Mc-
Massachusetts Benefit L. Ass'n v. Cluny v. Jackson, 6 Gratt. 96; Parker
Robinson, 104 Ga. 256, 30 S. E. Rep. v. United States. 1 Pet. C. C. 262;
918, 42 L. R. A. 261; Looney v. Dis- Lawrence v. Schuylkill Navigation
trict of Columbia, 113 U. S. 258, 5 Co., 4 Wash. C. C. 562; Bill v. Porter,
Sup. Ct. Rep. 463; Brown v. Same, 17 9 Conn. 23. See Case Manuf. Co. v.
Ct. of Cls. 402; Donnelly v. Same, Soxman, 138 U. S. 431, 438, 11 Sup.
119 U. S. 339, 7 Sup. Ct. Rep. 276; Ct. Rep. 360.
Loth V. Mothner. 53 Ark. 116, 13 S. 3 Shaw v. Gookin, 7 N. a 16.
W. Rep. 594; Smith v. Ferrand, 7 B.
574
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 22S.
§ 228. Collaterals collected or lost by negligence of cred-
itor are payments. When security is given for a debt and
money is realized therefrom, it is, as has just been said, a pay-
ment j9w tanto} The money thus received is deemed so appro-
priated by mutual agreement.'- It is payment, not merely a
set-off;' but if the debtor pays his debt after such collections
on collaterals he may recover them from the creditor.*
[380] There is an implied obligation on the creditor to ac-
count for the proceeds of collaterals. His failure or refusal to
give an account of the application thereof will operate as a
bar to the recovery of the debt itself.' But where the collat-
been insisted upon. The plaintiff
kept the check for nine daj's before
he presented it for payment. W. in
the meantime had become insolvent.
The cashier of the bank on which
the check was drawn testified that
there were no funds to meet it, and
that it would not have been paid if
it had been presented any time after
the day of its date. There was no
agreement that the check should be
taken in satisfaction of the debt.
Held, that it was error to direct a
verdict for the plaintiff; that the de-
lay in presenting the clieck dis-
charged the defendant from liability
as indorser; that the delay was not
excused by the fact that the drawer
had no funds, or was insolvent, or
because presentment would have
been unavailing as a means of pro-
curing payment; that while the in-
dorsement and transfer of the check
operated as a provisional payment
only, if the delay caused a loss to the
defendant, to the extent of the loss
the delay was tantamount to actual
payment: that as there was evidence
tendmg to show that the delay pre-
vented a collection of the check in
whole or in part, and that so much
was lost to the defendant, the ease
was for the jury.
1 Montgomery v. Schenck, 83 Hun,
24, 31 N. Y. Supp. 42; Pauly v. Wil-
son, 57 Fed. Rep. 548 ; § 227. See New
London Bank v. Lee, 11 Conn. 112, 73
Am. Dec. 713.
A mortgage or other security to
indemnify an accommodation in-
dorser is not available as security for
the debt, either to relieve the in-
dorser or surety from paying it (Post
V. Tradesmen's Bank, 28 Conn. 420;
Horner v. Savings Bank, 7 id. 478), or
as a means of payment at the in-
stance of the creditor. Ohio Life
Ins. & T. Co. V. Reeder, 18 Ohio, 35,
46. See Russell v. La Roque, 13 Ala.
149.
If collaterals have been exchanged
for other securities which prove to
be worthless the debtor, whose paper
was accepted conditionally, is not
released except so far as he is in-
jured. Hunter v. Moul, 98 Pa. 13. 42
Am. Rep. 610; Girard F. & M. Ins.
Co. V. Marr. 46 Pa. 504.
2 Pope V. Doilson, 58 IlL 360; Kem-
mil V. Wilson, 4 Wash. C. C. 308;
Midgeley v. Sloconib, 2 Abb. Pr.
(N. S.) 275; Lincoln v. Bassett, 23
Pick. 154; Kenniston v. Avery, 16
N. H. 117; Dismukes v. Wright, 3
Dev. & Bat. 78.
3 King V. Hutchins, 28 N. H. 561:
In re Ouimette, 1 Sawyer, 47.
^Overstreet v. Nunn, 36 Ala. 666;
Dorrill v. Eaton, 35 Mich. 302.
^Simes v. Zane, 1 Phila. 500; Dussol
v. Bruguire, 50 Cal. 456.
g 22S.] PAYMENT.
O tO
erals are placed in the hands of a third person by the debtor,
and were never in the hands or under the control of the cred-
itor, he is entitled to recover against the debtor without ac-
counting for them.' If bank bills have been received it lies
on the creditor, in a suit against a surety, to show what has
been done with them,^ Taking a collateral does not suspend
the right to bring suit on the debt secured.' Nor can the
debtor obtain credit thereon for such collateral unless it has
been collected or appropriated by the creditor, or lost by his
negligence or fault.^
Where negotiable paper is received as a means of payment
it is prima facie payment, and the creditor must show what
has become of it; show diligence to obtain payment, or excuse
non-presentment, and produce it at the trial.^ A note de-
livered as collateral continues a valid security until the debt
is paid, notwithstanding it is changed in form, as into a judg-
ment.^ And a creditor who holds security, without special
instructions for its application, for various notes due from his
debtor, some of which bear the names of sureties, may, in
case of the insolvency of the principal debtor and of some of
the sureties, apply the same towards the payment of such of
the notes as may be necessary for his own protection; and
1 Bank of United States v. Peabody, out the consent of the pledgor or his
20 Pa. 454. assignee, return the note received
^Spaulding v. Bank of Susque- and take back the original note, so
hanna County, 9 Pa. 28. as to reinstate the liability of the
3Wilhelni v. Schmidt. 84 111.183; pledgor or deprive his assignee of
Flanagan v. Hambleton, 54 Md. 222; the right to the surplus. Post v.
Williams V. National Bank, 72 id. 441, Union Nat. Bank, 159 111. 421, 43
450, 20 Atl. Rep. 191; Dugan v. N. E. Rep. 976.
Sprague, 2 Ind. 600; Foster V. Purdy, 5 Dayton v. Trull. 23 Wend. 345;
5 Met. 442; Lincoln v. Bassett, 23 Cooper v. Powell, Anth. 49; Roberts
Pick. 154. V. Gallagher. 1 Wash. C. C. 156;
* Id. ; Fiske v. Stevens, 21 Ma 457; Brown v. Cronise, 21 Cal. 386; Plants
Hawks V. Hinchcliff, 17 Barb. 492; Manuf, Co. v. Falvey. 20 Wis. L'OO;
Cooke V. Chaney, 14 Ala. 65; Slevin Bullard v. Hascall, 25 Mich. 132.
V. Morrow, 4 Ind. 425; Hall v. Green, « Fisher v. Fisher, 98 Mass. 303;
14 Ohio, 499; Prettyman v. Barnard, Smith v. Strout, 63 Me. 205; Chapman
37 111. 105; Marschuetz v. Wright, 50 v. Lee, 64 Ala. 483; Sonoma Valley
Wis. 175, 6 N. W. Rep. 511; Hunter Bank v. Hill. 59 Cal. 107; Duncombe
■V. Moul, 98 Pa. 13, 42 Am. Rep. 610. v. New York. etc. R. Co., 84 N. Y. 193,
The holder of a note as collateral 88 id. 1; Waldron v. Zacharie, 54 Tex.
cannot receive another note in pay- 503.
•ment of it, and subsequently, with-
5TG
CONVENTIONAL LIQUIDATIONS AND DISCHAEGES. [§ 22S.
insolvent parties upon others cannot avail themselves thereof
[381] in any way, in equity, without paying or offering to pay
the whole of the notes for which the security was given.^ A
creditor is only obliged to apply the net proceeds of collat-
erals. Expenses necessarily incurred in rendering them avail-
able are to be deducted, and the balance only is a payment
upon the debt secured,^ But the equitable interest of the as-
signee of a non-negotiable promissory note assigned as collat-
eral security extends only to the amount of the debt for the
security of which it was assigned, and not to the costs which
have accrued in a suit subsequently brought thereon. And
a release from the payee, executed subsequent to the assign-
ment, will be available for all of such collateral in excess of
such debt.* A chose in action which is transferred as coUat-
1 Wilcox V. Fairhaven Bank, 7
Allen, 270. F. and H. made and deliv-
ered to S. their joint and several
note for §4,500: before its maturity
S. gave his note for §1,000 to C, and
indorsed and delivered as collateral
the note of F. and H. C. subse-
quently assigned S.'s note to F. and
delivered the note of F. and H. as
collateral security. After this S.
sold and assigned the note of F. and
H., then in the hands of F., to D.,
who thereafter demanded the $4,500
of F., offering to credit the same
vpith the amount of the $1,000 note,
which was refused. Held, that D.
was entitled to recover on the note
agamst F. and H. less the amount of
the $1,000 note.
A principal note is paid as against
a surety thereon, when the holder
receives payment of a larger note
pledged as collateral security there-
for, though a third note be taken in
lieu of such collateral note. Post v.
Union Nat. Bank, 159 111. 421, 42 N. E.
Rep. 976.
^Starrett v. Barber, 20 Me. 457;
Herrington v. Pouley, 26111.94; Van
Blarcom v. Broadway Bank, 37 N. Y.
540.
3 Blake v. Buchanan, 22 Vt. 548.
The defendant and one A. of Massa-
chusetts exchanged notes of equal
amounts and having equal time to
run, in August, 1854. Later in the
same month A. deposited defend-
ant's notes and others as collateral,
and procured a discount of his own
note for $8,000 by plaintiff. The
note had ten days to run; A. failed
to pay it, and was driven into insolv-
ency. Separate suits were brought
against the defendant on his notes
when they became due. At the time
of bringing these suits between
$:iOOO and $4,000 of the collaterals
had been paid. When the actions
(together) were tried, the collaterals
had been paid in to an amount suf-
ficient to pay the plaintiff's claim,
except about $200. Held, that the
plaintiff should have judgment for
the full amount of the notes, interest
and costs, but the rights of the de-
fendant should be provided for by
an order in the judgment permitting
him to be discharged by paying the
balance due the plaintiff with costs;
the residue to be paid into court to
be subject to its further order on the
application of A.'s assignees, or of A.
§ 229.]
PA.TMENT.
577
eral security is put under the control of the creditor to [382]
make his claim out of it, and it is not in the nature or subject
to the incidents of a pawn or pledge. It should be collected,
not sold,^
§ 329. Same subject. A creditor receiving collateral se-
curities is required to use ordinary diligence, and to observe
good faith in respect to the same; if they are lost or impaired
tlirough his act or neglect he is liable to the debtor to the ex-
tent of the injury; and such damages, or so much as is neces-
sary therefor, will inure as a payment of the debt for which
the collaterals were received as security.- If they be ne<^otiable
paper to mature at a future day, due diligence imposes on the
creditor the necessity of doing those acts which will preserve
on notice. Nantucket Bank v. Steb-
bins, 6 Duer, 341.
In Russell v. La Eoque. 13 Ala. 149,
it was held that where a surety re-
ceived from his principal a note as
indemnity, and passed the same
over to the creditor as collateral se-
curity for the principal, the creditor
could not recover upon such note
after the principal debt was barred
by the statute of limitations; but it
would have been otherwise if the
note had been delivered to the cred-
itor in discharge of the surety's lia-
bility.
1 Chambersburg Ins. Co. v. Smith,
11 Pa. 120; Nelson v. Wellington,
5 Bosw. 178; Brookman v. Metcalf,
id. 4-39.
■^ Roberts v. Gallagher, 1 Wash. C.
C. 156; Gallagherv. Roberts, 2 id. 191;
Hanna v. Holton, 78 Pa. 334, 21 Am.
Rep. 20; Girard F. & M. Ins. Co. v.
Marr. 46 Pa. 504; Miller v. Gettys-
burg Bank, 8 Watts, 192; Dyott's Es-
tate, 2 W. & S. 463; Lisliy v. O'Brien,
4 Watts, 141; Bank of United States
V. Peabody, 20 Pa. 454; Chambers-
burg Ins. Co. V. Smith, 11 id. 120;
Sellers v. Jones, 22 id. 423; Muirhead
V. Kirkpatrick, 21 id. 237; Foote v.
Brown, 2 McLean, 369; Brown v.
Cronise, 21 Cal. 386; Whitten v.
You 1 — 37
Wright, 34 Mich. 92; Exeter Bank v.
Gordon, 8 N. H. 66; Finnell v. Meaur,
8 Bush. 449; Kenniston v. Avery, 1ft
N. H. 117; In re Brown, 2 Story, 502;
Chamberlyn v. Delarive, 2 Wilson,
353; Bonta v. Curry, 3 Bush, 678;
Russell V. Hester, 10 Ala. 535; Pow-
ell V. Henry, 27 Ala. 612; Lee v.
Baldwin, 10 Ga. 208; Cardin v. Jones,
23 Ga. 175; Kiser v. Ruddick, 8
Blackf. 382: Noland v. Clark, 10 B.
Mon. 239; Hoffman v. Johnson, 1
Bland Ch. 10b; Steger v. Bush.Sm. &
M. Ch. 172; Barrow v. Rhinelander, 3
Johns. Ch. 619; Jennison v. Parker, 7
Mich. 355; Goodhall v. Richardson,
14 N. H. 567; White v. Howard, 1
Sandf. 81; Nexsen v. Lyell, 5 Hill,
466: Montague v. Stelts, 37 S. C. 200,
15 So. Rep. 968, 34 Am. St. 736.
If the creditor is negligent the
debtor need not claim his damages
by separate action or counter-claim,
but may interpose tlie negligence as
a defense to his creditor's action and
require an accounting for the collat-
erals. Montague v. Stelts, supin.
The loss of the collateral by theft,
without negligence, before the ma-
turity of the principal note, is not a
defense to an action on the latter.
Winthrop Savings Bank v. Jackson,
67 Me. 570: 24 Am. Rep. 56.
578 CONVENTIONAL LIQUIDATIONS AND DISCHARGES, [§ 229.
the liabilit}'^ of indorsers or other secondary parties.^ In case
of neglect the creditor is liable for the actual loss, but no more ; ^
and the onus is on the debtor to show the extent of the injury.'
[383] So if the creditor receives a check in payment of a debt,
and unreasonably delays presenting it, he is only liable for the
actual injury to the drawer.*
A transfer of the collateral by the creditor is an appropria-
tion of it, and he will be held to have elected to take it for
what appears by its face to be due thereon in satisfaction to
that extent.'* If he transfers the collateral for less than its face it
is his loss.^ He must settle with the debtor for the whole nominal
value of the collateral, though he settled with the maker for
less, or took a note in part satisfaction.^ A creditor may re-
Imquish a collateral security to his debtor without the consent
of other creditors, and not thereby lose his resort to the debt-
or's property.^ But a surety would be discharged by such re-
linquishment; for the creditor is bound to hold security for the
benefit of the surety as well as for himself; and if he parts
with it, without the knowledge or against the will of the surety,
he will lose his claim against him to the value of what is
so surrendered.^ One who receives from his debtor as collat-
eral negotiable paper of a third person, indorsed b}'' the debtor,
makes it his own and releases the debtor's indorsement if he
neglects to protest it for non-payment.^'' A creditor having a
1 Jennison v. Parker, 7 Mich. 355; Ct. Rep. 276; Williams, Ex parte, 17
Russell V. Hester, 10 Ala. 535; Ken- S. C. 396; Adger v. Pringle, 11 id. 535;
niston v. Avery, 16 N. H. 117; Foote Tovvnsends v. Stevenson, 4 Rich. 62.
V. Brown, 2 McLean, 369; Brown v. ""Id.
Cronise, 21 Cal. 386; Phoenix Ins. Co. ''Depuy v. Clark, 12 Ind. 427. See
V. Allen, 11 Mich. 501, 83 Am. Dec. Garlick v. James, 12 Johns. 146; Phil-
756. lips V. Thompson, 2 Johns. Ch. 418, 7
2Aldrich v. Goodell, 75 111. 452; Am. Dec. 535.
Coonley v. Coonley, Hill & Denio, 8 Dyotfs Estate, 2 W. & S. 463.
312. 9 Stewart v. Davis. 18 Ind. 74. See
3 Id.; Fiske v. Stevens, 21 Me. 457. ch. 17.
* McWilliams v. Phillips, 71 Ala, '» Whitten v, Wright, 34 Mich. 92.
80; Hunter v. Moul, 98 Pa. 13, 42 Am. In this case, upon the trial the plaintr
Rep, 610; Bell v. Alexander, 21 Gratt. iff oflFei'ed to sliow that at the time
1. See § 227. the note was given the maker was
5 Hawks v. Hinchcliff, 17 Barb. 492; insolvent, that he was so at the time
Looney v. District of Columbia, 113 of its maturity, and continued so up
U. S. 258, 5 Sup. CL Rep, 463; Don- to the time of the trial, for the pur-
nelly v. Same, 119 U. S. 339,7 Sup. pose of showing that though the note
\
§ 23U.]
PAYMENT.
579
note for the purchase-money of a slave, on the death of [384'
the purchaser took possession of the skve; he was held liable
for the injury done to the estate as executor <h son tort, and the
amount of such liability payment so far upon the note.^ A
creditor who included in a mortgage a premium for a policy
of insurance on the life of the debtor as additional security for
the debt and neglected to effect the insurance was held liable
as upon an express agreement to insure for the amount of the
sum for which he should have procured insurance. -
§ 230. Who may malie payments. The general rule as to
payment or satisfaction by a third person, not himself liable
as a co-contractor or otherwise, seems to be that it is not suf-
ficient to discharge the debtor unless it is made as anient for
him and on his account, and with his prior authority or sub-
sequent ratification; but the debtor may ratify the payment
by pleading it unless he has previously disavowed it.' The
was not properly protested the de-
fendant lost nothing by it. That evi-
dence was held properly excluded.
Marston, J., delivering the opinion
of the court, said: "It is of the ut-
most importance that no uncertainty
should exist as to the rights and lia-
bilities of parties to negotiable paper.
Should the introduction of evidence
upon the trial be sanctioned to show
that an indorser had not suffered
any injury from a want of protest
and notice, an element of uncer-
tainty would then exist, and the
way would be opened for a new class
of questions and much needless liti-
gation. The value of a note cannot
always be determined from the solv-
ency or insolvency alone of the
maker. As was said in Rose v.
Lewis, 10 Mich. 48.), 'the value of
negotiable paper is well understood
not to be absolutely dependent on
the amount of property liable to exe-
cution which may be possessed by
the maker. A very large portion of
current securities of undoubted
goodness would, under such a test,
be worthless. And in cases where
the holder of such paper is indebted
to the maker, it may be as valuable
to him, by way of set-off, as if the
maker were wealthy and in sound
credit. The value of commercial
paper must always depend very
much upon tlie integrity and busi-
ness habits of those who issue it.
And we cannot perceive the justice
or good sense of any rule which
should disregard the results of com-
mon experience.' If the note in this
case had been properly protested
and notice given to the defendant,
he might have been able to collect
it or secure its payment. We think
the evidence was properly excluded."
1 Finnell v. Meaux, '6 Bush, 449.
2Soule V. Union Bank, 45 Barb. Ill,
30 How. Pr. 105.
^ Gray v. Herman. 75 Wis. 453, 44
N. W. Rep. 248, 6 L. R. A. 691; Wal-
ter V. James, L. R. 6 Ex. 124; Simp-
son V. Eggmgton, 10 Ex. 845: James
V. Isaacs, 13 C. B. 791; Belshaw v.
Bush, 11 id. 191; Jones v. Broad-
hurst, 9 id. 193; Clow v. Borst, 6
Johns. 37; Stark v. Thompson, 3 T.
B. Mon. 296: Woolfolk v. McDowell,
5S0
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 230,
payment by a principal of a claim for goods delivered to his
agent is not the satisfaction of it by a mere stranger, and it
extinguishes the demand of the creditors.^ And so of the pay-
ment of a claim made by the principal stockholder in a cor-
9 Dana, 268; Lucas v. Wilkinson, 1
Hurl. & N. 420; Atlantic Dock Co. v.
Mayor, 53 N. Y. 64; Bleakley v.
WJiite, 4 Paige, 654.
In a note to Simpson v. Eggington,
supra, it is said that " the rule which
requires the consideration to move
between the parties has been modi-
fied in many important particulars
by the introduction of the action for
money had and received, and it
would seem only reasonable to per-
mit a debt to be extinguished by a
payment made to a creditor when-
ever the circumstances are such that
the amount paid might have been
recovered by the debtor had no
debt existed."
The early cases on the subject are
considered by Creswell. J., in Jones
V. Broadhurst, supra, and also in the
arguments of counsel in Walter v.
James, supra. See Hooper's Case, 3
Leon. 110; Grimes v. Blofield, Cro.
Eliz. 541; Edgecombe v. Rodd, 5 East.
294.
In Belshaw v. Bush, 11 C. B. 191
(1851), Maule, J., said: "If a bill
given by the defendant himself on
account of the debt operate as a con-
ditional payment, and so be of the
same force as an absolute payment
by the defendant, if the condition by
which it is to be defeated has not
arisen, there seems no reason why a
bill given by a stranger for and on
account of the debt should nob oper-
ate as a conditional payment by the
stranger; and if it have that opera-
tion, the plea in the present case will
have the same effect as if it had al-
leged that the money was paid by
William Bush (the stranger) for and
on account of the debt. But, if
a stranger give money in payment,
absolute or conditional, of the debt
of another, and the causes of action
in respect to it, it must be payment
on behalf of the other, against whom
alone the causes of action exist, and
if adopted by him, will operate as
payment by himself." Coke, Litt.
206&, m H. 6.
James v. Isaacs, 12 C. B. 791 (1852).
In assumpsit for work and labor the
defendant pleaded that the money
mentioned in the declaration ac-
crued due to the plaintiff under an
agreement for the building of a
church; that the plaintiff having sus-
pended the work another agreement
was entered into between him and
one A. under which the plaintiff, in
consideration of certain stipulated
payments, undertook to complete the
work and to rely for the residue of
the contract price upon certain sub-
scriptions which were to be raised;
and that A. duly made and the
plaintiff received the payments stip-
ulated for by the second agreement
in satisfaction and discharge of the
original agreement between the
plaintiiT and the defendants, and of
the performance thereof by the
latter. Held, that the plea was bad
in substance inasmuch as it did not
show that the agreement made by
A. and the payments under it were
intended to be made for the benefit
of the defendants, and that they
adopted A.'s acts. See 2 Am. Lead.
Cas. (4th ed.) 270; Wellington v,
Kelly, 84 N. C. 543; Wolff v, Walter,
56 Mo. 292.
1 Case V. Phillips, 182 III 187, 55
N. E. Rep. 66.
§ 230.] PAYMENT. 581
poration to one for services rendered it as general manao-er.^
A payment made to the holder of a note by an indorscr, not
as agent for the maker, but simply in discharge of his own
obligation, the note having been executed by the maker for
value, does not inure to the benefit of the latter, and in an
action upon the note he is liable for the whole amount for
which it was given. So far as the indorser's payment is con-
cerned it was an equitable purchase of the note by him.-' In
a Wisconsin case the defendant became a debtor for the ben-
efit of a third person, who made payment of his own volition
and on his own behalf. The trial court ruled that it was not
competent for the party sued to plead payment by another
party who was not sued, and who could not be affected by the
judgment. Cole, C. J., considered this ruling by asking:
" Why not, if it is shown that the creditor accepts the pay-
ment in satisfaction of the debt ? Can it be said that the ob-
ligation is still in force? What sense or reason is there in
any such technical rule as that, if it exists? If a debt is fully
paid it would seem, according to plain common sense, that the
obligation was extinguished and is no longer in force as a
contract. What concern is it to the creditor who pays his
debt, especially where he accepts the payment made in satis-
faction of his debt ?"^ The demand of a creditor which is
paid with the money of a third person, without an agreement
that the security shall be assigned or kept alive for the bene-
fit of such third person, is extinguished.* Payment made by
1 Porter v. Chicago, etc. R. Co., 99 was held an extinguishment of it,
Iowa, 351, G8 N. W. Rep. 724. whether made by the debtor's con-
2 Madison Square Banii v. Pierce, sent or not.
137 N. Y. 444, 88 N. E. Rep. 557, 88 Am. In Pearce v. Bryant Coal Co., 121
St. 751, 20 L. R. A. 885, following 111. 590, 13 N. E. Rep. 561, payment
Jones V. Broadhurst, 9 C. B. 175, the by a trustee at the request of an
doctrine of which is recognized in officer of the corporation ovv-ing the
England in Thornton v. Maynard, debt extinguished the evidence of
L, R, 10 C. P. 695. The New York the indebtedness so that the trustee
case is of first impression in the could not enforce it.
United States. Payment made by one who is pri-
3 Gray v. Herman, 75 Wis. 453, 44 marily liable extinguishes the debt.
N. W. Rep. 248, 6 L. R. A. 691; Porter Smith v. Waugh, 84 Va. 806, 6 S. E.
V. Chicago, etc. R. Co., supra. Rep. 132.
In Harrison v. Hicks. 1 Port. 423, < Grady v. O'Reilly, 116 Ma 346,
27 Am. Dec. 688, the payment of a 23 S. W. Rep. 79a
•debt by a stranger to the contract
582 CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 230.
a third person at the request of the debtor inures to the lat-
ter's benefit.^ After default in the performance of the condi-
tions of a bill of sale providing that the title to the goods
shall not pass until full performance, the vendor is not bound
to receive payment from any person except his own vendee.^
If the creditor accepts payment under a mistake of fact, as by
erroneously supposing that the person who made it had au-
thority to do so, he may return the money and appl}^ to his
debtor for the payment of his demand.' Satisfaction by one
joint tort-feasor or joint debtor is a bar to an action against
another,* and a payment made by one of several joint debtors
inures to the benefit of all as a credit upon the debt.* But
one joint maker of a note cannot, by payment thereon, unless
authorized by his co-obligor, stop the running of the statute of
limitations. Where that statute is involved and the payments
on a note are all indorsed in the payee's handwriting, made
in the absence of the maker, the former must show that such
payments were made by the latter or by his authority.*' If a
creditor, knowing the liability of his debtor, takes the indi-
vidual note of his agent in payment, without at the same time
doing anything to indicate a purpose to hold the principal, the
latter is discharged.''
[387] A purchaser of mortgaged property subject to the
mortgage may pay the debt, and payment by him extinguishes
the lien.^ If a mere stranger or volunteer pays a debt for
which another is bound he cannot be subrogated to the cred-
1 Crawford V. Tyng, 10 N. Y. Misc. ^Goldbeck v. Kensington Nat.
143, 30 N. Y. Supp. 907. Bank, supra.
2 Lippinc!ott v. Rich, 19 Utah, 140, « Waughop v. Bartlett, 165 IlL 124,
56 Pac. Rep. 806. 46 N. E. Rep. 197.
3 Walter v. James, L. R. 6 Ex. 124. 7 Ames Packing* P. Co. v. Tucker,
4 Livingston v. Bishop, 1 Johns. 8 Mo. App. 95; Paige v. Stone. 10
291, 3 Am. Dec. 330; Thomas v. Rum- Met. 169; Wilkin v. Reed. 6 Me. 220.
sey, 6 Johns. 31; Barrett v. Third 19 Am. Dec. 211; French v. Price. 24
Avenue R. Co., 45 N. Y. 635; Woods Pick. 22; Hyde v. Paige, 9 Barb. 250.
V. Pangborn, 76 id. 498; Ellis v. A less extended rule is applied in
Esson, 50 Wis. 138, 36 Am. Rep. 830, some cases. Coleman v. First Nat.
6 N. W. Rep. 518; Knapp v. Roche, Bank, 53 N. Y. 388; Calder v. Dobell,
94 N. Y. 329; Brick v. Bual, 73 Tex. L. R. 6 C. P. 486.
511, 11 S. W. Rep. 1044; Goldbeck v. 8 Appledorn v. Streeter, 20 Midi. 9.
Kensington Nat. Bank, 147 Pa. 267,
2 ! Atl. Rep. 565.
§ 231.] PAYMENT. 583
iter's rights in respect to the security given by the real debtor;
but if the person who pays is compelled to pay for the pro-
tection of his own interests and rights, he is entitled to such
subrogation.^
§ 231, To whom payment may be made. Payment must
be made to the creditor or to one authorized by him to receive
it as agent or assignee; or to one whom the law substitutes in
the creditor's place as executor, administrator, creditor by
trustee process, or the like. If it is made to one entitled to
receive it the debt is extinguished though there was a mistake
as to the right in which the amount paid accrued.^ Payment
of a judgment or decree to an attorney of record who obtained
it, before his authority is revoked and notice of it given, is
valid as to the party making the payment,^ but payment of a
judgment after it has been assigned to one who is merely the
beneficial owner is not a discharge of it; it is otherwise when
payment is made to the person having the legal title without
notice of his assignment.* A sheriff is only entitled to receive
payment of an execution when he is in possession of a judicial
mandate directing him to make the collection of the sum
called for, unless he is the creditor's agent.^ Payment made
to the party designated by the creditor is good,^ but such a
designation may be changed, and if changed, the debtor pays
to the person originally designated at his peril,'' if he has notice
of the substitution. If an attorney who has a claim for collec-
tion places it in the hands of another for that purpose, the
owner assenting, payment to the latter discharges the debt.^
If a principal has clothed his agent with the indicia of au-
thority to receive payment,^ as by intrusting to him the pos-
1 Hough V. ^tna L. Ins. Co., 57 111. 35 N. W. Rep. 475; Sailer v. Bar-
318, 11 Am. Rep. 18; Grady v. nousky, 60 Wis. 169, 18 N. W. Rep.
O'Reilly, 116 Mo. 346, 23 S. W. Rep. 763; Fiske v. Fisher, 100 Mass. 97.
798. 7 Kice & Bullen Malting Co. v. In-
2 Hemphill v. Moody, 64 Ala. 468. ternational Bank, 185 111. 422, 56 N.
3 Harper v. Harvey, 4 W. Va. 539; E. Rep. 1062. 86111. App. 136; Meeker
Yoakum v. Tilden, 3 id. 167, 100 Am. v. Manina, 162 111. 203, 14 N. E. Rep.
Dec. 738. 397; Mechem on Agency, § 224.
* Seymour v. Smith, 114 N. Y. 481, ^ Dentzel v. City & Suburban R.
11 Am. St. 683, 21 N. E. Rep. 1042. Co., 90 Md. 434. 45 Atl. Rep. 201.
5 Bailey v. Hester, 101 N. C. 538, 8 ^ Florida Central & P. R. Co. v.
S. E. Rep. 164. Ragan, 104 Ga. 353, 30 S. K Rep. 745.
« Walker v. Crosby, 38 Minn. 34,
i84
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 231.
session of the goods to be sold, the purchaser is warranted in
paying the price of such as he buys to the agent; but if the
latter is not in possession of the goods and is only authorized
to make sales, payments made to him are at the risk of the
payer.^ Payment to an agent is unauthorized after the death
of the principal,^ unless the agency is coupled with an interest.
The fact that the agent is entitled to commissions on sums col-
lected does not give him such an interest as will continue his
power after the principal's death ; the interest which will work
that result must be in the thing on account of which payment
is made or in the money paid as such.' If a negotiable note,
indorsed by the payee in blank, is in the hands of an agent for
collection its payment in good faith, after the death of the
principal and without notice thereof, is valid.* Possession of
[388] mercantile paper authorizes the receipt of the money,
even before it is due,^ if the possessor has authority from the
owner to collect the amount payable on it.^ But circumstances
1 Lakeside Press & Photo-Engrav-
ing Co. V. Campbell, 39 Fla. 523. 23
So. Rep. 878; McKindly v. Dunham,
55 Wis. 515, 13 N. W. Rep. 485, 42
Am. Rep. 740; Law v. Stokes, 32 N.
J. L. 249, 90 Am. Dec. 655; Clark v.
Murpliy, 164 Mass. 490, 41 N. E. Rep.
674; Seiple v. Irwin, 30 Pa. 513;
Hirshfield v. Waldron, 54 Mich. 649,
20 N. W. Rep. 628; Chambers v.
Short, 79 Mo. 204; Clark v. Smith, 88
111. 298; Brown v. Lally, 79 Minn. 38,
81 N. W. Rep. 538; Crawford v.
Whittaker, 42 W. Va. 430, 26 S. E.
Rep. 516; Butler v. Dorman, 68 Mo.
298, 30 Am. Rep. 795; Kebwn v. Vogel,
25 Mo. App. 35; Pardridge v. Bailey,
20 III App. 351; Putnam v. French,
53 Vt. 404, 38 Am. Rep. 682; Hoskins
V. Johnson, 5 Sneed, 470; Capel v.
Thornton, 3 C. & P. 352; Dean v. In-
ternational Tile Co., 47 Hun, 319;
Higgins V. Moore. 34 N. Y. 417; Art-
ley V. Morrison, 73 Iowa, 132, 34 N.
W. Rep. 779; Adams v. Kearney, 2
E. D. Smitli, 42. See Stanton v.
French, 83 Cal. 194, 23 Pac. Rep. 355.
If money is paid to an agent who
is not authorized to receive it, the
payment is ratified by the principal's
bringing an action against him to
recover it. Bailey v. United States,
15 Ct. of Cls. 490. And by suing to
recover the purchase price of goods
sold. Pardridge v. Bailey, supra.
See Estey v. Snyder, 76 Wis. 624, 45
N. W. Rep. 415; Payne v. Hackney,
84 Minn. 195, 87 N. W. Rep. 608.
2 Lochenraeyer v. Fogarty, 112 111.
572.
3 Farmers' Loan & Trust Co. v.
Wilson, 139 N. Y. 384, 34 N. E. Rep.
784.
4 Deweese v. Muflf, 57 Neb. 17, 77 N.
W. Rep. 361,73 Am. St. 488; Johnson
V. Hollens worth, 48 Mich. 143, 11 N.
W. Rep. 843.
5 Bliss V. Cutter, 19 Barb. 9; Thorn-
ton V. Lawther, 169 111. 228, 48 N. E.
Rep. 412. For some limitations on
this rule see Dilenbeck v. Rehse, 105
Iowa, 749. 73 N. W. Rep. 1077.
•> Merchants' Nat. Bank v. Camp,
110 Ga. 780, 36 S. E. Rep. 201; Cheney
v. Libby, 134 U. S. 68, 10 Sup. Ct.
Rep. 498.
§ 231.] PAYMENT. 5S5
raaj impeach a payment made to one having possession of the
evidence of the debt. Thus, payment by the maker of a note
before maturity to the son of the holder, who had been for-
bidden to take payment, with the knowledge of the party pay-
ing, is not a good payment, although the note is delivered up
by the son; the father may maintain a suit for the note, not
having ratified the payment.^ The circumstances, however,
must show payment in bad faith; it is not enough that there is
gross negligence in not ascertaining the party entitled to the
money." Pajniientof a lost negotiable instrument, after notice
of its loss, will not operate as a discharge against the loser un-
less the person presenting it establishes his title thereto. A
notice previously given of the loss of a coupon, distinguishable
by its number or other ear-mark, is sufficient to fix uj)on the
maker the duty of inquiry and of refusal to pay a holder who
cannot prove his right; especially is this the rule where an in-
strument is presented after it has matured.' Pa3nnent to one
not in possession of the evidence of debt, and without a sur-
render of it, is at the risk of the payer; and if the party receiv-
ing the money had no right to receive it the note is not dis-
charged.^ But if the person who receives the money, though
1 Kingman v. Pierce, 17 Mass. 247. 59 Pac. Rep. 117; Wheeler v. Guild,
2 Cothran v. Collins, 29 How. Pr. 20 Pick. 543, 32 Am. Dec. 231; Rush
113; Haescig v. Browu, 34 Mich. 503. v, Fister, 23 111. App. 348; Viskoeii v.
3 Hinckley v. Union Pacific R. Co., Doktor, 27 id. 232; Stiger v. Bent, 111
129 Mas.s. 52, 37 Am. Rep. 297. See 111. 328.
Hinckley v. Merchants' Nat. Bank, Payment of a pledged note to the
131 Mass. 147. pledgor will not discharge it. Gris-
* Fortune v. Stockton, 182 111. 454, wold v. Davis, 31 Vt. 390.
55 N. E. Rep. 367, 82 111. App. 272 The authorities recognize the rule
(suhnom, Stockton v. Fortune): Leon that "where a principal has, by his
V. Mclntyre, 88 id. 349; Englert v. voluntary act, placed an agent in a
White, 92 Iowa, 97, 60 N. W. Rep. situation that a person of ordinary
224; Bank of Montreal v. Ingerson, prudence, conversant with business
105 Iowa, 349, 75 N. W. Rep. 351; usages and the nature of the partic-
Hall V. Smith, 3 Kan. App. 685, 44 ular business, is justified in presum-
Pac. Rep. 908; Cummings v. Hurd, ing that such agent has authority to
49 Mo. App. 139; Dodge v. Birken- perform, on behalf of his principal,
feld, 20 Mont. 115, 49 Pac. Rep. 590; a particular act, such particular act
Hitchcock V. Kelley, 18 Ohio Ct. Ct. having been performed, the princi-
808; Hollinshead v. Stuart, 8 N. D. pal is estopped, as against such inno-
35, 77 N. W. Rep. 89; Stalzman v. cent third person, from denying the
Wyman, 8 N. D. 108, 77 N. W. Rep. agent's authority to perform it."
285; Rhodes v. Belchee, 36 Ore. 141, Johnston v. Milwaukee & Wyoming
586
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 231.
he had not possession of the evidence of the indebtedness or
authority to receive payment, pays it to the person entitled
and such person receives it, the debt is discharged.^
The rule that payment to one who is without the evidence
of indebtedness is at the risk of the debtor applies though the
note is paid at the place designated in it for payment.^ It
was heUl in Iowa that if a note is made payable at a bank
payment made there on the date of the maturity of the note
is satisfaction though the note was not in possession of the
bank.^ But this position has been receded from, in deference
to the almost unvarying current of authority, to the extent of
holding that the fact that a note is so payable does not au-
thorize the bank, in the absence of the note, to collect any-
thing on it before maturity.* The authorities are reviewed by
the New Jersey court, and the conclusion arrived at (which is
concurred in by the Iowa court), that the contract of the
maker, acceptor or obligor is to pay the holder of the paper,
and the place for payment is designated simply for the con-
venience of both parties. Making a bill or note payable at a
Investment Co., 46 Neb. 480, 64 N. W.
Rep. 1100; Reid v. Kellogg, 8 S. D.
596, 67 N. W. Rep. 687. This doctrine
has been applied where an agent
who was not possessed of the mort-
gage or notes, or a satisfaction of
them, received payment of them be-
fore it was due. Harrison v. Legore,
109 Iowa, 618, 80 N. W. Rep. 670.
Doyle V. Corey, 170 Mass. 337, 49 N.
E. Rep. 651, is in harmony with the
cases referred to.
1 Second Nat. Bank v. Spottswood,
10 N. D. 114. 86 N. W. Rep. 359; Cole-
man V. Jenkins, 78 Ga. 605, 3 S. E.
Rep. 444.
- McNamara v. Clark, 85 111. App.
439; Englert v. White, 92 Iowa, 97,
60 N, W. Rep. 224; Klindt v. Hig-
gins, 95 Iowa. 529, 64 N. W. Rep. 414;
Cummings v. Hurd, 49 Mo. App. 139.
3 Lazier v. Horan, 55 Iowa, 75, 7
N. W. Rep. 457.
* Bank of Montreal v. Inger.son, 105
Iowa, 349, 75 N. W. Rep. 351, distin-
guishing Bank of Charleston Nat.
Banking Ass'n v. Zorn, 14 S. C. 444,
and citing Caldwell v. Evans, 5
Bush, 380, 96 Am. Dec. 358; Adams
v. Hackensack Improvement Com-
mission, 44 N. J. L. 638, 43 Am.
Rep. 406; St. Paul Nat. Bank v. Can-
non, 46 Minn. 95, 48 N. W. Rep. 526,
24 Am. St. 189; Hills v. Place, 48 N.
Y. 520. 8 Am. Rep. 568; Cheney v.
Libby, 134 U. S. 68, 10 Sup. Ct. Rep.
498; Ward v. Smith, 7 Wall. 447;
Williamsport Gas Co. v. Pinkerton,
95 Pa. 62; Wood v. Merchants' Sav-
ing. Loan & Trust Co., 41 111. 267;
Grissom v. Bank, 87Tenn. 350, 3 L. R.
A. 273. 10 S. W. Rep. 744, 10 Am. St.
669; Turner v. Hay den. 4 B. & C. 1;
Walton V. Henderson, Smith (N. H.),
168, as sustaining tlie doctrine that
the bank, in such a case, is not the
agent of the payee of the note,
though the latter be due, so as to be
authorized to accept payment of it,
unless the note is in its possession.
§ 231.] PAYMENT. 587
banker's is authority to the banker to apply the funds of tlio
acceptor or maker on deposit to the payment of the paper. If
maturing paper be left with the banker for collection he be-
comes the agent of the holder to receive payment; but unless
the banker is made the holder's agent by a deposit of the
paper with him for collection, he has no authority to act for
the holder. The naming of a bank in a note as the place of
payment does not make the banker an agent for the collection
of the note or the receipt of the money. Ko power, authority
or duty is thereby conferred upon the banker in reference to
the note; and. the debtor cannot make the banker the agent
of the holder simply by depositing with him the funds to pay
it. Unless the banker has been made the agent of the holder
by the indorsement of the paper or the deposit of it for col-
lection, any money which the banker receives to apply in
payment of it will be deemed to have been taken by him as
the agent of the payer.^
The fact that an attorney is authorized to collect interest
does not empower him to receive the principal.- Such author-
ity, in the absence of direct proof, may in some cases be in-
ferred from the possession of the bond and mortgage; but it is
incumbent upon the debtor who pays to the attorney to show
that the securities were in his possession on each occasion
when payments were made, for their withdrawal would be a
revocation of the authority.^ If an attorney employed to col-
1 Adams V. Hackensack Imp. Cora- Eq. 13; Eaton v. Knowles, 61 Mich,
mission, supra; First Nat. Bank v. 625, 38 N. W. Rep. 740; Brewster v.
Chilson. 45 Neb. 257, 63 N. W. Rep. Carnes. 103 N. Y. 556. 9 N. E. Rep.
31)2; Baitel v. Brown, 104 Wis. 493, 323; Lane v. Duchac, 73 Wis. 646. 41
80 N. W. Rep. 801; Hollinsliead v. N. W. Rep. 962. Contra, Shane v.
rStuart, 8 N. D. 35. 77 N. W. Rep. 89. Palmer, 43 Kan. 481, 23 Pac. Rep. 594;
2 Campbell v. O'Connor, 55 Neb. 638, Quinn v. Dresbach, 75 Cal. 159. 7 Am.
76 N. W. Rep. 167. St. 138, 16 Pac. Rep. 762. Compare
3 Williams v. Walker, 2 Sandf. Ch. Wilcox v. Carr, 37 Fed. Rep. 130.
325; Doubleday v. Kress, 50 N. Y. A mortgagor who makes the agent
410, 10 Am. Rep. 502; Smith v. Kidd, of his mortgagee for the collection
68 N. Y. 130, 23 Am. Rep. 157; Crane of the principal and mterest due the
V. Gruenewald, 120 N. Y. 274. 17 Am. latter his own agent for the purpo.se
St. 643, 24 N. E. Rep. 456; Henn v. of securing a loan to be used in dis-
Conisby, 1 Ch. Cas. 93; Gerard v. charging a mortgage must stand a
Baker, id. 94; Garrels v. Morton, 26 loss caused by the agent's embezzle-
IIL App. 433; Cox v. Cutter, 28 N. J. ment of the money so obtained, tba
588 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 231.
lect a note receives part of the sum due in cash and takes se-
curity in his own favor for the balance, the payment is good
pro tanto; but the creditor may refuse to accept such securit}''
and recover on the note from the maker.' If payment of a
loan is made to the attorney who negotiated it while he has
the custody of the bond and mortgage, with the consent of the
mortgagee, and the mortgagor knows the fact, he is discharged
although the attorney was not in fact authorized to receive it.'-
If the attorney of a plaintiff comes into possession of money
belonging to the defendant and the latter and the attorney
agree that it should be paid on the plaintiff's claim, such agree-
ment is payment.'
The court of errors and appeals of Is"ew Jersey has ruled,
by a vote of eleven to one, reversing the vice-chancellor, that
the mere possession of a bond and mortgage by one not the
obligee will not warrant the payment thereof to such posses-
sor. Many years before payment these papers were drawn by
the person to whom payment was made, but of that fact it did
not appear that the debtor had any knowledge. The papers
were in the possession of the mortgagee from the time of
their execution until they were delivered to the scrivener for
safe keeping in his vault, and were put up by the mortgagee
in a bundle, tied with strings and sealed with wax. Interest
had been paid to the scrivener under special authority from
the mortgagee.* A late case in New York is hard to harmon-
ize with the case just stated, and holds a rule more consonant
with the authorities and the analogies of the law. The attor-
ney to whom payment was made had not made the original
loan, but had negotiated the purchase of an outstanding bond
and mortgage. Of the latter fact it does not appear that the
mortgagor not having directed the ^ Davis v. Severance, 49 Minn. 528,
agent to apply it to the mortgage in 53 N. W. Rep. 140.
his possession. Boardman v. Bliz- 2 Crane v. Gruenewald, swpra; IMc-
iard, 36 Fed. Rep. 26. Connell v. Mackin, 22 App. Div. 587,
The apparent authority of an at- 48 N. Y. Supp. 18.
torney to receive payment of inter- 3 Millhiser v. Marr, 130 N. C. 510,
est does not depend upon his pro- 41 S. E. Rep. 1038.
duction to the debtor of the securi- *Lawson v. Nicholson, 52 N. J. Eq.
ties, but on his possession of them. 821, SI Atl. Rep. 386, reversing Law-
Crane V. Gruenewald. 120 N. Y. 274, son v. Carson, 50 N. J. Eq. 370, 25
17 Am. St 643. 24 N. K Rep. 456. AtL Rep. 191.
§ 231.] PAYMENT. 589
mortgagor had any knowledge; indeed, he did not know of the
assignment of the bond and mortgage until informed of it by
the receipt of the attorney for interest paid a short time be-
fore payment of the principal. The same attorney had been
authorized to receive the interest from the assi"-nor of the
O
mortgage, and was so authorized by the assignee, the papers
being left in the attorney's possession. It is said: The fact
that the agent or attorney has made the loan does not give him
authorit}' to collect the debt,^ nor, it seems, does the mere pos-
session of the security bj'' such attorney give such authority .-
Both conditions must concur. Jt is said in the case last cited :
" The reason of the rule that one who has made a loan as a<'ent
and taken the security is authorized to receive payment wlien
he retains possession of the security is founded upon human
experience that the payer knows that the agent has been
trusted by the payee about the same business, and he is thus
given a credit with the payer."' The same rule was applied
to the case before the court,'
In case of a mortgage or other non-negotiable evidence of
debt, probably a payment in good faith to the original holder,
in the absence of the paper evidence, would be treated as valid,
although there had been an actual assignment of the debt.*
Payment, however, may not be made to an assignor after
1 To that effect is Heflin v. Camp- signed it is incumbent upon the
bell, 5 Tex. Civ. App. 106, 23 S. W. assignee to show that the debtor was
Rep. 595. notified in order to protect himself
2Doubleday v. Kress, 50 N. Y. 410, against any payment made to the
10 Am, Rep. 502. original creditor. Heermans v. Ells-
3 Central Trust Co. v. Folsom, 167 worth, 64 N. Y. 115; Quinn v. Dres-
N. Y. 285, 60 N. E. Rep. 599, approv- bach, 75 Cal. 159, 7 Am, St. 138, 16
ing Williams v. Walker, 2Sandf. Ch. Pac. Rep. 762; Bank v. Jones, 65 Cal
325. 437, 4 Pac. Rep. 418.
* Trustees of Union College v. Under the recording acts the rec
Wheeler. 61 N. Y. 88; Foster v. Beals, ord of the assignment of a mortgage
21 id. 247. See Richardson v. Ains- is constructive notice to the world
worth, 20 How. Pr. 521; Robinson v. of the rights of the assignee; a pur-
Weeks, 6 id. 161; Muir v. Schenck, chaser of the equity of redemption
3 Hill, 228, 38 Am. Dec. 633; Gamble cannot claim any benefit from pay-
V. Cummings, 2 Blackf. 235. ments made to the mortgagee after
It is a fair legal presumption that his assignment has been recorded,
the creditor who holds a non-negoti- Brewster v. Carnes, 103 N. Y. 556, 9
able chose in action is entitled to re- N. E. Rep. 323; Viele v. Judson, 83
ceive payment thereof. If it is as- N. Y. 32.
590 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 231.
notice of such assignment;^ and will not be recognized even
if the assignor still has possession of the securities;^ not even
under garnishment proceedings and an order of the court, if
that defense is not made.' Where the demand has been as.
signed, payment as garnishee of the original creditor is not
good unless it is compulsory, though there has been no notice
of the assignment, for assignment passes the title without
notice.*
The hona fide payment of a debt due a person who died
intestate made to his sole heir and the sole distributee of the
funds of the estate, before administration is granted, will, if
equity requires it, relieve the debtor from liability to an ad-
ministrator subsequently appointed.'^ If the executor of a de-
ceased postmaster has made application for the readjustment
of the latter's salarj'', requesting that payment be made tohira,
a payment to the widow of the deceased is not binding on the
executor, though she also applied for readjustment.^ One who
pays a note to a person who had sued upon it at law does so at
his peril if, at the time of payment, he has notice of the pend-
ency of an appeal in a chancery suit brought against him by
another person to establish his right to the note.'^ A husband
is not authorized to accept payment for the personal labor of
his wife rendered outside his family; but if the debtor sold
property to the husband and wife jointly and she agreed that
the money due her might be applied on the purchase price, her
demand is satisfied.^
A compulsory payment under a foreign attachment from a
court of competent jurisdiction is good, and will be recognized
[389] even in a foreign jurisdiction, though in the latter an
earlier attachment had been levied for the same debt.^ A pay-
1 Lyman v. Cartwright, 3 E. D. 5 Vail v. Anderson, 61 Minn. 552,
Smith, 117; Meriam v. Bacon, 5 Met. 64 N. W. Rep. 47; Hannah v. Lank-
95; Guthrie v. Bashline, 25 Pa. 80; ford, 43 Ala. 163; Lewis v, Lyons, 13
Field V. Mayor, 6 N. Y. 179; Ten Eick 111. 117.
V. Simpson, 1 Sandf. Ch. 244. ^ Holt v. United States, 29 Ct. of
2 Chase v. Brown, 32 Mich. 225. Cls. 56.
3 Roy V. Baucus. 43 Barb. 310. ^ McClintock v. Helberg, 168 111.
4 Richardson v. Ainsworth, 20 How. 384, 48 N. E. Rep. 145, 64 111. App. 190.
Pr. 521: Robinson v. Weeks, 6 id. 161; « Strickland v. Hamlin, 87 Me. 81,
Muir V. Schenck, 3 Hill, 228, 38 Am. 32 Atl. Rep. 732.
Dec. 633. ^ Minor v. Rogers Coal Co. 25 Ma
§ 231.] PAYMENT. 59i
ment as trustee or garnishee is good though the trustee might
have disputed the jurisdiction of the court ordering such pa}''-
raent.' But it is otherwise if the garnishee, knowing that the
cLaim has been assigned, fails to set up that fact, notwithstand-
ing the assignee did not intervene, thoui-h havinir knowled"-e of
the garnishment proceedings.^ Money paid by the govern-
ment to a receiver of the property of a citizen by the court of
a state in which he is domiciled discharges the claim of the
government's creditor.*
Where a debt is owing to two persons jointly it may be paid
to either. Thus, where two persons joined in an agreement
to sell and convey land, it was held that a payment to one of
them was good though he had no title to the land.* If the
survivor of two joint payees of a note is the sole devisee of the
deceased payee payment may be made to him.'^ But payment
made to a third person is not valid unless such person was
authorized by all the obligees to receive it.^ Payment of money
to a part of the heirs of a person insured for their benefit does
'Dot discharge the insurer's liability; the indebtedness was not
joint.^ Payment of a debt due to a deceased person, made before
letters granted, to a person who afterward takes them out, is
made good by the subsequent letters.^
The secondary liability of the owner of a building for the
services of workmen employed by the contractor and for
materials supplied does not arise until the steps prescribed by
statute to acquire a lien therefor have been taken; hence
payment made to other persons than the contractor does not
bind him.® The right to the emoluments of an office follows
App. 78; Allen v. Watt. 79 111. 284; 33 Me. 67; Moore v. Bevier, 60 Minn.
Lieber v. St. Louis Agricultural & 240, 63 N. W. Rep. 281; Heury v. Mt.
M. Ass'n, 36 Mo. 382; Holmes v. Pleasant, 70 Mo. 500.
Remsen, 4 Jolins. Ch. 460, 20 Johns. ^ Perry v. Perry's Ex'r, 98 Ky. 242,
229, 11 Am. Deo. 269; McDaniel v. 33 S. W. Rep. 755.
Huglies, 3 East, 367. « Moore v. Bevier, 60 Minn. 240, 63
iReed v. Parsons, 11 Cush. 255; N. W. Rep. 281.
Sauntry v. Dunlap, 13 Wis. 364. ^ Brown v. Iowa Legion of Honor,
2 Greenwich Ins. Co. v. Columbia 107 Iowa, 439, 78 N. W. Rep. 73.
Manuf. Co., 73 111. App. 560. » Priest v. Watkins. 2 Hill. 235, 38
' Boi-cherling v. United States, 35 Am. Dec. 584; In re Faulkner, 7 Hill,
Ct. of Cls. 311, 329. 18L
'♦Waters v. Travis, 9 Johns. 450; ^ Walker v. Newton, 53 Wis. 336,
Flanigan v. Seelye, 53 Minn. 23, 55 10 N. W. Rep. 436.
N. W. Rep. 115: Oatman v. Walker,
592
CONVENTIONAL LIQUIDATIONS AND DISCHAEGES. [g 23U
the true title to it.^ As between the person entitled to an office
and the public, there is no obligation upon the latter until the
duties of the office have been assumed. The salary fixed
therefor is the reward for express or implied services, and
therefore cannot belong to one who has not performed services
although he is wrongfully hindered from occupying the posi-
tion in which he might have rendered them.^ AVhere disburs-
ing officers pay compensation for official services, pursuant to
law, they are justified, by the weight of authority, on grounds
of public policy in paying to a de facto officer, and such pay-
ment is a good defense to an action against the public by
the de jure officer to recover the salary, after he has been
placed in possession of the office.' The public is liable for
the salary due and unpaid a de jure officer before judgment in
his favor.* This is the rule whether the compensation arises
1 Conner v. New York. 2 Sandf. 370;
Nichols V. MacLean, 101 N. Y. 526,
54 Am. Rep. 730, 5 N. E. Rep. 347;
People V. Tieman, 30 Barb. 193;
Dolan V. Mayor. 68 N. Y. 274. 23 Am.
Rep. 168; McVeany v. Mayor, 80 N.
Y. 185, 36 Am. Rep. 600; People v.
Miller. 24 Mich. 458, 9 Am. Rep. 131;
Dorsey V. Smith, 28 Cal. 21; Hunter
V. Chandler, 45 Mo. 452; Glascock v.
Lyons, 20 Ind. 1, 83 Am. Dec. 299;
Douglass V. State, 31 Ind. 429; War-
den V. Bayfield County, 87 Wis. 181,
58 N. W. Rep. 248.
2 Smith V. Mayor. 37 N. Y. 518;
Connor v. Mayor, 5 id- 285; Auditors
V. Benoit, 20 Mich. 176, 4 Am. Rep.
382.
s Dolan v. Mayor, 68 N. Y. 274, 23
Am. Rep. 168; McVeany v. Mayor, 80
N. Y. 185. 36 Am. Rep. 600; Auditors
V. Benoit, supra; Coughlin v. Mc-
Elroy, 74 Conn. 397, 409, 50 Atl. Rep.
1025; State v. Clark, 52 Mo. 508;
W^estberg v. Kansas, 64 Mo. 493;
Steubenviile v. Culp, 38 Ohio St. 18,
23, 43 Am. Rep. 417: Commissioners
of Saline County v. Anderson, 20
Kan. 298, 27 Am. Rep. 171; State v.
Milne, 36 Neb. 301, 19 L. R. A. 689. 54
N. W. Rep. 521, 38 Am. St. 724;
Shannon v. Portsmouth, 54 N. H.
183; Shaw v. Prina County, — Ari-
zona, — , 18 Pac. Rep. 273. Contra,
Dorsey v. Smyth, 28 Cal. 21; Car-
roll V. Siebenthaler, 37 Cal. 193: An-
drews v. Portland, 79 Me. 484, 10 Atl.
Rep. 458; Rasmussen v. Carbon
County, 8 Wyo. 277, 45 L. R. A. 295,
56 Pac. Rep. 1098; Philadelphia v.
Rink, 2 Atl. Rep. 505 (Pa.).
In Tennessee the test applied is,
could the person wrongfully in office
compel the payment of the salary to
him? The case ruled was this: A.
was elected to succeed L. ; the latter
obtained an injunction restraining
A. and the authorities who were
about to induct him into office from
interfering with his enjoyment of it.
The injunction was made perpetual
and L. remained in possession and
drew the salary. After the injunc-
tion was dissolved and A."s title
established by the appellate court,
he recovered from the public the
salary provided for the office and
paid L. during his incumbency. The
injunction did not require the offi-
cers to make payment thereof to L.
Memphis V. Woodward, 12Heisk. 499.
4 Dolan V. Mayor, supra; Comstock
V. Grand Rapids. 40 Mich. 397; Peo-
ple V. Brenan, 30 How. Pr. 417.
§ 232.] PAYMENT. 593
from fees payable from the public treasury or an annual salary
payable at intervals, and whether the officer was appointed or
elected.^ If payment is made after notice of an adjudication
against the right of the person in office the public is liable to
the de jure officer for the amount.^ i!^otice to the government
from a corporation that it has changed its treasurer is not
effective to prevent payment to the former treasurer in pur-
suance of a contract in his name.^ Payment of a private debt
due to a member of a firm to the firm of which the creditor is a
member will not support a plea of payment in the absence of
evidence, express or implied, that the creditor has authorized
the receipt of the money by the firm as his agents.*
§ 233. Pleading payment. By the theory of common-law
pleading in the action of aasximpsit^ as well as by the provis-
ions of the modern code, payment, either full or partial, being
in confession and avoidance, must be pleaded. It cannot be
proved under the general issue or general denial. The issue
in debt was upon the existence of present indebtedness; and
therefore in that action the rule was different. The general
issue in asmmpsit^ however, by a later practice, came to be so
expanded as to materially infringe this logical rule; and it was
held to embrace many defenses which admitted all the essential
facts stated in the declaration, and avoided their effects by
matter subsequent, including payment.' If the plaintiff al-
1 McVeany v. Mayor, 80 N. Y. 185, Morton. 3 Call, 234. SeeEcIson v. Del-
36 Am. Rep. 600. lage, 8 How. Pr. 273. But see Hirsch
2 Id. V. Caler, 21 Cal. 71; Davaney v. Eg-
' Chapter of Calvary Cathedral v. genhoff, 43 id. 397.
United States, 29 Ct. of Cls. 269. In Kentucky it is considered to be
* Powell V. Brodhurst, [1901] 2 Ch. settled that a partial payment on or
160. before the day on which the debt is
sMcKyring v. Bull, 16 N, Y. 297. due may be pleaded; and full pay-
In this case the opinion of Selden, J., ment after the day is pleadable by
interestingly and instructively dis- statute; but the courts there have
cusses the subject and reviews many not gone so far as to sanction a plea
English cases ; the conclusion reached of partial payment after the day, but
being that the code requires the de- have decided that it cannot be
fendant to plead any new matter pleaded. Gearhart v. Olmstead, 7
constituting either an entire or par- Dana. 445; Mc Waters v. Draper, 5
tial defense, and prohibits him from T. B. Mon. 494; Young v. Park, 6 J. J.
giving such matter in evidence upon Marsh. 540: Craigs v. Whips, 1 Dana,
the assessment of damages when not 375. Nor is either partial or full pay-
set up in the answer. Skipwith v. ment after the day provable under
Vol. I — 38
594
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 232.
leges non-payment and must establish it to show a cause of
action, payment may be proven under a general denial.^ Under
[31)0-31)0] a general allegation of payment the defendant may, ,
in some jurisdictions, give in evidence any facts which in law
amount to payment;^ while in others only such facts can be
shown as tend to establish a common-law or actual payment.*
A plea of payment need not allege tlie amount paid, the date
of payment nor the person who received it; * under such plea
partial payment may be proven.'^ But if payment in property''
is relied on the answer must be specific as to its value.^ And
this is necessary in some cases where partial payment is ad-
mitted and the suit is on a contract for the payment of money.
The defendant may plead a payment in excess of the admis-
sion, but should allege the amount paid and . not merely that
the plaintiff has been fully paid as to some or all of the items
of the demand, especially where the amount payable is de-
pendent upon another amount, also traversable.'^ An allega-
tion of the place of payment is surplusage and will not preju-
the general issua Hamilton v. Coons,
5 Dana, 317.
When the petition states facts con-
stituting the plaintiff's claim a gen-
eral denial does not present an issue
authorizing the defendant to prove
payment. St. Louis, etc. R. Co. v.
Grove, 39 Kan. 731, 18 Pac. Rep. 958.
iKnapp V. Roche, 94 N. Y. 329;
Quin V. Lloyd. 41 id. 349; McElwee
V. Hutchinson, 10 S. C. 436; State v.
Roche, 94 Ind. 373; Robertson v. Rob-
ertson, 37 Oreg. 339, 62 Pac. Rep. 377;
Marley v. Smith, 4 Kan. 155; State
V. Peterson, 143 Mo. 536, 39 S. W. Rep.
453.
2 Edmunds v. Black, 13 Wasli. 490,
43 Pac. Rep. 330; Bush v. Sprout, 43
Ark. 416; Morehouse v. Northrop, 33
Conn. 380, 89 Am. Dec. 311; Hart v.
Crawford, 41 Ind. 197; Farmers' &
Citizens' Bank v. Sherman, 33 N. Y.
69; Whittington v. Roberts, 4 T. B.
Mon. 173. See Day v. Clarke, 1 A. K.
Marsh. 521.
3 Lovegrove v. Christman, 164 Pa.
390, 30 Atl. Rep. 385.
This doctrine is said to have no
application to suits in justices' courts.
Rider v. Gulp, 68 Mo. App. 527.
An equitable defense cannot be
proven without leave and upon no-
tice. Steiner v. Erie Dime Savings
& L. Co., 98 Pa, 491; Hawk v. Geddis,
16 S. & R. 28.
In Massachusetts the discharge of
a note payable in money by the de-
livery and acceptance of property
must be the result of a subsequent
and independent agreement resting
upon substantial facts which the
answer must set forth. Ulsch v. Mul-
ler, 143 Mass. 379. 9 N. E. Rep. 736.
* Johnson v. Breedlove, 104 Ind. .521,
6 N. E. Rep. 906; Stacy v. Coleman,
10 Ky. L. Rep. 78 (Ky. Super. Ct.).
SKeyes v. Fuller, 9 III App. .528;
State V. Roche, 94 Ind. 372.
6 Choate v. Hoogstraat, 46 C. C. A.
174. 105 Fed. Rep. 713.
^Shipman v. State, 43 Wis. 381.
§ 233.] PAYMENT. 595
dice.' It has been held in Kentucky not necessary for a jury
when sworn on an inquiry of damages, or, indeed, on the trial
of an issue, to notice credits indorsed on a note, unless under
the issue of payment; but under the practice in that state
whenever a note on which an action is brought is filed the courts
of original jurisdiction notice it so far as to cause the clerk
to note on the record all credits indorse:! thereon as credits on
ihe judgment, and this after a writ of inquiry or verdict [.'J07J
<vhen the jury has not noticed thera.^ Payment of a debt and
30sts while suit is pending for its recovery extinguishes the
jlaim.^ Payment is an aflirmative defense and must bo
pleaded.* Such defense may be made to an action upon con-
tract under an answer to a declaration in set-off alleging that if
the defendant shall prove that the plaintiff ever owed the de-
fendant the amounts alleged, he has paid the same in full.'
The party alleging payment has the onus; and if it is claimed
that payment was made in anything but money he has also
the burden of proving that what was received was taken in
satisfaction and at the creditor's risk.^ Under a plea of pay-
ment the laws of the state in which the note sued upon was
made may be received in evidence to show that such note was
there paid and extinguished by another note.''
§ 233. Evidence of payment. Possession of the evidence
of debt is presumptive evidence of authority to receive pay-
1 Brown v. Gooden, 16 Ind. 444 Ilsley Bank v. Child, 76 Minn. 173, 78
'i Phelps V. Taylor, 4 T. B. Mon. 170. N. W. Rep. 1048; Griffith v. Creigh-
3 Root V. Ross, 29 Vt. 488. ton, 61 Mo. App. 1; Godfrey v. Cris-
4 Gregory v. Hart, 7 Wis. 533, 540; ler, 121 Ind. 203, 22 N. E. Rep. 999;
Martin v. Pugh, 23 id. 184; Hawes v. Cheltenham Stone & G. Co. v. Gates
Woolcock, 30 id. 213; Rossiter v. Iron Works, 124 111. 623. 16 N. E. Rep.
Suhultz, 62id. 655, 22N.W. Rep. 839; 923; Hunter v. Moul, 98 Pa. 13, 43
Christian v. Bryant, 103 Ga. 561, 27 Am. Rep. 610; Brown v. Olmsted, 50
S. E. Rep. 666; Hander v. Baade, 16 Cal, 162; Bradley v. Harwi. 43 Kan.
Tex. Civ. App. 119, 40 S.W. Rep. 422. 314, 23 Pac. Rep. 566: Runyon v.
SGossv. Calidns, 164 Mass. 546, 24 Snell, 116 Ind. 164, 9 Am. St. 839. 18
N. E. Rep. 96; Swett v. Southworth, N. E. Rep. 522; McWilliams v. Phil-
125 Mass. 417. lips, 71 Ala. 80; Insurance Co. v.
An allegation of payment made Dunscorab, 108 Tenn. 724, 735, 69 S.
upon information and belief is good. W. Rep. 335.
First Nat. Bank v. Roberts, 2 N. D. ^Thomson-Houston Electric Co. v.
195, 49 N. W. Rep. 722. Palmer, 52 Minn. 174, 53 N. W. Rep.
6 Atkinson v. Linden Steel Co., 138 1137, 38 Am. St. 536.
111. 187, 27 N. E. Rep. 919; Marshall &
596 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 233.
ment.^ But, as evidence of agency, the presumption ceases on
the death of the principal.- So possession of the evidence of
debt by the malcer, or one who succeeds to his rights or estate,
is ^jrma facie evidence of payment.^ Thus the possession of
a bank check by the bank on which it is drawn is such evi-
dence that the bank has paid it.^ The possession of a canceled
check by the drawer who testifies that on the day of its date
he made and delivered it to the payee in payment of a debt
is sufficient prima facie proof of the payment of the amount
it calls for.^ It is presumed, where a check payable to bearer
was one day the property of A. and the following day was in
the possession and apparent ownership of B., that it was de-
livered by A. to B. in payment of a debt, though it is not pre-
sumed that the transfer was direct.^ Possession of the evidence
of the indebtedness by the payee is prima facie proof that the
debt has not been paid J The execution and delivery of a deed
which acknowledges the receipt of the purchase-money, in the
absence of any other proof, \b prima facie evidence of its pay-
ment.^ But possession of a note by the maker is such evidence
only after maturity;^ nor isthe presumption of payment from
such possession rebutted by proof of the mere fact that the
payee or former holder is dead.'" The force of the presumption
varies with the circumstances of the case in which it is sought
to be applied; and the amount of evidence necessary to over-
1 Lochenmeyer v, Fogarty, 112 111. W. Rep. 272: Magruder v. De Haven's
572; Williams v. Walker, 2 Sandf. Adm'r. 21 Ky. L. Rep. 580, 52 S. W.
Ch. 325; Megary v. Funtis, 5 id. 376. Rep. 795.
See §231. 6 Poucher v. Scott, 98 N. Y. 422.
2 Id. See Stimson v. Vroman, 99 id. IL
3 Gibbon v. Featherstonhaugh, 1 "Keyes v. Fuller, 9 111. App. 528;
Stark. 92; Hollenberg v. Lane. 47 Humpeler v. Hickman, 13 id. 537;
Ark. 394, 1 S. W. Rep. 687; Potts v. Brooks v. Holt, 65 Mo. App. 618.
Coleman. 67 Ala. 221; Grimes v. Hil- 8 Crowe v, Colbeth, 63 Wis. 643, 24
liary, 150 111. 141, 36 N. E. Rep. 977; N. W. Rep. 478; Coles v. Soulsby, 21
Smith V. Gardner, 36 Neb. 741, 55 N. Cal. 47; Kinster v. Babcock, 26 N. Y.
W. Rep. 245. 378; Clark v. Deshon, 12 Cush. 589.
When such presumption arises it ^ Erwin v. Shaffer, 9 Ohio St. 43;
is inferred that payment was made Baring v. Clark, 19 Pick. 220; McGee
to a person authorized to receive it. v. Prouty, 9 Met. 547. 43 Am. Dec.
Lipscomb v. De Lanos, 68 Ala. 592. 409. See Heald v. Davis, 11 Cush. 319.
4 Wilson V. Goodin, Wright, 219. i" Larimore v. Wells, 29 Ohio St. 13.
6Peavy v. Hovey, 16 Neb. 416, 20 N.
§ 233.] PAYMENT. 597
come it is, in general, for the jury.' A debtor's books of ac-
counts are not evidence to prove payments made by him to his
creditor.^
" A bond and mortgage taken for the same debt, though dis-
tinct securities possessing dissimilar attriljutes and subject to
remedies which are as unlike as personal actions and proceed-
ings in rem, are, nevertheless, so far one that payment of either
discharges both, and a release or extinguishment of either,
without actual payment, is a discharge of the other, unless
otherwise intended by the parties;" hence, an acknowledg-
ment upon the record of full satisfaction of the mortgage, no
mention being made of the debt or the honiX, prima facie im-
ports the extinguishment of the debt.'
The receipt of rent for a specified period is presumptive evi-
dence of the payment of previous renf So of taxes.'* So where
A., in consideration of a bill of goods sold to him by B., agreed
to pay the amount of the bill in discharge of certain notes
signed by B. and indorsed by A., it is like evidence of the pay-
ment of a previous indebtedness of B. to A.^
If a debtor is placed in an official or fiduciary relation, in
which it becomes his duty to receive money, the law will in
general presume payment of the debt — but the presumption
may be rebutted.* Payment received on Sunday, though in
violation of the law for the observance of that day, if it is re-
tained, is good.*
An indorsement of credit on an evidence of debt by [398]
the payee, within the period that raises the legal presumption
of payment, is evidence for him for the purpose of repelling
that presumption;^ but for that purpose it has reference to the
time when such payment purports to have been made.'" No
1 Grimes v. Hilliary, 150 111. 141, 36 6 Colvin v. Carter, 4 Ohio, 354.
N. E. Rep. 977; Gray v. Gray, 47 nVilson v. Wilson, 17 Oliio St. 150,
N. Y. 552; Larimore v. Wells, 29 91 Am. Dec. 125. See i^ 222.
Ohio St. 13. 8 Johnson v. Willis, 7 Gray, 164;
2 Hess' Appeal, 112 Pa. 168, 4 Atl. Shields v. Klopf, 70 Wis. 69, 35 N. W.
Rep. 340. Rep. 284; Jameson v. Carpenter, 68
3 Fleming v. Parry, 24 Pa. 47; Seiple N. H. 62, 36 Atl. Rep. 554
V. Seiple, 133 id. 460, 19 Atl. Rep. 406. ^ Dabney's Ex'r v. Dabney's Adm'r,
•» Brewer v. Knapp, 1 Pick. 332. 2 Rob. (Va.) 622, 40 Am. Dec. 761.
5 Attleborough v. Middleborough, •« Hayes v. Morse, 8 Vt. 316.
10 Pick. 378.
598
CONVENTIONAL LIQUIDATIONS AND DISCHARGES, [§ 234.
presumption of payment arises from the fact of long delaj^ in
prosecuting a claim because the alleged debtor had property
near the creditor's phice of residence if such property could not
have been reached without giving a bond.^ In England " where
a person serves in the capacity of a domestic servant, and no
demand for the payment of wages is made by the servant for a
considerable period after such service has terminated, the in-
ference is either that the wages have been paid, or that the
service was performed on the footing that no payment was to be
made.^ This doctrine is fully recognized in Pennsylvania,^
Section 2.
application of payments.
§ 234. General rule. The general rule on this subject is
that a debtor paying money to a creditor to whom he owes
several debts may appropriate it to which he pleases. In the
absence of an appropriation by the debtor the creditor has a
right to make the application. If both omit to make an ap-
propriation the law will apply it according to the justice and
equity of the case.* That some of the claims are secured is
1 Ludwig V, Blackshere, 102 Iowa,
366, 71 N. W. Rep. 3.-36.
-'Sellen v. Norman, 4 C. & P. 80;
Gough V. Findon, 7 Ex. 49.
3 Taylor v. Beatty, 202 Pa. 120, 125,
51 Atl. Rep. 771.
■» National Bank v. Bigler, 83 N. Y.
51; Wetherell v. Joy, 40 Me. 325:
Thayer v. Denton, 4 Mich. 192 ; Hall
V. Constant, 2 Hall, 185; Baker v.
Stack poole, 9 Cow. 420, 18 Am. Dec.
508; Parker v. Green, 8 Met. 137;
Truscott V. King, 6 N. Y. 147; Stew-
art V. Hopkins, 30 Ohio St. 502; Mc-
Daniel v. Barnes, 5 Bush, 183; Parks
V. Ingram, 22 N. H. 283, 55 Am. Dec.
153; Bosley v. Porter, 4 J. J. Marsh.
621; Reed v. Board man, 20 Pick. 441;
Shaw V. Picton, 4 B. & C. 715; Scott
V. Fisher, 4 T. B. Mon. 387; Bayley v.
Wynkoop, 10 111. 449: Nutall's Adm'r
V. Brannin's Ex'r, 5 Bush, 11; Hall v.
Mar.-.ton, 17 Mass. 575; Goddanl v.
Cox. 2 Str. 1194; Peters v. Anderson,
5 Taunt. 596; Bosanquet v. Wray. 6
id. 597; Brooke v. Enderby, 2 B. & B.
70; Bodenham v, Purchas, 2 B. &
Aid. 39; Brady's Adm'r v. Hill, 1 Mo.
315; Sprinkle v. Martin, 72 N. C. 92;
Dent V. State Bank, 12 Ala. 275;
Wooten V. Buchanan, 49 Miss. 386;
Hamilton V. Benbury, Mart. & Hayw.
586; James v, Malone, 1 Bailey, 334;
Mills V. Kellogg, 7 Minn. 469; Bobe
V. Stickney. 36 Ala. 492; Dennis v.
McLaurin, 31 Miss. 606; Gaston v.
Barney, 11 Ohio St. 506: Jones t.
Smith, 22 Mich. 360: Waterman v.
Younger, 49 Mo. 413; Starrett v. Bar-
ber, 20 Me. 457; Irwin v. Paulett, 1
Kan. 418; Pearl v. Clark. 2 Pa. 350:
Moorehead v. West Branch Bank,
3 W. & S. 550: Selleck v. Sugar Hol-
low Turnpike Co., 13 Conn. 459:
Whetmore v. Murdock, 3 Woodb. &
M. 390; Dulles v. De Forest, 19 Conn
§ 23:;.]
APrLICATION OF PAYMENTS.
599
immaterial so far as the rif^ht of either party to make the ap-
plication is concerned.^
§ 235. By debtor. The right of the debtor who [390]
makes a voluntary payment to direct how it shall be applied
is absolute if he sic?nifies his election at the time of making it.'-^
He will not lose that right unless he has an opportunity to
exercise it and neglects to do so.' The rule is the same in re-
spect to a partial payment accepted by the creditor.'' The
direction of the debtor may be inferred from circumstances,
1!)0; Souder v. Schechterly, 91 Pa. 83;
Clarke v. Scott, 45 Cal. 86; Har-
groves V. Cooke, 15 Ga. 321; Haynes
V. Nice, 100 Mass. 827; Cardineli v.
O'Dovvd, 43 Cal. 586; Putnam v. Rus-
sell, 17 Vt. 54. 42 Am. Dec. 478: Rob-
son V. McKoin, 18 La. Ann. 544;
Early v. Flannery, 47 Vt. 253; Holmes
V. Pratt, 34 Ga. 558; McMillan v.
Grayston, 83 Mo. App. 425; Under-
hill V. Wynkoop, 15 Pa. Super. Ct.
1'30; Burnett v. Sledge, 129 N. C. 114,
39 S. E. Rep. 775.
^ Post-Intelligencer Pub. Co. v.
Harris. 11 Wash. 500, 39 Pac. Rep.
965; Wood v. Callaghan, 61 Mich. 402,
28 N. W. Rep. 162, 1 Am. St. 597;
Arbuckles v. Chadwick, 146 Pa. 393,
23 Atl. Rep. 346.
2Eppinger v. Kendrick, 114 Cal.
620. 46 Pac. Rep. 613; Long worth v.
Aslin, 106 Mo. 155, 17 S. W. Rep.
294; Brown v. Brown, 124 Mo. 79, 27
S. W. Rep. 552; Koch v. Roth, 150
111. 212, 226, 37 N. E. Rep. 317; Ader-
holt V. Embry,78 Ala. 185; McCurdy
V. Middleton, 82 id. 131, 2 So. Rep.
721; Baldwin v. Flash, 59 Miss. 61;
Miles V. Ogden, 54 Wis. 573, 12 N. W.
Rep. 81; Long v. Miller, 93 N. C. 233;
Libby v. Hopkins, 104 U. S. 303;
Washington N. Gas Co. v. Johnson,
123 Pa. 576, 16 Atl. Rep. 799; Bray v.
Grain, 59 Tex. 649; Robinson v. Doo-
little, 12 Vt. 246; Wendt v. Ross, 33
Cal. 650; Gaston v. Barney, 11 Ohio
St. 506; Selleck v. Sugar Hollow
Turnpike Co., 13 Conn. 453; Reynolds
V. McFarlane, 1 Overt. 488; McDaniel
V. Barnes. 5 Bush, 183; Parks v. In-
gram, 22 N. H. 283, 55 Am. Dec. 153;
Bosley v. Porter, 4 J. J. Marsh, 621 ;
Parker v. Green, 8 Met. 144; Mann
V. Marsh, 2 Cai. 99: Trotter v. Grant,
2 Wend. 413: Allen v. Culver. 3
Denio, 284; Van Rensselaer v. Rob-
erts, 5 id. 470; Walther v. Wetmore,
1 E. D. Smith, 7; Pattison v. Hull, 9
Cow. 747; Baker v. Stackpoole, id.
420, 18 Am. Dec. 508; Webb v. Dick-
inson, 11 Wend. 62; Stone v. Sey-
mour, 15 id. 19.
Payments made by an agent to his
principal's creditor after the death of
the principal cannot be ap|)lied to
the discharge of indebtedness exist-
ing before his death in a proceeding
against the testator's estate, at least
when the estate is insolvent. Gif-
ford V. Thomas' Estate, 62 Vt. 34, 19
Atl. Rep. 1088.
Under the Louisiana code a debtor
who has the opportunity of ascer-
taining that his creditor has made
an application cannot, after failing
to avail him.self of the right to ob-
ject thereto and allowing a long
time to pass, be heard to ask for a
different application. Baker v.
Smith, 44 La. Ann. 925, 11 So. Rep.
585.
3 Jones V. Williams, 39 Wis. 300;
Waller v. Lacy, 1 M. & G. 54; 2 Pars,
on Cont. 631.
■* Gaston v. Barney, U Ohio St.
506; Wetherell v. Joy, 40 Me. 325.
GOO CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 235.
and if his intention can thus be shown it is of the same force
as though it had been expressed.^ The intention to appropriate
[400] a payment to a particular debt may be collected from
the nature of the transaction, and be referred to the jury as a
question of fact.^ Thus, where two charges of unequal amounts
exist, one legal and the other illegal, the former not due, and
a general payment of an amount not in excess of the illegal
claim is made on account, it was held to have been paid upon
that claim although there was no direction given.' And so
where a payment is made to a creditor who holds an original
claim against the debtor, of which the latter has knowledge,
and also claims which have been purchased without the debt-
or's knowledge, it will be presumed that the paj'ment was in-
tended to be applied upon the former.* If the debtor, at the
time of making the payment, makes an entry in his own book,
stating that it is upon a particular demand, and shows the
entry to tlie creditor, it is a sufficient appropriation.^ The
fact of the entries being made must be communicated to the
debtor," unless the right to make them was exercised pursuant
to a previous direction.'^ The proper time to direct the appli-
cation of the proceeds of personal property delivered or con-
signed to a lienee for sale is when the delivery or consignment
is made.^
1 Snell V. Cottingham, 72 111. 124; out specifying any particular ac-
Tayloe v. Sandlford, 7 Wheat. 13; count, is not an application of it.
Mayor v. Patten, 4 Cranch, 317; Ter- the payer owing the creditor on
hune V. Colton, 12 N. J. Eq. 233, 312; more than one account. Orr v.
Rowland v. Rench, 7 Blackf. 236; Nagle, 87 Hun, 12, 33 N. Y. Supp. 879.
Mitchell V. Dall, 2 Har. & G. 159: 3 Caldwell v. Wentworth. 14 N. H,
Robinson v. Doolittle, 12 Vt. 246; 431; Frazer v. Bunn, 8 C. & P. 704;
Shaw V. Picton, 4 B. & C. 715; Scott Dorsey v. Wayman, 6 Gill, 59. See
V. Fisher, 4T. B. Mon. 387; Keane v. McCarty v. Gordon, 16 Kan. 35.
Branden, 12 La. Ann. 20; Smuller v. ^Holley v. Hardeman, 76 Ga. 328;
Union Canal Co., 37 Pa. 68; Lanten Moose v. Marks, 116 N. C. 785, 21 S.
V. Rowan, 59 N. H. 215; Roakes v. E. Rep. 561.
Bailey, 55 Vt. 542; Bray v. Grain, 59 « Frazer v. Bunn, 8 C. & P. 704.
Tex. 649; Hansen v. Rounsavell, 74 ^ Reiss v. Schemer, 87 111. App. 84
111. 238; Plain v. Roth, 107 id. 588. 7 First Nat. Bank v. Roberts, 2 N.
2 Pritchard v. Comer, 71 Ga. 18; D. 195, 49 N. W. Rep. 722.
West Branch Bank v. Morehead, 5 » Bell v. Bell, 20 S. C. 34; Frost v.
W. & S. 542; Morehead v. West Weathersbee, 23 id. 368; Baum v.
Branch Bank, 3 id. 550. Trantham, 42 S. C. 104, 19 So. Rep.
Paying money on account, with- 973, 46 Am. St. 697.
§ 235.] APPLICATION OF PAYMENTS. 001
But this right of the debtor to elect to which of several debts
^ payment shall be applied is confined to voluntary payments.
It does not extend to moneys collected by legal process.' The
right of the debtor to so direct, however, cannot be defeated
by the creditor obtaining possession of the debtor's funds with-
out his consent, except by legal proceedings binding upon him.
Where a debtor intrusted funds to an agent with directions to
apply them by way of compromise in satisfaction of two de-
mands held against him by the same person, and the creditor,
knowing this fact, levied an attachment on the money so con-
fided to the agent, and also on the money of the agent, and
thereupon the latter, to regain possession of his own money,
assented, under protest, to the application of the debtor's money
to one of the debts which was unsecured, it was held not bind-
ing upon the debtor, and he was allowed, when afterwards
sued, to apply it to either at his option.- So where a surety
sends money by the principal to the creditor, and such prin-
cipal so informs the creditor, they can make no other applica-
tion than that directed by the surety.^
Where money is paid by the principal debtor a surety cannot
interfere to control the application contrary to the intention
of the party paying.* Xor can subsequent incumbran- [401]
cers control the application of moneys matle by the parties to
earlier liens.'^ But sureties on official bonds will not be ren-
dered liable as for defalcation by application of funds received
in their time to cancel prior balances or defalcations.® Nor
1 Blackstone Bank v. Hill. 10 Pick. 5 Richardson v. Washington Bank*
129; Barrett v. Lewis, 3 Pick. 123; 3 Met. 536; Mills v. Kellogg, 7 Minn.
Wooten V. Buchanan, 49 Miss. 386; 469. But see Green v. Tyler, 39 Pa.
Forelander v. Hicks. 6 Ind. 448; 361.
Nichols V. Knowles, 3 McCrary, 477, *> In United States v. Eckford's
17 Fed. Rep. 494; Monson v. Meyer, Ex'r, 1 How. 250, McLean, J., said:
190 111. 105, 60 N. E. Rep. 63, 93 IIL "The treasury officers are the agents
App. 127. of the law. It regulates their
'■i Dennis V. McLaurin. 31 Miss. 606; duties, as it does the duties and
Pearl v. Clark, 3 Pa. 350. rights of the collector and his .sure-
3 Reed v. Board man, 20 Pick. 441. ties. The officers of the treasury
See Lansdale v. Graves. Sneed, 215. cannot, by any exercise of their dis-
^ Mathews v. Switzler, 46 Mo. 301; cretion, enlarge or restrict the obli-
Gaston v. Barney, 11 Ohio St. 506; gation of tlie collector's bond. Much
Field V. Holland, 6 Cranch, 8; Allen less can they, by the mere fact of
V. Jones, 8 Minn. 202. keeping an account current, in
602
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 235...
will an intentioQ of the principal debtor to apply a payment
m favor of a surety be presumed, and thus exclude the right
of the creditor to make the application.^ The right of a debtor
to apply money regardless of his surety exists only where the
payment is made by his own funds free from any equity in
favor of the surety to have the application made in payment
of the debt for which he is liable. Where the specific money
paid to the creditor and applied on a debt of the principal, for
which the surety is not held, is the money for the collection
and payment of which the surety is bound, the latter is entitled
to have the money applied to the payment of the debt for
which he is surety unless the creditor shows a superior equity
to sustain the application made. The surety has the burden
of showing that the application made is inequitable to him.'-'
The absolute right of directing the application of payments
which a debtor has does not pass to his personal representa-
[402] tives; nor does it pertain to any one making payments
in a fiduciary capacity.^ If the terms of an express trust do
which debits and credits are entered
as they occur, and without any ex-
press appropriation of payments, af-
fect the right of sureties. The col-
lector is a mere agent or trustee of
the government. He holds the
money he receives in trust, and is
bound to pay it over to the govern-
ment as the law requires. And in
the faithful performance of this
trust the parties have a direct inter-
est, and their rights cannot be disre-
garded. It is true, as argued, if the
collector shall misapply the public
funds, his sureties are responsible.
But that is not the question under
consideration. The collector does
not misapply the funds in his hands,
but pays them over to the govern-
ment without any special direction
as to their application. Can the treas-
ury officers say, under such circum-
stances, that the funds currently re-
ceived and paid over shall be appro-
priated in discharge of a defalcation
which occurred long before the
sureties were bound for tlie collector.
and by such appropriation hold the
sureties bound for the amount? The
statement of the case is the best
refutation of the argument. It is so
unjust to the sureties, and so directly
in conflict with the law and its pol-
icy, that it requires but little consid-
eration." Jones v. United States, 7
How. 681; Boody v. United States, 1
Woodb. & M. 150; Postmaster-Gen-
eral v. Nor veil, Gilpin, 106; United
States V. January, 7 Cranch, 572;
Seymour V. Van Slyck, 8 Wend. 403;
Stone V. Seymour. 15 id. 19: United
States V. Linn, 2 McLean, 501.
1 Smith's Merc. L. 672; Plomer v.
Long, 1 Stark. 153; Hargroves v.
Cooke, 15 Ga. 321; Clark v. Burdett,
2 Hall, 197; James v. Malone, 1
Bailey. 334. See Lansdale v. Graves,
Sneed, 215: Gard v. Stevens, 12 Mich.
292, 86 Am. Dec. 52.
2 Merchants' Ins. Co. v. Herber, 08
Minn. 420. 71 N. W. Rep. 624.
3 Putnam V. Russell, 17 Vt. 54, 42
Am. Dec. 478; Barrett v. Lewis, 2:
Pick. 123; Cole v. Trull, 9 Pick. 325.
§ 230.J APPLICATION OF PAYMENTS. G03
not determine the order of payments, their order, it is believed,
must be fixed by law.
A series of cases in Pennsylvania have dealt with the right
of members of building and loan associations to direct the ap-
plication of payments made to the latter. Originally it was
determined that all payments were to l)e credited to the debt
created by the loan made to the member.^ But tliis doctrine
was qualified, and was not to be regarded as laying down the
rule that payment of dues on the stock, ipno facto ^ works an
extinguishment of so much of the mortgage. "The debtor
may so apply it, but the payment itself is not an application
of the money to the reduction of the mortgage."^ The right
of the debtor to direct the application of the payments on the
stock to the extinguishment of the debt is now recognized if
the rights of creditors, based on the assignment. of the stock,
are not alBfected,' or legal process has not been resorted to op
insolvency has not intervened.* An application made at the
inception of the contract for the loan cannot be subsequently
interfered with.^ Where a borrowing member of such an as-
sociation gives it his obligation for the payment of the princi-
pal debt in equal monthly instalments until the whole is paid,
according to the statute and the rules of the association, such
instalments cannot be appropriated to a direct payment on
account of the loan with the effect of leaving dues on the
stock unpaid."
g 236. Same subject. An agreement between debtor and
creditor for a particular application of moneys expected from
But in Marshall v. Nagel, 1 Bailey, 2 Building Ass'n v. Sutton, 35 Piu
308, it was held that if a debtor pays 463. 78 Am. Dec. 349.
a sum of money on account of dis- ^Wadlinger v. Washington Ger-
tinct debts due to different creditors man B. & L. Ass'n, 153 Pa. 622, 26
to a common agent of all the credit- Atl. R'^p. 647.
ors, and gives no directions as to ''strohen v. Franklin Savings &
the order in which the money is Loan Ass'n, 115 Pa. 273, 8 Ati. Rep.
to be applied to the debts, the agent 843; York Trust, Real Estate & De-
may make the application according posit Co. v. Gallatin, 186 Pa. 150, 40
to his discretion and the debtor will Atl. Rep. 317.
be bound by it. Carpenter v. Goin, » York, etc. Co. v. Gallatin, suipra.
19 N. H. 479. 6 preemansburg Building & L.
iKupfert V. Guttenberg Building Ass'n v. Watts, 109 Pa. 221, 48 AtL
Ass'n, 30 Pa. 465; Hughes's Appeal, Rep. 1075.
id. 471.
60i
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 236.
a specific source will preclude any diversion by either, without
the consent of the other, when the money is received.' Thus,
where money is realized by a creditor from a collateral se-
curity for a debt, such money is deemed appropriated to that
debt.- The plaintiff, an equitable mortgagee for 600Z., lent
the title deeds of the property to the defendant E., the mort-
gagor, to enable him to negotiate a sale of it, the deeds to be
returned. E. paid plaintiff oOOl. received by him as part of
the purchase-money ; afterwards E. became bankrupt. Before
such payment was made E. was indebted to the plaintiff on a
trade account for a larger amount. E. made no application
of the 300Z. he paid, and the plaintiff contended that he might
apply it to the trade account, thus leaving the mortgage un-
discharged. This contention was disapproved of, it being infer-
able from the nature of the transaction that E. made the pay-
ment only in respect to the plaintiff's right to the mortgage,
and that it must, from the circumstances, be understood that
the payer meant the money to be applied toward the satisfac-
tion of the mortgage.^ If money is advanced by a factor to
1 Thompson v. Hudson, L. R. 6 Ch.
.320; Lansdale v. Mitchell, 14B. Mon,
348; Hughes v. McDougle, 17 Ind.
399; King of Spain v. Oliver, Pet.
C. C. 276; Sproule v. Samuel, 5 111.
135; Stackpole v. Keay, 45 Me. 297;
Gwathney v. McLane, 3 McLean,
371: White v. Toles. 7 Ala. 569;
Smith V. Wood, 1 N. J. Eq. 74; Hahn
V. Geiger, 96 III. App. 104; Hansen v.
Rounsavell, 74 111. 238. See § 235,
last paragraph.
In Ross V. Crane, 74 Iowa, 375, 37 N.
W. Rep. 959, the purchaser of a note
and mortgage agreed with their
maker in writing to employ him and
apply his wages in payment of the
mortgage debt. After money enough
had been earned to pay the mortgage
the holder applied the amount to an-
other account and assigned the se-
curity and the note to a third person.
The agreement was held binding and
the debt to have been satisfied be-
fore the assignment was mad&
2 Howard v. Schwartz, 22 Tex. Civ.
App. 400. 55 S. W. Rep. 348; Cald-
well V. Hall. 49 Ark. 508, 1 S. W. Rep.
62; Strickland v. Hardie, 82 Ala. 412,
3 So. Rep. 40; Greer v. Turner, 47
Ark. 17, 14 S. W, Rep. 383; Pritchard
V. Comer, 71 Ga. 18; Hatcher v.
Comer, 73 id. 418; Taylor v. Cock-
rell, 80 Ala, 236; Marziou v. Pioche,
8 Cal. 522; Buckley v. Garrett, 47 Pa.
280; San ford v. Clark, 29 Conn. 457;
Masten v. Cummings, 24 Wis. 623;
Cross V. Johnson, 30 Ark. 398; Mo
Cune V. Belt. 45 Mo. 174; Paine v.
Bonney, 6 Abb. Pr. 99; Donally v. Wil-
son, 5 Leigh, 329; Windsor v. Ken-
nedy, 52 Miss. 164; Hicks v. Bing-
ham, 11 Mass. 300; Hall v, Marston,
17 Mass. 575. See Green v. Ford, 79
Ga, 130; Baum v. Frantham, 24 S. C
104.
3 Young V. English, 7 Beav. 10;
Buster v. Holland, 27 W. Va. 510, 53a
See Stoveld v. Eade, 4 Bing. 154;
Waters v. Tompkins, 2 Cr., M. & R
273; Pearl v. Deacon, 24 Beav. 18a
§ 236.]
APrLICATION OF PAYMENTS.
C05
purchase property, upon the security of its being shipped to
him, it will be implied that the advances were made upon tho
condition that they should be paid out of the proceeds of the
property; after the factor has obtained possession of it the
debtor cannot direct the application of the amount realized
from it to another debt.' But the agreement to control the
debtor's choice must be such as to give the creditor a ri"-ht in
the nature of a lien which can be specitically enforced.^
Where the debtor has directed the application of his pay-
ment to a particular debt, he has a right to treat it as actually
so applied. The debt will be deemed extinguished to the ex-
tent of such payment.' The creditor has no option to disre-
gard the direction,^ and no different application by him will
avail unless afterwards ratified or acquiesced in by the [403]
debtor;^ nor will the direction of the latter be overruled or
changed in equity.^ After a debtor has made application of a
1 Frost V. Weathersbee, 23 S. C. 354.
2 Whitney v, Traynor, 74 Wis. 289,
43 N. W. Rep. 267; Stewart v. Hop-
kins, 30 Ohio St. 502, See Mellendy
V. Austin, 69 111. 15; Clarke v. Scott,
45 Cal. 86.
3Libby v. Hopkins, 104 U. S. 303;
Washington N. Gas Co. v. Johnson,
123 Pa. 576, 16 Atl. Rep. 799; Lauteu
V. Rowan, 59 N. H. 215; Irwin v.
Paulett, 1 Kan. 418.
4 Runyon v. Latham, 5 Ired. 551;
Wetherell v. Joy, 40 Me. 325; Scott
V. Fislier, 4 T. B. Mon. 387; Blanton
V. Rice, 5 id. 253; Rugeley v. Smalley,
12 Tex. 238; Farmers', etc. Bank v.
Franklin, 1 La. Ann. 393; Stewart v.
Hopkins, 30 Ohio St 502; Bank of
Muskingum V. Carpenter, 7 Ohio, 21,
28 Am. Dec. 616.
5 Sherwood v. Haight, 26 Conn. 432;
Jackson v. Bailey, 12 111. 159; Fore-
lander V. Hicks, 6 Ind. 448; Semmes
V, Boy kin, 27 Ga. 47; Hall v. Marston,
17 Mass. 575; Solomon v. Dreschler,
4 Minn. 278; Tayloe v. Sandiford, 7
Wheat. 13: Bonaffe v. Woodberry,
12 Pick. 463; Hussey v. Manufact-
urers', etc. Bank, 10 Pick. 415; Blood-
worth V. Jacobs, 2 La. Ann. 24; Adams
V. Bank. 3 id. 351; Robson v.
McKoin, 18 id. 544; Treadwell v.
Moore, 34 Me. 112; Black v. Shooler,
1 McCord, 293; Martin v. Draher, 5
Watts 544; Mitchell v. Dall, 2 Har.
& G. 159; McDonald v. Pickett. 2
Bailey, 617: Reed v. Boardinan, 20
Pick. 441; McKee v. Stroup, 1 Rice,
291; Moorehead v. West Branch
Bank, 3 W. & S. 550; Jones v. Per-
kins, 29 Miss. 139; Smith v. Wood, 1
N. J. Eq. 74; Cardinell v. ODowd.
43 Cal. 586.
^Selfridge V.Northampton Bank,
8 W. & S. 320.
It has been held that the debtor
cannot impute a payment to princi-
pal when interest is due thereon
without first paying the interest.
Johnson v. Robbins, 20 La. Ann. 569.
This may be doubted if the creditor
receives the money. Unless the in-
terest was due as damages, it might,
notwithstanding, be recovered. See
Williams v. Houghtaling, 3 Cow. 86;
Pindall v. Bank of Marietta, 10 Leigh,
484.
GOG
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 236.
payment he cannot himself revoke it, and apply it otherwise,
without the creditor's consent.^ lie will be held to the applica-
tion made, though it was made for interest on a debt not bear-
ing interest; ^ to a debt on which the statute of frauds does not
allow an action to be brought; ' or to an illegal claim/ But
where usurious interest has been paid, it is deemed an extortion
and the payment may be recovered or applied to the principal
debt.^ A different rule prevails in Ohio,® and in the District of
[404] Columbia." By mutual consent of the debtor and creditor,
where no other parties are interested, the application of a pay-
ment may be changed; and in that case the indebtedness first
discharged will be revived by implication, without any express
promise.^ If there are other parties interested as a surety,''
1 Long V. Miller, 93 N. C. 233; York
Trust, Real Estate & Deposit Co. v.
Gallatin, 186 Pa. 150, 40 Atl. Rep.
317,
2 Beard v. Brooi^lyn, 31 Barb. 142.
a Haynes v. Nice, 100 Mas& 327, 1
Am. Rep. 109.
^Tomlinson Carriage Co. v. Kin-
sella, 31 Conn. 268; Hubbell v. Flint.
15 Gray, 550: Dorsey v. Way man, 6
Gill, 59; Richardson v. Woodbury, 13
Cush. 279; Feldman v. Gamble, 26
N. J. Eq. 494; Caldwell v. Went-
worth, 14 N. H. 431. See Plummer
V. Erskine, 58 Me. 59; Mueller v. Wie-
bracht. 47 Mo. 468.
A debtor may direct the applica-
tion of a payment upon an illegal
item of tiie account against iiim,
neither party believing it to be
illegal, and the transaction involving
it not being malum, in se, but vialum
prohibitum. Johnston v. Dahlgren,
48 App. Div. 537, 62 N. Y. Supp. 1115,
166 N. Y. 354, 59 N. E. Rep. 987.
5 Wood V. Lake. 13 Wis. 84, and
cases cited; Gill v. Rice, id. 549; Lee
V. Peckham. 17 id. 383; Fay v. Love-
joy, 20 id. 403; State Bank v. Ens-
minger, 7 Blackf. 105: Smead v.
Green, 5 Ind. 308; Browning v. Mor-
ris, 2 Cowp. 790; Smith v. Bromley,
2 Doug. 695, note; Williams v. Hed-
ley, 8 East, 378; Wheaton v. Hib-
bard, 20 Johns. 290, 11 Am. Dec.
284; Burrows v. Cook, 17 Iowa, 436;
Stanley v. Westrop, 16 Tex. 200;
Parchman v. McKinney, 12 Sm. &
M. 631. See Second Nat. Bank v.
Fitzpatrick, 23 Ky. L. Rep. 610, 63
S. W. Rep. 459; Citizens" Nat. Bank
V. Forman's Assignee, 33 Ky. L. Rep.
613, 63 S. W. Rep. 454.
In an action to recover payments
made on account of usury the appli-
cation to the principal debt will be
made as of the date of the writ, if
the party who made them so re-
quests. Peterborough Savings Bank
V. Hodgdon, 62 N. H. 300.
••See Conant v. Seneca County
Bank, 1 Ohio St. 298; Shelton v.
Gill, 11 Ohio, 417; Graham v. Cooper,
17 id. 605; Williamson v. Cole, 26
Ohio St. 207.
■^ Kendall v. Vanderlip, 2 Mackey,
105.
8 Rundlett v. Small, 25 Me. 29.
^Brockschmidt v. Hagebusch, 73
111. 562; Ruble v. Norman, 7 Bush,
533; Ware v. Otis, 8 Me. 387.
§ 237.] APPLICATION OF PAYMENTS. GL'7
co-debtor,' or a subsequent incumbrancer,^ their consent is
essential; ' but a debtor's general creditor cannot be heard to
complain.*
§237. Same subject; evidence. Parol evidence is admis-
sible to show that at the time a note was given for money lent
an agreement was made to pay a certain sum as extra inter-
est and that all the payments made were for such interest and
not upon the note.*^ A copy of a letter addressed by a cred-
itor to his debtor, contained in the letter book of the former,
advising the debtor that he had drawn on him for the amount
of a particular purchase, is not evidence for such creditor in
an action against a guarantor to establish that a payment made
shortly afterwards by the debtor, who was indebted on several
accounts, was made in discharge of such purchase, though the
draft itself or evidence of its contents, if lost, accompanied by
a letter from the debtor to the creditor regretting his inabil-
ity to meet the draft, and promising speed}' payment of that
demand, followed by a payment a few days after the date of
such letter, is evidence to show that it was a payment made
in discharge of that particular claim." The letter of a debtor,
or of his acknowledged general agent, to his creditor, direct-
ing him to which of two debts a payment he is about to [405]
make shall be applied, is the best evidence to show on what
account such payment was received by the creditor.'' Such an
act of the debtor in an action against his guarantor for one of
the debts, where several were due, is not considered as merely
the declaration of a third person, but it is the act of the party
who had the legal right to make the application.^
' Thayer v. Denton, 4 Mich. 192 ; appropriation was made after ne
Miller v, Montgomery, 31 111. 350; had applied for the benefit of the
Brown v. Brabham, 3 Ohio, 275. insolvent laws, and was therefore
2 Chancellor v. Sohott, 23 Pa. 68; invalid. Richmond Iron Works v.
Tooke V. Bonds. 39 Tex. 419. Woodruff, 8 Gray, 447. See Cremer v.
3 In a suit to foreclose a mortgage Higginson, 1 Mason, 323; Bank of
which the defendant alleged had North America v. Meredith. 2 Wash,
been paid, the plaintiff proved an C. C. 47.
agreement to change the appropria- •• Whitney v. Traynor, 74 Wis. 289,
tion of the payments, previously 42 N. W. Rep. 2G7.
stipulated to be applied to the mort- ^Rolian v. Hanson, 11 Cush. 44.
page debt, to another debt. Held, 6 Mitchell v. Dall, 2 H. & G. 159.
that the defendant might then prove ' Id.
'that the agreement to chanc-e the ^Id.
008
CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 238,
§ 238. By creditor. "Where the debtor omits to make any
appropriation at the time of payment the right to make the
application devolves on the creditor. But its exercise is sub-
ject to limitations. In one respect, however, it is less restricted
than that of the debtor. The creditor is not required to decide
at once on receiving the money. Within what time he must
exercise the choice has been much discussed. The weight of
opinion seems to be that he must make the application within
a reasonable time, in view of the circumstances of the particu-
lar case, at the latest, before any controversy arises or any
material change occurs in the relations of the parties.^ The
bringing of a suit may determine the creditor's election, as
1 Applegate v. Koons, 74 Ind. 347;
Robinson v, Doolittle, 13 Vt. 246;
Mills V. Fowkes, 5 Bing. N. C. 455;
Philpott V. Jones, 2 Ad. & El. 41;
Smith's Merc. L. 650; Peters v. An-
derson, 5 Taunt, 596; Norris v. Beaty,
6 W. Va. 477; Bridenbecker v. Low-
ell, 33 Barb. 9; Haynes v. W'aite, 14
Cal. 446; Allen v. Culver, 3 Denio,
284; Parker v. Green, 8 Met. 144:
Whetmore v. Murdock, 3 Woodb. &
M. 390; United States v. Kirk pat-
rick, 9 Wheat. 720; Backhouse v. Pat-
ton, 5 Pet. 160; Hill V. Southerland, 1
Wash. (Va.) 128; Van Rensselaer v.
Roberts, 5 Denio, 470; McCartney v.
Buck, 8 Houst 34, 12 Atl. Rep. 717.
In Marsh v. Oneida Central Bank,
34 Barb. 298, it was held that a bank
which holds a note against one of its
depositors is not bound to apply his
deposits immediately when it be-
comes due. If not made then, and a
judgment is recovered on the note,
the right to make such application is
not thereby waived or lost, and the
bank may afterwards avail itself of
the right against an assignee of the
deposit. See Long Island Bank v.
Townsend, Hill & Denio, 204; Mayor
V. Patten, 4 Cranch, 317.
In some cases it is held that an ap-
plication made after an action 'has
been begun is too late. Taylor v.
Coleman, 20 Tex. 773; Sanford v.
Van Arsdall, 53 Hun, 70, 6 N. Y. Supp.
494; Huff stater v. Hayes, 64 Barb.
573. But it has been sustained when
made after suit brought where it
harmonized with the intention of
the parties. Bank of California v.
Webb, 48 N. Y. Super. Ct. 175. It is
said in the same case (94 N. Y. 467)
that the application may be made
any time before the court makes it
unless the debtor previously requests
the creditor to exercise his right of
election.
In South Carolina the creditor has
until verdict or judgment to apply
the payments. Heilbron v. Bissell,
Bailey's Eq. *430; Price v. Hamilton,
12 S. C. 32; Thatcher v. Massey, 20id.
543; Baum v. Trantham, 43 S. C. 104,
19 So. Rep. 973, 46 Am. St. 697.
These cases are rested upon the prin-
ciple that until the debtor pays the
money it is his: and he has the right
to control its disposition. After the
creditor receives it he may exercise
such right, and it continues until the
court has exerted its power over the
payment.
Whenever the application is made
effect must be given to it as of the
time the money was received. Poul-
son V. Collier, 18 Mo. App. 583; Bray
v. Crain, 59 Tex. 649.
§ 23S.] APrLIOATION OF PAYMENTS. 609
where he holds two notes and an unappropriated payment
large enough to pay one of them is made, his suit on one of
the notes is an election to apply the money to the payment of
the other.i But if he brings separate suits on them he will not
bo allowed on the trial of one to elect to apply to the [iOG]
satisfaction of the other a payment previously made, and not
before specially applied by either party .^ If there is no pro-
vision given in securities, the payment of which is enforced by
law, as to the application of their proceeds the creditor has no
right to make an appropriation thereof.^ A stipulation in a
note that if the maker became otherwise indebted to the payee
before its payment the latter might apply the first payment to
such claims as he chose does not include property taken by
virtue of a mortgage securing such note, especially as against
sureties on the latter."* A creditor cannot appropriate pay-
ments after third persons have acquired rights against the
debtor, so as to affect their rights if an application can bo
made which will protect them.-^ In Arkansas the rule is that
where there is a single running account in which third persons
are not interested, and a general payment is made without ap-
plication by the debtor, the creditor has no election to make
the application; the law applies the payment to the several
items of the account in the order of their priority.^
A banker is not required to apply a balance due by him on
an account current to his depositor upon the liability of such
customer on a note or bill. And in a suit by a banker against
the acceptor of a bill the fact that the drawer had an account
with the banker, and that after protest of the bill there were
balances in favor of the drawer, would not be evidence in favor
' AUeu V. Kimball, 23 Pick. 473; that payments made by a third per-
Starrett v. Barber, 20 Me. 457; Bobe son, who is not the debtor's agent.
V. Stickney, 36 Ala. 492; Dent v. State are not voluntary, though they were
Bank, 12 Ala. 275. made pursuant to arrangement or
-Stone V. Talbot, 4 Wis. 442. understanding between the parties.
3 Orleans County Nat. Bank v. < Barrett v. Bass, 105 Ga. 421, 31 S.
Moore, 112 N. Y. 543, 8 Am. St. 775, R Rep. 435.
20 N. E. Rep. 357, 3 L. R. A. 302; » Willis v.McIntyre, 70Tex. 34, 7 S.
Snider v. Stone, 78 111. App, 17; Mat- W. Rep 594, 8 Am. St. 574
ter of Georgi, 21 N. Y. Misc. 419, 47 ^ Hughes v. Johnson, 38 Ark. 295;
N. Y. Supp. 1061. Dunnington v. Kirk, 57 Ark. 595, 23
It is said in Sanford v. Van Ars- S. W. Rep. 430.
dall, 53 Hun, 70, 77, 6 N. Y. Supp. 494,
Vol. 1 — 39
610
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 238.
of the acceptor to show a pajnnent or satisfaction by the
drawer.^ If a debtor owes to his creditor several debts it is
generally said that the creditor may apply a payment which
the debtor does not appropriate to either at his pleasure.- This
is not true in an absolute and unqualified sense. He is not at
liberty to apply a payment to a disputed,' contingent,* or un-
liquidated demand in preference to one admitted, absolute or
certain, nor to one not due in lieu of another past due.^ Money
collected on an execution should be credited on the writ; the
plaintiff cannot take a part of it and apply it to an unsecured
debt, though it may be that it could have been applied to an
execution of older date than that which was levied.^ This
1 Citizens' Bank v, Carson, 32 Mo.
191; Long Island Bank v. Townsend,
Hill & Denio, 204 But see State
Bank v. Arnastrong, 4 Dev. 519, and
State Bank v. Locke, id. 529.
2 Giles V. Vandiver, 91 Ga. 192, 17
S. E. Rep. 115; Skinner v. Walker, 98
Ky. 729, 34 S. W. Rep. 233; Coney v.
Laird, 153 Mo. 408, 55 S. W. Rep. 96;
On- V. Nagle. 87 Hun, 12, 33 N. Y.
Supp. 879; Burt v. Butterworth, 19
R. L 127, 32 Atl. Rep. 167; Perry v.
Bozeman, 67 Ga. 643; Greer v. Bur-
nam, 71 id. 31; Trotter v. Grant, 2
Wend. 413; Robbins v. Lincoln, 12
Wis. 1; Peters v. Anderson, 5 Taunt.
596; Arnold v. Johnson, 2 111. 196
Brady's Adm'r v. Hill, 1 Mo. 225
Brewer v. Knapp, 1 Pick. 332
Holmes v. Pratt, 34 Ga. 558; Wash-
ington Bank v. Prescott, 20 Pick.
339; Goddard v. Cox, 2 Str. 1194;
Allen V. Kimball, 23 Pick. 473;
Brooke v. Enderby, 2 B. & B. 70;
Bodenham v. Purchas, 2 B. & Aid.
39; Bosaiiquet v. Wray. 6 Taunt. 597.
3 Stone V. Talbot. 4 Wis. 442. See
Ayer v. Hawkins, 19 Vt. 26; Lee v.
Early, 44 Md. 80; McLendon v. Frost,
57 Ga. 448.
* Baker v. Stackpoole, 9 Cow. 420,
18 Am. Dec. 508; Cremer v. Higgin-
fion, 1 Mason, 338; Whetmore v. Mur-
dock, 3 Woodb. & M. 390. See Kid-
der V. Norris, 18 N. H. 532; Wright
V. Laing, 3 B. & C. 165.
6 Richardson v. Coddiugton, 49
Mich. 1. 12 N. W. Rep. 886; Lam-
prell V. Bellericay Union, 3 Ex. 283;
Baker v. Stackpoole, 9 Cow. 420, 18
Am. Dec. 508; Early v. Flannery, 47
Vt. 253; Niagara Bank v. Rosevelt, 9
Cow. 409; Bobe v. Stickney. 36 Ala.
482; Burks v. Albert. 4 J. J. Marsh.
97. 20 Am. Dec. 209; Heintz v. Cahn,
29 111. 308; Bacon v. Brown, 1 Bibb,
334, 4 Am. Dec. 640; Parks v. In-
gram, 22 N. H. 283, 55 Am. Dec. 153;
Cloney v. Richardson, 34 Mo. 370:
Smith V. Applegate, 1 Daly, 390. See
Dedham Bank v. Chickering, 4 Pick.
314; Gass v. Stinson, 3 Sumn. 99;
Hunter v. Osterhoudt, 11 Barb. 33;
Effinger v. Henderson, 33 Miss. 449.
In Arnold v. Johnson, 2 111. 196, it
is held the creditor may apply the
payment to any debt he sees proper,
unless there are circumstances
which would render the exercise of
such discretion on the part of the
creditor unreasonable, and enable
him to work injustice to his debtor.
See Bridenbecker v. Lowell, 33
Barb. 9; Lindsey v. Stevens, 5 Dana,
107.
6 Smith V. Smith, 105 Ga. 717,31
S. E. Rep. 754.
§ 238.] Al'l'LICATION OF PAYMENTS. Gil
principle does not seem to be recognized in ]\rissouri. In a
case where a deed of trust secured two nott^s, with different
sureties, the proceeds of the foreclosure sale being sufficient to
pay either note, but not both, the creditor was sustained in ap-
plying- the money so as to retain the benefit of both securities,
without regard to the dates when the notes matured.^ The
test as to whether the application made is valid or not, as ap-
plied to payments for goods sold, is whether the debtor couhl
recover the money paid, which, as a rule, can only be done
where payment has been made in consequence of fraud, or
under duress, or under a mistake of fact. This principle does
not extend to a case where liquors are sold for the purpose of
being resold in violation of law. Hence the application of
money paid to the items of an account covering such liquors
is v^alid, though no action would lie to recover their price.-
Where part of a debt is barred by the statute and a [407]
pirt is collectible, and the debtor makes a payment, requiring
and receiving a receipt in full of all demands, the law will
imply an application of the payment to the collectible portion.'
But where a debtor pays money, without any specific direc-
tions, on account of several debts, all of which are barred, the
creditor may apply it to either at his option; he may apply it
to the largest and thus revive it as to a balance. But he is
not at liberty to apply a part of the payment to each of the
several demands and thereby revive them all.'' And it has
been held that where a payment made is less than either of
several distinct demands, the creditor having a right to apply
it is not allowed to divide it and apply a part to each de-
mand,^ but in a later case, the indebtedness in question consist-
ing of two notes and an account of different dates, the creditor
was sustained in applying a general payment in such manner
as to keep all the debts alive.'* This is in accordance with the
prevailing doctrine, none of the debts being barred by statute.''
' Sturgeon Savings Bank v. Riggs, 5 Wheeler v. House, 27 Vt 735.
72 Mo. App. 239. « Rowell v. Estate of Lewis. 72 Vt
^IMiiyberry v. Hunt. 34 N. B. 628. 16:3, 47 At). Rep. 783; Beck v. Haas,
3 Berrian v. Mayor, 4 Robert. 538. Ill Mo. 264, 20 S. W. Rep. 19. 33 Am.
See Hill v. Robbins. 22 Mich. 475. St. 516.
■* Ayer v. Hawkins, 19 Vt. 26. See "^ Where money is paid by a debtor
contra, Jackson v. Burke, 1 Dill, to a creditor wlio has several de-
311. See Armistead v. Brooke, 18 mands against him, and no tUrec-
Ark. 521. tions are given how he shall apply
612
CONVENTIONAL LIQUIDATIONS AND DISCHARGES.
[§ 238.
The rule of Clayton's Case,' which is that, where an account
current is kept between parties, as a banking account, there is
no room for any other appropriation than that which arises
from the order in which the receipts and payments take place
and are carried into the account, is not an invariable rule; the
circumstances of a case may afford ground for inferring that
the transactions of the parties were not intended to come
under that rule, as where there is no account current, and no
setting off of one item against another, but credit is given for
the entire sum paid at the end of all the items. In such a
case the creditor may make the application up to the last mo-
ment, by action or, otherwise, by intention expressed, implied
or presumed.^
it, the creditor may apply it as he
pleases; therefore, when he holds
two bonds of his debtor, both due,
and payable with interest, and
money is so paid to him, he may
apply it to the part extinguishment
of both bonds; and he is not bound
to apply it on one bond until it be
satisfied, and the residue to the
other. Smith v. Screven, 1 McCord,
368. See James v. Malone, 1 Bailey,
334.
In Washington Bank v. Prescott,
20 Pick. 339, four notes were made
by the same person, and indorsed by
the defendant; they were in the
hands of the same holder; and the
defendant, before any of them be-
came due, gave the holder an order
for the payment of the notes with-
out expressing any priority out of
property conveyed by the maker to
assignees by an indenture to which
the indorser was a party, for the
payment of the notes in full or pro-
portionably, which property proved
to be insufficient. The assignees, in
pursuance of the order, made a pay-
ment after all the notes had fallen
due, and the holder applied the
money to all the notes pro rata, in-
stead of applying it wholly to those
which had first fallen due, and it
was held that he had a right to
make such application. In an ac-
tion on two of the notes, it was held
that the other two, with the indorse-
ments thereon, were admissible in
evidence in order to explain the ap
propriation of the money paid on
the order. And it vvas also held
that the jury in assessing the dam-
ages were not to regard any div-
idend which might in the future be
paid on such order. See Blackstone
Bank v. Hill, 10 Pick. 129; Black-
man V. Leonard, 14 La. Ann. 59;
White V. Trumbull, 15 N. J. L. 314,
29 Am. Dec. 687.
In order that the partial pay-
ment of a debt part of which is
barred shall take it all out of the
statute of limitations "there must
be reasonable evidence that the
debtor recognized and admitted the
whole of the indebtedness to be due;
but if he did so admit, and made a
general payment on account of it,
there is no reason for applying the
admission and payment to either of
1 1 Merivale, 585.
2 Cory V. Owners of Turkish Steam-
ship Mecca, [1897] App. Cas. 286.
§ 2;J9.]
APPLICATION OF PAYMENTS.
613
§ 2V.). Same subject. It has been held that a cred- [408''
itor may apply money paid by the debtor without directions
to a debt on which the statute of frauds does not allow an ac-
tion to be maintained/ or on a bill void for want of a stamp,*
or to one of two bills, or one of two debts barred by the
statute of limitations.'' The general rule, however, is that the
creditor cannot make an application of moneys to any demand
for which he could not sustain an action.^ lie is not permitted
to apply them to an illegal demand, although a debtor may do
so.' A more precise and accurate statement of the rule in re-
spect to a creditor's right to apply a payment not appropriated
by the debtor is that the creditor may apply it on either of
several demands at his pleasure where they are all equally
valid, payable absolutely, liquidated, due, antl not in fact con-
tested.^ A creditor will not be allowed to make such an ap-
the notes rather than to the others,
hut it would carry out the inten-
tions of the parties to apply the
acknowledgment and payment to
each of the notes, that is. to the
whole indebtedness." Taylor v. Fos-
ter, 132 Mass. 30.
In Mills V. Fowkes, 5 Bing. N. C.
455, it is ruled that a creditor may
apply a general payment to a barred
debt, though he holds claims which
are not barred. But see Reed v.
Hurd, 7 Wend. 408; Heath v, Gren-
ell, 61 Barb. 190; Harrison v. Day-
nes, 23 La. Ann. 216.
1 Haynes v. Nice, 100 Mass. 327;
Philpott V. Jones, 4 Nev. & Man. 14,
3 A. & R 41; Rohan v. Hanson. 11
Cush. 44; Ramsay v. Warner, 97
Mass. 13.
2 Biggs V. Dwight, 1 M & Ry. 308.
3 Mills V. Fowkes, 7 Scott, 444, 5
Bing. N. C. 458; Hopper v. Hopper,
61 S. C. 124, 137, 39 S. E. Rep. 366.
See last note to § 238.
4 Kidder v. Norris, 18 N. H. 532;
Wright V. Laing, 3 B. & C. 165; Ban-
croft V. Dumas, 21 Vt. 456; Nash v.
Hodgson, 6 De G., M. & G. 474; Ku-
ker V. Mclntyre, 43 S. C. 117, 20 S.
E. Rep. 976 (void bond executed by
a married woman): Mullooly v. Hua-
tau, 1 N. Z. L. R. (Sup. Ct.) 151.
* Rohan v. Hanson, 11 Cush. 44;
Greene v. Tyler, 39 Pa. 361; Robinson
V. Allison, 36 Ala. 525; Gill v. Rice,
13 Wis. 549. See McCarty v. Gor-
don. 16 Kan. 35; Fay v. Lovejoy, 20
Wis. 407; Phillips v. Moses, 65 Me, 70.
In Clark v. Mershon, 2 N. J. L. 70,
it was held where a tavern-keeper
was indebted to his customer, the
items of liquor were to be considered
as payment pro tanto, and not &
trust or credit, within the tavern act
of New Jersey.
In Adams v. Mahnken, 41 N. J. Eq.
332, 3 Atl. Rep. 520, it is held that
creditors who hold a bond contain-
ing a void usurious agreement and
other indebtedness unaffected by
such agreement can only appropri-
ate payments so far as they might
have been recovered. Edwards v.
Rumph, 48 Ark. 479, 3 S. W. Rep. 635:
Dunbar v. Garrity, 58 N. R 75.
6 Wellman v. Miner, 179 III. 326, 53
N. E. Rep. 609. See Stone v. Talbot,
4 Wis. 442.
614
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 239,
plication of a pay merit as the debtor might reasonably object to,
or as would work injustice to him.^ He may not, by applying
it to a contested claim, throw the burden upon the debtor of
disproving the demand.^ An application by the creditor, con-
[409] trary to the debtor's directions, but acquiesced in by hira,^
will be binding.' It is not necessary that the demands be all
of the same grade or dignity; part may be specialties, and part
simple contract debts, and the creditor has the choice on which
he will apply a general payment.* As between a legal and
equitable demand, it would seem that preference must be given
to the legal; the creditor is not at liberty to pay a later equi-
table claim instead of an older legal debt; " and it is not certain
that he has the option to apply the money to a prior equitable
demand in preference to a later legal one.^ He may apply a
payment to a demand not secured in lieu of one secured, or to
one the securitj^ for which is more precarious.^ Such right is
not affected by a clause in a chattel mortgage to the effect that,
upon the mortgagor's default, the mortgagee might sell the
property and apply the net proceeds to the payment of the
debt, returning the overplus to the mortgagor.^ Payments
1 Bonnell v. Wilder, 67 111. 327;
Bridenbecker v. Lowell, 32 Bai*b. 9;
Taylor v. Coleman, 20 Tex. 772;
Lindsey v. Stevens, 5 Dana, 107; Ar-
nold V. Johnson, 2 111. 196; Ayer v.
Hawkins, 19 Vt. 26. See Bean v.
Brown, 54 N. H. 395; Gass v. Stinson,
3 Sumn. 99.
2 Stone V. Talbot, supra.
3 Pennsylvania Coal Co. v. Blake,
85 N. Y. 226; Flarsheim v. Brestrup,
43 Minn. 298, 45 N. W. Rep. 438.
* Meggot V. Wild, 1 Ld. Rayra. 287;
Mayor v. Patten, 4 Cranch, 317;
Peters v. Anderson, 5 Taunt. 596;
Hargroves v. Cooke, 15 Ga. 321;
Pierce v. Knight, 31 Vt. 701; Penny-
packer V. Umberger, 23 Pa. 492;
Heintz v. Cahn, 29 111. 308; Brazier
V. Bryant, 2 DowL P. C. 477; Chitty
V. Naish, id. 511.
5 Goddard v. Hodges, 1 Cr. & M. 33.
* See Bosanquet v. Wray, 6 Taunt.
597; Birch v. Tebbutt, 2 Starkie, 74;
2 Pars, on Cont. 631.
■^Hargroves v. Cooke, 15 Ga. 321;
Waterman v. Younger, 49 Mo. 413;
Jenkins v. Beal, 70 N. C. 440; Sim-
mons V. Gates, 56 Ga. 609: Driver v.
Fortner. 5 Porter, 9; Burks v. Albert,
4 J. J. Marsh. 97, 20 Am. Dec. 209;
Wood V. Callaghan, 61 Mich. 402, 1
Am. St. 597, 28 N. W. Rep. 162;
White V. Beem, 80 Ind. 239; M. A.
Sweeney Co. v. Fry, 151 Ind. 178, 51
N. E. Rep. 234; Northern Nat. Bank
v. Lewis, 78 Wis. 475. 47 N. W. Rep
834; Haynes v. Nice, 100 Mass. 327, 1
Am. Rep. 109; Henry Bill Pub. Co. v.
Utley, 155 Mass. 366, 29 N. E. Rep.
635; Risher v. Risher, 194 Pa. 164. 45
Atl. Rep. 71; Montague v. Stelts, 37
S. C. 200. 34 Am. St. 736, 15 S. E.
Rep. 968; Hall v. Johnston, 6 Tex.
Civ. App. 110, 24 S. W. Rep. 861.
8 Baum v. Trantham, 42 S. C. 104,
19 S. E. Rep. 973, 46 Am. St. 697.
§ 239.] APPLICATION OF PAYMENTS. 015
made on a continuous account of several items, the whole con-
stituting but one debt, will be applied to the items in the order
of their date. The rule is not affected because some of Lii<;
items are subject to a mechanic's licn.^
The particular circumstances may give the creditor a right
to infer the consent of the debtor to an application not otliLT-
wise admissible. He may apply an unappropriated payment,
to a contingent liability, to a debt not due, to one barred by
the statute of limitations, or even to an illegal demand if ho
has no other. The payment of money under such circum-
stances necessarily implies a consent to apply it to the demands
actually existing.- If the debtor agrees that his creditor may
apply payments to any indebtedness due when they are made,
they may be applied to the satisfaction of an account due in-
stead of a matured note.'
Some distinctions have been made in respect to the creditor's
right of application between debts which the debtor paying
owes separately and alone, and those which he owes jointly
with others; and also between debts owing to the person re-
ceiving the payment alone, and those to which he and others
are jointly entitled. It has been held that if one member of a
firm makes a payment to a person who has an account against
him, and also against the firm of which he is a member, [4l0j
the creditor must apply the money to the individual account
unless he can show a consent to have it otherwise applied.^
The law will appropriate it to the individual debt in the ab-
sence of any application by the parties, if the money paid is
not shown to have been derived from the fund from which
the joint liability was to be raet.^ This strict rule has not been
1 Pond & Hasey Co. v. O'Connor, Gass v. Stinson, 3 Sumn. 98; Sneed
70 Minn. 2C6, 78 N. W. Rep. 248. v. Wiester, 3 A. K. Marsh. 277.
2 Hall V. Clement, 41 N. H. 166; » Baker v. Stackpoole, 9 Cow. 420,
Bowe V. Gano, 9 Hun, 6; Treadwell 18 Am. Dec. 508; Camp v. Smith, 136
V. Moore, 34 Me. 112; Ayer v. Haw- N. Y. 187, 33 N. E. Rep. 640; Liver-
kins, 19 Vt. 26. See Rackley v. more v. Claridge, 33 Me. 438. See
Pearce, 1 Ga, 241 ; Bancroft v. Dumas, Lee v. Fountaine, 10 Ala. 755, 44 Am.
21 Vt. 456; § 338; Arnold v. Prole. 4 Dec. 505.
IkL & G. 860. After the dissolution of a partner-
' Everton v. Day, 66 Ark. 73, 48 S. ship one of its members continued
W. Rep. 900. the business, agreeing to pay all the
< Johnson v. Boone, 2 Harr. 172; partnership debts and taking enough
GIG CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 2'±tJ.
uniformly recognized. The creditor has been given the choice,
in the absence of directions, to apply it upon the joint debt.^
Paj^ments made by a surviving partner, while carrying on the
partnership business for the joint benefit of himself and the
estate of the deceased partner, pursuant to a stipulation in the
partnership articles, upon an account, some items of which
were contracted before and some after the death of the other
partner, must be applied to the discharge of the first items.'-
Where the debtor making a general payment owes a debt to
a firm, and also one to the member of it to whom the payment
is personally made, the receiver is precluded by his relation of
agent for the firm from preferring his own claim. It is implied
in the very nature of an agent's or trustee's contract that he
will take the same care, at least, of the property intrusted to
him that he does of his own.' Therefore, he should apply the
payment /^ro rata to both debts.'* If the debtor is a firm the
creditor cannot apply moneys paid by it to the individual
debts of one or more of the partners.*
[411] § 210. Same subject. A creditor cannot apply a pay-
ment made generally on account of existing debts to a new
of the firm property to do so; he the money with which payment was
added other goods to the stock and made could not be presumed to have
mortgaged it to secure both the accrued out of the funds of the new
joint and individual debts. It was firm, and to be applied, therefore, to
held that a creditor might apply pay- the benefit of the fund from which
luents made to the latter debt. King it had been taken; that it could not
V. Sutton, 42 Kan. 600, 23 Pac. Rep. be applied to the portion of the ac-
695; St. Louis Type Foundry Co. v. count accruing after the withdrawal,
Wisdom, 4 Lea, 695. on the principle that it should be ap-
1 Van Rensselaer v. Roberts, 5 plied to the debt for which there was
Denio, 470; Boyd v. Webster, 59 N. the least security, because it did not
H. 89. appear but that the company was as
2Stanwood v. Owen, 14 Gray, 195; solvent after the withdrawal as be-
Morgan V. Tarbell, 28 Vt. 498. fore; but that the money so paid
In Fairchild v. HooUy, 10 Conn, should be applied to the oldest items
475, an account against a partnership, of the account,
upon which sundry payments had ^ Colby v. Copp, 35 N. H. 434
been made, was entire and unbal- ^Id.; Favenc v. Bennett. 11 East,
anced; before any payments had 36; Barrett v. Lewis, 2 Pick. 123;
been made a secret partner had with- Scott v. Ray, 18 id. 360; Cole v. Trull,
drawn from the concern, and the 9 id. 325.
payments were made by one of the ^ Farris v. Morrison, 66 Ark. 318,
partners who remained. Held, that 50 S. W. Rep. 693.
§ 240. J APPLICATION OF PAYMENTS. CI 7
debt subsequently contracted;' nor to an instalment of the
same debt becoming due subsequent to the payment.'' It has
been held that the creditor's application is not complete and
absolute until the debtor has been notified of it.' When suck
notice has been given the money is appropriated.^ An ob-
jection to the application made by the debtor ten days after
he has been informed of it is too late.*
If the holder for collection of several notes airainst one
debtor, which are owned by various persons, receives from iiim
a sum less than the amount of all the notes, and the debtor
makes no application of the payment, it is competent for the
creditors owning the notes to direct the application to any of
them. In an action after such payment upon one of such
notes, in the absence of any application up to the time of the
trial, no part will be applied to the note in suit if it appears
that the plaintiff has not received part of the money .^ An
attorney holding several notes for collection, belonging to dif-
ferent persons, and receiving a payment on account of them
not appropriated by the debtor, may himself appropriate it.''
But if an agent, having a demand himself against the debtor,
and also acting for a principal who has a demand against the
same debtor, receives an unappropriated payment from such
debtor, he must apply it ratably to both.*
1 Miles V. Ogden, 54 Wis. 573, 12 N. Ill, 14 S. W. Rep. 474; Seymour v.
W. Rep. 81; Law's Ex'r v. Suther- Sexton, 10 Watts, 255.
land, 5 Gratt. 357; Baker v. Stack- 3 Ryan v. O'Neil, 49 Mich. 281.13
poole, 9 Cow. 420, 18 Am. Dec. 508. N. W. Rep. 591; Lane v. Jones, 79
A. owed a debt to B. payable on Ala. 156; Sinison v. Ingham, 2 B. &C.
demand, for which C. was surety. 65; Allen v. Culver, 3 Denio. 284; Van
A. assigned debts of others to B. as a Rensselaer v. Roberts, 5 id. 470.
means of payment in part. After ^Id.; The Asiatic Prince, 47 C. C.
such assignment, but before the as- A. 325, 108 Fed. Rep. 287; Bopp v.
signed debts were collected, A. con- Wittich. 88 Mo. App. 129.
tracted another debt to B. for which ^ Risher v. Risher, 194 Pa. 164, 45
there was no security. Held, that B. Atl. Rep. 71.
could not, after collection of the as- In North Carolina no change of
signed debts, apply the same to pay the application can be made after
the debt contracted after the assign- the creditor has given the debtor
ment, and recover the first debt from credit by entering it. Burnett v.
C, the surety for it. Donally v. Wil- Sledge, 129 N. C. 114, 39 S. E. Rep.
son, 5 Leigh, 329. 775.
2 Gates V. Burkett, 44 Ark. 90; « Taylor v. Jones, 1 Ind. 17.
Heard v. Pulaski, 80 Ala. 502, 2 So. 7 Carpenter v. Goin, 19 N. H. 479.
Rep. 343; Kline v. Ragland, 47 Ark. 8 Barrett v. Lewis, 2 Pick. 123; Cole
V. Trull, 9 Pick. 325.
61S
CONVKXTIONAL LIQUIDATIONS AND DISCHARGES. [§ 240..
The right of appropriation is confined to the parties; no
third person can insist on any application which neither of
them has made.^ Thus the grantee of a mortgagor cannot
[412] insist that money of the mortgagor in the mortgagee's
hands shall be used to pay off the mortgage unless this was
clearly contemplated by the parties, and the grantee made his
purchase upon that understanding.' Strangers can demand
nothing in this regard which the parties have not required.^
"Where creditors claim equities through their debtors they are
usually estopped by what the debtors do; but fraud never
estops creditors. This doctrine relative to the application of
payments applies only where the creditor has two or more
honest claims against the debtor; it does not apply so as to
conclude creditors where there is only one such. Therefore a
subsequent mortgagee may object to the application by the
holder of an earlier mortgage of partial payments to usurious
interest for the purpose of keeping alive that part which is
valid.* As has been already stated, a surety of a debtor who
makes an indefinite payment cannot interfere with the elec-
tion of the creditor; nor will an intention of the debtor be
presumed to apply it in favor of the surety so as to exclude
the right of the creditor to make the application.^ But where,
1 Harding v. Tifft, 75 N. Y. 461;
Feldman v. Beier, 78 id. 393; Coles v.
Withers, 33Gratt. 186; Mack v. Adier,
23 Fed. Rep. 570; Jefferson v. Church
of St. Matthew, 41 Minn. 393, 43 N.
W. Rep. 74; Thorn & Hunkins' Lime
& Cement Co. v. Citizens' Bank, 158
Mo. 373, 59 S. W. Rep. 109.
2 Gordon v. Hobart, 3 Story, 243;
Backhouse v. Patton, 5 Pet. 160.
3 Spring Garden Ass'n v. Trades-
men's Loan Ass'n, 46 Pa. 493. See
Parker v. Green, 8 Met. 137.
4 Greene v. Tyler, 39 Pa. 361. See
Chester v. Wheelwright, 15 Conn.
562.
5 Hanson v. Manley, 73 Iowa, 48, 33
N. W. Rep. 857: Wilson v. Allen, 11
Ore. 154, 2 Pac. Rep. 91.
Payments made genei-ally to the
creditors on account of a person for
whom a guaranty is given may be
applied by them in liquidation of a
balance existing against him before
it was given, and the guarantor can-
not insist on the payments being ap-
plied in exoneration of his liability,.
although at the time of his assum-
ing it the creditors did not give him
notice that any such balance was
then existing. Kirby v. Marlbor-
ough, 2 M. & S. 18. See Merrimack
Co. V. Brown, 13 N. H. 330.
It is held in Gore v. Townsend, 105
N. C. 328, 11 S. E. Rep. 160, 8 L. R. A.
443, that a mortgagee who holds
two mortgages, the older of which
was executed by a husband and
his wife to secure the former's
debt, and the latter of which was
executed by him alone on the same
property to secure a subsequent note,
cannot appropriate the proceeds of
personal property to the payment o£
§ 241.]
APPLICATION OF PAYMENTS.
Gl'J
at the inception of the contract of suretyship, a mode of pay-
ment was agreed upon and a particular fund identified fot
that purpose, the surety may insist on the application of that
fund when it is realized. Thus, a factor who has accepted a
bill drawn by his principal, as against an accominodation
drawer who becomes such on the faith of a consifnment of
cotton made to meet it at maturity, cannot a|)ply the proceeds
of the consignment to another debt, and no factor's lien for
such other debt will be permitted to intervene.' When the
party having a right to appropriate a payment has done so, [-IIUJ
the appropriation is final, and he cannot change it.-
§ '^4^1. Appropriation by the court. Where the parties
have not made a specific appropriation of moneys paid, and
there are several debts or demands for which the party paying
the money is liable to the party receiving it, the fundamental
rule or principle is that the law will appropriate it according
to the justice and equity of the case.' It has been said that in
the second mortgage; it must e;o to
the payment of the first in exonera-
tion of the wife's dower right, she
being a surety for her husband.
1 Brander v. Phillips, 16 Pet. 131.
See Marryatts v. White, 3 Stark. 101,
in which security having been given
by a surety for goods to be supplied
and in respect of a pre-existing debt,
tlie goods were supplied, and pay-
ments made from time to time by
the principal, in respect of some of
which discount was allowed for
prompt payment; held, that it must
be inferred in favor of the surety
that all these payments were in-
tended to be in liquidation of the lat-
ter account; also Shaw v. Picton,
7 D. & R. 201, 4 B. & C. 715, where
the same agent had a bill of account
with the grantor of several annu-
ities, for the payment of which A.
became surety, and in consequence
of a letter written by an attorney in
the names of the grantees, at the in-
stance of the agents, demanding pay-
ment of the arrears of the annuities
from the grantor and his surety, a
sum of money was paid under cir-
cumstances from which it was to be
collected that the money was in-
tended to be specifically appropriated
to the annuity account, and the
agents applied it to the bill account;
held, that this was a misapplication,
and that the money ought to be ap-
propriated pro rata among the an-
nuitants in relief of the surety.
^ Wright V. Wright, 73 N. Y. 149.
3 Martin v. Ede, 103 Cal. 157,37 Pac.
Rep. 199; McCartney v. Buck, 8
Houst. 34, 13 Atl. Rep. 717: Field v.
Holland, 6 Cranch, 8; Souler v.
Schechterly, 91 Pa. 83; Spiller v.
Creditors, 16 La. Ann. 293; Stone v.
Seymour, 15 Wend. 19; Parker v.
Green, 8 Met. 144; Norris v. Beaty, 6
W. Va. 477; Robinson v. Doolittle. 13
Vt. 346: Randall v. Parramore, IFla.
409; Chester v. Wheelwright, 15
Conn. 563; Calvert v. Carter, 18 Md.
73; Neidig v. Whiteford, 29 McL 178;
Haden v. Phillips, 21 La. Ann. 517;
Upham V. Lefavour, 11 Met. 174;
Seymour v. Van Slyck, 8 Wend. 403;
Hargroves v. Cooke, 15 Ga. 331; Leef
620
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 241.
law that application is made which is most favorable to the
creditor; in equity, the payment is applied first to the debt for
\vhich the security is most precarious.^ In applying the cardinal
principle various subsidiary rules have been recognized, in
respect to which and in the reasons assigned therefor the de-
cisions are not entirely in accord. Many cases proceed upon
the assumption that the intention of one or both of the parties
is to be effectuated, or that the interest of one party in prefer-
[414] ence to that of the other is entitled to be subserved.-
V. Goodwin, Taney, 460; Callahan v.
Boazman. 21 Ala. 246; Bayley v.
Wynkoop, 10 111. 449; Benny v.
Rhodes, 18 Mo. 147, 59 Am. Dec. 293;
Proctor V. Marshall, 18 Tex. G3; Oliver
V. Phelps, 20 N. J. L. 180; McFarlani
V. Lewis, 3 III 344; Wiiite v. Trum-
bull, 15 N. J. L. 314, 29 Am. Dec. 687;
Carson v. Hill, 1 McMuU. (S. C.) 76;
Selleck v. Sugar Hollow Turnpike
Co.. 13 Conn. 453; Rosseau v. Cull. 14
Vt. 83; Starrett v. Barber, 20 Me. 457.
1 Chicago Title & Trust Co. v. Mc-
Glew, 90 111. App. 58.
^ Conduitt V. Ryan, 3 Ind. App. 1,
29 N. E. Rep. 160; McDaniel v. Barnes,
5 Bush, 183; Allen v. Culver, 3 Denio,
284; Byrne v. Grayson. 15 La. Ann.
457; Spiller v. Creditors, 16 id. 292;
Calvert v. Carter, 18 Md. 73; Pierce
V. Sweet, 33 Pa. 151; Poindexter v.
La Roche, 7 Sou & M. 699; Bussey v.
Gant's Adm'r, 10 Humph. 238; Patti-
son V. Hull. 9 Cow. 747; Dows v.
Morewood, 10 Barb. 183; Johnson's
Appeal, 37 Pa. 268; Seymour v. Sex-
ton, 10 Watts, 255.
In Johnson's Appeal, supra. Strong,
J., said: "The fact of actual appro-
priation to the earliest items of the
account not being established, the
next question is whether the law re-
quires that the credits should be thus
applied. In the absence of direction
by the debtor, and of actual appli-
cation by the creditor, the law will
make an equitable application, and
in making it will regard the circum-
stances of the case. In the present
case it should make no difference to
Duncan whether his credits were ap-
plied to the earlier or to the later
items of the account. He was equally
a debtor for both and both carried
interest. It is true that when pay-
ments are made upon a running ac
count it is one of the principles of
legal application that they shall be
treated as extinguishing the earliest
charges in the account. But this is
not a paramount principle. Another
of equal force is that the payments
are to be applied to that debt which
is least secured. Both these rules
look to the interest of the creditor,
it being presumed that the debtor by
neglecting to give any direction con-
sented to such an application as
would be most beneficial to the cred-
itor. But to apply Duncan's credits
to the first items of the account . .
against him and thus extinguish the
mortgage in the first instance would
be an application not beneficial to
the debtor, and most hurtful to the
creditor. It would be paying first
the debt which was best secured, and
leaving the later advances without
the protection of a factor's lien and
without any security at all as against
judgments entered before they were
made. It would be reversing the
fundamental rule of appropria-
tions." The equitable circumstan-
ces stated abundantly justify the
application which was made with-
§ 2il.]
AI'l'LICATION OF PAYMENTS.
021
But it is believed that there is no presumption of inten- [415]
tion which controls where the law makes the application.' If
there is evidence of intention, it governs, of course,- but the
application then is not made by the law, but by the party
whose intention controls. And when the interest of one party
is subserved it is not upon any invidious preference, but upon
some special ground of equity which appeals to the conscience
of the court in his behalf.^ Such considerations sometimes re-
out the presumption that " the
debtor by neglecting to give any di-
rection consented to such an appli-
cation as would be most beneficial
to the creditor." There would seem
to be no more ground lor such a pre-
sumption than that the creditor by
neglecting to make an actual appli-
cation of the credits consented to
such an application as would be
most beneficial to the debtor.
That there is no such presumption
that the debtor consents to an appli-
cation most beneficial to the creditor
is evident from the cases that con-
sult the interest of the debtor where
there are no countervailing equities.
Thus, in accordance with the gen-
eral course of authority, the law ap-
plies a payment to a debt bearing in-
terest in preference to one not bear-
ing interest. Seymour v. Sexton,
sujjra. Crompton v. Prall, 105 Mass.
255, proceeds on the same principle.
Dows V. Morehead, 10 Barb. 183,
holds that the law will apply pay-
ments to that debt, a relief from
which will be most beneficial to the
debtor; as, for example, acceptances
for which an instrument in the
shape of a mortgage or pledge of
personal property is given. Poiu-
dexter v. La Roche, 7 Sm. & M. 699,
and Pattison v. Hull, 9 Cow. 747, are
to the same effect. But a more satis-
factory statement of the principle is
to be found in Field v. Holland, 6
Cranch, 8, where Marshall, C. J.,
says: "'When a debtor fails to avail
himself of the power he possesses.
in consequence of which that power
devolves on the creditor, it does not
appear unreasonable to suppose
that he is content with the manner
in which the creditor will exercise
it. If neither party avails liimself
of his power, in consequence of
which it devolves on the court, it
would seem reasonable that an equi-
table application should be made. It
being equitable tiiat the whole debt
should be paid, it cannot be inequi-
table to extinguish first those debts
for which the security is most pre-
carious." See Langdon v. Bowen, 40
Vu 512; Truscott v. King, 6 N. Y. 147;
Worthley v. Emerson, 116 Mass. 374:
The A. R, Dunlap, 1 Low. 350; Robie
v. Briggs, 59 Vt. 443, 59 Am. Rep. 737.
In the last case the debtor owed
an individual and joint account; his
payments amounted to more than
the former; in ignorance of the ex-
act state of the account the creditor
entered the whole sum paid to the
credit of the individual account. The
court applied the surplus to the
other.
1 Moore v. Gray, 22 La. Ann. 289.
2 McMillan v. Grayston, 83 Mo. App.
425.
If the debtor pays with one intent
and the creditor receives with an-
other the former's intent will be
given effect. Roakes v. Bailey, 55
Vt. 542.
3 Pierce v. Knight, 31 Vt. 701;
Smith v. Loyd, 11 Leigh, 512. 37 Am.
Dec. 621; 2 Greenlf. Ev., § 533.
■G22 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 2i2,
quire a jpro rata distribution of the payment to all of several
debts; sometimes its appropriation to one for being the oldest,
or least secured, to relieve the debtor from some special hazard
or hardship, or to absolve a surety.
Where a bank is protected against loss on future overdrafts
by a principal his sureties are entitled to have payments made
applied to the account which they have guaranteed. • If the
money paid arises from some property or fund it will be ap-
plied to the discharge or reduction of the demand against the
same.- If several chattels are bought at the same time under
a single contract, the promise to pay being single, the court
will not apply payments made on the contract to the different
articles in the order in which they are specified therein ; but
will apply them to the contract generally.' Partial payments
made on a note infected with usury will be applied to the ex-
tinguishment of lawful interest, and then to the principal/ If
an incumbrance is void in part only, payments will be applied
first to the discharge of so much as is valid.^
§ 242. When payments applied pro rata. If an indefinite
payment is made where there are several debts of the same
nature and all things equal, it is applied proportionally.^
Moneys collected by judicial proceedings founded on several
claims cannot be applied by either party; the law will apply
them jpro rata. Thus, where a creditor having several de-
mands against his debtor recovers a portion of the entire
amount in a judicial proceeding founded on them all, the law
[416] will apply such a recovery as a payment ratably upon
them all; neither the debtor nor the creditor has the right to
apply it to the satisfaction of some of them in exclusion of
others.^
1 Drake v. Sherman, 179 IlL 362, 53 292; Jones v. Kilgore, 2 Rich. Eq. 63;
N. E. Rep. 638. Baine v. Williams, 10 Sm. & M. 113;
2 Brinckerhoff v. Greenan, 85 111. Pointer v. Smith, 7 Heisk. 137.
App. 253. Matured notes given for the same
3 Hill V. McLaughlin, 158 Mass. 307, consideration and in the hands of a
53 N. E. Rep. 514. single person constitute butone debt;
* Haskins v. Bank, 100 Ga. 216, 27 and payments made after their ma-
S. E. Rep. 985. See §§ 378, 379. turity are applicable to them all.
5 Wingate v. Peoples' Building & Egle v. Roman Catholic Church, 36
Loan Savings Ass'n, 15 Tex. Civ. App. La. Ann. 310.
416. 39 S. W. Rep. 999. '^ Olds Wagon Works v. Bank of
•> Spiller V. Creditors, 16 La. Ann. Louisville, 10 Ky. L. Rep, 253; Orleans
fi 2i2.] APPLICATION OF PAYMENTS. 623
If an insolvent debtor assigns for the benefit of those creditors
who become parties to the ussignincnt and thereby release
their claims, and a dividend is received by one of them, it
must be appropriated ratably to all his claims against the
debtor, as well to those upon which other parties are liable, or
which are otherwise secured, as to those which are not secured.*
A general payment made by the principal debtor, pursuant to
a compromise of several debts in one lump, will be applied
pro rata to all the claims against him, in an action against an
indorser for part.^ And doubtless the same rule of application
would be applied between the debtor and creditor where there
has been a general judgment pursuant to a compromise founded
upon and embracing several demands.'
A pro rata distribution of a payment is made on the equita-
ble maxim that equality is equity. Other considerations may
concur and lead to the same result. If a debtor creates a
trust or security for the payment of several demands, without
preference, money realized from that source is deemed appro-
priated by him to the demands so provided for, and to be pro-
portionately distributed thereto; and either party may insist
on such application.'* If a general payment is made to a per-
son having two accounts against the party paying, one due to
himself and the other to a third party, for whom he was act-
ing as agent, and no appropriation is made by either, it will bo
applied ratably to both accounts.^ So where a debt is [417]
payable by instalments, or a mortgage is made to secure a
County Nat. Bank v. Moore, 113 N. Tucker v. Brackett, 25 Tex. (Supp.)
Y. 543," 8 Am. St. 775, 20 N. E. Rep. 199; Ordinary v. McCoUura, SStrobh.
357, 3 L. R. A. 302; Bostick v. 494; Van Aken v. Gleason, 34 Mich.
Jacobs. 133 Ala. 344, 32 So. Rep. 136; 477; Stamps v. Brown, Walker (Miss.),
Standifer v. Codington, 35 La. Ann. 526. See Mahone v. Williams, 39
896; Cowperthwaite v. Sheffield, 1 Ala. 202; Jones v. Kilgore, 2 Rich.
Sandf. 416, 3N. Y. 243; Bridenbecker Eq. 63; Baine v. Williams. 10 Sm.
V. Lowell, 32 Barb. 9. See Thompson & M. 113.
V. Hudson, L. R. 6 Ch. 320; Merri- i Commercial Bank v. Cunning-
mack County Bank v. Brown, 12 N, ham. 24 Pick. 270, 35 Am. Dec. 322.
H. 320. 2 Butchers' and Drovers' Bank v.
Where a fund is insufficient to Brown, 1 N. Y. Leg. Obs. 149.
satisfy several judgments entered ' Thompson v. Hudson, L. R 6 Ch.
the same day, they should be paid 320.
Tpro rata, though one was entered a * Id.
-few hours later than the others. ^ Wendt v. Ross, 33 Cal. 6.50.
624:
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 242.
series of notes payable at different times, and a payment is
made after all the instalments or notes have become due, and
neither party makes any special appropriation of it, according^
to the weight of authority it will be applied by the court jt?n>
rata to all the instalments or notes — and this whether they
are held by the original creditor or a part have been trans-
ferred, unless the assignee has specially acquired a preference
by the agreement of transfer.^
When a debt is payable in instalments, and there are sep-
arate notes or other distinct evidences of debt payable at differ-
ent times, all equally payable with or without interest, and a
general payment made is not appropriated by either party, if
it exceeds the interest and principal due at the time it was
made it will be applied, of course, first to pay what is due of
interest and principal, and the residue ratably on all and each
of the instalments subsequently payable, with accrued interest
on the part thus extinguished.^
1 Cage V. Her. 5 Sm. & M. 410, 43
Am. Dec. 531; Wooten v. Buchanan,
49 Miss. 3S6; Donley v. Hays, 17 S. &
R. 400; Cooper v. Ulmann, Walk.
Ch. 251; Mohlen's Appeal, 5 Pa. 418,
47 Am. Dec. 413; Henderson v. Her-
rod, 10 Sm, & M. 631; English v.
Carney, 25 Mich. 178; McCurdy v.
Clark, 27 id. 445; Youmans v.
Heartt, 34 id. 397; Betz v. Heebner,
1 P. & W. 280; Smith v. Nettles, 9
La. Ann. 455; Bailey v. Bergen, 2
Hun, 520; Parker v. Mercer, 6 How.
(Miss.) 323; Cremer v. Higginson, 1
Mason, 323; Perrie v. Roberts, 2 Ch.
Cas. 84 But see State Bank v.
Tweedy, 8 Blackt. 447, 46 Am. Dec.
486: Murdock v. Ford, 17 Ind. 52;
Stanley V. Beatty, 4 Ind. 134; CuUum
V. Erwin, 4 Ala. 452; Bank of United
States V. Covert, 13 Ohio, 240; Turner
V. Pierce, 31 Wis. 342.
2 In Righter v. Stall, 3 Sandf. Ch.
608, a debtor owed a mortgage debt,
payable in ten annual instalments.
About two-thirds of the debt was
paid at a time when a small amount
was due for interest, and before any
part of the principal had fallen due.
There was no direction given by the
debtor, nor actual application of the
payment made by the creditor; and
it was held that the law must make
the application, and that after dis-
charging the interest due the balance
must be applied ratably in exonera-
tion of each and all of the instal-
ments.
In Jencks v. Alexander, 11 Paige,
619, the following rules are laid
down: 1. Where the principal is not
due, but the interest is due, the pay-
ment must first be applied to pay
the interest then due; and the resi-
due towards that part of the princi-
pal which will first become due and
payable, so as to stop the interest,
pro tanto, from the time of such
payment. 2. When neither princi-
pal nor interest has become due at
the time of the payment, the amount
paid should be applied to the extin-
guishment of principal and interest
ratably; so as to extinguish a part
of the principal and the interest
which has accrued on the part of
§ 243.]
APPLICATION OF PAYMENTS.
G25
§ 243. General payment applied to oldest debt. If [418]
no other paramount rule of appropriation governs, an indefi-
nite payment made to a person to whom a debtor paying the
money owes several debts will be applied to that which [419]
the principal thus extinguished.
The facts of the case were that Au-
gust 24, 1883, a mortgap;e was given
for $650, payable in five equal yearly
payments, the first to become due on
the first of January following, with
interest annually. Five hundred dol-
lars were paid and indorsed on the
day the mortgage was given. On
the 14th of the following September
a further sum of $3 was paid. On
the 4th of November, 1835, proceed-
ings to foreclose were commenced
on a claim of $20.98 of delinquent
interest, and it was held that $20.58
was then due. The chancellor said:
"I think the counsel for the com-
plainants is wrong in supposing that
nothing had become due and pay-
able upon the mortgage at the time
the proceedings to foreclose were
instituted. It is true a sum much
larger than the two instalments of
$130 each, and all interest upon the
residue, had been paid. But the
proper application of the payments
was to apply them towards the sat-
isfaction of the principal of the debt
at the time of such payments re-
spectively, after deducting from
such payments the interest which
had then accrued. The payment of
the $500 on the day of the date of
tlie mortgage, being applied in sat-
isfaction of the three first instal-
ments of principal and $110 of the
fourth instalment, left $20 of the
fourth and the whole of the fifth in-
stalments still due. And as by the
terms of the bond and mortgage the
interest on the whole $650 was pay-
able annually, the mortgagee would
have been entitled to the annual in-
terest on the $150 which still re-
VOL. 1 — 40
mained due on the last two instal-
ments, if there had been no subse-
quent payment. The payment of $3
on the 14th of September, 1833, must
be applied towards the fourth instal-
ment of principal, after deducting
therefrom the interest on the $3
from the 24th of the preceding Au-
gust. In other words, when the
principal is not due, but interest is
due (a different case), the payment
must first be applied to the extin-
guishment of the mteirest then due
and payable, and the residue to the
extinguishment of that part of the
principal which will first become
due, so as to stop interest, pro ta.ito,
from the time of such payment.
But when neither principal nor in-
terest has become due (the case in
hand) at the time of the payment,
such payment, in the absence of any
agreement as to the application, is
to be applied to the extinguishment
of principal and interest ratably, ac-
cording to the decision of the su-
preme court in the case of Williams
V. Houghtaling, 3 Cow. 86."
In Williams v. Houghtaling the
court say: " When, according to the
terms of the bond payable by instal-
ments, interest cannot be demanded
until the principal is payable (as in
this case), payments made on an in-
stalment not due and payable should
be applied to the extinguishment of
principal and such proportion of in-
terest as has accrued on the principal
so extinguished. For instance, an
instalment on a bond of $500 is due
on the 1st of January, 1825, with in-
terest from 1st of January, 18<4; on
the first of July, 1824, the obligor pays
$207; the $7 should be applied to pay
626
CONVENTIONAL LIQUIDATIONS AND DISCHARGES.
[§ 243.
first accrued.' This rule is especially applicable to items of
[420] debit and credit in a general account current.^ When
both parties concur in the entry of the payments upon general
account, without specific application, the law infers an inten-
the six months' interest accrued on
$200. and the $200 extinguishes so
much principal."
There is dictum in Jencks v. Alex-
ander apparently in conflict with the
text and in conflict with Righter v.
Stall. The conclusion arrived at is
not in conflict. If the payment of
§500 had been ratably applied to the
five instalments, they would have
been severally reduced to $80, and
interest on each annually payable
would be the same, and due at the
same time, as upon a like amount on
the two past instalments. When the
payment of $3 was made no interest
or principal was dua It being paid
on the mortgage generally was ap-
plicable ratably towards paying the
entire principal and interest.
In Turner v. Pierce. 31 Wis. 342,
there was a land contract made Oc-
tober 22, 1863, upon which the pur-
chase-money was $5,600, due in six
annual instalments, payable August
1, 1865, to 1870, with interest on the
whole sum unpaid, payable at the
time each instalment became due —
the purchaser having the option to
make the payments on or before the
times mentioned, and then to pay
interest only to the time of such
payment. Before any of the princi-
pal became due the purchaser made
a large payment, receipted to apply
on the land contract. On the 5th of
March, 1866, an action for strict
foreclosure of the contract was be-
gun on the ground that the pur-
chaser was in default. The title had
failed to a part of the lands, and the
court held that each instalment
should be reduced in the proportion
that the value of that part ($1,832)
bore to tlie whole value, and that the
defendant was entitled to have the
payment applied to the Instalments
first becoming due at such decreased
rates, and that therefore nothing
was due when the suit was com-
menced. See Starr v. Richmond, 80
111. 276.
1 Pond V, Harwood, 139 N. Y. Ill,
34 N. E. Rep. 768; Atkins v. Atkins,
71 Vt. 422, 41 Atl. Rep. 503; Thomp-
son V. St Nicholas Nat. Bank, 113 N.
Y. 325, 21 N. K Rep. 57; North-
western Lumber Co. v. American
Exp. Co., 73 Wis. 656, 41 N. W. Rep.
1059; The Mary K. Campbell, 40 Fed.
Rep. 906; Sanford v. Van Arsdall, 53
Hun, 70, 6 N. Y. Supp. 494; Duncan
V. Thomas, 81 CaL 56, 22 Pac. Rep.
297; Jefferson v. Church of St Mat-
thew, 41 Minn. 392, 43 N. W, Rep. 74;
Moses V. Noble, 86 Ala. 407, 5 So.
Rep. 181; Ashby v. Washburn, 23
Neb. 571, 37 N. W. Rep. 267; Marks v.
Robinson, 82 Ala. 69, 2 So. Rep. 293;
State V. Chad wick, 10 Ore. 423;
Mackey v. Fullerton, 7 Colo. 556, 4
Pac. Rep. 1198; Bennett v. McGillan,
28 Fed. Rep. 411; McGillin v. Ben-
nett, 133 U. S. 445, 10 Sup. Ct Rep.
122: Pardee v. Markle, 111 Pa, 548,
56 Am. Rep. 299; Kline v. Ragland,
47 Ark. Ill, 14 S. W. Rep. 474;
Brown v. Shirk, 75 Ind. 266; Mc-
Curdy v. Middleton, 82 Ala. 131, 3
So. Rep. 721 ; Hammett v. Dudley, 63
2 Carey-Lombard Lumber Co. v.
Hunt, 54 IlL App. 314; Winnebago
Paper Mills v. Travis, 56 Minn. 480,
58 N. W. Rep. 36; Goetz v. Piel, 26
Mo. App. 634; Swett v. Boyce, 134
Mass. 381; Crompton v. Pratt, 105 id.
255.
§ 243.]
APPLICATION OF PAYMENTS.
C27
tion on the part of both that they shall satisfy the charges
therein in the order of their entry; and they will be so ap-
plied unless some controlling equity requires a different dispo-
sition.^
It has been held that this rule should apply without refer-
ence to the fact that one item may be better secured than
another, since the particular parts, .being blended together in
one common account, have no separate existence; the balance
only is considered as due;^ and a payment made on such ac-
Md. 154; Hersey v. Bennett, 28 Minn.
86, 41 Am. Rep. 281, 9 N. W. Rep.
590; Helm v. Commonwealtli, 79 Ky.
67; Bancroft v. Holton, 59 N. H. 141;
Frost V. Mixsell, 38 N. J. Eq. 586;
Wagner's Appeal, 103 Pa. 185; Wies-
enfeld v. Byrd, 17 S. C. 106; Miliken
V. Tufts, 31 Me. 497; Faircliild v.
Holly, 10 Conn. 475; Smith v. Loyd,
11 Leigh, 512, 37 Am. Dec. 6'31; Rol>
inson's Adm'r v. Allison, 36 Ala. 526;
Howard v. McCall, 21 Gratt. 205;
Wendt V. Ross, 33 Cal. 650; Seymour
V. Sexton, 10 Watts, 255: Sliedd v.
Wilson, 27 Vt. 478; St. Albans v.
Failey, 46 Vt. 448; Langdon v.
Bowen, 46 Vt. 512; Upham v. Le-
favour, 11 Met. 174; Dovvs v. More-
wood, 10 Barb. 183; Allen v. Culver,
3 Denio, 284; Webb v. Dickinson, 11
Wend. 62; Hollister v. Davis, 54 Pa.
508; Allen v. Brown, 39 Iowa, 330;
Livermore v. Rand, 26 N. H. 85;
Parks V. Ingram, 33 N. H. 383;
Thompson v. Phelan, 23 N. H. 339;
Bacon v. Brown, 1 Bibb. 334, 4 Am.
Dec. 640; Sprague v. Hazenwinkle,
53 111. 419; Clayton's Case, 1 Meriv.
585; United States v. Kirkpatrick, 9
Wheat. 720; Berrian v. Mayor, 4
Robert. 538; Home v. Planters' Bank,
32 Ga. 1; Mills v. Fowkes, 5 Bing. N.
C. 455; Pennell v. Deffell, 4 De G.,
McN. & G. 373; Harrison v. Johnston,
27 Ala. 445; Postmaster-General v.
Furber, 4 Mason, 333: Hansen v.
Rounsavell, 74 III. 238: Souder v.
Schechterly, 91 Pa. 83; Perry v.
Booth, 67 A pp. Div. 235, 73 N. Y.
Supp. 216; National Park Bank v.
Seaboard Bank, 114 N. Y. 38, 35, 20
N. E. Rep. 033. See Killorin v. Ba-
con. 57 Ga. 497.
In the case of mutual accounts
the credits on one side are applied
to the extinguishment of the debts
on the other as payments intention-
ally made thereon, and not as the
set-off of one independent debt
against another. Sanford v. Clark,
29 Conn. 457.
As to the application of this rule
between cestuis que trust, see Wood
V. Stenning, [1895J 3 Ch. 433; Mutton
v. Peat, [1899] 3 Ch. 556.
1 Id. ; Jones v. United States, 7
How. 681; Sanford v. Clark, 20 Conn.
457; Souder v. Schechterly, 91 Pa.
83; Lodge v. Ainscow, 1 Pennewill,
327, 41 Atl. Rep. 187; Conduitt v.
Ryan, 3 Ind. App. 1, 29 N. E. Rep.
160; Grasser & Brand Brewing Co.
V. Rogers, 112 Mich. 113, 70 N. W. Rep.
443.
If a trustee pays trust money on
his account athis banker'sand mixes
it with his own funds and draws
checks against it in the usual man-
ner for his personal use he will be
presumed to have drawn his own and
not the trust money. Knatchbull v.
Hallett, 13 Ch. Div. 696, overruling
earlier cases.
2 Harrison v. Johnston, 27 Ala.
445.
628
CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 243.
count, without a more specific appropriation, is treated by a
majority of the cases as applied to the earliest items, although
for some of these the creditor has a lien or other security and
has none for the others.^ Where there is a single open account
and a general payment is made by the debtor at full age, it is
presumed to be in satisfaction of the earliest items although
they accrued during his minority .^ Such a payment will not
be judicially disturbed.^ The rule concerning the application
of payments to the oldest item of the account applies to an
open running account with a firm continued unchanged witli
a member of it who buys the interest of his copartner and con-
tinues the business.* As between a debt due and a contingent
liability a payment will be applied to the former.*
The rule under consideration for applying an indefinite pa}^-
ment to the debts which first accrued applies not only to the
first items of an account but to distinct debts contracted at dif-
ferent times.^ The rule is not unjust or prejudicial to a debtor;
it operates, however, more beneficially to the creditor; for it
' Conduitt V. Eyan, 3 Ind. App. 1,
29 N. E. Rep. 160; Dunnington v.
Kirk, 57 Ark. 595, 22 S. W. Rep.
430; Worthley v. Emerson, 116 Mass.
374; Truscott v. King, 6 N. Y. 147;
The A. R. Dunlap, 1 Low. 350; Moore
V. Gray, 22 La. Ann. 289; Gushing v.
Wyman, 44 Me. 121; Hersey v. Ben-
nett, 28 Minn. 86, 41 Am. Rep. 271, 9
N. W. Rep. 590; Miller v. Miller, 23
Me. 22, 39 Am. Dec. 597. But see
Pierce v. Sweet, 33 Pa. 151; Thomp-
son V. Davenport, 1 Wash. (Va.) 125;
Schuelenberg v. Martin, 2 Fed. Rep.
747. The last case is distinguishable
because tlie payment was not a
voluntary one; a fact which the
court failed to observa
2Thurlow V. Gilmore,40 Me. 378.
3 Pond & Hasey Go. v. O'Gonnor,
70 Minn. 266, 73 N. W. Rep. 248.
4 Schoonover v. Osborne, 108 Iowa,
453. 79 N. W. Rep. 2G3; Morgan v.
Tarbell, 28 Vt. 498.
5 Missouri Central Lumber Go. v.
Stewart, 78 Mo. App. 456; Niagara
Bank v. Rosevelt, 9 Cow. 409.
6 Parks v. Ingram, 22 N. H. 283, 55
Am. Dec. 153; Thompson v. Phelan,
22 N. H. 339; McDaniel v. Barnes, 5
Bush, 183; Robinson's Adm'r v. Al-
lison, 36 Ala. 526; Byrne v. Grayson,
15 La. Ann. 457; Upham v. Lefavour,
11 Met. 174; Langdon v. Bowen, 46
Vt. 512: Smith v. Loyd, 11 Leigh,
512, 37 Am. Dec. 621 ; Jones v. United
States, 7 How. 681; McKinzie v.
Nevius, 22 Me. 138, 38 Am. Dec. 291 ;
AUstan v. Gontee, 4 Har. & J. 351;
Draflfen v. Boon vi He, 8 Mo. 395; Cop-
land v. Toulmin, 7 CI. & F. 349; Sim-
son v. Ingham, 2 B. & C. 72; Hooker
V. Keay, 1 Q. B. Div. 178.
This rule will not be applied to
payments made by a reorganized
partnership without the consent of
its new members. St. Louis Type
Foundry Co. v. Wisdom, 4 Lea.
695; Burland v. Nash, 2 F. & F. 687;
Thompson v. Brown, 1 Mood. & M.
406; Roakes v. Bailey, 55 Vt. 542.
§ 244.] APPLICATION OF PAYMENTS. 629
often saves a debt from the bar of the statute of limitations,
and closes the door to the older transactions which it may bo
presumed are more ditRcult of proof. But the rule ap- [421]
plies the payments in the natural and logical order of the
transactions. It is not supported, however, by reasons so co-
gent but that it will yield when there is evidence of a contrary
intention,^ or where some superior equity requires a different
application.'^ " "Whenever the relation of the parties or the nat-
ure of the account or transaction between them shows that an
appropriation of payments to the earliest items of the ac-
count would do injustice between them or fail to conform
to their understanding or agreement, another application
is made." ' If property is exempt from execution the rule that
partial payments shall be so appropriated as to protect the
creditor does not apply so as to affect such property any more
than such payments would revive a debt barred by time,*
§ 214. General payment applied to a debt bearins; inter-
est, and first to interest. As between debts bearing and
those not bearing interest, the law directs an indefinite pay-
ment to be applied to the former.^ The reason generally as-
signed is that of relieving the debtor in respect to the debt
which is most burdensome, or the presumed choice of the
debtor. •* This may be conceded to be sufficient for this appli-
cation, and some others, where a particular one is specially
beneficial to a debtor without being attended with a corre-
sponding loss to the creditor which the law is equally solicit-
ous to prevent. Interest due is first to be satisfied when a
general payment is made, and if there be a surplus it is to be
applied to the principal. If the payment falls short of the in-
terest, the balance of the interest is not to be added to the
principal, but remains to be extinguished by the next payment,
if it is sufficient.'^ This rule yields to that which requires that
1 City Discount Co. v. McLean, L. Scott v. Fisher, 4 T. B. Men. 387;
R 9 C. P. 693; Langdon v. Bowen, 46 Blanton v. Rice, 5 id. 253; Bacon v.
Vt. 512. Brown, 1 Bibb, 334, 4 Am. Dec. 640;
2 Upham V. Lefavour, 11 Met. 174. Scott v. Cleveland, 33 Miss. 447;
^Faisst V. Waldo, 57 Ark. 270, 21 Bussey v. Gant's Adm'r, 10 Humph.
S. W. Rep. 436. 238.
* Sternberger v. Gowdy, 93 Ky. « Id. See Neal v. Allison, 50 Miss.
146, 19 S. W. Rep. 186. 175.
5 Heyward v. Lomax, 1 Vern. 24; ^ Weide v. St. Paul, 03 Minn. 07.64
630 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 24:4:.
the debt least secured shall first be paid ; hence if the claim for
mterest is better secured than the principal the application will
be in favor of the latter;' and is not to be applied where the
defendant in foreclosure appeals and gives a bond for the pay-
ment, if the judgment be aflBrmed, of such interest as might
accrue and remain otherwise unpaid upon the decree from the
date thereof. On affirmance of such judgment the proceeds
of the sale will be applied to meet the fees, costs and principal
before satisfying the interest on the decree; the deficiency, if
any, will thereby be secured by the appeal bond. " It would
not be in accordance with natural justice or with the rules
which govern courts of equity to allow appellant to delay a
sale by his appeal and render the security inadequate to pay
the accruing interest, and then, upon a sale, discharge the in-
terest from the proceeds of such security and free him from
his obligation." 2
Where a debt bearing interest remains unpaid until interest
is due on the interest, where that is permitted, general pay-
[4-22] ments are to be applied, first, to such interest on in-
terest; second, to interest on the principal; and third, to the
principal.^ And in applying payments on a sum secured by a
N. W. Rep. 65; Monroe v. Fohl, 73 State v. Jackson, 1 Johns. Cb. 13, 7
Cal. 568, 14 Pac. Rep. 514; Morgan v. Am. Deo. 471; People v. New York
Michigan Air Line R Co., 57 Mich. County, 5 Cow. 331; Jencks v.
430, 25 N. W. Rep. 161, 26 id. 865; Alexander, 11 Paige, 619; Starr v.
Bradford Academy V. Grover, 55Vt. Richmond, 30 111. 276, 83 Am. Dec.
463; Case V. Fish. 58 Wis. 56,15 N. 189; Johnson v. Johnson, 5 Jones' Eq.
W. Rep. 808; Hurst v. Hite, 20 W. 167; De Bruhl v. Neuflfer, 1 Strobh.
Va. 183; Frazier v. Hyland, 1 Har. & 426. See Mercer's Adm'r v. Beale, 4
J. 98; Gwinn v. Whitaker, id. 754; Leigh, 189.
Bond V. Jones. 8 Sm. & M. 368; Spires If part of the interest is barred by
V. Hamot, 8 W. & S. 17; Peebles v. the statute of limitations an unap-
Gee, 1 Dev. 341; Hampton v. Dean, 4 propriated payment will not be ap-
Tex. 455; Hearn v. Cutberth, 10 id. plied to its discharge because it is
216; McFadden v. Fortier, 20 111. 509; not wholly due. In re Fitzmaurice's
Hart V. Dorman, 3 Fla, 445: Lash v. Minors, 15 Irish Ch. 445.
Edgerton, 13 Minn. 210; Hammer v. 'Smythe v. New England Loan &
Nevill, Wright, 169; Estebeue v. Es- Trust Co., 12 Wash. 424, 41 Pac. Rep.
tebene, 5 La. Ann. 738; Union Bank 184.
V. Lobdell, 10 id. 130; Bird v. Lobdell, 2 Monson v. Meyer, 190 III 105, 60
id. 159; Johnson v. Robbins, 20 id. N. K Rep. 63, 92 IlL App. 127.
569; Moore v. Kiflf, 78 Pa. 96; Will- 3 Anketel v. Converse, 17 Ohio St.
iaras V. Houghtaling, 3 Cow. 86; IL
Righter v. Stall, 3 Sandf. Ch. 60S;
§ 245.]
APPLICATION OF PAYMENTS.
631
penal bond, they will be applied to the interest in the first in-
stance, although their sum exceeds the penalty.^ A payment
of usury will be applied in law to discharge the amount legally
due.^ Payments received on a debt bearing interest before
either is due should be applied to pay the principal and the in-
terest accrued on that part of the principal so extinguished.'
The rule which applies a general payment first to interest due,
rather than principal, is directly opposite to that which ap-
plies a payment on an interest-bearing debt in preference to
one not bearing interest; it does not favor the debtor, but the
creditor; for the law in some states allowing interest due to
bear interest is exceptional.
§ 245. General payments applied to the debt least se-
cured; comments on conflicting views of the general sub-
ject. If one debt be secured and another not, and a general
payment is made, the prevailing rule is that the court will ap-
ply it to the debt which is not secured, or that for which the
1 Smith V, Macon, 1 Hill Ch. (S. C.)
339.
2 Atlanta Savings Bank v. Spencer,
107 Ga. 629, 33 S. E. Rep. 878; Bur-
rows V. Cook, 17 Iowa, 436; Parch-
man v. McKinney, 12 Sm. & M. 681;
Stanley v. Westrop, 16 Tex. 200;
Bartholomew v. Yaw, 9 Paige, 165.
See g 236.
In a suit under the national bank
act to recover usurious interest and
the forfeiture provided for, if occa-
sional settlements have been made
by the parties, payments deducted
from the principal and interest then
due and new notes given for the
balances, the payments will be ap-
plied pro rata to the principal and
interest due at the time. Kinser v.
Farmers' Nat. Bank, 58 Iowa, 728, 13
N. W. Rep. 59.
3Righter v. Stall, 3 Sandf. Ch. 608;
Jencks v. Alexander, 11 Paige, 619;
Williams v. Houghtaling, 3 Cow. 86;
Miami Exporting Co. v. United States
Bank, 5 Ohio, 260.
In Starr v. Richmond, 30 IlL 276,
83 Am. Dec. 189, Walker, J., said:
"It appears to be more equitable
and just that when the holder re-
ceives money before it is due, on a
demand drawing interest, it should
be applied, in the absence of an
agreement to the contrary, to the
principal. Otherwise, by loaning
the sum thus received, he w^ould, in
effect, compound the interest, or
have placed at interest before its
maturity a larger sum than his
original claim. In other words, he
would receive interest on the
maker's money as well as his own.
After the principal and interest
both become due it would be otlier-
wise. The court below, we think,
erred in applying any portion of the
payment made before the maturity
of the note to the extinguishment
of interest, but should have appro-
priated the whole of the payment to
the principal." McElrath v. Dupuy,
2 La. Ann. 520; Fay v. Lovejoy, 20
Wis. 407.
632
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 245,
security is most precarious.^ The rule has been applied to
money recovered from a defaulting officer by his sureties and
paid over by them to the government, his defalcation being in
[4:23] excess of their liability.^ If, however, the security of
one of the debts is by a surety, a general payment will be ap-
plied to the debt for which he is liable that he may be relieved.*
' Sternberger v. Gowdy, 93 Ky. 146,
19 S. W. Rep. 186; Chicago Title &
Trust Co. V. McGlew, 90 111. App. 58;
Mouson V. Meyer, 98 IlL App. 94, 190
111. 105, 60 N. E. Rep. 63: Gardner v.
Leek, 53 Minn. 522, 54 N. W. Rep. 746;
Price V. Merritt, 55 Mo. App. 640;
McMillan v. Grayston, 83 Mo. App.
425; Smith v. Lewiston Steam Mill,
66 N. H. 613, 34 Atl. Rep. 153; Pond
V. Harvvood, 139 N. Y. Ill, 34 N. E.
Rep. 768; Pope v. Transparent Ice
Co., 91 Va. 79, 20 S. E. Rep. 940;
Poling V. Flanagan, 41 W. Va. 191, 23
S. E. Rep. 685; The Katie O'Neil 65
Fed. Rep. Ill; Garrett's Appeal, 100
Pa. 597; Goetz v. Piel, 26 Mo. App.
634, 643; Nichols v. Knowles, 3 Mc-
Crary, 477, 17 Fed. Rep. 494; Sanborn
V. Stark, 31 id. 18; McOurdy v. Mid-
dleton, 82 Ala. 131, 2 So. Rep. 721;
Poulson V. Collier, 18 Mo. App. 583;
The D. B. Steel man, 5 Hughes, 210;
Hare v. Stegali, 60 111. 380; Wilhelm
V. Schmidt, 84 id. 183; Plain v. Roth,
107 id. 588; Frazier v. Lanahan, 71
Md. 131, 17 At). Rep. 940, 17 Am. St.
516; Lester v. Houston, 101 N. C. 605,
8 S. E. Rep. 366; North v. La Flesh,
73 Wis. 520, 41 N. W. Rep. 633; Mc-
Daniel V. Barnes, 5 Bush, 183; Thomas
V. Kelsey, 30 Barb. 268; Blanton v.
Rice, 5 T. B. Mon. 253; Field v. Hoi-
land, 6 Cranch, 8; Burks v. Albert,
4 J. J. Marsh. 97, 20 Am. Dec. 209;
Foster v. McGraw, 64 Pa. 464; Patti-
Bon V. Hull, 9 Cow. 747; Dows v.
More wood, 10 Barb. 183; Johnson's
Appeal, 37 Pa. 268; Langdon v.
Bo wen, 46 Vt. 512; Wilcox v. Fair-
haven Bank, 7 Allen, 270; Hempfield
R. Co. V. Thornburg, 1 W. Va. 261;
Gaston v. Barney, 11 Ohio St. 510*.
Moss V. Adams, 4 Ired. Eq. 42; Ran-
sour V. Thomas, 10 Ired. 104; State v.
Thomas, 11 id. 251; Jenkins v. Beal,
70 N. C. 440; Sprinkle v. Martin, 72
id. 92; Chester v. Wheelwright, 15
Conn. 562; Bosley v. Porter, 4 J. J.
Marsh. 621; Gordon v. Hobart, 2
Story, 243; Taylor v. Talbot, 2 J. J.
Marsli. 49; Sager v. Warley, Rice Ch.
(S. C.) 26; Heilbron v. Bissell, 1 Bailey
Eq. 430; Gregory v. Forrester, 1 Mc-
Cord Ch. 318; Smith v. Wood, 1 N. J.
Eq. 74; Jones v. Kilgore, 2 Rich. Eq.
63; Baine v. Williams, 10 Sm. & M.
113; McQuaide v. Stewart, 48 Pa. 198;
Smith V. Brooke, 49 id. 147; Plant-
ers' Bank v. Stockman, 1 Freeman's
Ch. 502.
2 Alexander v. United States, 6 C.
C. A. 602, 57 Fed. Rep. 828.
sPritchard v. Comer, 71 Ga. 18;
Pearl v. Deacon, 1 De G. & J. 461;
Kinnaird v. Webster. 10 Ch. Div. 139;
Berghaus v. Alter, 9 Watts, 386; Ross
V. McLauchlan. 7 Gratt. 86; Marry-
atts V. White, 2 Stark. 101; Gard v.
Stevens, 12 Mich. 292, 86 Am. Dec.
52; Bridenbeckerv. Lowell, 32 Barb. 9.
Where one of several accommoda-
tion makers of a note has notified
the payee and holder of his desire to
terminate his liability, he cannot
claim in diminution thereof on ac-
count of outstanding advances money
paid to the holder by the accommo-
dation payee after such revocation,
such monej' being the proceeds of
the business of the payee conducted
on money advanced on the credit of
the other accommodation makers.
Patterson v. Bank of British Colum-
bia. 26 Ore. 509, 38 Pac. Rep. SI'S-
§ 245.] APPLICATION OF PAYMENTS. 633
No one except a surety will be heard to contend for a different
application. The court cannot go outside the case to see
whether or not equity requires that other than the parties to
the record shall be protected ; and, it seems, that in the absence
of fraud or imposition on the surety he has no equity to control
the application of a payment for which he is bound.' One
liable as guarantor for the prompt payment of interest on a
mortgage cannot, in an action upon the guaranty, after a fore-
closure sale which failed to bring the amount due on principal
and interest, assert the right to have the money applied to the
interest." In some states the courts, carrying the rule first
stated in this section to greater length, hold that the applica-
tion will be made to the debt which bears heaviest upon the
debtor, and apply a general payment so as to discharge a debt
for which he has given security in preference to an unsecured
demand in order to release the collateral.'
There is a marked conflict of decision upon this point relat-
ing to the application by the court of indefinite payments aris-
ing, as before intimated, from the diverse judicial assumptions
on the one hand, that such payments are as a general rule to
be applied in the manner most beneficial to the debtor, and
-on the other, that they are to be applied most beneficially to
the creditor.* No court, however, has so far relied upon [424:]
1 Richards' Estate, 185 Pa. 155, 39 Payments will be so applied as to
Atl. Rep. 1117; Stamford Bank v. save a debtor's homestead. First
Benedict, 15 Conn. 444. Nat. Bank v. Hollinsworth, 78 Iowa,
2 Smythe v. New England Loan & 575, 43 N. W. Rep. 536.
Trust Co., 13 Wash. 434, 41 Pac. Rep. * So much has this assumption of
184. favoring one party or the other as a
3 Compound Lumber Co. v. Murphy, rule entered into the judgment of the
169 111. 343, 48 N. E. Rep. 472; Frazier courts, that it has been a convenient
V. Lanahan, 71 Md. 131, 17 Atl. Rep. resort for determining incidental
940, 17 Am. St. 516; Griswold v. questions. Thus where it was proved
Onondaga County Savings Bank, 93 that a payment was made in a certain
N. Y. 301; Pattison v. Hull, 9 Cow. year, but the day and montli could
747; Dows v. Morewood, 10 Barb. 183; not be shown, the court directed tlie
Poindexter v. La Roche, 7 Sm. & M. credit to be given as of tlie last day
699; Dorsey v. Gassaway, 3 Har. & J. of the year, a day most favorable to
402, 3 Am. Dec. 557; McTavish v. the creditor. Byers v. Fowler, 14
Carroll, 1 Md. Ch. 160 (but see Gwinn Ark. 80. See Anderson v. Mason, 6
V Whitaker, 1 Har. & J. 754); The Dana, 217; Bank of Portland v.
Antarctic, 1 Sprague, 206; Neal v. Brown, 22 Me 295.
Allison, 50 Miss. 175. See Thatcher If the course of dealing between
^v. Massey, 20 S. C. 543. the parties indicates an understand-
634: CONVENTIONAL LIQUIDATIONS AND DISCHAEGEa. [§ 245..
either assumption as to resolve all questions by it. As before
stated, neither assumption, apart from some special ground,
is founded in reason or principle. Xeither party, by reason
merely of being debtor or creditor, has any claim to be pre-
ferred; each as a general rule has had an election to appropri-
ate the payment, and each having waived it has an equal claim
to a just application by the court. The rule that the debt
which is least secured should be first paid, where there are no-
special circumstances, stands on very slight preponderance of
equity. The most that can be said for it was said by Marsh-
all, C. J. : " It being equitable that the whole debt should be
paid it cannot be inequitable to extinguish first those debts for
which the security is most precarious; " ^ and it is not surpris-
ing that the humane consideration of relieving the debtor of
the more burdensome debt should determine the application
the other way. But the rule to pay first the debt least se-
cured seems to be supported by a decided weight of authority.
There is also considerable contrariety of decision upon other
points relative to the application of payments by the court.
The cases agree that an indefinite payment is to be applied to
the oldest debt, where no other rule of appropriation conflicts;
but it often occurs that another and sometimes several rules
do conflict. Then the relative force of the conflicting rules
and the particular circumstances must control the application.
That rule is often met by the rule that the least secured debt
shall be first paid. Both may be said to operate in favor of
the creditor, but they do not always conduce to the same ap-
plication. The latter is paramount when no circumstances
exist to increase the force of the other. Where the secured
and unsecured debts are by mutual consent items in a general
account current, and especially if, by like consent, the pay-
ment is also credited in the account, the rule for applying the
credit to the oldest items prevails, notwithstanding the partial
security;^ but not without dissent. Where the creditor's se-
curity consisted in retaining title to the property sold, and the
purchase price of the articles so conditionally sold constituted
ing that payments are to be applied ^ Field v. Holland, 6 Cranch, 8.
in the way most beneficial to the 2§243.
creditor the court will give effect to
it. Gwin V. McLean, 63 Jliss. 12L
§ 2^6.]
ACCOKD AND SATISFACTION.
635
the earliest items in the account, and the payments were, by
mutual consent, entered as credits therein, the interest [l-^.j]
of the purchaser to perfect his title to the property was
deemed to preponderate against the interest of the creditor to
obtain payment of his unsecured, rather than his secured,
claims; and the concurrence of the parties in making the
transaction a matter of account evinced their intention that
the payments should satisfy the charges in the order of their
entry.'
Section 3.
ACCORD AND SATISFACTION.
§ 246. Definition. A claim or demand may be satisfied by
the party liable delivering, paying or doing, and the claimant
accepting, something different from that which was owing or
claimed, if they so agree.^ It is a substituted payment. When
1 Crompton v. Pratt, 105 Mass. 255.
In Pointer v. Smith, 7 Heisk. 137,
A., a Tennessean, as agent, hired out
in Alabama the slaves of several
Tennesseans, and afterwards re-
ceived in Alabamaapart of thehire,
without any appropriation at the
time by either agent receiving or the
debtor paying. Held, that the law
of Alabama would govern as to the
subsequent appropriation of the pay-
ment; but in the absence of any
proof as to the law thereof, ap-
plicable to the circumstances, the
debtor could not make a subsequent
appropriation, and it should be dis-
tributed pro rata.
In Smith v. Union Bank of George-
town, 5 Pet. 518, it was held that the
right of priority of payment among
creditors of an intestate depends on
the law of the place where the assets
are administered, and not on the law
of the place of the contract, or of the
domicile of the deceased; and, there-
fore, where administration was taken
under the laws of Maryland of assets
there, where all debts are of equal
dignity, and the intestate was dom-
iciled and owed a bond debt in Vir-
ginia, where bond debts have a pref-
erence, the latter debt had no prior
right of payment out of the assets in
Maryland.
2 If the amount due is unliquidated
and the party owing it makes an
offer of a less sum in settlement and
attaches thereto the condition that
if the sum is taken at all it must be
received in full or in satisfaction,
and the other party receives it with
knowledge of the condition, he takes
it subject thereto, and it operates as
a full accord and satisfaction not-
withstanding the payee, at the time
of receivmg it, declares that he takes
it in satisfaction pro tanto only. Mc-
Daniels v. Bank, 29 Vt. 230, 70 Am.
Dec. 406; Preston v. Grant, 34 Vt.
201; Berdell v. Bissell, 6 Colo. 162;
Vermont State Baptist Convention
V. Ladd, 58 Vt. 95, 4 Atl. Rep. 634;
Bull V. Bull, 34 Conn. 455; Patten v.
Douglass, 44 id. 541.
If a party injured, with knowledge
of all the facts, demands and receives
from the wrong-doer a sum of money
on account of the injury, either in
whole or in part, it is presumed that
it was intended as a full recompense,
63G CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 24T.
such agreement is executed — carried fully into effect' — the
original demand is canceled, satisfied, extinguished. It is thus
discharged by what the law denominates accord and satisfac-
tion. It is a discharge of the former obligation or liability by
the receipt of a new consideration mutually agreed upon.^
The rule requiring that an accord be executed is satisfied if the
creditor accepts the promise of the debtor to perform some
act in future in satisfaction of the debt, and where that is the
case the debt is extinguished without performance.' But
there is an obvious distinction between an engagement to ac-
cept a promise in satisfaction and an agreement requiring per-
formance of the promise. In the latter case a tender of
performance, although made promptlv and in good faith, is
not satisfaction.*
[426] § 247. Consideration. For the purpose of support-
ing such an agreement and giving it effect, the law treats all
considerations which have value, without regard to the extent
of that value, as sufficient, as it does in all other cases of con-
tract; — inadequacy is not a valid objection; a court will not
consider the disparity, if there is any, between the value of
the liability discharged and the thing done or promised, which
forms the consideration, if the latter is of some value.* The
and it is an accord and satisfaction. 64 N.W. Rep. 1120; Rogers v. Spokane,
Hinkle v. Minneapolis, etc. R Co., 31 9 Wash. 168, 37 Pac. Rep. 300.
Minn. 434, 18 N.W. Rtp. 275. But it 2Vanbebber v. Plunkett, 26 Ore.
is otherwise if the party in fault 562, 569, 38 Pac. Rep. 707, 27 L. R A.
pays money voluntarily, and not in 811, quoting the text; Bush v. Abra-
response to a claim made by the ham, 25 Ore. 336, 345, 35 Pac. Rep.
other, or if any fact gives the pay- 1066, quoting the text,
ment the character of a gratuity. 3 Smith v. Elrod, 123 Ala. 269, 24
Sobieski V. St. Paul& D. R Co., 41 So. Rep. 994; Knowles v. Knowles,
Minn. 169, 42 N. W. Rep. 863. 128 111. 110, 29 N. E. Rep. 196;
1 Swoff or d Brothers Dry Goods Co. Potts v. Polk County, 80 Iowa,
y. Goss, 65 Mo. App. 55; Wenz v. 401, 45 N. W. Rep. 775; Averill v.
Meyersohn. 59 App. Div, 130, 68 N. Wood, 78 Mich. 342, 44 N. W. Rep.
Y. Supp. 1091; First Nat. Bank v. 381; Oregon Pacific R. Co. v. Forrest,
Leech, 36 C. C. A. 263, 94 Fed. Rep. 128 N. Y. 83, 28 N. E. Rep. 137; Bab-
310; Crow v. Kimball Lumber Co., 16 cock v. Hawkins, 33 Vt. 561; Sharp
C. C. A. 127, 69 Fed. Rep. 127; Hosier v. Mauston, 93 Wis. 629, 66 N. W.
V. Hursh, 151 Pa. 415, 25 AtL Rep. 53; Rep. 803. See § 252.
Omaha F. Ins. Co. v. Thompson, 50 * Hosier v. Hursh, 151 Pa, 415, 25
Neb. 580, 70 N. W. Rep. 30; Carpenter Atl. Rep. 52.
V. Cliicago, etc. R. Co., 7 S. D. 584, 5 Savage v. Everman, 70 Pa. 315,
§ 248.] ACCOKD AND SATISFACTION. 037
receipt of money paid into court by the defendant does not
deprive the plaintiff of his right to collect the balance due
unless the payment was accompanied by a condition that the
sum must be accepted in full satisfaction.^
§ 248. Payment of part of a debt will not support agree-
ment to discharge the whole. Where there is an overdue
money demand, liquidated and not disputed, and a part only
of it is paid, though this is accepted as full satisfaction, there
is only a part performance of the obligation in kind; the
agreement to discharge the residue is void for want of con-
sideration. All claims for damages, for torts committed, or
for contracts broken, are payable in money. When a demand
therefor is certain, or rendered certain by agreement or ad-
judication, and is no longer disputed, it cannot be satisfied
with any less amount than the precise sum owing. If a part
is paid there is a partial performance of the obligation of the
party liable, and no more. His payment is only a discharge
'pro tanto. This part payment may have been induced solely
by the assurance that it would be accepted as full satisfaction,
and it may have been impossible to compel payment; still,
the party paying has done in kind only what he was under
a legal obligation to do in respect to the amount paid, and
the corresponding amount of the obligation is thereby satis-
fied, but no more; therefore the agreement of the creditor to
discharge the residue is, in a legal sense, gratuitous and not
binding.^
10 Am. Rep. 676; Hartman v. Dan- iCooley v. Kinney, 119 Mich. 377,
ner, 74 Pa. 33; Very v. Levy, 13 How. 78 N. W. Rep. 333.
345; Hardman v. Bellhouse, 9 M. & 2 Swofford Brothers Dry Goods Ca
W. 596; Sibree v. Tripp. 15 id. 23; v. Goss, 05 Mo. App. 55; Morrill v.
Booth V. Smith. 3 Wend. 66; Kellogg Baggott. 157 111. 240, 41 N. R Rep.
V. Richards, 14 id. 116; Stein man v. 639; Hart v. Strong, 183 IIL 349, 55
Magnus, 11 East, 390; Lewis v. Jones, N. E. Rep. 629; Pottlitzer v. Wesson,
4 B. & C. 506; Blinn v. Chester, 5 8 Ind. App. 472, 35 N. E. Rep. 1030;
Day, 360; Webster v. Wyser, 1 Stew. Jennings v. Durflinger, 23 Ind. App.
181; Davis v. Noaks, 3 J. J. Marsli 673, 55 N. E. Rep. 979; Stengel v.
497; Wood v. Roberts, 2 Stark. 417; Preston, 11 Ky. L. Rep. 976, 13 S. W.
Boothby v. Sowden, 3 Camp. 175; Rep. 839; Leeson v. Anderson, 99
Bradley v. Gregory, 2 id. 383; Bush Mich. 247, 58 N. W. Rep. 72; Wet-
V. Abraham, 25 Ore. 336, 35 Pac. Rep. more v. Crouch, 150 Mo. 671, 51 S.
1066; Griffith v. Creighton, 61 Mo. W. Rep. 738; Griffith v. Creighton,
App. 1; Howard v. Morton, 65 Barb. 61 Mo. App. 1; Howe v. Robinson, 13
161. See § 249. N. Y. Misc. 256, 34 N. Y. Supp. 85;
638
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 248.
[427] The actual value of a debt or demand depends on the
probability of voluntary payment, or the possibility of collec-
tion by legal process. Where a debt is doubtful, a creditor
may obtain a part of the nominal amount by discharging the
residue, and thus realize all that it is actually worth, and per-
Jones V. Rice, 19 N. Y. Misc. 357, 43
N. Y. Supp. 491; Toledo v. Sanwald,
13 Ohio Ct. Ct. 496 (applying the
rule to a judgment); Mt. Holly
Water Co. v. Mt. Holly Springs, 10
Pa. Super. Ct. 162; Commonwealth
V. Cummins, 155 Pa. 30, 25 Atl. Rep.
996; Chicago, etc. K Co. v. Clark, 35
C. C. A. 120, 92 Fed. Rep. 968 (the
opinion of Lacombe, C. J., reviews
many cases); Hodges v. Truas, 19
Ind. App. 651, 49 N. E. Rep. 1079;
Rued V. Cooper, 119 Cal. 463, 51 Pac.
Rep. 704; Gurley v. Hiteshue, 5 Gill,
217; Markel v. Spitler, 28 Ind. 488;
Dederick v. Leman. 9 Johns. 333;
Harris v. Close, 2 Johns. 448, 3 Am.
Dec. 244; Seymour v. Minturn, 17
Johns. 169, 8 Am. Dec. 380; White v.
Jordan, 27 Me. 370; Latapee v. Pecho-
lier, 2 Wash. C. C. 180; Warren v.
Skinner, 20 Conn. 559: Campbell v.
Booth, 8 Md. 107; Curtiss v. Martin,
20 111. 575; Donohue v. Woodbury. 6
Cush. 150; Bryant v. Proctor, 14 B.
Mon. 451; Williams v. Langford, 15
id. 560; Conkling v. King, 10 Barb.
372, 10 N. Y. 440; Keeler v. Salisbury,
33 N. Y. 648: Fellows v. Stevens, 24
Wend. 299; Harper v. Graham, 20
Ohio, 105; Fell v. McHenry, 42 Pa.
41; Pierson v. McCahill, 21 Cal. 122;
Irvine v. Millbank, 56 N. Y. 635;
Hinckley v. Arey, 27 Me. 362; Riley
V. Kershan, 52 Mo. 224; Peterson v.
Whe-ler, 45 id. 369; Rose v. Hall, 26
Conn. 392, 68 Am. Dec. 402; Bailey v.
Day, 26 Me. 88; Redfield v. Holland
Purchase Ins. Co., 56 N. Y. 354, 15
Am. Rep. 424; Lewis v. Jones, 6 D. &
R. 567. 4 B. & C. 513; Ogborn v. Hoff-
man, 52 Ind. 439; Keen v. Vaughan,
48 Pa, 477; Carrington v. Crocker, 37
N. Y. 336; Cumber v. Wane, 1 Str.
426; Sibree v. Tripp, 15 M. & W. 23;
Fitch V, Sutton, 5 East, 230; Pin
nell's Case, 5 Rep. 117: Lynn v.
Bruce, 3 H. Bl. 317; Thomas v.
Heathorn, 2 B. & C. 477; Mitchell
V. Cragg, 10 M. & W. 367; Skaife v.
Jackson, 3 B. & C. 421; Graves v.
Key, 3 B. & Ad. 313; Straton v. Ras-
tall, 2 T. R. 366; Churchill v. Bow-
man, 39 Vt. 518; Hardey v. Coe, 5
Gill, 189; Smith v. Bartholomew, 1
Met. 276, 35 Am. Dec. 365; Arnold v.
Park, 8 Bush, 3; Tyler v. Odd Fel-
lows' Mut. Relief Ass'n, 145 Mass.
134, 13 N. E. Rep. 360; Smith v. Chil-
ton, 84 Va. 840, 6 S. E. Rep. 142; Mar-
tin V. Frantz, 127 Pa. 389, 14 Am. St.
859, 18 Atl. Rep. 20; Hayes v. Massa-
chusetts Mut. L. Ins. Co., 125 III
626. 18 N. E. Rep. 322; Sheibley v.
Dixon Count}', 61 Neb. 409, 85 N. W.
Rep. 399; Helling v. United Order
of Honor, 29 Mo. App. 309; Emmitts-
burg R. Co. V. Donoghue, 67 Md. 383,
1 Am. St. 396, 10 Atl. Rep. 233; St.
Louis, etc. R. Ca v. Davis, 35 Kan.
464, 11 Pac. Rep. 421; Foakes v. Beer,
9 App. Cas. 605, 11 Q. B. Div. 221;
Eldred v. Peterson, 80 Iowa, 264, 20
Am. St. 416, 45 N. W. Rep. 755.
In Gordon v. Moore, 44 Ark. 349,
355, 51 Am. Rep. 606, it is held "that
an agreement by a creditor to ac-
cept a smaller sum in satisfaction of
a debt, carried into effect by the
receipt of the money, and the exe-
cution of a formal and positive re-
lease, with all other acts essential
to an absolute relinquishment of his
right, is a valid and iri'evocable
act."
•§ 24:8(2.] ACCORD AND SATISFACTION. 639
^aps more. For this reason the rule stated has been ref^arded
by the courts as only a technical one; and they have satisfied
it on nice distinctions;^ or, as has been judicially said, "they
have seemed to seize with avidity upon any consideration to
support the agreement to accept the lesser sum in satisfaction
of the larger, or, in other words, to extract if possible from the
■circumstances of each case a consideration for the new aoree-
ment in place of the old, and thus to form a defense to the
action brought upon the old agreement."^
§ 24-8a. Same subject. In a recent case the Mississippi
court refused to recognize the rule stated in the last section,
notwithstanding it had been applied there. In a strong opin-
ion Woods, C. J., argues that the case in Coke' which is relied
upon as the foundation of the rule decided no such question.
"An examination of that mischievous and misleading reported
case will make it appear at once that the question before us
was not in any way involved. PinneFs plea was that, before
the maturity of his bond for the larger sum, plaintiff had ac-
cepted a lesser sum agreed upon between the parties, in full
satisfaction of the original debt. Kow, all the authorities,
American and English, including Coke himself, agree that this
was a good defense, and that the plaintiff was bound by it, if
defendant should properly plead it to a suit for the entire
original debt. But the hapless Pinnel, in that remote period
when courts were almost as zealous for the observance of tech-
nical rules of special pleading as for the execution of justice ac-
1 Kellogg V. Richards, 14 "Wend, less because the debtor was unable
116; Smith v. Ballou. 1 R I. 496; Har- to pay it. Judge Marshall said: " We
per V. Graham. 20 Ohio, 105; Brooks think his acceptance is sufficient to
V. White, 2 Met. 283, 37 Am. Dec. establish the adequacy of the satis-
95; McDaniels v. Lapham, 21 Vt. 222. faction. It cannot be said that there
See Weymouth v. Babcock, 42 Me. was no consideration for giving up
44; Milliken v. Brown, 1 Rawle, 391; any part of the debt of the defend-
Lamb v. Goodwin, 10 Ired. 320; Mc- ant, because although the value of
Daniels v. Bank, 29 Vt. 230; Mathis the entire consideration given can
V, Bryson, 4 Jones, 509; Brink v. be measured, there is no measure of
Garland, 58 Mo. A pp. 356. the value of the debt which the de-
In Woolfolk V, McDowell, 9 Dana, fendant could not pay."
268, a creditor accepted his own note -^ Jaffray v. Davis, 124 N. Y. 164, 26
outstanding in the hands of a third N. E. Rep. 351, 11 L. R A. 7ia
person, in satisfaction of a larger ^ Pinnel's Case, 5 Rep. 117.
amount against his debtor, but worth
GiO CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 24S«.
cording to right, was adjudged to pay the whole debt, the plaint-
iff having judgment against him because of his ' insufficient
pleading, for,' sa^^s Coke, ' he did not plead that he had paid
the ol. 2s. 2d. in full satisfaction (as by law he ought), but
pleaded the payment of part generally, and that the plaintiff
accepted it in full satisfaction.'" After showing that the
courts of this country generally adopted the rule supposed to
be so laid down, the writer comes to the question of consider-
ation, the absence of which is usually given as the reason for
the rule: "The absurdity and unreasonableness of the rule
seem to be generally conceded, but there also seems to remain
a wavering, shadowy belief in the fact, falsely so called, that
the agreement to accept, and the actual acceptance of, a lesser
sum in the full satisfaction of a larger sum, is without any
consideration to support it — that is, that the new agreement
confers no benefit upon the creditor. However it may have
seemed three hundred years ago in England, when trade and
commerce had not yet burst their swaddling bands, at this day
and in this country, where almost e\ery man is in some way
or other engao:ed in trade or commerce, it is as ridiculous as it
is untrue to say that the payment of a lesser part of an origi-
nally greater debt, cash in hand, without vexation, cost, and
delay, or the hazards of litigation m an effort to collect all, is
not often — nay, generally — greatly to the benefit of the
creditor. Why shall not money — the thing sought to be se-
cured by new notes of third parties, notes whose payment in
money is designed to be secured by mortgage, and even nego-
tiable notes of the debtor himself — why shall not the actual
payment of money, cash in hand, he held to be as good con-
sideration for a new agreement, as beneficial to the creditor,
as any mere promises to pay the same amount, by whomsoever
made and howsoever secured ? And why may not men make
and substitute a new contract and agreement for an old one,
even if the old contract calls for a money payment ? And
why may one accept a horse worth one hundred dollars in full
satisfaction of a promissory note for one thousand dollars, and
be bound thereby, and yet not be legally bound by his agree-
ment to accept nine hundred and ninety-nine dollars, and his
actual acceptance of it, in full satisfaction of the one thousand
dollar note ? No reason can bs assigned, except that just ad-
§ 249.]
ACCOED AND SATISFACTION.
641
verted to, and this rests upon a mistake in fact. And a rule of
law which declares that under no circumstances, however
favorable and beneficial to the creditor, or however hard and
full of sacrifice to the debtor, can the payment of a less sum of
money at the time and place stipulated in the original obli-
gation, or afterwards, for a greater sum, though accepted by
the creditor in full satisfaction of the whole debt, ever amount
in law to satisfaction of the original debt, is absurd, irrational,
unsupported by reason and not founded in authority, as has
been declared by courts of the highest respectability, and of
last resort, even when yielding reluctant assent to it."^
§ 249. Any other act or promise which is a new consider-
ation will suffice. If there be any benefit or even legal [428]
possibility of benefit ^ to the creditor thrown in, the additional
weight will turn the scale and render the consideration suffi-
cient to support the agree ment.' Payment at a different place,*
or before the original debt is due,* is sufficient. 8o if, instead
of offering payment of a less sum, the debtor procures a third
person to become security, either by engaging his personal
I Clayton v. Clark, 74 Miss. 499, 60
Am. St. 521, 37 L. R. A. 771, 21 So.
Rt-p. 565, 23 id. 189, modifying or
overruling Jones v. Perkins, 29 Miss.
139; Pulliam v. Taylor. 50 Miss. 251,
and Burrus v. Gordon, 57 Miss. 93. To
much the same effect as the princi-
pal case is Harper v. Graham, 20
Ohio, 105. See Shelton v. Jackson,
20 Tex, Civ. App. 443, 49 S. W. Rep.
414
2 '-What is called 'any benefit, or
even any legal possibility of benefit,'
is not that sort of benefit which a
creditor may derive from getting
payment of part of the money due to
him from a debtor who might other-
wise keep him at arm's length, or
possibly become insolvent, but is
some independent benefit, actual or
contingent, of a kind which might in
law be a good and valuable consider-
ation for any other sort of agreement
not under seal." Foakes v. Beer, 9
App. Cas. 605 (1884). Compare the
preceding section.
Vou 1 — 41
3 Grayson's Appeal, 108 Pa. 581;
Hendrick v. Thomas, 106 Pa. 327; Ty-
son V. Woodruff, 108 Ga. 308, 33 S. E.
Rep. 981; 1 Smith Lead. Cas. 600;
Steinman v. Magnus, 2 Camp, 124;
Bradley v. Gregory, id. 383; Wood v.
Roberts, 2 Stark. 417; Boothby v.
Snowden, 3 Camp. 175; Sibree v.
Tripp, 15 M. & W. 23; Bidder v.
Bridges, 37 Ch. Div. 406.
4 Smith V. Brown, 3 Hawks, 580;
Harper v. Graham, 20 Ohio, 105; Aus-
tin V. Dor win, 21 Vt 39; Spann v.
Baltzell, 1 Fla. 302, 46 Am. Dec. 340:
Arnold v. Park, 8 Bush, 3; Milliken
V. Brown, 1 Rawle, 391.
5 Sonnenberg v. Riedel, 16 ]\Iinn. 83;
Goodnow V. Smith, 18 Pick. 414, 29
Am. Dec. 200; Brooks v. White, 2
Met. 283, 37 Am. Dec. 95; Levy v.
Very, 12 Ark. 148; Boyd v. Moats, 75
Iowa, 151, 39 N. W. Rep. 237; Schwei-
der v. Lang, 29 Minn. 254, 13 N. W.
Rep. 33; Ricketts v. Hall, 2 Bush, 249,
43 Am. Rep. 302; Smith v. Brown, 3
Hawks, 580.
642
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 249.
credit or pledging his property for the payment of a smaller
sum;^ or the payment of such sum by a third person ;2 or if
the debtor alone gives negotiable paper for a smaller sum to
satisfy a larger debt not in negotiable form; " or if one of sev-
eral joint debtors, whether in partnership or not, does so, and
the note or bill, and not the payment of it, is accepted as satis-
faction, it is valid; giving such security is a new considera-
tion, for it may be more advantageous than the debt in its
previous form.* Giving notes for smaller sums than the amount
of the indebtedness which was represented by a single note,
so that the creditor may sue on them in justice's court, is a suf-
1 Lincoln Savings Bank & Safe De-
posit Co. V. Allen, 27 C. C. A. 87, 82
Fed. Rep. 148; Keeler v. Salisbury,
33 N. Y. 648; Brooks v. White, 2 ]\Iet.
283, 37 Am. Dec. 95; Babcock v. Dill,
43 Barb. 577; Le Page v. McCrea, 1
Wend. 164, 19 Am. Dec. 469; Harri-
son V. Close, 2 Johns. 448, 3 Am. Dec.
444; Seymour v. Minturn, 17 Johns.
169, 8 Am. Dec. 380; Conkling v.
King, 10 N. Y. 440; Welby v. Drake,
1 C. & P. 557; Belshaw v. Bush, 11 C.
B. 191; James v. Isaacs, 12 id. 791;
Steinman v. Magnus, 11 East, 390;
Henderson v. Stobart, 5 Ex. 99; Dias
V. Wanmaker, 1 Sandf. 469; Seymour
V. Goodrich, 80 Va. 303; Bidder v.
Bridges, 37 Ch. Div. 406; Roberts v.
Brandies, 44 Hun, 468; Varney v.
Conery, 77 Me. 527, 1 Atl. Rep. 683;
Laboyteaux v. Swigart, 103 Ind. 596,
3 N. R Rep. 373. See Warburg v.
Wilcox, 7 Abb. Pr. 336.
2 Fowler v. Smith, 153 Pa, 639, 25
AtL Rep. 744; Clark v. Abbott, 53
Minn. 88, 55 N. W. Rep. 542, 39 Am.
St. 577; Laboyteaux v. Swigart, 103
Ind. 596, 3 N. E. Rep. 373; Varney v.
Conery, 77 Me. 527, 1 Atl. Rep. 683;
Welby V. Drake, 1 C. & P. 557; Gordon
V. Moore, 44 Ark. 349, 51 Am. Rep.
606; Pettigrew Machine Co, v. Har-
mon, 45 Ark. 290.
3 Jaflfray v. Davis, 124 N. Y. 164, 26
N. E. Rep. 351, 11 L. R. A. 710, dis-
tinguishing or disapproving Keeler
V. Salisbury, 73 N. Y. 653, and Platts
V. Walrath, Lalor's Supp. 59; Me-
chanics' Bank v. Houston, 11 W. N.
C. 388 (Pa. Sup. Ct.) ; Curlewis v. Clark,
3 Ex. 375; Cooper v. Parker, 15 C. B.
825; Sibree v. Tripp, 15 M. & W. 23;
Goddard v. O'Brien, 9 Q. B. Div. 37.
* Thompson v. Percival, 5 B. & Ad.
925; Sheehy v. Mandeville, 6 Cranch,
253; Mason v. Wickersham, 4 W. &
S. 100; Cole v. Sackett, 1 Hill, 516;
Waydell v. Luer, 5 id. 448, 3 Denio,
410; Arnold v. Camp, 12 Johns. 409,
7 Am. Dec. 328; Lodge v. Dicas, 3 B.
& Aid. 611; Pearson v. Thomason, 15
Ala. 700, 50 Am. Dec. 159; Russell v.
Lytle, 6 Wend. 390, 22 Am. Dec. 537;
Barron v. Vandvert, 13 Ala. 232;
Webb V. Goldsmith, 2 Duer, 413;
Cartwright v. Cooke, 3 B. & Ad. 701;
Evans v. Powis, 1 Ex. 601; Kinsler
V. Pope, 5 Strobh. 126; Evans v.
Drummond, 4 Esp. 89; Reed v. White,
5 id. 122; Lyth v, Ault, 7 Ex. 669;
Bedford v. Deakin, 2 Stark, 178. See
Ricketts v. Hall, 2 Bush, 249; Keeler
v. Salisbury, 27 Barb. 485, 33 N. Y.
648; Conkling v. King. 10 Barb, 372.
In Bowker v. Harris, 30 Vt 425, a
wife's note was held sufficient con-
sideration, she having paid it,
though it was void when made. See,
also, Kirwan v. Kirwan, 4 Tyrwh.
491; Hart v. Alexander, 2 M. & W.
484; Powles v. Page, 3 C. B. 16.
§ 249.]
ACCOKD AKD SATISFACTION.
64J
ficient consideration.' An accord and satisfaction mov- [420]
ing from a stranger, or a person having no i)ecuniary interest
in the subject-matter, if accepted in discharge of the debt, con-
stitutes a good defense to an action to enforce the liability
against the debtor.^ He sufficiently adopts it by taking ad-
vantage of it by plea.' There must be something received to
which the creditor was not before entitled.* And it must pos-
sess some value or by legal possibility be of benefit to him.'
The extent of the value is not material.^ Part of a claim may
be satisfied by withdrawal of the defense of infancy to the
residue.^ Suspension or abandonment of a suit is a sufficient
consideration.^ If there is a new consideration of some value,
it is enough, though it is of much less value than the debt dis-
charged.^ The voluntary acceptance by an injured railroad
employee of the benefits provided for in his contract of mem-
bership in the relief department maintained by his employer,
knowing the effect of such acceptance, bars a suit to recover
for the injury sustained.'" Where a debtor pays part of a debt
1 In re Dixon, S McCrary, 556.
2 Jones V. Broadhurst, 9 C. B. 173;
Leavitt v. Morrow, 6 Ohio St. 71, 67
Am. Dec. o34; Harrison v. Hicks, 1
Port. 433, 27 Am. Dec. 638; Daniel v.
Hallenbeck, 19 Wend. 408; Clow v.
Borst, 6 Johns. 37; Stark v. Thomp-
son, 3 Mon. 296; Wool folk v. Mc-
Dowell, 9 Dana, 268; Belshaw v.
Bush, 11 C. B. 191; Jackson v. Penn-
sylvania R. Co.. 66 N. J. L. 319, 49
Atl. Rep. 730; Armstrong v. School
District, 28 Mo. App. 169.
3 Belshaw v. Bush, supra; Snyder
V. Pharo, 25 Fed. Rep. 398; Bennett
V. Hill, 14 R. L 322.
* Thurber v. Sprague, 17 R. L 634,
24 Atl. Rep. 48; Bryant v. Proctor,
14 B. Mon. 451; Hethcoate v. Crook-
shanks. 3 T. R. 24; Harper v. Gra-
ham, 20 Ohio, 105; Good v. Chees-
man, 2 B. & Ad. 328; Fitch v. Sutton,
5 East, 230; Acker v. Phoenix, 4
Paige, 305; Commonwealth v. Mil-
ler, 5 Mon. 205; Riley v. Kershan, 52
Mo. 224; Rose v. Hall, 26 Conn. 392,
68 Am. Dea 402; Bartlett v. Rogers,
3 Sawyer, 62.
SBIinn v. Chester, 5 Day, 360:
Booth V. Smith, 3 Wend. 66; Web-
ster V. Wyser, 1 Stew. 184; Keeler v.
Neal, 2 Watts, 424; Davis v. Noaks,
3 J. J. Marsh. 494. See § 247 ; Foster
V. Dawber, 6 Ex. 839.
«Id.; Pinnel's Case, 5 Rep. 117;
Andrew v. Boughey, 1 Dyer, 75a.
^ Cooper V. Parker, 15 C. B. 823.
8 Smith V. Monteith, 13 M. & W.
427; Lewis v. Donohue, 27 N. Y.
Misc. 514, 58 N. Y. Supp, 319.
9 1 Smith's Lead. Cas. pt. 1, *445;
Kellogg V. Richards, 14 Wend. 116:
Jones v. Bullitt, 2 Litt. 49; Brooks v.
White, 8 Met. 283; Harper v. Gra-
ham, 20 Ohio, 105; Boyd v. Hitch-
cock, 20 Johns. 76, 11 Am. Dec. 347;
Le Page v. McCrea, 1 Wend. 164, 19
Am. Dec. 469; Sanders v. Branch
Bank, 13 Ala. 353.
i^Eckman v. Chicago, etc. R Co.,
169 111. 312. 48 N. E. Rep. 496, 38 L.
R. A. 750, 04 IlL App. 444 See § &
6J-4 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 249.
for which the creditor holds a note, upon an agreement that
such part payment shall be full satisfaction, and, in pursuance
of such agreement, the note is surrendered or canceled, the
transaction will amount to full accord and satisfaction.^ The
surrender is equivalent to a release." If the principal and surety
in a bond given to secure the performance of a contract which
involves matters uncertain in their nature are insolvent, pay-
ment of less than the face of the bond is a good consideration
for its discharge.^ An agreement between grantor and grantee,
subsequent to a conveyance, in pursuance of which the former
places a sum of money in the hands of a third person to be for-
feited to the grantee in full satisfaction of all damage he may
sustain by reason of the breach of the former's covenant, is a
good accord and satisfaction.^
An accord and satisfaction by one of several jointly liable
is a discharge of all.^ At common law an accord and satisfac-
tion to one of two obligees of a common money bond was good
because they were considered as having a joint interest in
the debt, with its incident of survivorship, and the satisfaction
to one of them of the full amount due to all put an end to the
bond.^ But in equity the general rule with regard to money
lent by two persons to a third was that they v^qtq prima facie
regarded as tenants in common, and not as joint tenants, both
of the debt and of any security held for it. " Though they take
a joint security, each means to lend his own money and to take
back his own." '^ This is, however, but a presumption, and may
be rebutted. The accord is good as to the obligee who re-
ceived his share.*
1 Ellsworth V. Fogg, 35 Vt. 355; 57 id. 497, 10 N. W. Rep. 875; Go.=?s v.
Draper V. Hitt, 43 Vt 439, 5 Am. Rep. Ellison, 136 Mass. 503; Coonley v.
293; Beach v. Endress, 51 Barb. 570; Wood, 36 Hun, 559.
Kent V. Reynolds, 8 Hun, 559. The discharge of a party not
- Id. shown to be a wrong-doer will not
sShelton v. Jackson, 20 Tex. Civ. affect the right of action against the
App. 443, 49 S. W. Rep. 414. other defendants. Wardell v. Mc-
4 Reichel v. Jeffrey, 9 Wash. 250, 37 Connell, 25 Neb. 558, 41 N. W. Rep.
Pac. Rep. 296. 548.
5 Chicago V. Babcock. 143 III 358, 6 Wallace v. Kelsall, 7 M. «fe W. 264,
82 N. E. Rep. 271; Atwood v. Brown, 'Morley v. Bird, 3 Ves. 631; Mat-
72 Iowa, 723, 32 N. W. Rep. 108; Tur- son v. Dennis, 10 Jur. (N. S.) 461, 12
ner v. Hitchcock, 20 Iowa, 310: Metz Week. Rep. 926.
V. Soule, 40 id. 236; Long v. Long, 8 steeds v. Steeds, 22 Q. B. Div. 537.
§§ 250, 251.]
ACCORD AND SATISFACTION.
G45
§ 2.)0. Composition with creditors. There is no want [430]
of consideration in agreements for composition between a
debtor and two or more of his creditors; for the enirajrement
of one is a sufficient consideration for that of the others.^ The
fact that a creditor whose claim was disputed was not a party
to the agreement does not invalidate it, no such contingency
being provided for.^ When an unliquidated or disputed de-
mand is the subject of accord, and a certain sum is paid and
accepted as full satisfaction, the consideration is manifest.
§ 251. Compromise of disputed claim. The settlement or
compromise of a disputed or doubtful claim is a good consid-
eration for a promise.'' The claim must be a real one and the
parties must regard their rights concerning it as in fact or in
law doubtful, and the compromise must be made lonafide} A
iPierson v. McCahill, 21 Cal. 132
Fellows V. Stevens, 24 Wend. 292
Steinman v. Magnus, 11 East, 390
Keeler v. Salisbury, 33 N. Y. 648
Way V. Langley, 15 Ohio St. 392
Ricketts v. Hall, 2 Bush. 249; Tuck
erman v. Newhall, 17 Mass. 581; Dier
raeyer v. Hackman, 52 Mo. 282; Keay
V. Whyte, 3 Tyrvvh. 596; Boyd v.
Hin.l, 1 H. & N. 938; Cutter v. Reyn-
olds, 8 B. Mon. 596; Boothby v. Sow-
den, 3 Camp. 174; Bradley v. Gregory,
2 id. 383; Wood v. Roberts, 2 Stark.
417; Cockshott v. Bennett, 2 T. R.
765; Hale v. Holmes, 8 Mich. 37;
Hartle v. Stahl, 27 Md. 157. See Case
V. Gerrish, 15 Pick. 49.
2 Crawford v. Krueger, 201 Pa. 348,
50 Atl. Rep. 931.
3 Brockley v. Brockley. 122 Pa. 1, 15
Atl. Rep. 646; Schaben v. Brunning,
74 Iowa, 102, 36 N. W. Rep. 910; Zim-
mer v. Becker, 66 Wis. 527, 29 N. W.
Rep. 228; Stewart v. Ahrenfeldt, 4
Denio, 189; Wehrura v. Kuhn, 61 N.
Y. 623; Hammond v. Christie, 5
Robert. 160; United States v. Clyde,
13 Wall. 35; United States v. Child,
12 Wall. 232; United States v. Justice,
14 Wall. 535; Brett v. Universalist
Society, 63 Barb. 610.
< Wahl V. Barnum, 116 N. Y. 87. 22
N. K Rep. 280, 5 L. R A. 623: Zoe-
bisch V. Von Minden, 120 N. Y. 406,
24 N. E. Rep. 795; Moon v. Martin,
122 Ind. 211, 23 N. E. Rep. 608; Gilliam
V. Alford. 69 Tex. 267, 6 S. W. Rep.
757; Grandin v, Grandin. 49 N. J. L.
508, 60 Am. Rep. 642. 9 Atl. Rep. 756;
Cook V. W^right, 1 B. & S. 559: Cal-
lisher v. Bischoffscheim, L. R. 5 Q. B.
449; Ockford v. Barrelli. 20 Week.
Rep. 116; Miles v. New Zealand Al-
ford Estate Co., 32 Ch. Div. 266;
Demars v. Musser-Sauntry Land Co.,
37 Minn. 418, 35 N. W. Rep. 1; An-
thony V. Boyd, 15 R. I. 495, 8 AtU
Rep. 701, 10 id.657;Headley v. Hack-
ley, 50 Mich. 43, 14 N. W. Rep. 693.
In Miles v. New Zealand Alford
Estate Co., supra, the court dissents
from some observations made by
Lord Esher, M. R., in Ex parte Ban-
ner, 17 Ch. Div. 480, 490, to the effect
that it was not only necessary to the
validity of a settlement that the
plaintiff believed he had a good cause
of action, but that the circumstances
must in fact raise some doubt
whether there was or was not a good
cause of action.
t46
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 251.
mere statement that the amount of a claim was in dispute is
not enough to show that there was a consideration for ac-
cepting less than was due*/ but it is suflHcient if the contro-
versy be real and the issue respecting it be considered by the
parties as doubtful.^ "Whether the compromise amount be re-
ceived or a promise to pay it, the original claim is extin-
guished if the parties so agree and there is a sufficient consid-
eration.^ Inequality of consideration will not, of itself, avoid
a settlement.* The adjustment of any unliquidated demand,
whether in dispute or not, stands on a similar principle.^ Stated
1 EmmittsburgR Co. v. Donoghue,
67 Md. 383, 1 Am. St. 396, 10 AtL
Rep. 233.
It was observed in Edwards v.
Baugh, 11 M. & W. 641: "The dec-
laration alleges that certain disputes
and controversies were pending be-
tween the plaintiff and the defend-
ant whether the defendant was in-
debted to the plaintiff in a certain
sum of money. There is nothing in
the use of the word ' controversy' to
render this a good allegation of con-
sideration. The controversy merely
is that the plaintiff claims the debt
and the other denies it."
^ Galusha v. Sherman, 105 Wis. 263,
81 N. W. Rep. 495, 47 L. R. A. 417.
As applied to the subject of accord
and satisfaction a demand is not
liquidated, even if it appears that
something is due, unless it appears
how much is due, and when it is ad-
mitted that one of two specific sums
is due, but there is a real difference
as to which is the proper amount, the
demand is unliquidated. Nassoiy v.
Tomlinson, 148 N. Y. 326, 42 K K
Rep. 715, 51 Am. St. 695.
An account cannot be considered
as liquidated so as to prevent the
receipt of a less amount than is
claimed from being a satisfaction if
there is a controversy over a set-off
and the amount of the balance. Os-
trander v. Scott, 161 111. 339, 43 N. E.
Rep. 1089. See Bingham v. Brown-
ing, 197 III 122, 64 N. R Rep. 317, 97
111. App. 443.
3 Wilder v. St Johnsbury, etc. R.
Co., 65 Vt. 43, 25 AtL Rep. 896; Gran-
din V. Grandin. 49 N. J. L. 508, 9 Atl.
Rep. 756, 60 Am. Rep. 642; Korne v.
Korne, 30 W. Va. 1; Tuttle v. Tuttle,
12 Met. 551, 46 Am. Dec 701; Peace
v. Stennet, 4 J. J. Marsh. 449; Jones
V. Bullitt, 2 Litt. 49; Reid v. Hibbard,
6 Wis. 175; Pulling v. Supervisors, 3
Wis. 337; Calkins v. State, 13 Wis.
389; Metz v. Soule, 40 Iowa, 236; Og-
born V. Hoffman, 52 Ind. 439; Riley
V. Kershan, 52 Mo. 224; Merry v. Al-
len, 39 Iowa, 235; Gates v. Shutts, 7
Mich. 127; Converse v. Blumrich, 14
id. 109, 90 Am. Dec. 230; May hew v.
Phoenix Ins. Co., 23 Mich. 105;
Hooper v. Hooper, 26 id. 435; Bo wen
v. Lockwood, id. 441; Hull v. Swarth-
out, 29 id. 249; Campbell v. Skinner,
30 id. 32;Reithmaier v. Beckwith, 35
id. 100; Neary v. Bostwick, 2 Hilt*
514.
4 Galusha v. Sherman, 105 Wis. 263,
81 N. W. Rep. 495, 47 L. R A. 417.
6 Sanford v. Abrams, 24 Fla. 181, 2
So. Rep. 373; Donohue v. Woodbury,
6 Cush. 148, 52 Am. Dec. 777; Eate-
man v. Daniels, 5 Blackf. 71; Harris
V. Story, 2 E. D. Smith, 363; Long-
ridge V. Dorville, 5 B. & Aid. 117;
Watters v. Smith, 2 B. & Ad. 889;
Haigh V, Brooks, 10 A. & K 309;
Wilkinson v. Byers, 1 id. 106; Wright
v. Acres, 6 id. 726; Atlee v. Back-
§ 251.] ACCORD AND SATISFACTION. 647
accounts and settlements are treated with favor, and are con-
clusive unless there is proof of mistake or fraud.^ A def- [431]
inite sum paid or agreed to be paid, and adopted by the par-
ties as an adjustment and compensation for either a doubtful
and disputed demand, or one which is uncertain and unliquid-
ated, constitutes a sufficient consideration for the discharge of
such original demand. And upon such adjustment, by which
a definite sum, paid or to be paid, is substituted for the claim
as it formerly existed, the latter is extinguished on the princi-
ple of accord and satisfaction.- An infant's action for dam-
ages is barred by the acceptance, in full satisfaction from the
party liable therefor, of a sum of money which is undisposed
of and not returned, notwithstanding an offer to credit it on
any judgment that might be obtained.^ If a receipt for money
paid contains anything in the nature of an agreement upon the
compromise or settlement of a disputed claim that the payee
accepts and receives the sum designated in it in satisfaction
and discharge of his claim, it is a contract and cannot be var-
ied or contradicted by parol.*
Where money is due and there is an agreement to accept
something else in lieu of it, and that something else is deliv-
ered and accepted, the agreement cannot be said to be without
consideration, though the thing so delivered and accepted is
of less value than the nominal amount of the debt. Anything
house, 3 M.&W. 633; Sibree V.Tripp, ing, 197 111. 123, 64 N, E. Rep. 317;
15 id. 23; Llewellyn v. Llewellyn, 3 Housatonic Nat. Bank v. Foster, 85
Dowl. & L. 318; Allis v. Billing, 2 Hun, 376, 32 N. Y. Supp. 1031.
Cush. 19; Durham v. Wadlington, 2 The satisfaction of a cause of ac-
Strobb. Eq. 258; Abbott v. Wilmot, tion for personal injury made by the
22 Vt. 437; Ellis v. Bitzer, 2 Ohio, 295. person injured bars his representa-
1 Id. ; Wilde v. Jenkins, 4 Paige, tives after his death from asserting
481; Lockwood v. Thorne, 11 N. Y. any claim because of theactofneg-
170; Pulliam v. Booth, 21 Ark. 420. ligence for which satisfaction was
See Purtel v. Morehead, 2 Dev. & made. Read v. Great Eastern R. Co.,
Bat. 239; Galusha v. Sherman, 105 L. R. 8 Q. B. 355; Dibble v. New
Wis. 263. 81 N. W. Rep. 495, 47 L. R. York & E. R. Co., 25 Barb. 183.
A. 417. 2 Lane v. Dayton, etc. Co., 101 Tenn.
2Storch V. Dewey, 57 Kan. 370, 46 581. 48 S. W.Rep. 1094
Pac. Rep. 698; Maack v. Schneider, * Komp v. Raymond, 42 App. Div.
51 Mo. App. 92; Lapp v. Smith, 183 33, 58 N. Y. Supp. 909; Coon v. Knapp,
111. 179, 55 N. E. Rep. 717; Home F. 8 N. Y. 402. 59 Am. Dec. 502; Ryan
Ins. Co. V. Bredehoft, 49 Neb. 152, 68 v. Ward, 48 N. Y. 204.
N. W. Rep. 400; Bingham v. Brown-
G48 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 251.
of legal value, whether a chose in possession or in action, act-
ually received in full satisfaction of a debt is good for that
effect.' Nor is the adequac}'' of the consideration affected be-
cause the value of the collateral thing received in satisfaction
was fixed by agreement of the parties at a less sum than the
amount of the debt. Thus, where a larger sum than S750 was
owing and actually due in money, an agreement to receive
$750 worth of salt and the actual reception of it in discharge of
the whole debt was held to have that effect.'^ The right to
compromise a suit may be exercised by the person who is au-
thorized to bring it in the first instance,' and a compromise
made by one plaintiff will bind his co-plaintiffs if it appears
that the amount paid was received as full satisfaction for the
whole injury.* Where a statute gives the widow the prior
right to sue for the death of her husband, she has the right to
compromise her suit over the objections of her children, and
without let or hindrance from any one.^ She may also com-
promise the whole right of action before suit is brought, and a
payment to her of the sum agreed upon will discharge the
wrong-doer.^ But if the suit is brought by an administrator
on behalf of the widow and children she cannot compromise
without the plaintiff's consent or the concurrence of the other
beneficiaries.^
1 1 Smith's Lead. Cases, pt. 1, 445; In Platts v. Walrath, Hill& Denio,
Jones V. Bullitt, 2 Litt. 49; Brooks 59, it was held that giving a mort-
V. White, 2 Met. 283, 37 Am. Dec. 95; gage for a debt, less a certain deduc-
New York State Bank v. Fletcher, 5 tion agreed to be made in considera-
Wend. 85; Frisbie v. Larned, 21 id. tion of the security, is not payment
451; Bullen V. McGillicuddy, 2 Dana, of the debt so that a note subse-
90; Pope v. Tunstall, 2 Ark. 209; quently given for the sum deducted
Booth V. Smith, 3 Wend. 66; Boyd v. will be deemed without considera-
Hitchcock, 20 Johns. 76, 11 Am. Dec. tion.
247; Le Page v. McCrea, 1 Wend. s Stephens v. Nashville, etc. R, 10
164; Sanders v. Branch Bank, 13 Lea. 448.
Ala. 353; Blinn v. Chester, 5 Day, <Pogel v. Meilke, 60 Wis. 248, 18
359; Watkinson v. Inglesby,5 Johns. N. W. Rep. 927; Ellis v. Esson, 50
386; Eaton v. Lincoln, 13 Mass. 424; Wis. 138, 36 Am. Eep. 830, 6 N. W.
Musgrove v. Gibbs, 1 Dall. 216; Ar- Rep. 518.
nold V. Post, 8 Bush, 3; Churchill v. 5 Webb v. Railway Co., 88 Tenn.
Bowman, 39 Vt. 518; Gavin v. Annan, 119, 12 S. W. Rep. 428.
2 Cal. 494. 6 Holder v. Railroad, 92 Tenn. 141,
••J Jones v. Bullitt, 2 Litt. 49; Wool- 20 S. W. Rep. 537, 36 Am. St. 77.
folk V. McDowell, 9 Dana, 268; Gaff- 'Railroad v. Acuff, 92 Tenn. 26, 20
ney v. Cliapman, 4 Robert. 275. But S. W. Rep. 34a
see Howard v. Norton. 65 Barb. 161,
5§ 252, 252«.] ACCORD and satisfaction.
G49
§252. Agreement must be executed. The agreement [432]
or accord must be executed.* But if the agreed satisfaction
consists of an agreement rather than the performance of it, the
accord is executed when the agreement which is the consider-
ation of the discharge is entered into, whether it is ever per-
formed or not.2 Formerly to an action on a bond, accord and
satisfaction could be pleaded by deed only, for an obligation
under seal could not be discharged but by an instrument of
equal dignity.^ But this rule is not now followed if there has
been actual performance.*
§ 252a. Rescission or exoneration before breach. Kescis-
sion of an executory contract, or exoneration before breach,
is not accord and satisfaction.^ After breach, however, when
the demand becomes due for damages, whatever may be the
iHearn v. Kiefe, 38 Pa. 147,80 Am.
Dec. 472; Green v, Lancaster County,
fil Neb. 473, 85 N. W. Rep. 439;
Williams v. Stanton, 1 Root. 426;
Pope V. Tunstall, 2 Ark. 209; Hall v.
Smith, 10 Iowa, 48; Flack v. Garland,
8 Md. 191; Woodward v. Miles, 24
N. H. 289; Coit v. Houston. 3 Johns.
Cas. 248: Watkinson v. Inglesby, 5
Johns. 386; Russell v. Lytle. 6 Wend.
390, 22 Am. Dec. 537; Bank v. De
Grauw, 23 Wend. 342, 35 Am. Dec.
569; Fey toe's Case, 9 Co. 79; Walker
V. Seaborne, 1 Taunt. 526; Fitch v.
Sutton, 5 East, 230; Tuckerman v.
Newhall, 17 Mass. 581; Spruneberger
V. Dentler, 4 Watts, 126; Rising v.
Patterson, 5 Whart. 316; Daniels v.
Hatch, 21 N. J. L. 391, 47 Am. Dec.
109; Bayley v. Homan, 3 Bing. N. C.
915; Allies v. Probyn, 5 Tyrwh. 1079;
Edwards v. Chapman, 1 M. & W. 231;
CoUingbourne v. Mantel!, 5 id. 292;
Gabriel v. Dresser, 15 C. B. 622;
Brown v. Perkins, 1 Hare, 564; Hel-
ton V. Noble, 83 CaL 7, 23 Pac. Rep.
58; Gulf, etc. R. Co. v. Gordon, 70
Tex. 80, 7 S. W. Rep. 695; Burgess v.
Denison Paper Manuf. Co., 79 Me. 266,
9 Atl. Rep. 726; San ford v. Abrams,
24 Fla. 181, 2 So. Rep. 373; Hoxsie v.
Empire Lumber Co.. 41 Minn. 548,43
N. W. Rep. 476: Johnson v. Hunt, 81
Ky. 321; Schlitz v. Meyer, 61 Wis. 418.
21 N. W. Rep. 243: Fink v. Joseph, 2
New Mex. 138. See § 240.
2 Woodward v. Miles. 24 N. H. 289;
Watkinson v. Inglesby, 5 Johns. 386;
Eaton V. Lincoln, 13 Mass. 424; Sea-
man V. Haskins, 2 Johns. Cas. 195;
Heaton v. Angier, 7 N. H. 397, 28 Am.
Dec. 353; Good v. Cheesman, 2 B. &
Ad. 328; Reeves v. Hearne, 1 M, & W,
323; Buttigieg v. Booker, 9C. B. 089;
Kromer v. Heim, 75 N. Y. 574, 31 Am.
Rep. 491; McCreery v. Day, 119 N. Y.
1, 16 Am. St. 793, 23 N. E. Rep. 198,
6 L. R. A. 503; Bennett v. Hill, 14 R.
L 432.
3 Levy V. Very, 12 Ark. 148; Ligon
V. Dunn, 6 Ired. 133.
* McCreery v. Day, supra; Capital
City Mutual F. Ins. Co. v. Detwiler,
23 111. App. 656: Hastings v. Love-
joy, 140 Mass. 261, 54 Am. Rep. 462,
2 N. E. Rep. 776.
5 Barelli v. O'Conner, 6 Ala, 617. It
is said to be a general rule that a
simple contract may, before breach,
be waived or discharged without
deed and without consideration; but
after breach there can be no dis-
charge except by deed or upon suffi-
cient consideration. Byles on Bills,
168. See Foster v. Dawber, 6 Ex,
838; Dobsou v. Espei, 2 H. & N. 79.
650
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 253.
[433] grade of the contract which is broken, it may be satis-
fied by matter in jpais^ and is subject to the defense of accord
and satisfaction. That is a good defense to an action for
breach of covenant.^ And the modern doctrine is that it is
good to an action on a judgment.*
Section 4.
KELEASB.
§ 253. Definition. A release of a chose in action is an im-
mediate technical discharge of it by deed.^ It operates di-
rectly upon the demand to extinguish it, and must be pleaded
This is doubtless true of contracts
mutually executory. In such con-
tracts mutual waiver is a rescission.
See 1 Smith's Lead. Cas. *465. If the
consideration be executed on one
side, the executory obligation of the
other party founded thereon cannot
be waived without consideration, or
such act of renunciation as would
amount to a release, unless it has
been acted upon.- See upon this
general subject. Blood v. Enos, 12
Vt. 625; Johnson v. Reed, 9 Mass. 78, 6
Am. Dec. 36; Rogers v. Atkinson, 1
Ga. 12; Richardson v. Cooper, 25 Me.
450: Cuff V. Peun, 1 M. & S. 21; Goss
v. Nugent, 5 B. & Ad. 58; Cummings
V. Arnold, 3 Met. 48G. 37 Am. Dec.
155; Weld v. Nichols, 17 Pick. 538;
Ward v. Walton, 4 Ind. 75; Low v.
Forbes, 18 111, 568; Crowley v. Vitty,
7 Ex. 322; Grafton Bank v. Wood-
ward, 5 N. H. 99, 20 Am. De& 566;
Payne v. New South Wales Coal Co.,
10 Ex. 291; Kellogg v. Olmsted, 28
Barb. 96; Hunt v. Barfield, 19 Ala.
117; Thurston v. Ludwig, 6 Ohio
St. 1; Adams v. Nichols, 19 Pick.
275, 31 Am. Dec. 1P7; McKee v. Mil-
ler, 4 Blackf. 222; Harrison v. Close,
2 Johns. 448, 3 Am. Dec. 444; Sard v.
Rhodes, 1 M. & W. 155; Crawford v.
Millspaugh, 13 Johns. 87; Seymour
v. Minturn, 17 id. 169, 8 Am. Dec.
380; Foster v. Daw bar, 6 Ex. 839;
King V. Gillett, 7 K & W. 55; Lang-
den v. Stokes, Cro. Car. 383.
The technical distinction between
a satisfaction before or after the
breach is disregarded, and a new
parol agreement followed by its act-
ual performance, whether made or
executed before or after the breach,
is a good accord and satisfaction of
a covenant. McCreery v. Day, 119
N. Y. 1, 16 Am. St. 793, 23 N.
E. Rep. 198, 6 L. R. A. 503, and
cases cited; Hastings v. Lovejoy, 140
Mass. 261, 54 Am. Rep. 462, 2 N. K
Rep. 776.
1 Payne v. Barnet, 2 A. K. Marsh.
312; Strang v. Holmes, 7 Cow. 224;
Keeler v. Salisbury, 33 N. Y. 648;
United States v. Howell, 4 Wash. C.
C. 620.
^ Savage v. Everman, 70 Pa. 315,
10 Am. Rep. 676; Jones v. Ransom, 3
Ind. 327; Reid v. Hibbard, 6 Wis.
175; Farmers' Bank v. Groves, 12
How. 51; McCullough v. Franklm
Coal Co., 21 Md. 256; Campbell v.
Booth, 8 Md. 107; Le Page v. McCrea,
1 Wend. 164, 19 Am. Deo. 469; Brown
V. Feeter, 7 Wend. 301; Evans v.
Wells, 22 id. 324, 341; Boyd v.
Hitchcock, 20 Johns. 76, 11 Am.
Dec. 247; Witherby v. Mann, 11
Johns. 518; Baum v. Buntyn, 62
Miss. 10.
3 A parol release of a money judg-
§ 254.] EELEASE. C51
as a release.' But a release implies a consideration, and there-
fore the demand is inferentially satisfied.^ The cancelment of
a released demand, however, is not the consequence of the
supposed satisfaction, but the direct effect of the release. The
release is not merely evidence of the extinguishment, but is
itself the extinguisher.'^ Though it recites only a nominal
consideration,* or, under statutes allowing the consideration
of sealed instruments to be inquired into, it is proved [l-M]
to -be only nominal, the release will still operate to extinguisli
the claim to which it relates.^ An agreement by one of
several defendants not to defend a suit supports a release as
to him.^ A release is binding notwithstanding the party re-
leased does not keep his promise to give the other employ-
ment, that being part of the consideration for the release;'
and so if the contract re-employing an injured servant does
not fix the time the employment shall continue, the fault be-
ing his, and he is discharged.^ If there are two debts in ex-
istence, established and known, the payment of one is not a
consideration for the release of the other.^
§ 254. Ditters from accord and satisfaction. A seal is not
necessary to render a release and discharge of a liability ef-
ment in consideration of the receipt N. BL 229, 17 Am. Dec. 419; Gully v.
of a less sum than it calls for is in- Grubbs, 1 J. J. Marsh. 387; Maclary
valid, tliough the release be indorsed v. Reznor, 3 Del. Ch. 445.
upon the execution issued in the 5 Eckman v. Chicago, etc. R. Co.,
original action. Weber v. Couch, 134 169 111. 312, 48 N. E. Rep. 496; Stearns
Mass. 26, 45 Am. Rep. 274. v. Tappen, 5 Duer, 294. See Davis v.
Voluntary declarations by a ci-ed- Boveker, 2 Nev. 487; Green v. Lang-
itor of an intention to release a don, 28 Mich. 222.
debtor, unless accompanied by some A cause of action may be released
act vi^hich amounts to a release at upon a consideration coming from a
law, will not operate as an equitable third person. Compton v. Elliott, 48
release. Irwin v. Johnson, 36 N. J. N. Y. Super. Ct. 211.
Eq. 347, overruling Leddel v. Starr, ^ McClung v. Mabry, 2 Tentu Cas.
20 id. 274. 91.
1 Corbett v. Lucas, 4 McCord, 323. "^ Szymanski v. Chapman, 45 A pp.
2 Warner v. Durham, Hill & Denio. Div. 369, 61 N. Y. Supp. 310.
206; Matthews v. Chicopee Manuf. 8 Xexas Midland R. v. Sullivan, 20
Co., 3 Robert. 711; MoAIlester v. Tex. Civ. App. 50, 48 S. W. Rep. 598;
Sprague, 34 Me. 296. East Line, etc. R. Co. v. Scott, 73
3 McCrea v. Purmort, 16 Wend. 460, Tex. 70, 10 S. W. Rep. 99, 13 Am. St.
474. 753.
* Wilt v. Franklin, 1 Bin. 502, 2 » Fire Ins. Ass'n v. Wickham, 141
Am. Dec. 474; Morse v. Shattuck, 4 U. S. 564, 580, 12 Sup. Ct. Rep. 84.
G52 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 255.
fectual if the agreement embraces the demand and is upon a
sufficient consideration. It can operate to extinguish the de-
mand by way of accord and satisfaction,' and in this form a
debtor may avail himself of a release made by an agent in his
own name.2 A mere receipt may have such an effect; but it
is only prima facie evidence of payment.' In Connecticut a
receipt approximates in its effect to a release.'* The general
rule, however, is that a mere receipt is but evidence of the
pajnnent which it states, and is open to contradiction.* A re-
lease not under seal, and without consideration, is void.^ Nor
will equity compel a creditor to affix a seal to a release not
founded on a consideration, even upon an averment that the
seal was omitted by mistake.^
§ 255. Extrinsic evidence and construction. Extrinsic
proof is not allowed to restrict a release of all demands, by
showing it was not intended to cover particular ones within its
terms ;^ but according to some authorities this rule is operative
only between the parties to the contract, and a joint tort-feasor
is not a party to a release given his co-wrongdoer, and may con-
tradict it by parol evidence.^ The weight of authority seems
1 Farmers' Bank v. Blair, 44 Barb. 1 Am. St. 721; Shoemaker v. Stiles,
641; Corbett v. Lucas, 4 McCord, 323; 103 Pa. 549; Bulwlnkle v. Cramer, 27
Coon V. Knap, 8 N. Y. 402, 59 Am. S. C. 376, 8 S. E. Rep. 776, 13 Am. St.
Dec. 502; Lewiston v. Junction R. 645; Hill v. Durand, 58 Wis. 160,15
Co., 7 Ind. 597. N. W. Rep. 390; 2 Jones on Evidence,
2 Evans v. Wells, 22 Wend. 324 § 502 et seq.
3 Thompson v. Fausate, 1 Pet. C. C. '^ Crawford v. Millspaugh, 13 Johns.
182; Maze v. Miller, 1 Wash. C. C. 87; Seymour v. Minturn, 17 id. 169, 8
328. Am. Dec. 380; Dewey v. Derby, 20
*Hurd V. Blackman, 19 Conn. 177; Johns. 462; Barnard v. Darling, 11
Bishop V. Perkins, id. 300; Tucker v. Wend. 28.
Baldwin, 13 id. 136, 33 Am. Dec. 384; ■? Jackson v. Stackhouse, 1 Cow.
Bonnell v. Chamberlin, 26 Conn. 487. 122, 13 Am. Dec 514.
^Danziger v. Hoyt, 46 Hun, 270; ^Qreen v, Chicago, etc. R. Co., 35
Coon V. Knap, supra; Egieston v. C. C. A. 68, 92 Fed. Rep. 873; Denver,
Knickerbacker, 6 Barb. 458; Houston etc. R. Co. v. Sullivan, 21 Colo. 302,
v. Shindler, 11 id. 36; White v. 41 Pac. Rep. 501; Deland v. Ames-
Parker, 8 id. 48; Thompson v. Max- bury Manuf. Co., 7 Pick. 244; West
well, 74 Iowa, 415, 38 N. W. Rep. 125; Boylston Manuf. Co. v. Searle, 15 id.
Grant v. Frost, SO Me. 202, 13 Atl. 225; Rice v. Woods, 21 id. 30. See
Rep. 881; Hart v. Gould. 62 Mich. Van Brunt v. Van Brunt, 3 Edw. Ch.
262, 28 N. W. Rep. 831; Elsbarg v. 14; Hoes v. Van Hoesen, 1 Barb. Ch.
Myrman, 41 Minn. 541, 43 N, W. Rep. 379.
572; McFadden v. Missouri Pacific 9 0'Sheav. New York, etc. R. Co.,
R. Co., 92 Mo. 343, 4 S. W. Rep. 208, 44 C. C. A. 601, 105 Fed. Rep. 559.
§ 255.] KELEASE. 053
to be against the exception to the general rule.' A release
may extinguish a particular demand, although it was not in
the minds of the parties at the time of its execution. It will
be held to embrace demands which are within its terms,
whether contemplated or not.'^ Eut under a statute to [435]
the effect that a general release does not extend to ckiims
which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by
him must have materially affected his settlement with his
debtor, a release does not extend to claims of which the debtor
was ignorant through his ignorance of law.^ In construing re-
leases, however, general words, and even those the most com-
prehensive, may be limited to particular demands, where it
appears by the consideration, the recitals and the nature and cir-
cumstances of the demands, to one or more of which it is pro-
posed to apply the release, that such restriction was intended
by the parties.* And even where the word "release " is used, and
the instrument is under seal, if it be apparent from the whole
of it and the circumstances of the case that the parties did not
intend a release, such intention as may appear will prevail, and
the instrument may be construed simply as an agreement not
to charge the person to whom it is executed.^ Where the re-
lease for personal injuries specified the injuries and expressed
that it also covered all manner of actions, causes of action,
claims and demands whatever from the beginning of the world
to this day, the particular recital was a qualification of the
1 Brown V. Cambridge, 3 Allen, 474; not be added to or taken from.
Goss V. Ellison, 136 Mass. 503; Den- Rowe v. Rand, 111 Ind. 206, 12 N. E.
ver, etc. R. Co. v. Sullivan, 21 Colo. Rep. 377. If only general words are
302, 41 Pac. Rep. 501. used the instrument will be con-
2 Hyde V. Baldwin, 17 Pick. 307. strued most strongly against its
3 Rued V. Cooper, 119 CaL 463, 51 maker. Ibid.
Pac. Rep. 704. A release will not be given retro-
* Jeffreys v. Southern R. Co., 127 active effect unless its terms require
N. C. 377, 37 S. E. Rep. 515; Rich v. it. Hughson v. Richmond & D. R
Lord, 18 Pick. 322. Co., 2 D. C. App. Cas. 98.
A release will be construed from ^ Solly v. Forbes, 2 Brod. & Bing.
the standpoint occupied by the par- 46; 1 Par on Cont. 28. See Jackson
ties to it when it was executed; in v. Stackhouse, 1 Cow. 122, 13 Am.
order to do this extrinsic evidence is Dec. 514; Mclntyre v. Williamson, 1
admissible to show the circumstances Edw. 34; Kirby v. Turner, Hopk. 309;
then existing, and the nature of tlie Matthews v. Chicopee Manuf. Co., 3
transaction. The words used must Robert. 711.
C51 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 255.
general words, and these were limited by the specific recital of
the injuries that the payment was made to cover; hence an in-
jury unknown to both parties when the release was made was
not included in it.^ A release of all claims for damages by
reason of the construction of a railroad upon the lands of the
releasor cuts off his right and any right of his lessee or grantee
to recover for injuries resulting from the careful and skilful
construction of the road, and carries with it to the company
the right to do all incidental acts essential to the enjoyment of
the right granted ; ^ and an agreement on the part of the land-
owner to sell a railroad company a right of way across his
land covers all damages for which the vendor is entitled to
compensation,' unless they result from negligence and occur
after the release is given.* A covenant to discontinue a pend-
ing action at law and to release all claim or right of action for
present or future damages arising from a specified cause bars
all judicial proceedings for that cause — a suit for an injunc-
tion as well as an action for damages.^ In determining the
scope to be given a release the consideration for it will have
great influence; if that is nominal or small as compared with
the rights surrendered, and the generality of the language
used indicates that it affects rights of which the party who ex-
ecuted it was ignorant, equity will restrict its effect to that in-
tended.^ The obligation imposed upon a railroad company to
fence its road cannot be got rid of by any release it may ob-
tain from the owner of the land over which the road is con-
structed.''
1 Union Pacific R Co. v. Artist, 9 'Kemp v, Pennsylvania R, 156
C. C. A. 14, 60 Fed. Pep. 365, 23 L. R. Pa. 430, 26 Atl. Rep. 1074*
A. 581; Lumley v. Wabash R. Co., 22 < Brown v. Pine Creek R. Co., 183
C. C. A. 60, 76 Fed. Rep. 66. See Mc- Pa. 38, 38 Atl. Rep 401; Missouri, etc.
Carty v. Houston, etc. R Co., 21 Tex. R. Co. v. Hopson, 15 Tex. Civ. App.
Civ. App. 568, 54 S. W. Rep. 421. 126. 39 S. W. Rep. 384. See g 1090.
2DenverU. & P. R. Co. v. Barsa- ^ Kennerty v. Etiwan Phosphate
loux, 15 Colo. 297, 25 Pac. Rep. 165; Co., 17 S. C. 411, 43 Am. Rep. 607.
Burrow v. Terre Haute & L. R Co., " Blair v. Chicago & A. R Co., 89
107 Ind. 432, 8 N. E. Rep. 167; Hoffe- Mo. 383; Lusted v. Chicago & N. R
ditz v. Railroad Co., 129 Pa. 264, 18 Co., 71 Wis. 391, 86 N. W. Rep. 857;
Atl. Rep. 125; Updegrove v. Pennsyl- Kirchner v. New Home Sewing Ma-
vania. etc. R Co., 132 Pa. 540, 19 Atl. chine Co., 59 Hun, 186, 13 N. Y.
Rep. 283, 7 L. R. A. 213. Compare Supp. 473.
St. Louis, etc. R Co. v. Hurst, 25 IIU ^Cincinnati, etc. R Co. v. Hild-
App. 98. reth, 77 Ind. 504
§§ 256, 257.] RELEASE. 655
§ 256. Who may execute. A release will be effectual to
discharge a debt or liability within its terras, although it is
not executed by all in whom the right of action is vested, and
though it is to only one of several persons jointly liable. Where
several must join as plaintiffs in bringing an action a release
of the cause of action by one of them is a bar.* One partner
may, without being specially authorized thereto, bind his firm
by a sealed release of a partnership claim.^ The right to exe-
cute a release cannot be exercised to the detriment of third
persons. If a grantee by a covenant in a deed has assumed
the payment of a mortgage upon the premises, the grantor
cannot, after the mortgagee has accepted the grantee as his
security, and without the mortgagee's assent, release the
grantee.^ The person who is entitled to the damages resulting
from the death of another may release the right of action
therefor.* If a ward, after attaining majority, makes a settle-
ment with his guardian without the mtervention of the court,
and after having received the amount agreed to be coming to
him gives a release to the guardian, he cannot thereafter trouble
either court or guardian unless he shows that he has been preju-
diced by the guardian's fraud.®
§ 257. Effect when executed by or to one of several
claiming or liable. One of several joint creditors may receive
payment or satisfaction and discharge the entire obligation,
and the others will be bound.® But the case must be free
lOsborn v. Martha's Vineyard R. Mason, 206; Wiggin v. Tudor, 23 Pick,
Co.. 140 Mass. 549, 5 N. E. Rep. 486; 4.34; Wilkinson v. Lindo, 7 M. & W,
Pattison v. Skillman, 48 N. J. Eq. 392, 81; Gibson v. Winter, 5 B. & Ad. 96.
13 Atl. Rep. 808; Wallace v. Kelsall, 2 Allen v. Cheever, 61 N. H. 32.
7 M. & W. 264; Clark v. Dinsmore, 3 Giflford v, Corrigan. 117 N. Y. 2-57,
5 N. H. 136; Kimball v. Wilson, 3 id. 15 Ana. St. 508, 22 N. K Rep. 756, 6
96, 14 Am. Dec. 342; Austin v. Hall, L. R. A. 610.
13 Johns. 286, 7 Am. Dec. 376; Decker * Stuebing v. Marshall, 10 Daly, 406.
V. Livingston, 15 Johns. 479; Sher- See §6.
man v. Ballou, 8 Cow. 304; Pierson ^ Luken's Appeal, 7 W. & S. 48;
V. Hooker,3Johns. 68,3 Am. Dec. 467; Alexander's Estate, 156 Pa. 368, 27
Napier v. McLeod, 9 Wend. 120; AtL Rep. 18.
Bulkley v. Dayton, 14 Johns. 387; e Hall v. Gray, 54 Me. 230; Piersoa
Murray v. Blatchford, 1 Wend. 583, v. Hooker, 3 Johns. 68, 8 Am. Dec.
19 Am. Dec. 537. See Gram v. Cad- 467; Kimball v. Wilson. 3 N. H. 96,
well, 5 Cow, 489; Bruen v. Marquand, 14 Am. Dec. 342; Lumbermen's Ins.
17 Johns. 58; Halsey v. Fairbanks, 4 Co. v. Preble, 50 III 333.
656
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 257,
[436] from fraud on the co-creditors who do not join.^ Where^
however, the release on its face purports to be a satisfaction
of only the portion of the debt or claim belonging to the-
party executing it, it will have effect only to that extent.
The demand will then be deemed severed with the debtor's
consent, and a separate action may be brought for the residue
by the creditors entitled thereto.^ And such is the effect of a
general release by one of two plaintiffs of all actions, debts,
claims and demands which the plaintiff has against the de-
fendant.^ A release by the nominal creditor is not good
against, but a fraud on, the real party in interest. If the
party taking it and seeking to avail himself of it was aware
that the releasor had no interest in the demand released, the
instrument will be disresfarded.*
1 Id. In Upjohn v. Ewing, 2 Ohio
St. 13, it was held that one or less
than all of several joint creditors,
between whom no partnership ex-
ists, cannot release the common
debtor, so as to conclude the co-
creditors who do not assent to such
release. Tliough they may thus de-
feat an action at law, in which all
the joint creditors must join, it does
not follow that a recovery in equity,
where no such jomder is necessary,
may not be had. See Emerson v.
Baylies, 19 Pick. 55; 3 Par. on Cont.
617 and note.
2 In Holland v. Weld, 4 Me. 255,
there was a contract by one with
four persons that he would clear cer-
tain obstructions from a river. Af-
terwards one of the four executed
to him a release from all liability to
such party, making the release for
any damage sustained in conse-
quence of any past or future non-
performance. Mellen, C. J., said:
"This release, in its terms, discharges
Weld from his liabilities to Austin
only, for any damage sustained by
him. To give it any more broad and
extensive operation would be con-
trary to the expressed intention of
both of the parties. According to
Cole V. Knight, 3 Mod. 277, and Ly-
man V. Clark, 9 Mass. 235, a release
should be confined to the object
which was in view, and on which it
was plainly the intention of all that
it should operate. The contract was
originally joint; and had no release
been given by Austin, an action
must necessarily have been brought
in the name of all the four against
the defendant; but as he has ac-
cepted the release, and availed him-
self of it so far as he was once liable
to Austin, he has by this act con-
verted the joint contract into a sev-
eral one; and he must now permit
the plaintiff and the other two prom-
isees to consider the contract in that
light, and assert their claims against
him accordingly. This course is
manifestly just and sanctioned by
settled principles." Baker v. Jewell,
6 Mass. 460, 4 Am. Dec. 162; Carring-
ton V. Crocker, 37 N. Y. 336; Farm-
alee v. Lawrence, 44 111. 405.
3 Crafts V. Sweeney, 18 R 1. 730, 30
Atl. Rep. 658; Boston & M. R v.
Portland, etc. R Co., 119 Mass. 498,
20 Am. Rep. 338.
4 Gram v. Cadwell, 5 Cow. 489;
Legh V. Legh, 1 Bos. & P. 447: 1 Par.
ou Cont. 27; 2 id. 617, and note; Timan
V. Leland, 5 Hill, 237.
A surety paying the debt may be
§ 257.]
RELEASE.
657
A release of one of several joint or joint and several debt-
ors or wrong-doers discharges all. The deed is taken most
strongly against the releasor, and is conclusive evidence that
he has been satisfied.' This rule applies to wrong-doers
though there was no concert of action among them, if the in-
jury was single;^ and the effect is the same in some jurisdic-
tions, though a claim is made against one who was not in
fact liable, if he has given a consideration for a release.' But
subrogated notwithstanding a legal
release of it; and an intention to be
subrogated will be presumed from
the mere act of paying. Neilson v.
Fry. 16 Ohio St. 552; Dempsey v.
Bush, 18 id. 376.
1 Hale V. Spaulding, 145 Mass. 483,
1 Am. St. 475, 14 N. E. Rep. 534 (the
words used were " in full satisfaction
for his liability"); McClung v. Mabry,
8 Tenn. Cas. 91 ; O'Shea v. New York,
etc. R Co., 44 C. C. A. 601, 105 Fed.
Rep. 559; Denver, etc. R. Co. v. Sul-
livan. 21 Colo. 302, 41 Pac. Rep. 501;
Hartigan v. Dickson, 81 Minn. 284,
83 N. W. Rep. 1091; Clark v. Mallory,
185 111. 227, 56 N. E. Rep. 1099; De-
long V. Curtis, 35 Hun, 94; Urton v.
Price, 57 Cal. 270; Ellis v. Esson, 50
Wis. 138, 6 N. W. Rep. 518, 36 Am.
Rep. 830; Lamb v. Gregory, 12 Neb.
506, 11 N. W. Rep. 755 (joint judg-
ment debtors); Chapin v. C, & E. L
R. Co., 18 111. App. 47; Gunther v.
Lee, 45 Md. 60, 24 Am. Rep. 504;
Coke Litt. 232; Bac. Abr., Release, 9;
Bronson v. Fitzhugh, 1 Hill, 185;
Rowley v. Stoddard, 7 Johns. 207;
Catskill Bank v. Messenger, 9 Cow.
37; Hoffman v. Dunlop, 1 Barb. 185;
Parsons v. Hughes, 9 Paige, 591;
Ward V. Johnson, 13 Mass. 148; Tuck-
erman v. Newhall, 17 id. 581; Wiggin
V. Tudor, 23 Pick. 434; Houston v.
Darling. 16 Me. 413: Ruble v. Turner,
2 Hen. & M. 39; Cornell v. Masten,
35 Barb. 157; Matthews v. Chicopee
Manuf. Co., 3 Robert. 711 ;Mottram v.
Mills, 2 Sandf. 189; Bloss v. Plyraale,
Vol. 1 — 43
3 W. Va. 393, 100 Am. Dec. 752;
Brown v. Marsh, 7 Vt 320; Arm-
strong V. Hayward, 6 Cal. 183; Frink
V. Green, 5 Barb. 455; Rice v. Web-
ster, 18 111. 321; Prmce v. Lynch, 38
CaL 528; Hunt v. Terril's Heirs, 7
Marsh. 68; Dean v. Newhall, 8 T. R.
168; Hutton v. Eyre, 6 Taunt. 289;
Lacey v. Kinaston, 1 Ld. Raym. 688,
12 Mod. 551; .Johnson v. Collins, 20
Ala, 435; McAllister v. Dennin. 27
Mo. 40. See as to the effect of a re-
lease to one of two joint tort feasors
under the statute of Kansas, Hager
V. McDonald, 65 Fed. Rep. 200.
2 Stone v. Dickinson, 5 Allen, 29, 81
Am. Dec. 727; Brown v. Cambridge,
3 Allen, 474; Goss v. Ellison, 136
Mass. 503; Aldrich v. Parnell, 147 id.
409, 18 N. E. Rep. 170; Seither v.
Philadelphia Traction Co., 125 Pa.
397, 4 L. R. A. 54, 17 Atl. Rep. 338;
Tompkins v. Clay Street R. Co., 66
Cal. 163, 4 Pac. Rep. 1165.
3Leddy v. Barney, 139 Masa 394;
Seither v. Philadelphia Traction Co.,
Tompkins v. Clay Street R Co.,
supra; Hartigan v. Dickson, 81 Minn.
284, 83 N. W. Rep. 1091; Miller v.
Beck, 108 Iowa, 575, 79 N. W. Rep.
344. Contra, Wardell v. McConnell,
25 Neb. 558, 41 N. W. Rep. 548; Mis-
souri, etc. R Co. V. McWherter, 59
Kan. 345, 53 Pac. Rep. 135, citing
Bloss V. Ply male, 3 W. Va. 393: Wil-
son V. Reed, 3 Johns. 175; Snow v.
Chandler, 10 N. H. 92: Bell v. Perry,
43 Iowa, 368; Owen v. Brockschmidt,
54 Mo. 285; Pogel v. Meilke, 60 Wi&
658 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 257.
if a release is given without the payment of any part of the
damages sustained to one who is not a joint wrong-doer it
will not necessarily release another who may have had some
connection with the wrong.^ A release is to be construed ac-
cording to the intention of the parties, and if it shows that no
satisfaction was given or received by or from those released;
that the intention was simply to discharge them from the ac-
tion because they were not liable, it will not affect the rights
of the injured party against him who was in fact liable, the
fact that it was not intended to release him being shown
on the face of the release.- The general rule that the release
of one of several joint or joint and several debtors or wrong-
doers discharges all, applies where one is discharged by law,
as in bankruptcy, at the instance or with the consent of the
creditor or the party injured.* The release of one of several
joint debtors, if it does not increase the original responsibili-
ties of the others, will not work a dissolution of the contract
to those not released.* This is the case where parties are only
separately liable; there the discharge of one does not discharge
any other.^ The plaintiff, however, is entitled to only one
satisfaction; and if the manner of releasing one involves sat-
isfaction in whole or in part of the claim it will inure to the
248, 18 N. "W. Rep. 927; Kentucky & of a note after he has repudiated his
Indiana Bridge Co. v. HalJ, 125 Ind. liability on attaining his majority
220, 25 N. K Rep. 219. and reconveyed his interest in the
1 Miller v. Beck, 108 Iowa, 575, 582, land which was the consideration for
79 N. W. Rep. 344; Ellis v. Esson. 50 the note does not discharge the other
Wis. 138, 6 N. W. Rep. 518, 36 Am. maker. Young v. Curridr. 63 N. H.
Rep. 830; Chicago v. Babcock, 143 111. 419.
358, 32 N. E. Rep. 271; Long v. Long, The defense of a release by opera-
57 Iowa, 497, 10 N. W. Rep. 875; tion of law is purely personal and
Knapp V. Roche, 94 N. Y. 729. the instrument is not cause for set-
2 Derosa V. Hamilton, 3 Pa. Dist. ting aside, at the instance of another
Rep. 404 The opinion of Simonton, creditor, a confession of judgment
P. J., contains the result of a careful by the person who has been dis-
examination of English and Ameri- charged for the amount due on the
can cases on the question of eflfectu- obligation covered by the releasa
atingthe intentof the parties giving Thomas v. Mueller, 106 111. 36.
releases. ^ Bank of Pouglikeepsie v. Ibbot-
3 Robertson V. Smith, 18 Johns. 459, son, 5 Hill, 461; Van Rensselaer v.
9 Am. Dec. 227; 1 Par. onCont. 29. Chadwick, 24 Barb. 333; Mathewson
^Mortland v. Hiraes, 8 Pa, 265. v. Lydiate. Cro. Eliz. 408, 470; Bac.
The release of an infant co-signer Abr., Release (G.).
§ 257.]
EELEASE.
659
discharge, pro tanto, of all who are liable therefor.' Where
two are separately liable for the same debt, and stand in such
relation to each other that in case of payment by one there is
a right to reimbursement or contribution from the other, then
a release of the party bound to reimburse or liable to con-
tribute has been held to be a discharge of both. The reason
the release of one joint obligor discharges the other is that
if either pays the debt the other is liable to contribution,
which would be defeated if it were permitted to exonerate
only the party to whom it is made. Thus, where by the con-
stitution and statutes of a state stockholders are personally
liable, jointly and severally, for the debts of a corporation, the
discharge, by release under seal, of one stockholder was held
a discharge not only of all the others but also of the corpora-
tion.^
1 Ellis V. Esson, 50 Wis. 138, 36
Am. Rep. 830, 6 N. W. Rep. 518; Lord
V. Tiffany, 98 N. Y. 412, 50 Am. Rep.
689; Kasson v. People, 44 Barb. 347.
In Babcook & W. Co. v. Pioneer
Iron Works, 34 Fed. Rep. 338, the
bill charged the joint infringement
of a patent by P. and S., by the man-
ufacture by P. for sale by S. of the
patented article. A settlement was
made between complainant and P.,
the money paid by him " to cover the
costs of complainant in this suit
against P. and all damages for the
infringement by said P. of the letters
patent sued on; " all claims and de-
mands against S. were expressly re-
served. Held, that the stipulation
released S. from liability for both
costs and damages. See Gunther v.
Lee, 45 Md. 60, 24 Am. Rep. 504.
2 Prince v. Lynch, 38Cal. 528. Saw-
yer, C. J., said: " If not jointly liable
in the strict sense of that term, as has
been suggested, the legal incidents,
as between the corporation and
stockholders, to the extent of their
personal liability, are, it seems to us,
precisely the same. The stockholder
is not a surety in any sense of the
term. He is under the constitution
and statute primarily liable in the
same sense as the corporation is pri-
marily liable. The same identical
act which casts the liability on the
corporation also casts it on the stock-
holder. There are not separate con-
tracts. The stockholder does not
stand in the position of an indorser
or guarantor. An indorser or guar-
antor is not liable on the same con-
tract. His contract is a separate and
distinct one of his own, to which the
principal is no party. It is founded
upon the principal contract, and
finds its consideration only in that
contract; but it is a separate and
distinct contract, nevertheless, and
the terras are different. Each is
liable on his own particular contract,
but there is no joint contract or joint
obligation. The maker and indorser
or guarantor of a note may be sued
jointly, it is true, but this does not
result from the fact that there is a
single joint contract.
"It is suggested that the reason
the release of one joint obligor dis-
charges the other is, that if one
pays the debt the other is liable to
contribution, which would be de-
feated by the release if it were per-
660
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 257.
[43S] A simple contract cannot operate as a release nor be
pleaded as such; therefore such an agreement for the discharge
of one of several parties jointly or jointly and severally liable
must, as before stated, be of such character as to discharge all
mitted to exonerate only the party
to whom it is made. On this ground
it is said to be held to extinguish the
debt. Now thisincident attends the
relation in question, and this princi-
ple is as applicable to it as to the case
of two joint makers of a note.
"Suppose the corporation is sued
and a recovery had ; the stockholder
released must contribute his share,
for the corporation can levy an as-
sessment on all the stockholders, ac-
cording to their respective shares, to
raise funds to pay the judgment.
The corporation must pay it, unless
it too is discharged, and the other
shareholders are entitled to have him
contribute his share. Or, suppose
the corporation is in funds, and pays
without an assessment, it takes from
the stockholder released his pro rata
share of a fund which would other-
wise go to him in dividends, and thus
he is made to contribute notwith-
standing his release. So, suppose
McClelland had sued other stock-
holders of the corporation and re-
covered and collected from them the
whole amount of his debt; the stock-
holder or stockholders so compelled
to pay would have a claim for con-
tribution against Lynch for his share,
and thus either the right to contribu-
tion of the stockholder who has been
compelled to pay, or the release of
Lynch, must be defeated. Suppose,
again, that McClelland should dis-
charge all the stockholders from per-
sonal liability, as has been suggested,
and the corporation itself should still
remain liable, each stockholder would
still be liable to contribute his pro
rata share, either in the form of an
assessment levied by the corporation
to pay the debt, or by a diminution
of dividends, and the release would
be defeated, or the corporation de-
prived of power to protect its prop-
erty. One of two results must inevi-
tably be reached. Either the debt is
extinguished as to all by the release,
or the release is wholly inoperative as
to all. Thus the incidents and con-
sequences are the .same as between
joint debtors and joint obligors in
any other form. We think, there-
fore, that the case is within the rule,
and that a valid release, under seal,
discharges the corporation and other
stockholders, as well as the stock-
holder relea-ed. The releases to the
defendant. Lynch, referred to in the
findings, were in due form and under
seal, and we think, to the extent of
the amount released, discharged the
corporation as well as Lynch, But
we think the court erred in holding
that the whole $416.66. due McClel-
land, was released. The language of
the release is: 'I hereby release and
discharge said Francis Lynch from
Ms proportion of said company's
said indebtedness to me.' The release
by its express terms, then, is only
'from his proportion of said com-
pany's said indebtedness to me; ' not
from the whole. ' And this shall he
said Lynch's receipt in full, to date,
for his proportion and share of all
indebtedness to me by said company,
and a bar to any and all suits against
said Lynch for the same; ' that is to
say, for his proportion and share. It
is manifest that McClelland did not
intend to release his whole demand,
but only Lynch's share. Although
Lynch might be liable under the act
to pay McClelland the whole demand
against the company, as held in Lar-
rabee v. Baldwin, 35 Cal. 155, if the
§ 258.]
RELEASE.
GGl
by way of accord and satisfaction. If the agreement em-
braces the entire cause of action, and purports, upon suf- [4.*{9]
ficient consideration, to discharge it, it will have that effect
as to all the parties liable, though made with only one.^ But
a simple contract to discharge one of several who are liable
will not have that effect by force of the agreement, as a release
operates, but only by force thereof based upon a sufficient
consideration for satisfaction of the entire demand.^ Hence a
conventional discharge which has been given to only one of
several who are bound, in order to have the effect of a release
as to all and to be pleadable as such, must be a technical re-
lease under seal."
§ 258. What will operate as a release. No special [440]
form of words is necessary if the intention is clear to discharge
amount of the aggregate debts of the
corporation upon which he was per-
sonally responsible was sufficient;
yet, tlie whole would not he his share
of the indebtedness, because he
would be entitled to recover the
excess paid by him over his share
from the corporation, and to call
upon his co-stockholders, who were
personally liable, to contribute. The
fact that he might be liable person-
ally, under the statute, in the first
instance, to pay the whole to the
creditor, does not increase or dimin-
i.«h or in any way affect the amount
if his share of the demand."
1 Ellis V. Esson, 50 Wis. 188, 56 Am.
Rep. 830, 6 N. W. Eep. 518; East-
•^nan v. Grant, 34 Vt. 390; Matthews
'. Chicopee Manuf. Co., 3 Robert.
ni.
2 Ellis V. Esson, supra; Walker v.
McCulloch, 4 Me. 421; McAllester v.
Sprague, 34 id. 296; Rowley v. Stod-
dard, 7 Johns. 207; Harrison v. Close,
3 id. 449, 3 Am. Dec. 444; Farmers'
Bank v. Blair, 44 Barb. 641; Shaw v.
Pratt, 22 Pick. 305; Smith v. Bar-
tholomew, 1 Met. 276, 35 Am. Dec.
^65. See Honegger v. Wettstein, 47
N. Y. Super. Ct. 125.
3 Bloss V. Ply male, 3 V/. Va. 393, 100
Am. Dec. 752; Frink v. Green, 5 Barb.
455; De Zeng v. Bailey, 9 Wend. 336;
Rowley V. Stoddard, 7 Johns. 207;
McAllester v. Sprague, 34 Me. 296;
Bronson v. Fitzhugh, 1 Hill, 185;
Shaw V. Pratt, 22 Pick. 305; McAl-
lister v. Deunin, 27 Mo. 40; Beriy v.
Gillis, 17 N. H. 9, 43 Am. Dec. 584.
In Mitchell v. Allen, 25 Hun, 543,
an unsealed instrument acknowl-
edged the payment of money from
one of several persons liable for the
releasor's injuries; it expressly pro-
vided that it was not to affect the
other defendants,and that the claims
against them were retained. It was
held that the discharge of all was a
necessary legal result of the satisfac-
tion and discharge of one. The court
approved Ruble v. Turner, 2 Hen. &
Munf. (Va.) 38, where three persons
were sued for an assault and battery;
pending suit an unsealed stipulation
acknowledged satisfaction from one
of them and provided that it was not
to affect the liability of the others.
It was held to work a discharge of
all See Ellis v. Esson, 50 Wis. 138,
56 Am. Rep. 830, 6 N. W. Rep. 518,
for an interesting discussion of the
subject.
6G2 CONVENTIONAL LIQUIDATIONS AND DISCHAEGES. [§ 258.
the debt* Various acts will have the effect of a release. The
act of surrendering a note or other evidence of debt will work
that result.2 A bequest of the debt to the debtor; ^ the inter-
marriage of the debtor and creditor;^ appointment of the
debtor executor/ and the intentional destruction of the evidence
of indebtedness,® will produce the same result. So, taking
judgment against one of several jointly bound without issuing
process against the others releases those not sued ; ^ and so does
taking the body of the debtor or one of several on execution *
and discharging him or them from custody. Under a statute
which authorizes any surety to require a creditor or obligee
forthwith to institute an action upon the accrual of the right
to do so, and which provides that if it is not done within a
reasonable time the surety shall be discharged, only such sure-
ties as have given the notice required are released by the neglect
to sue,' A release of damages by a widow whose husband was
killed is not invalid because it was executed in order that
another person, who was named by him as the beneficiary in
a mutual insurance policy on his life, might realize the amount
due, a condition of it being that any employee of a designated
railway company who was a member of the society should re-
lease the company from all liability for injuries to him.'^ An
agreement by the owner of property which has been seized
under a writ against a third person that it may be sold and the
proceeds retained in its place does not release a cause of ac-
tion for the taking and selling." A contract between master
and servant which gives the latter, when physically injured,
whether as the result of his own negligence or not, or when
he is sick, the right to pecuniary aid and other valuable benefits,
»2 Par. on Cont. 713. Anderson v. Levan, 1 W. & S. 334;
2 Beach v. Endress, 51 Barb. 570; Jones v. Johnson, 3 id. 276, 78 Am.
Vanderbeck v. Vanderbeck, 30 N. J. Dec. 760; Stewart's Appeal, 'd Watts,
Eq. 265. 476.
3Hobart v. Stone, 10 Pick. 215. » Gould v. Gould, 4 N. H. 173; Pale-
♦ Curtis V. Brooks, 37 Barb. 476; thorpe v. Lesher, 2 Rawle, 272;
Smiley v. Smiley, 18 Ohio St. 543. Sharp v. Speckenagle, 3 S. & Pu 464.
5 Thomas v. Thompson, 2 Johns. 9 Cochran v. Orr, 94 Ind. 433.
470; Eichelbergerv. Morris, 6 Watts, i" State v. Baltimore & O. R. Co.,
42; Fishel v. Fishel, 7 id. 44; Raab's 36 Fed. Rep. 655. See Fuller v.
Estate. 16 Ohio St 271 Baltimore & O. Relief Ass'n, 67 Md.
6 Booth V. Smith, 3 Woods, 19. 433, 10 AtL Rep. 237.
'Mitchell V. Brewster, 28 III 163; n Sartwell v. Moses, 62 N. H. 355.
§ 259.]
EELBASE.
603
and which make the acceptance of these operate as a release
of the master, is not contrary to public policy.^
§ 259. Covenant not to sue. A covenant with a sole debtor
or all the debtors never to sue, or not to sue without any lim-
itation of time, will, on the principle of avoiding circuity of
action, have the effect of a release.^ For the same reason a
covenant by the creditor to indemnify the debtor against the
particular debt is a release.' But a covenant not to sue one of
several joint debtors or joint obligors, or to indemnify him,
is not a release; the covenantee's only remedy is by [-l-tlj
action on the covenant;* because it cannot be inferred from
1 Petty V. Brunswick & W. E. Co.,
109 Ga. 666, 35 S. E. Rep. 82. See 4^ 6.
2 McChesney v. Bell, 59 111. App.
84; White v. Richmond & D. R. Co.,
110 N. C. 456, 15 a E. Rep. 197; Ken-
nerty v. Etiwan Phosphate Co., 17 S.
C. 411, 43 Am. Rep. 607; Clopper v.
Union Bank, 7 Har. & J. 92; Parker
V. Holmes, 4 N. H. 97; Hodges v.
Smith, Cro. Eliz. 623; Cuyler v. Cuy-
ler, 3 Johns. 186; Arnold v. Park, 8
Bush, 3; 2 Saund. 47s, note (1); Deux
V. Jefferies, Cro. Eliz. 353; Ford v.
Beach, 11 Q. B. 842; Willis v. De
Castro, 4 C. B. (N. S.) 216; Badeley v.
Vigurs, 4 El. & B. 71; Giles v. Spen-
cer, 3 C. B. (N. S.) 244; Phelps v.
Johnson, 8 Johns. 54; Clark v. Bush,
3 Cow. 151; Brown v. Williams, 4
Wend. 360; Hosack v. Rogers, 8
Paige, 229; Hastings v. Dickinson, 7
Mass. 155, 5 Am. Dec. 34; Shed v.
Pierce, 17 Mass. 623; Williamson v.
McGinnis, 11 B. Mon. 74, 52 Am. Dec.
561; Lane v. Owings, 3 Bibb, 247;
Harvey v. Harvey, 3 Ind. 473; Reed
V. Shaw, 1 Blackf. 245; Jackson v.
Stackhouse, 1 Cow. 122. 13 Am. Dec.
514; Garnett v. Macon, 6 Call, 308;
Lacy V. Kynaston, 2 Salk. 575, 13
Mod. 548, 1 Ld. Raym. 688; Dean v.
Newhall, 8 T. R. 168. See Kowing v.
Manly, 3 Abb. Pr. (N. S.) 377.
» Con nop V. Levy, 11 Q. B. 769;
Clark V. Bush, 3 Cow. 151.
* Chicago V. Babcock, 143 111. 358,
32 N. E. Rep. 271 ; Benton v. Mullen,
61 N. H. 125; Tuckerman v. Newhall,
17 Mass. 581; Miller v. Fenton, 11
Paige, 18; Harrison v. Close, 2 Johns.
448. 3 Am. Dec. 444; Catskill Bank v.
Messenger, 9 Cow. 37; Rowley v.
Stoddard, 7 Johns. 207; Bank of Che-
nango V. Osgood, 4 Wend. 607; Couch
V. Mills, 21 id. 424; Shed v. Pierce, 17
Mass. 633; Goodnow v. Smith, 18
Pick. 414, 29 Am. Dec. 600; Ayles-
worth V. Brown, 31 Ind. 270; Caron-
delet V. Desnoyer, 27 Mo. 36; Walker
V. McCulloch, 4 Me. 421; Williamson
V. McGinnis, 11 B. Mon. 74. 52 Am.
Dec. 561; Lane v. Owings, 3 Bibb,
247; Frink v. Green, 5 Barb. 455;
Snow V. Chandler, 10 N. H. 92, 34
Am. Dec. 140; Mason v. Jouett, 2
Dana, 107; Berry v. Gillis. 17 N. H. 9,
43 Am. Dec. 584; Durell v. Wendell,
8 N. H. 369; Parker v. Holmes, 4 id.
97; Smith v. Mapleback, 1 T. R. 441;
Hutton v. Eyre, 6 Taunt. 289; Gib-
son V. Gibson, 15 Mass. 112; Ward v.
Johnson, 6 Munf. 6, 8 Am. Dec. 729;
Thimbleby v. Barron, 3 M. & W. 210;
Dow v. Tuttle. 4 Mass. 414, 3 Am.
Dec. 226; Aloff v. Scrimshaw, 3 Salk.
573; Hoffman v. Brown, 6 N. J. L.
429; Fullman v. Valentine, 11 Pick.
159; Garnett v. Macon, 6 Cal. 308;
Lacy V. Kynaston, 3 Salk. 575, 12
Mod. 548, 1 Ld. Raym. 688; Dean v.
Newhall, 8 T. R 16a
GG4
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 259.
such a covenant that it was the intention to discharge the
debt.' It cannot avail as an estoppel in order to avoid circuity
of action. It is said by high authority that a covenant con-
tainino; no words of release has never been construed as a
release unless it gave the party claiming the benefit of that
construction a right of action which would precisely counter-
vail that to which he was liable; and, unless, also, it was the
intention of the parties that the last instrument should defeat
the first.^ And where two are jointly and severally bound a
covenant not to sue one does not amount to a release of the
other,' unless, perhaps, the covenant be given after a suit had
been brought separately against one, and the creditor had by
that action chosen to consider the covenantee the sole debtor.*
The amount paid, however, upon the demand by way of par-
tial discharge as a consideration for such a covenant will be
regarded as satisfaction to that extent.-^ ISTor will a covenant
with a debtor not to sue for a limited time suspend the right
of action.*
[44'2] The release of the principal debtor will absolve the
sureties, and the release of a primary security will discharge
collaterals.^ But it is competent to provide otherwise and to
lid.: Ruggles v. Patton, 8 Mass.
480; Sewall v. Sparrow, 16 id. 24;
Shed V. Pierce, 17 id. 623; Snow v.
Chandler, 10 N. H. 92, 34 Am. Dec.
140; Walker v. McCulloch,4 Me. 421;
Durell V. Wendell, 8 N. H. 369.
^ Garnet v. Macon, 6 Call. 308. See
Berry v. Gillis, 17 N. H. 9, 48 Am.
Dec. 584
3 Chicago V. Babcock, 143 111. 358,
32 N. E. Rep. 271; Bates v. Wills
Point Bank, 11 Tex. Civ. App. 73,
32 S. W. Rep. 339; Lacy v. Kynaston,
12 Mod. 548, 551; Ward v. Johnson,
6 Munf. 6, 7 Am. Dec. 729; Tucker-
man V. Newhall, 17 Mass. 581; Hut-
ton V. Eyre, 6 Taunt. 289.
4 Shed V. Pierce, 17 Mass. 623.
5 Snow V. Chandler, 10 N. B. 92, 34
Am. Dec. 140.
6 Id. ; Guard v. Whiteside, 13 III. 7;
Foster v. Purdy, 5 Met 442; How-
land V. Marvin, 5 Cal. 501; Clark v.
Russel, 3 Watts, 213; Hamaker v.
Eberley, 2 Bin. 510; Berry v. Bates,
2 Blackf. 118; Reed v. Shaw, 1 id.
245; Thalman v. Barbour, 5 Ind. 178;
Lowe V. Blair, 6 Blackf. 282; Pearl v.
Wells, 6 Wend. 291 ; Chandler v. Her-
rick, 19 Johns. 129; Winans v. Hus-
ton, 6 Wend. 471: Perkins v. Gilman,
8 Pick. 229: Couch v. Mills, 21 Wend.
424. But see Clopper v. Union Bank,
7 Har. & J. 92. 16 Am. Dec. 294; Blair
V. Reid, 20 Tex. 310; Morgan v. But-
terfield, 3 Mich. 615.
''Jackson v. Stackhouse, 1 Cow.
122, 13 Am. Dec. 514; Mottram v.
Mills, 2 Sandf. 189; Newcomb v. Ray-
nor, 21 Wend. 108, 34 Am. Dec. 219;
Brown v. Williams, 4 Wend. 360.
A release by an acceptor of the
drawer, discharging him from any
claim for damages, etc., as drawer of
a bill, will not bar an action by the
acceptor for money paid to take up
^' 259.]
BELEASE.
6G5
reserve a right to resort to securities.' And a release may, by
express provision, discharge one of several who are liable, and
exempt others from its operation. In such case the action
may be brouglit against all for the purpose of recovery against
those not released. ^ Such a reservation or limitation cannot
be made by paroL^* When, however, the debtor, or one of
several debtors jointly bound, stipulates that his discharge
shall not prevent a recovery against other parties, it is implied
that he will not set it up against them when they have paid
the demand and call on him for reimbursement or contribu-
tion.'' A release cannot take effect infuturo or upon a future
right of action; but only upon some present right either com-
plete or inchoate; it may be so framed as to cut off a condi-
tional or contingent liability, as for example that of an indorser.^
the bill for the drawer's accommoda-
tion. Pearce v. Willdns, 2 N. Y. 469,
afifirming Wilkins v. Pearce, 5 Denio,
541.
1 Pierce v. Sweet 33 Pa. 151; Bruen
V. Marquand, 17 Johns. 58: Stewart
V. Eden, 3 Cai. 181, 2 Am. Dec. 233;
Sohier v. Loring, 6 Cush. 537; Hutch-
ins V. Nichols, 10 id. 290; Seymour
V. Minturn, 17 Johns. 169: Keeler v.
Bartine. 13 Wend. 110: Hubbell v.
Carpenter, 5 N. Y. 171. See Matthews
V. Chicopee Manuf. Co., 3 Robert. 711.
2 Northern Ins. Co. v. Potter, 63
Cal. 157; Pettigrew Machine Co. v.
Harmon, 45 Ark. 290; Twopenny v.
Young, 3 B. & C. 211; Lancaster v.
Harrison, 4 M. & P. 561, 6 Bing. 726;
Solly V. Forbes, 3 Brod. & Bing. 38;
North V. Wakefield, 13 Q. B. 538.
SBronson v. Fitzhugh, 1 Hill, 185;
Brooks V. Stuart, 9 A. & E. 854.
4 1 Par. on Con. 285; Hubbell v. Car-
penter, 5 N. Y. 171; Pitman on Pr. &
Surety, 181-2, 189. See 1 Brandt on
Suretyship (2d ed.), § 147.
5 Reed v. Tar bell, 4 Met. 93; Nich-
ols V. Tracy, 1 Sandf. 278; Pierce v.
Parker, 4 Met 80; Hastings v. Dick-
inson, 7 Mass. 153, 5 Am. Dec 34;
tribson V. Gibson, 15 Mass. 110, 8 Am.
Dec. 94.
Parsons says (2 Par. on Cont 714):
"A release, strictly speaking, can op-
erate only on a present right, because
one can give only what he has, and
can only promise to give what he
may have in future. But where one
is possessed of a distinct right, which
is to come into effect and operation
hereafter, a release in words of the
present may discharge this right."
In Martin v. Baltimore & O. K. Co.,
41 Fed. Rep. 125, an emploj-ee of de-
fendant became a member of a relief
association, and as a condition of
membership and in consideration of
funds paid by defendant to said asso-
ciation and its guaranty of the pay-
ment of the benefits promised hy the
association signed a contract releas-
ing defendant from any liability to
him by reason of accident while in
its service. Bond, J., charged the
jury that if, prior to the plaintiff's
employment, he signed such contract
and received the benefits arising
therefrom before and after suit
brought, and gave receipts for the
money paid, which receipts released
and discharged the defendant, he
could not recover. See § 6.
666 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§§ 260-262.
Section 5.
TENDEE.
[443] § 260. Eight to make. Though a fc'7?c?<?r, not accepted,
does not go to the extent of liquidation, it is so connected with
the subject of payment as to justify some consideration of it
in this connection. A debtor has the right at common law,,
before suit, to tender the amount due to his creditor upon a
certain and liquidated demand, and thereby save himself from
the payment of subsequent interest and costs.
§ 261. On what demands it may be made. It seems that
a tender may be made on a quantum meruit^ but not on a
claim for unliquidated damages.^ It may be pleaded in an ac-
tion on a bare covenant for the payment of money.' In an
action for breach of contract the court cannot compel the ac-
ceptance in mitigation of damages of the property for the non-
delivery of which the action is brought on a tender of it being
made on the trial.*
§ 262. When it maybe made. At common law the tender
must be made before the commencement of the suit,^ but this
1 Johnson v. Lancaster,! Str. 576. folk Bank v. Worcester Bank, 5 Pick,
See Dearie V. Barrett, 2 A. & E. 83. 106: Jackson v. Law, 5 Cow. 248;
2 Id.; Green v. Shurtliff, 19 Vt 592; Retan v. Drew, 19 Wend. 304.
Gregory v. Wells, 62 IIL 232; Cilley In Sweetland v. Tuthill, 54 111. 215,
V. Hawkins, 48 111. 308; McDowell v. Walker, J., said: "It is first urged
Keller, 4 Cold. 258; Davys v. Rich- that our practice does not warrant
ardson, 21 Q. B. Div. 202; Kaw Valley the payment of money into court.
Fair Ass'n v. Miller, 42 Kan. 20, 21 so as to escape the payment of the
Pac. Rep. 794. costs of the suit. This may be true.
If a tender for such damages is but we deem it unnecessary to de-
authorized by statute, the tender termine that question in this case,
must be kept good. Dunbar v. De The law does clearly authorize a
Boer, 44 111. App. 615. Contra, Mc- debtor to make a tender of the
Pherson v. James, 69 id, 337. amount he owes his creditor, and
3 Johnson v. Clay, 7 Taunt. 486, 1 thus relieve himself from costs if a
Moore. 200. See Mitchell v. Greg- suit shall afterwards be brought.
cry, 1 Bibb, 449; g 383. And no reason is perceived why a
"•Colby V. Reed, 99 U. S. 560. debtor may not, even after a suit is
SLevan v. Sternfeld, 55 N. J. L.41, brought, and at any time before the
25 Atl. Rep. 854; Colby v. Reed. 99 trial, make a sufficient tender and
U. S. 560; Bac. Abr., Tender; Fish- relieve himself from future costs."'
burne v. Sanders. 1 N. & McC. 242; See Thurston v. Marsh, 14 How. Pr..
Reed v. Woodman, 17 Me. 43: Knight 572.
V. Beach, 7 Abb. Pr. (N. S.) 241; Suf-
§ 2G2.] TENDER. 067
limitation has long since been general!}' abrogated by statute.
It is no answer to a plea of tender, before the commence- [HI]
ment of the suit, that the plaintiff had, before such tender, re-
tained an attorney and instructed him to sue out a writ against
the defendant, and the attorney had accordingly applied for
such writ before the tender, and it was afterwards sued out.*
In strictness the plea of tender is applicable only to cases
where the party pleading it has never been guilty of any breach
of his contract, and therefore it is not good if made after the
day fixed for payment.'-' But this rigid rule is not adhered to
in this country, and in many of the states the right of tender
at any time after the debt is due is recognized.' Tender of the
sura due on a mortgage any time before foreclosure discharges
the lien,* and under a statute authorizing the redemption of
mortgaged chattels any time before foreclosure the mortgagor
may so make a tender notwithstanding the mortgagee has
taken possession of the property under the mortgage after con-
dition broken.^ "Where goods have been sold and title reserved
as security for the unpaid portion of the ])rice and payments
have been received after the time fixed for full payment, the
vendor cannot retake the goods without notice and demand.
A tender on demand is sufficient to protect the vendee's right
of possession.^ A tender by the defendant to the plaintiff pend-
ing an appeal by the latter from a judgment in his favor, if re-
fused, stops interest.'^ If payment is required to be made within
a certain period which ends on Sunday, a tender the next day
is in time.^ It may be made on an interest-bearing debt before
it is due, tendering the amount which would be due at raa-
1 Briggs V. Calverly, 8 T. R. 629. •* Kortright v. Cady, 21 N. Y. 343.
See Kirton v. Braithwaite, 1 M. & 5 Davies v. Dow, 80 Minn. 223, 83
W. 310; Hull V. Peters, 7 Barb. 331. N. W. Rep. 50.
2 Hume V. Peploe, 8 East, 168; •> People's Furniture & Carpet Co.
Poole V. Tumbridge, 3 M. & W. 223; v. Crosby, 57 Neb. 283, 77 N. W. Rep.
Dobie V. Larkan, 10 Ex. 776; City 658, 73 Am. St. 504, citing O'Rourke
Bank v. Cutter, 3 Pick. 414; Suffolk v. Hadcock, 114 N. Y. 541, 22 N. E.
Bank v. Worcester Bank. 5 id. 106; Rep. 33; Taylor v, Einley, 48 Vt. 78;
Dewey V. Humphrey, id. 187; Frazier New Home Sewing Machine Co. v.
V. Cushman, 13 Mass. 277; Rose v. Bothane, 70 Mich. 443, 38 N. W. Rep.
Brown. Kirby, 293, 1 Am. Dec. 23; 326.
Tracy v. Strong, 2 Conn. 659; Ash- ^Ferrea v. Tubbs, 125 Cal. 687, 53
burn V. Poulter, 35 id. 553. Pac. Rep. 308.
»2 Par. on Cont. 642. ssands v. Lyon, 18 Conn. 18.
668
CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 2G2.
turity.^ Some doubt has been expressed whether a tender is
good of a debt not bearing interest before it is due.^ A vendor
cannot be placed in default by a tender of the purchase-money
before the stipulated time for payment;* nor can a premature
tender affect the security for a debt;^ nor any other right of
the creditor.'^ A tender on a past-due obligation is good though
preliminar}' notice of it is not given.^ The necessity of such
notice in England when 2ipost diem tender of the money due
upon a mortgage is made rests entirely on custom.''
In computing the time, after entry for condition of a mort-
gage broken, within which a mortgagor ma}'^ redeem the day
of entry is to be excluded.^ And where payment must be
made, as in such a case within a certain period, it has been
made a question at what time of the last day the right of ^nj-
ment or tender expires. In the old cases it is held that pay-
ment should be made at a convenient time in which the
money may be counted before sunset.^ It is probable that
1 Eaton V. Emerson, 14 Me. 335;
Tillou V. Britton, 9 N. J. L. 120;
Saunders v. Frost, 5 Pick. 259; Bacon
V. Hooker, 153 Mass, 554, 54 N. E.
Rep. 253.
A tender of the amount due on a
promissory note is good if made at
the time fixed for payment, though
before the expiration of the days of
grace, interest for such days being
included. Wyckoff v. Anthony, 9
Daly, 417. On appeal this question
was not passed upon, it being held
that the r.ght to object to the ten-
der at the time it was made was
waived. Wyckoff v. Anthony, 90
N. Y. 443.
2 2 Par. on Cont 642. See McHard
V. Whetcroft, 3 Har. & McH. 85.
3 Rhorer v. Bila, 83 Cal. 51, 23 Pac.
Rep. 274; Reed v. Rudman, 5 Ind.
409; Cogan v. Cook, 23 Minn. 137.
4Noyes v. Wyckoff, 114 N. Y. 204,
21 N. E. Rep. 158.
5 Moore v. Kime, 43 Neb. 517, 61 N.
W. Rep. 736; Burns v. True, 5 Tex.
Civ. App. 74, 24 S. W. Rep. 388; Ab-
shire v. Corey, 113 Ind. 484, 15 N. E.
Rep. 685.
6 Sharp V. Wyckoff, 39 N. J. Eq.
376.
'> Browne v. Lockhart, 10 Sim. 420,
424.
8 Wing V. Davis, 7 Me. 31.
The necessity of a tender for such
purpose is denied. Quin v. Brittain,
Hoff. Ch. 353; Beach v. Cooke. 14 N.
Y. 508; Casserly v. Witherbee, 119 N.
Y. 523, 23 N. E. Rep. 1000; especially
if the person seeking to redeem does
not know, because of the mortgagee's
fault, the sum due. Aust v. Rosen-
baum, 14 Miss. 893, 21 So. Rep. 555.
9 In Wade's Case, 5 Coke, 114a, it
was said: " Although the last time
of payment of the money by force
of the condition is a convenient
time in which the money may be
counted before sunset, yet. if the
tender be made to him who ought to
receive it at the place specified in
the condition, at any time of the
day, and he refuse it, the condition
is forever saved, and the mortgagor
262.]
TENDEE.
GG9
the courts would not now recognize the rule as a fixed [l-to]
and arbitrary requirement, without regard to circumstances
necessitating a tender while the daylight lasts. There [l-iG]
is some reason for holding a tender unseasonable which is
or obligor needs not make a tender
of it again before the last instant."
See Coke Litt. 203.
In Wing V. Davis, 7 Me. 31, the
validity of a tender made late in the
evening of the last day to redeem
after entry for condition broken was
in question. Mellen, C. J., said: " In
Hill v. Grange, 1 Plowd. 178, the con-
dition was to pay rent within ten
days after certain feasts, in which
case the justices unanimously held
that the lessee had liberty within the
ten days; and, therefore, they ob-
serve ' the lessee is in no danger as
long as he has time to come and pay
it; and he has time to come and pay
it as long as the tenth day continues,
and the tenth day continues until
the night comes; and when the night
is come, then his time elapses. So
that his time to pay continues until
the separation of day and night.
And in arguing this point, Robert
Brook, chief justice, and Saunders,
said that if the rent reserved was a
great sum, as £500 or £1.000, the les-
see ought to be ready to pay it in
such convenient time before sunset
in which the money might be
counted; for the lessor is not bound
to count it in the night, after sunset,
for if so he might be deceived; for
Brook said: ' Qui anibulat in tene-
bris nescit qua vadiV The language
of the court in the case of Greeley
V, Thurston does not advance a dif-
ferent principle. The question is,
what is the whole day in relation to
a tender in contracts of this charac-
ter. We are not aware that modern
decisions have changed the law as
established by the old cases; or the
facts necessary to be proved to sup-
port a plea of tender, except so far
as the conduct of the creditor may
in certain cases amount to a waiver
of objections against the formality
of the tender, or in case of his art-
ful avoidance or evasion. In the
case before us there is nothing like
a waiver as to the unseasonableness
of the hour; in fact, this was the
objection made by the defendants
at the time of the alleged tender,
which was attempted to be made not
long before midnight, when tlie de-
fendants and their families were
asleep, and all the lights extin-
guished. No reason has been as-
signed why a payment or a tender
was delayed to so unusual an hour;
and if a loss to the plaintiff is the
consequence of this strange delay,
he must thank his own imprudence.
We do not decide that a tender may
not, in any circumstances, be good,
though made after the departure of
daylight; it is not necessary to inti-
mate any opinion on the point. Our
decision is founded on the facts of
this case; and the tender not having
been made in due season, we need
not inquire as to the sufficiency of
the sum which was offered.''
In Greeley v. Thurston, 4 Me. 479,
16 Am. Dec. 285, the question was
when the default of the maker of a
promissory note occurred, he claim-
ing that he had the whole of the
last day in which to pay it, and that
until that day is passed he cannot
be said to have broken his contract.
Weston, J., said: "There is no ques-
tion that with regard to bonds, mort-
gages and instruments in writing,
other than notes of hand or bills of ex-
change, the party who engaged to
pay money, or to perform any other
duty, fulfills his contract, if he does
670
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 2G2.
made late at night if the creditor has gone to bed, and de-
[447] clines to consider it on that ground, where no cause for
«o delaying it exists.^ A late judicial exposition of the ques-
tion is to the effect that, where no place is named in the
so on any part of the day appointed.
Unless the case of negotiable paper
forms an exception to the general
rule which attaches to other written
contracts, the maker of a negotiable
note of hand and the acceptor of a
bill of exchange are not liable to be
sued until the day after these instru-
ments become due and payable. In
the case of Leftey v. Mills, 4 T. R
170, we have the opinion of Mr. Jus-
tice BuUer, given in strong terms,
although the decision was finally
placed upon another ground, that
the general rule before intimated
does not apply to bills of exchange.
In that case a clerk called with the
bill, upon which the question arose,
at the house of the defendant, the
acceptor, on the day it became due,
and, not finding him at home, left
word where the bill might be found,
that the defendant might send and
take it up; this not being done at
six o'clock in the evening it was
noted for non-payment. Between
seven and eight o'clock the same
clerk called again on the defendant
with the bill, who then offered to
pay the amount of it, but refused to
pay an additional half-crown for the
notary. Lord Kenyon was of opin-
ion, at the trial, that the tender was
sufficient, and directed a verdict for
the defendant. A rule was obtained
to show cause why the verdict
should not be set aside and a new
trial granted. The court said, in
granting the rule, that the main
question was whether the acceptor
had the whole day to pay the bill in,
or whether it became due on demand
at any time on the last day. After
argument, Lord Kenyon stated in
this, as in other contracts, the ac-
ceptor had the whole day; but said,
if there were any difl'erence between
bills of exchange and other contracts
in this respect, the claim of the no-
tary could not be supported, this
being an inland bill pa5'able fourteen
days after sight, and the statute of
William, which first authorized a
protest upon inland bills, givmg it
only upon such bills as were payable
a certain number of days after date.
Upon this last ground Duller, J.,
concurred; andheadded: *I cannot
refrain from expressing my dissent
to what has fallen from my lord re-
specting the time when the payment
of bills of exchange may be enforced.
One of the plaintiff's counsel has cor-
rectly stated the nature of the ac-
ceptor's undeitaking, which is to
pay the bill on demand on any part
of the third day of grace; and that
rule is now so well established that
it will be extremely dangerous to
depart from it. With regard to
foreign bills of exchange, all the
books agree that the protest must be
made on the last day of grace; now
that supposes a default in payment,
for a protest cannot exist unless de-
fault be made. But if the party has
until the last moment of the day to
pay the bill, the protest cannot be
made on that day. Therefore the
usage on bills of exchange is estab-
lished; they are payable any time
on the last day of grace, on demand,
provided that demand be made
within reasonable hours. A demand
at a very early hour of the day, at
two or three o'clock in the morning.
1 Wing V. Davis, 7 Me. 31.
§ 263.] TENDER. 671
-agreement for the making of payment, or no established
usage prevails to the contrary, as in the case of notes and
bills, the payer has the whole of the day, at any place where ho
may meet the payee, and both may have the proper means and
opportunity of making and receiving the tender. The party
bound must do all that, without the concurrence of the other,
he can do to make the payment or perform the act, and that
at a convenient time before midnight, such time varying ac-
cording to the quantum of payment or the nature of the act
to be done. If he is to pay money it must be tendered at a
sufficient time before midnight for the tenderee to receive and
count it.^ This rule may well be qualified by adding a con-
dition that the tender shall be made at such time as will
give the creditor an opportunity to ascertain the state of the
account between him and his debtor; because he is not bound
to know at his peril at all times the exact sum due hira;^ and
besides the law will doubtless take account of the fact that
business men are not at all times prepared to surrender the
evidences of their claims against their debtors. Commercial
paper being payable on the day of maturity at any reasonable
hour when demanded, a breach of the contract to pay may
occur whenever such demand is made. In the absence, how-
ever, of any demand the debtor upon such paper undoubtedly
has the same time on the last day to fulfill his promise as
when he is indebted in any other form.'
§ 263. In what money. The offer must be made in legal
tender money of the country, if it is demanded.* But where
would be an unreasonable hour; but, or duly forwarded." Shed v. Brett,
on the other hand, to say that the de- 1 Pick. 401; City Bank v. Cutter, 3
mand should be postponed until mid- Pick. 414.
night would be to establish a rule i Smith v. Walton, 5 Houst, 141,
attended with mischievous conse- following Startup v. Macdonald, 6 M.
quences.' Upon consideration we «fc G. 598, 624, 46 Eng. C. L. 623.
adopt the views of Mr. Justice Bui- 2 Root v. Bradley, 49 Mich. 27, 13
ler; and it is our opinion that bills N. W. Rep. 896; Waldron v. Murphy,
of exchange and negotiable notes 40 Mich. 668; Chase v. Welsh, 45
should be paid on demand, if made Mich. 345, 7 N. W. Rep. 8'.)5.
at a reasonable hour, on the day ^ Sweet t. Harding, 19 Vt. 587.
they fall due; and if not then paid, < Wilson v. McVey, 83 Ind. 108;
that the acceptor or maker may be Collier v. White, 67 Miss. 133, 6 So.
sued on that day. and the indorser Rep. 618; Wharton v. Morris, 1 Ball.
and drawer also, after notice given 124; Moody v. Mahurin, 4 N. H. 296;
672
CONVEKTIOXAL LIQUIDATIONS AND DISCHARGES. [§ 263,
bank or treasury notes which circulate as money, though not
made a legal tender, are offered, the objection that they are
not legal tender is deemed one of form, and waived if not
specially made, or if objection is rested on some other ground; *
[44S] for to invalidate a tender or to divest an offer to pay of
the legal effect of a tender, if the objection is to the medium
or currency and not to the sum offered, the ground of it must
be stated, or the right to object in that respect will be waived,
and it cannot afterw^ards be taken advantage of in court oa
the score of the tender not being legal; in other words, an
objection on a point of fact works a waiver of an objection on
points of law.- It is a general rule that if a tender is refused
on a specified ground of objection no other can afterwards be
relied upon.* This applies, however, only to such objections
as could be obviated, and not to a tender made before a debt
is due.* An offer of depreciated bank notes, without any ex-
planation, is in legal effect but an offer of compromise or of
Lee V. Biddis, 1 Dall. 175: Long v.
Waters, 47 Ala. 624; Hallowell & A.
Bank v. Howard. I'd Mass. 235; Lange
V. Kohne, 1 McCord, 115; Smith v.
Keels, 15 Rich. 818; Magraw v. Mc-
Glynn, 26 Cal. 420: Martin v. Bott.
17 Ind. App. 444, 46 N. K Rep. 151 (a
finding that a tender was made of
the " lawful .sum in money " is not a
finding that it was made in legal
tender). See Tate v. Smith, 70 N. C.
685; Graves v. Hardesty, 19 La. Ann.
186; Parker v. Broas. 20 id. 167; Har-
ris V. Jex, 55 N. Y. 421, 14 Am. Rep.
285.
1 Koehler v. Buhl, 94 Mich. 496, 54
N. W. Rep. 157; Cooley v. Weeks, 10
Yerg. 141; Ball v. Stanley, 5 id. 199,
26 Am. Dec. 263; Fosdick v. Van
Husan, 21 Mich. 567; Curtiss v. Green-
banks, 24 Vt. 536; Warren v. Mains,
7 Johns. 476; Holmes v. Holmes, 13
Barb. 137; Wheeler v. Knaggs, 8
Ohio, 172: Lockyer v. Jones, Peake,
180, n.; Wright v. Reed, 3 T. R 554;
Brown v. Saul, 4 Esp. 267; Polglass
V, Oliver, 2 Cr. & J. 15; Tiley v. Court-
ier, id. 16, n.; Saunders v. Graham,
Gow, 121; Brown v. Dysinger, 1
Rawle, 408; Snow v. Perry, 9 Pick.
539; Towson v. Havre de Grace Bank,
6 H & J, 53; Williams v. Rorer, T
Mo. 555; Sea well v. Henry, 6 Ala.
226; Noe v. Hodges, 3 Humph. 162;
Cummings v. Putnam, 19 N. H 569;
Brown v. Simons, 44 id. 475; Snow
V. Perry, 9 Pick. 539.
2 Polglass V. Oliver, 2 Cr. & J. 15;
Gradle v. Warner, 140 III 123, 29 N.
K Rep. 1118. See Waldron v. Murphy,
40 Mich. 668, and § 270.
SMcGrath v. Gegner, 77 Md. 331,
26 Atl. Rep. 502, 39 Am. St. 415.
In Moynahan v. Moore, 9 Mich. 9,
it was said to be "a well established
principle, that an objection made at
the time of tender precludes all
others, and if that be not well
grounded the tender will be held
good." See Perkins v. Dunlap, 5 Me.
268, 271; Hull v. Peters, 7 Barb. 331;
Carman v. Pultz, 21 N. Y. 547; Keller
V. Fisher, 7 Ind. 718: Stokes v. Reck-
nagle, 38 N. Y. Super. Ct. 368; § 27a
* Mitchell V. Cook, 29 Barb. 243.
§ 204.] TENDER. C73
accord and satisfaction, and not a legal tender,' unless thoy are
tendered to the bank which issued them.^ Even a ciieck for
money handed the payee or sent by a letter is a good tender,
where no objection is made on that ground, but only to the
amount.^ But when the party entitled to payment is not pres-
ent and has no opportunity to urge the objection, he cannot
be presumed to have waived it by his silence.* A note for dol-
lars payable in gold and silver is payable in money, and neither
bullion, nor gold and silver in any other form than money, is
a legal tender.^ In an action for the breach of a covenant of
seizin a tender of the amount paid by the grantee and of the
unpaid notes and mortgage executed by him to secure the bal-
ance of the purchase price is good."
§ 264. By wlioiii. Of course it may be made by an author-
ized agent.'^ Where the tender is made in behalf of the debtor,
strict authority at the time does not seem to be requisite; it
being for his benefit and in his name, it may be effectual with-
out such agency as would enable the person making it [WO]
to do any act which would bind the debtor. Thus, a tender
made for an infant by his uncle has been held good, though
he was not at that time his guardian.^ So when an agent was
sent to tender a sum less than that demanded, and he added
of his own funds to the sum furnished by his principal and
tendered the full amount required, it was held good.® A
tender made by an inhabitant of a school district to one hav-
ing a claim against it was held good, though such inhabitant
1 Newberry V. Trowbridge, 13 Mich. 'Jennings v. Mendenhall, 7 Ohio
263. St. 258; Jones v. Arthur, 8 Dowl. P.
A certified check was tendered and G 442; Shipp v. Stacker. 8 Mo. 145;
returned for insufficiency in amount; Petrie v. Smith, 1 Bay, 115; Wyckoff
but the court found that it was suf- v. Anthony, 9 Daly, 417; Harriman
ficient; the check was then deposited v. Meyer, 45 Ark. 37.
in court.aud while there deposited the ^ Sloan v. Petrie, 16 111.262; Hub-
bank on which it was drawn failed, bard v. Chenango Bank, 8 Cow. 88;
It washeldthatthecheck,if accepted, Ward v. Smith, 7 Wall. 447.
wouM have been only conditional ^Hart v. Flynn's Ex'r, 8 Dana. 190.
payment, and the loss resulting from 6 Conrad v. Trustees of Grand
its non-payment must be borne by Grove, 64 Wis. 258, 25 N. W. Kep. 24.
the drawer. Larsen v. Breene, 12 '^ Eslow v. Mitchell, 26 Mich. 500.
Colo. 480, 21 Pac. Rep. 498. 8 Brown v. Dysinger, 1 Rawle, 408.
- Northampton Bank v. Balliet, 8 See Coke Litt. 2066.
W. & S. 311, 43 Am. Dec. 297. 9 Read v. Goldring, 3 M. & S. 86.
Vol. I — 43
674: CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 264.
was not regularly authorized to do so.^ A corporation ap-
pointed three agents to tender a sum to B, and obtain from
him a reconveyance of a certain estate conveyed to him by
the corporation as security for a debt; one of the three made
the tender and it was held good.^ A person having no inter-
est in the tender has no right to make it in his own behalf.'
He should make it in behalf of the debtor and so inform the
creditor.'* The creditor must object on the ground of a want
of authority or the right to do so is waived.^ If a tender is
made by the debtor's prior authority, or is subsequently rati-
fied, it is good.® Any person may make a tender for an idiot.'
A tender of the amount due one who has purchased land at a
tax sale is not good if it is made by several persons, one of
whom has no right to redeem.^ A mortgagee may refuse a
tender of the amount due him made by one who is a stranger
to him and to the mortgagor, and who is not acting in the
interest or at the request of the latter, though he had tax
titles on the mortgaged property, they not being subject to
the mortgage.^ One who has purchased mortgaged premises
and mortgaged chattels thereon from the mortgagor, the for-
mer subject to existing liens, has no authority to make a
tender of the amount due on the latter, the debt accrued
thereby being payable on demand and none being made.^" But
it is otherwise where a tender is made by the mortgagor's
grantee after the debt is due, the creditor having knowledge
of the transfer.^^ A tender of the amount of a mortgage lien
by the assignee in insolvency of the mortgagor has the same
effect as if made by the latter ; '^ and so of a tender by the
vendee of chattels.^^ A tender by a subsequent grantee of the
iKincaidv. School District, 11 Me. ^Coke Litt. 2066; Brown v. Dy-
188. singer, 1 Rawle, 468.
2 St Paul Division No. 1, Sons of 8 Bender v. Bean, 52 Ark. 132, 12
Temperance v. Brown, 11 Minn, 356. S. W. Rep. 180, 241.
3 Mahler v. Newbaur, 32 CaL 168, 9 Sinclair v. Learned, 51 Mich. 335,
91 Am. Dec. 571. 16 N. W. Rep. 672.
* Id.; McDougald v. Dougherty, 11 lONoyes v. Wyckoff, 114 N. Y. 204^
Ga. 570. 21 N. E. Rep. 158, 30 Hun, 466.
5 Lampley v. Weed, 27 Ala. 631. n Yeager v. Groves, 78 Ky. 278.
e Harding v. Davies, 2 C. & F. 77; 12 Davies v. Dow, 80 Minn. 223, 83
McIniflEe v. Wheelock, 1 Gray, 600; N. W. Rep. 50.
Eslow V. Mitchell, 26 Mich. 500. is Flanigan v. Seelye, 53 Minn. 23,
65 N. W. Rep. 115.
§ 205.] TENDEE. 675
equity of redemption is good.* An executor lias no authority
to make a tender to a legatee in a jurisdiction in which his
foreign letters have not been recognized although the funds
tendered were realized from the personal property of the tes-
tator situated in the jurisdiction in which the tender was made.
A tender so made is not validated by the subsequent issuance
of letters from a court in the jurisdiction in which the legatee
was at the time it was made.-
§ 265. To whom. A tender should, in general, be made
direct to the creditor.' But it may be made to his attorney*
or authorized agent,'^ although such attorney falsely denies his
authority,^ or such agent has been instructed not to receive it.^
A tender to an agent is good though it was made on the sup-
position that he continued to be the party in interest.^ An
attorney, having a demand for collection, wrote the debtor re-
questing him to pay it at the attornej^'s office; the debtor sub-
sequently made a tender in the absence of the attorney [450]
to his clerk in his office, and it was held good.^ Such a request
of payment gives the debtor a right to treat any person havino-
charge of such office in the absence of the attorney as author-
ized to receive the money.^" But a letter from the attorney,
demanding payment to him instead of at his office, will not
warrant a tender to a writing clerk there who disclaims and
has not authority to receive it."
1 Kortright v. Cady, 21 N. Y. 343. « Mclniffe v. Wheelock, 1 Gray, 600.
2 "Welch V. Adams, 152 Mass. 74, 25 'Muffatt v. Parsons, 1 Marsh. 55, 5
N. E. Rep. 34, 9 L. R. A. 244. Taunt. 307.
3 Hornby v. Cramer, 12 How. Pr. ^ Conrad v. Trustees of Grand
490: Smith v. Smith, 2 Hill, 351. Grove, 64 Wis. 258, 25 N. W. Rep. 24.
A tender pending an appeal need ^ Wilmot v. Smith, 3 C. & P. 453;
not be made to the attorney; it is Kirton v. Braithwaite, 1 M. & \V. 310.
good if made to the opposite party '"Watson v. Hetherington, 1 C. &
in person. Ferrea v. Tubbs, 125 Cal. K. 30; Kirton v. Braithwaite, 1 M. &
687, 58 Pac. Rep. 308. W. 310.
^ Salter v. Shove, 60 Minn. 483, 63 "Id.; Bingham v. Allport, 1 N. &
N. W. Rep. 1126; Brown v. Mead, 68 M. 398.
Vt. 215, 34 AtL Rep. 950; Billiot v. A tender to an attorney with whom
Robinson, 13 La. Ann. 529; Wilmot V. a demand is lodged for collection,
Smith, 3 C. & P. 453. before suit is brought, is unavailing;
^Hargous v. Lahens, 3 Sandf. 213; if made after suit is commenced the
Goodland v. Blewith, 1 Camp. 477; costs must be tendered. Thurston v.
Anonymous, 1 Esp. 349; Continental Blaisdall, 8 N. H. 367.
Ins. Co. V. Miller, 4 Ind. App. 553, 30 In Finch v. Boning, 4 C. P. Div.
N. E. Rep, 718. 143, the judges disagreed as to the
676 CONVENTIONAL LIQUIDATIONS AND DISCHAEGE8. [§ 265.
"When an instrument is pa^^able at a bank, and is lodged
there for collection, the bank becomes the agent of the payee
to receive payment. The agency extends no further, and with-
out special authority such agent can only receive payment of
the debt due his principal in the legal currency of the country,
or in bills which pass as money at their par value by the con-
sent of the community.^ A tender may be made to a clerk in
a store for goods there purchased, and it will be equivalent to
a tender made to the principal, even though prior thereto the
claim has been lodged with an attorney for suit. Such clerk
can also waive, either by implication or expressly, any objec-
tion to the validity of the tender on the ground of its being in
bank bills and not in specie.^ Where there is no general agency
to collect, but power simply to receive the sum demanded, a
tender of a less sum to such special agent is invalid ; as where
the plaintiff sent his son to demand a specific amount for an
unliquidated claim, it was held that an offer to him of a less
sum could not be considered as a tender to the plaintiff.^ Where
an agent of the defendants had been notified not to receive a
tender, but to refer the plaintiff to a third person named, of
which the plaintiff had notice, the latter was at liberty to seek
the person to whom he had been so referred or the defendants,
at his election, and could make the tender to either.* A tender
made to the holder of a note is good though he subsequently
assigns it;^ but it is otherwise as to a tender to the original
payee if he has transferred the obligation.^ A mortgagor or
his assignee must make tender to the mortgagee or person
claiming under him; it cannot be made to the assignee of the
[451] contract secured by the mortgage.^ Money due to a
cestui que trust should be tendered to the trustee.® But a tender
to an executor while in another state, before he had acted or
effect of a disclaimer by a solicitor's * Abshire v. Corey, 113 Ind. 484, 15
clerk who said that the solicitor was N. E. Rep. 685.
out of the office, and he, the clerk, ^ Burns v. True, 5 Tex. Civ. App. 74,
had no instructions, 24 S. W. Rep. 338.
1 Ward V. Smith, 7 Wall. 447. See ^ Smith v. Kelley, 27 Ma 237, 46
§ 231. Am. Dec. 595.
2Hoyt V. Byrnes. 11 Me. 475. sChahoon v. Hollenback, 16 S. &
» Chipman V. Bates, 5 Vt. 14a R. 425, 16 Am. Dec. 587; Cook v.
* Hoyt V. Hall, 3 Bosw. 42. Kelley, 9 Bosw. 358; Hay ward v.
Munger, 14 Iowa, 516.
\
§ 2G6.]
TENDER.
G77
qualified, will not stop interest.* If a tender is made to a clerk,
agent, or other representative of the creditor, it must be shown
that he had authority to receive the money.'^ A debt duo
jointly to several persons may be tendered to either, but should
be pleaded as tendered to all.=» If no place has been appointed
for payment, a tender to the creditor wherever he may be found
is good; * but if it is made without notice at an unusual or un-
fit place it may be declined if it is necessary for the creditor
to examine the account between him and his debtor.'
§ 266. It must be sufiicieiit in amount. The tender must
include the full amount due. A tender of part of a debt is in-
operative.^ The creditor is not obliged to receive it. The
debtor must, at his peril, tender enough; if his tender is less
it will be of no avail, though the deficiency is small and oc-
iTodd V. Parker, 1 N. J. L. 45.
2Hargous v. Lahens, 3 Sandf. 213;
Goodland v. Blewith, 1 Camp, 477;
Anonymous, 1 Esp. 349; Jevvett v.
Earle. 53 N. Y. Super. Ct. 349.
3 Wyckoflf V. Anthony, 9 Daly, 417;
Douglas V. Patrick, 3 T. R. 683;
Southard v. Pope, 9 B. Mon. 264;
Beebe v, Knapp, 28 Mich, 53; Flanigan
V. Seelye, 53 Minn, 23, 55 N. W. Rep.
115. See Dawson v. Ewing, 16 S. &
R. 371.
*Slingerland v. Morse, 8 Johns. 474;
Hunter v. Le Conte, 6 Cow. 728. See
^214.
5 Waldron v. Murphy, 40 Mich. 668;
Chase v. Welsh, 45 id. 345, 7 N. W.
Rep, 895; Root v. Bradley, 49 Mich.
27, 12 N. W. Rep. 896.
6 San Pedro Lumber Co, v. Rey-
nolds, 111 Cal, 588, 44 Pac. Rep. 309;
Helphrey v. Chicago, etc. R, Co., 29
Iowa, 480; Louisiana Molasses Co. v.
Le Sassier, 52 La. Ann. 2070, 28 So.
Rep. 217; Hoppe & Strub Bottling Co.
V. Sacks, 11 Ohio Ct. Ct. 3; Elderkin
V. Fellows, 60 Wis. 339, 19 N. W. Rep,
101; Dixon v. Clark, 5 C. B. 365;
Baker v. Gasque, 3 Strobh. 25: Pat-
note V. Sanders, 41 Vt. 66, 98 Am. Dec.
664; Boyden v. Moore, 5 Mass. 365.
In the last case Parsons, C, J., said:
" It is a well-known rule that the de-
fendant must take care at his peril
to tender enough; and if he does not,
and if the plaintiff replies that there
is more due than is tendered, which
is traversed, the issue will be against
the defendant, and it will be the
duty of the jury to assess for the
plaintiff the amount due on the
promise; and if not covered by the
money tendered, he will have judg-
ment for the balance. ... In
calculating, there may be, and prob-
ably must arise, fractions not to be
expressed in the legal money of ac-
count; these fractions are trilles, and
may be rejected, . . . If any sum
large enough to be discharged in the
current coin of the country is a trifle
which, although due, the jury are
not obliged to award to the plaintiff,
the creditor, it will be difficult to
draw a line and say how large a sum
must be not to be a trifle. The law
fixes no such rule,"
Under the code of California a
tender is not ineffectual because it is
insufficient in amount unless it is ob-
jected to for that reason at the time
it is made. Oakland Bank v. Apple-
garth, 67 Cal. 80, 7 Pac, Rep. 139, 476.
6T8 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ '206.
curred by mistake.^ If a tender is made after suit it must
cover the costs,^ including the fees of witnesses. " The fact
that the plaintiff did not inform the defendant that he had
summoned these witnesses was of no importance. If the de-
fendant desired any information astotheamountof the plaint-
iff's costs from him, he should have inquired, for he knew a
suit had been brought and some costs had accrued, and if he
chose to make a tender without inquiry, the plaintiff certainl}'-
was not in fault.' Tender of the amount due on a note must
include attorney's fees when the note stipulates for their pay-
ment and is in the hands of an attorney for collection, and
there is a dispute as to the amount due. But if the payee re-
fuses to give information concerning the fees, or the maker be
ignorant of the employment of an attorney, or the tender be
refused upon other grounds, and the maker be thereby misled,
the court would protect him in making the tender.* The ne-
cessity of tendering the whole sum due does not require the
[452] debtor to tender a sum to cover all demands his creditor
may have against him. He may tender for the payment of
any one of several debts which is distinct and separable.* A
tender of a gross sum upon several demands, without des-
1 Id. 2 Smith V. Wilbur, 35 Vt. 133.
In Harris v. Jex. 55 N. Y. 421, 14 Am. 3 Rouyer v. Miller, 16 Ind. App. 519,
Rep. 285, a tender was made upon a 44 N. K Rep. 51, 45 id. 674. See
debt contracted prior to the passage Haskell v. Brewer, 11 Me. 258; Nelson
of the legal tender law of 1862; and v. Robson, 17 Minn. 284
this tender was made in legal tender < Emerson v. White, 10 Gray, 351;
notes after the decision in Hepburn People v. Banker, 8 How. Pr. 258;
V. Griswold, 8 Wall. 603, and before Collier v. White, 67 Miss. 133, 6 So.
the reversal of that case in Knox Rep. 618.
V. Lee, 12 Wall. 457; it was refused But in Connecticut a tender made
because it was not the currency pay- before the defendant has been served
able. And it was held that the plaint- with process is good though costs are
iff was justified in refusing the not included. Ashburn v. Poulter,
tender; he had a right to refuse on 25 Conn, 553.
the decision of the highest judicial ^ Wright v. Robinson, 84 Hun, 172,
tribunal in the land; that decision, 82 N. Y. Supp. 463; North Chicago
for the time being, was the law, and Street R. Co. v. Le Grand Co., 95 111.
not merely the evidence of it; App. 435; Hurt v. Cook, 151 Mo. 417,
but it was intimated that if the 52 S. W. Rep. 396; East Tennessee,
tender had been kept good it would etc. R. Co. v. Wright, 76 Ga. 532; 2
have been a defense to interest and Par. on Cont. 641.
costs, after the decision of Knox v.
Lee.
§ 266.]
TENDER.
079
ignating the amount tendered upon each, is sudicient.' Where,
however, there are several separate demands sued for, and
there has been a tender made of a less sum than the amount
demanded for the whole, but not specifically applied to any
separable portion of it, it has been held that it cannot be ap-
plied in pleading to either.^ A tender of the amount justly
due by the condition of a bond is good although less than the
penalty.^ The penalty is only nominally the debt, and the
tender of that sum which if paid would satisfy the bond will
be effectual.* A tender is not invalidated by being of a larger
sum than the amount it is offered to pay or is demanded, even
though change is requested, unless objection is made to it on
that account.*
1 Johnson v. Cranage, 45 Mich. 14,
7 N. W. Rep. 188; Thetford v. Hub-
bard, 23 Vt. 440.
2 Hardingliam v. Allen, 5 C. B. 793.
If A.. B. and C. have a joint demand,
and C. has a separate demand
against D., and D. offers A. to pay
him both the debts, which A. re-
fuses, without objecting to the form
of the tender, on account of being
entitled only to the joint demand,
D. may plead this tender in bar of
an action on the joint demand, and
should state it as a tender to A., B.
and C. Douglas v. Patrick, 3 T. R.
688. But see Strong v. Harvey, 3
Biug. 304, where it is held that if a
party has separate demands for un-
equal sums against several persons,
an offer of one sum for the debts of all
will not support a plea stating that
a certain portion of this sum was
tendered for the debt of one.
It was held in Hampshire Manuf.
Bank v. Billings, 17 Pick. 89, that a
tender of the amount due on a joint
and several promissory note by a
surety, while an action brought by
a holder against the principal was
pending, will not discharge the
surety from his liability unless he
offers to indemnify the holder against
the costs of such action.
8 Tracy v. Strong. 2 Conn. 659.
4 See Fraser v. Little, 13 Mich. 195;
Spencer v. Perry, 18 Mich. 394.
5 North Chicago Street R. Co. v.
Le Grand Co., 95 III. App. 435.
In Dean v. James, 4 B. & Ad. 546,
it was held that a tender of 201. 9s.
GcL in bank notes is sufficient to sup-
port a plea of tender of 20Z. Taun-
ton, J., referring to Watkins v. Robb,
2 Esp. 710, said: "There the defend-
ant tendered a 57. note and demand-
ed 6c?. change, which the defendant
was not bound to give." Betterbee v.
Davis, 3 Camp. 71. Littledale, J., said:
"This case falls within the third res-
olution in Wade's Case, 5 Co. 115,
that if a man tender more than he
ought to pay it is good, for omne
majus continet in se minus, and the
other is bound to accept so much of
it as is due to him." The argument
against the tender was that a sub-
sequent demand must be of the
specific sum tendered, and if that
sum is more than the plaintiff's de-
mand, it would be inapplicable. Re-
ferring to this Littledale, J., con-
tinues: " As to replying a demand it
is not the plaintiff's business to de-
mand more than is actually due; it is
enough if in his replication he admits
that the sum due was tendered, but
680
CONVENTIONAL LIQUIDATIONS AND DISCHAEGES. [§ 267.
[453] § 267. Same subject. The creditor is entitled to
payment in money made legal tender by law, and the debtor
has a right to make payment in that currency. Debts made
payable in the denominations of the legal tender currency
are solvable in that currency at par, without regard to when
or where they were contracted, or the relative value of
[454] the denominations in that currency at and after the
alleges that he afterwards demanded
that and it was refused."
Lord Abinger said in Bevans v.
Rees, 5 M. & W. 306: " I am prepared
to say that if the creditor knows the
amount due to him, and is offered a
larger sum, and without any objec-
tion of a want of change makes
quite a collateral objection, that will
be a good tender." Black v. Smith,
Peake. 88; Cadman v. Lubbuck, 5 D.
& Ry. 289; Hubbard v. Chenango
Bank, 8 Cow. 89; Patterson v. Cox,
25 Ind. 261; Douglas v. Patrick, 3 T.
R. 6«3; Dean v. James. 4 B. & Ad.
546; Astley v. Reynolds, 2 Str. 916;
Strong V. Harvey, 3 Bing. 304; Rob-
inson V. Cook, 6 Taunt. 336; Blow v.
Russell, 1 C. & P. 365.
Cadman v. Lubbuck, 5 D. & Ry.
289. Where the defendant, who
owed the plaintiff 108Z. for principal
and interest on two promissory
notes, in consequence of an applica-
tion from the plaintiff's attorney for
the amount sent a person to the at-
torney, who told such attorney that
he came to settle the amount due on
the notes, and desired to be in-
formed what was due, and laid
down 150 sovereigns on a desk, out
of which he desired the attorney to
take what was due for such princi-
pal and interest, but the attorney re-
fused to do so, unless a shop account
due from the plaintiff to the defend-
ant was fixed at a certain amount,
held to be a good tender. Bevans v.
Rees, 5 M. & W. 306. A tender has
been held vitiated by delivering a
counter-claim at the same time.
Thus, where a defendant tendered
seven sovereigns in payment of a de-
mand of Ql. 17s. 6d., and said to the
plaintiff. "There, take your de-
mand," and at the same time deliv-
ered a counter-claim upon the plaint-
iff of 11. 5s., -who said you must go
to my attorney: Held, not a good
tender to an action for the 61. 17s. Qd.
Brady v. Jones, 2 D. & R. 305; and
see Holland v. Phillips, 6 Esp. 46.
See, also, Laing v. Meader, 1 C. & P.
257.
In Saunders v. Frost, 5 Pick. 259,
269, there was a tender of a mort-
gage debt which was not due, and
bearing interest, and of which only
interest was due. Objection was
made by counsel that the tender
was made of a debt not due. The
tender was of a sum equal to the
interest and the principal. Parker,
C. J., said: "But it appears to U3
that, in order to avail himself
of this objection, the defendant
ought to have shown a willingness
to take what was due, and to have
stated that he claimed to hold pos-
session only for the non-payment of
interest." Odom v. Carter, 86 Tex.
281.
A tender of $5 by a street-car pas-
senger who has no smaller money is
reasonable, and his ejection from the
car thereafter is unlawful. Barrett
V. Market Street Cable R. Co., 81 Cal.
296, 22 Pac. Rep. 859, 15 Am. St. 61, 6
L R. A. 336.
§ 267.] TENDER. 081
contract was made. The legal tender currency for the time
bsing, when the contract is performed or enforced, is the cur-
rency applicable to it.' If money be payable in the legal cur-
rency of another country, the legal rather than the market
equivalent is the amount to be paid. A contract to pay in
"dolkirs" may require payment in either coin or legal tender
currency provided by the government, according to the inten-
tion of the parties. Treasury notes, commonly called "green-
backs," are the currency payable, unless the contract itself
indicates the intention that the debt be paid in coin.'^ A con-
tract to pay in " dollars" in gold and silver is a contract for
the direct payment of money; neither bullion, gold dust, gold
and silver bars, old spoons and rings, are a proper tender in
satisfaction.^ But current bank notes, which pass as money,
offered in payment and not objected to on that ground, will
constitute a good tender.* When a debtor tenders a bank
check in payment of a debt, and the creditor expressly waives
all objection to that mode of payment and only objects to the
amount, it is good;* but not, as a rule, otherwise.® If numer-
1 Story on Prom. Notes, § 390 and Williams v. Eorer, 7 Mo. 556; Cooley
note; George v. Concord, 45 N. H. v. Weeks, 10 Yerg. 141; Snow v.
434; Wood v. Bullens, 6 Allen, 516; Perry, 9 Pick. 539; Wheeler v.
Pong V. De Lindsey, 1 Dyer, 82a; Knaggs, 8 Ohio, 169; Fosdick v. Van
Dooley v. Smith, 13 Wall, 604; Legal Husan, 21 Mich. 567; Curtiss v. Green-
Tender Cases, 13 id. 457; Trebilcock banks, 24 Vt. 536; Petrie v. Smith, 1
V. Wilson, id. 687; Vorgesv. Giboney, Bay, 115; Brown v. Dysinger, 1
38 Mo. 458; Warnibold v. Schlich- Rawle, 408. See Ward v. Smith, 7
ting, 16 Iowa, 243; Murray v. Harri- Wall, 447.
son, 47 Barb. 484; Wilson V. Morgan, & Dale v. Richards, 21 D. C. 312;
4 Robert. 58; Strong v. Farmers', etc. Jennings v. Mendenhall, 7 Ohio St.
Bank, 4 Mich. 350; Wills v. Allison, 258.
4 Heisk. 385; Bond v. Greenwald, id. The court say in the last case
453; Caldwell v. Craig, 22 Gratt. 340. cited: "On a somewhat extensive
2 Trebilcock v. Wilson, 12 Wall, examination of the cases, it seems
687. to us that mere silence is held to be
3 Hart V. Flynn, 8 Dana, 190. See a waiver of objection in the case of
Lang V. Waters, 47 Ala. 624; McCune current bank notes, for the reason
V. Erfort, 43 Mo. 134. that they constitute the common
* Brown v. Simons, 44 N. H. 475; currency of the country, and are by
Ball V, Stanley, 5 Yerg. 199, 26 Am. all classes paid out and received as
Dec. 263; Noe v. Hodges, 3 Humph, money, which is a reason that does
162; Seawell v. Henry, 6 Ala. 226; not fully apply to bank checks. All
'Cummings v. Putnam, 19 N. H. 569; the cases, however, proceed on tlie
6Te Poel V. Shutt, 57 Neb. 592, 78 N. VV. Rep. 28&
682
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 268
ous payments have been made by the debtor to the creditor by
checks, and no objection to them has been raised, a tender by
check is sufficient, though it would be otherwise if the creditor
informed his debtor of an objection to continue receiving
them.* If a check is objected toon any other ground than that
it is not money the effect of the tender can only be got rid of by
a personal demand and a refusal to pay.- Where a note is
[455] payable to a bank in which the debtor has a deposit, his
check on such bank is a good tender;' but a note or other ob-
ligation of the creditor is not a legal tender. A tender for
part of an entire demand and set-off for the residue cannot
be pleaded.*
§ 268. How made. As a general rule the money must be
actually produced and placed within the power of the creditor
to receive it, unless he dispense with its production by express
declaration or other equivalent act.* A mere verbal offer to
principle that where all objection to
the proposed medium of payment is
waived, the tender is good, though
not made in coin; and the only dif-
ference between them is on the
question as to what shall be held to
be conclusive of such waiver."
1 Wright V. Robinson, 84 Hun, 173,
33 N. Y. Supp. 4r33: Mitchell v. Ver-
mont Copper Mining Co., 67 N. Y.
280; McGrath v. Gegner, 77 Md. 331,
26 Atl. Rep. 502, 39 Am. St. 415.
2 Daly V. Egan, 13 Vict. L. R. 81.
3Shipp V. Stacker, 8 Mo. 145.
"Lawful current money" of a
state is construed to mean money is-
sued by congress. Wharton v. Morris,
1 Ball." 124; McChord v. Ford, 3 T. B.
Mon. 166. " Current lawful money "
is the same. Lee v. Biddis, 1 Dall.
175. But "currency," where bank
notes are the only currency, does not
mean money. McChord v. Ford,
supra; Lange v. Kohne, 1 McCord,
115.
A tender in confederate money
was held not good, although it was
at the time the circulating currency
in the community. Graves v. Hard-
esty, 19 La. Ann. 186. See Parker v.
Broas, 20 id. 167; but see, also, Phil-
lips V. Gaston, 37 Ga. 16; Tate v.
Smith, 70 N. C. 685.
*Carj V, Bancroft, 14 Pick. 315, 25
Am. Dec. 393; Hallowell & A. Bank
V. Howard, 13 Mass. 235; Searles v.
Sadgrove, 85 Eng. 0. L. 639, 5 El. &
Bl. 639.
5 Pinney v. Jorgenson, 27 Minn, 26,
6 N. W. Rep. 376; Deering Harvester
Co. V. Hamilton, 80 Minn. 163, 83
N. W. Rep. 44; Te Poel v. Shutt, 57
Neb. 592, 78 N. W. Rep. 288; Brown
V. Gilmore, 8 Me. 107, 22 Am. Dec.
223; Ladd v. Patten, 1 Cranch C. C.
263; Thomas v. Evans, 10 East, 101;
Liebrandt v. Myron Lodge, 61 111. 81;
Dickinson v. Shee, 4 Esp. 68; Walker
V. Brown, 12 La. Ann. 266: Sands v.
Lyon, 18 Conn. 18; Strong v. Blake,
46 Barb. 227; Matheson v. Kelly, 24
Up. Can. C. P. 598; Holmes v. Holmes,
13 Barb. 137; Bakeman v. Pooler. 15
Wend. 637; Breed v. Hurd, 6 Pick.
356; Gilmore v. Holt, 4 id. 258; East-
land V. Longshom, 1 N. & McC. 194
Southworth v. Smith, 7 Cush. 891
Lohman v. Crouch, 19 Gratt. 331
§ 2GS.]
TENDEK.
6 S3
pay a certain sum does not constitute a tender.^ The cases
concur in the foregoing rule, but differ somewhat in its appli-
cation. Where there is a verbal offer of a particular [450]
sura, and the creditor insists on more being due in such man-
ner as amounts to a declaration that the offered sum would
not be received, the actual production of the money is not
necessary.2 The immediate departure of the creditor on such
an offer being made, or any intentional evasion of the debtor,
would seem to be equivalent to an express refusal of it, and
equally to excuse the production of the money.' So on a verbal
Dunham v, Jackson, 6 Wend. 22;
Mclntire v. Clark, 7 id; 330; Sargent
V. Graham. 5 N. H. 440, 33 Am. Dec.
469. See Champion v. Joslyn, 44 N.
Y. 653; Hill v. Place, 5 Abb. Pr. (N.
S.) 18, 7 Robert. 389; Borden v. Bor-
den, 5 Mass. 67, 4 Am. Deo. 32; Sliu-
gerland v. Morse, 8 Johns. 474;
Blight V. Ashley, 1 Pet. C. C. 15;
Thayer v. Brackett, 13 Mass. 450;
Gary v. Bancroft, 14 Pick. 315, 25
Am. Dec. 393.
1 Shank v. Groflf, 45 W. Va. 543, 33
S. E. Rep. 248; De Wolfe v. Taylor,
71 Iowa. 648, 33 N. W. Rep. 154;
Eastman v. Rapids. 31 Iowa, 590;
Camp V. Simon, 34 Ala. 126; Steele v.
Biggs, 22 111. 643; Hornby v. Cramer,
12 How.Pr. 490; Sheredine v. Gaul, 2
Dall. 190; Bacon v. Smith, 2 La. Ann.
441; Hunter v. Wa,rner, 1 Wis. 141.
See Harris v. Mulock, 9 How. Pr.
402; Hill v. Place, 7 Robert. 389.
2 Smith V. Old Dominion Building
& Loan Ass'n, 119 N. C. 257, 26 S. E.
Rep. 40; Bradford v. Foster, 87 Tenn.
11, 9 S. W. Rep. 195; Johnson v.
Garlichs, 63 Mo. App. 578: Graham
V. Frazier. 49 Neb. 90, 68 N. W. Rep.
367; Bender v. Bean, 52 Ark. 132, 13
S. W. Rep. 180, 341; Pinney v. Jor-
genson, 27 Minn. 26, 6 N. W. Rep.
376; Black v. Smith, Peake, 88; Jack-
son V. Jacob, 3 Bing. N. C. 869; Sands
V. Lyon, 18 Conn. 18; Read v. Gold-
ring, 2M. & S. 86; Finch v. Brook, 1
Scott, 70; Dauks, Ex parte, 2 De Gex,
M. & G. 936; Murray v. Roosevelt,
Anth. 101; Vaupell v. Woodward, 2
Sandf. Ch. 143; Stone v. Sprague, 20
Barb. 509; Dana v. Fiedler, IE. D.
Smith, 463; Slingerland v. Morse, 8
Johns. 474; Everett v. Saltus, 15
Wend. 474; Warren v. Mains, 7 Johns.
476; State v. Spicer, 4 Houst. 100;
Hazard v. Loring, 10 Gush. 207;
Strong V. Blake, 46 Barb. 227; Apple-
ton V. Donaldson, 3 Pa. 381.
In Dunham v. Jackson, 6 Wend.
23, it was held that a hesitating re-
fusal, based on a claim of more than
is due, will not dispense with the
actual production of the money.
Sargent v. Graham, 5 N. H. 440, 22
Am. Dec. 469; Harding v. Davies, 2
C. & P. 77.
3 Continental Ins. Co. v. Miller, 4
Ind. App.553, 30 N. E.Rep. 718: Adams
Exp. Co. V. Harris, 120 Ind. 73, 21 N.
E. Rep. 340, 16 Am. St 315, 7 L. K.
A. 214; West v. Averill Grocery Co.,
109 Iowa, 488, 80 N. W. Rep. 555;
Hurt V. Cook, 151 Mo. 417, 52 S. W.
Rep. 39G; Schayer v. Commonwealth
Loan Co., 163 Mass. 3J2, 39 N. E. Rep.
1110; Gilmore v. Holt, 4 Pick. 257;
South worth v. Smith, 7 Gush. 391;
Judd V. Ensign, 6 Barb. 258; Houbie
V. Volkening. 49 How. Pr. 169; Sands
V. Lyon, 18 Conn. 18; Raines v. Jones,
4 Humph. 490; Littel v. Nichols,
Hard. 60; Holmes v. Homes, 12 Barb.
137. But see Leatherdale v. Sweep-
stone, 3 C. & P. 342; Knight v. Ab-
684 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 268.
offer of a specified sum in legal tender notes in which the debt
might be paid, a declaration by the creditor that he would re-
ceive nothing but gold or silver would dispense with the act-
ual production of the offered money.' An absolute refusal to
receive the amount, or, in case of mutual executory contracts,
to do the act in consideration of which it is to be paid, is a
waiver of production.- But the debtor must have the money
to immediately comply with his offer; having it in a bag is
[457] no objection.' In some cases it is held that such a re-
fusal will not dispense with the actual production of the money;
that there must be some declaration or equivalent act to the
effect that the debtor need not offer it.* The sight of the
money may tempt the creditor to accept it.* The question
whether the production has been dispensed with is for the
jury, and if they find the facts specially and do not find the
fact of dispensation, the court will not infer it.^ The money
must be actually at hand and ready to be produced immedi-
ately if it should be accepted. It is not enough that a third
person has it on the spot and is willing to loan it, unless he
actually consents to do so for the purpose of the tender.^ At
bott, 30 Vt. 577; Thome v. Mosher, Walk. (Miss.) 369, 12 Am. Dec. 570.
20 N. J. Eq. 267, 36 Am. Rep. 542. Compare Sharp v. Todd, 38 N. J. Eq.
1 Chinn v. Bretches, 43 Kan. 316, 22 234.
Pac. Rep. 426; Hanna v, Rateldn, 43 * Thomas v. Evans, 10 East, 101;
111. 462; Hayward v. Hunger, 14 Douglas v. Patrick, 3 T. R 683; Dick-
Iowa, 516; Wynkoop v. Cowing, 21 inson v. Shee, 4 Esp. 68; Finch v.
III. 570. Brook, 1 Bing. N. C. 253; Leather-
2 Murray v. Roosevelt, Anth. 101; dale v. Sweepstone, 3 C. & P. 342;
Hazard v. Loring, 10 Cush. 267; Firth v. Purvis, 5 T. R. 432; Kraus
Vaupell v. Woodward, 2 Sandf. Ch. v. Arnold, 7 Moore, 59; Brown v.
143; Strong v. Blake. 46 Barb. 227; Gilmore, 8 Me. 107, 22 Am. Dec. 223;
Stone V. Sprague, 20 id. 509; Apple- Bakeman v. Pooler, 15 Wend. 637.
ton V. Donaldson, 3 Pa. 381; Dana v. 5 Finch v. Brook, supra.
Fiedler, 1 E. D. Smith, 463; Slinger- 6 id.; 2 Greenlf. Ev., ^ 603.
land V. Morse, 8 Johns. 474; Everett The burden of proving readiness
V. Saltus, 15 Wend. 474; Warren v. andability to pay is upon the debtor.
Mains, 7 Johns. 476; Thompson v. Ladd v. Mason, 10 Ore. 308; Park v.
Lyon, 40 W. Va. 78, 20 S. E. Rep. 812. Wiley, 67 Ala. 310.
3 Con way V. Case, 22 111. 127; Breed ''Sargent v. Graham, 5 N. H. 440,
V. Hurd, 6 Pick. 356; Davis v. Stone- 22 Am. Dec. 469; Bakeman v. Pooler,
street, 4 Ind. 101; Harding v.Davies, 15 Wend. 637; Breed v. Hurd, 6
2 C. & P. 77; Borden v. Borden, 5 Pick. 356; Eastland v. Longshorn, 1
Mass. 67, 4 Am. Dec. 32; Sucklinge N. & McC. 194
V. Coney, Noy, 74; Behaly v. Hatch,
§ 208.]
TENDEK.
685
an interview between the pLaintiff and the defendant the latter
was willing to pay £10, and a third person otl'ered to go up-
stairs and fetch that sum, but was prevented by the plaintiff
saying " he cannot take it." Such offer was held a good tender.*
A tender made by holding an unstated sum in hand, [-t.iS]
peremptorily rejected without inquiry as to amount, is good.-
1 Harding v. Davies, 2 C. & P. 77.
But in Kraus v. Arnold, 7 Moore, 59,
the defendant ordered A. to pay the
plaintiff £7 12s., and the clerk of the
plaintiff demanded £8, on which A.
said he was only ordered to pay £7
13s., which sum was in the hands of
B., and B. put his hand to his pocket
with a view to pulling out his pocket-
book to pay £7 12s., but did not do
so, by the desire of A. ; but B. could
not say whether he had that sum
about him, but swore he bad it in
his house, at the door of which he
was standing at the time. Held, not
a legal tender, because the money
was not produced.
And in Glasscott v. Day, 5 Esp. 48,
it was held the tender was not good
because the money was not in sight;
the witness supposed it was in the
desk, but never saw it produced;
and it did not appear that if the
creditor had been willing to accept
the money it could be immediately
paid; the money should be at hand
and capable of immediate delivery.
In Breed v. Kurd, 6 Pick. 356, a
witness told the plaintiff that the
defendant had left money with him
to pay his bill, and that if tlie plaint-
iff would make it right by deducting
a certain sum he would pay it, at
the same time making a motion with
his hand towards his desk, at which
he was then standing; he swore that
he believed, but did not know, that
there was money enough in his desk;
but if there was not, he would have
obtained it in five minutes if the
plaintiff would have made the de-
duction; but the plaintiff replied
that he would deduct nothing. Held,
not a tender.
2 State v. Spicer, 4 Houst. 100. It
appeared in this case that the par-
ties met, and the debtor, in his
wagon, which stopped on meeting
the creditor, said; "I've got the
money to pay you," specifying the
claim, and put his hand into his
pocket to take out the bag which
contained the money; while he was
doing this the creditor said, "I want
nothing to do with such a cut-throat
as you," and walked rapidly away.
The jury found that the debtor was
thei'eby prevented from producing
the money and offering it to the
creditor, and it was held a good ten-
der. Sands v. Lyon, 18 Conn. 18.
In Knight v, Abbott, 30 Vt. 577,
the defendant, desiring to make a
tender, said to the plaintiff as he
was passing in a wagon, " I want to
tender you this money for labor you
have done for me," at the same time
holding a sum in his hand equal to
his indebtedness, but not mention-
ing any amount; the plaintiff did not
reply, nor stop his team. Held, not
a good tender.
In Thorne v. Mosher, 20 N. J. Eq.
257, A. offered to pay money to B.,
holding her purse in her hand in
sight of B., who saw the purse, but
not the bills. A. opened the purse,
and was in the act of taking out the
bills, but stopped on account of the
refusal of B. to receive tlie money.
Held, that the offer was neither pay-
ment nor tender, but the refusal was
an excuse for not making a tender.
686 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 269.
To make a valid tender under a statute providing that an offer
in writing to pay a particular sura of money is, if not accepted,
equivalent to the actual production and tender of the money,
the party must have the ability to produce the money, and
must act in good faith. Such an offer does not deprive the
creditor of the right to a reasonable time in which to ascertain
the amount due, and to determine whether he will accept.^
§ 269. Where to be made. If a debt is payable at a partic-
ular place the creditor has a right to receive the money there.-
When payable at a bank, the designation of place imports a
stipulation that the holder will have the instrument on which
the money is payable at the bank to receive payment, and that
the debtor will have the funds there to pay it; and it is the
general usage in such cases to lodge the instrument with the
bank for collection. If the instrument is not there lodged,
and the debtor is there at maturity with the necessary funds
to pay it, he so far satisfies the contract that he cannot be
made responsible for any future damages, either in costs of
suit or interest for the delay.' Having money, howev^er, in a
bank where a note is payable is not a tender unless it is in
some way appropriated to the note.* A tender to the cashier
[•459] of the amount of a note payable at his bank, coupled
with a demand of the note, is not good, it not being there at
the time, and the money not being deposited nor afterwards
offered.'^ Where no place of payment is appointed the debt is
payable anywhere; and it is the duty of the debtor to seek the
creditor if within the state.® If the creditor is without the
^ Hyams v. Bamberger, 10 Utah, 1, Houbie v. Volkening, 49 How. Pr.
36 Paa Rep. 202. 169; Harris v. Mulock, 9 id. 402.
2 United States v. Gurney, 4 In the last case it appeared that the
Cranch, 338; Adams v. Rutherford, creditor went to the debtor's office to
13 Ore. 78, 18 Pac. Rep. 896. See § 214. receive payment. While in the act
3 Ward V. Smith, 7 Wall. 447; of counting one of several packages
Cheney v. Bilby, 20 C. C. A. 291, 74 of bank bills delivered to him by the
Fed. Rep. 52. debtor as payment, he suddenly left
* Myers v. Byington, 34 Iowa, 205. the office by reason of insulting
5 Balrae v. Wambaugh, 16 Minn, language addressed to him by the
116; Hill V. Place, 7 Robert. 389. See latter. It was held that the money
Rowe V. Young, 2 Brod, & Bing. 165; not being current coin, it would not
Bacon v. Dyer, 12 Me. 19; Wallace v. be a tender if the creditor objected
McConnell, 13 Pet. 136. to it for that reason; therefore to
6 Littell V. Nichols. Hardin, 66; constitute that money a tender, the
.§ 270.]
TENDER.
687
state the tender is dispensed with, and no riglits are lost by
the debtor's inability to make it.^ The publication of a notice
of a change in the place designated for payment of the princi-
pal of bonds does not affect their holders without actual notice
of such change.^
§ 270. Must be unconditional. A tender must bo uncondi-
tional,' or at least cannot be clogged by any condition to which
the creditor can have reasonable objection; ^ so that if he takes
the money and there is more due, he may still bring an action
for the residue.* An offer of a certain sum in full of a [400]
demand is not a good tender.^ But a tender is not vitiated by
being an offer of payment under protest. If the debtor abso-
debtor was obliged to give the cred-
itor time sufficient to ascertain
whether the money was such as lie
would be willing to receive instead
of coin; and the creditor having
cause to leave on account of the in-
sulting language before such exam-
ination was completed, the tender
was not sufficient; the debtor must
seek the creditor for that purpose.
See Mathis v. Thomas, 101 Ind. 119;
g214.
1 Buckner v. Finley, 2 Pet. 587;
Smith v. Smith, 25 Wend. 405; Hale
V. Patton, 60 N. Y. 233, 19 Am. Rep.
168; Allshouse v. Ramsay, 6 Whart.
331, 37 Am. Dec. 417; Gill v. Bradley,
21 Minn. 15; Gage v. McSweeney, 74
Vt. 370, 53 Atl. Rep. 960.
2Kelley v. Phenix Nat. Bank, 17
App. Div. 496, 45 N. Y. Supp. 533.
See Williamson County v. Farson,
101 111. App. 328, 199 111. 71, 64 N. K
Rep. 1086.
8 Rose V. Duncan, 49 Ind. 269; Jen-
nings V. Major, 8 C. & P. 61; Holton
V. Brown, 18 Vt. 224, 46 Am. Dec. 148;
Wagenblast v. McKean, 3 Grant's
Cas. 393; Cothren v. Scanlan, 34 Ga.
555; Pulsifer v. Shepard, 36 III. 513;
Shaw V. Sears, 3 Kan, 242; Hunter
V. Warner, 1 Wis. 141; Gibson v.
Lyon, 115U. S. 439, 6 Sup. Ct. Rep. 129.
* Connecticut Mut. L. Ins. Co. v.
Stinson, 86 111. App. 668; Be vans v.
Rees, 5 M. & W. 306; Richardson v.
Jackson, 8 id. 298; Wheelock v. Tan-
ner, 39 N. Y. 481; Foster v. Drew, 39
Vt. 51; Dedekam v. Vose, 3 Blatchf.
44. See Moynahan v. Moore, 9 Mich.
9; Hepburn v. Auld, 1 Cranch, 321.
5 Moore v. Norman, 52 Minn. 83, 53
N. W. Rep. 809, 38 Am. St. 526, 18 L.
R. A. 359; Beckman v. Birchard, 48
Neb. 805, 67 N. W. Rep. 784; Te Poel
V. Shutt, 57 Neb. 592, 78 N. W. Rep.
288; Mitchell v. King, 6 C. & P. 237;
Hartings v. Thorley, 8 id. 573; Jen-
nings V. Major, id. 61; Peacock v.
Dickerson, 2 id. 51, n. ; Benkard v.
Babcock, 27 How. Pr. 391; Hen wood
V. Oliver, 1 G. & D. 25, 1 Q. B. 409;
Bowen v. Owen, 11 id. 130; Wood v.
Hitchcock, 20 Wend. 47; Loring v.
Cooke. 3 Pick. 48; Roosevelt v. Bull's
Head Bank, 45 Barb. 579.
*> Shiland v. Loeb, 58 App. Div. 565,
69 N. Y. Supp. 11; L'Hommedieu v.
The H. L. Dayton, 38 Fed. Rep. 926;
Noyes v. Wyckoflf, 114 N. Y. 204, 21
N. K Rep. 158; Tompkins v. Batie, 11
Neb. 147, 7 N. W. Rep. 747, 38 Am.
Rep. 361 ; Boulton v. Moore, 14 Fed.
Rep. 922; Shuck v. Chicago, etc. R.
Co., 73 Iowa, 333, 35 N. W. Rep. 429;
Griffith V. Hodges, 1 C. & P. 419;
Strong V. Harvey. 3 Bing. 304; Che-
minant v. Thornton, 2 C. & P. 50;
688
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 270.
lutely oflPers to pay he does not vitiate the offer by protesting.*
There have been some intimations that even asking a receipt
[461] would vitiate a tender; and it is probable the require-
Thayer v. Braokett, 13 Mass. 450;
Mitchell V. King. 6 C. & P. 237; Wood
V, Hitchcock, 20 Wend. 47.
In the last case Cowen, J., said:
"It was clearly a tender to be ac-
cepted as the whole amount due,
which is holden to be bad by all the
books. The tender was also bad be-
cause the defendant would not allow
that he was ever liable for the full
amount of what ho tendered. His
act was within the rule which says
he shall not make a protest against
his liability. He must also avoid all
counter-claim, as of set-oflf against
part of the debt due. That this de-
fendant intended to impose the
terms, or raise the inference that the
acceptance of the money should be
in full and thus conclude the plaint-
iff against litigating all further or
other claim, the referees were cer-
tainly entitled to say. That the de-
fendant intended to question his
liability to part of the amount tend-
ered is equally obvious, and his ob-
ject was at the same time to adjust
his counter-claim. It is not of the
nature of a tender to make condi-
tions, but simply to pay the sum
tendered as for an admitted debt.
Interlarding any other object will
always defeat the effect of the act
as a tender. Even demanding a re-
ceipt or an intimation that it is ex-
pected, as by asking, 'Have you got
a receipt?' will vitiate. The demand
of a receipt in full would of course
be inadmissible."
The reason of this rule is obvious
where the debtor does not in fact
tender all that is due; for if a debtor
tenders a certain sum as all that is
due, and the creditor receives it,
under these circumstances it might
compromise his rights in seeking to
recover more; but if the same sum
was tendered unconditionally, no
such effect would follow. Sutton v.
Hawkins, 8 C, & P. 259. The reason
why a tender has so often been held
invalid when a receipt in full has
been demanded seems not to have
been merely because a receipt was
asked for, but rather because a part
was offered in full payment. See
Sanford v. Bulkley, 30 Conn. 344.
In Holton v. Brown, 18 Vt. 224, 46
Am. Dec. 148, it was held that a tender
to pay a note is vitiated by demand of
it, and refusing to accept a discharge
of the mortgage and a receipt for the
payment, the holder not being able
at the time to find the note. See
Wilder v, Seelye, 8 Barb. 408; Story
on Prom. Notes, § 106 et seq. ; §§ 243,
244; Balme v. Wambaugh, 16 Minn.
116.
In Robinson v. Ferreday, 8 C. & P.
753, it was held that a tender was
not vitiated by the person making it
saying, at the time, that it was all
that the debtor considered was due;
but if he offers the sum " as all that
is due," it is diflferent. Sutton v.
Hawkins, 8 C. & P. 259; Field v.
Newport, etc. R Co., 3 H. & N. 409;
Thorpe v. Burgess, 8 Dowl. P. C. 603.
And in Bowen v. Owen, 11 Q. B. 130,
a tenant sent to his landlord 26Z.,
with a letter in these words: "I
have sent with the bearer 26Z. to set-
tle one year's rent of Nant-y-pair."
The landlord refused to take it, say-
ing that more was due. Held, a good
tender.
1 Manning v. Lunn, 2 C. & K. 13;
Scott V. Uxbridge & R. R. Co., L. R.
1 C. P. 596: Sweny V. Smith, L. R. 7
Eq. 324. But see Wood v. Hitchcock,
20 Wend. 47, quoted from in the pre-
ceding nota
§ 270.]
TENDER.
G89
raent to give one stamped would have that effect;^ but it is be-
lieved that the tenderer may ask a simple receipt for what is paid."
At all events, if the creditor refuse the tender wholly on the
ground of more being due he cannot afterwards object thereto
because the debtor required a receipt.' A tender, however,
which is accompanied by a demand for a receipt in full is con-
ditional, and of course invalid.* A tender of money in [462]
An offer to the effect that " I am
willing to pay you the named sum to
avoid litigation; it is not due you,
but I am willing to pay," if accom-
panied by the money (which is not
necessary in Iowa) is not a good
tender. Kulins v. Chicago, etc. R.
Co., 65 Iowa, 528, 22 N. W. Rep. 661.
1 Laing v. Header, 1 C. & P. 257.
See Ryder V. Townsend, 7 D. & R. 119.
2 See 2 Par. on Cont. 645, note m;
Jones V. Arthur, 8 Dowl. P. G 442;
Bowen v. Owen, 11 Q. B. 130.
Under the code of California the
debtor may demand a receipt. Fer-
rea v. Tubbs, 125 Cal. 687, 58 Pac.
Rep. 308. And so in Georgia; but
nothing more than a receipt can be
demanded. De Graffenreid v. Menard,
103 Ga. 651, 30 S. E. Rep. 560.
A tender of taxes may be condi-
tioned upon the giving of a receipt,
the statute requiring that the officer
do that. State v. Central Pacifio' R.
Co., 21 Nev. 247, 22 Pac. Rep. 237.
* Richardson v. Jackson, 8 M. &
W. 298; Cole v. Blake, Peake, 179.
^Halpin v. Phenix Ins. Co., 118
N. Y. 105, 23 N. E. Rep. 482; Noyes v.
Wyckoff, 114 N. Y. 204, 21 N. E. Rep.
158; Frost v. Yonkers Savings Bank,
70 N. Y. 558, 26 Am. Rep. 627; Bowen
V. Owen, 11 Q. B. 130; Griffith v.
Hodges, 1 C. & P. 419; Glasscott v.
Day, 5 Esp. 48; Higham v. Baddely,
Gow, 213; Foord v. Noll, 2 Dowl. (N.
S.) 617; Finch v. Miller, 5 C. B. 428;
Sanford v. Bulkley, 30 Conn. 344;
Richardson v. Boston Chemical Lab-
oratory, 9 Met. 42; Perkins v. Beck,
4 Crauch C. C. 68; Hart v. Flynn, 8
Vou 1 — 44
Dana. 190; Holton v. Brown. 18 Vt.
224, 40 Am. Dec. 148; Siter v. Robin-
son, 2 Bailey, 274; Brooklyn Bank v.
DeGrauw, 23 Wend. 342, 35 Am. Dec.
569: Wood v. Hitchcock, 20 Wend. 47;
Eddy V. O'Hara. 14 id. 221; Clark v.
Mayor. 1 Keyes, 9; Thayer v. Brack-
ett, 12 Mass. 450; Wagenblast v. Mc-
Kean, 2 Grant's Cas. 393; Pulsifer v.
Shepard, 36 111. 513; Cothran v. Scan-
Ian, 34 Ga. 555; Shaw v. Sears, 3 Kan.
242; Hunter v. Warner, 1 Wis. 141;
Rose V. Duncan, 49 Ind. 269.
Where a tender was made in
"greenbacks," and refused ber-ause
payment in coin was demanded, it
was considered a valid tender, if the
court should be of opinion that the
debtor was entitled to pay in such
money. The money was paid into
court, to be drawn only on its order
"or by the plaintiff, if he shall accept
the same as tendered." The plaint-
iff obtained an order of the court
and drew the money, and the order
recited that he should not be preju-
diced by his acceptance and appro-
priation of the amount. Lindsay. J.,
said: "So long as the legal tender
notes remained in the hands of the
court, or its agent, the Fanners'
Bank, they constituted a standing
and continuous offer to Robb, which
he had the option at any time to ac-
cept ' as tendered.' But he could not
of his own volition take out and ap-
propriate such notes upon any other
conditions than those upon which
the tender was made. Nor had the
court tlie power to change or modify
these conditions. If it should finally
690
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 270.
payment of a debt, to be available, must be without qualifica-
tion; that is, there must not be anything raising an implication
that the debtor intends to cut off or bar a claim for any amount
beyond the sum offered.^ A tender of money to pay negoti-
able paper may be so far conditional as to be accompanied by
a demand for its surrender,^ unless the creditor asserts in good
be adjudged that the tender was suf-
ficient in law, the appellant would
be entitled to his costs, and the title
to the money on deposit would be
vested in Robb. Upon the other
Jiand, if the court should adjudge
that Robb was entitled to have his
note paid in gold coin, a judgment
specifically enforcing his contract
would be rendered, and Wells would
have the right to withdraw from the
hands of the court the legal tender
notes on deposit. Theruleis diflFerent
■where there is no controversy as to
the character of the money tendered :
but where the plaintiff claims a
larger amount than the defendant
concedes to be due, in such cases
the tender establishes the liability of
the party sued for the amount ten-
dered, and the plaintiif has a right
to accept that amount as a payment
pro tanto, and continue the litiga-
tion for the balance claimed, he being
responsible for costs subsequently
accruing, in case lie fails to recover
judgment for such balance or some
part thereof. Here it was all the
time in the power of Robb to waive
his objection to the character of the
money tendered and accept it in
satisfaction of his debt; but as it
was lawful money, as held recently
by the supreme court of the United
States (Knox v. Lee and Parker v.
Davis), it was not within the power
of the circuit court to permit him to
take possession of it as property, and
account to appellant for its value in
coin, nor to compel the latter to pay
it out upon any debt for less than its
face value. As the unauthorized
order of the court under which Robb
obtained possession of the money
tendered was made at his instance,
and contrary to the objections of
his debtor, he occupies no better at-
titude than he would have done had
he withdrawn the money from the
bank, as he had a right to do, under
the order directing the deposit to be
mada He must be held to have
waived objection to the character of
the money tendered, and to have ac-
cepted it as a payment of his debt."
Wells' Adm'r v. Robb, 9 Bush, 26.
iWood V. Hitchcock, 20 Wend. 47;
Roosevelt v. Bull's Head Bank, 45
Barb. 579; Wilder v. Seelye, 8 id. 408
Sanford v. Bulkley, 30 Conn. 344
Perkins v. Beck, 4 Cranch C. C. 68
Brooklyn Bank v. De Grauw, 23
Wend. 342, 35 Am. Dec. 569; Holton
v. Brown, 18 Vt. 224, 46 Am. Dec. 148;
Hart V. Flynn, 8 Dana, 190; Eddy
V. O'Hara, 14 Wend. 221; Clark v.
Mayor. 1 Keyes, 9; Cheminant v.
Thornton, 2 C. & P. 50: Strong v.
Harvey, 3 Bing. 304; Mitchell v.
King, 6 C. & P. 237; Brady v. Jones,
2 Dow. & Ry. 305; Benkard v. Bab-
cock, 27 How. Pr. 391; Rose v. Dun-
can, 49 Ind. 269; Finch v. Miller, 5
C. B. 428; Sutton v. Hawkins, 8 C. «&
P. 259.
2 Bailey v. Buchanan County, 115
N. Y. 297, 6 L. R A. 562, 22 N. E. Rep.
155; Strafford v. Welch, 59 N. H. 46;
Cutler V. Goold, 43 Hun, 516; Wilder
V. Seelye, 8 Barb. 408; Rowley v
Ball, 3 Cow. 303, 15 Am. Dec. 266;
Smith V. Rockwell, 2 Hill, 482; Han-
sard V. Robinson, 7 B. & C. 90. See
Story on Bills, §§ 448-9; Chitty oa
§ 270.]
TENDER.
691
faith that the sutn tendered is insufficient.^ The debtor may-
require that a pledge be surrendered.^ The rule as to such
paper is exceptional, to withdraw it from circulation and for
recourse to other parties.
The general doctrine in respect to tender is that no condition
can be annexed which, by acceptance, would preclude any ques-
tion which would otherwise be open to the creditor. He should
be at liberty to accept the tender, and to say he does not take
it in full satisfaction of his demand; or that he does not [403]
forego any right by its acceptance except to deny that so much
was paid, and such benefits to the tenderer as are consequent
by legal intendment. The party making the tender should be
content to allow the creditor to take the money, and get more
if the jury find him entitled to it; or to assert any other right
consistent with the mere acceptance of the money, and applying
it to the subject.' If, however, there is no dispute as to the
Bills, 438; Story oa Prom. Notes,
?§ 106, 112, 143. 244; Storey v. Krew-
son. 55 Ind. 397, 23 Am. Rep. 668;
Dooley v. Smith, 13 Wall. 604.
1 Moore v. Norman, 52 Minn. 83,
53 N. W. Rep. 809, 38 Am. St. 526, 18
L. R. A. 359.
2 Cass V. Higenbotam, 100 N. Y.
253, 3 N. E. Rep. 189; Loughborough
V. McNevin, 74 Cal. 250, 5 Am. St.
435, 14 Pac. Rep. 369, 15 id. 773; John-
son V. Cranage, 45 Mich. 14, 7 N. W.
Rep. 188; Johnson v. Garlichs, 63 Mo.
App. 578.
•''Beardsley v. Beardsiey, 29 C. C.
A. 538, 86 Fed. Rep. 16. See Jennings
V. Major, 8 C. & P. 61; Thayer v.
Brackett, 12 Mass. 450.
A party qualifies his tender when
he demands in return what, accord-
ing to his own theory of his rights,
he is strictly entitled to for the
money he pays, and even though
such theory is legally correct, if that
theory is questioned. This is illus-
trated by Loring v. Cooke, 3 Pick.
48. A tender was made to redeem
from an execution sale. The amount
tendered was not the subject of dis-
pute; but the debtor demanded a re-
lease which was not necessary to
cancel the sale, and the purchaser's
inchoate title; and a release had
been prepared by the tenderer ready
for execution. The purchaser re-
fused to execute it, and claimed to
hold his purchase to secure other
debts. This right was held not to
exist, as the English doctrine of
tacking was not recognized; but the
tender was invalidated by the de-
mand of a release, though if exe-
cuted it would have extinguished
no right which the purchaser could
have asserted. In the subsequent
case of Saunders v. Frost, 5 Pick.
259, 275, a tender was made on a
mortgage debt after the mortgagee
had taken possession to foreclose for
interest in arrear, the principal not
being due. The tender was of the
whole mortgage debt, including in-
terest computed to the date of the
tender, and not to the maturity of
the debt. The court held that as to
the principal the tender was not
good ; for the creditor had a right to
keep his debt at interest until the
692
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 270.
amount of the debt a tender may always be restricted by such
conditions as by the terms of the contract are precedent to or
simultaneous with the payment of the debt or proper to be
performed by the tenderee; ^ as that he shall discharge amort-
time appointed for payment. But
it was no objection to the tender in
respect to interest due that a larger
sum was tendered; nor that a dis-
charge of the mortgage was de-
manded; for since the statute enti-
tled the mortgagor to a discharge
on payment of the mortgage debt
the demand of such discharge was
only of the performance of a duty
imposed by law. So it seems that
the tender, as to interest, was not
rendered nugatory by being accom-
panied by a condition which was
only admissible when a tender
could rightfully be made of the
mortgage debt. It was sustained
because it was the duty of the mort-
gagee to inform the mortgagor that
possession was held only for the in-
terest due; and the mortgagee should
have shown a willingness to accept
payment of such interest.
In Storey v. Krewson, 55 Ind. 397,
23 Am. Rep. 668. the court held that
under a statute which requires a mort-
gagee of lands to discharge a mort-
gage of record, after having received
full payment, a mortgagor is not en-
titled to demand such discharge
when tendering such full payment;
that the mortgagee could not be re-
quired to do so merely upon a ten-
der of the amount as a condition to
his right to receive the amount.
Biddle, J., said: "When one party is
to perform an act, whose right does
not depend upon any act to be per-
formed by the other party, the ten-
der must be without condition, as
where money is to be paid without
condition. The current of author-
ities — indeed we believe it to be
quite uniform — holds that the party
bound to pay the money cannot
make a good tender upon the condi-
tion that the party to whom the
money is to be paid shall give him a
written receipt therefor; and in the
case of a non-commercial promissory
note the authorities are in conflict
whether a good tender can be made
upon the condition that the note
shall be surrendered; but in the case
of commercial paper the authorities
seem to be uniform that a tender
upon condition that the paper shall
be surrendered is good, because such
paper might be put in circulation
after payment, and innocent parties
become liable; not so, however, with
non-commercial paper; after pay-
ment by the maker it becomes harm-
less against him, wherever it may
go."
A tender to be good must not be
upon any condition prejudicial to
the party to whom it was made. See
Wheelock v. Tanner, 39 N. Y. 481;
Hepburn v. Auld, 1 Cranch, 831. D.
purchased some oats of F., who took
goods worth S^l-78 in part payment.
D. tendered $170 to F., telling him
that if he took $130 of the amount it
closed the whole business; and if he
took the $170 it settled the oat busi-
ness and left the account for the
goods standing; held not conditional;
D. merely explained his tender. Fos-
ter V. Drew, 39 Vt. 51.
A tender of the amount due on
a judgment, accompanied by a de-
mand for the assignment of the se-
curity or writ, will not entitle the
person making it to be subrogated to
the plaintiff's rights therein. Forest
Oil Co.'s Appeals, 118 Pa. 138, 12 Atl.
Rep. 442.
iHalpin v. Phenix Ins. Co., 118 N.
Y. 165, 23 N. E. Rep. 482; Johnson v.
270.]
TENDER.
C93
gao-e;^ return collateral security ;2 give a release;' or surrea-
der mortgaged chattels, if a reasonable time be given.* If the
holder of a note secured by mortgage claims them under an
oral assignment from the payee and the latter has warned the
maker not to pay the holder, the maker may require a written
assignment or release from the payee as a condition of a ten-
der.-^ A tender in payment of a mortgage is not conditional.'
But if a tender is made upon condition its acceptance is an ac-
ceptance of the condition."^ Thus a creditor who accepts money
offered on condition that it be received in full satisfaction of
a demand does so subject to the condition, notwithstanding he
may then or subsequently protest.^ In some of these cases
Cranage, 45 Mich. 14, 7 N. W. Rep.
188; Lamb v. Jeffrey, 41 Mich. 719, 3
N. W. Rep. 204; Brink v. Freoff, 40
Mich. 614.
1 Halpin v. Phenix Ins. Co., supra;
Wheelockv. Tanner, 39 N. Y. 481;
Salinas v. Ellis, 26 S. C. 337, 2 S. K
Rep. 121. See Jewett v. Earle, 53 N.
Y. Super. Ct. 349; Werner v. Tuch,
52 Hun, 269. 5 N. Y. Supp. 219.
2 Cass V. Higgenbotam, 100 N. Y.
253, 3 N. E. Rep. 189; Ocean Nat.
Bank v. Fant, 50 N. Y. 474; Lough-
borough V. McNevin, 74 Cal. 250, 5
Am. St. 435, 14 Pao. Rep. 369, 15 id.
773.
3 Saunders v. Frost, 5 Pick. 259.
* Brink v. Freoff, 40 Mich. 610.
5 Kennedy V. Moore, 91 Iowa, 39,58
N. W. Rep. 1066.
8 Davis V. Dow, 80 Blinn. 223, 83 N.
W. Rep. 50.
'^ St. Joseph School Board v. Hull,
73 Mo. App. 403; Rosema v. Porter,
112 Mich. 13, 70 N. W. Rep. 316; Pot-
ter V. Douglass, 44 Conn. 546; Wal-
ston V. Denny, 84 111. App. 417;
Adams v. Helm, 55 Mo. 468; Kronen-
berger v. Binz, 56 id. 121; Lee v.
Dodd. 20 Mo. App. 284; Kofoed v.
Gordon, 122 CaL 315. 54 Pac. Rep.
1115.
8 Treat v. Price. 47 Neb. 875, 66 N.
W. Rep. 834, citing Fuller v. Kemp,
138 N. Y. 231, 33 N. E. Rep. 1034, 20
L. R A. 785; Reynolds v. Empire
Lumber Co., 85 Hun, 470, 33 N. Y.
Supp. Ill; Donohue v. Woodbury, 6
Gush. 150, 52 Am. Dec. 777; Mc-
Daniels v. Lipham, 21 Vt. 222, To
the same effect are Nassoiy v. Tom-
linson, 148 N. Y. 326, 51 Am. St. 695,
42 N. E. Rep. 715; Bull v. Bull, 43
Conn. 455; Hilliard v. Noyes, 58 N.
H. 312; Brick v. Plymouth County,
63 Iowa, 462, 19 N. W. Kep. 304;
Hinkle v. Minneapolis, etc. R. Co., 31
Minn. 434, 18 N. W. Rep. 275; Frei-
berg V. Moffett, 91 Hun, 17. 36 N. Y.
Supp. 95; Anderson v. Standard
Granite Co., 92 Me. 429, 43 Atl. Rep.
21, 69 Am. St. 522; Ennis v. Pullman
Palace Car Co., 165 111. 161, 46 N, E.
Rep. 439; Lang v. Lane, 83 111. App.
543; Pollman Coal & Sprinkling
Co. V. St. Louis, 145 Mo. 651, 47 S. W.
Rep. 563; Logan v. Davidson, 18 App.
Div. 353, 45 N. Y. Supp. 961, affirmed
without opinion 162 N. Y. 624; Con-
necticut River Lumber Co. v. Brown,
68 Vt 239, 35 Atl. Rep. 56; Murphy
V. Little, 69 Vt. 261, 37 Atl. Rep. 968;
Ostrander v. Scott, 161 111. 339, 43 N.
E. Rep. 1089; Vorhis v. Elias, 54 App.
Div. 412, 56 N. Y. Supp. 134, 67 id.
1149; Lewinson v. Montauk Theatre
Co., 60 App. Div. 572, 69 N. Y. Supp.
1050; Hamilton v. Stewart, 105 Ga.
300, 31 S. E. Rep. 184.
694 COiSrVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 270.
checks or drafts sent by mail to the creditor " in full satisfac-
tion " or as " payment in full " were retained, and in some
of them the claims were disputed. But ordinarily the reten-
tion of a check inclosed in a letter which refers to the amount
as the balance due on accounts between the parties will not be
an accord and satisfaction so as to bar an action for the bal-
ance due.^ " It is only in cases where a dispute has arisen be-
tween the parties as to the amount due and a check is tendered
on one side in full satisfaction of the matter in controversy
that the other party will be deemed to have acquiesced in the
amount offered fey an acceptance and retention of the check." ^
If the amount of the claim is in dispute and the creditor ad-
vises his debtor that the amount for which his check was sriven
has been credited to his account, and has not been accepted in
full, the debtor will be deemed to have acquiesced in that ap-
plication unless he expresses to the creditor his dissent.* To
constitute the acceptance of less than is due an accord and
satisfaction of a disputed and unliquidated claim the money
must be tendered in satisfaction and the tender accompanied
witii such acts and declarations as make its acceptance a con-
dition to that end.*
[464] When mutual acts are to be done by two parties at the
same time and the right of each depends upon the performance
of the other, either may tender his part of the performance
upon the condition that the other discharges his duty; and
neither is compelled to perform unless the other does so also;
as when land is bargained and sold to be conveyed upon pay-
ment of the purchase-money. In such a case neither can b©
compelled to perform his part of the agreement except on the
performance by the other of his part; that is, the vendee can-
not demand the conveyance without tendering the purchase-
money; and the vendor cannot demand the purchase-money
1 Eames Vacuum Brake Co. v. Pros- 3 Strock v. Brigantine Transporta-
ser, 157 N, Y. 289. 51 N. E. Rep. 986; tion Co., 23 N. Y. Misc. 358, 51 N. Y.
McKay v. Myers, 168 Mass. 312, 47 N. Supp. 327; McKeea v. Morse, 1 C. C.
E. Rep. 98; Day v. Lea, 22 Q. B. Div. A. 237, 49 Fed. Rep. 253.
610. *Kingsville Preserving Co. v.
^ Eames Vacuum Brake Co. v. Pros- Frank, 81 III. App. 586; Lang v. Lane,
ser, supra; Hodges v. Truax, 19 Ind. 83 id. 543.
App. 651, 49 N. E. Rep. 1079 (review-
ing many cases).
271.]
TENDER.
095
without tendering the conveyance; and either may make a
good tender to the other upon the condition that he will per-
form his part of the agreement.^ If the performance of prece-
dent or contemporaneous conditions is refused the person whose
duty it is to pay has done all that is required of him when he
has made a tender; he is thereby excused from keeping it good.*
But where it is provided by statute that a tender shall be un-
conditional except for a receipt in full or delivery of the obliga-
tion, one who has completed the payment of the purchase-
money of land and is entitled to evidence of the title condi-
tions a tender by making it dependent upon the execution of a
conveyance.^
§ 271. Effect of accepting. Acceptance of a tender, when
made as full payment, has the effect of entire satisfaction in
case of a disputed claim.* But the acceptance of a proper
tender, accompanied by no such condition, does not pre- [-lOo]
elude the creditor from proceeding for more,^ An appeal is
1 Scott V. Beach, 172 111. 273, 50 N.
E. Rep. 196; Comstock v. Lager, 78
Mo. App. 390; Clark v. Weis. 87 111.
438, 29 Am. Rep. 60; Englebach v.
Simpson, 33 S. W. Rep. 506, 12 Tex.
Civ. App. 188; Wheelock v. Tanner,
39 N. Y. 486; Mankel v. Belscamper,
84 Wis. 218, 54 N. W. Rep. 500; Hal-
pin V. Phenix Ins. Co., 118 N. Y. 165,
23 N. E. Rep. 482; Englander v. Rog-
ers, 41 Cal. 420; Heine v. Tread well,
72 id. 217, 13 Pac. Rep. 503; Storey v.
Krevvson, 55 Ind. 397, 23 Am. Rep.
668.
2 Cannon v. Handley, 72 Cal. 133,
13 Pac. Rep. 315; Washburn v. Dewey,
17 Vt. 92; White v. Dobson, 17Gratt
262; McDaneld v. Kimbrell, 3 G.
Greene, 335.
3 De Graffenreid v. Menard. 103 Ga.
651, 30 S. E. Rep. 560; Elder v. John-
son, 115 Ga. 691, 42 S. E. Rep. 51.
*St. Joseph School Board v. Hull,
72 Mo. App. 403: Towslee v. Healy,
89 Vt. 522; Springfield & N. R, Co. v.
Allen, 46 Ark, 217; United States v.
Adams, 7 WalL 463; Jenks v. Burr,
56 111. 450; Draper v. Pierce, 29 Vt.
250; Cole v. Champlain Transport;^
tion Co., 26 Vt. 87; McDaniels v. Bank
of Rutland, 29 Vt. 230. 70 Am. Dec.
406; Adams v. Helm, 55 Mo. 468.
It is held in some cases that an un-
accepted tender is an admission that
there is a sum due the tenderee equal
to it, and this although it be defect-
ive or be made in a case where it is
not binding and cannot be pleaded.
Denver, eta R Co. v. Harp, 6 Colo.
420; CiUey v. Hawkins, 48 111. 309.
These cases are of doubtful authority,
because the legal effect of such a
tender is no more than a mere offer of
compromise. No doubt is entertained
that where a tender is made under a
mistaken belief by tlie party who
made it that the sum tendered was
due evidence is admissible to rebut
the inference that a debt was thereby
admitted. Ashuelot R. Co. v. Chesii-
ire R Co., 60 N. H. 356.
sHiggins v. Halligan, 46 111. 173;
Ryal v. Rich, 10 East, 47; Sleght v.
Rhinelander, 1 Johns. 192.
696
CONVENTIONAL LIQUIDATIONS AND DISCHAEGES. [§ 272.
not waived by the receipt of a pa3'^merit. The acceptance of a
sura tendered on account of a claim only extinguishes it when
it is all that the creditor is entitled to, or when it is received
as being so.^
§ 272. Must be kept good. Unless the conduct of the party
who is entitled to payment excuses the other from so doing^
he must keep his tender good; that is, the debtor must at all
times be prepared to meet a demand for money tendered ; if
he fails to do so he places himself in default and loses the ben-
efit of his tender.^ And the rule applies in chancery and at
law.* It is not necessary to keep for the creditor the identical
money tendered. The tenderer is at liberty to use it as his
own; all he is under obligation to do is to be read}'^ at all times
to pay the debt in current money when requested.®
iBenkard v, Babcock, 2 Robert.
175.
2 See g 268.
3 Middle States Loan, Building &
Construction Co. v. Hagerstown
Mattress & Upholstery Co., 82 Md.
506, 33 Atl. Rep. 886; Parker v. Beas-
ley, 116 N. C. 1, 21 S. E. Rep. 955. 33
L. R. A. 231; Shank v. Groff, 45 W.
Va. 543, 33 a E. Rep. 248; McDaniel
V. Upton, 45 111. A pp. 151; Beardsley
V. Beardsley, 29 C. C. A. 538, 86 Fed.
Rep. 16; Crain v. McGoon, 86 111. 431;
Sanders v. Peck, 131 id. 407, 25 N. E.
Rep. 508; Aulger v. Clay, 109 111.
487; Wyckoflf v. Anthony, 9 Daly,
417; Rainwater v. Hummell, 79 Iowa,
571, 44 N. W. Rep. 814; Wilson v.
McVey, 83 Ind. 108; Park v. Wiley,
67 Ala. 310; Wilder v. Seelye, 8 Barb.
408; State v. Briggs. 65 N. C. 159;
Bronson v. Rock Island, etc. R Co.,
40 How. Pr. 48; Mohn v. Stoner, 14
Iowa, 115, 11 id. 30; Warrington v.
Pollard, 24 id. 281, 95 Am. Dec. 727;
Kortright v. Cady, 23 Barb. 490, 5
Abb. Pr. 358: Brooklyn Bank v. De-
Grauw, 23 Wend. 342, 35 Am. Dec,
569; Pulsifer v. Shepard, 36 111. 513;
Nelson v. Oren, 41 111. 18; Cullen v.
Green, 5 Harr. 17; Clark v. Mullenix,
11 Ind. 532; Jarboe v. McAtee, 7 B.
Mon. 279; Livingston v. Harrison, 3
E. D. Smith, 197; Call v. Scott, 4
Call, 402; Mason v. Croom, 24 Ga.
211; Brock v. Jones, 16 Tex. 461;
Webster v. Pierce, 35 111. 158; Wood
V. Merchants', etc. Co.. 41 III. 267;
Suver V. O'Riley, 80 111. 104; Haynes
V. Thorn, 28 N. H. 380; Nantz v.
Lober, 1 Duv. 304; Hay ward v.
Hague, 4 Esp. 93; Pierse v. Bowles, 1
Stark. 323; Spybey v. Hide, 1 Camp.
181; Rivers v. Griffiths, 1 D. & Ry.
215; Coles v. Bell, 1 Camp. 478, note;
Coore v. Callaway, 1 Esp. 115.
4 De Wolf V. Long, 7 111. 679; Doyle
V. Teas, 5 111. 202; Brooklyn Bank v.
De Grauw, 23 Wend. 342, 35 Am, Dec.
569; Stow v. Russell, 36 111. 18; Mo-
Daniel v. Upton, 45 111. App. 151,
(holding that the rule applies to jus-
tices' courts).
A plaintiff failing in his suit in
equity after tender and deposit of
money in court brought error, and
pending the proceedings in error
withdrew the deposit; held, not a
waiver of error. Vail v. McMillan,
17 Ohio St. 617.
6 Cheney v. Bilby, 20 C. C. A, 291,
74 Fed. Rep. 52; Thompson v, Lyon,
40 W, Va, 87, 20 S, E. Rep. 812; Cur-
tiss V. Greenbanks, 24 Vt. 536. But
§ 272.] TENDER. 697
A refusal by the debtor, after a tender, to pay the money
tendered on demand of the creditor deprives the offer [460]
of all legal availability and effect.^ For this purpose the
debtor should keep the money in his own possession. A de-
posit of it with a third person for the creditor, with or with-
out giving him notice thereof, will not exempt him from this
necessity ; for the creditor will be under no obligation to apply
to the depositary for it. If he thinks proper to accept the ten-
der, he may call on the debtor himself for it. In that case,
unless the debtor pays or tenders the sum, he will lose the
benefit of the previous tender.^ Hence the debtor is entitled
to the benefit of his tender if he is ready with the money on a
demand made to himself personally, although he may have
made the tender by his attorney.'
The demand for the money after a tender and refusal must
be of the precise sum tendered,* and must be made by some
one authorized to receive it and give the debtor a discharge.*
Where the tender had been made by two persons, demand on
one was sufficient.^ If money is tendered with which the
debtor has a right then to discharge the debt, and sufficient to
satisfy it, he is not to bear the loss of its subsequent depreci-
ation.''
see Quynn v. Whetcroft, 3 Harr. & ^Coles v. Bell, 1 Camp. 478, note;
McH. 353; Roosevelt v. Bull's Head Coore v, Calloway, 1 Esp. 115.
Bank, 45 Barb. 579. «Peirse v. Bowles, 1 Stark. 52a
1 Nantz V. Lobar, 1 Duval, 304; A letter, demanding payment of a
Rose V. Brown, Kirby, 293, 1 Am. debt, sent'to the debtor's house, to
Dec. 22. which an answer is returned that
2 Rainwater v. Hummell, 79 Iowa, the demand should be settled, was
571, 44 N. W. Rep. 814; Town v. held to be sufficient evidence of a
Trow, 24 Pick. 168. demand on an issue of a subsequent
3 Berthold v. Reyburn, 37 Ma 586. demand and refusal to a plea of
A defendant's attorney having made tender. Hay ward v. Hague, 4 Esp. 93.
a tender the plaintiff's attorney sub- A tender may lose its effect by
sequently agreed to take it, but it mutual waiver, as where afterward
was held this assent was not such a the debtor, at the suggestion of the
demand as would avoid the tender, creditor, consents to retain the
The demand for such a purpose money. He cannot afterwards set
must be made upon the debtor per- it up as a defense. Terrell v. Walker,
sonally. 65 N. C. 91.
*Spybey v. Hide, 1 Camp. 181; 'Anonymous, 1 Hayw. 183. See
Rivers v. Griffiths, 1 Dow. & Ry. 215. Jeter v. Littlejohn, 3 Murph. 18G.
698
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 273.
[467] §273. Waiver and omission of tender on sufficient
excuse. There is probably no difference in respect to the effect
of stopping interest as damages, based on default, between an
actual tender or tender with some punctilio waived and a
readiness to pay, and a tender altogether prevented by the
conduct of the creditor; as, for example, by his absence or
concealment. For this effect it is only needful to negative
default.^ Where, however, the debt bears interest by agree-
ment of the parties after it is payable, an actual tender is
doubtless essential to stop interest unless the creditor pre-
vents it by some fraudulent evasion.^ Where a tender is made
to the creditor, not in currency which he is bound to receive,
but in bank bills current at par as money, and not objected to
on that account; or is made by a check on a bank, assented to
as a mode of payment, the offer is a sufficient tender. And
where there is a verbal offer to pay and the debtor is prepared
to make his offer good, but omits to produce the money to
the view of the creditor because the latter says it need not
be produced as he will not receive it, the proffer is in sub-
stance and legal effect a tender.^ The law interprets the con-
duct of the parties in the ceremony of tender according to their
apparent intentions, and determines its sufficiency upon the
objections then stated. We have seen that certain incidents,
such as demanding a receipt for what is paid, or change where
there is an offer of a larger amount, or bank bills instead of
money which is legal tender, must be specially objected to at
the time. Silence is a tacit waiver of such objections. Other
objections may also be waived by implication on the maxim
of expressio unius est exclusio alterius. A general rule on this
subject is that if a tender is refused on a specific ground the
1 Thompson v. Lyon, 40 W. Va. 87,
20 S. E. Rep. 813; Thorne v. Mosher,
20 N. J. Eq. 257.
2 Gil more v. Holt, 4 Pick. 258;
South worth v. Smith, 7 Gush. 391;
Cheney v. Bilby, 20 G. C. A. 291, 74
Fed. Rep. 52.
3 Stephenson v. Kilpatrick, 166 Mo.
262, 267, 65 S. W, Rep. 773: Holmes
V. Holmes, 9 N. Y. 525; Hall v. Nor-
walk F. In& Co., 57 Conn. 105, 17
Atl. Rep. 356; Roe v. State, 83 Ala.
68, 3 So. Rep. 2; McDaneld v. Kim-
brell, 3 G. Greene, 335; Manhattan
L. Ins. Co. V. Smith, 44 Ohio St. 156,
58 Am. Rep. 806, 5 N. E. Rep. 417;
Mathisv. Thomas, 101 Ind. 119; Hoff-
man V. Van Diem en, 63 Wis. 362, 21
N. W. Rep. 542; Sharp v. Todd, 38 N.
J. Eq. 324; Duffy v. Patten, 74 Me.
396; Koon v. Snodgrass, 18 W. Va..
32a See §268.
§ 2T4.]
TENDEK.
G'JO
creditor will not be permitted afterwards to raise any otlier
objection which, if stated at the time it was made, could have
been obviated.^
§ 27i. Tender must be pleaded and money paid into court.
If the money tendered is not demanded by the creditor, [468]
and he brings suit, the defendant must plead the tender, and
his plea must be accompanied by payment of the money into
court for the creditor,- unless the effect of the tender is merely
the extinguishment of a lien without discharging the debt, in
Avhich case payment into court is not necessary.' It is also un-
necessary if it is merely desired to stop interest;* and so where
there has been a breach of the vendor's contract to put the
1 Hull V. Peters, 7 Barb. 331 ; Car-
man V. Pultz, 21 N. Y. 547; Keller v.
Fisher. 7 Ind. 718; Mitchell v. Cook,
29 Barb. 243; Haskell v. Brewer, 11
Me. 258; Hay ward v. Munger, 14
Iowa, 516; Graves v, McFariane, 2
Cold. 167; Bradshawv. Davis, 12 Tex.
386; Nelson v. Robson, 17 Minn. 284;
Rudulph V. Wagner, 36 Ala. 698;
Stokes V. Recknagel, 38 N. Y. Super.
Ct. 368; Rlck-er v. Blanchard, 45 N.
H. 39; Abbot v. Banfield, 43 id. 152;
Schroeder v. Pissis, 128 Cal. 209, 60
Pac. Rep. 758; Rickettsv. Buckstaff,
_ Neb. , 90 N. W. Rep. 915.
If a tender of money which the
creditor refused is left with him
against his wish, and he declines to
give it up when called for, it will be
sufficient. Rogers v. Rutter, 11 Gray,
410.
2 Colby V. Reed, 99 U. S. 560; Mat-
thews v. Lindsay, 20 Fla. 962; Allen
V. Cheever, 61 N. H. 32; Halpin v.
Pheuix Ins. Co., 118 N. Y. 165, 23 N.
E. Rep. 482; Coghlen v. South Caro-
lina R. Co., 32 Fed. Rep. 316; Morri-
son V. Jacoby, 114 Ind. 84, 14 N. E.
Rep. 546, 15 id. 806; Roberts v. White,
146 Mass. 256, 15 N. E. Rep. 568;
Park V. Wiley, 87 Ala. 310; Frank v.
Pickens, 69 id. 369; Goss v. Bo wen,
104 Ind. 207, 2 N. E. Rep. 704; Fer-
oald V. Young, 76 Me. 356; Jenkins
V. Briggs, 65 N. C. 159; Ciaflin v.
Hawes, 8 Mass. 261; Harvey v. Hack-
ley, 6 Watts, 264; Nelson v, Oren, 41
111. 18; Brown v. Ferguson, 2 Denio,
196; Sheriden v. Smith, 2 Hill, 538;
Livingston v. Harrison, 2 E. D. Smith,
197; Robinson v. Gaines, 3 Call, 243;
Hume V. Pepioe, 8 East, 168; Giles
V. Hartis, 1 Ld. Raym. 254; Becker
V. Boon, 61 N. Y. 317: Karthaus v.
Owings. 6 Har. & J. 134: Griffin v.
Tyson. 17 Vt. 35; Cullen v. Green, 5
Harr. 17; Mason v. Croom, 24 Ga, 2l 1 ;
Brock V. Jones, 16 Tex. 461: Clark v.
Mullenix, 11 Ind. 532; Marine Bank
V. Rushmore, 28 III. 463; Webster v.
Pierce, 35 111. 158; Warrington v. Pol-
lard, 24 Iowa, 281, 95 Am. Dec. 727;
Jarboe v. McAtee, 7 B. Mon. 279; De
Goer v. Kellar. 2 La. Ann. 496; Alex-
andrie v. Saloy, 14 id. 327; Call v.
Scott, 4 Call, 402; State v. Briggs, 65
N. C. 159; National Machine & Tool
Co. v. Standard Shoe Machinery Co.,
181 Mass. 275, 63 N. E. Rep. 900. See
Terrell v. Walker, 65 N. C. 91 ; and for a
construction of the code of Oregon,
see Holladay v. HoUaday, 13 Ora 523,
536, U Pac. Rep. 260, 12 id. 821.
3 Cass v. Higenbotam. 100 N. Y. 248,
3 N. E. Rep. 189. See § 277.
* Ferrea v. Tubbs, 125 Cal. 687, 58
Pac Rep. 308.
700 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 275.
vendee of land into possession, the former having told the ven-
dee that he would not comply with the contract.^ And if the
vendor puts himself in a position to make it appear that a
tender of the purchase price would be refused if made, the ven-
dee may plead an offer to bring the money into court, and
may have specific performance.^ If there is uncertainty as to
the amount due the plaintiff may have specific performance
by pleading readiness to bring the money into court whenever
the sum is liquidated.^ The payment made before trial is final ;
the debtor cannot speculate on the effect of the evidence and
add to the sum paid after the trial has begun.* If the plead-
ings do not object to the failure to allege payment into court
the money may be paid in during the trial, and, in the absence
of an objection in the record, the appellate court will assume
that it was so paid.^
§ 275. Effect of plea of tender. The plea of tender is a
conclusive admission that the sum tendered is due;** and if
the money is not paid into court the plaintiff may sign judg-
ment." But the tender and plea go no further than to admit
the contract or duty sued upon, and the right of the plaintiff to
the sum paid in. The defendant may contest the plaintiff's
right to anything beyond that sum upon any ground consist-
ent with an admission of the original contract or transaction.
1 Irwin V. Askew, 74 Ga. 581. T. 561, 23 N. R Rep. 1106; Voss v.
2 Kerr v. Hammond, 97 Ga. 567, 25 McGuire, 26 Mo. App. 452; Kansas
S. E. Rep. d'67. City Transfer Co. v. Neiswanger, 27
3 Id.; Irvin v, Gregory, 13 Gray, id. 356; Schnur v. Hickox, 45 Wis.
215. 200; Monroe v. Chaldeck, 78 111. 429;
4 Frank v. Pickens, 69 Ala. 369. Roosevelt v. New York & H. R. Co.,
A payment at the time of filing the 30 How. Pr. 226; Currier v. Jordan,
answer will not affect the costs un- 117 Mass. 260; Ruble v. Murray, 4
less there is a specification of the Hayw. 27; Huntington v. American
amount paid on the claim and for Bank, 6 Pick. 340; 2 Pars, on Cont.
costs. The Good Hope, 40 Fed. Rep. 638, note. But see Clarke v. Lyon
60a County, 7 Nev. 75.
6 Halpin v. Phenix Ins. Co., 118 N. ' Chapman v. Hicks, 2 Dowl. P. C.
Y. 165, 23 N. E. Rep. 482. 641; Monroe v. Chaldeck, 78 IlL 429.
6 McDaniel v. Upton, 45 111. App. See Knox v. Light, 12 111. 86; Sloan
151; Illinois Central Co. v. Cole, 62 v. Petrie, 16111. 262; Marine Bank v.
id. 480; Noble v. Fagnant, 162 Mass. Rush more, 28 111. 463; Webster v.
275, 286. 38 N. E. Rep. 507; Giboney Pierce, 85111. 158; Stow v. Russell, 36
V. German Ina Co., 48 Mo. App. 185; IlL 35; Reed v. Woodman, 17 Me. 4a
Taylor v. Brooklyn E. R. Co.. 119 N.
§ 275.]
TENDER.
701
He may insist upon the statute of limitations, payment beyond
the sum tendered or other defense.^ He cannot claim in a
motion for arrest of judgment that the complaint is so defect-
ive as not to authorize the recovery of any sum.- It has been
held that an answer under the code must allefre that the
money has been brought into court; and if it omits this alle-
gation it does not state facts sufficient to constitute a defense
and the plaintiff may avail himself of the objection on the
trial;' it must also be alleged that the money is brought into
court for the other party's use and benefit; it is not enough to
say for his use.^ And if issue be joined on the plea of ten-
der, where the money has not been brought into court, [469]
it has been held that judgment should be given for the plaint-
'iff, notwithstanding a verdict in favor of the defendant on that
issue.^ But in other cases the omission to pay the money into
court has been treated as an irregularity; and if the plaintiff
accept the plea and reply thereto without receiving notice that
the money has been paid in he waives the irregularity.^ The
1 Cox V. Parry, 1 T. R. 464; Reid v.
Dickons, 5 B. & Ad. 499; Meager v.
Smith, 4 id. 673; Spalding v. Vander-
cook, 2 Wend. 431; Wilson v, Doran,
110 N. Y. 101, 17 N. E. Eep. 688;
Griffin v. Harriman, 74 Iowa, 436, 38
N. W. Rep. 139; Young v. Borzone,
26 Wash. 4, 20, 65 Pac. Rep. 13.5.
2 Wilson V. Chicago, etc. R, Co., 68
Iowa, 673, 27 N. W. Rep. 916.
3 Becker v. Boon, 61 N. Y. 417. See
last section.
The notice of payment into court
after suit which is required by the
New York code is not waived by fail-
ing to return an answer pleading
tender before suit or to otherwise
raise the question before trial Wil-
son V. Doran, 110 N. Y. 101, 17 N. E,
Rep. 688.
* Phoenix Ins. Co. v. Overman, 21
Ind, App. 516, 52 N. E. Rep. 771.
*Claflin V. Hawes, 8 Mass. 261.
■ « Woodruff V. Trapnall, 12 Ark. 640;
Sheriden v. Smith, 2 Hill, 5,3S-, Shep-
herd V. Wysong, 3 W. Va. 46; Roose-
velt V. New York & H, R Co., 30
How. Pr. 226.
In the last case the defendant set
up in the answer a tender without
paying the money into court. This
answer was accepted, and the plaint-
iff afterwards applied to the court
for an order requiring the defendant
to pay to the plamtiff the sum ten-
dered, under a provision of the code
that •' when the answer of the de-
fendant express!}'-, or by not deny-
ing, admits part of the plaintiff's
claim to be just, the court, on mo-
tion, may order defendant to satisfy
that part of the claim, and may en-
force the order as it enforces a judg-
ment or provisional remedy.'' The
tender was held to be such an ad-
mission. The court say: "The
money tendered in this case was
not paid into court, and it is to be
inferred from the fact that the an-
swer is treated as part of the plead-
ings that it is accepted witiiout the
money being paid in. On the facts
702 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 275.
technical rules governing pleas of tender in actions at law do
not apply in equity. Upon a bill to enforce specific perform-
ance of an agreement to accept a named sum of money in sat-
isfaction of a debt secured by pledged property a tender is
well pleaded by alleging readiness, willingness and ability to
pay the amount due or to bring it into court to be paid ujDon
transfer of the collateral.*
The plaintiff is entitled to the money paid into a court of
law, with a plea of tender, in any event.^ He may take it out,
though he replies that the tender was not made before action
brought.' The fact that more is paid than is due, or that no
payment was necessary for the protection of the rights of the
party who paid, does not give him the right to withdraw the
money or any part of it.* But the rule that the plaintiff is en-
titled absolutely to the amount tendered and paid into court
has been held not to apply to an action brought to recover a
penalty or other fixed amount, where, unless the plaintiff re-
covers the amount of the penalty or fixed sum, he is not en-
titled to judgment.^ Nor is it applicable to money paid into
court by the plaintiff on a bill in equity to redeem, where the
defendant for whom such money is paid successfully contests
the right to redeem.^ In such an action the plaintiff paid in,
before me I must treat the plea of 15 Pac. Rep. 691; Sweetland v. Tut-
tender as sufficient, although the hill, 54 111. 215; Munk v. Kanzler, 26
money has not been paid into court. Ind. App. 105 58 N. E. Rep. 543;
But if the tender was irregular for Martin v. Bott, 17 Ind. App. 444, 46
thereasonstated, the admission of the N. E. Rep. 151; Beil v. Supreme
justice of the plaintiff's claim would Council American Legion of Honor,
be none the less distinct and une- 42 App. Div. 168, 58 N. Y. Supp. 1049.
qui vocal." See also Merritt v. See Ruble v. Murray, 4 Hayw. 27.
Thompson, 10 How. Pr. 428; Thurston If money paid into court in a suit
V. Marsh, 5 Abb. Pr. 389. for unliquidated damages is taken
1 Chicora Fertilizer Co. v. Dunan, out in good faith by the plaintiff's
91 Md. 144, 46 Atl. Rep, 347, 50 L. R. solicitor and paid to his client the so-
A. 401; Zebley v. Farmers' Loan & licitor cannot be compelled to repay
Trust Co., 139 N. Y. 461, 34 N. E. Rep. it after his client's death. Davys v,
1067. Richardson, 21 Q. B. Div. 208.
2 Foster v. Napier, 74 Ala. 393; Tay- 3 Le Grew v. Cooke, 1 Bos. & PuL
lor V. Brooklyn E. K Co., 119 N. Y. 332.
561, 23 N. E. Rep 1106; Kansas City ^Fox v. Williams, 92 Wis. 320, 66
Transfer Co. v. Neiswanger, 27 Mo. N. W. Rep. 357.
App. 356; Dillenback v. The Ross- •"' Canastota & M. Plank R. Co. v.
end Castle. 30 Fed. Rep. 462; Sup- Parkill, 50 Barb. 601.
ply Ditch Co. v. Elliott, 10 Colo. 327, « Putnam v. Putnam, 13 Pick. 129.
275.]
TENDER.
ro3
under order of the court, a sum previously tendered; in the
meantime he had failed to keep his tender good, and judgment
was given for the defendant for that reason. The plaintiff
was then entitled to withdraw the raone}' except so much as
might pay the defendant's costs.^ By withdrawing money
paid into court the plaintiff accepts it for the purposes for
which it was paid ; he cannot claim that it was merely pay-
ment on account.^
In this case Shaw, C. J., said: "There
is no analogy between the payment
of money into court in a common-
law action of debt or assumpsit and
a like payment upon a bill in equity
to redeem under our statute, and
hence the authorities applicable to
the former case afford no rule gov-
erning the present. By payment
into court, in an action claiming
debt or damages, the defendant ad-
mits, in the most formal manner, his
absolute liability to that sum, and by
the form of the rule or plea oflfei's it
in satisfaction and discharge of such
admitted liability. If not accepted
it is paid into court for the plaintiflf's
use, and the defendant derives the
full benefit of it as if paid to and ac-
cepted by the plaintiff himself, be-
cause it operates as a bar pro tanto
to all claims in respect to such sum.
It is therefore upon the strongest
reason held that such payment shall
be deemed absolute, and the party
shall not be permitted to draw it in
question on the ground of equity or
mistake, or any ground except fraud
or imposition.
" But the character of a payment
of money into court on a bill in
«quity to redeem a mortgage is en-
tirely different. It is in its nature
•entirely provisional; it is an offer to
pay in discharge of a debt secured
by mortgage on real estate, the pur-
pose of which is to release such real
estate from the incumbrance. But
the defendant contests the right to
redeem; alleges that, by force of law
and the lapse of time, the mortgage
is foreclosed, that she has become
the absolute owner of the estate, and
of course that there is no longer any
debt secured bj' mortgage, and, con-
sequently, that she has no claim to
the money offered in satisfaction of
such debt This defense prevails,
and the conclusion of law is that the
defendant was right in rejecting the
money tendered and not releasing
the estate. She cannot now be al-
lowed to claim this money against
her own formal actshowing that she
has no title to it. Nor ought the
plaintiffs to be bound by a provis-
ional offer of money to redeem an
estate, where it appears that they
cannot redeem, and the paj^ment
cannot avail them for the only pur-
pose for wliich the money was of-
fered."
1 Dunn V. Hunt, 76 Minn. 196, 78
N. W. Rep. 1100.
2 Haeussler v. Duross, 14 Mo. App.
103; Turner v. Lee Gin & Machine
Co., 98 Tenn. 604, 41 S. W. Rep. 57;
Gardner v. Black. 98 Ala. 638, 12 So.
Rep. 813; Hanson v. Todd, 95 Ala.
328, 10 So. Rep. 354; Chne v. Rude-
sill, 126 N. C. 523, 36 S. E. Rep. 36.
Compare Spaulding v. Vandercook,
2 Wend. 431; Sleght v. Rhinelander,
1 Johns. 192; Johnston v, Columbian
Ins. Co., 7 Johns. 315. The opinion
in the Tennessee case cited contains
a summary of the practice under the
old procedura
Y04 CONVENTIONAL LIQUIDATIONS AND DISCHAKGE8. [§§ 276, 277.
[470] § 276. Effect of tender when money paid into court.
A mere tender of a sufBcient sura only has the effect to stop
interest and protect the debtor against subsequent costs. It
does not discharge the debt.^ But when the debtor has kept
the tender good, and, on being sued, regularly pleads it and
brings the money into court, it accomplishes such discharge
[471] whether the action proceeds to judgment or not. If the
action abate or be withdrawn, the defendant in a subsequent
action may plead the tender and payment into court in the
first action; and if these facts are established he will be en-
titled to judgment.^
§277. Effect of tender on collateral securities. A suffi-
cient tender, however, will discharge all liens and collateral
securities; and for this effect it need not be kept good, nor be
brought into court.' Thus, where a mortgage of real estate is
a mere security for the debt and the legal title remains in the
mortgagor precisely the same after as before the debt is due,
1 Ferrea v. Tubbs, 125 Cal. 687, 58
Pac. Rep. 308; Ruppel v. Missouri
Guarantee Savings & Building Ass'n,
158 Mo. 618, 59 S. W. Rep. 1000;
Wright V. Robinson, 84 Hun, 173, 32
N. Y. Supp. 463; Law v. Jackson. 9
Cow. 641 ; Carley v, Vance, 17 Mass.
389; Haynes v. Thorn, 28 N. H. 386,
400; Barnard v. Cushman, 35 IlL 451;
Raymond v. Bearnard, 12 Johns. 274,
7 Am. Dea 317; Coit v. Houston, 3
Johns. Cas. 243; Jackson v. Law, 5
Cow. 248; Cornell v. Green, 10 S. &
R 14. See Jeter v. Littlejohn, 3
Murph. 186: Staat v. Evans, 35 111.
455; Teass' Adm'r v. Boyd, 29 Mo.
131; Wheeler v. Woodward, 66 Pa.
158; Pennsylvania Co. v. Dovey, 64
id. 260; Dixon v. Clark, 5 C. B. 365
Waistell v. Atkinson, 3 Bing. 289
Johnson v. Triggs. 4 G. Greene, 97
Freeman v. Fleming, 5 Iowa, 460
Shant v. Southern, 10 id. 415; Mohn
V. Stoner, 11 id. 30; Hayward v. Hun-
ger, 14 id. 516.
2 Robinson v. Gaines, 3 Call, 24a
See Warder v. Arell, 2 Wash. (Va.)
282, 1 Aiii. Dec. 48a
Keys V. Roder, 1 Head, 19, was an
action of debt commenced in a jus-
tice's court. It was held that a mere
offer by the defendant to the plaint-
iff of the sum claimed before the
issuance of the warrant could not be
pleaded as a valid tender in bar of
the action. The money should have
been produced and offered also at the
time of the trial before the justice;
and upon appeal to the circuit court,
it should have been brought into
that court at the time of filing the
papers, and still held ready and pro-
duced as a continuous offer. A mere
offer of the amount to the plaintiff
by the defendant's counsel, in the
progress of the argument in the cir-
cuit court, was not sufficient.
^Schayer v. Commonwealth Loan
Co., 163 Mass. 332, 39 N. E. Rep. 1110;
Mitchell V. Roberts, 17 Fed. Rep. 776;
Wright V. Robinson, 84 Hun, 172, 32
N. Y. Supp. 463; Willard v. Harvey,
5 N. H. 253; Swett v. Horn, 1 id. 332;
Maynard v. Hunt, 5 Pick. 240.
•]
TENDER.
7U5
and until there is a foreclosure, the tender of the amount due
after the law day and before foreclosure will discharge tLe
mortgage; and if the mortgagee is in possession the mortgagor
may recover in ejectment.^ But to establish a tender and re-
fusal, such as will discharge the lien of a mortgage without the
tender being kept good, the proof must be clear that the ten-
der was fairly made and deliberately and intentionally refused
by the owner of the mortgage, and that sufficient opportunity
was afforded to ascertain the amount due; at least it should ap-
pear that a sum was absolutely and unconditionally tendered
sufficient to cover the whole amount due.- Though the tender
be sufficient, yet if the mortgagor asks for affirmative relief,
even for extinguishment of the lien, he must do equity; this
obliges him to keep the tender good; he must pay the amount
equitably due the mortgagee.' Where the incidents attached
to a mortgage of real estate are those w^hich prevailed at the
common law^, the mortgagee having an estate on condition
which becomes absolute by reason of non-payment on the day
named, a tender will not discharge the lien unless it is made
punctually and is kept good.* A tender will discharge a
1 Kortright v. Cady, 21 N. Y. 343,
5 Abb. Pr. 358; Jackson v. Crafts. 18
Johns. 110; Edwards v. Farmers' F.
Ins. & L, Co., 21 Wend. 467; Farmers'
F. Ins. & L. Co. V. Edwards, 26 id. 541;
Arnot V. Post,6 Hill,65; Post v. Arnot,
2 Denio, 344; Tiffany v. St. John, 5
Lans. 153, 65 N. Y. 314; Hartley v.
Tatham, 1 Robert. 246, 1 Keyes, 222;
Trimm v. Marsh, 54 N. Y. 599, 13 Am.
Rep. 623: McDaniels v. Reed, 17 Vt.
674; Eslow v. Mitchell, 26 Mich. 500;
Caruthers v. Humphrey, 12 id. 270;
Van Husan v. Kanouse, 13 id. 303;
Saltus V. Everett, 20 Wend. 267; Sa-
linas V. Ellis, 26 S. C. 337, 2 S. E. Rep.
121; Thornton v. National Exchange
Bank, 71 Mo. 221. See Harris v. Jex,
66 Barb. 232; Merritt v. Lambert, 7
Paige, 344; Ketchum v. Crippen, 37
Cal. 223; Bryan v. Maume, 28 Cal. 238;
Wilson V. Keeling, 1 Wash. (Va.) 194;
Werner v. Tuch, 52 Hun, 269, 5 N. Y.
Supp. 219.
Vol. 1 — 45
2Tuthill V. Morris, 81 N. Y. 94;
Parks V. Allen. 42 Mich. 82, 4 N. W.
Rep. 227; Jewett v. Earle, 53 N. Y.
Super. Ct. 349; Waldron v. Murphy,
40 Mich. 668.
3Tuthill V. Morris, 81 N. Y. 94;
Landis v. Saxton, 89 Mo. 375, 1 S. W.
Rep. 359. See Salinas v. Ellis, 26 S. C.
337, 2 S. E. Rep. 121.
4 Grain v. McGoon. 86 111. 431; Mat-
thews V. Lindsay, 20 Fla.962; Schearff
V. Dodge, 33 Ark. 340; Alexander v.
Caldwell, 61 Ala. 543; Greer v. Tur-
ner, 36 Ark. 17; Currier v. Gale, 9
Allen, 522; Holman v. Bayley, 3 Met.
55; Phelps V. Sage, 2 Day, 151; Shields
V. Lozear, 34 N. J. L. 496, 3 Am. Rep.
256; Rowell v. Mitchell. 68 Me. 21;
Store}' V. Krewson, 55 Ind. 397, 23 Am.
Rep. 608; Collins v. Robinson, 33 Ala.
91; Slaughter v. Swift, 67 id. 494;
Frank v. Pickens. 69 id. 369; Tomp-
kins V. Batie, 11 Neb. 147, 38 Am. Rep.
361, 7 N. W. Rep. 747; Hudson v.
706
CONVENTIONAL LIQUIDATIONS AND DISCHAEGES. [§ 277.
mechanic's lien for the repair of personal propert}'';^ an attor-
ney's lien; 2 a pledge or mortgage of personal property;' the
[472] right to distrain for rent;* and will release a surety.'
But a tender of the sum due on a contract for the purchase of
land, the legal title being in the vendor, does not discharge his
lien; he can be divested of his title only by payment of the
purchase-money.® A landlord's statutory lien for rent is not
discharged by a tender of the rent due.'^
Whether a judgment which is a lien on land, or under which
an execution has been levied, will be discharged by a tender is
not very clearly settled. It has been held that to make a ten-
der effectual for this purpose the money should be brought
into court and the judgment satisfied of record. Being a debt
of record, and a tender not discharging it, the lien, beino- a
legal consequence, must subsist while the debt continues in
that form,^ But the weight of reason, if not authority, is in
Glencoe Sand & Gravel Co., 140 Mo.
103, 41 S. W. Rep, 450, 63 Am. St. 722;
Himmelmann v. Fitzpatrick, 50 Cal.
€50: Mitchell v. Roberts, 17 Fed. Rep.
776.
iMoynahan v. Moore, 9 Mich. 9;
Ball V. Stanley, 5 Yerg. 199, 26 Am.
Dec. 263.
2 Stokes on Lien of Att'ys, 81, 172;
Jones V. Tarleton, 9 IVL & W. 675;
Scarf 6 V. Morgan, 4 id. 280; Irving v.
Viana, 2 Y. & Jer. 71.
^Hyams v. Bamberger, 10 Utah, 3,
36 Pac. Rep. 202, citmg the text;
Norton v. Baxter, 41 Minn. 146, 42
N. W. Rep. 865, 4 L. R. A. 305; Lough-
borough V. McNevin, 74 Cal. 250, 5
Am.St. 435. 14 Pac. Rep. 369, 15 id. 773;
McCalla v. Clark, 55 Ga. 53: Wild-
man V. Radenaker, 20 Cal. 615; Ball
V. Stanley, supra; Cooley v. Weeks,
10 Yerg. 141; Coggs v. Bernard. 2 Ld.
Raym. 909; Comyn's Dig., tit. Mort-
gage, A. But not after the day it is
due. Tompkins v. Batie, supra.
Contra, Hyams v Bamberger, 10
Utah, 3, 36 Pac. Rep. 202. See Frank
V. Pickens, 69 Ala. 369.
* Hunter v. Le Conte, 6 Cow. 728;
Davis V. Henry, 63 Miss. 110.
s Smith V. Old Dominion Building
& Loan Assn, 119 N. C. 257, 26 S. E.
Rep. 40; Mitchell v. Roberts, 17 Fed.
Rep. 776; Brandt on Suretyship, §§ 21»
22; Appleton v. Donaldson, 3 Pa. 381;
Spurgeon v. Smitha, 114 Ind. 453, 17
N. E. Rep. 105; Joslyn v. Eastman, 46
Vt. 258; White v. Life Assn of
America, 63 Ala. 419, 35 Am. Rep.
45; McQuesten v. Noyes, 6 N. H. 19;
Sailly V. Elmore, 2 Paige, 497; Fisher
V. Stockebrand, 26 Kan. 565; Hayes
V. Josephi, 26 Cal. 535; Solomon v.
Reese, 34 id. 28. Compare Clark v.
Sickler, 64 N. Y. 231, 21 Am. Rep.
606; Second Nat. Bank v. Boucher,
56 N. Y. 348.
« Schearflf v. Dodge, 33 Ark. 346.
7 Hamlett v. Tallman, 30 Ark. 505;
Bloom V. McGehee, 38 Ark. 329.
8 Jackson v. Law, 5 Cow. 248; Law
V. Jackson, 9 id. 641; Halsey v. Flint,
15 Abb. Pr. 367. See Shumaker v.
Nichols, 6 Gratt. 592; Flower v. EI-
wood, 66 111. 447, 449; Redington v.
Chase, 34 Cat 666. But see also
Mason v. Sudam, 2 Johns. Ch. 172;
Tiffany v. St. John, 5 Lans. 153, 65
N. Y. 314, 23 Am. Rep. 55.
§ 277.]
TENDEE.
707
favor of holdinj^ an execution lien discbarged by a tender the
same as a conventional lion would be. In each case the lien
exists as a collateral advantage to the creditor. It is inciden-
tal to the debt. In each case, if the lien is not satisfied, there
is a power to sell. Payment will extinguish one as well as the
other.' But it will not discharge a lien to secure the payment
1 Tiffany v. St. John. 65 N. Y. 314,
23 Am. Rep. 55. In this case Dwight,
C, said: "There is, undoubtedly, a
stage in a proceeding in an action
where property is in the custody of
the law, that a tender will not de-
stroy tlie lien, as that might inter-
fere with the proper disposition of
the case. After the action is over,
and judgment obtained, and execu-
tion levied, the case becomes clearly
assimilated to that of an ordinary
lien; and if tender is made and not
accepted the lien will be extin-
guished. This distinction was set-
tled as far back as the time of Lord
Coke, and is clearly stated in the Six
Carpenters' Case (8 Coke, 146a). The
point there discussed was the effect
of a tender in the case of a distress
tor rent, or of cattle doing dam-
age — an instance of a lien created
by the act of the law. Coke con-
siders the distinction between a
tender made upon the land before
distress, after the distress and before
impounding, after impounding and
before the determination of the liti-
gation, and contrasts these with a
tender made after the law has deter-
mined the rights of the parties. He
says: 'Note, reader, this difference:
that tender upon the land before the
distress makes the distress tortious;
tender after the distress and before
the impounding makes the detainer,
and not the taking, wrongful; ten-
der after the impounding makes
neither one nor the other wrongful,
for then it comes too late, because
then the cause is put to the trial of
the law, to be there determined. But
after the law has determined it, and
the avowant has return irreplevisa-
ble, yet if the plaintiff makes him a
sufficient tender he may have an ac-
tion of detinue for the detainer after,
or he may. upon satisfaction made in
court, have a writ for the redelivery
of his goods.' He adds: 'And there
with agree all the books, and Pelk-
ington's Case, in the fifth part of my
reports (fol. 76), and so all the books
•which, pri)nn facie, seem to disagree,
are, upon full and pregnant reason,
well reconciled and agreed.'
" There is here a clear statement
of the principle applicable to the
case at bar. Here the law has al-
ready determined the right which
has became final in analogy to the
' return irreplevisable ' of Lord Coke,
and the tender having been made
and refused, if it were sufficient in
amount, an action of replevin in the
detinet will lie in analogy to the ac-
tion of detinue referred to by him.
It should also be observed that Lord
Coke's rule provides that the owner
of goods has his election to make an
application to the court for relief.
"The defendant cites in opposition
to these views the case of Jackson
V. Law, 5 Cow. 248, 9 id. 641. That
case, however, has no bearing upon
the present controversy. The point
there decided was that a tender of
money due upon a judgment by a
junior judgment creditor did not
discharge it, nor take away the lien
of the senior judgment creditor
upon lands, but that the latter might
still redeem upon his judgment
within the terms of the statute ap-
70S CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 27S.
of special assessments for street improvements, no personal
liability therefor existing.^
[4:73] A plea of tender should conclude by praying judgment
whether the plaintiff ought to recover any damages by reason
of the non-payment of the sum alleged to have been tendered.^
If upon the trial the sum tendered and brought into court is
found by the jury to be less than was due at the time of the
tender the verdict and judgment should be for the whole
amount of the plaintiff's demand, without any deduction on
account of the money brought into court. The defendant,
however, is entitled to the benefit of the payment by indorse-
ment upon the judgment or execution.^
[474] § 278. Paying money into court. A practice was
introduced into England in the time of Charles II. of paying
money into court where no previous tender had been made.*
This is supposed to have been adopted to avoid the hazard
and difficulty of pleading a tender.^ The money was paid in
on a rule of court, and thereafter the plaintiff proceeded for
more at the hazard of paying subsequent costs. The amount
paid in was stricken from the declaration, and no evidence
given of that part of the claim.^ It was at first required
to be paid in before plea, but was afterwards allowed by
plicabletothat subject. The ground court of equity may set aside a sale
of this decision briefly was that a underit as irregular and void. Mason
judgment, being a debt of record, is v. Sudani, 2 Johns. Cli. 172." See
not discharged by a tender, and it is, Crozer v. Pilling, 6 D. & R. 129.
in no case, the effect of a tender to ^ McGuire v. Bi'ockman, 58 Mo.
discharge the debt. The judgment App. 307.
could only be extinguished by act- -Karthaus v. Owings, 8 Har. & J.
ual satisfaction. As long as it re- 134.
mained in force, it must, by its very 3 Dakin v. Dunning, 7 Hill. SO, 42
nature, as prescribed by statute, be Am. Dec. 33; Huntington v. Zeigler,
a lien on the land. If its existence 2 Ohio St. 10; Bennett v. Odom, 30
continued it could not be deprived Ga. 940; Baker v. Gasque, 3 Strobh.
of its ordinary and usual character- 25; Reed v. Woodman, 17 Me. 43; 1
istics. The case is very different Tldd's Pr. 569.
with a pledge or mortgage, or lien of * Payment into court without a
any kind collateral to the debt. To rule may be disregarded. Levan v.
this class of collateral liens an exe- Sternfeld, infra.
cution belongs, and on general prin- 5 Levan v. Sternfeld, 55 N. J. L. 41,
ciples a tender destroys it. Even in 25 Atl. Rep. 854; Arch. Pr. 199;
the case of a judgment a tender may Boyden v. Moore, 5 Mass. 365; Reed
have such an effect as to make it in- v. Woodman, 17 Me. 43.
equitable to enforce the lien; and a *> Id.
§ 279.] STIPULATED DAMAGES. 709
withdrawing the plea. The rule allowing the defendant to pay
money into court was granted generally on condition of pay-
ing costs, directing that sura to be stricken out of the declara-
tion, if refused by the plaintiff, and concerning it no evidence
to be received on the trial. This reduced the controversy to
the quantum of damages; and the consequence was that, if
the plaintiff did not prove a greater sum due than that paid
in, a verdict passed for the defendant and he had judgment
for subsequent costs. If the plaintiff proved that more was
due, he had a verdict and judgment for the balance and
subsequent costs.^ The payment of money into court was
proved by production of the rule.^ But when the tender
is found sufficient and the money has been brought into court
the verdict should be for the defendant.'
Section 6.
stipulated damages.
§ 279. Contracts to liquidate damages valid. After [475]
damages have been sustained an agreement to pay such sum
therefor as shall be ascertained in a particular way is binding.*
And parties in making contracts are at liberty to stipulate the
amount which shall be paid by either to the other as compen-
sation for the anticipated actual loss or injury which they fore-
see or concede will result from a breach if it should occur.*
Without express statutory authority officers who are author-
ized by law to make contracts for a state or municipality have
11 Bac. Abr. 473c. See Ruble v. sence of proof that the plaintiff took
Murray, 4 Hayw. 27. it in satisfaction of his claim, he was
i Id. not thereby precluded from filing
spennypacker v. Umberger, 22 new counts and recovering an addi-
Pa. 492; Levan v. Sternfeld. supra. tional sum thereon.
In Hill V. Smith, .34 Vt. 535. the de- * Longridge v. Dorville, 5 B. & Aid.
fendant, before the new counts, 117. See Hosmer v. True, 19 Barb.
upon which alone the plaintiff re- 106.
covered, were filed, paid into court a ^Sun Printing & Pub, Ass'n v.
sum of money sufficient to satisfy all Moore. 183 U. S. 642, 22 Sup. Ct. Rep.
the damages the plaintiff could have 240; Guerin v. Stacy, 175 Mass. 595,
recovered under the original decla- 56 N. E. Rep. 892; Holmes v. Holmes,
ration and costs to the time of such 12 Barb. 137; Fasler v. Beard, 39
payment, and the plaintiff took the Minn. 32, 38 N. W. Rep. 755.
monev; it was held that in the ab-
710
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 279.
power to fix a sum as liquidated damages for their violation. i
The sura designated in the contract or subsequently agreed
upon becomes, on the happening of the event on which its
payment depends, the precise sum to be recovered, and the
jury are confined to it.^ ISTor will equity relieve from the pay-
ment of it.' As will more fully appear hereafter, there are
limitations on the power thus to contract. As a general rule,
where the injury resulting from the breach of a contract is
susceptible of definite measurement, as where the breach con-
sists in the non-payment of mone}^ the parties will not be
sustained in the enforcement of stipulations for a further sum,
whether in the form of a penalty or liquidated damages; but
where the damages sustained are uncertain and are not readily
susceptible of being reduced to a certainty by a legal compu-
tation they may be determined before a breach occurs."* The
1 State Trust Co. v. Duluth, 70 Minn.
257, 73 N. W. Rep. 249; Brooks v.
Wichita, 114 Fed. Rep. 297, 52 C. C.
A. 209; Little v. Banks, 86 N. Y. 258;
Parr v. Greeubush, 42 Hun, 232;
Nelson v. Jonesboro, 57 Ark. 168, 20
S. W. Rep. 1093; Salem v. Anson, 40
Ore. 339, 67 Pac. Rep. 190, 56 L. R. A.
169.
2 Smith V. Newell, 37 Fla. 147, 20 So.
Rep. 249; American Copper, Brass &
L Works V. Galland-Burke Brewing
& M. Co., — Wash. , 70 Pac. Rep.
238; Kelso v. Reid, 145 Pa. 606, 27
Am. St. 716, 23 Ati. Rep. 323; Welch
V. McDonald. 85 Va. 500, 8 S. E. Rep.
711; Stanley v. Montgomery, 102
Ind. 102, 26 N. E. Rep. 213; Lowe v.
Peers, 4 Burr. 2225; Beale v. Hayes,
5 Sandf. 640; Tardeveau v. Smith's
Ex'r, Hardin, 175, 18 Am. Dec. 727.
See Bradshaw v. Craycraft, 8 J. J.
Marsh. 79; Keeble v. Keeble, 85 Ala.
552, 5 So. Rep. 149.
In Louisiana the sum agreed to be
paid by way of liquidated damages is
subject to reduction under certain
circumstances; when the reduction is
permissible, and suit is brought for
the whole amount, the onus is upon
the party claiming the reduction to
establish the extent to which it
should be made. Goldman v. Gold-
man, 51 La. Ann. 761, 25 So. Rep. 555.
Under the Ontario judicature act
of 1895 equity will award actual
damages, estimated on a liberal scale,
in lieu of the damages stipulated for.
Townsend v. Toronto, etc. R. Co., 28
Ont. 195.
3 Harper v. Tidholm, 155 111. 870, 40
N. E. Rep. 575; Ewing v. Litchfield,
91 Va. 575, 22 S. E. Rep. 362; Sanford
V. First Nat. Bank, 94 Iowa, 680, 63
N. W. Rep. 459; Wood v. Niagara
Falls Paper Co., 121 Fed. Rep. 818
(Ct. Ct. of Appeals, 2d Ct.); Wi-
baux V. Grinnell Live Stock Co., 9
Mont. 154, 162, 22 Pac. Rep. 492; 3
Story's Eq. § 1318; 3 Lead. Cas. in
Eq. 671 et seq.; Westerman v. Means,
12 Pa. 97; Downey v. Beach, 78 IlL
53; Brooks v. Wichita, 114 Fed. Rep.
297, 52 C. C. A. 209; Sun Printing &
Pub. Ass'n V. Moore, 183 U. S. 642,
661, 22 Sup. Ct. Rep. 240; Young v.
Gaut, 69 Ark. 114, 61 S. W. Rep 372.
4 Goldman v. Goldman, 51 La. Ann.
761, 25 So. Rep 555; Kunkel v.
Wherry, 189 Pa. 198, 42 Atl. Rep. 112,
§ 280.] STIPULATED DAMAGES. 711
validity of an agreement to stipulate what the damages shall
be is to be determined by the situation of the parties and their
apprehension of the effect of a breach of the contract at the
time of making it. The fact that it is subsequently ascertained
that the damages caused by the breach were capable of ascer-
tainment does not change the legal effect of their stipuhition.*
There is an implied condition in every judicial sale that if the
purchaser does not pay the price he offered he will pay the
difference between that price and the price realized on a sub-
sequent sale duly made after proper notice, and also pay the
expense of such sale. This condition has the same effect as if
there was a formal contract stipulating the damages for such
default.2
§ 280. Damages can be liquidated only on a valid contract.
A valid contract must exist on which damages could be re-
covered.' If void for not being in writing/ or if impeached
for fraud,* the stipulation for damages will share the fate of
the contract. And it has been held that an agreement to pay
a sum as liquidated damages in case a court in which an action
was pending should fail to make an order containing a speci-
fied provision is void, for being against public policy, or in the
nature of a wager.'' A contract is not void so as to bar the re-
69 Am. St. 802; Tobler v. Austin, 22 non-payment. Royal Victoria L.
Tex. Civ. App. 99, 53 S. W. Rep. 706; Ins. Co, v. Richards, 31 Ont. 483.
Palmer v. Toms, 96 Wis. a67, 71 N. ^ Newman v. Perrill, 73 Ind. 153;
W. Rep. 654; Fasler v. Beard. 39 Minn. Scott v. Bush, 26 Mich. 418, 12 Am.
32, 38 N. W. Rep. 755; Sun Printing Rep. 311.
& Pub. Ass'n V. Moore, 183 U. S. 643, ^Darrow v. Cornell, 12 App. Div.
20 Sup. Ct. Rep. 240; Brooks v. 604, 43 N. Y. Supp. 1081; Wambaugh
Wichita, 114 Fed. Rep. 297, 52 C. C. v. Bimer. 25 Ind. 368. See Fruin v.
A. 209; Whitfield v. Levy, 35 N. J. L. Crystal R. Co., 89 Mo. 397, 14 S. W.
149. Rep. 557.
1 Wilson V. Jonesboro. 57 Ark. 168, « Dittrich v. Gobey, 119 Cal. 599, 51
20 S. W. Rep. 1093; Dunn v. Morgen- Pac. Rep. 962; Cowdrey v. Carpenter,
tliau, 73 App. Div. 147, 76 N. Y. Supp. 1 Robert. 429. A party to an action
827. for the foreclosure of a mortgage of
2 Howison V. Oakley, 118 Ala. 215, real estate on assigning a junior
238, 23 So. Rep. 810. mortgage of only a part of the prem-
' The ordinary terms of an applica- ises stipulated with its assignee that
tion for life insui'ance, stipulating the order of sale should direct the
that insurer should not be liable un- property not covered by the junior
til it received the first premium, does mortgage to be first sold for the pay-
not constitute the amount of such ment of the mortgage being fore-
premium liquidated damages for its closed. It was held that, the stipu-
712
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 281.
covery of the sura stipulated as damages for the violation of its
con.dition as to the sale of a good-will because it includes more
territor}'- than the statute allows. Though the contract is void
as to the excess of such territory the defendant, by breaching
it within the territory as to which it was valid, became liable
for the entire sum stipulated to be paid in that event.^ A pro-
vision in a contract for liquidating the damages which may re-
sult from its breach will not be extended by construction to
other provisions or conditions in it than are within its obvious
scope and purpose.^
§ 281. Modesof liquidating damages; computation of time.
[476] The stipulation for the adjustment of the amount of
damages is usually embraced in the contract for the violation
of which they are to be paid; but not always so. A deposit
may be made with a third person or with the party, of money,
a note, or something else of value to be paid, delivered over or
retained on the happening of the breach.* Agreements are of
lation being void, the assignee could
not recover the liquidated damages
specified in it upon its breach by the
making of an order without the
designated provision. See Voorhees
V. Reed, 17 111. A pp. 21.
1 Franz v. Bleler, 126 CaL 176, 56
Pac. Rep. 249, 58 id. 466; Price v.
Green, 16 M. & W. 346.
2 Curnan v. Delaware & O. R. Co.,
138 N. Y. 480, 34 N. E. Rep. 201.
3 Moore v. Durnam, — N. J. Eq. — ,
51 Atl. Rep. 449; Wallis v. Smith. 21
Ch. Div. 243; Lea v. Whitaker, L. R
8 C. P. 70; Magee v. La veil, 9 id. 107;
Swift v. Powell, 44 Ga. 128; Kellogg
V. Curtis, 9 Pick. 634; Stillwell v.
Temple, 28 Mo. 156; Reilly v. Jones,
1 Bing. 302; Betts v. Burch, 4 H. &
N. 506; Hinton v. Sparkes, L. R. 3 G
P. 160; Leslie v. Macmichal, 2 N. S.
W. 250; Sanders V. Carter, 91 Ga. 450,
17 S. E. Rep. 345; Csesar v. Rubinson,
71 Ap)). Div. 180. 75 N. Y. Supp. 544.
In White v. Dingley, 4 Mass. 433,
the plaintiff had given the defend
ant a license for two years, and cov-
enanted not to sue him within that
time, and that if he should sue him
he should be wholly discharged from
the claim. The creditor brought suit
in violation of the covenant, and the
debtor was Imprisoned upon the
writ, whereupon he brought suit
upon the covenant for damages. It
was held that the action could not
be maintained; the forfeiture was a
liquidation of the damages. Upham
V. Smith, 7 Mass. 265.
In an action to recover damages
for breaking up a highway the de-
fendant gave the plaintiff a cognovit
to confess judgment for £200, with a
defeasance that no execution should
issue if the defendant, within a lim-
ited time, should reinstate the road
according to certain specifications.
The road not being completely rein-
stated within the time prescribed,
the plaintiff sued out execution and
levied the £200 and costs. Held,
that the £200 was in the nature of a
penalty, and not of stipulated dam-
ages; and the court referred it to a
prothonotary to ascertain what dam-
ages the plaintiff had actually sus-
§ 281.]
STIPULATED DAMAGES.
713
this nature and valid which provide a particular method of
proof; as that property covered by insurance, if afterwards
destroyed by fire, shall be estimated by a particular [4:77]
standard,' or by a designated person.^ An agreement between
a broker and a farmer, the former having advanced money to
the latter to raise a crop, for the repayment of such money,
with interest, and to ship to the broker a certain number of
bales of cotton to be sold by him, or, in default, to pay the
customary broker's commission on such bales as he failed to
ship, is for liquidated damages, it not being shown to be a
cover for usury.' Where a part of the work required to be
done under a contract which provided for stipulated damages
in consequence of delay was sublet and both the contractor
and the subcontractor were in default, the clause providino- for
such damages was binding on the latter, and each was respon-
sible for the proportion of the damages his delay caused.* A
condition in a contract extending municipal ai(.l to a railroad
company that if it should cease to remain independent for a
tained, and what sum he was enti-
tled to recover from the defendant
for his failure to reinstate tiie road.
Charrington v. Laing. 3 M. & P. 587.
Where the intention of the parties
is potential, the circumstance that
the sum is deposited with a stake-
holder to be paid over, or in the
hands of the opposite party, with a
stipulation that it is to be forfeited
in the event of a breach, is pointed
out as stronger evidence of an inten-
tion to make it liquidated damages
than the words or nature of the con-
tract otherwise would. Magee v.
Lavell, L. R. 9 C. P. 107: Betts v.
Burch, 4 H. & N. 506; Hinton v.
Sparkes, L. R. 3 C. P. 160; Wallis v.
Smith, 21 Ch. Div. 243.
A contract which provides that if
it shall be broken by either of the
parties to it the party who commits
the breach shall pay such sum as the
other party would have received if
it had been observed, and tiiat the
average yearly receipts shall be the
basis on wJiich the sum to be paid
shall be determined, does not pro-
vide for liquidated damages, but
fixes the basis on which the actual
damages shall be ascertained. Tufts
V. Atlantic Tel. Co., 151 Mass. 269, 23
N. E. Rep. 844.
1 ^tna Ins. Co. v. Johnson, 11
Bush, .587. 21 Am. Rep. 223; Common^
wealtli Ins. Co. v. Sennett, 37 Pa.
208, 78 Am. Dec. 418; Lycoming Ins.
Co. V. Mitchell, 48 Pa. 3G7; Bodine v.
Glading, 21 id. 50, 59 Am. Dec. 749;
Irving V. Manning, 6 C. B. 391; C. H.
Brown Banking Co. v. Baker, 74 S. W.
Rep. 454, — Mo. App. — .
2 Faunce v. Burke. 16 Pa. 479; Rol>
inson v. Cropsey, 2 Edw. Cb. 138;
Wells V. Smith, id. 78; Barnet v.
Passumpsic Turnpike Co., 15Vt. 757;
City Bank v. Smith, 3 G. & J. 2G5.
3 Blackburn V. Haye.s, 59 Ark. 366,
27 S. W. Rep. 240.
< Chicago Bridge & Iron Co. v.
Olson, 80 Minn, 523, 83 N. W. Rep.
461.
714
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 2S'
stated time the money paid should be returned, provides for
liquidated damages.'
Where the stipulation was to pay five dollars per day for
every car delayed beyond the specified date the court refused
to exclude Sunday from the computation. This general rule
was laid down: In the computation of rents, interest, dam-
ages, or any other amounts in which the day, the week, the
month, or any other fixed period of time is the agreed standard
of measurement, every intervening Sunday, as well as every
secular day, must be included and counted in the reckoning.^
§ 28'-2. Alternative contracts. These are such as by their
terms may be executed by doing either of several acts at the-
election of the party from whom performance is due. Com-
pletion in one of the modes is a performance of the entire con-
tract, and no question of damages arises. Such a contract,
therefore, is not one for liquidated damages.' Where by the
condition of a bond the obligor might, by paying $600 in
twelve, or $400 in six, months, become the owner of a patent
right for a specified district, or otherwise should account for
a certain share of the profits, he had a choice of those alterna-
tives for those periods.* Stipulating the damages and promis-
ing to pay them in case of a default in the performance of an
otherwise absolute undertaking do not constitute an alternative
contract.^ The promisor is bound to perform his contract,
though there is generally a practical option to violate it and
take the consequences; but he is not entitled to an election to
pay the liquidated damages and thus discharge himself. A
contract stipulating that drainage works shall be completed in
all respects and cleared of all implements, tackle, impediments,
1 Hamilton County v. Grand Trunk
R. Co., 19 Ont. App. 252.
2 Pressed Steel Car Co. v. Eastern
R. Co., 121 Fed. Rep. 609, 619 (Ct. Ct.
of Appeals, 8tli Ct.).
3 Strickland v. Williams, [1899] 1
Q. B. 382; Salem v. Anson. 40 Ore. 339,
345. 67 Pac. Rep. 190, 56 L. R. A. 169;
Smith V. Bergengren, 153 Mass, 236,
26 N. E. Rep. G90, 10 L. R, A. 768.
nicNitt V. Clark, 7 Johns. 465;
Fisher v. Shaw, 42 Me. 32; Slosson v.
Beadle, 7 Johns. 72; Mercer v. Irv-
ing. 1 E., B. & E. 563; Reynolds v.
Bridge, 6 E. & B. 528; Choice v. Mose-
ley, 1 Bailey, 136, 19 Am. Dec. 661.
5 Stewart v. Bedell, 79 Pa. 336;
People V. Central Pacific R. Co., 76
Cal. 29, 34, 18 Pac. Rep. 90; Crane v.
Peer, 43 N. J. Eq. 553, 4 Atl. Rep. 72,
quoting the text and examming a
large number of cases. Compare
Hahn v. Concordia Society, 42 Md.
460. And see Indianola v. Gulf, etc
R. Co., 56 Tex. 594.
§ 2S2.] STIPULATED DAMAGES. 715
and rubbish on or before a date fixed, and that in default of
such completion the contractor shall forfeit and pay lOO/. and
5^. for every seven days during which the works shall be incom-
plete after the said time as and for liquidated damages, provides
for such payment only in a single event, the non-completion of
the works.' A bond conditioned for the defendant's oljedience
to a perpetual injunction restraining him from trespassing on
the lands of the plaintiff or the walls, gates or fences thereof,
or inclosing the same, and from pulling down or removino"
or otherwise injuring the same, or inciting others to commit
any such trespasses, depends upon one condition only — a
breach of the injunction — and the sura designated in it was
liquidated. 2 A party agreed to pay §350 for certain real estate,
and paid down a small part. On full performance the promisee
was to procure for the promisor, as purchaser, a deed from a
third person; it was also agreed that if the purchaser should
fail to perform the contract or any part of it, he should pay
the other party $25 as liquidated damages, and immediately
surrender possession. A tender of that sum and of possession
was made before suit brought for the remainder of the pur-
chase-money, and it was unsuccessfully contended in behalf of
the purchaser that he was entitled by the terms of the [478]
contract to relieve himself by those acts from its obligation.'
On entering the service of a bank the defendant executed a
1 Law V. Local Board of Redditch, 3Ayres v. Pease, 12 Wend. 393;
[1893] 1 Q. B. Div. 127; Townsend v. Phoenix Ins. Co. v. Continental Ins.
Toronto, etc. R. Co., 28 Ont. 195. Co., 14 Abb. Pr. (N. S.) 266; Long v.
A physician who goes to a special- Bowring, 33 Beav. 585; Howard v.
ist in his profession for treatment Hopkyns, 2 Atk. 371; Dike v. Greene,
and is told that, in the event of a 4 R. I. 285; Dooley v. Watson. 1 Gray,
cure, he would require either a cer- 414; Gray v. Crosby, 18 Johns. 219;
tificate of his skill and proficiency Sainter v. Ferguson. 7 C. B. 716; Hob-
as a specialist or $5,000 in cash, is son v. Trevor. 2 P. Wms. 191; Chilli-
liable for the latter sum, having re- ner v. Chilliner, 2 Ves. Sr. 528; In-
fused to give the certificate after as- gledew v. Cripps, 2 Ld. Raym. 814;
senting to the terms proposed. The Preble v. Boglmx-st, 1 Swanst. 580;
court considered the question as de- Sloman v. Walter, 1 Brown Ch. 418;
pending upon whether the contract Lampraan v- Cochran, 16 N. Y. 275;
provided for a penalty or liquidated Ward v. Jewett. 4 Robert. 714; Robe-
damages. Burgoon v. Johnson, 194 son v. Whitesides, 16 S. & R 320;
Pa. 61, 45 Atl. Rep. 65. Robinson v. Bakewell, 25 Pa. 424;
2 Strickland v. Williams, [1899] 1 Cartwright v. Gardner, 5 Cush. 273.
Q. B. 382.
716 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 2S3.
bond in the penal sum of 1,000?., its condition being that it
should be void if he discharged his duties in the manner stipu-
lated, and if he should pay the plaintiffs a like sum in case he
should at any time within two years after leaving their service
accept employment in any other bank within a distance of two
miles. This condition was violated. It was held that the
obligation could not be satisfied by paying the sura mentioned ;
there was an agreement implied from the bond that the defend-
ant should not enter the service of a rival bank, which agree-
ment would be enforced by a court of equity.^ Such courts
may enforce performance, or enjoin those acts that would be
a violation,- but in such cases the equitable is an elective, not a
cumulative, remed3^ Before granting such relief equity will
require the plaintiff to forego the legal claim to the stipulated
damages.*
§ 283. Liquidated damages contradistinguished from pen-
alty. The most important and difficult question in respect to
a sura stated in connection with a breach of contract is
whether it is liquidated daraages or penalt}'. If the latter, it
is not an actual debt; it cannot be recovered, but only the
real damages, which have to be proved; and the statement
of the agreement in the contract is of ver}'' little consequence.
If the former, it is the precise sum to be recovered on proof of
a breach of the undertaking to which it refers, and no evidence
of the manner and extent of the real injury is necessary.*
1 National Provincial Bank v. Mar- 3 Okl. 527. 41 Pac. Rep. 615; St
shall, 40 Ch. Div, 112. Louis, etc. R. Co. v. Shoemaker, 27
- Cases cited in the two preceding Kan. 677: Hathaway v. Lynn, 75 Wis.
notes. 186, 43 N. W. Rep. 956, 6 L. R. A. 551;
••Howard v. Hopkins, 2 Atk. 371; Spicer v. Hoop, 51 Ind. 365; Wood v.
1 Story's Eq., §§ 717a, 793/; 3 Par. on Niagara Falls Paper Co., 121 Fed.
Cont. 356, note q; Gordon v. Brown, Rep. 818 (Ct. Ct of Appeals, 2d Cir-
4 Ired. Eq. 399; Dooley v. Watson, 1 cuit). See § 279 for other cases.
Gray 414; French v. Macale, 2 Drury In some of the cases the qualifica-
& W. 2G9; Long v. Bowring, 33Beav. tion is added that the damages must
585. See § 298. be beyond nominal. That theory
* Salem V. Anson, 40 Ore. 339, 67 probably originated in Hathaway v.
Pac. Rep. 190, 56 L. R. A> 169; Hen- Lynn, supra. Doubt as to its being
nessy v. Metzger, 152 111. 505, 38 N. sound was expressed in the second
E. Rep. 1058, 43 Am. St. 267; McCann edition of this work. Since its pub-
V. Albany, 158 N. Y. 634, 53 N. E. lication that doubt has been ap-
Rep. 673; O'Keefe v. Dyer, 20 Mont, proved by several courts. The con-
477, 52 Pac. Rep. 196; Kelley v. Seay, trary rule was held prior to that
a
§ 2S3.] STIPULATED DAMAGES. 717
The decision of this question is often intrinsically difficult, for
judicial opinions, in the numerous cases on the subject, are
very inharmonious; they furnish no universal test or guide.
But, as was said by Christiancy, J.: ''While no one can fail
to discover a very great amount of apparent conflict, still it
will be found on examination that most of the cases, however
conflicting in appearance, have yet been decided according to
tlie justice and equity of the particular case." ^ " The (juestion
whether a sum named in a contract to be paid for a failure to
perform," said Earl, J., "shall be regarded as stipulated dam-
ages or a penalty, has been frequently before the courts, and
has given them much trouble. The cases cannot all be har-
monized, and they furnish conspicuous examples of judicial
efforts to make for parties wiser and more prudent contracts
than they have made for themselves. Courts of law have, in
some cases, assumed the functions of courts of equity, and
have relieved parties by forced and unnatural constructions
from stipuhitions highly penal. Where an amount stipulated
as liquidated damages would be grossly in excess of the actual
damages, they have leaned to hold it a penalty. Where the
actual damages were uncertain and difficult of ascertainment,
they have leaned to hold the stipulated amount to have been
intended as liquidated damages. No form of words has been
regarded as controlling. But the fundamental rule, so often
announced, is that the construction of these stipulations de-
pends, in each case, upon the intent of the parties, as evidenced
by the entire agreement construed in the light of the circum-
stances under which it was made."^
time in Kelso v. Reid, 145 Pa. 606, 27 ^ Jaquith v. Hudson, 5 Mich. 123.
Am. St. 716. 23 Atl. Rep. 323, and in 2 Kemp v. Knickerbocker Ice Co.,
Spicer v. Hoop, 51 Ind. 365. If the 69 N. Y. 145; Caesar v. Rubinson. —
money deposited is to be treated as N. Y. — , 67 N. E. Rep. 58: Butler v.
liquidated damages proof of damage Wallbaum Stone & Minnig Co., 47
because of the breach of contract 111. App. 153; Sanders v. Carter, 91
need not be made. "The case of Ga. 450, 17 S. E. Rep. 345; Allison v.
Hathaway v. Lynn, 75 Wis. 186, 43 Dunwody, 100 Ga. 51, 28 S. E. Rep.
N. W. Rep. 956, 6 L. R. A. 551, an- 651; Salem v. Anson, 40 Ore. 339. 67
nouncing a contrary rule, does not Pac. Rep. 190, 56 L. R A. 169, citing
commend itself to our judgment." the text; Taylor v. Times Newspaper
Sanford v. First Nat. Bank, 94 Iowa, Co., 83 Minn. 523, 86 N. W. Rep. 760;
680,63 N. W. Rep. 459; Smith v. Lennon v. Smith, 14 Daly, 520.
Newell, 37 Fla. 147, 20 So. Rep. 249. The question whether the amount
718 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 283.
The general tendency toward "judicial expansion," which
has been a marked characteristic of recent years, has in-
creased the uncertainty involved in this branch of the law of
■damages. That uncertainty was never absent; but it has be-
come so great that it is practically, if not actually, impossible
to formulate a rule which will be recognized in any consider-
able number of cases. While the judicial tendency to pater-
nalism is marked, there is abundant evidence to warrant the
conclusion that business men are much more inclined than for-
merly to stipulate their liability if there shall be failure to per-
form their contracts. Why the courts are more than ever dis-
posed to deny the same freedom of contract in this respect
that is unhesitatingly recognized in other departments of law
and business it is difficult to say. N^otwithstanding the de-
plorable state of the decisions it may be assumed, first, that if,
by the terms of the contract, a greater sum is to be paid upon
default in the payment of a lesser sum at a given time, the
provision for the payment of the greater sum will be held a
penalty; second, where, by the terms of a contract, the dam-
ages are not difficult of ascertainment according to such terms
and the stipulated damages are unconscionable, the latter will
be regarded as a penalty; third, within these two rules parties
may agree upon any sum as compensation for the breach of a
contract.'
[4:79J It has been often declared judicially that a stipulation
in a contract for the payment of a stated sum, in the event of
a breach, should be interpreted, like all its other provisions,
with a view to carrying into effect the intention of the parties.
Referring to this subject Nelson, C. J., said: "A court of law
stated in a conditional bond or con- be caused by the several breaches
tract is to be taken as a penalty provided against, the ease or diffi-
or a liquidation of damages arising culty of measuring a breach of dam-
from a breach of the condition is to ages, and such other matters as are
be determined by the intention of legally or necessarily inherent in the
the parties, drawn from the words of transaction. The concurrent decla-
the wliole contract, examined in the rations of the parties are inadmissi-
light of its subject-matter and its ble, except to show mistake or fraud,
surroundings; and in this examina- March v. Allabough, 103 Pa. 335.
tion will be considered tiie relation i Poppers v. Meagher, 148 111. 192,
which the sum stipulated bears to 35 N. E. Rep. 805: Law v. Local
the extent of the injury which may Board of Redditch, [1892] 1 Q. B. 127.
283.] STIPULATED DAMAGES. 719
possesses no dispensing power; it cannot inquire whether tho
parties have acted wisely or rashl}" in respect to any stipula-
tion they may have thought proper to introduce into their
agreements. If they are competent to contract, within the
prudential rules the law has fixed as to parties, and there has
been no fraud, circumvention or illegality in the case, the
court is bound to enforce the agreement." ' Best, C. J., said
3ii 7iisi prius: "The law relative to liquidated damages has
always been in a state of great uncertainty. Tliis has been
occasioned by judges endeavoring to make better contracts
for parties than they have made for themselves. 1 think that
parties to contracts, from knowing exactly their own situa-
tions and objects, can better appreciate the consequences of
their failing to obtain those objects than either judges or
juries. Whether the contract be under seal or not, if it states
what shall be paid bj'' the party who breaks it to the party to
Avhose prejudice it is broken, the verdict in the action for the
breach of it should be for the stipulated sum. A court of jus-
tice has no more authority to put a different construction on
the part of the instrument ascertaining the amount of dam-
ages than it has to decide contrary to any other of its
clauses." ^ Equally emphatic language is to be found in other
cases.^
In this connection language employed by the supreme court
of the United States in a case * ruled in 1902 is pertinent as in-
dicating a larger regard for the contractual rights of parties
than is manifested in many of the recent decisions. The con-
tention made was that where actual damages can be assessed
from the testimony the court must disregard any stipulation
fixing the amount and require proof of the damage sustained.*
1 Dakin V. Williams, 17 Wend. 447. <Sun Printing & Pub. Ass'n v.
'i Crisdee v. Bolton, 3 C. & P. 240. Moore, 183 U. S. 642, 22 Sup. Ct. Rep.
SDwinel v. Brown, 54 Me. 468; 240.
Brewster v. Edgerly, 13 N. H. 275; * Chicago House-Wrecking Ca v.
Clement v. Cash, 21 N. Y. 253; Yet- United States. 100 Fed. Rep. 385, 389.
ter V. Hudson, 57 Tex. 604; May v. 45 C. C. A. 343, and Gay Manuf. Ca
Crawford, 142 Mo. 390, 44 S. W. Rep. v. Camp, 25 U. S. App. 134, 65 Fed.
2G0; Emack v. Campbell, 14 D. C. Rep. 794, 68 id. 67, 15 C. C. A- 228,
App. Cas. 186; Knox Rock Blasting were relied upon,
Co. V. Grafton Stone Co., 64 Ohio St.
361, 60 N. E. Rep. 563.
720 CONVENTIONAL LIQUIDATIONS AND DISCHAK^iES. [§ 283.
The court said: We think the asserted doctrine is wrone: in
principle, was unknown to the common law, does not prevail
in the courts of England at the present time, and it is not sanc-
tioned by the decisions of this court. . . , The decisions
of this court on the doctrine of liquidated damages and pen-
alties lend no support to the contention that parties may not,
hona fide, in a case where the damages are of an uncertain
nature, estimate and agree upon the measure of damages
which may be sustained from the breach of an agreement. On
the contrary, this court has consistently maintained the prin-
ciple that the intention of the parties is to be arrived at by a
proper construction of the agreement made between them, and
that whether a particular stipulation to pay a sum of money is
to be treated as a penalty, or as an agreed ascertainment of
damages, is to be determined by the contract, fairly con-
strued, it being the duty of the court always, where the dam-
ages are uncertain and have been liquidated by an agreement,
to enforce the contract. ... In the case at bar, aside
from the agreement of the parties, the damage which might
be sustained by a breach of the covenant to surrender the ves-
sel was uncertain, and the unambiguous intent of the parties
was to ascertain and fix the amount of such damage. In effect,
however, the effort of the petitioner on the trial was to nullify
the stipulation in question by mere proof, not that the parties
did not intend to fix the value of the yacht for all purposes,
but that it was improvident and unwise for its agent to make
such an agreement. Substantially, the petitioner claimed a
greater right than it would have had if it had made applica-
tion to a court of equity for relief, for it tendered in its an-
swer no issue concerning a disproportion between the agreed
and actual value, averred no fraud, surprise or mistake, and
stated no facts claimed to warrant a reformation of the as:ree-
ment. . . . The law does not limit an owner of property,
in his dealings with private individuals respecting such prop-
erty, from affixing his own estimate of its value upon a sale
thereof, or on being solicited to place the property at hazard
by delivering it into the custody of another for employment
in a perilous adventure. If the would-be buyer or lessee is of
the opinion that the value affixed to the property is exorbitant,
he is at liberty to refuse to enter into a contract for its acqui-
§ 283.] STIPULATED DAMAGES. 72]
sition. But if he does contract and has induced the owner to
part with his property on the faith of stipulations as to value,
the purchaser or hirer, in the absence of fraud, should not
have the aid of a court of equity or of law to reduce the agreed
value to a sum which others may deem is the actual value.'
Pleretofore such views have been given but a limited prac-
tical application; and cases abound in which stroner lancruao'e
of a different tenor is employed. " They mistake," says Scott, J.,
"the object and temper of our system of jurisprudence, who,
while maintaining that men in making all contracts have a
right to stipulate for liquidated damages regardless of the dis-
proportion to the sum resulting from a breach of the contract,
insist that it would be hard if men were not permitted to make
their own bargains. Ko system of laws would demand our
respect, or secure our willing obedience, which did not [480]
to some extent provide against the mischiefs resulting from
improvidence, carelessness, inexperience and undue expecta-
tions on one side, and skill, avarice and a gross violation of the
principles of honesty and fair dealing on the other. The folly
of one making a wild and reckless stipulation will not justify
gross oppression in another. A just man, when be sees one in
a situation in which he is prepared to make a contract which
must grind and oppress him, will not take advantage of his
state of mind and enrich himself by his folly and want of ex-
perience. It has been remarked that in reason, in conscience,
in natural equity, there is no ground to say because a man has
stipulated for a penalty in case of his omission to do a partic-
ular act — the real object of the parties being the performance
of the act — that if he omits to do the act he shall suffer an
enormous loss, wholly disproportionate to the injury to the
other party." '
The trend of judicial thought and action on the subject is
well and frankly expressed by Justice Marshall of the Wiscon-
sin court: The law is too well settled to permit any reason-
able controversy in regard to it at this time, that where par-
ties stipulate in their contract for damages in the event of a
1 See Wood V. Niagara Falls Paper quith v. Hudson, 5 Mich. 123;
Co., 121 Fed. Rep. 818 (Ct. Ct. of Ap- Sclirimpf v. Tennessee Manuf. Co.,
peals, 2d Circuit). 8G Tenn. 219, 6 Am. St. 832, 6 S. W.
2Basye v. Ambrose, 28 Mo. 39; Ja- Rep. 131.
Vol. 1 — 46
722 CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 283.
breach of it, using appropriate language to indicate that the
damages are agreed upon in advance, and such damages are
unreasonable considered as liquidated damages, the stipulated
amount will be considered to be a mere forfeiture or penalty
and the recoverable damages be limited to those actually sus-
tained. While courts adhere to the doctrine that the intention
of the parties must govern in regard to whether damages men-
tioned in their contract are liquidated, they uniformly take
such liberties in regard to the matter, based on arbitrary rules
of construction, so called, as may be necessary to effect judicial
notions of equity between parties, guided of course by prece-
dents that are considered to have the force of law, sometimes
calling that a penalty which the parties call stipulated dam-
ages, where otherwise an unconscionable advantage would be
obtained by one person over another. The judicial power thus
exercised cannot properly be justified under any ordinary rules
of judicial construction. Such rules permit courts to go as far
as possible to effect the intent of the parties where it is left
obscure by their language so long as such intent can be read
out of the contract without violating the rules of language or
law. But in determining whether an amount agreed upon as
damages was intended as liquidated damages or as a penalty,
rules of language are ignored and the express intent of the par-
ties is made to give way to the equity of the particular case,
having due regard to precedents.^
As is remarked in the last paragraph, the intention of par-
ties on this subject, under the artificial rules that have been
adopted, is determined by very latitudinary construction.^ To
1 Seeman v. Biemann, 108 Wis. 365, Where the damages resulting from
373, 84 N. W. Rep. 490. a breach of the agreement were evi-
2 In each case we must look to the dently the subject of calculation and
language of the contract, the inten- adjustment between the parties and
tion of the parties as gathered from a certain sum was agreed on and in-
all its provisions, the subject of the tended as compensation, and is in
contract and all its surroundings, fact reasonable in amount, it will be
the ease or difficulty of measuring allowed by the court as liquidated
the breach in damages, and the sum damages; but though the intention
stipulated, and from the whole gather of the parties seems clear and mani-
the view which good conscience and fest that a breach shall operate as a
equity ought to take of the case, complete forfeiture of the entire sum
Clements v. Schuylkill, etc. R Co., named in the agreement, the court
132 Pa. 445, 19 Atl. Rep. 274. will decline to render its assistance
^ 2S3.]
STIPULATED DAMAGES.
be potential and controlling that a stated sum is liquidated
damage, that sum must be fixed as the basis of compensation
and substantial!}'- limited to it; for just compensation is reco"--
nized as the universal measure of damages not punitory.
to enforce the payment of an amount
whicli is grossly excessive, unreason-
able and unjust, and will treat the
stipulation as in the nature of a pen-
alty and will award only such dam-
ages as the injured party may have
actually sustained. Sanders v. Carter,
91 Ga. 450, 17 S. E. Rep. 345.
In d=itermining whether an amount
named in a contract is to be taken
as penalty or liquidated damages,
courts are influenced largely by the
reasonableness of the transaction and
are not restrained by the form of the
agreement nor by the terms used by
the parties, nor even by their mani-
fest intent. Where the contract has
expressly designated the amount
named as liquidated damages, courts
have held that it w^as a penalty: and
conversely, where the contract has
called it a penalty, it has been held
to be liquidated damages; and again,
where the parties have manifestly
supposed and intended that an ex-
orbitant and unconscionable amount
should be forfeited, the courts have
carried out the intent only so far as
it was right and reasonable. Davis
V. United States. 17 Ct. of Cls. 201,
215. See Beemanv. Hexter, 98 Iowa,
37-', 67 N. W. Rep. 270.
The term " estimated damages " is
equivalent to '"liquidated damages."
Gallo V. McAndrews, 29 Fed. Rep.
715.
The words " shall act as a forfeit-
ure dnd shall be forfeited" have been
construed to provide for liquidated
damages. Eakin v. Scott, 70 Tex.
442, 7 S. W. Rep. 777.
"To forfeit" is equivalent to "to
pay." Streeper v. Williams, 48 Pii,
450.
" Forfeiture " is synonymous with
"penalty." Muldoon v. Lynch, 66
Gal. 536. But it will be presumed,
in order to effectuate the intention
of the parties, that the word " for-
feit " was used in a conversational
sense. Maxwell v. Allen, 78 Jle. 32,
57 Am. Rep. 783, 2 Atl. Rep. 386;
Lynde v, Tliompson, 2 Allen, 456.
A penalty i.s not necessarily to be
understood from the use of tlieword
"forfeit:" the circumstances must
be considered. Claude v. Shepard,
122 N. Y.397, 400, 25 N. K Rep. 358;
Womack v. Coleman, — Minn. ,
93 N. W. Rep. 663 (the language was
"shall be ab.solute forfeiture and in-
demnity"); Chatterton v. Crothers, 9
Ont. 683; Tinkham v. Satori. 44 Mo.
App. 659. Nor is an instrument
using the words "penalty" or "for-
feit" to be always construed as pro-
viding for a penalty. Lipscomb v.
Seegers, 19 S. C. 425, 434.
In other cases " penalty " and " for-
feit " have been given their usual
signification. Bagley v. Peddie, 16
N. Y. 469, 69 Am. Dec. 713; Laurea v.
Bernauer, 33 Hun, 307.
A penalty is implied from the lan-
guage "and each party is hereby lield
and fully bound in the sum of $300
for the faithful fulfillment of the
above contract." Moore v. Colt, 127
Pa. 289, 14 Am. St 845, 18 Atl. Rep. 8.
A clause in a charter-party by
which the parties bind themselves
"in the penal sum of estimated
amount of freight" is a penalty.
Watts V. Camors, 115 U. S. 353. 6
Sup. Ct. Rep. 91. But if the sum is
mentioned as a penalty and the in-
strument uses the words " which
sum is hereby named as stipulated
damages," the latter expression will
control. Tode v. Gross, 22 N. Y. St.
724
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 283.
Parties may liquidate the amount by previous agreement.
But when a stipulated sum is evidently not based on that
principle, the intention to liquidate will either be found not to
exist or will be disre":arded and the stated sum treated as a
Rep. 818, 4 N. Y. Supp. 403; Ward v.
Hudson River B. Co., 24 N. Y. St
Rep. 347. 5 N. Y. Supp. 319. And so
where the language is that the parties
" bind themselves in the penal sum"
of " as fixed and settled damages to
be paid by the failing party." Parr
V. Greenbush. 43 Hun, 232.
The use of the words "liquidated
damages" will not control the con-
struction if tiie court can find in the
whole instrument reason to doubt
that it was the intention of the par-
ties to so contract. Bagley v. Peddie,
16 N. Y.469, 69 Am. Dec. 713; Wolf
V. Des Moines R. Co., 64 Iowa. 380,
20 N. W. Rep. 481; Ex parte Pollard,
2 Low. 411, 17 Nat. Bank. Reg. 229;
Condon v. Kemper, 47 Kan. 126, 27
Pac. Rep, 829, 13 L. R. A. 671, See
§284.
An agreement to pay $500, be-
sides all damages sustained, provides
for a penalty. Foote & Davies Co. v.
Malony. 115 Ga. 985, 42 S. E. Rep. 413.
See Dwinel v. Brown, p. 726, n.
In Pierce v. Jung, 10 Wis. 30,
Paine, J., said : *• The opinions on this
subject are conflicting. On the one
hand, they lean towards treating
such provisions as in the nature of
penalties, and to do so have some-
times disregarded the positive and
implicit language of the parties. On
the other, they go for upholding con-
tracts as made, treating the parties
as equally competent to provide for
the amount of damages to be paid in
case of a failure to perform as to de-
termine any other matter contained
in them. The case of Astley v. Wel-
don, 2 Bos. & Pul. 346, and Kemble
V. Farrel, 6 Bing. 141, are strong il-
lustrations of the first class; and in
Crisdee v. Bolton. 3 C. & P. 240, the
opposite doctrine is very clearly
stated. But even the first class of
cases concede the power of the par-
ties to liquidate the damages by their
agreement in case of a non-perform-
ance. And they profess also to go
upon the intention of the parties.
And perhaps the only real difference
between the two is that the former
takes greater liberties than the latter
with the words of the parties in de-
termining what the intention is.
They pay more attention to the whole
nature and object of the agreement
than to the precise words in de-
termining whether the intent was
to create a penalty or provide for
liquidated damages."
In Beale v. Hayes, 5 Sandf. 640,
Duer, J., said: "It is not always,
however, that damages are to be
construed as liquidated because the
parties have declared them to be so.
The language of the parties (to the
agreement in question) is clear and
emphatic that the sura of £3,000
shall be recoverable from the party
making default as and for liquidated
damages; yet no court of justice,
without an entire disregard of prior
decisions, can give effect to the ap-
parent intention of the parties by
adopting that construction of their
agreement which the terms they
have used so forcibly suggest. . . .
When consequences so unreasonable
would follow, the law presumes that
they must have been overlooked by
the parties, and therefore mercifully
gives to their language an interpre-
tation which excludes them. When
it would be plainly unconscientious
to exact a large sum for a trivial
breach, even a court of law, acting
upon a principle of equity, will re-
§ 283.]
STirULATED DAMAGES.
i25
penalty. Contracts are not made to be broken; and hence,
when parties provide for the consequences of a breach, they
proceed with less caution than if that event was certain, and
they were fixing a sum to be paid absolutely. The intention
lease the parties from the literal
obligation whicli their language im-
ports."
In Jaquith v. Hudson, 5 Mich. 123,
Christiancy, J., said: "It is true the
courts in nearly all these cases pro-
[4S-] fess to be construing the con-
tract with reference to the intention
of the parties, as if for the purpose
of ascertaining and giving effect to
that intention; yet it is obvious from
these cases that wherever it has ap-
peared to the court from the face of
the contract and the subject-matter
that the sum was clearly too lai'ge
for just compensation, here, while
they will allow any form of words,
even those expressing the direct con-
trary, to indicate the intent to make
it a penalty, yet no form of words,
no force of language, is competent
to the expression of the opposite in-
tent. Here, then, is an intention in-
capable of expression in words: and
as all written contracts must be ex-
pressed in words, it would seem to be
a mere waste of time and effort to
look for such an intention in such a
contract. And as the question is be-
tween two opposite intents only, and
the negation of one necessarily im-
1)1 ies the existence of the other, there
would seem to be no room left for
construction with reference to the
intent. It mvist, then, be manifest
that the intention of the parties in
such cases is not the governing con-
sideration.
" But some of the cases attempt to
justify this mode of construing the
contract with reference to the intent,
bydeolaring in substance that though
the language is the strongest which
could be used to evince the intention
in favor of stipulated damages, still.
if it appear clearly by reff^rence to
the subject-matter tliat the parties
have made the stipulation without
reference to the princijjid of just
compensation, and .so excessive as to
be out of all proportion to tlie actual
damage, the court must hold that
they could not have intended it as
stipulated damages though they have
so expressly declared. See, as an ex-
ample of this class of cases, Keuible
V. Farren, 6 Bing. 141.
"Now this, it is true, may lead to
the same result in the particular case
as to have placed the decision upon
the true ground, viz.: that though
the parties actually intended the sum
to be paid as the damages agreed be-
tween them, yet it being clearly un-
conscionable, the court would disre-
gard the intention and refuse to
enforce the stipulation. But, as a rule
of construction or interpretation of
contracts, it is radically vicious and
tends to a confusion of ideas in the
construction of contracts generally.
It is this, more than anything else,
which has produced so much appar-
ent conflict in the decisions upon
this whole subject of penalty and
stipulated damages. It sets at defi-
ance all rules of interpretation, by
denying tlie intention of the parties
to be what they in the most unam-
biguous terms have declared it to
be, and finds an intention directly
opposite to that which is clearly ex-
pressed — 'divinatio, nan interpnia-
tio est, qucB omnino recedit a literaJ'
" Again, the attempt to place this
question upon the intention of the
parties, and to make this the gov-
erning consideration, necessarily im-
plies that if the intention to make
the sum stipulated damages should
726
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 283,
in all SQch cases is material; but to prevent a stated sum from
being treated as a penalty the intention should be apparent
to liquidate damages in the sense of making just compensa-
tion; it is not enough that the parties express the intention
clearly appear the court would en-
force the contract accoi-ding to that
intention. To test this, let it be
asked whether in such a case if it
were admitted that the parties act-
ually intended the sum to be consid-
ered as stipulated damages and not
as penalty, would a court of law en-
force it for the amount stipulated ?
Clearly, they could not, without go-
ing back to the technical and long-
exploded doctrine which gave the
whole penalty of the bond, without
reference to the damages actually
sustained. They would thus be
simply changing the names of things,
and enforcing under the name of
[483] stipxdated damages what in
its own nature is but a penalty.
"The real question in this class of
cases will be found to be, not what
the parties intended, but whether
the sum is in fact in the nature
of a penalty; and this is to be de-
termined by the magnitude of the
sum, in connection with the subject-
matter, and not at all by the w-ords
or the understanding of the parties.
The intention of the parties cannot
alter it. While courts of law gave
the penalty of the bond, the parties
intended the payment of the penalty
as much as they now intend the
payment of stipulated damages; it
must therefore, we think, be very
obvious that the actual intention of
the parties in this class of cases and
relating to this point is wholly im-
material; and though the courts have
very generally professed to base their
decisions upon the intention of the
parties, that intention is not and
cannot be made the real basis of
these decisions. In endeavoring to
reconcile these decisions with the act-
ual intention of the parties, the courts
have sometimes been compelled to
use language wholly at war with
any idea of interpretation, and to
say 'that the parties must be con-
sidered as not meaning exactly what
they say.' Horner v. Flintoff, 9 M.
& W. 678, per Parke, B. May it not
be said, with at least equal propriety,
that courts have sometimes said
what they did not exactly mean 9
The foregoing remarks are all to be
confined to that class of cases where
it was clear from the sum mentioned
and the subject-matter that the prin-
ciple of compensation had been dis-
regarded."
In Dwinel v. Brown, 54 Me. 468,
the defendant had bound himself, in
the event of a failure to perform
each and every condition and stipu-
lation represented in a certain license
and agreement for carrying on a
lumbering operation upon the plaint-
iff's land, "in the full and liquidated
sum of $1,000 well and truly to be
paid," on demand, "over and above
the actual damages " which should
be sustained by the non-performance.
Dickerson, J., said: "The question
presented for our determination is
whether the sum named in the con-
tract to be paid by the defendant on
his failure to fulfill its conditions is
penalty or liquidated damages. It is
competent for the parties in making
a contract to leave the damages aris-
ing from a breach of its provisions
to be determined in a court of law, or
to specify the amount of such dam-
ages in the contract itself. If the
contract is silent in respect to dam-
ages, the law will allow only the
actual or proximate damages. In
order, however, to provide for con-
§ 283.]
STIPULATED DAMAGES.
ir^
that the stated sum shall be paid in case of a violation of the
contract. A penalty is not converted into liquidated damages
by the intention that it shall be paid; it is intrinsically a dif-
ferent thing, and the intention that it shall he paid cannot
sequential damages or secure the
profits wliich are expected to arise
from business, or contracts that de-
jiend upon tlie performance of the
principal contract, or to save ex-
pense, or to render certain what
would otherwise be difficult if not
impossible to ascertain, it is some-
times desirable that the contract
should fix the amount of damages.
If, for instance, a party has a con-
tract for building a ship at a large
profit, conditioned upon his having
her completed at a specified time, it
would be competent for him in con-
tracting for the material to make the
damages, in case of breach, suffi-
cient to cover his prospective profits
in building tlie ship. While to pei'-
sons unacquainted with the circum-
[484] stances the damages stipu-
lated in such a contract might seem
greatly disproportionate to the loss
sustained by a breach of it, they
might, in fact, be insufficient to in-
demnify the party against the loss he
might sustain by being prevented
from completing the ship accordmg
to his contract. The parties them-
selves best know what their expec-
tations are in regard to the advan-
tages of their undertaking, and the
damages attendant on its failure, and
when they have mutually agreed
upon the amount of such damages
in good faith and without illegality,
it is as much the duty of the court
to enforce the agreement as it is the
other provisions of the contract. As
in construing the other parts of the
contract, so in giving construction to
the stipulation concerning damages,
the intention of the parties governs.
The inquiry is, what was the under-
standing of the parties ; and when it is
said in judicial parlance that certain
language of the parties is held to
mean liquidated damages and cer-
tain other language a penalty, this is
affirmed of the intention of the par-
ties, and not of the construction of
tlie court, in contradistinction from
such intention. It isthe province of
the court to uphold existing con-
tracts, not to make new ones. It is
not for the court to sit in judgment
upon the wisdom or folly of the
parties in making a contract when
their intention is clearly expressed,
and there is no fraud or illegality.
No judges, however eminent, can
place themselves in the phice or posi-
tion of the parties when the contract
is made, scan the motives and weigh
the considerations which influenced
them in the transaction so as to de-
termine what would have been best
for them to do; who was least saga-
cious, or who drove the best bargain.
Courts of common law cannot, like
courts where the civil law prevails,
award such damages as they may
deem reasonable, but must allow the
damages, whether actual or esti-
mated, as agreed upon by the parties.
The bargain may be an unfortunate
one for the delinquent party, but it is
not the duty of courts of common
law to relieve parties from the con-
sequences of their own improvidence,
where these contracts are free from
fraud and illegality.
"The controversy in the courts,
whether the particular language of
a contract in regard to damages is to
be construed as a penalty or liqui-
dated damages, ari.ses mainly from a
desire to relieve parties from wliat,
under a different construction, is as-
sumed to be an imprudent and ab-
T28
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 28."
alter its nature. A bond, literally construed, imports an in-
tention that its penalty shall be paid if there be default in
the performance of the condition; and formerly that was the
legal e£Fect. Courts of law now, however, administer the
surd agreement. When, however, it
is considered how little courts know
of the modifying circumstances of
the case, how far the particular pro-
vision was framed with reference to
the personal feelings of the parties,
what fluctuations in the market
were anticipated at the time and
what efiPect the contract in question
was expected to have upon other
business engagements or negotia-
tions, there is perhaps less cause for
departing from tlie literal construc-
tion of the language used than might
at first view be supposed. These
considerations should at least ad-
monish us that in straining the lan-
guage of a contract to prevent a
seeming disadvantage to one of the
parties, we may impose upon the
other party the very hardships which
both intended to protect him against
by the terms of their agreement.
The interests of the public are quite
as likely to be subserved in main-
taining the inviolability of contracts
as they are in contriving ways and
means to make a contract mean
[485] what is not apparent upon the
face of it to save a party fi-oni some
conjectural inequity growing out of
his supposed inadvertence or im-
providence." The judge stated three
rules upon which he said the courts
are substantially agreed, and the
third he stated as follows: "If the
instrument provides for the pay-
ment of a larger sum in future to
pay a less sum, the larger will be re-
garded as penalty in respect to the
excess over the legal interest what-
ever the language used; and if the
contract consist of several stipula-
tions, the damages for the breach of
which independently of the sum
named in the instrument are uncer-
tain and cannot well be ascertained,
the sum agreed upon is to be treated
as liquidated damages. Orr v.
Churchill, 1 H. BL 227; Astley v.
Weldon, 3 B. & P. 346; Mead v.
Wheeler, 13 N. H. 351; Atkyns v.
Kinnier, 4 Ex. 776. . . .
" In the case at bar the defendant
bound himself *in the full and liqui-
dated sum of $1,000 over and above
the actual damages ' in the event of
his failure to do and perform each
and every condition and stipulation
in his contract. Language can
scarcely make the intention of the
parties to fix the amount of the dam-
ages more clear and emphatia The
sum is not only ' liquidated,' but, as
if to exclude all possibility of its
being a penalty, it is declared to be
' over and above the actual damages.'
Whether it was to afford an addi-
tional stimulus to secure the fulfill-
ment of the contract, or to provide
against all other losses, or compen-
sate for other advantages contingent
upon this contract, or from the diffi-
culty of ascertaining the actual dam-
ages, or for some other reason, it is
manifest that other damages than
the legal damages were taken into
the account by the parties when
they incorporated this provision in
their agreement. Besides, the con-
tract contains several distinct con-
ditions and requirements for the ful-
fillment of which, i-espectively, no
sum is specified; and it is impossible
to ascertain such damages from the
very nature of these stipulations.
What actual damages would result
to the plaintiff solely from the de-
fendant's omission to land the logs
at a suitable place, or to notify the
§ 2S3.-
STIPULATED DAMAGES.
729
same equity to relieve from penalties in other forms of con-
tract as from those in bonds. The evidence of an intention
to measure the damage, therefore, is seldom satisfactory when
scaler seasonably, or to mark the
logs, or drive them as early as prac-
ticable, or to cut clear without
waste, or to perform the dozen other
stipulations of the contract, is prac-
tically beyond the power of a judi-
cial tribunal to ascertain with any-
thing like accuracy. The case clearly
comes within the second clause of
the third rule of interpretation, that
when parties incorporate several
distinct stipulations in a contract,
the breach of which cannot be re-
spectively measured, they must be
taken to have meant that the sum
agi-eed upon was to be liquidated
damages and not a penalty. That
such was the intention of the parties,
moreover, as drawn from the par-
ticular language of the contract
upon this point, cannot admit of a
doubt."
The stiptilation in this case is so
•expressed that it would seem not to
have been intended to provide the
fixed sum, in lieu of actual damages
difficult of proof, but acomminatory
sum in addition. The dissenting
opinion of Appleton, C. J., is believed
to contain a sounder exposition of the
contract and, the law applicable to it:
" In case of a contract damages are
the pecuniary satisfaction to which
the injured party is entitled by way
of compensation for its breach. Liqui-
[480] dated damages are damages
agreed upon by the parties, as and
for a compensation for and in lieu
of the actual damages arising from
such breach. They may exceed or
fall short of the actual damages —
but the sum thus lixed and deter-
mined binds the parties to such
agreement. When this sum is paid
all damages are paid. In the case at
-bur the sum of $1,000 was not liqui-
dated damages. It was not for dam-
ages at all. The contract so expressly
and uuqualiliedly states it. It was
a sum 'over and above the actual
damages.' The plaintiff, by its terms,
was furtlier entitled to recover the
'actual damage' which he might
sustain by • the non-performance of
any agreement hereinafter con-
tained.' Suppose the actual damages
were $5,000, would not the plamtitf
be entitled to recover tliat sum?
Most assuredly. The actual damages
are therefore excluded from the sum
of $1,000, and yet remain to be as-
sessed. . . . Liquidated damages
are fixed, settled and agreed upon in
advance, to avoid all litigation as to
those actually sustained. They are a
compensation for and in lieu of act-
ual damages, never in addition there-
to. The language of the agreement
leaves no room for any other con-
clusion than that the sum fixed is a
penalty. It is not for damages by
the terms of the contract. It is not,
therefore, a sum agreed upon in
liquidation of damages, but is a pen-
alty and so must be regarded."
Gowen v. Gerrish, 15 Me. 2Td; Gam-
mon v. Howe, 14 Me. 250.
In Chamberlain v. Bagley, 11 N. H.
234, Upham, J., said: "Court.s, from
a desire to avoid cases of seeming
hardship, have in many instances
made decisions disregarding the evi-
dent intent and design of the parties
to contracts; and a variety of rea-
sons have been assigned for this
course. . . . We see no reason
why contracts of this kind should
not be judged of by the rules of
construction as other contracts; or
why a technical, restricted meaning
should be given to particular phrases
without reference to other portions
730
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 283.
S
the amount stated varies materially from a just estimate of
the actual loss finally sustained.^ If a contract provides for a
penalty for the breach of some of its provisions it must be re-
of the instrument to learn the design
of the parties. The modern decisions
upon this subject have turned on the
construction of the agreement ac-
cording to the general intent. In
Reilly v. Jones, 8 Moore, 244, it is
said that where it may be fairly col-
lected that tlie intent of the parties
was that the damages stipulated for,
as between themselves, were to be
considered as liquidated they cannot
be treated as a penalty although
they might operate as such in a pop-
ular sense. . . . The words for-
feit or forfeiture, penal sum or pen-
alty, have in some instances been re-
garded as furnishing a very strong,
if not conclusive, indication of the
intention of the parties in an instru-
ment of this description; but the
weight to be given to such phraseol-
ogy will depend entirely on its con-
nection with other parts of the in-
strument. If an individual promises
to pay the damage which may be in-
curred under a given penalty, or un-
der a forfeiture, the damage only in
such case is agreed to be paid. On
the other hand, the penalty may be
expressly agreed to be paid in such
terms as to admit of no doubt that
such was the intent of the parties;
and where such is the case, notwith-
standing it may be named as a for-
feiture, or the parties are spoken of
as bound in a certain sum, if it was
clearly the design of the parties that
such sum should be paid, it is [487]
holden in the more modern decisions
as liquidated damages."
In Brewster v. Edgerly, 13 N. H.
275, the same doctrine is affirmed,
Gilchrist, J., said: " Many of the de-
cisions of the judicial tribunals here-
tofore have been based upon what is
now admitted to be an insecure
foundation; for the judgments have
often proceeded not upon the plainly
expressed intention of the parties in
a case free from fraud or illegality,
but upon the view which the court
entertained of what would have been
1 ScoQeld V. Tompkins, 95 111. 190,
35 Am. Rep. 160; Myer v. Hart, 40
Mich. 517, 29 Am. Rep. 553; Muldoou
V. Lynch, 66 Cal. 536, 6 Pac. Rep. 417,
quoting the text and pronouncing it
a clear statement of the result of the
decisions; Glasscock v. Rosengrant,
55 Ark. 376, 18 S. W. Rep. 379; Con-
don V. Kemper, 47 Kan. 126, 27 Pac.
Rep. 829, 13 L. R. A. 671, quoting the
text; Doane v. Chicago City R Co.,
51 111. App. 353; Iroquois Furnace Co.
V. Wilkin Manuf. Co.. 181 III. 582, 54
N. E. Rep. 987; Willson v. Baltimore,
83 Md. 203, 34 Atl. Rep. 774, 55 Am.
St. 339; Cochran v. People's R. Co.,
113 Mo. 359, 21 S. W. Rep. 6;
Schmieder v. Kingsley, 6 N. Y. Misc.
107, 26 N. Y. Supp. 31; Lindsay v.
Rockwall County, 10 Tex. Civ. App.
225, 30 S. W. Rep. 380; Haliday v.
United States, 33 Ct. of Cls. 453;
Quinn v. United States, 99 U. S. 30;
Mundy v. United States, 35 Ct. of
Cls. 265; Caesar v. Rubinson, — N. Y.
, 67 N. E. Rep. 58; Rayner v. Red-
eriaktiebolaget Condor, [1895] 2 Q. B.
289; Radloflf v. Haase, 96 111. App. 74;
Denver Land & Security Co. v. Ro-
senfeld Construction Co., 19 Colo»
539, 36 Pac. Rep. 146; Gillilan v. Rol-
lins, 41 Neb. 540, 59 N. W. Rep. 893;
New Britain v. New Britain Tele-
phone Co., 74 Conn. 326, 332, 50 Atl.
Rep. 881, 1015; Zimmerman v. Con-
rad, 74 S. W. Rep. 139 (St. Louis Ct.
of App.).
§ 283.]
STIPULATED DAMAGES.
731
garded as so providing if there is a breach of them all; as
where the damages resulting from the breach of some of its
stipulations are capable of being ascertained. It cannot pro-
on the whole just, considering such
circumstances as were proved to
exist. Tlie dangerous uncertainty of
such a mode is manifest wiien the
imjiossibility of placing any other
person in the exact condition of the
parties at the time the contract was
made is considered. Many motives
influence tliem, many considerations
weigh witli tliem which no other
person could understand and appre-
ciate unless lie could thorouglily
identify himself with the parties;
{ind when the contract, reasonably
construed, has a plain meaning that
one party shall, in a certain contin-
gency, pay the other party a definite
sum, thus relieving him from that
liability and making the contract
mean something which on its face is
not apparent, by assuming that we
can place ourselves in the position of
the parties, and can then know pre-
cisely what would have been equita-
ble for them to do, is nothing else
than a rescission of their contract,
and a substitution for it of one made
by the court. This result the cautious
policy of the common law has never
recognized as within its powers, nor
have the courts ever in terms claimed
the right to produce it; still it has
sometimes been effected by the anx-
ious desire of tiie tribunals that the
law should not be made the insiru-
ment of injustice; forgetting some-
times, perhaps, in this laudable zeal
that one of the greatest evils in the
administration of justice, and one
which brings numberless others in
its train, is that feeling of social inse-
curity which will exist whenever the
inviolability of contracts is trenched
upon, however pure might have
been the motive for so doing." The
court seem inclined to think Kemble
V. Farren, G Bing. 141, a case of liq-
uidated damages by reason of tlie
obvious intent of the parties as ex-
pressed in the coiitracL Mead v.
Wheeler, 13 N. H. 351.
But in Davis v. Gillett. 52 N. TL
126, Foster, J., said: "Tiie substance
of these princifiles (laid down by
Sedgwick in his treatise on tlie Mea.-r-
ure of Damages) is that the language
of the agreement is not conclusive;
and that the elFort of the tribunal
called to put a construction upon it
will be to ascertain the true intent
of the parties and to effectuate that
intent. In order to do this courts
will not be absolutely controlled by
terms that may seem to be quite
definite in their meaning, but will
be at liberty to consider and declare
a sum mentioned in the bond to be
a penalty, even although it may be
denominated liquidated damages,
and vice versa, if manifest justice
requires that a construction opposite
to the expressed language of the in-
strument should be adopted. In such
cases the court do not assume (as they
certainly could not) to make a new
contract for the parties; but they con-
clude that the parties have incor-
rectly and inconsiderately expressed
their intention. The court, therefore,
ascertain the intention and then give
effect to it."
In Williams v. Dakin (court [4SS]
of errors), 22 Wend. 201, Walworth,
J., said: "There is undoubtedly a
class of cases in which courts have
been in the habit of considering a
certain specified sum as penalty,
whatever may be the language of the
agreement. Such is the case wher-
ever such specified sum is evidently
intended as a mere collateral secu-
rity for the payment of a different
i3^
rONVENTIONAL LIQUIDATION'S AND DISCHARGES, [§ 2 S3.
vide for a penalty as to those and for liquidated damages aa
to the other clauses, though the consequences of their breach
are uncertain.^
sum which is the real debt; or where
it was evidently intended to be in
the nature of a mere penalty; and
there is another class where from
the language of the agreement it was
difficult to ascertain what the parties
really intended, in which the courts
have taken the reasonableness of the
provision as liquidated damages into
consideration for the purpose of de-
termining whether it was intended
as such or only as a comminatory
sum."
In Cotheal v. Talmage, 9 N. Y. 551,
the court recognize it as a general
rule that courts in acting upon these
stipulations should carry into effect
the intent of the parties; but there is
an intimation that this rule may be
departed from when the party might
be made responsible for the whole
amount of damages supposed to be
stipulated for breach of an unim-
portant part of his contract; *'and so
be made to pay a sum by way of
damages grossly disproportionate to
the injury sustained."
In Lampman v. Cochran, 16 N. Y.
275, 61 Am. Dec. 716, a sum specially
named in an agreement as "liqui-
dated damages," in case either party
shall fail to perform the contract,
was nevertheless held a penalty, be-
cause on the face of the instrument
it appeared that such sum would
necessarily be an inadequate com-
pensation for the breach of some of
the provisions, and more than enough
for the breach of others. The court
say: "The parties to this contract
must be regarded as having given
a wrong name to the sum of $500,
and that it is in substance a penalty,
and not liquidated damages."
In Col well V. Lawrence, 38 N. Y.
71, Miller, J., said: "One of the
rules of construction established is
that the courts are to be governed
by the intention of the parties to be
gathered from the language of the
contract itself and from the nature
of the circumstances of the case.
And in all the cases the courts have
treated it as a question as to the
intention of the parties." In that
case a contract had been made to
build and place in a steamboat two
steam-engines of a particular de-
scription on or before a day specified
for $8,000, and to have the same
ready for steam on or before that day
" under a forfeiture of $100 per day
for each and every day after the
above date until the same is com-
pleted as above." Held, the amount
being large and grossly dispropor-
tionate to the actual damage, it was
not a reasonable inference that it
was agreed on as liquidated dam-
ages.
In Clement v. Cash, 21 N. Y. 253,
Wright, J., said: "When the sum
fixed is greatly disproportionate to
the presumed actual damage, prob-
ably a court of equity may relieve;
but a court of law has no right to
erroneously construe the intention of
parties when clearly expressed, in
the endeavor to make better con-
tracts for them than they have made
for themselves. In these, as in all
other cases, the courts are bound to
ascertain and carry into effect the
true intent of the parties. I am not
disposed to deny that a case may
arise in which it is doubtful, from
the language employed in the instru-
ment, whether the parties meant to
1 Lansing v. Dodd, 45 N. J. L. 525; Whitfield v. Levy, 39 id. 149; Laurea
V. Bernauer, 33 Hun, 307.
§ 284.]
STIPULATED DAMAGES.
Y33
§284. The evidence and effect of intention to liquidate.
A bond is prima facie a penal obligation; but the sura [480]
stated where a penalty is usually inserted has sometimes been
held liquidated damages.' This has seldom been done, how-
agree upon the measure of compen-
sation to the injured party in case of
a breach. In such cases there would
be room for construction, but cer-
tainly none where the meaning of
the parties was evident and unmis-
takable. When they declare, in dis-
tinct and unequivocal terms, that
they have settled and ascertained the
damages to be $500, or any other sum,
to be paid by the party failing to
perform, it seems absurd for a court
to tell them that it has looked into
the contract and reached the conclu-
sion that no such thing was intended,
but that the intention was to name a
sum as a penalty to cover any dam-
ages that might be proved to have
been sustained by a breach of the
agreement; still, certain rules have
crept into the law that are supposed
to control the construction of con-
tracts of this character, until in the
view of some it has become difficult,
if not impossible, to support an
agreement for liquidated damages
in cases where the amount ascer-
tained by the parties seems dispro-
portionate to the conjectured actual
damage." Rolf v. Peterson, 2 Brown,
P. C. 470.
If the sum would be very enor-
mous and excessive, considered as
liquidated damages, it should be
taken to be a penalty though agreed
to be paid. Lord Eldon, C. J., la-
ments, in Astley v. Weldon, 2 B. &
P. 346, the adoption of such a princi-
ple. Hoag v. McGinnis, 22 Wend.
163, per Cowen, J.; Spencer v. Tilden,
5 Cow. 144 and note; Bagley v. Ped-
dle, 5 Sandf. 192; Berry v. Wisdom,
3 Ohio St. 241; Esmond v. Van Ben-
schoten, 12 Barb. 366; Nash v. Hcr-
mosilla, 9 CaL 5S5, 70 Am. Dec. 670;
Bright V. llowland, 3 How. (Miss.)
398; Shreve v. Brereton, 51 Pa. IT'i;
Streeper v. Williams, 48 id. 4."i0;
Powell v. Burroughs, 54 id. 329;
Moore v. Anderson, 30 Tex. 224; Chase
V. Allen, 13 Cray, 42; Gowen v. Ger-
rish, 15 Me. 273; Leggett v. Mutual
L. Ins. Co., 53 N. Y. 394; Dennis v.
Cummins, 3 Johns. Cas. 297; Hamil-
ton V. Overton, 6 Blackf. 206, 38 Am.
Dec. 136; Lea v. Whitaker, L R. 8
C. P. 70; Streeter v. Rush, 25 Cal. 67.
1 Guerin v. Stacy, 175 Masa 595.
56 N. E. Rep. 892; Shelton v. .Jack-
son, 20 Tex. Civ. App. 443, 49 S. W.
Rep. 415; De Graff v. Wickham, 89
Iowa, 720, 52 N. W. Rep. 503, 57 id.
420: Wilkinson v. Colley,6 Kulp, 401;
Studabaker v. White, 21 Ind. 212;
Fisk V. Fowler, 10 CaL 512; DutTy v.
Shockey, 11 Ind. 70, 71 Am. Dec. 348.
It is not to be regarded as a uni-
versal rule that contracts in the ordi-
nary form of penal bonds, designed
as an indemnity between private
persons for the non-performance of
collateral agreements, are to be re-
garded as a penalty. It cannot cor-
rectly be said to be true in all such
cases that the intention to treat the
sum named in the bond as a penalty
to secure the performance of the
condition and to be discharged on
payment of damages arising from
non-performance can be inferred as
a rule of law or a conclusive pre-
sumption from the mere form of the
obligation. Clark v. Barnard, lOS
U. S. 436, 453, 2 Sup. CU Rep. 878.
See n. to t^ 283.
The weight to be given the words
"forfeit," "forfeiture," "paid sum "
or " penalty " will depend on their
connection with other parts of the
instrument in which they are used,
^M
CONVENTIONAL LIQUIDATIONS AND DISCUARGES. [§ 284.
ever, unless words were employed in connection with that
sum to countervail the implication of penalty.^ And where
the parties in any other form of contract designate the stated
sum a penalty, or characterize it by other equivalent words, it
is an indication that a penalty, in a strict or technical sense,
is intended; 2 but the inference is not so strong because the
[490] obligation is in the form of a bond as may be inferred
from the greater number of instances in which a sura called a
penalty or forfeiture by the parties in contracts has been held,
nevertheless, liquidated damages. The tendency and prefer-
ence of the law is to regard a stated sum as a penalty, because
the nature of the agreement, the in-
tention of the parties, and other facts
and circumstances. De Graff v.
Wicliham, supra; Dobbs v. Turner,
70 S. W. 458.
1 Cotheal v. Talmage, 9 N. Y. 551,
61 Am. Dec. 716; Shiell v. McNitt, 9
Paige, 101; Leary v. Laflin, 101 Mass.
384; Smith v. Wedgwood, 74 Me. 457.
If a bond which stipulates that the
obligor shall abide by the determina-
tion of arbitrators contains no ex-
press agreement that the sum named
in it is to be regarded as liquidated
damages, and there is no evidence of
an intention that it should be so
stated, such sum will be regarded as
a penalty. Henry v. Davis, 123
Mass. 345.
A stipulation for "a penalty as
liquidated damages," held to be the
latter. Toomey v. Murpiiy, [1897J 2
Irish, 601.
2 Iroquois Furnace Co. v. Wilkin
Manuf. Co., 181 111. 583, 54 N. E.
Rep. 987; Meyer v. Estes, 164 Mass.
457, 32 L. R. A. 283, 41 N. E. Rep.
683; McCann v. Albany. 11 App. Div.
878, 43 N. Y. Supp. 94; Edgar &
Thompson Works v. United States,
34 Ct. of Cls. 205; Bignall v. Gould,
119 U. S. 495, 7 Sup. Ct. Rep. 294;
L. P. & J. A. Smith Co. v. United
States, 34 Ct. of Cls. 472: Moore v.
'Colt, 137 Pa, 289, 18 Atl. Rep. 8;
Wilkinson v. Colley, 164 Pa. 35. 30
Atl. Rep. 286. 26 L. R. A. 114; Dill v.
Lawrence, 109 Ind. 564, 10 N. E. Rep.
573; March v. Allabough, 103 Pa. 335;
Whitfield v. Levy, 35 N. J. L. 149;
Yenner v. Hammond, 36 Wis. 277;
Tayloe v. San di ford. 7 Wheat. 13;
White V. Arleth, 1 Bond, 319; Smith
V. Dickenson, 3 B. & P. 630; Davies
V. Penton, 6 B. & C. 216; Harrison v.
Wright, 13 East, 343; Brown v. Bel-
lows. 4 Pick. 179; Burr v. Todd, 41
Pa. 206; Robinson v. Cathcart, 2
Cranch C. C. 590; Bigony v. Tyson,
75 Pa. 157; Esmond v. Van Ben-
schoten, 12 Barb. 366; Clement v.
Cash, 21 N. Y. 253; Cheddick v.
Marsh, 21 N. J. L. 463; Hodges v.
King, 7 Met. 583; Salters v. Ralph,
15 Abb. Pr. 273; Bearden v. Smith, 11
Rich. 554; Heatwole v. Gorrell, 35
Kan. 693. Compare the last case
with Streeter v. Rush, 25 Cal. 67.
Even if the use of the word "pen-
alty " is not conclusive, very strong
evidence is required to authorize a
court to say that the parties' own
words do not express their intention;
the use of that word prevents a court
from holding that the parties stipu-
lated the damages. Smith v. Brown,
164 Mass. 584, 42 N. E. Rep. 101; Kelley
V. Seay, 3 Okl. 537, 41 Pac. Rep. 615;
Reno V. Cullinane, 4 Okl. 457, 46 Pac.
Rep. 510.
§ 284.]
STIPULATED DAMAGES.
735
actual damages can then be recovered, and the recovery bo
limited thereto.^ This tendency and preference, however, do
not exist where the actual damages cannot be ascertained b\'
any standard. A stipulation to liquidate in such cases is con-
sidered favorably.- If the amount is not so large as to raise a
doubt that it is proportionate to the injury, other circum-
stances being equal, it is believed the tendency of the judicial
mind is to treat a fixed sura as liquidated damages by what-
ever name it may be mentioned in the contract.'' Another
1 Hennessy v. Metzger, 152 111. 505,
38 N. E. Rep. 1058; Willson v. Balti-
more, 83 Md. 203, 34 AtL Rep. 774, 55
Am. St. 339; Williston v. Mathews, 55
Minn. 422. 56 N. W. Rep. 1112; Hali-
day V. United States, 33 Ct. of Cls.
453; O'Keefe v. Dyer. 20 Mont. 471,
52 Pac. Rep. 196, quoting the text;
Iroquois Furnace Co. v. Wilkin Manuf.
Co.,181 III. 582, 54 N.E. Rep. 987; Mon-
mouth Park Ass'n v. Wallis Iron
Works, 55 N. J. L. 132, 26 Atl. Rep.
140, .39 Am. St. 626; Fisk v. Gray, 11
Allen, 132; Lansing v. Dodd, 45 N. J.
L. 525; Whitfield v. Levy, 35 id. 149;
Burrill v. Daggett, 77 Me. 545; Smith
V. Wedgwood, 74 id. 458; Henry v.
Davis, 123 Mass. 345; Shute v. Taylor,
5 Met. 61; Wallis v. Carpenter, 13
Allen, 19: Cheddick v. Marsh, 21 N.
J. L. 463; Baird V. Tolliver, 6 Humph.
186, 44 Am. Dec. 298; Spear v. Smith,
1 Denio, 464.
It is provided by sec. 961. R. S. of
the U. S., that in all suits brought to
recover the forfeiture annexed to
any articles of agreement, covenant
bond or other specialty, where the
forfeiture, breach or non-perform-
ance appears by the default or con-
fession of the defendant or upon de-
murrer, the court shall render
judgment for the plaintiff to recover
60 much as is due according to equity.
And when the sum for which judg-
ment should be rendered is uncertain
it shall, if either of the parties request
it, be assessed by a jury. This has,
apparently, been considered appli-
cable to a contract expressly provid-
ing for stipulated damages in a ca.se
where no material damage to the
government was shown to liave re-
sulted from the breach of the con-
tract. Chicago House-Wrecking Ca
V. United States, 45 C. C. A. 343, 106
Fed. Rep. 385. The doctrine of this
case, aside from the statute, has been
disaj)proved. Sun Printing & Pub.
Ass'n V. Moore. 183 U. S. 042, 600, 23
Sup. Ct. Rep. 240.
2 Kelly V. Fejervary. Ill Iowa, 603,
83 N. W. Rep. 791; Sanders v. Carter,
91 Ga. 450, 17 S. E. Rep. 345: Mon-
mouth Park Ass'n v. Wallis Iron
Works, 55 N. J. L. 132, 26 Atl. Rep.
140, 39 Am. St. 626; Everett Land
Ca V. Maney, 16 Wash. 552, 48 Pac.
Rep. 243; Tennessee Manuf. Co. v.
James, 91 Tenn. 154, 18 S. W. Rep.
262. 30 Am. St. 865, 15 L. R. A. 211,
quoting the text; Jaquith v. Hudson,
5 Mich. 123; Duffy v. Shockey, 11
Ind. 70; Sparrow v. Paris. 7 H. & N.
594; Pierce V. Jung, 10 Wis. 30; Co-
theal V. Talmage, 9 N. Y. 551; Boys v.
Ancell, 5 Bing. N. C. 390; Richards
V. Edick, 17 Barb. 200; Noyes v.
Phillips, 60 N. Y. 408: Harris v. Mil-
ler, 6 Sawyer, 319; Knowlton v. Mac-
kay, 29 Up. Can. C. P. 601; Ivinson
V. Althrop, 1 Wyo. 71; Williams v.
Vance, 9 S.C.344: Birdsall v. Twenty-
third St Ry. Co.. 8 Daly, 419; Salem
V. Anson, 40 Ore. 339, 67 Pac. Rep
190, 56 L. R A. 109.
s Hennessy v. Metzger, 152 111. 505,
38 N. K Rep. 1058, 43 Am. St. 267;
736 CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 284,
statement of the rule is that if the language of the parties is
clear and explicit to the effect that the sura named is to be
deemed liquidated damages and the actual damages contem-
plated when the contract was made "are in their nature un-
certain and unascertainable with exactness, and may be de-
pendent upon extrinsic considerations and circumstances, and
the amount is not, on the face of the contract, out of all pro-
portion to the probable loss," effect will be given the con-
tract.^ But wherever there is doubt as to the justice of the
stipulation, if the sum be called a " penalty " in the contract,
that circumstance is frequently referred to as a reason for
holding it to be a penalty, on the ground of intention. The
purpose in such cases, however, is commonly a deduction from
the general effect of the contract, and the word " penalty " is
alluded to to confirm a foregone conclusion.^ On the other
hand, if the general effect of the contract otherwise leads to
the conclusion that the stipulated sum should be held to be a
penalt}', the circumstance that the parties have called it
[491] "liquidated damages," and said they do not mean it as
penalty, and even use very clear language that it is to be act-
ually paid, will not control the interpretation; it will, not-
withstanding, be considered a penalty.^ Bonds given to secure
Gates V. Parmly, 93 Wis. 294, 66 N. i Curtis v. Van Bergh, 161 N. Y.
W. Rep. 253, 67 id. 739; Manistee 47, 55 N. E. Rep. 398; Pressed Steel
Iron Works Co, v. Shores Lumber Car Co. v. Eastern R, Co., 121 Fed.
Co., 92 Wis. 21, 65 N. W. Rep. 863; Rep. 609 (Ct. Ct. of Appeals, 8th Ct),
Half V. O'Connor, 14 Tex. Civ. App. citing this and the preceding sec-
191, 37 S. W. Rep. 238; Standard But- tion,
ton Fastening Co. v. Breed, 163 Mass. ^^^iiigon v. Dunwody, 100 Ga. 51,
10, 39 N. E. Rep 346; McCurry v. 28 S. E. Rep. 651 ; Poppers v. Meagher,
Gibson, 108 Ala. 451, 54 Am. St. 177, 148 111. 193, 35 N. E. Rep. 805; Gates
18 So. Rep. 806; Boyce v. Watson, 53 v. Parmly, 93 Wis. 294, 66 N. W. Rep.
III. App. 301; Pastor v. Solomon, 26 253, 67 id. 739; Edgar & Thompson
N. Y. Misc. 125, 54 N. Y. Supp. 575; Works v. United States, '34 Ct. of
Railroad v. Cabinet Co., 104 Tenn. Cls. 205; Willson v. Love, [1896] 1 Q.
568, 58 S. W. Rep. 303, 78 Am. St. 933; B. 626; Houghton v. Pattee, 58 N. H.
Jaqua v. Headington, 114 Ind. 309. 326; Mathews v. Sharp, 99 Pa, 560;
16 N. E. Rep. 527; Bird v. St John's Col well v. Lawrence, 38 N. Y. 75.
Episcopal Church, 154 Ind. 138, 65 N. ^ Chicago House- Wrecking Co. v.
E.Rep. 129; Maxwell v. Allen, 78 Me. United States, 45 C. C. A. 343, 106
32, 57 Am. Rep. 783, 3 Atl. Rep. 386; Fed. Rep. 385 (disapproved in Sun
Hoi brook v. Tobey, 66 Me. 410, 22 Am, Printing & Pub. Ass'n v. Moore, 183
Rep,'581;Lynde V.Thompson, 2 Allen, U. S. 642,660, 23 Sup. Ct. Rep. 240, as
456; Colby v. Bailey, 5 Hawaiia, 152. is Gay Manuf. Co. v. Camp, infra)'.
I 284.] STIPULATED DAMAGES. 737
the erection of public works pursuant to statutes are to bo re-
garded as penal because it cannot be supposed that it was the
intention of the legislature to fix the damages in every case
for each and every breach of the contracts the bonds were
given to secure the performance of, regardless of the resulting
injury.^ The penalty of a druggist's bond given to assure his
observance of the law is not to be considered as liquidated
damages.- And so of bonds usually given to secure the per-
formance of statutory duties,^ and the bonds required of retail
liquor dealers,* though a bond given under the liquor tax law
of Kew York to secure on the part of tlie principal therein the
observance of that law and also good behavior in other par-
ticulars essential to the orderW and proper conduct of his busi-
ness, is for stipulated damages, and the liability of the surety
thereon is not affected because a judgment has been rendered
against the principal for a sum equal to the penalty of the
bond.^ The rule in Connecticut is to the same effect.^
It is apparent from this consideration of the cases that in
determining whether the sura named in a contract is to be
taken as a penalty or liquidated damages courts are influenced
largely by the reasonableness of the transaction, and are not
restrained by the form of the agreement, nor by the terms
Radloff V. Haase, 96 111. App. 74; that something else was really in-
Gay Manuf. Co. v. Camp, 13 C. C. A. tended. Kelley v. Fejervary, 111
137, 65 Fed. Rep. 794; Lowman v. Iowa, 693, 83 N. W. Rep. 791.
Foley, 14 N. Z. 699; Wheedon v. i Nevada County v. Hicks, 38 Ark.
American Bonding & Trust Co., 128 557; Pigeon v. United States, 27 Ct.
N. C. 69, 38 S. E. Rep. 255; Seeman v. of Cls. 167. But see tlie last para-
Biemann, 108 Wis. 365, 84 N. W. Rep. graph of this section.
490; Higbie v. Farr. 28 Minn. 439, 10 2 state v. Estabrook, 29 Kan. 739.
N. W. Rep. 592; Horner v. Flintoff, 9 3 Clark v. Barnard, 108 U. S. 436, 2
M. & W. 678; Dennis v. Cummins, 3 Sup. Ct. Rep. 878; United States v.
Johns. Cas. 297, 2 Am. Dec. 160; Montell, Taney, 47. See People v.
Lindsay v. Anesley, 6 Ired. 188; Central Pacific R. Co., 76 Cal. 29, 18
Baird v. ToUiver, 6 Humph. 186, 44 Pac. Rep. 90.
Am. Dec. 298; Yenner v. Hammond, ^ State v. Larson, 83 Minn. 124, 86
36 Wis. 277; Lapman v, Cochran, 16 N. W. Rep. 3. See Jenkins v. Dan-
N. Y. 275. ville. 79 111. App. 339.
If the parties use the term "liq- ''Lyman v. Shenandoah Social
uidated damages" the usual tech- Club, 39 App. Div. 459, 57 N. Y. Supp.
nieal meaning will be given it if no 372.
reason appears for doing otherwise, ^ Quintard v. Corcoran, 50 Conn,
and the party objecting to such con- 34.
struction has the burden of showing
Vou 1 — 47
738 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 284.
used by the parties, nor even by their manifest intent. Where
the sum named has been expressly designated as stipulated
damages it has been held to be a penalty; and, conversely,
where the sum has been denominated a penalty, it has been
declared to be stipulated damages. And where the intent of
the parties has been manifest it has been disregarded if the
sum was an unconscionable one.^ The better rule is that de-
clared in a recent case decided by the supreme court of the
United States, the doctrine of which puts agreements for the
liquidation of damages upon substantially the same footing as
other contracts in which fraud, surprise or mistake has not
entered."
A condition in an ordinance governing the rights and duties
of a water company in its relations to the municipality may
be sustained as providing for stipulated damages though it
would be considered as providing for a penalty if it was part
of a contract between individuals. It was said in a case in-
volving this question: In granting the franchise to the water
company the city was exercising a public and governmental
function. It could impose such conditions and enforceable
penalties as it deemed necessary and proper to secure the
object sought to be attained. It had the right to provide what
rates or rentals the company might charge for water, and when
and under what circumstances it should have the right to
charge them. The business in which the water company was
about to engage was one affected with a public interest, and
hence subject to regulation in the exercise of the police power
of the state. In accepting the ordinance the water company
accepted it with all its terms and conditions. Hence, we do
not think the ordinary rules which apply to a contract between
private parties with reference to business not affected with a
public interest have any application in determining whether
this provision is or is not a non-enforceable penalty. Even if
1 Davis V. United States, 17 Ct. of Ian v. Rollins, 41 Neb. 540, 59 N. W.
Cls. 201; L. P. & J. A. Smith Co. v. Rep. 893; Ctesarv. Rubinson, 71 App.
United States. 34 id. 473; Sanford v. Div. 180, 75 N. Y. Supp. 544; Dobbs v.
First Nat. Bank, 94 Iowa, 683, 63 N. Turner, 70 S. W. Rep. 458.
W. Rep. 459; De Graff v. Wickiiaiu, 89 ^ Sun Printing & Pub. Co. v. Moore,
Iowa, 720, 52 N. W. Rep. 503, 183 U. S. 642, 22 Sup. Ct. Rep. 240,
57 id. 8:;0; O'Keefe v. Dyer, stated and quoted from in § 283.
20 Mont. 477, 52 Pac Rep. 196; Gilli-
1
§ 2S5.] STIPULATED DAMAGES. 739
it is to be considered as a penalty we think it is enforceable,
although the same provision, if contained in a private contract,
might be non-enforceable. There is no reason why the city,
in exercising a governmental function with reference to a busi-
ness affected with a public interest, might not incorporate
into the very ordinance granting the franchise an enforceable
condition or penalty in the nature of a public regulation to in-
sure performance of its public duty on part of the grantee of
the franchise.^
§ 285. Stipulated sum where damages otherwise certain
or uncertain. There is a marked difference between con-
tracts which relate to subjects within established rules for
measuring damages, and those for infraction of which the
damages are uncertain and difficult to be proved. A stipulated
sum in a contract of the former class is generally unnecessary
unless to restrict damages below the legal standard or extend
them beyond it. The parties have the right to do either; and
when the intention is clearly manifested to do so, it will be en-
forced in cases clear of fraud, oppression or unconscionable ex-
travagance.- But in such cases the disparity between the agreed
sum and the actual injury is readily seen, and may be supposed
1 State Trust Co. v.Duluth, 70 Minn, per bushel, when they were worth
257,73 N. W. Rep. 249. See Nilson thirty-seven cents. It was held that
V. Jonesboro, 57 Ark. 168, 20 S. W. the jury might disregard the con-
Rep. 1093; Brooks v. Wichita, 114 tract because unconscionable and
Fed. Rep. 297, 53 C. C. A. 209; Salem oppressive as to the sum added for
V. Anson, 40 Ore. 339, 67 Pac. Rep. costs; but otherwise valid, because
190, 56 L. R. A. 169; Whiting v. New within a specified time the debtor
Baltimore, 127 Mich. 66, 86 N. W. had the option to pay money at the
Rep. 403. rate of $1 for five bushels. Cutler v.
^Lincoln v. Little Rock Granite Johnson, 8 Mass. 266; Baxter v.
Co., 56 Ark. 405, 19 S. W. Rep. 1056; Wales, 12 id. 365; Leland v. Stone,
Nielson V. Read, ISPhila. 450. 12Fed. 10 id. 459; James v. Morgan, 1
Rep. 441; Gallo v. McAndrews, 29 Levinz, 111; Earl of Chesterfield v.
Fed. Rep. 715; Lipscomb v. Seegers, Jansen, 1 Wils. 287; Russell v.
19 S. C. 425; Sun Printing & Pub. Roberts, 3 E. D. Smith, 318.
Ass'n V. Moore, 183 U. S. 642, 22 Sup. In an action brought on a promise
Ct. Rep. 240. of £1,000 if the plaintiff should find
In Cutler v. How, 8 Mass. 257, a the defendant's owl, the court de-
party being liable to have his prop- clared, though the promise was
erty taken to satisfy an execution, proved, the jury might mitigate the
gave an obligation to pay tlie debt, damages. Bac. Abr., Damages, D.
and a certain amount for costs not See Thornborow v. Whitacre, 2 Ld.
incurred, in oats at twenty cents Raym. 1164.
740 CONVENTIONAL LICiUIDATIONS AND DISCHAROES. [§ 285.
to liave been equally apparent to the parties; and courts, pro-
ceeding upon the rational theory, which all experience con-
firms, that large damages for small injurj^ are never willingly
stipulated to be actually paid, nor a small and disproportionate
compensation accepted for a great injury, are seldom con-
vinced that such unequal contracts are voluntarily entered into
to liquidate damages. Of this nature are contracts for the
[492] payment of money, and all others for the violation of
which market values furnish the data ordinarily adequate for
the ascertainment of due compensation. AVhen such contracts
provide for damages, either more or less than those due by the
legal standard, they must be drawn with great clearness to
express the intention ; and in general there should appear on
their face or otherwise some ground for departing from that
standard ; for the leaning of the court in case of doubt will be
towards the construction that the provision is a penalty.^ On
the other hand, where a contract is of such a character that
the damaofes which must result from a breach of it are uncertain
in their nature and not susceptible of proof by reference to
any pecuniary standard, it is deemed especially fit that the
parties should liquidate them, and any stipulation they make
ostensibly for that purpose receives favorable consideration.^
iWilliston V. Mathews, 55 Minn. Pac. Rep. 196; Squires v. El wood, 33
422, 56 N. W. Rep. 1112; State Trust Neb. 126, 49 N. W. Rep. 939; Mcln-
Co. V. Duluth, 70 Minn. 257, 73 N. W. tosh v. Johnson, 8 Utah, 359, 30 Pac.
Rep. 257: Lowman v. Foley. 14 N. Z. Rep. 1091; Maudlin v. American Sav-
699: Parlin v. Boatman, 84 Mo. App. ings & Loan Ass'n, 63 Minn. 258, 65
67; Seemanv. Beemann, 108Wis. 365, N, W. Rep. 645; Radloff v. Haase,
84 N. W. Rep. 490; Tilley v. Ameri- 196 III. 365, 63 N. E. Rep. 729, and
can Building & Loan Ass'n, 52 Fed. local cases cited: Nilson v. Jones-
Rep. 618; Lansing v. Dodd. 45 N. J. boro, 57 Ark. 168, 175, 20 S. W. Rep.
L. 525: Tinkham v. Satori, 44 Mo. 1093, citing the text; Johnson v.
App. 659: Fisk v. Gray. 11 Allen, 132; Cook, 24 Wash. 474, 64 Pac. Rep. 729,
Baird V. ToUiver, 6 Humph. 186, 44 citing the preceding section; Home.
Am. Dec. 298; Foote v. Sprague, 13 Land & Cattle Co. v. McNamara, Til
Kan. 155; Tholen v. Duffy, 7 id. 405; Fed. Rep. 822, 49 C. C. A. 642, apply-
Kurtz V. Sponable, 6 id. 395; Wil- ing the Montana code, and citing the
mington Transportation Co. V. O'Neil, text; Ctesar v. Rubinson, — N. Y.
98 Cal. 1, 32 Pac, Rep. 705; Easton v. , 67 N. E. Rep. 58.
Cressey, 100 Cal. 75, 34 Pac. Rep. 622; 2 Consolidated Coal Co. v. Peers, 150
Jack V. Sinsheimer, 125 Cal. 563, 58 111. 344, 37 N. E. Rep. 937; Hennessy
Pac. Rep. 130; North & South Rolling v. Metzger, 152 111. 505, 38 N. E. Rep.
Stock Co. V. 0'Hara,73 111. App. 691; 10-58, 43 Am. St. 267; Heisen v.
O'Keefe v. Dyer, 20 Mont. 477, 52 Westfall, 86 111. App. 576; Louisville
§ 286.]
STIPULATED DAMAGES.
r4i
§ 2SG. Contracts for the payment of money. These are
contracts of the highest degree of certainty. Interest is the
universal measure of damages for mere delay of payment.*
But some latitude is allowed for modifying the rate by con-
tract. Stipulations as to rate before maturity, not exceeding
any statutory limit, are uniformly enforced in cases free from
fraud or oppression. There is no reason why a party may not
stipulate the rate after maturity as freely and effectually as be-
fore, except that such stipulations are made with less caution,
for they are made only to be operative in case of default, an
event not then anticipated to occur. When, therefore, the rate
is made very much higher immediately after maturity than
that reserved before, there is a departure from the standard of
compensation fixed by the parties for the period of credit, and
it has been held in some cases that such increased rate [493]
as damages is in the nature of a penalty i^ and in other cases
Water Co. v. Youngstown Bridge Co.,
16 Ky. L. Rep. 350; Woodbury v.
Turner, etc. Manuf. Co., 96 Ky. 459,
29 S. W. Rep. ^'95; Monmouth Park
Ass'n V. Wallis Iron Works, 55 N. J.
L. 132, 26 Atl. Rep. 140, 39 Am. St.
626; Goldman v. Goldman, 51 La.
Ann. 761, 25 80. Rep. 555; Willson v.
Baltimore, 83 Md. 203, 34 Atl. Rep.
774, 55 Am. St. 339; Mawson v. Lea-
vitt, 16 N. Y. Misc. 289, 87 N. Y.
Supp. 1138; Nilson v. Jonesboro, 57
Ark. 168, 20 S. W. Rep. 1093, citing
the text; Waggoner v. Cox, 40 Ohio
St. 539; Berrinkott v. Traphagen, 39
Wis. 219; Wooster v. Kisch, 26 Hun,
61; Jones v. Binford, 74 Me. 439;
Geiger v. Western Maryland R. Co.,
41 Md. 4; Pennsylvania R. Co. v.
Reichert, 58 id. 201, 277; Wolf Creek
Diamond Coal Co. v. Schultz, 71 Pa.
180; Kemble V. Farren, 6 Bing. 141;
Sainter v. Ferguson, 7 C. B. 716;
Fletcher v. Dyche, 2 T. R. 32; Spar-
row V. Paris, 7 H. & N. 594; Mundy
V. Culver, 18 Barb. 336; Bagley v.
Peddie, 16 N. Y. 469, 69 Am. Dec. 713;
Dakin v. Williams, 17 Wend. 447;
Knapp V. Maltby, 13 Wend. 587;
Price V. Green. 16 IL & W. 346;
Jaquith v. Hudson, 5 Mich. 123;
Cotheal v. Talmage, 9 N. Y. 551;
Dennis v. Cummins, 3 Johns. Cas.
297, 2 Am. Dec. 160; Whiting v. New
Baltimore, 127 Mich. 66, 88 N. W.
Rep. 403, citing the text; Peach v.
Jewish Congregation of Johannes-
burg, 1 So. African Rep. 345 (1894).
1 Morrill v. Weeks, 70 N. H. 178, 46
Atl. Rep. 32; Orr v. Cliurchill, 1 H.
Black. 227; Fisk v. Gray. 11 Allen,
132; Watkins v. Morgan, 6 C. & P.
661; Hughes v. Fisher, Walk. (Miss.)
516.
2 Waller v. Long, 6 Munf. 71 ; Upton
V. O'Donahue. 32 Neb. 565, 49 N. W.
Rep. 207; Hallam v. Telleren, 55 Neb.
255, 75 N. W. Rep. 560.
In Astley v. Weldon, 2 B. & P. 346,
Heath, J., said: "It is a well-known
rule in equity that if a mortgage
covenant be to pay 5L per cent., and
if tlie interest be paid on certain
days then to be redm-ed to 4/. per
cent, the court will not relieve if the
early days be suffered to pass with-
out payment; but if the covenant
be to pa)' 4/. per cent., and the party
742
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 286.
that anything above the legal rate is a penalty, even though
parties are by law at liberty to stipulate for any rate of inter-
est proper without restriction.^ But the general current of
authority is that any rate which parties may lawfully agree
to pay before maturity may be fixed as the rate afterwards,
though the debt, before it becomes due, bears no interest or a
lower rate.- If, however, a rate is fixed for interest as dam-
ages which is above the highest that may be reserved by agree-
ment to be paid during the period of credit, it is not usurious,
[494] because the debtor can at any time relieve himself by
payment.' But such excessive rate will be held a penalty if it
exceeds any which the law recognizes as compensation.* In
Illinois even a rate above that allowed by law to be contracted
for before maturity may be fixed as liquidated damages after
maturity, if not intended as an evasion of the statute against
do not pay at a certain time it shall
be raised to 5Z. per cent, there the
court of chancery will relieve." See
Gully V. Remy, 1 Blackf. 69; Her-
bert V. Salisbury, etc. R. Co., L. R. 2
Eq. 321; Ay let v. Dodd, 2 Atk. 238;
Watts V. Watts, 11 Mo. 547.
1 Mason v. Cailender, 2 Minn. 350,
72 Am. Dec. 102; Talcott v. Marston,
3 Minn. 339; Daniels v. Ward, 4 id.
168: Robinson v. Kinney, 2 Kan. 184;
Watkins v. Morgan, 6 C. & P. 661.
2 Palmer v. Leffler, 18 Iowa, 125;
Phinney v. Baldwin, 16 111. 108, 61
Am. Dec, 62; Fisher v. Bid well, 27
Conn. 363; Downey v. Beach, 78 111.
53: Funk v. Buck. 91 111. 575; Wern-
wag V. Mothershead, 3 Blackf. 401;
Latham v. Darling, 2 111. 203; Young
V. Fluke, 15 Up. Can. C. P. 360;
Witherow v. Briggs, 67 111. 96; Davis
V. Rider, 53 111. 416; Brewster v.
Wakefield, 22 How. 118; Wyman v.
Cochrane, 35 111. 152; Gould v.
Bishop Hill Colony. 35 111. 334; Law-
rence V. Cowles, 13 111. 577; Smith v.
Whitaker, 23 111. 367; Young v.
Thompson, 2 Kan. 83; Dudley v.
Reynolds, 1 Kan. 285; Wilkinson
V. Daniels, 1 Greene, 179; Taylor v.
Meek, 4 Blackf. 388. See ch. 8.
3 Lawrence v. Cowles. 13 111. 577;
Gould V. Bishop Hill Colony, 35 III.
324; Davis v. Rider, 53 ill. 416;
Witherow v. Briggs, 67 111. 96; Wil-
day V. Morrison, 66 III. 532; Cutler v.
How, 8 Mass. 357; Call v. Scott, 4
Call, 402; Wilson v. Dean, 10 Iowa.
432; Gower v. Carter, 3 Iowa, 244, 66
Am. Dec. 71; Moore v. Hylton, 1 Dev.
Eq. 433; Campbell v. Shields, 6
Leigh. 517; Gambril v. Doe, 8 Blackf.
140, 44 Am. Dec. 760; Fisher v. Otis,
3 Pin. 78; Shuck v. Wight, 1 G.
Greene, 128; Wight v. Shuck, Morris,
425; Fisher v. Anderson, 25 Iowa, 28,
95 Am. Dec. 761 ; Jones v. Berryhill, 25
Iowa, 289; Rogers v. Sample. 33 Miss.
310, 69 Am. Dec. 349; Roberts v. Tre-
mayne, Croke's James, 507; Floyer v.
Edwards, 1 Cowp. 112; Wells v. Gir-
ling, 1 Brod. & Bing. 447; Caton v.
Shaw, 2 H. & G. 13; Bac. Abr., title
Usury.
4 Gower v. Carter, 3 Iowa, 244, 66
Am. Dec. 71; Shuck v. Wight, 1 G.
Greene, 128; Wilson v. Dean, 10 Iowa,
432; Wight v. Shuck, Morris, 425.
§ 2sn.]
STIPULATED DAMAGES.
743
usury.i jlo damages for the mere non-payment of money can
be so liquidated between the parties as to evade that statute.''
An a^^^reement in a note and mortgage to pay an increased rate
of interest in case of default in payment of any instalment of
interest, insurance premium, taxes or the principal, is in the
nature of a penalty, and will not be enforced in a foreclosure
suit.*
Where there are special circumstances which require punctu-
ality in the payment of moneys when due or which cause
special loss, or necessitate a particular OTitJay in consequenco
of default, a stipulated forfeiture on that default equity has
refused to relieve against, and stipulated compensations there-
fur have been sanctioned. Thus costs and expenses of making
collection, including attorney's fees, are sometimes imposed on
the debtor by the terms of the contract, and when reasonable
in amount have been sustained as valid in some states,* but held
void as against public policy in others."'* •
1 Smith V. Whitaker, 23 III. 367;
Downey v. Beach, 78 111. 53; Funk v.
Buck, 91 111. 575.
2 0rr V. Churchill, 1 H. Black. 227;
Gray v. Crosby, 18 Johns. 219.
3Krutz V. Robbins, 12 Wash. 7, 40
Pac. Rep. 415, 50 Am. St. 871.
4 Peyser v. Cole, 11 Ore. 39, 50 Am.
Rep. 451, 4 Pac. Rep. 520; Imler v.
Imler, 94 Pa. 372; Darly v. Maitland,
88 id. 384, 32 Am. Rep. 457 (the
amount provided as attorney's fee in
a mortgage is rather in the nature of
a penalty than stipulated damages,
and may be reduced); Miner v. Paris
Exchange Bank, 53 Tex. 559; Parham
V, Pulliam, 5 Cold. 497; Smith v. Sil-
vers, 32 Ind. 321: First Nat. Bank v.
Larsen, 60 Wis. 206, 50 Am. Rep. 365,
19 N. W. Rep. 67 (the stipulation is
not conclusive as to the amount to
be recovered); Robinson v. Loomis,
51 Pa. 78; Huling v. Drexell, 7 Watts,
126; Fitzsimons v. Baum, 44 Pa. 32;
M'Al lister's Appeal, 59 Pa. 204; Tall-
man V. Truesdell, 3 Wis. 443; Mosher
V. Chapin, 12 id. 453; Billingsley v.
Dean, 11 Ind. 331; Kuhn v. Myers,
37 Iowa, 351; Nelson v. Everett, 29
id. 184; Williams v. Meeker, id. 292;
Wilson S. M. Co. v. Moreno, 6 Sawyer,
35; Bank of British North America
V. Ellis, id. 90; Merck v. American
Freehold L. M. Co., 79 Ga. 213, 233;
Reed v. Miller. 1 Wash. 426. See g 564^
* State V. Taylor, 10 Oiiio, 308; Shel-
ton V. Gill, 11 id. 417; Witherspoon v.
Musselman, 14 Bush, 214; Bullock v.
Taylor. 39 Mich. 137, 33 Am. Rep. 356;
Dow V. Updike, 11 Neb. 95, 7 N. W.
Rep. 857. See § 504.
In Foote v. Sprague, 13 Kan. 155, a
stipulation in a mortgage for $50 as
liquidated damages for its foreclosure
was held void. Valentine, J., said:
"The stipulation in the mortgage in
this case ... is for a certain
sum to be paid by the debtor as
liquidated damages over and above
tiie debt and interest and all legiti-
mate costs. Now what was the
term * liquidated damages ' in tills
mortgage designed to cover ? If it
was designed to cover attorney fees,
why did not the parties say so in the
mortgage? If it was designed to
744
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 287.
[405] § 287. Same subject. Where there is a stipulation in
public undertakings that shareholders, on non-payment of calls,
shall forfeit their shares, equity, upon grounds of public policy
and from the necessity of punctuality in payment in such
cases, will refuse to interfere and grant relief from forfeiture.'
Sir William Grant, M. R.,"'^ refused to relieve against a forfeit-
ure under a by-law of an incorporated company which pro-
vided that the members receiving notice of default in paying a
call should incur a forfeiture by non-payment ten days after,
although the non-payment arose from ignorance of the call,
absence from the town where the notice was sent and other
accidental circumstances. He said: "This bill is founded on
forfeiture, and upon the ground that the plaintiflf did not con-
sider himself as a partner, and offering compensation, and
praying to be relieved from the forfeiture. The parties might
contract upon any terms they thought fit, and might impose
cover any legitimate cliarge or ex-
pense, why did they not say so? . . .
If the damages were for usurious
interest they could not be allowed.
And would it be proper to allow an
issue to be framed and a trial had to
determine whether these ' liquidated
damages ' were intended to cover
some legitimate charge or expense,
or to cover usurious interest ? "
In Johnsons v. Anderson, 3 N. J. L.
983, the defendant was indebted to
the plaintiff in the sum of $500; and
the plaintiff was indebted to two
other persons in the sum of $100,
which would come due May 1, 1810.
In consequence of plaintiff being in
danger of suit and costs for these
debts, the defendant promised that
he would pay the debt due from him
to the plaintiff to enable him to dis-
charge in time these debts, and in
case of failure to do so, and the
plaintiff should be sued and put to
costs and expenses, the defendant
would pay them. The defendant
failed to pay the money at the time,
whereupon the plaintiff was sued in
two actions and put to $80 costs, for
recovery of which from the defend-
ant this suit was brought. It was
held that the plaintiff was not en-
titled to recover. The court say,
" there is no Jegal consideration on
which the promise can attach. If
this was law, usury and oppression
would take a wide range. The cred-
itor in most cases suffers an incon-
venience in the case of a want of
punctuality in his debtor; he cannot,
however, recover more than the
debt, interest and costs; nor will a
promise to pay more help his case."
A. being indebted to B. and not be-
ing able to raise the money himself
directed B. to raise it and promised
to pay him whatever he had to pay
for it. B. raised it at an exorbitant
interest for three years; held, that
B. was the mere agent of A. in rais-
ing the loan and was entitled to re-
cover the whole amount paid by B.
for the use of the money. Shirley v.
Spencer, 9 111. 583.
1 3 Lead. Cas. in Eq. 917.
2 Sparks v. Liverpool Water Works,
13 Ves. 428.
§ 287.] 8TIPDLATED DAMAGES. 745
terms as arbitrary as they pleased. It is essential to such
transactions. This struck me as not like the case of individ-
uals. If this species of equity is open to parties enga^-ed in
those undertakings, they could not be carried on. It is essen-
tial that the money should be paid, and that they should [4%]
know what is their situation. Interest is not an adequate
compensation, even among individuals, much less in these un-
dertakings. In particular cases interest might be a compen-
sation, but in a majority of cases it is no compensation from
the uncertamty in which they may be left. The effect is the
same whether the money has been paid or not. They know
the consequence; the party making default is no longer a
member; but if a party can, in equity, enter into a discussion
of the circumstances each may bring his suit. They must re-
main a considerable time to see whether a suit will be be^un,
and before the suit can be decided. They do not know when
any member will sue. If a bill is to be permitted there can-
not be an}'- certainty that every member who has made default
may not file a bill. Can the court impose a limitation of the
period when bills may be filed ? If the court ever began to
deal with these cases the number must be infinite. This is the
mode which a party has to withdraw from a losing concern.
AVhy is not this equity open to contracts for the government
loans? Why may not they come here to be relieved, when
they have failed in making their deposit ? And if they could
have their relief, how could the government go on ? It would
be just as difficult for these undertakings to go on. If com-
pensation cannot be effectually made, it ought not to be at-
tempted. It would be hazardous to entertain such a bill.
Accident here is only the want of precaution,"*
1 See Georgia Land and Cotton Co. paid because the sliareholder had
V. Flint, 35 Ga, 226; Huglies v. died, and no administrator had been
Fisher, Walk. (Miss.) 516; Fowler v, appointed before the time for pay-
Word, Harp. 372. rnent had fully elapsed. Glass v.
Equity, says Mr. Cook in vol. 1 of Hope, 16 Grant (Up. Can. Ch.) 420.
his treatise on Corporations (3d ed.), Cf. Walker v. Ogden, 1 Biss. 287. 29
§ 134, will sometimes set aside a for- Fed. Cas. 41. . . , But it seems
feiture on purely equitable grounds; that the weight of authority is to tlio
as, for example, where a forfeiture etlect that a forfeiture of shares,
was de lared for non-payment of lawful and regular, for non-payment
•calls, which, it was shown, were not of assessments, is one of those for-
r4G
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 287.-
A sum greater than interest may be fixed by the parties a»-
compensation for paying a debt at an earlier time or at a.
different place.' It is obvious that the omission to pay money
pursuant to agreement in particular situations, or for specific
purposes which would otherwise miscarry, followed by loss
or injury of uncertain amount, and for which interest would
be no adequate compensation, may be the subject of a differ-
ent measure of reparation by agreement, as it often is without
such asreement.^
feitures from which equity will not
afford relief except in very excep-
tional cases. Sparks v. Liverpool
Water Works, 13 Ves. 428; Prender-
gast V. Turner, 1 Y. & C. 98; Ger-
raantown, etc. R. v. Fitler, 60 Pa.
124; Clark v. Barnard, 2 Sup. Ct.
Rep. 878, 108 U. S. 436, 4.56. Equity
will not relieve where, on the reor-
ganization of a company, old stock-
holders fail to use their options for
securing new shares before the expi-
ration of a fixed time limit. Vatable
V. New York, etc. R. Co., 96 N. Y. 49,
57. Equity will not relieve from
such forfeiture, because to do so
would, it is said, be in contravention
of the direct expression of the legis-
lative will. Small v. Herkimer
Manuf. Co., 2 N. Y. 330. 340. Neither
can a shareholder have a forfeiture
set aside merely because the calls
which he refused to pay were for
the purpose of paying debts which
the company would not have owed
but for the previous misappropria-
tion of the corporate funds by the
trustees. Marshall v. Golden Fleece,
etc. Co., 16 Nev. 1.56, 179; Weeks v.
Silver Islet, etc. Co., 55 N. Y. Super,
Ct. 1; Taylor v. North Star, etc. Co.,
79 Cal. 285, 21 Pac. Rep. 753.
1 Plummer v. McKean, 2 Stew. 423;
Jordan v. Lewis, id. 426; Thompson
v. Hudson, L. R 4 Eng. & Ir. App. 1,
reversing L. R 2 Eq. 612; Lord Ash-
town V. White, 11 Irish L. 400. See
United States v. Gurney, 4 Cranch,
333.
2Woodbridge v. Bropley, 2 West.
L. Monthly, 274; Hardee v. Howard.
33 Ga. 533, 83 Am. Dec. 176; Sutton
V. Howard, 33 Ga. 536. See § 76.
In Parfitt v. Chambre, L R. 15
Eq. 36, an action at law was by con-
sent referred, and the arbitrator
awarded and ordered that the de-
fendant should pay to the plaintiff
in the action an annuity of £1,200 a
year for life, and that in order to
secure the annuity the defendant
should, within two months, purchase
and convey to trustees on behalf of
the plaintiff a government annuity
of £1,200 a year, and that if for any
reason the annuity should not have
been legally secured before the last
day of the second month from the
date of the award, then, in addition
to the annuity, a further sum of £100
should become due and payable by
the defendant to the plaintiff on the
last day of the second month, and a
like sum of £100 on the last day of
each successive month, until such
annuity should be legally secured;
and the award added: "These
monthly payments are to be consid-
ered as additional to the payments
due in respect of the annuity, and as
a penalty for delay in the legal set-
tlement of the same." No annuity
as directed by the award having
been purchased, the plaintiff having
been adjudicated a bankrupt, the de-
fendant having died, and the £1,200
a year and £100 a month having
been regularly paid to the plaintiff
§ 288.] STIPULATED DAMAGES. 747
A contract between a borrower and a loan association that
the gross amount of the stock dues without any rebate or dis-
count for the time they had run might be recovered as liqui-
dated damages in case of default in complying with the terms
of the mortgage, is void, because the breach of the mortgage
is merely the breach of a contract for the payment of money,
the damages for which are easily ascertained. • Where thoro
is a breach of a contract to deliver property in exchange or
pay its agreed value, the obligation becomes one for the pay-
ment of money, and no question as between penalty and li<|ui-
dated damages arises.'
The duty of a bank to pay the checks, drafts and or- [407]
ders of a d(>positor, so long as it has in its possession funds of
his sufficient to do so, and which are not incumbered by any
earlier lien in its favor, is but a legal obligation to pay money.
It is implied from the usual course of business, if it is not ex-
press; and it usually is not.' The customer may draw out his
funds in such parcels as he may see fit, both as regards num-
ber and amount. The rule of law forbidding a creditor to
split up his demand does not affect this principle, which is
based upon a custom of the banking business.^ This duty of
the bank is of such importance that if it refuses without suf-
ficient justification to pay the check of the customer, lie has
his action, and may recover substantial damages, though no
actual loss or injury be shown, and ma}' recover for such ap-
proximate loss or injury as may be proven.^
§ 288. Large sum to secure payment of a smaller. Where
a large sum, which is not the actual debt, is agreed to be paid
and her assigns up to the defendant's Loan Ass'n, 63 Minn. 358, 65 N. W.
death, but not since, upon claim by Rep. 645.
the assignees to prove against the ^ First Nat. Bank v. Lynch, 6 Tex.
defendant's estate for the payment Civ. App. 590, 25 S. W. Rep. 1042.
due in respect of the annuity, and of 3 j)ownes v. Pha?nix Bank, 6 Hill,
the monthly payments accrued due 297; Marzetti v. Williams, 1 B. & Ad.
since his death: Held, that the £100 415; Watson v. Phoenix Bank, 8 ^let.
per month, though called a penalty, 217, 41 Am. Dec. 500; Morse on Bank-
was not to be regarded strictly as ing, 29.
such, and that the assignees were en- *ld.: Munn v. Burch, 25 III. 35;
titled to prove for the arrears both of Chicago, etc. Ins. Co. v. Stanford, 23
the annuity and the £100 a month." 111. 168, 81 Am. Dec. 270.
1 Maudlin v. American Savings & sjjollin v. Steward, 14 C R 595;
Morse on Banking, 453; g 77.
74S
CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 288.
[198] in case of a default in the payment of a less sum, which
is the real debt, such larger sum is always a penalty.^ This
rule has often been loosely stated, and its true scope and oper-
ation overlooked by following too rigidly the letter. A con-
tract may be framed so as apparently to secure the payment
of a less sura b}^ a greater, when it is in substance but an alter-
native or conditional agreement to accept a stipulated part in
full satisfaction if paid at a particular time or in a specified
manner.^ A demise of land was made at a yearly rent of
1 Cimarron Land Co. v. Barton, 51
Kan. 554,83 Pac. Rep. 317; Schmieder
V. Kingsley, 6 N. Y. Misc. 107. 26
N. Y. Supp. 31; Goodj'ear Shoe Ma-
chinery Co. V. Selz, 157 111. 186, 41
N. E. Rep. 625; Kimball v. Doggett,
63 111. App. 528; Turrell v. Archer, 1
Mart. Ch. 103; Fisk v. Gray. 11 Allen,
132; Walsh v. Curtis. 73 Minn. 254, 76
N. W. Rep. 52; Krutz v. Robbins, 12
Wash. 7, 40 Pac. Rep. 415, 50 Am. St.
871; Bradstreet v. Baker, 14 K I. 546;
Bryton v. Marston, 33 111. App. 211;
Clements v. Railroad Co., 132 Pa. 445,
19 Atl. Rep. 274, 276: Astley v. Wel-
don, 2 B. & P. 346; Taul v. Everet, 4
J. J. Marsh. 10; Bagley v. Peddle, 5
Sandf. 192; Beale v. Hayes, id. 640;
Cairnes v. Knight, 17 Ohio St. 69;
Morris v. McCoy, 7 Nev. 399; Tiernan
V. Hinman, 16 111. 400: Fitzpa trick v.
Cottingham, 14 Wi& 219; Haldeman
V. Jennings, 14 Ark. 329; Mead v.
Wheeler, 13 N. H. 353; Chamberlain
V. Bagley, 11 id. 234; Kerable v
Farren, 6 Bing. 141; Mason v. Callen-
der, 2 Minn. 350. 72 Am. Dec. 102;
Niver v. Rossman, 18 Barb. 50; Kuhn
V. Myers, 37 Iowa, 351; Davis v.
Hendrie, 1 Mont 499; Wallis v. Car-
penter. 13 Allen, 19; Gray v. Crosby,
18 Johns. 219; Brockway v. Clark, 6
Ohio, 45; Brevard v. Wimberly, 89
Mo. App. 331; Morrill v. Weeks, 70
N. H. 178, 46 Atl. Rep. 32.
- In Thompson v. Hudson. L. R. 2
Eq. 612, a creditor had agreed with
his debtor to remit part of his debt
upon having a mortgage to secure
the payment of the balance in two
years, without prejudice to his right
to recover the whole debt if such
balance was not paid within that
time. The debtor executed a mort-
gage for such balance, containing a
proviso that if the mortgage debt be
not paid within two years, the whole
of the original should be recovered;
and it was held that the proviso was
of the nature of a penalty from which
the mortgagor was entitled to be re-
lieved in equity; that the mortgagee
could only recover the smaller sum.
But on appeal to the house of lords
(L. R. 4 Eng. & Ir. App. 1), this decis-
ion was reversed; and it was held if
the larger sum is actually due, and
the creditor agrees to take a lesser
sum, provided that sum is secured in
a certain way and paid on a certain
day, and that, if these stipulations
be not performed, he shall be entitled
to recover the whole of the original
debt, such remitter to such original
debt does not constitute a penalty,
and a court of equity will not relieve
against it. Mayne on Dam. 101.
Lord Westbury said that any plain
man walking the streets of London
would have said that it was in ac-
cordance with common sense; and
if he were told that it would be requi-
site to go to three tribunals before
getting it accepted, would have held
up his hands with astonishment at
the state of the law. Carter v. Cor-
ley, 23 Ala. 6ia
§ 2S8.] STIPULATED DAMAGES.
740
£187, with the usual clauses for distress and entry on non-puv-
ment, and an agreement that so long as the lessee porlonnc'd
the covenant the lessor would be content with the yearly rent
of £93, payable on the same day as the first reserved [4M9]
rent. It was held that tlie larger rent was not penal; that
ejectment could be maintained on its non-payment.^
Such cases must be determined on the true intent of tiie
transaction. If the larger sum is in truth the actual price or
debt, and the smaller only agreed upon as a satisfaction if paid
under stated conditions, the omission to comply with the
terms of payment in the easier mode will preserve to the
creditor the right to exact the larger sum.^ A case in Wisconsin
was correctly decided on this principle. A bond was mad.,- in
a penalty of $900, conditioned that if the obligor should pay
to the obligee one year after the death of her husband, and an-
nually thereafter during her natural life, the sum of the interest
on $464 at the rate of seven per cent, per annum, the bond
should be void, otherwise of force; and it was also provided in
the condition that should any default be made in the payment
of the said interest or any part thereof on any day wherein
the same was made payable by the bond, and the same should
remain unpaid and in arrear for thirty days, then and in tliat
case the principal sura of $464, with arrearages of interest
thereon, should, at the option of the obligee, become immedi-
ately payable; and that if the payment of said interest were
promptly made, then at the obligee's death the debt and the
mortgage given to secure the bond should cease and be null.
A default occurred in the payment of the annuities of interest;
and the obligee gave notice of her option to consider the prin-
cipal, with the arrears of interest, presently due and payable.
The question was what sum was due on the bond which the
mortgage in suit was given to secure. A decree had been
made adopting the sum of $464, mentioned in the condition as
the principal that became due on its breach, and for that sum,
with the delinquent interest, judgment was rendered. The de-
fendant contended that the sum the plaintiff was entitled to
recover was not $464, but only the value of a life annuity of
1 Lord Ashtown v. White, 11 Irish 2 Waggoner v. Cox, 4 Ohio St 539,
L. 400; McNitt v. Clark, 7 Johns. 465. 543, quoting the text.
750 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 28S.
$32.48 at the time the plaintiff declared her option; at which
time she was fifty-two or fifty-three years of age. Such value,
computed by the Northampton tables, was then a little less
than $300. Lyon, J., said : " The covenant was voluntarily
[500] made by the obligor, and, so far as appears, he received
therefor full value for the sum which he agreed to pay at the
option of the obligee in case of default. The most that can be
said against the justice of it is that the damages would be the
same if default were made and the option declared at a much
later period in the life of the obligee. But that is a contingency
which it may be fairly presumed the obligor took into consider-
ation when he made his covenant; and it was always in his
power to prevent the happening of such contingency by paying
the annuity which he covenanted to pay." The judge added:
" It follows that the sum named in the bond is to be regarded
as stipulated damages unless the gross value of the life annuity
can be ascertained by some exact pecuniary standard." He
discusses this question and arrives at the conclusion that the
value is uncertain. It may be observed that that method of
determining whether the sum mentioned in the condition was
penalty or not would be very proper if it be assumed that the
annuity was the primary object of the arrangement, and that
no sum was originally fixed which represented the value of the
defendant's undertaking, or of the consideration received; and
that the gross sum was stipulated as the valuation put by the
parties on the annuity; and equally so if the case was that $464
was a sum arising in the transaction which they agreed might
be withheld so long as the interest on it was promptly paid,
and with the further benefit that the debt should cease at the
creditor's death, otherwise to be paid at once; then the case
stands on the principle of Thompson v. Hudson,* and the con-
ditional method of discharge not having been strictly followed,
the dispensation depending on it failed, and the original debt
remained unsatisfied and absolute.^
IL. R 2 Eq. 612, stated supra. brought to foreclose a mortgage made
2Berrinkott V. Traphagen, 39 Wis. to secure a payment of this note:
219. "For value received, I promise to
Longworth v, Askren. 15 Ohio St. pay N. L., or order, one thousand
370, does not appear to be consistent dollars, with interest yearly till paid,
-with these views. An action was and payable as follows: In two,
^§ 288.]
STIPULATED DAMAGES.
751
Whore a large sum is stipulated to be paid on the non- [oOl]
payment of a less amount made payable by the same instru-
ment, the former is prima facie a penalty. If the question is
to bo determined by construction of the instrument alone it
three, four, five, six, seven, eight, nine
and ten years, equal instahnents,
with interest yearly, as aforesaid,
being the contract price of a lot. But
if each and every payment is made
punctually as due. or before due, or
v.'ithin ten days after each is due, as
an inducement to punctuality, two
hundred dollars of the amount will
be released. And eight hundred dol-
lars and its yearly interest accepted
in full payment, but not otherwise."
Before the ten years expired full
$800 and annual interest on that sum
had been paid; but the payments had
not been made according to the
terms of the contract as to time and
amount. The court held that the
sum of $1,000 was penalty, and $800
the actual debt according to the face
of the note. White, J., said: "This
case presents the single legal ques-
tion: whether, upon the true con-
struction of the mortgage note sued
on, the one thousand dollars therein
mentioned is to be regarded as a pen-
alty. If that be its character, the
judgment of thesuperiorcourtshould
be affirmed; otherwise, it should be
reversed. This is not the case of an
agreement for the composition of a
subsisting, independent indebtedness.
The instrument in question creates
the only debt on which the plaintiff
relies for a recovery. Nor can the
claim made by the plaintiff's counsel
be supported, that the stipulation for
the discharge of the obligation by
the punctual payment of $800 in in-
stalments is a privilege given to the
payer, and inserted for his exclusive
benefit. This claim is based on the
assumption that the $1,000 was the
sole consideration for the lot. and
■consequently is the amount of the
actual debt. But it is as fair to pre-
sume that the omiss. on of the stipu-
lation in regard to the $-800 would
have defeated the sale as that the in-
sertion of the $1,000 secured it. The
transaction was the sale of tiie lot:
and the instrument in question con-
tains the terms upon which it was
made. All the stipulations on the
part of the Ricords are supported by
the same identical consideration. It
is not to be presumed that the sale
would iiave been concluded had any
of the terms actuallyagreed to been
omitted; and, as the terms of the
sale were satisfactory to the parties,
the presumption is they were ac-
quiesced in. not as a special favor to
either, but for the mutual benefit of
both. Nor, in our view, does the
order in which the sums are stated
change their character, or the legal
effect of the instrument; for whether
the amount to be paid is to be re-
duced upon compliance with the
terms of payment, or to be increased
as a default, is only a different mode
of expressing the same thing.
"All that the plaintiff, at the time
of making the contract, had a right
to expect was the payment of $800,
with the interest, in the instalments
and at the times stipulated. These
payments Ricords had promised to
make punctually'. A default oc-
curred; and in such a contract, in
our opinion, interest is to be regarded
as a compensation for the injury
caused by the delay. All beyond
must be regarded either as penalty
or liquidated damages; but under
neither form can the plaintiff be al-
lowed to recover more than wliat the
law deems adequate compensation
for the breach.
752
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 288,
would be deemed a penalty. May the real transaction be in-
vestigated and, upon proper facts, a different interpretation
and effect be given to the agreement? No language of the
contract can be adopted which will shelter a penalty so that
[502] inquiry may not be made into the subject-matter and
surroundings to ascertain if it be such. The principle is often
declared in terras that permits inquiry to go to the intrinsic
nature of the transaction; and a large sum promised as a
consequence of the non-payment of a small one will be held a
penalty whatever may be the language describing it.' "Wright,
C. J., said in an Iowa case: "From all, however, we may de-
duce one point as settled. Whether the sum mentioned shall
be considered as a penalty or as liquidated damages is a ques-
tion of construction, on which the court may be aided by cir-
cumstances existing extraneous to the writing. The subject-
matter of the contract, the intention of the parties, as well as
other facts and circumstances may be inquired into, although
" It is to be noted that the only
evidence of the terms of the sale is
what appears from the instrument
itself. There is nothing to show that
the contract for the purchase of the
lot was originally made, in fact, at
§1,000; and that the remission of the
contract price to §800 was the gratu-
itous act of the vendor. If the
abatement stood on this footing, it
would devolve on the party seeking
its benefit to show that he had com-
plied with the conditions upon which
it was offered."
This opinion bases the right of the
debtor to discharge the bond by pay-
ment of $800 on its being reserved in
the agreement of purchase; it, how-
ever, concedes that it was equally a
part of the contract of sale that
$1,000 should be paid if all the instal-
ments should not be punctually paid.
It would seem to be a reciprocal
right to enforce the bond according
to its terms; that there was as am pie
a consideration for the agreement in
either alternative as in the cases of
Lord Ashtown v. White, supra, and
McNitt V. Clark, 7 Johns. 465.
Longworth v. Askren, supra, is ap-
proved in Goodyear Shoe Machinery
Co. v. Selz, 158 111. 186. 41 N. E. Rep.
625. In the latter case a contract for
the monthly rental of certain pat-
ented machines, to be computed on
the month's manufacture of goods
with the machines, stipulated that
the rental should be due on the first
day of the month next following,
and to be paid within one month
from that day, and that if the rents
due on the first day of any month
shall be paid on or before the fif-
teenth day thereof the lessor will
grant a discount of fifty per cent. It
was resolved that the sum to be com-
puted, less the discount, was the act-
ual debt, and that the so-called
discount was a penalty.
1 Bryton v. Marston, 33 111. App.
211; Bagley v. Peddle, 5 Sandf. 192;
Niver v. Rossman, 18 Barb. 55; Mor-
ris V. McCoy, 7 Nev. 399.
§ 289.]
STIPULATED DAMAGES.
the words are to be taken as proved exclusively by tbu uui
inrr"!
ins:
§ 289. Stipulations where damages certain and easily
proved. On general principles, an agreement to pay a [50:{J
fixed sura as damages for non-performance of a contract, where
the loss or injury might without it be easily determin.Hl by
proof of market values, or by a precise pecuniary standard, is
subject to nearly the same criticism as a contract to liquidate
damages for non-payment of money. There are no pt-culiar
reasons why a stipulated sum should be treated as a penalty
for exceeding just compensation for a default in the paym«.'nt
of money, and not be so treated in case of a different agree-
ment where the excess is capable of being made equally mani-
fest.2 In money contracts any rate of interest not prohibited
by statute may be contracted to be paid as interest proper;
1 Foley V. McKeegan, 4 Iowa, 1, 66
Am. Dec. 107; Perkins v. Lyman, 11
Mass. 76,6 Am. Dec. 158; Hodges v.
King, 7 Met. 583; Dennis v. Cum-
mins, 3 Johns. Cas. 297, 2 Am. Dec.
160.
In Morris v. McCoy, 7 Nev. 399,
Lewis, C. J., said: "Although, as a
general rule, it is acknowledged that
the intention of the parties as ex-
pressed in the contract should be en-
forced, still, it is clearly ignored in
that class of cases where the parties
stipulate for the payment of a large
sum of money as damages for the
non-payment of a smaller sum at a
given day. In such cases, it is said,
no matter what may be the language
of the parties, the large sum will be
deemed a penalty, and not liquidated
damages." But upon an exception
to the exclusion of parol testimony
to affect the question where the
agreement was apparently of this
nature, and such extrinsic evidence
was offered to rebut the inference
that the larger sum was a penalty,
the learned judge said " that was not
admissible, because there was no am-
biguity: and it must be supposed
that the agreement was fully em-
Vou 1 — 48
bodied in tlie written instrument. 1
Greenlf. Ev., g 275."
2 Fisher v. Bid well, 27 Conn. 36A
Sec. 1670 of the Civil Code of Cali-
fornia pi'ovides that "every contract
by which the amount of damage to
be paid, or other compensation to be
made, for a breach of an obligation,
is determined in anticipation thereof,
is to that extent void, except as ex-
pressly provided " in sec. 1071, wliich
says: "The parties to a contract
may agree therein upon an amount
which shall be presumed to be the
amount of damage sustained by a
breach thereof, when, from the nat-
ure of the case, it would be imprac-
ticable or extremely diflScult to fix
the actual damage." It has been
ruled under these provisions that a
stipulation by a building contractor
to pay tlie owner a specified sum for
each day's delay in completing the
building is not of itself sufficient to
authorize a recovery. Patent Brick
Co. V. Moore, 75 Cal. 205, 16 Pac. Rep.
890; Long Beach City School Dis-
trict V. Dodge, 135 Cal. 401, 67 Pac.
Rep. 499.
There is no difficulty in fixing the
actual damage wliicli one sustains
754 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 289.
that is, during the period of credit; so any sura may be con-
tracted to be paid for property or services in a contract of
purchase or hiring. But when parties contract for the same
thinff in advance as damao-es for a considerable excess above
the customary rate of interest, or the market value of prop-
erty or other thing, the agreement will raise the inquiry
whether such excessive sum was intended to be paid ; or
whether, even if it was, it is not a penalty. It would be such,
according to the preponderance of authority, if not intended
to be paid in case of default, and if not fixed on the basis of
compensation.^ In such cases courts generally arrive at har-
monious conclusions by diverse modes of reasoning. One will
say the sum fixed is so flagrantly excessive it was evidently
not the intention of the parties that it should be paid or en-
forced, and therefore it is a penalty. Another will say the
excess, per se, makes the stated sum a penalty, and the inten-
tion of the parties is simply immaterial. It generally occurs
that where there is an agreement to pay a gross sum in the
[504:] event of the non-performance of a contract, and the case
is such that a jury can ascertain with reasonable certainty how
much damages the injured party has actually sustained by the
non-performance, courts are strongly inclined to regard the
gross sum as a penalty, and not as liquidated damages.^ If
by being deprived of the use of land Co., 16 Ohio Ct. Ct. 21, 64 Ohio St.
to which he is entitled. Eva v. Mc- 361. 60 N. E. Rep. 563; Seim v.
Mahon, 77 Cal. 467, 19 Pac. Rep. 873. Krause, 13 S. D. 530, 83 N. W. Rep.
Nor in ascertaining the damage re- 583; Schroeder v. California Yukon
suiting from the breach of a war- Trading Co., 95 Fed. Rep. 296; Wil-
ranty of the fitness of a harvesting mington Transportation Co. v. O'Neil,
machine. Greenleaf v. Stockton 98 Cal. 1, 32 Pac Rep. 705; Willson
Combined Harvester & A. Works, 78 v. Baltimore. 83 Md. 203, 34 Atl. Rep.
Cal. 606, 21 Pac. Rep. 369. 774, 55 Am. St. 339; Chaude v. Shep-
iSee Sun Printing & Pub. Ass'n v. ard, 122 N. Y. 397, 25 N. E. Rep. 358;
Moore, 183 U. S. 642, 22 Sup. Ct. Rep. March v. Allabough, 103 Pa. 335;
240. Brennan v. Clark, 45 N. W. Rep. 472,
2 Carson v. Arvantes. 10 Colo. App. 29 Neb. 385; Lansing v. Dodd, 45 N.
382, 50 Pac. Rep. 1080; Smith v. New- J. L. 525; Bradstreet v. Baker, 14
ell. 37 Fla. 147, 20 So. Rep. 249; Si- R. L 546; Davis v. United States, 17
mon V. Lanius, 9 Ky. L. Rep. 59; Hill Ct. of Cls. 201; Spear v. Smith, 1
V. Wertheinier-Swarts Shoe Co., 150 Denio, 464; Dennis v. Cummins, 3
Mo. 483, 51 S. W. Rep. 702; Connelly Johns. Cas. 297. 2 Am. Dec. 160;
V. Priest, 72 Mo. App. 673; Knox Streeter v. Rush, 25 Cal. 67; Bright
Rock Blasting Co. v. Grafton Stone v. Rowland, 3 How. (Mi.ss.) 398; Sco-
§ 2S9.]
STIPULATED DAMAGES.
the intention, however, is clear to liquidate damages, and the
amount is either not greatly above or below the sum which
would otherwise be recoverable; or, if above, was fixed spe-
cially to cover contemplated consequential losses, not provable
under legal rules, and is not an unreasonable provision there-
for, the sum fixed may be sustained as liquidated damages.*
But if the intention be doubtful, or the amount materially
varies from a just estimate of compensation, the stated sum will
be considered a penalty .^
field V. Tompkins, 95 111. 190, 35 Am.
Rep. 160; In re Newman, 4 Ch. Div.
724: Mansur & T. Implement Co. v.
Tissier Arms & H. Co., — Ala. — ,
33 So. Rep. 818.
In Spencer v. Tilden, 5 Cow. 144,
the defendant had agreed in writing
not under seal, for value received, to
pay $360, or twelve cows and calves,
"to be paid or delivered at a place
mentioned, in four years. It was held
that the value of the consideration,
and of the cows and calves, might
be inquired into to see whether the
sum expressed was intended by the
parties as penalty or liquidated dam-
ages; and it appearing that that
sum was much beyond the value of
either, it was considered in the nat-
ui'e of a penalty, and the plaintiff's
recovery was confined to the value
of the cows and calves. See note at
end of the case.
1 May V. Crawford, 150 Mo. 504, 51
S. W. Rep. 693; Henderson v. Mur-
phree, 109 Ala. 556, 20 So. Rep. 45;
Burk V. Dunn, 55 111. App. 25; Bird
V. St. John's Episcopal Church, 154
Ind. 138; Jaqua v. Headington, 114
Ind. 309, 16 N. E. Rep. 527: Nielson
V. Read, 12 Fed. Rep. 441: Gallo v.
McAndrews, 29 id. 715; Brooks v.
Wichita, 114 id. 297, 52 C. C. A. 209;
Hodges V. King, 7 Met. 583; Man ice
V. Brady, 15 Abb. Pr. 173; Durst v.
Swift. 11 Tex. 273; Walker v. Engler,
30 Mo. 130; Cotheal v. Talmage, 9
N, Y. 551, 61 Am. Dec. 716; Fitzpat-
rick V. Cottingham, 14 Wis. 219;
Easton v. Penn.sylvania & O. C. Co..
13 Ohio, 80; Tardeveau v. Smith's
Ex'r, Hardin, 175. 3 Am. Dec. 727;
Bradshaw v. Craycraft, 3 J. J. Marsh.
79; Hodges, Ex parte, 24 Ark. 197;
Talcott V. Marston, 3 Minn. 339;
Shreve v. Brereton, 51 Piu 175;
Knapp v. :\Ialtby, 13 Wend. 587;
Powell v. Burrouglis, 54 Pa. 329;
John.ston v. Cowan, .59 id. 275; Keeble
V. Keeble, 85 Ala. 552; Salem v, An-
son, 40 Ore. 339, 67 Pac. Rep. 190. 56
L. R. A. 169; Nilson v. Jonesboro, 57
Ark. 168, 20 S. W. Rep. 1093; Indi-
anola v. Gulf, etc. R Co.. 59 Tex. 594.
2 Chicago House-Wrecking Co. v.
United States, 45 C. C. A. 343, 106
Fed. Rep. 385 (disapproved in Sua
Printing & Pub. Ass'n v. Sloore, sn-
pi'a); Dennis v. Cummins, 3 Johns.
Cas. 297, 2 Am. Dec. 100; Lindsay v.
Anesley, 6 Ired. 188; Mills v. Fox, 4
E. D. Smith, 220; Esmond v. Van
Benschoten, 12 Barb. 306: Baird v.
Tolliver, 6 Humph. 186, 44 Am. Dec.
298.
The Alabama court looks with
more favor upon contracts to stipu-
late damages than do most courts.
It does not apply an exceptional
rule of construction to them, nor
protect one of the parties from the
consequences of his error of judg-
ment or improvidence at the ex-
pense of the other who may be, and
in the case of any other contract
would be, entitled to the rights given
756
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 290.
§ 290. Stipulation when damages uncertain. If a contract
does not afford any data from which actual damages can be
calculated this circumstance has been held to afford a reason
for regarding a sum designated in it as liquidated damages.^
[505] This test would include among those deemed uncertain
all contracts which require any extrinsic evidence to ascertain
the extent of the actual injury. Expressions may be found in
some cases favoring this criterion of uncertain damages.^ But
where the damages cannot be calculated by market values, nor
by any precise pecuniary standard, or where, from the peculiar
circumstances which the contract contemplates, there must be
other uncertainty affecting the practical ascertainment of the
amount of the actual loss, the law favors any fair adjustment
of it by stipulation.* The damages resulting from breach of a
him under it. "Wiiether the sum
agreed to be paid is out of propor-
tion to the actual damages, which
will probably be sustained by a
breach, is a fact into which the court
will not enter on inquiry if the in-
tent is otherwise made clear that
liquidated damages, and not a pen-
alty, is in contemplation." Keeble
V. Keeble. 85 Ala. 552, 5 So. Rep. 149,
quoted with approval in Henderson
V. Murphree, 109 Ala. 556, 20 So. Rep.
45. This is in harmony with Sun
Printing & Pub. Ass'n v. Moore, 183
U. S. 642, 23 Sup. Ct. Rep. 240.
1 Nilson V. Jonesboro, 57 Ark. 168,
20 S. W. Rep. 1093; Garst v. Harris,
177 Mass. 72, 58 N. E. Rep. 174;
Guerin v. Stacy, 175 Mass. 595, 56 N.
E. Rep. 892; Thorn & Hunkins Lime
& Cement Co. v. Citizens' Bank, 158
Mo. 272, 59 S. W. Rep. 109; Coal
Creek, etc. Co. v. Tennessee Coal, etc.
Co., 106 Tenn. 651, 62 S. W. Rep. 162;
Collier v. Betterton, 87 Tex. 440, 29
S. W. Rep. 467; Barry v. Harris, 49
Vt. 392; Everett Land Co. v. Maney,
16 Wash. 552, 48 Pac. Rep. 243; San-
ders V. Carter, 91 Ga. 450, 17 S. E.
Rep. 345; Fletcher v. Dyche, 2 T. R.
34; Waggoner v. Cox, 40 Ohio St.
539; Wolf V. Des Moines R Co., 64
Iowa, 380, 20 N. W. Rep. 481; Ward
V. Hudson River B. Co., 125 N.Y. 230.
26 N. E. Rep. 256; Tode v. Gross, 127
N. Y. 480, 13 L. R. A. 652, 28 N. E.
Rep. 469, 24 Am. St. 475; De Graff v.
Wickham, 89 Iowa, 720, 52 N. W.
Rep. 503; Talkin v. Anderson, 19 S.
W. Rep. 852 (Texas Sup. Ct.).
2 Bagley v. Peddie, 16 N. Y. 469, 69
Am. Dec. 713; Streeter v. Rush, 25
Cal. 67; Esmond v, Van Benschoten,
12 Barb. 366; Craig v. Dillon, 6 Up.
Can. A pp. 116.
3 New Britain v. New Britain Tele-
phone Co., 74 Conn. 326, 333, 50 Atl.
Rep. 881; Monmouth Park Ass'n v.
Wallis Iron Works, 55 N. J. L. 132,
26 Atl. Rep. 140: Tennessee Manuf.
Co. V. James, 91 Tenn. 154, 15 L. R
A. 211, 18 S. W. Rep. 262; Common-
wealth v. Ginn & Co., 23 Ky. L.
Rep. 521, 63 S. W. Rep. 467; Kil-
bourne v. Burt & Brabb Lumber Co.,
23 Ky. L. Rep. 985, 64 S. W. Rep. 631 ;
Whiting v. New Baltimore, 127 Mich.
66, 86 N. W. Rep. 403; Taylor v. Times
Newspaper Co., 83 Minn. 523, 86 N.
W. Rep. 760; Keeble v. Keeble, 85
Ala. 552, 5 So. Rep. 149; St. Louis,
etc. R. Co. V. JeflFerson Stone Co., 90
Mo. App. 171; Emery v. Boyle, 200
Pa. 249, 49 Atl. Rep. 779; Jennings
§ 290.]
STIPULATED DAMAGES.
marriage promise; ' of an agreement not to engage in a partic-
ular occupation or business; 2 from delay in completing par-
ticular works, or in doing some other act on which ulterior
transactions depend;'' or damages from the disclosure of the
V. McCormick, 25 Wash. 427, 67 Pac.
Rep. 764; Reichenbach v. Sage, liJ
Wash. 364. 43 Pac. Rep. 354 52 Am.
St. 51; Menges v. Milton Piano Co.,
— Mo. App. — , 70 S. W. Rep. 250;
American Copper, Brass & Iron
Works V. Galland-Burke Brewing
& M. Co., — Wash. , 70 Pac. Rep.
236; Wooster v. Kisch, 26 Hun, 61;
Kemp V. Knickerbocker Ice Co., 69
N. Y. 45; Indiauola v. Gulf, etc. R.
Co., 56 Tex. 594; Jones v. Binford,
74 Me. 439; Lipscomb v. Seegers. 19
S. C. 425; 1 Dane's Abr. 549, § 18;
Gammon v. Howe, 14 Me. 250; Ting-
ley V, Cutler, 7 Conn. 291; Cotheal v.
Talmage, 9 N. Y. 551; Bagley v. Ped-
die, supra; Mundy v. Culver, 18
Barb. 336; Wolf Diamond Coal Co.
V. Schultz, 71 Pa. 180; Bingham v.
Richardson, 1 Win.ston, 217; DeGrofT
V. American L. T. Co.. 24 Barb. 375;
Fisk V. Fowler, 10 Cal. 512. In this
case an ordinary bond with condi-
tion for delivery of title to a boat
within a specified time was held to
liquidate the damages at the sum
stated as a penalty. See § 289.
1 Lowe V. Peers, 4 Burr. 2225. See
Abranis v. Kounts, 4 Ohio, 214.
2 McCurry v. Gibson, 108 Ala. 451,
18 So. Rep. 806, 54 Am. St. 177; Boyce
V. Watson, 52 111. App. 361 ; Stover v.
Spielman, 1 Pa. Super. Ct. 526; Tob-
ler V. Austin, 22 Tex. Civ. App. 99,
53 S. W. Rep. 706; Borley v. Mc-
Donald, 69 Vt. 309, 38 Atl. Rep. 60;
Snider v. McKelvey, 27 Ont. App.
339; Palmer v. Toms, 96 Wis. 367, 71
N. W. Rep. 654; Newman v. Wolfson,
69 Ga. 764; Mueller v. Kline, 27 111.
App. 473; Stevens v. Pillsbury, 57
Vt. 205; Tode v. Gross. 127 N. Y. 480,
24 Am. St. 475, 28 N. E. Rep. 469, 13
L. R. A. 652; Grasselli v. Lowden, 11
Ohio St. 349; Applegate v. Jacoby. 9
Dana, 2UG; Mott v. Mott, 11 Barb. 127;
Rawlinson v. Clarke, 14 M. & W. 1S7;
Hitchcock v. Coker, 6 Ad. & El. 438;
Galesworthy v. Strutt, 1 Ex. 6.59;
Green v. Price, 13 M. & \V. 695;
Dakin v. Williams, 17 Wend. 447;
Williams v. Dakin, 22 id. 210; Lange
V. Werk, 2 Ohio St. 519; Gushing v.
Drew, 97 Mass. 445; Atkyns v. Kin-
nier, 4 Ex. 776; Mercer v. Irving, 1
E., B. & K 563; Reynolds v. Bridge,
6 E. & B. 528; Nobles v. Bates. 7
Cow. 307: Pierce v. Fuller, 8 Mass.
223, 5 Am, Dec. 102; California Steam
Nav. Co. v. Wright, 6 Cal. 258; De-
Groff V. American L. T. Co., 24 Barb.
375; Stewart v. Bedell, 79 Pa. 336;
Horner v. Flintolf, 9 M. & W. 678;
Lightner v. Menzel, 35 Cal. 452;
Sainter v. Ferguson, 7 C. B. 716; Davis
V. Penton, 6 B. & C. 216; Bigony v.
Tyson, 75 Pa. 157; Hoi brook v. Tobey,
66 Me. 410, 22 Am. Rep. 581; Reilly
v. Jones, 1 Bing. 302; Leighton v.
Wales, 3 M. & W. 545; Crisdee v.
Bolton. 8 C. & P. 240.
3 Pressed Steel Car Co. v. Eastern
R. Co., 121 Fed. Rep. 609 (Ct. Ct. of
Appeals, 8th Ct.); Ward v. Hudson
River B. Co., 135 N. Y. 230, 26 N. K
Rep. 256; O'Brien v. Anniston Pipe-
works, 93 Ala, 582, 9 So. Rep. 415;
Law V. Local Roard of Redditch,
[1892] 1 Q. B. 127; De Graff v. Wick-
ham, 89 Iowa, 720. 52 N. W. Rep. 503;
Hall V. Crowley, 5 Allen, 304, 81 Am-
Dec. 745; Curtis v. Brewer, 17 Pick.
513; Fletcher v. Dyche, 2 T. R 32;
Hamilton v. Moore, 33 Up. Can. Q.
B. 100 and 520; Gaskin v. Wales. 9
Up. Can. C. P. 314; McPhee v. Wil-
son, 25 Up. Can. Q. B. 169; Bergheim
V. Blaenavon Iron & S. Co , L. R. 10
Q. B. 319; Folsom v. McDonougli, 6
758 CONTENTIOXAL LIQUIDATIO^'S AND DISCHARGES. [§ 290.
[506] secrets of business,' or from breach of an agreement to
abate a nuisance,- are manifestly of that nature; and stipula-
tions fixin<i- the damages for the total loss of a bars^ain for the
purchase or leasing of lands and real estate,' or personal prop-
erty,* have also been frequently sustained. An agreement by
an employer to pay an employee a stated sum per year, or in
a lump, if the former's business should be discontinued within
a specified time, is for stipulated damages.*
There is more or less uncertainty in everything which de-
pends upon the opinions or memories of witnesses; it may be
increased, in the sense of furnishing a motive for stipulating
damages, if the testimony under the circumstances contem-
plated by the contract would be at a great distance;^ or must
come solely from the defendant.'^ In a contract for the pur-
chase of several cit}^ lots from one having still a large number
to sell, the purchaser, in consideration of having the property
conveyed to him for $21,000, covenanted that he would by a
certain day erect on the lots so conveyed two brick houses of
specified dimensions, or, in default thereof, would pay on de-
mand to the seller the sum of $4,000. This sum was held to
be liquidated damages. "Whether the vendors would be better
off if they got the money than they would have been had the
Cusli. 208; Harmony V. Bingham, 12 ler, 7 Conn. 291; Knapp v. Maltby,
N. Y. 100; Dunlop v. Gregory, 10 N. 13 Wend. 587; Slosson v. Beadle, 7
Y. 241, 61 Am. Dec. 746; Weeks v. Johns, 72; Lynde v. Thompson, 2
Little, 47 N. Y. Super. Ct. 1: Worrell Allen, 456: Lampman v. Cochran, 1&
V. McClinagan, 5 Strob. 115; Young Barb. 388, 16 N. Y. 275; Mundy v.
V. White, 5 Watts, 460; O'Donnell v. Culver, 18 Barb. 836; Clement v.
Rosenberg, 14 Abb. Pr. (N. S.) 59; Cash, 21 N. Y. 253; Hasbrouck v. Tap-
Pettis V. Bloomer, 21 How. Pr. 817; pen, 15 Johns. 200; Harris v. Miller,
Crux V. Aldred, 14 Week. Rep. 656; 6 Sawy. 319.
Legge V. Harlock, 12 Q. B. 1015. '♦.Peirce v, Jung, 10 Wis. 30; Allen
But see Wilcus v. Kling, 87 111. 107. v. Brazier, 2 Bailey, .55; Main v. King,
1 Nessle v. Reese, 29 How. Pr. 38:2; 10 Barb. 59; Knowlton v. Mackay, 29
Reindel v. Schell, 4 C. B. (N. S.) 97; Up, Can. C. P. 601; Sun Printing &
Bagley v. Peddie, 16 N. Y. 469, 69 Pub. Ass'n v. Moore, 183 U. S. 642,22
Am. Dec. 713. Sup. Ct. Rep. 240.
2Grasselli v. Lowden, 11 Ohio St. & Glynn v. Moran, 174 Mass, 233, 54
349; Taylor v. Times Newspaper Co., N. E. Rep. 535.
83 Minn, 523, 86 N, W, Rep. 760, 6 Cotheal v. Talmage, 9 N. Y. 551,
3 Leggett V. Mutual L, Ins. Co., 50 61 Am, Dec. 716,
Barb. 616. 53 N. Y. 394; Heard v. ' Bagley v. Peddie, supra.
Bovvers, 28 Pick, 455; Tingley v. Cut-
§ 291.] STIPULATED DxlMAGES. 759
houses been erected must from the nature of the case be a diffi-
cult question to decide; and that is one reason why the parties
should be left to settle the matter for themselves." In another
case an agreement was made simultaneously with a sale of
village lots by the purchaser, that he would not sell [507]
spirituous liquors on the premises purchased, or in the buildings
erected thereon ; and if he did so he should be liable to pay the
vendor in the first case a fine of $10, in the second case a fine of
$20, and for each subsequent selling §50. It was held that the
contract was not invalid for being in restraint of trade; ^ but
the "fine" was held to be a penalty and not liquidated dam-
ages.'
§ 291. Same subject. The damages for breach of contracts
for the purchase of the good will of an established trade or
business, or for the withdrawal of competition, are so obviously
uncertain that courts have recognized the fullest liberty of
parties to fix beforehand the amount thereof in that class of
cases. In the decision of such cases the strongest expressions
are to be found to the effect that the intention of the parties is
all-controlling, and that courts have no power to defeat it on
the pretext of relieving from a bad bargain. Referring to such
a stipulation, Sedgwick, J., in an early Massachusetts case,
said: "The parties were competent in law to make a contract
imposing a limited restraint on the defendant's trade for the
plaintiff's benefit and without injury to the public. They were
competent to determine on what consideration it should be
made; and to liquidate the damages if it should be broken.
The consideration of one dollar is a valuable consideration. It
would be sufficient to pass by sale the defendant's stage and
stage horses, where no fraud or imposition was practiced. The
parties have considered it reasonable and adequate, and the de-
fendant, by honestly fulfilling his agreement, might have pro-
tected himself from the forfeiture. But he has broken it, and
he shall not be permitted to say that, although the contract
was fairly and honestly made, and for a valuable consideration
to w^hich he assented, the consideration was inadequate; that
he made a bad bargain; and that when the plaintiif lias suffered
1 Pearson v. Williams, 26 Wend. ^ Laubenheiraer v. Mann, 17 Wis.
630, 24 id. 244. See Chase v. Allen, 542.
13 Gray, 42. as. C, 19 Wis. 519.
760
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 291.
by a breach of it, he shall be relieved from the terms to which
he had voluntarily submitted,"^ The tendency, however, of
[508] more recent decisions is against holding any contract for
liquidated damages to be binding in this absolute sense. Courts
generally assume jurisdiction to declare an excessive sum men-
tioned in connection with the breach of any contract a penalty.'
If the disproportion between the consideration and the under-
taking, and the disparity between the probable advantages of
performance and the sum agreed to be paid in the event of
failure, negative the intention to limit the amount to just or
reasonable compensation, they say it should be deemed a pen-
alty, however uncertain the damages. The same principles govern
this stipulation in all contracts, but courts will, in general, en-
force such stipulations where the damages are uncertain;' be-
cause the parties, where no fraud or oppression is practiced,
know better their situations, and can form a more correct esti-
mate of the injury than a court or jury. Because the damages
are not susceptible of precise measurement the judgment and
agreement of the parties should have large scope; but when,
as sometimes happens, it is discovered that such stipulations
are not based on the idea of compensation they are not sus-
tained.* This will be particularly seen in the instances of con-
' Pierce v. Fuller, 8 Mass. 223, 5
Am. Dec. 102; Dakin v. Williams, 17
Wend. 454, per Nelson, C. J.; Streeter
V. Rush, 25 Cal. 67, per Rhodes. J.
Compare Hathaway v. Lynn, 75 Wis.
186, 43 N. W. Rep. 956, 6 L. R. A. 558,
which is mentioned in a note to
g288.
2 J. G. Wagner Co. v. Cawker, 112
Wis. 532, 88 N. W. Rep. 599; Seeman
V. Biemann, 108 Wis. 365, 84 N. W. Rep.
490. See Davies v. Daniels, 8 Hawaiia,
88.
3 Potter V. Ahrens, 110 Cal. 674, 43
Pac. Rep. 388; Seeman v. Biemann,
108 Wis. 365, 375, 84 N. W. Rep. 490;
Simon v. Lanius, 9 Ky. L. Rep. 59;
Connelly v. Priest, 72 Mo. App. 673;
Seim V. Krause, 13 S. D. 530, 83 N. W.
Rep. 583; Hurst v. Hurst, 4 Ex. 571;
Ponsenby v. Adams, 2 Brown P. C.
431; Roy v. Duke of Beaufort, 2 Atk.
190; Allen v. Brazier, 2 Bailey, 55;
Chase v. Allen, 13 Gray, 42; Pearson
V. Williams, 26 Wend. 630. See
^■§ 289, 290.
4 In Wilkinson v. Colley, 164 Pa. 35,
30 Atl. Rep. 286, 26 L. R, A. 114, one
phj'sician sold his practice to an-
other, stipulating that at the end of
a certain time he would cease
practicing. The vendee sold the
practice to another physician. The
defendant violated his agreement,
after which he and the plaintiff en-
tered into a contract in which the
defendant covenanted not to prac-
tice in the locality for ten years, and
bound himself in the penal sum of
$400 to that effect. This contract he
also violated. It was ruled that the
sum mentioned was a penalty; that
it was not the intention of the parties
that the defendant was to have the
I
f 291.] STIPULATED DAMAGES. 761
tracts which provide the same sum to be paid in the case of a
partial or of a total breach. Stipukations in an agreement by
the vendor of a business and its good will that he will not "-o
into business in G., or within a certain distance of it, either for
himself or as clerk for another, and will not permit his wife to
do so, all refer to the same thing, and the objection that the
sura named is a penalty, because the forbidden acts are of dif-
ferent degrees of importance, is without force.' After the sale
by the vendee of the busmcss and good will of the vendor no
beneficial interest in the contract stipulating the damages re-
mains ill the covenantee and he cannot enforce the covenant.
The purpose of the contract being to protect the property or
business to which it related, it was an incident of, and adhered
to, such property and business.^
The damages which may result from delay in fulfilling con-
tracts for particular works, or for performance of any specified
act stipulated to be done and completed within a given time,
^re not always of the most uncertain nature. Damages for
failure to complete a house, or any other structure, may some-
times be ascertained proximately b}'' a rental standard. But
when intended for a particular purpose other than to be rented,
and when delay may hinder or thwart other and dependent con-
tracts or enterprises, the damages will be more uncertain. In
a building contract containing the usual clauses fixing the days
for completing the various parts of the work, a stipulation to
the effect that any neglect to comply with the conditions of
the contract and finish the work as provided should entitle the
employer to claim damages at the rate of $10 per day [500]
for every day's detention so caused was held a covenant for
stipulated damages.' There are authorities to the effect that
privilege of practicing on the pay- Rep. 140, 39 Am. St. 626; Railroad
ment of it; that, because of the un- v. Cabinet Co., 104 Tenn. 568, 58 S.
certainty of the damages, an injunc- W. Rep. 303, 78 Am. St. 933; Collier
■tion would issue for the specific v. Betterton, 87 Tex. 440, 29 S. W.
performance of the contract. Rep. 467; Reichenbach v. Sage. 13
1 Stover V. Spielman, 1 Pa. Super. Wasli. 364,43 Pac. Rep. 354; De Oral!
Ct. 526. V. Wickham, 89 Iowa, 720, 52 N. W.
•-' Palmer v. Toms, 96 Wis. 367, 71 Rep. 503; Emack v. Campbell, 14 D.
N. W. Rep. 654, approving Gompers C. App. Cas. 186; O'Donnell v. Rosen-
V. Rochester, 56 Pa. 194. berg. 14 Abb. Pr. (N. S.) 59; Pettis
s^Monmouth Park Ass'n v. Wallis v. Bloomer. 21 How. Pr. 317; Curtis
Iron Works, 55 N. J. L. 132, 26 Atl. v. Brewer, 17 Pick. 513; Hamilton v.
;62
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 291.
the damages ordinarily resulting from the failure to fulfill a
building contract which contains only the usual conditions are
not so uncertain as to be the subjects for such stipulations, the
extrinsic circumstances not being unusual ;^ but the decisions
Moore, 33 Up. Can. Q. B. 100, 520;
Gaskin v. Wales, 9 Up. Can. C. P. 314;
MoPhee v. Wilson, 25 Up. Can. Q. B.
169; Bergheim v. Blaenavon Iron &
S. Co., L. R. 10 Q. B. 319: Young v.
Gaut, 69 Ark. 114, 61 S. W. Rep. 372:
Brown Iron Co. v. Norwood, 69 S. W.
Rep. 253, (Tex. Ct. of Civ. App.).
In Fletcher v. Dyche, 2 T. R. 32/a
stipulation for lOZ. per week for de-
lay in finishing a churcli was sus-
tained: in Duckworth v. Allison, 1
M. & W. 412, 51. per week for delay
in completing repairs on a ware-
house; in Legge v. Harlock, 12 Q. B.
Div. 1015, IZ. per day for delay in build-
ing a barn, wagon-shed and granary;
in Law v. Redditch, [1892] 1 Q. B. 127,
lOOZ. and 5Z. per week for delay in
constructing sewerage works; in
Ward V. Hudson River Building Co.,
125 N. Y. 230, 26 N. E. Rep. 256, $10 a
day for delay in erecting dwellings; in
Maione v. Philadelphia, 23 Atl. Rep.
628, in Monmouth Park Ass'n v.
Wallis Iron Works. 55 N. J. L. 132,
26 Atl. Rep. 140, 39 Am. St. 626, $100
per day for failure to complete a
grand stand for a race course.
In Curtis v. Van Bergh, 161 N. Y.
47, 55 N. E. Rep. 398, the defendants
provided for the lea,se of a building,
to be erected, when there was less
than six months' time within which
to complete it, and they needed pro-
tection from the consequences of
failure on account of their business
which required more room and ma-
chinery. In view of the expiration
of their lease of the premises in
which they were, the uncertainty of
their being able to secure another
place in which to do business, and
the consequences of a removal, a
stipulation for the payment of $50
per day for delay in the construction
of such building was sustained al-
though the rental agreed upon was
but $2,000 a year.
In Bird v. St. John's Episcopal
Church, 154 Ind. 138, 65 N. E. Rep.
129, a stipulation for $50 per day for
delay in completing a church was
sustained.
The defendant bound himself to
complete a building within eleven
months, and was to receive $100 for
each day less than the time limit,
and to pay $1,000 for each day that
he should exceed it. He made a con-
tract with the plaintiff for the stone
and granite work, and the latter
bound himself to pay $150 per day
as a penalty for each and every day
he was in default as and for liqui-
dated damages. The latter was an^
agreement for stipulated damages.
Kunkel v. Wherry, 189 Pa. 198, 43
Atl. Rep. 112, 69 Am. St. 802.
1 Chicago House- Wrecking Co. v.
United States, 45 C. C. A. 343, 352, .
106 Fed. Rep. 382, quoting the text;
Wheedon v. American Bonding &
Trust Co.. 128 N. C. 69. 38 S. E. Rep.
255; Clements v. Railroad Co.. 132 Pa.
445, 19 Atl. Rep. 274, 276; Brennan v.
Clark, 45 N. W. Rep. 472, 29 Neb. 385;
Patent Brick Co. v. Moore, 75 Cal.
205. 16 Pac. Rep. 890. But see Ward
v. Hudson River B. Co. 125 N. Y. 230,
26 N. E. Rep. 256; Sun Printing &
Pub. Ass'n V. Moore, 183 U. S, 642, 23
Sup. Ct. Rep. 240.
A contract on the part of a rail-
road bridge builder to provide a
crossing for trains by a date fixed
or pay $1,000 a week if he was in de-
fault is one for liquidated damages.
Texas, etc. R Co. v. Rust, 19 Fed-
Rep. 239.
§ 201.] STIPULATED DAMAGES. 7G3
are far from being unanimous on tlie question. Where a party
covenants that ho will transport and deliver goods within a
certain time, and also that lie will deduct a sum named from
the freight each day they are dehayed beyond the time spfcified
for the delivery, such agreed deduction is liquidated damages.^
Under peculiar circumstances an agreement to pay §;5<iO for
failure to surrender possession of leased premises at a certain
date was sustained as liquidating the damages. The lessor was
but a lessee himself, under stipulations to surrender a month
later. He had authority from his lessor to put additions and
improvements on the premises, all of which he had a right to
remove at the end of his term. It was considered a natural
and reasonable provision that, should the subtenant bind him-
self to leave the premises a month before the landlord's term
expired, he might have sufficient time to remove his improve-
ments and thus escape a forfeiture to his lessor." An agree-
ment provided that land should be restored to a prescriljed
condition and in default of performance the person bound should
pay £100 per acre. The condition was referred to in one clause
of the contract as a "penalt\\" The house of lords held, re-
versing the Scotch court, that the case was a proper one for
stipulated damages.^ No damages could be more uncertain
than those which might result from delay in furnishing for
publication the biography of a man for the time being attract-
ing public notice. Such a man undertook to furnish his biog-
raphy for publication within a specified time, and for every
day's delay beyond that time agreed to pay $105. In a suit
to recover for a delay of one hundred and sixty-one days, the
court held the agreement could not be literally enforced, and
1 Harmony v. Bingham, 13 N. Y. over after the termination of his
100; Sparrow v. Paris, 7 H. & N. 594. lease. Because the provision as to
2 Peine v. Weber, 47 111. 41. damages was lugiily penal, and the
In Klingle v. Ritter, 54 111. 140, a lease admitted of two constructions
lease provided for the surrender by as to the time the damages should
the lessee of portions of the property begin to accrue, they were not coii-
at different times, and without ad- sidered as commencing until the
verting to such provision there was time when the entire premises were
a covenant that the lessee should to be surrendered,
pay $50 per day as stipulated dam- 8Lord Elpliinstone v. Monkland
ages for every day he should hold Iron & C. Co., 11 App, Caa ^32.
76-i CONVENTIONAL LIQUIDATIONS AND DISCHAEGES. [§ 292.
that the plaintiff could only recover actual damages.^ So a
[510] contract to put machinery in a boat for $S,000, on or be-
fore a certain day, "under a forfeiture of $100 per day for
each and every day after the above date until the same should
be completed as above," was held to provide for a penalty and
not liquidated damages.^
§ 292. Same subject. The damages which may result from
a mechanic quitting work contrary to his contract are uncer-
tain ; but every agreement purporting to fix the amount he shall
forfeit or pay in such an event will not be treated as a liquida-
tion thereof. Where the contract of hiring required that if
the employee quit without giving thirty days' notice he should
forfeit all wages due him at the time of leaving, Campbell, J.,
said: "We ha\e no difficulty in holding that the injury caused
by a sudden breaking off of a contract of service by either
party involves such difficulties concerning the actual loss as to
render a reasonable agreement for stipulated damages appro-
priate. If a fixed sum, or a maximum within which wages
unpaid and accruing since the last pay-day might be forfeited,
should be agreed upon, and should not be an unreasonable or
oppressive exaction, there would seem to be no legal objection
to the stipulation if both parties are equally and justly pro-
tected. But the facts set forth in this record do not, we think,
bring the case within any such rule. . . . The forfeiture
under the contract covers all wages due at the time of leaving-.
This is open to the objection that the employer may have been
in arrears, and thus enabled to profit by his own wrong. No
such forfeiture could be enforced against wages, as such, which
the workman was to have paid to him before he committed
any breach of his duty. Again, it does not appear how often
wages were payable, and what proportion of the year's earn-
ings could thus be withheld for a breach of contract. It would
not be reasonable to make the forfeiture cover a very long
period. The inference, in the absence of proof to the con-
trary, would be that the price of work done by the piece might
not be payable at the same intervals as ordinary wages. And
1 Greer v. Tweed, 13 Abb. Pr. (N. 643: Colwell v. Foulks, 36 How. Pr.
S.) 427. See Laubenheimer v. Mann, 316; Van Buren v. Digjges, 11 How.
17 Wis. 543. 19 id. 519. 461; Kennedy v. United States, 24
2 Cohvell V. Lawrence, 38 Barb. Ct. of Cls. 122, 142.
I.
§ 292.]
STIPULATED DAMAGES.
TG5
inasmuch as the periodical earnings of such laborers coukl not
be uniform it would be difficult to sustain an agreement for
stipulated damages, unless some limit should bo fixed beyond
which the forfeiture sliould not extend. The agreement [oll^
set out in the record is also defective for want of mutuality.
The employer, on failure to give notice before dismissal, is sub-
jected to a payment of thirty days' wages. This stipulation,
when applied to the wages of piece work, is entirely vague and
indeterminate. It furnishes no standard of calculation, and
lacks the first essential of stipulated damages, which are al-
lowed to avoid uncertainty."! Where the employee's contract
1 Ricliardson v. Woehler, 26 ]\Iich.
90; Davis v. Freeman, 10 Mich. 18a
lu the last case Mauninj;, J., said:
•'The plaintiffs in error were to have
$1.50 per ]M. for drawing the timber.
$1 of which was to be paid as the
timber was drawn, in supplies to en-
able them to carry on the job: and
the remaining fifty cents in cash
■wlien all the timber was drawn. In
the language of the contract, • it be-
ing understood that the balance kept
back is to secure the completion of
this contract: and it is hereby agreed
between the parties that the fifty
cents per thousand feet is settled,
fixed and liquidated damages, in case
this contract is not completed by the
said first party.' They having failed
to draw all the timber, the question
is whether the fifty cents per thou-
sand feet on what was drawn, and
which was to be paid on completion
of the contract, is to be regarded as
stipulated damages, or in the nature
of a forfeiture or penalty for not
completing the contract. The court
below charged the jury that the fifty
cents per thousand feet on what had
been drawn was stipulated damages.
In this we think the court erred. If
stipulated damages for a non-per-
formance of the entire contract, the
defendant in error could not recover
any other or greater damage for a
non-performance, in whole or in part.
And it would follow that he would
recover no damages whatever on the
contract had tlie plaintilf in error
refused to draw any of tiie timber.
Such clearly could not have been tlie
intention of the parties. They must
have intended tliat if the plaintilf in
error should draw part of the timber,
and not the whole, tliey should not
be paid the fifty cents per thousand
feet on what had been drawn by
them. That, in tlie language of the
contract, should be 'fixed and liqui-
dated damages.' If the contract had
provided for the payment of fifty
cents per thousand feet as liquidated
damages for the timber not drawn,
the case would be altogether diflfer-
ent. For the nearer such a contract
was completed the less would be the
damages. The damages would be
proportioned to the non-performance.
But the contrary would be the case
as the contract is, if the fifty cents
per thousand is to be regarded as
liquidated damages, and not as
penalty. For the nearer the contract
is completed the greater are the
damages in case of failure. The dam-
age-! for not drawing five thousand
of five hundred thousand feet would
be $247.00, whereas the damages for
failing to draw four hundred and
ninety-five of the five hundred thou-
sand would be only $J..")0. The policy
of the law will not permit parties to
76G CONVENTIONAL LIQUIDATIONS AND DISCHAKGES. [§ 21)2.
stipulating the damages the employer might recover if the
contract of employment was violated was neither unreasonable
nor oppressive the stipulation was sustained under the facts
indicated in the following excerpt from the opinion: The
plaintiff in error was a cotton mill, having in its emplojMnent
hundreds of hands. The work is divided up into many de-
partments. The raw material is handled by one set of hands
and put in condition for another, and the second department
still further advances its manufacture; and so on through the.
successive stages of progress. The evidence shows that each
department is dependent upon that immediately below it.
ISTow, if the operatives of one department quit or their work is
delayed, its effect is felt in all to a greater or less degree. It
is also shown that it is not always easy to replace an operative
at once, and that the unexpected quitting of even one hand
will to some extent affect the results throughout the mill. Yet
the evidence shows that it would be impossible to calculate
with any certainty the precise, actual loss due to an unexpected
breach of an employee's engagement; though it is shown that
there are some departments of work where the quitting of a
small number of hands, without notice, would stop the entire
mill and throw other hundreds out of employment. . . .
The case is one, then, where the certainty of some damage,
and the uncertainty of means and standards by which the actual
damage can be determined, requires the courts to uphold the
contract as one for liquidated damages and not as providing
for a penalty.^ The uncertainty of the damages which follow
the breach of a contract by actors with a theatrical manager
for their services for a stated period by performing in another
make that liquidated damages, by give notice of his intention to quit,
calling it such in their contract, and if he failed to do so whatever
which in its nature is clearly a pen- was due him at the time he left the
alty or forfeiture for non-perform- service was to be an indebtedness to
ance. While it allows them, in cer- the employer to be considered as
tain cases, to fix their own damages, liquidated damages. The contract
it will in no case permit them to was held void because it was unrea-
evade the law by agreement. See sonable and oppressive.
Jaquith v. Hudson, 5 Mich. 128." i Tennessee Manuf. Co. v. James, 91
Stearns v. Barrett, 1 Pick. 443, 11 Tenn. 154, 161, 30 Am. St. 865, 15 L.
Am. Dec. 2:>3. R. A. 211, 18 S. W. Rep. 2G3; Walsh v.
In Schrimpf v. Tennessee Manuf. Fisher, 102 Wis. 172, 78 N. W. Rep.
Co.. 86 Tenn. 219, 8 Am. St. 832, 6 437, 76 Am. St. 865.
S. W. Rep. 131, a servant agreed to
I
I
§ 293.] STIPULATED DAMAGES.
TtJl
theatre before the fulfillment of their engagement with him
sustains a stipulation fixing the damages for its breach.'
The inquiry whether a fixed sum is intended as pen- [512]
alty or liquidated damages is generally answered according to
the equity and justice of the particular case. If the damirgcs
are uncertain in their nature, or difficult to be proved, and in
applying the stipulation to the case the result is not manifestly
at variance with the principle of just compensation, it is
readily adopted as consistent therewith. In such cases the
intention is inferred from these circumstances, and the lan-
guage of the parties is very liberally construed to give effect
to it. The sum may be called a penalty or forfeiture, or the
form and phraseology may be vague and equivocal; but, nev-
ertheless, the sum stated be held to be liquidated damages.^
§ 293. Same subject; illustrations. Some differences
will be noticed, resulting from a stricter adherence to the arti-
ficial rules of construction by some courts than by others. On
the other hand, where the actual damages may be ascertained
by mere computation, or can be easily established by proof,
and the sum stated is not a just measure of the actual loss or
injury, these circumstances prevail against very clear and posi-
tive expressions of intention to liquidate damages.' In cases
of neutral circumstances the language and form of the con-
tract may alone be decisive. All doubts as to the justice of
the stipulated sum, or as to the actual intention of the parties,
will be resolved by treating it as a penalty. Man}' stipula-
tions ostensibly providing a remuneration to be paid, or in
some way to inure to the party entitled to the benefit of tlie
•contract in case of a breach, have been held not to have the
•effect to liquidate damages because so framed as to be incon-
sistent in their effect with the idea of compensation either for
the reason that the intention to limit the compensation for
1 Pastor V. Solomon, 26 N. Y. Misc. Bip:ony v. Tyson, 75 id. 157; Pearson
125, 55 N. Y. Supp. 956, affirming 25 v. Williams, 26 Wend. 630; Knai)p v.
N. Y. Misc. 322, 54 N. Y. Supp. 575. Maltby, 13 id. 587; Upliam v. Smith,
2 §283, n.; Mathews v. Sharp, 99 7 Mass. 265: Fisli v. Fowler. 10 Cat
Pa. 560; Lennon v. Smith, 14 Daly, 512; Sparrow v. Paris, 7 H. & N. 594;
520; Miller v. Rankin, 11 Atl. Rep. Yenner v. Hammond, 36 Wis. 277:
^15 (Pa.); Eakin v. Scott. 70 Tex. 442, White v. Arleth, 1 Bond, 819; H.iy-
7 S. W. Rep. 777; Boys v. Ancell, 5 maker v. Schroers, 49 Mo. 406.
Bing. N.C. 890; Streeperv. Williams, 3 Kemble v. Farren. 6 Bing. 141;
48 Pa. 450; Burr v. Todd, 41 id. 206; Horner v. Flintofif, 9 M. & W. 67a
768 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 293,
[513] breach to such amount as the provision in question may
specify, or the purpose to afford compensation to that extent
is doubtful in view of the special facts of the case. A few
cases may be profitably consulted as illustrations of tlie uncer-
tain nature of such stipulations, and how much at large is the
judicial discretion by which their practical effect is governed.
In a case in New York two parties agreed upon an exchange
of real estate; each was to deliver a deed of his property or
" forfeit the sum of $500." Upon the first trial the court held
this to be a provision for liquidated damages, and the plaintiff"
had a verdict for that sura, which was set aside on the de-
fendant's motion, upon the ground that the court erred in
treating that sum as other than a penalt3^ The case was re-
tried upon this theory, and resulted in a verdict for the plaint-
iff of $1,000 against his request and exception that it should
be regarded as stipulated damages. The defendant then sought
to reverse the judgment on the ground that the sum stated in
the contract was not a penalty, but liquidated damages. The
ruling that it was a penalty was in harmony with the de-
fendant's argument for a new trial, and he had taken no ex-
ceptiou to a like construction of the contract on that trial. He
was, therefore, not in a situation on appeal to allege that that
construction was erroneous. Church, C. J., said: "It is, how-
ever, proper to say that, if the question was before us, we
should hesitate in holding it a penalty; and there are many
reasons for regarding it as a provision fixing the measure of
damages by the parties. The word ' forfeit ' is not conclusive.
A fundamental rule upon this subject is that the words em-
ployed must, in general, yield to the intention of the parties
as evinced by the nature of the agreement, the amount of the
sum named, and all the surrounding circumstances. The sum
named is reasonable in amount; it is payable for one breach,
viz.: a failure to deliver a deed; and the injury is in some de-
gree uncertain in amount and extent, and might depend upon
many unforeseen contingencies. These are material circum-
stances favorable to an inference that the parties intended to
fix the sum as the measure of damages." But that question
being precluded, by the absence of any objection on the ap-
pellant's part, the judgment was affirmed.^
1 Noyes v. Pliillips, 60 N. Y. 408.
I
§ 203,] STIPL'LATED DAMAGES. 709
In a later case in the same state an ice company agreed [5U]
to deliver to K. four thousand tons of ice in 1870, for retail.
Afterwards the company, by fraudulent representations, [)ro-
cured from K. a written exoneration as to all the ice above live
hundred and eighty-seven tons. By the original agreement K.
agreed to pay the ice company $1 per ton for each and every
ton that he failed to take according to the terms of the aL'ree-
raent; and the ice company agreed to forfeit $1 per ton for each
and every ton that they failed to deliver according to the terms
of the agreement. The contract price of the ice delivered was
$2.50 per ton, and the market price, when the exonerated quan-
tity should have been delivered, was from $14 to $10 per ton. A
suit was brought for rescission of the agreement obtained by
fraud, reducing the quantity, and for damages. The rescission
was granted, and the next question was between penalty and
liquidated damages under the $1 per ton clause referred to.
The court of common pleas held that the stipulation was a ])en-
alty.^ The court of appeals were of contrary opinion. Earl,
J., said: "What was here intended by the parties? The $1
was certainly intended at least to limit the extent of damages
to be paid in case of breach, else there would be no purpose lor
inserting it; and effect should be given to this intention if it
can be consistently with the rules of law. There is nothing
decisive in the language used. In case of failure b}' the
plaintiffs they agreed 'to pay ' the $1, in case of failure by the
defendant it agreed ' to forfeit ' the same sum. The words * to
pay ' and ' to forfeit ' were evidently used in the same sen.sc-,*
and might be used in case the sum was intended either as
liquidated damages or as a penalty." ^ In another case, a
1 Kemp V. Knickerbocker Ice Co., and there was added the following
51 How. Pr. 31; Basye v. Ambrose, provisions: "For non-conipliante
28 Mo. 89. See Cotheal v. Talmage, with this contract by either party
9 N. Y. 551, 61 Am. Dec. 716, the penalty shall be as follows: If
2 1^ 283, n. tlie parties of the first part are not
3 Kemp V. Knickerbocker Ice Co., themselves, or agents, on the spot
69 N. Y. 45, 57; Winch v. Mutual twenty days after the stipulated no-
Benefit Ice Co., 9 Daly, 117. tice be given, then the parties of the
In Lowry v. Barelli, 21 Ohio St. second part shall be at liberty to sell
324, one party offered to sell and de- said marble just as if consigned to
liver at a specified time and place them, and claim of said first par-
two thousand five hundred cubic feet ties the difference between the net
of Italian marble at $2.12^ per foot, amount that the marble sold at, and
Voul — 49
770
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 293.
[515] building contract, the builder was to receive for the com-
pleted house $4,600; the contract contained the provision that
the builder, who was the plaintiff, should " forfeit ten per cent.
on the whole amount if the said house is not entirely com-
what they bound themselves to pay
for it, say $2.12| per cubic foot; pro-
vided always, that said difference
shall never exceed thirty-seven and
one-half cents per cubic foot, which
difference shall be paid down, in
cash at once, without any difficulty;
and should the parties of the second
part fail to deliver within the speci-
fied time the quantity of marble
above mentioned, the parties of the
first part shall be at liberty to buy
the same quantity of marble at the
market price, and charge the differ-
ence, if any, to the parties of the
second part; provided always, that
the difference of the marble so pur-
chased shall not exceed thirty seven
and one-half cents per cubic foot of
the price fixed by this agreement,
and that the terms of payment be
cash."' The vendee sued the vendor
and assigned as a breach the non-
delivery of the marble. The jury
found, among other things, that " the
defendants refused to perform the
agreement on their part; that the
plaintiffs did not purchase, nor at-
tempt to purchase, marble corre-
sponding to that described in the con-
tract before bringing suit; that such
a lot of marble could not have been
purchased in New Orleans where the
contract was made; that tiie differ-
ence between the market price and
the contract price on the day of
breach was greater than thirty -seven
and a half cents per foot; that the
damages of the plaintiff amount to
§1,516.62," for which sum tliey re-
turned a verdict. A motion for a new
trial was made on the ground, among
others, that the verdict was con-
trary to the law and the evidence.
On this motion it was contended on
behalf of the defendants " that the
sum of thirty-seven and a half cents
per foot is in the nature of a limita-
tion of damages, and not actual or
liquidated damages, and is the ut-
most that the parties can recover."
This point was not noticed in the
opinion, which was adverse to the
motion, and judgment was ordered
to be rendered on the verdict. Mc-
Ilvaine, J., said: "It is no doubt
competent for parties to limit by
express stipulation the amount of
damages to be recovered in the event
of a breach of their contract: or to
make the right to recover at all to
depend upon a particular event; or
they may agree that damages shall
not be recovered in any event for a
violation of the contract; tlms mak-
ing wliat would otherwise be a con-
tract binding in law a mere option
on the part of the promisor to do or
not to do as he may choose. In our
opinion the contract between the
parties in this case was of the first
and not of the second or third classes
named. Taking it altogether, we
believe the parties intended to secure
the performance at what they sup-
posed would be a rea onabie com-
pensation to the injured party in
case of a default by the other in not
receiving or delivering the marble.
"It cannot be doubted that the par-
ties intended to bind each other by
this contract to the purchase and
sale upon the terms named therein.
For the breach of every contract
the law implies damages; and to es-
cape the consequences of this rule
of law the party in default should be
able to show that damages had been
waived. In this contract no waiver
or exemption from damages upon
^ 293.]
STIPULATED DAMAGES.
pleted and fit to occupy at the time agreed upon." Daniel, J.,
said: "The clause . . . cannot properly be regarded as an
agreement or settlement of liquidated damages. The [510]
terra 'forfeiture' imports a penalty; it has no necessary con-
the state of facts found in the special
verdict is expressed, nor can it be
inferred except upon the principle
that expressio unius est exclusio al-
teriufi. This maxim, however, should
not be applied in a case where, by
fair construction of the whole in-
strument, a different intention can
be ascertained. . . . Whatever
might have been the law of this case,
had there been such marble in the
market at the time of the defend-
ant's default, we are of opinion that
the plaintiffs, under the state of
facts found in the special verdict,
were excused not only from making
a purchase of alike quantity of mar-
ble in the market, but also from any
vain and fruitless effort to do so."
In Grand Tower Co. v, Phillips, 23
Wall. 471, a company having coal
mines agreed to deliver one hundred
and fifty thousand tons of coal, the
product of its mines, to P. at $3 a
ton during the year 1870, in equal
daily proportions, between the loth
of February and the 15th of Decem-
ber; that is to say, fifteen thousand
tons each month. The contract con-
tained this provision: "If through
no fault of the parties of the second
part (P.), the party of the first part
(the company) shall fail in any one
month to deliver all or any part of
the quota of coal to which the par-
ties of the second part may be en-
titled in such month, the party of
the first part shall pay to the parties
of the second part as liquidated dam-
ages twenty-five cents per ton for
each and every ton which it may
have so failed to deliver; or instead
thereof, the parties of the second part
may elect to receive all or any part
of the coal so in default in the next
succeeding month, in which case the
quota which the parly of the lirht
part would otherwise have been
bound to deliver under this contract
shall be increa.sed in such succeeding
month to the extent of the quantity
in default." Coal rose in value from
about .?3 a ton to .^9; and without
the fault of P. the company did fail
to deliver the quota — fifteen thou-
sand tons — due in October, and P.
thereupon elected and gave notice
of the election to take the said quota
in November. But the com i 'any
failed to deliver it then, and failed
also to deliver the quota — fifteen
thousand tons — due in November.
P. then elected and gave notice of
his election to take in December the
quota due in November, as also that
due in October. No coal, however,
was delivered at any time, and P.
brought suit for damage-s. It was
held that the plaintiffs were entitled
to their actual damages and were
not limited to twenty-five cents per
ton. Bradley, J., said: "The ques-
tion whether this view is right or not
depends upon the true construction
of the agreement made by the par-
ties. . . . It is evident from an
inspection of the contract that the
election given to the plaintiffs to re-
ceive in the following month the
coal which they were entitled to re-
ceive and did not receive in a par-
ticular month was a substitute for
the liquidated damages of twenty-
five cents per ton. With regard to
that particular amount of coal, the
rule of liquidated damages was at an
end. The agreement did not carry
it forward to the following month.
It imposed upon the defendant the
obligation, if the plaintiffs so elected*
772 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 293.
nection with the measure or degree of injury which may re-
sult from a breach of contract or from an imperfect perform-
ance. It implies an absolute infliction, regardless of the
nature and extent of the causes by which it is superinduced.
Unless, therefore, it shall have been expressly adopted and de-
[517] clared by the parties to be a measure of injury or com-
pensation it is never taken as such by courts of justice." •
The lessor for years of part of a steam mill covenanted with
his lessee to furnish him with a certain amount of steam-power
during every working day in the year, and that if at any time
he should fail to do so the rent should cease during the time of
such failure. The lessee had taken a lease for five years for
the purpose of carrying on business, and had placed machinery
on the premises on the faith of the lessor's covenant to furnish
him steam-power to work it. Soon after his work commenced
the lessor withheld all the power and thus broke up the busi-
[518] ness. On these facts the court held that the suspension
of rent was not full satisfaction of the damages; it Avas not
satisfied that the lessee had agreed to accept such suspension as
a full compensation for an entire breach of cne covenant.^
to furnish the coal itself instead of lation worse than useless. The plaint-
paying the liquidated sum. If not ififs might continue to exercise their
60, what was the option worth ? It election to receive the coal month
amounted to nothing more than the after month, without avail, and, at
right of giving to the defendant an- the end, find themselves exactly at
other month to furnish the coal, the point they started from — forced
Surely they would have had that to accept the twenty-five cents per
right without stipulating for it in ton."
this solemn way. Had not this op- ^ Van Buren v. Digges, 11 How.
tion been given to the plaintiffs, the 461. See § 283, n.
defendant would have had the option 2 Fisher v. Barret. 4 Gush. 381;
either to furnish the coal or to pay Pengra v. Wheeler, 24 Ore. 532, 34
the twenty- five cents per ton for not Pac. Rep. 354, 31 L. R. A. 726.
furnishing it — a sum which they In Nowlin v. Pyne, 40 Iowa, 166,
could very well afford to pay upon there was an agreement between
a slight rise in the market prices. It the parties for exchange of farms,
was evidently the very purpose of which contained this clause: "It is
the option given to the plaintiffs to also understood that, in case the said
avoid this oppressive result. They P. fails to make said conveyance, as
could require the coal to be delivered aforesaid, then he agrees to pay said
at all events, and if they elected to N. for all plowing done by him
do this it was the duty of the de- on said land." The qiiestion was
fendant to furnish it. The contrary whether N. was entitled to any other
construction would make the stipu- damages. It was contended by the
§ ^93.]
STIPULATED DAMAGES.
773
The general doctrine was well summed up in a Penn- [510'
sj^vania case. Tlie owners of a hotel had agreed to sell it
for $14,000, of which $3,000 was to be paid at a specific time,
when a deed was to be made; part possession was to be deliv-
other party that he was not. Day,
J.: "This position would be correct
if the parties to a contract must
stipulate for the damages to be re-
covered in order that they may re-
cover any. But the law, of itself,
attaches to the breach of every con-
tract the right to recover proper
damages. That the parties have
expressly provided for the payment
of some of the damages, which,
perhaps, the law would not have
awarded without such provision,
cannot be construed to be a waiver
of the right to recover other dam-
ages which the law permits. In
order to defeat the recovery of such
damages it must clearly appear that
the parties have stipulated for all the
consequences which they intend shall
follow a breach of their agreement.
It is plain that this agreement more
particularly refers to certain inci-
dental damages which might not
arise at all, whilst as to the principal
damages, and which are certain to
follow a breach of the contract if it
was an advantageous one to the
plaintiff, the contract is silent."
In Potter v. McPherson, 61 Mo.
240, there was a contract between
the parties for constructing a rail-
road, by the terms of which pay-
ments were to be made by the em-
ployer in monthly instalments, ten
per cent, being reserved by him until
the completion of the work, "as
security for the faithful performance
of the contract;" and in case of cer-
tain breaches on the part of the con-
tractor the amounts reserved were
to be absolutely forfeited to the other
party. Held, that the amounts so to
be retained were not liquidated dam-
ages for such breaches, but the con-
tractor could recover the entire sum
agreed upon, less the damages which
in fact might be sustained by reason
of his non-compliance with the con-
tract. Hough, J., said: "To hold
otherwise in such a case would pro-
duce the gros.sest inequality and in-
justice. The amount forfeited might
bear no just relation to the damage
suffered. The more nearly the con-
tract approaches completion, the
greater would be the reserve, and
the less would be the damage. As
the damage diminished the sum for-
feited would increase." Savannah,
etc. R. Co. V. Callahan, .56 Ga, 331.
See Phelan v. Albany, etc. R. Co., 1
Lans. 258; Jemmi.son v. Gray, 29
Iowa, 537; Faunce v. Burke. 16 Pa.
469. 55 Am. Dec. 519; Hennessey v.
Farrell, 4 Cush. 267; Jackson v.
Cleveland, 19 Wis. 400.
Easton v. Pennsylvania & O. C.
Co., 13 Ohio, 79, was a similar case,
the contract providing for monthly
payments, and a reserve of fifteen
per cent, to insure the completion of
the work; and also that in case of
its too slow progress, and in certain
other contingencies, the president of
the company or the engineer should
have power to determine that the
contract had been abandoned, and
such determination should put an
end to it, and exonerate the com-
pany from every obligation arising
therefrom, and then the job might
be disposed of as though the contract
had never existed. It was declared
abandoned because, in the opinion
of the engineer, the work was not
being prosecuted with suflScient
force to insure its completion with-
in the time agreed on. Suit was
brought by the contractor to recover
774
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 293.
ered at once, and in the contract the parties agreed to forfeit
'520] |1500 in case either failed to comply with its terms. It
was held that the forfeiture was intended by them as a com-
pensation to either in case the other wholly abandoned the
contract and was liquidated damages, not a penalty. As the
general rule of damages might not embrace all the compen-
sation the parties deemed would be due in view of the prob-
able risk, trouble, loss and expense incident to the contem-
plated change on the part of either party, they were regarded
as having fixed the sum stipulated as the amount of damage
the fifteen per cent, reserved in
monthly payments for work done.
Woods, J., said: "The contract may
be supposed to be severe upon the
plaintiffs. They were, however, by
no means forced to execute it. It
was voluntary. By its terms, exten-
sive control over the work is con-
ferred upon the defendant, and
great confidence reposed in the
honest and faithful exercise of his
discretion. If the defendant has
violated neither its letter nor its
spirit it is difficult to see what rea-
sons the'plaintitf shave for complaint.
We sit here to enforce the contracts
made by others, but we have no au-
thority to impose upon them obliga-
tions to which they have never as-
sented. The plaintiffs were to be
paid monthly on estimates made
monthly by the engineer. It
has been done. Fifteen per cent,
was to be retained to insure the
completion of the work. The de-
fendant kept back this amount. If
the contract was declared aban-
doned, the determination of the
president or engineer is conclusive.
The contract is at an end, and the
defendant exonerated from every
obligation thence arising by express
agreement. It is insisted that when
the whole work is completed the
fifteen per cent, may be recovered
by the plaintiffs. Had they finished
the work the position would be cor-
rect, but if the contract is aban-
doned, relet and others complete the
work, the amount retained as secu-
rity is in its nature liquidated dam-
ages. If it were not so intended,,
there would be no security in the re-
tention of this amount. . . . The
president or engineer is the umpire
between the parties. His determi-
nation ends the contract and ex-
empts the company from its obliga-
tions. The agreements of the parties
are the law by which their riglits
are to be determined, and I am ex-
tremely doubtful, at least, whether
any court can legitimately interfere
and upset their arrangements when
an honest discretion has been exer-
cised, where neither fraud nor cir-
cumvention has intervened. I am
instructed by my brethren, however,
to say, as the opinion of the court,
that in this class of cases tiie sub-
ject is open to inquiry whether the
contractors had done any act, or
omitted the performance of any duty
which, within the terms of the con-
tract between the parties, would
justify the president or engineer in
declaring it abandoned; and if no
such act had, in fact, been done, nor
duty omitted, the honest exercise of
the discretion conferred to abandon
the contract ought not to shield the
defendant from the payment of the
per centum so retained."
§ 293.] STIPULATED I/AMAGES. 775
each would suffer from a total failure; and the word "for-
feit" was outweighed by the other elements of interpretation
and meant " to pay." Agnew, J., said: " It is unnecessary
to examine the numerous authorities in detail, for they are
neither uniform nor consistent. No definite rule to determine
the question is furnished by them, each being determined more
in direct reference to its own facts than to any general rule.
In the earlier cases the courts gave more weight to the lan-
guage of the clause designating the sum as penalty or as liqui-
dated damages. The modern authorities attach greater im-
Dortance to the meaning and intention of the parties. Yet the
intention is not all-controlling, for in some cases the subject-
matter and surroundings of the contract will control the in-
tention where equit}' absolutely demands it. A sum expressly
stipulated as liquidated damages will be relieved from if it is
obviously to secure payment of another sum capable of being
compensated by interest. On the other hand, a sum denomi-
nated a penalt}^ or forfeiture will be considered liquidated
damages where it is fixed upon by the parties as the measure
of the damages, because the nature of the case, the uncertainty
of the proof or the difficulties of reaching the damages by proof
have induced them to make the damages a subject of previous
adjustment. In some cases the magnitude of the sum and its
proportion to the probable consequence of a breach will cause
it to be looked upon as minatory only. Upon the whole, the
only general observation we can make is that in each case we
must look at the language of the contract, the intention [521]
of the parties as gathered from all its provisions, the subject of
the contract and the surroundings, the ease or difficulty of
measuring the breach in damages and the sum stipulated, and
from the whole gather the view which good conscience and
equity ought to take of the case." '
1 Streeper v. Williams, 48 Pa. 450; case of the breach of the contract the
Shreve v. Brereton, 51 id. 175; Emery purchaser was bound "in the penal
V. Boyle, 200 id. 249. 49 Atl. Rep. 779; sum of $5,000 as liquidated damages."
Robeson v. Whitesides, 16 S. & R. 320. The difficulty of establishing the
It was a condition of the sale of actual loss was so great that the
goods by one firm to another that the stipulated sum was recoverable,
purchaser should not advertise them May v. Crawford, 142 Mo. 390, 44 S.
asof the stock of the seller, except as W. Rep. 260, 150 Mo. 504, 51 S. W.
to the goods actually bought, and in Rep. 693.
T76 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 293.
A contract for the use of a patent right for six years desig-
nated the annual license fee to be paid b}'- the licensee and
bound him, if he used it after the expiration of the terra with-
out a new license, to pay double the stipulated rate. This was
sustained as an agreement for stipulated damages. "As the
parties could not know in 1888 what the value of the use of
the patent might be after 1894, it was certainl}'- a proper sub-
ject for agreement between them as to what should be paid as
damages should the defendant continue to use the patent with-
out license after the expiration of the term, and this they did
by agreeing on the sum of $500. It could hardly have been
the intention of the parties that the right of the plaintiff, in
case use should be made of the patent after the expiration of
five years, should be limited each year to the actual damages
he might be able to show that he sustained from the use made.
It would be difficult to lay down a principle by which such
damages could be estimated by a jury.^ There is general con-
currence in the view that the uncertainty concerning the
amount of coal, ore or oil the lessee of a mine may take there-
from and the corresponding uncertainty as to the royalties the
'essor will receive make provisions stipulating that not less
*han a certain quantity of coal, ore or oil shall be taken each
year binding as agreements for stipulated damages.^ In a
case where the language used was not explicit as to the inten-
tion of the parties, the words "stipulated damages," or any
similar term not being used, their omission was regarded as of
some significance as to such intention; and the uncertainty of
the damages was urged as a reason for construing the contract
as one for stipulated damages. That argument was thus an-
Where a street railroad company i Knox Rock Blasting Co. v. Graf-
and the trustees of a village con- ton Stone Co.. 64 Ohio St. 361, 60 N.
tracted for the construction of a road E. Rep. 563, 16 Ohio Ct. Ct. 21.
and the former deposited $10,000 as 2Coal Creek, etc. Co. v. Tennessee
a guaranty of its good faith and Coal, etc. Co.. 106 Tenn. 651, 678, 63
stipulated that the same should be- S. W. Rep. 162; Lehigh Zinc & Iron
come the property of the village as Co. v. Bamford, 150 U.S. 665, 14 Sup.
liquidated damages in case of its de- Ct. Rep. 219; Fljmn v. White Breast
fault, such stipulation v^as binding. Coal & Mining Co., 72 Iowa, 738, 32
Peekskill, etc. R, Co. V. Peekskill, 21 N. W. Rep. 471; Consolidated Coal
App. Div. 94, 47 N. Y. Supp. 305, Co. v. Peers, 150 111. 344, 37 N. E. Repi
affirmed without opinion, 165 N. Y 937; Powell v. Burroughs, 54 Pa. 329.
628.
§ 294.] STIPULATED DAMAGES. 777
swared: There is no presumption in the law that damages
resulting from the breach of an obligation to convey a mining
claim cannot be calculated by market value or estimated by
reference to pecuniary standards; nor is tiiero a presumption
that it would be impracticable or extremely dillicult to fix thu
actual damage in such case. True, evidence of a character
different from that adduced to show the value of lands used
for purposes other than mining may be required, and its pro-
curement may be attended with difficulty and expense; but,
nevertheless, the law does not raise, and the courts do not in-
dulge, the presumption that proof of the value of such a claim
is impracticable. In the absence of exceptional circumstances,
a promise to pay a certain sum of money if the promisor fail
to perform his agreement to convey land is mere security and
a penalty;^ and this rule is applicable to mines as well.-
§ 294. Stipulation for payment of a fixed sum for partial
or total breach. Contracts often contain a variety of stipu-
lations of unequal importance and, therefore, admitting of
many breaches for which the damages would be different in
-amount. In such a case a total breach would involve an in-
jury greater than that which would result from the infraction
of a particular stipulation. Hence it is self-evident that a sum
stipulated to be paid, either for breach of one of the minor
provisions or of the whole contract, could not be a liquidation
of damages on the principle of compensation for actual injury.
The sum would either be too great for a partial breach or
wholly inadequate to one which involved the loss of the whole
contract.' Hence, if the agreement cannot be approj)riated to
1 Dooley v. Watson, 1 Gray, 414. machinery may be retained without
2 O'Keefe V.Dyer, 20 Mont. 477, 483, payment for it, or that for a gross
53 Pac. Rep. 196. breach it shall be retained as stipu-
3 Hoagland V. Segur, 38 N. J. L. 230. lated damages. No sum is fixed
In Pennypacker V.Jones, 106 Pa. 237, either as a penalty or as liquidated
the stipulation was that machines damages. It is manifest tliat if the
put into a mill should have a desig- defendants produced all tlie results
nated capacity to make high grades agreed upon except a deficiency of
of flour, and if the results were not one or two barrels in the daily prod-
as promised the machines were to uct, tiie forfeiture of the entire con-
be retained without payment being tract price of the machinery would
made for them. The court observe be entirely out of i>roportion to tiie
that nothing was "said to the effect, damage sustained. z\gain,the letter of
■either that for any breach the entire this provision of the contract is that
778 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 294.-
a total breach, but applies by necessary construction to such
as would cause trifling loss or inconvenience, as well as to
those of great importance, such sum is a penalty. Parke, B.,
said: "The rule laid down in Kemble v. Farren^ was that
w^hen an agreement contained several stipulations of various
degrees of importance and value, the sum agreed to be paid
^y way of damages for breach of any of them shall be con-
strued as a penalty, and not as liquidated damages, even though
the parties have in express terras stated the contrary. . . .
[522] When the parties say that the same ascertained sum
shall be paid for the breach of any article of the agreement,
however minute or unimportant, they must be considered as-
not meaning exactly what they say; and a contrary intention
may be collected from the other parts of the agreement." ^
But in a later case' he is reported to have said of the same
case: "That decision has since been acted upon in several
cases, and I do not mean to dispute its authority. Therefore,
if a party agree to pay 1,000/!. on several events, all of which
are capable of accurate valuation, the sum must be construed
as a penalty, and not as liquidated damages. But if there be
a contract consisting of one or more stipulations, the breach of
the machines may be retained if the cost to which the plaintififs were sub-
results are not as promised. This re- jected in repairing the mill after the
lates only to the non-production of defendants ceased work is also a di-
the results contracted to be pro- rect loss arising from the defective
duced, that is, that the mill should machinery furnished, and it is not
have a capacity of two hundred bar- provided for in the contract. We
rels daily, with full modern percent- think it clear that none of these
age of high grades flour equal in items come within the terms of the
quality to best in market. It makes stipulation for the retention of the
no provision for damages for other machines, and that it was not within
breaches of contract, which may oc- the contemplation of the parties that
cur consistently with the production they should. We therefore consider
of the results stated. One of the that the provision for the retention
items of damage sustained by the of the machines was only in the
plaintiffs was that it took a greater nature of a penalty, and that the
quantity of grain to produce a barrel true measure of damages is the loss
with the defendants' machines than actually sustained, flowing directly
with the ordinary process, and the from the defects in the defendants'
referee has found especially that machines."
from this source alone there was a ^ 6 Bing. 141.
positive loss of $1,096.7.5. This is a ^ Horner v. Flintoff, 9 M. & W. 678..
species of direct loss for which we ^ Atkyns v. Kinnier, 4 Ex. 776.
think there can be a recovery. The
§ 294.]
STIPULATED DAMAGES.
779
which cannot be measured, then the parties must be taken to
have meant that the sum agreed on was liquidated damages
and not a penalty." And the same antithesis is stated by him
in another case: ''Where a deed contains several stipulations
of various degrees of importance, as to some of whieli the dam-
ages might be considered liquidated, whilst for others they
might be deemed unliquidated, and a sum of money is made
payable on a breach of any of them, the courts have held it to
be a penalty only, and not liquidated damages. But when the
damages are altogether uncertain, and yet a definite sum of
money is expressly made payable in respect to it by way of
liquidated damages, those words must be read in the ordinary
sense, and cannot be construed to import a penalty."' This
latter distinction has been recognized and followed in other
cases in Eno-land and in America.^
1 Green v. Price, 13 M. & W. 695;
affirmed, 16 id. 346.
2 Emery v. Boyle, 200 Pa. 249, 49 Atl.
Rep. 779; Carpenter v. Lockliart. 1
Ind. 434.
Cotheal v. Talmage, 9 N. Y. 551,
61 Am. Dea 716, was decided on this
distinction. Ruggles, J., said: "It is
contended that because the contract
referred to in the bond bound the de-
fendant to do several things of dif-
ferent degrees of importance, and
the sum of $500 was made payable
for the non-performance of any or
either, it must be a penalty, and not
liquidated damages. This doctrine,
in the cases in which it is asserted,
is traced to the cases of Astley v.
Weldon, 2 Bos. & Pul. 340. and Kem-
ble V. Farren, 6 Bing. 141. But I do
not understand either of these cases
as establishing any such rule. The
principle to be deduced from them
is, that where a party agrees to do
several things, one of which is to pay
a sum of money, and in case of a
failure to perform any or either of
the sti pulations agrees to pay a larger
sum as liquidated damages, the
larger sum is to be regarded in the
nature of a penalty; and being a
penalty in regard to one of the stipu-
lations to be performed is a penalty
as to all. In Kembie v. Farren Tin-
dal. C. J., says that if the clause
fixing the sum for liquidated dam-
ages 'had been limited to breaches
which were of uncertain nature and
amount, we should have thought it
would have the effect of ascertain-
ing the damages upon any such
breach;' thus rejecting the doctrine
contended for by the defendant's
counsel in the present case. It is true
that the doctrine thus contended for
has been adopted in some English
and in several American cases: hast-
ily, I should think, and without care-
ful examination of the cases from
which it is supposed to be derived.
But if it should be considered as hav-
ing any solid foundation in principle,
it should be applied only in subor-
dination to the general rule, which
requires the courts in these, as in all
other, cases to carry into effect the
true intent of the parties. It should
never be applied to cases like the
present, wliere the amount of dam-
ages is uncertain from the nature of
the subject itself; and incapable of
proof, not only from that uucer-
780 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 294.
In a recent English case there is a very full discussion of the
earlier cases, and the conclusion reached is that a contract to
pay a sum of money if there shall be a breach of the stipula-
tions contained in it, they being of varied importance and
none of them trivial nor conditioned for the payment of speci-
fied amounts of money, provides for liquidated damages.^ In
the case referred to the plaintiff agreed to sell an estate for
70,000^. to the defendant; the latter was to build upon it and
complete the buildings within ten years. A deposit of 5,000?.
was to be paid by the defendant. The agreement provided
that " if the defendant should commit a substantial breach of
the contract, either in not proceeding with due diligence to
carrv out and complete the works, or in failing to perform any
of the provisions therein contained, then, and in either of the
said events, the deposit money of 5,000*^. was to be forfeited;
and if the balance of such deposit had not then been paid the
defendant should forfeit and pay a sum of money equal to
such balance, the intention being that if default was made by
the defendant as aforesaid he should forfeit and pay to the
plaintiff by way of liquidated damages the sum of 5,000Z., and
the agreement to be void and of no effect." The defendant
paid no part of the deposit, expended nothing on the estate
and performed none of the acts stipulated for. A suit was
brought to recover 5,000?. as liquidated damages, and the
court of appeal held, affirming the judgment of Fry, J., that
such sum was recoverable. It was pointed out by Jessel, M.
tainty, but from the circumstances some cases. I cannot think it ought
ah'eady stated ; and where, for these to be applied to the present. Thein-
reasons, there was a necessity for justice it professes to avoid is no
ascertaining them, by estimate by greater than that which is tolerated
the parties in their contract. The in many other cases for the purpose
only plausible ground for withhold- of enforcing a faithful performance
ing the doctrine in any case is, that of contracts." Bagley v. Peddie, 16
the party might be made responsible N. Y. 469, 69 Am. Dec. 713.
for the whole amount of damages ^ Wallis v. Smith, 21 Ch. Div. 243,
for the breach of an unimportant followed in Schrader v. Lillis, 10 Ont.
part of his contract, and so be made 358, notwithstanding the court of
to pay a sum by way of damages appeal had, previous to the decision
grossly disproportionate to the in- of Wallis v. Smith, announced the
jviry sustained by the other party, contrary doctrine in Craig v. Dillon,
Without undertaking to deny that 6 Ont. App. 116.
this rule may properly be applied to
§ ^'-^'-i-] STIPULATED DAMAGES. 7S1
K, that, although the dicta in the earlier cases' seemed to lay
down a positive rule, the actual decisions were in cases wliere
one or more of the stipuhitions was or were for the payment
of a sura of money less than that named as liquidated dam-
ages. He said: " Although I wisli to leave the (juestion open,
where there are several stipulations, and one or more is or are
of such a character that the damages must be small, I do not
wish for a moment to abstain from stating my opinion that
there is no such doctrine where there are several stipulations
irrespective of importance, which is the doctrine laid down by
Mr. Justice Ileath,'^ and apparently approved of by Lord Jus-
tice James.' There is neither authority nor principle for such
doctrine, and I cannot see that it is estal^lished by any case
which is binding on this court." Lord Justice Cotton said:
" It is not sufficient, in my opinion, to say that the covenants
to the breach of which this applies are of varying importance.
That may be so, but yet the parties may very reasonably come
to the conclusion that they will agree between themselves
that the sum mentioned shall be assessed between them as the
damages in consequence of the breaches of these various cov-
enants. Probably there may be an exception, that where
some of the covenants are of such a character that obviously
the damages which can possibly arise from a breach in any
Avay of that covenant would be very insignificant compared
with the sum which has been fixed by the parties, there the
court will give the non-natural construction to the terms used
by the parties. In my opinion that comes within the same
principle as where the courts have interfered, where one of
the covenants has been for payment of a sum of money where
the damage is capable of being assessed accurately, and is
very much below the sum named." This decision is correctly
interpreted to mean " that an agreement with various cov-
enants of different importance is not to bo governed by any
inflexible rule peculiar to itself, but is to be dealt with as com-
ing under the general rule that the intention of the parties
1 Astley V. Weldon, 2 B. & P. 34G, v. Local Board of Redditch, [1892] 1
353; In re Newman, 4 Ch. Div. 731; Q. B. 127.
Reynolds V, Bridge, 6 R & B. 540; 2 Astley v. Weldon. sxiprcu
Atkyns v. Kinnier, 4 Ex. 783: Gals- ^ Iq re Newman, sxiTpra.
worthy v. Strutt, 1 id. 659. See Law
7S2 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 295.
themselves is to be considered. If they have said that in the
case of any breach a fixed sura is to be paid, then they will be
kept to their agreement unless it would lead to such an ab-
surdity or injustice that it must be assumed that they did not
mean what they said." '
This doctrine has been adhered to in the court of appeal in
a case in which the lease of a farm contained a covenant b}'"
the lessees not to sell hay or straw off the premises during the
last twelve months of the term, but to consume the same; it also
provided that an additional rent of SI. per ton should be pay-
able by way of penalty for every ton of hay or straw so sold.
It appeared that there was a substantial difference between the
manurial value of hay and that of straw. This difference was
sufficient to make the stipulation one for a penalty, regardless
of the use of that word by the parties. Lord Esher, comment-
ing on the following language used by the court in Lord
Elphinstone v. Monkland Iron and Coal Co.,'^ "When a
single lump sum is made payable by way of compensation on
the occurrence of one or more or all of several events, some of
which may occasion serious, and others but trifling, damage,
the presumption is that the parties intended the sum to be
penal, and subject to modification," said: I think the effect is
subs tan tiall}'' the same as if, instead of the words " some of
which may occasion serious and others but trifling damage,"
he had said " some of which may occasion serious and others
less serious damage." '
[523] § 295. Same subject. Whether the damages are
certain or not, a fixed sum made payable on the happening of
one or of several events, each of which will be the occasion
of some loss, cannot be deemed a sum intended for compensa-
tion unless the stipulations are all of primary importance and
the damages resulting from their breach are equally uncertain,
or the provisions are parts of one whole, steps in the accora-
1 Mayne on Dam., Gth London ed., disajjproved Wright v. Tracey, Irish
160. Hep. 7 C. L. 134, which held that one
2L. R. 11 App. Cas. 332, 342. sum was to be paid in the event of
3Willson V. Love, [1896] 1 Q. B. the breach of any one of several
626. Oneof the judges was in doubt stipulations of varying degrees of
as to whether the conclusion arrived importance.
at was correct. A majority of them
§ 295.] STIPULATED DAMAGES. 783
plishment of one end, and to be ref^^arded as a single contract.
Otherwise, no stipulation can operate on that principle. In
many courts the law is held to be that a sum is stipulated
damages when it conclusively appears that the parties have
intentionally adopted it for that purpose. But where the
couits proceed on the theory that there can be no sucli inten-
tion when the stipulation is so framed that it cannot by any
possibility operate to adjust the recompense to the actual in-
jury, a sum made payable indifferently for one breach or for
many, for a breach attended with a small loss or a large one,
can have no effect to liquidate damages. In case the damages
are easily computed, the extent of the inequality of the pro-
vision is seen at once; but even if they are uncertain, the in-
equality is logically certain. Eyan, C. J., stated the [52-1-]
point with great clearness: "Where the sura is agreed to be
paid for any of several breaches of the contract, and the dam-
ages resulting from the breach of all of them are uncertain,
and there is no fixed rule for measuring them, but tiie breaches
are apparently of various degrees of importance and injury,
the cases are conflicting on the rule whether the sum should be
held as a penalty or as liquidated damages. On principle, "we
are very clear that in such a case the sum should be held as a
penalty. For it appears to us that it would be as unjust to
sanction a recovery of the sum agreed to be paid alike for one
trivial breach, or for one important breach, or for breach of the
whole contract, as it would be to sanction such a recover}--
equally for damages certain and uncertain in their nature. The
rule holding the sura to be a penalty in the latter case goes
upon the injustice of allowing such a recovery equally in case
of damages, uncertain indeed, but manifestly and materially
different in amount; equally for breach of part of the contract,
and for breach of the entire contract. Such a rule would not
•only put the same value on a small part as on a large part, but
would put the same value on any part as on the whole." ' This
1 Lyman v. Babcock, 40 Wis. 503. it is agreed that the promisor shall
lu 3 Parsons on Cont. 161, the author pay, by way of liquidated dama?:es,
says: '' Let us suppose a contract be- a large sum, if the promisee recover
tween parties, one of whom, for against him in an action for a breach
good consideration, promises to the of this contract. It must be sup-
other to do several things, and then posed that this sum is intended and
784
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 295.
[525] is believed now to be the doctrine generally held; if a
gross sum is stipulated to be paid for any failure to fulfill an
agreement consisting of several parts and requiring several
things to be done or omitted, it is a penalty.^
regarded as adequate compensation
for the breach of the whole contract;
for it is all that the promisor is to
pay if he breaks the whole. It
would, of course, be most unjust
and oppressive to require him to pay
this whole sum for violating anyone
of the least important items of the»
contract. But such would be the
effect, if the words of the parties
prevailed over the justice of the
case. The sum to be paid would,
therefore, be treated as penalty, and
reduced accordingly, unless the
agreement provided that it should
be paid only when the whole con-
tract was broken, or so much of it
as to leave the remainder of no
value; or unless the sum agreed
upon was broken up into parts, and
to each breach of the contract its
appropriate part assigned; and the
sum or sums paj'able came in other
respects within the principles of
liquidated damages." Astley v. Wel-
don, 2 B. & P. 346, per Heath, J.;
Boys V. Ancell, 5 Bing. N. C. 390;
Reilly v. Jones, 1 Bing. 302; People
V. Central Pacific R. Co., 76 Cal. 24,
36. 18 Pac. Rep. 90; Keeble v. Keeble,
85 Ala. 552, 5 So. Rep. 149; Mansur
& T. Implement Co. v. Tissier Arms
& H. Co.. — Ala. — , 33 So. Rep. 818.
1 Iroquois Furnace Co. v. Wilkin
Manuf. Co., 181 111. 582, 54 N. E. Rep.
987: Wilhelm v. Eaves, 21 Ore. 194,
14 L. R. A. 297, 27 Pac. Rep. 1053,
citing the text; Keck v. Bieber, 148
Pa. 645, 33 Am. St. 846, 24 Atl. Rep.
170; Wilkinson v. Colley, 164 Pa. 8.5,
30 At). Rep. 286, 26 L. R A. 114;
Krutz V. Robbin.s, 12 Wash. 7, 14, 50
Am. St. 871, 40 Pac. Rep. 415; East
Moline Co. v. Weir Plow Co., 37 C.
x":;. A. 62, 95 Fed. Rep. 250; People v.
Central Pacific R Co., 76 Cal. 24, 37,
18 Pac. Rep. 90, quoting the text;
Radloff V. Haase, 96 IlL App. 74,
quoting the text; El Reno v. Culli-
nane, 4 Okl. 457, 46 Pac. Rep. 510;
Watts v. Camors, 115 U. S. 353, 6
Sup. Ct. Rep. 91; Bignall v. Gould,
119 U. S. 495, 7 Sup. Ct. Rep. 294;
St. Louis, etc. R Co. v. Shoemaker,
27 Kan. 677; Higbie v. Farr, 28 Minn.
439, 10 N. W. Rep. 592; Carter v.
Strom, 41 Minn. 522, 43 N. W. Rep.
394; Dickson v. Lough, 18 L. R. Ire.
518; Charles Fruit Co. v. Bond, 26
Fed. Rep. 18; McPherson v. Robert-
son, 82 Ala. 459, 2 So. Rep. 333; Moore
V. Colt, 127 Pa. 289, 18 Atl. Rep. 8,
14 Am. St. 845; Farrar v. Beeman,
63 Tex. 175; Lansing v. Dodd, 45 N.
J. L. 525; Whitfield v. Levy, 35 id.
149; Tayloe v. Sandiford, 7 Wheat.
13; Van Buren v. Digges, 11 How.
461; Carpenter v. Lockhart, 1 Ind.
434; Cook v. Finch, 19 Minn. 407;
Lee V. Overstreet, 44 Ga, 507; Owens
V. Hodges, 1 McMull. 106; Hammer
V. Breidenbach, 31 Mo. 49; Goldsbor-
ough V. Baker, 3 Cranch C. C. 48;
Nash V. Hermosilla, 9 Cal. 581; Foley
V. McKeegan, 4 Iowa, 1, 66 Am. Dec.
107; Martin v. Taylor, 1 Wash. C. C.
1; Henderson v. Cansler, 65 N. C. 542;
Lord V. Gaddis, 9 Iowa, 265; Hallock
v. Slater, id. 599; Brown v. Bellows,
4 Pick. 179; Moore v. Platte County, 8
Mo. 467; Jackson v. Baker, 2 Edw.
Ch. 471; Thoroughgood v. Walker, 2
Jones, 15; Curry v. Larer, 7 Pa. 470.
49 Am. Dec. 486; Fitzpatrick v. Cot-
tingham, 14 Wis. 219; Trower v. El-
der, 77 111. 452; Hoagland v. Segur,
38 N. J. L. 230; Long v. Towl, 42 Mo.
545, 97 Am. Dec. 355: Gower v. Salt-
marsh, 11 Mo. 271: Watts v. Shep-
pard, 2 Ala, 425; Cheddick v. Marsh,
i
§ 295.]
STIPULATED DAMAGES.
785
A distinction is taken in England where a deposit is made
and it is to be forfeited for the breach of a number of stipula-
tions of varying importance. Though some of them may be
trifling or require the payment of a designated sum of money
on a given day, if the contract provides forstipuhited damages
it will be carried out. Commenting on this rule Fry, J., said:
" In that there seems to me to bo great good sense, and f(jr tliis
reason, that if a fund is set apart to meet a particular contin-
gency which is described, and that contingency arises, it is
difficult to say tliat the stakeholder, or other person having
the fund, is not to hand it over at once to the person wlio
claims it under the contingency which has happened." ' There
are American cases which hold that where the instrument re-
fers to a sum deposited as security for performance, the for-
feiture, if reasonable in amount, will be enforced as liquidated
damages, the intention being evident that the monej'^ shall
be paid over upon breach of the contract.'^ But this rule does
21 N. J. L. 463: Niver v. Rossman. 18
Barb. 50; Berry v. Wisdom. 8 Ohio
St. 241; Clement v. Cash, 21 N. Y.
253; Chase v. Allen, 13 Gray, 42;
Trustees v. Walrath. 27 Mich. 232;
Elizabethtown, etc. R. Co. v. Geoghe-
gan, 9 Bush, 56; Daily v. Litchfield,
10 Mich. 29; Staples v. Parker, 41
Barb. 648; Magee v. Lavell, L. R. 9
C. P. 107; Shute v. Taylor, 5 Met. 61
Beckham v. Drake, 9 M. & W. 79
Hoag V. McGinnis. 22 Wend. 163
Higginson v. Weld, 14 Gray, 165
Lea V. Whitaker, L. R 8 C. P. 70; In
re Newman, 4 Ch. Div. 724; Hooper
V. Savannah & M. R. Co.. 69 Ala. 529;
Heatwole v. Gorrell, 35 Kan. 692;
Bryton v. Marston, 33 111. App. 211.
In some of the foregoing cases the
rule is quoted as applicable to agree-
ments for performance or omission of
various acts, in respect to one or more
of which the damages on a breach
would be readily ascertainable, be-
cause the particular case embraced
such stipulations; but without any
expression to indicate that the de-
termination would have been dif-
Vol. I — 50
ferent if all the damages had been
of an uncertain nature.
in Hathaway v. Lynn, 75 Wi.s.
186, 43 N. W. Rep. 956 (see Palmer
V. Toms. 96 Wis. 367, 71 N. W. Rep.
654), there was a single stipulation
for a series of acts of the same nat-
ure from each of which the prom-
isee might expect a benefit, but it
■was contingent, and $'200 was .stijiu-
lated as damages for violation or
disregard of the terms of the agree-
ment; it was held that for a partial
breach only nominal damages could
be recovered in the absence of proof
of substantial damages. See Mc-
Cullough V. Manning, 132 Pa. 43, 18
Atl. Rep. 1080.
iWallis V. Smith, 21 Ch. Div. 243,
250, 258; Hinton v. Sparkes, L. R 3
C. P. 161; Lea v. Whitaker, 8 id. 70;
Magee v. Lavell, 9 id. 107.
2 San ford v. First Nat. Bank, 04
Iowa. 680, 63 N. W. Rep. 459; Max-
well V. Allen. 78 Me. 33, 57 Am. Rep.
783, 2 Atl. Rep. 386; Sanders v. Carter,
91 Ga. 450, 17 S. E Rep. 345.
32.
Y86 CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 295.
not extend to the case of a deposit made by a bidder where his
bid does not refer to it as either liquidated damages or a pen-
alty, the proposals providing simply that if the successful bid-
ders enter into contract with bond without delay, their checks
will be returned. The only implication from such language is
that a failure to enter into bond shall entitle the party invit-
ing the bids to so much of the deposit as will be a just com-
pensation for any loss that may result from the failure of the
bidder to furnish the bond. " A failure to give the bond is a
breach of the contract and the damages which would result
from that breach would be the difference the city paid, if any-
thing, in excess of the amount of the unexecuted bid, and also
the expense of a re-advertisement for new bids. These ele-
ments of damage are neither uncertain nor difficult of ascer-
tainment."^ This view is in accord with a New York case in
which a tenant deposited with the landlord a sum of money
which the lease provided should be held as security for the
tenant's performance of his covenants, the same to be applied
on payment of rent for the last three months of the term if
the lease was not sooner terminated by the tenant's failure to
perform, in which event the money was to be forfeited and
become the landlord's. After default in paying one month's
rent the tenant was dispossessed, and the landlord refused to
pay any part of the deposit. The tenant was entitled to re-
cover it except so much as was necessary to pay the one
month's rent.^ Where the agreement is that the money de-
1 Willson V. Baltimore, 83 Md, 202, covenants and held as indemnity for
213, 34 Atl. Rep. 774. such loss as should arise from Vjreach.
2 Chaude v. Shepard, 122 N. Y. 397, And in that view the plaintiff was
25 N. E. Rep. 358. The opinion con- entitled to the surplus remaining
tains this: In view of the intention after such claim of the defendant
of the parties as derived from the was satisfied. Scott v. Montells, 109
entire provision in respect to this N. Y. 1, 15 N. E. Rep. 729. It is,
deposit, there was nothing within however, urged for the defendant
their contemplation in its purpose, that, as the money was actually
in the event of the premature ter- placed in the possession of the do-
mination of their relation given by fendant pursuant to the contract at
the lease, other than such damages the time of the execution of the
as should result from the default of lease, the disposition of it is governed
the plaintiff. This is evident from by a different rule than that which
the fact that the deposit was made would have been applicable if the
as security for performance of the claim to it had been founded upon
§ 295.] STIPULATED DAMAGES. 787
posited may be retained by the landlord as liquidated damages
if the tenant is dispossessed, witliout any rebate or allowance,
the rights of the parties are llxed by it.' But the sum paid
and the value of the property exercise a potent influence in
the judicial mind to the same extent as where the stipulation
is not accompanied by a deposit or provision is not made that
the sum paid as part of the purchase price shall become the
property of the vendor if the vendee fails to perform. Where
a contract for the purchase of oranges upon the trees provided
for the payment of a lump sum, fifteen hundred dollars of
which was paid at the time it was made, and that if the vendee
did not comply with its conditions such payment was to be
forfeited, the court refused to treat that sum as liquidated
damages.^
There is one class of contracts in which the general con-
struction of stipulations liquidating damages may at first sight
seem to be in conflict with the doctrine stated: contracts of a
negative character, requiring a party to abstain continuously
from doing certain acts, as to discontinue a nuisance^ or to
secure enjoyment of the good will in a certain trade or busi-
ness. A contract of the latter description contains a guaranty
against competition from the promisor for a certain time and
the executory agreement of the continued to the end of the term,
plaintiff to pay it. That would have In that event only, it was to be ap-
been so if the money had been paid plied in payment of tlie rent for the
upon the contract by way of partial three months ending with its close,
performance by the plaintiff. In such The provision relating to the deposit
case the party so paying, and after- and expressive of forfeiture cannot,
wards by reason of his default is de- therefore, be treated as indicative of
prived of or denied the benefits of intention of the parties to give it
his contract, cannot recover the the character of liquidated damages,
money so paid by him upon it. Page but rather that it should have the
V. McDonnell, 55 N. Y. 299; Law- nature of a penalty in the event
rence V. Miller, 86 N. Y. 131; Havens there mentioned. Carson v, Ar-
V. Patterson, 43 N. Y. 218. And vantes, 10 Colo. App. 382. 50 Pac. Rep.
tliese views are not inconsistent 1080, is to the same effect,
with the rule applied to the facts in • Longobardi v. Yuliano. 33 N. Y.
the cases of Ockenden v. Henly, Misc. 472, 67 N. Y. Su|)p. 902.
Ellis, Bl. & E. 485, and Hinton v. 2 Nichols v. Haines, 30 C. C. A. 235,
Sparkes, 3 C. P. Div. 161. There is no 98 Fed. Rep. 692.
provision in the lease in question 3 Grasselli v. Lowden, 11 Ohio St
that the money deposited should be 849; not to poach, Roy v. Duke of
treated as a payment, or to make it Beaufort, 2 Atk. 190.
such, unless the plaintiffs tenancy
788
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 295.
at a specified place, or in some limited district. He agrees
not to engage in that business for such time within that place,
and if he does, or violates the contract, or fails to fulfill it, he
will pay a certain sura. In general, a single violation, though
[526] it be accomplished in one day, and is confined to a small
part of the district, subjects him to liability for the stated
sum, and a repetition of such acts, or a failure to abstain at
all, may subject him to no greater liability.' These agree-
ments are in general such as to require one continuous act of
abstention, and the consideration and the amount required to
be paid evince the intention that such stipulated sum be paid
for a minimum of violation. The agreement may be so framed
that there may be repeated recoveries for successive infrac-
tions, or so that only one infraction is possible.-
1 See Hathaway v. Lynn, 75 Wis.
186, 43 N. W. Rep. 956. 6 L. R. A. 551.
2 Dakin v. Williams, 17 Wend. 447;
Dunlop V. Gregory, 10 N. Y. 241,
61 Am. Dec. 746; Mott v. Mott. 11
Barb. 127; Streeter v. Rush, 25 Cal.
67; Duffy v. Shockey, 11 Ind. 70, 71
Am. Dec. 348; Spicer v. Hoop, 51 Ind.
365; Jaquith v. Hudson, 5 Mich. 123;
Mercer v. Irving, El., B. & E. 563;
Reynolds v. Bridge, 6 El. & B. 528;
Sainter v. Ferguson. 7 C. B. 716; Muse
V. Swayne, 2 Lea, 251, 31 Am. Rep.
607: Galsworthy v. Strutt, 1 Ex. 659;
Rawlinson v. Clarke, 14 M. & W. 187.
It is held in Kansas that contracts
not to engage in business must be
sued upon as breaches thereof occur.
Heatwole v. Gorrell, 35 Kan. 692.
But this is not in accord with the
weight of authority. Streeter v.
Rush, 25 Cal. 67; Gushing v. Drew,
97 Mass. 445; Grasselli v. Lowden, 11
Ohio St. 349; Moore v. Colt, 127 Pa,
289, 18 Atl. Rep. 8 14 Am. St. 845.
See Leary v. Laflin. 101 Mass. 334.
Under a statute of New York a
contract was authorized to be made
with certain officers for the publica-
tion of the reports of the decisions
of the court of appeals. The officers
were given power to impose terms
beneficial to the public on the con-
tracting publisher, and to make pro-
vision in the contract that a party
injured by the refusal of the con-
tractor to sell and deliver as pre-
scribed in the contract s5»ould be en-
titled to recover damages- and might
fix a sum as liquidated damages. A
contract so entered into required the
contractor to furnish, at the contract
price, any volume published under
it to any other law-book seller in the
city of New York or Albany apply-
ing therefor, "in quantities not ex-
ceeding one hundred copies to each
applicant," unless the contractor
choose to deliver more. The con-
tract also provided that for any fail-
ure on the part of the contractor '• to
keep on sale, furnish and deliver the
volumes, or any of them, as agreed,
he shall forfeit and pay . . . the
sum of $100, hereby fixed and agreed
upon, not as penalty, but as liqui
dated damages," to be sued for and
recovered by the persons aggrieved
The plaintiff, a bookseller, applied
on six different occasions for a nuns
ber of copies required by him in bia
business, of certam volumes puK
lished under the contract, tehJering
the contract price, which aefendant
§ 295.]
STIPULATED DAMAGES.
7S9
Where the stated sum obviously and grossly exceeds [527]
any just measure of compensation there is the same recognized
discretion in such cases as in others to declare it a penalty.'
refused to deliver. In an action on the
contract it was held a valid stipula-
tion of damages, not a penalty, and
that the plaintiff was entitled to re-
cover the damages for each refusal.
Miller. J., delivering the opinion of
the court, treats the question as one
depending on the intention of the
parties, ascertained from the lan-
guage of the contract and from the
nature of the surrounding circum-
stances of the case. Referring to the
case he says: "The breach provided
for was a single one — a failure to
keep on .sale, furnish and deliver the
volumes named at a price fixed.
The agreement expressly provides
that the sum named is fixed and
agreed upon 'not as a penalty.' The
failure to sell and deliver embraced
not only a single volume, but might
be one hundred volumes at one time.
The damages for a failure to deliver
a single volume might be very small,
while for a larger number it would
be far greater; and, in case of a
bookseller, disposing of them in the
course of his trade, might be beyond
the amount actually fixed. The
damages for a single breach were
also uncertain, and could not be
determined without extrinsic evi-
dence, and without some embarrass-
ment. The mere loss of profits on
a volume to a bookseller might also
be of but trifling amount when com-
pared with the injury to his trade
by being unable to furnish to his
customers volumes of the reports as
required. Under the circumstances
it is easy to see that there would be
considerable difficulty in making
proof of the actual damages in-
curred. In view of the facts, al-
though the question is bj' no means
free from embarrassment, it is, per-
haps, a fair inference that the parties
actually intended to guard against
these difficulties by fixing tlieamount
named in the contract as liquidated
damages. As the damages wlnCh
might possibly be incurred by a fail-
ure to supply a larger number of
copies provided for by the contract
miglit be greater, we think the
amount was not unreasonable, or
grossly disproportionate to the prob-
able estimate of actual damagea"
Little V. Banks, 83 N. Y. 25a
1 Wheatland v. Taylor, 29 Hun, 70;
Burrill v. Daggett, 77 Me. 545; Smith
V. Wedgwood, 74 id. 457; Stearns v.
Barrett, 1 Pick. 448, 11 Am. Dec. 223;
Grant V. Pratt, 52 App. Div. 540, 549,
65 N. Y. Supp. 486.
In Perkins v. Lyman, 9 Mass. 522,
11 id. 76, 6 Am. Dec. 158, the defend-
ant covenanted for a valuable con-
sideration that he would not be di-
rectly or indirectly interested in any
voyage to the northwest coast of
America or in any traffic with the
natives of that coast for seven years,
in the penal sum of $8,000. It was
held a violation of such covenant to
own and fit a vessel for such voyage,
although before her departure the
covenantor divested himself of ail
in<^^erest in the vessel and cargo; but
also held that the §8.000 was penalty.
"The question whether a sum of
money mentioned in an agreement
shall be considered as a penalty and
so subject to the chancery powers of
this court or as damages liquidated by
the parties is always a question of con-
struction, on which, as in other cases
where a question of the meaning of
the parties in a contract, provable in
a written instrument, arises, the
court may take some aid to them-
selves from circumstances extrane-
Y90
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 296.
§ 296. Effect of part performance accepted where dam-
[528] ages liquidated. For the same reason that one sum
cannot consistently be compensation alike for a total and
partial breach, a stated sura made payable for the former can-
not by construction be applied to any infraction after accept-
ance of part performance.^ In case of such a stipulation the
ous to the writing. In order to de-
termine upon the words used there
may be an inquiry into the subject-
matter of the contract, the situation
of the parties, the usages to which
they may be understood to refer, as
well as to other facts and circum-
stances 'of their conduct; although
their words are to be taken as proved
by the writing exclusively." The
court considered there was nothing
in the transaction and subject-mat-
ter to indicate whether the sum
stated was penalty or liquidated dam-
ages. It might be either consistently
with the object of the contract. But
the court say: " If the sum of $8,000,
mentioned in the agreement, is to be
treated as liquidated damages, then
for one instance, in which the con-
tract should be broken, and for a
thousand in which the defendant
should interfere in the trade contem-
plated by the parties to be secured
to the plaintiffs for seven years, ex-
clusively of him and of all acting
under him, the same damages, the
amount of demand, would be recov-
ered, and having been once paid,
if demanded as a penalty, there
would be an end of the contract: but
if demanded as damages, then, it
seems. thedemand might be repeated.
Examined in this view we see noth-
ing which gives this contract any
other determinate meaning than
that of penalty. If there is nothing
to prevent the plaintiffs, in case the
defendant should have injured them
in the breach of his contract to a
greater amount than $8,000 from re-
covering upon his covenant, and in
that form of action, the extent of
the damage actually sustained, al-
though greatly exceeding the sum
mentioned, it would be a severe con-
struction, indeed, which should con
siderhim liable to that amount upon
one breach, however slight the injury
and loss may have been. . . . He
binds himself in the sum of $8,000 for
his faithfully and strictly adhering
to this contract. It is not said, if he
does so, contrary to his agreement,
then he will pay that sum as a satis-
faction. Nor is there anything ex-
pressed which would conclude the
plaintiffs, unless it be their form of
action (debt), when the amount of
damages should exceed $8,000, from
demanding to the extent of their
loss."
1 Hoagland v. Segur, 38 N. J. L. 230;
Shute V. Taylor, 5 Met. 61; Taylor v.
The Marcella, 1 Woods, 302; Watts
v. Sheppard, 2 Ala. 425; Berry v.
Wisdom, 3 Ohio St. 241; Lampman
V. Cochran, 16 N. Y. 275, per Shank-
land, J.; Sheill v. McNitt. 9 Paige,
101; Mundy v. Culver, 18 Barb. 336;
Smith Granite Co. v. Newall. 22 R.
I. 295, 47 Atl. Rep. 597. The text is
approved in Wibaux v. Grmnell Live
Stock Co., 9 Mont. 154, 165, 22 Pac.
Rep. 493. In the last case the con-
tract was for the sale and purchase
of cattle, and stipulated that a sum
should be paid if the vendor failed
to deliver the entire number called
for; no provision was made for the
delivery of a less number. Less
than the whole M-ere delivered and
accepted. As a result the agreement
for stipulated damages was con-
verted into one in the nature of a
penalty.
§ 297.] STIPULATED DAMAGES 701
Stated sum is only recoverable upon the happening of the very
event mentioned in the contract. If a partial breach occurs
it has sometimes been said the stated sum is as to tliat hreacli
only penalty, and damages are given on proof without regard
to it.^ In other instances it has been held that thf (himages
for a partial breach are a constituent of the sum stipulated ior
an entire failure to perform. Thus, where there were liqui-
dated damages for a failure to convey land, and a part only of
it was conveyed, and a failure as to the residue, the damage
allowed was a sum which bore the same ratio to the stipulated
sum that the value of the land not conveyed bore to that of
the whole.2 If the owner of the building, with the consent of
the contractor, who has bound himself to pay $10 per day as
liquidated damages for delay in completing it, occupies a part
of the building after the time stipulated for its completion, but
before it is finished, the liability for the stipulated sum termi-
nates with such occupancy; thereafter the contractor is only
liable for the actual damages.'
§ 297. Liquidated damages are in lieu of perlonuance.
It has been held that in all cases where a party relies [529]
on the payment of liquidated damages it must clearly appear
from the contract that they are to be paid and received in lieu
of performance.* Where the sti])ulated sum covers the loss of
the whole contract, and does not apply where there is merel}'-
1 Wheatland V. Taylor, 29 Hun, 70; liquidated as to that covenant it is
Shute V. Taylor, 5 Met. 61. not as to the other. Lansing v,
2 Watts V. Sheppard, 2 Ala. 425. Dodd, 45 N. J. L. 525; Whitfield v.
See Chase v. Allen, 13 Gray, 42. Levy. 35 id. 149, 15G; Laurea v. Ber-
Tlie sum named must be regarded nauer. 33 Hun, 307.
as liquidated as to all the provisions If tlie requests and acts of one in
to which it shall extend, or it will whose favor damages are stipulated
not be so regarded as to any. It are responsible for part of tiie delay
cannot be liquidated damages in one in the execution of a building con-
case and not in the other. If the tract, there cannot be an apportion-
contract applies to the covenant of ment of the stipulated sum. Willia
one party to convey, and to that of v. Webster, 1 App. Div. 301, 37 N. Y.
the other party to pay the consider- Supp. 354.
ation money on the delivery of the ' Collier v. Betterton, 87 Tex. 440,
deed, the measure of damages in one 29 S. W. Rep. 467.
case is the unpaid purcliase-money, <Gray v. Crosby, 18 Johns. 219:
which can be ascertained, and as to Winch v. Mutual Beneflt Ice Co., 9
that covenant it cannot be consid- Daly, 177.
ered liquidated damages, and if not
792
CONVENTIONAL LIQUIDATIONS AND DISCHARGES. [§ 297.
a violation of some detail of it, they are in lieu of the per-
formance of the entire contract; they satisfy the whole and
everj'^ particular of it. Thus, if in an agreement for submis-
sion of a controversy to arbitration it is mutually agreed that
either party failing to fulfill it shall pay to the other a speci-
fied sum as stated damages, not so large in itself as to imply
a penalty, it would be recoverable from the party who should
revoke the power of the arbitrators, for he would thereby re-
pudiate the submission and defeat the entire object of the
agreement. But if there be no revocation, and after an award
is made one party refuses to perform it, the refusal is not such
a breach as the stated sum applies to.^ And if such sum is
Ud. In Lowe V. Nolte. 16 111. 475,
an action was brought on an award.
The submission stated that several
suits were pending between the par-
ties, arising out of a contract in re-
lation to the purchase of grain; and
it was agreed that all matters con-
nected with the contract and the
suits were to be referred; that the
decision be conclusive, and that judg-
ment, on ten days' notice, should be
entered on the award. It was also
provided that the submission should
not operate to dismiss any of the
pending suits until final judgment
on the award, or tlie performance of
it; the parties binding themselves to
abide by the award "in the penalty
of $1,000 as stipulated damages, to be
paid by the party delinquent to the
party complj'ing." The award was
for $0,876.46. Scates, C. J. (speaking
of causes of demurrer to the declara-
tion), said: "The most important is
the want of an averment of a failure
to pay the liquidated damages, stip-
ulated to be $1,000, for non-compli-
ance with the award, and which it
is here contended is all that can be
recovered under the submission and
award. If this view is sustainable
no action will lie upon the award as
it is here brought, but alone upon the
submission. To solve this objection
it is necessary' to ascertain, from the
nature of the matters in controversy
and the terms and language of the
parties in their submission, whether
they intended by this part of the
agreement that the $1,000 fixed as
liquidated damages should be strictly
and technically so held, or only as
a penalty. Courts have not been
confined and controlled alone by the
literal terms, stipulated damages,
used by the parties, when inquiring
into their true intention and mean-
ing; but they have looked to the sub-
ject-matter of the dispute, the situa-
tion and condition of the parties, and
all the circumstances, together with
the effects and consequences, as aids
in arriving at the true meaning.
"Where a covenant is made concern-
ing an existing cause of action, that
cause may or may not be merged in
the covenant. If it be merged, and
the covenant be broken, the party is
liable alone on the covenant, and not
on the original cause of action. If it
is not merged, then the covenant af-
fords a new and additional cause of
action and remedy upon it. In this lat-
ter case, if the amount named in the
covenant or agreement be fixed as
liquidated or stipulated damages,
and is intended by the parties to be
paid in lieu of performance, then the
recovery will be confined to that
amount for the breach, as well as to
§ 298.] STIPULATED DAMAGES. 793
made payable as liquidated damages for a breach of [o.'iO]
some particular only of the agreement, then it may still be a
question whether that feature of the contract will, notwithstand-
ing the breach, and the claim or even payment of those dam-
ages, be of continuing obligation so as to admit of other
breaches and successive claims and recoveries of the same
stipulated damages. This question is not to be settled by any
rule peculiar to the construction of such stipulations; it depends
on the intention of the parties as ascertained by a fair inter-
pretation of the contract. "Where certain work is required to
be done within a specified time it may be, and often is, agreed
that a stated sum shall be paid for every week, month or other
period during which its completion is delayed beyond that
time. In such cases there is, by necessary implication, a con-
tinuing obligation as well as right to finish the work, though
the stipulated time of performance has elapsed. These suras
are recoverable and may be aggrega '"ed ; ' and they are sever-
ally payable only as complete satisfaction for the delay of per-
formance and not in lieu of it.
§ 298. Effect of stipulation upon right of action. It is
not the effect of the ordinary contract which stipulates for
damages to constitute the person who claims the benefit of
the stipulation a tribunal to determine his rights thereunder.
Plence, where a contractor has not performed according to
his agreement the contractee may sue for the sum which the
other has agreed shall be the damages; ^ and where the
amount is to be deducted from the payment last due, if such
deduction has been made, the fact may be shown in bar of the
action.' A plaintiff who elects to take liquidated damages
cannot have an injunction; he may elect between the two
remedies, but cannot have both.* If it is not apparent that the
his action on the covenant or agree- v. Crowley, 5 Allen. 304, 81 Am. Dec.
ment for his remedy, and cannot 745. See § 291; Weeks v. Little. 47
preserve his original cause of action. N. Y. Super. Ct 1.
But when such intention does not ^Mitcliell v. McKinnon, 65 ^lich.
appear, the sum named asstipulated 683, 32 N. W. Rep. 895; Leav, Whita-
or liquidated damages will be re- ker, L. R. 8 C. P. 70.
ceived and treated as a penalty; and 3 jiitcliell v. McKinnon, supra;
ihe party may recover upon tl)e orig- Stillwell v. Temple. 'J8 Mo. 156.
inal cause." < General Accident Assurance Co.
J Fletcher v. Dyche. 2T. R. 32; Pet- v. Noel, [1902] 1 K. B. 377.
tis V. Bloomer. 21 How. Pr. 317; Hall
794 CONVENTIONAL LIQUIDATIONS AND DISCHAEGES. [§ 299..
payment of the stipulated sum is to be made as an alternative
in lieu of strict performance, equity will enjoin the defendant
from breaching his covenant.'
§ 299. Waiver of right to stipulated damages. If part
performance of an entire contract is accepted a stipulation
concerning the damages is waived.^ The waiver of the right
to annul a building contract waives a claim to stipulated dam-
ages for either non-performance or delay by the contractors,
in the absence of an express agreement to the contrary.^
There is no waiver of the right to such damages on the ground
of part performance where the obligee performs for and at
the request of the obligor; no consent that an existing breach
shall be disregarded can be implied from the obligee's act.^
"Where it is provided that a sum shall be deducted from the
contract price for the performance of work for each week's
delay beyond a time fixed, the right thereto is not waived
because the amount is not deducted from the monthly esti-
mates or claimed from month to month, if the contract is
silent as to the time when the claim shall be asserted.* If the
defendant's right to retain the money which has been agreed
upon as stipulated damages depends upon the failure of the
plaintiff to perform and the termination of the contract for
that reason, the fact that the contract is ended by consent
does not waive the right to the damages.^ But such damages
cannot be recovered if the delay in the performance of a build-
ing contract is owing to the failure of the person for whom
the building is being erected to perform a condition precedent."
If such a contract provides for the completion of the building
1 Davies v. Daniels, 8 Hawaiia, 8a 330, 348, 61 Pac. Rep. 142; Eldridge
2 Wibaux V. Grinnell Live Stock v. Fuhr, 59 Mo. App. 46; Standard
Co., 9 Mont. 154, 22 Pac. Rep. 492. Gaslight Co. v. Wood, 9 C. G A. 362,
3 Henderson Bridge Co. v. O'Con- 61 Fed. Rep. 74; Kerr Engine Co. v.
nor, 88 Ky. 303, 331, 11 S. W. Rep. 18, French River Tug Co., 21 Ont. App.
11 Ky. L. Rep. 146; O'Connor v. Hen- 160. See Starr v. Gregory Consol-
derson Bridge Co., 95 Ky. 633, 27 S. idated Mining Ca, 6 Mont. 485, 13
W. Rep. 251. Paa Rep. 195; King Iron Bridge &
* Parr v. Greenbush, 42 Hun, 232. Manuf. Co. v. St. Louis, 43 Fed. Rep.
5 Texas, etc. R. Co. V. Rust, 19 Fed. 768, 10 L. R A. 826; Ortmann v.
Rep. 239, 245. First Nat. Bank, 49 Mich. 56, 12 N.
6 Wolf V. Des Moines R Co., 64 W. Rep. 907; Dannat v. Fuller, 120'
Iowa, 380, 20 N. W. Rep. 48L N. Y. 554, 24 N. R Rep. 815.
^ Long V. Pierce County, 22 Wash.
§ 299.] STIPULATED DAMAGES. 795
by a day designated, and, in default, that the contractor shall
pay liquidated damages, and, further, that other work may be
ordered in addition to that expressly provided for, and such
work is ordered with the necessary result that the completion
of the building is delayed, the contractor is not liable for the
liquidated damages unless he has agreed that, whatever addi-
tional work may be ordered, he will complete the whole
within the specified time.^ And where the delay in the per-
formance is caused by the default of both parties, and the
damages cannot be apportioned, the stipulation for compensa-
tion cannot be enforced.'^
1 Dodd 'v. Churton, [1897] 1 Q. B, tunity to construe the contract, the
562;Holmesv. Guppy. 3M. &W. 387; alleviation that the builder had en-
Westwood V. Secretary of State for tered into the contract pleaded be-
India, 11 Week. Rep. -61, 7 L. T. 736. ing admitted by the demurrer.
Jones V. St. John's College, L. R. 6 ^Cbamplain Const. Ca v. O'Brien,
Q. B. 115, was distinguished on the 117 Fed, Rep. 27L
ground that the court had no oppor-
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