Olcrtif U IGam ^rl|ool Htbrarjj Cornell University Library KF 801. E46 V.I Commentaries on the law of contracts :be 3 1924 018 827 315 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924018827315 COMMENTARIES ON THE LAW OF CONTRACTS BEING A CONSIDERATION OF THE NATURE AND GENERAL PRINCIPLES OF THE LAW OF CONTRACTS AND THEIR APPLICATION IN VARIOUS SPECIAL RELATIONS BY WILLIAM F. ELLIOTT CO-AUTHOR OF "ROADS AND STREETS," "RAILROADS," "EVIDENCE," ASSISTED BY THE PUBLISHERS' EDITORIAL STAFF IN SEVEN VOLUMES Volume I INDIANAPOLIS THE BOBBS-MERRILL COMPANY PUBLISHERS Copyright 191 3 by the bobbs-merrill company PREFACE No branch or department of the law is of more importance in the daily intercourse and relations of life than the law of Con- tracts. It occupies one of the most extensive fields of the law, and no other branch of the law has had greater growth and borne more fruit in recent years. It was said by a learned writer a century ago : "Contracts comprehend the whole business of hu- man negotiations. They are applicable to the correspondence of nations as well as to the concerns of domestic life. They include every change and relation of private property and consequently furnish the principal subject on which all legal and equitable juris- diction is exercised.''^ If the subject was so important a hundred years ago, what shall be said of it at the present time? In this age of commerce, with its multiplied industry and complex busi- ness relations the subject is of supreme importance. So not only have old principles been amplified and applied to new conditions but it has also been found that many of the old principles them- selves were misunderstood and misapplied by some of the older writers and judges. The modern law of contracts is a very dif- ferent thing from what the law of contracts was supposed to be many years ago, and the older treatises upon the subject are in many respects obsolete. It has been the purpose in preparing this work to cover the subject of contracts fully and more in detail than in any other book on the general subject. It is believed that this work has all the advantages of both an ordinary treatise and an encyclopedia. The underlying principles are fully treated, the reasons for the rules are stated, and copious illustrations are given. The notes are unusually full and consist not merely of citations in support of general principles but also contain brief statements of the facts ni IV PREFACE. in many of the cases cited and show the appHcation of the gen- eral principles, or their exceptions, to particular states of facts. The first three volumes constitute a complete general treatise upon the subject; the fourth and fifth volumes contain the most important topics of the law of contracts specifically treated under an alphabetical arrangement. These, in addition to showing the specific application of the general principles in detail, also contain practically all that is found in separate text-books on the different topics, and much that is not found in any text-book. The sixth volume contains forms for contracts of every description likely to be needed and the seventh volume is given over to the table of cases and index. Thus in one work we have combined every- thing that can well be required in the widest practice. The ad- jective or remedial law as well as the substantive law is fully treated, and the work may well take the place of a dozen text- books on special topics in addition to a treatise on the general law of contracts. There is certainly no other book on the sub- ject that is so comprehensive. The author has been assisted in this work by the editorial staff of the publishers, especially in the assembling of authorities, the verification of citations and matters of clerical detail, including the making of the table of cases and the exhaustive index. With- out the assistance of this trained editorial force, it would have been impossible for one man to make an examination of the great multitude of authorities incident to the preparation of this treatise. The work of these assistants has been of the highest order and acknowledgment is here made to them for their co- operation and efficient aid. William F. Elliott. TABLE OF CONTENTS VOLUME ONE. NATURE, FORMATION AND EXECUTION. CHAPTER I. NATURE AND ELEMENTS. SECTION. PAGE. 1. Definition 1 2. Quasi contract 2 3. Statutory obligations 3 4. The agreement 4 5. The obligation 5 6. Concurrence of agreement and obligation 6 7. Essential elements of contract 7 CHAPTER II. DEVELOPMENT AND CLASSIFICATION. 10. Importance and place of contract in the law 8 11. Development of the law of contract 9 12. Influence of past doctrines — Change in classification 13 13. How contracts may originate 14 14. Bilateral and unilateral contracts IS L-'"''^ 15. Executory and executed contracts 16 16. Specialties and simple or parol contracts 18 17. Specialties or contracts under seal further considered 19 18. Express and implied contracts 20 19. Valid, void and voidable contracts 21 CHAPTER III. OFFER AND ACCEPTANCE. 25. In general 24 26. Aggregatio mentium — Mutuality 25 • 27. Nature of offer— Obligation 27 V VI TABLE OF CONTENTS. SECTION. PAGE. 28. Offer cannot require express refusal 31 29. Offer may prescribe form of acceptance 31 30. Offer must not be uncertain 32 31. Offer that may be made certain 33 ZZ/ Offer need not be made to a particular ascertained person 34 \ --33. Revocation of offer 35 34. Time in which to accept 2iJ 35. Lapse of offer and acceptance 42 36. When the contract is complete 44 Ts] . Acceptance must be unconditional 44 38. Acceptance must be on terms of offer 45 39. Variance between offer and acceptance 46 40. Mistakes 48 41. Condition amounts to a rejection of offer 49 42. Counter offer 49 43. Manner of communicating acceptance 50 » 44. Communications by mail 51 •"45. Communications by telegraph 54 ^46. Communications by telephone or phonograph 58 47. Conduct as offer or acceptance , 59 48. Silence does not always give consent 62 49. Performance or acceptance of consideration as an acceptance of the offer 63 50. Acceptance must be by an ascertained person 63 51. Rewards 64 52. Reward — Who may not accept 66 53. Tickets, receipts and the like 67 54. Deeds 74 55. Deeds — Subject continued 75 56. The American doctrine as to deeds and sealed instruments 76 57. Sales 78 58. Auction sales 80 59. Building and working contracts 82 60. Miscellaneous cases of offer and acceptance held sufficient 86 61. Miscellaneous cases of offer and acceptance held insufficient 88 62. Time and place of contract determined by acceptance 90 63. Intention to reduce the contract to writing 92 64. Alteration and filling blanks by consent 94 CHAPTER IV. FRAUD AND MISREPRESENTATION. 70. Apparent consent may not be real 98 71. Fraud or misrepresentation as to inducement or collateral matter.... 99 72. Fraud or misrepresentation as to essential elements of contracts 101 IZ. Fraud as to contracts or substance of contracts 107 74. Fraud where there is a fiduciary or confidential relation Ill TABLE OF CONTENTS. vii SECTION. PAGE. 75. Constructive fraud 120 76. Fraud in execution 121 n. Negligence 122 78. Fraud of third persons 126 79. Active concealment 129 80. Misleading, partial disclosure 134 81. False representation 135 82. Must be as to facts 136 83. Promise or representations of intentions as to future 136 84. Opinions and predictions 138 85. Misrepresentations as to law 145 86. Materiality 147 87. Falsity 148 88. Knowledge and intention 149 89. Reliance on false statement 158 90. Must mislead 162 91. Must result in damage or injury 163 92. Parties in pari delicto 164 CHAPTER V. MISTAKE. 100. Generally— Materiality 168 101. As to the nature of transactions 169 102. As to parties 172 103. Mistake as to subject-matter 174 104. Mistake as to existence of subject-matter 174 105. As to identity of subject-matter 176 106. As to nature or quality of subject-matter 177 106a. Mistake as to quantity 179 107. As to price 181 108. As to value 184 109. In execution of writing 185 110. Negligence 189 111. Ratification— Laches 193 112. Mutuality of mistake 195 113. Mistake as to the law 197 114. Mistake of fact as to interest induced by mistake of law 202 CHAPTER VI. FAILURE TO DISCLOSE MATERIAL FACTS. 120. Nondisclosure as to essential elements 204 121. Failure to disclose matter of inducement 205 122. Fact peculiarly within the knowledge of one party 207 123. Silence where there is a duty to speak 208 Vlll TABLE OF CONTENTS. SECTION. PAGE. 124. Relations of trust and confidence 208 125. Failure to disclose changes in fact 209 126. Insurance cases 210 127. Suretyship 213 128. Sales 216 129. Warranties 218 130. Leases 228 131. Commercial paper 231 132. Stock subscriptions and sales 233 133. Compromise 234 CHAPTER VII. DURESS AND UNDUE INFLUENCE. 140. What is meant by such terms 236 141. When it affects the contract ;■ 239 142. How it affects the contract 241 143. General rule as to avoidance of contract because of duress 242 144. Duress of goods 243 145. Duress by imprisonment 248 146. Duress by threat and oppression 249 147. When presumed 261 148. Relation of parties 261 149. Family relations 265 150. Guardian and ward 268 151. Husband and wife 270 152. Principal and agent 271 153. Attorney and client 271 154. Physician and patient 272 155. Religious advisers 273 156. Other confidential relations 273 157. Mental weakness 275 158. Inadequacy of consideration 277 159. Unconscionable contracts 280 160. Contract with expectant heirs, and the like 281 161. Ratification 284 162. In pari delicto, principle of when not applicable to contracts pro- cured through undue influence 285 CHAPTER VIII. CERTAINTY. 170. General rule 287 171. That is certain which can be made certain 291 172. Illustration of the maxim, "id certum est quod certum reddi potest". 292 173. Other illustrative cases 292 TABLE OF CONTENTS. IX SECTION. PAGE. 174. Reference to plans and specifications 294 175. Agreement to make future contract 295 176. Uncertainty as to time 297 177. Uncertainty as to place 305 178. Uncertainty as to subject-matter 306 179. Uncertainty as to description 308 180. Uncertainty as to amount 309 181. Uncertainty as to price 311 182. Uncertainty as to what is to be done 313 183. Miscellaneous instances of uncertainty 313 184. Miscellaneous instances of contract held suflSciently certain 315 185. Effect of using terms ''more or less", "about" and the like 317 186. "Say" and "say about" and the like 320 CHAPTER IX. CONSIDERATION. 195. Necessity for 323 196. When it is presumed or imported 324 197. Contracts in restraint of trade 326 198. When presumed or imported — Statutory abolition of seals 326 199. When presumed — Negotiable instruments 327 200. When presumed — Consideration declared unnecessary by statute or rule of law 329 201. When presumed — Contracts in writing 329 202. When presumed — Executed contracts 330 203. What is meant by consideration 331 204. Distinguished from motive 333 205. Concurrent, executed, executory and continuing consideration 334 206. Good consideration Z^7 207. Valuable consideration 337 208. Nudum pactum 339 ^ 209. Sufficient consideration or adequate consideration 340 210. Insufficient or inadequate consideration 343 211. Moral consideration 345 212. New promise — Equitable consideration 348 213. Past or antecedent consideration 359 214. Exceptions to rule that past consideration will not support a subse- quent promise 362 215. Doing what one is legally bound to do 366 216. The same — Refusal to perform without further recompense 369 217. Part payment of liquidated liability 374 218. The rule against satisfaction by payment of a lesser sum strictly construed ^'^'^ 219. Other consideration — Receiving property in addition to the sum paid. 378 220. Other consideration — Payment of debt before due, or at different place 378 X TABLE OF CONTENTS. SECTION. PAGE. 221. Other consideration — Additional security 379 222. Miscellaneous exceptions 380 223. Rule deducible from the authorities 381 224. Impossible consideration 381 225. Physical and legal impossibility 382 226. Illegal consideration 383 227. Voluntary subscription 384 228. Voluntary subscription valid when supported by a consideration 384 229. Mutual promises as a consideration therefor 386 230. Obligation to apply the funds in a certain way as a consideration... 386 231. Promise for promise 387 232. Mutuality, options 394 233. Abandonment of legal right 397 234. Forbearance 402 235. Forbearance to sue — Time 403 236. Extension of time 408 237. Compromise of disputed claims 413 238. Delivery of property in trust 417 239. Incurring liabilities or obligations 417 240. Services 418 241. Marriage 422 242. Name and change of name 426 243. Contracts and contractual rights generally 428 244. Rights to personal property 430 245. Interests in real property 430 246. Blood or natural affection 431 247. Evidence of consideration 433 248. Entire or indivisible consideration 436 249. Divisible considerations or promises 438 250. From whom consideration must move 440 251. At whose instance the consideration must move 441 252. To whom consideration must move 442 253. Want of consideration 442 254. Failure of consideration 444 CHAPTER X. PARTIES. 260. Must have capacity to contract 448 261. Capacity is generally presumed 448 262. How incapacity may arise or be caused 449 263. United States or state as a party 449 264. Foreign governments and representatives 455 265. Aliens 456 266. Convicts 460 267. Effect of laws requiring license or the like 461 268. Youth or lack of age 466 TABLE OF CONTENTS. XI SECT.DN. PAGE. 269. Mental incapacity 468 270. Deaf mutes 470 271. Coverture 471 272. Artificial persons and corporations 474 273. Agents and representatives 475 274. Drunken persons 476 275. Where incapacity is such as to make contracts void 477 276. Where incapacity is such as to make contracts voidable 479 277. Ratification 480 CHAPTER XL INFANTS. 285. Infants — When infants become of age 483 286. Infants — Contracts may be void, voidable or valid 484 287. Former rule for determining whether void, voidable, or valid 484 288. Present rule 486 289. Effect of emancipation 487 290. Valid contracts generally 488 291. Valid contracts generally — Contracts authorized by statute or the common law 488 292. Contracts authorized by statute — Contracts of enlistment 489 293. Marriage contracts 490 294. Contract by infant to do what he is legally bound to do 491 295. Valid contracts — Necessities 491 296. What are necessities? 493 297. Ntcessities — Food, wearing apparel, lodging and the like 494 298. Necessities — Education 495 299. Necessities — Services of an attorney 496 300. Necessities — Miscellaneous 497 301. What are not necessities 498 302. Voidable contracts generally 505 303. Conveyances, transfers and mortgages of property 506 304. Bills and notes 509 305. Contracts for service, work and labor 511 306. Awards and compromise 514 307. Suretyship 516 308. Partnership 517 309. Corporation stock and membership 519 310. Other illustrative cases— Marriage settlement 521 311. Other illustrative cases— Mechanic's lien 522 312. Other illustrative cases— Assignment for benefit of creditors 523 313. Other illustrative cases — Leases made by guardian extending beyond the term of guardianship 523 314. Other illustrative cases— Apprenticeship 523 315. Effect of concealment or misrepresentation 524 316. Active concealment, estoppel 525 Xi: TABLE OF CONTENTS. SECTION. PAGE. 317. Active concealment — Action in tort 528 318. Action to compel a reconveyance 530 319. Active misrepresentation, liability for false pretense 530 320. Summary 531 321. Ratification 532 322. Ratification — What amounts to 533 323. Express ratification 534 324. When ratification must be in writing 536 325. Ratification by conduct — Retention of property 537 326. Ratification by conduct — Sale or conversion of property 539 327. Ratification by conduct — Receiving agreed consideration 540 328. Ratification by conduct — Miscellaneous 540 329. Ratification by laches 541 330. Laches — Statute of limitations 543 331. Ratification need not be supported by an additional consideration. .. S4S 332. Ratification — Knowledge as to legal liability 545 333. Ratification— Effect 547 334. Disaffirmance and avoidance 548 335. Who may disaffirm or avoid 548 336. Time and manner of disaffirmance — Personal contracts and contracts concerning personalty 550 337. Time of disaflSrmance — Contracts concerning an interest in real estate 552 338. Time of disaffirmance — Executory contracts 553 339. Disaffirmance after majority 554 340. Disaffirmance — Delay greater than that permitted by statute of limi- tations 555 341. Disaffirmance — How indicated 557 342. What amounts to disaffirmance 557 343. Cannot disaffirm in part and ratify in part 558 344. What amounts to disaffirmance— Illustrations 559 345. Disaffirmance of contract concerning an interest in real estate 560 346. Restoration of consideration 562 347. Restoration of consideration — Cannot use privilege as a sword in- stead of a shield 564 348. Restoration of consideration — Contract fair and reasonable 566 349. Restoration of consideration as a condition precedent 566 350. Restoration of consideration — Statutory modification of common- law rule 568 351. Restoration of consideration — Both parties infants 569 352. Effect and result of disaffirmance 569 353. Disaffirmance — Liability in tort 570 354. Disaffirmance — Effect — Miscellaneous instances 571 355. Finality of disaffirmance 571 TABLE OF CONTENTS. XIU CHAPTER XII. INSANE PERSONS. SECTION. PAGE. 365. When one person is of such unsound mind as to be incapable of con- tracting 573 366. Insanity mast bear directly on the agreement 575 367. Contracts of insane persons generally voidable 576 368. Contracts of insane persons — When void 577 369. Proceeding to commit to an asylum and to appoint guardian — Dis- tinction between 578 370. Rule holding contract of insane persons void strictly construed 579 371. Voidable contracts of an insane person 580 372. Valid contracts of insane persons 581 373. Contracts for necessities 583 374. What are necessities 583 375. Effect of inquisition and adjudication of insanity 586 376. Adjudication covering period of time prior to finding 586 377. Adjudication — Collateral attack 587 378. Contracts after office found 588 379. Effect of knowledge of the other party 589 380. Effect of want of knowledge 590 381. Ratification and avoidance 590 382. Who may affirm or avoid 592 383. Acts showing a disaffirmance 593 384. Restoration of consideration 594 385. Illustrations of the rule 595 386. Restoration as a condition precedent 597 387. Liability for benefits received, subrogation, insanity a question of fact 598 CHAPTER Xin. MARRIED WOMEN. 390. Incapable of contracting at common law 599 391. Contracts void at common law 600 392. Contracts in cases of necessity 600 393. Contracts in equity— Separate estate— Origin 601 394. Equitable separate estate — Powers over 602 395. Equitable separate estate — Limitations on powers over 603 396. Must intend to bind her separate estate 604 397. Intention to bind separate estate — Rule in equity 60S 398. Rule that intention to bind must expressly appear 606 399. Feme covert cannot bind herself personally 607 400. Liability attaches to property in her control at time liability assumed. 607 401. Conveyances directly to husband 608 402. Contracts under modern statutes 608 XIV TABLE OF CONTENTS. SECTION. PAGE. 403. Contract must be in form prescribed by law 610 404. Contracts as to separate estate under statutes 611 405. Power conferred to contract with reference to statutory separate es- tate as to feme sole , 614 406. Other statutes conferring limited capacity 61S |407. Statutes requiring husband to join or consent 617 : 408. Statutes requiring written contracts 620 , 409. Statutes giving power to contract as a feme sole 621 410. Contracts as sole trader 623 411. Contracts of suretyship 624 412. Securing husband's debt 626 413. Contracts with husband 628 414. Contract with husband must not contravene public policy 631 415. Consideration need not proceed from husband 633 416. Contracts of agency 633 417. May appoint husband her agent 634 418. Evidence of husband's agency 635 419. Wife may act as husband's agent 636 420. Power to pledge credit of husband 636 421. Power to take and hold lands as trustee 637 422. Ratification or confirmation (HI 423. Restoration 638 424. Estoppel 639 425. May be estopped by agreement within limit of her capacity to con- tract 640 426. Illustration of the rule 641 427. Estoppel by silence or acquiescence 643 428. Estoppel — When abandoned by husband 644 429. Coverture a personal defense and must be pleaded 644 430. Conflict of laws — Lex loci contractus 646 431. Lex loci contractus — Exceptions 647 432. Lex fori controls as to remedy 648 CHAPTER XIV. DRUNKEN PERSONS. 440. Efifect of intoxication on contracts generally 650 441. Extent or degree of intoxication 651 442. Contracts voidable when intoxication is such as to render the- party incapable of understanding 653 443. Intoxication coupled with fraud and unfair conduct 654 444. Ratification and disaffirmance 656 445. Restoration of consideration 657 446. Habitual drunkards — Effect of adjudication 658 447. Contracts for necessities 660 448. Drugs and drug habit 660 TABLE OF CONTENTS. XV CHAPTER XV. AGENTS. SECTION. PAGE. 450. Introduction 663 451. Capacity to appoint or be an agent 663 452. Authority of agents — How conferred 665 453. Authority of agents — Extent 668 '454. Estoppel 671 455. Ratification 675 456. Ratification — Who may ratify as principal 678 457. Ratification — What acts may be ratified 680 458. Ratification — What amounts to 681 459. Implied ratification 683 460. Termination of agent's authority — By lapse of time 687 461. Revocation by act of the parties 687 462. Liability of principal 690 463. Liability of agent 692 464. When personally liable 693 465. Rights and liabilities of parties where principal is named 695 466. Rights and liabilities of parties where principal is not disclosed — Rights of principal 697 467. Rights and liabilities of parties when principal not disclosed — Lia- bility of agent 698 468. Rights and liabilities of parties when principal not disclosed — Rights of third persons 699 469. Rights and remedies of principal 701 470. Rights and remedies of agent 701 CHAPTER XVI. PARTNERS. 475. Introductory 703 476. Definition and nature of partnership 703 477. Tests by which to determine existence of partnership — Mutual agency and profit sharing 705 478. Profit sharing abandoned as an exclusive test 705 479. Modified statement of profit sharing test 709 480. Question of law or fact— Intention 710 481. Profit sharing evidence of a partnership — Estoppel 713 482. Limited partnership 715 483. Who may be partners 716 484. How relation is formed 718 485. Illustrative cases of partnership 719 486. Cases in which relation was not created 721 487. Scope of partnership— Purpose and subject-matter generally 722 XVI TABLE OF CONTENTS SECTION. PAGE. 488. Dealing in real estate — Verbal agreement — Statute of frauds 724 489. Illegal purpose or business 726 490. Scope of partnership and authority of partners 726 CHAPTER XVII. FIDUCIARIES. 500. Introductory 730 501. Trustees generally 731 502. Creation of trusts 731 503. When trust must be in writing 732 504. Constructive implied trusts 72i 505. Resulting implied trusts 735 506. Rights, powers and liabilities of trustees 735 507. Rule against personal gain given a strict construction 7Z7 508. Trustee entitled to recover money advanced and to a reasonable compensation 738 509. Powers of trustee 740 510. When trustee's contract binds estate or cestui que trust 741 510a. When trustee's contract binds estate or cestui que trust 742 511. When trustee is personally liable 744 512. Executors and administrators^Authority generally 747 513. Power to bind the estate by contract — Illustrative cases 748 514. Order of court — When it adds nothing to power of administrator. . . 750 515. Ratifications of administrators' acts — Duties of administrator 750 516. Statutory authority 751 517. Powers given by will 752 518. Liability where estate is benefited 753 519. Personal liability 754 520. Joint liability of two or more executors or administrators 756 521. When relieved from personal liability 756 522. Guardians — Authority generally 757 523. When and how guardian may bind estate 759 524. Personal liability of guardian 761 525. When not personally liable 762 526. Statutory authority to bind estate 763 527. Receivers — Authority generally 764 528. Receivers' contracts under order of court 766 529. Receiver's certificates 767 530. Personal liability of receiver 770 531. Other persons occupying fiduciary relations, as parties to contract, trustees in bankruptcy 772 532. Other persons occupying fiduciary relations — Promoters 773 533. Personal liability of promoter — Right to compensation 776 534. Other persons occupying fiduciary relations — Directors of corpora- tion 778 TABLE OF CONTENTS. Xvii CHAPTER XVIII. PRIVATE CORPORATIONS. SECTION. PAGE. 540. Power of private corporations to contract generally 780 541. Express power 782 542. Incidental and implied powers 783 543. Implied contracts 789 544. Seal 789 545. Power to take and hold land 797 546. Power to take by a mortgage and to mortgage real estate 799 547. Power to hold and convey personal or real property 801 548. Power of one corporation to purchase and hold stock in another corporation 805 549. Power to appoint agents 808 550. Power to appoint agent — Ratification 810 551. Power to act as agent 810 552. Power to make extraterritorial contracts 811 553. Extraterritorial contracts — What law governs 812 554. Foreign corporation subject to the laws of the state in which it seeks to do business 813 555. Contracts made before incorporation 816 556. Ultra vires — ^Different meaning of term "ultra vires" 817 557. Recovery where ultra vires contract has been performed by parties. . 820 558. Ultra vires contracts — Performance by one party 822 559. Executed contracts — Rule criticized 823 560. Contracts ultra vires — Estoppel 825 561. Contracts ultra vires — Cases discriminated 827 562. Contracts ultra vires — Ratification 829 563. Laches 829 564. State as proper party to raise question of ultra vires 830 CHAPTER XIX. PUBLIC SERVICE CORPORATIONS. 570. Introductory 832 571. Power to such corporations to contract generally 834 572. Necessity for a consideration — Necessity for capacity to contract 836 573. Parties bound to take notice of charter provision 837 574. Knowledge of extraneous circumstances 839 575. Corporations cannot contract so as to escape public duties 840 576. Attempt to transfer franchises 841 577. Attempt to transfer franchises — Transfer of property essential to operation 845 578. Contracts suppressing competition or monopoly 847 579. Not required to undermine own business 852 580. Different methods of fixing rates — Discrimination in favor of public 854 XVlll TABLE OF CONTENTS. SECTION. PAGE. 581. Contracts as to location of stations and route 8SS 582. Ultra vires contracts 858 583. Leases generally 859 584. Mortgages generally 862 585. Traffic agreements 865 586. Right to engage in a collateral business 869 587. When a carrier may refuse to perform its public duty 869 588. Ultra vires contracts— Street railway companies 870 589. Ultra vires contracts — Gas and water companies 872 590. Illustrative cases of doctrine to telegraph and telephone companies. . 872 CHAPTER XX. MUNICIPAL AND OTHER PUBLIC CORPORATIONS. 600. Introductory 876 601. Powers of municipal or other public corporation 878 602. Municipal contracts — By whom made — Extent of power — Parties chargeable with notice 881 603. Contracts extending beyond term of board 883 604. What are municipal contracts 886 605. Municipal contracts — Implied contracts 888 606. When no implied liability arises 890 607. Validity of contracts generally 893 608. Validity of contracts generally — Examples of valid contracts 894 609. Validity of contracts generally — Examples of invalid contracts 898 610. Leasing public property for private purposes 903 611. Leasing public property for private purposes — Enforcement of con- tract 905 612. Ratification 906 613. Rescission 908 614. Ultra vires 909 615. Estoppel 910 616. The borrowing of money and the issuance of negotiable papers 913 617. No right of action on void bonds 916 618. Defenses available against bona fide holders 917 619. Bona fide holder — Bond containing no recitals 917 620. Limitation of indebtedness — Limitation on power to create munici- pal indebtedness 918 621. Indebtedness depending on popular vote 920 622. Indebtedness limited by a per cent, of valuation 921 623. Preliminary provisions for a sinking fund 922 624. Aggregate indebtedness — How determined — Refunding and sinking fund bonds 923 625. Indebtedness payable annually or monthly 924 626. Vahd indebtedness only included 925 627. Includes implied as well as express liability 926 TABLE OF CONTENTS. XIX SECTION. PAGE. 628. Current expense not inclsded 926 629. Debts payable out of special fund — Special assessment — Optional debts 927 630. Diverted money — License money — Miscellaneous 928 631. Evasion of constitutional limitations 929 632. Indebtedness in excess of limit not a defense when 931 633. Construction of constitutional provisions 932 634. Special statutory provisions 934 635. Other special provisions 93S 636. Indebtedness for water and lights 936 637. Effect of exceeding the limit 937 ELLIOTT ON CONTRACTS CHAPTER I. NATURE AND ELEMENTS. § 1. Definition. § 5. The obligation. 2. Quasi contract. 6. Concurrence of agreement and 3. Statutory obligations. obligation. 4. The agreement. 7. Essential elements of contract. § 1. Definition. — According to one of the oldest definitions, a contract is "an agreement, upon a sufficient consideration, to do or not to do a particular thing."^ But this, though often quoted with approval, is not entirely satisfactory. A modern writer of ability and originality has endeavored to formulate a more exact, and at the same time more comprehensive, definition as follows : "A contract is a promise from one or more persons to another or others, either made in fact or created by law, to do or refrain from some lawful thing; being also under the seal of the promisor, or being reduced to a judicial record, or being accompanied by a valid consideration, or being executed, and not being in a form forbidden or declared inadequate by law."^ But later writers look ^2 Bl. Comm. 442; 2 Kent Comm. 493, 1 Am. Rep. 576. The word "con- 449. As either expressly approving tract" is derived from the words con this definition or giving a definition and traho (contrahere), meaning a the same in substance, see Sturges v. drawing or bringing together (of Crowninshield, 4 Wheat. (U. S.) 122, minds until they meet). Hughes 4 L. ed. 529; Fletcher v. Peck, 6 Cont., § 27; Bouv. L. Diet. Tit. Con- Cranch (U. S.) 87, 3 L. ed. 328; Rob- tracts. See also. Fuller v. Kemp, 138 inson V. Magee, 9 Cal. 81, 70 Am. Dec. N. Y. 231, 33 N. E. 1034; McNulty 638; McCormickv. Bonfils,9Okla.60S, v. Prentise, 25 Barb. (N. Y.) 204; 60 Pac 296, 299; Ladd v. Portland, Wilcox v. Cherry, 123 N. Car. 72, 31 32 Ore. 271, 51 Pac. 654, €1 Am. St. S. E. 369; Sidenham & Worlmgton s 526, 528; Chitty Cont. 7; Newland Case, 2 Leon 224, 225. Cont. 1; 1 Parson Cont. 6; 1 Story 'Bish. Cont., § 22. A shorter defi- Cont, § 1. See also definitions re- nition, and, it seems, a better one, viewed in Justice v. Lang, 42 N. Y. along the same hnes, attemptmg to I 1 — Contracts, Vol. I § 2 CONTRACTS. 2 at the subject from a somewhat different point of view, bringing into prominence the element of obligation and the right acquired as well as the element of agreement. In this view a contract, in the broadest sense, may be defined as an agreement whereby at least one of the parties acquires a right, either in rem or in per- sonam, in relation to some person, thing, act or forbearance.^ In its narrower and more proper sense, however, it is executory in character and creates some obligation and confers some right in personam.* A contract, as so understood, may therefore be de- fined as an agreement, such as is enforcible at law, between two or more persons, whereby a right is acquired by at least one of them to an act or acts, or to forbearance, on the part of the other or others.^ § 2. Quasi contracts. — There are two classes of obligations frequently called contracts, especially by the older writers and in the earlier decisions, that do not fall within the definition given in the preceding section ; but later investigation and thought have more clearly shown the nature of such obligations, and they are now more properly called "quasi contracts." They lack the essen- tial element of agreement which is found in all ordinary and true state the essential elements of a con- given in the text is substantially the tract is that given by Andrews, as fol- same as that given by Anson. Much lows : "A contract is an agreement the same idea is conveyed or ex- between competent parties upon suffi- pressed in an older definition and de- cient consideration, in accordance scription given by an earlier writer with the forms of law, by which on the subject, as follows: "A con- some, or all, are bound to do or for- tract, according to the common-law bear to do a particular thing." 1 An- definition of it, is an agreement be- drews Am. Law, 693. tween two or more concerning some- "Benj. Cont., § 2. _ thing to be done, whereby both par- * But in the provision of the Consti- ties are bound to each other, or one is tution of the United States against bound to the other. But, by the impairing the obligation of contracts writers upon general law, it is de- the term is used in the wider sense fined to be, 'Duorum pluriumve in and includes executed contracts, a idem placitum consensus, obligationis grant from a state being within this licite constituendae vel toUendae provision. Fletcher v. Peck, 6 Cranch causa datus' ; that is, the consent of (U. S.) 87, 3 L. ed. 162; Dartmouth two or more persons in the same College V. Woodward, 4 Wheat. (U. thing, given with the intention of con- S.) 518, 4 L. ed. 629; Hamilton v. stituting, or dissolving lawfully some Brown, 161 U, S. 256, 40 L. ed. 691, obligation. * * *'a contract is a 16 Sup. Ct. 585. See also Fisk v. transaction in which each party comes Jefferson Police Jury, 116 U. S. 131, under an obligation to the other, and 29 L. ed. 587, 6 Sup. Ct. 329; Seattle each, reciprocally, acquires a right to &c. R. Co. V. Seattle, 190 Fed. 75. what is promised bjy the other.' " "Anson Cont. 9. The definition Powell Cont., § 6. / 3 NATURE AND ELEMENTS. § 3 contracts. These two classes are so-called contracts of record con- sisting of judgments of a court, not by consent, and recognizances ; and obligations created by law in order to do justice between parties where one of them has paid or received something which the other ought, in justice, to have paid or received." There is some difference of opinion as to whether judgments should be classed as contracts, but the decided tendency of the later authori- ties is to deny that they are true contracts,' and, logically, this is the correct view. As will be shown in the next chapter, the classification of contracts and primary rights generally, under the old common law was made with reference to forms of action by which they were enforced rather than with reference to their inherent nature. But when its inherent nature is considered it is evident that a judgment without consent lacks the essential element of agreement, and possesses certain elements, or has cer- tain effects, inconsistent with the present idea and theory of contract.' § 3. Statutory obligations. — A liability to pay money im- posed by statute, is also merely quasi-contractual rather than a true contract obligation." As said in a well-considered case, "A statute liability wants all the elements of a contract, consider- ation and mutuality, as well as the assent of the party."^" But "See Keener Quasi Cont, ch. I; Percha &c. Mfg. Co. v. Houston, 108 Pracht V. Daniels, 20 Colo. 100, 103, N. Y. 276, 15 N. E. 402; Wyoming 36 Pac. 845 ; People v. Speir, 11 N. Y. Nat. Bank v. Brown, 9 Wyo. 153, 61 144, ISO ; Columbus &c. R. Co. v. Gaff- Pac. 465 ; 1 Black, on Judgments 8. ney, 65 Ohio St. 104, 113, 61 N. E. 'Thus, when the question of the 152. See also Maines Ancient Law conclusiveness of a judgment is con- (3rd Am. ed.) 332; Sceva v. True, 53 sidered with its limitations, and the N. H. 627; Hertzog v. Hertzog, 29 rules as to collateral attack are borne Pa. St. 465 ; 1 Addison Cont. 55, § in mind, it will be seen that it differs 31 ; Sidenham & Worlington's Case, from a true contract. So, too, it 2 Leon. 224, 225 ; Phillips v. Homfray, merges the original cause of action 24 Ch. Div. 439; article in 2 Harv. and liabiHty thereafter is on the judg- Law Rev. 63, 64. ment; and a judgment may be en- ' Hilton V. Guyot, 159 U. S. 113, forced by execution, and, under most 200, 201, 40 L. ed. 95, 16 Sup. Ct. 139; statutes, is a lien on real estate. Louisiana v. New Orleans, 109 U. S. "Keener Quasi Cont. 16; Milford v. 285, 27 L. ed. 936, 3 Sup. Ct. 211 ; Commonwealth, 144 Mass. 64, 10 N, E. Smith V. Harrison, 33 Ala. 706; Lar- 516; Woods v. Ayres, 39 Mich. 345; rabee v. Baldwin, 35 Cal. 155 ; Rae Woodstock v. Hancock, 62 Vt. 348, 19 v. Hulbert, 17 111. 572; Olson v. Dahl, Atl. 991; Pacific S. S. Co. v. Joliffe, 99 Minn. 433, 109 N. W. 1001, 116 2 Wall. (U. S.) 450, 17 L. ed. 805. Am. St. 435 ; O'Brien v. Young, 95 " McCoun v. New York Central &c. N. Y. 428, 47 Am. Rep. 64; Gutta R. Co., 50 N. Y. 176, 180, quoted in § 4 CONTRACTS. 4 as the legislature may make provision in regard to the validity, effect and consequences of contracts within constitutional limits, it may provide that certain liabilities shall follow from making or entering into certain relations and kinds of contracts and when one voluntarily does so, and thus incurs the liability, it may be said to be contractual in its nature. Such is the view generally taken of the statutory liability of a stockholder in a corporation to its creditors, resulting from the statute and the ownership of the stock." § 4. The agreement. — Agreement, in the legal sense as here understood, is the union of two or more persons in a com- mon expression of will, either by words or conduct or both, affecting their legal relations. ^^ There must be a meeting of at least two minds in the same intention — an aggregatio mentium. As often said in common parlance, "it takes two to make a bar- gain."^' And the common intention must be expressed, for a mere mental undisclosed intention or assent to an offer is insuffi- cient and does not constitute an acceptance.^* ' As said by an English writer, "An agreement is an act in the law whereby two or more persons declare their consent as to any act or thing to be done or forborne by some or one of those persons for the use of Morley v. Lake Shore &c. R. Co., 146 lin, 185 N. Y. 54, 77 N. E. 877, 113 U. S. 162, 13 Sup. Ct. 54. Am. St. 863; Hancock Nat. Bank v. " Whitman v. Oxford Nat. Bank, Farnum, 20 R. I. 466, 40 Atl. 341. 176 U. S. 559, 44 L. ed. 587, 20 Sup. ''Anson Cont. 3; Benj. Cont., § 1. Ct. 477; Flash V. Conn, 109 U. S. 371, "See Thurston v. Thornton, 1 27 L. ed. 966, 3 Sup. Ct. 263 ; Paine V. Cush. (Mass.) 89, 93; Broom's Stewart 33 Conn. 516; Pusey v. Comm. *260, 261. "The minds of the Love, 6 Pennew. (Del.) 80, 66 Atl. parties must meet and they must as- 1013, 130 Am. St. 144; Bell v. Far- sent to the same thing in the same well, 176 111. 489, 52 N. E. 346, 68 sense." Foshier v, Fetzer, — Iowa — , Am. St. 194, 42 L. R. A. 804; Pa- 134 N. W. 556. cific Elevator Co. v. Whitbeck, 63 Kan. " White v. Corlies, 46 N. Y. 467 ; 102, 64 Pac. 984, 88 Am. St. 229; Pul- Averill v. Hedge, 12 Conn. 424; sifer v. Greene, 96 Me. 438, 52 Atl. Trounstine v. Sellers, 35 Kan. 447, 921; Foster v. Row, 120 Mich. 1, 79 454, 11 Pac. 441; O'Donnell v. Clin- N. W. 696, n Am. St. 565. See also ton, 145 Mass. 461, 463, 14 N. E. 747; Avery & Son v. McClure, 94 Miss. 172, Beckwith v. Cheever,, 21 N. H. 41 ; 47 So. 901, 22 L. R. A. (N. S.) 256; Prescott v. Jones, 69 N. H. 305, 41 Kulp v. Fleming, 65 Ohio St. 321, 62 Atl. 352; Borland v. Guffey, 1 Grant N. E. 334, 87 Am. St. 611. But com- (Pa.) 394. See also, Hebbs' Case pare Cnppen v. Laighten, 69 N. H. (1867), L. R. 4 Eq. *9, and New v. 540, 44 Atl. 538, 76 Am. St. 192 ; Mar- Germania Fire Ins. Co., 171 Ind. 33, shall V. Sherman, 148 N. Y. 9, 42 N. 40, 85 N. E. 703, as to necessity that E. 419, 34 L. R. A. 538, 51 Am. St. assent should be communicated. 654; Knickerbocker Trust Co. v. Ise- 5 NATURE AND ELEMENTS. § 5 the Others or other of them," and "such declaration may take place by (a) the concurrence of the parties in a spoken or writ- ten form of words as expressing their common intention, or (b) an offer made by some or one of them, and accepted by the others or other of them."" But, since the intention or union of wills can be known or ascertained only by such outward expres- sion by means of words or conduct, the law imputes to each of the parties a state of mind or intention corresponding to the natural and reasonable meaning of his words and conduct, no matter what may have been his real state of mind or secret in- tent." The intention must also be with reference to the creation of legal relations and contemplate legal consequences affecting the parties themselves.^' Illustrations of these propositions and of the manner in which agreement is usually brought about or reached will be found in a subsequent chapter on offer and acceptance. It is sufficient to state here that, as already affirmed, agreement is an essential element of every true contract.^' § 5. The obligation. — As intimated in the last preceding section, a distinguishing feature of such agreement as results in contract is that there is found, in its last analysis or effect at least, an offer and acceptance resulting in a promise, to which the law attaches or gives a binding force in the character of an obliga- "Pol. Cont. 1. mania Fire ins. Co., 171 Ind. 33, 40, "Smith V. Hughes, L. R. 6 Q. B. 85 N. E. 703. 597; Bank V. Kennedy, 17 Wall. (U. "Anson Cont. 3; Clark Cont. 7, S.) 19, 21 L. ed. 554; Wilhams v. 8; Benj. Cent, § 1; Keller v. Hol- Fletcher, 129 III. 356, 21 N. E. 783; derman, 11 Mich. 248, 83 Am. Dec. Hobbs V. Massasoit Whip Co., 158 737. It .is such a declared intention Mass. 194, 197, 33 N. E. 495 ; Bohn by the one party and accepted by the Mfg. Co. V. Sawyer, 169 Mass. 477, other that constitutes a promise dis- 48 N. E. 620 ; Hudson v. Columbian tinguishing the agreement constituting Transfer Co., 137 Mich. 255, 257, 100 an essential feature of contracts from N. W. 402; Haubelt v. Rea &c. Mill other agreements. Co., 77 Mo. App. 672, 681. See also "This has already been shown in Rodgers &c. Co. v. Bell, 156 N. Car. the preceding section on quasi con- 378, 72 S. E. 817 ; Dusenberry v. Mut. tracts. But see also, as to the neces- Ins. Co., 188 Pa. St. 454, 461, 41 At!, sity for agreement, the following: 736. Leake Cont. 8. There can be Sweeney v. Bienville Supply Co., 121 no meeting of minds unless the inten- Ala. 454, 25 So. 575 ; Campbell v. tion is known or is put in the way of Haney, 128 Cal. 109, 60 Pac. 532 ; communication. White v. Corlies, 46 Hogue v. Mackey, 44 Kan. 277, 24 N.y. 467; Brogdenv. Metropolitan R. Pac. 477; Graves v. Dill, 159 Mass. Co., 2 App. Cas. 666. See also Brown 74, 34 N. E. 336; Hanson v. Nelson, V. Hare, 3 H. & N. 484; New v. Ger- 82 Minn. 220, 84 N. W. 742; Colum- § 6 CONTRACTS. 6 tion.^^ The very object of contract is to create an obligation between the parties. ObHgation, in this sense, has been defined as "a legal bond whereby constraint is laid upon a person or group of persons to act or forbear on behalf of another person or group."^" But such obligation in the case of contract is not a mere general one consisting of a right incident to ownership or a merely public or official right, nor an indefinite one binding a party to the entire community or relating to indefinite acts oi; forbearances. It is "a control exercisable by definite persons over definite persons for the purpose of definite acts or forbear- ances reducible to a money value."" The importance and effect of an agreement resulting in such an obligation are shown in the legal maxim "modus et conventio vincunt legem,"^^ which is said by Broom to be the most elementary principle of law relative to contracts.^* § 6. Concurrence of agreement and obligation. — In a true contract there must be concurrence of agreement and obligation, or, in other words, there is no true contract in the absence of bus &c. R. Co. V. Gaffney, 65 Ohio sisting in the efficacy of the law which St. 104, 61 N. E. 152; Wallingford v. attaches to the contract, * * * but Columbia &c. R. Co., 26 S. Car. 258, it is also used as correlative to 'right,' 2 S. E. 19; Gorringe v. Reed, 23 so that 'whatever I, by my contract, Utah 120, 63 Pac. 902, 90 Am. St. give another a right to require of 692; Lawrence v. Milwaukee &c. R. me, I thereby lay myself under an ob- Co., 84 Wis. 427, 54 N. W. 797; post, ligation to give or do.'" And he § 26. adds, "a contract imposes no obliga- " See Beverly v. Barnitz, 55 Kan. tion upon parties, unless it be a con- 466, 42 Pac. 725, 49 Am. St. 257, re- tract recognized as valid by the law." versed in 163 U. S. 122, 16 Sup. Ct. Broom's Comm., *248. 1042, but not questioned as to the '"Anson Cont. 7. It is defined by definition of obligation; Chesapeake Pollock as "a relation that exists be- &c. Canal Co. v. Baltimore &c. R. Co., tween two persons of whom one has 4 Gill & Johns (Md.) 1; Sturges v. a private and peculiar right (that is, Crowinshield, 4 Wheat. (U. S.) 122, not a merely public or official right, 197, 4 L. ed. 529; Anson Cont. 5. As or a right incident to owner- to the necessity for mutuality of ob- ship or a permanent family re- ligation or engagement, see post, § lation) to control the other's ac- 26; also HoUingsworth v. Colthurst, tions by calling upon him to do or 78 Kan. 455, 96 Pac. 851 ; Murphy & forbear some particular thing.'" Pol. Co. V. Reed, 125 Ky. 585, 101 S. W. Cont. 3 (new ed. 1885). And if it 964, 128 Am. St. 259; Stensgaard v. were not reducible to a pecuniary or Smith, 43 Minn. 11, 44 N. W. 669, moriey value it would not be easy to' 19 Am. St. 20S, and note. distinguish it from mere moral and "" Anson Cont. 5, § 3. Mr. Broom social relations. See Pothier Obliga- says "The term 'obligation' has been tions, § 1. thus far used as equivalent to 'binding ^ 2 Rep. 73. force' or 'vinculum juris,' and as con- ^Broom's Leg. Max. *690. 7 NATURE AND ELEMENTS. § 7 either. This is clear in the case of executory contracts.^* There may be an agreement and still no obligation because it has been executed and concluded as soon as the parties have expressed their assent, as in the case of a conveyance without covenants, or the like.^° So, on the other hand, there may be an obligation without agreement, such as that arising from a judgment, or a tort or delict, or from a breach of contract, or from a quasi contract of any kind. As already shown in prior sections, while such agreements or obligations are sometimes called contracts, they are not true contracts where either element is wanting. § 7. Essential elements of contract. — The essential ele- ments of a contract or requisites thereto are, therefore, the fol- lowing: I. Parties capable of making the contract. 2. A con- sideration such as the law will recognize, or its equivalent in case of a sealed instrument. 3. A subject-matter or object that is legal. 4. An agreement, by offer and acceptance, or, in other words, a communication and meeting of minds whereby the parties come together in a common expression of will as to their legal relations.^" To accomplish and constitute such an agree- ment there must be reality of consent; and it must be in such form as the law may require, as, for instance, when the contract is within the statute of frauds a writing is required. ^ See Dartmouth College v. Wood- fundamentals of a legal contract are ward, 4 Wheat. (U. S.) 518, 656, 4 parties, subject-matter, consideration L. ed. 629 ; Powell Cont. *7. and assent. There can be no contract ^ See Wheeler v. Glasgow, 97 Ala. if any one of these elements is lack- 700, 11 So. 758; Maynard v. Hill, 125 ing." In Durlacher v. Frazer, 8 Wyo. U. S. 190, 31 L. ed. 654, 8 Sup. Ct. 723 58, 55 Pac. 306, 309, 80 Am. St. 918, (marriage relation not a true con- 923, it is said that the essentials of a tract). Settlements of property in contract are: "A person able to con- trust for persons unborn may be by tract, a person able to be contracted agreement and give rise to incidental with, a thing to be contracted for, a and future obligations, but they are good and sufficient consideration, not true contracts. See Watkins v. clear and explicit words to express Watkins, 135 Mass. 83 ; Wade v. Kalb- the contract, the assent of both con- fleisch, 58 N. Y. 282; Ditson v. Dit- tracting parties." See also, Loaiza v. son, 4 R. I. 87. Superior Court, 85 Cal. 11, 24 Pac. "" In Clark v. Great Northern Ry. 707 ; Comyn on Contracts 2. Co., 81 Fed. 282, 283, it is said : "The CHAPTER II. DEVELOPMENT AND CLASSIFICATION. § 10. Importance and place of con- § IS. Executory and executed con- tract in the law. tracts. 11. Development of the law of con- 16. Specialties and simple or parol tract. contracts. 12. Influence of past doctrines — 17. Specialties or contracts under Change in classification. seal further considered. 13. How contracts may originate. 18. Express and implied contracts. 14. Bilateral and unilateral con- 19. Valid, void and voidable con- tracts, tracts. § 10. Importance .ind place of contract in the law. — It has been said that "the law of contracts, in its widest extent, may be regarded as inchiding nearly all the law which regulates the relations of parties," and that, indeed, it may be looked upon as the basis of human society. Certain it is that contracts deal with matters of almost every conceivable kind and are of almost daily occurrence in the affairs of life, and especially in modern business. With the exception of the criminal law, the whole body of the substantive law, almost, may be divided into the law of con- tract or of tort. And even in the criminal law and in cases of tort, contracts are sometimes involved. Contracts may affect both persons and things and create relations that would not otherwise exist. "Commercial intercourse is carried on almost entirely by contract. Persons are the actors, contracts the medium, and things the subject of traffic."^ Contract is recognized as the main means of acquiring or transferring property, real as well as personal. "Nearly all rights of property," says a philosophical writer, "originate in contract, and the law of property is, there- fore, , in the main, but an application of the principle of con- tract."^ Indeed, rights that arise from contract constitute one of the two great divisions of primary rights, considered with 'Andrews Am. L., § 534. 'Smith's Law of Private Right 12. See also, Bingham Real Prop. 10. 8 9 DEVELOPMENT AND CLASSIFICATION. § II reference to their origin; and the law of contracts, relating as it does, to a large body of rights, whether of persons, things, acts, or forbearances, constitutes a great branch of the substantive private or civil law, so that, when taken in connection with the secondary or remedial rights relating thereto, it is one of the most extensive branches of the entire law/ § 11. Development of the law of contract. — Interesting discussions as to the early history of contracts and as to their characteristics and binding force in natural law are found in some of the reports* and text-books' of the law as well as in books on political economy and the like, but it is to the growth and development of the English law of contracts, especially as bearing on and accounting for some peculiarities in the treatment and classification of certain obligations and contracts, that at- tention is now directed. Little is known about the law of con- tracts in Anglo-Saxon times, and it received little consideration prior to the Norman conquest. Indeed, not until long after that date did the law of contracts in England develop to any great extent." It is said by Oliver Wendell Holmes, Jr., (now Mr. Justice Holmes) that "to explain how mankind first learned to promise, we must go to metaphysics, and find out how it ever 'Even before the subject of con- "See Broom's Comm. 264, 265; Bl. tract had reached its present magni- Comm. 45, 54. Mr. Broom says that tude, an English lecturer said : "The natural law and moral duty bind men whole practice of our English courts to keep faith and perform their en- of common law, if we except their gagements, and that all states assum- criminal jurisdiction and their ad- ing the pre-existence of the obliga- ministration of the law of real prop- tion of contracts— which is doubtless erty to which may be added those derived in civiHzed countries tacitly cases which fall within the fiscal jur- from the law, by reason of the mani- isdiction of the Court of Exchequer, fest necessity which exists, with a may be distributed into two classes, view to the well-being of the corn- Contracts and Torts. Of this you can munity, that every man should fairly easily satisfy yourselves by putting and honestly perform what he has un- to vour own minds any conceivable dertaken to do— have merely super- case of legal inquiry If it do not added by municipal law the means of involve a question of criminal law, or carrying the pre-existing obligation of the title to land, or of Exchequer into effect See a so May v. Breed jurisdiction, you will find that it re- 7 Cush. (Mass.), 31 54 Am Dec. 700, solves itself into a Contract or a Bliss on Sovereignty, ch. Hi. Ton." Smi^h on the Law of Con- ^° See 2 Pollock &Ma.tland Hi^^^^^^^ trar-to T pcture 1 1 Eng. Law (2nd ed.) 184, 194, et seq. , * See Ogden v'saunders, 12 Wheat. Glanville Book X ; 2 Street's Founda- (U. S.) 213, 6 L. ed. 606. tions of Leg. Liability, ch. I. § II CONTRACTS. lO came to frame a future tense."^ But it is not so difficult to determine, approximately at least, when a promise or agreement first became en forcible at law in Great Britain, so as to be deemed a true contract. In comparatively uncivilized countries, and in the early stages of the law, little attention is given to enforcing agree- ments. The protection of life and property is naturally the first consideration as civilization advances in early stages, and "the task of enforcing promises" involves problems beyond the capacity of early law, "and coercive authority beyond its strength.'" So forms and ceremonies are characteristic of prim- itive law, and both the early English law and the Roman law had this characteristic, as well as a very similar growth and develop- ment. ° A sealed writing came to be received as irrebuttable ' Holmes Com. Law 251. '2 Holdsworth, Hist, of Eng. Law, 72; 1 Pollock & Maitland, Hist, of Eng. Law, 34, 35 ; Esmein, Etudes sur les Contracts daus tres ancien Droit Francais, 8. ° Professor Holdsworth gives the following description of the early law, with intimations of its effect on the later law : "Of the real contracts (so called in Roman nomenclature) the most important were sale, ex- change and loan. The basis of the transaction and the ground of action is not agreement, it is the fact that one man has parted with property to an- other, and the fact that the other is therefore indebted to him. * * * The plaintiff claims the price or the thing as his ; and we shall see, when we come to deal with the actions of debt and detinue, that this idea lived long in the law. * * * With these transactions we must class the obliga- tion to restore a gage or pledge. The borrower or debtor gave a thing — a gage — as security, or some person was given into the power of the cred- itor by way of pledge. * * * In both these classes of transaction, therefore, the creditor who did not restore when the debt was paid laid himself open to the charge of retain- ing the debtor's property. "Turning to the formal principle, we find among the Franks and Lombards undertakings guaranteed by 'making one's faith' — Fides Facta. This was symbolized or solemnized by such formal acts as the giving of a rod, the handshake, or the plac- ing of one's hands in those of an- other. * * * The obligation, for instance, between creditor and surety was made in this way. * * * Xhe debtor, according to the Lombard law, gave the 'festuca' or 'wadium' to the creditor, who handed it to the surety. * * * "phe binding force is derived from the ceremony, and not, as in the case of the real con- tracts, from the fact that something has passed from the creditor to the debtor. * * * "Probably these two classes of forms were the only ones known to very early law. But we soon see a development which is due chiefly to two causes. (1) The real and the formal principles tend to shade off into one another, 'The gage was capable of becoming a symbol; an object which intrinsically was of trifling value might be given and might serve to Ijind the contract.' * * * Thus the rod (festuca) may originally have been a symbol with a religious meaning. It comes to be the symbol of some gage given as a se- curity. In the same way we get the God's penny and the Earnest, which seem to have about them a strong II DEVELOPMENT AND CLASSIFICATION. § II evidence, not necessarily of agreement, but that the defendant had come under a liability to the plaintiff, and that a duty was thus created, which the law would enforce, and from this it came about that "a covenant or contract under seal was no longer a a promise well proved; it was a promise of a distinct nature, for which a distinct form of action came to be provided."" And the grantor or obligor was bound because he had so stated in such a form that he was not allowed to deny his liability. So, the action of debt likewise exerted an important influence in the development of the law of contracts. In all the early cases, however, it was duty, or the obligation of duty, arising generally from performance on one side rather than the obligation of a mere promise or agreement, that was enforced, and it was long before the doctrine of consideration was developed, or any strictly and wholly executory contract was enforced.^^ As may be gathered from what has been said, the development of the law of contract is closely connected with procedure and forms of action. At an early date certain writs had been adopted element of the formal principle, and perhaps, too, some element of the real principle. * * * "(2) The church gave a new meaning to old forms, and intro- duced wholly new forms and new conceptions. The older folk laws knew the oath. * * * Much use was made of it in procedure. * * * The church enforced oaths of a new model by penance, and did not nicely distinguish between the assertory and the promissory oath. * * * This will lead the church, when the system of the Canon Law has become formu- lated, to promote the idea of an en- forcible agreement by assuming wide jurisdiction over breaches of faith. * * * Again, a man may give as se- curity his hopes of salvation, or he may take God as his pledge, or place his faith in the hands of some bishop or sheriff to whom he gives coercive powers over him in case faith is not kept. * * * But the most import- ant contribution of the church _ was the introduction of writing to validate legal acts. No doubt these writings were usually used to convey property; but at this early date it is, as we have seen, hardly possible to distin- guish accurately between contract and conveyance. * * * "We can see but dimly the ele- ments which will go to the mak- ing of some of the later legal ideas upon the subject of agreements and topics related thereto. We see very clearly the real element which will color the actions of debt and detinue. We see, if not in Anglo- Saxon law, at least in contempory for- eign law, the writing which will be- come the great formal contract of the common law. We see in the God's penny and the Earnest, conceptions which mercantile custom will add to the common law. We see in the wide jurisdiction assumed by the church the germs of that conception of laesio £dei which will, in later days, make the ecclesiastical courts formidable rivals to the royal courts." 2 Holds- worth's Hist, of Eng. Law, 73, 74, 75. "Holmes Com. Law 272, 273; and see 2 Bracton 119; Salmond, Essays in Jurisprudence, 181. "3 Holdsworth's Hist, of Eng. Law, 344. §11 CONTRACTS. 12 tinder which remedies could be had for the most obvious kinds of wrong or injury, but they did not by any means cover every case, especially as, in the progress of society, new cases of injury or wrong arose or were recognized by advanced civilization as in justice requiring a legal remedy, and the cause of action had to correspond to the original writ and no remedy could be had at law upon any state of facts not reached by one of such writs.^" I This was an obvious deficiency in the law, amounting to a denial or failure of justice in many cases, and it was sought to be remedied by the Statute of Westminster 2, 13 Edward I, ch 24. passed in 1284, which provided for new writs in similar cases (in consUnili casu), that is, when in one case a writ was found, and in a like case falling under like law and requiring like rem- edy none was found, or, in other words, in analogous cases. '^ Under this authority new writs were formed and several new forms of action were developed, including trespass upon the case for torts and assumpsit or trespass on the case in assumpsit or on promises. And from the very beginning the original writs had the effect of limiting and defining the right of action itself and primary rights and subjects were classified accordingly, as there was no enforcible right unless it fell within the scope of one of such writs. In this way it happens not only that the law of con- tracts was expanded but also that many cases for which as- sumpsit as finally developed was the remedy, were, and still are by a few courts and writers, classed as cases of contract, even though the promise is a pure fiction of law and the element of agreement essential to a genuine contract is not present." But there has been a more or less gradual getting away from the old formalism, es- pecially in procedure, so that now we look to substance rather than form and the old classification on a basis of procedure is no longer regarded by the best authorities as correct or adequate. "See 2 Pollock & Maitland Hist. N. E. 280. And the custom of mer- of Eng. Law (2d ed.) 184, 194 et chants or "law merchant," adopted or seq. ; Glanville, Book X ; 2 Street's incorporated in the common law, has Foundation of Leg. Liability, ch. L also exerted an important ' influence "Stephens PI. (Andrew's ed.) 110, and given rise to certain peculiarities 111, § 64; 3 Bl. (Copley's ed.) SO, 51. in that branch of the subject relating " See Board of Highway Com'rs v. to negotiable instruments or commer- City of Bloomington, 253 111. 164, 97 cial paper. 13 DEVELOPMENT AND CLASSIFICATION. § 12 The law of contract, particularly, has become more important and has received much study, so that now we seem to have a better un- derstanding and theory of the subject and the modern law of contract has developed into a fairly logical and systematic branch of the law." § 12. Influence of past doctrines — Change in classification but subjects still treated. — For what may be called historical reasons, and because still expected and looked upon as necessary to a complete and comprehensive treatment of the general sub- ject, classes of so-called implied contracts based on or arising from the legal fiction referred to in the last preceding section, and thus, in a sense, created by law, are included in the treatment of the subject of contracts in all text-books purporting to cover the entire law of modern contracts. Including such topics may slightly impair the symmetry of the work and may not be entirely logical; but it is expected by the profession, and, for practical purposes it is certainly not undesirable. Indeed, it also serves to show more clearly the distinction and theory of the modern law. So, too, there is a close connection between such quasi contracts and true contracts, and a change in classification does not necessarily make it improper to treat all in a comprehensive work of this character. " Professor Holdsworth says that others, the following original author- during the Middle Ages the history ities: Y. B. 11 Hen. IV, 33, pi. 60; of the law of contracts falls into three Y. B. Hen. VI, 36, pi. 33 ; Y. B. 2 fairly well-marked periods: (1) The Hen. VI, Hil. pi. 10; Mich. Term 21 age of Glanville and .Bracton, in which Hen. VIII, Keilw. 77, 78; Pecke v. the old ideas as to contract were still Redman (ISSS), 2 Dyer 113a; Nor- prominent, although those writers wood v. Read (1S57), Plowden, 180; were influenced considerably by the Estrigge v. Owles (1587), 3 Leon. Roman law. (2) The end of the thir- 200; Stranborough v. Warner (1S88), teenth, the fourteenth, and beginning 4 Leon. 3; Gower v. Capper (1S97), of the fifteenth centuries, in which 2 Cro. Eliz. 543; Slade's Case (1602), there was a remodeling and develop- 4 Coke 92a, 92b; Bane's Case (1612), ment under the influence of the rules 9 Coke 94; Nichols v. Raynbred regulating account, covenant and (1615), Hobart 88. See also Holds- debt. (3) The latter part of the fif- worth's Hist, of Eng. Law, 318-349; teenth, and the sixteenth centuries, Holland's Jurisprudence; Holmes' in which the action of assumpsit grew Com. Law ; Pollock & Maitland, Hist, up and was influential in reforming of Eng. Law; and Salmond's Juris- the whole law of contract. Holds- prudence. In recent times the subject worth's Hist. Eng. Law, 320. One has been greatly clarified by Anson, who desires to trace this history and Leake and Pollock, development should consult, among S 13 CONTRACTS. 1 4 § 13. How contracts may originate. — Before attempting to classify contracts under the modern law it may be well to further elucidate the subject and to consider how they may originate. As already stated, under the modern view, a contract involves the idea of an outstanding obligation, or, in other words, an execu- tory and enforcible promise. There may be a promise and it may even be accepted and still there may be no enforcible promise or outstanding obligation, unless there is an instrument under seal. Such an instrument or contract under seal imports a con- sideration at common law or is binding because of its form, but in the case of the ordinary simple contract there is no enforcible promise and outstanding legal obligation unless there is a consid- eration. Thus, although an agreement may originate in an ofifer or a promise on one side and an acceptance on the other, as where A offers a promise and B accepts it, yet if A's promise does not require B to do or forbear a right, there being no consideration, there is no contract in the absence of a seal, and it is only because the seal imports a consideration or makes the offer irrevocable, after assent, that contract can be said to result in any event. ^^ Again, A may offer an act to be performed if B performs an act in return, so that B cannot accept in any other way. In such a case if B does accept by performing the act, there is then no ex- ecutory promise or outstanding obligation left, so that there is in reality no contract. The transaction is often called an executed contract, but, as the effect of the agreement is concluded as soon as the parties have expressed their common assent, the transac- tion is closed before a contract could result, and it is in reality the agreement or transaction that is executed, although it has often been called an executed contract. "See Williams v. Forbes, 114 111. tain formalities, such as the seal, as 167, 28 N. E. 463 ; Chicago Sash & well as by or from a consideration. Mfg. Co. V. Haven, 195 111. 474, 63 And if one makes such a formal con- N. E. 158; Krell v. Codman, 154 tract, he may not unjustly be said to ]\Iass. 454, 28 N. E. 578, 26 Am. St. do so in view of the law and to vol- 260, 14 L. R. A. 860. See also, Kern's untarily create or agree to such ob- Estate, 171 Pa, St. 55, 32 Atl. 129. ligation. The seal and delivery take In other words, it may be said the place of consideration and have that ^ while the element of ob- the same effect even if in a true sense ligation as well as agreement they do not import it. Historically, must be present, it may be created or of course, it is something of an anach- arise by or from the presence of cer- ronism to say that they import 15 DEVELOPMENT AND CLASSIFICATION. §14 But a true contract, even though not under seal, may originate in either of the following ways : i. By the offer of an act for a promise, as where a carrier offers transportation by having its car, omnibus or the like standing ready and offering to carry persons to places along its line for the scheduled fare and a traveler gets in and is carried to the destination. In such a case there is an offer of an act by the carrier for a promise of the fare and the traveler who accepts thereby promises to pay such fare.^^ Here there is no outstanding obligation enforcible against the carrier after per- forming its part, which may be necessary, indeed, to bring the con- tract into existence and make the promise of the other obligatory, but after such performance, there is an executory promise and outstanding obligation on the part of the traveler to pay the fare. 2. By the offer of a promise for an act, which can only be ac- cepted by doing such act, as, for instance, where a reward is offered by A for lost property or the like, and B, knowing there- of, finds and returns the property." Here, too, the outstanding obligation is on one side only. 3. A promise for a promise, as where A promises B to pay him a certain sum of money on a certain day in the future for certain services if B will promise to perform such services within such time, and B makes such promise.^® Here there is an outstanding obligation on each side. § 14. Bilateral and unilateral contracts. — Contracts may be classified, on the basis of the outstanding obligation, that is, consideration and make the transac- payment or tender of the considera- tion a contract on that account, as tion." they were given this effect before con- " Post, §§ 32, SO, 51. See also, Vigo sideration in fact was ever recognized Agricultural Soc. v. Brumfiel, 102 Ind. as an essential element. 146, 151, 1 N. F. 382, 52 Am. Rep. 651. " See also. Day v. Caton, 19" Mass. " Earle v. Angell, 157 Mass. 294, 32 513, 20 Am. Rep. 347; Cicotte v. N. E. 164; Hodges v. O'Brien, 113 Church of St. Anne, 60 Mich. 552, 27 Wis. 91, 88 N. W. 901 ; post, § 231. N. W. 682; Clark v. Ulster R. R. Co., See also New v. Germania Fire Ins. 189 N. Y. 93, 81 N. E. 766, 13 L. Co., 171 Ind. ii, 85 N. E. 703. In R. Ar (N. ST) 104 and note; Benj. the first case cited, which was an ac- Princ. Cent. 18; post, § 60. Rule or tion against an executor to recover custom may make necessary the pay- on an alleged contract with defend- ment or tender of fare in advance, ant's testatrix in her lifetime, the See 4 Elliott R. R. (3rd ed.), ch. 69, plaintiff testified that the testatrix said 70. In Louisville R. R. Co. v. Hutti, to him: "If you will agree to come 141 Ky. 511, 133 S. W. 200, ZZ L. R. to my funeral I will give you $500, A. (N. S.) 867, 868, the court says: and that he promised to come if alive "The contract began only upon the and notified in time, and the court § 15 CONTRACTS. 1 6 as to whether it exists on both sides or only on one side, into bilateral contracts and unilateral contracts. Where it is execu- tory on both sides, there being an outstanding obligation as to both, as in the case of a promise for a promise referred to in the last preceding section, the contract is a bilateral contract.^" Con- tracts of the nature of those referred to in the preceding section where there is merely an offer of an act for a promise duly ac- cepted or a promise for an act duly accepted, and executory only on one side, are or may be called unilateral contracts. So, contracts under seal, such as those first referred to in the preceding section, and the like, where there is merely a promise on one side and assent, so that no liability is imposed upon both except, if at all, by the law and not by the terms of the contract, if considered as in any sense true contracts, should be classified as unilateral con- tracts. But where there is no seal and no consideration, while an agreement or a promise so accepted by the promisee as to rimpose no liability upon him is often called a unilateral contract, and not generally enforcible, it is for that very reason no true contract at all.^^ § 15. Executory and executed contracts. — Contracts are also frequently classified, on the basis of performance, as execu- tory or executed. An executory contract is one that has not been performed, or, in other words, where there yet remains an out- standing obligation, while an executed contract, so called, is one held that the jury was warranted in In Richardson v. Hardwick, 106 U. finding a promise for a promise. S. 252, 1 Sup. Ct. 213, 216, it is said : '" See 2 Street's Foundation of Leg. "In suits upon unilateral contracts it Liability 52, 55, and chapters 12 and is only where the defendant has had 13, for nature and history of bilateral the benefit of the consideration for contracts. Consult also, 3 Holds- which he bargained that he can be worth's Hist, of Eng. Law, 344 et bound." And a unilateral contract is seq- ^ often defined as a contract "where " See Hardwick v. McClurg, 16 one party makes no express agree- Colo. App. 354, 65 Pac. 405; Plumb ment, but his obligation is left to V. Campbell, 129 111, 101, 18 N. E. implication of law." See also, Morton 790. See also 23 Harv. L. Rev. 159; v. Burn (1837), 7 Ad. & El. 19, 34 Dodge V. Adams, 19 Pick. (Mass.) E. C. L. 18, and compare Bowser & 429; Thorne v. Deas, 4 Johns (N. Y.) Co. v Marl" Henthorn v. Eraser, L. R. (1892) C. P. piv. 344; Stevenson v. McLean, 2 Ch. 27; Bryne v. Van Tiehoven, L. L. R. 5 Q. B. Div. 346 ; Henthorn v. R. 5 C. P. Div. 344 ; Stevenson v. Mc- Fraser, L. R. (1892) 2 Ch. 27; Adams Lean, L. R. 5 Q. B. Div. 346; Tayloe V. Lindsell, 1 B. & Aid. 681; Dunlop v. Merchants' Fire Ins. Co., 9 How. V. Higgins, 1 H. L. Cas. 381; House- (U. S.) 390, 13 L. ed. 187; Moore hold Fire 8zc. Ins. Co. v. Grant, L. R. v. Pierson, 6 Iowa 279, 71 Am. Dec. 4 Exch. Div. 216; Tayloe v. Mer- 409; Wheat v. Cross, 31 Md. 99, 1 chants' Fire Ins. Co., 9 How. (U. S.) Am. Rep. 28; Price v. Atkinson, 117 390, 13 L. ed. 187; Patrick v. Bow- Mo. App. 52, 94 S. W. 816; Malloy v. man, 149 U. S. 411, 37 L. ed. 790; Drumheller, 68 Wash. 106, 122 Pac. Waterman v. Banks, 144 U. S. 394, 1005 ; contra, Watters v. Lincoln, — 36 L, ed. 479; Stitt v. Huidekoper, S. Dak. — , 135 N. W. 712. 17 Wall. (U. S.) 384, 21 L. ed. "" Brauer v. Shaw, 168 Mass. 198, 46 644; Kempner v. Cohn, 47 Ark. 519, N. E. 617, 60 Am. St. 387; Price 1 S. W. 869, 58 Am. Rep. 775; v. Atkinson, 117 Mo. App. 52, 94 S. Smith V. Weaver, 90 111. 392 ; Shobe W. 816. V. Luff, 66 111. App. 414; Burton v. "Dickinson v. Dodds, 2 Ch. Div. Shotwell, 13 Bush. (Ky.) 271; Trav- 463; Union Sawmill Co. v. IMitchell, eler's Ins. Co. v. Parker, 92 Md. 22, 122 La. 900, 48 So. 317; Coleman v. 47 Atl. 1042; Wheat v. Cross, 31 Md. Applegarth, 68 Md. 21, 11 Atl. 284, 6 99, 1 Am. Rep. 28; Brauer v. Shaw, Am. St. 417. See also, post, § 232, 168 Mass. 198, 46 N. E. 617, 60 Am. Mutuality— Options. St. 387; Craig v. Harper, 3 Cush. 39 OFFER AND ACCEPTANCE. § 34 given to every one that might have seen the advertisement. Such an offer may be revoked by pubHshing notice to that effect in the same manner the original offer was made." This might be termed constructive notice of the revocation. The offer may or may not specify the time within which the offer must be accepted. In case the time is fixed by the offerer it may be accepted at any time before the expiration of that period, provided there is no revocation by the offerer before acceptance. This is true even though the delay might be considered unreason- able if it were not for the terms of the offer.°° In case the offer is couched in language, or conveyed in a manner, or relates to a mat- ter which shows that prompt action is demanded, unnecessary de- lay is not permissible. Thus, if an offer stipulates that an answer is desired by return mail,°'' this stipulation must be complied with or notice given by some other means of communication equally as rapid. And where the correspondence in regard to a transaction is carried on by telegraph it seems that this very fact would imply that there should be no unnecessary delay in accepting. This does not mean that acceptance must be instantaneous, but is to be made as soon as it is reasonably possible to consider and act upon the of- fer.^* Thus where the offer contained a stipulation which read, "' Shuey V. United States, 92 U. S. row," and the acceptance is not re- 73, 23 L. ed. 697. ceived until late in the evening of the "" Rickard v. Taylor, 122 Fed. 931, day specified, in the absence of any 59 C. C. A. 45S ; Ide v. Leiser, 10 proof showing that the offer was Mont. 5, 24 Pac. 695, 24 Am. St. 17; complied with, the contract is not Houghwout V. Boisaubin, 18 N. J. Eq. complete. Union Nat. Bank v. Miller, 315; Paddock v. Davenport, 107 N. 106 N. Car. 347, 11 S. E. 321, 19 Am. Car. 710, 12 S. E. 464; Arnold v. Bla- St. 538. bon 147 Pa. St. 372, 23 Atl. 575 ; Wat- " Dunlop v. Higgins, 1 H. L. Cas. son'v Coast, 35 W. Va. 463, 14 S. E. 387; Bernard v. Torrance, 5 Gill. & 249; Clark v. Gordon, 35 W. Va. 735, J. (Md.) 383; Maclay v. Harvey, 90 14 S. E. 255. The acceptance must be III. 525, 32 Am. Rep. 35 ; Taylor v. made within the time specified. Park Rennie, 35 Barb. (N. Y.) 272, 22 How. v. Whitney, 148 Mass. 278, 19 N. E. Pr. (N. Y.) 101. A proposal by letter 161 ; Cannon River Mfg. Assn. v. which calls for an answer "now" Rogers, 42 Minn. 123, 43 N. W. 792 ; must be accepted by return mail. Bat- Potts V. Whithead, 20 N. J. Eq. 55. terman v. Morford, 76 N. Y. 622. If And when the offerer states that he there are several mails a day or sorne shall consider the offer "no" in case other circumstance enters in, a strict he does not hear from the other party compliance with the provision may by a certain date, the acceptance must not be necessary. Palmer v. Phcenix actually reach him by that date. Mut. Life Ins. Co., 84 N. Y. 63. Lewis V Browning, 130 Mass. 173. '" Lucas v. Western Union Tel. Co., Where a proposal by telegram pro- 131 Iowa 669, 109 N. W. 191, 6 L. R. vided "must have reply early to-mor- A. (N. S.) 1016. 34 CONTRACTS. 40 "This is for a wired acceptance on receiving this letter, or no trade," an acceptance wired the day following the receipt of the letter was insufhcient."" Or when it read "kindly wire us at our own expense on receipt of this," an answer by letter two days after the offer was received was too late."" Likewise, where the offer stated "wire instantly or this is withdrawn," a delay of from 10 p. m. Saturday night until Monday morning was unreasonable and an acceptance at that time unavailing." If the offer relates to articles that fluctuate in price or matters that from the very nature of things demand immediate attention, that acceptance must be as soon as circumstances will permit."^ Should there be nothing to indicate the time within which ac- ceptance must be made, the proposition must be accepted within a reasonable time."^ What is a reasonable time within which an act such as an acceptance is to be performed, when a contract is silent upon the subject, has been held a question of law, depending upon the situation of the parties and the subject-matter of the con- tract."* But each case necessarily depends upon its particular facts. '"' Eagle Mill Co. v. Caven, 76 Mo. App. 458. '"Home V. Niver, 168 Mass. 4, 46 N. E. 393. °^ James v. Marion Fruit &c. Co., 69 Mo. App. 207. "^Dunlop V. Higgins, 1 H. L. Cas. 387; The M. N. Hamilton, Fed. Cas. No. 9685, 1 Hask. (U. S.)489; Minne- sota Linseed Oil Co. v. Collier White- Lead Co., 4 Dill. (U. S.) 431, Fed. Cas. No. 9635 ; Maclay v. Harvey, 90 111. 52s, 32 Am. Rep. 35; Home v. Niver, 168 Mass. 4, 46 N. E. 393. See also, Talbot v. Pettigrew, 3 Dak. 141, 13 N. W. 576. An acceptance by a creditor after the date set by the debtor for payment is not an accept- ance within a reasonable time. Tay- lor Spencer & Co. v. Brimbery, 2 Ga. App. 84, 58 S. E. 371. ""Martin v. Black's Ex'r., 21 Ala. 721 ; Averill v. Hedge, 12 Conn. 424 ; Ortman v. Weaver, 11 Fed. 358; Trounstine v. Sellers, 35 Kan. 447, 11 Pac. 441 ; Moxley's Admrs. v. Mox- ley, 2 Mete. (Ky.) 309; Bowen v. McCarthy, 85 Mich. 26, 48 N. W. 155 ; Stone V. Harmon, 31 Minn. 512, 19 N. W. 88; Bruner v. Wheaton, 46 Mo. 363; McCracken v. Harned, 66 N. J. L. 37, 48 Atl. 513; Hallock v. Com- mercial Ins. Co., 26 N. J. L. 268 ; Chi- cago &c. R. Co. V. Dane, 43 N. Y. 240 ; Mizell V. Burnett, 49 N. Car. 249, 69 Am. Dec. 744; Keck v. McKinley, 98 Pa. St. 616 ; Fort Worth &c. R. Co. v. Lindsey, 11 Tex. Civ. App. 244, 32 S. W. 7l4. See also, Ferrier v. Storer, 63 Iowa 484, 19 N. W. 288, SO Am. St. 752 ; Graff v. Buchanan, 46 Minn. 254, 48 N. W. 915 ; Cunyus v. Hooks Lum- ber Co., 20 Tex. Civ. App. 290, 48 S. W. 1106. " Morse v. Bellows, 7 N. H. 549, 28 Am. Dec. 372. It is usually a ques- tion of law when there is no dispute about the facts. Gilmore v. Wilbur, 12 Pick. (Mass.) 120; Aymar v. Beers, 7 Cowen (N. Y.) 705. But see Strauss v. Nat. &c. Furniture Co., 76 Miss. 343, 24 So. 703. "Where con- tracts are optional in respect to one party, delay on his part is viewed with especial strictness." Jones v. Moncrief-Cook Co., 25 Okla. 856, 108 Pac. 403. 41 OFFER AND ACCEPTANCE. § 34 and for this reason authorities are of slight aid in determining the question."^ Thus, where an advertisement offering a reward for the apprehension of criminals was made and four years thereafter the reward was claimed, the Supreme Court of Massa- chusetts held the offer had lapsed before the expiration of four years."* It has also been held that an interval of four months between the application for shares in a corporation and their allotment was not a reasonable time and the proposed application had lapsed,"^ and the Supreme Court of Iowa has declared that"* where an acceptance was delayed four weeks, "We could not say that four weeks was not an unreasonable time," and in another case"^ where there was a delay to accept for twenty-four hours it was held that an acceptance was not made within a reasonable time.'" Delays of six months,''^ a month and over,^^ twenty days,^^ two days,'* have been declared unreasonable. On the other hand, an acceptance made after a delay of seventeen days was held not unreasonable under the circumstances in another case.'^ The better opinion is, that what is, or is not, a reason- able time must depend upon the circumstances attending the ne- gotiations, and the character of the subject-matter of the con- tract. If the negotiation is in respect to an article staple in price, there is not so much reason for an immediate acceptance of the offer, and the same rule would not apply as in a case where the negotiations related to an article subject to sudden and great fluctuations in the market.'" "" Lucas V. Western Union Tel. Co., "" Minnesota Unseed Oil Co. v. Col- 131 Iowa 669, 109 N. W. 191, 6 L. lier White Lead Co., 4 Dill. (U. S.) R. A. (N. S.) 1016. Nor is the 431, Fed. Cas. No. 9635. question of reasonable time for per- " Minnesota Linseed Oil Co. v. Col- formance generally a pure question of lier White Lead Co., 4 Dill. (U. S.) law. Even in regard to a reasonable 431, Fed. Cas. No. 9635. time for acceptance we think the " McCurdy v. Rogers, 21 Wis. 197, question is usually to be more prop- 91 Am. Dec. 468. erly regarded as a mixed question of '" Carmichael v. Newell, 2 Phila. law and fact, at least where there is (Pa.) 289. conflict in the evidence and more than " Mizell v. Burnett, 49 N. Car. 249, one reasonable inference may be 69 Am. Dec. 744. drawn. "Averill v. Hedge, 12 Conn. 424. •" Loring V. Boston, 7 Mete. (Mass.) "Phillips v. Deck, 76 Cal. 384, 18 409. See also, In re Kelly, 29 Conn. Pac. Z36. If the offer is under seal 159. it does not lapse on the expiration of " Baily's Case, L. R. 5 Eq. 428. See a reasonable time. Xenos v. Wick- also, Chicago &c. R. Co. v. Dane, 43 ham, L. R. 2 H. L. 296; Butter v. N. Y. 240. Baker, 3 Coke 25. "° Ferrier v. Storer, 63 Iowa 484, "" Kempner v. Cohn, 47 Ark. 519. 1 489, 19 N. W. 288. S. W. 869; Minnesota Linseed Oil § 35 CONTRACTS. 42 § 35. Lapse of offer and acceptance. — An offer, as has just been seen, lapses on the expiration of the time for which it is left open." And if the date on which it will lapse is not defi- nitely stated, the proposal usually becomes a nullity if not accepted within a reasonable time." Likewise, the death of either party before any acceptance of the proposal, causes it to lapse. An offer which has not been accepted in the lifetime of the maker is necessarily terminated by his death ; nor can the representa- tives of the deceased be made liable upon the unaccepted offer." Co. V. Collier Write Lead Co., 4 Dill. 48 N. W. 155; Stone v. Harmon, 31 (U. S.) 431, Fed. Cas. No. 9635; Lar- Minn. 512, 19 N. W. 88; McCracken mon V. Jordan, 56 111. 204; Moxley's v. Harned, 66 N. J. L. ZT , 48 Atl, 513; Admrs. v. Moxley, 2 Mete. (Ky.) Chicago &c. R. Co. v. Dane, 43 N. 309; James v. Marion Fruit Jar Co., Y. 240; Keck v. McKinley, 98 Pa. 69 Mo. App. 207. See ante, note 62. 616; Ryan v. United States, 136 U. " See ante, § 34. Time within which S. 68, 34 L. ed. 447, 10 Sup, Ct. 913. acceptance must be made. Patterson v. " Dickinson v. Dodds, L. R. 2 Ch. Farmington St. R. Co., Id Conn. 628, Div. 463, 475; Campanari v. Wood- 645, 57 Atl. 853; Longfellow v. Moore, burn, 15 C. B. 400; Lee v. Griffin, 1 102 111. 289; Harding v. Gibbs, 125 Best & S. 272; The Palo Alto, Fed. 111. 85, 17 N. E. 60; Stembridge v. Cas. No. 10700; Grand Lodge &c. Stembridge, 87 Ky. 91, 7 S. W. 611; v. Farnham, 70 Cal. 159, 11 Pac. 592; Cleaves v. Walsh, 125 Mich. 638, 84 Riner v. Husted, 13 Colo. App. 523, N. W. 1108; Cannon River Assn. v. SS Pac. 793; Pratt v. Baptist Soc. of Rogers, 42 Minn, 123, 43 N. W. 792 ; Elgin, 93 111. 475, 34 Am. Rep. Mason v. Payne, 47 Mo. 517; 187; Union Sawmill Co. v. Mit- Schields V. Horback, 30 Nebr. 536, chcU, 122 La. 900, 48 So. 317; Jor- 46 N. W. 629; Page v. Shainwald, dan v. Dobbins, 122 Mass. 168, 23 169 N. Y. 246, 62 N. E. 356; Union Am. Rep. 305; Busher v. New York Nat. Bank v. Miller, 106 N. Car. 347, Life Ins. Co., 72 N. H. 551, 58 Atl. 11 S. E. 321; Potts V. Whitehead, 20 41; 23rd St. Baptist Church v. Cor- N. J. Eq, 55, 59; Longworth v. Mitch- nell, 117 N. Y. 601, 23 N. E. 177, 6 ell, 26 Ohio St. 334, 342; Swank v. L. R. A, 807; Wallace v. Townsend, Fretts, 209 Pa. 625, 59 Atl. 264; Ca- 43 Ohio St. 537, 3 N. E. 601, 54 Am. bot V. Kent, 20 R. L 197, 7>1 Atl. 945 ; Rep. 829 ; Helfenstein's Estate, 11 Pa. Cummings v. Town &c. Realty Co., St. 328, 18 Am. Rep. 449; Phipps v. 86 Wis. 382, 57 N. W. 43; Richardson Jones, 20 Pa. 260, 59 Am. Dec. 708; V. Hardwick, 106 U. S. 252, 27 L. ed. Foust v. Board of Publication, 8 Lea 145, 1 Sup Ct. 213; Waterman v. (Tenn.) 552; Michigan State Bank Banks, 144 U. S. 394, 36 L. ed. 479, 12 v. Leavenworth's Estate, 28 Vt. 209. Sup. Ct. 646. See also, Sheffield v. Whitfield, 6 Ga. " See ante, Time within which ac- App. 762, 65 S. E. 807. A request to ceptance must be made. Ramsgate do work and furnish material is re- Victoria Hotel Co. V. Montefiore, L. voked by the death of the person R. 1 Ex, 109; Averill v. Hedge, 12 making the ofifer. Herrlich v. Hy- Conn, 424, 433; Larmon v. Jordan, 56 man, 61 Misc. (N. Y.) 606, 113 N. 111. 204; Ferrier v. Storer, 63 Iowa Y. S. 971. The reason for this rule 484, 19 N. W. 288; Trounstine v. Sel- is that the continuance of an offer is. lers, ?!i Kans. 447, 11 Pac. 441; Park in the nature of a constant repetition. V. Whitney, 148 Mass. 278, 19 N. E. Cooke v. Oxley, 3 T. R. 653. This 161 ; Bowen v. McCarthy, 85 Mich. 26, necessarily requires one capable of 43 OFFER AND ACCEPTANCE. 35 Thus, a continuing guarantee, so far as it is a mere offer which may be acted upon, is revoked as to a future action upon it, by the death of the guarantor.*" So an agency or authority to con- tract on behalf of a person is terminated by his death, and a con- tract purporting to be made under it, although without notice of the death, is not chargeable against his representatives." How- ever, if the offer is one supported by a sufficient consideration and could not have been withdrawn by the offerer in his lifetime, his death does not cause it to lapse prior to the date mentioned therein.*^ In case it is he to whom the offer is made that dies, the same rule applies. The proposal lapses with his death.*' The privilege of acceptance does not descend to his personal repre- sentatives.*'' Nor have they the right either to accept, continue or renew an offer made to the deceased person.*^ Likewise, an offer relating to the property of a person is terminated by his bankruptcy, which transfers all his property to his trustees,*' or making a repetition. Pratt v. Trus- tees &c., 93 111. 475, 34 Am. Rep. 187. ™Coulthart v. Clementson, L. R. 5 Q. B. Div. 42, 49 L. J. Q. B. 204 ; In re Sherry, L. R. 25 Ch. Div. 692, 53 L. J. Ch. Div. 404 ; Valentine v. Dono- hoe-Kelly B. Co., 133 Cal. 191, 65 Pac. 381; Aitken v. Lang, 106 Ky. 652, 51 S. W. 154, 90 Am. St. 263. But a continuing guaranty under seal, where the consideration is given once for all, is not terminated by the death of the guarantor, nor by the fact that his death has come to the knowledge of the person to whom the guaranty is given, nor can such guaranty be determined by the guarantor or his executors upon notice, unless there is an express stipulation to that effect. In re Crace, 71 L. J. Ch. 358, 86 Law Times 144. "Blades v. Free, 9 B. & C. 167; Campanari v. Woodburn, 15 C. B. 400; Hunt v. Rousmanier, 8 Wheat. (U. S.) 174, 5 L. ed. 379; Gait v. Galloway, 4 Pet. (U. S.) 332, 7 L. ed. 876; Johnson v. Wilcox, 25 Ind. 182 ; Lewis v. Kerr, 17 Iowa 73 ; Lin- coln v. Emerson, 108 Mass. 87; Clay- ton V. Merrett, 52 Miss. 353; Weber V. Bridgman, 113 N. Y. 600, 21 N. E. 985; Farmers' Loan &c. Co. v. Wil- son, 139 N. Y. 284, 34 N. E. 784, 19 N. Y. S. 142; Peries v. Aycineva, 3 W. & S. (Pa.) 64; Jenkins v. Atkins, 1 Humph. (Tenn.) 294, 34 Am. Dec. 648. '"Mueller v. Nortmann, 116 Wis. 468, 93 N. W. 538, 96 Am. St. 997. The death of the offerer after the ac- ceptance does not cause the offer to lapse or affect the validity of the contract. Northwestern Mutual Life Ins. Co. V. Joseph, 31 Ky. L. 714, 103 S. W. 317, 21 L. R. A. (N. S.) 439; Mactier's Admrs. v. Firth, 6 Wend. (N. Y.) 103, 21 Am. Dec. 262. "^ Werner v. Humphreys, 2 M. & G. 853 ''Newton v. Newton, 11 R. I. 390, 23 Am. Rep. 476. "^ In re Cheshire Banking Co., L. R. 32 Ch. Div. 301 ; Werner v. Hum- phreys, 2 M. & G. 853 ; Sutherland v. Parkins, 75 111. 338. It is also held that if the offerer becomes insane be- fore his proposal is accepted it is cause to lapse. " Meynell v. Surtees, 25 L. J. Ch. 257. § 36 CONTRACTS. 44 the dissolution of partnership/^ or corporation/' when one of the parties causes the offer to lapse. § 36. When the contract is complete. — The contract is com- plete when both parties have agreed to one and the same set of propositions.*® This is accomplished when, without fraud, du- ress or mistake on the part of either party, one submits a propo- sition to which the other accedes, provided such acceptance neither takes from nor adds to the offer, but accepts it in every respect just as it stands."" When the offer is accepted on the terms in which it is made before a valid revocation"^ the con- tract becomes instantly binding on the parties and neither party can subsequently recede from the contract without the consent of the other. "^ § 37. Acceptance must be unconditional. — Before this can be accomplished there must be an unconditional acceptance of the offer. The assent must be absolute and final."^ The one who makes an offer cannot be bound by a conditional accept- ance."* But an acceptance is not conditional because the acceptor "Goodspeed v. Wiard Plow Co., 45 76; Spencer v. Pike Co., 183 Fed. 894; Mich. 322, 7 N. W. 902. Strong &c. Co. v. H. Baars & Co., ''Saltmarsh v. Planters' &c. Bank, 60 Fla. 253, 54 So. 92; Corcoran v. 14 Ala. 668. White, 117 111. 118, 7 N. E. 525. One " Phenix Ins. Co. v. Schultz, 80 cannot, without his assent, be made Fed. 337, 25 C. C. A. 453; Andrews the debtor of another. Mackenzie v. V. Schreiber, 93 Fed. 367. Barrett, 148 111. App. 414; Cal Hirsch ^ Davenport v. Newton, 71 Vt. 11, &c. Co. v. Peru Casting Co., — Ind. 42 Atl. 1087. The parties must agree App. — , 96 N. E. 807; Breen v. on the same thing in the same sense. Mayne, 141 Iowa 399, 118 N. W. 441; American Can Co. v. Agricultural Hutcheson v. Blakeman, 3 Mete. Ins. Co., 12 Cal. App. 133, 106 Pac. (Ky.) 80; Wheaton Building &c. Co. 720. V. Boston, 204 Mass. 218, 90 N. E. "Mott V. Jackson, 172 Ala. 448, 55 598; Sibley v. Felton, 156 Mass. 273, So. 528. 31 N. E. 10 ; Cangas v. Rumsey Mfg. ''Adams v. Lindsell, 1 B. & Aid. Co., VI Mo. App. 297; Melick v. Kel- 681; Linn v. McLean, 80 Ala. 360; ley, 53 Nebr. 509, 73 N. W. 945; Har- Gartner v. Hand, 86 Ga. 558, 12 S. E. ris v. Scott, 67 N. H. 437, 32 Atl. 770; 878; Boston &c. Maine R. Co. v. Bart- Hough v. Brown, 19 N. Y. Ill; Mc- lett, 3 Cush. (Mass.) 224; Wheaton Cotter v. New York, Zl N. Y. 325; Building &c. Co. v. Boston, 204 Mass. Cameron v. Wright, 21 App. Div. (N. 218, 90 N. E. 598; McLean v. Pas- Y.) 395, 47 N. Y. S. 571, affd. 163 time Gymnasium Assn., 64 Mo. App. N. Y. 586, 57 N. E. 1105; Corning v. 55. Colt, 5 Wend (N. Y.) 253. There *° Appleby v. Johnson, L. R. 9 C. must be a mutual assent to a definite P. 158; Martin v. Northwestern Fuel proposition. Strong &c. Co. v. H. Co., 22 Fed. 596; Bowen v. Hart, 101 Baars & Co., 60 Fla. 253, 54 So. 92. Fed. 376, 41 C. C. A. 390; Ortman v. "Monk v. McDaniel, 116 Ga. 108, Weaver, 11 Fed. 358; McGovern v. 42 S. E. 360; Baxter v. Bishop, 65 David Kaufman's Sons Co., 163 Fed. Iowa 582, 22 N. W. 685; Plant Seed 45 OFFER AND ACCEPTANCE. § 38 expresses dissatisfaction with the offer, yet nevertheless gives his unqualified assent,°° nor because he adds immaterial words."" § 38. Acceptance must be on terms of offer. — Not only must the acceptance be unconditional but it must be identical with Co. V. Hall, 14 Kans. 553; Seymour V. Armstrong, 62 Kans. 720, 64 Pac. 612; Eggleston v. Wagner, 46 Mich. 610, 10 N. W. 27; Falls Wire Mfg. Co. V. Broderick, 12 Mo. App. Hi,; Brecheisen v. Coffey, 15 Mo. App. 80. Where a bid for the construction of a building is accepted upon condi- tion that bond or surety be given for the faithful performance of the con- tract, the contract is not complete un- til the condition is complied with. Flynn v. Dougherty (Cal.), 26 Pac. 831 ; Howard v. Industrial School, 78 Maine 230, 3 Atl. 657; Mc- Grath V. Brown, 66 Barb. (N. Y.) 481. But if the defendants permit the contractor to go ahead and perform the work without executing the bond, they cannot set up this as a defense in an action for the balance due. Dev- lan V. Wells, 65 N. J. L. 213, 47 Atl. 467. See also, Disken v. Herter, 175 N. Y. 480, 67 N. E. 1081; Joske v. Pleasants, 15 Tex. Civ. App. 433, 39 S. W. 586. An agreement to take certain city bonds conditioned upon the opinion of the city attorney that the bonds were valid does not bind the city. Coffin v. Portland, Ai Fed. 411. The acceptance of an offer to sell real estate "provided the title is perfect" is conditional and does not constitute a binding contract. Cor- coran V. White, 117 111. 118, 7 N. E. 525, 57 Am. Rep. 858; Sawyer v. Brossart, 67 Iowa 678, 25 N. 'W. 876, 56 Am. Rep. 371. A reply to an offer for the sale of tin which read "We accept your offer, if full weight plates,'' was conditional and did not constitute a contract. Kirwan v. Byrne, 9 Misc. (N. Y.) 76, 29 N. Y. S. 287. The acceptance of an offer for the unexpired term of a lease, provided the lessor assented, was con- ditional and did not form a contract. Putnam v. Grace, 161 Mass. 237, Z7 N. E. 166. By the terms of an agree- ment fish were to be shipped to Bos- ton. Subsequently one of the parties requested that they be shipped to Plymouth, to which the other assent- ed on condition that he be paid a certain commission. It was held in an action for breach of contract that the contract was never completed be- tween the parties. Harlow v. Curtis, 121 Mass. 320. In Egger v. Nesbitt, 122 Mo. 667, 27 S. W. 385, 43 Am. St. 596, Burgess, J., said: "Defendant's letter to plaintiff of March 4, 1890. vyas not an acceptance of the proposi- tion contained in defendant's letter to him of date February 26, 1890, for the reason that the acceptance was not unconditional, but with the un- derstanding that plaintiff would de- liver to him all the jiapers in refer- ence to the land — United States pat- ents and other deeds — about which there was nothing said in defendant's letter or proposition, thereby making a new proposition of his own, and imposing new burdens upon defend- ant, though light they may have been. As the conditions upon which the proposition was accepted materially differed from the original proposi- tion, it amounted to the rejection of the offer. Cangas v. Mfg. Co., 37 Mo. App. 297 ; Strange v. Crowley, 91 Mo. 287, 2 S. W. 421." An agreement to buy if the horse suits him is condi- tional. Stagg V. Compton, 81 Ind. 171. The acceptance of an order for bottles "if you will give us any rea- sonable opportunity to make ready for you" is conditional. Sidney Glass Works V. A. S. Barnes & Co., 86 Hun (N. Y.) 374, 33 N. Y. S. 508. '= Joyce V. Swann, 17 C. B. (N. S.) 84; Brown v. Cairns, 63 Kans. 693, 66 Pac. 1033. °'' Simpson v. Hughes, 66 L. J. Ch. 334 ; Bruner v. Wheaton, 46 Mo. 363 ; Hubbell V. Palmer, 76 Mich 441, 43 N. W. 442; Warren Bros. Co. v. King, 96 Minn. 190, 104 N. W. 816; Wood v. Dales, 20 Barb. (N. Y.) 42; Fitzhugh V. Jones, 6 Munf. (Va.) 83; Matteson v. Scofield, 27 Wis. 671. § 39 CONTRACTS. 46 the terms of the offer.°^ It must not vary from the proposal either by way of omission, addition or alteration. If it does, neither party is bound.*^ § 39, Variance between offer and acceptance. — An accept- ance varies from the terms of the offer vi^hen it omits certain features of the proposal and assent is given to only part of its terms."" Thus, where one party offers to sell all the timber on his land at a certain price and the other responded by offering to buy only that standing on a part of land, there is no contract.^ So, also, where defendant offered to sell plaintiff a certain num- ber of kegs of nails and the plaintiff in reply wrote that he would not take the number of kegs proposed, but that the defendant might ship him a certain less number, there was no sale or agree- ment to sell.^ Likewise, if the acceptance adds to or goes be- yond the terms proposed, no contract is formed.^ Thus, one advertised his estate for sale. The plaintiff proposed to purchase it, and authorized his solicitor to make an offer of a certain sum " Eliason v. Henshaw, 4 Wheat. (U. S.) 22s, 4 L. ed. 556; Salomon v. Webster, 4 Colo. 353; Strong &c. Co. V. H. Baars & Co., 60 Fla. 253, 54 So. 92; Fox V. Turner, 1 111. App. 153; Rugg V. Davis, IS 111. App. 647; Es- man v. Gorton, 18 111. 483; Hutch- eson V. Blakeman, 3 Mete. (Ky.) 80; McDonough v. Winchester, 1 La. 188; Barrow v. Ker, 10 La. Ann. 120; Jen- ness V. Mt. Hope Iron Co., 53 Maine 20; Eggleston v. Wagner, 46 Mich. 610, 10 N. W. 27; Thomas v. Green- wood, 69 Mich. 215, 27 N. W. 195; Eads V. Carondelet, 42 Mo. 113; Bru- ner v. Wheaton, 46 Mo. 363; Strange V. Crowley, 91 Mo. 287, 2 S. W. 421 ; Green v. Colo, 103 Mo. 70, 15 S. W. 317; Sutter v. Raeder, 149 Mo. 297, 50 S. W. 813 ; State v. Board &c., 37 Mont. 378, 96 Pac. 736; Krum v. Chamberlain, 57 Nebr. 220, 77 N. W. 665; Potts V. Whitehead, 23 N. J. Eq. 512; Swing v. Walker, 27 Pa. Super. Ct. 366; Mead & Speer Co. v. Krimm, 43 Pa. Super. Ct. 376; Olds V. East Tennessee Stone &c. Co. (Tenn. Ch. App.), 48 S. W. 333; Virginia Hot Springs Co. v. Har- rison, 93 Va. 569, 25 S. E. 888 ; Snow V. Miles, Fed. Cas. No. 13146; Carr V. Duval, 14 Pet. (U. S.) 77, 10 L. ed. 361. "'Scott V. Davis, 141 Mo. 213, 42 S. W. 714. A modified acceptance does not create a contract. Kimbark V. Illinois Car &c. Co., 103 111. App. 632; Kansas City &c. R. Co. v. Mc- Guire Mfg. Co., 108 111. App. 258 Baker v. Johnson Co., 37 Iowa 186 Bethel v. Hawkins, 21 La. Ann. 620 ]\Ietropolitan Coal Co. v. Boutell &c. Co., 185 Mass. 391, 70 K. E. 421. "' Crabtree v. St. Paul Opera House Co., 39 Fed. 746. Any qualification of or departure from the terms of the offer invalidates it, unless agreed to by the proponent. Goodridge v. Wood, 133 111. App. 483 ; Fox v. Tur- ner, 1 111. App. 153; Steel v. Miller, 40 Iowa 402; Potts v. Whitehead, 23 N. J. Eq. 512; Bruce v. Pearson, 3 Johns. (N. Y.) 534; Davenport v. Newton, 71 Vt. 11, 42 Atl. 1087. 'Davenport v. Newton, 71 Vt. 11, 42 Atl. 1087. ^Jenness v. Mount Hope Iron Co., 53 Maine 20. " Baker v. Johnson Co., 37 Iowa 186; Bridge v. Calhoun &c., 57 Wash. 272, 106 Pac. 762. '47 OFFER AND ACCEPTANCE. § 39 for it. This offer was accepted by letter, but with the added con- dition that a certain deposit should be made and the sale com- pleted within a given time. The House of Lords agreed that there was no contract here.* Also where the defendant agreed to feed and water 400 cattle for a certain sum per head and the plaintiff accepted the terms but changed the number of cattle to be fed from 400 to 650 or 700 head, they thereby undertook to add to the offer, and, as a result, no contract was formed. ° The doctrine that the acceptance must be unequivocal has been carried in some cases to the extreme. Thus, a resident of Cali- fornia wrote to a resident of Iowa, offering to sell certain land, and added : "Let me hear from you at once." The receiver of the letter telegraphed his acceptance of the offer and added "money at your order at First National Bank here." It was' held that as the proposal said nothing about the place where the money was to be paid, it was payable in California, and the de- positing it in the bank in Iowa was not an unconditional accept- ance of the offer.** And where a person in Connecticut wrote to a man in Wisconsin, offering to sell land for a certain sum, noth- ing being said about the place of payment or delivery of the deed, a letter was written accepting this proposal, and this was added : "You may make out the deed, leaving the name of the grantee in blank, and forward the saine to X or to your agent, if you have one here to be delivered to me on payment." It was held there was no unconditional acceptance.' In another case, the plaintiff by letter offered defendant three hundred dollars for two horses. "The defendant wrote in reply 'that he might have the horses for three hundred dollars if he would come for them,' " and the court declared there was no consummated contract.* In these latter cases the courts fail to appreciate the fact that the reply may go beyond the terms of the proposal without qualifying the * Honeyman v. Marryatt, 6 H. L. ' Baker v. Holt, 56 Wis. 100, 14 N. C. 112. Lord Wensleydale said: W. 8. "There certainly was no complete ' Fenno v. Weston, 31 Ver. 34S. For contract in this case." other rather extreme cases, see Rob- " Ingham & Sons v. Cisco Oil Mill, inson v. Weller, 81 Ga. 704, 8 S. E. 38 Tex. Civ. App. 608, 86 S. W. 630. 447; Sidney Glass Works v. A. S. "Sawyer v. Brossart, 67 Iowa 678, Barnes & Co., 86 Hun (N. Y.) 374, 33 25 N W 876 N, Y. S, 508; Myers v. Smith, 48 Barb. (N. Y.) 614. § 40 CONTRACTS. 48 acceptance. The addition may be such as fairly to impart a re- quest instead of a condition," or, as has been seen, the words in- serted may be immaterial.^" So long as no new'- term is added to the proposal and the offer is not varied in any respect, the acceptance is unconditional and valid.^^ The rule that an ac- ceptance must be absolute should be applied with caution and the language construed so as not to defeat the intent of the parties.^^ § 40. Mistake. — The doctrine of the preceding section must be qualified by the words "provided the agreement is not entered into through mistake." If the mistake relates to the subject- matter and is such that but for it the contract would not have been made, there is no valid agreement. This is based upon the idea that no contract has been consummated, the minds of the parties never having met.^^ For this reason if an offer is made through mistake as to the facts, its acceptance does not form a binding contract.^* It is in general, however, only when the phraseology of the contract has no obvious meaning or is reasonably capable of diverse interpretation and was in fact differently understood by the parties, that there is no agreement. Consequently, if there is °Purrington v. Grimm, 83 Vt. 466, &c. Milling Co., 11 Mo. App. 672; 76 Atl. 158. Western Union Tel. Co. v. Shotter, 71 " See ante, § 37. Ga. 760. The above cases go on the " Wheaton Bldg. &c. Co. v. Boston, assumption that the telegraph com- 204 Mass. 218, 90 N. E. S98. pany is the agent of the sender and ^ See McKell v. Chesapeake &c. R. that he is bound by any mistake the Co., 175 Fed. 321 : Empire Rubber company may make in the transmis- Mfg. Co. V. Morris, 73 N. J. L. 602, sion of the message, but that it in 65 Atl. 450. turn is answerable to him in damages. " Iowa Loan & Trust Co. v. Other cases base their decision on the Schnose, 19 S. Dak. 248, 103 N. W. theory that the company has violated 22; Bedell v. Wilder, 65 Vt. 406, 26 its duty and is answerable in damages Atl. 589, 36 Am. St. 871. If the mistake therefor. Rose v. United States Tel. is made by one party because of its Co., 3 Abb. Pr. (N. S.) (N. Y.) 408; own negligence, this fact will not be Shingleur v. West Union Tel. Co., 72 permitted to prejudice the other party. Miss. 1030, 18 So. 425, 30 L. R. A. 444, Bowers &c. Co. v. United States, 41 48 Am. St. 604 ; Pepper v. West Union Ct. CI. 214. Tcl. Co., 87 Tenn. 544, 11 S. W. 783, " Merriam v. Lapsley, 12 Fed. 457, 4 L. R. A. 660, 10 Am. St. 699. Fail- 2 McCrary (U. S.) 606; Board &c. v. ure to deliver within time limit. Pur- Bender, ?>(i Ind. App. 164, 72 N. E. don Naval Stores Co. v. Western 154; Gulf &c. R. Co. v. Dawson, — Union Tel. Co., 153 Fed. 327. A mis- Tex. Civ. App. — , 24 S. W. 566. As take in the transmission of a message to the liability of a telegraph com- may be ratified by accepting a part pany for the incorrect transmission of, payment of the prices quoted with or failure to transmit an offer or its knowledge of the mistake. Culver v. acceptance, see Haubalt Bro. v. Rea Warren, 36 Kan. 491, 13 Pac. 577. 49 OFFER AND ACCEPTANCE. § 4I no mistake of fact, but simply a misconception of the consequences of the language used in making the proposal, the agreement is binding, and against such mistakes of law the court affords no remedy. The misunderstanding of the legal effect of language used in an instrument freely signed is not such a mistake as will afford grounds for relief." § 41. Condition amounts to a rejection of offer. — It is well recognized that any change of any material stipulations or the in- jection of new stipulations amounts to a rejection of the offer." Consequently a subsequent acceptance in accordance with the terms of the proposal is unavailing. The rejection of an offer terminates it and it is beyond the power of the acceptor to revive the proposal by a subsequent acceptance." However, a mere in- ' quiry as to the term of the proposal, or a request to modify or change the offer, does not have the effect of rejecting the offer, and if the offer has not been revoked a party may accept it, al- though he previously asked the proposer to modify it.^* § 42. Counter offer. — Both the modified acceptance and an unconditional assent after such modified acceptance are in effect nothing more than counter propositions that must be assented to by the original offerer before any binding obligation is fastened on the parties.^" In case the original proponent accedes to the "Wheaton Building &c. Co. v. Bos- Johnson Co., il Iowa 186; Wheaton ton, 204 Mass. 218, 90 N. E. 598; Tay- BIdg. &c. Co. v. Boston, 204 Mass. lor V. Buttrick, 165 Mass. 547, 43 N. 218, 90 N. E. 598; Metropolitan Coal E. 507, 52 Am. St. 530. At com- Co. v. Boutell &c. Co., 185 Mass. 391, mon law a party who enters into a 70 N. E. 421 ; Egger v. Nesbit, 122 contract in writing, without any fraud Mo. 667, 27 S. W. 385, 43 Am. St. 596 ; or imposition being practiced upon Bridge v. Calhoun &c., 57 Wash. 272, him, is conclusively presumed to un- 106 Pac. 762. derstand and assent to its terms and " Goulding v. Hammond, 54 Fed. legal effect. Zdancewicz v. Burling- 639, 4 C. C. A. 533, 13 U. S. App. 30 ; ton Co. Traction Co., n N. J. L. 10, Ortraan v. Weaver, 11 Fed. 358; Crab- 71 Atl. 123. tree v. St. Paul Opera House Co., 39 "National Bank v. Hall, 101 U. S. Fed. 746; Egger v. Nesbit, 122 Mo. 43, 25 L. ed. 822; Sloan v. Wolf Co., 667, 27 S. W. 385, 43 Am. St. 596; 124 Fed. 196, 59 C. C. A. 612; Galla- Prith v. Lawrence, 1 Paige (N. Y.) gher v. Equitable Gas Light Co., 141 434. See also, Zearing v. Crawford Cal. 699, 75 Pac. 329; Goodridge v. &c. Co., — Ark. — , 145 S. W. 226. Wood, 133 111. App. 483 ; Kansas City But see Foster v. Boston, 39 Mass. il. &c. R. Co. v. McGuire Mfg. Co., 108 " Stesienafln_y:,JMcLean,_L. R. 5 Q. 111. App. 258; Kimbark v. Illinois Car B. Diy. 346. &c. Co., 103 111. App. 632; Baker v. "Jones v. Daniel (1894), L. R. 2 Ch. 4 — Contracts, Vol. I § 43 CONTRACTS. 50 modification imposed and gives notice to that effect, the contract is concluded.^" It is not necessary in every instance that an ex- press assent to the modified acceptance be showm. If the parties proceed with their contract as if the condition of the acceptance were a part of it, this is as effectual as an acceptance as if the changes had been formaUy assented to.^^ § 43. Manner of communicating or indicating acceptance. — In the absence of any restriction placed by the offerer on the manner of communicating or indicating acceptance it may be given by any means competent to bring knowledge of such ac- ceptance to the offerer. But it is essential that the acceptance be evinced by some intelligent conduct, act or sign actually com- municated to the offerer.^'^ The mere intention to accept is not sufficient if no notice of such intention is sent to or received by the proposer within a reasonable time or in accordance with the Div. 332 ; Crossley v. Maycock, L. R. 18 Eq. 180, followed; Sheffield Canal Co. V. Sheffield &c. R. Co., 3 Eng. Ry. & C. Cas. 357; Burchard-Hulburt Inv. Co. V. Hanson, 143 111. App. 97 ; Hart- ford Life Ins. Co. v. Milet, 31 Ky. L. 1297, 105 S. W. 144; Wheaton Build- ing &c. Co. V. Boston, 204 Mass. 218, 90 N. E. 598; Putnam v. Grace, 161 Mass. 237, Z1 N. E. 166; Egger v. Nesbit, 122 Mo. (^61, 27 S. W. 385, 43 Am. St. 596; Greenwich Bank &c. v. Oppenheim, 133 App. Div. S86, 118 N. Y. S. 297; Mead & Speer Co. v. Krimm, 43 Pa. Super. Ct. 376; Bridge V. Calhoun &c., 57 Wash. 272, 106 Pac. 762. ^ Sloan V. Wolf Co., 124 Fed. 196, 59 C. C. A. 612 ; Baldwin v. Common- wealth, 11 Bush. (Ky.) 417; Earle v. Angell, 157 Mass. 294, 32 N. E. 164; Long V. Battle Creek, 39 Mich. 323, Zi Am. Rep. 384; Underbill v. North American &c. Co., 36 Barb. (N. Y.) 354. '" McKell V. Chesapeake &c. R. Co., 175 Fed. 321; Tilt v. La Salle Silk Mfg. Co., 5 Daly (N. Y.) 19; Gray V. Foster, 10 Watts (Pa.) 280; Gen- eral Lithographing &c. Co. v. Wash- ington Rubber Co., 55 Wash. 461, 104 Pac. 650. A request that the contract be modified after it has been con- ckided does not affect the validity of the contract. Society &c. v. Old Jor- dan Mining Co., 9 Utah 483, 35 Pac. 492. "^ Peet V. Meyer, 42 La. Ann. 1034, 8 So. 534; Woods v. Ayres, 39 Mich. 345, ii Am. Rep. 396 ; White v. Cor- lies, 46 N. Y. 467. Assent in the eyes of the law is a matter of overt acts, not of inward unanimity of motive. Mental acts are not the stuff from which promises are made. Cleveland &c. R. Co. V. Shea, — Ind. — , 91 N. E. 1081; O'Donnell v. Clinton, 145 Mass. 461, 14 N. E. 747. The accept- ance must be actually or constructive- ly communicated. McCuUy's Admr. V. Phoenix Mut. Life Ins. Co., 18 W. Va. 782 ; Flethouse v. Bindley, 11 C. B. (N. S.) 869; Brogden v. Metropol- itan R. Co., 2 L. R. App. Cas. 666, 688, 691, 697; Trounstine v. Sellers, 35 Kan. 447, 11 Pac. 441; Jenness v. Mount Hope Iron Co., 53 Maine 20; Caton v. Shaw, 2 Har. & G. (Md.) 13 ; McCullough v. Eagle Ins. Co., 1 Pick. (Mass.) 278; McDonald v. Boe- ing, 43 Mich. 394, 5 N. W. 349, 38 Am. Rep. 199; Beckwith v. Cheever, 21 N. H. 41 ; Perry v. Dwelling House Ins. Co., 67 N. H. 291, 33 Atl. 731, 68 Am. St. 668; White v. Corlies, 446 N. Y. 467; Mactier's Admrs. v. Frith, 6 Wend. (N. Y.) 103. If the proponent has knowledge of the acceptance it is 51 OFFER AND ACCEPTANCE. § 44 terms of the offer.^' The assent of the acceptor may be evi- denced by his signature attached to an offer/^ it may be orally given,^" or by conduct which shows assent.^" § 44. Communications by mail. — Negotiations which finally culminate in a contract may be carried on entirely by letter." There is no dispute as to whether or not contracts can be so formed. The only question to be determined in such instance is whether the correspondence shows an agreement upon which the minds of the parties met or whether the negotiations are equivalent to a communication there- of. Bascom v. Smith, 164 Mass. 61, 41 N. E. 130. A contract arises in that place where a valid acceptance of the offer is made and is put in the way of communication. Bennett v. Cosgrifl, 38 L. T. (N. S.) 177; Tay- lor V. Jones, 1 C. B. D. 87; Newcomb V. De Roos, 2 El. & El. 271 ; Cowan v. O'Connor, L. R. 20 Q. B. Div. 640; Boit V. Maybin, 52 Ala. 252. Where a party puts his acceptance in a way to reach the proponent in the natural course of things, a contract is thereby consummated between the parties. Morrison v. Tuska, 113 N. Y. S. 611. ■ '' Cleveland &c. R, Co. v. Shea, — Ind. — , 91 N. E. 1081 ; Trounstine v. Sellers, 35 Kans. 447, 11 Pac. 441; Cangas v. Rumsey Mfg. Co., 37 Mo. App. 297; Busher v. New York Life Ins. Co., 72 N. H. 551, 58 Atl. 41. Ac- cidental omission of the acceptance from a letter. Frith v. Lawrence, 1 Paige (N. Y.) 434. '* Groetzinger v. Wyman, 105 Iowa 574, 75 N. W. 512; Elastic Tip Co. v. Graham, 174 Mass. 507, 55 N. E. 315 ; Taylor Co. v. Bannerman, 120 Wis. 189, 97 N. W. 918; Happel v. Rosen- thal, 103 N. Y. S. 715. In the above case it is said that if the written agreement omits portions of the ver- bal understanding, the acceptance should not be signed without insisting on a correction of the writing if the acceptor does not wish to be bound by the written agreement in its then form. "= Tinn v. Hoffmann, 29 Law. Times (N. S.) 271; Block v. J. Stern & Sons, 152 111. App. 434; Metropolitan Coal Co. v. Boutell &c. Co., 196 Mass. 72, 81 N. E. 645. If an acceptance is made both orally and in writing the acceptor may rely on each to show a binding agreement. Beach &c. Co. v. American &c. Co., 202 Mass. 177, 88 N. E. 924. ^ Harvey v. Johnston, 6 C. B. 295, 304, Cresswell, J. : "If a man writes, send me such and such goods and I will pay for them, is not the sending of the goods, without more, an ac- ceptance of the offer?" Sellers v. Greer, 172 111. 549, 50 N. E. 246, 40 L. R. A. 589; Springer v. Cooper, 11 111. App. 267; Graves v. Smedes' Admr., 7 Dana (Ky.) 344. The bringing of a suit may show acceptance. Shreve- port Tract. Co. v. Mulhaupt, 122 La. 667, 48 So. 144. An offer may be ac- cepted by a performance of its condi- tions, in case the proposal does not stipulate the form of acceptance. Su- perior v. Douglas County Tel. Co., 141 Wis. 363, 122 N. W. 1023. See post, § 57, Sales. ""Household Fire &c. Ins. Co. v. Grant, 4 Exch. Div. 216; Kimbell v. Moreland, 55 Ga. 164; Kennedy v. Supreme Lodge K. of P., 124 111. App. 55; Dana v. Short, 81 111. 468; Thames Loan & Trust Co. v. Beville, 100 Ind. 309: Warner v. Marshall, 166 Ind. 88, 75 N. E. 582; Lynn v. Richardson, 151 Iowa 284, 130 N. W. 1097; Bourne v. Shapleigh, 9 Mo. App. 64; Busher v. New York life Ins. Co., 72 N. H. 551, 58 Atl. 41; Mactier's Admrs. v. Frith, 6 Wend. (N. Y.) 103; Baker v. Packard, 112 App. Div. (N. Y.) 543, 98 N. Y. S. 804, affd., 189 N. Y. 524, 82 N. E. 1124; Spier v. Hyde, 78 App. Div. (N. Y.) 151, 79 N. Y. S. 699; Haw- kinson v. Harmon, 69 Wis. 551, 35 N. W. 28; Shrewsbury v. Tufts, 41 W. Va. 212, 23 S. E. 692. § 44 CONTRACTS. 52 inchoate and unperfected. If the latter is true there is, of course, no contract.^* A contract entered into by means of such agency becomes complete when the latest proposition on the part of one is assented to by the other of the parties.^^ This happens at the time an unqualified assent to the offer is dropped in the post-office properly directed and stamped,^" unless the offer is so qualified as to require the actual receipt of the letter of acceptance before '"Bissenger v. Prince, 117 Ala. 480, 23 So. 67; Havens v. American Ins. Co., 11 Ind. App. 315, 39 N. E. 40; Wills V. Carpenter, 75 Md. 80, 25 Atl. 415; Ellis v. Block, 187 Mass. 408, IZ N. E. 475; Brown v. New York &c. R. Co., 44 N. Y. 79; Brauer V. Oceanic Steam Nav. Co., 11 App. Div. (N. Y.) 407, 79 N. Y. S. 299; Myers v. Smith, 48 Barb. (N. Y.) 614; Miller v. Leo, 35 App. Div. (N. Y.) 529, 55 N. Y. S. 165, affd. 165 N. Y. 619, 59 N. E. 1126. As in all other cases the offer must be un- conditionally accepted, (Franck v, McGilvray, 144 Mich. 318, 107 N. W. 886; Sennett v. Melville (Nebr.), 107 N. W. 991 ; Dougherty v. Briggs, 231 Pa. 68, 79 Atl. 924), in exact har- mony with the proposal. Eagle Mill Co. V. Caven, 76 Mo. App. 458. See also, Hollister Bros. v. Bluthenthal, 9 Ga. App. 176, 70 S. E. 970 ; Stroock Plush Co. V. Talcott, 134 N. Y. S. 1052. See ante, § 27. ™ Darlington Iron Co. v. Foote, 16 Fed. 646. See also. Union Service Co. v. Moffet-West Drug Co., 148 Mo. App. 327, 128 S. W. 7. AH the terms of the agreement need not be em- bodied in a single instrument. Fruit Dispatch Co. v. Gilinsky, 84 Neb. 821, 122 N. W. 45. '"Household Fire &c. Co. v. Grant, L. _R. 4 Exch. D. 216, 234. See, es- pecially, the remarks of Lord Bram- well. Adams v. Lindsell, 1 B. & Aid. 681; McGiverin v. James, 33 U. C. Q. B. 203; In re Dodge, 9 Ben. (U. S.) 482; Winterport &c. Co. v. The Jasper, 1 Holmes 99; Yonge v. Equi- table Life Assur. Soc, 30 Fed. 902 ; Darlington Iron Co. v. Foote, 16 Fed. 646; Sea Ins. Co. v. Johnston, 105 Fed. 286, 291, 44 C. C. A. 477; Levi- sohn V. Waganer, 76 Ala. 412; Linn V. McLean, 80 Ala. 360; Triple Link &c. Assn. v. Williams, 121 Ala. 138, 26 So. 19, n Am. St. 34; Levy v. Cohen, 4 Ga. 1 ; Bryant v. Booze, 55 Ga. 438; Haas v. Myers, 111 111. 421; Chytraus v. Smith, 141 111. 231, 257, 30 N. E. 450; Kentucky Mut. Ins. Co. V. Jenks, 5 Ind. 96; Swing v. Marion Pulp Co., 47 Ind. App. 199, 93 N. E. 1004; Moore v. Pierson, 6 Iowa 279, 71 Am. Dec. 409; Ferrier v. Storer, 63 Iowa 484, 19 N. W. 288, 50 Am. Rep. 752 ; Siebold v. Davis, 67 Iowa 560, 25 N. W. 778; Hunt v. Higman, 70 Iowa 406, 30 N. W. 769 ; Gipps Brewing Co. v. De France, 91 Iowa 108, 112, 58 N. W. 1087, 51 Am. St. 329; Chiles v. Nelson, 7 Dana (Ky.) 281; Northwestern JMut. L. Ins. Co. V. Joseph, 31 Ky. L. 714, 103 S. W. 317, 12 L. R. A. (N. S.) 439; Carter v. Hibbard, 26 Ky. L. 1033, 83 S. W. 112; Bailey v. Hope Ins. Co., 56 Maine 474; Wheat v. Cross, 31 Md, 99; Daily v. Preferred Masonic &c. Assn., 102 Mich. 289, 57 N. W. 184, 26 L. R. A. 171; Price v. Atkinson, 117 Mo. App. 52, 94 S. W. 816; Lungstrass v. German Ins. Co., 48 Mo. 201, 8 Am. Rep. 100; Lan- caster V. Elliott, 42 Mo. App. 503; Egger V. Nesbitt, 122 Mo. 667, 674. 27 S. W. 385, 43 Am. St. 596; Horton V. New York Life Ins. Co., 151 Mo. 604, 52 S. W. 356 ; Abbott v. Shepard, 48 N. H. 14; Davis v. Rfaz. Mut. F. I. Co., 67 N. H. 218, 34 Atl. 464; Busher v. New York Life Ins. Co., 72 N. H. 551, 58 Atl. 41; Hallock v. Commercial Ins. Co., 26 N. J. L. 268; Commercial Ins. Co. v. Hallock, 27 N. J. L. 645, 72 Am. Dec. 379; North- ampton &c. Ins. Co. V. Tuttle, 40 N. J. L. 476; Mactier v. Frith, 6 Wend. (N. Y.) 103, 21 Am. Dec. 262; Vas- sar V. Camp, 11 N. Y. 441. "The con- tract as made by letters must not be incomplete or indefinite in some sub- stantial provision or requirement." Stein Gray Drug Co. v. H. Michel- 53 OFFER AND ACCEPTANCE. § 44 the agreement is complete." Whether the correspondence con- stitutes a contract is a question of law for the court.^^ Posting an acceptance or an offer may be sufficient where it can be fairly inferred from the circumstances of the case that the ac- ceptance might be sent by post ; that is, where the circumstances sen Co., 116 N. Y. S. 789; Trevor v. Mich. 402, 28 N. W. 162- Greenwich Wood, 36 N. Y. 307; Watson v. Rus- Bank v. DeGroot, 7 Hun (N Y ) sell, 149 N. Y. 388, 391, 44 N. E. 161 ; 210. Delivery to a letter carrier while Hacheny &c. v. Leary, 12 Ore. 40, 7 in the performance of his duties is Pac. 329; Hamilton v. Lycoming M. sufficient. Pearce v. Langfit, 101 Pa. I. Co., 5 Pa. St. 339; McClintock v. 507. Contra in England. In re Lon- South Penn. Oil Co., 146 Pa. 144, 161, don & Northern Bank, 69 L. T. Ch. 23 Atl. 211; Otis v. Payne, 86 Tenn. 24, 81 Law T. (N. S.) 512. The 663, 8 S. W. 848; Blake v. Hamburg- rule that an acceptance becomes bind- Bremen F. I. Co., 67 Tex. 160, 2 S. ing when it is mailed, irrespective of W. 368; Haarstick v. Fox, 9 Utah the time it is received, and the rule 110, 33 Pac. 251; Durkee v. Ver- that the withdrawal of an offer op- mont Central R. R. Co., 29 Vt. 127; erates not from the time it is mailed, Washburn v. Fletcher, 42 Wis. 152. but only from the time it is actually Where one party proposes by mail a received, seems rather anomalous, contract with another residing at a But the anomaly, if any, arises from distance, and the latter accepts it the different nature of the two com- and deposits his acceptance by letter munications. If it was contemplated in the post-office, addressed and to by the parties that acceptance might be transmitted to the former, that be sent by post, the acceptor has contract is complete. The contract done all he is bound to do by post- must be carried out, and becomes ing the letter, but this cannot be said mutually obligatory upon both parties, as to the notice of withdrawal. This and 3. revocation of the proposal or was not a contemplated proceeding, a notice of its withdrawal takes ef- The person withdrawing is bound to feet only if received by the offerer bring his change of purpose to the before the mailing of the acceptance, knowledge of the other party. Ben- Taylor V. Merchants' Fire Ins. Co., ton v. Springfield Y. M. C. A., 170 9 How. (U. S.) 390. 13 L. ed. 187; Mass. 534, 49 N. E. 928, 64 Am. St. Patrick V. Bowman, 149 U. S. 411, 320. 37 L. ed. 790, 13 Sup. Ct. 811; Kemp- ''Cobb v. Dunlevie, 63 W. Va. 398, ner v. Cohn, 47 Ark. 519, 1 S. W. 60 S. E. 384. 869, 58 Am. Rep. 775 ; Moore V. Pier- == Henthorn v. Eraser (1892), L. son, 6 Iowa 279, 71 Am. Dec. 409; R. 2 Ch. 27; Scanlan v. Hodges, 52 Hand v. Marble Co., 88 Md. 226, 40 Fed. 354, 3 C. C A. 113; Ennis Atl. 899; Brauer v. Shaw, 168 Mass. Brown Co. v. Hurst, 1 Cal. App. 752, 198, 46 N. E. 617, 60 Am. St. 387; 82 Pac. 1056; Luckhart v. Ogden, 30 Vassar v. Camp, 11 N. Y. 441; Bris- Cal. 547; Ellis v. Crawford, 39 Cal. ban v. Boyd, 4 Paige (N. Y.) 17; 523; Telluride Power &c. Co. v. Clark V. Dales, 20 Barb. (N. Y.) 42; Crane Co., 103 III. App. 647, affd. 208 Stein Gray Drug Co. v. H. V. Mich- III. 218, 70 N. E. 319; Robinson Ma- elsen Co., 116 N. Y. S. (Mun. Ct.) chine Works v. Chandler, 56 Ind. 789; Hartford &c. Ins. Co. v. Lasher 575. In the above case the answer Stocking Co., 66 Vt. 439, 29 Atl. 629, was by telegram. Penn Investment 44 Am. St. 859. It is not when the Co. v. Wilson, 3 Kans. App. 651, 44 letter is written that controls, but Pac. 291 ; Van Valkenburg v. Rogers, when it is actually mailed. Averill 18 Mich. 180; Union Service Co. v. v. Hedge, 12 Conn. 424 ; Maclay v. Moffett-West Drug Co., 148 Mo. App. Harvey, 90 111. 525, 32 Am. Rep. 35. 327, 128 S. W. 7; Falls Wire Mfg. Co. Depositing it in a street mail box is v. Broderick, 12 Mo. App. 378. sufficient. Wood v. Callaghan, 61 § 45 CONTRACTS. 54 are such that it must have been within the contemplation of the parties that the post was to be or might be used as a means of com- municating an acceptance of the offer, then the acceptance by post is justified ; but it is generally stated that when a proposition is sent by mail the sender impliedly authorizes its acceptance through the same agency and that such implication arises when the post is used to make the offer and no other mode is suggested. ^^ This doctrine, however, is loosely stated. It certainly is somewhat artificial to speak of the person to whom the offer is made as having implied authority of the other party to send his accept- ance by post. He needs no authority to transmit the acceptance through any particular channel, he may select any means he pleases provided they are within the contemplation of the parties and according to the ordinary usages of mankind, the post-office no less than any other. To give effect to the rule as it is usually stated would be to limit the manner of acceptance to the method used in making known the proposal. If any other means of com- munication were adopted the acceptor would do so at his own risk.^* The post-office is merely an agent to convey communi- cations, not to receive them, and cannot be considered as the only means by which an acceptance may be communicated.^" § 45. Communications by telegraph. — There is but little, if any, difference between the rules governing contracts formed by correspondence through the post-olifice and those governing con- tracts made through communication by means of the telegraph.'" It is universally conceded that people may contract by means of telegraphic messages. ^^ Contracts thus formed are governed, the =" Lucas V. Western Union Tel. Co., 5 Atl. 362, 2 Am. St. 902. See also, 131 Iowa 669, 109 N. W. 191, 6 L, R. Tuttle v. Iowa State Traveling Men's A. (N. S.) 1016; Scottish-American Assn., 132 Iowa 652, 104 N. W. 1131, Mortg. Co. V. Davis, 96 Tex. 504, 74 7 L. R. A. (N. S.) 223. S. W. 17, 97 Am. St. 932. « Minnesota &c. Oil Co. v. Collier "Lucas V. Western Union Tel. Co., &c. Co., 4 Dill. (U. S.) 431, Fed. Cas. — Iowa — , 109 N. W. 191, 6 L. R. No. 9635. A. (N. S.) 1016. See also, Scottish- "Utiey v. Donaldson, 94 U. S. 29, American Mortg. Co. v. Davis, 96 24 L. ed. 54; Calhoun v. Atchison, 4 Tex. 504, 74 S. W. 17, 97 Am. St. 932. Bush. (Ky.) 261, 96 Am. Dec. 299; ^'Henthorn v. Fraser (1892), 2 Ch. Whaley v. Hinchman, 22 Mo. App. 27; Phenix Ins. Co. v. Schuhz, 80 483; Trevor v. Wood, 36 N. Y. 307, Fed. ii7, 22 C. C. A. 453; Perry v. 93 Am. Dec. 511; Duble v. Batts &c., Mount Hope Iron Co., 15 R. I. 380, 38 Tex. 312. 55 OFFER AND ACCEPTANCE. 45 same as all other contracts, by the general rules relative to offer and acceptance. A telegram, in order to constitute an offer, must be made with the intention to form a legal obligation or relation. It must not be intended only as a preliminary negotiation.''® The telegrams sent and received must be final,'" free from fatal ambi- guity or indefiniteness,*" and sufficiently designate the parties." And the answers must usually be given promptly in order to form a binding contract.^^ In short, they must show all the essential elements of the contract.^' As in the case of offer and acceptance by letter, the contract becomes complete at the time the acceptance is delivered to the telegraph company without reference to the time "' Strobridge Lithographing Co. v. Randall, 7Z Fed. 619, 19 C. C. A. 611; Williams v. Brickell, 37 Miss. 682, 75 Am. Dec. 88. ^In the case of Martin v. North- western Fuel Co., 22 Fed. 596, a proposition was made by the plain- tiff, by telegraph, to sell coal at a certain figure, to which the following reply was made : "Telegram received. You can consider the coal sold. Will be in Cleveland next week, and ar- range particulars." The question be- fore the court was whether these two despatches made a definite contract between the parties, whether there was a direct, unqualified acceptance of the terms offered. The court held that there was not (after citing ap- provingly the case of Myers v. Smith, 48 Barb. (N. Y.) 614), in the fol- lowing language: "So it seems to me that the telegram carrying to the proposed vendor a statement from the proposed vendee that he will come to Cleveland, to his place of business, and arrange particulars, carries with it a fair implication that the par- ticulars are to be arranged before the contract is finally consummated." " Breckenridge v. Crocker, 78 Cal. 529, 21 Pac. 179; North v. Mendel, 73 Ga. 400, 54 Am. Rep. 879; Watt V. Wisconsin Cranberry Co., 63 Iowa 730, 18 N. W. 898; Lincoln v. Erie Preserving Co., 132 Mass. 129; Hazard v. Day, 14 Allen (Mass.) 487, 92 Am. Dec. 790; Hastings v. Weber, 142 Mass. 232, 7 N. E. 846, 56 Am. Rep. 671; Palmer v. Marquette &c. Co., 32 Mich. 274; Williams v. Brick- ell, 37 Miss. 682, 75 Am. Dec. 88; Alexander v. Western Union Tel. Co., 67 Miss. 386, 7 So. 280; Rector Provision Co. v. Sauer, 69 Miss. 235, 13 So. 623; Whaley v. Hinchman, 22 Mo. App. 483; Marschall v. Eisen Vineyard Co., 7 Misc. (N. Y.) 674, 28 N. Y. S. 62 ; Moulton v. Kershaw, 59 Wis. 316, 18 N. W. 172, 48 Am. Rep. 516. See also. Miller v. Nu- gent, 12 Ind. App. 348, 40 N. E. 282. In this case defendant contracted orally to sell plaintiff his farm for $13,000, but, having an offer of $13,- 800, telegraphed plaintiff: "Will you take four hundred and let them have it, or will you take it at $13,400?" to which he replied by telegram, "I will take $400 and let them have the farm." There was no answer to this. It was held that plaintiff would not be entitled to $400 unless defendant sold the farm. ^^ Breckinridge v. Crocker, 78 Cal. 529, 21 Pac. 179; Brewer v. Horst & Lachmond, 127 Cal. 643, 60 Pac. 418, 50 L. R. A. 240; Watt v. Wisconsin Cranberry Co., 63 Iowa 730, 18 N. W. 898; Lincoln v. Erie Preserving Co., 132 Mass. 129; Crossett v. Carle- ton, 23 App. Div. (N. Y.) 366, 48 N. Y. S. 309. "' See ante, § 34, Time in which to accept. "Breckinridge v. Crocker, 78 Cal. 529, 21 Pac. 179. The telegrams may be signed by the parties or their agents. Cobb v. Glenn Boom &c. Co., 57 W. Va. 49, 49 S. E. 1005 ; Purdom Naval Stores Co. v. Western Union Tel. Co., 153 Fed. 327. § 45 CONTRACTS. 56 the telegram is actually received/* It has been held, however, that an acceptance by a telegram of an offer sent by mail and which does not specify any mode of acceptance does not complete the contract until the telegram is delivered to the sendee/^ This de- cision is based on the theory that the offerer by depositing his let- ter in the post-office selects a common agency through which to conduct the negotiations and there is consequently no implied au- thority granted by the offerer that acceptance may be communi- cated by telegram, and for this reason there is no acceptance until the actual receipt of the message by the proponent. It seems, how- ever, that such holding rests on no solid foundation. Unless par- ticularly limited as to the means by which acceptance shall be communicated, the acceptor may transmit his assent through any particular channel he may select or by any means he may choose, provided the means employed are sufficient, according to the ordinary usage of mankind, to carry notice of the acceptance to the offeree within a reasonable time.*'* But where the offer is made by telegram, there is more reason for requiring an answer by telegram or actual reception of the acceptance and while there is dictum to the effect that where an offer is made by telegram and the acceptance is sent by mail the contract is closed when !the letter accepting the offer is deposited in the post-office," its correctness may be ques- " Burton v. United States, 202 U. that the contract shall be complete S. 344, 50 L. ed. 1087, 26 Sup. Ct. only upon the actual delivery of the 688; Andrews v. Schreiber, 93 Fed. accepting message to the proponent, 367, affd. 101 Fed. 763; Minnesota such delivery is essential. Haas v. Linseed Oil Co. v. Collier &c. Co., 4 Myers, 111 111. 421, S3 Am. Rep. 634; Dill, (U. S.) 431, Fed. Cas. No. 9635; Lewis v. Browning, 130 Mass. 173. Garrettson v. North Atchison Bank, " Lucas v. Western Union Tel. Co., 47 Fed. 867, affd. 51 Fed. 168, 2 C. C. 131 Iowa 669, 109 N. W. 191, 6 L. A. 145; Price v. Atkinson, 117 Mo. R. A. (N. S.) 1016. See also, West- App. 52, 94 S. W. 816; Trevor v. ern Union Tel. Co. v. E. F. Connell Wood, 36 N. Y. 307, 93 Am. Dec. &c. Co., — Tex. Civ. App. — , 128 S. 511; Lungstrass v. Insurance Co., 48 W. 1162. Mo. 201, 8 Am. Rep. 100; Perry v. "= Henthorn v. Fraser (1892), L. R. Mt. Hope Iron Co., IS R. I. 380, 5 Atl. 2 Ch. 27. See also, Tuttle v. Iowa 632, 2 Am. St. R. 902 ; Western State Traveling Men's Assn., 132 Iowa Union Tel. Co.v. E. F. Connell Land 652, 104 N. W. 1131, 7 L. R. A. (N. Co., — Tex. Civ. App. — , 128 S. W. S.) 223. On this question of agency 1162; Malloy v. Drumheller, 68 see also. Pepper v. Telegraph Co., 87 Wash. 106, 122 Pac. 1005. See also, Tenn. 554, 11 S. W. 783, 4 L. R. A. Chesebrough v. Western Union Tel. 660, 10 Am. St. 699. Co., 135 N. Y. S. 583. However, if " Phenix &c. Ins. Co. v. Schultz, it is apparent that the parties intend 80 Fed. 337, 25 C. C. A. 453. 57 OFFER AND ACCEPTANCE. § 45 tioned, since the means employed to communicate the offer would indicate that there must be a prompt and immedi- ate acceptance. An offer by telegram might be regarded as implying that the proponent desired to be informed by the same prompt means of acceptance. Therefore, acceptance by letter might be evidence of an unreasonable delay.** But this does not mean that the acceptance must be sent by telegram and that the telegraph company is the agency through which the offerer in- tends that the negotiations are to be conducted. Such a narrow and technical holding would limit the acceptor to the particular company employed by the offerer. If he sent his message by any other company, there would be no acceptance until the telegram was received by the offerer. Such a holding would not be in accordance with reason. It is manifest that parties intend only that the negotiations shall be carried on by means that might be reasonably contemplated or that are equally as expeditious as the means employed in transmitting the offer. Whether or not communications carried on entirely by telegraph and letters com- bined constitute a contract is a question of law for the court.*" Since the rule is firmly established that a contract is complete the moment the letter of acceptance is posted or a telegram giv- ing assent is delivered to the telegraph company,"" it would logic- ally follow that the acceptor cannot revoke his acceptance after it has been mailed or delivered to the telegraph company. The minds of the parties have met and there is a concurrence upon a distinct proposition. And if the offerer is bound it must also be true that the acceptor is bound. Both must be bound or neither.''^ To hold that the acceptor might revoke his acceptance would be to hold, in effect, that the acceptance did not take effect until received by the offerer. It has been decided, however, by the Supreme Court of Texas that, in the absence of agreement expressed or implied, the mails or telegraph may be used as a means of acceptance of the terms of an offer, and that the one em- ploying either of such means of communication constitutes it his " Quenerduaine v. Cole, 32 Weekly ""See ante, §§ 44, 45, Acceptance by Rep. 185. mail and telegraph. I " American Jobbing Assn. v. James, " See ante, § 26, Aggregatio men- I 24 Okla. 460, 103 Pac. 670. See ante, tium— Mujualitx- Communication by letter. 46 CONTRACTS. 58 agent, and the offer or acceptance, as the case may be, can be recalled at any time prior to the actual delivery of the assent." § 46. Communications by telephone or phonograph. — Con- tracts may be consummated by means of telephonic conversa- tions. When a person places himself in connection vv^ith another by means of the telephone system he thereby invites communi- cation relative to his business through that channel.^^ In a recent case, referring to an argument against the validity of such a contract, it is said : "If by this is meant that a contract cannot be made by telephone conversation it is too late to so argue. A large part of our business transactions are, in this century, car- ried on by telephone. Our courts have long ago held that con- tracts made by telephone are as effective and binding in law as if made verbally between the parties standing face to face and carrying on the conversation which culminates in the contract. "°'' From the reasoning in a recent case, and pn principle, it would °^ Scottish-American Mortgage Co. V. Davis, 96 Tex. 504, 76 S. W. 17, 97 Am. St. 932; Flowers v. Sovereign Camp Modern Woodmen, 40 Tex. Civ. App. 593, 90 S. W. 526. These cases are decided on the theory that the mails or telegraph companies, as the case may be, are the agents of the one using them. The above cases simply hold that where the offerer has not, by conduct expressed or im- plied, constituted the mails his agent to receive acceptance, the offeree may revoke his mailed or telegraphed as- sent prior to its receipt by the offeree. See also, Sherrerd v. Western Union Tel. Co., 146 Wis. 197, 131 N. W. 341. Lord Bramwell in his dissent- ing opinion in the case of Household Fire Ins. Co. v. Grant, L. R. 4 Ex. Div. 203, 216, says "it" (meaning the letter of acceptance) "is revokable when sent by post," not that the let- ter can be got back, but that its arrival might be anticipated by hand or telegram, and there is no case to show that such anticipation would not prevent the letter from binding. It would be a most alarming thing to say it would ; and that a letter hon- estly but mistakably written and posted must bind the writer, if hours before its arrival he informed the person addressed that it was coming, but was wrong and recalled." " Bank of Yolo v. Sperry Flour Co., 141 Cal. 314, 74 Pac. 855, 65 L. R. A. 90; Wolfe v. Missouri Pac. R. Co., 97 Mo. 473, 11 S. W. 49, 3 L. R. A. 539. The operator may act as intermediary. Sullivan v. Kuyken- dall, 82 Ky. 483, 56 Am. Rep. 901; Oskamp v. Gadsden, 35 Nebr. 7, 52 N. W. 718, 17 L. R. A. 440. In the following cases the conversation over the telephone was supplemented by a subsequent writing. Monarch Elec- tric & Wire Co. v. Nat. Conduit & Cable Co., 138 Fed. 18; Williams v. Bedford Bank, 63 App. Div. (N. Y.) 278, 71 N. Y. S. 539. " St. Louis Maple &c Co. v. Knost, — Uo. — , 128 S. W. 532. As to what amounts to a sufficient identi- fication of the person with whom the conversation is had, see Planters' Cotton Oil Co. V. Western Union Tel Co., 126 Ga. 621, 55 S. E. 495, 6 L. R. A. (N. S.) 1180 and note; Knickerbocker Ice Co. v. Gardiner Dairy Co., 107 Md. 556, 69 Atl. 405. 16 L. R. A. (N. S.) 746; Barrett v. Magner, 105 Minn. 118, 117 N. W. 245, 127 Am. St. 531. 59 OFFER AND ACCEPTANCE. § 47 seem that a phonograph may be the means through which the offer may be made and its acceptance recorded. Communica- tions conducted through the medium of the telephone are held to be admissible in evidence at least in case where there is testi- mony that the voice was recognized. The ground for receiving the testimony on the phonograph would seem even stronger since in this case there is not only proof by the human witness of the making of the sounds to be reproduced, but a reproduction by the mechanical witness of the sounds themselves.^" § 47. Conduct as offer or acceptance. — It is not necessary that either the offer or acceptance be communicated by express words written or oral. The offer may be implied from the con- duct of the proponent and the acceptance express, or vice versa. For it is elementary that if one knowingly accepts and avails himself of a service performed by another, there may be implied a request and promise to pay therefor, although in fact it may not have been requested nor authorized.^" On the other hand, the offer may be express and the acceptance implied from the conduct of the one to whom the offer was made. If he does the work or bears the expense entailed by a compliance with the offer this usually constitutes an acceptance by conduct and the contract is complete and binding on the proponent."^ This prin- ciple is well illustrated by a recent ruling of the Supreme Court "Boyne City &c. Co. v. Anderson, Snyder v. Neal, 129 Mich. 692, 89 146 Mich. 328, 109 N. W. 429, 8 L. R. N. W. 588. A town which accepts A. (N. S.) 306. It must be under- water furnished it is liable for a rea- stood that in the foregoing cases in sonable compensation therefor. Port order to form a binding obligation Jervis Water Works Co. v. Port Jer- there must be present all the essen- vis, 151 N. Y. Ill, 45 N. E. 388. See, tial elements of the contract. however, Klug v. Sheriffs, 129 Wis. ""Ford V. Ward, 26 Ark. 360; Ab- 468, 109 N. W. 656, 7 L. R. A. (N. bott V. Third School Dist, 7 Maine S.) 362. See also. Post, ImpHed Con- 118; Indiana Mfg. Co. v. Hayes, 155 tracts. Pa. 160, 26 Atl. 6; Bartholomae v. "United States v. Carlisle, Fed. Paull, 18 W. Va. 771 ; Wheeler v. Cas. No. 14724 ; Mott v. Jackson, 172 Hall, 41 Wis. 447; Wellauer v. Fel- Ala. 448, 55 So. 528; Springer v. lows, 48 Wis. 105, 4 N. W. 114; Cooper, 11 111. App. 267. The per- Manitowoc Steam Boiler Works v. formance must be induced by the Manitowoc Glue Co., 120 Wis. 1, 97 offer. Schmitt v. Weil, 46 Ind. App. N. W. 515. Services by a stenogra- 264, 92 N. E. 178; Orme v. Cooper, 1 pher. Palmer v. Miller, 19 Ind. App. Ind. App. 449, 27 N. E. 655 ; Brad- 624, 49 N. E. 975. Services by a ford v. Brown, 11 Mart. (La.) (O. nurse. Baxter v. Knox (Ky.), 44 S. S.)217; Seal v. Erwin, 2 Mart. (La.) W. 972. Serving as farm hand. (N. S.) 245; Springfield v. Har- § 47 CONTRACTS. 60 of Vermont. It was shown that the deceased agreed to make certain provisions for her niece in consideration of her surren- dering her employment and rendering such services as the de- ceased might, during her Hfetime, require of her. The niece im- mediately gave up her employment and made full performance of the things required of her in the proposal of her aunt. This conduct was held to amount to a complete acceptance.^* So where a debtor offered to allow his creditor to take certain ma- chinery from his mill in satisfaction of the debt, the action of the creditor in taking such machinery four days thereafter con- stituted an acceptance of the proposition.*^" And where a land- owner, desirous of having a railroad constructed over his land, executed a written agreement "releasing to the company which undertakes to construct such road the right of way of lawful width through my land; * * * the damages to be assessed when the road is located, and the amount of such damages to be paid in stock in said railroad," it was held that the acceptance of such agreement by the railroad company by a resolution of its board of directors, followed by a construction of the road on the right of way so granted, rendered the agreement binding on the landowner without formal written notice of acceptance, inas- much as the construction of the road was equivalent thereto, and that a delay of three years in the construction of the road after the agreement was executed was not unreasonable, in view of the nature of the work to be done, including the organization of a company, and the raising of the money necessary for the enter- ris, 107 Mass. 532; Mauger v. Cros- Bunch, and the co-operation of the by, 117 Mass. 330; Allen v. Chonteau, latter in its execution, are sufficient 102 Mo. 309, 14 S. W. 869; Nichol- proof of its acceptance by them." son V. Acme &c. Co., — Mo. App. Atchison &c. R. Co. v. Miller, 16 — , 122 S. W. m. Kennedy v. Sie- Nebr. 661, 21 N. W. 451; Morse v. mers, 120 Mo. 12>, 25 S. W. 512, per Bellows, 7 N. H. 549, 28 Am. Dec. Macfarlane, J. : "We think there is 372 ; Hallock v. Commercial Ins. Co., no significance in the fact that the 26 N. J. L. 268; New York &c. R. Siemer agreement was not signed Co. v. Pixley, 19 Barb. (N. Y.) 428; by Brault and Bunch, the other par- Patton v. Hassinger, 69 Pa. St. 311; ties interested in and to be benefited Lamb v. Prettyman, 33 Pa. Super, by it. Its acceptance by them was Ct. 190; Hooker v. Hyde, 61 Wis. sufficient to bind them to its cov- 204, 21 N. W. 52. enants and conditions. Wiggins °' Porter v. Evert's Estate, 81 Vt. Ferry Co. v. Chicago &c. R. Co., IZ 517, 71 Atl. 722. Md. 389 ; Heim v. Vogel, 69 Mo. 529. '° Watters v. Glendenning, 87 Wis. The written assignment of the con- 250, 58 N. W. 404. tract by Mrs. Brault, attested by 6 1 OFFER AND ACCEPTANCE. § 47 prise ; and hence that such delay did not invaHdate the acceptance, time not being declared to be the essence of the contract.""* It is obvious, however, that before there can be an acceptance by conduct the offer must be one capable of being so accepted, in which case the doing of the act will constitute the acceptance. The acts intended as an acceptance of the proposal must be done openly. They must amount to an absolute and unconditional ac- ceptance,"^ and be such that knowledge of them as an acceptance may be communicated to the proponent."* '"' Hoffman v. Bloomsburg &c. R. 106, 89 Pac. IS, 10 L. R. A. (N. S.) Co, 157 Pa. St. 174, 27 Atl. 564, per 1138; Garst v. Harris, 177 Mass. 72, curiam: "Such acceptance was not 58 N. E. 174; Walters v. Glenning. late by reason of the delay of over 87 Wis. 250, 58 N. W. 404. Both the three years. No time was specified offer and acceptance may be implied, in the agreement, and from the na- Indiana Mfg. Co. v. Hayes, 155 Pa. ture of the work to be done, the 160, 26 Atl. 6. time required to organize the com- "Warner v. Wilhngton, 3 Drew, pany and raise the money necessary 523; Trounstine v. Sellers, 35 Kans. for the enterprise, it was not in- 447, 11 Pac. 441; Beckwith v. Chee- tended that it should in any manner ver, 21 N. H. 41 ; White v. CorHes, ^ be of the essence of the contract. 46 N. Y. 407. The purpose of the appellant as °^ Morton v. Burn, 7 Ad. & El. 19 ; shown was to secure the building of Sumner v. Thompson, 31 N. S. 481 ; the railroad, and as soon as the com- Old Jordan &c. Co. v. Societe &c.. pany was in condition to build, it was 164 U. S. 261, 41 L. ed. 427, 17 Sup. contemplated that it should then en- Ct. 113; Whitney v. Wyman, 101 U. ter upon the right of way thus S. 392, 25 L. ed. 1050; Sanford v. granted. No time was designated for Howard, 29 Ala. 684, 68 Am. Dec. acceptance, and a reasonable time 101 ; Marshall v. Old, 14 Colo. App. was intended. Time does not be- 32, 59 Pac. 217; Stanton v. New York come of the essence of a contract, &c. R. Co., 59 Conn. 272, 22 Atl. 300, unless so declared or indicated by 21 Am. St. 110; Lauder v. Peoria &c. the circumstances. Shaw v. Turn- Trotting Society, 71 111. App. 475 ; pike Co., 2 Pen. & W. 454 ; Hewson More v. Habbard, IS Ind. App. 84, 42 V. Paxson, 38 Leg. Int. 308; Barnard N. E. 962; Moore v. McKenney, 83 V. Lee, 97 Mass. 92. The delay un- Maine 80, 21 Atl. 749, 23 Am. St. der the circumstances of this case 953; Howe v. Taggart, 133 Mass. was not unreasonable, and it does 284; Wellington v. Apthorp, 145 not appear by the evidence that ap- Mass. 69, 13 N. E. 10; Batelle v. pellant himself so treated or con- Northwestern &c. Co., 2)1 Minn. 89, sidered it." Where a franchise fails ii N. W. 327 ; Allen v. Chouteau, 102 to provide any manner for accept- Mo. 309, 14 S. W. 869; W. W. Ken- ance, use of the franchise constitutes dall &c. Co. v. Bain, 46 Mo. App. 581 ; an acceptance, (City of Superior v. Pettis v. Asphalt Co., 71 Nebr. 513, Douglas County Tel. Co., 141 Wis. 363, 99 N. W. 235 ; Morse v. Bellows, 7 122 N. W. 1023 ; Heath v. Silverthorn N. H. 549, 28 Am. Dec. 372 ; Strong &c. Co., 39 Wis. 146; Madison &c. v. Sheffield, 144 N. Y. 392, 39 N. E. Co. V. Reynolds, 3 Wis, 287), and 330; Elting v. Vanderlyn, 4 Johns, where goods are taken by the pur- (N. Y.) 237; Crook v. Cowan, 64 N. chaser without objection to the terms Car. 743; Thomas v. Croft, 2 Rich, of the sale it is an acceptance in ac- L. (S. Car.) 113, 44 Am. Dec. cordance to such terms. Dent v. 279; Yancey v. Brown, 3 Sneed Steamship Co., 49 N. Y. 390. See (Tenn.) 89; Erbacher v, Seefeld, 92 also, Bauman v. McManus, 75 Kans. Wis. 350, 66 N. W. 252, Even when § 48 CONTRACTS. 62 § 48. Silence does not always give consent. — Perhaps it would be more accurate if this section were headed, "Silence but rarely gives consent." It is even doubtful whether silence will of itself ever constitute an acceptance in ordinary cases, but silence coupled with other circumstances may do so. Where hides were shipped to the defendant in a manner similar to the '■way in which they had been sent several times before and the defendant remained silent for an unreasonable length of time and he had reason to suppose that the plaintiff would presume from his silence that the hides were accepted, it was held that his fail- ure to give notice entitled the plaintiff to recover.*^^ Likewise, the retention of a contract without any express acceptance or rejection may raise a question as to whether an acceptance may not be inferred from such silence."* But in each of these cases there was something more than silent assent. In one the goods were retained for an unreasonable length of time, in the other, the contract was kept by the acceptor in his possession. In a re- cent case the head-notes state that "assent to the stipulations of a parol contract may be implied by silent acquiescence."^^ In this case the facts show that the defendant advertised pasture for horses. The parties to the suit had a conversation over the telephone relative to the pasturing of plaintiff's horse, nothing being said about its condition. The horse was taken to the pas- ture by the plaintiff's agent. The defendant then saw that it was blind and informed the agent that there were at least a dozen places in the pasture where a blind horse might kill itself. It was, however, turned in the pasture by the agent and was later killed by falling in a well. This silence on the part of the plain- tiff's agent was construed as an agreement to the defendant's an act is done showing an intention this information is obtained by the to accept, it may be insufficient to proponent is immaterial. German constitute an acceptance. New v. Sav. Bank v. Roofing Co., 112 Iowa Germania Fire Ins. Co., 171 Ind. 33, 184, 83 N. W. 960, 88 Am. St. 335, 51 85 N. E. 703. In case there has been L. R. A. 758. a modified acceptance and the mod- ™ Hobbs v. Massasoit Whip Co., ification is not expressly acquiesced 158 Mass. 194, 33 N. E. 495; to the in, but the parties nevertheless pro- same efl'ect, Wheeler v. Klaholt, 178 ceed with the agreement as though Mass. 141, 59 N. E. 756. the condition had been accepted, the "Robertson v. Tapley, 48 Mo. App. agreement is valid. McKell v. Chesa- 239. peake &c. R. Co., 175 Fed. 321, 99 C. ""Wilensky v. Martin, 4 Ga. App. C. A. 109. The manner in which 187, 60 S. E. 1074. 63 OFFER AND ACCEPTANCE. § 49 offer to keep the horse only at the risk of the plaintiff. Here again the leaving of the horse would indicate an acceptance. In any event, the silence must be under such circumstances as amount to an acquiescence before it is equivalent to an acceptance."" § 49. Performance or acceptance of consideration as an ac- ceptance of the offer. — The performance or acceptance of the consideration is sometimes mentioned as a valid and binding as- sent to a proposal. This is no doubt true, but it is hardly proper that such matters be included under the heading "offer and ac- ceptance." They amount to an executed consideration and vi^ill be discussed under that head in the chapter on Consideration."' § 50. Acceptance must be by an ascertained person. — As has been seen, the offer may or may not be made to a particular individual."^ If the offer is made by public advertisement for the recovery of property and the like, the proposal is open to the public generally and any one vi^ho performs its condition is en- titled to the reward. It is an offer to become liable to any oncj who meets its terms. It was originally held that the performance of such a proposal imposed no liability on Ihe offerer because "it was not averred nor declared to whom the offer was made.""® This rule no longer obtains and by the modern doctrine an offer need not be made to an ascertained person but no contract is formed until it has been accepted by an ascertained person. The offer is made to those who do accept, not those who may. The truth of this will become apparent in the consideration of the fol- lowing specific instances. '"Huckv. Flentye, 80 111.258; Whit- eflfect a contract binding upon him man Agricultural Co. v. Hornbrook, under the statute of frauds. Godkin 24 Ind. App. 25S; Royal Ins. Co. v. v. Weber, 154 Mich. 207, 117 N. W. Beatty, 119 Pa. 6, 12 Atl. 607. Com- 628, 20 L. R. A. (N. S.) 498. pare Ind. Mfg. Co. v. Hayes, ISS Pa. "' See, however, Meridian Life &c. St. 160, 26 Atl. 6. Where A offered to Co. v. Eaton, 41 Ind. App. 118, 82 buy B's horse for a certain price, N. E. 480, in which the court holds adding "If I hear no more about him, that a party cannot accept the benefits I consider the horse is mine at that of a contract and at the same time re- price," and no answer was returned, fuse to be bound by its terms. See it was held that there was no con- also. Miller v. McManis, 56 111. 126; tract. Felthouse v. Bindley, 11 C. Pickrel v. Rose, 87 111. 263. B. (N. S.) 869. Mere failure of one "See ante, § 32. who has made a verbal offer to pur- "^ Weeks v. Tybald, Noy 11, 1 Rolle chase chattels .to reply to a letter ac- Ab., 6 M. PI. 1. cepting the offer has been held not to § 51 CONTRACTS. 64 § 51. Rewards. — The publication of an advertisement of- fering a reward is a general offer to make a contract with any person who is able to perform the required services and meet the conditions of the proposal. The performance of the service, or the performance of the condition on which the promise is made, with knowledge, is an acceptance of the offer, and, when done, concludes the contract. The matter rests exclusively in the do- main of contracts involving an offer and its acceptance.'" This being true, it logically follows that a reward cannot be earned by one who did not know it had been offered, for there can be no acceptance of an uncommunicated offer. This view is supported by the weight of authority.'^ There are a few cases which hold that one may earn a reward by services rendered without knowl- edge of the offer. Some of the cases so holding, in effect, base their decisions on the moral obligation to pay.''^ Others hold "Williams v. Carwardine, 4 B. & Ad. 621; McClaughry v. King, 147 Fed. 463, 79 C. C. A. 91, 7 L. R. A. (N. S.) 216; Campbell v. Mercer, 108 Ga. 103, 33 S. E. 871; Bank of Minneapolis v. GrifSn, 66 111. App. 577; Cummings v. Clinton Co., 181 Mo. 162, 79 S. W. 1127; Broadnax V. Ledbetter, 100 Tex. 375, 99 S. W. 1111, 9 L. R. A. (N. S.) 1057. See also, Hayden v. Songer, 56 Ind. 42; Wentworth v. Day, 3 Mete. (Mass.) 352; Crowell v. Hopkinson, 45 N. H. 9; Reif v. Paige, 55 Wis. 496, 13 N. W. 473. " Chicago &c. A. R. Co. v. Sebring, 16 111. App. 181 ; Ensminger v. Horn, 70 111. App. 605; Williams v. West Chicago St. R. Co., 191 111. 610, 61 N. E. 456, 85 Am. St. 278; Fitch V. Snedaker, 38 N. Y. 248, 97 Am. Dec. 791 ; Rowland v. Lounds, 51 N. Y. 604, 10 Am. Rep. 654; Couch v. State, 14 N. Dak. 361, 103 N. W. 942; Stamper v. Temple, 6 Humph. (Tenn.) 113, 44 Am. Dec. 296; Bent V. Wakefield Bank, L. R. 4 C. P. D. 1 ; Thatcher v. England, 3 C. B. 254. See also. Tamer v. Walker, L. R. 2 Q. B. 301, 36 L. J. Q. 112; Williams V. Carwardine, 4 Barn. & Add. 621 ; Hewitt V. Anderson, 56 Cal. 476, 38 Am. Rep. 65 ; Marvin v. Treat, 37 Conn. 96, 9 Am. Rep. 307 ; Lee v. Trus- tees of Flemingsburg, 7 Dana (Ky.) 29; overruled. Auditor v. Ballard, 9 Bush. (Ky.) 572, 15 Am. Rep. 728. So where the plaintiff's information leading to the conviction of persons charged with a murder was given before he knew of the offer of a re- ward for the conviction of the mur- derers, he is not entitled to the re- ward. Judgment, 94 111. App. 385, affd. Williams v. West Chicago St. R. Co., 191 111. 610, 61 N. E. 456, 85 Am. St. 278; Broadnax v. Ledbet- ter, 100 Tex. 375, 99 S. W. 1111, 9 L. R. A. (N. S.) 1057 and note. Some cases hold that the act must be done, not only with knowledge of, but also with the intention to claim, the re- ward. Hewitt V. Anderson, 56 Cal. 476, 38 Am. Rep. 65. If it appears that information was given which led to the detection of a crime by reason of fear of punishment for complicity and not for the reward, a judgment for defendant in an action for the re- ward will not be disturbed. Vitty v. Eley, 51 App. Div. (N. Y.) 44, 64 N. Y. S. 397. The motives which prompted compliance with the terms of the reward are immaterial. Wil- liams V. Carwardine, 4 Barn. & Ad. 621. But see Vitty v. Eley, 51 App. Diy. (N. Y.) 44, 64 N. Y. S. 397. '^ Dawkins v. Sappington, 26 Ind. 199; Auditor v. Ballard, 9 Bush. (Ky.) 572, IS Am. Rep. 728. See also. 65 OFFER AND ACCEPTANCE. 51 that a performance of the conditions is an acceptance of the offer/^ Not only must the services be rendered with knowledge of the offer but their performance must be a substantial compli- ance with the conditions of the proposal." Thus, a reward offered for the arrest of an offender is not earned by giving in- formation which leads to his arrest. ''° Likewise, if the reward is offered for the arrest of a fugitive, it seems the one arrested must actually be a fugitive to entitle the one making the arrest to the reward offered.''' Nor will part performance of its condi- tions entitle one to the reward." It is held, however, that the Gibbons v. Proctor, 64 L. T. (N. S.) 594; Drummond v. U. S., 35 Ct. CI. (U. S.) 356; Burke v. Wells & Far- go, SO Cal. 218; Eagle v. Smith, 4 Houst. (Del.) 293. It has been held that the claimant of the reward may recover even though he apprehends the criminal before the reward is of- fered, but does not deliver him over until after the reward is offered. Cof- fey v. Commonwealth, — Ky. — , Ji] S. W. 575. In the jurisdiction so holding it is unnecessary to plead knowledge. Everraan v. Hyman, 26 Ind. Aop. 165, 28 N. E. 1022, 84 Am. St. 284; Clinton Co. v. Davis, 162 Ind. 60, 69 N. E. 680, 64 L. R. A. 780. " Russell V. Stewart, 44 Vt. 170. In the above case payment was not con- tested because of want of knowledge. In the following cases it does not definitely appear whether the one claiming the reward had knowledge that it had been offered at the time of performance. Campbell v. Mercer, 108 Ga. 103, iZ S. E. 871 ; Curamings V. Clinton Co., 181 Mo. 162, 79 S. W. 1127. The decisions holding contrary to the general rule are criticized by text writers, and, in the main, justly so. For as is said in a note on p. 14 of Wald's Pollock of Contracts (3rd), "They are utterly inconsistent with the idea that the obligation to pay the reward arises out of con- tract." It would seem that these cases have, however, been decided on a mis- taken theory. Had they been deter- mined on the ground that the publica- tion of the offer was a constructive offer to any one who did comply with its conditions it is difficult to see where the inconsistency would arise. 5 — Contracts, Vol. I In other words, give the publication of the offer the same effect as is given a legal publication. "Haskell v. Davidson, 91 Maine 488, 40 Atl. 330, 64 Am. St. 254. '"McClaughry v. King, 147 Fed. 463, 79 C. C. A. 91, 7 L. R. A. (N. S.) 216; Burke v. Wells &c. Co., 50 Cal. 218; Everman v. Hyman, 3 Ind. App. 459, 29 N. E. 1140; Lovejoy v. Atchison &c. R. Co., S3 Mo. App. 386; In re Walker, 9 Pa. Dist. Cts. 121; Sias V. Hallock, 14 Nev. 332; Kinn v. First Nat. Bank, 118 Wis. 537, 95 N. W. 969, 99 Am. St. 1012. It has been held that the arrest must be legal in order to entitle the one making the arrest to the reward. Marking v. Neevy, 8 Bush. (Ky.) 22; Moore v. Peace, — Ky. — , 97 S. W. 762; Mor- ris V. Kasling, 79 Tex. 141, IS S. W. 226, 11 L. R. A. 398n. '" Goldsborough v. Cradle, 28 Md. 477; State v. Clark, 61 Mo. 263; Monroe v. Bell (Miss.), 18 So. 121. See also, Currie v. Swindall, 11 Ired. (N. Car.) 361. Contra, Mont- gomery Co. v. Robinson, 85 111. 174; Hogg V. Commonwealth, 3 Ky. L. 470. In case a reward is offered for the person who steals a horse, one who arrests a man guilty of stealing a mule does not earn the reward. Commonwealth v. Edwards, 10 Phil. (Pa.) 215; Commonwealth v. David- son, 4 Pa. Dist. 172. "Van Horn v. Rick Water Co., 115 Cal. 448, 47 Pac. 361 ; Hogan v. Sto- phlet, 179 111. 150, 53 N. E. 604, 44 L. R. A. 809; Partin v. Snider, 8 Ky. L. 616; Pool V. Boston, 5 Cush. (Mass.) 219; Jones v. Phoenix Bank, 8 N. Y. 228 ; Adair v. Cooper, 25 Tex. 548. In 52 CONTRACTS. 66 arrest need not be made personally and alone in order to earn the reward. He may have the assistance of an officer." Or he may hire another to make the arrest as his agent or servant." § 52. Rew^ard — Who may not accept. — By the decided weight of authority a public officer cannot claim a reward for the apprehension of a criminal whom he was in duty bound to arrest.^" This ruling is based on public policy and sound morals case the reward is offered for the ar- rest of two persons, the apprehension of one does not entitle one making the arrest to the reward. Blain v. Pacific Exp. Co., 69 Tex. 74, 6 S. W. 679. But where one in order to save himself kills a fugitive he is entitled to the reward offered for his arrest. Mosley v. Stone, 108 Ky. 492, 56 S. W. 965. If the delivery is to be made at a particular jail, the delivery to an officer of the law does not entitle the one first making the arrest to the re- ward. Clanton v. Young, 11 Rich. L. (S. Car.) 546. It is otherwise, how- ever, if the officer delivers the felon to the designated jail. Williams v. Thweatt, 12 Rich. (S. Car.) 478. " Swanton v. Ost, 74 111. App. 281 ; Stone V. Wickliffe, 106 Ky. 252, 50 S. W. 44; Crawshaw v. Roxbury, 7 Gray (Mass.) 374; Besse v. Dyer, 9 Allen, (Mass.) 151; Ralls Co. v. Stevens, 104 Mo. App. lis, 78 S. W. 291. _ ™ Montgomery Co. v. Robinson, 85 111. 174; Pruitt V. Miller, 3 Ind. 16; Heather v. Thompson, 25 Ky. L. 1554, 78 S. W. 194. But see, Juniata Co. v. McDonald, 122 Pa. 115, 15 Atl. 696. By statute in Mississippi, "Any per- son who shall arrest any one who has killed another and is fleeing or at- tempting to flee before arrest and shall deliver him up for trial shall be entitled to the sum of $100." For de- cision under this statute see, lata- waraba Co. v. Candler, 62 Miss. 193 ; Newton Co. v. Dolittle, 72 Miss. 929, 18 So. 451; Wilson v. Wallace, 64 Miss. 13, 8 So. 128; Martin v. Copiah Co., 71 Miss. 407, 15 So. 73 ; Gould v. Chickasaw Co., 85 Miss. 123, 37 So. 710. '"Witty v. Southern Pac. Co., 76 Fed. 217; Spinney v. United States, 32 Ct. CI. 397; St. Louis &c. R. Co. v. Grafton, 51 Ark. 504, 11 S. W. 702, 14 Am. St. 66; Lees v. Colgan, 120 Cal. 262, 52 Pac. 502, 40 L. R. A. 355 ; Ho- gan V. Stophlet, 179 111. 150, 53 N. E. 604, 44 L. R. A. 809; Marking v. Needy &c., 8 Bush. (Ky.) 22; Smitha V. Gentry, 20 Ky. L. 171, 45 S. W. 515, 42 L. R. A. 302; Pool v. Boston, 5 Cush. (Mass.) 219; Warner v. Grace, 14 Gil. (Minn.) 364; Day v. Putnam Ins. Co., 16 Gil. (Minn.) 365; Ex parte Gore, 57 Miss. 251; Monroe County V. Bell, — Miss. — , 18 So. 121; Gould V. Chickasaw County, 85 Miss. 123, 37 So. 710 ; Kick v. Merry, 23 Mo. 72, 66 Am. Dec. 658; Thorn- ton V. Missouri P. R. Co., 42 Mo. App. 58; Atwood v. Armstrong, 102 App. Div. (N. Y.) 601, 92 N. Y. S. 596; Malpass v. Caldwell, 70 N. Car. 130; Somerset Bank v. Edmund, 76 Ohio St. 396, 81 N. E. 641, 11 L. R. A. (N. S.) 1170; Rea v. Smith, 2 Handy (Ohio) 193; Gilmore v. Lewis, 12 Ohio 281 ; Brown v. Sandusky Coun- ty, 24 Ohio C. C. 481; Smith v. Whildin, 10 Pa. 39, 49 Am. Dec. 572 ; Commonwealth v. Harshman, 20 Pa. St. Co. Ct. 666; Commonwealth v. Lane, 28 Pa. Super. Ct. 149; Common- wealth V. Edwards, 6 Lack. (Pa.) Legal News 44 ; Commonwealth v. Riker, 6 Lack, (Pa.) Legal News 46; Commonwealth v. Hobbs, 3 Del. Co. (Pa.) 97; Stamper v. Temple, 6 Humph. (Tenn.) 113, 44 Am. Dec. 296. But it has been held by the United States Supreme Court that if a statute authorizing a reward is broad enough to include an officer, he is entitled to the reward on comply- ing with the conditions under which it is offered. United States v. Mat- thews, 173 U. S. 381, 43 L. ed. 738, 19 Sup. Ct, 413. See, however, dicta in Means v. Hendershott, 24 La. 78. 6/ OFFER AND ACCEPTANCE. § 53 and has been held to apply although the arrest was made by the officer when ofif duty," or when he makes the arrest without war- rant if it was his duty to make the arrest, notwithstanding the lack of any warrant.*^ However, if the officer is not in duty bound to make the arrest without a warrant, he may earn a re- ward for an arrest when made without process/^ This brings us to the exception to the general rule, which is, that an officer can earn a reward for the arrest of a person if he was under no obligation, because of his official character, to make the arrest.** § 53. Tickets, receipts and the like. — A great many con- tracts are now made by delivery by one of the contracting parties to the other of a document in a common form, stating the terms by which the person delivering it will enter into the proposed contract. Such a form constitutes the offer of the party tender- ing it. If the form is accepted without objection by the person to whom it is tendered, this person is, as a general rule, bound by its contents; and his act amounts to an acceptance of the offer made to him, whether he reads the document or otherwise in- forms himself of its contents or not.*" This rule apphes where ''In re Russell, 51 Conn. 577, SO v. Sandusky Co., 24 Ohio C. C. 481. Am. Rep. 55. It has also been held that an officer °^ Witty V. Southern P. Co., Id Fed. has a right to a reward oflfered for 217; Warner v. Grace, 14 Minn. 487. the arrest of one who has jumped his '"Creamer v. Hall, 2 Del. Co. (Pa.) bond, since the reward is offered not 378; Davis v. Munson, 43 Vt. 676, 5 because of the commission of the Am. Rep. 315; Russell v. Stewart, 44 crime but by the surety for his own Vt. 170; Kinn v. First Nat. Bank, 118 individual benefit and to save himself Wis. 537, 95 N. W. 969, 99 Am. St. from loss as surety on the bail bond. 1012. Curran v. Collier (Ind. Ter.), 104 S. ^ Smith V. Vernon County, 188 Mo. W. 572. 501, 87 S. W. 949, 70 L. R. A. 59, 107 "^ Watkins v. Rymill, L. R. 10 Q. B. Am. St. 324; Pyle v. Sweigart, 18 D. 178; Zunz v. South Eastern R. Co., Lane. L. Rev. (Pa.) 81; Kasling v. L. R. 4 Q. B. 539; Harris v. Great Morris, 71 Tex. 584, 9 S. W. 739, 10 Western R. Co., L. R. 1 Q. B. D. 515; Am. St. 797. If he makes, an ar- Parker v. South Eastern R. Co., L. R. rest outside the limits of the territory 2 C. P. D. 416; Burke v. South East- in which he is called upon to act he is em R. Co., L. R. 5 C. P. D. 1 ; Bank entitled to the reward. Bronnenberg of Kentucky v. Adams Ex. Co., 93 U. v. Coburn, 110 Ind. 169, 11 N. E. 29; S. 174, 23 L. ed. 874; Southern R. Co. Gregg V. Pierce, 53 Barb. (N. Y.) v. White, 108 Ga. 201, 33 S. E. 952; 387, or if he arrests a fugitive for Freeman v. Atchison &c. R. Co., 71 another state. Morrell v. Quarles, 35 Kans. 327, 80 Pac. 592; Coburn v. Ala. 544; Smith v. Vernon County, Morgan's &c. R. Co., 105 La. 398, 29 188 Mo, 501, 87 S. W. 949, 70 L. R. A. So. 882, 83 Am. St. 242; Grace v. 59, 107 Am. St. 324. Contra, Rea v. Adams, 100 Mass. 505, 1 Am. Rep. Smith, 2 Handy (Ohio) 193; Brown 131, 97 Am. Dec. 117; McMillan v. § 53 CONTRACTS. 68 the person buying the ticket^" or bill of lading" knows the terms and conditions on which it is issued. In case he does not know of the special terms incorporated in the ticket or other paper given him it then often becomes a question of fact whether the notice given was reasonably sufficient to inform the party of its conditions.** It has been held that if one signs a ticket"" even Michigan &c. R. Co., 16 Mich. 79, 93 Am. Dec. 208; Heffron v. Detroit City R. Co., 92 Mich. 406, 52 N. W. 802, 16 L. R. A. 34S, 31 Am. St. 601; Collender v. Dismore, 55 N. Y. 200, 14 Am. Rep. 224; Magnin v. Dins- more, 56 N. Y. 168; Kirkland v. Dins- more, 62 N. Y. 171, 20 Am. Rep. 475 ; Long V. New York &c. R. Co., 50 N. Y. 76; Madan v. Sherard, 1i N. Y. 329, 334, 29 Am. Rep. 153; Gulf &c. R. Co. V. Riney, 41 Tex. Civ. App. 398, 92 S. W. 54 ; Schaller v. Chicago &c. R. Co., 97 Wis. 31, 71 N. W. 1042. See also, Denton v. Great Northern R. Co., 5 El. & Bl. 860; Sears v. East- ern R. Co., 14 Allen (Mass.) 433. One accepting a street car transfer which states on its face that the trans- fer is to be made at a certain point has no right to attempt to make the transfer before such point is reached, although the cars from and to which the transfer is made run over the same track to the transfer point. Shortsleeves v. Capital Tract. Co., 28 App. D. C. 365, 8 L. R. A. (N. S.) 287; Perry v. Metropolitan St. R. Co., 58 Mo. App. 75. The time with- in which the transfer is to be used may also be limited. Hornesby v. Georgia R. &c. Co., 120 Ga. 913, 48 S. E. 339; Garrison v. United R. &c. Co., 97 Md. 347, 99 Am. St. 452, 55 Atl. 371. But as to the cars of the company being late and preventing the making of the transfer within the time prescribed see. Little Rock Tract. &c. Co. v. Winn, 75 Ark. 529, 87 S. W. 1025; Heffron v. Detroit City R. Co., 92 Mich. 406, 52 N. W. 802, 31 Am. St. 601, 16 L. R. A. 345 ; Hanna v. Nassau Electric R. Co., 45 N. Y. S. 437, 18 App. Div. 137 ; Jen- kins V. Brooklyn Heights R. Co., 29 App. Div. 8, 51 N. Y. S. 216; Golden V. Pittsburg R. Co., 28 Pa. Super. Ct. 313. '"Hanlon v. Illinois Cent. R. Co., 109 Iowa 136, 80 N. W. 223; Coburn V. Morgan's Louisiana &c. R. Co., 105 La. Ann. 398, 29 So. 882, 83 Am. St. 242 ; Trezona v. Chicago Great West- ern R. Co., 107 La. 22, 11 N. W. 486, 43 L. R. A. 136; Bowers v. Pitts- burg &c. R. Co., 158 Pa. St. 302, 27 Atl. 893 ; Houston &c. R. Co. v. Arey, 18 Tex. Civ. App. 457, 44 S. W. 894 ; Muldoon v. Ry. Co., 10 Wash. 311, 38 Pac. 995, 45 Am. St. 787. °' Merchants' &c. Transp. Co. v. Joesting, 89 III. 152; Smith v. Ex- press Co., 108 Mich. 572, 66 N. W. 479; Texas &c. R. Co. v. Gallagher (Tex Civ. App.), 70 S. W. 97. See also, 4 Elliott on Railroads (2d ed.), § 1423. "= Acton V. Packets Co. (Q. B.), 73 Law T. 158; McGhee v. Drisdale, 111 Ala. 597, 20 So. 391 ; Boylan v. Hot Springs R. Co., 132 U. S. 146, 33 L. ed. 290, 10 Sup. Ct. SO. A ware- house receipt which has stamped on its face, "at owner's risk" exempts the warehouseman from examining the goods to detect leakage. Taussig v. Bode, 134 Cal. 260, 66 Pac. 259, 54 L. R. A. 774; Garden Grove Bank v. Huneston &c. R. Co., 67 Iowa 526, 25 N. W. 761 ; Hewett v. Chicago &c. R. Co., 63 Iowa 611, 19 N. W. 790; Rob- inson V. Transportation Co., 45 Iowa 470; Mulligan v. Illinois &c. R., 36 Iowa 181, 14 Am. Rep. 514; Walker v. Price, 62 Kans. 327, 62 Pac. 1001, 84 Am. St. 392; Grace v. Adams, 100 Mass. 505, 1 Am. Rep. 131, 97 Am. Dec. 117; Rahilly v. St. Paul Stc. R. Co., 66 Minn. 153, 68 N. W. 853; Aiken v. Wabash R. Co., 80 Mo. App. 8; Zimmer v. New York Cent. &c. R. Co., 137 N. Y. 460, Zi N. E. 642; Bal- lon V. Earle, 17 R. I. 441, 22 Atl. 1113. 14 L. R. A. 433, 33 Am. St. 881. ™ Watson V. New York &c. R. Co., 24 Misc. (N. Y.) 628, 54 N. Y. S. 201 ; Daniels v. Florida &c. R. Co., 62 S. Car. 1, 39 S. E. 762; Boylan v. Hot 6g OFFER AND ACCEPTANCE. § 53 though hastily,®" or even where he fails to sign"^ the purchaser is bound by its conditions, the fact that he was required to sign and the very appearance of the ticket giving him notice that it contained special provisions. Such tickets are sometimes termed "contract tickets." The sale of a ticket at a reduced rate is no- tice that it contains conditions."" Likewise a pass is notice that |there are special provisions in the contract of carriage."^ The i above rules also apply to bills of lading. Where the terms of ship- ' ment appear on the face of the bill the shipper is bound regard- less of whether or not he read its terms,®* and even though he may not be able to read.°° Springs R. Co., 132 U. S. 146, 33 L. 442, 48 L. ed. 742, 24 Sup. Ct. SIS. He ed. 290, 10 Sup. Ct. 50. is deemed to have accepted the condi- ■" Bethea v. Northeastern R. Co., 26 tion. Quimby v. Boston &c. R. Co., S. Car. 91, 1 S. E. 372. 150 Mass. 365, 23 N. E. 205, 5 L. R. "'Fonseca v. Cunard Steamship Co., A. 846. 153 Mass. 553, 27 N. E. 665, 25 Am. « Mouton v. Louisville &c. R. Co., St. 660, 12 L. R. A. 340. 128 Ala. 537, 29 So. 602; St. Louis &c. " St. Louis &c. R. Co. V. Weakley, R. Co. v. Weakley, 50 Ark. 397, 8 S. SO Ark. 397, 8 S. W. 134, 7 Am. St. W. 134, 7 Am. St. 104; Michalitschke 104; Holing v. St. Louis &c. R. Co., v. Wells, Fargo & Co., 118 Cal. 683, 50 189 Mo. 219, 88 S. W. 35; Bissell v. Pac. 847; Overland Mail &c. Co. v. New York Central R. Co., 25 N. Y. Carroll, 7 Colo. 43, 1 Pac. 682; Cal- 442, 82 Am. Dec. 369; Watson v. deron v. Steamship Co., 64 Fed. 874; Louisville &c. R. Co., 104 Tenn. 194, Pacific Express Co. v. Foley, 46 Kans. 56 S. W. 1024, 49 L. R. A. 454; Ran- 457, 26 Pac. 565, 26 Am. St. 107; Cox chau V. Rutland R. Co., 71 Vt. 142, 43 v. Central Vermont R. Co., 170 Mass. Atl. 11, 76 Am. St. 761. In case such 129, 49 N. E. 97; Graves v. Express a ticket provides that it must be Co., 176 Mass. 280, 57 N. E. 462; stamped before returning this provi- Smith v. Express Co., 108 Mich. 572, sion is binding even though the holder 66 N. W. 479 ; Christenson v. Ameri- can not read. Watson v. Louisville can Express Co., 15 Minn. 270, 2 Am. &c. R. Co., 104 Tenn. 194, 56 S. W. Rep. 122; St. Louis &c. R. Co. v. 1024, 49 L. R. A. 454. This rule does Cleary, 77 Mo. 634, 46 Am. Rep. 13 ; not apply when full fare is charged. Wyrick v. Missouri &c. R. Co., 74 Boyd v. Spencer, 103 Ga. 828, 30 S. Mo. App. 406; McFadden v. Missouri E. 841, 68 Am. St. 146; Norman v. Pacific R. Co., 92 Mo. 343, 4 S. W. Southern R. Co., 65 S. Car. 517, 44 S. 689, 1 Am. St. 721; Durgin v. Express E. 83, 95 Am. St. 809; Dagnall v. Co., 66 N. H. 277, 20 Atl. 328, 9 L. R. Southern R. Co., 69 S. Car. 110, 48 S. A. 453; Merrill v. American Express E. 97. Co., 62 N. H. 514; Hill v. Syracuse, "' Griswold v. New York &c, R. Co., Binghamton &c. R. Co., 73 N. Y. 351, S3 Conn. 371, 4 Atl. 261, 55 Am. Rep. 29 Am. Rep. 163 ; Phifer &c. v. Caro- 115; Illinois &c. R. Co. v. Read, 37 lina Cent. R. Co., 89 N. Car. 311, 45 111 484, 87 Am. Dec. 260; Quimby v. Am. Rep. 687; Johnstone v. Rich- Boston &c. R. Co., 150 Mass. 365, 23 mond &c. R. Co., 39 S. Car. 55, 17 S. N. E. 205, S L. R. A. 846; Squire v. E. 512; Davis v. Central Vermont R. New York Central Ry. Co., 98 Mass. Co., 66 Vt. 290, 29 Atl. 313, 44 Am. 239 93 Am Dec. 162 ; Perkins v. New St. 852. See also, 4 Elliott on Rail- York Central R. Co., 24 N. Y. 196, 82 roads (2nd ed.), § 1607; Cau v. Am Dec 282n ; Gulf &c. R. Co. v. Texas &c. R. Co., 194 U. S. 427, 48 L. McGown, 65 Tex. 640 ; Boering v. ed. 1053, 24 Sup. Ct. 663. Chesapeake Beach R. Co., 193 U. S. ""Jones v. Cincinnati &c. R. Co., 89 § 53 CONTRACTS. 70 To this general rule, however, there are a number of exceptions or qualifications. In the first place the nature of transactions may be such that the person accepting the ticket, bill of lading or the like may believe and justly so, that it contains no terms other than those already agreed upon and that it is merely an acknowledgment thereof not intended to introduce any special terms.*" Thus where a passenger enters into an oral agreement with a railroad company, he has a right to assume in the absence of any notice to the contrary that the ticket given him embodies the terms of the agreement.'^ So, ordinarily, when a shipper is given a bill of lading which embodies terms different from those orally agreed upon, he is not bound thereby."^ Nor will, it seems, Ala. 376, 8 So. 6l'. See also, Rogers v. Lombard Ayres & Co., 164 N. Y. 324, Kennebec Steamship Co., 86 Maine 58 N. E. 44; Pittsburgh &c. R. Co. v. 261, 29 Atl. 1069, 25 L. R. A. 491; Blakemore, 1 Ohio Cir. Ct. 42, 1 Quimby v. Boston &c. R. Co., 150 Ohio C. D. 26; Galveston &c. R. Co. Mass. 365, 23 N. E. 205, 5 L. R. A. v. Botts, 22 Tex. Civ. App. 609, 55 S. 846; 4 Elliott on Railroads (2d ed.), W. 514; Gulf &c. R. Co. v. Combes § 1607. &c., — Tex. Civ. App. — , 80 S. W. ""See Parker v. South Eastern R. 1045; Gulf &c. R. Co. v. Funk, 42 Co., L. R. 2 C. P. D. 416; Southern Tex. Civ. App. 490, 92 S. W. 1032. Pac. Co. v. Artderson, 26 Tex. Civ. See also, 4 Elliott on Railroads (2d App. 518, 63 S. W. 1023. ed.), § 1423. Under such circum- " Indianapolis &c. R. Co. v. Cox, 29 stances the bills of lading are only Ind. 360, 95 Am. Dec. 640 ; Callaway evidence of the date and amount of v. Mellett, 15 Ind. App. 366, 44 N. E. shipment. St. Louis &c. R. Co. v. El- 198, 59 Am. St. 238; Malone v. Bos- gin &c. Milk Co., 74 111. App. 619, ton &c. R. Corp., 12 Gray (Mass.) affd. 175 111. 557, 51 N. E. 911, 67 Am. 388, 74 Am. Dec. 598; Aplington v. St. 238. Where the carrier and ship- Pullman Co., 110 App. Div. (N. Y.) per enter into an oral agreement by 250, 97 N. Y. S. 329, 17 N. Y. Ann. the terms of which the liability of the Cas. 455; Gulf &c. R. Co. v. Copeland, carrier is unlimited and subsequently 17 Tex. Civ. App. 55, 42 S. W. 239. a bill of lading is given him contain- See also, Cincinnati &c. R. Co. v. ing restrictive features the shipper Harris, 115 Tenn. 501, 91 S. W. 211. must give his express- assent thereto " Northwest &c. Co. v. McKenzie, in order to relieve the carrier of its 25 Can. Sup. Ct. 38; Merchants &c. common-law liability. Michigan Cen- Co. V. Furthmann, 149 111. 66, 36 N. tral Ry. Co. v. Boyd, 91 111. 268; Gott E. 624, 41 Am. St. 265, affd. 47 111. v. Dinsmore, 111 Mass. 45; Gann v. App. 561; Stoner v. Chicago &c. R. Chicago &c. R. Co., 72 Mo. App. 34; Co., 109 Iowa 551, 80 N. W. 569; Mis- Bostwick v. Baltimore &c. R. Co., 45 souri Pac. R. Co. v. Beeson, 30 Kans. N. Y. 712; Gains v. Union Transpor- 298, 2 Pac. 496; Caldwell v. Felton, tation &c. Co., 28 Ohio St. 418; Mo- 21 Ky, L, 397, 51 S. W. 575; Louis- bile &c. R. Co. v. Jurey, 111 U. S. 584, villa &c. R. Co. V. Cooper, 21 Ky. L. 28 L. ed. 527, 4 Sup. Ct. 566, and it 1644, 56 S. W. 144; Rudell v. Ogdens- may be necessary that this release be burg Transit Co., 117 Mich. 568, 76 N. supported by a valid consideration. W. 380, 44 L, R. A. 415 ; Southard v. Kansas Pacific Ry. Co. v. Reynolds, Minneapolis &c. Ry., 60 Minn. 382, 62 17 Kans. 251 ; Plendrick v. Boston &c. N. W. 442, 619; Germania Fire Ins. R. Co., 170 Mass. 44, 48 N. E. 835; Co. v. Memphis &c. R. Co., 72 N. Y. Texas &c. R. Co. v. Avery 19 Tex. 90, 28 Am. Rep. 113; Lowenstein v. Civ. App. 235, 46 S. W. 897;' Missouri 71 OFFER AND ACCEPTANCE. § 53 a receipt which the shipper puts in his pocket and does not read vary the terms of a verbal agreement entered into before the giv- ing of the receipt. Assent to the alleged change cannot be inferred from his acceptance of the folded writing.^' Nor does it apply in those cases where there is no actual notice given pf the terms and conditions on which the ticket is sold and the ticket itself does not give the purchaser reasonable notice thereof.^ Nor is a shipper bound who is given no opportunity to examine his bill of lading.^ &c. Ry. Co. V. Carter, 9 Tex. Civ. App. (m, 29 S. W. 565 ; San Antonio R. Co. V. Wright, 20 Tex. Civ. App. 136, 49 S. W. 147; Gulf &c. R. Co. v. House &c., 40 Tex. Civ. App. 105, 88 S. W. 1110; Strohn v. Detroit & Mil- waukee R. Co., 21 Wis. 562, 94 Am. Dec. 564. See also, 5 Cent. L. J. 134. The written contract may, however, be signed under such circumstances as to supersede the oral agreement. Helm V. Missouri Pac. R. Co., 98 Mo. App. 419, 72 S. W. 148. And see, Mc- Fadden v. Missouri Pac. R. Co., 92 Mo. 343, 4 S. W. 689, 1 Am. St. 721. The verbal agreement may be waived. Wabash Ry. Co. v. Wright, 75 111. App. 243. '"This same rule applies when the prior agreement was in writing. Farmers Loan & Trust Co. v. North- ern &c. R. Co., 120 Fed. 873, 57 C. C. A. 533, affd. 195 U. S. 439, 49 L. ed. 269, 25 Sup. Ct. 84. This is certainly true where he has a right to believe that the receipt does not change the terms. Stoner v. Chicago &c. R. Co., 109 Iowa 551, 80 N. W. 569. ^ Richardson v. Browntree, L. R. (1894) App. Cas. 217; Potter v. Ma- jestic, 60 Fed. 624, 9 C. C. A. 161, 23 L. R. A. 746; The Majestic, 56 Fed. 244 ; Wiegand v. Cent. R. Co., 75 Fed. 370; Phillips v. Georgia &c. Banking Co., 93 Ga. 356, 20 S. E. 247 ; Boyd v. Spencer, 103 Ga. 828, 30 S. E. 841, 68 Am. St. 146; Kansas &c. R. Co. v. Rodabaugh, 38 Kans. 45, 15 Pac. 899, 5 Am. St. 715 ; Quimby v. Vanderbilt, 17 N. Y. 306, 72 Am. Dec. 469; Run- yan v. Cent. R. Co., 61 N. J. L. 537, 41 Atl. 367, 43 L. R. A. 284, 68 Am. St. 711; Cole v. Goodwin, 19 Wend. (N. Y.) 251, 32 Am. Dec. 470; Raw- son V. Pennsylvania R. Co., 48 N. Y. 212, 8 Am. Rep. 543; Kent v. Balti- more &c. R. Co., 45 Ohio St. 284, 12 N. E. 798, 4 Am. St. 539; Lake Shore &c. R. Co. V. Mortal, 8 Ohio C. D. 134; Mack &c. Co. v. Great West- ern Dispatch, 2 Ohio C. D. 22; Pennsylvania R. Co. v. Spicker, 105 Pa. St. 142; Arnold v. Pennsyl- vania R. Co., 115 Pa. St. 135, 8 Atl. 213, 2 Am. St. 542; Louisville &c. R. Co. V. Turner, 100 Tenn. 213, 47 S. W. 223, 43 L. R. A. 140 ; San Antonio &c. R. Co. V. Newman, 17 Tex. Civ. App. 606, 43 S. W. 915 ; The Majestic, 166 U. S. 375, 41 L. ed. 1039, 17 Sup. Ct. 597. "If the ticket constituted the contract in part, it could only become binding, on the plaintiff in the event of his knowing or discovering its pro- visions or his attention being drawn thereto, and whether he was negligent in not discovering the same would, at most, be a question for the jury." Aplington v. Pullman Co., 110 App. Div. (N. Y.) 250, 97 N. Y. S. 329, 17 N. Y. Ann. Cas. 455. For instance in which the notice has been unreason- able see, "See back" on face of ticket. The Majestic, 166 U. S. 375, 41 L. ed. 1039, 17 Sup. Ct. 597. Handing pas- senger folded ticket. Richardson v. Browntree, L. R. (1894) App. Cas. 217. Insufficient light by which to read terms and was assured by agent that it was all right. Callaway v. Mel- lett, 15 Ind. App. 366, 44 N. E. 198, 59 Am. St. 238. See also, Blossom v. Dodd, 43 N. Y. 264, 3 Am. Rep. 701. Expressed in marks which are unin- telligible. Madam v. Sherard, Ti N. Y. 329, 29 Am. Rep. 153. Or cannot be readily understood by a person of ordinary intelligence. O'Rourke v. Citizens' Street R. Co., 103 Tenn. 124, 52 S. W. 872, 76 Am. St. 639, 46 L. R. A. 614. ^Chicago &c. R. Co. v. Simon, 160 § 53 CONTRACTS. 72 It is obvious that if the conditions were printed in such manner as to be fraudulent/ misleading and the instrument does actually mislead the person to whom it is made* or if through mistake on the part of the agent, the ticket is so limited that it would be im- possible to use it^ the acceptor is not bound. It has also been held that if the conditions are unreasonable or irrelevant to the main purposes of the contract they are of no binding force." This would be true of a ticket having on it a condition that the goods depos- ited in a cloak room should become the absolute property of the railway if not removed in two days.^ As appears from the cases cited in this section the general rule set out at its beginning is sought most frequently to be applied in contracts entered into with common carriers. In such cases a con- fusing element is apt to enter in. There is usually an attempt on the part of the carrier to limit or avoid its common-law liability. As to whether or not this may be done is something that does not concern offer and acceptance.^ However, there is one question in- volved in such cases that does concern itself with offer and accept- ance and that is whether, as in the case of rewards, the terms of the offer must be actually brought to the attention of the adverse party. It has been held by many cases that where a common car- rier seeks to avoid its common-law liability it must call special at- tention to the terms which do this to the party to be bound there- in. 648, 43 N. E. 596. As to bills of sold the plaintiff which through mis- lading see, M. C. R. Co. v. Mfg. Co., take was made to expire on the day 16 Wall. (U. S.) 318, 21 L. ed. 297; it was issued. It was held that the iVIerchants &c. Transp. Co. v. Furth- plaintiff would not be compelled to mann, 149 111. 66, 36 N. E. 624, 41 Am. stand on the contract as written nor St. 265 ; Newell v. Smith, 49 Vt. 255 ; have the mistake reformed in equity. New York &c. Co. v. Sayles, 87 Fed. ° Company may make reasonable 444; Ryan v. M. K. & T. R. Co., 65 rules. Shortsleeves v. Capital Trac. Tex. 13, 57 Am. Rep. 589; Perry v. Co., 28 App. D, C. 365, 8 L. R. A. (N. Thompson, 98 Mass. 249. S.) 287; Cherry v. Chicago &c. R. ' Watkins v.. Rymill, L. R. 10 Q. B. Co., 191 Mo. 489, 90 S. W. 381, 2 L. D. 178. R. A. (N. S.) 695; O'Rourke v. *The case of Henderson v. Steven- Street R. Co., 103 Tenn. 124, 52 S. W. son (L. R. 2 H. L. 470), is an il- 872, 46 L. R. A. 614, 76 Am. St. 639; lustration of this. A particular clause Louisville &c. R. Co. v. Turner, 100 of a bill of lading will not be given a Tenn. 213, 47 S. W. 223, 43 L. R. A. hidden or obscure meaning. Texas 140. &c. R. Co. V. Reiss, 183 U. S. 621, 46 ' Parker v. South Eastern Ry. Co., L. ed. 358, 22 Sup. Ct. 253. L. R. 2 C. P. D. 416. ° Krueger v. Chicago &c. R. Co., 68 ° See post, § 765 et seq. Agreements Minn. 445, 64 Am. St. 487. In the exempting from liability for negli- above case a 2,000-mile ticket was gence. TZ OFFER AND ACCEPTANCE. § 53 by." The reason for the ruling given in such jurisdictions is that tickets are usually bought in haste and that the ticket is not a contract but merely the evidence of one, i. e., the oral contract entered into before the delivery of the ticket.'" Consequently if the ticket is bought under such circumstances as to furnish the purchaser with full opportunity for examination," it may be said. °Wiegand v. Cent. R. Co., 75 Fed. 370; Boyd v. Spencer, 103 Ga. 828, 30 S. E. 841, 68 Am. St. 146; Illinois Central R. Co. v. Beebe, 174 111. 13, 50 N. E. 1019, 66 Am. St. 253, 43 L. R. A. 210, affd. 69 111. App. 363; Illi- nois Central R. Co. v. Carter, 165 111. 570, 46 N. E. 374, 36 L. R. A. 527 ; re- versing 62 111. App. 618; Chicago &c. R. Co. V. Simon, 160 111. 648, 43 N. E. 596; Chicago &c. R. Co. v. Davis, 159 111. 53, 42 N. E. 382, SO Am. St. 143 ; Kansas City &c. R. Co. v. Rode- baugh, 38 Kans. 45, 15 Pac. 899, 5 Am. St. 715 ; Newberger Cotton Co. v. Illinois Cent. R. Co., 75 Miss. 303, 23 So. 186; Gardner v. Southern R. Co., 127 N. Car. 293, 37 S. E. 328; Nor- man V. Southern R. Co., 65 S. Car. 517, 44 S. E. 83, 95 Am. St. 809; Lou- isville &c. R. Co. V. Turner, 100 Tenn. 213, 47 S. W. 223, 43 L. R. A. 140; The Majestic, 166 U. S. 375, 41 L. ed. 1039, 17 Sup. Ct. 597 ; M. C. R. Co. v. Mfg. Co., 16 Wall. (U. S.) 318, 21 L. ed. 297. ^° Henderson v. Stevenson, L. R. 2 H. L. 470; Mauritz v. New York &c. R. Co., 23 Fed. 765 ; Boyd v. Spen- cer, 103 Ga. 828, 30 S. E. 841, 68 Am. St. 148; Aiken v. Southern R. Co., 118 Ga. 118, 44 S. E. 828, 62 L. R. A. 666, 98 Am. St. 107; Kansas City &c. R. Co. V. Rodebaugh, 38 Kans. 45, 15 Pac. 898, 5 Am. St. 715 ; Burnham V. Grand Trunk R. Co., 63 Maine 298, 18 Am. Rep. 220 ; Sears v. Eastern R. Co., 96 Mass. 433, 92 Am. Dec. 780; Brown v. Eastern R. Co., 11 Cush. (Mass.) 97. Even though the pas- senger may not be able to read. O'Reagan v. Steamship Co., 160 Mass. 356, 35 N. E. 1070, 39 Am. St. 484; Fonseca v. Steamship Co., 153 Mass. 553, 27 N. E. 665, 12 L. R. A. 340, 25 Am. St. 660; Logan v. Hannibal &c. R. Co., n Mo. 663, 12 Am. & Eng. R. Cas. 140; Steers v. Steamship Co., 57 N. Y. 1, 15 Am. Rep. 453; Quimby v. Vanderbilt, 17 N. Y. 306, 72 Am. Dec, 469; Rawson v. Pennsylvania R. Co., 48 N. Y. 212, 8 Am. Rep. 543; John- son V. Concord R. Corp., 46 N. H. 213, 88 Am. Dec. 199; Gordon v. Man- chester &c. R. Co., 52 N. H. 596, 13 Am. Rep. 97 ; Cleveland &c. R. Co. v. Bartram, 11 Ohio St. 457; Baltimore &c. R. Co. V. Campbell, 36 Ohio St. 647, 38 Am. R. 617; Kent v. Balti- more &c. R. Co., 45 Ohio St. 284, 12 N. E. 798, 4 Am. St. 539; O'Rourke v. Citizens St. R. Co., 103 Tenn. 124, 52 S. W. 872, 46 L. R. A. 614, 76 Am. St. 639 ; Eddy v. Harrris, 78 Tex. 661, 15 S. W. 107, 22 Am. St. 88; McCol- lum V. Southern Pac. R. Co., 31 Utah 494, 88 Pac. 663. The ticket is but the evidence of the contract. It is the act of the carrier over which the passenger has no control. The car- rier is alone responsible for mistakes therein and their consequences. The passenger has a right to presume and rely upon the ticket as correctly ex- pressing the contract. Cincinnati &c. R. Co. V. Harris, 115 Tenn. 501, 91 S. W. 211, 5 L. R. A. (N. S.) 779. Nor- man V. Southern R. Co., 65 S. Car. 517, 44 S. E. 83, 95 Am. St. 809. (In Louisville & N. R. Co. v. Turner, 100 Tenn. 213, 47 S. W. 223, 43 L. R. A. 140, it was held the printing of re- striction on the back; of a local ticket and its acceptance by the passenger is in the absence of actual notice of such restrictions and assent thereto does not render them binding on the passenger.) This case also gives prominence to the haste with which tickets are usually bought. On this later point see also, Norman v. South- ern R. Co., 65 S. Car. 517, 44 S. E. 83, 95 Am. St. 809. " Mere acceptance of a bill of la- ding does not as a matter of law show an acceptance of its terms. Chi- cago &c. R. Co. v. Stock Farm, 194 111. 9, 61 N. E. 1095, 88 Am. St. 68; § 54 CONTRACTS. 74 at least with plausibility, that the reason for the rule fails and is no longer applicable. § 54. Deeds. — Under this heading all contracts under seal will be considered although a majority of the cases will have to do with transfers of realty. At this point it would be well to note the variance between the law of United States and England. Thus will be made apparent, what, at first, seems as anomalous holding by the courts of the latter country and the American rule emphasized by such comparison. It is well settled in England that a deed may be binding on the obligor before it comes into the custody of the obligee, and even before he knows of it.^^ This consequence arises from the inherent nature of a deed. History reveals that the very object of a sealed writing was to dispense with any other form of proof, as the hazards of oath, ordeal, trial by combat, and the like. The maker acknowledged himself actually bound and, except in special and exceptional cases, was estopped from disputing its validity. Whether a deed should in modern law, retain its ancient qualities does not concern us. However, until a deed is accepted by the obligee it is merely an offer which he may refuse, ^^ because it is well settled that no matter how formal a document may be and how it may purport to bind a party, until acceptance by the person to be benefited thereby it is a mere offer,^* but, according to the English rule it is one that can- not be withdrawn. As a consequence of these rules of law a propo- sal made by deed, though the deed itself until acceptance is a mere offer, is binding on the obligor before the obligee either accepts or knows of the offer, and is irrevocable ; thus where a policy of insurance, purporting to be signed, sealed and delivered in the presence of a witness by the directors of an insurance company, was left in the company's office to be sent for by the insured, Chicago &c. R. Co. V. Simon, 160 111. Xenos v. Wickham, L. R. 2 H. L. 648, 43 N. E. 596; Erie &c. Transpor- 296, 36 L. J. C. P. 313. Compare tation Co. v. Dater, 91 111. 195, 33 Am. Dillon v. Coppin, 4 M. & Cr. 647 ; Rep. 51; Gamies v. Union Trans. &c. Roberts v. Security Co. (1897), 1 Q. Co., 28 Ohio St. 418. B. D. Ill; Exton v. Scott, 6 Sim. 31. ^Doe V. Knight, 5 B. & C. 671; "Xenos v. Wickham, L. R. 2 H. Hall V. Palmer, 3 Hare 532; Fletch- L. 296, 312. er V, Fletcher, 4 Hare 67; In " Dickison v. Dodds, L. R. 2 Ch. re Dodds, 60 L. J. Q. B. 599 ; Crack- Div. 463, 473. nail V. Janson, L. R. 11 Ch. D. 1; 75 OFFER AND ACCEPTANCE. § 55 according to the usual practice, it was held to be a valid policy and binding upon the company, though they canceled it while it remained in their possession." A father, being displeased with his son, executed a deed giving his wife $ioo per annum in aug- mentation of her jointure; he kept the settlement in his own power, and on being reconciled to his son, canceled it. The wife found the deed after his death, and on a trial at law, the deed being proved to have been executed, was adjudged good, though canceled.^* § 55. Deeds — Subject continued. — A woman executed a deed, by which she covenanted to stand seized to the use of her- self, remainder to a child, her nephew, in fee. She kept this deed in her possession and afterward burnt it and made a new settle- ment; it was held that the first settlement was valid and a per- petual injunction was granted against the party claiming under the second.^' Where a bond was executed for the benefit of a woman with whom the grantor had cohabited, though retained in the hands of the testator's solicitor, and quite unknown to her till his death, it was declared to be valid for her benefit.^^ So in another case where a man had executed a deed in favor of his illegitimate son, though unknown to the son, and the deed was kept in, the grantor's possession, and not discovered until after his death, it was held to entitle the son to sue his estate for the amount. ^° And in delivering a learned and elaborate opinion in a leading case on this subject,^" it has been said : "Upon these au- thorities, it seems to me, where an instrument is formally sealed and delivered, and there is nothing to qualify the delivery but the keeping of the deed in the hands of the executing party, nothing to show he did not intend it to operate immediately, that it is a valid and effectual deed, and that delivery to the party who is to take by it, or to any person for his use, is not essential." According to this English doctrine contracts under seal do not have their in- "Xenos V. Wickham, L. R. 2 H. "Hall v. Palmer, 13 L. J. (N. S.) L. 296. Ch. 352, 3 Hare 532. '"See dictum of Bailey, J., in Doe "Doe v. Lewis, 11 C. B. 1035; V. Knight, 5 B. & C. 671, 690. Fletcher v. Fletcher, 4 Hare 67. "Naldred v. Gilham, 1 Pr. Wms. "°Doe v. Knight, S B. & C. 671, 577. 692. § 56 CONTRACTS. 1^ ception in proposal and acceptance, and the rules touching propo- sal and acceptance, their communication and revocation have no place in contracts by deed and are entirely inapplicable. § 56. The American doctrine as to deeds and sealed instru- ments. — The old common-law rule has been altered by the courts of this country. Here the law is well settled that a sealed instrument in order to take effect must be delivered by the grantor, and actually or by implication be accepted as his own by the grantee. A deed takes effect only from its delivery ; either express or implied. They are necessarily simultaneous and cor- relative acts.^^ The mere subscribing and sealing, accompanied with the ordinary attestation of those acts by the witnesses, fol- lowed by the grantor keeping the deed in his own custody, are not sufficient to constitute a legal delivery of a sealed instru- ment.-^ The English cases which have established the doctrine that a deed can be effective without the grantee's knowledge or ''Tibbals v. Jacobs, 31 Conn. 428; Merrills v. Swift, 18 Conn. 257 ; Stall- ings V. Newton, 110 Ga. 875, 36 S. E. 227; Desmond v. Lanphier, 86 111. App. 101 ; Hawes v. Hawes, 177 111. 409, 53 N. E. 78; Pratt v. Griffin, 184 111. 514, 56 N. E. 819; Berry v. Anderson, 22 Ind. 36; Hawkes v. Pike, 105 Mass. 560; Meigs v. Dex- ter, 172 Mass. 217, 52 N. E. 75; Hef- fron V. Flanigan, 37 Mich. 274; Pen- nington V. Pennington, 75 Mich. 600, 42 N. W. 985 ; Bisard v. Sparks, 133 Mich. 587, 95 N. W. 728; Ligon v. Barton, 88 Miss. 135, 40 So. 555; Young V. Elgin (Miss.), 27 So. 595; Parmelee v. Simpson, 5 Wall. (U. S.) 81, 18 L. ed. 542; Younge v. Gail- beau, 3 Wall. (U. S.)_636, 18 L. ed. 262. From the execution and record of a deed delivery is presumed. Mc- Reynolds v. Grubb, ISO Mo. 352, 51 S. W. 822. An instrument transfer- ring property even though recorded, cannot be given effect to the preju- dice of third parties, who acquired rights in the property before the ac- tual delivery of the conveyance. Barnes v. Cox, 58 Nebr. 675, 79 N. W. 550. Church V. Oilman, 15 Wend. (N. Y.) 656; Stilwell v. Hubbard, 20 Wend. (N. Y.) 44; Clay v. Cline, 18 Ohio Cir. Ct. 89, 9 Ohio C. D. 871 ; Payne v. Hallgarth, 33 Ore. 430, 54 Pac. 162; Cameron v. Gray, 202 Pac. 566, 52 Atl. 132; Blackmore v. Crutcher, — Tenn. Ch. App. — , 46 S. W. 310. But the recording of a deed by one not authorized so to do by the grantor will not be given the effect of a delivery of the deed. Blackman v. Schierman, 21 Tex. Civ. App. 517, 51 S. W. 886; Gaines v. Kenner, 48 W. Va. 56, 35 S. E. 856. '^ Fisher v. Hall, 41 N. Y. 416. The grantee need not, however, be put in actual possession of the deed. Mc- Cartney V. McCartney, 93 Tex. 359, 55 S. W. 310. Cowen & Hill's Notes, _(3d ed.) 826; and their general result is stated to be that, "to constitute a complete delivery of a deed, the grantor must do some act putting it beyond his power to revoke." The Supreme Court of the United States has said : "The delivery of a deed is essential to the transfer of the title. It is the final act without which all other formalities are ineffectual. To constitute such delivery, the grantor must part with the possession of the deed, or the right to retain it." Younge v. Gilbeau, 3 Wall. (U. S.) 636, 641, 18 L. ed. 262. What amounts to a delivery will be discussed else- where. 77 OFFER AND ACCEPTANCE. § 56 consent, and binding on the grantor beyond revocation, are di- rectly opposite to the entire current of modern authority, both in the state and federal courts, and they have been repudiated. Under modern conditions a rule of law by which a voluntary deed, executed by the grantor, and retained by him during his life in his own exclusive possession and control, never during that time being made known to the grantee, and never delivered to any one for him, or declared by the grantee to be intended as a present operative conveyance, could be permitted to take effect as a trans- mission of the title or as a binding proposal, is so inconsistent with every substantial right of property, that it would be unsafe for any court, either of law or equity, to adopt it.^^ After the delivery of a deed it is not revocable by the grantor,^* even with the grantee's consent.^^ The result of the American cases on the subject of sealed in- struments is that a deed has no effect until delivered ; that a deliv- ery can only be made by such an act on the part of the grantor as shows an absolute intention to surrender all control over it and such an act on the part of the grantee as communicates to the grantor or shows his acceptance; that the delivery of a deed is synonymous with its acceptance, the two things being correlative terms ; that until the deed is delivered and accepted it is revocable ; that after delivery of a deed it is irrevocable. A contract by deed has its inception in proposal and acceptance, and the rules govern- ing proposal and acceptance, their communication and revocation ^Fisher v. Hall, 41 N. Y. 416. The 110, 72 Pac. 567; Jeffers v. Philo, 35 court says that such a rule should Ohio St. 173; Rogers v. Rogers, 53 deserve "no toleration whatever from Wis. Zii, 10 N. W. 2 ; Parker v. Kane, intelligent court, either of law or 4 Wis. 1 ; Bogie v. Bogie, 35 Wis. equity." 6S9; Hinchliff v. Hinnian, 18 Wis. ^Grilley v. Atkins, 78 Conn. 380, 130; Lowber v. Connit, 36 Wis. 176; 62 Atl. 2>2,1, 4 L. R. A. (N. S.) 816, See also, Clark v. Harper, 215 111. 24, and note, 112 Am. St. 152; Munro v. 74 N. E. 61; Hazle v. Bondy, 70 111. Bowles, 187 111. 346, 58 N. E. 331, App. 185, affd. in part 173 111. 302, 50 54 L. R. A. 865 and note; Tompkins N. E. 671; Old National Bank v. V. Thompson, 93 N. Y. S. 1070, 16 Findley, 131 Ind. 225, 31 N. E. 62; N. Y. Ann. Cas. 275 ; Arnegaard v. Tabor v. Tabor, 136 Mich. 255, 99 N. Arnegaard, 7 N. Dak. 475, 75 N. W. W. 4; Brown v. Hartman, 57 Neb. 797, 41 L. R. A. 258. 341, 11 N. W. 116; Peterson v. Car- '= Fletcher v. Shepherd, 174 111. 262, son, (Tenn.) 48 S, W. 383; McClen- 51 N. E. 212; Herculis &c. Mining don v. Brockett, 32 Tex. Civ. App. Co. V. Central Inv. Co., 98 111. App. 150, 1Z S. W. 854. 427; Durand v. Higgins, 67 Kans. 57 CONTRACTS. 78 are in general as applicable to a sealed instrument in America as they are to a simple contract. § 57. Sales. — The general rules governing offer and ac- ceptance find many illustrations in the case of sales. Indeed an offer to sell goods or chattels and an acceptance of such offer is the most apt illustration that can be given showing that a contract has its inception in offer and acceptance. There must be an offer to buy,^" or sell"^ to which must be given an unconditional as- sent^^ prior to the withdrawal or lapse of the offer.^^ A sufficient assent may be shown by acting on the offer. Thus the shipment or delivery of the goods specified by the order and in accordance with its terms is an acceptance of such order.^" If an acceptance ^ Shady Hill Nursery Co. v. Water- er & Sons, 179 Mass. 318, 60 N. E. 789; West Shore Lumber Co. v. Nor- throp, 94 Wis. 558, 69 N. W. 338; Abrohams v. Revillion Freres, 129 Wis. 235, 107 N. W. 656. See ante, § 27, Nature of offer. " State V. Peters, 91 Maine 31, 39 Atl. 342; Ward v. Beecher, 56 Mich. 616, 23 N. W. 438 ; Buckberg v. Wash- burn-Crosby Co., lis Mo. App. 701, 92 S. W. 733. See ante, § 27, Nature of offer. ''Hyde v. Wrench, 3 Beav. 334; Jones V. Daniel (1894), 2 Ch. 332; Appleby v. Johnson, L. R. 9 C. P. 159; Hutchinson v. Bowles, 5 M. & W. 535 ; Jordan v. Norton, 4 M. & W. 155 ; D. S. Cage & Co. v. Black, 97 Ark. 613, 134 S. W. 942; Four Oil Co. v. United Oil Producers, 145 Cal. 623, 79 Pac. 366, 68 L. R. A. 226; Kelley &c. Co. V. Sibley, 137 Fed. 586, 69 C. C. A. 674; China &c. Trading Co. v. Davis, 119 Fed. 688, 56 C. C. A. 108; Robin- son V. Weller, 81 Ga. 704, 8 S. E. 447; Decker v. Gwinn, 95 Ga. 518, 20 S. E. 240 ; Chicago &c. Co. v. Paepcke &c. Co., 108 111. App. 249; Maclay v. Harvey, 90 111. 525 ; Rogers v. French, 122 Iowa 18, 96 N. W. 767; Hudson V. Arnold, 29 Ky. L. 375, 93 S. W. 42 ; Hutcheson v. Blakeman, 3 Mete. (Ky.) 80; Stock v. Towle, 97 Maine 408. 54 Atl. 918; Maynard v. Tabor, 53 Maine 511 ; Thomas v. Greenwood, 69 Mich. 215, 37 N. W. 195; Eggles- ton V. Wagner, 46 Mich. 610, 10 N. W. 37; Brophy v. Idaho &c. Provi- sion Co., 31 Mont. 279, 78 Pac. 493; Arnold v. Cason, 95 Mo. App. 426, 69 S. W. 34; Robinson & Co. v. Ralph, 74 Nebr. 55, 103 N. W. 1044; Potts v. Whitehead, 23 N. J. Eq. 512; Myers V. Smith, 48 Barb. (N. Y.) 614; Uhl- man v. Day, 38 Hun. (N. Y.) 298; Myers v. Trescott, 59 Hun (N. Y.) 395, 13 N. Y. S. 54; Hartford &c. In- surance Co. V. Lasher Stocking Co., 66 Vt. 439, 29 Atl. 629 ; Snow v. Miles, 3 Clif. (U. S.) 608; Carr v. Duval, 14 Pet. (U. S.) 77, 10 L. ed. 361 ; Brings ham y. American Bridge Co., 39 Wash. 3, 80 Pac. 788; Northwestern Iron Co. V. Meade, 21 Wis. 474. ™ Minneapolis Threshing Machine Co. V. Evans, 139 Fed. 860; Bradley V. Smith (Iowa), 77 N. W. 506; Ar- nold V. Cason, 95 Mo. App. 426, 69 S. W. 34; Hallwood Cash Register Co. V. Finnegan, 84 N. Y. S. 154; E. Be- ment & Sons v. Rockwell, 92 App. Div. (N. Y.) 44, 86 N. Y. S. 876. Lapse by death of offerer, Riner v. Husted's Estate, 13 Colo. App. 523, 58 Pac. 793. '° McCormick Harvesting Mach. Co. V. Markert, 107 Iowa 340, 78 N. W. 33 ; Aultman Miller &c. Co. v. Nilson, 112 Iowa 634, 84 N. W. 692; Minne- apolis &c. Co. V. Zemanek, 130 Iowa 120, 106 N. W. 512; National Cash Register Co. v. Dehn, 139 Mich. 406, 102 N. W. 965. 79 OFFER AND ACCEPTANCE. § 57 is duly signified by mail/'' or telegraph,'^ it is usually binding from the time the assent is mailed or delivered to the telegraph company. In the absence of an express agreement providing otherwise it is the sending and not the receipt of the acceptance that con- trols.^* A mere proposal to sell^* or purchase/^ notwithstanding it purports to give a definite time for acceptance/* may be with- drawn at any time before the acceptance. This is true of orders given agents. Since they may be rejected by the principal, the signature of the agents attached to such orders not being an acceptance on the part of the employer, the purchaser may coun- termand the order before acceptance by the agent's principal.*^ But if the agent has authority to bind his principal and accept the offer, his acceptance is binding on the principal who cannot sub- =^ Wheat V. Cross, 31 Md. 99; Peck V. Freese, 101 Mich. 321, 59 N. W. 600; Reeves & Co. v. Bruening, 13 N. Dak. 157, 100 N. W. 241 ; Patrick v. Bowman, 149 U. S. 411, 37 L. ed. 790, 13 Sup. Ct. 811, 866; Taylor v. Mer- chants Fire Ins. Co., 9 How. (U. S.) 390, 13 L. ed. 187; The Palo Alto, 2 Ware (N. S.) 344; Whitman Agri- cultural Co. V. Strand, 8 Wash. 647, 36 Pac. 682. "" Brauer v. Shaw, 168 Mass. 198, 46 N. E. 617, 60 Am. St. 387 ; Minnesota Linseed Oil Co. v. Collier White Lead Co., 4 Dill. (U. S.) 431, Fed. Cas. No. 9635. " See also. Acceptance by mail and telegraph. "Miller v. Douville, 45 La. Ann. 214 12 So. 132; Sprague v. Train, 34 Vt. 150. ='Weiden v. Woodruff, 38 Mich. 130. =" Dickinson v. Dodds, 2 Ch. D. 463 ; Offord V. Davies, 12 C. B. (N. S.) 748; Great Northern R. Co. v. Wit- ham, L. R. 9 C. P. 16, 19; Smith v. Bateman, 25 Colo. 241, 53 Pac. 457; School Directors v. Trefethren, 10 111. App. 127; Larmon v. Jordan, 56 111. App. 204, 206; Crandall v. Willig, 166 111. 233, 46 N. E. 755 ; Coleman v. Applegarth, 68 Md. 21, 11 Atl. 284, 6 Am. St. 417; Boston &c. R. Co. v. Bartlett, 3 Cush. (Mass.) 224; Wei- den V. Woodruff, 38 Mich. 130; Wil- cox V. Cline, 70 Mich. 517, 38 N. W. 555; Schenectady Stove Co. v. Hol- brook, 101 N. Y. 45, 4 N. E. 4; Boss- hardt &c. Co. v. Crescent Oil Co., 171 Pa. 109, 32 Atl. 1120; Minneapolis &c. R. Co. V. Columbus Rolling Mill Co., 119 U. S. 149, 30 L. ed. 376, 7 Sup. Ct. 168; Atlee v. Bartholomew, 69 Wis. 43, 33 N. W. 110, 5 Am. St. 103n. ■" Gould V. Gates Chair Co., 147 Ala. 629, 41 So. 675 ; Atlanta Buggy Co. v. Hess Springs &c. Axel Co., 124 Ga. 338, 52 S. E. 613, 4 L. R. A. (N. S.) 43 In; L. A. Becker Co. v. Alvey, 27 Ky. L. 832, 86 S. W. 974; Gary v. Appo, 84 N. Y. S. 569 ; National Ref . Co. V. Miller, 1 S. Dak. 548, 47 N. W. 962; Whitaker v. Zeihme (Tex. Civ. App.), 61 S. W. 499; Wolf v. Gal- braith, 35 Tex. Civ. App. 505, 80 S. W. 648. The above is especially true where it is expressly provided in the order that the sale was made subject to the seller's approval. Martin v. Wilms, 61 111. App. 108 ; J. Thompson & Sons Mfg. Co. V. Perkins, 97 la. 607, 66 N. W. 874; notwithstanding, there is also in the provision in the order against its being counter- manded. Challenge &c. Mill. Co. v. Kerr, 93 Mich. 328, 53 N. W. 555. After the order has been accepted by the principal it then becomes mutu- ally binding. Bauman v. McManus, 75 Kans. 106, 89 Pac. 15, 10 L. R. A. (N. S.) 1138n. There is no sale until the order is accepted by the seller. Bowlin Liquor Co. v. Beaudoin, 15 N. Dak. 557, 108 N. W. 545. Peck v. Freese, 101 Mich. 321, 59 N. W. 600. § S8 CONTRACTS. 80 sequently reject it.^* A fortiori, a purchaser may cancel an order given to an agent at any time before its acceptance by the principal.^" The reason for this rule being that since there is no consideration for the offer, it is a mere unilateral promise and consequently a nudum pactum/" § 58. Auction sales. — The announcement that a person will sell his property at public auction to the highest bidder is a mere declaration of intent to hold an auction at which bids will be received. A bid is an offer which is accepted when the hammer falls. *^/^Until the acceptance of the bid is signified in some man- ner neither party assumes any legal obligation to the other. At any time before the highest bid is accepted, the bidder may with- draw his offer to purchase,*^ or, ordinarily at least the auctioneer his offer to sell.*^ In reviewing the decisions on this subject one ^ Oklahoma Vinegar Co. v. Carter, 116 Ga. 140, 42 S. E. 378, 94 Am. St. 112n, 59 L. R. A. 122; Reeves v. Bruening, 13 N. Dak. 157, 100 N. W. 241. ™ Merchants Exchange Co. v. San- ders, 74 Ark. 16, 84 S. W. 786 ; Har- vey V. Duffey, 99 Cal. 401, 23 Pac. 897; Baird v. Pratt, 148 Fed. 825, 78 C. C. A. 515, 10 L. R. A. (N. S.) 1116; Martin & Co. v. Wilms, 61 111. App. 108; Durkee v. Schultz, 122 Iowa 410, 98 N. W. 149; L. A. Becker Co. V. Alvey, 27 Ky. L. 832, 86 S. W. 974; Brown v. Snider, 126 Mich. 198, 85 N. W. 570 ; Hallwood Cash Regis- ter Co. V. Finnegan, 84 N. Y. S. 154 ; Mayo V. Koller, 28 Pa. Super. Ct. 91 ; L. J. Mueller Furnace Co. v. Meikle- , John, 121 Wis. 605, 99 N. W. 332. V "Cooke v. Oxley, 3 T. R. 653; Storch V. Duhnke, 76 Minn. 521, 79 N. W. 533; Cady v. Straus, 97 Va. 701, 34 S. E. 615. An order for ma- terials may be canceled at any time before acceptance. Johnson v. Filk- ington, 39 Wis. 62. ■" Anderson v. Wisconsin &c. R. Co., 107 Minn. 296, 120 N. W. 39, 20 L. R. A. (N. S.) 1133n. *" Payne v. Cave, 3 T. R. 148; Fen- wick V. McDonald &c. Co., 6 Fed. 850; Anderson v. Wisconsin &c. R. Co., 107 Minn. 296, 120 N. W. 39, 20 L. R. A. (N. S.) 1133n; Fisher v. Seltzer, 23 Pa. St. 308, 62 Am. Dec. 335. Property may be withdrawn before any bids are received and one who in- tended to bid is not entitled to recov- er for loss of time and expenses in attending such sale. Harris v. Nick- erson (1873), L. R. 8 Q. B. 286, 21 Weekly Rep. 635. See also, Manser V. Back, 6 Hare 443. ^'CorryoUes v. Mossy, 2 La. 504. This decision is based in the statutory provision. Anderson v. Wisconsin R. Co., 107 Minn. 296, 120 N. W. 39, 20 L. R. A. (N. S.) 1133n; Newman v. Vonderheide, 9 Ohio Dec. (reprint) 164. One holding a judicial (Keight- ley V. Birch, 3 Campb. 521 ; Hender- son v. Sublett, 21 Ala. 626; State Bank v. Brown, 128 Iowa 665, 105 N. W. 49; McPherson Bros. Co. v. Oka- nogan County, 45 Wash. 285, 88 Pac. 199, 9 L. R. A. (N. S.) 748) ; or ad- ministrator's sale (Bean v. Kirkpat- rick, 105 Ga. 476, 30 S. E. 426 ; Rogers V. Dickey, 117 Ga. 819, 45 S. E. 71; Tillman v. Dunman, 114 Ga. 406, 40 S. E. 849, 88 Am. St. 28, 7 L. R. A. 784) ; may withdraw the property and prevent its being sacrificed. As to sheriff withdrawing from sale, see Conway v. Nolte, 11 Mo. 74. Knox v. Spratt, 19 Fla. 817; Shaw v. Potter, SO Mo. 281; State v. Moore, 72 Mo. 285; Cole Co. v. Madden, 91 Mo. 585, 4 S. W. 397; Rogers &c. Co. 8i OFFER AND ACCEPTANCE. § 58 occasionally finds strong intimations to the effect that the auc- tioneer cannot withdraw the property from sale when it is offered without reserve.** But investigation discloses that the cases con- taining statements to this effect were decided on other grounds. Nor could such a holding be sustained on principle, for it is con- ceded that the bidder may withdraw his bid any time before ac- ceptance. It follows therefore that the bid is a mere offer which is not binding until accepted. Mutuality is an essential element of a contract. One party cannot be bound and the other remain free ; consequently if the bidder has a right to withdraw his bid it fol- lows that the auctioneer or owner must be accorded the privilege of withdrawing the property from sale.*^ The property in a chat- tel sold by auction passes at the fall of the hammer.*^ V. Cleveland Co., 132 Mo. 442, 34 S. W. 57, S3 Am. St. 494, 31 L. R. A. 335; Davis v. McCann, 143 Mo. 172, 44 S. W. 795 ; Blossom v. Milwaukee &c. R. Co., 3 Wall. (U. S.) 196, 18 L. ed. 43. The following are cases hold- ing that the sheriff has no discretion but must sell in case bids are made by a responsible person. See State v. Johnson, 2 N. Car. 293: Gilbert v. Watts-DeGolyer Co., 169 111. 129, 48 N. E. 430, 61 Am. St. 154; Morton v. Moore, 4 Ky. L. 717 ; McLeod v. Mc- Call, 48 N. Car. 87. An auctioneer may refuse to accept a bid which is trifling when compared to the actual value of the property. Taylor v. Harnett, 26 Misc. (N. Y.) 362, 55 N. Y. S. 988. To same effect, Anderson v. Wisconsin &c. R. Co., 107 Minn. 296, 120 N. W. 39, 131 Am. St. 462n, 20 L. R. A. (N. S.) 1133n. It is pro- vided by the uniform sales law that goods offered at auction may be with- drawn at any time before the fall of the hammer provided the sale has not been announced to be without reserve. This statute has been adopted by the states of Arizona, Connecticut, New Jersey, Massachusetts, Ohio, Rhode Island. It has been suggested by Prof. Langdell that it would have been better to hold that every bid con- stitutes "an actual sale, subject to the condition that no one else should bid higher." Summary Law of Contracts, § 19. 6 — Contracts, Vol. I "Warlow v. Harrison, 1 El. & El. 309. The above case is criticized and doubted in Walds Pollock on Con- tracts (3d ed.), p. 18. Johnston v. Boyes (1899), 2 Ch. D. 73, 68 L. J. Ch. (N. S.) 425; Harris v. Nicker- son (1873), L. R. 8 Q. B. 286, 21 Weekly Rep. 635 ; Spencer v. Hard- ing, L. R. 5 C. P. S61 ; In re Agra &c. Bank, L. R. 2 Ch. 391 ; Miller v. Bay- nard, 2 Houst. (Del.) 559, 83 Am. Dec. 168; Hartwell v. Gurney, 16 R. I. 78, 13 Atl. 113. *° Anderson v. Wisconsin &c. R. Co., 107 Minn. 296, 120 N. W. 39, 131 Am. St. 462n, 20 L. R. A. (N. S.) 1133n. "Sweeting v. Turner, L. R. 7 Q. B. 310, 41 L. J. Q. B. 58; Coker v. Dawkins, 20 Fla. 141 ; Lucas v. Wal- lace, 42 111. App. 172; Canal Bank V. Copeland, 6 La. 543; Municipality No. 1 V. Cordeviolle, 19 La. 235 ; Suc- cession of Bondonsquire, 9 Rob. (La.) 405; Noah v. Pierce, 85 Mich. 70, 48 N. W. 277; Ives v. Tregent, 29 Mich. 390; Clark v. Greeley, 62 N. H. 394. Unless under the terms and condi- tions of the sale a contrary intention is evinced. Williams v. Connoway, 3 Houst. (Del.) 63; Mazoue v. Caze, 18 La. Ann. 31. In the case of Pike V. Balch, 38 Maine 302, 61 Am. Dec. 248, 254, it is said, "The property did not rest in the bidder by being fairly knocked off to him," but this case was decided under a statute of that state. One who bid off a lot under § 59 CONTRACTS. 82 § 59. Building and working contracts. — A contract which calls for the performance of work and labor in the construction, erection or repair of some building, structure or work, is gov- erned by the rules applicable to contracts in general. Conse- quently, before a binding working or building contract is formed, there must be an offer and its acceptance.^' The builder may ask the good faith impression that he is buying a different one is not bound by the purchase provided he can show there was no want of diligence on his part to ascertain the facts. There was no meeting of minds. Clay v. Kagelmacher, 98 Ga. 149, 26 S. E. 493. The employment of "puffers" to bid up the price invalidates a sale to a bona fide purchaser at his option ; Miller v. Baynard, 2 Houst. (Del.) 559, 83 Am, Dec. 168; Baham v. Bach, 13 La. 287, 23 Am. Dec. 561; Moncrieff v. Goldsborough, 4 Har. & McH. (Md.) 281, 1 Am. Dec. 407; Curtis V. Aspinwall, 114 Mass. 187, 19 Am. Rep. 332; Springer v. Klein- sorge, 83 Mo. 152; Wolfe v. Luyster, 1 Hall Super. Ct. (N. Y.) 146; Na- tional Ins. Co. V. Loomis, 11 Paige (N. Y.) 431; Fisher v. Hersey, 17 Hun. (N. Y.) 370; Bowman v. Mc- Clenahan, 20 App. Div. (N. Y.) 346, 46 N. Y. S. 945, 4 N. Y. Ann. Cas. 388; Trust v. Delaplaine, 3 E. D. Smith (N. Y.) 219; Towle v. Leavitt, 23 N. H. 360, 55 Am. Dec. 195; Smith v. Greenlee, 2 Dev. (N. Car.) 126, 18 Am. Dec. 564; Mc- Dowell V. Simms, 6 Ired. Eq. (N. Car.) 278; Woods v. Hall, 1 Dev. Eq. (N. Car.) 411; Morehead v. Hunt, 1 Dev. Eq. (N. Car.) 35; Pen- nock's Appeal, 14 Pa. St. 446, 53 Am. Dec. 561 ; Donaldson v. JMcRoy, 1 Browne (Pa.) 346; Yerkes v. Wil- son, 32 Smith (Pa.) 9; Flannery v. Jones, 180 Pa. St. 338, 36 Atl. 856, 57 Am. St. 648 ; Staines v. Shore, 16 Pa. St. 200, 55 Am. Dec. 492; Hinde V. Pendleton, Wythe (Va.) 145; Peck V. List, 23 W. Va. 338, 48 Am. Rep. 398; Veazie v. Williams, 8 How. (U. S.) 134, 12 L. ed. 1018, 3 Story (U. S.) 611. Even though the buyer gets his money's worth. Staines v. Shore, 16 Pa. St. 200, 55 Am. Dec 492. As to who is a "puffer" see AfcMillian V. Harris. 110 Ga. 72, 35 S. E. 334, 78 Am. St. 93, 48 L. R. A. 345; Locke v. Willingham, 99 Ga. 297, 25 S. E, 693. On the other hand an agree- ment among the bidders not to bid against each other vitiates a sale and the seller is not bound, Car- rington v. Caller, 2 Stew. (Ala.) 175; Loyd V. Malone, 23 111. 41, 74 Am. Dec. 179n; Pike v. Balch, 38 INIaine 302, 61 Am. Dec. 248; Phippen v. Stickney, 3 Mete. (Mass.) 384; Whitaker v. Bond, 63 N. Car. 290; Smith V. Greenlee, 13 N. Car. 126, 18 Am. Dec. 564. But the mere at- tempt on the part of the purchaser to stifle competition will not invali- date the sale. Haynes v. Crutchfield, 7 Ala. 189. An attempt by the auc- tioneer to discourage bidding is a fraud on the seller. Brotherline v. Swires, 48 Pa. St. (12 Wright) 68. But an agreement among several per- sons by which one is to purchase for all is valid unless it was intended to prevent competition. Goode v. Haw- kins, 17 N. Car, 393. James v. Ful- crod, 5 Tex. 512, 55 Am. Dec. 743. See also, Kearney v. Taylor, 15 How. (U. S.) 494, 15 L. ed. 607; Allen v. Stephanes, 18 Tex. 658. In case the auctioneer is selling goods for one man, and another procures him to sell his goods without disclosing to whom they belong, it is a fraud both on the auctioneer and purchaser and will entitle the latter to repudi- ate the sale. Thomas v. Kerr, 3 Bush. (Ky.) 619, 96 Am. Dec. 262n. "Hodges v. Sublett, 91 Ala. 588, 8 So. 800; Mobile &c. R. Co. v. Worthington, 95 Ala. 598, 10 So. 839; Nagle v. McMurray, 84 Cal. 539, 24 Pac. 107; Dunning v. Thomas, 10 Colo. 84, 14 Pac, 49; Lewis v. Crow, 69 Ind, 434; Jackson v. Car- son, 160 Mass. 215, 35 N. E. 483; White v. Codies, 46 N. Y, 467; Poulson V. De Navarro, 171 N, Y. 692, 64 N. C. 1125, 57 App. Div. (N. Y.) 623: Disken v. Herter, 175 N. Y. 480, 67 N. E. 1081, 73 App. 83 OFFER AND ACCEPTANCE. 59 for bids on the work to be performed but until he has accepted one of the bids there is no binding contract.** The agreement is consummated and becomes binding on the parties when a partic- ular offer is accepted.** This acceptance must, of course, be un- conditional and conform strictly to the terms of the bid.*" A modified acceptance is nothing more than a new ofifer which must be accepted by the bidder before there is any binding contract.^' Div. (N. Y.) 453, n N. Y. S. 300; Talmadge v. Spofford, 41 N. Y. Super. Ct. 428; Levenson v. Bollowa, 85 N. Y. S. 386; Peoples R. Co. v. Memphis R. Co., 10 Wall. (U. S.) 38, 19 L. ed. 844; Johnson y. Filkington, 39 Wis. 62. See also, Detroit Sav. Bank v. Loveland, — Mich. — , 130 N. W. 678. A schedule of prices when signed by the parties does not consti- tute a written agreement to erect a building. Eyser v. Weissgerber, 2 Iowa 463. An offer to dig a well is not binding until accepted by the em- ployer. Kernan v. Carter, 31 Ky. L. 865, 104 S. W. 308. As with rewards, the offer need not be made to any particular person. Bull v. Talcot, 2 Root (Conn.) 119, 1 Am. Dec. 62. *° Reusch V. American Brewing Assn., 44 La. Ann. 1111; Howard v. Maine Industrial School, 78 Maine 230, 3 Atl. 657; Doyle v. Desenberg, 74 Mich. 79, 41 N. W. 866 ; Hogan v. Shields, 20 Mont. 438, 52 Pac. 55 ; So- per V. Buffalo &c. R. Co., 19 Barb. (N. Y.) 310; Topping v. Swords, 1 E. D. Smith (N. Y.) 609; State V. Board of Education, 42 Ohio St. 374; Leskie v. Haseltine, 155 Pa. St. 98, 25 Atl. 886. See also, MoUoy V. New Rochelle, 198 N. Y. 402, 92 N. E. 94, 30 L. R. A. (N. S.) 126n, holding that making of lowest bid does not complete the making of the contract where the advertisement for bids reserves the right to reject any or all bids. "Acceptance (Allen v. Yoxall, 1 C. & K. 315, 47 E. C. L. 314; Lewis V. Brass, 3 Q. B. D. 667; McCormack V. Lynch, 69 Mo. App. 524; Dutch v. Harrison, 37 N. Y. Super. Ct. 306; Lane & Nearn v. Warren, S3 Tex. Civ. App. 122, lis S. W. 903; Gar- field V. United States, 93 U. S. 242, 23 L. ed. 779) binds the builder (Jackson v. North Wales R. Co., 1 Hall & T. 75, 6 R. & Can. Cas. 112; Mobile &c. R. Co. v. Worthington, 95 Ala. 598, 10 So. 648; Sandford V. East Riverside Irrigation Dist., 101 Cal. 275, 35 Pac. 865; Matter of Protestant Episcopal School, 58 Barb. (N. Y.) 161, 40 How. Pr. (N. Y.) 139; Highland Co. v. Rhoades, 26 Ohio St. 411; Hughes v. Clyde, 41 Ohio St. 339; Joske v. Pleasants, 15 Tex. Civ. App. 433, 39 S. W. 586) even though it seems that the par- ties may have intended to draw up a contract at a time subsequent to the acceptance of the bid provided no new or different provisions were to be embodied therein (Lewis v. Brass, 3 Q. B. D. 667), notwithstanding that it is understood that a formal contract is to be drawn up. Disken V. Herter, 73 App. Div. (N. Y.) 453, n N. Y. S. 300. Where the builder agreed to reduce the contract to writing the contractor may suspend work until this provision is complied with. Smith v. O'Donnell, 36 N. Y. S. 480, 15 Misc. (N. Y.) 98. ^ Howard v. Industrial &c. School, 78 Maine 230, 3 Atl. 657. "Hughes v. Clyde, 41 Ohio St. 339. Should the bid vary from the specifications of the request, its ac- ceptance will create a contract in con- formity to the terms of such bid. Sneed &c. Iron Works v. Douglas, 49 Ark. 355, 5 S. W. 585 ; Schwoerer v. Zimmermann, 63 N. Y. S. 1020, 30 Misc. (N. Y.) 800._ In case a formal written contract is drawn up and signed after acceptance, which con- tains provisions which differ from those of the original offer and accept- ance, the original contract found by such assent is merged in the written contract. Taylor v. Fox, 16 Mo. App. 527; Megrath v. Gilmore, 10 Wash. 339, 39 Pac. 131. § 59 CONTRACTS. 84 In the absence of any express provision as to the method by which acceptance is to be evidenced, it is unnecessary to follow any particular form in making the acceptance/^ provided there is manifested an intention to accept the bid.^^ Should there be a provision in the specifications requiring the bidder to give bond it may be waived by the one asking for bids,^* and when this is done failure to furnish such bond is no defense to an action on the contract.'*^ By the statutes of most states it is provided that when a municipal corporation contracts for the performance of work and labor such contract is to be let to the lowest responsible bidder.^^ The competition between bidders on public works must be real ; consequently an agreement whereby the prospective bidders seek to stifle competition in bids is against public policy and illegal/' and should one of the parties to such an agreement be awarded the contract the municipality may avoid the contract because of fraud/^ The assent must be real. But one's conduct may be such that he will not be permitted to assert that he did not intend to accept, when the other relying on such conduct has per- formed his part of the contract. '''' Nor will one be relieved from the contract resulting from his unconditional acceptance of an offer when such acceptance was induced by his own mistake °=Burch V. New Lindell Hotel Co., Mitchell, 82 Pa. St. 343; Mueller v. 7 Mo. App. S83. Eau Claire Co., 108 Wis. 304, 84 N. "Leskie v. Haseltine, 155 Pa. St. W. 430. 98, 25 Atl. 886. ''Hannah v. Fife, 27 Mich. 172; "Mobile &c. R. Co. v. Worthing- Gulick v. Ward, 10 N. J. L. 102, 18 ton, 95 Ala. 598, 10 So. 839. Am, Dec. 389; People v. Lord, 6 "'Disken v. Plerter, 1i App. Div. Hun (N. Y.) 390, affd. 71 N. Y. (N. Y.) 453, n N. Y. S. 300, affd. 527; Atcheson v. Mallon, 43 N. Y. 175 N. Y. 480, 67 N. E. 1081; Joske 147, 3 Am. Rep. 678; Woodworth v. V. Pleasants. 15 Tex. Civ. App. 433, Bennett, 43 N. Y. 273, 3 Am Rep 39 S. W. 586. 706; People v. Stephens, 71 N. Y. "Roberts v. Taft, 109 Fed. 825, 116 527; Breslin v. Brown, 24 Ohio St. Fed. 228; Littler v. Jayne, 124 III. 565, IS Am. Rep. 627, 123, 16 N. E. 374; Fox v. New Or- ■=* People v. Lord, 6 Hun (N. Y.) leans, 12 La. Ann. 154, 68 Am. Dec. 390, affd. 71 N. Y. 527. 766; Hoole v. Kinkead, 16 Nev. 217; "'Phillip v. Gallant, 62 N. Y. 256. People V. Dorsheimer, 55 How. Pr. One who requests that certain work (N. Y.) 118; Weed v. Beach, 56 be done is liable on an implied prom- How. Pr. (N. Y.) 470; People v. ise to pay the reasonable cost of such Contracting Board, 27 N. Y. 378; work. Hennessy v. Fleming, 40 State V. Licking Co., 26 Ohio St. Colo. 27, 90 Pac. 11. See also, Jones 531 ; State v. Board of Education, 42 v. Slaughter, 28 App. D. C. 43. Ohio St. 374; Commonwealth v. 85 OFFER AND ACCEPTANCE. § 59 negligently made.*' Nor will he be relieved on the ground that he misunderstood the legal import of the language used." As with other contracts, building and working agreements must be certain in their terms."^ The oft repeated rule that a contract is not complete until the minds of the parties have met upon all the terms which they intend to introduce into the contract applies. But this does not mean that the parties must leave absolutely nothing to be done after the acceptance of the offer. It means merely that as between them nothing further is to be agreed upon. The agreement may be entered into with reference to certain plans and specifications which detail the work to be done,"^ but the reference to such plans must be definite and cer- tain.®* The interpretation of the drawings and specifications may be left to the architects."'^ Or they may select some one per- son to act as umpire, supervise the work and determine how much is due the contractor for work and materials."" The time within ""Mofifett &c. Co. V. Rochester, 91 Club, 123 N. Car. 28S, 31 S. E. 654; Fed. 28, 33 C. C. A. 319 (reversed Levering v. Mayor, 7 Humph, in Moffett v. Rochester, 178 U. S. (Tenn.) 553 ; Cole v. Clark, 4 Chand. 37i, 44 L. ed. 1108, 20 Sup. Ct. 957, (Wis.) 29, 3 Pin. (Wis.) 303. on the ground that the minds of the °° O'Connor v. Adams, 6 Ariz. 404, parties never met, however, and not 59 Pac. 105 ; Worden v. Hammond, denying the general rule stated in the 37 Cal. 61. text). Brown v. Levy, 29 Tex. Civ. °* Worden v. Hammond, 37 Cal. App. 389, 69 S. W. 255. See also, 61; Williamette &c. Co. v. Los An- Steinmeyer v. Schroeppel, 226 111. 9, geles &c. Co., 94 Cal. 229, 29 Pac. 80 N. E. 564n, 10 L. R. A. (N. S.) 629; Donnelly v. Adams, 115 Cal. 114, 117 Am. St. 224 and note; 1 129, 46 Pac. 916; Almini Co. v. Elliott on Roads & Sts. (3d ed.). King, 92 111. App. 276. If the con- § 648. But if the mistake is mutual tract itself sufficiently describes the and renders the contract impossible work to be done the mere fact that of performance it discharges the the reference to the specifications agreement. Nordyke & Marmon Co. is indefinite is not such an uncer- v. Kehlor, 155 Mo. 643, 56 S. W. 287, tainty as will render the agreement 78 Am. St. 600. See also, R. O. unenforcible. Hitchcock v. Galveston, Bromagin & Co. v. Bloomington, 234 3 Woods (U. S.) 287, 12 Fed. Cas. 111. 114, 84 N. E. 700. No. 6534. »' Kimberley v. Dick, L. R. 13 Eq. 1 ; "" Norcross v. Wyman, 187 Mass. Wood V. Wack, 31 Ind. App. 252, 67 25, 72 N. E. 347. Or the contract N. E. 562; Wheaton Building &c. Co. may provide that the owner shall V. City of Boston, 204 Mass. 218, 90 have the right to construe the con- N. E. 598. tract and that his construction is "'Fraley v. Bentley, 1 Dak. 25, 46 final. Swealt v. Hunt, 42 Wash. 96, N. W. 506; Phelps v. Sheldon, 13 84 Pac. 1. Pick. (Mass.) 50, 23 Am. Dec. 659; "Carlile v. Corrigan, 83 Ark. 136, Long v. Battle Creek, 39 Mich. 323, 33 103 S. W. 620; Mundy v. Louisville Am. Rep. 384; Doyle v. Desenberg, &c. R. Co., 67 Fed. 633; Bentley v. 74 Mich. 79, 41 N. W. 866; Isaacs v. Davidson, 74 Wis. 420, 43 N. W. Smith, 55 N. Y. Super. Ct. 446; 139. The one to whom this power is Thomas v. Thomasville Shooting delegated must exercise it in good § 6o CONTRACTS. 86 which the work is to be done and payment made therefor need not be set out."' The contractor may usually recover for a substan- tial performance provided he has made a good faith attempt to comply with its provisions."^ § 60. Miscellaneous cases of offer and acceptance held suf- ficient. — The appellee advertised for bids for the erection of a proposed residence. The appellant submitted a proposal. When the bids that had been submitted were opened and ex- amined by appellee, it was found that the one submitted by appel- lant was the lowest. The appellee then remarked to the appellant, "Well, Mr. Lane, I guess it is up to you. Yours is the lowest faith. Baltimore &c. R. Co. v. Scholes, 14 Ind. App. 524, 43 N. E. 156, 56 Am. St. 307n; Edwards V. Hartshorn, 42 Kans. 19, 82 Pac. 520, 1 L. R. A. (N. S.) 1050; Young V. Stein, 152 Mich. 310, 116 N. W. 195, 17 L. R. A. (N. S.) 231, 125 Am. St. 412; Chism v. Schipper, 51 N. J. L. 1, 16 Atl. 316; 14 Am. St. 668, 2 L. R. A. 544; Cornell v. Steele, 109 Va. 589, 64 S. E. 1038, 132 Am. St. 931 ; Halsey v. Waukesha Springs &c. Co., 125 Wis. 311, 104 N. W. 94, 110 Am. St. 838. "Where the agreement is silent as to how certain work is to be done there is an implied agreement that it shall be done in a workmanlike manner. Schindler v. Green, 149 Cal. 752, 87 Pac. 626. It is implied that the contractor take such steps toward the completion of the work as the necessaries of the occasion de- mand. Neeley v. Searight, 113 Ind. 316, IS N. E. 598. Phelps v. Shel- don, 13 Pick. (Mass.) SO, 23 Am. Dec. 659. "Walstrom v. Oliver-Watts Const. Co., 161 Ala. 608, 50 So. 46; See- bach V. Kuhn, 9 Cal. App. 485, 99 Pac. 723 ; Pinches v. Swedish Evan- gelical Lutheran Church, 55 Conn. 183, 10 Atl. 264; Morehouse v. Brad- ley, 80 Conn. 611, 69 Atl. 937; Peter- son V. Pusey, 141 111. App. 578; Evans v. Howell, 211 111. 85, 71 N. E. 854; Concord Apartment House Co. v. O'Brien, 228 III. 476, 81 N. E. 1067; Fauble v. Davis, 48 Iowa 462; Morford v. Mastin, 6 T. B. Mon. (Ky.) 609, 17 Am. Dec. 168; Dugue V. Levy, 114 La. 21, Z1 So. 995; Handy v. Bliss, 204 Mass. 513, 90 N. E. 864, 134 Am. St. 673n ; Hayward v. Leonard, 7 Pick. (Mass.) 181, 19 Am. Dec. 268n; Gleason v. Smith, 9 Cush. (Mass.) 484, 57 Am. Dec. 62 Cullen V. Sears, 112 Mass. 299 Handy v. Bliss, 204 Mass. 513, 90 N E. 864, 134 Am. St. 673n; Strome v, Lyon, 110 ^lich. 680, 68 N. W. 983 Leeds v. Little, 42 Minn. 414, 44 N. W. 309; Elliott v. Caldwell, 43 Minn, 357, 45 N. W. 845, 9 L. R. A. 52n Boteler v. Roy, 40 Mo. App. 234; Hahn v. Bonacum, 1^ Nebr. 837, 107 N. W. 1001, 109 N. W. 368; Feeney V. Bardsley, 66 N. J. L. 239, 49 Atl. 443 ; Nolan v. Whitney, 88 N. Y. 648 ; Van Orden v. MacRae, 121 App. Div. (N. Y.) 143, 105 N. Y. S. 600; An- derson V. Todd, 8 N. Dak. 158, 11 N. W. 599; Kane v. Ohio Stone Co., 39 Ohio St. 1 ; Ashley v. Henahan, 56 Ohio St. 559, 47 N. E. 573; Todd v. Huntington, 13 Ore. 9, 4 Pac. 295; Danville Bridge Co. v. Pomroy, IS Pa. 151 ; Gallagher v. Sharpless, 134 Pa. 134, 19 Atl. 491 ; Aldrich v. Wil- marth, 3 S. Dak. 523, 54 N. W. 811; Jennings v. Wilier (Tex. Civ. App.), 32 S. W. 24 ; Franks v, Harkness, — Tex. Civ. App. — , 117 S. W. 913; Foulger v. McGrath, 34 Utah 86, 95 Pac. 1004; Oilman v. Hall, 11 Vt. 510, 34 Am. Dec. 700; Manthey v. Stock, 133 Wis. 107, 113 N. W. 443; Foeller v. Heintz, 137 Wis. 169, 118 N. W. 543, 24 L. R. A. (N. S.) 327. As to what constitutes substantial performance, see ante, § 49, Perform- ance of Consideration as Acceptance. §7 OFFER AND ACCEPTANCE. § 6o bid." The submission of the bid was held to be an offer and the statement by appellee to appellant construed as an acceptance of such offer/" And where it appeared that an intestate, had during his life, a desire to sell his stock in a certain oil company and wrote the company to that effect to which the superintendent replied, "Now at any time after six months if you still think you want to quit, I will cash you up myself and pay you 6 per cent., if you can't do better," This was held to be a continuing offer good, if not withdrawn, for six months and for reasonable time thereafter.''" Likewise where a defendant offered to lease his store to a trading corporation and to furnish a certain amount of money for an issue of preferred stock by such company, a meet- ing of the stockholders and the authorization of such increase and the election of the defendant as a director in the corporation amounted to an acceptance of his offer.'^ And where it appeared that the parties had orally agreed upon the terms of a contract and that this oral agreement was reduced to writing but was not read by one of the parties who, when sued, claimed that the terms of said oral agreement were not the same as those contained in the formal writing, a judgment in favor of defendant was set aside. For it appeared that after defendants had knowledge of the contents of the writing which they had previously signed, they shipped goods, received shipping orders, sent stock lists and promised performance of the contract and failed to repudiate its terms. For this reason it was held that the plaintiff was en- titled to a new trial.'^ The defendant wrote the plaintiff to the effect, "You understand that I have guaranteed the stock to Mr. Doyon as against bills owing Mr. Stevens on the stock and there is no need of you making costs or trouble for Mr. Doyon." To which the plaintiff replied, "We will accept $338.59 as payment in "Lane & Neam v. Warren, S3 278, 19 N. E. 161. What is a reason- Tex. Civ. App. 122, US S. W. 903. able time is ordinarily a question of "Ellis' Admr. v. Durkee, 79 Vt. fact. New England Fire Ins. Co. 341, 65 Atl. 94. For other cases v. Hayes, 71 Vt. 306, 4S Atl. 221, 76 holding that the offeree has a reason- Am. St. 771 ; Brainard v. Vandyke, able time in which to accept upon the 71 Vt. 359, 45 Atl. 758; Reynolds v. arrival and the time for which the Reynolds, 74 Vt. 463, 52 Atl. 1036. offer is made. See Dawley v. Potter, " Person-Riegel Co. v. Lipps, 219 19 R. I. 372, 36 Atl. 92. For a case Pa. 99, 67 Atl, 1081. held that six months is too long to "Hobe Lumber Co. v. McGrath, wait, see Park v. Whitney, 148 Mass. 102 Minn. 66, 112 N. W. 1053. § 6 1 CONTRACTS. 88 full of this claim, provided we receive remittance at once." This Vfa.s held to be a substantial acceptance of the defendant's terms as the words "provided we receive remittance at once" would be implied by the terms of the promise." And where an offer was accepted by mail and the letter read, "We have your esteemed favor of the 24th inst. with order No. 6504 * * * which we have entered for our best attention, and expect to make shipment by the time you have specified." It was held that there had been a complete and binding acceptance.^* Likewise the words "your kind order through Mr. Schultz is duly at hand and will receive our prompt and careful attention," amounted to an acceptance.'^ A certain company offered to sell its business together with all property and effects for a specified sum. This offer after de- scribing the property in question was as follows, "We offer the above property when we have finished our year's business for $13,909." By agreement these terms were left open for accept- ance on or before a certain date. This offer was construed as one contemplating an immediate sale on acceptance though possession was not to be surrendered until the expiration of the year's business, consequently the proposal was not so conditional that its acceptance would not constitute a contract.'" And it has been held that there is an implied promise to pay for the support furnished where the decedent, before her death, requested her son-in-law to keep her, stating that she did not expect to be kept as a pauper, and that she was able to pay and requested that he keep an account.'' § 61. Miscellaneous cases of offer and acceptance held in- sufficient. — Bids were requested for the construction of a public work. On opening the bids it was found that the defend- ant had submitted the lowest figures. Thereupon "A motion was made and carried that the contract, as per plans and specifications be awarded to Mr. R. H. Fisher, he being the lowest bidder " Grimsrud Shoe Co. v. Jackson, 106, 89 Pac. IS, 10 L. R. A. (N. S.) 22 S. Dak. 114, IIS N. W. 656. 1138ti. "Haskell & Barker Car Co. v. Al- '" Purdom Naval Stores Co. v. legheny Forging Co., — Ind. App. Western Union Tel. Co., 153 Fed. — , 91 N. E. 975. 327. " Bauman v. McManus, 75 Kans. " Ervson's Admr. v. Biggs, 32 Ky. L. 159, 104 S. W. 982. 89 OFFER AND ACCEPTANCE. § 6l and that the secretary instruct said Fisher to that efifect." The secretary sent Fisher the following telegram : "You are the low- est bidder. Come on morning train." This telegram was held not to conclude a contract with him. It served no other purpose than the words thereof import, to advise Fisher that his bid was the lowest and that further consideration or arrangement awaited his appearance in response to the invitation to come.^* Upon opening the bids for private enterprise the defendant or his agent said to the plaintiff, "You are the lucky man." These words were held not to complete the contract but were simply an ac- knowledgment that the plaintiff was the lowest bidder. ''^ So, the mere fact that the lowest bidder knows that he is the lowest bidder will not award the contract to him.^" Likewise a letter which stated, "I am instructed by our executive committee to say in reply that the plan set forth in your letter is entirely satisfac- tory to our company and we are ready to accept the agreement upon the basis proposed whenever prepared and submitted to us" did not conclude the contract, but was merely a preliminary step.^^ And where the plaintiff in order to prove an acceptance of defendant's proposal alleged that he had refrained from ac- quiring a lien on its property because he had relied on such pro- posal, the court said, "There is an entire absence of proof that appellee ever announced or advised appellant that he would file a claim on its property, * * *" "Appellee may have had it in mind to claim a lien upon the property and may have had it in mind that appellee's letter to him was an offer to pay his claim if he would not file a lien for such claim, and he may have had it in mind to accept said offer but if so he announced none of these mental processes to appellant. The acceptance must be put by the party accepting, in a proper channel to be communicated to the party making the offer.^^ A manufacturer of condensed milk claimed there was an agreement with a dealer whereby he was to have the exclusive right to sell a certain brand of milk in "Cedar Rapids Lumber Co. v. "Erving v. New York, 131 N. Y. Fisher, 129 Iowa 332, 105 N. W. 595, 133, 29 N. E. 1101. 4 L R A (N S.) 177n. '^ Commercial Tel. Co. v. Smith, ™Leskie V. Haseltine, 155 Pa. 98, 47 Hun (N. Y.) 494. 25 Atl 886 "" Cleveland &c. R. Co. v. Shea, 174 Ind. 303, 91 N. E. 1081. § 62 CONTRACTS. 9O a given territory. The evidence to support this agreement w^as a statement in a letter written by the manufacturer to this effect, "We expect you to have a large sale of this brand, as you have the exclusive control of it in your city." Under the circum- stances this was held not to prove the agreement.^^ Nor does a broker employed to sell or procure a purchaser earn his commis- sion by procuring a person to sign an option purchase and not binding him to purchase. The signing of a mere option to pur- chase would not be authorized by an authority to sell. It would not be a "sale" or contract of sale within the meaning of the principal's authority ; for "sale" must ordinarily be taken to mean a complete sale and to include the agreement of the vendee to purchase as well as agreement to the vendor to sell.^* It is also a general rule that where contracts are optional in respect to one party any delay on his part is viewed with especial strictness for the reason that the party seeking to enforce performance was not bound, while the other party was bound."^ The mere fact that terms of an alleged contract are contrary to common experience is not as a general rule controlling. But where the evidence is so conflicting that the truth cannot be clearly perceived, the reason- ableness or absurdity of what is claimed to have been the conduct of the parties may be of controlling importance.^^ § 62. Time and place of contract determined by acceptance. — As has been seen, no contract is formed until an unconditional assent has been given to the offer. The contract dates from the acceptance. The parties are not bound until that time. And while the acceptance is in the nature of an acknowledgment of an existing agreement it is held by an early English case*' that this does not cause the contract to relate back to the date of the proposal, — at least not so as to effect the rights of third persons.'* =" Michigan Condensed Milk Co. v. (N. S.) 869, 31 L. J. C. P. 204. Kenneweg Co., 30 App. D. C. 491. ^ See also. Ex parte Hardy, 30 ''Stengel v. Sergerant, 74 N. J. Beav. 206; Townley v. Bedwell, 14 Eq. 20, 68 Atl. 1106. Ves. Jr. 591 ; Edwards v. West, L. R. ■" Jones V. Moncrief-Cook Co., 25 7 Ch. Div. 858, 26 Weekly Rep. 507; Okla. 856, 108 Pa?. 403. Caldwell v. Frazier, 65 Kans. 24, 68 ™ Patterson v. Mikkelson, 86 Nebr. Pac. 1076; Gilbert v. Port, 28 Ohio 512, 125 N. W. 1104. St. 276; Smith v. Loewenstein, 50 "Felthouse v. Bindley, 11 C. B. Ohio St. 346, 34 N. E. 159. 91 OFFER AND ACCEPTANCE. § 62 However, the Supreme Court of California has said that the right to buy land under an option, "when exercised, must neces- sarily relate back to the time of giving the option."** In this case and the case cited by it, the rights of third persons acquired after the giving of the option but before the right to purchase thereun- der had been exercised, were defeated. But in each case the third parties acquired their rights with notice of such option. There seems to be no question as to the correctness of this ruling. Persons having knowledge of the option take subject to it."" But if a third person becomes an innocent purchaser for value of the optioned property specific performance will not be decreed against him."^ Consequently we do not believe that the true rule is as stated in either the CaHfornia or English decision. It would be more accurate to say that acceptance does not cause the contract to relate back to the date of the proposal, — at least not so as to afifect the rights of third persons, — innocently acquired and without knowledge. The place of the contract is also usually determined by the place where the acceptance is given."^ Thus, an order to make certain bets having been transmitted by postal telegraph from the plaintiff without the city of London to the defendant within it, he tele- graphed from the city that the order had been obeyed. It was held ™ Smith V. Bangham, 156 Cal. 359, R. A. 90; State v. Peters, 91 Maine 104 Pac. 689, 28 L. R. A. (N. S.) 31, 39 Atl. 342; Mack v. Lee, 13 R. 522n. See also, Williams v. Lilley, I. 293; Galloway v. Standard Fire 67 Conn. 50, 34 Atl. 765, 27 L. R. A. Ins. Co., 45 W. Va. 237, 31 S. E. 969. ISOn; Peoples St. R. Co. v. Spen- Perhaps it would give use to less cer, 156 Pa. 85, 27 Atl. 113, 36 Am. confusion to say that the place of a St. 22. contract is, as a general rule, the °°Ross V. Parks, 93 Ala. 153, 8 So. place where the last act necessary to 368, 11 L. R. A. 148, 30 Am. St. 47; render the contract binding on the Faraday Coal & Coke Co. v. Owens, parties was done. Emerson Co. v. 26 Ky L. 243, 80 S. W. 1171; Whited Proctor, 97 Maine 360, 54 Atl. 849; 6 Wheless v. Calhoun, 122 La. 100, McGarry v. Nicklin, 110 Ala. 559, 47 So. 415; Haughwout V. Murphy, 22 17 So. 726, 55 Am. St. 40n; Gipps N J Eq 531 ■ Laughead v. Beale, Brewing Co. v. De France, 91 Iowa 24 Pa Co Ct. 465 ; Jackson v. Groat, 108, 58 N. W. 1087, 28 L. R. A. 386, 7 Cow. (N. Y.) 285. If the option is 51 Am. St. 329; Milliken v. Pratt, 125 recorded this is sufficient to put cred- Mass. 374, 28 Am. Rep. 241 ; Tol- itors of the grantor upon inquiry, man v. Reed, 115 Mich. 71, 72 N. W. Donnally v Parker, 5 W. Va. 301. 1104; Northampton &c. Co. v. Tuttle, "See Barrett v. McAllister, 33 W. 40 N. J. L. 476; Waldron v. Ritch- Va. 738, 11 S. E. 220. ings, 9 Abb. Pr. (N. Y.) (N. S.) "Bank of Yolo v. Sperry Flour 359. Co., 141 Cal. 314, 74 Pac. 855, 65 L. § 63 CONTRACTS. 92 that the contract of agency was made in the city."' And where an offer was made in Boston, and accepted by telegram from Provi- dence, it was held that the contract was made in Rhode Island, al- though to be performed in Massachusetts."* Likewise the contract is made at the place when the acceptance is mailed."' If the com- munications are had over the telephone the contract is deemed to have been made at the place where the ofifer of one is accepted by another."" The place of contract is material as prima facie denoting the law by which it is to be construed and regulated, and the law by which the capacity of the parties to the contract, as dependent upon infancy, lunacy, marriage, is determined."" § 63. Intention to reduce the contract to writing. — As has already been mentioned, the fact that the parties intended to em- body the terms of their contract in a formal written agreement is strong evidence that the negotiations prior to the drawing up of such writing are merely preliminary and not understood or in- tended to be binding."* And if it is definitely expressed and understood that there is to be no contract until the formal writing is executed no binding agreement is formed until this provision is complied with."" It is also true that if all the terms of the agreement have not been settled and it is understood these unset- tled terms are to be determined by the formal contract there is ■" Cowan V. O'Connor, L. R. 20 Q. Mo. App. 101 ; Irish v. Pulliam, 32 B. D. 640. Nebr. 24, 48 N. W. 963 ; Wharton v. "Perry v. Mount Hope Iron Co., Stoutenburgh, 35 N. J. Eq. 266; IS R. I. 380, S Atl. 632, 2 Am. St. Brown v. New York Central R. Co., 902. To the same effect, Tilling- 44 N. Y. 79; Bryant v. Ondrak, 87 hast V. Boston &c. Lumber Co., 39 Hun (N. Y.) 477, 34 N. Y. S. 384, S. Car. 484, 18 S. E. 120, 22 L. R. A. 68 N. Y. St. 316; Virginia Hot 49. Springs Co. v. Harrison, 93 Va. 569, "^ Taylor v. Jones, L. R. I. C. P. D. 25 S. E. 888. See ante, § 27, Nature 87; Jameson v. Gregory, 4 Mete, of Offer — Obligation. (Ky.) 363; Emerson Co. v. Proctor, "Lloyd v. Nowell (1895), 2 Ch. 91 Maine 360, 54 Atl. 849. 744; Chinnock v. Marchioness of ""Bank of Yolo v. Sperry Flour Ely (1865), 4 De G. & J. S. 638; Co., 141 Cal. 314, 74 Pac. 855, 65 L. Crossley v. Maycock, L. R. 18 Eq. R. A. 90. 180, 43 L. J. Ch. 379; Winn v. Bull, "Leake on Contracts, 49, See also, L. R. 7 Ch. Div. 29, 47 L. J. Ch. 139; Male V. Roberts, 3 Esp. 163. See Harvey v. Principal Szc. Co., SO L. further under Conflict of Laws. J. Ch. 750; Honeyman v. Marryatt, "'Canning v. Farquhar (1886), 16 6 H. L. Cas. 112, 26 L. J. Ch. 619; Q. B. Div. 727, 55 L. J. Q. B. 225; Kingston-Upin-Hull &c. v. Fetch, 10 Lyman V. Robinson, 14 Allen (Mass.) Exch. 610; Hawkesworth v. Chaffey, 242; Allen v. Chouteau, 102 Mo. 309, 54 L. T. (N. S.) 72, 55 L. J. Ch. 14 S. W. 869; Methudy v. Ross, 10 335; Spinney v. Downing, 108 Cal. 93 OFFER AND ACCEPTANCE. 63 no binding obligation until the writing is executed/ However, should the parties disregard the provision relative to the exe- cution of a formal writing and act upon the preliminary under- standing, such understanding will be treated as a valid and bind- ing contract.^ Likewise if the agreement or written memoran- dum is complete in itself and embodies all the terms to be inserted in the intended formal writing, a binding obligation is fixed on the parties, unless it is understood and intended that such contract shall not become operative unless reduced to writing.^ And the 666, 41 Pac. 797; Strong v. Trow- bridge Co., H. Baars & Co., — Fla. — , 54 So. 92; Weitz v. Des Moines &c. Dist., 79 Iowa 423, 44 N. W. 696; Lynn v. Richardson, 151 Iowa 284, 130 N. W. 1097; Fredericks v. Fas- nacht, 30 La. Ann. 117; Ferre Canal Co. V. Burgin, 106 La. 309, 30 So. 863; Mississippi &c. S. S. Co. v. Swift, 86 Maine 248, 29 Atl. 1063, 41 Am. St. 545; Wills V. Carpenter, 75 Md. 80, 25 Atl. 415; Lyman v. Robinson, 14 Allen (Mass.) 242; Sibley v. Felton, 156 Mass. 273, 31 N. E. 10; Edge Moor Bridge Works v. Bristol, 170 ]Mass. 528, 49 N. E. 918; Eads v. Carondelet, 42 Mo. 113; Bourne v. Shapleigh, 9 Mo. App. 64; Morrill V. Tehama &c. Co., 10 Nev. 125; Water Commissioners v. Brown, 32 N. J. L. 504; Donnelly v. Currie Hardware Co., 66 N. J. L. 388, 49 Atl. 428; Brown v. N. Y. Central R. Co., 44 N. Y. 79; Commercial Tel. Co. V. Smith, 47 Hun (N. Y.) 494, 15 N. Y. St. 19; NichoUs v. Gran- ger, 7 App. Div. (N. Y.) 113, 40 N. Y. S. 99; Arnold v. Roths- child's Sons Co., 37 App. Div.^ (N. Y.) 564, 56 N. Y. S. 161, affd. 164 N. Y. 562, 58 N. E. 1085; Franke v. Hewitt, 56 App. Div. (N. Y.) 497, 68 N Y. S. 968 ; Sidney Glass Works V. Barnes, 86 Hun. (N. Y.) 374, 33 N. Y. S. 508; MacMackin & Young V. Timmins, 1 Lane. Law Rev. (Pa.) 176; Congdon v. Darcy, 46 Vt. 478 ; Boisseau v. Fuller, 96 Va. 45, 30 S. E. 457. If it is the intention of the parties that there shall be no con- tract binding on the parties unto the execution of the formal agreement it must be clearly expressed m such a way as to show that such condi- tion was to be insisted on. Cochrane v. Justice Min. Co., 16 Colo. 415, 26 Pac. 780 ; Allen v. Chouteau, 102 Mo. 309, 14 S. W. 869; Disken v. Herter, 17 N. Y. S. 300, 1Z App. Div. (N. Y.) 453, affd. 175 N. Y. 480, 67 N. E. 1081. Whether or not a contract is formed prior to the execution of the formal writing depends on the in- tention of the parties. Mississippi &c. Steamboat Co. v. Swift, 86 Maine 248, 29 Atl. 1063, 41 Am. St. 545. "Connery v. Best, 1 Cab. El. 291; Hussey v. Horne-Payne, L. R. 4 App. Cas. 311; Bristol &c. Co. v. Maggs, L. R. 44 Ch. Div. 616; Donnison v. Peoples Cafe Co., 45 L. T. (N. S.) 187; Methudy v. Ross, 10 Mo. App. 101, affd. 81 Mo. 481 ; Bourne v. Shap- leigh, 9 Mo. App. 64; Boysen v. Van Dorn Iron Works, 94 App. Div. (N. Y.) 95, 87 N. Y. S. 995; Commercial Tel. Co. V. Smith, 47 Hun (N. Y.) 494, ^ Riggins V. Missouri &c. R. Co., Ti Mo. 598; Miller v. McManis, 57 111. 126; Paige v. Fullerton Woolen Co., 27 Vt. 485. In such case there need be no written acceptance. Sawyer v. Walker, 204 Mo. 133, 102 S. W. 544. See also, McKell v. Chesapeake &c. R. Co., 175 Fed. 321. 'Hodges v. Sublett, 91 Ala. 588, 8 So. 800; Fredricks v. Fasnacht, 30 La. Ann. 117; Mississippi &c. Steam- boat Co. v. Swift, 86 Maine 248, 29 Atl. 1063, 41 Am. St. 545; Lyman v. Robinson, 14 Allen (Mass.) 242; Concannon v. Point Min. & Mill Co., 156 Mo. App. 79, 135 S. W. 988; Pratt V. Hudson River R. Co., 21 N. Y. 305 ; International Harvester Co. v. Camp- bell, 43 Tex. Civ. App. 421, 96 S. W. 93; Green v. Cole, 103 Mo. 70, 15 S. W. 317. 64 CONTRACTS. 94 mere suggestion that a formal contract be drawn up/ or even an understanding to that effect/ will not render the oral or memo- randum agreement unenforcible. The controlling question in this class of cases is whether or not there is a final consent of the parties such that no new terms or variation can be inserted in the formal writing to be prepared. § 64. Alteration and filling blanks by consent. — The au- thority to fill blanks in an instrument does not also confer upon one so authorized the right to do more and to alter or add to it in any material respect.® Any material alteration made without the consent of the parties to the agreement discharges the instrument as to all those not consenting to the change.^ However, it is the general rule that if the alteration is made merely in order to cor- rect a mistake in the instrument and make it give effect to the in- tention of the parties such change will not avoid the agreement even though made without the knowledge or consent of one of the ' Lewis V. Brass, L. R. 3 Q. B. Div. 667; Cayley v. Walpole, 22 L. T. (N. S.) 900, 39 L. J. Ch. 609; Dalrymple V. Scott, 19 Ont. App. 477 ; Cheney v. Eastern Transp. Line, 59 Md. 557; Green v. Cole, 103 Mo. 70, IS S. W. 317. " Chinnock v. Marchioness of Ely, 4 De. G. J. & S. 638; Thomas v. Ber- ing, 1 Jur. (O. S.) 211, 1 Keen 729; Heyworth v. Knight, 17 C. B. (N. S.) 298; Rossiter v. Miller, L. R. 3 App. Cas. 1124; Cohn v. Plumer, 88 Wis. 622, 60 N. W. 1000; Ocala Coop- erage Co. V. Florida Cooperage Co., 59 Fla. 390, 52 So. 13 ; Bell v. Offutt, 10 Bush. (Ky.) 632; Avendano v. Ar- thur, 30 La. Ann. 316; Drummond V. Crane, 159 Mass, 577, 35 N. E. 90, 38 Am. St. 460, 23 L. R. A. 707; Beach &c. Co. v. American &c. Co., 202 Mass. 177, 83 N. E. 924 ; Lowrey V. Danforth, 95 Mo. App. 441, 69 S. W. 39; Rankin v. Mitchem, 141 N. Car. 277, 53 S. E. 854; Blaney v. Hoke, 14 Ohio St. 292; Mackey v. Mackey, 29 Gratt (Va.) 158; Law- rence V. Milwaukee &c. R. Co., 84 Wis. 427, 54 N, W. 797. Where it is intended to reduce the contract to writing merely for facility of proof failure to draw up such writing does not avoid the agreement. Smith v. Kaufman, 30 Pa. Super. Ct. 265. But see Cala Cooperage Co. v. Florida Cooperage Co., 59 Fla. 390, 52 So. 13. "To be enforcible, a contract to en- ter into a future contract must spe- cify all its material and essential terms, and leave none to be agreed upon, as a result of future negotia- tions." St. Louis &c. R. Co. V. Gor- man, 79 Kans. 643, 100 Pac. 647. ° Hodge V. Farmers' Bank, 7 Ind. App. 94, 34 N. E. 123. 'Fitch V. Jones, 5 El. & Bl. (85 Eng. C. L. 238) ; Master v. Miller, 2 H. Bl. 141; In re Hood's Appeal (Pa.), 5 Cent, 851; Mackay v. Dodge, S Ala. 388; Carlisle v. Peoples Bank, 122 Ala. 446, 26 So. 115; Bedgood- Howell Co. V. Moore, 123 Ga. 336, 51 S. E. 420; Monroe v. Paddock, 75 Ind. 422 ; Bowman v. Mitchell, 79 Ind. 84 ; McKinney v. Cabell, 24 Ind. App. 676, 57 N. E. 598 ; Deitz v. Harder, 72 Ind. 208; New York Life Ins. Co. v. Martindale, 75 Kans. 142, 88 Pac. 559, 21 L. R. A. (N. S.) 1045, 121 Am. St. 362; Phcenix Ins. Co. v. McKernan, 100 Ky. 97, 18 Ky. L. 617, 37 S. W. 490; Northern Bank v. Farmers Bank, 18 B. Mon. (Ky.) 506, 3 Ran- dolph Com. Paper, 956; Ver Steeg v. 95 OFFER AND ACCEPTANCE. 64 contracting parties.' Notwithstanding that it has been rather re- cently held that, "one party to a written instrument which does not speak the actual contract of the parties does not have the right to alter the instrument to make it accord therewith."" If the parties to the contract consent to the alteration, the instru- ment as altered is binding, the change in no way affecting its validity/" It is immaterial whether such consent is given before jor after execution.^^ So, the holder of an instrument is usually Becker-Moore Paint Co., 106 Mo. App. 257, 80 S. W. 346; Presbury v. Michael, 33 Mo. 542; Foxworthy v. Colby, 64 Nebr. 216, 89 N. W. 800, 62 L. R. A. 393 ; Woodworth v. Bank of America, 19 Johns (N. Y.) 391, 10 Am. Dec. 239n; Clute v. Small, 17 Wend. (N. Y.) 238; Nazro v. Fuller, 24 Wend. (N. Y.) 374; Bruce v, Westcott, 3 Barb. (N. Y.) 374 Sturges V. Williams, 9 Ohio St. 443 Southwark Bank v. Gross, 35 Pa. 80 Batchelder v. White, 80 Va. 103. One not assenting to the modification of an agreement to which he is a party is not bound by such modification. Agnew V. Baldwin, 136 Wis. 263, 116 N. W. 641. ' Lynch v. Hicks, 80 Ga. 200, 4 S. E. 255; Sanitary Dist. v. Allen, 178 111. 330, 53 N. E. 109; Osborn v. Hall, 160 Ind. 153, 66 N. E. 457 ; Duker v. Franz, 7 Bush. (Ky.) 273, 3 Am. Rep. 314; Produce Exchange Trust Co. v. Bieberbach, 176 Mass. 577, 58 N. E. 162 ; Kelly v. Thuey, — Mo. — , 37 S. W. 516; Cole v. Hills, 44 N. H. 227; Ames V. Colburn, 11 Gray (Mass.) 390, 71 Am. Dec. 723n; Clute v. Small 17 Wend. (N. Y.) 238; Van Brunt V. Eoff, 35 Barb. (N. Y.) 501; Bechtel's Appeal, 133 Pa. 367, 19 Atl. 412; McClure v. Little, 15 Utah 379, 49 Pac. 298, 62 Am. St. 938; Derby V. Thrall, 44 Vt. 413, 8 Am. Rep. 389. But a party who does not know of the real contract will be discharged by the alteration. Pelton v. San Jacinto Lumber Co., 113 Cal. 21, 45 Pac. 12; McMillan v. Hefiferlin, 18 Mont. 385n, 45 Pac. 548. " Merritt v. Dewey, 218 111. 599, 75 N. E. 1066, 2 L. R. A. (N. S.) 217. In the above case it does not appear with certainty just what the agree- ment actually was. See also, Evans V. Foreman, 60 Mo. 449; Fay v. Smith, 1 Allen (Mass.) 477, 79 Am. Dec. 752. Some states adhere to the rule that a mistake in expression can- not be corrected by one party alone. Murray v. Graham, 29 Iowa 520; Letcher v. Bates, 6 J. J. Marsh. (Ky.) 524, 22 Am. Dec. 92 ; Evans v. Fore- man, 60 Mo. 449; Hunt v. Gray, 35 N. J. L. 227, 10 Am. Rep. 232 ; Smith v. Smith, 27 S. Car. 166, 3 S. E. 78, 13 Am. St. 633. "Mundy v. Stevens, 61 Fed. 77, 9 C. C. A. 366; State v. Van Pelt, 1 Cart. (Ind.) 304; Busjahn v. Mc- Lean, 3 Ind. App. 281, 29 N. E. 494; Walkley v. Clarke, 107 Iowa 451, 78 N. W. 70; Philips V. Crips, 108 Iowa 60S, 79 N. W. 373; Hunt v. Nance, 122 Ky. 274, 28 Ky. L. 1188, 92 S. W. 6; Goodwin v. Norton, 92 Maine 532, 43 Atl. Ill; Nichols v. Rosenfeld, 181 Mass. 525, 63 N. E. 1063; Love v. Shoape, 1 Walk. (Miss.) 508; Evans v. Foreman, 60 Mo. 449; Martin v. Buffaloe, 121 N. Car. 34, 27 S. E. 995; Reynolds v. Smitz, 18 Ohio C. C. 84, 9 Ohio C. D. 484; Wilson v. Jameson, 7 Pa. St. 126 ; Fitzpatrick v. Fitzpatrick, 6 R. I. 64, 75 Am. Dec. 681; Gunter v. Addy, 58 S. Car. 178, 36 S. E. 553; Bryant v. Bank of Charleston, 107 Tenn. 560, 64 S. W. 895; Schmelz v. Rix, 95 Va. 509, 28 S. E. 890. " Speake v. United States, 13 U. S. (9 Cranch.) 28, 3 L. ed. 645. In the case of Abbott v. Abbott, 189 111. 488, 59 N. E. 958, 82 Am. St. 470, it is said, "If a deed is altered after delivery by consent of both parties and again delivered after the change, the deed will be valid." It may be given be- fore or at the time of the change but not after. Cleaton v. Chambliss, 6 Rand. (Va.) 86. The consent need § 64 CONTRACTS. 96 deemed to have been given an implied authority by the maker to fill blanks with the proper terms." not be in writing. Stewart v. First Co., 92 U. S. 330, 23 L. ed. 5S6. The National Bank, 40 Mich. 348. above rule applies to instruments re- "Russel V. Langstaffe, 2 Doug. 514; quired by law to be executed under Montague v. Perkins, 22 Eng. L. & seal, and to be witnessed and ac- Eq. 516; Montgomery v. Crossthwait, knowledged. Friend v. Yahr, 126 90 Ala. 553, 8 So. 498, 24 Am. St. Wis. 291, 104 N. W. 997, 1 L. R. A. 832, 12 L. R. A. 140n; Visher (N. S.) 891, 110 Am. St. 924. V. Webster, 8 Cal. 109 ; Fisher v. Den- While it is settled that parol evidence nis, 6 Cat. 577, 65 Am. Dec. 534 ; Har- is not admissible to vary the terms of ris V. Bank of Jacksonville, 22 Fla. a written agreement, it is generally 501, 1 So. 140, 1 Am. St. 201 ; Canon conceded that the parties to an ex- v. Grigsby, 16 111. App. 558; Gillaspie ecutory agreement not under seal, V. Kelley, 41 Ind. 158, 13 Am. Rep. have the right at any time before its 318; Grimes v. Piersol, 25 Ind. 246; breach, by a subsequent oral agree- Coburn v. Webb, 56 Ind. 96, 26 Am. ment founded on a sufficient consid- Rep. 15 ; Rainbolt v. Eddy, 34 Iowa eration, to discharge altogether, 440, 11 Am. Rep. 152; Iowa &c. Bank waive or annul the prior contract, or V. Sigstad, 96 Iowa 491, 65 N. W. add to, subtract from, vary or qualify 407 ; State v. Matthews, 44 Kans. 596, the terms of such prior contract, and 25 Pac. 36; Lowden v. Schoharie that this new agreement may be County Bank, 38 Kans. 533, 16 Pac. proved by parol, whether considered 748 ; Woolf oik v. Bank of America, as a substitute for the old or merely 73 Ky. 504 ; Jones v. Shelbyville Fire an addition or condition attached Ins. Co., 58 Ky. 58; Bank of Com- thereto. Goss v. Nugent, 5 Barn. & monwealth V. McChord, 4 Dana (Ky.) Adol. 58, 64; Adier v. Friedman, 16 191, 29 Am. Dec. 398; Burrows v. Cal. 139; White v. Soto, 82 Cal. 654, Klunk, 70 Md. 451, 17 Atl. 378, 14 23 Pac. 210; Calliope Min. Co. v. Am. St. 371, 3 L. R. A. 576; Herzinger, 21 Colo. 482, 42 Pac. 668; Smith v. Crooker, 5 Mass. 538; JMichels v. Olmstead, 14 Fed. 219; Greenfield Sav. Bank v. Stowell, 123 Wilson v. McClenny, 32 Fla. 363, 13 Mass. 196, 25 Am. Rep. 67 ; Whit- So. 873 ; Spann v. Baltzell, 1 Fla. 301, more v. Nickerson, 125 Mass. 496, 28 46 Am. Dec. 346; Simonton v, Liver- Am. Rep. 257; Wilson v. Henderson, pool &c. Ins. Co., SI Ga. 76, 80; Dan- 17 Miss. 375, 48 Am. Dec. 716; Cap- forth v. Mclntyre, 11 III. App. 417; ital Bank v. Armstrong, 62 Mo. 59; Morrill v. Colehour, 82 III. 618; Bow- Washington Sav. Bank v. Ecky, 51 man v. Cunningham, 78 111. 48; Rigs- Mo. 272; Roe v. Town Mutual Fire bee v. Bowler, 17 Ind. 167; Loomis v. Ins. Co., 78 Mo. App. 452; Ivory v. Donovan, 17 Ind. 198; Viele v. Ger- Michael, 33 Mo. 398; Reed v. Mor- mania Ins. Co., 26 Iowa 9, 96 Am. ton, 24 Neb. 760, 40 N. W. 282, 1 L. Dec. 83n ; Hubbell v. Ream, 31 Iowa R. A. 736, 8 Am. St. 247n; Red- 289; Todd v. Allen, 18 Kans. 543; lich V. Doll, 54 N. Y. 234, 13 Am. Cain v. Pullen, 34 La. Ann. 511 ; Leeds Ret). 573; Bruce v. Westcott, 3 Barb. v. Fassman, 17 La. Ann. 32; Courte- (N. Y.) 374; McGrath v. Clark, 56 nay v. Fuller, 65 Maine 156; Wiggin N. Y. 34, IS Am. Rep. 372; Campbell v. Goodwin, 63 Maine 389; Marshall v. McArthur, 2 Hawks. (N. Car.) 33, v. Baker, 19 Maine 402; Allen v. 11 Am. Dec. 738; Marshall v. Wil- Sowerby, 37 Md. 410; Mactier v. hite, 4 Ohio C. C. 203, 2 Ohio Wirgman, 4 Har. & J. (Md.) 568, C. D. 500; Stahl v. Berger, 10 Serg. 578; Creamer v. Stephenson, IS Md. & R. (Pa.) 170, 13 Am. Dec. 666; 211; Thomas v. Barnes, 156 Mass. Wessell V. Glenn, 108 Pa. St. 104; 581, 31 N. E. 683; Richardson v. Witte V. Williams, 8 S. Car. 290, 28 Hooper, 13 Pick. (Mass.) 446; Ken- Am. Rep. 294; Waldron v. Young, 9 nebec Co. v. Augusta Ins. &c. Co., 6 Heisk. (56 Tenn.) 777; Butler v. Gray (Mass.) 204; Cummings v. United States, 21 Wall. (U. S.) 272; Arnold, 3 Mete. (Mass.) 486, 37 Am. Ansjle V. North Western Life Ins. Dec. 155; Morgan v. Butterfield, 3 97 OFFER AND ACCEPTANCE. § 64 Mich. 615 ; Hewitt v. Brown, 21 Minn. 149 Pa. St. 178, 24 Atl. 201 ; McCau- 163 ; Chouteau v. Jupiter-Iron Works, ley v. Keller, 130 Pa. St. S3, 18 Atl. 94 Mo.- 388, 7 S. W. 467; Whar- 607, 17 Am. St. 758; Smith v. Lilley, ton V. Missouri Car Foundry Co., 1 17 R. I. 119, 20 Atl. 227; Bryan v. Mo. App. 577; Vastine v. Wyman, S Hunt, 4 Sneed (Tenn.) 543, 70 Am. Mo. App. 598; Grafton Bank v. Dec. 262; Cobb v. O'Neal, 2 Sneed Woodward, 5 N. H. 99, 20 Am. Dec. (Tenn.) 438; Perry v. Central South- 566; Van Syckel v. Dalryraple, 32 N. em R. Co., 5 Cold. (Tenn.) 138; J. Eq. 233; Perrine v. Cheeseraan, 11 Hogan v. Crawford, 31 Tex. 633; N. J. L. 174, 19Am. Dec. 388; McKin- Heatherly v. Record, 12 Tex. 49; stry V. Runk, 12 N. J. Eq. 60; Julliard Flanders v. Fay. 40 Vt. 316; Hay- V. Chaffee, 92 N. Y. 529; Brewster v. ward Rubber Co. v. Duncklee, 30 Vt. Countryman, 12 Wend. (N. Y.) 446; 29; Shepherd v. Wysong, 3 W. Va. 46; Blood V. Goodrich, 9 Wend. (N. Y.) Bannon v. Aultman, 80 Wis. 307, 49 68, 24 Am. Dec. 121n ; Harris v. Mur- N. W. 967, 27 Am. St. 37 ; Grace v. phy, 119 N. Car. 34, 25 S. E. 708, 56 Lynch, 80 Wis. 166, 49 N. W. 751; Am. St. 6S6n; Negley v. Jeffers, Piatt's v. Unted States, 22 Wall. (U. 28 Ohio St. 100; Guthrie v. Thomp- S.) 496, 22 L. ed. 858; Emerson v. son, 1 Ore. 353 ; Oregonian Ry. Co. v. Slater, 22 How. (U. S.) 28, 16 L. Wright, 10 Ore. 162; Lauer v. Lee, ed. 360; Swain v. Seamens, 9 Wall. 42 Pa. St. 165 ; HoUoway v. Frick, (U. S.) 254, 19 L. ed. 554. 7_CoNTRAcTS, Vol. I CHAPTER IV. FRAUD AND MISREPRESENTATION. ! 70. Apparent consent may not be real. 71. Fraud or misrepresentation as to inducement or collateral mat- ter. 72. Fraud or misrepresentation as to essential elements of contracts. 73. Frand as to contents or sub- stance of contracts. 74. Fraud where there is a fiduciary or confidential relation. 75. Constructive fraud. 76. Fraud in execution. n . Negligence. 78. Fraud of third persons. §79. 80. 81. 82. 83. 85. 86. 87. 88. 89. 90. 91. 92. Active concealment. Misleading, partial disclosure. False representation. Must be as to facts. Promise or representations of intentions as to future. Opinions and predictions. Misrepresentations as to law. Materiality. Falsity. Knowledge and intention. Reliance on false statement. Must mislead. Must result in damage or injury. Parties in pari delicto. § 70, Apparent consent may not be real. — As was stated in the preceding chapter no contract is formed until one party has given an unqualified and unconditional assent to the offer of another.^ But the offer and acceptance may be apparently com- plete in every respect, and notwithstanding this the contract be voidable at the option of one of the parties. This occurs when the assent of the parties is apparent but not real. Chief among the ways by which apparent consent may be induced are fraud and misrepresentation. Fraud as to material matter will viti- ate, or render voidable any contract,^ for good faith is to this extent, at least, one of the essential elements of an ^ See ante, ch. 3, Offer and Accept- ance. " Chesterfield v. Janssen, 1 Atlc. 340, 2 Ves. Sr. 155; Williams v. Moore- Grant Co., 3 Ga. App. 756, 60 S. E. 372. "Whatever fraud creates justice will destroy." Vreeland v. N. J. Stone Co., 29 N. J. Eq. 188; Jones v. Emery, 40 N. H. 348. See also. Buck v. Vories, 89 Ind. 116, 117. See also. Nelson v. Nelson, 111 Minn. 183, 126 N. W. 731, 137 Am. St. 549; Olston v. Oregon &c. R. Co., 52 Ore, 343, 97 Pac. 538 ; Le Vine v. Whitehouse, 37 Utah 260, 109 Pac. 2. Fraud renders the contract voidable at the option of the party defrauded. Eldorado Jew- elry Co. V. Darnell, 135 Iowa 555 113 N. W. 344; Smith v. Ryan, 191 N. Y. 452, 84 N. E. 402, 123 Am. St. 609. See also, Richardson v. Vick, — Tenn. — 145 S. W. 174. 99 FRAUD AND MISREPRESENTATION. §71 agreement* If one is induced to go through the form of mak- ing a contract because of some fraud or misi-epresentation made by the other party or his agent, relative to a material ele- ment of the agreement, such that if he had known the truth he would not have given his assent, the contract may be avoided by him. There can be no real assent when it is induced by fraud. Misrepresentation is sometimes distinguished from fraud where there is no evil intent. But actual fraud may consist either in the statement of what is false, suggestio falsi, or in the conceal- ment of what is true, suppressio veri. However, in those juris- dictions where the distinction between sealed and unsealed instru- ments has not been abolished, a contract under seal, which is induced by fraud cannot be avoided by setting up such fraud as a defense in an action at law. It is only available in equity.* It is otherwise if this distinction has been abolished. In such jurisdic- tions an instrument under seal may be attacked for fraud in an action at law for affirmative relief.^ § 71. Fraud or misrepresentation as to inducement or col- lateral matter. — As a general rule representations which re- late to matters that are merely collateral to an agreement are not material, and do not affect the validity of the contract.® How- ever, if there is a false representation made relative to a collateral but material matter, it will vitiate the contract if the person de- frauded relied upon such representation and would not have entered into the contract but for it.' Thus, representations by the seller of an agency right to sell a certain article, as to the ° Campion v. Marston, 99 Maine not material. Gaddes v. Pennington, 410, 59 Atl. 548. _ 5 Dow. 159. Nor is a statement of a * Jackson v. Security Mut. Life vendor relative to the expense in- Ins. Co., 233 111. 161, 84 N. E. 198. curred in acquiring the property ma- ° Olston V. Oregon &c. R. Co., 52 terial unless shown to affect the value Ore. 343, 97 Pac. 538. thereof. Bowman v. Branson, 111 » Blair v. Buttolph, 72 Iowa 31, 33 Mo. 343, 19 S. W. 634. Nor are mis- N. W. 349; Palmer v. Bell, 85 Mame representations as to rival companies' 3S2, 27 Atl. 250; O'Brien v. Luques, stocks of goods such fraud as will 81 Maine 46, 16 Atl. 304; Hedden v. avoid a sale of the line of goods sold Griffin, 136 Mass. 229, 49 Am. Rep. by the one making such representa- 25 ; Clark v. Everhart, 63 Pa. St. 347 ; tions. Stone v. Robie, 66 Vt. 245. Fulton V. Hood, 34 Pa. St. 365, 75 ' Canham v. Berry, 15 C. B. 597, 80 Am Dec. 664; Edelman v. Latshaw, B. C. L. 597; Stewart v. Lester, 49 180 Pa. St. 419, 36 Atl. 926. A mis- Hun (N. Y.) 58; Valton v. National representation by the seller of _a Fund &c. Co., 20 N. Y. 32. horse as to where he purchased it is 71 CONTRACTS. 100 number of family rights others had sold and the profits derived therefrom, have been held material, and, if false, constitute such fraud as will justify a rescission of the contract of sale.* Like- wise, when the seller of territory for the sale of a book falsely rep- resented that such book had been copyrighted, and thus induced the defendant to buy the territory offered for sale, this was held a good defense to an action by an assignee to collect the notes given in payment for the right to sell the book in the territory bar- gained for.^ A representation, trivial in character, which does not influ- ence the actions of the other party, is immaterial although false, and known so to be by the party making it.^" False representations as to an immaterial matter do not constitute a fraud in contemplation of law,^^ no matter how reprehensible such conduct may be in morals,^^ for, independent of all moral considerations, if one has not been damaged by the false repre- sentation there has been no fraud.^^ Fraud and injury must con- » Crooker v. White, 162 Ala. 476, SO So. 227. •Coffey V. Hendrick, 23 Ky. L. 1328, 65 S. W. 127. The fraudulent representation may relate to matters not embodied in the written contract. Watson V. Kirby, 116 Ala. 557, 23 So. 61. "Smith V. Chadwick, 20 Ch. Div. 27, 51 L. J. Ch. 597; Colton v. Stan- ford, 82 Cal. 351, 23 Pac. 16, 16 Am. St. 137; Frenzel v. Miller, 37 Ind. 1, 10 Am. Rep. 62; Hall v, Johnson, 41 Mich. 286, 2 N. W. 55; Seeley v. Price, 14 Mich. 541 ; Whiting v. Hill, 23 Mich. 398; Mizner v. Kussell, 29 Mich. 229. " Sprague v. Taylor, 58 Conn. 542, 20 Atl. 612; Ruff v. Jarrett, 94 111. 475; Hicks v. Stevens, 121 111. 186, 11 N. E. 241; Braley v. Powers, 92 Maine 203, 42 Atl. 362; Cook v. Gill, 83 Md. 177, 34 Atl. 248; Safford v. Grout, 120 Mass. 20; Windram v. French, 151 Mass. 547, 24 N. E. 914, 8 L. R. A. 750; Roberts v. French, 153 Mass. 60, 26 N. E. 416, 10 L. R. A. 656, 25 Am. St. 611; Marshall v. Gil- man, 52 Minn. 88, 53 N. W. 811 ; Mor- gan V. Skiddv, 62 N. Y. 319; Strong V. Strong, 102 N, Y. 69, 5 N. E. 799; Kley V. Healy, 127 N. Y. 555, 28 N. E. 593; Handy v. Waldron, 19 R. I. 618, 35 Atl. 884; James v. Hodsden, 47 Vt. 127, 137. ^Fuchs & Lang Mfg. Co. v. Kit- tredge, 242 111. 88, 89 N. E. 723. ^= Wallace v. Bentley, 11 Cal. 19, 18 Pac. 788, 11 Am. St. 281; Holton v. Noble, 83 Cal. 7, 23 Pac. 58; Nelson County V. Northcote, 6 Dak. 378, 43 N. W. 897, 6 L. R. A. 230n ; Loewer V. Harris, 57 Fed. 368, 6 C. C. A. 394 ; Bigby V. Powell, 25 Ga. 244, 71 Am. Dec. 168 ; Bartlett v. Blaine, 83 111. 25, 25 Am. Rep. 346; Wharf v. Roberts, 88 111. 426 ; Hale v. Philbrick, 47 Iowa 217; Danforth v. Gushing, 11 Maine 182 ; First National Bank v. Maxfield, 83 Maine 576, 22 Atl. 479; Medbury V. Watson, 6 Mete. (Mass.) 246, 39 Am. Dec. 726n ; Dawe v. Morris, 149 Mass. 188, 21 N. E. 313, 4 L. R. A. 158, 14 Am. St. 404; Hamlin v. Abell, 120 Mo. 188, 25 S. W. 516; Traber v. Hicks, 131 Mo. 180, 32 S. W. 1145; Lorenzen v. Kansas City Inv. Co., 44 Nebr. 99, 62 N. W. 231 ; Dung v. Par- ker, 52 N. Y. 494; Fagan v. Newson, 12 N. Car. 20; Farrar v. Alston, 12 N. Car. 69; Walsh v. Hall, 66 N. Car. 233 ; Whitson v. Gray, 40 Tenn. 441 ; Lake v. Tyree, 90 Va. 719, 19 S. E. 787; Crispil v. Cain, 19 W. Va. 438. lOI FRAUD AND MISREPRESENTATION. § r- cur in order to furnish ground for judicial action.^* A sufficient defense cannot be predicated on fraud, unless such fraud resulted in some injuiy. Both fraud and injury must exist." Fraud or misrepresentation, to be material, must be as to some essen- tial element or relate to the negotiation in some manner, so as to form an inducement to enter into the agreement. But while it must form an inducement and be acted upon it is not necessary for it to be the sole inducement for the agreement before it can be avoided for this reason.^" A representation is material when but for it the contract would not have been made.^' This test cannot, however, be taken as conclusive in all cases.^* Whether or not a given course of conduct has been fraudulent will, in the end, depend upon the circumstances of each particular case.^* § 72. Fraud or misrepresentation as to essential elements of contracts. — If under certain circumstances false repre- " Freeman v. McDaniel, 23 Ga. 354; Jones V. Foster, 175 111. 459, 51 N. E. 862; Bartlett v. Blaine, 83 III. 25, 25 Am. Rep. 346; Werden v. Graham, 107 111. 169 ; Lewis v. Brookdale Land Co., 124 Mo. 672, 28 S. W. 324; Han- son V. Edgerly, 29 N. H. 343; Taylor V. Guest, 58 N. Y. 262; Nye v. Mer- riara, 35 Vt. 438. " Bowen v. Waxelbaum, 2 Ga. App. 521, 58 S. E. 784; Power v. Turner, 37 Mont. 521, 97 Pac. 950. In the above case the defendant sought damages by way of counterclaim. Nelson v. Grondahl, 12 N. Dak. 130, 96 N. W. 299. See also, Conklin v. Benson, 159 Gal. 785, 116 Pac. 34, 36 L. R. A. (N. S.) 537n. "Jordan v. Pickett, 78 Ala. 331; Winter v. Bandel, 30 Ark. 362; Sprague v. Taylor, 58 Conn. 542, 20 Atl. 612; Sioux Nat. Bank v. Nor- folk State Bank, 56 Fed. 139, 5 C. C. A. 448; Savage v. Jackson, 19 Ga. 305 ; Ruflf V. Jarrett, 94 111. 475 ; Hicks V. Stevens, 121 111. 186, 11 N. E. 241 ; Thome v. Prentiss, 83 111. 99; Hale V. Philbrick, 47 Iowa 217; Braley v. Powers, 92 Maine 203, 42 Atl. 362; Cook V. Gill, 83 Md. 177, 34 Atl. 248; Matthews v. Bliss, 22 Pick. (Mass.) 48; Windram v. French, 151 Mass. 547, 24 N. E. 914, 8 L. R. A. 750; Roberts v. French, 153 Mass. 60, 26 N. E. 416, 10 L. R. A. 656, 28 Am. St. 611; Safford v. Grout, 120 Mass. 20; Marshall v. Oilman, 52 Minn. 88, S3 N. W. 811; Humphrey v. Merriam, 32 Minn. 197, 20 N. W. 1138; Burr v. Wilson, 22 Minn. 206; Morgan v. Skiddy, 62 N. Y. 319; Kley v. Healy, 127 N. Y. 555, 28 N. E. 593; Strong v. Strong, 102 N. Y. 69, 5 N. E. 799; Handy v. Waldron, 19 R. I. 618, 35 Atl. 884; Lebby v. Ahrens, 26 S. Car. 275, 2 S. E. 387; James v. Hods- den, 47 Vt. 127; Gates v. Moldstad, 14 Wash. 419, 44 Pac. 881. The false representation must be proxi- mate, immediate and material, and must affect its very essence and sub- stance. McAleer v. Horsey, 35 Md. 439; Farrar v. Churchill, 135 U. S. 609, 10 Sup. Ct. 771. "Thomas v. Grise, 1 Penn. (Del.) 381, 41 Atl. 883; McAleer v. Horsey, 35 Md. 439. " Hall V. Johnson, 41 Mich. 286, 2 N. W. 55. '"Evidence of fraud which tends to vary the terms of the contract and make a different agreement from that executed by the parties, and which does not relate to material facts, is inadmissible. Tradesman Co. v. Su- perior Mfg. Co., 147 Mich. 702, 111 N. W. 343, 112 N. W. 708. 7- CONTRACTS. 102 sentations as to collateral matters may be grounds for avoiding the agreement, it is obvious that a misrepresentation relative to an essential element will be cause for avoidance if relied on by the promisor.^" The truth will be demonstrated by reference to the following particular classes of contracts : ( i ) Contracts for sale of land. (2) Fraud in the purchase of personal property. (3) Insurance contracts. The special forms of contracts above set out will be briefly treated in the order named. Any false repre- sentation as to the title to real estate, made as a fact or without regard to its truth or falsity, and in order to induce another to purchase the same, constitutes actionable fraud, when such repre- sentations are relied on and induce the contract to purchase, and injury results therefrom. If the purchaser acts with reasonable promptness after discovering the fraud he may maintain an action for the fraud and deceit or a rescission of the sale.^^ Nor '"Crooker v. White, 162 Ala. 476, SO So. 227 ; Water Commissioners v. Robbins, 82 Conn. 623, 74 Atl. 938. In the above case the plaintiff brought action to recover on a bond given by defendants, Robbins & Potter, for the faithful performance of certain work. The defendants filed a counterclaim and recovered damages thereon. In this case a false representation con- sisted in statements relative to the character and kind of work to be done, alleging that it had been esti- mated by the board's engineer and was approximately correct. But in connection with this case, see Ricker V. Sanitary District of Chicago, 91 Fed, 833, reversing 98 Fed 251. Enge- man v. Taylor, 46 W. Va. 669, 33 S. E. 922. ''Young V. Harris, 2 Ala. 108; Meeks v. Garner, 93 Ala. 17, 8 So. 378, 11 L. R. A. 196; Fitzhugh v. Davis, 46 Ark. 337 ; MuUer v. Palmer, 144 Cal. 305, 77 Pac. 954; Linn v. Green, 17 Fed. 407; Crutchfield v. Danilly, 16 Ga. 432 ; Fenley v. Moody, 104 Ga. 790, 30 S. E. 1002; Eames v. Morgan, 37 111. 260; Drake v. La- tham, 50 111. 270; Craig v. Hamilton, ■118 Ind. 565, 21 N. E. 315; James v. Lawrenceburgh Ins. Co., 6 Blackf. (Ind.) 525; Anderson v. Buck, 66 Iowa 490, 24 N. W. 10 ; Riley v. Bell, 120 Iowa 618, 95 N. W. 170; Carpen- ter V. Wright, 52 Kans. 221, 34 Pac. 798; Provident Loan Trust Co. v. Mcintosh, 68 Kans. 452, 75 Pac. 498, 1 A. & E. Ann. Cas. 906; Young v. Hopkins, 6 T. B. Mon. (Ky.) 18; Campbell v. Whittingham, 5 J. J. Marsh (Ky.) 96, 20 Am. Dec. 241; Breckinridge v. Moore, 3 B. Mon. (Ky.) 629; Fristoe v. Laytham, 18 Ky. L. 157, 36 S. W. 920 ; Skinner v. Brigham, 126 Mass. 132 ; Stockhara v. Cheney, 62 Mich. 10, 28 N. W. 692; Reynolds v. Franklin, 39 Minn. 24,38 N. W. 636 ; Haight v. Hayt, 19 N. Y. 464; Updike v. Abel, 60 Barb. (N. Y.) 15; Jenkinson v. Stoneman, 4 Ohio Dec. 289; Babcock v. Case, 61 Pa. St. 427, 100 Am. Dec. 654; In re Wilson's Appeal, 109 Pa. St. 606, 7 Atl. 88 ; Leird v. Abernathy, 10 Heisk. (Tenn.) 626; Corbett v. McGregor (Tex. Civ. App.), 84 S. W. 278; Mor- ris v. Brown, 38 Tex. Civ. App. 266, 85 S. W. 1015; Koepke v. Winter- field,_ 116 Wis. 44, 92 N. W. 437. A positive statement that a title is good may be somewhat a matter of opin- ion, but it also implies that there are no facts affecting its validity within the knowledge of the vendor making the representation, and a purchaser is entitled to rely thereon. Burns v. Dockray, 156 Mass. 135, 30 N. E. 551. See also, Buchanan v. Burnett, 52 Tex. Civ. App. 68, 114 S. W. 406, affd. 103 FRAUD AND MISREPRESENTATION. § 72 is the right of the purchaser to rescind necessarily defeated by the fact that the statement made as to the character of the vendor's title was honestly or mistakenly made.^^ Representations that land is free and clear of encumbrances may be relied upon, and the person to whom it is made is not required to examine the rec- ords. ^^ The constructive notice furnished by the records will not relieve the party from the consequences of positive statements fraudulently made as to the land being unencumbered.^* Like- wise, a fraud may be predicated upon misrepresentations as to boundaries'^ or the quantity of land in a farm or tract.'" Fraud in the purchase of personal property may be prac- ticed in many ways. Thus, if one induces another to sell 102 Tex. 492, 119 S. W. 1141, 132 Am. St. 900. See, however, Conwell v. Clifford, 45 Ind. 392, where it is held that a false representation by the vendor, who had a good title to cer- tain land, is no defense to an action, by the person making the representa- tions, upon notes given for the pur- chase-price. ^ It is immaterial whether the ven- dor knew the representations to be false, if the misrepresentation is in relation to a material matter and a purchaser is misled thereby. Lanier V. Hill, 25 Ala. 554; Bailey v. Jordan, 32 Ala. SO; Lindsey v. Veasy, 62 Ala. 421 ; Kiefer v. Rogers, 19 Gil. (Minn.) 14; Parham v. Randolph, 4 How. (Miss.) 435, 35 Am. Dec. 403; Rimer V. Dugan, 39 Miss. 477, 11 Am. Dec. 687; Zunker v. Kuehn, 113 Wis. 421, 88 N. W. 605. A vendor who repre- sents his title as being a freehold when it is only a copy-hold is guilty of fraud, where the purchaser relies upon the representation, and this _ is true even though the vendor believed in the truth of his statement. Hart v. Swaine, L. R. 7 Ch. Div. 42. The vendor is bound to make the prepara- tion, no matter whether the represen- tation is made with or without his knowledge of its falsity. Buchanan V. Burnett, 52 Tex. Civ. App. 68, 114 S. W. 406, affd. 102 Tex. 492, 119 S. W. 1141, 132 Am. St. 900. "The as- sertion is equivalent to an assump- tion of its truth." Piche v. Robbins, 24 R. I. 325, 53 Atl. 92. Where one who held a tax title falsely repre- sented such title to be perfect, there is such a fraud in law as will entitle the one defrauded to rescind a con- tract induced thereby, even though the one making the representation believed it to be true. Kathan v. Comstock, 140 Wis. 427, 122 N. W. 1044, 28 L. R. A. (N. S.) 201. The mere fact, however, that the vendors refer to it as "my property" does not sufficiently establish fraud. Renter V. Lawe, 86 Wis. 106, 56 N. W. 472. See also, Brown v. Manning, 3 Minn. 35, 74 Am. Dec. 736; Buchal v. Hig- gins, 109 App. Div. (N. Y.) 607, 96 N. Y. S. 241. ^Linn V. Green, 17 Fed. 407; Car- penter V. Wright, 52 Kans. 221, 34 Pac. 798. ^A representation by an executor that land is unencumbered may ren- der him personally liable for dam- ages, though he did not know the representations were false. West v. Wright, 98 Ind. 335; Weber v. Weber, 47 Mich. 569, 11 N. W. 166. ^ Camp V. Camp. 2 Ala. 632, 36 Am. Dec. 423 ; Weatherford v. Fish- back, 3 Scam. (111.) 170; (Towger v. Gordon, 4 Blackf. (Ind.) 110; Hoock V. Bowman, 42 Nebr. 87, 60 N. W. 391. "Gauldin v. Shehee, 20 Ga. 531. See also, Hervey v. Parry, 82 Ind. 263 ; Boody V. Henry, 126 Iowa 31, 101 N. W. 447. But compare Wamsley v. Currence, 25 W. Va. 543. § y2 CONTRACTS. 104 him property on credit, concealing the fact of his insolvency, and having no intention of paying, he is guilty of fraud; and the vendor may disaffirm the contract and recover the goods, providing the rights of third parties have not intervened." The mere insolvency of a purchaser does not of itself render the contract voidable. It must usually be coupled with the intention not to pay.^* This intention must relate to the time the contract is made, and not the time when the goods are deliv- ered, in order to render the sale of goods fraudulent on the ground of intent not to pay for them.^" On the other hand, a purchaser of goods usually has a right to rely on the seller's representation as to ownership,^" but he has no right to rely on what amounts to a mere prediction or an opinion of the seller.^^ ''Wright V. Brown, 67 N. Y. 1; Des Farges v. Pugh, 93 N. Car. 31, S3 Am. Rep. 446n; Ditton v. Purcell, — N. Dak. — , 132 N. W. 347, 36 L. R. A. (N. S.) 149. See also Ayres v. French, 41 Conn. 142; Union Nat. Bank v. Hunt, 76 Mo. 439; Buckley v. Artcher, 21 Barb. (N. Y.) S8S; Mulliken v. Millar, 12 R. I. 296; Donaldson v. Farwell, 93 U. S. 631, 23 L. ed. 993. The vendee's knowledge that he will not be able to pay for the goods purchased is equivalent to an intention not to pay. Elsass v. Harrington, 28 Mo. App. 300. ^Morrill v. Blackman, 42 Conn. 324; Houghtaling v. Hills, 59 Iowa 287, 13 N. W. 305; Kelsey v. Har- rison, 29 Kans. 143; Powell v. Bradlee, 9 Gill & J. (Md.) 220; Shipman v. Seymour, 40 Mich. 274; Zucker v. Karteles, 88 Mich. 413, SO N. W. 373; Illinois Leather Co. V. Flynn, 108 Mich. 91, 65 N. W. 519; Bidault v. Wales, 19 Mo. 36, 59 Am. Dec. 327; Klopenstein v. Mulcahy, 4 Nev. 296; Nichols v. Pin- ner, 18 N. Y. 295 ; Hennequin v. Nay- lor, 24 N. Y. 139; Morris v. Talcott, 96 N. Y. 100; Talcott v. Henderson, 31 Ohio St. 162, 27 Am. Rep. 501n; ' Rodman v. Thalheimer, 75 Pa. St. 232 ; Dalton v. Thurston, 15 R. I. 418, 7 Atl. 112, 2 Am. St. 905; Biggs v. Barry, 2 Curt. (U. S.) 259, Fed. Cas. No. 1402; Garbutt v. Bank, 22 Wis. 384; Consolidated Milling Co. V. Fogo, 104 Wis. 92, 80 N. W. 103. See also, Ex parte Whittaker, L. R. 10 Ch. App. 446. But the fact that the purchaser cannot reasonably hope to pay may give rise to an inference that there was no intention of pay- ing. Wilk V. Key, 117 Ala. 285, 23 So. 6; Burchinell v. Hirsch, 5 Colo. App. 500, 39 Pac. 352 ; Deere v. Mor- gan, 114 Iowa 287, 86 N. W. 271; Watson V. Silsby, 166 Mass. 57, 43 N. E. 1117; Syracuse Knitting Co. V. Blanchard, 69 N. H. 447, 43 Atl. dyi \ Sinnott v. German-American Bank, 164 N. Y. 386, 58 N. E. 286. Where a person desiring credit, on being asked "how he stood," correct- ly stated what he had in business and property, but was silent as to the fact that he owed about two-thirds as much as he possessed, the court said : "To tell half a truth only is to conceal the other half. Conceal- ment of this kind, under the circum- stances, amounts to a false representa- tion." Newell V. Randall, 32 Minn. 171, 19 N. W. 972, 50 Am. Rep. 562. ^Whitten V. Fitzwater, 129 N. Y. 626, 29 N. E. 298. On this subject see also, post, § 88, Knowledge and Intention. '"Hale V. Philbrick, 42 Iowa 81. '^ See post, § 84, Opinions and Pre- dictions. See also, Poland v. Brown- ell, 131 Mass. 138, 41 Am. Rep. 215; Collins V, Jackson, 54 Mich. 186, 19 N. W. 947. I05 FRAUD AND MISREPRESENTATION. § 72 The promoters- of an enterprise or the agents of a corporation are guilty of fraud if they induce a person to subscribe for shares of stock by representing that other well-known business men, prominent in the community, have subscribed for stock, when such subscriptions were made merely for the purpose of influencing others, and under a secret agreement that they would not be re- quired to pay for their stock, or that, in case of payment, the money would be refunded to them. The courts have held that such ^a secret agreement is a fraud on the rights of the one to whom it is represented that others have subscribed for stock, and that because of this fraud the subscriber is entitled either to rescind the con- tract or to defeat a recovery on notes he may have given in pay- ment for the stock.^^ It is immaterial whether or not the persons represented as subscribers were active in securing subscriptions.'* Thus, where the appellant, who was a banker and well-known business man, represented that he was one of the joint purchasers of a certain patent right, and was executing his notes for the same, but did not disclose that they were executed with the secret understanding that if he would induce the appellee and others ta purchase said patent right then the notes executed by appellee for a part of the purchase-money thereof were to be returned to him, this secret agreement was held to be a fraud on the rights of appellee.''* Likewise, if a book agent induces a subscription " Gilpin V. Netograph Mach. Co., stock subscription by representing 25 Okla. 408, 108 Pac. 382, 29 L. R. that an application for a patent had A. (N. S.) 477. In the above case been allowed by the patent office as it was held that the execution of re- originally filed, such statement be- newal notes before the discovery of ing made without any knowledge the fraud practiced did not consti- that they were untrue, and without tute a waiver of such fraud. Byers intent to deceive, the court held that V. Maxwell, 32 Tex. Civ. App. 269, the reckless assertion of that which 54 S. W. 789. vras untrue, and which deceived the *' Henderson v. Lacon, L. R. 5 Eq. party subscribing for stock, was a 249; Alabama Foundry &c. Works v. fraud which entitled the subscriber Dallas, 127 Ala. 513, 29 So. 459; to defeat an action to collect such Coles V. Kennedy, 81 Iowa 360, 46 subscription. Foulk's Accelerating N. W. 1088, 25 Am. St. 503; State Air Motor Co. v. Thies, 26 Nev. 158, Bank V. Cook, 125 Iowa 111, 100 N. 65 Pac. 373, 99 Am. St. 684. Where W. 72; Cox V. Cline, 147 Iowa 353, a father purchased a certificate of 126 N. W. 330; Talmage v. Sanitary tuition for his daughter in a business Security Co., 31 App. Div. (N. Y.) college on being told that several of 498, 52 N Y S 139; Elgin City her classmates were going to attend Banking Co. v. Hall, 119 Tenn. 548, plaintiff's college, he had a right to 108 S. W. 1068. rescind the agreement when it ap- ^ Coulter v. Clark, 160 Ind. 311, peared that such classmates had not 66 N. E. 739. Where one induced a purchased certificates of tuition. § ']2 CONTRACTS. Io6 by misrepresenting the contents and scope of a book to be pub- lished, the subscriber being in no position to ascertain the truth of the representations, the subscription so induced cannot be enforced.^^ Should the agent represent that the books sold are a special, limited, extra-illustrated edition, which fact, if true, would have added greatly to the value of such books, it has been held that a note given in payment therefor cannot be en- forced when the representations prove false. ^'^ The concealment or misstatement of material facts will avoid a contract of insurance. Thus in life insurance contracts the in- sured must disclose all facts known to him affecting the life upon which the insurance is placed,^' and if the statement is a warranty (not merely a representation), and is positive and unqualified, the contract is avoided by any part of the statement being in fact untrue,^* even though the insured did not know the statement was false.^' Brown v. Search, 131 Wis. 109, 111 fries v. Life Ins. Co., 22 Wall. (U. N. W. 210. S.) 47; ^tna Life Ins. Co. v. France, ^Greenleaf v. Gerald, 94 Maine 91 U. S. 510. As to when a state- 91, 46 Atl. 799, SO L. R. A. 542, 80 ment in an insurance contract is to Am. St. ill; History Co. v. Durham be construed as a warranty or a rep- (Tex.), 23 S. W. 327; History Co. resentation, see Goff v. Supreme V. Flint, 4 Wills. (Tex. Civ. App.) Lodge Royal Achates, 90 Nebr. 578, Cas., § 224, 15 S. W. 912. 134 N. W. 239, Zl L. R. A. (N. S.) "■Schultheis v. Sellers, 223 Pa. 1191. 513, 72 Atl. 887, 22 L. R. A. (N. S.) "Bloomington Benefit Assn. v. 1210. Cummings, 53 III. App. 530; Con- " London Assurance Co. v. Man- tinental Inv. Co. v. Rogers, 119 111. sel, 11 Ch. Div. 363, 48 L. J. Ch. 331; 474, 10 N. E. 242, 59 Am. Rep. 810n; Lycoming Ins. Co. v. Rubin, 79 111. Glade v. Germania Fire Ins. Co., 56 402; Walden v. Louisiana Ins. Co., Iowa 400, 9 N. W. 320; Ring v. 12 La. 134; New York Ins. Co. v. Phoenix Assur. Co., 145 Mass. 426, New York Fire Ins. Co., 17 Wend. 14 N. E. 525; Goddard v. Monitor (N. Y.) 351; Burritt v. Saratoga Ins. Mutual Fire Ins. Co., 108 Mass. 56, Co., 5 Hill (N. Y.) 188, 40 Am. Dec. 11 Am. Rep. 307; Campbell v. New 345n; Smith v. ^tna Life Ins. Co., England Life Ins. Co., 98 Mass. 381; 49 N. Y. 211; Smith v. Columbia Seal v. Farmers' &c. Ins. Co., 59 Ins. Co., 17 Pa. St. 253, 55 Am. Dec. Nebr. 253, 80 N. W. 807 ; Clemans v. 546. See also, Locke v. N. American Supreme Assembly Royal Society, Ins. Co., 13 Mass. 61 ; Clark v. Union 131 N. Y. 485, 30 N. E. 496, 16 L. Mut. Ins. Co., 40 N. H. 333, 11 Am. R. A. iZ; Armour v. Transatlantic Dec. 721; Columbia Ins. Co. v. Law- Fire Ins. Co., 90 N. Y. 450; Cushman rence, 10 Pet. (U. S.) 507, 9 L. ed. v. United States Life Ins. Co., 63 512. N. Y. 404 ; Byers v. Farmers' Ins. ''Alabama Ins. Co. v. Garner, 11 Co., 35 Ohio St. 606, 35 Am. Rep. Ala. 210; Rice v. Fidelity &c. Co., 623n; Connecticut Mut. Life Ins. Co. 103 Fed. 427, 43 C. C. A. 270; Su- v. Pyle, 44 Ohio St. 19, 4 N. E. 465, preme Lodge v. McLaughlin, 108 111. 58 Am. Rep. 781 ; Hartman v. Key- App. 85; Cushman v. United States stone Ins. Co., 21 Pa. St. 466; Bloom- Life Ins. Co., 63 N. Y. 444; Jef- ing Grove v. McAnerney, 102 Pa. St. 107 FRAUD AND MISREPRESENTATION. § 7Z § 73. Fraud as to contents or substance of contracts. — As a general rule the mind must accompany the act of signing a con- tract in writing. If one is induced to sign an instrument by a fraudulent reading or statement of its contents or substance, un- mixed with any fault or negligence in himself or his agents, and he believes he is assenting to a contract of different import from that which he actually signs, he is not bound. It makes no differ- ence whether such misstatement or misreading of the contents or substance was made by the party who seeks to enforce the obligation or by a stranger who acted for him.*" Thus far all authorities agree. They also agree that if one to whom the in- strument is falsely read, or its contents misstated, is on an un- equal footing with the party who reads the instrument or makes the statements as to its contents he is not guilty of negligence in signing the instrument because of a rightful reliance on such party. So when the party defrauded by such means is illiterate and unable to read," reads with difficulty, has defective eye- 335, 48 Am. Rep. 209; Freedman v. Providence Ins. Co., 182 Pa. St. 64, 37 Atl. 909; Standard &c. Ins. Co. V. Lauderdale, 94 Tenn. 635, 30 S. W. 732; New York Life Ins. Co. v. Fletcher, 117 U. S. 519, 6 Sup. Ct. .837; Powers v. North Eastern Mut. ' Life Ins. Co., 50 Vt. 630 ; Ryan v. Springfield Fire Ins. Co., 46 Wis. 671, 1 N. W. 426. " In re Thorogood's Case, 2 Coke 9; Foster v. Mackimon, 38 L. J. C. P. 310; Sementek v. Cornhauser, 17 111. App. 266; Rockford &c. R. Co. v. Shunick, 65 111. 223; Strong v. Lin- ington, 8 111. App. 436; Alfred Shrimpton v. Philbrick, 53 Minn. 366, 55 N. W. 551 ; CotteriU v. Crum, 100 Mo. 397, 13 S. W. 753, 18 Am. St. 549n; Bridger v. Goldsmith, 143 N. Y. 424, 38 N. E. 458; Albany City Saving Inst. v. Burdick, 87 N. Y. 40. See also. Case Mill Mfg. Co. v. Vick- ers, 147 Ky. 396, 144 S. W. 76. As to the right, as against a subsequent bona fide purchaser, to avoid a deed be- cause of a false impression, induced by fraud, as to the contents or char- acter of the paper signed, see Conk- lin V. Benson, 159 Cal. 785, 116 Pac. 34, 36 L. R. A. (N. S.) 537, and note. "Jones V. Austin, 17 Ark. 498; Alexander v. Dickinson (Ark), 101 S. W. 739; American Standard Jew- elry Co. v. Witherington, 81 Ark. 247, 98 S. W. 695; Metropolitan Loan Assn. v. Esshe, 75 Cal. 513, 17 Pac. 675; Sullivan v. Moorhead, 99 Cal. 157, 33 Pac. 796 ; Skym v. Weske Con- solidated Co., 115 Cal. 17, 47 Pac. 116; Hawkins v. Hawkins, 50 Cal. 558; Senter v. Senter, 70 Cal. 619, 11 Pac. 782 ; Wilson v. Moriarty, 11 Cal. 596, 20 Pac. 134, 88 Cal. 207, 26 Pac. 85; Meyer v. Hass, 126 Cal. 560, 58 Pac. 1042; May v. Seymour, 17 Fla. 725; Grimsley v. Singletary, 133 Ga. 56, 65 S. E. 92, 134 Am. St. 196; Chi- cago &c. R. Co. V. Lewis, 109 111. 120 ; Rockford &c. R. Co. v. Shunick, 65 111. 223; Union &c. Ins. Co. v. Huyck, 5 Ind. App. 474, 32 N. E. 580; Green V. Wilkie, 98 Iowa 74, 66 N. W. 1046, Z6 L. R. A. 434, 60 Am. St. 184; Win- field National Bank v. Corco, 46 Kans. 620, 26 Pac. 939; Sibley v. Hol- comb, 104 Ky. 670, 47 S. W. 765; Trambley v. Ricard, 130 Mass. 259. In the above case the party signing the contract failed to have it read or explained to him, supposing that it contained the terms of their oral agreement. Mullen v. Old Colony Co., 127 Mass. 86, 34 Am. Rep. 349; 73 CONTRACTS. 1 08 sight,*^ or cannot understand the language in which it is writ- ten." Some courts lay down the rule that the carelessness or neg- ligence of a party in signing a contract does not estop him from afterward setting up that it does not contain the true agree- ment of the parties, in a suit thereon between the original parties to such contract, or their privies, where the party seeking en- forcement practiced fraud or deception in order to induce the other to sign.** The rule laid down by the foregoing cases seems correct in principle, for if one signs an agreement, relying on the Schaller v. Borger, 47 Minn. 357, SO N. W. 247; Campbell v. Doggett (Miss.), 23 So. 371; Vandergrif v. Brock, 89 Mo. App. 411; Birdsall v. Coon, 157 Mo. App. 439, 139 S. W. 243; Spelts v. Ward (Nebr.), 96 N. W. 56; Decker v. Hardin, 5 N. J. L. 579; Mason v. Postal Tel. Cab. Co., 71 S. Car. ISO, SO S. E. 781. The same rule applies even though the repre- sentation be made by one not a party to the agreement, but acting for one who is a party to the contract. Fenter V. Obough, 17 Ark. 71 ; Schuylkill Co. V. Copley, 67 Pa. St. 386, 5 Am. Rep. 441. But the mere fact that the party signing is illiterate does not ex- cuse him from exercising due dili- gence under the circumstances. Mont- gomery V. Scott, 9 S. Car. 20, 30 Am. Rep. 1. The failure of an illiterate person to have a contract read to him before signing it will ordinarily estop him from avoiding the contract. This is not true, however, where he was induced to sign by false representa- tions as to its contents. Baldwin v. Postal Tel. Cable Co., 78 S. Car. 419, 59 S. E. (il. " Loucks V. Taylor, 23 Ind. App. 245, 55 N. E. 238; Dashiel v. Harsh- man, 113 Iowa 283, 85 N. W. 851; St. Louis Jewelry Co. v. Bennett, 75 Kans. 743, 90 Pac. 246. In the above case the defendant's daughter was present and would have read the in- strument to him had he requested her so to do. His failure to have the in- strument read by her did not prevent him from setting up the fraud prac- ticed in procuring his signature. Win- field Nat. Bank v. Croco, 46 Kans. 620, 26 Pac. 939; Stewart v. Roberts, 33 Ky. L. 332, 110 S. W. 340; First Nat. Bank v. Deal, 55 Mich. 592, 22 N. W. 53. See also, Winter v. John- son, — S. D. — , 131 N. W. 1020. Here plaintiff was old and his eye- sight defective. "Alexander v. Dickinson (Ark), 101 S. W. 739; Meyer v. Hass, 126 Cal. 560, 58 Pac. 1042; Adolph v. Minneapolis R. Co., 58 IMinn. 178, 59 N. W. 959; Beck &c. Lith. Co. v. Obert, 54 Mo. App. 240. If an instrument is signed under such circumstances as to prevent the one signing from gain- ing knowledge of its contents he is lot bound. Chapman v. Atlantic Guano Co., 91 Ga. 821, 18 S. E. 41. " Moline Jewelry Co. v. Crew, 171 Ala. 415, 55 So. 144; Shook v. Puri- tan Mfg. Co., 75 Kans. 301, 89 Pac. 653, 8 L. R. A. (N. S.) 1043; St. Louis Jewelry Co. v. Bard, 75 Kans. 837, 90 Pac. 783; Eggelston v. Ad- vance Thresher Co., 96 Minn. 241, 104 N. W. 891; Woodbridge v. DeWitt, 51 Neb. 98, 70 N. W. 506; Ward v. Spelts, 39 Nebr. 809, 58 N. W. 426. In this case it is said, "the doctrine that the carelessness or negligence of a party in signing the writing estops him from afterward disputing the contents of such writing is not ap- plicable in a suit thereon between the original parties thereto, when the de- fense is that such writing, by reason of fraud, does not embrace the con- tract actually made." Griffin v. Roanoke R. &c. Co., 140 N. Car. 514, S3 S. E. 307, 6 L. R. A. (N. S.) 463; Weil & Co. V. Hendrick Mfg. Co., — R. I. — , 80 Atl. 447. See also. Van Metre v. Nunn, — Minn. — , 133 N. W. 1012. I09 FRAUD AND MISREPRESENTATION. § 73 statement of the other party as to its contents, which statement proves false, the contract should be voidable as between the par- ties or their privies, for the defrauded party should not be per- mitted to take advantage of his own wrong, or to say that the other party was negligent in believing him. A majority of the courts take this view of the subject.*^ This rule, however, is not universal. Other courts hold that if the defrauded party could read, or if by the exercise of reasonable diligence he might have discovered the deception, he is bound by the contract, his own negligence defeating his right to avoid the agreement. *° But on "Prestwood v. Carlton, 162 Ala. 327, SO So. 254; Bates v. Harte, 124 Ala. 427, 26. So. 898, 82 Am. St. 186; Beck &c. Lith. Co. v. Houppert, 104 Ala. 503, 16 So. 522, 53 Am. St. 11; Tillis V. Austin, 117 Ala. 262, 22 So. 975 ; Cannon v. Lindsey, 85 Ala. 198, 3 So. 676, 7 Am. St. 38; Davis v. Snider, 70 Ala. 315 ; Foster v. Johnson, 70 Ala. 249; Wenzel v. Shulz, 78 Cal. 221, 20 Pac. 404 ; McBride v. Macon Tel. Co., 102 Ga. 422, 30 S. E. 999; Brooks v. Matthews, 78 Ga. 739, 3 S. E. 627; New V. Wamback, 42 Ind. 456; Givan V. Masterson, 152 Ind. 127, 51 N. E. 237; Burlington Lumber Co. v. Evans Lumber Co., 100 Iowa 469, 69 N. W. 558; Western Mfg. Co. v. Cotton, 31 Ky. L. 1130, 104 S. W. 758, 12 L. R. A. (N. S.) 427. In the above case the contract contained this statement : "I have read this contract." The court held, however, that this did not prevent the one signing the contract from setting up fraud in an action brought to enforce it, and stated "the law is not designed to protect the vig- ilant or the tolerable vigilant, alone, although it rather favors them, but is intended as a protection to even the foolishly credulous as against the machinations of the designedly wicked." Tanton v. Martin, 80 Kans. 22, 101 Pac. 461; Whiting v. Price, 172 Mass. 240, 51 N. E. 1084, 70 Am. St. 262; Freedley v. French, 154 Mass. 339, 28 N. E. 272; First Na- tional Bank v. Deal, 55 Mich. 592, 22 N. W. 53; Anderson v. Walter, 34 Mich. 113; Maxfield v. Schwartz, 45 Minn. 150, 47 N. W. 448, 10 L. R. A. 606; Birdsall v. Coon, 157 Mo. App. 439, 139 S. W. 243; Story v. Gam- mell, 68 Nebr. 709, 94 N. W. 982; Cole Bros. V. Williams, 12 Nebr. 440, 11 N. W. 875 ; Alexander v. Brogley, 62 N. J. L. 584, 41 Atl. 691, affd. 63 N. J. L. 307, 43 Atl. 888; Smith v. Smith, 134 N. Y. 62, 31 N. E. 258, 30 Am. St. 617 ; Monnett v. Columbus &c. R. Co., 26 Ohio Cir. Ct. 469; Charleston &c. R. Co. v. Devlin, 85 S. Car. 128, 67 S. E. 149. The fraud practiced relates to the time the instrument is signed, and fraud practiced at that time will not excuse the failure to observe open and apparent departures in the thing delivered from that bargained for, within a reasonable time after deliv- ery. Steinberg v. Phoenix Ins. Co., 49 Mo. App. 255 ; Bostwick v. Mutual LJfe Ins. Co., 116 Wis. 392, 92 N. W. 246, 89 N. W. 538, 67 L. R. A. 705. See also, Cases cited in the preceding note. But see Continental Ins. Co. v. Ruckman, 127 111. 364, 20 N. E. 11, 11 Am. St. 121; Keller v. Equitable Fire Ins. Co., 28 Ind. 170; McKenzie V. Planters' Ins. Co., 9 Heisk. (Tenn.) 261. Whether the signor was guilty of negligence in signing is a question of fact for the jury. Voyles v. Pos- tal Tel. Co., 78 S. Car. 430, 59 S. E. 68. As to whether fraud in procure- ment of a negotiable instrument will entitle the maker to a void payment when such instrument is in the hands of an innocent purchaser, see under title "Bills and Notes." As a general rule jt is no defense, although there are jurisdictions which hold other- wise. "Toledo Computing Scale Co. v. Garrison, 28 App. D. C. 243 ; Dunham Lumber Co. v. Holt, 123 Ala. 336, 26 So. 663; Kimmell'v. Skelly, 130 Cal. § 72, CONTRACTS. IIO examining the above cases it will be found that they, in the main, give illustrations of gross negligence on the part of the party defrauded, while on the other hand, little, if any, actual fraud was practiced by the adverse party. Thus in one of them the facts showed that plaintiff's agent, who solicited an order for a certain article from defendant, did nothing whatever to induce him to sign the order without reading it, no false representations as to its contents were made, but the agent simply, silently, rap- idly and somewhat illegibly wrote the order, with a pencil, and then silently placed it immediately and quickly before the de- fendant, who signed the same without reading it.*^ In another it appears that the signer was a highly educated man, and that the instrument sought to be avoided consisted of one sentence of three lines, legibly written, so far as appears, and that the part which was claimed to have been fraudulently inserted was in the last line and immediately above his signature.*^ It goes without saying that, if the party is capable of reading the instrument understandingly and actually does read it, he can- 555, 62 Pac. 1067; Hazard v. Gris- wold, 21 Fed. 178; Taylor v. Flecken- stein, 30 Fed. 99; Chicago Building &c. Co. V. Summerour, 101 Ga. 820, 29 S. E. 291 ; Rounsaville v. Leonard Mfg. Co., 127 Ga. 735, 56 S. E. 1030; McCormack v. Molburg, 43 Iowa 561 ; Wallace v. Chicago &c. R. Co., 67 Iowa 547, 25 N. W. 772; Reid v. Bradley, 105 Iowa 220, 74 N. W. 896; Bannister v. Mclntire, 112 Iowa 600, 84 N. W. 707; Maine Mut. Marine Ins. Co. V. Hodgkins, 66 Maine 109; Johnston v. Covenant Mut. Life Ins. Co., 93 Mo. App. 580; McNinch v. Northwest Thresher Co., 23 Okla. 386, 100 Pac. 524, 138 Am. St. 803n. The decision in the above case is based on the ground that "the exe- cution of a contract in writing super- seded all oral negotiations or stipula- tions concerning its terms and sub- ject-matter which preceded or accom- panied the execution of the instru- ment, in the absence of fraud or mis- take of fact; and any representation made prior to or contemporaneous with the execution of the written con- tract is inadmissible to contradict, change or add to the terms plainly incorporated into and made a part of the written contract." Farlow v. Chambers, 21 S. Dak. 128, 110 N. W. 94; Gibson v. Brown (Tex. Civ. App.), 24 S. W. 574; Dowagiac Mfg. Co. V. Schroeder, 108 Wis. 109, 84 N. W. 14; Standard Mfg. Co. v. Slot, 121 Wis. 14, 98 N. W, 923, 105 Am. St. 1016. In the case of Phillips v. Gallant, 1 Hun (N. Y.) 528, 3 Thomp. & C. 618, the defendant was held bound, although misinformed as to the terms of the contract by an in- terpreter. " Rounsaville v. Leonard Mfg. Co., 127 Ga. 735, 56 S. E. 1030. "Farlow v. Chambers, 21 S. Dak. 128, 110 N. W._94. It is not claimed, however, that in all cases cited neg- ligence of the defrauded party was so apparent. For instance, in one of them a deed was presented to the de- fendant for signature while he was at work in the woods, and did not have his spectacles with him. He did not have the deed read to him, and signed it under a misrepresentation as to its contents. The plaintii? was the de- fendant's step-son. Gibson v. Brown (Tex. Civ. App.), 24 S. W. 574, Ill FRAUD AND MISREPRESENTATION. § 74 not complain of false representations as to its contents." Or, if he is given ample opportunity to familiarize himself with its terms, and if he does in fact actually counsel with a business man of experience, and on his advice signs the contract, although not reading it himself, he is bound, and cannot maintain an action in equity to rescind the same, even though the other party to the con- tract had misrepresented its terms.^" § 74. Fraud where there is a fiduciary or confidential rela- tion. — Where a confidential relation exists between the par- ties to an agreement it is the duty of the dominant party to make a full and clear statement of all facts which relate to the subject- matter of the contract. Not only this, but such party will be re- quired to fully establish the agreement and remove from it every element of doubt or suspicion that may attach to its execution. The law thus rightfully places the burden upon him of proving the righteousness of his conduct and the validity of the con- tract."^ The one standing in a confidential relation who conceals or fails to make a full disclosure of facts which are within his knowledge, knowing the other party to be ignorant of those facts, is guilty of fraud both in law and in equity."^ Confidential relations have been held to exist between trustee and cestui que trust, principal and agent, attorney and client, phy- sician and patient, husband and wife, parent and child, guardian and ward, partners, clergyman and parishioners, and some others. These relations will be very briefly considered in the order named. A trustee may not purchase the trust estate from his cestui que "Oliphant v. Liversidge, 142 111. N. E. 59; Mason v. Bauman, 62 III. 160, 30 N. E. 334; James v. Dalbey, 16. See also, Meyers v. Merillion, 118 107 Iowa 463, 78 N. W. 51; Nicol v. Cal. 352, SO Pac. 662; Colton v. Stan- Young, 68 Mo. App. 448. ford, 82 Cal. 351, 23 Pac. 16, 16 Am. °°Magee v. Verity, 91 Mo. App. St. 137; Daniel v. Brown, 33 Fed. 486, 71 S. W. 472. 849; Green v. Peeso, 92 Iowa 261, 60 ='Bowen v. Kutzner, 167 Fed. 281, N. W. 531; Purslow v. Jackson, 93 93 C. C. A. 33. See also, Huguenin Iowa 694, 62 N. W. 12; Finegan v. V Baseley, 13 Ves. 105 ; Wright v. Thiesen, 92 Mich. 173, 52 N. W. 619 ; Proud, 13 Ves. 136; Edmonds v. Mey- Zahn v. McMillin, 179 Pa. St. 146, ?)(^ rick, 2 Hare 60; Harris v. Tremen- Atl. 188, 57 Am. St. 591; Mallory v, heere, 15 Ves. 34; Hunter v. Atkins, Leach, 35 Vt. 156, 82 Am. Dec. 625; 3 My'l & K. 113; Cowee v. Cornell, Virginia Land Co. v. Haupt, 90 Va, 75 N Y 91, 31 Am. Rep. 428; Nesbit 533, 19 S. E. 168, 44 Am. St. 934; V Lockman, 35 N. Y. 167; Sears v. Bell v. Bell, 3 W. Va. 183; Wells v. Shafer, 2 Seld. (N. Y.) 268. McGesck, 71 Wis. 196. 35 .N. W. 769. ''^ Miller v. Whelan, 158 111. 544, 42 § 74 CONTRACTS. 112 trust. The law regards with a jealous eye all transactions be- tween persons occupying confidential relations. As a general rule a court of equity will avoid a contract altogether without proof of fraud, and will never sustain it except where the trustee clearly proves the fairness of such transaction, and that it was advantageous to the cestui que trust.^^ Consequently, if the trustee attempts to gain an interest in the trust property without disclosing his identity he will continue to hold as trustee.^* Nor can he purchase at his own sale as trustee,^^ unless he obtains spe- cial permission from a court of competent jurisdiction.^" While a trust remains unperformed a trustee has no right to purchase the trust property unless he discloses his identity, obtains the con- sent of the beneficiaries, and make a full disclosure of everything that relates to it.^^ Courts will even look with suspicion upon a purchase by a former trustee after the termination of the trust "Saunders v. Richard, 35 Fla. 28, 16 So. 679. See also, Dwight v. Black- mar, 2 Mich. 330; Terwilliger v. Brown, 44 N. Y. 237; Graves v. Waterman, 63 N. Y. 657; Spencer & Newbold's Appeal, 80 Pa. St. 317. The transactions will not be sustained if the trustee has taken advantage of any information received by him in such capacity, nor if the cestui que trust entered into the transaction in ignorance of her legal rights. Mc- Cants V. Bee, 1 McCord Equity (S. Car.) 383, 16 Am. Dec. 610. "Mareck v. Minneapolis Trust Co., 74 Minn. 538, 11 N. W. 428; New- man V. Newman, 152 Mo. 398, 54 S. W. 19; Shelby v. Creighton, 65 Neb. 485, 91 N. W. 369, 101 Am. St. 630; Bohle V. Hassel Broch, 64 N. J. Eq. 334, 51 Atl. 508; Trustees of Oberlin College v. Blair, 45 W. Va. 812, 32 S. E. 203. This is true notwithstand- ing a fair and adequate price is paid for the property so purchased. Smith V. Miller, 98 Va. 535, Z1 S. E. 10. The trustee is not permitted to make a profit for himself out of the trust property. Frazier v. Jeakins, 64 Kans. 615, 68 Pac. 24, 57 L. R. A. 575. To avoid a purchase by a trustee of prop- erty involved in the trust it is suffi- cient for the cestui que trust to show the trustee's relation to property and to them. Wilson v. Brookshire, 126 Ind. 497, 25 N. E. 131, 9 L. R. A. 792. "^St. Paul Trust Co. v. Strong, 85 Minn. 1, 88 N. W. 256; Torrey v. Bank of Orleans, 9 Paige (N. Y.) 649; SchoUe v. Scholle, 101 N. Y. 167, 4 N. E. 334; Davoue v. Fanning, 4 Johns. Ch. (N. Y.) 199; Allen v. Gil- lette, 127 U. S. 589, 32 L. ed. 271, 8 Sup. Ct. 1331. ""Allen V. Gillette, 127 U. S. 589, 32 L. ed. 271, 8 Sup. Ct. 1331. In Texas the trustee may purchase at a judicial sale over which he has no control, and which was not brought about by himself. Goodgame v. Rush- ing, 35 Tex. 722; Scott v. Mann, 36 Te.x. 157; Howard v. Davis, 6 Tex. 174; Erskine v. Dela Baum, 3 Tex. 406, 49 Am. Dec. 751. "Ward V. Armstrong, 84 111. 151; Woodridge v. Bockes, 170 N. Y. 596, 63 N. E. 362; In re Brownfield's Es- tate, 193 Pa. St. 151, 44 Atl. 246; Brown v. Brown, 107 Tenn. 349, 65 S. W. 413. 113 FRAUD AND MISREPRESENTATION. § 74 relation/^ These principles do not apply, however, in matters outside the trust."" As between principal and agent, the agent occupies a con- fidential relation and is required to exercise the highest faith toward, and to secure the best terms for his principal.^" An agent cannot assume incompatible relations nor place his in- terests in conflict with those of his principal;"^ nor can he purchase the principal's property without disclosing his identity and getting his principal's assent."^ The agent is bound to exer- cise the most perfect good faith to keep his principal informed of facts coming to his knowledge affecting his rights and inter- ests.°^ The same general principles above stated apply to relations between attorney and client. Thus it has been that fraudu- lently representing the value of his service to procure the exe- cution of a note constituted fraud, and is a defense available against a note given for excessive fees.°* It has even been held that he is not entitled to accept a gift from the client during the continuance of the confidential relation.'" Where the attorney purchases property at a price much less than its value, the client having no knowledge of the value except what the attorney told him, the burden rests upon the attorney to establish perfect fair- "Tate V. Williamson, L. R. 2 Ch. ""Bent v. Priest, 86 Mo. 47S; Le App. 55. In the above case it is said: Gendre v. Byrnes (N. J.), 12 Cent. "The broad principle on which the Rep. 815; Murray v. Beard, 102 N. Y. courts act in cases of this description SOS, 7 N. E. SS3 ; O'Grady v. Coe, 13 is that, whereby there exists such a Hun (N. Y.) 598. confidence, of whatever character that "^ Dodge v. Black, 21 Ky. L. 992, 53 confidence may be, as enables the per- S. W. 1039 ; Louisville Bank v. Gray, son in whom confidence or trust is 84 Ky. 565. See also, Adams v. Sayre, reposed to exert an undue influence 70 Ala. 318; Francis v. Kerker, 85 over the person trusting him, the 111. 198; Gardner v. Ogden, 22 N. Y. court will not allow any transaction 327, 78 Am. Dec. 192; Michoud v. between the parties to stand unless Girod, 4 How. (U. S.) 503. there has been the fullest and fairest "" Holmes v. Cathcart, 88 Minn. 213, explanation and communication of 92 N. W. 956, 60 L. R. A. 733, 97 every particular resting in the breast Am. St. 513. of the one who seeks to establish a " Manley v. Felty, 146 Ind. 194, 45 contract with the person so trusting N. E. 74. ^ ,, him See also, Ilgenfritz v. Ilgen- In re Greenfields Estate, 14 Pa. fritz, 116 Mo. 429, 22 S. W. 786. St. 489, 506. As between attorney and "" Boyd V. Blankman, 29 Cal. 19, 87 client, in matters of a gift, a contract Am Dec. 146- Kern v. Kern, 36 Ore. must be carried on with the greatest S 58 Pac 527; Fuller v. Abbe, 105 fairness. Jennings v. McConnel, 17 Wis 235 81 n' W. 401. HI- 148; McCormick v. Malin, 5 "Cheney v. Gleas'on, 125 Mass. 166. Blackf. (Ind.) 509. 8 — Contracts, Vol. I § 74 CONTRACTS. 114 ness, accuracy and equity; and it makes no difiference that the transaction was through a third person."^ The general rule may be stated that an attorney must make a full and fair disclosure of all material facts to his client/^ and any doubt as to the fair- ness of an agreement must be resolved in favor of the client."^ The relation of physician and patient is confidential in its na- ture."® Thus, where it appeared that the donor was very old and sick much of the time, weak in mind, and broken down generally, that she made a gift of a large portion of her estate to the de- fendant, who was not a relative but her physician, that he had charge of all her affairs and was her only adviser, and that the gift was made without consulting any one else and was kept secret until after her death, it was declared void.'" Confidential relations exist between husband and wife.'^ Con- tracts entered into subsequent to the marriage, which are disad- vantageous to the wife, are presumed to be fraudulent.'^ As a ™ Edwards v. Meyrick, 2 Hare 60; Zeigler v. Hughes, SS 111. 288; How- ell V. Ranson, 11 Paige (N. Y.) 538. "Cox V. Delmas, 99 Cal. 104, 33 Pac. 836; Miller v. Whelan, 158 111. 544, 42 N. E. 59; Elmore v. Johnson, 143 111. 513, 32 N. E. 413, 21 L. R. A. 366, Z6 Am. Rep. 401n ; Bibb v. Smith, 1 Dana (Ky.) 580; Beedle v. Crane, 91 Mich. 429, 51 N. W. 1070; Rose v. Mynatt, 7 Yerg. (Tenn.) 30; Baker V. Humphrey, 101 U. S. 494, 25 L. ed. 1065; Vanesse v. Reid, 111 Wis. 303, 87 N. W. 192. "'Cassem v. Heustis, 201 111. 208, 66 N. E. 283, 94 Am. St. 160. If the fairness of an agreement cannot be made to conclusively appear the con- tract will be presumed to be fraudu- lent. Willin V. Burdett, 172 III. 117, 49 N. E. 1000; Shirk v. Neible, 156 Ind. 66, 59 N. E. 281, 83 Am. St. 150; French v. Cunningham, 149 Ind. 632, 49 N. E. 797; Bibb v. Smth, 1 Dana (Ky.) 580; Merryman v. Euler, 59 Md. 588, 43 Am. Rep. 564; Gray v. Emmons, 7 Mich. 533; Phillips v. Overton, 4 Hayw. (Tenn.) 291; Rose V. Mynatt, 7 Yerg. (Tenn.) 30. "Dent V. Bennett, 4 Myl. & C. 269; Unruh v. Lukens, 166 Pa. St. 324, 31 Atl. 110. '"Woodbury v. Woodbury, 141 Mass. 329, 5 N. E. 275, 55 Am. Rep. 479n. The above case is one of un- due influence, yet the general princi- ples announced by it are also appli- cable to the case of fraud. "Meldrum v. Meldrum, 15 Colo. 478, 24 Pac. 1083, 11 L. R. A. 65; In re Darlington's Appeal, 86 Pa. St. 512, 27 Am. St. 726. The relations no longer continue after the wife has commenced suit for divorce ; after this she is under the necessity of making the efforts to test the truth of representation made by the hus- band the same as any other person. Champion v. Woods, 79 Cal. 17, 21 Pac. 534, 12 Am. St. 126. "Witbeck V. Witbeck, 25 Mich. 439; Hovorka v. Havlik, 68 Neb. 14, 93 N. W. 990, 110 Am. St. 387; Farmer v. Farmer, 39 N. J. Eq. 211; Hall V. Otterson, 52 N. J. Eq. 522, 28 Atl. 907. "The rule of equity that 'he who bargains, in a matter of ad- vantage, with a person placing con- fidence in him, is bound to show that a reasonable use has been made of that confidence' (Gibson v. Jeyes, 6 Ves. 266), applies with peculiar force to a transaction by which a husband secures from his wife a portion of her estate. The most dominant of all relations is that of the husband over the wife. There are, of course, exceptional cases when the will of 115 FRAUD AND MISREPRESENTATION. § 74 general rule voluntary transfers made by the wife to the husband, especially if made under circumstances such as give rise to a sus- picion of unfairness," as where made just prior to her death," are presumed fraudulent.'^ the woman may control. The rela- tion is so close, the trust of the wife so absolute, her dependence so entire, it may be,_ her fear so abject, while the dominion of her husband is so complete, his influence so insidious yet so controlling, that equity regards all such transactions with a jealous care and subjects them to the sever- est scrutiny. The greater the affec- tion, the more submissive the de- pendence; the stronger the trust, the more liable is the wife to be subject to the control of the husband, and the more vigilant should the court be in protecting the weak. Farmer v. Farmer, 39 N. J. Eq. 211, 216; May, Fraud. Conv. (Text-Book Series), 483 ; Black v. Black, 30 N. J. Eq. 215, 219; Boyd v. De La Montagnie, Ti N. Y. 502 ; Weeks v. Haas, 3 Wills & S. 520; Campbell's Appeal, 80 Pa. St. 298; Darlington's Appeal, 86 Pa. St. 512; McRae v. Battle, 69 N. Car. 98; Witbeck V. Witbeck, 25 Mich. 439; Smyley v. Reese, 53 Ala. 89; Shaffer V. Kugler, 107 Mo. 58, 17 S. W. 698. Chief Justice Gibson says, in Watson V. Mercer, 6 Serg. & R. (Pa.) 49, with reference to transfers obtained from the wife for the purpose of vesting the estate in the husband: 'What honest mind would feel regret that, in the hurry of accomplishment, some circumstance, merely formal, was omitted by which the wife and her family were rescued from his rapac- ity?' This deed was executed at a critical period of Mrs. Otterson's life. She was in extremely delicate health; it was doubtful if she could survive the peril of her approaching confinement. She was a refined lady, unacquainted with business, relying for its care first on her agents and then on her husband, who, after their marriage, became her agent and was entrusted by her with the entire man- agement of her estate and exclusively of the property in question in short; she was most dependent on and de- voted to him and his interests, her affection for and attention to him were marked, as was her anxiety to please him. He was a prominent law- yer; so was the selected trustee, who was the husband's intimate friend; and so was also the officer who took the acknowledgment. So far as the evidence shows, this inexperienced lady, she being without any compe- tent independent adviser, was sur- rounded by these gentlemen, of whose legal ability she must have been aware, in one of whom she reposed the most implicit confidence. It is a case in which the court should be alert to require the observance of all the technical rules applicable. In all transactions between persons occupy- ing relations, whether legal, natural, or conventional in their origin, in which confidence is naturally in- spired, is presumed, or in fact, rea- sonably exists the burden of proof is thrown upon the person in whom con- fidence is reposed, and who has ac- quired an advantage, to show affirma- tively, not only that no deception was practiced therein, no undue influence used, and that all was fair, open and voluntary, but that it was well un- derstood. Mott V. Mott, 49 N. J. Eq. 192, 22 Atl. 997; Gibson v. Jeves, 6 Ves. 266." Boyd v. De La Montagnie, IZ N. Y. 498, 29 Am. Rep. 197. " Way V. Union Cent. Life Ins. Co., 61 S. Car. 501, 39 S. E. 742. "Lewis V. McGrath, 191 111. 401, 61 N. E. 135. "But there is no presumption of fraud in conveyances made by the husband to a wife. McDougall v. Mc- Dougall, 135 Cal. 316, Q Pac. 778; Sheehan v. Sullivan, 126 Cal. 189, 58 Pac. 543; Ford v. Ford, 193 Pa. St. 530, 44 Atl. 561. However, she may be guilty of fraudulent conduct. _ 'This fact may be shown in an action to avoid the conveyance. Lins v. Lin- hardt, 127 Mo. 271, 29 S. W. 1025; Birdsong v. Birdsong, 2 Head. (Tenn.) 289. See also. Stone v. Wood, 85 111. 603. It has been held that under the California Code a wife who brings an action to enforce a § 74 CONTRACTS. Il6 Equity scrutinizes with special care transactions between parents and their children. "Everybody will affirm that if there be a pecuniary transaction between parent and child just after the child attained the age of twenty years, and prior to what may be called complete emancipation, without any benefits moving to the child, the presumption is that undue influence has been exercised to procure that liability, and it is a business and duty of the party who endeavors to maintain that trans- action to show that the presumption is adequately rebutted, and that it may be adequately rebutted is clear.'"" A conveyance of land made by a young girl to her grandparents, with whom she has resided from infancy and who have had entire control of her person and property, and have purposely kept her in ignor- ance of her rights, is fraudulent and will be set aside by a court of equity." Contracts and conveyances whereby benefits are se- cured by the children to their parents must be entered into with scrupulous good faith, and must be reasonable under the circum- stances ; unless this is true they will be set aside, except, perhaps, where the rights of innocent third parties have intervened.''^ On the other hand, conveyances or other transactions by the parent which are beneficial to the child are not presumed to be fraudu- lent;'^ but if it appears that the child was the dominant party the burden may be upon such child to explain any circumstances which give rise to suspicion.^" The relations among the members of a firm are also confiden- tial, and they sustain a trust relation toward each other with reference to partnership matters.^^ Each partner is under an contract against the husband, which Notes in 2 White and Tudor's Lead- contract was entered into by him in ing Cases in Equity (fourth edition), order to induce her to dismiss a di- 1206. If, under such circumstances, vorce suit, must show that it is fair a son obtains a conveyance from a in its terms. Stiles v. Cain, 134 Cal. parent, this court will not permit it to 170, 66 Pac. 231. stand, unless such son establishes by "Archer v. Hudson, 7 Beav. 551. abundant proof that the contract was " Brown v. Burbank, 64 Cal. 99, 27 not only free, but fair, and made with Pac. 940. the utmost good faith." Sands v. "Highberger v. Stiffler, 21 Md. Sands, 112 111. 225; Jacox v. Jacox, 338, 83 Am. Dec. 593. 40 Mich. 473, 29 Am, Rep. 547. See " Carney v. Carney, 196 Pa. St. 34, also, Dick v. Albers, 243 111, 231, 90 46 Atl. 264. N, E. 683, 134 Am. St. 369. ™ See Wilcox v. Mann, 115 Iowa " Goldsmith v. Eichold, 94 Ala. 116, 91, 87 N. W. 748; Mott v. Mott, 49 10 So. 80, 33 Am. St. 97; Caldwell v. N. J. Eq. 192, 22 Atl. 997; American Davis, 10 Colo. 481, IS Pac. 696, 3 11? FRAUD AND MISREPRESENTATION. § 74 obligation to make a full and fair disclosure to the others of all material facts which are known to him and not to the others." This relation of trust and confidence relates only to the partner- ship business, however, and a partner may engage in an enter- prise outside of and not connected with the partnership.'^ He is under no obligation to account to the partnership for the profits derived from such outside business, even though the part- nership agreement provided that he should not engage in any other business.'* The same general rules governing the relation of trustee and cestui que trust control transactions between guardian and ward ; a relation of trust and confidence exists.'* The guardian cannot acquire the property of the ward at his own sale without disclos- ing his identity and gaining the consent of the ward after he has attained his majority.'^ He must also make a full and complete disclosure as to all material facts.'' These principles are held to apply in a proper case, even after the ward has acquired the capac- ity to contract and the guardianship relation has terminated. Thus, where a ward a few days after attaining her majority, and be- fore her guardian has made his final report, conveyed her land to the guardian's wife, who is her elder sister, and with whom she is living, it was held the burden was on the guardian to show Am. St. 599; Raymond v. Vaughn, 245 ; Latta v. Kilbourn, ISO U. S. 524, 128 111. 256, 21 N. E. 566, 4 L. R. A. 37 L. ed. 11, 14 Sup. Ct. 206. 440, 15 Am. St. 112; Bennett v. Mc- "Dean v. MacDowell, 8 Ch. Div. Millin, 179 Pa. St. 146, 36 Atl. 188, 345 ; Mullaney v. Duffy, 145 111. 559, 33 57 Am. St. 591; Patrick v. Bowman, N. E. 750, 36 Am. St. 478; Murrell 149 U. S. 411, 37 L. ed. 790, 13 Sup. v. Murrell, 33 La. Ann. 1233; Latta Ct. 811; Sexton v. Sexton, 9 Grat. v. Kilbourn, ISO U. S. 524, 2>1 L. ed. (Va.) 204; Wells v. McGeoch, 71 1169, 14 Sup. Ct. 201. Wis. 196, 35 N. W. 769. "^ Gillett v. Wiley, 126 111. 310, 19 '' Baker v. Cummings, 4 App. D. C. N. E. 287, 9 Am. St. 587. 230; Meyers v. Merillion, 118 Cal. ^Hindman v. O'Connor, 54 Ark. 352, 50 Pac. 662; Warren v. Schain- 627, 16 S. W. 1052, 13 L. R. A. 490; wald 62 Cal. 56; Roby v. Colehour, Frazier v. Jeakins, 64 Kans. 615, 68 135 111. 300, 25 N. E. 177, affd. 146 U. Pac. 24, 57 L. R. A. 572; Dickinson S. 153, 36 L. ed. 922, 13 Sup. Ct. 47 ; v. Durfee, 139 Mass. 232, 1 N. E. Jones V. Dexter, 130 Mass. 380, 39 416; Mann v. McDonald, 10 Humph. Am. Rep. 4S9n; Patrick v. Bowman, (Tenn.) 275. 149 U. S. 411, il L. ed. 790, 13 Sup. "Lataillade v. Orena, 91 Cal. 565, Ct 811 27 Pac. 924, 25 Am. St. 219; Gillett " Sullivan V. Louisville &c. R. Co., v. Wiley, 126 111. 310, 19 N. E. 287, 9 128 Ala. 99, 30 So. 528; Belcher v. Am. St. 587; Berkmeyer v. Keller- Whittemore, 134 Mass. 330. See also, man, 32 Ohio St. 239, 30 Am. Rep. Aas v. Benhara (1891), 2 Ch. 244, 577. 74 CONTRACTS. ii8 good faith and the absence of undue influence. Settlements be- tween guardian and ward, and transactions between those who have relations of mutual confidence, are watched jealously by the courts.** However, if a sale is made after the relation has terminated, and a full disclosure of all material facts is made, and the full market value paid, the mere fact that the property subsequently greatly increases in value is not ground for avoid- ing such sale.*" The foregoing are the most important illustrations of par- ties who sustain relations of trust and confidence one to the other. In addition to these, clergyman and parishioner,'" joint owners,"^ promoters of corporations and the corporation and stockholders they represent,"^ persons under contract to marry, and a few others,"^ have been held to sustain confiden- '^ McFarland v. Larkin, 155 III. 84, 39 N. E. 609. See also, Tucke v. Buchholz, 43 Iowa 415 ; Richardson V. Linney, 7 B. Mon. (Ky.) 571; Will- iams V. Powell, 1 Ired. Eq. (N. Car.) 460. '"Kirschner v. Kirschner, 113 Mo. 290, 20 S. W. 791. " Finegan v. Theisen, 92 Mich. 173, 52 N. W. 619. "' Teachout v. Van Hoesen, 76 Iowa 113, 40 N. W. 76, 14 Am. St. 206; Turner v. Sawyer, 150 U. S. 578. See also, Mills V. Hart, 24 Colo. 505, 52 Pac. 680, 65 Am. St. 241; Franklin Min. Co. V. O'Brien, 22 Colo. 129, 43 Pac. 1016, 55 Am. St. 118; Boyd v. Boyd, 176 111. 40, 51 N. E. 782, 68 Am. St. 169; Loyd v. Lynch, 28 Pa. St. 419, 70 Am. Dec. 137; Bissell v. Foss, 114 U. S. 252, 29 L. ed. 126, 5 Sup. Ct. 851; Downer v. Smith, 31 Vt. 1, 76 Am. Dec. 148; Cedar Canyon &c. Co. V. Yarwood, 27 Wash. St. 271, 67 Pac. 749, 91 Am. St. 841; Cecil V. Clark, 44 W. Va. 659, 30 S. E. 216. "' Erlanger v. New Sombrero Phos- phate Co., L. R. 3 App. Cas. 1218; New Sombrero Phosphate Co. v. Er- langer, 5 Ch. Div. 73, 118; Burbank V. Dennis, 101 Cal. 90, 35 Pac. 444; Plaquemines Tropical Fruit Co. v. Buck, 52 N. J. Eq. 219, 27 Atl. 1094; Dickerman v. Northern Trust Co., 176 U. S. 181, 44 L. ed. 423, 20 Sup. Ct. 311; Pittsburg Mining Co. v. Spooner, 74 Wis. 307, 42 N. W. 259, 17 Am. St. 149. The management of the business and property of a corpo- ration is entrusted to its officers, and they are empowered to act for the whole body of stockholders. They therefore occupy the position of trus- tees for the stockholders as a body, in respect to such business and property and cannot have or acquire any per- sonal or pecuniary interest in con- flict with their duty as such trustees. Hooker v. Midland Steel Co., 215 111. 444, 74 N. E. 45, 106 Am. St. 170. See also, Pacific Vinegar &c. Works v. Smith, 145 Cal. 352, 78 Pac. 550, 104 Am. St. 42; Crichton v. Webb Press Co., 113 La. Ann. 167, 36 So. 926, 67 L. R. A. 76, 104 Am. St. 500; Scott V. Farmers' &c. Bank, 97 Tex. 31, 104 Am. St. 835. A director, however, does not sustain that relation to an individual stockholder with respect to his stock, over which he has no control whatever, but he may deal with an individual stockholder and purchase his stock practically on the same terms as a stranger. Hooker v. Midland Steel Co., 215 111. 444, 74 N. E. 445, 106 Am. St. 170. See, how- ever, Oliver v. Oliver, 118 Ga. 362, 45 S. E. 232. "'Fisher v. Koontz, 110 Iowa 498, 80 N. W. 551; Peet v. Peet, 81 Iowa 172, 46 N. W. 1051 ; Simpson v. Simp- son, 94 Ky. 586, 23 S. W. 361 ; In re Pulling's Estate, 93 Mich. 274, 52 N. W. 1116; Pierce v. Pierce, 71 N. Y. 119 FRAUD AND MISREPRESENTATION. § 74 tial relations to each other. However, it is not always neces- sary that a definitely recognized relation of trust and confidence exist to render the rules governing relations of trust and con- fidence applicable; for where actual trust and confidence is re- posed in another, and this fact is known to that other, any mis- representations by the party confided in, relative to a material fact and which are an inducement to the contract, may be re- garded as fraud."* A relation of trust and confidence will arise when it is known to the parties that actual trust and confidence is reposed each in the other, and the failure to disclose a material fact will amount to fraud."'^ In this connection it might not be out of place to mention that gifts between persons occupying confidential relations toward each other are always closely scru- tinized by a court of law or equity when their validity is at- tacked. Unless the gift is voluntarily made, without any com- pulsion whatever and with a full understanding of the facts, it will be invalidated, especially when its validity is attacked by the donor. Many cases go to the extent of holding that inde- pendent advice from a disinterested third person must be sought by the donor before making the gift, or it will be invalidated."" 154, 27 Am. Rep. 22n; In re Kline's 443; Forworth v. Bullock, 44 Miss. Estate, 64 Pa. St. 122. 457; Bennett v. McMillin, 179 Pa. St. "Haygarth v. Wearing, L. R. 12 146, 36 Atl. 188, 57 Am. St. 591; Eq. 320; Hanger v. Evins, 38 Ark. Friend v. Lamb, 152 Pa. St. 529, 25 334; Baum v. Holton, 4 Colo. App. Atl. 577, 34 Am. St. 672; Cooper v. 406, 36 Pac. 154; Nolte v. Reichelm, Lee, 1 Tex. Civ. App. 9, 21 S. W. 998, 96 111. 425; Shaeffer v. Sleade, 7 In the above case one of the parties Blackford (Ind.) 178; Peter v. was a son-in-law of the other. Wright, 6 Ind. 183; Harris v. Mc- Brothers may stand in a confidential Murry, 23 Ind. 9; King v. Sioux City relation, one to the other. Shevlin v. Loan Co., 76 Iowa 11, 39 N. W. 919; Shevlin, 96 Minn. 398, 105 M. W. 257. Bean v. Herrick, 12 Maine 262, 28 The relation extends to all persons Am. Dec. 176; Brady v. Finn, 162 who occupy a position of trust and Mass. 260, 38 N. E. 506 ; Kilgore v. confidence, of influence and independ- Bruce, 166 Mass. 136, 44 N. E. 108; ence in fact, although not, perhaps, Eaton v. Winnie, 20 Mich. 156, 4 in law. Nelson v. Brown, 164 Ala. Am. Rep. 377; Cahn v. Reid, 18 Mo. 397, 51 So. 360, 137 Am. St. 61. To Aon 115; Smith V. Countryman, 30 N. same efi'ect, Dick v. Albers, 243 111. Y 655 ; Smith v. Smith, 134 N. Y. 62, 231, 90 N. E. 683, 134 Am. St. 369. 31 N. E. 258, 30 Am. Rep. 617; Drake °° Rhodes v. Bate, 12 Jur. (N. S.) V Grant, 4 N. Y. S. 899; Smith v. 178; Broun v. Kennedy, 9 Jur. (N. Griswold, 6 Ore. 440; Fisher v. Bud- S.) 1163; Morgan v. Minett, L. R. long 10 R. I. 525. 6 Ch. Div. 638; Liles v. Terry (1895), '"' Emmons v. Moore, 85 111. 304 ; 2 Q, B. 679 ; Prideaux v. Lonsdale, 1 Shaeffer v. Sleade, 7 Blackf. (Ind.) DeG. J. & S. 433; Powell v. Powell 178; Peter v. Wright, 6 Ind. 183; (1900), L. R. 1 Ch. Div. 243; Bain- Davis V. Heard, 44 Miss. 50; Hall v. brigge v. Browne, L. R. 18 Ch. Div. Thompson, 1 Smedes & M. (Miss.) 188. See, however, the case of Hunter § 75 CONTRACTS. I20 Certain cases in this country adopted the early English doctrine and hold that the advice of the third person is necessary ;°^ but as a general rule the courts of this country do not declare the advice of a third person absolutely necessary."* Most of them merely hold that the burden is on the donee to establish to the full satisfaction of the court that the gift was a free, voluntary unbiased act of the donor."* § 75. Constructive fraud. — The term "constructive fraud" is one which has been loosely used, and has been applied not only to cases such as those treated in the last preceding section, but to almost every case of fraud imaginable, but it is usually used to denote cases of innocent misrepresentation or unintentional neg- ligence. Thus, in a recent case where it appeared that a vendor sold the plaintiff a certain tract of land, and subsequently sold it a second time to another, the court said that, "the defendant was guilty of such gross negligence as to amount in law to "con- structive fraud.' "^ But to use the term in this vague and indefi- nite manner serves no good purpose and tends only to confusion. It has been condemned by the majority of text writers.^ The V. Atkins, 3 Myl. & K. 113, where it 627; Consett v. Bell, 1 Young & C. is said : "There are certain relations Ch. Cas. 569. The law presumes the known to the law, as attorney, guard- exercise of undue influence in trans- ian, trustee ; if a person standing in actions inter vivos where confiden- these relations to client, ward or tial relations exist between the par- cestui que trust, takes a gift or makes ties, and puts upon the donee, when a bargain, the proof lies upon him, shown to be the dominant party in that he has dealt with the other party the transaction, the burden of repell- the client, ward, etc., exactly as a ing this presumption. Nelson v. stranger would have done, taking no Brown, 164 Ala. 397, 51 So. 360, 137 advantage of his influence or knowl- Am. St. 61. edge, putting the other party on his " Gillespie v. Holland, 40 Ark. 28, guard, bringing everything to his 48 Am. Rep. 1 ; Albert v. Haeberly, knowledge which he himself knew. 68 N. J. Eq. 664, 61 Atl. 380, 111 Am. * * * This appears to me a much St. 652; Slack v. Rees, 66 N. J. Eq. more intelligible and sound principle 447, 59 Atl. 466, 69 L. R. A. 393. than that to which reference is made "Zimmerman v. Frushour, 108 Md. by the master of the rolls in his judg- US, 69 Atl. 796, 16 L. R. A. (N. S.) ment, and which, in cases of this de- 1087 and note, scription, will sometimes be alluded "Todd v. Grobe, 33 Md. 188. to, — that a third person ought to be * Madden v. Caldwell Land Co., 16 interposed. I say you will see it al- Idaho 59, 100 Pac. 358, 21 L. R. A. luded to, for I can nowhere find it (N. S.) 332. In the above case it ap- established as the rule." See also, peared that the defendant made the Allcard v. Skinner, L. R. 36 Ch. Div. second conveyance through mistake, 145; Wright v. Carter C1903), 1 Ch. and without any intention of commit- Div. 27 ; Bury v. Oopenheim, 26 Beav. ting a fraud. 594; Savery v. King, 5 H. L. Cas. 'See Wald Pollock on Contracts, 121 FRAUD AND MISREPRESENTATION. § 76 term constructive fraud "negatives actual fraud but affirms that the actual conditions will have similar consequences,"^ that is to say, the lawr will infer fraud from the relationship of the parties and the circumstances that surround them, independent of the intention.* The term "from the relationship of the parties" con- templates a special relationship, and this relationship cannot be logically applied to any other than confidential relations, for it is only in relations of this kind that the law presumes fraud, — i. e. from the relationship of the parties the law gives the transaction that construction. Unless the term "constructive fraud" is lim- ited in this manner it had better not be used at all, for if it is used so as to make it apply to all cases of innocent misrepresentations the distinction between fraud and innocent misrepresentation is thereby broken down, and the rights and remedies of the parties confused. By giving the term constructive fraud a loose applica- tion every misrepresentation becomes fraudulent. For this reason the only cases to which the term "constructive fraud" will be ap- plied are those where a confidential relation existed between the parties. Cases of this character will be found in the preceding section. § 76. Fraud in execution. — No principle of law is more firmly established than that fraud in the execution of an in- strument renders it voidable at the option of the party de- frauded, and that courts of law have concurrent jurisdiction with courts of equity to prevent its use as evidence, thereby prevent- ing the fraudulent party from obtaining any advantage by it.^ Consequently, if the owner's signature to a contract is obtained by trickery and fraud he may properly deny its execution and plead affirmatively the fraud practiced upon him by which he was induced to apparently execute it.® Thus, where a contract was 3rd edition, pp. 647, 648; Hammon affd. 152 Fed. 627. In the above case on Contracts, p. 124; 1 Page on Con- it was held by the territorial court tracts, 281, 282; 14 Am. & Eng. Ency. that the fraudulent execution of a of Law 21, § 3. See also, Kountze lease may be shown by oral proof in V Kennedy 147 N. Y. 124, 41 N. E. an action of unlawful detainer. See 414, 29 L. R. A. 360, 49 Am. St. 651. also, Clark v. Evans, 138 111. App. 56; 'Wald's Pollock on Contracts, 3rd Western Mfg. Co. v. Cotton & Long, Edition, p. 647. 31 Ky. L. 1130, 104 S. W. 758, 12 L. ^ Smith on Law of Fraud, § 1, p. 3. R. A. (N. S.) 427. " Sass v. Thomas, 6 Ind. Ter. 60, " If one, by some artifice, prevents 89 S. W. 656, 11 L. R. A. (N. S.) 261, or induces another to enter into a § "jy CONTRACTS. 122 hastily signed by defendant because plaintiff represented that he was in a hurry, as he desired to catch a train that was about to leave the city, the court held that a palpable fraud was perpe- trated on the defendant.^ Likewise, obtaining a release for all damages resulting from personal injuries sustained in a railroad accident, executed while the injured person was still dazed from the shock, ** or writing the terms of the agreement in small type,' have been held to be such fraud as would render the contract voidable. § 77. Negligence. — The cases on this branch of the sub- ject will be classified under two general heads, the first being those instances where the party committing the fraud seeks to enforce the contract and sets up negligence on the part of his adversary in an attempt to defeat the plea of fraud, or pleads it by way of defense when sued by the defrauded party; the second being those cases wherein the defrauded party seeks either to rescind or avoid the agreement or to recover damages for the fraud perpetrated on him. It may be stated as a general rule contract in ignorance of its contents was in a hurry to catch a train, and or character such conduct amounts to that if he signed under such circum- fraud. Henderson v. Henshall, 54 Fed. stances he was inexcusably negligent 320, 4 C. C. A. 357; Davis v. Jackson, in so doing. A statement of facts is 22 Ind. 233 ; Nysewander v. Lowman, not given in the above opinion, it be- 124 Ind. 584, 24 N. E. 355 ; McKnight ing the second appeal of the case, but V. Thompson, 39 Nebr. 752, 58 N. W. the opinion in the former appeal, re- 453; Chrysler v. Canaday, 90 N. Y. ported in. United Breeders Co. v. 272, 43 Am. Rep. 166. The doctrine Wright, 134 Mo. App. 717, 115 S. W. that a party is conclusively presumed 470, shows that the character of the to know the contents of an instrument instrument was misrepresented. See signed by him does not obtain as also. Standard Mfg. Co. v. Slot, 121 against fraud. Vaillancourt v. Grand Wis. 14, 98 N. W. 923, 105 Am. St. Trunk R. Co., 82 Vt. 416, 74 Atl. 99; 1116, where it is held that failure to Loveland v. Jenkins-Boys Co., 49 read a contract where one was re- Wash. 369, 95 Pac. 490. quested to do so, and when a casual ' McBride v. Macon Tel. Pub. Co., glance would have apprised the signer 102 Ga. 422, 30 S. E. 999. To the that the instrument was not of the same effect, Wood v. Cincinnati Safe character he claimed it was repre- Lock Co., % Ga. 120, 22 S. E. 909. In sented, is inexcusable negligence, the above cases the contents of the ' Bliss v. N. Y. Cent. &c. R. Co., 160 instrument signed were misrepre- Mass. 447, 36 N. E. 65, 39 Am. St. sented. See, however, the case of 504. See also, Och v. Missouri R. United Breeders Co. v. Wright, 139 Co., 130 Mo. 27, 31 S. W. 962, Zd L. Mo. App. 195, 122 S. W. 1105, where R. A. 442; Larsted v. Chicago &c. R. the court held that a competent busi- Co., 71 Wis. 391, 36 N. W. 857. See ness man, laboring under no disabil- also, 44 Cent, L. J. 70. ity, had no business signing a con- 'Keller v. Equitable &c. Ins. Co., tract without reading it merely be- 28 Ind. 170. cause the man who asked him to sign 123 FRAUD AND MISREPRESENTATION. § 77 that the one guilty of fraud cannot urge negligence on the part of the one defrauded, if he relied on the representation and acted as a reasonably prudent man, either to assist him to recover on the contract,'" or in defense of an action brought by the defrauded party." Thus, where a vendor of real estate makes false repre- sentations with reference to the title thereto, the vendee has a right to rely on such representations. Consequently, it is no de- fense that the vendee might have searched the records or sought other information and thereby discovered the falsity of the rep- resentations,'^ for "no man can complain that another has too implicitly relied on the truth of what he himself has stated.'"' On the other hand fraud is never presumed,'* but is a question "Western Mfg. Co. v. Cotton, 126 Ky. 749, 104 S. W. 758, 12 L. R. A. (N. S.) 427; Warder &c. Co. v. Whit- ish, n Wis. 430, 46 N. W. 540. "Wilson V. Moriarty, 88 Gal. 207, 26 Pac. 85; Davis v. Forman, 229 Mo. 52, 129 S. W. 213; Cole Bros. v. Williams, 12 Nebr. 440, 11 N. W. 875; Griffin v. Roanoke &c. Lumber Co., 140 N. Gar. 514, 53 S. E. 307, 6 L. R. A. (N. S.) 463; Grompton v. Beedle, 83 Vt. 287, 75 Atl. 331, 30 L. R. A. (N. S.) 748. ^ Carpenter v. Wright, 52 Kans. 221, 34 Pac. 798 ; Young v. Hopkins, 6 T. B. Mon. (Ky.) 18; Campbell v. Whittingham, 5 J. J. Marsh (Ky.) 96, 20 Am. Dec. 241; Pryse v. McGuire, 81 Ky. 608, 5 Ky. L. 716; Kiefer v. Rogers, 32 Gil. (Minn.) 14; Parham V. Randolph, 4 How. (Miss.) 435, 35 Am. Dec. 403; Blumenfeld v. Stine, 96 App. Div. (N. Y.) 160, 89 N. Y. S. 85 ; In re Wilson's Appeal, 109 Pa. St, 606, 7 Atl. 88 ; Vernam v. Wilson, 31 Pa. Super. Gt. 257; Griffeth v. Hanks, 46 Tex. 217 ; Morris v. Brown, 38 Tex. Giv. App. 266, 85 S. W. 1015. See also, Watson v. Atwood, 25 Conn. 313. The vendee is not bound under the law to go to the extent of veri- fying the truth or falsity of the ven- dor's representations (Wilson v. Higbee, 62 Fed. 723), and even though the vendee makes a partial examina- tion of the abstracts, it does not de- feat his right to avoid the sale for misrepresentation on the part of the vendee. Buchanan v. Burnett, 52 Tex. Giv. App. 68, 114 S. W. 406, affd. 102 Tex. 492, 119 S. W. 1141, 132 Am. St. 900. But see, in this connection, War- ner Elevator Co. v. Guthrie, 7 Ohio N. P. 200; Simmang v. Harris (Tex. Giv. App.), 27 S. W. 786. " Reynell v. Sprye, 1 DeG. M. & G. 660 ; Price v. Macauley, 2 DeG. M. & G. 339. When such a plea is set up the defrauded party has a right to reply, "You, at least, who have stated what is untrue or have concealed the truth for the purpose of drawing me into a contract, cannot accuse me of want of caution because I relied im- plicitly upon your fairness and hon- esty." Central R. Go. v. Kirch, L. R. 2 H. L. 99, 6 Eng. Rul. Gas. 759; Eaton V Winnie, 20 Mich. 156, 4 Am. Rep. in. To same effect, see Gra- ham v. Thompson, 55 Ark. 296, 18 S. W. 58, 29 Am. St. 40; Buckley v. Acme Food Co., 113 111. App. 210 ; Lin- nington v. Strong, 107 111. 295 ; Kirk- land V. Lott, 3 111. 13; Firestone v. Werner, 1 Ind. App. 293, 27 N. E. 623; Garmichael v. Vandebur, 50 Iowa 651 ; Young v. Hopkins, 6 T. B. Mon. (Ky.) 18; Bristol v. Braidwood, 28 Mich. 191; Kiefer v. Rogers, 32 Gil. (Minn.) 14; Erick- son V. Fisher, 51 Minn. 300, 53 N. W. 638; Wilder v. DeCou, 18 Minn. 470; Martindale v. Harris, 26 Ohio St. 379; Labbe v. Cor- bett, 69 Tex. 503, 6 S. W. 808; Warder &c. Go. V. Whitish, n Wis. 433, 46 N. W. 540. "Marsh v. Cramer, 16 Colo. 331, 27 Pac. 169; Walker v. Collins, 59 Fed. 70; McCann v. Preston, 79 Md. § 17 CONTRACTS. 124 of fact. When it is pleaded at law or in equity, the facts out of which it is supposed to arise must be stated. A mere general averment of fraud, without a statement of the facts, is not suf- ficient.^^ The evidence adduced must be sufficient to overcome the legal presumption of honesty.^* Not only this, but the de- frauded party can neither defeat an action on the contract nor recover in a suit brought by himself, if he was guilty of negli- gence in relying on the false representations of the adverse party. But he is not required to show an extraordinary degree of dili- gence. If he is able to prove that he exercised ordinary care, or such care as would be exercised by an ordinarily prudent man un- der like circumstances, it will absolve him from the charge of negligence.^' It is usually the duty of one who is about to con- 223, 28 Atl. 1102; Redpath Bros. v. Lawrence, 48 Mo. App. 427; Guidet V. New York &c. R. Co., 120 N. Y. 649, 24 N. E. 1102; Eaton v. Avery, 83 N. Y. 31, 38 Am. Rep. 389. The rule that fraud is never presumed is not virithout its exceptions, for, as has been seen in a prior section, fraud may be presumed where a confidential relation exists between the parties. See ante, § 74. '°Stouffer V. Smith-Davis Hard- ware Co., 154 Ala. 301, 45 So. 621, 129 Am. St. 59; Loucheim v. First Na- tional Bank, 98 Ala. 521, 13 So. 374; Truitt-Silvey Hat Co. v. Callaway, 130 Ga. 637, 61 S. E. 481; Studa- baker v. Faylor, 170 Ind. 498, 83 N. E. 747, 127 Am. St. 397; Lindsay v. Kroeger, Zl Mont. 231, 95 Pac. 839. "The burden of charging as well as proving fraud is on the party alleg- ing it, and facts constituting the al- leged fraud must be set forth in order to entitle a party to introduce evi- dence of it; mere conclusions of law are not enough." Eppley v. Ken- nedy, 131 App. Div. (N. Y.) 1, 115 N. Y. S. 360. ^° London &c. Bank v. Lempriere, L. R. 4 P. C. 572; Smith v. Chad- wick, L. R. 9 App. Cas. 187; Beard V. Bliley, 3 Colo. App. 479, 34 Pac. 271; Prentice v. Crane, 234 111. 302, 84 N. E. 916; Bowden v. Bowden, 75 III. 143; Hill V. Reifsnider, 46 Md. 555; Baldwin v. Buckland, 11 Mich. 389; Hildreth v. Sands, 2 Johns. Ch. (N. Y.) 35; Devoe v. Brandt, 53 N. Y. 462; Kaine v. Weigley, 22 Pa. St. 179. These general statements must not, however, be given too strong an application. They merely mean that every contract, honest and lawful on its face, must be treated as such until it is shown to be otherwise by evi- dence of some kind, either positive or circumstantial. Smith on the Law of Contracts, § 266. The circumstances may be so strong that no other rea- sonable conclusion than that of fraud can be drawn from them. Paxton v. Boyce, 1 Tex. 317. " Camp V. Camp, 2 Ala. 632, 36 Am. Dec. 423; Belfast v. Boon, 41 Ala. SO; Newsom v. Jackson, 26 Ga. 241, 71 Am. Dec. 206; Earaes v. Morgan, 37 111. 260; Grier v. Puterbaugh, 108 111. 602; Hutchinson Furnace &c. Co. V. Lyford, 123 111. 300, 13 N. E. 844; Gee V. Moss, 68 Iowa 318, 27 N. W. 268; Jackson v. Collins, 39 Mich. 557; Osborne v. Missouri Pac. R. Co., 71 Nebr. 180, 98 N. W. 685; Page v. Parker, 43 N. H. 363, 80 Am. Dec. 172; Brown v. Post, 1 Hun (N. Y.) 303; Wheeler v. Robinson, 86 Hun (N. Y.) 561; Fagan v. Newson, 1 Dev. (N. Car.) 21; Bank of North America v. Sturdy, 7 R. I. 109. The courts do not require caution, but only the absence of negligence. Hoitt v. Holcomb, 32_ N. H. 185. The mere fact that the victim has proved him- self a fool will not entitle the de- frauding party to retain that which I2S FRAUD AND MISREPRESENTATION. § 71 summate a contract, in the absence of any confidential relation, to prosecute a reasonably diligent inquiry as to its terms and contents." This rule may be interpreted as meaning that if the means of information as to the matter represented are equally accessible to both parties, and they are on an equal footing with each other, they will be presumed to have informed themselves, and if they neglect to do so each must abide the consequences of his own carelessness.'* "The common law," says Chancellor Kent, "affords to every one a reasonable protection against fraud in dealings, but does not go to the romantic length of giving an indemnity against the consequence of indolence and folly, or a he has received. Chamberlin v. Ful- ler, 59 Vt. 247, 9 Atl. 832. However, folly alone does not necessarily show fraud. Equitable Loan &c. Co. v. Waring, 117 Ga. 599, 44 S. E. 320, 97 Am. St. 177, 62 L. R. A. 93. A de- frauded party does not owe to the party who defrauds him an obliga- tion to use diligence to discover the fraud. Smith v. Werkheiser, 152 Mich. 177, 115 N. W. 964, 15 L. R. A. (N. S.) 1092, 125 Am. St. 406. That one may reasonably act, not knowing that facts involved himself, on the faith of representation by another, is a matter too elemental for discussion. Kathan v. Comstock, 140 Wis. 427, 122 N. W. 1044, 28 L. R. A. (N. S.) 201. "Baily v. Merrell, 3 Bulst. 94; Burk V. Johnson, 146 Fed. 209, 76 C. C. A. 567; Humphreys v. Comline, 8 Blackf. (Ind.) 516; Mabardy v. Mc- Hugh, 202 Mass. 148, 88 N. E. 894, 132 Am. St. 484 ; Long v. Warren, 68 N. Y. 426; Anderson v. Rainey, 100 N. Car. 321, 5 S. E. 182; Slaughter v. Gerson, 13 Wall. (U. S.) 379; First National Bank v. Swan, 3 Wyo. 356, 23 Pac. 473. There is an indis- position on the part of the courts to extend legal immunity for the false- hood of vendors in the course of ne- gotiations for sales beyond the bounds already established. Mabardy v. Mc- Hugh, 202 Mass. 148, 88 N. E. 894, 23 L. R. A. (N. S.) 487n, 132 Am. St. 484. In a recent case it is said: "Where a party is induced to refrain from making an examination of a pa- per given him by another, through misrepresentation as to its purport, it would be an extreme case that would warrant a court holding that there was an assent to the contents of the document before such con- tents were in fact known." Lotter v. Knospe, 144 Wis. 426, 129 N. W. 614. In some jurisdictions it is held that the purchaser of real estate must ex- ercise ordinary diligence in investi- gating the truth or falsity of the ven- dor's representations as to title. Steele v. Kinkle, 3 Ala. 352; Grosjean v. Galloway, 82 App. Div. (N. Y.) 380, 81 N. Y. S. 871 ; Andrus v. St. Louis Smelting &c. Co., 130 U. S, 643. But see Haight v. Hayt, 19 N. Y. 464n. If the facts cannot be ascertained by the exercise of ordinary diligence equity will grant relief for the injury suf- fered, or the vendees may maintain an action in deceit against the ven- dor. Fenley v. Moody, 104 Ga. 790, 30 S. E. 1002. "Delaney v. Jackson, 95 Ark. 131, 128 S. W. 859. See also, Reynolds v. Palmer, 21 Fed. 433; American Ins. Co. V. Crawford, 7 111. App. 29 ; Foley v. Cowgill, 5 Blackf. (Ind.) 18, 32 Am. Dec. 49; Catling v. Newell, 9 Ind. 572; Moore v. Turbeville, 2 Bibb. (Ky.) 602, 5 Am. Dec. 642; Salem India Rubber Co. v. Adams. 23 Pick. (Mass.) 256; Mayhew v. Phoenix Ins. Co., 23 Mich. 105 ; Hall v. Thompson, 1 S. & M. (Miss.) 443; Anderson v. Burnett. 5 How. (Miss.) 165, 35 Am. Dec. 425 ; Arthur v. Wheeler &c. Co., 12 Mo. App. 335 ; Leavitt v. Fletcher, 60 N. H. 182; Hanson v. Edgerly, 29 N. H. 343 ; Page v. Parker, 40 N. H. 47; Saunders v. Hatterman, 2 Ired. L. (N. Car.) 32; Farrar v. Alston, 12 Dev. (N. Car.) 69; ^tna Ins. Co. v. Reed, 33 Ohio St. 283; Fulton v. 78 CONTRACTS. 126 careless indifference to the ordinary and accessible means of in- formation."^" § 78. Fraud of third persons. — Fraud by a stranger to the contract will not ordinarily be ground for an avoidance of the agreement, nor render the party benefited liable for damages.^^ Before the false representation of a third person will work this result he must either act under authority of/^ in collusion with/^ Hood, 34 Pa. St. 36S, 75 Am._ Dec. 664. Courts of equity do not sit for the purpose of relieving parties who, under ordinary circumstances, refuse to exercise a reasonable diligence. Tuck V. Downing, 76 111. 71, 99. See also, post, § 89, Reliance on false statement. /"2 Kent's Commentaries, 485. This pithy statement of the law was quoted with approval in Smith v. Richards, 13 Pet. (U. S.) 26; and in the subse- quent case of Slaughter v. Gerson, 13 Wall. (U. S.) 379, it was laid down as the estabhshed doctrine, in conformity with the authorities al- ready cited, that where the means of knowledge are at hand, and equally available to both parties, and the sub- ject of purchase is alike open to their inspection, if the purchaser does not avail himself of these means and op- portunities he will not be heard to say that he has been deceived by the vendor's misrepresentation; that if, having eyes, he will not see matters directly before them, where no con- cealment is made or attempted, he will not be entitled to favorable con- sideration when he complains that he has suffered from his own voluntary blindness, and been misled by over- confidence in the statements of an- other. Bishop tersely states the rule deducible from the authorities to be that "the law, departing from the rule in morals, tolerates a good deal of lying in trade, when in the nature of merely puffing one's own goods or depreciating those of another, pro- vided the thing bargained about re- veals its own qualities and is open to the parties' equal inspection." ^'Wheelton v. Hardisty, 8 El. & BI. 232; In re Smith's Case, 2 Ch. App. 604, 616; Sturge v. Starr, 2 Mvl. & K. 19S ; Lindsev v, Veasy, 62 Ala. 421; Bradford v. Bush, 10 Ala. 386; Schultz v. McLean (Cat), 25 Pac. 427; Strong v. Smith, 62 Conn. 39, 25 Atl. 395 ; In re The Seguranca, 70 Fed. 258; Hayner v. Mcllwain, 53 HI. App. 652; Whitesides v. Tay- lor, 105 111, 496; Catling v. Rodman, 6 Ind. 289; Lewark v. Carter, 117 Ind. 206, 20 N. E. 119, 3 L. R. A. 440, 10 Am. St. 40; Jones v. Swift, 94 Ind. 516; Belau v. Bryan, 89 Iowa 348, 56 N. W. 512; Roach v. Karr, 18 Kans. 529, 26 Am. Rep. 778; Equitable Life Assur. Society Co. v. Cosby (Ky.), 126 S. W. 142; Fight- master V. Levi, 13 Ky. 412, 17 S. W. 195 ; Prescott v. Cooper, Zl La. Ann. 553; Martin v. Campbell, 120 Mass. 126; Nash v. Minnesota &c. Ins. Co., 163 Mass. 574, 40 N. E. 1039, 28 L. R. A. 753, 47 Am. St. 489; Williamson v. Raney, Freem. Ch. (Miss.) 112; Madison County Bank v. Graham, 74 Mo. App. 251; Vass v. Riddick, 89 N. Car. 6; Kingsland v. Pryor, 33 Ohio St. 19; Trevitt v. Converse, 31 Ohio St. 60; Dangler v. Baker, 35 Ohio St. 673; Cason v. Cason, 116 Tenn. 173, 93 S. W. 89; Layne v. Bone, 12 Lea (Tenn.) 667; Kuhn v. Foster, 16 Tex. Civ. App. 465, 41 S. W. 716; Atkinson v. Reed (Tex. Civ. App.), 49 S. W. 260; American National Bank v. Cruger (Tex. Civ. App.), 44 S. W. 1057; Law v. Grant, Zl Wis. 548. But in certain in- stances the contract so induced may be avoided on the ground of mistake. See post, ch. 5, Mistake. '"Glaspie v. Keator, 56 Fed. 203. S C. C. A. 474; Stiles v. White, 11 Mete. (Mass.) 356, 45 Am. Dec. 214; Brackett v. Griswold, 112 N. Y. 454, 20 N. E. 376. ^ Thus, if representations are made by a third person, who is in conspir- acy with the vendors of an article, as to the value of such article, an ac- tionable fraud is committed, and 127 FRAUD AND MISREPRESENTATION. 78 or as the agent for a party to the contract.'* This is true even though the principal may be innocent of fraud, provided the false statements of the agent wrere made vi^ithin the scope of his authority.'^ The principal is generally presumed to know what the agent knows."'' On the other hand, if the false representa- tions made by the agent are not within the scope of his authority, and the principal has no knowledge of such misrepresentation and does not adopt them as his own, he is not liable." Representations fraud grows out of the artifice of the seller in procuring the representation to be made by an apparently disin- terested party, thereby throwing the purchaser off his guard. Kenner v. Harding, 85 III. 264, 28 Am. Rep. 615 ; Manning v. Albee, 11 Allen (Mass.) 520; Adams v. Soule, 33 Vt. 538. See also, Bagshaw v. Seymour, 18 C. B. 903; Davis v. Jackson, 22 Ind. 233; Medbury v. Watson, 6 Mete. (Mass.) 246, 39 Am. Dec. 726. Should one party refer the other to a third per- son for information he is liable for such third person's fraud in giving false information. Ashner v. Aben- heim, 19 Misc. (N. Y.) 282, 43 N. Y. S. 69. The fraud of a third per- son which induces the purchase of goods will not give the purchaser a right to rescind the contract. If the seller is not a party to the fraud the contract will stand. Nash v. Minn. &c. Trust Co., 163 Mass. 574, 40 N. E. 1039, 28 L. R. A. 753, 47 Am. St. 489. "" Maggart v. Freeman, 27 Ind. 531 ; Watson V. Crandall, 7 Mo. App. 233, affd. 78 Mo. 583. See also, Rhoda v. Annis, 75 Maine 17, 46 Am. Rep. 354; Bennett v. Judson, 21 N. Y. 238; Jeffrey v. Bigelow, 13 Wend. (N. Y.) 518, 28 Am. Dec. 476. The principal may become responsible by ratifica- tion of agent's fraud. Reser v. Wal- ton, 78 Cal. 490 ; Atlantic Cotton Mills V. Indian Orchard Mills, 147 Mass. 268; Fairchild v. McMahon, 139 N. Y. 290, 34 N. E. 779, 36 Am. St, 701. See also, infra, note 23. So, by refer- ring to third person for information, Chadsey v. Greene, 24 Conn. 562; Witherwax v. Riddle, 121 111. 140, 13 N. E. 545; Beebe v. Young, 14 Mich. 136. ^Weir V. Bell, 3 Exch. Div. 238; Barwick v. English Joint Stock Bank, L. R. 2 Ex. 259 ; Mackay v. Commer- cial Bank, L. R. S P. C. 394; Swire v. Francis, 3 App. Cas. 106; Udell v. Atherton, 7 Hurl. & N. 172; Bing- hampton Trust Co. v. Auten, 68 Ark. 299, 57 S. W. 1105, 82 Am. St. 295; Western Md. R. Co. v. Franklin Bank, 60 Md. 36; Fishkill Sav. Inst. V. National Bank, 80 N. Y. 162, 36 Am. Rep. 595 ; Fitzsimmons v. Jos- lin, 21 Vt. 129, 52 Am. Dec. 46. '"Jeffrey v. Bigelow, 13 Wend. (N. Y.) 518, 28 Am. Dec. 476; Sutton v. Dillaye, 3 Barb. (N. Y.) 529; Buchan- an v. Exchange Ins. Co., 61 N. Y. 26; Jackson v. Sharp, 9 Johns. (N. Y.) 163, 6 Am. Dec. 267. See also, Lilly V. Hamilton Bank, 178 Fed. 53, 102 C. C. A. 1, 29 L. R. A. (N. S.) 558, and rote; Emerado' Farmers' Elev. Co. V. Farmers' Bank, 20 N. Dak. 270, 127 N. W. 522, 29 L. R. A. (N. S.) 567. " Barwick v. English Joint Stock Bank, L. R. 2 Ex. 259 ; Lynch v. Mer- cantile Trust Co., 18 Fed. 486. In the above case it is held that the acts of the agent were ratified. Mayo v. Wahlgreen, 9 Colo. App. 506, 50 Pac. 40; Scofield Rolling Mill Co. v. State, 54 Ga. 635 ; Rhoda v. Annis, 75 Maine 17, 46 Am. Rep. 354; Lamm V. Port Deposit Homestead Assn., 49 Md. 233, 33 Am. Rep. 246; Jewett v. Carter, 132 Mass. 335 ; Concord Bank v. Gregg, 14 N. H. 331; Jeffrey v. Bigelow, 13 Wend. (N. Y.) 518, 28 Am. Dec. 476; Erie City Iron Works V. Barber, 106 Pa. St. 125, 51 Am. Rep. 508; Henderson v. San An- tonio &c. R. Co., 17 Tex. 560, 67 Am. Dec. 675 ; Law v. Grant, 37 Wis. 548. And see Kennedy v. McKay, 43 N. J. L.^ 288, 39 Am. Rep. 581, where it is said "that an innocent vendor can- not be sued in tort for the fraud of his agent in effecting a sale." Aldrich v. Scribner (Mich.), 117 N. W. 581, 78 CONTRACTS. 128 made by a third person without any authority whatever may, how- ever, be ratified by accepting the benefits or otherwise, and if this is done the result may be the same as if the beneficiary had ex- pressly authorized the mis-statements.^' In most cases the party defrauded would have a right of action against the third person for the fraud and deceit practiced by him and the injury result- ing therefrom. Such third person has been held liable for false affirmations, if made with the intent to defraud, which affirma- tions would not be actionable if made by one of the parties to the contract, because the stranger stands in the situation of a disinterested person, in the light of a friend who has no motive or intention to defraud or tell an untruth, and who does throw the vendee off his guard and exposes him to be misled by the deceitful representation.^^ Nor does the statute of frauds apply 18 L. R. A. (N. S.) 379. In the above case the principal, who had never seen the land and knew nothing about it, stated that the representa- tions made by the agent were true. It was held that he had adopted the agent's estimate as his own. To same effect, Holcomb v. Noble, 69 Mich. 396, 37 N. W. 497; Busch v. Wilcox, 82 Mich. 315, 46 N. W. 940. "^Pilmore v. Hood, 35 E. C. L. 62; Atlantic Cotton Mills v. Indian Or- chard Mills, 147 Mass. 268, 17 N. E. 496, 9 Am. St. 698; Morse v. Ryan, 26 Wis. 356. Should the vendor ratify a sale made by an agent he cannot escape responsibility for false repre- sentations of the agent made to in- duce the sale. Riser v. Walton, 78 Cal. 490, 21 Pac. 362; Presby v. Par- ker, 56 N. H. 409; Fairchild v. Mc- Mahon, 139 N. Y. 290, 34 N. E. 779, 36 Am. St. 701 ; Krumm v. Beach, 96 N. Y. 398; Barnard v. Roane Iron Co., 85 Tenn. 139, 2 S. W. 21; Veazie v. Williams, 8 How. (U. S.) 134; Ladd v. Lord, 36 Vt. 194; Crump v. United States Min. Co., 7 Grat. (Va.) 352. The principal can- not accept the benefits and avoid the liability resulting from the statements of his agent; O'Leary v. Tillinghast, 22 R. I. 161, 46 Atl. 754; Fitzsimmons v. Joslin, 21 Vt. 129, 52 Am. Dec. 46. The principal cannot affirm the action of the agent in making the sale and not assume responsibility for his rep- resentations. Schulteis v. Sellers, 223 Pa. 513, 72 Atl. 887, 22 L. R. A. (N. S.) 1210. ^Medbury v. Watson, 6 Mete. (Mass.) 246, 39 Am. Dec. 726; Hoitt v. Holcomb, 32 N. H. 185. See also, Eames v. Morgan, 37 111. 260; Car- penter v. Wright, 52 Kans. 221, 34 Pac. 798; Kennedy v. McKay, 14 Vroom (N. Y.) 288, 39 Am. Rep. 581. One who executed a deed, leav- ing the name of the grantee blank, and thus made it possible for the holder to deceive another as to his title, is liable for the fraud so prac- ticed. Baker v. Hallam, 103 Iowa 43, 72 N. W. 419. But the mere silence of a third person does not render him liable, although he was present at the time the sale was consummated and knew of the defect in the seller's title. Littlejohn v. Drennon, 95 Ga. 743, 22 S. E. 657. A merchant may rely on a letter written by a third per- son relative to the credit of one who wishes to purchase goods. Einstein V. Marshall, 58 Ala. 153, 25 Am. St. 729. To same effect, Daniel v. Rob- inson, 66 Mich. 296, 33 N. W. 497. Such third person cannot insist that he was not a person upon whose opinion the other had a right to rely. Runge V. Brown, 23 Nebr. 817, 37 N. W. 660. He may be liable even though he derived no benefit from the fraud and did not collude with the person benefited. Endsley v. 129 FRAUD AND MISREPRESENTATION. § 79 and prevent recovery because the representations are not in writ- ing. Representations as to the character, conduct, credit, ability, trade or dealings of a third person, when the primary purpose for which such representations are made is not to induce the extension of credit or the delivery of money or goods to the per- son concerning whom they are made, but to secure the execution of a contract to which the person making them is a party, are not within the terms of the statute and need not be in writing in order to be actionable.^" § 79. Active concealment. — The law distinguishes between passive concealment and active concealment. Passive or inno- cent nondisclosure does not, as a general rule, amount to fraud. The seller, it is said may let the buyer cheat himself ad libitum, but must not actively assist him in cheating himself.^^ On the other hand, active concealment is usually held to amount to fraud.^^ The term "active concealment" may be properly applied to any form of conduct which under the circumstances prevents the other party from gaining knowledge of a material fact.'^ A concealment sufficient to justify the rescission of an executory contract must Johns, 120 111. 469, 12 N. E. 247, 60 439, 9 Sup Ct. 101; Southern Devel- Am. Rep. 572. A real estate broker opment Co. v. Silva, 125 U. S. 247, is not liable to the vendee of land 31 L. ed. 678, 8 Sup. Ct. 881. Where sold by such broker because he mis- the defendants actively concealed the represents the minimum price at which condition of a mine they wished to the vendor will sell. Ripy v. Cronan, sell and adopted means to thwart in- 131 Ky. 631, 115 S. W. 791, 21 L. R. vestigation and inquiry, they cannot A. (N. S.) 305. To same effect, complain that the purchaser failed to Merryman v. David, 31 111. 404. exercise common prudence. Tooker °°St John V. Hendrickson, 81 Ind. v. Alston, 159 Fed. 599, 86 C. C. A. 350; Hassinger v. Newman, 83 Ind. 425, 16 L. R. A. (N. S.) 818n. See 124, 43 Am Rep. 64; Grover v. Cav- also, Wainscott v. Occidental &c. anaugh, 40 Ind. App. 340, 82 N. E. Loan Association, 98 Cal. 253, 33 104 But see Knight v. Rawlings, Pac. 88; Kenner v. Harding, 85 111. 205 Mo 412 104 S. W. 38, 13 L. R. 264, 28 Am. Rep. 615; Bowman v. A. (N. S.) 212 and note. Bates, 2 Bibb (Ky.) 47, 4 Am. Dec. ^Wilson V. Higbee, 62 Fed. 723. 677; Brady v. Finn, 126 Mass. 260, Mere silence is not necessarily fraud- 38 N. E. 506; Gottschalk v. Kircher, ulent, even though inquiry is made, so 109 Mo. 170, 17 S. W. 905 ; Gruber long 'as there is no absolute duty to v. Baker, 20 Nev. 453, 23 Pac. 858, speak, and failure to speak does not 9 L. R. A. 302 ; Clark v. Clark, 55 N. lead the other to believe he is with- J. Eq. 814, 42 Atl. 98; Brotherton out knowledge on the subject inquired v. Reynolds, 164 Pa. St. 134, 30 Atl. about Laidlaw v. Organ, 2 Wheat. 234; Merchants Bank v. Campbell, 75 (U. S.) 178, 4 L. ed. 214. Va. 455. '^ Stewart v Wyoming Cattle " Wald's Pollock on Contracts, p. Ranche Co., 128 U. S. 383, 32 L. ed. 681. 9 — Contracts, Vol, I § 79 CONTRACTS. 130 be a wilful suppression of facts in regard to the subject-matter of the agreement which the party guilty of the suppression is bound to disclose.^* This principle finds its most usual applica- tion in the purchase and sale of property, real or personal. For the sake of convenience, the cases which illustrate active conceal- 5ient on the part of the vendor will be grouped separately from those which show instances of concealment on the part of the purchaser. The concealment of material facts by the vendor may sometimes be fraudulent, as well as positive mis-statements, at least,^^ if done with the intention to deceive.''* Thus, failure to disclose a material fact known to the vendor, and which cannot be discovered by the buyer, as, for instance, hidden diseases in animals sold, may be f raud.^' The fact that the purchaser might have weighed cattle which he bought does not defeat his right to take advantage of an overestimate by the seller of their weight, when at the time the seller made the statement he had weighed "Juzan V. Toulmin, 9 Ala. 662, 44 Am. Dec. 448. "A suppression of the truth may amount to a suggestion of falsehood ; and if with intent to de- ceive, either party to a contract of sale conceals or suppresses a material fact, which he is in good faith bound to disclose, this is evidence of, and equivalent to, a false representation." Oliver v. Oliver, 118 Ga. 362, 45 S. E. 232; Turner v. Ware, 2 Ga. App. 57, 58 S. E. 310. In equity all the material facts must be known to both parties to render the agreement just and fair in all its parts, and if there be any intentional misrepresentation or concealment of facts in the mak- ing of contracts, in cases in which the parties have not equal access to the means of information, it will vitiate and void the contract. Seal v. Hol- comb, 48 Tex. Civ. App. 330, 107 S. W. 916; Rison v. Newberry, 19 Va. 513, 18 S. E. 916. '' Prentiss v. Russ, 16 Maine 30 ; Milliken v. Chapman, 75 Maine 306, 46 Am. Rep. 386. '^ Hanson v. Edgerly, 29 N. H. 343 ; Binnard v. Spring, 42 Barb. (N. Y.) 470. " Downing v. Dearborn, 77 Maine 457, 1 Atl. 407; Duvall v. Medtart, 4 Har. & J. (Md.) 14; Grigsby v. Staoleton, 94 Mo. 423, 7 S. W. 421; McAdams v. Gates, 24 Mo. 223 ; Bar- ron V. Alexander, 27 Mo. 530 ; Stevens V. Fuller, 8 N. H. 463 ; Dixon v. Mc- Clutchey, Add. (Pa.) 322; Hough V. Evans, 4 McCord (S. C.) 169; Cardwell v. McClelland, 3 Sneed. (Tenn.) 150; Paddock v. Strobridge, 29 Vt. 470. And see Stewart v. Wy- oming Cattle Ranche Co., 128 U. S. 383, 32 L. ed. 439, 9 Sup. Ct. 101. The sale, for breeding purposes, of an im- potent horse has been held to be a fraud, unless the fact is disclosed to the buyer. Raeside v. Hamm, 87 Iowa 720, 54 N. W. 1079; Hadley v. Clinton County Imp. Co., 13 Ohio St. 502, 82 Am. Dec. 454; Maynard V. Maynard, 49 Vt. 297. For the holder of a check to sell it, when he knows that other checks of the maker have been protested and that he is insolvent, has been held a fraud. Se- bastian May Co. v. Codd, 77 Md. 293 ; Brown v. Montgomery, 20 N. Y. 287, 75 Am. Dec. 404. For the vendor to allege that his horse has distemper, when in fact he has glan- ders, a deadly disease. George v. Johnson, 6 Humph. (Tenn.) 36, 44 Am. Dec. 288; Howard v. Gould, 28 V't. 523, 67_ Am. Dec. 728, or that he has him hitched close in order to keep him from rubbing his saddle when he has him so tied to prevent him 131 FRAUD AND MISREPRESENTATION. 79 the cattle and knew their weight.*^ A bill for the rescission of the purchase of a silver mine, on the ground of fraud, alleged that the defendant represented that the ore therein contained a certain average of pure silver, making it very valuable, whereas in fact the average was so low that it was worthless; that the defendant "salted" the samples which plaintiff took from the mine, by fraudulently mixing native silver therewith, and upon the faith of this analysis, the purchase was made. It was held that where the latter allegation is sustained the defendant cannot shelter himself behind the plea that his representations were mere expressions of opinion as to the value of the mine.*' The vendor has been held guilty of fraud where he packed goods so that its defects would be concealed.*" The vendor of real estate must not intentionally conceal defects in his title, where he knows the vendee is purchasing in ignorance of such defect and will be in- jured thereby.*^ But active concealment is not confined to the vendor alone; the vendee may be guilty of fraud. Thus the vendee has from "cribbing" or "stump-sucking," Croyle v. Moses, 90 Pa. St. 250, 35 Am. Rep. 654, or that a mule kicked and thus prevents the discovery of defective hind legs (Kenner v. Har- ding, 85 III. 264, 28 Am. Rep. 615), is a fraud. =* Birdsey v. Butterfield, 34 Wis. 52. °° Mudsill Mining Co. v. Watrous, 61 Fed. 163, 9 C. C. A. 415. "Roseman v. Canovan, 43 Cal. 110; Singleton's Admr. v. Kennedy, 9 B. Mon. (Ky.) 222. "■ CuUum V. Bank of Alabama, 4 Ala. 21, 37 Am. Dec. 725 ; Bryant's Exr. V. Boothe, 30 Ala. 311, 68 Am. Dec. 117 ; Prout V. Roberts, 32 Ala. 427; Strong V. Lord, 107 111. 25; Devers v. Dal- lam, 6 T. B. Mon. (Ky.) 102; Pauls- rud V. Peterson, 109 Minn. 524, 121 N. W. 898, 122 N. W. 874; Johnson V. Pryor, 5 Hayw. (Tenn.) 243; In- gram V. Morgan, 4 Humph. (Tenn.) 66, 40 Am. Dec. 626 ; Napier v. Elam, 6 Yerg. (Tenn.) 108. It is a fraud for the vendors of real estate to rep- resent their title as good, and conceal the fact that, one of the grantors is insane, where such insanity clouds the title. Anderson v. Buck, 66 Iowa 490, 24 N. W. 10. The vendee may rescind where the vendor concealed an outstanding adverse title not shown by the abstract. Anderson v. Buck, 66 Iowa 490, 24 N. W. 10. Likewise, a vendor who sells the coal underly- ing land and then sells the land in fee to another, without any reserva- tions, is guilty of fraud. Vernam v. Wilson, 31 Pa. Super. Ct. 257. But silence by the vendor is not fraudu- lent where he has no knowledge of any cloud on his title. Harland v. Eastland, Hardin (Ky.) 590. In the following case the defendants were held not guilty of fraud for failing to disclose information as to the true value of certain timber sold, when there was no demand for such in- formation and the sale was consum- mated through plaintiff's agent, who was an experienced lumberman and whorn the defendant supposed had examined the timber and estimated its value, the defendants having no definite information as to its value. Cook v. Bagnell Timber Co., 78 Ark. 47, 94 S. W. 695. In the above case it appeared that plaintiff's agent was intoxicated at the time he purchased the timber. The court stated, "The rule deductible * * * from all the 79 CONTRACTS. 132 been held guilty of fraudulent conduct where he pays with the notes of a third person whom he knew to be insolvent, but of whose insolvency the vendor knew nothing;*^ where he gives in exchange stolen property;*^ or where he buys a judgment of over $7,000 for $400, without making it known that the judg- ment debtor has died and left an estate worth $6,000, but instead represented that the judgment debtor was alive and judgment proof.*^* One seeking to purchase real estate from the owner may be guilty of fraudulently misrepresenting its value or loca- tion, when the sale is made in reliance upon such representations, the vendor being ignorant as to its value or location, and the vendee having information concerning these matters.** It is a fraud for the purchaser to misrepresent and conceal the fact that valuable mineral exists in the land when the vendor is ignorant of such fact and relies on the representations of the vendee.*^ authorities, is that the contract of a person partially intoxicated at the time will not be set aside because of his intoxication. That the condition results from his own act and en- titles him to no consideration what- ever in either a court of law or of equity. It is not because of his in- toxication that courts will annul the contract, but because of some fraud or imposition perpetrated by the per- son who takes advantage of his con- dition to make a contract with him. The courts merely grant relief from the fraud or imposition perpetrated. Therefore, while the inadequacy or excessiveness of the consideration for the contract may be a circumstance tending to establish the perpetration of a fraud, it does not, of itself, when good faith is affirmatively shown, constitute such a fraud or imposition as will afford grounds for setting aside a contract. ' Citing, Birdsong v. Birdsong, 2 Head (Tenn.) 290. *= Henry v. Allen, 93 Ala. 197, 9 So. 579. To same effect, Sebastian May Co. V. Codd, 11 Md. 293. "'Titcomb v. Wood, 38 Maine 561. "aGottschalk v. Kircher, 109 Mo. 170, 17 S. W. 905. «Culley v. Jones, 164 Ind. 168, 11 N. E. 94. In the above case the rep- resentations relate to a deaf mute mentally weak and ignorant of the value of the lands conveyed. Moun- tain V. Day, 91 Minn. 249, 97 N. W. 883; Lolgren v. Peterson, 54 Minn. 343, 56 N. W. 44; Morgan v. Dinges, 23 Nebr. 271, 36 N. W. 544, 8 Am. St. 121; Manley v. Carl, 20 Ohio C. C. 161, 11 Ohio C. D. 1. However, if the parties are on an equal footing, and have an equal opportunity for knowledge, statements as to the value of land are usually considered as mere expressions of opinion, and must be grossly and palpably false to authorize inference of fraud there- from which would entitle the vendor to rescind. People v. Tynon, 2 Colo, App. 131, 29 Pac. 809; Marshall v. Lewis, 4 Litt. (Ky.) 140. See also, Pennybacker v. Laidley, iZ W. Va. 624, 11 S. E. 39. In the above case it was held that a lawyer who knew that a deed given by a married woman for land worth over $200,000 was void, because it was unacknowledged, did not commit fraud by procuring her to convey such land on the pay- ment of $500 to her, even though he misrepresented that she was merely conveying her dower right, she not believing that she had any right what- ever to such land. " Stackpole v. Hancock, 40 Fla. 362, 24 So. 914, 45 L. R. A. 814. In this case the land contained deposits of phosphate. Bowman v. Bates, 2 Bibb (Ky.) 47, 4 Am. Dec. 677. In this case the land contained salt de- ^33 FRAUD AND MISREPRESENTATION. § 79 Or the vendee may be guilty of fraud if he misrepresents to the owner of real estate the extent of his interest therein." It has been held that the purchaser was guilty of fraud where he mis- represented the value of standing timber" by stating that he had not measured all the timber standing on certain land, and repre- senting that what he had measured indicated that it amounted I to about what the vendor had estimated it, when in fact the i quantity was about double that amount, and the vendee had in I'fact measured all the timber.*^ One who procures the appoint- ment of his partner as appraiser of land he intends to purchase has been held guilty of fraud. "^ It must be borne in mind, how- ever, that in common-law jurisdictions the mere failure of a pur- chaser to disclose something extrinsic or intrinsic to the thing bought, known to him and not known to the seller, is not gen- erally, in a legal sense, fraud.*" Active concealment has been held to be fraud both in law and in equity, and may give rise to an action of deceit,"" or for rescission.'* posits. The vendee also induced the vendor's agent not to send his prin- cipal information in regard thereto. Livingston v. Peru Iron Co., 2 Paige (N. Y.) 390, reversed on other grounds, 9 Wend. (N. Y.) 511. The land contained deposit of iron ore. Crompton v. Beedle, 83 Vt. 287, 75 Atl. 331, 30 L. R. A. (N. S.) 748. In the above case the land contained valuable stone deposits. Merchants' Bank v. Campbell, 75 Va. 455, con- cealing a cave in land. Dunlap v. Richmond &c. R. Co., 81 Ga. 136, 7 S. E. 283. In the above case the vendee denied knowledge of the ex- istence of an oil well on the land when asked by the vendor if he knew of any oil well. •"Wilson V. Nichols, 72 Conn. 173, 43 Atl. 1052 ; Hays v. Meyers, 32 Ky. 832, 107 S. W. 287, 17 L. R. A. (N. S.) 284. In the above case the land purchased was held by one as a life tenant. When this life tenant was on his death-bed the defendant went to the remainderman and purchased his interest in such land, misrepre- senting the condition of the life tenant's health. To same effect, Ob- ney v. Obney, 26 Pa. Super. Ct. 116. See also, Faxon v. Baldwin, 136 Iowa 519, 114 N. W. 40. " Garr v. Alden, 139 Mich. 440, 102 N. W. 950. In the above case the purchaser induced the vendor not to investigate the value of the timber. " Prescott v. Wright, 4 Gray (Mass.) 461. "^ Haywood v. Marsh, 6 Yerg. (Tenn.) 69. See also. Fox v. Mack- reth, 2 Bro. Ch. 400. '"Dolman v. Nokes, 22 Beav. 402; Pratt Land &c. Co. v. McClain, 135 Ala. 452, 33 So. 185, 93 Am. St. 35; Mitchell V. Macdougall, 62 111. 498; Burt V. Mason, 97 Mich. 127, 56 N. W. 365 ; Smith v. Beatty, 2 Ired. Eq. (N. Car.) 456, 40 Am. Dec. 435; Har- rison v. Tyson, 34 Pa. St. 347, 64 Am. Dec. 661, 14 Mor. Min. Rep. 634 ; Guaranty Safe Deposit &c. Co. v. Leibold, 207 Pa. 399, 56 Atl. 951; Standard Steel Car Co. v. Stamm, 207 Pa. 419, 56 Atl. 954; Boyd v. Leith (Tex. Civ. App), SO S. W. 618; Crompton v. Beedle, 83 Vt. 287, 75 Atl. 331, 30 L. R. A. (N. S.) 748. "Roseman v. Canovan, 43 Cal. 110; Kenner v. Harding, 85 111. 264, 28 Am. Rep. 615 ; Singleton v. Kennedy, 9 B. Mon. (Ky.) 222; Stewart v. Wy- oming Cattle Ranch Co., 128 U. S. 383, 32 L. ed. 439, 9 Sup. Ct. 101; Howard v. Gould, 28 Vt. 523, 67 Am. Dec. 728. "'Bowman v. Bates, 2 Bibb (Ky.) 47; 4 Am. Dec. 677; Gottschalk v. § 8o CONTRACTS. 134 § 80, Misleading, partial disclosure. — The telling of a half- truth in such form as to mislead the party to whom the state- ment is made, and which deceives and throws him ofJ his guard, constitutes fraud equally as objectionable as any other form."* A representation may be absolutely true, and yet if it is made with a fraudulent intent to deceive and accomplishes its purpose. Kircher, 109 Mo. 170, 17 S. W. 90S ; Clark V. Clark, S5 N. J. Eq. 814, 42 Atl. 98; Merchants' Bank v. Camp- bell, 75 Va. 4SS. For further cases illustrating the truth of this see the other cases cited in this section. "a Peek V. Gurney, L. R, 6 H. L. 377, 7 Eng. Rul. Case 527; Ark- wright V. Newbold, 17 Ch. Div. 301; Stevenson v. Marble, 84 Fed. 23. In the above case the seller of bonds stated that there vi'as but one mort- gage on them. This was true, but he did not disclose that there were other liens prior to the mortgage. Moncrief v. Wilkinson, 93 Ala. 373, 9 So. 159; Camp v. Camp, 2 Ala. 632, 36 Am. Dec. 423; West v. Anderson, 9 Conn. 107, 21 Am. Dec. 736; Craig V. Hamilton, 118 Ind. 565, 21 N. E. 315. In the above case an heir made representations as to his share in his father's estate without disclosing that it had been advanced to him during his father's lifetime. Coles v. Ken- nedy, 81 Iowa 360, 46 N. W. 1088, 25 Am. St. 503. In the above case a pro- moter represented that a certain per- son was a subscriber for stock, but did not disclose that such person was not to pay for it. One who quit- claims land set off to him by a judg- ment, and conceals the fact that an appeal from this judgment is pend- ing, is guilty of fraud and liable in damages. Atwood v. Chapman, 68 Maine 38, 28 Am. Rep. 5; Tyron v. Whitmarsh, 1 Mete. (Mass.) 1, 35 Am. Dec. 339; Kidney v. Stoddard, 7 Mete. (Mass.) 252; Burns v. Dock- ray, 156 Mass. 135, 30 N. E. 551. In the above case the vendors showed an apparently good title without dis- closing that one of the grantors was insane. Van Houton v. Morse, 162 Mass. 414, 38 N. E. 705, 44 Am. St. 373, 26 L. R. A. 430. The above case had to do with a marriage contract. The court held that while the one making the disclosure might not be under any obligation to make such disclosure, yet if she undertook to state the facts she must state them fully, and not give one a partial and misleading statement. Potts v. Cha- pin, 133 Mass. 276. A disclosure of the list . of subscribers to a certain stock, without also revealing that one of them has subscribed conditionally, has been held a fraud. Zabel v. New State Tel. Co., 127 Mich. 402, 86 N. W. 949; Traber v. Hicks, 131 Mo. 180, 32 S. W. 1145; Loraerson v. Johnson, 47 N. J. Eq. 312, 20 Atl. 675, 24 Am. St. 410; Clark v. Clark, 55 N. J. Eq. 814, 42 Atl. 98; Haviland V. Willets, 141 N. Y. 35, 35 N. E. 958; Nickley v. Thomas, 22 Barb. (N. Y.) 652. In the above case the seller of a horse on inquiry stated that "he had balked with a man I had him of once," and did not tell that he had bought him as a balky horse and had used him very carefully. Gough v. Dennis, Hill. & Den. (N. Y.) 55; Croyle v. Moses, 90 Pa. St. 250, 35 Am. Rep. 654 ; Baker v. Seahorn, 1 Swan (Tenn.) 54, 55 Am. Dec. 724; George v. Johnson, 6 Humph. (Tenn.) 36, 44 Am. Dec. 288; White v. Cox, 3 Hayw. (Tenn.) 79; Wintz v. Mor- rison, 17 Tex. 372, 67 Am. Dec. 658; Chamberlin v. Fuller, 59 Vt. 247. For stating that there was one lien on the property without disclosing that there were several others also, see Spencer V. Sandusky, 46 W. Va. 582, 33 S. E. 221. For failure to give a complete statement of the liabilities of a third party, see Remington &c. Co. v. Kez- ertee, 49 Wis. 409, 5 N. W. 809. "The old adage applies that a half truth is a lie." Gluckstein v. Barnes (1900), App. Cas. 240; Henry v. Vance, 23 Ky. L. 491, 63 S. W. 273, 111 Ky. 72; Newell v. Randall, 32 Minn. 171, 19 N. W. 972, 50 Am. Rep. 562; Hadley v. Clinton County Im- porting Co., 13 Ohio St. 502, 82 Am. Dec. 454; Mallory v. Leach, 35 Vt. 156, 82 Am. Dec. 625. 135 FRAUD AND MISREPRESENTATION. § 8l it may be fraudulent/'^ It may be presented in such a way as to create a false impression.'^^ § 81. False representation. — At this point it will be well to gain a more or less comprehensive and general idea of the mean- ing of fraud and its associate, misrepresentation ; consequently the definition commonly given, with slight changes, will be stated. Fraud, either at law or in equity, is a false representation of a material fact made by word or conduct with knowledge of its falsehood or in reckless disregard of its truth, in order to induce and actually inducing another to act thereon to his injury."* Mis- representation is in the main inclusive of the term fraud. Prac- tically every fraud is a misrepresentation, but every misrepre- sentation is not fraudulent. Thus a misrepresentation as to the subject-matter of or parties to a contract may be innocently made, and if so it does not amount to fraud, but is a misrepresentation. Misrepresentations are made without knowledge of falsity. This demonstrates the distinction between the two."" Perhaps the distinction between fraud and misrepresentation can be more ac- curately stated by saying that a false representation will be con- sidered as fraudulent only when it gives rise to an action ex delicto, the action of deceit."" There are, however, instances in '^^ Mulligan v. Bailey, 28 Ga. 507 ; been said, it would be dangerous and Denny v. Oilman, 26 Maine 149. unwise to give a definition of fraud "^Lomerson v. Johnston, 47 N. J. so inclusive and exclusive as to fix Eq. 312, 20 Atl. 675, 24 Am. St. 410. definite bounds, since the ingenuity "A false representation may be made of man would find means of evasion, by presenting that which is true, so 1 Hov. on Frauds 13; Kerr on Fraud as to create an impression which is and Mistake. false, and then profiting by the false "' See Farjeon v. Indian Territory impression thus created." Tolley v. Illuminating Oil Co., 120 N. Y. S. Poteet, 62 W. Va. 231, 57 S. E. 811. 298. „ , ,, , ^ ,„ " See Anson on contracts ; Prentice °° Derry v. Peek, 14 App. Cas. ii7 ; V Crane 234 111. 302, 84 N. E. 916; Angus v. Clifford (1891), 2 Ch. 449; Shackett v Bickford, 74 N. H. 57, 65 Le Lievre v. Gould (1893), 1 Q. B. Atl 252 7 L R A (N S.) 646n, 124 491; Elwell v. Russell, 71 Conn. 462, Am St' 933- Byard v. Holmes, 34 42 Atl. 862; Shackett v. Bickford, 74 N J L 296'- Brackett v. Griswold, N. H. 57, 65 Atl. 262, 7 L. R. A. (N. 112 N Y 454 20 N. E. 376; Arthur S.) 646n, 124 Am. St. 933. See also, v Griswold 55 N. Y. 400; Southern Hiner v. Richter, 51 111. 299; Holdom Development Co. v. Silva, 125 U. S. v. Ayer, 110 111. 448; Boddy v. Henry, 247, 31 L. ed. 678, 8 Sup. Ct. 881. 113 Iowa 462, 85 N. W. 771 ; Warfield This definition is not given in the be- v. Clark, 118 Iowa 69, 91 N. W. 833; lief that it is all inclusive and that it Stevens v. Allen, 51 Kans. 144, 32 properly excludes everything. It is Pac. 922; Trimble v. Reid, 97 Ky. intended merely as a general state- 713, 31 S. W. 861 ; Cowley v. Dob- ment which will give a fairly accu- bins, 136 Mass. 401; Nash v. Minne- rate conception of fraud, for, as has § 82 CONTRACTS. 136 which it can hardly be said that the fraud practiced amounts to a misrepresentation, as where one enters into an agreement with a collateral wrongful or unlawful purpose/^ or with no inten- tion of performing it, as where one buys goods with no intention of paying for them.^' § 82. Must be as to facts. — As appears from a reading of the definition given in the preceding section a false representation sufficient to avoid a contract must be a positive statement of fact.^'' The succeeding sections will demonstrate the truth of the statement. § 83. Promise or representations of intentions as to future. — Not only must the representation be the affirmance of a fact, but it must relate to some existing condition or present fact, and not be the mere expression of a future intention f° for a mere sota &c. Trust Co., 163 Mass. 574, 40 N. E. 1039; Hedin v. Minneapolis Med. &c. Inst., 62 Minn. 146, 64 N. W. 158, 35 L. R. A. 417, 54 Am. St. 628; Humphrey v. Merriam, 32 Minn. 197, 20 N. W. 138; Haven v. Neal, 43 Minn. 315, 45 N. W. 612; Dunn v. White, 63 Mo. 181 ; Spead v. Tomlin- son, 1Z X. H. 46, 59 Atl. 376; Cow- ley V. Smyth, 46 N. J. L. 380, 50 Am. Rep. 432; Wakeman v. Dalley, 51 N. Y. 27; Daly v. Wise, 132 N. Y. 306, 30 N. E. 837, 16 L. R. A. 236. In the case of Kountze v. Kennedy, 147 N. Y. 124, 41 N. E. 414, 29 L. R. A. 360, 49 Am. St. 652, it is said, "The prin- ciple (that only fraud can give rise to an action for deceit) has been ob- scured by the use by judges of the phrase 'legal fraud,' which has some- times been interpreted as meaning fraud by construction, and as indicat- ing that something less than actual fraud may sustain an action for de- ceit." Dilworth v. Bradner, 85 Pa. St. 238; Lamberton v. Dunham, 165 Pa. St. 129, 30 Atl. 716. See also, Montreal Riv. Lumber Co. v. Mihllls, 80 Wis. 540, 50 N. W. 507 ; Krause v. Busacker, 105 Wis. 350, 81 N. W. 406. But see Holcomb v. Noble, 69 Mich. 396, 37 N. W. 497; Totten v. Burhans, 91 Mich. 495, 51 N. W. 1119; Johnson v. Gulick, 46 Nebr. 817, 65 N. W. 883, 50 Am. St. 629; Piche V. Robbins, 24 R. I. 325, 53 Atl. 92. '""' Evans v. Carrington, 2 DeG. F. & J. 481, 30 L. J. Ch. 364; Feret v. Hill, IS C. B. 207. ™ See post, § 88, Knowledge and In- tention. °° See ante, § 81, False Representa- tions. See also, in this connection, Hecht V. Metzler, 14 Utah 408, 48 Pac. Zl, 60 Am. St. 906. ""Johanson v. Stephanson, 154 U. S. 625, 38 L. ed. 1009, 14 Sup. Ct. 1180. Representations as to what de- fendant would or would not do in the future are merely promissory in character, and even if not carried out could not form the basis of a suit to set aside a contract or false repre- sentation entered into before such promise was broken. Huber v. Gug- genheim, 89 Fed. 598; Miller v. Sut- liff, 241 111. 521, 89 N. E. 651, 24 L. R. A. (N. S.) 735; Casselberry v. War- ren, 40 111. App. 626; Hartsville Uni- versity V. Hamilton, 34 Ind. 506 ; Welshbillig v. Dienhart, 65 Ind. 94. Representations which will give rise to an action in fraud must relate to an existing fact or to a fact alleged to exist, and not be a mere promise to do some- thing afterward. Fouty v. Fouty, 34 Ind. 433. To same effect. State v. Prather, 44 Ind. 287; Smith V. Parker, 148 Ind. 127, 45 N. E. 770; Kelty V. McPeake, 143 Iowa 567, 121 N. W. 529; Wheeler v. Mowers. 16 Misc. (N. Y.) 143, 38 N. Y. S. 950; ^Z7 FRAUD AND MISREPRESENTATIOM, 83 breach of contract does not amount to fraud, and consequently does not entitle the injured party to bring either an action of de- ceit or to rescind a contract induced by the promise." Any other holding would, on principle, render the nonperformance of any agreement fraud, and thus make nugatory laws relative to ex- emption. There is a conflict of authority as to whether the prom- ise is fraudulent if made without any intention of fulfilling it. Some jurisdictions hold that if the promise to perform some act 'in the future ij made with the design and intention of the prom- isor to disregard it, and with no intention to perform it, and was made to deceive and entrap the other party, then such promise, in case the refusal to perform takes place, will amount to actual fraud."' Others hold that if a promise is made to do something Clark V. Rice, 127 Wis. 451, 106 N. W. 231. ""Freeney v. Howard, 79 Cal. S2S, 21 Pac. 984, 4 L. R. A. 826, 12 Am. St. 162 ; Harrington v. Rutherford, 38 Fla. 321, 21 So. 283; Weigand v. Cannon, 118 111. App. 635; Slatten v. Konrath, 1 Kans. App. 636, 42 Pac. 399; Boettger &c. Co. v. Electrical Audit &c. Co., lis N. Y. S. 1102; Crampton v. McLaughlin Realty Co., 51 Wash. 525, 99 Pac. 586, 21 L. R. A. (N. S.) 823n. »= Nelson v. Shelby Mfg. &c. Co., 96 Ala. 515, 11 So. 695, 38 Am. St. 116; Ansley v. Bank of Piedmont, 113 Ala. 467, 21 So. 59, 59 Am. St. 122; Newman v. Smith, 77 Cal. 22, 18 Pac. 791; Lawrence v. Gayetty, 78 Cal. 126, 20 Pac. 382, 12 Am. St. 29; Russ Lumber &c. Co. v. Muscupiabe Land &c. Co., 120 Cal. 521, 52 Pac. 995, 65 Am, St. 186 ; Langley v. Rod- riquez, 122 Cal. 580, 55 Pac. 406, 68 Am. St. 70; Rogers v. Virginia-Caro- lina Chem. Co., 149 Fed. 1, 78 C. C. A. 615; National Bank v. Mackey, 5 Kans. App. 436, 49 Pac. 324; Laing v. McKee, 13 Mich. 124, 87 Am. Dec. 738; Gross v. McKee, 53 Miss. 536; Abbott V. Abbott, 18 Nebr. 503, 26 N. W. 361; Pollard v. McKenney. 69 Nebr. 742, 96 N. W. 679, 101 N. W.9; Cerny v. Paxton &c. Co., 78 Nebr. 134, 110 N. W. 882, 10 L. R. A. (N. S.) 640. ''"a, however, Perkins v. Lou- pee, ebr. 220; Goodwin v. Home, 60 N. H. 485; Troxler v. New Era Bldg. Co., 137 N. Car. 51, 49 S. E. 58; Braddy v. Elliott, 146 N. Car. 578, 60 S. E. 507, 16 L. R. A. (N. S.) 1121, 125 Am. St. 523 ; American Hosiery Co. V. Baker, 18 Ohio C. C. 604; Mu- tual Reserve Life Ins. Co. v. Seidell, 52 Tex. Civ. App. 278, 113 S. W. 945. In the above case it is said, "It is a general rule that a promise to per- form some act in the future will not amount to fraud in the eyes of the law ; and although it may have been the inducement to the execution of the contract, and though it may have been totally disregarded, it could not be the basis for an action. There is, however, an exception to the rule rec- ognized in Texas." (The exception is that stated in the text.) Scoggin V. Mason, 46 Tex. Civ. App. 480, 103 S. W. 831; M. T. Jones Lumber Co. v. Villegas, 8 Tex. Civ. App. 669, 28 S. W. 558; Touchstone v. Staggs (Tex. Civ. App.), 39 S. W. 189. Thus it has been held that an action for damages for deceit will lie where the buyer purchased a slave and agreed not to sell her out of the state or out of the neighborhood. Oldham v. Bentley, 6 B. Mon. (Ky.) 428; Price V. Read, 2 Harr. & G. (Md.) 291; Adams v. Anderson, 4 Har. & J. (Md.) 558; Fenwick v. Grimes, 5 Cranch (U. S.) 603, Fed. Cas. No. 4734. While conceding that fraud cannot be founded solely upon a promise not performed, even if the promisor never intended to fulfil it, it is held in Adams v. Tillig. 131 Apo. Div. (N. Y.) 494, 115 N. Y. S. 909, 84 CONTRACTS. 138 in the future, and at the time it is not intended to perform the promise, that fact does not constitute fraud in law or equity.**^ § 84. Opinions and predictions. — Mere expressions of opin- ions and predictions are not generaUy considered as representa- tions of fact. Consequently they are not fraudulent, and are in- sufficient for the purpose of maintaining an action of deceit,"^ or that fraud may be predicated on a present existing intent, and that a statement ' and representation by pur- chaser that he intended to erect a. dweUing house on the land bought when he had in fact already formed the intention to build a garage was fraudulent. The intention to disre- gard the promise must exist at the time it is made in order to constitute fraud. Chicago &c. R. Co. v. Titter- ington, 84 Tex. 218, 19 S. W. 472, 31 Am. St. 39; McFarland v. McGiU, 16 Tex. Civ. App. 298, 41 S. W. 402. ■" Farris v. Strong, 24 Colo. 107, 48 Pac. 963; Miller v. Sutliff, 241 111. 521, 89 N. E, 651, 24 L. R. A. (N. S.) 735; Weigand v. Cannon, 118 111. App. 635; Murray v. Smith, 42 111. App. 548; Gage v. Lewis, 68 III. 604; Chambers v. Mitchell, 123 III. App. 595; Bethell v. Bethell, 92 Ind. 318; Burt V. Bowles. 69 Ind. 1 ; Robinson v. Reinhart, 137 Ind. 674, 36 N. E. 519; Ayres v. Blevins, 28 Ind. App. 101, 62 N. E. 305; Balue v. Taylor, 136 Ind. 368, 36 N. E. 269; Reagan v. Hadley, 57 Ind. 509; State v. Carlisle, 21 Ind. App. 438, 52 N. E. 711; Noble v. State, 39 Ind. 352. In the case of Balue V. Taylor, 136 Ind. 368, 36 N. E. 269, it is said, "Counsel also re- minds us that representations upon which an action of fraud can be pred- icated must be of alleged existing facts, and not upon a promise to do something in the future, although the party promising had no intention of fulfiling the promise at the time it was made. * * * The foregoing principles enunciated by counsel are elemental." Younger v. Hoge, 211 Mo. 444, 111 S. W. 20, 18 L. R, A. CN. S.) 94; Gallager v. Brunei. 6 Cow. CN. Y.) 346; Fisher v. New York Common Pleas, 18 Wend. (N. Y.) 608; Tufts v. Weinfeld, 88 Wis. 647, 60 N. W. 992. See also, In re Barker's Estate, 113 Iowa 584, 85 N. W. 786. " Pasley v. Freeman, 3 T. R. 51, 1 R. R. 634; Jendwine v. Slade, 2 Esp. N. P. 572, 5 R. R. 754; Haycroft V. Creasy, 2 East 92, 6 R. R. 380; Harvey v. Young, Yelv. 21 ; Bayly v. Merrel, 3 Bulst. 94, Cro. Jac. 386; Bellairs v. Tucker, 13 Q. B. Div. 562 ; Munroe v. Pritchett, 16 Ala. 785, SO Am. Dec. 203; Foster v. Kennedy's Adrar., 38 Ala. 359, 81 Am. Dec. 56; Nounnan v. Sutter County Land Co., 81 Cal. 1, 22 P. 515, 6 L. R. A. 219n; Mayo V. Wahlgreen, 9 Colo. App. 506, 50 Pac. 40; Hedin v. Minneapolis Medical &c. Ins., 62 Minn. 146, 64 N. W. 158; 35 L. R. A. 417, 54 Am. St. Rep. 628; Gor- don V. Butler, 105 U. S. 553, 26 L. ed. 1166. And see Beard v. Bliley, 3 Colo. App. 479, 34 Pac. 271 ; Bull v. Pratt, 1 Conn. 342; Williams V. McFadden, 23 Fla. 143, 11 Am. St. 345; Endsley v. Johns, 120 111. 469, 12 N. E. 247, 60 Am. Rep. 572 ; Tuck V. Downing, 76 111. 71 ; State Bank v. Hamilton, 2 Ind. 457 ; Sieveking v. Litzler, 31 Ind. 13 ; Hartman v. Fla- herty, 80 Ind. 472; Bondurant v. Crawford, 22 Iowa 40 ; Longshore v. Jack, 30 Iowa 298; Moore v. Turbe- ville, 2 Bibb (Ky.) 602, 5 Am. Dec. 642; Bishop v. Small, 63 Maine 12; Atwood V. Chapman, 68 Maine 38, 28 Am. Rep. 5 ; Holbrook v. Conner, 60 Maine 578, 11 Am. Rep. 212; Long v. Woodman, 58 Maine 49 ; Thompson v. Phoenix Ins. Co., 75 Maine 55, 46 Am. Rep. 357 ; Buschman v. Codd, 52 Md. 202; Robertson v. Parks, 76 Md. 118, 24 Atl. 411; Mooney v. Mil- ler, 102 Mass. 217; Parker v. Moul- ton, 114 Mass. 99, 1 Am. Rep. 315; Barnard v. Coffin, 138 Mass. 37; Nash v. Minnesota Title Ins. &c. Co., 159 Mass. 437, 34 N. E. 625; Collins v. Jackson, 54 Mich. 186, 19 N. W. 947 ; Anderson v. McPike, 86 Mo. 293; Nauman v. Oberle, 90 Mo. 666, 3 S. W. 380; Banta v. Savage, 12 Nev. 151; Morrill v. Wallace, 9 N. H. Ill; 1 39 FRAUD AND MISREPRESENTATION. § 84 for the purpose of rescinding a contract at law,*'' or in equity.*" Page V Parker, 43 N. H. 363, 80 Am. Van Vechten v. Smith, 59 Iowa 173, ^.^'^- 1^2; Messer v. Smyth, 59 N. H. 13 N. W. 94; Swan v. Mathre, 103 7^i Bradbury V. Haines, 60 N. H. Iowa 261, 72 N. W. 522; Scroggin A ,' ,?J^.^*^v!f- 'r^^^' ^2 N. J. L. 77, 18 v. Wood, 87 Iowa 497, 54 N. W. 437; ,i}- ^Jri .?^^^ ,y- Meelcer, 5 Johns. Merritt v. Dufur, 99 Iowa 211, 68 N. t\-,', ay ,.5 ',„^*^'''' ^- Bennett, S W. 533; Marshall v. Peck, 1 Dana li''lT^,r- ^•\r"''' ^'^'^ ^- Andrews, (Ky.) 609; English v. Thomasson, 56 N. Y. 83 15 Am. Rep. 379; Simar 82 Ky. 280, 6 Ky. L. 267; Head v. Yif anaday, S3 N. Y. 298, 13 Am. Rep. Dant, 14 Ky. L. 742, 21 S. W. 528; 523; Hubbell V. Meigs, 50 N. Y. 480; Jafifray v. Moss, 41 La. Ann. 548, 6 Duffany v. Ferguson, 66 N. Y. 482; So. 520; Dennison v. Thomaston Mut. Chrysler V. Canaday, 90 N. Y. 272, Ins. Co., 20 Maine 125, 37 Am. Dec. 43 Am. Rep. 166; Saunders v. Hat- 42; Page v. Bent, 2 Mete. (Mass.) terman, 2 Ired L. (N. Car.) 32, 37 371; Pike v. Fay, 101 Mass. 134; Am. Dec. 404; Credle v. Swindell, 63 Milliken v. Thorndike, 103 Mass. 382; N- Car 305 ; Walsh v. Hall, 66 N. Homer v. Perkins, 124 Mass. 431, 26 Car. 233; Belmont Min. Co. v. Rog- Am. Rep. 677; Bristol v. Braidwood, ers, 10 Ohio Cir. Ct. 305, 6 Ohio Cir. 28 Mich. 191 ; Wilder v. DeCou, 18 Dec. 619. And see Aetna Ins. Co. v. Minn. 470; Cochrane v. Halsey, 25 Reed, Z2, Ohio St. 283; Lyons v. Minn. 52; Wilkinson v. Clauson, 29 Briggs, 14 R. I. 222, 51 Am. Rep. 372; Minn. 91; Doran v. Eaton, 40 Minn. Handy v. Waldron, 18 R. I. 567, 29 35, 41 N. W. 244; Anderson v. Bur- Atl. 143, 49 Am. St. 794; Hecht v. nett, 5 How. (Miss.) 165, 35 Am. Metzler, 14 Utah 408, 48 Pac. i7, 60 Dec. 425; Anderson v. Hill, 12 Sm. Am. St. 906; Jude v. Woodburn, 27 & M. (Miss.) 679, 51 Am. Dec. 130; Vt. 415 ; Sheldon v. Davidson, 85 Wis. Walker v. Mobile &c. R. Co., 34 138, 55 N. W. 161 ; Warner v. Benja- Miss. 245 ; Selma &c. R. Co. v. An- min, 89 Wis. 290, 62 N. W. 177. derson, 51 Miss. 829; Saunders v. °=Munroe v. Pritchett, 16 Ala. 785, McClintock, 46 Mo. App. 216; Rem- 50 Am. Dec. 203; Cooke v. Cook, ington v. Van Ingen, 9 Misc. (N. 100 Ala. 175, 14 So. 171; Davis v. Y.) 128, 29 N. Y. S. 301, 59 N. Y. Betz, (£ Ala. 206; Brown v. Freeman, St. 704, affg. 6 Misc. (N. Y.) 215, 26 79 Ala. 406; Moses v. Katzenberger, N. Y. S. 878, 56 N. Y. St. 600; ^tna 84 Ala. 95, 4 So. 237; Grid v. Lo- Ins. Co. v. Reed, 33 Ohio St. 283; max, 94 Ala. 641 10 So. 232; Bain v. Smith v. Griswold, 6 Ore. 440; Withey, 107 Ala. 223, 18 So. 217; Banfield v. Banfield, 24 Ore. 571, 34 Georgia Home Ins. Co. v. War- Pac. 659; Rockafellow v. Baker, 41 ten, 113 Ala. 479, 22 So. 288, 59 Pa. St. 319, 80 Am. Dec. 624; Fulton Am. St. 129; Ansley v. Bank of Pied- v. Hood, 34 Pa. St. 365, 75 Am. Dec. mont, 113 Ala. 467, 21 So. 59, 59 Am. 664; Watts v. Cummins, 59 Pa. St. St. 122; Rendell v. Scott, 70 Cal. 514, 84; Byrne v. Stewart, 124 Pa. St. 11 Pac. 779; Cooper v. Hunter, 8 450, 17 Atl. 19; Jackson v. Stock- Colo. App. 101, 44 Pac. 944; Greene bridge, 29 Tex. 394, 94 Am. Dec. 290; V. Societe &c., De St. Denis, 81 Fed. Barrett v. Featherstone, 89 Tex. 567, 64; Bond v. Ramsey, 89 111. 29; Wash- 35 S. W. 11; Blake v. Peck, 11 Vt. ington V. Louisville &c. R. Co., 34 483; Rison v. Newberry, 90 Va. 513, 111. App. 658, affd. 136 111. 49; Mu- 18 S. E. 916; Watkins v. West sick V. Gatzmeyer, 47 111. App. 329; Wytheville Land &c. Co., 92 Va. 1, Foley V. Cowgill, 5 Blackf. (Ind.) 22 S. E. 554; West Seattle Land &c. 18, 32 Am. Dec. 49; Catling v. Co. v. Herren, 16 Wash. 665, 48 P. Newell, 9 Ind. 572 ; Bish v. Bradford, 341 ; Maltby v. Austin, 65 Wis. 527, 17 Ind 490- Parker v. Thomas, 19 27 N. W. 31; Montreal River Lum- Ind. 213, 81 Am. Dec. 385 ; Curry v. ber Co. v. Mihills, 80 Wis. 540, SO Keyser 30 Ind. 214; Hunter v. Mc- N. W. 507; Fromer v. Stanley, 95 Laughlin, 43 Ind. 38; Adkins v. Ad- Wis. 56, 69 N. W. 820; Morrison v. kins, 48 Ind. 12; Shade v. Creviston, Koch, 32 Wis. 254; Cheyenne First 93 Ind 591 • Conant v. National State National Bank v. Swan, 3 Wyo. 356, Bank, 121 Ind, 323, 22 N. E. 250; 23 Pac. 743. Bondurant v. Crawford, 22 Iowa 40; "Denton v. Macneil, L. R. 2 Eq. § 84 CONTRACTS. 140 In the sale or transfer of real or personal property it is not always easy to determine whether the language used by the seller should be construed as a warranty or as the mere expression of an opinion.^^ One must exercise care and not confuse statements of opinions and predictions with warranties. In determining whether an affirmation was intended as a warranty, a decisive test is whether the vendor assumes to assert a fact of which the buyer is ignorant, or merely state an opinion or judgment upon a matter of which the vendor has no special knowledge and on which the buyer may be expected also to have an opinion and to exercise his judgment. In the former case there is generally a warranty, in the latter not.°^ Before a representation will be considered fraudulent it must be in regard to a matter susceptible of approximate accurate knowledge. It must import knowledge and be made as a state- ment of fact.''^ Thus a statement by one of the parties to a 352; Crown v. Carriger, 66 Ala. 590; Lockwood V. Fitts, 90 Ala. ISO, 7 So. 467; Dugan v. Cureton, 1 Ark. 31, 31 Am. Dec. 727 ; Lawrence v. Gayetty, 78 Cal. 126, 20 Pac. 382, 12 Am. St. 29 ; People v. Tynon, 2 Colo. App. 131, 29 Pac. 809; Banque Franco- Egyptienne v. Brown, 34 Fed. 162; Reeves v. Corning, 51 Fed. 774; Payne v. Smith, 20 Ga. 654; Drake V. Latham, SO 111. 270; Douglass v. Littler, 58 111. 342; Warren v. Doo- little, 61 111. 171; Tuck v. Downing, 76 III. 71; Dillman v. Nadlehoffer, 119 111. 567, 7 N. E. 88; Brady v. Cole, 164 111. 116, 45 N. E. 438; Crocker V. Manley, 164 111. 282, 45 N. E. 577, 56 Am. St. 196; Swanson v. Fisher, 148 111. App. 104; Sieveking v. Litz- ler, 31 Ind. 13; McClanahan v. Mc- Kinley, 52 Iowa 222, 2 N. W. 1101; Lucas V. Crippen, 76 Iowa 507, 41 N. W. 205 ; Chambers v. Baptist Educa- tion Soc, 1 B. Mon. (Ky.) 215; Seng V. Keller (Ky,), 37 S. W. 581; Carl- ton V. Rockport Ice Co., 78 Maine 49, 2 Atl. 676; Commonwealth v. Mechanics' Mut. Fire Ins. Co., 120 Mass. 495 ; Mayhew v. Phoenix Ins, Co., 23 Mich. 105; Hall v. Thomp- son, 1 Sm. & M. (Miss,) 443; Reel V. Ewin.g, 4 Mo. App. 570; Moore v. Scott, 47 Nebr. 346, 66 N. W. 441; Wise V. Fuller, 29 N. J. Eq. 257; Norfolk &c. Hosiery Co. v, Arnold, 49 N. J. Eq. 390, 23 Atl. 514; Ban- field V. Banfield, 24 Ore. 571, 34 Pac. 659; Rockafellow v. Baker, 41 Pa. St. 319, 80 Am. Dec. 624; Maney v. Porter, 3 Humph, (Tenn.) 347; Leiker v, Henson (Tenn. Ch.), 41 S. W. 862, affd. orally by the Su- preme Court; Moore v. Cross, 87 Te.x. 557, 29 S. W. 1051; Johanson V, Stephanson, 154 U. S, 625, 38 L, ed. 1009, 14 Sup. Ct. 1180; Southern Development Co. v. Silva, 125 U. S, 247, 31 L. ed, 678, 8 Sup, Ct. 881; Stebbins v. Eddy, 4 Mason (U. S,) 414; Rison v, Newberry, 90 Va. 513, 18 S. E. 916; i\Iax Meadows Land &c. Co. V. Brady, 92 Va. 71, 22 S. E. 845; Orr v. Goodloe, 93 Va. 263, 24 S. E, 1014; English v. Grinstead, 12 Wash. 670, 42 Pac, 121; Whitaker v. Southwest Virginia Imp. Co., 34 W. Va. 217. "'Hazelton Boiler Co. v. Fargo Gas Co., 4 N. Dak. 365, 61 N. W. 151. "'Pasley v. Freeman, 3 T. R. 51, 1 R. R. 634; Titus v. Poole, 145 N. Y. 414, 40 N. E. 228; Shippen v. Bowen, 122 U. S, 575; Benjamin on Sales, 7th ed,, pp. 612, 664. ™ Statements by a vendor of a mining lease that it had never been mined, but that prospecting shafts had been dug to the ore and then 141 FRAUD AND MISREPRESENTATION. § 84 contract relative to the depth of a certain kind of sand, when neither of the parties was in position to know its depth, was held not to be a false representation or warranty, but a mere opin- ion or estimate.'" Likewise, statements that one has wells which will supply water sufficient for a certain number of cattle," or as to the amount of wood the timber on certain property would make,'^ have been held expressions of opinion. In matters of opinion every one is presumed to rely on his own judgment." Not only are expressions of opinion relative to indefinite matters not considered fraudulent, but under ordinary circumstances deal- ers' talk or statements "puffing" trade are held to be mere expres- sions of opinion and do not avoid the contract.'* Mere expres- sions of belief or opinion on the part of the vendor as to the value of articles sold by him, even though false and in a sense fraudu- lent, cannot be made the basis of an action for fraud, and this has been held true in many cases, even though strong and positive language has been used. This principle is expressed in the old maxim, Simplex commendatio non obligat.'^ Thus the mere ex- left, are statements of fact and not merely opinions. Kendrick v. Ryus, 225 Mo. 150, 123 S. W. 937, 135 Am. St. 585. See also, Ansley v. Bank of Piedmont, 113 Ala. 467, 21 So. 59, 59 Am. St. 122; McCormick v. Jor- don, 65 W. Va. 86, 63 S. E. 778; Cleavenger v. Sturm, 59 W. Va. 658, 53 S. E. 593. " McCormick v. Jordon, 65 W. Va. 86, 63 S. E. 778. " Bonbourt v. Crawford, 22 Iowa 40. "Longshore v. Jack, 30 Iowa 298. "Smith V. Richards, 38 U. S. (13 Pet.) 26. There can be no reliance on the expression of an opinion in reference to a matter equally open to the inquiry of both parties. Davis V. Betz, 66 Ala. 206; Crown v. Car- riger, 66 Ala. 590; Townsend v. Cowles, 31 Ala. 428; Dawson v. Gra- ham, 48 Iowa 387; Cornwall v. Mc- Farland Real Estate Co., 150 Mo. yjl, 51 S. W. 736; Williams v. Dai- ker, a Misc. (N. Y.) 70, 68 N. Y. S. 348, affd. &i App. Div. (N. Y.) 614, 71 N. Y. S. 247. "Dugan V. Cureton, 1 Ark. 31, 31 Am. Dec. 727. "Puffing mining claims, or making glowing predic- tions as to how such claims will 'pan out' does not amount to such false representation as will authorize a court of chancery to set aside a sale of stock in a mining company, where the parties are compos mentis and deal at arm's length." Burwash v. Ballou, 230 111. 34, 82 N. E. 255, 15 L. R. A. (N. S.) 409n; Schramm v. O'Conner, 98 111. 539; Allen v. Hart, 72 111. 104; Bridges v. Robinson, 2 Tenn. Ch. 720; Vernon v. Keys, 12 East 632. " A misrepresentation by the vendor as to the total cost of certain articles sold is not ground for avoid- ing the sale, where no confidential relation exists between the parties, and the vendee was experienced in the business and might have calculated the cost, the price per lb. being fixed and the weight ascertained. Dalhofif Const. Co. v. Block, 157 Fed, 227, 85 C. C. A. 25, 17 L. R. A. (N. S.) 419n. See also, Gustafson v. Rust- meyer, 70 Conn. 125, 39 Atl. 104, 39 L. R. A. 644, 66 Am. St. 92; Sher- wood V. Salmon, 5 Day (Conn.) 439. 5 Am. Dec. 167. A statement by a book agent as to the book's value may be and usually is the expression § 84 CONTRACTS. 142 pression of opinion by the vendor of real estate as to his title when based upon the facts truthfully stated, or which are within of an opinion. Patterson v. Barrie, 30 App. D. C. 531 ; Terhune v. Coker, 107 Ga. 352, 33 S. E. 394; Strubhar V. Shorthose, 78 III. App. 394. A statement by a book agent that Bal- zac's works were "nice books that her children would love to read, and that they would be nice to have in the library," has been held the ex- pression of an opinion, and not such a fraud as would entitle the purchaser to rescind the contract. Barrie v. Jerome, 112 111. App. 329. Repre- sentations as to the richness of a mine which are mere opinions are not ground for the rescission of a contract for the purchasing of stock in such mine. Crocker v. Manley, 164 111. 282, 45 N. E. 577, 56 Am. St. 196; Noetling v. Wright, 72 111. 390; Ellefritz v. Taylor, 84 111. App. 396; Plummer v. Rigdon, 78 111. 222, 20 Am. Rep. 261 ; Kennedy v. Rich- ardson, 70 Ind. 524; Cagney v. Cu- son, 17 Ind. 494; Hartman v. Fla- herty, 80 Ind. 472; Hoffman v. Wil- helm, 68 Iowa 510, 27 N. W. 483; Lucas V. Crippen, 76 Iowa 507, 41 N. W. 205; Poland v. Brownell, 131 Mass. 138, 41 Am. Rep. 215; Veasey V. Doton, 3 Allen (Mass.) 380; Homer v. Perkins, 124 Mass. 431, 26 Am. Rep. 677; Bristol v. Braidwood, 28 Mich. 191; Collins v. Jackson, 54 Mich. 186, 19 N. W. 947; Columbia Electric Co. v. Dixon, 46 Minn. 463, 49 N. W. 244; Brownlow v. Wollard, 61 Mo. App. 124; Nostrum v. Halli- day, 39 Nebr. 828, 58 N. W. 429; Canon v. Farmers' Bank, 3 Nebr. 348, 91 N. W. 585 ; Page v. Parker, 43 N. H. 363, 80 Am. Dec. 172; Speigle- myer v. Crawford, 6 Paige Ch. (N. Y.) 254; Hutchinson v. Brown, Clarke Ch. (N. Y.) 408; Weidner V, Phillips, 39 Hun (N. Y.) 1; Saunders v. Hatterman, 2 Ired. L. (N. Car.) 32, 37 Am. Dec. 404; Handy V. Waldron, 18 R. I. 567, 29 Atl. 143, 49 Am. St. 794, per Tillinghast, J.: "It is based upon the universal prac- tice of the seller to recommend the article or thing offered for sale, and to employ more or less extravagant language in connection therewith. As said by Benjamin on Sales (Vol. 1, § 508), 'the buyer is always anxious to buy as cheaply as he can, and is sufficiently prone to find imaginary fault in order to get a good bargain; and the vendor is equally at Hberty to praise his merchandise, in order to enhance its value, if he abstain from a fraudulent representation of facts, provided the buyer have an opportunity of inspection, and no means are used for hiding the de- fects.' And the common experience of mankind is that an ordinarily pru- dent buyer will not rely upon such statements to his hurt. The law, therefore, recognizes the fact that men will naturally overstate the value and qualities of the article which they have to sell, and that a buyer has no right to rely thereon. Kimball v. Bangs, 144 Mass. 321, 11 N. E. 113. Indeed, the decisions have gone so far, under this principle, as to hold that, as said by Holmes, J., in Dem- ing V. Darling, 148 Mass. 504, 20 N. E. 107, 'the law does not exact good faith from a seller, in those vague commendations of his wares which tnanifestly are open to difference of opinion, which do not imply untrue assertions concerning matters of di- rect observation (Teague v. Irwin, 127 Mass. 217), and as to which it has always been understood, the world over, that such statements are to be distrusted.' But while the law thus countenances a certain degree of misrepresentation, sometimes termed 'privileged fraud,' in commercial transactions, yet it holds the seller responsible if he falsely represents a particular fact (other than the price he paid, or an offer to him) affecting the value, quality or condi- tion of the property in question. Grinnell on Deceit, § 28, and cases cited. If there is an express war- ranty as to quality or value, the thing sold not being open to the inspection of the buyer, or if any trick or de- vice is employed by the seller to prevent such inspection, and the buyer relies upon the warranty or false representations of the seller, and is injured thereby, the matter may be held liable." See also, South- ern Development Co. v. Silva, 125 U. S. 247, 31 L. ed. 678, 8 Sup. Ct. 881 ; 143 FRAUD AND MISREPRESENTATION. § 84 the knowledge of the vendee, do not constitute fraud even though the opinion may not be well founded, the vendee not being entitled to rely thereon/" There are instances, though, where misrepresentations as to value may amount to fraud. The parties themselves may make value the principal element in a contract,, and there are many cases where articles possess a standard commercial value, in which it is the chief criterion of quality for those who are not experts. Thus, where a seller falsely warrants bonds to be of a certain value, and the buyer, having no knowledge of their real value nor any present means of learning it, relies solely on such statement, the rule of caveat emptor does not apply. A stock- holder's false statement that the stock he is offering has always paid a certain rate in dividends is a positive statement of a mate- rial fact, on which the buyer has a right to rely, and the rule of caveat emptor does not apply although there was no express war- ranty.'^ But an assertion that stock which one is selling will pay a certain dividend is a mere opinion and does not amount to fraud.'* It has also been held that an action for a fraudulent representation cannot be maintained against the president and vice-president of a corporation where they represented to a stock- holder, who was also secretary and treasurer of the corporation, that the business was going down ; that one of them had purchased Grim V. Byrd, 32 Gratt. (Va.) 293. owner to whom the vendee is re- Upon the question of value the pur- ferred the vendor is not guilty of chaser must rely upon his own judg- fraud. Hawkins v. Wells, 17 Tex. ment. Patten v. Glatz, 87 Fed. 283; Civ. App. 360, 43 S. W. 816. Ellis V Andrews, 56 N. Y. 83, 15 " Hennessy v. Damourette, 15 Colo. Am. Rep. 379; Chrysler v. Canaday, App. 354, 62 Pac. 229. 90 N. Y. 272, 43 Am. Rep. 166. " Mumford v. Tolman, 157 111. 258, "'Saltonstall v. Gordon, 33 Ala. 41 N. E. 617; Murray v. Tolman, 162 149; Martin v. Wharton, 38 Ala. 637 Fitzhugh v. Davis, 46 Ark. 337 Choate v. Hyde, 129 Cal. 580, 62 Pac 118; Drake v. Latham, 50 111. 270 Conwell V. Clifford, 45 Ind. 392 111. 417, 44 N. E. 748. Compare Strand v. Griffith, 97 Fed. 854; Swan V. Mathre, 103 Iowa 261, 72 N. W. 522; Townsend v. Felthousen, 156 N. Y. 618, 51 N. E. 279; Handy v. Howard v. Witham, 2 Greenl. Waldron, 18 R. I. 567, 29 Atl. 143, (Maine) 390; Hoyt v. Bradley, 27 49 Am. St. 794; Tacoma v. Tacoma Maine 242; Perkins v. Trinka, 30 Light &c. Co., 17 Wash. 458, 50 Pac. Minn 241 'l5 N W. 115; Herman 55; Beetle v. Anderson, 98 Wis. 5, V. Hall, 140 Mo. 270, 41 S. W. 733; 73 N. W. 560. Complaint in an ac- F'ellows V. Evans, 33 Ore. 30, 53 Pac. tion for fraudulent representations, 491. Thus where the vendor states see Spencer v. Johnston, 58 Nebr. 44, that his opinion is based upon state- 78 N. W. 482. ments made to him by the former § 84 CONTRACTS. 1 44 sufficient stock to give him a controlling interest in the corpora- tion, and that this was his (the secretary and treasurer's) last chance to get his money out.'^" In the case above referred to, and the cases cited in connection therewith, the relation, between the parties, approached one of trust and confidence. Likewise, representations as to the quality of articles are ordi- narily matters of mere opinion upon which one has no right to rely, where the thing purchased is before the parties and the means of knowledge are equally open to both.*" The courts have quite generally applied the term "promissory representations" to predictions and hold that representations looking to the future as to what the vendee can do with the property, how much he can make out of it, or how much he can save by its use, are on a par with affirmations as to the value or quality of the property, and do not usually constitute fraud. *^ Thus the nonfulfilment of roseate views expressed by various speakers at a public sale of lots in a boom town does not entitle the purchasers of such lots to rescind their contract.*"" However, if the parties sustain a confidential re- lation one to the other, expressions of opinion or prediction ™ Boulden v. Stilwell, 100 Md. 543, land," is a mere opinion. Scott v. 60 Atl. 609, 1 L. R. A. (N. S.) 258. Hanson, 1 Sim. 13; affd. 1 Russ. & The court stated that representations M. 128; Ormrod v. Huth, 14 M. & concerning the future value or profit- W. 651 ; Pearce v. Carter, 3 Houst. ableness of the business should be (Del.) 385; Wiest v. Carman, 3 Del. excluded from the jury as a basis Ch. 422; Castelberry v. Scandrett, 20 of recovery, since it is but a predic- Ca. 242 ; Manes v. Kenyon, 18 Ca. tion of future insolvency, and not a 291 ; Van Velsor v. Seeberger, 35 111. statement of the existence of in- App. 598; McClanahan v. McKinley, solvency. They also held that mis- 52 Iowa 222, 2 N. W. 1101 ; Farrell representations as to the owner- v. Lovett, 68 Maine 326, 28 Am. Rep, ship of the stock did not jus- 59; Parker v. Moulton, 114 Mass. 99, tify a recovery, and that the one de- 19 Am. Rep. 315 ; Taylor v. Fleet, 4 frauded, since he was secretary and Barb. (N. Y.) 95; Fields v. Rouse, 3 treasurer, had at least equal means Jones Law (N. Car.) 72. of knowledge with the other as to '^ Long v. Woodman, 58 Maine 49; the condition and prospects of the Gordon v. Parmlee, 2 Allen (Mass.) corporation, even though the books 212; Williamson v. Holt, 147 N. Car. had not been broufiht down to date. 515, 61 S. E. 384, 17 L. R. A. (N. See also, in connection with this sub- S.) 240; Sheldon v. Davidson, 85 ject, Crowell v. Jacksnn, 53 N. J. L. Wis. 138, 55 N. W. 161; Warner v, 656, 23 Atl. 426; Stark v. Soule, 27 Benjamin, 89 Wis. 290, 62 N. W. 179; N. Y. Week. Dig. 80, 9 N. Y. St, First Nat. Bank v. Swan, 3 Wyo. 356, 555; Krumbhaar v. Griffiths, 151 Pa, 23 Pac. 743. St. 223, 25 Atl. 64. »= Pine Mountain &c. Co. v. Ford, ""A statement that certain land is 21 Ky. L. 142, SO S. W. 27. "uncommonly rich water meadow 145 FRAUD AND MISREPRESENTATION. § 8; on the part of the dominant party may be ground for avoid- ing a contract induced thereby/'' Thus representations as to value made by an agent to his principal,'* an attorney to his client/^ or where trust and confidence is in fact reposed, although there is no special relation of trust and confidence,*" are consid- ered as representations of fact and may be relied on. § 85. Misrepresentations as to law. — In the absence of a relation of trust and confidence, or some other peculiar fact or circumstance, a misrepresentation of a matter of law is not suffi- cient to constitute fraud.*^ A misrepresentation of the legal effect of a written contract is but the expression of an opinion upon a question of law equally open to the observation and in- ^Baum V. Holton, 4 Colo. App. 406. 36 Pac. 154; Merritt v. Wassen- ich, 49 Fed. 785 ; Hawk v. Brownell, 120 111. 161, 11 N. E. 416; Hulett v. Kennedy, 4 Ind. App. 33, 30 N. E. 310; Barnard v. Coffin, 138 Mass. 37; Lofgren v. Peterson, 54 Minn. 343, 56 N. W. 44; Smith v. Patterson, 33 Ohio St. 70 ; Fisher v. Budlong, 10 R. I. 525 ; Davenport v. Buckhanan, 6 S. Dak. 376, 61 N. W. 47; Boyd v. Ja- cobs, 6 Tex. Civ. App. 442, 25 S. W. 681. *' Cheney v. Gleason, 125 Mass. 166; White v. Lowden, 8 Misc. (N. Y.) 106, 28 N. Y. S. 619, 59 N. Y. St. 509; Palmer v. Pirson, 4 Misc. (N. Y.) 455, 24 N. Y. S. 333, 54 N. Y. St. 157. Where plaintiff listed his land with defendant, a real estate agent, for exchange, and, relying on defend- ant's representation that certain land of- his was worth as much as plain- tiff's, exchanged his land therefor, his deed to defendant will be canceled where defendant grossly misrepre- sented the value of his land, smce plaintiff has a right to rely on de- fendant's representations because of the fiduciary relations existing be- tween them. Shute v. Johnson, 25 Ore. 59, 34 Pac. 965. ^^^ ^. ^'Manley v. Felty, 146 Ind. 194, 45 N. E. 74. '"Nolte V. Reichelm, 96 111. 425; Nichols v. Colgan, 130 Ind 341 30 N. E. 301 ; Swimra v. Bush, 23 Mich. 99 See also, White v. Southerland, 64 111. 181 ; Dorr v. Cory, 108 Iowa 10 — Contracts, Vol. I 725, 78 N. W. 682; McCormick v. Malin, S Blackf. (Ind.) 509; Wells v. McGeoch, 71 Wis. 196, 35 N. W. 769. "Lewis V. Jones, 4 B. & C. 506; Georgian Home Ins. Co. v. Warten, 113 Ala. 479, 22 So. 288, 59 Am. St. 129; Rutter & Hendrix v. Hanover Fire Ins. Co., 138 Ala. 202, 35 So. 33; Townsend v. Cowles, 31 Ala. 428; Craig V. Blow, 3 Stew. (Ala.) 448; Champion v. Woods, 79 Cal. 17, 21 Pac. 534, 12 Am. St. 126; Fish v. Cleland, 33 111. 238; Drake v. Latham, 50 III. 270; Dillman v. Nadlehoffer, 119 111. 567, 7 N. E. 88; Clem v. New Castle &c. R. Co., 9 Ind. 488, 68 Am. Dec. 653 ; Russell v. Branham, 8 Blackf. (Ind.) 277; New Albany &c. R. Co. V. Fields, 10 Ind. 187 ; Fry v. Day, 97 Ind. 348; Louchheim v. Gill, 17 Ind. 139; Smither v. Calvert, 44 Ind. 242; Burt v. Bowles, 69 Ind. 1; Piatt V. Scott, 6 Blackf. (Ind.) 389, 39 Am. Dec. 436; Clodfelter v. Hulett, 72 Ind. 137; Abbott v. Treat, 78 Maine 121, 3 Atl. 44; Miller v. Brooks, 109 Mich. 174, 66 N. W. 1092 ; Catlin V. Fletcher, 9 Minn. 85 ; Jaggei V. Winslow, 30 Minn. 263, 15 N. W. 242 ; American Ins. Co. v. Capps, 4 Mo. App. 571; Starr v. Bennett, 5 Hill. (N. Y.) 303; ^tna Ins. Co, v. Reed, 33 Ohio St. 283 ; Upton v. Trib- ilcock, 91 U. S. 45, SO ; Mut. Life Ins. Co. v. Phinney, 178 U. S. 327, 44 L. ed. 1088, 20 Sup. Ct. 906; Gormely v. Gymnastic Assn., 55 Wis. 350, 13 N. W. 242. § 85 CONTRACTS.. I46 quiries of both parties, and as to which the law presumes the party to whom it was made had knowledge/* However, where igno- rance of the law exists on one side, and that ignorance is known and taken advantage of by the other party, the former may be relieved from the terms of a contract so induced. More par- ticularly will this be so if the mistakes are encouraged or induced by misrepresentations of the other party. Thus a settlement of a claim for half the amount a party was entitled to, made in ig- norance of the law and upon the fraudulent representations of the other party, who knew of such ignorance and knew the rights of the parties, has been set aside.**" It may therefore be deduced as a general rule that if a mistake in law by one party to a contract is known to the other party thereto, and accompanied and induced by the fraud of the latter party, the contract resulting therefrom may be avoided at the option of the defrauded party."" The rule that misrepresentations as to law do not ordinarily constitute fraud, is not applicable where the misrepresentation is in regard to a foreign law or the laws of another state. Misrep- resentations as to the laws of a foreign or of a sister state are con- sidered as statements of fact."^ Representations as to special or private laws may also be fraudulent, such as statements relative to the private character of corporations."^ False representation as to a matter of law may also be fraudu- lent if the parties sustain a confidential relation toward each other."' Thus, misrepresentations as to law where the parties '"Townsend v. Cowles, 31 Ala. "'Bethell v. Bethell, 92 Ind. 318; 428; Beall v. McGehee, 57 Ala. 438. Haven v. Foster, 9 Pick. (Mass.) See also, Fish v. Cleland, 33 111. 238; 112, 19 Am. Dec. 353; Wood v. Roe- Russell V. Branham, 8 Blackf. (Ind.) der, 50 Nebr. 476, 70 N. W. 21; King 277; Wood v. Boeder, 50 Nebr. 476, v. Doolittle, 1 Head (Tenn.) 77. "A 70 N. W. 21 ; Upton v. Tribilcock, 91 misrepresentation which includes the U. S. 45. opinion of a law of another state is '" Titus V. Rochester German Ins. without the rule, and may be fraudu- Co., 97 Ky. 567, 31 S. W. 127, 28 L. lent ; and ignorance may be pleaded R. A. 478, S3 Am. St. 426. by the party to whom the representa- "Townsend v. Cowles, 31 Ala. 428; tions were made." Wood v. Roeder, Chestnut Hill Reservoir Co. v. Chase, SO Nebr. 476, 70 N. W. 21 ; Rosenbaum 14 Conn. 123 ; Broadwell v. Broad- v. U. S. Credit System, 64 N. J. L. 34, 'well, 1 Gil. (111.) 599; Williams v, 44 Atl. 966. Revd. on other grounds, Hamilton, 104 Iowa 423, 73 N. W. 65 N. J. L. 255, 48 Atl. 237, 53 Atl. 1029, 65 Am. St. 475 ; Berry v. Whit- 449. ney, 40 Mich. 65 ; Nelson v. Betts, 21 '' West London Commercial Bank Mo. App. 219; Whelen's App., 70 Pa. v. Kitson, 13 Q. B. Div. 360; King v. St. 410; Moreland v. Atchison, 19 Doolittle, 1 Head (Tenn.) 77. Tex. 303. " Sims v. FerriU, 45 Ga. 585 ; Sands 147 FRAUD AND MISREPRESENTATION. ~ § 85 Stood in relation of attorney and client,"* stepmother and step- son/= executor and heir,*" or persons under contract to marry," have been declared fraudulent. If trust and confidence is ac- tually reposed, even though there is no specific relation be- tween the parties which is considered confidential, a misrep- resentation of law may amount to fraud. Thus, where a lessee refused to sign a lease because it failed to provide that if the building burned he would not be liable for the rent, and a lawyer of ability, who was attorney for the lessor, repre- sented that it was unnecessary to place such provision in the lease because there was a statute which would protect him in case the building burned, and thereupon the lessee, relying on this repre- sentation, signed the agreement, the court said, "The court will not sanction fraud nor will it enforce a contract obtained thereby. Under the admitted allegations of the answer, the contract as written did not, by reason of the fraud practiced by Headley (the attorney), correctly set out the agreement of the parties. A written contract may always be avoided for fraud, and where actual fraud has been perpetrated the contract thus obtained dif- ferent from what the parties agreed on, will not be enforced."®' § 86. Materiality. — Another element of fraud or misrepre- sentation, as shown by the definition, is that of materiality. A representation which is immaterial is not ground for avoiding a contract. As has been stated in a preceding section, a misrepre- sentation relative to a collateral matter is not, as a general rule, ground for the rescission of a contract, for which it may have been V. Sands, 112 111. 225; Lamb v. Lamb, ''Headley v. Pickering, 23 Ky. L. 130 Ind. 273, 30 N. E. 36, 30 Am. St. 90S, 64 S. W. 527. Where there is a 227; Motherway v. Wall, 168 Mass. mistake or misrepresentation relative 333, 47 N. E. 135 ; Haviland v. Wil- to the law accompanied by fraud, in lets, 141 N. Y. 35, 35 N. E. 958; any form, such misrepresentation or Wheeler v. Smith, 9 How. (U. S.) concealment or taking advantage of 55; Hubbard v. McClean, 115 Wis. 9, one's ignorance of the law may be 90 N. W. 1077. ground for relief in equity. Schutt- " Allen V. Frawley, 106 Wis. 638, 82 ler v. Brandfass, 41 W. Va. 201, 23 N. W. 593. S. E. 808. See also, Ross v. Drink- "West V. West, 9 Tex. Civ. App. ard's Admr., 35 Ala. 434; Lehman v. 475 29 S W 242. Shackleford, 50 Ala. 437; Murray v, "'Schuttler v. Brandfass, 41 W. Va. Tolman, 162 III. 417, 44 N. E. 748 201 23 S E 808 Moreland v. Atchison, 19 Tex. 303 "Lamb v Lamb, 130 Ind. 273, 30 Snell v. Atlantic Fire &c. Ins. Co., 98 N. E. 36. 30 Am. St. 227. U. S. 95. 25 L. ed. 52. § 87 CONTRACTS. 148 one of the inducements.®^ A representation is material when, but for it, the contract would not have been made/ although this test is not conclusive in every case.^ In the final analysis, the mate- riality of a representation will depend on the circumstances of each particular case. Thus a weak-minded or illiterate person would have a right to rely on representations which an educated and sagacious man would have no right to credit.^ § 87. Falsity. — It is obvious that the statement, in order to be fraudulent or amount to a misrepresentation, must be false at the time it is made.* If the statement is substantially true it will not be considered as a false representation.'^ But a mislead- ing and partial disclosure, even though true as far as it goes, may amount tO' a false representation if made to deceive and does, in fact, deceive the party to whom it is made." The mere fact that "Gillespie v. Fulton Oil &c. Co., 236 111. 188, 86 N. E. 219; Home Gas Co. V. Mannington Co-operative Win- dow Glass Co., 63 W. Va. 266, 61 S. E. 329. See ante, § 71, Fraud or Mis- representation as to Inducement or Collateral Matter. 'Thomas v. Grise, 1 Pen. (Del.) 381, 41 Atl. 883; McAleer v. Horsey, 35 Md. 439. A fraudulent misrepre- sentation does not furnisli ground for equitable relief unless it formed a material inducement to the agree- ment sought to be rescinded. Pow- ell V. Adams, 98 Mo. 598, 12 S. W. 295. That which is intended as a part of the contract may be relied on. Finney v. Andrus, 41 Vt. 631. 'Hall V. Johnson, 41 Mich. 286, 2 N. W. 55. 'Ingalls V. Miller, 121 Ind. 188, 22 N. E. 995. See also, ante, §§ 72, 73, Fraud or Misrepresentation as to An Essential Element of Contract ; as to Contents or Substance of Contract. * Benton v. Ward, 59 Fed. 411 ; Peo- ple V. Healy, 128 111. 9, 20 N. E. 692, 15 Am. St. 90; Austin Mfg. Co. v. Decker, 109 Iowa 277, 80 N. W. 312 ; Southern Express Co. v. Fox, 131 Ky. 257, 115 S, W. 184, 117 S. W. 270, 133 Am. St. 241; Potts v. Chapin, 133 Mass. 276; Hoeft v. Kock, 119 Mich. 458, 78 N. W. 556; Southern Devel- opment Co. V. Silva, 125 U. S. 247, 31 _L. ed. 678, 8 Sup. Ct. 381. In an action for false representation it is necessary to establish falsity, the in- tention to deceive, and that the plain- tiff relied upon the representation and has suffered damages thereby. Bu- chal V. Higgins, 109 App. Div. (N. Y.) 607, 96 N. Y. S. 241 ; Frishmuth v. Barker, 159 Pa. St. 549, 28 Atl. 368; Hamberger v. Lusky (Tenn.), 56 S. W. 24. A contracted to buy a lot of B, who represented it to be unen- cumbered. This statement was true at the time it was made, but in be- tween the time the agreement was made and the giving of the deed, B placed a mortgage on the lot. The court held the "time of the sale was at the deeding of the lot, and at that time the assertion was not true." Piche V. Robbins, 24 R. I. 325, 53 Atl. 92. = Beard v. Bliley, 3 Colo. App. 479, 34 Pac. 271 ; Benton v. Ward, 59 Fed. 411; Austin Mfg. Co. v. Decker, 109 Iowa 277, 80 N. W. 312; World Mfg. Co. V. Hamilton-Kenwood Cycle Co., 123 Mich. 620, 82 N. W. 528; Zim- merman V. Hallinger, 59 N. J. Eq. 644. 44 Atl. 1100. " See ante, § 80, Misleading and Partial Disclosures. 149 FRAUD AND MISREPRESENTATION. the one making the representation believes it to be untrue does not make it fraudulent, when the statement is in fact true.' § 88. Knowledge and intention. — In an action of fraud, as a general rule, it is necessary to establish the representation, its falsity, the intention to deceive, and that the plaintiff relied upon the representation and has suffered damage thereby.^ But such intention to deceive may be implied, and it has been held by the leading case on this question that a false representation becomes fraudulent when made (i) knowingly, (2) without belief in its truth, or (3) recklessly, carelessly, whether it be true or false.® It is the rule in this country and England that if the representa- tion is made without belief in its truth,^" or made recklessly, with- out caring whether it be true or false, ^^ the representation may amount to fraud. Some cases lay clown the rule that if the mis- representation is negligently made it may give rise to an action 'Austin Mfg. Co. v. Decker, 109 Iowa 277, 80 N. W. 312. 'Buchal V. Higgins, 109 App. Div. (N. Y.) 607, 96 N. Y. S. 241. See also, Crowell v. Jackson, S3 N. J. L. 656, 23 Atl. 426; Chisholm v. Gads- den, 1 Strob. L. (S. Car.) 220, 47 Am. Dec. 550; Dushane v. Benedict, 120 U. S. 630, 30 L. ed. 810, 7 Sup. Ct. 696. " Derry v. Peek, 14 App. Cas. 337. ^"Derry v. Peek, 14 App. Cas. 337; Angus V. Clifford, 2 Ch. (1891) 449; Eichelberger v. Mills Land &c. Co., 9 Cal. App. 628, 100 Pac. 117; Hindraan V. First Nat. Bank, 112 Fed. 931, 50 C. C. A. 623, 57 L. R. A. 108. In Shackett v. Bickford, 74 N. H. 57, 65 Atl. 252, 7 L. R. A. (N. S.) 646, 124 Am. St. 933, it is said, "Applymg these principles to this case, it would seem to follow that when the defend- ant, with a view to affecting the sale, stated to the plaintiff that the horse was safe and just what he wanted, he thereby affirmed his belief in the truthfulness of his statement, and, it being found that the horse was vi- cious, and that the defendant sus- pected that his statement was false, that his want of belief or conscious disregard for the truth or falsity of his statement was established; for a person who suspects that his state- ment is false does not entertain an honest belief that it is true, or is consciously and wickedly indifferent to its truth or falsity." Mahurin v. Harding, 28 N. H. 128, 59 Am. Dec. 401; Kountze v. Kennedy, 147 N. Y. 124, 41 N. E. 414, 29 L. R. A. 360, 49 Am. St. 651. "In Le Lievre v. Gould (1893), 1 Q. B. 491, 498, it is said, "A man must also be said to have a fraudu- lent mind if he recklessly makes a statement intending it to be acted upon, and not caring whether it be true or false. I do not hesitate to say that a man who thus acts must have a wicked mind," and again on pages 500 and 501, "but his mind is wicked, not because he is negligent, but because he is dishonest in not caring about the truth of his state- ment. In the first case, it is the knowledge of the falsehood; in the second, it is the wicked indifference, which constitutes the fraud." Kim- ber V. Young, 137 Fed. 744, 70 C. C. A. 178; Watson v. Jones, 41 Fla. 241, 25 So. 678. In the above case the American decisions are reviewed. Trimble v. Reid, 97 Ky. 713, 31 S. W. 861; Kiefer v. Rogers, 19 Gil. (Minn.) 14. See also, Nash v. Minnesota Ti- tle Ins. Co., 163 Mass. 574, 40 N. E. 1039, 28 L. R. A. 753, 47 Am. St. 489; Vincent v. Corbitt, 94 Miss. 46, 47 So. 641, 21 L. R. A. 85. But see Penn § 88 CONTRACTS. 150 for fraud or deceit.^^ It may therefore be laid down as a general rule that one is guilty of fraud who without knowledge of the truth or falsity of a material representation, and without any grounds of belief, asserts it as a fact with intent that another shall act thereon as much as if he knew it to be untrue." Mut. Life Ins. Co. v. Mechanics' Sav- ing &c. Co., IZ Fed. 653, 19 C. C. A. 316, 38 L. R. A. ZZ. " Cunningham v. C. R. Pease House Furnishing Co., 74 N. H. 435, 69 Atl. 120, 124 Am. St. 979. In the above case it is said, "If, therefore, the defendant's false representation that it was safe to use the blacking on a hot stove was the cause of plain- tiff's injury, the facts that they thought the statement was true and had no intent to deceive do not necessarily bar her right to a recov- ery. Proof of those facts would merely require her to prove facts not essential to her case, if the repre- sentation was deceitfully made. If the representation was deceitful, she could recover by showing that their fault contributed to cause her in- jury; but, if it was merely negligent, she must show that it was the sole cause of her injury. The reason for this is that the law makes it the duty of everyone to use ordinary care to avoid being injured by another's negligence ; but it imposes on no one the duty to use such care to avoid being injured by another's intention- ally wrongful act. In actions for neg- ligence contributory negligence is a defense ; in actions for intentional in- juries, it is not." It is also said a false statement negligently made may amount to fraud. Madden v. Cald- well Land Co., 16 Idaho 59, 100 Pac. 358, 21 L. R. A. (N. S.) 332. It is difficult to see why the third class of cases above given does not include those negligently made. It would seem that the terra "carelessly and recklessly" made would include those negligently made. " Brownlie v. Campbell, 5 App. Cas. 925; Taylor v. Ashton, 11 M. & W. 401 ; Juzan v. Toulmin, 9 Ala. 662, 44 Am. Dec. 448; Munroe v. Prichett, 16 Ala. 785, 50 Am. Dec. 203; Ein- stein v. Marshall, 58 Ala. 153 ; Hanger v. Evins, 38 Ark. 334; Mayer v. Sa- lazar, 84 Cal. 646, 24 Pac. 597; Schol- field &c. Pulley Co. v. Scholfield, 71 Conn. 1, 40 Atl. 1046 ; Miller v. John, 208 111. 173, 70 N. E. 27; Endsley v. Johns, 120 111. 469, 12 N. E. 247, 60 Am. Rep. 572 ; Ruff v. Jarrett, 94 III. 475 ; Case v. Ayers, 65 111. 142 ; Kirk- patrick v. Reeves, 121 Ind. 280, 22 N. E. 139; Ingalls v. Miller, 121 Ind. 188, 22 N. E. 995 ; West v. Wright, 98 Ind. 335; Trimbell v. Reid, 97 Ky. 713, 31 S. W. 861; Foard v. Mc- Comb, 12 Bush (Ky.) 723; Braley v. Powers, 92 Maine 203, 42 Atl. 362; Brown v. Blunt, 72 Maine 415; Mc- Aleer v. Horsey, 35 Md. 439; Savage V. Stevens, 126 Mass. 207 ; Tucker v. White, 125 Mass. 344; Litchfield v. Hutchinson, 117 Mass. 195; Fisher v. Mellen, 103 Mass. 503 ; Chatham Fur- nace Co. V. Moffatt, 147 Mass. 403, 18 N. E. 168, 9 Am. St. 727; Arnold v. Teel, 182 Mass. 1, 64 N. E. 413; Stone V. Denny, 4 Mete. (Mass.) 151; Lob- dell V. Baker, 1 Mete. (Mass.) 193,35 Am. Dec. 358; Stone v. Covell, 29 Mich. 359; Beebe v. Knapp, 28 Mich. 53; BulHtt V. Farrar, 42 Minn. 8, 43 N. W. 566, 18 Am. St. 485, 6 L. R, A. 149; Knappen v. Freeman, 47 Minn. 491, 50 N. W. 533; Carlton v. Hulett, 49 Minn. 308, 51 N. W. 1053; Bus- terud v. Farrington, 36 Minn. 320, 31 N. W. 360; Humphrey v. Merriam, 32 Minn. 197, 20 N. W. 138; Merriam V. Pine City Lumber Co., 23 Minn. 314; Wilder v. DeCou, 18 Minn. 470; Sims V. Eiland, 57 Miss. 607; Ham- lin V. Abell, 120 Mo. 188, 25 S. W. 516; Walsh v. Morse, 80 Mo. 568; Caldwell v. Henrv, 1(^ Mo, 254; Ger- ner v. Yates, 61 Nebr. 100, 84 N. W. 596; Phillips v. Jones, 12 Nebr. 213, 10 N. W. 708; Foulks &c. Motor Co. v. Thies, 26 Nev. 158, 65 Pac. 373, 99 Am. St. 684; Rowell v. Chase, 61 N. H. 135 ; Bennett v. Judson, 21 N. Y. 238; Indianapolis P. & C. R. Co. v. Tyng, 63 N. Y. 653 ; Hadcock v. Os- mer, 153 N. Y. 604, 47 N. E. 923; Wakeman v. Dalley, 51 N. Y. 27, 10 Am. Rep. 551; L. D. Garrett Co. v. Appleton, 101 App. Div. (N. Y.) 507, 151 FRAUD AND MISREPRESENTATION. § 88 In many cases transactions are declared fraudulent and language used which would indicate that it is immaterial whether the repre- sentation was intentional or not, and regardless of the good faith of the one making the statement. For instance, it has been said, "An intentional misrepresentation or concealment in relation to land, either as to the quality or title by which the purchaser is imposed on, is fraudulent, and it is immaterial whether the false representations are intentional or not. If the vendor under- takes to make statements, he is responsible for them."^* But in this case it appears, first, that the statement was made knowing that it was false; second, that the action was not one of deceit, but for the rescission of a contract, — an action which by the great weight of authority can be maintained regardless of whether the false representation amounts to a fraud or is an innocent mis- representation.^° In another case it is said, "If the defendant asserted a fact as true at the time of the sale which was not true. 92 N. Y. Supp. 136; Oberlander v. Spiess, 45 N. Y. 175 ; Meyer v. Ami- don, 45 N. Y. 169; Lunn v. Shermer, 93 N. Car. 164; Parmelee v. Adolph, 28 Ohio St. 10; ^tna Ins. Co. v. Reed, 33 Ohio St. 283; Cawston v. Sturgis, 29 Ore. 331, 43 Pac. 656; Griswold V. Gebbie, 126 Pa. St. 353, 17 Atl. (>1Z, 12 Am. St. 878; Hexter V. Bast, 125 Pa. St. 52, 17 Atl. 252, 11 Am. St. 874; Mitchell v. Zimmerman, 4 Tex. 75, 51 Am. Dec. 717; Cooper V. Schlesinger, 111 U. S. 198, 28 L. ed. 382, 4 Sup. Ct. 360; Lehigh Zinc &c. Co. V. Bamford, 150 U. S. 665, Z1 L. ed. 1215, 14 Sup. Ct. 219; Smith V. Columbus Buggy Co., — Utah — , 123 Pac. 580; Cabot v. Christie, 42 Vt. 121, 1 Am. Rep. 313; Darling v. Stuart, 63 Vt. 570, 22 Atl. 634; Krause v. Busacker, 105 Wis. 350, 81 N. W. 406; Standard Mfg. Co. v. Slot, 121 Wis. 14, 98 N. W. 923, 105 Am. St. 1016. See also, Holcomb v. Noble, 69 Mich. 396, il N. W. 497; Totten V. Burhans, 91 Mich. 495, 51 N. W. 1119. And compare Wariield V. Clark, 118 Iowa 69, 91 N. W. 833; Riley V. Bell, 120 Iowa 618, 95 N. W. 170; Boddy v. Henry, 126 Iowa 31, 101 N. W. 447. "Bailey v. Jordan, 32 Ala. SO. "'Parham v. Randolph, 4 How. (Miss.) 435, 35 Am. Dec. 403. To same effect, see Rimer v. Dugan, 39 Miss. 477, n Am. Dec. 687. The case of Kimball v. Saguin, 86 Iowa 186, S3 N. W. 116, uses similar lan- guage, but it is alleged that the rep- resentations were knowingly made. The following cases also use similar language, but in each of them the ac- tion was to rescind a contract. La- nier V. Hill, 25 Ala. 554; Lindsey v. Veasey, 62 Ala. 421. "Such an action (the action of deceit) differs essen- tially from one brought for rescission of a contract on the ground of mis- representation. In the latter kind of suit it is immaterial whether the rep- resentation was made dishonestly or not. If the contract was obtained by misrepresentations, however honestly made, it cannot stand. But, when the action is for fraud or deceit, it is not enough to show that the repre- sentation was untrue." Hindman v. First Nat. Bank, 112 Fed. 931, SO C. C. A. 623, 57 L. R. A. 108; Penn Mut. Life Ins. Co. v. Mechanics' Sav. &c. Co., 73 Fed. 653, 19 C. C. A. 316, 38 L. R. A. 33; Kimber v. Young, 137 Fed. 744, 70 C. C. A. 178; Gardner v. Mann, Z(i Ind. App. 694, 16 N. E. 417; Adams v. Reed. 11 Utah 480, 40 Pac. 720; Robinson v. Welty, 40 W. Va. 385, 22 S. E. 73. § 88 CONTRACTS. 15^ the plaintiff was equally deceived, whether the assertion was made in good faith or not. * * * In such cases the assertion is equivalent to the assumption of its truth. "^'' In this case it ap- pears that the fraud resulted from the gross negligence of the defendant, and also that the jury might have believed that he had knowledge of the truth or falsity of his statement." Conse- quently it may be stated as a general rule that one is not guilty of fraud if he has a bona fide belief in the truth of his representa- tion, and has reasonable ground upon which to base such belief.^* Where a statement is made with knowledge of its falsity, and where the one making the false statement also knows that it will mislead another to his injury, the actual intent of the party guilty " Piche V. Robbins, 24 R. I. 325, S3 Atl. 92. See also, Frenzel v. Miller, 37 Ind. 1, 10 Am. Rep. 62. In Michi- gan it is held, "that if a representa- tion is false in fact, and actually de- ceives the one to whom it is made, it is actionable fraud, even though made in the best of faith, and even though the one who made it had every reason to believe it to be true." The prin- ciple is declared peculiar to Michi- gan. Aldrich v. Scribner, 154 Mich. 23, 117 N. W. 581, 18 L. R. A. (N. S.) 379 ; Bullitt v. Farrar, 42 Minn. 8, 43 N. W. 566, 6 L. R. A. 149, 18 Am. St. 485. See also, Walters v. Eaves, 105 Ga. 584, 32 S. E. 609. " Many of the cases laying down the broad general doctrine that an action in deceit may be maintained regardless of innocence of the mis- representation, are explainable on the ground that the misrepresentation was contractual and that the action is really maintainable because of the breach of warranty expressed or im- plied. The case of Aldrich v. Scrib- ner (cited in note 16) might be placed on this ground. An action for deceit is distinct from an action for breach of warranty. Hitchcock V. Gothenburg Water &c. Co., 4 Nebr. 620, 95 N. W. 638. '' The basis of the action of deceit is the actual fraud of defendant, his moral delinquency; and therefore his knowledge of the falsity of the rep- resentation, or that which in law is equivalent thereto, must be averred and proved. Kimber v. Young, 137 Fed. 744, 70 C. C. A. 178; Endsley v. Johns, 120 111. 469, 12 N. E. 247, 60 Am. Rep. 572; Buchal v. Higgins, 109 App. Div. (N. Y.) 607, 96 N. Y. S. 241 ; Erie City Iron Works v. Barber, 106 Pa. St. 125, 51 Am, Rep. 508. In order to maintain an action for de- ceit, the statement relied on must be false, and must be made with actual or constructive knowledge of its fals- ity. Southern Express Co. v. Fox, 131 Ky. 257, 115 S. W. 184, 117 S. W. 270, 133 Am. St. 241 ; Bank of Atchi- son V. Byers, 139 Mo. 627, 41 S. W. 325. See also, Baldwin v. Marsh, 6 Ind. App. 533, Zi N. E. 973 ; Chatham Furnace Co. v. Moffatt, 147 Mass. 403, 18 N. E. 168, 9 Am. St. 727 ; Griswold V. Gebbie, 126 Pa. St. 353, 17 Atl. 673, 12 Am. St. 878; Standard Mfg. Co. V. Slot, 121 Wis. 14, 98 N. W. 923, 105 Am. St. 1016. See also, Nash V. Minnesota &c. Trust Co., 163 Mass. 574, 40 N. E. 1039, 28 L. R. A. 753, 47 Am. St. 489; Bullitt v. Farrar, 42 Minn. 8, 43 N. W. 566, 6 L. R, A. 149, 18 Am. St. 485 ; Kountze v. Kennedy, 147 N. Y. 124, 41 N. E. 414, 29 L. R. A. 360, 49 Am. St. 651. It may be questionable whether or not the be- lief must have some reasonable ground upon which to rest, but it would seem that it must, for it is difficult to see how one could have a good-faith belief in the truth of his representation if he had no reason- able ground upon which to base it. A statement made without knowledge of its truth could not be a statc.icr'; honestly believed. See Hindman v. First Nat. Bank, 112 Fed. 931, SC C. C. A. 623, 57 L. R. A. 108; Bullitt v. 153 FRAUD AND MISREPRESENTATION. § 88 of such fraudulent conduct is immaterial since the intent to de- ceive will be presumed." However, in many instances the in- tention of the one guilty of a misrepresentation becomes im- portant in order to deteiTnine whether his conduct has been fraudulent. Thus, it has been seen in a preceding section that some jurisdictions hold that if a promise to perform some act in the future is made with the design and intention of the prom- isor to disregard it, and was made to deceive and entrap the other party, then such promise, in case the refusal to perform takes place, will amount to actual fraud.^" Again, if one buys goods without any intention of ever paying for them he is guilty of fraud.^^ So, also, there is no fraud where the false repre- Farrar, 42 Minn. 8, 43 N. W. 566, 6 L. R. A. 149, 18 Am. St. 485 ; Cooper V. Schlesinger, 111 U. S. 148, 28 L. ed. 382, 4 Sup. Ct. 360. See, how- ever, Penn Mutual Life Ins. Co. v. Mechanics' Saving &c. Co., Ti Fed. 653, 19 C. C. A. 316, 38 L. R. A. 33. See also, Vinvent v. Corbett, 94 Miss. 46, 47 So. 641, 21 L. R. A. (N. S.) 85, where it is held that one who makes an emphatic assertion of a fact should be required to disprove the presumption of knowledge vvhich is thereby created, and disclose, if he can, what reasonable grounds existed for his belief. " Hine v. Campion, L. R. 7 Ch. Div. 344; Eichelberger v. Mills Land &c. Co., 9 Cal. App. 628, 100 Pac. 117. In the above case it is said, "As the representations were made prior to the transaction, and directly related to it, it must be presumed that they were made for the purpose and with the design of inducing plaintiiifs to enter into the contract." Judd v. Weber, 55 Conn. 267, 11 Atl. 40; Endsley v, Johns, 120 111. 469, 12 N. E. 247, 60 Am. Rep. 572; Chatham Furnace Co. v. Mofifatt, 147 Mass. 403. 18 N E. 168, 9 Am. St. 727 ; Hudnut V Gardner, 59 Mich. 341, 26 N W 502 ; Haven v. Neal, 43 Minn. 315, 45 N W. 612 ; Cowley v. Smyth, 46 N. J. L. 380, 50 Am. Rep. 432; Griswold v. Gebbie, 126 Pa. St. 353, 17 Atl 673, 12 Am. St. 878; Standard Mfg^Co.v Slot, 121 Wis. 14, 98 N. W. 923, 105 Am. St. 1016. . _, ^See, ante. § 83, Promise or Rep- resentation of Intention as to Future. "^ Ferguson v. Carrington, 9 B. & C. 59; Load v. Green, 15 M. & W. 216; White V. Garden, 10 C. P. 919; Clough V. L. & N. W. R. Co., 7 Ex. 26 ; Ex parte Whittaker, L. R. 10 Ch. App. Cas. 446; Maxwell v. Brown Shoe Company, 114 Ala. 304, 21 So. 1009; Legrand v. Eufaula Bank, 81 Ala. 123, 1 So. 460, 60 Am. Rep. 140 ; WoUner v. Lehman, 85 Ala. 274, 4 So. 643; McKenzie v. Rothschild, 119 Ala. 419, 24 So. 716; Taylor v. Missis- sippi Mills, 47 Ark. 247, 1 S. W. 283 ; Bugg V. Wertheimer Shoe Co., 64 Ark. 12, 40 S. W. 134 ; W. W. John- son Co. V. Triplett, 66 Ark. 233, 50 S. W. 455 ; Ayres v. French, 41 Conn. 142; Thompson v. Rose, 16 Conn. 71, 41 Am. Dec. 121 ; Brower v. Brower, 29 Fed. 485 ; Fechheimer v. Baum, 37 Fed. 167, 2 L. R. A. 153; Farwell v. Hanchett, 120 111. 573, 11 N. E. 875; Farwell v. Natlianson, 99 111. App. 185; O'Donald v. Constant, 82 Ind. 212; Brower v. Goodyer, 88 Ind. 572; Peninsular Stove Co. v. Ellis, 20 Ind. App. 491, 51 N. E. 105; Oswego Starch Factory v. Lendrum, 57 Iowa 573, 42 Am. Rep. S3; Cox Shoe Co. V. Adams, 105 Iowa 402, 75 N. W. 316; Deere v. Morgan, 114 Iowa 287, 86 N. W. 271; Lindauer v. Hay, 61 Iowa 663, 17 N. W. 98; Reager v. Kendall, 19 Ky. L. 27, 39 S. W. 257 ; Burrill v. Stevens, 73 Maine 395, 40 Am. Rep. 366: Powell v. Bradlee, 9 Gill & J. (Md.) 220; Dow v. San- born, 3 Allen CMass.") 181; Jordan v. Osgood, 109 Mass. 457, 12 Am. Reo. 731; Watson v. Silsby, 166 Mass. 57, 43 N. E. 1117; Shipman v. Seymour, "CONTRACTS. 154 sentation is not made directly to the one who acts thereon, unless it appears that the person making such representation intended that it should be conveyed to and acted on by the one who does in fact act thereon.^^ Thus, where a fraudulent representation is 40 Mich. 274 ; Koch v. Lyon, 82 Mich. 513, 46 N. W. 779; Ross v. Miner, 67 Mich. 410, 35 N. W. 60; Frisbee v. Chickering, 115 Mich. 185, li N. W. 112; Slagle v. Goodnow, 45 Minn. 531, 48 N. W. 402; Fox v. Webster, 46 Mo. 181; McCready v. Phillips, 56 Nebr. 446, 76 N. W. 885; Stewart v. Emerson, 52 N. H. 301; Johnson v. Monnell, 41 N. Y. 655, 2 Abb. Dec. (N. Y.) 470; Hennequin v. Naylor, 24 N. Y. 139 ; Devoe v. Brandt, 53 N. Y. 462; Wright v. Brown, dl N. Y. 1; Whitten v. Fitzwater, 129 N. Y. 626, 29 N. E. 99; Des- Farges v. Pugh, 93 N. Car. 31, 53 Am. Rep. 446; Wallace v. Co- hen, 111 N. Car. 103, 15 S. E. 1031; Talcott V. Henderson, 31 Ohio St. 162, 27 Am. Rep. SOln ; Wilmot v. Lyon, 49 Ohio St. 296, 34 N. E. 720; Mulliken V. Millar, 12 R. I. 296; Dalton v. Thurston, IS R. I. 418, 7 Atl. 112, 2 Am. St. 905 ; Swift v. Rounds, 19 R. I. 527, 35 Atl. 45, 61 Am. St. 791; B elding v. Frankland, 8 Lea (Tenn.) 67; Donaldson v. Farwell, 93 U. S. 631, 23 L. ed. 993; Lee v. Simmons, 65 Wis. 523, 27 N. W. 174. In Penn- sylvania the purchaser must make some misstatement or practice some trick or artifice in order to render the sale fraudulent. In re Lewis, 125 Fed. 143; Smith v. Smith, 21 Pa. St. 367; Bunn V. Ahl, 29 Pa. St. 387 ; Rodman V. Thalheimer, 75 Pa. St. 232 ; Bugh- man v. Central Bank, 159 Pa. St. 94, 28 Atl. 209. The mere failure, how- ever, of a purchaser of goods to dis- close his insolvency to the vendor is not fraudulent in the absence of an intent not to pay for the goods. Ex parte Whittaker, L. R. 10 Ch. App. Cas. 446; Legrand v. Eufaula Nat. Bank, 81 Ala. 123, 1 So. 460, 60 Am. Rep. 140; Kyle v. Ward, 81 Ala. 120, 1 So. 468; Loeb v. Flash, 65 Ala. 526; McCormick v. Joseph, 11 Ala. 236; Spira V. Hornthall, 11 Ala. 137; Hornthall v. Schonfield, 79 Ala. 107; Bell V. Ellis, 33 Cal. 620, overruling Seligman v. Kalkman, 8 Cal. 207; Morrill v. Blackman, 42 Conn. 324; Mears v. Waples, 3 Houst. (Del.) 581; Kitson v. Farwell, 132 111. 327, 23 N. E. 1024; Kelsey v. Harrison, 29 Kans. 143 ; Cross v. Peters, 1 Greenl. (Maine) 376, 10 Am. Dec. 78; Powell V. Bradlee, 9 Gill & J. (Md.) 220; Nichols V. Pinner, 18 N. Y. 295 ; Hall V. Naylor, 18 N. Y. 588, 75 Am. Dec. 269; Hennequin v. Naylor, 24 N. Y. 139; Johnson v. Monell, 41 N. Y. 655, 2 Abb. App. Dec. (N. Y.) 470; Mitch- ell V. Worden, 20 Barb. (N. Y.) 253; Fish V. Payne, 7 Hun (N. Y.) 586; Morris v. Talcott, 96 N. Y. 100; Talcott v. Henderson, 31 Ohio St. 162; Dalton v. Thurston, 15 R. I. 418, 7 Atl. 112, 2 Am. St. 905 ; Conyers v. Ennis, 2 Mason (U. S.) 236, Fed. Cas. No. 3149; Biggs v. Barry, 2 Curt. (U. S.) 259, Fed. Cas. No. 1402; Redington & Co. V. Roberts, 25 Vt. 686; Garbutt v. Bank of Prairie Du Chien, 22 Wis. 384. But the intention not to pay for the goods purchased may be evi- denced by the circumstances such as insolvency, &c. Davis v. McWhirter, 40 U. C. Q. B. 598; Fechheimer v. Baum, 37 Fed. 167, 2 L. R. A. 153; Powell V. Bradlee, 9 Gill & J. (Md.) 220 ; Johnson v. Moneli, 41 N. Y. 655, 2 Abb. App. Dec. (N. Y.) 470; Wright V. Brown, 67 N. Y. 1 ; Van Kleek v. Leroy, 4 Abb. Pr. (N. Y.) 431; Hall V. Naylor, 6 Duer (N. Y.) 71; Tal- cott V. Henderson, 31 Ohio St. 162; Smith V. Smith, 21 Pa. St. 367, 60 Am. Dec. 51; Rodman v. Thalheimer, 75 Pa. St. 232; Backentoss v. Speicher, 31 Pa. St. 324; Mulliken v. Millar, 12 R. I. 296. The question of intent is for the jury. Bristol v. Wilsmore, 1 B. & C. 515; Wabash &c. R. Co. v. Shryock, 9 111. App. 323; Byrd and Hall V. Hall, 2 Keyes (N. Y.) 646; Hall V. Naylor, 18 N. Y. 588, 75 Am. Dec. 269; Hennequin v. Naylor, 24 N. Y. 139; Buckley v. Artcher, 21 Barb. (N. Y.) 585; Johnson v. Monell, 2 Abb. App. Dec. (N. Y.) 470; Biggs V. Barry, 2 Curt. C. C. (U. S.) 259, Fed. Cas. No. 1402. -Coe V. East &c. R. Co., 52 Fed. 531 ; Lebanon Steam Laundry Co. v. Dyckman, 22 Ky. L. 348, 57 S. W. 155 FRAUD AND MISREPRESENTATION. § 88 made to an agent with the intention that it be conveyed to and acted on by the principal, it will be considered as fraud if the representation would have been fraudulent if made directly to the principal. ^^ But on the other hand it has been held that the agent himself has no right of action for deceit where the rep- resentations were made to the agent with the intention that they be communicated to the principal and not to induce the agent to act thereon.^* The fraudulent representation is not, in every instance, how- ever, so strictly confined in its scope; if general in its nature it may be relied on by any one dealing with the person mak- ing the representation. Thus a statement to a commercial agency may be fraudulent.^^ It has been held that where the president of a corporation gave a false statement of its financial 227; Hunnewell v. Duxbury, 154 Mass. 286, 28 N. E. 267, 13 L. R. A. 733; Hoeft v. Kock, 119 Mich. 458, 78 N. W. 556; Rawlings v. Bean, 80 Mo. 614; Wells v. Cook, 16 Ohio St. 67, 88 Am. Dec. .436 ; McCracken v. West, 17 Ohio 16; Butterfield v. Barber, 20 R. I. 99, 37 Atl. 532; Gainesville Na- tional Bank v. Bamberger, 11 Tex. 48, 13 S. W. 959, 19 Am. St. 738; Mar- shall V. Hubbard, 117 U. S. 415, 29 L. ed. 919, 6 Sup. Ct. 806; Thorp v. Smith, 18 Wash. St. 277, 51 Pac. 381 ; Tacoma v. Water Co., 16 Wash. St. 288, 47 Pac. 738. ^Schoefield &c. Pulley Co. v. Schoefield, 71 Conn. 1, 40 Atl. 1046; Hubbard v. Weare, 79 Iowa 678, 44 N. W. 915. ^' Wells V. Cook, 16 Ohio St. 67, 88 Am. Dec. 43.6. In the above case it appears that representations were made relative to the soundness of certain sheep. On the strength of these representations the agent's prin- cipal bought the sheep. Subsequently the agent purchased the sheep of his principal. They proved to be suffer- ing from a contagious disease. He then brought this action and it, was held that he could not recover on the ground that it must appear that the defendant intended that the plaintiff should act on his false and fraudulent statement. '''Nicholls v. McShane, 16 Colo. App. 165, 64 Pac. 375; Soper Lum- ber Co. V. Halstead &c. Co., 12, Conn. 547, 48 Atl. 425 ; Fechheimer v. Baum, 37 Fed. 167. 2 L. R. A. 153; In re Epstein, 109 Fed. 874; Moyer v. Le- derer, 50 111. App. 94; Furry v. O'Connor, 1 Ind. App. 573, 28 N. E. 103; Cox Shoe Co. v. Adams, 105 Iowa 402, 75 N. W. 316; Frisbee v. Chickering, 115 Mich. 185, li N. W. 112; Genesee County Sav. Bank v. Michigan Barge Co., 52 Mich. 164, 17 N. W. 790; Mooney v. Davis, 75 Mich. 118, 42 N. W. 802, 13 Am. St. 425; Cortland Mfg. Co. v. Piatt, 83 Mich. 419, 47 N. W. 330; Silberman V. Munroe, 104 Mich. 352, 62 N. W. 555; Hinchman v. Weeks. 85 Mich. 535, 48 N. W. 790; Charles P. Kel- logg Co. V. Holm, 82 Minn. 416, 85 N W. 159; Stevens v. Ludlum, 46 Minn. 160, 48 N. W. 771, 24 Am. St. 210, 13 L. R. A. 270; John V. Farwell Co. V. Boyce, 17 Mont. 83, 42 Pac. 98 ; Poska v. Stearns, 56 Nebr. 541, 1() N. W. 1078, 42 L. R. A. 427, 71 Am. St. 688; Tindle v. Birkett, 171 N. Y. 520, 64 N. E. 210, 89 Am. St. 822; Eaton &c. Co. v. Averv, 83 N. Y. 31, 38 Am. Rep. 389; Wilmot v. Lyon, 49 Ohio St. 296, 34 N. E. 720 ; Sharpless v. Gummey. 166 Pa. St. 199, 30 Atl. 1127; Avery v. Dickson (Tex. Civ. App.), 49 S. W. 662 ; Gainesville Bank V. Bamberger, 11 Tex. 48, 13 S. W. 959, 19 Am. St. 738; Belleville Pump &c. Works V. Samuelson, 16 Utah 234, 52 Pac. 282. § 88 CONTRACTS. 1 56 standing to the local representative of a commercial agency, one who is not a subscriber to such agency has a right to rely on such report where he obtains it through one who is a subscriber, and if such report is in part false he may rescind the contract and recover money paid for stock.^" In the above case it will be ob- served that the party defrauded was not a patron of the agency. In that case this fact was held not to defeat recovery. On the other hand it has been held by the Supreme Court of Minnesota that reports to a commercial agency are intended only for its patrons, and being intended for the patrons they are entitled to redress when they rely and act on the statement and representa- tions to their injury, but that the right of redress was confined to the patrons of the agency."' The two foregoing cases may perhaps be reconciled on the theory that in the first the terms under which the report was furnished to the commercial agency was sufficiently broad to serve as an invitation to all who might obtain possession of such report, while in the latter it was ex- pressly for the patrons of the agency. However, the federal court expressly refused to follow the Minnesota decision. Likewise, if the statement is made to deceive the public generally it will amount to fraud. Thus it has been held that where "a report in writing was made by the directors of a bank and addressed ex- pressly to the shareholders, but it was left at the bank and copies could be had by shareholders or any person applying for them who was desirous of information in regard to the affairs of the bank with a view to purchase shares, the representations are made to all who might obtain possession of the report, and there- fore would be considered as having been made to the plaintiff."^^ And so, again, an action was brought against a director of a banking company for falsely, fraudulently and deceitfully pub- lishing and representing to plaintiffs that a dividend was about to be paid out of the profits, and that the shares were a safe invest- ment for money. It appeared that these representations were made in a report by the directors to the shareholders. Copies of this report were left at the bank and were to be had by any " Davis V. Louisville Trust Co., 181 " Irish-American Bank v. Ludlum, Fed. 10, 104 C. C. A. 24, 30 L. R. A. 49 Minn. 344, 51 N. W. 1046. (N. S.) 1011. ^ Scott V. Dixon, 29 L. J. Exch. (N, S.) 62n, 7 Eng. Rul. Cas. 523. 157 FRAUD AND MISREPRESENTATION. § 88 persons applying for them who were desirous of information in regard to the affairs of the bank and with a view to the purchase of shares. It was held that, since a copy could be procured by any one who desired it, it was a publication directly to each per- son who obtained a report from the bank, in the same manner as if it had been personally delivered to him by the director, and that the action could be maintained.^' This is true of a statement required to be filed with a state or federal official, if such state- ment is sufficiently broad to be an invitation to all who may be disposed to deal in the company's shares.^" Consequently, if this statement is furnished a public official and subsequently published in pursuance of a statutory requirement the fraud seems clear. Under such circumstances the statement is sufficiently broad to serve as an invitation to all. It is made with knowledge that it will be published to all who may wish to deal with the company and its stock.^^ Nor is it necessary that this statement be pub- lished under authority of the state. It may be an annual state- ment published in the newspapers which purports to give the condition of the corporation.''^ It has also been held that ad- vertisements published in a daily newspaper by the directors of a bank, in which advertisements they make representations as to its solvency, its capital stock, and other matters, such representa- tions may be relied upon, and that the directors are personally liable for damages sustained by reason of the insolvency of the corporation, where a depositor is induced to place money in the bank solely upon the false representations of solvency made to the general public by the directors.^^ =°Peek V. Gurney, L. R. 6 H. L. Gerner v. Mosher, 58 Nebr. 135, 78 Zn, 7 Eng. Rul. Cas. 527. N. W. 384, 46 L. R. A. 244; Mer- ^ Hindman v. First National Bank, chants' Nat. Bank v. Thorns, 28 Ohio 112 Fed. 931, 50 C. C. A. 623, 57 L. R. L. J, 164, 11 Ohio Dec. 632; Gerner A. 108; Hunnewell v. Duxbury, 154 v. Yates, 61 Nebr. 100, 84 N. W. 596. Mass. 286, 28 N. E. 267, 13 L. R. A. "' Hamilton Brown Shoe Co. v. Mil- 733. liken, 62 Nebr. 116, 86 N. W. 913. In '' Davis V. Louisville Trust Co., 181 an action of deceit if the representa- Fed. 10, 104 C. C. A. 24, 30 L. R. A. tions are made for the whole or any (N. S.) 1011; Warfield v. Clark, 118 of the public, if seen, relied and acted Iowa 69, 91 N. W. 833; Prewett v. upon by any person, and damage re- Trimble 92 Ky. 176, 13 Ky. L. 581, suits, a right of action arises. Stuart 17 S W 356 36 Am. St. 586; Graves v. Bank of Staplehurst, 57 Nebr. 569, V. Lebanon National Bank, 10 Bush 78 N. W. 298. (Kv ) 23 19 Am Rep. 50; Trimble "^ Scale v. Baker, 70 Tex. 283, 8 Am. V Raid 97 Ky. 713, 31 S. W. 861 ; St. Rep. 592. See also, to same effect, § 89 CONTRACTS. 158 § 89. Reliance on false statement. — The representation may be false and it may be material, but unless it is relied on by the party to whom it is made he has no right to relief or redress. This is elementary.'* Thus, if the means of knowledge are open and at hand, and the party who claims to have been defrauded investigated for himself, or if the circumstances were such as he was bound to investigate, and nothing was done to prevent the in- vestigation from being as full as he might choose to make it, he cannot say he relied on the representations of the other.'^ Nor is it necessary that the investigation be conducted in person. If Westervelt v. Damarest, 46 N. J. L. 37, 50 Am. Rep. 400. "* Hartford Fire Ins. Co. v. Kirk- patrick, 111 Ala. 456, 20 So. 651; Spinks V. Clark, 147 Cal. 439, 82 Pac. 4S ; Estep v. Armstrong, 69 Cal. 536, 11 Pac. 132; Bank v. Hammond, 25 Colo. 367, 55 Pac. 1090; Bennett v. Gibsons, 55 Conn. 450, 12 Atl. 99; Su- preme Council V. Casualty Co., 63 Fed. 48, 11 C. C. A. 96; Hawkins v. British &c. Mortg. Co., 84 Fed. 526, 28 C. C. A. 484 ; Huber v. Gugenheim, 89 Fed. 598; Hale Elevator Co. v. Hale, 98 111. App. 430; Crocker v. Manley, 164 111. 282, 45 N. E. 577, 56 Am. St. 196 ; Dady v. Condit, 163 111. 511, 45*N. E. 224; Musick v. Gatz- meyer, 47 111. App. 329; Gillespie v. Fulton Oil &c. Co., 236 111. 188, 86 N. E, 219; Craig v. Hamilton, 118 Ind. 565, 21 N. E. 315; Newman v. Sylves- ter, 42 Ind. 106; Kain v. Rinker, 1 Ind. App. 86, 27 N. E. 328; Provi- dent Loan Trust Co. v. Mcintosh, 68 Kans. 452, 75 Pac. 498; Wood v. Staudenmayer, 56 Kans. 399, 43 Pac. 760; Harper v. Cincinnati &c. R. Co., IS Kv. L. 223, 22 S. W. 849; Flanders V. Cobb, 88 Maine 488, 34 Atl. 277, 51 Am. St. 410; Burns v. Dockray, 156 Mass. 135, 30 N. E. 551 ; Crehore v. Crehore, 97 Mass. 330, 93 Am. Dec. 98; Spencer v. Johnston, 58 Nebr. 44, 78 N. W. 482 ; Davidson v. Crosby, 49 Nebr. 60. 68 N. W. 338: Griswold V. Hazels, 52 Nebr. 64, 71 N. W. 972 ; Murphey v. Illinois Trust &c. Bank, 57 Nebr. 519, 11 N. W. 1102; Amer- ican Buildintj &c. Assn. v. Bear, 48 Nebr. 455, (il N. W. 500; Pearce v. Buell, 22 Ore. 29, 29 Pac. 78; Brown V. Eccles, 2 Pa. Super, Ct. 192 ; Cham- berlain V. Fox Coal Co., 92 Tenn. 13, 20 S. W. 345 ; Schwartz v. Mittenthal (Tex. Civ. App.), 50 S. W. 182; Cal- houn v. Quinn (Tex. Civ. App.), 21 S. W. 705 ; Smith v. Richards, 13 Pet. (U. S.) 26; Pennybacker v. Laidley, 33 W. Va. 624, 11 S. E. 39; Bush v. Maxwell, 79 Wis. 114, 48 N. W. 250. A false representation, to have any efifect on a contract, must be shown to have operated on the defrauded person's mind as an influence to en- ter into the contract, and that but for such influence he would have acted differently. McNealy v. Bartlett, 123 Mo. App. 58, 99 S. W. 767. "One rule always adhered to is, that to en- able a party to set aside a contract the representations alleged to be false must be relied upon in entering into the contract." In this case it appears that the plaintiff not only distrusted the defendant, but also made an inde- pendent investigation through an at- torney. Hooker v. IMidland Steel Co., 215 111. 444, 74 N. E. 445, 106 Am. St. 170. If one's own testimony shows he did not rely or act on the repre- sentations he cannot avoid the con- tract claimed to have been induced thereby. Dady v. Condit, 163 111. 511, 45 N. E. 224. =» Attwood v. Small, 1 M. & R. 246; Jennings v. Broughton, 17 Beav. 234; Haywood v. Cope, 25 Beav. 140 ; Cur- ran V. Smith, 149 Fed. 945, 81 C. C. A. 537, affg. 138 Fed. 150; Ripy v. Cronan, 131 Ky. 631, IS S. W. 791, 21 L. R. A. (N. S.) 305; Farrar v. Churchill, 13S U. S. 609, 34 L. ed. 246, 10 Sup. Ct. 771; Southern De- velopment Co. V. Silva, 125 U. S. 247, 31 L. ed. 678, 8 Sup. Ct. 881; Farns- worth v. Duffner. 142 U. S. 43, 35 L. ed. 931, 12 Sup. Ct. 164; Shappirio v. 159 FRAUD AND MISREPRESENTATION. § 89 the party claiming to have been defrauded, appoints an agent to investigate the matter or submits the contract to an attorney for approval, it is apparent that no reliance was placed in the repre- sentation of the other party.^^ Since it is obvious that the representation must be relied on, the really important questions to be determined are, what representations may be relied on and who may rely on them? It has already been pointed out that there can be no reliance placed in mere expressions of opinion, such as trade talk, opinions of law, predictions and the like.^' Likewise, if an im- possibility is stated as the truth, or if the statement is obviously untrue, the party to whom it is made will not be heard to say that he relied on it.'* Misrepresentations made in a different transac- Goldberg, 192 U. S. 232, 48 L. ed. 419, 24 Sup. Ct. 259. In the above case it appeared that the defendant went on the ground and made a personal ex- amination of conditions, and spent a month in so doing. It was held that it could not be said that the defendant relied on the plaintiff's representa- tions where they conducted a personal examination. Tuck v. Downing, 76 111. 71 ; Hall v. Thompson, 1 Sm. & M. (Miss.) 443; Long v. Warren, 68 N. Y. 426; Williamson v. Holt, 147 N. Car. SIS, 61 S. E. 384, 17 L. R. A. (N. S.) 240; National Cash Register Co. V. Townsend Grocery Store, 137 N. Car. 6S2, 50 S. E. 306, 70 L. R. A. 349; Mahaffey v. Ferguson, 156 Pa. St. 156, 27 Atl. 21; Ludington v. Renick, 7 W. Va. 273. Where the means of knowledge are at hand and equally available to both parties, and the subject of purchase is alike open to their inspection, if the purchaser does not avail himself of these means and opportunities he will not be heard to say that he has been deceived by the vendor's misrepresentations. If, having eyes, he will not see matters directly before them, where no con- cealment is made or attempted, he will not be entitled to favorable con- sideration when he complains that he has suffered from his own voluntary blindness, and been mislead by over- confidence in the statements of an- other." Slaughter's Admr. v. Gerson, 13 Wall. (U. S.) 379, 20 L. ed. 627. But if the nature of the thing mvesti- gated is such that the one investi- gating it cannot understand or ap- preciate its imperfection he is en- titled to rely on the representations of the other party relative thereto. Thus, where the defendant went to see a fence-weaving machine this did not defeat his right to rely on the representation of the inventor when the defendant had no special knowl- edge of machinery. Watson v. Brown, 113 Iowa 308, 85 N. W. 28. See also, Fargo Gaslight &c. Co. v. Fargo Gas &c. Co., 4 N. Dak. 219, 59 N. W. 1066, Zl L. R. A. 593. °'' American Fine Art Co. v. Simon, 140 Fed. 529, 72 C. C. A. 45; Hooker v. Midland Steel Co., 215 111. 444, 74 N. E. 445, 106 Am. St. 170; Eppley v. Kennedy, 198 N. Y. 348, 115 N. Y. Supp. 360. ^ See, ante, § 84, Opinion and Pre- diction. •^Dyer v. Hargrave, 10 Ves. 505, 8 R. R. 36; Dillard v. Moore, 7 Ark. 167 ; Stone v. Moore, 75 Ga. 565 ; Van Velson V. Seeberger, 35 111. App. 598 ; Woodruff V. Garner, 27 Ind. 4, 89 Am. Dec. 477n; Moore v. Turbeville, 2 Bibb (Ky.) 602, S Am. Dec. 642; Irving V. Thomas, 18 Maine 418. _ One may act with his eyes closed if he so desires, but this is no reason why he should later complain of a lack of information which he might read- ily have obtained if he had kept his eyes open. Exchange Bank v. Will- iams, 120 La. 901, 45 So. 935. § 89 CONTRACTS. l6o tion and for a different purpose will not entitle one to rescind a contract. A misrepresentation which will entitle the party misled, to a rescission of a contract must have been made as a part of the same transaction.^" Consequently it cannot be said that the defendant was misled by representations made by the plaintiff's agent where it appeared that a contract was drawn up pursuant to such representations and submitted to the plaintiff, who re- fused to approve it and submitted a new proposition, to which de- fendant assented. This new agreement was not obtained by false representations, and in effect was a repudiation of those made by the agent.*" It is also true that the party to whom the representa- tions are made is usually required to exercise a reasonable degree of diligence under the circumstances to ascertain the truth of the assertion.*^ But where the statement is a positive assertion of a present existing fact, relative to a material element of the con- tract, the truth or falsity of which is unknown to the one to whom it is made, it may as a general rule be relied on by him.*^ Es- pecially is this true where there are no means at hand whereby the truth or falsity of the statement may be tested,*^ as where the rep- resentation relates to property or conditions located at a dis- tance,** or as to the location, boundaries of, or timber on, real ™ Barnett v. Barnett, 83 Va. 504, 2 son, 19 Tex. 303 ; Boyce v. Grunndy, S. E. 733. 6 Pet. (U. S.) 777, 8 L. ed. S79; Hull " Simpson v. Crane, 149 Mich. 352, v. Field, 76 Va. 594 ; Brown v. Rice's 110 N. W. 1081. Admr., 26 Gratt. (Va.) 467. " See, ante, § 77, Negligence. "^ Edwards v. M'Leay, 2 Swanst. *" Brown v. Freeman, 79 Ala. 406; 287; Shorp v. Ponce, 74 Maine 470; Baker v. Maxwell, 99 Ala. 558, 14 So. IMerrian v. Pine City Lumber Co., 23 468; Stimson v. Helps, 9 Colo. 33; Minn. 314; CottriU v. Krum, 100 Mo. Reid V. Flippen, 47 Ga. 273; Kramer 3' '7. 13 S. W. 753, 18 Am. St. 549; V. Williamson, 135 Ind. 655, 35 N. E, Fishback v. Miller, IS Nev. 428; Tut- 388; Jones v. Hathaway, 77 Ind. 14; hill v. Babcock, 2 Woodb. & M. (U. Manley v. Felty, 146 Ind. 194, 45 N. S.) 298. E. 74 ; Westerman v. Corder, 86 Kans. " In re Smith's Case, L. R. 2 Ch, 239, 119 Pac. 868; Campbell v. Hill- App. Cas. 603; Sellar v. Clelland, 2 man, 15 B. Mon. (Kv.) 508, 61 Am. Colo. 532; Henderson v. Henshall, S4 Dec. 195; Smith v. Werkheiser, 152 Fed. 320, 4 C. C. A. 357; Bartlett v. Mich. 177, lis N. W. 964, 125 Am. Smith, 17 Fed. 668; Bryan v. Suggs, St. 406; Bailey v. Smock, 61 Mo. 213; 56 Ga. 679; Baker v. Rockabrand, 118 Foley V. Holtry, 43 Nebr. 133, 61 N. 111. 365, 8 N. E. 456; Borders v. Kat- W. 120; Bacon v. Frisbie, IS Hun tleman, 142 111. 96, 31 N. E. 19; Ladd (N. Y.) 26; Drake v. Grant, 36 Hun v. Piggott, 114 111. 647, 2 N. E. 503; (N. Y.) 464; Fargo Gaslight &c. Co. Armstrong v. White, 9 Ind. App. 588, V. Fargo Gas &c. Co., 4 N, Dak. 219, 37 N. E. 28; Wolfe v. Pugh, 101 Ind. 59 N. W. 1066, 37 L. R. A. 593; 293; Ross v. Hobson, 131 Ind. 166, 26 Brotherson v. Reynolds, 164 Pa. St. N. E. 775; Stevens v. Allen, 51 Kans. 134, 30 Atl. 234; Moreland v. Atchi- 144, 32 Pac. 620; Matlack v. Shaffer, i6i FRAUD AND MISREPRESENTATION. 89 estate. ■'° One may also rely on representations of fact materially affecting the contract, peculiarly within the knowledge of the other party, and in respect to what one, in the exercise of rea- 51 Kans. 208, 32 Pac. 890; Hanks v. McKee, 2 Litt. (Ky.) 227, 13 Am. Dec. 265; Bean v. Herrick, 12 Maine 262, 28 Am. Dec. 176; Savage v. Ste- vens, 126 Mass. 207; Deming v. Dar- ling, 148 Mass. 504, 20 N. E. 107, 2 L. R. A. 743; Griffin v. Farrier, 32 Minn. 474, 21 N. W. 553; Bradley v. Bosley, 1 Barb. Ch. (N. Y.) 125; Lin- hart V. Foreman's Admr., 11 Va. 540; Miner v. Medbury, 6 Wis. 295. But see Williams v. McFladden, 23 Fla. 143, 11 Am. St. 345. "The matters directly before the party which may be observed he must be presumed to see. But does the reason of the jus- tice of the rule apply where the sub- ject-matter is not present, but dis- tant from the contracting parties? In such case, where the party making the representation has had means and opportunities to know the facts con- cerning the subject-matter of the con- tract which the other party has not had, and cannot have without going to the expense and delay of an in- vestigation of matters at a distance, we see no reason why he may not rely upon such representations of fact." Kingston v. L. P. & J. A. Smith Co., 114 Fed. 294, 52 C. C. A. 206. Where the work to be done is located at a distance one may rely on the state- ments of the other party relative to the conditions under which the work is to be done. Kingston v. L. P. & J. A. Smith Co., 114 Fed. 294, 52 C. C. A. 206. In the above case the thick- ness of rock to be dredged was mis- represented. See also, § 71, Fraud as to Essential Element of Contract, supra. " Sherwood v. Salmon, 5 Day (Conn.) 439, 5 Am. Dec. 167; Ste- vens V. Giddings, 45 Conn. 512; Lynch V. Mercantile Trust Co., 18 Fed. 486; Cooke V. Jersey County School Comrs., 6 111. 537; Weatherford v. Fishback, 4 111. 170 ; Brooks v. Riding, 46 Ind. 15 ; Cowger v. Gordon, , 4 Blackf. (Ind.) 110; Ledbetter v. Davis, 121 Ind. 119, 22 N. E. 787; TTervey v. Parry, 82 Ind. 263; Campbell v. Frankem, 65 Ind. 591 ; McGibbons v. Wilder, 78 Iowa 531, 43 N. W. 520; 11 — Contracts, Vol. I Carmichael v. Vandebur, SO Iowa 651 ; Upshaw v. Debow, 7 Bush (Ky.) 447; Pringle v. Samuel, 1 Litt. (Ky.) 43, 13 Am. Dec. 214; Roberts v. Plais- ted, 63 Maine 335 ; Roberts v. French, 153 Mass. 60, 26 N. E. 416, 10 L. R. A. 656,25 Am. St. 611; Starkweather v. Benjamin, 32 Mich. 305 ; Chase v. Boughton, 93 Mich. 285, 54 N. W. 44; Porter v. Fletcher, 25 Minn. 493; Brooks V. Hamilton, IS Minn. 26; Olson V. Orton, 28 Minn. 36, 8 N. W. 878; Hall v. Thompson, 1 Sm. & M. (Miss.) 443; Hitchcock v. Baughan, 44 Mo. App. 42 ; Couse v. Boyles, 4 N. J. Eq. 212, 38 Am. Dec. 514; Clarke V. Baird, 7 Barb. (N. Y.) 64; Schwenk v. Naylor, 102 N. Y. 683; Whitton V. Goddard, 36 Vt. 730; Gunther v. Ulrich, 82 Wis. 222, 52 N. W. 88, 2,7, Am. St. 37; McKinnon v. Vollmar, 75 Wis. 82, 43 N. W. 800, 6 L. R. A. 121, 17 Am. St. 178. In the above case the wrong tract of land was pointed out. For cases holding that misrepresentations as to number of acres and a tract of land is actionatjle, see Eichelberger v. Mills Land &c. Co., 9 Cal. App. 628, 100 Pac. 117; Coon v. Atwell, 46 N. H. 510; Whitney v. Allaire, 1 N. Y. 305; Beardsley v. Duntley, 69 N. Y. 577; Kill v. Brower, 76 N. Car. 124; Mitchell V. Zimmerman, 4 Tex. 75, 51 Am. Dec. 717; Bedford v. Hickman, 5 Call (Va.) 236, 2 Am. Dec. 590. But see Mabardy v. McHugh, 202 Mass. 148, 88 N. E. 894, 132 Am. St. 484. Where it is held that mere mis- representation as to the area of a tract of land, not so extensive but that its area may be inspected and estimated, unmixed with any other fraud, cannot maintain an action of deceit. See, however, Roberts v. French, 153 Mass. 60, 26 N. E. 416, 19 L. R. A. 656, 25 Am. St. 611. The circumstance may be such that no re- liance can be placed in such state- ments, as where it is the mere ex- pression of an opinion (Hill v. Bush, 19 Ark. 522), or both parties have equal means of knowledge and the facts are apparent. Hill v. Bush, 19 Ark. 522. If the purchaser accepts CONTRACTS. 162 sonable diligence, has not opportunity to ascertain their truth or falsity." § 90. Must mislead. — No reliance can be placed in state- ments known to be false. The one to whom such statements are made cannot be considered as having been misled thereby.*' Be- fore a false representation will be ground for the avoidance of a with the knowledge that the property- conveyed does not contain the num- ber of acres it is represented as con- taining he may be estopped to claim a rescission. McMichael v. Webster, 57 N. J. Eq. 295, 41 Atl. 714, 73 Am. St. 630. But the party defrauded is not estopped because he suspected fraud at the time the property was delivered, but did not know just what it was, or the extent thereof, at the time. Griffith v. Bergeson, 115 Iowa 279, 88 N. W. 451. " McGar v. Williams, 26 Ala. 469, 62 Am. Dec. 739; Leicester Piano Co. V. Front &c. Imp. Co., 55 Fed. 190, 5 C. C. A. 60. The purchaser of stock has a right to rely on the statement of another, relative to the indebted- ness of the corporation, when the vendor alleges there are no account books showing the corporate indebt- edness. Davis V. Butler, 154 Cal. 623, 98 Pac. 1047; Thomas v. Grise, 1 Penn. (Del.) 381, 41 Atl. 883; Ends- ley V. Johns, 120 111. 469, 12 N. E. 247, 60 Am. Rep. 572; Louisville &c. R. Co. V. Bodenschatz-Bedford Stone Co., 141 Ind. 251, 39 N. E. 703; Bloomer v. Gray, 10 Ind. App. 326, 37 N. E. 819; Lee v. Lemert, 26 Kans. Ill; Hazard v. Irwin, 18 Pick. (Mass.) 95; Rorer Iron (3o. v. Trout, 83 Va. 397, 2 S. E. 713, 5 Am. St. 285. By some authorities it is held that such representation may be re- lied on, though the means of ascer- taining its falsity are fully open to him. Gammill's Heirs v. Johnson, 47 Ark. 335, 1 S. W. 610. See also, Beckwith v. Ryan, 66 Conn. 589, 34 Atl. 488. "Nelson v. Stocker, 4 DeG. & J. 458, 28 L. J. Ch. 760, 5 Jur. (N. S.) 751; Jennings v. Broughton, 17 Beav. 234, 22 L. J. Ch. (N. S.) 584, 17 Jur. 905, affd. S DeG. M. & G. 126. 23 L. J. Ch, (N. S.) 999; Vigers v. Pike, 8 Clark & F. 562; Cowen v. Simpson, 1 Esp. 290; Lord Brooke v. Roun- thwaite, 5 Hare 298, 15 L. J. Ch. (N. S.) 332, 10 Jur. 656; Aberaman Iron Works v. Wickens, L. R, 4 Ch. 101, 18 L. T. (N. S.) 305, 20 L. T. (N. S.) 89, 17 Week. 211, L. R. 5 Eq. 485; Stiewel v. American Surety Co., 70 Ark. 512, 68 S. W. 1021; IMcDaniel v. Strohecker, 19 Ga. 432; Bowman v. Carithers, 40 Ind. 90; Hess v. Young, 59 Ind. 379 ; Manley v. Felty, 146 Ind. 194, 45 N. E. 74; Continental Ins. Co. V. Pierce, 39 Kans. 396, 18 Pac. 291, 7 Am. St. 557; Standard Horseshoe Co. V. O'Brien, 91 Md. 751, 46 Atl. 346; Whiting v. Hill, 23 Mich. 399; Morse v. Rathburn. 49 Mo. 91 ; Will- iamson v. Holt, 147 N. Car. SIS, 61 S. E. 384, 17 L. R. A. (N. S.) 240; Dunning v. Cresson, 6 Ore. 241 ; Cox V. Highley, 100 Pa. St. 249; Kister V. Lebanon Mut. Ins. Co., 128 Pa. St. 553, 18 Atl. 447, 5 L. R. A. 646, 15 Am. St. 696; Trammel v. Ashworth, 99 Va. 646, 39 S. E. 593. "A repre- sentation must be of a material ex- isting fact, present or past, and actu- ally relied on by the other party, who must have been misled." Home Gas Co. v. Mannington Co-operative Win- dow Glass Co., 63 W. Va. 266, 61 S. E. 329. Where a party is actually de- ceived by the representation the de- frauded party may set up fraud in his defense to an action on the con- tract. Turner v. Ware, 2 Ga. App. 57, 58 S. E. 310; Epps v. Warring, 93 Ga. 765, 20 S. E. 645. If the party who claims to have been deceived is well aware of the truth or falsity of the representation he is not misled thereby. Thus where one railroad represents to another that it intended to build its line to N., and the rail- road to which these representations were made knew the other road did not have the means to build this ex- tention, there was no reliance placed in such representations. Harper v. i63 FRAUD AND MISREPRESENTATION. 91 contract it must be reasonably relied upon by the party to whom it is made/^ § 91. Must result in damage or injury. — The remaining es- sential element of fraud is damage. Before fraud will give rise to an action for deceit, or for rescission, or before a sufficient de- fense can be predicated thereon in an action on the contract, the fraud practiced must result in injury. The principle of damnum absque injuria applies.*" Thus, where a debtor was by a false representation induced to sign a note for the full amount of his debt, when the creditor had agreed to accept fifty per cent, as pay- ment in full consideration of the debtor not going through bank- ruptcy, it was held that while the debtor was under no obligation to execute the note he was under a duty to pay the- debt, and Cincinnati &c. R. Co., IS Ky. L. 223, 22 S. W. 849. Where the defendant represented to plaintiff that certain stock was at par, and yet traded shares of it to the plaintiff for a farm, taking his farm at four or five times the value, defendant must have known that such stock was far below its par value. Younger v. Hoge, 211 Mo. 444, 111 S. W. 20, 18 L. R. A. (N. S.) 94. An answer which does not allege that the defendant was deceived by the false representations is demurrable. Fuy V. Haughton, 83 N. Car. 467. ''Dillman v. Nadlehoffer, 119 III. 567, 7 N. E. 88; Moore v. Recek, 163 111. 17, 44 N. E. 868; Jones v. Foster, 175 111. 459, 51 N. E. 862; Hooker v. Midland Steel Co., 215 111. 444, 74 N. E. 445, 106 Am. St. 170; King v. WilHams, 71 Iowa 74, 32 N. W. 178; Clark V. Tanner, 100 Ky. 275, 38 S. W. 11; Brown v. Leach, 107 Mass. 364 ; Whiting v. Price, 172 Mass. 240, 51 N. E. 1084, 70 Am. St. 262; Lewis v. Brookdale Land Co., 124 Mo. 672, 28 S. W. 324; Long v. Warren, 68 N. Y. 426; Chrysler v. Canaday, 90 N. Y. 272, 43 Am. Rep. 166; Kane v. Chester Traction Co., 186 Pa. St. 145, 40 Atl. 320, 65 Am. St. 846; Griffith V. Strand, 19 Wash. 686, 54 Pac. 613 ; Prince v. Overholser, 75 Wis. 646, 44 N. W. 775; Kaiser v. Nummerdor, 120 Wis. 234, 97 N. W. 932. Where a complainant alleged that he had found out B had made misrepresenta- tions that his statements were con- tradictory and that he was distrustful of him, but alleged that the distrust went only to suspecting that in a doubtful case, where B's own interest could be served by misrepresentation, &c., he would resort thereto, but at the time of the sale he was not con- vinced that he would perpetrate a de- liberate, positive and malicious fraud, it was held that the sale was not made in reliance on the representations of B, and that, in view of the knowledge complainant had, a reasonable person would not have relied upon them. Hooker v. Midland Steel Co., 215 111. 444, 74 N. E. 445, 106 Am. St. 170. But the mere fact that there were suspicious circumstances which cal- culated to arouse suspicion will not necessarily cause a court of equity to deny relief to parties ignorant of the true conditions, and who rely on the false representations made as to ma- terial facts. Eichelberger v. Mills Land &c. Co., 9 Cal. App. 628, 100 Pac. 117. "Merryman v. David, 31 111. 404; Buford V. Guthrie, 14 Bush (Ky.) 690; Power v. Turner, 37 Mont. 521, 97 Pac. 950; Butte Hardware Co. v. Knox, 28 Mont. Ill, 72 Pac. 301; Stetson v. Riggs, 37 Nebr. 797, 56 N. W. 628: Riinge v. Brown, 23 Nebr. 817, 37 N, W. 660; McNeny v. Camo- bell, 81 Nebr. 754, 116 N, W. 671, 81 Nebr. 761, 117 N. W. 885; Taylor v. Guest, 58 N. Y. 262; Sonnesyn v. Akin. 14 N. Dak. 248, 104 N. W. 1026; Withers v. Atkinson, 1 Watts (Pa.) 236. § 92 CONTRACTS. 1 64 that he could not be injured by merely promising to pay his debt.^° However, when suit to rescind is brought by the party defrauded or fraud is set up as a defense to an action for specific perform- ance it would seem that the word damage should not be restricted in its meaning to financial loss, but that where the party to whom the misrepresentation is made has, as a result, acquired either some legal right or incurred a liability, different from that repre- sented or contracted for, he has a right to avoid the agreement re- gardless of pecuniary loss.^^ § 92. Parties in pari delicto. — Where two persons guilty of participation in an unlawful transaction are in pari delicto, neither a court of law nor a court of equity will aid either to re- cover or reinvest himself with any title or interest which he, in consideration of such unlawful contract, has vested in the other, but will leave them in the same condition as to vested interests as they, by their own acts, have placed themselves. If such a participator cannot recover in a suit at law, on account of the principle embodied in the maxim, "in pari delicto, melior est conditio possidentis," he can have no relief in equity ; because a court of equity will not relieve him from the operation of such principle any more than will a court of law, but merely lends its aid in the case of executory contracts, when the circumstances are such that the defensive remedy at law is not as equally cer- tain, complete and adequate as it may be made in equity.^^ Thus, for example, a court of equity will not order that notes given as °° Bowen v. Waxelbaum, 2 Ga. App. 278, 45 N. E. 859. As to necessity of 521, 58 S. E. 784. placing defendant in statu quo be- ""If a party is induced to enter fore rescinding contract for fraud, see into a contract by fraudulent repre- Basye v. Paola Refining Co., 79 Kans. sentations as to a fact which he deems 755, 101 Pac. 658, 25 L. R. A. (N. S.) material, and upon which he has a 1302, 131 Am. St. 746. See also, Baker right to rely, he may rescind the con- v. Maxwell, 99 Ala. 558, 14 So. 468 ; tract upon the discovery of the fraud, Williams v. Kerr, 152 Pa. St. 560, and the party in the wrong will not 25 Atl. 618. be heard to say that no real injury ""Jackson v. Dwight, 78 Fed. 896, can result from the fact misrepre- 24 C. C. A. 380; Beer v. Landman sented." MacLaren v. Cockran. 44 (Texas), 30 S. W. 64, revd. in 88 Minn. 255, 46 N. W. 408. Thus, Tex. 450, 31 S. W. 805, on the ground where the wrong but an equally valu- that where the parties are in pari de- able piece of land was pointed out as licto equity will not order that a note one being sold, the purchaser is en- given in settlement of a garnbling titled to rescind for mistake. Clapp transaction be canceled and deliverad V. Greenlee, 100 Iowa 586, 69 N. W. up. 1049; Harlow v. La Brum, 151 N, Y. ^^5 FRAUD AND MISREPRESENTATION. § 92 collateral to a note given in consideration of a gambling debt be delivered up." Where an owner, during the pendency of a suit "Beer v. Landman, 88 Texas 4S0, 31 S. W. 805, per Denman, J. : "Thus, Parke, B., in Scarfe v. Morgan, (1838), 4 M. & W. 280, where a mare was delivered by plaintiff to defendant as security for a debt un- lawfully contracted on Sunday, said: 'This is not the case of an executory contract; both parties were in pari delicto — it is one which has been ex- ecuted, and the consideration given; and although in the former case the law would not assist one to recover against the other, yet if the contract is executed, and the property, either special or general, has passed there- by, the property must remain' * * * and refuse to allow plaintiff to re- cover. In the leading case of Tay- lor V. Chester (1869), L. R. 4 Q. B. 313, it was held, that the plaintiff, having deposited with the defendant the half of a fifty-pound bank note as a pledge to secure the payment for wine, etc., supplied to plaintiff by de- fendant in a brothel kept by her, to be there consumed in a debauch, could not recover such half note, the court saying: 'Plaintiff's argument was based upon the hypothesis that in spite of the finding of the jury, the plain- tiff was entitled to recover by virtue of his property in the half note, and that it was the defendant alone who set up an immoral transaction as the answer to the plaintiff's claim. This argument appears to us to be founded upon an entirely erroneous view of the facts. The plaintiff, no doubt, was the owner of the note, but he pledged it by way of security for the price of meat and drink provided for, and money advanced to him, by the defendant. Had the case rested there, and no pleading raised the question of illegality, a valid pledge would have been created, and a special property conferred upon the defendant in the half note, and the plaintiff could only have recovered by showing payment or a tender of the amount due. In or- der to get rid of the defense arising from the plea, which set up an exist- ing pledge of the half note, the plain- tiff had recourse to the special repli- cation, in which he was obliged to set forth the immoral and illegal char- acter of the contract upon which the half note had been deposited. It was therefore impossible for him to re- cover except through the medium and by the aid of an illegal transaction to which he was himself a party. And under such circumstances, the maxim, "in pari delicto, potior est conditio possidentis", clearly applies, and is decisive of the case.' In the case of King V. Green (1863), 6 Allen (Mass.) 139, where plaintiff had pledged his watch to secure an unlaw- ful livery bill, the court refused to allow him to recover the same, say- ing: 'It is true that the law would not enable the defendant to recover such a debt (Way v. Foster, 1 Allen, 408) ; but neither will it enable the plaintiff to recover back his property given in pledge for the debt, any more than to recover back the money after paying it. In such cases the maxim, "potior est conditio possi- dentis," is applicable. The plaintiff has at least as little claim to the aid of the law as the defendant' In Harris v. Woodruff (1878), 124 Mass. 205, where plaintiff had deliv- ered a mare to defendant for the purpose of training her for races, the court, after holding that defend- ant had an implied lien on the mare for such training, on the question of illegal consideration, Gray, C. J., said: 'It is quite clear that, even if the parties were in pari delicto, "po- tior est conditio possidentis," and the law will not assist the plaintiff to obtain possesion of the mare, with- out paying the defendant for his serv- ices under the executed contract, by which the general owner had volun- tarily transferred to the defendant a special property in the mare.' The principles applicable to cases of this character will also be found ably dis- cussed by Judge Gray, in Hall v. Corcoran (1871), 107 Mass. 251, and Cranson v. Goss (1871), 107 Mass. 440, 9 Am. Rep. 45. In Frost v. Plumb (1873), 40 Conn. 112, 16 Am. Rep. 18, discussing the principle un- der consideration, and following in the line of the English and Massa- § 92 CONTRACTS. 1 66 against him, and in view oi a possible judgment being rendered therein adversely to him, conveys his property to another, with intent to defeat the satisfaction of such judgment as may be re- covered against him in the suit, he cannot, after judgment in such suit in his favor, have the aid of a court of equity to compel the grantee to reconvey to him the property." While in such a case the fraudulent grantee, from a sense of his moral duty, ought to give back the property to him from whom he received it, yet the law, to discourage frauds, will not compel him to restore chusetts cases above cited, the court say: 'We understand the rule to be this : The plaintiff cannot recover when it is necessary for him to prove, as a part of his cause of action, his own illegal contract, or other illegal transactions; but if he can show a complete cause of action without be- ing obliged to prove his own illegal act, although such illegal act may incidentally appear, and may be im- portant even as explanatory of other facts in the case, he may recover. It is sufficient if his cause of action is not essentially founded upon some- thing which is illegal. If it is, what- ever may be the form of the action, he cannot recover.' " , " Price V. Andrew, 51 Ohio St. 405, 38 N. E. 84, per Dickman, C. J. : "In Fletcher v. Fletcher, 2 MacArthur 38, an action of slander had been com- menced against the grantor and his wife, and the conveyance was exe- cuted to the defendant to protect the real estate therein described from the result of the action at law, upon an [agreement with the defendant that, as soon as the action was dismissed, or decided in favor of the grantor and his wife, he would reconvey the property to the grantor, his heirs or assigns. It was held that such an averment was fatal to the bill of com- plaint, and that a court of equity would not interpose to set the convey- ance aside, but would leave the par- ties to the consequences of their own act. It was conceded, however, that a court of equity might assist the grantor where circumstances were shown to exist which recognized its interposition on other grounds of set- tled equity jurisdiction, 'such as fraud in procuring the deed, imposi- tion by the grantee, a violation of some fiduciary relation, an abuse of confidence, delusion or the like on the part of the grantor at the time of executing the deed.' See also, Pinck- ston v. Brown, 3 Jones Eq. (N. Car.) 496; Boyd v. De La Montagnie, 73 N. Y. 498, 29 Am. Rep. 197; Free- love V. Cole, 41 Barb. (N. Y.) 318; Ford V. Harrington, 16 N. Y. 285; Holliway v. Holliway, 11 Mo. 396; Nichols V. McCarthy, S3 Conn. 299, 23 Atl. 93, 55 Am. Rep. 105; Barnes V. Brown, 32 Mich. 146. In comment- ing upon the foregoing and other cases of like tenor, Mr. Wait, in his work on Fraudulent Conveyances (§ 401), very forcibly says: 'While it is possible to deduce from them a general principle that degrees of guilt will be recognized in such transac- tions, and that grantors may, in cer- tain cases, reclaim the property fraudulently alienated where the transaction was superinduced by the unfair action of a vendee who oc- cupied some relation of confidence which enabled him to unduly influ- ence the vendor, yet a very clear case, with well-defined reasons for excepting it from the general rule, must be presented. Debtors contem- plating fraudulent alienations should draw little encouragement from these exceptional cases, as for a general rule, after passing through the troubled waters of insolvency, they will find themselves stripped of the power to reach or recover the secret property in the hands of their fraud- ulent grantees. The ancient rule, "In pari delicto melior est conditio pos- sidentis," is not to be easily uprooted, and must not be considered as over- thrown or abrogated by these cases.' " 167 FRAUD AND MISREPRESENTATION. § 92 it to the fraudulent grantor/" Nevertheless, it has been held proper to give relief if the nature of the case is such that public policy demands that it be granted one who has been defrauded, even though the one defrauded had intended and expected to defraud others and share in the profits derived thereby/" In the foregoing case the party defrauded knew that the race on which he was betting was a "fake" race, but supposed he knew the way it was to go. Another line of cases holds that where the one betting does not know that the race or other chance on which he placed his money is false or pretended he may recover on the ground that the transaction does not amount to a wager, but is only a pretended wager. "Swift V. Holdridge, 10 Ohio 230, soner, 80 Iowa 548, 45 N. W. 1077; 36 Am. Dec. 85. Shirey v. Ulsh, 2 Ohio C. C. 401, 1 "Hobbs V. Boatright, 195 Mo. 693, Cir. D. 554; Carter v. Lillie, 3 Ohio 93 S. W. 934, 5 L. R. A. (N. S.) 906, C. C. 364. Fake foot-race, Lockman 113 Am. St. 709 and note. To same v. Cobb, 11 Ark. 279, 91 S. W. 546. effect, Stewart v. Wright, 147 Fed. Shell game, Webb v. Fulchire, 25 N. 321, 77 C. C. A. 499. Contra, Abbe v. Car. (3 Ired. L.) 485, 40 Am. Dec. 419 Marr, 14 Cal. 210. In the above case Card game, Preston v. Hutchmson, the facts are similar to those in the 29 Vt. 144. Contra, Babcock v. Hobbs case. See also, Bohemian Thompson, 3 Pick. (Mass.) 446, 15 Oats Swindle Cases, Shipley v. Rea- Am. Dec. 235. CHAPTER V. MISTAKE. § 100. Generally — Materiality. § 106a. Mistake as to quantity. 101. As to the nature of transac- 107. As to price. tions. 108. As to value. 102. As to parties. 109. In execution of writing. 103. Mistake as to subject-matter. 110. Negligence. 104. Mistake as to existence of sub- 111. Ratification — Laches. ject matter. 112. Mutuality of mistake. 105. As to identity of subject mat- 113. Mistake as to the law. ter. 114. Mistake of fact as to in- 106. As to nature or quality of sub- terest induced by mistake of ject-matter. law. § 100. Generally — Materiality. — Contracts entered into through mistake bear in many respects a close similarity to those induced by fraud or misrepresentation. In both cases one or both of the parties enter into the agreement in ignorance of the true conditions; the distinction being that in the case of mistake the ignorance of one party is not caused or fostered by the other, while in the case of misrepresentation it is caused or fostered by the other party, and when this is done with wrongful intent such conduct becomes fraudulent. The reason contracts are avoided or reformed because of mistake is the same that underlies the avoidance of contracts for fraud — there is no real assent. In reality it is not the mistake that avoids the agreement but the want of assent to its terms. ^ As with fraud or misrep- resentation, in order to entitle a party to relief from a mistake, it must be material to the transaction and affect its substance, and not merely its incidents.^ Some of the cases cited hold that the ^Curtis V. Albee, 167 N. Y. 360, 11 Conn. 134; Wilson v. Queen Ins. 60 N. E. 660; Miles v. Stevens, 3 Pa. Co., 5 Fed. 674; Steinmeyer v. St. 21, 45 Am. Dec. 621n. See also, Schroeppel, 226 111. 9, 80 N. E. 564, Knight V. Lanfear, 7 Rob. (La.) 172. 10 L. R. A. (N. S.) 114n, 117 ''Carpmael v. Powis, 10 Beav. 36; Am. St. 224n; Harrod v. Cowan, Stone V. Godfrey, 5 De G. M. & G. Hard. (Ky.) 542; Mayor v. 1(>; Okill V. Whittaker, 1 De G. & Blache, 3 Mill. (La.) 618; Stewart Sm. 83; Trigge v. Lavallee, IS v. Ticonic Nat. Bank, 104 Maine 578, Moore P. C. 270; Segur v. Tingley, 72 Atl. 741; Henderson v. Dickey, 35 169 MISTAKE. § 1 01 mistake must have determined the conduct of him by whom it was made, but as has been pointed out courts cannot "be expected to enter upon an inquiry as to how the parties would have traded if each had known the same facts as to the state of the crops, the conditions of trade, a declaration of war, the signing of a treaty of peace, or any speculative matter or extrinsic fact of general or special knowledge."^ § 101. As to the nature of transaction. — Mistakes may be divided into two general groups. Those of the first class are fundamental in character and relate to an essential element of the contract. This prevents the minds of the parties from meeting and consequently no agreement is in fact made.* These funda- mental errors have to do with the existence and identity of the subject-matter, errors as to price, quantity and the like being merely subdivisions under these two general heads. In the other class of mistakes an actual, good-faith understanding is reached but through some error in expression the actual agreement is not reduced to writing. This is not a fundamental error and may be corrected. Cases illustrating these two kinds of mistakes will not Mo. 120; Penny v. Martin, 4 Johns, due to negligence, relative to an in- Ch. (N. Y.) 566; Dambmann v. trinsic fact, past or present, not un- Schulting, 75 N. Y. 55; Stettheimer derstood to be conjectural. Kowalke V. Killip, 75 N. Y. 282; Trigg v. v. Milwaukee Elec. &c. Co., 103 Wis. Read, 5 Humph. (Tenn.) 529, 42 472, 79 N. W. 762, 74 Am. St. 877. Am. Dec. 447n; Darnell v. Dolan, — "Oliver v. Oliver, 118 Ga. 362, 45 Tex. Civ. App. — . 132 S. W. 857; S. E. 232. Compare with Stahl v. Ketchum v. Catlin, 21 Vt. 191 • Sim- Schwartz, — Wash. — , 120 Pac. 856. mons V. Palmer, 93 Va. 389, 25 S. E. It would perhaps be more accurate 6; Weaver v. Carter, 10 Leigh (Va.) to say that the mistake must be one 37. "A mistake as to a matter of which entered into the contemplation fact to warrant relief in equity must of both parties as a condition of the be material; and the fact must be assent. Gibson v. Union Rolling such that it animated and controlled Mill Co., 3 Watts (Pa.) 32. See the conduct of the party. It must go also, Wilson v. Wyoming Cattle and to the essence of the object in view, Investment Co., 129 Iowa 16, 105 N. and not be merely incidental. The W. 338. See post, § 112, Mutuality of court must be satisfied that but for Mistake. the mistake the complainant would 'Mutual assent is requisite to the not have assumed the obligation creation of a contract and if there is from which he seeks to be released." a mistake of fact by one of the par- Lamoreaux v. Phelan, 89 Nebr. 47, ties going to the essence of the con- 130 N. W. 988, quoting from Grymes tract, no agreement is, in fact, made. V. Sanders, 93 U. S. 55, 23 L. ed. Steinmeyer v. Schroeppel, 226 111. 9, 798; M'Ferran v. Taylor, 3 Cranch 80 N. E. S64, 10 L. R. A. (N. S.) 114n, (U. S.) 270, 2 L. ed. 577. Before a 117 Am. St. 224n; Morgan v. Owens, mistake will be relieved against it 228 111. 598, 81 N. E, 1135; Briggs must be an unconscious error, not v. Watkins, 112 Va. 14, 70 S. E. 551. § lOI CONTRACTS. I70 be carefully grouped together but the distinction is here pointed out as it will aid greatly in understanding the subject.^ The principle on which contracts are avoided for mistake is the same as that which governs the law of offer and acceptance, the only difference in the two cases being that in the latter the parties must assent to the same thing. There must be no variance be- tween the offer and its acceptance. The question as to what the parties may have meant does not arise because they have not said the same thing. In the former there is apparent agreement and the contract concluded, but a common intention on the part of the parties is wanting and their minds never in reality met on some essential element of the agreement. It follows, therefore, that if the parties do not actually understand each other, one meaning to give his assent to one thing and the other to another there is no contract. This happens when there is a mistake as to the nature of the transactions. This principle finds its application in those cases where one, through no fault or negligence of his own, signs an agreement under the supposition that it is an instrument of another and different character. In the majority of cases the signature may have been induced by fraud but it is no less mistake because of this. It should be borne in mind, however, that where the signature is procured by fraud it may be voidable merely, but when signed by mistake it is no agreement at all.*^ In contempla- tion of law the one whose name is appended to the contract never signed it.' If not guilty of negligence,^ the one so signing may ''Green v. Stone, 54 N. J. Eq. 387, 259; Shurte v. Fletcher, 111 Mich. 34 Atl. 1099, 55 Am. St. 577. 84, 69 N. W. 233 ; Aultman v. Olson, "Eldorado Jewelry Co. v. Darnell, 34 Minn. 450, 26 N. W. 451; Max- 135 Iowa 555, 113 N. W. 344, 124 field v. Schwartz, 45 Minn. 150, 47 Am. St. 309. See also, Bates v. N. W. 448, 10 L. R. A. 606n ; Wright Harte, 124 Ala. 427, 26 So. 898, 82 v. McPike, 70 Mo. 175 ; Cole v. Wil- Am. St. 186; Meyer v. Haas, 126 Hams, 12 Nebr. 440, 11 N. W. 875; Cal. '560, 58 Pac. 1042; Rockford &c. Alexander v. Brogley, 63 N. J. L. R. Co. V. Schunick, 65 111. 223 ; Schaper 307, 43 Atl. 888; Smith v. Smith, 134 V. Schaper, 84 111. 603; Pioneer N. Y. 62, 31 N. E. 258, 30 Am. St. Cooperate Co. v. Romanowicz, 186 617n ; Schuylkill v. Copley, 61 Pa. 111. 9, 57 N. E. 864; Esterly v. Ep- St. 386, 5 Am. Rep. 441; Cameron v. pelsheiraer, Ti Iowa 260. 34 N. W. Estabrooks, 1Z Vt. 73, 50 Atl. 638; 846; Warden v. Reser, 38 Kans. 86, Lord v. American Mut. &c. Assn., 89 16 Pac. 60; Sibley v. Holcomb, 104 Wis. 19, 61 N. W. 293, 46 Am. St. Ky. 670, 47 S. W. 765 ; Freedlev v. 815, 26 L. R. A. 741. French, 154 Mass, 339, 28 N. E. 272; 'Foster v. MacKinnon, L. R. 4 C. Bliss V. New York Cent. &c. R. Co., P. 704, reported in a note to Doug- 160 Mass. 447. 36 N. E. 65, 39 Am. St. las v. Matting, 4 Am. Rep. 238. 504; Trambly v. Ricard, 130 Mass. 'Bedell v. Herring, 11 Cal. 572, 20 171 MISTAKE. § 1 01 avoid the instrument even when it is in the hands 01 an innocent purchaser.^ In one of the oldest and at the same time leading cases on this subject it appears that an ilHterate man signed, a deed which Viras explained to him by a third person as merely a re- lease for arrears of rent but which was in fact a general release of all claims, it was held that the instrument so signed was not the plaintiff's deed.^" Likewise where one signed a bill of ex- change on the representation that he was signing a guaranty it was held that the signature was not binding.^^ Likewise where an illiterate man signed a paper which was falsely represented to him as a petition but it was in reality a bond, it was held that he was not liable thereon, the plea of non est factum being good even though the obligee was not aware of the fraud at the time the bond was accepted. ^^ Mistakes of this character are confined almost entirely to written agreements wherein one of the parties is led to sign the agreement believing it to be of a different import. Con- sequently where one through no negligence of his own signs an agreement different from the contract proposed orally the per- son so signing is not bound." This class of cases must be dis- Pac 129 11 Am. St. 307n. See Swan- Millard v. Barton, 13 R. I. 601, 43 nell V. Watson, 71 III. 456; Fisher v. Am. Rep. 51; Wallcer v. Ebert, 29 Von Behren, 70 Ind. 19, 36 Am. Rep. Wis. 194, 9 Am. Rep 548; Keller v. 162, Ruddell V. Dillman, n Ind. 518, Ruppold, 115 Wis. 636, 92 N. W. 364, 38 Am Rep. 152; Williams v. Stoll, 95 Am. St. 974; Bowers v. Tliomas, 79Ind. 80, 41 Am. Rep. 604n; Fayette 62 Wis. 480, 22 N. W. 710 County Sav. Bank V. Steffes, 54 Iowa "In re Thoroughgood s Case, 1 214, 6 N. W. 267; Dinsmore v. Stim- Coke, Part II 9 (b). ^ t, ^ ^ bert 12 Neb. 433, 11 N. W. 872; "Foster v. Mackinnon, L. R. 4 C. Mackey v. Peterson, 29 Minn. 298, P 704 See also, Nance v. Lary 5 13 N. W. 132, 43 Am. Rep. 211; Page Ala. 370; W.lson v. Miller, 72 111 V Krekev 137 N. Y. 307, 2>Z N. E. 616; First Nat. Bank v. Zeims, 93 ^il 21 T R A 409n 33 Am. St. Iowa 140, 61 N. W. 483; Caulkms v. 731 • Albrecht v ' Milwaukee &c. R. Whisler, 29 Iowa 495, 4 Am. Rep. ?m' I 3^'^- '''' '' ""■ '^- '"' '' '''-Schuylkill v. Copley, 67 Pa. St 28;nXVdsl;„ -':"^'lchir?z, ^?9 '^I'^TfZoZ.oo.s Cas. 1 Til 3n Webb V Corbin, 78 Ind. Coke, Part II, 9 (b ; Foster v. Mac- '3 ; BaldwTnt BHck^r: 86' Ind 221 ; kinnon, L R 4 C P. 704 ; B^tes v. Green v Wilkie, 98 Iowa 74, 66 N. Harte, 124 Ala. 427, 26 So 898, Hi W 1046 36 L R A. 434n, 60 Am. St. Am. St. 186; Puffer v. Smith, 57 II. f^4 Willard V. Ndson, 35 Nebr. 651, 527; Baldwin v Br.cker, 86 Ind 221 ; II N.^ 572 37 A- S, ,ss wH,- ff -^,^^. ^^^ t-l\^\^rn,^°9 ney V. Snyder, 2 Lans. (N. Y.) 4//, o^^^ ^^_ Trambly v. Ricard, 130 § I02 CONTRACTS. 1 72 tinguished from those wherein the party signing understands the character of the instrument executed but is led to believe that it is a mere form or does not understand the precise effect of the agreement or conveyance executed/* It is well settled that the person entering into an agreement under a mistake as to the nature of the transaction must be reasonably free from negligence under the circumstances. If he is guilty of negligence he will not be re- lieved from mistake. This phase of the subject will be discussed later. '^ § 102. As to parties. — When the identity of one of the par- ties is a material element of the contract a mistake in respect thereto invalidates the agreement." Mistakes as to the identity of the person with whom the contract is made arise where A contracts with X believing him to be M ; that is, where the offerer has in contemplation a definite person with whom he intends to contract." One has the right to select the person with whom he wishes to contract, especially where the nature of the transaction is such that it is important that performance be had by a par- ticular individual, as agreements with a painter, writer, or which call for the performance of any act requiring skill such as the one sought to be contracted with is supposed to possess. In such cases one may contract with whomever he may choose and the suf- ficiency of his reasons for so doing is immaterial.^* Thus, where one sends an order for goods or other proposal to another, a third person cannot without the knowledge of the one sending the Mass. 259; Soper v. Peck, 51 Mich. 7 Ch. App. 75; Terry v. Tuttle, 24 563, 17 N. W. 57; Wright v. Mc- Mich. 206. In the above case it is Pike, 70 Mo. 175 ; First Nat. Bank v. said, "If a person signs and acknowl- Lierman, 5 Nebr. 247; Jackson v. edges a deed, supposing it to be a Hayner, 12 Johns. (N. Y.) 469; lease without reading the same and Whitney v. Snyder, 2 Lans. (N. Y.) thereby enables his grantee to sell 477; Leonard v. Southern Power Co., to an innocent purchaser for value 155 N. Car. 10, 70 S. E. 1061 ; he cannot as against the latter deny Schuylkill v. Copley, 67 Pa. St. 386, the validity of the deed. 5 Am. Rep, 441 ; De Prez v. Everett, " See post, § 110, Negligence. Ti Tex. 431, 11 S. W. 388; Walker "Rodliff v. Dallinger, 141 Mass. V. Ebert, 29 Wis. 194, 9 Am. Rep. 1, 4 N. E. 805, 55 Am. Rep. 439. 548; Benjamin on Cont., 180; Bow- "Anson on Contracts (8 ed.), p. ers V. Thomas, 62 Wis. 480, 22 N. W. 163; Fifer v. Clearfield &c. Coke Co., 710. And see, Hewitt v. Jones, 72 103 Md. 1, 62 Atl. 1122. 111. 218; Gibbs v. Linabury, 22 Mich. "Boston Ice Co. v. Potter, 123 479, 7 Am. Rep. 675; DeCamp v. Mass. 28, 25 Am. Rep. 9. See also, Hamma, 29 Ohio St. 467. Humble v. Hunter, 12 Q. B. 310; "Hunter v. Walters (1871), L. R. Arkansas Valley Smelting Co. v. 173 MISTAKE. 1 02 order or making the proposal become a party to the agreement by accepting such proposal.^" Likewise, where one enters into an apparent agreement with another by correspondence or other means of communication, without coming in personal contact with him, believing him to be another person, there is in general no binding agreement.^" Again, where one represents himself as the agent or member of a reputable firm, there is no intention on the part of the seller to deal with or convey title to the one making such representation nor is there any intention on the part of the principal, the imposter purported to represent, tO' accept title, consequently there is no contract and the title to the goods remains in the seller.-^ However, the mere fact that the seller believes the buyer is acting as agent for a certain third person and because of such belief makes the sale does not avoid it where Belden Min. Co., 127 U. S. 379, 32 L. ed. 246, 8 Sup. Ct. 1308; Winchester V. Howard, 97 Mass. 303, 93 Am. Dec. 93; Gregory v. Wendell, 40 Mich. 432; King v. Batterson, 13 R. I. 117, 43 Am. Rep. 13. " Boulton V. Jones, 2 H. & N. 564. In the above case goods were or- dered of A and supplied by C with- out the one giving the order being informed of the change. The goods were accepted and later an invoice was received from C in his own name whereupon the one giving the order and who had accepted the_ goods said they knew nothing of him, that is C. The court held there was no contract and that C could not re- cover the price of the goods. Bos- ton Ice Co. V. Potter, 123 Mass. 28, 25 Am. Rep. 9; Randolph Iron Co. V. Elliott, 34 N. J. L. 184. But if the person has notice that the goods are being furnished by another and accepts them notwithstanding this fact he thereby assents to and ratifies the filling of the order and such ratifica- tion relates back and gives the or- der the same effect as if it had been given directly to the person who filled it. Barnes v. Shoemaker, 112 Ind. 512, 14 N. E. 367. See also. Fox V. Tabel, 66 Conn. 397, 34 Atl. 101; Roof V. Morrisson, 37 111. App. 37- Barker v. Keown, 67 111. App. 433 ; Haines v. Starkey, 82 Minn. 230, 84 N. W. 910; Newberry v. Norfolk &c. R. Co., 133 N. Car. 45, 45 S. E. 356; Belfield v. National Supply Co., 189 Pa. St. 189, 42 Atl. 131, 69 Am. St. 799. ^° Cundy V. Lindsay, 3 App. Cas. 459; Barnett, Ex parte (1876) 3 Ch. Div. 123. ^'Hardman v. Booth, 1 H. & C. 803; Kingsford v. Merry, 1 H. & N. 503; Cundy v. Lindsay, 3 App. Cas. 459; La Salle &c. Brick Co. v. Coe, 65 111. App. 619; Alexander v. Swack- hamer, 105 Ind. 81, 4 N. E. 433, 5 N. E. 908, 55 Am. Rep. 180; Peters Box &c. Co. V. Lesh, 119 Ind. 98, 20 N. E. 291, 12 Am. St. 367; Moody V. Blake, 117 Mass. 23, 19 Am. Rep. 394; Edmunds v. Merchants' &c. Transp. Co., 135 Mass. 283; Rodliff v. Dallinger, 141 Mass. 1, 4 N. E. 805, 55 Am. Rep. 439; Collins v. Rain, 20 Hun (N. Y.) 246, 85 N. Y. 637; Hensz v. Miller, 94 N. Y. 64; Soltau V. Gerdau, 119 N. Y. 380, 23 N. E. 864, 16 Am. St. 843; Dean v. Yates, 22 Ohio St. 388; Hamet v. Letcher, 37 Ohio St. 356, 41 Am. Rep. 519; Decan v. Shipper, 35 Pa. St. 239, 78 Am. Dec. 334; Barker v. Dins- more, 72 Pa. St. 427, 13 Am. Rep. 697; McCrillis v. Allen, 57 Vt. 505; Mayhew v. Mather, 82 Wis. 355, 52 N. W. 436. See also, Higgons v. Bur- ton, 26 L. J. Ex. 342; Kingsford v. Merry, 26 L. J. Ex. 83; Hardman v. Booth, 1 H. & C. 803; Edmunds v. Merchants Despatch Transportation § I03 CONTRACTS. 1 74 there was no misrepresentation made or fraud practiced. ^^ It has also been held where one was led to suppose he was dealing with a corporation with a paid-up capital and a legal status, he did not intend to contract with an individual and when misled in so doing there was no valid agreement between the parties and a suit for damages could not be maintained for its breach.^^ How- ever, if the identity of the other party to the contract is imma- terial it would seem that no mistake as to the identity of the parties, such as would avoid the agreement, could be made.^^ § 103. Mistake as to subject-matter. — Not only must there be no mistake as to the nature of the transaction but it is essen- tial that the subject-matter of the contract be identified. Mistake as to the subject-matter usually arises when some material phase of the contract has no obvious meaning, or is reasonably capable of a diverse interpretation and was in fact differently understood by the parties. "° This involves a mistake relative to the existence, identity, nature or quality of the subject-matter and will be dis- cussed in the order named in the following sections. § 104. As to existence of subject-matter. — It is obvious that practically every contract is entered into under the assump- tion that certain things are true. One of the things which the parties assume in the absence of absolute knowledge, is that the subject-matter actually exists. Consequently when the contract is, in effect, conditioned on the existence of the subject-matter its non-existence invalidates any agreement made in reference thereto.^° Where certain facts assumed by both parties are the Co., 135 Mass. 283; Consumers' Ice recover for work actually done. Co. V. E. Webster, Son & Co., 32 "'Smith v. Wheatcroft (1878) 9 App. Div. (N, Y.) 592, 53 N. Y. S. Ch. Div. 223. 56. See however, Hawkins v. Davis, '^ Wheaton Bldg. &c. Co. v. Boston, 8 Baxt. (Tenn.) 506. 204 Mass. 218, 90 N. E. 598. See ^ Stoddard v. Ham, 129 Mass. 383, also, Crislip v. Cain, 19 W. Va. 438. 37 Am. Rep. 369. "° Couturier v. Hastie, 5 H. L. Cas. ''"Fifer v. Clearfield &c. Coke Co., 673. A sale of a cargo of a vessel 103 Md. 1, 62 Atl. 1122. But see, at sea has been held void where it Weber & Co. v. Hearn, 49 App. Div. subsequently appears that the cargo (N. Y.) 213, 63 N. Y. S. 41, where was lost before the sale was made, it is held that in the absence of any Hastie v. Couturier, 9 Exch. 102; actual misrepresentation, the fact Schmidt v, Tiden, L. R. 9 Q. B, 446; that the defendant thought he was Koenig v, Haddix, 21 111, App. S3; dealing with a partnership does not Blakemore v. Blakemore, 19 Ky. L. affect the right of the plaintiff to 1619, 44 S. W. 96; Neal v. Coburn, '175 MISTAKE. § 104 basis of a contract and it subsequently appears that such facts do not exist the apparent agreement is inoperative." Thus where both parties assumed that a certain flouring mill produced a speci- fied grade of flour and attempted to form a contract on that basis and later discovered that the mill in question did not produce that grade of flour the contract was held impossible of fulfilment and unenforcible.^* And where the defendant sold water rights to the plaintiff and it was afterward discovered that the defendant had no such rights to convey, it was held that the agreement was inoperative and void.^" Likewise, where the plaintiff and de- fendant were under the impression that there was rock in a certain quarry more than sufficient to fulfil the contract between them, which behef was erroneous, it was held that the contract was unenforcible since based on assumed facts which did not exist.'" However, when the parties treat upon the basis that the fact which is the subject of the agreement is doubtful and the consequent risk each is to encounter is taken into consideration in the stipulations 92 Maine 139, 42 Atl. 348, 69 Am. Fitch, 5 Whart. (Pa.) 325, 34 Am. St. 495 ; Gould V. Emerson, 160 Mass. Dec. 558; St. Louis &c. R. Co. v. 438, 35 N. E. 1065, 39 Am. St. 501; Johnston, — Tex. Civ. App. — . 125 Gauntlett v. Sea Ins. Co., 127 Mich. S. W. 61. 504, 86 N. W. 1047; Allen v. Ham- "^ Nordyke & Marmon Co. v. mond, 11 Pet. (U. S.) 63, 9 L. Ed. Kehlor, 155 Mo. 643, 56 S. W. 287, 633. An agreement based on a sup- 78 Am. St. 600. posed judgment which has no exist- "Bedell v. Wilder, 65 Vt. 406, 26 ence in fact is no agreement because Atl. 589, 36 Am. St. 871. of the want of a subject matter. Gib- '°St. Louis &c. R. Co. v. Johnston son V. Pelkie, 37 Mich. 380; Beland (Tex. Civ. App.), 125 S. W. 61. To V. Anheuser-Busch Brew. Assn., 157 same effect, Edwards v. Trinity &c. Mo. 593, 58 S. W. 1; Fisher v. Dur- R. Co. (Tex. Civ. App.), 118 S. W. ing, 53 Mo. App. 548; Duncan v. 572. In the above case it was as- New York Mut. Ins. Co., 138 N. Y. sumed that there was sufficient gravel 88, 33 N. E. 730, 20 L. R. A. 386; in a certain pit to fulfil the contract ^ Fink V. Smith, 170 Pa. St. 124, 32 between the parties. See however, Atl. 566, 50 Am. St. 750; Riegel v. Du Bois Borough v. Du Bois City American Life Ins. Co., 153 Pa. St. Waterworks Co., 176 Pa. St. 430, 35 134, 25 Atl. 1070, 19 L. R. A. 166. Atl. 248, 53 Am. St. 678, 34 L. R. A. Same case, 140 Pa. St. 193, 21 Atl. 92, where the court refused to re- 392, 11 L. R. A. 857, 23 Am. scind a contract merely because the St.' 225; Bedell v. Wilder, 65 parties thereto had mistaken the Vt. 406,' 26 Atl. 589, 36 Am. amount of water that could be ob- St.' 871 '; Darnell v. Dolan, — tained from certain springs. The Tex. Civ.' App. , 132 S. W. 857. See court further stated that the contract also,' Hannah "v. 'Steinman, 159 Cal. might be reformed. For further il- 142 112 Pac 1094 lustrations, see Cooper v. Hayward, "Fink V Smith,' 170 Pa. St. 124, 32 71 Minn. 374, 74 N. W. 152, 70 Am. Atl 566 50 Am St. 750; Horbach v. St. 330; State Sav. Bank v. Buhl, 129 Gray 8 ' Watts (Pa.) 492; Willing v. Mich. 193, 88 N. W. 471, 56 L. R. A. Peters, 7 Pa. St. 287; Prevail v. 944. § I05 CONTRACTS. 1 76 assented to, the contract is valid, notwithstanding it may develop that one or both of the parties held a mistaken opinion relative to the doubtful subject-matter of the agreement, provided there be no concealment or unfair dealing by the opposite party that would affect any other contract. This principle applies to insur- ance contracts and every compromise of a doubtful right.^^ § 105. As to identity of subject-matter. — Error as to the identity of the subject-matter is an error relative to the specific thing. If one agrees to buy and the other to sell a tract of land, the cargo of a particular ship, a horse or other chattel, reference being had by them to different objects or animals, no contract is concluded.^^ Thus it has been held that where the defendant ordered a cargo of cotton, "to arrive Ex. 'Peerless' from Bom- bay" and there were two ships of that name which sailed from Bombay, it was held that "the defendant only bought that cotton which was to arrive by a particular ship" and not by any ship bearing the name "Peerless," and that the defendant meant one ship and the plaintiff another.^^ So in an action for the purchase price of land where it appeared that the contract was to buy a lot on Prospect street and there were two Prospect streets in the town and the buyer meant a lot on one of them and the seller a lot on the other, it was held that their minds did not agree on the sub- ject-matter of the sale and there was no contract whereby the pur- chaser could be bound.^* However, where the terms of the agree- ment were unambiguous the contract will not be declared void on the ground of mistake when the misconception of one of the par- ties relative to the identity of the subject-matter is wholly un- =" Ancient Order of United Work- schi, 174 Pa. St. 80, 34 Atl. 576; men v. Mooney, 230 Pa. 16, 79 Atl. Sheldon v. Capron, 3 R. I. 171. 233; Perkins v. Gay, 3 Serg. & R. ^Raffles v. Wichelhaus, 2 H. & C. (Pa.) 327, 8 Am. Dec. 653. See also, 906. John Soley & Sons v. Jones, 208 Mass. "' Kyle v. Kavanagh, 103 Mass. 356, 561, 95 N. E. 94. 4 Am. Rep. 560. To same effect, "^ Bridgewater Iron Co. v. Enter- Stong v. Lane, 66 Minn. 94, 68 N. W. prise Ins. Co., 134 Mass. 433. See 765; Briggs v. Watkins, 112 Va. 14, also, Hazard v. New England Marine 70 S. E. 551 (mistake as to the lo- ins. Co.. 1 Summ. (U. S.) 218; Har- cation of timber land). See also, vey Y. Harris, 112 Mass. 32; Page v. Harris v. Pepperell, L. R. 5 Eq. 1. Higgins, ISO Mass. 27, 22 N. E. 63, Where one purchases a lot at public 5 L. R. A. 152n ; Cutts v. Guild, 57 sale understanding the auctioneer to N. Y. 229; Irwin v. Wilson, 45 Ohio offer lot 25 when in fact he offered St. 426, IS N. E. 209 ; Reilly v. Gaut- lot 24, no valid contract was made ; 177 MISTAKE. § io6 authorized by the language used in the terms of the agreement.''^ If two parties bargaining do actually misunderstand each other, if their language is equivocal, and one is meaning to speak of one subject and the other of another, it is clear there is no contract; for there is no aggregatio mentium necessary to make one. If the words are clear and unequivocal neither party can say that he understood them in a different sense from what they plainly bear ; and if either party knows that the other understands him as speaking of one subject, or with one meaning, he will not be al- lowed to say that he had in mind another or intended a different meaning.^® § 106. As to nature or quality of subject-matter. — It may be stated as a general rule that a mistake merely as to the quality of the subject-matter unmixed with any other ele- ment is not sufficient to afford ground for the rescission of a contract or for the reformation of its terms. Such mis- takes are ordinarily deemed collateral in their nature and the error is one for which no relief is afforded either in law," or Sheldon v. Capron, 3 R. I. 171. Mis- takes as to the tract of land agreed upon (Page v. Higgins, ISO Mass. 27, 22 N. E. 63, 5 L. R. A. lS2n), or location of the boundary line thereto (Bigham v. Madison, 103 Tenn. 358, 52 S. W. 1074, 47 L. R. A. 267) may prevent the formation of any contract. ^ Teachout v. Clough, 143 Mo. App. 474, 127 S. W. 672. In the above case the alleged ambiguity arose oyer the meaning of the words "saw tim- ber" as used in an agreement ex- changing real estate. '= Oldham v. Kerchner, 79 N. Car. 106, 28 Am. Rep. 302n. "Citizens' Bank v. James, 26 La. Ann. 264. To same efifect, see Cleaveland v. Richardson, 132 U. S. 318, 33 L. ed. 384, 10 Sup. Ct. 100; Schurtz V. Romer, 82 Cal. 474, 23 Pac. 118; Dewey v. Whitney, 93 Fed. 533, 35 C. C. A. 414, affd. 85 Fed. 325; Grannis v. Quintard, 69 Fed. 206; Barker v. Northern Pac. R. Co., 65 Fed. 460 ; Hamblin v. Bishop, 41 Fed. 74; Williams v. Thwing Electric Co., 160 111. 526, 43 N. E. 595; McDonald v. Minnick, 147 111. 651, 35 N. E. Zdl; Post v. First Nat. 12— Contracts, Vol. I Bank, 38 111. App. 259; City R. Co. V. Citizens' St. R. Co. (Ind.) 52 N. E. 157 ; Smith v. Tewalt, 9 Ind. App. 646, 2>1 N. E. 294 ; German Sav. Bank V. Geneser, 116 Iowa 119, 89 N. W. 201; Kiburz v. Jacobs, 104 Iowa 580, IZ N. W. 1069; Bigelow v. Wilson, 99 Iowa 456, 68 N. W. 798; Wood v. Stedwell, 91 Iowa 224, 59 N. W. 28 ; Hecht V. Batcheller, 147 Mass. 335, 17 N. E. 651, 9 Am. St. 708; Bridge- water Iron Co. V. Enterprise Ins. Co., 134 Mass. 433; Miller v. Brooks, 109 Mich. 174, 66 N. W. 1092; Haeg V. Haeg, 53 Minn. 33, 55 N. W. 1114; Grinnell v. Wisconsin Cent. Co., 47 Minn. 569, 50 N. W. 891; Schields V. Hickey, 26 Mo. App. 194; Brong v. Spence, 56 Nebr. 638, 11 N. W. 54; Moore v. Scott, 47 Nebr. 346, (i(> N. W. 441 ; Stettheimer v. Killip, 75 N. Y. 282; White v. Richmond &c. R. Co., 110 N. Car. 4S6,_ IS S. R 197; Goldsmith v. Cincinnati, 14 Ohio C. C. 342; Seeley v. Citizens' Traction Co., 179 Pa. St. 334, 36 Atl. 229; Gormly v. Gormly, 130 Pa. St. 467, 18 Atl. 727; Pickett v. Fidelity & Casualty Co., 60 S. Car. 477, 38 S. E. 160, 629; Ruohs v. Third Nat. § io5 'contracts.' 178 equity.^^ Thus, where the defendant bought a horse under a mistake of fact as to the actual condition of the horse such error was held to be a mistake which in no manner effected the validity of the contract. The court said, "In a case where there is a mu- tual mistake of the parties as to the subject-matter of the contract, or the price or terms, going to show the want of a consensus ad idem, without which no contract can arise, such a defense may be made. But here the mistake of the defendants was in relation to a fact wholly collateral, and not affecting the essence of the contract itself. The vendee cannot escape from the obligation of their contract because they have been mistaken or disappointed in the quality of the article purchased. In the absence of a war- ranty the principle of caveat emptor applies, and the buyer takes the risk of quality upon himself."^* The mere fact that one signs a release in full of all dam- ages which have accrued or which may accrue for personal in- juries received in an accident, under a misapprehension as to the nature and extent of his injuries, does not in the absence of fraud or misrepresentation constitute such mistake as will avoid the re- lease.*" Mistakes as to quality of land,*^ usefulness of a ma- chine,''- or validity of municipal bonds purchased''^ have been held insufficient to affect the validity of the contract. And where a diamond worth seven hundred dollars was sold for one dollar, both parties to the sale having no knowledge as to the value of the stone and thought it to be a topaz, it has been held that the one selling the stone could not recover its possession and rescind the Bank, 94 Tenn. 57, 28 S. W. 303, =° Wheat v. Cross, 31 Md. 99, 1 Am. Gholson V. Finney (Tenn. Ch. App.), Rep. 28. 46 S. W. 345; Houston &c. R. Co. v. "Houston &c. R. Co. v. McCarty, McCarty, 94 Tex. 298, 60 S. W. 94 Tex. 298, 60 S. W. 429, S3 L. R. 429, 53 L. R. A. 507, 86 Am. A. 507, 86 Am. St. 854 ; Kane v. Ches- St. 854, revg. 21 Tex. Civ. App. ter Traction Co., 186 Pa. St. 145, 40 568, 54 S. W. 421; Coughran v. Atl. 320, 65 Am. St. 846; 67 Central Alderete (Tex. Civ. App.), 26 S. W. Law Journal. 109; Adams v. Pardue (Tex. Civ. "Citizens' Bank v. James, 26 La. App.), 36 S. W. 1015; Kowalke v. Ann. 264; Moore v. Scott, 47 Nebr. Milwaukee Elec. &c. Light Co., 103 346, 66 N. W. 441; Crist v. Dice, 18 Wis. 472, 79 N. W. 762, 74 Am. St. Ohio St. 536. 877; Wood v. Boynton, 64 Wis. 265, *= Chanter v. Hopkins, 4 M. & W. 25 N. W. 42, 54 Am. Rep. 610n. 399. 'ntoore V. Scott, 47 Nebr. 446, 66 "Ruohs v. Third Nat. Bank, 94 N. W. 441. Tenn. 57. 28 S. W. 303. 179 MISTAKE. § io6a sale.** It will be observed that in this case there could be no ques- tion as to the identity of the thing sold. The question as to the nature of the thing sold does not appear te have been raised or if raised was not decided and herein lies a distinction which in some cases may be drawn. Thus, where the contract for the sale of a cow was entered into, both parties believing her to be barren, which supposition proved to be untrue, it was held that the mis- take was not as to the mere quality of the animal sold, but went to the very nature of the thing and that the vendor had a right to rescind the agreement." § 106a. Mistake as to quantity. — A mistake as to the quan- tity of something which is contracted for by generic description "Wood V. Boynton, 64 Wis. 265, 25 N. W. 42, 54 Am. Rep. 610n. An eminent writer on this subject has formulated four general rules which govern mistakes as to quality. They are first, on the sale of a specified article, unless there be a warranty, the purchaser is bound to take the article bought, even though it does not pes- 1 sess the quality he presumed it to ' possess. Each takes the consequences. The purchaser may get a better thing than the vendor intended to sell, but he may get a worse thing than he intended to buy. In neither case is the validity of the contract affected. Smith v. Hughes, L. R. 6 Q. B. 597. Second, should the seller have knowledge that the purchaser believes that the article possesses a quality which it does not possess, the contract is binding so long as the seller does nothing to de- ceive the purchaser. In the absence of a confidential relation the seller is under no obligation to correct the er- roneous impression of the purchaser. Smith V. Hughes, L. R. 6 Q. B. 597. Third, in case the purchaser over- estimates the quality of the article sold and believes the seller intends to sell an article of the quality the pur- chaser desires to buy, the contract is binding, the mere apprehension of the purchaser of the extent of the seller s promise unknown to tKe seller does not defeat the validity of the agree- ment. The purchaser might have pro- tected himself by inserting the terms which he wished to form a part of the contract. Smith v. Hughes, L. R. 6 Q. B. 597; Scott v. Littledale. 8 E. & B. 815. Fourth, where the buyer be- lieves the article possesses a certain quality and thinks the seller intends to sell an article of that quality, and the seller knows that the purchaser is mistaken not only as to the quality of the goods but also the extent of the promise and allows this mistake to continue, the contract is void. In this instance the error is not one of judg- ment but is an error in regard to the intention of the seller. It is the knowledge that the vendee has mis- taken the quality promised that viti- ates the sale. Anson on Contracts (4th ed.) 132; Smith v. Hughes, L. R. 6 Q. B. 597; Hammond on Con- tracts, 113. "Sherwood v. Walker, 66 Mich. 568, 33 N. W. 919, 11 Am. St. 531. See also, Morgan v. Owens, 228 111. 598, 81 N. E. 1135, in which it is held that a grantor was ignorant of the right of title that he had in the prop- erty, he could not be held to have in- tended it as a gift where he conveyed it without consideration. In this case, however, it appeared that a confiden- tial relation existed between father and son and that it was the duty of the son under the circumstances _ to disclose every essential fact relative to the agreement. Also Tolley v. Po- teet, 62 W. Va. 231, 57 S. E. 811, where it is held that if an election is made in ignorance or under a mistake as to the real nature of their proper- § io6a CONTRACTS. 1 80 (whether alone or in connection with an individual characteriza- tion) may avoid the agreement for the reason that there never was any real consent because the minds of the parties never met.^° If the parties to a contract for the sale of land estimate the quan- tity at so much and the amount of land has a direct influence on the price to be paid or was a controlling motive in entering into the contract, equity will grant relief in case there is a material ex- cess or deficiency, by compelling a reconveyance of the excess,*^ or fixing an equitable compensation,*^ or rescinding the agreement/'' Specific performance has been refused in several instances where the mistake was not mutual but was caused by the act of the other party.^" So, on the other hand, where the purchaser knew that the vendor was making a mistake as to the size of the lot to be conveyed," or where it would be inequitable to enforce the agree- ment.°^ However, where a tract of land is sold as a whole the ties or as to the nature of the elector's rights, such mistake will be regarded as one of fact rather than of law and the election held not binding, a court of equity will permit it to be revoked, unless the rights of third parties have intervened which would be interfered with by the revocation. In this case one of the parties was overreached and taken advantage of by the other. "Henkel v. Pape, L. R. 6 Ex. 7. In the above case the defendant or- dered three rifles. The telegraph agent, through mistake, transmitted the order for fifty rifles. The pur- chaser accepted three of the fifty and refused to receive the others. It was held that the telegrapher was the pur- chaser's agent only to transmit the message as delivered to him. Singer V. Grand Rapids Match Co., 117 Ga. 86, 43 S. E. 755. In the above case owing to an ambiguity in the offer quoted the purchaser thought he was buying five carloads of matches while the seller understood he was selling one carload. Devine v. Edwards, 101 111. 138. Mutual mistake as to the capacity of a milk can. "Shipp V. Swann, 2 Bibb. (Ky.) 82 ; Miller v. Craig, 83 Ky. 623, 4 Am. St. 179; Gilmore v. Morgan, 2 J. J. Marsh. (Ky.) 65. ** Winston v. Browning, 61 Ala. 80 ; Folsom V. Howell, 94 Ga. 112, 21 S. E. 136; McCormick v. Jones (Ky.), 22 S. W. 881 ; Weart v. Rose, 16 N. J, Eq. 290; Marvin v. Bennett, 8 Paige (N. Y.) 312; Hull v. Cunningham, 1 Mumf. (Va.) 330. The measure of damages is the difference between the estimated and actual quantity. Hays v. Hays, 126 Ind. 92, 25 N. E. 600, 11 L. R. A. 376n. " Harris v. Pepperell, L. R. 5 Eq. 1 ; Trout V. Goodman, 7 Ga. 383. Contra, Iverson v. Wilburn, 65 Ga. 103 ; Baird v. Beall (Ky.), 21 S. W. 236, 14 Ky. L. 653; Megie v. Bennett, 51 N. J. Eq. 281, 27 Atl. 917; Irwin v. Wilson, 45 Ohio St. 426, IS N. E. 209; Ladd v. Pleasants, 39 Tex. 415 ; Yost V. Mallicote, 11 Va. 610; Pratt v. Bowman, Zl W. Va. 715, 17 S. E. 210. ""Coles V. Bowne, 10 Paige (N. Y.) 526. Mistake caused by manner in which auctioneer made the sale. ■^ Chute V. Quincy, 156 Mass. 189, 30 N. E. 550. °'In the following cases property not intended to be conveyed was, through a mistake in the description, included in the contract. Neap v. Ab- bott, C. P. Cooper 333 ; Richards v. North London R. Co., 20 Week. Rep. 194; Mansfield v. Sherman, 81 Maine 365, 17 Atl. 300. ^S^ MISTAKE. § 107 amount may be immaterial even though greater than the vendor supposed, and the contract be valid and enforcible." § 107. As to price. — Mistakes as to price are closely allied to those relating to quantity. If the mistake as to price is such that it prevents the minds of the parties from meeting there is no contract even though each party believes that the contract as in- terpreted by him is concluded, when it is repudiated or rescinded on the discovery of the mistake prior to the delivery and ac- ceptance of the property." This rule has been held applicable to a price quoted by an agent through mistake, as where the wrong freight rate was given a shipper. It was held that the railroad could recover the difference between the price actually paid and the charge that should have been made.°^ And when no contract is formed because of the failure of the minds of the parties to meet, the written agreement cannot be refomied to express the understanding of either of the parties,^' and is subject to cancella- tion or rescission only.^^ Rescission is usually the only remedy in those cases where the parties can be placed in statu quOj in case there has been performance in whole or in part.^^ If the parties ■^ Davis V. Parker, 14 Allen (Mass.) the minds of the parties never met 94. and that no contract was formed °' Phillips V. Bistolli, 2 Barn. & C. since each party was in reality agree- 511, 3 Dowl. & R. 822, 26 Rev. Rep. ing to something different notwith- 433 ; Wilkinson v. Williamson, Id Ala. standing the apparent mutual assent. 163 ; Rovegno v. Defferari, 40 Cal. 459. Estey Organ Co. v. Lehman, 132 Wis. Offer to sell for $850 understood as 144, 111 N. W. 1097, 11 L. R. A. (N. an offer to sell for $750. Werner v. S.) 254, 122 Am. St. 951. (Sale of Rawson, 89 Ga. 619, 15 S. E. 813. In organ, mistake as to price.) See also, the above case the vendor understood Everson v. International Granite Co., that he offered the lots at $1,200 65 Vt. 658, 27 Atl. 320. Compare the for each, while the vendee understood foregoing with S. F. Bowser & Co. v. that $2,500 covered the cost of both Marks, 96 Ark. 113, 131 S. W. 334, lots. Rupley v. Daggett, 74 III. 351. 32 L. R. A. (N. S.) 429. Offer understood to be $65 when in °° Rowland v. New York &c. R. Co., fact it was $165. Muraraenhoff v. 61 Conn. 103, 23 Atl. 755, 29 Am. St. Randall, 19 Ind. App. 44, 49 N. E. 40. 175. To same effect. Gulf &c. R. Co. In this case the defendant intended to v. Dawson (Tex. Civ. App.), 24 S. W. offer the plaintiff potatoes at 55 cents 566; Hartford &c. R. Co. v. Jackson, per bushel ; through mistake the offer 24 Conn. 514, 63 Am. Dec. 177. was transmitted 35 cents per bushel. '" Bancharel v. Patterson, 64 Minn. The defendant accepted. The pota- 454, 67 N. W. 356. toes were shipped. After receipt of " Werner v. Rawson, 89 Ga. 619, 15 a part of the potatoes, the mistake S. E. 813; Bancharel v. Patterson, 64 was discovered. In a suit brought to Minn. 454, 67 N. W. 356. recover the difference between 35 and "' Norton v. Bohart, 105 Mo. 615, 55 cents per bushel, it was held that 16 S. W. 598. 107 CONTRACTS. 182 cannot be placed in statu quo the reasonable value of the goods furnished or services rendered may be recovered/" It has been held, however, that where the goods are received and retained after the mistake in price has been discovered, and notice given thereof the purchaser will be deemed to have accepted at the price at which the goods were billed and not at the price origin- ally quoted.*" In the foregoing cases the mistake was either obvious or the circumstances were such that the mistake was or should have been known by the purchaser. The cases were in fact decided on the theory that a person cannot snap up an offer which he must have known to be a mistake."^ Con- sequently if the error in computing the price is known,"^ or the circumstances are such that the purchaser should have known it,*^ or if the mistake is excusable,"* or if nO' completed contract °' West V. De Wezele, 4 Post. & F. 596; Peerless Glass Co. v. Pacific Crockery & Tinware Co., 121 Cal. 641, 54 Pac. 101; Rowland v. New York &c. R. Co., 61 Conn. 103, 23 Atl. 7SS, 29 Am. St. 175; Butler v. Moses, 43 Ohio St. 166, 1 N. E. 316; Gulf &c. R. Co. V. Dawson (Tex. Civ. App.), 24 S. W. 566. Recovery is not had on the contract. It is invalid. Re- covery is for the quantum meruit of the services. Vickery v. Ritchie, 202 Mass. 247, 88 N. E. 835, 26 L. R. A. (N. S.) 810. "" Cunningham Mfg. Co. v. Roto- graph Co., 30 App. D. C. 524, 15 L. R. A. (N. S.) 368n; Mummenhofif v. Randall, 19 Ind. App. 44, 49 N. E. 40 ; Fear v. Jones, 6 Iowa 169; FuUerton V. Dalton, 58 Barb. (N. Y.) 236; Estey Organ Co. v. Lehman, 132 Wis. 144, 111 N. W. 1097. 11 L. R. A. (N S.) 254n, 122 Am. St. 951. See, how- ever, Webster v. Cecil, 30 Beav. 62; Shelton v. Ellis, 70 Ga. 297; Griffin v. O'Neil, 48 Kans. 117, 29 Pac. 143, revg. 47 Kans. 116, 27 Pac. 826; Ed- wards &c. Lumber Co. v. Baker, 2 N. Dak. 289, 50 N. W. 718; Harran V. Foley, 62 Wis. 584, 22 N. W. 837. "" Webster y. ^ Cecil, 30 Beav. 62. See also, Plaintiff agreed to cut cer- tain timber for the defendant and by mistake the price to be paid for such services was written as $10 for a 1,000 feet instead of $1, per 1,000 feet. The court stated that if the plaintiff was ignorant of the mistake, he could recover, but the evidence was held to show that plaintiff had knowledge of the mistake and could not recover. It was also held that as the plaintiff had knowledge of the mis- take it was unnecessary for the de- fendant to inform him of the error as the law never imposes a needless obli- gation. Mercer v. Hickman-Ebbert Co., 32 Ky. L. 230, 105 S. W. 441. See cases cited ante, note 60. "' Shelton v. Ellis, 70 Ga. 297 ; Ever- son V. International Granite Co., 65 Vt. 658, 27 Atl. 320. *" Cunningham Mfg. Co. v. Roto- graph Co., 30 App. D, C. 524, IS L. R. A. (N. S.) 368, 11 Am. & Eng. Ann. Qas. 1147; Buckberg v. Wash- burn-Crosby Co., 115 Mo. App. 701, 92 S. W. 733; Butler v. Moses, 43 Ohio St. 166. 1 N. E. 316. See also ante, note 61. " School Com'rs v. Bender, 36 Ind. App. 164, 72 N. E. 154. Where a party contracts to do certain work based on estimates prepared by the adversary party's engineer, he may, in the absence of negligence on his part, have it canceled because of mutual mistake when induced by erroneous estimates by the adversary party's en- gineer of the amount of work to be done. Long v. Athol, 196 Mass. 497, 82 N. E. 665, 17 L. R. A. (N. S.) 96. 183 MISTAKE. § 107 has in fact been made,"'' relief will usually be granted the one making the error. Thus, it has also been held that a purchaser cannot defeat an action brought to recover the purchase price of goods sold and delivered where it appears that, at the time the contract was entered into, the seller made a mistake in com- puting the total cost, and the buyer was experienced in the business and might easily have ascertained for himself the total amount. "^ On the other hand, where the mistake is not obvious and the purchaser is not informed of the error before re- ceiving or accepting the goods and the contract is made and the goods accepted by the purchaser in entire ignorance of the mistake and he in no way contributes thereto, the contract will not be avoided because of the vendor's error."' Thus where a mistake was made in adding a column of figures the court said, "a mistake which will justify relief in equity must affect the sub- stance of the contract, and not a mere incident or the inducement for entering into it. The mistake of the appellants did not relate to the subject-matter of the contract, its location, identity or amount, and there was neither belief in the existence of a fact which did not exist nor ignorance of any fact material to the con- tract which did exist. The contract was exactly what each party understood it to be and it expressed what was intended by each. If it can be set aside on account of the error in adding up the amounts representing the selling price, it could be set aside for a mistake in computing the percentage of profits which appellants intended to make, or on account of a mistake in the cost of the "^ Neill V. Midland R. Co., 20 L. T. given and no itemized statement fur- (N. S.) 864, 17 Week. Rep. 871; Mof- nished, the agent made a mistake of fett &c. Co! V. Rochester, 178 U. S.. over $1,000. It was held that this 373, 20 Sup. Ct. 957, affd. 82 Fed. error did not affect the contract, did 255,' revg. 91 Fed. 28. not go to its substance and afforded "Dalh'off Const. Co. v. Block, 157 no grounds for its rescission or Fed 227, 85 C. C. A. 25, 17 L. R. A. avoidance. Adkins & Co. v. Campbell, (N. S.) 419. 6 Pen. (Del.) 96, 64 Atl. 628. See "Tatum V Coast Lumber Co., 16 also. Griffin v. O'Neil, 48 Kans. 117, Idaho 471, 101 Pac. 957, 23 L. R. A. 29 Pac. 143, revg. 47 Kans. 116, 27 (N. S.) 1109n. In this case the de- Pac. 826. Here it is held there can fendant furnished plaintiff's agent be no recovery by the vendor unless with a list of machinery desired by the mistake is mutual or the vendee him and asked for the company's knowingly took advantage of the price. This price was furnished by vendor's error, the agent, the gross amount being § I08 CONTRACTS. 1 84 lumber to them, or any other miscalculation on their part. If equity would relieve on account of such a mistake, there would be no stability in contracts.""^ § 108. As to value. — The mere fact that parties to a con- tract of sale may be mistaken as to the value of the thing sold does not defeat the validity of the sale so long as the defendant stands on equal footing and the mistake arises from a misconception of the intrinsic worth of the articles sold.*^" However, where the value of the thing sold depends upon some extrinsic fact or upon the nature of the thing sold, both parties being ignorant as to such facts or the nature of the thing sold and neither party had means of discovering the truth, equity may grant relief." But if the information is equally open to both parties and might have been obtained by the exercise of ordinary diligence, neither can plead ignorance or mistake and thus attempt to avoid the agreement.''^ A mistake as to the value of services to be rendered is not neces- sarily ground for the avoidance of the agreement. On the con- trary where the facts are equally open to the observation of both °^ Steinmeyer v. Schroeppel, 226 III. specified sura. Later it was discov- 9, 80 N. E. 564, 117 Am, St. 224n, 10 ered that the bookkeeper had embez- L. R. A. (N. S.) 114n. To the same zled $4,500 of the firm's funds. This effect, Crilly v. Board of Education, sum was recovered by the purchasing 54 III. App. 371 ; Douglas v. Grant, 12 partner from the bondsmen of the 111, App, 273 ; Boeckler Lumber Co. bookkeeper. The retired partner then V. Cherokee Realty Co., 135 IVlo. App. brought suit for one-half the amount 708, 116 S. W. 452; Chaplaine Realty recovered. Neither partner knew of &c. Co. V. Philip Gruner &c. Co., 137 the mistake at the time the sale was Mo. App. 451, 118 S. W. 665; Brown made. Held there was no mutual V. Levy, 29 Tex. Civ. App. 389, 69 S. mistake that would entitle plaintiff to W. 255. recover. Cohen v. Haberman, 126 ™ Smith v. Hughs, L. R. 6 Q. B. App. Div. (N. Y.) 710, 111 N. Y. S. 597 ; Juzan v. Toulmin, 9 Ala. 662, 44 67. Am. Dec. 448; Smith v. Tewalt, 9 " Hore v. Becker, 12 Sim. 465; Bo- Ind. App, 646, 37 N. E. 294; Citizens' gardus v. Grace, 78 Fed, 856; Fritz- Bank V. James, 26 La. Ann. 264; ler v. Robinson, 70 Iowa 500, 31 N. Hecht V. Batcheller, 147 IVlass. 335, W. 61 ; Montgomery Co. v. American 17 N. E. 651, 9 Am. St. 708; Moore Emigrant Co., 47 Iowa 91; Sherwood v Scott 47 Neb. 346, 66 N. W. 441 ; v. Walker, 66 Mich. 568, 33 N, W. 919, Hunter v, Goudy, 1 Ohio 449; Adams 11 Am. St. 531; Mays v. Dwight, 82 v. Pardue (Tex. Civ. App.), 36 S. W. Pa. St. 462; Bluestone Coal Co. v. 1015 ; Warner v. Daniels, 1 Woodb. Bell, 38 W. Va. 297, 18 S. E. 493. See & JM. (U. S.) 90; Person v. Sanger, ante, §§ 103 et seq., Nature or quality 1 Woodb. & M. (U. S.) 138; Hough of the subject-matter. V. Richardson, 3 Story (U. S.) 659; " Dortic v. Dugas, 55 Ga. 484; Wood V. Bovnton, 64 Wis. 265, 25 N. Griffin v. O'Neil, 48 Kans. 117, 29 W. 42, 54 Am, Rep. 610n. One part- Pac. 143 ; Ludington v. Ford, 33 Mich, ner sold his interest to another for a 123; Hecht v. Batcheller, 147 Mass. 1 8s MISTAKE. § 109 parties and no advantage whatever is taken by the party agreeing to perform the services, the contract will not be set aside merely because the one agreeing to perform made a mistake as to the value of the services to be rendered." § 109. In execution of writing. — Quite frequently parties to an agreement have reached an oral understanding and then at- tempt to reduce it to writing. In so doing through some mistake on the part of the scrivener or on the part of the parties in the selection of words used, the writing fails to give expression to the contract it was intended to evidence. Such an error does not render the contract void because the minds of the parties never met, for their minds did in fact meet, but the agreement as written merely fails to give expression to the real agreement. Against errors of this nature equity will grant relief in a proper case by permitting them to be set up as a defense, or by canceling or re- forming the written contract so as to make it conform to the real intention of the parties.''* It is apparent, however, that the writ- ing will not be reformed unless there was a prior agreement, so 335, 17 N. E. 651, 9 Am. St. 708; and conveyed to the dock designated. Sample v. Bridgforth, 72 Miss. 293, The owners refused to pay more than 16 So. 876; Stettheimer v. KiUip, 75 the contract price. Tlie court held N. Y. 282 ; Sankey v. First Nat. Bank, that they would not be bound to pay 78 Pa. St. 48; Ruohs v. Third Nat. a greater amount than the agreed Bank, 94 Tenn. 57, 28 S. W. 303. See price notwithstanding the libellant ex- ante, § 107, Price — Mistakes in com- pended $13,800.22 in raising the ves- putation. sel and conveying her to dock. An "The Stanley v. Miner, 172 Fed. engineer's estimate of the value of 486. In this case the above named certain work may be corrected when vessel had been wrecked and was ly- it clearly appears that the engineer ing on her side in the shoals. The made a mistake. Cleveland v. Griffin, owner and the one who subsequently 27 Ohio C. C. 167. agreed to raise her hired a diver and " Against the mistake of both par- attempted to ascertain the extent of ties, by which, in the effort to reduce her injuries but owing to her position the agreement which they have made and the condition 6f the water were to writing, they mistake its terms so unable to gain the desired informa- that the writing does not represent tion. The parties subsequently en- the real contract, equity will grant tered into an agreement whereby the relief. Canedy v. Marcy, 13 Gray owner agreed to pay $2,750 for having (Mass.) i7i; McGraw v. Muma, 164 the vessel raised and conveyed to Mich. 117, 129 N. W. 20, 17 Detroit either New York or Philadelphia. This Leg. N. 1037 ; Albany City Sav. Inst, the libelant undertook to do and in a v. Burdick, 87 N, Y. 40; Kilmer v. short time discovered that the injuries Smith, 77 N. Y. 226, 33 Am. Rep. 613 ; were much more extensive than sup- Kelley v. Ward, 94 Tex. 289, 60 S. posed and gave notice that he would W. 311 ; Silbar v. Ryder, 63 Wis. 106, continue with the work but that he 23 N. W. 106; Menomonee Locomo- would look to the owner for extra five Mfg. Co. v. Langworthy, 18 Wis. compensation. The vessel was raised 444. The real contract may be alleged § 109 CONTRACTS. 1 86 certain and definite in its terms that a court might enforce it." Any other holding would result in making a contract for the par- ties which they themselves did not make.'° Before the contract as written can be reformed there must be an agreement to which it should conform.'" It must not only be shown that the writing does not give expression to the real contract but the actual con- tract must also be shown.'' If the prior agreement would be un- enforcible because of some legal disability on the part of one of the parties/* or be void because of some statute or positive rule of law,'" the agreement will not be enforced. However, the statute of frauds does not defeat the reformation of a contract merely be- cause the prior agreement was not in writing. The statute is in- tended to prevent, not to promote, fraud and must be so con- strued. Consequently it has been held that deeds of conveyance of land may be reformed notwithstanding the fact that the con- tract of sale was oral.*** and proved. Germer v. Gambill, 140 Ky. 469, 131 S. W. 268. Equity inter- feres to correct an instrument only as between the original parties, or those claiming under them in privity. Adams v. Baker, 24 Nev. 162, 51 Pac. 252, 77 Am. St. 799n ; Blackie v. Clark, IS Beav. 595. See post, § 112. " Thompson v. Phoenix Ins. Co., 25 Fed. 296. "Grant Marble Co. v. Abbot. 142 Wis. 279, 124 N. W. 264. "Robertson v. Walker, 51 Ala. 484. A contract Virill not be reformed if such reformation would have the ef- fect of supplying the contract with a material and essential element rather than that of correcting a mistake that has been made in the contract itself. Allen v. Kitchen, 16 Idaho 133, 100 Pac. 1052; Nelson v. Davis, 40 Ind. 36^; Citizens' Nat. Bank v. Judy, 146 Ind. 322, 43 N. E. 259; St. Anthony Falls Water Power Co. v. Merriman, 35 Minn. 42, 27 N. W. 199; j:ilison v. Fox, 38 Minn. 454, 38 N. W. 358; Clark V. Blumenthal, 53 N. Y. Super. Ct. 211; Ray v. Durham County, 110 N. Car. 169, 14 S. E. 646 ; Mitchell v. Holraan, 30 Ore. 280, 47 Pac. 616; Mills V. Evansville Seminary, 47 Wis. 354, 2 N. W. 550. " Guilmartin v. Urquhart, 82 Ala. 570, 1 So. 897 ; Slobodisky v. Phcenix Ins. Co., 52 Nebr. 395, 72 N. W. 483 ; Grant Marble Co. v. Abbot, 142 Wis. 279, 124 N. W. 264. "Holland v. Moon, 39 Ark. 120; Leonis v. Lazzarovich, 55 Cal. 52; Heaton v. Fryberger, 38 Iowa 185 ; Gebb v. Rose, 40 Md. 387; Montana Nat. Bank v. Schmidt, 6 Mont. 609, 13 Pac. 382; Cannon v. Beatty, 19 R. I. 524, 34 Atl. 1111; Williams v. Cudd, 26 S. Car. 213, 2 S. E. 14, 4 Am. St. 714. " Osborn v. Phelps, 19 Conn. 63, 48 Am. Dec. 133; Andrews Bros. Co. v. Youngstown Coke Co., 39 Fed. 353; Williamson v. Hitner, 79 Ind. 233. '"Wall v. Arrington, 13 Ga. 88; Hunter v. Bilyeu, 30 111. 228 ; Jones v. Sweet, 77 Ind. 187; Morris v. Stern, 80 Ind. 227; Louisville &c. R. Co. v. Power, 119 Ind. 269, 21 N. E. 751; Gelpcke &c. Co. v. Blake, 15 Iowa 387, 83 Am. Dec. 418 ; Conaway v. Gore, 24 Kans. 389; Noel v. Gill, 84 Ky. 241, 1 S. W. 428; Turpin v. Marksberry, 3 J. J. Marsh. (Ky.) 622; Lew v. Ward, 33 La. Ann. 1033; Bond v. Dorsey, 65 Md. 310, 4 Atl. 279; Popp- lein V. Foley, 61 Md. 381; Glass v. Hulbert, 102 Mass. 24, 3 Am. Rep. 418; Goode v. Riley, 153 Mass. 585, 28 N. E. 228 ; Bellows v. Stone, 14 N. H. 175; Prior v. Williams. 3 Abb. App. Dec. (N. Y.) 624; Gillespie v. i87 MISTAKE. § 109 To justify the reformation of a contract for mistake in its execution the mistake must be mutual. For, as has been seen, the writing will not be reformed unless there is a valid prior agreement. Consequently if the mistake is not mutual there could be no prior agreement to which the instrument could be made to conform.*^ It is not every mistake, error, or misconception that will justify the reformation of a contract. The mistake must be about or material to the agreement.*^ But the rule that the mistake must be mutual in order to entitle one or both the parties to the contract to set up mistake as a ^efense, or as ground for cancellation or reformation of the contract does not apply where one of the parties was mistaken and the other guilty of fraud or inequitable conduct.*^ Moon, 2 Johns. Ch. (N. Y.) 585, 7 Am. Dec. S59n ; Stites v. Wiedner, 35 Ohio St. 555 ; Smith v. Butler, 11 Ore. 46, 4 Pac. 517; Schettiger v. Hopple, 3 Grant Cas. (Pa.) 54; Bartle v. Vos- bury, 3 Grant Cas. (Pa.) 277; Huss V. Morris, 63 Pa. St. 367; Bumpas v. Zachary (Tex. Civ. App.), 34 S. W. 672; Goodell v. Field, 15 Vt. 448; Petesch v. Hambach, 48 Wis. 443, 4 N. W. 565. On this subject see Allen V. Kitchen, 16 Idaho 133, 100 Pac. 1052. "'Douglas V. Grant, 12 III. App. 273; Dulany v. Rogers, SO Md. 524; Diman v. Providence &c. R. Co., 5 R. I. 130. See ante note 76 infra. See also, Keepter v. Force, 86 Ind. 81. '' Moffett Co. V. Rochester, 82 Fed. 255; New York Life Ins. Co. v. Mc- Master, 87 Fed. 63; Ruffner v. Mc- Connel, 17 111. 212, 63 Am. Dec. 362; Whitesides v. Taylor, 105 111. 496; Douglas V. Grant, 12 111. App. 273 ; Purvines v. Harrison, 151 111 219, 37 N. E. 705 ; Carskaddon v. South Bend, 141 Ind. 596, 39 N. E. 667, 41 N. E. 1 ; Marshall v. Westrope, 98 Iowa 324, 67 N. W. 257 ; Bigelow v. Wilson, 99 Iowa 456, 68 N. W. 798; Reeder v. Gorsuch, 55 Kans. 553, 40 Pac. 897; Andrews v. Andrews, 81 Mame 337, 17 Atl. 166; Dulany v. Rogers, 50 Md. 524; Stockbridge Iron Co. v. Hudson Iron Co., 102 Mass. 45 ; Clark v. Hig- gins, 132 Mass. 586; Chute v. Qumcy, 156 Mass. 189, 30 N. E. 550; White v. Port Huron &c. R. Co., 13 Mich. 356; Burns v. Caskey, 100 Mich. 94, 58 N. W. 642; Benson v. Markoe, 37 Minn. 30, 33 N. W. 38, 5 Am. St. 816; Mar- tini V. Christenson, 60 Minn. 491, 62 N. W. 1127; Bartlett v. Brown, 121 Mo. 353, 25 S. W. 1108; Home Fire Ins. Co. V. Wood, 50 Nebr. 381, 69 N. W. 941 ; Welles v. Yates, 44 N. Y. 525; Ranney v. McMullen, 5 Abb. N. Cas. (N. Y.) 246; Fames Vacuum Brake Co. v. Prosser, 88 Hun (N. Y.) 343, 34 N. Y. S. 398; Smith v. Mackin, 4 Lans. (N. Y.) 41; Ramsey v. Smith, 32 N. J. Eq. 28; Green v. Stone, 54 N. J. Eq. 387, 34 Atl. 1099, 55 Am. St. 577; Fehlberg v. Cosine. 16 R. I. 162; Norman v. Norman, 26 S. Car. 41, 11 S. E. 1096; Webster v. Stark, 10 Lea (Tenn.) 406; Lott v. Kaiser, 61 Tex. 665; Farley v. Des- londe, 69 Tex. 458, 6 S. W. 786; Har- vey's Case, 13 Ct. CI. (U. S.) 322; Fishack V. Ball, 34 W. Va, 644, 12 S. E. 856; Coates v. Buck, 93 Wis. 128, 67 N. W. 23 ; St. Clara Female Acad- emy v. Rockford Ins. Co., 93 Wis. 57, 66 N. W. 1140. ""Higgins v. Parsons, 65 Cal. 280, 3 Pac. 881; Wilson v. Moriarty, 88 Cal. 207, 26 Pac. 85; Essex v. Day, 52 Conn. 483; Wyche v. Greene, 26 Ga. 415; Bergen v. Ebey, 88 111. 269; Roszell V. Roszell, 109 Ind. 354, 10 N. E. 114; Williams v. Hamilton, 104 Iowa 423, 73 N. W. 1029, 65 Am. St. 47Sn; Manatt v. Starr, 72 Iowa 677 34 N. W. 784; Germer v. Garabill, 140 Ky. 469, 131 S. W. 268; Kilmer v. 109 CONTRACTS. 1 88 Equity will also relieve against mistakes made by the scrivener where he fails to draw up the agreement in accordance with instructions, the mistake being deemed the mistake of both.^* Thus where the parties to a deed intended that a fee simple should be conveyed, but the word "heirs" was omitted, so that only a life estate was conveyed, a reformation of the deed will be decreed, although the omission arose from a mistake of law made by the scrivener.*' The omission of the scrivener from a lease executed by an illiterate man, who could not speak English, of a material portion of the consid- eration, which the lessor believed to be inserted therein, is ground for reforming the lease.*" So, also, it has been decided in Ken- Smith, n N. Y, 226, 33 Am. Rep. 613 ; Leonard v. Southern Power Co. (N. Car.), 78 S. E. 1061; McCormick Harvesting Mach. Co. v. Woulph, 11 S. Dak. 2S2, 76 N. W. 939. One of limited intelligence and inability to read English, who, in the absence of fraud practiced upon him, executes an instrument, comes within the rule that mere ignorance of the contents of an instrument which a party volun- tarily executes is not sufficient ground for setting it aside if ultimately the paper is found to be different from what he supposed it to be. Atlas Shoe Co. V. Bloom, 209 Mass. S63, 95 N. E. 952. "Hartford &c. Ore Co. v. Miller, 41 Conn. 112; Wooden v. Haviland, 18 Conn. 101 ; Stedwell v. Anderson, 21 Conn. 139; Rogers v. Atkinson, 1 Ga. 12 ; Nowlin v. Pyne, 47 Iowa 293. An allegation to the effect that cer- tain timber was bought, and that by mutual mistake of the parties and the scrivener, the agreement specified only a part of the timber, sufficiently shows the mistakes existed at the time the agreement was made. Doell v. Schrier, 36 Ind. App, 253, 75 N, E. 600; Rice v. Hall (Ky.), 19 Ky. L. 814, 42 S. W. 99; Germer v. Gam- bill, 140 Ky. 469, 131 S. W. 268; Can- edy V. Marcy, 13 Gray (Mass.) Z1Z; Stines V. Hays, 36 N. J. Eq. 364; Heblerv. Brown, 18 Misc. (N. Y.) 395 ; Linton v. Unexcelled Fireworks Co., 128 N. Y, 672, 28 N. E. 580; Born v. Schrenkeisen, 110 N. Y. 55, 17 N. E. 339; Silbar v. Ryder, 63 Wis. 106, 23 N. W. 106. «> Brock v. O'Dell, 44 S. Car. 22, 21 S. E. 976. ^ Neuenberger v. Neuenberger, 16 Ky. L. 710, 29 S. W. 617. "It is claimed in this answer that furnish- ing the vegetables was only a part consideration for the lease, and the proof, as already stated, shows such to have been the case. The father was advanced in years, is an ignorant and illiterate German, cannot speak the English language so as to be un- derstood, and when signing the lease beHeved that all the stipulations of the agreement had been inserted by the draftsman, who seems to have concluded that the essential part of the lease was a mere private agree- ment between the parties, and, there- fore, not necessary to be reduced to writing. We are of the opinion, how- ever, that the lease ought not to be canceled, but the stipulations should be inserted as herein indicated, re- forming its terms so as to express the true intent and meaning of the parties — that, in consideration of the lease the lessee binds himself to fur- nish the table of his father and mother with food, such as is suited to their condition during their lives, including not only vegetables, but their meat, bread and groceries; also fuel for their room. If the appellee is not willing to accept the terms in- dicated, the chancellor will cancel the lease, and in doing so will charge the I §9 MISTAKE. § IIO tucky that where several successive renewal notes stated that the place of payment was the "German National Bank" and it was shown that the parties intended to make all renewal notes pay- able at that place, a mistake in drafting a subsequent renewal note, making it payable at "said bank," the note containing no more definite designation of the place of payment may, in a suit be- tween the original parties, be corrected by inserting the omitted words "German National."" This decision is in accordance with the general rule that wherever an instrument which is intended to carry into execution an agreement previously made, but which, by mistake of the draftsman either as to law or fact, does not fulfil that intention, or violates it, equity will correct the mistake, and compel the parties to comply with the agreement according to its terms.** § 110. Negligence. — As has been seen, equity will grant relief against a mistake of fact; but this general statement must usually be qualified by adding, when the error is of such a nature that it could not, by reasonable diligence, have been avoided at the time. Equity will not relieve against mistakes occasioned by inexcusable negligence.*" Ordinary diligence and prudence must be exercised."" Consequently when a person able to read executes a contract without reading the same or is otherwise guilty of negligence, he cannot avoid liability on the ground that he was mistaken as to its contents, no fraud or misrepresentation having been practiced on him."^ If one negligently signs a deed appellee with no rent nor the appel- 39 S. E. 400, 84 Am. St. 267. Espe- lant with any improvements. An cially where the other party will ob- amended petition should be filed by tain no unconscionable advantage, the appellant to meet the proof of- Bibber v. Carville, 101 Maine 59, 63 fered." Atl. 303, IIS Am. St. 303. *' German Nat. Bank v. Louisville '"' Williamson v. Hitner, 79 Ind. &c. Tallow Co., 97 Ky. 34, 16 Ky. L. 233. This rule prevails not only 881, 29 S. W. 882. when the rights of third parties have ^ Story on Equity Jurisprudence, § intervened but between the original S. Scales V. Ashbrook, 1 Mete. (Ky.) parties. Robinson v. Glass, 94 Ind. 358. Citing Inskoe v. Proctor, 6 T. 211. B. Mon. (Ky.) 311; McCurdy v. "Bates v. Harte, 124 Ala. 427, 26 Breathitt, 5 T, B. Mon. (Ky.) 234; So. 898, 82 Am. St. 186; Dunham Hunt V. Rhodes, 1 Pet. (U. S.) 1, 7 Lumber Co. v. Holt, 123 Ala. 336, 26 L. ed. 27. To the same effect see So. 663; Martin v. Smith, 116 Ala. Parcels v. Gohegan, 2 J. J. Marsh 639, 22 So. 917; Terry v. Mutual Life (Ky.) 133. Ins. Co., 116 Ala. 242, 22 So. 532: ^ Woodside v. Lippold, 113 Ga. 877, Bank of Guntersville v. Webb, 108 § no CONTRACTS. I90 supposing it to be a lease he is bound by such deed as against an Ala. 132, 19 So. 14; Beck &c. Lith- 396, 144 S. W. 16; EMridge v. Dex- ographing Co. v. Houppert, 104 Ala. ter &c. R. Co., 88 Maine 191, 33 Atl. 503, 16 So. 522, S3 Am. St. 11; Jones 974; Condon v. Rice, 88 Md. 720, 44 V. Cincinnati &c. R. Co., 89 Ala. 376, Atl. 169; Condon v. Mutual &c. Life 8 So. 61; Campbell v. Larmore, 84 Assn., 89 Md. 99, 42 Atl. 944, 44 L. Ala. 499, 4 So. 593; Pacific Guano R. A. 149, li Am. St. 169; Spitze v. Co. V. Anglin, 82 Ala. 492, 1 So. 852 ; Baltimore &c. R. Co., 75 Md. 162, Foster v. Johnson, 70 Ala. 249 ; Goet- 23 Atl. 307, 32 Am. St. 378 ; Bakhaus ter, Weil & Co. v. Pickett, 61 Ala. v. Caledonian Ins. Co., 112 Md. 676, 77 387; Blum v. Mitchell, 59 Ala. 535; Atl. 310; Clark v. City of Boston, 179 Birmingham &c. Power Co. v. Jor- Mass. 409, 60 N. E. 793; Fonseca v. dan, 170 Ala. 530, 54 So. 280; Lester Cunard Steamship Co., 153 Mass. V. Walker, — Ala. — 55 So. 619; 553, 27 N. E. 665, 12 L. R. A. 340, Alosi V. Birmingham Waterworks 25 Am. St. 660 ; Rahilly v. St. Paul &c. Co., — Ala. — 55 So. 1029; Placer R. Co., 66 Minn. 153, 68 N. W. 853; County Bank v. Freeman, 126 Cal. Quimby v. Shearer, 56 Minn. 534, 58 90, 58 Pac. 388; Metropolitan Loan N. W. 155; Alabama &c. R. Co. v. Assn. V. Esche, 75 Cal. 513, 17 Pac. Jones, 73 Miss. 110, 19 So. 105, 55 Am. 675; Barker v. N. P. R. Co., 65 Fed. St. 488; Benn v. Pritchett, 163 Mo. 460; Harrison & Garrett v. Wilson 560, 63 S. W. 1103; International Lumber Co., 119 Ga. 6, 45 S. E. 730; Text-Book Co. v. Lewis, 130 Mo. Georgia Medicine Co. v. Hyman, 117 App. 158, 108 S. W. 1118; Crim v. Ga. 851, 45 S. E. 238; Walton Guano Crim, 162 Mo. 544, 61 S. W. 489, 54 Co. V. Copelan, 112 Ga. 319, Z7 S. E. L. R. A. 502; Och v. Missouri &c. 411, 52 L. R. A. 268; Jossey v. R. Co., 130 Mo. 27, 31 S. W. 962, 36 Georgia &c. R. Co., 109 Ga. 439, 34 L. R. A. 442 ; Campbell v. Van Hou- S. E. 664; Chicago Bldg. & Mfg. ten, 44 Mo. App. 231 ; Mateer v. Mis- Co. V. Summerour, 101 Ga. 820, 29 souri Pac. R. Co., 105 Mo. 320, 16 S. E. 291 ; Boynton v. McDaniel, 97 S. W. 839 ; Goldstein v. Curtis, 63 N. Ga. 400, 23 S. E. 824; Fuller v. J. Eq. 454, 52 Atl. 218; Atkinson v. Buice, 80 Ga. 395, 6 S. E, 17; Mac- Farrington Co. (N. J. Eq.), 28 Atl. Pherson v. Morrill, 190 III. 194, 60 315; Gage v. Phillips, 21 Nev. 150, N. E. 86; Stewart v. Chicago &c. R. 26 Pac. 60, V Am. St. 494; Little v. Co., 141 Ind. 55, 40 N. E. 67; Miller Little, 2 N. Dak. 175, 49 N. W. 736; V. Powers, 119 Ind. 79, 21 N. E. 455, Fivey v. Pennsylvania R. Co., 67 N. 4 L. R. A. 483; Wood v. Wack, 31 J. L. 627, 52 Atl. 472, 91 Am. St. Ind. App. 252, 67 N. E. 562; Beist 445; Howell v. Bloom, 117 N. Y. S. V. Sipe, 16 Ind. App. 4, 44 N. E. 762; 893; Rubinstein v. Radt, 133 App. D. Norris v. Scott, 6 Ind. App. 18, 32 (N. Y.) 57, 117 N. Y. S. 893, 119 N. N. E. 103; Chicago Cottage Organ Y. S. 1143; Ross v. Doland,29 0hio S. Co. V. Caldwell, 94 Iowa 584, 63 N. 473; Winchell v. Crider, 29 Ohio S. W. 336: Chicago &c. Trust Co. v. 480; McNuich v. Northwest Thresher Smyth, 94 Iowa 401, 62 N. W. 792; Co., 23 Okla. 386, 100 Pac. 524, 138 Jenkins v. Clyde Coal Co., 82 Iowa Am. St. 803; In re Weller's Appeal, 618, 48 N. W. 970; Minneapolis &c. 103 Pa. St, 594; Pennsylvania R. Co. R. Co. V. Cox, 76 Iowa 306, 41 N. v. Shay, 82 Pa. St. 198; Wylie v. W. 24, 14 Am. St. 216; Wallace v. Commercial &c. Bank, 63 S. Car. Chicago &c. R. Co, 67 Iowa 547, 25 406, 41 S. E. 504; Sloan v. Courtenay, N. W. 772: Garden Grove Bank v. 54 S. Car. 314, 32 S. E. 431; Robert- Humeston ^c. R. Co., (il Iowa 526, son v. Smith, 11 Tex. 211, 60 Am. 25 N. W. 761; Hewett v. Chicago &c. Dec. 234; Kansas City Packing Box R. Co., (,2, Iowa 611, 19 N. W. 790; Co. v. Spies (Tex. Civ. App."), 109 Robinson v. Transportation Co., 45 S. W. 433; Ellicott Machine Co. v. Iowa 470; Mulligan v. I. C. R. Co., United States, 43 Ct. CI. (U. S.) 7,6 Iowa 181. 14 Am. Rep. 514; Mc- 469; Boylan^ v. Hot Springs R. Gregor v. Metropolitan Life Ins. Co., Co., 132 U. S. 146, 33 L. ed. 290. 10 143 Ky. 488. 136 S. W. 889: Cass Sup. Ct. SO: Larsen v. Oregon Short Mill Mfg. Co. V. Vickers, 147 Ky. Line R. Co. (Utah), 110 Pac. 983; IQI MISTAKE. § IIO innocent purchaser for value.®^ And where one signed an agree- ment hastily in order to accommodate the other party but was fully cognizant of its terms, one clause being omitted because o'f haste, with the understanding that the feature omitted should be considered as covered by another clause, it was held that the contract must be enforced as written and that its terms could not be changed or varied because of the alleged mistake or under- standing."' Nor will the court reform a contract because of mis- take, by striking out the words : "This machine is not guaranteed against slugs, spurious coins, or weather," where the one seeking such reformation signed without reading the order, no fraud or artifice being practiced to obtain his signature."* Nor can one de- feat an action to recover on a stock subscription where he signed the subscription without reading it or having it read to him but supposed that he was merely expressing a willingness to subscribe for stock and not actually subscribing therefor."'' Nor will a contract be reformed where through negligence on the part of the plaintiff he agreed to do the marble work on six stories of a build- ing when he intended to do such work only on five stories."" A material man has also been held liable on his contract to furnish the marble and tile work for a building when he called at the office of the party having the plans and specifications in his pos- Pederson v. Seattle Consolidated R. Threshing Mach. v. Mattingly, 142 Co., 6 Wash. 202, 33 Pac. 351, 34 Ky. 581, 134 S. W. 1131. (In the Pac. 665 ; Ferrell v. Ferrell, 53 W. above case the signer said he was in a Va. SIS, 44 S. E. 187; Pennybacker hurry and refused to wait to have the V. Laidley, 33 W. Va. 624, 11 S. E. contract read to him.) Zeller v. Ran- 39; Bostwick v. Mutual Life Ins. Co., som, 140 Mo. App. 220, 123 S. W. 116 Wis. 392, 92 N. W. 246; Albrecht 1016. In the above case an order for V. Milwaukee Co., 87 Wis. 105, 58 jewelry was given with the alleged N. W. 72, 41 Am. St. 30; Weltner understanding that it was subject to V. Thurmond, 17 Wyo. 268, 98 Pac. countermand and must be assented to 590, 129 Am. St. 1113. See also, by the other member of the firm be- Blake v. Black Bear Coal Co., 145 fore it would be binding. The con- Ky. 788, 141 S. W. 403. One cannot tract contained a warning in bold set up his own negligence and call it type, that it should not be signed a mutual mistake. EUicott Mach. Co. without reading and also provided V. United States, 44 Ct. CI. (U. S.) that its terms could not be changed 127. He may show that his signature by the agent. was obtained by artifice or fraud. " Mitchell Manufacturing Co. v. Ike Acme Food Co. v. Older, 64 W. Va. Kempner, 84 Ark. 349, 105 S. W. 880. 255 61 S E 23S. ^ Mower, Harwood &c. Co. v. Hill, ""-Gavagan v. Bryant, 83 111. 376. 135 Iowa 600, 113 N. W. 466. ■^ Kansas City Packing Box Co. v. "Grant Marble Co. v. Abbott. 142 Spies (Tex. Civ. App.), 109 S. W. Wis. 279, 124 N. W. 264. 432. To the same effect, J. I. Case ; § no CONTRACTS. 1 92 session but was unable to read them accurately by reason of his having left his glasses at home and was misinformed by a clerk in the office as to the scale upon which the plans were drawn." Where one signs a release for personal injuries and before the signature is attached every effort is made to explain its meaning to him and he apparently comprehends, the one so signing can- not avoid the release even though he fails to understand when the other party did not know of such misunderstanding and was guilty of no fault, fraud or collusion.'^ Nor will one be relieved from the terms of a contract on the ground of mistake when it was within his power to have a stipulation inserted in the agree- ment which would have fully protected him. He is bound to assume any risk he might have provided against in the contract. °° It may therefore be stated as a rule generally applicable that where there is no excuse to justify the failure to read or under- stand the terms of a contract before one affixes his signature thereto, and no fraud is practiced on him by the other party the one so signing is estopped by his own signature from questioning the validity of the agreement.^ However it is not every instance of negligence that will defeat a right to relief. In case no preju- dice will result to the other party relief may be granted even though negligence is established.^ Thus, where the owner of a " C. H. Young Co. V. Springer, 113 cannot read he should have the con- ]\Iinn. 382, 129 N. W. 773. tract read to him. Hawkins v. Hawk- "'Blossi V. Chicago &c. R. Co., 144 ins, SO Cal. 558; Chicago St. P. M. Iowa 697, 123 N. W. 360, 26 L. R. & O. R. Co. v. Belliwith, 83 Fed. A. (N. S.) 255. When the execution 437, 28 C. C. A. 358; Mulderrig of a release for personal injuries is v. Burke, 24 Misc. (N. Y.) 716, 53 shown the burden is on the party giv- N. Y. S. 1004; Appeal of Weller, ing the release to show that it was 103 Pa. St. 594; Hurt v. Wallace, obtained by misrepresentation. Bir- (Tex. Civ. App.), 49 S. W. 675. mingham &c. Power Co. v. Jordan, He is presumed to understand the 170 Ala. 530, 54 So. 280. See also, contents of the agreement he signs. Atlas Shoe Co. v. Bloom, 209 Mass. Haag v. Burns, 22 S. Dak. 51, 115 N. 563, 95 N. E. 952 (as to the signa- W. 104. See, however, Moore v. ture of a contract by one incapable Copp, 119 Cal. 429, 51 Pac. 630; Green of understanding the language). v. Maloney. 7 Houst. (Del.) 22, 30 ""Potts v. Riddle, 5 Ga. App. 378, Atl. 672; Muller v. Kellev, 125 Fed. 63 S. E. 253; Soley v. Jones, 208 212, revg. 116 Fed. 545, 60 C. C. A. Mass. 561, 95 N. E. 94. When the 170; Melle v. Candelora, 88 N. Y. S. contract as written expresses the ac- 385. An illiterate person is not bound tual agreement it cannot be reformed, if the instrument is incorrectly read Curtis V. Albee, 167 N. Y. 360, 60 to him. Suffern v. Butler, 18 N. J. N. E. 660. Eq, 220. ^ Reed v. Coughran, 21 S. Dak. = Leuty v. Hillas, 2 De G. & J. 110; 257, 111 N. W. S59. If the one signing Beaufort v. Neeld, 12 CI. & Fin. 248; 193 MISTAKE. § III lot paid an assessment for street improvement on an adjoining lot, under the mistaken supposition that he was paying the assess- ment on his own lot equity will assist him to recover it even though he was negligent in making the payment.^ § 111. Ratification — Laches. — Courts generally term those contracts entered into under mistake as to the essential element, i. e. mistakes as to the nature of the transaction, person of the other party, or the subject-matter of the agreement, void. This being true it would seem that they could not be ratified. How- ever, where the vendee bought a lot different from that he in- tended to purchase by reason of the vendor through mistake pointing out the wrong lot, it was held that the vendee rati- fied the sale by holding the lot after the mistake was discovered and making no attempt to rescind until the lot had greatly de- preciated in value.* A mistake which does not avoid the agree- ment but which merely furnishes ground for reformation may be ratified. If this is done the parties in effect substitute the agreement as written for their original contract.® No definite specified act is necessary to amount to a ratification. One may be held to have ratified the agreement through his own laches. The application for relief upon the ground of mistake must be made with due diligence on discovery of the mistake,^ and what Wild V. Hillas, 28 L. J. Ch. 170; Beas- tional Mec. Bank Assn., SS N. Y. 211, ley V. Beasley, L. R. 9 Ch. D. 103, 1 14 Am. Rep. 232. Atk. 97 ; Snyder v. Ives, 42 Iowa 157 ; * Simmons v. Palmer, 93 Va. 389, Wood V. Patterson, 4 Md. Ch. 335 ; 25 S. E. 6. In this case it also appears Western R. R. Corporation v. Bab- that the vendee was familiar with cock, 6 Mete. (Mass.) 346; Dillett v. the property and its location and Kemble, 25 N. J. Eq. 66; Voorhis v. might by the exercise of reasonable Murphy, 26 N. J. Eq. 434; Mayer v. diligence have known of the mistake. New York, 63 N. Y. 455 ; Capehart v. It also appears that the lot was Mhoon, 5 Jones' Eq. (N. Car.) 179; bought for speculative purposes and Lewis V. Lewis, 5 Ore. 169;Dimanv. that the location was not so material Providence &c. R. Co., S R. I. 130; as to have influenced the conduct of Person v. Sanger, 1 Wood. & M. (U. the parties. See also, Spaulding Mfg. S.) 138; United States Bank v. Bank Co. v. Godbold, 92 Ark. 63, 121 S. W. of Georgia, 10 Wheat. (U. S.) 333. 1063, 29 L. R. A. (N. S.) 282n. ' Mayer v New York, 63 N. Y. 455. " See New York Life Ins. Co. v. To same effect. Union Nat. Bank v. McMaster, 87 Fed. 63, 30 C. C. A. Sixth Nat. Bank, 43 N. Y. 452, 3 Am. 532 ; Dotterer v. Freeman, 88 Ga. 479, Rep. 718 ; Duncan V. Berlin, 46 N. Y. 14 S. E. 863. 685 ; Lawrence v. American Nat. Bank, " Sweeny v. Water Supply Co^ 121 54 N. Y. 432; Kingston Bank v. El- Ala. 454 25 So^ 575 ; Werner v. Jlaw- tinge, 40 N. Y. 391, 100 Am. Dec. 516; son, 89 Ga. 619, 15 S. L. iil6. National Bank of Commerce v. Na- 13 — Contracts, Vol. I Ill CONTRACTS. 194 amounts to due diligence is (in the absence of a statute of limi- tations applicable to the case) determined by reference to the facts attending the particular case.' If the party seeking relief is guilty of unreasonable delay/ and the other party has altered his position so that it is impossible to place him in statu quo," re- lief will be denied.^" But before a change in position will be per- mitted to defeat a rescission of the contract it must be such a change as affects the substantial rights of the parties." In case one of the parties to an agreement makes a mistake which is known to and taken advantage of by the other party, the one making the mistake may rescind, when it is such a mistake as ' Simmons v. Palmer, 93 Va. 389, 25 S. E. 6; Welles v. Yates, 44 N. Y. 525 ; De Forestv. Walters, 153 N. Y. 229,47 N. E. 294; Harris v. Ivey, 114 Ala. 363, 21 Sa 422 ; Providence Steam- Engine Co. v. Hathaway Mfg. Co., 79 Fed. 512; Citizen's National Bank V. Judy, 146 Ind. 322, 43 N. E. 259; Bidwell V. Astor Mut Ins. Co., 16 N. Y. 263, note to Gillespie v. Moon, 2 John's Ch. (N. Y.) 585, 7 Am. Dec. 559; Day v. Day, 84 N. Car. 408; Metropolitan Lumber Co. v. Lake Su- perior &c. Canal Co., 101 Mich. 577, 60 N. W. 278; Schautz v. Keener, 87 Ind. 258; Wilson v. Wilson, 23 Nev. 267 ; Hill v. Kuhlman, 87 Fed. 498, 31 C. C. A. 87 ; Thompson v. Marshall, 36 Ala. 504, 76 Am. Dec. 328; Kropp v. Kropp, 91 Wis. 137, 72 N. W. 381; JMerrifield v. Ingersoll, 61 Mich. 4, 27 N. W. 714; Koons v. Blanton, 129 Ind. 383, 27 N. E. 334; Stevens v. Hertzler, 114 Ala. 563, 22 So. 121. 'Van Vleet v. Van Vleet, 45 Fed. 743; Murphy v. Bank, 95 Iowa 325, 63 N. W. 702. ° Conn. Ins. Co. v. Stewart, 95 Ind. 588; Truesdale v. Sidle, 65 Minn. 315, 67 N. W. 1004. "Crymes v. Sanders, 93 U. S. 55, 23 L. ed. 798; Haviland v. Willets, 141 N. Y. 35, 35 N. E. 958, per Finch, J. : "If he intended not to be bound it was his duty to speak, and he had full opportunity to do so. Silence .misled to their harm both the administrators and the sup- posed legatees. The former paid and the latter accepted the money as rightfully payable and due, and the one incurred risk and the other may have spent the money or changed modes of life in consequence, and certainly thereby incurred an un- known and unsuspected obligation, if required to return the fund. Under such circumstances the plaintiff is estopped from a recovery. The mo- ment he learned his real rights it was his duty to speak. He had full oppor- tunity to speak, and he knew that his silence would necessarily mislead the other parties to their harm. Erie County Bank v. Roop, 48 N. Y. 298; Blair V. Wait, 69 N. Y. 113; Viele v. Judson, 82 N. Y. 32; Queen v. Lords of the Treasury, 16 Q. B. 357; Bris- bane V. Dacres, 5 Taunt. 144. Indeed, if the case should be reduced down to its simplest elements, and treated from the moment in which Barclay knew his rights on the basis of a mere gift which he had authorized the representatives of the estate to make out of his own share, he could not recover back from the donees the gift so far as executed. It can- not be that a gift voluntarily made, without mistake or fraud, can be at will recovered back; and, from the day when Barclay knew that the lapsed share was his every payment made to Samuel's daughters was his payment because made by his direc- tion and authority, with full knowl- edge of both law and facts, and by the assent of his silence during more than three years." " Culbertson v. Blanchard, 79 Tex. 486, IS S. W. 700. 1 95 MISTAKE. § 112 will entitle him to a rescission notwithstanding the other party cannot be placed in statu quo.^^ A person cannot be said to have ratified a contract unless it appears that he knew and understood the terms of the agreement at the time the alleged ratification is made. Ratification involves knowledge of the facts on the part of the person ratifying.^^ § 112. Mutuality of mistake. — As is demonstrated by many of the cases cited in the preceding section of this chapter either a mutual or a unilateral mistake may be ground for the rescission of a contract, if the error is of such character as to prevent the minds of the parties from meeting. However, there is a well- marked distinction between mutual and unilateral mistakes. A mistake on one side (i. e. unilateral mistake) may be ground for rescinding but not reforming a contract.^* A contract may also be set aside for the mistake of one of the parties without the con- tract being induced by and the mistake arising from the fraud of the other party." A court will not, however, cancel a contract because of a unilateral mistake induced by no fraud, falsehood, misrepresentation or concealment on the part of the other party where ordinary diligence would have revealed the error. Espe- cially is this true where no unconscionable advantage will be ob- tained by the party not guilty of error." A contract will not be "Phetteplace v. Bucklin, 18 R. I. U. S. 373, 20 Sup. Ct. 957, 44 L. ed. 297, 27 Atl. 211. 1108. ^^Dolvin V. American Harrow Co., ^^ Moore v. Copp, 119 Cal. 429, 51 125 Ga. 699, 54 S. E. 706, 28 L. R. A. Pac. 630. See also, Singer v. Grand (N. S.) 785; Williams v. Hamilton, Rapids Match Co., 117 Ga. 86, 43 S. 104 Iowa 423, 73 N. W. 1029, 65 Am. E. 755. St. 475n. See also, Alabama &c. R. "Bibber v. Carville, 101 Maine 59, Co. V. Jones, 73 Miss. 110, 19 So. 105, 63 Atl. 303, 115 Am. St. 303. "The 55 Am. St. 488 ; Dinwiddle v. Self, power of a court of equity to relieve 145 111. 290, 33 N. E. 892. parties from their contracts, upon the "Douglas V. Grant, 12 111. App, ground of mutual mistake of fact, 273- Dulaney v. Rogers, 50 Md. 524; or mutual mistake of mixed law and Green v. Stone, 54 N. J. Eq. 387, 34 fact, is well settled. * * * To au- Atl. 1099, 55 Am. St. 577; Wirsching thorize the relief, however, the mis- V. Grand Lodge &c., 67 N. J. Eq. 711, take must be clearly shown to be mu- % Atl. 713, 63 Atl. 1119, 3 Am. & Eng. tual to both parties, for equity will Ann. Cas. 442; Fehlberg v. Cosine, rarely relieve from the mistake of 16 R. I. 162, 13 Atl. 110; Dietrich one of the parties, except in those in- V. Hutchinson, 73 Vt. 134, 50 Atl. 810, stances where the mistake was in a 87 Am. St. 698; Hearne v. New Eng. measure induced or brought about by Mut. Marine Ins. Co., 20 Wall. (U. the inequitable conduct of, or when S.) 488, 22 L. ed. 395; Moffett. Hodg- known to and wrongfully acted upon kins & Clarke Co. v. Rochester, 178 or taken advantage of by, the other § 112 CONTRACTS. 196 reformed unless the mistake is mutual/^ or the adverse party is guilty of fraud, or other reprehensible or inequitable con- contracting party. Mutual mistake consists in a clear showing of a mis- understanding, reciprocal and com- mon to both parties, in respect to the terms and subject-matter of the con- tract, or some substantial part there- of." C. H. Young Co. v. Springer, 113 Minn. 382, 129 N. W. m. Where parties in entering into a contract stand upon an equality with respect to each other and with regard to the subject-matter of the contract, courts ought not to interfere merely because one party or the other must assume or discharge a burden not anticipated when the contract was ehtered into, provided such burden comes within its terms. White v. Snell, 35 Utah 434, 100 Pac. 927. One party may know that the other is mistaken but unless there is a duty to disclose, this fact alone does not constitute suffi- cient grounds for the cancellation of the agreement. Morgan v. Owens, 228 111. 598, 81 N. E. 1135. "No court, however, so far as we are ad- vised, has ever held a contract void or invalid on account of a unilateral mistake of which the other party was not aware, and which did not go to the subject-matter of the con- tract itself." Tatum v. Coast Lum- ber Co., 16 Idaho 471, 101 Pac. 957, 23 L. R. A. (N. S.) 1109n. See also, Wilson V. Wyoming Cattle & Invest- ment Co., 129 Iowa 16, 105 N. W. 338; Monks & Sons v. West Street Imp. Co., 134 N. Y. S. 39. " Clark V. Hart, 57 Ala. 390 ; Lof- tus V. Fischer, 106 Cal. 616, 39 Pac. 1064; New York Life Ins. Co. v. Mc- Master, 87 Fed. 63, 30 C. C. A. 532 ; Iverson v. Wilburn, 65 Ga. 103 ; Com- er V. Granniss, 75 Ga. 277 ; Morgan v. Owens, 228 111. 598, 81 N. E. 1135; Hoops V. Fitzgerald, 204 111. 325, 68 N. E. 430; Douglas v. Grant, 12 111. Km. 273; Citizens' Nat. Bank v. Tudy, 146 Ind. 322, 43 N. E. 259; Marshall v. Westrope, 98 Iowa 324, 61 N. W. 257; Wilson v. Wyoming Cattle & Investment Co., 129 Iowa 16, 105 N. W. 338; Prescott v. Cooper, i1 La. Ann. 553; Dulany v. Rogers, 50 Md. 524; Chute v. Quincy, 156 Mass. 189, 30 N. E. 550; Loud V. Barnes, 154 Mass. 344, 28 N. E. 271 ; Martine v. Christensen, 60 Minn. 491, 62 N. W. 1127; Ban- charel v. Patterson, 64 Minn. 454, 67 N. W. 356; Fitschen v. Thomas, 9 Mont. 52, 22 Pac. 450; Raymond v. Cox, 44 N. J. Eq. 415, 15 Atl. 593; Pasman v. Montague, 30 N. J. Eq. 385; jMorris v. Penrose, 38 N. J. Eq. 629; Eames Vacuum Brake Co. v. Prosser, 88 Hun (N. Y.) 343, 34 N. Y. S. 398, 68 N. Y. St. 388; Ranney V. McMullen, 5 Abb. N. C. (N. Y.) 246; Floors v. yEtna L. Ins. Co., 144 N. Car. 232, 56 S. E. 915, 11 L. R. A. (N. S.) 3S7n; Archer v. California Lumber Co., 24 Ore. 341, 2,2, Pac. 526 ; Plollenback's Appeal, 121 Pa. St. 322, 15 Atl. 616; Breneiser v. Davis, 141 Pa. St. 85, 21 Atl. 508; Fehlberg v. Cosine, 16 R. I. 162 ; Norman v. Nor- man, 26 S. Car. 41, 11 S. E. 1096; Monks V. McGrady, 71 Tex. 134, 8 S. W. 617; Lott V. Kaiser, 61 Tex. 665; Rushton v. Hallett, 8 Utah 277, 30 Pac. 1014; De Voin v. De Voin, !(, Wis. 66, 44 N, W. 839; Grant Marble Co. v. Abbott, 142 Wis. 279, 124 N. W. 264 ; Harvey's Case, 3 Ct. of CI. (U. S.) 38. ''New York Life Ins. Co. v. ^Ic- Master, 87 Fed. (,2, 30 C. C. A. 532; Prater v. Bennett, 98 Ga. 413, 25 S. E. 510; Citizens' Nat. Bank v. Judy, 146 Ind. 322, 43 N. E. 259; Winans V. Huyck, 71 Iowa 459, 32 N. W. 422; ^Marshall v. Westrope, 98 Iowa 324, 67 N. W. 257; Bush v. Merri- man, 87 Mich. 260, 49 N. W. 567; Bancharel v. Patterson, 64 Minn. 454, 67 N. W. 356 ; Hay v. Star Fire Ins. Co., n N. Y. 235, 33 Am. Rep. 607; Archer v. California Lumber Co., 24 Ore. 341, 33 Pac. 526. The doctrine of reformation for mistake applies when a fire insurance agent knowingly lo- cates the property insured in the wrong building. ^Etna Ins. Co. v. Brannon, 99 Tex. 391n, 89 S. W. 1057, 2 L. R. A. (N. S.) 548; Lott v. Kais- er, 61 Tex. 665 ; Trustees v. Delaware Ins. Co., 93 Wis. 5'. 66 N. W. 1140. In the following cases the one whose duty it was to reduce the contract to writing prepared an agreement ma- terially different from that orally agreed upon. McDonald v. Yung- 197 MISTAKE. § 113 duct.^' The reason for this rule has been pointed out. § 113. Mistake as to the law. — A mistake of law is in strict- ness, an erroneous conclusion as to the legal effect of known facts." As a general rule a mistake of this nature, unmixed with matters of fact or any other reason for equitable relief, affords no ground for the rescission or reformation of the contract in- duced thereby.^" Other circumstances must combine with the bluth, 46 Fed. 836; Hansford v. Free- man, 99 Ga. 376, 27 S. E. 706; Ber- gen V. Ebey, 88 111. 269; Williams V. Hamilton, 104 Iowa 423, 73 N. W. 1029, 65 Am. St. 475; Hay v. Star Fire Ins. Co., 11 N. Y. 235, 33 Am. Rep. 607. The theory upon which these cases were decided is that the fraud practiced by one party prevents the real contract from be- ing reduced to writing and since the other party by mistake receives such writing as the real contract equity will lend its aid to the party thus de- frauded and reform the written agree- ment. Grant Marble Co. v. Abbott, 142 Wis. 279, 124 N. W. 264; James v. Cutler, 54 Wis. 172, 10 N. W. 147. "a See ante, § 109, Mistake in Exe- cution of Writing. ^ Purvines v. Harrison, 151 111. 219, 37 N. E. 705 ; Mowatt v. Wright, 1 Wend. (N. Y.) 355, 19 Am. Dec. 508 ; Deseret Nat. Bank v. Dinwoodey, 17 Utah 43, S3 Pac. 215. '"Midland G. W. R. Co. v. John- son, 6 H. L. Cas. 798 ; Bilbie v. Lum- ley, 2 East 469; Cockerell v. Chol- meley, 1 Russ. & M. 419; Stewart v. Kennedy, L. R. 15 App. Cas. 108; Haden v. Ware, 15 Ala. 149; Clark v. Hart, 57 Ala. 390; Steinfeld v. Zeck- endorf, 10 Ariz. 221, 86 Pac. 7; Tay- lor V. Holmes, 14 Fed. 498, affd. 127 U. S. 489, 32 L. ed. 179, 8 Sup. Ct. Rep. 1192; Allen v. Galloway, 30 Fed. 466; Dinwiddie v. Self, 145 111. 290, 33 N. E. 892; Bonney v. Stoughten, 122 111. 536, 13 N. E. 833; Oswald v. Sproehnle, 16 111. App. 368; Goltra v. Sana- sack, 53 111. 456; Ruffner v. Mc- Connel, 17 111. 212, 63 Am. Dec. 362; Shaffer v. Davis, 13 111. 395 ; Oiler v. Gard, 23 Ind. 212; Allen v. Ander- son, 44 Ind. 395; Pierson v. Arm- strong, 1 Iowa 282, 63 Am. Dec. 440; Casady v. Woodbury County, 13 Iowa 113; Stewart v. Ticonic Nat. Bank, 104 Maine 578, 72 Atl. 741; Stover v. Poole, 67 Maine 217; Car- penter V. Jones, 44 Md. 625; Gist v. Drakely, 2 Gill (Md.) 330, 41 Am. Dec. 426; Pittsburgh & L. A. Iron Co. V. Lake Superior Iron Co., 118 Mich. 109, 76 N. W. 395 ; McGraw v. Munia, 164 Mich. 117, 129 N. W. 20, 17 Detroit Leg. N. 1037; Sparks v. Pittraan, 51 Miss. 511; Price v. Es- till, 87 Mo. 378 ; St. Louis v. Priest, 88 Mo. 612; Kleimann v. Gieselmann, 114 Mo. 437, 21 S. W. 796, 35 Am. St. 761; Hayes v. Stiger, 29 N. J. Eq. 196; Champlin v. Laytin, 18 Wend. (N. Y.) 407, 31 Am. Dec. 382; Mowatt V. Wright, 1 Wend. (N. Y.) 355, 19 Am. Dec. 508 ; Terry v. Moore, 12 Misc. (N. Y.) 641, 67 N. Y. St. 499, 33 N. Y. S. 846; Kent v. Man- chester, 29 Barb. (N. Y.) 595; Dupre V. Thompson, 4 Barb. (N. Y.) 279; Lyon v. Richmond, 2 Johns. Ch. (N. Y.) 51; Morehead Bkg. Co. v. More- head, 124 N. Car. 622, 32 S. E. 967; Gross v. Leber, 47 Pa. 520; In re Dunham, 9 Phila. (Pa.) 471, Fed. Cas. No. 4146 ; Good v. Herr, 7 Watts & S. (Pa.) 253, 42 Am. Dec. 236; Norman v. Norman, 25 S. Car. 41, 11 S. E. 1096; Talley v. Courtney, 1 Heisk. (Tenn.) 715 ; Farnsworth v. Dinsmore, 2 Swan (Tenn.) 38; Lott v. Kaiser, 61 Tex. 655; Emerson v. Navarro, 31 Tex. 334, 98 Am. Dec. 534; Scott v. Slaughter, 35 Tex. Civ. App. 524, 80 S. W. 643 ; Deseret Nat. Bank v. Dinwoodey, 17 Utah 43, 53 Pac. 215; Proctor v. Thrall, 22 Vt. 262; McDaniels v. Bank of Rutland, 29 Vt. 230, 70 Am. Dec. 406 ; Mellish V. Robertson, 25 Vt. 603; Brown v. Armistead, 6 Rand. (Va.) 594; Mack- intosh V. Renton, 3 Wash. Terr. 431, 19 Pac. 144 ; Tolley v. Poteet, 62 W. Va. 231, 57 S. E. 811; Beard v. Beard, 25 W. Va. 486, 52 Am. Rep. 219; § 113 CONTRACTS. 198 mistake of law before it will be relieved against.^^ However, it is possible to divide such mistakes into two more or less well- defined classes ; first a mistake in law as to the legal effect of the contract actually made by the parties, and second, a mistake of law in reducing the contract to writing whereby it does not carry out or effectuate the intention of the parties.^^ In the first instance the contract actually entered into will sel- dom, if ever, be relieved against, unless there are other equitable features calling for the interposition of the court. Here the instrument is just as the parties design it to be.^^ When the language used or the form adopted has been deliberately and voluntarily chosen by the parties to express their meaning, the parties must be bound thereby, and equity will not, as a general rule, afford them relief merely because they have mistaken the legal effect of the language used."* It has been held, however. Harner v. Price, 17 W. Va. 523; Rochester v. Alfred Bank, 13 Wis. 432, 80 Am. Dec. 746; Bank of United States V. Daniel, 12 Pet. (U. S.) 32, 9 L. ed, 989; Sims v. Lyle, 4 Wash. C. C. 301, Fed. Cas. No. 12891 ; Sims V. Lyle, 4 Wash. C. C. 320, Fed. Cas. No. 12892. "' Stephenson v. Atlas Coal Co., 147 Ala. 432, 41 So. 301; Wintermute v. Snyder, 3 N. J. Eq. 489; Sparks v. White, 7 Humph. (Tenn.) 86; Des- eret Nat. Bank v. Dinwoodey, 17 Utah 43, S3 Pac, 215; Snell v. At- lantic F. & M. Ins. Co., 98 U. S. 85, 25 L. ed. .52; Griswold v. Hazard, 141 U. S. 260, 35 L. ed. 678, 11 Sup. Ct. 972 ; Hunt v. Rhodes, 1 Pet. (U. S.) 1, 7 L. ed. 27. ^ Richmond v. Ogden Street R. Co., 44 Ore. 48, 74 Pac. 333. ^^Langley v. Brown, 2 Atk. 195, 1 M. & P. 583; Robertson v. Walker, 51 Ala. 484 ; Kelly v. Turner, 74 Ala. 513 ; Dunham v. New Britain, 55 Conn. 378, 11 Atl. 354; Hackemack V. Wiebrock, 172 111. 98, 49 N. E. 984; Nelson v. Davis, 40 Ind. 366; Armstrong v. Short, 95 Ind. 326; Showman v. Miller, 6 Md. 479; Mc- Elderry v. Shipley, 2 Md. 25, 56 Am. Dec. 703 ; Sanf ord v. Nyman, 23 Mich. 326; Bradford v. Bradford, 54 N. H. 463; Beers v. Hendrickson, 6 Robt. (29 N. Y. Super. Ct.) S3; Mills v. Kampfe, 135 App. Div. (N. Y.) 748, 119 N. Y. Supp. 903; Fehlberg v. Cosine, 16 R. I. 162, 13 Atl. 110; Fletcher v. Jackson, 23 Vt. 581, 56 Am. Dec. 98. " Hunt V. Rousmainere's Admrs., 8 Wheat. (U. S.) 174, 5 L. ed. 589. In the above case a borrower of money proposed to secure the lender by either of three modes — a mortgage on his vessel, a bill of sale of the vessel, or an irrevocable power to sell. The lender selected the latter, and, al- though there was no doubt of the in- tention of both parties to have the loan adequately secured, yet the court declined to give relief when the se- curity proved unavailing by reason of the death of the borrower before the maturity of the debt, which, as matter of law, operated as a revoca- tion of the power of sale, although it was contended that the lender acted under a mistaken belief that the power of sale was irrevocable, and that he should be relieved from the consequences of such mistake. In that case it was undoubtedly the in- tention of the parties, the one to give, and the other to obtain, adequate se- curity for the repayment of the money loaned; yet, as the mistake was due to an erroneous construction of the legal effect of the instrument, which was adopted to carry out the intention, relief was denied, although the lender acted under the advice of 199 MISTAKE. § 113 that 1 lease of premises might be rescinded by the lessee when both lessor and lessee had no knowledge of the fact that an ordi- nance had been recently passed which placed the property in the district within which the erection of wooden buildings was pro- hibited, inability to erect a wooden building rendering the lease valueless.^® In the second class the mistake is not in the contract, but terms are used or omitted which gives the instrument a legal effect not intended by the parties and different from the contract actually made. Consequently there is a large and growing class of cases which hold when the terms of an agreement, employed by the parties, result in a contract different from the one really entered into by reason of omission, ignorance or misapprehension of their legal effect, a court of equity will in its discretion reform the instrument so as to effectuate the intention of the parties.^" Especially where failure to do so would give an unconscionable advantage to one and operate as a gross injustice to the other.^^ Under this principle of law mistakes made in drawing up deeds,^^ negotiable instruments,^* and insurance policies,^" have been re- counsel, which proved to be erro- 188, 32 Atl. 919; Brock v. O'Dell, 44 neous, that the power to sell was ir- S. Car. 22; Walden v. Skinner, 101 revocable." William Cramp & Sons U. S. 577, 25 L. ed. 963; Bailey v. &c Co v Sloan, 21 Fed. 561 ; Doug- American Central Ins. Co., 4 McCrary las v. Grant, 12 111. App. 273; Show- (U. S.) 221. man v Miller, 6 Md. 479 ; Rogers v. ^' Dolvin v. American Harrow Co., Smith (Tenn.), 48 S. W. 700; Dela- 125 Ga. 699, 54 S. E. 706, 28 L. R. A. ware Ins. Co. v. Hill (Tex. Civ. (N. S.) 785; Allen v. Elder, 76 Ga. App.), 127 S. W. 283; Moore v. 674, 2 Am. St. 63. Studebaker Bros. Mfg. Co. (Tex. ''"Spaulding Mfg. Co. v. Godbold, Civ App ), 136 S. W. 570; Cathcart 92 Ark. 63, 121 S. W. 1063, 29 L. R. v Robinson, 5 Pet. (U. S.) 264, 8 L. A. (N. S.) 282n, 135 Am. St. 168; ed. 120. No relief will be granted AIHs v. Hall, 76 Conn. 322, 56 Atl. where the terms are such as the par- 637; Sampson v. Mudge, 13 Fed. 260; ties intended to use. Andrus v. Blaz- Allen v. Elder, 76 Ga. 674, 2 Am. St. zard 23 Utah 233, 63 Pac. 888, 54 63; Dinwiddie v. Self, 145 111. 290, L. R. A. 354. See also, Wheaton 33 N. E. 892; Cooke v. Husbands, 11 Building &c Co. v. City of Boston, Md. 492; Corrigan v. Tiernay, 100 204 Mass 218, 90 N. E. 598. Mo. 276, 13 S. W. 401; McMillan v. "' Hannah v. Steinman, 159 Cal. 142, Fish, 29 N. J. Eq. 610 ; Condor v. 112 Pac 1094 Secrest, 149 N. Car. 201, 62 S. E. '''Clark V. Hart, 57 Ala. 390; Moore 921; Brock v. O'Dell, 44 S. Car. 22, v. Tate, 114 Ala. 582, 21 So. 820; 21 S. E. 976. Marshall v. Westrope, 98 Iowa 324, "• Clayton v. Bussey, 30 Ga. 946, 76 67 N W 253 • Reed v. Root, 59 Iowa Am. Dec. 680 ; Hausbrandt v. Hofler, 359, 13 N. W. 323; Trusdell v. Leh- 117 Iowa 103, 90 N. W. 494, 94 Am. man 47 N j Eq 218 ; Evants v. St. 289. As to evidence necessary, see, Stro'de's Admr., 11 Ohio 480, 38 Am. Van Vleet v. Sledge, 45 Fed. 743. Dec 744- Ryder v. Ryder, 19 R. I. ''' Woodbury Saving &c. Assn. v. § "3 CONTRACTS. 200 formed. However, before equity will reform an instrument en- tered into through mistake of law, in the absence of fraud or misrepresentation the mistake must have been mutual.'^ It has been held that a contract entered into under a mistake of law which is of such a nature as to prevent the minds of the par- ties from meeting is void and neither party is bound as a matter of law." It is also well settled that where there is a mistake of law on one side and either positive fraud, inequitable, unfair, and deceptive conduct on the part of the party, which tends to con- firm the mistake and conceal the truth, equity will award relief. Thus, a mistake of law accompanied and induced by fraud of the Charter Oak &c. Ins. Co., 31 Conn. 517; Sias v. Roger Williams Ins. Co., 8 Fed. 183 ; Lansing v. Commercial Union Assur. Co., 4 Nebr. Unof. 140, 93 N. W. 756; Eastman v. Provident AlutLial Relief Assn., 65 N. H. 176, 18 Atl. 745, 5 L. R. A. 712, 23 Am. St. 29; Maher v. Hibernia Ins. Co., 67 N. Y. 283. ''Mortimer v. Shortall, 2 Drury & War. 363; Parker v. Carter, 91 Ark. 162, 120 S. W. 836, 134 Am. St. 60; New York L. Ins. Co. v. McMaster, 30 C. C. A. 532, 87 Fed. 63 ; Spare v. Home Mutual Ins. Co., 19 Fed. 14; Houser v. Austin, 2 Idaho (Hasb.) 204, 10 Pac. 37; Sutherland v. Suth- erland, 69 111. 481 ; Douglas v. Grant, 12 111. App. 273 ; Phenix Ins. Co. v. Rogers, 11 Ind. App. 72, 38 N. E. 865; Schoonover v. Dougherty, 65 Ind. 463; Baldwin v. Kerlin, 46 Ind. 426;- Wachendorf v. Lancaster, 61 Iowa 509, 14 N. W. 31^, 16 N. W. 533; Williams v. Hamilton, 104 Iowa 423, IZ N. W. 1029, 65 Am. St. 47Sn; Conaway v. Gore, 24 Kans. 389; Stockhoff V. Brannin, 14 Ky. L. 717; Chute V. Quincy, 156 Mass. 189, 30 N. E. 550; Burns v. Caskey, 100 Mich. 94, 58 N. W. 642; Steinberg V. Phosnix Ins. Co., 49 Mo. App. 255 ; Adkins v. Tomlinson, 121 Mo. 487, 26 S. W. 573 ; Bartlett v. Brown, 121 Mo. 353, 25 S. W. 1108; Meek v. Hurst, 223 Mo. 688, 122 S. W. 1022, 135 Am. St. 531 ; Henderson v. Beas- ley, 137 Mo. 199, 38 S. W. 950 ; Ram- sey V. Smith, 32 N. J. Eq. 28; Green V. Stone, 54 N. J. Eq. 387, 34 Atl. 1099, 55 Am. St. 577 ; Lesser v. Dem- arest (N. J. Eq.), 72 Atl. 14; Lanier V. Wyman, 5 Robt. (28 N. Y. Super. Ct.) 147; Devereux v. Sun Fire Of- fice, 51 Hun (N. Y.) 147, 4 N. Y. Supp. 655, 20 N. Y. St. 584; Allison Bros. Co. V. Allison, 144 N. Y. 21, 38 N. E. 956; Berringer v. Schaefer, 52 How. Pr. (N. Y.) 69; Mills v. Kampfe, 135 App. Div. (N. Y.) 748, 119 N. Y. S. 903; Kent v. Manches- ter, 29 Barb. (N. Y.) 595; Nevius v. Dunlap, 33 N. Y. 676; Whittemore V. Farrington, 76 N. Y. 452 ; Brioso V. Pacific Mut. Ins. Co., 4 Daly (N. Y.) 246; Coles v. Bowne, 10 Paige (N. Y.) 526; Evarts v. Steger, 5 Ore. 147; Thornton v. Krimbel, 28 Ore. 271, 42 Pac. 995; Mitchell v. Hol- man, 30 Ore. 280, 47 Pac. 616; Rob- inson V. Braiden, 44 W. Va. 183, 28 S. E. 798 ; Biggs v. Bailey, 49 W. Va. 188, 38 S. E. 499; Grant Marble Co. V. Abbot, 142 Wis. 279, 124 N. W. 264; De Voin v. De Voin, 76 Wis. 66, 44 N. W. 839; Moehlenpah v. Mayhew, 138 Wis. 561, 119 N. W. 826; Harvey v. United States, 13 Ct. CI. (U. S.) 322; Durham v. Fire & M. Ins. Co., 10 Sawy. (U. S.) 526, 22 Fed. 468. "'Silander v. Gronna, 15 N. Dak. 552, 108 N. W. 544, 125 Am. St. 616. See also, Wirsching v. Grand Lodge &c., 67 N. J. Eq. 711, 56 Atl. 713, 63 Atl. 1119, 3 Am. & Eng. Ann. Cas. 442; Green v. Stone, 54 N. J. Eq. 387, 34 Atl. 1099, 55 Am. St. 577; Dietrich v. Hutchinson, 73 Vt. 134, SO Atl. 810, 87 Am. St. 698. 20I MISTAKE. § 113 Other party may authorize a reformation or rescission of the agreement.*" It is not necessary that the conduct of one of the parties to a contract be actually fraudulent in order to entitle the other party to have it rescinded or reformed when he entered into it under a mistake of law. Inequitable conduct on the part of the other may be sufficient to give the one so mistaken relief." .Thus, where plaintiff, who was an old man, through a mistake of 'law supposed that, on the lapse of a legacy caused by the death of a legatee, it went to the deceased legatee's children, although in fact the plaintiff was entitled to it as the testator's brother and heir, executed to the executor a release of all claims against the estate, it was held that the release was voidable because of the executor's concealment from plaintiff of his legal rights as heir.'^ A mistake relative to the laws of another state or a foreign country is considered as a mistake of fact against which relief will be granted."^ Private and special acts*' are also considered as ''Cooper V. Joel, 1 DeG. F. & J. 240; Townsend v. Cowles, 31 Ala. 428; Chestnut Hill Reservoir Co. v. Chase, 14 Conn. 123 ; Broadwell v. Broadwell, 6 111. 599; Williams v. Hamilton, 104 Iowa 423, 73 N. W. 1029, 65 Am. St. 47Sn; Berry v. Whitney, 40 Mich. 65; Nelson v. Betts, 21 Mo. App. 219; Drew v. Clark, Cooke (Tenn.) 373, 5 Am. Dec. 698; Gorman v. McCabe, 24 R. I. 245, 52 Atl. 989; Moreland v. At- chison, 19 Tex. 303; Tolley v. Po- teet, 62 W. Va. 231, 57 S. E. 811; Grant Marble v. Abbott, 142 Wis. 279, 124 N. W. 264. See ante, Fraud Mis- representations as to law. °* Evans v. Llewellyn, 2 Bro. Ch. ISO; A'Dair v. McDonald, 42 Ga. 506; Bales V. Hunt, 11 Ind. 355; Jordan V. Stevens, 51 Maine 78, 81 Am. Dec. 556; Wilson v. Maryland Life Ins. Co., 60 Md. 150; Busiere v. Reilly, 189 Mass. 518, 75 N. E. 958; Nelson V. Betts, 21 Mo. App. 219; Champlin V. Laytin, 18 Wend. (N. Y.) 407, 31 Am. Dec. 382; Heert v. Cruger, 14 Misc. (N. Y.) 508,35 N. Y. S. 1063,70 Y. St. 688; Garnar v. Bird, 57 Barb. (N. Y.) 277; Emerson v. Navarro, 31 Tex. 334, 98 Am. Dec. 534 ; More- land V. Atchison, 19 Tex. 303; West v. West, 9 Texas App. 475, 29 S. W. 242. "Whatever may be the effect of a mistake of law pure and simple, there is no doubt that equitable relief will be granted when the ignorance or misapprehension of a party con- cerning the legal effect of a trans- action in which he engages, or con- cerning his own legal rights which are to be affected, is induced, pro- cured, aided, or accompanied, by in- equitable conduct of the other par- ties." Weeke v. Wortmann, 84 Nebr. 217, 120 N. W. 933. "'Haviland v. Willets, 141 N. Y. 35, 35 N. E. 958. ""McCormick v. Garnett, 5 DeG. M. & G. 278; Patterson v. Bloomer, 35 Conn. 57, 95 Am. Dec. 218; Samp- son V. Mudge, 13 Fed. 260; Norton V. Marden, IS Maine 45, 32 Am. Dec. 132; Raynhan v. Canton, 3 Pick. (Mass.) 293; Haven v. Foster, 9 Pick. (Mass.) 112, 19 Am. Dec. 353; Rosenbaum v. United States Credit System Co., 64 N. J. L. 34, 44 Atl. 966, 65 N. J. L. 255, 48 Atl. 237; Kenny v. Clarkson, 1 Johns. (N. Y.) 385; Chillicothe Bank v. Dodge, 8 Barb. (N. Y.) 233; Morgan v. Bell, 3 Wash. 554, 28 Pac. 925, 16 L. R. A. 614. "'Cooper V. Phibbs, L. R. 2 H. L. 149; Beauchamp v. Winn, L. R. 6 H. § 114 CONTRACTS. 202 matters of fact.'* Courts do not take judicial notice of the laws of other jurisdictions; consequently, the laws of a foreign juris- diction are provable as facts."" § 114. Mistake of fact as to interest induced by mistake of law. — "Private right of ownership is a matter of fact."*" Con- sequently, if one or both of the parties should enter into a con- tract under a mistake and misapprehension as to their existing private legal rights or interest in the thing conveyed or contracted about, the mistake may be treated as a mistake of fact against which equity will grant relief, defensive or affirmative.*^ A mistake thus made is, in a certain sense, one of law, but in its most important features it is one of private right of owner- ship. It is, therefore, considered as one of fact although it may result from ignorance or mistake as to the law.*^ This mistake must not, however, be confused with mistake as to the legal scope and operation of the contract actually formed. A mistake by a party as to his antecedent existing legal rights is distinct from a mistake as to the legal import of the act done. The former fur- L. 223, 22 W. R. 193; State v. Paup, 13 Ark. 129, 56 Am. Dec. 303. '"A mistake relative to a court or- der would seem to be a mistake of fact. Allen v. Galloway, 30 Fed. 466 ; Gardiner v. Schermerhorn, Clarke (N. Y.) 101; Gaul v. Miller, 3 Paige (N. Y.) 192, ^"Holmes v. Broughton, 10 Wend. (N. Y.) 75, 25 Am. Dec. 538. "Cooper V. Phibbs, L. R. 2 H. L. 149, 22 Eng. Rul. Cas. 870; Marshall V. Lane, 27 App. D. C. 276. '^ Bingham v. Bingham, 1 Ves. Sr. 126; Marshall v. Lane, 27 App. D. C. 276; Rued v. Cooper, 119 Cal. 463, 51 Pac. 704; Blakeman v. Blakeman, 39 Conn. 320 ; Bonney v. Stoughton, 122 111. 536, 13 N. E. 833; Morgan v. Owen, 228 111. 598, 81 N. E. 1135; Baker v. Massey, SO Iowa 399; Wilson V. Maryland Life Ins. Co., 60 Md. 150; Galard v. Winans, 111 Md. 434, 74 Atl. 626; Livingstone V. Murphy, 187 Mass. 315, 72 N. E. 1012, 105 Am. St. 400; Renard v. Clink, 91 Mich. 1, 51 N. W. 692, 32 Am. St. 458; Hamilton v. Park, 125 Mich. 72, 83 N. W. 1018; Gerdine v. Menage, 41 Minn. 417, 43 N. W. 91 ; Hoy v. Hoy, 93 Miss. 732, 48 So. 903, 25 L. R. A. (N. S.) 182; Alabama &c. R. Co. V. Jones, 73 Miss. 110, 19 So. 105, 55 Am. St. 488; Griffith v. Townley, 69 Mo. 13, 33 Am. Rep. 476; Martin v. McCorraick, 8 N. Y. 331; Champlin v. Laytin, 6 Paige (N. Y.) 189; Baldock v. Johnson, 14 Ore. 542, 13 Pac. 434; In re Whelen's Ap- peal, 70 Pa. St. 410; Fink v. Smith, 170 Pa. St. 124, 32 Atl. 566, SO Am. St. 750; Wilson v. Ott, 173 Pa. St. 253, 34 Atl. 23, 51 Am. St. 767; Grif- fing v. Gislason, 21 S. Dak. 56, 109 N. W. 646 ; Cook v. Summer Spinning &c. Co., 1 Sneed (Tenn.) 698; Toland V. Corey, 6 Utah 392, 24 Pac. 190; Varnum v. Highgate, 65 Vt. 416, 26 Atl. 628; Waggoner v. Waggoner, 111 Va. 325, 68 S. E. 990, 30 L. R. A. (N. S.) 644n; Morgan v. Bell, 3 Wash. 554, 28 Pac. 925, 16 L. R. A. 614. One cannot release a claim of which he has no knowledge. Cooper v. Hav- ward, 71 Minn. 374, 74 N. W. 1S2, 70 Am. St. 330. See also, Hannah v. Steinman, 159 Cal. 142, 112 Pac. 1094. "Galard v. Winans, 111 Md. 434, 74 Atl. 626. 203 MISTAKE. § 114 nishes a ground for equitable relief in cases in which the mistake can be rectified without injury to the rights of others/^ while the latter does not."** "In re McFarlin, — Del. — , 75 Atl. 281; Wyche v. Greene, 16 Ga. 47; Renard v. Clink, 91 Mich. 1, 51 N. W. 692, 30 Am. St. 458. Thus A may give a deed for a certain land; the effect of this deed is understood per- fectly, but A may give it under a mistake as to his legal interest or right in the property, in which case, as is above pointed out, it may be avoided. See 2 Pom. Equity 841, 856. "It has been held that a misrep- resentation to the effect that the plaintiff was not bound by the assign- ment to a bank because it had not formally accepted the instrument was not a mistake of law, but of fact. Montgomery Door &c. Co. v. Atlan- tic Lumber Co., 206 Mass. 144, 92 N. E. 71. See ante, § 113, Mistake as to Law. CHAPTER VI. FAILURE TO DISCLOSE MATERIAL FACTS. § 120. Nondisclosure as to essential § 125. Failure to disclose changes in elements. fact. 121. Failure to disclose matter of 126. Insurance cases. inducement. 127. Suretyship. 122. Fact peculiarly within the 128. Sales. knowledge of one party. 129. Warranties. 123. Silence where there is a duty 130. Leases. to speak. 131. Commercial paper. 124. Relations of trust and confi- 132. Stock subscriptions and sales. dence. 133. Compromise. § 120. Nondisclosure as to essential elements. — In certain instances mistake and nondisclosure overlap each other. As a result of this it is sometimes said that the nondisclosure of an essential element of a contract prevents the formation of any con- tract at all. It will be found upon investigation that in those cases in w^hich this principle is announced one of the parties vi^as mistaken as to an essential element of the contract, and that the other party knew of this mistake but did not correct it. The mistake was such that it prevented the minds of the parties from meeting, and thus prevented the formation of any contract at all. One is not permitted to snap up or take advantage of the offer of another when he knows, or ought to know, that a mistake has been made.^ Likewise, when one pays money without knowledge of circtunstances, with which the receiver is ac- quainted but does not make known, which if made known would have avoided the payment, the receiver acts fraudulently and ' Cunningham Manufacturing Co. v. N. E. 40 ; Smith v. Mackin, 4 Lans. Rotograph Co., 30 App. D. C. 524, IS (N. Y.) 41 ; Butler v. Moses, 43 Ohio L. R. A. (N. S.) 368; Germain Fruit St. 166, 1 N. E. 316; Mofifett &c. Co. Co. V. Western Union Tel. Co., 137 v. Rochester, 178 U. S. 373, 44 L. ed. Cal. 598, 70 Pac. 658, 59 L. R. A. 575; 1108, 20 Sup. Ct. 957, revg. 91 Fed. Singer v. Grand Rapids Match Co., 28, 33 C. C. A. 319, which reversed 82 117 Ga. 86, 43 S. E. 755; Mumraen- Fed. 255. See also, ch. 5, Mistake, hoff V. Randall, 19 Ind. App. 44, 49 204 20S FAILURE TO DISCLOSE MATERIAL FACTS. § 121 the money may be recovered.^ But in this instance it is the fraud which in reahty avoids the agreement, and not the nondisclosure. To say that nondisclosure of an essential element prevents the formation of a contract leads to confusion. It would be better if the preceding cases and cases similar thereto were classified under the respective heads of Fraud and Mistake. § 121. Failure to disclose matter of inducement. — The mere failure of one party to disclose facts extrinsic or intrinsic to the contract, known to him and not to the adversary party, does not, in the absence of special circumstances or relations, amount to fraud or affect the validity of the contract.^ Nondis- closure must be distinguished from active concealment. The one guilty of nondisclosure must say or do nothing to mislead the other, or induce him not to investigate or otherwise prevent him from ascertaining the truth, for a very little is sufficient to affect the application of the principle that nondisclosure does not avoid a contract, and it is said that "if a word, if a single word be dropped, v/hich tends to mislead the other, that principle will not be allowed to operate."* The above principles as to mere nondis- ■^ Carson v. Berson, 86 Cal. 433, 25 W. Va. 624, 11 S. E. 39; Dickson v. Pac. 7; Chickasaw County &c. Fire Pritchard, 111 Wis. 310, 87 N. W. 292. Ins. Co. V. Weller, 98 Iowa 731, 68 N. "Turner v. Harvey, Jac. 178; Dol- W. 443. man v. Nokes, 22 Beav. 402; Fox v. ' Turner v. Harvey, Jac. 178 ; Davies Mackreth, 3 Bro. Ch. 45 ; Stackpole v. V. Cooper, 5 Myl. & C. 270; Roseman Hancock, 40 Fla. 362, 24 So. 914, 45 V. Canovan, 43 Cal. 110; Jackson v. L. R. A. 814; Akers v. Martin, 110 Combs, 7 Mack. (D. C.) 608, 1 L. R. Ky. 335, 61 S. W. 465; Nickley v. A. 742; Mitchell v. McDougall, 62 111. Thomas, 22 Barb. (N. Y.) 652; Bench 498; Hayner v. Mcllwain, 53 111. v. Sheldon, 14 Barb. (N. Y.) 66; Liv- App. 652; Luthy v. Kline, 56 111. App. ingston v. Peru Iron Co., 2 Paige (N. 314; Court v. Snyder, 2 Ind. App. 440, Y.) 390, reversed on other grounds m 28 N. E. 718, 50 Am. St. 247; Will- 9 Wend. (N. Y.) 511; Smith iams V. Beazley, 3 J. J. Marsh. (Ky.) v. Beatty, 2 Ired. Eq. (N. Car.) 577; Potts V. Chapin, 133 Mass. 276; 456, 40 Am. Dec. 435. See also, Williams v. Spurr, 24 Mich. 335 ; Active Concealment. "Mere non- Drake V. Collins, 5 How. (Miss.) disclosure of material facts, how- 253 ; Wood v. Amory, 105 N. Y. 278, ever morally censurable, would, in my 11 N. E. 636; People's Bank v. Bo- opinion, form no grounds for an ac- gart, 81 N. Y. 101, 37 Am. Rep. 481; tion in the nature of an action for Nickley v. Thomas, 22 Barb. (N. Y.) misrepresentation. There must, in my 652; Harris v. Tyson, 24 Pa. St. 347, opinion, be some active misstatement 64 Am. Dec. 661 ; Wilkinson v. Sup- of fact, or, at all events, such a par- lee, 166 Pa. St. 315, 31 Atl. 36; Laid- tial or fragmentary statement of fact, law V. Organ, 2 Wheat. (U. S.) 178, as that the holding of that which is 4 L. ed. 214 ; Crompton v. Beedle, 83 not stated makes that which is stated Vt. 287, 75 Atl. 331, 30 L. R. A. (N. absolutely false." Peek v. Gurney, L. S.j 748; Pennybacker v. Laidley, 33 R. 6 H. L. 377. For a good case il- 121 CONTRACTS. 206 closure find their application in those instances where the parties deal at arm's length. Where no confidential relation, actual or im- plied, exists, one is not bound to make known facts equally within the means of knowledge of both parties ; and upon failure so to do it will not give rise to an action for the avoidance or for the rescission of the contract.^ The above is the common-law rule. By weight of authority the same principle is applied in equity.^ lustrating the distinction between ac- tive concealment and silence, see Chi- cora Fertilizer Co. v. Dunan, 91 Md. 144. 46 Atl. 347, SO L. R. A. 401. See, however, CuUum v. Branch Bank, 4 Ala. 21, i1 Am. Dec. 725; Perkins v. McGavock, Cooke (Tenn.) 41S ; Trigg V. Read, S Humphrey (Tenn.) 529, 42 Am. Dec. 447. 'Keates v. Cadogan, 10 C. B. 591, 70 E. C. L. 591 ; Southerne v. Howe, 2 RoUe 5; Hill v. Balls, 2 H. & N. 299; Burnett v. Stanton, 2 Ala. 181; Armstrong v. Bufford, 51 Ala. 410; Moses v. Katzenberger, 84 Ala. 95, 4 So. 237; Kohl v. Lindley, 39 111. 195, 89 Am. Dec. 294; Cogel v. Kniseley, 89 111. 598 ; Roper v. Sangamon Lodge No. 6, 91 111. 518, Z'i Am. Rep. 60; McAroy v. Wright, 25 Ind. 22; Dean V. Morey, ZZ Iowa 120; Hobbs v. Parker, 31 Maine 143; Hall v. Thompson, 1 Sm. & M. (Miss.) 443; Stewart v. Dugin, 4 Mo. 245, 28 Am. Dec. 348; Barnard v. Duncan, 38 Mo. 170, 90 Am. Dec. 416; Kircher v. Con- rad, 9 Mont. 191, 23 Pac. 74, 7 L. R. A. 471, 18 Am. St. 731 ; Jones v. Ed- wards, 1 Nebr. 170; Corby v. Drew, 55 N. J. Eq. 387, 36 Atl. 827 ; People's Bank v. Bogart, 81 N. Y. 101, 37 Am. Rep. 481 ; Thompson v. Morris, 5 Jones L. (N. Car.) 151; Brown v. Gray, 6 Jones L. (N. Car.) 103, 72 Am. Dec. 563; Walsh v. Hall, 66 N. Car. 233; Hadley v. Clinton County Importing Co., 13 Ohio St. 502, 82 Am. Dec. 454; Kintzing v. McElrath, 5 Pa. St. 467 ; Harris v. Tyson, 24 Pa. St. 347, 64 Am. Dec. 661 ; In re But- ler's Appeal, 26 Pa. St. 63; Rocka- fellow V. Baker, 41 Pa. St. 319, 80 Am. Dec. 624; McCall v. Davis, 56 Pa. St. 431. 94 Am. Dec, 92; Laidlaw V. Organ, 2 Wheat. (U. S.) 178, 4 L. ed. 214; Blvdenburgh v. Welsh, 1 Baldw. (U. S.) 331, Fed. Cas. No. 1583. ' Davies v. London &c. Ins. Co., 8 Ch. Div. 469; Juzan v. Toulmin, 9 Ala. 662, 44 Am. Dec. 448; Marriner v. Dennison, 78 Cal. 202, 20 Pac. 386; Hemingway v. Coleman, 49 Conn. 390, 44 Am. Rep. 243; Pickering v. Day, 3 Houst. (Del.) 474, 95 Am. Dec. 291; Randolph v. Allen, IZ Fed. 23, 19 C. C. A. 353, 41 U. S. App. 117; Mitchell V. McDougall, 62 111. 498; Jackson v. Miner, 101 111. 550; JNIills' Heirs v. Lee, 6 T. B. Mon. (Ky.) 91, 17 Am. Dec. 118; Smith v. Fisher, 5 J. J. Marsh. (Ky.) 194; WiUiams v. Beazley, 3 J. J. Marsh. (Ky.) 577; Hall V. Thompson, 1 Sm. & M. (Miss.) 443; Young v. Bumpass, Freem. (Miss.) 241; Jillett v. Union Nat. Bank, 56 Mo. 304; Conover v. Warden, 22 N. J. Eq. 492; Corby v. Drew, 55 N. J. Eq. 387, 36 Atl. 827; Carpenter v. Danforth, 52 Barb. (N. Y.) 581; Smith v. Beatty, 2 Ired. Eq. (N. Car.) 456, 40 Am. Dec. 435; Rockafellow v. Baker, 41 Pa. St. 319, 80 Am. Dec. 624; Neill v. Shamburg, 158 Pa. St. 263, 27 Atl. 992; Harris v. Tyson, 24 Pa. St. 347, 64 Am. Dec. 661 ; In re Butler's Appeal, 26 Pa. St. 63; Rison v. Newberry, 90 Va. 513, 18 S. E. 916 ; Pennybacker v. Laidley, iZ W. Va. 624, 11 S. E. 39. ';if the mistake is not in the expression of the agreement, but in some fact ma- terially inducing it, the mere knowl- edge by one party of a mistake in the other party does not, in the ab- sence of a duty to disclose it, consti- tute sufficient grounds, in equity, to have the agreement canceled. If the parties are at arm's length, either may remain silent. The case, however, is otherwise if there be a duty to dis- close and the party who is under such duty does not disclose. He will then not be permitted by a court of equity to hold the other party to his agree- ment." Morgan v. Owens, 228 111. 598, 81 N. E. 1135. 207 FAILURE TO DISCLOSE MATERIAL FACTS. § 122 § 122. Fact peculiarly within the knowledge of one party. The mere fact that circumstances material to the inducement of the contract are pecuHarly within the knowledge of one of the parties does not, in the absence of any relation of trust and con- fidence, impose upon him the duty to impart such knowledge to the other.'' Consequently, when there are no peculiar circum- stances calling for disclosure, such as some confidential or fiduci- ary relation existing between the parties, a purchaser, having superior knowledge of value, does not commit fraud merely by purchasing without disclosing his knowledge of the value of the thing purchased.® So, on the other hand no legal obligation rests on the vendor to inform the purchaser that he is under such a mistake, when the mistake is not induced by the act of the vendor. The principle of caveat emptor applies.® ' Fox V. Mackreth, 3 Bro. C. C. 45, 2 Cox 158, 2 R. R. 55; Turner v. Harvey, Jac. 178; Ex parte Ham- mond, 6 DeG. M. & G. 699; Van Arsdale v. Howard, 5 Ala. 596; Otis V. Raymond, 3 Conn. 413; Mitchell v. McDougall, 62 111. 498; Jackson v. Miner, 101 111. 550; Frenzel v. Miller, 37 Ind. 1, 10 Am. Rep. 62; Comrs. Tippecanoe County v. Reynolds, 44 Ind. 509; Williams v. Beazley, 3 J. J. Marsh. (Ky.) 577; Smith v. Fisher, 5 J. J. Marsh. (Ky.) 188; Taylor v. Bradshaw, 6 T. B. Mon. (Ky.) 145, 17 Am. Dec. 132; Faulk v. Hough, 14 La. Ann. 659; Matthews v. Bliss, 22 Pick. (Mass.) 48; Willams v. Spurr. 24 Mich. 335; Crowell v. Jackson, 53 N. J. L. 656, 23 Atl. 426; Corby v. Drew, 55 N. J. Eq. 387, 36 Atl. 827; Shank V. Shoemaker, 18 N. Y. 489; Dambmann v. Schulting, 75 N. Y. 55 ; People's Bank v. Bogart, 81 N. Y. 101, 37 Am. Rep. 481; McMichael v. Kilmer, 76 N. Y. 36, reversing 12 Hun (N. Y.) 336; Bench v. Sheldon, 14 Barb. (N. Y.) 66; Carpenter v. Dan- forth, 52 Barb. (N. Y.) 581; Setzar V. Wilson, 4 Ired. L. (N. Car.) 501; Smith v. Beatty, 2 Ired. Eq. (N. Car.) 456, 40 Am. Dec. 435 ; Kintzing v. Mc- Elrath, 5 Pa. St. 467; Harris v. Ty- son, 24 Pa. St. 347, 64 Am. Dec. 661 ; In re Butler's Appeal, 26 Pa. St. 63 ; Neill V. Shamburg, 158 Pa. St. 263, 27 Atl. 992; Laidlaw v. Organ, 2 Wheat. (U. S.) 178, 4 L. ed. 214. ' Pratt Land &c. Co. v. McClain, 135 Ala. 452, 33 So. 185, 93 Am. St. 35. In the above case the plaintiiif's prop- erty had increased in value on ac- count of improvement in a nearby city. To same effect, Burt v. Mason, 97 Mich. 127, 56 N. W. 365. In the above case it was held that the vendee need not reveal the fact that a rail- road was prospected close to the place bought. Smith v. Beatty, 2 Ired. Eq. (N. Car.) 456, 40 Am. Dec. 435. In the above case the lessee failed to disclose to the lessor that there was a valuable gold mine on the land. Harris v. Tyson, 24 Pa. St. 347, 64 Am. Dec. 661, In the above case the vendor had no knowledge of sand chrome on his land, and the vendee failed to reveal its existence. Guar- anty Safe Deposit &c. Co. v. Liebold, 207 Pa. 399, 56 Atl. 951; Standard Steel Car Co. v. Stamm, 207 Pa. 418, 56 Atl. 954. In the two preceding cases the vendee failed to reveal that a large manufacturing plant would be located near the property bought. Boyd V. Leith (Tex. Civ. App.), SO S. W. 618. Vendee need not reveal that a railroad would pass close to the land. See also, Dolman v. Nokes, 22 Beav. 402; Mitchell v. McDougall, 62 111. 498. See, however, Williams V. Beazley, 3 J. J. Marsh. (Ky.) 577; Perkins v. McGavock, Cooke (Tenn.) 415. "Ward V. Hobbs, 3 Q. B. D. ISO, 4 § 123 CONTRACTS. 208 § 123. Silence where there is a duty to speak. — It is well settled that silence, when there is a duty to disclose a material fact, constitutes fraud.^° This principle, while true, gives rise to difficulty because it is hard to determine just when there is a duty to speak. A review of the cases shows, however, that there is a duty to make a full disclosure when the parties stand in a con- fidential relation one to the other ; there is also a duty to make a full disclosure where, by reason of the subject-matter with refer- ence to which the parties are dealing or other circumstances, a duty is imposed, legal or equitable, upon the dominant party, to make known all the material facts known to him and not known to the other. The truth of this will be demonstrated in the suc- ceeding sections of this chapter. § 124. Relations of trust and confidence. — No principle of law is better established than that whenever a party to a contract occupies a relation of trust and confidence, actual or implied, the dominant party must make a full disclosure of all material facts.^^ App. Cas. 13; Keates v. Lord Cado- gan, 10 C. B. 591. See also, opinion of Blackburn, J., in Smith v. Hughes, L. R. 6 Q. B. 597; Wilson v. Higbee,,62 Fed. 723. Kent, in his Commentaries, states, "That as a general rule each party is bound to communicate to the other his knowledge of the material facts, provided he knows the other to be ignorant of them, and they be not open and naked, or equally within the reach of his observation." 2 Kent 483, 12th Ed. In regard to the above statement Benjamin says: "The courts of equity even fall far short of this principle." Benjamin on Sales, 7th Ed. 421. It was seen that Benjamin's criticism is justified, al- though there are many cases which use language similar to that used by Chancellor Kent. However, it will be found upon reviewing these cases that they were in the main decided upon other grounds, or that the party making the nondisclosure was also guilty of active concealment, or that the omission to disclose was so un- conscionable as to prevent specific performance. " Central R. Co. v. Kisch, L. R. 2 H. L. 99; Loewer v. Harris, 14 U. S. App. 615, 57 Fed. 368, 6 C. C. A. 394; Cecil V. Spurger, 32 Mo. 462, 82 Am. Dec. 140; Dambmann v. Schulting, 75 N. Y. 55 ; Ingram v. Morgan, 4 Humph. (Tenn.) 66, 40 Am. Dec. 626. See also, Jackson v. Combs, 7 Mackey (D. C.) 608, 1 L. R. A. 742. " Central R. Co. v. Kisch, L. R. 2 H. L. 99; Davies v. London &c. Ins. Co., 8 Ch. Div. 469; Dunne v. Eng- lish, L. R. 18 Eq. 524; Dent v. Ben- nett, 4 Myl. & C. 269; Todd v. Wil- son, 9 Beav. 486; Billage v. Southee, 9 Hare 534; Warren v. Schainwald, 62 Cal. 56; Colton v. Stanford, 82 Cal. 351, 23 Pac. 16, 16 Am. St. 137; ]\Ieyers v. Merillion, 118 Cal. 352, 50 Pac. 662; Caldwell v. Davis, 10 Colo. 481, 15 Pac. 696, 3 Am. St. 599; Heminway v. Coleman, 49 Conn. 390, 44 Am. Rep. 243; Daniel v. Brown, 33 Fed. 849; Capital Bank v. Ruther- ford, 70 Ga. 57; Poullain v. PouUain, 76 Ga. 420, 4 S. E. 92; Hopkins v. Watt, 13 III. 298; Mason v. Baiiman, 62 III. Id; Miller v. Whelan, 158 111. 544, 42 N. E. 59; Morgan v. Owens, 228 111. 598, 81 N. E. 1135; McCor- mick V. Malin, 5 Blackf. (Ind.) 509; Green v. Peeso, 92 Iowa 261, 60 N. W. 531 ; Purslow v. Jackson, 93 Iowa 694, 62 N. W. 12; Beard v. Camp- bell, 2 A. K. Marsh. (Ky.) 125, 12 209 FAILURE TO DISCLOSE MATERIAL FACTS. § 1 25 The necessity for a full and fair disclosure between parties that Sustain a formal and technical fiduciary relation towards each other has already been given a somewhat thorough review under the title, "Fraud Where There is Ficudiary or Confidential Rela- tion," in the chapter entitled "Fraud and Misrepresentation" and nothing further will be added here on that phase of the subject." § 125. Failure to disclose changes in fact. — Although a contrary doctrine has been announced," it may be stated as a general rule that, if a person makes a representation by which he induces another to take a particular course, and the circumstances are afterward altered to the knowledge of the party making the i-epresentation but not to the knowledge of the party to whom the representation was made, the alteration of the circumstances may well affect the course of conduct which may be pursued by the party to whom the representation is made. It is then the duty of the. party who has made the representation to communi- cate to the party to whom the representation has been made the alteration in the circumstances.^* For instance, if, after a mer- chant has made a statement to a commercial agency as to his solvency, there is a change for the worse therein, it is his duty to notify such agency that parties with whom he has commercial Am. Dec. 362; Kruson v. Kruson, 1 (Va.) 352, 56 Am. Dec. 116; Sexton Bibb (Ky.) 183; Prentiss V. Russ, 16 v. Sexton, 9 Gratt. (Va.) 204; Maine 30; Franklin Bank v. Cooper, Thomas v. Turner, 87 Va. 1, 12 S. 36 Maine 179; Gray v. Emmons, 7 E. 149; Bosher v. Richmond &c. Land Mich. 533 ; Moore v. Mandlebaum, 8 Co., 89 Va. 455, 16 S. E. 360, i1 Am. Mich. 435 ; Tompkins v. Hollister, 60 St. 879 ; Virginia Land Co. v. Haupt, Mich. 470, 27 N. W. 651; Finegan v. 90 Va. 533, 19 S. E. 168, 44 Am. St. Theisen, 92 Mich. 173, 52 N. W. 612; 9Z9; Bell v. Bell, 3 W. Va. 183; Bus- Pomeroy v. Benton, 57 Mo. 531 ; Gru- sian v. Milwaukee &c. R. Co., 56 Wis. her V. Baker, 20 Nev. 453, 23 Pac. 325, 14 N. W. 452; Wells v. Mc- 858, 9 L. R. A. 302 ; Porter v. Wood- Geoch, 71 Wis. 196, 35 N. W. 769. ruff, Z6 N. J. Eq. 174; Howell v. "See Anti-Fraud and Misrepre- Baker, 4 Johns. Ch. (N. Y.) 118; sentation, Ch. 4. Morris v. Budlong, 16 Hun (N. Y.) "'Arkwright v. Newbold, 17 Ch. 570; Miller v. Curtiss, 15 N. Y. Supp. Div. 301. See also, Corbett v. Gil- 140, 39 N. Y. St. 383, 59 N. Y. Super, bert, 24 Ga. 454. Ct. 503, affirmed without opinion in "Traill v. Baring, 4 DeG. J. & S. 133 N. Y. 622, 30 N. E. 1150; Kline 318; In re Scottish Petroleum Co., V. Kline, 57 Pa. St. 120, 98 Am. Dec. 23 Ch. Div. 413; Loewer v. Harris, 206; Bennett v. McMiUin, 179 Pa. 57 Fed. 368, 6 C. C. A. 394; Janes St. 146, 36 Atl. 188, 57 Am. St. 591 ; v. Mercer University, 17 Ga. 515 ; Belcher v. Belcher, 10 Yerg. (Tenn.) Lindauer v. Hay, 61 Iowa 663, 17 121; Jeffries v. Wiester, 2 Sawy. (U. N. W. 98; Mooney v. Davis, 75 Mich. S.) 135, Fed. Cas. No. 7254; Crump 188, 42 N. W. 802, 13 Am. St. 425. V. United States Min. Co., 7 Gratt. 14 — Contracts, Vol. I §126 CONTRACTS. 210 dealings may not be misled as to the extent of credit they may safely give, and if he fails to do so and obtains credit on the strength of the original statement to the agency he is guilty of fraud. ^^ The same principle applies to a statement believed to be true at the time it is made, but subsequently discovered to be false. If one discovers its falsity before it is acted upon by the other party, he must correct the statement, otherwise, he is guilty of fraud. ^® Likewise, it is fraud for another to secretly change the conditions and to procure another to act under an assumption that they have not been changed." § 126. Insurance cases. — The insurer must to greater or less degree rely on the representations of the insured. Conse- quently the parties to a contract of insurance are considered as occupying a relation of trust and confidence, so that the insured must generally make a full disclosure of all facts material to the agreement, as the insurer acts on the assumption that a full dis- closure has been made.^® Thus, the existence in the hands of the mortgagee of an outstanding unfiled chattel mortgage upon a stock of goods has been held a fact material to the risk in a con- tract of insurance of the goods, even though the instrument con- tained a clause that it "shall not be valid until and unless filed."^* This rule does not require the applicants to give information on a fact which the insurer is presumed to know unless there is a ''Mooney v. Davis, 75 Mich. 188, &c. Co. v. Abbott, 12 Md. 348; 42 N. W. 802, 13 Am. St. 425. Stocker v. Merrimack &c. Ins. Co. 6 "Reynell v. Sprye, 1 DeG. M. & Mass. 220; Lewis v. Eagle Ins. Co., G. 660; Davies v. London &c. Ins. 10 Gray (Mass.) 508; Rosenheim v. Co., 8 Ch. Div. 469; Pettigrew v. American Ins. Co., 33 Mo. 230; New Chellis, 41 N. H. 95. In the case last York Bowery Ins. Co. v. New York cited it is held that if the mistake is Fire Ins. Co., 17 Wend. (N. Y.) 359; not discovered until after the consum- Burritt v. Saratoga County &c. Ins. mation of the contract the agreement Co., 5 Hill (N. Y.) 188, 40 Am. Dec. induced thereby cannot be avoided 345 ; Smith v. ^tna Life Ins. Co., 49 because of failure to correct the same. N. Y. 211 ; Ely v. Hallett, 2 Caines "Lancaster County Bank v. Al- (N. Y.) 57; Howell v. Cincinnati Ins. bright, 21 Pa. St. 228. Co., 7 Ohio 276; Smith v. Columbia ^' Bates V. Hewitt, L. R. 2 Q. B. Ins. Co., 17 Pa. St. 253; McLanahan 595; lonides v. Pender, L. R. 9 Q. B. v. Universal Ins. Co., 1 Pet. (U. S.) 531; Blackburn v. Vigors, 12 App. 170, 7 L. ed. 98; Columbia Ins. Co. Cas.. 531; Hart v. British Ins. Co., 80 v. Lawrence, 10 Pet. (U. S.) 507, 9 Cal. 440, 22 Pac. 302; Chicago &c. R. L. ed. 512; Sun Ins. Co. v. Ocean Co. V. Thompson, 19 111. 577 ; Lycom- Ins. Co., 107 U. S. 485, 27 L. ed 337. ing Ins. Co. v. Rubin, 79 111. 402; " Modsen v. Farmers' &c. Ins. Co., Walden v. Louisiana Ins. Co., 12 La. 87 Nebr. 107, 126 N. W. 1086, 29 L. 134, 32 Am. Dec. 116; Augusta Ins. R. A. (N. S.) 97. 211 FAILURE TO DISCLOSE MATERIAL FACTS. 126 direct inquiry relative thereto ; but any matter material to the risk and unknown to the insurer must be communicated/" However, where a written application is furnished by the insurer to the insured which contains questions to be answered by the latter, it is held that an. innocent failure to communicate facts not inquired about will not avoid the policy.^^ The insured, it is said in such a case, has a right to suppose that the insurer will make 'proper inquiries concerning all facts except such as are sup- posed to be known or are regarded as immaterial.'''* In the jurisdictions so holding mere nondisclosure does not avoid the policy,-^ in the absence of intentional bad faith on the part of the insured.^* Concealment involves not only the materiality of the fact withheld, and which ought to have been communicated, but also the design and intention of the insured in withholding it. ™ Bebee v. Hartford County &c. Ins. Co., 25 Conn. 51, 65 Am. Dec. 553; Keith V. Globe Ins. Co., 52 111. 518, 4 Am. Rep. 624; Security Trust Co. V. Tarpey, 182 III. 52, 54 N. E. 1041 ; German-American Ins. Co. v. Norris, 100 Ky. 29, 18 Ky. L. 537, il S. W. 267, 66 Am. St. 324; Green v. Mer- chants' Ins. Co., 10 Pick. (Mass.) 402; Richards v. Washington &c. Ins. Co., 60 Mich. 420, 27 N. W. 586; De Longuemere v. Fire Ins. Co., 10 Johns. (N. Y.) 120; Hey v. Guar- antor's Liability Indemnity Co., 181 Pa. St. 220, Zl Atl. 402, 59 Am. St. 644 ; Clark v. Manufacturers' Ins. Co., 8 How. (U. S.) 235, 12 L. ed. 1061; Wright V. Hartford Fire Ins. Co., 36 Wis. 522. ''Iowa Life Ins. Co. v. Zehr, 91 111. App. 93 ; Commonwealth v. Massachusetts Fire Ins. Co., 112 Mass. 116; Washington Mfg. Co. v. Weymouth &c. Ins. Co., 135 Mass. 503; Boggs V. American Ins. Co., 30 Mo. 63; Gates v. Madison County Ins. Co., 5 N. Y. 469 ; Rawls v. Amer- ican &c. Ins. Co., 27 N. Y. 282, 84 Am. Dec. 280; Browning v. Home Ins. Co., 71 N. Y. 508, 27 Am. Rep. 86; Wytheville Ins. Co. v. Stultz, 87 Va. 629, 13 S. E. 11. '"Continental Ins. Co. v. Munns, 120 Ind. 30, 22 N. E. 78, 5 L. R. A. 430; Seal v. Farmers' &c. Ins. Co., 59 Nebr. 253, 80 N. W. 807 ; Arthur v. Palatine Ins. Co., 35 Ore. 27, 57 Pac. 62, 1() Am. St. 450; Clark v. Manu- facturers' Ins. Co., 8 How. (U. S.) 235. ^ Continental Ins. Co. v. Munns, 120 Ind. 30, 22 N. E. 78, 5 L. R. A. 430; Washington &c. Mfg. Co., v. Weymouth &c. Ins. Co., 135 Mass. 503; Guest v. New Hampshire Fire Ins. Co., 66 Mich. 98, 33 N. W. 31; O'Brien v. Ohio Ins. Co., 52 Mich. 131, 17 N. W. 726; Seal v. Farmers' &c. Ins. Co., 59 Nebr. 253. 80 N. W. 807; Hanover Fire Ins. Co. v. Bohn, 48 Nebr. 743, 67 N. W. 774, 58 Am. St. 719; Insurance Co. of North America v. Bachler, 44 Nebr. 549, 62 N. W. 911; Arthur v. Palatine Ins. Co., 35 Ore. 27, 57 Pac. 62, 76 Am. St. 450; Koshland v. Hartford Fire Ins. Co., 31 Ore. 402, 49 Pac. 866; Hey V. Guarantor's Liability Indem- nity Co., 181 Pa. St. 220, 37 Atl. 402, 59 Am. St. 644; Clark v. Manufac- turers' Ins. Co., 8 How. (U. S.) 235, 12 L. ed. 1061 ; Dooly v. Hanover Fire Ins. Co., 16 Wash. 155, 47 Pac. 507, 58 Am. St. 26; Sanford v. Royal Ins. Co., 11 Wash. 653, 40 Pac. 609; Vankirk v. Citizens' Ins. Co., 79 Wis. 627, 48 N. W. 798; Alkan v. New Hampshire Ins. Co., 53 Wis. 136, 10 N. W. 91. ^ Dooly V. Hanover Fire Ins. Co., 16 Wash. 155, 47 Pac. 507, 58 Am. St. 26; Campbell v. American Fire Ins. Co., 1Z Wis. 100, 40 N. W. 661. 126 CONTRACTS. 212 If an inquiry is made about a material fact, and that fact is not disclosed upon such inquiry, it is very likely that the person ques- tioned intended to withhold it ; but if no inquiry is made the in- tention to withold the fact is not so plain.^^ The insured can only be said to fail in his duty to the insurer when he withholds from him some fact which, though not made the subject of inquiry, he nevertheless believes to be material to the risk, and which actually is so, for fear it would induce a rejection of the risk, or, what is the same thing, with fraudulent intent.^® Consequently, where upon the face of the application a question appears to be not answered at all or to be imperfectly answered, and the insurers issue a policy without further inquiry, they waive the want or imperfection in the answer, and render the omission to answer more fully immaterial.^' The distinction between an answer apparently complete, but in fact incomplete and therefore untrue, and an answer manifestly incomplete, and as such accepted by the insurer, may be illustrated by two cases of fire insurance which are governed by the same rules in this respect as cases of life insurance. If on applying for insurance upon a building against fire, it is asked whether the property is encumbered, and for what amount, and the answer discloses one mortgage, but in fact there are two, the policy issued thereon is avoided.^' But if to the same question he merely answers that the property is encumbered, without stating the amount of the encumbrances, the '"'"Concealment is the designed and Carson v. Jersey City Ins. Co., 43 intentional withholding of any fact, N. J. L. 300, 44 N. J. L. 210, 39 Am. material to the risk, which the as- Rep. 584; Dilleber v. Home Life Ins. sured in honesty and good faith ought Co., 69 N. Y. 256, 25 Am. Rep. 182 ; to communicate." Connecticut Fire Higgins v. Phcenix Ins. Co., 74 N. Y. Ins. Co. V. Colorado &c. Milling Co., 6; Lorillard Fire Ins. Co. v. McCul- 50 Colo. 424, 116 Pac. 154, quoting loch, 21 Ohio St. 176; Dayton Ins. from Clark v. Union Mut. Ins. Co., Co. v. Kelly, 24 Ohio St. 345, IS Am. 40 N. H. 333, n Am. Dec. 721. Rep. 612; Armenia Ins. Co. v. Paul, =^Penn Mut. Life Ins. Co. v. Me- 91 Pa. St. 520, 36 Am. Rep. 676; chanics' Sav, &c. Co., 72 Fed. 413, 19 Lebanon Mut. Ins. Co. v. Kepler, 106 CCA. 286, 38 L. R. A. 33. Pa. St, 28; Phcenix Ins. Co. v. Rad- ^Penn Mut. Life Ins. Co. v. Wiler, din, 120 U. S. 183, 30 L. ed. 644; 100 Ind. 92, SO Am. Rep. 769; Hall Hosford v. Germania Ins. Co., 127 V Peoples' Fire Ins. Co,, 6 Gray U. S. 399. 8 Sup. Ct. 1199, 32 L. ed. (Mass.) 185; Liberty Hall Assn. v. 196; Dunbar v. Phrenix Ins. Co., 72 Housatonic Mut. Fire Ins. Co., 7 Wis. 492, 40 N. W. 386. Gray (Mass.) 261; American Life ''Towne v. Fitchburg &c. Ins. Co., Ins. Co. V. Mahone, 56 Miss. 180; 7 Allen (Mass.) 51. 213 FAILURE TO DISCLOSE MATERIAL FACTS. § 127 issue of the policy without further inquiry is a waiver of the omission to state the amount.^" § 127. Suretyship. — It is hard to formulate any general rule applicable to this branch of the subject. In contracts of suretyship there is no universal obligation to make disclosure.'" The law does not, as a rule, require that the party to whom the security is given shall seek out the surety and explain to him the nature and extent of the obligation, nor does it hold him responsi- ble for fraudulent misrepresentation made to the surety by the principal, or by a third party, unless such misrepresentations are made with his knowledge or consent.^^ Consequently the obligee or creditor is not required in the absence of inquiry to disclose to the surety the insolvency of his principal at the time the con- tract of surety is entered into.'^ So far as the general character or reputation of the principal is concerned, it is to be assumed that ■* Nichols V. Fayette Fire Ins. Co., 1 Allen (Mass.) 63; Phcenix Life Ins. Co. V. Raddin, 120 U. S. 183. See further as to insurance in a subse- quent volume under title Insurance. '"Railton v. Matthews, 10 CI. & F. 934. For a discussion as to when dis- closures are necessary, see Opie v. Pacific Investment Co., 26 Wash. SOS, 67 Pac. 231, 56 L. R. A. 778. =^Cobbet V. Brock, 20 Beav. 524; Wallace v. Wilder, 13 Fed. 707; Brown v. Davenport, Id Ga. 799; Young V. Ward, 21 111. 223 ; Ladd v. Trustees of Township Forty-one, 80 111. 233; Anderson v. Warne, 71 111. 20, 22 Am. St. 83 ; Davis Sewing Ma- chine Co. v. Buckles, 89 111. 237 ; Lu- cas V. Owens, 113 Ind. 521, 16 N. E. 196; Home Ins. Co. v. Holway, SS Iowa 571, 39 Am. Rep. 179; Graves v. Tucker, 10 Sm. & M. (Miss.) 9; Sooy V. State, 39 N. J. L. 135 ; West- ern New York Life Ins. Co. v. Clin- ton, 66 N. Y. 326; George v. Tate, 102 U. S. 564, 26 L. ed. 232; Mason Lumber Co. v. Buchtel, 101 U. S. 633, 25 L. ed. 1072; Dair v. United States, 16 Wall. (U. S.) 1, 21 L. ed. 491 ; Ryan v. United States, 19 Wall. (U. S.) 514, 22 L. ed. 172; United States v. Girault, 11 How (U. S.) 22; Quinn v. Hard, 43 Vt. 375, 5 Am. Rep. 284; Atlantic Trust &c. Co. v. Union Trust &c. Corporation, 110 Va. 286, ai S. E. 182, 135 Am. St. 937; Griffith v. Reynolds, 4 Graft. (Va.) 46. "It is the business of the surety to ascertain who the true principal is, and any false representations made to induce him to sign the obligation as to the principal, if unknown to the obligee, will not defeat his right to recover against the sureties." Will- iams v. Morris, — Ark. — , 138 S. W. 464. But it seems to be equally well settled that where, with the knowl- edge or assent of the creditor, there is a misrepresentation made to the surety with regard to any material fact, which, if known to him, might have prevented him from entering into the undertaking of suretyship, it will thereby be rendered invalid and the surety discharged from his lia- bility. Atlantic Trust &c. Co. v. Union Trust &c. Corporation, 110 Va. 286, 67 S. E. 182, 135 Am. St. 937. ^'^ Roper V. Sangamon Lodge, 91 III. 518, 33 Am. Rep. 60; Ham v. Greve, 34 Ind. 18; Bank of Monroe v. Gif- ford, 72 Iowa 750, 32 N. W. 669; Sebald v. Citizens' Deposit Bank, 31 Ky. L. 1244, 105 S. W. 130, 14 L. R. A. (N. S.) 376; First National Bank V. Johnson, 133 Mich. 700, 95 N. W. 975, 103 Am. St. 468; Farmers' &c. Bank V. Braden, 145 Pa. 473, 22 Atl. 1045; Noble v. Scofield, 44 Vt. 281. § 127 ~ CONTRACTS. 214' the surety has informed himself, or, if not, that he is wilHng to take the risk involved on such knov^rledge as he may have. It is, well settled, however, that a person proposing to become surety for the conduct or contract of another has a right to be treated with perfect good faith.'^ Consequently, it is held by the weight of authority that if the creditor fails to reveal any defalca- tion, misappropriation or failure to account for a previous indebt- edness, existing at the time of the execution of the contract of surety or guaranty, it will release the surety if unknown to him.^* Thus, when an agent has acted dishonestly in his employment, the principal, with knowledge of the fact, cannot accept a surety for his future honesty from one who is ignorant of the agent's dishonesty, and to whom the agent is held out as a person worthy of confidence. The failure to communicate such knowledge, under such circumstances, would be a fraud upon the surety. The bad faith in withholding from the surety such information, so material to the risk, is manifested not only by the fact that the dishonest character of the agent is peculiarly within the knowl- edge of the principal, but the holding him out as a person entitled to confidence, by continuing him in the service, is held to be equiv- alent to a declaration that the principal has no knowledge of the dishonesty of the agent.'° However, if the previous defalcation '^Atlantic Trust &c. Co. v. Union Ins. Co., 8 Mo. App. ?>7; Farmers' Trust &c. Corporation, 110 Va. 286, Nat. Bank v. Van Slyke, 49 Hun (N. 67 S. E. 182, 135 Am. St. 9i7. See Y.) 7, 1 N. Y. S. 508; Wayne v. also, La Rose v. Logansport Nat. Commercial Nat. Bank, 52 Pa. St. Bank, 102 Ind. 332, 1 N. E. 805; At- 343; Wilmington &c. R. Co. v. Ling, las Bank v. Brownell, 9 R. L 168, 11 18 S. Car. 116; Magee v. Manhattan Am. Rep. 231. Life Ins. Co., 92 U. S. 93, 23 L. ed. '' Smith V. Bank of Scotland, 1 699, 51 How. Pr. (N. Y.) 413; Rem- Dow 272 ; Railton v. Matthews, 10 ington Sewing-Machine Co. v. Kezer- Cl. & F. 934; Lee v. Jones, 17 C. B. tee, 49 Wis. 409, S N. W. 809. (N. S.) 482; Cashin v. Perth, 7 Grant '"Guardian Fire Ins. Co. v. Thomp- (U. C.) 340; Peers v. Oxford, 17 son, 68 Cal. 208, 9 Pac. 1; Dinsmore Grant. (U. C.) 472; Phillips v. Fox- v. Tidball, 34 Ohio St. 411. See also, hall, L. R. 7 Q. B. 666 ; Gananoque Graves v. Lebanon Nat. Bank, 10 V. Stunden, 1 Ont. 1; Guardian &c. Bush (Ky.) 23, 19 Am. Rep. SO. The Ins. Co. V. Thompson, 68 Cal. above principle does not apply to 208, 9 Pac. 1 ; Drabek v. Grand sureties on official bonds. They are Lodge, 24 111. App. 82; Fishburn v. not discharged by fraud or default on Jones, 27 Ind. 119; Wilson v. Monti- the part of the principal, or failure on cello, 85 Ind. 10; Connecticut Life the part of the government to give Ins. Co. V. Scott, 81 Ky. 540 ; Frank- information relative thereto. San lin Bank v. Cooper, 36 Maine 179; Francisco v. Staude, 98 Cal. 560, 28 Franklin Bank v. Stevens, 39 Maine Pac. 778; Fidelity &c. Co. v. Com- 532; Harrison v. Lumberman's &c. monwealth, 104 Ky. 579, 47 S. W. 215 FAILURE TO DISCLOSE MATERIAL FACTS. § 127 is unknown to the creditor the surety is not discharged."" Like- wise, in the absence of any attempt to conceal or culpable negli- gence, failure to reveal the untrustworthiness of an official does not release the surety."^ But a secret agreement between the principal and the creditor, which in any way changes the surety's liability, is a fraud which will discharge him."^ Thus, the non- disclosure of a secret partnership between the principal and his creditor has been held such fraud as would discharge the surety from his obligation.'" So, if the surety understands and is led to believe that he is merely securing a particular debt or going security for a particular purpose, and a preexisting indebtedness, unknown to the security, is included in the amount secured, this is a material fact which will avoid the contract of the surety.*" It appears from the foregoing that while, as between creditor 579; Detroit v. Weber, 26 Mich. 284; Bower v. Commissioners, 25 Pa. St. 69; Harrisburg v. Guiles, 192 Pa. St. 191, 44 Atl. 48; Hallettsville v. Long, 11 Tex. Civ. App. 180, 32 S. W. 567; Farrar v. United States, S Pet. (U. S.) 37i, 8 L. ed. 159; United States v. Boyd, 5 How. (U. S.) 29; Ryan v. United States, 19 Wall. (U. S.) 514, 22 L. ed. 172; Osborne v. United States, 19 Wall. (U. S.) 577, 22 L. ed. 208, Fed. Cas. No. 10599; State v. Bates. 36 Vt. 387. " Home Ins. Co. v. Holway, 55 Iowa 571, 8 N. W. 457, 39 Am. Rep. 179; Amherst Bank v. Root, 2 Mete. (Ky.) 522; State v. Dunn, 11 La. Ann. 549; Farmington v. Stanley, 60 Maine 472 ; Tapley V. Martin, 116 Mass. 275; State V. Atherton, 40 Mo. 209; Howe Machine Co. v. Farrington, 82 N. Y. 121 ; Bostwick v. Van Voorhis, 91 N. Y. 353; Wayne v. Commercial Nat. Bank, 52 Pa. St. 343; Domestic Sew- ing Mach. Co. V. Jackson, 15 Lea (Tenn.) 418; Screwmen's Ben. Assn. V. Smith, 70 Tex. 168, 7 S. W. 793; ^tna Life Ins. Co. v. Mabbett, 18 Wis. 667. "Guardians of Stokesley Union v. Strother, 22 L. T. 84; Anaheim &c. Water Co. v. Parker, 101 Cal. 483, 35 Pac. 1048; Atlantic &c. Co. v. Barnes, 64 N. Y. 385, 21 Am. Rep. 621 ; Atlas Bank V. Brownell, 9 R. I. 168, 11 Am. Rep. 231 ; ^tna Life Ins. Co. v. Mab- bett, 18 Wis. 667. Where additional security was taken on account of the gambling of the cashier, the fact that the gambling was not disclosed did not release the surety. The gambling related, not to the subject of the transaction, but to the general char- acter of the cashier. La Rose v. Lo- gansport Nat. Bank, 102 Ind. 332, 1 N. E. 805 ; Atlas Bank v. Brownell, 9 R. I. 168, 11 Am. Rep. 231. ■« Pendlebury v. Walker, 4 Y. & C. 424; Pidcock v. Bishop, 3 B. & C. 60S; Comstock V. Gage, 91 111. 328 ; Spring- field Engine &c. Co. v. Park, 3 Ind. App. 173; Peck v. Durett's Admr., 9 Dana (Ky.) 486. ''Jungk V. Holbrook, IS Utah 198, 62 Am. St. 921. See also. Phoenix Mut. Life Ins. Co. v. HoIIoway, 51 Conn. 310, 50 Am. Rep. 21; Griswold V. Hazard, 141 U. S. 260, 35 L. ed. 678, 11 Sup. Ct. 972. "Stone V. Compton, 5 Bing. 142; Pidcock V. Bishop, 3 B. & C. 605; Hamilton v. Watson, 12 CI. & F. 109 ; Wason V. Wareing, 15 Beav. 151 ; Owen V. Homan, 3 Macn. & G. 378, 4 H. L. Cas. 997, 17 Jur. 861, 19 L. J. Ch. S49; Doughty v. Savage, 28 Conn. 146; Comstock v. Gage, 91 111. 328; Fassnacht v. Emsing & Gagen Co., 18 Ind. App. 80, A7 N. E. 480, 63 Am. St. 322; Warren v. Branch, IS W. Va. 21. See, however, Hamil- ton v. Wilson, 12 CI. & F. 109; Wythes v. Labouchere, 3 DeG. & J 593, S Jur. (N. S.) 499. §128 CONTRACTS. 2l6 and surety there is no positive legal duty which requires the cred- itor to give information as to his relation with and circumstances of the debtor, he is bound to exercise good faith in his dealing with the surety. The surety is, at least, entitled to know the real nature of the transaction, and liability he is undertaking; and if the creditor undertakes to make known facts he is under no obli- gation to disclose he is bound to represent them as they are in all respects material to the surety. The creditor having undertaken to make known the facts, and his representation as to them being material and false, the surety cannot be held liable unless he has notice of the true character of the loan.^^ § 128. Sales. — Where there is no relation of a confidential or fiduciary character between the vendor and the vendee, neither is under any obligation to disclose to the other facts material to the sale unless there is a legal or equitable obligation to communi- cate them, so that he cannot innocently keep silence.*' It is held, however, that in the sale of real estate the vendor is bound to dis- close any defect in the title to or encumbrance on the property sold, known to him and not known to the purchaser, and that fail- *^ Atlantic Trust &c. Co. v. Union one of fact, and not merely tiae ex- Trust &c. Corporation, 110 Va. 286, pression of an opinion. Evans v. Kee- 67 S. E. 182, 135 Am. St. 9?>1 . "A land, 9 Ala. 42, As to the duties the representation merely that the per- creditor owes the surety after the con- sons whose names appear on the note tract of suretyship has been entered are 'good' does not constitute a war- into, see Davenport v. State Banking ranty that the signatures are genu- Co., 126 Ga. 136, 54 S. E. 977, 115 ine.' Milan Bank v. Richmond, 235 Am. St. 68, and note. As to the duty Mo. 532, 139 S. W. 352, In the above of the surety to make disclosures to case the creditor, in order to induce the creditor, see Opie v. Pacific In- the defendant to go his son's security vestment Co,, 26 Wash. 505, 67 Pac. represented that the son has already 231, 56 L. R. A, 778. deposited with it a "good" note as '"Lindsay Petroleum Co. v. Hurd, collateral. It developed that the sig- L, R, 5 P. C. 221 ; Juzan v, Toulmin, natures to the collateral note were 9 Ala. 662, 44 Am. Dec. 448; Salton- forged. The court used the above Ian- stall v. Gordon, 33 Ala. 149; Griel v. guage in answer to the defense of Lomax, 89 Ala. 420, 6 So, 741 ; Camp forgery. The court said further that, v. Camp, 2 Ala, 632, 36 Am. Dec, 423 ; "If the bank officials had had knowl- Lockridge v, Foster, 5 111. 569; Fish edge of the forgery, and then had v. Cleland, 33 111, 238; Whitesides v. made use of their possession of the Taylor, 105 111. 496; Smith v. Fisher, note to induce respondent to become 5 J. J. Marsh, (Ky,) 188; Hall v, surety for his son a different question Thompson, 1 Sm. & M. (Miss.) 443; would be presented," "The additional Crane v, Conklin, 1 N, J, Eq. 346, 22 statement of the cashier, and I am Am, Dec, 519; Torrey v. Buck, 2 N, J. ready to say this note is all right, Eq, 366; Inness v. Willis, 48 N. Y. was but the expression of an onin- Super. Ct. 188. ion." The misrepresentation must be 217 FAILURE TO DISCLOSE MATERIAL FACTS. § 128 ure so to do will render the contract voidable at the vendee's option.*" And this has been held to be true even though the en- cumbrance is of record.** Likewise, he is bound to disclose a deficiency in quantity which is not open and apparent, and of which he knows.*^ As has been seen, the purchaser of real prop- erty is not bound to disclose to the vendor the presence of min- erals, or any other fact which affects the value of the land, in the absence of any confidential relations.** However, if the vendee, upon inquiry, denies knowledge of their existence,*' or intention- ally misleads the vendor,*^ the transaction is fraudulent.*' In the sale of personal property, there is ordinarily no duty on the part of the vendor to disclose open and apparent defects, or extrinsic matters affecting the value of the property, when there is an opportunity to inspect and the defects or extrinsic matters are equally within the observation of both parties.^" The vendor of personal property is bound, however, to disclose defects in his ^^ Edwards v. M'Leay, 2 Swanst. 287; Ward v. Packard, 18 Cal. 391; Crutchfield v. DaniUy, 16 Ga. 432; Bryan v. Primm, 1 111. 59; Thomas v. Coultas, 76 111. 493; Anderson v. Buck, 66 Iowa 490, 24 N. W. 10; Nairn v. Ewalt, 51 Kans. 355, 32 Pac. 1110; Carr v. Callaghan, 3 Litt. (Ky.) 365; Glass v. Brown, 6 T. B. Mon. (Ky.) 356; Campbell v. Whittingham, 5 J. J. Marsh. (Ky.) 96, 20 Am. Dec. 241 ; Breckinridge v. Moore, 3 B. Mon. (Ky.) 629; Ruffner v. Ridley, 81 Ky. 165, 4 Ky. L. 958; Peak v. Gore, 94 Ky. 533, 15 Ky. L. 278, 23 S. W. 356; Tretheway v. Hulett, 52 Minn. 448, 53 N. W. 1063; Shiffer v. Dietz (Sup. Ct. Spec. T.), 53 How Pr. (N. Y.) 372; Babcock v. Case, 61 Pa. St. 427, 100 Am. Dec. 654; Johnson v. Pryor, 5 Hayw. (Tenn.) 243; Crawford v. Keebler, 5 Lea "(Tenn.) 547; East Tennessee Nat. Bank v. First Nat. Bank, 7 Lea (Tenn.) 420; Max Meadows Land &c. Co. V. Brady, 92 Va. 71, 22 S. E. 845; Pollard v. Rogers, 4 Call (Va.) 239 ; Spencer v. Sandusky, 46 W. Va. 582, 33 S. E. 221. See also, Barnard V. Duncan, 38 Mo. 170, 90 Am. Dec. 416 (as to sales of land by a trustee). "Napier v. Elam, 6 Yerg. (Tenn.) 108. « Bedford v. Hickman, 5 Call (Va.) 236, 2 Am. Dec. 590. See also, ante, § 79, Fraud. " See ante, § 79 et seq., Fraud. " Smith V. Beatty, 2 Ired. Eq. (N. Car.) 456, 40 Am. Dec. 435. " Caples V. Steel, 7 Ore. 491. " See ante, § 79 et seq., Fraud. ""Burnett v. Stanton, 2 Ala. 181; Armstrong v. Bufford, 51 Ala. 410; Kohl V. Lindley, 39 111. 195, 89 Am. Dec. 294; Stewart v. Dugin, 4 Mo. 245, 28 Am. Dec. 348; Kircher v. Conrad, 9 Mont. 191, 23 Pac. 74, 7 L. R. A. 471, 18 Am. St. 731 ; Rockafel- low V. Baker, 41 Pa. St. 319, 80 Am. Dec. 624. The following instruction, given by the trial court, has been ap- proved : "When one sells personal property he impliedly warrants that it is merchantable and reasonably suited to the use intended, and that the seller knows of no latent defects. 'Latent defects' mean such defects as are hidden. The implied warranty, however, does not cover such defects which can be discovered by ordinary prudence and caution." Puis v. Horn- beck, 24 Okla. 288, 103 Pac, 665, 138 Am. St. 883. For the rule when the property is located at a distance, see Hanks v. McKee, 2 Litt. (Ky.) 227. 13 Am. Dec. 265. See ante, § 79, Fraud. § 129 CONTRACTS. ' 2l8 title." He is also bound to make known the encumbrances there- on/^ and latent defects therein of which he has knowledge, which will render the thing sold valueless for the purposes for which it is sold.^' Thus it has been held that one who sells cattle at a sound price, with knowledge that they have Texas fever ticks on them, or any other infection affecting their value for the pur- poses for which they are bought, the infection not being easily detected by those having had no experience with it, and who fails to disclose his knowledge of the infection to the vendee, is guilty of the fraudulent concealment of a latent defect, for which he is liable, and the rule of caveat emptor does not apply. But the vendor is not answerable unless he had knowledge, prior to the time the sale was consummated, that the cattle had such ticks on them." On the other hand, the purchaser of personal property is under no obligation to disclose to the seller any fact or circum- stance affecting the value of the property, although such fact or circumstance may be particularly within his knowledge, and would defeat a sale if known to the vendor. '^^ § 129. Warranties. — The broad general principles relative to the necessity for a full and fair disclosure in the sale of chattels are somewhat restricted in their application by the law of implied "^ Cross V. Gardner, Carth. 90, 1 See also, Merchants' &c. Bank v. Sho. 68; Peto v. Blades, 5 Taunt. 657; Fraze, 9 Ind. App. 161, 36 N. E. 378, Bartholomew v. Warner, 32 Conn. 98, S3 Am. St. 341 ; Olds Motor Works 85 Am. Dec. 251 ; Scott v. Scott, 2 A. v. Shaffer, 145 Ky. 616, 140 S. W. K. Marsh. (Ky.) 217; Abbott v. Mar- 1047, 37 L. R. A. (N. S.) 560 (sale shall, 48 Maine 44. of an automobile in an unsafe condi- ''- Merritt v. Robinson, 35 Ark. 483; tion). See, however, Court v. Snyder, Firestone v. Werner, 1 Ind. App. 293, 2 Ind. App. 440, 28 N. E. 718, 50 27 N. E. 623 ; Abbott v. Marshall, 48 Am. St. 247. Maine 44; Junkins v. Simpson, 14 "Puis v. Hornbeck, 24 Okla. 288, Maine 364. One impliedly warrants 103 Pac. 665, 138 Am. St. 883. his title when he sells personal prop- °°Fox v. Mackreth, 2 Bro. C. C. erty as his own. St. Anthony &c. Ele- 400 ; Turner v. Harvey, Jac. 178 ; vator Co. v. Dawson, 20 N, Dak. 18, Smith v. Fisher, 5 J. J. Marsh. (Ky.) 126 N. W. 1013, Ann. Cas. 1912, B. 188; Williams v. Beazley, 3 J. J. 1337. See also, Bevan v. Muir, 53 Marsh. (Ky.) 577; Bench v. Sheldon, Wash. 54, 101 Pac. 485, 32 L. R. A. 14 Barb. (N. Y.) 66; Laidlaw v. Or- (N. S.) 588. gan, 2 Wheat. (U. S.) 178, 4 L. ed. "^ Snowden v. Waterman, 105 Ga. 214. In the absence of any special 384, 31 S. E. 110; Puis v. Hornbeck, circumstance which demands a full 24 Okla. 288, 103 Pac. 665, 138 Am. disclosure one purchasing a judgment St. 883 ; Westmoreland v. Dixon, 4 is not bound to disclose facts affect- Hayw, (Tenn.) 223, 9 Am. Dec. 763. ing its value. In re Butler's Appeal, Compare with Farren v. Dameron, 99 26 Pa. St. 63. Md. 323, 58 Atl. 367, 105 Am. St. 297. 219 FAILURE TO DISCLOSE MATERIAL FACTS. 129 warranties. As was seen in the preceding section, a vendor must disclose his title, and if he fails to do so the law implies a war- ranty of title in the sale of chattels, real or personal, in the actual or constructive possession of the vendor to a vendee, who honestly believes he is obtaining a clear title to the same. Fur- thermore, the implied warranty of title is a warranty of the whole title and protects against mortgages, liens, or other encum- brances.^® There are few subjects of the law that appear, upon a cursory examination of the authorities, to be in such a hopeless state of confusion as that which relates to what constitutes proper exceptions to the rule of caveat emptor. It will be found, how- ever, upon examination, that the cases on this subject are gov-. "Western v. Short, 12 B. Mon. (Ky.) 153; Myers v. Smith, 27 Md. 91 ; Grose v. Hennessey, 13 Allen (Mass.) 389; Hunt v. Sackett, 31 Mich. 18; Close v. Crossland, 47 Minn. 500, SO N. W. 694; Hendrick- son V. Back, 74 Minn. 90, 76 N. W. 1019; Davis v. Smith, 7 Gil. (Minn.) 328; Ranney v. Meisenheiraer, 61 Mo. App. 434; Hickman v. Dill, 39 Mo. App. 246; Dryden v. Kellogg, 2 Mo. App. 87; Caproon v. Mitchell, 11 Nebr. 562, 110 N. W. 378; Hall v. Aitkin, 25 Nebr. 360, 41 N. W. 192; Partridge v. Dartmouth College, 5 N. H. 286; Sargent v. Currier, 49 N. H. 310, 6 Am.^Rep. 524; Higbie v. Rogers, 63 N. J. Eq. 368, 50 Atl. 366; McKnight V. Devlin, 52 N. Y. 399, 11 Am. Rep. 715 ; Rew v. Barber, 3 Cow. (N. Y.) 272; Bordewell v. Colie, 1 Lans. (N. Y.) 141, affid. 45 N. Y. 494; Vibbard v. Johnson, 19 Johns. (N. Y.) 78; McClure v. Central Trust Co., 165 N. Y. 108, 58 N. E. Ill, 53 L. R. A. 153; Dresser v. Ainsworth, 9 Barb. (N. Y.) 619; Hodges v. Wil- kinson, 111 N. Car. 56, 15 S. E. 941, 17 L. R. A. 545 ; Clevenger v. Lewis, 20 Okla. 837, 95 Pac. 230, 16 L. R. A. (N. S.) 410n; Patee v. Pelton, 48 Vt. 182; Baker v. McAllister, 2 Wash. Terr. 48, 3 Pac. 581. "There is an implied warranty of title in sales of chattels, but not of quality." Lam- bert V. Armentrout, 65 W. Va. 375, 64 S. E. 260, 22 L. R. A. (N. S.) 5S6n; Lane v. Romer, 2 Pin. (Wis.) 404, 2 Chand. (Wis.) 61. There is no implied warranty that the goods sold are the best of their kind, but merely that they are reasonably suitable for the purposes intended. Hodge v. Tufts, 115 Ala. 366, 22 So. 422; Tennessee River &c. Co. v. Leeds, 97 Tenn, 574, 2,1 S. W. 389; Harris Bros. v. Waite, 51 Vt. 480, 31 Am. Rep. 694. In the sale of realty the seller does not im- pliedly warrant his title to be per- fect, but merely that it is market- able. Revol V. Stroudback, 107 La. 295, 31 So. 665 i Sisters of Mercy v. Benzinger, 95 Md. 684, 53 Atl. 448; Gump V. Sibley, 79 Md. 165, 28 Atl. 977 ; French v. Folsom, 181 Mass. 483, 63 N. E. 938; Conley v. Finn, 171 Mass. 70, 50 N. E. 460, 68 Am. St. 399; Womack v. Coleman, 89 Minn. 17, 93 N. W. 663 ; Mathews v. Light- ner, 85 Minn. 333, 88 N. W. 992, 89 Am. St. 558 ; Hedderly v. Johnson, 42 Minn. 443, 44 N. W. 527, 18 Am. St. 521; Meyer v. Madreperla, 68 N. J. L. 258, 53 Atl. 477, 96 Am. St. 536; Kullman v. Cox, 167 N. Y. 411, 60 N. E. 744, 53 L. R. A. 884; Westfall v. Washlagel, 200 Pa. 181, 49 Atl. 941. A warranty is an undertaking col- lateral to the express object of the contract, and, in the absence of fraud or an agreement to rescind, breach of warranty does not warrant the re- scission of the contract by the pur- chaser, but an action for damages. Gay Oil Co. v. Roach, 93 Ark. 454, 125 S. W. 122. 137 Am. St. 95. §129 CONTRACTS. 220 erned by certain general principles which, when applied, obviate much of the difficulty. It may be said that when chattels are sold generally for all purposes for which they are adapted, and the seller is not the manufacturer or producer, and the property is in existence and may be inspected by the buyer, and there is no fraud on the part of the seller, the maxim of caveat emptor applies, even though defects exist in the goods which are not discoverable on examination." But where the purchaser has no opportunity to inspect the goods, and no knowledge of their quality, and no means of forming an opinion of his own with respect to their quality, then the reason of the rule fails. Upon such facts, an important exception has been ingrafted upon the rule, namely, that where the contract is for a certain kind of chattel, to be used for a particular purpose known to the seller, and it is impracticable or no opportunity is afforded the buyer to inspect the property before delivery, and where the property is kept for sale by the vendor as suitable for the particular purpose, and sold by him to the vendee for a sound price and as adapted and good for the pur- pose, there arises an implied warranty that the thing is reasonably fit for the special purpose intended by the vendee. This is true without reference to whether the transaction relates to an execu- tory or completed contract, or whether made with a manufacturer or dealer.^^ "Oil Well Supply Co. v. Watson, Kans. 334, 25 Pac. 886, 11 L. R. A. 168 Ind. 603, 80 N. E. 157, 15 L. R. A. 681n (sale of flax-seed to be sown) ; (N. S.) 868. Fee v. Sentell, 52 La. Ann. 1957, 28 ""Troy Grocery Co. v. Potter, 139 So. 279; New Birdsall Co. v. Keys, Ala. 359, 36 So. 12 (fish sold to 99 Mo. App. 458, 74 S. W. 12. In the dealer to be resold by him) ; Edwards two preceding cases second-hand ma- V. Dillon, 147 111. 14, 35 N. E. 135, Zl chinery was sold for a specified pur- Am. St. 199 (sale of stallion for pose. Little v. G. E. Van Syckle, 115 breeding purposes) ; Oil Well Supply Mich. 480, Ti N. W. 554 (sale of Co. V. Watson, 168 Ind. 603, 80 N. E. piano) ; Atkins Bros. Co. v. South- 157, 15 L. R. A. (N. S.) 868 ern Grain Co., 119 Mo. App. 119, 95 (sale of cable for drilling oil S. W. 949 (grain) ; Landreth v. well) ; Oil Well Supply Co. v. Priddy, Wyckoff, 67 ApP- Div. (N. Y.) 145, 41 Ind. App. 200, 83 N. E. 623 (sale 12, N. Y. S. 388 (vegetable seeds) ; of pipe for driving an oil well) ; Zim- Newman v. Wilson, 78 Hun (N. Y.) merman v. Druecker. 15 Ind. App. 295, 28 N. Y. S, 914, 60 N. Y. St. 512, 44 N. E. 557 (cement for side- 243 (vinegar) ; Oil Well Supply Co. walks) ; Merchants' &c. Sav. Bank v. v. Davidson, 28 Ohio C. C. 731, affd. Fraze, 9 Ind. App. 161, 36 N. E. 378, 75 Ohio St. 611, 80 N. E. 1130 (sale 53 Am. St. 341 (sale of stallion for of cable for drilling oil well) ; Lenz breeding purposes) : H. B. Smith Co. v. Blake-McFall Co., 44 Ore. 569, 76 v. Williams, 29 Ind. App. 336, 63 N. Pac. 356 (paper boxes) ; Gold Ridge E. 318 ^heater) ; Shaw v. Smith, 45 Min. Co. v. Tallmadge, 44 Ore. 34, 74 221 FAILURE TO DISCLOSE MATERIAL FACTS. § 129 Care must be taken, however, to adhere to the distinction above pointed out, and to distinguish between contracts to Pac. 325, 102 Am. St. 602 (sale of water for mining purposes) ; McCor- mick Harvesting Machine Co. v. Nicholson, 17 Pa. Super. Ct. 188 (sale of cable for drilling wells) ; Pease v. Sabin, 38 Vt. 432, 91 Am. Dec. 364 (cheese sold to dealer to be shipped to foreign country) ; Getty v. Rountree,2Pin. (Wis.) 379, 2 Chand. (Wis.) 28, 54 Am. Dec. 138 (pump). See also. Olds Motor Works v. Shaf- fer, 145 Ky. 616, 140 S. W. 1047, 2,1 L. R. A. (N. S.) 560 (sale of auto- mobile in unsafe condition). Where a manufacturer contracts to supply an article, and the buyer communi- cates with the seller the purpose for which he intends the article, and re- lies upon the seller's judgment to fur- nish him an article that will answer his purpose, there is an implied war- ranty that it will be reasonably fit for the intended use. Snow v. Scho- macker Mfg. Co., 69 Ala. Ill, 44 Am. Rep. 509 (piano, sale by manufac- turer to dealer) ; Main v. Dearing, li Ark. 470, 84 S. W. 640 (jewelry) ; Main v. El Dorado Dry Goods Co., 83 Ark. 15, 102 S. W. 681 (jewelry) ; Nashua Iron & Steel Co. v. Brush, 91 Fed. 213, 33 C. C. A. 456, 50 U. S. App. 461 (strap for beam engine) ; Cleveland Linseed Oil Co. v. Buchan- an, 120 Fed. 906, 57 C. C. A. 498 (lin- seed oil) ; The Nimrod, 141 Fed. 215, affd. without opinion in 141 Fed. 834, 72 C. C. A. 300 (steam boiler for tug) : Iroauois Furnace Co. v. Wilkin Mfg. Co., 181 111. 582, 54 N. E. 987 (engine) ; Brenton v. Davis, 8 Blackf. (Ind.) 317, 44 Am. Dec. 769 (river boat) ; Poland v. Miller, 95 Ind. 387, 48 Am. Rep. 730 (whisky barrels) ; Robinson Machine Works v. Chan- dler, 56 Ind. 575 (saw mill) ; Alpha Checkrower Co. v. Bradley, 105 Iowa 537, 75 N. W. 369 (corn cutter) ; Marbury Lumber Co. v. Stearns Mfg. Co., 32 Ky. L. 739, 107 S. W. 200 (locomotive for logging railway) ; Queen City Glass Co. v. Pittsburg Clay Pot Co., 97 Md. 429, 55 At!. 447 (clay pots to be used in the manu- facture of glass) ; West End Mfg. Co. V P. R. Warren Co., 198 Mass. 320, 84 N. E. 488 (manila-lined chip) ; West Mich. Furniture Co. v. Dia- mond Glue Co., 127 Mich. 651, 87 N. W. 92 (glue) ; Cram v. Gas Engine &c. Co., 75 Hun (N. Y.) 316, 26 N. Y. S. 1069, 58 N. Y. St. 201 (naphtha launch) ; Cooper v. Payne, 103 App. Div. (N. Y.) 118, 93 N. Y. S. 69 (knitting machine) ; Carleton v. Lom- bard, 149 N. Y. 137, 43 N. E. 422, revg. 78 Hun (N. Y.) 616, 28 N. Y. S. 1107, 59 N. Y. St. 882 (petroleum for export trade) ; League Cycle Co. v. Abrahams, 27 Misc. (N. Y.) 548, 58 N. Y. S. 306 (hubs and spokes) ; Baylies v. Weibezahl, 42 Misc. (N. Y.) 178, 85 N. Y. S. 355, 14 N. Y. Ann. Cas. 280 (pliers) ; Hauser v. Curran, 5 Ohio N. P. 224 (kiln for cooperage factory) ; Haines &c. Co. V. Young, 13 Pa. Super. Ct. 303 (uprights to support marble slabs used as partitions) ; Pullman Car Co. V. Metropolitan Street R. Co., 157 U. S. 94, 39 L. ed. 632, IS Sup. Ct. 503 (brakes on traction cars) : Gerst v. Jones, 32 Gratt. (Va.) 518, 34 Am. Rep. m (tobacco boxes) ; Woodle v. Whitney, 23 Wis. 55, 99 Am. Dec. 102 (corn cultivator). See also, Murray Iron Works V. De Kalb Electric Co., 103 111. App. 78; Brown v. Murphee, 31 Miss. 91 ; Thomas v. Simpson, 80 N. Car. 4. Firewood is not a manufac- tured article within the above rule. Correio v. Lynch, 65 Cal. 273, 3 Pac. 889. Some cases apparently draw a distinction between sales made by dealers and those made by manufac- turers, and hold that an implied war- ranty will not rise in the case of the dealer, but that to the contrary the rule of caveat emptor applies. These cases are based upon the theory that the manufacturer must know the make-up of the goods and the quality of the material used, while the dealer has no knowledge on this subject. McCaa v. Elam Drug Co., 114 Ala. 74, 21 So. 479, 62 Am. St. 88; Cafre v. Lockwood, 22 App. Div. (N. Y.) 11, 47 N. Y. S. 916, 90 N. Y. St. 1091; Strauss v. Salzer, 58 Misc. (N. Y.) 573, 109 N. Y. S. 734; Livingston v. Stevenson, 163 Pa. 262, 29 Atl. 715. But it would seem that the true prin- ciple upon which these cases should be decided is whether an article of a 129 CONTRACTS. 222 furnish an article that will be fit for a particular purpose, and a contract to make or supply a described and definite article. In the former a warranty is implied because of the contract to make or furnish the article specified for the accomplishment of a spe- cific purpose. The accomplishment, or fitness for the accom- plishment, of the purpose is the essence of the contract. In the lat- ter instance the essence of the contract is the delivery of the article jspecified, and not the accomplishment of the purpose, and if it conforms to the pattern, model or description there is no war- ranty that it will answer the particular purpose intended by the buyer.^^ If food is sold to the purchaser to be used directly for domes- tic consumption, there is, as between the dealer and consumer, an implied warranty that the articles are sound and wholesome and fit for the purposes for which they were sold.*" It is a particular description is ordered, or whether it is the sale of an article for a specific purpose. See ante, text, this section. An implied warranty is not waived by mere- ly receiving the goods. The vendee has a reasonable time in which to discover defects. Northern Supply Co. V. Wangard, 117 Wis. 624, 94 N. W. 785, 98 Am. St. 963, and note. ™ Jones V. Just, L. R. 3 Q. B. 197; Bancroft v. San Francisco Tool Co., 120 Cal. 228, 52 Pac. 496; Oil Creek Gold Min. Co. v. Fairbanks, 19 Colo. App. 142, 74 Pac. 543 ; Ottawa Bottle &c. Co. V. Gunther, 31 Fed. 208; Davis Calyx Drill Co. v. Mallory, 137 Fed. 332, 69 C. C. A. 662, 69 L. R. A. 973 ; Ehrsam v. Brown, 76 Kans. 206, 91 Pac. 179, IS L. R. A. (N. S.) 877; Ricketts v. Sisson, 9 Dana (Ky.) 358, 35 Am. Dec. 141 ; Dreyfus v. Lourd, 111 La. 21, 35 So. 369; Rice v. For- syth, 41 Md. 389; Whitmore v. South Boston Iron Co., 2 Allen (Mass.) 52; Cosgrove v. Bennett, 32 Minn. 371, 20 N. W. 359; Goulds v. Brophy, 42 Minn. 109, 43 N. W. 834, 6 L. R. A. 392; Cram v. Gas Engine &c. Co., 75 Hun (N. Y.) 316, 26 N. Y. S. 1069, 58 N. Y. St. 201 ; Durbrow &c. Mfg. Co. V. Cuming, 35 App. Div. (N. Y.) 376, 54 N. Y. S. 818; Jarecki Mfg. Co. V. Kerr, 165 Pa. St. 529, 30 Atl. 1019, 44 Am. St. 674; Mine Supply Co. V. Columbia Min. Co., 48 Ore. 391. 86 Pac. 789; Seitz v. Brewers' Refrigerating Mach. Co., 141 U. S. 510, 35 L. ed. 837, 12 Sup. Ct. 46; Mason v. Chappell, IS Gratt. (Va.) 572 ; Milwaukee Boiler Co. v. Duncan, 87 Wis. 120, 58 N. W. 232, 41 Am. St. 33; J. Thompson Mfg. Co. v. Gunder- son, 106 Wis. 449, 82 N. W. 229, 49 L. R. A. 859. "Year Book, 9 Henry VI, S3; Bigge V. Parkinson, 7 H. & N. 955; Wiedeman v. Keller, 171 III. 93, 49 N. E. 210, revg. S8 III. App. 382 ; Far- rell V. Manhattan Market Co., 198 Mass. 271, 84 N. E. 481, IS L. R. A. (N. S.) 84; Howard v. Emerson, 110 Mass. 320, 14 Am. Rep. 608 ; Craft v. Parker, 96 Mich. 245, 55 N. W. 812, 21 L. R. A. 139; Copas v. Anglo- American Provision Co., 73 Mich. 541, 41 N. W. 690 ; Sinclair v. Hatha- way, 57 Mich. 60, 23 N. W. 459, 58 Am. Rep. 327; Van Bracklin v. Fonda, 12 Johns. (N. Y.) 468, 7 Am. Dec. 339; Fairbank Canning Co. v. Metzger, 118 N. Y. 260, 23 N. E. 372, 43 Hun (N. Y.) 71, 16 Am. St. 753; Divine v. McCormick, SO Barb. (N. Y.) 116; Hart v. Wright, 17 Wend. (N. Y.) 267; Goad v. Johnson, 6 Heisk. (Tenn.) 340. The same rule applies where food is sold intended for an animal other than man. Houk V. Berg (Tex. Civ. App.), 105 S. W. 1176. See also, French v. Vining, 102 223 FAILURE TO DISCLOSE MATERIAL FACTS. § 129 general rule, however, that where provisions are sold as merchan- dise to be resold by the vendee there is no implied warranty that they are fit for food." Consequently, it is held if an animal is sold to a retail butcher there is no implied warranty that it is fit for food, notwithstanding the vendor may know that the butcher buys the animal with the intention of slaughtering it and selling its meat to his customers for their consumption."^ In many jur- iMass. 132, 3 Am. Rep. 440 (sale of hay by which cow was poisoned) ; Coyle V. Baum, 3 Okla. 695, 41 Pac. 389 (implied warranty that oats sold were fit to be fed horses) ; Houston Cotton Oil Co. V. Trammell (Tex. Civ. App.), 72 S. W. 244, revd. on other grounds, 96 Tex. 598, 74 S. W. 899 (cotton seed meal sold to be fed cattle). See, however, National Cot- ton Oil Co. V. Young, 74 Ark. 144, 85 S. W. 92, 109 Am. St. 71 ; Lukens v. Freiund, 27 Kans. 664, 51 Am. Rep. 429. °' Humphreys v. Comline, 8 Blackf. (Ind.) 516; Jones v. Murray, 19 B. Mon. (Ky.) 83; Emerson v. Brigham, 10 Mass. 197, 6 Am. Dec. 109 ; Ryder v. Neitge, 21 Minn. 70; Tomlinson v. Armour Co., 74 N. J. L. 274, 65 Atl. 883; Moses v. Mead, 1 Denio (N. Y.) 378, 43 Am. Dec. 676; Hyland v. Sherman, 2 E. D. Smith (N. Y.) 234; Rinschler v. Jeliflfe, 9 Daly (N. Y.) 469. There is no implied warranty on sale to a middleman. Wiedeman v. Keller, 171 111. 93, 49 N. E. 210. See also, Farren v. Dameron, 99 Md. 323, 58 Atl. 367, 105 Am. St. 297, which contains a discussion of the general principles governing the law of im- plied warranties. See also, cases cited in preceding note. "^Howard v. Emerson, 110 Mass. 320, 14 Am. Rep. 608; Hanson v. Hartse, 70 Minn. 282, i:S N. W. 163, 68 Am. St. 527; Cotton v. Reed, 25 Misc. (N. Y.) 380, 54 N. Y. S. 143; Needham v. Dial, 4 Tex. Civ. App. 141, 23 S. W. 240; Warren v. Buck, 71 Vt. 44, 42 Atl. 979, 76 Am. St. 754. See, however, Truschel v. Dean, 17 Ark. 546, 92 S. W. 781 (implied war- ranty that certain grapes sold would stand shipment and be in a merchant- able condition, so that the purchaser might resell them) ; Nixa Canning Co. V. Lehmann-Higginson Grocer Co., 70 Kans. 664; 79 Pac. 141, 70 L. R. A. 653 (holding that where a manufacturer sold canned apples to a grocer he impliedly warranted the process by which they were canned) ; Sinclair v. Hathaway, 57 Mich. 60, 23 N. W. 459, 58 Am. Rep. 327 (hold- ing that a baker impliedly warrants the wholesomeness of bread which he sells to a pedler who distributes it) ; St. Louis Brewing Assn. v. McEnroe, 80 Mo. App. 429 (implied warranty that the beer sold was reasonably fit for the purposes intended. It ap- peared that the beer was to be resold by the vendee). Nelson v. Armour Packing Co., 76 Ark. 352, 90 S. W. 288. In the above case the plaintiff bought canned tongue from a grocer ; he then sued the packers for injuries due to the unwholesomeness of the food sold. It was held that he could not recover because the packers owed no direct duty to him, he having bought from the grocer. On the other hand, in Julian v. Laubenberger, 16 Misc. (N. Y.) 646, 38 N. Y. S. 1052, it was held that a consumer could not recover from a dealer for unwhole- some canned salmon sold him. The court said: "The defendant sells a can of food. It is well known, and must be known to both parties, that he has not prepared it, that he has not inspected it, and that he is en- tirely ignorant of the contents of the can, except so far as he has purchased from reputable dealers in the market. It seems to me that it would be un- reasonable to say that, at the time of the purchase here the vendee relied upon the superior knowledge of the vendor; but it must be assumed that both parties knew, and must have necessarily known, that the vendor was entirely ignorant of, and without means of ascertaining, the condition of the article sold, and that the means § 1^9 CONTRACTS. 224 isdictions the implied warranty of food stufifs is given a strict construction and is held to apply strictly to dealers who sell directly to consumers ; thus it has been held that there is no im- plied warranty that hogs were fit for food when killed by farmers who were not dealers in provisions, and by them sold to pur-, chasers intended for their domestic use.°^ The doctrine of implied warranty appears to be founded largely on an actual or presumed knowledge by the vendor, as manufacturer, grower or producer, of the qualities and fit- ness of the things sold for the purpose for which they are intended or desired, as far as such knowledge is reason- ably attainable. Consequently a manufacturer is liable only for failing to exercise the proper degree of care and skill in the selection of material and in the manufacture of the same, but he impliedly warrants that he has done this."* of inspection were as much open to the purchaser as to the vendor. Un- der such circumstances, if the pur- chaser desires to protect himself, he must have recourse to an express warranty. The law cannot be so mi- reasonable as to inject into a contract what neither party had, or could have had, in mind at the time the contract was made." °= Giroux V. Stedman, 145 Mass. 439, 14 N. E. 538, 1 Am. St. 472. To same effect, Farrell v. Manhattan Market Co., 198 Mass. 271, 84 N. E. 481, 15 L. R. A. (N. S.) 884n, 126 Am. St. 436. See, however, Troy Grocery Co. V. Potter, 139 Ala. 359, 36 So. 12; Hoover v. Peters, 18 Mich. 51 ; Van Bracklin v. Fonda, 12 Johns. (N. Y.) 468, 7 Am. Dec. 339; Divine v. Mc- Cormick, 50 Barb. (N. Y.) 116; Burch V. Spencer. 15 Hun (N. Y.) 504 ; Fairbanl< Canning Co. v. Metz- ger, 118 N. Y. 260, 23 N. E. 372, 43 Hun (N. Y.) 71, 16 Am. St, 753; Pease v. Sabin, 38 Vt. 432, 91 Am. Dec, 364. "Beers v. Williams, 16 111. 69; Wisconsin Red Pressed Brick Co. v. Hood, Q Minn. 329, 69 N. W. 1091, 64 Am. St. 418; Hoe v. Sanborn, 21 N. Y. 552, 78 Am. Dec. 163 ; Bierman V. City Mills Co., 151 N. Y. 482, 45 N. E. 856, 37 L. R. A. 799, 56 Am. Misc. (N. Y.) 178, 85 N. Y. S. St. 635 ; Baylies v. Weibezahl, 42 355, 14 N. Y. Ann. Cas. 280; Rodgers V. Niles, 11 Ohio St. 48, 78 Am. Dec. 290. See also, Farren v. Dameron, 99 Md. 323, 58 Atl. 367, 105 Am. St. 297. Some cases seem to go to the extent of holding that a manufacturer abso- lutely insures his products from latent defects. Randall v. Newsome, L. R. 2 Q. B. Div. 102; Rodgers v. Niles, 11 Ohio St. 48, 78 Am. Dec. 290. Likewise a grower or producer im- pliedly warrants that the thing sold is free from any latent defects of which he knows, or ought to know. Gard- ner v. Winter, 117 Ky. 382 25 Ky. L. 1472, 78 S. W. 143, 63 L. R. A. 647; Prentice v. Fargo, 53 App. Div. (N. Y.) 608, 65 N. Y. S. 1114, affd. with- out opinion, 173 N. Y. 593, 65 N. E. 1121. In the above case it is held that one who raises and harvests wheat, and sells it for seed grain, im- ph'edly warrants that there are no latent defects arising from the man- ner of cultivation, harvesting or stor- ing, that would render it unsuitable for seed. McQuaid v. Ross, 85 Wis. 492, 55 N. W. 705, 22 L. R. A. 187, 39 Am. St. 864. To same effect. Ca- chet V. Warren, 72 Ala. 288; Frith v. Hollan, 133 Ala. 583, 32 So. 494, 91 Am. St. 54; Shaw v. Smith, 45 Kans. 334, 25 Pac. 886, 11 L. R. A. 681n; Shatto V. Abernethy, 35 Minn. 538, 225 FAILURE TO DISCLOSE MATERIAL FACTS. 129 In case goods are sold by sample,"" or description,"" there is an implied warranty that the bulk of the commodity is equal in quality to the sample, or description, and corresponds to it in kind and character. A distinction is made between sales by sample when made by the manufacturer of the goods sold, and sales made by one who is a mere dealer in the goods, and not their manufacturer. In the former case it is held that the manufact- urer impliedly warrants the goods sold are merchantable, and free from latent defects of which he knows, or ought to know, not dis- 29 N. W. 325 ; Johnson v. Sproull, 50 Mo. App. 121; Wolcott V. Mount, 38 N. J. L. 496, 20 Am. Rep. 425; Van Wyck V. Allen, 69 N. Y. 61, 25 Am. Rep. 136; White v. Miller, 71 N. Y. 118, 27 Am. Rep. 13; Prentice v. Far- go, 53 App. Div. (N. Y.) 608, 65 N. Y. S. 1114, aiifid. in 173 N. Y. 593, 65 N. E. 1121; Landreth v. Wyckoff, 67 App. Div. (N. Y.) 145, Ti N. Y. S. 388; Bell v. Mills, 78 App. Div. (N. Y.) 42, 80 N. Y. S. 34; Gubner v. Vick, 42 Hun (N. Y.) 657, 6 N. Y. St. 4. But if the purchaser inspects the seeds and relies on his own judgment and past experience in such matters, or if he neglects to inspect them when an examination would disclose their unfitness, no implied warranty as to their fitness is raised. Gardner v. Winter. 117 Ky. 382, 25 Ky. L. 1472, 78 S. W. 143, 63 L. R. A. 647; Bell V. Mills, 68 App. Div. (N. Y.) 531, 74 N. Y. S. 224; Lord v. Grow, 39 Pa. St. 88, 80 Am. Dec. 504. °°Magee v. Billingsley, 3 Ala. 679; Hughes V. Bray, 60 Cal. 284; Love V. Barnesville Mfg. Co., 3 Pen. (Del.) 152, 50 Atl. 536; Spring v. Slayden- Kirksey Woolen Mills, 106 111, App. 579; Myer v. Wheeler, 65 Iowa 390, 21 N. W. 692; Phillipi v. Gove, 4 Rob. (La.) 315; Hall v. Plassan, 19 La. Ann. 11 ; Osgood v. Lewis, 2 Har. & G. (Md.) 495, 18 Am. Dec. 317; Brad- ford V. Manly, 13 Mass. 139, 7 Am. Dec. 122; Dickinson v. Gay, 7 Allen (Mass.) 29, 83 Am. Dec. 656; Foot V. Bentley, 44 N. Y. 166, 4 Am. Rep. 652; Ideal Wrench Co. v. Garvin Mach. Co., 65 App. Div. (N. Y.) 235, 72 N. Y. S. 662 ; Dayton v. Hooglund, 39 Ohio St. 671 ; Fraley v. Bispham, 10 Pa. St. 320, 51 Am. Dec, 486; Boyd V. Wilson, 83 Pa. St. 319, 24 Am, 15 — Contracts, Vol. I Rep. 176; Selser v. Roberts, 105 Pa. St. 242 ; Brantley v. Thomas, 22 Tex. 270, 1Z Am. Dec. 264; Wilkirson v. Randle (Tex. Civ. App.), 29 S. W. 431; Willings v. Consequa Pet. (C. C.) 301, Fed. Cas. No. 17767; King V. Graef, 136 Wis. 548, 117 N. W. 1058, 128 Am. St. 1101. See also, note in 27 L. R. A. (N. S.) 922; Hume V. Sherman Oil &c. Co., 27 Tex Civ. App. 366, 65 S. W. 390; King v. Graef, 136 Wis. 548, 117 N. W. 1058, 20 L. R. A. (N. S.) 86n. ""Americus Grocery Co. v. Brack- ett, 119 Ga. 489, 46 S. E. 657 ; Timken Carriage Co. v. Smith, 123 Iowa 554, 99 N. W. 183; Morse v. Moore, 83 Maine 473, 22 Atl. 362, 13 L. R. A. 224, 23 Am. St. 783; Wisconsin Red Pressed Brick Co. v. Hood, 60 Minn. 401, 62 N. W. 550, 51 Am. St. 539; Fairbank Canning Co. v. Metzger, 118 N. Y. 260, 23 N. E. 372, 43 Hun (N. Y.) 71, 16 Am. St. 753; Northwestern Cordage Co. v. Rice, 5 N. Dak. 432, 67 N. W. 298, 57 Am. St. 563 ; Lenz v. Blake, 44 Ore. 569, 76 Pac. 356; Bor- rekins v. Bevan, 3 Rawle (Pa.) 23, 23 Am. Dec. 85 ; Springfield Shingle Co. V. Edgecomb Mill Co., 52 Wash. 620, 101 Pac. 233, 35 L. R. A. (N. S.) 258, which contains an exhaustive note on the subject. For an interest- ing case on this subject see Haynor Mfg. Co. V. Davis, 147 N. Car, 267, 61 S. _E. 54, 17 L. R. A. (N. S.) 193, in which it is held that the manufac- turer of a beverage which is intended to be sold as a nonalcoholic drink, impliedly warrants that it is not sub- ject to taxation as an alcoholic bev- erage. The court said: "The manu- facturer, in selling through Guy, war- ranted against latent defects, that the article is merchantable, and can be 129 CONTRACTS. 226 coverable upon ordinary examination.®^ In the latter instance there is no imphed warranty that the goods sold are merchantable or of a certain quality or fitness, or free from latent defects not discoverable by reasonable diligence, when the defects are com- mon to both sample and bulk.*® Then the general rule first announced, i. e., that the bulk must correspond to the sample, applies in all its strictness.*® If goods are sold without a chance on the part of the buyer to make an inspection, a warranty of their quality or fitness will as a general rule be implied." There is, at least, an implied warranty that the goods are or will be merchantable.'^ Even where there is op- portunity for inspection, there is an implied warranty that there are no latent defects known to the vendor which are not made lawfully sold by the purchaser, if bought for resale." "Heilbutt V. Hickson, L. R. 7 C. P. 438; Mody v. Gregson, L. R. 4 Exch. 49; Drummond v. Van Ingen, L. R. 12 App. Cas. 284; Leggett v. Young, 29 N. B. 675; Price v. Kohn, 99 111. App. 115; Nixa Canning Co. V. Lehmann-Higginson Grocer Co., 70 Kans. 664, 79 Pac. 141, 70 L. R. A. 653; Bierman v. City Mills Co., 151 N. Y. 482, 45 N. E. 856, Zl L. R. A. 799, 56 Am. St. 635. See also, Jones V. Padgett, L. R. 24 Q. B. Div. 650 ; Pratt v. Metzger, 78 Ark. 177, 95 S. W. 451; Frederick Manufacturing Co. V. Devlin, 127 Fed. 71, 62 C. C. A. S3 ; Monroe v. Hickox &c. Co., 144 Mich. 30, 107 N. W. 719; Hardt v. ^^'estern Electric Co., 84 App. Div. (N. Y.) 249, 82 N. Y. S. 835; Dur- brovif &c. Mfg. Co. V. Cuming, 35 App. Div. (N. Y.) Zld, 54 N. Y. S. 818; Crocker-Wheeler Electric Co. v. Johns-Pratt Co., 29 App. Div. (N. Y.) 300, 51 N. Y. S. 793, affd. 164 N. Y. 593, 58 N. E. 1086; Studer v. Bleistein, 115 N. Y. 316, 22 N. E. 243, 5 L. R. A. 702n. In this case, however, there was an acceptance after a full and fair opportunity of inspection, which the warranty was held not to survive. This principle must not be confused with the one that where a known, described and definite article is sold by sample the manufacturer does not warrant that it will answer the particular purpose for which the buyer intended it. See ante, note 59. "'Parkinson v. Lee, 2 East 314; Price V. Kohn, 99 111. App. 115; Dick- inson v. Gay, 7 Allen (Mass.) 29, 83 Am. Dec. 656; Remy v. Healy, 161 Mich. 266, 126 N. W. 202, 29 L. R. A. (N. S.) 139n. See also, Mayer v. Dean, 115 N. Y. 556, 22 N. E. 261, 5 L. R. A. 540; Carnochan v. Gould, 1 Bailey Law (S. Car.) 179, 19 Am. Dec. 668. °" See, however. Miller v. Moore, 83 Ga. 684, 10 S. E. 360, 6 L. R. A. 374, 20 Am. St. 329. "Jones v. Just, L. R. 3 Q. B. 197; Huntington v. Lowe, 3 La. Ann. 377; Gallagher v. Waring, 9 Wend. (N. Y.) 20; Morse v. Union Stock-yard Co., 21 Ore. 289, 28 Pac. 2, 14 L. R. A. 157 ; Brantley v. Thomas, 22 Tex. 270, 17: Am. Dec. 264 ; Hood v. Bloch, 29 W. Va. 244, 11 S. E. 910; Mer- riam v. Field, 39 ^yis. 578. It is held, however, that this principle applies only where inspection is impracticable, or impossible. Hyatt v. Boyle, 5 Gill 6 J. (Md.) 110, 25 Am. Dec. 276. " Blackwood v. Cutting Co., 76 Cal. 212, 18 Pac. 248, 9 Am. St. 199; Davis V. Sweeney, 75 Iowa 45, 39 N. W. 174; Murchie v. Cornell, 155 Mass. 60, 29 N. E, 207, 14 L. R. A. 492, 31 Am. St. 526; Standard Rope and Twine Co. v. Olmem, 13 S. Dak. 296, 83 N. W. 271. 227 FAILURE TO DISCLOSE MATERIAL FACTS. § 129 known to the vendee/^ Consequently when a »^endor sells a diseased or unsound animal, and this disease is known to him, and is hidden in its nature, the sale is voidable.'^ Thus the sale of an impotent bull,'* blind horse," or the sale of cattle suffering from contagious disease,'" has been held a fraud on the vendee. In cases where no warranty is implied the vendee must either judge for himself, or exact an express warranty." As a general rule the existence of an express warranty in a written contract excludes any implied warranty on the same subject therefrom.'^ Some cases lay down a rule so strict that it would seem to exclude any implied warranty from a writing which contained an express "Wisconsin &c. Brick Co. v. Hurd Refrigerator Co., 60 Minn. 401, 62 N. W. SSO, 51 Am. St. 539; Hoe v. Sanborn, 21 N. Y. 552, 78 Am. Dec. 163; McGavock v. Ward, Cooke (Tenn.) 403; Kellogg Bridge Co. v. Hamilton, 110 U. S. 108, 28 L. ed. 86, 3 Sup. Ct. 537. See also, Olds Motor Works v. Shaffer, 145 Ky. 616, 140 S. W. 1047, 37 L. R. A. (N. S.) 560. " Downing v. Dearborn, 77 Maine 457, 1 Atl. 407; Duvall v. Medtart, 4 H. & J. (Md.) 14; McAdams v. Cates, 24 Mo. 223; Barron v. Alexander, 27 Mo. 530; Dixon v. M'Clutchey, Add, (Pa.) 322; Hough v. Evans, 4 McCord(S. Car.) 169; Grigsby v. Stapleton, 94 Mo. 423, 7 S. W. 421; Stevens v. Fuller, 8 N. H. 463 ; Card- well V. McClelland, 3 Sneed (Tenn.) 150; Paddock v. Strobridge, 29 Vt. 470, a marked case. And see John- son V. Wallower, 15 Minn. 472, 18 Minn. 288 ; Stewart v. Wyoming Cat- tle Ranche Co., 128 U. S. 383, 32 L. ed. 439, 9 Sup. Ct. 101. There is authority to the effect that the con- cealment must be made with intent to deceive. Hanson v. Edgerly, 29 N. H. 343; Binnard v. Spring, 42 Barb. (N. Y.) 470. See also, ante, § 128, Sales. "Dowling V. Lawrence, 58 Wis. 282, 16 N. W. 552. '= Maynard v. Maynard, 49 Vt. 297. See also, Snowden v. Waterman, 105 Ga. 384, 31 S. E. 110 (glandered mules) ; State v. Fox, 79 Md. 514, 29 Atl. 601, 47 Am. St. 424, in which a glandered horse was sold, the seller representing that it had a bad cold. " Grigsby V. Stapleton, 94 Mo. 423, 7 S. W. 421. See also. Puis v. Horn- beck, 24 Okla. 288, 103 Pac. 665, 138 Am. St. 883. "Moore v. Paving Co., 118 Ala. 563, 23 So. 798; Court v. Synder, 2 Ind. App. 440, 28 N. E. 718, 50 Am. St. 247; Scott v. Renick, 1 B. Mon. (Ky.) 63, 35 Am. Dec. 177. "Oil Creek Gold Min. Co. v. Fair- banks, 19 Colo. App. 142, 74 Pac. 543; Reynolds v. General Electric Co., 141 Fed. 551, 72, C. C. A. 23 ; Crank- shaw V. Schweizer Mfg. Co., 1 Ga. App. 363, 58 S. E. 222; Malsby v. Young, 104 Ga. 205, 30 S. E. 854; White V. Gresham, 52 111. App. 399; Reeves v. Byers, 155 Ind. 535, 58 N. E. 713; Lombard Water- Wheel &c. Co. v. Great Northern Paper Co., 101 Maine 114, 63 Atl. 555, 6 L. R. A. (N. S.) 180; Walter A. Wood &c. Co. V. Bobbst, 56 Mo. App. 427; Fairbanks &c. Co. v. Baskett, 98 Mo. App. 53, 71 S. W. 1113; Beck &c. Iron Co. V. Holbeck, 109 Mo. App. 179, 82 S. W. 1128; Dowagiac Mfg. Co. V. Mahon, 13 N. Dak. 516, 101 N, W. 903; G. Ober & Sons Co. v. Blalock, 40 S. Car. 31, 18 S. E. 264; Dwight Bros. Paper Co. v. Western Paper Co., 114 Wis. 414, 90 N. W. 444; LaCrosse Plow Co. v. Helgeson, 127 Wis. 622, 106 N. W. 1094; North- ern Supply Co. V. Wangard, 117 Wis. 624, 94 N. W. 785, 98 Am. St. 963; Boothby v. Scales, 27 Wis. 626. See also, Davis v. Sweeney, 75 Iowa 45, 39 N. W. 174. §130 CONTRACTS. 22t warranty. However, they may both be present in the same con- tract, when not incompatible with each other. Thus, it has been held that the fact that there was an express warranty in the writ- ten contract would not exclude an implied warranty upon another matter, concerning which the express warranty was silent.'® Con- sequently, it has been held that an express warranty of title does not exclude an implied warranty that the thing conveyed is sound.^" Nothing further will be added at this point relative to implied warranties on the sale of real estate. The duty of the seller to disclose his title having been considered in treating the preceding subject of sales, this subject will also be touched upon in the succeeding paragraph on leases. § 130, Leases. — As a general rule the doctrine of caveat emptor is applicable to the relation of lessor and lessee. It extends to all parts and appurtenances of the property leased.'^ Conse- quently, it is held by the weight of authority that in the absence of fraud there is no implied warranty as to the fitness of the leased premises for the purposes for which they are leased.^^ This rule " Bucy V. Pitts Agricultural Works, in which it is said : "The warranty 89 Iowa 464, 56 N. W. 541. See also, of the title expressed is an exclusion Bigge V. Parkinson, 7 H. & N. 955; of all other warranties not expressed, Wilcox V. Owens, 64 Ga. 601 ; Haw- and conclusive that the defendant did ley &c. Furnace Co. v. Van Winkle not warrant the quality or soundness &c. Machine Works, 4 Ga. App. 85, of the slave." It has also been held 60 S. E. 1008; Merriam v. Field, 24 that where words purport to create Wis. 640. "The general rule denies an express warranty and the warranty an implied warranty as to any matter expressed thereby is, in fact, merely or particular which may be brought equivalent to the warranty which the within the purview or intendment of law would imply, the contract will the special warranty. But there may not be treated as containing an ex- be an implied warranty so wholly press warranty. Heath Dry Gas Co. independent of anything contemplated v. Hurd, 193 N. Y. 255, 86 N. E. 18, in the express warranty as to stand 25 L. R. A. (N. S.) 60, and note, by virtue of its own distinctive force. " Hamilton v. Feary, 8 Ind. App. In other words, the two warranties 615, 35 N. E. 48, 52 Am. St. 485; may be so distinct and separate that Franklin v. Tracy, 117 Ky. 267, 25 both may stand at the same time, and Ky. L. 1409, 77 S. W. 1112, 63 L. R. both be enforced." Aultman &c. Co. A. 649; Whitmore v. Orono &c. Pa- V. Hunter, 82 Mo. App. 632. To same per Co., 91 Maine 297, 64 Am. St. effect, Blackmore v. Fairbanks, 79 229; Phelan v. Fitzpatrick, 188 Mass. Iowa 282, 44 N. W. 548. 237, 74 N. E. 326, 108 Am. St. 469; *> Castellano v. Peillon, 2 Mart. (N. Clifton v. Montague, 40 W. Va. 207, S.) (La.) 466 ; Houston v. Gilbert, 3 21 S. E. 858, 33 L. R. A. 449, 52 Am. Brev. (S. Car.) 63, 5 Am. Dec. 542; St. 872. Trimmier v. Thomson, 10 S. Car. '"Morton v. Hanes, 162 Mich. 366, 164. See, however, Wren v. Wardlaw, 127 N. W. 269, 139 Am. St. 566, and Minor (Ala.) 363, 12 Am. Dec. 60, note, Clifton v. Montague, 40 W. 229 FAILURE TO DISCLOSE MATERIAL FACTS. 130 has been given a strict application, regardless of whether the property leased was to be used as a dwelling or apartment house/* or for other purposes/* It follows that unless a landlord agrees with his tenant before the execution of the lease to repair the leased premises, he cannot, in the absence of a statute, be com- pelled to do so, and cannot be held liable for repairs/' The land- lord ordinarily has a right to assume that the tenant will go and ilook at the premises himself, and is not bound to tell him that they Va. 207, 21 S. E. 858, 23 L. R. A. 449, 52 Am. St. 873. "^Fisher v. Lighthall, 4 Mackey (D. C.) 82, 54 Am. Rep. 258: Hamilton V. Feary, 8 Ind. App. 615, 35 N. E. 48, 52 Am. St. 485 ; Franklin v. Tracy, 117 Ky. 267, 25 Ky. L. 1409, 77 S. W. 1112, 63 L. R. A. 649; Foster v. Pey- ser, 9 Cush. (Mass.) 242, 57 Am. Dec. 43; Phelan v. Fitzpatrick, 188 Mass. 237, 74 N. E. 326, 108 Am. St. 469; Murray v. Albertson, 50 N. J. L. 167, 13 Atl. 394, 7 Am. St. 787. Some cases hold that there is an im- plied contract that a furnished house, to let for a short time, is in proper condition for immediate occupation as a dwelling. Ingalls v. Hobbs, 156 Mass. 348, 31 N. E. 286, 16 L. R. A. 51, 32 Am. St. 460, and cases cited. See also, note to Minneapolis Co- operative Co. V. Williamson, 51 Minn. 53, 52 N. W. 986, 38 Am. St. 473n. It is difficult to see, however, why ariy distinction should be made be- tween leases for a long and short period, and there are cases denying the existence of any distinction. Franklin v. Brown, 118 N. Y. 110, 23 N. E. 126, 6 L. R. A. 770, 16 Am. St. 744. "Erskine v. Adeane, L. R. 8 Ch. 756; Sieber v. Blanc, 76 Cal. 173; Davidson v. Fischer, 11 Colo. 583, 19 Pac. 652, 7 Am. St. 267; Purcell v. English, 86 Ind. 34, 44 Am. Rep. 255; Lucas v. Coulter, 104 Ind. 81, 3 N. E. 622; Estep v. Estep, 23 Ind. 114; Libbey v. Tolford, 48 Maine 316, 77 Am. Dec. 229; Toole v. Beckett, 67 Maine 544, 24 Am. Rep. 54; Royce v. Guggenheim, 106 Mass. 201, 8 Am. Rep. 322; Woods v. Naum- keag Steam Cotton Co., 134 Mass. 357, 45 Am. Rep. 344; Button v. Gerrish, 9 Cush. (Mass.) 89, 55 Am. Dec. 45; Clark V. Babcock, 23 Mich. 164; Har- pel V. Fall, 63 Minn. 520, 65 N. W. 913; Wilkinson v. Clauson, 29 Minn. 91; Kerr v. Merrill, 4 Mo. App. 592; Scott v. Simons, 54 N. H. 426; Mul- len V. Rainear, 45 N. J. L. 520; Mur- ray v. Albertson, 50 N. J. L. 167, 13 Atl. 394, 7 Am. St. 787; Naumberg v. Young, 44 N. J. L. 331, 43 Am. Rep. 380 ; Simons v. Seward, 22 Jones 6 S. (N. Y.) 406; McGlashan v. Tall- madge, 37 Barb. (N. Y.) 313; Post V. Vetter, 2 E. D. Smith (N. Y.) 248; Edwards v. New York &c. R. Co., 98 N. Y. 245, 50 Am. Rep. 659; Kabus V. Frost, 18 Jones & S. (N. Y.) 72; Huber v. Baum, 152 Pa. St. 626, 630, 26 Atl. 101; Hazlett v. Powell, 30 Pa. St. 293; Harlan v. Lehigh Coal &c. Co., 35 Pa. St. 287 ; Wein v. Simp- son, 2 Philadelphia (Pa.) 158; Banks v. White, 1 Sneed (Tenn.) 613; Perez v. Rabaud, 76 Tex. 191, 13 S. W. 177, 7 L. R. A. 620; Lynch v. Ortlieb, 70 Tex. 727, 8 S. W. 515; Clifton v. Montague, 40 W. Va. 207, 21 S. E. 858, 33 L. R. A. 449, 52 Am. St. 872. See also, Petz v. Voight Brewery Co., 116 Mich. 418, 74 N. W. 651, 72 Am. St. 531. ""Delaney v. Johnson, 95 Ark. 131, 128 S. W. 859. A covenant is never implied that a lessor will make any repairs. Kirby v. Wylie, 108 Md. 501, 70 Atl. 213, 129 Am. St. 451; Phelan v. Fitzpatrick, 188 Mass. 237, 74 N. E. 326, 108 Am. St. 469; Sheets V. Selden, 74 U. S. 423, 19 L. ed. 169. Consequently, if the promise to re- pair is made after the execution of the lease, it is gratuitous and with- out consideration, and it cannot form the basis of an action for its breach. Glenn v. Hill, 210 Mo. 291, 109 S. W.j 27, 16 L. R. A. (N. S.) 699. See also, Goot v. Gandy, 2 El. & Bl. 845; Ward v. Fagin, 101 Mo. 669, 14 S. W. 738, 10 L. R. A. 147n, 20 I30 CONTRACTS. 230 are in bad repair or even ruinous, if the condition can be discov- ered by inspection/" However, the foregoing rules are not with- out exception. Thus, the lessor is liable when the premises contain some hidden defect or defects which render the premises dangerous and uninhabitable, of which dangerous elements or defects the landlord has, or in the exercise of reasonable dili- gence would have, some knowledge, and of which the lessee is ignorant.^^ Under this principle it has been held that if the lessor fails to disclose that the leased premises are. liable to communicate a serious and contagious disease,*^ or fails to reveal the existence of a hidden cesspool which impairs the health of the occupant,*" or fails to make known a dan- gerous condition resulting from the original method of con- Am. St. 650; Joyce v. DeGiverville, 2 Mo. App. 596; Clancy v. Byrne, 56 N. Y. 129, IS Am. Rep. 391; Cory V. Mann, 14 How. Pr. (N. S.) (N. Y.) 163. ™ Keates v. Earl Cadogan, 10 C. B. 591 ; Gallagher v. Button, 73 Conn. 172, 46 Atl. 819; Foster v. Peyser, 9 Cush. (Mass.) 242; Krueger v. Fer- rant, 29 Minn. 385, 13 N. W. 158, 43 Am. Rep. 223 ; Naumberg v. Young, 44 N. J. L. 331, 43 Am. Rep. 380; Clyne v. Helmes, 61 N. J. L. 358, 39 Atl. 767; Cleves v. Willoughby, 7 Hill (N. Y.) 83; Doyle v. Union Pa- cific Co., 147 U. S. 413, 37 L. ed. 223, 13 Sup. Ct. 333. "'Thum V. Rhodes, 12 Colo. App. 245, 55 Pac. 264; Archer v. Blalock, 97 Ga. 719, 25 S. E. 391 ; Hamilton v. Feary, 8 Ind. App. 615, 35 N. E. 48, 52 Am. St. 485; Coke v. Gutkese, 80 Ky. 598, 4 Ky. L. 545, 44 Am. Rep. 499; Cowen v. Sunderland, 145 Mass, 363, 14 N. E. 117, 1 Am. St. 469. The landlord is liable, if by the exercise of reasonable diligence, he would have discovered the defect. Hines v. Will- cox, 96 Tenn. 148, 33 S. W. 914, 34 L. R. A. 824, 54 Am. St. 823; Will- cox V. Hines, 100 Tenn. 538, 46 S. W. 297, 66 Am. St. 770. See also, Albert v. State, 66 Md. 325, 7 Atl. 697, 59 Am. Rep. 159; Lindsey v. Leighton, 150 Mass. 28S, 22 N. E. 901, IS Am. St. 199; Gill v. Middle- ton, 105 Mass. 477, 7 Am. Rep. 548; Looney v. McLean, 129 Mass. 33, 37 Am. Rep. 295. ''Minor v. Sharon, 112 Mass. 477, 17 Am. Rep. 122. In the above case the premises were infected with smallpox; Cutter v. Hamlen, 147 Mass. 471, 18 N. E. 397, 1 L. R. A. 429 (infected with diphtheria) ; Eaton V. Winne, 20 Mich. 156, 14 Am. Rep. 377 (land rented for sheep pasture infected with disease known as "scab") ; Cesar v. Karutz, 60 N. Y. 229, 19 Am. Rep. 164 (infected with smallpox). See also. Long v. Chi- cago &c. R. Co., 48 Kans. 28, 28 Pac. 977, 15 L. R. A. 319, 30 Am. St. 271 ; Snyder v. Gorden, 46 Hun (N. Y.) 538; Span v. Ely, 8 Hun (N. Y.) 255; Missouri &c. R. Co. v. Wood, 95 Tex. 223, 66 S. W. 449, 56 L. R. A. 592, 93 Am. St. 834. The same rule ap- plies as between innkeeper and guest. Gilbert v. Hoffman, 66 Iowa 205, 23 N. W. 632, 55 Am. Rep. 263. As to the necessity of the landlord having knowledge of the infected condition of the premises, see Long v. Chicago &c. R. Co., 48 Kans. 28, 28 Pac. 977, 15 L. R. A. 319, 30 Am. St. 271; Cutter v. Hamlen, 147 Mass. 471, 18 N. E. 397, 1 L. R. A. 429. '° Cowen V. Sunderland, 145 Mass. 363, 14 N. E. 117, 1 Am. St. 469; Martin v. Richards, 155 Mass. 381, 29 N. E. 591 ; Maywood v. Logan, 78 Mich. 135, 43 N. W. 1052, 18 Am. St. 431 (water on premises infected). It has been held that failure to disclose defect in plumbing does not render the landlord liable in fraud. Blake V. Ranous, 25 111. App. 486. But it 231 FAILURE TO DISCLOSE MATERIAL FACTS. § I3I struction or from decay,"" he is liable for the injury which reasonably may, and in fact does, result from such concealed dangers. This liability of the landlord for failure to disclose does not, however, arise out of any contractual relation, express or implied. It is grounded on the principle that one who delivers an article which he knows to be dangerous to another ignorant of its qualities, without giving him notice thereof, is liable for the injuries reasonably liable to result, and which in fact do result. In failing to disclose concealed defects and dangers the lessor is deemed guilty of a failure to perform a duty which he owes the lessee."^ § 131. Commercial paper. — It is sometimes stated that one who negotiates commercial paper is bound to disclose all material facts which affect its vahdity and value, when they are peculiarly within his knowledge.®^ It then becomes important to determine what are considered material facts. The statements referred to as made in some of the cases may be too broad in some respects and too narrow in others to fit all cases. But there are well does entitle the tenant to vacate the tion to inspect the premises, and premises and terminate the contract, exercises care and diligence in an ef- Pursel V. Teller, 10 Colo. App. 488, fort to discover latent defects.. Frank- Si Pac 436. Hn v. Tracy, 117 Ky. 267, 25 Ky. L. ""Coke V. Gutkese, 80 Ky. S98, 4 1409, 11 S. W. 1112, 63 L. R. A. 649. Ky. L. S4S, 44 Am. Rep. 499; Hines "Coke v. Gutkese, 80 Ky. 598, 4 V Willcox, 96 Tenn. 148, 33 S. W. Ky. L. 545, 44 Am. Rep. 499; Minor 914, 34 L. R. A. 824, 54 Am. St. 823; v. Sharon, 112 Mass. 477, 17 Am. Willcox V Hines, 100 Tenn. 524, Rep. 122; Cowen v. Sunderland, 145 45 S. W. 781, 66 Am. St. 761. Mass. 363, 14 N. E. 117, 1 Am. St. But he is not liable for fail- 469; Willcox v. Hines, 100 Tenn. 524, ure to disclose secret conditions 66 Am. St. 761 ; Hines v. Willcox, 96 which render the property un- Tenn. 148, 33 S. W. 914, 34 L. R. A. safe, when, through no fault or neg- 824, 54 Am. St. 823. See also, Ham- ligence of his own, he is unaware of ilton v. Feary, 8 Ind. App. 615, 35 N. their existence. Angevine v. Knox- E. 48, 52 Am. St. 485; Franklin v. Goodrich (Cal.), 31 Pac. 529; Thum Tracy, 117 Ky. 267, 25 Ky. L. 1409, V. Rhodes, 12 Colo. App. 245, 55 Pac. 11 S. W. 1112, 63 L. R. A. 649; 264- Metzger v Schultz, 16 Ind. App. Bowe v. Hunking, 135 Mass. 380, 46 454,' 43 N. E. 886, 45 N. E. 619, 59 Am. Rep. 471. See, however, Chad- Am' St 323- Bowe v. Hunking, 135 wick v. Woodward, 13 Abb. (N. C.) Mass 380, 46 Am. Rep. 471; Kern v. (N. Y.) 441, reported in note, 46 Am. Myll, 94 Mich. 477, 54 N. W. 176; ReP- 474._ ,, „ . ,„ Henkle v Murr, 31 Hun (N. Y.) 28; •' Prentiss v. Russ, 16 Mame 30; Schmalzried v White, 97 Tenn. 36, i(> Hoopes v. Newman, 2 Sm. & M. S W 393 32 L R A. 782; Marshall (Miss.) 71; Brown v. Montgomery, v' Heard, 'S9 Tex. 266. Not only this, 20 N. Y. 287, 75 Am. Dec. 404. See but in s'ome jurisdictions it is held however. Ex parte Hammond, 6 De that the lessor is under no obliga- G. M. & G. 699. § 131 CONTRACTS. 232 defined instances in which the vendor of such an instrument must make disclosure, and several in regard to which he is even treated as a warrantor.^^ It is generally held that the seller of a negotia- ble instrument is under an obligation to disclose the known insol- vency of the maker, and if he fails to do so he is guilty of fraud."* It is also well settled that the seller of commercial paper, even though the thing sold is a promissory note endorsed without recourse, impliedly warrants the genuineness of the signatures orf prior parties attached thereto,'^ that the instrument itself is a genuine obligation of the sort it purports to be,"" and that he has °' "The law on the sale of commer- cial paper implies a warranty on the part of the vendor of title and that the instrument is genuine, and also as stated by Judge Story that the vendor 'has no knowledge of any facts which prove the instrument if originally valid to be worthless either by fail- ure of the maker, or by its being al- ready paid, or otherwise to have be- come void or defunct.' But no case has been cited supporting the prop- osition that there is any implied war- ranty or representation on the part of the vendor of bill valid in the hands of the endorsee, that it was drawn against funds, or that it was not accommodation paper." People's Bank V. Bogart, 81 N. Y. 101, 37 Am. Rep. 481. ""Gordon v. Irvine, 105 Ga. 144, 31 S. E. 151; Sebastian May Co. v. Codd, n Md. 293, 26 Atl. 316; Bridge V. Batchelder, 9 Allen (Mass.) 394. In the above case the concealment was accompanied with false repre- sentations. Brown v. Montgomery, 20 N, Y. 287, 75 Am. Dec. 404 ; Roth- miller V. Stein, 143 N. Y. 581, 38 N. E. 718, 26 L, R. A. 148. He does not, however, warrant that the maker is solvent. Challiss v. McCrum. 22 Kans. 157, 31 Am. Rep. 181 ; Milliken V. Chapman, 75 Maine 306, 46 Am. Rep. 386; Hecht v. Batcheller, 147 Mass. 335, 17 N. E. 651, 9 Am. St. ,708; Burgess v. Chapin, 5 R. I. 225; 'Hannum v. Richardson, 48 Vt. 508, 21 Am, Rep. 152. See, however, Stew- art V. Orvis, 47 How. Pr. (N. Y.) 518. °° State V. Corning State Sav. Bank, 139 Iowa 338, lis N. W. 937; Challiss V. McCrum, 22 Kans. 157, 31 Am. Rep. 181; Ware v. McCormack, 96 Ky. 139, 28 S. W. 157; Palmer v. Courtney, 32 Nebr. ITi, 49 N, W. 754 ; Dumont v. Williamson, 18 Ohio St. 515, 98 Am. Dec. 186; Hall v. Latimer, 81 S. Car. 90, 61 S. E. 1057. "By indorsing a negotiable instru- ment the indorser admits the signa- ture and capacity of every prior party. This includes the existence and capacity of a firm ; and by the same reasoning the existence and ca- pacity of a corporation." Glidden v. Chamberlin, 167 Mass. 486, 46 N. E. 103, 57 Am. St. 479. However it is held by the weight of authority that, as between the drawee and a good- faith holder of a draft, the drawee bank is to be deemed the place of final settlement, where all prior mis- takes and forgeries shall be corrected and settled ; and if not noticed, and payment is made, the money cannot be recovered. State Bank v. First Nat. Bank, 87 Nebr. 351, 127 N. W. 244, 29 L. R. A. (N. S.) lOOn. ^ Snyder v. Reno, 38 Iowa 329; Russell V. Critchfield, 75 Iowa 69, 39 N. W. 186; Smith v. McNair, 19 Kans. 330. 27 Am. Rep. 117; Ware v. McCormack, 96 Ky. 139; Merriam v. Wolcott, 3 Allen (Mass.) 258, 80 Am. Dec. 69; Worthington v. Cowles, 112 Mass. 30; Ripley v. Case, 86 Mich. 261, 49 N. W. 46; Brown v. Ames, 59 Minn, 476, 61 N. W. 448; Palmer v. Courtney, 32 Nebr. ITi, 49 N. W. 754; Wood v. Sheldon, 42 N. J. L. 421, 36 Am. Rep. 535; Frank V. Lanier, 91 N. Y. 112; Meriden Nat. Bank V. Gallaudet, 120 N. Y. 298, 24 N. E. 994; McClure v. Central Trust Co., 165 N. Y. 108, 58 N. E. m, S3 L. R. A. 153 ; Dumont v. Wil- 233 FAILURE TO DISCLOSE MATERIAL FACTS. 132 title to the paper which gives him authority to sell it.°' § 132. Stock subscriptions and sales. — Nondisclosure in the procurement of stock subscription is usually accompanied with fraud and active concealment, and will be found discussed in the chapter on Fraud.°^ It must be borne in mind, however, that the false and fraudulent representations from which a subscriber may be released do not consist alone of positive affirmation as to existing facts or conditions, but they may consist of the suppres- sion of a material fact that the party in good faith was bound to disclose."' As was intimated in the preceding section the same liamson, 18 Ohio St. SIS, 98 Am. Dec. 186; Aldrich v. Jackson, 5 R. I. 218; Utley V. Donaldson, 94 U. S. 29, 24 L. ed. 54; Giffert v. West, 33 Wis. 617. The above rule has been said to apply where a negotiable note is indorsed without recourse. Seeley v. Reed, 28 Fed. 164 ; Palmer v. Court- ney, 32 Nebr. 773, 49 N. W. 754. There is no question but what this is true when the indorser knows the instrument transferred to be worth- less (Dayton v. Tillotson, 39 Iowa 404) or invalid. Challiss v. McCrum, 22 Kans. 157, 31 Am. Rep. 181; Ble- then V. Lovering, 58 Maine 437 ; Han- num V. Richardson, 48 Vt. 508, 21 Am. Rep. 152. See, however, Free- man v. Guyer, 13 111. 652; Littauer V. Goldman, 72 N. Y. 506, 28 Am. Rep. 171. The above principles do not apply to persons negotiating pub- lic or corporate securities, other than bills and notes. Otis v. CuUum, 92 U. S. 447, 23 L. ed. 496. "Hecht V. Batcheller, 147 Mass. 335, 17 N. E. 651, 9 Am. St. 708; Frazer v. DTnvilliers, 2 Pa. St. 200, 44 Am. Dec. 190; Hannum v. Rich- ardson, 48 Vt. 508, 21 Am. Rep. 152. It is provided by the negotiable in- strument law, §§ 65 and 66, original draft, that (§ 65) every person ne- gotiating an instrument by delivery, or by a qualified indorsement, war- rants first, that the instrument is genuine and in all respects what it purports to be; second, that he has good title to it; third, that all prior parties had capacity to contract; fourth, that he has no knowledge of any fact which would impair the validity of the instrument to render it valueless. But when the nego- tiating is by delivery only, the war- ranty extends in favor of no other holder than the immediate transferee. The provisions of subdivision 3 of this section do not apply to persons negotiating public or corporate se- curities other than bills and notes. (§ 66.) Every indorser who in' dorses without qualification warrants to all subsequent holders, in due course, first, the matters and things in subdivisions 1, 2 and 3 of the next preceding section ; and, second, that the instrument is, at the time of his indorsement, valid and subsisting. In addition, he engages that on due presentment it shall be accepted or paid, or both, as the case may be, ac- cording to its tenor, and that if it be dishonored, and the necessary pro- ceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any such indorser who may be compelled to pay it. On the question of the indorsee's knowledge of the infirmity, see Bank of Samp- son V. Hatcher, 151 N. Car. 359, 66 S. E. 308, 134 Am. St. 989. »=See ante, Ch. 4, Fraud and Mis- representation. " Central R. of Venezuela v. Kisch, L. R. 2 H. L. 99 ; Stewart v. Wyoming Cattle Ranche Co., 128 U. S. 383, 32 L. ed. 439, 9 Sup. Ct. 101; Tyler v. Savage, 143 U. S. 79, 36 L. ed. 82, 12 Sup. Ct. 340. See Alabama Foun- dry &c. Works V. Dallas, 127 Ala. 513, 29 So. 459. Other parties were represented as subscribers, but there was a failure to disclose that these § 133 CONTRACTS. 234 general rule governing sales of commercial paper applies to the sale and transfer of corporate stock/ The transferer impliedly warrants that the stock sold is genuine, that is to say, that it is not a forgery, but he does warrant that the stock was legally issued.^ § 133. Compromise. — While courts may refuse to give ef- fect to the compromise of a claim which the claimant knew to be without any foundation whatever,^ they do not require the parties negotiating a compromise of a claim, about which there is a good faith dispute, to disclose facts affecting the validity or extent of the claim,* in the absence of any confidential relation between the parties thereto. Ordinarily they deal at arm's length; but there may be cases in which there is a relation of trust and confidence even between parties making a compromise. Thus the parties to a family settlement often sustain a relation of trust and confi- dence one to the other. Consequently the parties and their agents subscriptions were paid in property at an overvaluation. Coles v. Ken- nedy, 81 Iowa 360, 46 N. W. 1088, 25 Am. St. 503. In the above case it was represented that a well-known business man was a bona fide sub- scriber. New Jersey Stone Co. v. Vreeland, 29 N. J. Eq. 651. In the above case there was simulated op- position to the acceptance of the sub- scription. Virginia Land Co. v. Haupt, 90 Va. 533, 19 S. E. 168, 44 Am. St. 939. The promoter failed to reveal that he and another person held an option on the land to be pur- chased. Weissiger v. Richmond Ice &c. Co., 90 Va. 795, 20 S. E. 361; Bosher v. Richmond &c. Land Co., 89 Va. 455, 16 S. E. 360, 2,1 Am. St. 879. In the two preceding cases the officers issued a false statement of the financial condition of such cor- porations. See also, Thomp. Corp. (2d ed.), § 718. ^ See ante, note 97, concerning ne- gotiable instruments. 'Harvey v. Dale, 96 Cal. 160, 31 Pac. 14; First Nat. Bank v. Drew, 191 111. 186, 60 N. E. 856; Higgins v. Illinois &c. Bank, 193 111. 394, 61 N. E. 1024; Harter v. Elzroth, 111 Ind. 159, 12 N. E. 129; Maze v. Owings- ville Banking Co., 23 Ky. L. 574, 63 S. W. 428; White v. Robinson, 50 Mich, li, 14 N. W. 704; People's Bank v. Kurtz, 99 Pa. St. 344; Otis V. Cullum, 92 U. S. 447, 23 L. ed. 496. As to the Louisiana law on this subject, see Meyer v. Richards, 163 U. S. 385, 41 L. ed. 199, 16 Sup. Ct. 1148. If it is a bond that is sold the seller does not warrant that it will be paid. Ketchum v. Duncan, 96 U. S. 659, 24 L. ed. 868. As to the duty of a stockholder to disclose the in- solvency of the corporation upon sale of its stock, see RothmiUer v. Stein, 143 N. Y. 581, 38 N. E. 718, 26 L. R. A. 148. In the above case the pur- chaser bought the stock of his own accord and the vendor had made no previous offer to sell. The holder of power of attorney to transfer stock impliedly warrants its genuineness. Oliver v. Bank of England (1901), 1 Ch. 652; Boston &c. R. Co. v. Rich- ardson, 135 Mass. 473. ' See post, Ch. 9, Consideration. 'Turner v. Green (1895), 2 Ch. 205, 72 L. T. 763; Jackson v. Miner, 101 111. 550; Mills' Heirs v. Lee, 6 T. B. Mon. (Ky.) 91, 17 Am. Dec. 118. See also, Daly v. Bush Tunnel R. Co., 129 Fed. 513, 64 C. C. A. 87; Chicora Fertilizer Co. v. Dunan, 91 Md. 144, 46 Atl. 347, 50 L. R. A. 401. 235 FAILURE TO DISCLOSE MATERIAL FACTS. § 133 are usually under a legal obligation to communicate to the others all material facts known to them, which affect the rights to be dealt with." ° Gordon v. Gordon, 3 Swanst. 471 ; Bowen v. Kutzner, 167 Fed. 281. One representing a surety is not, for that reason, wholly absolved from the duty of making inquiries or deduc- tions from facts within his knowl- edge, nor is he entitled to rely blindly on such information as the opposite party sees fit to communicate, without seeking other information that may be of advantage to his client. Daly V. Bush Tunnel R. Co., 129 Fed. 513, 64 C. C. A. 87. CHAPTER VII. DURESS AND UNDUE INFLUENCE. i 140. What is meant by such terms. 141. When it affects the contract. 142. How it affects the contract. 143. General rule as to avoidance of contract because of duress. 144. Duress of goods. 145. Duress by imprisonment. 146. Duress by threat and oppres- sion. 147. When presumed. 148. Relation of parties. 149. Family relations. 150. Guardian and ward. 151. Husband and wife. 152. Principal and agent. § 153. Attorney and client. 154. Physician and patient. 155. Religious advisers. 156. Other confidential relations. 157. Mental weakness. 158. Inadequacy of consideration. 159. Unconscionable contracts. 160. Contract with expectant heirs, and the like. 161. Ratification. 162. In pari delicto, principle of when not applicable to con- tracts procured through un- due influence. § 140. What is meant by such terms. — There are three well defined periods of development in the law relative to duress. By ancient authorities it was held that duress could only exist where there was such a threat of danger to the object of it as was deemed sufficient to deprive a constant, or courageous man of his free will. The resisting power which every person was bound to exercise for his own protection was measured, not by the stand- ard of the individual affected, but by the standard of the man of courage.^ At a subsequent period it was stated by text writers and courts of last resort that duress, sufficient to render the con- tract voidable must be of a nature to overcome the will of a person of ordinary firmness or courage. This statement of the rule is still found in many recent authorities.^ Within recent ^ Galusha v. Sherman, 105 Wis. 263, Andrews v. Connolly, 145 Fed. 43 ; 81 N. W. 495, 47 L. R. A. 417. The above case is a valuable one on this subject. Bracton 1, 2 Chap. 5; 1 Blackstone Commentaries 131 ; Coke's Littleton 253. 'Bosley v. Shanner, 26 Ark. 280; Hines v. Hamilton Co., 93 Ind. 266; Williamson-Halsell Frazier Co. v. Ackerman, 11 Kans. 502, 94 Pac. 807; United States Banking Co. v. Veale, 84 Kans. 385, 114 Pac. 229; Bryant V. Levy, 52 La. Ann. 1649, 28 So. 236 237 DURESS AND UNDUE INFLUENCE. § 140 years, however, the rule has been further modified and rendered more flexible. Courts now hold and text-books affirm that the test is not whether the threat was sufficient to overcome the will of a man of courage, or of ordinary courage, but whether it ac- tually overcame the will of the person threatened. Under the modern rule the law takes into consideration, not so much the nature of the threat, but the effect of the threat or violence on the mind of the person subjected thereto. Under the modern doc- trine the law e'xtends its protection to an individual without refer- ence to whether he is strong or weak intellectually, and does not measure his rights by an arbitrary yard stick avowedly applicable only to men of ordinary intellect, firmness or courage. Duress is now determined by the standard of the individual affected and not merely by the nature of the threat.^ 191 ; Harmon v. Harmon, 61 Maine 227, 14 Am. Rep. SS6; Higgins v. Brown, 78 Maine 473, S Atl. 269; Morse v. Woodworth, 155 Mass. 233, 27 N. E. 1010, 29 N. E. 525; Robin- son V. Gould, 11 Cush. (Mass.) 55; Detroit Nat. Bank v. Blodgett, 115 Mich. 160, 73 N. W. 120 ; Flanigan v. Minneapolis, 36 Minn. 406, 31 N. W. 359; Wood v. Kansas City Home Tel. Co., 223 Mo. 537, 123 S. W. 6; Wolfe V. Marshal, 52 Mo. 167; Wilkerson v. Hood, 65 Mo. App. 491 ; Horton v. Bloedorn, il Nebr. 666, 56 N. W. 321 ; Brown v. Pierce, 7 Wall. (U. S.) 205, 19 L. ed. 134 ; Walla Walla Fire Ins. Co. V. Spencer, 52 Wash. 369, 100 Pac. 741; Simmons v. Trumbo, 9 W. Va. 358; Wolff v. Bluhm, 95 Wis. 257, 70 N. W. Ti, 60 Am. St. 115; Barrett v. Mahnken, 6 Wyo. 541, 48 Pac. 202, 71 Am. St. 953; United States V. Huckabee, 16 Wall. (U. S.) 414. Perhaps the reason _this_ latter statement of the rule persists is that in the absence of any showing to the contrary the coerced party will be - presumed to be a person of ordinary courage and constancy. 'Hartford &c. Ins. Co. v. Kirkpat- rick, 111 Ala, 456, 20 So. 651; Burr V. Burton, 18 Ark. 214; McCarthy v. Taniska, 84 Conn, ill, 80 Atl. 84 ; In- ternational Harvester Co. v. Voboril, 187 Fed. 973, 110 C. C. A. 311; Stan- ley V. Dunn, 143 Ind. 495, 42 N. E. 908; Rose v. Owen, 42 Ind. App. 137, 85 N. E. 129. Baldwin v. Hutchison, 8 Ind. App. 454, 35 N. E. 711, per Gavin, J. : "Counsel for appellant con- tend that the threats were not suffi- cient to constitute duress, because not of such character as should have rea- sonably excited the fears actually caused, and cite Hines v. Board, 93 Ind. 266, and Darling v. Hines, 5 Ind. App. 319, 32 N. E. 109. The case in hand is easily distinguished from those by the fact that appellee was a man of weak mind, ignorant of the law and his rights, as was actually known to appellant. The threats made, unquestionably, did excite the fear and belief that appellant could and would carry them out. It comes with an ill grace from appellant to say that appellee ought not to have been so badly scared. We deem the law to have been well stated by Morse, J., in the case of Cribbs v. Sowle, 87 Mich. 340, 49 N. W. 587, where it is said : 'It has been held by some of the courts that mere threats of criminal prosecution, when neither warrant has been issued nor proceedings commenced, do not con- stitute duress (Buchanan v. Sahlein, 9 Mo. App. 552 ; Higgins v. Brown, 78 Maine 473, 5 Atl. 269 ; Town Coun- cil of Cahaba v. Burnett, 34 Ala. 400), and by others that a threat of arrest, for which there is no ground, does not constitute duress, as the party could not be put in fear thereby § I40 CONTRACTS. 238 Under these later decisions duress may be defined as any course of action or conduct which may actually or reasonably coerce the will of the party oppressed and exists when the con- tract results from such coercion.* There are two forms of duress : it may be either of the person, or of the goods of the party.^ Duress in either of the foregoing instances may be either actual or threatened. Duress of the person may be accomplished by unlawful imprisonment or violence. This unlawful imprison- ment or violence may be directed directly against the other party to the contract, or the husband or wife, parent or child, or other near relative of such party. The foregoing principles will be dis- cussed and illustrated in the succeeding sections of this chapter. Undue influence is closely allied to duress; indeed it has been held that "duress is but the extreme of undue influence."" The compulsion exercised is merely insufficient to constitute technical duress.'' Duress implies that the coerced party is compelled to execute the contract against his will; undue (Knapp V. Hyde, 60 Barb. (N. Y.) 80; Preston v. Boston, 12 Pick. (Alass.) 12). But these rules do not seem to have any regard to the con- dition of the mind of the person acted upon by the threat, or to take into consideration the age, disposition, or intellect of the person so threatened, and leave the old, the ignorant, the weak and the timid at the mercy of the bully or to the scoundrel who operates upon their fears to extort money from them.' " Overstreet v. Dunlap, 56 111. App. 486; Youngs v. Simm, 41 111. App, 28; Callendar Sav. Bank V. Loos, 142 Iowa 1, 120 N. W. 317; Silsbee v. Webber, 171 Mass. 378, SO N. E. SSS ; Meech v. Lee, 82 Mich. 274, 46 N. W. 383; Cribbs v. Sowle, 87 Mich. 340, 49 N. W. 587, 24 Am. St. 166: Miller v. Minor Lumber Co., 98 Mich. 163, 57 N. W. 101, 39 Am. St. 524; Wood V. Kansas City Home Tel, Co., 223 Mo. 537, 123 S. W. 6; Rossiter v. Loeber, 18 Mont. 372, 45 Pac, 560, First Nat, Bank v, Sargeant, 65 Nebr, 594, 91 N, W, 595, 59 L. R. A. 296; Nebraska Mut, Bond &c, Assn, V, Klee, 70 Nebr. 383, 97 N, W. Md; Earle v. Norfolk &c. Hosiery Co., Z(, N. J. Eq. 188; Eadie v. Slim- mon, 26 N. Y. 9, 82 Am. Dec. 395; James v. Roberts, 18 Ohio 548; Par- mentier v. Pater, 13 Ore. 121, 9 Pac. 59; Sulzner v. Cappeau-Lemley &c. Co. (Pa.), 83 Atl. 103; Galusha v. Sherman, 105 Wis. 263, 81 N. W. 495, 47 L. R. A. 417. It is not "the true policy of the law to make an arbitrary and unyielding rule in such cases to apply to all alike, without regard to age, sex, or condition of mind. Weak and cowardly people and old and ig- norant persons are the ones that need the protection of the courts, and they are the ones usually operated upon and influenced by threats." Cribbs v. Sowle, 87 Mich. 340, 49 N. W. 587, 24 Am. St. 166; 3 Elliott Ev., § 2177. * Rose V. Owen, 42 Ind. App. 137, 85 N. E. 129; Price v. Bank of Poy- nette, 144 Wis. 190, 128 N. W. 895, ° Callendar Sav, Bank v. Loos, 142 Iowa 1, 120 N, W, 317; Foote v, De- poy, 126 Iowa 366, 102 N. W. 112, 68 L. R. A, 302, 106 Am, St, 365 ; Smith- wick v, Whitley, 152 N. Car, 369, 67 S, E, 913; Harris v. Cary, 112 Va. 362, 71 S. E, 551, " Commercial Nat, Bank v, Whee- lock, 52 Ohio St, 534, 40 N, E, 636, 49 Am, St, 738, 'Edwards v. Bowden, 107 N, Car. 58, 12 S. E. 58. 239 DURESS AND UNDUE INFLUENCE. § I4I influence denotes that the party influenced entered into a contract because of a moral, social or domestic force exerted so as to control the free action of his will, even though assent thereto may have been apparently freely and voluntarily given.' Undue in- fluence bears much the same relation to duress that constructive fraud sustains to actual fraud, and might properly be designated as constructive duress. In short, undue influence is the abuse of pow^er derived from a confidential relation actual or implied; consequently a contract is voidable at the option of the servient party w^hen induced by the unconscionable use of pow^er afforded by parental, marital, or other such fiduciary or confidential rela- tions existing betw^een the parties, or by mental weakness, or necessity, or extravagance of an expected heir, or one sustaining that character, on the part of one of the parties. These princi- ples will be discussed later. "The doctrine of equity concerning undue influence is very broad and is based upon principles of highest morality, it reaches every case and grants relief where in- fluence is acquired and abused, or where confidence is reposed and betrayed."* § 141. When it affects the contract. — A contract cannot be avoided for either duress or undue influence, unless it controls the free action of the servient party's will.^° It is elementary that » Munson v. Carter, 19 Nebr. 293, St. 234 ; Van Alstine v. McAIdon, 141 27 N. W. 208; Hartnett v. Hartnett, III. App. 27; McAldon v. Van Al- 42 Nebr. 23, 60 N. W. 362. See also, stine, 135 III App. 396; Rose v. Central Bank of Fredrick v. Cope- Owen, 42 Ind. App. 137, 85 N. E. 129; land, 18 Md. 305, 81 Am. Dec. 597. Williamson-Halsell Frazier Co. v. ° Parker's Admr. v. Parker, 45 N. Ackerman, 11 Kans. 502, 94 Pac. 807, J. Eq. 224, 16 Atl. 537. See also, 20 L. R. A. (N. S.) 484; Knight v. Smith V. Kay, 7 H. L. Cas. 750; Zim- Brown, 137 Mich. 396, 100 N. W. merman v. Bitner, 79 Md. 115; Mun- 602; Hackley v. Headley, 45 Mich, son V. Carter, 19 Nebr. 293, 27 N. W. 569, 8 N. W. 511; Roloson v. De Hart 208; Fisher v. Bishop, 108 N. Y. 25, & Rigge, 134 Mo. App. 633, 114 S. W. 15 N. E. 331, 2 Am. St. 357; Long v. 88; Jewelers' League v. DeForest, 80 Mulford, 17 Ohio St. 484, 93 Am. Hun (N. Y.) 376, 30 N. Y. S. 88, 61 Dec. 638 ; Du Bose v. Kell, — S. Car. N. Y. St. 827, Bykman, J. : "Judge ■ — , 71 S. E. 371 ; Fishburne v. Fergu- Story says relief is administered son, 85 Va. 321, 7 S. E. 361. No dis- in such cases to a party 'where tinct line of demarcation can be he does an act or makes a con- drawn between duress and undue in- tract when he is under duress fluence, however, because courts have or the influence of extreme ter- used these terms interchangeably. ror, or of threats or aporehen- "The following cases are cases of sion short _ of duress. For in duress which support the text. Love cases of this sort he has no free V. State, 78 Ga. 66, 3 S. E. 893, 6 Am. will, but stands in vinculis.' (1 Story § 141 CONTRACTS. 24O there can be no valid agreement until the free consent of each party thereto is gained. But neither duress^^ nor attempted Eq. Juris. [10th ed.], § 239). We do action the result of another's will, not find that the mother in this case Francis v. Wilkinson, 147 111. 370, was at any time subjected to such in- 35 N. E. 151; Farnsworth v. Noff- fluence as would overcome her free singer, 46 W. Va. 410, 33 S. E. 246; agency. She was never terrorized in Delaplain v. Grubb, 44 W. Va. 612, any way, and she never was intimi- 30 S. E. 201, 67 Am. St. 788. He dated by the apprehension of any seri- must be as one in vinculis. Bell v. ous evil. There was no constraint Campbell, 123 Mo. 1, 25 S. W. 359, over her person, and she was not 45 Am. St. 505 ; Conley v. Nailor, placed in dread of any personal in- 118 U. S. 127, 6 Sup. Ct. 1001 ; Er- jury. * * * She was neither placed win v. Hedrick, 52 W. Va. 537, 44 under apprehension of injury nor sub- S. E. 165; Delaplain v. Grubb, 44 W. jected to intimidation, and that seems Va. 612, 30 S. E. 201, 67 Am. St. 788. to be essential within all the author- See also, Ball v. Ward, 76 N. J. Eq. 8, ities. * * * The leading case on 74 Atl. 158; Meyer v. Fishburn, 65 the subject in this state is Eadie Nebr. 626, 91 N. W. 534; Haydock v. V. Slimman (26 N. Y. 9), and Haydock, 33 N. J. Eq. 494, 38 Am. the latest case is Adams v. The Irving Rep. 385. National Bank (116 N. Y. 606, 23 "Bosley v. Shanner, 26 Ark. 280; N. E. 7). Both of those cases mani- Mascolo v. Montesanto, 61 Conn. 50, fest the severity with which courts 23 Atl. 714; St. Louis &c. R. Co. v. of equity scrutinize transactions in Thomas, 85 111. 464; Eberstein v. which covenants or written instru- Willets, 134 111. 101, 24 N. E. ments have been obtained by threats 967 ; Yates v. Royal Ins. Co., of undue influence, but the facts in 200 111. 202, 65 N. E. 726; this case do not bring it within the Stanley v. Dunn, 143 Ind. 495, 42 N. scope of the decision in either of the E. 908; James v. Dalbey, 107 Iowa cases." Smithwick v. Whitley, 152 463, 78 N. W. 51; Feller v. Green, N. Car. 369, 67 S. E. 913; Schoell- 26 Mich. 70; Detroit Nat. Bank v. hamer v. Rometsch, 26 Ore. 394, 38 Blodgett, 115 Mich. 160, 7i N. W. Pac. 344; Walla Walla Fire Ins. Co. 120; Barger v. Farnham, 130 Mich. V. Spencer, 52 Wash. 369, 100 Pac. 487, 90 N. W. 281; Flanigan v. City 741; Galusha v. Sherman, 105 Wis. of Minneapolis, 26 Minn. 406, 31 N. 263, 81 N. W. 495, 47 L. R. A. 417; W. 359; Alexander v. Pierce, 10 N. Batavia Bank v. North, 114 Wis. 637, H. 494; Dunham v. Griswold, 100 N. 90 N. W. 1016. See also. Price v. Y. 224; Barrett v. Weber, 125 N. Y. Bank of Poynette, 144 Wis. 190, 128 18, 25 N. E. 1068; Phillips v. Henry, N. W. 895. The following cases have 160 Pa. 24, 28 At!. 477 ; Wolff v. to do with undue influence. The in- Bluhm, 95 Wis. 257, 70 N. W. 7i, 60 fluence exerted must deprive the party Am. St. 115. The danger must not of his free agency. Shea v. Murphy, only exist but it must operate on the 164 111. 614, 45 N. E. 1021, 56 Am. St. mind as the controlling motive for 215; Earle v. Norfolk &c. Hosiery the performance of the act sought to Co., 36 N. J. Eq. 188; Du Bose v. be avoided. Wilkerson v.. Bishop, 47 Kell, — S. Car. — , 71 S. E. 371 ; Tenn. 24. A note has been held pro- Farnsworth v. Noffsinger, 46 W. Va. cured by duress when it appears that 410, 33 S. E. 246. It must be an act the threats were made a few days he would not have done had he fol- prior to the giving of such note and lowed his own free judgment. Kellv had not been retracted. Taylor v. v. Perrault, S Idaho 221, 48 Pac. 45; Jaques, 106 Mass. 291. As a general Seward v. Seward, 59 Kans. 387, 53 rule mere angry words, or vexations, Pac. 63. The will of the person sub- or annoyances (Brower v. Callender, jected to the duress or undue influ- 105 111. 88; Hagan v. Waldo, 168 111. ence must be overcome. Mallow v. 646, 48 N. E. 89; Adams v. Stringer, Walker, 115 Iowa 238, 88 N. W. 452; 78 Ind. 175; Gabbev v. Forgeus, 38 Towson V. Moore, 173 U. S. 17. It Kans. 62, IS Pac. 866) ; or idle im- must be such as to in fact make the potent threats (Rendleman v. Rendle- 241 DURESS AND UNDUE INFLUENCE. § 142 exercise of undue influence" will affect the validity of an agreement if the contract is not induced thereby. A party cannot avoid a contract because of threats made or influences exerted which in no way influence his action. From the fore- going it appears that it is not every influence exerted that will be considered as undue influence. The influence which the law not only refuses to recognize, but repudiates, is undue influence, de- nominated "undue" because it is unrighteous, illegal, and de- signed to perpetrate a wrong. It must amount to fraud or coercion. The grantor must be overreached .and deceived by some false representation or stratagem, or by coercion, physical or moral.^^ It is generally held that solicitations and entreaties,^* fair argument and persuasion,'^ or appeals to the emotions or affections'" do not amount to undue influence unless they over- come the will of the person and take away his ability to act as a free agent. '^ § 142. How it affects the contract. — Ordinarily, contracts man, 156 111. 568, 41 N. E. 223; Van Deventer v. Van Deventer, 46 N. J. L. 460; Miller v. Miller, 68 Pa, 486) ; or persuasion (Hamilton v. Smith, 57 Iowa 15, 10 N. W. 276, 42 Am. Rep. 711; Parker v. Lancaster, 84 Maine 512, 24 Atl. 952; Batavia Bank v. North, 114 Wis. 637, 90 N. W. 1016) ; do not constitute duress. " Borchers v. Barckers, 143 Mo. App. 72, 122 S. W. 357. If it appears that the party was active in execut- ing the transaction and was in fact putting through a fixed purpose of his own, undue influence cannot be said to exist. McMillan v. McMillan, 184 111. 230, 56 N. E. 302; Gardner v. Lightfoot, 71 Iowa 577, 32 N. W. 510; Wright's Exr. v. Wright, 32 Ky. L. 659. 106 S. W. 856; White v. Johnson, 4 Wash. 113, 29 Pac. 932. '' Davis V. Culver, 13 How, Pr. (N, Y.) 62: Fjone v, Fjone, 16 N. Dak. 100, 112 N, W. 70. "Bowdoin College v. Merntt, 75 Fed. 480, 169 U. S. 551, 18 Sup, Ct. 415. 42 L. ed. 850; Rogers v. Higgins, 57 III. 244, "Rogers v. Higgins, 57 111. 244; Sturtevant v. Sturtevant, 116 111. 340, 16— Contracts, Vol. I 6 N. E. 428; Beith v. Beith, 76 Iowa 601, 41 N. W. 371 ; Seward v. Seward, 59 Kans. 387, 53 Pac. 63; Hammond v. Welton, 106 Mich. 244, 64 N. W. 25; Latham v. Udell, 38 Mich. 238; Taylor v. Taylor, 6 Ired. Eq, (N. Car.) 26; Longenecker v. Zion &c. Church, 200 Pa. 567, 50 Atl. 244; Hummel v. Kistner, 182 Pa. 216, 2,1 Atl. 815 ; Du Bose v. Kell, — S. Car. — , 71 S. E. 371 ; Seat v. McWhirter, 93 Tenn, 542, 29 S. W. 220 ; Delaplain V, Grubb, 44 W, Va. 612, 30 S. E. 201, 67 Am. St. 718. "Adair v. Craig, 135 Ala, 332, 33 So. 902; Sawyer v. White, 122 Fed, 223 ; Burt v. Quisenberry, 132 111, 385, 24 N, E, 622; Mallow v. Walker, 115 Iowa 238, 88 N. W. 452, 91 Am, St. Rep, 158; Fjone v, Fjone, 16 N. Dak, 100, 112 N. W. 70; Doran v, McConlogue, 150 Pa, St, 98, 24 Atl. 357; Orr v, Pennington, 93 Va, 268, 24 S, E, 928 ; Delaplain v. Grubb. 44 W. Va. 612, 30 S. E. 201, 67 Am, St, 788. "This branch of the subject has been more fully developed in the law of wills and the reader is referred to books on that subject for a full dis- cussion. § 143 CONTRACTS. 242 obtained by duress^' or undue influence^* are merely voidable at the option of the party coerced or unduly influenced, and not void.^" However, duress or undue influence when actually exer- cised with effect, furnishes grounds for the avoidance of any con- tract. Thus the principle that the law favors compromise has no application to a case where the settlement is obtained by coercion. Duress will vitiate and render voidable a compromise agreement the same as any other contract.^^ § 143. General rule as to avoidance of contract because of duress. — The general rule as to avoidance of contracts be- cause of duress is thus stated in a comparatively recent text-book : "Duress considered as a ground for avoiding a contract consists of any of the following acts committed or threatened by one of the parties, or with his connivance, and causing the other to enter into the contract : i. Unlawful imprisonment of the other party. 2. Imprisonment of the other party procured through the abuse of "Ormes v. Beadel, 2 De Gex F. & J. 333; Royal v. Goss, 154 Ala. 117, 45 So. 231; Deputy v. Stapleford, 19 Cal. 302; Eberstein v. Willets, 134 111. 101, 24 N. E. 967; Veach v. Thompson, 15 Iowa 380; Fairbanks V. Snow, 145 Mass. 153, 13 N. E. 596, 1 Am. St. 446; Morse v. Woodworth, 155 Mass. 233, 27 N. E. 1010, 29 N. E. 525 ; Miller v. Minor Lumber Co., 98 Mich. 163, 57 N. W. 101, 39 Am. St. 524; Mundy v. Whittemore, 15 Nebr. (AT, 19 N. W. 694; Oregon Pac. R. Co. V. Forrest, 128 N. Y. 83, 28 N. E. 137; Commercial Nat. Bank V. Wheelock, 52 Ohio St. 534, 40 N. E. 636, 49 Am. St. 738; Galusha v. Sherman, 105 Wis. 263, 81 N. W. 495, 47 L. R. A. 417. See also, Mc- Clintock V. Cummins, 2 McLean (U. S.) 98 Fed. Cas. No. 8,698; Thomp- son V. Niggley, 53 Kans. 664, 35 Pac. 290, 26 L. R. A. 803; Inhabitants of Worcester v. Eaton, 13 Mass. 371 ; Robinson v. Gould, 11 Cush. (Mass.) 55. But see Belote v. Henderson, 5 I Cold. CTenn.) 471, 98 Am. Dec. 432. Only the servient party can plead duress. The dominant party is bound. Peirce v. Mclntire, 2 Dane Abr. 224. However, there mav be such fraud in the execution of the contract as to render it void. Palmer v. Poor, 121 Ind. 135, 22 N. E. 984, 6 L. R. A. 469. The above case was a suit on a prom- issory note. It was held there could be no recovery since because of the duress practiced the note was never delivered. If the duress is such that the person on whom it is imposed, is converted into a mere automaton for the purpose of obeying the command and registering the will of the person who imposes it the contract then be- comes null and void. Royal v. Goss, 154 Ala. 117, 45 So. 231. '° Burton v. McMillan, 52 Fla. 469, V. Roach, 139 Ind. 275, 38 N. E. 822; 42 So. 849, 120 Am. St. 220; Tucker Somes V. Skinner, 16 IMass. 348; Fisher v. Publishing Association, 85 Mich. 472, 48 N. W. 622. ™ George Conlon & Co. v. East, 189th St. Bldg &c. Co., 141 App. Div. (N. Y.) 441, 126 N. Y. S. 226. In case the oppressed party seeks to re- scind he must rescind in toto. He cannot accept the benefits of the agreement and avoid its burdens. Royal V. Goss, 154 Ala. 117, 45 So. 231. ■^Tucker v. Roach, 139 Ind. 275, 38 N. E. 822; Baldwin v. Hutchinson, 8 Ind. App. 454, 35 N. E. 711: Tavlor V. Patrick. 1 Bibb (Ky.) 168; Hol- land V. Hoyt, 14 Mich, 238; Gering 243 DURESS AND UNDUE INFLUENCE. 144 lawful process or made unjustly oppressive. 3. Imprisonment of the husband or wife, parent or child, or other near relative of the other party. 4. Unlawful and great bodily harm to the other party or his near relative. 5. Unlawful seizure, detention, or destruction of the property of such person."" § 144. Duress of goods.— Originally the common-law rule relative to duress was narrow; by it duress meant only duress of the person, and even in that instance nothing short of duress amounting to a reasonable apprehension of imminent danger to life, limb or liberty was sufficient to avoid a contract or to enable a party to recover money paid.''^ Courts of equity would, how- ever, set aside contracts when there was imposition on the serv- ient party of such character as to overcome his free agency. Gradually the courts of law extended the doctrine so as to recog- nize duress of property as a sort of moral duress which might, equally with duress of person, constitute a defense to a contract induced thereby, and that duress of property would entitle one to recover money paid under its influence.^* Consequently, it is V. School District No. Twenty-eight, 76 Nebr. 219, 107 N. W. 250. "^Benj. Contract (2d ed.) 217. ""Skeate v. Beale, 11 A. & E. 983; Sumner v. Ferryman, 11 Mod. 201; Whitt V. Blount (Ga.), 53 S. E. 205; Wells V. Adams, 88 Mo. App. 215; First Nat. Bank v. Sargent, 65 Nebr. 594, 91 N. W. 595, 59 L. R. A. 296; Adams v. Irving Nat. Bank, 116 N. Y. 606, 23 N. E. 7, 6 L. R. A. 491, IS Am. St. 447. "In examining the au- thorities upon the question as to what pressure or constraint amounts to duress, justifying the avoidance of contracts made, or the recovery back of money paid, under its influence, one is forcibly impressed," says Jus- tice Mitchell, "with the extreme nar- rowness of the old common-law rule on the one hand and with the great liberality of the equity rule on the other. At common law, 'duress' meant only duress of the person, and nothing short of such duress amount- ing to a reasonable apprehension of imminent danger to life, limb, or lib- erty, was sufficient to avoid a con- tract, or to enable a party to recover back money paid. But courts of equity would unhesitatingly set aside contracts whenever there was impo- sition or oppression, or whenever the extreme necessity of the party was such as to overcome his free agency. The courts of law, however, gradually extended the doctrine so as to recog- nize duress of property as a sort of moral duress, which might, equally with duress of the person, constitute a defense to a contract induced there- by, or entitle a party to recover back money paid under its influence ; and the modern authorities generally hold that such pressure or constraint as compels a man to go against his will, and virtually takes away his free agency and destroys the power of re- fusing to comply with the unlawful demand of another, will constitute duress, irrespective of the manifesting or apprehension of physical force." Joannin v. Ogilvie, 49 Minn. 564, 52 N. W. 217, 16 L. R. A. 376, 32 Am. St. 581. ^Joannin v. Ogilvie, 49 Minn. 564, 52 N. W. 217, 16 L. R. A. Z16, 32 Am. St. 581. See also, Kilpatrick v. Ger- mania Life Ins. Co.. 183 N. Y. 163, 75 N. E. 1124, 2 L. R. A. (N. S.) 574, 111 Am. St. 722. "To constitute duress [of goods] it is sufficient if the will § 144 CONTRACTS. 244 now well settled that payment of a void tax to prevent the seizure, or, if seized, to prevent the sale of personal property, may be con- sidered as paid or given under duress, and may be recovered."' Likewise, if money is paid or a note given to prevent the seizure of goods under an execution illegally or improperly issued or used"^ or to release goods from an attachment fraudulently ob- tained,^' it is considered as being paid or given under such coer- cion as to amount to duress.^^ It has been held that a refusal to permit one to draw on his bank account until a certain contract be constrained by the unlawful pres- entation of a choice between com- parative evils, as inconvenience and loss by the detention of property, loss of property altogether, or compliance with an unconscionable demand." Harris v. Gary, 112 Va. 362, 71 S. E. 551. During the transition which the common law underwent in reaching the conclusion that there may be du- ress of goods, there developed what now seems a very artificial distinction to the effect that one who paid money induced by duress of goods might re- cover it but that an executory con- tract induced thereby could not be avoided. The action was in debt for money had and received. Skeate v. Beale, 11 Ad. & El. 983; Atlee v. Backhouse, 3 M. & W. 633. See also, Edwards v. Handley, Hard. (Ky.) 602, 3 Am. Dec. 745; Hazelrigg v. Donaldson, 2 Mete. (Ky.) 445; Bing- ham V. Sessions, 6 Sm. & M. (Miss.) 13; Foshay v. Ferguson, 5 Hill (N. Y.) 154; Williams v. Phelps, 16 Wis. 80. That is to say, if a person paid money to recover goods unlawfully detained he could recover it, but if he gave a promissory note to induce their surrender he could not defeat recovery on the note because of duress. Oliphant v. Markham, 79 Tex. 543, 15 S. W. 569, 23 Am. St. 363. But it would seem this doctrine has been generally repudiated in this country. Oliphant v. Markham, 79 Tex. 543, 15 S. W. 569, 23 Am. St. 363. See also, note to Hatter v. Greenlee, 1 Porter (Ala.) 222, 26 Am. Dec. 370. "^ Bailey v. Goshen, 32 Conn. 546, 87 Am. Dec. 191; Hennel v. Van- derburgh County, 132 Ind. 32, 31 N. E. 462; Greenabaum v. King, 4 Kans. 332, 96 Am. Dec. 172 ; Nickodemus v. East Saginaw, 25 Mich. 456; Lyon v. Receiver of Taxes, 52 Mich. 271; 17 N. W. 829; Minor Lumber Co. v. Alpena, 97 Mich. 499, 56 N. W. 926; ^tna Ins. Co. v. New York, 153 N. Y. 331, 47 N. E. 593; Dale v. New York, 71 App. Div. (N.Y.) 227, 75 N. Y. S. 576, 1123; Kelley v. Rhoads, 7 Wyo. 237, 51 Pac. 593, 39 L. R. A. 594, 75 Am. St. 904. However, if the payment is made without compulsion, even though the tax assessed is il- legal, it cannot be recovered, as where one pays an illegal tax in or- der to secure the rebate allowed for prompt payment the amount so paid cannot be recovered. Louisville v. Becker, 139 Ky. 17, 129 S. W. 311, 28 L. R. A. (N. S.) 1045. And the gen- eral rule is that a voluntary pay- ment cannot be recovered, a protest being necessary in some cases and even a protest will not always make a payment involuntary or under duress within the rule of the text. Lee V. Templeton, 13 Gray (Mass.) 476. But when payment is made not only to procure the discount but also to prevent the issuance of a threatened warrant, it is made under compulsion and recovery may be had. Stowe V. Stowe, 70 Vt. 609, 41 Atl. 1024. ^Thurman v. Burt, 53 111. 129; Snell V. State, 43 Ind. 359 ; Hollings- worth V. Stone, 90 Ind. 244. "Spaids V. Barrett, 57 111. 289; Chandler v. Sanger, 114 Mass. 364, 19 Am. Rep. 367; Downing v. Ely, 125 Mass. 369; Adams v. Reeves, 68 N. Car. 134, 12 Am. Rep. 627; Clark v. Pearce, 80 Tex. 146, 15 S. W. 787. ^The rule is that money paid vol-- untarily with full knowledge of the facts cannot be recovered. How- 245 DURESS AND UNDUE INFLUENCE. § 144 was executed, amounts to duress.^" Duress finds further illus- tration in those cases where property is wrongfully obtained or detained by a carrier/" or collector of duties/^ or other person,^^ and money paid or tiotes given by the one entitled to possession as a condition precedent to the delivery of the property, may be recovered or avoided.^^ It has been held that equity will grant relief to a minority stockholder who has been compelled to sur- render stock to one controlling the corporation by reason of the former's pecuniary necessities and unconscionable demands ac- companied by threats of the latter to entirely destroy the value of the stock/* ever, there is a class of cases where, although there be a legal remedy, a person s situation or the situation of his property is such that the legal remedy would not be adequate to protect him from irreparable injury; where the circumstances and the ne- cessity to protect himself or his prop- erty otherwise than by resort to legal remedies, may operate as stress or coercion upon him to comply with the illegal demands. In such cases his act will be deemed to have been done under duress. Joannin v. Ogil- vie, 49 Minn. £64, 52 N. W. 217, 16 L. R. A. 376, 32 Am. St. 581. =» Adams v. Schififer, 11 Colo. IS, 17 Pac. 21, 7 Am. St. 202. ""Ashmole v. Wainwright, 2 Q. B. 837; Tutt V. Ide, 3 Blatchf. (U. S.) 249; Lafayette &c. R. Co. v. Pattison, 41 Ind. 312; Chamberlain v. Reed, 13 Maine 357, 29 Am. Dec. 506 ; Far- gusson V. Winslow, 34 Minn. 384, 25 N. W. 942 ; Harmony v. Bingham, 12 N. Y. 99, 62 Am. Dec. 142; Baldwin V. Liverpool &c. S. S. Co., 74 N. Y. 125, 30 Am. Rep. 277; Beckwith v. Frisbie, 32 Vt. 559. See also, St. Louis &c. R. Co. V. Gorman, 79 Kans. 643, 100 Pac. 647, 28 L. R. A. (N. S.) 637n, holding voidable at the shipper's election a special contract limiting the carrier's common-law liability which he rightfully refused to sign but which he was compelled to sign by means of a refusal to transport cattle already in the car- rier's possession unless the contract was signed. "''Robertson v. Frank Bros. Co., 132 U. S. 17, 33 L. ed. 236, 10 Sup. Ct. 5; Elliott V. Swartwout, 10 Pet. (U. S.) 137, 9 L. ed. 373; Maxwell V. Griswold, 10 How. (U. S.) 242, 13 L. ed. 405; Ripley v. Gelston, 9 Johns. (N. Y.) 201, 6 Am. Dec. 271. "'Lonergan v. Buford, 148 U. S. 581, 37 L. ed. 569, 13 Sup. Ct. 684; Cobb V. Charter, 32 Conn. 358, 87 Am. Dec. 178; Pemberton v. Wil- liams, 87 111. 15 ; Bennett v. Ford, 47 Ind. 264; Lightfoot v. Wallis, 12 Bush. (Ky.) 498; Chase v. Dwinal, 7 Greenl. (Maine) 134, 20 Am. Dec. 352; Whitlock Mach. Co. v. Holway, 92 Maine 414, 42 Atl. 799; Carew v. Rutherford, 106 Mass. 1, 8 Am. Rep. 287; Hackley v. Headley, 45 Mich. 569, 8 N. W. 511; McCabe v. Shaver, 69 Mich. 25, 36 N. W. 800; Stenton V. Jerome, 54 N. Y. 480; Scholey v. Mumford, 60 N. Y. 498; McPherson v. Cox, 86 N. Y. 472 ; White v. Heyl- man, 34 Pa. St. 142; Motz v. Mitch- ell, 91 Pa. St. 114; Oliphant v. Mark- ham, 79 Tex. 543, 15 S. W. 569, 23 Am. St. 363. ""It has been held that a payment made to liberate tools of trade (Cobb V. Charter, 32 Conn. 358, 87 Am. Dec. 178), or a cargo (Fargusson v. Wins- low, 34 Minn. 384, 25 N. W. 942), or a ship (Ripley v. Gelston, 9 John. (N. Y.) 201, 6 Atai. Dec. 271), or lumber (Chase v. Dwinal, 7 Greenl. (Maine) 134, 20 Am. Dec. 352), may be recovered when such articles are illegally held. It has also been held that money paid to an officer in or- der to induce him to return personalty to the owner is not voluntarily paid and. may be recovered. Alston v. Durant, 2 Strob. (S. Car.) 257, 49 Am. Dec. 596; Clark v. Pearce, 80 Tex. 146, 15 S. W. 787. "* Harris v. Gary, 112 Va. 362, 71 S. E. 551. § 144 CONTRACTS. 246 The general rule relative to involuntary payment is usu- ally stated thus : "To constitute coercion or duress which will be regarded as sufficient to make a payment involuntary, there must be some actual or threatened exercise of power possessed, or believed to be possessed, by the party exacting or receiving the payment over the person or property of another, from which the latter has no other means of immediate relief than by making the payment.""^ There is authority for the proposition that there can be no duress of real estate such as will render a payment of money on account thereof involuntary.^" This statement is not true, however, in its broad sense. There may be duress of realty as well as of personalty although perhaps not as readily seen in the former as in the latter instance.^' Thus it has been held that under certain circumstances the assertion of an un- founded lien on real property^' or the demand of an extortionate bonus for the release of a mortgage^^ may amount to duress. There is authority to the effect that the payment of a void tax to prevent the sale of real estate in satisfaction of such tax, is not "^ Radich v. Hutchins, 95 U. S. 210, 24 L. ed. 409; Lonergan v. Buford, 148 U. S. 581, 37 L. ed. 569, 13 Sup. Ct. 684; Brumagim v. Tillinghast, 18 Cal. 265; Harris v. Gary, 112 Va. 362, 71 S. E. 551. As to what does not constitute involuntary payment see New Orleans &c. R. Co. v. Louisiana Const. & Improvement Co., 109 La. 13, 94 Am. St. 395, and note 33 So. 51. See also. Buck v. Houghtaling, 110 App. Div. (N. Y.) 52, 96 N. Y. S. 1034. ™ Fleetwood v. New York, 2 Sandf. (N. Y.) 475; Forrest v. Mayor of New York, 13 Abb. Pr. (N. Y.) 350. See note 45 Am. Dec. 160. " See Joannin v. Ogilvie, 49 Minn. 564, 52 N. W. 217, 16 L. R, A. 376, .32 Am. St. 581 ; Fout v. Giraldin, 64 Mo. App. 165; Wells v. Adams, 88 Mo. App. 215. '"Joannin v. Ogilvie, 49 Minn. 564, 52 N. W. 217, 16 L, R. A. 376, 32 Am. St. 581. " Kilpatrick v. Germania Life Ins. Co., 183 N. Y. 163, 75 N, E. 1124, 2 L. R. A. (N. S.) 574, 111 Am. St. 722. See also, Whitcomb v. Harris, 90 Maine 206, 38 Atl. 138; Cazenove V. Cutler, 4 Mete. (Mass.) 246; Mc- Murtrie v. Keenan, 109 Mass. 185; Klein v. Bayer, 81 Mich. 233, 45 N. W. 991; Wells v. Adams, 88 Mo. App. 215; Fout v. Giraldin, 64 Mo. App. 165 ; First Nat. Bank v. Sar- geant, 65 Nebr. 594, 91 N. W. 595, 59 L. R. A. 296; Vick v. Shinn, 49 Ark. 70, 4 S. W. 60, 4 Am. St. 26; Burke V. Gould, 105 Cal. 277, 38 Pac. 733 ; Savannah Sav. Bank v. Logan, 99 Ga. 291, 25 S. E. 692; Patterson V. Cox, 25 Ind. 261 ; Hipp v. Cren- shaw, 64 Iowa 404, 20 N. W. 492; Wessel V. D. S. B. Johnson Land &c. Co., 3 N. Dak. 160, 54 N. W. 922, 44 Am. St. 529; Shuck v. Interstate BIdg. &c. Association, 63 S. Car, 134, 41 S. E. 28. See, however, Mariposa Co. v. Bowman, Deady (U. S.) 228, Fed. Gas. No. 9089; Vereycken v. Vanden Brooks, 102 Mich. 119, 60 N. W. 687, per Montgomery, J.: "The general rule is that, to constitute a payment involuntary, it must be under such circumstances as precludes the exercise of the free will of the payor. There must be either duress of the person or the property. Some courts have held that there can be no duress of real property which remains in the possession of the payor, but most courts hold the con- trary. State V. Nelson, 41 Minn. 25, 247 DURESS AND UNDUE INFLUENCE. § 144 under compulsion, and must be regarded as voluntary." But by the weight of authority the payment of an illegal tax under pro- test or the like to prevent the sale of real estate is not voluntary and such payment may be recovered." Thus it has been held that payment of a tax made to enable a deed to be recorded,*^ to 42 N. W. 548; Pemberton v. Wil- liams, 87 111. 15; White v. Heylman, 34 Pa. St. 142; Joannin v. Ogilvie, 49 Minn. 564, 52 N. W. 217. So it has been held that if the mortgagee of land require that the mortgagor pay more than is legally due, for the purpose of preventing a foreclos- ure by advertisement, this is such a compulsory payment as entitles the party to sue and recover back the excess. But it is to be noted that in such a case the mortgagee, by his own act, unaided by any process of court, has it within his power to de- prive the mortgagor of his title. Such was not the case here. All that the plaintiff had done was to file a bill to obtain a decree of the court fixing the amount due. Before any decree could pass against the present plain- tiff, he was entitled to his day in court. Under these circumstances, we think that there was no duress of property such as the law recognizes. See Forbes v. Appleton, 5 Cush. (Mass.) 115; Benson v. Monroe, 7 Cush. (Mass.) 125; Taylor v. Board, 31 Pa. St. 73; Oceanic Steamship Co. V. Tappan, 16 Blatchf. (U. S.) (C. C.) 296; Fed. Cas. No. 10405; Mari- posa Co. V. Bowman, Deady (U. S.) (C. C.) 228; Fed. Cas. No. 9089." *° Sonoma County Tax Case, 8 Saw- yer 312, 13 Fed. 789; Bucknell v. Story, 46 Cal. 589, 13 Am. Rep. 220; Phelan v. San Francisco, 120 Cal. 1, 52 Pac. 38; Otis v. People, 196 111. 542, 63 N. E. 1053; Davies' Exrs. v. Galveston, 16 Tex. Civ. App. 13, 14 S. W. 145. It has been held that a sale of land for taxes made under an unconstitutional law does not con- stitute a cloud upon the title, and therefore, payment of such tax to prevent a sale is voluntary, though made under protest, and cannot be recovered. Detroit v. Martin, 34 Mich. 170, 22 Am. Rep. 512. How- ever, a distinction is drawn between taxes levied under an unconstitution- al statute and cases where the stat- ute under which the proceedings to levy the tax are taken is constitu- tional and where the illegality thereof is claimed from some irregularity or defect in the statutory proceedings. In the latter case payment to prevent the sale of real estate in payment of such tax has been declared involun- tary and capable of being recovered. Whitney v. Port Huron, 88 Mich. 268, SO N. W. 316, 26 Am. St. 291. See also, Thompson v. Detroit, 114 Mich. 502, 72 N. W. 320. "■ Whitney v. Port Huron, 88 Mich. 268, 50 N. W. 316, 26 Am. St. 291; Breucher v. Port Chester, 101 N. Y. 240, 4 N. E. 272 ; Bowns v. May, 120 N. Y. 357, 24 N. E. 947; Stephen v. Daniels, 27 Ohio St. 527; Whittaker V. Deadwood, 12 S. Dak. 608, 82 N. W. 202. Especially is this true where the plaintiff's right would have been cut off, if he had not paid the assess- ment or enjoined the sale. Gill v. Oakland, 124 Cal. 335, 57 Pac. 150. In many states the return or recov- ery of void or illegal taxes is pro- vided for by statutes. See White v. Smith, 117 Ala. 232, 23 So. 525; Wil- mington V. Ricaud, 90 Fed. 214; Donch v. Lake County, 4 Ind. App. 374, 30 N. E. 204; Simonson v. West Harrison, 5 Ind. App. 459, 32 N. E. 585 ; Iowa R. Land Co. v. Woodbury County, 64 Iowa 212, 19 N. W. 915; Topeka Commercial &c. Co. v. Har- per County, 63 Kans. 351, 65 Pac. 660; McGee v. Salem, 149 Mass. 238, 21 N. E. 386; Monroe Water Co. v. Frenchtawn, 98 Mich. 431, 57 N. W. 268; Western Ranches v. Custer County, 28 Mont. 278, 72 Pac. 659; People V. Matthias, 84 App. Div. (N. Y.) 122, 81 N. Y. S. 1105; Day v. Pel- ican, 94 Wis. 503, 69 N. W. 368. ''State V. Nelson, 41 Minn. 25, 42 N. W. 548, 4 L. R. A. 300n. See, however, Weston v. Luce County, 102 Mich. 528, 61 N. W. 15. § 145 CONTRACTS. 24a facilitate the sale of land*^ or to redeem from a tax sale^* may be recovered. § 145. Duress by imprisonment. — Duress by imprisonment was recognized at common law.*^ Imprisonment in the sense in which it is used here is the restraint of personal liberty whether in prison or elsewhere.*" But mere imprisonment is not alone sufficient to establish duress.*^ It is necessary to show either an unlawful imprisonment, or abuse of, or oppression under lawful process, or legal detention, such as overcomes the free will of the party detained.** "Gage V. Saginaw, 128 Mich. 682, 87 N. W. 1027. ** American Baptist Missionary Union v. Hastings, 67 Minn. 303, 69 N, W. 1078. See also, Keehn v. Mc- Gillicuddy, 19 Ind. App. 427, 49 N. E. 609. See, however, Phillips v. Jef- ferson County, 5 Kans. 412 ; Wabaun- see County V. Walker, 8 Kans. 431 ; Dickinson County v. National Land Co., 23 Kans. 196 ; Shane v. St. Paul, 26 Minn. 543, 6 N. W. 349; Fleet- wood V. New York, 4 N. Y. Super. Ct. 475 ; Lamborn v. Dickinson County, 97 U. S. 181, 24 L. ed. 926; Powell V. St. Croix Supervisors, 46 Wis. 210, 50 N. W. 1013. "Bush V. Brown, 49 Ind. 573, 19 Am. Rep. 695; Wood v. Kansas City Home Tel. Co., 223 Mo. 537, 123 S. W. 6. See also, 3 Elliott Ev., § 2168. "First Nat. Bank v. Bryan, 62 Iowa 42, 17 N. W, 165; Hackley v. Headley, 45 Mich. 569, 8 N, W. 511. Courts of admiralty pay no respect to agreements of seamen to forfeit their wages, extorted from them at sea or in places where the power of the ship's master is supreme. The Fred E. Sander, 95 Fed. 829. "Clem V. Guncun, 94 U, S. 664; McCarthy v. Taniska, 84 Conn. 377, 80 Atl. 84; Smith v. Atwood, 14 Ga. 402; Jones v, Peterson, 117 Ga. 58, 43 S. E. 417; Taylor v. Cottrell, 16 111. 93; Heahs v. Dunham, 95 111. 583; Neally V. Greenough, 25 N. H. 325. " Mascolo V. Montesanlo, 61 Conn. 50, 23 Atl. 714, 29 Am. St. 170 ; Jones V. Peterson, 117 Ga. 58, 43 S. E. 417; Taylor v. Cottrell, 16 111. 93; Heaps V. Dunham, 95 111. 583 ; Grimes v. Briggs, 110 Mass. 446; Fulton v. Gregory, 130 Mass. 176; Prichard v. Sharp, 51 Mich. 432, 16 N. W. 798; Holmes v. Hill, 19 Mo. 159; Nealley v. Greenough, 25 N. H. 325 ; Clark v. Turnbull, 47 N. J. L. 265, 54 Am. Rep. 157; Pflaum v. McClintock, 130 Pa. St. 369, 18 Atl. 734; Meacham V. Newport, 70 Vt. 67, 39 Atl. 631. Where there is an arrest for an im- proper purpose without just cause, or where there is an arrest for a just cause, but without lawful authority, or for a just cause, but for an un- lawful purpose, in either of those events the party arrested, if he was thereby induced to enter into a con- tract, may avoid it as one procured by duress. Morrill v. Nightingale, 93 Cal. 452, 28 Pac. 1068, 27 Am. St. 207; Whitt V. Blount (Ga.), 53 S. E. 205 ; Schommer v. Farwell, 56 111. 542; Bane v. Detrick, 52 111. 19; Rollins V. Lashus, 74 Maine 218; Wat- kins v. Baird, 6 Mass. 506, 4 Am. Dec. 170; Hackett V. King, 6 Allen (Mass.) 58; Sweet v. Kimball, 166 Mass. 332; Seiber v. Price, 26 Mich. 518; Fossett v. Wilson, 59 Miss. 1; Breck V. Blanchard, 22 N. H. 303; Richardson v. Duncan, 3 N. H. 508; Clark V. Pease, 41 N. H. 414; Os- born V. Robbins, 36 N. Y. 365, 4 Abb. Prac. (N. S.) (N. Y.) 15; Guilleaume V. Rowe, 94 N. Y. 268, 46 Am. Rep. 141 ; Reinhard v. City, 49 Ohio St. 257, 31 N. E. 35; Phelps v. Zuschlag, 34 Tex. 371; Baker v. Morton, 12 Wall. (U. S.) 150, 20 L. ed. 262; Behl v. Schuett, 104 Wis. 76, 80 N. W. 73. Notwithstanding the arrest may be for a just cause and under a vahd process, yet if it is made for an illegal purpose, and if the person so arrested pays money for his release, he may be considered as having paid under 249 DURESS AND UNDUE INFLUENCE. 146 § 146. Duress by threat and oppression. — The common law originally recognized but two kinds of duress. One of them has just been discussed, i. e., duress by imprisonment." The other was duress per minas. Duress per minas was a threatened or impending hardship and was held to exist when a person was threatened with loss of life, limb, or mayhem, or with imprison- ment.'" Since under the definition just given, duress per minas may arise when one is threatened with personal injury, it is well settled that threats of violence may constitute duress." Thus it has been held that threats of mob violence^^ or fear of physical injury and abandonment by husband, may constitute such du- ress.°' Nor is marriage excepted from the operation of the fore- going principles. Notwithstanding the rule that the law requires that marriages shall not lightly be set aside, yet if one of the parties has been coerced by abduction or terror or fright caused by threats of physical violence, the marriage may be annulled."* duress of imprisonment, and be per- mitted to recover such payment. Mayer v. Oldham, 32 111. App. 233; Sweet V. Kimball, 166 Mass. 332, 44 N. E. 243, 55 Am. St. 406; Morse v. Woodworth, 155 Mass. 233, 27 N. E. 1010, 29 N. E. 525 ; Richardson v. Duncan, 3 N. H. 508; Reinhard v. Columbus, 49 Ohio St. 257, 31 N. E. 35 ; Fillman v. Ryon, 168 Pa. St. 484, 32 Atl. 89; Phelps v. Zuschlag, 34 Tex. 371 ; Heckman v. Swartz, 64 Wis. 48, 24 N. W. 473. Some cases lay down a rule, largely dictum, to the effect that where one believes he has a cause of action against others, and by lawful process causes him to be arrested and imprisoned, and the one so arrested voluntarily executes a deed or makes a contract, or pays the money claimed for his deliverance, he cannot avoid such deed, or con- tract for duress by imprisonment, or reclaim the money as extorted from him, although, in fact, the plaintiff had no good cause of action. Mas- colo V. Montesanto, 61 Conn. SO, 23 Atl. 714, 29 Am. St. 170; Watkins v. Baird, 6 Mass. 506, 4 Am. Dec. 170; Clark V. Turnbull, 47 N. J. L. 265, 54 Am. Rep. 157. *" See § 145 ante. ™Whitt V. Blount, 124 Ga. 671, 53 S. E. 205; 2 Bacon Abr. 156. "Du- ress is of two kinds — duress of im- prisonment, when a man actually loses his liberty, and duress per minas, where the hardship is only threat- ened and impending." Bush v. Brown, 49 Ind. 573, 19 Am. Rep. 695. Wood V. Kansas City Home Tel. Co., 223 Mo. 537, 123 S. W. 6. See also, 3 Elliott Ev., § 2168. " Burr V. Burton, 18 Ark. 214 ; Rus- sell v. McCarty, 45 Ga. 197; Mollere V. Harp, 36 La. Ann. 471 (threat to take life) ; Rossiter v. Loeber, 18 Mont. 372, 45 Pac. 560; Bueter v, Bueter, 1 S. Dak. 94, 45 N. W. 208, 8 L. R. A. 562; Bogle v. Hammons, 49 Tenn. (2 Heisk.) 136; Brown v. Pierce, 74 U. S. (7 Wall.) 205, 19 L. ed. 134 (threat to take life unless contract executed) ; Baker v. Mor- ton, 79 U. S. (12 Wall.) 150, 20 L. ed. 262. "'Doolittle v. McCullough, 7 Ohio St. 299; Baker v. Morton, 12 Wall. (U. S.) 150, 20 L. ed. 262; Brown v. Pierce, 7 Wall. (U. S.) 205, 19 L. ed. 134. " Berry v. Berry, 57 Kans. 691, 47 Pac. 837, 57 Am. St. 351. See also. Central Bank v. Copeland, 18 Md. 305, 81 Am. Dec. 597 ; Tapley v. Tap- ley, 10 Minn. 448, 88 Am. Dec. 76; Kocourek v. Marak, 54 Tex. 201, 38 Am. Rep. 623. "Scott v. Sebright. L. R. 12 Prob. Div. 21; Quealy v. Waldron, 126 La. § 146 CONTRACTS. 250 However, if the threat is unreasonable and the danger not immi- nent, it cannot well amount to duress.^' Thus it has been held that mere angry words and looks by a paralyzed husband cannot amount to duress.'^"' Under the modern theory there may be duress of goods or of the person unaccompanied with a threatened physical injury or imprisonment/' It follows that if one's business necessities are taken advantage of in such a manner as to impress payment with an involuntary character the amount so paid may be recov- ered in a proper case. Thus, where a lessee wrongfully re- fuses to join his lessor in making proof of loss by fire until he pays the former a sum which he does not owe, the payment may be recovered/* Likewise, where money or a contract is illegally obtained under such circumstances as threaten great loss or risk in respect to property or person without any legal or other adequate remedy^' or where obtained by threat and fear of the destruction of property"" they are procured by duress, and the money so paid may be recovered or the contract avoided. 258, 52 So. 479, 27 L. R. A. (N. S.) 803n (plaintiff assaulted and threat- ened with further violence by armed relatives) ; Marsh v. Whittington, 88 Miss. 400, 40 So. 326 (coerced by armed relatives) ; Hampstead v. Plaistow, 49 N. H. 84; Ferlat v. Go- jon, Hopk. Ch. (N. Y.) 478, 14 Am. Dec. 554; Willard v. Willard, 6 Baxt. (Tenn.) 297, 32 Am. Rep. 529. See, however, Meredith v. Meredith, 79 Mo. App. 636. •"Barrett v. Mahnken, 6 Wyo. 541, 48 Pac. 202, 71 Am. St. 953. ■" Van Deventer v. Van Deventer, 46 N. J. L. 460. See also, Dausch v. Crane, 109 Mo. 323, 19 S. W. 61. " Callender Sav. Bank v. Loos, 142 Iowa 1, 120 N. W. 317. °° Guetzkow Bros. Co. v. Breese, 96 Wis. 591, 72 N. W. 45, 65 Am. St. 83. See also, Corkle v. Maxwell, 3 Blatchf. (U. S.) 413, Fed. Cas. No. 3231 ; Degraff v. Ramsey, 46 Minn. 319, 48 N. W. 1135; Lehigh Coal &c. Co. V. Brown, 100 Pa. St. 338. '"United States v. Ellsworth, 101 U. S. 170. 25 L. ed. 862; Swift V. United States, 111 U. S. 22, 28 L. ed. 341, 4 Sup. Ct. 244; Chicago &c. R. Co. V. Coal Co., 79 111. 121; Chi- cago V. Waukesha &c. Brewing Co., 97 III. App. 583; Searle v. Gregg, 67 Kans. 1, 72 Pac. 544; Dana v. Kemble, 17 Pick. (Mass.) 545; Cunningham v. Munroe, 15 Gray (Mass.) 471; Carew v. Rutherford, 106 Mass. 1, 8 Am. Rep. 287 ; McMurtrie v. Keenan, 109 Mass. 185; Vyne v. Glenn, 41 Mich. 112, 1 N. W. 997; State v. Nelson, 41 Minn. 25, 42 N. W. 548, 4 L. R. A. 300n ; Joannin v. Ogilvie, 49 Minn. 564, 52 N. W. 217, 16 L. R. A. 376, 32 Am. St. 581 ; Westlake v. St. Louis, 77 Mo. 47; Tandy v. El- more-Cooper &c. Co., 113 Mo. App. 409, 87 S. W. 614 ; Fitzgerald v. Fitz- gerald & Mallary Const. Co., 44 Nebr. 463, 62 N. W. 899; First Nat. Bank V. Sargeant, 65 Nebr. 594, 91 N. W. 595, 59 L. R. A. 296; Peters Ricker & Co. V. R. Co., 42 Ohio St. 275; Ratterman v. American Exp. Co., 49 Ohio St. 608, 32 N. E. 754; Lehigh &c. Co. V. Brown, 100 Pa. St. 338; Guetzkow Bros. v. Breese, 96 Wis. 591, 72 N. W. 45, 65 Am. St. 83. "Spaids V. Barrett, 57 111. 289; Foshav v. Ferguson, 5 Hill (N. Y.) 154; Motz v. Mitchell, 91 Pa. St. 114; French v. Shoemaker, 14 Wall. (U. S.) 314, 20 L. ed. 852; United States V. Huckabee, 16 Wall. (U. S.) 414. 251 DURESS AND UNDUE INFLUENCE. 146 It is well settled by the weight of authority that threats of crim- inal prosecution which will lead to imprisonment may constitute duress."^ This is especially true when the imprisonment threat- ened seems imminent,**" as where the coerced party believes that a warrant has already been issued,"^ or where the wife knows her husband is in custody though not under arrest."* Some of the cases expressly limit the doctrine of duress by threat of criminal prosecution to instances where the imprisonment threatened is immediate.*" As a result of this principle it has been held that a threat to bring criminal proceedings against one who is in another state or country does not constitute duress.** It has also been held, that a mere threat of criminal prosecution when no warrant has been issued nor proceedings begun and there is no immediate danger, does not constitute duress." These last-mentioned prin- " Morrill v. Nightingale, 93 Cal. 452, 28 Pac. 1068, 27 Am. St. 207; Walb ridge v. Arnold, 21 Conn. 424; Baldwin v. Hutchinson, 8 Ind. App. 454, 35 N. E. 711; Gohegan v. Leach & Co., 24 Iowa 509; Thompson v. Niggley, 53 Kans. 664, 35 Pac. 290, 26 L. R. A. 803 ; Winfield Nat. Bank V. Croco, 46 Kans. 620, 26 Pac. 939; Morse v. Woodworth, 155 Mass. 233, 29 N. E. 525, 27 N. E. 1010; Bryant V. Peck, 154 Mass. 460, 28 N. E. 678 ; Bentley v. Robson, 117 Mich. 691, 76 N. W. 146; Weiser v. Welch, 112 Mich. 134, 70 N. W. 438; Benedict V. Roome, 106 Mich. 378, 64 N. W. 193; Cribbs v. Sowle, 87 Mich. 340, 49 N. W. 587, 24 Am. St. 166 ; Meech V. Lee, 82 Mich. 274, 46 N. W. 383; Hensinger v. Dyer, 147 Mo. 219, 48 S. W. 912; Hargreaves v. Korcek, 44 Nebr. 660, 62 N. W. 1086; Beindorf V. Kaufman, 41 Nebr. 824, 60 N. W. 101; Horton v. Bloedorn, Zl Nebr. 666, 56 N. W. 321; Springfield Fire & Marine Ins. Co. v. Hull, 51 Ohio St. 270, Zl N. E. 1116, 25 L. R. A. Zl, 46 Am. St. 571; James v. Rob- erts, 18 Ohio 548; Western Avenue Building Assn. v. Walters, 7 Ohio C. C. 202; Morrison v. Faulkner, 80 Tex. 128, 15 S. W. 797; Galusha v. Sherman, 105 Wis. 263, 81 N. W. 495, 47 L. R. A. 417; Nack v. Prang, 104 Wis. 1, 79 N. W. 770, 45 L. R. A. 407, 76 Am. St. 848; McCormick Harvesting Mach. Co. v. Hamilton, 73 Wis. 486, 41 N. W. 727. "Morrill v. Nightingale, 93 Cal. 452, 28 Pac. 1068, 27 Am. St. 207; Green v. Moss, 65 111. App. 594; Bradley v. Irish, 42 111. App. 85 ; Win- field Nat. Bank v. Croco, 46 Kans. 620, 26 Pac. 939; Miller v. Minor Lumber Co., 98 Mich. 163, 57 N. W. 101, 39 Am. St. 524; Wilkerson v. Hood, 65 Mo. App. 491; Horton v. Bloedorn, 2,1 Nebr. 666, 56 N. W. 321 ■"Bradley v. Irish, 42 111. App. 85. "Miller v. Minor Lumber Co., 98 Mich. 163, 57 N. W. 101, 39 Am. St. 524. •" Rendleman v. Rendleman, 156 111. 568, 41 N. E. 223; Youngs v. Simm, 41 111. App. 28; Harmon v. Harmon, 61 Maine 227, 14 Am. Rep. 556; Taylor v. Jacques, 106 Mass. 291; Beath v. Chapoton, 115 Mich. 506, li N. W. 806, 69 Am. St. 589; Flani- gan V. Minneapolis, 36 Minn. 406, 31 N. W. 359; Bodine v. Morgan, 37 N. J. Eq. 426; Dunham v. Griswold, 100 N. Y. 224, 3 N. E. Id; Philhps V. Henry, 160 Pa. St. 24, 28 Atl. 477, 40 Am. St. 706. In the case of Beath V. Chapoton, 115 Mich. 506, 73 N. W. 806, 69 Am. St. 589, it is said: "Threats of criminal prosecution un- accompanied by threats of immediate imprisonment do not constitute duress." " Miller v. Minor Lumber Co., 98 Mich. 163, 57 N. W. 101, 39 Am. St. 524; Phillips v. Henry, 160 Pa. St. 24, 28 Atl. 477, 40 Am. St. 706. " St. Louis R. Co. v. Thomas, 85 111. 464; Loan &c. Assn. v. Ho!li=i 6' § 146 CONTRACTS. 252 ciples should be applied with caution, however, for most of the cases sustaining them are based on the old theory that the threat must be such as to overcome the mind of a person of ordinary- courage. Under the modern doctrine all that is necessary to con- stitute duress in this respect is a threat sufficient to overcome the mind of the person actually threatened, whether he be a person possessed of courage greater or less than that of the ordinary person."' Not only this, but a threat of arrest or prosecution may be more persuasive than a levy on a seizure of goods.°° A distinction may in some cases be drawn between threats of arrest made by a private individual and those made by public officials vested with power to carry them into execution by arrest and prosecution." Thus it has been held that the payment of a license fee under threats of prosecution by town officials is not volunta- rily made and may be recovered.'^ The authorities differ as to whether the threatened arrest or imprisonment must be unlawful. There is no question that duress may exist where there is a threat of unlawful imprisonment.'^ Likewise, if the threat of lawful imprison- ment is unlawfully used in order to procure a contract, 111. App. 58 ; Hines v. Hamilton '° Chicago v. Waukesha &c. Brew- County, 93 Ind. 266; Harmon v. Har- ing Co., 97 111. App. 583. mon, 61 Maine 227, 14 Am. Rep. 556; "Chicago v. Sperbeck, 69 111. App. Hilborn v. Bucknam, 78 Maine 482, 562; Harvey v. Olney, 42 III. 336; 7 Atl. 272, 57 Am. Rep. 816; Higgins Neumann v. La Crosse, 94 Wis. 103, V. Brown, 78 Maine 473, 5 Atl. 269; 68 N. W. 654. See, however, Wil- Thorn v. Pinkham, 84 Maine 101, Hams v. Stewart, 115 Ga. 864, 42 S. 24 Atl. 718; Claflin v. McDonough, E. 256, where it is held that the threat 33 Mo. 412, 84 Am. Dec. 54; Bu- of a tax collector, who has no author- chanan v. Sahlein, 9 Mo. App. 552. ity to issue a warrant or make an °' Duress may be caused by threats arrest, to have a warrant issued and of a criminal prosecution of a hus- have the person prosecuted unless he band, wife, child or other near rela- pays his tax, does not make the pay- tive of the person whose action is ment involuntary, since the danger thereby controlled, though no crime threatened is not urgent or immediate, has in fact been committed nor prose- One who voluntarily repays money al- cution begun. If the contracting leged to have been stolen, when not party has been put in such fear as to paid under an unlawful agreement, be deprived of the free will power cannot recover such payment on be- essential to contractual capacity, the ing acquitted of the charge. Puckett transaction thereby induced may be v. Roquemore, 55 Ga. 235. A state- avoided. International Harvester ment made by the court that a child Co. V. Voboril, 187 Fed. 973, 110 C. will be sent to the reformatory unless C. A. 311. See cases first cited in bond is given for his support has been note 1 of this section and matter at held to operate as duress. St. Thomas the beginning of this chapter. v. Yearsley, 22 Ont. Anp, 340. '"Neumann v. La Crosse, 94 Wis. "Bane v. Detrick, 52 111. 19; Har- 103, 68 N. W. 654. vey v. Olney, 42 111. 336; Bush v. 253 DURESS AND UNDUE INFLUENCE. § 146 duress may exist.'* By the weight of authority where a contract is made or money paid under coercion of a threat of imprisonment, if such threat oyerpowers the mind of the person threatened, duress exists, no matter whether the threat is for law- ful or unlawful imprisonment, the contract so given may be re- scinded or the money so paid recovered.'* In practically all of the foregoing cases it will be found, however, that there was some abuse of the threatened legal process, or that the threat was made to a relative. Thus it has been held that the execution of written securities extorted by means of threats of prosecution for criminal offenses of which the party threatened was guilty in fact, but which were in no manner connected with the demands for which compensation was sought, may be avoided by the party executing them not only in the hands of the original payee, but in the hands of an assignee if such assignee had notice of the cir- Brown, 49 Ind. 573, 19 Am. Rep. 695 ; Baldwin v. Hutchison, 8 Ind. App. 4S4, 35 N. E. 711; Kennedy v. Rob- erts, 105 Iowa 521, 75 N. W. 363; Foss V. Hildreth, 10 Allen (Mass.) 76; Cribbs v. Sowle, 87 Mich. 340, 49 N. W. 587, 24 Am. St. 166 ; Foshay V. Ferguson, 5 Hill (N. Y.) 154; James V. Roberts, 18 Ohio 548; Spring- field &c. Ins. Co. V. Hull, 51 Ohio St. 270, ?>7 N. E. 1116, 25 L. R. A. 37, 46 Am. St. 571; Landa v. Obert, 78 Tex. a, 14 S. W. 297; Morrison v. Faulkner, 80 Tex. 128, IS S. W. 797; Neumann v. La Crosse, 94 Wis. 103, 68 N. W. 654. "Hartford &c. Ins. Co. v. Kirk- patrick. 111 Ala. 456, 20 So. 651; Richardson v. Duncan, 3 N. H. 508; Adams v. Irving Nat. Bank, 116 N. Y. 606, 23 N. E. 7, 6 L. R, A. 491. 15 Am. St.. 447. See also, Fillman v. Ryon, 168 Pa. St. 484, 32 Atl. 89; Meacham v. Newport, 70 Vt. 67, 39 Atl. 63; Behl v. Schuett, 104 Wis. 76. 80 N. W. 73. '* Williams v. Bayley, L. R. 1 H. L. 200; Hartford &c. Ins. Co. v. Kirk- patrick. 111 Ala. 456, 20 So. 651; Town of Sharon v. Gager, 46 Conn. 189; Burton v. McMillan, 52 Fla. 469, 42 So. 849, 120 Am. St. 220; Bane V. Detrick, 52 111. 19; Heaton v. Norton County State Bank, 59 Kans. 281, 52 Pac. 876; same case 5 Kans. App. 498, 47 Pac. 576; Thompson v. Niggley, 53 Kans. 664, 35 Pac. 290, 26 L. R. A. 803; Morse v. Wood- worth, 155 Mass. 233, 27 N. E. 1010, 29 N. E. 525 (where the subject is carefully considered) ; Bryant v. Peck &c. Co., 154 Mass. 460, 28 N. E. 678 ; Harris v. Carmody, 131 Mass. 51, 41 Am. Rep. 188; Taylor v. Jacques, 106 Mass 291 ; Miller v. Minor Lumber Co., 98 Mich. 163, 57 N. W. 101, 39 Am. St. 524 ; Davis v. Luster, 64 Mo. 43; Nebraska Mut. Bond Assn. v. Klee, 70 Nebr. 383, 97 N. W. 476; Adams v. Irving Nat. Bank, 116 N. Y. 606, 23 N. E. 7, 6 L. R. A. 491, 15 Am. St. 447; Schoener v. Lissauer, 107 N. Y. Ill, 13 N. E. 741; Eadie v. Slimmon, 26 N. Y. 9, 82 Am. Dec. 395 ; Springfield &c. Ins. Co. v. Hull, 51 Ohio St. 270, 37 N. E. 1116, 25 L. R. A. 37, 46 Am. St. 571; Foley v. Greene, 14 R. I. 618, 51 Am. Rep. 419; Phelps & Johnson v. Zuschlag, 34 Tex. 371 ; Fay V. Oatley, 6 Wis. 42. See also, Bailey v. Devine, 123 Ga. 653, 51 S. E. 603, 107 Am. St. 153. See, how- ever. Gregor v. Hyde, 62 Fed. 107, 10 C. C. A. 290; Mullin v. Leamy, 80 N. J. L. 484, 79 Atl. 257. Many of the cases which give expression to an unqualified statement of the rule that a threat of either lawful or un- lawful imprisonment may amount to duress are cases in which a near relative of one of the contracting par- § 146^ CONTRACTS. 254 cumstances under which the securities were taken.'^ It has also been held an abuse of legal process to lure a foreign debtor ties was threatened with arrest. For a case drawing a distinction be- tween threats to arrest the party him- self and threats to arrest a relative, see Giddings v. Iowa Sav. Bank, 104 Iowa 676, 74 N. W. 21. See also, generally, 3 Elliott Ev., §§ 2182, 2183. ' " Thompson v. Niggley, S3 Kans. '664, 35 Pac. 290, per Allen, J., 26 L. R. A. 803 : "It is impossible to ex- tract from the cases any complete definition which has been uniformly adhered to. There are cases hold- ing that mere threats of criminal prosecution when no warrant has been issued, do not constitute duress. Higgins V. Brown, 78 Maine 473, 5 Atl. 269; Harmon v. Harmon, 61 Maine 277 ; Buchanan v. Sahlein, 9 Mo. App. 552. This court, however, held, in the case of Winfield Nat. Bank v. Croco, 46 Kans. 620, 26 Pac. 939, that, 'if the creditor operated upon the fears of the husband by threats of arrest and imprisonment, believed by him to be imminent, and thus overcame his will, and through fear and undue influence compelled him to sign the mortgage, the signa- ture is not binding; and if the wife was induced to execute the mortgage from fear, excited by threats made to her by the creditor of an illegal crim- inal prosecution against her husband, the instrument thus obtained will not be binding upon her.' This case set- tles the question as to the necessity that a prosecution should have been actually commenced in order to es- tablish duress, but does not touch the point presented here as to whether duress can be predicated on threats of a lawful arrest and prosecution. It appears from the testimony of Nig- gley himself that he was guilty of the offenses for which he was threat- ened with prosecution, and the du- ress consisted mainly, if not entirely, in the fears excited in the mind of the defendant by threats of such prosecution. There are many cases holding that the threat of a lawful arrest does not constitute duress in such sense as to discharge the per- son threatened from liability on a contract which he has been induced to sign by means of such threats. Nealley v. Greenough, 25 N. H. 325; Compton V. Bunker Hill Bank, 96 111 301; Eddy v. Herrin, 17 Maine 338; Clark V. Turnbull, 47 N. J. Law, 265; Mundy v. Whittemore, 15 Nebr' 647, 19 N. W. 694; Sanford v. Sorn- borger, 26 Nebr. 295, 41 N. W. 1102. For other cases, see 6 Am. and Eng. Ency. of Law, p. 64 et seq. We have examined a great number of cases de- claring this doctrine, in all of which it appeared that the threat made was of a prosecution for the particular matter for which payment or settlement was sought. In many of the older cases, as well as in some of the latter ones, the arrest threatened was on process issued, or to be issued, in a civil ac- tion, for the collection of the plain- tiff's demand. In this case the threats made were of a prosecution for offenses in no wise connected with Summers' claim. The facts that Niggley was guilty of violations of the law of the state, and that Sum- mers, his attorney, and friends knew of the facts showing his guilt them- selves, and were witnesses to the un- lawful sales of liquor, were used as a menace to drive Niggley into a settlement of Summers' claim. The court of appeals of New York ex- pressly denies the doctrine that the threats must be of an unlawful arrest. In Adams v. Irving Nat. Bank, 116 N. Y. 606, 23 N. E. 7, it was held 'that money paid by a wife in settlement of her husband's debt upon the threat by the creditor to arrest the husband if the debt was not paid, may be re- covered back, although there was law- ful grounds for arresting the hus- band.' The case of Schoener v. Lis- sauer, 107 N. Y. Ill, 13 N. E. 741, also holds that duress may be exer- cised through threats of prosecution for an offense of which the party is actually guilty. See also, Phelps v. Zuschlag, 34 Texas 371 ; Taylor v. Jaques, 106 Mass. 291 ; Davis v. Lus- ter, 64 Mo. 43. In Seiber v. Price, 26 Mich. 518, it was said: 'An arrest by legal warrant, on a criminal charge, to compel the satisfaction of a mere private civil demand, is a 255 DURESS AND UNDUE INFLUENCE. § 146 by false promises into the creditor's state and then arrest him and thus procure a settlement." Consequently it may be stated as a general rule that if resort, in bad faith, is had to arrest," or, in general, if it is resorted to'* or a threat is made to resort thereto" for the purpose of compelling the payment of a private claim or demand, and a party is thus coerced, duress exists.'" Other authorities, however, lay down the rule that contracts ex- ecuted under threat of lawful imprisonment cannot be avoided misuse of process, a fraud upon the law, and an illegal arrest as respects the party who knowingly and purpose- ly perverts the machinery of the law in that way. And papers obtained under the pressure of such a pro- ceeding by the party promoting it are at least voidable as against him, at the election of the party thus con- strained to make them.' " See also, Berry v. Berry, 57 Kans. 691, 47 Pac. 837, 57 Am. St. 351. See also, Kel- sey v. Hobby, 16 Pet. (U. S.) 269, 10 L. ed. 961; Watkins v. Baird, 6 Mass. 506, 4 Am. Dec. 170; Card v. Arnold, 157 Mo. 538, 57 S. W. 1035; Breck v. Blanchard, 22 N. H. 303; Mayer v. Walter, 64 Pa. 283. " Sweet V. Kimball, 166 Mass. 332, 44 N. E. 243, 55 Am. St. 406. See also, Wanzer v. Bright, S2 111. 35; Dunlap v. Cody, 31 Iowa 260; Wil- liams v. Reed, 29 N. J. L. 385; Townsend v. Smith, 47 Wis. 623, 3 N. W. 439, 32 Am. St. 793. "Behl v. Schuett, 104 Wis. 76, 80 N. W. 7i. "Mayer v. Oldham, 32 111. App. 233; White v. Rubber Co., 181 Mass. 339, 63 N. E. 885; Wood v. Graves, 144 Mass. 365, 11 N. E. 567, 59 Am. Rep. 58; Hackett v. King, 6 Allen (Mass.) 58; Seiber v. Price, 26 Mich. 518; Holbrook v. Cooper, 44 Mich, Z7Z, 6 N. W. 850 ; Clark v. Pease, 41 N. H. 414; Osborn v. Robbins, 36 N. Y. 365, 4 Abb. Prac. (N. S.) (N. Y.) 15; In re Work's Appeal, 59 Pa. St. 444; Fillman v. Ryan, 168 Pa. St. 484, 32 Atl. 89; Phelps & Johnson v. Zuschlag, 34 Tex. 371; Brownell v. Talcott, 47 Vt. 243 ; Fay v. Oatley, 6 Wis. 42; Heckman v. Swartz, 64 Wis. 48, 24 N. W. 473. ™ Morrill v. Nightingale, 93 Cal. 452, 28 Pac. 1068, 27 Am. St. 207; Bane v. Deitrick, 52 111. 19; Taylor v. Jacques, 106 Mass. 291; Miller v. Bryden, 34 Mo. App. 602; Adams v. Irving Nat. Bank, 116 N. Y. 606, 23 N. E. 7, 6 L. R. A. 491, 15 Am. St. 447. " See ante, § 145, Duress by im- prisonment. "It has sometimes been held that threats of imprisonment, to constitute duress, must be of unlaw- ful imprisonment. But the question is whether the threat is of imprison- ment which will be unlawful in refer- ence to the conduct of the threatener who is seeking to obtain a contract by his threat. Imprisonment that is suffered through the execution of a threat whjch was made for the pur- pose of forcing a guilty person to enter into a contract may be lawful as against the authorities and the public, but unlawful as against the threatener, when considered in refer- ence to his efforts to use for his pri- vate benefit processes provided for the protection of the public and the pun- ishment of crime. One who has overcome the mind and will of an- other for his own advantage, under such circumstances, is guilty of a per- version and abuse of laws which were made for another purpose. * * * We do not intimate that a note given in consideration of money embezzled from the payee can be avoided on the ground of duress, merely because the fear of arrest and imprisonment, if he f^led to pay, was one of the in- ducements to the embezzler to make the note. But if the fact that he is liable to arrest and imprisonment is used as a threat to overcome his will and compel a settlement which he would not have made voluntarily, the case is different. The question in every such case is whether his liabil- ity to imprisonment was used against him, by way of a threat, to force a 146 CONTRACTS. 256 for duress/^ In this connection it would be well to note that one cannot have a marriage annulled on account of duress when he enters into such relation because threatened with prosecution for seduction unless the marriage is contracted. If he would rather enter into marriage than the penitentiary the law affords him no relief.^' Ordinarily the institution or threatened institution of a civil suit, or ordinary legal proceedings to enforce a legal de- settlement. If so, the use was im- proper and unlawful, and if the threats were such as would naturally overcome the mind and will of an ordinary man, and if they overcome his, he may avoid the settlement." Morse v. Woodworth, ISS Mass. 233, 27 N. E. 1010, 29 N. E. S2S. " Gregor v. Hyde, 62 Fed. 107, 10 C C. A. 290 (statutory) ; Bailey v. Devine, 123 Ga. 653, SI S. E. 603, 107 Am. St. 153 ; Knapp v. Hyde, 16 Barb. (N. Y.) 80. In connection with this case however, see, Adams v. Irving Nat. Bank, 116 N. Y. 606, 23 N. E. 7, 6 L. R. A. 491, 15 Am. St. 447 ; Compton v. Bunker Hill Bank, 96 111. 301, 36 Am. Rep. 147; McCor- mick Harvesting Machine Co. v. Miller, 54 Nebr. 644, 74 N. W. 1061 ; Bodine v. Morgan, 37 N. J. Eq. 426. "A demand made under the urgency of an intimation that, if not complied with, the law will be appealed to, can- not reasonably be claimed to be either extortion or duress." Mullin v. Leamy (N. J. L.), 79 Atl. 257, quoting from Sooy v. State, 38 N. J. L. 324; Thorn v. Pink-ham, 84 Maine 101, 24 Atl. 718, 30 Am. St. 335n. In the above case it is said that if the threat is made under a good faith belief that there is just ground for causing the arrest of the other party the set- tlement obtained thereby cannot be avoided for duress. Some cases draw a distinction between threats of law- ful arrest made directly to the party himself and threats made to a third person that unless settlement was made a relative of such third person would be arrested. Giddings v. Iowa Sav. Bank, 104 Iowa 676, 74 N. W. 21. See, however, Gregor v. Hyde, 62 Fed. 107, 10 C. C. A. 290; Bailey V. Devine, 123 Ga. 653, 51 S. E. 603, 107 Am. St. 153. For good cases il- lustrating the extent to which one may go without being guilty of du- ress, see, Roloson v. DeHart, 134 Mo. App. 633, 114 S. W. 1122. In the above case it appears that the one accused of stealing the defendant's goods was with others called in and confronted with the charge of rob- bery, and told that settlement was desired. No threats whatever were made. The accused denied the charge but admitted the evidence was strong enough to send him to the penitentiary. The court held his con- tract of settlement binding. Roth v. Holmes (Tenn.), 52 S. W. 699. Fear of imprisonment, when there has been no threats thereof, does not con- stitute duress. Felton v. Gregory, 130 Mass. 176; Roloson v. DeHart & Riggs, 134 Mo. App. 633, 114 S. W. 1122. See, however, Greenwell v. Negley, 31 Ky. L. 144, 101 S. W. 961. In the above case, however, the par- ties were partners and there was some misrepresentation on the part of the dominant party. "'Griffin v. Griffin, 130 Ga. 527, 61 S. E. 16, 16 L. R. A. (N. S.) 937; Collins v. Ryan, 49 La. Ann. 1710, 22 So. 920, 43 L. R. A. 814, and note; Blankenmiester v. Blankenmiester, 106 Mo. App. 390, 80 S. W. 706 ; Ingle V. Ingle (N. J. Eq.), 38 Atl. 953; Thorne v. Farrar, 57 Wash. 441, 107 Pac. 347, 27 L. R. A. (N. S.) 385, 135 Am. St. 995. See also, McCarthy v. Taniska, 84 Conn. 377, 80 Atl. 84 (contract in settlement of bastardy proceeding). See, however, Hawkins V. Hawkins, 142 Ala. 571, 38 So, 640, 110 Am. St. 53 (case of inexperienced boy). 257 DURESS AND UNDUE INFLUENCE. § 146 mand does not constitute duress/" even though it may be made in a period of business depression." Thus an agreement or settle- ment induced by a threat to commence legal proceedings for the removal of a dam/' or for the collection of a debt contracted during infancy'" to foreclose a chattel," or other mortgage/' to sue out a writ of attachment'^ or levy executions/" or a threat by an officer to arrest an execution debtor and take him to jail unless he secures the debt, the officer having in his possession at the time legal process requiring him to take the debtor into custody," "^ Burke v. Gould, 105 Cal. 277, 38 Pac. 733; Bestor v. Hickey, 71 Conn. 181, 41 Atl. 5SS; Stover v. Mitchell, 45 111. 213 ; Swanston v. Ijams, 63 111. 165; Kerting v. Hilton, 152 111. 658, 38 N. E. 941 ; Hart v. Strong, 183 111. 349, 55 N. E. 629; Van Alstine v. McAldon, 141 111. App. 27; Snyder v. Braden, 58 Ind. 143; Buck v. Axt, 85 Ind. 512; Town of Ligonier v. Hak- erman, 46 Ind. 552, 15 Am. Rep. 323 ; Dickerman v. Lord, 21 Iowa 338, 89 Am. Dec. 579; Hill v. Phixton, 13 Ky. L. 333 ; Baltimore v. Lefferman, 4 Gil. (Md.) 425, 45 Am. Dec. 145; Kingsbury v. Sargent, 83 Maine 230, 22 Atl. 105; Wilcox v. Howland, 23 Pick. (Mass.) 167; Forbes v. Apple- ton, 5 Cush. (Mass.) 115; Emmons V. Scudder, 115 Mass. 367; Regan v. Baldwin, 126 Mass. 485, 30 Am. Rep. 689; Vereycken v. Vanden Brooks, 102 Mich. 119, 60 N. W. 687; Perkins V. Trinka, 30 Minn. 241, IS N. W. 115; Minneapolis Land Co. v. McMil- lan, 78 Minn. 287, 82 N. W. 591; Wolfe V. Marshal, 52 Mo. 167; Dausch V. Crane, 109 Mo. 323, 19 S. W. 61 ; Weber v. Kirkendall. 44 Nebr. l()e, 63 N. W. 35; Jones v. Hough- ton, 61 N. H. 51 ; Morris v. Tuthill, 72 N. Y. 575; Dunham v. Griswold, 100 N. Y. 224, 3 N. E. 76; Harris v. Tyson, 24 Pa. St. 347, 64 Am. Dec. 661; Peebles v. Pittsburgh, 101 Pa. St. 304, 47 Am. Rep. 714; Flack v. National Bank, 8 Utah 193, 30 Pac. 746; Burnham v. Strafford, 53 Vt. 610; York v. Hinkle, 80 Wis. 624, 50 N. W. 895, 27 Am. St. n. A threat to sue by one who has the legal right to do so does not usually amount to duress. Walla Walla Fire Ins. Co. v. Spencer, 52 Wash. 369, 100 Pac. 741. " Morton v. Morris, 72 Fed. 392, 18 C. C. A. 611. See also. Thus a mere demand for counter security and threats that if the counter security were not given, legal proceedings would be commenced to compel the plaintiff to give an account and make settlement of his administration, such demand and threat being induced by information that the plaintiff had lost money at gambling does not amount to such duress as will avoid the sure- ty given. Hunt v. Bass, 17 N. Car. 292, 24 Am. Dec. 274; Sanborn v. Bush, 41 Tex. Civ. App. 24, 91 S. W. 883 ""Manigault v. S. M. Ward &c. Co., 123 Fed. 707, affd. 199 U, S. 473, 50 L. ed. 274, 26 Sup. Ct. 127. ™ Bestor v. Hickey, 71 Conn. 181, 41 Atl. 555. " Pease v. Francis, 25 R. I. 226, 55 Atl. 686. ''Burke v. Gould, 105 Cal. 277, 38 Pac. 733; Rodgers v. Wittenmeyer, 88 Cal. 553, 26 Pac. 369; Savanah Sav. Bank v. Logan, 99 Ga. 291, 25 S. E. 692; Hart v. Strong, 183 111. 349, 55 N. E. 629; Buck v. Axt, 85 Ind. 512; Stout V. Judd, 10 Kans. App. 579, 63 Pac. 662; Vereycken v. Van- den Brooks, 102 Mich, 119, 60 N. W. 687; Wessel v. Mortgage Co., 3 N. Dak. 160, 54 N. W. 922, 44 Am. St. 529. ™ Lehman Durr & Co. v. Schackle- ford, 50 Ala. 437; Waller v. Cralle, 47 Ky. 11; BoUn v. Metcalf, 6 Wyo. 1, 42 Pac. 12. Howland, 23 Pick. '"' Wilcox v, (Mass.) 167. " Bunker v. Atl. 558. Steward (Maine), 4 17 — Contracts, Vol. I § 146 CONTRACTS. 258 has in each of the foregoing instances been held not to have been procured through duress. The mere threat to bring a good faith action, maintainable at law, does not amount to duress. If the party threatened would rather pay than resort to litigation he is remediless. °^ However, if a civil proceeding actually begun or threatened is wrongful and oppressive in its nature and brought or threatened with the intention of coercing the adverse party and does in fact coerce such party into the payment of money or the formation of a contract, such payment or contract is made under duress and may be avoided.'^ Thus a threat to institute receiver- ship proceedings against a certain company at a time when it would ruin the company's business and affect the reputation of the defendant, constitutes such duress as will avoid the defendant's contract to pay a specified sum of money in order to save the business of the company and his own reputation from being falsely attacked."^* Likewise, it has been held that a bond given, or money paid to release property seized in attachment proceed- ings oppressively instituted or conducted may be cancelled or re- covered.'* It has also been held that when an invalid and unfounded claim for a lien upon real property is filed and the necessities of the defendant's business require that this lien be immediately discharged, payment under such circumstances was °' Peckham v. Hendren, 76 Ind. 47 ; tachment fraudulently obtained. The Lester v. Mayor &c. of Baltimore, plaintiff in order to save his property 29 Md. 415, 96 Am. Dec. 542; Benson from perishing was compelled to pay V. Monroe, 7 Cush. (Mass.) 125, 54 an exorbitant claim and execute a re- Am. Dec. 716. See also, Buch v. lease for all damages sustained. Houghtaling, 110 App. Div. (N. Y.) Collins v. Westbury, 2 Bay (S. Car.) 52, 96 N. Y. S. 1034 (margin transac- 211, 1 Am. Dec. 643. In the above tion). case defendant's property was seized " Foote V. DePoy, 126 Iowa 366, by writ of attachment while he was 102 N. W. 112, 68 L. R. A. 302, 106 moving from one home to another. Am. St. 365. See also, Watkins v. The circumstances were such that he Baird, 6 Mass. 506; Behl v. Schuett, ' could not await the slow process of 104 Wis. 76, 80 N. W. 73; Guetzkow the law to establish his rights. In V. Breese, 96 Wis. 591, 72 N. W. 45. order to gain the release of his prop- "'a Rose v. Owen, 42 Ind. App. 137, erty he signed the bond sued on. 85 N. E. 129. See also, Callender Sav. Chandler v. Sanger, 114 Mass. 364, Bank v. Loos, 142 Iowa 1, 120 N. W. 19 Am. Rep. 367. In the above case 317. See, however, McCammon v. a writ of attachment was sued out Shantz, 26 Misc. (N. Y.) 476, 57 N. for the purpose of extorting money, y. S. 515. The property levied on was perishable "* Spaids v. Barrett, 57 111. 289, 11 and the plaintiff's business would have Am. Rep. 10. In the above case oys- been greatly damaged had the attach- ters were seized under a writ of at- ment not been immediately removed. 259 DURESS 'AND UNDUE INFLUENCE. § 146 made under duress and that it might be recovered."" A threat- ened civil action may also amount to duress where the parties are not on an equal footing. Thus, threats made against a per- son of inferior intellect,"" or an aged man weakened in body and mind" to the effect that certain civil proceedings will be insti- tuted, have been held such duress as will avoid a contract induced thereby. Threatening litigation while the defendant is ill,"* or to continue litigation when the circumstances are oppressive"" has been held to amount to duress. Duress may exist even where there is no threat of legal proceedings, civil or criminal, and where there is no im- prisonment of the individual or any threatened violence to his person. Under this principle a special written contract which limited a carrier's common-law liability, extorted from a shipper who had refused to sign it by prohibiting the shipment of cattle already in its possession unless the plaintiff signed the paper tendered him, has been held to have been procured by duress and to be voidable at the option of the shipper.^ The °'Joannin v. Ogilvie, 49 Minn, 564, 52 N. W. 217, 16 L. R. A. 376, 32 Am. St. 581. " Galusha v. Sherman, 105 Wis. 263, 81 N. W. 495, 47 L. R. A. 417. In the above case there were also threats of criminal proceedings. The alleged claim arose from illness said to have been caused by eating a meal at defendant's hotel. "Foote V. DePoy, 126 Iowa 366, 102 N. W. 112, 68 L. R. A. 302, 106 Am. St. 365. In the above case guard- ianship proceedings had been insti- tuted, the aged party in order to pro- cure their dismissal entered into an unconscionable agreement. " Heinlein v. Imperial &c. Ins. Co., 101 Mich. 250, 59 N. W. 615, 25 L. R. A. 627, 45 Am. St. 409. ""First Nat. Bank v. Sargeant, 65 Nebr. 594, 91 N. W. 595, 59 L. R. A. (N. S.) 296. ' St. Louis &c. R. Co. v. Gorman, 79 Kans. 643, 100 Pac. 647, 28 L. R. A. (N. S.) 637n. For further illustra- tions of this principle in cases where contracts of shipment were extorted by some sort of compulsion, see, York Manufacturing Co. v. Illinois &c. R. Co., 3 Wallace (U. S.) 107; Chicago R. I. & P. R. Co. v. Cotton, 87 Ark. 339, 112 S. W. 742; Evans- ville & T. H. R. Co. v. McKinney, 34 Ind. App. 402, 73 N. E. 148; Cleve- land & C, C. & St. L. R. Co. V. Hollo- well, 172 Ind. 466, 88 N. E. 680; Kansas &c. R. Co. v. Reynolds, 17 Kans. 251; Atchison T. & S. F. R. Co. V. Dill, 48 Kans. 210, 29 Pac. 148 ; Atchinson T. & S. F. R. Co. v. Mason, 4 Kans. App. 391, 46 Pac. 31 ; Parker V. Atlantic &c. R. Co., 133 N. Car. 335, 45 S. E. 658, 63 L. R. A. 827; Missouri &c. R. Co. v. Carter, 9 Tex. Civ. App. 677, 29 S. W. 565 ; Gulf &c. R. Co. V. Batte (Tex. Civ. App.), 107 S. W. 632. In the above case it is held that the mere fact the plain- tiff did not ask for time to read the contract before attaching his signa- ture thereto would not necessarily make it binding if it was procured under duress. For the application of this principle to telegraph compa- nies, see Kirby v. Western Union Tel- egraph Co., 4 S. Dak. 105, 55 N. W. 759, 30 L. R. A. 612, 46 Am. St. 765. It is obvious that if the goods offered or presented for transportation are of such a character that the carrier is under no obligation to transport § 146 CONTRACTS. 260 payment of an illegal or excessive rate charged for gas, water or the like, by a public service corporation cannot be recovered if voluntarily made.^ But if the excessive rate is paid as a matter of necessity in order to obtain what one is justly entitled to when the parties do not stand on equal terms and there is a threat to turn off the gas,^ or water* unless the company's demands are complied with and damage will result from such action, recovery may be had.^ However, the mere threat to do what one has a legal right to do does not ordinarily amount to duress.^ Nor does the threat to withhold from the party a legal right which he has an adequate remedy to enforce constitute in the eyes of the law such duress as will avoid a contract induced thereby.'' But where one has the advantage of the other, where delay or a resort to the the same he may impose his own terms for carrying them. Wilson v. Atlantic Coast Line Co., 133 Fed. 1022, 66 C. C. A. 486, affd. 129 Fed. 774 (circus paraphernalia including wild animals). Chicago M. & St. P. R. Co. V. Wallace, 66 Fed. 506, 30 L. R. A. 161, 14 C. C. A. 257 (circus par- aphernalia including wild animals). Russell V. Pittsburgh &c. R. Co., 157 Ind. 305, 61 N. E. 678, 55 L. R. A. 253, 87 Am. St. 214 (cars of sleeping car CO.) ° Cincinnati v. Gaslight & Coke Co., 53 Ohio St. 278, 41 N. E. 239. ^Indiana &c. Gas Co. v. Anthony, 26 Ind. App. 307, 58 N. E. 868. See also, New Orleans &c. Banking Co. v. Paulding, 12 Rob. (La.) 378. ' Panton v. Duluth Gas &c. Co., 50 Minn. 175, 52 N. W. 527, 36 Am. St. 635; St. Louis &c. Brew. Assn. v. St. Louis (Mo.), 37 S. W. 525; Westlake V. St. Louis, n Mo. 47, 46 Am. Rep. 4. " Corkle V. Maxwell, Fed. Cas. No. 3231, 3 Blatchf. (U. S.) 413, Fargus- son V. Winslow, 34 Minn. 384, 25 N. W. 942 ; DeGraff v. Ramsey, 45 Minn. 319 48 N. W. 1135; Guetzkow v. Bre'ese, 96 Wis. 591, 72 N. W. 45, 65 Am. St. Rep. 83. If the purchaser merely refuses to pay for goods in his possession and adopts a course of ac- tion which if persisted in will ruin the vendor, a contract entered into by the vendor induced by the op- pressive conduct of the vendee will be held voidable at the former's op- tion. Snyder v. Stribling, 18 Okla. 168, 89 Pac. 222, aff., 215 U. S. 261, 30 Sup. Ct. TZ. Duress or undue in- fluence may exist where a grossly oppressive and unfair advantage is taken of another's necessities or dis- tress. Snyder v. Stribling, 18 Okla. 168, 89 Pac. 222, affd. Snyder v. Ros- enbaum, 215 U. S. 261, 30 Sup. Ct. IZ. "Miller V. Davis (Colo.), 122 Pac. 793. See also, Kansas City &c. R. Co. v. Graham (Tex. Civ. App.), 145 S. W. 632. Threats to convey or lease mortgaged property when the mort- gagee has the right to do this, Goos V. Goos, 57 Nebr. 294, 11 N. W. 687, or threats to advance no more money by a member of a mining partnership unless the other member executed a contract tendered him does not amount to duress. Connolly v. Bouck, 174 Fed. 312, 98 C. C. A. 184. The refusal of township officials to call an election to authorize the is- suance of bonds for a certain public improvement, unless a certain private enterprise would agree to help pay for such improvement has been held not to amount to duress. Electric Plaster Co. v. Blue Rapids City Tp., n Kans. 580, 96 Pac. 68. Ordinarily it is not duress to threaten to do that which a party has a right to do. United States Banking Co. v. Veale, 84 Kans. 385, 114 Pac. 229. ' Simmons v. Sweeney, 13 Cal. App. 283, 109 Pac. 265; Electric Plastering Co. v. Blue Rapids City Tp., 11 Kans. 580, 96 Pac. 68. See also, Sanborn v. 2^^ DURESS AND UNDUE INFLUENCE. § I47 law is indififerent to the one, but may produce serious loss and injury to the other, it is unconscionable to press such advantage to the obtaining of unjust demands, and this might well amount to extortion.^ § 147. When presumed.— The existence of a confidential relation creates a presumption of influence which imposes upon the one holding the position of influence and receiving the benefit the burden of proving an absence of undue influence by showing that the servient party acted upon competent and independent advice of another, or such facts as will satisfy the court that the dealing was at arm's length, or that the transaction was had in the most perfect good faith on his part and was equitable and just between the parties, or, as some of the authorities say, that it was beneficial to the other party.* In some cases undue influ- ence will be inferred from the nature of the transaction alone; in others, from the nature of the transaction and the exercise of occasional and habitual influence.^" The full application of the foregoing principles will be developed in the subsequent sections of this chapter. § 148. Relation of parties. — Under this topic no fiduciary or blood relations will be discussed, but instead reference is had to the relation which the parties sustain to the contract itself. The validity of the contract may depend first, on whether the Bush, 41 Tex. Civ. App. 24, 91 S. W. 249. 35 N. E. 430; Gibson v. Ham- 883. mang, 63 Nebr. 349, 88 N. W. 500; ' Beckwith v. Frisbie, 32 Vt. 559. Disch v. Timm, 101 Wis. 179, 77 N. ° Hensan v. Cooksey, 237 111. 620, W. 196. It is not, however, in every 86 N. E. 1107, 127 Am. St. 345; Fjone case of close relationship, even of V. Fjone, 16 N. Dak 100, 112 N. W. blood, that a presumption of undue 70. Equity will closely scrutinize influence arises from the relationship such contracts. In the above case alone, and there is reason for saying mother deeded property to son. A that the presumption being merely fiduciary relation exists in every case prima facie may only cast upon the "in which there is confidence reposed dominant party the burden of intro- on one side and the resulting supe- ducing or proceeding with the evi- riority and influence on the other, the dence to meet it as distinguished relation of the duties involved in it from the burden of proof in the need not be legal; may be moral, so- sense of ultimately establishing the cial, domestic, or merely personal." issue. See ante, Ch. 4, Fraud and Mis- Hensan v. Cooksey, 237 111. 620, 86 representation. N. E. 1107, 127 Am. St. 345; Irwin v. "Cowee v. Cornell, 75 N. Y. 91, 31 Sample, 213 111. 160, 72 N. E. 687. See Am. Rep. 428; Sears v. Shafer, 6 N. also, Kyle v. Perdue, 95 Ala. 579, 10 Y. 268. See ante, Ch. 6, Failure to So. 103; Barnard v. Gantz, 140 N. Y. disclose material facts. § 148 CONTRACTS. 262 adverse party or a third person practiced the duress committed, or second, it may depend on whether the threats were made di- rectly to and against the promisor, or to or against a third per- son. From what has been said in tlie preceding sections of this chapter, it is obvious that if the duress is practiced by the domi- nant party to the contract the party oppressed may avoid the agreement.^ ^ Duress or undue influence may, however, be prac- ticed by one not a party to the agreement, if he acts as the agent of^^ or in collusion with^^^ the dominant party. Likewise, if the facts constituting the duress are known by the other party to the contract, or if he is not a bona fide purchaser of the agreement so obtained" the oppressed party may avoid the agreement so induced. However, if the duress practiced is not the act of the dominant party or his agent, and is committed without his knowl- edge or consent, and is not taken advantage of by him for the purpose of obtaining the agreement there is no such duress as will afford grounds for the avoidance of the agreement.^* It is " See ante, § 141 at seq., and Mor- rill V. Nightingale, 93 Cal. 452, 28 Pac. 1068, 27 Am. St. 207; James V. Roberts, 18 Ohio 548; Bueter v. Bueter, 1 S. Dak. 94, 45 N. W. 208, 8 L. R. A. 652; Galusha v. Sherman, 105 Wis. 263, 81 N. W. 495, 47 L. R. A. 417. " Winfield National Bank v. Croco, 46 Kans. 620, 26 Pac. 939; Miller v.- Minor Lumber Co., 98 Mich. 163, 57 N. W. 101, 39 Am. St. 524; Spring- field &c. Ins. Co. V. Hull, 51 Ohio St. 270, il N. E. 1116, 25 L. R. A. 37, 46 Am. St. 571 ; Neumann v. LaCrosse, 94 Wis. 103, 68 N. W. 654; McCor- mick Harvesting Machine Co. v. Hamilton, 73 Wis. 486, 41 N. W. 727. The foregoing cases lay down the principle that the contract may be avoided notwithstanding the agent had no authority to commit the dur- ess practiced. They are based on the theory that if the principal accepts the benefits of the contract so ob- tained he takes it subject to all de- fenses. ^'a Dimmitt v. Robbins, 74 Tex. 441, 12 S. W. 94; Magoon v. Reber, 76 Wis. 392, 45 N. W. 112; Brown v. Peck, 2 Wis. 261. In the case of Dimmitt v. Robbins, 74 Tex. 441, 12 S. W. 94, it appears that Dimmitt was held up by robbers and bor- rowed money from Robbins to meet their demands. The court lays down the rule quoting from Prothier Obli- gations, Vol. I, page 115, that "if be- ing attacked by robbers, I descry a person to whom I promise a sum of money for delivering me out of their hands" the agreement is valid. The applicability of this principle to the present case, however, was denied because Robbins was found to be in collusion with the robbers. "Line V. Blizzard, 70 Ind. 23; Helm V. Helm, 11 Kans. 19; Good- rich V. Cushman, 34 Nebr. 460, 51 N. W. 1041; Doolittle v. McCuUough, 7 Ohio St. 299. In the last case above cited a deed of assignment was pro- cured through threats of mob vio- lence, the assignee knowing the means by which it had been procured. "Rogers v. Adams, 66 Ala. 600; Line v. Blizzard, 70 Ind. 23 ; Green V. Scranage, 19 Iowa 461, 87 Am. Dec. 447; Ely v. Hartford Life Ins. Co., 110 S. W. 265, 33 Ky. L. 272; Fair- banks V. Snow, 145 Mass. 153, 13 N. E. 596, 1 Am. St. 446 ; Springfield &c. Co. V. Donovan, 147 Mo. 622, 49 S. W. 500. In the foregoing cases duress 263 DURESS AND UNDUE INFLUENCE. § 148 likewise obvious that if compulsion amounting to duress is brought to bear directly on the promisor the agreement is voidable at his option." It is also true as a general rule that if the threats are not directed against the promisor he cannot in law be said to have been coerced or subjected to duress." Thus it has been held that a creditor cannot avoid a contract obtained from his debtor by duress," nor, as a general rule will duress of the principal re- was exercised by a husband to procure the signature of his wife to a note. The duress practiced being unknown to the adversary party. Mutual &c. Life Assn. v. Cleveland &c. Mills. 27 C. C. A. 212. 82 Fed. 508; Beals v. Neddo, 2 Fed. 41, 1 McCrary (U. S.) 206; Moog V. Strang, 69 Ala. 98; Compton V. Bunker Hill Bank, 96 111. 301, 36 Am. Rep. 147; Frasure v. McGuire (Ky.), 66 S. W. 1015; Springfield &c. Co. V. Donovan, 147 Mo. 622, 49 S. W. 500. In the foregoing cases the wife signed a mortgage because co- erced in so doing by the husband. "Duress, to be available as a defense, must have been exercised upon the person who sets it up as a defense by the person who claims the benefit of the contract, or by some one acting in his behalf or with his knowledge." Mullin V. Leamy, 80 N. J. L. 484, 79 Atl. 257. The wife's fear of her hus- band's criminal prosecution when communicated by the husband and not the creditor does not amount to du- ress. Mutual &c. Life Assn. v. Cleve- land &c. Mills, 82 Fed. 508, 27 C. C. A. 212; Compton v. Bunker Hill Bank, 96 111. 301, 36 Am. Rep. 147. There are cases, however, which hold that the coerced party may avoid the contract induced by duress even though the other party is ignorant thereof. Bryant v. Levy, 52 La. Ann. 1649, 28 So. 191 (duress exercised by labor union) ; Central Bank v. Cope- land, 18 Md. 305, 81 Am. Dec. 597; Barry v. Equitable Life Assur. So- ciety, 59 N. Y. 587 ; Magoon v. Reber, 76 Wis. 392, 45 N. W. 112. Thus, where the assignment of a life insur- ance policy was procured through du- ress practiced by the assignor's hus- band the assignee was not permitted to hold the policy as against the as- signor even though he had no knowl- edge of the duress practiced. Barry V. Equitable Life Assur. Society, 59 N. Y. 587. Likewise, it has been held that where the wife signed a mort- gage because of threats made by the husband she might avoid such mort- gage, even though the mortgagee was ignorant of the method by which her signature was procured. Central Bank v. Copeland, 18 Md. 305, 81 Am. Dec. 597. The above case lays down the principle that if the execution of the mortgage was procured by the husband's acting in the mortgagor's interest and for their benefit their ac- ceptance of the mortgage implies an adoption of his agency. In some states it is provided by statute that a homestead can be conveyed only by the free and unrestrained act of both the husband and wife. In the states possessing such a statute a mortgage of the homestead signed by the wife under duress of the husband is void and unenforcible, even though the mortgagee is ignorant of the method by which it was procured. First Nat. Bank v. Bryan, 62 Iowa 42, 17 N. W. 165 ; Berry v. Berry, 57 Kans. 691, 47 Pac. 837, 57 Am. St. 351. The latter case holds the mortgage absolutely void and not even binding on the one who does consent voluntarily. ^° See Hunt v. Hunt, 94 Ga. 257, 21 S. E. 515 ; Overstreet v. Dunlap, 56 111. App. 486; Rossiter v. Loeber, 18 Mont. 372, 45 Pac. 560; Galusha v. Sherman, 105 Wis. 263, 81 N. W. 495, 47 _L. R. A. 417, and many other cases cited in the preceding sections which might be added here. " Oak V. Dustin, 79 Maine 23, 7 Atl. 815, 1 Am. St. 281; Bowman v. Hiller, 130 Mass. 153, 39 Am. Rep. 442. See also, George Colon & Co. v. East 189th St. Bldg. &c. Co., 141 App. Div. (N. Y.) 441, 126 N. Y. S. 226. . " Lewis V. Bannister, 16 Gray (Mass.) 500. 148 CONTRACTS. 264 lieve the surety when he enters into such contract freely, volun- tarily, and with knowledge of the duress practiced/* Other courts announce a general rule to the effect that duress of the principal relieves the surety,^" if he becomes surety without knowledge of the duress practiced on his principal.^" However, the threatened imprisonment or prosecution of the husband or wife, parent or child, or other near relative may operate as du- ress. It is well settled that the wife may be subjected to duress by the arrest or threatened arrest of her husband,^^ or the parent when the threat is directed against the child, ^^ or other near rela- " Graham v. Marks, 98 Ga. 67, 25 S. E. 931; Tucker v. State, 72 Ind. 242; Oak V. Dustin. 79 Maine 23, 7 Atl. 815, 1 Am. St. 281 ; Bowman v. Hiller, 130 Mass. 153, 39 Am. Rep. 442; Robinson v. Gould, 11 Cush. (Mass.) 55 ; East Strondsburg Nat. Bank v. Seiple, 13 Pa. Dist. 575. "Singer Mfg. Co. v. Ferrell (Ky.), 48 S. W. 1078; Wilkerson v. Hood, 65 Mo; App. 491 ; Hyabt v. Robinson, 15 Ohio 372; Jones v. Turner, 5 Litt. (Ky.) 147 (false imprisonment). See also, United States v. Tingey, 5 Pet. (U. S.) 115 (false imprisonment). '"Patterson v. Gibson, 81 Ga. 802, 10 S. E. 9, 12 Am. St. 356; Griffith v. Sitgreaves, 90 Pa. St. 161. "^Holt V. Agnew, 61 Ala. 360; Mc- Mahon v. Smith, 47 Conn. 221, 36 Am. Rep. (:>! \ International Harvester Co. V. Voboril, 187 Fed. 973, 110 C. C. A. 311 ; Burton v. McMillan, 52 Fla. 469, 42 So. 849, 8 L. R. A. (N. S.) 991, 120 Am, St. 220 ; Jones v. Dannenberg Co., 112 Ga. 426, Zl S. E. 729, 52 L. R. A. 271 ; Mills v. Hudgins, 97 Ga. 417, 24 S. E. 146 (husband and son threat- ened) ; Line v. Blizzard, 70 Ind. 23 ; Brooks V. Berryhill, 20 Ind. 97; Gid- dings V. Iowa &c. Bank, 104 Iowa 676, 74 N. W. 21 ; First National Bank v. Bryan, 62 Iowa 42, 17 N. W. 165; Singer Mfg. Co. v. Rawson. 50 Iowa 634; Green v. Scranage, 19 Iowa 461. 87 Am. Dec. 447; Heaton v. Norton County State Bank, 59 Kans. 281, 52 Pac. 876; same case, 5 Kans. App. 498, 47 Pac. 576; Winfield National Bank v. Croco, 46 Kans. 620, 26 Pac. 939. Threat to tell plaintiff's hus- band that her son had embezzled de- fendant's money. Plaintiff feared this would drive her husband insane and in order to prevent the disclosure be- ing made to him executed the con- tract, held executed under duress. Silsbee v. Webber, 171 Mass. 378, SO N. E. 555; Bentley v. Robson, 117 Mich. 691, 76 N. W. 146; Benedict V. Roome, 106 Mich. 378, 64 N. W. 193; Miller v. Minor Lumber Co., 98 Mich. 163, 57 N. W. 101, 39 Am. St. 524; Leflore V. Allen, 80 Miss. 298, 31 So. 815; Hensinger v. Dyer, 147 Mo. 219, 48 S. W. 912; Hargreaves v. Korcek, 44 Nebr. 660, 62 N. W. 1086; Davis v. Smith, 68 N. H. 253, 42 Atl. 384, 73 Am. St. 584 ; Barrett v. Weber, 125 N. Y. 18, 25 N. E. 1068; Adams v. Irv- ing Nat. Bank, 116 N. Y. 606, 23 N. E. 7, 15 Am. St. 447, 6 L. R. A. 491 ; Eadie v. Slimmon, 26 N. Y. 9, 82 Am. Dec. 395 ; Williams v. Walker &c. Co., 18 S. Car. 577 ; Delta County Bank v. McGranahan, 37 Wash. 307, 79 Pac. 796; Mack v. Prang, 104 Wis. 1, 79 N. W. 770, 45 L. R. A. 407, 76 Am. St. 848; City National Bank v. Kus- worra, 88 Wis. 188, 59 N. W. 564, 26 L. R. A. 48, 43 Am. St. 880. A con- veyance has been held procured by duress when the threats were made prior to the execution of the deed but were not repeated at the time she signed it. Leflore v. Allen, 80 Miss. 298, 31 So. 815. This principle has also been applied where the woman was coerced by threats against her intended husband. Rau v. Von Zed- litz, 132 Mass. 164. " Shattuck V. Watson, S3 Ark. 147, 13 S. W. S16, 7 L. R. A. SSln; South- ern Express Co. v. Duffey, 48 Ga. 358; Bailey v. Devine, 123 Ga. 653, 51 S. E. 603, 107 Am. St. 153; Youngs V. Simm, 41 111. App. 28; Peed v. Mc- 265 DURESS AND UNDUE INFLUENCE. 149 tive of the promisor such as a brother," grandson,"^ nephew/' or son-in-law.^" And this is true, in general, no matter whether the arrest is lawful or unlawful or the one threatened therewith is guilty or innocent." When the threats are communicated to a third party with the intention that he shall carry them to the promisor and he does in fact so carry them and the promisor is coerced thereby, duress exists, if sufficient to overcome the will of the promisor.^* § 149. Family relations. — In case the parties to a contract are members of the same family and one of such parties is pre- dominant, either because of age, force of character, or other cir- Kee, 42 Iowa 689, 20 Am. Rep. 631; Seymour v. Prescott, 69 Maine 376; Bryant v. Peck &c. Co., 154 Mass. 460, 28 N. E. 678; Harris v. Carmody, 131 Mass. SI, 41 Am, Rep. 188; Weiser v. Welch, 112 Mich. 134, 70 N. W. 438; Meech v. Lee, 82 Mich. 274, 46 N. W. 383; Beindorff v. Kaufman, 41 Nebr. 824, 60 N. W. 101 ; Ball v. Ward (N. J. Eq.), 74 Atl. 158; Schroener v. Lissauer, 107 N. Y. Ill, 13 N. E. 741, revg. 36 Hun (N. Y.) 100; Haynes V. Rudd, 102 N. Y. 372, 7 N. E. 287, 55 Am. Rep. 815; National Bank v. Cox, 47 App. Div. (N. Y.) 53, 62 N. Y. S. 314; Roll v. Raguet, 4 Ohio 400, 22 Am. Dec. 759; Western Ave- nue Building Assn. v. Walters, 7 Ohio C. C. 202; Avery v. Layton, 119 Pa. St. 604, 13 Atl. 528; Swope v, Jeffer- son Fire Ins. Co., 93 Pa. St. 251 ; Na- tional Bank v. Kirk, 90 Pa. St. 49; Foley v. Greene, 14 R. I. 618, 51 Am. Rep. 419; Coffman v. Lookout Bank, 5 Lea (Tenn.) 232, 40 Am. Rep. 31; McCormick Harvesting Machine Co. V. Hamilton, 12, Wis. 486, 41 N. W. 727; Schultz v. Culbertson, 49 Wis. 122, 4 N. W. 1070; Catlin v. Kenton, 9 Wis. 476; Price v. Bank of Poy- nette, 144 Wis. 190, 128 N. W. 895 (father and other members of the family threatened). See, hovi^ever, Gregor v. Hyde, 62 Fed. 107, 10 C. C. A. 290. '' Henry v. State Bank, 131 Iowa 97, 107 N. W. 1034; Schultz v. Catlin, 78 Wis. 611, 47 N. W. 946. "^ Bradley v. Irish, 42 111. App. 85. "Town of Sharon v. Gager, 46 Conn. 189. ""Bentley v. Robson, 117 Mich. 691, 76 N. W. 146; Bell v. Campbell, 123 Mo. 1, 25 S. W. 359, 45 Am. St. 505; Nebraska Mut. Bond &c. Assn. v. Klee, 70 Nebr. 383, 97 N. W. 476. But where the contract is entered into de- liberately and after considerable ne- gotiation for a compromise and pay- ment is made with the understanding that it is to be an advancement to the daughter no duress is shown. Loud V. Hamilton (Tenn. Ch. App.), 51 S. W. 140, 48 L. R. A. 400. "Burton v. McMillan, 52 Fla. 469, 42 So. 849, 120 Am. St. 220 ; Bailey v. Devine, 123 Ga. 653, 51 S. E. 603, 107 Am. St. 153; Thompson v. Niggley, 53 Kans. 664, 35 Pac. 290, 26 L. R. A. 803; Williamson-Halsell Frazier Co. V. Ackerraan, 11 Kans. 502, 94 Pac. 807, 20 L. R. A. (N. S.) 484; Heaton V. Norton County State Bank, 59 Kans. 281, 52 Pac. 876, same case, 5 Kans. App. 498, 47 Pac. 576; Hen- singer V. Dyer, 147 Mo. 219, 48 S. W. 912; Beindorff v. Kaufman, 41 Nebr. 824, 60 N. W. 101; Ball v. Ward (N. J. Ch.), 74 Atl. 158; Gorringe v. Read. 23 Utah 120, 63 Pac. 902, 90 Am. St. 692. See, however, Gregor v. Hyde, 62 Fed. 107, 10 C. C. A. 290 ; Bailey v. Devine, 123 Ga. 653. 51 S. E. 603, 107 Am. St. 153. Whether or not duress exists, depends on the facts and cir- cumstances of each case. Jaeger v. Koenig, 30 Misc. (N. Y.) 580, 62 N. Y S 803 '"' (biddings v. Iowa &c. Bank, 104 Iowa 676, 74 N. W. 21 ; State Bank v. Hutchinson, 62 Kans. 9, 61 Pac. 443. § 149 CONTRACTS. 266 cumstances, and obtains an advantage thereby, a presumption arises that the dominant party exercised an undue influence over the other in order to obtain the benefits received under the con- tract, and the burden is cast upon him to show that the transac- tion was fair in its terms and was the free-will act of the other. This principle has been applied in the cases where a child con- veys property or bestows some other benefit on his parents.^" Tha term parent in the sense in which it is used here extends to any person who stands in loco parentis.^" This does not mean that courts of equity will prevent acts of even bounty between parent and child or person standing in loco parentis, but such courts are jealous in seeing that the child is placed in a position which will enable him to form a judgment dictated by his own free will in- dependent of control. ^^ On the other hand, should a child take advantage of its parent, or one standing in loco parentis, and by reason of such relation obtain a conveyance of the parent's property to himself upon a promise upon his part to care for and support the parent in his old age, and, after the conveyance is made repudiate his part of the agreement to furnish the parent main- tenance and support^^ or otherwise abuse the relation which he sustains toward the parent and thereby obtains an unjust advan- =» Powell V. Powell (1900), 1 Ch. INIaitland v. Irving, IS Sim. 437; 243; Noble v. Moses, 81 Ala. S30, 1 Kempson v. Ashbee, L. R. 10 Ch. App. So. 217, 60 Am. Rep. 17S ; White v. Cas. IS ; Gillespie v. Holland, 40 Ark. Ross, 160 111. 56, 43 N. E. 336 ; Sayles 28, 48 Am. Rep. 1 ; Brown v. Bur- V. Christie, 187 111. 420, S8 N. E. 480 ; bank, 64 Cal. 92, 27 Pac. 940 ; Leh- Ferns v. Chapman, 211 111. 597, 71 N. mann v. Rothbarth, 111 111. 185; Mc- E. 1106; Ewing v. Wilson, 132 Ind. Parland v. Larkin, 155 111. 84, 39 N. 223, 31 N. E. 64; Couchman's Admr. E, 609; Woods v. Roberts, 185 111. 489, V. Couchman, 98 Ky. 109, 32 S. W. 57 N. E. 426; Tucke v. Buchholz, 43 283; Whitridge v. Whitridge, 76 Md. Iowa 415; Bradshaw v. Yates, 67 Mo. 54, 24 Atl. 645 ; Ashton v. Thompson, 221 ; Berkemeyer v. Kellerman, 32 32 Minn. 25, 18 N. W. 918; Miller v. Ohio St. 239, 30 Am. Rep. 577; In re Simonds, 72 Mo. 669; Summers v. Worrall's Appeal, 110 Pa. St. 349, 1 Coleman, 80 Mo. 488; Bergen v. Atl. 380; In re Miskey's Appeal, 107 Udall, 31 Barb. (N. Y.) 9; Rider v. Pa. St. 611; Jenkins v. Pye, 12 Pet. Kelso, S3 Iowa 367, 5 N. W. 509; (U. S.) 241, 9 L. ed. 1070. Wood V. Rabe, 96 N. Y. 414; In re "'Archer v. Hudson, 7 Beav. 551: Miskey's Appeal, 107 Pa. St. 611; Jenkins v. Pye, 12 Pet. (U. S.) 241, In re Coleman's Estate, 193 Pa. St. 9 L. ed. 1070. 60S, 44 Atl. 1085 ; Taylor v. Taylor, 8 == Williams v. Langwill, 241 111. 441, How. (U. S.) 183; Davis v. Strange's 89 N. E. 642, 25 L. R. A. (N. S.) Exr„ 86 Va. 793, 11 S. E. 406, 8 L. R. 932n; Mott v. Mott, 49 N. J. Eq. 192, A. 261. 22 Atl. 997. "Archer v. Hudson, 7 Beav. 551; 267 DURESS AND UNDUE INFLUENCE. 149 tage,^° equity will set aside the conveyance and restore the parent his property, or avoid a contract thus obtained. In transactions between parent and child, however, whereby the child derives a benefit, undue influence is not inferred from their mere relation- ship. The parent is presumed to be the dominant party, conse- quently undue influence on the part of the child must be proved.^* The sajne principle governs dealings between husband and wife. The husband in general being deemed the dominant party.^" However, this presumption is not strong enough to cause a con- tract between husband and wife to be set aside when there is no evidence other than the existence of the relation and a fair con- tract tending to establish undue influence.'"' The rule that con- tracts between husband and wife which result in a benefit to the husband are presumed to be procured through undue influence on the part of the husband is statutory in some jurisdictions.''^ These statutes have in the main broadened the rule so as to make it applicable to contracts by which Liie wife secures advantage."^ Dealings between sisters,^" brothers,*" brother and sister," "Burt V. Quisenberry, 132 111. 385, 24 N. E. 622; Francis v. Wilkinson, 147 111. 370, 35 N. E. 150; Rickraan V. Meier, 213 111. 507, 72 N. E. 1121; Fitch V. Reiser, 79 Iowa 34, 44 N. W. 214; Paddock v. Pulsifer, 43 Kans. 718, 23 Pac. 1049; Highbergher v. Stiffler, 21 Md. 338, 83 Am. Dec. 593 ; Bauer v. Bauer, 82 Md. 241, 33 Atl. 643; Bowe v. Bowe, 42 Mich. 195, 3 N. W. 843; Graham v. Burch, 44 Minn. 33, 46 N. W. 148 ; Mott v. Mott, 49 N. J. Eq. 192, 22 Atl. 997; Gold- smith V. Goldsmith, 145 N. Y. 313, 39 N. E. 1067; Brummond v. Krause, 8 N. Dak. 573, 80 N. W. 686. =* McLeod V. McLeod, 145 Ala. 269, 40 So. 147, 117 Am. St. 41; Oliphant V. Liversidge, 142 111. 160, 30 N. E. 334; Kennedy v. Kennedy, 194 111. 346, 62 N. E. 797; Slayback v. Witt, 151 Ind. 376, 50 N. E. 389; Mallow V. Walker, 115 Iowa 238, 88 N. W. 452, 91 Am. St. 158; Lynch v. Doran, 95 Mich, 395, 54 N. W. 882 ; Hatcher V. Hatcher, 139 Mo. 614, 39 S. W. 479; Wessell v. Rathjohn, 89 N. Car. 377: Clark v. Clark, 174 Pa. St. 309, 34 Atl. 610 ; Carney v. Carney, 196 Pa. St. 34. 46 Atl. 264; Saufley v. Jack- son, 16 Tex. 579; Millican v, Milli- can, 24 Tex. 426; Towson v. Moore, 173 U. S. 17, 19 Sup. Ct. 332. ''Hall V. Otterson, 52 N. J. Eq. 522, 28 Atl. 907. See also, Egger v. Egger, 225 Mo. 116, 135 Am. St. 566, 123 S. W. 928. ""Jones V. Gorham, 90 Ky. 622, 12 Ky. L. 568, 14 S. W. 599, 10 L. R. A. 223, 29 Am. St. 423. In the above case the parties entered into an agree- ment the effect of which was to give the survivor all the prope'^ty of the other at his or her death The wife subsequently died and it \»ias sought to set aside the agreement for un- due influence. =" White V. Warren, 120 Cal. 322, 49 Pac. 129, 52 Pac. 723. •^ Jackson v. Jackson, 94 Cal. 446, 29 Pac. 957. See, further on this subject, post, § 151, Husband and Wife. "Harvey v. Mount, 8 Beav. 439; Watkins v. Brant, 46 Wis. 419, 1 N. W. 82. "Hill V. Miller, 50 Kans. 659, 32 Pac. 354 ; Shevlin v. Shevlin, 96 Minn. 398, 105 N. W. 257. "Million v. Taylor, 38 Ark. 428; Odell V. Moss, 130 Cal. 352. 62 Pac. 555 ; Bowen v. Kutzner, 167 Fed. 281 ; Smith v. Cuddy, 96 Mich. 562, 56 N. §150 CONTRACTS. 268 uncle and nephew," uncle and niece/' or grandparents and grand- child^* may be set aside if it appears from the circumstances of each particular case that one of the parties exercised a predomi- nant influence in the family and used the power thus afforded to obtain the contract. As between the relatives last mentioned, however, undue influence is not presumed merely from the rela- tionship existing between the parties.*'' If it appears that in deal- ings between parties sustaining a family relation, the servient party was the moving spirit in the transaction and that he entered into the agreement voluntarily, deliberately, and advisably, know- ing its nature and effects, and that his consent was not obtained by reason of the power and influence to which the relation be- tween the parties might be supposed to give rise, undue influence cannot be said to exist.*" § 150. Guardian and ward. — The relation of guardian and ward is one of trust and confidence, and transactions between them whereby the guardian derives a benefit are generally pre- sumed to have been induced by undue influence.*' This may be W. 89; Thornton v. Ogden, 32 N. J. *" Williams v. Langwill, 241 III. 441, Eq. 723; Jones v. Jones, 120 N. Y. 89 N. E. 642, 25 L. R. A. (N. S.) 589, 24 N. E. 1016; Sears v. Shafer, 932n; Du Bose v. Kell, 72 S. Car 208, 6 N. Y. 268. 51 S. E. 692. See also, Andrews v. *' Chambers v. Chambers, 139 Ind. Connolly, 145 Fed. 43. Where one 111, 38 N. E. 334; Hall v. Perkins, 3 brother, a party to a family settle- Wend. (N. Y.) 626. ment, reluctantly signed the agree- " Tribau v. Tribau, 96 Maine 305, ment at the instance of the others, 52 Atl. 795. and later accepted large advances un- "Todd V. Grove, 33 Md. 188; Ran- der such contract and subsequent- ken V. Patton, 65 Mo. 378; McClure ly sought to avoid the contract for V. Lewis, 72 Mo. 314. duress, he was held bound. The ''° Albrecht v. Hunecke, 196 111. 127, court held he would not be permitted 63 N. E. 616; Shevlin v. Shevlin, 96 to lie in wait until time and change Minn. 398, 105 N. W. 257 ; Hamilton make his interest plain and then make V. Armstrong, 120 Mo. 597, 25 S. W. his choice. 545; Lodge v. Hulings, 63 N. J. Eq. " Davies v. Davies, 4 Giff. 417; Ev- 159, 51 Atl. 1015; Cowee v. Cornell, eritt v. Everitt, 7 Ch. D. 428; Smith 75 N. Y. 91, 31 Am. Rep. 428; Do- v. Kay, 7 H. L. Cases 50; Hoghton v. heny v. Lacy, 168 N. Y. 213, 61 N. E. Hoghton, 15 Beav. 278 ; Malone v. 255; Doran v. McConlogue, 150 Pa. Kelley, 54 Ala. 532; Noble v. Moses, St. 98, 24 Atl. 357 : Todd v. Sykes, 97 81 Ala. 530, 1 So. 217, 60 Am. Rep. Va. 143, 33 S. E. 517. In the case of 175; Willey v. Tindal, 5 Del. Ch. 194; Bade v. Feay, 63 W. Va. 166, 61 S. Ralston v. Turpin, 25 Fed. 7 ; Gaither E. 348, it is held that the relation of v. Gaither, 20 Ga. 709; Carter v. Tice, aunt and nephew, master and servant, 120 111. 277, 11 N. E. 529; Gillett v. and patient and nurse does not raise Wiley, 126 111. 310, 19 N, E. 287, 9 a presumption of undue influence. In Am. St. 587 ; Albrecht v. Hunecke, this connection, see chapter on Dis- 196 111. 127, 63 N. E. 616 ; Richardson closure. v. Linney, 7 B. Mon. (Ky.) 571; 269 DURESS AND UNDUE INFLUENCE. 150 true even after the ward has attained legal capacity/' Where a ward a few days after attaining her majority and before her guardian had made his final report conveys her land to the guardian's wife, who is her elder sister and with whom she is living, the burden is on the guardian to show good faith and the absence of undue influence." A presumption of undue influence has been held to attach to various transactions between guardian Highberger v. StifHer, 21 Md. 338, 83 Am, Dec. S93; McConkey v. Cockey, 69 Md. 286, 14 Atl. 465; Jacox v. Jacox, 40 Mich. 473, 29 Am. Rep. 547; Ashton v. Thompson, 32 Minn. 25, 18 N. W. 918; Meek v. Perry, 36 Miss. 190 ; Garvin v. Williams, 44 Mo. 465, 100 Am. Dec. 314; Caspari v. New Jerusalem First German Church. 12 Mo. App. 293; Matter of Sparks, 63 N. J. Eq. 242; Smith v. Boyd, 61 N. J. Eq. 175, 47 Atl. 816; Fish v. Miller, 1 Hoffm. Ch. (N. Y.) 267; Ross V. Ross, 6 Hun (N. Y.) 80; Mc- Clellan v. .Grant, 83 App. Div. (N. Y.) 599, 82 N. Y. S. 208; In re Hol- man's Will, 42 Ore. 345, 70 Pac. 908 ; Say V. Barnes, 4 S. & R. (Pa.) 112, 8 Am. Dec. 679; Wade v. Pulsifer, 54 Vt. 45. *'Earhart v. Holmes, 97 Iowa 649, 66 N. W. 898. In the above case it appears that the property had been offered by the ward to a third person. The guardian paid one-third more than such third person offered. The guardian was also the uncle of the ward. Tucke v. Buchholz, 43 Iowa 415; Smith v. Boyd, 61 N. J. Eq. 175, 47 Atl. 816; McRae v. Malloy, 93 N. Car. 154. In the two cases last cited it is held that this presumption may be sufficient to establish undue influ- ence if it appears that the ward acted without independent advice. ""Courts will watch settlements of guardians with their wards, or any act or transaction between them af- fecting the estate of the ward, with great jealousy. From the confidential relation between the parties it willbe presumed that the ward was acting under the influence of the guardian, and all transactions between them prejudicially affecting the interests of the ward will be held to be construct- ively fraudulent. Carter v. Tice, 120 111. 277, 11 N. E. 529. The doctrine is thus stated in 1 Story on Equity Jur., § 317 : 'Where the guardianship has, in fact, ceased by the majority of the ward, the courts "will not permit transactions between guardians and wards to stand, even when they have occurred after the minority has ceased, and the relation thereby ac- tually ended, if the intermediate pe- riod be short, unless the circum- stances demonstrate, in the highest sense of the term, the fullest delibera- tion on the part of the ward, and the most abundant good faith on the part of the guardian; for, in all such cases, the relation is still considered as having an undue influence upon the mind of the ward, and as vir- tually subsisting, especially if all the duties attaching to the situation have not ceased; as if the accounts be- tween the parties have not been fully settled, or if the estate still remains, in some sort, under the control of the guardian." ' " McParland v. Larkins, 155 111. 84, 39 N. E. 609. See also, Willey V. Tindal, S Del. Ch. 194 ; Gil- lett V. Wiley, 126 111. 310, 19 N. E. 287, 9 Am. St. 587 ; Ashton v. Thomp- son, 32 Minn. 25, 18 N. W. 918 ; Gar- vin V. Williams, 44 Mo. 465, 100 Am. Dec. 314. Even if there has been no legal steps taken to create the rela- tion of guardian and ward, yet if such relation practically exists, and advan- tage is taken of such relation undue influence exists. Bowe v. Bowe, 42 Mich. 195, 3 N. W. 843. In the fore- going case the one acting as guardian was the son of his aged ward. ItI CONTRACTS. 270 and ward such as gifts.^" settlements/^ releases,"^ sales,"*' leases," receipts,^'' or other contracts/" By the weight of authority the presumption of undue influence is only prima facie, and may be rebutted." § 151. Husband and wife, — Contracts between parties sus- taining a marital relation one to the other and which result in a benefit to the husband usually create a presumption of undue in- fluence, the husband being deemed the dominant party.^' The wife may, however, be shown to have acquired a dominant in- fluence over the husband, in which case the burden is upon her to prove the fairness of the agreement."' Undue influence upon ™HyIton V. Hylton, 2 Ves. 547; Hatch V. Hatch, 9 Ves. Jr. 292; An- drews V. Jones, 10 Ala. 400; Gaither V. Gaither, 20 Ga. 709; Richardson v. Linney, 7 B. Mon. (Ky.) 571; Garvin V. Williams, 44 Mo. 465, 100 Am. Dec. 314; Fish v. Miller, 1 Hoffm. Ch. (N. Y.) 267; Say v. Barnes, 4 S. & R. (Pa.) 112, 8 Am., Dec. 679; Wade v. Pulsifer, 54 Vt. 45; Waller v. Armi- stead, 2 Leigh (Va.) 11, 21 Am. Dec. 594. "Gregory v. Orr, 61 Miss. 307; Matter of Van Horn, 7 Paige (N. Y.) 46; Elliott v. EIHott, 5 Binn. (Pa.) 1; Fay v. Barnes, 4 S. & R. (Pa.) 112, 8 Atn. Dec. 679; Hawkin's Appeal, 32 Pa. St. 263. ''^ Hylton V. Hylton, 2 Ves. 547; Ferguson v. Lowery, 54 Ala. 510, 25 Am. Rep. 718; Hall v. Cone, 5 Day (Conn.) 543; Carter v. Tice, Uff III 277, 11 N. E. 529; McConkey v. Cockey, 69 Md. 286, 14 Atl. 465 ; Fish V. Miller, Hoffm. Ch. (N. Y.) 267; Stanley's Appeal, 8 Pa. St. 431, 49 Am. Dec. 530; Wills' Appeal, 22 Pa. St. 325 ; Eberts v. Eberts, 55 Pa. St. 110; Cowans' Appeal, 74 Pa. St. 329; Waller v. Armistead, 2 Leigh (Va.) 11, 21 Am. Dec. 594. See, however, Kirby v. Taylor, 6 Johns. Ch. (N. Y.) 242. "' Sherry v. Sansberry, 3 Ind. 320. ■^Dawson v. Massey, 1 Ball & B. 219 ; Aylward v. Kearney, 2 Ball & B. 463. "" Gillett V. Wiley, 126 111. 310, 19 N. E. 287, 9 Am. St. 587 ; Say v. Barnes, 4 S. & R. (Pa.) 112, 8 Am. Dec. 679; Witman's Appeal, 28 Pa. St. 376. "Andrews v. Jones, 10 Ala. 400; Ralston v. Turpin, 25 Fed. 7; Hol- man's Will, 42 Ore. 345, 70 Pac. 908. "' Highberger v. Stiffler, 21 Md. 338, 83 Am. Dec. 593; Meek v. Perry, 36 Miss. 190; Garvin v. Williams, 44 Mo. 465, 100 Am. Dec. 314; Wade v. Pulsifer, 54 Vt. 45. In some juris- dictions, however, the presumption is so strong that it is difficult to over- come it. Willey v. Tindal, 5 Del. Ch. 194. °° Harraway v. Harraway, 136 Ala. 499, 34 So. 836; Dolliver v. DoUiver, 94 Cal. 642, 30 Pac. 4 ; White v. War- ren, 120 Cal. 322, 49 Pac. 129, 52 Pac. 723; Lewis v. McGrath, 191 111. 401, 61 N. E. 135 ; Golding v. Golding, 82 Ky. 51, 5 Ky. L. 806; Stiles v. Stiles, 14 Mich. 72; Witbeck v. Witbeck, 25 Mich. 439 ; Ilgenf ritz v. Ilgenfritz, 116 Mo. 429, 22 S. W. 786; Stenger Assn. V. Stenger, 54 Nebr. 427, 74 N. W. 846; Hovorka v. Havlik, 68 Nebr. 14, 93 N. W. 990, 110 Am. St. 387; Farmer v. Farmer, 39 N. J. Eq. 211; Hall v. Otterson, 52 N. J. Eq. 522, 28 Atl. 907; Boyd v. De La Montagnie, 73 N. Y. 498, 29 Am. Rep. 197; Al- dridge v. Aldridge, 120 N. W. 614, 24 N. E. 1022; McRae v. Battle. 69 N. Car. 98; Darlington's Appeal, 86 Pa. 512, 27 Am. Rep. 726; Way v. Union Cent. Life Ins. Co., 61 S. Car. 501, 39 S. E. 742. ™ Shipman v. Furniss, 69 Ala. 555 ; Meldrum v. Meldrum, 115 Colo. 478, 24 Pac. 1083; Rockafellow v. New- comb, 57 111. 186 ; Leiffhton v. Orr, 44 Iowa 679; Hanna v. Wilcox, 53 Iowa 547, 5 N. W. 717 ; Turner v. Turner, 271 DURESS AND UNDUE INFLUENCE. § 15^ the part of the wife, however, is not presumed from the mere marital relation.'"' § 152. Principal and agent. — An agent sustains a confiden- tial relation toward his principal."^ Consequently, contracts be- tween principal and agent connected with the agency, which are advantageous to the agent, are prima facie presumed to have been procured through undue influence."^ However, if the transac- tion relates to a subject-matter outside the scope of, and uncon- nected with, the agency, undue influence is not presumed."^ § 153. Attorney and client. — Contracts between attorney and client entered into during the continuance of such relation are carefully scrutinized in equity. In case the attorney derives a benefit therefrom a presumption of undue influence and undue advantage exists against him which requires him to assume the burden of proving the fairness and justness of the transaction."* 44 Mo. S3S ; Haydock v. Haydock, 34 N. J. Eq. 570, 38 Am. Rep. 385 ; Disch V. Timm, 101 Wis. 179, 11 N. W. 196. "Tillaux V. Tillaux, 115 Cal. 663, 47 Pac. 691; McDougall v. McDougall, 135 Cal." 316, 67 Pac. 778; Ford v. Ford, 193 Pa. 530, 44 Atl. 561. The foregoing principle usually applies to persons living together as man and wife. Coulson v. Allison, 2 DeG., F. & J. 521 ; Shipman v. Furniss, 69 Ala. 555 ; Hanna v. Wilcox, S3 Iowa 547, 5 N. W. 717; Leighton v. Orr, 44 Iowa 679. See, however. Farmer v. Farmer, 1 H. L. Cases 724. See also, ante, § 149, Family Relations. "Dunne v. English, L. R. 18 Eq. 524; Waddell v. Lanier, 62 Ala. 347; Burke v. Taylor, 94 Ala. 530, 10 So. 129; De Rubidoex v. Parks, 48 Cal. 215; Norris v. Tayloe, 49 111. 17, 95 Am. Dec. 568; Uhlich v. Muhlke, 61 111. 499; Prince v. Dupuy, 163 111. 417, 45 N. E. 298; Rochester v. Levering, 104 Ind. 562, 4 N. E. 203; Green v. Peeso, 92 Iowa 261, 60 N. W. 531; Fisher v. Lee, 94 Iowa 611, 63 N. W. 442; Todd v. Grove, 33 Md. 188; Kerby v. Kerby. 57 Md. 345; Brown v. Mercantile & Trust Co., 87 Md. 377, 40 Atl. 256; Thorn v. Thorn, 51 Mich. 167, 16 N. W. 324; Donnelly v. Cun- ningham, SB Minn. 376, 59 N. W. 1052; Yosti v. Laughran, 49 Mo. 594; Oliver v. Lansing, 48 Nebr. 338, 67 N. W. 195; Condit v. Blackwell, 22 N. J. Eq. 481 ; LeGendre v. Byrnes, 44 N. J. Eq. 372, 14 Atl. 621; Mott V. Mott, 49 N. J. Eq. 192, 22 Atl. 997 ; Comstock V. Corastock, 57 Barb. (N. Y.) 453; Savage v. Savage, 12 Ore. 459, 8 Pac. 754; Shute v. Johnson, 25 Ore. 59, 34 Pac. 965; Darlington's Estate, 147 Pa. 624, 23 Atl. 1046, 30 Am. St. 116; Ralston v. Turpin, 129 U. S. 663, 32 L. ed. 747, 9 Sup. Ct. 420 ; Cook v. Berlin Woolen Mill Co., 43 Wis. 433. "'Burke V. Taylor, 94 Ala. 530, 10 So. 129; Darlington's Estate, 147 Pa. St. 624, 30 Am. St. 776, 23 Atl. 1046; Ralston v. Turpin, 129 U. S. 663, 32 L. ed. 747, 9 Sup. Ct. 420. See cases above cited in note 61 of this para- graph. °' Brown v. Mercantile Trust & De- posit Co., 87 Md. Zn, 40 Atl. 256 ; De- honey V. Lacy, 168 N. Y. 213, 61 N. E. 255 ; Cowee v. Cornell, 75 N. Y. 91, 31 Am. Rep. 428. " Gibson V. Jeyes, 6 Ves. Jr. 266 ; Savery v. Kina:, 5 H. L. Cas. 627; Dickinson v, Bradford, 59 Ala. 581, 31 Am. Reo. 23; White v. Tolliver. 110 Ala. 300, 20 So. 97; Kislin.e v. Shaw, 33 Cal. 425, 91 Am. Dec. 644; § 154 CONTRACTS. 272 The attorney is bound to show that his cHent was fully informed of his rights and interests in the subject-matter of the transac- tion and the nature and effect thereof. He must, it is said, be able to show that the client was in such a position as would enable him to deal at arm's length with his attorney."^ The client may be in such circumstances that he cannot exercise resistance against unjust exactment. Thus, a note and mortgage procured while the client's sons were in jail on a charge of murder when public ex- citement was high and the parents were laboring under great mental stress has been declared unenforcible for the full amount, although a quantum meruit recovery was permitted in the case referred to."* § 154. Physician and patient. — The physician is inhibited from taking advantage of the confidence reposed by his patient, growing out of such relation.'^ The presumption against the physician is given added strength if the patient is in the custody of the physician."* It has also been held that in case the physi- Felton V. Le Breton, 92 Cal. 457, 28 Pac. 490; Mills v. Mills, 26 Conn. 213; Jennings v. McConnell, 17 111. 148; Robv v. Colehour, 135 111. 300, 25 N. E. W ; Elmore v. Johnson, 143 111. 513, 32 N. E. 413, 21 L. R. A. 366, 36 Am. St. 401 ; Ross v. Payson, 160 III. 349, 43 N. E, 399; Willin v. Burdette, 172 111. 117, 49 N. E. 1000; Robinson v. Sharp, 201 111. 86, 66 N. E. 299; Shirk v. Neible, 156 Ind. 66, 59 N. E. 281; Poison v. Young, Z1 Iowa 196; Ryan v. Ashton, 42 Iowa 365; Carter v. West, 93 Ky. 211, 14 Ky. L. 191, 19 S. W. 592; Dunn v. Record, (si Maine 17; Burnham v. Heselton, 82 Maine 495, 20 Atl. 80, 9 L. R. A. 90; Merryman v. Euler, 59 Md. 588, 43 Am. Rep. 564; Gray V. Emmons, 7 Mich. 533 ; Klein v. Borchert, 89 Minn. 377, 95 N. W. 215 ; Dunn V. Dunn, 42 N. J. Eq. 431, 7 Atl. 842; Porter v. Bergen, 54 N. J. Eq. 405, 34 Atl. 1067; Howell v. Ran- som, 11 Paige (N. Y.) 538; White- head V. Kennedy, 69 N. Y. 462 ; Place V. Havward, ll'7 N. Y. 487. 23 N. E. 25: Greenfield's Estate, 14 Pa. St. 489; Wistar's Appeal, 54 Pa, St. 60; Unruh v. Lukens, 166 Pa. St. 324, 31 Atl. 110; Young v. Murphy, 120 Wis. 49, 97 N. W. 496. " Kisling V. Shaw, 133 Cal. 425, 91 Am. Dec. 644; Willin v. Burdette, 172 III. 117, 49 N. E. 1000; Yeamans v. James, 27 Kans. 195 ; Whipple v. Bar- ton, 63 N. H. 613. ""Shirk V. Neible, 156 Ind. 66, 59 N. E. 281, 83 Am. St. 150n. See also, French v. Cunningham, 149 Ind. 632, 49 N. E. m, and authorities there cited. "Dent V. Bennett, 4 Mylne & Cr. 269 ; Thomas v. Whitney, 186 III. 225, 57 N, E. 808; Woodbury v. Wood- bury, 141 Mass. 329, 5 N. E. 275, 55 Am. Rep. 479n. The above case is one of gift. Cadwallader v. West, 48 Mo. 483; Bogie v. Nolan, 96 Mo. 85, 9 S. W. 14 ; Unruh v. Lukens, 166 Pa. St. 324. 31 Atl. 110. In the above case the influence of physician and attor- ney were combined. The case of Au- genrite's Appeal, 89 Pa. St. 114, 33 Am. Rep. 731, apparently conflicts the above case. Peterson v. Budge (Utah), 102 Pac. 211. ™ Thomas v. Whitney, 186 111. 225, 57 N. E. 808. The same principles which govern relations between phy- 273 DURESS AND UNDUE INFLUENCE. ' § 1 55 cian exercises his influence to obtain a contract advantageous to a third party for whom the physician acts as agent such agree- ment will be set aside at the instance of the patient."" To render an agreement between physician and patient valid, however, so far as this question is concerned, it is only necessary to show that the patient had competent and disinterested advice, or that he per- formed the act or entered into the transaction voluntarily, delib- erately, and advisedly, knowing its nature and effect, and that his consent was not obtained by reason of the power and influ- ence to which the relation might be supposed to give rise.'* § 155. Religious advisers. — By the weight of authority transactions between a pastor and his parishioner by which the religious adviser obtains a benefit, are presumed to be due to undue influence. This principle has been applied to both catho- lics and protestants, and the particular church or denomination seems to make no difference.'^ § 156. Other confidential relations. — Closely allied to the relation of pastor and parishioner is the relation of spiritualistic teacher and his followers. When the relation of spiritualistic medium and follower is established between parties to a transac- tion advantageous to the medium, and it is shown that the me- sician and patient govern those be- '"Zeigler v. Illinois Trust & Sav. tween nurse and patient. Dingman Bank, 245 III. 180, 91 N. E. 1041. See V. Romine, 141 Mo. 466, 42 S. W. also, Kellogg v. Peddicord, 181 111. 1087. See, however, Bade v. Feay, 63 22, 54 N. E. 623 (conveyance to su- W. Va. 166, 61 S. E. 348. perintendent of the sanatorium). "Viallet V. Consol. &c. Power Co., "Huguenin v. Basley, 14 Ves. Jr. 30 Utah 260, 84 Pac. 496, 5 L. R. A. 273 ; Allcard v. Skinner, 36 Ch. Div. (N. S.) 663. In the above case the 145; Morley v. Loughman (1893), 1 physician procured a release from lia- Ch. 736; Ross v. Conway, 92 Cal. 632, bility for personal injuries sustained 28 Pac. 785; Dowie v. Driscoll, 203 by the patient at the hands of the 111. 480, 68 N. E. 56; Good v. Zook, above company. In this connection 116 Iowa 582, 88 N. W. 376; Fine- see, however, Penn Mutual Life Ins. gan v. Theisen, 92 Mich. 173, 52 N. Co. V. Union Trust Co., 83 Fed. 891. W. 619; Ford v. Hennessy, 70 Mo. In this case the court said : "An act S80 ; Caspari v. First German Church, that is the result of honest argument 82 Mo. 649; Corrigan v. Pironi, 48 and persuasion or of such influence N. J. Eq. 607, 23 Atl. 355; Marx v. as one may properly exercise over an- McGlynn, 88 N. Y. 357 ; McClellan other does not constitute undue influ- v. Grant, 83 App. Div. (N. Y.) 599, ence." In this case it appears that the 82 N. Y. S. 208. A priest or pastor physician merely advised his patient is not, however, barred from accept- as to the assignment of the life jnsur- ing a gift from his parishioner if it ance policy. The physician himself is freely made. Greenfield's Estate, derived no benefit whatever. 24 Pa. St. 232. 18 — Contracts, Vol. I § 156 CONTRACTS. 274 dium has great control over such adherent, a presumption of un- due influence arises. Consequently the medium has the burden of showing that there was no undue influence exercised." As has been pointed out in a preceding section, a relation of trust and confidence may exist even though the parties do not sustain to- ward each other a technical relation of that character.'^ In all cases where the parties are required to exercise the greatest of good faith in their dealings with each other, contracts advantage- ous to the dominant party will usually be presumed to have been obtained through undue influence.'* The law considers that a con- fidential relation exists in every case in which there is confidence reposed on one side and the resulting superiority and influence on the other. The relation and the duties involved in it need not be legal; they may be moral, social, domestic and merely per- sonal. The existence of such a relation creates a presumption of undue influence which imposes upon the one receiving the benefits the burden of proving an absence of undue influence by showing that the party acted upon confidence, independent ad- vice of another, or such facts as will satisfy the courts that the dealing was at arm's length, or that the transaction was had in the most perfect good faith on his part and was equitable and just between the parties or, as some of the authorities say, that it was beneficial to the other party.'^ "Lyon V. Home, L. R. 6 Eq. 655; 736; Ryan v. Price, 106 Ala. 584, 17 Connor v. Stanley, 72 Cal. 556, 14 So. 734; Sears v. Hicklin, 13 Colo. Pac. 306, 1 Am. St. 84; Leighton v. 143, 21 Pac. 1022; Potter's Appeal, 56 Orr, 44 Iowa 679. See also. Orchard- Conn. 1, 12 Atl. 513, 7 Am. St. 272; son V. Cofield, 171 III. 14, 49 N. E. Hensan v. Cooksey, 237 111. 620, 86 N. 197, 40 L. R. A. 256, 63 Am. St. 211. E. 1107, 127 Am. St. 345; Casey v. Ca- 1'ae case last cited relates to a will, sey, 14 111. 112; Conant v. Risebor- The law relative to relations between ough, 139 111. 383, 28 N. E. 789; Ir- medium and spiritualist has been win v. Sample, 213 111. 160, 72 N. E. largely developed in the law of wills 687; McCormick v. Malin, 5 Blackf. and the reader is referred to books (Ind.) 509; Forrestel v. Forrestel, 110 on that subject for further discussion. Iowa 614, 81 N. W. 797; Zimmerman "Ante, ch. 4. See also, Simonton v. Bitner, 79 Md. 115, 28 Atl. 820; V. Bacon, 49 Miss. 582; Stepp v. Hall v. Knappenberger, 97 Mo. 509, Frampton, 179 Pa. St. 284, 36 Atl. 11 S. W. 239, 10 Am. St. 337; Wright 177. V. Smith, 23 N. J. Eq. 106; McKee v. "Dorsey v. Wolcott, 173 111. 539, Griggs, 51 N. J. Eq. 178, 26 Atl. 158; 50 N. E. 1015; Holland v. John, 60 Sears v. Shafer, 6 N. Y. 268; Fisher N. J. Eq. 435, 46 Atl. 172. See ante, v. Bishop, 108 N. Y. 25, 15 N. E. 331, Ch. 6, Failure to Disclose. 2 Am. St. 357 ; Ten Evck v. Whit- " Smith V. Kay, 7 H. L. Cas. 750; beck, 156 N. Y. 341, 50 N. E. 963; Tate V. Williamson, L. R. 2 Ch. 55 ; Long v. Mulford, 17 Ohio St. 484, 93 Morley v. Loughraan (1893), 1 Ch. Am. Dec. 638; Rankin v. Porter, 7 275 DURESS AND UNDUE INFLUENCE. § 1 57 As has been intimated in one of the preceding sections," con- tracts may be set aside for undue influence even when the agree- ment was procured after the technical relation has been ter- minated." However, as a general rule, no presumption of undue influence arises when the relation of trust and confi- dence has been dissolved for a considerable period of time.'* I Thus it has been held that no such presumption arises in I a contract between physician and patient where it appears that such relation has been terminated two months before the agree- ment was entered into and was not resumed until four months after it had been consummated.'* Ordinarily no presumption of undue influence arises in dealings between master and servant, or landlord and boarder.*" Such relations are not considered as confidential. Consequently it has been held that a mere allega- tion to the effect that the employe was at a disadvantage in deal- ing with the employer does not amount to undue influence.'^ § 157. Mental weakness. — The contract of a person men- tally weak, on which account he is liable to imposition, will be set aside in courts of equity if the circumstances justify the con- clusion that such party has not exercised a deliberate judgment, but has been imposed upon or overcome by undue influ- ence.*^ But while courts of equity will jealously scrutinize such Watts (Pa.) 387; Stepp v. Framp- "Banner v. Rosser, 96 Va. 238, 31 ton, 179 Pa. St. 284, 36 Atl. 177; S. E. 67. In the above case the rela- Longenecker v. Zion &c. Church, 200 tion had been dissolved for about Pa. 567, SO Atl. 244 ; Smith v. Smith, twenty months. 60 Wis. 329, 19 N. W. 47; Davis v. '"Tichy v. Simicek (Nebr.), 95 N. Dean, 66 Wis. 100, 26 N. W. 737. W. 629. " See ante, § 150, Guardian and ^ Doran v. McConlogue, 150 Pa. St. Ward. 98, 24 Atl. 357; Bade v. Feay, 63 W. "Archer v. Hudson, 7 Beav. 551; Va. 166, 61 S. E. 348. Rhodes v. Bate, L. R. I Ch. 252; ^'Vickers v. Chicago &c. R. Co., 71 Moxon V. Payne, L. R. 8 Ch. 881; Fed. 139. See also, Spitz v. Balti- Mitchell V. Homfray, 8 Q. B. Div. more &c. R. Co., 75 Md. 162, 23 Atl. 587; Allcard v. Skinner, 36 Ch. Div. 307, 32 Am. St. 378n. It has also been 145 ; Noble v. Moses, 81 Ala. 530, 1 held that failure to apply for a patent So. 217; Zeigler v. Hughes, 55 111. on an invention which the employe 288; Ashton v. Thompson, 32 Minn, alleges he made because he feared he 25, 18 N. W. 918; Miller v. Simonds, would lose his position if he made 72 Mo. 669; Mason v. Ring, 3 Abb. such application does not show du- Dec. (N. Y.) 210, 2 Abb. Prac. (N. ress. Barr Car Co. v. Chicago &c. R. S.) (N. Y.) 322; Hawkin's Appeal, Co., 110 Fed. 972, 49 C. C. A. 194. 32 Pa. St. 263; Coffee v. Ruffin, 4 ''Smith v. Kay, 7 H. L. Cas. 750; Coldw (Tenn.) 487. And see Henry Moore v. Moore, 56 Cal. 89; Moore v Raiman, 25 Pa. 354, 64 Am. v. Moore, 81 Cal. 195, 22 Pac. 589; Dec. 703 ; Taylor v. Taylor, 8 How. Hick v. Thomas, 90 Cal. 289, 27 Pac. (U. S.) 183. § 157 CONTRACTS. 276 contracts, yet mental distress or weakness of a nature insufficient to avoid the presumption of legal capacity,*^ does not alone estab- lish undue influence. So long as legal incapacity does not exist mere mental weakness is not alone sufficient to justify a court in setting aside a contract of conveyance entered into with such per- son, there being no other circumstances indicative of duress or 208; Klose v. Hillenbrand, 88 Cal. 473, 26 Pac. 352; Taylor v. Atwood, 47 Conn. 498; Hart v. Hart, 44 Conn. 327; Sands v. Sands, 112 111. 225; Dorsey v. Wolcott, 173 111. 539, 50 N. E. 1015; Ikerd v. Beavers, 106 Ind. 483, 7 N. E. 326; Ashmead v. Rey- nolds, 134 Ind. 139, 33 N. E. 763, 39 Am. St. 328; Yount v. Yount, 144 Ind. 133, 43 N. E. 136; Harris v. Wamsley, 41 Iowa 671 ; Clough v. Adams, 71 Iowa 17, 32 N. W. 10; Hill V. Miller, 50 Kans. 659, 32 Pac. 354; Smith v. Snowden, 96 Ky. 32, 27 S. W. 855; Cherbonnier v. Evitts, 56 Md. 276; Frush v. Green, 86 Md. 494, 39 Atl. 863; Seeley v. Price, 14 Mich. 541 ; Duncombe v. Richards, 46 Mich. 166, 9 N. W. 149; Smith v. Smith, 90 Mich. 97, 51 N. W. 361; Graham v. Burch, 44 Minn. 33, 46 N. W. 148; Dickson v. Kempinsky, 96 Mo. 252, 9 S. W. 618; Martin v. Baker, 135 Mo. 495, 36 S. W. 369; James v. Groff, 157 Mo. 402, 57 S. W. 1081; Bennett v. Bennett, 65 Nebr. 432, 91 N. W. 409; Meyer v. Fishburn, 65 Nebr. 626, 91 N. W. 534; Roberts v. Barker, 63 N. H. 332; White v. White, 60 N. J. Eq. 104, 45 Atl. 767; Thorp v. Smith, 63 N. J. Eq. 70, 51 Atl. 437; Rider v. Miller, 86 N. Y. 507; Green v. Ro- worth, 113 N. Y. 462, 21 N. E. 165; Tracey v. Sacket, 1 Ohio St. 54; Hasel V. Beilstein, 179 Pa. St. 560, 36 Atl. 336; Anthony v. Hutchins, 10 R. I. 165; Allore v. Jewell, 94 U. S. 506; Griffith v. Godey, 113 U. S. 89, 28 L. ed. 934, 5 Sup. Ct. 383 ; King v. Ctimmings, 60 Vt. 502, 11 Atl. 727; Fishburne v. Ferguson's Heirs, 84 Va. 87, 4 S. E. 575; Giles v. Hodge, 74 Wis. 360, 43 N. W. 163; Cole v. Getzinger, 96 Wis. 559, 71 N. W. 75. In the case of Sprinkle v. Wellborn, 140 N. Car. 163, 52 S. E. 666, 3 L. R. A, (N. S.) 174n, 111 Am. St. 827, it is said : "Whether there is any dif- ference in moral quality, between the act of obtaining a deed of land from a woman known to be totally bereft of reason and the act of procuring one from a woman merely of weak understanding, who is unable to guard herself against impositions or to resist importunity, it does not lie in our province to decide ; but in law, and in so far as the validity of such transactions may be involved, we know there is not and should not be any difference, and that either is suffi- cient to induce a court of equity to rescind the contract, and cancel the deed, or to require the vendee to give up what he has unfairly and unjustly received, with proper deductions for any sums paid out by him, if the spe- cific remedy of rescission and cancel- ation cannot equitably be adminis- tered." "^Rogers v. Higgins, 57 111. 244; Wilson V. Brown (Tenn Ch. App.), 35 S. W. 1098; Meyer v. Fishburn, 65 Nebr. 626, 91 N. W. 534. In the above case the court said : "We rec- ognize as a general rule that a court of equity cannot undertake to inquire into and measure the size of men's capacity and understanding, there be- ing no such thing as an equitable in- capacity but there is a legal capacity. But, whatever weight this rule may be entitled to and whatever its applica- tion, it is obvious that mental weak- ness, although not sufficient to show an absolute disqualification, is a very important circumstance in de- termining whether a contract has been obtained through fraud, imposi- tion or undue influence, and when the contract is of such a nature as to justify the conclusion that a party has been imposed upon by cunning, arti- fice or undue influence, a court of equity will not hesitate to set the contract aside." See also, Foote v. De Poy, 126 Iowa 366, 102 N. W. 112, 106 Am. St. 365, 68 L. R. A. 302. 277 DURESS AND UNDUE INFLUENCE. 158 undue influence.** But if inequitable circumstances are shown t/e contract may be set aside in a proper case.** » § 158. Inadequacy of consideration. — In general, mere in- adequacy of consideration uncombined with other circumstances does not afford sufficient ground for the rescission of a contract, or the cancellation of a written instrument.*® A contract will be set aside for inadequacy of consideration only when the consid- eration is so grossly inadequate as to shock the conscience, and then a court of equity interferes because under such circum- stances it constitutes satisfactory evidence of fraud or undue in- fluence.*' But this does not mean that inadequacy of considera- ** Sawyer v. White, 122 Fed. 223; Perry v. Pearson, 135 111. 218, 25 N. E. 636; Colyer v. Hyden, 94 Ky. 180, 21 S. W. 868, 15 Ky. L. 101 ; Duncan V. Mason, 14 Ky. L. 318, 20 S. W. 252; Stewart v. Curtis, 85 Mich. 496, 48 N. W. 872; Davis v. Phillips, 85 Mich. 198, 48 N. W. 513; Arnold v. Whitcomb, 83 Mich. 19, 46 N. W. 1029; Tichy v. Simicek (Nebr.), 95 N. W. 629; King v. Humphreys, 138 Pa. St. 310, 22 Atl. 19; Stringfellow V. Hanson, 25 Utah 480, 71 Pac. 1052. "Old age, sickness, abatement of men- tal vigor and impairment of memory does not * * * rebut the legal presumption of mental competency to transact business." Bade v. Feay, 63 W. Va. 166, 61 S. E. 348. '^ Foote V. Depoy, 126 Iowa 366, 102 N. W. 112, 106 Am. St. 365, 68 L. R. A. 302; Austin v. Bridges, 21 Ky. L. 694, 52 S. W. 966. See also, cases cited in note 82 of this section. "We agree that if he was an imbecile, they could not bargain with him, and if he was simply weak and exclu- sively in their care, all bargains would be closely criticized, and the utmost fairness insisted on. In deal- ing with him they would have been exposed to serious suspicions, but there was no legal impediment so long as he retained legal capacity." Mason v. Dunbar, 43 Mich. 407, S N. W. 432, 38 Am. Rep. 201. As to weak- ness of mind connected with inade- quacy of consideration, see post, § 158, Inadequacy of Consideration. '"Ju/an v. Toulmin, 9 Ala. 662, 44 Am. Dec. 448 ; Hemstreet v. Wheeler, 100 Iowa 282, 69 N. W. 518 (prop- erty worth six thousand dollars was conveyed to a daughter for three thousand dollars and a contract for support of both parents for life) ; Lewis V. Arbuckle, 85 Iowa 335, 52 N. W. 237, 16 L. R. A. 677 ; Beard v. Campbell, 2 A. K. Marsh. (Ky.) 125, 12 Am. Dec. 362; Davidson v. Little, 22 Pa. St. 245, 60 Am. Dec. 81 ; John- son v. Franklin, 58 S. Car. 394, 36 S. E. 664; Briscoe v. Bronaugh, 1 Tex. 326, 46 Am. Dec. 108; White V. Johnson, 4 Wash. 113, 29 Pac. 932; Cooper V. Reilly, 90 Wis. 427, 63 N. W. 885. See post, ch. 9, Consideration. The case of Davidson v. Little, 22 Pa. St. 245, 60 Am. Dec. 81, contains an obiter statement to the efifect that inadequacy of consideration may be grounds for rescinding an executory contract bu1v,B0t for canceling an exe- cuted convd^nce. '^ Macoupin County v. People, 58 111. 191; Madison County v. People, 58 111. 456; Watson v. Doyle, 130 111. 415, 22 N. E. 613; Mathews v. Rein- hardt, 149 111. 635, 37 N. E. 85 : Mor- riso V. Philliber, 30 Mo. 145 ; Phillips V. Pullen, 45 N. J. Eq. 5, 16 Atl. 9; Osgood v. Franklin, 2 Johns. Ch. (N. Y.) 1 ; Dunn v. Chambers, 4 Barb. (N. Y.) 376; Hough v. Hunt, 2 Ohio 495, 15 Am. Dec. 569; Brown v. Hall, 14 R. I. 249, 51 Am. Rep. 375: Ste- phens V. Ozbourne, 107 Tenn. 572, 64 S. W. 902, 89 Am. St. 957; Eyre v. Potter, 15 How. (U. S.) 42, 14 L. ed. 592; Randolph v. Quidnick Co., 135 U. S. 457, 10 Sup. Ct, 655; Jones v. Degge, 84 .Va. 685, 5 S. E. 799. See §158 CONTRACTS. 278 tion is not an important factor in determining the validity of a contract. It, in connection with other circumstances, may well be evidence of fraud or undue influence.'* Consequently, if the party who receives the inadequate consideration is found to sus- tain a confidential relation to the other party, or is a person of weak mentality, or in great distress of mind at the time the con- tract is executed, or there are other inequitable circumstances, equity may avoid the agreement. The existence of a confiden- tial relation combined with inadequacy of consideration greatly strengthens the presumption of undue influence which arises when contracts are entered into between persons who sustain a confidential relation to each other.*' Thus, where one sustains a relation of daughter-in-law and nurse to an enfeebled, sick, and at times delirious, old lady and while this relation existed a deed was secretly given to the daughter-in-law, such deed has been set aside for undue influence, the court saying: "In such case, if error is committed it is better to err in favor of restoring the property of a feeble old woman to her dominion and control than to err in upholding a deed given under such circumstances post, Ch. 9, Consideration. In some ju- Y.) 381; Losee v. Morey, 57 Barb, risdictions specific performance will (N. Y.) 561; Seymour v. Delancey, be denied unless the consideration is 3 Cow. (N. Y.) 445, revd. 6 adequate. Prince v. Lamb, 128 Cal. Johns. Ch. (N. Y.) 222; White v. 120, 60 Pac. 689 (statutory) ; Morrill Thompson, 1 Dev. & Bat. Eq. (N. V. Everson, 11 Cal. 114, 19 Pac. 190. Car.) 493; Fripp v. Fripp, Rice's Eq. See also, Espert v. Wilson, 190 III. (S. Car.) 84; Sarter v. Gordon, 2 629, 60 N. E. 923; Powers v. Hale, Hill Ch. (S. Car.) 121; Woodfolk v. 25 N. H. 145; Eastman v. Plumer, Blount, 3 Hayw. (Tenn.) 146; Cath- 46 N. H. 464; Osgood v. Franklin, cart v. Robinson, 5 Pet. (U. S.) 264, 2 Johns. Ch. (N. Y.) 1, 7 Am. Dec. 8 L. ed. 120; Garnett v. Macon, 2 513; Knobb v, Lindsay, S Ohio 468; Brock. (U. S.) 185, Fed. Cas. No. Clitherall V. Ogilvie, 1 Des. (S. Car.) 5245; Hale v. Wilkinson, 21 Grat. 250; Gasque v. Small, 2 Strobb. Eq. (Va.) 75; Talley v. Robinson's As- (S. Car.) 72, _The weight of author- signee, 22 Grat. (Va.) 888; White v. ity is otherwise. Collier v. Brown, McGannon, 29 Grat. (Va.) 511. 1 Cox. 428; January v. Martin, 1 ■* Lewis v. Arbuckle, 85 Iowa 335, 52 Bibb (Ky.) 586; Wollums v. Hers- N. W. 237, 16 L. R. A. 677; Stephens ley, 14 Ky. L. 642, 20 S. W. 781 ; v. Ozbourne, 107 Tenn. 572, 64 S. W. Shepherd v. Bevin, 9 Gill (Md.) 32; 902, 89 Am. St. 957; Talbott v. Ma- Young V. Frost, S Gill (Md.) 287; nard, 106 Tenn. 60, 59 S. W. 340; Western R. Corp. v. Babcock, 6 Mete. Mann v. Russey, 101 Tenn. 596, 49 S. (Mass.) 346; O'Brien v. Boland, 166 W. 835. Mass. 481, 44 N. E. 602; Harrison "OHphant v. Liversidge, 142 111. V. Town & Dixon, 17 Mo. 237; Ready 160, 30 N. E. 334; Holland v. John, V. Noakes, 29 N. J. Eq. 497; Shaddle 60 N. J. Eq. 435, 46 Atl. 172; Doyle V. Disborough, 30 N. J. Eq. 370; v. Welch, 100 Wis. 24, 75 N. W. 400. Viele V. Railroad Co., 21 Barb. (N. 279 DURESS AND UNDUE INFLUENCE. § 1 58 as to cast suspicion upon it."°" Conveyances between husband and wife," pastor and parishioner,®^ guardian and ward,"' uncle and niece,"* child and parent,"' have been set aside in instances where it appeared that the consideration was inadequate. The foregoing principles are also applicable in cases where no technical fiduciary relations exist, but confidence ij in fact re- posed.®® In case property is obtained at an inadequate price from a person of weak mind, when not protected by independent advice or other circumstances, it may be sufficient to show undue influ- ence.*" Inadequacy of consideration taken in connection with oppressive circumstances insufficient in themselves to amount to duress may, when considered together, amount to undue influ- ence."^ Thus it has been so held when one of the parties to a contract was in great mental distress at the time the agreement was entered into, such as domestic troubles, or sorrow caused by the death of a husband"" or the death of a son, together with old age and financial difficulties.^ The financial difficulties of one may also be taken advan- tage of in such a way as to avoid the agreement induced thereby, when connected with inadequate consideration. How- ever, in practically all of the cases so holding, the dominant " Payne v. Payne, 12 Cal. App. 251, 1046 (note given by uncle to 107 Pac. 148. nephew) ; Watkins v. Brant, 46 Wis. "' White V. Warren, 120 Cal. 322, 49 419, 1 N. W. 82 (conveyance by Pac. 129, 52 Pac. 723. brother to sister). "^Huguenin v. Baseley, 14 Ves. Jr. "Turner v. Collins, L. R. 7 Ch, 273 ; Corrigan v. Pironi, 48 N. J. Eq. App. Cas. 329 ; Gandy v. McCauley, L. 607, 23 Atl. 355. R. 31 Ch. Div. 1 ; Wilkie v. Sassen °' Tucke V. Buchholz, 43 Iowa 415. (Iowa), 99 N. W. 124; Brugier v °* Tribou v. Tribou, 96 Maine 305, 52 Pepin, 106 Iowa 432, 76 N. W. 808: Atl 795. Smith v. Cuddy, 96 Mich. 562, 56 N == Muzzy V. Tompkinson, 2 Wash. W. 89; Allore v. Jewel, 94 U. S. 506. 616, 27 Pac. 456, 28 Pac. 652. ■* McLean v. Equitable Life &c ""Odell V. Moss, 130 Cal. 352, 62 Soc, 100 Ind. 127, 50 Am. Rep. 779; Pac. 555; Cowen v. Adams, 78 Fed. Bruguier v. Pepin, 106 Iowa 432, 76 536, 24 C. C. A. 198 (surrender of N. W. 808; Musick v. Fisher, 96 Ky. legal right by legatee to executor); IS, 16 Ky. L. 277, 27 S. W. 812; Lanfair v. Thompson, 112 Ga. 487, 37 Hough v. Hunt, 2 Ohio 495, 15 Am. S. E. 717; Bowe v. Bowe, 42 Mich. Dec. 569. 195, 3 N. W. 843. In the two preced- "» Bruguier v. Pepin, 106 Iowa 432, ing cases conveyances were made by 76 N. W. 808. parent to child. Armstrong v. Logan, ^ McLean v. Equitable Life &c. 115 Mo 465 22 S. W. 384; Lamb v. Soc, 100 Ind. 127, 50 Am. Rep. 779. Lamb (N. J. Eq.), 23 Atl. 1009 See also, Kellogg v. Kellogg, 21 Colo, (conveyance from step-mother to 181, 40 Pac. 358; Stewart v. Stewart, step-son) ; Darlington's Estate, 147 7 J. J. Marsh. (Ky.) 183, 23 Am. Dec. Pa St. 624, 30 Am. St. 776, 23 Atl. 396. § 159 CONTRACTS. 280 party, knowing the needs of the other, had taken advantage of the opportunity thus afforded to drive an unconscionable bargain and had made demands he had no legal right to make, or had refused the performance of acts he was under a legal obligation to perform.^ It must not be understood from the foregoing that courts of equity will relieve against every hard bargain. In the absence of any confidential relation or mental weakness a hard bargain entered into by one who is in financial difficulties brought on by himself will not ordinarily be relieved against. Especially is this true when a borrower applies to the lender for help and agrees to secure him with all his available assets and he gives him help, thereby taking a great risk for the chance of a big profit.^ The mere fact that a contract is improvident and is made without professional advice or consultation with friends, even when cou- pled with somewhat inadequate consideration, is not sufficient in equity to cause a contract to be set aside when both parties were able to judge for themselves, were on an equal footing and there were no oppressive circumstances.* § 159. Unconscionable contracts. — An unconscionable con- tract is usually defined as one "such as no man in his senses and not under a delusion would make on the one hand, and such as no honest and fair man would accept on the other. "^ And by the general rule inadequacy of consideration will not render a contract unconscionable unless there exists "an inequality so strong, gross, and manifest, that it must be impossible to state it to a man of common sense without producing an exclamation at the inequality of it,"" but, as is sometimes stated, "where the ''Stewart v. Stewart, 7 J. J. Marsh. Dunn v. Chambers, 4 Barb. (N. Y.) (Ky.) 183, 23 Am. Dec. 396; Rothen- 376; Green v. Thompson, 11 N. Car. barger v. I^othenbarger, 111 Mo. 1, 19 365. See also, Joslin v. Cowee, 56 N. S. W. 932 ; Hough v. Hunt, 2 Ohio Y. 626. 495, 15 Am. Dec. 569, and note. See " Chesterfield v. Janssen. 2 Ves. Sr. also, Ritchie v. McMullen, 79 Fed. 125 ; King v. Cohorn, 6 Yerg. (Tenn.) 522, 25 C. C. A. SO ; Cobb v. Day, 106 75, 27 Am. Dec. 455 ; Hume v. United Mo. 278, 17 S. W. 323; Flummerfelt's States, 132 U. S. 406, 33 L. ed. 393, 10 Exrs. V. Flummerfelt, 51 N. J. Eq. Sup. Ct. 134 ; Howells v. Pacific States 432, 26 Atl. 857. &c. Building Co., 21 Utah 45, 60 Pac. =■ Colonial Trust Co. v. Hoffstot, 219 1025, 81 Am. St. 659. Pa. 497, 69 Atl. 52. See also, Mofifat ° Gwynne v. Heaton, 1 Brown Ch. 1 ; [V. Winslow, 7 Paige (N. Y.) 124. Stephens v. Ozbourne, 107 Tenn. 572, ' " Harrison v. Guest, 6 DeG., M. & G. 64 S. W. 902, 89 Am. St. 957, See 424, 8 H. L. Cas. 481 ; Juzan v. Toul- also, Howard v. Edgell, 17 Vt. 9. min, 9 Ala. 662, 44 Am. Dec. 448; 28l DURESS AND UNDUE INFLUENCE. § l6o inadequacy of the price is so great that the mind revolts at it the court will lay hold on the slightest circumstances of oppression or advantage to rescind the contract.'" Whether a contract is ren- dered unconscionable because of an inadequate consideration de- pends upon the circumstances of each particular case as viewed in the light of the general principle announced.^ § 160. Contracts with expectant heirs, and the like. — Un- just contracts of this character are termed "catching bargains" and are defined as the purchase by means of an unconscionable agreement of an expected estate or interest from an expectant heir, a reversioner or remainderman, or from any one who has the hope of succession to the property or estate of an ancestor or relative.® Against such contracts equity affords relief. Owing to social conditions more or less peculiar to England the law on this branch of the subject has been largely developed in that country. The rules governing contracts of the above character seem to be given a somewhat less strict application in the United States than in England. Under the theory that expectant heirs, reversioners, and the like, in a real or imagined need of money, are exposed to the demand of another and are peculiarly liable to imposition, equity has established rules for their protection.^" 'Hough V. Hunt, 2 Ohio 495, IS McClure v. Raben, 125 Ind. 139, 25 Am. Dec. 569. See also, McKinney N. E. 179, 9 L. R. A. 477; Clenden- V. Pinckard, 2 Leigh (Va.) 149, 21 ing v. Wyatt, 54 Kans. 523, 38 Pac. Am. Dec. 601. 792; Lowry v. Spear, 7 Bush (Ky.) " See further on this subject in the 451 ; Boynton v. Hubbard, 7 Mass. chapter on Consideration, post, §209, 112; Fitch v. Fitch, 8 Pick. (Mass.) Sufficiency or Adequacy of Consider- 480; Mastin v. Marlow, 65 N. Car. ation. 695 ; In re Kuhn's Estate, 163 Pa. 438, °6 Cyc. 702; 5 Am. & Eng. Ency. 30 Atl. 215. In the case of Curtis v. Law 764; Black's L. Diet. 178. But Curtis, 40 Maine 24, 63 Am. Dec. 651, see as to the rule being less stringent it is said : "There are two reasons in case of a reversion, remainder or why sales of expected estates by their fixed legacy, Cribbins v. Markwood, heirs should be discountenanced. One, 13 Grat. (Va.) 495, 498; Parmelee v. that it opens the door to taking undue Cameron, 41 N. Y. 392; Whelan v. advantage of an heir in distress and Phillips, 151 Pa. St. 312, 322, 25 Atl. necessitative circumstances ; the other 44. is founded upon public policy in order " King V. Hamlet, 2 Myl. & K. 456 ; to prevent an heir from shaking off Peacock v. Evans, 16 Ves. Jr. 512; his father's authority and feeding his Aylesf ord v. Morris, L. R. 8 Ch. 484 ; extravagance by disposing of the fam- O'Rorke v. Bolingbroke, 2 App. Cas. ily estate." Some cases lay down the 814; Fry v. Lane, 40 Ch. D. 312; rule that where an ancestor has no Jenkins v. Pye, 12 Pet. (U. S.) 240; knowledge of the contract he may per- Parsons v Ely, 45 111. 232 ; Crum v. mit his property to go under the law Sawyer 132 111. 443, 24 N. E. 956; of descent, believing the heir will re- § i6o CONTRACTS. 282 Such contracts are regarded by the law with disfavor and are presumed to be founded on fraud or oppression, so much so that one who attempts the enforcement of such a contract must gen- erally allege and prove that there was neither fraud nor oppres- sion before he is entitled to any consideration.^^ But if it is proved that they are fair and just and that no undue advantage was taken of the heir they may be enforced in equity/^ In England by the weight of authority it is held that even in the absence of fraud or undue influence mere inadequacy of con- sideration is a sufficient ground for setting aside the contract whereby expectant heirs seek to convey their prospective inheri- tance.^^ In the United States, however, mere inadequacy of price, not too flagrant nor gross, is considered only as evidence of fraud or undue influence that is not of itself sufficient to avoid the agreement.^* As has already been indicated, it is held in some jurisdictions ceive the benefit, but in truth it goes to an entire stranger, if the contract of such hei^ is enforced. This is deemed equivalent to a fraud upon the ancestor. King v. Hamlet, 2 Myl. 6 K. 456; Cole v. Gibbons, 3 P. Wms. 290; Chesterfield v. Janssen, 2 Ves. Sr. 158; McClure v. Raben, 133 Ind. 557, 33 N. E. 275, 36 Am. St. 558. "Bromley v. Smith, 26 Beav. 644; Hannah v. Hodson, 30 Beav. 19; Mc- Clure V. Raben, 133 Ind. 557, 33 N. E. 275, 36 Am. St. 558; Hale v. Hollon, 90 Tex. 427, 39 S. W. 287, 36 L. R. A. 75, 59 Am. St. 819; Nimmo v. Davis, 7 Tex. 26; Cribbins v. Markwood, 13 Grat. (Va.) 495, 67 Am. Dec. 775. '^Chambers v. Chambers, 139 Ind. Ill, 38 N. E. 334; Clendening v. Wyatt, 54 Kans. 523, 33 L. R. A. 278 ; Hale V. Hollon, 90 Tex. 427, 39 S. W. 287, 36 L. R. A. 75, 59 Am. St. 819. K unconscionable it will not be given effect. Butler v. Duncan, 47 Mich. 94, 10 N. W. 123, 41 Am. Rep. 711. "O'Rorke V. Bolingbroke, L. R. 2 App. Cas. 814; St. Albyn v. Harding, 27 Beav. 11; Evans v. Llewellin, 1 Cox 333 ; Jones v. Ricketts, 31 Beav. 130; Shelly v. Nash, 3 Madd. 232 Gowland v. De Faria, 17 Ves. Jr. 20 Davies v. Cooper, 5 Myl. & C. 270 Bawtree v. Watson, 3 Myl. & K. 339 Emmet v. Tottenham, 10 Jur. (N. S.) 1090. "Anything that can he substan- tially considered as inadequacy is a ground for setting aside the contract." Peacock v. Evans, 16 Ves. Jr. 512. In Edwards v. Burt, 15 Eng. L. & Eq. 434, it is said : "It is, however, un- necessary now to canvass or discuss the principles on this subject, for the rule on it was finally and distinctly established by the house of lords in the case of Lord Adlborough v. Tyre, and that case, following several of the previous authorities, clearly estab- lishes that the purchaser of a rever- sionary interest, or, at all events, the purchaser of such an interest from an expectant heir, or from a person standing in the situation of an ex- pectant heir, * * * is bound, if the transaction is impeached within a reasonable time, to satisfy the court that he gave the fair market value for what he purchased." There are, however, earlier cases to the contrary. Murray v. Palmer, 2 Sch. & Lef. 474; Nicholls V. Gould, 2 Ves. Sr. 422; Verner v. Winstanley, 2 Sch. & Lef. 393; MacGhee v. Morgan, 2 Sch. & Lef. 395. "Parsons v. Ely, 45 111. 232; Va- rick V. Edwards, Hoffm. Ch. (N. Y.) 382. See also. Dunn v. Chambers, 4 Barb. (N. Y.) 376; Mastin v. Marlow, 65 N. Car. 695 ; McDonald v. McDon- ald. 58 N. Car. 211, 75 Am. Dec. 434; 283 DURESS AND UNDUE INFLUENCE. § i6o that a contract disposing of a reversionary interest, when un- known to the ancestor, is a fraud upon him, and as a consequence it is held that if the contract is unknown to such ancestor, and he does not assent thereto, it is voidable for that reason. ^^ Other authorities hold that even though the ancestor did not and could not assent to the assignment by the heir of his expectancy this alone is not fatal to the contract, and it will be sustained if other- wise fair and free from objectionable circumstances.^" This would seem to be the more logical holding, since the primary pur- pose of the rule is to protect improvident and necessitant heirs from being despoiled by those who seek to prey upon them.^' If the doctrine of ancestral assent is followed to its logical conclusion it would lead to a total disregard of the welfare of the heir, and this result has been accomplished by a strict adherence to the rule.^^ The rule that the assent of the ancestor is necessary to give validity to the contract is erroneous for the further reason that it is assumed that such contract may be ratified by the ex- pectant heir after the special circumstances have ceased to oper- Davidson v. Little, 22 Pa. St. 24S, 60 Am. Dec. 81; In re Power's Appeal, 63 Pa. St. 443; Whelen v. Phillips, 151 Pa. St. 312, 25 Atl. 44; Butler v. Haskell, 4 Desaus. (S. Car.) 651; M'Kinney v. Pinckard, 2 Leigh (Va.) 149, 21 Am. Dec. 601; Mayo v. Car- rington, 19 Gratt. (Va.) 74; Cribbins V. Markroad, 13 Grat. (Va.) 495, 67 Am. Dec. 775. Before inadequacy of consideration will avoid such an agreement it must be so flagrant as to give rise to a presumption of fraud. Dunn v. Chambers, 4 Barb. (N. Y.) 376; Brown v. Hall, 14 R. I. 249, 51 Am. Rep. 375. See, however. Chambers v. Chambers, 139 Ind. HI, 38 N. E. 334; Osgood v. Franklin, 2 Johns. Ch. (N. Y.) 1, 7 Am. Dec. 513. " In the case of King v. Hamlet, 2 Myl. & K. 456, it is said : "The ex- traordinary protection given in the general case must be withdrawn, if it shall appear that the transaction was known to the father or other person standing in loco parentis— the person, for example, from whom the spes successionis was entertained, or after whom the reversionary interest was to become vested in possession, even although such parent or other person took no active part in negotiation provided the transaction was not op- posed by him, and so carried through in spite of him. * * * Still more fatal to his claim of relief will it be, if the father, or person in loco par- entis shall be found to have con- curred in this adoption of the re- pudiated contract." McClure v. Ra- ben, 133 Ind. 507, 33 N. E. 275, 36 Am. St. 558. By the English decisions it would seem that the ancestor must actually sanction or join in the trans- action in order to render it unassail- able. Aylesford v. Morris, 8 L. R. Ch. 484; Talbot v. Stainforth, 1 J. & H. 484, 31 L. J. (N. S.) Ch. 197; O'Rorke v. Bolingbroke, L. R. 2 App. Cas. 814. See also, Miller v. Cook, L. R. 10 Eq. 641 ; Savery v. King, 5 H. L. Cas. 627. "Mastin v. Marlow, 65 N. Car. 695 ; Hale v. Hollon, 90 Tex. 427, 39 S. W. 287, 36 L. R. A. 75, 59 Am. St. 819; Searcy v. Gwaltney Bros., 36 Tex. Civ. App. 158, 81 S. W. 576. " See ante, note 12. '' See Williams v. Williams, L. R. 2 Ch. 294; Jenkins v. Pye, 12 Pet (U. S.) 241, 9 L ed, 1070. § l6l CONTRACTS. 284 ate. If the heir may ratify such contract it would seem that fraud on the ancestor is not entitled to much consideration/" It is doubtless true that if the vendor and purchaser of an ex- pectant interest before the consummation of the sale procure a well-considered and impartial estimate of what the property would be likely to bring on sale from a third person and act upon that opinion, the presumption of undue influence will be rebutted.^" A sale of an expectancy at auction has been upheld.^^ Such a sale has also been upheld where there were many attempts to sell at a specified price and a purchaser was finally found who was willing to pay that price. ^^ The foregoing principles relative to the sale of expectancies have been held to apply to contracts for the sale,^^ or mortgage/* of such expectancy, and to contracts calling for the payment of a specified sum of money on the death of the person, upon whose death the vesting of the expectancy is contingent." They do not apply to a contract disposing of an interest already vested or fixed.^° § 161. Ratification. — A contract procured through duress or undue influence may be ratified by the oppressed party if he so chooses after the coercive influence has been removed. Not only this, but he will be held to have ratified the agreement if he does not repudiate it within a reasonable time after the re- moval of such influences.^' The law imposes upon the servient " Page on ContractSj Vol. 1, page Am. Dec. 81 ; Whelen v. Phillips, 151 360, § 238, citing Cole v. Gibbons, 3 Pa. St. 312, 25 Atl. 44; Cribbins v. P. Wms. 290. Markwood, 13 Gratt. (Va.) 495, 67 "" Edwards v. Burt, 2 DeG., M. & G. Am. Dec. 775 ; Mayo v. Carrington, 55. See also, Perfect v. Lane, 3 DeG., 19 Gratt. (Va.) 74. F. & J. 369 ; Miller v. Cook, L. R. 10 " Cases holding that a contract pro- Eq. 641 ; Tynte v. Hodge, 2 Hem. & cured through undue influence may be M. 287. ratified. More v. More, 133 Cal. 489, =' Shelly V. Nash, 3 Madd. 232. See, 65 Pac. 1044; Albrecht v. Hunecke, however, Fox v. Wright, 6 Madd. 196 111. 127, 63 N. E. 616; Roby v. 111. Colehour, 135 111. 300, 25 N. E. 777; '^ Moct V. Atwood, 5 Ves. Jr. 845. Sanderson v. Adams, 133 Mich. 359, =' Foster v. Roberts, 29 Beav. 467; 94 N. W. 1063; Keller v. Lamb, 202 Chambers v. Chambers, 139 Ind. Ill, Pa. St. 412, 51 Atl. 982; Talbott v. 38 N. E. 334. Manard, 106 Tenn. 60, 59 S. W. 340; "-^ Beynon v. Cook, L. R. 10 Ch. 389 ; Ellis v. Ellis, 5 Tex. Civ. App. 46, 23 Butler V. Duncan. 47 Mich. 94, 10 N. S. W. 996. The following cases are E. 123, 41 Am. Rep. 711. cases holding that a contract pro- "° Chesterfield v. Janssen, 2 Ves. Sr. cured through duress may be ratified. 125, 1 Atk. 352. Gillespie v. Simpson (Ark.), 18 S. W. ^° Parmelee v. Cameron, 41 N. Y. 1050; Craig v. Ginn, 3 Pennew. '(Del.) 392; Davidson v. Little, 22 Pa. 245, 60 117, 48 Atl. 192, 53 L. R. A. 715, 94 285 DURESS AND UNDUE INFLUENCE. § 1 62 party the duty to exercise the option of either being bound by the agreement or to repudiate it with all convenient speed after the duress or undue influence has been removed.^' Consequently, if one under duress enters into marriage with another and he afterward has ample opportunity to protest against the consum- mation of the marriage and did not do so, he cannot have it an- nulled for duress, but instead will be held to have consented.^" One will not be held, however, to have ratified a contract so in- duced from conduct while still under the influence exerted by the dominant party/" Thus, payments on notes made under the same influence that procured the contract will not amount to a ratifica- tion/^ When affirmative acts are reHed upon as constituting a confirmation they must be such as to indicate an intention to con- done the wrong and a purpose to abide by the contract/^ Contracts by which an expectant heir disposes of the prospective estate may be ratified/'' § 162. In pari delicto, principle of, when not applicable to contracts procured through undue influence. — It is well set- Am. St. 11; Ferrari v. Board of 117 Mich. 691, 76 N. W. 146; Buck Health, 24 Fla. 390, 5 So. 1 ; Walker v. First Nat. Bank, 27 Mich. 293, 15 V. Larkin, 127 Ind. 100, 26 N. E. 684; Am. Rep. 189; Bell v. Campbell, 123 Bushnell v. Loomis, 234 Mo. 371, 137 Mo. 1, 25 S. W. 359, 45 Am. St. 505 ; S. W. 257, 36 L. R. A. (N. S.) 1029; Avakian v. Avakian, 69 N. J. Eq. 89, Bodine v. Morgan, 37 N. J. Eq. 426; 60 Atl. 521. Carver v. United States, 111 U. S. ''Woodham v. Allen, 130 Cal. 194, 609, 28 L. ed. 450, 4 Sup. Ct. 561, 19 62 Pac. 398. However, partial pay- Ct. CI. (U. S.) 714. ments made on a contract after du- ^ Andrews v. Connolly, 145 Fed. 43. ress has been removed are an affirma- ^' Linebaugh v. Linebaugh, 137 Cal. tion of it. Bushnell v. Loomis, 234 26, 69 Pac. 616; Boutterie v. Dema- Mo. 371, 137 S. W. 257, 36 L. R. A. rist, 126 La. 278, 27 L. R. A. (N. S.) (N. S.) 1029. 80S, 52 So. 492; Marsh v. Whitting- ''St. Louis &c. R. Co. v. Gorman, ton, 88 Miss. 400, 40 So. 326; Hamp- 79 Kans. 643. 100 Pac. 647, 28 L. R. stead v. Plaistow, 49 N. H. 84 ; Rich- A. (N. S.) 637. It has been held that ards v. Richards, 19 Pa. Co. Ct. 322; the fact that the wife cohabited with Merrell v. Moore, 47 Tex. Civ. App. her husband subsequent to a convey- 200, 104 S. W. 514. See, however, ance, under duress, of real estate to Avakian v. Avakian, 69 N. J. Eq. 89, her husband, may be evidence of a 60 Atl. 521; Quealy V. Waldron (La.), ratification of the conveyance made 27 L. R. A. (N. S.) 803, 52 So. 479. under duress but was not necessarily ™ St Louis &c R. Co. V. Gorman, conclusive. Hoag v. Hoag, 210 Mass. 79 Kans. 643, 100 Pac. 647, 28 L. R. 94, 96 N. E. 49, 36 L. R. A. (N. S.) A. (N. S.) 637; Bryant v. Levy, 52 329. La Ann 1649, 28 So. 191; Quealy v. ''Kay v. Smith, 21 Beav. 522; Cole Waldron 126 La. 258, 52 So. 479, 27 v. Gibbons, 3 P. Wms. 290 ; Dunham L. R. A. (N. S.) 803; Rau v. Von Zed- v. Bentley, 103 Iowa 136, 72 N. W. litz, 132 Mass. 164; Bently v. Robson, 437; Curtis v. Curtis, 40 Maine 24, 63 § 1 62 CONTRACTS. 286 led that under ordinary circumstances one who voluntarily enters into an illegal contract will be denied relief therefrom. The foregoing principle does not apply, however, where it appears that some fraud, duress, oppression or undue influence is prac- ticed by one party upon the other so that it appears that the guilt of the latter is subordinate to that of the former.'* Consequently it has been held that the maxim "in pari delicto" does not apply to a case where a married woman sued to set aside a deed of her separate property made by her under express or implied threats of the prosecution of her husband and to save him from prosecu- tion, whether the threatened prosecution was lawful or unlawful, and when she was sick and nervous, and when she does not ap- pear to have abundant opportunity for consideration and consul- tation with disinterested advisers."^ This has also been held true of a payment of money made to a judge at his suggestion and without knowledge on the part of the other of the illegality of such contract.'^ Am. Dec. 651. See also, Gowland v. Allen, 130 Cal. 194, 62 Pac. 398; Colby De Faria, 17 Ves. Jr. 20; Purcell v. v. Title Ins. &c. Co., 160 Cal. 632, 117 M'Namara, 14 Ves. Jr. 91. Pac. 913, 35 L. R. A. (N. S.) 813 ■" Colby V. Title Ins. &c. Co., 160 (mother conveying land to save Cal. 632, 117 Pac. 913, 35 L. R. A. (N. daughter from criminal prosecution) ; S.) 813 (revievifing the authorities) ; Gray v. Freeman, i7 Tex. Civ. App. Baehr v. Wolf, 59 111. 470; Davidson 556, 86 S. W. 1105. In such instance V. Carter, 55 Iowa 117, 7 N. W. 466; the parties may be "in delicto" but Roman v. Malij 42 Md. 513; Kitchen not in "pari delicto." Gorringe v. V. Greenabaum, 61 Mo. 110. Reed, 23 Utah 120, 63 Pac. 902, 90 Am. '"' Burton v. McMillan, 52 Fla. 469, St. 692. 42 So. 849, 8 L. R. A. (N. S.) 991. =° Evans v. Funk, 151 111. 650, 38 N. 120 Am. St. 220, 11 Am. & Eng. Ann, E. 230, aflg. 38 111. App. 441. Cases 380. See also, Woodham v. CHAPTER VIII. CERTAINTY. 1 170. General rule. 171. That is certain which can be made certain. 172. Illustration of the maxim, "id certum est quod certum reddi potest," 173. Other illustrative cases. 174. Reference to plans and speci- fications. 175. Agreement to make future con- tract. 176. Uncertainty as to time. 177. Uncertainty as to place. 178. Uncertainty as to subject-mat- ter. § 179. Uncertainty as to description. 180. Uncertainty as to amount. 181. Uncertainty as to price. 182. Uncertainty as to what is to be done. 183. Miscellaneous instances of un- certainty. 184. Miscellaneous instances of con- tract held sufficiently certain. 185. Effect of using terms "more or less", "about" and the like. 186. "Say" and "say about" and the like. § 170. General rule. — Parties and a subject-matter are two essential elements of every legal contract. Consequently, it fol- lows as an elementary proposition that in order to constitute a valid oral agreement the parties must express themselves in such terms that it can be ascertained to a reasonable degree of cer- tainty who is to be bound^ and what is meant. If the agreement is so vague and indefinite that it is not possible to collect from it the full intention of the parties, it is void. Neither the court nor +,he jury can make an agreement for the parties.^ Such a con- ^Winslow V. Winslow, 52 Ind. 8 respondents so as to bind them, espe- (failed to show who promisor was) ; cially since it was alleged in the bill Ross V. Burse, 17 Colo. 24 (failed to and admitted by the demurrer that show who promisee was). See also, they are the parties intended. Phil- Watkins v. Turner, 34 Ark. 663; Clark Hps v. Cornelius (Miss.), 28 So. 871. V. Great Northern R. Co., 81 Fed. 282 ; See also, Scanlan v. Alexander, 71 Stanton v. Miller, 58 N. Y. 192; Mar- Minn. 351, 74 N. W. 146. shall V. White's Creek Tpk. Co., 7 ' McFarlane v. York, 90 Ark. 89, Cold. (Tenn.) 252. The parties need 117 S. W. 773; Sherman v. Kits- not be expressly named, but it must miller, 17 Serg. & R. (Pa.) 45. "If be made to appear who they are. the agreement is so vague and in- Webster v. Ela, 5 N. H. 540. Where definite that it is not possible to col- one of the parties to a contract was lect from it the full intention of the designated as "Phillips & Bro.," it parties, it is void; for neither the was held to sufficiently identify the court nor tha jury can make an 287 § I70 CONTRACTS. 288 tract cannot be enforced in equity,^ as by a suit for specific par- agreement for the parties. Such a contract can neither be enforced in equity nor be sued upon at law. It is hardly necessary to cite any of the numerous authorities that sustain this plain legal proposition.'' Thom- son V. Gortner, 1Z Md. 474, 21 Atl. 371; Price v. Stipek (Mont.), 104 Pac. 195. "It is elementary in the law that, for the validity of a con- tract, the promise or the agreement of the parties to it must be certain and explicit, and that their full in- tention may be ascertained to a rea- sonable degree of certainty. Their agreement must be neither vague nor indefinite." United Press v. New York Press Co., 164 N. Y. 406, 58 N. E. 527, S3 L. R. A. 288n. "If the contract in any case is so indefinite as to make it impossible for the court to decide just what it means, and fix exactly the legal liability of the par- ties, it cannot result in an enforcible contract." Gaines v. Vandecar (Ore.), 115 Pac. 721, rehearing de- nied lis Pac. 1122. 'Lloyd V. CoUett, 4 Bro. C. C. 469; Harnett v. Yeilding, 2 Sch. & Lef. 549; Paris Chocolate Co. v. Crystal Palace Co., 3 Sm, & G. 119; Tatham v. Piatt, 9 Hare 660; Franks v. Mar- tin, 1 Eden 309; South Wales R. Co. V. Wythes, 5 De G. M. & G. 880; Taylor v. Portington, 7 De G. M. & G. 328; Cooper v. Hood, 26 Beav. 293; Bromley v. Jefiferies, 2 Vern. 415; Blagden v. Bradbear, 12 Ves. Jr. 466; De Sollar v. Hanscome, 158 U. S. 216, 39 L. ed. 956, 14 Sup. Ct. 816; Preston v. Preston, 95 U. S. 200, 24 L. ed. 494; Col son v. Thomp- son, 2 Wheat. (U. S.) 336, 4 L. ed. 253; Carr v. Duval, 14 Pet. (U. S.) 77, 10 L. ed. 361; Kendall v. Almy, 2 Sumn. (U. S.) 278, Fed. Cas. No. 7690; Bowen v. Waters, 2 Paine (U. S.) 1, Fed. Cas. No. 1725; Strang v. Richmond &c. R. Co., 93 Fed. 71 ; Minnesota Tribune Co. v. Asso- ciated Press, 83 Fed. 350, 27 C. C. A. 542; Walcott v. Watson, S3 Fed. 429; Zeringue v. Texas &c. R. Co., 34 Fed. 239; Walton v. Coulson, 1 McLean (U. S.) 120. See also, How- ison V. Jackson, 124 Ala. 187, 27 So. 494; Angel v. Simpson, 85 Ala. S3, 3 So. 758; Iron Age Pub. Co. v. Western Union Tel. Co., 83 Ala. 498, 3 So. 449, 3 Am. St. 758; Carlisle v. Carlisle, 17 Ala. 339; Shelburne v. Letsinger, 52 Ala. 96; Pike v. Pettus, 71 Ala. 98; Williams v. Barnes, 28 Ala. 613; Aday v. Echols, 18 Ala. 353, 52 Am. Dec. 225; Goodwin v. Lyon, 4 Port. (Ala.) 297; Sutton v. Myrick, 39 Ark. 424; Jordan v. Deaton, 23 Ark. 704; Foster v. Ma- ginnis, 89 Cal. 264, 26 Pac. 828; Ma- gee V. McManus, 70 Cal. 553, 12 Pac. 451; Forrester v. Flores, 64 Cal. 24, 28 Pac. 107; Los Angeles Immigra- tion &c. Assn. v. Phillips, 56 Cal. S39; Agard v. Valencia, 39 Cal. 292; Minturn v. Baylis, Zi Cal. 129; Blum V. Robertson, 24 Cal. 127; Morrison v. Rossignol, 5 Cal. 64; Morris v. Peckham, 51 Conn. 128; Dodd v. Seymour, 21 Conn. 476; Hollenbeck v. Prior, S Dak. 298, 40 N. W. 347; Diamond State Iron Co. v. Todd, 8 Houst. (Del.) 372, 6 Del, Ch. 163, 14 Atl. 27; Carlisle v. Fleming, 1 Har. (Del.) 421; Repetti v. Maisak, 6 Mackey (D. C.) 366; Armes v. Bigelow, 6 MacArthur (D. C.) 442; Beall v. Clark, 71 Ga. 818; Shrop- shire v. Brown, 45 Ga. 175; Printup V. Mitchell, 17 Ga. 558, 63 Am. Dec. 258; Miller v. Gotten, 5 Ga. 341; Shaw V. Schoonover, 130 111. 448, 22 N. E. 589; Clark v. Clark, 122 111. 388, 13 N. E. 5S3; Bowman v. Cun- ningham, 78 111. 48; Allen v. Webb, 64 111. 342; Fitzpatrick v. Beatty, 1 Gil. (111.) 454; Woods v. Evans, 113 III. 186, 55 Am. Rep. 409; Phoenix Ins. Co. V. Rink, 110 111. 538; Mar- shall V. Peck, 91 111. 187; Gosse v. Jones, 73 111. 508; Cutsinger v. Bal- lard, 115 Ind. 93, 17 N. E. 206; New- man V. Perrill, IZ Ind. 153; Gigos V. Cochran, 54 Ind. 593; Miller v. Campbell, 52 Ind. 125 ; Baldwin v. Kerlin, 46 Ind. 426; Taggart v. Te- vanny, 1 Ind. App. 339, 27 N. E. 115; Jewett v. Perrette, 127 Ind. 97. 26 N. E. 685 (holding that a stipulation for "good wages" ren- ders the contract fatally defect- ive under the rule). And see Burke v. Mead, 159 Ind. 252, 64 N. E. 880; Truman v. Truman, 79 Iowa 506, 44 N. W. 721; Corliss v. Con- able, 74 Iowa 58, Ze N. W. 891 ; Reck- nagle v. Schmalz, 72 Iowa 63, 33 N. 289 CERTAINTY. § I/O W. 365 ; Thomas v. Griffith, 68 Iowa N. J. Eq. 191 ; Potts v. Whitehead, 11, 25 N. W. 900; Dunn v. McGov- 20 N. J. Eq. 55, affid. 23 N. J. Eq. ern, 116 Iowa 663, 88 N. W. 938; 512; Cooper v. Carlisle, 17 N. J. Eq. Day V. Griffith, IS Iowa 104; Wil- 525; McKibbin v. Brown, 14 N. J. Eq. liamson v. Winiamson, 4 Iowa 279; 13; Lokerson v. Stillwell, 13 N. J. Waters' Heirs v. Brown, 7 J. J. Eq. 357; Smith v. McVeigh, 11 N. Marsh. (Ky.) 123; Burke v. His J. Eq. 239; Wallace v. Brown, 10 N. creditors, 9 La. Ann. 56; Higgins v. J. Eq. 308; Rockwell v. Lawrence, 6 Butler, 78 Maine 520, 7 Atl. 276; N. J. Eq. 190; Robeson v. Horn- Hopkins V. Roberts, 54 Md. 312; baker, 3 N. J. Eq. 60; Wharton v. O'Brien v. Pentz, 46 Md. 562; Reese Stoutenburgh, 35 N. J. Eq. 274. See V. Reese, 41 Md. 554 ; Gelston v. Sig- Oakey v. Cook, 41 N. J. Eq. 350, 7 mund, 27 Md. 334; Smith v. Cran- Atl. 495; Winne v. Winne, 166 N. dall, 20 Md. 482; Triebert v. Bur- Y. 263; Stokes v. Stokes, 148 N. Y. gess, 11 Md. 452; Mundorff v. Kil- 708, 43 N. E. 211; Cronkhite v. bourn, 4 Md. 459; Beard v. Linthi Cronkhite, 94 N. Y. 323; Buck- cum, 1 Md. Ch. 345 ; Grace v. Den- master v. Thompson, 36 N. Y. 558 ; ison, 114 Mass. 16; Boston &c. R. Mclneres v. Hogan (C. PI. Eq. Co. V. Babcock, 3 Cush. (Mass.) T.), 61 How. Pr. (N. Y.) 446; 228; Atwood v. Cobb, 16 Pick. Foot v. Webb, 59 Barb. (N. Y.) 38; (Mass.) 227, 26 Am. Dec. 657; Port Jervis &c. R. Co. v. New York Bumpus V. Bumpus, 53 Mich. 346, &c. R. Co., 56 Hun. (N. Y.) 647, 19 N. W. 29; Brown v. Brown, 47 10 N. Y. S. 852, 22 N. Y. St. 359, Mich. 378, 11 N. W. 205; Kinyon modified, 132 N. Y. 439, 30 N. E. V. Young, 44 Mich. 339, 6 N. W. 855; Lawrence v. Saratoga Lake R. 835; James v. Muir, 33 Mich. 223; Co., 36 Hun (N. Y.) 467; Greenleaf Wright V. Wright, 31 Mich. 380; v. Blakemen (Sup. Ct. Spec. T.), 25 Blanchard v. Detroit &c. R. Co., 31 Misc. (N. Y.) 564, 56 N. Y. S. 76; Mich. 43, 18 Am. Rep. 142; Mc- Mehl v. Von Der Wulbeke, 2 Lans. Clintock V. Laing, 22 Mich. 212; (N. Y.) 267, revd. 46 N. Y. 539; Munsell v. Loree, 21 Mich. 491; Wil- Whitlock v. Duffield, Hoffm. Ch. (N. son V. Wilson, 6 Mich. 9; McMurtrie Y.) 110; Paget v. Melcher, 42 App. V. Bennette, Harr. (Mich.) 124; Div. (N. Y.) 76, 58 N. Y. S. 913; Ramsdell v. Millerd, Harr. (Mich.) Flaherty v. Gary (N. Y.), 67 N. E„ 373; Olson v. Erickson, 42 Minn. 440, 1082, affg. 62 App. Div. (N. Y.) 116, 44 N. W. 317; Burke v. Ray, 40 Minn. 70 N. Y. S. 951. And see Gouge v. 34, 41 N. W. 240 ; Nippolt V. Kammon, Gouge, 26 App. Div. (N. Y.) 154; 39 Minn. 372, 40 N. W. 266; Fisher 49 N. Y. S. 879; Teague v. V. Kuhn, 54 Miss; 480; Aston V. Rob- Schaub, 133 N. Car. 458, 45 S. inson, 49 Miss. 348; Montgomery v. E. 762. In the above case an Norris, 1 How. (Miss.) 499; Strange injunction was sought. Maud v. v. Crowley, 91 Mo. 287, 2 S. W. 421; Maud, 33 Ohio St. 147; Ferguson v. Berry v. Hartzell, 91 Mo. 132, 3 S. Blackwell, 8 Okla. 489, 58 Pac. 647; W. 582; Charpiot v. Sigerson, 25 Mo. Wagonblast v. Whitney, 12 Ore. 83, 63; Bernhardt v. Walls, 29 Mo. App. 6 Pac. 339; Ballou v. March, 133 Pa. 206; Burks v. Stam, 65 Mo. App. 455; St. 64, 19 Atl. 304; In re Delp's Ap- Belch V. Miller, 32 Mo. App. 387; peal, 109 Pa. St. 277; In re Lord's Foster v. Kimmons, 54 Mo. 488 ; Lap- Appeal, 105 Pa. St. 451 ; Hammer v. ham v. Dreisvoght, 36 Mo. App. 275; McEldowney, 46 Pa. St. 334; McCue Clarke v. Koenig, 36 Nebr. 572, 54 v. Johnson, 25 Pa. St. 306; Charnley N. W. 842; Schroeder v. Gemeinder, v. Hansbury, 13 Pa. St. 16; Wood 10 Nev. 355 ; Bunton v. Smith, 40 N. v. Farmare, 10 Watts (Ta.) 195 ; H. 352; Myers v. Metzger, 63 N. J. Sherman v. Kitsmiller, 1/ Serg. & Eq. 779, 52 Atl. 274; Banks v. R. (Pa.) 45 (promise of one hun- Weaver (N. J.), 48 Atl. 515; Worch dred acres of land without any ref- v. Woodruff, 61 N. J. Eq. 78; Rutan erence to locality or value); Spears V. Crawford, 45 N. J. Eq. 99, 16 v. Long, 32 S. Car. 528, 11 S. E. Atl. 180; Brown v. Brown, 33 N. 332; May v. Cavender, 29 S. Car. J. Eq. 650; Green v. Richards, 23 598, 7 S. E. 489; Izard v. Middleton, N. J. Eq. 32; Nichols v. Williams, 1 Desaus. (S. Car.) 116; Morrison 22 N. J. Eq. 63; Walker v. Hill, 21 v. Searight, 4 Baxt. (Tenn.) 476; 19 — Contracts, Vol. I § 170 CONTRACTS. 29O ance,^^ noi sued upon in an action at law.* The intention of the parties sliould be taken out of the realm of conjecture by full and clear proof. ^ But the courts very reluctantly reject an agreement regularly and fairly made as unintelligible or insen- sible. It will be sustained if the meaning of the parties can be ascertained, either from the express terms of the instrument or Willis V. Matthews, 46 Tex. 478; Coles v. Hulme, 8 B. & C. 568; Van Bracken v. Hambrick, 25 Tex. 408; Slyke v. Broadway Ins. Co., 115 Cal. Taylor v. Ashley, 15 Tex. 50; Reed 644, 47 Pac. 689, 928; Truitt v. V. Lowe, 8 Utah 39, 29 Pac. 740; Fahey, 3 Pen. (Del.) 573, 52 Atl. Griggsby v. Osborn, 82 Va. 371; Lit- 339; Hart v. Georgia R. Co., 101 Ga. terall v. Jackson, 80 Va. 604; Shen- 188, 28 S. E. 637; Chumasero v. Gil- andoah Valley R. Co. v. Lewis, 76 bert, 24 III. 293 (a case of a bond Va. 833; Pierce v. Catron, 23 Gratt. conditioned to pay " • dollars"); (Va.) 588; Broughton v. Coffer, 18 Gilpatrick v. Foster, 12 111. 355 Gratt. (Va.) 184; Pigg v. Corder, (where it was held that a creditor 12 Leigh (Va.) 69; McCully v. Mc- of "50" indorsed on a note must be Lean, 48 W. Va. 625, 37 S. E. 559; rejected as a nullity unless ex- Hissam v. Parrish, 41 W. Va. 686, plained) ; Fairplay School Twp. v. 24 S. E. 600, 56 Am. St. 892; Camp- O'Neal, 127 Ind. 95, 26 N. E. 686 bell V. Fetterman's Heirs, 20 W. Va. (contract between school trustee and 398; Patrick v. Horton, 3 W. Va. teacher to pay her good wages) ; 23 ; Park v. Minneapolis &c. R. Co., Blakistone v. German Bank, 87 Md. 114 Wis. 347, 89 N. W. 532; Stout 302, 39 Atl. 855; Thomson v. Gortner, V. Weaver, 72 Wis. 148, 39 N. W. 73 Md. 474, 21 Atl. 371; Gelston v. 136; Tiernan .V. Gibney, 24 Wis. 190; Sigmund, 27 Md. 334; Myers v. Blanchard v. McDougal, 6 Wis. 167, Forbes, 24 Md. 598; Marble v. Stand- 70 Am. Dec. 458. ard Oil Co., 169 Mass. 553, 48 N. E. "a The subject of specific perform- 783; Dayton v. Stone, 111 Mich. 196, ance of contracts is treated in an- 69 N. W. 515 ; Rue v. Rue, 21 N. J. other part of this work (Ch. 48), L. 369; Buckley v. Wood, 67 N. J. L. but it is proper here to state that 583, 52 Atl. 564; Thomas v. Thomas- a greater degree of certainty is ville Shooting Club, 123 N. Car. 285, required in the terms of an agree- 31 S. E. 654; Reed v. Lowe, 8 Utah ment, which is to be specifically 39, 29 Pac. 740. "If it is so uncer- executed in equity, than is nee- tain and ambiguous that neither a essary in a contract which is to be general nor particular intent can be the basis of an action at law for clearly gathered from it, * * * damages. The action at law is the contract cannot be enforced." founded upon the mere non-perform- Nevins, J., in Rue v. Rue, 21 N. J. ance by the defendant, and the neg- L. 369. The contract must be suffi- ative conclusion can often be estab- ciently definite to ascertain what the lished without determining all the parties meant. Lawrence v. Saratoga terms of the agreement with exact- Lake R. Co., 36 Hun (N. Y.) 467; ness. In order that a contract may Buckmaster v. Thompson, 36 N. Y. be enforced in equit}', however, it 558. Less definiteness is required to has been held that it is only nee- support an action for damages than essary that the subject-matter thereof for a suit for specific performance. in case the uncertainty relates to Stanton v. Singleton, 126 Cal. 657, subject-matter, be ascertainable at 59 Pac. 146, 47 L. R. A. 334; the time the court is called upon to Olympia Bottling Works v. Olympia act. Daily v. Minnick, 117 Iowa 563, Brewing Co. (Ore.), 107 Pac. 969. 91 N W. 913, 60 L. R. A. 840. ''Huntington &c. Development Co. *In re Clarke, L. R. 36 Ch. Div. v. Thornburg, 46 W. Va. 99, 33 S. 348; Figes v. Cutler, 3 Stark. 139; E. 108. 291 CERTAINTY. 171 by fair implication, and to this end words or phrases may often be supplied, transposed or treated as surplusage.* § 171. That is certain which can be made certain. — In other words, the courts will attempt to discover and enforce the intention of the parties, and an uncertain agreement may be so supplemented by subsequent acts, agreements or declarations of the parties as to make it certain and enforcible.^ This attitude of the courts toward contracts has given rise to a rule which is now axiomatic, to the effect that "that is certain which can be made certain,"* or expressed by the Latin phrase, "id certum est quod certum reddi potest."" "Langdon v. Goole, 3 Lev. 21; Coles V. Hulme, 8 B. & C. 568; Targus v. Puget, 2 Ves. Sr. 194; Worthington v. Hylyer, 4 Mass. 196; Rue V. Rue, 21 N. J. L. 369, citing Lord Say and Sele's Case, 10 Mod. 40; Barnard's Admr. v. Russell, 19 Vt. 334; McCall Co. v. Icks, 107 Wis. 232, 83 N. W. 300. "The law leans against the destruction of contracts on the ground of uncertainty and a con- tract will not be declared void on that ground unless after reading it and in- terpreting it in the light_ of the cir- cumstances under which it was made and supplying or rejecting words nec- essary to carry into effect the reason- able intention of the parties, their intention cannot be fairly collected and effectuated." Boykin v. Bank of Mobile, 72 Ala. 262, 47 Am. Rep. 408; Leffler v. Dickerson, 1 Ga. App. 63, 57 S. E. 911; Sumner v. Wil- liams, 8 Mass. 162. It may be per- fectly certain that "North" was writ- ten for "South" in a description of land in a deed, and the court may, by construction, correct such a pal- pable discrepancy. If a contract is definite at the time it is made it can- not be rendered indefinite by the sub- sequent acts of a party thereto. Fraker v. Hyde, 135 App. Div. (N. Y.) 64, 119 N. Y. S. 879. See post, Ch. 35, Interpretation and Construction. ^ If the agreement can be made definite by evidence aliunde, it is bind- ing. Foy v. Dawkins, 138 Ala. 232, 35 So. 41; Alabama &c. R. Co. v. South &c. R. Co., 84 Ala. 573, 30 So. 286, 5 Am. St. 401; Daily v. Minick, 117 Iowa 563, 91 N. W. 913, 60 L. R. A. 840; Wallace v. Ryan, 93 Iowa lis, 61 N. W. 395; Lovejoy V. Lovett, 124 Mass. 270. See also, San Reno Copper Min. Co. v. Moneuse, 133 N. Y. Supp. 509. »Gaytes v. Hibbard, 5 Biss (U. S.) 99. See also, 9 Coke 47a; Wehner v. Bauer, 160 Fed. 240; Grier v. Puterbaugh, 108 111. 602; Norton v. Gale, 95 111. 533, 35 Am. Rep. 173; Bates v. Harris, 144 Ky. 399, 138 S. W. 276, 36 L. R. A. (N. S.) 154; Losecco V. Gregory, , 108 La. 684, 32 So. 985 ; Crooker v. Holmes, 65 Maine 195, 20 Am. Rep. 687; Sturdi- vant V. Hull, 59 Maine 172, 8 Am. Rep. 409; Kirwan v. Roberts, 99 Md. 341, 58 Atl. 32; Cooper v. Bigly, 13 Mich. 463; Stillwell v. Craig, 58 Mo. 24; Woods v. Hart, 50 Nebr. 497, 70 N. W. 53 ; Parker v. Pettit, 43 N. J. L. 512; Wells v. Alexandre, 130 N. Y. 642, 29 N. E. 142, 15 L. R. A. 218n; Thompson v. Stevens, 71 Pa. St. 161; Northern Cent. R. Co. v. Walworth, 193 Pa. St. 207, 44 Atl. 253; Riker v. Sprague Mfg. Co., 14 R. I. 402, 51 Am. Rep. 413. •Koch V. Streuter, 218 111. 546, 75 N. E. 1049, 2 L. R. A. (N. S.) 210; Solomon v. Wilmington Sewerage Co. (N. Car.), 55 S. E. 300, 6 L. R. A. (N. S.) 391; Idalia Realty &c. Co. v. Norman, 232 Mo. 662, 135 S. W. 47, 34 L. R. A. (N. S.) 1069; Broom's Legal Max., 623-626. See also, Gordon v. Whitehouse, 18 C. B. 747; Baldwin v. Boyce, 152 Ind. 46, 51 N. E. 334; Brown v. Bellows, 4 Pick. (Mass.) 179; 1 Elliott Ev., § 8 172 CONTRACTS. 292 § 172. Illustration of the maxim, "id certum est quod cer- tum reddi potest." — The following cases illustrate this prin- ple. The defendant, by an instrument in writing, agreed with the plaintifif, a town, that a certain illegitimate child should not be- come a charge to the town "during such time as under the statute laws of this state the person accused of begetting such a child would be liable for the support of such child, and only to an amount not exceeding the amount to which under said statute laws the person begetting such a child would be liable." This agreement was upheld as sufficiently definite, the time and amount being capable of ascertainment in the mode provided by the stat- ute referred to.^° A contract to convey lands will not be held invalid because of a defective description where the data are suf- ficient to enable a surveyor to locate the property.^^ So a con- tract giving the exclusive right to sell goods "in D, and the ter- ritory tributary thereto," has been held sufficiently certain.^^ § 173. Other illustrative cases. — An agreement to pay an attorney for his services an amount equal to that paid another attorney connected with the same action has been held valid." Upon similar grounds a contract providing that payment for cut- ting timber is to be according to a scale which is to exclude "dead culls" has been held to be unambiguous; and where a lumbering 602. But compare Parsons v. Jack- v. Harris, 144 Ky. 399, 138 S. W. son, 99 U. S. 434, 25 L. ed. 457. 276, 36 L. R. A. (N. S.) 154 (farm '"Town of Hamden v. Merwin, 54 described as my "Muddy Creek Conn. 418, 8 Atl. 670. In Gelston v. farm") ; Ferguson v. Arthur, 128 Sigmund, 27 Md. 334, it was decided Mich. 297, 87 N. W. 259, 8 Det. Leg. that a contract on the part of a N. 658; Woods v. Hart, SO Nebr. lessor "to let the tenant retain the 497, 70 N. W. 53; Boardman v. possession from July 1, 1866, to July Lessees, 6 Pet. (U. S.) 328; Barnard 1, 1867, upon his giving the lessor v. Russell, 19 Vt. 334; Atwater v. the same rent the latter might be Schenck, 9 Wis. 160. "If the land able to obtain from other parties," granted be so inaccurately described was void for uncertainty and could as to render its identity wholly un- not be enforced, citing Bromley v. certain it is admitted that the grant Jefferies, 2 Vern. 415. But see Cun- is void." ningham v. Brown, 44 Wis. 72, dis- ''^ Kaufman v. Farley Mfg. Co., 79. tinguishing Gelston v. Sigmund, 27 Iowa 679, 43 N. W. 612, 16 Am. St- Md. 334. See also, Idalia Realty &c. 462. Co v Norman, 232 Mo. 662, 135 S. " Lungerhausen v. Crittenden, 103 W' 47 34 L. R. A. (N. S.) 1069. Mich. 173, 61 N. W. 270. See Kent "White v Hermann, 51 111. 243. &c. Mfg. Co. v. Ransom, 46 Mich. See also, Fidelity &c. Co. v. Robert- 416, 9 N. W. 454. son, 136 Ala. 379, 34 So. 933; Bates 293 CERTAINTY. § 173 contract provides that payment for cutting the timber is to be made according to the tally of a certain saw-mill where the logs were to be sawed, dead culls being excluded, the fact that the grading of the mill was higher than was customary among other mills is immaterial." Under a contract by which the plaintiff agreed for a price named to furnish defendant "free on board cars" at place of delivery a quantity of coal, it was held incum- ■ bent on the defendant to furnish the cars." But, on the other hand, an agreement to use one's best efforts, through a certain newspaper, to advance the value of lands, is too indefinite to con- stitute a valid consideration for an option to purchase." •■^Brigham v. Martin, 103 Mich. ISO, 61 N. W. 276. " Hocking v. Hamilton. 158 Pa. St. 107, 27 Atl. 836. "The appellee undertook to sell and deliver at the tipple the coal at the des- ignated price, and the appellants covenanted to receive it there and pay for it. If so, they were bound to furnish the cars for it, and the appellee was required to be ready and willing to deliver it there. As he was so prepared, and as the latter neglected and refused to receive it, they became liable in damages for the nonperformance of their contract." In Kunkle v. Mitchell, 56 Pa. St. 100, it is said : "The article of agree- ment between the plaintiflf and de- fendant is dated December 27th, 1862, by which thp defendant Mitch- ell agreed to 'deliver on the cars at Indiana 75,000 feet of lumber at eighty-five cents per hundred feet. This is a controlling clause as to the place of delivery. The cars would be either the cars of the plaintiff or those of the railroad company, and in either case they were to be provided by the plaintifif, and not by the defendant. The cars, therefore, being to be pro- vided by the plaintifif, * * * the duty was imposed upon him to see that he was at least ready with the cars or willing to provide them, and to have notified the defendant of such readiness and willingness." And in Dwight V. Eckert, 117 Pa. St. 490, 12 Atl. 32, it is said: "It is a well- established principle of law that in a contract for the sale and delivery of goods 'free on board vessel' the seller is under no obligation to act until the buyer names the ship to which the delivery is to be made." "Barton v. Spinning, 8 Wash. 458, 36 Pac. 439. See also, United Press V. New York Press Co., 164 N. Y. 406, 58 N. E. 527, 53 L. R. A. 288, and note. An uncertainty or am- biguity in an agreement is usu- ally to be resolved against the party causing such ambiguity or uncertain- ty. Blankenship v. Decker, 34 Mont. 292, 85 Pac. 1035. Where the lan- guage used is capable of being con- strued in two difTerent ways it is to be interpreted in the sense in which the promisor, or the one who executed the agreement, knew. Potter v. On- tario &c. Ins. Co., 5 Hill. (N. Y.) 147. See also, Suttliff v. Seidenberg, 132 Cal. 63, 64 Pac. 131; McClena- than V. Davis, 243 111. 87, 90 N. E. 265, 27 L. R. A. (N. S.) 1017; Bar- low V. Scott, 24 N. Y. 40; Jordon V. Dyer, 34 Vt. 104, 80 Am. Dec. 668, or in the way he had reason to be- lieve, it was understood by the other party. Potter v. Berthelet, 20 Fed. 240; American Loan &c. Co. v. To- ledo &c. R. Co., 47 Fed. 343; Inman Mfg. Co. v. American Cereal Co. (Iowa), 110 N. W. 287, 8 L. R. A. (N. S.) 1140; Thoubboron v. Lewis, 43 Mich. 635, 5 N. W. 1082, 38 Am. Rep. 218; Hofifman v. ^tna Fire Ins. Co., 32 N. Y. 405, 88 Am. Dec. , 337; Tallcot v. Arnold, 61 N. Y. 616; White V. Hoyt, 73 N. Y. 505; Gillet V. Bank of America, 160 N. Y. 549, 55 N. E. 292; Johnson v. Hathorn, 41 N. Y. 476, 2 Abb. Dec. (N. Y.) 465; Sherwood v. Crane, 12 Misc. § 174 CONTRACTS. 294 § 174. Reference to plans and specifications. — Building contracts must be definite and certain;" but their terms need not all be embodied in a single instrument. Plans and specifications may be a part of the contract, and when this is true they must be taken into consideration in determining the rights and obligations of the parties. ^^ But witli such plans and specifications the con- tract must be definite and certain, in order that it may be possible to ascertain to a reasonable degree of certainty the, meaning and intention of the parties." Where the contract or plans annexed (N. Y.) 83, 33 N. Y. S. 17, 66 N. Y. St. 517; Ranson v. Wheelwright, 17 Misc. (N. Y.) 141, 39 N. Y. S. 342; Guccione v. Scott, 21 Misc. (N. Y.) 410, 47 N. Y. S. 475; Kendrick v. Mutual Ben. Life Ins. Co., 124 N. Car. 315, 32 S. E. 728, 70 Am. St. 592; Chamberlain v. Painesville &c. R. Co., 15 Ohio St. 225; Williamson V. McClure, Zl Pa. St. 402. For other statements of the rule, see Wells V. Carpenter, 65 111. 447; San Jacinto Oil Co. v. Ft. Worth Light &c. Co., 41 Tex. Civ. App. 293, 93 S. W. 173; Gunnison v. Bancroft, 11 Vt. 490; Clark v. Lillie, 39 Vt. 405. These rules apply only in those contracts the terms of which are open to construction. Chicago Wharfing &c. Co. V. Street, 54 III. App. 569, affd. 157 111. 60S, 41 N. E. ^ 1108; Gongower v. Equitable Mut. Life &c. Assn. (Iowa), 72 N. W. 416; Peter- son V. Modern Brotherhood, 125 Iowa 562, 101 N. W. 289, 76 L. R. A. 631; Montgomery v. Firemen's Ins. Co., 16 B. Mon. (Ky.) 427. See also, Laidlaw v. Marye, 133 Cal. 170, 65 Pac. 391; Hill v. John P. King Mfg. Co., 79 Ga. 105, 3 S. E. 445; Lull V. Anamosa National Bank, 110 Iowa 537, 81 N. W. 784 ; Cobb v. Mc- Elroy, 79 Iowa 603, 44 N. W. 824; Schroeder v. Nielson, 39 Nebr. 335, 57 N. W. 993; Patterson v. First Nat. Bank, 78 Nebr. 228, 110 N. W. 721 ; American Soda Fountain Co. v. Gerreis Bakery, 14 Okla. 258, 78 Pac. 115. See post, Ch. 35, Interpretation and Construction. "Doyle V. Dessenberg, 74 Mich. 79, 41 N. W. 866; Thomas v. Thomas- ville Shooting Club, 123 N. Car. 285, 31 S. E. 654. " It may be embodied in more than one instrument. Howard v. Pensa- cola &c. R. Co., 24 Fla. 560, 50 So. 356. See also, Francis v. Heine Safety Boiler Co., 109 Fed. 838, 48 C. C. A. 687. For plans and speci- fications as part of contract, see Wil- lamette Steam Mills &c. Co. v. Los Angeles College Co., 94 Cal. 229, 29 Pac. 629; Harvey v. United States, 8 Ct. CI. 501. To the same effect, see O'Connor v. Adams, 6 Ariz. 404, 59 Pac. 105; Worden v. Hammond, il Cal. 61; Charles v. E. F. Hallack Lumber &c. Co., 22 Colo. 283, 43 Pac. 548; Howard v. Pensacola &c. R. Co., 24 Fla. 560, 5 So. 356 ; Suarez v. Duralde, 1 La. 260; Learmonth v. Veeder, 11 Wis. 138. ""Worden v. Hammond, 37 Cal. 61; Willamette Steam Mills Co. v. Los Angeles College Co., 94 Cal. 229, 29 Pac. 629; Donnelly v. Adams, 115 Cal. 129, 46 Pac. 916; United States v. Ellicott (U. S.), 32 Sup. Ct. 334. Where the agreement set out that the plans and specifications are made a part of the contract, but they are not attached to it, and where there is nothing to locate or identify them in any way, the agreement is in- complete. Almini Co. v. King, 92 111. App. 276. If the plans and speci- fications are so drawn as to make it impossible to erect the building to be constructed, there is no contract. Lyle V. Jackson Co., 23 Ark. 63. See also, Turney v. Town of Bridgeport, 55 Conn. 412, 12 Atl. 520; Nave v. McGrane, 19 Idaho 111, 113 Pac. 82 (suit by architect to recover contract price for certain building plans and specifications). As to the liability of a contractor who attempts to erect a building under plans that are im- perfect, and because of such imper- 295 CERTAINTY. § 175 are not sufficiently definite to show just what was in the minds of the parties it is often necessary and proper for the court to ad- mit testimony showing the facts existing at the time of the exe- cution of the contract, the circumstances of the parties and the character of the work to be done.^° The same general rule per- mitting contracts to be aided by plans and specifications referred to is also often applied in the case of contracts for street im- provements and the like.^^ § 175. Agreement to make future contract. — As has been seen where the terms of a contract are clear, unambiguous and explicit a provision therein merely looking to the preparation of a formal instrument will not be treated as superseding that agreement.^^. Unless an agreement to make a future contract is fections the building collapses before completion, see Lonergan v. San An- tonio Loan &c. Co., 101 Tex. 63, 104 S. W. 1061, 130 Am. St. 803. ""Whelan v. McCuUough, 4 App. D. C. 58; St. Anthony Falls &c. Co. V. Eastman, 20 Minn. 277; Doane College V. Lanham, 26 Nebr. 421, 42 N. W. 405. In the above case it ap- peared that the contract provided as follows : "All work done is to conform to plans to be furnished, and to be done under the supervision of the master mason to be appointed by the building committee, and to their entire satisfaction and acceptance." This was the only reference to a plan or plans contained in the contract. The court said: "This language doubtless refers to working plans, or drawings, showing the details of the work, but not necessarily nor or- dinarily giving any information as to the height of the building, or the number of stories of which it should consist; and even these plans arc not spoken of as having been seen by either of the parties, or even as hav- ing been drawn or prepared at the date of said contract." In this case it seemed that the contractor con- templated only erecting a two-story building, while he was compelled to erect a three-story building. He then brought suit to recover for the extra services. See also. Stein v. Mc- Carthy, 120 Wis. 288, 91 N. W. 912. Specifications not signed by the par- ties but agreed upon by them may be introduced in evidence. Maxted v. Seymour, 56 Mich. 129, 22 N. W. 219. Or a plan may be introduced in evidence which is not attached to the contract, but which was ex- hibited to the contractor at the time the agreement was signed and which purported to show how the work should be done. Myer v. Friun (Tex.), 16 S. W. 868. See also, note in 9 L. R. A. (N. S.) 1007. But see Snead & Co. Iron Works v. Mer- chants' Loan &c. Co., 225 111. 442, 80 N. E. 237, 9 L. R. A. (N. S.) 1007; Lennon v. Smith, 23 App. Div. (N. Y.) 293, 48 N. Y. S. 456. The un- certainty must be such as to show there was no meeting of minds be- fore the contract will be declared void for uncertainty. American Surety Co. v. San Antonio Loan &c. Co. (Tex. Civ. App.), 98 S. W. 387. ^See 1 EUiott on Roads & Sts. (3rd ed.), §§ 633, 639. The fact that the government, in a public contract, has power to change details does not render it unenforcible for want of certainty. United States v. McMul- len (U. S.), 32 Sup. Ct. 128. ^'^ See on Intention to Reduce Contract to Writing, ante, § 63. Also, Gibbins v. Northeastern &c. Asylum, 11 Beav. 1, 17 L. J. Ch. (N. S.) 5, 12 Jur. 22 ; Lewis v. Brass, L. R. 3 Q. B. Div. 667, Zl L. J. (N. S.) § 175 CONTRACTS. 296 definite and certain upon the subjects to be embraced therein it is nugatory. ^^ Consequently, the acceptance of a proposition to make a contract, the terms of which are to be subsequently fixed, does not constitute a binding obligation.^* The reason for this rule is that there would be no way by which the court could de- termine what sort of a contract the negotiations would result in; no rule by which the court could ascertain what damages, if any, might follow a refusal to enter into such future contract on the arrival of the time specified. Therefore a contract to enter into a future contract must specify all its material and essential terms, and leave none to be agreed upon as a result of future negotia- tions.^^ Applying this rule it was held that where the agreement providing for the future contract to deliver logs manifestly left the place of delivery to be agreed upon, and required certain payments to be made "within days" after the sale, evi- dently contemplating that the prospective contract should fix the 738; Sanders v. Pottlitzer &c. Fruit Co., 144 N. Y. 209, 29 L. R. A. 431, and note. By such an agreement an obligatory contract is formed which neither party is at liberty to refuse to perform. Pratt v. Hudson River R. Co., 21 N. Y. 30S. For oral con- tract for insurance, see Newark Ma- chine Co. V. Kenton Ins. Co., 50 Ohio St. 549, 35 N. E. 1060, 22 L, R. A. 768, and note. One of the parties cannot refuse to execute the writ- ten agreement after it has been pre- pared, in case all its terms have been agreed upon. Blight v. Ashley, 1 Pet, (U. S.) 15. See also, Drum- mond V. Crane, 159 Mass. 577, 35 N. E. 90, 23 L. R. A. 707, 38 Am. St. 460; Baldwin v. Chouteau Ins. Co., 56 Mo. 151, 17 Am. Rep. 671. See counsel's brief in the case of Vicksburg Waterworks Co. v. J. M. Gufify Petroleum Co. (Miss.), 38 So. 302. '^ St. Louis &c. R. Co. V. Gorman, 79 Kans, 643, 100 Pac. 647; Dorr v. Johnson, 170 Mass. 540, 49 N. E. 919 ; /Sibley v. Felton, 156 Mass. 273, 31 N. E. 10. Parties may bind them- selves by a present contract to enter into another contract in the future. The exf^ution of a lawful future con- tract, wKereof all the terms are fixed, may b-; the subject of a present con- tract. Kaplan v. Whitworth, 116 La. 337, 40 So. 723. It has been held that .the parties may agree to renew a present contract at the expiration of a certain time, upon such reason- able terms as are mutually agreed upon at that time. Slade v. Lexing- ton, 141 Ky. 214, 132 S. W. 404, 32 L. R. A. (N. S.) 201, and note. =^' Winn v. Bull, L._ R. 7 Ch. Div. 29. "The general rule is that an agree- ment to make at a certain time such an agreement as the parties may then agree on is invalid." Slade v. Lexington, 141 Ky. 214, 132 S. W. 404, 32 L, R. A. (N. S.) 201; Wills v. Carpenter, 75 Md. 80. There is no enforcible contract between the par- ties. Connery v. Best, 1 Cab. & El. 291 ; Hussey v. Horne-Paine, 4 App. Cas. 311; Donnison v. Peoples' Cafe Co., 45 L. T. (N, S.) 187; McDon- ald v. Bewick, 51 Mich. 79, 16 N, W. 240; Bourne v. Shapleigh, 9 Mo. App. 64. If it is an agreement for a con- tract and not a contract no ria:ht of action exists. Megrath v. Gilmore, 10 Wash. 339, 39 Pac. 131. See also, Chinnock v. Marchioness of Ely, 4 De G. J. & S. 638; Mathiasen v. Barkin, 62 App. Div. (N. Y.) 614, 70 N. Y. S. 770. " Shepard v. Carpenter, 54 Minn. 153, 55 N. W. 906. 297 CERTAINTY. § 1 76 number of days, these were deemed such important matters as to render the contract wholly void for want of precision.^" So a memorandum, reciting the terms of a contract of employment, which are, however, "subject to the conditions and regulations of a contract which is to be substituted for the memorandum," im- poses no legal obligation." An agreement by the payee of a note with the maker that at its maturity he will double the loan to .the latter and take a new note for double the amount of the first one, and a mortgage on certain lands to secure it, is void for un- certainty in the absence of any stipulation as to what the terms of the new note and mortgage shall be.^^ Nothing must be left open for future negotiations.^" If the price is to be determined,^" the time of delivery^^ or a time and place appointed for "com- pleting" the contract,^^ or any material term of the agreement left unsettled,^^ there is no completed or binding obligation fas- tened on the parties. § 176. Uncertainty as to time. — There is danger that after a review of the cases on this subject one may be oppressed with a sense of hopeless confusion. This feeling will be exaggerated ^° In Shepard V. Carpenter, 54 Minn. W. 109; Shephard v. Carpenter, 54 153, 55 N. W. 906, GilfiUan, C. J., Minn. 153, 55 N. W. 906; Krum v. said: "Where a final contract fails Chamberlain, 57 Nebr. 220, 11 N. W. to express some matter as, for in- 665 ; Shaw v. Woodbury Glass Wks., stance, a time for payment, the law 52 N. J. L. 7; Brown v. New York may imply the intention of the par- Cent. R. Co., 44 N. Y. 79; Schenec- ties; but where a preliminary con- tady Stove Co. v. Holbrook, 101 N. tract leaves certain terms to be agreed Y. 45, 4 N. E. 4 ; Sparks v. Pittsburgh upon for the purpose of a final con- Co., 159 Pa. St. 295, 28 Atl. 152; tract, there can be no implication of Carr v. Duval, 14 Pet. (U. S.) 11, what the parties will agree upon." 10 L. ed. 361 ; Compania Bilbaina v. " Walton V. Mather, 4 Misc. (N. Spanish- American Light &c. Co., 146 Y.) 261, 24 N. Y. S. 307. U. S. 483, 36 L. ed. 1054, 13 Sup. '^Van Schaick v. Van Buren, 70 Ct. 142; Virginia Hot Springs Co. Hun (N. Y.) S7S, 24 N. Y. S. 306. v. Harrison, 93 Va. 569, 25 S. E. See also, Mayer v. McCreey, 119 N. 888. Y. 434, 23 N. E. 1045; Milliraan v. ""Sault Ste. M. Land &c. Co. v. Huntington, 68 Hun (N. Y.) 258, 22 Simons, 41 Fed. 835. See also, Hut- N. Y. S. 997, 52 N. Y. St. 273. ton v. Moore, 26 Ark. 382; Hand v. "» Appleby v. Johnson, L. R. 9 C. Gas Engine Co., 167 N. Y. 142, 60 P. 158; Ridgway v. Wharton, 6 H. N. E. 425. But see Greene v. Lewis, L. Cas. 238, 264, 304; Honeyman v. 85 Ala. 221, 4 So. 740, 7 Am. St. 42, Marryatt, 6 H. L. Cas. 112; Page v. and compare, post, § 181. Norfolk, 70 Law T. (N. S.) 781; "Decker v. Gwinn, 95 Ga. 518, 20 Martin v. Northwestern Fuel Co., 22 S. E. 240. Fed. 596; Monk v. McDaniel, 116 Ga. '=Edmondson v. Fort, 75 N. Car, 108, 42 S. E. 360 ; Callanan v. Chapin, 404. 158 Mass. 113, 32 N. E. 941; Topliff '^ Wilfred v. Myers, 40 Fed. 170. V. McKendree, 88 Mich. 148, 50 N. §176 CONTRACTS. 298 unless some classification is attempted. For present purposes, the following grouping is perhaps most serviceable : ( i ) Con- tracts for the payment of money, no definite time for such pay- ment being specified. (2) Contracts for the performance of cer- tain definite work, labor or acts, no time within which such work, labor or acts is to be done being specified. (3) Contracts of em- ployment or hiring, no mention being made of or limit fixed to their duration. These classes of contracts will be discussed in the order named. 1 Contracts for the payment of money in which no time for payment is fixed are payable on demand or within a reason- able time. Thus, where the promisor agreed to pay a certain sum of money "when I can make it convenient," it was held to be a promise to pay within a reasonable time.^* Where the maker of a promissory note made it "payable when I sell my place where I now live," it was held that the maker was bound to sell his place within a reasonable time, and that if he failed to do this the note was due.^^ Likewise, where a note was re- newed for an "indefinite" time, the agreement was construed to fix the time of payment at its date, or at least within a reasonable time.^" Promises to pay "as soon as collected from accounts" at a certain designated place,^^ "from avails of logs bought of A when there is a sale made,"^* "as soon as I have received the sum mentioned from the government, or as soon as otherwise convenient,"^" have been construed as promises to pay within a reasonable time.''" Where it was agreed that the time of pay- ment for a mortgage may and shall be extended, the court said, "It is not unreasonable to infer the intention to have been that the "'Lewis V. Tipton, 10 Ohio St. 88, ""Ramot v. Schotenfels, IS Iowa 75 Am. Dec. 498. Where a thing is 457, 83 Am. Dec. 425. sold without any definite understand- " Ubsdell v. Cunningham, 22 Mo. ing as to the time of payment the 124. implication is that payment is to be "* Sears v. Wright, 24 Maine 278. made on delivery. Drake v. Scott, ^ Jones v. Eisler, 3 Kans. 134. 136 Ala. 261, 33 So. 873, 96 Am, St. " Sivers v. Sivers, 97 Cal. 518, 25; National Bank of Commerce v. 32 Pac. 571. In the above case the Wisconsin Cent. R. Co., 44 Minn, money was held payable on demand 224, 46 N. W. 342, 20 Am. St. 566. under the California code. Kincaid ^Crooker v. Holmes, 65 Maine 195, v. Higgins, 1 Bibb (Ky.) 396; Page 20 Am. Rep. 687. To same effect, v. Cook, 164 Mass. 116, 41 N. E. see Noland v. Bull, 24 Ore. 479, 33 115; Smith v. Dotterweich, 132 App. Pac. 983. Div. (N. Y.) 489, 116 N. Y. S. 896. 299 CERTAINTY. § 176 duration of the extension should be lil] Ohio St. 431 (year) ; San Antonio & A. P. R. Co. V. Sale (Tex. Civ. App.), 31 S. W. 325 (month) ; In re The Hud- son, Olcott (U. S.) 396, Fed Cas. No. 6831 (month) ; Cronemillar v. Du- luth-Superior Mill Co., 134 Wis. 248, 114 N. W. 432 (month). See also, Fawcett v. Cash, 5 B. & A. 904 (year) ; Foxall v. International Land Credit Co., 16 L. T. (N. S.) 637 (year) ; Lowe v. Walter, 8 Times L. R. 358 (year) ; Rex v. Mitcham, 12 East 351 (week) ; Rex v. Puckle- church, 5 East 382 (week) ; Bucking- ham V. Surrev & H. Canal Co., 46 L. T. (N. S.) 885 (year) ; Rex v. New- ton Toney, 2 T. R. 453 ; Tennessee Coal &c. R. Co. V. Pierce, 81 Fed. 814, 26 C. C. A. 632, 52 U. S. App. 355 (month) ; revd. 173 U. S. 1, 43 L. ed. 591, 19 Sup. Ct. 335. A contract of employment at $60 a month is the contract for an entire month. Moss v. Decatur Land Improvement &c. Co., 93 Ala. 269, 9 So. 188, 30 Am. St. 55. Likewise an agreement whereby one was to receive a certain sum per month and the contract provided "at the end of the first year" an increase of salary was to be granted, was held to be a contract of hiring for the term of one year. Morton v. Colwell, 65 Md. 359, 4 Atl. 408, 57 Am. Rep. 331. If the payment of monthly or weekly wages is the only circum- stances from which the duration of the contract is to be inferred it will be taken to be a hiring for a month or week. Beach v. Mullin, 34 N. J. L. 343. A contract whereby one is to receive his pay quarterly was held to be a contract of hiring for a year, the court saying that "quarterly" is s\-n- onymous with "quarter yearly and means once in a quarter of a year." Kirk V. Hartman, 63 Pa. St. 97; § 176 CONTRACTS. 304 employment whereby the employer agrees to engage another for whatever length of time the latter may desire to serve and which does not bind him for either a definite or indefinite term is not sufficiently certain to entitle the employe to recover on such con- tract."^ However, where the promise of the employer to furnish steady and permanent employment for a definite or indefinite period without demanding from the employe a corresponding promise to remain and work was given in consideration of the employe releasing the employer from liability for injuries re- ceived, the employer has been held bound,''° and an agreement to give permanent employment at stipulated wages if the em- ploye would give up his business and enter the service of the other party in the same occupation has been held not too indefinite to be enforced when construed as a contract of employment so long as the employer might be engaged in the business and had such work which the employe could and would do."^ When it is stated in an agreement that the employment is to commence at not later than a certain named day but may begin at an earlier Emmens v. Elderton, 4 H. L. Cas. 624; Rex v. St. Andrew, 8 B. & C. 664 ; Liddell v. Chidester, 84 Ala. 508, 4 So. 426, 5 Am. St. 387; Rosenber- ger V. Pacific Coast R. Co., Ill Cal. 313, 43 Pac. 963 ; Baldwin v. Western Union Tel Co., 93 Ga. 692, 21 S. E. 212, 44 Am. St. 194; M. Herainway &c. Silk Co. V. Porter, 94 111. App. 609; Smith v. Theobald, 86 Ky. 141, 5 S. W. 394; Maynard v. Royal Wor- cester &c. Co., 200 Mass. 1, 85 N. E. 877; Graves v. Lyon Bros. Co., 110 Mich, 670, 68 N. W. 985. See also, Mason v. New York Produce Ex- change Co., 127 App. Div. (N. Y.) 282, 111 N. Y. S. 163; Hotchkiss v. Godkin, 63 App. Div. (N. Y.) 468, 71 N. Y. S. 629; Seago v. White, 45 Tex. Civ. App. 539, 100 S. W. 1015; Kel- logg V. Citizens Ins. Co., 94 Wis. 554, 69 N. W. 362. " St. Louis &c. R. Co. v. Matthews, 64 Ark. 398, 42 S. W. 902, 39 L. R. A. 467; Lord v. Goldberg, 81 Cal. 596, 22 Pac. 1126, 15 Am. St. 82. A contract of employment which is to continue until mutually agreed void is unenforcible for uncertainty as to the time of employment. Faulkner V. Des Moines Drug Co. (Iowa), 90 N. W. 585; Louisville &c. R. Co. v. Offutt, 99 Ky. 427, 36 S. W. 181, 59 Am. St. 467; Perry v. Wheeler, 12 Bush (Ky.) 541. A theatrical mana- ger's engagement which was to "con- tinue as long as the same may mutu- ally agree upon" is too indefinite to be enforced. Mcintosh v. Miner, 37 App. Div. (N. Y.) 483, 55 N. Y. S. 1074; East Line &c. R. Co. v. Scott, 72 Tex. 70, 10 S. W. 99, 13 Am. St. 758. See also, Bolles v. Sachs, 37 Minn. 315, 33 N. W._ 862. Contra, Newhall v. Journal Printing Co., 105 Minn. 44, 117 N. W. 228, 20 L. R. A. (N. S.) 899. "' Pennsylvania Co. v. Dolan, 6 Ind. App. 109, 32 N. E. 802, 51 Am, St. 189 ; Carter White Lead Co. v. Kinlin, 47 Nebr. 409, 66 N. W. 536 ; Rhoades V. Chesapeake &c. R. Co., 49 W, Va. 494, 39 S. E. 209, 55 L. R. A. 170, 87 Am. St. 826. See also ch. 9. See, however. Smith v. Crum Lynne &c. Co,, 208 Pa. 462, 57 Atl. 953, " Carnig v. Carr, 167 Mass. 544, 46 N. E. 117, 35 L. R. A. S12n, and note, 57 Am. St. 48a 305 CERTAINTY. 177 day, the time within which the agreement is to go into effect is stated with sufficient definiteness." But a writing which re- quested the plaintiff to "dehver 60 days' use horse, cart and driver at $3.50 per day" without specifying at what time the 60 days' period should begin or whether it should run consecutively has been held insufficient to constitute a contract."' A contract with an actress for the season to commence May 12, 1902, was held not to be unenforcible, however, for indefiniteness as to time where there was a provision as to performance during Christmas week, from which it could be concluded that the en- gagement was not for the summer season only,*" and it has also been held that there is no fatal uncertainty in a contract to de- liver ice for sale at retail "during the coming season.'"" § 177. Uncertainty as to place. — Contracts which are to be operative and executed only in a certain place or a locality must designate that place or locality with reasonable certainty and be construed according to the intention of the parties as gathered from the particular circumstances.'^ It has been held that a "Troy Fertilizer Co. v. Logan, 96 Ala. 619, 12 So. 712. ''Durkin v. City of New York, 49 Misc. (N. Y.) 114, 96 N. Y. S. 1059. '"Shubert v. Angeles, 80 App. Div. (N. Y.) 625, 80 N. Y. S. 146. "Booske V. Gulf Ice Co., 24 Fla. 550, 5 So. 247. "Kaufman v. Farley Mfg. Co., 78 Iowa 679, 43 N. W. 612, 16 Am. St. 462. The court argued the case as follows : "While perhaps it would be very difficult, if not impossible, to establish definite lines as bound- ing the territory intended, the reg- ulations of trade and the experi- ence of tradesmen would enable the court to so find the fact as to meet the intent of all parties, and enforce the contract with reasonable certainty. If A should employ B as a traveling salesman in Dubuque and the territory tributary thereto, we do not think it would be held that either could avoid the contract merely be- cause of indefiniteness as to the ter- ritory. The law assumes that the parties contracted understandingly upon the question, and the court will not dismiss them without inquiry as 20 — Contracts, Vol. I to the fact, where its ascertainment is a matter of reasonable certainty. The case should not be confounded with the rule as to contracts being disregarded because of indefiniteness arising from the terms or language used in the contract, where the intent of the parties cannot be understood." Cole V. Edwards, 93 Iowa 477, 61 N. W. 940. The above case was an ac- tion for an injunction brought by one physician to restrain another from practicing medicine in the town of W or vicinity. The contract read, "Received of C $262 for my share of the office fixtures, and proceeds of practice for month of March, and good will of business in Town of W, and agree not to practice therein." This contract was held sufficiently definite as to place. See, however, the case of Hauser v. Harding, 126 N. Car. 295, 35 S. E. 586. Where the agreement provided that the defend- ant was to turn over and deliver to the plaintiff his location, good will and practice in the territory sur- rounding Y, the court held that the language of that part of the contract which undertook to restrain the de- § 17^ CONTRACTS. 306 contract by a railroad company to establish its depot "at" a specified town is complied with by locating at a convenient dis- tance from the business portion of the town, and the location of such depot would be controlled more by the number and char- acter of buildings composing the town than by the corporate limits as defined in its charter." And where the parties agree to erect a store building on a described tract of land at some place thereafter to be agreed upon, the site, however, to be not more than 40 rods from the right of way of a railroad running through the land, the contract was held sufficiently certain to sustain an action for damages when one of the parties refused to negotiate or agree with respect to a suitable location.'' § 178. Uncertainty as to subject-matter. — It is essential to the validity of an agreement either verbal or written, that its subject-matter be expressed by the parties in such terms that it may be ascertained with a reasonable degree of certainty.''* Thus an agreement which provides for the payment of a contingent commission but which is silent as to the basis upon which the contingency depends and the sum or sums upon which it is cal- culated, fails to express any meaning and cannot be "holpen by fendant from practicing medicine the particular county where the cen- outside the town of Y was not suffi- tral point was located, the bounda- ciently definite to mark and define ries being capable of exact ascertain- any certain territory and was so un- ment. Franz v. Bieler, 126 Cal. 176, certain as to be incapable of being 56 Pac. 249. See also, Peck-William- marked out or being identified. The son &c. Co. v. Miller & Harris (Ky), contract was held sufficiently definite 118 S. W. 376. Where a contract giv- as to the town of Y, however, and ing plaintiffs an exclusive agency in that the defendant was prohibited B and vicinity, was upheld the court from practicing medicine in such also holding that where one was town. And where the only means by given an exclusive agency he should which the place where the contract be given a reasonable time in which was to be operative was the word to prove his capacity. "Roxboro" written on the back of the " Frey v. Fort Worth R. Co., 6 contract it did not sufficiently de- Tex. Civ. App. 29, 24 S. W. 9S0. See scribe the territory, and meant noth- also, Williams v. Fort Worth &c. R. ing more than that the contract had Co., 82 Tex. 553. been signed at that place. Teague v. " Iowa-Minnesota Land Co. v. Con- Schaub, 133 N. Car. 458, 45 S. E. 762. ner (Iowa), 112 N. W. 820. ■' An agreement where one con- '* Sutlitf v. Seidenberg, 132 Cal. 63, tracted not to engage in the wine 64 Pac. 131; Van Slyke v. Broadway and liquor business within a radius Ins. Co., 115 Cal. 644, 47 Pac. 689; of 10 miles in either direction from Pope & Fleming v. Graniteville Mfg. a designated place, has been held Co., 1 Ga. App. 176, 57 S. E. 949; sufficiently definite, especially as to Price v. Stipek, 39 Mont. 426, 104 that part which would be located in Pac. 195. 307 CERTAINTY. 178 averment." So an agreement by one party to erect a first-class hotel and to maintain the same in a first-class manner in con- sideration of a railway giving it the patronage of its road, is too vague and indefinite to sustain an action for its breach.'^ And whevQ the words used were "The only thing I ask you is that, when I ask you from time to time to give me something on ac- count, to keep up my pay roll, you will do it" to which the ap- pellant replied that he would help him, the agreement was cor- rectly held too uncertain to confer any rights whatever, enforcible ■either at law or equity.''* An order for three hundred and sixty dollars' worth of jewelry to be selected from articles named in a price list contained in the order which in no way designated either the quantity, quality or price of any of the articles ordered has been held void for uncertainty.''^ But the fact that the refer- ence is made to matters incidental or immaterial to the agreement does not necessarily render the contract unenforcible.''* ■"Hart V. Georgia R. Co., 101 Ga. 188, 28 S. E. 637. See also, Arundel Realty Co. v. Maryland Electric Rys. Co. (Md.), 81 Atl. 787, in which a contract by the railway company to give a special rate between Baltimore and a new addition to the city, held too indefinite to sustain an action for breach thereof. '° Blakistone v. German Bank of Baltimore (Md.), 39 Atl. 855. Or the words "You shall have the option to come into the mill and take part in its management on the same terms as ourselves" does not guarantee the right to any particular office for any length of time or that_ the party to whom such statement is made shall have the same salary as the promisors and he cannot maintain an action to compel them to restore him to the oifice of secretary and have the agree- ment specifically enforced. Hampton v. Buchanan, 51 Wash. 155, 98 Pac. 374. "Price V. Wiesner (Kans.), Ill Pac. 439, 31 L. R. A. (N. S.) 927. ™Howe V. Howe &c. Co., 154 Fed. 820; Kemp v. Davis Bros. Lumber Co,, 122 La. 1046, 48 So. 451. , The mere fact that an agreement fads to specify a particular kind of machin- ery to be bought to carry on a stave manufacturing establishment does not render the contract indefinite. In- definiteness in details of this charac- ter does not make the entire contract void. Alderton v. Williams, 139 Mich. 296, 102 N. W. 753. A contract by which the vendee agreed to erect "a good steam saw mill" is sufficiently definite to entitle him to maintain an action in damages, the words "good mill" having a reasonably definite meaning. Fraley v. Bentley, 1 Dak. 25, 46 N. W. 506. Where the defend- ant agreed to pay half the cost if the plaintiff would erect a good bridge across a certain river, he was held liable, plaintiff's city council having advertised for bids, let the contract and constructed the bridge, the de- fendant having knowledge of these facts and acquiescing therein. Long V. Battle Creek, 39 Mich. 323, 33 Am. Rep. 384. A contract to erect a "neat and tasteful" station is not invalid for indefiniteness. Lawrence v. Sara- toga Lake R. Co., 42 Hun (N. Y.) 655, 3 N. Y. St. 743. A contract whereby a railroad agrees to carry, free of charge, the personal freight of the plaintiffs, is not too indefinite to be enforced. By personal freight is meant freight owned by them in- dividuallv. Hurley v. Big Sandy &c. R. Co. (Ky), 125 S. W. 302. § 179 CONTRACTS. 308 § 179. Uncertainty as to description. — ^The description of the subject-matter of an agreement may be indefinite and yet if it is capable of being identified and rendered definite and certain by evidence aliunde, the contract may even be specifically en- forced.'" And where the contract contains one description of the property sold sufficiently definite to enable it to be identified and another description which is erroneous and false, the latter may be rejected as surplusage.*" It has also been held that a de- scription of land to be conveyed as the "Ideal Fruit Farm" lo- cated a certain distance in a given direction from a specified town and referred to as the property of the vendor, was sufficiently definite to be specifically enforced. ^^ But if it is impossible to locate or determine what property is intended to be conveyed, the agreement is invalid for uncertainty.*^ Thus, a contract for the sale or transfer of realty which fails to identify in any way the land to be conveyed cannot be specifically enforced.*^ ™Koch V. Streuter, 218 111. 546, 75 N. E. 1049, 2 L. R. A. (N. S.) 210; Woods V. Hart, 50 Nebr. 497, 70 N. W. 53. See also, Davis v. Seybold, 195 Fed. 402 (prior deeds looked to to secure a true description) ; Short- ridge V. Allen, 2 Tex. Civ. App. 193, 21 S. W. 419. Where a building con- tract provides that the structure shall be located on the corner of tvifo streets and names them, the de- scription of the location is sufficiently definite to support an action on the agreement. Grier v. Puterbaugh, 108 111. 602. An agreement "to take 1,000 sets Dickens sheets, same as last," is sufficiently definite, the phrase "same as last" being held to indicate the kind of sheets. Routledge v. Worth- ington Co., 119 N. Y. 592, 23 N. E. 1111. '"Woods V. Hart, SO Nebr. 497, 70 N. W. 53. =^Koch V. Streuter, 218 111, 546, 75 N.E. 1049,2L.R.A. (N. S.)210. The description in a deed must be suffi- ciently accurate to enable a surveyor to locate it. Marks v. Ligonier Bor- ough (Pa.), 82 Atl. 477. See also, McDougald v. Southern Pa. R. Co. (Colo.), 120 Pac. 766; Lambert v. Murray (Colo.), 120 Pac. 415; Franz V. Vincent, 152 Iowa 680, 133 N. W. 121; Whitwell v. Spiker, 238 Mo. 629, 142 S. W. 248; Noland v. Weems (Tex. Civ. App.), 141 S. W. 1031; Hurley v. Charles, 112 Va. 706, 72 S. E. 689. *^Red Star Coal Co. v. Graves (Ala.), 56 So. 596 (contract held void because of uncertainty in the descrip- tion of the land from which appellee contracted to extract coal) ; Leslie v. Smith, 32 Mich. 64; Beard v. Taylor, 157 N. Car. 440, 73 S. E. 213; Sher- man v. Kitsmiller, 17 Serg. & R. (Pa.) 45. A description of property as "goods, wares and merchandise" has been held insufficient. Pennsyl- vania &c. Nav. Co. V. Dandridge, 8 Gill. & J. (Md.) 248. An agreement which provides that "undamaged goods be taken at cost price and dam- aged goods at price agreed upon" is too indefinite to constitute an enforci- ble contract, where no provision is made as to who should determine what goods were damaged or fix their prices. Dayton v. Stone, 111 Mich. 196, 69 N. W. 515. See also, Freed v. Mills, 120 Ind. 27, 22 N. E. 86. The parties by their actions and construc- tion of the contract may render the description definite. Rhea v. Meyers' Estate, 111 Mich. 140, 69 N. W. 239. " A contract for the conveyance of real estate for a right of way, which read, "said tract, after it intersects 309 CERTAINTY. § i8o § 180. Uncertainty as to amount. — Mere indefiniteness as to the exact amount of material or goods which may be deHvered under a contract is not necessarily a fatal uncertainty.** In case the agreement is to furnish goods, material or other commodity sufficient for the needs of a specified undertaking, the contract is not invalid for uncertainty. Thus, an agreement to furnish enough coal to supply three steamers for a year is a definite and binding contract on both parties.** Agreements to furnish all the iron a company may need in its business for the ensuing year/" to furnish a hotel proprietor with all the ice he may require for the use of the hotel,*^ to supply a company with all the oil their the west line of the land of B in sec- tion 3 T. 2, N. R. 8 W. to run in a southerly or southeasterly direction, following the ravine along the south- easterly over the west half of the quarter to where it intersects the north line of section 10," is too in- definite. Bauer v. Lumaghi Coal Co., 209 111. 316, 70 N. E. 634. And where the land to be conveyed was described as block so and so in section 7, etc., it was held that there was no such governmental subdivision of the sec- tion as a "block" and that the agree- ment was too indefinite. Glos v. Wilson, 198 111. 44, 64 N. E. 734. Like- wise an agreement to deed four lots in either section 8 or 9 cannot be en- forced. Rampke v. Buehler, 203 111. 384, 67 N. E. 796. A contract where- by P agreed to convey 160 acres of land in any one of the following counties, viz., W. D. S. C. R. or T., cannot be enforced because there is no description of the land to be con- veyed and therefore no contract of conveyance. Newman v. Perrill, 73 Ind. 153. Contracts containing no description or reference identifying the land cannot be specifically en- forced. Hanley v. Blackford, 1 Dana (Ky.) 1, 25 Am. Dec. 114. And where a contract calls for the conveyance of a 100 acres "of the west end" of the land and did not specify whether it was to be taken from land which the grantor already owned or which he was to acquire, it is unenforcible be- cause of the indefiniteness of the de- scription. Knight V. Alexander, 42 Ore. 521, 71 Pac. 657. An agreement which merely states the size of the lots without locating them is too in- definite to be enforced. Agnew v. Southern Ave. Land Co., 204 Pa. 192, S3 Atl. 752. But, as elsewhere shown, that is certain which can be made cer- tain, and it is usually sufficient if proper means of identification are furnished or the description is such that a surveyor can locate the prop- erty. " Mclntyre Lumber &c. Co. v. Jack- son Lumber Co., 165 Ala. 268, 51 So. 767, 138 Am. St. 66; McCall Co. v. Icks, 107 Wis. 232, 83 N. W. 300. An agreement whereby one contracts to sell all the straw he has to spare, not exceeding three tons, is not uncertain since the amount to be sold can be ascertained by extrinsic evidence. Parker v. Pettit, 43 N. J. L. 512. ""Wells v. Alexandre, 130 N. Y. 642, 29 N. E. 142, IS L. R. A. 218n. To the same effect, Minnesota Lum- ber Co. v. Whitebreast Coal Co., 160 111. 85, 43 N. E. 774. But of course, there are cases in which the amount must be designated, and even in the cases cited it was designated in a gen- eral sense. So, in sales of goods, the offer may not specify the amount to be ordered and yet acceptance by the purchaser who does state the amount may conclude the contract where such is the intention, and such, in many in- stances, is the usual course of busi- ness. Dambmann v. Lorentz, 70 Md. 380, 17 Atl. 389. " National Furnace Co. v. Keystone Mfg. Co., 110 111. 427. "Smith V. Morse, 20 La. Ann. 220. A contract by which the sellers agreed to furnish and the purchasers i8o CONTRACTS. 310 plants may require/' or to purchase all the cross-ties of a desig- nated kind made by a manufacturer of lumber, at a given price, until the vendee orders the manufacturer to make no more,*° or to support the plaintiff,'" have all been declared enforcible since the amounts necessary to be furnished could be ascertained v^rith reasonable certainty."^ A contract to deliver a certain number of carloads of wood has been held not void for uncertainty be- cause a carload varies from thirty-five thousand to sixty thousand feet. The vendee has a right to insist upon as much, at least, as the specified number of loads of the smallest capacity."^ However, where the amount to be furnished is not governed by the needs of a particular business or undertaking and the determining factor is altogether uncertain, as where the purchaser is not bound to take any of the thing bargained for or is free to de- mand, in many instances, an unlimited amount should he desire it, the agreement is too indefinite to be upheld."' agreed to buy all the ice necessary to carry on their business in a certain locality for a period of five years, is not void for want of mutuality, as the quantity to be taken is measured by the necessities of the business, which is presupposed to continue for the time agreed. Hickey v. O'Brien, 123 Mich. 611, 82 N. W. 241, 49 L. R. A. 594, 81 Am. St. 227. See also. East V. Cayuga Ice Line, 66 Hun 636, 21 N. Y. S. 887. ^Vicksburg Water Co. v. J. M. Guffy Petroleum Co., 86 Miss. 60, 38 So. 302. " Mclntyre Lumber &c. Co. v. Jack- son Lumber Co., 165 Ala. 268, 51 So. 767, 138 Am. St. 66. " Henderson v. Spratlen, 44 Colo. 278, 98 Pac. 14. See also. In re Comp- ton's Estate, 30 Pa. Super. Ct. 605 (contract by son to pay his share of expenses of support and maintenance of his father). " To same effect. Eastern R. Co. of Minn. V. Tuteur, 127 Wis. 382, 105 N. W. 1067; Excelsior Wrapper Co. V. Messinger, 116 Wis. 549, 93 N. W. 459. See, however, Drake v. Vorse, 52 Iowa 417, 3 N. W. 465 ; Bailey v. Austrian, 19 Gil. (Minn.) 465, 19 Minn. 535 ; Consumers' Ice Co. v. E. Webster, Son & Co., 79 App. Div. (N. Y.) 350, 79 N. Y. S. 385. "" Indianapolis Cabinet Co. v. Herr- man, 7 Ind. App. 462, 34 N. E. 579, where the court said that "so far as the contract is uncertain the courts cannot enforce it, but within the limits that the contract is certain, the courts will enforce it." In Schreiber v. Butler, 84 Ind. 576, it was held that a contract for the delivery of a cer- tain number of carloads of ice was not void for uncertainty and that the quantity could be made certain by averment and proof. The suit was based upon the refusal of the defend- ant, after delivering ten carloads, to deliver the remainder of the specified number of thirty. See also, O'Ferrall V. Van Camp, 124 Ind. 336, 24 N. E. 134. "'Keller v. Ybarru, 3 Cal. 147; Hazelhurst Lumber Co. v. Merchan- tile Lumber Co., 166 Fed. 191 ; Drake V. Vorse, 52 Iowa 417, 3 N. W. 465 ; Campbell v. Lambert, 36 La. Ann. 35, 51 Am. Rep. 1; Jackson v. Alpha Portland Cement Co., 122 App. Div. (N. Y.) 345, 106 N. Y. S. 1052; Houston &c. R. Co. v. Mitchell. 38 Tex. 85. See, however, McCall v. Icks, 107 Wis. 232, 83 N. W. 300. An agreement to "divide" the profits derived from a certain trade has been upheld as sufficiently definite since the word "divide" meant to 3" CERTAINTY. I»I § 181. Uncertainty as to price. — As a general rule, price is an essential ingredient of every executory contract for the sale or transfer of any and all property rights or the furnishing or rendering of services; consequently if there is a total absence of any agreement concerning the price to be paid for property or rights therein or for services to be rendered, the agreement will not be enforcible.** However, when a contract has been exe- cuted on one side the other party will not be permitted to receive and retain the benefit without paying unless such action is com- pelled by some binding rule of law. Thus where a defendant promised the plaintiffs that, if they would withdraw his appeal from the probate of a will and let the will be allowed he [the de- fendant] would "make it right * * * with a certain sum" and sever in two equal parts. Graves v. White, 43 Colo. 131, 95 Pac. 347, 127 Am. St. 106. But a promise to divide the profits of a business on a "liberal basis" has been declared too indefinite to be enforced since it would be impossible to determine what the parties would consider a liberal basis. Butler v. Kemmerer, 218 Pa. 242, 67 Atl. 332. "Taylor v. Brewer, 1 Mau. & Sel. 290; Patrick v. Colorado Smelting Co., 20 Colo. 268, 38 Pac. 236; Flagg v. Mann, 2 Sumn. (U. S.) 486, Fed. Cas. No. 4847 ; Fairplay School Tp. v. O'Neal, 127 Ind. 95, 26 N. E. 686; James v. Muir, 33 Mich. 223 ; Shaw v. Woodbury Glass Works, 52 N. J. L. 7, 18 Atl. 696; Thomas v. Thomasville Shooting Club, 123 N. Car. 285, 31 S. E. 654; Anders v. Ellis, 87 N. Car. 207; Bigley v. Risher, 63 Pa. St. 152; Smith v. Ankrim, 13 Serg. & R. (Pa.) 39; Lombard Investment Co. v. Carter, 7 Wash. 4, 34 Pac. 209, 38 Am. St. 681. Where a stock of merchandise was sold, the undam- aged goods to be taken at cost price, and the damaged goods at price agreed upon, no provision being made as to who was to determine what goods were damaged and fix a price, the contract was held too indefinite to constitute a sale. Dajrton v. Stone, 111 Mich. 196, 69 N. W. SIS. See also. Prince v. Thomas, 15 Ark. 378; Gulf &c. R. Co. V. Dawson (Tex. Civ. App.), 24 S. W. 566. If the reference to the price was so vague and indefi- nite as to be unintelligible, the con- tract cannot be enforced. Adams v. Adams, 26 Ala. 272 ; Bumpus v. Bumpus, 53 Mich. 346, 19 N. W. 29. The price must be definitely fixed or the agreement contain provisions from which it can be ascertained. Borland v. Nevada Bank, 99 Cal. 89, 33 Pac. 737, 37 Am. St. 32. Thus an order for 1,000 cases of lye to be furnished as heretofore sufficiently designates the price. Walsh v. Myers, 92 Wis. 397, 66 N. W. 250. An agree- ment to pay $50 or $60 to another if he will find a purchaser for certain property and a purchaser is found by such party, is not so uncertain as to price as to defeat a recovery. And if the promisee elects to take the less valuable of two alternatives the promisor has no cause for complaint. Cramer v. Ewing (Okla.), 61 Pac. 1064. A promise in the alternative, as a general rule, gives the promisor the right to elect which alternative he will choose. Foster v. Goldschmidt, 21 Fed. 70; Galloway v. Legan, 4 Mart. (La.) (N. S.) 167; Barker v. Jones, 8 N. H. 413; Smith v. San- born, 11 Johns. (N. Y.) 59; Mayer V. Dvvinell, 29 Vt. (3 Williams), 298. But if he fails or refuses to elect within the time given the right of election passes to the opposite party. Phillips v. Cornelius (Miss.), 28 So. 871 ; Patchin v. Swift, 21 Vt. 292. 1«I CONTRACTS. 312 "give a certain sum which would be satisfactory" the contract was upheld, the court saying : "The only element left undetermined in this contract is that of price. But this is not infrequently found to be indefinite in contracts of sale and for work and labor. * * * It is enough if there is a reasonable value, which can be ascertained by the practical methods of trial.""' But there is no real or fatal uncertainty as to price if it is dependent on the market value at a certain date,"" or upon the award of a referee."^ A contract whereby one was to devote his time and skill to pro- "' Silver V. Graves, 210 Mass 26, 95 N. E. 948. If the services have been rendered without any definite under- standing as to the price to be paid, the quantum meruit or value of the services may be recovered. Hoadly v. McLaine, 10 Bing. 482, 4 Moore & S. 340; Levitt v. Miller, 64 Mo. App. 147; Albemarle Lumber Co. v. Wil- cox, 105 N. Car. 334, 10 S. E. 871; Fenton v. Braden &c. Co.. 2 Cranch (U. S.) 550, Fed. Cas. No. 4730. A contract whereby the defendant agrees to pay his proportion of the expense sustained by the plaintiff in pumping the water from the proper- ties of both parties has been held suf- ficiently certain, the court being able to determine what would be a just and fair proportion. Fisk Min. & Mill. Co. V. Reed, 32 Colo. 506, ,77 Pac. 240. A contract for the sale of stock is not indefinite where the price to be paid is fixed, the purchaser, however, having the right to retain sufficent of the purchase-money to assure him that the company is free from debt, since the amount of the indebtedness can be ascertained with certainty. Northern Central R. Co. V. Walworth, 193 Pa. St. 207, 44 Atl. 253, 74 Am. St. 683. It has been held that where an attorney was to receive a reasonable fee for his services, be could only recover nominal damages where he did not actually defend the suit and no special damage was shown. Wilson v. Barnes, 13 B. Mon. (Ky.) 330. ""Acebal v. Levy, 10 Bing. 376, 4 Moore & S. 217 ; Lent v. Plodgman, 15 Barb. (N. Y.) 274. See also, James V. Muir, 33 ]\'Iich. 223. " Brown v. Bellows, 4 Pick. fMass.) 179. One party may give another the refusal of certain property. Brom- ley V. Jeffries, 2 Vern. 415 ; Cothran V. Witham, 123 Ga. 190, 51 S. E. 285; Hayes v. O'Brien, 149 111. 403, Zl N. E. 11, 23 L. R. A. 555 ; Fogg v. Price, 145 Mass. 513, 14 N. E. 741. There is no complete contract where the parties agree to fix a price at some subsequent time. Milnes v. Gery, 14 Ves. Jr. 400; Watts v. Weston, 62 Fed. 136, 10 C. C. A. 302; Wittkowsky V. Wasson, 71 N. Car. 451. Agree- ments to deliver ice for the price which will afford the profit not to ex- ceed $100 per ton (Buckmaster v. Consumers' Ice Co., 5 Daly (N. Y.) 313; compare with: Noble v. Joseph Burnett Co., 208 Mass. 75, 94 N. E. 289) . _ "If the horse was lucky to the plaintiff, he would give iS more, or the buying of another horse" (Buth- ing V. Lynn, 2 B. & Ad. 232) ; or to "pay more if he could afford it" (Clark V. Pearson, 53 111. App. 310) ; or to return a fair proportion of the premiums should the insured wish to cancel the policy. Hayward v. Knick- erbocker Life Ins. Co., 12 Daly (N. Y.) 42, have been held too vague and uncertain to be enforced. See also, Foster v. Lumbermen's Min. Co., 68 Mich, 188, 36 N. W. 171 ; De- yane v. Fennell, 24 N. Car. 36. But if it is agreed that more is to be paid upon the happening of a certain con- tingency, the seller is entitled to re- cover the amount agreed upon the happening of the contingency. Mil- ler V. Kendig, 55 Iowa 174, 7 N. W. 500. An agreement to pay the teacher the same salary for his services as was established at the date of the contract for like services by the board of directors of the school district has been held to fix the compensation 3^3 CERTAINTY. § 1 82 duce formulas of the kind therein specified for which he was to receive "a fair and equitable share of the net profits" has been held sufficiently definite to uphold an action for an accounting and division of accrued profits.'* § 182. Uncertainty as to what is to be done. — The forego- ing sections of this chapter demonstrate that if the contract is so uncertain as to render it impossible to ascertain the intention of the parties or what was to be done by them, it cannot form the basis for an action either in law or equity. Where there is so great an uncertainty that it cannot be known what is contracted for, the contract is necessarily void on this account.*' So, to give another illustration, where a building or working contract, insufficient in itself, refers to plans and specifications and no such plans nor specifications are in existence or none can be identified, so that it cannot be determined what is to be done, the uncertainty is fatal.^ §183. Miscellaneous instances of uncertainty. — ^Two stockholders in a corporation entered into an agreement whereby one contracted "to provide, as a loan to said (corporation), what- ever additional capital is needed to provide a working fund." Suit was brought for damages on failure of the promisor to advance the promised funds. The court held the agreement too uncertain and vague to be enforced in a court of law by an action to recover damages for defendant's breach.^ Where one part of a contract is in the form of an unconditional obligation, and another part, which is evidently designed as a qualification or limitation, is ab- with sufficient certainty. Caldwell v. Hart v. Georgia &c. R. Co., 101 Ga. School Dist. No. 7 of Lake County, 188, 28 S. E. 637. 55 Fed. 372; Lungerhausen v. Crit- 'Donnelly v. Adams, 115 Cal. 129, tenden, 103 Mich. 173, 61 N. W. 270. 46 Pac. 916 ; Worden v. Hammond, 21 See also, Troy Laundry &c. Co. v. Cal. 64; Almini Co. v. King, 92 111. Dolph, 138 U. S. 617, 11 Sup. Ct. App. 276. See also. Long v. Battle 279. Creek, 39 Mich. iZi, 33 Am. Rep. °' Noble V. Joseph Burnett Co., 208 384; Doyle v. Desenberg, 74 Mich. Mass. 75, 94 N. E. 289. 79, 41 N. W. 866. A contract may "Rhyne v. Rhyne, 151 N. Car. 400, also be so uncertain from-ambiguitj 66 S. E. 348. If construing the un- that it cannot be enforced or the true derstanding of the parties as a whole, intention discovered even with the aid it is impossible to determine with rea- of extrinsic evidence that may be sonable certainty what was the con- available and permissible, tract between them and the obliga- ^ Jones v. Vance Shoe Co., 115 Fed. tions of each, there is no contract. 707, 53 C. C. A. 289. §183 CONTRACTS. 3I4 solutely unintelligible, the whole agreement is ineffective for rad- ical uncertainty/ An agreement which provided that it might be cancelled by either party for "good cause" has been held revocable for any cause assigned in good faith, as the phrase was so uncer- tain as to be incapable of being reduced to lawful certainty by ju- dicial effort.* A contract to sell oil to the buyer on such reason- able terms as will enable him to compete with other parties selling in the same territory is too indefinite to be enforced. ° Where the defendant, in consideration that the plaintiffs would purchase a storehouse and lot and a stock of goods, agreed to assist them by indorsing their paper and advancing money to enable them to carry on the mercantile business advantageously, the meaning of the parties could not be reduced to certainty by judicial effort.' A contract to aid and assist another to procure an order of court was held too indefinite to sustain an action for refusal or neglect.'' A father's promise upon a valuable consideration to give his child "a full share" of his property was said to have no lineaments of a contract that the law could recognize.' In one case the court denied a suitors request to mulct a contractor who had tried in vain to build a house according to specifications calling for more dimensions than finite minds have yet discovered.' The following order accompanied by a draft and measurement was written upon a postal card: "Please send us pice counter screen like draft." The order was declared to be unintelligible, and a refusal to submit it to the jury to determine whether the letters "pice" meant "piece" or "price" was sustained on appeal.^" Wliere, by a memorandum in " Leonard v. Carter, 16 Wis. 607. which defendant agrees to furnish But see also, Giles v. Halsted, 24 N. 300 men on demand of plaintiff, and J. Law 366, 61 Am. Dec. 668. by which the latter agrees to work ■* Cummer v. Butts, 40 Mich. 322, not less than 100 men, is not so in- 29 Am. Rep. 530; Leslie v. Smith, 32 definite and uncertain as to be in- Mich. 64. At the bottom of a note valid. McConnell v. Arkansas Brick payable on demand was a memoran- & Mfg. Co., 70 Ark. S68, 69 S. W. dum constituting a part of the con- 559. tract— "one-half payable in twelve ''Marble v. Standard Oil Co., 169 months, the balance in twentyfour Mass. 553, 48 N. E. 783. months." The court decided that it ° Erwin v. Erwin, 25 Ala. 236. was intended to limit and control the ' Case v. Lennington, 3 N. J. L. 853. generality of the words "on demand", ° Adams v. Adams, 26 Ala. 272. and thus avoided a fatal repugnancy. "Lyle v. Jackson County, 23 Ark. Heywood v. Perrin, 10 Pick. (Mass.) 63. 228, 20 Am. Dec. 518. A contract by "Cheney Bigelow Wire Works v. 315 CERTAINTY. § I 84 writing a party agreed to convey to another "seventy acres of land," the vendee "to have half the wheat on the piece that is to be sowed," by a third party, " exceeding seven acres," an ac- tion for breach of the contract was not sustained, as there was nothing from which it could be ascertained on what part of the earth the premises were situated/^ An agreement to renew a note till business shall improve is not a promise but merely a hopeful prophecy.^^ A contract which excludes some remedy given by law should be so definite and positive in its terms as to show the clear intention of the parties so to do.^^ § 184. Miscellaneous instances of contracts held sufficiently certain. — An agreement whereby one party contracted to sell another "all the prunes and other fruit that may grow and may be produced during the year 1884," on a certain farm, a portion of the purchase-price to be paid "when the crop is taken off at the end of the year," has been upheld." Nor is a contract fatally un- certain whereby one sells his interest in a certain invention and agrees to continue to use his best effort to make further improve- ments thereon in consideration of the purchaser paying him $20 per week, or in case of his death to his wife so long as they con- tinue to use his patents.^° Where an agreement provides for an Sorrell, 142 Mass. 442, 8 N. E. 332. the_ lessee derived no definite rights "These letters do not mean anything," which he could enforce in law or said Morton, C. J., "and neither the equity. In Abeel v. Radclifif, 13 Johns, court nor the jury can construe them (N. Y.) 297, it was held that "a as meaning 'piece'." covenant in a lease, on the part of "Rollin V. Pickett, 2 Hill (N. Y.) the lessor, to let the lot, at the expira- 552. But see Fish v. Hubbard's tion of the term, to the lessee, with- Admrs., 21 Wend. (N. Y.) 651. It out mentioning any price for which was held in Palmer v. Albee, 50 Iowa it was to be let," was altogether void 429 (by a divided court), that a sub- for uncertainty. See also, Clinan v. scription agreement to give "twenty Cooke, 1 Sch. & Lef. 22. For other in- acres of land" was too indefinite to stances of contracts held void for un- sustain an action for damages for a certainty, see Moore v. Smith, 19 Ala. failure to convey any certain tract, 774. and that the uncertainty could not be " Hall v. First Nat. Bank, 173 removed by parol evidence. In De- Mass. 16, S3 N. E. 154, 44 L. R. A. lashmutt v. Thomas, 45 Md. 140, there 319, 73 Am. St. 255. was an agreement under seal for the " Strauss v. Yeager (Ind. App.), lease of a store for a term certain at 93 N. E. 877. a fixed rent containing the following Brown v. Anderson, 7/ Cal. 236, words: "The said (lessee) to have 19 Pac. 487. the preference of renting said prop- Raymond v. White, 119 Mich. 438, erty so long thereafter as it shall be 78 N. W. 469. rented for a store." It was held that §184 CONTRACTS. 316 assignment of certain shares of stock to be held as collateral, such agreement is not void for uncertainty because it does not specify what kind of an assignment was intended.^* And where a physi- cian agreed not to practice in a certain locality "unless forced to return because of unforeseen circumstances," it was held that mere failure to build up a practice in another locality was not such an unforeseen circumstance as would entitle him to return to the old location.^' Nor is an agreement void for indefiniteness (as to the time when it should become operative) which provides: "I hereby agree not to sell all, or any part of the stock (certain bank stock) at any time, until I have first offered the same to W in writing at the book value of said stock, giving him ample time to accept or refuse the purchase, binding my heirs, executors and the administrators in the above option and agreement."^' And an agreement where one sells certain fair grounds for part cash and "one-third of the proceeds of all privileges incident to the holding of fairs, races or other events of like character upon said grounds" is not void for indefiniteness. ^° A contract which gives one the exclusive sale of a certain article in a specified territory for a definite time and which further provides that in case he succeeds in doing such a busi- ness as the other party may "reasonably expect" it will be re- newed, is not indefinite nor uncertain that it will not sup- port an action for damages should the defendant refuse to re- new at the expiration of the first term.^" So, also, a promise by a father to give his son a particular farm, "but should Providence determine otherwise he is to receive from my estate one thousand dollars," was held to involve an inscrutable condition and the court substituted the pronoun "I" in the place of "Providence."^^ And in a contract to buy a stock of merchandise, "all soiled or damaged goods at valuation," the word valuation was construed to mean "value."^^ "First Nat. Bank v. Park, 117 Iowa '"' Worthington v. Beeman, 33 C. C. SS2, 91 N. W. 826. A. 47S, 91 Fed. 232. " Ryan v. Hamilton, 205 111. 191, 68 " Rue v. Rue, 21 N. J. L. 369. N. E. 781. ^ Sargeant v. Dwyer, 44 Minn. 309, " Cothran v. Witham, 123 Ga. 190, 46 N. W. 444. A contract is not void 51 S. E. 285. for uncertainty where from the con- "Dargin v. Hewlitt, 115 Ala. 510, tents of the contract itself any aiM- 22 So. 128. biguity which may exist can be ts 3^7 CERTAINTY. '§ 1 85 A conlract which is originally indefinite and uncertain may be made definite by the conduct of the parties in construing its terms and performing the contract.^' Moreover, if there is a patent ambiguity in one clause of a contract which renders it void for uncertainty, the nullity of such clause will not af- fect the remainder of the instrument, if there be enough left to constitute a complete contract.^* § 185. Effect of using terms "more or less", "about" and the like. — The words "more or less" have a plain, ordinary and popular signification, and are often used in contracts relating both to real and personal estate. As applied to quantity they are to be construed as qualifying a representation or statement of an absolute and definite amount, so that neither party to a contract can avoid it or set it aside by reason of any deficiency or surplus occasioned by no fraud or want of good faith, if there is a reason- able approximation to the quantity specifically stipulated in the contract. In sales of merchandise, especially in large quantities, the office and effect of the words "more or less," in connection with the specific amount which forms the subject-matter of the contract, is to cover any variation from the estimate which is likely to arise from difference in weight, errors in counting, dimi- nution by shrinking or other similar causes. It is sometimes briefly expressed to be "an absolute contract for a specified quantity with- in a reasonable limit."^^ What is a reasonable limit and a sub- plained. Northern Central R. Co. v. S. E. 280; American Refrigerator &c. Walworth, 193 Pa. St. 207, 44 Atl. Co. v. Chilton, 94 111. App. 6. These 253, 74 Am. St. 683. latter cases are decided on the theory ^ Robson V. Mississippi River &c that part performance will neither Co., 61 Fed. 893. See, however, in supply mutuality nor show assent, connection with the above case, 69 ^ State v. Racine Sattley Co. (Tex. Fed. 773, 16 C. C. A. 400, in which it Civ. App.), 134 S. W. 400. is affirmed. Louisville &c. R. Co. v. "^The words "more or less" do not Coyle (Ky.), 97 S. W. 772, 8 L. R. render a contract prima facie void. A. (N. S.) 433; Loveridge v. Shurtz, Cockerell v. Aucompte, 2 C. B. (N. Ill Mich. 618, 70 N. W. 132; Cooper S.) 440; Morris v. Levison, L. R. 1 C. V. Lansinff Wheel Co., 94 Mich. 272, P. Div. 15S; United States v. Pine 54 N. W. 39, 34 Am. St. 341. See River L. & I. Co., 89 Fed. 907, 32 C. also, Gray v. Hinton, 7 Fed. 81, 2 C. A. 406; Cabot v. Winsor, 1 Allen McCrary 167- Morrow v. Southern (Mass.) 546, where it was held that Exp. Co., 101 Ga. 810, 28 S. E. 998; a shortage of five per cent, on "500 Savannah" Ice" &c. Co. v. American bundles, more or less, gunny bags" Refrigerator &c. Co., 110 Ga. 142, 35 i8s CONTRACTS. 318 stantial compliance with such a contract, if the facts are not in dispute between the parties, are questions of law for the deter- mination of the court.^° A contract for a herd of cattle containing two hundred and sixty-two head, "more or less," was held not elastic enough to require an acceptance of one hundred and seventy-eight." Under a contract calling for "about three hundred quarters more or less" of rye, the buyer was not compelled to ac- cept three hundred fifty quarters.^' But under a contract to de- liver five hundred thousand feet of lumber, "more or less," a de- livery of four hundred seventy-three thousand feet was said to be a deviation quite within the degree the courts have held to be reasonable.-^ A contract to pay "a claim * * * of about $150" was held to be a contract to pay the whole amount, although the latter was in fact $50 more than the sum mentioned.^" The was not such a deficiency as to fall outside of the fair and reasonable limit of short delivery, and that by delivering a portion of 47S bundles and a readiness to deliver the residue of the 475, the plaintiff proved a full compliance v^rith the terms of the con- tract. After declaring the law in sub- stantially the language of the text, the court continued : "In such cases parol evidence is not admitted to show that the parties intended to buy and sell a different quantity or amount from that stated in the written agreement. On the contrary, it is held to be a contract for the sale of the quantity or amount specified and the effect of the words, "more or less," is only to permit the vendor to fufiU his con- tract by a delivery of so much as may reasonably and fairly be held to be a compliance with the contract after making due allowance for an excess or short delivery arising from the usual and ordinary causes, which pre- vent an accurate estimate of the weight or number of the articles sold." See, further, to the point that the words "more or less" do not ren- der a contract prima facie void. Brown v. Bellows, 4 Pick. (Mass.) ' 179, 190 ; Holland v. Rea, 48 Mich. ■ 218, 12 N. W. 167, and cases there cited. =" Moore v. Campbell, 10 Exch. 323 ; Bourne v. Seymour, 16 C. B. 337; Cross V. Eglin, 2 B. & Ad. 106; Cabot V. Winsor, 1 Allen (Mass.) 546; Pem- broke Iron Co. V. Parsons, 5 Gray (Mass.) 589; Watson v. New York, 67 App. Div. (N. y.) 570, 73 N. Y. S. 1027, affg. 34 Misc. (N. Y.) 701, 70 N. Y. S. 1033; Stebbins v. Eddy, 4 Mason (U. S.) 414. 419. ^'Tilden v. Rosenthal, 41 111. 385. "We understand the phrase 'more or less' " said Lawrence, J., "as having been used by the parties to cover such trifling deficiencies in number as might be caused by the ordinary casu- alties of death or loss." "^ Cross V. Eghn, 2 B. & Ad. 106. " Holland v. Rea, 48 Mich. 218, 12 N. W. 167. »° Turner v. Whidden, 22 Maine 121. "The terms 'about' and 'more or less' have frequently found their way into contracts, and the courts have without disagreement held that they induced no ambiguity, and that extrinsic evi- dence of previous or contemporaneous conversations is not admissible to show what the parties meant by their use unless the contract on its face makes reference to some independent circumstances to identify the thing said." Peterson v. Chaix (Cal.), 90 Pac. 948 (quoting from Brawley v. United States, 96 U. S. 168, 24 L. ed. 622). Where a contract is made to 319 CERTAINTY. I8S effect of the words, "more or less," when annexed to a specified quantity in contracts relating to land has been thus stated : "In an agreement for the sale and purchase of land for an entire sum, either the description of the land by its boundaries, or the insertion of the words, 'more or less,' or equivalent words, will control a statement of the quantity of land or of the length of one of the boundary lines so that neither party may be entitled to relief on account of a deficiency or surplus, unless in case of so great a dif- ference as will naturally raise the presumption of fraud or gross mistake in the very essence of the contract."^^ sell or furnish certain goods identi- fied by independent circumstances, such as the entire lot deposited in a certain warehouse, or all that may be manufactured by the vendor in a cer- tain establishment, or that may be shipped by his agent or correspondent in certain vessels, and the quantity is named with the qualification of "about", or "more or less", or words of like import, the contract applies to the specific lot ; and the naming of the quantity is not regarded as in the nature of a warranty, but only as an estimate of the probable amount, in reference to which good faith is re- quired of the party making it. In all such cases the governing rule is somewhat analogous to that which is applied in the description of lands, where natural boundaries and monu- ments control courses and distances and estimates of quantity. But when no such independent circumstances are referred to, and the engagement is to furnish goods of a certain qual- ity or character to a certain amount, the quantity specified is material, and governs the contract. The addition of the qualifying words, "about", "more or less", and the like, in such cases, is only for the purpose of pro- viding against accidental variations arising from slight and unimportant excesses or deficiencies in number, measure or weight. If, however, the qualifying words are supplemented by other stipulations or conditions, which give them a broader scope or a more extensive significance, then the con- tract is to be governed by such added stipulations or conditions. If it be agreed to furnish so many bushels of wheat, more or less, according to what the party receiving it shall re- quire forthe use of his mill, then the contract is not governed by the quan- tity named, nor by the quantity with slight and unimportant variations, but by what the receiving party shall re- quire for the use of his mill; and the variation from the quantity named will depend upon his discretion and requirements, so long as he acts in good faith. So, when a manufacturer contracts to deliver at a certain price all the articles he shall make in his factory for the space of two years, "say one thousand to twelve hundred gallons of naphtha per month," the designation of quantity is qualified not only by the indeterminate word, "say", but by the fair discretion or ability of the manufacturer, provided, always, he acts in good faith. Brawley v. United States, 96 U. S. 168, 24 L. ed. 622, 13 Ct. CI. (U. S.) 521. ^'Stull V. Hurtt, 9 Gill (Md.) 446; Noble V. Googins, 99 Mass. 231, citing Stebbins v. Eddy, 4 Mason (U. S.) 414; Weart v. Rose, 15 N. J. Eq. 290, 1 C. E. Green 290 ; Marvin v. Bennett, 8 Paige (N. Y.) 312, 26 Wend. (N. Y.) 169; Morris Canal Co. v. Em- mett, 9 Paige (N. Y.) 168; Faure v. Martin, 7 N. Y. 210, 57 Am. Dec. 515 ; Ketchum v. Stout, 20 Ohio 453. The latitude which will be given by a court of equity to the words "more or less" in such cases was thoroughly discussed in the light of authorities by Comstock, J., in Belknap v. Sealey, 14 N. Y. 143. For other cases involv- ing the phrase "more or less" in deeds, see Thomas v. Perry, Pet. (C. C.) 49; United States v. D'Aguirre, § i86 CONTRACTS. 320 § 186. "Say" and "say about" and the like.— The same words may have different meanings, according to the context, in different contracts. But, unless there is something in the context to dictate a more positive signification, such words as "say," or "say about," when used to specify quantity, ought not to be con- strued as words of warranty.^^ In a similar connection, the words "say about" afford a contractor as much latitude as the words "say from."^^ On the other hand, an agreement to furnish "say not less than" a certain quantity leaves no uncertainty as to the mini- mum.^* A contract to load "a full and complete cargo of iron, say about one thousand one hundred tons," where the ship could carry one thousand two hundred ten tons, was not fulfilled by loading one thousand eighty tons.'^ Oral evidence may in certain instances be admitted to prove local usage or custom when the local meaning of certain words or phrases is involved. Thus the meaning of the term "gross ton" has been held to be explainable 1 Wall. (U. S.) 311. See also, Har- rell V. Hill, 19 Ark. 102, 68 Am. Dec. 202; Dale v. Smith, 1 Del. Ch. 1, 12 Am. Dec. 64; Patton v. Schneider, 23 Ky. L. 2190, 66 S. W. 1003. In the above case the description read SSyi acres, "more or less," when in fact it contained only 20^ acres; it was held the vendor must make good the difference. Poague v. Allen, 3 J. J. Marsh. (Ky.) 421; Shipp v. Swan, 2 Bibb (Ky.) 82; WiUiford v. Bentley, 5 J. J. Marsh. (Ky.) 181; Pollock v. Wilson, 3 Dana (Ky.) 25; McCoun V. Delany, 3 Bibb (Ky.) 46, 6 Am. Dec. 635 ; Fannin v. Bellomy, S Bush (Ky.) 663; Hoffman v. Johnson, 1 Bland (Md.) 103; Smallwood v. Hat- ton, 4 Md. Ch. 95 ; Tyson v. Hardesty, 29 Md. 305; Blaney v. Rice, 20 Pick. (Mass.) 62, 32 Am. Dec. 204; Phipps v. Tarpley, 24 Miss. 597 ; Sullivan v. Ferguson, 40 Mo. 79; McConnell v. Brayner, 63 Mo. 461 ; Williamson v. Hall, 62 Mo. 405; Gerrens v. Huhn, 10 Nev. 139 ; Couse v. Boyles, 4 N. J. Eq. 212, 38 Am. Dec. 514; Brady v. Hennion, 8 Bosw, (N. Y.) 528; Pet- tit V. Shepard, 32 N. Y. 97; Gentry V. Hamilton, 3 Ired. Eq. (N. Car.) 376; Smith v. Evans, 6 Bin, (Pa.) 102; Baynard v. Eddings, 2 Strob. (S. Car.) 374; Peden v. Owens, Rice (S. Car.) 55; Allison v. Allison, 1 Yerg. (Tenn.) 16; Smith v. Fly, 24 Tex. 345; Pendleton v. Stewart, S Call (Va.) 1; Duvals v. Ross, 2 Munf. (Va.) 290. A deficiency of eight acres in a contract for 552 acres is more than a purchaser who buys for more or less can reasonably ex- pect. Nelson v. Matthews, 2 Hen. & M. (Va.) 164. The words "more or less" as used in a deed ordinarily mean "about." Carling v. Wilson (Ala.), 58 So. 417. '^M'Connel v. Murphy, L. R. 5 P. C. 203. Thus, a contract to sell all the naphtha that the vendor might make during a certain period, "say from one thousand to one thousand two hundred gallons per month," was held not to impose an absolute obli- gation to supply that number of gal- lons. Gwillim V. Daniel, 2 C. M. & R. 61. =^ M'Connel v. Murphy, L. R. 5 P. C. 203, holding that 496 will satisfy "say about 600." "Leeming v.. Snaith, 16 Q. B. 275, was declared in McConnel v. Murphy, cited in the preceding note, not to be inconsistent with Gwillim v. Daniel, 2 C. M. & R. 61. "'Morris v. Levison, L. R. 1 C. P. D. 155. 321 CERTAINTY. § l86 by parol evidence/* The same is true as to the meaning of the term, "no trees to be counted less than one foot high,"" "amber colored bottles to be of uniform weight and color,'""' and "for three years at a salary of five, six and seven pounds per vi^eek" during all the term of a theatrical engagement.^" °°Higgins V. California Petroleum &c. Co., 120 Cal. 629, 52 Pac. 1080. "Barton v. McKelway, 22 N. J. Law 165. "^ Whitney v. Hop Bitters Mfg. Co., 2 N. Y. S. 438, 18 N. Y. St. 891. '" Grant v. Maddox, 15 M. & W. 737, 16 L. J. Ex. 227. See also, Leavitt v. Kennicott, 157 111. 235, 41 N. E. 737. But in the following cases oral evi- dence was held inadmissible to ex- plain the meaning by local usage or custom to the following terms : "good three-coat plastering" (Cook v. Hawk- ins, 54 Ark. 423, 16 S. W. 8), "clear, grub and pile the brush on the land south of the road" (Holmes v. Stum- mel, IS 111. 412), "delivered" (Will- mering v. McGaughey, 30 Iowa 205, 6 Am. Rep. 673). It has been held that parol evidence is not admissible to explain the meaning of the term, "fully insured", as its plain ordinary signfication would mean insured to the full value of the original. Kentucky Wagon Co. v. People's Supply Co., 77 S. Car. 92, 57 S. E. 676, 122 Am. St. 540. The right to explain the mean- ing of the terms, "to be advertised until sold" (Wikle v. Johnson Lab- ratories, 132 Ala. 268, 31 So. 715), and "new and useful improvements" (Adams v. Turner, 73 Conn. 38, 46 Atl. 247), has been denied. See also. Withers v. Moore, 140 Cal. 591, 74 Pac. 159; Hale v. MiUiken, 142 Cal. 134, 75 Pac. 653; Mayer v. Lawrenc: 58 111. App. 194; Covington v. Ka- nawha Coal Co., 121 Ky. 681, 89 S. W. 1126, 3 L. R. A. (N. S.) 248; Bigelow v. Legg, 102 N. Y. 652, 6 N. E. 107; Goetze V. Dunphy, 63 N. Y. St. 751, 31 N. Y. S. 302; O'Donohue v. Leg- gett, 55 Hun (N. Y.) 607, 8 N. Y. S. 426, 29 N. Y. St. 983; Richard v. Haebler, 55 N. Y. S. 583; Burton v. Forest Oil Co., 204 Pa. 349, 54 Atl. 266. The object and purpose of this chapter is mainly to illustrate and ex- plain the necessity for certainty in the terms of the offer and acceptance, so that there is a meeting of the minds and a complete contract. Mat- ters that might have been placed in this chapter will be found under such titles as Interpretation and Construc- tion, Specific Performance, Time, When the Essence of a Contract, etc. 21— Contracts, "/ol. j CHAPTER IX. CONSIDERATION. 3 195, Necessity for. ^ § 219. 196. When it is presumed or im- ported. 197. Contracts in restraint of trade. 220. 198. When presumed or imported — Statutory abolition of seals. 199. When presumed — Negotiable 221. instruments. 200. When presumed — Considera- 222. tion declared unnecessary by 223. statute or rule of law. 201. When presumed — Contracts in 224. writing. 225. 202. When presumed — Executed 226. contracts. 227. 203. What is meant by considera- 228. tion. 204. Distinguished from motive. 205. Concurrent, executed, execu- 229. tory and continuing consider- ation. 230. 206. Ciood consideration. 207. "\'"aluable consideration. 208. Nudum pactum. _ 231. 209. Sufficient consideration or ade- 232. quate consideration. 233. 210. Insufficient or inadequate con- 234. sideration. 235. 211. Moral consideration, 236, 212. Hew promise — Equitable con- 237, sideration, 238, 213. Past or antecedent considera- 239, tion. 214. Exceptions to rule that past 240. consideration will not sup- 241. port a subsequent promise, 242, 215. Doing what one is legally 243, bound to do, 216. Same — Refusal to perform 244. without further recompense. 245, 217. Same — Part payment of liqui- 246, dated liability, _ 247, 218. The rule against satisfaction by 248, ■ payment of a lesser sum strictly construed, 249. Other consideration — Receiving property in addition to the sum paid. Other consideration — Payment of debt before due, or at dif- ferent place. Other consideration — Addition- al security. Miscellaneous exceptions. Rule deducible from the author ities. Impossible consideration. Physical and legal impossibJ'ity, Illegal consideration. Voluntary subscription. Voluntary subscription valid when supported by a consid- eration. Mutual promises as a consider- ation therefor. Obligation to apply the funds in a certain way as a consid- eration. Promise for promise. Mutuality, options. Abandonment of legal right. Forbearance, Forbearance to sue — Time, Extension of time. Compromise of disputed claims. Delivery of property in trust. Incurring liabilities or obliga- tions. Services. Marriage. Name and change of name. Contracts and contractual rights generally. Rights to personal property. Interests in real property. Blood or natural affection. Evidence of consideration. Entire or indivisible considera- tion. Divisible considerations or promises. 322 3-3 CONSIDERATION. § 195 250. From whom consideration must 252. To whom consideration must move. move. 251. At whose instance the consider- 253. Want of consideration. tion must move. 254. Failure of consideration. § 195. Necessity for. — Prior to the year 1505 the binding force of a simple promise had not been definitely established.^ In that year it was settled that failure to perform a simple promise was actionable in case the promisee had parted with a thing of value on the faith of the promise.^ With this principle once es- tablished it was not long until the doing of almost any act by the promisee was held sufficient to support a promise to procure the doing of that act.^ But, notwithstanding the dictum of Lord Mansfield, in a case decided as late as 1765, to the effect that no consideration is essential to a commercial contract in writing,* the general rule has long been settled that executory contracts not under seal must be supported by a consideration whether in writ- ing or not. And since the year 1 778,^ it has been consistently held by all courts that every executory contract, with few exceptions, must be supported by a consideration. A promise, whether oral or written, must be founded on a sufficient consideration, either of benefit to the one party or of detriment to the other or of both combined." 'Year Book, 20 Henry VII 8, pi. v. Neale Pub. Co., 34 App. D. C. 257; 18; Walton v. Brinth, Y. B. 2 Hen. Arnold v. Scharbauer, 116 Fed. IV 3, pi. 9. 492; Lowe v. Bryant, 32 Ga. 235; = Mich, term 21 Henry VII, Kielw. Mason v. Terrell, 3 Ga. App. 348, 60 ^]^ 78 " S. E. 4; Ryan v. Hamilton, 205 111. ■ ^Es'trigge V. Owles (1587), 3 Leon. 191, 68 N. E. 781; Heartt v. Sherman, 200; Gill V. Harewood, 1 Leon. 61; 229 III. 581, 82 N. E. 417; Berry v. Banes's Case, 9 Coke 94; Mapes v. Bates, 2 Blackf. (Ind.) 118; Bright Sidney, Cro. Jac. 683; Y. B. 2 Hen. v. Cofifman, 15 Ind. 371, 77 Am. Dec. VII 41 pi 66 96; Starr v. Earle, 43 Ind. 478; ^Pillans V. Van Mierop, 3 Burr. Plunkett v. Black, 117 Ind. 14, 19 N. 1663 E. 537; Eastman v. Miller, 113 Iowa ° Rann v. Hughes, 7 T. R. 350n. 404, 85 N. E. 635 ; Gilmore v. Green, 77 "Chapman v. Franklin, 21 T. L. Ky. ( 14 Bush) 772 ; Streshley v. Pow- 515; Watson v. Dunlap, Fed. Cas. No. ell, 51 Ky. 178; Adams v. Wathen, 21 17282, 2 Cranch (U. S.) 14; ConsoH- Ky. L. R. 101, 50 S. W. 962; Broaddus dated Portrait &c. Co. v. Barnett, 165 v. Nolley, 25 La. Ann. 184. The re- Ala. 655, 51 So. 936; Wheeler v. Glas.- quiring of a small pecuniary consid- gow, 97 Ala. 700, 11 So. 758; Sum- eration to support an agreement is a mers v. Heard, 66 Ark. 550, 50 S. W. mere fiction, unknown to the civil, 78 51 S. W. 1057; Hochstein v. Berg- law and to the laws of this state, hauser, 123 Cal. 681, 56 Pac. 547; Mouton v. Noble, 1 La. Ann. 192. Kephart v. Buddecke, 20 Colo. App. Williams v. Robinson, TS Maine 186, 546, 80 Pac. 501 ; Cook v. Bradley, 7 40 Am. Rep. 352 ; Wyman v. Gray, 7 Conn. 57, 18 Am. Dec. 79; Littlepage Harr. & J. (Md.) 409; Wilson v. § 196 CONTRACTS. 324 § 196. When it is presumed or imported. — This rule, how- ever, is not universal, at least in so far as it seems to re- quire the shoviring of an actual consideration in all cases pf con- tract. In the case of certain contracts or quasi contracts, a con- sideration is unnecessary or is presumed or imported. To this class of contracts belong contracts under seal or specialties. In- dependent of any statute, at common law the seal obviates the necessity for a consideration and renders its proof needless, be- cause the instrument binds the parties by force of the natural and conclusive presumption that an instrument executed with so much deliberation and solemnity is founded upon some sufficient con- Clefnents, 3 Mass. 1 ; Fowler v; Shearer, 7 Mass. 14 ; Tenney v. Prince, 21 Mass. (4 Pick.) 38S, 16 Am. Dec. 347; Mecorney v. Stanley, 8 Cush. (Mass.) 85; Chase v. Chase, 191 Mass. 556, 78 N. E. 115; Koppitz- Melchers Brewing Co. v. Behm, 130 Mich. 649, 90 N. W. 676, 9 Detroit Leg. N. 226; Gloeckner v. Kittlaus, 192 Mo. 477, 91 S, W. 126 ; George v. Chicago &c. R. Co., 214 Mo. 551, 113 S. W. 1099 ; Scriba v. Neely, 130 Mo. App. 258, 109 S. W. 845; Clark v. Robertson, 135 Mo. App. 90, 115 S. W. 514; Riley v. Stevenson, 118 Mo. App. 187, 94 S. W. 781; Burton v. Kipp, 30 Mont. 275, 76 Pac. 563; Portsmouth Brewing Co. v. Mudge, 68 N. H. 462, 44 Atl. 600; Conover V. StiUwell, 34 N. J. L. (5 Vroom) 54; Day v. Gardner, 42 N. J. Eq. (IS Stew.) 199, 7 Atl. 365; Drake v. Laniling, 49 N. J. Eq. 452, 24 Atl. 378; Graham v. Spence (N. J. Eq.), 63 Atl. 344; Powell v. Brown, 3 Johns. (N. Y.) 100; Moskowitz v. Hornberger, 20 Misc. 558, 46 N. Y. S. 462; Majory v. Schubert, 82 App. Div. 633, 81 N. Y. S. 703 ; Perkins v. Smith, 83 App. Div. 630, 81 N. Y. S. 955; HoUins v. Hubbard, 38 App. Div. 629, 56 N. Y. S. 711, affd. 165 N. Y. 534, 59 N. E. 317; Hayden v. Hayden, 8 App. Div. 547, 75 N. Y. St. 259, 40 N. Y. S. 865; Bodine v. Andrews, 47 App. Div. 495, 62 N. Y. S. 385 ; Buckley v. Zimmerman, 32 Misc. 704, 65 N. Y. S. 512; Oldham V. Pincus, 32 Misc. (N. Y.) 199, 65 N. Y. S. 691 ; McBride v. Adams, 84 N Y. S. 1060; New York Automo- bile Co. V. Franklin, 49 Misc. (N. Y.) 8, 97 N. Y. S. 781 ; Leeming v. Dur- yea, 49 Misc. 240, 97 N. Y. S. 355; Engel V. Gordon, 49 Misc. (N. Y.) 641, 97 N. Y. S. 981 ; Berkow v. Lam- pel, 125 N. Y. S. 513; Springstead v. Nees, 125 App. Div. 230, 109 N. Y. S. 148; Bull v. Payne, 47 Ore. 580, 84 Pac. 697; Kennedy v. Ware, 1 Pa. St. (1 Barr) 445, 44 Am. Dec. 145; In re Crawford's Appeal, 61 Pa. St. 52, 100 Am. Dec. 609 ; In re Lenning's Estate, 182 Pa. St. 485, 38 Atl. 466, 38 L. R. A. 378, 61 Am. St. 725; Roper V. Stone, 3 Tenn. (Cooke) 497; Clark V. Small, 14 Tenn. (6 Yerg.) 418; Patrick v. Wilson, 1 Nott & McC. (S. Car.) 112; Mueller v. Bell (Tex. Civ. App.), 117 S. W. 993; Thorp v. Gordon (Tex. Civ. App.), 43 S. W. 323 ; Brin v. McGregor (Tex. Civ. App.), 45 S. W. 923; Beverly v. Holmes, 4 Mun. (Va.) 95; Southern R. Co. V. WiUcox, 98 Va. 222, 35 S. E. 355; Triplett v. Woodward's Admr., 98 Va. 187, 35 S. E. 455; Sturm V. Parish, 1 W. Va. 125 ; Tem- pleton V. Butler, 117 Wis. 455, 94^ N. W. 306. By sufficient consideration, however, as the term is used above, is not meant that the consideration must necessarily be adequate. See post, § 209. But it must not be illegal and must be of some value in the eye of the law. An executory contract not supported by a consideration can- not be enforced in a court either of law or equity. Heartt v. Sherman, 229 111. 581, 82 N. E. 417. "It is al- ways in order to plead want of con- sideration as a defense to the en- forcement of a contract." First Nat. Bank V. Asel (Mo. App.), 134 S. W. 110, 111. 325 CONSIDERATION. 196 sideration.'' It thus becomes possible by means of a deed under seal to make a voluntary promise, that is, one that is gratuitous or without any consideration, in a manner which shall be binding on the promisor, when such promise would not be binding in the form of a simple contract/ Equity, however, ordinarily re- quires a consideration and permits the want of it to be shown, notwithstanding the seal.® I 'Lowe V. Peers, 4 Burr. 2225; iPillans V. Van Mierop, 3 Burr. 1663; Rann v. Hughes, 7 T. R. 3S0n; Fal- lovves V. Taylor, 7 T. R. 475; Tracy V. Alvord, 118 Cal. 654, 50 Pac. 757; Sims V. Scheussler, 5 Ga. App. 850, 64 S. E. 99; Sivil v. Hogan, 119 Ga. 167, 46 S. E. 6]; Rendleman v. Ren- dleman, 156 111. 568, 41 N. E. 223; Adams v. Peabody Coal Co., 230 111. 469, 82 N. E. 645 ; Gray v. Blooming- ton &c. R. Co., 120 111. App. 159; Gourley v. Chicago &c. R. Co., 96 111. App. 68; Bullen v. Morrison, 98 111. App. 669; Leonard v. Bates, 1 Blackf. (Ind.) 172; Ruth v. Ford, 9 Kans. 17; Van Valkenburgh v. Smith, 60 Maine 91; Wing v. Chase, 35 Maine 260; Edelen v. Gough, 5 Gill (Md.) 103; Graham v. Middleby, 185 Mass. 349, 70 N. E. 416; Paige v. Parker, 8 Gray (Mass.) 211; Fletcher v. Fletcher, 191 Mass. 211, 11 N. E. 758; Hobbs v. Brush &c. Co., 75 Mich. 550, 42 N. W. 965 ; Jackson v. Cleve- land, 15 Mich. 94, 90 Am. Dec. 266; Erickson, v. Brandt, S3 Minn. 10, 55 N. W. 62; Saunders v. Blythe, 112 Mo. 1, 20 S. W. 319; First Presby- terian Church V. Nat. Bank, 57 N. J. L. 27, 29 Atl. 320; Kam v. Benjamin, 158 N. Y. 725, 53 N. E. 1126, affg. 10 App. Div. 419, 42 N. Y. S. 99; Rothschild V. Frank, 14 App. Div. (N. Y.) 399, 43 N. Y. S. 951 ; Williams v. Whittell, 69 App. Div. 340, 74 N. Y. S. 820; Howie V. Kasnowitz, 83 App. Div. 295, 82 N. Y. S. 42; Parker v. Par- mele, 20 Johns. (N. Y.) 130, "a mere failure of consideration is no defense at law to an action on a deed or specialty"; Vrooman v. Phelps, 2 Johns. (N. Y.) 177; Dorr v. Mun- sell, 13 Johns. (N. Y.) 430; Smith V. Northrup, 80 Hun (N. Y.) 65; Childs V. Barnum, 11 Barb. (N. Y.) 14; Johnston v. Wadsworth, 24 Ore. 494, 34 Pac. 13; Dickey v. Jackson, 47 Ore. 531, 84 Pac. 701; Clymer v. Groff, 22 Pa. St. 580, 69 Atl. 1119; Cosgrove v. Curaraings, 195 Pa. St. 497, 46 Atl. 69; Geiselbrecht v. Geisel- brecht, 8 Pa. Super. Ct. 183; Owens V. Wehrle, 14 Pa. Super. Ct. 536; Evans v. Dravo, 24 Pa. (12 Harns) 62, 62 Am. Dec. 359; Yard v. Patton, 13 Pa. 278; Carter v. King, 11 Rich. (S. Car.) 125; United States v. Linn, 15 Pet. (U. S.) 290; Storm v. United States, 94 U. S. 76, 24 L. ed. 42; Bar- rett V. Garden, 65 Vt. 431, 26 Atl. 530, 36 Am. St. 876; Harris v. Har- ris' Exr., 23 Grat. (Va.) lil ; Carey V. Dyer,' 97 Wis. 554, li N. W. 29. 'Morley v. Boothby, 3 Bing. 107; Sharington v. Strotton, 1 Plowden 298; Rann v. Hughes, 7 T. R. 350n; Jerome v. Ortman, 66 Mich. 668, i2> N. W. 759; Woodruff v. Woodruff, 44 N. J. Eq. 349, 16 Atl. 4, 1 L. R. A. 380n ; Aller v. Aller, 40 N. J. L. 446, the head-note of the above case is "It is not a good defense to a promise in writing, under seal" to pay a sum of money, for value received, that it was voluntary. Kam v. Benjamin, 10 App. Div. 419, 42 N. Y. S. 99, aifd. in 158 N. Y. 725, 53 N. E. 1126; Stan- ley V. Smith, 15 Ore. 505, 16 Pac. 174; Burkholder's Exrs. v. Plank, 69 Pa. St. 225 ; Hirschhorn v. Nelden-Judson Drug Co., 26 Utah 110, 72 Pac. 386. At common law contracts under seal were enforcible in the absence of con- sideration not because a considera- tion is conclusively presumed but be- cause consideration is not an essential element of such contracts. Lacey v. Hutchinson, 5 Ga. App. 865, 64 S. E. 105. "Lacey v. Hutchinson, 5 Ga. App. 865, 64 S. E. 105 ; Crandall v. Willig, 166 111. 233, 46 N. E. 755 ; Corbett v. Cronkhite, 239 111. 9, 87 N. E. 874. Equity will not decree the specific performance of a gratuitous promise under seal. Crandall v. Willig, 166 111. 233, 46 N. E. 755; Buford v. Mc- § 197 CONTRACTS. 326 § 197. Contracts in restraint of trade. — There is an excep- tion to the doctrine of the last preceding section in cases of con- tracts in restraint of trade. Here there must be an actual consid- eration, and the seal does not import one.^" This is the only exception usually noted, and it is said that it is the only case in which a contract of specialty is void merely because there is no actual consideration.^^ But a late writer seems to regard a con- tract, under seal, in restraint of marriage as another exception." § 198. When presumed or imported — Statutory abolition of seals. — Legislation dealing with the question of seals has taken three forms: The first is where the use of private seals is absolutely abolished ;" the second is where all distinction between sealed and unsealed instruments is done away with;" the third Kee, 1 Dana (Ky.) 107, 46 N. E. 7SS; Bosley v. Bosley, 85 Mo. App. 424. "Horner v. Ashford, 3 Bing. 322; Hitchcock V. Coker, 6 Ad. & Ek 438 ; Archer v. Marsh, 6 Ad. & Ek 959; Mitchel V. Reynolds, 1 P. Wms. 181 ; Palmer v. Stebbins, 3 Pick. (Mass.) 188, 15 Am. Dec. 204; Pierce v. Fuller, 8 Mass. 223. The considera- tion in this case was one dollar, the promise being not to run a stage on a certain road specified. This sum was held adequate to support the promise. Draper v. Snow, 20 N. Y. 331, 75 Am. Dec. 408. See Ross v. Sadgbeer, 21 Wend. (N. Y.) 166, where it is said : "It is true that a consideration will be implied from the seal, where the parties contract by deed. * * * But the seal only im- ports that there was some considera- tion — not that there was a peculiar one, such as this case requires. If we imply a pecuniary consideration, how- ever large it may be in amount, it will not remove the difficulty under which the plaintiff labors. It must appear that he purchased the defend- ant's works, or a secret which he possessed in the relation to the manu- facturing of ashes, or that there ^yas some other good reason for taking this bond. Otherwise, it was a con- tract to deprive a man of his liveli- hood, and the public of a useful mem- ber, without any benefit to the plain- tiff, which the law will not permit." Lemon v. Graham, 131 Pa. St. 447, 19 Atl. 48, 6 L. R. A. 663; In re Hacker's Appeal, 121 Pa. St. 192, 15 Atl. 500, 1 L. R. A. 861; Keeler v. Taylor, 53 Pa. St. 467, 91 Am. Dec. 221 ; Sanders v. Bagwell, 32 S. Car. 238. Compare Bender v. Been, 78 Iowa 283, 43 N. W. 216, 5 L. R. A. 596. "An agreement not to carry on a certain business anywhere is in- valid, whether it be by parol or spe- cialty." Story on Contracts, § 650. "Lawson Cont, § 65, citing Mete. Cont. 270; Ross v. Sadgbeer, 21 Wend. (N. Y.) 161. "2 Page Cont., § 561, p. 875. ''Globe Ace. Ins. Co. v. Reid, 19 Ind. App. 203, 47 N. E. 947. The common-law rule that a seal imports a consideration, still obtains in the state of Washington, notwithstanding § 4523, Ballinger's Ann. Codes & Stat., abolishing the use of private seals. Monro v. National Srirety Co. (Wash.), 92 Pac. 280. The follow- ing states have legislation of this sort : Ohio, Indiana, Iowa, Kansas, Nebraska, Tennessee, Texas, North Dakota, South Dakota, Montana, Mississippi and Washington. Stim- son's "American Statute Law", p. 197. "This obtains in Kentucky, Ten- nessee, Texas, California, Oregon and Mississippi; Stimson's "American Statute Law", p. 197. It will be seen that some states have enacted both forms of legislation, as Indiana. 32? CONSIDERATION. § 199 is where a seal raises only a presumption of consideration, which may be rebutted as if the instrument were not sealed.^^ But al- though there are these different forms of legislation upon the subject, their effect is in most respects substantially the same. These enactments merely take away from the seal its character of conclusive evidence of a sufficient consideration and in effect make it only presumptive evidence. In the absence of misap- prehension or fraud, these statutes do not affect voluntary agree- ments under seal unsupported by a consideration where no con- sideration was intended.^* § 199. When presumed — Negotiable instruments. — A sec- ond apparent exception to the rule declaring the necessity of con- sideration is that concerning negotiable instruments. But it is "Mitchel V. Reynolds, 1 P. Wms. 181 ; Ruppert v. Frauenkneckt, 146 111. App. 397; United &c. Mfg. Co. V. Conard, 80 N. J. L. 286, 78 Atl. 203, Ann. Cas. 1912A. 412; Waller V. Hersee, 10 Hun (N. Y.) 431; Williams v. Whittell, 69 App. Div. 340, 74 N. Y. S. 820; Ross v. Sadg- beer, 21 Wend. (N. Y.) 166; Vulcan Iron Works v. Pittsburg-Eastern Co., 144 App. Div. 827, 129 N. Y. S. 676; Briggs V. Partridge, 64 N. Y. 357, 21 Am. Rep. 617 ; Boutten v. Welling- ton &c. Co., 128 N. Car. 337, 38 S. E. 920 ; Gompers v. Rochester, 56 Pa. St. 194; Carey v. Dyer, 97 Wis. 554, 73 N. W. 29; Waterman v. Norwalk, 145 Wis. 663, 130 N. W. 479; Sixta v. Ontonagon, Valley Land Co., 148 Wis. 186, 134 N. W. 34. This sort of legislation obtains in New York, New Jersey, Michigan, Wisconsin, Oregon and Alabama; Stimson's "American Statute Law", p. 455. There is a fourth form of legislation in some states, which enacts that all contracts in writing import a consideration. The following are these states : Iowa, Kansas, Tennessee, Missouri, Texas, California, Dakota, Alabama, Florida, and South Dakota. While the lan- guage of the statutes may differ they are all referrable to one or the other kinds stated in the text. Legislation has in a great many states accurately defined "a seal". "Jones V. Morris, 61 Ala. 518. Here an instrument which purported to be a deed was so construed, and held that, as the principal did not purport to sign it and the agent executed it in his own name, it could not be va- ried by parol evidence. Rendleman v. Rendleman, 156 111. 568, 41 N. E. 223 ; Hobbs v. Brush &c. Co., 75 Mich. 550, 42 N. W. 965; Aller v. Aller, 40 N. J. Law 446; Wain v. Wain (N. J.), 22 Atl. 203 ; Conover's Admr. v. Brown's Exrs., 49 N. J. Eq. 156, 23 Atl. 507 ; .Briggs V. Partridge, 64 N. Y. 357, 21 Am. Rep. 617. In Fay v. Richards, 21 Wend. (N. Y.) 626, the head note is : "Where a party obtains what he contracted for, he cannot avoid his contract on the ground that what he received is valueless, unless he shows fraud, or a misapprehension in respect to the subject-matter of the contract." A plea of want of seizin in a vendor who has conveyed real estate with covenant of seisin, is no bar to an action of debt on bond given for the purchase-money. Case v. Boughton, 11 Wend. (N. Y.) 106; Talmadge v. Wallis, 25 Wend. (N. Y.) 107; Avery v. Latimer, 14 Ohio 542; Judy v. Louderman, 48 Ohio St. 562, 29 N. E. 181 ; Osborn v. Kistler, 35 Ohio St. 99. It is a grossly inac- curate statement of the law to say "that equity always required an actual consideration, and permits the want of it to be shown notwithstanding the seal." The truth is that equity recog- § 199 CONTRACTS. 328 not a real exception, for a consideration is presumed, and if there is none in reality it may be equally fatal, as between the parties, as in other cases. Such instruments import a consideration. In the absence of any showing to the contrary it will be presumed there was a sufficient consideration.^' This is true even though nized the failure of consideration as a defense to a sealed instrument, but never so recognized the want of a consideration. In re Candor's Ap- peal, 27 Pa. St. 119. See further to this effect, Kennedy v. Howell, 20 Conn. 349; Wing v. Chase, 35 Maine 260; Walker v. Walker, 13 Ired. (N. Car.) 33S; Harrell v. Watson, 63 N. Car. 454; Meek v. Frantz, 171 Pa. St. 632, 33 Atl. 413; Yard v. Patton, 13 Pa. St. 278; Sherk v. Endress, 3 W. & S. (Pa.) 255; Carter v. King, 11 Rich. L. (S. Car.) 125; Harris v. Har- ris's Exr., 23 Grat. (Va.) IZl . See also, Miles v. Hemenway (Ore.), 117 Pac. 273. See also, the following cases which deal with the question as to how far consideration can be in- quired into, and the effects of stat- utes abolishing distinctions between sealed instruments and simple con- tracts. Carrington v. Potter, 37 Fed. 767; Williams v. State, 25 Fla. 734; McCoy V. Cassidy, 96 Mo. 429, 9 S. W. 926; Bosley v. Bosley, 85 Mo. App. 424; Excelsior Mfg. Co. v. Wheelock, 6 N. M. 410, 28 Pac. 772; Todd V. Union Dime Co., 118 N. Y. iil \ Kam V. Benjamin, 158 N. Y. 725, 53 N. E. 1126, affg. 10 App. Div. (N. Y.) 419, 42 N. Y. S. 99; Williams V. Whittell, 69 App. Div. 340, 74 N. Y. S. 820; Stegman v. Hollingsworth, 60 Hun (N. Y.) 597, 14 N. Y. S. 465 ; Boutten v. Wellington &c. Co., 128 N. Car. 337, 38 S. E. 920; Os- borne V. Hubbard, 20 Ore, 318, 25 Pac. 1021 ; Stevens v. Philadelphia Ball Club, 142 Pa. St. 52, 21 Atl. 797 ; Frost V. Wolf, n Texas 455, 14 S. W. 440, 19 Am. St. 761; Jacobs v. Daugherty, 78 Texas 682, 15 S. W. 160. But the presumption of consider- ation arising from a seal will not overcome the express language and consideration of a sealed instrument, showing that it is without considera- tion. Bender v. Been, 78 Iowa 283, 43 N. W. 216, 5 L. R. A. 596. In some jurisdictions where a contract is executed under seal and such seal is not essential it will be given no practical effect and the agreement held good as a simple contract. Ed- wards V. Dillon, 147 111. 14, 35 N. E. 135, i1 Am. St. 199 ; Barton v. Gray, 57 Mich. 622, 24 N. W. 638; Blewitt V. Boorum, 142 N. Y. 357, 37 N. E. 119, 40 Am. St. 600; McNeal &c. Foundry Co. v. Woltman, 114 N. Car. 176, 19 S. E. 109. And in case a seal is affixed to an instrument not neces- sarily under seal and the addition of the seal would render the contract void, it may be treated as surplusage. Hartnett v. Baker, 4 Pennew. (Del.) 431, 56 Atl. 672; Mcintosh v. Hodges, 110 Mich. 319, 322, 68 N. W. 158, 70 N. W. 550 ; Long v. Hartwell, 34 N. J. L. (5 Vroom) 116; Robinson v. Crowder, 4 McCord (S. Car.) 519, 17 Am. Dec. 762. "Lipsmeier v, Vehslage, 29 Fed. 175; Perot v. Cooper, 17 Colo. 80, 28 Pac. 391, 31 Am. St. 258; Whit- ford v. Herting, 60 III. App. 413; Murry v. Clayburn, 2 Bibb (Ky.) 300; Townsend v. Derby, 3 Mete. (Mass.) 363; Perley v. Perley, 144 Mass. 104, 10 N. E. 726; Young v. Shepard's Estate, 124 Mich. 552, 83 N. W. 403; Manistee Nat. Bank v. Seymour, 64 Mich. 59, 31 N. W. 140; Nichols &c. Co. V. Dedrick, 61 Minn. 513, 63 N. W. 1110; Cox v. Sloan, 158 Mo. 411, 57 S. W. 1052; Carn- wright V. Gray, 127 N. Y. 92, 27 N. E. 835, 12 L. R. A. 845, 24 Am. St. 424 ; Dalrymple v. Wyker, 60 Ohio St. 108, 53 N. E. 713; Derry v. Holman, 27 S. Car. 621, 2 S. E. 841 ; Tillman V. Heller, 78 Texas 597, 14 S. W. 700, 11 L. R. A. 628, 22 Am. St. 11; McClain v. Lowther, 35 W. Va. 297, 13 S. E. 1003. See Ginn v. Dolan, 81 Ohio St. 121, 90 N. E. 141, 135 Am. St. 761, and note on the Ijurden of proving want of consideration. But see Huntington v. Shute, 180 Mass. 371, 62 N. E. 380, 91 Am. St. 309, in which it is said that although the 329 CONSIDERATION. § 200 there is no recital in the instrument averring consideration, such as, "for value received."^* This presumption, however, becomes conclusive only when the instrument in question is in the hands of a bona fide holder for value. As against such a holder it can- not be shown that the paper is not founded upon a sufficient con- sideration.^° § 200. When presumed — Consideration declared unneces- sary by statute or rule of law. — Neither is a consideration necessary when declared unnecessary by statute. The rule re- quiring consideration is an equitable and common-law rule which may be repealed by statute.^" Contracts of record, more cor- rectly termed quasi contracts, such as judgments^^ and recogni- zances, or indemnity bonds^^ need not be supported by a consid- eration, but are binding by virtue of the fact that they are founded upon the authority and the sanction of a court of com- petent jurisdiction. § 201. When presumed — Contracts in writing. — In most of the code states all written contracts are presumed to have been made on sufficient consideration and the burden of proving want introduction of the note makes a pri- 381 ; Howry v. Eppinger, 34 Mich. ma facie case, yet if the question is 29; Jennings v. Todd, 118 Mo. 296, put in issue the party relying on the 24 S. W. 148, 40 Am. St. 373; Gre- note must establish the existence of neaux v. Wheeler, 6 Tex. SIS. consideration "by a fair preponder- '"Roberts v. Brooks, 71 Fed. 914, ance of the evidence." affd. 78 Fed. 411, 24 C. C. A. 58; " Holliday v. Atkinson, S Barn. & Thompson v. Blanckard, 3 N. Y. 33S ; Cr. 501; Grant v. Da Costa, 3 Mau. Bildersee v. Aden, 62 Barb. (N. Y.) & Sel. 3S1; Hatch v. Trayes, 11 Ad. 175. See also. Withers' Admr. v. & El. 702; Clayton v. Gosling, 5 Withers' Heirs, 30 Ky. L. 1099, 100 Barn. & Cr. 360; People v. McDer- S. W. 253, holding that a promise mott, 8 Cal. 288; Benjamin v. Till- by the recipient of assets of an es- man. Fed. Gas. No. 1304, 2 McLean tate to pay a debt of the estate was 213; Kendall v. Galvin, IS Maine not without consideration when the 131,' 32 Am. Dec. 141 ; Townsend v. beneficiary is by statute made liable Derby, 3 Mete. (Mass.) 363; Clarke for the debts of the testator to the V Marlow, 20 Mont. 249, 50 Pac. 713 ; extent of the assets received. Carnwright v. Gray, 127 N. Y. 92, ^ Reid v. Brown, Wilson Super. Ct. 27 N E. 835, 12 L. R. A. 845, 24 Am. (Ind.) 312; Kimbro v. Clark, 17 St. 424; Hughes v. Wheeler, 8 Cow. Nebr. 403, 22 N. W. 788; Burgess v. (N Y) n- Hubble v. Fogartie, 3 Simonson, 45 N. Y. 225; Minnesota Rich (S Car.) 413, 45 Am. Dec. Thresher Mfg. Co. v. Schaack, 10 S. 775- Arnold v. Sprague, 34 Vt. 402. Dak. 511, 74 N. W. 445. Contra, Da- " Goodman v. Harvev, 4 Ad. & El. vis v. Davis, 20 Ore. 78, 25 Pac. 140. 870; Murray v. Beckwith, 81 111. 43; ^Buffington v. Bronson, 61 Ohio Shenandoah Nat. Bank v. Marsh, 89 St. 231, 56 N. E. 762. See ch. 31, Im- lowa 273, 57 N. W. 458, 48 Am. St plied or Quasi Contracts. 202 CONTRACTS. of consideration rests on the party seeking to impugn it.^ this is not always true. 330 But § 202. When presumed — Executed contracts. — And in case a contract has been so far performed by one of the parties that the other party has received all that he contracted for, the con- sideration, even if lacking at the beginning, attaches and relates back to the inception of the contract and makes it binding on the parties."* Where a contract has been fully performed and exe- cuted the mere fact that it was never supported by a considera- ^ Kennedy v. Lee, 147 Cal. 596, 82 Pac. 257 ; Toomy v. Dumphy, 86 Cal. 639, 25 Pac. 130; Southern R. Co. v. Blunt, 155 Fed. 496; First M. E. Church V. Donnell, 95 Iowa 494, 64 N. W. 412; Byers v. Harris, 67 Iowa 685, 25 N. W. 879; Roller v. Ott, 14 Kans. 609; Waynick v. Richmond, 11 Kans. 488; Fuller v. Scott, 8 Kans. 25 ; Snowden v. Light, 5 Ky. L. 603 ; Williams Com. Co.'s Assignee v. W. A. Shirley, 136 Ky. 303, 124 S. W. 327; Houck v. Frisbee, 66 I\Io. App. 16; Wulze v. Schaefer, i7 Mo. App. 551 ; Shelton v. St. Louis &c. R. Co., 131 Mo. App. 560, 110 S. W. 627; Noyes v. Young, 32 Mont. 226, 79 Pac. 1063; Dackich v, Barich, 37 Mont. 490, 97 Pac. 931 ; Western Twine Co. V. Wright, 11 S. Dak. 521, 78 N. W. 942, 44 L. R. A. 438; Smith v. Gale, 13 S. Dak. 162, 82 N. W. 385 ; Grims- rud Shoe Co. v. Jackson, 22 S. Dak. 114, 115 N. W. 656; Kimm v. Wol- ters (S. Dak.), 133 N. W. 277; Till- man V. Heller, 78 Tex. 597, 14 S. W. 700, 11 L. R. A. 628, 22 Am. St. 77; Gulf &c. R. Co. V. Wright, 1 Tex. Civ. App. 402, 21 S. W. 80; Ash v. Beck (Tex. Civ. App.), 68 S. W. S3; Howard v. Zimpelman (Tex.), 14 S. W. 59; Western Mfg. Co. v. Free- man (Tex. Civ. App.), 126 S. W. 924. "Every contract in writing herein- after made shall import a considera- tion in the same manner and as fully as sealed instruments have hereto- fore done." First Nat. Bank v. Home Ins. Co, (N. M.), 113 Pac. 815, quot- ing § 12, c. 62, laws 1901. But if the plaintiff attempts, although un- necessarily, to show that there was a consideration for the written agree- ment, the presumption ceases. Noe v. Keen, 5 Ky. L. 928; Drexelius v. Leathers, 12 Ky. L. 142. A telegram containing a warranty of goods con- stitutes a contract in writing under § 3538, Comp. Laws S. Dak. which makes a written instrument presump- tive evidence of consideration. West- ern Twine Co. v. Wright, 11 S. Dak. 521, 78 N. W. 942, 44 L. R. A. 438. A recital of consideration in a con- tract of shipment is not conclusive evidence thereof, but it is prima facie evidence which must be contradicted or such contract will be sustained. Shelton v. St. Louis &c. R. Co., 131 Mo. App. 560, 110 S. W. 627. A con- tract which recites negotiations lead- ing up to its execution, and the con- sideration and purpose of the agree- ment is prima facie evidence of all the facts necessary to give it validity, including its consideration. In re Wickersham's Estate, 153 Cal. 603, 96 Pac. 311. But under such statutes, no presumption arises where the con- tract shows on its face that no con- sideration exists. Lane v. Richards, 119 Iowa 24, 91 N. W. 786. The bur- den of showing want of consideration sufficient to support a written instru- ment is upon him seeking to invali- date the instrument. Grimsrud Shoe Co. V. Jackson (S. Dak.), 115 N. W. 656. °*Laboyteaux v. Swigart, 103 Ind. 596, 3 N. E. 373 ; Maxwell v. Graves, 59 Iowa 613, 13 N. W. 758; Oregon &c. R. Co. V. Forrest, 128 N. Y. 83,i 28 N. E. 137. A promise, although a nudum pactum when made, because the promisee is not bound, may be- come binding when he subsequently furnishes the consideration by doing what he was expected to do. Peeples 33 1 CONSIDERATION. § 203 tion is immaterial, and affords no ground for rescission. ^° This is true even of a promise to make a gift.''" Notwithstanding the donor obtains possession of the gift after it has been delivered, he cannot retain it in case the donee seeks its recovery.^' § 203. What is meant by consideration. — Soon after the theory of consideration was differentiated from the then general rules governing the law of contracts and it had gained recognition as a fundamental principle, we find it spoken of as the quid pro quo, essential to an enforcible simple contract.^* This designa- tion of consideration is cumbersome and it was unsatisfactory for the reason that usage associated it with a promise to pay a debt or money obligation, while the origin of the defendant's lia- bility in assumpsit was that the plaintiff had been induced to act in reliance upon his promise. And it is upon this latter theory that the modern principle governing consideration rests. There- fore, broadly stated, consideration may be defined as any act or forbearance called for and induced by the promise.^^ It is quite generally stated that a consideration sufficient to support a con- V. Citizen's Nat. Life Ins. Co., (Ga.), Russell, 93 Tenn. 261, 2S S. W. 1070; 73 S. E. 1034. See also, Finnerty v. Williamson v. Johnson, 62 Vt. 378, Stratton's Estate (Colo.), 123 Pac. 20 Atl. 279, 9 L. R. A. 277, 22 Am. 667 (involving commissions earned St. 117. by finding purchaser for real estate). "Whiting v. Ralph, 75 Conn. 41, But see as to payment of part of a 52 Atl. 406; Whitford v. Horn, 18 liquidated claim, post, § 217 et seq; Kans. 4SS; Allen v. Knowlton, 47 Vt. note to Melroy v. Kenmerer, 11 L. R. 512. A. (N. S.) 1018; Ex parte Zeigler, 83 ""Y. B. 37 Hen. VI 8, pi. 18. S. Car. 78, 64 S. E. 513, 21 L. R. A. '' Street v. Gait, 136 App. Div. 724, (N. S.) 1005, and note. 121 N. Y. S. 514; Lyndon Sav. Bank ^Lamb's Estate V. Morrow (lowra), v. International Co., 78 Vt. 169, 62 117 N. W. 1118, 18 L. R. A. (N. S.) Atl. 50, 112 Am. St. 900. See Hen- 226. drick v. Lindsay, 93 U. S. 143, 23 L. ^ Smith V. Youngblood, 68 Ark. ed, 855, virhere it is said : "Any dam- 255, 58 S. W. 42; Williams v. Smith, age or suspension of a right, or pos- 66 Ark. 299, 50 S. W. 513; Minor sibility of a loss occasioned to the V. Rogers, 40 Conn. 512, 16 Am. plaintiff by the promise of another is Rep. 69; In re Camp's Appeal, 36 a sufficient consideration for such Conn. 88, 4 Am. Rep. 39; Berry promise, and will make it binding, V. Kinnaird, 14 Ky. L. 578, 20 _ S. although no actual benefit accrues to W. 511; Grover v. Grover, 24 Pick, the party promising," quoting from (Mass.) 261, 35 Am. Dec. 319; Rock- Pillan v. Van Mierop, 3 Burr. 1663. wood V. Wiggin, 16 Gray (Mass.) In Powell on Contracts, § 330, :t is 402; Holmes v. McDonald, 119 Mich, defined as "the material cause of a 563, 78 N. W. 647, 75 Am. St. 430; contract or agreement, or that, in ex- Walker V. Crucible Co., 47 N. J. Eq. pectation of which each party is in- 342, 20 Atl. 885; Fasset's Appeal, 167 duced to give his assent to what is Pa. St. 448, 31 Atl. 686 ; Marshall v. i stipulated reciprocally between both 203 CONTRACTS. 332 tract may be either a benefit accruing to the promisor, or a loss or disadvantage sustained by the promisee.'" However, it will be found that in practially every case the element of benefit to the promisor was accompanied by a detriment to the promisee, while on the other hand, detriment to the promisee unaccompanied by. any benefit to the promisor is sufficient consideration to sustain the contract." Consequently in unilateral contracts or contracts parties." In Phoenix Ins. Co. v. Rad- din, 120 U. S. 183, 7 Sup. Ct. SOO, consideration is defined or designated as "tliat which the party to whom a promise is made does or agrees to do in exchange for the promise." ""Alabama G. S. R. Co. v. South R. Co., 84 Ala. 570, 3 So. 286, 5 Am. St. 401 ; Phcenix Cement Sidewalk Co. V. Russellville &c. Co. (Ark), 140 S. W. 996; Cook v. Bradley, 7 Conn. 57, 18 Am. Dec. 79; Kemp v. Nat. Bank, 109 Fed. 48, 48 C. C. A. 213; Sanders v. Carter, 91 Ga. 450, 17 S. E. 345 ; Tompkins v. PhiHps, 12 Ga. 52 ; Molyneux v. ColUer, 17 Ga. 46; Doyle v. Knapp, 4 111. (3 Scam.) 334; Buchanan v. International Bank, 78 111. SOO; People v. Commercial Life Ins. Co., 247 111. 92, 93 N._ E. 90; Brown v. Marion Commercial Club (Ind. App.), 97 N. E. 958; Glasgow V. Hobbs. 32 Ind. 440 ; Starr v. Earle, 43 Ind. 478 ; Judd v. Martin, 97 Ind. 173 ; Grant v. Isett, 81 Kans. 439, 105 Pac. 1021; Van Winkle v. King, 141 Ky. 691, 141 S. W. 46; Lemaster v. Burckhart, 5 Ky. (2 Bibb) 25; Tal- bott V. Stemmons, 89 Ky. 222, 12 S. W. 297, 5 L. R. A. 856, 25 Am. St. 531 ; Ryan v. Trimble, 22 Ky. L. 1444, 60 S. W. 633; Overstreet v. Philips, 11 Ky. (1 Litt.) 120; Forster v. Fuller, 6 Mass. 58 ; Train v. Gold, 22 Mass. 380; Tucker v. Dolan, 109 Mo. App. 442, 84 S. W. 1126; Carr v. Card, 34 Mo. 513; Frye v. Hubbell, 74 N, H. 358. 68 Atl. 325; Conover V. Stillwell, 34 N. J. L, (5 Vroom.) 54; Day v. Gardner, 42 N. J. Eq. 199, 7 Atl. 365 ; Frear v. Hardenbergh, 5 Johns. (N. Y.) 272, 4 Am. Dec. 356; Powell V. Brown, 3 Johns. (N. Y.) 100; Wilkinson v. Chamber of Com- merce, 73 Misc. 141, 130 N. Y. S. 676 (promise by chamber of com- merce to pay the owner of property the difference between the price asked by him and the price ofifered by a purchaser if he would sell. Held, sale was in part for the benefit of the chamber of commerce) ; Erie Forge Co. v. Pennsylvania Iron Works Co., 22 Pa. Super. Ct. 550; Townsley v. Sumrall, 27 U. S. (2 Pet.) 170; Utah Nat. Bank v. Nelson (Utah), 111 Pac. 907 (giving a num- ber of definitions) ; Dorwin v. Smith, 35 Vt. 69; Tindall v. Northern Pac. R. Co. (Wash.), 107 Pac. 1045. When a benefit is derived on each side it satisfies the demand for a considera- tion. John L. Rowan & Co. v. Hull, 55 W. Va. 335, 47 S. E. 92, 104 Am. St. 998 ; Rutherford v. Rutherford, 55 W. Va. 56, 47 S. E. 240; Phoenix Life Ins. Co. V. Raddin, 120 U. S. 183, 197. "In a contract of insurance, the prom- ise of the insurer is to pay a certain amount of money upon certain con- ditions ; and the consideration on the part of the assured is his payment of the whole premium at the inception of the contract, or his payment of part then and his agreement to pay the rest at certain periods while it continues in force. * * * The ex- pression at the beginning of the pol- icy, that the insurance is made 'in consideration of the representations made in the application for this pol- icj',' and of certain sums paid and to be paid for premiums, does not make those representations part of the consideration, in the technical sense, or render it necessary or proper to plead them as such." »'Dyer v.^ McPhee, 6 Colo. 174; Clark V. Sigourney, 17 Conn. 511 ; White V. Walker, 31 111. 422; Milby V. Mowry, 125 111. App. 417; Hughes V. Sprague, 4 111. App. (4 Bradw.) 301 ; Druckamiller v. Coy, 42 Ind. App. 500, 85 N. E. 1028; Hunt v. Dederick, 105 Ind. 555, 5 N. E. 710; Pitcher v. Dove, 99 Ind. 175; Greene 333 CONSIDERATION. 204 when the consideration is executed, it would seem that the pri- mary if not the sole element which gives to the assumptual prom- ise its binding force is a detriment to the promisee. § 204. Distinguished from motive. — The "motive" for en- tering into a contract and the "consideration" of the contract are not the same. An expectation of certain results is often the motive which leads to the formation of a contract, but neither the expectation nor the result necessarily make the contract bind- ing. As is said in a frequently quoted case,^^ "Nothing is con- sideration that is not regarded as such by both parties. It is the price voluntarily paid for the promisor's undertaking."^^ There V. Bartholomew, 34 Ind. 235 ; Moench V. Hower (Iowa), US N. W. 229; Brown v. Jennett, 130 Iowa 311, 106 N. W. 747, 5 L. R. A. (N. S.) 725; Riegel v. Ormsby, 111 Iowa 10, 82 N. W. 432; Fain v. Turner's Admr., 96 Ky. 634, 16 Ky. L. 719, 29 S. W. 628; Ford V. Ingles Coal Co., 31 Ky. L. 382, 102 S. W. 332 ; Magee v. Catch- ing, 33 Miss. 672; Bigelow v. Bige- low, 95 Maine 17, 49 Atl. 49; Under- wood Typewriter Co. v. Century Realty Co., 118 Mo. App. 197, 94 S. W. 787; Halsa v. Halsa, 8 Mo. 303; Houck V. Frisbee, 66 Mo. App. 16; Hartzell v. Saunders, 49 Mo. 433, 8 Am. Rep. 136; Brannock v. Magoon, 141 Mo. App. 316, 125 S. W. 535; Southern Realty Co. v. Hannon, 89 Nebr. 802, 132 N. W. 533; Mack v. Mack, 87 Nebr. 819, 128 N. W. 527; Faulkner v. Gilbert, 57 Nebr. 544, 11 N. W. 1072; Henry v. Dussell, 71 Nebr. 691, 99 N. W. 484; White v. Baxter, 71 N. Y. 254; Kirkman v. Hodgin, 151 N. Car. 588, 66 S. E. 616; Brown v. Ray, 32 N. Car. (10 Ired.) 72, 51 Am. Dec. 379; Watkins V. James, 50 N. Car. lOS ; Wright v. Snell, 22 Ohio C. Co. 85; Corbett v. Cochran, 3 Hill (S. Car.) 41, 30 Am. Dec. 348; Johnson v. Laurence, 88 S. Car. 496. 70 S. E. 1025 ; Bills v. Polk, 4 Lea (Tenn.) 494; McKinney v. E. F. Rowson & Co. (Tex. Civ. App,), 146 S. W. 643; Violett v. Patton, 9 U. S. 142; County Court of Barbour County V. Hall, 51 W. Va. 269, 41 S. E. 119. Consideration means not so much that one party is profited as that the other abandons some legal right in the present, or limits his legal freedom of action in the future as an inducement for the act or promise for the first. Scriba v. Neely, 130 Mo. App. 258, 109 S. \Y. 845. The detri- ment to the promisee which suffices as a consideration for a contract must be a detriment on entering into the contract, not from the breach of it. Ridgway v. Grace, 2 Misc. (N. Y.) 293, 50 N. Y. St. 326, 21 N. Y. S. 934. See also, Phillips v. Riser, 8 Ga. App. 634, 70 S. E. 79; Ruppert V. Frauenknecht, 146 111. App. 397 (holding the execution of an instru- ment by one not obliged to execute it a sufficient consideration especially when a benefit is thereby conferred on the other party) ; Brown v. Jen- nett, 130 Iowa 311, 106 N. W. 747, 5 L. R. A. (N. S.) 725 (broker releas- ing claim for commission against owner upon agreement of the pur- chaser to pay it). See also, in con- nection with the last case the case of Cole V. Mendenhall, 117 App. Div. 786, 102 N. Y. S. 1030; Yeager v. Scott (Tex. Civ. App.), 132 S. W. 83 (attorney abandoning right to a fee) ; Utah Nat. Bank v. Nelson (Utah), 111 Pac. 907. ='Philpot V. Gruninger, 14 Wall. (U. S.) 570, 20 L. ed. 743. ""Levy & Cohn Mule Co. v. Kauff- man, 114 Fed. 170. To same effect. Brown v. Marion Commercial Club (Ind. App.), 97 N. E. 958. "The mere presence of some incident to a contract which might, under certain circumstances, be upheld as a con- sideration for a promise, does not § 205 CONTRACTS. 334 is a motive for every promise given ; therefore, if "motive" and "consideration" were synonymous, every promise, not vitiated by fraud or duress, would be en forcible at law but, as every one well knows, such is not the case.^* § 205, Concurrent, executed, executory and continuing consideration. — While practically every executory contract must be supported by a consideration, the consideration may be rendered or performed at different times. Classified as to time, consideration may be concurrent, executed, executory or continu- ing. Concurrent considerations arise in the case of mutual sim- ultaneous promises, the promise of each being the consideration for the other.'^ A consideration becomes executed in case the promisee does or forbears to do some lawful act which concludes his part of the contract and renders the proposal of the promisor binding upon such promisor. In short, an executed consideration is an act executed for a promise by virtue of which act the prom- ise is made binding. The defendant has received that for which he bargained and is bound by his promise.'^ Sir William Anson defined it in much the same language when he said : "Where the benefit in contemplation of which a promise is made is conferred necessarily make it the consideration estate supported by a sufficient con- fer the promise in that contract. To sideration. Parish v. Stone, 14 Pick, give it that effect, it must have been (Mass.) 198, 25 Am. Dec. 378. Nor offered by one party, and accepted is a note given by the wife in order by the other, as one element of the to save the husband from disgrace contract." Fire Ins. Assn. v. Wick- supported by a sufficient considera- ham, 141 U. S. 564. Compare vsrith tion. Mawhinney v. Cassio, 63 N. J. Burgher v. Wabash R. Co., 139 Mo. L. 412. 43 Atl. 676. App. 62, 120 S. W. 673. =' Cooke v. Oxley, 3 T. R. 653. See ■"Thomas v. Thomas, 2 Q. B. 851; post, § 231. Promise for Promise. Peek V. Peek, 11 Cal. 106, 19 Pac. 227, ^° A promise with an executed con- 1 L, R. A. 185, 11 Am. St. 244; Davis sideration is a unilateral contract. V. Morgan, 117 Ga. 504, 43 S. E. 732, Where there are two promises, each 61 L. R. A. 148, 97 Am. St. 171; the consideration of the other, the Trimble v. Rudy (Ky.), 53 L. R. A. contract is bilateral. Farrington v. 353 ; Graham v. Spence, 71 N. J. Eq. Tennessee, 95 U. S. 679, 24 L. ed. 183, 63 Atl. 344 ; Langdell's Summary 558. "In suits upon unilateral con- of the Law of Contracts, § 60. An tracts it is only where the defendant expectation on the part of the prom- has had the benefit of the considera- isee that the promisor would marry tion for which he bargained that he her is not a sufficient consideration can be held bound." Richardson v. for a promise. Raymond v. Sellick, Hardwick, 106 U. S. 252, 27 L. ed. 10 Conn. 480. Nor is a note given 145, 1 Sup. Ct. 213. Thus where a pub- by the maker for the purpose of lisher agrees with an author to pub- equalizing the distribution of his lish his book and the author con- 335 CONSIDERATION. § 205 at the same time that the promise acquires a binding force, — where it is the doing of an act that concludes the contract, — then the act so done is called an executed or present consideration for the promise."^' The term "executed consideration" must not be confused with that of "past consideration." A "past consideration" arises when some act has been done or forborne, without any promise having been given to induce such action and without any being implied by law, whereby a man is benefited. A subsequent promise by the beneficiary of the act to compensate the doer thereof is null and of no binding force. This principle was early recognized.^® The term "past consideration" is a misnomer. It tracts to pay a designated sum of money to the publisher which the lat- ter is to repay when a specified num- ber of volumes of the book have been sold, and the publisher does nothing toward publishing the book, the agreement of the author to pay the sum named is without considera- tion and cannot be enforced. Little- page V. Neale Pub. Co., 34 App. D. C. 257. It is a general rule that where a surety assumes the obliga- tions of suretyship in consideration of something to be done by the cred- itor, failure on the part of the latter to perform releases the surety. Law- rence V. Walrasley, 12 C. B. (N. S.) 799, 104 E. C. L. 799 ; Rolt v. Cozens, 18 C. B. 673, 25 L. J. C. P. 254; Smith V. Compton, 6 Cal. 24; Weldin v. Porter, 4 Houst. (Del.) 236; Jones V. Keer, 30 Ga. 93; Capps v. Smith, 3 Scam. (111.) 177; Jeffries v. Lamb. 73 Ind. 202; Campbell v. Gates, 17 Ind. 126; Port v. Robbins, 35 Iowa 208; Griggs v. Moors, 168 Mass. 354, 47 N. E. 128; Fay v. Jenks, 93 Mich. 130, 53 N. W. 163; Bookstaver v. Jayne, 60 N. Y. 146, revg. 3 Thomp. & C. 397; Crigler v. Bedell, 51 Hun (N. Y.) 638, 20 N. Y. St. Rep. 623, 4 N Y. S. 653 ; Walker v. Gold- smith, 7 Ore. 161; Durrell v. Far- well, 88 Tex. 98, 30 S. W. 539, 31 S. W. 185. Compare with United &c. Mfg. Co. V. Conard, 80 N. J. L. 286, 78 Atl. 203, Ann. Cas. 1912A, 412. See also, post, § 254, Failure of Consideration. See also, Cause v. Commonwealth Trust Co., 196 N. Y. 134, 89 N. E. 476. But upon the execution of the considera- tion or condition the contract be- comes absolute. Kennaway v. Tre- leavan, 5 M. & W. 498; Morton v. Burn, 7 Ad. & El. 19; Jones v. Robin- son, 17 L. J. Ex. 36; Mills v. Black- all, 11 Q. B. 358; Butler v. Thomson, 92 U. S. 412. 23 L. ed. 684 ; Frue v. Houghton, 6 Colo. 318. See also, Mott V. Jackson (Ala.), 55 So. 528; Buf- fington v. McNally, 192 Mass. 198, 78 N. E. 309; Holt v. United States Se- curity &c. Co. (N. J. L.), 67 Atl. 118. See also, Underwood Typewriter Co. v. Century Realty Co., 118 Mo. App. 197, 94 S. W. 787. Where defendant requested certain information which was furnished by plaintiff the law implied a promise to pay for such information where it was received and acted upon. An executed con- sideration given upon such a request will sustain a promise upon it. Fried- man V. Suttle, 10 Ariz. 57, 85 Pac. 726, 9 L. R. A. (N. S.) 933. ''Anson on Cont. (4th Ed.) 13. ■"l Rolle Abr. 11 pi. 1. See also, Allen V. Bryson, 67 Iowa 591, 56 Am. Rep. 358; Whitall v. Morse, 5 Serg. & R. (Pa.) 358; Davis v. Anderson, 99 Va. 620, 39 S. E. 588 ; Stoneburner v. Motley, 95 Va. 784, 30 S. E. 364. In Forbis v. Inman &c. Co., 23 Ore. 68, 31 Pac. 204, it is said, that if the consideration be past and the party derives a benefit, or if he is legally bound to pay, the subsequent promise implies a previous request, the legal effect of which is the same as if it § 205 CONTRACTS. 336 is in fact no consideration at all.''' But, as hereafter shown, that which is often called a past consideration may support a subse- quent promise where there was a request, either actual or im- plied under such circumstances as evidence an intention that there should be a recompense. An executory consideration arises where a promise is given to do or refrain from doing some act in return for another promise. In this case the consideration on both sides is executory, i. e., each promises to give or do something in the future. The contract is bilateral, because each of the parties is bound to fulfil an outstanding promise.*" A con- sideration which is executed in part before any promise is given in return therefor is called a continuing consideration, and is valid, the executory portion being sufficient to support the entire promise.*^ "Continuing considerations" might be termed as be- existed from the beginning, and the contract will be enforced. A prom- isor may bind himself by merging an oral agreement into a written con- tract, and cannot escape liability merely because the consideration had passed to the promisee prior to the execution of the written contract. Noyes v. Young, 32 Mont. 226, 79 Pac. 1063. It seems to be the general rule that past services are not a suf- ficient consideration for a promise to pay therefor, made at a subsequent time, and after such services have been fully rendered and completed ; but in some courts a modified doc- trine of moral obligation is adopted, and it is held that a moral obligation founded on previous benefits received by the promisor at the hands of the promisee will support a promise to pay him. Edson v. Poppe, 24 S. Dak. 466, 124 N. W, 441, 26 L, R. A. (N. S.) 534. See also, note 26 L. R. A. (N. S.) 520, S3 L. R. A. 353. ""Hopkins v. Logan, 5 M. & W. 241; Brooks v. Haigh, 10 Ad. & El. 323. "People V. Suburban R. Co., 178 111, 594, 53 N. E. 349, 49 L. R. A. 650 ; Ransdel v. Moore, 153 Ind. 393, S3 N. E. 767, 53 L, R. A. 753 ; Barrus v. Phaneuf, 166 Mass. 123, 44 N. E, 141. "A contract may be valid, though based on no consideration presently supplied, if there is a promise that one shall be supplied." Bing v. Bank of Kingston, S Ga. App. 578, 63 S. E. 652. "Stilk v. Myrick, 2 Camp. 317; Beston v. Roberts, 58 Ala. 331 ; Parke &c. Co. V. San Francisco Bridge Co., 145 Cal. 534, 78 Pac. 1065, 79 Pac. 71; Irwin v. Locke, 20 Colo. 148, 36 Pac. 898; Fisk Min. &c. Co. v. Reed, 32 Colo. 506, 77 Pac. 240; Hargroves V. Cooke, IS Ga. 321 ; Wiggins v. Keizer, 6 Ind. 252; Loomis v. New- hall, 15 Pick. (Mass.) 159; Carroll v. Nixon, 4 Watts & S. (Pa.) 517. It cannot be doubted that where there is a request and continuous services of value are rendered to the person making the request, the consideration is a valid one, and will support a promise to pay for such services, al- though some of them were rendered prior to the request. Wolford v. Powers, 85 Ind. 294, 44 Am. Rep. 16. A promise to pay for the support of a bastard child, past and future, if the stepfather will continue to sup- port it, is binding on the father. Wig- gins V. Keizer, 6 Ind. 252. Where defendant's wife, at his request, re- sided with the plaintiff for a year after their marriage, and about the middle of the year defendant prom- ised to pay his wife's board for the whole year at the end thereof, the promise was held good. Colton v. Wescott, 3 Bulst. 187. Where the 337 CONSIDERATION. § 206 ing in the "twilight zone" between "past considerations" and "executed considerations." § 206. Good consideration. — Apart from the time of their rendition or performance, considerations may be distinguished according to their nature as good, valuable and equitable or moral. A "good consideration" is such as that of blood, or of natural love and affection, as when a man grants an estate to a near relation, being founded on motives of generosity, prudence, and natural duty.^^ § 207. Valuable consideration. — A valuable consideration is generally defined as "some right, interest, profit or benefit ac- cruing to one party, or some forbearance, detriment, loss or re- sponsibility given, suffered or undertaken by the other."" There is danger, however, of misunderstanding this definition. The term "benefit" does not refer necessarily to a money gain arising out of the transaction, but has reference to any advantage or benefit slight but recognizable at law, derived by the promisor in return for his promise.^* Nor does the term detriment refer to I defendant, after the plaintiff, a doc- 162 ; Mascolo v. Montesanto, 61 Conn, tor, had made several professional SO, 23 Atl. 714, 29 Am. St. 170; Riegel calls on his married daughter, prom- v. Ormsby, 111 Iowa 10, 82 N. W. ised to pay plaintiff's bill, it was held 432; Price's Admx. v. Price's Admx., that the promise was founded on a 23 Ky. L. 1911, 66 S. W. 529; Cooper valid consideration. Bagley v. Moul- v. Hayward, 71 Minn. 374, 74 N. W. ton, 42 Vt. 184. 152, 70 Am. St. 330; Brownlow v. " 2 Black. Comm. 297 ; 1 Parsons on Wollard, 66 Mo. App. 636 ; In re Contracts (6th ed.) 431; Candee v. Lehnhoff's Estate (Nebr.), 109 N. W. Connecticut Sav. Bank, 81 Conn. 372, 164; Faulkner v. Gilbert, 57 Nebr. 71 Atl. 551. See post, § 246. There- 544, 77 N. W. 1072; Morse v. Bel- lationship of parent and child or hus- lows, 7 N. H. 549, 28 Am. Dec. 372 ; band and wife is such that it may Corle v. Monkhouse, 50 N. J. Eq. 537, constitute a good consideration. 25 Atl. 157; Dalrymple v. Wyker, 60 Nichols V. Emery, 109 Cal. 323, 41 Ohio St. 108, 53 N. E. 713; Rector v. Pac. 1089; Oliphant v. Liversidge, 142 Wood, 24 Ore. 396, 34 Pac. 18, 41 Am. 111. 160, 30 N. g. 334; Pierson v. St. 860; Eastman Land &c. Co. v. Armstrong, 1 Iowa 282, 63 Am. Dec. Long-Bell Lumber Co. (Okla.), 120 440; In re Ferguson's Appeal, 117 Pa. Pac. 276; Darcey v. Darcey, 29 R. I. St. 426, 11 Atl. 885; Stafford v. Staf- 384, 71 Atl. 595; Brooklyn City &c. ford, 41 Tex. 111. See also, Schneit- R. Co. v. Nat. Bank, 102 U. S. 14, 26 ter V. Carman, 98 Iowa 276, 67 N. W. L. ed. 61. 249 (parent and step-child) ; Beith " Sanders v. Carter, 91 Ga. 450, 17 v. Beith, 76 Iowa 601, 41 N. W. 371 S. E. 345 ; Talbott v. Stemmon s (mother-in-law and daughter-in-law) : Admr., 10 Ky. L. 33; Ryan y. Trim- Bell V. Scammon, 15 N. H. 381, 4l ble, 22 Ky. L. 1444 60 S. W. 633; Am Dec. 706 (father-in-law and son- Tucker v, Dolan, 109 Mo. App. 442, in-law). 84 S. W. 1126; Erie Forge Co. v. " Currie v. Misa, L. R. 10 Exch. Pennsylvania Iron Works Co., 22 Pa. 22— Contracts, Vol. i § 207 CONTRACTS. 338 any pecuniary loss. Any act done by the promisee, at the request of the promisor, by which the former sustains any loss, trouble or inconvenience, even of the most trifling description, if not ut- terly worthless in the eye of the law, constitutes a valuable con- sideration for a promise.*^ While it is well recognized that the term "valuable consideration" as 'iised in a deed necessarily re- quires something of actual value, capable of pecuniary measure- ment, in estimation of law,, such as the parting with money or money's worth or an actual change of the purchaser's legal posi- tion, the amount is not material if the transaction is otherwise in good faith.*" Whether the contract rests upon a valuable con- sideration must be determined by the conditions as they exist Super. Ct. 550. Marriage is a valu- able consideration. Nelson v. Brown, 164 Ala. 397, 57 So. 360, 137 Am. St. 61. The leasing of property may be a valuable consideration for a prom- ise by one who is interested in the property leased. Person &c. Co. v. Lipps, 219 Pa. 99, 67 Atl. 1081. See also. Phoenix Cement &c. Co. v. Rus- sellville Water &c. Co. (Ark.), 140 S. W. 996. An expectation or a hope, if it has an appreciable value, is a sufficient consideration to support a contract of sale. Gill v. Stebbins, 2 Paine (U. S.) 417, Fed. Cas. No. 5431; Garrow v. Davis, 15 How. (U. S.) 271. " Clark V. Sigourney, 17 Conn. 511 ; Talbott V. Stemmons's Admr., 10 Ky. L. 33 ; Bigelow v. Bigelow, 95 Maine 17, 49 Atl. 49; Nicholson v. Acme Cement Plaster Co., 145 Mo. App. 523, 122 S. W. 773 ; Tucker v. Dolan, 109 Mo. App. 442, 84 S. W. 1126. In order to constitute a valuable con- sideration for a promise, neither the benefit to the promisor nor the detri- ment to the promisee need be actual. It would be a detriment to the prom- isee, in a legal sense, if he, 'id the request of the promisor and on the strength of his promise, performed any act which occasioned him the slightest trouble or inconvenience, and which he was not obliged to per- form. Bigelow V. Bigelow, 95 Maine 17, 49 Atl. 49. Under the circum- stances, remaining in the house was a detriment to the lessee, and this would be a good consideration for the new agreement between him and his lessor. White v. Walker, 31 111. 422. It may be a benefit in fact but a detri- ment at law, as the giving up of a vicious habit. Dunton v. Dunton, 18 Vict. L. R. 114; Hamer v. SidwayX 124 N. Y. 538, 27 N. E. 256. A change of residence at another's request is a valid consideration for a promise to pay money. Burgesser v. Wendel, 73 N. J. L. 286, 62 Atl. 994. " Tourville v. Naish, 3 P. Wms. 306; Story v. Windsor, 2 Atk. 631; Brown v. Welch, 18 111. 343, 68 Am. Dec. 549; Keys v. Test, 33 111. 316; Palmer v. Williams, 24 Mich. 328; McLeod V. First Nat. Bank, 42 Miss. 99; Aubuchon v. Bender, 44 Mo. 560; Haughwout V. Murphy, 21 N. J. Eq. 118; Wood V. Chapin, 13 N. Y. 509; Lawrence v. Clark, 36 N. Y. 128; Williams V. Shelly, 37 N. Y. 375; Weaver v. Barden, 49 N. Y. 286; Delancy v. Stearns, 66 N. Y. 157 ; Westbrook v. Gleason, 79 N. Y. 23; Gary v. White, 52 N. Y. 138; Reed v. Gannon, 3 Daly (N. Y.) 414, revd., 50 N. Y. 345; Seward v. Jackson, 8 Cow. (N. Y.) 406; Pickett v. Bar- ron, 29 Barb. (N. Y.) 505; Webster V. Van Steenbergh, 46 Barb. (N. Y.) 211; Penfield v. Dunbar, 64 Barb. (N. Y.) 239; Roxborough v. Messick, 6 Ohio St. 448, 67 Am. Dec. 346 ; Munn V. McDonald, 10 Watts (Pa.) 270; Union Canal Co. v. Young, 1 Whart. (Pa.) 410; Spurlock v. Sullivan, 3f Texas 511. 339 CONSIDERATION. § 2o8 when it is made, not as they may be at some subsequent time." In the absence of any sufficient consideration the law supplies no means and affords no remedy to compel the performance of a simple executory agreement made without consideration; such a contract is a nude pact, and not binding in law no matter how strongly it may appeal to the conscience.*^ § 208. Nudum pactum. — The term nudum pactum is of an- icient origin, and was originally adopted from the Roman law. In Roman law the pactum was an agreement which could not support an action for affirmative relief, though it might supply the subject-matter of a good defense. In medieval times the dis- tinction between the contract and pactum was broken down, and it came to be the generally accepted doctrine that any contract was enforcible provided it was based on an adequate "causa" or cause. A nude pact then became known as an agreement or promise not supported by a sufficient "causa" in the eye of the civil law. The "causa" of the civil law corresponds to the con- sideration of the common law. We adopted the term nudum pactum without change.** In St. Germain's Doctor and Student, Dialogue II, chap. 24, it is said : "A nude contract is, when a man maketh a bargain, or a sale of his goods or lands, without any recompense appointed for it ; as if I say to another, I sell thee all my land, or else my goods, and nothing is assigned that the other shall give or pay for it ; this is a nude contract, and as I take it, it is void in the law and conscience. And a nude or naked prom- ise is, where a man promiseth another to give him certain money such a day, or to build an house, or to do him such certain serv- ice,. and nothing is assigned for the money, for the building, nor "Casserleigh v. Wood, 119 Fed. (Mass.) 385, 7 Pick. (Mass.) 243; 308, 56 C. C. A. 212.. Culver v. Banning, 19 Minn. 303; *'Rann v. Hughes, 7 T. R. 3S0n; State v. Associated Press, 159 Mo. > Cooke V. Oxley, 3 Term. R. 653; Wil- 410, 81 Am. St. 368; Reynolds v. Bur- kerson V. Oliveira, 1 Bing. N. C. 490; lington &c. R. Co., 11 Neb. 186, 7 Smith's Case, 3 Leon. 88; Hendy v. N. W. 737; Lang v. Johnson, 24 N. Kier, 59 Cal. 138; Lowe v. Bryant, H. 302; Conover v. Stillwell, 34 N. 32 Ga. 235 ; Eagle Mfg. Co. v. Jen- J. L. 54 ; Pearson v. Pearson, 7 Johns. nings, 29 Kans. 657, 44 Am. Rep. 668; (N. Y.) 26; Travis v. Duffau, 20 Gay V. Botts, 13 Bush. (Ky.) 299; Texas 49; Dorwin v. Smith, 35 Vt. Ames V. Taylor, 49 Maine 381 ; Rich- 69. ardson v. Williams, 49 Maine 558 ; " Street on Foundations of Legal Aldridge v. Turner, 1 Gill & J. (Md.) Liability 36, 37. See also, Broom's 427; Tenney v. Prince, 4 Pick. Leg. Max. 745. § 209 CONTRACTS. 34O for the service ; these be called naked promises, because there is nothing assigned why they should be made ; and I think no action lieth in those cases, though they should not be performed. Also if I promise to another to keep him such certain goods safely to such a time, and after I refuse to take them, there lieth no act on against me for it. But if I take them, and after they be lost or impaired through my negligent keeping, there an action lieth." Many illustrative cases are referred to in subsequent sections of this chapter, but the following are typical. Thus, a gratuitous promise by the payee of a note to the surety thereon to sue forth- with, not founded upon any new consideration, is a mere nudum pactum.^" And a mere gratuitous promise "not to make any trouble" on a claim which could not be enforced, where no ad- vantage accrues to the one party and no loss or disadvantage is caused the other, is a nudum pactum. ^^ So, where A had made a binding contract with B to give B a mortgage on certain prop- erty, but afterward, as a condition to the execution of the mort- gage, exacted a promise from B to pay a debt due from A to C, not included in the original transaction, such promise was held to be without consideration and not enforcible by C.°^ A promise in writing to sell cotton, not signed by the other party to the agreement and which showed no promise to take and pay for the cotton, or other consideration for the promise to sell, has been held a nudum pactum.^'* § 209. Sufficient consideration or adequate consideration. — While the courts refuse to give effect to a contract unsupported by a consideration, and insist that the consideration be something " Mendel v. Cairnes, 84 Ind. 141. tous promise. Hardison v. Reel, 154 " Anderson v. Nystrora, 103 Minn. N. Car. 273, 70 S. E. 463. 168, 114 N. W. 742, 123 Am. St. 320. '^Runkle & Fouse v. Kettering, 127 See also, the leading case of White Iowa 6, 102 N. W. 142. V. Bluett, 23 L. J. Exch. 36; Widger "^Mallett v. Watkins, 132 Ga. 700, V. Baxter, 190 Mass. 130, 76 N. E. 64 S. E. 999. See also, Eustice v. 509, 3 L. R. A. (N.'S.) 436, and note. Neytrott (Ark.), 140 S. W. 590; A voluntary promise to perform a Velie Motor Car Co. v. Kopmeier gratuitous service is a nudum pac- Motor Car Co., 194 Fed. 324. In case turn. Brown v. Lyford, 103 Maine the consideration is subsequently fur- 362, 69 Atl. 544. See also, New York nished a nude pact may become bind- Automobile Co. v. Franklin, 49 Misc. ing. Peeples v. Citizens' Nat. Life (N. Y.) 8, 97 N. Y. S. 781. One is Ins. Co. (Ga. App.), 74 S. E. 1034. not liable for the breach of a gratui- 341 CONSIDERATION. § 209 of value in the eyes of the law, yet it need not be adequate. Courts do not inquire into the proportionate value of the thing received ; that is for the parties to settle. If the parties get that which they bargained for and were not acting under mistake, fraud or the like, the courts do not concern themselves with the relative values exchanged or the wisdom of the contract-^V This general doctrine is applied and illustrated in a multitude of cases."** The promisor will not be heard to say that that which ""When a thing is to be done by the plaintiff, be it never so small, this is a sufficient consideration to ground an action." Sturlyn v. Albany, Cro. Eliz. 67; Brooks v. Haigh, 10 Ad. & El. 323; Thornborow v. Whitacre, 2 Ld. Raym. 1164; Pilkington v. Scott, 15 M. & W. 657; Skeate v. Beale, 11 Ad. & El. 983 ; Hitchcock v. Coker, 6 Ad. & El. 438; Phillips v. Bateman, 16 East 356; Kirwan v. Kirwan, 2 Cr. & M. 617; Lawrence v. McCal- mont, 2 How. (U. S.) 426, 11 L. ed. 326; Hoot v. Sorrell, 11 Ala. 386; Woodruff V. McDonald, 33 Ark. 97; In re Wickersham's Estate (Cal.), 96 Pac. 311; Barnum v. Barnum, 8 Conn. 469, 21 Am. Dec. 689; Clark V. Sigourney, 17 Conn. 511; Bates v. Capital State Bank (Idaho), 121 Pac. 561; Duffy V. Shockey, 11 Ind. 70, 71 Am. Dec. 348; Chicago &c. R. Co. v. Derkes, 103 Ind. 520, 3 N. E. 239; Price V. Jones, 105 Ind. 543, 5 N. E. 683, 55 Am. Rep. 230 ; Knarr v. Sand Creek Tpk. Co., 45 Ind. 278; Smock V. Pierson, 68 Ind. 405, 34 Am. Rep. 269; Farber v. National Forge &c. Co., 140 Ind. 54, 39 N. E. 249; Mul- len V. Hawkins, 141 Ind. 363, 40 N. E. 191; Pierce v. Pierce, 17 Ind. App. 107, 46 N. E. 480; Drefahl v. Secur- ity &c. Bank, 132 Iowa 563, 107 N. W. 179 ; Mail &c. Pub. Co. v. Marks, 125 Iowa 622, 101 N. W. 458; Caplice v. Kelley, 27 Kans. 359; Matthis v. O'Brien, 137 Ky. 651, 126 S. W. 156; Scholl V. Hopper, 134 Ky. 83, 119 S. W. 770 ; Guerand v. Dandelet, 32 Md. 561, 3 Am. Rep. 164; Drury v. Bris- coe, 42 Md. 154; Hubbard v. Cool- idge, 1 Mete. (Mass.) 84; Forbs v. St. Louis &c. R. Co., 107 Mo. App. 661, 82 S. W. 562; Clark v. Robert- son, 135 Mo. App. 90, 115 S. W. 514 (promise to release claim for rent bill supported by promise to cut wil- lows) ; Bedel v. Loomis, 11 N. H. 9; Sanborn v. French, 2 Foster (N. H.) 246; Earl v. Peck, 64 N. Y. 596; Oak- ley V. Boorman, 21 Wend. (N. Y.) 588; Worth v. Case, 42 N. Y. 362; Judy V. Louderman, 48 Ohio St. 562, 29 N. E. 181; Van Arsdale v. Brown, 18 Ohio Cir. Ct. 52; Threlkeld v. Stewart, 24 Okl. 403, 103 Pac. 630; Hind V. Holdship, 2 Watts (Pa.) 104, 26 Am. Dec. 107; Harlan v. Harlan, 20 Pa. St. 303 ; Davidson v. Little, 22 Pa. St. 245, 60 Am. Dec. 81 ; White- field V. McLeod, 2 Bay (S. Car.) 380, 1 Am. Dec. 650; Goree v. Wilson, 1 Bail. (S. Car.) 597; Randle v. Har- ris, 6 Yerg. (Tenn.) 508; Giddings V. Giddings' Admr., 51 Vt. 227, 31 Am. Rep. 682; Whittle v. Skinner, 23 Vt. 531 ; Troy Academy v. Nelson, 24 Vt. 189; Banner v. Rosser, 96 Va. 238, 31 S. E. 67; Tausick v. Tausick, 52 Wash. 301, 100 Pac. 757; Wood v. Boynton, 64 Wis. 265, 25 N. W. 42, 54 Am. Rep. 610n. "It is sufficient that the consideration be of some value. It may only be of slight value or such as would be of value to the party promising." Bloodworth v. Boos- er (Ark.), 138 S. W. 457. "3 "Adequacy or inadequacy of con- sideration is a subject to be considered by the parties at the time they make the contract. There is no law regulat- ing the amount of consideration nec- essary to support a particular prom- ise. If the parties have the capacity to contract and there is no fraud or mis- placed confidence, and there is any valuable consideration, the courts will enforce the contract according to its terras." Atlanta &c. R. Co. v. Camp, 130 Ga. 1,60 S. E. 177, 124 Am. St. 151. "Where the parties agree upon a con- sideration, and it is one of indeter- minate value, the courts will not sub- stitute their judgment for that of the 209 CONTRACTS. 342 he contracted for was of no value in case he has received the benefit of it, and would not have been entitled to such benefit except for the contract.^^ contracting parties, but will uphold the contract." First Nat. Bank v. Farm- ers' &c. Nat. Bank, 171 Ind. 323, 86 N. E. 411. If an agreement be made bona fide it will be valid no matter how insignificant the consideration or how slight the inconvenience or dam- age appears to be to the promisee, provided it be susceptible of legal es- timation. Blake v. Blake, 7 Iowa 46. A contract by which one's right and interest in the dead, against desecra- tion of their graves, is supported by a consideration. Orr v. Dayton &c. Tract. Co. (Ind,), 96 N. E. 462. The contract between a railroad company and a traction company, whereby each was to bear one-half the cost of in- stalling and maintaining lights on cer- tain corners where the railroad lines of the parties intersected, has been held supported by a sufficient con- sideration. Beaumont Tract. Co. v. Texarkana &c. R. Co. (Texas), 123 S. W. 124. An agreement not to pub- lish certain matter (said to be de- famatory and false) predicated upon the delivery of certain papers, the value of which was not disclosed, has been held supported by a sufficient consideration. National Life Ins. Co. V. Myers, 140 III. App. 392, The suffi- ciency of the consideration for an honest bargain could not be inquired into if there was any consideration of value which was not separable at the time into specific values. Kennedy v. Shaw, 43 Mich. 359, S N. W. 396. One consideration may sustain a num- ber of agreements covering more than one subject, Studwell v. Bush Co,, 126 App, Div. (N, Y,) 818, 111 N, Y. S, 293, To same effect, Johnson v. Wilkerson (Ark,), 131 S, W, 690, See also, McAulifTe v, Vaughan, 135 Ga, 852, 70 S. E, 322, 33 L, R. A. (N, S,) 255, " Mound City Land &c, Assn. v. Slauson, 65 Cal. 425, 4 Pac. 396; Mi- zell Live Stock Co. v. J. T. McCaskill Co., 59 Fla, 322, 51 So, 547: Cates v. Bales, 78 Ind, 285; Hall Mfg, Co. v. American R, &c, Co,, 48 Mich, 331, 12 N. W. 205; Marston v, Swett. 82 N, Y. 526; Angler v. Eaton &c. Co., 98 Pa. St. 594; Sykes v. Chadwick, 18 Wall. (U. S.) 141, 21 L. ed. 824; Brooks V. Wage, 85 Wis. 12, 54 N. W. 997. The licensee of an invalid patent, in case he uses the invention the same as if it were valid and re- ceives the benefit of it, cannot avoid paying the license fees because of the invalidity. Bartlett v. Holbrook. 1 Gray (Mass,) 114; Marston v. Swett, 66 N. Y. 206, 23 Am, Rep. 43 ; Davis v. Gray, 17 Ohio St. 330; Kins- man V. Parkhurst, 18 How. (U. S.) 289, IS L. ed. 385. But it is other- wise if by reason of the invalidity he has not enjoyed a monopoly con- templated by the license. White v. Lee, 14 Fed. 789; Harlow v. Put- nam, 124 Mass. 553. The advantage to the surety on a contractor's bond of having the work progress has been held sufficient consideration for the surety's promise to pay the owner of a dredge the amount due him if he would continue work. Taylor v. Guinan, 67 Misc. (N. Y.) 262, 124 N. Y, S, 408, afifd, 141 App, Div. (N. Y.) 921, 126 N. Y. S. 1147. "The fact that a foolish contract was made, so far as one party is concerned, will not invalidate the contract," Dewitt v. Bowers (Tex. Civ. App,), 138 S, W. 1147, The courts are not concerned with the wisdom or folly of con- tracts, Florida Assn. v. Stevens, 61 Fla. 598, 55 So. 981. In the absence of fraud or overreaching the ade- quacy of the consideration is solely the business of the parties. The court inquires only into its legality, and not whether an improvident bar- gain has been made. Nelson v. Brassington, 64 Wash, 180, 116 Pac. 629, The consideration must be valu- able and legal, Saunders v. Bank of Mecklenburg, 112 Va, 443, 71 S, E. 714, A contract of employment, which provides for a certain wage in any event and for additional com- pensation in case the employe stays with his employment for a stipulated period of time, has been held not a nude pact, Hoag v, Rogers (Ga, App,), 72 S, E, 46, See also, Tohn- ston V, Stearns, 160 Mich, 247, 125 N. W, 29, 16 Detroit Leg, N, 1076 343 CONSIDERATION. § 210 § 210. Insufficient or inadequate consideration. — To this rule there is one well-recognized exception. Where the things contracted for on each side are either money or something fixed by law at a certain value in money, the courts may pass upon the ade- quacy of the consideration."** A money consideration is capable of exact and definite admeasurement; its value is fixed and un- alterable, and there can be no uncertainty as to its adequacy or inadequacy. Therefore, a promise to pay one sum of money in exchange for another is without consideration, except in so far as the money to be repaid equals the original money plus a legal rate of interest.'*^' And so where the law fixes a certain value on specified services a contract lo pay more"^ or less^" than the fee allowed by law is without consideration and invalid, even though such officer exerts himself more than usual."" So, if the consideration is so grossly inadequate as to "shock the conscience", and amounts in itself to conclusive evidence of (agreement by employer to sell shares of its stock to employe to be paid out of the profits of the business, iip- held). See also in connection with this last case, Herron v. Stewart, 30 Ohio Cir. Ct. 662. "Wolford V. Powers, 85 Ind. 298, 44 Am. Rep. 16; Kennedy v. Shaw, 43 Mich. 359, 5 N. W. 396. "In es- timating the value of a thing as the consideration for a promise, there is a manifest distinction between prop- erty of a certain and determinate value and things which have but a contingent and indeterminate value." Bloodworth v. Booser (Ark.), 138 S. W. 457. "Schnell v. Nell, 17 Ind. 29, 79 Am. Dec. 453; Hey v. Harding, 21 Ky. L. 771, 53 S. W. 33; Andrews v. Schmidt, 10 N. Dak. 1, 84 N. W. 568; Shepard v. Rhodes, 7 R. I. 470, 84 Am. Dec. 573. A judgment re- covered upon a promissory note, pay- able in gold, was paid in full in legal tender notes. Gold was at a prem- ium and at the time of the above payment the judgment debtor ex- ecuted to the creditor a note to cover the difference between the value of legal tender notes and gold. The latter note was held to be without consideration. Turner v. Young, 27 Ind. 373, 89 Am. Dec. 508. Contra, Smith V. McKinney, 22 Ohio St. 200. ■"Stotesbury v. Smith, 2 Burr. 924; Morrell v. Quarles, 35 Ala. 544; De- catur V. Vermillion, 77 111. 315 ; Kern- ion V. Hills, 1 La. Ann. 419; Burk V. Webb, 32 Mich. 173; Evans v. Trenton, 24 N. J. L. 764; Carpenter V. Taylor, 164 N. Y. 171, 58 N. E. 53; Crofut v. Brandt, 58 N. Y. 106, 47 How. Pr. (N. Y.) 263, 17 Am. Rep. 213; Downs v. McGlynn, 6 Abb. Pr. (N. Y.) 241, 2 Hill. 14; Gilmore V. Lewis, 12 Ohio 281 ; Territory v. King, 1 Ore. 106; Smith v. Whildin, 10 Pa. St. 39, 49 Am. Dec. 572; Dull V. Mammoth Min. Co., 28 Utah 467, 79 Pac. 1050. ■» Settle V. Sterling, 1 Idaho 259; Hawkeye Ins. Co. v. Brainard, 72 Iowa 130, 33 N. W. 603; People v. Board of Police, 75 N. Y. 38; Tap- pan V. Brown, 9 Wend._ (N. Y.) 175. For county clerk agreeing to charge less than legal fee for certain serv- ices, see Duncan v. Scott County, 68 Ark. 276, 57 S. W. 934. For no- tary agreeing to accept less than legal fee, see Ohio Nat. Bank v. Hop- kins, 8 App. D. C. 146. "Hatch v. Mann, 15 Wend. (N. Y.) 44. § 2IO CONTRACTS. 344 fraud, it will enable the promisor to resist a suit for specific per- formance/^ or obtain a cancellation of the promise."^ The con- sideration may be so grossly inadequate as to raise a presumption of fraud and mistake."'' But it is the fraud and not the mere in- adequacy of the consideration that invalidates the contract." '^Shepherd v. Bevin, 9 Gill (Md.) 32; Seymour v. Delancy, 3 Cow. (N. Y.) 44S; Galloway v. Barr, 12 Ohio St. 354; Cathcart v. Robinson, S Pet. (U. S.) 264; Conrad v. Schwamb, 53 Wis. 372, 10 N. W._ 395. An un- conscionable contract is one "such as no man in his senses, and not under a delusion, would make on the one hand, and no honest and fair man would accept on the other." Wen- ninger V. Mitchell, 139 Mo. App. 420, 122 S, W. 1130. " Gwynne v. Heaton, 1 Brown Ch. 1; Bowhan v. Patrick, 36 Fed. 138, revd., 149 U. S. 411, 37 L. ed. 790, 13 Sup. Ct. 811 ; Stephens v. Ozbourne, 107 Tenn. 572, 64 S. W. 902, 89 Am. St. 957; Pennybacker v. Laidley, 33 W. Va. 624, 11 S. E. 39. The in- adequacy must be established as of the date of the contract, and if there were not, at that date, such an in- adequacy as to shock the "moral sense" none can arise from subse- quent enhancement, depreciation or change of circumstances. Penny- backer V. Laidley, 33 W. Va. 624, 11 S. E. 39. Where one sold and another bought a diamond worth $700 for one dollar, the stone being open to the inspection of both, both being ignorant of its real value and supposing the price to be a fair one, the sale cannot be rescinded. Wood V. Boynton, 64 Wis. 265, 25 N. W. 42, 54 Am. Rep. 610, and note. This case merely goes to the point that, when an executed sale has been fairly made, inadequate consideration is alone insufficient to set it aside. Mere inadequacy of consideration, unless extremely gross, does not per se prove fraud. Kempner v. Churchill, 8 Wall. (U. S.) 362, 19 L. ed. 461. "^Griffith V. Spratley, 1 Cox 383; Cowen V. Adams, 78 Fed. 536, 24 C. C. A. 198; Eyre v. Potter, 15 How. (U. S.) 42, 14 L. ed. 592; Follett v. Rose, 3 McLean (U. S.) 332, Fed. Cas. No. 4900. For confidential re- lation between principal and agent, see Burke v. Taylor, 94 Ala. 530, 10 So. 129; Juzan v. Toulmin, 9 Ala. 662, 44 Am. Dec. 448; Duncan v. Sanders, 50 III. 475; Brown v. Budd, 21 Ind. 442; Hunter v. McLaughlin, 43 Ind. 38; Blake v. Blake, 7 Clarke (Iowa) 46; Talbott's Devisees v. Hooser, 12 Bush (Ky.) 408. For confidential relation between attor- ney and client, see Leggat v. Leggat, 13 Mont. 190, 33 Pac. 5. For con- fidential relation between guardian and ward, see Williams v. Powell, 1 Ired. Eq. (N. Car.) 460; Green v. Thompson, 37 N. Car. 365 ; Judy v. Louderman, 48 Ohio St 562, 29 N. E. 181 ; Knobb v. Lindsay, 5 Ohio 468; Merriraan v. Lacefield, 4 Heisk. (Tenn.) 209; Mann v. Russey, 101 Tenn. 596, 49 S. W. 835; Talbott v. Manard; 106 Tenn. 60, 59 S. W. 340; Briscoe v. Bronaugh, 1 Tex. 326, 46 Am. Dec. 108; Lowe v. Trundle, 78 Va. 65; Crebs v. Jones, 79 Va. 381. " Harrison v. Guest, 6 De G. M. & G. 424; Davies v. Cooper, 5 M. & Cr. 270; Falcke v. Gray, 4 Drew. 651 ; Mortlock v. Buller, 10 Ves. 315 ; Coles v. Trecothick, 9 Ves. 234; Borell v. Dann, 2 Hare 440; Morrill V. Everson, 77 Cal. 114, 19 Pac. 190; Winter v. Goebner, 2 Colo. App. 259, 30 Pac. 51; Kennedy v. Howell, 20 Conn. 349; Stock v. Stoltz, 34 111. App. 645 ; Blake v. Blake, 7 Iowa 46; Lewis v. Arbuckle, 85 Iowa 335, 52 N. W. 237, 16 L. R. A. 677 ; Wing v. Chase, 35 Maine 260 ; Rice v. Gibbs, 33 Nebr. 460, 50 N. W. 436 ; Aller v. Aller, 40 N. J. L. 446; Woodruff v. Woodruff, 44 N. J. Eq. 349 ; Walker v. Walker, 13 Ired. (N. Car.) 335; Har- rell v. Watson, 63 N. Car. 454; In re Candor's Appeal, 27 Pa. St. 119; Yard V. Patton, 13 Pa. St. 278; Henrici v. Davidson, 149 Pa. St. 323, 24 Atl. 334; Sherk v. Endress, 3 Watts & S. (Pa.) 255; Carter v. King, 11 Rich. L. (S. Car.) 125; Hunter v. Mills, 345 CONSIDERATION. § 211 Inadequacy of consideration may also be treated as corroborative evidence of fraud."^ Suppression of material facts,"" oppressive circumstances" or undue influence"^ may render the contract unenforcible in equity. §211. Moral consideration. — There are dicta in certain early English cases which lay down the broad general doctrine that a moral obligation is a sufficient consideration for an express promise."" This doctrine was, however, repudiated in a note to an early case'" where it was stated "An express promise, there- fore, as it should seem, can only revive a precedent good consid- eration which might have been enforced at law through the me- diiun of an implied promise, had it not been suspended by some positive rule of law, but can give no original right of action of the obligation on which it is founded never could have been en- 29 S. Car. 72, 6 S. E. 907; Harris Ky. L. 552, 5 S. W. 554; Bean v. V. Harris' Ex'r., 23 Grat. (Va.) m \ Valle, 2 Mo. 126; Hume v. United Hibbert v. Mackinnon, 79 Wis. 673. States, 132 U. S. 406, 33 L. ed. 393, 49 N. W. 21. 10 Sup. Ct. 134. °' Clarkson v. Hanway, 2 P. Wms. '^ Kellogg v. Kellogg, 21 Colo. 181, 203; Morse V. Royal, 12 Ves. Jr. 371; 40 Pac. 358; Ritchie v. McMullen, St. Louis &c. R. Co. V. Phillips, 66 79 Fed. 522, 25 C. C. A. 50; McLean Fed. 35, 13 C. C. A. 315; Baldwin v. Equitable Life &c. Society, 100 V. National Hedge &c. Co., 73 Fed. Ind. 127, 50 Am. Rep. 779; Bruguier 574, 19 C. C. A. 575; Cathcart v. v. Pepin, 106 Iowa 432, 76 N. W. Robinson, 5 Pet. (U. S.) 264; St. 808; Stewart v. Stewart, 7 J. J. Louis &c. R. Co. V. Phillips, 27 U. Marsh (Ky.) 183, 23 Am. Dec. 396; S. App. 643. "The adequacy of the Musick v. Fisher, 96 Ky. IS, 16 Ky. consideration is an element of the L. 277, 27 S. W. 812; Cobb v. Day, good faith of the transaction." Lind- 106 Mo. 278, 17 S, W. 323 ; Rothen- ley V. Blumberg (Cal,), 93 Pac. 894; barger v. Rothenbarger, HI Mo. 1, Wormack v. Rogers, 9 Ga. 60; Goff 19 S. W. 932. V. Rogers, 71 Ind. 459; Boyd v. Ellis, "'Gartside v. Isherwood, 1 Bro. C. 11 Iowa 97: Van Norsdall v. Smith, C. 558; Fox v. Mackreth, 2 Cox 158. 141 Mich. 355, 104 N. W. 660; Chou- For conveyance by niece to uncle teau V Nuckolls, 20 Mo. 442; Shot- who had been her guardian, see Ear- well V. Shotwell, 24 N. J. Eq. 378; hart v. Holmes, 97 Iowa 649, 66 N. Hamet v. Dundass, 4 Pa. St. 178; W. 898; Richardson v. Barrick, 16 Davidson v. Little, 22 Pa. St. 245, Iowa 407; Beard v. Campbell, 2 A. 60 Am. Dec. 81; Birdsong v. Bird- K. Marsh (Ky.) 125, 12 Am. Dec. song, 2 Head (Tenn.) 289. For 362; Case v. Case, 26 Mich. 484; conveyance by child to parent, see Bunch v. Shannon, 46 Miss. 525 ; Muzzy V. Tompkinson, 2 Wash. 616, Simonton v. Bacon, 49 Miss. 582; 27 Pac 456, 28 Pac. 652; Deepwater Whelan v. Whelan, 3 Cow. (N. Y.) Council No. 40 v. Renick, 59 W. Va. 537. 343 53 S E. 552; Fisher v. Shelver, ™ Atkins v. Banwell, 2 East 505; S3 'wis. 498, 10 N. W. 681; Kuel- Atkins v. Hill, Cowp. 284; Hawkes kamc V Hidding, 31 Wis. 503. v. Saunders,' Cowp. 289; Watson v. •"Juzan v. Toulmin, 9 Ala. 662, 44 Turner, Bull. N. P. 281. Am Dec 448 ; Witherwax v. Rid- ™ Wennall v.' Adney, 3 B. & P. 247. die, 121 111. 140; Havlin v. Reed, 9 § 211 CONTRACTS. 346 forced at law, though not barred by any legal maxim or statute provision." The doctrine of this note has gained almost uni- versal acceptance, although there are sporadic cases which seem to announce a contrary doctrine, and the courts of one or two jurisdictions have consistently refused to give it their assent and hold a moral obligation sufficient.'^ It is well settled that a moral consideration alone is not sufficient to give an original cause of action if the obligation on which it is founded was never enforci- ble at law, though not barred by any legal rule, statutory or otherwise.'^ There are, however, some apparent differences of ^ Barnes v. Hedley, 2 Taunt. 184 ; think the cases point to a distinction Lee V. Muggeridge, S Taunt. 36; of this sort, which is probably the cor- Wells V. Horton, 2 Car. & P. 383; rect one — where a person is under a Robinson v. Hurst, 78 Md. 59, 26 legal obHgation to pay money, and an- Atl. 958, 20 L. R. A. 761, 44 Am. St. other pays it for him without request, 266 (in effect overruled by Linz v. the law raises an implied assumpsit, Schuck, 106 Md. 220, 67 Atl. 286, to refund without any express prom- 11 L. R. A. (N. S.) 789n, 124 Am. ise on his part. But where he was St. Rep. 481, 14 Am. & Eng. Ann. not under any legal obligation, but Cas. 495; Wilson v. Burr, 25 Wend, receives the benefit of a payment (N. Y.) 386; Hemphill v. Mc- made, or labor done by another Climans, 24 Pa. St. 367; Bailey v. * * * and I promise to reimburse Philadelphia, 167 Pa. St. S69, 31 Atl. him * * * and pay him for his 925, 46 Am. St. 691 ; Kelly v. Eby, trouble, here the express promise is 141 Pa. St. 176, 21 Atl. 512; Holden good." McMorris v. Herndon, 2 V. Banes, 140 Pa. St. 63, 21 Atl. 239; Bail. (S. Car.) 56, 21 Am. Dec. 515. Brooks V. Merchants' Nat. Bank, 125 It is provided by statute in South Pa. St. 394, 17 Atl. 418; Shenk v. Dakota that "a moral obligation Mingle, 13 Serg. & R. (Pa.) 29; originating in some benefit conferred Bentley v. Lamb, 112 Pa. St. 480, upon the promisor, or prejudice suf- 4 Atl. 200, 6 Am. Rep. 330, 25 Am. fered by the promisee, is a good con- Law Reg. (N. S.) 632; In re Sutch's sideration for a promise, to an ex- Estate, 201 Pa. 305, 50 Atl. 943 ; tent corresponding with the extent Commissioners of Canal v. Perry, S of the obligation, but no farther or Ohio 58; Ferguson v. Harris, 39 S. otherwise. Civ. Code S. Dak., § Car. 323, 17 S. E. 782, 39 Am. St. 1225. Barlow v. Smith, 4 Vt. 139; 731. "There is no doubt of the Glass v. Beach, 5 Vt. 172; Muir v. soundness of defendant's position that Kane, 55 Wash. 131, 104 Pac. 153, a perfect moral obligation is in this 26 L. R. A. (N. S.) 519. See also, state a sufficient consideration to sup- Hoover v. Wasson, 11 Colo. App. port a contract." Bank of Spartan- 589, 105 Pac. 945. burg V. Mahon, 78 S. Car. 408, 59 "Eastwood v. Kenyon, 11 Ad. & S. E. 31. The perfect moral obliga- El. 438, 6 Eng. Rul. Cas. 23. Beau- tion referred to in this case is de- mont v. Reeve, 8 Q. B. 483 ; Littlefield fined as "an obligation of justice, and v. Shee, 2 B. & Ad. 811; Jennings v. not of benevolence or piety. There- Brown, 9 M. & W. 496; Humphrys fore, if a man should pay money to v. Polak, 70 L. J. K. B. 752, 2 K. B. relieve the distresses of my father 385, 85 L. T. 103, 49 Week, Rep. 612 ; or mother, this perhaps would be no Kenen v. Holloway, 16 Ala. 53, 50 consideration for my promise to re- Am. Dec. 162; Morris v. Norton, 75 amburse him. Otherwise it seems in Fed. 912, 21 C. C. A. 153; Sponhaur the case of a wife, or son, from whom v. TMalloy, 21 Ind. App. 287, 52 N. I am bound to provide. * * * j £_ 245; Nightingale v. Barney, 4 G. 347 CONSIDERATION. § 211 Opinion as to the application of this general doctrine in particular cases.'^* Greene (Iowa) 106; Allen v. Bryson. 67 Iowa 591, 56 Am. Rep. 358; Farn- ham V. O'Brien, 22 Maine 475; War- ren V. Whitney, 24 Maine 561 ; Linz V. Schuck, 106 Md. 220, 67 Atl, 286; 11 L. R. A.. (N. S.) 789, 124 Am. St. 481, 14 Am. & Eng. Ann. Cas. 495. Shepherd v. Young, 8 Gray (Mass.) 152, was the case of a widow who supported a destitute infant grand- child. She cannot, upon the death of the child by a railroad accident, and the payment of damages to its ad- ministrator by the railroad, maintain an action against the administrator for the amount of the child's board, even if he has expressly promised to pay it. Hale v. Rice, 124 Mass. 292; Valentine v. Foster, 1 Mete. (Mass.) 520; Robinson v. McAfee, 59 Mich. 375, 26 N. W. 643. In Greenabaum v. Elliott, 60 Mo. 25, Wagner, J., said: "A moral obliga- tion by itself is not a good considera- tion for a promise. To impart to it any binding character, there must be some antecedent legal ability to which it can attach." Ehle v. Judson, 24 Wend. (N. Y.) 97; Edwards v. Davis, 16 Johns. (N. Y.) 281; Sternbergh v. Provost, 13 Barb. (N. Y.) 365; Puckett V. Alexander, 102 N. Car. 95, 8 S. E. 767, 3 L. R. A. 43 ; Fisher V. Harrisburg Gas Co., 1 Pears. (Pa.) 118; Hawley v. Farrar, 1 Vt. 420; Gooch v. Gooch (W. Va.), IZ S. E. 56. The only moral obliga- tion which affords consideration for a promise is one which has at some time been a legal duty. Schwerdt v. Schwerdt, 141 111. App. 386, affd., 235 111. 386, 85 N. E. 613. The moral obligation resting on a feme covert to pay for goods purchased by her, under a contract void under the Jaw in force at that time, is not sufficient to support a promise to pay therefor made after the passage of a law giving her the right to contract as if unmarried. Lyell v. Walbach, 113 Md. 574, 11 Atl. 1111. For promises to pay for the past support of a relative which the promisor is under no legal obligation to support, see Mortimer v. Wright, 6 M. & W. 482 ; Cook V. Bradley, 7 Conn. 57, 18 Am. Dec. 79; Schnell v. Nell, 17 Ind. 29, 79 Am. Dec. 453; Wiggins v. Keizer, 6 Ind. 252; Dawson v. Dawson, 12 Iowa 512; Mercer v. Mercer, 87 Ky. 30, 9 Ky. L. 884, 7 S. W. 401 ; Free- man v. Dodge, 98 Maine 531, 57 Atl. 884, 66 L. R. A. 395. In Dodge v. Adams, 19 Pick. (Mass.) 429, where a man's minor children were taken from his house without his consent, and were boarded by his wife's father during the pendency of a suit for a divorce, it was held that the fa- ther's express promise to pay after the board had been furnished was void. Loomis V. Newhall, 15 Pick. (Mass.) 159; Mills V. Wyman, 3 Pick. (Mass.) 207 (promise to pay for one's infant children's 'board held void) ; Hen- dricks V. Robinson, 56 Miss. 694, 31 Am. Rep. 382. Freeman v. Robinson, 38 N. J. Law 383, 20 Am. Rep. 399. In this case goods were sold to a minor child without parent's knowl- edge or consent. It was held that the parent's subsequent promise to pay was invalid, the court saying : "The principle thus enunciated (that a moral consideration will not sup- port a promise) was approved by Lord Dennan in Eastwood v. Ken- yon, 11 A. & E. 438, and adopted by the judges of the Queen's Bench in Beaumont v. Reeve, 8 Q. B. 486, and may now be considered as the settled law in the English courts. It has also been approved and made the basis of the judicial decision quite generally by the courts in this coun- try." Chilcott V. Trimble, 13 Barb. (N. Y.) 502. "a In Pennsylvania the moral ob- ligation to provide for an illegiti- mate child is a sufficient consider- ation to support a trust declared by its parent for the child. K. X. v. A. Y. (1894), 34 W. N. Cas. (Pa.) 145; Davis v. Anderson, 99 Va. 620, 39 S. E. 588. In Easley v. Gordon, SI Mo. App. 637, it is held that a promise by the father of a bastard child to the mother to pay the lat- ter for the support of the child was without consideration and unen- forcible since it was the duty of the mother to support the child. The 212 CONTRACTS. 348 § 212. New promise — Equitable consideration. — Where a former legal liability is no longer enforcible, and the promisor has received all he bargained for, and by reason of some positive rule of law the promisee cannot obtain what he was promised, a new promise given by the party benefited after capacity to con- tract is acquired, or after the positive rule of law is repealed, and in those cases when it may be done, operates to waive the statutory provision protecting him, and such new promise is bind- ing. Thus in case an infant enters into a contract, and after he attains his majority he ratifies such contract and gives a new promise, such promise is binding and needs no new consideration. He is then supposed to have acquired the power of deciding for court states that if the promise had been made to a third person for fu- ture support it would have been bind- ing. To sam.e effect, Wiggins v. Keizer, 6 Ind. 252. The father is under a moral obligation to support his children, and that duty alone, even in the absence of the bastardy statute, is, without doubt, a sufficient consideration for a bond conditioned for its performance. Trayer v. Set- zer, 72 Nebr. 845, 101 N. W. 989. For promise by child to pay obliga- tion of parent, see Cook v. Bradley, 7 Conn. 57, 18 Am. Dec. 79 (a prom- ise by a son to pay for necessaries which had previously been furnished to his father, who was indigent) ; McElven v. Sloan, 56 Ga. 208; Tucker v. Denton, 32 Ky. L. 521, 106 S. W. 280, 15 L. R. A. (N. S.) 289; Schroeder v. Fink, 60 Md. 436; Par- ker V. Carter, 4 Munf. (Va.) 273, 6 Am. Dec. 513. Where the son gave notes for old notes given by his father, it was held that since the son had the right to pay his father's debt he had the right to promise to pay it, he had the right to bind himself as he did, and since he had seen fit to bind himself he was bound. Matthews v. Williams, 25 La. Ann. 585. See, however, Worth v. Daniel, 1 Ga. App. 15, 57 S._ E. 898 (uphold- ing contract by child making pro- vision for the support of its par- ent). For promise to pay legacy or make a particular distribution of property, see Peek v. Peek, 77 Cal. 106, 19 Pac. 227, 1 L. R. A. 185, 11 Am. St. 244; Schnell v. Nell, 17 Ind. 29, 79 Am. Dec. 453; Gay v. Botts, 13 Bush (Ky.) 299; Duttera v. Baby- lon, 83 Md. 536, 35 Atl. 64; Murphy's Estate, 11 Phila. (Pa.) 2. A prom- ise made subsequent to the sale to correct a mistake or to relieve the purchaser from a hardship resulting from such sale is not supported by a sufficient consideration. Eakin v. F'entom, IS Ind. 59; Williams v. Hathaway, 19 Pick. (Mass.) 387; Smith V. Ware, 13 Johns. (N. Y.) 257; Geer v. Archer, 2 Barb. (N. Y.) 420. Contra, Cardwell v. Strother, Litt. Sel. Cas. (Ky.) 429, 12 Am. Dec. 326. For past cohabitation, see Binnington v. Wallis, 4 B. & Aid. 650; Beaumont v. Reeve, 8 Q. B. 483, 15 L. J. Q. B. (N. S.) 141. Contra, Shenk v. Mingle, 13 Serg. & R. (Pa.) 29; Wyant v. Lesher, 23 Pa. St. 338. See also, Robbins v. Potter, 11 Allen (Mass.) 588. The statement in this case to the effect that past co- habitation is sufficient consideration is obiter. For promise by wife to pay debt of husband, see Fidelity &c. Co. V. Thompson, 128 Cal. 506, 61 Pac. 94; Grimes v. Grimes, 28 Ky. L. 549, 89 S. W. 548; Stevens v. May- berry, 82 Maine 65, 19 Atl, 92 ; Widger V. Baxter, 190 Mass. 130, 76 N. E. 509, 3 L. R. A.^ (N. S.) 436n. A moral obligation is not a sufficient con- sideration to support the promise of a third person to pay it. Widger v. Baxter, 190 Mass. 130, 76 N. E. 509, 3 L. R. A. (N. S.) 436n, The moral obligation must have once been a 349 CONSIDERATION. § 212 himself whether, the transaction in question is one of meritorious character by which in good conscience he ought to be bound." In some jurisdictions it is held that a contract made during coverture, and which was unenforcible because of that fact, may be ratified after discoverture without a new consideration. In the leading case on this subject'^ a married woman carrying on business in her own name bought goods for her business on her own credit, and gave her notes for a part of the larice. Subsequent to her husband's death she promised to pay the notes so given and the residue of the price of the goods bought. This promise was held good because sup- ported by the moral obligation founded upon the antecedent valu- able consideration created for her own personal benefit. It will be seen that the facts in this case distinguish it from those cases, when the original debt, although contracted in the name of the wife, was in fact or legal effect the debt of the husband. But this distinction is not controlling, and the broad, general principle as laid down in the case reviewed is followed in Pennsylvania^ ° legal one to support a contract. Hulse kins v. Stevens, 4 Barb. (N. Y.) 168; V. Hulse, 155 111. App. 343. See also, Hodges v. Hunt, 22 Barb. (N. Y.) Brown v. Akeson (Kans.), 86 Pac. 150. 299 (promise to pay state judgment). " Goulding v. Davidson, 26 N. Y. '^Cockshott V. Bennett, 2 T. R. 604, 25 How. Prac. (N. Y.) 483; 765, 1 R. R. 617; Cooper v. Martin, Wilson v. Burr, 25 Wend. (N. Y.) 4 East 76; Williams v. Moor, 11 M. 386. & W. 263, 2 Dowl. (N. S.) 993; Kay "Hemphill v. McClimans, 24 Pa. V. Smith, 21 Beav. 522; American St. 367; Leonard v. Duffin, 94 Pa. St. Freehold Land &c. Co v. Dykes, 111 218; Brooks v. Merchants' Nat. Bank, Ala. 178, 18 So. 292, 56 Am. St. 38; 125 Pa. St. 394, 17 Atl. 418; Holden Baker v. Gregory, 28 Ala. 544, 65 v. Banes, 140 Pa. St. 63, 21 Atl. 239; Am. Dec. 366; Jefford's Admr. v. Rathfon v. Locher, 215 Pa. 571, 64 Ringgold, 6 Ala. 544; Conklin v. Atl. 790; Kelly v. Eby, 141 Pa. St. Ogborn, 7 Ind. 553 ; Heady v. Boden, 176, 21 Atl. 512 ; Geiselbrecht v. Geis- 4 Ind. App. 475, 30 N. E. 1119; elbrecht, 8 Pa. Super. Ct. 183; Lyons Minock v. Shortridge, 21 Mich. 304; v. Burns, 8 Pa. Co. Ct. 359; In re Tibbets V. Gerrish, 25 N. H. 41, 57 Root, 11 Lane. L. Rev. (Pa.) 225. Am. Dec. 307; Grant v. Beard, 50 N. She may ratify a contract to convey H. 129; Taft v. Sergeant, 18 Barb, real estate in case after discoverture (N. Y.) 320. In some cases it is she accepts an installment due un- said that the new promise must be der the contract. Brown v. Bennett, equivalent to a new contract, or must 75 Pa. St. 420; Trout v. McDonald, possess all the ingredients of a com- 83 Pa. St. 144. It will be remem- plete agreement, in order to constitute bered that Pennsylvania holds a a valid ratification. But this sup- moral consideration sufficient. See, poses that the action is on the new ante, § 211. See also, Allen v. McCul- promise, in which case no new con- lough, 2 Heisk. (Tenn.) 174, 5 Am. sideration would be required. Wat- Rep. 27 (which contains an obiter § 212 CONTRACTS. 350 and also in Louisiana'"' on the ground that the nullity of the contract made during coverture was not such as rendered it abso- lutely non existent, and that it simply remained during the mar- riage without effect. The doctrine of the foregoing cases is con- trary to the general rule, it being held that the moral obligation resting upon a woman to make good her promise made during coverture is not a sufficient consideration to uphold an affirmation of the promise made after she becomes discovert." But if an ex- press promise is given after discoverture, when the original obli- gation, though not legally enforcible, was binding on the wife's separate estate, she is bound thereby.'' In some jurisdictions it is held that the new promise will be binding if the original prom- ise was binding in equity upon the wife's separate estate."* In case a contract is entered into which is usurious under the then existing law, and the law declaring the rate of interest charged usurious is subsequently repealed and a new contract is statement supporting the doctrine of Goulding V. Davidson, supra) ; Frank- lin V. Beatty, 27 Miss. 247 (in sup- port of the New York doctrine, which was in effect later overruled) ; Hendricks v. Robinson, S6 Miss. 694, 31 Am. Rep. 382; Porterfield v. But- ler, 47 Miss. 165, 12 Am. Rep. 329. "Laffitte v. Delogny, 33 La. Ann. 659. In this case the original note was given as surety for the husband's debt. Brownson v. Weeks, 47 La. Ann. 1042, 17 So. 489. "Eastwood V. Kenyon, 11 Ad. & El. 438; Dixie v. Worthy, 11 U. C. Q. B. 328; Watson v. Dunlap, 2 Cranch (U. S.) 14 Fed. Cas. No. 17282; Loyd v. Lee, 1 Str. 94; Union Nat. Bank v. Hartwell, 84 Ala. 379, 4 So. 156; Thompson v. Hudgins, 116 Ala. 93, 22 So. 632; Hethering- ton V. Hixon, 46 Ala. 297; Waters v. Bean, 15 Ga. 358; Maher v. Mar- tin, 43 Ind. 314; Putnam v. Tenny- son, 50 Ind. 456; Thomas v. Passage, 54 Ind. 106; Long v. Brown, 66 Ind. 160; Austin v. Davis, 128 Ind. 472, 26 N. E. 890, 12 L. R. A. 120, 25 Am. St. 456; Keadle v. Siddens, 5 'Ind. App. 8, 31 N. E. 539; Davis v. Schmidt (Ind.) 31 N. E. 840; Gil- bert v. Brown, 29 Ky. L. 1248, 97 S. W. 40, 7 L. R. A. (N. S.) 1053; Rupple v. Kissel, 24 Ky. L. 2371, 74 S. W. 220; Trimble v. Rudy (sub nomine Holloway v. Rudy), 22 Ky. L. 1406, 60 S. W. 650, 53 L. R. A. 353; Lyell v. Walbach, 113 Md. 574, n Atl. 1111, 33 L. R. A. (N. S.) 741n; Porterfield v. Butler, 47 Miss. 165, 12 Am. Rep. 329; Hendricks v. Robinson, 56 Miss. 694, 31 Am. Rep. 382 (these last two cases overruling Franklin v. Beatty, 27 Miss. 347) ; Musick v. Dodson, 76 Mo. 624, 43 Am. Rep. 780; Kennerly v. Martin, 8 Mo. 698; Bragg v. Israel, 86 Mo. App. 338; Kent v. Rand, 64 N. H. 45, 5 Atl. 760; Parker v. Cowan, 1 Heisk, (Tenn.) 518 (obiter) ; Manard V. Cawood, 1 Tenn. Ch. App. 'id (obiter) ; Hayward v. Barker, 52 Vt. 429, 36 Am. Rep. 762; Valentine v. Bell, 66 Vt. 280, 29 Atl. 251. ''Vance v. Wells, 8 Ala. 399; Doss V. Peterson, 82 Ala. 253, 2 So. 644; Viser v. Bertrand, 14 Ark. 267; Craft V. Rolland, Zl Conn. 491; Cleland v. Low, 32 Ga. 458; Hubbard v. Bug- bee, 55 Vt. 506, 45 Am. Rep. 637; Sherwin v. Sanders, 59 Vt. 499, 9 Atl. 239, 59 Am. Rep. 750. "Condon v. Barr, 49 N. J. L. 53, 6 Atl. 614; Felton v. Reid, 52 N. Car. 269; Long v. Rankin, 108 N. Car. ZiZ, 12 S. E. 987; Wilcox v. 351 CONSIDERATION. § 212 then entered into, carrying what was formerly the usurious rate of interest, the new contract or promise will be binding.'" So in case a usurious contract is entered into which is subsequently abandoned, and a new promise is given to repay the principal at a legal rate of interest, the latter is held binding.*^ So a new promise made on a week day to pay a note, invalid because en- tered into on Sunday, is supported by a sufficient consideration.*^ |And where goods were purchased on credit on Sunday and a promise was subsequently made on a day other than Sunday to pay for such goods, the new promise was held to be based on sufficient consideration, and to be binding.*^ There are many other cases in which the consideration may be distinguished as an equitable consideration, rather than a naked moral consideration, and deemed sufficient to support a contract.** Arnold, 116 N. Car. 708, 21 S. E. 434; Hubbard v. Bugbee, 58 Vt. 172, 2 Atl. 594. ""Flight V. Reed, 1 H. & C. 703; Houser v. Planters' Bank, 57 Ga. 95; Campbell v. Linder, 50 S. Car. 169, 27 S. E. 648. This would seem to be an exception to the general rule. A sale of liquor in violation of law will not be a consideration suffi- cient to support a new promise to pay for the same after the repeal of the law. Ludlow v. Hardy, 38 Mich. 690. To the same effect, Dever v. Corcoran, 8 N. B. 338. Contra, Carr V. Louisiana Nat. Bank, 29 La. Ann. 258. And where the contract was void at its inception there was no consideration to support the promise, notwithstanding the fact that the act making such contract void was sub- sequently repealed. Puckett v. Alex- ander, 102 N. Car. 95, 8 S. E. 767, 3 L. R. A. 43. In this case it does not appear whether or not a new promise was given subsequent to the repealing of the act, but the court intirnates that this would have made no differ- ence "^ Barnes v. Hedley, 2 Taunt. 184; Garvin v. Linton, 62 Ark. 370, 35 S. W. 430, Zl S. W. 569; Kilbourn v. Bradley, 3 Day (Conn.) 356, 3 Am. Dec. 273; Sanford v. Kunz, 9 Idaho 29, 71 Pac. 612; Kassing v. Ordway, 100 Iowa 611, 69 N. W. 1013; Phil- lips V. Columbus City &c. Assn., 53 Iowa 719, 6 N. W. 121 ; Vermeule v. Vermeule, 95 Maine 138, 49 Atl. 608 ; Peters Shoe Co. v. Arnold, 82 Mo. App. 1 ; Early v. Mahon, 19 Johns. (N. Y.) 147, 10 Am. Dec. 204; Ham- mond V. Hopping, 13 Wend. (N. Y.) 505. *' Tucker v. West, 29 Ark. 386; Gwinn v. Simes, 61 Mo. 335 ; Clough v. Davis, 9 N. H. 500. Contra, Pope v. Linn, 50 Maine 83, on the ground that a void or illegal contract cannot be ratified. However, the payment of interest on a note so made does not amount to a new promise. Reeves v. Butler, 31 N. J. L. 224. Contra, Russell V. Murdock, 79 Iowa 101, 44 N. W. 237, 18 Am. St. 348; Sargeant V. Butts, 21 Vt. 99. '" Melchoir v. McCarty, 31 Wis. 252, 11 Am. Rep. 605. "See Wright v. Jones, 105 Ind. 17, 4 N. E. 281; Pierce v. Walton, 20 Ind. App. 66, 50 N. E. 309; Linz v. Schuck, 106 Md. 220, 67 Atl. 286, 11 L. R. A. (N. S.) 789, 124 Am. St. 481; King v. Duluth &c. R. Co., 61 Minn. 482, 63 N. W. 1105; Stuht v. Sweesy, 48 Nebr. 767, 67 N. W. 748; Mohr v. Rickgauer, 82 Nebr. 398, 47 N. W. 950, 26 L, R. A. (N. S.) 533; Elson v. Poffe, 24 S. Dak. 466, 124 N. W. 441, 26 L. R. A. (N. S.) 534; Muir v. Kane, 55 Wash. 131, 104 Pac. 153, 26 L. R. A. (N. S.) 519 and note. Equitable Con- sideration, 15 Cent. L. J. 386. § 212 CONTRACTS. 352 The protection of a statute barring a valid obligation may be waived and a new promise given, in which case the old obligation barred by the statute is a sufficient consideration for the new promise. Thus, in case a new promise is given after the bar of the statute of limitations has attached, the new promise is binding and needs no additional consideration to support it.**^ But the rule is general in America that a promise r "= Barnes v. Hedley, 2 Taunt. 184; ley v. Jewett, 3 Mete. (Mass.) 439; Chapman v. Barnes, 93 Ala. 433. 9 Foster v. Shaw, 2 Gray (Mass.) 148; So. 589; Grimball v. Mastin, 77 Ala. Bangs v. Hall, 2 Pick. (Mass.) 368, 553 ; Turlington v. Slaughter, 54 Ala. 13 Am. Dec. 437 ; Perkins v. Cheney, 195; McCormick v. Brown, 36 Cal. 114 Mich. 567, 72 N. W. 595, 68 Am. 180, 95 Am. Dec. 170; Chabot v. St. 495; Brisbin v. Farmer, 16 Tucker, 39 Cal. 434; Hoover v. Was- Gil. (Minn.) 187; Young v.- Perkins, son, 11 Cal. App. 589, 105 Pac. 945; 29 Minn. 173; Bowmer v. Peine, 64 Biddel v. Brizzolara, 56 Cal. 374, 64 Miss. 99, 8 So. 166; Tennessee Brew- Cal. 354, 30 Pac. 609; Wilcox v. ing Co. v. Hendricks, 11 Miss. 491, Gregory, 135 Cal. 317, Gl Pac. 139; 27 So. 526; Chambers v. Rubey, 47 Rose V. Foord, 96 Cal. 152, 30 Pac. Mo. 99, 4 Am. Rep. 318; Fourth Nat. 1114; Beardsley v. Hall, 36 Conn. Bank v. Craig, 1 Nebr. 849, 96 N. W. 270, 4 Am. Rep. 74; Cook v. Brad- 185; Nelson v. Becker, 32 Nebr. 99, ley, 7 Conn. 57, 18 Am. Dec. 79; 48 N. W. 962; Trumball v. Tilton, Newlin v. Duncan, 1 Har. (Del.) 21 N. H. 128; Sands v. Gelston, 15 204, 25 Am. Dec. 66; Bean v. Wheat- Johns. (N. Y.) 511; Murray v. Cos- ley, 13 App. (D. C.) 473, 26 Wash, ter, 20 Johns. (N. Y.) 576, 11 Am. L. 805 ; Pittman v. Elder, 56 Ga. 371 Comer v. Allen, 72 Ga. 1 ; Brew ster V. Hardeman, Dud. (Ga.) 138 Dec. 333 ; McNamee v. Tenny, 41 Barb. (N. Y.) 495; Jackson v. Hunt, 6 Johns. (N. Y.) 16; Adams v. Or- Kelly V. Leachman, 3 Idaho 629, Zi ange County Bank, 17 Wend. (N. Pac. 44; Keener v. Crull, 19 111. 189; Y.) 514; Morrow v. Morrow, 12 Walker v. Freeman, 209 111. 17, 70 Hun (N. Y.) 336; Bryan v. Will- N E. 595; Boone v. Colehour, 165 cocks, 3 Cow. (N. Y.) 159; Ross v. III. 305, 46 N. E. 253; Ennis v. Pull- Ross, 6 Hun (N. Y.) 80; Davis v. man Car Co., 165 111. 161, 46 N. E. Noyes, 61 Hun (N. Y.) 87, 39 N. Y. 439- Drury v. Henderson, 36 111. App. St. 632, 15 N. Y. S. 431; Harper v. 521, affd. 143 III. 315, 32 N. E. 186; Fairley, S3 N. Y. 442; Simonton v. Waldron v. Alexander, 136 III. 550, Clark, 65 N. Car. 525; Turner v. 27 N E 41 ■ Collar v. Patterson, 137 Chrisman, 20 Ohio 332 ; Davis v. III. 403, 27 N. E. 604; Harts v. Davis, 20 Ore. 78, 25 Pac. 140; Emery, 84 111. App. 317 ; Norton v. Shreiner v. Cummings, 63 Pa. St. Colby, 52 111. 198; Hulse v. Hulse, 374; Levy v. Cadet, 17 Serg. & R. 155 111. App. 343; Carey v. Hess, 112 (Pa.) 126, 17 Am. Dec. 650; Brown Ind. 398, 14 N. E. 235; Hellman v. v. Campbell, 1 Serg. & R. (Pa.) 176; Kiene, 73 Iowa 448, 35 N. W. 516; In re Marshall's Estate, 138 Pa. St. Stewart v. McFarland, 84 Iowa 55; 285, 22 Atl. 24; Wells v. Wilson, 140 Emmons v. Overton, 18 B. ;\lon. Pa. St. 645, 21 Atl. 445; Linderman (Ky.) 643; Head v. Manners, 5 J. v. Pomeroy, 142 Pa. St. 168, 21 Atl. J. Marsh. (Ky.) 255; Harrison v. 820, 24 Am. St. 494 ; Lowrey v. Rob- Handley, 1 Bibb (Ky.) 443; French inson, 141 Pa. St. 189, 21 Atl. 513; v. Motley, 63 Maine 326; Hall v. Wesner v. Stein, 97 Pa. St. 322; Bryan, 50 Md. 194; Stewart v. Gar- Fleming v. Fleming, 33 S. Car. 505, rett, 65 Md. 392; Ingersoll v. i\Iar- 12 S. E. 257, 26 Am. St. 694; Savage tin, 58 Md. 67, 4 Ky. L. 79, 42 Am. v. Gaut (Tenn. Ch. App.) 57 S. W. Rep. 322; Georgetown College v. 170; Womack v. Womack, "8 Tex. Perkins, 74 Md. 72, 21 Atl. 551; lis- 397, 58 Am. Dec. 119; Bell v. Mor- 353 CONSIDERATION. § 21. waiving the statute must be in writing, or that there must be such a written acknowledgment of the barred debt as will support an implied promise to pay it/° And the acknowledgment or admis- sion must be a clear and unambiguous recognition of an existing debt, and so distinct and express as to preclude all doubt as to the debtor's meaning, and as to the particular debt to which it applies, rison, 1 Pet. (U. S.) 351; Wetzell v. Bussard, 11 Wheat. (N. S.) 309; Clementson v. Williams, 8 Cranch (U. S.) 72, 3 L. ed. 491; Campbell v. Holt, lis U. S. 620, 29 L. ed. 483, 6 Sup. Ct. 209; Giddings v. Giddings, 51 Vt. 227, 31 Am. Rep. 682; Farmers & Mechanics Bank v. Flint 17 Vt 508, 44 Am. Dec. 351; Ray v. Rood, 62 Vt. 293, 19 Atl. 226; Lonsdale v.' Brown, 4 Wash. C. C. 86, Fed. Gas No. 8493; Walker v. Henry, 36 W Va. 100, 14 S. E. 440; Marshall v. Holmes, 68 Wis. 555, 32 N. W. 685; Pritchard v. Howell, 1 Wis. 131, 60 Am. Dec. 363. In Earle v. Oliver, 2 Ex. 71, 90, the court said: ''Where the consideration was orig- inally beneficial to the party prom- '^iig.. yet if he be protected from liability by some provision of the statute or common law, meant for his advantage, he may renounce the benefit of that law; and if he prom- ises to pay the debt, which is only what an honest man ought to do, he is then bound by the law to perform it." It is to be observed that the rule gO€s no further than a debtor may renew his liability by a promise to pay the debt without further con- sideration. A barred debt does not constitute a consideration for any other promise than of a promise to pay it. A number of the foregoing cases base the cause of action arising from the new promise on the moral obligation of the promise to discharge the barred debt. No doubt the moral element has had much to do with the shaping of the law on this ques- tion, but the real ground for the de- cisions is that the promissor has re- ceived all he bargained for. The remedy of the promisee is merely de- nied and in case a new promise is given, the statutory bar is waived and the past consideration is suffi- cient to support the new promise. Moulton v. Williams, 6 Idaho 424. 55 Pac. 1019. ""In re River Steamer Co., L. R. 6 Ch. App. 822; Chapman v-. Barnes, 93 Ala. 433, 9 So. 589; Chabot v. Tucker, 39 Cal. 434. The court here said: "An acknowledgement or promise contained in writing, signed by the party to be charged thereby, is the only competent evidence of a new or continuing contract, whereby to take a case out of the operation of the statute of limitations." Southern Pac. Co. V. Prosser, 122 Cal. 413, 52 Pac. 836, 55 Pac. 145 ; Paille v. Plant, 109 Ga. 247, 34 S. E. 274; Cleveland Paper Co. v. Mauk, 8 Kans. App. 562, 54 Pac. 1035; Frisbee v. Seaman, 49 Iowa 95; Johnston v. Hussey, 92 Maine 92, 42 Atl. 312; Browmar v. Peine, 64 Miss. 99, 8 So. 166; City Nat. Bank v. Phelps, 86 N. Y. 484; Morrow v. Morrow, 12 Hun (N. Y.) 336; Clark v. Van Amburgh, 14 Hun (N. Y.) 557; Kincaid v. Archibald, 73 N. Y. 189; Sturges v. Burton, 8 Ohio St. 215 ; Fleming v. Fleming, 33 S. Car. 505, 12 S. E. 257, 26 Am. St. 694; Ray v. Rood, 62 Vt. 293, 19 Atl. 226. See statutes of Arkansas, Cali- fornia, Idaho, Iowa, Maine, Massa- chusetts, Michigan, Minnesota, Ne- braska, Nevada, New York, Ohio, Oregon, Texas, Vermont, Virginia. A written acknowledgement is unneces- sary in Maryland. Beeler v. Clarke, 90 Md. 221, 44 Atl. 1038. Under such a statute an oral promise has no validity. Morehouse v. Morehouse (Cal.), 69 Pac. 625; Hughes v. Tread- away, 116 Ga. 663, 42 S. E. 1035; Adams v. Mills, 49 La. Ann. 775, 22 So. 257; King v. Davis, 168 Mass. 133, 46 N. E. 418; Shapley v. Abbott, 42 N. Y. 443, 1 Am. Rep. 548; Whitehill V. Lowe, 10 Utah 419, 57 Pac. 589. Unless the acknowledgement is deliv- ered it has no effect. Abercombie v. Butts, 72 Ga. 74, 53 Am. Rep. 832; 23 — Contracts, Vol. I § 212 CONTRACTS. 354 and must be consistent with a promise to pay." Moreover, an admission or acknowledgment made to a stranger, not intended to be communicated to, or to influence the conduct of, the cred- itor, is not effectual to revive a debt barred by the statute of limi- tations.**^ In some jurisdictions it is held that when the creditor Merriara v. Leonard, 6 Cush. (Mass.) 151; Allen v. Collier, 70 Mo. 138, 35 Am. Rep. 416. An oral promise can- not be considered in connection with a writing which fails to show an ex- press promise, in aid of the writing. Johnson v. Hussey, 92 Maine 92, 42 Atl. 312. A deposition by the maker of a note and signed by him in a case where the obHgee was not a party, for which he was allowed a credit, is an acknowledgement of the debt which will defeat the plea of the statute of limitations in an action on the note. Dinguid V. Schoolfield, 32 Grat. (Va.) 803. Although that statute provides that a promise to pay a debt barred by the statute of limitations must be in writing, still the promise, if in parol, is not illegal ; the only effect of the statute is to take away the right to prove the promise save by written evidence, and if a party permits the promise to be shown by parol evi- dence, he waives the statutory objec- tion, and the promise is effective to prevent the operation of the statute. Ray V. Rood, 62 Vt. 293, 19 Atl. 226. " Green v. Humphreys, 26 Ch. Div. 474; Kelly v. Telle, 66 Ark. 464, 51 S. W. 633; Biddel v. Brizzolara, 64 Cal. 354; Pierce v. Merrill, 128 Cal. 473, 61 Pac. 67, 79 Am. St. 6Z ; Wein- berger v._ Weidmann, 134 Cal. 599, 66 Pac. 869; Thomas v. Carey, 26 Colo. 485, 58 Pac. 1093; Blackmore v. Neale, 15 Colo. App. 49, 60 Pac. 952 ; Blakeman v. Fonda, 41 Conn. 561 ; Mann v. McDonald, 6 App. D. C. 548; Le Roy v. Crowinshicld, Fed. Cas. No. 8269, 2 Mason (U. S.) 151 ; Lanier v. McCabe, 2 Fla. 32, 48 Am. Dec. 173 ; Slack V. Sexton, 113 Ga. 617, 38 S. E. 946; Kirven v. Thornton, 110 Ga. 276, 34 S. E. 848; Moulton v. Wil- liams, 6 Idaho 424, 55 Pac. 1019; Boone v. Colehour, 165 111. 305, 46 N. E. 253 ; Ennis v. Pullman &c. Car Co., 165 111. 161, 46 N. E. 439; Carroll v. Forsyth, 69 111. 127 ; Schmidt v. Pf au, 114 111. 494, 2 N. E. 522; Nelson v. Hanson, 92 Iowa 356, 60 N. W. 655, 54 Am. St. 568; Johnston v. Hussey, 89 Maine 488, 36 Atl. 993; Krebs v Olmsted, 137 Mass. 504; Weston v. Hodgkins, 136 Mass. 326; Westing- house Co. v. Boyle, 126 lilich. 677, 86 N. W. 136, 8 Detroit Leg. N. 180; Rumsey v. Settle's Est., 120 Mich. 372, 79 N. W. 579; Halladay v. Weeks, 127 Mich. 363, 86 N. W. 799, 8 Detroit Leg. N. 316, 89 Am. St. 478; Yarbrough v. Gillard, 77 Miss. 139, 24 So. 170; Harms v. Freytag, 59 Nebr. 359, 80 N. W. 1039; Holt v. Gage, 60 N. H. 536; Kahn v. Crawford, 28 Misc. (N. Y.) 572, 59 N. Y. S. 853; Marcum v. Marshall, 129 Pa. St. 506, IS Am. St. 730 ; Marshall v. Marcum (Pa.), 18 Atl. 640; Ward v. Jack, 172 Pa. St. 416, 51 Am. St. 744; Wesner V. Stein, 97 Pa. St. 322; Randolph v. Thomas, 107 Tenn. 132, 64 S. W. 5; Bell V. Morrison, 1 Pet. (U. S.) 351; Fort Scott V. Hickman, 112 U. S. 150, 28 L. ed. 636, 5 Sup. Ct. 56. But see Warren v. Cleveland, 111 Tenn. 174, 76 S. W. 910, 102 Am. St. 749n; Clay- ton V. Watkins, 19 Tex. Civ. App. 133, 47 S. W. 810; Cann v. Cann's Heirs, 45 W. Va. 563, 31 S. E. 923 ; Stiles v. Laurel F. O. &c. Co., 47 W. Va. 838, 35 S. E. 986; Pierce v. Seymour, 52 Wis. 272, 9 N. W. 71, 38 Am. Rep. 737. The rule as it exists in Mary- land is more liberal than as stated general!}'. Beeler v. Clarke, 90 Md. 221, 44 Atl. 1038. '"Ringo V. Brooks, 26 Ark. 540; Biddel v. Brizzolara, 64 Cal. 354; Wachter v. Albee, 80 111. 47 ; Carroll V. Forsyth, 69 111. 127; Collard v. Pat- terson, 137 111. 403, 27 N. E. 604; Sibert v. Wilder, 16 Kans. 176, 22 Am. Rep. 280 ; Trousdale v. Ander- son, 72 Ky. 276 ; Hargis v. Sewell's Admr., 87 Kv. 63, 7 S. W. 557, 9 Ky. L. 920; Wolford v. Cook, 71 Minn. 77, 72, N. W. 706, 70 Am. St. 315 ; Wil- liamson V. Williamson, 50 Mo. App. 194 ; Cape Girardeau Co. v. Harbison, 58 Mo. 90 ; In re Kendrick, 107 N. Y. 104, 13 N. E. 762; Bloodgood v. 000 CONSIDERATION. '.12 sues after the statute has run on the original contract, his cause of action is not on the original contract, for his action thereon is barred, but is on the new promise/" Other authorities hold that the new promise merely takes the case out of the statute, others that it removes the bar of the statute, others still that it renews the original contract and that the creditor's cause of action is on the original contract.^" Bruen, 8 N. Y. 362, Seld. notes 129; Fletcher v. Updike, 3 Hun (N. Y.) 350; Hussey v. Kirkman, 95 N. Car. 63; Parker v. Shuford, 76 N. Car. 219; Spangler v. Spangler, 122 Pa. St. 358, 15 Atl. 436, 9 Am. St. 114; Kyle V. Wells, 17 Pa. St. 286, 55 Am. Dec. 555 ;Parker v. Remington, 15 R. I. 300, 3 Atl. 590, 2 Am. St. 897; Trammel v. Salmon, 2 Bail. (S. Car.) 308; Robbins v. Farley, 2 Strob. (S. Car.) 348; Bachman v. Roller, 9 Baxt. (Tenn.) 409, 40 Am. Rep. 97; Hous- ;on V. Jankowskie, 76 Tex. 368, 13 S. W. 369, 18 Am. St. 57; Ft. Scott v. Hickman, 112 U. S. 150, 28 L. ed. 636, 5 Sup. Ct. 56; Cowhick v. Shingle, 5 Wyo. 87, 37 Pac. 689, 25 L. R. A. 608, 63 Am. St. 17. It may be used to cor- roborate an acknowledgment to the creditor. Cape Girardeau Co. v. Har- bison, 58 Mo. 90; Paty v. Davis, 12 Lea. (Tenn.) 286. The acknowledg- ment, if binding when made to a third person, must be made by the debtor to the third person as agent to convey the acknowledgment to the creditor. O'Hara v. Murphy, 196 111. 599, 63 N. E. 1081. As to the creditor him- self being agent, see Wolford v. Cook, 71 Minn. 77, 73 N. W. 706, 70 Am. St. 315. The following cases hold that an acknowledgment may be made to a stranger: St. John v. Garrow, 4 Port. (Ala.) 223, 29 Am. Dec. 280; Newkirk v. Campbell, 5 Har. (Del.) 380; In re Succession of Harrell, 3 La. Ann. 323 ; Utz v. Utz, 34 La. Ann. 752; Oliver v. Gray, 1 Harr. & G. (Md.), 204; Stewart v. Garrett, 65 Md. 392, 5 Atl. 324, 57 Am. Rep. 333n ; Whitney v. Bigelow, 4 Pick. (Mass.) 110; Mastin v. Branham, 86 Mo. 643; Philips v. Peters, 21 Barb. (N. Y.) 351; Collett v. Frazier, 56 N. Car. 80. The moral duty which rests upon one to pay an antecedent legal obligation [dormant judgment] which has been extinguished but never performed is sufficient consideration to support a new promise. Brown v. Akeson, 74 Kans. 301, 86 Pac. 299. '" Southern Pac. R. Co. v. Prosser, 122 Cal. 413, 52 Pac. 836, 55 Pac. 145 ; McCormick v. Brown, 36 Cal. 180, 95 Am. Dec. 170; Chabot v. Tucker, 39 Cal. 434; Rodgers v. Byers, 127 Cal. 528, 60 Pac. 42 ; Biddel v. Brizzolara, 56 Cal. 374; Harrell v. Davis, 108 Ga. 789, 32 S. E. 852; Howe v. Saun- ders, 38 Maine 350 ; Little v. Blunt, 9 Pick. (Mass.) 488; Shackleford v. Douglass, 31 Miss. 95 ; Van Alen v. Feltz, 32 Barb. (N. Y.) 139; Sturges V. Burton, 8 Ohio St. 215, 72 Am. Dec. 582n; Hill y. Henry, 17 Ohio 9; Mar- tin V. Jennings, 52 S. Car, 371, 29 S. E. 807 ; Fleming v. Fleming, 33 S. Car. 505, 12 S. E. 257, 26 Am. St. 694 ; Walters v. Kraft, 23 S. Car. 578, 55 Am. Rep. 44n; Smith v. Caldwell, 15 Rich. (S. Car.) 365; McKelvey v. Tate, 3 Rich. (S. Car.) 339; Dickson v. Gordin, 29 S. Car. 343, 7 S. E. 510, 1 L. R. A. 628; Reigne v. Desportes, Dud. L. (S. Car.) 118; Colvin v. Phillips, 25 S. Car. 228; Interstate Building & Loan Assn. v. Goforth, 94 Tex. 259, 59 S. W. 871; Howard V. Windora, 86 Tex. 560, 26 S. W. 483; Womack v. Womack, 8 Tex. 397, 58 Am. Dec. 119; Ireland v. Mackintosh, 22 Utah 296, 61 Pac. 901 ; Ray v. Rood, 62 Vt. 293, 19 Atl. 226 ; Walker v. Henry, 36 W. Va. 100, 14 S. E. 440. "Newlin v. Duncan, 1 Harr. (Del.) 204, 25 Am. Dec. 66 ; Keener v. Crull, 19 111. 189; Frisbee v. Seamen, 49 Iowa 95; Cleveland Paper Co. v. Mauk, 8 Kans. App. 562, 54 Pac. 1035 ; Stewart v. Garrett, 65 Md. 392, 5 Atl. 324, 57 Am. Rep. 333n ; Fiske v. Need- ham, 11 Mass. 452; Soulden v. Van Rensselaer, 9 Wend. (N. Y.) 203; McCrea v. Purmort, 16 Wend. (N. Y.) 460, 30 Am. Dec. 103; Watkins v. Stevens, 4 Barb. (N. Y.) 168; Car- § 212 CONTRACTS. 356 The same rule applies when a person has been discharged as a bankrupt. A promise to pay a debt barred by such discharge is binding."^ By the weight of authority the promise may be given at any time after the promisor has been adjudged a bank- rupt. He is bound, therefore, even though the promise is given before he has received his discharge in bankruptcy. °^ In order shore v. Huyck, 6 Barb. (N. Y.) 583; Philips V. Peters, 21 Barb. (X. Y.) 351; Winchell v. Bowman, 21 Barb. (N. Y.) 448; Esselstyn v. Weeks, 12 N. Y, 635, 2 Abb. Prac. (N. Y.) 272; Wadsworth v. Thomas, 7 Barb. (N. Y.) 445. In Wesner V. Stein, 97 Pa. St. 322, the court says : "The debt is not destroyed by the statute of limita- tions, but the right of action is lost; when that is restored the declaration is still on the original contract and not on the promise." Suter v. Shee- ler, 22 Pa. St. 308; Burr v. Burr, 26 Pa. St. 284; Yaw v. Kerr, 47 Pa. St. 333; Patton v. Hassinger, 69 Pa. St. 311 ; In re Barclay's Appeal, 64 Pa. St. 69. " Trueman v. Fenton, 2 Cowp. 544 ; Griel V. Solomon, 82 Ala. 85, 2 So. 322, 60 Am. Rep. 7Zi ; Smith v. Rich- mond, 19 Cal. 476; Lambert v. Schmalz, 118 Cal. 33, 50 Pac. 13; In re Merriam's Estate, Fed. Cas. No. 9479, 44 Conn. 587, 26 Pitts. Leg. J. 120; Mutual Reserve Fund &c. Assn. V. Beatty, 93 Fed. 747, 35 C. C. A. 573 ; Anderson v. Clark, 70 Ga. 362 ; Mein- hard, Schaul & Co. v. Folsom Bros., 3 Ga. App. 251, 59 S. E. 830; Katz v. Moessinger, 110 111. 372; St. John v. Stephenson, 90 111. 82 ; Willis v. Cush- man, 115 Ind. 100, 17 N. E. 168; Carey V. Hess, 112 Ind. 398, 14 N. E. 235; Shockey v. Mills, 71 Ind. 288, 36^Am. Rep. 196; Ford v. Sidebottora, 5 Ky. L. 316; Telle v. Smith's Ex'r, 98 Ky. 464, 33 S. W. 410 ; Ogden v. Redd, 13 Bush (Ky.) 581; Rosenfield v. Gold- smith, 11 Ky. L. 662, 12 S. W. 928, 13 S. W. 3; Andrien's Succession, 44 La Ann. 103, 10 So. 388 ; Webster v, Le Compte, 74 Md. 249, 22 Atl. 232; Baltimore &c. R. Co. v. Clark, 19 Md. 509; Maxim v. Morse, 8 Mass. 127; Lerow v. Wilmarth, Z Allen (Mass.) 463; Way v. Sperry, 6 Cush. (Mass.) 238, 52 Am. Dec. 779; Edwards v. Nelson, 51 Mich. 121, 16 N. W. 261; Craig V. Seitz, 63 Mich. 727, 30 N. W. 347; Higgins v. Dale, 28 Minn. 126, 9 N. W. 583; Smith v. Stanch- field, 84 Minn. 343, 87 N. W. 917; McWillie V. Kirkpatrick, 28 Miss. 802, 74 Am. Dec. 125; Second National Bank v. Wood, 59 N. H. 407 ; Christie V. Bridgman, 51 N. J. Eq. 331, 25 Atl. 939, 30 Atl. 429 ; Stewart v. Reck- less, 24 N. J. L. 427 ; Briggs v. Sutton, 20 N. J. L. 581 ; Shippey v. Hender- son, 14 Johns. (N. Y.) 178; Dusen- bury V. Hoyt, 53 N. Y. 521, 13 Am. Rep. 543 ; KuU v. Farmer, 78 N. Car. 339; Turner v. Chrisman, 20 Ohio 332; Earnest v. Parke, 4 Rawle (Pa.) 452, 27 Am. Dec. 280 ; Bolton v. King, 105 Pa. St. 78; Hobough v. Murphy, 114 Pa. 358, 7 Atl. 139; Murphy v. Crawford, 114 Pa. 496, 7 Atl. 142; Kenyon v. Worsley, 2 R. I. 341 ; Allen V. Ferguson, 18 Wall. (U. S.) 1; Farmers' &c. Bank v. Flint, 17 Vt. 508, 44 Am. Dec. 351 ; Hill v. Trainer. 49 Wis. 537, 5 N. W. 926. A member of a partnership can only revive debts so as to bind himself. Meinhard, Schaul & Co. V. Folsom, 3 Ga. App. 251, 59 S. E. 830. °' Earle v. Oliver, 2 Exch. 71 ; Kirk- patrick V. Tattersall, 13 Mees. & Wels. 766; Griel v. Soloman, 82 Ala. 85, 2 So, 322, 60 Am. Rep. 733 ; Wheeler v. Wheeler, 28 111. App. 385; Knapp v. Hoyt, 57 Iowa 591, 10 N. W. 925, 42 Am, Rep. 59; Otis v, Gazlin, 31 Maine 567; Lerow v. Wilmarth, 7 Allen (Mass.) 463; Cook v. Shearman, 103 Mass. 21 ; Wiggin v. Hodgdon, 63 N. H. 39; Stilwell v, Coope, 4 Denio (N. Y.) 225; Jersey City Ins. Co, v. Arch- er, 122 N, Y. 376, 25 N. E. 338. But, see Ogden v. Redd, 76 Ky. 581: Thornton v. Nichols & Lemon, 119 Ga. 50, 45 S. E. 785; Meinhard, Schaul & Co, v. Folsom Bros,, 3 Ga. App. 251, 59 S. E, 830, Payment on a note to the plaintiff by defendant dur- ing pendency of proceedings in bank- ruptcy does not constitute a new promise within Gen. St. c. 105, § 3 or 357 CONSIDERATION. § 2i: to revive the discharged debt, the new promise to pay must be clear, distinct and unequivocal."" There must be an expression by the discharged debtor of a clear intention to bind himself to pay the debt."* In case the discharged bankrupt promises to pay upon the happening of a contingency it must be shown that the contingency has arisen. Thus "A promise to pay as soon as the > bankrupt is able" can be upheld only on satisfactory proof of the discharged bankrupt's ability to pay."^ If he promises to pay on certain conditions such conditions must be accepted by the creditor before the promise becomes binding."" The creditor, it has been held, may sue on the old obligation and need not sue on the new promise." Other cases hold that the new promise creates a new debt for which the prior indebtedness is the consideration merely and that the declaration must be on the new promise."' Likewise a new promise by the debtor to pay the remainder of his obligation, given after he has been discharged from his debt by insolvency proceedings is based upon sufficient consideration Pub. St. c. 78, § 3. Heim v. Chapman, 171 Mass. 347, SO N. E. 529. The promise may be by parol. Mutual Re- serve Fund &c. Assn. v. Beatty, 93 Fed. 747; Lambert v. Schmaltz, 118 Cal. 33, SO Pac. 13 ; Smith v. Stanch- field, 84 Minn. 343, 87 N. W. 917. By statute in New York the promise must be in writing. Bair v. Hilbert, 82 N. Y. S. 1010, 84 App. Div. (N. Y.) 621; Mandell v. Levy, 93 N. Y. S. 545, 47 Misc. (N. Y.) 147; Tompkins V. Hazen, 165 N. Y. 18, 58 N. E. 762. A subsequqent promise by a third per- son to pay a discharged bankrupt's debts does not come within the rule, and such promise, if without any other consideration, is void. McElven v. Sloan, 56 Ga. 208. See also, Rice v. Maxwell, 13 S. & M. (Miss.) 289, S3 Am. Dec. 85; contra, Webster v. Le Compte, 74 Md. 249. " Thornton v. Nichols & Lemon, 119 Ga. 50, 45 S. E. 785; Shockey v. Mills, 71 Ind. 288, 36 Am. Rep. 196; Hubbard v. Farrell, 87 Ind. 215; Smith V. Stanchfield, 84 Minn. 343, 87 N. W. 917 ; Mandell v. Levy, 47 Misc. 147, 93 N. Y. S. 545 ; Allen v. Fergu- son, 18 Wall. (U. S.) 1 : McDougall v. Page, 55 Vt. 187. "Meech v. Lamon, 103 Ind. SIS, 3 N. E. 159, 53 Am. Rep. 540. By the above case, Hubbard v. Farrell, 87 Ind. 215, is overruled. Craig v. Seitz, 63 Mich. 727, 30 N. W. 347 ; Brewer V. Boynton, 71 Mich, 254, 39 N. W. 49 ; In re Appeal of Canfield, 4 Walk. (Pa.) 457. °°Kraus v. Torry, 146 Ala. 548, 40 So. 956; Baltimore &c. R. Co. v. Clark, 19 Md. 509; Yates Admrs. v. Hollingsworth, 5 Har. & J. (Md.) 216; Wiggin v. Hodgdon, 63 N. H. 39. " Smith V. Stanchfield, 84 Minn. 343, 87 N. W. 917; International Harves- ter Co. v. Lyman, 90 Minn. 275, 96 N. W. 87. "Gruenberg v. Treanor, 40 Misc. (N. Y.) 232, 81 N. Y. S. 675. ■"Katz V. Moessinger, 110 III. 372; Higgins V. Dale, 28 Minn. 126, 9 N. W. 583 ; Shippey v. Henderson, 14 Johns. (N. Y.) 178; Deputy v. Swart, 3 Wend. (N. Y.) 135; Murphy v. Crawford, 114 Pa. St. 496, 7 Atl. 142. 212 CONTRACTS. 358 and binding.^" But if it was optional with the creditor whether he would receive his share of assets and discharge the debt or refuse his pro rata share and hold the debtor liable in full, and he voluntarily elects to share in the assets and give a discharge in full, such discharge being voluntary is binding and a subse- quent promise by the debtor to pay the balance due is without con- sideration and void/ There is a conflict of authority as to whether a new promise, valid under the statute of frauds, is enforcible and needs no new consideration to support it when the original contract is void or unenforcible under the statute, even though the consideration moving from the promisee has already been received. In cer- tain jurisdictions it is held that such new promise cannot be enforced because the original contract was void and not merely voidable and will not sustain a subsequent valid promise. They hold that a precedent sufficient consideration can give no original right of action if the obligation on which it is founded could never have been enforcible at law.^ Other cases hold to the con- " Lambert v. Schmalz, 118 Cal. 33, 50 Pac. 13 (holding that an oral promise sufficient to revive the debt and that when an action is brouglit to recover such a debt it must be based on the new promise). "Ex parte Hall, 1 Beacon, 171; Samuel v. Fairgrieve, 21 Ont. App. 418; Rasmussen v. State Nat. Bank, 11 Colo. 301, 18 Pac. 28; Montgomery v. Lampton, 3 Mete. (Ky.) 519; Warren v. Whitney, 24 Me. 561, 41 Am. Dec. 406; Phelps v. Den- nett, 57 Maine 491 ; Ingersoll v. Martin, 58 Md. 67, 42 Am. Rep. 322; Hale v.^ Rice, 124 Mass. 292. "If a debt is voluntarily released by the creditor, a subsequent promise to pay it made by the debtor is with- out consideration." Cole v. Bedford, 97 Mass. 326n ; Mason v. Campbell, 27 Minn. 54, 6 N. W. 405 ; Valentine V. Foster, 1 Mete. (Mass.) 520; Grant v. Porter, 63 N. H. 229 ; Crans V. Hunter, 28 N. Y. 389; Stafford v. Bacon, 1 Hill (N. Y.) 532, 37 Am. Dec. 366 ; Zoebisch v. Von Minden, 47 Hun (N. Y.) 213; Lewis v. Simons, 1 Handy (Ohio) 82; Shepard V. Rhodes, 7 R. L 470, 84 Am. Dec. 573; Evans v. Bell, IS Lea (Tenn.) 569; contra, McPherson v. Rees, 2 Penr. & W. (Pa.) 521; contra. Will- ing V. Peters, 12 Serg. & R. (Pa.) 177. But see, Snevily v. Read, 9 Watts (Pa.) 396; Callahan v. Ack- ley, 9 Phila. (Pa.) 99. The rule is otherwise in those jurisdictions where a moral obligation is sufficient to sup- port a subsequent promise. Baeder V. Barton, 11 W. N. C. 165, 25 Alb. L. J. 377. ^Antenuptial promise to settle wife's property upon her. Lloyd v. Fulton, 91 U. S. 479, 23 L, ed. 363. Antenuptial agreement void under statute. Richardson v. Richardson, 148 111. 563, 36 N. E. 608, 26 L. R. A. 305. Verbal agreement to pay debt of another subsequently put in writing. Hall V. Soule, 11 Mich. 494. Promise to pay real estate broker commission. Stout V, Humphries, 69 N. J. L. 436, 55 Atl. 281. Promise to pay real es- tate broker commission. Bagnole v. Madden, 76 N. J. L. 255, 69 Atl. 967. Oral contract for sale of wheat void under statute of frauds. Hooker v. Knab, 26 Wis. 511 ; Nichols v. Mitch- ell. 30 Wis. 329. 359 CONSIDERATION. § 213 trary on the ground that the statute of frauds does not render a contract void but merely makes it unenforcible and that such con- tract, though unenforcible so long as it remained in a form pro- hibited by the statute of frauds is a sufficient consideration for a new and valid promise/ Still other authorities upholding such contracts base their decision on the moral obligation resting on the promisor to discharge his contract.* § 213. Past or antecedent consideration. — As was pointed out in the paragraph relative to executed considerations/ the general rule is that a past or antecedent consideration is not sufficient to support a subsequent promise.* The reason for this rule is that a past consideration is in law no consideration, and in many instances another sufficient reason would be that one man cannot make another his debtor without his consent.^ It 'Wills V. Ross, n Ind. 1, 40 Am. Rep. 279. A promise to convey land originally unenforcible because of un- certainty of subject-matter. In this case the promisor received his con- sideration prior to the making of the new and valid promise. The executed consideration is the basis of the de- cision. Daily v. Minnick, 117 Iowa S63, 91 N. W. 913, 60 L. R. A. 840. Original contract not to be performed within a year. Stout v. Ennis, 28 Kans. 706. Promise to pay commis- sion to real estate broker. Mohr v. Rickgauer, 82 Nebr. 398, 117 N. W. 950, 26 L. R. A. (N. S.) 533; Ander- son V. Best, 176 Pa. St. 498, 35 Atl. 194. See post, Ch. 30, Statute of Frauds. * Oral contract to reconvey land. Brown v. Latham, 92 Ga. 280, 18 S. E. 421 ; Sedgwick v. Tucker, 90 Ind. 271. Oral promise to answer for debt of another. Rogers v. Stevenson, 16 Minn. 68; Anderson v. Best, 176 Pa. St. 498, 35 Atl, 194; Rankin v. Mat- thiesen, 10 S. Dak. 628, 75 N. W. 196, The decision in this case is controlled by § 3531 Comp. Laws of the above state. Promise to pay real estate brok- er commission. Muir v, Kane, 55 Wash, 131. 104 Pac. 153, 26 L. R. A. CN. S,) 519. If the new promise is fully performed and performance is accepted, the statute does not apply. Detroit &c. R. Co. v. Forbes, 30 Mich. 165. "Ante, § 205. °West V. West. 1 RoUe Abr, 11, 9 Jur. (N. S.) 400, 7 L. T. 779; East- wood V. Kenyon, 11 A. & E. 438; Lev- erone v. Hildreth, 80 Cal, 139, 22 Pac. 72; Carson v. Clark, 1 Scam (III.) 113, 25 Am. Dec. 79; Pittsburgh &c. R. Co. v. Fawsett, 56 111. 513; Hobbs v. Greifenhager, 91 111. App. 400, 194 111. Ti ; Wiggins v. Keizer, 6 Ind, 252 ; Whipperman v. Hardy, 17 Ind. App. 142; Marsh v. Chown, 104 Iowa 556, 73 N. W. 1046 ; Dearborn v. Bowman, 3 Mete. (Mass.) 155; Massachusetts &c. Ins. Co. v. Green, 185 Mass. 306, 70 N. E. 202; Ludlow v. Hardy, 38 Mich. 690; Widiman v. Brown, 83 Mich, 241, 47 N. W, 231; Woodburn v. Renshaw, 32 Mo. 197; Boney v. Williams, 55 N. J, Eq, 691, 38 Atl. 189; Ehle v. Judson, 24 Wend. (N. Y.) 97; Bartholomew v. Jackson, 20 Johns. (N. Y.) 28, 11 Am. Dec. 237; Thompson v, Thompson, 76 App. Div, (N. Y.) 178, 78 N. Y, S, 389; Whitall V. Morse, 5 Serg, & R, (Pa,) 358; Hess' Estate, 150 Pa. St, 346, 24 Atl, 676 ; Lloyd v. Fulton, 91 U. S. 479, 23 L, ed, 363, ' See also, Stokes v. Lewis, 1 T. R, 20; Jenkins v. Tucker, 1 Hen. Bl. 90; Potter v. Potter, 3 N. J. L. 415; Dunbar v. Williams, 10 Johns, (N, Y.) 249; Everts v, Adams, 12 Johns. (N. Y.) 352; Bartholomew v. Jack- son, 20 Johns. (N. Y.) 28, 11 Am. § 213 CONTRACTS. 360 is not enough to show that a service has been rendered and that it was beneficial to the party sought to be charged unless such service was rendered at the promisor's special request or under such conditions as the law will imply such request. A promise given in consideration of past services voluntarily ren- dered without the promisor's privity or request is purely gratui- tous and creates no legal liability.' Thus, it has often been held that if buildings have been erected on land without request they cannot be reinoved, and the use of them by the owner of the land is not such an acceptance of the benefit as raises an implied promise to pay therefor.^ For the Dec. 237 (where a field was afire and a man removed a $iack of wheat to save it, no recovery allowed). " Lampleigh v. Braithwait, Hob. lOS, 1 Smith's L. Cas. 67; Bradford v. Roulston, 8 Ir. C. L. 468, Langdell 450. (In these cases, however, the rule was stated broadly that if there was a previous request the past considera- tion was sufficient and as to this com- parison should be made with Barthol- omew v. Jackson, 20 Johns. (N. Y.) 28, which is, perhaps, the leading case in this country and in which no recov- ery was allowed.) To the same ef- fect, Merrick v. Giddings, 1 Mackey (D. C.) 394; Wulff v. Lindsay, 8 Ariz. 168, 71 Pac. 963. But see, Bradford V. Roulston, 8 Ir. C. L. 468; Allen v. Bryson, $7 Iowa, .S91, 25 N. W. 820, 56 Am, Rep. 358; Dearborn v. Bow- man, 3 Mete. (Mass.) 155; Conant v. Evans, 202 Mass. 34, 88 N. E. 438; Bond v. Corbett, 2 Gil. (Minn.) 209; Gardner v. Schooley, 25 N. J. Eq. ISO. In Force v. Haines, 17 N. J. L. 385, the court said : "The world abounds with acts of this kind, done upon no request ; but would more abound with ruinous litigation, and the overthrow of personal rights, and civil freedom, if the law was otherwise." Sharp v. Hopes, 74 N. J. L. 191, 64 Atl. 989; Thompson v. Thompson, 76 App. Div. (N. Y.) 178, 78 N. Y. S. 389; Strevell V. Jones' Estate, 106 App. Div. (N. Y.) 334, 92 N. Y. S. 719, 94 N. Y. S. 627j In re Pinkerton's Estate, 49 Misc. (N. Y.) 363, 99 N. Y. S. 492; Critcher v. Watson, 146 N. Car. 150, 59 S. E. 544, 18 L. R. A. (N. S.) 270, 125 Am. St. 470 ; Glenn v. Savage, 14 Ore. 567, 13 Pac. 442, to recover for goods furnished, the court saying: "The great and leading rule of law is to deem an act done for the benefit of another without his request as a voluntary act of courtesy, for which no action can be sustained." James v. O'DriscoU, 2 Bay (S. Car.) 101, 1 Am. Dec. 632; Austin &c. R. Co. v. Swisher, 1 White & W. Civ. Cas. Ct. App. (Tex.) §75. See also, Elmore V. Snow (Ark.), 146 S. W. 476. If the agreement to pay for past services is but the merger or consummation of a prior agreement entered into before the services were rendered the prom- isor cannot escape liability on the ground that the consideration had passed prior to the execution of the latter contract. Fearnlev v. Fearnley, 44 Colo. 417, 98 Pac. 819; Noyes v. Young, 32 Mont. 226, 79 Pac. 1063. ' Burn v. Miller, 4 Taunt. 745 ; Ellis V. Hamlen, 3 Taunt. 52; Munro v. Butt, 8 El. & Bl. 738 ; Ranger v. Great Western R. Co., 5 H. L. C. 72; Pat- tinson v. Luckley, L. R. 10 Ex. 330; Farnsworth v. Garrard, 1 Camp. 38; Graham v. Connersville R. Co., 36 Ind. 463, 10 Am. Rep. 56; Boston v. Dodge, 1 Blackf. (Ind.) 19, 12 Am. Dec. 205; Meriam v. Brown, 128 Mass. 391. (Railroad company laying rails on land, held it could not remove them.) First Parish v. Jones, 8 Cush. (Mass.) 184; Oakman v. Dor- chester, 98 Mass. S7 ; Madigan v. Mc- Carthy, 108 Mass. 376, 11 Am. Rep. 371, the court saying: "If one erects a permanent building, like a dwelling house, upon the land of another vol- untarily and without any contract . 36i CONSIDERATION. same reason a past forbearance of a creditor to prosecute a claim is no consideration for a new promise/" So a note given by a candidate for an elective office in payment of services in promot- ing his election, but which were not rendered at his request, is void for want of consideration/^ And where chattels are sold without warranty and after sale is completed the seller warrants the thing sold, the warranty so given is void since it is a separate and independent contract not supported by a consideration/" A writing which recites that it is given "in consideration of your having endorsed the undermentioned notes" is insufficient because based on a past consideration/" A promise by an administrator to pay for board gratuitously furnished a child since deceased is with the owner, it becomes a part of the realty, and belongs to the owner of the soil." Guernsey v. Wilson, 134 Mass. 482; Drake v. Bell, 46 App. Div. 275, 61 N. Y. S. 657; Crest v. Jack, 3 Watts (Pa.) 238, 27 Am. Dec. 353; West V. Stewart, 7 Pa. St. 122. Com- pare Cincinnati R. Co. v. Bensley, 51 Fed. 738, the court saying: "Thus, if a man build a house upon the land of another, with his assent, the law raises an obligation on his part to pay its value, since he has been benefited to that extent, and, if he did not intend to pay, it was his duty to forbid its construction, or, at least, to give no- tice that he would not be chargeable. * * * So, if A promises to pay B for a house to be built upon the land of C, provided it be built within a certain time, and the house be not completed within the time named, it is difficult to see how A could be held liable in any form of action, since he has received no benefit from the sub- sequent performance of the contract. In such case, however, if C should ac- cept the house, he would undoubtedly be bound to pay its value; but, if he failed to do so, the builder would have no recourse but to remove the house from the land." Compare also, Critcher v. Watson, 146 N. Car. 150, 59 S. E. 544, 125 Am. St, 470. "Shealy v. Toole, 56 Ga. 210; Young V. Hill, 61 N. Y. 162, 23 Am. Rep. 99. " Dearborn v. Bowman, 3 Mete. (Mass.) 155. '^ Horse sold and afterward war- ranted sound, Roscorla v. Thomas, 3 Q. B. 234; Roswel v. Vaughan, Cro. Jac. 196 ; Pope v. Lewyns, Cro. Jac. 630; Thornton v. Jenyns, 1 Man. & G. 166. Warranty of saw-mill. Summers V. Vaughan, 35 Ind. 323, 9 Am. Rep. 741. "Any subsequent or collateral contract of warranty must arise from an express promise to warrant, and that upon a new consideration distinct from that of the sale itself." Hod- gins V. Plympton, 11 Pick. (Mass.) 97 ; Aultraan v. Kennedy, Zi Minn. 339, 23 N. W. 528 (machinery war- ranted) ; Halchell v. Odom, 19 N. Car. (2 Dev. & B.) 302 (promise to cure slave or refund money) ; Fletcher v. Nelson, 6 N. Dak. 94, 69 N. W. 53 (horse sold and then warranty giv- en) ; Bloss V. Kittridge, 5 Vt. 28; Morehouse v. Comstock, 42 Wis. 626. But where an auctioneer has sold a horse, if before the money is paid and the horse delivered it is agreed that words of warranty shall be writ- ten in the bill of sale and the money is then paid and the horse delivered, this warranty rests upon a present con- sideration. McGaughey v. Richard- son, 148 Mass. 608, 20 N. E. 202. See also, Hobart v. Young, 63 Vt. 363, 21 Atl. 612, 12 L. R. A. 693 ; Eastern Ice Co. V. King, 86 Va. 97, 9 S. E. 506. "Bulkley v. Landon, 2 Conn. 404. An agreement entered into immedi- ately after the execution and delivery of a mortgage that it should not be recorded has been held unsupported by consideration. Robinson v. Ran- dall (Ky.), 143 S. W. 769. §214 CONTRACTS. 362 without consideration/^ A note by a wife given to a builder for the price of a structure ah'eady built on her land by the order and on the credit of her husband is within the rule that a past con- sideration is insufficient to support a promise.^" A promise made after the assignment of a lease to pay the assignee the sum due for breaches of covenant on the part of the former holder of the lease," or a promise by lessors to pay for lumber furnished to lessee, if made after the lumber is furnished;" or an agreement to pay additional compensation made after the services are ren- dered;^* or a promise made after marriage in consideration there- of ;^^ or a promise given after the making of a contract of sale by the purchaser to pay a sum additional to that mentioned in the con- tract;"" or an agreement after sale not to engage in the same busi- ness in that vicinity for a stated period f^ or a promise to indem- nify a surety made after he became bound, ^^ are none of them supported by a sufficient consideration because of its being past. However, where the signing of the contract is a part of the pre- ceeding transaction it is supported by a consideration. ^^^ § 214. Exceptions to rule that past consideration will not support a subsequent promise. — It is frequently stated that a past consideration will support a promise in case the service or services are rendered on request, no promise or remuneration be- ing made at the time but subsequently an express promise being made to pay for them.^' It was so held by the early cases on the ground that the past consideration continued until the making of "Shepherd v. Young, 74 Mass. (8 =" Howard v. McNeil, 25 Ky. L. Gray) 152, (,9 Am. Dec. 242. A prom- 1394, 78 S. W. 142. ise to pay the past indebtedness of "^ Cleaver v. Lenhart, 182 Pa. St. another must be supported by a con- 285, 37 Atl. 811; Zanturjian v. Boor- sideration moving to the promisor, nazian, 25 R. I. 151, 55 Atl. 199. Kephart v. Buddecke, 20 Colo. App. '' Holloway's Assignee v. Rudy, 22 546, 80 Pac. 501. Ky. L. 1406, 60 S. W. 650, S3 L. R. A. " Morse v. Mason, 103 Mass. 560. 353. "Woodburn v. Renshaw, 32 Mo. ===3 Bennett v. Baum, 90 Nebr. 320, 197. 133 N. W. 439. "Bailey v. Rutjes, 86 N. Car. 517. =' Osborne v. Rogers, 1 Saund. 264; ^° Fisher v. Harrisburg Gas Co., 1 Hayes v. Warren, 2 Stra. 933 ; Lamp- Pears (Pa.) 118. leigh v. Brathwait, Hob. 105, 1 Smith's " Lloyd V. Fulton, 91 U. S, 479, 23 L. Cas. 141 ; Hunt v. Bate, 3 Dyer, L. ed. 363. Such an agreement will 272a; Bradford v. Roulston, 8 Ir. not bar the right of creditors of one Com. Law. 468; Field v. Dale, 1 RoUe of the parties. Albert v. Minn, 5 Md. 66. 363 CONSIDERATION. § 2I4 the promise by the recipient of the benefit,^* and that the promise when given related back to the previous request and was con- nected writh it.^° But the unquaHfied statement of the alleged ex- ception is misleading for the reason that in many instances services are rendered upon request and it is either mutually under- stood that such services are to be gratuitous or the circumstances negative any intention or expectation of reward.^'' The rule as commonly stated and as given above is not only open to the ob- jection that it includes matters not properly within the rule but it is also subject to criticism for the further reason that it seems to exclude cases that should be included, for under the rule as stated it would be necessary in all cases to allege and prove a previous request before any recovery could be had."^ There are many cases in which services are rendered on request which should be paid for regardless of a subsequent promise to do so, also there are services rendered without request but under such circumstances that a request and promise to pay should be implied. For the reasons stated the English courts seem to have abandoned the doctrine of "previous request" and "subsequent promise," and they incline to the doctrine that the subsequent promise is admis- sible in evidence as tending to show that the services were not in- Abr. 11 pi. 8; Marsh v. Rainsford, 2 defendant's benefit, the promise is Leon. Ill; Bosden v. Thinne, Yelv. binding though made upon a past con- 40; Riggs V. Bullingham, Cro. Eliz. sideration," citing Boothe v. Fitzpat- 715; Oliverson v. Wood, 3 Lev. 366; rick^ 36 Vt. 681. Lonsdale v. Brown, Friedman v. Suttle, 10 Ariz. 57, 85 4 Wash C. C. 148, Fed. Cas. No. 8494. Pac' 726, 9 L. R. A. (N. S.) 933; "Langdell on Contracts, § 92. See Carson v. Clark, 1 Scam. (III.) 113, 25 also, Wolford v. Powers, 85 Ind. 294, Am. Dec. 79; Pool v. Horner, 64 Md. 306, 307. 131, 20 Atl. 1036; Gleason v. Dyke, "' Lampleigh v. Brathwait, Hob. 105, 22 Pick. (Mass.) 390; Dearborn v. 1 Smith L. Cas. 141. Bowman, 3 Mete. (Mass.) 155; Wil- '"See, Osier v. Hobbs, 33 Ark. 215; son V. Edmonds, 24 N. H. 517; Allen Forbes v. Williams, 13 111. App. 280, V Woodward, 22 N. H. 544; Chaffee 117 111. 167; Allen v. Bryson, 67 Iowa V. Thomas, 7 Cow. (N. Y.) 358; 591, 25 N. W. 820, 56 Am. Rep. 358; Brightly v. McAleer, 3 Pa. Super. Ct. Stone v. Gerrish, 1 Allen (Mass.) 442 40 Week No. Cas. 107; Holden 175; James v. O'Driscoll, 2 Bay. (S. V Banes 140 Pa. St. 63, 21 Atl. 239. Car.) 101, 1 Am. Dec. 632. See also, Spencer v. Potter's Estate "Hayes v. Warren, 2 Strange 933. (Vt.), 80 Atl. 821, holding that See also, Victors v. Daviess, 12 M. "though no legal obligation ever pre- & W. 758; Goldsby v. Robertson, 1 viously existed, yet, if the considera- Blackf. (Ind.) 247; Bartholomew v. tion, even without request, moves di- Jackson, 20 Johns. (N. Y.) 28, 11 rectly from the plaintiff to the defend- Am. Dec. 237. Broom's Leg. Mat ant, and inures directly to the *759. ,i 214 CONTRACTS. 364 tended to be gratuitous but is not of itself sufificient to form a binding obligation.^^ The recognition of implied promises might well be made the test by which to govern all cases. It is sufificiently broad to en- force a liability in every case where the ends of justice will be subserved by so doing. Thus if a benefit is pre- ceded by a request and the request reasonably implies a promise of remuneration the implied promise may be enforced.^" Even if beneficial services are rendered without request the cir- cumstances may be such that a subsequent promise to pay therefor will imply a previous request, the legal effect of which is the same as if it had existed from the beginning and the promise will be enforced.^" This is especially true if it is evident that the services were not intended to be gratuitous.^^ In practically every case which holds that a past service will support a subsequent promise if the service was rendered upon request it will be found that the previous request virtually amounted to a promise or contemplated a subsequent promise to pay.^^ It is submitted therefore that the only true rule that can be universally applied is the one enunciated ''Stewart v. Casey, 1 Ch. (1892) &c. Co. v. Cerebus Oil Co., 79 Kans. 104; Paynter v. Williams, 1 C. & M. 603, 100 Pac. 631. Chadwick v. Knox, 810; Kennedy v. Broun, 13 C. B. 31 N. H. 226, 64 Am. Dec. 329; (N. S.) 677. See also, Chadwick v. Snyder v. Castor, 4 Yeates (Pa.) Kno.x, 31 N. H. 226, 64 Am. Dec. 353; Jilson v. Gilbert, 26 Wis. 637, 329. But compare Bradford v. Roul- 7 Am. Dec. 100; Silverthorne v. sten, 8 Ir. C. L. 468. Wylie, 96 Wis. 69, 71 N. W. 107. =" Powell V. McCord, 121 111. 330, ^Friedman v. Suttle, 10 Ariz. 57, 12 N. E. 262; Allen v. Bryson, 67 85 Pac. 726, 9 L. R. A. (N. S.) 933; Iowa 591, 25 N. W. 820, 56 Am. Rep. "A voluntary courtesy moved by a 358 ; Moore v. Elmer, 180 Mass. 15, previous request is a good considera- 61 N. E. 259. Davidson v. West- tion for an express promise. It is Chester Gas Light Co., 99 N. Y. 558, not sufficient, in the absence of benefits 2 N. E. 892, the court saying : "A conferred, to raise an implied prom- promise to pay for services is some- ise." Clark v. Nat. Steel & Wire times implied by law ; but this is done Co., 82 Conn. 178, 72 Atl. 930 ; Mont- only when the court can see that gomery v. Downey, 116 Iowa 632, 88 they were rendered under such cir- N. W. 810; Daily v. Minnick, 117 cumstances as authorized the party Iowa 563, 91 N. W. 913, 60 L. R. A. performing to entertain a reasonable 840; Pool v. Horner, 64 Md. 131, expectation of their payment by the 20 Atl. 1036 ; O'Connor v. Beckwith, party soliciting the performance." 41 Mich, 657, 3 N. W. 166; Stuht v. Milliken v. Western Union Tel. Co., Sweesy, 48 Nebr. 767, €1 N. W. 748; 110 N. Y. 403, 18 N. E. 251. Wilson v. Edmonds, 24 N. H. 517; ™Forbis v. Inman, Paulson & Co., Hicks v. Burhams, 10 Johns. (N. Y.) 23 Ore. 68, 31 Pac. 204. 243; Paul v. Stackhouse, 38 Pa. 302; "Edson V. Poppe, 24 S. D. 466, Seymour v. Marlboro, 40 Vt. 171; 124 N. W. 441, 26 L. R. A. (N. S.) Silverthorne v. Wylie, 96 Wis. 69, 534. See also, Pittsburg Vitrified 71 N. W. 107. 3^5 CONSIDERATION. §214 by the English courts to the effect that "a past consideration will support no other promise than such as would be implied by law/'^^* One other alleged exception to the general rule that a past con- sideration will not support a contract is that where one has vol- untarily done for another what that other was legally bound to do, it is sufficient consideration to support a subsequent promise given by the person benefited by such voluntary act.^* The reason for the rule seems to be, however, that the subsequent ratification of an act done by a voluntary agent of another with- out authority from the principal, is equivalent to a previous authority/^ The law will not allow a party to maintain an action for money paid to discharge the debt of another without his con- sent; for, to allow this would subject every debtor to the power of those who might be disposed to injure him, and who might harass him with suits and burden him with costs, in the most unreason- able and oppressive manner. But if the debtor assents to the pay- ment, the reason for the rule fails; and whether this assent be given before or after the payment is immaterial. Thus if a person pay a mortgage without request of the mortgagor,'" judg- ment,'' or other form of indebtedness,^' it will support a subse- quent promise of reimbursement therefor. But to say generally that the promise to recompense a person who has performed a duty which the promisor was under a legal obligation to perform, is binding although made subsequently to the doing of the act ''Roscorla v. Thomas, 3 Q. B. 234; N. E. 202; Price v. Towsey, 3 Litt. Kay V. Dutton, 7 Man. & G. 495; (Ky.) 423, 14 Am. Dec. 81. Elderton v. Emmens, 13 C. B. 495 ; ™ Osborne v. Rogers, 1 Saund. 264 ; Hopkins v. Logan, 5 M. & W. 241. Watson v. Turner, Bull N. P. 147n; See also, Atkinson v. Stephen, 7 Exch. Paynter v. Williams, 1 C. & M. 810 ; 567; Broom's Leg. Max. *764. Wing v. Hill, 1 B. & Aid. 104; Atkins =* Watson V. Turner, Bull N. P. v. Banwell, 2 East 505; Gleason v. 147n.; Wing v. Mill, 1 B. & Aid. Dyke, 22 Pick. (Mass.) 390. 104. The voluntary payment of " Bevan v. Tomlinson, 25 Ind. 253 ; a judgment against a defendant in Doty v. Wilson, 14 Johns. (N. Y.) favor of a third person, which wholly 378; Wright v. Farmer's Nat. Bank, discharges the same will support a 31 Tex. Civ. App. 406, 72 S. W. 103. subsequent promise by defendant to "' Roundtree v. Holloway, 13 Ala. repay the same. Wright v. Farmer's 357; Kenan v. Holloway, 16 Ala. 53, National Bank (Tex. Civ. App.), 72 50 Am. Dec. 162; Ingraham v. Gil- S. W. 103. bert, 20 Barb. (N. Y.) 151; St. Nich- ^° Gleason V. Dyke, 22 Pick. (Mass.) olas Ins. Co. v. Howe, 7 Bosw. (N. 390; but see Massachusetts Mut. Life Y.) 450; Hassinger v. Solms, 5 Ins. Co. V. Green, 185 Mass. 306, 70 Serg. & R. (Pa.) 4. CONTRACTS. 366 done without request, is to state the rule too broadly. For if the payment is made gratuitously the subsequent promise would be without consideration. The person making the payment must do so as the voluntary agent of the other and must assume to act on behalf of that other.^" § 215. Doing what one is legally bound to do. — Neither the promise to do, nor the actual doing, of that which the prom- isor is, by law or subsisting contract, bound to do, is a sufficient consideration to support a promise made to the person upon whom the legal liability rests, either to induce him to perform what he is bound to do or to make a promise so to do.*° For "" See Massachusetts Mut. Life Ins. Co. V. Green, 185 Mass. 306, 70 N. E. 202. "Deacon v. Gridley, IS C. B. 295; Byrd v. Hickman, 167 Ala. 351, 52 So. 426; Worthen v. Thompson, 54 Ark. 151, 15 S. W. 192 ; KiUough v. Payne, 52 Ark. 174, 12 S. W. 327; Sullivan V. Sullivan, 99 Cal. 187, 33 Pac. 862; Averill v. Sawyer, 62 Conn. 560, 27 Atl. 73 ; Littlepage v. Neale Pub. Co., 34 App. D. C. 257; Bush v. Rawlins, 89 Ga. 117, 14 S. E. 886; Gardner v. Watson, 13 111. 347; Hennessey v. Hill, 52 111. 281 ; Dennis v. Piper, 21 111. App. 169; Strange v. Carrington &c. Co., 116 111. App. 410; Freeman V. Brehm (Ind. App.), 30 N. E. 712, 31 N. E. 545; Reynolds v. Nugent, 25 Ind. 328; Shortle v. Terre Haute &c. Co., 131 Ind. 338, 30 N. E. 1084; Harris v. Cassady, 107 Ind. 158, 8 N. E. 29; Spencer v. McLean, 20 Ind. App. 626, 50 N. E. 769, 67 Am. St. 271; Mader v. Cool, 14 Ind. App. 299, 42 N. E. 945, 56 Am. St. 304; Runkle v. Kettering, 127 Iowa 6, 102 N. W. 142; Grant v. Green, 41 Iowa 88; Newton v. Chicago &c. R. Co., 66 Iowa 422, 23 N. W. 90S; Ayres v. Chicago &c. R. Co., 52 Iowa 478, 3 N. W. 522; Schuler v. Myton, 48 Kans. 282, 29 Pac. 163 ; Eblin v. Mil- ler, 78 Ky. 371: Kernion v. Hills, 1 La., Ann. 419; Warren v. Hodge, 121 Mass. 106; Trombly v. Klersy (Mich.), 104 N. W. 419; Widiman V. Brown, 83 Mich, 241. 47 N. W. 231 ; .Keith v. Miles, 39 Miss. 442, 77 Am. ' Dec. 685; Wendover v. Baker, 121 Mo. 273, 25 S. W. 918; Esterly &c. Machine Co. v. Pringle. 41 Nebr. 265, 59 N. W. 804. ("The rule is ele- mentary that neither the promise to do, nor the actual doing, of that which the promisor is, by law or subsisting contract, bound to do, is a sufficient consideration to support a promise in his favor.") Billings v. Filley, 21 Nebr. 511, 32 N. W. 567 (second ap- peal, 26 Nebr. 537, 42 N. W. 713) ; Allen V. Plasmeyere, 3 Nebr. 187, 90 N. W. 1125; In re Lehnhoff's Estate (Nebr.), 109 N. W. 164, 112 N. W. 563 ; Conover v. Stillwell, 34 N. J. L. 54; Gardner's Admrs. v. Schooley, 25 N. J. Eq. 150; Robinson v. Jewett, 116 N. Y. 40, 22 N. E. 224; Vander- bilt V. Schreyer, 91 N. Y. 392; Crosby V. Wood, 6 N. Y. 369; Olmstead v. Latimer, 158 N. Y. 313, 53 N. E. 5, 43 L. R. A. 685; Coleman v. Burr, 93 N. Y. 17, 45 Am. Rep. 160; Arend V. Smith, 151 N. Y. 502, 45 N. E. 872; Carpenter v. Taylor, 164 N. Y. 171, 58 N. E. 53; Seybolt v. New York &c. R. Co., 95 N. Y. 562, 47 Am. Rep. 75 ; Callagan v. Hallett, 1 Caines (N. Y.) 104; Bartlett v. Wy- man, 14 Johns. (N. Y.) 260; Bickart V. Hoffmann (Com. PI. N. Y.), 19 N. Y. S. 472; Gaar, Scott & Co. v. Green, 6 N. Dak. 48, 68 N. W. 318 Withers v Ewing, 40 Ohio St. 400 Sherwin v. Brigham, 39 Ohio St 137 Snyder v. Schardt, 29 Ohio C. C. 714 (plaintiff had already agreed with another to do the work for a valu- able consideration, which he was sub- sequently requested to perform by de- 367 CONSIDERATION. § 215 this reason if one does, or promises to do merely that which the law requires of him, it is no consideration for a return promise. The principle is illustrated in many cases. An agreement to pay a nonexpert witness duly subpoenaed and legally bound to attend a trial an additional sum if he will attend such trial as witness is not supported by a consideration.*^ The same is true of a contract whereby the owner of stolen property bargains to repay the sheriff certain of his expenses in case the recovered property is turned over by the sheriff;''^ or of a promise to pay a constable an amount in excess of his statutory fee, if he will make an arrest,*^ or of a promise to pay an executor for the fendant who promised to pay for such work) ; Meyer v. Livesley, 56 Ore. 383, 107 Pac. 476, 108 Pac. 121; Erb V. Brown, 69 Pa. 216; Hanks v. Bar- ron, 95 Tenn. 275, 32 S. W. 195; Heisch V. Adams, 81 Tex. 94, 16 S. W. 790; Chase v. Soule, 76 Vt. 353, 57 Atl. 754 ; Cobb v. Cowdery, 40 Vt. 25, 94 Am. Dec. 370 ; Merrill v. Pease, 51 Vt. 556; Smith v. Phillips, 11 Va. 548; Wadhames v. Page, 1 Wash. 420, 25 Pac. 462. See also, Petze v. Leary, 117 App. Div. 829, 102 N. Y. S. 960. "While it is settled that the promising to do, or the doing of, that which the promisor is already legally bound to do, does not, as a rule, constitute a consideration for a reciprocal promise, or support a re- ciprocal undertaking given by the promisee, it by no means follows that such promise may not be enforced against such promisor by the prom- isee, although its enforcement com- pels the performance of that which was already a legal obligation." Ward V. Goodrich, 34 Colo. 369, 82 Pac. 701, 2 L. R. A. (N. S.) 201n, 114 Am. St. 167. Where the defendant, to in- duce the plaintiff to pay for stock for which he had subscribed, agreed to repurchase such stock or pay the plaintiff a certain sum in case it failed to yield a certain dividend, the prom- ise could not be enforced since it was without consideration. Marinovich v. Kilburn, 153 Cal. 638, 96 Pac. 303. Where the promoter of a corporation gave it a license to use a patent owned by him, in order to induce one who had subscribed for capital stock to agree to pay therefor, it was held that the license was without con- sideration, since the subscriber merely promised to do what he was legally bound to do. Havana Press Drill Co. V. Ashurst, 148 111. 115, 35 N. E. 873. " Collins v. Godefrby, 1 Barn. & Ad. 950; Dodge v. Stiles, 26 Conn. 463 ; Hargarten v. Berz, 126 111. App. 368; Sweany v. Hunter, 5 N. Car. (1 Murph.) 181. But if the witness could not be compelled to attend, the agreement to pay extra fees is bind- ing. Armstrong v. Prentice, 86 Wis. 210. ^Worthen v. Thompson. 54 Ark. 151, 15 S. W. 192. See also, Kil- lough V. Payne, 52 Ark. 174, 12 S. W. 327; Erny v. Sauer (Pa.), 83 Atl. 205. *= Hatch V. Mann, 15 Wend. (N. Y.) 44. But a public officer may per- form services in the detection and punishment of crime and recovery of stolen property which it is not his of- ficial duty to perform, and such serv- ices will constitute a consideration for a promise. England v. Davidson, 11 Ad. & El. 856; Matthews v. United States, 32 Ct. CI. (U. S.) 123, affd. 173 U. S. 381 ; Russell v. Stewart, 44 Vt. 170; Davis v. Munson, 43 Vt. 676, 5 Am. Rep. 315. In Davis v. Munson, 43_Vt. 676,5 Am. Rep. 315, the court said : "This case is broadly distin- guished from Pool V. Boston, 5 CushT' (Mass.) 219." Warner v. Grace, 14 Minn. 487 ; Gregg v. Pierce, 53 Barb. (N. Y.) 387. See also, Brown v. God- frey, 33 Vt. 120. And the perform- § 215 CONTRACTS. 368 performance of duties which by law he was bound to perform," or an agreement signed in order to induce the executor to perform an act which, as executor, he was bound to perform/^ For the same reason an agreement to pay an assistant county clerk extra for the performance of the duties required by his employ- ment is a nudum pactum/" Where the wife, for a consideration, agreed to care for her insane husband, she cannot enforce it, as she owes that duty to her husband regardless of any contract." Likewise a contract by which the husband agrees to live as a hus- band should live is not supported by a consideration since the husband agrees to do nothing more than he was already bound to do.*^ The same is true of contracts by the husband to com- pensate the wife for the performance of duties rendered obliga- tory by the marriage relation ;"" a contract whereby the husband bound himself to pay the wife a certain sum if she will discon- tinue living apart from him f an agreement by wife to give all her property to the husband in consideration of his caring for her during her life;^^ and an agreement by a father to pay his minor daughter wages if she will stay at home and help her mother take care of the house." Where the president of a railway company takes a lease for its benefit in his own name, without assent of the ance of any service which a con- in caring for and nursing her hus- stable, policeman or other public of- band did not furnish consideration iicer is not bound to render may be for a check given to her by the hus- consideration for a contract. Eng- band. land V. Davidson, 11 Ad. & EI. 856. "Miller v. Miller, 78 Iowa 177, 35 The plaintiff, a constable, gave infor- N. W. 464, 42 N. W. 641, 16 Am. St. mation leading to a conviction of a 431. felon, it not being in the line of his '"Lee v. Savannah Guano Co., 99 duties to furnish such information. Ga. 572, 27 S. E. 159, 59 Am. St. 243; It was held he could recover on a i\Iichigan Trust Co. v. Chapin, 106 promise supported by such a service. Mich. 384, 64 N. W. 334, 58 Am. St. Studley v. Ballard, 169 Mass. 295, 47 490. This is true even though the N. E. 1000, 61 Am. St. 286; North- wife is by statute given the individual rop v. Ballard, 169 Mass. 295, 47 N. ownership of her earning. Mewhir- E. 1000. ter v. Hatten, 42 Iowa 288, 20 Am. " Orr V. Sanford, 74 Mo. App. 187. Rep. 618. "Slater v. Slater, 94 N. Y. S. 900, °°Copeland v. Boaz, 9 Baxt. affd.. 114 App. Div. (N. Y.) 160, 99 (Tenn.) 223, 40 Am, Rep. 89. N. Y. S. 564, affd., 188 N, Y. 633, 81 '' Ryan v. Dockery, 134 Wis. 431, N. E. 1176. 114 N. W. 820, 126 Am. St. 820. See "Bloodgood v. Wuest, 69 App. Div. also, Corcoran v. Corcoran, 119 Ind. (N. Y.) 356, 74 N. Y. S. 913. 138, 21 N. E. 468, 4 L. R. A. 782, "Grant v. Green, 41 Iowa 88. See 12 Am, St, 390. also, Foxworthy v. Adams, 136 Ky. °' Bolton v. Terpeny, 14 N. Y. 403, 124 S. W. 381, Ann. Cas. 1912 A, Week. Dig. 533. 327, holding that services rendered 369 CONSIDERATION. § 2l6 corporation, he is bound to transfer the lease to it upon demand, and any promise such corporation makes to secure the transfer is void for the reason that the president only does what he is legally bound to do/^ Equally a surrender of mortgaged prem- ises by the mortgagor, after condition broken, "to save the mort- gagee trouble in getting possession of the mortgaged premises," is no consideration for the mortgagee's agreement to cancel notes secured thereon/* Nor is the release of the mortgaged debt after payment of the debt which it secured, consideration for an agree- ment allowing the mortgagee to retain certain rents,°° nor the sur- render of stolen property to the owner, consideration for a prom- ise.^' ^ § 216. Same — Refusal to perform without further recom- pense. — And the same principle applies to contractual obliga- tions in general where one party to a contract refuses to perform it unless promised some further pay or benefit than the contract provides for, and if the promise is made, it is without considera- tion and unenforcible for the reason that the party performing the contract in return for the promised additional compen- sation or benefit agrees to do nothing more than that which he was already bound to do."^ While this is undoubtedly '"Robinson v. Jewett, 116 N. Y. give the property back to the holder 40, 22 N. E. 224. ' in case the thief is not convicted oi, " Wendover v. Baker, 121 Mo. 273, its theft. Fink v. Smith, 170 Pa. St. 25 S. W. 918. An agreement by the 124, 32 Atl. 566, 50 Am. St. 750. mortgagor when in default to sur- "' Harris v. Watson, Peake 102 ; render possession upon a release from Stilk v. Myrick, 2 Campb. 317, 6 Esp. further liabiHty is not supported by a 129; Frazer v. Hatton, 2 C. B. (N. consideration nor is the considera- S.) 512; Shriner v. Craft, 166 Ala. tion supplied by the fact that the 146, 51 So. 884, 28 L. R. A. (N. S.) mortgagor went to the trouble of 450n; Alaska Packers Assn. v. Do- moving to another residence. Erny menico, 117 Fed. 99, 54 C. C. A. 485; v. Sauer (Pa.), 83 Atl. 205. Willingham Sash &c. Co. v. Drew, ■^Chilson v. Bank of Fairmount, 9 117 Ga. 850, 45 S. E. 237; Nelson v. N. Dak. 96, 81 N. W. 33 ; Jones v. Pickwick Assn. Co., 30 III. App. 333 ; Risky, 91 Texas 1, 32 S. W. 1027. Moran v. Peace, 72 111. App. 135 ; ™ Worthen v. Thompson, 54 Ark. Ritenour v. Mathews, 42 Ind. 7 ; Rey- 151, 15 S. W. 192; Fink v. Smith, 170 nolds v. Nugent, 25 Ind. 328; Ayers Pa. St. 124, 32 Atl. 566, 50 Am. St. v. Chicago &c. R. Co., 52 Iowa 478, 750. Nor does the return of such 3 N. W. 522; King v. Duluth &c. R. property support a promise to permit Co., 61 Minn. 482, 63 N. W. 1105; the holder to retain a portion of it. Lingenfelder v. Wainwright Brewing Morgan v. Hodges, 89 Mich. 404, 50 Co., 103 Mo. 578, 15 S. W. 844; N. W. 876, IS L. R. A. 438. Nor i!i Wear Bros. v. Schmelzer, 92 Mo. the return of the property to the App. 314; Esterry Harvester Mach. owner consideration for a promise t'3 Co. v. Pringle, '4\ Nebr. 265, 59 N. 24 — Contracts, Vol. I § 2l6 CONTRACTS.' 37O the general rule the courts have given it strict construction and have declared it inapplicable in many cases apparently within it provisions. It will be readily recognized that the general rule does not apply where the promisee has broken either an express or an implied condition of the original contract and agrees to give the contractor additional com- pensation if he will disregard the breach and perform the contract. Thus where one party to a contract has by his acts so delayed the other party in the performance of his part of the con- tract that he is not legally bound to complete the contract within the stipulated time, and thereupon the former promises him extra pay if he will complete the contract within such time, and he so promises and performs, the promise of extra pay is supported by a valid consideration. °^ And under a building contract when the owner fails to pay the instalments when they are due, and the contractor refuses to perform the work without security, the agreement for security is valid. ^'' Nor is it applicable where additional compensation is promised in consideration of the con- tractor rendering additional services,"" or assuming extra risks not contemplated in the original contract."^ But the various courts have rendered decisions declaring the rule inapplicable which rest on more technical and less obvious grounds. These rulings may be classified under two general heads the first consisting of those cases which hold that the new W. 804; Marten v. Brown, 80 N. J. R. Co., 1S2 Mo. App. 221, 133 S. W. L. 143, 76 Atl. 1009; Galway & Co. 389 (also holding that an agreement V. Prignano, 134 N. Y. S. 571 ; Bart- on the part of the contractor to finish lett V. Wyman, 14 Johns. (N. Y.) the work more rapidly than they 260 ; Schneider v. Heinscheimer, 26 would have been bound to do under Misc. (N. Y.) 11, 5S N. Y. S. 630; the old contract is a sufficient con- Price V. Press Pub. Co., 117 App. Div. sideration to support the new prom- 854, 103 N. Y. S. 296; Snyder v. ise). Monroe Eckstein Brewing Co., 107 ""Byington v. Simpson, 134 Mass. App. Div. 328, 95 N. Y. S. 144, aflfd., 145. See also, Turner v. Owen, 3 188 N. Y. 576, 80 N. E. 1120; Cos- Post. & F. 176. gray v. New Eng. Piano Co., 10 App. ™ Maxwell v. Graves, 59 Iowa 613, Div. 351, 75 N. Y. St. 1254, 41 N. Y. 13 N. W. 758; Richardson v. Hooper, S. 886; Nesbitt v. Louisville &c. R. 13 Pick. (Mass.) 446; Corrigan v. Co., 2 Speers (S. Car.) 697. See Detsch, 61 Mo. 290; Marten v. also. Bell v. Dates (Miss.) 53 So. Brown, 80 N. J. L. 143, 76 Atl. 1009. 491. "'Hartley v. Posonby, 7 El. & Bl. "'King V. Duluth &c. R. Co., 61 872; Turner v. Owen, 3 Post. & F. Minn. 482, 63 N. W. 1105. To same 176. effect, Lindsly v. Kansas City &c. 371 CONSIDERATION. § 2l6 pi-omise is a rescission of the old contract and the formation of a new and different agreement by the parties. The courts in the second class of cases rest their decisions on equitable grounds. The reasoning in the first class of cases may be summarized as follows: where a party has broken his contract and refused to perform it, it is optional with the adverse party to sue him for damages, or waive the breach and enter into a new con- tract with the delinquent party. Parties competent to con- tract can abrogate or rescind the contract and enter into a new contract touching the same subject-matter to be performed in the same or a different way, upon a different consideration. This is true even though no unforeseen difficulties arose in the performance of the original contract. The release of one from the stipulations of the original agreement is the consideration for the release of the other ; and the mutual releases are the consid- eration for the new contract and are sufiScient to give it full legal effect."^ The correctness of this rule may be conceded but the difficulty arises as to what amounts to a rescission. In some cases it is held that the new promise is presumptive evidence that the original contract has been rescinded by the parties and the subsequent promise stands as a new contract."^ It is held by other courts "that where the parties agree to rescind the contract, and each one gives up the provision for his benefit, the mutual as- sent is complete, and the parties are then competent to make any new contract that may suit them. Where one piece of work is sub- stituted for another, the contractor is released from doing one, in °" Connelly v. Devoe, 2,1 Conn. 570 ; W. 62S ; Scanlon v. Northwood, 147 Cook V. Murphy, 70 111. 96; Sargent Mich. 139, 110 N. W. 493; Wilhelm V. Robertson, 17 Ind. App. 411, 46 N. v. Voss, 118 Mich. 106, 76 N. W. E. 925; Coyner v. Lynde, 10 Ind. 282; 308; Spicer v. Earl, 41 Mich. 191, 1 Abbott V. Doan, 163 Mass. 433, 40 N. N. W. 923, 32 Am. Rep. 152; Koerper E. 197, 34 L. R. A. 33, 47 Am. St. v. Royal Invest. Co., 102 Mo. App. 465. In this case the extra compen- 543, 11 S. W. 307; Lattimore v. Har- sation was promised by a third per- sen, 14 Johns. (N. Y.) 330; Foley v. son who would be benefited by the Storrie, 4 Tex. Civ. App. ill, 23 S. performance of the contract. Munroe W. 442; Morrison v. Heath, 11 Vt. V. Perkins, 9 Pick. (Mass.) 298, 20 610; Lawrence v. Davey, 28 Vt. 264; Am Dec. 475; Rollins v. Marsh, 128 Agel & Levin v. F. R. Patch Mfg. Mass. 116; Rogers v. Rogers, 139 Co., 11 Vt. 13, 58 Atl. 792; Evans v. Mass 440, 1 N. E. 122; Parrot v. Oregon &c. R. Co., 58 Wash. 429, 28 Mexican Cent. R. Co., 207 Mass. 184, L. R. A. (N. S.) 455, 108 Pac. 1095. 93 N. E. 590; Moore v. Detroit Lo- "" Bishop v. Busse, 69 111. 403; comotive Works, 14 Mich. 266; Blod- Cooke v. Murphy, 70 111. 96. gett v. Foster, 120 Mich. 392, 79 N. § 2l6 CONTRACTS. ' 2)1^ consideration that he will do the other. But where one party re- fuses to do the work which his contract requires him to do, or even threatens to abandon the work, unless he is paid more, and the other promises to pay more, the original contract still remain- ing subsisting, we consider it merely a promise to pay for what he was already obligated to do, and a nudum pactum."" As indi- cated by the cases last cited it would seem that the general rule announced in the first class of cases under discussion should be applied with caution, for as was said in the leading case on this subject,''^ "The doctrine of these cases as it is frequently applied does not commend itself either to our judgment or our sense of justice, for where the refusal to perform and the promise to pay extra compensation for performance of the contract are one trans- action, and there are no exceptional circumstances making it equitable that an increased compensation should be demanded and paid, no amount of astute reasoning can change the plain fact that the party who refuses to perform, and thereby coerces a promise from the other party to the contract to pay him an increased com- pensation for doing that which he is legally bound to do, takes an unjustifiable advantage of the necessities of the other party.""" " Shriner v. Craft, 166 Ala. 146, 51 ceed with the work, and he promised So. 884, 28 L. R. A. (N. S.) 450n. them extra coinpensation if they To same effect, Alaska Packer's Assn. would perform their contract, the V. Domenico, 117 Fed. 99, 54 C. C. A. case is within the rule stated, and the 485; Davis & Co. v. Morgan, 117 Ga. demurrer ought to have been sus- 504, 43 S. E. 732, 61 L. R. A. 148, 91 tained as to the first cause of action. Am. St. 171 ; Willingham Sash &c. It is claimed, however, by the re- Co. V. Drew, 117 Ga. 850, 45 S. E. spondent that such is not the proper 237; Widiman v. Brown, 83 Mich, construction of the complaint, and 241, 47 N. W. 231; Lingenfelder v. that its allegations bring the case Wainwright Brewing Co., 103 Mo. within the rule adopted in several 578, 15 S. W. 844. See also, Wendling states, and at least approved in our V. Snyder, 30 Ind. App. 330, 65 N. E. own, to the effect that if one party 1041; Combs v. Burt & Brabb Lum- to a contract refuses to perform his ber Co., 27 Ky. L. 439, 85 S. W. 227. part of it unless promised some fur- "King V. Duluth &c. R. Co., 61 ther pay or benefit than the contract Minn. 482, 63 N. W. 1105. provides, and such promise is made °° "If the allegations of the com- by the other party ,_ it is supported by plain*, when taken together, are in a valid consideration, for the mak- legal effect simply that the contrac- ing of the new promise shows a re- tors, finding by the test of the work, scission of the original contract and that they had agreed to do that which the substitution of another. In other involved a greater expenditure of words, that the party, by refusing to money than they calculated upon, perform its contract, thereby subjects that they had made a losing contract, himself to an action for damages, and thereupon notified the opposite and the opposite party has his elec- party that they were unable to pro-- tion to bring an action for the recov- CONSIDERATION. ;i6 This brings us to the second class of cases which hold, that where the refusal to perform was equitable and fair and the diffi- culties in the way of its performance were substantial, unforseen and not within the contemplation of the parties when the original contract to pay was made, a new promise to pay an additional sum or grant a further benefit than the original contract provided will be upheld.^' The distinction which is sought to be drawn is well illustrated by two early English cases. In the first case during the course of a voyage from London to the Baltic and back two seamen deserted, and the captain promised the rest of the crew that if they would work the vessel home the wages of the two deserters should be divided among them. The promise was held void for want of consideration. Lord Ellenborough said, "Before they (the mariners) sailed from London they had undertaken to do all they could under all the emergencies of the voyage. * * * The desertion of a part of the crew is to be con- sidered an emergency of the voyage as much as death; and those who remain are bound by the terms of their original contract to ery of such damages or to accede to the demands of his adversary and make the promise ; and if he does so it is a relinquishment of the original contract and the substitution of a new one." King v. Duluth &c. R. Co,, 61 Minn. 482, 63 N. W. 1105. "Bishop V. Busse, 69 111. 403. In Moran v. Peace, 72 111. App. 135, the above case is said to have been over- ruled by later cases. Pierce v. Wal- ton, 20 Ind. App. 66, 50 N. E. 309; Ayres v. Chicago &c. R. Co., 52 Iowa 478, 3 N. W. 522 ; McCarty v. Hamp- ton &c. Assn., 61 Iowa 287, 16 N. W. 114; Linz v. Schuck, 106 Md. 220, 67 Atl. 286, 11 L. R. A. (N. S.) 789, 124 Am. St. 481, 14 Am. & Eng. Ann. Cas. 495. This case adopts the reasoning of the court in the case of King v. Duluth &c. R. Co., 61 Minn. 482, 63 N. W. 1105; Shipman v. Butterfield, 47 Mich. 487, 11 N. W. 283; Goebel V. Linn, 47 Mich. 489, 11 N. W. 284, 41 Am. Rep. 723 ; King v. Duluth &c. R. Co., 61 Minn. 482, 63 N. W. 1105; Bryant v. Lord, 19 Gil, (Minn,) 342; Michaud v. McGregor, 61 Minn. 198, 63 N. W. 479; Osborne v. O'Reilly, 42 N. J. Eq. 467, 9 Atl. 209; Meech V. Buffalo, 29 N. Y. 198; Galveston V. Galveston City R. Co., 46 Tex. 435. The cases of Meech v. Buffalo, 29 N. Y. 198, where the unforeseen dif- ficulty in the execution of the con- tract was quicksand, in place of ex- pected ordinary earth excavation, and Michaud v. McGregor, 61 Minn. 198, 63 N. W. 479, where the unfore- seen obstacles were rocks below the surface of the lots to be excavated, which did not naturally belong there, but were placed there by third party, and of the existence of which both parties to the contract were ignorant when the contract was made, are il- lustrations of what unforeseen diffi- culties will take a case out of the gen- eral rule. Compare the foregoing cases with Stees v. Leonard, 20 Minn, 494; Trustees of Public Schools v. Bennett, 27 N. J, L. 513, 72 Am. Dec. 373 (building fell on account of la- tent defect in the soil) ; Creamery Package Mfg. Co. v. Russell, 84 Vt. 80, 78 Atl. 718 (latent defect in the soil made necessary the putting in of a foundation for a cellar wall. Con- tractor held not entitled to extra com- pensation). See post, §§ 224, 225, Im- possible Consideration. §217 CONTRACTS. 374 bring the ship in safety to her destined port.'"' But in the second case,"" it was held that such a contract as the one entered into in the previous case contained an imphed condition that the ship was seaworthy, so that in case the ship proved unseaworthy a promise of extra reward to induce a mariner to abide by his contract was binding. Here a risk arose which was not contemplated by the contract. The true test by which to determine whether the new promise is binding or not is this : if a court of equity might, under the circumstances, have relieved the promisor from the execution of the original contract the new contract will be binding. What the court might have done the parties can do voluntarily.'" There is no necessary conflict in these two classes of cases. In one it is merely held that the original contract, while it remained execu- tory in whole or in part, was rescinded and a new contract formed. And so long as the contract is executory it may be rescinded by the parties thereto. The other line of cases simply hold that the original contract was not in fact rescinded on account of coercion, bad faith or some other element vitiating the new promise. § 217. Same — Part pajnnent of liquidated liability. — And to this principle is referable the doctrine that part payment by a debtor of a liquidated liability already due with the understanding that such payment is to be received in satisfaction of the whole amount due is not supported by a consideration. It was origin- ally held that such an agreement was binding on the parties.'^ But in the year 1562 it was held that a receipt by the debtor of 20 lbs. in full satisfaction of a debt amounting to 100 lbs. is in- effectual as a release unless under seal.''^ And ever since the year 1601, it has been consistently, even if reluctantly, held that part payment of a debt is not good as a discharge of the whole." It "' Stilk V. Myrick, 2 Camp. 317. " Dalison 49, pi. 13. See also, " Hartley v. Ponsonby, 7 El. & Bl. Anonymous, 4 Leon. 81 ; Richards v. 872. _ _ Bartlet, 1 Leon. 19. '"John King Co. v. Louisville & N. " Pinnel's Case, 5 Coke ll7a; Cum- R. Co. (Ky.), 114 S. W. 308; New ber v. Wane, 1 Strange 426; Foakes Jersey Trust &c. Co. v. Nat. Gas &c. v. Beer, 9 L. R. App, Cas. 60S; God- Co., 71 N. J. L. 29, 58 Atl. 104. dard v. O'Brien, L. R. 9 Q. B. D. 37; "Y, B. 33 Hen. VI, 48a, pi. 32; Y. Down v. Hatcher, 10 Ad. & El. 121; B. 10 Hen. VH, 4, pi. 4; Perkins Pearson & Fant v. Thomason, 15 Ala. Prof. Book, § 749. 700, 50 Am. Dec. 159; Scott v. Rawls, 375 CONSIDERATION. § 217 has, indeed, been said that there is no respectable authority to 159 Ala. 339, 48 So. 710; Cavaness v. Ross, 33 Ark. 572 ; Reynolds v. Reyn- olds, 55 Ark. 369, 18 S. W. 377; De- land V. Hielt, 27 Cal. 611, 87 Am. Dec. 102; Holton v. Noble, 83 Cal. 7, 23 Pac. 58; Rose v. Hall, 26 Conn. 392, 68 Am. Dec. 402 ; Gates v. Steele, 58 Conn. 316, 20 Atl. 474, 18 Am. St. 268; Spann v. Baltzell, 1 Fla. 301, 46 Am. Dec. 346; Jones v. Grantham, 80 Ga. 472, S S. E. 764; Flaningham v. Hogue, 59 111. App. 315, affd., 162 111. 129, 44 N.^ E. 394; Farmers' & Me- chanics' Life Assn. v. Caine, 224 111. 599, 79 N. E. 956 ; Titsworth v. Hyde, 54 111. 386; Fusheck v. Frances E. Willard &c. Assn., 94 111. App. 192; Heintz v. Pratt, 54 111. App. 616; State Sav. Loan &c. Co. v. Stewart, 65 111. App. 391 ; Capital City Mut. Fire Ins. Co. V. Detwiler, 23 111. App. 656; Curtiss V. Martin, 20 111. 557 ; Reynolds V. Nugent, 25 Ind. 328; Ford v. Gar- ner, IS Ind. 298 ; Peelman v. Peelman, 4 Ind. 612; Miller v. Eldridge, 126 Ind. 461, 27 N. E. 132. A promise to pay one for what he is obliged to render has no consideration to sup- port it. Laboyteaux v. Swigart, 103 Ind. 596, 3 N. E. 373; Fletcher v. Wurgler, 97 Ind. 223 ; Smith v. Tyler, 51 Ind. 512; Ritenour v. Mathews, 42 Ind. 7; Markel v. Spitler, 28 Ind. 488; Stone V. Lewman, 28 Ind. 97; Cam- eron V. Warbritton, 9 Ind. 351 ; Fitz- gerald V. Smith, 1 Ind. 310 ; Bateman V. Daniels, 5 Blackf. (Ind.) 71; Beaver v. Fulp, 136 Ind. 595, 36 N. E. 418, the court saying: "Is the pay- ment of a part of one's liability suf- ficient consideration to support _ a promise to cancel the whole liability, where that liability is definitely ascer- tained and adjudicated? This inquiry is answered in the negative by the numerous and consistent holdings of this court." Hodges v. Truax, 19 Ind. App. 651, 49 N. E. 1079; Sheets V. Russell, 12 Ind. App. 677, 40 N. E. 30; Swope v. Bier, 10 Ind. App. 613, 38 N E. 340; Indianapolis R. Co. v. Hyde, 122 Ind. 188; Bright v. Coff- man, 15 Ind. 371, 77 Am. Dec. 96; Bryant v. Brazil, 52 Iowa 350, 3 N. W. 117; Bodenhofer v. Hogan, 142 Iowa 321, 120 N. W. 659; Keller v. Strong, 104 Iowa 585, 73 N. W. 1071 ; Amer- ican Bridge Co. v. Murphy, 13 Kans. 35; St. Louis R. Co. v. Davis, 35 Kans. 464, 11 Pac. 421 ; Cox v. Adels- dorf, 21 Ky. L. 421, 51 S. W. 616; Russell v. Meek, 22 Ky. L. 498, 58 S. W. 373 ; Louisville &c. R. Co. v. Helm, 109 Ky. 388, 59 S. W. 323; Huff v. Logan, 22 Ky. L. 1314, 60 S. W. 483; Schminke v. Creditors, 50 La. Ann. 511, 23 So. 712; Glaze v. Duson, 40 La. Ann. 692, 4 So. 861; Austin v. Smith, 39 Maine 203; Bird v. Smith, 34 Maine 63, 56 Am. Dec. 635 ; Geiser v. Kershner, 4 Gill & J. (Md.) 305, 23 Am. Dec. 566; Eramittsburg R. Co. V. Donoghue, 67 Md. 383, 10 Atl. 233, 1 Am. St. 396; Commercial &c. Nat. Bank v. McCormick, 97 Md. 703, 55 Atl. 439; Chicora Fertilizer Co. v. Dunan, 91 Md. 144, 46 Atl. 347, 50 L. R. A. 401 ; Gilman v. Gary, 198 Mass. 318, 84 N. E. 312; Gilson v. Nesson, 198 Mass. 598, 84 N. E. 854, 17 L. R. A. (N. S.) 1208; Attorney-General v. Supreme Council A. L. H., 196 Mass. 151, 81 N. E. 966; Weber v. Couch, 134 Mass. 26, 45 Am. Rep. 274; Harri- man v. Harriman, 12 Gray (Mass.) 341 ; Pease v. Saginaw, 126 Mich. 436, 95 N. W. 1082; Leeson v. Anderson, 99 Mich. 247, 58 N. W. 72, 41 Am. St. 597 ; Wherlev v. Rowe, 106 Minn. 494, 119 N. W. 222; Hoidale v. Wood, 93 Minn. 190, 100 N. W. 1100; Duluth Chamber Commerce v. Knowlton, 22 Minn. 229, 44 N. W. 2; Helling v. United Order, 29 Mo. App. 309; Young V. Schofield, 132 Mo. 650, 34 S. W. 497; Wetmore v. Crouch, 150 Mo. 671, 51 S. W. 738; C. H. Brown Co. V. Baker, 99 Mo. App. 660, 70 S. W. 454; Hanson v. Crawford, 130 Mo. App. 232, 109 S. W. 98; New Amsterdam Casualty Co. v. Mesker, 128 Mo. App. 183, 106 S. W. 561 ; Mc- intosh V. Johnson, 51 Nebr. 33, 70 N. W. 522 ; Sheibley v. Dixon County, 61 Nebr. 409, 85 N. W. 399; Fremont Foundry &c. Co. v. Norton, 3 Nebr. (Unof.) 804, 92 N. W. 1058; Pase- walk V. Bollman, 29 Nebr. 519, 45 N. W. 780, 26 Am. St. 399 ; Blanchard v. Noyes, 3 N. H. 518; Daniels v. Hatch, 21 N. J. L. 391, 47 Am. Dec. 169; Day V. Gardner, 42 N. J. Eq. 199, 7 Atl. 365 : Eckert v. Wallace, 75 N. J. L. 171, 67 Atl. 76; Chambers v. Ni- agara Fire Ins. Co., 58 N. J. L. 216, 33 Atl. 283; Gussow v. Beineson, 76 § 217 CONTRACTS. 376 the contrary.'^* Nor will an executory agreement to accept less than the amount due as payment in full or for an assignment of the whole be upheld.'^ Nor will it support an agreement to N. J. L. 209, 68 Atl. 907; New York V. New York City R. Co., 126 App. Div. (N. Y.) 36, 110 N. Y. S. 720, affd. 193 N. Y. 680, 87 N. E. 117; Evers v. Ostheimer, 11 Misc. (N. Y.) 163, 74 N. Y. S. 872; Fake v. Eddy's Exrs., IS Wend. (N. Y.) 76; Miller V. Coates, 66 N. Y. 609; Redfield v. Holland &c. Ins. Co., 56 N. Y. 3S4, IS Am. Rep. 424; Bliss v. Shwarts, 65 N. Y. 444; Bunge v. Koop, 48 N. Y. 225, 8 Am. Rep. 546; Ryan v. Ward, 48 N. Y. 204, 8 Am. Rep. S39; Peo- ple V. Board of Supervisors, 17 N. Y. S. 314; Hills V. Sommer, hZ Hun (N. Y.) 392, 2S N. Y. St. 1003, 6 N. Y. S. 469; Jaffray v. Davis, 48 Hun (N. y.) 500, 1 N. Y. S. 814, 16 N. Y. St. 32; Jones v. Wilson, 104 N. Car. 9, 10 S. E. 79; Griffin v. Petty, 101 N. Car. 380, 7 S. E. 729; Hayes v. Davidson, 70 N. Car. 573 ; Martin v. Frantz, 127 Pa. St. 389, 18 Atl. 20, 14 Am. St. 859; Girard F. & M. Ins. Co. v. Can- van, 195 Pa. St. 589, 46 Atl. 115; Commonwealth v. Cummins, 155 Pa. St. 30, 25 Atl. 996; Rose v. Daniels, 8 R. I. 381 ; Bowden v. Robinson, 4 Tex. Civ. App. 636, 23 S. W. 816; Rising V. Cummings, 47 Vt. 345 ; Wheeler v. Wheeler, 11 Vt. 60; Smith v. Chilton, 84 Va. 840, 6 S. E. 142; Smith v. Phillips, n Va. 548; Weidner v. Standard Life &c. Co., 130 Wis. 10, 110 -N. W. 246; Prairie Grove Cheese Mfg. Co. v. Luder, 115 Wis. 20, 89 N W. 138, 90 N. W. 1085; Otto v. Klauber, 23 Wis. 471; Hooker v. Hyde, 61 Wis. 204, 21 N. W. 52. Contra, Clayton v. Clark, 74 Miss. 499 21 So. 565, 22 So. 189, 37 L. R. A. 771, 60 Am. St. 521. Contra, Na- poleon B. Frye v. Abbie A. Hubbell, 74 N. H. 358, 68 Atl. 325, 17 L. R. A. (N. S.) 1197. But where money is offered in satisfaction of a claim and the offer is accompanied with such acts and declarations as amount to conditions that if the money is ac- cepted it is accepted in satisfaction, and such that the party to whom this offer is made is bound to un- derstand therefrom that he takes it upon such conditions if the cred- itor accepts the amount so ten- dered, it acts as a discharge of an entire debt. When the tender or offer is thus made the party to whom it is made has no alternative but to re- fuse it or to accept it, upon the con- ditions if he takes it his claim is can- celed and no protest, declaration or denial of his, so long as the condi- tion is insisted on can vary the result. Fuller v. Kemp, 138 N. Y. 231, 2,i N. E. 1034, 20 L. R. A. 785n; Preston v. Grant, 34 Vt. 201. "a In Jaffray v. Davis, 124 N. Y. 164, 26 N. E. 351, the court says : "One of the elements em- braced in the question presented upon this appeal is, viz., whether the payment of a sum less than the amount of a liquidated debt under an agreement to accept the same in satisfaction of such debt forms a bar to the recovery of the balance of the debt. This single question was presented to the Eng- lish court in 1602, when it was re- solved (if not decided) in Pinnel's case (5 Coke R. 117) 'that payment of a lesser sum on the day in satis- faction of a greater, cannot be any satisfaction for the whole,' and that this is so, although it was agreed that such payment should satisfy the whole. This simple question has since arisen in the English courts and in the courts of this country in almost numberless instances, and has re- ceived the same solution, notwith- standing the courts, while so ruling, have rarely failed, upon any recur- rence of the question, to criticize and condemn its reasonableness, justice, fairness or honesty. No respectable authority that I have been able to find has, after such unanimous dis- approval by all the courts, held other- wise than was held in Pinnel's case." "A father's agreement to discharge a son from a debt on the son's paying a smaller sum to his sister after the father's death, is unenforcible for want of consideration. Judgment 75 111. App. 503, modified. — Jennings v. Neville, 180 111. 270, 54 N. E. 202; Isham v. Therasson, 53 N. J. Eq. 10, 30 Atl. 969; Day v. Gardner, 42 N. 377 CONSIDERATION. § 2l8 forbear to sue upon a debt already due and payable," as in mak- ing such payment the debtor does no more than he was already bound to do. § 218. The rule against satisfaction by payment of a lesser sum strictly construed. — While the courts have steadfastly ad- hered to this doctrine they seize with avidity upon any consider- ation to support the agreement to accept the lesser sum in satis- faction of the larger and find if possible from the circumstances of each case a consideration for the new agreement. While not able to escape the logic back of the rule, criticism of it is a fa.vorite pastime and courts have resorted to very technical distinctions to escape its application.'* It is strictly construed." Numerous cases have been declared outside the scope of the rule, some on grounds the validity of which will be readily recognized, others on grounds more fictitious than real. It is obvious of course that the rule does not apply where the claim is unliquidated or is in good faith disputed.'* J. Eq. 199, 7 Atl. 365; Tulane v. Clif- ton, 47 N. J. Eq. 351, 20 Atl. 1086. "Liening v. Gould, 13 Cal. 598; HoUiday v. Poole, 11 Ga. 159; War- ren V. Hodge, 121 Mass. 106; Gibson V. Renne, 19 Wend. (N. Y.) 389; Tryon v. Jennings, 22 How. Pr. (N. Y.) 421; Farmers' Bank v. Blair, 44 Barb. (N. Y.) 641; Parmelee v. Thompson, 45 N. Y. 58, 6 Am. Rep. 33; Reynolds v. Ward, 5 Wend. (N. Y.) 501; Pfeififer v. Campbell, 111 N. Y. 631, 19 N. E. 498; TurnbuU v. Brock, 31 Ohio St. 649. "Kellogg V. Richards, 14 Wend. (N. Y.) 116; Ex parte Zeigler, 83 S. Car. 78, 64 S. E. 513, 21 L. R. A. (N. S.) 1005n. "Chicago M. & St. P. R. Co. V. Clark, 178 U. S. 353, 44 L. ed. 1099; Little V. Koerner, 28 Ind. App. 625, 63 N. E. 766; First Nat. Bank v. Shook, 100 Tenn. 436. 45 S. W. 338; Rotan Grocery Co. v. Noble, 36 Tex. Civ. App. 226, 81 S. W. 586; Brown V. Kern, 21 Wash. 211, 57 Pac. 798; Herman v. Schlesinger, 114 Wis. 382, 90 N. W. 460, 91 Am. St. 922; ™ Warren v. Skinner, 20 Conn. 559; Bull V. Bull, 43 Conn. 455; In re D. H. McBride & Co., 132 Fed. 285 ; En- nis V. Pullman Palace Car Co., 165 111. 161, 46 N. E. 439, affg. 60 IlL App. 398; Bingham v. Browning, 97 111. App. 442, affd. in 197 111. 122, 64 N. E. 317; Harland v. Staples, 79 111. App. 72; Little v. Koerner, 28 Ind. App. 625. 63 N. E. 766; Storch v. Dewey, 57 Kans. 370, 46 Pac. 698; Union Bank of Georgetown v. Geary, 5 Pet. (U. S.) 114, 8 L. ed. 66; United States v. Child, 12 Wall. (U. S.) 232, 20 L. ed. 360; Fisher v. May's Heirs, 2 Bibb (Ky.) 448, 5 Am. Dec. 626; Taylor v. Patrick, 1 Bibb (Ky.) 168; Cunningham v. Standard Construction Co., 134 Ky. 198, 119 S. W. 765; Reed v. Bartlett, 19 Pick. (Mass.) 273; Tuttle v. Tut- tle, 12 Mete. (Mass.) 554, 46 Am. Dec. 701; Chamberlain v. Smith, 110 Mo. App. 657, 85 S. W. 645; H. C. Pollman &c. Sprinkling Co. v. St. Louis, 145 Mo. 651, 47 S. W. 563; Brink v. Garland, 58 Mo. App. 356; Maack v. Schneider, 51 Mo. App. 92; Slade V. Swedeburg Elevator Co., 39 Nebr. 600, 58 N. W. 191; Palmerton V. Huxford, 5 Denio (N. Y.) 166; Pierce v. Pierce, 25 Barb. (N. Y.) 243; Laroe v. Sugar Loaf Dairy Co., 87 App. Div. (N. Y.) 585, 84 N. Y. S. 609, revd. on another ground, 180 N. Y. 367, 73 N. E. 61 ; Riggs v. Home Mut. Fire Protective Assn., 61 S. Car. 448, 39 S. E. 614; Hussey v. Crass § 219 CONTRACTS. 378 § 219. Other consideration — Receiving property in addi- tion to the sum paid. — Although the claim is a liquidated money demand and cannot be satisfied with a smaller sum of money, yet if any property other than money is received in addi- tion to the sum paid, or if there is no payment of money and other property is accepted in satisfaction of the debt, it will oper- ate as a full discharge, no matter what the value in case it is re- ceived as such.'® § 220. Other consideration — Payment of debt before due, or at different place. — If payment of less than the whole debt is made before it is due, if received as payment in full, it will dis- Even if payment is made at a charge the entire obligation.^" (Tenn. Ch. App.), 53 S. W. 986; Con- necticut River Lumber Co. v. Brown, 68 Vt. 239, 35 Atl. 56. The rule will not apply where there was a bona fide dispute between the parties as to whether the contracts are payable in United States currency or in Porto Rico currency. San Juan v. St. Johns Gas Co., 195 U. S. 510. In case there was no dispute at the time of the pay- ment the agreement will not be up- held, although the dispute did arise as to the amount due subsequent to the payment. Tucker v. Dolan, 109 Mo. App. 442, 84 S. W. 1126. The rule is restored in South Dakota by the act of 1893, eliminating the words "or less than" from § 4383, Comp. L. 1887, to the effect that "an accord is an agreement to accept in extinc- tion of an obligation something dif- ferent from or less than that to which the person agreeing to accept is en- titled." Eggland v. South, 22 S. Dak. 467, 118 N. W. 719. "Foakes v. Beer, L. R. 9 App. Cas. 605 ("gift of a horse hawk or robe in satisfaction is good") ; Gavin V. Annan, 2 Cal. 494; Rose v. Hall, 26 Conn. 392, 68 Am. Dec. 402; Bull V. Bull, 43 Conn. 455; Missouri Am. Elect. R. Co. V. Hamilton-Brown Shoe Co., 165 Fed. 283; Neal v. Handley, 116 111. 418, 6 N. E. 45, 56 Am. Rep. 784; Very v. Levy, 54 U. S. (13 How.) 345. But where the lessee at the request of the lessor performed certain work on the lessor's premises of the agreed value of $700, and such work and labor were received by the lessor in payment of a conceded in- debtedness for a larger amount, it was held that the $700 due the lessee could satisfy only the same amount of indebtedness due from him to the lessor. Morrill v. Baggott, 157 111. 240, 41 N. E. 639. The giving of an order on a merchant for a less sum than a judgment owed by the giver of the order, though paid in merchan- dise, will not sustain an agreement to discharge the judgment. Flenor v. Flenor, 30 Ky. L. 543, 99 S. W. 258; Howard v. Norton, 65 Barb. (N. Y.) 169. This case states the rule well, and harmonizes the cases of Morrill V. Baggott, 157 111. 240, 41 N. E. 639, and Flenor v. Flenor, 30 Kv. L. 543, 99 S. W. 258. And see Williams v. Stanton, 1 Root (Conn.) 426; BHnn v. Chester, 5 Day (Conn.) 360; An- derson V. Highland Tpk. Co., 16 Johns. (N. Y.) 86; Gaffney v. Chap- man, 4 Robt. (N. Y.) 275; Dimmick V. Sexton, 125 Pa. St. 334, 125 Atl. 334. '"Pearson v. Thomason, 15 Ala. 700, 50 Am. Dec. 159; Martin-Alexander Lumber Co. v. Johnson, 70 Ark. 215, 66 S. W. 924; Spann v. Balzell. 1 Fla. 301, 46 Am. Dec. 346; Hutton v. Stoddart, 83 Ind. 539; Boyd v. Moats, 75 Iowa 151, 39 N. W. 237; Chicora Fertilizer Co. v. Dunan, 91 Md. 144, 46 Atl. 347, 50 L. R. A. 481; Brooks V. White, 2 Mete. (Mass.) 283, 37 379 CONSIDERATION. 221 place other than that originally stipulated it will support an accord and satisfaction based on a part payment of the obligation.^^ § 221. Other consideration — Additional security. — Giving further security for part of a debt or other security, although for a less sum than the debt, and the acceptance of it in full of all demands, extinguishes the whole/^ Akin to this excep- tion is the doctrine that where the creditor receives in full sat- isfaction of the debt a note endorsed by a third person, for a less sum than the debt, this transaction supports a promise to remit the excess.*' And the applying of property exempt from execution or which for any reason could not be levied on in satisfaction of the debt to the payment thereof, is sufficient consideration to sus- tain a satisfaction of the entire amount due.** Am. Dec. 95; Sonnenberg v. Riedel, 16 Minn. 83; Dalrymple v. Craig, 149 Mo. 345, 50 S. W. 884; Weiss v. Marks, 206 Pa. 513, 56 Atl. 59; First Nat. Bank v. Shook, 100 Tenn. 436, 45 S. W. 338; Mayiield Woolen Co. V. Long (Tex. Civ. App.), 119 S. W. 908; Russell v. Stevenson, 34 Wash. 166, 75 Pac. 627. "^ Cavaness v. Ross, 33 Ark. 572 ; Fenwick v. Phillips, 3 Mete. (Ky.) 87; Jones v. Perkins, 29 Miss. 139, 64 Am. Dec. 136; Blanchard v. Noyes, 3 N. H. 518; McKenzie v. Culbreth, 66 N. Car. 534; Harper v. Graham, 20 Ohio 115; Seymour v. Goodrich, 80 Va. 303. But see Saunders v. Whit- comb, 177 Mass. 457, 59 N. E. 192 (dishonored bill paid at a place other than that provided in the bill). " In re Black Diamond Copper Min- ing Co., 11 Ariz. 415, 95 Pac. 117; Kemmerer v. Kokendifer, 65 III. App. 31 ; Post V. First Nat. Bank, 138 111. 559, 28 N. E. 978; Mason v. Campbell, 27 Minn. 54, 1 Ky. L. 301, 6 N. W. 405 ; Pulliam v. Taylor, SO Miss. 251 ; Fred v. Fred (N. J. Eq.), 50 Atl. 776; Boyd v. Hitchcock, 20 Johns. (N. Y.) 76, 11 Am. Dec. 247; Le Page v. Mc- Crea, 1 Wend. (N. Y.) 164, 19 Am. Dec. 469. "^ Steinman v. Magnus, 11 East 390 ; Varner v. Conery, 77 Maine 527; Brooks V. White, 2 Mete. (Mass.) 283, 37 Am. Dec. 95; Gill v. Butler, 127 Mass. 386 ; Schmidt v. Ludwig, 26 Minn. 85; Mason v. Campbell, 27 Minn. 54, 6 N. W. 405 ; Boyd v. Hitch- cock, 20 Johns. (N. Y.) 76, 11 Am. Dec. 247 ; Dolsen v. Arnold, 10 How. Pr. (N. Y.) 528; Partridge v. Moyni- han, 59 Misc. (N. Y.) 234, 110 N. Y. S. 539: Stafford v. Bacon, 1 Hill (N. Y.) 532, 27 Am. Dec. 366; Dry den v. Stephens, 19 W. Va. 1. Or if part payment is made by a third person the rule does not apply. Whipper- man v. Hardy, 17 Ind. App. 142, 46 N. E. 537; Marshall v. BuUard, 144 Iowa 462, 87 N. W. 427, 54 L. R. A. 862 ; Saunders v. Whitcomb, 177 Mass. 457, 59 N. E. 192 ; Clark v. Abbott, S3 Minn. 88, 55 N. W. 542, 39 Am. St. 577 ; Ebert v. Johns, 206 Pa. St. 395, 55 Atl. 1064. However, if the debtor merely borrows the money with which to make the part payment this fact alone does not sustain the promise to release the remainder, at least where this fact is not known to the creditor when the payment was made. Schles- singer v. Schlessinger (Colo.), 88 Pac. 970, 8 L. R. A. (N. S.) 863; Specialty Glass Co. v. Daley, 172 Mass. 460, 52 N. E. 633; Bunge v. Koop, 48 N. Y. 225, 8 Am. Rep. 546. But see Rotan Grocer Co. v. Noble, 36 Tex. Civ. App. 226, 81 S. W. 586. °* Lincoln Savings &c. Co. v. Allen, 82 Fed. 148, 27 C. C. A. 87; Mc- Nealey v. Baldridge, 106 Mo. App. 11, 78 S. W. 1031 ; Meeker v. Requa, 94 App. Div. (N. Y.) 300, 87 N. Y. S. 959; Ward v. Young, 40 Tex. Civ. App. 294, 89 S. W. 456. 222 CONTRACTS. 380 § 222. Miscellaneous exceptions. — It is held by some courts that, if an unsecured note or check is given by the debtor as payment in full of a greater indebtedness, it will act as a discharge in full in case the creditor agrees to accept it as such."" Likewise, if the part payment is made by a joint debtor who has been^ dis- charged in bankruptcy, which is accepted by the creditor, it will operate as a discharge of the whole debt in favor of both the one making the payment and his joint debtor.*" If part payment is made and a release under seal is given the rule does not apply, since want of consideration cannot be shown in such case.*' And where the debtor contemplates taking advantage of the bank- ruptcy law, and the creditor dissuades him from so doing and agrees to accept in satisfaction of his debt a sum less than the entire amount, in case the debtor would not go through bank- ruptcy, the agreement is supported by a sufficient consideration.** ^ In Goddard v. O'Brien, L. R. 9 Q. B. D. 37, Huddelson, J., approved the language of the opinion in Sibree v. Trippe, 15 M. & W, 23, "that a nego- tiable security may operate if so given and taken in satisfaction of a debt of a greater amount." Bidder v. Bridges, 37 Ch. Div. 406; Jackson v. Brown, 102 Ga. 87, 29 S. E. 149, 66 Am. St. 156; In re Dixon, 2 Mc- Creary (U. S.) 556, 13 Fed. 109. But see Shanley v. Koehler, 80 App. Div. (N. Y.) 566, 80 N. Y. S. 679, affd. without opinion in 178 N. Y. 556, 70 N. E. 1109, which holds that a prom- ise to satisfy a judgment upon pay- ment of an amount in cash and the giving of an unendorsed note of the debtor for an additional amount is not binding where the amount in cash and the note given together aggregate less than the amount of the judg- ment. '° Ex parte, Zeigler (sub nomine. T. T. Haydock Carriage Co.), 83 S. Car. 78. 64 S. E. 513, 21 L. R. A. (N. S.) lOOSn. "Wood V. Bangs, 2 Pennew. (Del.) 435, 48 Atl. 189; Jackson v. Security Mutual Life Ins. Co., 233 111. 161, 84 N. E. 198. The rule as stated in some courts would imply that where the distinctions between sealed and un- sealed instruments have been abol- ished any formal discharge or release in writing will take the case out of the rule. Dreyfus v. Roberts, 75 Ark. 334, 87 S. W. 641, 69 L. R. A. 823, 112 Am. St. 67. Williams v. Blumenthal, 27 Wash. 24, 67 Pac. 393. ''Hinckley v. Arey, 27 Maine 365; Melroy v. Kemmerer (Pa.), 67 Atl. 699, 11 L. R. A. (N. S.) 1018; Her- man V. Schlesinger, 114 Wis. 382, 90 N. W. 460, 91 Am. St. 922. See also, the following cases for various cir- cumstances taking them out of the general rule : Price's Admx. v. Price's Admx., Ill Ky. 771, 64 S. W. 746, 66 S. W. 529; Lewis v. Donohue, 27 Misc. (N. Y.) 514, 58 N. Y. S. 319; Tucker v. Dolan, 109 Mo. App. 442, 84 S. W. 1126; Chicago &c. R. Co. v. Brown, 70 Nebr. 696, 97 N. W. 1038; Roberts v. Banse, 78 N. J. L. 57, 72 Atl. 452; Bendix v. Avers, 21 App. Div. (N. Y.) 570, 48 N. Y. S. 211. As to insolvent debtor, see Curtiss v. Martin, 20 111. 557; Engbretson v. Seiberiing, 122 Iowa 522, 98 N. W. 319, 64 L. R. A. 75, 101 Am. St. 279. Contra, Pearson v. Thomason, 15 Ala. 700, SO Am. Dec. 159; Robert v. Bar- num, 80 Ky. 28, 3 Ky. L. 529. As to waiving right of appeal, see In re Freemen, 117 Fed. 680; Bofinger v. Tuyes, 120 U. S. 198, 30 L. ed. 649, 7 Sup. Ct. 529; Williams v. Blumen- 3^1 CONSIDERATION. 223 But the payment of the smaller sum, without any release, will not constitute a satisfaction of the residue. It must be tendered on condition that it be accepted as payment in full, and accepted with that understanding and under those conditions.^' And the mere retention by the creditor of money to which he is entitled uncon- ditionally will not amount to a release, or constitute an accord and satisfaction, although he knows that it is tendered as such."" § 223. Rule deducible from the authorities. — The rule upon this subject, under the modification of later decisions, both in England and America, seems to be that a creditor cannot bind himself by a simple agreement to accept a smaller sum in lieu of an ascertained debt of larger amount, such an agreement being nudum pactum, because the debtor only does what he is legally bound to do ; but if there be any benefit, or even any legal possi- bility of benefit to the creditor thrown in, that additional weight will turn the scale, and render the consideration sufficient to sup- port a promise to forego the balance. § 224. Impossible consideration. — Impossibility of perform- ance of the consideration does not necessarily relieve the promisor from his liability on the contract. °^ Mere difficulty"^ or expense is not such an impossibility as will relieve the promisor from lia- bility on his contract."^ "If the covenant be within the range of possibility, however absurd or improbable the idea of execution may be, it will be upheld, as where one covenants it shall rain to- morrow, or that the Pope shall be at Westminster on a certain thai, 27 Wash. 24, 67 Pac. 39. As to sex Water Co. v. Knappmann Whit- payment after suit commenced, see ing Co., 64 N. J. L. 240, 45 Atl. 692 Mitchell V. Wheaton, 46 Conn. 315, 33 49 L. R. A. 572, 81 Am. St. 467; Har- Am, Rep. 24 ; Gates v. Steele, 58 Conn, mony v. Bingham, 12 N. Y. 99, 62 316, 20 Atl. 474, 18 Am. St. 268; Am. Dec. 142; Dexter v. Norton, 47 Baum V. Buntyn, 62 Miss. 110. N. Y. S. 62, 7 Am. Rep. 415. " Duluth Chamber of Commerce v. °' Dewey v. Alpena School District, Knowlton, 42 Minn. 229, 44 N. W. 2. 43 Mich. 480. 5 N. W. 646, 38 Am. °° Duluth Chamber of Commerce v. Rep. 206; Matthews v. American Knowlton, 42 Minn. 229, 44 N. W. 2 ; Cent. Ins. Co., 154 N. Y. 449, 48 N. People V. Board of Supervisors, 40 E. 751, 39 L. R. A. 433, 61 Am. St. Hun (N. Y.) 353. For distinction in 627; Randolph v. Sanders, 22 Tex. this class of cases, see Fuller v. Kemp, Civ. App. 331, 54 S. W. 621 ; McKay 138 N. Y. 231, 33 N. E. 1034, 20 L. R. v. Barnett, 21 Utah 239, 60 Pac. 1100, A. 785. SO L. R. A. 371. "^ Anderson v. May, SO Minn. 280, "'Cornell v, Rodabaugh, 117 Iowa 52 N. W. 530. 36 Am. St. 642; Middle- 287, 90 N. W. 599, 94 Am. St. 298. § 225 CONTRACTS. 382 day. To bring the case within the rule of dispensation, it must appear that the thing to be done cannot by any means be accom- phshed ; for if it be only probable or out of the power of the obligor it is not deemed in law impossible. "°* However, if the consideration for the promise is obviously and absolutely impos- sible of performance, and such fact is apparent upon the face of the promise and is known to the parties, the consideration is un- real and will not support the contract.'^ § 225. Physical and legal impossibility. — The consideration may be physically or legally impossible. It is physically impos- sible of performance if "according to the state of knowledge of the day" the consideration is incapable of fulfilment."" Thus, "if a man is bound in an obligation with condition that, if the obligor do go from the church of St. Peter in Westminster to the church of St. Peter in Rome within three hours, then the obligation shall be void, the condition is void and impossible, and the obligation standeth not" ;*" and so with an agreement entered into by sixteen men to purchase 6,400 shares of stock out of a certificate for 5,000 shares."^ If the impossibility exists at the time the contract is entered into, but such fact is unknown to the contracting par- ties, this mistake may avoid the contract. °^ In case the impossi- bility arises after the contract is made it will, in certain cases, operate as a discharge of the contract. For there may be in the nature of an agreement an implied condition by which the prom- isor will be relieved from his unqualified obligation; and when in such case, without his fault, performance is rendered impossi- ble it may be excused,^ as where the continued existence of some- thing essential to its performance is an implied condition in the "Supt. of Public Schools V. Ben- "Coke's Littleton, 206b; In re The nett, 3 Dutch. (N.J.L.) 513, 72 Am. Harriman, 9 Wall. (U. S.) 172. Dec. 373 ; Beebe v. Johnson, 19 Wend. "^ Bennett v. Morse, 6 Colo. App. (N. Y.) 500, 32 Am. Dec. 518. See, 122, 39 Pac. 582. See also Hall v. ante. Refusal to Perform Without Cazenove, 4 East 477; Doe v. Lean, Further Recompense. 1 Q. B. 229. °=Haslam v. Sherwood, 10 Bing. ""Nordyke &c. Co. v. Kehlor, 155 540; Nerot v. Wallace, 3 Term. R. Mo. 643, 56 S. W. 287. 78 Am. St. 17; Bennett v. Morse, 6 Colo. App. 600. 122, 39 Pac. 582 ; Stevens v. Coon, 1 ^ Stewart v. Stone, 127 N. Y. 500, Pin. (Wis.) 356. 28 N. E. 595, 14 L. R. A. 215n; Dexter "Clifiord V. Watts, L. R. 5 C. P. v. Norton, 47 N. Y. 62, 7 Am. Rep. 577. 415. 3S3 CONSIDERATION. § 226 contract;^ or where the Hfe and health of the contracting party is essential to the execution of the contract, performance is ex- cused by the death or illness of the contracting party.^ The question as to what will discharge an agreement is not involved in the discussion and will be taken up more fully in another part of this work. § 226. Illegal consideration. — When a positive rule of law renders the consideration impossible it will not support a con- tract, as where a person being indebted to another agreed with the servant of his creditor that, in consideration of the servant dis- charging him for the debt, he would do certain work, it was held that, as the servant could not legally discharge the debt of his master, the proposed consideration was impossible and the con- tract void.* This is also applicable to a promise that another's land shall sell for a certain sum on a given day, since one cannot compel the sale of another's property,^ or a promise to marry by one already married and known so to be by the other." In case the consideration is rendered impossible by a subsequent disability imposed by law it may, as in the case of physical impossibilities arising subsequent to the contract, discharge the agreement,' or as when war is declared between two countries of which the par- "• Taylor v. Caldwell, 3 B. & S. 826 ; = Robinson v. Davison, 40 L. J. Ex. Siegel V. Eaton &c. Co., 165 111. 550, 172, L. R, 6 Eq. 269; Cooke v. Col- 46 N. E. 449; Walker v. Tucker, 70 craft, 2 W. Bl. 856; Marvel v. Phil- Ill. 527; Knight v. Bean, 22 Maine lips, 162 Mass. 399, 38 N. E. 1117, 26 531; Angus v. Scully, 176 Mass. 357, L. R. A. 416, 44 Am. St. 370; Powell 57 N. E. 674, 79 Am. St. 318; Butter- v. Newell, 59 Minn. 406, 61 N. W. field V. Byron, 153 Mass. 517, 27 N. 335; Middlesex Water Co. v. Knapp- E. 667, 25 Am. St. 654; Middlesex mann Whiting Co., 64 N. J. L. 240, 45 Water Co. v. Knappmann Whiting Atl. 692, 49 L. R. A. 572, 81 Am. Co., 64 N. J. L. 240, 45 Atl. 692, 49 L. St. 467; Blakely v. Sousa, 197 Pa. St. R. A. 572, 81 Am. St. 467 ; Dexter v. 305, 47 Atl. 286, 80 Am. St. 821. Norton, 47 N. Y. 62, 7 Am. Rep. 415 ; ♦ Harvey v. Gibbons, 2 Lev. 161. Stewart v. Stone, 127 N. Y. 500, 28 "^Stevens v. Coon, 1 Pin. (Wis.) N. E. 595, 142 L. R. A. 215n ; Powell v. 356. Dayton R. Co., 12 Ore. 488, 8 Pac. ' Paddock v. Robinson, 63 111. 99, 14 544; Yerrington v. Greene, 7 R. I. 589, Am. Rep. 112; Haviland v. Halstead, 84 Am. Dec. 578. In case the subject- 34 N. Y. 643. matter of an entire contract has been 'Atkinson v. Ritchie, 10 East 530; destroyed without the fault of either Bailey v. De Crespigny, L. R. 4 Q. B. party, before the contract is fully per- 180 ; Macon &c. R. Co. v. Gibson, 85 formed, there can be no recovery of Ga. 1, 11 S. E. 442, 21 Am. St. 135 ; a quantum meruit, or otherwise for a Middlesex &c. Co. v. Knappmann part performance thereof. Huyett &c. Whiting Co., 64 N. J. L. 240, 45 Atl. Mfg. Co. V. Chicago Edison Co., 167 692, 49 L. R. A. 572, 81 Am. St. 467. 111. 233, 47 N. E. 384, 59 Am. St. 272. § 22/ CONTRACTS. 384 ties severally are inhabitants, which makes the performance of the contract illegal.' § 227. Voluntary subscription. — A voluntary subscription is not supported by a sufficient consideration. It is merely a gra- tuitous promise, to furnish a sum of money, or its equivalent for a designated purpose and cannot be enforced." There are some few decisions that contain obiter statements to the contrary,^" but they do not give expression to any generally recognized rule. § 228. Voluntary subscription valid when supported by a consideration. — But while it is well established that voluntary subscriptions are, when considered alone and unsupported by any other element, unenforcible the necessary consideration to support such contracts is usually found in the expenditure of money,^^ the 'Esposito V. Bowden, 7 El. & Bl. 763; Hillyard v. Mutual Benefit Life Ins. Co., 35 N. J. L. 415, affd., il N. J. L. 444 ; Mutual &c. Ins. Co. v. Hill- yard, 37 N. J. L. 444, 18 Am. Rep. 741. " Pratt V. Baptist Society Trustees, 93 111. 475; Augustine v. Methodist Episcopal Society, 79 111. App. 452; Bucklen v. Johnson, 19 Ind. App. 406, 49 N. E. 612; University of Des Moines v. Livingston, 57 Iowa 307, 10 N. W. 738, 42 Am. Rep. 42 ; Simp- son College V. Tuttle, 71 Iowa 596, iZ N. W. 74; Williams v. Barton, 13 La. 405; Foxcroft Academy v. Favor, 4 Maine 382; Bridgewater Academy V. Gilbert, 2 Pick. (Mass.) 579, 13 Am. Dec. 457 ; Boutell v. Cowdin, 9 Mass. 254; Phillips Limerick Acad- emy V. Davis, 11 Mass. 113, 6 Am. Dec. 162; Farmington Academy v. Allen, 14 Mass. 172, 7 Am. Dec. 201 ; Cottage St. Methodist Church v. Ken- dall, 121 Mass. 528, 23 Am. Rep. 286; Methodists &c. Assn. v. Sharp's Exr., 6 Mo. App. ISO; Hull v. Pear- son, 38 App. Div. 588, 56 N. Y. S. 518; Hamilton College v. Stewart, 1 N. Y. 581. But see Barnes v. Ferine, 12 N. Y. 18; Stewart v. Trustees of Hnmilton College, 2 Denio (N. Y.) 403; First Presljy. Church v. Cooper, 112 N. Y. 517, 20 N. E. 352, 3 L. R. A. 468, 8 Am. St. 767; Twenty-Third St. Baptist Church v. Cornell, 117 N. Y. 601, 23 N. E. 177, 6 L. R. A. 807; Stoddard v. Cleveland, 4 How. Pr. (N. Y.) 148; Johnson v. Otter- bein Univ., 41 Ohio St. 527. But see Irwin V. Lombard Univ., 56 Ohio St, 9, 46 N. E. 63, 36 L. R. A. 239, 60 Am. St. 727; Hassenzahl v. Bevins, 24 Ohio C. C. 173; Sutton v. Otter- bein University, 7 Ohio C. C. 343; In re Lippincott's Estate, 21 Pa. Super. Ct. 214; In re Thum's Estate, 5 Pa. Dist. 739. The moral obligation to fulfil the agreement is sufficient to support it Caul v. Gibson, 3 Barr. (Pa.) 416. In Pennsylvania a moral consideration is sufficient to uphold a contract. See, however, Reimensny- der V. Cans, 110 Pa. St. 17, 2 Atl. 425 ; Montpelier Seminary v. Smith's Estate, 69 Vt. 382, 38 Atl. 66. A sub- scription, like any other contract, must be supported by a consideration. Gait's Exr. v. Swain, 9 Grat. (Va.) 633, 60 Am. Dec. 311. " Garrigus v. Home &c. Mission- ary Soc, 3 Ind. App. 91, 28 N. E. 1009, 50 Am. St. 262; Irwin v. Lom- bard Univ., 56 Ohio St. 9, 46 N. E. 63, 36 L. R. A. 239, 60 Am. St. 727. " Expenditure of money in main- taining an institution of learning. Burlington University v. Barrett, 22 Iowa 60, 92 Am. Dec. 376; Irwin v. Lombard Univ., 56 Ohio St. 9, 46 N. E. 63, id L. R. A. 239, 60 Am. St. 727; Irwin v. Webster, 7 Ohio C. C. 269, 4 Ohio C. D. S90; Ohio Wes- 385 CONSIDERATION. 228 performance of work," or the incurring of some liability'^ by the promisee on the faith of the subscription. But if the money has been expended, the work performed or the liabiHty incurred prior to the giving of the subscription such subscription is not supported by a consideration, for the reason that the consideration is past. Thus a subscription to pay an existing debt is not enforcible when no new Hability or obligation is assumed on the faith of it." leyan College v. Love, 16 Ohio St. 20; Commissioners Canal Fund v. Perry, 5 Ohio 56. " Services performed upon the strength of the promise. Trustees &c. Soc. V. Carter, 72 111. 247. But see Augustine v. Methodist &c. Soc, 79 111. App. 452; Keuka College v. Ray, 167 N. Y. 96, 60 N. E. 325; Cottage Hospital V. Merrill, 92 Iowa 649, 61 N. W. 490 (erecting a hospital) ; Kansas City School Dist. v. Sheidley, 138 Mo. 672, 40 S. W. 656, 60 Am. St. 576 (library building) ; Howell v. Church, 61 111. App. 121 (church) ; Central Presbyterian Church v. Thompson, 75 N. Y. 305, 8 App. Div. (N. Y.) 565, 40 N. Y. S. 912; Jud- son v. Gage, 91 Cal. 304, 27 Pac. 676 (railroad) ; Cook v. McNaughton, 128 Ind. 410, 24 N. E. 361, 28 N. E. 74; Wright V. Irwin, 35 Mich. 347; Rob- inson v. Nutt, 185 Mass. 345, 70 N. E. 198 (not materially increasing cur- rent expenses of the parish for five years) ; Miller v. Western College, 71 111. App. 587, aflfd., 177 111. 280, 52 N. E. 432, 42 L. R. A. 797, 69 Am. St. 242 (building a hall to be used by a certain college) ; Town of Grand Isle V. Kinney, 70 Vt. 381, 41 Atl. 130 (building a bridge) ; Armann v. Buel, 40 Nebr. 803, 59 N. W. 515 (depot) ; Hassenzahl v. Bevins, 24 Ohio C. C. 173 (road) ; Sherwin v. Fletcher, 168 Mass. 413, 47 N. E. 197 (factory) ; Fearnley v. De Mainville, 5 Colo. App. 441, 39 Pac. 12> (locating post-office) ; Rogers v. Burr, 105 Ga. 432, 31 S. E. 438, 70 Am. St. SO (fac- tory) ; Bohn Mfg. Co. v. Lewis, 45 Minn. 164, 47 N. W. 652; Davis &c. Mfg. Co. v.,Caigle (Tenn. Ch. App.), S3 S. W. 240; Rogers v. Galloway Female College, 64 Ark. 627, 44 S. W. 454, 39 L. R. A. 636 (college); Schuler v. Myton, 48 Kans. 282, 29 Pac. 163 ; Keuka College v. Ray, 167 N. Y. 96, 60 N. E._ 325 ; Kansas City School Dist. V. Sheidley (sub nomine, Stocking), 138 Mo. 672, 40 S. W. 656, 60 Am. St. 576, 21 L. R. A- 406 (holding an election) ; La Fayette County Monument Corp. v. Magoon, 12, Wis. 627, 42 N. W. 17, 3 L. R. A. 761 (taxing people in order to raise money to meet the terms of the sub- scription) ; Woodworth v. Veitch, 29 Ind. App. 589, 64 N. E. 932 (continu- ing to teach certain religious doc- trine) ; Lasar v. Johnston, 125 Cal. 549, 58 Pac. 161 (giving a ball) ; Williams College v. Danforth, 29 Mass. 541 (keeping a college on the same location). "Trustees of the institution becom- ing individually liable therefor. First M. E. Church v. Donnell, 110 Iowa 5, 81 N. W. 171, 46 L. R. A. 858; United Presbyterian Church v. Baird, 60 Iowa 237, 14 N. W. 303; Augustine v. Methodist Episcopal Soc, 79 111. App. 452 (trustees advancing money). Obligations incurred in maintaining a college. Albert Lea College v. Brown's Estate, 88 Minn. 524, 60 L. R. A. 870, 93 N. W. 672; Trustees &c. University v. Hofifman, 95 Mo. App. 488,69 S. W. 474; Baptist Fe- male Univ. V. Borden, 132 N. Car. 476, 44 S. E. 47, 1007; Philomath College V. Hartless, 6 Ore. 158, 25 Am. Rep. 510 (expense of construc- tion college buildings) ; Presbyterian Board &c. Missions v. Smith, 209 Pa. 361, 58 Atl. 689 (sending a missionary into the foreign field). "University of Des Moines v. Liv- ingston, 57 Iowa 307, 10 N. W. 738, 42 Am. Rep. 42; Johnson v. Otter- bein Univ., 41 Ohio St. 527. 25 — Contracts, Vol. I § 229 CONTRACTS. 386 § 229. Mutual promises as a consideration therefor. — Vol- untary subscriptions are also upheld on the ground that one gra- tuitous subscription is the consideration for the other. In many cases it is stated that when several agree to contribute to a common object which they wish to accomplish the promise of each is a good consideration for the promise of the others/'' This is, however, too broad a statement of the rule unless the courts which give it expression have, without so stating, adopted the holding of Michigan's supreme tribunal to the effect that "where subscrib- ers sign the same paper it is not necessary to prove that the sub- scription was made in consideration of each of the other sub- scribers. This is presumed."" For the mere fact that all sign the same subscription list or that the promise of any one particular subscriber has led others to subscribe does not necessarily make this promise mutual and therefore binding. Unless the promises are given in consideration of each other, they do not constitute a contract.^'' § 230. Obligation to apply the funds in a certain way as a consideration. — There are some cases holding that, where the funds raised by the subscriptions are required to be applied in a certain way, the obligation to so apply them is sufficient consid- eration to uphold the promise to pay.^^ "Nor is it necessary that '= Christian College v. Hendley, 49 Mich. 640, 89 N. W. 687; Comstock v. Cal. 347; Berkeley Divinity School Howd, 15 Mich. 236. V. Jarvis, 32 Conn. 412; Higert v. In- "Cottage St. M. E. Church v. Ken- diana Asbury Univ. S3 Ind. 326; dall, 121 Mass. 528, 23 Am. Rep. 286; Pierce v. Ruley, 5 Ind. 69; Curry v. Methodists Orphans' Home Assn. v. Kentucky Western R. Co., 25 Ky. L. Sharp's Exr., 6 Mo. App. ISO; Curry 1372, 78 S. W. 435; New Lindell Ho- v. Rogers, 21 N. H. 247; First Pres- tel Co. V. Smith, 13 Mo. App. 7; byterian Church v. Cooper, 112 N. Y. George v. Harris, 4 N. H. 533, 17 517, 20 N. E. 352, 3 L. R. A. 468, 8 Am. Dec. 446. But see Curry v. Am. St. 767. Rogers, 21 N. H. 247 ; Congregational " Harnett v. Franklin College, 10 Soc, V. Perry, 6 N. H. 164, 25 Am. Ind. App. 103, 57 N. E. 427; Collier Dec. 455; SteAvart v. Trustees of v. Baptist &c. Soc, 8 B. Mon. (Ky.) Hamilton College, 2 Denio (N. Y.) 68; Kentucky &c. School v. Fleming, 403, repudiated in First Presbvterian 10 Bush (Ky.) 234; Parsonage Fund Church V. Cooper, 112 N. Y. 517, 20 v. Ripley, 6 Greenl. (Maine) 442; N. E. 352, 3 L. R. A. 468n, 8 Am. St. Maine Cent. Inst, v, Haskell, 73 767- Irwin v. Lombard Univ., 56 Maine 140. In Ladies' Institute v. Ohio St. 9, 46 N. E. 63, 36 L. R. A. French, 16 Gray (Mass.) 196, 239. 60 Am. St. 727 ; Lathron v. which was a suit upon a col- Knapp. 27 Wis. 214. See post, §231, lege subscription, the court said: Promise for Promise. "The second objection is that the "Waters v. Union Trust Co., 129 promises of the defendants, being 387 CONSIDERATION. § 23 1 the obligation of the trustee should be performed in advance of the payment of the fund, for the very purpose of the subscription is to enable such party to perform the duty imposed. Courts of equity have ample power to coerce the application of the funds arising from the subscription to the accomplishement of the pur- pose in the contract."^" This doctrine is not, however, in accord with the principle that doing or promising to do what one is already legally bound to do is not a sufficient consideration to up- hold a contract, whether the previous obligation arises by contract or by law independently of it. When funds are raised or sub- scribed to be applied in a certain way the trustees of the funds are bound to so apply them. This legal obligation could not be a consideration for the subscription.^" Moreover, it would seem that the obligation to apply funds in a certain way can only arise when there are funds to apply. This would necessitate the pay- ment of the subscription in order that the obligation may attach. After the payment of the subscription the question then becomes academic. § 231. Promise for promise. — A promise given in consider- ation and because of the fact that another promise is given, is mere subscriptions to the funds of the concurrent promises." In Troy Acad- institute, are without consideration, emy v. Nelson, 24 Vt. 189, which was and therefore void. Subscriptions of also a suit upon a college subscrip- this character have been made the tion, it was said: "A legal considera- subject of litigation in many instances, tion may consist in loss, damage or and the earlier cases in our reports inconvenience, sustained by the party contain dicta some of which have not to whom the promise is made, or of been sanctioned by later decisions, benefit or advantage to the party But in the cases of Amherst Acad- promising. The amount of the con- emy v. Cowls, 6 Pick. (Mass.) 427; sideration is unimportant, nor is it Williams College v. Danforth, 12 necessary, in this state, that it should Pick. (Mass.) S41, and Thompson v. appear upon the face of the contract Page, 1 Mete. (Mass.) S6S, their va- or agreement, as it may be proved lidity is established, and the ground by testimony aliunde. The considera- of it is definitely stated. It is_ held tion for this agreement is found in that by accepting such a subscription the obligation imposed upon, and as- the promisee agrees on his part with sumed by the trustees of this acad- the subscribers that he will hold and emy to see to, and make the appli- appropriate the funds subscribed in cation of this money as directed to conformity with the terms and ob- the subscribers to this fund, so as to jects of the subscription, and thus enable this institution to prosecute its mutual and independent promises are duties of public instruction, for which made, which constitute a legal and it was incorporated." sufficient consideration for each other. ^ Barnett v. Franklin College, 10 They are thus held to rest upon a Ind. App. 103, 37 N. E. 427. well-settled principle in respect to ""Montpelier Seminary v. Smith's § 231 CONTRACTS. 388 binding provided the promise given is for the performance of some act which, if executed, would be a sufficient consideration for an obligatory unilateral contract.^^ Concisely stated, a prom- ise may constitute the consideration for another promise." Estate, 69 Vt. 382, 38 Atl. 66. See Ind. App. 205, 44 N. E. 940; Steves ante, § 215, Doing what one is legally v. Frazee, 19 Ind. App. 284, 49 N. E. bound to do. 385; Davis v. Calloway, 30 Ind. 112, ''McKell v. Chesapeake &c. R. Co., 95 Am. Dec. 67 1; Boies v. Vincent, 186 Fed. 39, 108 C. C. A. 41 (agree- 24 Iowa 387; Leach v. Keach, 7 Iowa ment by owner of coal land to de- 232; Crawford v. Paine, 19 Iowa 172; velop mines thereon, coke a certain Spencer v. Taylor, 69 Kans. 493, Tl part of the coal produced, and con- Pac. 276; Cowan v. Hite, 2 A. K. tribute free right of way in considera- Marsh. (Ky.) 238; Pike v. Thomas, tion of a railroad company building 4 'Bibb (Ky.) 486, 7 Am. Dec. 741; the line and taking the coal produced Kernan v. Carter, 31 Ky. L. 865, 104 at the ruling price) ; Beauchamp v. S. W. 308; Harper v. Cincinnati &c. Couch, 54 Tex. Civ. App. 471, 117 S. R. Co., IS Ky. L. 223, 22 S. W. 849; W. 924. Mutual obhgations imposed Stovall v. McCutchen, 107 Ky. 577, by the contract form a sufficient con- 21 Ky. L. 1317, 54 S. W. 969, 47 L. sideration for entering into it, and R. A. 287; Babcock v. Wilson, 17 the reciprocal release from such ob- Maine 372, 35 Am Dec. 263 ; Prebel ligations likewise form sufficient con- v. Hunt, 85 Maine 267, 27 Atl. 151; sideration for rescission. Kilgore Martin v. Meles, 179 Mass. 114, 60 Lumber Co. v. Thomas, 98 Ark. 219, N. E. 397; Barnett v. Block, 94 IMinn. 135 S. W. 858. See also, Hodges v. 138, 102 N. W. 392; Ames-Brooks Co. Bankers' Surety Co., 152 111. App. v. ^tna Ins. Co., 83 Minn. 346, 86 372; Minehan v. Hill, 144 App. Div. N. W. 344; Steele v. Johnson, 96 Mo. (N. Y.) 854, 129 N. Y. S. 873 (rau- App. 147, 69 S. W. 1065; Baker v. tual promises to share decedent's Kansas City &c. R. Co., 91 Mo. 152, property equally) ; Holden v. Gil- 3 S. ^\^ 486; Lamb v. Wilson feather, 78 Vt. 405, 63 Atl. 144 (mu- (Nebr.), 97 N. W. 325; Pryor v. tual promises of the parties to release Hunter, 31 Nebr. 678, 48 N. W. 736; a lien on a horse and take in lieu Doolittle v. Callender (Nebr.), 130 thereof a lien on oxen). N. W. 436 (contract between mer- ^ Gower V. Capper, Cro. Eliz. 543 ; chant and advertising agency) ; Con- Nichols v. Raynbred, Hob. 88; gregational Society v. Perry, 6 N. H. Strangborough's Case, 4 Leon. 3 ; In 164, 25 Am. Dec. 455 ; George v. Har- re Fuller's Case, Godb. 94; Thoma- ris, 4 N. H. 533, 17 Am. Dec. 446; son v. Dill, 30 Ala. 444; Davis v. Buckingham v. Ludlum, 40 N. J. 422, Williams, 121 Ala. 542, 25 So. 704; 2 Atl. 265; Livingston v. R.ogers, 1 Wells Fargo &c. Co. v. Enright, 127 Caines (N. Y.) 583; Tradesman's Cal. 669, 60 Pac. 439, 49 L. R. A. 647; Nat. Bank v. Curtis, 167 N. Y. 194, Barringer v. Warden, 12 Cal. 311; 60 N. E. 429, 52 L. R. A. 430; Cole- Siddall V. Clark, 89 Colo. 321, 26 Pac. man v. Eyre, 45 N. Y. 38; Briggs v. 829; New Haven Mfg. Co. v. New Tillotson, 8 Johns. (N. Y.) 304; Haven Pulp &c. Co., 16 Conn. 126, 55 Keep v. Goodrich, 12 Johns. (N. Y.) Atl. 604 ; Mason V. Terrell, 3 Ga. App. 397; Gould v. Banks, 8 Wend. (N. 348, 60 S. E. 4; Ferst v. Blackwell, Y.) 562, 24 Am. Dec. 90; Weed v. 39 Fla. 621, 22 So. 892; Van Housen Spears, 193 N. Y. 289, 86 N. E. 10; V. Copeland, 180 111. 74, 54 N. E. 161; Maloney v. Nelson, 12 App. Div. (N. Gray v. Bloomington &c. R. Co., 120 Y.) 545, 42 N. Y. S. 418, affd., 158 N. 111. App. 159; Murphy v. Murphy, Y. 351, S3 N. E. 31; Roussel v. 93 111. App. 671 ; Funk v. Hough, 29 Mathews, 171 N. Y. 634, 63 N. E. 111. 145; Thayer v. Allison, 109 111. 1122, affg. 62 App. Div. (N. Y.) 1; 180; Downey v. Hinchman, 25 Ind. Shannon v. Hawley, 32 Misc. (N. Y.) 453 ; Bruce v. Smith, 44 Ind. 1 ; Ohio 623, 66 N. Y. Supp. 471 ; White v. Farmers' Ins. Co. v. Stowman, 16 Demilt, 2 Hall (N. Y.) 405; Forney 389 CONSIDERATION. § 231 Cases illustrating and showing the application of this principle are numerous, and the facts involved in a number of them are briefly stated in the note below.^^^ But a promise is not a good consideration for a promise unless there is absolute mutuality of the engagement, so that each party has the right to hold the other V. Shipp, 49 N. Car. 527; Whitehead condition. Chappell v. McMillan (N. V. Potter, 4 Ired. L. (N. Car.) 257; M.), 113 Pac. 611. When promises Howe V. O'Mally, 1 Murphy (N. are made in the alternative, and one Car.) 287, 3 Am. Dec. 693; Shields v. alternative becomes impossible of per- Titus, 46 Ohio St. 528, 22 N. E. 717; formance, this does not impair theob- Commissioners v. Perry, 5 Ohio 56; Nott V. Johnson, 7 Ohio St. 270 ; Mc- Feasters v. Pattison, 188 Pa. St. 270, 41 Atl. 609; McNish v. Reynolds, 95 ligation of the other alternative prom- ise. Chappell v. McMillan (N. Mex.), 113 Pac. 611. An agreement whereby one promises to sell and deliver a cer- Pa. St. 483; Aldrich v. Lyman, 6 R. tain number of cattle and another to I. 98; Rice v. Sims, 8 Rich. (S. Car.)^^eceive and pay for them at a future 416; Seward v. Mitchell, 1 Cold, time and designated place, is binding Seward (Tenn.) 87; Arnold v. Chamberlain, 14 Tex. Civ. App. 634, 39 S. W. 201 ; on the parties. Funk v. Hough, 29 111. 145 ; Boies v. Vincent, 24 Iowa James v. Fulcrod, 5 Texas 512, 55 387. Where the seller agreed to de- Am. Dec. 743; Flanders v. Wood, 83 Tex. 277, 280, 18 S. W. 572; Beau- champ V. Couch, 54 Tex. Civ. App. 471, 117 S. W. 924; Phillips v. Pres- ton, 5 How. (U. S.) 278, 12 L. ed. liver corn at a designated place and at an agreed price and the purchaser contracted to supply the seller with sacks and the corn was not to be de- livered until the sacks were furnished, 152; Abba v. Smyth, 21 Utah 109, 59 the respective undertakings of each Pac. 756; Missisquoi Bank v. Sabin, are a sufficient consideration to sup- 48 Vt. 239; Patton v. Cardiner, 72 Vt. port the promise of the other. Low 47, 47 Atl. 110; Richmond U. P. R. v. Forbes, 18 111. 568. An agree- Co. V. Richmond, 96 Va. 670, 32 S. E. ment to furnish board to non- 787; Carnegie Trust Co. v. Security union men in consideration of de- Life Ins. Co., Ill Va. 1, 68 S. E. 412, fendants furnishing a certain number 31 L. R. A. (N. S.) 1186 (voting of such men for a designated period trust agreement) ; Hawes v. Wool- of time is supported by a considera- cock, 26 Wis. 629; Excelsior Wrap- tion. Marr v. Burlington &c. R. Co., per Co. v. Messinger, 116 Wis. 549, 121 Iowa 117, 96 N. W. 716. A writ- 93 N. W. 459; Cramer v. Redman, 10 ten agreement entered into by the Wyo. 328, 68 Pac. 1003. merchants of a town whereby they '^^ Mutual subscription contracts agreed to close their places of bnsi- are upheld on this ground (Brown ness at 6:30 o'clock during the sum- v. Marion Commercial Club (Ind. mer months is binding, the mutual App.), 97 N. E. 958). "A prom- ise may be a sufficient consid- eration for a promise. * * * And it is the promise, and not the per- formance thereof, that constitutes the promises being a sufficient considera- tion. Stovall V. McCutchen, 107 Ky. 577, 54 S. W. 969, 47 L. R. A. 287, 92 Am. St. 373. An agreement to an- nul a contract on one side is sufficient consideration, except where by the consideration for an agreement to an- terms or necessary intendment of the nul on the other. Proctor Coal Co. agreement between the parties, per- v. Strunk, 29 Ky. L. 995, 96 S. W. formance on one side is made a con- 603. Where an officer agreed not to dition precedent to performance on move the property levied on by him the other." United and Globe Rubber to satisfy an execution on condition Mfg. Co. v. Conard, 80 N. J. L. 286, that the holder thereof keep the prop- 78 Atl. 203. The promise given for erty safely, and have it forthconiing a promise may be dependent upon a at the sale on execution, there is a § 2-31 CONTRACTS. 390 to a positive agreement.^'' This statement must not, however, be misunderstood. While the contract must be mutual in obligation sufficient consideration for the mutual promises. Ames v. Taylor, 49 Maine 381. A promise by the abutting prop- erty owners on a street to pay the costs of curb stones, if city would not destroy a row of trees standing in the street, is binding. Springfield V. Harris, 107 Mass. 532. And a promise to share in the expense of an enterprise is sufficient consideration for a promise to receive a portion of the proceeds. Britenstool v. Mi- chaels, 56 N. Y. 607. An agreement to grind corn at a reasonable price in satisfaction of a judgment has been held sufficient consideration to sup- port an agreement on the part of the judgment creditor to deliver him suf- ficient corn for that purpose. Old- ham V. Kerchner, 79 N. Car. 106, 28 Am, Rep. 302. And an agreement that if defendants would hire two negroes of plaintiff as boat hands, he would deliver to the defendant his cotton crop to be transported to market, is supported by sufficient consideration. Rice V. Sims, 8 Rich. (S. Car.) 416. A demand for and a promise to fur- nish a sleeping-car berth constitutes a contract and the mutual obligations are binding. Pullman Palace Car Co. V. Booth (Tex. Civ. App.), 28 S. W. 719. Where a shipper agreed to load and ship cattle on a certain day and the railroad contracts to furnish the cars and receive the cattle on that day, there is a sufficient considera- tion for the contract of shipment where the shipper has the cattle ready for shipment at the time agreed. Gulf &c. R. Co. V. Combes (Tex. Civ. App.), 80 S. W. 1045. An agreement by the parties to exchange their prom- issory notes is supported by a con- sideration, the note of each being a consideration for the note of the other. Dockray v. Dunn, Tsl Maine 442. Williams v. Banks, 11 Md. 198; Eaton V. Carey, 10 Pick. (Mass.) 211 ; Higginson v. Gray, 6 Mete. (Mass.) 212; Whittier v. Eager, 1 Allen (Mass.) 499; Backus v. Spauld- ing, 116 Mass. 418; Dowe v. Schutt, 2 Den. (N. Y.) 621; Baldwin v. Van Deusen, 37 N. Y. 487; Newman v. Frost, 52 N. Y. 422. Mutual prom- ises to deliver and pay for goods are binding. Bettisworth v. Champian Yelv. 133; Morris v. Lagerfelt, 103 Ala. 608, 15 So. 895; Mississippi River Logging Co. v. Robson, 69 Fed. m, 16 C. C. A. 400; Minnesota Lum- ber Co. V. Whitebreast Coal Co., 160 111. 85, 43 N. E. 774, 31 L. R. A. 529 Appleton V. Chase, 19 Maine 74 Jones V. Binford, 74 Maine 439 White V. Demilt, 2 Hall (N. Y.) 405, Cherry v. Smith, 3 Humph. (Tenn.) 19, 39 Am. Dec. 150. See also, Nich- olson V. Acme Cement Plaster Co. (Mo. App.), 122 S. W. 773 (promise by one party to pay for replastering ceilings of a building). ^ Miners v. Fox, 3 Eng. L. & Eq. 420; Eustice v. Meytrott (Ark.), 140 S. W. 590 ; Stiles v. McCIellan, 6 Colo. 89; Hoagland v. Murray, (Colo.), 123 Pac. 664 (contract for purchase and sale of real estate upheld) ; Ve- lie Motor Car Co. v. Kopmeier ^lo- tor Car Co., 194 Fed. 324; Mason v. Terrell, 3 Ga. App. 348. 60 S. E. 4; Morrow v. Southern Express Co., 101 Ga. 810, 28 S. E. 998; Cooley v. i\Ioss, 123 Ga. 707, 51 S. E. 625; Mc- kinley V. Watkins, 13 111. 140; Bean V. Burbank, 16 :\Iaine 458, ZZ Am. Dec. 681 ; Coleman v. Applegarth, 68 Md. 21, 11 Atl. 284, 6 Am. St. 417; Dresel v. Jordan, 104 Mass. 407; Wil- kinson V. Heavenrich, 58 Mich. 574, 26 N. W. 139, 55 Am. Rep. 708; Stensgaard v. Smith, 43 Minn. 11, 44 N. W. 666, 19 Am. St. 205; Bailey V. Austrian, 19 Gil. (Minn.) 465; Mers V. Franklin Ins. Co., 68 Mo. 127; Ewins v. Gordon, 49 N. H. 444; Townsend v. Fisher, 2 Hilt. (N. Y.) 47; Keep v. Goodrich, 12 Johns. (N. Y.) 397; Burnet v. Bisco, 4 Johns. (N. Y.) 235; Benedict v. Lynch, 1 Johns. Ch. (N. Y.) 370, 7 Am. Dec. 484; Bodine v. Glading, 21 Pa. St. 50, 59 Am. Dec. 749; Hirschhom, Mack & Co. V. Nelden-Judson Drug Co., 26 Utah 110. 72 Pac. 386; Smoke- less Fuel Co. V. W. E. Seaton & Sons, 105 Va. 170, 52 S. E. 829; American Agricultural Chemical Co. v. Ken- nedy, 103 Va. 171, 48 S. E. 868; Atlee V. Bartholomew, 69 Wis. 43, 33 N. W. 110, S Am. St. 103. See also, Foulds 391 CONSIDERATION. § 231 and remedy^* there need not be the same remedy to both parties.^' Furthermore, if the contract is voidable at the option of one of the parties the one with whom the option rests may enforce the contract, notwithstanding he himself might avoid it. Thus, an infant's promise may be the consideration for a promise, although the infant may enforce the contract against the adult, while the adult might not be able to enforce it against the infant.^^ And V. Watson, 116 111. App. 130; EI Paso &c. R. Co. V. Eichel (Tex. Civ. App.), 130 S. W. 922. A new promise by a party to do less than he has already agreed to do has been held an insuffi- cient consideration for the promise of another party to do more than he is obliged to do. Weed v. Spears, 193 N. Y. 289, 86 N. E. 10. A party against whom redress by specific per- formance could not be maintained, cannot himself successfully seek it. Iron Age Pub. Co. v. Western Union Tel. Co., 83 Ala. 498, 3 So. 449, 3 Am. St. 758; Cooper v. Pena, 21 Cal. 403; Lattin v. Hazard, 91 Cal. 87, 27 Pac. 51S; Banbury v. Arnold, 91 Cal. 606, 27 Pac. 934; Sterling v. Klepsattle, 24 Ind. 94, 87 Am. Dec. 319; Rogers V. Saunders, 16 Maine 92, 33 Am. Dec. 635; Alworth v. Seymour, 42 Minn. 526, 44 N. W. 1030 ; Bodine v. Glading, 21 Pa. St. 50, 59 Am. Dec. 749; Decordova v. Smith's Admx., 9 Tex. 129, 58 Am. Dec. 136. A unilat- eral contract binding in law may, however, be specifically enforced. Rogers v. Saunders, 16 Maine 92, 33 Am. Dec. 635. ^ Hissam v. Parrish, 41 W. Va. 686, 24 S. E. 600, 56 Am. St. 892. See also, Utica R. Co. v. Brinckerhoff, 21 Wend, (N. Y.) 139, 34 Am. Dec. 220. '""The legal principle that con- tracts must be mutual, that they must bind both parties or neither, does not then mean that in every case each party must have the same remedy for a breach by the other. Covenant may lie against one, when only as- sumpsit can be maintained against the other. Nor does the principle mean that when a contract is written each party must sign it. It is true that when a contract consists of mutual promises, both parties must be bound, or neither is; but in no case, when the consideration is a covenant or a promise, is the form of the under- taking material. It is its substance." Grove v. Hodges, 55 Pa. St. 504. See also, the case of James Maccalum Printing Co. v. Graphite Compendius Co., ISO Mo. App. 383, 130 S. W. 836, in which it is said, "We do not under- stand that a contract, supported when it is made by a full consideration moving to both parties, is unilateral, because one of the parties is accorded the privilege to do or not to do cer- tain things in the future, if he agrees to render a consideration for the privilege. * * * If that were so, most or all contracts allowing an op- tion to buy property within a stated period would be treated as invalid." ^ "The numerous decisions which have been had in this country justify the settlement of the following defi- nite rule, as one that is subject to no exceptions. The only contract bind- ing on an infant, is the implied con- tract for necessaries ; the only act which he is under a legal incapacity to perform, is the appointment of an attorney; all other acts and con- tracts, executed or executory, are voidable or confirmable by him at his election." 1 Am. Lead. Cas. (5th ed.) 300. See also, Williams v. Moor, 11 M. & W. 256; Shropshire v. Burns, 46 Ala 108; Vaughan v. Parr, 20 Ark. 600; Cole v. Pennoyer, 14 111. 158; Fetrow v. Wiseman, 40 Ind. 148; Murphy, Thompson & Co. v. Reed, 125 Ky. 585, 101 S. W. 964, 128 Am. St. 259 ; Fonda v. Van Home, 15 Wend. (N. Y.) 631, 30 Am. Dec. 77; Curtin v. Patton, 11 Serg. & R. (Pa.) 305; Hinely v. Margaritz, 3 Pa. St. 428; Scott v. Buchanan, 11 Humph. (Tenn.) 467; Cummings v. Powell, 8 Tex. 80; Patchin v. Cromach, 13 Vt. 330; Mustard v. Wohlford's Heirs, IS Graft. (Va.) 329, 76 Am. Dec. 209. § 231 CONTRACTS. 392 a contract may be unenforcible as to one party, it being as to him within the statute of frauds, while the same contract is enforcible as to the other because he has signed such contract in writing.^^ Except in the case of voidable contracts, in order that one promise may be consideration for another, the promises must be concurrent and obhgatory upon each at the same time in order to render them binding.'* It is evident from a reading of the cases cited that this does not mean that the promises, like any other offer and acceptance, cannot be made at different times, but they must become concurrent or obligatory at the same time, i. e., on the acceptance of the offer. The law regards the offer as continu- ing in force until it is accepted, at which time the promises be- come binding upon both parties, provided of course the offer is not revoked or extinguished before acceptance. ^^ Although a promise may constitute the consideration for a promise and the law will give effect to a consensual agreement, it must be borne in mind that the promise must be for the perform- "Parton v. Crofts, 16 C. B. (N. S.) 11; Farwell v. Lowther, 18 111. 252; Shirley v. Shirley, 7 Blackf. (Ind.) 452. The weight of authority from adjudicated cases will be found to fully sustain the doctrine that a con- tract may not bind one party, in con- sequence of his omitting to sign it according to the statute of frauds; and yet he may sue the other party who has complied with the act. Old Colony R. Co. v. Evans, 6 Gray (Mass.) 25, 66 Am. Dec. 294. See Wilkinson v. Heavenrich, 58 Mich. 574, 55 Am. Rep. 708, where a great many authorities on both sides of this question are collected and discussed. But this subject is more germane to the statute of frauds, and will be treated thereunder. Clason's Exrs. v. Baley, 14 Johns. (N. Y.) 484; Justice V. Lang, 42 N. Y. 493, 1 Am. Rep. 576 ; Worrall v. Munn, 5 N. Y. 229, 55 Am. Dec. 330n ; Hodson v. Carter, 3 Pin- nev (Wis.) 212, 3 Chand. (Wis.) 234; Cheney v. Cook, 7 Wis. 413. -"'Stiles V. McClellan, 6 Colo. 89; Morrow v. Southern Express Co., 101 Ga. 810, 28 S. E. 998 ; Mason v. Ter- rell, 3 Ga. App. 348, 60 S. E. 4; Vogel V. Pakoc, 157 111. 339, 42 N. E. 386, 30 L. R. A. 491; Kernan v. Carter, 31 Ky. L. 865, 104 S. W. 308; Coleman V. Applegarthe, 68 Md. 21, 11 Atl. 284; Steffen v. Mississippi River &c. R. Co., 156 Mo. 322, 56 S. W. 1125; Buckingham v. Ludlum, 40 N. J. Eq. 422, 2 Atl. 265 ; Chicago &c. R. Co. v. Dane, 43 N. Y. 240; Keep v. Good- rich, 12 Johns. (N. Y.) 397; Tucker V. Woods, 12 Johns. (N. Y.) 190, 7 Am. Dec. 305 ; Utica R. Co. v. Brinck- erhoff, 21 Wend. (N. Y.) 139, 34 Am. Dec. 220 ("the promise of each must be concurrent and obligatory at the same time to render either binding and should be so stated in the declara- tion") ; Livingston v. Rogers, 1 Caines (N. Y.) 583; Macedon &c. Road Co. V. Snediker, 18 Barb. (N. Y.) 317; James v. Fulcrod, 5 Tex. 512, 55 Am. Dec. 743; Flanders v. Wood, 83 Tex. 277, 18 S. W. 572 ; Dorsey v. Packwood, 12 How. (U. S.) 126, 13 L. ed. 921 ; Greve v. (danger, 36 Wis. 369. One promise may be in writing and the other may be oral. Dicken v. Morgan, 54 Iowa 684, 7 N. W. 145. Or it may be contained in separate instruments. Martin v. Murphy, 129 Ind. 464, 28 N. E. 1118; Cohn v. Hus- son, 119 N. Y. 609, 23 N. E. 573. ™ Schultz V. Simmons Fur Co., 46 Wash. 555, 90 Pac. 917. As to revo- 393 CONSIDERATION. § 2T,l ance of some act which, upon execution, will result either in some right, interest, profit or benefit accruing to the one party or some forbearance, detriment, loss or responsibility to the other party. If by the terms of the agreement no legal right or forbearance is to be received by the promisor in return for his promise, it is without consideration and cannot be enforced/" Thus a promise by the payee of a note to cancel the same at his death by will if the maker pays the interest regularly,''^ or to renew the note when due,^^ or give additional time in which to pay the debt,^^ or reduce the rate of interest,"* or an agreement by a landlord after the lease is executed to furnish the house, cut the grass and keep the hedge trimmed,"' are none of them enforcible if no return promise or other consideration exists. In case the promise of one of the parties imposes no legal duty upon the party making it, such promise furnishes no considera- tion for a promise."" Therefore, independent of any other con- sideration, where a contract of employment fails to bind one of the parties for either a definite or indefinite time but by its terms binds the other, or, in other words, where the continuation or termination of the contract rests with the will or actions of one of the parties, such a contract is not considered a mutual cation and extinguishment of offers, " Harris v. Creveling, 80 Mich. 249, see ante, Ch. 3, Offer and Acceptance. 45 N. W. 85. ='°Peek V. Peek, 77 Cal. 106, 19 Pac. ='Leeming v. Duryea, 49 Misc. (N. 227, 1 L. R. A. 185, 11 Am. St. 244; Y.) 240, 97 N. Y. S. 3SS. Corbett V. Cronkhite, 239 111. 9, 87 N. '' Stanton v. Singleton, 126 Cal. 657, E. 874; Jackson v. Bloom, 66 111. App. 59 Pac. 146, 47 L. R. A. 334; Krause 473; Houghton v. Milford Pink-Gran- v. Kraus, 162 111. 328, 44 N. E. 736; ite Co., 171 Mass. 354, 50 N. E. 646; Vogel v. Pekoe, 157 111. 339, 42 N. E. Rose V. Fall River Bank, 165 Mass. 386, 30 L. R. A. 491; Weaver v. 273, 43 N. E. 93 ; Hicks v. Hamilton, Weaver, 109 111. 225 ; Allen v. Rouse, 144 Mo. 495, 46 S. W. 432, 66 Am. St. 78 111. App. 69; Louisville &c. R. Co. 431; Lincoln v. Wright, 23 Pa. St. 76, v. Flanagan, 113 Ind. 488, 14 N. E. 62 Am Dec 316. 370, 3 Am. St. 674; Heiland v. Ertel, °'Trombly v. Klersy, 141 Mich. 73, 4 Kans. App. 516, 44 Pac. 1005; Jack- 104 N W 419 son v. Sessions, 109 Mich. 216, 67 N. "'Arend v Smith 151 N. Y. 502, 45 W. 315; Davie v. Lumberman's Min- N E 872 ing Co., 93 Mich. 491, 53 N. W. 625, " Davis V. Stout, 126 Ind. 12, 25 N. 24 L. R. A. 357; McDonald v. E 862, 22 Am. St. 565; Howe v. Bewick, 51 Mich. 79, 16 N. W. 240; Klein 89 Maine 376, 36 Atl. 620; Cole- Stensgaard v. Smith, 43 Minn. 11, 44 man v. Applegarth, 68 Md. 21, 11 Atl. N. W. 669, 19 Am. St. 205 ; Rose v. 284, 6 Am. St. 417; Bank v. Gay, 114 Oliver, 32 Ore. 447, 52 Pac. 176; Rich- Mo 203 21 S. W. 479; Wolz v. ardson v. Hardwick, 106 U. S. 252, 27 Parker, 134 Mo. 458, 35 S. W. 1149. L. ed. 145 ; Lowber v. Connit, 36 Wis. 176; Dodge v. Hopkins, 14 Wis. 630. 232 CONTRACTS. 394 obligation and tlierefore not binding upon either unless the ele- ment of mutuality is otherwise supplied.^^ It is obvious that a party not bound by the agreement itself cannot invoke the aid of the court to enforce such a contract. His right does not depend upon the subsequent offer to perform, but upon its original oblig- atory character. However, if some other consideration is fur- nished by the employe, as the execution of a release from liability for injuries, the employer is bound to furnish such employment in accordance with the terms of the contract.^^ § 232. Mutuality, options. — An option is a contract by which the owner agrees with another person that he shall have the right to buy certain designated property, within a certain time, at a stipulated price. It is a continuing offer to sell which may or may not, within the time specified at the election of the optionee, be accepted. The owner parts with the right to sell to another for such time and gives to the optionee the exclusive privilege to buy on the terms set forth in the option.^^ There are earlier cases " St. Louis &c. R. Co. V. Mathews, 64 Ark. 398, 39 L. R. A. 467; Louis- ville &c. R. Co. V. Gaines, 99 Ky. 411, 36 S. W. 174, 59 Am. St. 465 ; Louis- ville &c. R. Co. V. Oiifutt, 99 Ky. 427, 36 S. W. 181, 59 Am. St. 467; Benja- min V. Bruce, 87 Md. 240, 39 Atl. 810; Vogel v. Pekoe, 157 111. 339, 42 N. E. 386, 30 L. R. A. 491; Hirsch- horn, Mack & Co. v. Neldon &c. Drug Co., 26 Utah 110, 72 Pac. 386, " Pennsylvania Co. v. Dolan, 6 Ind. App. 109, 51 Am. St. 289; Kelly v. Peter &c. Stone Co., 130 Ky. 530, 113 S. W. 486 ; Yellow Poplar Lumber Co. V. Rule, 106 Ky. 455, SO S, W. 685; Sax V. Detroit &c. R. Co., 125 Mich. 252, 84 N. W. 314, 84 Am. St. 572; Stearns v. Lake Shore &c. R. Co., 112 Mich. 651, 71 N. W. 148; Hobbs v. Brush Electric Light Co., 75 Mich. 550, 42 N. W. 965 ; Smith v. St. Paul &c. R. Co., 60 Minn. 330, 62 N. W. 392; Lake Erie &c. R. Co. v. Tlernev, 75 Ohio St. 565, 80 N. E. 1128, 29 Ohio C. C. 83; East Line &c. R. Co. V. Scott, 72 Tex. 70, 10 S. W. 99, 13 Am. St. 758. Or if the contract is definite as to time and each promises something of value in return for the promise, the mutual agreements will be upheld. Healy v. Southern States Alcohol Mfg. Co., 125 La, 1038, 52 So. 150; Federal Iron &c. Bed Co. v. Hock, 42 Wash. 668, 85 Pac. 418; Schultz V. Simmons Fur Co., 46 Wash, 555, 90 Pac. 917. See Gulf &c. R. Co, V, Jackson, 29 Tex. Civ. App. 342, 69 S. W. 89, in which it is held that the parties might enter into an agreement binding upon one of them for a certain length of time, but which the other might abrogate whenever he chose to do so, and Newhall v. Jour- nal Printing Co., 105 Minn. 44, 117 N. W. 228, 20 L. R. A. (N. S.) 899, where it is stated "it is, however, well settled that a contract for employ- ment is not lacking in mutuality be- cause the party employed does not bind himself to continue in the em- ployment for definite period," citing Carnig v. Carr, 167 Mass. 544, 46 N. E. 117, 35 L. R. A. 512, 57 Am. St. 488. But in the case quoted and in the case it cites there was an inde- pendent executed consideration mov- ing from the employe. ™ Pollock V, Brookover, 60 W. Va. 75, 53 S. E. 795, 6 L. R. A. (N. S.) 403. 39; CONSIDERATION. 232 holding tlyii such agreements are unenforcible for want of mu- tuality.^" / These decisions cannot be taken as authority for it is now universally held that when an option is accepted, no other element entering in, it becomes an executory contract for the sale of the property with mutuality of obligation and remedy.*^ And the acceptance of the option in the manner and within the time specified is sufficient to bind both parties and removes any objec- tion to the enforcement of the agreement based thereon for want of consideration.*^ The option so given may or may not be sup- ported by a sufficient consideration. If it is not so supported the offer is a mere gratuity which may be withdrawn at any time before its acceptance.'"' But if an option unsupported by a con- sideration is accepted before it expires or is withdrawn, a binding contract is thus formed." And if the offer to sell is sup- "» Cooke V. Oxley, 3 T. R. 653; Bell V. Howard, 9 Mod. 302; Jenkins v. Locke, 3 App. D. C. 485 ; Boucher v. Vanbuskirk, 2 A. K. Marsh. (Ky.) 346; Litz v. Goosling, 93 Ky. 185, 14 Ky. L. 91, 19 S. W. 527, 21 L. R. A. 127. The doctrine of the first case has been repudiated. Murphy, Thomp- son & Co. V. Reed, 125 Ky. 585, 101 S. W. 964, 128 Am. St. 259. The lan- guage of the second has been limited so as to make it conform to the gen- eral rule. Murphy, Thompson & Co. V. Reed, 125 Ky. 585, 101 S. W. 964, 128 Am. St. 259. See also, Johnson V. Virginia &c. Lumber Co., 163 Fed. 249 ; Warren v. Castello, 109 Mo. 338, 19 S. W. 29, 32 Am. St. 669 ; Davis v. Petty, 147 Mo. 374, 48 S. W. 944. " Pollock V. Brookover, 60 W. Va. 75, 53 S. E. 795, 6 L. R. A. (N. S.) 403 ; Frank v. Stratf ord-Handcock, 13 Wyo. 37, 77 Pac. 134, 67 L. R. A. 571, 110 Am. St. 963. "' Smith V. Bangham, 156 Cal. 359, 104 Pac. 689, 28 L. R. A. (N. S.) S22n. ^^ If the optionee has notice that the optionor has done some act incon- sistent with the continuance of the offer, it may amount to a withdrawal of the offer. Dickinson v. Doods, L. R 2 Ch. Div. 463 ; Crandall v. Willig, 166 111. 233, 46 N. E. 755 ; Corbett v. Cronkhite, 239 111. 9, 87 N. E 874; Murphy, Thompson & Co. v. Reed, 125 Ky. 585, 101 S. W. 964, 128 Am. St. 259; Boston & M. R. Co. v. Bart- lett, 3 Cush. (Mass.) 224; Bosshardt &c. Co. V. Crescent Oil Co., 171 Pa. St. 109, 32 Atl. 1120; Bradford v. Fos- ter, 87 Tenn. 4, 9 S. W. 195 ; Walker V. Bamberger, 17 Utah 239, 54 Pac. 108 ; Cummins v. Beaver, 103 Va. 230, 48 S. E. 891, 106 Am. St. 881 ; Barton V. Spinning, 8 Wash. 458, 36 Pac. 439; Weaver v. Burr, 31 W. Va. 736, 8 S. E. 743, 3 L. R. A. 94. The death of optionee revokes the offer. New- ton v. Newton, 11 R. I. 390, 23 Am. Rep. 476. But the death of the op- tionor before the expiration of an option given for a sufficient considera- tion does not impair the right of the other party to make his election and enforce performance against the heirs and representatives of the giver. Mueller v. Nortmann, 116 Wis. 468, 93 N. W. 538, 96 Am. St. 997. See also, Dickson v. Fames, 134 Mo. App. 373, 114 S. W. 574. "Wilks V. Georgia &c. R. Co., 79 Ala. 180; Perkins v. Hadsell, 50 111. 216; Murphy, Thompson & Co. v. Reed, 125 Ky. 585, 101 S. W. 964, 128 Am. St. 259 (the case of Litz v. Goos- ling, 93 Ky. 185, 14 Ky. L. 91, 19 S. W. 527, 21 L. R. A. 127, limited); Boston & M. R. Co. v. Bartlett, 3 Cush. (Mass.) 224; Wilcox v. Cline, 70 Mich. 517, 38 N. W. 555; Ide v. Leiser, 10 Mont. 5, 24 Pac. 695, 24 Am. St. 17; Donahue v. Potter & G. Co., 63 Nebr. 128, 88 N. W. 171 ; Brad- § 232 CONTRACTS. 396 ported by a sufficient consideration, it cannot be withdrawn prior to the expiration of the time specified.*^ As in the case of other contracts, the inadequacy of the consideration given for the option is not sufficient reason for refusing to grant specific performance of the agreement based thereon/" If the consideration given be of an appreciable value, the contract will, as a general i-ule, be upheld. An option given in consideration of $1.00 has been held valid. *^ However, the holding in these cases has not gone un- challenged and the consideration of $1.00 has been held insuffi- cient.*' In case the option given is under seal, the adequacy of the consideration given is iinmaterial where the common-law rule pervails, since in such jurisdictions want of consideration cannot be set up as a defense to an action in which it is sought to enforce the contract resulting from an acceptance of an option under seal.*" In certain cases, however, it is held that since a suit for spe- cific performance is an equitable proceeding, want of considera- tion may be shown even though the option is under seal, as in ford V. Foster, 87 Tenn. 4, 9 S. W. 195; Cheney v. Cook, 7 Wis. 413; Frank v. Stratford-Handcock, 13 Wyo. 37, n Pac. 134, 67 L. R. A. 571, 110 Am. St. 963. *= Ross V. Parks, 93 Ala. 153, 8 So. 368, 11 L. R. A. 148, 30 Am. St. 47; Linn v. McLean, 80 Ala. 360; Mur- phy, Thompson & Co. v. Reed, 125 Ky. 585, 101 S. W. 964, 128 Am. St. 259; Bradford v. Foster, 87 Tenn. 4, 9 S. W. 195 ; Cummins v. Beavers, 103 Va. 230, 48 S. E. 891, 106 Am. St. 881 ; Weaver v. Burr, 31 W. Va. 736, 8 S. E. 743, 3 L. R. A. 94; Tibbs v. Zirkle, 55 W. Va. 49, 46 S. E. 929, 104 Am. St. 977; Mueller v. Nortmann, 116 Wis. 468, 93 N, W. 538, 96 Am. St. 997; Sixta v. Ontonagon Valley Land Co., 148 Wis. 186, 134 N, W. 341 ; Frank v. Stratford-Handcock, 13 AVvo. 37, n Pac. 134, 67 L. R. A. 57i, 110 Am. St. 963. ■"Smith V. Bangham. 156 Cal. 359, 104 Pac. 689, 28 L. R. A. (N. S.) S22n. "'Smith V. Bangham, 156 Cal. 359, 104 Pac. 689, 28 L. R. A. (N. S.) ,S22n; Watkins v. Robertson, 105 Va. 269, 54 S. E. 33, 5 L. R. Ar (N. S.) 1194, 115 Am. St. 880. See also, Lov- ett V. Eastern Oil Co., 68 W. Va. 667, 70 S. E. 707, Ann. Cas. 1912 B. 360, and note; Rust v. Fitzhugh, 132 Wis. 549, 112 N. W. 508 (contract for sale of land and division of profits which were uncertain as was also the time when the profit would be realized). "Rude V. Levy, 43 Colo. 482, 96 Pac. 560, 127 Am. St. 123 ; Corbett v. Cronkhite, 239 111. 9, 87 N. E. 874; INIurphy, Thompson & Co. v. Reed, 125 Ky. 585, 101 S. W. 964, 128 Am. St. 259. See also. Great Western Oil Co. V. Carpenter, 43 Tex. Civ. App. 229, 95 S. W. 57 (oil and gas lease). *° Mathews Slate Co. v. New Em- pire Slate Co., 122 Fed. 972; Smith V. Smith, Ze Ga. 184, 91 Am. Dec. 761; O'Brien v. Boland, 166 Mass. 481, 44 N. E. 602; Mansfield v. Hodg- don, 147 Mass. 304, 17 N. E. 544; Fuller V. Artman, 69 Hun (N. Y.) 546, 24 N. Y. S. 13 ; Willard v. Tay- loe, 8 Wall. (U. S.) 557; Cummins v. Beavers, 103 Va. 230, 48 S. E. 881, 106 Am. St. 881, overruling Graybill v. Braugh, 89 Va. 895, 17 S. E. 558, 21 L. R. A. 133, Z1 Am. St. 894; Watkins v. Robertson, 105 Va. 269, 54 S. E. ZZ, S L. R. A. (N. S.) 1194, 115 Am. St. 880: Donnally v. Parker, 5 W. Va. 301 ; Weaver v. Burr, 31 W. Va. ne, 8 S. E. 743, 3 L. R. A. 94. 397 CONSIDERATION. § 232 equity the real consideration may be inquired into since the par- ties are not concluded by the recitals in the contract though under seal.'^° And in case an option has been given for a valuable con- sideration and there is a promise to extend the time for the exer- cise of the option which is not based on any additional or new consideration such agreement is a nudum pactum. It is a mere continuing offer to sell at a price previously fixed not based upon any consideration and may be withdrawn at any time before ac- ceptance. The old consideration will not make the promise to extend the option binding." § 233. Abandonment of legal right. — The abandonment of any legal right may be sufficient consideration to support a prom- ise.°^ Nor is it necessary that a property right be directly or in- directly involved. The abandonment of any legal right though it may not or cannot result in any financial gain or loss to either party may be a valuable consideration. The abandonment may even be beneficial to the one abandoning the right and yet in the eyes of the law be such a detriment as will support the agree- ment."^/ Likewise the waiver or abandonment of privileges which ■"Rude V. Levy, 43 Colo. 482, 96 hardt (Mich.), 128 N. W. 1078. Pac. 560, 127 Am. St. 123 ; Corbett v. An agreement by a creditor to with- Cronkhite, 239 III. 9, 87 N. E. 874; hold from sale securities held by Crandall v. WilHg, 166 111. 233, 46 N. him to secure claims due him held a E. 7SS ; Graybill v. Braugh, 89 Va. sufficient consideration. Bean v. 89S, 17 S. E. 558, 21 L. R. A. 133, 37 Trust Co. of America, 136 App. Div. Am. St. 894, overruled in Cummins (N. Y.) 69, 120 N. Y. S. 728. An V. Beavers, 103 Va. 230, 48 S. E. 891, agreement by one to forego his right 106 Am. St. 881. to prosecute an action for fines and "Coleman v. Applegarth, 68 Md. penalties and to merge his evidence 21, 11 Atl. 284, 6 Am. St. 417; Cum- with and join defendant in the mins V. Beavers, 103 Va. 230, 48 S. E. prosecution of a larger claim, the 891, 106 Am. St. 881. See also, note money to be divided between them, to Harris v. Murphy, 119 N. Car. 34, has been upheld. Overton v. Wil- 25 S. E. 708, 56 Am. St. 664. liams, 139 App. Div. (N. Y.) 177, '^Sikes v. Lafferry, 27 Ark. 407; 123 N. Y. S. 758. Weston V. Hight, 18 Maine 281; °°Thus the waiver of a right to Vogel V. Meyer, 23 Mo. App. 427; use tobacco (Talbott v. Stemmons, Farmer v. Stewart, 2 N. H. 91; Mc- 89 Ky. 222, 12 S. W. 297, 5 L. R. A. Cormick v. Oliver, 7 Yerg. (Tenn.) 8S6n, 25 Am. St. 531) ; intoxicating 24- Ballard v. Burton, 64 Vt. 387, liquors (Lindell v. Rokes, 60 Mo. 24 'Atl, 769, 16 L. R. A. 664; Chap- 249, 21 Am. Rep. 395), or to refrain man v. Pittsburgh &c. R. Co., 18 W. from doing either of the above-men- Va. 184. Thus where acceptance of tioned things and, in addition, not work and payment therefor is ob- to swear or play cards (Hamer v. tained by giving a guaranty, the guar- Sidway, 124 N, Y. 538, 27 N. E. 256, anty is supported by a consideration. 12 L. R. A. 463, 21 Am. St. 693), have A. M. Campau Realty Co. v. Len- been held valuable considerations. The § 233 CONTRACTS. 398 may indirectly involve property rights is sufficient to support a return promise/'' Thus a promise given in consideration of an agreement to refrain from resisting the probate or contest of a will is enforcible as based on a sufficient consideration.'^'' The waiving of the right to make a defense'^" or the waiver, dismissal surrender of the control or posses- " McKinney v. E. F. Rowson & sion of a child by the one rightfully Co. (Tex. Civ. App.), 146 S. W. 643 possessing or controlling it is a val- (the giving up of the right of making uable consideration. Healey v. Simp- payments called for by a contract son, 113 JVIo. 340, 20 S. W. 881 ; Benge and thus forfeiting all right in a given V. Hiatt's Admr., 82 Ky. 666, 56 Am. tract of land held a sufficient con- Rep. 912; Story v. Story (Ky.), 62 sideration). S. W. '865; Henry v. Dussell, 71 "" Owen v. Hancock, 1 Head. (Tenn.) Nebr. 691, 99 N. "W. 488 (consent by 563; Shadburne v. Daly, 76 Cal. parent to the marriage of a minor 355, 18 Pac. 403, but it is otherwise daughter). 'Where the husband gives if there is no agreement to forbear, a note to one who had been intimate This was a case where the widow with his wife on condition that he promised to pay if the claimant would would try to induce her to return to forbear to present his claim to her her husband and himself leave the deceased husband's executor. Fain v. country there is a consideration for Turner, 96 Ky. 634, 29 S. 'W. 628; such note. Lyts v. Keevey, 5 'Wash. Blount v. 'Wheeler. 199 Mass. 330, 606, 32 Pac. 534. Attending a cer- 85 N. E. 477, 17 L. R. A. (N. S.) tain institution of learning is a suffi- 1036; Grochowski v. Grochowski, ^^ cient consideration for a promise to Nebr. 506, 109 N. W. 742 ; Lawrence pay a certain sum toward the ex- v. Cammeyer, 96 App. Div. (N. Y.) penses of the one attending. Young 633, 89 N. Y. S. 220; Clark v. Lyons, V. Boyd, 107 Md. 449, 69 Atl. Z2>; 38 Misc. (N. Y.) 516, 11 N. Y. S. Hoshor V. Kautz, 19 Wash. 258, 53 967; Palmer v. North, 35 Barb. (N. Pac. 51. Likewise an agreement to Y.) 282; Durham v. 'Wadhngton, 2 pay for the support, maintenance and Strob Eq. (S. Car.) 258; Pariss v. education of certain grandchildren, Jewell, 57 Tex. Civ. App. 199, 122 S. when such agreement is executed on 'W. 399; Bellows v. Sowles, 55 Vt. the part of the promisee. Ellicott 391, 45 Am. Rep. 621. See also, v. Turner, 4 Md. 476. Going to Lockwood v. Title Ins. Co., 1i Misc. Europe at the request and on the (N. Y.) 296, 130 N. Y. S. 824; Blake promise of another to reimburse him v. Robinson, 129 Iowa 196, 105 N. all money spent on the trip (Dev- W. 401 (agreement by administrator emon v. Shaw, 61 Md. 199, 14 Atl. to pay a claim if claimant would not 464, 9 Am. St. 422), attending funeral press it). To same efifect, Franchi (Earle v. Angell, 157 Mass._ 294, 32 v. Tirelli, 92 N. Y. S. 784. But if N. E. 164), or furnishing informa- the contract not to oppose the pro- tion ("Wilkerson v. Ohveira, 1 Bing. bate of the will is upheld it must ap- N. C. 490; Friedman v. Suttle, 10 pear that the plaintiffs are related Ariz. 57, 85 Pac. 726, 9 L. R. A. to the testator in some degree or (N. S.) 933; Green v. Brooks, 81 had some right to contest which was Cal. 328, 22 Pac. 849 ; Reed v. Golden, abandoned. Sheppey v. Stevens, 177 28 Kans. 632, 42 Am. Rep. 180; Cobb Fed. 484. See, however, Sheppev v. v. Cowdery, 40 Vt, 25, 94 Am. Dec. Stevens, 185 Fed. 147. An agree- 370n), will support a promise to pay ment to prevent a person from at- therefor. And for a city to grant tempting to break a will is without a cemetery association the right of consideration when such person had burial within the city limits is a no right whatever to contest. House consideration for a promise by the v. Callicott, 83 Miss. 506, 35 So. 761. association not to charge more than ""■ Moore v. First Nat. Bank, 139 a certain sum for its lots. City of Ala. 595, ZG So. Ill; Union Bank v. Austin V. Austin Citv Cemetery Assn., Geary, 5 Pet. (U. S.) 99, 8 L. ed. 96 Tex. 384, 73 S. 'W. 525. 60; Timmons v. Boyd, 89 S. Car. 11, 399 CONSIDERATION. 233 or discontinuance of an action instituted in good faith is a valu- able consideration for a promise," and will support a compro- mise of the dispute." The abandonment by a married woman of her right to dower is a sufficient consideration to uphold a con- 71 S. E. 298 (withdrawing answer and permitting judgment "to be re- vived) ; Roller v. McGraw, 63 W. Va. 462, 60 S. E. 410. See also, Renwick V. Wheeler, 48 Fed. 431. "Skeate v. Beale, 11 A. & E. 983 (distress for rent) ; Burne v. Lee, 156 Cal. 221, 104 Pac. 438 (waiver of right to sue for damages) ; Heath v. Potlatch Lumber Co., 18 Idaho 42, 108 Pac. 343, 27 L. R. A. (N. S.) 707 (waiver of right to sue) ; Booth V. Wiley, 102 111. 84 (dis- missal of replevin suits) ; Wray v. Chandler, 64 Ind. 146 (abandonment of appeal) ; Matthews v. 'Merick, 4 Md. Ch. 364 (abandonment of ap- peal) ; Silver v. Graves, 210 Mass. 26, 95 N. E. 948 (withdrawal of an appeal from a decree probating will) ; Case V. Hawkins, 53 Miss. 702 (dis- missal of appeal) ; Commercial Bank of Manchester v. Bonner, 13 S. & M. (21 Miss.) 649 (dismissal of an ac- tion on a promissory note) ; Sim- mons V. Kelsey, 1(> Nebr. 124, 107 N. W. 122 (dismissal of proceedings for appointment of guardian). In this case the court held that it was ev- ident the proceeding was not insti- tuted in good faith and therefore its dismissal was no consideration for a contract. Weilage v. Abbott, 3 Nebr. (unof.) 157, 90 N. W. 1128 (the dismissal of a suit will sustain a promise to pay costs and attorneys' fees). "A promise to pay a certain sum upon the discontinuance of a pending suit, by the promisee, is prima facie founded on a good con- sideration." Flannagan v. Kilcome, 58 N. H. 443. Bartlett v. Wood- worth-Mason Co., 69 N. H. 316, 41 Atl. 264 (discontinuance of attach- ment proceedings) ; Dell v. New England Malt Co., 65 N. H. 25, 17 Atl. 1059 (action for damages and failure to transfer certain shares of stock) : Sommer v. Sommer, 88 App. Div. (N. Y.) 434, 84 N. Y. S. 444 (dismissal of action for a separa- tion) ; Downer v. Church, 44 N. Y. 647 (withdrawal of proceedings liti- gating right to property) ; Brown v. McCreight, 187 Pa. St. 181, 41 Atl. 45 (dismissal of the prosecution for removing debtor's goods to prevent levy) ; Town of Levis v. Black River Improvement Co., 105 Wis. 391, 81 N. W. 669 (dismissal by the town of damage suits). ■^Crowther v. Farrer, IS Q. B. 617; Cooper V. Parker, 14 C. B. 118; Long- ridge v. Dorville, 5 B. & Al. 117; Edwards v. Bough, 11 M. & W. 641; Longridge v. Dorville, 5 Barn. & Aid. 117 (damages, collision between ves- sels at sea) ; Bozeman v. Rushing, 51 Ala. 529; McCIure v. McClure, 100 Cal. 339, 34 Pac. 822 (title to real estate) ; Harland v. Staples, 79 111. App. 72; Sigsworth v. Coulter, 18 111. 204. In Moon v. Martin, 122 Ind. 211, 23 N. E. 668 (bastardy proceed- ings), the court said: "There is a difference between compromising a suit that has been instituted in good faith and settling a claim asserted by one against another." Atchison &c. R. Co. V. Starkweather, 21 Kans. 322 (title to land) ; McClellan v. Ken- nedy, 8 JNId. 230 (vacate deed) ; Glou- cester &c. Co. V. Russia Cement Co., 154 Mass. 92, 27 N. E. 1005, 12 L. R. A. 563, 26 Am. St. 214 (infringement of a patent) ; Barlow v. Ocean Ins. Co., 4 Met. (Mass.) 270; Sanford v. Huxford, 32 Mich. 313, 20 Am. Rep. 647 (withdrawing opposition to bank- ruptcy proceedings) ; Rankin v. Mc- Cleery (Ala.), 57 So. 599 (waiv- ing right to file a claim against bank- rupt's estate) ; Phillips v. Pullen, 50 N. J._ L. 439, 14 Atl. 222 (damages, invasion of marital rights) ; Morey V. Newfane, 8 Barb. (N. Y.) 645. In Stewart v. Ahrenfeldt, 4 Denio (N. Y.) 189, the court said: "The plain- tiff is right in his law, that the set- tlement of a suit, or the compromise of a doubtful claim, is a good con- sideration for a promise to pay '-33 CONTRACTS. 400 tract based thereon/* This is true of the releasing of a Hen/ money.'' Dovale v. Ackerman, 11 Misc. (N. Y.) 24S, 66 N. Y. St. 513, 33 N. Y. S. 13; Feeter v. Weber, 78 N. Y. 334; Barnes v. Ryan, 66 Hun (N. Y.) 170, 49 N. Y. St. 152, 21 N. Y. S. 127 (damages for obstructing drain). Suit on life insurance policy, after settlement ; it developed the in- sured was still living. Held, the company must settle in accordance with the terms of the agreement where it was entered into in good faith by the parties. Sears v. Grand Lodge &c., 163 N. Y. 374, 57 N. E. 618, SO L. R. A. 204; Grasselli v. Lowden, 11 Ohio St. 349 (damages) ; Bennet v. Paine, 5 Watts (Pa.) 259 (ejectment) ; Brown v. Sloan, 6 Watts (Pa.) 421 (withdrawing contest of administrator's report) ; O'Keson v. Barclay, 2 Penn. & W. (Pa.) 531 (suit for slander) ; Hunter v. Lanius, 82 Tex. 677, 18 S. W. 201; Green v. Seymour, 59 Vt. 459, 12 Atl. 206 (suit on debt) ; Holcomb v. Stimp- son, 8 Vt. 14i (bastardy proceed- ings) ; Billingsley v. Clelland, 41 W. Va. 234, 23 S. E. 812 (bastardy pro- ceedings) ; Griswold v. Wright, 61 Wis. 195, 21 N. W. 44; Bolln v. Met- calf, 6 Wyo. 1, 42 Pac. 12, 44 Pac. 694, 71 Am. St. 898 (discontinuance of atttachment proceedings). See also, in connection with this last case, Lamb V. Zundell, 78 Vt. 232, 62 Atl. 33; Prater v. Miller, 25 Ala. 320, 60 Am. Dec. 521 (contesting will) ; Murphy v. Murphy, 84 111. App. 292 (withdrawal of suit to contest will) ; Adams v. Adams, 70 Iowa 253, 30 N. W. 795 (agreement not to contest will). Where there is no ground for the contest the abandonment thereof will not support a promise. Busby V. Conoway, 8 Md, 55, 63 Am. Dec. 688; Grandin v. Grandin, 49 N. J. L. 508, 9 Atl, 756, 60 Am. Rep. 642. In case it is obvious that no cause of action exists a dismissal of suit is no consideration for a promise by the defendant to pay a sum of money in settlement of action. Kidder v Blake, 45 N. H. 530; Melchoir v. Mc- Carty, 31 Wis. 252, 11 Am. Rep. 60S; Wilbur V. Crane, 13 Pick. (Mass.) 284. Seaman v. Seaman. 12 Wend. (N. Y.} 381. The dismissal of a suit which could not possibly be suc- cessful is no consideration for a promise. Long v. Towl, 42 Mo. 545, 97 Am. Dec. 355 ; Wade v. Simeon, 2 C. B. 548; Tooley v. Windham, Cro. Eliz. 206; Loyd v. Lee, 1 Strange 94 ; Bick v. Seal, 45 Mo. App. 475; HayTies v. Thorn, 28 N. H. 386; Duck V. Antle, 5 Okla. 152, 47 Pac. 1056. '"' Andrews v. Andrews, 28 Ala. 432 ; Pool v. Docker, 92 111. 501 ; Clay v. Clay, 23 111. App. 109; Worley v. Sipe, 111 Ind. 238, 12 N. E. 385; Harrow v. Johnson, 60 Ky. 578; Farwell v. Johnston, 34 Mich. 342; Hart V. Young, 1 Lans. (N. Y.) 417; Harvey v. Alexander, 1 Rand (Va.) 219, 10 Am. Dec. 519. See also, Kin- kead v. Peet (Iowa), 111 N. W. 48. '"Buckner v. Mcllroy, 31 Ark. 631; Wilson- v. Samuels, 100 Cal. 514, 35 Pac. 148, 559; St, Clair v. Perrine, 75 111. 366; Allmendinger v. Malcolm McDonald Lumber Co., 82 111. App. 166; Luark v. Malone, 34 Ind. 444; Sharpe v. Carnody, 17 Ky. 827, 32 S. W. 749; Hillenbrand v. Shippen, 22 Ky. L. 652, 58 S. W. 525; Mason V. Gass 62 Mo. App. 449; Nicholson V. May (Wright), Ohio 660; Hughes V. Lansing, 34 Ore. 118, 55 Pac. 95, 75 Am. St. 574; McKinley v. Wilson (Tex. Civ App.), 96 S. W. 112 (re- lease of vendor's lien) ; Griswold v. Wright, 61 Wis. 195, 21 N. W. 44. The forbearance to file a mechanic's lien is a valuable consideration. Rip- pey v. Friede, 26 Mo. 523 ; Alley v. Turck, 8 App. Div. (N. Y.) SO, 74 N. Y. St. 865, 40 N. Y. S. 433 ; Flan- agan V. Mitchell, 16 Daly (N. Y.) 223, 32 N. Y. St. 303, 10 N. Y. S. 234. "The real consideration here was for- bearance on the part of the plaintiff. * * * Plaintiff's theory of this ac- tion is that, relying on M's accept- ance, he did not take immediate steps to secure himself by a lien. This is certainly ample consideration, etc." The defendants sought to escape liability on the ground that they owed the drawer of the order nothing when they agreed with plaintiff to accept. Harness v. McKee-Brown Lumber Co., 17 Okla. 624, 89 Pac. 1020; Cul- ver V. Pocono Spring Water Ice Co., 206 Pa. 481, 56 Atl. 29; Hewett v. Currier, 63 Wis. 386, 23 N. W. 884. 40I CONSIDERATION. § 233 mortgage/^ or other security, "^ in consideration of a prom- ise. The relinquishment of a right to a homestead entry on public land is a valid consideration in a written instrument for the payment of money. "^ Compare, however, with Cleveland &c. R. Co. V. Shea, 174 Ind. 303, 91 N. E. 1081, and Dipula v. Green (Md.), 82 Atl. 205, where there was no right to a lien. In connection with the two cases last cited, see, however, Wells V. Brown, 67 Wash. 351, 121 Pac. 828. "Cliff Foy V. Dawkins, 138 Ala. 232, 35 So. 41; Smith v. Boruff, 75 Ind. 412; Gaines v. Fitch, 14 Ky. L. 620 ; Blagbourne v. Hunger, 101 Mich. 375, 59 N. W. 657 ; Bradshaw v. Mc- Laughlin, 39 Mich. 480; Norris v. Vosburgh, 98 Mich. 426, 57 N. W. 264; Smith v. Richardson, 17 Mo. App. 422 : Henry &c. Co. v. Bond, 2,1 Nebr. 207, 55 N. W. 643; Traders' &c. Bank V. Parker, 130 N. Y. 415, 29 N. E. 1094 ; Columbia Ave. &c. Co. V. Lewis, 190 Pa. St. 558, 42 Atl. 1094. Release of a chattel mortgage. Green V. Hadfield, 89 Wis. 138, 61 N. W. 310. The discharge of a void chat- tel mortgage cannot serve as a con- sideration. Mandeville v. Avery, 124 N. Y. 376, 26 N. E. 951, 21 Am. St. 678. A forbearance to redeem prop- erty sold under a decree of fore- closure is a sufficient consideration to support a promise to extend the time for redemption. Bickel v. Wes- singer, 58 Ore. 98, 113 Pac. 34. "" Rollins V. Hare, 15 Ind. App. 677, 44 N. E. 374; Smith v. Taylor, 39 Maine 242; Stebbins v. Smith, 21 Mass. 97; Smith v. Weed, 20 Wend. (N. Y.) 184, 32 Am. Dec. 525; Saun- ders V. Pope, 1 Ohio 486; Mason Lumber Co. v. Buchtel, 101 U. S. 633, 25 L. ed. 1072. "Hardesty (sub nomine Pelham) V. Service (1891), 45 Kans. 614, 26 Pac. 29. ("All [cases] affirm that contracts about the possession, im- provements and relinquishment of rights of public land, when free from fraud, can be enforced, and consti- tute a good consideration.") Tessen- dorf V. Lasater, 10 Kans. App. 19, 61 Pac. 677; McCabe v. Caner, 68 Mich. 182, 35 N. W. 901; Olson v. Orton, 28 Minn. 36, 8 N. W. 878 ; Hooker v. 26 — Contracts, Vol. I Mcintosh, 1(> Miss. 693, 25 So. 866; Murray v. White, 42 Mont. 423, 113 Pac. 754, Ann. Cas. 1912A, 1297 (action for specific performance) ; Macy v. Sunderman, 15 N. Mex. 372, 110 Pac. 511; Tecumseh State Bank v. Maddox, 4 Okla. 583, 46 Pac. 563; Waring v. Loomis, 35 Wash. 85, 76 Pac. 510. See also, Sutherland v. Richardson, 55 Ore. 535, 106 Pac. 1017. Also agreements to refrain from bidding at a sale, (Wicker v. Hoppock, 6 Wall. (U. S.) 94; Heim v. Butin, 109 Cal. 500, 42 Pac. 138, SO Am. St. 54; Garrett v. Moss, 20 III. 549; Phippen v. Stick- ney, 3 Mete. (Mass.) 384; German v. Gilbert, 83 Mo. App. 411; Carter v. Gibson, 29 Nebr. 324, 45 N. W. 634, 26 Am. St. 381; National Bank v. Sprague, 20 N. J. Eq. 159; Hop- kins v. Ensign, 122 N. Y. 144, 25 N. E. 306, 9 L. R. A. 731 ; Marie v. Gar- rison, 83 N. Y. 14; Tom v. Daily, 4 Ohio 368; Allen v. Gregg, 130 Pa. St. 611, 18 Atl. 1020; Maffett v. Ijams, 103 Pa. St. 266; Brown v. Jackson (Tex. Civ. App.), 40 S. W. 162. See also, Rauch v. Donovan, 126 App. Div. (N. Y.) 52, 110 N. Y. S. 690; Satterfield v Kindley, 144 N. Car. 455, 57 S. E. 145; Kearney v. Taylor, 15 How. (U. S.) 494, 14 L. ed. 787; but see McClelland v. Citi- zens' Bank, 60 Nebr. 90, 82 N. W. 319, in which it is held that a con- tract not to bid at a chattel mortg&ge sale is void as against public policy), not to compete in business (Moore v. First Nat. Bank, 139 Ala. 595, 36 So. m ; Johnson v. Gwinn, 100 Ind. 466; Marshalltown Stone Co. v. Mfg. Co., 114 Iowa 574, 87 N. W. 49i5; Pierce v. Fuller, 8 Mass. 223, 5 Am. Dec. 102; Up River Ice Co. v. Den- ier, 114 Mich. 296, 72 N. W. 157, 68 Am. St. 480; Camden v. Dewing, 47 W. Va. 310, 34 S. E. 911, 81 Am. St. 797), or to "pool" the stock of various owners (Green v. Highan, 161 Mo. 333, 61 S. W. 798), have been held suf- ficient considerations to support a promise. A waiver of the right to re- § 234 CONTRACTS. 402 § 234. Forbearance. — An agreement to forbear the exer- cise of a right for a definite''* or a reasonable"^ time is a sufficient consideration for a promise where the forbearance is granted scind a contract (Waters v. White, 75 Conn. 88, 52 Atl. 401; Piatt v. Coke Co., 155 111. 530, 40 N. E. 1032; Sisson V. Kaper, 105 Iowa 999, 75 N. W. 490; Globe Fertilizer Co. v. Tenn. Phosphate Co., 27 Ky. L. 636, 85 S. W. 1177; Osborne v. O'Reilly, 42 N. J. Eq. 467, 9 Atl. 209), to be re- leased from a bond (Thomson v. Way, 172 Mass. 423, 52 N. E. 525; Esch V. White, 76 Minn. 220, 78 N. W. 1114), to withdraw from an offer (Manary v. Runyon, 43 Ore. 495, 73 Pac. 1028), to obtain additional se- curity (Heitsch v. Cole, 47 Minn. 320, 50 N. W. 235, see also, Robinson V. Boyd, 60 Ohio St. 57, S3 N. E. 494; Pollock v. Carolina Interstate Building, 51 S. Car. 420, 29 S. E. 77, 64 Am. St. 683), or the right of exemption (Gunthur v. Gunthur, 181 Mass. 217, 63 N. E. 402), to demand and notice (L'Amoreux v. Gould, 7 N. Y. 349, 57 Am. Dec. 524), to declare dividends (Knickerbocker v. Athletic Co., 20 Ohio C. C. 655), to destroy an unrecorded assignment of a patent (Winfrey v. Gallatin, 72 Mo. App. 191), not to close sales of stock (Rogers v. Wiley, 131 N. Y. 527, 30 N. E. 582, the court saying: "A sufficient consideration, however, for the promise of the defendants to carry the stock without additional margin, was shown when it was made to appear that the plaintiff fore- bore his determination to immediate- ly cover the stock and close his ac- count without the risk of further loss."), have all been held valuable considerations. "Shadburne v. Daly, 76 Cal. 355, 18 Pac. 403 ; Bell v Bean, 75 Cal. 86, 16 Pac. 521; Scribner v. Hanke, 116 Cal. 613, 48 Pac. 714; Jones v. Sikes, 85 Ga. 546, 11 S. E. 664; Blumenthal v. Tibbetts, 160 Ind. 70, 66 N. E. 159 ; Marshalltown Stone Co. v. Des Moines Brick Mfg. Co., 114 Iowa 574, 87 N. W. 496; Pelham v. Service, 45 Kans. 614, 26 Pac. 29; Foard v. Grinter, 14 Ky. L. S, 18 S. W. 1034; Brandenburgh v. Bank, 19 Ky. L. i974, 45 S. W. 108; Smith v. Bibber, 62 Maine 34, 19 Atl. 89, 17 Am. St. 464; Haskell v. Tukesbury, 92 Maine 551, 43 Atl. 500, 69 Am. St. 529; Howe v. Taggart, 133 Mass. 284; Poison v. Stewart, 167 Mass. 211, 45 N. E. HI, 36 L. R. A. 771, 57 Am. St. 452; Fraser v. Backus, 62 Mich. 540, 29 N. W. 92 ; Calkins v. Chand- ler, 36 Mich. 320, 24 Am. Rep. 593; Tousey v. Moore, 79 Mich. 564, 44 N. W. 958; Mosher v. Lansing Lum- ber Co., 112 Mich. 517, 71 N. W. 161; Union B. Co. v. Martin, 113 Mich. 521, 71 N. W. 867; Heitsch v. Cole, 47 Minn. 320, 50 N. W. 235; Lundberg v. Northwestern Elevator Co., 42 Minn. 7>1, 43 N. W. 685 ; Min- neapolis Land Co. v. McMillan, 79 Minn. 287, 82 N. W. 591 ; Hooker v. Mcintosh, 76 Miss. 693, 25 So. 866; Murdock v. Lewis, 26 Mo. App. 234, Faulkner v. Gilbert, 57 Nebr. 544, 77 N. W. 1072; Hockenbury v. Meyers, 34 N. J. L. 346 ; Atlantic Nat. Bank v. Franklin, 55 N. Y. 235, revg. 64 Barb. 449; Perkins v. Proud, 62 Barb. (N. Y.) 420; Traders Bank V. Parker, 130 N. Y. 415, 29 N. E. 1094; Rogers v. Wiley, 131 N. Y. 527, 30 N. E. 582; Hopkins v. En- sign, 122 N. Y. 144, 25 N. E. 306, 9 L. R. A. 731 ; Flanagan v. Mitch- el, 16 Daly 223, 32 N. Y. St. 303, 10 N. Y. S. 234; Mechanics' Nat. Bank V. Jones, 175 N. Y. 518, 67 N. E. 1085, affg. 76 App. Div. (N. Y.) 534, 78 N. Y. S. 800; German Sav. Bank v. Brodsky, 82 App. Div. 635, 81 N. Y. S. 1126, affg. 39 Misc.lOO, 78 N. Y. S. 910; Olmstead v. Latmer, 9 App. Div. (N. Y.) 163, 75 N. Y. St. 500, 41 N. Y. S. 44; McCullough v. Barr, 145 Pa. St. 459, 22 Atl. 962; First Nat. Bank v. Reid (Tenn.), 58 S. W. 1124 Von Branbenstein v. Ebensberger, 71 Tex. 267, 9 S. W. 153; Armstrong &c. Co. v. Snyder, 15 Tex. Civ. App. 394, 39 S. W. 379; Bedford's Exr. v. Chand- ler, 81 Vt. 270, 69 Atl. 874; Brad- shaw V. Bratton, 96 Va. 577, 32 S. E. 56; Mygalt v. Tarbell, 78 Wis. 351, 47 N. W. 618. "'Mapes V. Sidney, Cro. Jac. 683; Barnehurst v. Cabbot, Hard. 5 ; Tay- lor v. Thomas, 61 Ga. 472; Steadmarj V. Guthrie, 61 Ky. 147; Moore v. Mc . 403 CONSIDERATION. § 235 upon request and because of a return promise."" The mere for- bearance is not sufficient without some agreement, express or implied, but the circumstances may be such that an agreement may be impHed. §235. Forbearance to sue — Time. — An agreement to withhold suit either at law or in equity is a sufficient considera- tion to support a promise, although no fixed and definite time is expressly agreed upon." Thus an agreement by a creditor to Kinney, 83 Maine 80, 23 Am. St. 753; King V. Upton, 4 Maine 387, 16 Am. Dec. 266; Howe v. Taggart, 133 Mass. 284; Niles-Bement-Pond Co. V. Ury, S3 Misc. (N. Y.) 305, 103 N. Y. S. 226; Finch v. Skilton, 79 Hun (N. Y.) 531, 61 N. Y. St. 544, 29 N. Y. S. 92S ; Strong v. Sheffield, 144 N. Y. 392, 39 N. E. 330; Thomas V. Croft, 2 Rich. (S. Car.) 133, 44 Am. Dec. 279; Hakes v. Hotchkiss, 23 Vt. 231; Lonsdale v. Brown, 4 Wash. C. C. 148, Fed. Cas. No. 8494. When no period for forbear- ance is fixed it imports that forbear- ance shall be for a reasonable time. United & Globe Rubber Mfg. Co. V. Conard, 80 N. J. L. 286, 78 Atl. 203. °° "A promise to do or forbear from doing an act may be just as valuable consideration for a promise as the act or forbearance would be." Chappell V. McMillan, 15 N. Mex. 686, 113 Pac. 611. Forbearance from doing an illegal act is no considera- tion for a compromise. In re Thomas, (Conn.) 81 Atl. 972. See also, ante, § 233, Abandonment of legal right. "Oldershaw v. King, 2 H. & N. 517; Coles v. Pack, L. R. 5 C. P. 65; Morgan v. Park Nat. Bank, 44 111. App. 582; Wills v. Ross, 77 Ind. 1, 40 Am. Rep. 279; Johnson v. Staley, 32 Ind. App. 628, 70 N. E. 541; East Omaha Land Co. v. Hansen, 117 Iowa 96j 90 N. W. 705; Foard v. Grinter, 14 Ky. L. 5, 18 S. W. 1034; King V. Upton, 4 Maine 387; Haskell V. Tukesbury, 92 Maine 551, 43 Atl. 500, 69 Am. St. 529; Manter v. Churchill, 127 Mass. 31; Mecorney v. Stanley, 8 Cush. (Mass.) 85; Pratt V. Hedden, 121 Mass. 116; Ellis v. Clark, 110 Mass. 389, 14 Am. Rep. 609; Boyd v. Frieze, 71 Mass. (5 Gray) 553; Robinson v. Gould, 11 Cush. (Mass.) 55; Howe v. Taggart, 133 Mass. 284; Prouty v. Wilson, 123 Mass. 297; Mecorney v. Stanley, 8 Cush. (Mass.) 85; Walker v. Sher- man, 11 Mete. (Mass.) 170; Calkins V. Chandler, 36 Mich. 320, 24 Am. Rep. 593; Cheneweth v. Pacific Exp., 93 Mo. App. 185 ; Weilage v. Abbott, (Nebr.), 90 N. W. 1128; Hocken- bury V. Meyers, 34 N. J. L. 346; Mc- Cammon v. Shantz, 26 Misc. (N. Y.) 476, 57 N. Y. S. 515; Traders' &c. Bank v. Parker, 130 N. Y. 415, 29 N. E. 1094; Elting v. Vanderlyn, 4 Johns. (N. Y.) 237; Watson v. Ran- dall, 20 Wend. (N. Y.) 201; Mutual Life Ins. Co. v. Smith, 23 Hun (N. Y.) 535; Williamson v. McGill, 8 Ohio D. R. 185, 6 W. L. B. 202; Brownell v. Harsh, 29 Ohio St. 631; Downing v. Funk, 5 Rawle (Pa.) 69; Sidwell V. Evans, 1 Pen. & W. (Pa.) 383, 21 Am. Dec. 387; Cathcart v. Thomas, 8 Baxt. (Tenn.) 172; Hakes V. Hotchkiss, 23 Vt. 231 ; Lonsdale v. Brown, Fed. Cas. No. 8494, 4 Wash. C. C. 148. See also, note 60 Am. Dec. 524. An agreement to forbear for a "short time" or a "little while" is in- sufficient, it being too indefinite and uncertain. Lutwich v. Hussey, Cro. Ehz. 19; Oldershaw v. King, 2 H. & N. 517; Sidwell v. Evans, 1 Pen. & W. (Pa.) 383, 21 Am. Dec. 387; Lonsdale v. Brown, 4 Wash. C. C. 148. An agreement to forbear for a fortnight is good. Baker v. Jacob, 1 Bulst. 41. See also, Heineman v. Cans, 142 Mich. 289, 105 N. W. 763, 12 Detroit Leg. N. 722 (eight days' forbearance in bringing an action for removal of a person in possession). An agreement not to sue until after the maker's death is sufficient con- sideration to support a promise (Wil- § 235 CONTRACTS. 404 withhold suit against his debtor is a good consideration to sup- port a promise by a third party to pay the debt, although no fixed and definite time of extension is expressly agreed on."* And whenever there is an agreement to forbear bringing suit for a debt due, for an indefinite time, if followed by actual forbearance for a reasonable time, this is a good consideration for a promise to pay the debt by a person other than the debtor.'"' What would liamson v. McGill, 8 Ohio D. R. 185. 6 W. L. Bull. 202), or to hold a note until the death of one of the makers or nine and one-half years, provided such maker lived that long, is good. Daniels v. Daniels, 3 Cal. App. 294, 85 Pac. 134. There must be some- thing of value in the eyes of the \3.w promised in return for the forbear- ance. Thus an agreement by the holder of a note not to sue thereon for a certain length of time, sup- ported only by the debtor's promise to pay within that time, is not bind- ing. Austin Real Estate Co. v. Bohn, 87 Tex. 582, 29 S. W. 646, 30 S. W. 430, distinguishing Benson v. Phipps, 87 Tex. 578, 29 S. W. 1061, 47 Am. St. 128. And see also, Norris v. Gra- ham (Tex. Civ. App.), 42 S. W. 575. A surrender of a vested right in re- turn for refraining from prosecuting a claim which is legally untenable is without consideration and void. Jen- nings V. Jennings (Iowa), 87 N. W. 726. An agreement never to sue is a release of the obligation and may be pleaded in bar of an action to recover the debt. Guard v. Whiteside, 13 111. 7; Marietta Saving Bank v. Janes, 66 Ga. 286; Harvey v. Harvey, 3 Ind. 473; Reed v. Shaw, 1 Blackf. (Ind.) 245 ; McAllester v. Sprague, 34 Maine 296; Walker v. McCulloch, 4 Maine 421 ; Stebbins v. Niles, 25 Miss. 267; Cuyler v. Cuyler, 2 Johns. (N. Y.) 186; Jackson v. Stackhouse, 1 Cow. (N. Y.) 122, 18 Am. Dec. 514. It has been held that such an agree- ment relieves the maker from all lia- bility on the note and that a subse- quent voluntary promise to pay it, made without consideration, to the executor of the payee is not sup- ported by a consideration. Monroe v. Martin, 137 Ga. 262, 73 S. E. 341. An agreement to forbear to sue in general without adding any particular time is to be understood as a total and absolute forbearance. Lane v. Owings, 3 Bibb (Ky.) 247; Phelps V. Johnson, 8 Johns. (N. Y.) 54; Jackson v. Stackhouse, 1 Cow. (N. Y.) 122, 13 Am. Dec. 514; Clark v. Russell, 3 Watts (Pa.) 213, 27 Am. Dec. 348j Hamaker v. Eberly, 2 Binn (Pa.) 506, 4 Am. Dec. 4^7. ™ Spielberger v. Thompson, 131 Cal. 55, 63 Pac. 132, 678; Van Epps v. Redfield, 68 Conn. 39, 35 Atl. 809, 34 L. R. A. 360; Knight & Wall Co. v. Tampa Sand Lime Brick Co., 55 Fla. 728, 46 So. 285; Wickham v. Hyde Park Building & Loan Assn., 80 111. App. 523 ; Allmendinger v. Malcom &c. Co., 82 111. App. 166; McMicken V. Safford, 100 111. App. 102, affd. 197 III. 540, 64 N. E. 540; Harris v. Harris, 180 111. 157, 54 N. E. 180; J. H. Queal & Co. v. Peterson, 138 Iowa 514, 116 N. W. 593; Poison v. Stewart, 167 Mass. 211, 45 N. E. 737, 36 L. R. A. 771, 57 Am. St. 452 ; Boyd V. Freize, 71 Mass. (5 Gray) 553; Hooper v. Pike, 70 Minn. 84, 72 N. W. 829, 68 Am. St. 512; German v. Gilbert, 83 Mo. App. 411; Traders' &c. Bank v. Parker, 130 N. Y. 415, 29 N. E. 1094; Honsinger v. Mulford, 157 N. Y. 674, 51 N. E. 1091, affg. 35 N. Y. S. 986, 51 Hun (N. Y.) 589; Red River &c. Bank v. Barnes (sub- nomine North Star &c. Shoe Co.), 8 N. Dak. 432, 79 N. W. 880; Saal- field V. Manrow, 165 Pa. St. 114, 30 Atl. 823; Schoening v. Maple Valley Lumber Co., 61 Wash. 332, 112 Pac. 381 ; Washburn County v. Thompson, 99 Wis. 585, 75 N. W. 309. See also. In re Pray's Estate, 111 Minn. 449, 127 N. W. 392 (forbearance on part of legatee to sue for legacy on prom- ise by one of the trustees of the estate to pay her the difference be- tween her legacy and the amount the trustees were willing to allow her). " An agreement to forbear, in the absence of any stipulation as to a 405 CONSIDERATION. § 235 be a reasonable time, if not always a question of fact, would be at least a question of law and fact, depending for its solution upon the circumstances of each case.'" An agreement to forbear the foreclosure of a mortgage either for a definite or indefinite time is a sufficient consideration for a return promise." Also forbearance to enforce a judgment or to levy an attachment or execution is a sufficient consideration.^^ To constitute a forbearance to sue a sufficient consideration for a promise such forbearance must have been pursuant of an agreement to forbear.'* A mere forbearance to sue is not specified time, will be presumed to be for a reasonable time. J. H. Queal & Co. V. Peterson, 138 Iowa 514, 116 N. W. 593, 19 L. R. A. (N. S.) 842; Howe V. Taggart, 133 Mass. 284; Prouty V. Wilson, 123 Mass. 297; Robinson v. Gould, 11 Cush. (Mass.) 55 ; Boyd v. Frieze, 5 Gray (Mass.) 553; Calkins v. Chandler, 36 Mich. 320, 24 Am. Rep. 593; Watson v. Randall, 20 Wend. (N. Y.) 201; United & Globe Rubber Mfg. Co. v. Conard, 80 N. J. L. 286, 78 Atl. 203 ; Strong V. Sheffield, 144 N. Y. 392, 39 N. E. 330; Sidwell v. Evans, 1 Pen. & W. 383, 21 Am. Dec. 387. But see, Herbert v. Mueller, 83 111. App. 391. See also, Parsons v. Silva, 1 Cal. App. 602, 82 Pac. 685. " Traders' &c. Bank v. Parker, 130 N. Y. 415, 29 N. E. 1094. 3LMarshall v. Olds, 14 Colo. App. 32, 59 Pac. 217; Storms v. Storms, 21 Ind. App. 191, 51 N. E. 955; Burke V. Dillin, 92 Iowa 557, 61 N. W. 370: "It is well settled that an agree- ment to forbear, for a time, proceed- ings at law or in equity to enforce a well-founded claim, is a valid con- sideration for a promise. 1 Parsons on Contracts, § 441 ; 3 Am. & Eng. Ency. Law, p. 836; Loraax v. Smyth, 50 Iowa 223. See Hamer v. Sidway, ■ 124 N. Y. 538, 27 N. E. 256. What- ever may be said as to Rice, Lodge & Henry, by carrying out the con- tract, would not be doing what they were in any event obliged to do, as they were under no legal obligation to pay the taxes, or to pay the inter- est on the Squire mortgage, in the absence of this agreement." Burchard v. Frazer, 23 Mich. 224; Streeter v. Smith, 31 Minn. 52, 16 N. W. 460 (chattel mortgage) ; Chiles v. Wal- lace, 83 Mo. 84; Williams v. Bedford Bank, 63 App. Div. 278, 71 N. Y. S. 539; Audas v. Nelson, 64 Barb. (N. Y.) 362; Haggerty v. Allaire, 5 Sandf. (N. Y.) 230, 7 Super. Ct. 230; Prime V. Koehler, 7 Daly (N. Y.) 345, affd. n N. Y. 91; Colgin v. Henley, 6 Leigh (Va.) 85. "Barker v. Guilliam, S Iowa 510; Foster v. Clarke, 36 Mass. 329; Barnes v. Moody, 5 How. (Miss.) 636, n Am. Dec. 172; Oldham v. Kerchner, 79 N. Car. 106, 28 Am. Rep. 302; Brice v. Clark, 8 Pa. St. (8 Barr.) 301. Forbearance to en- force a judgment against real estate on which it is a lien is sufficient con- sideration for a promise by a subse- quent purchaser to pay such judg- ment. Bradshaw v. Bratton, 96 Va. 577, 32 S. E. 56. " In order that forbearance may be a consideration for a promise there must be a request of forbearance and a forbearance in consequence of that request. Deacon v. Gridlev, 15 Com. B. 295, 28 Eng. L. & Eq. "345 ; Miles V. New Zealand Alford Estate, 32 Ch. Div. 266, 55 L. J. Ch. 801, 54 L. T. 582, 34 W. R. 669 ; Shadburne v. Daly, 76 Cal. 355, 18 Pac. 403; Breed v. Hillhouser, 7 Conn. 523 ; Robinson v. Gould, 11 Cush. (Mass.) 55; Me- cronev v. Stanley, 8 Cush. (Mass.) 85; Walker v. Sherman, 11 Mete. (Mass.) 170; Manter v. Churchill, 127 Mass. 31 ; Rue v. Meirs, 43 N. J. Eq. 377, 12 Atl. 369 ; Gary v. White, 52 N. Y. 138; Oilman v. Kibler, 5 Humph. (Tenn.) 19; Von Branden- stein V. Ebensberger, 71 Tex. 267, 9 S. W. 153. § 235 CONTRACTS. 406 enough in the absence of any circumstance from which an agree- ment to forbear may be inferred." But an actual forbearance to sue may often, in connection with other circumstances, sometimes sHght, be evidence of an impHed agreement to forbear and thus form a consideration for a promise."* "Shadburne v. Daly, 1(i Cal. 3SS, 18 Pac. 403; Hargroves v. Cooke, 15 Ga. 321; Beggs v. First Nat. Bank, 134 111. App. 403; J. H. Queall & Co. V. Peterson, 138 Iowa 514, 116 N. W. 593; Ford v. Grinter (Ky.), 18 S. W. 1034; Manter v. Churchill, 127 Mass. 31; Mecorney v. Stanley, 8 Cush. (Mass.) 85; McFarland v. Smith, 6 Cow. (N. Y.) 669; Bieber v. Beck, 6 Pa. St. 198; Cobb v. Page, 17 Pa. 469; Shupe v. Galbraith, 32 Pa. 10. Forbearance without any agreement on the part of the creditor to forbear will not be deemed a sufficient con- sideration. "There must be promise for promise." Hoffmann v. Mayaud, 93 Fed. 171, 35 C. C. A. 256. ''Breed v. Hillhouse, 7 Conn. 523; Waters v. White, 75 Conn. 88, 52 Atl. 401; McMicken v. Safford, 197 111. 540, 64 N. E. 540, affg. 100 111. App. 102; Webbe v. Romona Oolitic Stone Co., 58 111. App. 222; Steadman v. Guthrie, 4 Mete. (Ky.) 147; Lansing Nat. Bank V. Coleman, 117 Mich. 177, 75 N. W. 624; Union Trust Co. v. Conus, 129 Mich. 156, 88 N. W. 407; Mosher v. Lansing &c. Co., 112 Mich. 517, 71 N. W. 161; Hill v. Omaha &c. R. Co., 82 Mo. App. 188; Mat- hews V. Seaver, 34 Nebr. 592, 52 N. W. 283; Strong v. Sheffield, 144 N. Y. 392, 39 N. E. 330 ; Muir v. Greene, 191 N. Y. 201, 83 N. E. 685; Niles- Bement-Pond Co. v. Ury, 53 Misc. (X. Y.) 305, 103 N. Y. S. 226; Arm- strong &c. Co. V. Snyder, 15 Tex. Civ. App. 394, 39 S. W. 379; Saunder v. Bank of Mecklenburg, 112 Va. 443, 71 S, E. 714. "I take it to be un- doubted law that the mere fact of forbearance would not be a consid- eration for a person's becoming sure- ty for a debt. It is quite clear pn the other hand that a binding promise to forbear would be a good consid- eration for a guarantee. The ques- tion is whether, if the guarantor re- quests the creditor to forbear from suing and the creditor on such re- quest, although he does not at the time bind himself to forbear, does in fact afterward forbear to sue, there is a good consideration for the guarantee. * * * If at the request of the guarantor the creditor does in fact forbear, there is a sufficient con- sideration to bind the guarantor, who has promised to pay the debt. * * * The question whether the request is expressed or is to be inferred from the circumstances is a mere question of evidence. If a request is to be implied from the circumstances, it is the same as if there were an express request." Crears v. Hunter, L. R. 19 Q. B. Div. 341. Mere forbearance of a complainant will not suffice. Gil- man V. Ferguson, 116 III. App. 347. "Whether actual forbearance, follow- ing a promise to pay interest upon interest for forbearance, is evidence of an acceptance of the promise, is a question of fact. If, under all the circumstances in evidence throwing light upon the question, it is reason- able to believe the party acted upon the faith of and pursuant to the promise, a jury would be justified in finding that he so acted, — otherwise not. * * * If the question were whether there was an express accept- ance by words, there would be no difficulty in perceiving the ques- tion to be purely one of fact." Edger- ton v. Weaver, 105 111. 43. ^ "Such agreement may be express, or implied by law. The question, we think, has been between the mere fact of for- bearance, without any promise to for- bear; and a forbearance in conform- ity with such express or implied agreement. * * * Whether there was an implied agreement to forbear is a question of fact depending on the circumstances ; and if they are such as lead to a natural and reason- able conclusion that the new security or other new promise was given to induce the creditor to forbear, and he did in fact forbear, a jury may find that there was such implied agree- ment or understanding, upon which a 407 CONSIDERATION. 235 While it is definitely settled that a promise to refrain from resorting to legal means to enforce a valid obligation may fur- nish a sufficient consideration for a promise, yet if the claim threatened to be enforced is invalid and virorthless, a prom- ise not to attempt to enforce or to refrain from making trouble concerning it is not a consideration recognized by the law as valu- able." This doctrine vi^as originally given a rigorous application, but it has been very materially modified by subsequent cases, and it is now held that it is not necessary in a suit on a promise given in consideration of a forbearance from suit that it should appear that there was a good cause of action or a fair and reasonable ground of success in the threatened suit. Forbearance to sue on a claim known to be frivolous and vexatious is not a sufficient consideration for the reason that the promotion of such suit would be or could be found to be either fraudulent or wanting in good faith, but, short of that, forbearance to sue is a good court will hold that there was a good and legal consideration to give effect to the new promise." Boyd v. Freize, 5 Gray (Mass.) 553. '" Stone V. Wythipol, Cro. Eliz. 126 ; Tooley v. Windham, Cro. Eliz. 206; King V. Hobbs, Yelv. 26 ; Goodwin v. Willoughby, Lat. 141 S. C. Pohp. 177 ; Hammon v. Roll, Mar. 202; Atkin- son V. Settree, Willes 482; Barber v. Fox, 1 Vent. 1S9, 2 W. Saund. 136; Loyd v. Lee, 1 Strange 94; Wade V. Simeon, 2 C. B. 548; Her- ring V. Dorell, 8 Dowl. 604; Nelson V. Searle, 4 Mees. & Wels. 795 ; Smith V. Jones, Yelv. 184; Davis v. Wright, I Vent. 120, 2 Lev. 3 ; Rosyer v. Lang- dale, Style, 248; Jones v. Ashburn- ham, 4 East. 455 ; Edwards v. Baugh, II M. & W. 641. Forbearance after instituting suit is upon the same foot- ing as forbearance before suit is brought. In both cases the claim must not be unfounded. Wade v. Simeon, 2 C. B. 548; Martin v. Black's Exrs., 20 Ala. 309; Didlake v. Robb, 1 Woods 680, Fed. Cas. No. 3899; McElven v. Sloan & Co., 56 Ga. 208; Cline V. Templeton, 78 Ky. 550, 1 Ky. L. 276; Schroeder v. Fink, 60 Md. 436; Taylor v. Weeks, 129 Mich. 233, 88 N. W. 466; Anderson v. Nystron (Minn.), 13 L. R. A. (N. S.) 1141, 114 N. W. 742; Oregon &c. R. Co. v. Potter, 5 Ore. 228; Sidwell v. Evans, 1 Pen. & W. (Pa.) 383, 21 Am. Dec. 387. Forbearance to attach a debtor's goods is no consideration for a prom- ise when there was no valid ground for attachment. Bates v. Sandy, 27 111. App. 552 ; Smith v. Fasten, 54 Md. 138, 39 Am. Rep. 255 ; Rood v. Jones, I Dougl. (Mich.) 188; Wierman v. Bay City Mich. Sugar Co., 142 Mich. 422, 106 N. W. 75, 12 Detroit Leg. N. 839. An agreement to pay a specified sum upon a claim the validity of which is disputed and had been ad- judicated against the complainant is not supported by a promise to pay the same in the absence of any additional consideration being given the prom- isor. Hargarten v. Berz, 126 111. App. 368; Palfrey v. Portland &c. R. Co., 86 Mass. 55; Jacobs v. Curtis (Pa.), II Leg. Int. 27. A promise to pay a claim if the promisee will forbear an attempt to enforce a lien which has been lost creates no cause of ac- tion. Dunham v. Johnson, 135 Mass. 310; Lindsey v. Sellers, 26 Miss. 169. In order for a promisor to avail him- self of such a defense he must show conclusively that the suit which was a foundation of the promise could not have been prosecuted with effect. Gould V. Armstrong, 2 Hall (N. Y.) 266. § 236 CONTRACTS. 408 consideration for a promise founded thereon. It is only essential that the claim be doubtful either in law or equity and asserted in good faith. ^' § 236. Extension of time. — An extension of time/* whether for a definite'" or reasonable period/" in which to pay a debt constitutes a valuable consideration. If no time is men- tioned it will be presumed that a reasonable time was intended f- and in such case forbearance to sue for a reasonable time in ac- cordance with the promise and in reliance thereon is sufficient.*^ " Longridge v. Dorville, 5 B. & Aid. 117, 7 E. C. L. 74; Callisher v. Bisch- offshein, L. R. 5 Q. B. 449; Cook v. Wright, 1 B. & S. 559, 4 L. T. 704; Matthews v. Morris, 31 Ark. 222; Macklin v. Dwyer (Mass.), 91 N. E. 893; Rue v. Meirs, 43 N. J. Eq. 377, 12 Atl. 369; Springstead v. Nees, 125 App. Div. .(N. Y.) 230, 109 N. Y, S. 148. Forbearance to sue on a claim which the creditor honestly be- lieves to be valid will support a prom- ise by a third person to pay the same, even though the claim is not valid. Di Oiorio v. Di Brazio, 21 R. I. 208, 42 Atl. 1114. In a suit for damages where the plaintiff's claim was dis- puted and doubtful, a suit was threat- ened. The waiver of a right to sue was sufficient for the defendant's promise to pay damages although there was in fact no legal liability for such damages. Snohomish River Boom Co. V. Great Northern R. Co. 57 Wash. 693, 107 Pac. 848. " Lipsmeier v. Vehslage, 29 Fed, 175 ; Janis v. Roentgen, 59 Mo. App, 75 ; Virginia-Carolina &c. Co. v. Mc- Nair, 139 N. Car. 326, 51 S. E. 949 Ford V. Rehman, Wright (Ohio) 434; Lonsdale v. Brown, 4 Wash. C, C. 148, Fed. Cas. No. 8, 494. '"Lyons v. Donkin, 23 N. S. 258 Hobson V. Hassett, 76 Cal. 203, 18 Pac. 320, 9 Am. St. 193. An exten- sion of one day has been held suffi- cient to support a note. Whelan v. Swain, 132 Cal. 389, 64 Pac. 560; Tuttle v. Bigelow, 1 Root (Conn.) 108, 1 Am, Dec. 35; Martin v. Stub- bings, 126 111. 387, 18 N. E. 657, 9 Am. St. 620 ; Wickham v. Hvde Park Loan Assn., 80 111. App. 523 ; Sweeney v, Kaufman, 64 III. App. 151, affd, 168 111. 233, 48 N. E. 144; Burke v. Dillin, 92 Iowa 557, 61 N. W. 370; Whitt v. Bailey (Ky.), 59 S. W. 514; Pulliam V. Withers, 8 Dana (Ky.) 98, 33 Am. Dec. 479; Wooley v. Cobb, 165 Mass. 503, 43 N. E. 497; Union Trust Co. V. Conus, 129 Mich. 156, 88 N. W. 407 ; Lundburg v. Northwestern Ele- vator Co., 42 Minn. 37. 43 N. W. 685; Peterson v. Russell, 62 Minn. 220, 64 N. W. 555, 54 Am. St. 634, 29 L. R. A. 612; Smith v. Richardson, 77 Mo. App. 422; Murdock v. Lewis, 26 Mo. App. 234 ; Farmers &c. Bank v. Wallace, 45 Ohio St. 152, 12 N. E. 439; Brainard v. Harris, 14 Ohio 107, 45 Am. Dec. 525 ; Hamaker v. Eber- lev, 2 Binn. (Pa.) 506, 4 Am. Dec. 477; Sidwell v. Evans, 1 Pen. & W. (Pa.) 383, 21 Am. Dec. 387; Walker V. Cole (Tex. Civ. App.), 28 S. W. 1012; Washburn Co. v. Thompson, 99 Wis. 585, 75 N. W. 309. '"Morgan v. Park National Bank, 44 111. App. 582. An agreement to delay "a short time" has been held too indefinite and uncertain and no consideration. Gates v. Hackethal, 57 111. 534, 11 Am. Rep. 45, "■ Moore v. McKenney, 83 Maine 80, 21 Atl. 749, 23 Am, St. 753 ; Traders' Nat. Bank v. Parker, 130 N. Y. 415, 29 N, E. 1094. ''Marshall v. Old, 14 Colo. App. 32, 59 Pac. 217; Breed v. Hillhouse, 7 Conn. 523; Hoffmann v. Mayaud, 93 Fed. 171, 35 C. C. A, 256; Mc- Micken v. Safford, 197 111. 540, 64 N. E. 540, affg. 100 111, App. 102; Webbe v. Romona Oolitic Stone Co,, 58 111, App, 222 ; Cooper v, Jack- son, 22 Ky, L. 295, 57 S. W. 254; Moore v. McKennev, 83 Maine 80, 21 Atl, 749, 23 Am. St. 753; Haskell 409 CONSIDERATION. § 236 The promise to extend the time must be supported by a considera- tion."*^ If the creditor is promised nothing but that which he is already legally entitled to, there is no consideration for the prom- ised extension and it may be abrogated at any time.*''^ But when V. Tukesbury, 92 Maine 551, 43 Atl. 500, 69 Am. St. 529; Howe v. Tag- gart, 133 Mass. 284. "^ An agreemnt to extend the time of a payment, without a consideration for it, is not binding on the parties. Jones V. Chamberlain, 97 111. App. 328. A proposition for an extension of the time for the payment of a note by the payee, to be valid, must be for a valuable consideration, accepted by the payor, and relied upon by the payee. Ott v. Anderson, 9 Kans. App. 320, 61 Pac. 330; Powe v. Klein, 89 Maine 376, 36 Atl. 620 ; Hilderbrandt v. Fallott, 46 Misc. (N. Y.) 615, 92 N. Y. S. 804 ; Benedict v. Pincus, 134 App. Div. (N. Y.) 555, 119 N. Y. S. 266 (agreement by broker entitled to commissions he had earned by pro- curing a tenant for premises to await payment thereof until the tenant paid the stipulated rent). See also, Swee V. Newmann, 67 Misc. (N. Y.) 605, 123 N. Y. S. 776 (subsequent agree- ment by real estate broker to take less commission or wait until time for the execution of the contract of sale). Compare the two foregoing cases with Glade v. Ford, 131 Mo. App. 164, 111 S. W. 135 (where the owner re- fused to sell on the terms offered un- less the brokers would wait for one- half of their commission until the purchase-money notes were collected). Payment of part of a debt or the in- terest already accrued is not a suffi- cient consideration to support a prom- ised extension of time. Peachy v. Witter, 131 Cal. 316, 63 Pac. 468. =^aln Miller v. Holbrook, 1 Wend. (N. Y.) 317, it was held that a promise to extend was not valid unless founded upon a good and sufficient considera- tion; also, "the promise of a maker to pay part of a note when due, and payment in pursuance thereof, is not such sufficient consideration." In Gib- son V. Renne, 19 Wend. (N. Y.) 389, the question of the sufficiency of_ a consideration to support a promise was raised, and, in dealing with it, Bronson, J., said : "The debt was due. The debtor says to the creditor, you promised, in consideration that I would discharge in part an existing and present duty, that you would give further time for the satisfaction of the residue. I cannot understand how this makes a good consideration for the promise. The discharge of a legal obligation by the debtor to the creditor cannot be such an injury to the one, or benefit to the other, as will make what the law calls a 'sufficient consideration' for an agreement." In Manchester v. Van Brunt, City Ct. (N. Y.), 19 N. Y. S. 685, it was said : "The promise to extend the time of payment of the note was void unless founded upon a good consideration, and the payment of $100, part of the amount due on the note, was not a good consideration for such promise." In Pabodie v. King, 12 Johns. (N. Y.) 426, a partial payment was made upon the plaintiff's debt, and it was claimed there was an agreement in considera- tion thereof to "forbear to sue." The court said : "The promise to forbear was a nudum pactum. In paying the fifty dollars, King did no more than he was legally bound to do; and the promise, on the part of Pabodie, was without any benefit to him, and occa- sioned no loss to King." Part pay- ment of wages due employees. Skin- ner V. Garnett Gold Min. Co., 96 Fed. 734; Fain v. Turner's Admr., 96 Ky. 634, 29 S. W. 628; Kronschnabel- Smith Co. V. Kronschnabel, 82 Minn. 230, 91 N. W. 892. An executory agreement by the plaintiff with the de- fendant to accept in payment less than the whole amount of the debt is not obligatory without a fresh con- sideration to support it. No payment of a part of the sum agreed on will serve as a consideration. Blalock V. Jackson, 94 Ga. 469, 20 S. E. 346. An agreement to extend the time for payment based only on a promise to pay interest regularly is void. Mc- Cann v. Lewis, 9 Cal. 246; Helms v. Crane, 4 Tex. Civ. App. 89, 23 S. W. '§ 236 CONTRACTS. 410 the debtor does or promises more than his contract calls for/* or when a third person'^ promises to do or forbear some act in con- sideration of the extension of time to the debtor, there is a con- sideration sufficient to support the agreement. Thus as between the original parties the debtor's promise to pay either back interest on a non-interest bearing debt,** or, if the debt does not carry interest, a promise to pay interest during the extension of time,*' or to pay an increased rate of interest,*^ will each of them support an agreement to grant an extension of time to the promisor. A promise to grant an extension of time is binding if made in consideration of the payment of the same rate of interest in advance,*" or the same rate of interest as is called for by the original agree- ment, provided there is an agreement, either expressed or implied, to pay the same or a different rate during the entire time granted."" Those promises, however, where an extension of 392. The creditor must accept the terms and agree to forbear. Blumen- tal V. Tibbits, 160 Ind. 70, 66 N. E. 159; Manter v. Churchill, 127 Mass. 31 ; First National Bank v. Cecil, 23 Ore. 58, 31 Pac. 61, 32 Pac. 393. For- bearance without an agreement on the part of the creditor to forbear is not a sufficient consideration for a guar- anty of the debt. Hoffman v. May- ard, 93 Fed. 171. See also, Russell v. Buck, 11 Vt. 166. The extension must be granted at the instance of the promisor and in reliance on such promise. Oilman v. Ferguson, 116 111. App. 347. " Bedford's Exr. v. Chandler, 81 Vt. 270, 69 Atl. 874. ''Martin v. Black's Exrs., 20 Ala. 309 ; In re Burchell, 4 Fed. 406 ; King V. Upton, 4 Greenl. (Maine) 387, 16 Am. Dec. 266; Elting v. Vanderlyn, 4 Johns. (N. Y.) 237; Gansevoort Bank V. Altshul, 26 Misc. (N. Y.) 6, 55 N. Y. S. 733; Honsinger v. Mul- ford, 90 Hun (N. Y.) 589, 35 N. Y. S. 986, affd., 157 N. Y. 674, 51 N. E. 1091 ; Cathcart v. Thomas, 55 Tenn. 172, '» Hutton V. Edgerton, 6 S. Car. 485. ''Moore v. Redding, 69 Miss. 841, 13 So. 849. "Taylor v. Thomas, 61 Ga. 472; Austin V. Bainter, 50 111. 308; Beck- ner v. Carey, 44 Ind. 89; Royal v. Lindsay, 15 Kans. 591 ; Glidden v. Chamberlin, 167 Mass, 486, 57 Am. St. 479; Smith v. Graham, 34 Mich. 302; Clarkson v. Creely, 35 Mo. 95 ; Knapp V. Mills, 20 Tex. 123; Marine &c. Mfg. Co. V. Bradley, 105 U. S. 175, 26 L. ed. 1034. Where the time of payment is extended in consideration of the payment of a sum exceeding the interest past due such agreement is binding. Schoonhoven v. Pratt, 25 111. 379. "Warner v. Campbell, 26 111. 282; Williams V. Scott, 83 Ind. 405 ; Hub- bard V. Ogden, 22 Kans. 363 ; Preston V. Henning, 6 Bush (Ky.) 556; Lime- rock Bank v, Mallett, 34 Maine 547; Nelson v. Brown, 140 Mo. 580, 41 S. W. 960, 62 Am. St. 755; Wright v. Bartlett, 43 N. H. 548; Bank of Brit- ish Columbia v. Jeffs, 18 Wash. 135, 51 Pac. 348, 63 Am. St. 875. °°Rees V. Berrington, 2 Ves. Jr. 543; Stallings v. Johnson, 27 Ga. 564; Reynolds v, Barnard, 36 111. App, 218; Pierce v. Goldsberry, 31 Ind. 52 ; Rob- inson V. Miller, 2 Bush (Ky.) 179; Chute V, Pattee, 37 Maine 102 ; Shay- ler V. Giddins, 122 Mich. 659, 81 N. W. 552; Keirn v. Andrews, 59 Miss. 39; Marfluardt Bank v. Freund, 80 Mo. App. 657, 2 Mo. App. 693 ; Owen V. Bray, 80 Mo. App. 526; Fowler v. 411 CONSIDERATION. 2.^6 time is granted in consideration of a promise to pay the same rate of interest during such extension, are upheld on the ground that the payer waives his right to stop interest by paying the debt at any time after maturity, and binds himself to pay interest for such further and definite time. He thereby assumes an obligation which was not before imposed upon him, and the holder of the note acquires an additional substantial right — that of refusing payment and exacting interest for the full period of extension." In certain cases this latter element was not involved, and by them it is held that a promise to give a debtor time, on condition that he continue paying the same rate of interest, is inoperative and unsupported by a sufficient consideration."^ Brooks, 13 N. H. 240; Davis v. Lane, 10 N. H. 156; Fawcett v. Freshwater, 31 Ohio St. 637; Wood v. Newkirk, 15 Ohio St. 295; McComb v. Kit- tridge, 14 Ohio 348. In many cases, which seemingly support the contrary doctrine, there was a mere promise by the creditor to forbear, without any corresponding promise on part of the debtor not to pay during the time of the promised forbearance. In such cases it is clear that there is no consideration for the promise. Angel V. Miller, 16 Tex. Civ. App. 679, 39 S. W. 1092; Benson v. Phipps, 87 Tex. 578, 29 S. W. 1061, where it is said: "Whether a mere agreement for an extension by the debtor is sufficient to support a promise to extend by the creditor is a question upon which the authorities are not in accord. We are of opinion, however, that the question should be resolved in the affirmative, at least in cases in which it is con- templated by the contract that the debt should bear interest during th* time for which it is extended. If the new agreement were that the debtor should pay, at the end of the period agreecf upon for the extension, pre- cisely the same sum which was due at the time the agreement was entered into, the case might be different. But a promise to do what one is not bound to do, or to forbear what one is not bound to forbear, is a good considera- tion for a contract. In case of a debt, which bears interest either by convention or by operation of law, when an extension for a definite per- iod is agreed upon by the parties thereto, the contract is that the cred- itor will forbear suit during the time of the extension, and the debtor fore- goes his right to pay the debt before the end of that time. The latter se- cures the benefit of the forbearance; the former secures an interest-bear- ing investment for a definite period of time. One gives up his right to sue for a period, in consideration of a promise to pay interest during the whole of the time ; the other relin- quishes his right to pay during the same period, in consideration of the promise of forbearance. To the ques- tion why this is not a contract, we think no satisfactory answer can be given. It seems to us it would be a binding contract, even if the agree- ment were that the debt should be ex- tended at a reduced rate of interest. That an agreement by the debtor and creditor for an extension for a defi- nite time, the debt to bear interest at the same rate, or at an increased, but not usurious, rate, is binding upon both, is held in many cases." Zapalac v. Zapp, 22 Tex. Civ. App. 375, 54 S. W. 938; Nelson v. Flagg, 18 Wash. 39, 50 Pac. 571. " Eaton v. Whitmore, 3 Kans. App. 760, 45 Pac. 450. In the above case the interest to be paid during the ex- tension was to be less than that called for by the original agreement. Nel- son V. Flagg, 18 Wash. 39, SO Pac. 571. "'Crossman v. Wohlleben, 90 111. 537; Holmes v. Boyd, 90 Ind. 332 Hunt V. Postlewait, 28 Iowa 427 Wilson V Powers, 130 Mass. 127 236 CONTRACTS. 41- In case the debtor agrees to furnish his creditor with security for the debt this is sufficient to support a promise by the creditor to extend the time of payment of such debt.°^ Likewise, an agreement to extend the time of payment of a debt is sufficient consideration for the execution, by a third party, of his note to tlie creditor as collateral security for the payment of such debt."* Such an agreement entered into at the instance of a third person will support a direct promise by that person to pay the debt,"^ or to become surety for it."" Hale V. Forbis, 3 Mont. 395 ; Kellogg V. Olmsted, 25 N. Y. 189; Stickler v. Giles, 9 Wash. 147. 37 Pac. 293. "'Union Trust Co. v. Conus, 129 Mich. 156, 88 N. W. 407; Martin v. Nixon, 92 Mo. 26, 4 S. W. 503 ; Penn- sylvania Coal Co. V. Blake, 85 N. Y. 226; Red River Nat. Bank v. Barnes, (sub nomine, North Star &c. Shoe Co.), « N. Dak. 432, 79 N. W. 880; Ament v. Sarver, 2 Grant (Pa.) 34; Mansur &c. Co. v. Beer, 19 Tex. Civ. App. 311, 45 S. W. 972; Washburn Co. V. Thompson, 99 Wis. 585, 75 N. W. 309. An agreement to extend the time of payment of the note first ma- turing was a valid and sufficient con- sideration for a promise to pay that note, and a second note at the time of the expiration of the extension agreed upon (Brown v. First Nat. Bank, 115 Ind. 572, 18 N. E. 56), giving time for the payment of a judgment, will sup- port an agreement by the judgment debtor to pay plaintiff's attorney's fees. Brainard v. Harris, 14 Ohio 107, 45 Am. Dec. 525. A promise to pay the remainder of a judgment on a certain day if plaintiff would not issue execution is supported by a sufficient consideration. Fraser v. Backus, 62 Mich. 540, 29 N. W. 92. Where the holder of a claim was told by the debtor that if he would wait until the final disposition of his property he (the debtor) would see that he was well paid, and well paid for waiting, and the claimant consents to do so, the agreement is based on a sufficient consideratiop and therefore valid. Davis V. Teachout, 126 Mich. 135, 85 N. W. 475, 86 Am, St. 531. An agree- ment whereby a creditor promised to give time for the payment of a joint debt is consideration for a promise by one of the debtors to pay the debt by applying it to a note owed by the creditor to the joint debtor individ- ually. Hawes v. Woolcock, 26 Wis. 629. And where a surety consented to an extension of time on condition that the creditor would procure a chattel mortgage from the debtor to secure the debt, the court says, "It needs the citation of no authority that if the transaction was of advan- tage to Waterman or detrimental but to the disadvantage of Resseter, it would form a sufficient consideration for the promise. That Resseter was induced thereby to assent to the ex- tension of time of payment to Serve- son's property, which, by the failure of Waterman to keep his promise and subsequent conduct in violation of it subjected Resseter to the loss, is not questioned." Resseter v. Waterman, 151 111. 169, 37 N. E. 875. "In re Burchell, 4 Fed. 406; Nich- ols &c. Co. v. Dedrick, 61 Minn. 513, 63 N. W. 1110. " Martin v. Black, 20 Ala. 309 ; San- ders v. Barlow, 21 Fed. 836; Haskell V. Tukesbury, 92 Maine 551, 43 Atl. 500, 69 Am. St. 529; Russell v. Bab- cock, 14 Maine 138; Cook v. Du- vall, 9 Gill (Md.) 460; Lent v. Pan- delford, 10 Mass. 230, 6 Am. Dec. 119; Illinois Roofing &c. Co. v. Cribbs, 142 Mich. 689, 106 N. W. 274; Calkins v. Chandler, 36 Mich. 320, 24 Am. St. 593; German Sav. Bank v. Brodsky, 82 App. Div. (N. Y.) 635, 78 N. Y. S. 910, 39 Misc. (N. Y.) 100, 81 N. Y. S. 1126; Hon- singer v. Mulford, 90 Hun (N. Y.) 589, 35 N. Y. S. 986; Di Orio v. Di- Brazia, 21 R. I, 208, 42 Atl. 1114. "Cathcart v Thomas, 55 Tenn. 172; Dahlman v. Hammel, 45 Wis. 466. 413 CONSIDERATION. § 237 § 237. Compromise of disputed claims. — The compromise of a claim which is asserted in good faith and under color of right" is conclusive and binding on the parties thereto when the claim is doubtful,"'^ and the compromise made in settlement "Miles V. New Zealand Alford Es- 45; Johnson v. Redwine, 98 Ga. 112, tate, L. R. 32 Ch. Div. 266; Allen v. 25 S. E. 924; Frank v. Heaton, 56 Prater, 35 Ala. 169; Ernst v. HoUis, 111. App. 227; Honeyman v. Jarvis, 86 Ala. 511, 6 So. 85; Ware v. Mor- 79 III. 318; Cassell v. Ross, 33 111. gan, 67 Ala. 461; Vane v. Towle, 5 244, 85 Am. Dec. 270 ; Bement v. May, Idaho 471, SO Pac. 1004; Adams v. 135 Ind. 664, 34 N. E. 327; Smith v. Crown Coal &c. Co., 198 111. 445, 65 Cedar Rapids &c. R. Co., 43 Iowa N. E. 97; Bement v. May, 135 Ind. 239; Sullivan v. Collins, 18 Iowa 228; 664, 34 N. E. 327, 35 N. E. 387; French v. French, 84 Iowa 655, 51 Emery v. Royal, 117 Ind. 299, 20 N. N. W. 145, 15 L. R. A. 300; Rowe E. 150; United States &c. Co. v. v. Barnes, 101 Iowa 302, 70 N. W. Henderson, 111 Ind. 24, 12 N. E. 88; 197; Western &c. Ins. Co. v. Quinn, Harris v. Cassady, 107 Ind. 158, 83 130 Ky. 397, 113 S. W. 456; Reinecke N. E. 29; Smith v. Boruff, 75 Ind. v. Bailey, 33 Ky. L. 977, 112 S. W. 412 ; Sweitzer V. Heasley, 13 Ind. App. 569; Read v. Hitchings, 71 Maine 567, 41 N. E. 1064; Keefe v. Vogle, 590; Melcher v. Ins. Co., 97 Maine 36 Iowa 87; Hurst v. Taylor, 32 Ky. 512, 55 Atl. 411; Adams v. Wilson, L. 1051, 107 S. W. 743; Keley v. 12 Mete. (Mass.) 138, 45 Am. Dec. Peter &c. Stone Co., 130 Ky. 530, 240; Prout v. Pittsfield Fire Dist., 113 S. W. 486; Melcher v. Ins. Co. 154 Mass. 450, 28 N. E. 679; Demars of Pa., 97 Maine 512, 55 Atl. 411; v. Muser-Sauntry &c. Co., 37 Minn. Gates V. Shutts, 7 Mich. 127 ; Nei- 418, 35 N. W. 1 ; Osborne v. Fridrich, bles V. Minneapolis &c. R. Co., 37 134 Mo. App. 449, 114 S. W. 1045; Minn 151, 33 N. W. 332; Osborne v. Gering v. School District, 76 Nebr. Fridrich 134 Mo. App. 449, 114 S. 219, 107 N. W. 250; Pitkin v. Noyes, W. 1045; Rue v. Neirs, 43 N. J. Eq. 48 N. H. 294, 2 Am. Rep. 218, 97 377, 12 Atl. 369; Trenton St. R. Co. Am. Dec. 615. In the case of Rus- V. Lawlor, 74 N. J. Eq. 828, 71 Atl. sel v. Cook, 3 Hill (N. Y.) 504, the 234, 74 Atl. 668 ; Zoebisch v. Von J\Iin- compromise of a disputed claim, not den, 120 N. Y. 406, 24 N. E. 795 ; in suit, was held to sustain a promise. Silb'erman v. Horowitz, 114 N. Y. S. Judge Cowan there says: "No one 1 ; McGlynn v. Scott, 4 N. Dak. 18, 58 would think of denying, that at least N. W. 460 ; Fryer v. Cetnor, 64 N. the dispute between parties was doubt- Dak. 518, 72 N. W. 909; Smith v. ful, and that probably the law was Farra, 21 Ore. 395, 28 Pac. 241, 20 against the defendants on the facts L. R.' A. 115;' Anthony v. Boyd, 15 disclosed by their evidence. It is r". I. 495, 8 Atl. 701, 10 Atl. 657 ; enough, however, that it was doubt- Bellows V. Sowles, 55 Vt. 391, 45 ful." This language would indicate Am. Rep. 221. See also, Morey v. that the word doubtful, as used, in Newfane, 8 Barb. (N. Y.) 645. this connection, has some meaning— °' Satchfield v. Laconia Levee Dist., that the claim must have some prob- 74 Ark. 270, 85 S. W. 409 ; Mason able foundation^must be really doubt- V. Wilson, 43 Ark. 172; Lee v. Swill- ful. This being so, if the case, in- ing 68 Ark. 82, 56 S. W. 447; Union stead of being doubtful, is clear in Collection Co. v. Buckman, ISO Cal. the JTidgment of the court and free 159 88 Pac 708, 9 L. R. A. (N. S.) from doubt against the claim, it fol- 568n, 119 Am. St.'l64, 11 Am. & Eng. lows that the compromise could not be Cas ' 609 • Swem v. Green, 9 Colo, sustained. See in connection with 358 12 Pac 202. If the parties con- the above, Morey v. Newfane, 8 sider the claim doubtful it is suffi- Barb. (N. Y.) 645; Wahl v. Barnum, cient to make it the subject of a 116 N Y 87, 22 N. E. 280 5 L R. compromise. City Elect. R. Co. v. A. 623; White v. Hoyt 73 N. Y. SOS; Floyd County, 115 Ga. 655, 42 S. E. Crans v. Hunter, 28 N. Y. 289; § 237 CONTRACTS. 4I4 of a dispute,"" even though it may be ultimately found that the claimant could not have prevailed/ Nor will the court inquire into the adequacy or inadequacy of the consideration for a com- promise fairly and deliberately made.^ Even though one does not receive all that is legally due him, yet, where the sum actually due is in dispute, the avoidance of litigation is a sufificient consideration to support a settlement fairly made with full knowledge of all the facts.' But a compromise in which one party makes the entire concession, and receives nothing in return, is not mutual or binding.* Each party to the dispute must yield something.^ Therefore, the compromise of a claim which is clearly without foundation, and cannot be sus- tained either in law or equity, furnishes no consideration for a promise." A fortiori, a claim which is known by the claimant Moore v. Blanck, 71 Misc. (N. Y.) 259; Union Collection Co. v. Buck- 257, 129 N. Y. S, 1105. A void claim man, 150 Cal. 159, 88 Pac. 708, 9 L. R. cannot be considered doubtful. Mo- A. (N. S.) 568, 119 Am. St. 164n. rey v. Newfane, 8 Barb. (N. Y.) 645; See also, Hulse v. Hulse, 155 III. App. Dickey v. Jackson, 47 Ore. 531, 84 Pac. 343. 701 ; Gaynor v. Quinn, 212 Pa. 362, 61 = Smith v. Smith, 36 Ga. 184, 91 Atl. 944; Blake v. Peck, 11 Vt. 483. Am. Dec, 761; Bowers Hydraulic ™ Llewellyn v. Llewellyn, 3 D. & L. Dredging Co. v. Hess, 71 N. J. L. 318; Smyth v. Holmes, 10 Jur. 862; 327, 60 Atl. 362; Trenton St. R. Co. McKenna v. McKenna, 118 111. App. v. Lawlor, 74 N. J. Eq. 828, 71 Atl. 240; American Cent. Ins. Co. v. 234, 74 Atl. 668; Worcester Loom Sweetser, 116 Ind. 370, 19 N. E. 159; Co. v. Heald, 78 N. J. L. 172, 72 Atl. Bunnell v. Bunnell, 111 Ky. 566, 23 421; Stewart v. Ahrenheldt, 4 Denio Ky. L. 800, 64 S. W. 420, 65 S. W. (N. Y.) 189; Barnawell v. Thread- 607. A mere refusal to pay an un- gill, 56 N. Car. 50; Galusha v. Sher- disputed claim is not such a dispute man, 105 Wis. 263, 81 N. W. 495, 47 as will support a compromise. De- L. R. A. 417. mars v. Muser-Sauntry &c. Co., il ° Battle v. McArthur, 49 Fed. 715. Minn. 418, 35 N. W. 1 ; Fitzgerald v. * Red Cypress Lumber Co. v. Beall, Fitzgerald & Co., 44 Nebr. 463, 62 N. 5 Ga. App. 202, 62 S. E. 1056; Cruetz W. 899; Home Fire Ins. Co. v. Skou- v. Heil, 89 Ky. 429, 12 S. W. 926. mal, 51 Nebr. 655, 71 N. W. 290; ° Silander v. Gronna, IS N. Dak. Flannagan v. Kilcome, 58 N. H. 443 ; 552, 108 N. W. 544, 125 Am. St. 616. Williams v. Irving, 47 How. Pr. (N. "Jones v. Ashburnham, 4 East 455; Y.) 440; Dolcher v. Fry, Zl Barb. Ivy Coal &c. Co. v. Long, 139 Ala. (N. Y.) 152; Silander v. Gronna, 15 535, 36 So. 722; Prince v. Prince. 67 N. Dak. 552, 108 N, W. 544. 125 Am. Ala. 565 ; Ware v. Morgan, (^ Ala. St. 616; Duck v. Antle, 5 Okla. 152, 461; North v. Forest, 50 Conn. 47 Pac. 1056. The dismissal of an ac- 400; Schnell v. Nell, 17 Ind. 29, 79 tion to set aside a trust deed has Am. Dec. 453; Emery v. Royal, 117 been held consideration for a recon- Ind. 299, 20 N. E. 150; United States veyance of the trust property, and a Mortgage Co. v. Henderson, ill Ind. contract by its owner not to make a 24, 12 N. E. 88 ; Moon v. Martin, 122 will. Jones V. Abbott, 228 111. 34, 81 Ind. 211, 23 N. E. 668; Tucker v. N. E. 791. Ronk, 43 Iowa 80; Jennings v. Jen- 'I\Iurray Show Case &c. Co. v. nings (Iowa), 87 N. W. 726; Read Sullivan, 15 Cal. App. 475, 115 Pac. v. Hitchings, 71 Maine 590; Gunning 415 CONSIDERATION. ^n to be wholly without foundation, either in law or equity, cannot form the basis of a compromise.'' A claim may be compromised although a judgment has been rendered for it. It may still be considered as doubtful, the right of appeal existing to contest its validity.* However, if the compro- V. Royal, 59 Miss. 45, 42 Am. Rep. 350; House v. Callicott, 83 Miss. 506, 35 So. 761 ; Holladay-Klotz Land &c. I Co. V. Beekman Lumber Co., 136 Mo. App. 176, 116 S. W. 436; Wheeler v. Reynolds Land Co., 193 Mo. 279, 91 S. W. 1050; Haynes v. Thom, 28 N. H. 386; Sherman v. Barnard, 19 Barb. (N. Y.) 291; Fuller v. Green, 64 Wis. 159, 24 N. W. 907, 54 Am. Rep. 600. An agreement to pay a lessee a certain sum, in consideration that he surrender his rights under a void lease, is unenforcible. Con- queror Gold &c. Co. V. Ashton, 39 Colo. 133, 90 Pac. 1124. There are cases holding that the relinquishing of a right to litigate the question of law or fact involved in the dispute will furnish a consideration for a compromise, even though there was no liability which a court would en- force. Brown v. Jennett, 130 Iowa 311, 5 L. R._A. (N. S.) 725, 106 N. W. 747. It is held as a general rule that "the compromise of a doubtful claim asserted and maintained in good faith constitutes a sufficient con- sideration for a new promise, even though it may ultimately be found that the claimant could not have pre- vailed." Murray Show Case &c. Co. v. Sullivan, 15 Cal. App. 475, 115 Pac. 259, quoting from Union Collec- tion Co. V. Buckman, 150 Cal. 163, 88 Pac. 710, 9 L. R. A. (N. S.) 568, 119 Am. St. 164. The compromise of a suit upon a note claimed by the maker to be a forgery has been held binding. The settlement of the dis- pute, and not the alleged forged pa- per, was held a consideration for the compromise. Grant v. Chambers, 30 N. J. L. 323. 'Ex parte Banner, L. R. 17 Ch. Div. 480; Wade v. Simeon, 2 C. B. 548; Cook v. Wright, 30 L. J. Q. B. 321 ; Union Collection Co. v. Buck- man, 135 Cal. 159, 88 Pac. 708, 9 L. R. A. (N. S.) S68n, 119 Am. St. 164n, 11 Am.-Eng. Ann. Cas. 609; Bell v. Beam, 75 Cal. 86, 16 Pac. 521; Mc- Kinley v. Watkins, 13 111. 140 ; Walk- er v. Shepard, 210 111. 100, 71 N. E. 422 ; Adams v. Crown Coal Tow. Co., 198 111. 445, 65 N. E. 97; Melcher v. Ins. Co., 97 Maine 512, 55 Atl. 411; Headley v. Hackley, 50 Mich. 43, 14 N. W. 693; Sheldon v. Estate of Rice, 30 Mich. 296, 18 Am. Rep. 136 ; Gates V. Shutts, 7 Mich. 127; Carter White Lead v. Kinlin, 47 Nebr. 409, 66 N. W. 536; White v. Hoyt, Ti N. Y. SOS ; McGlynn v. Scott, 4 N. Dak. 18, 58 N. W. 460; Fryer v. Cetnor, 6 N. Dak. 518, 72 N. W. 909; Ormsbee V. Howe, 54 Vt. 182, 54 Am. Rep. 841; Davisson v. Ford, 23 W. Va. 617. However, if one party to the compromise knows that the other claims against him without a right, but rather than Htigate the question into such agreement, preferred to set- tle said claim, understandingly, freely and on equal terms with the claimant, the settlement will be sustained by the courts. Dailey v. King, 79 Mich. 568, 44 N. W. 9S9. See also, cases cited ante, in this note. 'Hanchet v. Ives, 171 111. 122, 69 111. App. 83, 49 N. E. 206; Prout v. Pittsfield Fire District, 154 Mass. 450, 28 N. E. 679; Gering v. School District, 76 Nebr. 219, 107 N. W. 250; Jeffries v. Mutual Life Ins. Co., 110 U. S. 305, 28 L. ed. 156, 4 Sup. Ct. 8. A claim may also be compromised after there has been a trial of the cause in which trial the jury dis- agreed. Stoddard v. Mix, 14 Conn. 12. See also, Livingston v. Dugan, 20 Mo. 102. But if the time for ap- peal has passed a compromise made in consideration of no appeal being taken it is without consideration. Denny v. Bean, 51 Ore. 180, 93 Pac. 693. § 237 CONTRACTS. 416 mise of a doubtful claim is obtained by fraud,* duress/" or mistake, provided such mistake is one of fact^^ and not law,^^ it will not furnish a consideration to support a prom- ise or contract based thereon. It is perhaps impossible to formu- late a general rule that will govern all the cases which have been cited on the subject of compromise. It would seem, however, that the good faith of the parties to the compromise instead of color of right has been finally adopted in England and in most of the states of this country as the test by which to determine the validity of a compromise. ^^ The rule most applicable to all the "Walker v. Shepard, 210 111. 100, made in order to procure a promisor's 71 N. E. 422; Tucker v. Roach, 139 release from prison cannot be avoided Ind. 275, 38 N. E. 822; Spahr v. Hoi- on the ground of duress. Clark v. lingshead, 8 Blackf. (Ind.) 415; Turnbull, 47 N. J. L. 265, 54 Am. Rep. Mills' Heirs v. Lee, 6 T. B. Mon. 157. Threats of prosecution and arrest (Ky.) 91, 17 Am. Dec. 118; Taylor do not of themselves constitute duress. V. Patrick, 1 Bibb (Ky.) 168; Barlow Dunham v. Griswold, 100 N. Y. 224, V. Ocean Ins. Co., 4 Mete. (Mass.) 3 N. E. 76. Money paid to revenue 270; North Nebraska Fair &c. Assn. officers for infringement of the reve- V. Box, 57 Nebr. 302, n N. W. 770; nue laws cannot be recovered on the Baker v. Spencer, 47 N. Y. 562; ground that it was paid under duress. Stewart v. Ahrenfeldt, 4 Denio (N. Atlee v. Backhouse, 3 M. & W. 633. Y.) 189; Stephens v. Splires, 25 N. ^^ Underwood v. Brockman, 4 Dana Y. 380; Truett v. Chaplin, 11 N. Car. (Ky.) 309, 29 Am. Dec. 407; Casville 178; Barnawell v. Threadgill, 56 N. Roller Mill Co. v. ^tna Ins. Co., 105 Car. 50; Brown v. Eccles, 2 Pa. Su- Mo. App. 146, 79 S. W. 720; North per. Ct. 192; Anthony v. Boyd, IS R. Nebraska &c. Assn. v. Box, 57 Nebr. I. 495, 8 Atl. 701, 10 Atl. 637; Fuller 302, 11 N. W. 770; In re Waters' Ap- v. Green, 64 Wis. 159, 24 N. W. 907, peal, 4 Walk. (Pa.) 52; Fink y.y 54 Am. Rep. 600; Oglesby v. Attriil, Smith, 170 Pa. 124, 32 Atl. 566, 50 105 U. S. 60S, 26 L. ed. 1186. A Am. St. 750. But see Rabun v. Pier- party, however, is not called upon to son, 23 La. Ann. 696 (obiter) ; Wells direct others' attention to the bearing v. Neff, 14 Ore. 66, 12 Pac. 84; of or meaning to be drawn from ficts Meinecke v. Sweet, 106 Wis. 21, 81 known to both. Daly v. Busk Tun- N. W. 986. nel R. Co., 129 Fed. 513, 66 C. C. A. " Coffee v. Emigh, 15 Colo. 184, 25 87. Compromise is presumed to te Pac. 83, 10 L. R. A. 125; Stover v. based upon a sufficient consideration. Mitchell, 45 III. 213 ; Knotts v. Pre- Doyle V. Donnelly, 56 Maine 26. ble, 50 111. 226, 99 Am. Dec. 514; "Vane v. Towle, 5 Idaho 471, 50 Gilek v. Sock, 33 111. App. 147; Em- Pac. 1004; Tucker v. Roach, 139 Ind. ery v. Royal, 117 Ind. 299, 20 N. E. 275, 38 N. E. 822; Baldwin v. Hutch- ISO; Smith v. Farra, 21 Ore. 395, 28 inson, 8 Ind. App. 454, 35 N. E. 711; Pac. 341, 20 L. R. A. 115; Warren v. Tavlor V. Patrick, 1 Bibb (Kv.) 168; Williamson, 8 Baxt. (Tenn.) 427; Holland v. Hoyt, 14 Mich. 238; Ger- Lewis v., Cooper, Cooke (Tenn.) 467. ing v. School District, 76 Nebr. 219, But see Underwood v. Brockman, 4 107 N, W. 250. A mere threat to sue Dana (Ky.) 309, 29 Am. Dec. 407; on a claim does not amount to duress. Warder v. Tucker, 7 Mass. 449, 5 Kiler V. Wohletz, 79 Kans. 716, 101 Am. Dec. 62. Pac. 474; Dunham v. Griswold, 100 "Murray Show Case &c. Co. v. N. Y. 224, 3 N. E. 76; Bolln v. Met- Sullivan, 15 Cal. App. 475, 115 Pac. calf, 6 Wyo. 1, 42 Pac. 12, 44 Pac. 259; Union Collection Co. v. Buck- 694, 71 Am. St, 898. A compromise man, ISO Cal. 159, 88 Pac. 708, 9 L. 417 CONSIDERATION. § 238 cases may therefore be stated thus, — the compromise of a claim which is asserted in good faith and of the vaHdity of which the parties at the time entertain a doubt, and about which there is a bona fide controversy, is a valuable consideration and will sup- port a promise or a contract. § 238. Delivery of property in trust. — A promise to exe- cute a trust based upon a delivery of the trust property to the promisor rests upon a sufficient consideration." Likewise, the delivery of property to another is sufficient consideration to up- hold a promise by the receiver to return it." It has also been held that a pledge of stock as security for an overdue note was sup- ported by a sufficient consideration.^* § 239. Incurring liabilities or obligations. — Damages, lia- bilities or obligations occasioned to one by the promise of another are sufficient consideration for such promise, and will make it binding although no actual benefit accrues to the promisor.^' If a gift is promised, and in reliance on such promise the promisee incurs a liability, obligation, or voluntarily sustains any detriment, the gift will be upheld." Thus payment of a promissory note, R. A. (N. S.) 568, 119 Am. St. 164n; 25 S. Dak. 577, 127 N. W. 590, 29 Osborne v. Fridrich, 134 Mo. App. L. R. A. (N. S.) 523. 449, 114 S. W. 1045; Bowers Hy- " Mascola v. Mantesanto, 61 Conn, draulic Dredging Co. v. Hess, 71 N. 50, 23 Atl. 714, 29 Am. St. 170; Beat- J. L. 327, 60 Atl. 362 ; Worcester ty's Estate v. Western College of To- Loom Co. V. Heald, 78 N. J. L. 172, ledo, 177 111. 280, 52 N. E. 432, 42 L. 72 Atl. 421. R. A. 797, 69 Am. St. 242 ; Lomax v. "Hart V. Miles, 4 C. B. (N. S.) Smyth, 50 Iowa 223; Choppin v. 371 ; Wadsworth v. Thompson, 3 Dauphin, 48 La. Ann. 1217, 20 So. Gilm. (111.) 423; Miller v. Upton, 6 681, 33 L. R. A. 133, 55 Am. St. 313; Ind. 53; Jenkins v. Bacon, 111 Mass. School Dist. v. Sheidley (sub nomine 373, 15 Am. Rep. 33; McCauley v. Stocking), 138 Mo. 672, 37 L.'R. A. Davidson, 10 Gill. (Minn.) 335; Rut- 406, 60 Am. St. 576; Bank of New gers V. Lucet, 2 Johns. (N. Y.) Cas. Hanover v. Bridgers, 98 N. Car. 67, 3 92; Robinson v. Threadgill, 35 N. S. E. 826, 2 Am. St. 317; Barrett v. Car. 39. See also, McSorley v. Coyle, Mahnken, 6 Wyo. 541, 48 Pac. 202, 71 40 Pa. Super. Ct. 560 (property of Am._ St. 953. See also, Hoffman v. St. the vendors given to agents of the Louis &c. Storage Co., 120 Mo. App. vendors with which such agents prom- 661, 97 S. W. 619 (agreement entered ised to discharge a lien on the prop- into by a contractor with a third per- erty sold which could not then be son which imposed liabilities on the paid). contractor not imposed on him by his " Clark v. Gaylord, 24 Conn. 484 ; contract with the city) . Leverenz v. Haines, 32 111. 357; Ames "Simpson Centenary College v. V. Taylor, 49 Maine 381 ; Lockwood Tuttle, 71 Iowa 596, 33 N. W. 74. See V. Bull, 1 Cow. (N. Y.) 322, 13 Am. also, ante, §§ 227, 203^ Voluntary sub- Dec. 539. scriptions, and What is meant by con- " State Banking &c. Co. v. Taylor, sideration. 27 — Contracts, Vol. I § 240 CONTRACTS. 418 given to enable the payee to quit work, cannot be resisted on the ground that it was without consideration if the payee abandons work in anticipation of such note being paid.^' So where the ad- ministrator of a decedent's estate agreed to loan the buyer of mortgaged chattels of the estate money with which to pay the mortgage debt and the sale would not have been consummated without the promise, the administrator's promise was held sup- ported by a sufficient consideration.^" § 240. Services. — The right to recover compensation for personal services rendered was early recognized, and it is thought by historians that in the latter part of the reign of Ed- ward I the king's court would have placed services rendered on the same footing with the delivery of a chattel which constituted the quid pro quo of other similar contracts.^^ At the present time it is hardly necessary to cite authorities to support the proposition that the performance of services which the promisee was under no legal obligation to perform, for the benefit of the promisor or for a third person at the promisor's request, is a valuable consid- eration and will support a return promise.^^ Nor is the validity "Ricketts V. Scothorn, 57 Nebr. 509, 81 Pac. 242, 108 Am. St. 107 51, n N. W. 365, 42 L. R. A. 794, (procuring divorce) ; Cory v. New- 73 Am. St. 491. Equitable estoppel is ton, 9 Colo. App. 181, 48 Pac. 156 the theory upon which these decisions (circulating petition) ; Collins v. are based. Hutchins, 2 Pennew. (Del.) 496, 47 "° Hedden v. Schneblin, 126 Mo. Atl. 1004 (searching for criminal that App. 478, 104 S. W. 887. has forfeited his bond) ; Wilson v. ""2 Pollock and Maitland Hist. Eng. Clonbrock Steam Boiler Co., 105 Fed. L. (2d ed. ) 211; 2 Street Foundations 846 (advertising a business) ; Sheppey of Legal Liability 23. v. Stevens, 177 Fed. 484 (using best ^^ Barley v. Buell, 70 Cal. 335, 11 efforts to break off a third person's Pac. 632; Steves v. Frazee, 19 Ind. relations with certain people); Han- App. 284, 49 N. E. 385; Harper v. R. cock v. McFarland, 17 Iowa 124 (con- Co., 15 Ky. 223, 22 S. W. 849; Murry structing cofferdam) ; Roberts v. V. Kennedy, 15 La. Ann. 385, 77 Am. Sayre, 22 Ky. (6 T. B. Mon.) 188 Dec. 189; Borden v. Curtis, 46 N. J. (recovering mortgaged slave); Trun- Eq. 468, 19 Atl. 127; Cowee v. Cor- die's Admr. v. Rieley, 17 B. Mon. nell, 75N. Y.91,31 Am. St. 428; Free- (Ky.) 396 (extra services and atten- land v. Bacon, 27 N. Y. St. 27J'', 7 N. tion given by jailer to prisoner) ; Col- Y. S. 674; Macfeaters v. Pattison, yer v. Hyden, 94 Ky. 180, 15 Ky. L. 188 Fa. St. 270, 41 Atl. 609. Exam- 101, 21 S. W. 868 (son moving in pies of services sufficient to uphold with and caring for a parent) ; Bras- a return promise, see Dexter v. Mc- well's Admr. v. Braswell, 109 Ky. 15, Clellan, 116 Ala. 37,_ 22 So. 461 (or- 58 S. W. 426 (caring for the business ganixing a corporation) ; Benton v. of another) ; Chick v. Trevett, 20 Holliday. 44 Ark. 56 (duties and re- Maine 7, Zl Am. Dec. 68 (erecting sponsibilities of foreclosing a mort- parsonage) ; Wilson v. Church, gage) ; Patrick v. Morrow, iZ Colo. 1 Pick. (Mass.) 23 (services rendered 419 CONSIDERATION. § 240 of the promise affected by the fact that the value of the reward received exceeded that of the services rendered.^^ A note made payable at the maker's death, given in consideration of the services rendered, will be enforced against the estate of the deceased.^* Nor will the fact that the payee received some compensation for such services during the payor's lifetime defeat recovery there- on." An agreement to pay for the services rendered in the ab- sence of any express agreement to that effect may be implied, if warranted by the circumstances.^" by a pauper) ; Rice v. Dwight Mfg. Co., 56 Mass. 80 (to perform services additional to those required by con- tract) ; Muir v. Kalamazoo Corset Co., ISS Mich. 624, 119 N. W. 1079 (selling out retail department and ex- ecuting a release for commission on sales) ; Young v. Ruhwedel, 119 Mo. App. 231, 96 S. W. 228 (contract with land agent for his services in finding a purchaser for land) ; Underwood Typewriter Co. v. Century Realty Co., 118 Mo. App. 197, 94 S. W. 787 (spending time and labor to procure a tenant) ; Wilson v. Moore, 13 Nebr. 240, 13 N. W. 217 (furnishing data in regard to claims) ; Title Guarantee &c. Co. V. Steinberg, 119 App. Div. (N. Y.) 28, 103 N. Y. S. 857 (serv- ices in searching title to premises) ; First Religious See. v. Stone, 7 Johns. (N. Y.) 112 (preaching the gospel) ; Archer v. McDuffie, 5 Barb. (N. Y.) 147 (selling land) ; Hamlin v. Whee- dock, 42 Hun (N. Y.) 530, 4 N. Y. St. 475 (in introducing customers to merchant) ; Lord v. Hull, il Misc. (N. Y.) 83, 74 N. Y. S. 711, affd., 80 App. Div. (N. Y.) 194, 80 N. Y. S. 321 (aiding firm of architects to get a contract) ; Smith v. McKenna, 53 Pa. St. 151 (erecting public defenses in time of war). Where services are rendered by one under no legal obli- gation to perform them, and the bene- ficiary makes an express promise to pay for such services, and in reliance on such promise the services are con- tinued, there is a consideration to sup- port the promise to pay. In re Cur- re/s Estate, 26 Pa. Super. Ct. 479. Where there was a dispute between two parties as to which one was en- titled to the possession- of a hopyard and the one in possession agreed to harvest the crop and hold it until the rights of the parties were determined by the courts, and the other agreed, in case the decision was in his favor, to pay the one in possession for his services, such agreement was sup- ported by a consideration ; the services rendered by the one in possession in harvesting the crop, holding it and foregoing the right to sell immediately were sufficient to uphold defendant's promise to pay therefor. Meyer v. Livesley (Ore), 107 Pac. 476. Neal's Exr. v. Gilmore, 79 Pa. St. 421 (an express agreement to pay a child wages on condition that he live with certain of his relation until attaining his majority) ; Texarkana Lumber Co. v. Lennard, 47 Tex. Civ. App. 116, 104 S. W. 506 (contract by employer for services of a physician in giving medical attention to employes) ; Hub- bel V. Olmstead, 36 Vt. 619 (adminis- tering an estate) ; Pond v. Pond's Es- tate, 79 Vt. 352, 65 Atl. 97 (daughter remaining at home and assisting with the work). "^ Earl V. Peck, 64 N. Y. 596. °* Stone V. Pennock, 31 Mo. App. 544; Worth v. Case, 42 N. Y. 362; Bentley v. Lamb, 112 Pa. St. 480, 4 Atl. 200, 56 Am. Rep. 330. See also, Drefahl v. Security Sav. Bank, 132 Iowa 563, 107 N. W. 179. ^°In re Clark's Appeal, 57 Conn. 565, 19 Atl. 332; Barthe v. Succes- sion of Lacroix, 29 La. Ann. 326, 29 Am. Rep. 330; Stone v. Pennock, 31 Mo. App. 544; Bentley v. Lamb, 112 Pa. St. 480, 4 Atl. 200, 56 Am. Rep. 330. ""Paynter v. Williams, 1 C. & M. 811, 3 Tyrw. 894; Friedman v. Sut- tle, 10 Ariz. 57, 85 Pac. 726, 9 L. R. A. (N. S.) 933; Dewolf v. Chicago, § 240 CONTRACTS. 42G If the services are gratuitous, or voluntarily rendered, how- ever, they are not a sufficient consideration to sustain an execu- tory promise.^' Services rendered to relatives, in the absence of an express agreement, are presumed to be gratuitous. It is pre- sumed that the service is rendered without intending to ask for compensation. The motives which prompt the service or the expectation which the doer hopes may be realized in no way affect the rule.^^ Thus, as between parent and infant child, the relation of the parties negatives the idea that the pay- ment was to be made for services rendered, and no compensation can be recovered.^** This same rule applies to adults where the child continues after attaining its majority to live with its par- ents, in the absence of any agreement or understanding, and where no circumstances warrant the inference that remuneration was to be made for the services rendered there is no legal liability 26 111. 443 ; Montgomery v. Downey, 116 Iowa 632, 88 N. W. 810; Daily v. Minnick, 117 Iowa 563, 91 N. W. 913, 60 L. R. A. 840; Pool v. Horner, 64 Md. 131, 20 Atl. 1036; Day v. Caton, 119 Mass. 513, 20 Am. Rep. 347; O'Connor v. Beckwith, 41 Mich. 657, 3 N. W. 166; McClary v. Michigan &c. R. Co., 102 Mich. 312, 60 N. W. 695; Crane v. Bandouine, 55 N. Y. 256; Baillard v. Rowan, 21 Misc. (N. Y.) 324; Hicks v. Burhans, 10 Johns. (N. Y.) 243; Blount v. Guthrie, 99 N. Car. 93, 5 S. E. 890; Seymour v. Marlboro, 40 Vt. 171; Wheeler v. Hall, 41 Wis. 447; Silverthorn v. Wy- lie, 96 Wis. 69, 71 N. W. 107. See also, ante, § 213, Past consideration. '' Polk V. Johnson, 160 Ind. 292, 66 N. E. 752, 98 Am. St. 274; In re Jones, 106 App. Div. (N. Y.) 334, 92 N. Y. Supp. 719, 94 N. Y. Supp. 627 ; In re Pinkerton Estate, 49 Misc. (N. Y.) 363, 99 N. Y. S. 492. See also. Conqueror Gold Min, &c. Co. v. Ash- ton, 39 Colo. 133, 90 Pac. 1124; Utah Sav. &c. Co. V. Bamberger, 29 Utah 370, 81 Pac. 887. "'Castle V. Edwards, 63 Mo. App. 564; Swires v. Parsons, S Watts & S. (Pa.) 357. "° Morris v. Simpson, 3 Houst. (Del.) 568; Poole v. Baggett, 110 Ga. 822, 36 S. E. 86 ; McNemar v. McNe- mar, 137 III. App. 504; Finch v. Green, 225 111. 304, 80 N. E. 318; Reeve's Estate v. Moore, 4 Ind. App. 492, 31 N. E. 44 ; Collins v. Williams, 21 Ind. App. 227, 52 N. E. 92 ; Tank V. Rohweder, 98 Iowa 154, 67 N. W. 106; In re Bishop's Estate, 130 Iowa 250, 106 N. W. dZl ; Coleman v. Simp- son, 2 Dana (Ky.) 166; Turner's Admr. v. Turner (Ky.), 38 S. W. 506; Conway v. Conway, 130 Ky. 218, 113 S. W. 94; Bixler v. Seelraan, 77 Md. 494, 27 Atl. 137 ; Lowe v. Lowe, 111 Md. 113, 73 Atl. 878; Harris v. Harris, 106 Mich. 246, 64 N. W. 15; Baxter v. Gale, 74 Minn. 36, 76 N. W. 954; Louder v. Hart, 52 Mo. App. Zll; Birch v. Birch, 112 Mo. App. 157, 86 S. W. 1106; Moore v. Moore, 58 Nebr. 268, 78 N. W. 495 ; Page v. Page, 1i N. H. 305, 61 Atl. 356, 6 Ann. Cas. 510; In re Cooper, 6 Misc. (N. Y.) 501, 57 N. Y. St. 704, 27 N. y. S. 425 ; In re Sworthout's Estate, 38 Misc. (N. Y.) 56, 76 N. Y. S. 961 ; In re Barhite's Appeal, 126 Pa. 404, 17 Atl. 617; Dash v. Inabniet, 53 S. Car. 382, 31 S, E. 297; Gorrell v. Taylor, 107 Tenn. 568, 64 S. W, 888; Beale V. Hall, 97 Va. 383, 34 S. E, 53; Coons V. Coons, 106 Va. 572, 56 S. E. 576; Pelton v. Smith, 50 Wash. 459, 97 Pac. 460; Ellis v. Gary, 74 Wis. 176, 42 N. W. 252, 4 L. R. A. 55, 17 Am. St. 125. 421 CONSIDERATION. § 240 to pay.'" It is also applicable to mutual services rendered by brothers or sisters/^ grandparents and grandchildren/^ uncle or aunt, nephew or niece,"^ in case they are living together as one family, or one is dependent upon the other.^* And where serv- ices are rendered by persons related by affinity they are presumed to be gratuitous. Thus as between parent and son-in-law or I °°Friermuth v. Friermuth, 46 Cal. 42; Wall v. Wall, 69 111. App. 389; Neish V. Gannon, 98 111. App. 248, affd., 198 111. 219, 64 N. E. 1000; Adams v. Adams' Admr., 23 Ind. SO; Hill V. Hill, 45 Ind. App. 99, 90 N. E. 331 ; Donovan v. DriscoU, 116 Iowa 339, 90 N. W. 60; Wise v. Outtrim, 139 Iowa 192, 117 N. W. 264, 130 Am. St. 301n; Dowell v. Dowell's Admr., 137 Ky. 167, 125 S. W. 283 ; Saunders V. Saunders, 90 Maine 284, 38 Atl. 172; Hialey v. Hialey's Estate, 157 Mich. 45, 121 N. W. 465 ; Ronsiek v. Boverschmidt's Admr., 63 Mo. App. 421; Carrell v. McDonell, 139 Mo. App. 450, 122 S. W. 1129; Moore v. Moore, 58 Nebr. 268, 78 N. W. 495; Munger v. Munger, 33 N. H. 581; Page V. Page, 73 N. H. 305, 61 Atl. 356, 6 Ann. Cas. 510; Smith v. Smith's Admr., 30 N. J. Eq. 564; Haberman V. Kaufer, 70 N. J. Eq. 381, 61 Atl. 976; In re Hughey, 7 N. Y. St. 732; More V. Shepard, 133 App. Div. (N. y.) 471, 117 N. Y. S. 1095; Grant v. Grant, 109 N. Car. 710, 14 S. E. 90; Wilkes V. Cornelius, 21 Ore. 348, 28 Pac. 135; Burgess v. Burgess, 109 Pa. St. 312, 1 Atl. 167; Newell v. Lawton, 20 R. I. 307, 38 Atl. 946; Harris v. Currier, 44 Vt. 468; West- cott V. Westcott's Estate, 69 Vt. 234, 39 Atl. 199; Harshberger's Admr. v. Alger, 31 Grat. (Va.) 52; Cann v. Cann, 40 W. Va. 138, 20 S. E. 910; Stansbury v. Stansbury's Admr., 20 W. Va. 23 ; Wells v. Perkins, 43 Wis. 160; Voss V. Voss, 134 Wis. 52, 113 N. W. 1097. '^ State V. Connoway, 2 Houst. (Del.) 206; Chapman v. Chapman, 87 111. App. 427; Fuller v. Fuller's Estate, 21 Ind. App. 42, 51 N. E. 373; Keegan v. Malone's Estate, 62 Iowa 208, 17 N. W. 461 ; Cochran v. Zach- ery, 137 Iowa 585, 115 N. W. 486, 16 L. R. A. (N. S.) 235n, 126 Am. St. 307, 15 Ann. Cas. 297; Price v. Price's Exr., 101 Ky. 28, 19 Ky. L. 211, 39 S. W. 429; Spencer v. Spencer, 181 Mass. 471, 63 N. E. 947; Martin v. Sheridan, 46 Mich. 93, 8 N. W. 722; Callahan v. Riggins, 43 Mo. App. 130 ; Moore v. Renick, 95 Mo. App. 202, 68 S. W. 936 ; Carpenter v. Weller, 15 Hun (N. Y.) 134; Taylor v. Taylor, 1 Lea (Tenn.) 83; Key v. Harris, 116 Tenn. 161, 92 S. W. 235, 8 Ann. Cas. 200; Morrissey v. Faucett, 28 Wash. 52, 68 Pac. 352. ""Murrell v. Studstill, 104 Ga. 604, 30 S. E. 750; Teeter v. Poe, 48 111. App. 158; In re Wells, 4 N. Y. St. 878; Dodson v. McAdam, 96 N. Car. 149, 2 S. E. 453, 60 Am. Rep. 408; In re Barhite's Appeal, 126 Pa. 404, 17 Atl. 617; Davis v. Goodenow, 27 Vt. 715. =' Hurst V. Lane, 105 Ga. 506, 31 S. E. 135; Collar v. Patterson, 137 111. 403, 27 N. E. 604; Hays v. Mc- Connell, 42 Ind. 285; Weir v. Weir's Admr., 3 B. Mon. (Ky.) 645, 39 Am. Dec. 487; Robinson v. McAfee's Es- tate, 59 Mich. 375, 26 N. W. 643; Sloan V. Dale, 90 Mo. App. 87 ; Hay- den V. Parsons, 70 Mo. App. 493 ; In re Galway's Estate, 19 Misc. (N. Y.) 92, 43 N. Y. Supp. 970; Hicks V. Barnes, 132 N. Car. 146, 43 S. E. 604; Def ranee v. Austin, 9 Pa. St. 309; Glenn v. Gerald, 64 S. Car. 236, 42 S. E. 155; Andrus v. Foster, 17 Vt. 556; Riley v. Riley, 38 W. Va. 283, 18 S. E. 569. See also, Hoflfman V. Condon, 134 App. Div. (N. Y.) 205, 118 N. Y. S. 899. ''As to services rendered by cous- ins each to the other, see Gallaher v. Vought, 8 Hun (N. Y.) 87; Neal's Exr. V. Gilmore, 79 Pa. St. 421. § 241 CONTRACTS. 422 daughter-in-law/^ brothers-in-law and sisters-in-law,^^ parent and step-child/' in case they are living together as one family,^* and services rendered by an adopted child/" or any de facto mem- bers of the family/" are presumed gratuitous.*^ § 241. Marriage. — Marriage is a valuable consideration/^ and will support an antenuptial agreement whereby the husband ^ JNIariner v. Collins, 5 Har. (Del.) its nature there may be a recovery. 290; Poole v. Baggett, 110 Ga. 822, Succession of Stuart, 48 La. Ann. 36 S. E. 86; Oxford v. McFarland, 3 1484, 21 So. 29. Ind. 156; Rogers v. Millard, 44 Iowa '"But there is no presumption that 466; Coe v. Wager, 42 Mich. 49, 3 the services rendered by a step-son- N. W. 248 ; Ramsey v. Hicks, S3 Mo. in-law or step-daughter-in-law were App. 190; Bonney v. Haydock, 40 N. gratuitous. Hardiman's Admr. v. J Eq. 513, 4 Atl 766; Heinz v. Ja- Crick, 131 Ky. 358, 115 S. W. 236, 133 cobi, 76 N. J. L. 189, 68 Atl. 1069; Am. St. 248n. McConnell v. McConnell, 75 N. H. '° Lang v. Dietz, 191 111. 161, 60 N. 385, 74 Atl. 875 ; Conger v. Van Aer- E. 841 ; Lunay v. Vantyne, 40 Vt. num, 43 Barb. (N. Y.) 602; Reid v. 501. Farrar, 6 N. Y. St. 199; Koebel v. "Walker v. Taylor, 28 Colo. 233, Beetson, 112 App. Div. (N. Y.) 639, 64 Pac. 192; Martin v, Martin, 101 98 N. Y. S. 408; Callahan v. Wood, III. App. 640, revd., 202 111. 382, 67 118 N. Car. 752, 24 S. E. 542; Lovet N. E. 1 ; Waechter v. Walters, 41 Ind v. Price, Wright' (Ohio) 89; In re App. 408, 84 N. E. 22; Ottoway v. Young's Estate, 148 Pa. 573, 24 Atl. Milroy,^ 144 Iowa 631, 123 N. W. 467; 124; Gerz v. Weber, 151 Pa. 396, 25 Frailey's Admr. v. Thompson, 20 Ky. Atl. 82; Sprague v. Waldo, 38 Vt. L. 1179, 49 S. W. 13 ; Graham v. Stan- 139; Williams v. Stonestreet, 3 Rand, ton, 177 Alass. 321, 58 N. E. 1023; (Va.) 559; Thompson v. Halstead, 44 Fitzpatrick v. Dooley, 112 Mo. App. W. Va._ 390, 29 S. E. 991 ; In re 165, 86 S. W. 719. Schmidt's Estate, 93 Wis. 120, 67 N. " It is a universal rule, however, W. 37. Contra, Wright's Admr. v. that before any of the before-men- Donnell, 34 Tex. 291. tioned presumptions will arise the "' Broughton v. Smart, 59 111. 440. parties must either live under the Contra, In re Russell's Estate, 7 same roof or the one be dependent Phila. (Pa.) 64; In re McCarty's Es- upon the other. Williams v. Will- tate, 9 Phila. (Pa.) 318. iams, 114 Wis. 79, 89 N. W. 835. "Murdock V. Murdock, 7 Cal 511; "Barrow v. Barrow, 2 Dick. 504; Kirchgassner v. Rodick, 170 Mass. Campion v. Cotton, 17 Ves. Jr. 271; 543, 49 N. E. 1015; Harris v. Smith, Nairn v. Prowse, 6 Beav. 752. In 79 Mich. 54, 44 N. W. 169, 6 L. R. A. Prewit v. Wilson, 103 U. S. 22, 26 L. 702 ; Baxter v. Gale, 74 Minn. 36, 76 ed. 360, the court said : "Now, mar- N. W. 954 ; Guenther v. Birkick's riage is not only a valuable considera- Admr., 22 Mo. 439; Williams v. tion, but as Coke says, there is no Hutchinson, 5 Barb. (N. Y.) 122, 3 other consideration so much respected N. Y. 312, 53 Am. Dec. 301 ; Satterly in the law." Andrews v. Andrews, 8 v. Dewick, 129 App. Div. (N. Y.) Conn. 79; Rockafellow v. Newcomb, 701, 114 N. Y. S. 354; Lantz v. Frey, 57 111. 186; Marmon v. White, 151 19 Pa. St. 366; Brown v. Cummings, Ind. 445, SI N. E. 930; State v. Os- 27 R. I. 369, 62 Atl. 378; Nichols v. born, 143 Ind. 671, 42 N. E. 921; McCormick (Tex. Civ. App.), 35 S. Deary v. Deery, 74 Ind. 560; Wright W. 530; Wells v. Perkins, 43 Wis. v. Wright, 114 Iowa 748, 87 N. W. 160 ; Ellis V. Gary, 74 Wis. 176, 42 709, 55 L. R. A. 261 ; Kinnard v. Dan- N. W. 252, 4 L. R. A. 55, 17 Am. St. iel, 13 B. Mon. (Kv.) 496; Tolman v. 125. But it has been held that in Ward, 86 Maine 303, 29 Atl. 1081, 41 case the service is extraordinary in Am. St. 556; Waters v. Howard, 8 423 CONSIDERATION. 241 contracts to make provision for the intended wife,^' or the wife Gill (Md.) 262; Dugan v. Gittings, 3 Gill (Md.) 138, 43 Am. Dec. 306 Smith V. Allen, 5 Allen (Mass.) 4S4 Nowack V. Berger, 133 Mo. 24, 34 S'. W. 489, 31 L. R. A. 810, 54 Am. St, 663; Lionberger v. Baker, 88 Mo, 447; Mellick v. Mellick, 47 N. J. Eq, 86, 19 Atl. 870, aflfd., 48 N. J. Eq, 613, 23 Atl. 582; Peck v. Vanderaark, 99 N. Y. 29, 1 N. E. 41; Wright v. Wright, 54 N. Y. 440; Sterry v. Ar- den, 1 Johns. Ch. (N. Y.) 261; Whe- lan V. Whelan, 3 Cow. (N. Y.) 537; Wood V. Jackson, 8 Wend. (N. Y.) 9, 22 Am. Dec. 603; Gurvin v. Cro- martie, 33 N. Car. 174, 53 Am. Dec. 406; In re Frank's Appeal, 59 Pa. St. 190 ; Magniac v. Thompson, 7 Pet. (U. S.) 348, 8 L. ed. 709, affg. Fed. Cas. No. 8956, Baldw. 344. McCreery V. Davis, 44 S. Car. 195, 22 S. E. 178, 28 L. R. A. 655, 51 Am. St. 794, per Pope, J. : "Under our law, 'marriage is a valuable consideration. Some have considered it the highest known in law. None would say it was a lower consideration than money. There is nothing unreasonable in this. The great value of the consideration consists in this : that the wife sur- renders her person and her self-do- minion to the husband, and enters into an indissoluble engagement with him, foregoing all other prospects in life; and, if the consideration for which she stipulates fails, she cannot be restored to the status in quo. She can have no remedy or relief.' " Her- ring V. Wickham, 29 Grat. (Va.) 628, 26 Am. Rep. 405 ; Snell v. Bray, 56 Wis. 156, 14 N. W. 14. "Marriage is a valuable consideration and a mar- ried woman is regarded as a pur- chaser for a valuable consideration of all property which accrues to her by virtue of the marriage, or by virtue of any valid antenuptial agreement." Nelson v. Brown, 164 Ala. 397, 51 So. 360, 137 Am. St. 61. "Synge v. Synge, L. R. (1894) 1 Q. B. 466, per Lord Justice Kay: "The learned judge who decided this case has held that the letter was not treated by the lady as a contract, al- though by the advice of Mr. Wood- ruff she preserved ;t. * * * We cannot, with deference to the learned judge, agree in his view that she treated the letter as a mere statement of intention by which the intended husband was not to be bound. The law relating to proposals of this kind before marriage was thus stated by Lord Lyndhurst, L. C, in Hammers- ley V. De Biel, 12 CI. & F. 45 : 'The principle of law, or at least of equity, is this — that if a party holds out in- ducements to another to celebrate a marriage, and holds them out deliber- ately and plainly, and the other party consents, and celebrates the marriage in consequence of them, if he had good reason to expect that it was in- tended that he should have the bene- fit of the proposal which was so held out, a Court of Equity will take care that he is not disappointed, and will give effect to the proposal.' "We are of opinion that the proposal of terms in this case was made as an inducement to the lady to marry, that she consented to the terms, and mar- ried the defendant on the faith that he would keep his word, and that ac- cordingly there was a binding con- tract on the defendant's part to leave to his wife the house and land at Ardfield for her life. * * * "Marriage is a valuable considera- tion for such a contract of the high- est order, and where, as here, the contract is in writing, so that there is no question upon the Statute of Frauds, in the language already quoted, a Court of Equity will take care that the party who marries on the faith of such a proposal 'is not disappointed, and will give effect to the proposal.' " Wright v. Wright, 54 N. Y. 440. In the case of Smith v. Allen, 5 Allen (Mass.) 454, a deed executed to induce the interlded wife to marry him was held good although the intended husband djed before the marriage. Offutt v. Offutt, 106 Md. 236, 67 Atl. 138, 12 L. R. A. (N. S.) 232, 124 Am. St. 491. Equity will en- force such an agreement, HolthaHi V. Ryland, Nelson Ch. 205; Haymer v. Haymer, 2 Vent. 343 ; Acton v. Peirce, 2 Vern, 480; Collins v. Col- lins, 72 Iowa 104, 33 N. W. 442; Cul- ver V. Culver, 8 B. Mon. (Ky.) 128; Miller v. Goodwin, 8 Gray (Mass.) 542. And where the agreement was oral, and is subsequently executed, 241 CONTRACTS. 424 the husband/* Consequently the settlement of lands, although made by the settler with the design to defraud his creditors, will not be set aside in the absence of clearest proof of his intended wife's participation in the fraud/° In such case the wife is deemed a purchaser for value of the property settled on her in considera- tion of marriage, and is entitled to hold it against the world.*" By such agreement he may waive his right to curtesy,*^ and she may waive her right to dower.** If such a contract is fairly and the grantor will be bound by the re- citals in the deed. Prignon v. Daus- sat, 4 Wash. 199, 29 Pac. 1046, 31 Am. St. 914, where it is said : "As we view the law, it is the contract to marry, and not the marriage itself, which is the consideration which sup- ports the deed." And see Potts v. Merrit, 14 B. Mon. (Ky.) 326, which was an antenuptial contract, the hus- band agreeing to allow the wife to keep her slaves if she would marry him. " Lawrence v. Bartlett, 2 Allen (Mass.) 36; In re Appleby, 100 Minn. 408, 111 N. W. 305, 10 L. R. A. (N. S.) 590; De Barante v. Gott, 6 Barb. (N. Y.) 492. "^Prewit V. Wilson, 103 U. S. 22, 26 L. ed. 360. " Barrow v. Barrow, 2 Dickens 504, the court saying : "I never knew an instance where a settlement in con- sideration of marriage hath been set aside, and I will not make a prece- dent for it." Campion v. Cotton, 17 Ves. 271 ; Nairn v. Prowse, 6 Beav. 752 ; Ex parte McBurnie's Trustees, 1 DeG., M. & G., 441 ; Eraser v. Thomp- son, 4 DeG. & J. 659; Tunno v. Treze- vant, 2 Des. (S. Car.) 264; Magniac V. Thompson, 1 Bald. (U. S.) 344, Fed. Gas. No. 8956; Greenhow v. Coutts, 4 Hen. & M. (Va.) 48S. See Magniac v. Thompson, 7 Pet. (U. S.) 348, 8 L. ed. 709, where Judge Story said : "Nothing can be clearer, both upon principle and authority, than the doctrine, that to make an antenuptial settlement void, as a fraud upon cred- itors, it is necessary that both parties should concur in, or have cognizance of the intended fraud. If the settler alone intended a fraud, and the other party have no notice of it, but is in- nocent of it, she is not, and cannot be affected by it. Marriage, in contem- plation of the law, is not only a valu- able consideration to support such a settlement, but it is a consideration of the highest value, and from mo- tives of the soundest policy is upheld with a steady resolution. The hus- band and wife, parties to such a con- tract, are therefore deemed in the highest sense purchasers for a valu- able consideration, and so that it is bona fide, and without notice of fraud, brought home to both sides, it becomes unimpeachable by cred- itors." Andrew v. Jones, 10 Ala. 400 Bunnel v. Witherow, 29 Ind. 123 Smith v. Allen, 5 Allen (Mass.) 454 Armiield v. Armfield, Freem. Ch. (Miss.) 311; Verplank v. Sterry, 12 Johns. (N. Y.) 536. Sterry v. Arden. 1 Johns. Ch. (N. Y.) 260, where Chanc. Kent said : "It is the con- stant language of the books and of the courts, that a voluntary deed is made good by a subsequent marriage, and a marriage has always been held to be the highest consideration in law." In re Jones's Appeal, 62 Pa. St. 324; Herring v. Wickham, 29 Grat. (Va.) 628, 26 Am. Rep. 405; Metz V. Blackburn, 9 Wyo. 481, 65 Pac. 857. See also, Huston v. Cant- ril, 11 Leigh (Va.) 136; Eppes v. Randolph, 2 Call (Va.) 125; Bentley V. Harris' Admr., 2 Gratt. (Va.) 357; Welles V. Cole, 6 Gratt. (Va.) 645; Fones v. Rice, 9 Gratt. (Va.) 568. " In re Appleby, 100 Minn. 408, 101 N. W. 305, 10 L. R. A. (N. S.) 590. "' In re Staub's Appeal, 66 Conn. 127, 33 Atl. 615; Cowles v. Cowles, 74 Conn. 24, 49 Atl. 195 ; McMahill v. McMahill, 113 111. 461; Shaffer v. Mathews. 77 Ind. 83; McNutt v. Mc- Nutt, 116 Ind. 54.5, 19 N. E. 115, 2 L. R. A. 372; Paine v. Hollister, 139 Mass. 144, 29 N. E. 541 ; Desnoyer v. Jordan, 27 Minn. 295, 7 N. W. 140; 425 CONSIDERATION. § 24I equitably made between the parties it, and not the law, furnishes the measure of their respective rights, nor will a mistake as to the law, of itself, be sufficient ground on which to set aside a con- tract waiving dower rights." But if one of the parties know- ingly or fraudulently misrepresents the law or the facts, such contract may be set aside.^" The fact that the engagement of marriage between the parties is entered into several months be- fore an agreement was formally drawn up and signed does not exclude the marriage as a consideration for such agreement.^^ While it is evident that the parties may contract with each other before marriage as to their mutual property rights they cannot vary the personal duties and obligations to each other which re- sult from the marriage contract itself. Consequently an ante- nuptial agreement entered into by the parties, in which she con- tracts to bequeath the intended husband all her property in con- sideration of his nursing, supporting and caring for her during her life, will not be enforced at the instance of the husband on her failure so to do.°^ Even should a third person promise to do or perform certain acts in consideration of the marriage of others, their marriage will make such promise binding. Thus where ah uncle wrote to his nephew, saying, "I am glad to hear of your intended mar- riage to E. N. ; and, as a consideration, I promise -to assist you at starting. I am happy to tell you I will pay to you yearly and until your income derived from your profession of chancery barrister shall amount to 600 guineas," it was held that this was a binding promise.^V And when a settlement is made in Tierman v. Binns, 92 Pa. St. 248; In Deller (Wis.), 124 N. W. 278, 25 L. re Deller (Wis.), 124 N. W. 278, 25 R. A. (N. S.) 751. L. R. A. (N. S.) 751. ""McNutt v. McNutt, 116 Ind. 545, '"Robbins v. Robbins, 225 111. 333, 19 N. E. 115, 2 L. R. A. 372; In re 80 N. E. 326, 9 L. R. A. (N. S.) Appleby, 100 Minn. 408, 111 N. W. 9S3n. See also, Hudnall v. Ham, 183 305, 10 L. R. A. (N. S.) 590. 111. 486, 56 N. E. 172, 48 L. R. A. "^Ryan v. Dockery, 134 Wis. 431, 557, 75 Am. St. 1024. 114 N. W. 820, 15 L. R. A. (N. S.) ™Lamb V. Lamb, 130 Ind. 273, 30 491n, 126 Am. St. 1025. As to the N. E. 36, 30 Am. St. 227; Simpson wife contracting to support the hus- V. Simpson, 94 Ky. 586, 23 S. W. 361 ; band, see Cocoran v. Cocoran, 119 Graham v. Graham, 67 Hun (N. Y.) Ind. 138, 21 N. E. 468, 4 L. R. A. 329, 22 N. Y. S. 299, affd., 143 N. Y. 782, 12 Am. St. 390. 573, 38 N. E. 722 ; Spurlock v. Brown, "" Shadwell v. Shadwell, 9 C. B. (N. 91 Tenn, 241, 18 S. W. 868; Ellis v. S.) 159. A father's promise to his Ellis, 1 Tenn. Ch. App. 198; In re son's fiancee that he will give her § 24^ CONTRACTS. 426 contemplation of marriage the law presumes it was an induce- ment to it. So, where a father makes such a settlement upon his daughter, even before any contract of marriage, if the settlement was known to third persons, it will be presumed it was a probable inducement to the marriage.'^* § 242. Name and change of name. — The privilege of nam- ing a child is a valid and legal consideration for a promise. The right to name the child belongs to its parents. If they surrender this right at the instance of and in reliance on the promise of an- other it constitutes a valuable consideration.^^ This rule applies certain property in case she marries his son is binding (Wright v. Wright, 114 Iowa 748, 87 N. W. 709, 55 L. R. A. 261), or where the promise is made by the father to the son in con- sideration of the son's marriage. Curvin v. Cromartie, 11 Ired. (N. Car.) 174, S3 Am. Dec. 406; Thomp- son V. Thompson, 17 Ohio St. 649; Caines v. Jones, 5 Yerg. (Tenn.) 249. A promise given in consideration of marriage to one's niece is binding. Barr v. Hill, Add. (Pa.) 276, A verbal promise given before marriage will support a written agreement en- tered into after marriage. Argen- bright V. Campbell, 3 Hen. & M. (Va.) 144. A deed given to a daugh- ter and her husTjand in consideration of marriage shows a valuable con- sideration. Arnold v. Estis, 92 N. Car. 162. See also, Hammersley v. De Biel, 12 C. & F. 45, where a man represented to his daughter's suitor that he would leave her a provision by will. Brown v. Jones, 1 Atk. 188; Browne v. Garborough, Cro. Eliz. 63; Bradley v. Toder, Cro. Jac. 228; Ex parte Cottrell, 2 Cowp. 742; Doug- lasse V. Waad, 1 Ch. App. Cas. 100; Prole V. Soady, 2 Giffard 1. Here a settlement was directed to be made in accordance with the representa- tions although they were by parol. " 'If it be supposed to be necessary for this purpose to find a contract such as usually accompanies transactions of importance in the pecuniary affairs of mankind, there may not be found in the memorandum or in the other evidence in the cause proof of any such contract. When the authorities on this subject are attended to, it will be found that no such formal con- tract is required. A representation made by one party for the purpose of influencing the conduct of the other party, and acted on by him, will in general be sufficient to entitle him to the assistance of this court for the purpose of realizing such repre- sentation,' " Jorden v. Money, S H. L. C. 185, the court saying: "That is a principle of universal applica- tion, and has been particularly ap- plied to cases where representations have been made as to the state of the property of persons about to con- tract marriage, and where, upon the faith of such representations, mar- riage has been contracted. There the person who has made the false repre- sentations has in a great many cases been held bound to make his repre- sentations good." "* Brown v. Carter, 5 Ves. 862; Hering v. Wickham, 29 Grat. (Va.) 628, 26 Am. Rep. 405 ; Welles v. Cole, 6 Gratt. (Va.) 645. '"Wolford V. Powers, 85 Ind. 294, 44 Am. Rep, 16. "In Diffen- derfer v. Scott, 5 Ind. App. 243, 32 N, E. 87, it was held, fol- lowing the Wolford case, that naming a child after the niaker of a note is a sufficient consideration for the note given to the child. In gen- eral a waiver of any legal or equitable right at the request of another party is a sufficient consideration for a promise. Parsons on Contracts (8th ed,)_444. It is said: 'A valuable consideration in the sense of the law may consist either in some right, in- terest, profit, or benefit accruing to the one party, or some forbearance, 427 CONSIDERATION. § 242 to the changing of a child's Christian name, as where the grand- father of a child promises her parents to leave to her by his will a specified amount of money as a legacy, if they would change her name from Catherine to Harriet, and the change was accordingly made. It was held that the change of name was a sufficient con- sideration for the promise, and that there was a sufficient privity detriment, loss or responsibility, giv- en, suffered or undertaken by the other.' Currie v. Misa, L. R. 10 Exch. 153, referred to in Hamer v. / Sidway, 124 N. Y. 538, where it also said that courts 'will not ask whether the thing which forms the considera- tion does in fact benefit the promisee or a third party, or is of any sub- stantial value to anyone. It is enough that something is promised, done, forborne or suffered by the party to whom the promise is made as con- sideration for the promise made to him.' It is also said quoting from Pollock on Contracts, 166, that 'con- sideration means not so- much that one party is profiting as that the other abandons some legal right in the present, or limits his legal freedom of action in the future as an induce- ment for the promise of the first.' In Hamer v. Sidway, 124 N. Y. 538, a promise to pay the promisee $5,000 if he would refrain from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he should become twenty-one years of age, was held to be based on sufficient consideration. A similar view was taken in Lindell v. Rokes, 60 Mo. 249. In Earle v. Angell, 157 Mass. 294, it was held that a promise to pay the promisee $500 if he would attend the funeral of the promisor was enforcible. In view of the doc- trine of the Wolford case and the general principle enunciated or ap- proved in the Hamer case, we are of the opinion that a sufficient consider- ation is alleged for the promise of the decedent. There is no question here about the adequacy. Earl v. Peck, 64 N. Y. 596. In 1 Comyn's Digest C5th ed., p. 210, note), the rule is stated, 'Where one for whose bene- fit a contract has been expressly made is nearly related to_ the party from whom its consideration moves, either may sue for the breach of it, though the pendency of either's suit will pre- clude the other's action.' This is based mainly on the case of Button V. Poole, 2 Levinz 210, where the right of the child to sue was asserted. The authority of that case has been often recognized. Shepard v. Shep- ard, 7 Johns. Ch. (N. Y.) 57; Todd V. Weber, 95 N. Y. 193; Knowles v. Erwin, 43 Hun (N. Y.) 152, affd., 124 N. Y. 633 ; Sackett v. Sackett, 14 N.Y. St. 251. The principle that re- lationship may be the basis of a privity sufficient for the action is also recognized in Bogardus v. Younge, 64 Hun (N. Y.) 398; Coleman v. Hiler, 85 Hun (N. Y.) 547. In Vrooman v._ Turner, 69 N. Y. 280, 284, it is said: 'To give a third party who may derive a benefit from the per- formance of the promise an action, there must be, first, an intent by the promisee to secure some benefits to the third party, and second, some privity between the two, the promisee and the party to be laenefited, and some obligation or duty owing from the former to the latter which would give him a legal or equitable claim to the benefit of the promise or an equivalent from him personally.' The plaintiff here has certainly an equi- table claim to the benefit of the promise. The plaintiff's parents acted for her as well as for themselves in the transaction. They owed her a duty in that regard from which it may well be said a privity arose suffi- cient for the maintenance of the ac- tion." Babcock v. Chase, 92 Hun (N. Y.) 264, 36 N. Y. S. 879. See Daily V. Minnick, 117 Iowa 563. 91 N. W. 933, 60 L. R. A. 840 ; Eaton v. Libey, 165 Mass. 218, 42 N. E. 1127, 52 Am. St 511; Nightingale v. Withington, 15 Mass. 272, 8 Am. Dec. 101. See also. Parks v. Francis, 50 Vt. 626, 28 Am. Rep. 517. § 243 CONTRACTS. 428 between the child and her parents to enable her to enforce the promise. °° § 243. Contracts and contractual rights generally. — One consideration will support all the provisions of a contract if such was the intention of the parties."*^ Therefore, if the agreement is but the completion of a former contract it has the original con- sideration for its support/^ as when the contract calls for the giving of bond for its faithful performance such bond is not without consideration merely because it was executed after the contract. The letting of the contract is sufficient consideration for the bond.^" Or should one party at the instance of the other consent to a change or modification in the terms of their mutual obligations the modification so made is a valuable consideration, and will support a promise given by the party at whose request the change was made."" A fortiori, cancellation of a contract or the granting of a release and the relinquishment of its benefits ""Babcock V. Chase, 92 Hun (N. Y.) 264, 72 N. Y. St. 401, 36 N. Y. S. 879, 3 N. Y. Ann. Cas. 25. "Boughn V. Smith, 58 Nebr. 590, 79 N. W. 160. One consideration may sustain more than one promise. Studwell V. Bush Co., 126 App. Div. (N. Y.) 818, 111 N. Y. S. 293. See also, Johnson v. Wilkerson, 96 Ark. 320, 131 S. W. 690. But an agree- ment collateral to the original con- tract must be supported by a con- sideration. Norton v. Abbott, 28 How. Pr. (N. Y.) 388, 113 N. Y. S. 669. See also, Seymour v. Hughes, 55 Misc. (N. Y.) 248, 105 N. Y. S. 249; Heal v. Richmond, etc.. Bank, 127 App. Div. (N. Y.) 428, 111 N. Y. S. 602, 196 N. Y. 549, 89 N. E. 1101. ■^'Griffith V. Fields, 105 Iowa 362, 75 N. W. 325. Plaintiff and another bought stock in a bank, paying there- for with notes and mortgages en- dorsed to the bank, and as part of the contract of sale the defendant under- took to hold the plaintiff harmless and indemnify him against any action by the bank to recover on his endorse- ment. Held, that defendant's con- tract was supported_ by a sufficient consideration. Patrick v. Barker, 78 Nebr. 535, 112 N. W. 358. "• Smith V. Molleson, 148 N. Y. 241, 42 N. E. 669. See also. Standard Fashion Co. v. Ostrom, 16 App. Div. (N. Y.) 220, 44 N. Y. S. 666; An- drews V. Pontue, 24 Wend. (N. Y.) 285; Cady v. Allen, 22 Barb. (N. Y.) 388; Bourne v. Sherrill, N. Car,, 55 S. E. 799; Wiswall v. Potts, 58 N. Car. 184 ; Haile v. Morgan, 25 S. Car. 601 ; Tyson v. Jackson, 41 Tex. Civ. App. 128, 90 S. W. 930; Rabaud v. D'Wolf, 1 Paine (U. S.) 580, Fed. Cas. No. 11519, affd., 1 Pet. (U. S.) 476; Carpenter v. French, 28 Vt. 796; Peterson v. Chase, 115 Wis. 239, 91 N. W. 687. ^ Merchant v. O'Rourke, 111 Iowa 351, 82 N. W. 759; Murray v. Meagh- er, 71 Ky. 574; Hildreth v. Pinker- ton Academy, 29 N. H. 227; Lamkin V. Palmer, 24 App. Div. (N. Y.) 255, 48 N. Y. S. 427, affd., 164 N. Y. 201, 58 N. E. 123; Eccleston v. Ogden, 34 Barb. (N. Y.) 444 (receiving ad- ditional security) ; Smith v. McKin- ney, 22 Ohio St. 200; Deutschman v. Battaile (Tex. Civ. App.), 36 S. W. 489; Old River Rice Irr. Co. v. Stubbs CTex. Civ. App.), 137 S. W. 154 (parol change in a contract for water to be furnished for irrigation purposes made subsequent to its exe- cution). 429 CONSIDERATION. § 243 accrued or expected is a valuable consideration."^ Thus the sur- render of all rights under a contract of employment is a consid- eration which will support a return promise."^ The assignment of a contract is a sufficient consideration for a promise by the assignee.*^ Where there is a lien by attachment"* or mortgage"^ the release of such lien is a consideration ; and if property is held by another in bailment the relinquishment by the bailor of his right to possession is a sufficient consideration to support a prom- ise by the bailee."" "In re Tuke's Case, 7 Mod. 13; Carpenter v. Murphree, 49 Ala. 84; Jones V. Jones, 1 Colo. App. 28, 27 Pac. 85 ; Montgomery v. Morris, 32 Ga. 173; Morrill v. Colehour, 8z 111. 618; Runnion v. Beard, 6 Blackf. (Ind.) 401; Taylor v. Meek, 4 Blackf. (Ind.) 388; Farr v. Bach, 13 Ind. App. 12s, 41 N. E. 393; Mansfield v. Watson, 2 Iowa 111; Weld v. Nichols 34 Mass. 538; Scott v. McKinney, 98 Mass. 344; Blagborne v. Hunger, 101 Mich. 375, 59 N. W. 657; Midland Nat. Bank v. Missouri Pac. R. Co., 132 Mo. 492, 33 S. W. 521, S3 Am. St. 505 ; Lamkin v. Palmer, 24 App. Div. (N. Y.) 255, 48 N. Y. S. 427, affd., 164 N. Y. 201, 58 N. E. 123; Wile V. Wilson, 93 N. Y. 255 ; Oregon Pac. R. Co. V. Forrest, 128 N. Y. 83, 28 N. E. 137; Tallman v. Earle, 13 N. Y. S. 805 ; Kvello v. Taylor, 5 N. Dak. 76, 63 N. W. 889; Hawkins v. Barney, 27 Vt. 392; Perry v. Buck- man, 33 Vt. 7 ; Buechal v. Buechal, 65 Wis. 532, 27 N. W. 318. The re- lease of one party to a valid marriage contract by the other party thereto is a sufficient consideration for a promise, the agreement being merely the making of a legal contract in con- sideration of the release frorri an- other legal contract, the considera- tion of the original contract being the consideration for the substituted agreement. Henderson v. Spratlen, 44 Colo. 278, 98 Pac. 14, 19 L. R. A. (N. S.) 655; Snell v. Bray, 56 Wis. 156, 14 N. W. 14. But a release from a void agreement is not a sufficient consideration for a promise. Van Allen V. Jones, 10 Bosw. (N. Y.) 369; Prior v. Flagler, 13 Misc. (N. Y.) 115, 68 N. Y. St. 199, 34 N. Y. S. 152. Also see Hargarte v. Berg, 126 111. App. 368. But see Brown v. Jenett, 130 Iowa 311, 106 N. W. 747, 5 L. R. A. (N. S.) 725n. The sur- render of the right to declare a breach of a contract is sufficient to support a promise. Globe Fertilizer Co. V. Tennessee Phosphate Co., 27 Ky. L. 636, 85 S. W. 1177. See ante, § 237, Compromise. "'Richardson v. Mellish, 2 Bing. 229, 1 C. & P. 241 ; Peck v. Requa, 13 Gray (Mass.) 407; Worrell v. First Presbyterian Church, 23 N. J. Eq. 96; Perry v. Buckman, 33 Vt. 7. "' Early v. Reed, 60 Mo. 528 ; Gard- iner V. Hopkins, 5 Wend. (N. Y.) 23. °* Smith V. Taylor, 39 Maine 242. ■"Norris v. Vosburgh, 98 Mich. 426. •"■Hart V. Miles, 4 C. B. (N. S.) 371, 93 E. C. L. 371 ; Prince v. State Fair, 106 Ala. 340, 17 So. 449, 28 L. R. A. 716 ; Clark v. Gaylord, 24 Conn. 484 ; Miller v. Upton, 6 Ind. 53 ; New- hall V. Paige, 10 Gray (Mass.) 366; Rickey V. Morrison, 69 Mich. 139, 37 N. W. 56; Keller v. Smith, 59 Minn. 203, 60 N. W. 1102; Smith v. Library, 58 Minn. 108, 59 N. W. 979, 25 L. R. A. 280; McKay v. Buffalo Bill's Show, 7 Misc. (N. Y.) 396, 39 N. Y. S. 1041; Robinson v. Threadgill, 35 Ired. L. (N. Car.) 39; Sturm v. Boker, ISO U. S. 312, 37 L. ed. 1093, 14 Sup. Ct. 99. In case the pawnee delivers the pledge to a third person not authorized to receive it, it is a valuable consideration for an agree- ment with such pawnee. Saunders V. Pope, 1 Ohio 486. & 244 CONTRACTS. 430 § 244. Rights to personal property. — The assignment, transfer or sale of personal property, or any interest therein, is a valuable consideration." The mere fact that the property is sold subject to a lien does not affect the validity of the contract."* The sale or transfer of stock in a corporation,^® negotiable bonds,'" a promissory note'^ or bank checks'^ are all valuable con- siderations. A sale of the good will of an established business may be the consideration for a return promise.'^ Should per- sonal property be subject to a lien its release is a sufficient con- sideration.'* § 245. Interests in real property. — A conveyance of an in- terest in realty is a valuable consideration." Nor is it necessary " McCurry v. Gibson, 108 Ala. 451, 18 So. 806, 54 Am. St. 177; Lemmon V. Sibert, 15 Colo. App. 131, 61 Pac. 202 ; Hellman v. Schwartz, 44 111. App. 84; Linton v. Porter, 31 111. 107; Phil- lips V. Gifford, 104 Iowa 458, 12, N. W. 1033; Gunther v. Gunther, 181 Mass. 217, (ii N. E. 402 ; Nash v. Lull, 102 Mass. 60, 3 Am. Rep. 435 ; Rich- mond V. Nye, 126 Mich. 602, 85 N. W. 1120; Demarco v. Williams (Miss.), 12 So. 552 ; Connecticut River &c. Ins. Co. V. Whipple, 61 N. H. 61 ; Electric Fireproofing Co. v. Smith, 113 App. Div. (N. Y.) 615, 99 N. Y. S. 37, (sale of business to corporation in exchange for stock of corporation) ; Grand Forks Lumber &c. Co. v. Tourtelot, 7 N. Dak. 587, 75 N. W. 901 ; Maloney V. Moore (Tenn. Ch. App.), 42 S. W. 805. Instruments affecting rights in property must be supported by a con- sideration in order to give them bind- ing force in law. Bonney v. Bonney, 237 111. 452, 86 N. E. 1048, affg. 141 111. App. 476. The sale of the good will of a business together with an agreement not to engage in the same business in a reasonable space for a reasonable time, is supported by a consideration. Lee v. United States Graphite Co., 161 Mich. 157, 125 N. W. 748, 17 Detroit Leg. N, 211. See post, Ch. 22, also ante, § 197, Contracts in restraint of trade. "" Gunnell v. Emerson, li Mo. App. 291 ; Provenchee v. Piper, 68 N. H. 31. .36 Atl. 552; Lessel v. Zillmer, 105 Wis. 334, 81 N. W. 403. ""Say ward v. Houghton, 119 Cal. 545, 51 Pac. 853 ; Knarr v. Sand Creek Turnpike Co., 45 Ind. 278; Up River Ice Co. V. Denier, 114 Mich. 296, 72 N. W. 157, 68 Am. St. 480; Wyatt v. Jackson, 55 Minn. 87, 56 N. W. 578; Atwater v. Stromberg, 75 Minn. 277, n N. W. 963; Farmers &c. Bank v. Jenks, 7 Mete. (Mass.) 592. ™ Denny v. Campbell's Exr., 9 Ky. L. 367, 4 S. W. 301. "Litchfield V. Falconer, 2 Ala. 280; Farber v. National Forge &c. Co., 140 Ind. 54, 39 N. E. 249; Dockray v. Dunn, 37 Maine 442; Backus v. Spaulding, 116 Mass. 418. " Deal V. Bank, 79 Mo. App. 262. '" McCurry v. Gibson, 108 Ala. 451, 18 So. 806, 54 Am. St. 177; Smock v. Pierson, 68 Ind. 405, 34 Am. Rep. 269; Davis V. Garrison, 85 Iowa 447. 52 N. W. 359 ; Phillips V. Gifford, 104 Iowa 458, Ti N. W. 1033 ; Searing v. Tye, 4 E. D. Smith (N. Y.) 197. " Cronkhite v. White, 25 Ind. 418. "> Hanold v. Kays, 64 Mich. 439, 31 N. W. 420, 8 Am, St. 835; Goss v. Goss, 57 Nebr. 294, 11 N. W. 687; Alexander v. McDaniel, 56 S. C. 252, 34 S. E. 405 ; Bushby v. Bush, 79 Tex. 656, 15 S. W. 638. See also, Jasper v. Wilson, 14 N. Mex. 482, 94 Pac. 951, 23 L. R. A. (N. S.) 982; Faust v. Faust, 144 N. Car. 383, 57 S. E. 22, (conveyance held sufficient to support a promise on the part of the grantee's father to pay a designated sum of money to the grantor's child). 431 CONSIDERATION. 246 that the fee simple be conveyed.'" The release of a mortgage" or other lien" is a sufficient consideration for a promise/" The yielding of possession of real estate may constitute a sufficient consideration for a contract/" § 246. Blood or natural affection. — As has already been stated/^ a good consideration consists of natural love and affec- tion. But natural love and affection can serve as a consideration only when the contracting parties are related by blood or mar- riage. Thus it may constitute the consideration for an ex- ecuted contract between husband and wife/^ or between one and his lineal descendants, such as his children'^ or grand- children.** But it is no consideration for a contract be- tween collateral relatives either of consanguinity*^ or affin- ™ Fish V. Dunn, 59 Minn. 99, 60 N. W. 843. A conveyance of property by a trustee from which he is entitled to support is a sufficient consideration for a promise by the grantee to pay a certain annuity to the trustee. Hiss v. Hiss, 228 111. 414, 81 N. E. 1056. An equity of redemption is a sufficient consideration to support a promise. J. F. Hall-Martin Co. v. Hughes (Cal. App.), 123 Pac. 617. " Henry &c. Co. v. Fisherdick, 37 Nebr. 207, 55 N. W. 643. For sale or surrender of mortgagor's right to re- deem, see Shade v. Creviston, 93 Ind. 591. ' '' Day V. Gardner, 42 N. J. Eq. 199, 7 Atl. 365; Lane v. Logue, 12 Lea (Tenn.) 681. See also. Sharp v. Car- mody, 17 Ky. L. 827, 32 S. W. 749. As to assignment or surrender of lease, Creighton v. Finlayson, 46 Nebr. 457, 64 N. W. 1103; Spear v. Fuller, 8 N. H. 174, 28 Am. Dec. 391. See also, Sharp V. Carmody, 17 Ky. L. 827, 32 S. W. 149; Creighton v. Finlayson, 46 Nebr. 457, 64 N. W. 1103; Spear v. Fuller, 8 N. H. 174, 28 Am. Dec. 396. " But a promise by the vendor's hus- band to apply the first two payments made by the vendee to the satisfaction of a trust deed given by the husband and wife has been held without con- sideration when the wife was the sole owner of the land. Savage v. Cau- thorn, 109 Va. 694, 64 S. E. 1052. '" Rogers Devel. Co. v. Southern Cal, &c. Co.. 159 Cal. 735, 115 Pac. 934, 35 L. R. A. (N. S.) 543, upholding the validity of a contract by the vendor of real estate to repurchase vendee's in- terest after the latter's default. See also, Herkenrath v. Ragley, 55 Wash. 52, 109 Pac. 279, upholding an oral contract by which a real estate agent, in order to induce a customer to buy, agreed that if he did not resell the property within nine months he him- self would repay the purchase price to the vendee. The contract was held to be one by which money was advanced by the vendee for the agent's use. "^ See ante, § 206, Good Considera- tion. "' Brown v. Brown, 44 S. Car. 378, 22 S E. 412. »' Worth V. Daniel, 1 Ga. App. IS, 57 S. E. 898 (promise by child to support parent) ; Oliphant v. Liversidge, 142 111. 160, 30 N. E. 334; Schneitter v. Carman, 98 Iowa 276, 67 N. W. 249; Hutsell V. Crewse, 138 Mo. 1, 39 S. W. 449; Bell v. Scammon, 15 N. H. 381, 41 Am. Dec. 706; Carney v. Carney, 196 Pa. St. 34, 46 Atl. 264; In re Fer- guson's Appeal, 117 Pa. St. 426, 11 Atl. 885. " Hanson v. Buckner's Exr., 4 Dana (Ky.) 251, 29 Am. Dec. 401. Contra, Borum v. King, 37 Ala. 606. " Buf ord's Heirs v. McKee, 1 Dana (Ky.) 107; Markv. Clark, 11 B. Mon. (Ky.) 44; Studybaker v. Cofield, 159 Mo, 596, 61 S. W. 246; Coombe v. Carthew, 59 N. J. Eq. 638, 43 Atl. 1057 ; Hayes v. Kershow, 1 Sandf. Ch. (N. Y.) 258. § 246 CONTRACTS. 432 ity.°° A "good consideration" imports merely the motive of natural affection toward relations, and excludes the ele- ment of compensation or its equivalent for the promise virhich is essential to constitute a valuable consideration. The rule is practically universal, that every executory simple contract must be supported by a valuable consideration.*^ Consequently, a promise supported by a good consideration only is voidable, and a deed made on such consideration is a voluntary one which is valid only between the parties, and is not aided in equity, but is voidable as to creditors and purchasers for value if shown to have been made with an intent to defraud.** A good consideration is sufficient in equity to support an executed conveyance,*^ but is not sufficient in law or equity to support an executory promise."" '"Kirksey v. Kirksey, 8 Ala. 131; Cotton V. Graham, 84 Ky. 672, 8 Ky. L. 658, 2 S. W. 647 ; Corwin v. Cor- win, 6 N. Y. 342, 57 Am. Dec. 453 (father-in-law and son-in-law). " Sullivan V. Sullivan, 122 Ky. 707, 92 S. \V. 966, 7 L, R. A. (N. S.) 156n; Maynard v. Maynard, 105 Maine 567, 75 Atl. 299. ""The only purpose for which a good consideration is effectual is to support a covenant to stand seized to uses. Tweddle v. Atkinson, 1 B. & S. 393; Pulvertoft v. Pulvertoft, 18 Ves. 99; Buckle v. Mitchell, 18 Ves. 100; Yeend v. Weeks, 104 Ala. 331, 16 So. 165, 53 Am. St. 50 ; Morrow v. South- ern Exp. Co., 101 Ga. 810, 28 S. E. 998; Rockhill v. Spraggs, 9 Ind. 32. As against pre-existing creditors and subsequent bona fide purchasers, such conveyances are deemed prima facie void. Cathcart v. Robinson, 5 Pet. (U. S.) 264, 8 L. ed. 328. As against subsequent creditors the transfer is valid. Bennett v. Bedford Bank, 11 Mass. 421. '" Oliphant v. Liversidge, 142 111. 160, 30 N. E. 334 ; Nicholas v. Shiplett, 19 Ky. L. 1295, 43 S. W. 248 ; Parsons v. Teller, 188 N. Y. 318, 80 N. E. 930, revg. Ill App. Div. 637, 97 N. Y. S. 808; Jackson v. Delancey, 4 Cow. (N. Y.) 427. °° Peek V. Peek, 77 Cal. 106, 19 Pac. 227, 1 L. R. A. 185, 11 Am. St. 244; Kirkpatrick v. Taylor, 43 111. 207; Geer v. Gondy, 174 111. 514, 51 N. E. 623; Schwerdt v. Schwerdt, 141 111. App. 386; Denman v. McMahin, 37 Ind. 241 ; Talbott v. Stemmons, 10 Ky. L. 33 ; Pennington v. Gittings, 2 Gill. & J. (Md.) 208; Phillips v. Frye, 96 Mass. (14 Allen) 36; Conrad v. Man- ning, 125 Mich. 77, 83 N. W. 1038; Duvoll V. Wilson, 9 Barb. (N. Y.) 487; Parsons v. Teller, 188 N. Y. 318, 80 N. E. 930, revg. Ill App. Div. 637, 97 N. Y. S. 808 ; Kennedy v. Ware, 1 Pa. St. 445, 44 Am. Dec. 145 ; Wilbur v. Wilbur, 17 R. I. 295; 21 Atl. 497; Keffer v. Grayson, 76 Va. 517, 44 Am. Rep. 171 ; Pennybacker v. Maupin, 96 Va. 461, 31 S. E. 607. The love and affection which one bears his wife is no consideration for a promise to pay a third person money. Schnell v. Nell, 17 Ind. 29, 79 Am. Dec. 453. The af- fection and sense of duty which should naturally exist on the part of a child towards an aged and depend- ent parent is, under sec. 3658 code 1895, a good consideration to support an executory contract by the child making provision for the parent. Worth V. Daniel, 1 Ga. App. 15, 57 S. E. 898. In the state of Kentucky "love and affection, growing out of the rela- tionship of parent and child, is a good consideration, and sufficient to uphold not only an executed, but an executory contract between them." Doty v. Dickey, 29 Ky. _L. 900, 96 S. W. 544. See also, Corwin v. Corwin, 6 N. Y. 342, 57 Am. Dec. 453 (a case in which a parent deeded his son-in-law certain real estate). 433 CONSIDERATION. § 247 Thus it is the general rule that a promissory note, the considera- tion of which is love and affection, will not be enforced against the maker either during his life or against the estate after his death,"^ but the fact that natural affection forms an element of the consideration does not impair the force of a contract.'" Ex- cept in a few instances, equity will not enforce an executory promise founded on a good consideration, as when the promisor has died, without having altered his intention and the promisee or covenantee has an equity superior to those against whom the promise or covenants is sought to be enforced.*^ § 247. Evidence of consideration. — Since a simple contract must be supported by a consideration it is inciunbent upon the one- seeking to enforce the contract to show that it is so sup- ported, but as has been seen a consideration is presumed or im- ported in certain cases."* In case a written contract recites a con- " Holfiday v. Atkinson, S Barn. & Cr. 501 ; Jones v. Lock, L. R. 1 Ch. 25; Armstrong v. Armstrong, 142 111. App. 507; Williams v. Forbes, 114 111. 167, 28 N. E. 463 ; West v. Gavins, 74 Ind. 265 ; Sullivan v. Sullivan, 122 Ky. 707, 92 S. W. 966, 7 L. R. A. (N. S.) 156n. See, however, Doty v. Dukey (Ky.) 96 S. W. 544; Strevell v. Jones, 106 App. Div. (N. Y.) 334, 94 N. Y. S. 627; Fink v. Cox, 18 Johns (N. Y.), 145, 9 Am. Dec. 191; Hadley v. Reed, 58 Hun (N. Y.) 608, 34 N. Y. St. 949, 12 N. Y. S. 163 ; Simmons v. Cincinnati Sav. Soc, 31 Ohio St. 457, 27 Am. Rep. 521 ; Prior v. Reynolds, 1 Ohio Dec. 366, 8 West. Law. J, 325; Starr v. Starr, 9 Ohio St. 74; Kern's Estate, 171 Pa. St. 55, 33 Atl. 129; Kline's Estate, 9 Pa. Dis. R. 386; Priester v. Priester, Rich Eq. (S. Car.) 26, 18 Am. Dec. 191 ; Shugart v. Shugart, 111 Tenn. 179, 76 S. W. 821, 102 Am. St. 777 ; Holley v. Adams, 16 Vt. 206, 42 Am. Dec. 508; Smith v. Kittridge, 21 Vt. 238. See, however, Woodbridge v. Spooner, 1 Chitty 661 ; Bowers v. Kurd, 10 Mass. 427; In re Ross' Appeal, 127 Pa. St. 4, 17 Atl. 682. "'Puterbaugh v. Puterbaugh, 131 Ind. 288, 30 N. E. 519, 15 L. R. A. 341 ; Brown v. Whaley, 58 Ohio St. 654, 49 N. E. 479, 65 Am. St. 793. "'Conover's Admr. v. Brown's Exrs., 49 N. J. Eq. 156,_ 23 Atl. 507. The relationship existing between father and daughter is sufficient to up- hold a mortgage given by her to him as security for her deceased husband's debts, though they could not have been enforced as against her. Ray v. Hallenbeck, 42 Fed. 381. " Byers v. Harris, 67 Iowa 685, 25 N. W. 879; Kentucky Female Or- phans' School V. Fleming, 10 Bush (Ky.) 234; Snowden v. Light, 5 Ky. L. 603; Williams Commission Com- pany's Assignee v. W. A. Shirley, 136 Ky. 303, 124 S. W. 327; Barrow v. Cazeaux, 5 La. 72 ; Marigny v. Union Bank, 12 Rob. (La.) 283; Brashear v. Hazard, 12 Rob. (La.) 328; Quimb v. Morrill, 47 Maine 470 ; Shelton v. St. Louis &c. R. Co., 131 Mo. App. 560, 110 S. W. 627; Noyes v. Young, 32 Mont. 226, 79 Pac. 1063 ; Brown v. Ed- sall, 23 S. Dak. 610, 122 N. W. 658; Grimsrud Shoe Co. v. Jackson, 22 S. Dak. 114, lis N. W. 656; Western Mfg. Co. V. Freeman (Tex. Civ. App.), 126 S. W. 924. As to the bur- den of proving want of consideration, see Ginn v. Dolan, 81 Ohio St. 121, 90 N. E. 141, 135 Am. St. 761 and note. See ante, § 198 et seq.. When Pre- sumed or Imported. 28 — Contracts, Vol. I § 247 CONTRACTS. 434 sideration/" as "for value received","* it is generally presumed to be sufficient. In those cases where a consideration is not con- clusively presumed, the statement thereof as set out in the con- tract is, as a general rule, merely formal. It is not deemed an essential part of the contract but merely a recital. Consequently it may be shovi^n to be different from that expressed."' An addi- " In re Wickersham's Estate, 153 Cal. 603, 96 Pac. 311; Lee v. Davis, 70 Ind. 464; Sims v. Stilwell, 3 How. (Miss.) 176; Shelton v. St. Louis &c. R. Co., 131 Mo. App. 560, 110 S. W. 627; Town of Grand Isle v. Kinney, 70 Vt. 381, 41 Atl. 130. ■" Whitney v. Stearns, 16 Maine 394 ; Bourne v. Ward, 51 Maine 191; Par- ish V. Stone, 14 Pick. (Mass.) 198, 25 Am. Dec. 378; Conrad Seipp. Brew. Co. V. McKittrich, 86 Mich. 191, 48 N. W. 1086; Frank v. Irgens, 27 Minn. 43, 6 N. W. 380 ; Jerome v. Whitney, 7 Johns. (N. Y.) 321; Hamilton v. Hamilton, 127 App. Div. (N. Y.) 871, 112 N. Y. S, 10; Eastern Plank Road Co. V. Vaughan, 14 N. Y. 546; Jones V. Holliday, 11 Tex. 412, 62 Am. Dec. 487 ; Thrall v. Newell, 19 Vt. 202, 47 Am. Dec. 682. "Coles V. Soulsby, 21 Cal. 47; Phelps V. Clasen, Fed. Cas. No. 11074; Swope V. Forney, 17 Ind. 385 ; Stewart V. Chicago &c. R. Co., 141 Ind. 55, 40 N. E. 67; Brown v. Summers, 91 Ind. 151; Nichols &c. Co. V, Burch, 128 Ind. 324, 27 N. E. 737; Bourne V. Bourne, 92 Ky. 211, 13 Ky. L. 545, 17 S. W. 443; Dickson v. Ford, 38 La. Ann. 738; Smith v. Con- rad, 15 La. Ann. 579; Tyler v. Carlton, 7 Maine (7 Greenl) 175, 20 Am. Dec. 357; Emmons v. Littlefield, 13 Maine 233 ; Dayton v. Warren, 10 Minn. 233 ; Aull Sav. Bank v. AuU, 80 Mo. 199; Moore v. Ringo, 82 Mo. 468; Lehn- dorf V. Schields, 13 Mo. App. 486; Mc- Crea v. Purmort, 16 Wend. (N. Y.) 460, 30 Am. Dec. 103; Rosboro v. Peck. 48 Barb. (N, Y.) 92; Cassily v. Cassily, 4 Ohio S. & C. P. Dec. 62, 2 Ohio N. P. 387 ; Barbre v. Goodale, 28 , Ore. 465, 43 Pac. 378; Appeal of Holmes, 79 Pa. St. 279; Taylor v. Merrill, 64 Tex. 494. Contra, Mead v. Steger, 5 Port. (Ala.) 498; Cutter & Co. V. Reynolds, 8 B. Mon. (Ky.) 596; Emery v. Chase, 5 Greenl. (Maine) 232; Boyce v. Wilson, 32 Md. 122; Maigley v. Hauer, 7 Johns. (N. Y.) 341 ; Schemerhorn v. Vanderheyden, 1 Johns. (N. Y.) 139, 3 Am. Dec. 304; Miller V. Bagwell, 3 McCord (S. Car.) 562. If the stipulation as to the consideration is contractual it cannot be varied by parol evidence. Pickett V. Green, 120 Ind. 584, 22 N. W. 737 ; Miller v. Edgerton, 38 Kans. 36; Hil- ton V. Homans, 23 Maine 136; Baum V. Lynn, 72 Miss. 932; Davis v. Gann, 63 Mo. App. 425, (see also. Strong v. Whybark, 204 Mo. 341, 102 S. W. 968, 12 L. R. A. (N. S.) 240n.) ; Maigley v. Hauer, 7 Johns. (N. Y.) 341; Hub- bard V. Marshall, 50 Wis. 322, 6 N. W. 497. "A mere statement of a certain amount of money, without more, as the consideration, is inatten- tive recital, common in conveyancing, of a consideration in most general use. It is thus spoken of in the books and adjudications. But when this common form of expression, thus re- citing a sum of money, the medium of exchange which is generally used as a consideration, is departed from and an unusual provision inserted, thereby evidencing the contractual intention, it is as binding as any other contract. But money may also be contracted for as a consideration in a written con- tract. And when the intention to sc contract is disclosed by the written in- strument, no other or additional con- sideration can be shown. Thus, sup- pose that the consideration was stated in the written contract to be 'one thou- sand dollars, to be paid as follows : Two hundred dollars in six months from date without interest; four hun- dred dollars in twelve months from date with three per cent, interest; and four hundred dollars in eighteen months from date with ten per cent, interest from maturity ; all to be se- cured by a mortgage' on certain de- scribed property. Could it be shown in contradiction to this that the con- sideration agreed upon was fifty head 435 CONSIDERATION. § 247 tional consideration to that expressed may be shown."' And if no consideration is expressed in a written agreement the real con- sideration may be shown."" But if the contract sued on does not import a consideration and none is set out in express terms, a consideration must be alleged and proved.^ ParoP or documen- tary^ evidence is admissible to show the real consideration, if any, ^ of cattle or an additional sum of ''money? Clearly not. The reason is jthat it has been contracted otherwise by the parties and that contract has been reduced to writing." Jackson v. Chicago. &c. R. Co., 54 Mo. App. 636. But if the evidence offered to prove the real consideration would, in effect, change the character of the instru- ment, it is not admissible. Meades v. Lansjngh, Hopk. (N. Y.) 124. ""Cowan V. Cooper, 41 Ala. 187; Stringfellow v. Ivie, 73 Ala. 209; Mo- bile & M. R. Co. V. Wilkinson, 72 Ala. 286; Fraley v. Bentley, 1 Dak. 25, 46 N. W. 506 ; Pennsylvania Company v. Dolan, 6 Ind. App. 109, 32 N. E. 302 ; McMahan v. Stewart, 23 Ind. 590; Bryant v. Hunter, 6 Bush (Ky.) 75; Emmons v. Littlefield, 13 Maine 233; Nedvidek v. Meyer, 46 Mo. 600 ; In re Buckley's Appeal, 48 Pa. St. 491; Wood V. Moriarty. IS R. I. 518, 9 Atl. 427; Fort v. Orndoff, 7 Heisk.(Tenn.) 167; Taylor v. Merrill, 64 Tex. 494; Wait V. Walt, 28 Vt. 350. '" Booth V. Dexter Steam &c. Co., 118 Ala. 369, 24 So. 405; Kinney v. Whiton, 44 Conn. 262, 26 Am. Rep. 462; Jessup v. Trout, 11 Ind. 194; Singer Mfg. Co. v. Forsyth, 108 Ind. 334, 9 N. E. 372; Warren v. Walker, 23 Maine 453; Dryden v. Barnes, 101 Md. 346, 61 Atl. 342 ; Greer v. Nutt, 54 Mo. App. 4; Ash v. Beck (Tex. Civ. App.), 68 S. W. 53. As to the suffi- ciency of the statement of the consid- eration set forth m the contract see, Fearnley v. Fearnley, 44 Colo. 417, 98 Pac. 819; Southern Bell &c. Co. v. Harris, 117 Ga. 1001, 44 S. E. 885; Boyce v. Royal Stove &c. Co., 45 Ind. App. 469; 91 N. E. 32; Watkins v. Robertson, 105 Va. 269, 54 S. E. 33, 5 L. R. A. (N. S.) 1194, 115 Am. St. 880. ^Rann v. Hughes, 7 T. R. 350; Higham v. Harris, 108 Ind. 246 8 N. E. 255; Rayburn v. Comstock, 80 Mich. 448, 45 N. W. 378; Thomas v. Kyles, 54 N. Car. 302; Greenless Ran- son Co. V. Berne, 9 Ohio Dec. 298, 12 Wkly. Law Bui. 100; In re Thun's Es- tate, 5 Pa. Dist. 739 ; Greer v. Latimer, 47 S. Car. 176, 25 S. E. 136; Tilden v. Smith, 24 S. Dak. 576, 124 N. W. 841 ; Denison v. Tyson, 17 Vt. 549. Non- negotiable instruments. National Sav. Bank v. Cable, li Conn. 568, 48 Atl. 428; Bristol v. Warner, 19 Conn. 7; Wickersham v. Beers, 20 III. App. 243 ; Louisville E. & St. Louis R. Co. v. Caldwell, 98 Ind. 245 ; Prior v. Linsey, 3 Bibb (Ky.) 76; Hemmenway v. Hickes, 21 Mass. 497; Courtney v. Doyle, 10 Allen (Mass.) 122; Hardin V. Pelan, 41 Miss. 112; Conover v. Stillwell, 34 N. J. L. 54; Joseph v. Ca- tron, 13 N. Mex. 202. 81 Pac. 439, 1 L. R. A. (N. S.) 1120; Stronach v. Bledsoe, 85 N. Car. 473; Wingo v. McDowell, 8 Rich. (S. Car.) 446; Reade v. Wheeler, 10 Tenn. (2 Yerg.) 50; Averett v. Booker, 15 Grat. (Va.) 163, 76 Am. Dec. 203. " St. Louis &c. R. Co. V. Crandell, 75 Ark. 89, 86 S. W. 855, 112 Am. St. 42; Guidery v. Green, 95 Cal. 630, 30 Pac. 786; Moffatt v. Bulson, 96 Cal. 106, 30 Pac. 1022, 31 Am. St. 192 ; Kinney v. Whiton, 44 Conn. 262, 26 Am. Rep. 462; Laiitte v. Shawcross, 12 Fed. 519; Collier v. Mahan, 21 Ind. 110; Jessup V. Trout, n Ind. 194 ; Singer Mfg. Co. V. Forsyth, 108 Ind. 334, 9 N. E. 372 ; First Nat. Bank v. Snyder, 79 Iowa 191, 44 N. W. 356 ; Lake Manawa R. Co. V. Squire, 89 Iowa 576, 57 N. W. 307; Warren v. Walker, 23 Mame 453 ; Semple v. Fletcher, 3 Mart. (La.) (N. S.) 382; IngersoU v. Martin, 58 Md. 67, 42 Am. Rep. 322; Breitenwischer V. Clough, 111 Mich. 6, 69 N. W. 88, 66 Am. St. 372; Greer v. Nutt, 54 Mo. App. 4; Chesson v. Pettijohn, 28 N. Car. 121. 'Adams v. Adams, 29 Ala. 433; Parke & Lacey Co. v. San Francisco Bridge Co., 145 Cal. 534, 78 Pac. 1065 ; Keefer v. Mattingly, 1 Gill. (Md.) § 248 CONTRACTS. 436 supporting the contract. But in proving the real consideration evidence of its adequacy or value cannot be shown to defeat the contract of itself in the absence of an entire w^ant or failure thereof.* As to the weight and sufficiency of the evidence it must be borne in mind that while any consideration, however small, may be regarded as sufficient to support a contract, yet the effect of a consideration when proved or admitted and the effect of the evidence offered to prove it are entirely different things."* And its weight or sufficiency is a question of fact for the court or jury as the case may be.* § 248. Entire or indivisible consideration. — The considera- tion for a contract may be entire and indivisible, in which case if any part of such consideration is illegal and the illegal portion is not separable from the whole consideration, the whole contract is as a general rule declared unenforcible.' This is true in such 182; Dole v. Wilson, 20 Minn. 356; Weaver v. Wood, 9 Pa. St. 220. In order to establish the value of certain services, the terms of the settlement made with another employe for simi- lar services are inadmissible. Dixon V. Million, 142 III. App. SS9. Any evi- dence is admissible under the general issue. Chamberlain v. Painesville &c. R. Co., 15 Ohio St. 225. If the instru- ment recites a consideration as, "for value received," evidence of a money consideration may be given. Munro v. Robertson, Fed. Cas. No. 9927, 2 Cranch (U. S.) 262. Evidence may be admitted to show the value of the con- sideration at the time the contract was made. Randall v. Pettes, 12 Fla. 517. It may be shown in order to defeat the assignment of a life insurance policy given in consideration of mar-- riage, that the one to wliom it was as- signed was married at the time the as- signment was made. Howe v. Hagan, 110 App. Div. (N. Y.) 392, 97 N. Y. S. 86. ■* American Merchants' Mfg. Co. v. Kantrowitz, 11 III. App. 155 (action on a note given for a patent — validity of patent still standing) ; Hartle v. Stahl, 27 Md. 157. "Liberty v. Haines, 103 Maine 182, 68 Atl. 738. "Earle v. Angell, 157 Mass. 294, 32 N. E. 164; Bluff Springs Mercantile Co. V. White (Tex. Civ. App.), 90 S. W. 710; Missouri &c. R. Co. v. Carter, 95 Tex. 461, 68 S. W. 159. Auditor's finding as conclusive as a finding by the court or jury. In re Dutton's Es- tate, 181 Pa. St. 426, 37 Atl. 582. 'Wadsworth v. Dunham, 117 Ala. 661, 23 So. 699; Edwards v. Randle, 63 Ark. 318, 38 S. W. 343, 36 L. R. A. 174, 58 Am. St. 108; C. B. Ensign & Co. V. Coffelt (Arli.), 145 S. W. 231 (sale of a patented device) ; Douth- art v. Congdon, 197 111. 349, 64 N. E. 348, 90 Am, St. 167; Chicago I. & L. &c. R. Co. V. Southern Indiana R. Co. (Ind. App.), 70 N. E. 843; Flersheira V. Cary, 39 Kans. 178, 17 Pac. 825; Nicholson V. EUis, 110 Md. 322, 73 Atl. 17, 24 L. R. A. (N. S.) 942n, 132 Am. St. 445; McNamara v. Gargett, 68 Mich. 454, 36 N. W. -218, 13 Am. St. 355 ; Case v. Smith, 107 Mich. 416, 65 N. W. 279, 31 L. R. A. 282, 61 Am. St. 341 ; Rand v. Mather, 11 Cush. (Mass.) 1, 59 Am. Dec. 131; Wood- ruff V. Wentworth, 133 Mass. 309; Bishop V. Palmer, 146 Mass. 469, 16 437 CONSIDERATION. § 248 cases, notwithstanding there may be several considerations for the promise, since it is impossible to say whether the return promise was induced by the legal or the illegal portion of the consideration.* Thus in case a contract is made which is in di- rect violation of some law of the land, the courts will not sus- tain any action growing out of such transaction, as where goods are furnished to those in open rebellion against the government, the party furnishing the goods cannot recover their value." Likewise, it has been held that there can be no recovery on a promissory note given for intoxicating liquors sold on Sunday, even though the note may be also intended as payment for articles which were legally purchased,^" and money loaned for gaming purposes is, as a general rule, held not recoverable.^^ Likewise, a N. E. 299, 4 Am. St. 339; Clark v. Ricker, 14 N. H. 44; Carleton v. Woods, 28 N. H. 290; Woodruff v. Hinman, 11 Vt. 592, 34 Am. Dec. 712. " Sims V. Alabama Brewing Co., 132 Ala. 311, 31 So. 35 ; Santa Clara &c. Co. V. Hayes, 76 Cal. 387, 18 Pac. 391, 9 Am. St. 211; Pueblo &c. R. Co. v. Taylor, 6 CoIq. 1, 45 Am. Rep. 512; Allen V. Pearce, 84 Ga. 606, 10 S. E. 1015 ; St. Louis &c. R. Co. v. Mathers, 104 III. 257; Rickets v. Harvey, 106 Ind. 564, 6. N. E. 325 ; Dennis v. Kus- ter, 57 Kans. 215, 45 Pac. 602; Kim- brough V. Lane, 11 Bush (Ky.) 556; Sandige v. Sanderson, 21 La. Ann. 757 ; Taylor v. Jaques, 106 Mass. 291 ; Fosdick V. Van Arsdale, 74 Mich. 302, 41 N. W. 931 ; Sumner v. Summers, 54 Mo. 340 ; Merrill v. Carr, 60 N. H. 114 ; Foley V. Speir, 100 N. Y. 552, 3 N. E. 477 ; Haynes v. Rudd, 102 N. Y. 372, 7 N. E. 287, 55 Am. Rep. 815; Coving- ton V. Threadgill, 88 N. Car. 186; Gage V. Fisher, 5 N. Dak. 297, 65 N. W. 809, 31 L. R. A. 557; Widoe v. Webb, 20 Ohio St. 431, 5 Am. Rep. 664; Springfield &c. Ins. Co. v. Hull, 51 Ohio St. 270, 37 N. E. 1116, 25 L. R. A. 37, 46 Am. St. 571 ; Bredin's Ap- peal, 92 Pa. 241, 37 Am. Rep. 677; Sul- livan V. Horgan, 17 R. I. 109, 20 Atl. 232, 9 L. R. A. 110; Massey v. Wal- lace, 32 S. Car. 149, 10 S. E. 937; Potts V. Gray, 3 Cold. (Tenn.) 468, 91 Am. Dec. 294; Read v. Brewer, 90 Tex. 144, 37 S. W. 418; Bowen v. Buck, 28 Vt. 308. •Hanauer v. Doane, 12 Wall. (U. S.) 342, 20 L. ed. 439. "Wadsworth v. Bunman, 117 Ala. 661, 23 So. 699; Braitch v. Guelick, 37 Iowa 212; Gerlick v. Skinner, 34 Kans. 86, 8 Pac. 257, 55 Am. Rep. 240; Ladd v. Dillingham, 34 Maine 316; Gotten v. McKenzie, 57 Miss. 418; Bick v. Seal, 44 Mo. App. 475; Sanderson v. Goodrich, 46 Barb. (N. Y.) 616; Widoe v. Webb, 20 Ohio St. 431, 5 Am. Rep. 664. "Viser v. Bertrand, 14 Ark. 267; Reed v. Reeves's Admr., 13 Bush (Ky.) 447; Emmerson v. Townsend, 73 Md. 224, 20 Atl. 984; White v. Buss, 3 Gush. (Mass.) 448; Raymond V. Leavitt, 46 Mich. 447, 9 N. W. 525, 41 Am. Rep. 170; Hall v. Cos- tello, 48 N. H. 176, 2 Am. Rep. 207; Staples v. Gould, 9 N. Y. 520; Grit- cher V. Holloway, 64 N. Gar. 526. Money loaned to furnish a house for gaming purposes, even though the plaintiff knew that the house was to be so used, may be recovered. Michael v. Bacon, 49 Mo. 474, 8 Awi. Rep. 138. § 249 CONTRACTS. 438 contract which tends to corrupt good morals^^ or unduly influ- ence legislative action^'' is unenforcible/* § 249. Divisible considerations or promises. — But if the legal portion of the consideration can be separated from the ille- gal portion, the contract will be upheld. ^^ Thus a contract in re- straint of trade will be enforced as to its remaining provisions if that part in unreasonable restraint thereof is divisible from the remainder of the contract." And where several articles are sold "' Chateau v. Singla, 114 Cal. 91, 4S Pac. 1015, 33 L. R. A. 7S0, 55 Am. St. 63 ; Dougherty v. Seymour, 16 Colo. 28S, 26 Pac. 823; Walraven v. Jones, 1 Houst. (Del.) 355; Ralston V. Boady, 20 Ga. 449; McDonald v. Fleming, 12 B. Mon. (Ky.) 285; Kathman v. Walters, 22 La. Ann. 54; Ashbrook v. Dale, 27 Mo. App. 649; Ernst V. Crosby, 140 N. Y. 364, 35 N. E. 603 ; Hunstock v. Palmer, 4 Tex. Civ. App. 459, 23 S. W. 294; Mack- bee V. Griffith, 2 Cranch (U. S.) 336, 15 Fed. Cas. No. 8660; Standard Fur- niture Co. V. Van Alstine, 22 Wash. 670, 62 Pac. 145, 51 L. R. A. 889, 79 Am. St. 960. "Pratt V. Foot, 6 Conn. 232; Howell V. Fountain, 3 Ga. 176, 46 Am. Dec. 415 ; Cook v. Shipman, 24 111. 614; Coquillard's Admr. v. Bearss, 21 Ind. 479, 83 Am. Dec. 362; Mc- Bratney v. Chandler, 22 Kans. 692, 31 Am. Rep. 213; Wood v. McCann, 6 Dana (Ky.) 366; Gil v. Williams, 12 La. Ann. 219, 68 Am. Dec. 767; Bur- ney's Heirs v. Ludeling, 47 La. Ann. 73, 16 So. 507; Frost v. Belmont, 6 Allen (Mass.) 152; Buck v. First Nat. Bank, 27 Mich. 293, IS Am. Rep. 189; Houlton v. Dunn, 60 Minn. 26, 61 N. W. 898, 30 L. R. A. 737, 51 Am. St. 493; Richardson v. Scott's Bluff County, 59 Nebr. 400, 81 N. W. 309, 48 L. R. A. 294, 80 Am. St. 682; Sedgwick V. Stanton, 14 N. Y. 289; Mills V. Mills, 40 N. Y. 543, 100 Am. Dec. 535; Basket v. Moss, 115 N. Car. 448, 20 S. E. 733, 48 L. R. A. 842, 44 Am. St. 463; Sweeney v. McLeod, IS Ore. 330, 15 Pac. 275; Clippinger v. Hepbaugh, S Watts & S. (Pa.) 315, 40 Am. Dec. 519; Spalding v. Ewing, 149 Pa. 375, 24 Atl. 219, 15 L. R. A. 727, 34 Am. St. 608; Powers v. Skin- ner, 34 Vt. 274, 80 Am. Dec. 677; Bryan v. Reynolds, 5 Wis. 200, 68 ■Am. Dec. 55. ^* See post, § 226, Illegal Contracts. " Hanauer v. Gray, 25 Ark. 350, 99 Am. Dec. 226; Treadwell v. Davis, 34 Cal. 601, 94 Am. Dec. 770; Rags- dale V. Nagle, 106 Cal. 332, 29 Pac. 628; Hoyt v. Macon, 2 Colo. 502; Allen V. Pearce, 84 Ga. 606, 10 S. E. 1015; Emshwiler v. Tyner, 21 Ind. App. 347, 52 N. E. 459, 69 Am. St. 360 ; Casady v. Woodbury County, 13 Iowa 113; Nicholson v. Ellis, 110 Md. 322, 73 Atl. 17, 24 L. R. A. (N. S.) 942n, 132 Am. St. 445; Sawyer v. Smith, 109 Mass. 220 ; Eaton v. Kegan, , 114 Mass. 433; Carleton v. Woods, 28 N. H. 290 ; Feldman v. Gamble, 26 N. J. Eq. 494; Stewart v. Lehigh Valley R. Co., 38 N. J. L. 505 ; Leavitt v. Blatch- ford, 5 Barb. (N. Y.) 9; State v. Board of Education, 35 Ohio St. 519; Frazier v. Thompson, 2 Watts & S. (Pa.) 235; Cobb v. Cowdery, 40 Vt. 25, 94 Am. Dec. 370; Sprigg's Admr. V. Rutland R. Co., 77 Vt. 347, 60 Atl. 143 ; Conradt v. Lepper, 13 Wyo. 473, 81 Pac. 307, 82 Pac. 2. "Vulcan Powder Co. v. Hercules Powder Co., 96 Cal. 510, 31 Pac. 581, 31 Am. St. 242; Western Union Teh Co. V. Burlington &c. R. Co., 11 Fed. 1, 3 McCrary (U. S.) 130; Con- sumer's Oil Co. V. Nunnemaker, 142 Ind. 560, 41 N. E. 1048, 51 Am. St. 193; Nicholson v. Ellis, 110 Md. 322, 73 Atl. 17, 24 L. R. A. (N. S.) 942n, 132 Am. St. 445; Dean v. Emerson, 102 Mass. 480 ; Hubbard v. Miller, 27 Mich. 15, 15 Am. Rep. 153; Rosen- baum V. United States Credit Sj's- tem Co., 65 N. J. L. 255, 48 Atl. 237, S3 L. R. A. 449 ; Arnot v. Pittson, &c. Co., 2 Hun (N. Y.) 591, S Thomp. 439 CONSIDERATION. § 249 and a definite and fixed price is put on each article, the fact that some of the articles are sold unlawfully will not prevent a recov- ery for the price of those legally sold." And in case a mortgage is given as security for two or more notes one of which is valid and the other illegal, it is, nevertheless, enforcible as to the valid note.'' The divisibility or indivisibility of the consideration may usually be determined by ascertaining whether or not the plain- tiff requires any aid from the illegal part of the transaction to assist him in the establishment of his case.'" Therefore, if the illegal portion of the consideration is merely incidental to the contract, and after separating the legal part of the consideration from the illegal, there still remains a consideration, the contract will usually be given effect.^" But where the sole object for the formation of the contract was the accomplishment of an illegal purpose, no part of the contract will be enforced.^' It is important that the illegality and indivisibility of the con- sideration be distinguished from the validity of the promise. For if the consideration is valid and one or more of the promises given in consideration of it are illegal, the illegality of one or more of such promises will not avoid the rest, provided that those which are valid are severable from the others.^'^ If the consideration is & C. 143, revd., 68 N. Y. 558, 23 Am. 139; Shaw v. Carpenter, 54 Vt. 155, Rep. 190 ; Thomas v. Miles' Admr., 41 Am. Rep. 837 ; State v. Wilson, 73 3 Ohio St. 274. Kans. 334, 84 Pac. 737, 117 Am. St. "Boyd V. Eaton, 44 Maine 51, 69 479. See also, Padget v. O'Connor, Am. Dec. 83; Verett v. Delano 71 Nebr. 314, 98 N. W. 870. (Maine), 14 Atl. 288; Walker v. "Oliphant v. Markham, 79 Tex. Lovell, 28 N. H. 138, 61 Am. Dec. 543, 15 S. W. 569, 23 Am. St. 363. 60S; Chase's Exr. v. Burkholder, 18 ""Larsen v. Johnson, 78 Wis. 300, Pa. 48; Shaw v. Carpenter, 54 Vt. 47 N. W. 615, 23 Am. St. Rep. 404. 155, 41 Am. Dec. 837. Where fertil- See post, Ch. 21, et seq., Legality of izer is shipped, and notes are given Object and Illegal Contracts, in payment thereof, and one of the ^^ Santa Clara Valley, etc., Co. v. sacks did not have a tag attached Hayes, 76 Cal. 387, 18 Pac. 391, 9 Am. thereto as required by law, this would St. 211. not defeat a recovery of all the notes, ^ Pigot's Case, 6 Coke 47 (Part XI, but only on that note given for the 26b) ; Gaskell v. King, 11 East. 165, fertilizer of which that sack formed 10 Rev. R. 462; Keener's Cases, 1632; a part. Alabama Nat. Bank v. C. C. Newman v. Newman, 4 Mau. & Sel. Parker & Co., 146 Ala. 513, 40 So. 66; Bank of Australasia v. Breillatt, 987. 6 Moore P. C. 152; Kerrison v. Cole, " Hynds v. Hays, 25 Ind. 31 ; War- 8 East 231 ; Baines v. Geary, 35 Ch. ren v. Chapman, 105 Mass. 87; Car- Div. 154; Wallis v. Day, 2 Mees. & radine v. Wilson, 61 Miss. 573 ; Wels. 273 ; Havnes v. Doman, 80 L. Yundt V. Roberts, 5 Serg. & R. (Pa.) T. (N. S.) 569; St. Louis, etc., R. § 250 CONTRACTS. 44O deemed an entirety and a part thereof is invalid, the entire con- tract fails if there has been no apportionment made or means of apportionment furnished by the parties themselves. But where the entire consideration is lawful and the promisor undertakes to do two things, one lawful and the other unlawful, and they may be separated, the entire and legal consideration will uphold the lawful part of the contract.^^ § 250. From whom consideration must move. — There is much confusion on this general subject and a wilderness of con- flicting cases concerning it. The question, the answer to which has given rise to this confusion, is whether or not a stranger to the consideration, who is not a party to the agreement, can sue to enforce a contract made for his benefit or is the right of ac- tion confined to the one from whom the consideration moves, i. e. the promisee. This branch of the subject, however, has nothing to do with consideration and will be discussed elsewhere.^^ It is obvious that the consideration cannot move from a stran- ger or third person in no way a party to the contract. It must, therefore, move from one or both of the parties. For this reason it is necessary to revert to a definition of consideration and by an analysis of it answer the question. As has already been stated,^^ the common definition of consideration is "A benefit to the prom- isor, or to a third person at his request, or an injury, detriment, loss, change, or inconvenience, or the actual risk thereof, to the Co. V. Mathews, 64 Ark 398, 42 S. W. which was valueless and two of 902, 39 L. R. A. 467; Pueblo &c. R. which were legal and valuable, for Co. V. Taylor, 6 Colo. 1, 45 Am. Rep. the plaintiffs' promise that the $2,250 512; Presbury v. Fisher &c., 18 Mo. should be paid to the city; the plain- 50; Stewart v. Lehigh Valley R. Co., tiffs were not induced to make this 38 N. J. L. 505 ; Erie R. Co. v. Union agreement by fraud, mistake, or acci- Locomotive & Express Co., 35 N. J. dent. * * * The covenants to ac- L. 240; State v. Berryburg Board of cept and grade the streets and alleys Education, 35 Ohio St. 519; Gelpcke constituted ample consideration for V. City of Dubuque, 1 Wall. (U. S.) the plaintiffs' undertaking." For a 221 ; Oregon Steam Navigation Com- case contrary to this general doctrine pany v. Winsor, 20 Wall. (U. S.) 64, see, Lindsay v. Smith, 78 N. Car. 328, 22 L. ed. 315; Western Union Tel. 24 Am. Rep. 463. Co. V. Burlington &c. R. Co., 3 Mc- "^ See ante, §§ 209, 254, Failure of Crary (U. S.) 130, 11 Fed. \. In Consideration, Adequacy of Consid- the case of Tuttle Bros. & Bruce v. eration. City of Cedar Rapids, 176 Fed. 86, ''See post. Parties, Ch. 10. the court uses this language: "The ''See ante, §203, What is meant by result is that by the contract in hand consideration, the city gave three covenants, one of 441 CONSIDERATION. § 25 1 promisee."^' By this definition the consideration may be either a benefit to one party, a loss to the other or both. In case it is assumed that the consideration consists of a benefit to the prom- isor or a third person, from whom is this benefit derived if not the promisee, — the person to whom the promisor gives his prom- ise? There is no other alternative. If the consideration consists of a detriment, it is clear that such detriment is sustained by the promisee. Here, as in the first instance, there can be no alterna- tive. It is evident from what has been said that the consideration must always move from the promisee. This substantiates the statement previously made^' that the consideration in all unilateral executory contracts consists in detriment to the promisee. For if the consideration is held to be a benefit to the promisor, the benefit so conferred must pass from the promisee and the con- ferring of this benefit would, in the eyes of the law, be a detri- ment to him, while, on the other hand, the detriment suffered by the promisee need not be a benefit to the promisor.^* § 251. At whose instance the consideration must move. — It* is equally clear that the consideration must move at the in- stance of the promisor.^" For as has been seen the promise to perform or the actual performance of a gratuitous service is not a sufficient consideration no matter how great the detriment suf- fered by one party on account of the failure to perform the prom- ised gratuitous service,'" or on the other hand no matter how ''1 Chit Cont. (11 Am. Ed.) 31n. Bank of Kingston, 5 Ga. App. 578, 63 See also, ante, § 203, What is meant S. E. 652, in which it is stated "that by consideration. the consideration need not flow di- " See ante, § 203, What is meant by rectly from the promisee," but this is consideration. due to a confusion of terms. See '^It must be borne in mind in this also, Elmer v. Campbell, 136 Mo. connection that it is not absolutely App. 100, 117 S. W. 622, holding that necessary for the promise to be given where a promise is made for the ben- to the one from whom the considera- efit of several persons each of them tion moves. Thus if A promises C to need not have paid some considera- perform an act for C, if D will do a tion for the promise before there certain thing and D does that thing, can be a recovery, the latter is the promisee in contem- '"Ellis v. Clark, 110 Mass. 389, 14 plation of law, although C may have Am. Rep. 609; Stewart v. Hamilton been the one to whom the promise College, 2 Denio (N. Y.) 403. was actually given. 2 Street Founda- ^° Brawn v. Lyford, 103 Maine 362, tion of Legal Liability, p. 154. See 69 Atl. 544; Heal v. Richmond Co. also, Van Winkle v. King, 145 Ky. Sav. Bank, 127 App. Div. (N. Y.) 691 141 S W. 46. But see Bing v. 428, 111 N. Y. S. 602; Thorne v. § 252 CONTRACTS. 442 great the detriment suffered by an actual performance of the gratuitous service.^^ If, however, the promisee does any act which the law will consider as a detriment, at the request, either express or implied, of the promisor, and in reliance on a return promise, it is a sufficient consideration.^^ . § 252. To whom consideration must move. — While the consideration must move from the promisee at the instance of the promisor it is not necessary that the promisor be the recipient of it.^' It need not pass directly to the latter, but under the pre- vailing rule, may move from the promisee to a third person at the promisor's request."* § 253. Want of consideration. — Since every simple execu- tory contract must be supported by a consideration and its ab- sence renders the contract or promise a nudum pactum and void,^° a contract unsupported by a consideration is unenforcible.''* But Deas, 4 Johns. (N. Y.) 84; Ridgeway V. Grace, 2 Misc. (N. Y.) 293, 50 N. Y. St. 326, 21 N. Y. S. 934. °^ See ante, § 213, Past Considera- tion. "Shadwell v. Shadwell, 9 C. B. (N. S.) 159, 99 E. C. L. 159; Violett v. Fatten, 5 Cranch (U. S.) 142, 3 L. ed. 61 ; Johnson v. Wabash Col., 2 Ind. 555 ; Owing's Case, 1 Bland (Md.) 370, 17 Am. Dec. 311; Chapin V. Laphan, 20 Pick. (Mass.) 467; Wilson V. Baptist Education Soc, 10 Barb. (N. Y.) 308. See also, § 239, Incurring Liabilities or Obligations. ''Daniel &c. Co. v. Dickey, 6 Ga. App. 548, 65 S. E. 301; Ashburn v. Watson, 8 Ga. App. 566, 70 S. E. 19; McMicken v. Safford, 100 111. App. 102, afifd. 197 111. 540, 64 N. E. 540; Shaffer v. Ryan, 84 Ind. 140; Van Winkle V. King, 145 Ky. 691, 141 S. W. 46 ; Watt v. Rice, 1 La. Ann. 280 ; Haskell v. Tukesbury, 92 Maine 551, 43 Atl. SOO, 69 Am. St. 529 ; Mack v. Mack, 87 Nebr. 819, 128 N. W. 527; Gansevoort Bank v. Altshul, 26 Misc. (N. Y.) 6, 55 N. Y. S. 733. See also, Utah Nat. Bank v. Nelson (Utah), 111 Pac. 907, See ante, §§ 234, 235, Forbearance; Extension of Time. "William v. Perkins, 21 Ark. 18; Reed v. Pueblo First Nat. Bank, 23 Colo. 380, 48 Pac. 507; Dillman v. Nadelhofer, 160 111. 121, 43 N. E. 378; Crawford v. Shaw, 18 Ind. 495 ; Mill- er V. Root, n Iowa 545, 42 N. W. 502; Bowling v. Floyd (Kans. App.), 48 Pac. 875; Hunt v. Adams, 5 Mass. 358, 4 Am. Dec. 68; Osborne V. Gullikson, 64 Minn. 218, 66 N. W. 965; Beakes v. Da Cunba, 126 N. Y. 293, 27 N. E. 251 ; Pennsylvania Coal Co. V. Blake, 85 N. Y. 226; Johnston V. Elizabeth Bldg. Assn., 104 Pa. St. 394. See also, Buell v. Adams, 157 Mich. 248, 121 N. W. 752, 16 Detroit Leg N. 309. Where the parties con- tract for the benefit of a third per- son the latter need not give any con- sideration. Klitzke V. Smith, 46 Ind. App. 26, 91 N. E. 748. An agent's contract with a third person may be supported by a consideration which moves to the principal. Loeb v. Flan- n^ry, 148 111. App. 471. '"See ante, §§ 195, 208, Necessity for; Nudum Pactum. ™An agreement by a purchaser, who holds the vendor's bond to con- vey title upon payment of the pur- chase-price and who is not by such bond excluded from possession, to pay the vendor rent, has been held without consideration. Able v. Gun- ter (Ala.), 57 So. 464. Pinkerton v. Hudson, 87 Ark. 506, 113 S. W. 35 443 CONSIDERATION. § 253 where want of consideration is merely partial the contract is (agreement to pay part of costs of a suit when the promisor was in no way obliged so to do). The assign- ment by a subcontractor to his cred- itor of any debt which the contractor might owe him held not considera- tion for an agreement by the subcon- tractor or his creditor. S. R. H. Robinson &c. Co. v. Harrison, 97 Ark. 643, 133 S. W. 197. In re Casner's Es- tate, 1 Colo. App. 145, 81 Pac. 991 (promise to assign property unsup- ported by a consideration) ; Cowan v. Howard (Colo.), 116 Pac. 153 (al- leged promise made for the release of an option) ; Price v. Press Pub. Co., 117App.Div. (N.Y.)854, 103 N. Y. S. 296 (promise to pay bonus if em- ploye would abide by his contract of employment) ; Jenkins v. Bishop, 136 App. Div. (N. Y.) 104, 120 N. Y. S. 825 (agreeing to give plaintiff credit for any reduction defendant might obtain in the purchase price of cer- tain real estate). In case a tenant cannot abandon premises for bad re- pair the landlord's agreement to al- low him to make repairs and give him three months' rent free is with- out consideration. Kaye v. Hoage, 63 Misc. (N. Y.) 332, 117 N. Y. S. 122; Smith v. Burditt, 107 App. Div. (N. Y.) 628, 95 N. Y. S. 188 (or to pay no further money to a contractor until it appeared that a subcontractor had received his money) ; Bank of Spartanburg v. Mahon, 78 S. Car. 408. 59 S. E. 31 (agreement to apply proceeds derived from the sale of a stock of goods in a certain way) ; McKone v. Metro- politan Life Ins. Co., 131 Wis. 243, 110 N. W. 472 (promise to repay money embezzled by another) ; Mar- tin V. Flahive, 112 App. Div. (N. Y.) 347, 98 N. Y. S. 577 (promise by prin- cipal contractor to pay materialman for material furnished subcontract- or). See also, Snyder v. Monroe Eckstein Brewing Co., 107 App. Div. (N. Y.) 328, 95 N. Y. S. 144. Utah Sav. & Trust Co. v. Bamberger, 29 Utah 370, 81 Pac. 887 (promise made in consideration of the payment of a note when note had already been cancelled) ; Engel v. Gordon, 97 N. Y. S. 981, 49 Misc. 641 (promise to pay the obligation of another) ; Bull V. Payne, 47 Ore. 580, 84 Pac. 697 (promise to pay claimant a specified sum of money and to convey a farm on perfecting title thereto) ; Riley v. Stevenson, 118 Mo. App. 187, 94 S. W. 781 (promise by vendor to repair damages made after the completion of the sale) ; Graham v. Spence, 71 N. J. Eq. 183, 63 Atl. 344 (an agree- ment entered into with third person that a gift should be the property of the one to whom it was given) ; Gloeckner v. Kittlaus, 192 Mo. 477, 91 S. W. 126 (promise to share land purchased at sheriff's sale with an- other) ; Precht v. Howard, 110 App. Div. (N. Y.) 680, 97 N. Y. S. 462 (agreement to convey building to its owner) ; affd., 187 N. Y. 136, 79 N. E. 847, 9 L. R. A. (N. S.) 483; Chase V. Chase, 191 Mass. 556, 78 N. E. 115 (promise by the devisee to share with other heirs) ; Bunnell v. Rosen- berg, 126 111. App. 196 (promise to forbear where promisor suffers noth- ing). An agreement made without any consideration to fix the division line between two adjoining property owners at a place which is known by both parties not to be the true line, is without effect.. Lewis v. Ogram, 149 Cal. 505, 87 Pac. 60, 10 L. R. A. (N. S.) 610n, 117 Am. St. 151. See note to above case as reported in 10 L. R. A. (N. S.) 610n. A promise by a county treasurer to return money de- posited with an application for a liquor license, to one advancing it to the applicant, in case the license is re- fused, is without consideration, and not binding when the law specifies that the deposit shall be returned to the applicant who has not assented to the contract. Hemrich Bros. Brew- ing Co. v. Kitsap County, 45 Wash. 454, 9 L. R. A. (N. S.) 910, 88 Pac. 838; Fox v. Seabury, 211 Pa. 140, 60 Atl. 508 (where the sole inducement for the promise is a threat made by plaintiff at the time it was given). For further discussion of Want of Consideration, see ante, § 209 et seq. ; Rowland v. Phalen, 14 N. Y. Super Ct. 43 (want of authority on the part of an agent to contract does not prove want of consideration). § 254 CONTRACTS. 444 usually affected only pro tanto, and may be enforced to the extent of the valuable consideration/' § 254. Failure of consideration. — Want or failure of con- sideration overlap and no clear, distinct dividing line can be drawn between them. This fact, however, gives rise to prac- tically no difficulty in practice except, in some jurisdictions, as to the pleadings.^* When the term want of consideration is used it is understood that there was no consideration whatever for the contract at the time it was made. By failure of consid- eration is meant that a sufficient consideration was contemplated by the parties at the time the contract was entered into but either on account of some innate defect in the thing to be given or non- performance in whole or in part of that which the promisee agreed to do or forbear nothing of value can be or is received by the promisee. As indicated by this definition, failure of consid- eration may result from lack of value in the thing given or from the act of one of the parties. Where the thing contracted for is a nullity it is ineffectual as a consideration and will not support a promise based thereon.^® Thus a failure of consideration re- sults on the assignment of a patent which the parties deem valid, but which subsequently is proven void and a contract based there- on cannot be enforced.*" And in the transfer of personal prop- "Doebler v. Waters, 30 Ga. 344; (Mass.) 83; Deering Harvester Co. Gamble v. Grimes, 2 Ind. 392; Rob v. Melheim, 83 Minn. 359, 86 N. W. son V. McKoin, 18 La. Ann. S44 ; 348 ; Nichols & Shepard Co. v. Soder- Parish V. Stone, 14 Pick. (Mass.) qtiist, 11 Minn. 509, 80 N. W. 630; 198, 25 Am. Dec. 378; Griffiths v. Wentworth v. Wentworth, 5 N. H. Parry, 16 Wis. 218. But a plea of en- 410; Crosby v. Wood, 6 N. Y. 369; tire want or failure of consideration House v. Kendall, 55 Tex. 40. The has been held bad if it shows only one alleging failure of coasideration a partial want, and is not supported must introduce evidence of such fail- by proof of a partial want or failure ure of consideration and of what of consideration. Wilson v. Town such failure consisted. National Tube of Monticello, 85 Ind. 10; Wheelock Works v. Ring &c. Mach. Co., 201 V. Barney, 27 Ind. 462. _ Mo. 30, 98 S. W. 620. The above case ^' See Osborne & Co. v. Hanlin, also holds that evidence of failure of 158 Ind. 325, 63 N. E. 572; Billan v. consideration is admissible under a Hercklebrath, 23 Ind. 71. plea of want of consideration. ™Sorrells v. McHenry, 38 Ark. " Sandage v. Studabaker Bros. 127; Pettyjohn v. Liebscher, 92 Ga. Mfg. Co., 142 Ind. 148, 41 N. E. 380, 149; Jeffries v. Lamb, 73 Ind. 202; 34 L. R. A. 363, 51 Am. St. 165; Sny- Montelius v. Wood, 56 Iowa 254, 9 N. der v. Kurtz, 61 Iowa 593, 16 N. W. W. 212; Dodge v. Oatis, 27 Kans. 722; First Nat, Bank v. Peck, 8 762; Woods v. Schlater, 24 La. Ann. Kans. 660; Lester v. Palmer, 4 Allen 284; Cabot v. Haskins, 3 Pick. (Mass.) 145; Bierce v. Stocking, 11 445 CONSIDERATION. § 254 erty generally, if the seller did not have title," or if the goods are sold under a warranty and do not meet the specifications of such warranty,^^ there is no consideration for the contract based on the transfer. Likewise, it is true, as a general rule, that if real estate is conveyed by warranty deed and the title thereto en- tirely fails, want of consideration may be pleaded in an action for the purchase-price." And the failure of a party to a contract to fulfil his promise to do or refrain from doing some act before the other party is obligated to perform, is a failure of con- sideration and relieves the other party from performing.** But if the performance is rendered impossible by the promisor's own act he cannot escape liability on the ground that there was a fail- Gray (Mass.) 174; Bliss v. Negus, 8 Mass. 46; Harlow v. Puttnan, 124 Mass. 553; Hash v. Lull, 102 Mass. 60, 3 Am. Rep. 435 ; JoUiffe v. Collins, 21 Mo. 338; Herzog v. Heyman, 151 N. Y. 587, 45 N. E. 1127, 56 Am. St. 646; Geiger v. Cook, 3 Watts. & S. (Pa.) 266; Clough v. Patrick, 37 Vt. 421. The English courts hold the contrary. Adie v. Clark, L. R. 3 Ch. Div. 134; Hall v. Conder, 2 C. B. (N. S.) S3; Lawes v. Purser, 6 El. & Bl. 930. And the courts of this country apply the English rule in case the patent is granted in England. Chem- ical &c. Co. V. Howard, 148 Mass. 352, 20 N. E. 92, 2 L. R. A. 168 (second appeal, 150 Mass. 495, 23 N. E. 317). Or if the machine is absolutely use- less for the purpose named in the letters patent no recovery can be had on a note given for its purchase. Rowe V. Blanchard, 18 Wis. 441, 86 Am. Dec. 783. ''Chenault v. Bush, 84 Ky. 528, 8 Ky, Law 490, 2 S. W. 160; Maxfield V. Jones, 76 Maine 135; Ledwick v. McKim, 53 N. Y. 307; Wilkinson v. Ferrce, 24 Pa. St. 190 ; Vance v. Dav- enport, 11 Rich. L. (S. Car.) 517. ''Lathrop v. Hickson, 67 Ga. 445; Thompson v. Wheeler &c. Mfg. Co., 29 Kans. 476; Button v. Trader, 75 Mich. 295, 42 N. W. 834; Shepard v. Temple, 3 N. H. 455. ^'Heaton v. Myers, 4 Colo. 59; Cook v. Mix, 11 Conn. 432; Slack v. McLagan, 15 111. 242; Davis v. Mc- Vickers, 11 111. 327; Fleetwood v. Brown, 109 Ind. 567, 9 N. E. 352; Rice V. Goddard, 14 Pick. (Mass.) 293; Redding v. Lamb, 81 Mich. 318, 45 N. W. 997 ; Durment v. Tuttle, 50 Minn. 426, 52 N. W. 909; TiUotson V. Grapes, 4 N. H. 444; Tibbets v. Ayer, Hill & D. (N. Y.) 174; Stein- hauer v. Witman, 1 Serg. & R. (Pa.) 438; Gray v. Handkinson's Ex'rs, 1 Bay (S. Car.) 278; Chandler v. Marsh, 3 Vt. 161. Contra, Fields v. Clayton, 117 Ala. 538, 23 So. 530, 67 Am. St. Rep. 189; Jenness v, Parker, 24 Maine 289. "Billings V. Everett, 52 Cal. 661; Booth v. Fitzer, 82 Ind. 66; Medcalf v. Brown, 11 Ind. 476; New Orleans Polo Club v. New Orleans Jockey Club, 128 La. 1044, 55 So. 668; Taft v. Montague, 14 Mass. 281, 7 Am. Dec. 215; Perkins v. Brown, 115 Mich. 41, 72 N. W. 1095; Ward v. Textile Commission Co., 139 App. Div. (N. Y.) 109, 123 N. Y. S. 918; Denniston v. Bacon, 10 Johns. (N. Y.) 198; Gilmartin v. Van Horn, 107 N. Y. S. 131; Richardson & Morgan Co. V. GudewJll, 30 Misc. (N. Y.) 818, 61 N. Y. S. 1120; Pope v. Hays, 19 Tex. 375. Where the act is to be performed by a third person his non- performance constitutes a failure of consideration. Gale v. Harp, 64 Ark. 462, 43 S. W. 144. Where a con- tractor agreed to lay and maintain for ten years a pavement in consider- ation of a stipulated price, failure on the part of the contractor to main- tain the pavement constituted a fail- ure of consideration. Nelson v. San Antonio Tract. Co. (Tex. Civ. App.), § 254 CONTRACTS. 446 ure of consideration/" Nor is failure of consideration a defense in case the promisor himself destroys the consideration he re- ceived." Nor is it any defense, in the absence of fraud, duress or mutual mistake of fact that the consideration received is not as valuable as the promisor supposed it to be.*^ And if the con- tract is still in force and may be ultimately fulfilled, a suit cannot be maintained to recover the consideration given.*' Should there be a partial failure of consideration a recovery pro tanto may be had in case the contract is divisible.*® This is not true, however, if a part of the entire consideration is illegal."" After what has been said it is hardly necessary to add that want or failure of consideration is always available as a defense,^^ except in those few instances where a consideration is conclu- sively presumed, as in the case of instruments under seal, or ne- gotiable instruments in the hands of an innocent purchaser, and the establishment of this defense avoids the contract." And as 142 S. W. 146. The grantor of an interest in tide lands in consideraton of the construction of a canal by the grantee has been held entitled to show that the canal was not con- structed and that the consideration has failed for the subsidy. Ames v. Kin- near, 42 Wash. 80, 84 Pac. 629. See ante, § 205, Continuing, executed and concurrent considerations. "Stray v. Russell, 1 El. & El. 888; Bean v. Prosens, 96 Cal. 17, 31 Pac. 49; Mitcherson v. Dozier, 7 J. J. Marsh. (Ky.) S3, 22 Am. Dec. 116. See also, Sixta v. Ontonagon Valley Land Co., 148 Wis. 186, 134 N. W. 341. *° Simmons v. Sefrit (Iowa), 125 N. W. 93. See also, Lund v. Smith, 191 Mass. 473, n N. E. 893. " See also, § 209, Adequacy of Con- sideration ; White v. Butler Univer- sity, 78 Ind. 585 ; Valley City Milling Co. V. Prange, 123 Mich. 211, 81 N. W. 1074 ; C. H. Brown Banking Co. V. Fink, 95 Mo. App. 257, 68 S. W. 586 ; Pittsburgh Stove & Range Co. v. Penn. Stove Co., 208 Pa. i1, 57 Atl. n. ■"Hinrichs v. Consolidated Adjust- ment Co., 145 111. App. 8. See also, Flanagan v. Callanan, 22 Misc. (N. Y.) 139, 48 N. Y. S. 708. "Keller v. Vowell, 17 Ark. 445; Doebler v. Waters, 30 Ga. 344; Gam- ble V. Grimes, 2 Ind. 392; Robson v. McKoin, 18 La. Ann. 544; Parish v. Stone, 14 Pick. (Mass.) 198, 25 Am. Dec. 378; Collins Iron Co. v. Burk- ham, 10 Mich. 283; Deering Harves- ter Co. V. Melheim, 83 Minn. 359, 86 N. W. 348; Briscoe v. Kinealy, 8 Mo. App. 76; Griffiths v. Perry, 16 Wis. 218. By statute in New Jersey a partial failure of consideration operates not as a complete defense, but only as a ground for an abate- ment of the damages. United &c. Mfg. Co. V. Conard, 80 N. J. L. 286, 78 Atl. 203. " Douthart v. Congdon, 197 111. 349, 64 N. E. 348, 90 Am. St. Rep. 167; Gait V. Provan, 131 Iowa 277, 108 N. W. 760; State v. Wilson, IZ Kans. 343, 84 Pac. Til, 117 Am. St. 479. See also, Todd v. Bettingen, 98 Minn. 170, 107 N. W. 1049 ; Widoe v. Webb, 20 Ohio St. 431, 5 Am. Rep. 664. See ante, § 248, Indivisible considerations. "Butler & Co. v. McCall, 119 Ga. 503. 46 S. E. 647. "^Russ Lumber &c. Co. v. Mus- cupiabe Land & Water Co., 120 Cal. 521, 52 Pac. 995, 65 Am. St. 186; Arthur v. Blackman, 63 Fed. 536; Paton V. Stewart, 78 111. 481; Booth 447 CONSIDERATION. § 254 a general rule the money paid or the thing of value given, if tangible, may be recovered in case the consideration therefor has entirely failed."* V. Fitzer, 82 Ind. 66; Sandage v. Studabaker &c. Co., 142 Ind. 148, 41 N. E. 380, 34 L. R. A. 363, 51 Am. St. 165; Grisby v. Grisby, 1 Ky. L. 62; Sentell & Co. v. Bonner (La.), Man. Unrep. Cas. 345 ; Hackley v. Headley, 45 Mich. 569, 8 N. W. 511; Ward v. Hartley, 178 Mo. 135, 11 S. W. 302; Chemical Elect. &c. Co. v. Howard, 148 Mass. 352, 20 N. E. 92, 2 L. R. A. 158; Sawyer v Chambers, 44 Barb. (N. Y.) 42; Rowe v. Blanchard, 18 Wis. 441, 86 Am. Dec. 783. ""Spring V. Coffin, 10 _ Mass. 31; Lawrence v. Carter, 16 Pick. (Mass.) 12; Claflin v. Godfrey, 21 Pick. (38 Mass.) 1; Lathrop v. Mayer, 86 Mo. App. 335; Tausig v. Drucker, 90 N. Y. S. 380. CHAPTER X. PARTIES. § 260. Must have capacity to contract. § 269. Mental incapacity. 261. Capacity is generally presumed. 270. Deaf mutes. 262. How incapacity may arise or be 271. Coverture. caused. 272. Artificial persons and corpora- 263. United States or state as a tions. party. 273. Agents and representatives. 264. Foreign governments and rep- 274. Drunken persons. resentatives. 275. Where incapacity is such as to 265. Aliens. make contracts void. 266. Convicts. 276. Where incapacity is such as to 267. Effect of laws requiring license make contracts voidable. or the like. 277. Ratification. 268. Youth or lack of age. § 260. Must have capacity to contract. — One fundamental principle applied over and over in the law of contracts is to the effect that no binding agreement can exist until the parties have mutually assented to its terms. This presupposes a free, fair and serious exercise of the reasoning faculty, or at least an ability to give an intelligent assent, in other words, the power both phys- ical and mental of deliberating upon the matter and weighing its consequences. It follows that capacity to contract is absolutely necessary to the formation of a binding agreement.^ This is too elementary to require the citation of additional authority. § 261. Capacity is generally presumed. — The law pre- sumes, however, that there is a full capacity to contract. Want of capacity is the exception and not the general rule. Conse- quently its absence must be established by the party alleging in- capacity. It is only in certain instances that protection will be given. Weakness of mind short of insanity, the mere absence of experience or skill upon the particular subject of the contract in question, or immaturity of reason where the party has obtained 'Carson v. Clark, 1 Scam. (111.) N. W. 590. See also, post, chaps. 11, 113, 25 Am. Dec. 79; Van Buren &c. 12, 13. Infancy, Insanity, Married R. Co. V. Lanphear, 54 Mich. 575, 20 women, etc. 448 449 PARTIES. § 262 full age, affords in general no ground for release at law or in equity if no fraud is practiced on the party. Persons entering into an agreement will be presumed to be adults and competent to contract.^ § 262. How incapacity may arise or be caused. — Incapaci- ties may be classified under two heads; they are: first, natural incapacity, such as insanity or imbecility, and under this head will also be included drunken persons ; second, artificial incapaci- ties. An artificial incompetency arises when by a positive rule of law a specified class of individuals is declared incapable of bind- ing themselves by a contractual obligation." Certain individuals of such class may or may not be mentally or physically capable, but no distinction is made in such cases; all are impartially de- clared incompetent to contract. The foregoing is true of infants, married women at common law, and those incapable from such causes as are declared grounds of incapacity by the laws of the various states, varying in different jurisdictions.* The various persons incapacitated by operation of natural or artificial reasons will be specifically mentioned in the following sections of this chapter, and some of them, — infancy, for instance, — will be specially treated in separate chapters. § 263. United States or state as a party. — The United States Government and the several states have the power to make contracts as "an incident to the general right of sovereignty.'"* It follows that if this power is "an incident to the general right of sovereignty" the capacity of the federal and state governments = Hickson V. Aylward, 3 Moll. IS; Allen's Adm'rs v. Allen's Adm'rs, 79 Foltz V. Wert, 103 Ind. 404, 2 N. E. Vt. 173, 64 Atl. 1110. 950; Paulus v. Reed, 121 Iowa 224, 'See 2 Parsons on Contracts (6tli 96 N. W. 7S7; Merchants' Nat. Bank ed.), *S73. V. Soesbe, 138 Iowa 354, 116 N. W. *It will of course be understood 123; Nason v. Chicago &c. R. Co., that the disabilities of coverture 149 Iowa 608, 128 N. W. 854 (holding have been largely removed by legis- mere physical weakness as a general lative enactment m the various rule insufficient to avoid a contract) ; states. , 1,, t Mathews v. Nash, 151 Iowa 125, 130 "United States v. Lane, 3 McLean N W 796; Farnam v. Brooks, 9 (U. S.) 365 ; United States v. Tmgey, Pick. (Mass.) 212; 1 Elliott on Ev., 5 Pet. (U. S.) US, 8 L. ed 66; §§125, 126; 3 Elliott on Ev., § 2266. Floyd Acceptances, 7 Wall (U. S.) See also Moore v. Gilbert, 175 Fed. 666, 19 L. ed. 169, 7 Ct. C . (U. S.) 65. 1 99 C C A 141 ; Hauber v. Lei- "It does not require legislation to em- bold, 76 Nebr.'706, 'l07 N. W. 1042; power the proper department to act 29— Contracts, Vol. I 263 CONTRACTS. 45C to contract must be coextensive with their functions.® But since the government of the United States and the various states com- posing it are limited in their power they have no right to enter into contracts opposed to an express constitutional limitation or inhibition, or which is beyond the sphere and does not further the in making the contract or receiving M. (U. S.) 1(>, 24 Fed. Cas. No. ■ the security; the power exists as an 14441; United States v. Howell, 4 , incident to sovereignty and may be Wash. (U. S.) 620; United States exercised by the proper department, v. Lane, 3 McLean (U. S.) 365, 26 if not forbidden by legislation." Fed. Cas. No. 1S5S9; United States Dikes V. Miller, 25 Tex. Supp. 281, v. Noah, 1 Paine (U. S.) 368; In re 78 Am. Dec. 571. Floyd's Case, 2 Ct. CI. (U. S.) 429; . » Danolds v. State, 89 N. Y. 36, 42 In re Fowler's Case, 3 Ct. CI. (U. Am. Rep. 277; United States v. Mau- S.) 43; In re Allen's Case, 3 Ct. CI. rice, 2 Brock. (U. S.) 96; United (U. S.) 91; United States v. Lane, 3 States V. Lane, 3 McLean (U. S.) McLean (U. S.) 365, 26 Fed. Cas. 365. The United States government No. 15559; United States v. Speed, 8 has the implied power to enter into Wall. (U. S.) 11 , 19 L. ed. 449. The any contract, not prohibited by law, same principles apply to contracts that is expedient and appropriate for entered into by state governments, the accomplishment of the powers except that their powers are not only conferred upon it by the constitu- limited by their own separate consti- tion. United States v. Tingey, 5 tutions but all are limited by the Con- Pet. (U. S.) 115, 8 L. ed. 66. See stitution of the United States. Their also. United States v. Pittsburgh power to contract may also be limited &c. R. Co., 26 Fed. 113; United by a valid express statute. State v. States v. Tygh Valley Land &c. Co., Smyrna Bank, 2 Huston (Del.) 99, 76 Fed. 693; Dugan v. United 73 Am. Dec. 699; Kauffmann v. States, 3 Wheat. (U. S.) 172, 4 L. Cooper, 46 Nebr. 644, 65 N. W. 796; ed. 362; United States v. Bradley, Van Dusen v. State, 11 S. Dak. 318, 10 Pet. (U. S.) 343, 9 L. ed. 448; 11 N. W. 201; Piqua Branch of United States v. Linn, 15 Pet. (U. State Bank v. Knoop, 16 How. (U. S.) 290, 10 L. ed. 742; Cotton S.) 369, 14 L. ed. 911; Poole v. v. United States, 11 How. (U. S.) Fleeger's Lessee, 11 Pet. (U. S.) 229, 13 L. ed. 265 ; Neilson v. 185, 9 L. ed. 680, 955 ; Green v. Bid- Lagow, 12 How. (U. S.) 98, 13 L. die, 8 Wheat. (U. S.) 1, S L. ed. 547. ed. 909; United States v. Hodson, The state may be the payee of a 10 Wall. (U. S.) 395, 19 L. ed. promissory note. State v. Little 937; United States v. Powell, 14 Rock R. Co., 31 Ark. 701 ; Indiana v. Wall. (U. S.) 493, 20 L. ed. 726; Woran, 6 Hill (N. Y.) Zi, 40 Am. Jessup V. United States, 106 U. S. Dec. 378. It may convey its prop- 147, 27 L. ed. 85, 1 Sup. Ct. 74; Ty- erty. Bilger v. State, 63 Wash. 457, ler v. Hand, 7 How. (U. S.) 573, 12 116 Pac. 19. A corporation charter L. ed. 824 ; United States v. Mora, 97 is a contract. Michigan State Bank U. S. 413, 24 L. ed. 1013; Daniels v. v. Hastings, 1 Doug. (Mich.) 225, 41 Tearney, 102 U. S. 415, 26 L. ed. 187; Am. Dec. 549; Backus v. Lebanon, Moses V. United States, 166 U. S. 571, 11 N. H. 19, 35 Am. Dec. 466; Dart- 41 L. ed. 1119, 17 Sup. Ct. 682; mouth College v. Woodward, 4 United States v. Garlinghouse, 4 Wheat. (U. S.) 518, 4 L. ed. 629; Ben. (U. S.) 194, 25 Fed. Cas. No. Province Bank v. Billings, 4 Pet. (U. 15189; Eight Hundred and Fifty- S.) 514, 7 L. ed. 939. The United Eight Bales Cotton, Blatchf. Prize States may be liable on an implied Cas. 325, 8 Fed. Cas. No. 4318; contract. United States v. Buffalo United States v. Boice, 2 McLean Pitts Co., 193 Fed. 90S. See post, (U. S.) 352, 24 Fed. Cas. No. 14619; ch. 31, Implied Contracts. United States v. Ames, 1 Woodb. & 45 1 PARTIES. § 263 objects for which the government was organized.'' Nor can they by contract divest themselves of their attributes of sov- ereignty and agree not to exercise them.® When a state enters into a contract it binds itself substantially as an individual does, and it can claim no exception from the rules of law applicable to contracts between individuals.* The legislative branch of the government may, however, within the limits of the constitution, regulate the manner in which con- tracts shall be entered into. If the provisions relative thereto are mandatory they must be strictly adhered to or the agreement will be void;^" but if directory the agreement may be sustained 'Patton V. Gilmer, 42 Ala. 428, 94 Am. Dec. 665 ; Oxnard Beet Sugar Co. V. State, 7 Nebr. 57, 102 N. W. 80, 105 N. W. 716. See also, Dagett V. Colgan, 92 Cal. 53, 28 Pac. 51, 14 L. R. A. 474, 27 Am. St. 95. A contract in contravention of an express constitutional provision is unenforcible. Jobe v. Urquhart (Ark.), 143 S. W. 121. The United States Supreme Court is the final ar- biter as to the meaning of the United States Constitution and whether or not a given statute is in contraven- tion thereof. Van Home's Lessee V. Dorrance, 2 Dall. (U. S.) 304; Martin v. Hunter's Lessee, 1 Wheat. (U. S.) 304, 4 L. ed. 97; Cohens v. Virginia, 6 Wheat. (U. S.) 264, 5 L. ed. 257; Ablemann v. Booth (sub nomine United States v. Booth), 21 How. (U. S.) 506, 16 L. ed. 169. A contract in contravention of a valid statute is as a general rule unenforc- ible, depending on the wording of the statute. Myrick v. Thompson, 99 U. S. 291, 25 L. ed. 324. In the above case the agreement was in contraven- tion of a treaty. William Wilcox Mfg. Co. V. Brazos, 74 Conn. 208, 50 Atl. 722; Douthart v. Congdon, 197 111. 349, 64 N. E. 348, 90 Am. St. 167 ; McNulta V. Corn Belt Bank, 164 111. 427, 45 N. E. 954, 56 Am. St. 203; State V. Wilson, 73 Kans. 343, 84 Pac. m, 117 Am. St. 479. Thus, when coal was bought by the board of the state institution in vio-lation of a statute, and the coal was used by such institution, it was held that the price of the coal could not be re- covered. Consolidated Coal Co. v. Board Trustees, 164 Mich. 235, 129 N. W. 193; Haggerty v. St. Louis Ice &c. Co., 143 Mo. 238, 44 S. W. 1114, 40 L. R. A. 151. 65 Am. St. 647. In the above case it is said that the consequences resulting from an act malum prohibitum are the same as if the act were malum in se. See also, post, § 267. Effect of law requiring license, and the like. Also, Chap. 22, Illegal Contracts. " Spooner v. McConnell, 1 McLean (U. S.) 337, Fed. Cas. No. 13245. ° Patton V. Gilmore, 42 Ala. 428, 94 Am. Dec. 665 ; Calloway v Cossart, 45 Ark. 81; Chapman v. State, 104 Cal. 690, 38 Pac. 457, 43 Am. St. 158; Carr v. State, 127 Ind. 204, 26 N. E. 778, 11 L. R. A. 370', 22 Am. St. 624; People v. Stephens, 71 N. Y. 527; Davis v. Gray, 16 Wall. (U. S.) 203, 21 L. ed. 477. "Ordinarily the state is liable for prospective profits, on breach of contract, to the same extent as an individual." Chal- stran v. Board of Education, 244 111. 470, 91 N. E. 712; Danolds v. State, 89 N. Y. Z6, 42 Am. Rep. 277. "A state is not presumed to have parted with any part of its property in the absence of conclusive proof of an in- tention to do so. Any ambiguity must operate against the grantee and in favor of the public." United States v. Michigan, 190 U. S. 379, 47 L. ed. 1103. Also, McCarter v. Lehigh Val- ley R. Co., 78 N. J. Eq. 346, 79 Atl. 93. "Clark v. United States, 95 U. S. 539, 24 L. ed. 67, 12 Ct. CI. (U. S.) 60; § 263 CONTRACTS. 452 if entered into voluntarily." Thus, it may prohibit contracts of purchase on behalf of the United States unless they are author- ized by law or made under an appropriation adequate therefor." A state may enter into a contract through its agent, but the limits of his power must be strictly observed.^^ For, contrary to the general rule, a state is ordinarily not bound by contracts entered into on its behalf by its agent, even though when made within the apparent scope of his authority, if in fact he acted without authority.^* It is the duty of persons dealing with pub- United States V. Bradley, 10 Pet. (U. S.) 343, 9 L. ed. 448. "United States v. Bradley, 10 Pet. (U. S.) 343, 9 L. ed. 448. While the legislature may modify the charter of a municipal corporation or abolish it altogether, yet the rights of a cred- itor based thereon and being an obli- gation in contract cannot be impaired by subsequent legislation. Chalstran V. Board of Education, 244 111. 470, 91 N. E. 712. " Revised Statutes of United States, § Til. There are certain exceptions made relative to the war and navy departments. Chase v. United States, 155 U. S. 489, 39 L. ed. 284, 15 Sup. Ct. 174. See in this connection Kauff- mann v. Cooper, 46 Nebr. 644, 65 N. W. 796; Van Dusen v. State, 11 S. Dak. 318, n N. W. 201. "United States v. Cosgrove, 26 Fed. 908; Mason &c. Co. v. Com- monwealth (Ky.), 36 S. W. 570 Osborn v. Tunis, 25 N. J. L. 633 Boyers v. Crane, 1 W. Va. 176 Slaughter v. State, 132 Ind. 465, 31 N. E. 1112; People v. Stephens, 71 N. Y. 527; Brown v. State, 14 S. Dak. 219, 84 N. W. 801 ; State v. Hamilton, 11 Humph. (Tenn.) 47; Floyd Ac- ceptances, 7 Wall. (U. S.) 666, 19 L. ed. 169, 7 Ct. CI, (U. S.) 65; Pierce v. United States, 1 Ct. CI. (U. S.) 270. See also, Hove v. United States, 218 U, S. 322, 54 L. ed. 1055, 31 Sup. Ct. 85 ; McClenny v. United States, 45 Ct. CI. (U. S.) 305. "People v. Talmage, 6 Cal. 256; Mullan v. State, 114 Cal. 578, 46 Pac. 670, 34 L. R. A. 362; Penitentiary Co. No. 2 V. Gordon, 85 Ga. 159, 11 S. E. 584; State v. Southwest- ern R. R., 70 Ga. 11; Julian v. State, 140 Ind. 581, 39 N. E. 923; McCaslin v. State, 99 Ind. 428; Fries v. Porch, 49 Iowa 351 ; Mar- tin's Admr. v. United States, 4 T. B. Mon. (Ky.) 487; Baltimore v. Rey- nolds, 20 Md. 1; Ellis v. State Au- ditors, 107 Mich. 528, 65 N. W. 577; Stanser v. Gather, 85 Nebr. 305, 123 N. W. 316, 124 N. W. 102; State v. Horton, 21 Nev. 466, 30 Pac. 876; Delafield v. State, 2 Hill (N. Y.) 159, 26 Wend. (N. Y.) 192; State v. Be- vers, 86 N. Car. 588; Commonwealth V. Sanderson, 40 Pa. Super. Ct. 416; Floyd Acceptances, 7 Wall. (U. S.) 666, 19 L. ed. 169, 7 Ct. CI. (U. S.) 65; Young V. State, 19 Wash. 634 ; State v. Hastings, 10 Wis. 518; Kneeland v. Milwaukee, 18 Wis. 431. The usual statement of the rule is as follows : "All persons dealing with public offi- cers, whose power and authority to represent and bind the state, or some subordinate municipality thereof, de- pends upon or is limited by statute, are charged at their peril with notice of the scope of the power of such officers under the statute." Hord v. State, 167 Ind. 622, 79 N. E. 916. "The government of a state is its mere agent, and all its officers act in a representative capacity, binding the state by their acts only in those in- stances in which they liave authority to act for her. The law under which they act constitutes their power of attorney or warrant of authority, and when, for any reason, that law is void, the act done under it is like- wise void, and amounts to a wrong and a trespass. As, in such case, the state cannot be deemed to have au- thorized the wrongful act, the person who did it, although an officer in name, is deemed to have acted in his individual capacity." Coal &c. R. Co, 453 PARTIES. § 263 lie officials to inform themselves as to the power of such official to bind the government." A state may bring and maintain suit the same as an indi- vidual; it may sue within the courts of its own jurisdiction, or in the courts of another state, or in the federal courts. The federal government may in turn sue in the state courts.^" Thus, when a state becomes a party to a suit and voluntarily submits its right to judicial determination it is bound by the same principles that govern individuals. It voluntarily submits to the law and places itself upon an equality with other litigants.^' Thus it has been held that in a suit by the state to recover for the services of convicts, which it had leased to a contractor, the latter is enti- tled to recoupment for damages for failure to furnish the num- ber of convicts called for by the contract.^^ Under the old common-law rule the sovereign was exempted from being a defendant in his own court. This rule is enforced V. Conley, 67 W. Va. 129, 67 S. E. 613. In the absence of a statute cre- ating liability, neither a state nor the United States is legally liable to re- spond in damages to a person for an injury resulting from the misconduct, negligence or tortious acts of its offi- cers or agents. State v. Mutual Life Ins. Co. (Ind.), 93 N. E. 213. "" Woodward v. Campbell, 39 Ark. 580; United States v. Cosgrove, 26 Fed. 908; Hume v. United States, 132 U. S. 406, 33 L. ed. 393, 10 Sup. Ct. 134; Pierce v. United States, 1 Ct. CI. (U. S.) 270. See also, Jobe V. Urquhart (Ark.), 143 S. W. 121. The state may, however, be liable on a contract entered into by its agent under an implied power when reason- ably necessary for the exercise of the power given. Kirby v. State, 68 Misc. (N. Y.) 626, 125 N. Y. S. 742. " United States v. Holmes, 105 Fed. 41; People v. St. Louis, 5 Gilm. (111.) 351, 48 Am. Dec. 339; United States V. Murdock, 18 La. 305, 89 Am. Dec. 651; United States v. Burrill, 107 Maine 382. 78 Atl. 568 (holding that the United States may maintain an action of forcible entry and de- tainer) ; State v. Grant, 10 Minn. 39; Spencer v. Brockway, 1 Ohio 259, 13 Am. Dec. 615; United States v. Barker, 1 Paine (U. S.) 156; State V. Burkeholder, 30 W. Va. 593, 5 S. E. 439. "United States v. Beebee, 17 Fed. 36; Cleveland Terminal &c. R. Co. v. State (Ohio), 97 N. E. 967; Clark V. United States, 6 Wall. (U. S.) 543, 18 L. ed. 916, 3 Ct. CI. (U. S.) 451 ; In re Smoot's Case, 15 Wall. (U. S.) 36; Amoskeag Mfg. Co. v. United States, 17 Wall. (U. S.) 592, 21 L. ed. 715, 9 Ct. CI. (U. S. )S0; In re The Siren, 7 Wall. (U. S.) 152, 19 L. ed. 129; United States v. Bostwick, 94 U. S. S3, 24 L. ed. 65; United States v. Smith, 94 U. S. 214, 24 L. ed. 115; Chicago &c. R. Co. V. United States, 104 U. S. 680, 26 L. ed. 891, 17 Ct. CI. (U. S.) 435; Floyd Acceptances, 7 Wall. (U. S.) 666, 19 L. ed. 169, 7 Ct. CI. (U. S.) 65; In re Mann's Case, 3 Ct. CI. (U. S.) 404; Spofford v. United States, 32 Ct. CI. (U. S.) 452; Clifford v. United States, 34 Ct. CI. (U. S.) 223. When sued by the state the defendant has the right to set up defensive matter. Texas Channel &c. Co. v. State (Tex.), 135 S. W. 522. "State V. Arkansas &c. Mfg. Co., 98 Ark. 125, 135 S. W. 843, 33 L. R. A. (N. S.) 376, and note. There is a conflict of authority as to the right of set-off or counterclaim in an ac- tion by the state. See note in 33 L. R. A. (N. S.) 376. 263 CONTRACTS. 454 in this country and neither the United States^® nor a state^" can be sued without its consent. By this means it may defeat recov- ery on a contract. This exemption from suit may, however, be waived," or it may by statutory enactment or constitutional pro- vision consent to be sued." Thus the United States has estab- Hshed the court of claims and has thereby given permission to be sued in that court on contracts. Since the right to sue the sov- ereign is not an inherent right but one acquired only by permis- sion, the state may in granting such permission impose any re- striction or condition thereupon it sees fit.^^ " United States v. Murdock, 18 La. Ann. 305, 89 Am. Dec. 651; Orleans Navigation Co. v. The Amelia, 7 Mar- tin (La.) 632, 12 Am. Dec. 516; United States V. Clarke, 8 Pet. (U. S.) 436, 8 L. ed. 1001 ; In re The Siren, 7 Wall. (U. S.) 152, 19 L. ed. 129; Ute In- dians V. United States, 45 Ct. CI. (U. S.) 440 (holding that interest can be recovered from the sovereign only with the sovereign's consent). ="Pitcock v. State, 91 Ark. 527, 121 S. W. 742, 134 Am. St. 88; Hun- saker v. Borden, 5 Cal. 288, 63 Am. Dec. 130; Pattison v. Shaw, 6 Ind. 377; Carr v. State, 127 Ind. 204, 26 N. E. 778, 11 L. R. A. 370, 22 Am. St. 624; State v. Mutual Life Ins. Co. (Ind.), 93 N. E. 213; Troy &c. R. Co. V. Commonwealth, 127 Mass. 43; Michigan State Bank v. Hammond, 1 Doug. (Mich.) 527; Michigan State Bank v. Hastings, 1 Doug. (Mich.) 225, 41 Am. Dec. 549; San- ders v. Saxton, 182 N. Y. 477, 75 N. E. 529, 1 L. R. A. (N. S.) 727n, 108 Am. St. 826n; Treasurers v. Cleary, 3 Rich. (S. Car.) 372; Caro- lina Glass Co. V. State, 87 S. Car. 270, 69 S. E. 391. If the state is the real party in interest, though only its officers and agents are parties, then it is in effect a suit against the state, and falls within the rule of prohibi- tion. Pitcock v. State, 91 Ark. 527, 121 S. W. 742, 134 Am. St. 88; Jobe v, Urquhart, 98 Ark. 525, 136 S. W. 663; Sanders v. Saxton, 182 N. Y. 477, 75 N. E. 529, 1 L. R. A. (N. S.) 127n, 108 Am. St. 826n; General Oil Co. V. Grain, 117 Tenn. 82, 95 S. W. 824, 121 Am. St. 967n; Pen- noyer v. McConnaughy, 140 U. S. 1, 35 L. ed. 363, 11 Sup. Ct. 699. In this connection see Coal &c. R. Co. V. Conley, 67 W. Va. 129, 67 S. E. 613, for an illustration of when the state is not, in fact, the real party at interest. As to what are suits against the state, see Texas Chan- nel &c. Co. V. State (Tex.), 135 S. W. 522. It has been held that county commissioners cannot be restrained from using a ventilating apparatus placed in a courthouse by a contract- or for its construction, on the ground that its use infringes a patent. Mc- Creery Engineering Co. v. Massachu- setts Fan Co., 180 Fed. 115. '^Hanly v. Sims (Ind.), 94 N. E. 401 ; Sinking Fund Commissioners v. Northern Bank, 1 Mete. (Ky.) 174; Garr v. Bright, 1 Barb. Ch. (N. Y.) 157; Cohen v. Virginia, 6 Wheat. (U. S.) 264, 5 L. ed. 257. "" Green v. State, 73 Cal. 29, 11 Pac. 602, 14 Pac. 610 ; Divine v. Har- vie, 7 T. B. Mon. (Ky.) 439, 18 Am. Dec. 194 ; Wesson v. Commonwealth, 144 Mass. 60, 10 N. E 762; County Board of Education v. State Board, 106 N. Car. 81, 10 S, E. 1002; Nich- oll v. United States, 7 Wall. (U. S.) 122, 19 L. ed. 125; Finn v. United States, 123 U. S. 227. 31 L. ed. 128, 8 Sup. Ct. 82, 23 Ct. CI. (U. S.) 486; United States v. Gumming, 130 U. S. 452, 32 L. ed. 1029. .t. constitutional provision, to the effect that "suits may be brought against the state in such manner and in such courts as the leg- islature may by law direct," is not self-executing. General Oil Co. v. Grain, 117 Tenn. 82, 95 S. W. 824, 121 Am. St. 967. ^Ball V. Halsell, 161 U. S. 72, 40 L. ed. 622, 16 Sup. Ct. 554, Treat v. Farmers' Loan &c. Co., 185 Fed. 760; 455 PARTIES. § 2G4 § 264. Foreign governments and representatives. — The principle applicable to contracts of the United States and states are in the main applicable to those of a foreign country. A for- eign state, its sovereign or representatives, are none of them subject to the jurisdiction of the courts of another country un- less they submit themselves thereto. Consequently, a contract entered into in this country with the before-mentioned persons cannot be enforced against them without their consent, although they have the right to enforce it.^* Thus the courts of England have refused to enforce a promise of marriage made by a sov- ereign of a foreign country, the fact that he was ruler over a petty state having nothing to do with the question.^" Wailes V. Smith, 157 U. S. 271, 39 L. ed. 698; Spalding v. Vilas, 161 U. S. 483; Satterlee v. United States, 30 Ct. CI. (U. S.) 31; State v. Foster, S Wyo. 199, 38 Pac. 926, 29 L. R. A. 226n, 63 Am. St. 47. By establishing the court of claims the United States did not give permission to be sued in state courts. Stanley v. Schwalby, 162 U. S. 2SS, 16 Sup. Ct. 754. The action must be confined to such claims as are contemplated by the statute. State v. Mutual Life Ins. Co. (Ind.), 93 N. E. 213. "The prin- ciple that a state, in entering into a contract, binds itself, substantially, as an individual does under similar circumstances necessarily carries with it the inseparable and subsid- iary rule that it abrogates the power to annul or impair its own contract. It cannot be true that a state is bound by a contract, and yet be true that it has power to cast off its obli- gation and break faith, since that would involve the manifest contra- diction that a state is bound and yet not bound by its obligation. It may have the might and means of defeat- ing the enforcement of the contract, yet, in a just sense, have no power to do so. Might and opportunity do not constitute power in a true sense. To constitute power, another element must be present, and that element is right. If right is absent, there is no power. Legislatures may, by a fail- ure to make an appropriation, defeat a just claim, or, indeed, block the wheels of government; but under the constitution they have no power to do any such thing. It seems very clear, therefore, that there is no con- stitutional power to annul or impair a valid contract entered into by a state, and so it has long been settled." Carr v. State, 127 Ind. 204, 26 N. E. 778, 11 L. R. A. 370, 22 Am. St. 624. "The only remedy for a party who has entered into a contract with a state, is by an appeal to the legisla- ture, who, it is fair to presume, will, from motives of public duty, make provisions for its full execution, and do ample justice to the party with whom it may have contracted; or else refer the case to the decision and judgment of the judiciary, by a special legislative enactment." Mich- igan State Bank v. Hastings, 1 Doug. (Mich.) 22s, 41 Am. Dec. 549. As to the assignment of claims against the United States, see post, Ch. 33, Assignments. '"Taylor v. Best, 14 C. B. 487; Hul- let V. King of Spain, 1 Dow & C. 169; Tagart v. State, IS Mo. 209; King of Prussia v. Kuepper's Admr., 22 Mo. 550, 66 Am. Dec. 639; Re- public of Mexico v. De Arrangois, 11 How. Pr. (N. Y.) 1; King of Spain V. Oliver, 1 Pet. (U. S.) 276. '" "This case must be decided upon exactly the same considerations as if the ruler of some undoubted great power — such as King of Italy, or the president of the French Republic — had been sued in the courts of this country. To begin with, there is no precedent for saying that an inde- § 265 CONTRACTS. 456 § 265. Aliens. — An alien may be defined as a citizen or subject of a foreign nation not naturalized under our laws.-" Aliens may be divided into two classes : alien friends and alien enemies. Whether one not a citizen of this country is an alien friend or enemy depends on .whether the nation to which he owes his allegiance is at peace or war with this country." An alien friend may ordinarily legally enter into a contract with a subject of this country either here or abroad, and may during peace maintain an action thereon, the same as in the case of contracts in which both parties are subjects of this country.^' In times of peace they have practically the same privileges that are extended to citizens in respect to personal property and the obligations arising out of contracts. It is the common-law rule, which is in effect in this country, that an alien may acquire and hold any and all beneficial estates in personalty.^' Any other rule would render commerce between nations impossible. He cannot, how- pendent sovereign ruler can be sued in our courts. On the contrary, the proposition is opposed to every prin- ciple of international law as applied to the persons of sovereigns or those who represent them. The ground up- on which tlie immunity of sovereign rulers from process in our courts is recognized by our law is that it would be absolutely inconsistent with the status of an independent sover- eign that he should be subject to the process of a foreign tribunal. * * * It is one thing to say that a foreign sovereign is capable of making an ef- fectual contract in this country; it is quite another thing to say that he can be sued in the courts of this coun- try." Mighell V. Sultan of Johore, 1 Q. B. 149 (1894). =« Martin v. Brown, 7 N. J. L. 305 ; Milne V. Huber, 3 McClean (U. S.) 212, Fed. Cas. No. 9617. "' 1 Blackstone Comm. 371 ; 1 Kent's Comm. 73; Black's Law Diet. 59. "^ Roberts v. Knights, 7 Allen (Mass.) 449; Barrell v. Benjamin, IS Mass. 354; Arbuckle v. Reaume, 96 Mich. 243, 55 N. W. 808; McKee v. Jones, 67 Miss. 405, 7 So. 348; Brad- street V. Oneida County Sup'rs, 13 Wend. (N. Y.) 546; Franco-Texan Land Co. v. Chaptive (Tex.), 3 S. W. 31; Openheimer v. Levy, 2 Strange (U. S.) 1082; Taylor v. Car- penter, 3 Story (U. S.) 458, Fed. Cas. No. 13784. For an interesting case of the power of an alien to maintain suit in this country, see Disconto Gesellschaft v. Unbreit, 127 Wis. 651, 106 N. W. 821, 15 L. R. A. (N. S.) 1045n. In this case it appears that the original action was between two non-resident aliens upon a for- eign cause of action; it was held that the action could not be main- tained as a matter of right, but only, if at all, on the principles of comity, and under the facts of this particu- lar case the right of action was de- nied. '"In re Calvin's Case, 7 Coke 17; Angus V. Noble, 73 Conn. 56, 46 Atl. 278; Greenheld v. Morrison, 21 Iowa 538; Greenia v. Greenia, 14 Mo. 526; Beck V. McGiUis, 9 Barb. (N. Y.) 35; Commonwealth v. Detwiller, 131 Pa. 614, 18 Atl. 990, 7 L. R. A. 357 (holding that a citizen of one state may own shares of stock in a com- pany incorporated under the laws of another state) ; Franco-Texan Land Co. V. Chaptive (Tex.), 3 S. W. 31; Craig v. Leslie, 3 Wheat. (U. S.) 563, 4 L. ed. 460 ; 1 Blackstone Coram, 372; 2 Kent Comm. 62. A statute which arbitrarily forbids aliens to en- 457 PARTIES. §" 265 ever, at common law, hold any beneficial estate, either legal or equitable, in real property.*" The right of aliens to acquire and hold real property is gen- erally regulated by statute in the various states. In some they have the right to acquire, hold and transfer real property, in others these privileges are vi^ithheld from them." However, it is held that an alien may take by deed or devise and hold real estate against any one but the sovereign until office found.^^ Consequently, a grantor who conveys land to an alien divests himself of title thereto, and is in no position to question its validity. The alien grantee takes what is known as a defeasi- ble estate as against the state only.^' gage in ordinary kinds of business to earn their living is unconstitutional and void. Commonwealth v. Hana, 195 Mass. 262, 81 N. E. 149, 122 Am. St. 251. =° Angus V. Noble, 73 Conn. 56, 46 Atl. 278; Craig v. Leslie, 3 Wheat. (U. S.) 563, 4 L. ed. 460; 1 Black- stone Comm. 372; 2 Blackstone Comm. 249. He cannot hold by de- scent or otherwise. Ahrens v. Ah- rens, 144 Iowa 486, 123 N. W. 164, Ann. Cas. 1912A. 1098; Scottish- American Mort. Co. V. Butler (Miss.), 54 So. 666; Reese v. Waters, 4 W. & S. (Pa.) 145. Nor could he convey valid title to another. Bea- van V. Went, 155 111. 592, 41 N. E. 91, 31 L. R. A. 85, and note; Murray v. Kelly, 27 Ind. 42; Jackson v. Fitz- simmons, 10 Wend. (N. Y.) 9, 24 Am. Dec. 198; Orr v. Hodgson, 4 Wheat. (U. S.) 453, 4 L. ed. 613; Levy V. M'Cartee, 6 Pet. (U. S.) 102; 2 Blackstone Comm. 249; 2 Kent Comm. 62. See note to Eas- ton V. Huott, 95 Iowa 473, 64 N. W. 408, 31 L. R. A. 177, where many cases in support of these propositioris are cited. As to the right of a citi- zen to inherit from an alien under the New York law, see Douglass v. Douglass, 70 Misc. (N. Y.) 412, 126 N. Y. S. 912. See Cramer v. Mc- Cann, 83 Kans. 719, 112 Pac. 832, for the Kansas law on this subject. =' State V. Smith, 70 Cal. 153 ; Kalies v. Ewert, 248 111. 612, 94 N. E. 105 (construing Illinois statute) ; Doug- lass V. Douglass, 70 Misc. (N. Y.) 412, 128 N. Y. S. 912; Simpson Stat- ute Law 6013. An alien may be given the right to inherit real estate on such conditions as the state may impose. In re Colbert's Estate, 44 Mont. 259, 119 Pac. 791. See Ah- rens V. Ahrens, 144 Iowa 486, 123 N. W. 164, Ann. Cas. 1912A. 1098, and note on the suspension of a statute prohibiting aliens irom acquiring real estate by a treaty giving non- resident alien heirs certain rights in the real estate of their ancestor. =^Harley v. State, 40 Ala. 689, and cases cited; Guyer v. Smith, 22 Md. 239, 85 Am. Dec. 650; Waugh v. Ri- ley, 8 Mete. (Mass.) 290; Cross v. De Valle, 1 Wall. (U. S.) 5, 17 L. ed. 515; Governeur v. Robertson, 11 Wheat. (U. S.) 332, 6 L. ed. 488; Fairfax v. Hunter, 7 Cranch (U. S.) 603, 3 L. ed. 453; Phillips v. Moore, 100 U. S. 208, 25 L. ed. 603; Abrams V. State, 45 Wash. 327, 88 Pac. 327, 122 Am. St. 914. Consequently he can devise lands so acquired and his devisee will hold against all save the sovereign. In re Palmer Window Glass Co., 183 Fed. 902; Williams v. Wilson, Mart. & Y. (Tenn.) 248. The party to whom he conveys title holds subject to divestiture by the state. Bradstreet v. Oneida County Suprs., 13 Wend. (N. Y.) 548. See, to the same effect, Harley v. State, 40 Ala. 689; Purczell v. Smidt, 21 Iowa 540; Waugh v. Riley, 8 Mete. (Mass.) 290. »' Abrams v. State, 45 Wash. 327, 88 Pac. 327. 122 Am. St. 914. See g 265 CONTRACTS. 458 By the law of nations all intercourse between citizens of countries at war with each other which is inconsistent with a state of hostilities is prohibited. Within that prohibition is included any act or contract which tends to increase the enemy's resources, and every kind of trading or commercial dealing or intercourse, directly or indirectly, between the two countries in any form.^* Except as mentioned in the preced- ing note an alien enemy cannot, except with the license or permission of the government,^^ make a valid contract,^" nor enforce a prior existing agreement,^' so long as the war con- tinues.^* Ordinarily contracts entered into prior to the dec- Scottish-Am. Mort. Co. v. Butler (Miss.). 54 So. 666, construing the Mississippi statute. See also, Bunck- ley V. Scottish-Am. Mort. Co., 185 Fed. 783, 31 L. R. A. (N. S.) 598. Thus, in case an alien locates a mining claim it is held by the modern doctrine that such location is voidable only and not void. Its validity can be attacked only by the government, and that defect may be cured by the alien conveying to a citizen. Stewart V. Gold &c. Co., 29 Utah 443, 82 Pac. 47S, 110 Am. St. 719. See also, note in 7 L. R. A. (N. S.) 813-814. " Kershaw v. ■ Kelsey, 100 Mass. 561, 'il Am. Dec. 124, 1 Am. Rep. 142; Shaw v. Carlisle, 9 Heisk. (Tenn.) 594; Briggs v. United States, 143 U. S. 346, 36 L. ed. 180, 12 Sup. Ct. 391. As to status of citi- zens of the North and South during the Civil War, see The Prize Cases, 2 Black. (U. S.) 635, 17 L. ed. 459. The following agreements are recog- nized as valid: (1) agreements for the ransom of persons; (2) property from the enemy's hands; (Brandon v. Nesbit, 6 T. R. 28; Goodrich v. Gor- don, 15 Johns. (N. y.) 6; Crawford V. The William Penn, 3 Wash. (U. S.) 484, Fed. Cas. No. ■iilZ) ; (3) contracts by prisoners of war made for their subsistence while in the hands of the enemy (Crawford v. The William Penn, 3 Wash. (U. S.) 484, Fed. Cas. No. 3373) ; (4) or contracts to enable a shipmaster in an enemy's harbor to return the vessel to her home port (Crawford v. The William Penn, 3 Wash. (U. S.) 484, Fed. Cas. No. 3373; Hallet v. Jenks, 3 Cranch (U. S.) 210, 2 L. ed. 414). =" Matthews v. McStea, 91 U. S. 7, 23 L. ed. 188. License may be im- plied from such aliens being permit- ted to remain in the country after the outbreak of hostilities. Zacharie V. Godfrey, SO 111. 186; Parkinson v. Wentworth, 11 JNIass. 26; Hutchin- son V. Brock, 11 Mass. 119; Ker- shaw V. Kelsey, 100 Mass. 561, 97 Am. Dec. 124, 1 Am. Rep. 142; Clark V. Morey, 10 Johns. (N. Y.) 68; Bradwell v. Weeks, 13 Johns. (N. Y.) 1; Russel v. Skipwith, 6 Bin. (Pa.) 241; Otteridge v. Thomp- son, 2 Cranch (U. S.) 108, Fed. Cas. No. 10618. It may be implied from a general relaxation of the rule against nonintercourse. Blackburne v. Thompson, IS East 81. "Hill V. Baker, 32 Iowa 302, 7 Am. Rep. 193; Phillips v. Hatch, 1 Dill. (U. S.) S71, Fed. Cas. No. 11094; Wright v. Graham, 4 V/. Va. 430. " Serames v. City Fire Ins. Co., 36 Conn. 543; Brooke v. Filer, 35 Ind. 402; Bell v. Chapman, 10 Johns. (N. Y.) 183; Jackson v. Decker, 11 Johns. (N. Y.) 418; Blackwell v. Willard, 65 N. Car. S5S, 6 Am. Rep. 749; Wilcox v. Flenrv, 1 Dall. (U. S.) 69; i\Ium- ford v. Mumford, 1 Gall. (U. S.) 366, Fed Cas. No. 9918; Haymond v. Cam- den, 22 W. Va. 180; Sturm v. Flem- ing, 22 W. Va. 404. '"Marchand v. Coyle, 18 La. Ann. 632; Shotwell v. Ellis, 42 Miss. 439; In re The Rapid, 8 Cranch (U. S.) 155, 3 L. ed. S20; In re The Eliza, 2 459 PARTIES. § 26: laration of war are merely suspended during its continuance and revive upon its termination.'" But commercial partnerships or other executory contracts, continuing in their nature, vi^hich can- not be performed without violating the laws governing a state of war, are dissolved thereby. This applies to any contract en- tered into prior to hostilities that contemplates or necessitates intercourse with the enemy during hostilities.^" Nor can a con- tract not licensed by the government, entered into during the war, be enforced after peace is declared.*^ Legal proceedings may, however, be maintained on a subsisting contract against an alien enemy or his property, if found within the jurisdiction of the courts of this country ; if this were not true an enemy would be more advantageously situated than a friend.*^ An agreement Gall. (U. S.) 4; Crawford v. The William Penn, 3 Wash. 484, Fed. Cas. No. 337Z. ^ Harmon v. Kingston, 3 Camp. ISO; Flindt v. Waters, 15 East. 260; Stiles V. Easley, 51 111. 275; Perkins V. Rogers, 35 Ind. 124, 9 Am. Rep. 639; Wheelan v. Cook, 29 Md. 1; Kershaw v. Kelsey, 100 Mass. 561, 97 Am. Dec. 124, 1 Am. Rep. 142; Hutchinson v. Brok, 11 Mass. 119; Bell V. Chapman, 10 Johns. (N. Y.) 183 ; Griswold v. Waddington, 15 Johns. (N. Y.) 57; Kierstad v. Orange &c. Co., 1 Hun (N. Y.) 151, 54 How. Pr. (N. Y.) 29, revd., 69 N. Y. 343, 25 Am. Rep. 199; Sanderson V. Morgan, 39 N. Y. 231 ; Semmes v. City Fire Ins. Co., 6 Blatchf. (U. S.) 445, affd., 13 Wall. (U. S.) 158, 20 L. ed. 590; New York Life Ins. Co. V. Stratham, 93 U. S. 24, 23 L. ed. 789; Lamar v. Micou, 112 U. S. 452, 28 L. ed. 751, 5 Sup. Ct. 221; Hanger v. Abbott, 6 Wall. (U. S.) 532, 18 L. ed. 939; Brown v. Hiatts, 15 Wall. (U. S.) 177, 21 L. ed. 128; Ross V. Jones, 22 Wall. (U. S.) 576, 22 L. ed. 730 ; Ware v Hilton, 3 Dall. (U. S.) 199; Dunlop v. Ball, 2 Cranch (U. S.) 180, 2 L. ed. 247; Ahnert v. Zaun, 40 Wis. 622. "Esposito V. Bowden, 7 E. & B. 763; Williams v State, i7 Ark. 463; Yeaton v. Berney, 62 111. 61 ; Brown V. Delano, 12 Mass. 370 ; Mutual Ben. Life Ins. Co. v. Hillyard, 37 N. J. L. 444, 18 Am. Rep. 741; Griswold v. Waddington, IS Johns. (N. Y.) 57, 16 Johns. (N. Y.) 438; Woods v. Wilder, 43 N. Y. 164; Cohen v. New York &c. Ins. Co., 50 N. Y. 610, 10 Am. Rep. 522; Bank of New Orleans V. Matthews, 49 N. Y. 12; Shaw v. Carlile, 9 Heisk. (Tenn.) 594; The William Bagaley, 5 Wall. (U. S.) 377, 18 L. ed. 583; University v. Finch, 18 Wall. (U. S.) 106, 21 L. ed. 818; Matthews v. McStea, 91 U. S. 7, 23 L. ed. 188 ; Cramer v. United States, 7 Ct. CI. (U. S.) 302; Booker V. Kirkpatrick, 26 Grat. (Va.) 145. " Willison V. Patteson, 7 Taunt. 436; Perkins v. Rogers, 35 Ind. 124, 9 Am. Rep. 639; Dorsey v. Kyle, 30 Md. 512, 96 Am. Dec. 617, and note; United States v. Grossmayer, 9 Wall. (U. S.) 72, 19 L. ed. 627; Scholefield V. Tickelberger, 7 Pet. (U. S.) 586, 8 L. ed. 793; Hart v. United States, 15 Ct. CI. (U. S.) 414; Mixer v. Sibley, S3 111. 61 ; Seymour v. Bailey, 66 111. 288; Buford v. Speed, 11 Bush (Ky.) 338; Dorsey v. Kyle, 30 Md. 512, 96 Am. Dec. 617, and note ; Dor- sey V. Thompson, 37 Md. 25; Dejar- nette v. DeGiverille, 56 Mo. 440; Foreman v. Carter, 9 Kans. 674. "McVeigh v. United States, 11 Wall. (U. S.) 259, 20 L. ed. 80; Uni- versity V. Finch, 18 Wall. (U. S.") 106, 21 L. ed. 818. The courts are closed, however, against the alien enemy during the continuance of hos- tilities except with permission of the government. Wells v. Williams, 1 § 266 CONTRACTS. 460 by a citizen in a neutral state to deliver goods in a neutral coun- try to a subject of that country at a stipulated price and on certain conditions, the consignor talking all risks attending the trans- portation, is a legal and valid agreement in reference to the bel- ligerent and does not destroy the neutral character of the prop- erty.''^ § 266. Convicts. — Under the English common-law rule a person convicted of a felony, or attainted of certain crimes, was civilly dead. He lost the protection of the law, and forfeited his goods, chattels and chose in action to the crown." He could not make a valid contract, nor could he enforce a contract made prior to his conviction.*'* A convict might, however, be sued on contracts made by him prior to or during outlawry or conviction. *° These disabilities attaching to the convict might be removed by a pardon or a reversal of the judgment of outlawry.*' The dis- abilities which under the common law attached to convicts do Salk. 46; Hoskins v. Gentry, 2 Duv. (Ky.) 28S; Dorsey v. Thompson, 37 Md. 25; Clark v. Morey, 10 Johns. (N. Y.) 68. "Ludlow V. Bowne, 1 Johns. (N. Y.) 1, 3 Am. Dec. 277; DeWolf v. New York &c. Ins. Co., 20 Johns. (N. Y.) 214. A woman who is abandoned by her husband, he becoming an alien enemy, is accorded the right of a feme sole. Kay v. Duchess De Pienne, 3 Camp. 123; Cornwall v. Hoyt, 7 Conn. 420; Gregory v. Paul, IS Mass 31 "Britton V. Cole, 1 Salk. 395; 3 Blackstone Comm. 284; Chitty on Contracts 151. "Civil death imports a deprivation of all rights whose ex- ercise or enjoyment depends upon some provision of law." In re Estate of Donnelly, 125 Cal. 417, 58 Pac. 61, 73 Am. St. 62. A person civilly dead is not a "decedent" within the provi- sions of the code relative to estates on which letters of administration may be granted. In re Zeph's Estate, SO Hun (N. Y.) S23, 3 N. Y. S. 460. "Avery v. Everett, 110 N. Y. 317, 18 N, E. 148, 1 L. R. A. 264, 6 Am. St. 368; Chitty on Contracts, 151; Wald's Pollock on Contracts 104. In Chitty on Contracts, 262, it is said: "So a convict may acquire, but he cannot enjoy; he may acquire, not by virtue of any capacity in himself, but because, if a gift be made to him, the donor cannot make his own act void, and reclaim his own gift. Al- though the donor cannot reclaim his gift, yet, by the common law, the thing given vested in the crown by its prerogative." Citing King v. In- habitants of Haddenham, 15 East 463, It will be noticed that this is the same rule that applies in conveyances of real estate to aliens where their dis- ability to hold real estate has not been removed. See ante, § 265, Aliens. " MacDonald v. Ramsey, Post. Cr. Cas. 61 ; Wald's Pollock on Contracts, 104; Chitty on Contracts, 151._ It has been held by the courts in this coun- try that, under statutes suspending the civil rights of a convict, the civil rights of his creditors are not sus- pended. Coffee V. Haynes, 124 Cal. 561, 57 Pac. 482, 71 Am. St, 99; In re Estate of Nerac, 35 Cal. 392, 95 Am. Dec. 111. See also, Dunham v. Drake, 1 N. J. L. 315; Bonnell v. Rome &c. R. Co., 12 Hun (N. Y.) 218. *' Chitty on Contracts, 151. 461 PARTIES § 267 not as a general rule obtain in this country.*' In the absence of a statute declaring him to be such, a convict is not civilly dead.*' He may enter into contracts and sue and be sued thereon.'*'' By the statutes of most of the states some disabilities are imposed upon the convict during his term of imprisonment. Reference must be had to the statutes of the various states in order to deter- mine what those disabilities are.°^ § 267. Effect of laws requiring license or the like, — Ordi- narily a contract entered into by an unlicensed person Vfho is followring, and which contract is made in the course of, a trade or profession required to be licensed, cannot be enforced by such person if it appears that the law was designed to protect the pub- lic from its own ignorance and the dishonesty of those who may engage in such calling.^^ However, if the purpose of the statute is to raise revenue only, the contract may be valid, notwithstand- ing the want of a license.^^ The foregoing is the general rule " In re Nerac, 35 Cal. 392, 95 Am. Dec. Ill; Cannon v. Windsor, 1 Houst. (Del.) 143; Willingham v. King, 23 Fla. 478, 2 So. 851; Pres- bury V. Hull, 34 Mo. 29; Plainer v. Sherwood, 6 Johns. Ch. (N. Y.) 118; Frazer v. Fulcher, 17 Ohio 260; Ken- yon V. Sanders, 18 R. I. 590, 30 Atl. 470, 26 L. R. A. 232 ; Davis v. Laning, 85 Tex. 39, 19 S. W. 846, 18 L. R. A. 82, 34 Am. St. 784; United States Constitution, Art. 3, § 3; Stimpson Am. Stat. L., §§ 143, 1162. '^ Cannon v. Windsor, 1 Houst. (Del.) 143; Dade Coal Co. v. Haslett, 83 Ga. 550, 10 S. E. 435; Beck v. Beck, 36 Miss. 72 ; Presbury v. Hull, 34 Mo. 29; Williams v. Shackleford, 97 Mo. 322, 11 S. W. 222 ; Davis v. Duffie, 1 Abb. Dec. (N. Y.) 486; Kenyon v. Saunders, 18 R. I. 590, 30 Atl. 470, 26 L. R. A. 232. A convict is not mere property without any civil rights, but has all the rights of an ordinary citi- zen which are not expressly or by necessary implications taken from him by law. Westbrook v. State, 133 Ga. 578, 66 S. E. 788. See In re Nerac's Estate, 35 Cal. 392, 95 Am. Dec. Ill; Coffee V. Haynes, 124 Cal. 561, 57 Pac. 482, 71 Am. St. 99; Matter of Zeph, 50 Hun (N. Y.) 523, 3 N. Y. Supp. 460; Avery v. Everett, 110 N. Y. 317, 18 N. E. 148, 1 L. R. A. 264, 6 Am. St. 368. ■"> Willingham v. King, 23 Fla. 478, 2 So. 851; Plainer v. Sherwood, 6 Johns. Ch. (N. Y.) 118; Stephani v. Lent, 30 j\lisc. (N. Y.) 346, 63 N. Y. S. 471; Avery v. Everett, 110 N. Y. 317, 18 N. E. 148, 1 L. R. A. 264, 6 Am. St. 368; Kenyon v. Saunders, 18 R. I. 590, 30 Atl. 470, 26 L. R. A. 232. °' For illustration of the nature and effect of statutes taking away the civil rights of convicts, see In re Donnelly, 125 Cal. 417, 58 Pac. 61, 73 Am. St. 62 ; Gray v. Stewart, 70 Kans. 429, 78 Pac. 852, 109 Am. St. 461; Harmon v. Bowers, 78 Kans. 135, 96 Pac. 51, 17 L. R. A. (N. S.) 502n; Smith v. Becker (Kans.), 53 L. R. A. 141; Avery v. Everett, 110 N. Y. 317, 18 N. E. 148, 1 L. R. A. 264, 6 Am. St. 368. "' Cope v. Rowland, 2 Mees. & Wels. 149; Woods v. Armstrong, 54 Ala. 150, 25 Am. Rep. 671n ; Levinson v. Boas, 150 Cal. 185, 88 Pac. 825, 12 L. R. A. (N. S.) 575, and note; Talia- ferro v. Moffett, 54 Ga. 150; Randall V. Tuell, 89 Maine 443, 36 Atl. 910, 38 L. R. A. 143 ; Puckett v. Alexander, 102 N. Car. 95, 8 S. E. 767, 3 L. R. A. 43. "'Vermont Loan &c. Co. v. Hoff- man, 5 Idaho 376, 49 Pac. 314, 37 L. § 267 COXTRACTS. 462 underlying such statutes and is given application in those in- stances where the statute does not specifically declare a contract entered into by an unlicensed person void or unenforcible or does not declare its violation a criminal offense. In many in- stances the statute itself declares the contract void or unenforci- ble." Consequently, it has been held either on the ground of pub- lic policy or because expressly so provided by the statute re- quiring the procurement of a license, that no recovery could be had for services rendered by a physician or surgeon,^'' law- yer,"" a teacher in the public schools,'^' brokers in real estate or other property,^^ pawnbrokers and other persons who lend R. A. 509, 95 Am. St. 186 ; Larned v. Andrews, 106 Mass. 435, 8 Am. Rep. 346; Mandelbaum v. Gregovich, 17 Nev. 87, 28 Pac. 121, 45 Am. Rep. 433; Ruckman v. Bergholz, Zl N. J. L. 437. "^Mabry v. Bullock, 7 Dana (Ky.) 337; Sun Mutual Insurance Co. v. Searles, IZ Miss. 62 ; Rearden v. Hen- son (Miss.), 29 So. 764; Johnston v. Dahlgren, 31 App. Div. (N. Y.) 204, 52 N. Y. S. 555. See also, Douthart V. Congdon, 197 111. 349, 64 N. E. 348, 90 Am. St. 167. "'D'Allax V. Jones, 2 Jur. (N. S.) 979; Harrison v. Jones, 80 Ala. 412. In the above case the statute made it a misdemeanor to practice without a license. Quarles v. Evans, 7 La. Ann. 543; Fox V. Dixon, 58 Hun (N. Y.) 60S, 34 N. Y. St. 71.0, 12 N. Y. S. 267. (In the above case the statute made it a misdemeanor to practice medicine without a license.) Deaton v. Law- son, 40 Wash. 486, 82 Pac. 879, 2 L. R. A. (N. S.) 392, 111 Am. St. 922. In the above case it was held that as long as the contract remains execu- tory money paid thereunder may be recovered. In case the legislature re- peals that part of the statute which prevents recovery, a physician not provided with a statutory certificate may then recover for his services. Smythe v. Hanson, 61 Mo. App. 285. See also, Gremare v. Le Glare Bois Valon, 2 Comp. 144; Prietto v. Lewis, 11 Mo. App. 601 ; Prince v. Eighth St. Baptist Church, 20 Mo. App. 332. "" Taylor v. Crowland Gas &c. Co., 10 Exch. 293 ; Hall v. Bishop, 3 Daly (N. Y.) 109. In the case of Hittson v. Brown, 3 Colo. 304, it is held that two persons practicing law as part- ners cannot recover for joint profes- sional services unless both have pro- cured the required license. "Wells V. People, 71 HI. 532; Hos- mer v. Sheldon School District, 4 N. Dak. 197, 59 N. W. 1035, 25 L. R. A. 383, 50 Am. St. 639. °'Gunter v. Lecky, 30 Ala. 591; Hustis v. Pickands, 47 111. App. 270; Douthart v. Congdon, 197 111. 349, 64 N. E. 348, 90 Am. St. 167; Rich- ardson v. Brix, 94 Iowa 626, 36 N. W. 325 ; Harding v. Hagar, 60 Maine 340, 63 Maine 515; Black v. Surety Mutual Life Assn., 95 Maine 35, 49 Atl. 51", 54 L. R. A. 939; Pratt v. Burdon, 168 Mass. 596, 47 N. E. 419; Buckley v. Humason, 50 Minn. 195, 52 N. W. 385, 16 L. R. A. 423, 36 Am. St. 637; Holt v. Green, IZ Pa. 198, 13 Am. Rep. 1Z1. In the above case the statute did not declare that the contract should be void, but only inflict a penalty on the offender. The court laid down the rule "that if a plaintiff cannot open his case without showing that he has b''ol Am. St. 26; Wheeler Whitehead, 149 Ind. 560, 49 N. E. v. Bank, 188 111. 34, 58 N. E. 598, 80 592, 39 L. R. A. 725, 63 Am. St. 302 ; Am. St. 161 ; Leonard v. American Commercial Bank v. Nolan, 7 How. Ins. Co., 97 Ind. 299 ; Twiss v. Guar- (Miss.) 508; Marshall v. Baltimore anty Life Assn., 87 Iowa IZi, 55 N. &c. R. Co., 16 Howard (U. S.) 314; W. 8, 43 Am. St. 418; Lucas v. White Chippeway Valley &c. R. Co. v. Chi- Line Transfer Co., 70 Iowa 541, 30 cago, St. P. &c. R. Co., 75 Wis. 224, N. W. 771, 59 Am. Rep. 449; Bank- 44 N W 17 6 L R A. 601. ers' Union of the World v. Crawford, ' Chewacla' Lime Works v. Dis- 67 Kans. 449, li Pac. 79, 100 Am. St. mukes, 87 Ala. 344, 6 So. 122, 5 L. 465; M. V. Monarch v. Farmers' & R. A. 100; Eel River R. Co. v. State, Drovers' Bank, 105 Ky. 430, 20 Ky. 155 Ind. 433, 57 N. E. 388; Bruns- L. 1315, 49 S. W. 317, 88 Am. St. 310; wick Gas Light Co. v. United Gas, Weckler v. First Nat. Bank, 42 Md. Fuel &c. Co., 85 Maine 532, 27 Atl. 581, 20 Am. Rep. 95; Smith v. 525, 35 Am. St. 385; Middlesex R. Stoughton, 185 Mass. 329, 70 N. E. Co. v. Boston & C. R. Co., 115 Mass. 195; Salem Mill Dam Corp. v. Ropes, 347; Wolford v. Military Assn., 54 6 Pick. (Mass.) 23; Davis v. Old Minn 440 56 N. W. 56; Barry v. Colony R. Co., 131 Mass. 258, 41 Am. Merchants' Exchange Co,, 1 Sands. Rep. 221; Day v Spiral Springs Ch (N Y.) 280; Alexander v. Buggy Co., 57 Mich. 146, 23 N. W. Cauldweil, 83 N. Y. 480; Thomas v. .628, 58 Am. Rep. 352; Gould v. Ful- W Jersey R Co 101 U. S. 71, 25 L. ler, 79 Minn. 414, 82 N. W. 673 ; State ed.'950; Louisville &c. R. Co. v. Ken- v. Trust Co., 144 Mo 562, 46 SW. tuckv 161 U S 677, 40 L. ed. 849, 16 593 ; Matthews v. Skmker, 62 Mo. Suo Ct 714- State v. Anderson, 91 329, 21 Am. Rep. 425; Sturdevant Wis' 114 72 NW 386. Bros. v. Bank, 62 Nebr. 472, 87 N. W. "Stein'er v Lumber Co., 120 Ala. 156; National Trust Co. v. Miller, 33 128, 26 So. 494; New York Firemen N. J Eq 155; Jemison v. Citizens' Ins Co V Ely 5 Conn. 560; Byrne Sav. Bank, 122 N. Y. 135, 25 N. E. v Schuyler E ectric Mfg. Co., 65 264, 9 L. R. A. 708, 19 Am. St. 482: 1/4 CONTRACTS. 476 been held that the act whereby a person of unsound mind^^ or an infant" attempts to appoint an agent is absolutely void. In other words, they cannot act as a principal. On the other hand, one may act as agent even though he is unable to stand in the position of principal or does not have the capacity to enter into a contract on his own responsibility.^^ In the absence of ratifica- tion by, or estoppel of, the principal, the agent binds his princi- pal only in so far as he acts within the apparent scope of his em- ployment." § 274. Drunken persons. — A contract entered into by a person when in a state of complete intoxication and deprived of National Park Bank v. German- drunkard may act as administrator or American Co., 116 N. Y. 281, 22 N. executor. Sill v. M'Knight, 7 WaUs. E. 567, S L. R. A. 673; Alexander v. & S. (Pa.) 244. Cauldwell, 83 N. Y. 480; Markley v. "See Simon v. Johnson, 101 Ala. Mineral City, 58 Ohio St. 430, 51 368, 13 So. 491 ; Birmingham Mineral N. E. 28, 65 Am. St. 776 ; Straus v. &c. Co. v. Tennessee R. Co., 127 Ala. Eagle Ins. Co., 5 Ohio St. 59 ; Frank- 137, 28 So. 679 ; Snapp v. Stanwood, lin Bank v. Commercial Bank, 36 65 Ark. 222, 45 S. W. 546; Lakeside Ohio St. 350, 38 Am. Rep. 594; Com- &c. Co. v. Campbell, 39 Fla. 523, 22 monwealth v. Erie &c. R. Co., 27 Pa. So. 878 ; Brandenstein v. Douglas, 105 339, 67 Am. Dec. 471n; Fowler v. Ga. 845, 32 S. E. 341; Blackmer v. Scully, 72 Pa. 456, 13 Am. Rep. 699; Summit Coal & Mining Co., 187 111. Head v. Providence Ins. Co., 2 32, 58 N. E. 289; Kinser v. Clay Cranch (U. S.) 127, 2 L. ed. 229; County, 165 111. 505, 46 N. E. 372, Bank of Augusta v. Earle, 13 Pet. affg. 64 111. App. 437; Noftsger v. (U. S.) 519, 10 L. ed. 274; Thomas Barkdall, 148 Ind. 531, 47 N. E. 960; V. West Jersey R. Co., 101 U. S. 71, 25 Kiefer v. Klinsick, 144 Ind. 46, 42 N. L. ed. 950. For a further discussion E. 447; Stover v. Flower, 120 Iowa of corporations and their contracts, 514, 94 N. W. 1100; Godshaw v. see post, ch. 18. Struck, 109 Ky. 285, 22 Ky. L. 820, 58 "Plaster v. Rigney, 97 Fed. 12, 38 S. W. 781, 51 L. R. A. 668; Warren C. C. A. 25; McCIun v. McClun, 176 v. Goodwyri, 110 La. 198, 34 So. 411; 111. 376, 52 N. E. 928; Clay v. Ham- Munroe v. Whitehouse, 90 Maine 139, mond, 199 111. 370, 65 N. E. 352, 93 27 Atl. 866 ; Davies v. Eastern Steam- Am. St. 146; Williams v. Sapieha, 94 boat Co., 94 Maine 379, 47 Atl. 896, 53 Tex. 430, 61 S. W. 115; Dexter v. L. R. A. 239; Clark v. Murphy, 164 Hall, 15 Wall. (U. S.) 9, 21 L. ed. 72. Mass. 490, 41 N. E. 674; Gore v. As- '=Philpot V. Bingham, 55 Ala. 435; surance Co., 119 Mich. 136, 77 N. W. Trueblood v. Trueblood, 8 Ind. 195; 650; Clark v. Haupt, 109 Mich. 212, Pyle V. Cravens, 4 Litt. (Ky.) 17; 68 N. W. 231; Olson v. Great North- Lawrence V. McArthur, 10 Ohio 37; ern R. Co., 81 Minn. 402, 84 N. W. Rocks v. Cornell, 21 R. I. 532, 45 Atl. 219; Perrine v. Cooley's Exrs., 42 N. 552; Knox v. Flack, 22 Pa. 337; Dex-' J. L. 623; Law v. Stokes, 32 N. J. L. ter V. Hall, IS Wall. (U. S.) 9, 21 L. 249, 90 Am. Dec. 655; Ferguson v. ed. 73. See, however, CoursoUe v. Davis & Rankin Bldg. & Mfg. Co., 118 Weyerhauser, 69 Minn. 328, 72 N. W. N. Car. 946, 24 S. E. 710 ; Thompson 697. V. Sproul, 179 Pa. 266, 36 Atl. 290; ^'Lyon V. Kent, 45 Ala. 656; Talbot Mundis v. Emig, 171 Pa. St. 417, 32 V. Bowen, 18 Kv. (1 A. K. Marsh.) Atl. 1135; Brown v. West, 69 Vt, 440, 436, 10 Am. Dec. 747. It has been 38 Atl. 87; Parr v. Northern Electri- held that one adjudged an habitual cal Mfg. Co,, 117 Wis. 278, 93 N. W. 477 PARTIES. § 27s the use of his reason is not binding upon him, and it is immate- rial whether he was drawn into that situation by the connivance of the other party or not.^"* § 275. Where incapacity is such as to make contracts void. - — Much confusion has arisen on this branch of the subject be- cause courts have used the words void and voidable interchange- ably. The trend of modern authority, however, is to limit the doctrine which declares contracts entered into by parties, one of whom is incapable of contracting, void. Thus, the only void con- tracts of an infant, if any, are those whereby he attempts to ap- point an agent.^° The cases which hold that the appointment of an agent by an infant is absolutely void are of doubtful author- ity, however, and are contrary to the weight of authority." It is difficult to see why a distinction should be drawn between con- tracts entered into by the infant in person and those negotiated by his agent. If he ratify in the first instance no valid reason exists for denying the right to ratify in the latter.^* In case a person of unsound mind has been judicially declared insane and a guardian or a conservator appointed, contracts en- tered into by such person of unsound mind subsequent to the 1099; McKindly v. Dunham, SS Wis. 195; Hardy v. Waters, 38 Maine 450; 515, 13 N. W. 485, 42 Am. Rep. 740. Whitney v. Dutch, 14 Mass. 457, 7 For a further discussion of this sub- Am. Dec. 229; Welch v. Welch, 103 ject see chapter IS post. Mass. 562 ; Simpson v. Prudential Ins. "Nance v. Kemper, 35 Ind. App. Co., 184 Mass. 348, 68 N. E. 673, 63 605, ^^ N. E. 937; Kuhlman v. L. R. A. 741, 100 Am. St. 560; Stiff v. Wieben, 129 Iowa 188, 105 N. W. 445, Keith, 143 Mass, 224, 9 N. E. 577 ; 2 L. R. A. (N. S.) 666; Cameron- Patterson v. Lippincot, 47 N. J. L. Barkley Co. v. Thorton &c. Co., 138 457, 1 Atl. 506, 54 Am. Rep. 178; N. Car. 365, 50 S. E. 695, 107 Am. St. Cummings v. Powell, 8 Tex. 80; 532; Barrett v. Buxton, 3 Aik. (Vt.) Voglesang v. Null, 67 Tex. 465, 3 S. 167 16 Am Dec. 691. See further on W. 451; Ferguson v. Houston R. Co., this subject, post, chapter 14. 73 Tex. 344, 11 S. W. 347; Askey y. »«Zouch V Parsons, 3 Burr. 1794; Williams, 74 Tex. 294, 11 S. W. 1101, Allen V. Allen, 2 Dru. & War. 307; 5 L. R. A. 176. Doe V Roberts, 16 M. & W. 778; "In some jurisdictions it is held Burns v Smith 29 Ind. App. 181, 64 that gifts made by an infant are ab- N E 94 94 Am St. 268; Phillips v. solutely void and incapable of being Green, 3' A. K. Marsh. (Ky.) 7, 13 ratified Robinson y Coulter, 90 Am. Dec. 124; Breckenridge's Heirs Tenn. 705, 18 S. W. 250, 25 Am bt. V Ormsby 1 J J. Marsh. (Ky.) 236, 708. In Tennessee they still adhere 19 Am Dec 71 ; Dana v. Coombs, 6 to the old common-law rule to the Maine 89 19 Am Dec. 194; Conroe effect that beneficial contracts of an V. Birdsa'u, 1 Johns. Cas. (N. Y.) infant are valid, those of questionable 127 1 Am Dec. 105. benefit voidable, and those to his det- " Hastings v. Dollarhide, 24 Cal. riment void. § 275 CONTRACTS. 4/8 appointment of the guardian are absolutely void.^° Certain other contracts are declared void even though entered into prior to the appointment of the guardian, the same as with infants. A per- son of unsound mind is declared incapable of executing a power of attorney, and it is held that in case he attempts so to do it is absolutely void and not merely voidable.^" By some authorities a lunatic's deed of conveyance has been declared void.^^ Other authorities lay down the rule that if one contracts with an insane person with knowledge of his insanity the agreement is void.'^ By the common-law rule a feme covert cannot bind herself by contract except as previously noted.^^ The doctrine of ultra vires as applied to corporate contracts is given a strict construction by the Supreme Court of the United States, the courts of England, and by many courts of last resort in the United States. Where this is true a corporate contract which is ultra vires in the proper sense, that is to say, outside " American Trust &c. Co. v. Boone, 102 Ga. 202, 29 S. E. 182, 40 L. R. A. 250, 66 Am. St. 167 ; Burnhara v. Kid- well, 113 111, 425; New England Loan & Trust Co. V. Spitler, 54 Kans. 560, 38 Pac. 799; Pearl v. McDowell, 3 J. J. Marsh. (Ky.) 658, 20 Am. Dec. 199; Bradbury v. Place (Maine), 10 Atl. 461; Lynch v. Dodge, 130 Mass. 458; Leonard v. Leonard, 14 Pick. (Mass.) 280; Wait v. Maxwell, 5 Pick. (Mass.) 217, 16 Am. Dec. 391; White V. Palmer, 4 Mass. 147; Payne V. Burdette, 84 Mo. App. 332; Carter V. Backwith, 128 N. Y. 312, 28 N. E. 582; Wadsworth v. Sherman, 14 Barb. (N. Y.) 169; Fitzhugh v. Wil- cox, 12 Barb. (N. Y.) 235; McCreight V. Aiken, Rice (S. Car.) 56; Elston V. Jasper, 45 Tex. 409; Hanley v. Nat, Loan &c. Co., 44 W. Va. 450, 29 S. E. 1002. " Plaster v. Rigney, 97 Fed. 12, 38 C. C. A. 25; Rigney v. Plaster, 88 Fed. 686; McClun v, McClun, 176 111. 376, 52 N. E. 928; Elias v. Enterprise Loan &c. Assn., 46 S. Car. 188, 24 S. E. 102 ; Dexter v. Hall, IS Wall. (U. S.) 9, 21 L. ed. 73. See also. Clay v. Hammond, 199 111. 370, 65 N. E. 352, 93 Am. St. 146 ; Wolcott v. Connecti- cut General Life Ins. Co., 137 Mich. 319, 100 N. W. 569; Eaton v. Eatoh, 37 N. J. L. 117, 18 Am. Rep. 716; Smith V. Smith, 106 N. Car. 498, 11 S. E. 188; In re Misselwitz, 177 Pa. St. 359, 35 Atl. 722. Contra, Will- iams V. Sapieha, 94 Tex. 430, 61 S. W. lis. As to the appointment of an agent by less formal means, see Ar- thurs V. Bridgewater Gas Co., 171 Pa. St. 532, 33 Atl. 88. ■'' Doughtery v. Powe, 127 Ala. 577, 30 So. 524; Walker v. Winn, 142 Ala. 560, 39 So. 12, 110 Am. St. 50. In the above case it is said that re- gardless of the holding in other ju- risdictions, in Alabama all contracts of an insane person are void. The point in question was the transfer of a note by an insane person. Elder v. Schumacher, 18 Colo. 433, 33 Pac. 175 ; Van Deusen v. Sweet, 51 N. Y. 378; Brown v. Miles, 61 Hun (N. Y.) 453, 16 N. Y. S. 251; Farley v. Parker, 6 Ore. 105, 25 Am. Rep. 504. " Bethany Hospital Co. v. Philippi, 82 Kans. 64, 107 Pac. 530, 30 L. R. A. (N. S.) 194. For a further discus- sion see chapter 12 on Insane Per- sons. ^Here see ante, § 271, Coverture. The agreement of a married woman is altogether void and no action will lie against her husband or herself for the breach of it. Fairhurst v. Liverpool &c. Assn., 9 Ex. 422, 23 L. J. Ex. 163 ; In re Corastock, 11 N. B. R. 169; '479 PARTIES. § 276 the object of its creation as defined in the law of its organization, and therefore beyond the powers conferred upon it by the legisla- ture, it is not only voidable but wholly void, and of no legal effect.^* However, most of the American courts recognize an exception or a limitation to the rule in cases where the contract has been executed by one of the parties and the other party retains the benefit therefrom. Good-faith performance by either party 'and an acceptance by the other party of the benefits of such per- .formance will prevent the latter from setting up the defense of ultra vires while retaining the benefits or when the ends of justice ■require an adherence to the terms of the agreement.^^ § 276. Where incapacity is such as to make contracts voidable. — In the preceding section those instances were mentioned in which contracts may be declared void because of incapacity on the part of one or both of the parties thereto. It must not be understood that it contains a statement of all con- tracts that are in effect void. An agreement may also be void because of the illegality of the subject-matter, or the law may deny one of the parties a remedy for its enforcement, as in the case of contracts with alien enemies. But contracts void for the causes last mentioned are clearly distinguished from contracts which are void because of incapacity of one of the parties. Con- sequently, except as mentioned in the preceding sections, all con- tracts entered into by persons under either a natural or artificial Prentiss v. Paisley, 25 Fla. 927, 7 So. (2d ed.), § 2768, and cases cited in 56, 7 L. R. A. 640; Frazee v. Frazee, note therein. 79 Md. 27, 28 Atl. 1105; Tracy v. '"'Main v. Casserly, 67 Cal. 127, 7 Keith, 11 Allen (Mass.) 214; Flesh Pac. 426; Denver Fire Ins. Co. v. Mc- V. Lindsay, 115 Mo. 1, 21 S. W. 907, Clelland, 9 Colo. 11, 9 Pac. 771, 59 Z1 Am. St. 374; Keen v. Hartman, 48 Am. Rep. 134; Union Hardware Co. v. Pa. 497 86 Am. Dec. 606, 88 Am. Dec. Plume & A. Mfg. Co., 58 Conn. 219, 20 '472; Bank v. Partee, 99 U. S. 325, 25 Atl. 455; Wright v. Hughes, 119 Ind. L ed. 390; Woodward v. Barnes, 46 324, 21 N. E. 907, 12 Am. St. 412; Vt. 332, 14 Am. Rep. 626. See also, Flint & W. Mfg. Co. v. Kerr-Murray Earle v. Kingscote (1900), 1 Ch. 203. Mfg. Co., 24 Ind. App. 350, 56 N. E. See also, ante, § 271, Coverture. 858; Beach v. Wakefield, 107 Iowa '■' Central Transportation Co. v. 567, 76 N. W. 688, 107 Iowa 591, 78 Pullman's Palace-Car Co., 139 U. S. N. W. 197; Traer v. Prospecting Co., 24, 35 L. ed. 55, 11 Sup. Ct. 478; Cali- 124 Iowa 107, 99 N. W. 290; Alex- fornia Bank v. Kennedy, 167 U. S. andria &c. R. Co. v. Johnson, 58 Kans. 362, 42 L. ed. 198, 17 Sup. Ct. 831; 175, 48 Pac. 847; Blue Rapids Opera De La Vergne &c Co. v. German Sav- House Co. v. Mercantile Building &c. ino- Institution, 175 U. S. 40, 44 L, ed. Assn., 59 Kans. 778, 53 Pac. 761 ; 65, 20 Sup. Ct. 20; 3 Thomp. Corp. Dewey v. Toledo R. Co., 91 Mich. 351, 277 CONTRACTS. 480 disability are voidable and not void. As a general rule, the con- tracts of such persons are voidable and not void. § 277. Ratification. — A contract voidable at the option of one of the parties because of want of capacity on the part of such party may be ratified after the disability or incapacity has been removed.^" Thus a principal may ratify the unauthorized act of his agent if such principal had the capacity to do the act ratified not merely at the time the act was done but also at the time of ratification.^^ Ratification does not amount to the formation of a new contract, consequently no new consideration is necessary.^* When a voidable contract is ratified it becomes binding from the 51 N. W. 1063; Butterworth v. Krit- zer Milling Co., 115 Mich. 1, 72 N. W. 990; Seymour v. Chicago Guaranty- Fund Life Co., 54 Minn. 147, 55 N. W. 907; Hunt V. Hauser Malting Co., 90 Minn. 282, 96 N. W. 85; First Nat. Bank v. Guardian Trust Co., 187 Mo. 494, 86 S. W. 109, 70 L. R. A. 79 ; In- ternational Trust Co. V. Davis & Far- num Mfg. Co., 70 N. H. 118, 46 Atl. 1054; Chapman v. Iron Clad Rheostat Co., 62 N. J. L. 497, 41 Atl. 690 ; Whit- ney Arms Co. v. Barlow, 63 N. Y. 62, 20 Am. Rep. 504; Bath Gaslight Co. v. Claffy, 151 N. Y. 24, 45 N. E. 390, 36 L. R. A. 664; Vought v. Eastern Building &c. Assn., 172 N. Y. 508, 65 N. E. 496, 92 Am. St. 761; Boyd v, American Carbon-Black Co., 182 Pa. 206, 37 Atl. 937; Pittsburgh, J., E. & E. R. Co. V. Altoona R. Co., 196 Pa. 452, 46 Atl. 431 ; Bullen v. Milwaukee Trading Co., 109 Wis. 41, 85 N. W. 115; Wuerfler v. Trustees &c., 116 Wis. 19, 92 N. W. 433, 96 Am. St. 940. For an extended discussion of this subject, see 3 Thomp. Corp. (2d ed.), § 2787 et seq. and cases there cited. "" Conklin v. Ogborn, 7 Ind. 553 ; Losey v. Bond, 94 Ind. is! ; Mansfield V. Watson, 2 Iowa 111; Whitney v. Dutch, 14 Mass. 457, 7 Am. Dec. 229n ; Thompson v. Lay, 4 Pick. (Mass.) 48, 16 Am. Dec. 325 ; Boyden v. Boyden, 9 Mete. (Mass.) 519; Howe v. Howe, 99 Mass. 88; Goodnow v. Empire Lumber Co., 31 Minn. 468, 18 N. W. 283, 47 Am. Rep. 798; Ferguson v. Bell, 17 Mo. 347; Lynde v. Budd, 2 Paige (N. Y.) 191, 21 Am. Dec. 84; Bigelow V. Grannis, 2 Hill (N. Y.) 120 ; Irvine v. Irvine, 9 Wall. (U. S.) 617, 19 L. ed. 800; Forsyth v. Hast- ings, 27 Vt. 646. Ratification can be made only by one who has power to make the contract in the first instance. Cushman v. Cloverland &c. Min. Co., 170 Ind. 402, 84 N. E. 759, 16 L. R. A. (N. S.) 1078, 127 Am. St. 391. ='Kelner v. Baxter, L. R. 2 C. P. 174, 36 L. J. C. P. 94; Hardware Co. V. Deere, 53 Ark. 140, 13 S. W. 1102, 7 L. R. A. 405n; McCrack^n v. San F'rancisco, 16 Cal. 591 ; McDonald v. McCoy, 121 Cal. 55, 53 Pac. 421 ; Na- tional Foundry & Pipe Works v. Oconto Water Co., 68 Fed. 1006; Mc- Arthur v. Times Printing Co., 48 ]\Iinn. 319, 51 N. W. 216, 31 Am. St. 653; Pollock v. Cohen, 32 Ohio St. 514; Bell's Gap R. Co. v. Christy, 79 Pa. 54. 21 Am. Rep. 39; Milford v. Milford Water Co., 124 Pa. 610, 17 Atl. 185, 3 L. R. A. 122; Cook v. Tullis, 18 Wall. (U. S.) 332, 21 L. ed. 993. ""American Freehold Land Mort- gage Co. V. Dykes, 111 Ala. 178, 18 So. 292, 56 Am. St, 38; Conklin v. Og- born, 7 Ind. 553; Grant v. Beard, SO N. H. 129. See also, § 321 et seq., Ratification under the title Infants, etc. 48 1 PARTIES. § 277 date on which it was made and not merely from the date of rati- fication.^" " American Freehold Land Mort- gage Co. V. Dykes, 111 Ala. 178, 18 So. 292, 56 Am. St. 38; Hall v. Jones, 21 Md. 439; Durfee v. Abbott, 61 Mich. 471, 28 N. W. 521 ; Minock v. Short- ridge, 21 Mich. 304; Tibbets v. Ger- rish, 25 N. H. 41, 57 Am. Dec. 307; Hoit V. UnderhiU, 10 N. H. 220, 34 Am. Dec. 148; Harner v. Dipple, 31 Ohio St. 72, 27 Am. Rep. 496; Cheshire v. Barrett, 4 McCord (S. Car.) 241, 17 Am. Dec. 735. See fur- ther on the subject of Ratification un- der chapters on Fraud, Duress and Undue Influence, Infants, Married Womenj etc. 31— Contracts, Vol. I CHAPTER XI. INFANTS. ! 285. Infants — When infants become § 314. of age. 286. Infants — Contracts may be 315. void, voidable or valid. 287. Former rule for determining 316. whether void, voidable, or 317. vaHd. 288. Present rule. _ _ 318. 289. Effect of emancipation. 290. Valid contracts generally. 319. 291. Valid contracts generally — Contracts authorized by stat- 320. ute or the common law. 321. 292. Contracts authorized by stat- 322. ute — Contracts of enlistment. 323. 293. Marriage contracts. 324. 294. Contract by infant to do what he is legally bound to do. 325. 295. Valid contracts — Necessities. 296. What are necessities? 326. 297. Necessities — Food, wearing ap- parel, lodging and the like. 327. 298. Necessities — Education. 299. Necessities — Services of an at- 328. torney. 300. Necessities — Miscellaneous. 329. 301. What are not necessities. 330. 302. Voidable contracts generally. 331. 303. Conveyances, transfers and mortgages of property. 304. Bills and notes. 332. 305. Contracts for service, work and labor. 333. 306. Awards and compromise. 334. 307. Suretyship. 335. 308. Partnership. 336. 309. Corporation stock and member- ship. 310. Other illustrative cases — Mar- riage settlement. 337. 311. Other illustrative cases — Me- chanic's lien. 312. Other illustrative cases — As- 338. signment for benefit of cred- itors, 339, 313. Other illustrative cases — Leases 340. made by guardian extending beyond the term of guardian- ship. 341. 482 Other illustrative cases — Ap- prenticeship. Effect of concealment or mis- representation. Active concealment, estoppel. Active concealment — Action in tort. Action to compel a reconvey- ance. Active misrepresentation, lia- bility for false pretense. Summary. Ratification. Ratification — What amounts to. Express ratification. When ratification must be in writing. Ratification by conduct — Reten- tion of property. Ratification by conduct — Sale or conversion of property. Ratification by conduct ^ Re- ceiving agreed consideration. Ratification by conduct — ^lis- cellaneous. Ratification by laches. Laches — Statute of limitations. Ratification need not be sup- ported by an additional con- sideration. Ratification — Knowledge as to legal liability. Ratification — Effect. Disaffirmance and avoidance. Who may disaffirm or avoid. Time and manner of disaffirm- ance — Personal contracts and contracts concerning person- alty. Time of disaffirmance — Con- tracts concerning an interest in real estate. Time of disaffirmance — Execu- tory contracts. Disaffirmance after majority. Disaffirmance — Delay greater than that permitted by stat- ute of limitations. Disaffirmance— How indicated. 483 INFANTS. § 28s 3 342. What amounts to disaffirmance. 343. Cannot disaffirm in part and ratify in part. 344. What amounts to disaffirmance — Illustrations. 345. Disaffirmance of contract con- cerning an interest in real es- tate. 346. Restoration of consideration. 347. Restoration of consideration — Cannot use privilege as a sword instead of a shield. 348. Restoration of consideration — Contract fair and reasonable. § 349. Restoration of consideration as a condition precedent. 350. Restoration of consideration — Statutory modification of common-law rule. 351. Restoration of consideration— Both parties infants. 352. Effect and result of disaffirm- ance. 353. Disaffirmance — Liability in tort. 354. Disaffirmance — Effect — Mis- cellaneous instances. 355. Finality of disaffirmance. §285. Infants — When infants become of age. — By the common law all persons under the age of twenty-one, whether male or female, were styled infants. By it a person remained an infant until the full age of twenty-one was attained.^ This rule still obtains except as changed by statute in the various states. The law has drawn no line between an infant six years old and one twenty years old. All infants are, in the eyes of the law, entitled to equal protection.* It follows that a minor who has nearly attained his majority may be as able to protect his interests in a contract as a person who has passed that period, but the law must necessarily fix some precise age at which persons shall be held sui juris. It cannot measure the individual capacity in each case as it arises ; it musl hold the youth who has nearly reached his majority to be no more bound by his contract than a child of tender years.^ By the common law and in all jurisdictions where the rule de- clared by it has not been changed by statute an infant attains his majority at the earliest minute of the day immediately preceding the anniversary of his birth.* It is entirely competent, however. 'Coke's Litt. 171; 1 Bl. Com. 463, 466; 2 Bouvier's Law Diet. (Rawle's Ed.) 1209; 2 Pol. & Mait. (2 ed.) 438; Anon., 1 Salk. 44; Banco De Sonora v. Bankers' &c. Co., 124 Iowa 576, 100 N. W. 532, 104 Am. St. 367. ^ Baker v. Lovett, 6 Mass. 78, 4 Am. Dec. 88. See also, Beekman v. Beek- man, 53 Fla. 858, 43 So. 923. ^McCarty v. Carter, 49 111. 53, 95 Am. Dec. 572. * Herbert v. Turball, 1 Keb. 589; Anonymous, 1 Salk. 44; Fitzhugh v. Dennington, 6 Mod. 259; State v. Clarke, 3 Harr. (Del.) 557; Wells v. Wells, 6 Ind. 447; Banco De Sonora V. Bankers' &c. Co., 124 Iowa 576, 100 N. W. 532, 104 Am. St. 367; Hamlin V. Stevenson, 4 Dana (Ky.) 597; Bardwell v. Purrington, 107 Mass. 419; Benjamin Cases on Contracts 296 ; Ross v. Morrow, 85 Tex. 172, 19 S. W. 1090, 16 L. R. A. 542 ; In re Richardson, 2 Story (U. S.) 571. § 286 CONTRACTS. 484 for the legislature to change the time at which an infant shall attain his or her majority. Thus the legislatures of some of the states have by statutory enactment provided that a minor attains full age at the first minute of his proper birthday;^ others, that a female reaches her majority at the age of eighteen." By the statutes of some states- all minors whether male or fe- male are deemed of full age after marriage.' By the statutes of North Dakota an infant over eighteen has the right of election for one year after reaching his majority to affirm or disaffirm his contract.^ The statutes of many states provide that the dis- abilities of infancy may be removed by a specified court proceed- ing. The various statutes changing the common-law rule in relation to infancy cannot be set out here ; reference must be had to the legislative enactment of the separate states. § 286. Infants' contracts may be void, voidable or valid. — The contracts of an infant with reference to their validity and his liability may be divided into three classes : first, those agree- ments that are absolutely void, — a comparatively small number of his contracts fall within this classification ; second, contracts that are merely voidable, most of the contracts entered into by an in- fant are of this description ; third, agreements valid and binding upon him." § 287. Former rule for determining whether void, void- able, or valid. — The classification of infants' contracts above "Civil Code Cal., § 26; Civil Code Lofland, 21 Tex. Civ. App. 503, 52 S. S. Dak., § 10; Ex parte Wood (Cal), W. 121. See also. Statutes of Mary- 90 Pac. 961. land and Oregon. By the statutes of ° See statutes of Arkansas, Califor- Nebraska a married woman over six- nia, Colorado, Dakota, Idaho, Illinois, teen years of age has reached her ma- Iowa, Kansas, Maryland, Minnesota, jarity. Ward v. Laverty, 19 Nebr. Missouri Nebraska, Nevada, Ohio, 429, 27 N. W. 393. Oregon, Vermont and Washington. ' See statutes of Iowa, Louisiana In this connection, see Rowland v. and also Washington. In the case of McGuire, 64 Ark. 412, 42 S. W. 1068; Ex parte Hollopeter, 52 Wash. 41, 100 Ex parte Wood (Cal.), 90 Pac. Pac. 159, the court said : "Under the 961 ; Stevenson v. Westfall, 18 111. general rule of law Grover H. be- 209 ; Banco De Sonora v. Bankers' &c. came of lawful age when the mar- Co., 124 Iowa 576, 100 N. W. 532, 104 riage ceremony was performed." Am. St. 367; Cogel v. Ralph, 24 Minn. 'Luce v. Jestrabe, 12 N. Dak. 548, 194; Sparhawk v. Buell, 9 Vt. 41. In 97 N. W. 848. some jurisdictions the woman be- " Reference will be had in the suc- comes of full age on her marriage, ceeding sections to the various kinds Chubb V. Johnson, 1 1 Tex. 469 ; White of contracts enumerated. V. Latimer, 12 Tex. 61 ; Grayson v. 485 INFANTS. 287 given is an ancient one, but the test by which to determine to what class a contract belongs has not always remained the same. Under the rule first announced the validity of an infant's con- tract depended upon whether it was beneficial to such infant. Under this rule when the court could or thought it could pro- nounce the contract to be to the infant's prejudice it was void; when to his benefit, as for necessities, it was held valid, and when the contract was of an uncertain nature and might in the end prove either beneficial or prejudicial it was voidable at the elec- tion of the infant.^" The foregoing test has, however, in the main been abandoned although it is not altogether obsolete, and is in some jurisdictions still observed and given its original significance.^^ In England it is still used as a test whereby to determine the validity of work and labor contracts^^ and perhaps some others." "Keane v. Boycott, 2 H. Bl. Sll; Harvey v. Ashley, 3 Atk. 617; Zouch V. Parsons, 3 Burr. 1794; Philpot v. Bingham, 55 Ala. 435; Kendrick v. Neisz, W Colo. 506, 30 Pac. 245; Green v. Wilding, 59 Iowa 679, 13 N. W. 761, 44 Am. Rep. 696; Guirot v. Guirot, 3 Mart. (N. S.) (La.) 400; Fridge v. State, 3 Gill & J. (Md.) 103, 20 Am. Dec. 463 ; Levering v. Heighe, 2 Md. Ch. 81 ; Ridgeley v. Crandall, 4 Md. 435 ; Baker v. Lovett, 6 Mass. 78, 4 Am. Dec. 88; Oliver v. Houdlet, 13 Mass. 237, 7 Am. Dec. 134; Whitney v. Dutch, 14 Mass. 457, 7 Am. Dec. 229; Cogley v. Cushman, 16 Minn. 397 ; Woolston v. King, 2 Penn. (3 N. J. L.) 599; In re Bowman's Estate, 10 Lane. Bar. (Pa.) 139; Radford v. Wescott's Exrx., 1 Desaus. (S. Car.) 596; Wheaton v. East, 5 Yerg. (Tenn.) 41, 26 Am. Dec. 251; Mc- Minn. v. Richmonds, 6 Yerg. (Tenn.) 9; McGan v. Marshall, 7 Humph. (Tenn.) 121 ; Cummings v. Powell, 8 Tex. 80. This classification seems "founded on solid reason." United States V. Bambridge, 1 Mason (U. S.) 71. " See Robinson v. Coulter, 90 Tenn. 705, 18 S. W. 250, 25 Am. St. Rep. 708 ; Askey v. Williams, 74 Tex. 294, 11 S. W. 1101, 5 L. R. A. 176; Hatton V. Bodan Lumber Co., (Tex. Civ. App.), 123 S. W. 163. See, however. Gage V. Menczer (Tex. Civ. App.), 144 S. W. 717. See also. Griev- ance Committee v. Ennis, 84 Conn. 594, 80 Atl. 767; Benson v. Tucker (Mass.), 98 N. E. 589; Aborn V. Janis, 62 Misc. (N. Y.) 95, 113 N. Y. S. 309. See Chabot v. Paulhus (R. I.), 79 Atl. 1103 (holding that the sale of a saloon to a minor was not beneficial to him so as to preclude him from disaffirming his contract of purchase). "Reg. V. Lord, 12 Q. B. 757; Fel- lows V. Wood. 59 L. T. (N, S.) 513; Meakin v. Morris, 12 Q. B. D. 352; Evans v. Ware (1892), 3 Ch. 502; Corn V. Matthews (1893), 1 Q. B. 310; Clements v. L. & N. W. R. Co. (1894), 2 Q. B. 482. The test applied is, "whether on the true construction of the contract as a whole, it was for his advantage. * * * If it was for his advantage, it was not a voidable contract but one binding on him, which he had no right to repudiate." Clements v. L. & N. W. R. Co. (1894), 2 Q. B. D. 482. See, however, Wald's Pollock on Contracts, 60, 61, 62, in which the rule is criticized and its validitv denied. "Clements v. L. & N. W. R. Co. § 288 CONTRACTS. 486 § 288. Present rule. — Some cases early recognized that the ancient rule was unsatisfactory." The unsatisfactory character of the old test has led nearly all courts to abandon it, only the classification of void, voidable and valid being retained, in the main at least. They came to understand that infancy is a per- sonal privilege which no one can take advantage of but the infant himself, and therefore that his contract although voidable by him binds the person of full age. A recognition of this principle re- quired that practically all contracts of an infant should be held voidable rather than void and as a result the number of con- tracts classified as void has been greatly restricted, and the num- ber of agreements so designated seems to approach the vanishing point. The only contracts of an infant that are now void merely because of infancy are those whereby he attempts to execute a power of attorney,^° and in some jurisdictions the appointment of agents generally is declared void.^° It is believed, however, that the cases laying down the propo- sition that the attempted appointment by an infant of agents in general is void, are contrary to the weight of authority.^' Nor (1894), 2 Q. B. D. 482, in which it is Ferguson v. Houston, E. & W. T. R. said: "I will not attempt to say how Co., IZ Tex. 344, 11 S. W. 347. In far the rule extends, but that it does the case of Lawder v. Larkin (Tex. apply to some contracts that are not Civ. App.), 94 S. W. 171, it is held contracts of labor is clear from many that the execution of a deed of trust decided cases." For a criticism of coupled with the power of sale is the above case see Wald's Pollock on not void but voidable. Contracts, 75 note M. " Cole v. Pennoyer, 14 111. 158 ; " See Breckenridge's Heirs v. Trueblood v. Trueblood, 8 Ind. 195, Ormsby, 1 J. J. Marsh. (Ky.) 236, 19 65 Am. Dec. 756; Burns v. Smith, 29 Am. Dec. 71; Oliver v. Houdlet, 13 Ind. App. 181, 64 N. E. 94, 94 Am. Mass. 237, 7 Am. Dec. 134. Set also, St. 268 ; Semple v. Morrison, 7 T. B. remarks of Pollock at 60 et seq. of Mon. (Ky.) 298; Armitage v. Widoe, Wald's Pollock on Contracts, in which 36 Mich. 124; Poston v. Williams, 99 he affirms that the rule announced Mo. App. 513, 73 S. W. 1099; Bool v. above and as given by various au- Mix, 17 Wend. (N. Y.) 119, 31 Am. thorities never was in fact the law. Dec. 285. In the case of State v. "Flexner & Lichten v. Dickerson, Field (Mo. App.), 119 S. W. 499, it 72 Ala. 318;^ Philpot v. Bingham, 55 was held that a minor could not make Ala. 435 ; Di Meglio v. Baltimore & a valid appointment of another to act O. R. Co. (Del.), 74 Ath 558; Waples as agent to buy beer for him. v. Hastings, 3 Harr. (Del.) 403; Hie- "Towie v. Dresser, 73 Maine 252; stand v. Kuns, 8 Blackf. (Ind.) 345, Simpson v. Prudential Ins. Co,. 184 46 Am. Dec. 481 ; Pyle v. Cravens, 4 Mass. 348, 68 N. E. 673, 63 L. R. A. Litt. (Ky.) 17; Lawrence v. McArter, 741, 100 Am. St. 560; Benson v. 10 Ohio Z1\ Knox v. Flack, 22 Pa. St. Tucker (Mass.), 98 N. E. 589. See 337. This rule, however, is not uni- also, ante, Parties, § 275, Void Con- versal. Coursolle v. Weyerhauser, 69 tracts. Minn. 328, 72 N. W. 697. See also, 487 INFANTS. 289 is there any principle other than that of stare decisis upon which the cases holding that the execution of the power of attorney or appointment of an agent is void, can rest." The cases so holding are, perhaps, the survival in a modified form of the old common- law principles that all such gifts, grants, or deeds made by an in- fant as do not take effect by delivery of his hand are void. But all gifts, grants or deeds made by an infant by matter in deed or in writing which take effect by delivery of his own hand are voidable by himself and his heirs and by those who have his estate." Prac- tically all other contracts except those for necessities are voidable at the infant's option.^" § 289. Effect of emancipation. — The emancipation of an infant by his father does not enlarge or affect his capacity to make a contract, its only direct effect being to release him from his father's control and to give him a right as against his father to his earnings.^^ Nor is the rule otherwise when emancipation is brought about by marriage of the minor either with or without " In the case of Fetrow v. Wise- man, 40 Ind. 148, it is said that the proposition "may not be founded in solid reason, but is so held by all the authorities." "'Zouch V. Parsons, 3 Burr. 1794; Allen V. Allen, 2 Dr. & War. 307; Doe V. Roberts, 16 M. & W. 778; Phillips V. Green, 3 A. K. Marsh. (Ky.) 7, 13 Am. Dec. 124; Breck- enridge's Heirs v. Ormsby, 1 J. J. Marsh. (Ky.) 236, 19 Am. Dec. 71; Dana v. Coombs, 6 Maine 89, 19 Am. Dec. 194; Conroe v. Birdsall, 1 Johns. Cas. (N. Y.) 127, 1 Am. Dec. 105; Perkins on Conveyancing, § 12. ™ The English Relief Act provides : 1. All contracts whether by specialty or by simple contract henceforth en- tered into by infants for the repay- ment of money lent or to be lent, or for goods supplied or to be supplied (other than contracts for necessa- ries), and all accounts stated with infants, shall be absolutely void : pro- vided always that this enactrnent shall not invalidate any contract into which an infant may by any existing or future statute or by the rules of common law or equity enter, ex- cept such as now by law are voidable; 2. No action shall be brought where- by to charge any person upon any promise made after full age to pay any debt contracted during infancy, whether there shall or shall not be any new consideration for such promise or ratification after full age. 3. This act may be cited as The Infant's Relief Act, 1874. ^ Burns v. Smith, 29 Ind App. 181, 64 N. E. 94, 94 Am. St. 268; Tandy v. Masterson, 1 Bibb. (Ky.) 330; Mason v. Wright, 13 Mete. (Mass.) 306; Tyler v. Gallop, 68 Mich. 185, 35 N. W. 902, 13 Am. St. 336; Genereux v. Sibly, 18 R. I. 43, 25 Atl. 345; Person v. Chase, Zl Vt. 647, 88 Am. Dec. 630. The latter case holds the above prin- ciple applicable to gifts. The fact that a minor has neither parent nor guardian and works for himself and receives his own wages does not op- erate to confer upon him the power to contract generally. Wickham v. Torley, 136 Ga. 594, 71 S. E. 881, 36 L. R. A, (N. S.) 57 and note. An emancipated infant may sue for his wages and the employer will not be § 290 CONTRACTS. 488 the consent of the parent."^ But the capacity of an infant to contract for necessities is in one sense enlarged by his marriage, for he is bound for the reasonable value of necessities furnished his family as well as himself;^" and emancipation by the parent may also be important on the question as to what are necessaries in the particular case, and in cases of contracts, express or im- pHed, between parent and child, as well as upon the infant's right to recover from others for his services or the like.^* § 290. Valid contracts generally. — The valid contracts of an infant may be divided into three classes. They are : first, con- tracts authorized by law; second, contracts entered into in the performance of a legal duty f^ and third, contracts for necessities. § 291. Valid contracts generally — Contracts authorized by statute or the common law. — If a contract is entered into by a minor under the authority or direction of a statute it is binding upon him so far as the question of infancy is concerned and cannot be disaffirmed. The above is expressly provided in stat- utes of the several states.^' Thus if a minor gives a recogni- zance for his appearance in court he is bound by the same."' On permitted to deny the manumission of And if the statutes of the state pro- the infant by the parent. Webb v. vide that upon marriage an infant be- Harris (Okla.), 121 Pac. 1082. comes of full age and the disabilities - Harrod v. Myers, 21 Ark. 592, 76 of infancy are removed he then has Am. Dec. 409; Watson v. Billings, 38 the capacity to contract. Ark. 278, 42 Am. Rep. 1 ; Burns v. ^ See Wright v. Dean, 79 Ind. 407 ; Smith, 29 Ind. App. 181, 64 N. E. 94, Daniel v. Parish, 4 App. Cas. (D. C.) 94 Am. St. 268. In the above case it 213; Washington v. Washington is said: "The marriage of an infant (Tex. Civ. App.), 31 S. W. 88. with the consent of the father is an '^At common law antenuptial debts emancipation only to the extent as to of the wife are considered as a con- enable him to make contracts from his tract liability for which the infant own services, and to apply his wages can not escape except as provided to the support of his family. Other- for by statute. See post, § 291. wise it does not enlarge his power to ^ If the statute reads "any person" contract, nor does it remove the dis- it will be construed so as to include abilities of infancy so that he is bound infants unless it clearly appears that by his contracts, except for actual nee- it was intended to exclude them. Earl essaries." Hartman v. Kendall, 4 of Buckinghamshire v. Drury, Wil- Ind. 403; Cummings v. Everett, 82 mot 177; People v. Mullin, 25 Wend. Maine 260, 19 Atl. 456; Taunton v. (N. Y.) 698. Inhabitants of Plymouth, 15 Mass. " Gavin v. Burton, 8 Ind. 69; State 203; Davis v. Caldwell, 12 Cush. v. Weatherwax, 12 Kans. 463; Stow- CMass.) 512; Welch v. Young, 110 ers v. Hollis, 83 Ky. 544, 7 Ky. L. Mass. 396. 549; McCall v. Parker, 13 Mete. "= Chapman v. Hughes, 61 Miss. 339. (Mass.) 372, 46 Am. Dec. 735; Bor- 489 INFANTS. § 292 the same principle he is bound on a bastardy bond given by him.^' It has been held that he may make a valid assignment for the benefit of creditors under a statute which provides that "any person" may make such assignment.^" By the statutes of New York an infant may make a valid contract by which he insures his life.^" Under the common law a male infant who marries as- sumes his wife's antenuptial debts.*^ § 292. Contracts authorized by statute — Contracts of en- listment. — Contracts of enlistment are also upheld, not only on the ground of public policy, but for the added reason that the govern- ment has conferred upon minors over sixteen the right to enlist if the consent of the parent or guardian is obtained.^^ The power of congress to authorize the enlistment of minors is undoubted, the only question being whether or not congress has, under the statutes which have been passed from time to time, authorized the enlistment of such persons. It has been usually held that the infant himself is bound and cannot avoid the con- tract of enlistment, this being a right personal to the parent or guardian.^^ dentown Tp. v. Wallace, SO N. J. L. 13, 11 Atl. 267; People v. Moores, 4 Denio (N. Y.) 518, 47 Am. Dec. 272. ==Stowers v. HoUis, 83 Ky. 544, 7 Ky. L. 549; People v. Moores, 4 Denio (N. Y.) 518, 47 Am. Dec. 272. ^People V. Mullin, 25 Wend. (N. Y.) 698. °° Hamm v. Prudential Ins. Co., 137 App. Div. (N. Y.) 504, 122 N. Y. S. 35. ^Anderson v. Smith, 33 Md. 465; Butler V. Breck, 7 Mete. (Mass.) 164, 39 Am. Dec. 768; Roach v. Quick, 9 Wend. (N. Y.) 238; Cole v. Seeley, 25 Vt. 220, 60 Am. Dec. 258. ''Lanahan v. Birge, 30 Conn. 438; In re Dowd, 90 Fed. 718; Solomon v. Davenport, 87 Fed. 318; Ex parte Anderson, 16 Iowa 595; In re Gra- ham, 8 Jones (N. Car.) 416; Com- monwealth V. Gamble, 11 Serg. & R. (Pa.) 93; Morrissey v. Perry, 137 U. S. 157, 34 L. ed. 644, 11 Sup. Ct. 57; In re Tarble, 25 Wis. 390, 3 Am. Rep. 85. "Whenever any disability, en- acted by the common law, is removed by the enactment of a statute, the competency of the infant to do all acts within the purview of such stat- ute is as complete as that of a person of full age." United States v. Bain- bridge, 1 Mason (U. S.) 71. It is a fundamental principle of nation- al law essential to national life that every citizen whether of an age to make contracts generally or not is under obligation to serve and de- fend the constituted authorities of the states and nation and for that purpose to bear arms when of suf- ficient age and capacity to do so and when such service is lawfully re- quired of him. Lanahan v. Birge, 30 Conn. 438. See, also, United States V. Blakeney, 3 Grat. (Va.) 405. '"In re Dowd, 90 Fed. 718; Solo- mon V. Davenport, 87 Fed. 318; In re Kaufman, 41 Fed. 876; In re Cose- now, 2)} Fed. 668; In re Zimmerman, 30 Fed. 176; Ex parte Anderson, 16 Iowa 595; In re Graham, 8 Jones L. (N. Car.) 416; Commonwealth v. Gamble, 11 Serg. & R. (Pa.) 93; Morrissey v. Perry, 137 U. S. 157, 34 L. ed. 644, 11 Sup. Ct. 57; United § 293 CONTRACTS. 49O It has been held by other authorities, however, that the minor could avoid such contracts either before or after reaching ma- jority."* On this principle it has been held that the minor may avoid such contracts without being punished for desertion." §293. Marriage contracts. — At common law a male four- teen years of age and a female twelve years of age could contract a valid and binding marriage.^" Even if one or both parties were below the ages just mentioned and above the age of seven, a mar- riage between them was not void but merely voidable, and might be ratified by the female on her reaching the age of twelve and by the male on his attaining fourteen. ^^ The common-law rule is still in force in the various states except as changed by statutes/' While the age of consent has been changed in many jurisdictions yet in practically all of them infants may contract valid marriages. The statutory enactments of the various states and their effect cannot be treated here. They may, however, be divided into two classes. They are : statutes which absolutely prohibit the celebra- tion of a valid marriage by a party above the common-law age States V. Blakeney, 3 Grat. (Va.) ""Co. Litt. 79b; Rex v. Gordon, 405. See also, In re McDonald, 1 Russ. & Ry. 48; Arnold v. Earle, 2 Low. (U. S.) 100. Lee Ecc. S29; Beggs v. State, 55 Ala. " In re Chapman, 37 Fed. 327, 2 L. 108 ; Goodwin v. Thompson, 2 G. R. A. 332. See, however. United Greene (Iowa) 329; Parton v. Her- States V. Reeves, 126 Fed. 127, in vey, 1 Gray (Mass.) 119; State v. which it is said: "In re Chapman Lowell, 78 Minn. 166; Bennett v. was overruled by the Supreme Court Smith, 21 Barb. (N. Y.) 439; Koonce in Morrissey's case and in Grimley's v. Wallace, 7 Jones (52 N. Car.) case and it is now of no effect. It 194; Shafher v. State, 20 Ohio 1; reads well, but it is not sound." Warwick v. Cooper, 5 Sneed (Tenn.) ='In re Von Dieselskie, 5 Mackey 659; Pool v. Pratt, 1 D. Chip. (Vt.) (D. C.) 485; United States v. Hanch- 252; Fisher v. Bernard, 65 Vt. 663, 27 ett, 18 Fed. 26; In re Davison, 21 Atl. 316; In re Hollopeter, 52 Wash. Fed. 618; In re Baker, 23 Fed. 30; In 41, 100 Pac. 159, 21 L. R. A. (N. S.) re Chapman, 11 Fed. 327, 2 L. R. A. 847n, 132 Am. St. 952. 332; Commonwealth v. Fox, 7 Pa. '' Bacon Abridgment 4, 336; Koonce St. 336. Practically all the foregoing v. Wallace, 7 Jones (52 N. Car.) 194; cases have, however, been many times Holtz v. Dick, 42 Ohio St. 23, 51 Am. criticized, explained, qualified, or Rep. 792; Warwick v. Cooper, 5 overruled. See cases cited in note 32 Sneed (Tenn.) 659. and ZZ of this section and also United '» State v. Bittick, 103 Mo. 183, IS States V. Reeves, 126 Fed. 127; In re S. W. 325, 11 L. R. A. 587 and note, Grimley, 137 U. S. 147, 34 L. ed. 636, 23 Am. St. 869; Fisher v. Bernard, 65 11 Sup. Ct. 54. As was mentioned Vt, 663, 27 Atl. 316; In re Hollopeter, above, however, the controversy is 52 Wash. 41, 100 Pac. 159, 21 L. R. not over the principle but over the A. (N. S.) 847n, 132 Am. St. 952. effect and meaning of the statute actually enacted. 491 INFANTS. § 294 and under the statutory age/" and those which are merely cumu- lative and do not abrogate the common-law rule.*" § 294. Contract by infant to do what he is legally bound to do. — An infant is not excepted from the operation of the rule that a person is bound when he does an act which at law he would have been compelled to do. The doing of an act which an infant is bound at law to do, binds him notwithstanding it was done voluntarily and without legal compulsion.*^ Thus the execution of a trust is binding on the infant, when it is a disposition which equity would have compelled.*^ Likewise, an infant mortgagee is bound by his release upon the mortgage debt being discharged.*^ § 295. Valid contracts — Necessities. — The third class of contracts that are vaHd and binding on the infant are those for necessities, or "necessaries" as they are usually called in the law. A large majority of the valid contracts of an infant are of this character, consequently, because of the importance of the subject, it will be treated in a separate section. It is well settled and definitely understood that an infant is liable for the reasonable value of necessities actually furnished him.** It is the policy of the law to protect infants from imposi- "" Vernon v. Vernon (Ohio), 12 v. Moreland, 10 Pet. (U. S.) 58; Wkly. L. Bull. 237; Shafher v. State, Irvine v. Irvine, 9 Wall. (U. S.) 617, 20 Ohio 1. See also. Hardy v. State, 19 L. ed. 800. il Tex. Crim. SS, 38 S. W. 615 ; Eliot « Elliott v. Horn, 10 Ala. 348, 44 V. Eliot, n Wis. 634, 46 N. W. 806, 10 Am. Dec. 488 ; Norholdt v. Nor- L. R. A. 568. holdt, 87 Cal. 552, 26 Pac. 599, 22 " Goodwin v. Thompson, 2 Green Am. St. 268 ; Prouty v. Edgar, 6 (Iowa) 329; State v. Bittick, 103 Mo. Iowa, 353; Bridges v. Bidwell, 20 183, 15 S. W. 325, 11 L. R. A. 587 Nebr. 18, 29 N. W. 302; Starr v. and note, 23 Am. St. 869; Fisher v. Wright, 20 Ohio St. 97; Trader v. Bernard, 65 Vt. 663, 27 Atl. 316; In Jarvis, 23 W. Va. 100. re Hollopeter, 52 Wash. 41, 100 Pac. *'Zouch v. Parsons, 3 Burr. 1794. 159, 21 L, R. A. (N. S.) 847, 132 Am. See also, Kearby v. Hopkins, 14 Tex. St. 952. Such marriages may be void- Civ. App. 166, 36 S. W. 506 ; Tucker able, however. Willits v. Willits, 76 v. Moreland, 10 Pet. (U. S.) 58. Nebr. 228, 107 N. W. 379, 5 L. R. A. " Ford v. Fothergill, 1 Esp. 211 ; (N. S.) 767. A distinction must be Oliver v. McDuffie, 28 Ga, 522; Hunt drawn between the marriage itself v. Thompson, 4 111. (3 Scam.) 179, and a promise to marry. The latter id Am. Dec. 538; Price v. Sanders, is always voidable at the option of 60 Ind. 310; Fruchey v. Eagleson, IS the infant party. Rush v. Wick, 31 Ind. App. 88, 43 N. E. 146; Trainer Ohio St. 521; Benj. on Cont. p. 135. v. Trumbull, 141 Mass. 527, 6 N. E. ^'Zouch V Parsons, 3 Burr. 1794; 761; McCarty v. Murray, 3 Gray Bavington v. Clarke, 2 Pen. & W. (Mass.) 578: Squier v. Hydliff, 9 (Pa.) lis, 21 Am. Dec. 432; Tucker Mich. 274; Epperson v. Nugent, 57 § 295 CONTRACTS. 492 tion, hence the right to avoid their general contracts. It is appar- ent, however, that if this rule should be applied so as to include liabilities for necessities furnished it would defeat the very pur- pose for which it was created. Infants might under such a con- struction be unable to obtain suitable food, clothing, shelter and education.^^ Hence, the law imposes an obligation upon the infant to pay for necessities furnished him. This is true regard- '|less of any express agreement on his part to pay therefor. If the goods received are shown to have been necessary for the well- being of the infant and \vere furnished under such circumstances as to impose a duty to pay therefor, he is liable.*" It follows that while infants may make an express promise to compensate one for necessities furnished and while courts are in the habit of en- forcing the promise to pay, taking the amount agreed upon as prima facie just, it is nevertheless manifest that the obligation enforced is imposed by law on the facts of the case and does not have its origin in the binding force of the infant's agreement.*^ Miss. 45, 34 Am. Rep. 434; Gay v. Ballon, 4 Wend. (N. Y.) 403, 21 Am. Dec. 158; Shaw v. Bryant, 65 Hun (N. Y.) 57; Hyman v. Cain, 3 Jones (48 N. Car.) Ill; Smith v. Young, 2 Dev. & Bat. (19 N. Car.) 26; Sco- field V. White, 29 Vt. 330; Bent v. Manning, 10 Vt. 225. "An agree- ment with an infant to give him board, clothing and schooling in payment for his labor, if reasonable under all circumstances, cannot be repudiated by the infant after it has been executed." Squier v. Hydliff, 9 Mich. 274; Mountain v. Fisher, 22 Wis. 93. "Where necessaries are furnished with things that are not necessaries, there is a remedy for the former, but none for the latter." Turberville v. Whitehouse, 12 Price 692; Maddox v. Miller, 1 1\I. & S. 738; Bent v. Manning, 10 Vt. 225; Johnson v. Lines, 6 Watts & S. (Pa.) 80, 40 Am. Dec. 542; Wallace V. Lerov, 57 W. Va. 263, 50 S. E. 243, 110 Am. St. 777; Crafts v. Carr, 24 R. I. 397, S3 Atl. 275, 60 L. R. A. 128, 96 Am. St. 721. " Ryder v. Wombell, L. R. 4 Exch. 32 ; Wallin v. Highland Park Co., 127 Iowa 131, 102 N. W. 839; Benjamin's Cases on Contracts, 335 ; Heeler v. Young, 1 Bibb (Ky.) 519; Squier v. Hydliff, 9 Mich. 274. •"Duncomb v. Tickridge, Aleyn 94; Bliss V. Ferryman, 1 Scam. (111.) 484; Ayers v. Burns, 87 Ind. 245, 44 Am. Rep. 759; Gay v. Ballou, 4 Wend. (N.Y.) 403, 21 Am. Dec. 158; Ben- jamin's Cases on Contracts 334; Hy- man V. Cain, 3 Jones L. (48 N. Car.) 111. "Walter v. Everard (1891), 2 Q. B. 369; Gregory v. Lee, 64 Conn. 407, 30 Atl. 53, 25 L. R. A. 618 ; Barnes v. Barnes, 50 Conn. 572 ; Burton v. Wil- lin, 6 Hous. (Del.) 522, 22 Am. St. 363; Hunt v. Thompson, 4 111. (3 Scam.) 179, 36 Am. Dec. 538; Price V. Sanders, 60 Ind, 310; Kilgore v. Rich, 83 Maine 305, 22 Atl. 176, 12 L. R. A. 859, 23 Am. St. 780 ; Trainer v. Trumbull, 141 Mass. 527, 6 N. E. 761 ; Earle v. Reed, 10 Mete. (Mass.) 387; Stone v. Dennison, 13 Pick. (Mass.) 1, 23 Am. Dec. 654; Welch V. Olmstead, 90 Mich. 492, 51 N. W. 541; Epperson v. Nugent, 57 Miss. 45, 34 Am. Rep. 434 ; Locke v. Smith, 41 N. H. 346; Pardey v. American- Ship Windlass Co., 20 R. I. 147, 37 Atl. 706, 78 Am. St. Rep. 844; Gen- ereux v. Sibley, 18 R. I. 43, 25 Atl. 345; Rainwater v. Durham, 2 Nott 493 INFANTS. 296 An infant is not liable on an executory contract for necessities to be furnished in the future.*^ Not only this, but before any re- covery can be had, the reasonable value of the goods furnished must be proved and the fact that they vsrere for necessities actually established." This brings us to the question, what are necessi- ties? This question will be discussed in the succeeding section. § 296. What are necessities? — The word "necessities" as used here is a relative term. Its meaning as applied to infants cannot be defined by general rules applicable to all cases. The question is a mixed one of law and fact to be determined in each case from the particular facts and circumstances peculiar there- to,^'' it being for the court to determine whether the goods fur- nished may be classified as necessities and for the jury to deter- & McC. (S. Car.) 524, 10 Am. Dec. 637; Askey v. Williams, 74 Tex. 294, 11 S. W. 1101, 5 L. R. A. 176; Smith V. Crohm (Tex. Civ. App.), 37 S. W. 469. An infant may make an ex- press written contract for necessaries upon which he may be sued, but * * * by showing the price agreed to be paid was unreasonable, he can reduce the recovery to a just com- pensation for the necessaries received by him. Guthrie v. Morris, 22 Ark. 411 ; Askey v. Williams, 74 Tex. 294, 11 S. W. 1101, S L. R. A. 176. An infant is liable to pay only what the necessities were reasonably worth and not what he may foolishly have agreed to pay for them. Trainer v. Trumbull, 141 Mass. 527; Locke v. Smith, 41 N. H. 346. The person furnishing the necessities can recover only the fair and reasonable value of such necessaries. In re Appeal of Ennis, 84 Conn. 610, 80 Atl. 772. Some cases hold that the infant's express promise is absolutely unenforcible and that no action can be maintained thereon. (See cases cited in the next to last preceding note.) Other cases treat the express promise as the express foundation of the action dif- fering from the ordinary contract only in that the reasonable value of the necessities alone can be recovered. Viewed strictly from a legal stand- point it would seem that the legal principle back of the latter doctrine is convenience only. For an infant so young as to be utterly incapable of forming or assenting to a contract is nevertheless liable for the necessities furnished him. It is the law that in reality makes the contract and im- poses the legal duty. ** Gregory v. Lee, 64 Conn. 407, 30 Atl. 53, 25 L. R. A. 618; Wallin v. Highland Park Co., 127 Iowa 131, 102 N. W. 839, Benjamin's Cases on Contracts, 335 ; Pool v. Pratt, 1 Chip. (Vt.) 252; Jones v. Valentine's School of Telegraphy, 122 Wis. 318, 99 N. W. 1043; International Text- Book Co. V. McKone, 133 Wis. 200, 113 N. W. 438 (holding his surety also excused). "Brent v. Williams, 79 Miss. 355, 30 So. 713; Gray v. Sands, 66 App. Div. (N. Y.) 572, IZ N. Y. S. 322; International Text-Book Co. v. Aber- ton, 30 Ohio C. C. 352. ""Englebert v. Troxell, 40 Nebr. 195, 58 N. W. 852, 26 L. R. A. 177, 42 Am. St. 665, per Ragan, C: "It is therefore a preliminary question to be settled, whether the alleged liabil- ity arises from expenditures for what the law deems necessaries; and, un- less that be shown, it is not compe- tent to introduce the evidence to show . that in a pecuniary point of view the expenditure was beneficial to the minor." See also, Mathes v. Dob- schuetz, 72 111. 438; Price v. Sanders, 60 Ind. 310. In Decell v. Lgwenthal, S 297 CONTRACTS. 494 mine whether they were in fact necessary.^^ The only general rule that can be formulated is to the effect that those articles are necessities which are necessary to the infant's existence and com- fort and enable him to live according to his real position in society." § 297. Necessities, food, wearing apparel, lodging and the like. — Lord Coke stated that: "An infant may bind himself to pay for his necessary meat, drink, apparel, necessary physic, and such other necessaries, and likewise for his good teaching or instruction whereby he may profit himself afterward."^^ The modern law on this subject might be stated in practically the same 57 Miss. 331, 34 Am. Rep. 449, it was held that the money furnished an in- fant to enable him to carry on a plantation was not a necessary. In Anding v. Levy, 57 Miss. 51, 34 Am. Rep. 435, it was held that where an infant had no guardian, and the services rendered by an attorney were beneficial to the infant's estate, he was liable for such services. Bloomer v. Nolan, Z6 Nebr. 51, Si N. W. 1039, 38 Am. St. 690. In Barker V. Hibbard, 54 N. H. 539, 20 Am. Rep. 160, it was held that the services rendered by an attorney in defend- ing an infant in a bastardy proceed- ing were necessaries. In Turner v. Gaither, 83 N. Car. 357, it was held that money furnished an infant to enable him to acquire a professional education was not a necessary. In Hull V. Connolly, 3 McCord (S. Car.) 6, IS Am. Dec. 612, and in Kline v. L'Amoreux, 2 Paige (N. Y.) 419, 22 Am. Dec. 652, it was held that "if an infant was living with his parents or guardian and properly maintained by them, his contract, even for necessaries, was not bind- ing." "Rainsford v. Fenwick, Cart. 215; Harris v. Fane, 1 Scott N. R. 287, 1 Man. & G. 550; Peters v. Fleming, 6 M. & W. 42; Brooker v. Scott, 11 M. & W. 67; Wharton v. McKenzie, S Q. B. 606; Bryant v. Richardson, L. R 3 Ex. 93n; Ryder v. Wombwell, L R 4 Ex. 32; Skrine v. Gordon, Jr. R. 9 C. L. 479; Hill v. Arbon, 34 L. T. 125; AIcKanna v. Merry, 61 111. 177; Henderson v. Fox, 5 Ind. 489; Garr v. Haskett, 86 Ind. 373; Beeler v. Young, 1 Bibb (Ky.) 519; Tupper V. Cadwell, 12 Mete. (Mass.) 559, 46 Am. Dec. 704; Merriam v. Cunningham, 11 Cush. (Mass.) 40; Davis V. Caldwell, 12 Cush. (Mass.) 512; Decell v. Lewenthal, 57 Miss. 331, 34 Am. Rep. 449; Cobbey v. Buchanan, 48 Nebr. 391, 67 N. W. 176; Jordan v. Coffield, 70 N. Car. 110; Saunders v. Ott, 1 McCord (S. Car.) 572; Smith v. Young, 2 Dev. & Bat. (19 N. Car.) 26; Johnson v. Lines, 6 Watts & S. (Pa.) 80, 40 Am. Dec. 542; Grace v. Hale, 2 Humph. (Tenn.) 27, 36 Am. Dec. 296; Bent v. Manning, 10 Vt. 225. "" Peters v. Fleming, 6 M. & W. 42; Ryder v. Wombwell, L. R. 4 Ex. 32; Walter v. Everard (1891), 2 Q. B. 369; Hands v. Slaney, 8 T. R. 578; Strong V. Foote 42 Conn. 203 ; Nich- olson V. Spencer, 11 Ga. 607; Mc- Kanna v. Merry, 61 111. 177, Ben- jamin's Cases on Contracts, 343; Mc- Kanna v. Merry, 61 111. 177; Sams v. Stockton & Curtis, 14 B. Mon. (Ky.) 232, Benjamin's (Tases on Contracts, 346; Davis v. Caldwell, 12 Cush. (Mass.) 512; Jordan v. Coffield, 70 N. Car. 110; Rivers v. Gregg, 5 Rich. Eq. (S. Car.) 274; Middle- bury College v. Chandler, 16 Vt. 683, 42 Am. Dec. 537; Gayle v. Hayes' Admr., 79 Va. 542; Wallace v. Leroy, 57 W. Va. 263, SO S. E. 243, 110 Am. St. Rep. 777. ■" Co. Lit. 172a. 495 INFANTS. § 298 language. The cases decided since Lord Coke's time have in the main merely applied and amplified the rule as announced by that eminent jurist. Consequently, it is well settled that an infant is liable for the reasonable value of necessary food," medical atten- tion°° including nursing during sickness,^" wearing apparel," services rendered by dentists in caring for decayed teeth,°* or lodging.^" § 298. Necessities, education. — In conformity with Lord Coke's definition a trade education"" and common school educa- tion"^ are held necessities. It seems from decided cases that a college"^ or professional education"^ is not to be classed as a neces- "Barnes v. Barnes, SO Conn. 572; L. R. A. 859, 23 Am. St. 780; Trainer Price V. Sanders, 60 Ind. 310; Kil- v. Trumbull, 141 Mass. 527, 6 N. E. gore V. Rich, 83 Maine 305, 22 Atl. 761; Rivers v. Gregg, 5 Rich. Eq. (S. 176, 12 L. R. A. 859, 23 Am. St. 780; Car.) 274. See also. Peck v. Cain, Trainer v. Trumbull, 141 Mass. 527, 27 Tex. Civ. App. 38, 63 S. W. 177. 6 N. E. 761; Stone v. Dennison, 13 ^^ Walter v. Everard (1891), 2 Q, Pick. (Mass.) 1, 23 Am. Dec. 654; B. 369; Party v. American-Ship McConnell v. McConnell 75 N. H. Windlass Co., 20 R. I. 147, Zl Atl. 385, 74 Atl. 875. The above case 706, 78 Am. St. 844. See Maul- holds the fact that she was under din v. Southern &c. Business Univ., guardianship to be immaterial. Saun- 126 Ga. 681, 55 S. E. 922, where ders v. Ott, 1 McCord (S. Car.) 572; it is held that whether or not Rivers v. Gregg, 5 Rich. Eq. (S. Car.) a stenographic course for a minor 274; Bradley v. Pratt, 23 Vt. 378. was a necessity depended "entirely '^ Price V. Sanders, 60 Ind. 310. upon that particular infant's condition The infant may be liable for its in life, and the particular sphere in necessities when the parent fails or society or calling in life which her refuses to provide them. In this case previous education and attainments it was medical attention. Harris v. had prepared and fitted her to occupy Crawley, 161 Mich. 383, 126 N. W. or fill." International Text-Book Co. 421; Gibbs v. Poplar &c. Co., 142 Mo. v. McKone, 133 Wis. 200, 113 N. W. App. 19, 125 S. W. 840; Saunders v. 438. In the above case he is held Ott, 1 McCord (S. Car.) 572. liable only on his executed contract. ""In re Werner's Appeal, 91 Pa. St. Nor is his surety liable in case the 222. infant repudiates his executory con- " Price v. Sanders, 60 Ind. 310; tract. Stone V. Denison, 13 Pick. (Mass.) ""Peters v. Fleming, 6 Mes. & W. 1, 23 Am. Dec. 654; Lynch v. John- 42; St. John's Parish v. Bronson, 40 son, 109 Mich. 640, 67 N. W. 908; Conn. 75, 16 Am. Rep. 17; Saunders Atchison v. Bruff, 50 Barb, (N. Y.) v. Ott, 1 McCord (S. Car.) 572; 381; Saunders v. Ott, 1 McCord (S. Rivers v. Gregg, 5 Rich. Eq. (S. Car.) Car.) 572; Rivers v. Gregg, 5 Rich. 274; Middlebury College v. Chandler, Eq. (S. Car.) 274. See also, Austin 16 Vt. 683, 42 Am. Dec. 537. V. Kahn, 1 White & W. Civ. Cas. °' Middlebury College v. Chandler, (Tex.), § 1049. 16 Vt. 683, 42 Am. Dec. 537 (especial- " Strong V. Foote, 42 Conn. 203, ly where the infant's wealth, station Benjamin's Cases on Contracts, 338. in society, or genius or talent do not ™ Gregory v. Lee, 64 Conn. 407, suggest the fitness and expediency of 30 Atl 53 25 L. R. A. 618; Price a college education for him). V Sanders. 60 Ind. 310; Kilgore v. "^ Turner v. Gaither, 83 N. Car. Rich, 83 Maine 305, 22 Atl. 176, 12 357, 35 Am. Rep. 574 (educated as 299 CONTRACTS. 496 sity. It is believed, however, that the foregoing cases denying that a college or professional education may be a necessity are of doubtful propriety, nor can any reason be seen for drawing a distinction between the case in which money is advanced in order to enable an infant to learn a trade or engage in business and the case in which it is advanced to enable him to learn a profession."* § 299. Necessities, services of an attorney. — The services of an attorney may be classed as a necessity if rendered for the protection of his personal rights or for the release of his person."^ In conformity with this rule it has been held that an attorney is entitled to the reasonable value of his services for bringing a breach of promise suit on behalf of a destitute female,"" bringing suit for indecent assault"^ or prosecuting an action to recover for personal injury."' It has also been held that an attorney is entitled to recover when he defends a minor in a bastardy"^ or criminal proceeding,'" or any action where his liberty and reputation are at stake.'^ Ser- vices rendered in the prosecution or defense of a civil action physician) ; Bouchell v. Clary, 3 Brev. (S. Car.) 194 (educated as physi- cian). See also, Smith v. Gibson, Peake's Add. C. 52, in which it is held that money advanced to place out defendant's infant wife as an ap- prentice to learn millinery could not be considered as a necessity. De Moss V. Giltner, S Ky. L. 691, in which it was held that instruction in music and painting given without authority of the person in whose cus- tody the infant was, was not to be classed as a necessity. It has also been held that religious instruction is not such education as is classed as a necessity. St. John's Parish v. Bronson, 40 Conn. 75, 16 Am. Rep. 17. " See Peters v. Fleming, 6 M. & W. 42. Education furnished to an infant may be necessary to him, but only when it is suitable to his wants and condition. International Text-Book Co. v. Doran, 80 Conn. 307, 68 Atl. 255; Mauldin v. Southern &c. Busi- ness Univ., 126 Ga. 681, 55 S. E. 922 ; Cory V. Cook, 24 R. I. 421, 53 Atl. 315. '"Munson v. Washband, 31 Conn. 303, 83 Am. Dec. 151; Englebert v. Troxell, 40 Nebr. 195, 58 N. W. 852, 26 L. R. A. 177, 42 Am. St. 665; Barker v. Hibbard, 54 N. H. 539, 20 Am. Rep. 160; Crafts v. Carr, 24 R. I. 397, 53 Atl. 275, 60 L. R. A. 128, 96 Am. St. 721; Askey v. Williams, 74 Tex. 294, 11 S. W. 1101, 5 L. R. A. 176; Hanlon v. Wheeler (Tex. Civ. App.), 45 S. W. 821. ""Munson v. Washband, 31 Conn. 303, 83 Am. Dec. 151. "Crafts V. Carr, 2 R. I. 397, 53 Atl. 275, 60 L. R. A. 128, 96 Am. St. 721. °» Sutton V. Heinzle, 84 Kans. 756, 115 Pac. 560, 116 Pac. 614, 34 L. R. A. (N. S.) 238; Hanlon v. Wheeler (Tex. Civ. App.), 45 S. W. 821. " Barker v. Hibbard, 54 N. H. 539, 20 Am. Rep. 160. ™ Askey V. Williams, 74 Tex. 294, 11 S. W. 1101, 5 L. R. A. 176. "See McCrilHs v. Bartlett, 8 N. H. 569. See also, Nagel v. Schilling, 14 Mo. App. 576. 497 INFANTS. 300 have been held a necessity when they conserve the infant's prop- erty and are highly beneficial to the infant's estate." No definite and satisfactoi-y rule can be laid down as to when attorney's fees will be deemed necessities. An action at law may be a necessity for an infant, and whether it is or not is to be determined by the particular circumstances of each case.'^ § 300. Necessities, miscellaneous. — There may be special circumstances such as will render necessary certain things that might not under ordinary conditions be so classified. Thus it has been held that regimentals furnished an infant who was a member of a volunteer corps were necessities.''* On the same principle a captain in the army has been held liable for a livery furnished his servant, the court saying that they could not hold the servant was not a necessity and if he was necessary a livery for him was also necessary.''^ An infant widow has been held liable on her contract as for necessities for the funeral expenses of her husband who left no property to be administered.'" Mourning goods may also be a necessity.'^ "Epperson v. Nugent, 57 Miss. 45, 34 Am. Rep. 434. Searcy v. Hunter, 81 Tex. 644, 17 S. W. 372, 26 Am. St. 837. In the case last cited it is said : "Looking to the condition of affairs in our state, it seems to us that to refuse to allow an attorney, who, at the instance of a next friend, has instituted a suit in behalf of a minor and recovered for him money or property, to claim from the in- fant a reasonable compensation for his services would be to establish a rule which would operate to the prejudice of the class it is designed to protect. In such case where the services have been beneficial to the infant we are of the opinion that reasonable compensation should be allowed." However, it has been held that services rendered in successfully defending a foreclosure suit (Engle- bert v. Troxell, 40 Nebr. 195, 58 N. W. 852, 26 L. R. A. 177, 42 Am. St. 665), looking up the title and ad- vising an infant as to his rights in certain property (Cobbey v. Buchan- an, 48 Nebr. 391, 67 N. W. 176), or defending a suit in order to protect ' 32 — Contracts, Vol. I the infant's title at the instance of his guardian (Phelps v. Worcester, 11 N. H. 51), were not necessities and that the attorney could not recover for the services rendered. See also, Dillon v. Bowles, 77 Mo. 603. While a rule of law (expressly for the infant's benefit) which holds an infant liable for necessities and yet refuses compensation to one who ren- ders services in obtaining possession or conserving, for the infant, his prop- erty (the means whereby he may furnish himself with the necessities) would seem a short-sighted policy not expressly for the infant's benefit, yet if the old rule limiting necessities to the person and not the estate of the infant is adhered to cases hold- ing the infant liable for an attorney's services rendered in conserving his estate cannot be upheld on principle. " Thrall V. Wright, 38 Vt. 494. "Coates V. Wilson, 5 Esp. 152. "Hands v. Slaney, 8 T. R. 578. "Chappie V. Cooper, 13 Mees. & W. 252. "De Moss V. giltner, 5 Ky. L. 691. § 301 CONTRACTS. 498 While a horse is not generally considered as a necessity yet it may be considered as such for an infant who has medical advice to take exercise on horseback. '* An infant has also been held liable for a wedding outfit proper for the occasion although not suitable for ordinary purposes.'^ Expensive fruits furnished a sick infant may be classed as necessities.'" As has been previously stated the capacity of an infant husband to contract for necessities is enlarged by his marriage and he will be bound for the reasonable value of necessities for his family as well as for himself.*^ Consequently a married infant who leased a house for two years has been held liable for the rental value of the property during the time he actually occupied it but not liable on the executory part of the contract. In this case it appeared that the infant had leased the property for two years; he remained in it ten days, and the court held him liable only for the rental value of the property for ten days.*^ The law on this subject may be summarized as follows : neces- sities concern the person and not the estate. The personal needs of an infant include all such articles, uses and services as are rea- sonably necessary for one in his circumstances and condition of life. § 301. What are not necessities. — The mere fact that an article or articles, such as food, clothing, and the Hke, may be classed as necessities does not mean that they will under all cir- cumstances be held necessary. The actual need and not the name controls. If it appears that an infant is sufficiently supplied with ''Hart V. Prater, 1 Jiir. 623. Also, Phillips's admr., 5 Harr. (Del.) 428; Clowes V. Brooke, 2 Strange, 1001; Price v. Sanders, 60 Ind. 310; Chap- Aaron V. Harley, 6 Rich. L. (S. Car.) man v. Hughes, 61 Miss. 339; Rivers 26. V. Gregg, 5 Rich. Eq. (S. Car.) 274. "Garr v. Haskett, 86 Ind. 373; »= Peck v. Cain, 27 Tex. Civ. App. Sams V. Stockton, 14 B. Men. (Ky.) 38, 63 S. W. 177. See also. Melton 232; Jordan_ v. Coffield, 70 N. Car. v. Katzenstein, (Tex. Civ. App.) 49 S. 110. Expensive jewelry even may be W. 173. In the above case it appeared necessary as an engagement present, that the infant was married and keep- Jenner v. Walker, 19 L. T. 398. ing house. Articles were sold him and "Wharton v. Mackenzie, S Q. B. it was alleged that they were neces- 606. sary to enable him to make a crop in " See ante, § 289, Emancipation. See order that he might support his fam- also. Hill and Bunning's Case, 1 Sid. ily. The court held the question as 17; Turner v. Trisby, 1 Strange 168; to whether they were necessities, a Turberville v. Whitehouse, 1 Car. & mixed question of law and fact, that P. 94, afifd. m 12 Price 692 ; Cantine v. might be proved by any competent witness. 499 INFANTS. § 301 necessities, whether by his parents, guardian, or friend, or from any source whatever, his contracts for additional articles, in excess of his personal needs, are not binding upon him.*^ So long as a minor continues to live with his parents or is under guardianship the law presumes that he is provided with necessities.** This presumption is prima facie only, and it is generally held that if parents fail or are unable to supply the wants of their minor children such children may be held liable on their contracts for necessities.^"* '^Bainbridge v. Pickering, 2 W. Black. 1325; Ford v. Fothergill, Peake N. P. 229, 1 Esp. 211 ; Cook v. Deaton, 3 Car. & P. 114; Story v. Pery, 4 Car. & P. 526; Burghart v. Angerstein 6 Car. & P. 690; Mortara V. Hall, 6 Sim. 465 ; Brayshaw v. Eaton, 7 Scott 183, 5 Bing. (N. C.) 231; Steedman v. Rose, Car. & M. 422 ; Foster v. Redgrave, L. R. 4 Ex. 35n; Barnes v. Toye, L. R. 13 Q. B. D. 410; Johnstone v. Marks, L. R. 19 Q. B. D. 509; Nicholson v. Spencer, .11 Ga. 607; Nicholson v. Wilborn, 13 Ga. 467; McKanna v. Merry, 61 111. 177; Angel v. McLel- lan, 16 Mass. 28, 8 Am. Dec. 118; Swift V. Bennett, 10 Cush. (Mass.) 436; Davis v. Caldwell, 12 Cush. (Mass.) 512; Hoyt v. Casey, 114 Mass. 397, 19 Am. Rep. 371 ; Trainer V. Trumbull, 141 Mass. 527, 6 N. C. 761; Decell v. Lewenthal, 57 Miss. 331, 34 Am. Rep. 449 ; Perrin v. Wilson, 10 Mo. 451 ; Wailing v. Toll, 9 Johns. (N. Y.) 141; Kline v. L'Amoureux, 2 Paige (N. Y.) 419, 22 Am. Dec. 652; Hussey v. Roundtree, Busb. L. (N. Car.) 110; Smith v. Young, 2 Dev. & B. (N. Car.) 26; Guthrie v. Mur- phy, 4 Watts (Pa.) 80, 28 Am. Dec. 681 ; Johnson v. Lines, 6 Watts & S. (Pa.) 80, 40 Am. Dec. 542; Assignees of Hull V. Connolly, 3 McCord (S. Car.) 6, 15 Am. Dec. 612; Edwards V. Higgins, 2 McCord Eq. (S. Car.) 16; Kraker v. Byrum, 13 Rich. (S. Car.) 163; Rivers v. Gregg, 5 Rich. Eq. (S. Car.) 274; Elrod v. Myers, 2 Head (Tenn.) 33; Nichol v. Steger, 2 Tenn. Ch. 328, affd., 6 Lea (Tenn.) 393. A trader selling goods to a minor does so at his peril, and before he can recover for their value he must show that the articles furnished were necessaries, were actually needed, and that they or the money therefor were not supplied by the guardian or oth- ers. Brent v. Williams, 79 Miss. 355, 30 So. 713. The fact that the trader had no knowledge that the neces- sities were being furnished by an- other is immaterial. Fames v. Sweetser, 101 Mass. 78. Nor does the mere fact that the trader may or may not have inquired into the infant's circumstances in any way change the question to be de- cided; whether inquiry was or was not made, the question for the jury would still be the same. Brayshaw V. Eaton, 7 Scott 183, 5 Bing. (N. C.) 231. See also, Dalton v. Gibb, 7 Scott 117, 5 Bing. (N. C.) 198. ''Conboy V. Howe, 59 Conn. 112, 22 Atl. 35 ; McKanna v. Merry, 61 111, 177; Trainer v. Trumbull, 141 Mass. 527, 6 N. E. 761; Davis v. Caldwell, 12 Cush. (Mass.) 512; Perrin v. Wil- son, 10 Mo. 451; Kline v. L'Amour- eux, 2 Paige (N. Y.) 419; Smith v. Young, 2 Dev. & B. (N. Car.) 26; Freeman v. Bridger, 49 N. Car. 1, 67 Am. Dec. 258; State v. Cook, 12 Ired. L. (N. Car.) 67; Guthrie v. Murphy, 4 Watts (Pa.) 80, 28 Am. Dec. 681 ; Connolly v. Assignees of Hull, 3 McCord (S. Car.) 6, 15 Am. Dec. 612; Parsons v. Keys, 43 Tex. 557. *° See cases cited in preceding note, and, also, Mauldin v. Southern &c. Business Univ., 126 Ga. 681, 55 S. E. 922. Under the Georgia statute, when a suit is brought against_ a minor for necessities furnished him, it must affirmatively appear that the parent or guardian of such minor has failed or refused to supply him with sufficient necessities. McAllister v. § 30I CONTRACTS. SOO Closely analogous to the foregoing authorities is the rule that necessities, when furnished, must be in accordance with the needs and circumstances of the individual. If an excess is furnished there can be no recovery for that which is over and above the rea- sonable amount required by the necessities of the occasion.^* The foregoing instances are, in the main, cases in which the articles furnished properly fell within that class designated as necessities, but owing to some circumstance peculiar to each case they were taken out of the general rule. In other words they were necessities in name, but not such in fact. The succeeding cases have to do with articles that are not generally classified as necessities. The word necessity, as here used, has to do with the personal needs of the infant. A ministry to his fancied needs, appetite or passion, under the guise of necessities, is not tolerated ; Galtin, 3 Ga. App. 731, 60S. E.3SS; Harris v. Crawley, 161 Mich. 383, 126 N. W. 421 (parent) ; McConnell v. McConnell, 75 N. H. 38S, 74 Atl. 875 (guardianship) ; Goodman v. Alex- ander, 165 N. Y. 289, 59 N. E. 145, 55 L. R. A. 781. See Kline v. L'Amoureux, 2 Paige (N. Y.) 419, 22 Am. Dec. 652, which holds that an infant cannot bind himself for necessi- ties when under the care and control of a parent or guardian able and will- ing to provide for him. See also. Angel V. McLellan, 16 Mass. 28, 8 Am. Dec. 118. See, however, Hoyt V. Casey, 114 Mass. 397, 19 Am. Rep. 371, in which it was held that an in- fant was not liable for medical at- tention furnished him where his father was poor and unable to pro- vide such attention. In connection with this case see, however. Trainer V. Trumbull, 141 Mass. 527, 6 N. E. 761. "^ Johnson v. Lines, 6 Watts & S. (Pa.) 80, 40 Am. Dec. 542; Benjamin Cases on Contracts, 339. In the above case it is said : "Their [the plaintiffs'] account mounts up to more than a thousand dollars, com- prising charges for many articles which might be ranked with neces- saries when supplied in reason ; but not at the rate of twelve coats, seven- teen vests, and twenty-three panta- loons, in the space of fifteen months and twenty-one days; to say nothing of three bowie knives, sixteen pen- knives, eight whips, ten whiplashes, thirty-nine handkerchiefs, and five canes, with kid gloves, fur caps, chip hats, and fancy bag to match. Such a bill makes one shudder. Yet the jury found for the plaintififs almost their whole demand, including sums ad- vanced for pocket money, and to pay for keeping the minor's horses, which no one would be so hardy as to call necessaries. How they could recon- cile such a verdict to the dictates of conscience, I know not. They surely could not complacently look upon the ruin of their own sons, brought on by ministering to their appetites, and stimulating them with the means of gratification. Every father lias a deeper stake in these matters than the public mind is accustomed to suppose; and it intimately concerns the cause of morality and virtue, that the rule of the common law on the subject be strictly enforced." If articles are furnished an infant, some of which articles are necessi- ties and others not, the reasonable value of the necessary articles so furnished may be recovered. Bent v. Manning, 10 Vt. 225 ; Wallace v. Le- roy, 57 W. Va. 263, 50 S. E. 243, 110 Am. St. m. 501 INFANTS. § 301 consequently, except in extraordinary cases, articles of ornament or things conducive to pleasure are not considered necessities/^ Thus courts have refused to hold kid gloves, cravats, cologne and walking canes,'^ velvet and satin suits ornamented with gold lace,^'' racing jackets supplied to one not a jockey,"" liquors, pis- tols, powder, saddles, bridles, whips, fiddles and fiddle strings,"^ rich and costly betting books,"^ balls and serenades,"^ jewelry,"^ notwithstanding it is sold to one of high degree,°° dinners for friends, confectionery and fruits,'" cigars and tobacco,"' and pleas- ure trips,"^ are not necessities. Horses, whether used for pleasure or business,"" bridle and saddle,^ pony,^ buggies,^ bicycles,* and " Articles of mere luxury are al- ways excluded, though luxurious ar- ticles of utility are in some cases al- lowed. Chappel V. Cooper, 13 M. & W. 2S2. ''Lefils V. Sugg, IS Ark. 137. ^'Makarell v. Bachelor, Cor. Eliz. 583. ""Burghart v. Angerstein, 6 Car. & P. 690. •^Saunders v. Ott's Admr., 1 Mc- Cord (S. Car.) 572. "Jenner v. Walker, 19 L. T. 398. ■"North and Thompson's Case, cited Cart. 216. " Peters v. Fleming, 6 M. & W. 42 ; Lefils V. Sugg, IS Ark. 137; McKenna V. Merry, 61 111. 177. " Ryder v. Wombwell, L. R. 4 Ex. 32. See, however, Berrolles v. Ram- say, Holt N. P. IT, in which it was held that a breast pin and watch and chain might be considered as necessi- ties when purchased by the son of a wealthy nobleman. See also, Jenner V. Walker, 19 L. T. 398. ""Brooker v. Scott, 11 M. W. 67; Wharton v. MacKenzie, 5 Q. B. 606. See, however, Watson v. Cross, 2 Duv. (Ky.) 147. " Bryant v. Richardson, 14 L. T. 24. "'McKanna v. Merry, 61 111. 177. Traveling expenses may, however, be a necessity, [Breed v. Judd, 1 Gray (Mass.) 455] as when traveling for the minor's health. Howard v. Simp- kins, 70 Ga. 322. " Skrine v. Gordon, 9 Ir. R. C. L. 479; House v. Alexander, 105 Ind. 109, 4 N. E. 891, 55 Am. Rep. 189; Smithpeters v. Griffin's Admr., 10 B. Mon. (Ky.) 259; Wood v. Losey, 50 Mich. 475; Rainwater v. Durham, 2 Nott. & McC. (S. Car.) 524. 10 Am. Dec. 637; Grace v. Hale, 2 Humph. (Tenn.) 27, 36 Am. Dec. 296. See also, Mohney v. Evans, 51 Pa. St. 80. See also, ante, § 300, as to when a horse may be necessary. 'Beeler v. Young, 1 Bibb (Ky.) 519. ' Miller V. Smith, 26 Minn. 248, 2 N. W. 942, Zl Am. Rep. 407. ° Howard v. Simpkins, 70 Ga. 322 ; Paul V. Smith, 41 Mo. App. 275 ; Hef- fington V. Jackson, 43 Tex. Civ. App. 560, 96 S. W. 108. *Gillis V. Goodwin, 180 Mass. 140, 61 N. E. 813, 91 Am. St. Rep. 265; Pyne v. Wood, 14S Mass. 558, 14 N. E. 775. In the above case it appeared that the infant was employed a con- siderable distance from home and that he rode the wheel going to and from work. See also. Rice v. Butler, 25 App. Div. (N. Y.) 388, 49 N. Y. S. 494, revd. on other grounds, 160 N. Y. 578, 55 N. E. 275, 47 L. R. A. 303, 73 Am. St. 703. In the above case the bicycle was purchased for a domestic living at her employer's house. See, however, the case of Clyde Cycle Co. v. Hargreaves, L. T. R. 107 (N. S.) 296, in which it is held not error to find affirmatively that a bicycle was a necessary where it ap- peared that the use of bicycles was common among persons of the in- fant's station in life in the surround- ing neighborhood. The machine bought was a racing bicycle with which the infant won some prizes; he also used it on the road. § 30I CONTRACTS. 502 an expensive chronometer, notwithstanding it was bought by a Heutenant in the EngHsh royal navy/ are not, except under very exceptional circumstances, necessities. The law does not contemplate that an infant shall carry on any business which necessitates or involves the making of contracts on his personal responsibility." Consequently, purchases made by an infant for the purpose of trading, although he thereby gain his living, do not bind him.'' Nor is he liable for the value of articles furnished him in carrying on a business, such as running a cigar stand,* barber-shop," farm^° or plantation," on the ground that such articles were necessities.'^ Necessities concern the person and not the estate of the infant. In case he has an estate its management and control are the proper business of his guardian." For these reasons it is held that an infant is not liable, as for necessities, for repairs on his dwelling house or other buildings, although required for the pre- vention of immediate and serious injury thereto.^* Nor is the rule affected by the fact that the dwelling is occupied by the in- ° Berrolles v. Ramsay, Holt N. P. 80. The board of horses used by an in- 17 . fant hackman has been held not to be ° Wallace v. Leroy, 57 W. Va. 263, a necessary for which the infant was 50 S. E. 243, 110 Am. St. W. liable. Merriam v. Cunningham, 11 ' Whittingham v. Hill, Cro. Jac. 494. Cush. (Mass.) 40. See also, Paul v. See also, Dilk v. Keighley, 2 Esp. 480. Smith, 41 Mo. App. 275. In the above However, if such articles are con- case a wagon was bought to be used sumed as necessities in his own fam- on a farm. ily he is liable therefor. Turbeville v. " Decell v. Lewenthal, 57 Miss. 331, Whitehouse, 1 Car. & P. 94, 12 Price 34 Am. Rep. 449; State v. Howard, 692. The sale of a saloon to a minor is 88 N. Car. 650. See, however. Chap- neither necessary nor beneficial. Cha- man v. Hughes, 61 Miss. 339. bot v. Paulhus, (R. I.) 79 Atl. 1103. "As to liability when engaged in ' Wallace v. Leroy, 57 W. Va. 263, business with guardian's consent, see 50 S. E. 243, 110 Am. St. W. Rundel v. Keeler, 7 Watts (Pa.) 237. "Ryan v. Smith, 165 Mass. 303, 43 See also, Lowe v. Griffiths, 1 Scott N. E. 109, Benjamin's Cases on Con- 458, 1 Hodges 30, in which it is held tracts 341. _ that an infant is chargeable with the " In the following cases the infant use and occupation of a house in was held not liable for a horse pur- which he carries on a business, and chased by him to be used in farming : which he also occupies as a dwelling. House v. Alexander, 105 Ind. 109, 4 "Tupper v. Caldwell, 12 Mete. N. E. 891, 55 Am. Rep. 189; Wood v. (Mass.) 559, 46 Am. Dec. 704. Losey, 50 Mich. 475, 15 N. W. 557; "Tupper v. Caldwell, 12 Mete. Rainwater v. Durham, 2 Nott. & (Mass.) 559, 46 Am. Dec. 704; Wal- McC (S. Car.) 524, 10 Am. Dec. lace v. Bardwell, 126 Mass. 366; West 637; Grace v. Hale, 2 Humph, v. Gregg, 1 Grant (Pa.) 53; Phillips (Tenn.) 27, 36 Am. Dec. 296. See, v. Lloyd, 18 R. L 99, 25 Atl. 909. however, Mohney v. Evans, 51 Pa. St 503 INFANTS. § 301 fant." On the same principle, work done and material furnished for the erection of a dwelling or other buildings on an infant's premises are not considered as necessaries." However, it has been held that equity may in a proper case subrogate the party who makes improvements on an infant's real estate to the in- creased value of the premises due to such improvements,^^ or the increased rental value of the premises.^' A contract for insurance on buildings already erected, or other property, while admittedly prudent, is not usually considered a necessary.^° The common law does not regard money as a necessity ; con- sequently it is well settled that money loaned to an infant and not expended by him for necessities cannot be considered as a neces- sity.^" In accordance with this principle it is held in law that an infant is not liable for money borrowed by him to pay for neces- sities. The reason given for so holding is that the cause of action must arise, if at all, when the money is lent, and subsequent mat- ters such as the manner in which the money is spent cannot give rise to a right of recovery. The lender must apply it or actually see that it is applied for necessities before he can recover.^^ " Horstmeyer v. Conners, 56 Mo. Ohio St. 478, 59 N. E. 230, 53 L. R. A. App. 115. 462n, 81 Am. St. 644; note to Craig v. "McCarty v. Carter, 49 111. 53, 95 Van Bebber, 100 Mo. 584, 13 S. W. Am. Dec. 572; Price v. Jennings, 62 906, 18 Am. St. 569. Such a contract Ind. Ill; Price v. Sanders, 60 Ind. cannot, however, be avoided by the 310; Wornack v. Loar, 11 Ky. L. 6, 11 insurer. Monaghan v. Agriculture S. W. 438; Allen v. Lardner, 78 Hun Fire Ins. Co., 53 Mich. 238, 18 N. W. (N. Y.) 603, 60 N. Y. St.. 768, 29 N. 797. Under the statutes of New York Y. S. 213 ; Freeman v. Bridger, 49 N. an infant can make a valid contract Car. 1, 67 Am. Dec. 258. See also, for life insurance. Hamm v. Pruden- Morris v. Mitchell, 19 Ky. L. 136, 39 tial Ins. Co., 137 App. Div. (N. Y.) S. W. 250, holding that the homestead 504, 122 N. Y. S. 35. See also, Equi- interest of infants is not chargeable table Trust Co. v. Moss, 134 N. Y. S. with the cost of improvement made 533. without their authority. See, how- ™Root v. Stevenson's Admr,, 24 ever, Chapman v. Hughes, 61 Miss. ind. 115; Kennedy v. Doyle, 10 Al- 339. len (Mass.) 161; Turner v. Gaither, " Langdon v. Clayson, 75 Mich. 204, 83 N. Car. 357, 35 Am. Rep. 574. 42 N. W. 805; McGreal v. Taylor, 167 ^ Darby v. Boucher, 1 Salk. 279; U. S. 688, 42 Law. ed. 326, 17 Sup. Ellis v. Ellis, 5 Mod. 368; Earle v. Ct. 961. See also, Utermehle v. Mc- Peale, 1 Salk. 386, 10 Mod. 66; Pro- Greal, 1 App, D. C. 359. bart v. Knough, 2 Esp. 472, note ; "Schumate v. Harbin. 35 S. Car. Price v. Sanders, 60 Ind. 310; Beeler 521, IS S. E. 270. V. Young, 1 Bibb (Ky.) 519; Swift v. "New Hampshire Mut. Fire Ins. Bennett, 10 Cush. (Mass.) 436; Ran- Co. V. Noyes, 32 N. H. 345. See also, dall v. Sweet, 1 Denio (N. Y.) 460; Union &c. Ins. Co. v. Hilliard, 63 Dent v. Manning, 10 Vt. 225. See 30I CONTRACTS. 504 Equity applies a different rule, however, and holds that one who loans money to an infant, who in turn expends it for neces- sities, is subrogated to the right of the party furnishing the same.^^ In conformity with this rule it is held that if an infant gives a note for necessities, signed by a surety, and the surety afterwards pays the note, he is entitled to recover the amount so paid from the infant.^^ In case money is loaned to discharge a prior valid lien on realty owned by a minor, equity subrogates the lender to the rights of the holder of the prior valid lien which has been paid by the money advanced.^* Subject to the general rule hereinbefore discussed an infant is liable both at law and equity to a third person for money expended in order to supply such infant with necessities,^^ or for money paid to settle a pre-existing debt for necessities.^^ But, as already intimated, notwithstanding the fact that it may be rea- sonable and prudent for an infant to take out a policy of life also, Morton v. Steward, 5 111. App. 533; Henderson v. Fox, 5 Ind. 489; Ayers v. Burns, 87 Ind. 245, 44 Am. Rep. 759. Dorrell v. Hastings, 28 Ind. 478, in which it is said : "We are not aware of any authority that would justify us in holding that money paid to relieve an infant from a military draft to which the law subjects him comes within the excep- tion of necessities. Upon principles we think it clear that it does not." McCrillis V. How, 3 N. H. 348. ='Marlow v. Pittfield, 1 P. Wms. 558; Price v. Sanders, 60 Ind. 310; Hickman v. Hall's Admr., S Litt. (Ky.) 338. See also, Kilgore v. Rich, 83 Maine 305, 22 Atl. 176. ^Conn V. Coburn, 7 N. H. 368, 26 Am. Dec. 746; Haine's Admr. v. Par- rant, 2 Hill (S. Car.) 400. See also, Dial V. Wood, 9 Baxt. (Tenn.) 296. Contra, Ayres v. Burns, 87 Ind. 245, 44 Am. Rep. 759. ■" Charles v. Hastedt, 51 N. J. Eq. 171, 26 Atl. 564; Folts v. Ferguson, 11 Tex. 301, 13 S. W. 1037; McGreal v. Taylor, 157 U. S. 688, 42 Law ed. 326, 17 Sup. Ct. 961. See, however, Burton v. Anthony, 46 Ore. 47, 79 Pac. 185, 58 L. R. A. 826, 114 Am. St. 847, which holds that a court of equity will not impose a lien on a minor's interest in land to secure a payment of money advanced at his request to redeem the premises from a sale under decree of fore- closure, the redemption not being a necessity for which the minor is liable. At law money loaned to a minor, by which he discharges a prior valid lien existing against his real estate, is not considered as a necessity. Magee v. Welsh, 18 Gal. 155. '" Randall v. Sweet, 1 Denio (N. Y.) 460; Smith v. Oliphant, 2 Sands. (N. Y.) 306. ^Clarke v. Leslie, 5 Esp. 38; Hedgeley v. Holt, 4 Car. & P. 104; Kilgore v. Rich, 83 Maine, 305, 22 Atl. 176, 12 L. R. A. 8S9n, 23 Am. St. 780; Benjamin's Cases on Contracts, 336. In the above case it is said : "The infant's liability is in no way enlarged by owing the debt to one rather than to another. The rule lends no temp- tation to create a debt as it is already created. The right to transfer the liability from one to another might be a great convenience to a minor. One creditor might be unable or unwilling to wait for a payment while a friend and acquaintance, as a substituted creditor, might be accommodating in that respect. It would give a self- supporting minor more facilities for support. We have not, in our exam SOS INFANTS. § 303 insurance such a contract is not considered as one for necessi- ties." § 302. Voidable contracts generally. — A great majority of the contracts of an infant are voidable by him, and, as has been demonstrated by the preceding sections of tliis chapter, such agreements gain no binding force from the fact that he is engaged in business for himself or is emancipated.^^ The exercise of his right to disaffirm his contract may operate injuriously and unjustly against the other party, but the right exists for the protection of the infant against his own improvi- dence, and may be exercised entirely in his discretion. The fact that the contract has been executed is immaterial. There is no distinction between executed and executory contracts, so far as the right of disaffirmance is concerned.^* In fact all contracts ination of authorities, noticed any case that opposes the principle." Swift V. Bennett, 10 Cush. (Mass.) 436; Bicknell v. Bicknell, 111 Mass. 265. In the latter case the money was advanced at the request of the guard- ian. See also, Bradley v. Pratt, 23 Vt. 378. See also, Ray v. Tubbs, 50 Vt. 688, 28 Am. Rep. 519, in which a minor is held liable on a note given in settlement of the claim arising in tort. The decision is based on the analogy existing in the liability of an infant for his necessity and his liability for his tort. " Simpson v. Prudential Ins. Co., 184 Mass. 348, 68 N. E. 673, 63 L. R. A. 741, 100 Am. St. 560. An infant's contract of insurance is not void, but is merely voidable. Union Cen- tral Life Ins. Co. v. Hillard, 63 Ohio St. 478, 59 N. E. 230, 53 L. R. A. 462, 81 Am. St. 644. Cases holding that a college or pro- fessional education is not a necessity are cited in the preceding section on What are Necessities, in that para- graph relating to trade and common- school education. ® See ante, § 289, Effect of emanci- pation, and also, § 301, What are not necessities. Under the statutes of Georgia, which permit an infant to bind himself by a contract in a busi- ness carried on with the permission of his parent guardian, or by permis- sion of law, a mere single transaction does not constitute the infant one en- gaged in business. White v. Sikes, 129 Ga. 508, 59 S, E. 228, 121 Am. St. 228. "* Wuller V. Chuse Grocery Co., 241 111. 398, 89 N. E. 796, 28 L. R. A. (N. S.) 128n, 132 Am. St. 216. Sever- al cases and some text-books assert that there is a difference be- tween an executory and executed con- tract of an infant. The difference pointed out is that the executed con- tract is binding until it is avoided, whereas an executory contract is without binding force until it is af- firmed. Morton v. Steward, 5 111. App. 533 ; Minock v. Shortridge, 21 Mich. 304; Tyler v. Gallop, 68 Mich. 185, 35 N. W. 902, 13 Am. St. 336; Beardsley v. Hotchkiss, 96 N. Y. 201 ; Edgerly v. Shaw, 25 N. H. 514, 57 Am. Dec. 349; State v. Plaisted, 43 N. H. 413. It is apparent that this is a distinction without any basis in fact. To say that an in- fant's executory contract is of no binding force until ratified is equiv- alent to saying that so far as he is concerned the contract is as if it did not exist. If this is true there is no consideration for the adult's promise, and if there is no consideration for his promise he is not bound ; yet all authorities agree that an adult is bound byhis execu- tory contract with an infant. It § 303 CONTRACTS. 506 Other than those mentioned in the preceding sections of this chap- ter entered into by an infant are voidable and cannot be consid- ered as either vaHd or void.'" The various contracts of an infant deemed voidable will be considered in the succeeding sections of this chapter. § 303. Conveyances, transfers and mortgages of property. — An infants' conveyance of property is, unless made in accord- ance with the provision of some statutory enactment peculiar to that state, voidable,''- and may be disaffirmed on reaching his Phipps V. Phipps, 39 Kans. 495, 18 Pac. 707; Breckinridge's Heirs v. Ormsby, 1 J. J. Marsh. (Ky.) 236, 19 Am. Dec. 71 ; McDonald v. Sargent, 171 Mass. 492, 51 N. E. 17; Dube v. Beaudry, ISO Mass. 448, 23 N. E. 222, 6 L. R. A. 146, 15 Am. St. Rep. 228; Owen V. Long, 112 Mass. 403; Reed v. Batchelder, 1 Mete. (Mass.) 559; Whitney v. Dutch, 14 Mass. 457, 7 Am. Dec. 229n ; Bloomingdale v. Chit- tenden, 74 Mich. 698, 42 N. W. 166; Tyler v. Gallop, 68 Mich. 185, 35 N. W. 902, 13 Am. St. 336; Johnson v. Northwestern Mut. Life Ins. Co., 56 Minn. 365, 57 N. W. 934, 59 N. W. 992, 26 L. R. A. 187, 43 Am. St. 473 ; Englebert v. Troxell, 40 Nebr. 195, 58 N. W. 852, 26 L. R. A. 177, 42 Am. St. 665 ; Danville v. Amoskeag Mfg. Co., 62 N. H. 133 ; Patterson v. Lippincott, 47 N. J. L. 457, 1 Atl. 506, 54 Am. Rep. 178; Willard v. Stone, 7 Cow. (N. Y.) 22, 17 Am. Dec. 496; Cam- bell V. Stakes, 2 Wend. (N. Y.) 137, 19 Am. Dec. 561 ; Fonda v. VanHorne, 15 Wend. (N. Y.) 631, 30 Am. Dec. 17; Harner v. Dipple, 31 Ohio St. 72, 27 Am. Rep. 496; Rush v. Wick, 31 Ohio St. 521, 27 Am. Rep. 523 ; Dolph V. Hand, 156 Pa. St. 91, 27 Atl. 114, 36 Am. St. 25; Curtin v. Pattin, 11 Serg. & R. (Pa.) 305; Scott v. Buch- anan, 11 Humph. (Tenn.) 468; Bon- ner V. Bryant, 79 Tex. 540, IS S. W. 491, 23 Am. St. 361; Clemmer v. Price (Tex. Civ. App.), 125 S. W.604; Cummings v. Powell, 8 Tex. 80; Mc- Greal v. Taylor, 167 U. S. 688, 42 L. ed. 326, 17 Sup. Ct. 961 ; Patchin v. Cromach, 13 Vt. 330; Mustard v. Wohlford's Heirs, 15 Grat. (Va.) 329, 76 Am. Dec. 209. ^ McDonald v. Restigouche Salmon Club, 23 N. B. 472 ; Manning v. John- therefore appears that the rule above announced amounts to a declaration that an infant's executory contract is void. Not only is neither party bound by a void contract, but there is also the further question as to whether such an agreement can be ratified. An infant's executory contract is in fact valid and binding until disaffirmed. See Gregory v. Lee, 64 Conn. 407, 30 Atl. S3, 25 L. R. A. 618; Harner v. Dipple, 31 Ohio St. 72, 27 Am. Rep. 496; Rush v. Wick, 31 Ohio St. 521, 27 Am. Rep. 523. "Many text- writers state the proposition that the contract of the infant is void, but, upon a careful examination of the cases cited by them, we are of the opinion that they do not sup- port such a doctrine. * * * To hold the executory contract of a minor void would unsettle the law in many of its branches. It would necessitate the holding that the promise of a minor cannot furnish a consideration for the promise of an adult, and the latter's promise would be void, both for want of consideration and for lack of mutuality, whereas the con- trary is the settled law. based upon the proposition that the infant's con- tract is only voidable." Brown v. Farmers' &c. Bank, 88 Tex. 265, 31 S. W. 285, 33 L. R. A. 359. In an action upon an executory con- tract it is incumbent upon the minor to plead his infancy. Under the prin- ciple announced in the above cases this would be unnecessary. "" Shropshire v. Burns, 46 Ala. 108 ; Savage v. Lichlyter, 59 Ark. 1, 26 S. W. 12; Barlow v. Robinson, 174 111. 317, 51 N. E. 1045; Cole v. Pennoyer, 14 III. 158; Alvey v. Reed, 115 Ind. 148, 17 N. E. 265, 7 Am. St. 418; 507 INFANTS. 303 majority, or within a reasonable time thereafter." The same is true of his executory contracts to convey real estate,"^ or to pur- chase it,** or of a lease executed by'^ or to him.°* son, 26 Ala. 446, 62 Am. Dec. 732; Hastings v. DoUarhide, 24 Cal. 195; Walker v. Pope, 101 Ga. 665, 29 S. E. 8; Tunison v. Chamblin, 88 111. 378; Keil V. Healy, 84 111. 104, 25 Am. Rep. 434; Gillenwaters v. Campbell, 142 Ind. 529, 41 N. E. 1041; Green v. Wilding, 59 Iowa 679, 13 N. W. 761, 44 Am. Rep. 696 ; Hoffert v. Miller, 86 Ky. 572, 6 S. W. 447 ; Vallandingham V. Johnson, 85 Ky. 288, 3 S. W. 173 ; Syck V. Hellier, 140 Ky. 388, 131 S. W. 30; Hiles v. Hiles, 26 Ky. L. 324, 82 S. W. 580; Davis v. Dudley, 70 Maine 236, 35 Am. Rep. 318; Kendall v. Lawrence, 22 Pick. (Mass.) 540; Ridgeway v. Herbert, 150 Mo. 606, 51 S. W. 1040, 73 Am. St. 464; Craig V. Van Bebber, 100 Mo. S84, 13 S. W. 906, 18 Am. St. 569; Robinson v. Allison, 192 Mo. 366, 91 S. W. 115; Engelbert v. Troxell, 40 Nebr. 195, 58 N. W. 852, 26 L. R. A. 177, 42 Am. St. 665; Roberts v. Wiggin, 1 N. H. 73, 8 Am. Dec. 38; Pedro v. Pedro, 127 N. Y. S. 997 (holding his deed of trust voidable if disaffirmed within a reasonable time) ; Green v. Green, 69 N. Y. 553, 25 Am. Rep. 233; Eagle Fire Co. v. Lent, 6 Paige (N. Y.) 635, affg. 1 Edw. Ch. (N. Y.) 301; Cresinger v. Welch, 15 Ohio 156, 45 Am. Dec. 565; Drake's Lessee v. Ramsay, 5 Ohio 251; Dolph v. Hand, 156 Pa. St. 91, 27 Atl. 114, 36 Am. St. 25 ; Ihley v. Padgett, 27 S. Car. 300, 3 S. E. 468; Wheaton v. East, S Yerg. (Tenn.) 41, 26 Am. Dec. 251 ; Scott v. Buchanan, 11 Humph. (Tenn.) 468; Bullock V. Sprowls, 93 Tex. 188, 54 S. W. 661, 47 L. R. A. 326, 11 Am. St. 849; Stone v. Wolfe, 50 Tex. Civ. App. 231, 109 S. W. 981; Hatton v. Bodan Lumber Co., 57 Tex. Civ. App. 478, 123 S. W. 163 (containing a state- ment to the effect that "it is only in cases where it is shown that the con- tract is prejudicial to the infant that it will be treated by the courts as void") ; Tucker v. Moreland, 10 Pet. (U. S.) 59; Bigelow v. Kinney, 3 Vt. 353, 21 Am. Dec. 589; Darraugh v. Blackford, 84 Va. 509, 5 S. E. 542 ; Birch v. Linton, 78 Va. 584, 49 Am. Rep. 381; Gillespie v. Bailey, 12 W. Va. 70, 29 Am. Rep. 445. In the case of Britt v. Caldwell- Norton Lumber Co., 126 La. 155, 52 So. 251, it is said, "A sale of minors' property without any regard whatever to legal formalities is null." In this case it appears that land in which certain minors had an interest was sold without their knowledge or con- sent, the deed being signed in their name by some one unknown to them. Infants are not only incapable of conveying their real estate, but are in- competent to consent to any of the proceedings provided by law for its disposition. They stand in the posi- tion of hostile parties to such pro- ceeding and are treated as objecting to every step taken therein. Coleman v. Virginia Stove &c. Co., 112 Va. 61, 70 S. E. 545. "^ See cases cited, ante, note 31. As to when and how to disaffirm, see post, § 304 et seq.. Disaffirmance. The right of disaffirmance is superior to equities of other persons, and may be exercised against a bona fide purchaser from the infant's grantee. Conn V. Boutwell, (Miss.) 58 So. 105. =^ Barlow v. Robinson, 174 111. 317, 51 N. E. 1045; Johnson v. Rockwell, 12 Ind. Id ; Yeager v. Knight, 60 Miss. 730; Shurtleff v. Millard, 12 R. I. 272, 34 Am. Rep. 640; Merida v. Cum- mings, (Tex. Civ. App.) 115 S. W. 613; Mustard v. Wohlford's Heirs, 15 Grat. (Va.) 329, 76 Am. Dec. 209. '^ Forsee's Admx. v. Forsee, 144 Ky. 169, 137 S. W. 836; Lynd v. Budd, 2 Paige (N. Y.) 191, 21 Am. Dec. 84. »' Slator V. Trimble, 14 Ir. C. L. 342; Slator V. Brady, 14 Ir. C. L. 61 ; Field V. Herrick, 101 111. 110. ^ Flexner v. Dickerson, 72 Ala. 318 ; Gregory v. Lee, 64 Conn. 407, 30 Atl. 53, 25 L. R. A. 618; Baxter v. Bush, 29 Vt. 465, 70 Am. Dec. 429. See also, McCoon v. Smith, 3 Hill (N. Y.) 147, 38 Am. Dec. 623, in which it is held that an infant's con- tract of tenancy does not estop him from denying his landlord's title when sued by the latter in ejectment. The title to the land was confessedly in the infant. The court said: "A con- § 303 CONTRACTS. 508 An infant's mortgage of his realty is voidable.'^ Nor is the mortgage rendered vaUd and binding because given to obtain necessities/"* or to secure money to erect improvements on the (premises.^* It has been held that infancy is no defense to an action to foreclose a mortgage given to secure the purchase-price money.*" He may disaffirm the mortgage and relinquish the property/^ but if he continues to hold the estate and apply it to his own uses after he reaches his majority he is deemed to have affirmed the mortgage.*^ He cannot enjoy the benefit of the agreement and at the same time avoid the obligations it imposes upon him.*^ fession by contract is alleged against him by which the efifect of his title and right of possession is to be over- come. This is certainly no more than the confession that a contract was made which he had no right to make and does not come within the rule."' "Hubbard v. Cumraings, 1 Maine 11; Monumental Bldg. Assn. v. Her- man, 33 Md. 128; Mansfield v. Gor- don, 144 Mass. 168, 10 N. E. 773; Uecker v. Koehn, 21 Nebr. 559, 32 N. W. 583, 59 Am. St. 849; Roberts v. Wiggin, 1 N. H. 73, 8 Am. Dec. 38; Palmer v. Miller, 25 Barb. (N .Y.) 399 ; Hetterick v. Porter, 20 Ohio Cir. Ct. 110, 11 Ohio Cir. Dec. 145; McGan V. Marshall, 7 Humph. (Tenn.) 121. A minor may call into existence a trust which is valid until avoided. Eldredge v. Hoefer (Ore.), 93 Pac. 246, 94 Pac. 563. See Missouri Central &c. Assn. v. Eveler, 237 Mo. 679, 141 S. W. 877, in which a father, who was a life ten- ant, represented that he owned the fee, and borrowed money and gave a mortgage on the premises. It was held that the remainderman, who was an infant at the time the mortgage was given, could not assent to the giv- ing of the mortgage and was not es- topped to dispute it. '"McGan v. Marshall, 7 Humph. (Tenn.) 121; Askey v. Williams, 74 Tex. 294, 11 S. W. 1101, 5 L. R. A. 176. See, however. Cooper v. State, 37 Ark. 421. '"New York Building & Loan &c. Co. V. Fisher, 23 App. Div. (N .Y.) 363 48 N. Y. S. 152. See, however, McGreal v. Taylor, 167 U. S. 688, 42 L. ed. 326, 17 Sup. Ct. 961. Under the holding in the above case he might be subrogated to the in- creased value of the premises. *° Robinson v. Bergholz, 4 Ohio Dec. 103. See, however. Hook v. Donald- son, 9 Lea (Tenn.) 56. ''Willis V. Twambly, 13 Mass. 204. " Grace v. Whitehead, 7 Grant U. C. 591; Utermehle v. McGreal, 1 D. C. App. 359; McClurevMcClure, 74 Ind. 108 ; Hubbard v. Cummings,, 1 Greenl. (Maine) 11; Dana v. Coombs, 6 Maine 89, 19 Am. Dec. 194; Badger V. Phinney, 15 Mass. 359, 8 Am. Dec. 105; Langdon v. Clayson, 75 Mich. 204 42 N. W. 805 ; Young v. McKee, 13 Mich. 552 ; Betts v. Carroll, 6 Mo. App. 518; Uecker v. Koehn, 21 Nebr. 559, 59 Am. Rep. 849; Roberts v. Wiggin, 1 N. H. 73, 8 Am. Dec. 38; Robbins v. Eaton, 10 N. H. 561 1 Heath v. West, 28 N. H. 101 ; Henry v. Root, 33 N. Y. 526; Lynde v. Budd, 2 Paige (N. Y.) 191, 21 Am. Dec. 84; Kitchen v. Lee, 11 Paige (N. Y.) 107, 42 Am. Dec. 101 ; Coutant & Hobby v. Servoss, 3 Barb. (N. Y.) 128; Ottman V. Moak, 3 Sandf. Ch. (N, Y.) 431; Walsh V. Powers, 43 N. Y. 23, 3 Am. Rep. 654; Kennedy v. Baker, 159 Pa. St. 146, 28 Atl. 252; Hook v. Donald- son, 9 Lea (Tenn.) 56; Weed v. Beebe 21 Vt. 495 ; Richardson v. Bo- right, 9 Vt. 368: Bigelow v. Kmney, 3 Vt. 353. 21 Am. Dec. 589; Callis v. Day, 38 Wis. 643. '=Dana v. Coombs, 6 Maine 89, 19 Am. Dec. 194; Lanedon v. Clayson, 75 Mich. 204. 42 N. W. 80S; Heath v. West, 28 N. H. 101. It has been held, however, that where an in- 509 INFANTS. § 304 The same rules governing the transfer or mortgage of real estate by an infant are apphcable to his sales of personal prop- erty.** An infant's purchase of personal property is voidable at his option/^ as are also his mortgages on personalty.*" A chattel mortgage made for an infant in the course of a business upon which he depends for support and to enable him to carry it on is not void but merely voidable.*^ Nor can he be held crim- inally responsible for selling chattels mortgaged by him since such sale is simply a disaffirmance of the mortgage which it is his right to make.*' His contract of warranty of things sold is also voidable.*' § 304. Bills and notes. — After the negotiability of bills of exchange was finally established by the common law and their fant executes a mortgage which contains a power of sale, such power of sale is invalid and the sale under it absolutely void, and that while the infant might ratify the mortgage he would nevertheless be entitled to redeem if the allegations to the bill sufficiently set forth the in- validity of the power of sale as a ground for release. Rocks v. Cornell, 21 R. I. 532, 45 Atl. 552. See ante, § 288, as to void contracts of an infant, the giving of powers of attor- ney and appointment of agents. See, however, Askey v. Williams, 74 Tex. 294, 11 S. W. 1101, 5 L. R. A. 176. " Williams v. Brown. 34 Maine 594 ; Kingman v. Perkins, 105 Mass. Ill ; Holmes v. Rice, 45 Mich. 142; Roof V. Stafford, 7 Cow. (N. Y.) 179; Johnson v. Packer, 1 Nott. & McC. (S. Car.) 1. *> Riley v. Mallory, 33 Conn, 201; House v. Alexander, 105 Ind. 109, 4 N. E. 891, 55 Am. Rep. 189; Rice v. Boyer, 108 Ind. 472, 9 N. E. 420, 58 Am. Rep. 53 ; Butler v. Stark, 25 Ky. L. 1886, 79 S. W. 204; Robinson v. Weeks, 56 Maine 102; McCarthy v. Henderson, 138 Mass. 310; Barney v. Rutledge, 104 Mich. 289, 62 N. W. 369; Nichols &c. Co. v. Snyder, 78 Minn. 502, 81 N. W. 516; Whitcomb V. Joslyn, 51 Vt. 79, 31 Am. Rep. 678. "Corey v. Burton, 32 Mich. 30; Barney v. Rutledge, 104 Mich. 289, 62 N. W. 369; Miller v. Smith, 26 Minn. 248, 2 N. W. 942, 11 Am. Rep. 407; Cogley V. Cushman, 16 Minn. 397; Chapin V. Shafer, 49 N. Y. 407; Skin- ner V. Maxwell, 66 N. Car. 45. An infant's contract concerning per- sonalty differs from one concern- ing realty in that it may be disaffirmed before reaching majority. See post, § 334 et seq., Disaifirmance. " Hangen v. Hachemeister, 49 N. Y. Super. Ct. 34. "Jones V. State, 31 Tex. Crim. App. 177, 20 S. W. 354. An eminent writer on the law of contracts has stated that : "If an infant goes upon the streets of a city shopping, he cannot afterwards retrace his steps and get back the money he paid, even though he tenders the goods in return ; for to permit it would render shopkeeping impossi- ble." Bishop on Contracts, 2 En- larged Edition, § 921. The above principle would be applicable to ne- cessities purchased but it is believed that it cannot be given any broader application. If the author intended that it should apply generally it is not supported by authority — he cites none — and would seem to be entirely erroneous. "Howlett v. Haswell, 4 Camp. 118; Green v. Greenbank, 2 Marsh. (Ky.) 485; Hewett v. Warren, 10 Hun (N. Y.) 560; West v. Moore, 14 Vt. 447, 39 Am. Dec. 235; Morrill v. Aden, 19 Vt. SOS. 304 CONTRACTS. 510 validity in the hands of an innocent purchaser for value before maturity affirmed, it seemed impossible to designate any instru- ment negotiable in form as voidable. It must either be void or valid. In conformity with this view the earlier cases hold that an infant's bills and notes are void.°° This ruling has, however, been abandoned. Under modern authorities the bill or note of an infant is considered as nonnegotiable in law notwithstanding it is negotiable in form. Consequently minority is a good de- fense to an action on such an instrument even when in the hands of an innocent purchaser. It follows that they are voidable in character except perhaps when given for necessities.'*^ An infant may also avoid his liability to a surety on his note unless it is given for necessities."^ It is held, however, by the weight of authority that if such note is given for necessities he must reimburse the surety thereon at least to the amount of the reasonable value of the necessities furnished.^' ■"Burgess v. Merrill, 4 Taunt. 468; Swasey v. Vanderheyden's Admr., 10 John. (N. Y.) 33; Bouchell v. Cleary, 3 Brev. (S. Car.) 194; McMinn v. Richmonds, 6 Yerg. (Tenn.) 9. See also, Gibbs v. Merrill, 3 Taunt. 307; Williamson v. Watts, 1 Camp. 522. °' Harris v. Wall, 1 Exch. 122 ; Hunt V. Massey, S B. & Ad. 903 ; Fisher v. jewett, 2 N. B. 69 ; Fant v. Cathcart, 8 Ala. 72S ; Buzzell v. Bennett, 2 Cal. 101; Alsop V. Todd, 2 Root (Conn.) 105; Strain v. Wright, 7 Ga. 568; Gavin v. Burton, 8 Ind. 69; LaGrange Collegiate Institute v. Anderson, 63 Ind. 367, 30 Am. Rep. 224; Fetrow v. Wiseman, 40 Ind. 148 ; Best v. Givens, 3 B. Mon. (Ky.) 72; Keokuk &c. Bank v. Hall, 156 Iowa 540, 76 N. W. 832 ; Seely v. Seely Howe &c. Co., 128 Iowa 294, 103 N. W. 961; Stern v. Freeman, 4 Met. (Ky.) 309; Beeler V. Young, 1 Bibb (Ky.) 519; Tandy v. Masterson, 1 Bibb (Ky.) 330; Boody V. McKenney, 23 Maine 517; Lawson V. Lovejoy, 8Greenl. (Maine) 405, 23 Am. Dec. 526; Reed v. Batchelder, 1 Met. (Mass.) 559; Whitney v. Dutch, 14 Mass. 462, 7 Am. Dec. 229n ; Earle V. Reed, 10 Mete. (Mass.) 387; Min- ock V. Shortridge, 21 Mich. 304; Nich- ols & Shepherd Co. v. Snvder, 78 Minn. 502, 81 N. W. 516; Baker v. Kennett, 54 Mo. 82; Aldrich v. Grimes, 10 N. H. 194; State v. Plaisted, 43 N. H. 413; Wright v. Steele, 2 N. H. 51; Houston v. Cooper, 3 N. J. L. 866; Darlington V. Hamilton Nat. Bank, 63 Misc. (N. Y.) 289, 116 N. Y. S. 678; Goodsell v. Myers, 3 Wend. (N. Y.) 479; Bald- win V. Van Deusen, 37 N. Y. 487; Everson v. Carpenter, 17 Wend. (N. Y.) 419; Armfeld v. Tate, 7 Ired. L. (29 N. Car.) 258; Hesser v. Steiner, 5 Watt. & S. (Pa.) 476; Du Bose v. Wheddon, 4 McCord (S. Car.) 221; Little V. Duncan, 9 Rich. L. (S. Car.) 55, 64 Am. Dec. 760; Askey v. Wil- liams, 74 Tex. 294, 11 S. W. 1101, 5 L. R. A. 176; Heffington v. Jackson 6 Norton, 43 Tex. Civ. App. 560, 96 S. W. 108; Young v. Bell, 1 Cranch (U. S.) 342; Baldwin v. Rosier, 1 McCrary (U. S.) 384, 48 L. ed. 810; Patchin v. Cromach, 13 Vt. 330; Wamsley v. Lindenberger, 2 Rand. (Va.) 478; Stokes v. Brown, 3 Pin. (Wis.) 311; Brown v. Bank, 88 Tex. 265, 31 S. W. 285, 33 L. R. A. 359. "' Leacox v. Griffith, 76 Iowa 89, 40 N. W. 109. "^ Contra, Ayers v. Burns, 87 Ind. 245, 44 Am. Rep. 759; Conn v. Co- burn, 7 N. H. 368, 26 Am. Dec. 746; Haine's Admr. v. Tarrant, 2 Hill (S. Car.) 400. Ordinarily the surety can- not avoid payment on the ground 511 INFANTS. § 30s An infant's acceptance of a bill of exchange is merely voidable and therefore subject to confirmation." It has also been deter- mined that if an infant indorses a promissory note or bill of ex- change such indorsement is not void but voidable at his election."^ § 305. Contracts for service, work and labor. — It is held by the vi^eight of authority that an infant may avoid a contract for service entered into by him after a whole or part performance thereof and recover the reasonable value of his services."* This that his principal is a minor. Keokuk &c. Bank v. Hall, 106 Iowa 540, 76 N. W. 832; Hesser v. Steiner, 5 Watts & S. (Pa.) 476. See also, Brown v. Bank, 88 Tex. 265, 31 S. W. 285, 33 L. R. A. 359. However, if the principal, i. e., the infant, dis- affirms the contract and returns the consideration received under it the surety is thereby discharged. Keo- kuk &c. Bank v. Hall, 106 Iowa 540, 76 N. W. 832. "Hyer v. Hyatt, 3 Cranch D. C. 276, Fed. Cas. No. 6977. The accep- tance of a bill of exchange drawn while the acceptor is an infant but accepted after he became of age is not even voidable. Stevens v. Jack- son, 4 Camp. 164. See also, Belfast Banking Co. v. Doherty, 4 L. R. Ir. 124. An infant accepting a bill of ex- change may plead his infancy upon an action brought against him. Williams V. Harrison, 3 Salk. 197. See also, Soltykoff, In re (1891), 1 Q. B. 413. "^ Hastings v. DoUarhide, 24 Cal. 195; Nightingale v. Withington, 15 Mass. 272. 8 Am. Dec. 101 ; Willis v. Twambly, 13 Mass. 204. The endorse- ment by the infant transfers a valid title so far as the maker (Grey V. Cooper, 3 Dougl. 65; Briggs V. McCabe, 27 Ind. 327, 89 Am. Dec. 503; Frazier v. Massey, 14 Ind. 382; Garner v. Cook, 30 Ind. 331; Hardy v. Waters, 38 Maine 450; Nightingale v. Withington, 15 Mass, 272, 8 Am. Dec. 101; Blake v. Liv- ingston County, 61 Barb. (N. Y.) 149; Dulty v. Brownfield, 1 Pa. St. 497) or acceptor (Taylor v. Croker, 4 Esp. 187; Jones v. Darch, 4 Price 300) is concerned. This has been held true even though the endorse- ment was made by an agent. Hardy V. Waters, 58 Maine 450; Whitney v. Dutch, 14 Mass. 457, 7 Am. Dec. 229n. Contra, Sample v. Morrison, 7 T. B. Mon. (Ky.) 298. As to whether or not an infant may en- dorse a bill of exchange and then after the maker has paid the amount of such bill to the infant's endorsee infant may disaffirm the contract of endorsement and recover payment from the maker of the instrument is a question. See dictum in Briggs V. McCabe, 27 Ind. 327, 89 Am. Dec. 503, to the effect that he can recover and dictum in Welch v. Welch, 103 Mass. 562, to the effect that the in- fant cannot recover. "Ray V. Haines, 52 111. 485; Van Pelt V. Corwine, 6 Ind. 363 ; Dallas v. Hollingsworth, 3 Ind. 537; Haugh &c. Works V. Duncan, 2 Ind. App. 264, 28 N. E. 334; Derocher v. Continental Mills, 58 Maine 217. 4 Am. Rep. 286; Benjamin's Cases on Contracts 332; Judkins v. Walker, 17 Maine 38, 35 Am. Dec. 229; Morse v. Ely, 154 Mass. 458, 28 N. E. 577, 26 Am. St. 263 ; Dube v. Beaudry, 150 Mass. 448, 23 N. E. 222, 6 L. R. A. 146, IS Am. St. 228; Gaffney v. Hayden, 110 Mass. 137, 14 Am. Rep. 580 ; Spicer v. Earl, 41 Mich. 191, 1 N. W. 923, 32 Am. Rep. 152; Thompson v. Mar- shall, SO Mo. App. 14S; Danville v. Amoskeag Mfg. Co., 62 N. H. 133; Haggerty v. Nashua Lock Co., 62 N. H. 576; Voorhees v. Wait, 15 N. J. L. 343; Dearden v. Adams, 19 R. L 217, 36 Atl. 3; Taft v. Pike, 14 Vt. 405, 39 Am. Dec. 228. Infant sea- men may disaffirm their contract of shipment and recover the reasonable value of their services. Belyea v. Cook, 162 Fed. 180. A general guard- ian, as such, is not entitled to the § 30S CONTRACTS. 512 is true even though he left the service before the expiration of the time for which he hired.^^ In case an infant agrees to work for a certain wage"^ or accepts goods instead of money,^^ he may usually avoid such agreement and recover the quantum meruit."" Some courts have held that the employer is entitled to set off the amount of injury occasioned to him by the infant abandoning the special contract from the value of the services rendered by such infant ; in other words the infant is allowed to recover only the difference, if any, in his favor between the amount due him in wages and the damage sustained by the employer by his abandon- ing the agreement. '^^ The better and more general rule is to the effect that the infant has a right to avoid his contract of hiring and still not be liable to any penalty for such act.''^ Thus it has been held that an infant may avoid his contract to give two weeks notice of his intention to quit or else forfeit two weeks' wages and not be held bound by the clause concerning forfeiture.''^ The foregoing must not be confused, however, with the rule services or society of his ward, and cannot by virtue of his office, bind the ward's person or property, un- less expressly authorized by statute. Aborn v. Janis, 62 Misc. (N. Y.) 95, 113 N. Y. S. 309. "Gaffney v. Hayden, 110 Mass. 137, 14 Am. Rep. 580; Winters v. Mc- Mahon, 23 N. Y. Weekly Digest 119. An infant actress may avoid her contract to render services for a the- atrical season or seasons (especially when the agreement is not to her ben- efit) nor will she be enjoined from performing services for another. Aborn v. Janis, 62 Misc. (N. Y.) 95, 113 N. Y. S. 309. ='Lufkin V. Mayall, 25 N. H. 82. ™ Abell V. Warren, 4 Vt. 149. See also, Morse v. Ely, 154 Mass. 458, 28 N. E. 577, 26 Am. St. 263. ™ However, it has been held that if the contract has been fully executed on both sides, that is to say if the in- fant has performed the work and ac- cepted the compensation agreed upon he cannot recover more. Murphy v. Johnson, 45 Iowa 57. In the above case the decision is based on a statute. Wilhelm v. Hard- man, 13 Md. 140. See, however, iNIorse v. Ely, 154 Mass. 458, 28 N. E. 577, 26 Am. St. 263. "Judkins V. Walker, 17 Maine 38, 35 Am. Dec. 229 ; Moses v. Stevens, 2 Pick. (Mass.) 332; Lowe v. Sinklear, 27 Mo. 308; Thomas v. Dike, 11 Vt. 273, 34 Am. Dec. 690; Hoxie v. Lin- coln, 25 Vt. 206. "''Derocher v. Continental Mills, 58 Maine 217, 4 Am. Rep. 286; Benja- min's Cases on Contracts 332 ; Judkins V. Walker, 17 Maine 38, 35 Am. Dec. 229; Danville v. Amoskeag Mfg. Co., 62 N. H. 133 ; Medbury v. Watrous, 7 Hill (N. Y.) 110; Whitmarsh v. Hall, 3 Denio (N. Y.) 375; Shurtleff v. Millard, 12 R. I. 272, 34 Am. Rep. 640. See also cases cited in note 56 of this section. °^ Danville v. Amoskeag Mfg. Co., 62 N. H. 133. A similar holding was made in a similar case, except that in this latter instance the in- fant was to forfeit all his wages if he failed to give two weeks' notice. Derocher v. Continental Mills, 58 Maine 217, 4 Am. Rep. 286; Benja- min's Cases on Contracts, 332; Dear- den V. Adams, 19 R. I. 217, 36 Atl. 3. 513 INFANTS. § 305 which permits recovery by the employer of damages arising from the negHgeace or disobedience of orders on the part of the infant. An infant is entitled to recover only the reasonable value of his services; if by negligence or disobedience of orders he damages his employer's property his services are manifestly worth just so much less."* Contracts whereby an infant renders services in return for necessities furnished are not within the operation of the general rule. After the agreement has been fully executed on both sides the infant cannot repudiate his contract and recover the quantum meruit for the services rendered when it appears that the contract was reasonable and fair. The agreement may be supported on the ground that it is one for necessities or it may be upheld upon the theory that the services have been fully paid for."' The right of an infant to rescind his agreement and recover the quantimi meruit of his services is further restricted by the rule that whatever the infant has already received in the way of com- pensation is to be charged against him as a part payment."" In case a minor assigns his wages he may disaffirm the assign- ment at any time and his doing so and collecting the money for himself is no crime."' The infant's right to recover the quantum "Vehue v. Pinkham, 60 Maine 142, four months he received more than See, however, in this connection, Gaff- he earned. The question of justice ney v. Hayden, 110 Mass. 137, 14 Am. is not limited to a month, or to the Rep. 580. damages for which the defendants °° Robinson v. Van Fleet, 91 Ark. can maintain an action against him. 262, 121 S. W. 288; Harney v. Owen, The law of the case is no more in- 4 Black. (Ind.) ii7, 30 Am. Dec. 662; consistent with moral right than his Wilhelm v. Hardman, 13 Md. 140; contractual disability requires." Hag- Stone V. Dennison, 13 Pick. (Mass.) gerty v. Nashua Lock Co., 62 N. H. 1, 23 Am. Dec. 654; Squier V. Hydliff, 576; Morse v. Ely, 154 Mass. 458, 9 Mich. 274. See also. Breed v. Judd, 28 N. E. 577, 26 Am. St. 263. 1 Gray (Mass.) 455; Spicer v. Earl, See also, Dube v. Beaudry, 150 41 Mich. 191, 1 N. W. 923, 32 Am. Mass. 448, 23 N. E. 222, 6 L. R. A. Rep. 152. 146, IS Am. St. 228, in which it ap- °°Waugh V. Emerson, 79 Ala. 295; pears that an infant agreed to work Belyea v. Cook, 162 Fed. 180; Spicer for another person with the under- V. Earl, 41 Mich. 191, 1 N. W. 923, standing that his wages were to be 32 Am. Rep. 152; Haggertyv. Nashua applied for paying off a debt owed by Lock Co., 62 N. H. 576; Taft v. Pike, his father's estate to his employer, 14 Vt. 405, 39 Am. Dec. 228. See it was held that in case the infant also, Hobbs v. Godlove, 17 Ind. 359; failed to receive anything from his Breed v. Judd, 1 Gray, (Mass.) 455. father's estate he could repudiate his "He (the infant) can recover no agreement and recover the value of more than is equitably due ; and equity his services. considers the whole transaction, in- "People v. Kelly, 27 Hun (N. Y.) eluding the fact that during the first 160, 3 N. Y. Grim. Rep. 414. 33— Contracts, Vol. I 3o6 CONTRACTS. 514 meruit of his services may be defeated by the existence of a fam- ily relation between the minor and his alleged employer, nor need this relation be one of blood. "^ The foregoing has to do with affirmative relief. Infancy is a good defense to an action brought against an infant on a claim for work, labor and services."® § 306. Awards and compromises. — By modern authorities it is held that if an infant submits his rights to arbitration he will not be bound by the award, because of a presumed incompetency to choose suitable arbitrators, and a lack of sufficient judgment to properly care for his own interests, and he is thus protected until he attains his majority. His agreements to arbitrate are there- fore voidable.'" Consequently the infant may ratify the award on reaching his majority.'^ An infant's submission to arbitration was by an old case declared void,'^ and this doctrine was adhered to in a comparatively recent case which has been widely cited in text-books," but it is interesting to note that on a subsequent " Purviance v. Shultz, 16 Ind. App. 94, 44 N. E. 766, in connection with this case, however, see Garner's Admr. v. Board, 27 Ind. 323; Smith V. Johnson, 45 Iowa 308. See Im- plied and Quasi Contracts, Considera- tion, etc. It is competent for the state to forbid the employment of children in certain callings merely because it believes such prohibition to be for their best interests although the pro- hibited employment does not involve a direct danger to morals, decency or of life or limb. The supervision and control of minors is a subject which has always been regarded as within the province of legislative authority, how far it shall be exercised is a ques- tion of expediency and propriety A\hich is the sole province of the legislature to determine. The judi- ciary has no authority to interfere with the legislature's judgment on that subject unless perhaps its enact- ments are so manifestly unreasonable and arbitrary as to be invalid on that account. Starnes v. Albion Mfg. Co., 147 N. Car. 556, 61 S. E. 525, 17 L. R. A. (N. S.) 602 and note therein contained; State v. Shorey, 48 Ore. 396, 86 Pac. 881, 24 L. R. A. (N. S.) 1121, and note therein contained. See also, Inland Steel Co. v. Yedinak, 172 Ind. 423, 87 N. E. 229, 139 Am. St. 389; People v. Williams, 189 N. Y. 131, 81 N. E. 778, 12 L. R. A. (N. S.) 1130, 121 Am. St. 854. ""Bill V. Wolinsky, 123 N. Y. S. 290. "Baker v. Lovett, 6 Mass. 78, 4 Am. Dec. 88. The above case was the arbitration of a claim arising out of tort. The court gave full ai^sent to the proposition that the infant had a right to disaffirm the award but held that if it appeared upon trial that the award was ample only nom- inal damages should be recovered. Millsaps V. Estes, 137 N. Car. 535, 50 S. E. 227, 70 L. R. A. 170, 107 Am. St. 496. "Barnaby v. Barnaby, 1 Pick. (Mass.) 221; Jones v. Phoenix Bank, 8 N. Y. 228. "Rudston and Yates' Case, March 111. See also, Britton v. Williams, 6 Munf. (Va.) 453. " Millsaps v. Estes, 134 N. Car. 486, 46 S. E. 988. 515 INFANTS. § 306 appeal of the same case the agreement to arbitrate was held void- able and not void.'* An infant's agreement to compromise a disputed claim is governed by the same principle. His contract to compromise is voidable and not void, regardless of whether the claim arises out of a contract" or tort." Thus it has been held that an infant has the right to avoid the compromise of a claim for slander and this is true regardless of whether he conducts negotiations in person or through an agent.'' The same is true of a compromise of the amount of a legacy due under a will." It has been held that an infant cannot repudiate the settlement without repaying or tendering the consideration received,'* but it is believed that the better rule is to permit a rescission of the compromise agreement and charge whatever he has received under such agreement as a payment upon his claim.*" A set- tlement made by an infant of a claim against himself is also voidable and such infant may recover whatever he has parted "Millsaps V. Estes, 137 N. Car. S3S, SO S. E. 227, 70 L. R. A. 170, 107 Am. St. 496. See also, Jones v. Payne, 41 Ga. 23. An agreement to arbitrate a dispute as to the interest of a deceased partner in a firm entered into between his widow and surviving partner can- not be repudiated by the latter be- cause it does not bind the deceased's minor children since the minor's con- tract is avoidable only at the minor's option. In an action on an alleged award made by arbitrator, de- fendant cannot, under an answer de- nying the agreement to arbitrate, show that the arbitration was void because of the party interested being a minor. Chambers v. Ker, 6 Tex. Civ. App. 373, 24 S. W. 1118. "Commonwealth v. Hantz, 2 Pen. & W. (Pa.) 333. ™ Mattel v. Vautro, 78 L. T. 682; St. Louis &c. R. Co. V. Higgins, 44 Ark. 293 ; Di Meglio v. Baltimore &c. R. Co. (Del.), 74 Atl. 558; Pittsburg, C. C. & St. L. R. Co. V. Healey, 170 111. 610, 48 N. E. 920; Baker v. Lovett, 6 Mass. 78, 4 Am. Dec. 88; Hollinger v. York Rys. Co., 225 Pa. 419, 74 Atl. 344; Bonner v. Bryant, 79 Tex. 540, 15 S. W. 491, 23 Am. St. 361. See, however. Fridge v. State, 3 Gill & J. (Md.) 103, 20 Am. Dec. 463; Langford v. Frey, 8 Humph. (Tenn.) 443. "Ware v. Cartledge, 24 Ala. 622, 60 Am. Dec. 489. " In re Cumming's Estate, 120 Iowa 421, 94 N. W. 1117; Chambers v. Chambers, 41 La. Ann. 443, 6 So. 659. ™Lane v. Dayton Coal &c. Ca, 101 Tenn. 581, 48 S. W. 1094. "^ Baker v. Lovett, 6 Mass. 78, 4 Am. Dec. 88; Bonner v. Bryant, 79 Tex. 540, IS S. W. 491, 23 Am. St. 361. Where an infant has executed a release for value which he subse- quently repudiates and brings suit on the original claim the jury should in- quire to what extent he has been really benefited by the consideration paid and take that into account in finding a verdict in his favor for dam- ages. Worthy v. Jonesville Oil Mill (S. Car.), 67 S. E. 634, 11 L. R. A. (N. S.) 690. § 307 CONTRACTS. 516 with under the compromise agreement, the other party having the right to bring an action on the original claim. *^ A next friend or guardian ad litem has no power to compro- mise or settle a claim of his ward without the express sanction of the court and the ward is not bound by such an agreement.^^ The above is especially true after the claim has been prosecuted to judgment.^^ Not only must there be judicial sanction of the set- tlement but this sanction must be upon a real and not a perfunc- tory hearing. The attendant compromise does not become effect- ive by the consent of the next friend but by the judgment of the court acting upon the facts judicially ascertained. The compro- mise may be set aside if the hearing is merely formal and intended solely to employ the functions and powers of the court to give validity to the prior agreement.^* It is of course proper for the legislature to provide a method whereby the infant may enter into a valid compromise or execute a binding release. On this subject the statutes of the various states must be consulted. § 307. Suretyship. — Under the ancient rule whereby con- tracts against the interests of a minor were held void, those for his benefit deemed valid, and those of an uncertain nature con- sidered as voidable, contracts of suretyship entered into by an infant were regarded as prejudicial to his interests and therefore void.*^ The question as to whether the agreement will benefit the ^ Ware v. Cartledge, 24 Ala. 622, ^ Missouri Pac. R. Co. v. Lasca,. 79 60 Am. Dec. 489; Shaw v. Cofifin, 58 Kans. 311, 99 Pac. 616, 21 L. R. A. Maine 254, 4 Am. Rep. 290. See, (N. S.) 338n. See also, the note to however, Ray v. Tubbs, SO Vt. 688, the above case. The next friend or 28 Am. Rep. 519. guardian ad litem being intrusted ^ Isaacs V. Boyd, 5 Porter (Ala.) with the rights of the infant so 388 ; Johnson v. McCann, 61 III. App. far as they are involved in the 110 J Fort V. Battle, 13 Sm. & M. cause, and acting under responsi- (Miss.) 133; Edsall v. Vandermark, bility to the court and to the in- 39 Barb. (N. Y.) 589; Millsaps v. fant, may negotiate for a fair ad- Estes, 137 N. Car. 535, 50 S. E. 227, justment of the controversy. Walsh 70 L. R. A. 170, 107 Am. St. 496; v. Walsh, 116 Mass. 377, 17 Am. Tucker v. Dabbs, 12 Heisk. (Tenn.) Rep. 162. He may not, however, 18; Hannum's Heirs v. Wallace, 28 bind the infant by such settlement. Tenn. (9 Humph.) 129; Fletcher v. It can become effective only when Parker, 53 W. Va. 422, 44 S. E. 422, given due judicial sanction. Tripp 97 Am. St. 991. v. Gifford, 155 Mass. 108, 29 N. E. ''O'Donnell v. Broad, 2 Pa. Dist. 208, 31 Am. St. 530. Rep. 84; Fletcher v. Parker, S3 W. ^West v. Penny, 16 Ala. 186; Has- Va. 422, 44 S. E. 422, 97 Am. St. tings v. Dollarhide, 24 Cal. 195; Ma- 991. pies V. Wightman, 4 Conn. 376, 10 517 INFANTS. 308 promisor is under modern authority not deemed controlling. The old test has disappeared and with it the rule that an infant's contract of suretyship is void. Such an agreement is now consid- ered voidable,*" and may be ratified by him after reaching his majority.*^ Thus it has been held that a recognizance signed by him as surety,** an undertaking as surety for a stay of execution,*' or surety on a note°" are all voidable. § 308. Partnership. — A contract of partnership between an infant and an adult is not void'^ but only voidable at the infant's option."^ Consequently he may avoid being held liable by the partnership creditors. No individual liability attaches to him upon his plea of infancy,'* nor can he be held liable by the adult member of the firm who settles the partnership liabilities.'* The infant may even avoid liability for the partnership debts without disaffirming his contract with the partner.'" However, Am. St. 149; Robinson v. Weeks, 56 Maine 102; Cronise v. Clark, 4 Md. Ch. 403; Chandler v. McKinney, 6 Mich. 217, 74 Am. Dec. 686; Wheaton V. East, 5 Yerg. (Tenn.) 41, 26 Am. Dec. 251. '°Fetrow v. Wiseman, 40 Ind. 148; Wills V. Evans, 18 Ky. 1067, 38 S. W. 1090; Owen v. Long, 112 Mass. 403; Johnson v. Storie, 32 Nebr. 610, 49 N. W. 371 ; Harner v. Dipple, 31 Ohio St. 72, 27 Am. Rep. 496; Reed V. Lane, 61 Vt. 481, 17 Atl. 796. •"Fetrow v. Wiseman, 40 Ind. 148; Owen V. Long, 112 Mass. 403; Har- ner V. Dipple, 31 Ohio St. 72, 27 Am. Rep. 496. "^ State V. Satterthwaite, 20 S. Car. 536. See also, Reed v. Lane, 61 Vt. 481, 17 Atl. 796. ''Harner v. Dipple, 31 Ohio St. 72, 27 Am. Rep. 496. ""Fetrow v. Wiseman, 40 Ind. 148; Owen V. Long, 112 Mass. 403; John- son V. Storie, 32 Nebr. 610, 49 N. W. 371. To same effect, see Grau- man &c. Co. v. Krienitz, 142 Wis. 556, 126 N. W. 50. The above case lays down the rule that an _ infant can be estopped only by showing ac- tual discretion, and fraud on his part and a contract beneficial in its na- ture to him. "^Osborn v. Farr, 42 Mich. 134, 3 N. W. 299. ■"Latrobe v. Deitrich, 114 Md. 8, 78 Atl. 983; Gordon v. Miller, 111 Mo. App. 342, 85 S. W. 943. ■"Goode v: Harrison, 5 B. & Aid. 147; Murphy v. Yeomans, 29 U. C. C. P. 421; Woods v. Woods, 3 Manitoba 33 ; Conklin v. Ogborn, 7 Ind. 553; Mehlhop v. Rae, 90 Iowa 30, 57 N. W. 650; James v. Alford & Co., 15 La. Ann. 506; Neal v. Berry, 86 Maine 193, 29 Atl. 987 Latrobe v. Dietrich, 114 Md. 8, 78 Atl 983; Bush v. Linthicum, 59 Md. 344 Tobey v. Wood, 123 Mass. 88, 25 Am. Rep. 27n; Mason v. Wright, 13 Mete. (Mass.) 306; Osburn v. Farr, 42 Mich. 134, 3 N. W. 299; Dunton V. Brown, 31 Micb. 182; Folds v. Allardt, 35 Minn. 488, 29 N. W. 201 ; Gordon v. Miller, 111 Mo. App. 342, 85 S. W. 943; Avery v. Fisher, 28 Hun (N. Y.) 508. "Neal V. Berry, 86 Maine 193, 29 Atl. 987. ""Meahlhop v. Rae, 90 Iowa 30, 57 N. W. 650; Canary v. Sawyer, 92 Maine 463, 43 Atl. 27, 69 Am. St. 525; Tobey v. Wood, 123 Mass. 88, 25 Am. Rep. 27n. See, however. Miller v. Sims, 2 Hill (S. Car.) 479; Salinas V. Bennett, 33 S. Car. 285, 11 S. E. 968. § 3o8 CONTRACTS. 518 courts attempt to prevent the minor from gaining an undue advantage from his disability. Consequently it is held by the weight of authority that he cannot at the same time set up his dis- ability to relieve himself of the firm's debt and retain possession of the firm's assets.** It follows that in the absence of any fraud practiced on the infant in order to induce him to enter into the partnership relation the minor cannot rescind his partnership agreement and recover additions made by him to the assets of the firm. He is entitled to only his pro rata share of the assets re- maining after the settlement of the firm's liabilities."' ^ Shirk V. Shultz, 113 Ind. 571, 15 N. E. 12; Latrobe v. Deitrich, 114 Md. 8, 78 Atl. 983 ; Bush v. Linthicum, 59 Md. 344; Pelletier v. Couture, 148 Mass. 269, 18 N. E. 400, 1 L. R. A. 863; Gordon v. Miller, 111 Mo. App. 342, 85 S. W. 943 ; Yates v. Lyon, 61 N. Y. 344, revg. Yates v. Lyon, 61 Barb. (N. Y.) 205. See also, Rich- ards V. W. H. Hellen & Son (Iowa), 133 N. W. 393. "The plaintiff, however, contends that inasmuch as he was a minor, and had disaffirmed his personal liability for the debts of the firm, he has an individual interest in such of the partnership property as has been fully paid for at the time when insolvency pro- ceedings were instituted. We do not think that such a contention is main- tainable, either on principle or on au- thority. * * * It will be observed that he did not and does not dis- affirm his contract of copartnership, but only his liability for firm debts. He claims title to the goods sued for, as a partner, such goods having been paid for by the firm, and being partnership assets." Canary v. Saw- yer, 92 Maine 463, 43 Atl. 27, 69 Am. St. 525. In the case of Adams v. Beall, 67 Md. 53, 8 Atl. 664, 1 Am. St. 379, it is said: "The business was not, it is true, a successful one, but this in the absence of fraudulent representa- tions on the part of the appellant cannot affect the question. * * * Where money is paid by a minor in consideration of being admitted as a partner into the business of the ap- pellant (the adult), and he does be- come and remain a partner for a given time he ought not to be allowed to recover back the money thus paid, unless he was induced to enter into the partnership by the fraudulent representations of the appellant." See also, Wilhelm v. Hardman, 13 Md. 140, in which it is said : "Where an infant pays money on a voidable con- tract, and has enjoyed the benefit of it, he cannot avoid it, and recover back his money. The rule which pro- tects infants from liability on con- tracts, will be allowed to operate reciprocally where it can be so ap- plied. It is not too much to say that if an infant goes into a mercantile venture which proves unsuccessful he ought, at least, to be held so far that the assets acquired by the firm should be applied to the payment of the debts of the concern. If he has been cajoled into any waste of his capital it hardly seems equitable that the creditor of his firm should, either directly or indirectly, be called upon for reimbursement." Yates v. Lyon, 61 N. Y. 344. " Ex parte Taylor, 8 DeG. M. & G. 254; Latrobe v. Deitrich, 114 Md. 8, 78 Atl. 983; Adams v. Beall, 67 Md. 53, 8 Atl. 664, 1 Am. St. 379; Page v. Morse, 128 Mass. 99; Moley v. Brine, 120 Mass. 324; Breed v. Judd, 1 Gray (Mass.) 455. The adult partner has the right to insist upon the assets of the firm be- ing applied to the payment of the firm's debts and the infant's right to rescind is subject to this equity. Hill V. Bell, 111 Mo. 35, 19 S. W. 959. In regard to the case so holding it is said in the note to the case of Craig V. Van Bebber, 18 Am. St. 604: The broad views expressed to 519 INFANTS. § 309 The partnership agreement of an infant, being voidable only, may of course be ratified by him on reaching his majority and by so doing he becomes liable for the firm obligations incurred during his minority."^ § 309. Corporation stock and membership. — An infant's purchase of capital stock of a corporation is voidable and he may at his election avoid it and recover the purchase-money.®® This right to disaffirm has been accorded the infant even though he the effect "that the assets of a part- nership should be appropriated to the satisfaction of firm creditors over the claims of an infant partner, ap- pear to us to be a departure from the general principles governing the lia- ability of infants on their contracts. Why the interest of the infant in the partnership assets should be subjected by implication of law to the claims of creditors of the firm, when it is per- fectly well settled that an infant may repudiate any security, as a mortgage, expressly given by him, is not clear. Of course, if an infant would rescind a contract he may be obliged to re- store the consideration he may have received, provided he still retains it ; but the rule as stated here makes no distinction between such creditors who have disposed of property to the firm, which it still retains, and those creditors who are not in that condi- tion. If it be said that the infant must restore an equivalent, if he have not the original consideration, the rule should not have stopped with the firm assets, but should at least make the infant answerable to the extent of any property which may belong to him. The question cannot be regarded as settled." The decisions holding that an infant cannot recover money or other assets advanced by him to the firm seem erroneous. All the members of the firm whether infants or other- wise have a lien on the firm assets. It would be more nearly correct to hold the infant unable to recover where the rights of creditors have inter- vened on equitable grounds. The in- fant has, the same as other members of the partnership, a lien on the firm assets, but the creditors of the firm take precedence over the lien of the partners, even defeating the lien of an infant partner. See Conn v. Bout- well (Miss.), 58 So. 105. See also, Sparman v. Kiem, 83 N. Y. 245, in which it is held that an in- fant partner may recover money which he was induced to invest in business on restoring the benefits re- ceived from the partnership. "'Penn v. Whitehead, 17 Grat. (Va.) 503, 94 Am. Dec. 478. He even renders himself liable on claims of which he was entirely ignorant at the time. Miller v. Sims, 2 Hill (S. Car.) 479. It has al- ready Ijeen seen that by some juris- dictions it is held that the act whereby an infant attempts to ap- point an agent is void and that he therefore cannot ratify the act of such agent. Consequently it has been con- tended that an infant could not ratify the acts of his partner since he was incapable of communicating authority to such partner to contract for him and that the attempt to communicate such authority being void it is not subject to a subsequent ratification. This contention was, however, over- ruled, it being held that the infant might ratify such an agreement. Whitney v. Dutch, 14 Mass. 457, 7 Am. Dec. 229. That one of the gen- eral partners is an infant does not affect the liability of a special part- ner. Continental Nat. Bank v. Strauss, 137 N. Y. 148, 32 N. E. 1066. "^ Northwestern R, Co. v. M'Mich- ael, 5 Exch. 114; Newry &c. R. Co. V. Coombe, 3 Exch, 565 ; In re Nas- sau Phosphate Co., L. R. 2 Ch. Div. 610; Baker's Case, L. R. 7 Ch. 115; Lumsden's Case, L. R. 4 Ch. 31; Hamilton v. Vaughan-Sherrin Elec- trical Engineering Co. (1894), 3 Ch. 589; Wuller v. Chuse Grocery Co., § 309 CONTRACTS. 520 could not place the other party in statu quo.^ The transfer of shares by a minor is also voidable and not void.^ In IlHnois it has been held that, in the absence of statutory restrictions, minors are not ineligible to membership in mutual benefit societies. The objection that an infant could avoid his contract was said not to be important, as in such cases the adult members could do the same without incurring liability.^ On the other hand, if prohibited by a statute, infants are ineligible to membership in a corporation. * It seems to be definitely settled that, unless expressly permitted by statute, an infant cannot become one of the corporators in the organization of a corporation. It is presumed that the legis- lature in authorizing persons to form a corporation contemplates that such persons shall be of full age.^ 241 111. 398, 89 N. E. 796, 28 L. R. A. (N. S.) 128, 132 Am. St. 216; In- dianapolis Chair Mfg. Co. v. Wilcox, 59 Ind. 429; Robinson v. Weeks, 56 JMaine 102; Gage v. Menczer (Tex. Civ. App.), 144 S. W. 717. 'White V. New Bedford Cotton Weight Corporation, 178 Mass. 20, 59 N. E. 642. In an action by an, infant to recover money deposited with de- fendant as margin for operations in stocks, it was conceded by them that he had a right to recover his deposit upon returning all he had received under the contract. As this did not include the stocks but consisted of notices of purchases and sales only and he had received no benefits from the transaction, it was held that he was entitled to rescind and recover without restoration. Mordecai v. Pearl, 63 Hun (N. Y.) 553, 45 N. Y. St. 140, 18 N. Y. S. 543. ''Lumsden's Case, L. R. 4 Ch. 31. In connection with this case see Chicago Mutual Life &c. Assn. v. Hunt, 127 III. 257, 20 N. E. 55, 2 L. R. A. 549, in which it is said: "If an infant performs the conditions pre- scribed in the certificate, he, the same as an adult becomes entitled to the benefits thereby secured. If he fails to perform his membership ceases and that is all. We do not assent to the view that as a _ further conse- quence of his disability he may re- cover back the dues and assessments he may have already paid. If an in- fant advances money on a voidable contract which he afterwards rescinds he cannot recover his money back, be- cause it is lost to him by his own act and the privilege of infancy does not extend so far as to restore this money unless it was obtained by fraud." Citing 1 Parsons Contracts, 322. It is said of the case just quoted from in Wuller v. Chuse Grocery Co., 241 III. 398, 89 N. E. 796, 28 L. R. A. (N. S.) 128n, 132 Am. St. 216: "This lan- guage of the court used in argument was not essential to the decision and the quotation from Parsons is at vari- ance with authority and the doctrine now accepted. If the fact that the payment of money upon his contract was voluntary precluded its recovery, the right to avoid the contract would be no protection to an infant against his inexperience and the wiles of swindlers and thieves. Such voluntary payment may be recovered upon the avoidance of the contract." Smith v. Nashville &c. R. Co., 91 Tenn. 221, 18 S. W. 546. 'Chicago Mutual &c. Assn. v. Hunt, 127 111. 257, 20 N. E. 55, 2 L. R, A. 459. Hn re Globe Mutual Benefit Assn., 135 N. Y. 280, 32 N. E. 122, 17 L. R. A. 547, afifg., 63 Hun (N. Y.) 263, 43 N. Y. St. 756, 17 N. Y. S. 852. ° Hamilton &c. R. Co. v. Townsend, 13 Ont. App. 534, 16 Am. & Eng. Cor. 521 INFANTS. § 310 It has been held in England that the directors of a corporation have power to prevent a minor from becoming a shareholder of a corporation,*' but that a transfer of shares to a minor is not void but voidable merely.' After having been made it cannot be ignored by the corporation^ and is good until avoided by the infant," nor is the corporation liable for having made such transfer.^" § 310. Other illustrative cases — Marriage settlement. — A marriage settlement entered into by an infant is voidable at his option. However, it is valid until avoided and passes an estate.^"- The settlement may be avoided by the infant's privies in blood after his death,^^ but cannot be avoided by the creditors of the infant's son whom the infant left surviving.^^ Cases 645 ; In re Globe &c. Assn., 135 N. Y. 280, 32 N. E. 122, 17 L. R. A. 547, affg. 63 Hun (N. Y.) 263, 43 N. Y. St. 756, 17 N. Y. S. 852. See, however, Chicago &c. Assn. v. Hunt, 127 III. 257, 20 N. E. 55, 2 L. R. A. 549. The above case was, however, decided under a peculiar statute. It has been held, however, that the infant's disability to act as an incor- porator cannot be attacked collater- ally. In re Nassau Phosphate Co., 2 Ch. Div. 610; In re Laxon & Co. (1892), 3 Ch. Div. 555. His dis- ability, however, is subject to di- rect attack. Hamilton &c. Co. v. Townsend, 13 Ont. App. 534, 16 Am. & Eng. Cor. Cases 645. •Asiatic Banking Corporation, L. R. 5 Ch. 298; Symond's Case, L. R. 5 Ch. App. 298. 'Blakeley Ordnance Co., L. R. 4 Ch. 31; Maguire's Case, 3 DeG. & Sm. 31 ; Lumsden's Case, L. R. 4 Ch, App. Cas. 31; Ebbett's Case, L. R. 5 Ch. App. Cas. 302; Baker's Case, L. R. 7 Ch. App. Cas. 115. ° Hart's Case, L. R. 6 Eg. 512; Wilson's Case, L. R. 8 Ch. 45; Mit- chell's Case, L. R. 9 Eq. 363; Creed V. Lancaster Bank, 1 Ohio St. 1. ° In re Nassau Phosphate Co., 2 Ch, Div. 610. " Smith V. Nashville &c. R. Co., 91 Tenn. 221, 18 S. W. 546, For general discussion of infants as in- corporators and subscribers to cor- poration stock see Thomp. Corp. (2d. ed.), §§ 175, 642. " Temple v. Hawley, 1 Sand. Ch. (N. Y.) 153; Jones v. Butler, 30 Barb, (N. Y.) 641. "Levering v. Heighe, 2 Md. Ch. 81, second appeal, 3 Md. Ch. 365. "Lester v. Frazer, 2 Hill Eq. (S. Car.) 529, Ril. Eq. 76. Under the old rule of law whereby the per- sonal property of the wife became the absolute property of the hus- band upon marriage it was held that the general personal estate of a female infant is bound by a settlement made on her marriage because such personal estate became by the mar- riage the absolute property of the husband and the settlement is in ef- fect his settlement and not hers. But as to her real estate and also personal property settled to her separate use, the marriage settlement was not bind- ing because her real estate did not, by the marriage, become the absolute property of her husband. Simson v. Jones, 2 Russ. & M. 365; Durnford V. Lane, 1 Bro. Ch. 106; Clough v. Clough, 5 Ves. 710; Milner v. Lord Harewood, 18 Ves, 275 ; Simson v. Jones, 2 Russ. & M. 365 ; Johnson v. Johnson, 1 Keen 648; Campbell v, Ingilby, 21 Beav. 567; In re Waring, 21 L. J. Ch. 784; Field v, Moore, 25 L. J. Ch. 66; Levering v. Heighe, 2 Md. Ch. 81, second appeal, 3 Md. Ch. 365; Temple v. Hawley, 1 Sand. Ch. § 3" CONTRACTS. 522 § 311. Other illustrative cases — Mechanic's Lien. — A me- chanic's lien predicated merely on a contract entered into with a minor cannot be acquired against the property of such infant. A lien implies a contract, and as an infant cannot make a valid contract, no hen can be obtained against his property.^* Even if the building contract is entered into with the infant's guardian no lien can be acquired unless such guardian acted under valid legal authority in making the improvements. ^'^ The infant does not ratify the agreement and subject his property to the lien by (N. Y.) 153; Wetmore v. Kissam, 3 Bosw. (N. Y.) 321; McIIvaine v. Kadel, 30 How. Pr. (N. Y.) 193, 26 N. Y. Sup. Ct. 429; Whichcote v. Lyle's Exrs., 28 Pa. St. 73; Tabb V. Archer, 3 Hen. & M. (Va.) 398, 3 Am. Dec. 657; Healy v. Rowan, 5 Grat. (Va.) 414, 52 Am. Dec. 94. The infant's relief act does not ap- ply to a marriage settlement executed by an infant, but such a settlement is, as against the infant, voidable only ; that is to say, valid until repudiated within the time and in the manner allowed by law. Duncan v. Dixon, 44 Ch. Div. 211, 59 L. J. Ch. 437, 62 L. T. 319, 38 W. R. 700; Jones Ex parte, 18 Ch. Div. 122, explained. JNIar- riage articles executed by an adult and an infant, there being no set- tlement under the infants' settle- ment act, nor any afterwards exe- cuted in pursuance of the articles, al- though voidable by the infant on his or her attaining twenty-one, are bind- ing on the adult. Smith's Trusts, 25 L. R. Ir. 439. A settlement voidable on the ground of the settler's infancy is binding on the settler, unless he re- pudiates it within a reasonable time after attaining full age. Ignorance of particular provisions of the settle- ment cannot be set up by the settler as an excuse for delav in repudiating. Carter v. Silber C1892), 2 Ch. 278, 61 L. J. Ch. 401, 66 L. T. 473— C. A. Under eighteen and nineteen Vict., Chap. 43, an infant may, with the sanction of the court, make a valid marriage settlement of either his real or personal property. Seaton v. Sea- ton, 13 App. Cases 61 ; Moore v. Johnson, 3 Ch. 48 (1891). "Alvey v. Reed, 115 Ind. 148, 17 N. E. 265, 7 Am. St. 418; Bloomer V. Nolan, 36 Nebr. 51, 53 N. E. 1039, 38 Am. St. 690; Hall v. Aken, 47 N. J. L. 340. And the fact that the in- fant authorizes another to act for her in drawing up the building con- tract is immaterial. McCarty v. Car- ter, 49 111. 53, 95 Am. Dec. 572, The lien cannot be upheld on the theory that the improvement was a necessity. Price v. Jennings, 62 Ind, 111. "Fish V. McCarthy, 96 Cal. 484, 31 Pac. 529, 31 Am. St. 237. In the above case it was held that the guard- ian could not subject his ward's property to a mechanic's lien unless he obtained an order from the court authorizing the improvement. Guy v. Dii Uprey, 16 Cal. 195, 76 Am. Dec. 518; Payne v. Stone, 7 Sm. & M. (Miss.) 367; Logan Planing Mill Co. v. Aldredge, 63 W. Va. 660, 60 S. E. 783, 15 L. R. A. (N. S.) 1159, 129 Am. St. 1035. In the above case it was held that the guardian's author- ity was to be strictly construed. Con- sequently where the probate court gave the guardian permission "to erect out of the funds of his wards a building upon their lot and of such dimensions and qualities as may suit their interests" the authority does not authorize the guardian to erect a building upon credit and thereby de- stroy the interests of his ward. The right to a mechanic's lien was there- fore denied. If the guardian him- self advances the money to erect a building without being authorized so to do by a court of competent juris- diction, he cannot recover the amount so advanced from his ward. Hassard v. Rowe, 11 Barb. (N. Y.) 22. Nor can he create a lien on the premises in favor of the mechanics employed. Copley v. O'Niel, 57 Barb. (N. Y.) 299. 523 INFANTS. § 312 the use^* or retention*' of the property improved since this would, in effect, nullify his right to rescind. § 312. Other illustrative cases — ^Assignment for benefit of creditors. — An infant's assignment for the benefit of cred- itors is also voidable at the election of such infant. It can, how- ever, be avoided only by the infant or some one entitled to stand upon his rights.^* § 313. Other illustrative cases — Leases made by guardian extending beyond the term of guardianship. — Under the common law, or a statute simply declaratory thereof, leases made by the guardian to extend beyond the term of the guardian- ship are voidable.^" But it has been held under the statutes of Arkansas that a lease made by order of the court may be valid although it is to continue beyond the minority of the infant.^" § 314. Other illustrative cases — Apprenticeship. — Accord- ing to some early cases an infant's contract of apprenticeship was valid and binding because for his benefit.^^ Under the mod- ern theory such an agreement has been held valid because for a necessity.^^ Contrary to more or less prevalent opinion, such " McCarty v. Carter, 49 111. S3, 95 esting one. Two minors owned a fee Am. Dec. 572. to certain property subject to the " Bloomer v. Nolan, 36 Nebr. 51, dower right of their mother. The 53 N. E. 1039, 38 Am. St. 690. disabilities of infancy were removed "Soper V. Fry, 37 Mich. 236; as provided by the statutes of Okla- Yates V. Lyon, 61 N. Y. 344. The homa, they being residents of that above cases hold that the assign- state. The infants then joined with ment cannot be avoided by creditors, their mother in a warranty deed for The latter case holds that an assign- the property to B. After reaching ment made by co-partners is not twenty-one they deeded the property fraudulent and void in law because to C who then tirought suit for pos- one of the assignors is an infant, and session. The court held that in con- if the infant ratifies the assignment veyance of real estate the lex loci on reaching his majority no fraud sitae controlled and by the laws of can be claimed because of the in- Arkansas a valid deed cannot be fancy. See also, Kingman v. Per- given by persons under twenty-one, kins, 105 Mass. Ill, in which it is consequently the deed to B was void- held' that an infant's assignment of a able, and that the deed to C was a debt cannot be avoided by his cred- disaffirmance thereof, itors because of his nonage. "^Rex v. The Inhabitants of Arun- "Beauchamp v. Bertig, 90 Ark. 351, del, 5 M. & S. 257; Rex v. Inhabi- 119 S W. 75, 23 L. R. A. (N. S.) tants of Great Wigston, 3 B. & C. 559 ' " 484; Woodruff v. Logan, 6 Ark. 276, ■"Beauchamp v Bertig, 90 Ark. 42 Am. St. 695. See also, note in 34 351, 119 S. W. 75, 23 L. R. A. (N. Am. Dec. 538. S.) 659. The above case is an mter- '"'Pardey v. American Ship Wind- § 3^5 CONTRACTS. 524 agreements were not generally binding at common law but in- stead were voidable.^^ It follows that unless considered as a necessity an infant's con- tract of apprenticeship has no binding force unless authorized by, and executed in conformity with, some statutory enactment.^* Various jurisdictions have at one time or other enacted stat- utes empowering the infant to bind himself by a contract of apprenticeship.^^ The infant is not bound unless the contract is signed by him, unless the statute specifically provides that the agreement may be executed on his behalf by his parents or guard- ian.^" As a general rule, however, the infant is not liable for damages, for breach of the conditions contained in the agree- ment, if the plea of infancy is interposed. At most he is merely subject to the control and discipline of the master and to the statutory penalties prescribed, in case he is guilty of miscon- duct." § 315. Effect of concealment or misrepresentation. — Per- haps no legal question has received so much discussion or given rise to so many diverse holdings as the one relative to the effect of an infant's concealment or misrepresentation of his age on a lass Co., 20 R. I. 147, 37 Atl. 706, 78 Young, 54 S. Car. 388, 44 L. R. A. Am. St. 844. 277, 32 S. E. 448; Stringfield v. "^ Clark V. Goddard, 39 Ala. 164, Heiskell, 2 Yerg. (Tenn.) 545; Pierce 84 Am. Dec. Ill ; Harney v. Owen, v. Massenburg, 4 Leigh (Va.) 493, 26 4 Blackf. (Ind.) 2,11, 30 Am. Dec. Am. Dec. 333. 662. See also, Tague v. Hayward, 25 "" Lylly's Case, 7 Mod. 15 ; Gilbert Ind. 427; Hunsucker v. Elmore, 54 v. Fletcher, Cro. Car. 179; Brock v. Ind. 209; Kerwin v. Myers, 71 Ind. Parker, 5 Ind. 538; McKnight v. 359. Hogg, 1 Const. (S. Car.) 117. "* Clark V. Goddard, 39 Ala. 164, 84 Contra, Woodruff v. Logan, 6 Ark. Am. Dec. Ill ; Tague v. Hayward, 25 276, 42 Am. Dec. 695. See also, Wal- Ind. 427; Hunsucker v. Elmore, 54 ter v. Everard (1891), 2 Q. B. 369. Ind. 209; Kerwin v. Myers, 71 Ind. The technical relation of appren- 359; Frazier v. Rowan, 2 Brev. (S. tice and master has fallen almost en- Car.) 47. tirely into disuse and is now confined ^ See Whitmore v. Whitcomb, 43 principally to the administration of Maine 458 ; Harper v. Gilbert, 5 Gush, the poor laws in the care of orphans, (Mass.) 417 ; Fisher V. Lunger, 33 N. indigent and abandoned children. J. L. 100; State v. Reuff, 29 W. Va. Manifestly this is a matter controlled 751, 6 Am. St. 676, 2 S. E. 801. entirely by statutes of mere local ap- ^ Rex V. Inhabitants of Arnesby, 3 plication. These statutes cannot be B. & Aid. 584 ; Ivins v. Norcross, 3 taken up in detail here, and the en- N. J. L. 911 ; Balch v. Smith, 12 N. actments of the various states on H. 437; In re McDowle, 8 Johns. (N. this subject must therefore be con- Y.) 328; Commonwealth v. Moore, 1 suited. Ashm. (Pa.) 123; Anderson v. 525 INFANTS. § 316 contract induced thereby. The net result has not inaptly been termed a "multitude of undistinguishable distinctions."" The fundamental rule applicable to the subject will first be stated. Generally speaking, passive concealment on the part of the infant does not, either directly or indirectly, defeat the right of the infant to avoid his agreement. The contract of an infant otherwise voidable is not enforcible against him because he dealt or traded as an adult.^" Nor is the operation of the above rule affected by the fact that the infant appears to be of full age and that he was believed by the other party to be an adult.*" § 316. Active concealment, estoppel. — It is believed that the foregoing rule is practically universal. Many jurisdictions go a step further and hold that active misrepresentation of his age does not estop an infant to set up his minority either affirm- atively in an action to rescind and recover the consideration parted with or as a defense to an action brought by the adult on the contract. The reason given for these decisions is that any other rule would enable the infant to enter into a binding agree- ment by a representation that he was of full age and thus greatly, restrict the operation of a rule of law adopted for his protec- tion.^^ '^ See concurring opinion of Cal- Harper v. Utsey (Tex. Civ. App.), houn, J., in Commander v. Brazil, 88 97 S. W. 508; Carpenter v. Prigden, Miss. 668, 41 So. 497, 9 L. R. A. (N. 40 Tex. 32; Grauman &c. Co. v. S.) 1117. Krienitz, 142 Wis. 556, 126 N. W. SO. ''Miller v. Blankley, 38 L. T. 527; ""Buchanan v. Hubbard, 96 Ind. 1; Confederation Life Assn. v. Kinnear, Sewell v. Sewell, 92 Ky. 500; Ru- 23 Ont. App. 497; Oliver v. McClel- chizky v. De Haven, 97 Pa. 202. See, Ian, 21 Ala. 675 ; Davidson v. "^oung, however, Smith v. Cole, 148 Ky. 138, 38 111. 145; Alvey v. Reed, 115 Ind. 146 S. W. 30. "Positive intentional 148, 17 N. E. 265, 7 Am. St. 418; fraud would bar an infant of years Price V. Jennings, 62 Ind. Ill; Sew- of discretion, but mere silence or ac- ell V. Sewell, 92 Ky. 500, 18 S. W. quiescence surely will not." William- 162, 36 Am. St. 606; Bailey v. Barn- son v. Jones, 43 W. Va. 562, 27 S. E. berger, 11 B. Mon. (Ky.) 113; Baker 411, 38 L. R. A. 694, 64 Am. St. 891. v. Stone, 136 Mass. 405; Brantley v. By silence is meant entire silence. Wolf, 60 Miss. 420; Folds v. Allardt, as distinguished from that sort which 35 Minn. 488, 29 N. W. 201; Stack merely keeps back part of the truth V. Cavanaugh, 67 N. H. 149, 30 Atl. told or suggested. Williamson v. 350; Houston v. Cooper, 3 N. J. L. Jones, 43 W. Va. 562, 27 S. E. 411, 866; Van Winkle v. Ketcham, 3 Cai. 38 L. R. A. 694, 64 Am. St. 891. See (N. Y.) 323; Waugh v. Beck, 114 Pa. also, cases above cited in note 2. St. 422, 6 Atl. 923 60 Am. Rep. 354; ''Bartlett v. Wells, 1 B. & S, 836; Curtain v. Patton, 11 Serg. & R. De Roo v. Foster, 12 C. B. (N. S.) (Pa.) 305; Bible v. Wisecarver 272; Bateman v. Kingston, 6 L. R. (Tenn. Ch. App.), 50 S. W. 670; Ir. 328; Tobin v. Spann, 85 Ark. 556, § 3i6 CONTRACTS. 526 The above rule is harsh in its operation. In many instances it enables the infant to use the protection of the law afforded him as a sword instead of a shield. Courts thought to avoid the hard- ships entailed by an enforcement of the rule and it is this spirit which has given rise to the confusion mentioned at the beginning of this section. Notwithstanding the tangle which has resulted it is possible to classify the various cases into three or four groups. These groups, while the final result is in all of them practically the same and in that sense they are based on undistin- guishable distinctions, are decided on different principles. A knowledge of these principles therefore becomes important. The largest and most important class of cases consists of those in which it is held that when a minor has reached that stage of maturity which indicates that he is of full age, and enters into a contract falsely representing himself to be of age, accepting the benefits of the contract, he will be estopped to deny that he is not 109 S. W. 534, 16 L. R. A. (N. S.) 672n. (In this case action was brought by the infant for affirmative rehef.) Wieland v. Kobick, 110 111. 16, 51 Am. Rep. 676; Rice v. Boyer, 108 Ind. 472, 9 N. E. 420, 58 Am. Rep. S3 ; Slayton v. Barry, 175 Mass. 513, 56 N. E. 574, 49 L. R. A. 560, 78 Am. St. 510; Merriam v. Cunning- ham, 11 Cush (Mass.) 40; Conrad V. Lane, 26 Minn. 389, 4 N. W. 695, 37 Am. Rep. 412; Alt v. Grofif (sub nomine Graf?), 65 Wmn. 191, 68 N. W. 9; Ridgway v. Herbert, 150 :Mo. 606, 51 S. W. 1040, 12, Am. St. 464; Cobbey v. Buchanan, 48 Nebr. 391, 67 N. W. 176; Conroe v. Birdsall, 1 Johns. Cases (N. Y.) 127, 1 Am. Dec. 105; Studwell v. Shapter, 54 N. Y. 249. See Boyd v. Weeks, 5 Hill (N. Y.) 393; Curtin v. Patton, 11 Serg. & R. (Pa.) 305; Keen v. Coleman, 39 Pa. 299, 80 Am. Dec. 524; Sims v. Everhardt, 102 U. S. 300, 26 L. ed. 87; Whitcomb v. Joslyn, 51 Vt. 79, 31 Am. Rep. 678; Nash v. Tewctt, 61 Vt. 501, 18 Atl. 47, 4 L R. .A. 561. 15 Am. St. 931 ; Elint v Eliot, 81 Wis. 205. 51 N. W. 81, 15 L. R. A. 2S0. "By the weight of authority infants are not liable for torts connected with or growing out of contracts, and the doctrine of estoppel in pais does not apply to them, * * * and a fraud- ulent representation of capacity can- not be an equivalent for actual ca- pacity." Kirkham v. Wheeler-Osgood Co., 39 Wash. 415, 81 Pac. 869. "A contrary doctrine would over- turn the whole law relative to the contracts of infants. From holding that an infant was estopped by a falsehood as to his age, the next step would be to hold him estopped by sup- pression of the fact that he was un- der age, when he was silent at that point, while he knew that the party with whom he was contracting sup- posed him to be of age. There is no difference between the direct and the inferential falsehood; the one is as fraudulent as the other." Brown v. McCune. 7 N. Y. Super. Ct. 224. See also, Carpenter v. Carpenter, 45 Ind. 142; Ridgeway v. Herbert, 150 Mo. 606, 51 So. 1040, n Am. St. 464; Burlev v. Russell, 10 N. H. 184, 34 Am. Dec. 146; New York Building &c. Co. V. Fisher, 20 Misc. (N. Y.) 242. 45 N. Y. S. 795; Johnson v. Clark. 23 Misc. (N. Y.) 346, 51 N. Y. S. 238; Brown v. McCune, 7 N. Y. Super. Ct. 224; Carolina Inter- state &c. Assn. V. Black, 119 N. Car. 323, 25 S. E. 975. 527 INFANTS. 316 of age when the obHgation of the contract is sought to be en- forced against him.'^ In accordance with the above rule it has been held that an infant is estopped to bring an action for the rescission of his executed contract or cancelation of his deed of conveyance where he misrepresented his age,^^ Thus an infant who conveys land falsely representing himself to be of age has been denied the right to have the deed set aside on the ground of infancy.^* ^"Commander v. Brazil, 88 Miss. 668, 41 So. 497, 9 L. R. A (N. S.) 1117. The language of the text is the language of the case last cited. In that case it is said : "We do not hold that an executory contract may be en- forced against an infant who falsely represents himself to be of age, un- less some damage has been done to the party with whom he contracts. We do not hold that an infant is es- topped by his deed merely. We do not hold that any sort of a contract may be enforced against an infant at any time on account of his false as- sertion that he is of age, unless the age and appearance indicate such years of maturity as the person whom he deals with may well be deceived by it." In the same case a concurring opinion said : "Recoiling from the multitude of undistinguishable dis- tinctions in the books, I take the law to comport with what is plainly right. Infants are shielded from their own improvidence, and their contracts, as to them, are of no force except for necessaries. But when a minor whose appearance justifies belief in such statement induces a contract, which is reasonable, by false assurances that he is of the age of majority, he should be, and is, estopped to repudi- ate it, and should be compelled to carry it out, or to fully restore the status quo by returning what he got and making compensation if he has wasted it." (The above was termed very unwise dictum in the case of Lake v. Perry, 95 Miss. SSO, 49 So. 569.) Ferguson v. Bobo, 54 Miss. 121 ; Ostrander v. Quin, 84 Miss. 230, 36 So. 257, 105 Am. St. 426; Har- seim v. Cohen (Tex. Civ. App.), 25 S. W. 977; Kilgore v. Jordan, 17 Tex. 341. See also, U. S. Investment Co. V. Ulrickson, 84 Minn. 14, 86 N. W. 613, 87 Am. St. 326; Pemberton B. & L. Assn. V. Adams, 53 N. J. Eq. 258, 31 Atl. 280. *• Schmitheimer v. Eiseman, 7 Bush (Ky.) 298; County Board of Education v. Hensley (Ky.), 144 S. W. 63; Ryan v. Growney, 125 Mo. 474, 28 S. W. 189. Compare the fore- going case with Ridgeway v. Her- bert, 150 Mo. 606, 51 S. W. 1040, 73 Am. St. 464; Hayes v. Parker, 41 N. J. Eq. 630, 7 Atl. 511. " Schmitheimer v. Eiseman, 7 Bush (Ky.) 298 (infant made oath that she was of age) ; Damton v. Commonwealth, 110 Ky. 268, 22 Ky. L. 1717, 61 S. W. 459, 96 Am. St. 453. In the above case an infant son conveyed land to his father in order that he might qualify as surety on a bond. The deed recited the considera- tion for which it was given and the son testified in open court that he was of age. Later suit was brought against the father on the bond. The son then sought to avoid the deed on the ground of infancy. He was held estopped. Ingram v. Ison, 26 Ky. Law 48, 80 S. W. 787. In the above case the infant lacked only about a month of being of age; he was mar- ried, had two children; he appeared to be, and the other party supposed him to be, of age. The infant was held estopped to deny the validity of his deed. Where an infant has con- veyed land for a reasonable price, representing at the time that he was of age, and thus induced the grantee to part with the consideration, the trade being fairly made and the grantee having no notice that the grantor was under age, the infant is bound by his deed. This principle does not apply when the grantee § 317 CONTRACTS. 528 No estoppel can arise against the infant because of such mis- representation when it appears that the other party was not in fact deceived,^^ nor where the misrepresentation was made to the agent of the other party, the agent knowing the misrepresentation to be false.^^ It must appear that the adult party both knew of and relied on the statement made by the infant that he was of age.^' Nor can the other party successfully set up an estoppel on the part of the infant when such other party does not claim title through or under the instrument executed by the infant.^^ § 317. Active concealment — Action in tort. — Cases of an- other class hold that an infant is not estopped to assert infancy by the fact that he has represented himself to be of full age, but that such misrepresentation or other tort may give rise to an action in deceit for the fraud practiced, this being the only form of re- lief granted.^' Thus, in case the infant is a bailee for hire, he is knows or has reason to believe that the grantor is under age. This was a suit to quiet title brought by one to whom the infant had conveyed after majority. Asher v. Bennett, 143 Ky. 361, 136 S. W. 879. See, however, Wilson v. Wilson, 20 Ky. L. 1971, SO S. W. 260. In the above case it appears that an in- fant daughter conveyed to her father her undivided interest in certain real estate, the deed containing recitals to the effect that the daughter was of age. The father then mortgaged the property to the University of Kentucky. It appears that the daugh- ter was a student in such school and that the matriculation record showed her to be only seventeen years of age, and under the circumstances it was held that she was not estopped to disaffirm the deed to her father. ""Watson v. Billings, 38 Ark. 278, 42 Am. Rep. 1; Putnal v. Walker, 61 Fla. 720, 55 So. 844, 36 L. R. A. (N. S.) 33 and note; Bradshaw v. VanWinkle, 133 Ind. 134, 32 N. E. 877; Mathers v. Mathers, 23 Ky. Law 2159, 66 S. W. 832; Ridgeway V. Herbert, 150 Mo. 606, 51 S. W. 1040, 1Z Am. St. 464. ™ Charles v. Hastedt, 51 N. J. Eq. 171, 26 Atl. 564; International Text- Book Co. V. Doran, 80 Conn. 307, 68 Atl. 255. In the above case the in- fant made the misrepresentation at the direction of the plaintiff's agent. '' Bradshaw v. Van Winkle, 133 Ind. 134, 32 N. E. 877 ; Cobbey v. Buchan- an, 48 Nebr. 391, 67 N. W. 176. ^'Lacy V. Pixler, 120 Mo. 383, 25 S. W. 206. The infant will be held to a strict proof of his nonage. Davis V. Coan, 14 La. 257. '' Rice V. Boyer, 108 Ind. 472, 9 N. E. 420, 58 Am. Rep. S3; Hall v. Butterfield, 59 N. H. 354, 47 Am. Rep. 209; Eaton v. Hill, 50 N. H. 235, 9 Am. Rep. 189; Fitts v. Hall, 9 N. H. 441; Eckstein v. Frank, 1 Daly (N. Y.) 334; Wallace v. Morss, 5 Hill (N. Y.) 391; New York Bldg. Loan Banking Co. v. Fisher, 23 App. Div. (N. Y.) 363, 48 N. Y. S. 152. The major premise of the above cases is, "An infant is liable for his torts." From this it is argued that being liable for his torts he is liable for those torts growing out of a con- tractual relation when such liability can be enforced without either directly or indirectly enforcing the contract. "The test and only satisfactory test is supplied by the answer to the ques- tion. Can the infant be held liable without directly or indirectly enforc- ing his promise?" Rice v. Boyer, 108 Ind. 472, 9 N. E. 420, 58 Am. Rep. 529 INFANTS. § 317 liable for wilful injury inflicted on the property." But the infant is not liable for his fraudulent warranty of goods sold by him." Nor is the infant liable for mere negligence in the performance of his contract either on the part of himself" or his agent." Before the infant will be liable injury must result from his wilful and deliberate act.** In cases of this character the infant is usually held to have rescinded his contract by some word or act, in which case his subsequent use of the property and the damage resulting therefrom amounts to trover and conversion for which the infant is liable. *° S3. See in this connection: Brooks v. Sawyer, 191 Mass. ISl, 76 N. E. 953, 114 Am. St. 594, and Slayton v. Barry, 175 Mass. 513, 56 N. E. 574, 49 L. R. A. 560, 78 Am. St. 510. These cases hold that, "The fraudulent act, to charge him (the infant), must be wholly tortious; and a matter arising ex contractu, though infected _ with fraud, cannot be changed into a tort in order to charge the infant in trover or case by a change in the form of the action." ■■"Furnis v. Smith, Rolle Abridg- ment 530; Denning v. Nelson, 1 Ohio Dec. 503; Peigne v. Sutcliff, 4 Mc- Cord (S. Car.) 387, 17 Am. Dec. 756; Vasse v. Smith, 6 Cranch (U. S.) 226, 3 L. ed. 207. "Howlett V. Hoswell, 4 Camp. 118; Brown v. Dunham, 1 Root (Conn.) 272; Green v. Greenbank, 2 Marsh. (Ky.) 485; Prescott v. Norris, 32 N. H. 101; West v. Moore, 14 Vt. 447, 39 Am. Dec. 235. See, however, Morrill v. Adan, 19 Vt. 505, in which it is held that if the infant ratifies his contract of sale after reaching majority and sues to recover the sale price he thereby ratifies his warranty and infancy is therefore no defense to the defendant's set-off for the breach of warranty. See also, as contrary to the general rule stated Word V. Vance, I Nott. & McC. (S. Car.) 197, 9 Am. Dec. 683. " Jennings v. Rundall, 8 T. R. 335 ; Lowery v. Cate, 108 Tenn. 54, 64 S. W. 1068, 57 L. R. A. 675, 91 Am. St. 744. ■"Burns v. Smith, 29 Ind. App. 181, 64 N. E. 94, 94 Am. St. 268. "Eaton v. Hill, 50 N. H. 235, 9 Am. Rep. 189. 34 — Contracts, Vol. I "For two celebrated English cases on this subject, see Burnard v. Hag- gis, 14 C. B. (N. S.) 45, 9 Jur. (N. S.) 132S, 11 Weekly Rep. 644. In the above case the infant hired the horse for riding on the road. He was used as a jumper and killed. The infant was held liable. Walley v. Holt, 35 L. T. R. (N. S.) 631, in which the court said: "The over- driving and flogging, and all that was done by the defendant, by which the plaintiff's mare was injured, was ultra the contract altogether, and con- stituted a separate and independent tort on his part, to which * * * the plea of infancy is no defense." Homer V. Thwing, 3 Pick. (Mass.) 492. In the above case the court said : "The driving of the horse beyond the place to which the defendant had permis- sion to go was a conversion and trover is the proper remedy." In this case it appears that the infant drove the horse beyond the place he had hired it to drive to. This case is ex- plained in Slayton v. Barry, 175 Mass. 513, 56 N. E. 574, 78 Am. St. 510. Churchill v. White, 58 Nebr. 22, 78 N. W. 369, 76 Am. St. 64 (drove horse beyond place he hired it to drive) ; Campbell v. Stakes, 2 Wend. (N. Y.) 137, 19 Am. Dec. 561 (held liable for hard and cruel usage of a horse) ; Fish v. Ferris, 3 E. D. Smith (N. Y.) 567 (case similar to the one just cited) ; Moore v. Eastman, 1 Hun (N. Y.) 578; Freeman v. Boland, 14 R. I. 39, 51 Am. Rep. 340; Towne v. Wiley, 23 Vt. 355, 56 Am. Dec. 85. See also, Elder v. Woodruff Hardware &c. Co., 9 Ga. App. 484, 71 S. E. 806, holding that where prop- erty was sold to an infant under a § 3l8 CONTRACTS. 53O While as has already been seen an infant's contract of marriage is voidable" yet if the promise is made the means to accomplish a wrong, such as seduction, the infant is liable for the tort/' On the same principle a vendor who was an old man has been held entitled to recover property sold to an infant when it appears that such infant vendee caused the vendor to become intoxicated and then negotiated the sale, giving his note in payment.** § 318. Action to compel a reconveyance. — The equitable maxim that "he who comes into equity must come in with clear hands," has also been applied to a case in which it appears that the infant misrepresented his age and then sought to compel a reconveyance without a restoration of what had been received by him.*" And many of the courts have been less inclined to grant the infant affirmative relief in such cases than they are to permit him to use his infancy as a defense. § 319. Active misrepresentation, liability for false pretense. — It has been held in at least one jurisdiction that an infant may be subjected to a criminal prosecution for obtaining goods under false pretense, where he represents himself to be over twenty-one years of age, when in fact he is not, if such representation is made for the fraudulent purpose of inducing the person to enter into contract by which the vendor re- 12 S. E. 671 (suit by woman se- tained title until a note given in pay- duced). ment therefor was paid and the in- *° Walker v. Davis, 1 Gray (Mass.) fant sold the buggy to another an S06. , action in trover might be maintained " International Land Co. v. Mar- against the infant's vendee and that shall, 22 Okla. 693, 98 Pac. 951, 19 had the infant been defendant the L. R. A. (N. S.) 1056. In the above action would have been maintainable case it appears that the infant made against him. Ray v. Tubbs, 50 Vt. affidavit that he was twenty-one years 688, 28 Am. Rep. 519. See, contra, of age in order to enable him to sell however, on practically the same his land and obtain the purchase- facts. Schenk v. Strong, 4 N. J. L. price. On Dec. 26, 1905, part of the 97; Penrose v. Curren, 3 Rawle (Pa.) purchase-price was paid him. On 351, 24 Am. Dec. 356; Wilt v. Welsh, Dec. 27, 1905, the infant's mother in- 6 Watts (Pa.) 9. formed defendant that he was under *■ See, ante, § 293 note 40. age. On December 28, 1905, a further "Hawk V. Harris, 112 Iowa 543, payment was made him. Held, the 84 N. W. 664, 84 Am. St. 352 (in the infant would not be permitted to in- ibove case the suit was by the par- voke the aid of equity to cancel the '?nt) ; Becker v. Mason, 93 Mich. 336, deed without offering to refund the 53 N. W. 361 (suit by woman se- money so obtained. See, however, duced) ; Fry v. Leslie, 87 Va. 269, Tobin v. Spann, 85 Ark. 556, 109 S. W. 534, 16 L. R. A. (N. S.) 672n, 53^ INFANTS. § 320 a contract or engagement that he would not have entered into if he had known that the person was an infant and the person to whom the statement is made is induced to, and does, part with his money or property on the faith of it.**" § 320. Summary. — It is believed the law, or the state of the law, on this somewhat confusing subject may be sitmmarized as follows. An infant is not estopped either in law or equity from avoiding his contract from the mere fact that he did not dis- close his minority at the time of the formation of the agreement notwithstanding the other party believed him to be an adult and dealt with him on that supposition.^^ Some jurisdictions while permitting the infant to avoid his contract so induced yet hold him liable for the tort^^ although such cases are in the minority.'* It is held, however, by a growing class of cases that if an infant actively conceals his nonage the other party, believing and relying on the minor's false representation relative thereto, and if his appearance justifies a belief that he has reached his majority, such infant is estopped to plead infancy either as a defense in an action to enforce the terms of the agreement or affirmatively in an action brought by the infant to set it aside." "" Commonwealth V. Ferguson (Ky.), E. 265, 7 Am. St. 418. See also, 121 S. W. 967, 24 L. R. A. (N. S.) cases cited ante, § 316, note 31. 1101. In the above case the defend- °^See ante, § 317. ant represented himself to be over "'Johnson v. Pie, 1 Lev. 169, 1 twenty-one years of age, and there- Sid. 258, 1 Keb. 905; Grove v. Nevill, by induced another party to buy a 1 Keb. 778; Jennings v. Rundall, 8 piece of real estate from him for T. R. 335 ; Green v. Greenbank, 2 which they paid $2,400. For other Marsh (Ky.) 485 ; Price v. Hewett, 8 cases somewhat similar in principle Exch. 146; Wright v. Leonard, 11 C. see Vinson v. State, 124 Ga. 19, 52 B. (N. S.) 258; De Roo v. Foster, 12 S. E. 79; Anthony v. State, 126 Ga. C. B. (N. S.) 272; Brown v. Dun- 632, 55 S. E. 479; People v. Kendall, ham, 1 Root (Conn.) 272; Geer v. 25 Wend. (N. Y.) 399, 37 Am. Dec. Hovy, 1 Root (Conn.) 179; Burns v. 240; Lively v. State (Tex. Crim. Hill, 19 Ga. 22; Brooks v. Sawyer, App.), 74 S. W. 321. See also, Rex 191 Mass. 151, 76 N. E. 953, 114 Am. V. Simmonds, 4 Cox C. C. 277; 1 St. 594; Slayton v. Barry, 175 Mass. Hawk. Pleas of the Crown, 345, § 6, 513, 56 N. E. 574, 49 L. R. A. 560, note 2. 78 Am. St. 510; Merriam v. Cunning- "Stikeman v. Dawson, 1 De Gex ham, 11 Cush. (Mass.) 40; Wilt v. & S. 90- Baker v. Stone, 136 Mass. Welsh, 6 Watts (Pa.) 9; Kilgore v. 405- Brantley v. Wolf, 60 Miss. 420. Jordan, 17 Tex. 341- Nash v. Jewett, See also, Davidson v. Young, 38 111. 61 Vt. 501, 18 Atl. 47, 4 L. R. A. 561, 145- Pyle V. Cravens, 4 Litt. (Ky.) 15 Am. St. 931; Gilson v. Spear, 38 17- Price V. Jennings, 62 Ind. Ill; Vt. 311, 88 Am. Dec. 659. Alvey V. Reed, 115 Ind. 148, 17 N. "See ante, § 316. § 3^1 CONTRACTS. 532 Equity early evinced a tendency to hold the infant responsible for any contract that he may have induced by his misrepresenta- tion as to his age when the circumstances were such that the other party might reasonably believe such representation.'^^ But not- withstanding this early tendency some jurisdictions still deny that minors may estop themselves from pleading infancy by a misrep- resentation of their age or else so limit the rule as to amount to a nullification thereof.'^" Nevertheless equity will as a general rule regard the circumstances surrounding the transaction, the appear- ance of the minor, his intelligence, the character of his repre- sentation, the advantage he has gained by the fraudulent repre- sentation and the disadvantage to which the person deceived has been put by him in determining whether he should be permitted to invoke successfully the plea of infancy.^^ § 321. Ratification. — The valid contracts of an infant need not be ratified ; they cannot be avoided. His void contracts can- not be ratified."^ It follows that only an infant's voidable con- tract need or can be ratified. The term ratification presupposes that the contract was not absolutely binding and on the other hand that it was not entirely void. It is also obvious that such agree- ment can only be ratified after the infant has reached his major- ity. An attempted ratification prior to that time would be subject °=See Clare v. Bedford, 13 Vin. L. R. A. (N. S.) 1117. The case Abr. 536; Harming v. Ferrers, 1 Eq. of Grauman &c. Co. v. Krienitz, Cas. Abr. 356; Louch v. Parsons, 3 142 Wis. 556, 126 N. W. 50, lays Burr. 1794. down the rule that an infant is "" Tobin V. Spann, 85 Ark. 556, 109 estopped only when the three f ollow- S. W. 534, 16 L. R. A. (N. S.) 672n; ing elements are present: (1) Actual Watson V. Billings, 38 Ark. 278, 42 ability to exercise discretion on the Am. Rep. 1; Lackraan v. Wood, 25 part of the infant; (2) actual fraud Cal. 147; Wieland v. Kobick, 110 111. practiced by him; (3) a necessity 16, 51 Am. Rep. 676; Carolina Inter- that the transaction be of a beneficial state &c. Loan Assn. v. Black, 119 nature to the infant. Applying the N. Car. 323, 25 S. E. 975; Mills v. above rule the court held that the Rodgers, 3 Western Law Monthly infant was not estopped to deny his (Ohio) 262; Stoolfoos v. Jenkins, 12 contract as accommodation endorser Serg. & R. (Pa.) 399; Williams v. since it was not for his benefit. Baker, 71 Pa. 476; Sims v. Ever- "Infants are not estopped, unless hardt, 102 U. S. 300, 26 L. ed. 87. their conduct has been intentional See also, Rimdle v. Spencer, Q Mich, and fraudulent." Harper v. Utsey 189, 34 N. W. 548. See ante, § 317. (Tex. Civ. App.), 97 S. W. 508. "Hayes v. Parker, 41 N. J. Eq. " Trueblood v. Trueblood, 8 Ind. 630, 7 Atl. 511. See also. Commander 195, 65 Am. Dec. 756. V. Brazil, 88 Miss. 668, 41 So. 497, 9 533 INFANTS. § 322 to the same infirmity as the contract itself and would not prevent a subsequent disaffirmance/" Not only must the infant have reached the age of tvi^enty-one but he must not be otherwise incapacitated. A ratification is valid only when made by one competent to contract and free from restraint. It follows that a ratification after majority by one under guardianship is ineffectual, the statute declaring the con- tract of the person so situated void."" It is frequently said that the privilege of either disaffirming or ratifying the agreement is personal to the infant and this is of course true. However, his personal representatives may ratify his contract after his death."' Not only this, but they may affirm the agreement at a time prior to that at which the infant would have attained his majority had he lived."^ Certain cases contain dictum to the effect that privies in estate with an infant may take advantage of the privi- lege of infancy.*" This, however, is erroneous, but privies in relationship may take advantage of the infant's disaffirmance after he has in fact disaffirmed."* § 322. Ratification — What amounts to. — Having indicated by whom and at what time ratification may be made, it remains to determine how it may be done. The affirmance may be accom- plished in three ways, which are : by voluntary express words " Sanger v. Hibbard, 104 Fed. 4SS, affirm a contract of his infant ward 43 C. C. A. 635 ; Dana v. Coombs, 6 after such ward has reached his ma- Greenl. (Maine) 89, 19 Am. Dec. jority, see Chandler v. Simmons, 97 194; Chandler v. Simmons, 97 Mass. Mass. 508, 93 Am. Dec. 117. 508, 93 Am. Dec. 117; Corey v. Bur- "^ White v. Flora, 2 Over. (Tenn.) ton, 32 Mich. 30 ; Ridgeway v. Her- 426 ; Beeler v. Bullitt, 3 A. K. Marsh, bert, 150 Mo. 606, 51 S. W. 1040, 73 (Ky.) 280, 13 Am. Dec. 161 ; Jackson Am. St. 464; Bank of Silver Creek v. Burchin, 14 Johns. (N. Y.) 124; V. Browning, 16 Abb. Pr. (N. Y.) Domminck v. Michael, 6 N. Y. Super. 272; Cheshire v. Barrett, 4 McCord Ct. 374; Nelson v. Eaton, 1 Redf. (S. Car.) 241, 17 Am. Dec. 735; Sur. (N. Y.) 498. O'Dell V. Rogers, 44 Wis. 136. "Harris v. Cannon, 6 Ga. 382; "Chandler v. Simmons, 97 Mass. Wimberly v. Jones, 1 Ga. Dec. 91; 508, 93 Am. Dec. 117. See also, Mc- Williams v. Norris, 2 Litt. (Ky.) Carty v. Carter, 49 111. 53, 95 Am. 157; Breckenridge's Heirs v. Orms- Dec. 572; Sims v. Everhardt, 102 U. by, 1 J. J. Marsh. (Ky.) 236, 19 Am. S. 300, 26 L. ed. 87. Dec. 71 ; Jackson v. Carpenter, 11 "Jefford's Admr. v. Ringgold, 6 Johns. (N. Y.) 539; Jackson v. Bur- Ala. 544 ; Shropshire v. Burns, 46 Ala. chin, 14 Johns. (N. Y.) 124; Den 108; Bozeman v. Browning, 31 Ark. v. Stowe, 2 Dev. & Bat. (N. Car.) 364. 320; McGill v. Woodward, 3 Brev. "'ShroDshire v. Burns, 46 Ala. 108. (S. Car.) 401. As to the right of a guardian to 323 CONTRACTS. 534 of ratification, by acts and conduct which clearly evince an inten- tion to confirm the agreement, and by failure to disaifirm the con- tract within a reasonable time after reaching full age where such omission is prejudicial to the interests of the other party, or when not prejudicial, failure to disaffirm within the statutory period of limitation. § 323. Express ratification. — The foregoing methods of ratification will be briefly discussed in the order named. No particular form of words is necessary to make a confirmation of the agreement entered into by a person when an infant after he attains his majority, but they must import an unequivocal recog- nition and confirmation of the previous engagement though they need not amount to a direct promise to pay. The language used must show a willingness and intention to fulfil the contract.''^ A mere acknowledgment is not sufficient to constitute a rati- fication."® Thus it has been held that there was no ratification "Thrupp V. Fielder, 2 Esp. 628; Catlin V. Haddox, 49 Conn. 492, 44 Am. Rep. 249; Bennett v. Collins, 52 Conn. 1; Wilcox v. Roath, 12 Conn. 550; Benham v. Bishop, 9 Conn. 330, 23 Am. Dec. 358; Martin V. Byrom, Dud. (Ga.) 203; Sayles V. Christie, 187 111. 420, 58 N. E. 480 ; Barlow v. Robinson, 174 111. 317, 51 N. E. 1045; Conklin v. Ogborn, 7 Ind. 553 ; Fetrow v. Wiseman, 40 Ind. 148; Smith v. Mayo, 9 Mass. 62, 6 Am. Dec. 28; Martin v. Mayo, 10 Mass. 137, 6 Am. Dec. 103 ; Jack- son V. Mayo, 11 Mass. 147, 6 Am. Dec. 167; Whitney v. Dutch, 14 Mass. 457, 7 Am. Dec. 229; Ford v. Phil- lips, 1 Pick. (Mass.) 202; Barnaby V. Barnaby, 1 Pick. (Mass.) 221; Thompson v. Lay, 21 Mass. (4 Pick.) 48, 16 Am. Dec. 325 ; Peirce v. Tobey, S Mete, (Mass.) 168; Smith v. Kelley, 13 Mete. (Mass.) 309; Proc- tor V. Sears, 4 Allen (Mass.) 95; Lynch v. Johnson, 109 Mich. 640; €1 N. W. 908; Baker v. Kennett, 54 Mo. 82; Wright v. Steele, 2 N. H. 51; Hale v. Gerrish, 8 N. H. 374: Hoit V. Underbill, 9 N. H. 436, 32 Am. Dec. 380, second appeal, 10 N. H. 220, 34 Am. Dec. 148; Tibbets v. Gerrish, 25 N. H. 41, 57 Am. Dec. 307; New Hampshire Mut. F. Ins. Co. V. Noyes, 32 N. H. 345; Alex- ander V. Hutcheson, 9 N. Car. 535 ; Dunlap V. Hales, 47 N. Car. 381; Turner v. Gaither, 83 N. Car. 357, 35 Am. Rep. 574; Hinely v. Margaritz, 3 Pa. St. 428; Chambers v. Wherry, 1 Bail. (S. Car.) 28; Reed v. Bo- shears, 4 Sneed (Tenn.) 118; Hatch V. Hatch's Estate, 60 Vt. 160, 13 Atl. 791; Ward v. Scherer, 96 Va. 318, 31 S. E. 518. "Thrupp V. Fielder, 2 Esp. 628; Bennett v. Collins, 52 Conn. 1 ; Cat- lin V. Haddox, 49 Conn. 492, 44 Am. Rep. 249; Sayles v. Christie, 187 111. 420, 58 N. E. 480; Conklin v. Og- born, 7 Ind. 553 ; Heady v. Boden, 4 Ind. App. 475, 30 N. E. 1119; Bar- naby V. Barnaby, 1 Pick. (Mass.) 221 ; Ford V. Phillips, 1 Pick. (Mass.) 202; Thompson v. Lay. 4 Pick. (Mass.) 48, 16 Am. Dec. 325; Mayer V. McLure, 36 Miss. 389, 72 Am. Dec. 190; Hoit V. Underbill, 9 N. H. 436, 32 Am. Dec. 380, second appeal, 10 N. H. 220, 34 Am. Dec. 148; Hale V. Gerrish, 8 N. H. 374 ; Bank of Sil- ver Creek v. Browning, 16 Abb. Pr. (N. Y.) 272; Bigelow v. Grannis, 2 Hill (N. Y.) "120; Gbodsell v. Myers, 3 Wend. (N. Y.) 479; Hine- 535 INFANTS. § 323 where one said of a note he had made during his minority that "if I ever get so that I could (pay) without inconvenience to my- self" he would settle but that he would not promise to pay within one year or ten years or at any time."'^ It has been held also that there was no ratification where it was merely stated that the plaintiff would get his pay, this statement being accompanied with a refusal to give a note/* On the other hand, the words "I do ratify and confirm the debt,""* "all that is justly due shall be paid,"'" "or to pay a promissory note" if he signed it,''^ have been held sufficient as a ratification. Moreover, the new promise or confirmation is insufficient if made to a stranger. It must be made to the other party, his agent or attorney.''' The words of ratification need not be express in their charac- ter. All that is necessary is that the erstwhile infant expressly agrees to ratify his contract, not by doubtful acts necessarily, but by words or in writing which imports a recognition and a con- ly V. Magaritz, 3 Pa. St. 428; Chand- ler V. Glover, 32 Pa. 509; Steele v. Poe, 79 S. Car. 407, 60 S. E. 951. "Bresse v. Stanly, 119 N. Car. 278, 25 S. E. 870. To same effect, Dunlap V. Hales, 47 N. Car. 381. For similar cases see the following: A statement to the effect that he owed the plaintiff but was unable to pay him; he would, however, en- deavor to get his brother to be bound with him has been held not to amount to a renewal of the promise [Ford vT Phillips, 1 Pick. (Mass.) 202], or words to the effect that "that his brother ought to have paid the note; that the writ should not go to court; that it should be set- tled; and that he would_ see his bro- ther who ought to pay it," and after the writ was returned, "that he meant to go to jail on it," have been held insufficient. Tappan v. Abbot, 1 Pick. (Mass.) 203. "'Hale V. Gerrish, 8 N. H. 374. The clatase in a will whereby the testator provided that all his just debts should be paid has also been held no answer to a plea of infancy. Smith V. Mayo, 9 Mass. 62, 6 Am. Dec. 28; Martin v. Mayo, 110 Mass. 137, 6 Am. Dec. 103; Jackson v. Mayo, 11 Mass. 147, 6 Am. Dec. 167; Merchants &c. Co. v. Grant, 2 Edw. Ch. (N. Y.) 544. °° Thompson v. Lay, 21 Mass. (4 Pick.) 48, 16 Am. Dec. 325. '"Wright V. Steele, 2 N. H. 51. "Tibbets V. Gerrish, 25 N. H. 41, 57 Am. Dec. 307. "Heady v. Boden, 4 Ind. App. 475, 30 N. E. 1119; Sayles v. Christie, 187 111. 420, 58 N. E. 480; Mayer v. Mc- Lure, 36 Miss. 389, 72 Am. Dec. 190; Hoit V. Underbill, 9 N. H. 436, 32 Am. Dec. 380, second appeal, 10 N. H. 220, 34 Am. Dec. 148; Goodsell V. Myers, 3 Wend. (N. Y.) 479; Bigelow V. Grannis, 2 Hill (N. Y.) 120; Chandler v. Glover, 32 Pa. 509. A new promise made to the plain- tiff's attorney to whom the note had been sent for collection is sufficient as a ratification. Hodges v. Hunt, 22 Barb. (N. Y.) ISO. It has also been held, where one left a note with his agent for collection, who in turn gave it to his clerk whom he directed to present it for pay- ment, that such clerk is not a stranger and a promise made to him is binding. Mayer v. McLure, 36 Miss. 389, 72 Am. Dec. 190. § 324 CONTRACTS. 536 firmation of his promise." If the new promise is conditional or is not to be binding until the happening of a contingency, it must be shown that the condition on which the promise was made has been fulfilled. Thus it has been held that where a promise was made to pay when able there could be no recovery thereon without proof of the ability to pay.'* A partial promise, that is to say, a promise to pay or perform a part of the original obliga- tion, is binding only to the extent of the new promise."* § 324. When ratification must be in writing. — In the ab- sence of any statutory provision requiring that the ratification be made in writing the confirmation may be verbal, notwithstanding the contract ratified be a deed of conveyance or an instrument un- der seal or in fact any contract required to be in writing.'" But, if there is a statute that requires the ratification to be in writing and the case falls within the statute the promise, or ratification must, of course, be in writing; a verbal promise will not then suffice." Thus it has been held by the Supreme Court of Vir- '= Whitney v. Dutch, 14 Mass. 457, 7 Am. Dec. 229. "Cole V. Saxby, 3 Esp. 159; Kend- rick V. Neisz, 17 Colo. 506, 30 Pac. 245; Thompson v. Lay, 4 Pick. (Mass.) 48, 16 Am. Dec. 325; Proc- tor V. Sears, 4 Allen (Mass.) 95; Peacock v. Binder, 57 N. J. L. 374, 31 Atl. 215 ; Everson v. Carpenter, 17 Wend. (N. Y.) 419; Bresee v. Stan- ly, 119 Ni Car. 278, 25 S. E. 870; Chandler v. Glover, 32 Pa. 509. See also, Martin v. Mayo, 10 Mass. 137, 6 Am. Dec. 103; Whitney v. Dutch, 14 Mass. 457, 7 Am. Dec. 229. In the above case it was held that a promise to pay on his return home was sufficient. "Minock v. Shortridge, 21 Mich. 304; Houlton v. Manteuffel, 51 Minn. 185, 53 N. W. 541 ; Edgerly v. Shaw, 25 N. H. 514. "Jefford's Admr. v. Ringgold, 6 Ala. 544; West v. Penny, 16 Ala. 186; Vaughan v. Parr, 20 Ark. 600; Phillips V. Green, 5 T. B. Mon. (Ky.) 344; Wheaton v. East, 5 Yerg. (Tenn.) 41, 26 Am. Dec. 251; Stokes V. Brown. 4 Chand. (Wis.) 39, 3 Pinney (Wis.) 311. "Hartley v. Wharton, 11 Ad. & El. 934; Stern v. Freeman, 4 Mete. (Ky.) 309; Lamkin & Foster v. Ledoux, 101 Maine 581, 64 Atl. 1048, 8 L. R. A. (N. S.) 104n; Neal v. Berry, 86 Maine 193, 29 Atl. 987; Bird V. Swain, 79 Maine 529, 11 Atl. 421; Thurlow v. Gilmore, 40 Maine 378; Barnes v. American Soda Foun- tain Co. (Okla.), 121 Pac. 250; Steele V. Poe, 79 S. Car. 407, 60 S. E. 951 ; Ward V. Scherer, 96 Va. 318, 31 S. E. 518. As to what amounts to a suffi- cient ratification see the following instances: "Any written instrument signed by the party, which in the case of adults would have amounted to the adoption of the act of a party acting as agent, will, in the case of an infant, who has attained his ma- jority, amount to a ratification." Har- ris V. Wall, 1 Ex. 122. "A rati- fication in writing must either in terms or on the fair construction of the instrument refer to the contract which is to be ratified, and treat it as a subsisting contract." Thro- well V. Shenton, L. R. 8 Ch. D. 318. A promise to pay "as a debt of honor" a debt guaranteed by the promisor during infancy has been held not such a ratification as is re- 537 INFANTS. § 325 ginia that a conditional promise to pay an unidentified open account does not comply with the statutes of that state requiring that one's ratification of a contract during infancy must be in writing and signed.'^ However, a written promise to pay an obligation contracted during infancy has been held sufficient, notwithstanding it did not contain the name of the creditor, the amount due, or the date, parol evidence being admissible to supply these particulars.'" And it must be borne in mind, that contracts may be confirmed by other means than voluntary, spoken or written ratifica- tion. They may be affirmed by conduct or laches. Nor do those statutes providing that the affirmation must be in writing prevent a contract from being ratified by these latter methods.^" § 325. Ratification by conduct — Retention of property. — This brings us to the second method of ratification, namely, af- firmation by conduct which evinces an intention to confirm the agreement. Various voluntary acts and conduct have been held quired by the statute. Macord v. Osborne, L. R. 1 C. P. D. 568. The words "particulars of account to the end of 1867, amounting to £162 lis. 6d. I certify to be correct and satisfactory" have been held but an acknowledgment of the debt and not a promise to pay. Rowe v. Hop- wood, L. R. 4 Q. B. 1. "No ac- tion shall be maintained whereby to charge any person upon any debt contracted during infancy, un- less such person shall have rati- fied the same by some other act than a verbal promise to pay the same; and the following acts on the part of such a person after he becomes of full age shall constitute a ratifica- tion of such debt: First, an acknowl- edgment of or promise to pay such debt, made in writing; second, a par- tial payment upon such debt; third, a disposal of part or all of the prop- erty for which such debt was con- tracted; fourth, a refusal to deliver property in his possession or under his control, for which such debt was contracted, to the person to whom the debt is due, on demand therefor made in writing." Koerner v. Wil- kinson, 96 Mo. App. SIO, 70 S. W. 509. "Ward V. Scherer, 96 Va. 318, 31 S. E. 518. It has also been held that when an infant sold a horse with a warranty of soundness and took a note which stipulated that title should remain in the vendor till paid for a written indorsement on the note which read "the within note being paid, I hereby discharge the property thereby secured," could not be con- strued as a ratification in writing of the warranty on the horse. Bird v. Swain, 79 Maine 529, 11 Atl. 421. '•Hartley v. Wharton, 11 Ad. & El. 934. ^McKamy v. Cooper, 81 Ga. 679, 8 S. E. 312; Hilton v. Shepherd, 92 Maine 160, 42 Atl. 387. The case of Lamkin & Foster v. Ledoux, 101 Maine 581, 64 Atl. 1048, 8 L. R. A. (N. S.) 104n, seems to hold that un- der the statute then in force no rati- fication would be sufficient unless in writing. The statute itself made two exceptions to this rule; they are, con- tracts for necessities or real estate of which he (the infant) has received the title and retains the benefit. § 325 CONTRACTS. 538 sufficient to amount to a ratification.'^ Thus, should the infant, after he reaches his majority, retain the possession and use of the property beyond a reasonable time, it may amount to a ratifica- tion."^ Where an infant upon reaching her majority assumed possession of the land, but refused to perform her part of the agreement, it was held that she had ratified the contract and that strict performance would be decreed against her.*^ The circum- stances may be such, however, as to preclude a ratification by such means ; thus a retention of the property by the infant after he has reached his majority cannot be said to amount to a ratifi- cation where he has done all in his power to secure a rescission, and has brought suit for that purpose.** "As to the necessity of the act be- ing voluntary, see McCarty v. Carter, 49 111. S3, 95 Am. Dec. 572; Smith v. Kelley, 13 Mete. (Mass.) 309; Tobey V. Wood, 123 Mass. 88, 25 Am. Rep. 27n; Bloomer v. Nolan, 36 Nebr. 51, 53 N. W. 1039, 38 Am. St. 690; Al- len V. Lardner, 78 Hun (N. Y.) 603, 60 N. Y. St. 768, 29 N. Y. S. 213. ''Ames Mfg. Co. v. Dykes, 111 Ala. 178, 18 So. 292, 56 Am. St. 38; Waters v. Lyons, 141 Ind. 170, 40 N. E. 662; Boody v. McKenney, 23 Maine 517; Boyden v. Boyden, 9 Mete. (Mass.) 519; Ellis v. Alford, 64 Miss. 8, 1 So. 155; Philpot v. Sandwich Mfg. Co., 18 Nebr. 54, 24 N. W. 428; Aldrich v. Grimes, 10 N. H. 194; Lynde v. Budd, 2 Paige (N. Y.) 191, 21 Am. Dec. 84; De- lano V. Blake, 11 Wend. (N. Y.) 85, 25 Am. Dec. 617. See, however, Walsh V. Powers, 43 N. Y. 23, 3 Am. Rep. 654. See also, Owens v. Phelps, 95 N. Car. 286, in which it is held that such conduct is admissible in evidence, though it is not of itself a ratification. The Georgia statute on this subject provides that, "if * * * the minor receives property or other valuable consideration, and after ar- riving at age retains possession of such property or enjoys the proceeds of such valuable consideration, such a ratification of the contract shall bind him. Wickham v. Torley, 136 Ga. 594, 71 S. E. 881. '^Kincaid V. Kincaid, 85 Hun (N. Y.) 141, 65 N. Y. St. 661, 32 N. Y. S. 476, affd., 157 N. Y. 715, S3 N. E. 1126. For other cases holding that contracts concerning realty may be affirmed by retaining possession an unreasonable length of time after reaching majority, see Cecil v. Comes Salisbury, 2 Vern. 225 ; Boody v. Mc- Kenney, 23 Maine 517; Ellis v. Al- ford, 64 Miss. 8, 1 So. 155; Baker v. Kennett, 54 Mo. 82; Roberts v. Wiggin, 1 N. H. n, 8 Am. Dec. 38; Henry v. Root, 33 N. Y. 526; Walsh V. Powers, 43 N. Y. 23, 3 Am. Rep. 654; Hook v. Donaldson, 9 Lea (Tenn.) 56; Callis v. Day, 38 Wis. 643. And see Evelyn v. Chichester, 3 Burr. 1717; Middleton v. Hoge, 5 Bush (Ky.) 478; Langdon v. Clay- son, 75 Mich. 204, 42 N. W. 805; Armfield v. Tate, 29 N. Car. 258; Ihley V. Padgett, 27 S. Car. 300, 3 S. E. 488. The principle applies to the settlement of a boundary line of land belonging to an infant during his infancy. Brown v. Caldwell, 10 Serg. & R. (Pa.) 114, 13 Am. Dec. 660; George v. Thomas, 16 Tex. 74, 67 Am. Dec. 612. An infant lessee ratifies the lease by retaining possession an unreasonable time after majority. Mahon v. O'Far- rell, 10 Ir. L. R. 527; McClure v. McClure, 74 Ind. 108; Boody v. Mc- Kenney, 23 Maine 517, Baxter v. Bush, 29 Vt. 465, 70 Am. Dec. 429. " House V. Alexander, 105 Ind. 109, 4 N. E. 891, 55 Am. Rep. 189. See also, Buchanan v, Hubbard, 96 Ind. 1; Thing v. Libbey, 16 Maine 55; Todd V. Clapp, 118 Mass. 495; Smith v. Kelley, 13 Mete. (Mass.) 309; 539 INFANTS. § 326 It has also been held that an infant, after reaching his ma- jority, must within a reasonable time disaffirm his subscription for capital stock, or he will be held to have ratified it, and will be liable to pay assessments made from the time of making his sub- scription.*" There is no question that the legislature has the right to change the common-law rule relative to ratification by retention of the goods after majority, and under such statute it has been held by the Missouri Court of Appeals that the retention of wear- ing apparel after majority did not, under the Missouri statute, amount to a ratification.*" § 326. Ratification by conduct — Sale or conversion of prop- erty. — A minor may, also, after reaching his majority, ratify his contract by selling or otherwise converting to his own use the property obtained thereby.*' Thus, if an infant purchases real estate and after he reaches his majority sells the same, he is deemed to have ratified the original purchase made during in- fancy.** Nor is there any distinction made under this rule be- tween personal and real property. If an infant purchases personal property and after coming of age sells the same, such an act of Tobey V. Wood, 123 Mass. 88, 25 Am. Maine 517; Lawson v. Lovejoy, 8 Rep. 27n; Baker v. Kennett, 54 Mo. Greenl. (Maine) 405, 23 Am. Dec. 82; Maupin v. Grady, 71 Mo. 278; 526; Henry v. Root, 33 N. Y. 526; Scott V. Scott, 29 S. Car. 414. And Kincaid v. Kincaid, 85 Hun (N. Y.) see Flexner v. Dickerson, 72 Ala. 141, 65 N. Y. St. 661, 32 N. Y. S. 318; McCarty v. Carter, 49 111. S3, 476, affd., 157 N. Y. 715, 53 N. E. 95 Am. Dec. 572; Dana v. Stearns, 3 1126; Cheshire v. Barrett, 4 McCord Cush. (Mass.) 372. (S. Car.) 241, 17 Am. Dec. 735. "Cork &c. R. Co v. Cazenove, 10 "Buchanan v. Hubbard, 119 Ind. Ad. & El. (N. S.) 935; Dublin &c. 187, 21 N. E. 538; Leathers v. Ross, R. Co. V. Black, 8 Exch. 181, 7 Rail- 74 Iowa 630, 38 N. W. 516; Middle- way & Canal Cases 434; Beardsley ton v. Hoge, 5 Bush (Ky.) 478; V. Hotchkiss, 96 N. Y. 201. As to Dana v. Coombs, 6 Greenl. (Mame) what amounts to a ratification, see 89, 19 Am. Dec. 194; Hubbard v. Cork &c. R. Co. V. Cazenove, 10 Ad. Cummings, 1 Greenl. (Maine) 11; & El. (N. S.) 935; Constantinople Thomas v. PuOis, 56 Mo. 211 ; Uecker &c. Hotel Co., L. R. 5 Ch. 302. v. Koehn, 21 Nebr. 559, 32 N. W. "Koerner v. Wilkinson, 96 Mo. 583, 59 Am. Rep. 849; Williams v. App. 510, 70 S. W. 509. Mabee, 7 N. J. Eq. 500; Lynde v. <" Curry v. St. John Plow Co., 55 Budd, 2 Paige (N. Y.) 191, 21 Am. 111. App. 82; Buchanan v. Hubbard, Dec. 84; Henry v. Root, 33 N. Y. 119 Ind 187 21 N. E. 538; Robinson 526; Walsh v. Powers, 43 N. Y. 23, V. Hoskins, 14 Bush (Ky.) 393; Hil- 3 Am. Rep. 654; Johnson v. Fur- ton V. Shepherd, 92 Maine 160, 42 nier, 69 Pa. St. 449. Atl. 387; Boody v. McKenney, 23 § Z'27 CONTRACTS. 540 ownership amounts to a ratification.*" Thus it has been held that a minor may ratify the purchase of a horse by selHng it after he reaches his majority.'" § 327. Ratification by conduct — Receiving agreed consid- eration. — In case one conveys title or other interest in prop- erty during minority, and after he has reached majority he re- ceives'^ or sues for'^ the agreed consideration, the contract is thereby ratified. Thus it has been held that if he accepts rents,'^ receives interest,"* receives part of the consideration for a mort- gage of his property"^ or the proceeds of an award,"" after reach- ing full age, he thereby ratifies the contract."' It has also been held that one ratifies a sale of land made during minority by rent- ing the land so sold from the grantee for two consecutive years after reaching his majority."^ § 328. Ratification by conduct — Miscellaneous. — Likewise, a mortgage given by an infant has been declared ratified by her ^ Shropshire v. Burns, 46 Ala. 108 ; Robinson v. Hoskins, 14 Bush (Ky.) 393; Deason v. Boyd, 1 Dana (Ky.) 45 ; Williams v. Brown, 34 Maine 594; Lawson v. Lovejoy, 8 Greenl. (Maine) 40S, 23 Am. Dec. 526; Minock v, Shortridge, 21 Mich. 304; Chesshire v. Barrett, 4 McCord (S. Car.) 241, 17 Am. Dec. 735. °° Robinson v. Hoskins, 14 Bush (Ky.) 393. "Walker v. Mulvean, 76 111. 18; Ward V. Ward, 143 Ky. 91, 136 S. W. 137; Clark v. Kidd (Ky.), 146 S. W. 1097; Keegan v. Cox, 116 Mass. 289; Ferguson v. Bell, 17 Mo. 347; Darraugh v. Blackford, 84 Va. 509 5 S E 542 »=' Morrill V. Aden, 19 Vt. SOS. See also, Barlow v. Robinson, 174 111. 317, 51 N. E. 1054 ; Carrell v. Potter, 23 Mich. in. In the above case it is held that suit after majority amounts to an affirmation of the agree- ment, but that suit by an assignee claiming under an assignment made by the infant during his minority does not amount to a ratification. ''Ashfield V. Ashfield, W. Jones 157; Smith v. Low, 1 Atk. 489; Slator V. Trimble, 14 Ir. C. L. 342. "Franklin v. Thornebury, 1 Vern. 132. "Keegan v. Cox, 116 Mass. 289. "Jones V. Phoenix Bank, 8 N. Y. 228. " See also, Hobbs v. Nashville &c. R. Co., 122 Ala. 602, 26 So. 139, 82 Am. St. 103, where it is said that if an infant, upon reaching full age and without unfairness, voluntarily re- ceives and retains the money paid her guardian under an invalid con- demnation proceeding, with a full knowledge of the facts, the other party being in possession and no ques- tion of the statute of frauds arising, such actions constitute an election to treat the transaction as valid. See, however, Scranton v. Stewart, 52 Ind. 68, in which it is held that an infant feme covert is not estopped from disaffirming a deed of her lands made jointly with her husband by the fact that after she reached her majority the grantee paid the husband a por- tion of the purchase-price, unless she knew that such purchase-pricewas un- paid and the grantee was ignorant of the fact that the grantor was an infant when she executed the deed. "Ingram v. Ison, 20 Ky. L. 48, 80 S. W, 787. 541 INFANTS. § 329 paying the interest coupon note after attaining majority."" Tlie same effect has been accorded a recital in a mortgage executed after reaching majority, that it is subject to a prior mortgage given during infancy to a third person.^ In case a minor purchases property and gives a mortgage for the purchase-money the deed and mortgage constitute one trans- action, and his affirmance of the purchase after his majority by selhng the property,^ or by other means,^ is a confirmation of the mortgage. A mortgage may also be ratified by a subsequent ac- knowledgment and redelivery after majority.* Likewise an in- fant's deed may be rendered valid ab initio by the infant, on reaching full age, taking up the old deed and reconveying by another in affirmance of it." A deed of assignment has been held to amount to a ratifica- tion." Likewise, it has been held that where a minor voluntarily continues to perform services under a contract made while a minor, and which extended for a period beyond his minority, he ratifies the agreement by continuing the service after coming of age.' § 329. Ratification by laches. — The third method of rati- fication mentioned in a preceding section is by an omission under certain circumstances to disaffirm within a reasonable time after reaching full age. It is announced by a large number "'American Mortgage Co. v. 63 N. E. 887; Young v. McKec, 13 Wright, 101 Ala. 658, 14 So. 399. Mich. 552 ; Robbins v. Eaton, 10 N. ^Losey V. Bond, 94 Ind. 67; Bos- H. 561; Kennedy v. Baker, 159 Pa. ton Bank v. Chamberlin, 15 Mass. St. 146, 28 Atl. 252; Richardson v. 220; Allen v. Poole, 54 Miss. 323; Boright, 9 Vt. 368; Callis v. Day, 38 Heinbockel v. Zugbaum, 5 Mont. 344, Wis. 643. 5 Pac. 897; Ward v. Anderson, 111 * Palmer v. Miller, 25 Barb. (N. N. Car. lis, 15 S. E. 933. Y.) 399. ^Hubbard v. Cummings, 1 Greenl. °Cox v. McGowan, 116 N. Car. 131, (Maine) 11; Dana v. Coombs, 6 21 N. E. 108. To same effect, Phil- Greenl. (Maine) 89, 19 Am. Dec. 194; lips v. Green, 5 T. B. Mon. (Ky.) Langdon v. Clayson, 75 Mich. 204, 42 344. See, however, Gaskins v. Allen, N. W. 805 ; Uecker v. Koehn, 21 137 N. Car. 426, 49 S. E. 919, in which Nebr. 559, 32 N. W. 583, 59 Am. St. it is held that a subsequent deed by 849; Lynde v. Budd, 2 Paige (N. Y.) a married woman never properly exe- 191, 21 Am. Dec. 84; Walsh v. Pow- cuted, and with no probate or privj ers, 43 N. Y. 23, 8 Am. Rep. 654. See examination taken, does not amount! also, Curtiss v. McDougal, 26 Ohio to a ratification of the deed given St. 66. during infancy. ^ American Mortgage Co. v. Dykes, ° Keller v. Cooper, 12 Ky. L. 188. Ill Ala. 178, 18 So. 292, 56 Am. St. 'McDonald v. Sargent, 171 Mass. 38; Ready v. Pinkham, 181 Mass. 351, 492, 51 N. E. 17; Spicer v. Earl, 41 § 3^9 CONTRACTS. 54:2 of cases, the statement being in many of them dictum, that an infant grantor who, after reaching full age, stands by for an un- reasonable length of time without disaffirming the conveyance, confirms the same. What constitutes a reasonable time within which a person who has executed such a deed shall disaffirm is a question of fact, depending upon the particular circumstances of each case.® It is impossible to fix any more definite limit as to what constitutes a reasonable time than to say that in no case does it extend beyond the period fixed by the statute of limitation.' Mich. 191, 1 N. W. 923, 32 Am. Rep. 152; State v. Dimock, 12 N. H. 194, 2,1 Am. Dec. 197n; Forsyth v. Hast- ings, 27 Vt. 646. "Hastings v. Dollarhide, 24 Cal. 19S; Kline v. Beebe, 6 Conn. 494; Wallace's Lessee v. Lewis, 4 Har. (Del.) 75; Nathans v. Arkwright, 66 Ga. 179; Cole v. Pennoyer, 14 111. 158; Blankenship v. Stout, 25 111. 132; Illinois Land &c. Co. v. Bonner, 75 111. 315; Keil v. Healey, 84 111. 104, 25 Am. Rep. 434; Tunison v. Cham- blin, 88 111. 378; Scranton v. Stew- art, 52 Ind. 68; Long v. Williams, 74 Ind. 115; Wiley v. Wilson, 11 Ind. 596; Stringer v. Northwestern Mut. Life Ins. Co., 82 Ind. 100; Sims v. Bardoner, 86 Ind. 87, 44 Am. Rep, 263n ; Richardson v. Pate, 93 Ind. 423, 47 Am. Rep. 374; Goodnow v. Em- pire Lumber Co., 31 Minn. 468, 18 N. W. 283, 47 Am. Rep. 798; Robinson V. Allison, 192 Mo. 366, 91 S. W. 115; O'Brien v. Gaslin, 20 Nebr. 347, 30 N. W. 274; Ward v. Laverty, 19 Nebr. 429; Scott v. Buchanan, 11 Humph. (Tenn.) 468; Matherson v. Davis, 2 Cold. (Tenn.) 443; Solser V. Barron (Tex. Civ. App.), 146 S. W. 1039 ; Bingham v. Barley, 55 Tex. 281, 40 Am. Re'p. 801; Ferguson v. Houston &c. R., 73 Tex. 344, 11 S. W. 347; Askey v. WilUams, 74 Tex. 294, 11 S. W. 1101, 5 L. R. A. 176; Groesbeck v. Bell, 1 Utah 338; Bige- low V. Kinney, 3 Vt. 353, 21 Am. Dec. 589; Richardson v. Boright, 9 Vt. 368. In the case of Bentley v. Greer, 100 Ga. 35, 27 S. E. 974, it is said: "The deed of an infant is not void, but merely voidable; and, unless dis- affirmed within a reasonable time after majority, he will be bound by it. Nor is he relieved from the duty of disafBrming it by the fact that no one is in possession of the land, claim- ing under the deed. This duty is not dependent on the other party doing anything under the deed. The maker has no right to assume that because the grantee, or some other person holding under him, does not go upon the land, no claim is made under the deed." "Sims V. Bardoner, 86 Ind. 87, 44 Am. Rep. 263n. See also, Bingham v. Barley, 55 Tex. 281, 40 Am. Rep. 801. "A reasonable time after major- ity within which to act is all that is es- sential to the infant's protection. That ten, fifteen or twenty years, or such other time as the law may give for bringing an action, is necessary as a matter of protection to him is absurd. The only effect of giving more than a reasonable time is to enable the mature man, not to correct what he did amiss in his infancy, but to specu- late on the events of the future — a consequence entirely foreign to the purpose of the rule which is solely protection to the infant. Reason, jus- tice to others, public policy (which is not subserved by cherishing defec- tive titles), and convenience, require the right of disaffirmance to be acted upon within a reasonable time. What is a reasonable time will depend on the circumstances of each particular case, and may be either for the court or for the jury to determine. Where, as in this case, there is mere delay, with nothing to explain or excuse it, or show its necessity, it will be for the court. * * * Three years and a half, the delay in this case (exclud- ing the period of the plaintiff's mi- nority, after the time within which to act had commenced to run), was 543 INFANTS. § 330 This may mean three^" or ten or more years,^^ dependent upon the number of years designated by the statutes of the various states.^^ The rule that affirmation results from an unreasonable delay is especially applicable where the grantee has made valuable im- provements on the property after the infant has reached the age of twenty-one.^* The erection of valuable improvements will not defeat the right to rescind, however, where they were made be- fore the disability of infancy was removed,^* or when the grantor was absent from the state." § 330. Laches — Statute of limitations. — There is another class of cases, however, that do not give assent to the doctrine that one will be held to have ratified his deed of conveyance un- prima facie more than a reasonable time, and prima facie the conveyance was ratified." Goodnow v. Empire Lumber Co., 31 Minn. 468, 18 N. W. 283, 47 Am. Rep. 798. See, however. Green v. Green, 69 N. Y. 553, 25 Am. Rep. 233, where it is held that mere acquiescence for three years after reaching majority does not amount to a ratification. See also. Urban v. Grimes, 2 Grant Cases (Pa.) 96. "Cole v. Pennoyer, 14 111. 158; Blankenship v. Stout, 25 111. 116; Keil V. Healey, 84 111. 104, 25 Am. Rep. 434; Sayles v. Christie, 187 111. 420, 58 N. E. 480. Prescription or adverse possession is suspended dur- ing minority as against the infant. Jenkins v. Salmen Brick & Lumber Co., 120 La. 549, 45 So. 435; Parker v. Ricks, 114 La. 942, 38 So. 687; Pennington v. Earley (N. J.), 43 Atl. 707; Winters v. Hainer, 107 Tenn. 337, 64 S. W. 44. " Combs V. Noble, 22 Ky. L. 736, 58 S. W. 707. "The minor who remains silent for ten years after his minority may be considered as having possi- bly ratified certain illegal acts o.f his own. This does not apply to_ il- legal acts of others in his name with- out the shadow of "authority." Britt V. Caldwell-Norton Lumber Co., 126 La. 155, 52 So. 251. " This is not true, however, where the grantor is laboring under some disability other than that of infancy, the other disability continuing after that of infancy has been removed. Thus where coverture prevents a wife from suing without the consent of her husband a delay of thirty-seven years has been held reasonable. Sims v. Bardoner, 86 Ind. 87, 44 Am. Rep. 263n. See also, Richardson v. Pate, 93 Ind. 423, 47 Am. Rep. 374; Mc- Morris v. Webb, 17 S. Car. 558, 43 Am. Rep. 629; Wilson v. Branch, 11 Va. 65, 46 Am. Rep. 709. "Fox V. Drewry, 62 Ark. 316, 35 S. W. 533 ; Wallace's Lessee v. Lewis, 4 Harr. (Del.) 75; Sims v. Bardoner, 86 Ind. 87, 44 Am. Rep. 255; Hart- man V. Kendall, 4 Ind. 403; Davis V. Dudley, 70 Maine 236, 35 Am. Rep. 318; Prout v. Wiley, 28 Mich. 164; Allen V. Poole, 54 Miss. 323; Dolph v. Hand, 156 Pa. St. 91, 27 Atl. 114, id Am. St. 25 ; Logan v. Gardner, 136 Pa. St. 588, 20 Atl. 625, 20 Am. St. 939; Wheaton v. East, 5 Yerger (Tenn.) 41, 26 Am. Dec. 251; Sims V. Everhardt, 102 U. S. 300, 26 L. ed. 87; Irvine v. Irvine, 9 Wall. (U. S.) 617, 19 L. ed. 800. And see McCul- lough V. Finley, 69 Kans. 705, 11 Pac. 696. "Davidson v. Young, 38 111. 145: Richardson v. Pate, 93 Ind. 423, 47 Am. Rep. 374; McClanahan v. Will- iams, 136 Ind. 30, 35 N. E. 897. '"Brantley v. Wolf, 60 Miss. 420; Birch V. Linton, 78 Va. 584, 49 Am. Rep. 381. 330 CONTRACTS. 544 less he disaffirms the same within a reasonable time after reach- ing majority. The preponderance of authority is that in deeds executed by infants mere inertness or silence, continued for a period less than prescribed by the statute of limitation, unless accompanied by affirmative acts manifesting an intention to as- sent to the conveyance, will not bar the infant's right to avoid the deed, and those confirmative acts must be voluntary.^'' The cases applying this rule concede that a lapse of time short of the statutory period may, when taken in connection with cir- cumstances other than mere silence, such as standing by and see- ing valuable improvements made upon the land, or any act incon- sistent with an intention to disaffirm, amount to a ratification or estop the grantor from avoiding the deed.^' " Eureka Company v. Edwards, 71 Ala. 248, 46 Am. Rep. 314; McCarthy V. Nicrosi, 72 Ala. 332, 47 Am. Rep. 418; Kountz v. Davis, 34 Ark. 590; Stull V. Harris, SI Ark. 294, 2 L. R. A. 741; Wells v. Seixas, 24 Fed. 82; Hoffert V. M'iUer, 86 Ky. 572, 6 S. W. 447; Boody v. McKenney, 23 Maine 517; Davis v. Dudley, 70 Maine 236, 35 Am. Rep. 318; Prout v. Wiley, 28 Mich. 164; Wallace v. Latham, 52 Miss. 291; Shipp v. McKee, 80 Miss. 741, 32 So. 281, 92 Am. St. 616; Allen v. Poole, 54 Miss. 323; Lacy V. Pixler, 120 Mo. 383, 25 S. W. 206; Peterson v. Laik, 24 Mo. 541, 69 Am. _ Dec. 441 ; Huth V. Carondelet, Marine R. &c. Co., 56 Mo. 202; Thomas v. Pullis, 56 Mo. 211; Jackson v. Carpenter, 11 Johns. (N. Y.) 539; Voorhies v. Voorhies, 24 Barb. (N. Y.) 150; Green v. Green, 69 N. Y. 553, 25 Am. Rep. 233; Den V. Stowe, 2_Dev. & B. (19 N. Car.) 320; Drake's Lessee v. Ramsey, 5 Ohio 251 ;_Hughes v. Watson, 10 Ohio 127; Cresinger v. Welch's Lessee, 15 Ohio 156, 45 Am. Dec. 565; Urban V. Grimes, 2 Grant Cas. (Pa.) 96; Tucker v. Moreland, 10 Pet (U. S.) 59, 1 Am. Lead. Cas. 224 ; Irvine v. Irvine, 9 Wall. (U. S.) 617, 19 L. ed. 800 ; Sims v. Everhardt, 102 U. S. 300, 26 L. ed. 87; Birch v. Linton, 78 Va. 584, 49 Am. Rep. 381; Wilson v. Branch, 77 Va. 65, 46 Am. Rep. 709; Birch V. Linton, 78 Va. 584, 49 Am. Rep. 381 ; Gillespie v. Bailey, 12 W. Va. 700, 29 Am. Rep. 445. See also, Barker v. Fuestal (Ark.), 147 S. W. 45. "There is no reason in principle for saying that the right to disaffirm a deed on account of infancy shall be cut off by lapse of time short of the period prescribed in the statute of limitations for bringing an action to recover the property, unless it be on the principle of estoppel, and it must be an exception to the ordinary rule if there can be an estoppel where there has been no change in the po- sition of the parties in respect to the matter in dispute, detrimental to the one who pleads the estoppel." Strin- ger V. Northwestern Mutual L. Ins. Co., 82 Ind. 100. While it is un- necessary for him to reacknowl- edge the deed or execute a new one, nevertheless, there must be some positive words or acts from which assent may be inferred. Mere ac- quiescence for a period less than that prescribed by the statute of limi- tations is insufficient. Syck v. Hel- lier, 140 Ky. 388, 131 S. W. 30. " Davis v. Dudley, 70 Maine 236, 35 Am. Rep. 318; Prout v. Wiley, 28 Mich. 164; Wallace v. Latham, 52 Miss. 291; Allen v. Poole, 54 Miss. 323; Lacy v. Pixler, 120 Mo. 383, 25 S. W. 206; Thomas v. Pullis, 56 Mo. 211; Drake's Lessee v. Ramsey, 5 Ohio 251 ; Cresinger v. Welch's Les- see, 15 Ohio 156, 45 Am. Dec. 565; Irvine v. Irvine, 9 Wall. (U, S.) 617, 19 L. ed. 800; Birch v. Linton, 78 Va. 584, 49 Am. Rep. 381; Gillespie v. Bailey, 12 W. Va. 70, 29 Am. Rep. 545 INFANTS. § 331 While it gives rise to hardships, something true of practically every case where an infant avoids his agreement, reason, as well as the weight of authority, is, perhaps, with the opinion expressed by the rule stated in this section. An infant's deed, while good until avoided, is, nevertheless, subject to disaffirmance, an infirm- ity that can be cured only by ratification or estoppel, and it is hard to see how silent acquiescence can amount to either. Rati- fication or estoppel is usually the result of an affirmative act" or at least something more than mere silence under ordinary cir- cumstances. A ratification, as the term is here used, is merely an expression by one of the methods above designated whereby an adult exercises his right to treat as valid and binding a con- tract voidable at his option, because entered into by him during infancy.^° § 331. Ratification need not be supported by an additional consideration. — Since it is in no sense the formation of a new contract, no new or additional consideration is necessary to make the ratified contract valid and binding, the original consideration being sufficient."" This would seem to be self-evident, and the proposition needs no elaboration. § 332. Ratification — Knowledge as to legal liability. — There is some conflict among authorities as to whether or not a ratification must be made with knowledge that there is no legal liability under the contract. Some of the authorities assert that any confirmatory promise or act must be given or done with full knowledge that no legal liability attaches under the contract. In 445. See also, cases cited in preced- right of an adult, having specific ing note. performance of a contract entered " This, of course, leaves out of con- into during minority, being bound by sideration the question of ratification a lapse of time, see Campbell v. Bart- by a retention of the consideration re- lett, 122 Tenn. 208, 122 S. W. 2S0, ceived. If he still has in his posses- 25 L. R. A. (N. S.) 639n. sion such consideration at the time he ""Kay v. Smith, 21 Beav. 522; Jef- reaches his majority, and continues to ford's Admr. v. Ringgold, 6 Ala. 544; retain the same, this may amount to American &c. Mortgage Co. v. Dykes, latification. See ante, § 325. If, 111 Ala. 178, 18 So. 292, 56 Am, St. after reaching majority, he does not 38; Bell v. Burkhalter (Ala.), 57 have the consideration received in So. 460; Conklin v. Ogborn, 7 Ind. his possession he cannot be said to 553; Calhoun v. Anderson, 78 Kans. ratify because retaining the consid- 749, 98 Pac. 275; Grant v. Beard, 50 eration. See post, § 346. As to the N. H. 129. 35— Contracts, Vol. I § 332 CONTRACTS. 546 many of the cases so holding, however, the rule as announced is merely dictum.^' However, it is held under the better and more modern theory that an adult's ratification is valid and binding even though made without knowledge of the fact that infancy was a defense.'^^ The principle that a ratification cannot be avoided because made without knowledge that infancy was a defense must not be confused with the rule that there is no ratification when made without knowledge of the facts. In the first instance there exists ^Harmer v. Killing, S Esp. 102; Flexner v. Dickerson, 72 Ala. 318; Eureka Company v. Edwards, 71 Ala. 248, 46 Am. Rep. 314; Fetrow v. Wiseman, 40 Ind. 148; Petty v. Rob- erts, 7 Bush (Ky.) 410; Owen v. Long, 112 Mass. 403; Baker v. Ken- nett, 54 Mo. 82; Turner v. Gaither, 83 N. Car. 3S7, 35 Am. Rep. 574 ; Dunlap V. Hales, 47 N. Car. 381; Alexander V. Hutcheson, 9 N. Car. 535; Curtin V. Patton, 11 Serg. & R. (Pa.) 305; Hinely v. Margaritz, 3 Pa. St. 428; Norris v. Vance, 3 Rich. L. (S. Car.) 164; Scott V. Buchanan, 11 Humph. (Tenn.) 468; Reed v. Boshears, 4 Sneed (Tenn.) 118; Tucker's Lessee V. Moreland, 10 Pet. (U. S.) 58, 1 Am. Lead. Cas. 224 ; Hatch v. Hatch's Estate, 60 Vt. 160, 13 Atl. 791. ^^ American jNIortgage Co. v. Wright, 101 Ala. 658, 14 So. 399; Morse v. Wheeler, 4 Allen (Mass.) 570; Ring v. Jamison, 66 Mo. 424; Anderson v. Soward, 40 Ohio St. 325, 48 Am. St. 687. "The contract of a minor, including the power, on coming of age, without any new consideration, to make the con- tract binding on him, is a trans- action sui generis, and is not strictly analogous to any other known to the law. The nature and validity of the contract depend on the acts of a mi- nor who has the capacity to assent, but not the capacity to bind himself, during minority. The right to en- force the contract depends on the acts of an adult who has no special inca- pacities nor privileges. When he ex- ercises his option, which results from his contract made while a minor, to bind or not to bind himself by the contract to which he has assented, he stands as every one else stands in the performance of a voluntary act ; he is presumed to know the law. So, in the present case, the defendant knew he had, while a minor, agreed, for a fair consideration, which he had re- ceived and enjoyed, to pay the amount in question to the plaintiff, and volun- tarily, in specific terms, promised to pay that sum. This promise bound him to make the payment, by force of the same law that exempted him from liability until the promise was made. It is immaterial whether he knew or did not know the law. If such knowl- edge could affect his act, he is charged with the knowledge, and can- not be permitted to show the con- trary." Bestor v. Hickey, 71 Conn. 181, 4 Atl. 555. "There was no fact found showing, or tending to show, that any fraud, undue in- fluence, or unfair means of any kind was resorted to or practiced by the appellant, or any other per- son, to persuade the appellee to ratify the contract; nor was there any fact found showing, or tending to show, that the ignorance of the appellee as to his legal right to disaffirm the con- tract, or withhold his ratification thereof, was induced by the appellant, or any other person. And yet, in the absence of such facts, and in the pres- ence of the facts that were found showing that the contract so ratified was founded upon an adequate con- sideration, and was one that ordinary honesty required the' ratification of, the master commissioner held that the appellee was not bound by his act ratifying the same, merely because he did not know that he had the legal right to disaffirm it." This was held error. Clark v. Van Court, 100 Ind. 113, SO Am. Rep. 774. 547 INFANTS. § 333 merely ignorance of law, which will not excuse the person rati- fying. In the latter case there is ignorance of some crucial fact rendering the transaction of no effect. Thus, it has been held that one is not estopped to repudiate a sale made by his tutor or guardian when shortly after emancipation he approves the tutor's account, when he did not know that the sale was invalid because made privately and sold for less than two-thirds of the appraised value.^' It has, also, been held that an action brought to set aside a deed on the ground of fraud, the plaintiff alleging that he was twenty-one years of age when the deed was executed, does not estop him from bringing suit to have the conveyance set aside on the ground of infancy upon discovering that he was in fact a minor at the time the deed was given, the first action having been dismissed.''* § 333. Ratification — Effect. — The confirmation of a con- tract, after reaching majority, relates back and renders the agree- ment binding from the date on which it was originally entered into, and not merely from the time it was ratified.^'^ If, after arriving at full age, a contract entered into during infancy is voluntarily ratified, it thereupon becomes the valid subsisting agreement, which cannot subsequently be rescinded. A valid ratification cannot be revoked and the contract so ratified cannot ^ Touchy V. Gulf Land Co., 120 La. It would seem, on principle, that 545, 45 So. 434, 124 Am. St. 440. these decisions are entirely erroneous. ^Ridgeway v. Herbert, ISO Mo. Contracts of an infant capable of a 606, 51 So. 1040, li Am. St. 464. ratification are voidable and not void; ^American &c. Mortgage Co. v. indeed, both a minor's executed and Dykes, 111 Ala. 178, 18 So. 292, 56 executory voidable contracts are valid Am. St. 38; Hall v. Jones, 21 Md. until disaffirmed, for, as has been 439; Durfee v. Abbott, 61 Mich. 471, seen, an infant's marriage settlement, 28 N. W. 521 ; Minock v. Shortridge, although voidable, is sufficient to pass 21 Mich. 304; Tibbets v. Gerrish, 25 title if the infant die without having N. H. 41, 57 Am. Dec. 307; Hoit v. disaffirmed it. It would seem, there- Underhill, 10 N. H. 220, 34 Am. Dec. fore, that it is immaterial whether the 148 ; Harner V Dipple, 31 Ohio St. 72, ratification is made prior or subse- 27 Am. Rep. 496 ; Cheshire v. Barrett, quent to the bringing of suit. Some 4 McCord (S. Car.) 241, 17 Am. Dec. authorities even assert "that aprom- 735. It has been said in many cases ise cannot relate back * * * that an executory contract cannot be so as to make the original contract a ratified after suit is brought, for the good foundation for an action from reason "there must be a subsisting the beginning." Merriam v. Wilkins, right of action at the time of suing 6 N. H. 432, 25 Am. Dec. 472. See out the plaintiff's writ, which right also. Freeman v. Nichols, 138 Mass. of action no subsequent promise can 313. give." Hale v. Gerrish, 8 N. H. 374. § 334 CONTRACTS. 548 be afterward disaffirmed.^" An offer to compromise is not a ratification, since in so offering one does not acknowledge lia- bility,"^ nor does the submission of the question to arbitration prove a ratification."^ § 334. Disaffirmance and avoidance. — Disaffirmance, also, has to do only with an infant's voidable contract ; his void agree- ment need not, and his valid agreement cannot, be disaffirmed. All voidable agreements entered into by a minor are subject to rescission by him, and this is true of both executed and executory agreements. There is no distinction between executed and execu- tory contracts, so far as the existence of the right of disaffirm- ance is concerned.^" The right of an infant to avoid his contract is an absolute and paramount right, superior to all equities of other persons. Thus the infant may disaffirm against a bona fide purchaser of real estate from the infant's grantee.^" § 335. Who may disaffirm or avoid. — It is a well-settled rule that, generally speaking, infancy is a personal privilege of which no one except the infant himself is permitted to take ad- vantage.''^ The adult party to the agreement cannot avoid be- =° Voltz V. Voltz, 75 Ala. SSS; Mc- Furman, 27 Vt. 268, 6S Am. Dec. 194; Carthy v. Nicrosi, 72 Ala. 332, 47 Person v. Chase, Z1 Vt. 647, 88 Am. Am. Rep. 418; Hastings v. Dollar- Dec. 630. hide, 24 Cal. 195; Curry v. St. John '"Conn v. Boutwell (Miss.), 58 So. Plow Co., 55 111. App. 82; Youmans 105; Brantley v. Wolf, 60 Miss. 420. V. Forsythe, 86 Hun (N. Y.) 370; See also, Gage v. Menczer (Tex. Civ. Luce V. Jestrab, 12 N. Dak. 548, 97 App.), 144 S. W. 717. N. W. 848. The ratification relates '"Coan v. Bowles, 1 Show. 165; back so as to cut off a gratuitous Grey v. Cooper, 3 Doug. 65 ; Riley v. conveyance of the same property Dillon, 148 Ala. 283, 41 So. 768; made after the giving of the original Shropshire v. Burns, 46 Ala. 108; deed and before the ratification. Pal- Hastings v. Dollarhide, 24 Cal. 195 ; mar V. Miller, 25 Barb. (N. Y.) 399. Frazier v. Alassey, 14 Ind. 382; Incidental and collateral circum- Schrock v. Crowl, 83 Ind. 243; Can- stances do not amount to a ratifica- non v. Alsbury, 1 A. K. Marsh (Ky.) tion in the face of the party's explicit If), 10 Am. Dec. 709; Heeler v. Bullitt, declaration that he did not intend 3 A. K. Marsh. (Ky.) 280, 3 Am. Dec. them as such, nor intend to be bound. 161 ; Hardy v. Waters, 38 Maine 450; Minock v. Shortridge, 21 Mich. 304. Oliver v. Houdlet, 13 Mass. 237, 7 "Martin v. Byron, Dud. (Ga.) 203. Am. Dec. 134; Nisrhtingale v. With- "^ Benhan v. Bishop, 9 Conn. 330, 23 ington, 15 Mass. 272, 8 Am. Dec. 101 Am. Dec. 358. Hill v. Keyes, 10 Allen (Mass.) 258 ^Wuller v. Chuse Grocery Co., 241 Monaehan v. Aericultural Fire Ins, 111. 398, 89 N. E. 796, 28 L. R. A. (N. Co., 53 Mich, 238, 18 N. W. 797 S.) 128n, 132 Am. St. 216; Robinson Voorhees v. Wait, IS N. J. L. 343 V. Weeks, 56 Maine 102; Hill v. An- Patterson v. Lippincott, 47 N. J. L. derson, 5 S. & M. (Miss.~) 216; 457, 1 Atl. 506, 54 Am. Rep. 178; In- Abell V. Warren, 4 Vt. 149; Price v. habitants Bordentown v. Wallace, 50 549 INFANTS. § 335 cause of the other's infancy.^^ A stranger to the agreement can- not take advantage of infancy on the part of one of the original parties.^^ Nor is this privilege extended to the infant's assignee or those who stand in privity of relationship,"* notvsrithstanding the fact that some cases contain statements to the effect that privies in estate may take advantage of the privilege of infancy/' However, it must be borne in mind that, after the infant has exercised his right to disaffirm, a privy in estate, or any one, may take advantage of such disaffirmance.^^ It has also been held that an infant's assignee in insolvency cannot avoid a mortgage N. J. L. 13, 11 Atl. 267; Van Bramer Nat. Ins. Co., 93 Wis. 223, 67 N. W. V. Cooper, 2 Johns. (N. Y.) 279; 416. Hartness v. Thompson, 5 Johns. (N. '"Hooper v. Payne, 94 Ala. 223, 10 Y.) 160; Mason V. Denison, 15 Wend. So. 431; Elder v. Woodruff Hard- (N. Y.) 64; Parker v. Baker, 1 ware &c. Co., 9 Ga. App. 484, 71 S. Clarke Ch. (N. Y.) 136; Beardsley E. 806; La Grange Collegiate Inst. v. V. Hotchkiss, 96 N. Y. 201; Slocum Anderson, 63 Ind. 367, 30 Am. Rep. V. Hooker, 13 Barb. (N. Y.) 536; 224; Cannon v. Alsbury, 1 A. K. Jones V. Butler, 30 Barb. (N. Y.) 641, Marsh. (Ky.) 16, 10 Am. Dec. 709; 20 How. Pr. (N. Y.) 189; Hesser v. Beeler v. Bullitt, 3 A. K. Marsh. ■Steiner, S Watts & S. (Pa.) 476; (Ky.) 280, 13 Am. Dec. 161 ; Thomp- Kuns's Exrs. V. Young, 34 Pa. St. 60 ; son v. Hamilton, 12 Pick. (Mass.) McGill V. Woodward, 3 Brev. (S. 425, 23 Am. Dec. 619; Nightingale v. Car.) 401; White v. Flora, 2 Over. Withington, IS Mass. 272, 8 Am. Dec. (Tenn.) 426; Harris v. Musgrove, 59 101; Hill v. Taylor, 125 Mo. 331, 28 Tex. 401; Crosby v. Ardoin (Tex. S. W. 599; Mott v. Purcell, 98 Mo. Civ. App.), 145 S. W. 709; Wamsley 247, 11 S. W. 564; Bordentown v. V. Lindenberger, 2 Rand. (Va.) 478. Wallace, 50 N. J. L. 13, 11 Atl. 267; ^ Seaton V. Cohill, 11 Colo. App. 211, Grogan v. United States &c. Ins. Co., 53 Pac. 170; Gooden v. Rayl, 85 Iowa 90 Hun (N. Y.) 521, 71 N. Y. St. 592, 52 N. W. 506; Resso v. Lehan, 707, 36 N. Y. S. 687; Curtiss v. Mc- 96 Iowa 45, 64 N. W. 689; Arnous Dougal, 26 Ohio St. 66; Blankenship v. Lesassier, 10 La. 592, 29 Am. Dec. v. Kanawha &c. R. Co., 43 W. Va. 470 ; Oliver v. Houdlet, 13 Mass. 237, 135', 27 S. E. 355. 7 Am. Dec. 134; Patterson v. Lippin- "In re Whitingham's Case, 8 Coke cott, 47 N. J. L. 457, 1 Atl. 506, 54 42 B; Riley v. Dillon, 148 Ala. 283, Am. Rep. 178; Willard v. Stone, 7 41 So. 768; Bozeman v. Browning, 31 Cow. (N. Y.) 22, 17 Am. Dec 496; Ark. 364; Harris v. Ross, 112 Ind. Hunt V. Peake, 5 Cow. (N. Y.) 475, 314, 13 N. E. 873 ; Breckenridge's IS Am. Dec. 475; Hicks v. Beam, 112 Heirs v. Ormsby, 1 J. J. Marsh. (Ky.) N. Car. 642, 17 S. E. 490, 34 Am. St. 236, 19 Am. Dec. 71 ; Curtiss v. Mc- 521 ; Withers v. Ewing, 40 Ohio St. Dougal, 26 Ohio St. 66. 400; Webb v. Harris (Okla.), 121 =' Beeler v. Bullitt, 3 A. K. Marsh. Pac. 1082; Assignees of Hull v. Con- (Ky.) 280, 13 Am. Dec. 161; Domi- noUy, 3 McCord (S. Car.) 6, IS Am. nick v. Michael, 6 N. Y. Super. Ct. Dec. 612; Warwick v. Cooper, 5 374; Nelson v. Eaton, 1 Redf. Sur. Sneed (Tenn.) 6S9; Stringfellow v. (N. Y.) 498; Jackson v. Burchin, 14 Early, 15 Tex. Civ. App. 597, 40 S. Johns. (N. Y.) 124. See White v. W. 871 ; Farr v. Summer, 12 Vt. 28, Flora, 2 Over. (Tenn.) 426. 36 Am. Dec. 327; Plate v. Durst, 42 "'Harris v. Cannon, 6 Ga. 382; W. Va. 63, 24 S. E. 580, 32 L.R. A. Wimberly v. Jones, 1 Ga. Dec. 91; 404; Johnson v. Scottish Union & Price v. Jennings, 62 Ind. Ill ; Breck- § 33^ CONTRACTS. 55O given by the infant, that being a right personal to the minor." The same has been held true of a guardian appointed during in- fancy.^* The rule that infancy is a privilege personal to the minor is subject to this exception, however, if the infant dies not hav- ing made any binding election, and he was not otherwise es- topped to plead infancy, his heirs, devisees^" or personal repre- sentatives, such as executor or administrator,*" or beneficiary un- der a life insurance policy taken out by such minor,*^ have the right to exercise the infant's option and either ratify or avoid his agreement. A further exception has been recognized where a guardian is appointed for the infant after he reaches his ma- jority, the appointment being made because the former infant is under some disability other than that of infancy, the guardian then being given the right to avoid his ward's contract entered into during his infancy.''^ § 336. Time and manner of disaffirmance — Personal con- tracts and contracts concerning personalty. — The time at enridge's Heirs v. Ormsby, 1 J. J. Kans. 64, 107 Pac. 530, 30 L. R. A. Marsh. (Ky.) 236, 19 Am. Dec. 71; (N. S.) 194. Williams v. Norris, 2 Litt. (Ky.) 157; *> Shropshire v. Burns, 46 Ala. 108; Jackson v. Carpenter, 11 Johns. (N. Vaughan v. Parr, 20 Ark. 600; Hill Y.) 539; Jackson v. Burchin, 14 v. Keyes, 10 Allen (Mass.) 258; Hus- Johns. (N. Y.) 124; Den v. Stowe, sey v. Jewett, 9 Mass. 100; Parsons 2 Dev. & B. (N. Car.) 320; McGill v. v. Hill, 8 Mo. 135; Roberts v. Wiggin, Woodward, 3 Brev. (S. Car.) 401. 1 N. H. 1Z, 8 Am. Dec. 38; Tilling- The right of avoidance is not assign- hast v. Holbrook, 7 R. I. 230; Person able. Austin v. Charleston Female v. Chase, 37 Vt. 647, 88 Am. Dec. Seminary, 8 Mete. (Mass.) 196, 41 630. Am. Dec. 497. See also, Armitage v. " O'Rourke v. John Hancock Mut. Widoe, ie Mich. 124, Life Ins. Co., 23 R. I. 457, 50 Atl. '^ Mansfield v. Gordon, 144 Mass. 834, 57 L. R. A. 496, 91 Am._ St. 643. 168, 10 N. E. m. In the above case the beneficiary was "' Oliver V. Houdlet, 13 Mass. 237, permitted to plead infancy in answer 7 Am. Dec. 134. to the company's defense of false war- " Bozeman v. Browning, 31 Ark. ranty in the infant's application for 364; Illinois Land &c. Co. v. Bonner, insurance. 75 111. 315; Sayles v. Christie, 187 111. "Chandler v. Simmons, 97 Mass. 420, 58 N. E. 480; Gillenwater v. 508, 93 Am. Dec. 117. In the above Campbell, 142 Ind. 529, 41 N. E. 1041 ; case the guardian was appointed be- Hill v. Keyes, 10 Allen (Mass.) 258; cause the ward was a spendthrift. Harris v. Ross, 86 Mo. 89, 56 Am. The guardian was permitted to avoid Rep. 411 ; Ihley v. Padgett, 27 S. Car. a conveyance made by the ward while 300, 3 S. E. 468; Walton v. Gaines, an infant. See also. Ledger Bldg. 94 Tenn. 420, 29 S. W. 458. See also, Assn. v. Cook, 12 Phila. (Pa.) 434, Bethany Hospital Co. v. Phillippi, 82 34 Leg. Int. (Pa.) 5. 551 INFANTS. § 336 which the infant may exercise the right to disaffirm depends largely upon the subject-matter of the contract. He may dis- affirm during minority personal contracts and contracts concern- ing personal property. He cannot finally and conclusively avoid " a conveyance of real estate until he has reached full age. One's first impression of this subject vi^ould be that if an infant has not discretion to ratify a contract he wrould also be incapable of dis- affirming the same, but the welfare of the infant is the law's first consideration. It gives the infant the right to disaffirm his con- tracts concerning personalty during minority because it recog- nizes that, by reason of the transitory nature of personal prop- erty, to withhold this right from an infant until he becomes of age would, in many cases, be to make it utterly valueless." Accordingly, it is now well settled that an infant may avoid a sale or exchange of personal property before he reaches his ma- jority." In accordance with this rule it has been held that an infant's chattel mortgage may be disaffirmed by him during mi- ''Towle V. Dresser, 73 Maine 252. See also, Scott v. Buchanan, 11 Humph. (Tenn.) 468; Gage v. Menczer (Tex. Civ. App.), 144 S. W. 717; Farr v. Sumner, 12 Vt. 28, J6 Am. Dec. 327. " Shipman v. Horton, 17 Conn. 481 ; Riley v. Mallory, 33 Conn. 201 ; Car- penter V. Carpenter, 45 Ind. 142; Shipley v. Smith, 162 Ind. 526, 70 N. E. 803; Rice v. Boyer, 108 Ind. 472, 9 N. E. 420, 58 Am. Rep. S3; Childs V. Dobbins, 55 Iowa 205, 7 N. W. 496; Bailey v. Bamberger, 11 B. Men. (Ky.) 113; Towle v. Dresser, li Maine 252 ; Pyne v. Wood, 145 Mass. 558, 14 N. E. 775 ; McCarthy v. Hen- derson, 138 Mass. 310; Bradford v. French, 110 Mass. 365; Bloomingdale V. Chittenden, 74 Mich. 698, 42 N. W. 166; Miller v. Smith, 26 Minn. 248, 2 N. W. 942, il Am. Rep. 407; Carr V. Clough, 26 N. H. 280, 59 Am. Dec. 345; Bool v. Mix, 17 Wend. (N. Y.) 119, 31 Am. Dec. 285; Stafford v. Roof, 9 Cow. (N. Y.) 626; Chapin V. Shafer, 49 N. Y, 407; Hoyt v. Wilkinson, 57 Vt. 404; Salter v. Krueger, 65 Wis. 217, 26 N. W. 544. Some of the earlier cases on this subject apparently limited the above rule to instances in which the prop- erty had been delivered. Thus in Carr V. Clough, 26 N. H. 280, 59 Am. Dec. 345, it is said: "If the subject of the sale be personal property, and a de- li-ery to and possession by the vendee follows, and there are no legal means to regain the property till the minor arrives at full age, so as to decide whether he will ratify the contract or not, the property may all be wasted and gone, beyond recovery, and in many cases for a very inadequate con- sideration." See also, Stafford v. Roof, 9 Cow. (N. Y.) 626, in which it is said: "It then stands before us, at best, as the case of an infant con- tracting to sell ; and the vendee tak- ing possession in virtue of the con- tract, without its being followed up by any act of delivery. Such a taking would be tortious, and a conversion in itself." These cases seem to go on the mistaken assumption that the in- fant's contract is void until there has been a delivery ; nor does it seem that the law would require the infant to make a delivery in order that he might be able to disaffirm. The dis- tinction herein mentioned is no longer recognized. 337 CONTRACTS. 552 nority.^^ The same is true of his purchase of personal prop- erty.'"^ This includes subscriptions for shares of stock in a cor- poration.*' Personal contracts of the infant may also be avoided during" infancy. Thus it has been held that an infant may avoid a partnership agreement/* a power of attorney/^ or a contract of service/" before reaching his majority.^^ § 337. Time of disaffirmance — Contracts concerning an in- terest in real estate. — As has already been pointed out a conveyance of real estate made during infancy cannot be avoided until after full age is reached. ^^ There are perhaps two reasons •^ Miller v. Smith, 26 Minn. 248, 2 N. E. 942, i1 Am. Rep. 407; Cogley V. Cushman, 16 Minn. 397 ; State v. Plaisted, 43 N. H. 413; Chapin v. Shafer, 49 N. Y. 407. He cannot be held criminally responsible for sell- ing chattels mortgaged by him, since such sale is simply a disaffirmance of the mortgage which it is his right to make. In this case the minor sold the crop after having mortgaged it. Jones V. State, 31 Tex. Crim. App. 177, 20 S. W. S78. "Riley V. Mallory, 2,3 Conn. 201; Indianapolis Chair Mfg. Co. v. Wil- cox, 59 Ind. 429; Rice v. Boyer, 108 Ind. 472, 9 N. E. 420, 58 Am. Rep. 53 ; Childs v. Dobbin, 55 Iowa 205, 7 N. W. 496; Leacox v. Griffith, 76 Iowa 89, 40 N. W. 109; Cogley v. Cushman, 16 Minn. 397. In the two preceding cases it is held that this rule is not changed by a statute which provided "a minor is bound not only by contracts for necessities, but also by his other contracts, un- less he disaffirm them within a rea- sonable time after he attains his ma- jority," the statute only fixing a time within wliich contracts must be dis- affirmed. " Newry &c. R. Co. v. Coombe, 3 Ex. 565 ; WuUer v. Chuse Grocery Co., 241 111. 398, 89 N. E. 796, 28 L. R. A. (N. S.) 128n, 132 Am. St. 216. See also, Indianapolis Chair Mfg. Co. v. Wilcox, 59 Ind. 429. "Adams v. Beall 67 Md. 53, 8 Atl. 664. 1 Am. St. 379. Contra, Dunton v. Brown, 31 Mich. 182. "Pickler v. State, 18 Ind. 266. If the power of attorney is void it would seem that it need not be dis- affirmed. ™ Clark V. Goddard, 39 Ala. 164, 84 Am. Dec. 777. " See, however, Lansing v. Michi- gan Cent. R. Co., 126 Mich. 663, 86 N. W. 147, 86 Am. St. 567, in which it is held that an infant cannot avoid his settlement of the claim for per- sonal injuries during minority. This decision is based on the authority of Dunton v. Brown, 31 Mich. 182. Ar- mitage v. Widoe, 36 Mich. 124; Os- born V. Farr, 42 Mich. 134, 3 N. W. 299. "Zouch V. Parsons, 3 Burr. 1794; McCarthy v. Nicrosi, 72 Ala. 332, 47 Am. Rep. 418; Harrod v. Myers, 21 Ark. 592, 76 Am. Dec. 409; Hastings V. DoUarhide, 24 Cal. 195; Welch v. Bunce, 83 Ind. 382; Shroyer v. Pit- tenger, 31 Ind. App. 158, 67 N. E. 475 ; Chapman v. Chapman, 13 Ind. 396; Irvine v. Irvine, S Gill (Minn.) 44; Singer Mfg. Co. v. Lamb, 81 Mo. 221; Baker v. Kennett, 54 Mo. 82; Shipley v. Bunn, 125 So. 445; Em- mons V. Murry, 16 N. H. 385; Staf- ford V. Roof, 9 Cow. (N. Y.) 626; Bool V. Mix, 17 Wend. (N. Y.) 119, 31 Am. Dec. 285; Matthewson v. Johnson, 1 Hof?. Ch. (N .Y.) 560; Doe V. Leggett, 8 Jones L. (N. Car.) 425 ; Cummings v. Powell, 8 Tex. 80; Kilgore v. Jordan, 17 Tex. 341. The rule has been thus stated : "Matters in fait (i. e., not of record) he shall avoyd either within age or at full age," but matters of record only on reaching his majority. 2 Cokes Littleton 380b. See also, Newry &c. R. Co. V. Coombe, 3 Ex. 565; North 553 INFANTS. § 338 why an infant is denied the privilege of rescinding a conveyance of realty tintil after majority. They are, first, that real estate is permanent and may be recovered at any time •,''^ second, that the infant, vi^hile he may not avoid the transfer, may, nevertheless, enter and take profits, thus protecting himself during the period of infancy."*' The last reason given is not applicable universally, however. The Supreme Court of Missouri has held that "the distinction that, although he (the infant) cannot avoid his conveyance dur- ing his minority, he can yet enter upon the land, and enjoy the profits, does not obtain in this state."^^ It would seem, however, that an infant lessor could avoid his lease during infancy for two reasons : the first one being that, in some jurisdictions, a lease of realty for years is considered as personal property, and for that reason may be rescinded before majority ;"" the second rea- son is, that if the infant has a right to enter in and take profit during his minority this would, in effect, avoid the lease. It has also been held that an infant lessee may avoid his lease during minority.^' If an infant mortgages his real estate he may avoid it during minority, at least to the extent of pleading infancy to an action to foreclose.^* § 338. Time of disaffirmance — Executory contracts. — It would seem on principle that all executory contracts, whether Western R. Co. v. M'Michael, 5 Ex. appoint a receiver to take charge of 114. See, however, International Land the property as equivalent to entry Co. V. Marshall, 22 Okla. 693, 98 Pac. by the infant. 951, 19 L. R. A. (N. S.) 10S6, which "'Shipley v. Bunn, 125 Mo. 445, says : "We are inclined to the doc- 28 S. W. 754. trine, that where the deed is abso- °° Shipley v. Smith, 162 Ind. 526, lutely void, and there is no question 70 N. E. 803. See also, Field v. of affirmance or disaffirmance, suit Herrick, 101 111. 110. may be maintained during_ infancy to "'Riley v. Mallory, 33 Conn. 201; have it declared void," citing Swaf- Gregory v. Lee, 64 Conn. 407, 30 ford V. Ferguson, 3 Lea (Tenn.) 292, Atl. 53, 25 L. R. A. 618. 31 Am. Rep. 639. "^ Gilchrist v. Ramsay, 27 U. C. Q. "'Scott V. Buchanan, 11 Humph. D. 500; Schneider v. Staihr, 20 Mo. (Tenn.) 468. 269. See, however, Robinson v. Berg- "Bool V. Mix, 17 Wend. (N. Y.) holz, 4 Ohio Dec. 103, in which it is 119, 31 Am. Dec. 285; Cummings v. held that where an infant buys real Powell, 8 Tex. 80. See also, estate and executes a mortgage to Matthewson v. Johnson, 1 Hoff. Ch. secure the purchase-money the infancy (N. Y.) 560, from which it would of the mortgagor is no defense to a seem that a court of chancery may foreclosure proceeding. § 339 CONTRACTS. 554 they relate to real or personal property, may be avoided by the infant either before or after majority; for would not the minor be given the privilege of interposing a plea of infancy, regardless of his then age, in an action brought by the other party to en- force the agreement P'*'* We have shown, however, the distinc- tions made by the courts and the reasons for them. § 339. Disaffirmance after majority. — While an infant may disaffirm his contract concerning personalty during minority his failure so to do does not defeat his right to rescind after major- ity ; to hold otherwise would, in effect, enable the infant to ratify during minority, and this power would enable him to bind him- self by contract. This he cannot do except in those instances al- ready mentioned.^" As has already been seen there is a variance among authorities as to the time within which disaffirmance must be made after majority is reached."^ The doctrine quite generally announced is that an infant must rescind within a reasonable time after ma- jority."^ However, the doctrine as announced is in many in- ■^See Riley v. Mallory, 33 Conn, lings, 38 Ark. 278, 42 Am. Rep. 1; 201; Wuller v. Chuse Grocery Co., Hastings v. Dollarhide, 24 Cal. 195; 241 111. 398, 89 N. E. 796, 28 L. R. A. Kline v. Beebe, 6 Conn. 494; Wal- (N. S.) 128n, 132 Am. St. 216; Childs lace's Lessee v. Lewis, 4 Harr. (Del.) V. Dobbins, SS Iowa 205, 7 N. W. 75; Tunison v. Chamblin, 88 111. 496; Robinson v. Weeks, 56 Maine 378; Buchanan v. Hubbard, 96 Ind. 102; Adams v. Beall, 67 Md. 53, 8 1; Stringer v. Northwestern Mut. Atl. 664, 1 Am. St. 379; Johnson v. L. Ins. Co., 82 Ind. 100; Petty v. Northwestern &c. Ins. Co., 56 Minn. Roberts, 7 Bush (Ky.) 410; Boody 365, 57 N. W. 934, 59 N. W. 992, 26 v. McKenney, 23 Maine 517; Amey v. L. R. A. 187, 45 Am. St. 473 ; Braucht Cockey, 73 Md, 297, 20 Atl. 1071 ; V. Graves-May Co., 92 Minn. 116, 99 Goodnow v. Empire Lumber Co., 31 N. W. 417; Miller v. Smith, 26 Minn. 468, 18 N. W. 283, 47 Am. Rep. Minn. 248, 2 N. E. 942, 37 Am. Rep. 798; Dolph v. Hand, 156 Pa. St. 91, 407; Chapin v. Shafer, 49 N. Y. 407; 27 Atl. 114, 36 Am. St. 25; Walton Whitmarsh v. Hall, 3 Denio (N. Y.) v. Gaines, 94 Tenn. 420, 29 S. W. 375; Petrie v. Williams, 68 Hun (N. 458; Searcy v. Hunter, 81 Tex. 644, Y.) 589, 52 N. Y. St. 587, 23 N. Y. 17 S. W. 372, 26 Am. St. 837; Askey S. 237. See, however, Dunton v. v. Williams, 74 Tex. 294, 11 S. W. Brown, 31 Mich. 182; Armitage v. 1101, 5 L. R. A. 176; Bingham v. Bar- Widoe, 36 Mich. 124; Stafford v. ley, 55 Tex. 281, 40 Am. Rep. 801; Roof, 9 Cow. (N. Y.) 626. Simkins v. Searcv, 10 Tex. Civ. App. ™ See ante, § 321 et seq.. Ratification. 406, 32 S. W. 849; Richardson v. "" See ante, § 321 et seq.. Ratification. Boright, 9 Vt. 368; Thormaehlen v. "'Edwards v. Carter (1893), A. C. Kaeppel, 86 Wis. 378, 56 N. W. 1089. 360; Viditz v. O'Hagan (1899), 2 This rule has been declared espe- Ch. 569, 68 L. J. Ch. (N. S.) 553; cially applicable to contracts concern- McDonald V. Restigouche Salmon ing personal property. See Page on Club, 33 N. B. 472; Watson v. Bil- Contracts 1378, citing McKamy v. 555 INFANTS. § 340 Stances purely dicta, and not only this, but in others unreasonable delay was coupled with a continual use and possession of the property, or a refusal to deliver the same and an assertion of ownership. Again, in many of them property was purchased instead of being sold by the infant; and it is much more easy to ratify a contract of purchase by lapse of time because of other elements entering in, such as continued possession and the like, than it is to ratify a conveyance of real estate."^ In some states it is provided by a statute that a minor must rescind within a reasonable time after reaching his majority, but notwithstanding these statutes and the cases that announce a similar doctrine it is believed that where a conveyance is made by an infant mere acquiescence, unaccompanied with any other element for a period of time shorter than prescribed by statutes of limitation, does not defeat the right to disaffirm.'* § 340. Disaffirmance — Delay greater than that permitted by statute of limitations. — There are, however, circum- Cooper, 81 Ga. 679, 8 S. E. 312; Dea- son V. Boyd, 1 Dana (Ky.) 45; Rob- inson V. Hoskins, 14 Bush (Ky.) 393; Delano v. Blake, 11 Wend. (N. Y.) 8S, 25 Am. Dec. 617. But it is believed that these cases furnish very little authority for the statement. "See, generally, on this subject, Shropshire v. Burns, 46 Ala. 108; Thomasson V. Boyd, 13 Ala. 419; Mc- Kamy v. Cooper, 81 Ga. 679, 8 S. E. 312; Robinson v. Hoskins, 14 Bush (Ky.) 393; Deason v. Boyd, 1 Dana (Ky.) 45; Lawson v. Love joy, 8 Greenl. (Maine) 405, 23 Am. Dec. 526; Williams v. Brown, 34 Maine 594; Boody v. McKenny, 23 Maine 517; Hubbard v. Cummings, 1 Greenl. (Maine) 11; Boyden v. Boyden, 9 Mete. (Mass.) 519; Minock v. Short- ridge, 21 Mich. 304; Robbins v. Eaton, 10 N. H. 561; Aldrich v. Grimes, 10 N. H. 194; Kitchen v. Lee, 11 Paige (N. Y.) 107, 42 Am. Dec. 101; Delano v. Blake, 11 Wend. (N. Y.) 85, 25 Am. Dec. 617; Alex- ander V. Heriot, Bail. Eq. (S. Car.) 223; Cheshire v. Barrett, 4 McCord (S. Car.) 241, 17 Am. Dec. 735; Eu- banks v. Peak, 2 Bailey (S. Car.) 407. Thus if a minor purchases and takes a conveyance of real estate and enters into possession [Cecil v. Comes Salis- bury, 2 Vern. 225 ; Boody v. McKen- ney, 23 Maine 517; Ellis v. Alford, 64 Miss. 8, 1 So. 155 ; Baker v. Ken- nett, 54 Mo. 82; Roberts v. Wiggin, 1 N. H. 73, 8 Am. Dec. 38; Henry v. Root, 33 N. Y. 526 ; Walsh v. Powers, 43 N. Y. 23, 3 Am. Rep. 654; Hook V. Donaldson, 9 Lea (Tenn.) 56; Cal- lis V. Day, 38 Wis. 643. And see Evelyn v. Chichester, 3 Burr. 1717; Middleton v. Hoge, 5 Bush (Ky.) 478; Armfield v. Tate, 29 N. Car. 258], or settles a boundary dispute [Brown v. Caldwell, 10 Serg. & R. (Pa.) 114, 13 Am. Dec. 660; George v. Thomas, 16 Tex. 74, 67 Am. Dec. 612], or takes a lease [McClure v. McClure, 74 Ind. 108; Boody v. Mc- Kenney, 23 Maine 517; Baxter v. Bush, 29 Vt. 465, 70 Am. Dec. 429], he must rescind within a reasonable time after majority, since he still con- tinues to enjoy the benefits of the con- tract. But as has already been pointed out the circumstances may be siich that continued possession does not show a ratification. See, ante, § 321 et seq., Ratification. °*See, ante, § 321, et seq., Ratifica- tion. § 34° CONTRACTS. 556 Stances which will excuse a delay even greater than that per- mitted by the statute of limitation. Thus, wherever coverture is a disability at the time the cause of action accrues, so that the feme covert is not required to sue, although she may be permitted so to do, the statute of limitations will not run against her and she will not be precluded from disaffirming a deed made during infancy by her mere omission so to do for any length of time after she attains majority and while coverture continues. Thus it has been held that a delay of thirty-seven years,*^ thirty-two years,*" twenty-three years," or twenty-eight,''^ if due to cover- ture, would not defeat her right to disaffirm. It follows that she is not barred of her right to disaffirm by lapse of time during coverture if the husband, who united in the deed, acquired by virtue of the marriage, such an interest in the land conveyed as would not be defeated by the wife's disaffirmance, since in such case the rescission would be a vain act."' However, if a woman not yet of age conveys her property and becomes of age before her marriage her subsequent marriage will not protect her. After the statute of limitation has commenced to run, subsequent dis- abilities will not ordinarily obstruct its course. One disability cannot be tacked to another to defeat the statute.'" A marriage settlement of realty, so far as the woman is con- cerned, is governed by the same rifles controlhng conveyances of real estate. Consequently, when an infant feme, upon the eve "'Sims V. Bardoner, 86 Ind. 87, (Tenn.) 468; Matherson v. Davis, 2 44 Am. Rep. 263n. Cold. (Tenn.) 443; Sims v. Ever- '«' Wilson V. Branch, 77 Va. 65, 46 hardt, 102 U. S. 300, 26 L. ed. 87; Am. Rep. 709. Darraugh v. Blackford, 84 Va. 509, "Richardson v. Pate, 93 Ind. 423, 5 S. E. 542; Wilson v. Branch, 11 47 Am. Rep. 374. Va, 65, 46 Am. Rep. 709; Bedinger «»McMorris v. Webb, 17 S. Car. v. Wharton, 27 Gratt. (Va.) 857. And 558, 43 Am. Rep. 629. see Vaughan v. Parr, 20 Ark. 600 ^ See StuU v. Harris, SI Ark. 294, (sale of an interest in remainder in a 2 L. R. A. 741 ; Miles v. Lingerman, slave) ; Magee v. Welsh, 18 Cal. 155 24 Ind. 385; Stringer v. Northwest- (execution of a note and mortgage), ern Miit. Life Ins. Co., 82 Ind. 100; See, however, Louisiana &c. Lumber Sims V. Bardoner, 86 Ind. 87, 44 Am. Co. v. Lovell (Tex. Civ. App.), 147 Rep. 263n ; Youse v. Norcoms, 12 Mo. S. W. 366. 549, 51 Am. Dec. 175; Temple v. ™Priddy v. Boice, 201 Mo. 309, Hawley, 1 Sand. Ch. (N. Y.) 153; 99 S. W. 1055, 9 L. R. A. (N. S.) Mcllvaine v. Kadel, 30 How. Pr. (N. 718n, 119 Am. St. 762. See, however, Y.) 193, 26 N. Y. Sup. Ct. 429; Epps Tilton v. Tilton, 130 Ky. 281, 113 S. V. Flowers, 101 N. Car. 158, 7 S. E. W. 134, 132 Am. St. Rep. 359. 680; Scott V. Buchanan, 11 Humph. 557 INFANTS. § 341 of her marriage, unites with her husband in setthng her real estate upon herself and the contemplated issue of such marriage the act is voidable and can be disaffirmed by her when the dis- ability of infancy and coverture has been removed, when she has in the meantime done no act to ratify or affirm such settlement." § 341. Disaffirmance — How indicated. — It is unnecessary for an infant to disaffirm his agreement in a definite and pre- scribed manner. It may be done by any act clearly demonstrat- ing a renunciation of the contract.'^ The specific acts that have been held to amount to a disaffirmance will be mentioned in a succeeding section. § 342. What amounts to disaffirmance. — While there is no particular manner by which the disaffirmance may be made yet it is obvious that there can be no disaffirmance of a contract un- less there is an intention to disaffirm on the part of the infant and this intention must be indicated by some positive act incon- sistent with the validity of the contract.''^ "Smith V. Smith, 107 Va. 112, 57 Heighe, 3 Md. Ch. 365; Temple v. S. E. 577, 12 L. R. A. (N. S.) 1184, Hawley, 1 Sand. Ch. (N. Y.) 153; 122 Am. St. 831. See also, Lancaster Shaw v. Boyd, 5 Serg. & R. (Pa.) V. Lancaster, 13 Lea (Tenn.) 126, in 309, 9 Am. Dec. 368. See, however, which it is said that a wife may in Wetmore v. Kissam, 3 Bosw. (N. Y.) equity affirm or disaffirm an ante- 321. Failure to disaffirm a convey- nuptial settlement of land or per- ance after reaching majority may be sonal property, or of both, voidable excused on account of the grantor by reason of her infancy. Tilton v. being under duress after reaching ma- Tilton, 130 Ky. 281, 113 S. W. 134, jority. Salser v. Barron (Tex. Civ. 132 Am. St. 359, holding that a App.), 146 S. W. 1039. woman may disaffirm an unconsciona- ' Shroyer v. Pittenger, 31 Ind. ble antenuptial agreement after the App. 158, 67 N. E. 475 (conveyance death of her husband. In the above of real estate) ; Cogley v. Cushman, case it appears that the marriage 16 Minn. 397; Heath v. West, 6 settlement was drawn up two months Foster (N. H.) 191; Roberts v. Wig- before the marriage. The parties gin, 1 N. H. 73, 8 Am. Dec. 38 (con- lived together for thirty years after veyance of real estate) ; State v. marriage. The court held that her Plaisted, 43 N. H. 413; Skinner v. failure to disaffirm during the two Maxwell, 66 N. Car. 45 ; Groesbeck v. months intervening between the sign- Bell, 1 Utah 338. In case a convey- ing of the contract and the consumma- ance of real estate is disaffirmed the tion of the marriage did not amount act of disaffirmance need not be as to a confirmation of the agreement, solemn as the original deed. Shroyer since the same influence which in- v. Pittenger, 31 Ind. App. 158, 67 N. duced her to sign it operated to lull E. 475 ; Allen v. Poole, 54 Miss. 323. her into silence and acquiescence not " Illinois Land & Loan Co. v. Beem, only during the two succeeding 2 III. App. 390; Dixon v. Merrltt, 21 months, but during the thirty-two Minn, 196; Roberts v. Wiggin, 1 N. years which followed. Levering v. H. Ti, 8 Am. Dec. 38; Hatton v. 343 COXTRACTS. 558 § 343. Cannot disaffirm in part and ratify in part. — There is one limitation placed on an infant's right to disaffirm that should be noticed at this point. It is to the effect that he cannot ratify a portion of a single transaction and disaffirm as to the rest. He either disaffirms or ratifies in toto. The entire trans- action is considered as a unit.'* Thus an infant cannot claim the benefits resulting from a conditional contract and not be bound by the conditions.'^ Nor is he permitted to retain property whether real,'^ or personal" purchased by him and avoid a pur- chase-money mortgage or a vendor's lien given to secure payment therefor" or avoid payment on the ground of infancy'" and this is true even though the money with which to purchase the prop- erty was advanced by a third person to whom the mortgage was given.^" The purchase of the property and the mortgage given to se- Bodan Lumber Co., 57 Tex. Civ. App. 478, 123 S. W. 163. See also, Dom- inick V. Michael, 6 N. Y. Super. Ct. 374; Voorhies v. Voorhies, 24 Barb. (N. Y.) ISO; Mustard v. Wohlford's Heirs, 15 Grat. (Va.) 329, 76 Am. Dec. 209. A disaffirmance "neces- sarily implies the action of a free mind exempt from all constraint or disability." Sims v. Everhardt, 102 U. S. 300, 26 L. ed. 87. " Peers v. McLaughlin, 88 Cal. 294, 26 Pac. 119, 22 Am. St. 306; Howard V. Cassels, 105 Ga. 412, 31 S. E. 562, 70 Am. St. 44; Biederman v. O'Con- nor, 117 111. 493, 7 N. E. 463, 57 Am. Rep. 876 ; Carpenter v. Carpenter, 45 Ind. 142; Robinson v. Berry, 93 :\Iaine 320, 45 Atl. 34; White v. Mount Pleasant &c. Corp., 172 Mass. 462, 52 N. E. 632; Strong v. Ehle, 86 Mich. 42, 48 N. W. 868; Henry v. Root, 33 N. Y. 526; Overbach v. Heermance, 1 Hopk. Ch. (N. Y.) 337, 14 Am. Dec. 546; Kitchen v. Lee, 11 Paige (N. Y.) 107, 42 Am. Dec. 101 ; Kincaid v. Kincaid, 85 Hun CN. Y.) 141i 65 N. Y. St. 661, 32 N. Y. S. 476; Curtiss v. McDougal, 26 Ohio St. 66; Tennessee &c. Co. v. Tames, 91 Tenn. 154, 18 S. W. 262, is L. R. A. 211n, 30 Am. St. 865. This statement must not be taken too literally. It merely means that where the benefits and obligations of a contract are indivisible, the infant cannot continue to enjoy the benefits and avoid the obligations. On the other hand if he is under no obliga- tion to return or relinquish what was received under the contract he may ratify as to part and avoid as to part. Thus he may ratify part of a debt contracted during infancy and repu- diate the rest. Peacock v. Binder, 57 N. J. L. 374, 31 Atl. 215. '"Biederman v. O'Connor, 117 111. 493, 7 N. E. 463, 57 Am. Rep. 876; Lowry v. Drake, 1 Dana (Ky.) 46. He cannot purchase goods on a con- ditional sale and after the condition is broken plead infancy as a defense. Robinson v. Berry, 93 Maine 320, 45 Atl. 34. "Strong V. Ehle, 86 Mich. 42, 48 N. W. 868; Uecker v. Koehn, 21 Nebr. 559, 32 N. W. 583, 59 Am. Rep. 849; Bigelow v. Kinney, 3 Vt. 353, 21 Am. Dec. 589. "Heath v. -West, 28 N. H. 101; Curtiss v. McDougal, 26 Ohio St. 66; Knaggs V. Green, 48 Wis. 601, 4 N. W. 760, 33 Am. Rep. 838. "Smith V. Henkel, 81 Va. 524. ™Thomason v. Phillips, 73 Ga. 140. "' Thurston v. Nottingham &c. Bldg. Society (1902), 1 Ch. 1; Ready v. Pinkham, 181 Mass. 351, 63 N. E. 887. 559 INFANTS. § 344 cure payment constitute one transaction and the mortgage cannot be avoided without also avoiding the conveyance or transfer, nor can one be ratified and the other disaffirmed." Nor can he re- tain the property after he reaches his majority and repudiate his note given for the purchase-price or other agreements entered into by him in consideration of the property being surrendered to him.^^ Likewise he cannot disaffirm his conveyance and at the same time sue for the unpaid purchase-price.'^ The foregoing must not be confused with the principle that if an infant enters into distinct and separate contracts he may dis- affirm one or more of them and not the others. Thus he may disaffirm one of several deeds made by him.'* § 344. What amounts to disaffirmance — Illustrations. — Subject to the foregoing limitations the following methods by which disaffirmance may be made known will be mentioned. If an infant sells personal property previously mortgaged by him it amounts to a disaffirmance of such chattel mortgage.'^ The agreement may also be disaffirmed by pleading infancy to an ac- tion brought to enforce the contract provided it has not been ratified or the minor is not otherwise estopped to enter such plea.'" He may disaffirm his contract for the performance of work and labor by leaving his employment and bringing an ac- '' Dana v. Coombs, 6 Maine 89, 19 ^ Craig v. Van Bebber, 100 Mo. Am. Dec. 194; Hubbard v. Cum- 584, 13 S. W. 906, 18 Am. St. Rep. mings, 1 Maine 11; Young v. McKee, 569. 13 Mich. 552; Betts v. Carroll, 6 Mo. "Tunison v. Chamblin, 88 111. 378. App. 518- Uecker v. Koehn, 21 Nebr. ''State v. Plaisted, 43 N. H. 413; 559, 32 N. W. 583, 59 Am. Rep. 852 ; Chapin v. Shafer, 49 N. Y. 407 ; State Roberts v. Wiggin, 1 N. H. 12,, 8 Am. v. Howard, 88 N. Car. 650. Dec. 38; Heath v. West, 28 N. H. "" Sparr v. Florida Southern R. 101; Lynde v. Budd, 2 Paige (N. Y.) Co., 25 Fla. 185; Strain v. Wright, 7 191, 21 Am. Dec. 84; Ottman v. Ga. 568; Shrock v. Crowl, 83 Ind. Moak, 3 Sand. Ch. (N. Y.) 431; Cur- 243; Freeman v. Nichols, 138 Mass. tiss V. McDougal, 26 Ohio St. 66; 313. It is obvious, however, that this Bigelow V. Kinney, 3 Vt. 353, 21 Am. plea can only be entered where the Dec. 589; Richardson v. Boright, 9 agreement is executory on the part Vt. 368 ; Callis -v. Day, 38 Wis. 643. of the infant or where the question is °^ Bennett v. McLaughlin, 13 111. presented in such form as to afford App. 349, Benj. Cas. on Contracts 326; opportunity to plead infancy. See Philpot V. Sandwich Mfg. Co., 18 Worcester v. Eaton, 13 Mass. 371, 7 Nebr 54 24 N W 428 : Kitchen v. Am. Dec. 155 ; Bool v. Mix, 17 Wend. Lee, 'll Paige (N. Y.) 107, 42 Am. CN. Y.) 119, 31 Am. Dec. 285. Dec. 101 ; Henry v. Root. 53 N. Y. The plea of infancy has been said 526; Armfield v. Tate, 29 N. Car. to be merely an initiatory step and 258- Weed v. Beebe, 21 Vt. 495. does not ipso facto avoid the agree- § 345 CONTRACTS. 560 tion for the quantum meruit of his services." Likewise he dis- affirms his release of a claim for a personal injury by bringing suit upon the original claim.*^ A suit to avoid the contract oper- ates as a disaffirmance.'" An offer to restore the property and a demand for the consideration paid therefor amounts to a rescission."" The same is true of a suit to recover the considera- tion paid therefor." § 345. Disaffirmance of contract concerning an interest in real estate. — Peculiar feudal principles rendered necessary the rule that an infant's feoffment with livery of seisen could be avoided only by an act of equal notoriety or solemnity."^ Consequently it was held by a few early cases that an infant's deed of conveyance could only be disaffirmed by an entry or by some act of equal notoriety or solemnity with the original con- veyance."^ While there is no cjuestion that such act is a sufficient disaffirmance,"* the ancient rule which declared it the necessary and only way no longer obtains. It is now held that the disaffirm- ing act need take no particular form or expression. The deed of a minor may be avoided by acts and declarations disclosing an unequivocal intent to repudiate the binding force and effect of it as a valid instrument."^ There are certain well-recognized methods by which this un- equivocal intent may be given expression. A minor's deed of ment for it may be sufficiently an- stand the infant testified tliat he was swered by the reply or defeated by then willing to stand by the contract. the trial or be withdrawn by the The court held that this did not show pleader. Best v. Givens & Wood, 3 that he had not avoided the contract B. Mon. (Ky.) 72. or that there was not a good cause *' Harney V. Owens, 4 Blackf. (Ind.) of action. 237, 30 Am. Dec. 662 ; Moses v. °" Drake's Lessee v. Ramsay, 5 Stevens, 2 Pick. (Mass.) 332. Ohio 251. " St. Louis &c. R. Co. V. Higgins, " Vallandingham v. Johnson, 85 Ky. 44 Ark. 293. 288; Jackson v. Burchim, 14 Johns. "Gage V. Menczer (Tex. Civ. (N. Y.) 124; Bool v. Mix, 17 Wend. App.), 144 S. W. 717. (N. Y.) 119, 31 Am. Dec. 285; Dom- ^ House v. Alexander, 105 Ind. 109, inick v. Michael, 6 N. Y. Super. Ct. 4 N. E. 891, 55 Am. Rep. 189; Pyne 374; Voorhies v. Voorhies, 24 Barb, v. Wood, 145 Mass. 558, 14 N. E. (N. Y.) ISO. 775. "Vallandingham v. Johnson, 85 " Pyne V. Wood, 145 Mass. 558, 14 Ky, 288; Mustard v. Wohlford's N. E. 775. In the above case suit Heirs, IS Grat, (Va,) 329, 76 Am. was brought by the infant's father to Dec. 209. See also, Green v. Green, recover the money paid, with the 69 N. Y. 553, 25 Am. Rep. 233. infant's consent. On the witness °° McCarthy v. Nicrosi, 72 Ala. 332., 56i INFANTS. § 345 conveyance may be disaffirmed, after he has reached his majority, by bringing suit to recover possession of the premises conveyed,"" or by a suit for the cancellation of the deed," or by an absolute sale and conveyance of the same land to a third person"' who is not in privity of relation with the first grantee."" The execu- tion of a quit-claim deed after majority to one not in privity of relationship with the person to whom the same property was granted by warranty deed during minority, may operate as a 47 Am. Rep. 418; Bagley v. Fletcher, 44 Ark. 153; Long v. Williams, 74 Ind. 115; Cogley v. Cushman, 16 Minn. 397; Allen v. Poole, 54 Miss. 323 ; Singer Mfg. Co. v. Lamb, 81 Mo. 221; State v. Plaisted, 43 N. H. 413; Chapin V. Shafer, 49 N. Y. 407; Drake's Lessee v. Ramsay, 5 Ohio 251; White v. Flora, 2 Over. (Tenn.) 426. See also, Shroyer v. Pittenger, 31 Ind. App. 158, 67 N. E. 475 ; Rob- erts V. Wiggin, 1 N. H. 73, 8 Am. Dec. 38. "Watson V. Billings, 38 Ark. 278, 42 Am. Rep. 1 ; Cole v. Pennoyer, 14 111. 158; Dunn v. Wheeler, 86 Maine 238, 29 Atl. 985; Walsh v. Young, 110 Mass. 396; Craig v. Van Bebber, 100 Mo. 584, 13 S. W. 906, 18 Am. St. 569; Clark v. Tate, 7 Mont. 171, 14 Pac. 761 ; Drake's Lessee v. Ram- say, 5 Ohio 251; Hughes v. Watson, 10 Ohio 127; Birch v. Linton, 78 Va. 584, 49 Am. Rep. 381. " Slator V. Rudderforth, 25 App. D. C. 497; Schaffer v. Lavretta, 57 Ala. 14; Harrod v. Myers, 21 Ark. 592, Id Am. Dec. 409; Tunison v. Cham- blin, 88 III. 378; Englebert v. Trox- ell, 40 Nebr. 195, 58 N. W. 852, 26 L. R. A. 177n, 42 Am. St. 665 ; Sims v. Everhardt, 102 U. S. 300, 26 L. ed. 87; Bedinger v. Wharton, 27 Grat. (Va.) 857. "' Beauchamp v. Bertig, 90 Ark. 351, 19 S. W. 75, 23 L. R. A. (N. S.) 659; Bagley v. Fletcher, 44 Ark. 153; Black V. Hills, 36 111. 376, 87 Am. Dec. 224; Losey v. Bond, 94 Ind. 67; Pitcher v. Laycock, 7 Ind. 398 ; Riggs V. Fisk, 64 Ind. 100 ; Tucker v. More- land, 10 Pet. (U. S.) 58, 9 L. ed. 345; Combs v. Hall, 22 Ky. L. 1418, 60 S. W. 647. In the above case the infant had given a title bond for land, while yet a minor. On reaching his majority he conveyed the land to another. Moore v. Baker, 92 Ky. 518, 13 Ky. Law 724, 18 S. W. 363; Corbett v. Spencer, 63 Mich. 731, 30 N. W. 385 ; Craig v. Van Bebber, 100 Mo. 584, 13 S. W. 906, 18 Am. St. 569; Peterson v. Laik, 24 Mo. 541, 69 Am. Dec. 441; Ridgeway v. Her- bert, 150 Mo. 606, 51 S. W. 1040, li Am. St. 464; Bool v. Mix, 17 Wend. (N. Y.) 119, 31 Am. Dec. 285; Cres- inger v. Welch's Lessee, IS Ohio 156, 45 Am. Dec. 565; Searcy v. Hunter, 81 Tex. 644, 17 S. W. ill, 26 Am. St. 837; Mustard v. Wohl- ford's Heirs, 15 Grat. (Va.) 329, 76 Am. Dec. 209. ™ Beauchamp v. Bertig, 90 Ark. 351 19 S. W. 75, 23 L. R. A. (N.S.) 659 Bagley v. Fletcher, 44 Ark. 153 Eagle Fire Co. v. Lent, 6 Paige (N. Y.) 635. Whether a deed executed after majority constitutes a disaf- firmance of a prior deed executed by the grantor during infancy is a ques- tion of law for the court. Peterson V. Laik, 24 Mo. 541, 69 Am. Dec. 441. In the absence of any other element entering in the following test is usu- ally applied : Is the instrument exe- cuted after majority so inconsistent with the one executed during minor- ity that the former of necessity de- stroys the force and effect of the lat- ter, if so it amounts to a disaffirm- ance of such latter instrument ; on the other hand if it is possible for the two to stand together and both be given effect the conveyance executed after majority does not of necessity amount to a disaffirmance. See the following cases bearing on the sub- ject. Scott v. Brown, 106 Ala. 604, 17 So. 731 ; Hastings v. Dollarhide, 24 Cal. 195; Losey v. Bond, 94 Ind. 67; Long V. Williams, 74 Ind. 115; Estep id — Contracts, Vol. I 346 CONTRACTS. 562 disaffirmance of the latter conveyance/ Re-entry upon the land,^ or notice of disaffirmance,^ especially if coupled with re-entry/ may amount to a rescission. § 346. Restoration of consideration. — This branch of the subject is an excellent illustration of the principle that hard cases make bad law. Courts have tried to make laws that would oper- ate fairly between infants who disaffirm and the adversary party to the contract, — an impossible task if the infant's right to dis- V. Estep, 24 Ky. L. 2198, 17, S. W. 777; Moore v. Baker, 92 Ky. S18, 13 Ky. Law. 724, 18 S. W. 363 ; Valland- ingham v. Johnson, 85 Ky. 288, 3 S. W. 173 ; Corbett v. Spencer, 63 Mich. 731, 30 N. W. 385 ; Haynes v. Bennett, 53 Mich. 15, 18 N. W, 539 ; Dawson v. Helraes, 30 Minn. 107, 14 N. W. 462 ; Ridgeway v. Herbert, ISO Mo. 606, 51 S. W. 1040, 73 Am. St. 464; Peter- son V. Laik, 24 Mo. 541, 69 Am. Dec. 441; Roberts v. Wiggin, 1 N. H. Ti, 8 -Am. Dec. 38; Bool v. Mix, 17 Wend. (N. Y.) 119, 31 Am. Dec, 285; Cresinger v. Welch, 15 Ohio 156, 45 Am. Dec. 565; Tucker v. Moreland, 10 Pet. (U. S.) 58, 9 L. ed. 345. Thus the execution of a mortgage after arriving at full age on land conveyed during infancy amounts to a disaf- firmance of such conveyance since it shows that he considers himself the owner, but it is otherwise if he joins with the grantee in executing the mortgage to secure a debt of the grantee. Watkins v. Wassell, 15 Ark. li. It has also been held that the exe- cution of a warranty deed after ma- jority is reached of land mortgaged during infancy is a disaffirmance of the mortgage. Dixon v. Merritt, 21 Minn. 196; Allen v. Poole, 54 Miss, 323, See also, Scott v. Brown, 106 Ala, 604, 17 So, 731, in which case the minor gave a mortgage_ on certain real property ; after majority she gave notice by her attorney on the day of the foreclosure sale that her interest could not be sold. Prior to that time she had executed a deed with convey- ance of general warranty to her brother. These acts were held to be a disaffirmance. On the execution of the warranty deed the court said that_ it was an act utterly inconsistent with the affirmance of the mortgage. These cases seem to be erroneous on principle, since the mortgage and deed are not consistent with each other. Both may stand and neither destroy the effect of the other. Sing- er Mfg. Co. v. Lamb, 81 Mo, 221; Palmer v. Miller, 25 Barb. (N, Y.) 399, But if the deed recites that the conveyance is subject to the mort- gage the mortgage is thereby con- firmed, Losey v. Bond, 94 Ind. 67; President &c, of Boston Bank v. Chamberlin, 15 Mass. 220. ^ Beauchamp v, Bertig, 90 Ark, 351, 119 S, W, 75, 23 L. R, A. (N. S,) 659; Bagley v, Fletcher, 44 Ark, 153. A quitclaim deed not coextensive with the previous deed does not amount to a disaffirmance, Leitens- dorfer v, Hempstead, 18 Mo, 269; Eagle Fire Co, v. Lent, 6 Paige (N. Y,) 635; Stuart v. Baker, 17 Tex. 417. ^ Shroyer v, Pittenger, 31 Ind, App. 158, 67 N, E, 475 ; Long v, Williams, 74 Ind. 115; Green v. Green, 69 N, Y. 553, 25 Am, Rep, 233 ; White v. Flora, 2 Over. (Tenn,) 426; Worcester v, Eaton, 13 Mass, 371, 7 Am, Dec, 155; Dominick v, Michael, 6 N, Y, Super, Ct, 374, The two cases last cited lay down the rule that re-entry is a requisite of a valid disaffirmance, a principle now obsolete. " McCartv v, Woodstock Iron Co., 92 Ala, 463, 8 So, 417, 12 L. R, A, 136; McCarthy v, Nicrosi, 72 Ala, 322, 47 Am, Rep, 418; Long v, Williams, 74 Ind, 115; Shrover v, Pittenger, 31 Ind, App, 158, 67 N, E, 475; Roberts V, Wiggin, 1 N, H, li, 8 Am, Dec, 38, * Green v. Green, 69 N. Y. 553, 25 Am, Rep, 232. 563 INFANTS. § 346 affirm is to afiford him any protection. As a result, much con- fusion exists among the cases on this branch of the subject mak- ing it difficult to form any rule of general application. It may be stated generally, however, subject to many important excep- tions, that the infant is not required to place the other party in statu quo in order to make his disaffirmance effectual.'' If during his minority the infant has lost, wasted or squan- dered the property or other consideration received or any part thereof under the contract before reaching his majority he may nevertheless repudiate the contract, nor is he obliged to make restitution in order to give effect to his disaffirmance.* The "McCarty v. Woodstock Iron Co., 92 Ala. 463, 8 So. 417, 12 L. R. A. 136; Carpenter v. Carpenter, 45 Ind. 142; White v. New Bedford Cotton- Waste Corp., 178 Mass. 20; Bartlett V. Drake, 100 Mass. 174, 97 Am. Dec. 92, 1 Am. Rep. 101; Chandler v. Simmons, 97 Mass. 508, 93 Am. Dec. 117; Dawson v. Helmes, 30 Minn. 107, 14 N. W. 462; Cresinger v. Welch's Lessee, 15 Ohio 156, 45 Am. Dec. 565 ; McGreal v. Taylor, 167 U. S. 688, 17 Sup. Ct. 961, 42 L. ed. 326. "American Mfg. Co. v. Dykes, 111 Ala. 187, 18 So. 292, 56 Am. St. 38; Eureka Co. v. Edwards, 71 Ala. 248, 46 Am. Rep. 314; Bell v. Burkhalter, (Ala.) 57 So. 460; Fox v. Drewry, 62 Ark. 316, 35 S. W. 533 ; St. Louis &c. R. Co. V. Higgins, 44 Ark. 293; Bar- ker V. Fuestal (Ark), 147 S. W. 45; Gonackey v. (General Accident &c. Corp., 6 Ga. App. 381, 65 S. E. 53; Reynolds v. McCurry, 100 111. 356; Featherstone v. Betlejewski, 75 111. App. 59; WuUer v. Chuse Grocery Co., 241 111. 398, 89 N. E. 796, 28 L. R. A. (N. S.) 128n, 132 Am. St. 216; United States &c. Co. v. Hams, 142 Ind. 226, 40 N. E. 1072, 41 N. E. 451 ; Gillenwater v. Campbell, 142 Ind. 529, 41 N. E. 1041 ; Shipley v. Smith, 162 Ind. 526, 70 N. E. 803 ; White v. Branch, 51 Ind. 210; Leacox v. Griffith, 76 Iowa 89, 40 N. W. 109; White V. Cotton-Waste Corporation, 178 Mass. 20, 59 N. E. 642 ; Walsh v. Young, 110 Mass. 396; Chandler v. Simmons, 97 Mass. 508, 93 Am. Dec. 117; Corey v. Burton, 32 Mich. 30; Miller v. Smith, 26 Minn. 248, 2 N. W. 942, i7 Am. Rep. 407; Harvey v. Briggs, 68 Miss. 60, 8 So. 274, 10 L. R. A. 62 ; Brantley v. Wolf, 60 Miss. 420; Ridgeway v. Herbert, 150 Mo. 606, 51 S. W. 1040, 73 Am. St. 464; Craig V. Van Bebber, 100 Mo. 584, 13 S. W. 906, 18 Am. St. 569; Tower- Doyle Commission Co. v. Smith, 86 Mo. App. 490 ; Clark v. Tate, 7 Mont. 171, 14 Pac. 761; Englebert v. Trox- ell, 40 Nebr. 195, 58 N. W. 852, 26 L. R. A. 177n, 42 Am. St. 665 ; Bloomer V. Nolan, 36 Nebr, 51, 53 N. W. 1039, 38 Am. St. 690 ; Green v. Green, 69 N. Y. 553, 25 Am. Rep. 233; Kane v. Kane, 13 App. Div. (N. Y.) 544, 43 N. Y. S. 662; Petrie v. Williams, 68 Hun (N. Y.) 589, 52 N. Y. St. 587, 23 N. Y. S. 237; Kincaid v. Kincaid, 85 Hun (N. Y.) 141, 65 N. Y. St. 661, 32 N. Y. S. 476; Youmans v. For- sythe, 86 Hun (N. Y.) 370; Lemmon V. Beeman, 45 Ohio St. 505. 15 N. E. 476; Ruchisky v. DeHaven, 97 Pa. 202; Lane v. Dayton &c. Co., 101 Tenn. 581, 48 S. W. 1094; Bullock v. Sprowls, 93 Tex. 188, 54 S. W. 661, 47 L. R. A. 326, 77 Am. St. 849: McGreal v. Taylor, 167 U. S. 688, 17 Sup. Ct. 961, 42 L. ed. 326 ; Wiser v. Lockwood, 42 Vt. 720; Price v. Fur- man, 27 Vt. 268, 65 Am. Dec. 194; Thormachlen v. Kaeppel, 86 Wis. 378. 56 N. W. 1089. The above rule is of course applicable to those cases in which an infant disaffirms dur- ing his minority a contract concern- ing personal property, the consid- eration received having been squan- dered before disaffirmance. Conse- quently if the property has depre- ciated in value (Whitcomb v. Jos- lyn, 51 Vt. 79, 31 Am. Rep. 678) either § 347 CONTRACTS. 564 above being true it naturally follows that if the infant has never in fact received any consideration, either because never paid over by the other party, or because paid to some third per- son such as the infant's husband,^ father,^ or agent,^ such infant is not bound to restore or offer to restore the consideration.^" § 347. Restoration of consideration — Cannot use privilege as a sword instead of a shield. — How^ever, the infant is not permitted to use his privilege as a sword instead of a shield. Consequently he is bound to return the consideration or so much thereof as remains in his possession at the time of disaffirmance, if made before majority, or if disaffirmance is made after ma- jority, so much thereof as remained in his possession at the time he became of full age." Some early cases laid dow^n the rule that in actions at law brought by infants to recover inoney or property based on their right to avoid their contracts there must be a restoration or offer to restore the consideration received. These cases have in the on account of misuse (White v. Branch, 51 Ind. 210) or consumption (Xichol V. Steger, 6 Lea (Tenn.) 393) by the infant he need not ac- count for the loss or depreciation. See also, Beickler v. Guenther, 121 Iowa 419, 96 N. W. 895, in which case the plaintiff bought a team of horses that he sold before reaching his ma- jority. At majority he disaffirmed the purchase. The court said : "He is only required by the statute to restore the money or property received by virtue of the contract 'remaining with- in his control at any time after at- taining his majority.' As stated he ceased to be tlie owner of the team before coming of age, and thereafter was not in control of anything re- ceived from defendant. There was nothing in his keeping to restore." ' Fox V. Drewry, 62 Ark. 316, 35 S. W. 533; Stull v. Harris, 51 Ark. 294, 11 S. W. 104, 2 L. R. A. 741 ; Richard- son V. Pate, 93 Ind. 423, 47 Am. Rep. 374; Bradshaw v. Van Valkenburg, 97 Tenn. 316. V] S. W. 88; Smith v. Evans, 5 Humph. (Tenn.) 70; Thor- maehlen v. Kaeppel, 86 Wis. 378, 56 N. W. 1089. "Clark V. Tate, 7 Mont. 171, 14 Pac. 761; Griffis v. Younger, 41 N. Car. 520, 51 Am. Dec. 438; Salser v. Brown (Tex. Civ. App.), 146 S. W. 1039. "Vogelsang v. Null, 67 Tex. 465, 3 S. W. 451. " See also, Shroyer v. Pettenger, 31 Ind. App. 158, 67 N. E. 475 ; Law v. Long, 41 Ind. 586; Robinson v. Weeks, 56 Maine 102; Ruchizky v. De Haven, 97 Pa. St. 202; Bedinger V. Wharton, 27 Gratt. (Va.) 857. "Bell V. Burkhalter (Ala.), 57 So. 460; American &c. Co. v. Dykes, 111 Ala. 178, 18 So. 292, 56 Am. St. 38; Wuller V. Chuse Grocery Co., 241 111. 398, 89 N. E. 796, 28 L. R. A. (N. S.) 128n, 132 Am. St. 216; Bennett v. McLaughlin, 13 111. App. 349; Shirk V. Shultz, 113 Ind, 571. 15 N. E. 12; Sanger v. Hibbard, 2 Ind. Ter. 547, S3 S. W. 330; Jenkins v. Jenkins, 12 Iowa 195 ; Burgett v. Barrick, 25 Kans. 526; Morse v. Ely, 154 Mass. 458, 28 N. E. 577, 26 Am. St. Rep. 263 ; Dube v. Beaudry, 150 Mass. 448, 23 N. E. 222, 6 L. R. A. 146, 15 Am. St. 228 ; Dawson v. Helmes, 30 Minn. 107, 14 N. W. 462 ; Brantley v. Wolf, 565 INFANTS. 347 main been overruled or limited by subsequent decisions." If the rule announced by these early cases should be adhered to, it would, in effect, result in the nullification of the infant's right 60 Miss. 420; Harvey v. Briggs, 68 Miss. 60, 8 So. 274, 10 L. R. A. 62; Craig V. Van Bebber, 100 Mo. 584, 13 S. W. 906, 18 Am. St. 569; Betts v. Carroll, 6 Mo. App. 518; Bloomer v. Nolan, 36 Nebr. 51, 53 N. W. 1039, 38 Am. St. 690; Hamblett v. Hamb- lett, 6 N. H. 333; Green v. Green, 69 N. Y. 553, 25 Am. Rep. 233; McGreal V. Taylor, 167 U. S. 688, 17 Sup. Ct. 961, 42 L. ed. 326; Tucker v. More- land, 10 Pet. (U. S.) 58, 9 L. ed. 345; Lane v. Dayton &c. Coal Co., 101 Tenn. 581, 48 S. W. 1094; Grace v. Hale, 2 Humph. (Tenn.) 27, 36 Am. Dec. 296; Bullock v. Sprowls, 93 Tex. 188, 54 S. W. 661, 47 L. R. A. 326, 77 Am. St. 849; Abernathy v. Phillips, 82 Va. 769, 1 S. E. 113; Bed- inger v. Wharton, 27 Gratt. (Va.) 857; Young v. Ry. Co., 42 W. Va. 112, 24 S. E. 615; Gillespie v. Bailey, 12 W. Va, 70, 29 Am. Rep. 445. The consideration received must, how- ever, be disposed of prior to ma- jority otherwise he might be held to have ratified the agreement by dis- posing of it after he reaches major- ity. For a good resume of the law on this subject see, White v. Sikes, 129 Ga. 508, 59 S. E. 228, 121 Am. St. 228, in which it is said: "But it is said that the law declares that if an infant receives property, or other valuable consideration, and after ar- rival at age retains possession of such property or enjoys the proceeds of such valuable consideration, this is such a ratification of the contract as will bind him; Civ. Code, § 3648. If an infant makes a contract, either executory or executed, and receives the consideration in whole or in part during his minority and disposes of the same before his majority, either by losing, expending or squandering it, this is nothing more than the law anticipates of him, and he will not be required to make any tender of the amount so disposed of before repu- diating the contract which he made during infancy. Southern Cotton Oil Co. V. Dukes. 121 Ga. 787, 49 S. E. 788. But if, upon arrival at majority, he has in his possession either the ex- act consideration that he received during infancy or any substantial part of the same, or property which is purchased with such consideration — that is, if he has then anything of a substantial nature into which can be traced the proceeds of the contract made during his infancy — then neither law, equity nor good con- science will permit him to repudiate his contract and retain that which is the fruits of the contract. But it must appear that the infant, after at- taining majority, retains possession and control of something which is tangible, which has become his prop- erty as a result of his having used the consideration paid to him under the contract made while he was an in- fant. If he expends the amount in the purchase of food and the food is consumed, the principle alluded to would have no application; and so, if he used the land in the purchase of an education, which is a thing of value in a sense, but is intangible, the principle would have no application." " Bozeman v. Browning, 31 Ark. 364, overruled by St. Louis &c. R. Co. v. Higgins, 44 Ark. 293; Bartlett v. Cowles, 15 Gray (Mass.) 445. Com- pare, however, with Chandler v. Simmons, 97 Mass. 508, 93 Am. Dec. 117; Bartholomew v. Finnemore, 17 Barb. (N. Y.) 428. Compare, how- ever, with Green v. Green, 69 N. Y. 553, 25 Am. Rep. 233; Taft v. Pike, 14 Vt. 405, 39 Am. Dec. 228 ; Farr v. Sumner, 12 Vt. 28, 36 Am. Dec. 327. Compare with these cases, however, Price V. Furman, 27 Vt. 268, 65 Am. Dec. 194; Whitcomb v. Joslyn, 51 Vt. 79, 31 Am. Rep. 678. See also, Craig V. VanBebber, 100 Mo. 584, 15 S. W. 906, 18 Am. St. 569, limiting vari- ous Missouri cases; Bullock v. Sprowls, 93 Tex. 188, 54 S. W. 661, 47 L. R. A. 326, 77 Am. St. 849, lim- iting a number of Texas cases in this respect. § 348 CONTRACTS. 566 to disaffirm, except as to executory contracts, and thus permit to be done by indirection that which can be done directly.^' § 348. Restoration of consideration — Contract fair and reasonable. — There is a line of cases, however, which hold that if the personal contract of an infant is fair and reasonable and free from any fraud or undue influence by the other party and has been wholly or partly executed on both sides so that the infant has enjoyed the benefits of it but has parted with what he bas received, or the benefits received are of such a nature that he cannot restore them, he cannot recover that which he has paid unless he places the other party substantially in statu quo.^* The effect of the foregoing rule is to place the fair and reason- able contracts of an infant, so far as executed, upon much the same footing as his contracts for necessities. It is perhaps a survival in a modified form of the ancient doctrine to the effect that an infant's beneficial contracts are binding. The burden is on the other party to show that the contract was fair to the in- fant and reasonable and free from any fraud or imposition. ^^ § 349. Restoration of consideration as a condition prece- dent. — In case the infant is bound to return the considera- " See Corey V. Burton, 32 Mich. 30; "Valentini v. Canali, L. R. 24 Q. Miller v. Smith, 26 Minn. 248, 2 N. B. D. 166; Adams v. Beall, 67 Md. W. 942, 37 Am. Rep. 407; Green v. S3, 8 Atl. 664, 1 Am. St. 379; Braucht Green, 69 N. Y. 553, 25 Am. Rep. 233. v. Graves-May Co., 92 Minn. 116, 99 In Parsons on Contracts, vol. 1, page N. W. 417; Johnson v. Northwestern 322, it is said: "If an infant ad- Mut. Life Ins. Co., 56 Minn. 365, 57 vances money on a voidable contract N. W. 934, 59 N. W. 992, 26 L. R. A. which he afterwards rescinds he can- 187, 45 Am. St. 473; Epperson v. not recover his money back, because Nugent, 57 Miss. 45, 34 Am. Rep. it is lost to him by his own act, and 434; Clark v. Tate, 7 Mont. 171, 14 the privilege of infancy does not ex- Pac. 761 ; Hall v. Butterfield, 59 N. tend so far as to restore this money H. 354, 47 Am. Rep. 209; Heath v. unless it was obtained from him by Stevens, 48 N. H. 251 ; Rice v. Butler, fraud." The case of WuUer v. Chuse 160 N. Y. 578, 55 N. E. 275, 47 L. R. Grocery Co., 241 111. 398, 89 N. E. A. 303, 73 Am. St. 703; Searcv v. 796, 28 L. R. A. (N. S.) 128n, de- Hunter, 81 Tex. 644, 17 S. W. 372, 26 clares the above statement to be at Am. St. 837. See also, Smith v. Cole, variance with authority and the doc- 148 Ky. 138, 146 S. W. 30. trine now accepted and also criticizes "Johnson v. Northwestern &c. Ins. an Illinois case which cites it with Co., 56 Minn. 365, 59 N. W. 992, 57 approval and cites as contrary there- N. W. 934, 26 L. R, A. 187, 45 Am. to • Robinson v Weeks, 56 Maine St. 473 ; Braucht v. Graves-May Co., 102- Ruchizky v. De Haven, 97 Pa. 92 Minn. 116, 99 N. W. 417. 202; Shurtleff v. Millard, 12 R.I. 272, 34 Am. Rep. 640. 567 INFANTS. 349 tion received by him there is a conflict of authority as to whether a tender of such consideration is a condition precedent to a valid rescission. Some authorities hold that it is;^" others hold that the infant may rescind vifithout making a tender or offering to restore the consideration received, but that the rescission revests the title thereto in the other party who may thereupon recover the property," or its value, should the infant, subsequent to such disaffirmance, convert the consideration to his own use.^" It will be found upon a review of the preceding cases that the tendency is not to require a tender when the action is at law, but if the action is in equity there is a disposition to require a tender or offer by the infant as a condition precedent to a valid rescis- sion, on the ground that he who seeks equity must do equity.^* By other cases the following test is applied: if the contract is executory on the part of the infant no tender prior to rescission is necessary, on the other hand if executed on the part of both parties a tender is required.^" But this rule has been declared " Eurega Co. v. Edwards, 71 Ala. 248, 46 Am. Rep. 314; Manning v. Johnson, 26 Ala. 446, 62 Am. Dec. 732; Riley v. Mallory, 33 Conn. 201; Braucht v. Graves-May Co., 92 Minn. 116, 99 N. W. 417; Englebert v. Trox- ell, 40 Nebr. 195, 58 N. W. 582, 26 L. R. A. 177n, 42 Am. St. 665; Interna- tional Land Co. v. Marshall, 22 Okla. 693, 98 Pac. 951, 19 L. R. A. (N. S.) 1056; Smith v. Evans, 5 Humph. (Tenn.) 70. This same rule applies with greater force to an adult, espe- cially if he seeks to take property by legal process from an infant. In this case a piano had been sold condition- ally to an infant. Action by vendor to replevin the same. Ross P. Cur- tis Co. V. Kent (Nebr.), 131 N. W. 944. "Carpenter v. Carpenter, 45 Ind. 142; Clark v. Van Court, 100 Ind. 113, 50 Am. Rep. 774; Shirk v. Shultz, 113 Ind. 571; Robinson v. Berry, 93 Maine 320, 45 Atl. 34; Chandler v. Simmons, 97 Mass. 508, 93 Am. Dec. 117; Drude v. Curtis, 183 Mass. 317, 67 N. E. 317, 62 L. R. A. 755; Mc- Carthy V. Henderson, 138 Mass. 310; Fitts V. Hall, 9 N. H. 441 ; Mustard v. Wohlford's Heirs, IS Grat. (Va.) 329, 76 Am. Dec. 209. See also. Strain v. Wright, 7 Ga. 568. See, however, post, § 352, Effect and Result of Dis- affirmance. " Drude v. Curtis, 183 Mass. 317, 67 N. E. 317, 62 L. R. A. 755; Fitts v. Hall, 9 N. H. 441. See also, ante, Ch. 4, Fraud and Misrepresentation. " See Eureka Co. v. Edwards, 71 Ala. 248, 46 Am. Rep. 314; Englebert v. Troxell, 40 Nebr. 195, 58 N. W. 852, 26 L. R. A. 177n, 42 Am. St. 665; International Land Co. v. Marshall, 22 Okla. 693, 98 Pac. 951, 19 L. R. A. (N. S.) 1056. This is true where the consideration is still in the hands of the infant. If it is no longer in his power to make restitution this fact should be alleged. "Eureka Co. v. Edwards, 71 Ala. 248, 46 Am. Rep. 314; Bailey v. Bam- berger, 11 B. Mon. (Ky.) 113; Bad- ger V. Phinney, 15 Mass. 359, 8 Am. Dec. 105 ; Craighead v. Wells, 21 Mo. 404; Bedinger v. Wharton, 27 Gratt. (Va.) 857; Mustard v. Wohlford's Heirs, 15 Grat. (Va.) 329, Id Am. Dec. 209. § 3 so CONTRACTS. 568 applicable only in equity." While the above test may reconcile many cases it does not completely do so, for it has been held in law and equity that a return of the consideration was a condi- tion precedent to a plea of infancy as a defense to a suit on a promissory note at law." § 350. Restoration of consideration — Statutory modifica- tion of common-law rule. — The common-law rule with refer- ence to rescission by an infant has been modified in some states by statutory enactment. Thus it is provided by the statutes of Iowa that, "all money or property received by him by virtue of the contract and remaining within his control at any tim^ after he has attained his majority" must be restored.^^ It is provided by the civil code of California that the contract of a minor "if made while he is under the age of eighteen may be disaffirmed," etc., but "if the contract be made by the minor while he is over the age of eighteen it may be disaffirmed in like manner upon restoring the consideration to the party from whom it was received or pay its equivalent."" It has been held by the Supreme Court of that state that the words "or pay its equivalent" clearly imply that if the infant cannot restore the identical consideration received he must pay its equivalent.^^ This would necessitate the infant's making good that part of the consideration which he had wasted before he could make a valid rescission. It is provided by the statutes of Indiana that "in all sales of an infant feme covert of lands belonging to her and in which sale and conveyance her husband has joined, he being of full age, said infant shall not be permitted to disaffirm said sale until she shall have first restored to the person owning said real estate the consideration she received for said lands."^'' " Smith V. Evans, S Humph, of the consideration received at the (Tenn.) 70. time he rescinds he must restore it " Philpot V. Sandwich Mfg. Co., 18 and if he disposes of the considera- Nebr. 54, 24 N. W. 428 (law) ; Pem- tion after reaching his majority this berton Bldg. & Loan Assn. v. Adams, is held to be a ratification. See ante, S3 N. J. Eq. 258, 31 Atl. 280 (equity). §§ 326, 347. ==See Stout v. Merrill, 35 Iowa 47; =* Civil Code § 35. Beickler v. Guenther, 121 Iowa 419, 96 '-^ White v. Rosencrantz, 123 Cal. N. W. 895. This seems toi be but lit- 634, 56 Pac. 436, 69 Am. St. 90. tie if anything more than a declara- ™ Sec. 3979 Burns' Annotated Stat- tion of the common-law rule. By utes 1908. the latter if the infant has all or part 569 INFANTS. § 351 And again in Illinois, "in all sales of real estate by an infant he or she shall not be permitted to disaffirm said sale without first restoring to the person owning the property sold the considera- tion received in said sale, if the infant falsely represented himself or herself to be over the age of twenty-one years and the pur- chaser acted in good faith."^' § 351. Restoration of consideration — Both parties infants. — In case both the contracting parties were infants the one who seeks to disaffirm the contract is not, under the common-law rule, liable for what he has spent before disaffirmance, nor can he re- cover from the other that which the latter has squandered, or wasted.^* § 352. Effect and result of disaffirmance. — Cases on this subject state generally that the valid disaffirmance of a contract entered into during infancy annuls and renders it void on both sides ab initio.^^ It logically follows that the rights of the parties, as a general rule, are determined without reference to the pro- visions of the contract.^" Thus the mere disaffirmance of a con- veyance made during infancy revests the legal title in the former infant so as to allow him to sue in ejectment.^^ On the same principle after an infant has rescinded his contract for the sale of personal property the title is thereby revested in him and an action in trespass cannot be sustained against him for taking the "Sec. 3980 Burns' Annotated Stat- Crowl, 83 Ind. 243; Boyden v. Boy- utes 1908. For construction of the den, 9 Mete. (Mass.) 519; French v. statute see Ackerman v. Hawkins, 45 McAndrew, 61 Miss. 187; Mustard v. Ind. App. 483, 88 N. E. 616. See Wohlford's Heirs, IS Grat. (Va.) also, Gillenwater v. Campbell, 142 329, 76 Am. Dec. 209 ; Hoyt v. Wilkin- Ind. 529, 41 N. E. 1041. The sales son, 57 Vt. 404. and conveyances mentioned in the '"Meyers v. Rehkopf, 30 III. App. first section above quoted include 209; Ross P. Curtice Co. v. Kent, 89 mortgages. Consequently a feme cov- Nebr. 496, 131 N W. 944; Danville v. ert cannot disaffirm a mortgage ex- Amoskeag Mfg. Co., 62 N. H. 133. ecuted during infancy in which her "'Cole v. Pennoyer, 14 111. 158; husband, he being of full age, joined, Haynes v. Bennett, 53 Mich. 15, 18 N. cannot rescind the same without re- W. 539; Craig v. VanBebber, 100 Mo. turning the consideration received. 584, 13 S. W. 906, 18 Am. St 569; United States &c Co. v. Harris, 142 Harris v. Ross, 86 Mo. 89, 56 Am. Ind. 226, 40 N. E. 1072, 41 N. E. 451. Rep. 411 ; Drake's Lessee v. Ramsey, =' Drude v. Curtis, 183 Mass. 317, 67 5 Ohio 252 ; Birch v Lmton, 78 Va. N. E. 317. 62 L. R. A. 755. S84, 49 Am. Rep. 381 See also. ='Rice V. Boyer. 108 Ind. 472, 9 N. Smith v. Ryan, 191 N. Y. 452 84 N E. 420, 58 Am. Rep. 53; Shrock v. E. 402, 19 L. R. A. (N. S.) 461n, 123 § 353 CONTRACTS. 57O property into his possession.^^ In conformity with the forego- ing principles it has been said that if chattels are sold to an in- fant, the title revests in the vendor on disaffirmance by the in- fant, and he may recover the specific goods if in the infant's possession. In practically all of the cases that contain a state- ment to this effect, however, the holding is obiter or the rule stated obscurely or indefinitely.^^ On the other hand a recent case decided by the Maine Supreme Court flatly contradicts the general rule above stated. It holds that where property is unconditionally sold and delivered to an infant his repudiation of the agreement after majority does not revest title in the vendor.^* § 353. Disaffirmance — Liability in tort. — The infant may also render himself liable for the value of the goods in case he disaffirms and then before they have been reclaimed by the vendor and subsequently to such disaffirmance disposes of or destroys the same.^^ This is on the principle that while the infant cannot be held liable in damages for breach of his contract he is sometimes held liable for torts arising out of contracts, the reasoning of the court being that since an infant is liable for his 'torts he is Am. St. 609. It is the disafBrmance retained by the vendor until purchase which avoids the deed and not the price paid). suit. Long V. Wilhams, 74 Ind. 115; '*Lamkin & Foster v. Le Doux, 101 Sims V. Bardoner, 86 Ind. 87, 44 Am. Maine 581, 64 Atl. 1048, 8 L. R. A. Rep. 263n. See, however, McCarty (N. S.) 104n. The decision in the V. Woodstock Iron Co., 92 Ala. 463, above case is controlled largely by a 8 So 417, 12 L. R. A. 136. statute concerning ratification, the '' Shipman v. Horton, 17 Conn. 481. court deciding there had been no rati- "^ Thomason v. Phillips, li Ga. 140 ; fication. There is nothing in the opin- Strain v Wright, 7 Ga. 568 ; Shirk v. ion to show that the statute m any Shultz, 113 Ind. 571, 15 N. E. 12; way changes the effect of a valid dis- Bailey v. Bamberger, 11 B. Mon. affirmance. (Ky.) 113; Badger v. Phinney, IS "Carpenter v. Carpenter, 45 Ind. Mass. 359, 8 Am. Dec. 105; Fitts v. 142. See also, generally on this subject, Hall, 9 N. H. 441 ; Heath v. West, 28 Jefford v. Ringgold & Co., 6 Ala. 544; N. H. 101; Kitchen v. Lee, 11 Paige Shuford v. Alexander, 74 Ga. 293; (N Y.) 107, 42 Am. Dec. 101. See Strain v. Wright, 7 Ga. 568; Shirk v. also McCarty v. Woodstock Iron Co., Shultz, 113 Ind. 571, 15 N. E. 12; Bad- 92 Ala. 463, 8 So. 417, 12 L. R. A. ger v. Phinney, 15 Mass. 359, 8 Am. 136; Bennett v, McLaughlin, 13 111. Dec. 105; Walker v. Davis, 1 Gray App. 349 Benj. Cas. on Contracts (Mass.) 506; Taft v. Pike, 14 Vt 405, 326 (title retained in vendor until 39 Am. Dec. 228; Mustard y. Wohl- purchase price paid) ; Robinson v. ford's Heirs, 15 Grat. (Va.) ozV, /O Berry, 93 Maine 320, 45 Atl. 34 (title Am. Dec. 209. 57^ INFANTS. § 354 liable for those torts growing out of contracts, in case he can be held liable therefor without giving effect to his agreement/" Disaffirmance by an infant is not a fraudulent act. It does not render him hable at law as for fraud nor will a court of equity grant relief against the disaffirmance on that ground." Conse- quently the infant cannot be held liable in damages for breach of contract.^* Nor is he criminally responsible because of his dis- affirmance.^' § 354. Disaffirmance — Effect — Miscellaneous instances. — Nor, as in the case of building contracts, can the infant be held liable by enforcing a lien on his premises.*" An infant has been held liable, however, for the rent and profits during his occu- pancy.*^ He has also been held liable for the value of improve- ments made by the purchaser,*^ although this liability has been limited to the increased rental value of the premises.*^ On the other hand the infant has been held entitled to a lien on the prem- ises as security for the return of purchase-money paid in by him.** But this does not entitle the infant to recover money paid in to a third person under the contract.*^ § 355. Finality of disaffirmance. — A valid disaffirmance cannot be retracted without the assent of the other party. It ^ See ante, i 315, Effect of Conceal- v. Howard, 88 N. Car. 6S0. In this ment or Misrepresentation. connection see, however, Common- "^ Burns v. Hill, 19 Ga. 22; Brantley wealth v. Ferguson, 135 Ky. 32, 121 V. Wolf, 60 Miss. 420; Glamorgan v. S. W. 967, 24 L. R. A. (N. S.) Lane, 9 Mo. 446; Huth v. Garondelet llOln, in which it was held that &c. R. Co., 56 Mo. 202; Seabrook v. the infant may be criminally liable if Gregg, 2 S. Gar. 68; Tucker v. More- he falsely represents his age and land, 10 Pet. (U. S.) 58, 9 L. ed. 345. thereby obtains property under a con- °* Harrison v. Burnes, 84 Iowa 446, tract. See also, ante, § 315 et seq., 51 N. W. 165 ; Derocher v. Continent- Concealment or Misrepresentation, al Mills, 58 Maine 217, 4 Am. Rep. " See ante, § 311, Mechanic's Lien. 286; Vent v. Osgood, 19 Pick. *^ Scott v. Scott, 29 S. Car. 414, 7 (Mass.) 572; Widridge v. Taggart, 51 S. E. 811. Mich. 103, 16 N. W. 251; Stotts v. *"Rundle v. Spencer, 67 Mich. 189, Leonhard, 40 Mo. App. 336; Medbury 34 N. W. 548. V. Watrous, 7 Hill (N. Y.) 110; '= Sewell v. Sewell, 92 Ky. 500, 18 S. Whitmarsh v. Hall, 3 Denio (N. Y.) W. 162, 36 Am. St. 606. 375, See, however, Thomas v. Dike, "Scott v. Scott, 29 S. Car. 414, 7 11 Vt. 273, 34 Am. Dec. 690; Moses S. E. 811; Morris v. Holland, 10 Tex. V. Stevens, 2 Pick. (Mass.) 332; Civ. App. 474, 31 S. W. 690. Lowe V. Sinklear, 27 Mo. 308. « Jennings v. Hare, 47 S. Car. 279, "Tones v. State, 31 Tex. Grim. 25 S. E. 198, distinguishing Scott v. App 177, 20 S. W. 578. Srt also, Scott, 29 S. Car. 414, 7 S. E. 811. State v. Plaisted, 43 N. H. 413; State 355 CONTRACTS. 572 follows that if the contract concerns personalty a disaffirmance made during minority is final and cannot afterward be avoided except by mutual assent.*" A fortiori a rescission after majority is a final election.*^ "Edgerton v. Wolf, 6 Gray (Mass.) 453. In the above case an infant bought a horse. During minor- ity he rescinded the purchase. This action was held to be final, the in- fant defendant ceasing to have any right over the property. Pippen v. Mutual Benefit &c. Cc, 130 N. Car. 23, 40 S. E. 822, 57 L. R. A. 505n. In the above case an infant avoided his contract of insurance. His admin- istrator attempted to avoid his disaf- firmance and hold the company liable on the policy. It was held this could not be done. "McCarty v. Woodstock Iron Co., 92 Ala. 463, 8 So. 417, 12 L. R. A. 136. In the above case a deed was dis- affirmed after majority. The court said : "The disaffirmance destroyed all defendant's equitable claim or title to the land but did not affect the legal. Defendant having once disaffirmed, could not repudiate it, and then con- firm ; the contract having been made void cannot be revived, except by mu- tual consent." It must be borne in mind that an infant cannot disaffirm his contract concerning real estate during minority. See ante, § 337. CHAPTER XII. INSANE PERSONS. i 36S. When one person is of such unsound mind as to be inca- pable of contracting. 366. Insanity must bear directly on the agreement. 367. Contracts of insane persons generally voidable. 368. Contracts of insane persons — When void. 369. Proceeding to commit to an asylum and to appoint guard- ian — Distinction between. 370. Rule holding contract of insane persons void strictly con- strued. 371. Voidable contracts of an insane person. 372. Valid contracts of insane per- sons. 373. Contracts for necessities. § 374. What are necessities. 375. Effect of inquisition and adju- dication of insanity. ild. Adjudication covering period of time prior to finding. ill. Adjudication — Collateral attack. 378. Contracts after office found. 2i]9. Effect of knowledge of the other party. 380. Effect of want of knowledge. 381. Ratification and avoidance. 382. Who may affirm or avoid. 383. Acts showing a disaffirmance. 384. Restoration of consideration. 385. Illustrations of the rule. 386. Restoration as a condition pre- cedent. 387. Liability for benefits received — Subrogation — Insanity a question of fact. § 365. When one is of such unsound mind as to be inca- pable of contracting. — Mental weakness, whether resulting from sickness, age or any other cause, which does not totally destroy the ability to comprehend the nature and effect of the transaction, furnishes no ground for the avoidance of a contract entered into by such person in the absence of evidence showing fraud, duress or undue influence.^ One may bind himself even though his mental capacity does not equal that of the average man.^ More than this, when a contract is sought to be set aside on the sole ground of mental incapacity, a person's mind may be clouded to a greater or less degree without rendering him inca- ^ See ante, chapter 10, Parties. See also, Seawel v. Dirst, 70 Ark. 166, 66 S. W. 1058; Nance v. Stock- burger, 111 Ga. 821, 36 S. E. 100; Saffer v. Mast, 223 111. 108, 79 N. E. 32; Richardson v. Traveler's Life Ins. Co. (Maine), 82 Atl. 1006; Mulloy v. Ingalls, 4 Nebr. 115; Blanchard v. Nestle, 3 Denio (N. Y.) 37; Stew- art's Exr. V. Lispenard, 26 Wend. (N. Y.) 303; Williams v. Sapieha, 94 Tex. 430, 61 S. W. 115. "" Coburn v. Raymond, 76 Conn. 484, 57 Atl. 116, 100 Am. St. 1000; Hale v. Hills, 8 Conn. 39. 573 § 36s CONTRACTS. 574 pable of forming a valid agreement. The law simply requires him, in general, to know what he is about.* Before one's capacity to contract will be destroyed by unsound- ness of mind, his reasoning faculties must be so impaired by age, disease, or other cause as to render him incapable of compre- hending and acting rationally in the transaction in which he is engaged. If he can understand the nature of his business and appreciate the effect of what he is doing and can exercise his will with reference thereto, his acts will be valid so far as this question is concerned.'' "Moore v. Gilbert, 175 Fed. 1. 99 C. C. A. 141; Hovey v. Chase, 52 Maine 304, 83 Am. Dec. 514; Allen's Admrs. v. Allen's Admrs. 79 Vt. 173, 64 Ad. 1110. The case of Green V. Maxwell, 251 III. 335, 96 N. E. 227, 36 L. R. A. (N. S.) 418, holds that a higher degree of intellect is required to make a valid contract than a valid will.^ It lays down the rule that to sustain a deed the grantor must have ability to transact ordinary business, and that mental strength to compete with an antagonist and understanding to pro- tect his own interest, are essential in the transaction of ordinary business. 'Dominick v. Randolph, 124 Ala. 557, 27 So. 481 ; Moore v. Gilbert, 175 Fed. 1, 99 C. C. A. 141; Barlow v. Strange, 120 Ga. 1015, 48 S. E. 344; Martin v. Hart, 231 111. 384, 83 N. E. 164, 13 L. R. A. (N. S.) 1000; Snyder V. Snyder, 142 111. 60, 31 N. E. 303, per Craig, J. : "In Indiana, under a statute quite similar to ours, in Fiscus V. Turner, 125 Ind. 46, 24 N. E. 633, where the jury had been instructed if they believed that, from the evi- dence, that 'in Nancy Fiscus there is an essential privation of her reason- ing faculties, or if she is incapable of understanding and acting with discre- tion in the ordinary affairs of life, then she is a person of unsound mind, and incapable of managing her estate, and you should so find.' This in- struction having been challenged, in passing upon it the court said : 'We think counsel is mistaken in his con- tention that the instruction does not fix any standard by which the jury is to be governed. The jury were told, in substance, that if Nancy Fis- cus, the appellant, was so far deprived of reason that she was no longer cap- able of understanding and acting with discretion in the ordinary affairs of life, that she was insane, within the meaning of the law. This, we think, was a correct definition of insanity, and one that was easily understood by the jury.'" Sands v. Potter, 165 111. 397, 46 N. E, 282, 56 Am. St. 253; Raymond v. Wathen, 142 Ind. 367, 41 N. E. 815 ; Elwood v. O'Brien, 105 Iowa 239, 74 N. W. 740 ; Richardson V. Traveler's Ins. Co. (Maine), 82 Atl. 1005; Milks v. Milks, 129 Mich. 164, 88 N. W. 402. See also, Wil- son v. Jackson, 167 Mo. 135, 66 S. W. 972 ; State v. Grand Lodge &c., 78 Mo. App. 546; Dennett v. Dennett, 44 N. H. 531, 84 Am. Dec. 97; Wilkinson v. Sherman, 45 N. J. Eq. 413, 18 Atl. 228; Sprinkle v. Well- born, 140 N. Car. 163, 52 S. E. 666, 3 L. R. A. (N. S.) 174n, 111 Am. St. 827; Whittaker v. Hamilton, 126 N. Car. 465, 35 S. E. 815; Carnagie v. Diven, 31 Ore. 366, 49 Pac. 891 ; Mil- ler V. Rutledge's Committee, 82 Va. 863, 1 S. E. 202; Buckey v. Buckey, 38 W. Va. 168, 18 S. E. 383. How- ever, where the consideration is in- adequate or where there is no con- sideration whatever, the degree of mental weakness required is much less than when the contract is made upon a fair consideration and is rea- sonable and just. Weeks v. Wort- mann, 84 Nebr. 217, 120 N. W. 933. To same effect, Allen's Admrs. v. Allen's Admrs., 79 Vt. 173, 64 Atl. 1110 (aged and infirm grantor of property made the conveyance with- out consideration while subjected to undue influence). Mere physical 575 INSANE PERSONS. § 366 § 366. Insanity must bear directly on the agreement. — Moreover, the insanity alleged must have a direct bearing on the agreement. A monomania or delusion unconnected vfith the subject-matter of the contract or which does not prompt the agreement does not destroy its binding force." On the other hand, if the insane delusion is so connected with the subject-mat- ter of the agreement as to render one of the parties thereto in- capable of understanding the nature or effect of the contract, it is thereby rendered voidable at the option of the party so afflicted." Lunacy may be intermittent in character; if so, a valid con- tract may be entered into during a lucid interval.'' However, where one is shown to have been mentally deranged at a recent period anterior to the execution of the contract, that condition is presumed to continue and the burden is on the other party to show that the agreement was entered into during a lucid interval or weakness not taken advantage of through fraud or undue influence is not usually sufficient if it does not produce a state of unconsciousness to invalidate a contract. Nason v. Chicago, R. I. & P. R. Co. (Iowa), 128 N. W. 854. "Searle v. Galbraith, 73 111. 269; Burgess v. Pollock, 53 Iowa 273, 5 N. W. 179, 36 Am. Rep. 218; Lewis v. Arbuckle, 85 Iowa 335, 52 N. W. 237, 16 L. R. A. 677 ; Staples v. Welling- ton, 58 Maine 453; Meigs v. Dexter, 172 Mass. 217, 62 N. E. 75 ; Blakeley V. Blakeley, 33 N. J. Eq. 502; Boyce V. Smith, 9 Grat. (Va.) 704, 60 Am. Dec. 313. See also. Wetter v. Haber- sham, 60 Ga. 193 ; Cutler v. Zollinger, 117 Mo. 92, 22 S. W. 895 ; Benoist v. Murrin, 58 Mo. 307; Pidcock v. Pot- ter, 68 Pa. St. 348, 8 Am. Rep. 181. "Dominick v. Randolph, 124 Ala. 557, 27 So. 481 ; Lemon v. Jenkins, 48 Ga. 313; Mathews v. Nash, 151 Iowa 125, 130 N. W. 796 (suit to set aside an executory land contract induced by an insane delusion by the promisor relative to her husband) ; Hovey v. Hobson, 55 Maine 256 ; Bond v. Bond, 7 Allen (Mass.) 1 ; Dewey v. Algire, 37 Nebr. 6, 55 N. W. 276, 40 Am. St. 468 ; Riggs v. American Tract Society, 95 N. Y. 503. ' Hall V. Warren, 9 Ves. 610, 7 R. R. 306; McCormick v. Littler, 85 111. 62, 28 Am. Rep. 610; Lilly v. Waggoner, 27 111. 395; Jones' Admr. v. Perkins, 5 B. Mon. (Ky.) 222; In re Gang- were, 14 Pa. 417, S3 Am. Dec. 554; Tozer v. Saturlee, 3 Grant (Pa.) 162; Lee's Heirs v. Lee's Exr., 4 McCord (S. Car.) 183, 17 Am. Dec. 722; Wright v. Market Bank (Tenn.), 60 S. W. 623 ; Reed v. Reed, 108 Va. 790, 62 S. E. 792. See also, Baldrick v. Garvey, 66 Iowa 14, 23 N. W. 156; King V. Robinson, 33 Maine 114, 54 Am. Dec. 614; Williams v. Hayes, 143 N. Y. 442, 38 N. E. 449, 26 L. R. A. 153n, 42 Am. St. 743n. Where in- sanity is shown to exist both before and after the transaction and so near the event as to leave but a very short time for a lucid interval to have in- tervened, the agreement may be held invalid when the nature of the mania is taken into consideration. Ellars V. Mossbarger, 9 III. App. 122. The promisor's mental condition at the time the contract was executed is the important question. Moore v. Gil- bert, 175 Fed. 1. 99 C. C. A. 141; T. M. Gilmore & Co. v. W. B. Samuels 6 Co., 135 Ky. 706, 123 S. W. 271. § 366 CONTRACTS. 576 after recovery/ provided the derangement is not caused by a tem- porary or transient ailment, such as fever, fits or the like." § 367. Contracts of insane persons generally voidable. — There are authorities to the effect that all contracts or convey- ances of an insane person are absolutely void.^° The foregoing cases are, however, clearly contrary to the v^eight of authority. It is well settled that the contract or conveyance of a lunatic be- fore office found is generally voidable only and not void.^^ Nor is it necessary that resort be had to equity in order to avoid the ° Rawdon v. Rawdon, 28 Ala. 565; Pike V. Pike, 104 Ala. 642, 16 So. 689 ; Hoge V. Fisher, Fed. Cas. No. 6585, Pet. C. C. 163 ; Emery v. Hoyt, 46 111. 258; Physio-Med. College v. Wilkin- son, 108 Ind. 314, 9 N. E. 167; Sheets V. Bray, 125 Ind. 33, 24 N. E. 357; Wright V. Wright, 139 Mass. 177, 29 N. E. 380; Ricketts v. Jolliff, 62 Miss. 440; Jackson v. King, 4 Cow. (N. Y.) 207, 15 Am. Dec. 354n ; Rogers v. Walker, 6 Pa. 371, 47 Am. Dec. 470; Pittsburg Nat. Bank v. Palmer, 22 Pittsburg Legal Journal 189; Elston V. Jasper, 45 Tex. 409; Fishburne v. Ferguson, 84 Va. 87, 4 S. E. 575; Wright V. Jackson, 59 Wis. 569, 18 N. W. 486 ; Ripley v. Babcock, 13 Wis. 425 ; Wright v. Jackson, 59 Wis. 569, 18 N. W. 486. The rule is some- times stated in this manner "perma- nent and confirmed insanity shown to exist at any time prior to the ex- ecution of the contract is presumed to continue until a return of sanity is established." See cases above cited. Kellogg V. United States, 103 Fed. 200, 43 C. C. A. 179. ' Trish V. Newell, 62 111. 196, 14 Am. Rep. 79; Corbit v. Smith, 7 Iowa 60, 71 Am. Dec. 431 ; Carpenter v. Car- penter, 8 Bush (Ky.) 283; Thornton V. Appleton, 29 Maine 298; Staples v. Wellington, 58 Maine 453; Turner v. Rusk, 53 Md. 65 ; Hix v. Whitteraore, 4 Mete. (Mass.) 545; Richardson v. Smart, 152 Mo. 623, 54 S. W. 542, 75 Am. St. 488; Cropp v. Cropp, 88 Va. 753, 14 S. E. 529. See also, Hall V. Unger, Fed. Cas. No. 5949, 4 Sawyer (U. S.) 672, 2 Abb. (U. S.) 507; Pike v. Pike, 104 Ala. 642, 16 So. 689; Townshend v. Townshend, 7 Gill (Md.) 10; Stewart v. Redditt, 3 Md. 67; Reed v. Reed, 108 Va. 790, 62 S. E. 792. For a discussion of insanity as an act of God, see Cen- tral of Georgia R. Co. v. Hall, 124 Ga. 322, 52 S. E. 679, 4 L. R. A. (N. S.) 898, 110 Am. St. 170n. "Walker v. Winn, 142 Ala. 560, 39 So. 12, 110 Am. St. 50; Daugherty V. Powe, 127 Ala. 577, 30 So. 524; Wilkinson v. Wilkinson, 129 Ala. 279, 30 So. 578; Galloway v. McLain, 131 Ala. 280, 31 So. 603; Edwards v. Davenport, 20 Fed. 756, 4 McCrary 34; Corbit v. Smith, 7 Iowa 60, 71 Am. Dec. 431 ; Owing's Case, 1 Bland Ch. (Md.) 370, 17 Am. Dec. 311. For an explanation of this case see, however, Riley v. Carter, 76 Md. 581, 25 Atl. 667, 19 L. R. A. 489, 35 Am. St. 443; Hanley v. National Loan &c. Co., 44 W. Va. 450, 29 S. E. 1002. See also, Lee's Heirs v. Lee's Executors, 4 McCord (S. Car.) 183, 17 Am. Dec. 722. By other au- thorities only conveyances of real es- tate are declared void. Elder v. Schumaker, 18 Colo. 433, 33 Pac. 175; Rogers v. Blackwell, 49 Mich. 102, 13 N. W. 512; Wager v. Wagoner, 53 Nebr. 511, 73 N. W. 937; Van Deusen v. Sweet, 51 N. Y. 378. In connection with this lat- ter case see Blinn v. Schwarz, 177 N. Y. 252, 69 N. E. 542, 101 Am. St 806, in which it is explained. Far- ley V. Parker, 6 Ore. 105, 25 Am. Rep. 504. See also. Bowman v. Wade, 54 Ore. 347, 103 Pac. 72. "Castro V. Geil, 110 Cal, 292, 42 Pac. 804, 52 Am, St. 84; Coburn v. Raymond, 76 Conn. 484, 57 Atl. 116, 100 Am, St. 1000; WooUey v. Gaines, 114 Ga, 122, 39 S. E. 892, 88 Am. St. 22; Rattliff v. Baltzer's Admr., 13 577 INSANE PERSONS. § 368 conveyance of an insane person. It may be set aside or held in- valid in an action in ejectment." § 368. Contracts of insane persons — When void. — There are certain contracts of an insane person that are said to be void. The instances in vi^hich this is true correspond to the void con- tracts of an infant. A power of attorney executed by a person of unsound mind v^rhereby he attempts to authorize another to sell land is absolutely void and not merely voidable.^' Contracts made with a person of unsound mind after inquisition and ad- judication of insanity and the appointment of a guardian or Idaho 152, 89 Pac. 71; Mead v. Stegall, n 111. App. 679; Burnham V. Kidwell, 113 III. 425; Studebaker V. Faylor, 170 Ind. 498, 83 N. E. 747, 127 Am. St. 397; Boyer v. Berryman, 123 Ind. 451, 24 N. E. 249; Aetna Life Ins. Co. v. Sellers, 154 Ind. 370, 56 N. E. 97, n Am. St. 481 ; Down- ham V. Holloway, 158 Ind. 626, 64 N. E. 82, 92 Am. St. 330; Allen v. Berryhill, 27 Iowa 534, 1 Am. Rep. 309; Willis v. Mason, 140 Ky. 88, 130 S. W. 964; Breckenridge v. Ormsby, 1 J. J. Marsh. (Ky.) 236, 19 Am. Dec. 71 ; Eaton v. Eaton, 37 N. J. L. 108, 18 Am. Rep. 716; Blakeley v. Blakeley, 33 N. J. Eq. 502; Ipock v. Atlantic &c. R. Co. (N. Car.), 74 S. E. 352; Luhrs v. Hancock, 181 U. S. 567, 45 L. ed. 1005, 21 Sup. Ct. 726. The right to disaffirm is superior to the rights of an innocent purchaser for value. Hovey v. Hobson, 53 Maine 451, 89 Am. Dec. 705; Flach V. Gottschalt Co., 88 Md. 368, 41 Atl. 908, 42 L. R. A. 745, 71 Am. St. 418 and note; Riley v. Carter, 76 Md 581, 25 Atl. 667, 19 L. R. A. 489, 35 Am. St. 443; Howe v. Howe, 99 Mass. 88; Wolcott v. Ins. Co., 137 Mich. 309, 100 N. W. 569; Thorpe V. Hanscom, 64 Minn. 201, 66 N. W. 1; McAnaw v. Tiffin, 143 Mo. 667, 45 S. W. 656; Gingrich v. Rogers, 69 Nebr. 527, 96 N. W. 156; Smith V. Ryan, 191 N. Y. 452, 84 N. E. 402, 19 L. R. A. (N. S.) 461n, 123 Am. St. 609; BHnn v. Schwarz, 177 N Y. 252, 69 N. E. 542, 101 Am. -St. 806; Sprinkle v. Wellborne, 140 N. Car! 163, 52 S. E. 666, 3 L. R. A. (N. S.) 174, 111 Am. St. 827;Creek- Zl — Contracts, Vol. I more v. Baxter, 121 N. Car. 31, 27 S. E. 994; Crawford v. Scovell, 94 Pa. 48, 39 Am. Rep. 766; Newman V. Taylor (Tex. Civ. App.), 122 S. W. 425 ; Pearson v. Cox, 71 Tex. 246, 9 S. W. 124, 10 Am. St. 740; French Lumbering Co. v. Theriault, 107 Wis. 627, 83 N. W. 927, 51 L. R. A. 910, 81 Am. St. 856. '= Brown v. Freed, 43 Ind. 253; Hovey v. Hobson, 53 Maine 451, 89 Am. Dec. 70S; Allis v. Bilhngs, 6 Mete. (Mass.) 415, 39 Am. Dec. 744; Eaton V. Eaton, il N. J. L. 108, 18 Am. Rep. 716; Smith v. Ryan, 191 N. Y. 452, 84 N. E. 402, 19 L. R. A. (N. S.) 461, 123 Am. St. 609 and note. In the above case the proposi- tion was discussed at length. The following cases were also cases in ejectment: Fitzgerald v. Shelton, 95 N. Car. 519; Crawford v. Scovell, 94 Pa. 48, 39 Am. Rep, 766. See also. Ball V. Mannin, 1 Dow. & C. 380; Moran v. Moran, 106 Mich. 8, 63 N. W. 989, 58 Am. St. 462. The case of Jacobs V. Richards, 18 Beav. 300, contains an obiter statement to the effect that relief must be had in equity. See also, McAnaw v. Clark, 167 Mo. 443, 67 S. W. 249. " Plaster v. Rigney, 97 Fed. 12, 38 C. C. A. 25; McClun v. McClun, 176 111. 376, 52 N. E. 928; Clay v. Ham- mond, 199 111. 370, 65 N. E. 352, 93 Am. St. 146; Dexter v. Hall, 15 Wal. (U. S.) 9, 21 L. ed. 73. And see Wolcott V. Ins. Co., 137 Mich. 309, 100 N. W. 569; Eaton v. Eaton, il N. J. L. 108, 18 Am. Rep. 716. Contra, Williams v. Sapieha, 94 Tex. 430, 61 S. W. 115. § 369 CONTRACTS. 578 conservator for such person and during the time such adjudica- tion and appointment remain in force, are void.^* So it has been held that the guardian cannot maintain an action on his ward's contract for the sale of his real estate/^ § 369. Proceeding to commit to an asylum and to appoint guardian — Distinction between. — It should be borne in mind, however, that there is a distinction between proceedings whereby it is sought to commit one to an insane asylum for safekeeping and treatment and a proceeding which has for its object the ap- pointment of a guardian on the ground that such person is in- competent to deal" with his property or manage his affairs. One may properly be committed to an insane asylum in order to pre- vent injury to himself or others and yet be competent to manage his estate." "Church V. Rosenstein (Conn.), 82 Atl. 568 (also holding that the con- servator cannot, without an order of the probate court, borrow money on the credit of the ward's estate) ; American Trust &c. Co. v. Boone, 102 Ga. 202, 29 S. E. 182, 40 L. R. A. 250, 66 Am. St. 167; Burnham v. Kidwell, 113 111. 425; Lilly v. Wag- goner, 27 111. 395 ; McCormick v. Littler, 85 111. 62, 28 Am. Rep. 610; Pearl v. McDowell, 3 J. J. Marsh, (Ky.) 658, 20 Am. Dec. 199; Hovey V, Hobson, 53 Maine 453, 89 Am. Dec. 705; Wait v. Maxwell, 5 Pick. (Mass.) 217, 16 Am. Dec. 391; Leon- ard V. Leonard, 14 Pick. (Mass.) 280; Lynch v. Dodge, 130 Mass. 458; Payne v. Burdette, 84 Mo. App. 332; Rannells v. Gerner, 80 Mo. 474. By the above case it is held that an in- sane person under guardianship cannot bind himself by contracts dur- ing a lucid interval. L'Amoureux v. Crosbv, 2 Paige (N. Y.) 422, 22 Am. Dec. 655 ; Carter v. Beckwith, 128 N. Y. 312, 28 N. E. 582; Wadsworth v. Sharpsteen, 8 N. Y. 388, 59 Am. Dec. 499; Hughes v, Jones, 116 N. Y. 67, 22 N. E. 446, 5 L. R. A. 637, 15 Am. St. 386; Hanley v. National Loan &c. Co., 44 W. Va. 450, 29 S. E. 1002. It is immaterial that the other party had no knowledge of the ad- judication. American Trust &c. Co. v. Boone, 102 Ga. 202, 29 S. E. 182, 40 L. R. A. 250, 66 Am. St. 167; Bradbury v. Place (Maine), 10 Atl. 461 ; Mohr v. Tulip, 40 Wis. 66. ^ Fitzhugh V. Wilcox, 12 Barb. (N. Y.) 235. '^Wagener v. Harriott (N. Y.), 20 Abb. N. Cas. 283, per McAdam, Ch. J. : "Wedmark had committed no offense, .and the money taken from his person was not the proceeds of crime. The defendant became pos- sessed of it for safekeeping only, and was bound to return it upon demand, The fact that Wedmark was com- mitted to the asylum did not in- capacitate him for making a legal transfer of the right of action. No committee of the person and estate of the lunatic had been appointed, and until inquisition and office found, the acts of the lunatic are voidable only — not void. (Ingraham v. Bald- win, 9 N. Y. 45, affg. 12 Barb. (N. Y.) 9; Matter of Beckwith, 3 Hun (N. Y.) 443, T. & C. (N. Y.) 13 ; Fitzhugh v. Wilcox, 12 Barb. (N. Y.) 235; Wait v. Maxwell, 5 Pick. (Mass.) 217.) Thus, a mar- riage between a lunatic and a sane woman, followed by cohabitation, is not void, but voidable only; it can- not be impeached in an action against the committee for necessaries fur- nished to the wife (Stuckey v 579 INSANE PERSONS. 370 § 370. Rule holding contracts of insane persons void strictly construed. — The rule that contracts of an insane per- son under guardianship are void is given a strict construction. It has been held that even though one has been judicially found in- sane a contract entered into subsequently to such finding and prior to the appointment of a guardian or conservator, is not con- clusively void.^' The same is true where the guardian has re- signed, been removed or the guardianship has been practically abandoned.^^ Certain authorities declare that if the insanity of a party to a contract is known by the other party thereto, the agreement is absolutely void." It would seem unnecessary to so hold, however, for the insane person would thereby lose the benefit of any advantageous contract he might make. If the con- tract is void neither party is bound. It could be as freely abro- gated by the sane as by the insane party. An insane person is amply protected by the rule holding his contracts voidable, es- Mathes, 24 Hun (N. Y.) 461). A deed executed by a lunatic before office found is not void, but voidable only; therefore, one not in privity with the lunatic cannot allege the lunacy as a matter of defense (Mer- ritt v. Gumaer, 2 Cow. (N. Y.) 5S2). Van Deusen v. Sweet, 51 N._ Y. 378, does not conflict with the view stated. In that case, the plaintiff brought ejectment, claiming title un- der the will of Sylvester Sweet made in 1849. The defendant claimed title under a deed executed by Sylvester Sweet in 1864. The question of Sweet's competency to make the deed in 1864 was submitted to the jury, who found for the plaintiff and the judgment was affirmed. The case presented a direct conflict between the legal representatives of the lunatic on the one hand, and a person claiming under a grant made by the lunatic on the other, and the ques- tion whether the grant was void or voidable only, became of no conse- quence, as the legal representatives had the right in either event to avoid it." See also, Treadwell v. Torbert, 122 Ala. 297, 25 So. 216; Kel- logg v. Cochran, 87 Cal. 192, 25 Pac. 677, 12 L. R. A. 104; Aldrich v. Su- perior Court, 120 Cal. 140, 52 Pac. 148; Leggate v. Clark, 111 Mass. 308; Knox v. Haug, 48 Minn. 58, SO N. W. 934; Hensinger v. Dyer, 147 Mo. 219, 48 S. W. 912; Dewey V. Algire, 37 Nebr. 6, 55 N. W. 276, 40 Am. St. 468; Wadsworth v. Sharp- steen, 8 N. Y. 388, 59 Am. Dec. 499; Imhoff V. Witmer, 31 Pa. St. 243. "McCormick v. Littler, 85 111. 62, 28 Am. Rep. 610; Topeka &c. Co. v. Root, 56 Kans. 187, 42 Pac. 715; Lower v. Schumacher, 61 Kans. 625, 60 Pac. 538; Black's Estate, 132 Pa. 134, 19 Atl. 31. Contra, Kiehne v. Wessell, 53 Mo. App. 667. " Willwerth v. Leonard, 156 Mass 277, 31 N. E. 299; Thorp v. Hanscom, 64 Minn. 201, 66 N. W. 1 ; Elston v. Jasper, 45 Tex. 409. See, however. Redden v. Baker, 86 Ind. 191. " Henry v. Fine, 23 Ark. 417 ; Beth- any Hospital Co. V. Philippi, 82 Kans. 64, 107 Pac. 530, 30 L. R. A. (N. S.) 194; Matthiessen & Weicher's Refin- ing Co. V. McMahon's Admr., 38 N. J. L. 536; Lincoln v. Buckmaster, 32 Vt. 652. Persons who deal with such persons are regarded as having per- petrated a fraud on them. Helbregv. Schumann, 150 111. 12, 37 N. E. 99, 41 Am. St. 339; Fecel v. Guinault, 32 La. Ann. 91. § 371 CONTRACTS. 580 pecially when it is remembered that it is unnecessary for the person non compos mentis to place the other party in statu quo when it appears that such other person has knowledge of his insanity. It follows that, by the better rule, contracts between parties, one of whom is non compos mentis and known so to be by the other party, are not void but voidable, the fact that the party dealing with the non compos mentis person had knowledge of his mental incapacity being material merely upon the question as to whether he is entitled to be placed in statu quo before there can be an avoidance of the deed in question."" § 371. Voidable contracts of an insane person. — All other contracts of an insane person are either valid or voidable. His chattel mortgage is valid until disaffirmed.^^ The bill or note of an insane person is voidable.°^ The same is true of his deed,^^ =°Studebaker v. Faylor, 170 Ind. 498, 83 N. E. 747, 127 Am. St. 397; Thrash V. Starbuck, 145 Ind. 673, 44 N. E. 543; Eaton v. Eaton, Zl N. J. L. 108, 18 Am. Rep. 716; Crawford v. Scovell, 94 Pa. 48, 39 Am. St. 766. See, however, Odom v. Reddick, 104 N. Car. 515, 10 S. E. 609, 7 L. R. A. 118, 17 Am. St. 686. ^Fay V. Burditt, 81 Ind. 433, 42 Am. Rep. 142. See also, Creekmore V. Baxter, 121 N. Car. 31, 27 S. E. 994. ^Voris V. Harshbarger, 11 Ind. App. S5S, 39 N. E. 521 ; Reinskopf v. Rogge, il Ind. 207 ; Wilder v. Weak- ley, 34 Ind. 181 ; Musselman v. Cra- vens, 47 Ind. 1 ; Taylor v. Dudley, 35 Ky. 308; Burke v. Allen, 29 N. H. (9 Foster) 106, 61 Am. Dec. 642. In the above case it was the payee and endorser that was insane. Hos- ier v. Beard, 54 Ohio St. 398, 43 N. E. 1040, 35 L. R. A. 161, 56 Am. St. 720. But if an insane person's note is accepted without knowledge of his insanity and no advantage is taken of him, but, instead, the transaction is for his benefit, he may be held liable thereon, at least to the amount of the loan expended for necessities. Davis v. Tarver, 65 Ala. 98; Lan- caster County Nat. Bank v. Moore, 78 Pa. 407, 21 Am. Rep. 24; First National Bank v. McGinty, 29 Tex. Civ. App. 539, 69 S. W. 495. As to the right of the maker of a bill or note to interpose the defense that the payee and endorser thereof was insane at the time of the en- dorsement, when sued by the en- dorsee, see Carrier v. Sears, 4 Al- len (Mass.) 336, 81 Am. Dec. 707, which holds that the maker cannot when neither the payee or his per- sonal representatives has disaffirmed the endorsement. See, however, Burke V. Allen, 29 N. H. 106, 61 Am. Dec. 642, and Hannahs v. Sheldon, 20 Mich. 278. In case the maker is insane the purchaser takes with no- tice of the maker's insanity. Jeneson v. Jeneson, 66 111. 259. "^ Greene v. Maxwell, 251 111. 335, 96 N. E. 227, 36 L. R. A. (N. S.) 418; Studebaker v. Faylor, 170 Ind. 498, 83 N. E. 747, 127 Am. St. 397; Kent V. LaRue, 136 Iowa 113, 113 N. W. 547 ; Dowell v. Dowell's Adrar. (Ky.), 125 S. W. 283; Campbell v. Kerrick, 142 Ky. 279, 134 S. W. 186; King V. Sipley, 166 Mich, 258, 131 N. W. 572; BHnn v. Schwarz, 177 N. Y. 252, 69 N. E. 542, 101 Am. St. 806; Smith v. Ryan, 191 N. Y. 452, 84 N. E. 402, 19 L. R. A. (N. S.) 461, 123 Am. St. 609; Shea v. Camp- bell. 71 Misc. (N. Y.) 222, 128 N. Y. S. 508; Sprinkle v. Wellborne, 140 N. Car. 163, 52 S. E. 666, 3 L. R. A. (N. S.) 174n, 111 Am. St. 827; Vogel v. Zuercher (Tex. Civ. App.), 58i INSANE PERSONS. § 372 mortgage/* or sale of realty thereunder/^ or release.^' His contract for services may be voidable at the option of himself or his personal representatives but not at the option of the servant/^ But he may be liable for services rendered either to the extent of the benefit received^* or on the ground that the services ren- dered were necessities.^" His bill of sale has been held voidable.'" Contracts that are voidable at the option of a party thereto who is non compos mentis are also voidable as against a purchaser '(although vv^ithout notice and for full value) from the other contracting party.'^ § 372. Valid contracts of insane persons. — Under certain circumstances the contracts of an insane person may be valid and binding upon him. Contracts of a monomaniac which are unaffected by the monomania are of this character.'^ The same is true of contracts entered into in a lucid interval. They, too, may be valid and binding.'^ A voluntary performance by an 135 S. W. 12t7. A deed given by an insane member of a partnership in the name of the firm is voidable. Riley V. Carter, 76 Md. 581, 25 Atl. 667, 19 L. R. A. 489, 35 Am. St. 443. See ante, § 367. His deed absolute may be shown to be in fact a mort- gage. Helbreg v. Schumann, 150 111. 12, i1 N. E. 99, 41 Am. St. 339. ^ Ingraham v. Baldwin, 12 Barb. (N. Y.) 9; Cook v. Parker, 4 Phila. (Pa.) 265; Mohr v. Tulip, 40 Wis. 66. ^Encking v. Simmons, 28 Wis. 272 ""'^tna Life Ins. Co. v. Sellers, 154 Ind. 370, 56 N. E. 91, 77 Am. St. 481. '^ Mead V. Stegall, 77 111. App. 679. See also, McGuirl v. McGuirl, 12 111. App. 624. "^ Ballard v. McKenna, 4 Rich. Eq. (S. Car.) 358. ""McKee's Admr. v. Ward, 18 Ky. L. 987, 38 S. W. 704; Key v. Harris, 116 Tenn. 161, 92 S. W. 235; Schra- mek V. Shepeck, 120 Wis. 643, 98 N. W. 213. "Wilkins V. Wilkins, 35 Nebr. 212, 52 N, W. 1109. For other cases il- lustrating the voidability of an in- sane person's contract, see Flach v. Gottschalk Co., 88 Md. 368, 71 Am. St. 418. In the above case two bar- rels of whiskey were bought, suit be- ing brought for the purchase-price. See also, Bunn v. Postell, 107 Ga. 490, 33 S. E. 707 ; Orr v. Equitable Mort- gage Co., 107 Ga. 499, 33 S. E. 708; ^tna Life Ins. Co. v. Sellers, 154 Ind. 370, 56 N. E. 97, 77 Am. St. 481 ; Rusk v. Fenton, 14 Bush (Ky.) 490, 29 Am. Rep. 413; Garland v. Rice, 4 Ky. L. 254; Morris v. Great Northern R. Co., 67 Minn. 74, 69 N. W. 628; Scott v. Hay, 90 Minn. 304, 97 N. W. 106; Luhrs v. Hancock, 181 U. S. 567, 45 L. ed. 1005, 21 Sup. Ct. 726. "'Hull V. Louth, 109 Ind. 315, 10 N. E. 270, 58 Am. Rep. 405; Hovey V. Hobson, 53 Maine 451, 89 Am. Dec. 705; Rogers v. Blackwell, 49 Mich. 192, 13 N. W. 512 ; McKenzie v. Don- nell, 151 Mo. 461, 52 S. W. 222; Dewey v. Algire, i7 Nebr. 6, 55 N. W. 276, 40 Am. St. 468; Gingrich v. Rogers, 69 Nebr. 527, 96 N. W. 156; Hosier v. Beard, 54 Ohio St. 398, 43 N. E. 1040, 35 L. R. A. 161, 56 Am. St. 720 ; Wirebach's Exr. v. First Nat. Bank, 97 Pa. 543, 39 Am. Rep. 821. °' See ante, § 366. °^ See ante, § 366. § 2)7^ CONTRACTS. 582 insane person or his representative of an act which the law might compel him to do is valid and binding upon him.^* The validity of a sale under a deed of trust is not affected by the insanity of one who purchased the premises subject to the lien of such deed and who assumes the payment of the debt secured by it as a part of the purchase-price, and it is immaterial that the purchaser at the trustee sale had actual knowledge of such insanity.^' Likewise if an executory contract, complete in its terms, is en- tered into by one of the parties while sane and is not executed until after such party has become insane, it is nevertheless a valid and binding agreement and may be enforced against such insane party. Thus when a lessor executed a lease while sane, the lessee having the option to extend the term thereof, his election to enlarge the term was valid and binding, notwithstanding the lessor had in the meantime become insane.^' A mortgage has been held valid where its terms were discussed and fully agreed upon at a time when there was no question as to the mortgagor's sanity, notwithstanding it was not signed until after he had become incompetent to transact business.^' The renewal of an accommodation indorsement made while such indorser was in- sane has been held binding, since the indorsement of the original note was executed while the indorser was in full possession of his faculties.^* A payor's promissory notes have been held valid, '^ In re Hirst's Estate, 147 Pa. St. of the mortgage was held void. To 319, 23 Atl. 455. In the above case same effect, Bevin v. Powell, 11 Mo. ground rents inherited from an an- App. 216, affd. 83 Mo. 365. See also, cestor were released upon the hap- Brown v. Miles, 61 Hun (N. Y.) 453, pening of the conditions which were 41 N. Y. St. 67, 16 N. Y. S. 251. to terminate it. In the above case a warranty deed ""Bensieck v. Cook, 110 Mo. 173, was e.xecuted at a time when the 19 S. W. 642, Zi Am. St. 422. In grantor was insane. The deed was the above case a suit in ejectment executed pursuant to the terms of a was brought against the insane party written contract entered into while and his wife. A guardian ad litem the grantor was sane. This deed was was appointed for the insane person, said to be absolutely void in law but It was held that after such appoint- it was held that the court, as a court ment the judgment rendered was of equity, might grant such equitable binding upon the lunatic and his prop- relief as the evidence disclosed the erty to the extent that a similar judg- transferee was entitled to, including ment would be on a sane person. a deed from the other party. " Quinn v. Valiquette, 80 Vt. 434, 68 " Memphis Nat. Bank v. Sneed, 97 Atl. 515, 14 L. R. A. (N. S.) 962n. Tenn. 120, 36 S. W. 716, 34 L. R. A. " Parker v. Marco, 76 Fed. 510. In 274, 56 Am. St. 788. The ground upon the above case the mortgage was held which the above decision is based is valid while a separate transaction that the accommodation indorser was proposed at the time of the execution liable on the original note and that 583 INSANE PERSONS. § 2>7i notwithstanding he became insane before they were due.°° In case a person enters into a contract while sane he is Hable for the breach thereof committed while insane.*" § 373. Contracts for necessities. — By far the largest and most important class of valid contracts that may be executed by an insane person are those for necessities. A person non compos mentis is liable on his contract for necessities the same as a minor. *^ Nor is the rule changed by the fact that such person has been adjudged a person of unsound mind and been placed under a conservator or guardian, if the goods furnished were in fact necessities, the guardian having failed to provide them.*^ § 374. What are necessities. — The term "necessities" in- cludes not only the individual wants of the insane party, but ne- this valid antecedent liability was not defeated by a renewal of the same. To same effect, Snyder v. Laubach, 7 Wkly. Notes Cas. 464. °° School District &c. v. Sheidley, 138 Mo. 672, 40 S. W. 656, 37 L. R. A. 406, 60 Am. St. 576. In the above case the notes were given as a volun- tary subscription. The notes were held valid on the ground that the school board had expended money and incurred a liability on the strength of the promise prior to the maker's insanity. '"Baldrick v. Garvey, 66 Iowa 14, 23 N. W. 156; Williams v. Hays, 143 N. Y. 442, 38 N. E. 449, 26 L. R. A, lS3n, 42 Am. St. 743n; In re Stras- burger, 132 N. Y. 128, 30 N. E. 379. *=-In re Rhodes, L. R. 44 Ch. D. 94; Borum v. Bell, 132 Ala. 85, 31 So. 454; Ex parte Northington, 37 Ala. 496, 79 Am. Dec. 67; Henry v. Fine, 23 Ark. 417 ; Miller v. Hart, 135 Ind. 201, 34 N. E. 1003 ; Palmer v. Hudson River State Hospital, 10 Kans. App. 98, 61 Pac. 506 ; Sawyer v. Lufkin, 56 Maine 308; Hallett v. Oakes, 1 Cush. (Mass.) 296; Kendall v. May, 10 Al- len (Mass.) 59; Reando v. Misplay, 90 Mo. 251, 2 S. W. 405, 59 Am. Rep. 13; Sceva v. True, Si N. H. 627; Young V. Stevens, 48 N. H. 133, 97 Am. Dec. 592; Van Horn v. Hann, 39 N. T. L. 207; Waldron v. Davis, 70 N. J. L. 788, 58 Atl. 293, 66 L. R. A. 591; Ingraham v. Baldwin, 9 N'. Y. 45, Seld. Notes 167; Richardson V. Strong, 35 N. Car. 106, 55 Am. Dec. 430; Hosier v. Beard, 54 Ohio St. 398, 43 N. E. 1040, 35 L. R. A. 161, 56 Am. St. 720; La Rue v. Gilkv- son, 4 Pa. St. 375, 45 Am. Dec. 700; Beals V. See, 10 Pa. St. 56, 49 Am. Dec. 573; Wirebach v. First Nat. Bank, 97 Pa. St. 543, 39 Am. Rep. 821 ; Stannard v. Burns' Admr., 63 Vt. 244, 22 Atl. 460. As with infants those things are necessities which are suitable to the condition and habits of life of the insane person. Richard- son V. Strong, 35 N. Car. 106, 55 Am. Dec. 430. In addition see cases cited above. "^Creagh v. Tunstall, 98 Ala. 249, 12 So. 713; Fruitt v. Anderson, 12 111. App. 421; Miller v. Hart, 135 Ind. 201, 34 N. E. 1003 ; Pearl v. McDow- ell, 3 J. J. Marsh. (Ky.) 658, 20 Am. Dec. 199 ; Sawyer v. Lufkin, 56 Maine 308; Seaver v. Phelps, 11 Pick. (Mass.) 304, 22 Am. Dec. 372; Re Renz, 79 Mich. 216, 44 N. W. 598; Reando v. Misplay, 90 Mo. 251, 2 S. W. 405, 59 Am. Rep. 13; Darby v. Cabanne, 1 Mo. App. 126; Barnes v. Hathaway, 66 Barb. (N. Y.) 452; Stannare v. Burns, 63 Vt. 244, 22 Atl. 460; Maughan v. Burns' Estate, 64 Vt. 316, 23 Atl. 583. It is the duty of the guardian to furnish his ward with necessities of life suitable to his con- 374 CONTRACTS. 584 cessities for his wife and children/^ Under the head of necessi- ties has also been included the expenses of a nurse and guard for such person/* and a not unreasonable journey for his enjoy- ment.*'* In some jurisdictions he is by statute made liable for his support while in an asylum.*" The services of an attorney may also be a necessity.*' It would also seem that the general rule limiting contracts for necessities to matters that concern the person is given a more liberal interpretation when applied to per- sons non compos mentis than when applied to infants and is made to include whatever is necessary for the preservation of the in- sane person's estate.*" There is a further analogy between the contracts of an infant and those of an insane person, in that courts of law and equity imply a promise on the part of one non compos mentis as well as on the part of an infant to pay for necessities actually supplied him. It follows that he is liable for the reasonable value of such necessities regardless of an express agreement to pay therefor.*" If the insane person is really sup- dition out of the ward's estate. Spence V. Miner, 89 Nebr. 610, 131 N. W. 1044, 132 N. W. 942. "Read V. Legard, 6 Exch. 637, 20 L. J. Ex. 309, IS Jur. 494; Booth v. Cottingham, 126 Ind. 431, 26 N. E. 84. In the above case the medical at- tention furnished wife of an insane man was held a necessity. Pearl v. McDowell, 3 J. J. Marsh. (Ky.) 658, 20 Am. Dec. 199; D. M. Smith's Committee v. Forsythe, 28 Ky. L. 1034, 90 S. W. 1075 ; Shaw v. Thomp- son, 16 Pick. (Mass.) 198, 26 Am. Dec. 655. Liable for board furnished wife. In re Stiles, 120 N. Y. S. 714, 64 Misc. (N. Y.) 658; Barnes v. Hathaway, 66 Barb. (N. Y.) 452. "Richardson v. Strong, 35 N. Car. 106, 55 Am. Dec. 430. See also, Ed- son V. Hammond, 142 App. Div. (N. Y.) 693, 127 N. Y. S. 359. '= Kendall v. May, 10 Allen (Mass.) 59. In determining what are to be con- sidered as necessities for a lunatic it would seem that courts give the term even a more liberal construction than in the case of infants, and include matters that partake of the nature_ of luxuries if supplied in the proportion to the means and condition of the in- sane person's life. See Baxter v. Earl of Portsmouth, 5 B. & C. 17, 11 E. C. L. 415. See also, Borum v. Bell, 132 Ala. 85, 31 So. 454; Cantrill v. Pecile, 22 Ky. L. 1121, 60 S. W. 16. " State Commission in Lunacy v. Eldridge, 7 Cal. App. 298, 94 Pac. 597; In re Callen's Estate, 152 Cal. 769, 93 Pac. 1011; Board of Chosen Freeholders &c. v. Ritson, 68 N. J. L. 666, 54 Atl. 839; State v. Ikley's Es- tate, 84 Vt. 363, 79 Atl. 850. "Carter v. Beckwith, 128 N. Y. 312, 28 N. E. 582. He is liable for the reasonable value of the services rendered. McKee's Admr. v. Ward, 18 Ky. L. 987, 38 S. W. 704; McKee's Admr. v. Purnell, 18 Ky. L. 879, 38 S. W. 70S. *=See Williams v. Wentworth, 5 Beav. 325; McCormick v. Littler, 85 111. 62, 28 Am. Rep. 610; First Nat, Bank of Navasato v. McGinty, 29 Tex. Civ. App. 539, 69 S. W. 495. The sister has been allowed to re- cover the cost of erecting an addition to her dwelling in order that the lu- natic might be cared for. Cecil v. Cantrill \Ky.). 128 S. W. 84. "Borum v. Bell, 132 Ala. 85, 31 So. 454; Ex parte Northington, 37 Ala. 496, 79 Am. Dec. 67 ; Fruitt v. Ander- son, 12 111. App. 421 ; Renado v. Mis- S85 INSANE PERSONS. 374 plied with necessities he is not liable for a further supply of such goods although furnished without notice that they are not needed.^" In case the insane person is under guardianship, however, there is a prima facie presumption that the guardian has furnished his ward with necessities. Thus a kinsman of an insane person who furnishes him with clothing and board cannot recover of the guardian of the latter therefor, unless the guardian has requested such supphes, or neglects or refuses to supply the ward with necessaries suitable to his estate and condition." It does not fol- low because one has been adjudged insane and is under guard- ianship that he cannot make a valid contract for necessaries. He can at least be held liable for the value of necessary services rendered or of material furnished, when they were in fact nec- essary.^^ play, 90 Mo. 251, 2 S. W. 405, 59 Am. Rep. 13; Sceva v. True, S3 N. H. 627; Johnson v. Ballard, 11 Rich. (S. Car.) 178. See, however, Massachusetts General Hospital v. Fairbanks, 132 Mass. 414 ; Bicknell v. Spear, 38 Misc. (N. Y.) 389, n N. Y. S. 920. In case an insane person borrows money on a note recovery may be had against him for such portion thereof as was spent for necessities or for the protection and benefit of his estate. First Nat. Bank of Navasota v. McGinty, 29 Tex. Civ. App. 539, (39 S. W. 495. "■Renando v. Misplay, 90 Mo. 251, 2 S. W. 405, 59 Am. Rep.. 13, "' Creagh v. Tunstall, 98 Ala. 249, 12 So. 713, per Stone, C. J. : "From these unaided facts the law does not raise a promise on the part of the guardian that he will pay her for such supplies. There is neither con- tractual nor legal privity between them. Prima facie, the guardian alone is authorized to select the ward's abiding place, and to supply his wants, and the present record fails to show his omission to do so. We concur with the chancellor in holding that the petition fails to make a case authorizing relief. Call v. Ward, 4 Watts & S. (Pa.) 118; Bre- din v. Dwen, 2 Watts (Pa.) 95; Bar- num V. Frost, 17 Grat. (Va.) 398; Tucker v. McKee, 1 Bail. (S. Car.) 344; Nicholson v. Spencer, 11 Ga. 607; Gwaltney v. Cannon, 31 Ind. 227." In 54 J. P. in, a periodical pub- lished in London, the editors thus sketch the theories relating to luna- tics' liability for necessaries : "It will be useful to notice the chief authori- ties at present bearing on the question whether a lunatic is impliedly liable for necessaries, the difficulty started being this, that, inasmuch as a lunatic would not, by express contract, bind himself for anything, it is suggested that it would be absurd to hold that such a contract can be implied, which implied contract is, at most, only a substitute for what would, if express, be valid." See also, Howard v. Dig- by, 2 CI. & Fin. 634; Wentworth v. Tubb, 2 Y. & C. Ch. 537; Williams V. Wentworth, 5 Beav. 325 ; Beavan v' McDonnell, 9 Exch. 309; Molton v. Camroux, 2 Exch. 487; Brockwell v. Bullock, L. R. 22 Q. B. D. 567; In re Rhodes, 62 L. T. R. (N. S.) 22; In re Weaver, L. R. 21 Ch. D. 615; Baxter v. Earl of Portsmouth, 5 B. & C. 170. "'Dandurand v. Kankakee, 96 111. App. 464, affd., 196 111. 537, dZ N. E. 1011; Hart v. Miller, 29 Ind. App. 222, 64 N. E. 239; Stannard v. Burns' Admr., 63 Vt. 244, per Start, J.: "It does not necessarily follow, when there has been an adjudication by the § 375 CONTRACTS. 586 § 375. Effect of inquisition and adjudication of insanity. — The procedure by which inquiry is made as to the mental com- petency of a person with a view to his guardianship or commit- ment to an asylum, or both, is in the main regulated by a statu- tory enactment in the various states. This does not concern con- tracts except in an indirect manner. It is sufficient to say that the form of procedure has little or no bearing on the effect of the ultimate finding. Until the finding of insanity and resultant guardianship, conservator, or committee is superseded, the per- son adjudged insane is incapable of forming a valid contractual relation at least when found incompetent to have the custody and management of his estate.'^" By the better rule the inquisition and finding of insanity binds the world.°* It is conclusive evi- dence that he was insane at the time of the finding,"^ which insanity is presumed to continue until the contrary is shown.^* § 376. Adjudication covering period of time prior to find- ing. — An inquisition and adjudication of insanity which is Probate Court that a person is in- sane, that the insanity is of that character which disqualifies him from making a valid contract for neces- saries. Motley V. Head, 43 Vt. 633; Blaisdell v. Holmes, 48 Vt. 492, In the last-named case the plaintiff was permitted to recover of the defend- ant for services rendered for him un- der a contract made with him, after he had been adjudged an insane per- son by the Probate Court, and while he . was under guardianship." Adult daughters of an insane person, who have lived with him prior to his in- sanity, and who take care of him at his home at the request of his guardian, and on the latter's promise that they shall receive pay therefor, are not precluded from receiving com- pensation by the rule that when rela- tives live together as members of a common family there is no implied obligation to pay for services ren- dered for each other. Masters v. Jones, 158 Ind. 647, 64 N. E. 213. To same effect, Jessup v. Jessup, 17 Ind. App. 177, 46 N. E. SSO. '" There are perhaps two exceptions to this rule, the first one is, that if the guardian fails to furnish his ward with necessities the ward may him- self purchase them and is liable for their reasonable value, see ante, § 373 ; the second is, that a person may be so insane as to require his commit- ment to an asylum in order to pre- vent personal injury to himself or to others, and yet be capable of man- aging his estate, in case the insanity is of this character and no guardian is in fact appointed his contracts may be held binding, see ante, § 369. "American Trust &c. Co. v. Boone, 102 Ga. 202, 29 S. E. 182, 40 L. R. A. 250, 66 Am. St. 167. The adjudica- tion is final and conclusive every- where and upon all persons. Foran v. Healy, 73 Kans. 633, 85 Pac. 751, 86 Pac. 470; Hughes v. Jones, 116 N. Y. 67, 22 N. E. 446, 5 L. R. A. 637. 15 Am. St. 386. "'Redden v. Baker, 86 Ind. 191. ■" Wiser v. Clinton, 82 Conn. 148, 72 Atl. 928, 135 Am. St. 264; American Trust &c. Co. V. Boone, 102 Ga. 202, 29 S. E. 182, 40 L. R. A. 250, 66 Am. St. 167; In re Nelson, 148 Iowa 118, 126 N. W. 973 ; Andrews v. Andrews Committee, 120 Ky. 718, 27 Ky. L. 5^7 INSANE PERSONS. § ■iill made to overreach a period of time prior to such finding is no more than prima facie evidence, however, as to the past condition of the person adjudged insane and is not conclusive on one who enters into a contract with such person prior to the adjudication and within the time overreached by it." An inquisition under a writ de lunatico inquirendo, stating that at the time of the execu- tion of the deed the grantor was non compos mentis, is presump- tive but not conclusive evidence of the grantor's incapacity in an action wherein a party claims under the deed.°* § 377. Adjudication — Collateral attack. — The adjudication cannot be attacked collaterally unless absolutel}^ void.^' The reason for the foregoing rule is that it is a proceeding in rem to determine the status of a person once and for all, and thus avoid driving the guardian to the constant litigation that would result if the question of the ward's sanity might be tried upon the performance of any and every act by the guardian."" The effect of the adjudication on the contractual capacity of the party declared insane will be treated more at length in the suc- ceeding sections of this chapter.®^ 1119, 28 Ky. L. 882, 87 S. W. 1080, Hawkins, 48 W. Va. 364, i1 S. E. 622, 90 S. W. 581; Wallace v. Frey, 27 ^ Soules v. Robinson, 158 Ind. 97, Misc. (N. Y.) 29, 56 N. Y. S. 1051. 62 N. E. 999, 92 Am. St. 301; Frazer "Sergeson v. Sealy, 2 Ayk. 412; v. Frazer, 25 Ky. L. 882, 76 S. W. Titcomb v. Vantyle, 84 111. 371; 546; Bible v. Wisecarver (Tenn. Ch. Lower v. Schumacher, 61 Kans. 625, App.), 50 S. W. 670. 60 Pac. 538; Hopson v. Boyd, 6 B. °° "Proceedings in rem are of two Mon. (Ky.) 296; Wall v. Hill's Heirs, kinds, namely: (1) Those which de- 1 B. Mon. (Ky.) 290, 36 Am. Dec. termine the status of a person, and 578; Mott v. Mott, 49 N. J. Eq. 192, (2) those which determine the status 22 Atl. 997; Hughes v. Jones, 116 N. of a thing. In the former all persons Y. 67, 22 N. E. 446, 5 L. R. A. 637, 15 are concluded by the judgment be- Am. St. 386; Searles v. Harvey, 6 cause they have no legal interest in Hun (N. Y.) 658; Reals v. Weston, the question, or, in less polite but 28 Misc. (N. Y.) €1, 59 N. Y. S. 807; more forcible language, it is none of In re Gangwere's Estate, 14 Pa. St. their business, and they cannot be ad- 417, 53 Am. Dec. 554; Wright v. mitted into the litigation as parties." Market Bank (Tenn.), 60 S. W. 623; The Law of Former Adjudication, Small V. Champney, 102 Wis. 61, 78 Van Fleet, Vol. 2, § 515, p. 1022. N. W. 407. ' " As to the power_ of a guardian or °'Van Deusen v. Sweet, 51 N. Y- committee to bind his ward or his es- 378 See L'Amoreux v. Crosby, 2 tate by his contract see Reams v. Paiffe Ch (N Y) 422-427, 22 Am. Taylor, 31 Utah 288, 87 Pac. 1089, Dec 655;' Hart v. Deamer, 6 Wend. 8 L. R. A. (N. S.) 436n, 120 Am. (N Y.)'497; Griswold v. Miller, IS St. 930. Barb. (N. Y.) 520. See also, Eakin v. § 378 CONTRACTS. 588 § 378. Contracts after office found. — It is held by the de- cided weight of authority that an insane person whose lunacy has been judicially determined and for whom a guardian or commit- tee has been appointed is incapable of entering into any contract or executing any conveyance, and that any contract or convey- ance that he may assume to make while in that situation is abso- lutely void.''^ However, if no guardian has been appointed"^ or if the guardianship has been abandoned"* the insane person's con- tract or conveyance will not, under such circumstances, be gener- ally considered void.*^ The incapacity of a lunatic whose lunacy '^ See cases cited in § 367, Con- tracts of an insane person generally voidable. See also, Wager v. Wag- oner, S3 Nebr. 511, 73 N. W. 937. •"McCormick v. Littler, 85 111. 62, 28 Am. Rep. 610; Topeka Water &c. Co. V. Root, 56 Kans. 187, 42 Pac. 715 ; Grimes v. Shaw, 2 Tex. Civ. App. 20, 21 S. W. 718, per Pleasants, J. : "Our Supreme Court, in accord with the great weight of authority, has said that a contract made with one who has been adjudged insane, and is under the control and custody of a guardian, duly appointed, is void. See Elston v. Jasper, 45 Tex. 409. But in this case the judgment of lu- nacy pronounced by the county court was suspended by the appeal and the supersedeas bond at the time of the purchase of the land by appellant, and at the time B was without a guardian of either his person or his estate ; and, when such is the case, it seems a judgment in lunacy is only prima facie evidence against third persons. See Black on Judgments, p. 803, § 802; Van Deusen v. Sweet, 51 N. Y. 379; Aber v. Clark, 10 N. J. L. 217, 18 Am. Dec. 417." See also, Beasley V. Beasley, 180 111. 163, 54 N. E. 187. Contra Kiehne v. Wessell, S3 Mo. App. 667, per Rombauer, P. J. : "The rule at common law is that insanity once proved to have existed is pre- sumed to continue, unless it was ac- cidental or temporary in its nature, as where it was occasioned by vio- lence or disease. 2 Greenleaf on Evi- dence, § 371 ; Hix V. Whittemore, 4 Mete. (Mass.) 545; Shelford on Lu- nacy, 275 (2 Law Lib. 175). The plaintiff offered no evidence that the defendant's insanity in this case was due to temporary causes. The rule under the statute makes this presump- tion conclusive in the case of an ad- judication of lunacy, as was held by the Supreme Court in Rannells v. Garner, 80 Mo. 474. In that case Sherwood, J., cites with approval Im- hoff V. Witmer, 31 Pa. St. 243, where it is said that, after inquisition, the fact of lunacy cannot be controverted by evidence of lucid intervals at the moment of contraction." "Willworth V. Leonard, 156 Mass. 277, 31 N. E. 299, per Morton, J.: "So long as the guardianship con- tinued, the decree of the probate court may well have been regarded as conclusive on the question of the ward's sanity, on the ground that the decree fixed the ward's status as to all the world, and also because it might greatly have embarrassed the executors of his trust if the guardian could have been compelled to try the question of his ward's sanity in every action for or against him. White v. Palmer, 4 Cush. (Mass.) 147; Leon- ard V. Leonard, 14 Pick. (Mass.) 280; Leggate v. Clark, 111 Mass. 308, 310. But when the guardianship has terminated, and a controversy has arisen between third parties, one of whom claims under a contract made with the ward after the termination of the guardianship, the reason ceases for holding the decree conclusive." Thorpe v. Hanscom, 64 Minn. 201, 66 N. W. 1. See also, Kimball v. Bum- gardner, 16 Ohio Cir. Ct. 587, 9 Ohio Dec. 409. *It has been held that where the guardian was removed and the peti- tion for the appointment of another dismissed that the former adjudica- 589 INSANE PERSONS. § 3/9 has been judicially ascertained in lunacy proceedings to bind him- self, does not relieve his estate from debts or liabilities incurred anterior to the lunacy."" Proof of a lucid interval cannot be made after adjudication and appointment of a guardian."^ One under a conservator or guardian may receive title even if he can- not give it."* § 379. Effect of knowledge of the other party. — As has al- ready been mentioned there are cases holding that where a con- tract is made with or a conveyance accepted from one known to be insane, notwithstanding he has never been so adjudged, the transaction is absolutely void.*" It would seem unnecessary to so hold, however, since the rights of the insane party are amply protected through the privilege of disaffirmance. If the contract is held void he would thereby not lose the benefit of any advan- tageous agreement he might make. This is especially true when one remembers that one dealing with a party known to be insane is entitled to no consideration in a court of equity, the insane party having the right to disaffirm without making any restitu- tion." Persons who contract with one who is, to their knowl- edge, insane, are deemed to have perpetrated a fraud on such insane party and courts of equity may set the contract aside on the ground of fraud. '^ tion ceases to be conclusive. Will- conveyance of a person known to werth V. Leonard, 156 Mass. 277, 31 be insane after the property had N. E. 299. come into the hands of an inno- ™ Gross V. Jones, 89 Miss. 44, 42 So. cent purchaser for value in good faith 802; In re Heller, 3 Paige (N. Y.) and without any knowledge of the in- 199; In re Hopper, S Paige (N. Y.) capacity of the grantor when no fraud 489. See also, Crippen v. Culver, 13 was practiced on the insane party nor Barb. (N. Y.) 424. any undue influence exercised over *' Kiehne v. Wessell, S3 Mo. App. him and the deed was made under the 667; Imhoff v. Witmer, 31 Pa. St. advice of counsel and for a full and 243. See, however, Stitzel v. Farley, fair consideration and the transaction 148 111. App. 635. was for the advantage of the grantor ^ Wiser v. Clinton, 82 Conn. 148, and his family. Odon v. Riddick, 104 72 Atl. 928, 135 Am. St. 264. N. Car. 515, 10 S. E. 609, 7 L. R. A. ""Bethany Hospital Co. v. Philippi, 118, 17 Am, St. 686. See also, Myers 82 Kans. 64, 107 Pac. 530, 30 L. R. A. v. Knabe, 51 Kans. 720, 33 Pac. 602. (N. S.) 194. "Helbreg v. Schumann, 150 III. 12, "See ante, §§ 370, 371. See also, 37 N. E. 99, 41 Am. St. 339; Fecel Mathews v. Nash, 151 Iowa 125, v. Guinault, 32 La. Ann. 91; Godwin 130 N. W. 796. See post, Restora- v. Parker, 152 N. Car. 672, 68 S. E. tion of Consideration, § 384. See, how- 208. See also, De Vries v. Crofoot, ever, the following case in which 148 Mich. 183, 111 N. W. 775. the court refused to set aside the § 3^0 CONTRACTS. 59O § 380. Effect of want of knowledge. — The only effect which want of knowledge of the insanity of the other party has upon an agreement made with him is in the equitable relief to which the person non compos mentis is entitled. When a con- tract is entered into with another who is in fact insane but ap- parently sane at the time the contract is executed and to whom is paid an adequate consideration he will not be permitted to re- scind unless he restores what he has received under the agreement or otherwise places the adversary party in statu quo. This phase of the subject will be treated more in detail in a subsequent section of this chapter.'^ § 381. Ratification and avoidance. — The contracts of an insane person not under guardianship that are voidable in char- acter may be ratified or rescinded.'^ They may be ratified by the insane party in a lucid interval or upon recovering mental capacity.'* It is not necessary that the ratification be made by express words, it may be evinced by any intelligent act or conduct of the party, made with full knowledge of the facts, which clearly shows an intention to be bound by the contract.'^ Thus if the insane party knowingly accepts the benefits of the agree- ment he may be held to have ratified it.''^ A conveyance of real " See post, Restoration of Consider- months he gave no indication of an ation, § 384. intention to disaffirm. Held that by " See ante, §§ 370, 371. conduct and failure to disaffirm with- " Arnold v. Richmond Iron Works, in a reasonable time he had ratified 1 Gray (Mass.) 434; Howe v. Howe, the agreement. He must upon recov- 99 Mass. 88; King V. Sipley, 166 Mich, ering his sanity disaffirm within a 258, 131 N. W. 572; Wolcott v. Con- reasonable time. West v. Seaboard necticut &c, Ins. Co., 137 Mich. 309, Air Line Co., ISl N. Car. 231, 65 S. 100 N. W. 569; Whitcomb v. Hardy, E. 979. T6 Minn. 285, 76 N. W. 29 ; Blakeley " Beasley v. Beasley, 180 111. 163, V. Blakeley, 33 N. J, Eq. 502; Blinn 54 N. E. 187; Bond v. Bond, 7 Allen V. Schwarz, 177 N. Y. 252, 69 N. E, (Mass.) 1. 542, 101 Am. St. 806; Gibson V. West- '"Gibson v. Western &c. R. Co., ern &c. R. Co., 164 Pa. St. 142, 30 164 Pa. St. 142, 30 Atl. 308, 44 Am. Atl. 308, 44 Am. St, 586. See St. 586. See also, the case of Wol- also, San Francisco &c. Clearing cott v. Connecticut &c. Ins. Co., 137 House V. MacDonald (Cal. App.), 122 Mich. 309, 100 N. W. 569, in which Pac. 964; Newman v. Taylor (Tex. it is held that a delay of over a year Civ. App.), 122 S. W. 425. In the after the grantor had been discharged above case it appears that appellee from the insane hospital as cured, in purchased property while insane, bringing suit to set aside his convey- After restoration to sanity he in- ance of real estate, accompanied by spected it with the aid of an expert evidence showing that he had, after and subsequently called upon the sell- regaining his sanity, exhibited a full er to set it up. For at least twelve understanding of the conveyance and S9I INSANE PERSONS. § 381 estate may be ratified by an intelligent reacknowledgment of the deed in the manner prescribed by law." Retaining the property received under the contract after one has recovered his mind may amount to a ratification.^^ This may be especially true if the property has decreased in value.^'' As with infants the voidable contracts of an insane person are valid and binding until dis- affirmed. It is the act of disaffirmance which destroys voidable contracts or deeds.*" This distinction between ratification and had given his reasons for executing it, showed a ratification. For a case stating the rule that the ratification must be the intelligent act of the person ratifying, see Bond v. Bond, 7 Allen (Mass.) 1. For a case similar to the case of Wolcott v. Connecticut General Life Ins. Co., cited 137 Mich. 309, 100 N. W. 569, see Howe v. Howe, 99 Mass. 88. "Doran v. McConlogue, ISO Pa. St. 98, 24 Atl. 357. "Barry v. Hospital (Cal.), 48 Pac. 68; Strodder v. Granite Co., 99 Ga, 595 27 S E 174 ""Bunn V. 'Postell, 107 Ga. 490, 33 S. E. 707. A suit brought by the guardian which abates at the insane person's death does not ratify the con- tract. McAnaw v. Tiffin, 143 Mo. 667, 45 S. W. 656. ™ Louisville, N. A. & C. R. Co. v. Herr, 135 Ind. 591, 35 N. E. 556, where it is said: "There is no ques- tion but that the contracts executed or executory may be avoided on the ground that the maker was of un- sound mind, but what is necessary to accomplish the avoidance? Here the contract was executed by one not un- der guardianship, and not judicially determined to be of unsound mind. The contract was more than an ex- ecutory contract ; it was executed in part. Such contracts are not void, but are merely voidable, and to avoid them it is necessary that they shall be disaffirmed. Ashmead v. Reynolds, 127 Ind. 441, 26 N. E. 80; Boyer v. Berryman, 123 Ind. 451, 24 N. E. 249; Schuff v. Ransom, 79 Ind. 458; Fay V. Burditt, 81 Ind. 433 ; Harden- brook V. Sherwood, 72 Ind. 403; Wray v. Chandler, 64 Ind. 146; Freed v. Brown, 55 Ind. 310 ; Nichols V Thomas, 53 Ind. 42; Musselman V. Cravens, 47 Ind. 1. As said m Ashmead v. Reynolds, 127 Ind. 441, 26 N. E. 80: 'It is the act of dis- affirming which destroys a voidable contract or deed, and not the proceed- ings which may be taken to give force and effect to the disaffirmance after it has been made.' See also. Potter V. Smith, 36 Ind. 231, and Long v. Williams, 74 Ind. 115. The reply does not allege that after the execu- tion of the contract the appellee's reason was restored, nor does it al- lege any act by him, or a guardian for him, disaffirming the contract. Such restoration and disaffirmance, or continued unsoundness of mind and disaffirmance by guardian, are neces- sary to the sufficiency of a plea in avoidance of a contract. Harden- brook V. Sherwood, 72 Ind. 403. No guardianship being alleged, we can- not presume its existence. Insanity being alleged, and it not appearing that he had been restored, we cannot presume the existence of that con- dition essential to a valid disaffirm- ance by him. While the reply does allege that the appellee did not re- ceive or accept the money or the pass, it alleges the apparently incon- sistent fact that both have been re- turned to the appellant. The con- struction of the pleading must be taken most strongly against the pleader, and we must hold the theory of the pleading_ to be that, while hav- ing been put into possession of the money and the pass, his mind did not concur in the acceptance of the same, and that they were returned. That the return was made with the concur- rence of the appellee's mind is a fact essential to a disaffirmance, but is, as we have said, absent from the reply. Northwestern Insurance Co. v. Blankenship, 94 Ind. 535 ; Lange- v. Dammier, 119 Ind. 567, 21 N. E. 749; § 382 CONTRACTS. 592 avoidance should be borne in mind. The contract is vahd and binding until disaffirmed, the only effect of ratification being to shut off the right to disaffirm. ^^ § 382. Who may affirm or avoid. — In case an insane per- son executes a conveyance or enters into a contract prior to the appointment of a guardian, the guardian subsequently appointed cannot make a valid affirmation of such conveyance or contract without an order of the court which appointed him.*^ Since the contract of an insane person under guardianship is, as a gen- eral rule void, the guardian can give his ward's contract, made while under guardianship, no validity by his ratification or assent thereto.*^ An insane person's personal representative may upon his death ratify his contract." The voidable contract of an in- Boyer v. Berryman, 123 Ind. 451, 24 N. E. 249." " See Bunn v. Postell, 107 Ga. 490, 33 S. E. 707; Gingrich v. Rogers, 69 Nebr. 527, 96 N. W. 156. ''Funk V. Rentchler, 134 Ind. 68, 33 N. E. 364. "The guardian has no authority to ratify the conveyances of his ward, either directly or indirectly." King V. Sipley, 166 Mich. 258, 131 N. W. 572. As to the right of the guard- ian to ratify an agreement made by his ward prior to his appointment as guardian, see : Gingrich v. Rogers, 69 Nebr. 527, 96 N. W, 156, in which it is held that collections by a guardian of principal and interest on a pur- chase-price note did not amount to a ratification of a conveyance made by his ward. The court seems to ques- tion the right of the guardian to ratify such an agreement at all. It says : "Counsel for the appellee insists that these transactions amounted to a rati- fication by the guardian and county court, or, what amounts to practically the same thing, to an election to en- force the collection of the securities given as payment for the land, and to abandon any claim or right to rescission. Here again counsel fails to cite tis any authority upholding the right or power of the guardian or county court to make such an elec- tion, and it would be manifestly an extremely objectionable public policy which would vest such a discretion in either or both. Untramelled as it would be, if it should exist at all, it might frequently be employed by in- competent or dishonest officials to the detriment and destruction of the ward's estate ; and, once having been exercised, it would, as counsel right- ly contends, be irrevocable." The guardian is bound at his peril to dis- affirm and avoid. Bowman v. Wade, 54 Ore. 347, 103 Pac. 72. See, how- ever, ante for cases where the guard- ian has been discharged or the guard- ianship abandoned. '^'Rannels v. Gerner, 80 Mo. 474, revg. 9 Mo. App. 506; Coleman v. Farrar, 112 Mo. 54, 20 S. W. 441; Fitzhugh V. Wilcox, 12 Barb. (N. Y.) 235. '"^Bunn V. Postell, 107 Ga. 490, 33 S. E. 707; Bullard v. Moor, 158 Mass. 418, 33 N. E. 928. If the deed of an insane grantor has been nei- ther ratified nor avoided in the life- time of the grantor, his heirs may avoid it after his decease; if the in* valid deed was made to one of his heirs, the other heirs or any one or more of them may according to their respective interests avoid it. The ex- ecutor of his will or the adminis- trator of his estate has no power to ratify such deed to the prejudice of his heirs, especially when he is the wrongful grantee named in the deed. Brown v. Brown, 209 Mass. 388, 95 N. E. 796. 593 INSANE PERSONS. § 383 sane person may be disaffirmed by himself in a lucid interval or on recovering mental capacity/" or by his guardian, committee, or conservator,^" or on his death by his personal representative, heirs, or devisees/' § 383. Acts showing a disaffirmance. — Any act or conduct that evinces an intention so to do is sufficient as a disaffirmance ; "Clay V. Hammond, 199 111. 370, 65 N. E. 352, 93 Am. St. 146; Mus- selman v. Cravens, 47 Ind. 1 ; Turner V. Rusk, S3 Md. 65; Allis v. Billings, 6 Mete. (Mass.) 415, 39 Am. Dec. 744. It must appear that the insane party's mentality has been restored before he can make a valid disaffirm- ance. Louisville &c. R. Co. v. Herr, 135 Ind. 591, 35 N. E. 556. One may rescind a conveyance of personal property made while insane after regaining his sanity. In the present case the one to whom the property had been given so negligently cared for it that the property was lost or stolen. The court said : "When he (the one to whom the property was given) learned that the jewels were the property of an insane man, it was his duty to take ordinary care of them, with a view of returning the same when defendant's reason was re- stored." Patton V. Washington, 54 Ore. 479, 103 Pac. 60. See also, Hardenbrook v. Sherwood, 72 Ind. 403. "Smith V. Smith, 29 App. D. C. 408; Covington v. Neftzger, 140 111. 608, 30 N. E. 764, 33 Am. St. 261; Greene v. Maxwell, 251 111. 335, 96 N. E. 227, 36 L. R. A. (N. S.) 418; McClain v. Davis, 77 Ind. 419; Hull V. Louth, 109 Ind. 315, 10 N. E. 270, SO Am. Rep. 405 ; Gibson v. Soper, 6 Gray (Mass.) 279, 66 Am. Dec. 414; Reason v. Jones, 119 Mich. 672, 78 N. W. 899; Halley v. Troester, 72 Mo. 73; Moore v. Hershey, 90 Pa. 196. If the ward has the right to recall his promise his guardian who has control of his person and estate may do likewise and revoke the promise. Buhler v. Trembly, 139 Mich. 557, 108 N. W. 343, 102 N. W. 647. "Bunn V. Postell, 107 Ga. 490, 33 S. E. 707 ; Orr v. Equitable Mortgage Co., 107 Ga. 499, 33 S. E. 708; Down- ham V. Holloway, 158 Ind. 626, 64 N. 38— Contracts, Vol. I E. 82, 92 Am. St. 330; Northwestern Mut. Fire Ins. Co. v. Blankenship, 94 Ind. 535, 48 Am. Rep. 185 ; Hovev V. Hobson, 53 Maine 451, 89 Am. Dec. 705 ; Hunt v. Rabitoay, 125 Mich. 137, 84 N. W. 59, 84 Am. St. 563; Camp- bell V. Kuhn, 45 Mich. 513, 8 N. W. 523, 40 Am. Rep. 479. The following cases are instances in which a devisee was held to have sufficient interest in the property devised to him, to en- title him to attack a transfer of the property devised : Bethany Hospital Co. v. Philippi, 82 Kans. 64, 107 Pac. 530, 30 L. R. A. (N. S.) 194. In the above case the hospital com- pany was a devisee under the will of R. While insane R. deeded the same property to the defendant. Held, that the devisee had sufficient in- terest under the will to maintain an action against the defendant to have the deed declared void. Valpey V. Rea, 130 Mass. 384; Brigham v. Fayerweather, 144 Mass. 48, 10 N. E. 735 ; Goodyear v. Adams, 1 Silv. (N. Y.) 185, 24 N. Y. St. 31, 5 N, Y. S. 275. See also, Powell v. Powell, 30 Ala. 697; Rickman v. Meier, 213 111. 507, 72 N. E. 1121 ; Le Gendre v. Goodridge, 46 N. J. Eq. 419, 19 Atl. 543; Van Deusen v. Sweet, 51 N. Y. 378; Wolf V. Harris, 57 Ore. 276, 106 Pac. 1016, 111 Pac. 54. It has been said that the court could see no good reason why a corporation may not seek to be excused from performing its contract on the sole ground that its representative who made the contract for it did not have sufficient mental capacity to know and understand the character and effect of the transaction. The agent was held, however, to have had capacity at the time the contract was executed. T. M. Gilmore & Co. V. W. B. Samuels & Co., 135 Ky. 706, 123 S. W. 271. Parties who are nei- ther privies in blood nor the legal rep- § 384 CONTRACTS. 594 thus a suit in ejectment/' or to quiet title/* or a conveyance of the property made to a third person after the grantor has re- gained his sanity°° has been held sufficient as a disaffirmance."^ The privilege of disaffirmance is personal to the parties above mentioned, and cannot be exercised by the adversary party to the contract."'' The statute of limitations once having commenced to run against a person, his subsequent insanity does not toll it,"^ but it will not begin to run against a person of unsound mind so long as he is insane."* § 384. Restoration of consideration. — As a general rule the contract of a person of unsound mind that is fair and bene- ficial to him and made in good faith without knowledge of his mental infirmity cannot be avoided unless the other party is placed in statu quo."^ Under such circumstances if the insane resentative of an insane grantor can- not avoid her conveyance. Hunt v. Rabitoay, 125 Mich. 137, 84 N. W. 59, 84 Am. St. 563. See also, Murphree v. Clisby, 168 Ala. 339, 52 So. 907, 29 L. R. A. (N. S.) 933. ^ Smith V. Ryan, 191 N. Y. 452, 84 N. E. 402, 19 L. R. A. (N. S.) 461n, 123 Am. St. 609. '"Owing's Case, 1 Bland. Ch. (Md.) 370, 17 Am. Dec. 311. »°Clay V. Hammond, 199 111. 370, 65 N. E, 352, 93 Am. St. 146. "The mortgage of an insane per- son cannot be forfeited without his being properly represented by a guardian or conservator, and equity will relieve against an attempted for- feiture in which the insane party was not so represented. Helbreg v. Schu- mann, 150 111. 12, 37 N. E. 99, 41 Am. St. 339. °' San Francisco &c. Clearing House V. MacDonald (Cal. App.), 122 Pac. 964 ; Harmon v. Harmon, 51 Fed. 113; Allen v. Berryhill, 27 Iowa 534, 1 Am. Rep. 309; Atwell v. Jen- kins, 163 Mass. 362, 40 N. E. 178, 28 L. R. A. 694, 47 Am. St. 463 ; Hunt V. Rabitoay, 125 Mich. 137, 84 N. W. 59, 84 Am. St. 563. See Fearnley v. Fearnley, 44 Colo. 417, 98 Pac. 819, holding that where the adversary party was the wife of the other party to the agreement that she could not dis- affirm the contract on the ground that her husband was unconscious at the time she signed the agreement and remained so until his death which prevented the delivery of the con- tract when she had received the agreed consideration. See also, ante, § 382. "Black V. Ross, 110 Iowa 112, 81 N. W. 229. " Moore v. City of Waco, 85 Tex. 206, 20 S. W. 61. °=Molton V. Cararoux, 4 Exch. 17, 18 L. J. Ex. 356; Coburn v. Ray- mond, 76 Conn. 484, 57 Atl. 116, 100 Am. St. 1000; Scanlan v. Cobb, 85 111. 296; Eldredge v. Palmer, 185 111. 618, 57 N. E. 770, 76 Am. St. 59; Ronan v. Bluhm, 173 111. 277, 50 N. E. 694; Boyer v. Berryman, 123 Ind. 451, 24 N. E. 249; Fay v. Burditt, 81 Ind. 433, 42 Am. Rep. 142; Harrison V. Otley, 101 Iowa 652, 70 N. W. 724; Abbott V. Creal, 56 Iowa 175, 9 N. W. 115; Gribben v. Maxwell, 34 Kans. 8, 7 Pac. 584, 55 Am. Rep. 233 ; Myers v. Knabe, 51 Kans. 720, 33 Pac. 602, per curiam: "A contract or convey- ance made fairly and in good faith with a lunatic who is apparently sane, and before any finding of lunacy is made, cannot be annulled by a mere showing of incapacity at the time it was made. If the other party entered into the contract without any knowl- edge of the insanity, his equitable rights must be protected before there 595 INSANE PERSONS. § 385 person does not offer to, or cannot place the other party in his former position the contract is binding."^ The reason given for this rule is that, "if a merely voidable contract can be repudiated by one of the parties, even though he be a lunatic, and a recovery can be defeated in the face of these circumstances simply because the party who made the purchase was of unsound mind, though ,not at the time adjudged to be so, the loss would fall upon a con- ifessedly innocent person, instead of on the one who received and used the article delivered in good faith under the contract." A lunatic who causes the loss must be made to bear the consequences of his infirmity as he must bear his misfortune."^ § 385. Illustrations of the rule. — Thus an insane grantor not under guardianship and not known to be non compos mentis cannot avoid his deed without offering to restore the considera- tion received therefor,"* or in case he purchases land and gives can be a rescission or annulment. Gribben v. Maxwell, 34 Kans. 8, 7 Pac. 584; Leavitt v. Files, 38 Kans. 26, IS Pac. 891." Rusk v. Fenton, 14 Bush (Ky.) 490, 29 Am. Rep. 413; Flach V. Gottschalk Co., 88 Md. 368, 41 Atl. 908, 42 L. R. A. 745, 71 Am. St. 418; Moran v. Moran, 106 Mich, 8, 63 N. W. 989, 58 Am. St. 462; Shoulters v. Allen, 51 Mich. 529, 16 N. W. 888 ; Morris v. Great Northern Ry. Co., 67 Minn. 74, 69 N. W. 628; Scott V. Hay, 90 Minn. 304, 97 N. W. 106; Schaps v. Lehner, 54 Minn. 208, 55 N. W. 911; Jamison v. Culligan, 151 Mo. 410, 52 S. W. 224; Young V. Stevens, 48 N. H. 133, 2 Am. Rep. 202; Yauger v. Skinner, 14 N. J. Eq. 389 ; Matthiessen & Weichers Refining Co. V. McMahon's Admr., 38 N. J. L. 536; Riggs v. American Tract So- ciety, 84 N. Y. 330; Mutual Life Ins. Co. V. Hunt, 79 N. Y. 541 ; Riggan v. Green, 80 N. Car. 236, 30 Am. Rep. 77 ; Hosier v. Beard, 54 Ohio St. 398, 43 N. E. 1040, 35 L. R. A. 161, 56 Am. St. 720; Lancaster &c. Bank v. Moore, 78 Pa. 407, 21 Am. Rep. 24; Wirebach's Ex'r. v. First Nat. Bank, 97 Pa. 543, 39 Am. Rep. 821. But see Woolley V. Gaines, 114 Ga. 122, 39 S. E. 892, 88 Am. St. 22; Hovey v. Hobson, 53 Maine 451, 89 Am. Dec. 705; Gibson v. Soper, 6 Gray (Mass.) 279, 66 Am. Dec. 414; Brigham v. Fayerweather, 144 Mass. 48, 10 N. E. 735 ; Wager v. Wagoner, 53 Nebr. 511, 73 N. W. 937; Rea v. Bishop, 41 Nebr. 202, 59 N. W. 555; Crawford V. Scovell, 94 Pa. 48, 39 Am. Rep. 766. "'Burnham v. Kid well, 113 111. 425.; Scanlon v. Cobb, 85 111. 296; Alex- ander V. Haskins, 68 Iowa 73, 25 N. W. 935; Gribben v. Maxwell, 34 Kans. 8, 7 Pac. 584, 55 Am. Rep. 233 ; Young V. Stevens, 48 N. H. 133, 97 Am. Dec. 592, 2 Am. Rep. 202; Matthiessen & Weichers Refining Co. V. McMahon's Admr., 38 N. J. L. 536; Yauger v. Skinner, 14 N. J. Eq. 389; Mutual Life Ins. Co. v. Hunt, 79 N. Y. 541; Riggan v. Green, 80 N. Car. 236, 30 Am. Rep. 77; Lan- caster Bank v. Moore, 78 Pa. St. 407, 21 Am. Rep. 24; Beals v. See, 10 Pa. St. 56, 49 Am. Dec. 573 ; Sims V. McLure, 8 Rich. Eq. (S. Car.) 286, 70 Am. Dec. 196; National Metal Edge Box Co. v. Vanderveer (Vt.), 82 Atl. 837. See also, Voris v. Harsh- barger, 11 Ind. App. 555, 39 N. E. 521. »' Flach V. Gottschalk Co., 88' Md. 368, 41 Atl. 908, 42 L. R. A. 745, 71 Am. St. 418. " Coburn v. Raymond, 76 Conn. 484, 57 Atl. 116, 100 Am. St. 1000; § 38s CONTRACTS. 596 a note and mortgage in payment therefor he cannot retain the land and avoid his note and mortgage.®" Contracts concerning personal property are controlled by the same principles.^ The compromise of an insane person before he has been adjudged non compos mentis can only be avoided by placing the other party in statu quo.^ Thus it has been held that vi^here an employe while mentally incompentent signed a release of liability for personal injuries and subsequently recovered judgment in an action for the injury, the amount received under the release should be deducted from the judgment.^ If the insane person did not derive any benefit or receive any part of the consideration, he may rescind without making restitution or placing the other party in statu Studebaker v. Faylor, 170 Ind. 498, 83 N. E. 747, 127 Am. St. 397; Grib- ben V. Maxwell, 34 Kans. 8, 7 Pac. 584, 55 Am. Rep. 233. "Wiser V. Clinton, 82 Conn. 148, 72 Atl. 928, 135 Am. St. 264 ; National Metal Edge Box Co. v. Vanderveer (Vt.), 82 Atl. 837 (old mortgage taken up and new one given). See also, Bates v. Hyman (Miss.), 28 So. 567, in which it is held that an insane vendee need not offer to restore the property sold to him as a condition precedent to disaffirmance where the vendor retained a mortgage on the property, the vendor's right in the property being fully secured by the mortgage. "Flach v. Gottschalk Co., 88 Md. 368, 41 Atl. 908, 42 L. R. A. 745, 71 Am. St. 418. ' Morris v. Great Northern R. Co., 67 Minn, 74, 69 N. W. 628. It has been held that the deed of an insane person not under guard- ianship will not be avoided, even though the grantee knew the grantor to be insane, where it appears that the transaction was absolutely fair and for the advantage of the grantor and his family. Odom v. Reddick, 104 N. Car. 515, 10 S. E. 609, 7 L. R. A. 118, 17 Am. St. 686. In the above case it also appears that the insane person's grantee had conveyed the property to an innocent purchaser. There is authority to the effect, however, that restitution is not neces- sary. Thus it has been said ; "To say that an insane man, before he can avoid a voidable deed, must first put the grantee in statu quo, would be to say in effect that in a large ma- jority of cases, his deed shall not be avoided at all. The more insane the grantor was when the deed was made, the less likely will he be to retain the fruits of his bargain, so as to be able to make restitution." It would be absurd to annul the bargain for the mental incompetency of a party and yet to require of him to retain and manage the proceeds of his sale so wisely and discreetly that they shall be forthcoming when, with restored intellect, he shall seek annulment. Gibson V. Soper, 6 Gray (Mass.) 279, 66 Am. Dec. 414 ; Hovey v. Hob- son, S3 Maine 451, 89 Am. Dec. 705; Dewey V. Algire, 37 Nebr. 6, 55 N. W. 276, 40 Am. St. 468. In the above case the insane party's gi'antee con- veyed to another person. This third person was found not to be an inno- cent purchaser. The court said this was immaterial, however. Wager v. Wagoner, 53 Nebr. 511, 73 N. \y. 937. In the above case it is said "this (restitution), in the case of an insane person, is not essential, as a condition of granting relief. It did not appear that the ability existed to restore the consideration in specie." In the cases above cited the insane party or his personal representative were granted affirmative relief. In case of Rea v. Bishop, 41 Nebr. 202, 59 N. W. 555, it is held that the de- fense of insanity may be interposed to an action on the agreement with- out offering to make restitution. 'Ipock V. Atlantic &c. R. Co. (N. Car.), 74 S. E. 352. 597 INSANE PERSONS. § 386 quo. Thus where the consideration is given a third person there need be no restitution made by the insane party.* The same is true where he executes a negotiable instrument as surety" or be- comes an accommodation indorser.^ § 386. Restoration as a condition precedent. — If the agree- ment is harsh or oppressive,' or is detrimental to the interest of the insane party/ it may be disaffirmed in a proper case without placing the other party in statu quo." Should one party know or have reasonable cause to believe the other to be insane the person non compos mentis may rescind without being required to make restitution. One dealing with a person known to be insane is not entitled to be placed in statu quo as a condition precedent to an avoidance of the agreement.^" This does not mean, how- ever, that there need be no restitution in any case; it merely means that restitution is not a condition precedent.^^ So much 'Northwestern Mut. Fire Ins. Co. V. Blankenship, 94 Ind. 535, 48 Am. Rep. 185. In the above case an in- sane wife mortgaged her property to secure money loaned her husband. Physio-Med. College v. Wilkinson, 108 Ind. 314, 9 N. E. 167. In the case last cited the consideration re- ceived was an education furnished a nephew and niece of the insane grantor. Hull v. Louth, 109 Ind. 315, 10 N. E. 270, 58 Am. Rep. 405. In the case last cited a deed of convey- ance was executed without considera- tion. " Van Fatten v. Seals, 46 Iowa 62. 'Wirebach's Exr. v. First Nat. Bank, 97 Pa. 543, 39 Am. Rep. 821; Memphis Nat. Bank v. Sneed, 97 Tenn. 120, 36 S. W. 716, 34 L. R. A. 274, 56 Am. St. 788. It is held that one who signs as accommodation in- dorser while sane and renews the same after he has become non compos mentis is nevertheless bound. Insanity of the maker of a promissory note does not relieve the surety. The surety warrants that the maker of the note is competent to contract. Caldwell v. Ruddy, 2 Idaho 1, 1 Pac. 339. See, however, Grove v. John- ston, Ir. L. R. 24 C. L. 352, in which it is held that insanity on the part of a collector before he could enter upon his duties relieved his bondsman. ' Mulligan V. Albertz, 103 Wis. 140, 78 N. W. 1093. 'Reason v. Jones, 119 Mich. 672, 78 N. W. 899. "See also. Hale v. Kobbert, 109 Iowa 128, 80 N. W. 308, in which the heirs were allowed to rescind, not- withstanding they could not place the other party in statu quo, where it ap- peared that their insane ancestor had made a bargain greatly to his disad- vantage. " Henry v. Fine, 23 Ark. 417 ; Elder V. Schumaker, 18 Colo. 433, 33 Pac. 175; Studebaker v. Faylor, 170 Ind. 498, 83 N. E. 747, 127 Am. St. 397; Thrash v. Starbuck, 145 Ind. 673, 44 N. E. 543 ; Hale v. Kobbert, 109 Iowa 128, 80 N. W. 308; Clark v. Lopez, 75 Miss. 932, 23 So. 648, rehearing denied, 23 So. 957; Matthiessen Re- fining Co. V. McMahon's Admr., 38 N. J. L. 536; Eaton v. Eaton, 37 N. J. L. 108, 18 Am. Rep. 716; Creekmore V. Baxter, 121 N. Car. 31, 27 S. E. 994; Hosier v. Beard, 54 Ohio St. 398, 43 N. E. 1040, 35 L. R. A. 161, 56 Am. St. 720; Crawford v. Scovell, 94 Pa. St. 48, 39 Am. St. 766; Al- lore V. Jewell, 94 U. S. 506, 24 L. ed. 260; Harding v. Wheaton, 2 Mason (U. S.) 278, Fed. Cas. No. 6051. See, however, Odom v. Reddick, 104 N. Car. 515, 10 S. E. 609, 7 L. R. A. 118. 17 Am. St. 686. "Thrash v. Starbuck, 145 Ind. 673, 44 N. E. 543 ; Wager v. Wagoner, 53 Nebr. 511, 73 N. W. 937. See also. § 387 CONTRACTS. 598 of the consideration as remains in the hands of the insane party must be restored by him upon rescission. ^^ § 387. Liability for benefits received — Subrogation — In- sanity a question of fact. — By another authority the insane person has been held liable to the extent of the actual benefit re- ceived by him.^' It has also been held that where money is loaned a person known to be insane and the insane party uses such money to pay valid and binding debts, the party making the loan is subrogated to the right of creditors.^* The sanity of one of the parties to a contract is a question for the jury.^'* Mathews v. Nash, 151 Iowa 125, 130 N. W. 796. " Helbreg v. Schumann, ISO III. 12, il N. E. 99, 41 Am. St. 339; Encking V. Simmons, 28 Wis. 272. " Creekmore v. Baxter, 121 N. Car. 31, 27 S. E. 994. In the above case advances were made on the mortgage to one known to be insane. See also, Physio-Medical College v. Wilkinson, 108 Ind. 314, 9 N. E. 167; Alexander V. Haskins, 68 Iowa IZ, 25 N. W. 935 (holds that the insane party need not make further restitution where the benefits actually received by the other party are equal to the considera- tion parted with by him). "McCracken v. Levi, 24 Ohio Cir. Ct. 584; Cathcart v. Sugenheimer, 18 S. Car. 123. In the above case sale was made by committee. See, how- ever, German &c. Soc. v. DeLashmutt, 67 Fed. 399. As to what circum- stances will charge one with notice that the other contracting party is of unsound mind, see Groff v. Stitzer, n N. J. Eq. 260, 11 Atl. 46, 31 L. R. A. (N. S.) 1159. See also, the note on this subject in 31 L. R. A. (N. S.) 1159. In this connection see Murphree v. Clisby, 168 Ala. 339, 52 So. 907, 29 L. R. A. (N. S.) 933, in which A, an insane person, contracted to pur- chase certain real estate of B. A bor- rowed a part of the purchase-price from C, which was paid by C, direct- ly to B, A giving C a mortgage on the premises. Neither B or C knsw of A's insanity. C attempted to hold B liable for the return of the pur- chase-money loaned A, on the ground that he was subrogated to A's claim against B for a return of the pur- chase-money. The principles of sub- rogation were held inapplicable to the case. " Shook v. Illinois Central R. Co., 115 Fed. 57, 52 C. C. A. 615. Under the laws of Kansas when one spouse is insane the other has no power to alienate the homestead. Withers v. Love, 72 Kans. 140, 83 Pac. 204, 3 L. R. A. (N. S.) 514n. See also, the note on the subject in 3 L. R. A. 515. To same effect, Weatherington V. Smith, n Nebr. 363, 109 N. W. 381, 13 L. R. A. (N. S.) 430 and note. According to the general rule in- sanity of the insured at the time a premium becomes due on his insur- ance policy does not excuse payment thereof at that time and is no ground for avoiding a forfeiture of the pol- icy. Pitts V. Hartford Life &c. Ins. Co., 66 Conn. 376, 34 Atl. 95, 50 Am. St. 96; Hawkshaw v. Supreme Lodge &c., 29 Fed. 770; Grand Lodge &c. V. Jesse, 50 III. App. 101 ; Ingram V. Supreme Council &c., 28 N. Y. Weekly Digest, 320, 14 N. Y. St. 600; Klein v. New York Life Ins. Co., 104 U. S. 88, 26 L. ed. 662; Thompson v. Knickerbocker Life Ins. Co., 104 U. S. 252, 26 L. ed. 765; Sheridan v. Modern Woodmen, 44 Wash. 230, 87 Pac. 127, 7 L. R. A. (N. S.) 973. See, however, Buchan- an v. Supreme Conclave &c., 178 Pa. St. 465, 35 Atl. 873, 34 L. R. A. 436, 56 Am. St. 774. As to the right of an insane person to sue and be sued see Plaines v. West, 101 Tex. 226, 105 S. W, 1118, 130 Am. St. 839 and note on page 841. CHAPTER XIII. MARRIED WOMEN. i390. Incapable of contracting at common law. 391. Contracts void at common law. 392. Contracts in cases of necessity. 393. Contracts in equity — Separate estate — Origin. 394. Equitable separate estate — Powers over. 395. Equitable separate estate— Lim- itations on powers over. 396. Must intend to bind her sep- arate estate. 397. Intention to bind separate es- tate — Rule in equity. 398. Rule that intention to bind must expressly appear. 399. Feme covert cannot bind her- self personally. 400. Liability attaches to property in her control at time liabil- ity assumed. 401. Conveyances directly to hus- band. 402. Contracts under modern stat- utes. 403. Contract must be in form pre- scribed by law. 404. Contracts as to separate estate under statutes. 405. Power conferred to contract with reference to statutory separate estate as to feme sole. 406. Other statutes conferring lim- ited capacity. 407. Statutes requiring husband to join or consent. 408. Statutes requiring written con- tracts. § 409. Statutes giving power to con- tract as a feme sole. 410. Contracts as sole trader. 411. Contracts of suretyship. 412. Securing husband's debt. 413. Contracts with husband. 414. Contract with husband must not contravene public policy. 415. Consideration need not pro- ceed from husband. 416. Contracts of agency. 417. May appoint husband hei agent. 418. Evidence of husband's agency. 419. Wife may act as husband's agent. 420. Power to pledge credit of hus- band. 421. Power to take and hold lands as trustee. 422. Ratification or confirmation. 423. Restoration. 424. Estoppel. 425. Maj; be estopped by agreement within limit of her capacity to contract. 426. Illustration of the rule. 427. Estoppel by silence or ac- quiescence. 428. Estoppel — When abandoned bj husband. 429. Coverture a personal defense and must be pleaded. 430. Conflict of laws — Lex loci con- tractus. 431. Lex loci contractus — Excep- tions. 432. Lex fori controls as to remedy, § 390. Incapable of contracting at common law. — In the chapter on Parties it was pointed out that married women were incapable of contracting at common law, except in a few in- stances arising, in the main, out of necessity.^ But, as was inti- ^ See ante, ch. 10. 599 § 391 CONTRACTS. 6oO mated in that chapter, and as will more fully appear in this chap- ter, the modern rule, especially under comparatively recent legislation, is much more liberal. § 391. Contracts void at common law. — The contracts of a feme covert were void at common law.^ This disability extended even to contracts for necessities.^ Under the common-law rule the husband and wife were one, the husband being that one. Feme coverts were practically a nonentity. In the words of Blackstone, "the very being and existence of the woman is sus- pended during the coverture, or entirely merged or incorporated in that of the husband."* Indeed, the same writer catalogs mar- riage as "a sixth method of acquiring property in goods and chattels."^ § 392. Contracts in cases of necessity. — Under this head are included those instances and circumstances under which a married woman may make a valid and binding contract. These exceptions to the general rule will be found enumerated under the head of Coverture in the chapter on Parties and need not be repeated here. ' See Forsyth v. Barnes, 228 III. woman are voidable and will not be 326, 81 N. E. 1028; Harris v. Web- enforced against her when there is a ster, 58 N. H. 481. See ante, § 271, plea of coverture." It does not ap- Coverture, and, also, § 276, where in- pear from the case whether there is capacity is such as to make contracts a statutory provision making the con- voidable, tract of married women voidable, or " Shaw V. Thompson, 16 Pick, whether the language employed is (Mass.) 198, 26 Am. Dec. 6SS; Mu- merely loosely used. See also, Clewis sick V. Dodson, 76 Mo. 624, 43 Am. v. Malone, 119 Ala. 312, 24 So. 767. Rep. 780; Fell v. Brown, 115 Pa. St. In equity, however, she could by ex- 218, 8 Atl. 70; Valentine v. Bell, 66 press contract bind her separate es- Vt. 280, 29 Atl. 251. See also, Smout tate for necessities. Miller v. New- v. Ilbery, 10 M. & W. 1, in which it ton, 23 Colo. 554 (holding that prom- is held that the wife is not liable for ise need not be in writing) ; Craft v. provisions furnished her after her Rolland, 37 Conn. 491 ; Porter v. husband's death but prior to the time Baldwin, 7 Humph. (Tenn.) 175 ; word was received by either party of Priest v. Cone, 51 Vt. 495, 31 Am. his death. Drais v. Hogan, 50 Cal. Rep. 695. See also, Hall v. Faust, 9 121; Whipple v. Giles, 55 N. H. 139; Rich. Eq. (S. Car.) 294. Wilson V. Burr, 25 Wend. (N. Y.) '2 Bl. Com. 433. See also, Hall 386; Clark v. Tenneson, 146 Wis. 65, v. Johns, 17 Idaho 224, 105 Pac. 71; 130 N. W. 895, 33 L. R. A. (N. S.) Henneger v. Lomas, 145 Ind. 287, 44 426. See, however. First National N. E. 462, 32 L. R. A. 848; Spencer Bank v. Shaw, 109 Tenn. 237, 70 S. v. Parsons, 89 Ky. 577, 11 Ky. L. 769, W. 807, 59 L. R. A. 498, 97 Am. St. 13 S. W. 72, 25 Am. St. 555. 840, in which it is said: "In Ten- '■2 Bl. Com. 433. nessee the contracts of a married 6oi MARRIED WOMEN. § 393 § 393. Contracts in equity — Separate estate — Origin. — The courts of chancery were the pioneers in the emancipation of women movement. About the end of the seventeenth century they recognized a separate proprietorship in the wife utterly at variance with the well-established principles of common law. This was accomplished through the medium of trusts and de- veloped into what is known as her equitable separate estate vested in her for her separate use, to the exclusion of the husband's marital rights therein." ' See, generally, Alston v. Rowles, 13 Fla. 117; Duke v. Duke, 81 Ky. 308; Struss v. Norton, 20 Ky. L. 1116, 43 S. W. 976; Petty v. Malier, 14 B. Mon. (Ky.) 246; Flaum v. Wallace, 103 N. Car. 296, 9 S. E. 567. See also, the case Drake v. Storr, Freem. ch. 205, which shows that as early as the year A. D. 1695 the wife's separate estate was a well settled doc- trine of equity. Taylor v. Meads, 4 DeG., J. & S. 597, in which it is said : "When the courts of equity estab- lished the doctrine of the separate use of a married woman and applied it to both real and personal estate, it became necessary to give the mar- ried woman, with respect to such jseparate property, an independent per- sonal status, and to make her in equity a feme sole. It is of the essence of |the separate use that the married woman shall be independent of and free from the control and interfer- ence of her husband. With respect to separate property, the feme covert is by the form of trust released and freed from the fetters and disability of coverture, and invested with the rights and powers of a person who is sui juris. * * * The violence thus done by courts of equity to the prin- ciples and policy of the common law as to the status of the wife during coverture is very remarkable, but the doctrine is established and must be consistently followed to its legiti- mate consequences." This disposition of courts of equity to evade the harsh and unjust rules of the common law as relates to married women has in many cases resulted in a statement of the general rule that is too broad. They seem to consider that equity re- gards a married woman absolutely as if she were a feme sole. Thus in the case of Currier v. Teske, 84 Nebr. 60, 120 N. W. 1015, 133 Am. St. Rep. 602, it is said : 'Tn equity a wife has ever been regarded as distinct person, capable of contract- ing, and whenever equitable grounds for relief have existed her rights have been enforced and protected." As to the wife's power to contract and the attitude of equity toward that power it is said in the case of Pike V. Fitzgibbon, L. R. 17 Ch. Div. 454: "As I understand their (counsels') argument it is this, that a court of equity deals with a married woman who has a separte estate as if she were a feme sole. Now, is that correct? First of all there is one clear and absolute distinction. Can a feme sole, or can a man, be restrained from anticipating, or dis- posing by way of anticipation, of any property to which she or he is en- titled? No. A married woman un- der coverture can ; but how and why? Simply as regards property settled to her separate use, and because equity can modify the incidents of separate estate, which is the creation of equity, and thus the position of a married woman having separate prop- erty differs materially from that of a feme sole. Is it true that she is re- garded in equity as a feme sole? She is regarded as a feme sole to a cer- tain extent, but not as a feme sole ab- solutely, and there is the fallacy. She, in my opinion, is regarded as a feme sole only as regards property which, under the trust, she is entitled to deal with as if she were a feme sole, but as regards property which she is re- strained from anticipating, she is not, as regards persons other than her § 394 CONTRACTS. 602 § 394. Equitable separate estate — Powers over. — The methods by which an equitable separate estate may be created and the language necessary to create it do not come within the scope of this work, and will not be considered. Equitable sepa- rate estates concern the law of contracts only so far as they re- move the disabilities of coverture and give a married woman the right to contract. In these respects it is held as a general rule, where the distinction obtains in its full scope, that a married woman has full power to charge or alienate her equitable sepa- rate property or interest therein practically as a feme sole unless specifically restrained by the instrument creating it;' and that it is also within the power of a feme covert to bind her separate estate by her contracts and obligations, and render it liable for the satisfaction of her debts and the fulfilment of her obliga- tions,' except in so far as she may be prohibited from so doing husband, in the position of a feme sole. As regards her husband, no doubt she is, as regards property set- tled to her separate use (whether there is a restraint upon anticipation or not), treated as a feme sole, that is to say, she, and not her husband, is the person who alone can receive and give a discharge for the money, and her husband is absolutely ex- cluded; but as regards the outside world she is not regarded as a feme sole in respect of property subject to a restraint upon anticipation." See also, Johnson v. Gallagher, 3 DeG., F. & J. 494. 'Johnson v. Gallagher, 3 DeG., F. & J. 494;Hulme v. Tenant, 1 Bro. C. C. 16, 1 Lead. Gas. in Equity (4th Am. Ed.) 679, and note; Taylor v. Meads, 4 DeG. & Sm. 597; Stead v. Nelson, 2 Beav. 245 ; Jackson v. Hob- house, 2 Mer. 483. See, for addi- tional English authorities, Ewing v. Smith, 3 Desaus. (S. Car.) 47, 5 Am. Dec. 557, note. Collins v. Rudolph, 19 Ala. 616; Imlay v. Huntington, 20 Conn. 146; Cooke v. Husbands, 11 Md. 492; (Zadematori v. Granger, 160 Mo. 352, 61 S. W. 195; Turner v. Shaw, 96 Mo. 22, 9 Am. St. 319; Jaques v. M. E. Church, 17 Johns (N. Y.) 549. 8 Am. Dec. 447; Todd v. Lee, IS Wis. 400, ' Hulme v. Tenant, 1 Bro. C. C. 16, 1 Lead. Gas. in Equity (4th Am. Ed.) 679, and note; Peacock v. Monk, 2 Ves. 190; Norton v. Turvill, 2 P. Wms. 145 ; Butler v. Cumpston, L. R. 7 Eq. 16; In re Leeds Banking Co., L. R. 3 Eq. 781; Murray v. Barlee, 3 Myl. & K. 209; Owens v. Dickenson, Craig & Ph. 48 ; Johnson v. Gallagher, 3 DeG., F. & J. 494; McHenry v. Da- vies, L. R. 10 Eq. 88, 39 L. J. Ch. 866, 22 L. T. (N. S.) 643, 18 W. R. 855; Chubb V. Stretch, L. R. 9 Eq. 555, 39 L. J. Ch. 329, 22 L. T. (N. S.) 86, 18 W. R. 483 ; Merrick v. Sherwood, 22 U. C. C. P. 467. See also, Burrows V. Leavens, 1 Can. L. T. 697; Stephen V. Beall, 22 Wall. (U. S.) 329, 22 L. ed. 786; In re Kinkead, 3 Biss. (U. S.) 405, Fed. Gas. No. 7824. But see Boyd V. Withers, 1 Chicago Leg. N. 401, 3 Fed. Gas. No. 1752; Bolman v. Overall, 86 Ala. 168, 5 So. 455 ; Brame V. McGee, 46 Ala. 170; Paulk v. Wolfe, 34 Ala. 541 ; Kaiser v. Stick- ney, 3 MacArthur (D. C.) 118; Staley V. Hamilton, 19 Fla. 275; Major v. Symmes, 19 Ind. 117; Burch v. Breck- enridge, 16 B. Mon. (Ky.) 482, 63 Am. Dec. 553; McKee v. Sypert, 6 Ky. L. 519; LiUard v. Turner, 16 B. M(jn. (Ky.) 374; Coleman v. Wooley, 10 B. Mon. (Ky.) 320. But see Dan- iel V. Robinson, 18 B. Mon. (Ky.) 301 ; Hanly & Co. v. Downing, 4 Mete. (Ky.) 95; Price v. Bigham, 7 Har. & 603 MARRIED WOMEN. § 395 by the provisions of the instrument creating the separate estate.' § 395. Equitable separate estate — Limitations on powers over. — In many jurisdictions, however, the foregoing rule is greatly limited in its application. By some authorities the sepa- rate estate of a feme covert is chargeable with her contracts only when entered into for its benefit." In other jurisdictions it seems that the contract will be good only when personally bene- ficial to the wife or her estate.^^ In still others, instead of hav- J. (Md.) 296; Hall v. Eccleston, Z1 Md. 510; Carpenter v. Leonard, 5 Minn. 155; Pond v. Carpenter, 12 Minn. 430 ; Futch v. Jeffries, 59 Miss. 506; Franklin v. Beatty, 27 Miss. 347; Frierson v. Williams, 57 Miss. 451. See also. Bank of Louisiana v. Will- iams, 46 Miss. 618, 12 Am. Rep. 319; Boatmen's Sav. Bank v. Collins, 75 Mo. 280; Davis v. Smith, 75 Mo. 219; Morrison v. Thistle, 67 Mo. 596 ; Met- ropolitan Bank v. Taylor, 62 Mo. 338 ; Meyerson v. Van Wagoner, 56 Mo. 115; Metropolitan Bank v. Taylor, 53 Mo. 444; Lincoln v. Rowe, 51 Mo. 571 ; Kimm v. Weippert, 46 Mo. 532, 2 Am. Rep. 541 ; Bruner v. Wheaton, 46 Mo. 363; Schafroth v. Arabs, 46 Mo. 114; Whitesides v. Cannon, 23 Mo. 457; Coats v. Robinson, 10 Mo. 757; Mendenhall v. Leivy, 45 Mo. App. 20 ; Boatmen's Sav. Bank v. Mc- Menamy, 35 Mo. App. 198; Kloke v. Martin, 55 Nebr. 554, 76 N. W. 168; Oakley v. Pound, 14 N. J. Eq. 178; Pentz V. Simonson, 13 N. J. Eq. 232 ; Miller v. Richardson, 88 Hun (N. Y.) 49, 68 N. Y. St. 290, 34 N. Y. S. 506; North American Coal Co. v. Dyett, 7 Paige (N. Y.) 9; Gardner v. Gard- ner, 7 Paige (N. Y.) 112, 22 Wend. (N. Y.) 526; Curtis v. Engel, 2 Sandf. Ch. (N. Y.) 287; Ballin v. DiUaye, il N. Y. 35, 35 How. Pr. (N. Y.) 216; Merchants' Bank v. Scott, 59 Barb. (N. Y.) 641; Treadwell v. Archer, 76 N. Y. 196, affg. 10 Hun (N. Y.) li\ Palen v. Starr, 7 Hun (N Y) 422; Yale v. Dederer, 18 N. Y. 265, 72 Am. Dec. 503, revg. 21 Barb (N. Y.) 286; Little v. Rawson, 8 Abb. N. Cas. (N. Y.) 253; Jaques v. M. E. Church, 17 Johns. (N. Y ) 549, revg. 3 Johns. Ch. (N. Y.) 11; Firemen's Ins. Co. v. Bay, 4 Barb. (N. Y.) 407, affd., 4 N. Y. 9; Rope V. Van Wagner, 41 Hun (N. Y.) 642, 3 N. Y. St. 156; McVey v. Cantrell, 70 N. Y. 295, 26 Am. Rep. 605, affg. 6 Hun (N. Y.) 528; Frazier v. Brownlow, 3 Ired. Eq. (N. Car.) 237, 42 Am. Dec. 165 ; Phillips v. Graves, 20 Ohio St. 371, 5 Am. Rep. 675; Karns v. Moore, 5 Pa. Super. Ct. 381 ; Ellis V. American Mortg. Co., 36 S. Car. 45, IS S. E. 267 ; Dial v. Agnew, 28 S. Car. 454, 6 S. E. 295; Cum- mings V. Irvin (Tenn. Ch. 1900), 59 S. W. 153; Warren v. Freeman, 85 Tenn. 513; Howe v. Chesley, 56 Vt. 727 ; Frary v. Booth, 37 Vt. 78 ; Price V. Planters' Nat. Bank, 92 Va. 468, 23 S. E. 887, 32 L. R. A. 214; Bain V. Buff's Admr., 76 Va. 371 ; Darnall V. Smith's Admr., 26 Gratt. (Va.) 878; Crockett v. Doriot, 85 Va. 240, 3 S. E. 128; Wooster v. Northrup, 5 Wis. 245; Todd v. Lee, 15 Wis. 400. ° Bank of Shelby v. James, 95 Tenn. 8, 30 S. W. 1038. Restraint may be expressed or implied. Collins v. Wassell, 34 Ark. 17; Webster v. Helm, 93 Tenn. 322. 24 S. W. 488; Bain V. Buff's Admr., 76 Va. 371; Atkinson v. McCormick, Id Va. 791 ; Dezendorf v. Humphreys, 95 Va. 473, 28 S. E. 880. "Heburn v. Warner, 112 Mass. 271, 17 Am. Rep. 86; Musson v. Trigg, 51 Miss. 172; Adams v. Mackey, 6 Rich. Eq. (S. Car.) 75; Owens v. Johnson, 8 Baxt. (Tenn.) 265. " Halle V. Einstein, 34 Fla. 589, 16 So. 554 ; Smith's Admrs. v. Poythress, 2 Fla. 92, 48 Am. Dec. 176; Johnson V. Cummings, 16 N. J. Eq. 91, 84 Am. Dec. 142; Armstrong v. Ross, 20 N. § 396 CONTRACTS. 604 ing every power from which she is not negatively debarred in the instrument creating the separate estate, she is deemed to have none but those positively given to or reserved for her.^^ Other jurisdictions give her the right to dispose of her separate property when it consists of personalty, and in this is included rents and profits from real estate, but they deny her the right to dispose of or charge the corpus of realty settled upon her as her separate estate. ^^ § 396. Must intend to bind her separate estate. — It will be seen from the foregoing that there is no uniformity among the decided cases on this question, and that they range all the way from those which practically hold that a married woman has no power to charge her separate estate except as that power is ex- pressly conferred upon her by the instrument creating it, to those which give her unrestricted freedom in this respect except as expressly prohibited by the instrument itself. Nor does the con- fusion end here. There is a further conflict as to what contracts which are within the scope of a feme covert's power to make do in fact bind her estate. The wife's separate estate is not bound unless it appears that she intended to bind it. The question of whether or not her separate estate is charged, therefore, becomes clearly a question of intent on the part of the parties, to be ascer- tained according to the rules of equity. It thus is made to appear J. Eq. 109; Perkins v. Elliott, 8 C. E. "Palmer v. Rankins, 30 Ark. 771 Green (N. J.) 526, revg. 22 N. J. Eq, Cookson v. Toole, 59 III. 515; Doty 127; Homeopathic Mut. Life Ins. Co. v. Mitchell, 9 Sm. & M. (Miss.) 435: V. Marshall, 32 N. J. Eq. 103; Noel Cochran v. O'Hern, 4 Watts & S V. Kinnev, 106 N. Y. 74, 12 N. E. 351, (Pa.) 95, 39 Am. Dec. 60; Thomas v 60 Am. Rep. 423; Yale v. Dederer, 18 Folwell, 2 Whart. (Pa.) 11, 30 Am N. Y. 265, 72 Am. Dec. 503; Dyett v. Dec. 230; Maurer's App., 86 Pa. 380: North American Coal Co., 20 Wend. Metcalf v. Cook, 2 R. I. 355 ; Creigh- (N. Y.) 570, 32 Am. Dec. 598; Pat- ton v. Clifford, 6 S. Car. 188; Ewing rick V. Littell, Z6 Ohio St. 79, 38 Am. v. Smith, 3 Desaus. (S. Car.) 417, 5 Rep. 552 ; Avery V. Vansickle, 35 Ohio Am. Dec. 557; Morgan v. Elam, 4 St. 270; Winternitz v. Porter, 86 Pa. Yerg. (Tenn.) 375; Kirby v. Miller, St. 35; Elliott V. Gower, 12 R. I. 79, 4 Coldw. (Tenn.) 3. 34 Am. Rep. 600; Scottish American " Penn v. Whitehead, 17 Grat. Mortg. Co. V. Deas, 35 S. Car. 42, 14 (Va.) 503, 94 Am. Dec. 478; Price v. S. E, 486, 28 Am. St. 832; Cater v. Planters' Nat. Bank, 92 Va. 468, 23 Eveleigh, 4 Desaus. ( S. Car.) 19, 6 S. E. 887, 32 L. R. A. 214; Burnett v. Am. Dec. 596; James v. Mayrant, 4 Hawpe's Exr., 25 Grat. (Va.) 481; Desaus. (S. Car.) 591, 6 Am. Dec. Patton v. Merchants' Bank, 12 W. 630; Hubbard v. Bugbee, 55 Vt. 506, Va. 587; Radford v. Carwile, 13 W. 45 Am. Rep. 637; Dale v. Robinson, Va. 572, reviewing a large number of 51 Vt. 20, 31 Am. Rep. 669. English and American cases. 605 MARRIED WOMEN. § 397 that the conflict does not arise from the test to be applied, but from the uncertainty as to what shall be sufficient evidence of her intention to bind her equitable separate estate. It is apparent that no question of intent arises where such intention expressly appears from the contract itself, as where entered into expressly on the credit of her separate estate, '^^ or where the obligation in- curred by a note or mortgage is made a charge upon her separate estate." § 397. Intention to bind separate estate — Rule in equity. — However, equity may in certain jurisdictions appropriate a mar- ried woman's property for the satisfaction of a debt ; and it may do this although nothing is said in the contract in regard to her separate property, and no express charge is made on her separate property by the contract. This is on the theory that since she cannot bind herself personally at law she must have intended, prima facie, at least, to bind her separate estate in equity, since it is only by this means that her contract can be given any effect. Unless this intention is ascribed to her she would be in position of having perpetrated a deliberate fraud on the other party. ^® Thus it has been held that in case a feme covert executes a promissory note or other written contract an intention to charge her separate estate is presumed, notwithstanding the note makes no mention thereof.^^ " Baker V. Gregory, 28 Ala. 544, 65 B. Mon. (Ky.) 374; Cardwell v. Am. Dec. 366; Rogers v. Ward, 8 Perry, 82 Ky. 129, 6 Ky. L. 97, 5 Ky. Allen (Mass.) 387, 85 Am. Dec. 710; L. 936; Vanderheiden v. Mallory, 1 Heburn v. Warner, 112 Mass. 271, 17 N. Y. 452; Phillips v. Graves, 20 Ohio Am. Rep. 86; Jones v. Craigmiles, 371, 5 Am. Rep. 675; Hershizer v. 114 N. Car. 613, 19 S. E. 638; Singluff Florence, 39 Ohio St. 516; Williams V. Tindal, 40 S. Car. 504, 19 S. E. v. Urmston, 35 Ohio St. 296, 35 Am. 137; Martin v. Suber, 39 S. Car. 525, Rep. 611 (overruling Levi v. Earl, 30 18 S. E. 125; National Exchange Ohio St. 147, and Rice v. Railroad Bank v. Cumberland Lumber Co., Co., 32 Ohio St. 380, 30 Am. Rep. 100 Tenn 479, 47 S. W. 85 ; Priest v. 610) ; Phillips v. Graves, 20 Ohio St. Cone 51 Vt. 495, 31 Am. Rep. 695. 371, 5 Am. Rep. 675; Price v. Plant- " Hester v Barker, 42 S. Car. 128, ers' Nat. Bank, 92 Va. 468, 23 S. E. 20 S. E. 52. The words "I hereby bind 887, 32 L. R. A. 214. my separate estate" have been held to "Burch v. Breckenridge, 16 B. create an express charge. National Mon. (Ky.) 482, 63 Am. Dec. 553; Exchange Bank v. Cumberland Lum- Coates v. Robmson, 10 Mo. 757; ber Co., 100 Tenn. 479, 47 S. W. 85. Machir v. Burroughs, 14 Ohio 519; "Miller v Newton, 23 Cal. 554; Williams v. Urmston, 35 Ohio St Deering v. Boyle, 8 Kans. 525, 12 296, 35 Am. Rep. 611. Am. Rep. 480; Lillard v. Turner, 16 § 398 CONTRACTS. 606 § 398. Rule that intention to bind must expressly appear. — Other authorities hold that no such presumption arises, but that the feme covert's intention to bind her separate estate must be made to expressly appear from the contract itself or the sur- rounding circumstances.^* Under this rule a promissory note signed by a married woman gives rise to no presumption that she intended to bind her separate estate, but such intention must be proved.^" Other cases give expression to a modified form of this rule, to the effect that the intent to bind her separate estate must expressly appear unless the contract is for the benefit of the estate itself.^" It will be seen from the foregoing that there is great confusion on this branch of the subject, it being impossi- ble to reconcile in many instances cases decided in the same juris- dictions. No attempt even has been made to do so, as it would be hopeless. The various theories upon which the different cases have been decided have merely been roughly indicated.^^ "Goldsmith v. Ladson, 9 Mack. (D. C.) 220; Kantrowitz v. Prather, 31 Ind. 92, 99 Am. Dec. 587; Quisen- berry v. Thompson, 19 Ky. L. 1554, 43 S. W. 723; Benson v. Simmers, 21 Ky. L. 1060, 53 S. W. 1035; Wester- velt V. Baker, 56 Nebr. 63, 76 N. W. 440, citing and following Grand Island Banking Co. v. Wright, S3 Nebr. 574, 74 N. W. 82; Ragsdale v. Gossett, 2 Lea (Tenn.) 729; Shack- lett V. Polk, 4 Heisk. (Tenn.) 104; Cherry v. Clements, 10 Humph. (Tenn.) 552; Litton v. Baldwin, 8 Humph. (Tenn.) 209, 47 Am. Dec. 60S ; Chatterton v. Young, 2 Tenn. Ch. 768; Dismukes v. Shafer (Tenn. Ch. App.), 54 S. W. 671. " Grand Island Banking Co. v. Wright, S3 Nebr. 574, 74 N. W. 82; Webstervelt v. Baker, 56 Nebr. 63, 76 N. W. 440; Farmers' Bank v. Boyd, 67 Nebr. 497, 93 N. W. 676. Under this principle it has been held that a promissory note does not bind a mar- ried woman's separate estate if the intent so to do is given expression only in a trust deed which is void for usury. Wallace v. Goodlet, 93 Tenn; 598. 30 S. W. 27. '" Kantrowitz v. Prather, 31 Ind. 92, 99 Am. Dec. 587 ; Wilson v. Jones, 46 Md. 349; Homeopathic &c. Ins. Co. v. Marshall, 32 N. J. Eq. 103 ; Yale v. Dederer, 22 N. Y. 450, 78 Am. Dec. 216; Dale v. Robinson, SI Vt. 20, 31 Am. Rep. 669. ^' An eminent writer has said of the topic under discussion : "Since the confusion of tongues at the Tower of Babel, there has been nothing more noteworthy, in the same line, than the discordant and ever-shifting utter- ances of the judicial mind on the sub- ject of the present sub-title. True, there has been sometimes a language, which, though limited in its sphere, was tolerably plain; but, no sooner was the language in the way of be- coming understood, than, lo, some conquering power of another sort came in, and all was confusion once more. * * * The practitioner must look carefully at what has been ad- judged in his own state, examining the cases in the original reports for himself, look at the true principles, consider the mental conformation and habits of the individual men who at the time when a controversy arises compose the supreme bench of his state, then judge of the question be- fore him somewhat as he would of a game of chance; and if his client, after being informed of the nature of the ground, chooses to travel it, he may well go along over it with her to guide, yet hardly to protect, 607 MARRIED WOMEN. § 399 § 399. Feme covert cannot bind herself personally. — In connection with this subject there is one other point that must be borne in mind. It is to the effect that in equity a feme covert cannot bind herself personally any more than she can at law.^^ In contemplation of law the creditor's remedy lies, not against the married woman, but against her separate estate.^' Moreover, it has been held that this liability attaches only to such property as was in her possession or control at the time the liability was assumed.^* § 400. Liability attaches to property in her control at time liability assumed. — It does not attach to property acquired after she has incurred the obligation.'^ From the foregoing it appears that the claim against the married woman is in the nature of a lien against her separate property. It is not a lien, however, which runs with the estate. If the property is sold or disposed of in any way before judgment it cannot be claimed by her creditors in satisfaction of debts contracted while she owned it.'° It is apparent that since the separate property of a feme covert is liable in a proper case in satisfaction of her keeping meanwhile in full sight of tied to her separate use as a debtor, her husband." 1 Bishop on Married and liable to satisfy the engagement." Women, §§ 847, 869. Ex parte Jones, L. R. 12 Ch. Div. 484. ^Johnson v. Gallagher, 3 DeG., F. To same effect, see Shattock v. Shat- & J. 494 ; Aylett v. Asnton, 1 Myl. & tock, L. R. 2 Eq. 182 ; London &c. C. 105 ; Prentiss v. Paisley, 25 Fla. Bank v. Lempriere, L. R. 4 P. C. 572 ; 927, 7 So. 56, 7 L. R. A. 640; Rode- Warren v. Freeman, 85 Tenn. 513, 3 meyer v. Rodman, 5 Iowa 426; Bell S. W. 513. V. Kellar, 13 B. Mon. (Ky.) 381; ^ Pike v. Fitzgibbon, 17 Ch. Div. Kocher v. Cornell, 59 Nebr. 315, 80 454. N. W. 911; Pierson v. Lum, 25 N. J. ""Pike v. Fitzgibbon, L. R. 17 Ch. Eq. 390; Fallis v. Keys, 35 Ohio St. Div. 454; In re Sykes's Trusts, 2 265 ; Pilcher v. Smith, 2 Head Johns. & H. 415 ; Mendenhall v. Leivy, (Tenn.) 208; Ankeney V. Hannon, 147 45 Mo. App. 20; Kocher v. Cornell, U. S. 118, il L. ed. 105, 13 Sup. Ct. 59 Nebr. 315, 80 N. W. 911; Sticken 206; Canal Bank v. Partee. 99 U. S. v. Schmidt, 64 Ohio St. 354, 60 N. E. 325, 25 L. ed. 390. 561 ; Manahan v. Hart, 24 Ohio C. C. ''Dobbin v. Hubbard, 17 Ark. 189, 527; Flanagan v. Oliver Finnic 65 Am. Dec. 425 ; Bijrch v. Brecken- Grocer Co., 98 Tenn. 599, 49 S. W. , ridge, 16 B. Mon. (Ky.) 482, 63 Am. 1079; Ankeney v. Hannon, 147 U. S. Dec. 553; Dougherty v. Sprinkle, 88 118, Zl L. ed. 105, 13 Sup. Ct. 206; N. Car. 300 ; Bain v. Buff's Admr., 76 Filler v. Tyler, 91 Va. 458, 22 S. E. Va. 371. "It is not the woman, as a 235. woman, who becomes a debtor, but ^ Osborn v. Graham, 46 Mo. App. her engagement has made that partic- 28 ; Flanagan v. Oliver Finnie Grocer ular part of her property which is set- Co., 98 Tenn. 599, 40 S. W. 1079. § 401 CONTRACTS. 6o8 obligation the right to sue and be sued in equity with respect to it exists.^' § 401. Conveyances directly to husband. — Under the old common-law rule the wife could not convey property directly to the husband. ^^ In equity, however, it has been held in some juris- dictions that she might make such a conveyance directly to the husband without the intervention of any third person or trustee, when made for an adequate consideration and untainted by fraud, circumvention or undue influence.^' Conveyances by the wife to the husband have, however, been held invalid in equity.^" § 402. Contracts under modern statutes. — The preceding discussion has had to do with the wife's separate estate as devel- oped by courts of equity. Modern statutes, in nearly if not all the states, have made many radical changes in the common-law rights of married women, giving them either complete or limited capac- ity to contract. Within the scope of her statutory power a mar- ried woman may make a valid contract, and her liability is governed by the rules applicable to persons under no disability ^ See Lombard v. Morse, 155 that this agreement would be en- Mass. 136, 29 N. E. 205, 14 L. R. A. forced in equity. An agreement simi- 273; Frankel v. Frankel, 173 Mass. lar to that in the case last cited may 214, IZ Am. St. 266, and note, p. 271. be enforced after the wife's death. In ^ Scarborough v. Watkins, 9 B. re Corr's Appeal, 62 Conn. 403, 26 Atl. Mon. (Ky.) 540, 50 Am. Dec. 528; 478; Hulse v. Bacon,26 Misc. (N. Y.) Frissell v. Rozier, 19 Mo. 448; Alex- 455, 40 App. Div. (N. Y.) 89, 57 N. ander v. Shalala, 228 Pa. 297, 74 Atl. Y. S. 537. See also. Grain v. Ship- 554, 31 L. R. A. (N. S.) 844n, 139 Am. man, 45 Conn. 572. St. 1004. See also, post, § 407, Stat- =°Milwee v. Wilwee, 44 Ark. 112. utes requiring husband to join or The above case holds her executory consent. contract to convey voidable at her "■ Mathy v. Mathy, 88 Ark. 56, 113 election, "if not a mere nullity." S. W. 1012. The presumption is Brooks v. Kerns, 86 111. 547; Kinna- against its validity, however. Mc- man v. Pyle, 44 Ind. 275 ; Luntz v. Donald v. Smith, 95 Ark. 523, 130 S. Greve, 102 Ind. 173, 26 N. E. 128; W. 515 (presumption against its va- White v. Wager, 25 N. Y. 328, affg. lidity) ; Blake v. Blake, 7 Iowa 46; 32 Barb. (N. Y.) 250. In the above Turner v. Shaw. 96 Mo. 22, 8 S. W. case it also appeared that the convey- 897, 9 Am. St. 319n ; Wimans v. Pee- ance was without a valuable consid- bles, 32 N. Y. 423 ; Scott v. Calladine, eration. Jarrell v. Crow, 30 Tex. 79 Hun (N. Y.) 79, 29 N. Y. S. 630, Civ. App. 629. 71 S, W. 397; Graham affd., 145 N. Y. 639, 41 N. E. 90; v. Stuve (sub nomine Struwe), Id Townshend v. Townshend, 1 Abb. N. Tex. 533, 13 S. W. 381. In the above Cas. (N. Y.) 81. See Wormley v. case it appeared that the conveyance Wormley, 98 111. 544, in which case was wholly without consideration, the husband bought property and took Smith v. Vineyard, 58 W. Va. 98, 51 title in his wife's name. The wife S. E. 871. See also, Gebb v. Rose, 40 agreed to convey to him. It was held Md. 387. 6o9 MARRIED WOMEN. § 402 whatever.^^ In some jurisdictions the disabilities of coverture are entirely removed.'^ Thus, under a statute providing that she may enter into any contract, express or implied, the same as if she were sole, it has been held that she might bind herself by a contract entered into with an employe.^^ Or where she is given a right to her separate earnings she may contract with a corpora- tion for compensation for services rendered by her to such corporation,^* or contract to furnish board and perform services in caring for persons other than her husband or members of her family.^^ She may be held liable on a contract by which she agrees to compensate an attorney for services rendered by him in an action for divorce brought by^" or against her.*^ Beyond the powers so conferred she cannot go. Her contracts outside the purposes authorized by statute are void. Her power to make certain contracts does not give her authority to enter into agree- ments of a different character.^* ^'Tarr v. Muir, 107 Ky. 283, 53 S. W. 663; McKell v. Merchants' Nat. Bank, 62 Nebr. 608, 87 N. W. 317; Hackettstown Nat. Bank v. Ming, 52 N. J. Eq. 1S6, 27 Atl. 920. How- ever, since the statutes are in derogation of the common la\v, they will be held to have repealed the same only in so far as their language plainly requires. See Graham v. Tucker, 56 Fla. 307, 47 So. 563, 131 Am. St. 124; Cole v. Van Riper, 44 111. 58; Spier v. Opfer, 73 Mich. 35, 40 N. W. 909, 2 L. R. A. 34Sn, 16 Am. St. 556;. Gordon v. Gordon, 183 Mo. 294, 82 S. W. 11; Compton v. Pier- son, 28 N. J. Eq. 229; Alexander v. Shalala, 228 Pa. 297. 77 Atl. 554, 31 L. R. A. (N. S.) 844n, 139 Am. St. 1004. Such statutes should be liberally construed so as to secure to the wife the rights plainly intended to be given her. Wills v. Jones, 13 App. D. C. 482; Buck v. Buck, 12 Ky. L. 638; Burr v. Swan, 118 Mass. 588; De Vries v. Conklin, 22 Mich. 255; Dunbar v. Meyer, 43 Miss. 679 ; Corn Exchange Ins. Co. v. Babcock, 42 N. Y. 613, 1 Am. Rep. 601; Kriz v. Peege, 119 Wis. 105, 95 N. W. 108. For a case giving the statute a very liberal construction, see Harrington V. Lowe, 73 Kans. 11, 84 Pac. 570, 4 L. R. A. (N. S.) 547. 39— Contracts, Vol. I '^ Harrington v. Lowe, 73 Kans. 11, 84 Pac. 570, 4 L. R. A. (N. S.) 547. See also, Murdock v. Leonard, 15 Wash. 142, 45 Pac. 751. Formerly, the ability of a feme covert to contract was exceptional and her disability gen- eral. Now the disability is exceptional and her capacity general. Atkins v. Grist, 44 Pa. Super. Ct. 310. " Rose v. Otis, 18 Colo. 59, 31 Pac. 493. " Baker v. Jewel Tea Co., 152 Iowa 72, 131 N. W. 674. ^"Elliott V. Atkinson (Ind. App.), 90 N. E. 779. To same effect, see Bartholomew v. Adams, 143 Iowa 354, 121 N. W. 1026. "Patrick v. Morrow, 33 Colo. 509, 81 Pac. 242, 108 Am. St. 107; Wol- cott V. Patterson, 100 Mich. 227, 58 N. W. 1006, 24 L. R. A. 629 and note, 43 Am. St. 456. In the above case the action was discontinued before decree. "Tyler v. Winder, 89 Nebr. 409, 131 N. W. 592, 34 L. R. A. (N. S.) 1080, and note. The above case re- views the authorities pro and con, and bases its decision on the ground that the right to contract for such services was necessarily incident to and in- cluded in her right to bring the suit. =' Graham v. Tucker, 56 Fla. 307, 47 So. 563, 131 Am. St. 124; Haas v. § 403 CONTRACTS. 61O § 403. Contract must be in form prescribed by law. — Con- tracts of married women not made in the form prescribed by law are absolutely void.'"' Thus where some statutory require- ment is omitted from the deed of a feme covert which is essential to its validity the deed is void,*" and the mistake cannot be cor- rected by a court of equity.*^ But, where her disabilities have been entirely done away with, her deed or contract may be reformed in equity the same as in the case of a feme sole.*' The modern statutes, by which a full or limited contractual capacity is conferred on married women, vary greatly in the several states. Since her power to make valid contracts depends on these statutes and their construction, reference must be had to the enactments of each state in order to determine with any Shaw, 91 Ind. 384, 12 Abb. N. Cas. (N. evidence aliunde can abate or alter Y.) 304, 46 Am. Rep. 607; Gilbert v. the force and eflfect of the contract Brown, 29 Ky. L. 1248, 97 S. W. 40, 7 McColIum v. Boughton, 132 Mo 601 L. R. A. (N. S.) 1053 ; Grand Island 30 S. W. 1028, 34 S. W. 480, 35 L. R Banking Co. v. Wright, 53 Nebr. 574, A. 480. See also. Smith v. Turpin 74 N. W. 82; Citizens' State Bank v. 109 Ala. 689, 19 So. 914; In re Twin- Smout, 62 Nebr. 223, 86 N. W. 1068; ing's Appeal, 97 Pa. St. 36; MacCon- Westervelt v. Baker, 56 Nebr. 63, 76 nell v. Lindsay, 131 Pa. St. 476, 19 N. W. 440; Stenger Benev. Assn. v. Atl. 306. Stenger, 54 Nebr. 427, 74 N. W. 846; ™ Barrett v. Tewksbury, 9 Cal. 13; Alexander v. Shalala, 228 Pa. 297, 77 Wedel v. Herman, 59 Cal. 507; Dick- Atl. 554, 31 L. R. A. (N. S.) 844n, 139 inson v. Glenney, 27 Conn. 104; Will- Am. St. 1004; Thompson v. Morrow iams v. Cudd, 26 S. Car. 213, 2 S. E. (Tex. Civ. App.), 147 S. W. 706; 14, 4 Am. St. 714. Taylor v. Thomas (Tex. Civ. App.), "Francis v. Rose, 141 Ky. 645, 133 145 S. W. 1061; Mullins v. Shrews- S. W. 550; Buchanan v. Henry, 143 bury, 60 W. Va. 694, 55 S. W. 736. Ky. 628, 137 S. W. 222. See also. See also. Kitchen v. Chapin, 64 Nebr. Bott v. Wright (Tex. Civ. App.), 132 144, 89 N. W. 632, 57 L. R. A. 914, S. W. 960. 97 Am. St. 637. Thus, under the "Bowden v. Bland, 53 Ark. 53, 13 statutes of Pennsylvania removing S. W. 420, 22 Am. St. 179; Barrett v. the disabilities of married women, it Tewksbury, 9 Cal. 13 ; Wedel v. Her- has been held that a feme covert man, 59 Cal. 507 ; Leonis v. Lazzaro- who is given a separate use in land vich, 55 Cal. 52 ; Moulton v. Hurd, 20 by will did not have the right to 111. 137, 71 Am. Dec. 257; Hamar v. mortgage or convey it away, such Medsker, 60 Ind. 413 ; Grapengether power not being given in the will, v. Fejervary, 9 Iowa 163, 74 Am. Dec. when the statute was silent as to sep- 336; Gebb v. Rose, 40 Md. 387; arate use trusts. Holliday v. Hive- Townsley v. Chapin, 12 Allen (Mass.) ly, 198 Pa. St. 335, 47 Atl. 988. A 476; Montana Nat. Bank v. Schmidt, feme covert who is the mere pos- 6 Mont. 609, 13 Pac. 382; Davenport sessor of a legal estate, under the v. Sovil's Widow, 6 Ohio St. 459; married women's act, is powerless to Spencer v. Reese, 165 Pa. St. 158, 30 bind or in any manner charge that Atl. 722. estate, except in the precise manner *^ Bradshaw v. Atkins, 110 111. 323; authorized and pointed out by law. Murdock v, Leonard, IS Wash. 142, But having once entered into a con- 45 Pac. 751. See also, Stevens v. tract, for which her legal estate may Holman, 112 Cal. 345, 44 Pac. 670, be liable, no verbal understanding nor 53 Am. St. 216. 6l I MARRIED WOMEN. § 4O4 degree of certainty the status of a married woman in that juris- diction. These statutes cannot each be given mention in a work of this character. The most that can be done is to group similar statutes together and give the general effect of the statutes so classified. § 404. Contracts as to separate estate under statutes. — Those enactments whereby a statutory separate estate is created may be divided roughly into two classes, namely, those that create a separate estate without providing that she shall have the right to contract with reference thereto as if she were a feme sole, and those that not only give her a separate estate but in addition give her the right to contract as to her separate estate as if she were single. Under statutes of the first class, especially if they contain no provisions whatever as to the feme covert's right to contract with reference to her statutory separate estate, her power to con- tract as to it is governed by the rules of equity concerning con- tracts with reference to her equitable separate estate.*^ The reason for this rule is that there is, on principle, no difference between separate estates created by statute and those brought into existence by a special conveyance, and it follows that the same circumstances which would induce a court of equity to charge a feme covert's equitable separate estate would operate to render liable her statutory separate estate.** "Hooper's Exr. v. Smith, 23 Ala. Graves, 20 Ohio St. 371, S Am. Rep. 639; Blevins v. Buck, 26 Ala. 292; 675; Fallis v. Keys, 7 Ohio Dec. 8, Warfield v. Ravesies, 38 Ala. 518; affd., 35 Ohio St. 265; Williams v. Ankeney v. Hannon, 147 U. S. 118, Z7 Urmston, 35 Ohio St. 296, 35 Am. L. ed. 105, 13 Sup. Ct. 206. But see Rep. 611; Hershizer v. Florence, 39 Wilkinson v. Cheatham, 45 Ala. 337; Ohio St. 516. See Rice v. Columbus McCravey's Admr. v. Todd, 66 Ala. &c. R. Co., 32 Ohio St. 380, 30 Am. 315. See Shulraan v. Fitzpatrick, 62 Rep. 610; Payne v. Thompson, 44 Ala. 571; Cookson v. Toole, 59 111. Ohio St. 192; Wooster v. Northrup, 5 515; Williams v. Hugunin, 69 111. 214, Wis. 245; Conway v. Smith, 13 Wis. 18 Am. Rep. 607 ; Bauman v. Street, 125 ; Todd v. Lee, 15 Wis. 400. Id 111. 526; Sweazy v. Karamer, 51 ""There is no distinction under the Iowa 642, 2 N. W. 506; Brookings v. chancery rules arising out of the for- White, 49 Maine 479 ; Carpenter v. mal nature of the wife's separate es- Leonard, 5 Minn. 155; Johnson v. tate, with reference to whether it Cummings, 16 N. J. Eq. 91, 84 Am. vested at common law, or by statute, Dec. 142; Yale v. Dederer, 18 N. Y. or in equity." James v. Gray, 131 265, 72 Am. Dec. 503, 22 N. Y. 450, Fed. 401, 65 C. C. A. 385, 1 L. R. A. 78 Am. Dec. 216; Ballin V. Dillaye, 37 (N. S.) 321; Hankins v. Columbia N. Y. 35, 35 How. Pr. (N. Y.) 216; Trust Co., 142 Ky. 206, 134 S. W. Corn Exch. Ins. Co. v. Babcock, 42 N. 498; Conway v. Smith, 13 Wis. 125. Y. 614, 1 Am. Rep. 601; Phillips v. § 404 CONTRACTS. 6l2 In some jurisdictions statutes of this same class are construed as giving her the right to make only such contracts as shall be for the benefit of such estate, in accordance with the equitable doc- trine there observed.*'^ Thus, she has been held liable for help em- ployed on her farm, although the contract of hiring was origin- ally made by the husband,^^ and bound by an agreement that the report made by appraisers shall be final.*^ Loans** made to her and debts contracted by her in her separate business have been held binding on the separate estate.*" On the other hand, contracts of suretyship, where the wife re- ceives no consideration for so acting,^" or a confession of judg- ment, except when for the express benefit of her separate estate,'^^ have been held not beneficial to her and therefore unenforcible. The contract must also relate to her separate estate as defined by "Robertson v. Robertson (Ky.), 72 S. W. 813; Ring v. Burt, 17 Mich. 465, 97 Am. Dec. 200 ; Russel v. Peo- ple's Sav. Bank, 39 Mich. 671, 33 Am. Rep. 444; Mosher v. Kittle, 101 Mich. 345, 59 N. W. 497; Detroit Chamber of Commerce v. Goodman, 110 Mich. 498, 68 N. W, 295, 35 L. R. A. 96; Edison v. Babka, 111 Mich. 235, 69 N. W. 499; Caldwell v. Jones, 115 Mich. 129, 7Z N. W. 129; Doane v. Feather's Etate, 119 Mich. 691, 78 N. W. 884; Billingsly v. Swenson Land Co. (Tex. Civ. App.), 123 S. W. 194. The rule is statutory in the above state. Under the Texas statute a simple contract of rental of land has been held not a contract for the benefit of the separate property of the wife. Taylor v. Thomas (Tex. Civ. App.), 145 S. W. 161. "Our con- clusion is, that when by the con- tract the debt is made expressly a charge upon the separate estate, or is expressly contracted upon its credit, or when the consideration goes to the benefit of such estate, or to enhance its value, then equity will decree that it shall be paid from such estate or its income, to the extent to which the power of disposal by the married woman may go. But where she is a mere surety, or makes the contract for the accommodation of another, without consideration re- ceived by her, the contract being void at law, equity will not enforce it against her estate, unless an express instrument makes the debt a charge upon it." Willard v. Eastham, 15 Gray (Mass.) 328, 77 Am. Dec. 366. "Mosher v. Kittle, 101 Mich. 345, 59 N. W. 497. " Montgomery v. American Cent, Ins. Co., 108 Wis. 146, 84 N. W. 175. The above case was decided under the Michigan statute. "Fletcher v. Brainerd, 75 Vt. 300, 55 Atl. 608. "First Nat. Bank v. Hirschkowitz, 46 Fla. 588, 35 So. 22. ™ Stiles v. Lord, 2 Ariz. 154, 11 Pac. 314; Bank of Commerce v. Bald- win, 14 Idaho 75, 93 Pac. 504, 17 L. R. A. (N. S.) 676n. In the above case the court said : "It clearly appeared that the statute did not extend her liability beyond that which would be for her own use or benefit, or in ref- erence to her separate estate.'' Rus- sel v. People's Sav. Bank, 39 Mich. 671, iZ Am. Rep. 444; Caldwell v. Jones, 115 Mich. 129, 7?, N. W. 129; Hansee v. De Witt, 63 Barb. (N. Y.) 53; White v. McNett, 33 N. Y. 371. A feme covert has been held not liable on her promise to pay her sis- ter's board. June v. Labadie, 132 Mich. 135, 92 N. W. 937. "Real Estate Investment Co. v. Roop, 132 Pa. St. 496, 19 Atl. 278, 7 L. R. A. 211. 6l3 MARRIED WOMEN. § 404 the statute/* since such statutory enactments confer no power to contract in regard to matters other than her separate estate.^^ It thus appears that the mere creation of a statutory separate estate does not enlarge the feme covert's power to contract in re- spect thereto, in the absence of any provision to that effect." Ordinarily those statutes that confer a limited capacity on married women to contract without reference to their separate estates are held neither to extend nor abridge the power already theirs in equity to charge their separate estates.^' ='Pyle V. Gross, 92 Md. 132, 48 Atl. son, 29 N. H. 11; Naylor v. Field, 29 713; June v. Labadie, 132 Mich. 135, N. J. L. 287; Yale v. Dederer, 18 N. 92 N. W. 937; Detroit Chamber of Y. 265. 72 Am. Dec. 503, 22 N. Y. Commerce v. Goodman, 110 Mich. 450, 78 Am. Dec. 216; BalHn v. Dil- 498, 68 N. W. 295, 35 L. R. A. 96; laye, il N. Y. 35, 35 How. Pr. (N. Speier v. Opfer, li Mich. 35, 40 N. Y.) 216; Pippen v. Wesson, 74 N. W. 909, 2 L. R. A. 345n, 16 Am. St. Car. 437 ; Huntley v. Whitner, V N. 556; Edison v. Babka, 111 Mich. Car. 392; Dougherty v. Sprinkle, 88 235, 69 N. W. 499; Doane v. Feather, N. Car. 300; Flaum v. Wallace, 103 119 Mich. 691, 78 N. W. 884; Simon N. Car. 296, 9 S. E. 567; Phillips v. V. Sabb, 56 S. Car. 38, 33 S. E. 799; Graves, 20 Ohio St. 371, 5 Am. Rep. Augusta Nat. Bank v. Beard's Exr., 675; Levi v. Earl, 30 Ohio St. 147; 100 Va. 687, 42 S. E. 694. Mahon v. Gormley, 24 Pa. St. 80; •^ American Mortgage Co. V. Owens, Flanders v. Abbey, 6 Biss. (U. S.) 72 Fed. 219, 18 C. C. A. 513; Shaffer 16, Fed. Cas. No. 4851; Ankeney v. V. Kugler, 107 Mo. 58, 17 S. W. 698; Hannon, 147 U. S. 118, il L. ed. 105, Stenger Benev. Assn. v. Stenger, 54 13 Sup. Ct. 206; Wooster v. North - Nebr. 427, 74 N. W. 846; Godfrey v. rup, 5 Wis. 245; Todd v. Lee, IS Wis. Megahan, 38 Nebr. 748, 57 N. W. 400; Krouskop v. Shontz, 51 Wis. 284; Hirth v. Hirth, 98 Va. 121, 34 204, 8 N. W. 241, 37 Am. Rep. 817. S. E. 964. See, however, Tyler v. "Her estate is wholly statutory and Winder, 89 Nebr. 409, 131 N. W. 592, her powers over it are wholly statu- 34 L. R. A. (N. S.) 1080n, which tory. If she needs more she must holds that a married woman who has resort to a court of chancery." Wil- no separate estate may contract for kinson v. Cheatham, 45 Ala. ^ZT . But the services of an attorney in a di- see Kraemer v. Gless, 10 U. C. C. P. vorce proceeding. The decision 470; Wallace v. Lea, 28 Can. Sup. Ct. turned on the divorce statute, how- 595, revg. 33 N. B. 492 ; Conway v. ever. Smith, 13 Wis. 125. Under such stat- " Wilkinson v. Cheatham, 45 Ala. utes she may contract for necessities 337; Fry v. Hamner, 50 Ala. 52; in accordance with the previously ex- Bradley V. Murray, 66 Ala. 269 ; Cook isting rules of equity. Conlin v. Can- V. Meyer, Ti Ala. 580; Carpenter v. trell, 51 How. Pr. (N. Y.) 312. See Mitchell, 50 111. 470: Williams v. Hu- also, Gayle v. Marshall, 70 Ala. 522; gunin, 69 111. 214, 18 Am. Rep. 607; Hammond v. Corbett, 51 N. H. 311; Stevens v. Parish, 29 Ind. 260, 95 Am. Tierneyer v. Turnquist, 85 N. Y. 516, Dec. 616; Brookings v. White, 49 39 Am. Rep. 674. See, however, Maine 479; West v. Laraway, 28 Schneider v. Garland. 1 Mackey (D. Mich. 464; Kitchell v. Mudgett, 37 C.) 350; Thomas v. Passage, 54 Ind. Mich. 81 ; Pond v. Carpenter, 12 Gil. 106 ; Howe v. North, 69 Mich. 272, 2>1 (Minn.) 315; Self v. Howland, 23 N. E. 213; Brown v. Thomson, 27 S. Miss. 264; Garrett v. Dabney, 27 Car. 500, 4 S. E. 345. Miss 335- McCollum v. Boughton, Wilkinson v. Cheatham, 45 Ala. 132 Mo. 601, 30 S. W. 1028, 34 S. W. 337 ; Sparks v. Moore, 66 Ark. 437, 480, 35 L. R. A. 480; Bailey v. Pear- 56 S. W. 1064; Arnold v. Engleman, § 405 CONTRACTS. 614 § 405. Power conferred to contract with reference to statu- tory separate estate as a feme sole. — The second group of legislative enactments not only creates a statutory separate estate for married women but confer upon a married woman the power to contract with reference thereto with perhaps certain specified exceptions, as a feme sole/" Under such statutes she may be- come a surety," buy property,^* or sell it (and this is true whether the property is acquired prior or subsequently to the passage of the statute which gives her the right to deal with her property as a feme sole),^° to form a partnership with persons other than her husband,"" act as a sole trader,"^ or contract for necessities."^ 103 Ind. 512, 3 N. E. 238; Ogden v. Guice, 56 Miss. 330; Corn Exch. Ins. Co. V. Babcock, 42 N. Y. 614, 1 Am. Rep. 601; Mahon v. Gromley, 24 Pa. St. 80. " American Mortgage Co. v. Owens, 72 Fed. 219, 18 C. C. A. 513; Liebes V. Steffy, 4 Ariz. 11, 32 Pac. 261; War- ner V. Hess, 66 Ark. 113, 49 S. W. 489; Kirkley v. Lacey, 7 Houst. (Del.) 213, 30 Atl. 994; Tarr v, Muir, 107 Ky. 283, S3 S. W. 663; Deering V. Boyle, 8 Kans. 525, 12 Am. Rep. 480 ; Knaggs v. Mastin, 9 Kans. 532 ; First Natchez Bank v. Moss, 52 La. Ann. 1524, 28 So. 133 ; Citizens' State Bank V. Smout, 62 Nebr. 223, 86 N. W. 1068; Stenger Benev. Assn. v. Stenger, 54 Nebr. 427, 74 N. W. 846; Melick V. Varney, 41 Nebr. 105, 59 N. W. 521; Farwell v. Cramer, 38 Nebr. 61, 56 N. W. 716; Godfrey v. Megahan, 38 Nebr. 748, 57 N. W. 284; Society of Friends v. Haines, 47 Ohio St. 423, 25 N. E. 119; Steffen v. Smith, 159 Pa. St. 207, 28 Atl. 295; Darwin v. Moore, 58 S. Car. 164, 36 S. E. 539 ; Duval v. Chelf, 92 Va. 489, 23 S. E. 893; Hirth v. Hirth, 98 Va. 121, 34 S. E. 964; Kittitas v. Travers, 16 Wash. 528, 48 Pac. 340; Tufts v. Copen, 37 W. Va. 623, 16 S. E. 793; "A married woman can make all con- tracts, agreements, and conveyances in regard to her separate estate, * * * and the only prohibition upon her is that she can not 'directly or indirectly become the surety for the husband.' " Sample v. Guyer, 143 Ala. 613, 42 So. 106. Her powers with reference to her separate estate are co- extensive with those of her husband. Farwell v. Cramer, 38 Nebr. 61, 56 S. W. 716. " Deering v. Boyle, 8 Kans. 525, 12 Am. Rep. 480; Westervelt v. Baker, 56 Nebr. 63, 76 N. W. 440; Kittitas V. Travers, 16 Wash. 528, 48 Pac. 340. Contra, Bank of Commerce v. Baldwin, 14 Idaho 75, 93 Pac. 504, 17 L. R. A. (N. S.) 676n. =" Liebes v. Stefify, 4 Ariz. 11, 32 Pac. 261 ; Hays v. Jordan, 85 Ga. 741, 11 S. E. 833, 9 L. R. A. 373; Melick V. Varney, 41 Nebr. 105, 59 N, W. 521. ™ Jackson v. Everett (Tenn.), 58 S" W. 340. See also, Williamson v. Cline, 40 W. Va. 194, 20 S. E. 917. She may convey her property without the husband joining. Stewart v. Weiser Lumber Co. (Idaho), 121 Pac. 775. ™VaiI v. Winterstein, 94 Mich, 230, 53 N. W. 932, 18 L. R. A. 515, 34 Am. St. 334n. •^ Kirkley v. Lacey, 7 Houst. (Del.) 213, 30 Atl. 994. ""Arnold v. Engleman, 103 Ind. 512, 3 N. E. 238; Mayer v. Lithauer, 28 Misc. (N. Y.) 171, 58 N. Y. S. 1064. See also, Carstens v. Hansel- man, 61 Mich. 426, 28 N. W. 159, 1 Am. St. 606; Covert v. Hughes, 8 Hun (N. Y.) 305; Wagg v. Gibbons, 5 Ohio St. 580. It has also been held that she may appoint an attorney in fact with power to mortgage her real estate (Linton v. National &c. Ins. Co., 104 Fed. 584, 44 C. C. A. 54. See, however, Frazee v. Frazee, 79 Md._27,_28 Atl. 1105), assign a policy of life insurance (Supreme Assembly Good Fellows v. Campbell, 17 R. I. 6iS MARRIED WOMEN. f 406 § 406. Other statutes conferring limited capacity. — It is provided by the statutes of some jurisdictions that a feme covert who has been deserted by her liusband may contract as if she were single.** The foregoing is especially true when she con- tracts for necessities.** By some statutes and in equity a feme covert may contract for necessities furnished the family, and they may be declared a charge to her separate estate.*' They must, 402, 22 Atl. 307, 13 L. R. A. 601n), give a release for personal injuries (Cooney v. Lincoln, 20 R. I. 183, 37 Atl. 1031), assume a mortgage on the purchase of real estate (Society &c. V. Haines, 47 Ohio St. 423, 25 N. E. 119; Brewer v. Maurer, 38 Ohio St. 543, 43 Am. Rep. 436), confess judg- ment (Abell V. Chaffee, 154 Pa. St. 254, 26 Atl. 364; Latrobe Bldg. &c. Assn. V. Fritz, 152 Pa. St. 224, 25 Atl. 558), borrow money (Crampton V. Newton's Estate, 132 Mich. 149, 93 N. W. 250; Steffen v. Smith, 15" Pa. St. 207, 28 Atl. 295), become a stock- holder (First Natchez Bank v. Moss, 52 La. Ann. 1524, 28 So. 133 ; Kerr v, Urie, 86 Md. 72, 2,1 Atl. 789, 38 L. R. A. 119, 63 Am. St. 493), or employ an attorney. Wells v. Gilpin, 19 Colo. 305, 35 Pac. 545; Thresher v. Barry, 69 Conn. 470, 2,1 Atl. 1064; Wolcott V. Patterson, 100 Mich. 227, 58 N. W. 1006, 24 L. R. A. 629n, 43 Am. St. 456. "^Arthur v. Broadnax, 3 Ala. 557, Zl Am. Dec. 707n; Love v. Moyne- han, 16 111. 277, 63 Am. Dec. 306; Carstens v. Hanselman, 61 Mich. 426, 28 N. W. 159, 1 Am. St. 606 ; Wright V. Hays, 10 Tex. 130, 60 Am. Dec. 200; Golden v. Galveston, 20 Tex. Civ. App. 584, 50 S. W. 416.^ See also, Wagg v. Gibbons, SO Ohio St. 580; Heagy v. Kastner (Tex. Civ. App.), 138 S. W. 788. °* Carstens v. Hanselman. 61 Mich. 426, 28 N. W. 159, 1 Am. St. 606. See also, ante, ch. 10. ""Boyd V. Withers, 1 Chicago Leg. N. 410, 3 Fed. Cas. No. 1752 ; Collins V. Lavenberg, 19 Ala. 682; Wilkinson V. Cheatham, 45 Ala. m \ Eskridge v. Ditmars, 51 Ala. 245; Lee v. Sims, 65 Ala. 248; Bradley v. Murray, 66 Ala. 269; Lee v. Winston, 68 Ala. 402; Gayle v. Marshall, 70 Ala. 522; Wright V. Strauss, 11 Ala. 227. But see Halliday v. Jones, 57 Ala. 525; Sellraeyer v. Welch, 47 Ark. 485, 1 S. W. in ; Button v. Higgins, 5 Colo. App. 167, 38 Pac. 390; Edminston v. Smith, 13 Idaho 645, 92 Pac. 842, 14 L. R. A. (N. S.) 871; Barnett v. Marks 71 111. App. 673. See Bauman v. Street, 76 111. 526; Arnold v. En- gleman, 103 Ind. 512, 3 N. E. 238. But see Thomas v. Passage, 54 Ind. 106; Rodemeyer v. Rodman, 5 Iowa 426; Pell v. Cole, 2 Mete. (Ky.) 252; McKee v. Hays, 9 Ky. L. 288; Marsh V. Alford, 5 Bush (Ky.) 392 (debt must be evidenced by writing signed by her) ; Young v. Smith, 9 Bush (Ky.) 421; Roberts v. Riggs, 84 Ky. 251, 8 Ky. L. 247, 1 S. W. 431; Gray v. Marshall, 12 Ky. L. 103, 13 S. W. 913; Herr v. Lane, 20 Ky. L. 1950, 50 S. W. 545. But see Toombs v. Stone, 2 Mete. (Ky) 520; First Natchez Bank v. Moss, 52 La. Ann. 1524, 28 So. 133; Gray v. Crook, 12 Gill & J. (Md.) 236; Jackson v. West, 22 Md. 71; Carstens v. Hanselman, 61 Mich. 426, 28 N. W. 159, 1 Am. St. 606 ; Pendle- ton V. Galbreath, 45 Miss. 43 ; Porter V. Caspar, 54 Miss. 359; Cook v. Ligon, 54 Miss. 368; Conlin v. Can- trell, 51 How. Pr. (N. Y.) 312, affd., 64 N. Y. 217; Mayer v. Lithauer, 28 Misc. (N. Y.) 171, 58 N. Y. S. 1064; Muller V. Piatt, 31 Hun (N. Y.) 121; Crisfield v. Banks, 24 Hun (N. Y.) 159; Rawlings v. Neal, 126 N. Car. 271, 35 S. E. 597; Bazemore v. Moun- tain, 121 N. Car. 59, 28 S. E. 17; Hackman v. Cedar, 5 Ohio Cir. Dec. 293, 13 Ohio Cir. Ct. 618; Darlington v. Ervin, 13 Phila. (Pa.) 375 ; Heugh V. Jones, 32 Pa. St. 432 ; Wauhlhoup's Estate, 13 Lane. Bar. (Pa.) 182; Coyle's Estate, 1 Lane. L. Rev. (Pa.) 234; Mahon v. Gormley, 24 Pa. St. 80; Bair v. Robinson, 108 Pa. St. 247, § 4o6 CONTRACTS. 6i6 however, be furnished on the credit of the wife, coupled with such circumstances as show a promise on her part to pay there- for.^° There are some statutes, however, that render her hable for family expenses, regardless of whether or not she contracted the expense in person or has assented thereto/' In other juris- 56 Am. Rep. 198; Hall v. Faust, 9 Rich. Eq. (S. Car.) Z16; Warren v. Freeman, 85 Tenn. 513, 3 S. W. 513; Palmer v. Coghlan (Tex. Civ. App.), 55 S. W. 1122; Brown v. Sumner's Estate, 31 Vt. 671; Priest v. Cone, 51 Vt. 495, 31 Am. Rep. 695. But see Hayward v. Barker, 52 Vt. 429, 36 Am. Rep. 762; Krouskop v. Shontz, 51 Wis. 204, 8 N. W. 241, 37 Am. Rep, 817; O'Malley v. Ruddy, 79 Wis. 147, 48 N. W. 116, 24 Am. St. Rep. 702. But see In re Dumbrill, 10 Ont. Pr. 216; Stack v. Padden, 111 Wis. 42, 86 N. W. 568. ™ Griffin V. Patterson, 1 Can. L. T. 177; Pontbriand v. Mazurette, S Rev. de Jur. 125 ; Gunn v. Samuel, 'i2i Ala. 201; Dodge v. Knowles, 114 U. S. 430, 29 L. ed. 144, 5 Sup Ct 1108, 1197. But see O'Connor v. Chamberlain, 59 Ala. 431; Craft v. Rolland, il Conn. 491 ; Hart v. Goldsmith, 51 Conn. 479; McDermott v. Garland, 1 Mackey (D. C. ) 496; Freeman v. Holmes, 62 Ga. 556; Edminston v. Smith, 13 Idaho 645, 92 Pac. 842, 14 L. R. A. (N. S.) 871, 121 Am. St. 294; Nelson v. Spaulding, 11 Ind. App. 453, 39 N. E. 168; McMahon v. Lewis, 4 Bush (Ky.) 138; Gatewood v. Bryan, 7 Bush (Ky.) 509; Bell v. Beadel, 12 Ky. L. 892 ; Quisenberry v. Thompson, 19 Ky. L. 1554, 43 S. W. 723; Weber v. Zook (Ky.), 53 S. W. 1034; Hirsch- field V. Waldron, 83 Mich. 116, 47 N. W. 239; Meads v. Martin, 84 Mich. 306, 47 N. W. 583 ; Campbell v. White, 22 iMich. 178; Paul v. Roberts, 50 Mich. 611, 16 N. W. 164; Fafeyta v, McGoldrick, 79 Mich. 360, 44 N. W, 617; Chester v. Pierce, iZ Minn. 370, 23 N. W. 539; Cook v. Ligon, 54 Miss! 368; Grubbs v, Collins, 54 Miss. 485 Caldwell v. Hart, 57 Miss. 123; Van Diver v. Buckley (Miss.), 1 So. 633 Miller v. Brown, 47 Mo. 504, 4 Am Rep. 345 ; Jeffrey v. Fleming, 26 Nebr, 685, 42 N. W. 747 ; Hammond v. Cor- bett, 51 N. H. 311; Wilson v. Herbert, 41 N. J. L. 454, 32 Am. Rep. 243; Feiner v. Boynton, 73 N. J. L. 136, 62 Atl. 420; Maxon v. Scott, 55 N. Y. 247 ; Deraott v. McMullen, 8 Abb. Pr. (N. S.) (N. Y.) 335, 31 N. Y. Super. Ct. 686; Strong v. Moul, 22 N. Y. St. 762; Travis v. Lee, 58 Hun (N. Y.) 605, 11 N. Y. S. 841; Kegney v. Ovens, 50 Hun (N. Y.) 600, 18 N. Y. St. 482, 2 N. Y. S. 319; Bradt v. ShuU, 46 App. Div. (N. Y.) 347, 61 N. Y. S. 484; Lugar v. Swayze, 2 Misc. (N. Y.) 409, affg. 1 Misc. (N. Y.) 209, 20 N. Y. S. 885. But see Weir v. Groat, 4 Hun (N. Y.) 193; Berger v. Clark, 79 Pa. 340; Robinson v. Bair, 2 Sad- ler (Pa.) 223, 3 Atl. 669 (promise by married women to pay burial expenses of mother) ; Reed's Estate, 4 Phila. (Pa.) 375; Darlington v. Ervin, 13 Phila. (Pa.) 127; Donohoe v. Hughes, 2 Kulp (Pa.) 52; Murray v. Keyes, 35 Pa. St. 384; In re Bear's Estate, 60 Pa. St. 430; In re Sawtelle's Appeal, 84 Pa. St. 306 ; Moore v. Copeley, 165 Pa. St. 294, 30 Atl. 829, 44 Am, St. 664; Warren v. Freeman, 85 Tenn. 513, 3 S. W. 513. " McDaniels v. McClure, 142 Iowa 370, 120 N. W. 1031, 134 Am. St. 424. In reference to what are "family ex- penses", the above case says : "Gen- erally speaking, the only criterion which the statute furnishes is that the account must be for items of goods furnished for and on account of the family, and to be used therein." Mc- Cartney &c. Co. V. Carter, 129 Iowa 20, 105 N. W. 339, 3 L. R. A. (N. S.). 145. The above case holds that the extent of her liability cannot be fixed by a note therefor given by the hus- band. A note given by the husband does not, however, release the wife from liability. Smedley v. Felt, 41 Iowa 588 ; Black v. Sippy, 15 Ore. 574, 16 Pac. 418. A diamond shirt-stud, furnished the husband for his per- sonal use and adornment, has been held a "family expense" for which the wife might be liable. Neasham v. McNair, 103 Iowa 695, 72 N. W. 773, 38 L. R. A. 847, 64 Am. St. 202 See, however, Hyman v. Hardmg, 162 lU. 6i7 MARRIED WOMEN. § 407 dictions a woman may contract debts for necessities furnished herself or children, and for all expenses incurred for the benefit of her separate property."* Under such a statute she has been held not liable on a contract for architect's services entered into by her husband as agent,"" and on notes given for the purchase- price of a piano.'''' Other statutes give the court power, in a proper case, to confer upon a married woman the rights of a feme sole. Desertion or its equivalent,'^ or separation by the spouses, the wife living apart and supporting herself," are the grounds usually specified which will justify a court in making such a decree. § 407. Statutes requiring husband to join or consent. — In many jurisdictions married women are at the present time given the right to contract the same as if sole, except when otherwise provided. In some of the above states the husband is, by statu- 357, 44 N. E. 754. A buggy purchased by the husband for use in the family is a family expense for which the wife may be liable, notwithstanding she had on one occasion been denied the use of the buggy and they sep- arated shortly after its purchase. Houck V. La Junta Hardw. Co., SO Colo. 228, 114 Pac. 645, 32 L. R. A. (N. S.) 939. But a stanhope used by the husband, a physician, is not. Staver Carriage Co. v. Beaudry, 138 111. App. 147. Wages of a domestic servant have been held a family ex- pense. Campbell v. Heuer, 139 111. App. 631. To same effect, Perkins v. Morgan, 36 Colo. 360, 85 Pac. 640. Medical services are family expenses. Russell v. Graumann, 40 Wash. 667, 82 Pac. 998. See Mueller v. Kuhn, 59 111. App. 353; Murdy v. Skyles, 101 Iowa 549, 70 N. W. 714, 63 Am. St. 411. The same is true of hospital ex- penses. In re Skillman's Estate, 146 Iowa 601, 125 N. W. 343. The above case states that "payment by one con- fers no right of recovery or of con- tribution from the other". Under the Iowa statute the wife is not, however, liable for the husband's board bill. Vose v. Myott, 141 Iowa 506, 120 N. W. 58, 21 L. R. A. (N. S.) 277. Feed for a horse and cow is not a family expense. Martin v. Vertres, 130 Iowa 175, 106 N. W. 516. Taking care of a drunken husband is not a family ex- pense (Featherstone v. Chapin, 93 111. App. 223), nor of an insane hus- band. Blackhawk County v. Scott, 111 Iowa 190, 82 N. W. 492. " Billingsley v. Swenson Land Co., (Tex. Civ. App.), 123 S. W. 194; Bott V. Wright (Tex. Civ. App.), 132 S. W. 960. "Edwards v. Annan (Tex. Civ. App.), 127 S. W. 299. See also, Stephens v. Hicks, 156 N. Car. 239. 72 S. E. 313, 36 L. R. A. (N. S.) 354, holding that in North Carolina a mar- ried woman cannot contract for the services of an architect to prepare plans and specifications for a house to be erected by her. '"Hall V. Decherd (Tex. Civ. App.), 131 S. W. 1133. '^In re Hughes (1898), 1 Ch. 529, 67 L. J. Ch. (N. S.) 279; Hill v. Cooper (1893), 2 Q. B. 85; Azbill v. AzbiU, 92 Ky. 154, 13 Ky. L. 501, 17 S. W. 284. "Azbill V. Azbill, 92 Ky. 154, 13 Ky. L. 501, 17 S. W. 284. Mere in- solvency of the husband does not justify such a decree. Kohn v. Steinau, 16 Ky. L. 804, 29 S. W. 885. Such a decree rendered without juris- diction is a nullity. New England Mortgage Security Co. v. Powell, 94 § 407 CONTRACTS. 6i8 tory enactment, required to join in or consent to a deed or con- veyance made by the wife of her separate real estate. Under such statutes a deed or conveyance executed by her is valid only if the husband joins therein.'^ Consequently deeds by a wife to her children'* and her mortgage'^ in neither of which the hus- band joined have been declared void. Her deed must be executed in conformity with the statute and even though the husband joins, it has been held that her deed is void where she fails to acknowledge it.'" Moreover, it has been held that such statutes contemplate that the husband shall join in the con- veyance as grantor and that he cannot be both grantor and grantee. It follows that at law the wife cannot convey directly to the husband, notwithstanding the husband joins in such con- veyance." Ala. 423, 10 So. 324. See In re Sta- heli, 78 N. J. Eq. 74, 78 Atl. 206, for an exposition of the New Jersey stat- ute. ™ De Roux V. Girard, 112 Fed. 89, SO C. C. A. 136. The above case was decided under the statutes of Penn- sylvania. Weber v. Tanner (Ky.), 64 S. W. 741 ; Simpson v. Smith, 142 Ky. 608, 134 S. W. 1166; Westlake v. City of Youngstowri, 62 Ohio St. 249, 56 N. E. 873; Bingler v. Bowman, 194 Pa. St. 210, 45 Atl. 80; Merriman v. Blalack, 56 Tex. Civ, App. 594, 121 S. W. 552. The above case holds that a reference in a subsequent deed exe- cuted by the husband to lands con- veyed by the wife alone does not cure his nonjoinder. However, under such statutes it has been held that a lease for a period not to exceed three years (Shipley V. Smith, 162 Ind. 526, 70 N. E. 803), or a lease for the exclu- sive right .to prospect and explore for gas for the term of one i/ear and as much longer as oil and gas is found in paying quantities thereon have been held not a conveyance or incumbrance in which the husband must join. Ko- komo Nat. Gas & Oil Co. v. Matlock (Ind.), 97 N. E. 787, In Illinois it is held that a deed from a married woman is not void because not joined in by the husband. Lawler v. Byrne, 252 111. 194, 96 N. E. 892. "Ellis V. Pearson, 104 Tenn. 591, 58 S. W. 318. " Sipley V. Wass, 49 N. J. Eq. 463, 24 Atl. 233. "Francis v. Rose, 141 Ky. 645, 133 S. W. SSO. To same effect, Buchanan V. Henry, 143 Ky. 628, 137 S. W. 222. See also, Bott v. Wright (Tex. Civ. App.), 132 S. W. 960. "^Ogden V. McArthur, 36 U. C. Q. B. 246; Trawick v. Davis, 85 Ala. 342, 5 So. 83. See, however, in connection with this case, Os- borne V. Cooper, 113 Ala. 405, 21 So. 320, 59 Am. St. 117, and Whittaker v. Van Hoose, 157 Ala. 286, 47 So. 741; Brooks v. Kearns, 86 111. 547; Breit v. Yeaton, 101 111. 242; Kinnaman v. Pyle, 44 Ind. 275; McCord V. Bright, 44 Ind. App. 275, 87 N. E. 654; Luntz v. Greve, 102 Ind. 173, 26 N. E. 128; Johnson v. Jouchert, 124 Ind. 105, 24 N.. E. 580, 8 L. R. A. 795 ; Scarborough v. Wat- kins, 9 B. Mon. (Ky.) 540, 50 Am. Dec. 528 ; Doty v. Cox, 15 Ky. L. Rep. 68, 22 S. W. 321 ; Vicroy v. Vicroy, 20 Ky. L. 47, 45 S. W. 7S ; Preston v. Fryer, 38 Md. 221 ; Gebb v. Rose, 40 Md. 387; Alexander v. Shalala, 228 Pa. 297, 77 Atl. 554, 31 L. R. A. (N. S.) 844n, 139 Am. St. 1004; Wicker v. Durr, 225 Pa. 305, 74 Atl. 64 ; Worrell V. Drake, 110 Tenn. 303, 75 S. W. 1015; Griffin v. Griffin (Tenn.), 37 S. W. 710; Smith v. Vineyard, 58 W. Va. 98, 51 S. E. 871; Mullins v. Shrewsbury, 60 W, Va. 694, 55 S. E. 736; Depue v. Miller, 65 W. Va. 120. 6l9 MARRIED WOMEN. § 407 Under such statutes a married woman's executory contract for the sale of land cannot be specifically enforced unless her husband joins/* The mere fact, however, that the contract cannot be specifically enforced does not in and of itself make the con- tract void. If she has the power to contract as a feme sole, a married woman may make contracts of all descriptions including contracts to convey real estate, and should the husband fail to join in such executory agreement when required so to do the con- tract may be valid although it cannot be specifically enforced as against the wife when the husband refuses to join with her in the conveyance. ''^ It may also be provided by statute that no conveyance of her real estate shall be valid unless made with the written consent of her husband.*" In Alabama, under the law as it stood in 1892 a married woman could not contract except with the assent or concurrence of her husband expressed in writing.^^ Not only this but the contract into which she did enter must have been expressed in writing; consequently she has been held not liable on her oral promise to pay for her husband's support while in an insane asylum.*^ In those jurisdictions where she cannot 64 S. E. 740, 23 L. R. A. (N. S.) 775. (N. S.) 353. See also. Clay v. Mayer, See ante, § 393, Contracts in Equity. 183 Mo. ISO, 81 S. W. 1066. See, "Bartlett v. Williams, 27 Ind. App. however, Knepper v. Egginian 637, 60 N. E. 715; Rosenour v. Rosen- (Ind.), 97 N. E. 161. our, 47 W. Va. 554, 35 S. E. 918. »»Rea v. Rea, 156 N. Car. 529, 72 S. '"Davis V. Watson, 89 Mo. App. IS; E. 573 (construing Laws 1911, C. 109. Brown v. Dressier, 125 Mo. 589, 29 This case also draws a distinction be- S. W. 13. "The impossibility of per- tween contracts and conveyances). formance of a contract to convey See also, Bazemore v. Mountain, 126 made by a married woman alone is, N. Car. 313, 35 S. E. 542; Council v. however, not, strictly speaking, an Pridgen, 153 N. Car. 443, 69 S. E. 404 ; impossibility in law such as would Mercantile Nat. Bank v. Benbow, ISO make the contract void. It is an im- N. Car. 781, 64 S. E. 891; Coffey v. possibility which may or may not Shuler, 112 N. Car. 622, 16 S. E. 911. arise, and is dependent upon the will This statutory provision does not ex- of her husband. One authorized to cuse her from tlie statutory liability contract may make a valid contract imposed upon her as a stockholder in although the possibility of its per- a banking corporation. Smathers v. formance depends upon the will of Western Carolina Bank, 155 N. Car. the other." Wolff v. Meyer, 75 N. J. 283, 71 S. E. 345. L 181, 66 Atl. 959, affd. 1(> N. J. L. ''Wood v. Potts & Potts, 140 Ala. 574, 70 Atl. 1103. "The refusal of the 425, 3? So. 253 ; Cowan v. Motley, 125 husband to join in the wife's deed Ala. 369, 28 So. 70. This statutory cannot operate to relieve her from provision is now obsolete in Alabama liability under her contract, any more and the cases above cited are given than her refusal to join in the htjs- here merely for the purpose of illus- band's would relieve him from lia- trating the construction placed on the bility under his." McCoy v. Niblick, statutes of this character. 228 Pa. 342, n Atl. SSI, 30 L. R. A. ^'McAnally v. Alabama Insane § 408 CONTRACTS. 62O convey her property without the written assent of her husband it has been held that her indorsement or transfer of a note with- out her husband's consent is invahd.'^ It has been held, however, that the husband's assent may be shown by a letter written for the wife by him as her agent" or by his joining in the execution of the instrument*^ or by his signing as a witness.*^ His assent must be given to the same contract that is entered into by the wife/^ Necessary personal expenses such as are for the support of the family or for repairs, and the like, are usually exempted from the operation of such statutes.*^ § 408. Statutes requiring written contracts. — In certain jurisdictions the contracts of married women with few excep- tions must be in writing. Thus formerly it was provided by the statutes of Alabama that a wife could not contract so as to bind herself except it be in writing and with the written assent or concurrence of her husband unless she has been authorized to enter into and pursue a lawful trade or business.'^ Under this statute it has been held that the wife could not appoint an agent by parol even though the person on whom she attempted to confer Hospital, 109 Ala. 109, 19 So. 492, 34 executory contract by the husband for L. R. A. 223n, 55 Am. St. 923. the sale of his real estate does not '" Vann v. Edwards, 128 N. Car. 425, considered by itself constitute on her 39 S. E. 66; Walton v. Bristol, 125 part a written assent to the sale. The N. Car. 419, 34 S. E. 544. Should the court said : "If she should join in the husband also endorse the note this execution of the contract, though not is sufficient to show assent. Coffin v. mentioned in the body thereof, it Smith, 128 N. Car. 252, 38 S. E. 864. would undoubtedly bind her. But " Brinkley v. Ballance, 126 N. Car. where she is not mentioned in the 393, 35 S. E. 631. A wife who con- contract, nor her interests in any way tracts through her husband as agent, referred to, and she signs as a witness, contracts with his assent. Bell v. Mc- expressly so designating her signa- Jones, 151 N. Car. 85, 65 S. E. 646. ture, no consent to a release of her "' Rushton V. Davis, 127 Ala. 279, interest can follow as a matter of 28 So. 476; Wachovia &c. Bank v. law." Ireland, 122 N. Car. 571, 29 S. E. 835 ; "Walton v. Bristol, 125 N. Car. In re Freeman, 116 N. Car. 199, 21 419, 34 S. E. 544. S. E. 110. "McAnally v. Hawkins Lumber "Souder v. Bank, 156 Pa. St. 374, Co., 109 Ala. 397, 19 So. 417; Baze- 27 Atl. 293. In the above case it also more v. Mountain, 126 N. Car. 313, 35 appears that certain blank spaces in S. E. 542. In this latter case the stat- the instrument were filled out in the ute is set out in the opinion of Spark, husband's handwriting. See, however, J. the case of Stromme v. Rieck, 107 ™ Clement v. Draper, 108 Ala. 211, Minn. 177, 119 N. W. 948, 131 Am. 19 So. 25; Strauss &c. Co. v. Glass, St. 452, which holds that the signature 108 Ala. 546, 18 So. 526; Mitchell v. of a wife attached as a witness to an Mitchell, 101 Ala. 183, 13 So. 147. 621' MARRIED WOMEN. § 4O9 authority was her husband."" Under a somewhat similar stat- ute the Supreme Court of North Carolina has held that a wife could not subject her land or separate interest therein to a lien for the cost of a building erected under a parol contract with her"^ and she cannot ratify a void contract."'' In Missouri the mere indorsement in blank by the wife of a promissory note payable to her is not such a written consent as is required by the statute as will enable the husband to pass title thereto to an- other."* Contracts for necessary personal expenses or for the support of her family are as a general rule excepted from the operation of the statutes above referred to,"* and the word neces- sities is here given a broader construction than is given in the law of infancy. Thus it has been held that a wife's land might be held liable for the payment of a note executed by her for a mule to enable her and her husband to cultivate a farm off of which they make their living."^ It has also been held to include supplies furnished her tenants, when it appears that it was neces- sary for her to make provision for them."" But it does not in- clude the wages agreed to be paid an overseer when it does not appear that his services were necessary."' Nor does it include the rent of a hotel when it appears that the wife went into the hotel business as a means to make money and accumulate a profit and not through necessity, or as a means of support for herself and family."^ § 409. Statutes giving power to contract as a feme sole. — By the statutes of many states a married woman is given the power to contract the same as if she were sole in all cases except "" Scott V. Gotten, 91 Ala. 623, 8 the contract was also invalid for the So. 783. further reason that it was not in "Weathers v. Borders, 121 N. Car. writing. 387, 28 S. E. 524. °' Crow v. Shacklett, 18 Ky. L. 908, ■" Weathers v. Borders, 121 N. Car. 38 S. W. 692. This lien against the 387, 28 S. E. 524. wife's property for necessities fur- °^ Case V. Espenschied, 169 Mo. 215, nished her can only be enforced by due 69 S. W. 276, 92 Am. St. 633. process of law. A creditor is not al- °* Weathers v. Borders, 121 N. Car. lowed to take possession of her per- 387, 28 S. E. 524. sonal property to satisfy the charge "° Allen V. Long, 19 Ky. L. 488, 41 against it. He can only proceed S. W. 17. through the court, obtain his judg- °°Bazeniore v. Mountain, 121 N. ment and issue his execution. Raw- Car 59, 28 S. E. 17. lings v. Neal, 126 N. Car. 271, 35 S. " Sanderlin v. Sanderlin, 122 N. E. 597. Car. 1, 29 S. E. 55. In the above case § 409 CONTRACTS. 622 where it is specifically provided otherwise."" In all cases that do not come within the exception specified she may contract as if unmarried.^ Her liability is personal on those contracts by which she is bound.^ Thus, under such statutes it has been held that she may convey the legal or equitable title of land acquired by her since the passage of such law, though executed by her alone, since it was unnecessary for her husband to join.^ She has been held personally Hable on her contract of warranty.* The Supreme Court of Kansas has interpreted a statute which gives a married woman the right to contract with respect to her separate estate or carry on a trade or business on her account as giving her the right to contract generally, even though she pos- sesses no separate estate, trade or business.* But as a general rule such a broad construction is not given to statutes which con- fer upon a married woman the power to contract "with reference to her separate property,"" or which give her the power to acquire this right or to carry on a trade or business or to perform services on her separate account.^ Statutes whereby a married woman is "Village of Western Springs v. Collins, 98 Fed. 933, 40 C. C. A. 33; Stacy V. Walter. 125 Ala. 291, 28 So. 89, 82 Am. St. 235 (cannot become surety for her husband) ; Rose v. Otis, 18 Colo. 59, 31 Pac. 493; Good- rich V. Atlanta Nat. Building & Loan Association, 96 Ga. 803, 22 S. E. 585 (cannot become surety) ; Pease v. L. Fish Furniture Co., 176 111. 220, 52 N. E. 932, affg. 70 111. App. 138 ; Snell v. Snell, 123 111. 403, 14 N. E. 684, 5 Am. St. 526; Crum v. Sawyer, 132 111. 443, 24 N. E. 956; Koh-i-moor Laundry Co. v. Lockwood, 141 Ind. 140, 40 N. E. 677 (cannot become surety or convey separate real estate without husband joining) ; Young v. McFadden, 125 Ind. 254, 25 N. E. 284; Security Bank v. Holmes, 68 Minn. 538, 71 N. W. 699; Wyatt v. Wyatt, 81 Miss. 219, 32 So. 317; McHenry v. Batavia Bldg. &c. Co., 17 Ohio C. C. 206 ; Hackman v. Cedar, 5 Ohio D. C. 293, 13 Ohio Cir. Ct. 618; First &c. Bank v. Leonard, 36 Ore. 390, 59 Pac. 873 ; Cooney v. Lincoln, 20 R. I. 183, 37 Atl. 1031; Ex parte Nurnberger, 40 S. Car. 334, 18 S. E. 935, sub nomine Nurnberger's Estate v. Lun- dekins. 40 S. Car. 334, 18 S. E. 935; Valentine v. Bell, 66 Vt. 280, 29 Atl. 251; Brookman v. State Insurance Co., 18 Wash. 308, 51 Pac. 395. ^ Hackettstown &c. Bank v. Ming, 52 N. J. Eq. 156, 27 Atl. 920. ' McHenry v. Batavia Bldg. &c. Co., 17 Ohio C. C. 206; First &c. Bank v. Leonard, 36 Ore. 390, 59 Pac. 873. ' Evans V. Morris, 234 Mo. 177, 136 S. W. 408; Farmer's Exch. Bank v. Hageluken, 165 Mo. 443, 65 S. W, 728, 88 Am. St. 434 ; Cadematori v. Guag- er, 160 Mo. 352, 61 S. W. 195. * Security Bank v. Holmes, 68 Minn. 538, 71 N. W. 699. " Harrington v. Lowe, 73 Kans. 11, 84 Pac. 570, 4 L. R. A. (N. S.) 547. The court said : "The words feme covert no longer have for us anything more than an historical interest. The species is extinct in this state." To the same effect, Deering v. Boyle, 8 Kans. 525, 12 Am. Rep. 480. ° Bank of Commerce v. Baldwin, 14 Idaho 75, 93 Pac. 504, 17 L. R. A. (N. S.) 676n. ' See generally, American Mortgage Co, v. Owens, 18 C. C. A. 513, 72 Fed. 219, 25 U. S. App. 659; First Nat. Bank v. Hirschkowitz, 46 Fla. 588, 35 So. 22; Frazee v. Frazee, 79 Md. 27, 623 MARRIED WOMEN. § 4IO authorized to contract with reference to her separate estate are as a general rule construed as giving her power to enter into a valid contract with respect to the acquisition of such property.^ § 410. Contracts as sole trader. — The statutes of a num- ber of states provide that a married woman may act as a sole trader and as such bind herself by contract." When she takes advantage of the statutory rights thus conferred upon her and engages in business as a sole trader she is bound by her acts and representations made in respect thereto to the same extent as a single woman or man.^° It has been held that under such stat- utes she may conduct her business in the name of an agent." When she is given only the powers of a sole trader she is not bound by contracts unconnected with her sole business/^ and it has been held that she cannot engage in business competition with her husband against his wishes.^' The mere fact that she owns a farm which is operated by her husband does not constitute her a sole trader.^* In case statutes provide that there must be a decree of court authorizing her to act as a sole trader she has no such power without such decree.^^ A married woman who has engaged in trade cannot claim when sued for debts incurred 28 Atl. IIOS; Kenton Ins. Co. v. Mc- make provision for married women Clellan, 43 Mich. 564, 6 N. W. 88 ; becoming free traders. Scott-Sparger Citizens' State Bank v. Smout, 62 Co. v. Ferguson, 152 N. Car. 346, 67 Nebr. 223, 86 N. W. 1068; Linderman S. E. 750. Under the statutes of V. Farquharson, 101 N. Y. 434, 5 N. E. North Carolina a married woman 67 ; Buning v. Berteling, 5 Ohio N. P. who engages in business through her 167; Hirth V. Hirth, 98 Va. 121, 34 S. husband without displaying her E. 964; Cliickering-Chase Bros. Co. v. Christian name is treated as a free White, 127 Wis. 83. 106 N. W. 797. trader. Stone Co. v. McLamb &c. Co., 'Hays V. Jordan, 85 Ga. 741, 11 S. 153 N. Car. 378, 69 S. E. 281. E. 833, 9 L. R. A. 373 ; Minners v. " Hackettstown Nat. Bank v. Ming, Smith, 40 Misc. (N. Y.) 648, 83 N. Y. 52 N. J. Eq. 156, 27 Atl. 920. S. 117; Cashman v. Henry, 75 N. Y. "Reed v. Newcomb, 64 Vt. 49, 23 103, 44 N. Y. Super. Ct. lOOn, 31 Am. Atl. 589. Rep. 437; Campe v. Home, 158 Pa. ^' First Nat. Bank v. Hirschkowitz, 508 27 Atl. 1106; Kriz v. Peege, 119 46 Fla. 588, 35 So. 22. Wis. 105, 95 N. W. 108. See, how- " Root v .Root, 164 Mich. 638, 130 ever, Harrison v. Mansur-Tibbetts N. W. 194, 32 L. R. A. (N. S.) 837n, Implement Co., 16 Tex. Civ. App. 630, Ann. Cas. 1912 B. 740. See, however, 41 S. W. 842. in connection with this case In re » Hickey v. Thompson, 52 Ark. 234, Kinkead, 3 Biss. (U. S.) 405, Fed. 12 S. W.- 475 ; Camden v. Mullen, 29 Cas. No. 7824. Cal. 564; Wallace v. Rowley, 91 Ind. "Union &c. Bank v. Coflfman, 101 586 ; Eskridge v. Carter, 16 Ky. L. 760, Iowa 594, 70 N. W. 693. 29 S. W. 748 ; Clark v. Manko, 80 Md. '" McDonald v. Rosen, 8 Idaho 353, 78, 30 Atl. 621. The legislature may 69 Pac. 125. §411 CONTRACTS. 624 therein that the act empowering her to trade as a feme sole is unconstitutional. ^° Under the statutes of Florida which provide that upon decree of the chancellor a married woman may be made a free dealer "in every respect" it has been held that such a decree gave her the right to convey her separate real estate without her husband joining.^^ On the other hand a statute of North Carolina which provides that a married woman who is registered free trader is "authorized to contract and deal as if she were a feme sole" has been considered not to include or describe conveyances of realty and hence that a married free trader cannot convey her real estate without the joinder of her husband and the execution of a deed in conformity to the statu- tory requirement.^^ § 411. Contracts of suretyship. — At common law the gen- eral rule, almost without exception, was that all contracts entered into by married women were void. This of course included con- tracts of suretyship. The common-law disability to contract has, however, been wholly or partly removed in all the states. In those jurisdictions where her disability to contract has been gen- erally removed, and surety contracts are not excepted, it is obvious that a feme covert may then enter into a contract of suretyship.^* The statutes of several states, however, expressly provide that a married woman cannot enter into any contract of " Louisville R. Co. v. Alexander, 16 " Council v. Pridgen, 153 N. Car. Ky. L. 306, 27 S. W. 981. The court 443, 69 S. E. 404. said : "It is enough to say that the " Binney v. Globe Nat. Bank, 150 beneficiary of the act, and the one Mass. 574, 23 N. E. 380, 6 L. R. A. procuring it, cannot thus impeach it. 379 ; State Bank v. Maxson, 123 Mich. The appellee cannot take advantage of 250, 82 N. W. 31, 8I Am. St. 196 (un- her own wrong, if wrong there was." der Kansas statute) ; King v. Hans- A married woman engaged in busi- ing, 88 Minn. 401, 93 N. W. 307; ness as a sole trader is not subject to Grandy v. Campbell, 78 Mo. App. 502; the act concerning involuntary in- Cooper v. Bank, 4 Okla. 632, 46 Pac. solvency. Clark v. Manko, 80 Md. 475; Colonial &c. Co. v. Stevens, 3 78, 30 Atl. 621. N. Dak. 265, 55 N. W, 578; Miller v. "Lerch v. Barnes, 61 Fla. 672, 54 Purchase, 5 S. Dak. 232, 58 N. W. So. 763. In Florida it would seem 556; Colonial &c. Co. v. Bradley, 4 that a feme covert has no capacity to S. Dak. 158, 55 N. W. 1108; First &c. contract except when the right to act Bank v. Leonard, 36 Ore. 390, 59 Pac. as a. sole trader is conferred upon her. 873, distinguishing Knofl v. Kiessling, Virginia-Carolina &c. Co. v. Fisher, 23 Ore. 8, 35 Pac. 248, and Campbell v. 58 Fla. 377. 50 So. 504; De Graum v. Snyder, 27 Ore. 249, 41 Pac. 659, in Jones, 23 Fla. 83, 6 So. 925; Hodges which the wife bound her separate v. Price, 18 Fla. 342. estate only and not herself. Ritter v. Bruss, 116 Wis. 55, 92 N. W. 361. 62 = MARRIED WOMEN. 8 411 guaranty or suretyship.^" Other statutes merely prohibit her from becoming surety for her husband.^^ It has been held under such a statute that she is not liable on an appeal bond signed by her as surety for her husband.''^ By other statutes she is pro- hibited from becoming surety for certain purposes.^^ The real difficulty in considering contracts of this class arises under those statutes whereby a married woman is given control over her separate estate. In certain jurisdictions statutes of this character are construed to mean that she can enter into only such contracts as are for her own use or benefit or in reference to her separate estate and since contracts of surety do not generally fall within this class of contracts she is not bound thereby, especially when not expressly made a charge upon her separate estate.^* ^Thompson v. Wilkinson, 9 Ga. App. 367, 71 S. E. 678; Finch v. Bar- clay, 87 Ga. 393, 13 S. E. 566; Smith V. Hardman, 99 Ga. 381, 27 S. E. 731 ; Munroe v. Haas, lOS Ga. 468, 30 S. E. 654; Coffee v. Ramey, 111 Ga. 817, 35 S. E. 641 ; Field v. Campbell, 164 Ind. 389, 72 N. E. 206, 108 Am. St. 301 ; Garrigue v. Kellar, 164 Ind. 676, 74 N. E. 523, 69 L. R. A. 870, 108 Am. St. 324; Cook v. Buhrlage, 159 Ind. 162, 64 N. E. 603; International &c. Assn. V. Watson. 158 Ind. 508, 64 N. E. 23; Andrysiak v. Satkowski, 159 Ind. 428, 63 N. E. 854, 65 N. E. 286; West V. Laraway, 28 Mich. 464 ; Seig- man v. Streeter, 64 N. J. L. 169, 44 Atl. 888; Pittman v. Raysor, 49 S. Car. 469, 27 S. E. 475; Gwynn v. Gwynn, 31 S. Car. 482, 10 S. E. 221. The case of Booth v. Merchants' Bank, 9 Ga. App. 650, 72 S. E. 44, holds that while a married woman can neither stand surety for her husband's debts nor lawfully pay them, she may pay the debts of a third person other than her husband although she cannot lawfully become surety for such third person. A provision of the statutes that prevents her from becoming surety does not prohibit her from becoming a partner with her husband if such agreement is not entered into merely for the purpose of rendering her liable for her husband's debts. Butler V. Frank, 7 Ga. App. 655, (il S. E. 884. ^Richardson v. Stephens, 122 Ala. 301, 25 So. 39; Hanchey v. Powell, 171 40 — Contracts, Vol. I Ala. 597, 55 So. 97; Evans v. Fair- cloth-Byrd &c. Co., 165 Ala. 176, 51 So. 785 ; Sample v. Guyer, 143 Ala. 613, 42 So. 106 ; Schening v. Cof er, 97 Ala. 726, 12 So. 414. "" Succession of Maloney, 124 La. 672, SO So. 647. ^Hyner v. Dickinson, 32 Ark. 776 (cannot become surety on an official bond). '^ Bank of Commerce v. Baldwin 14 Idaho 75, 93 Pac. 504, 17 L. R. A. (N. S.) 676n. See also, Flanders v. Abbey, 6 Biss. (U. S.) 16, Fed. Cas. No. 4851; Richardson v. Matthews, 58 Ark. 484, 25 S. W, 502 ; Stiles V. Lord, 2 Ariz. 154, 11 Pac. 314; Heburn v. Warner, 112 Mass. 271, 17 Am. Rep. 86 ; Nourse v. Hen- shaw, 123 Mass. 96; Bartlett v. Bart- lett, 4 Allen (Mass.) 440; Willard v. Eastham, 15 Gray (Mass.) 328, 11 Am. Dec. 366; Vankirk v. Skillman, 34 N. J. L. 109. See, however, in con- nection with the foregoing Massachu- setts cases the following ones from the same jurisdiction : Commonwealth V. Abbott, 168 Mass. 471, 47 N. E. 112; Kenworthy v. Sawyer, 125 Mass. 28; Middleborough Nat. Bank v. Cole, 191 Mass. 168, 11 N. E. 781 ; Bailey v. Pearson, 29 N. H. 11 ; People v. Wil- liams, 8 Daly (N. Y.) 264; White v. McNett, 33 N. Y. 371 ; Hansee v. De Witt, 63 Barb. (N. Y.) 53; Yale v. Dederer, 18 N. Y, 265, 72 Am. Dec. 503, 22 N. Y. 450, 78 Am. Dec. 216, 68 N. Y. 335 ; Drake v. E. M, Birdsall & Co., 10 Ohio Dec. Reprint 56, 18 § 412 CONTRACTS. 626 Other jurisdictions with similar statutes hold that they give her the power to enter into contracts of suretyship even though she does not expressly make it a charge upon her separate estate.^^ Statutes permitting her to sue and be sued as though sole^° or to make contracts and incur liability as though unmarried/^ have been held to confer upon her power to enter into contracts of suretyship. In still other jurisdictions her contract of suretyship is binding upon her separate estate if it is specifically made a charge thereon,-^ or is for the benefit of her separate estate or is supported by a consideration.^" § 412. Securing husband's debt. — In case the contract of surety is one that the wife was prohibited by law from entering into, any subterfuge resorted to by the parties to evade the statute will not meet with approval from the courts.'" The real nature Wkly. L. Bui. 243; Habenicht v. Rawls, 24 S. Car. 461, 58 Am. Rep. 268. She is bound by her executed contracts of suretyship. Shipman v. Lord, 58 N. J. Eq. 380, 44 Atl. 215. ^Frazee v. McFarland, 43 U. C. Q. B. 281; Deering v. Boyle, 8 Kans. 52S, 12 Am. Rep. 480; Cartan v. Da- vid, 18 Nev. 310, 4 Pac. 61; Kittias County V. Travers, 16 Wash. 528, 48 Pac. 340. See also. Bank of Com- merce V. Baldwin, 14 Idaho 75, 93 Pac. 504, 17 L. R. A. ("N. S.) 676n, for a review of the authorities. " Kenworthy v. Sawyer, 125 Mass. 28; Middleborough Nat. Bank v. Cole, 191 Mass. 168, 77 N. E. 781; Commonwealth v. Abbott, 168, Mass. 471. 47 N, E. 112. ^ Low Bros. & Co. v. Anderson, 41 Iowa 476. To same effect, Mayo V. Hutchinson, 57 Maine 546. "" Kershaw v. Barrett, 3 Nebr. (unof.) 36, 90 N, W. 764; Briggs v. First Nat. Bank, 41 Nebr. 17, 59 N. W. 351 ; Smith v. Spaulding, 40 Nebr. 339, 58 N. W. 952; Spatz v. Martin, 46 Nebr. 917, 65 N. W. 1063; First Nat. Bank v. Stoll, 57 Nebr. 758, 78 N. W. 254; Webster v. Helm, 93 Tenn. 322, 24 S. W. 488. It would seem, however, that this intention must expressly appear in the contract itself. Smith v. Bond, 56 Nebr. 529, 76 N. W. 1062. See, however, Knowles V. Toone, 96 N. Y. 534. See also, Union &c. Bank v. Coffraan, 101 Iowa 594, 70 N. W. 693; Eckman v. Scott, 34 Nebr. 817, 52 N. W. 822 ; Knowles V. Toone, 96 N. Y. 534; Woolsey v. Brown, 11 Hun (N. Y.) 52, 74 N. Y. 82; Gosman v. Cruger, 69 N. Y. 87, 25 Am. Rep. 141; Field v. Leavitt, 5 Jones & S. (N. Y.) 537. It is pro- vided by the statutes of Kentucky that a married woman's separate estate cannot be made to answer on her surety contract "unless such estate shall have been set apart for that pur- pose by deed of mortgage or other conveyance ." Third Nat. Bank v. Tierney (Ky.), 18 L. R. A. (N. S.) 81. See also, Kentucky Title Saving Bank & Trust Co. v. Langan, 144 Ky. 46, 137 S. W. 846; Baker v. Owens- boro Sav. Bank &c., 140 Ky. 121, 130 S. W. 969. ^Goad V. Moulton, 67 Cal. 536, 8 Pac. 63 ; Showman v. Lee, 79 Mich. 653, 44 N. W, 1061. See also, Kitchen v, Chapin, 64 Nebr. 144, 89 N. W. 632, 57 L. R. A. 914, 97 Am. St. 637. '"Bond v. Sullivan, 133 Ga. 160, 65 S. E. 376, 134 Am. St. 199 ; Third Nat. Bank v. Tierney, 128 Kv. 836, 110 S. W. 293, 18 L. R, A. (N. S.) 81 ; Kevstone Brewing Co. v. Varzalv, 39 Pa.' Super. Ct. 155. The fact that the wife cannot become surety for her husband has been mentioned in the preceding sections of this chapter. 62/ MARRIED WOMEN. § 412 and not the form of the transaction controls/^ Thus, when the circumstances are not such as to work an estoppel she will not be bound by her individual note given in satisfaction of her hus- band's debt/^ and the same is true where the money is loaned to the husband on the wife's note.*^ Should she sign as princi- pal and her husband as surety she will nevertheless be held a surety if it appears that the note was in fact given for the pre- existing debt of her husband.** The same is true when she renews her husband's note as principal,*" or gives her own note in lieu of one given by her husband,** or gives her note with collateral security,*^ or gives a deed intended as a mortgage, to her land** to secure her husband's pre-existing debt. And she remains surety for her husband to the extent the note given by her covers his indebtedness, notwithstanding it is made to include an individual indebtedness owed by her.*° Likewise her in- dorsement of a due bill owing her husband and by him assigned to her in order that she may indorse the same so that he will be able to obtain the money thereon is a contract of suretyship.*" " Harbaugh v. Tanner, 163 Ind. 574. 71 N. E. 145. =" First &c. Bank v. Hunton. 69 N. H. 509, 45 Atl. 351. "A woman can neither stand surety for her husband's debts nor lawfully pay them, and if having executed a promissory note as security for her husband, she pays the note, she may maintain an action for money had and received and recover the sum so paid from the creditor who knowingly received it." Booth v. Merchant's Bank (Ga.), 72 S. E. 44, citing Strickland v. Vance, 99 Ga. 531, 27 S. E. 152, 59 Am. St. 241. See also, Kentucky Title Sav. Bank v. Langan, 144 Ky. 46, 137 S. _W. 846, in which a married woman signed as accommodation indorser a draft which her husband had also indorsed. Subsequently after demand by the bank she paid the draft. Held that she might recover the money so paid on the ground that the payment was made under a mistake of law and that the bank in equity and good con- science ought not to retain it. '^Fisk V. Mills, 104 Mich. 433, 66 N. W. 559. "Indianapolis Brewing Co. v. Behnke, 41 Ind. App. 288, 81 N. E. 119; Crumbaugh v. Postell, 20 Ky. L. 1366, 49 S. W. 334; 2nd App. Postell V. Crumbaugh, 23 Ky. L. 2194, 66 S. W. 830. In the above case the wife added the word "principal" to her name and the husband the word "surety" after his. To same effect, Planters' Bank &c. Co. v. Major, 25 Ky. L. 702, Id S. W. 331. '" Continental National Bank v. Clarke, 117 Ala. 292, 22 So. 988; Pat- rick V. Smith, 165 Pa. St. 526, 30 Atl. 1044. =» Milburn v. Jackson, 21 Ky. L. 700, 52 S. W. 949; Deposit Bank v. Stitt, 107 Ky. 49, 21 Ky. L. 671, 52 S. W. 950; Burnham-Hanna-Munger &c. Co. V. Carter, 52 Tex. Civ. App. 294, 113 S. W. 782. " Her note given as collateral se- curity. Widger v. Baxter, 190 Mass. 130, 76 N. E. 509, 3 L. R. A. (N. S.) 436n ; Stewart v. Stewart, 207 Pa. 59, 56 Atl. 323. ''Harper v. T. N. Hayes Co., 149 Ala. 174. 43 So. 360. =• Lanier v. Olliff, 117 Ga. 397. 43 S. E. 711 ; Harbaugh v. Tanner, 163 Ind. 574, 71 N. E. 145; Christensen v. Wells, 52 S. Car. 497, 30 S. E. 611. *■ First Nat. Bank v. Hanscom, 104 §413 CONTRACTS. 628 So where the business which was vmdertaken was to be carried on by both husband and wife jointly such business will be con- sidered as the business of the husband and she will not be liable on a promissory note given by her in connection therewith espe- cially when it appears that such business arrangement was merely a contrivance whereby the wife might -become surety for the husband.*^ Even though she obtains, in person, the money upon her own obligation she will not be estopped to set up her suretyship when the party who advanced the money knew it was not to be used for her benefit but instead to satisfy another's indebted- ness.*^ In Kentucky it is held that in the absence of any proof that the note signed by the husband and wife was executed for necessities contracted for by her the presumption is that it was the debt of the husband and that she signed the note as surety for him.*^ However, if the note is signed by the wife alone the burden is upon her to allege and prove that she was surety and not principal.** The wife is, however, as a general rule subject to estoppel in pais the same as any other person.*^ § 413. Contracts with husband. — Contracts entered into by a feme covert with her husband formed no exception to the general common-law rule that a married woman's contracts were Mich. (H, 62 N. W. 167. See also, " Harbaugh v. Tanner, 163 Ind. 574, Kentucky Title Sav. Bank v. Langan, 71 N, E. 14S. A wife's contract of 144 Ky. 46, 137 S. W. 846 (accommo- suretyship has been held prima facie dation indorsement of draft), binding upon her. Miller v. Brown, 47 "Emerson &c. Co, v. Knapp, 90 Mo. 504, 4 Am. Rep. 345; Kimm v. Wis. 34, 62 N, W, 945. Weippert, 46 Mo. 532, 2 Am. Rep. 541 ; *" Freeman v. Mutual Bldg. & L. Moeckel v. Heim, 46 Mo. App. 340; Assn., 90 Ga. 190, IS S. E. 758; Field Williams v. Urmston, 35 Ohio St. 296, V. Campbell, 164 Ind. 389, 72 N, E. 35 Am. Rep. 611 ; Williamson v. Cline, 206, 108 Am, St, 301 ; Field v, Noblett, 40 W. Va. 194, 20 S. E. 917. 154 Ind. 357, 56 N. E. 841; Ft. '"'See post, § 424, Estoppel, The Wayne Trust Co, v, Sihler 34 Ind, legislatures of the various states make App, 140, 12 N. E, 494 ; Boyd v, Rada- such frequent changes in the law on baugh, ISO Ind, 394, SO N. E. 301; this branch of the subject that it is Temples v. Equitable Mortg. Co., 100 impossible to give an accurate and re- Ga. 503, 28 S, E. 232, 62 Am. St, 326; liable review of the law in the various Moran v. Bates, 16 Lane, L. Rev. states. Nothing more has been at- (Pa.) 145. See also, Estoppel, post, tempted than to call attention to the § 424. general principles that control irre- " Gilbert v. Brown, 29 Ky, L, 1248, spective of the statute in force at any 97 S. W. 40, 7 L. R. A. (N. S.) 1053, given time.. To same effect, Harbaugh v. Tanner, 163 Ind. 574, 71 N. E. 145. 629 MARRIED WOMEN. 413 void. They too were void.*° In some jurisdictions it still re- mains true that contracts between husband and wife are abso- lutely void and unenforcible between the spouses or by strangers into whose hands they may come by transfer.*^ This rule pre- vents the husband and wife from entering into a partnership agreement inter se.*^ It does not prevent her, however, from be- ing held liable as accommodation indorser on a promissory note of a firm which is indorsed both by herself and husband, since in such case her contract of indorsement was with the indorsee and not her husband.^" Her disability to contract with her husband has, however, in many jurisdictions either been entirely removed or else materially modified. Where her disability in this respect has been entirely removed she may contract with her husband and her contracts with him will be enforced at law, just as if she had contracted with a third person.^" Thus under such a statute it has been held that a married woman may lawfully enter into a contract of partnership with her husband." *° Heacock v. Heacock, 108 Iowa 540, 79 N. W. 353, 75 Am. St. 273; Pinkham v. Pinkham, 95 Maine 71, 49 Atl. 48, 85 Am. St. 392 ; Kimball v. Kimball, 75 N. H. 291. IZ Atl. 408; Hendricks v. Isaacs, 117 N. Y. 411, 22 N. E. 1029, 6 L. R. A. 559, 15 Am. St. 524. Courts of equity have, how- ever, enforced or granted relief from contracts between husband and wife notwithstanding the existence of the legal disability when the ends of jus- tice would thereby be furthered. Og- den V. Ogden, 60 Ark. 70, 28 S. W. 796, 46 Am. St. 151. "Although courts of law will not enforce contracts made between husband and wife, equity will in many instances recog- nize and enforce them when they are fair and reasonable." McDonald v. Smith, 95 Ark. 523, 130 S. W. 515; Brown v. Clark, 80 Conn. 419, 68 Atl. 1001 ; Haussman v. Burnham, 59 Conn. 117, 22 Atl. 1065, 21 Am. St. 74 ; Kimball v. Kimball, 75 N. H. 291, IZ Atl. 408. But see Hendricks v. Isaacs, 117 N. Y. 411, 22 N. E. 1029, 6 L, R. A. 559, 15 Am. St. Rep. 524. " Spurlock v. Spurlock, 80 Ark. 37, 96 S. W. 753. By the decisions of the above state such contracts may in a proper case be enforced in equity. See preceding note. Atkins v. Atkins, 195 Mass. 124, 80 N. E. 806, 11 L. R. A. (N. S.) 273n, 122 Am. St. 221 (cit- ing many Massachusetts cases) ; Caldwell v. Nash, 190 Mass. 507, 11 N. E. 515; MacKeown v. Lacey, 200 Mass. 437, 86 N. E. 799, 21 L. R. A. (N. S.) 683n; Crosby v. Clem, 209 Mass. 193, 95 N. E. 297. "Voss v. Sylvester, 203 Mass. 233, 89 N. E. 241. " Middleborough Nat. Bank v. Cole, 191 Mass. 168, 11 N. E. 781. ■» State V. Shaw, 79 Kans. 396, 100 Pac. 78, 131 Am. St. 298; Abbott v. Fidelity Trust Co., 149 Mo. App. 511, 130 S. W. 1120; Montgomery v. Montgomery, 142 Mo. App. 481, 127 S. W. 118; Egger v. Egger, 225 Mo. 116, 123 S. W. 928, 135 Am. St. 566: O'Day V. Meadows, 194 Mo. 588, 92 S. W. 637, 112 Am. St. 542. See fur- ther statutes of the various states. See also, Despain v. Wagner, 163 III. 598, 45 N. E, 129; Blake v. Blake, 7 Iowa 46; Allen v. Hooper, 50 Maine 371 ; Savage v. Savage, 80 Maine 472, 15 Atl. 43; Wilkinson v. Kneeland, 125 Mich. 261, 84 N. W. 142. °^ Jones V. Jones (Miss.), 55 So. 361. § 413 CONTRACTS. 630 Statutes which confer upon married women the power to con- tract generally, as if sole, with certain specified exceptions give her the right to contract with her husband when agreements be- tween them are not named as an exception.^^ She may be made the payee of a note executed by her husband/^ In Maine a stat- ute which secures to a married woman her property "in her own right" and gives her the right to "manage, sell, convey and de- vise" her property of every description "as if sole" has been held to give her the right to contract with but not to sue her husband.^* Under statutes giving her the right to convey her separate real estate as if unmarried she may transfer it directly to her husband, unless the instrument under which she held expressly forbid such transfer.'^^ The statutes of other states provide that the wife may not convey her separate estate to her husband unless allowed so to do by a court of competent jurisdiction. "^ Similar statutes have in various jurisdictions been given a dis- similar construction. Thus the statutes of Missouri declare that ^ Leimgruber v. Leimgruber, 172 Ind. 370. 86 N. E. 73. See also, Druckamiller v. Coy, 42 Ind. App. 500, 85 N. E. 1028, for a construction of the statute. Townsend v. Hunt- zinger, 41 Ind. App. 223, 83 N. E. 619. She may purchase land from her husband and her contract in that regard will be upheld when it appears that it is fair to her and that she was not thereby overreached. Washburn V. Gray (Ind. App.), 97 N. E. 190. ""Krouse v. Krouse (Ind.), 95 N. E. 262. "Webster v. Webster, SB Maine 139, 4 Am. Rep. 253; Perkins v. Blethen, 107 Maine 443, 78 Atl. 574, 31 L. R. A. (N. S.) 1148n. °=Vick V. Gower, 92 Tenn. 391, 21 S. W. 677. See also, Glascock v. Glascock, 217 Mo. 362, 117 S. W, 67. In the following jurisdictions the statute expressly provides that the wife may convey directly to the hus- band. Reynolds v. City Nat. Bank, 71 Hun, (N. Y.) 386, 24 N. Y. S. 1134, 55 N. Y. St. 45, affd. 151 N. Y. 641, 45 N. E, 1134; Hayden v. Zerbst, 49 Wash. 103, 94 Pac. 909. See also, Whittaker v. Van Hoose, 157 Ala. 286, 47 So. 741 ; Despain v. Wagner, 163 III. 598, 45 N. E. 129; Glascock v. Glascock, 217 Mo. 362, 117 S. W. 67; Wilkinson v. Kneeland, 125 Mich. 261, 84 N. W. 142. Agreement by the hus- band to care for and support his wife's children by a former husband constitutes a sufficient consideration for such deed. Schroeder v. Smith, 249 III. 574, 94 N. E. 969. It has been held that in case a married woman acquires property by deed from her husband for a nominal consideration only she is not a purchaser for value and stands in no better attitude than her grantor. Acker v. Pridgen (N. Car.), 74 S. E, 335. "Hood v. Perry, 75 Ga. 310, con- struing Ga. Code, § 1785 ; Flannery v. Coleman, 112 Ga. 648, 37 S. E, 878, construing Ga. Civ. Code 1895, § 2490; Webb V. Harris, 124 Ga. 723, 53 S. E. 247, construing Ga. Civ. Code 1863, §§ 1732-1735; Carpenter v. Booker, 131 Ga. 546, 62 S. E. 983, 127 Am. St. 241; Roland v. Roland, 131 Ga. 579, 62 S. E. 1042; Stonecipher v. Kear, 131 Ga. 688, 63 S. E. 215, 127 Am. St. 248n; American Ins. Co. v. Bagley, 6 Ga. App. 736, 65 S. E. 787, con- struing Ga. Civ. Code 1895, § 2490; Buchannon v. James, 135 Ga. 392, 69 S. E. 543 ; Carpenter v. Booker, 131 Ga. 546, 62 S. E. 983, 127 Am. St. 241. 631 MARRIED WOMEN. § 4I4 "a married woman shall be deemed a feme sole so far as to enable her to carry on and transact business on her own account, to con- tract and be contracted with, to sue and be sued," etc. This pro- vision has been held to empower her to make a valid legal con- tract with her husband." On the other hand the Supreme Court of Iowa has coAstrued a statute which reads "Contracts may be made by a wife and liabilities incurred, and the same enforced by or against her to the same extent and in the same manner as if she were unmarried," as empowering a married woman to con- tract with her husband only in reference to her separate estate."' It has been said that the statutes which confer upon a married woman the power to contract with her husband are to be strictly construed."" This is no doubt true if the well-established prin- ciple that statutes in derogation of the common law are to be strictly construed is followed. This does not always seem to have been done.*" § 414. Contract with husband must not contravene public policy. — It is obvious that notwithstanding the husband and wife are given the power to contract with each other they cannot enter into an agreement which contravenes the public policy of the state where it is executed." Thus contracts between husband By statutes of North Carolina she vort, 16 Nebr. 144, 19 N. W. 461, 20 may convey directly to her husband N. W. 122. upon compliance with certain statu- ™ Pinkham v. Pinkham, 95 Maine tory provisions. Sims v. Ray, 96 N. 71, 49 Atl. 48, 85 Am. St. 392. Car. 87, 2 S. E. 443. ™ Harrington v. Lowe, 73 Kan. 11, "Egger V. Egger, 225 Mo. 116, 123 84 Pac. 570, 4 L. R. A. (N. S.) 547. S. W. 928, 135 Am. St. 566. See also. See also, ante, § 409. ante, note 50 et seq., this section. "* Pereira v. Pereira, 156 Cal. 1, 103 ■^Heacock v. Heacock, 108 Iowa Pac. 488, 23 L. R. A. (N. S.) 880, 540 79 N. W. 353, 75 Am. St. 273; 134 Am. St. 107; In re Kopf's Estate, Estate of Deaner, 126 Iowa 701, 102 132 N. Y. S. 719. See also, the case N W 825, 106 Am. St. 374. For a of Ryan v. Dockery, 134 Wis. 431, 114 late exposition of the law in this state N. W. 820, IS L. R. A. (N. S.) 491, see Baker v. Syfritt, 147 Iowa 49, 125 126 Am. St. 1025, which holds that N. W. 998. See also. In re Pieper's they cannot enter into an antenuptial Estate, 145 Iowa 373, 124 N. W. 181. agreement against public policy. In As to the right of the husband to this case the intended husband agreed convey directly to the wife see Cur- to support, care for and nurse his fu- rier v. Teske, 84 Neb. 60, 120 N. W. ture wife in consideration of her giv- 1015, 133 Am. St. 602 and note, 120 ing him all property owned by her at N. W. 1015, to the effect that such her death. The contract was also said a conveyance is good and overruUng to be without consideration. To same Auhman, Taylor & Co. v. Obermeyer, effect, Foxworthy v. Adams (Ky.), 6 Nebr. 260, and Johnson v. Vander- 124 S. W. 381. See also, Corcoran v. 414 CONTRACTS. 632 and wife looking to a future separation"^ or to assist in the procurement of a divorce'^' are invalid. However, when the par- ties at the time of or after the separation enter into a separation agreement fair as to all parties it is, with a few exceptions, held valid and enforcible so far as property rights therein contracted for are concerned."* New Hampshire and North Carolina would seem to hold the contrary."^ It is held as a general rule that an agreement to dismiss a divorce suit and resume the marital rela- Corcoran, 119 Ind. 138, 21 N. E. 468, 4 L. R. A. 782, 12 Am. St. 390. "^ Hindley v. Westmeath, 6 Barn. & C. 200; St. John v. St. John, 11 Ves. Jr. 526 ; Westmeath v. Westmeath, Jac. 126; Proctor v. Robinson, 35 Beav. 329; Boland v. O'Neil, 72 Conn. 217, 44 Atl. 15 ; Sumner v. Sumner, 121 Ga. 1, 48 S. E. 727; McKee v. Reynolds, 26 Iowa 578; Gould v. Gould, 29 How. Pr. (N. Y.) 441; Carson v. Murray, 3 Paige (N. Y.) 483; Rogers v. Rogers, 4 Paige (N. Y.) 516, 27 Am. Dec. 84; Mercein v. People, 25 Wend. (N. Y.) 64, 35 Am. Dec. 653; Maney v. Maney, 119 App. Div. (N. Y.) 765, 104 N. Y. S. 541; Galusha v. Galusha, 116 N. Y. 635, 22 N. E. 1114, 6 L. R. A. 487, 15 Am. St. 453 ; Kaiser's Estate, 14 Pa. Super. Ct. 155. "^ Merryweather v. Jones, 4 Giff. 509; St. John v. St. John, 11 Ves. Jr. 526 ; Goodwin v. Goodwin, 4 Day (Conn.) 343. (It was so held in this case, although at the time a valid cause for divorce existed.) Birch v. Anthony, 109 Ga. 349, 34 S. E. 561, 77 Am. St. 379; Hamilton v. Hamil- ton, 89 111. 349; Stokes v. Anderson, 118 Ind. 533, 21 N. E. 331, 4 L. R. A. 313n; Stebbins v. Morris, 19 Mont. 115, 47 Pac. 642; Schmieding v. Doell- ner, 10 Mo. App. 373 ; Wilde v. Wilde, 37 Nebr. 891, 56 N. W. 724; Sayles V. Sayles, 21 N. H. 312, 53 Am. Dec. 208n; Palmer v. Palmer, 26 Utah 31, 72 Pac. 3, 61 L. R. A. 641, 99 Am. St. 820. "Besant v. Wood, L. R. 12 Ch. Div. 605 ; McGregor v. McGregor, L. R, 20 Q. B. 529; Bowers v Hutchin- son, 67 Ark. 15, 53 S. W. 399; Wick- ersham v. Comerford, 96 Cal. 433, 31 Pac. 358 ; Daniels v. Benedict, 97 Fed. 367, 38 C. C. A. 592 ; Sumner v. Sum- ner, 121 Ga. 1, 48 S. E. 727; Patter- son V. Patterson, 111 III. App. 342; Dutton V. Button, 30 Ind. 452; Hil- bish V. Hattle, 145 Ind. 59, 44 N. E. 20, 33 L. R. A. 783; McKee v. Rey- nolds, 26 Iowa 578 ; Robertson v. Rob- ertson, 25 Iowa 350; King v. MoUo- han, 61 Kans. 683, 60 Pac. 731, afifd., 61 Kans. 692, 61 Pac. 685; Labbe's Heirs v. Abat, 2 La. 553, 22 Am. Dec. 151 ; Helms v. Franciscus, 2 Bland. (Md.) 544, 20 Am. Dec. 402; Walker V. Walker's Exr., 9 Wall. (U. S.) 743, 19 L. ed. 814. " Kremelberg v. Kremelberg, 52 Md. 553 ; Randall v. Randall, 27 Mich. 563; Roll v. Roll, 51 Minn. 353, 53 N. W. 716; Stebbins v. Morris, 19 Mont. 115, 47 Pac. 642; Buttlar v. Buttlar, 57 N. J. Eq. 645, 42 Atl. 755, 73 Am. St. 648 (revg. decision of the chancery court reported in 38 Atl. 300) ; Garver v. Miller, 16 Ohio St. 527; Thomas v. Brown, 10 Ohio St. 247; Henderson v. Henderson, 37 Ore. 141, 60 Pac. 597, 61 Pac. 136, 48 L. R. A. 766, 82 Am. St, 741 ; McKennan v. Phillips, 6 Whart. (Pa.) 571, 37 Am. Dec. 438; Kaiser's Estate, 14 Pa. Super Ct. 155; Hitner's Appeal, 54 Pa. St. 110; In re Singer's Estate (Pa.), 81 Atl. 898; Rains v. Wheeler, 76 Tex. 390, 13 S. W. 324; Versvp v. Versyp (Tex. Civ. App.), 146 S. W. 705. See, however, Scherer v. Sche- rer, 23 Ind. App. 384, 55 N. E. 494, 77 Am. St. 437; Simpson v. Simpson, 4 Dana (Ky.) 140; Whitney v. Clos- son, 138 Mass. 49; Tourney v. Sin- clair, 3 How. (Miss.) 324; Carter v. Carter, 14 Sm. & M. (Miss.) 59 Friedman v. Bierman, 43 Hun (N, Y.) 387; Gibert v. Gibert. 5 Misc. (N Y.) 555, 26 N. Y. S. 30; Rogers v, Rogers, 4 Paige (N. Y.) 516, 27 Am, Dec. 84; Re Smith's Estate, 13 Misc (N. Y.) 592, 36 N. Y. S. 820; Morgan 633 MARRIED WOMEN. § 415 tion by one spouse in return for a consideration moving from the other is valid and not contrary to public policy."" § 415. Consideration need not proceed from husband. — Moreover, the consideration moving to the wife by which she is induced to dismiss her suit and live with her husband need not proceed from the husband. The promise of a third person made to induce the wife to return to her husband has been declared not in contravention of public policy."' It would also seem that the relation between husband and wife is one of trust and confi- dence, consequently they must deal fairly with each other in their contracts inter se.°* § 416. Contracts of agency. — The general rule concerning contracts of agency is that a person who has capacity to enter into a given contract in his own right may appoint an agent to V. Potter, 17 Hun (N. Y.) 403; Cropsey v. McKinney, 30 Barb. (N. Y.) 47; Maney v. Maney, 119 App. Div. (N. Y.) 765, 104 N. Y. S. S41 ; Poillon V. Poillon, 49 App. Div. (N. Y.) 341, 63 N. Y. S. 301; Tallinger V. Mandeville, 113 N. Y. 427, 21 N. E. 125; Mercein v. People, 25 Wend. (N. Y.) 64, 35 Am. Dec. 653; Col- lins V. Collins, 62 N. Car. (1 Phil. Eq.) 153, 9i Am. Dec. 606; (but see Sparks v. Sparks, 94 N. Car. 527) ; Ellett V. EUett, 157 N. Car. 161, 72 S. E. 861; Archbell v. Archbell (N. Car.), 74 S. E. 327; Baum v. Baum, 109 Wis. 47, 85 N. W. 122, 53 L. R. A. 650, 83 Am. St. 854. A resumption of marital relations abrogates articles of separation. Caster v. Caster's Es- tate, 90 Nebr. 529, 134 N. W. 235; Archbell v. Archbell (N. Car.), 74 S. E. 327. See, however. In re Singer's Estate (Pa.), 81 Atl. 898; Hill v. Hill, 74 N. H. 288, 67 Atl. 406, 12 L. R. A. (N S.) 848n, 124 Am. St. 966; Collins V. Collins, 62 N. Car. (1 Phil. Eq.) 153, 93 Am. Dec. 606. See, how- ever. Sparks v. Sparks, 94 N. Car. 527 "»' Webster v. Webster, 27 L. J. Ch. (N. S.) 115, 3 Jur. (N. S.) 655; Phillips v. Meyers, 82 111. 67, 25 Am. Rep. 295 ; Rozell v. Redding, 59 Mich. 331, 26 N. W. 498; Reithmaier v. Beckwith, 35 Mich. 110; Adams v. Adams, 24 Hun (N. Y.) 401, affd., 91 N. Y. 381, 43 Am. Rep. 675 ; Burkhold- er's Appeal, 105 Pa. St. 31; Reamey v. Bayley (Pa.), 11 Atl.. 438. See also, Duffy V. White, 115 Mich. 264, 75 N. W. 363; Darcey v. Darcey, 29 R. I. 384, 71 Atl. 595, 23 L. R. A. (N. S.) 886. To same effect. In re Christie's Estate, 36 Pa. Super. Ct. 506. See, however, Fisher v. Koontz, 110 Iowa 498, 80 N. W. 551; Merrill V. Peaslee, 146 Mass. 460, 16 N. E. 271; Copeland v. Boaz, 9 Baxt. (Tenn.) 223, 40 Am. Rep. 89; Rob- erts v. Frisby, 38 Tex. 219. " Mack V. Mack, 87 Nebr. 819, 128 N. W. 527, 31 L. R. A. (N. S.) 441. "'Brison v. Brison, 75 Cal. 525, 17 Pac. 689, 7 Am. St. 189; Egger v. Egger, 225 Mo. 116, 123 S. W. 928, 135 Am. St. 566; Bennett v. Bennett, 37 W. Va. 396, 16 S. E. 638, 38 Am. St. 47. Under modern statutes destroying the one- ness of husband and wife marriage does not, as a general rule, cancel a prior existing debt owed by one of the parties to the other. Mackeown V. Lacy, 200 Mass. 437, 86 N. E. 799, 21 L. R. A. (N. S.) 683 and note. The husband is presumed the domi- nant party. Leimgruber v. Leim- gruber, 172 Ind. 370, 86 N. E. 7i. §417 CONTRACTS. 634 negotiate it."" This general principle applies to married women. A married woman may appoint an agent to act for her in all such matters as she might lawfully transact in person.''" § 417. May appoint husband her agent. — She may confer this power upon her husband in all cases where she might appoint any one to act for her.'^ He does not, however, derive his authority to act from the marital relation.'^ The existence of ■" See post, ch. IS, Agency. Hun (N. Y.) 471 ; Abbey v. Deyo, "Vail V. Meyer, 71 Ind. 159; Ken- 44 Barb. (N. Y.) 374; Whedon v. ton Ins. Co. v. AlcClelland, 43 Mich. Champlin, 59 Barb. (N. Y.) 61; Stout 564, 6 N. W. 88 (the above case v. Perry, 152 N. Car. 312, 67 S. E. states the rule negatively) ; Baker v. 757, 136 Am. St. 826; Harper v. Dail Thompson, 214 Mo. 500, 114 S. W. & Bro., 92 N. Car. 394; Bazemore v. 497; Flesh v. Lindsay, 115 Mo. 1, Mountain, 121 N. Car. 59, 28 S. E. 21 S. W. 907, 2,1 Am. St. 374; Porter 17; Murphy v. Bright, 3 Grant Cas. V. Haley, 55 Miss. 66, 30 Am. Rep. (Pa.) 296; Stoops v. Blackford, 27 502. Pa. St. 213; Troxell v. Stockberger, " Nichol V. Gocher, 12 Manitoba 105 Pa. St. 405 ; Baxter v. Maxwell, 177; Hickey v. Thompson, 52 Ark. 115 Pa. St. 469, 8 Atl. 581; Brown 234, 12 S. W. 475; Coon v. Rigden, v. Thomson, 31 S. Car. 436, 10 S. 4 Colo. 275; Campbell v. Fillmore, E. 95, 17 Am. St. 40; Young v. 13 Colo. App. 503, 58 Pac. 790; Lep- Hurst (Tenn. Ch. 1898), 48 S. W. pel V. Englekamp, 12 Colo. App. 79, 355; Whitaker v. Lee (Tenn. Ch. 54 Pac. 403; Brownell v. Dixon, 37 1900), 57 S. W. 348; Perkins v. 111. 197 ; Wortman v. Price, 47 111. Baker, 38 Tex. 45 ; Aldridge v. Muir- 22; Dean v. Bailey, 50 111. 482, 99 head, 101 U. S. IB! , 25 L. ed. 1013, Am. Dec. 533 ; Walker v. Carrington, revg. 17 Fed. Cas. No. 9904 ; Voor- 74 111. 446; Blood v. Barnes, 79 111. hees v. Bonesteel, 16 Wall. (U. S.) 437; Cubberly v. Scott, 98 III. 38; 16, 21 L. ed. 268; Spaulding v. Drew, Bennett v. Stout, 98 111. 47; Booth v. 55 Vt. 253; Camden v. Hiteshew, 23 Smith, 117 III. 370, 7 N. E. 610, affg., W. Va. 236; Weisbrod v. Chicago &c. 18 111. App. 266; Nichols v. Wallace, R. Co., 18 Wis. 35, 86 Am. Dec. 743; 31 111. App. 408; Nigh v. Dovel, 84 Bouck v. Enos, 61 Wis. 660, 21 N. 111. App. 228; McDonald Mfg. Co. v. W. 825; Mayers v. Kaiser, 85 Wis. Williams, 96 111. App. 395; Baker v. 382, 55 N. W. 688, 21 L. R. A. 623, Roberts, 14 Ind. 552; Rowell v. 39 Am. St. 849. His agency may be Klein, 44 Ind. 290, 15 Am. Rep. 35; inferred from the acts and conduct Sims V. Smith, 99 Ind. 469, 50 Am. of himself and wife. Chamberlam Rep. 9fi; Whitescarver v. Bonney, v. Brown, 141 Iowa 540, 120 N. W. 9 Iowa 480; Rankin v. West, 25 334. A husband who acts as agent Mich, 195; Lee v. Briggs, 39 Mich, for his wife but does not disclose 592; Harris v. Weir-Shugart Co., 51 that he is acting as agent for her is Nebr. 483, 70 N. W. 1118; Tresch v. personally bound. Dayries v. Lmdsly, Wirtz, 34 N. J. Eq. 124; Knapp v. 128 La. 2S9, 54 So. 791. To same Smith, 27 N. Y. 277 ; Buckley v. effect. Young v. Inman & Nelson, 146 Wells, 33 N. Y. 518; Smith v. Sweeny, Iowa 492, 125 N. W. 177. 35 N. Y. 291; Draper v. Stouvenal, "Hoffman v. McFadden, 56 Ark. 35 N. Y. 507; Owen v. Cawley, 36 217, 19 S. W. 753, 35 Am. St. 101; N. Y. 600, affg. 42 Barb. (N. Y.) Fulton County v. Amorous, 89 Ga. 105; Noel v. Kinney, 106 N. Y. 74, 614, 16 S. E. 201; Boyd v. Merriel^ 12 N. E. 351, 60 Am. Rep. 423; 52 111. 151; Geary v. Hennessy, 9 Wronkow v. Oakley, 133 N. Y. 505, 111. App. 17; Wallace v. Monroe, 22 31 N. E. 521, 28 Am. St. 661, 16 L. 111. App. 602; McLaren v. Hall, 26 R. A. 209n; Kingman v. Frank, 33 Iowa 297; Price v. Seydel, 46 Iowa ^35 MARRIED WOMEK. § 418' the relation of principal and agent must be proved." Conse- quently no act of his in respect to her separate estate binds her in the absence of previous authority or a subsequent ratification.''* The statutes of a state may, however, make the husband his wife's agent for certain purposes.'" § 418. Evidence of husband's agency. — There is consider- able conflict in the authorities as to what shall be considered sufficient evidence of a husband's agency. In some of the cases it is held that the mere fact that the wife allows her husband to take the general control and management of her property carries with it sufficient evidence of an implied authority to keep it in repair, and to make such additions to it as may be necessary for its convenient use. Others hold that this is a doctrine dan- gerous to the rights of the wife. To this it is replied that any other doctrine is dangerous to the rights of creditors.'" When a husband has the general management of his wife's property, and, with her knowledge, orders lumber which is used in the con- struction of improvements upon her land, he may be justly held to have acted as her agent." In an action by a wife and her husband to recover possession of her separate property, conveyed by the husband under a power of attorney from the wife, where the petition demands judgment for the land, and the notice there- on says the action is brought to try title, although the question may be technically not one of title, but merely whether a bound- ary was changed by the authority and ratification of the wife, 696; Treadwell v. Herndon, 41 Miss. Bank v. Nenow, SO Nebr. 429, 60 38; Partee v. Stewart, SO Miss. 717; N. W. 936. Henry v. Sneed, 99 Mo. 407, 12 S. "See Boiling v. Mock, 35 Ala. 727; W. 663, 17 Am. St. S80; Rust-Owen Mobley v. Leophart, 47 Ala. 2S7; Lumber Co. v. Holt, 60 Nebr. 80, 82 O'Brien v. Foreman, 46 Cal. 80; N. W. 112, 83 Am. St. S12; Stern- American Express Co. v. Lankford, berger v. Hurtzig, 36 N. J. Eq. 37S Garber v. Spivak, 114 N. Y. S. 762 Towles V. Fisher, 17 N. Car. 437 2 Ind. T. 18, 46 S. W. 183; Sawyer V. Biggart, 114 Iowa 489, 87 N. W. 426; Toulmin v. Heidelberg, 32 Miss. Ricks V. Wilson, 1S4 N. Car. 282, 70 268; Mitchell v. Mitchell, 35 Miss. S. E. 476. 108; Leinkauf v. Barnes, 66 Miss. "Henderson v. State (Tex. Civ. 207, 5 So. 402; Wright v. Walton, 56 App.), 117 S. W. 825. To same ef- Miss. 1. feet, Steele v. Gold Fissure Gold Min. ™ Roberts v. Hartford, 86 Maine Co., 42 Colo. S29, 95 Pac. 349, 126 460, 29 Atl. 1099. Am. St. 177. "Roberts v. Hartford, 86 Maine " Cox V. Armstrong, 17 Ky. L. 460, 29 Atl. 1099. 1395, 34 S. W. 1075; Norfolk Nat. § 419 CONTRACTS. 636 under the Texas procedure, the power of attorney and deed are not admissible in evidence to prove such authority and ratifica- tion.'^ When husband and wife are sued jointly, but not as partners, there is no implied authority in the husband to employ counsel in behalf of the wife on her credit.'" § 419. Wife may act as husband's agent. — The husband may also authorize his wife to act as his agent.^" But she does not derive, as a general rule any authority from the marital rela- tion alone, to dispose of his property either by sale or exchange.*^ Thus, in a recent case, the plaintiff entered into a contract with the defendant's wife for the performance of certain work. He had no conversation with her husband about the work except once while the work was *in progress when the defendant said "My wife is boss. Anything as far as the wife goes that's all right. You will get your money." These words were held neither to prove defendant's wife was his agent nor to show a ratification on his part.*^ § 420. Power to pledge credit of husband. — Under certain circumstances the wife may, however, pledge her husband's credit for necessities.^^ The husband may, however, defeat his liability "Mexia v. Oliver, 148 U. S. 664, fess to act as agent for him. Shu- 37 L. ed. 602, 13 Sup. Ct. 754. man v. Steinel, 129 Wis. 422, 109 N. "Shelton v. Holderness, 94 Ga. W. 74, 7 L. R. A. (N. S.) 1048n, 671, 19 S. E. 977. 116 Am. St. 961. See post, ch. 15, *" Benjamin v. Benjamin, IS Conn. Agency. 347, 39 Am. Dec. 384; Casteel v. " Hughes v. Chadwick, 6 Ala. 651 ; Casteel, 8 Blackf. (Ind.) 240, 44 Am. Nissen v. Bendixsen, 69 Cal. 521, 11 Dec. 763; Cooper v. Haseltine (Ind. Pac. 29; Phillips v. Sanchez, 35 Fla. App.), 98 N. E. 437; JNIcKee v. Kent, 187, 17 So. 363; Eames v. Sweetser, 24 Miss. 131; Jones v. Jones, 3 Strob. 101 Mass. 78; Hamilton v. McEwen, (S. Car.) 315; Sawyer v. Cutting, 23 144 Mo. App. 542, 129 S. W. 39; Vt. 486. French v. Burlingame, 155 Mo. App. ■^Dunnahoe v. Williams, 24 Ark. 548, 134 S. W. HOG; Calkins v. Long, 264; Brown v. Hannibal &c. R. Co., 22 Barb. (N. Y.) 97; Strong v. 33 Mo. 309; Edwards v. Tyler, 141 Moul, 22 N. Y. St. 762, 4 N. Y. S. 111. 454, 31 N. E. 312; Wheeler &c. 299. The wife may sue and recover Mfg. Co. V. Morgan, 29 Kans. 519. from the husband money advanced bj "' Syring v. Zelenski, 77 N. J. L. her from her separate estate with 406, 71 All. 1119. When the wife con- which to purchase necessities. De tracts as principal the mere promise Brauwere v. De Brauwere, 144 App. of the husband to settle the obliga- Div. (N. Y.) 521, 129 N. Y. S. 587. tion so incurred is without considera- In McCarter v. I\IcCarter (Ga.), 74 tion and void. This decision is based S. E. 308, it is held that the wife has on the principle that one cannot ratify the right to provide necessities for the acts of another who did not pro- their children and look to the father 637 MARRIED WOMEN. § 42 1 by showing that she was amply suppHed with the necessities fur- nished or with the means to procure them.** §421. Power to take and hold lands as trustee. — By the common law married women had the capacity and power to take and hold lands as trustee and to execute the duties and powers of the trust, including that of conveying the trust property by deed, without the concurrence and joinder of their husbands.*^ § 422. Ratification or confirmation. — Since at common law all contracts of a married woman, with very few exceptions, were void ab initio, they could not be ratified either during cover- ture or after discoverture.*" In so far as the common-law dis- for reimbursement. "What are in- live separate, see Chas. W. Decker & eluded in the word 'necessaries,' when Bros. v. Moyer, 121 N. Y. S. 630. See applied to goods purchased by a wife, also, Simpson v. Dutcher, 123 N. Y. and for which it is sought to charge S. 340; Eder v. Grifka, 149 Wis. 606, the husband, are such articles of 136 N. W. 154. The liability of the utility as are suitable to maintain her husband in cases of this character is according to the degree and estate not really founded on the wife's of her husband and his ability to agency but on the legal duty imposed pay." Schwartz v. Cohn, 129 N. Y. upon every husband to support his S. 464. Diamonds and jewelry of wife, and supply her with necessi- the value of $246, bought by the wife ties. Bergh v. Warner, 47 Minn. 250, of a man worth $200,000 have been 50 N. W. 11, 28 Am. St. 362. It is held necessities. Cooper v. Haseltine in fact a case of quasi contract. See (Ind. App.}, 98 N. E. 437. A physi- post, ch. IS, Agency, cian's services to a sick wife are a ** Insurance Co. of Tennessee v. necessity for which the husband is Waller, 116 Tenn. 1, 95 S. W. 811, liable. Thrall Hospital v. Caren, 140 115 Am. St. 763. App. Div. (N. Y.) 171, 124 N. Y. S. ""Eastwood v. Kenyon, 11 Ad. & 1038. See also, Ketterer v. Nelson El. 438; Dixie v. Worthy, 11 U. C. (Ky.), 141 S. W. 409. Artificial teeth Q. B. 328; Loyd -w. Lee, 1 Strange have been held necessities. Clark v. 94; Union Nat. Bank v. Hartwell, 84 Tenneson, 146 Wis. 65, 130 N. W. Ala. 379, 4 So. 156; Thompson v. 895, 33 L. R. A. (N. S.) 426n. A Hudgins, 116 Ala. 93, 22 So. 632; set of Stoddard's Lectures has been Maher v. Martin, 43 Ind. 314; Put- held not a necessity. Shuman v. nam v. Tennyson, SO Ind. 456; Steinel, 129 Wis. 422, 109 N. W. 74, Thomas v. Passage, 54 Ind. 106; Long 7 L R A (N. S.) 1048n, 116 Am. v. Brown, 66 Ind. 160; Austin v. St 961 Davis, 128 Ind. 472, 26 N. E. 890, 12 ^ Morel Bro & Co. v. Earl of West- L. R. A. 120, 25 Am. St. 456 ; Keadle moreland (1903), L. R. 1 K. B. 64; v. Siddens, S Ind. App. 8, 31 N. E. Baker V. Carter, 83 Maine 132, 21 Atl. 539; Davis v. Schmidt (Ind. App.), 834 23 Am. St. 764; Meuschke v. 31 N. E. 840; Gilbert v. Brown, 29 Riley 159 Mo. App. 331, 140 S. W. Ky. L. 1248, 97 S. W. 40, 7 L. R. A. 639; Wilson v. Thomass, 127 N. Y. (N. S.) 1053- Rupple v. Kissel, 24 S 474- Wanamaker v. Weaver, 176 Ky. L. 2371, 74 S. W. 220; Porter- N. Y. 7S, 68 N. E. 135, 65 L. R. A. field v. Butler, 47 Miss. 165, 12 Am. 529n, 98 Am. St. 621n; Rosenfeld v. Rep. 329; Hendricks v. Robinson, 56 Peck, 134 N. Y. S. 392; Allen v. Miss. 694, 31 Am. Rep. 382. (The Rieder, 41 Pa. Super. Ct. 534. For a last two cases overruled Franklin v. statement of the rule when the parties Beatty, 27 Miss. 347.) Macfarland § 423 CONTRACTS. 638 abilities of a married woman still attach to her, her contracts are void and cannot be ratified.'^ It has also been held that she is not bound by a new promise made without additional considera- tion after the passage of an act giving her the capacity to make a contract, such as that for which the new promise is given. The wife was incapable, at the origin of the consideration to make a valid promise ; consequently any new promise based thereon is null.*^ When, however, a feme covert has capacity to appoint an agent to act in a given case, she may ratify the unauthorized con- tract of one acting in that case as her agent,^' and enforce specific performance.^" It is also obvious that she may ratify in all cases in which the contract was merely voidable at her option. The question as to what constitutes a ratification on her part in those cases in which she has capacity to ratify, need not be gone into here. Ratification by married women in such cases is governed by the same general rules that control ratification by principals in general.^^ § 423. Restoration. — Should a married woman seek to avoid a contract executory on her part on the ground of cover- ture,"" or because of such disability seek to recover that which she has parted with under a contract executed on her part,°^ she must restore the consideration received by her under the terms of the agreement."* Thus in the first instance it has been held that V. Heim, 127 Mo 327, 29 S. W. 1030, 29 Atl. 251. See also, Warner v. War- 48 Am. St. 629; Nesbitt v. Turner, ner, 235 111. 448, 85 N. E. 630. 155 Pa. St. 429, 26 Atl. 750; Brown ™ Steiner v. Tranum, 98 Ala. 315, V. Bennett, 75 Pa. St. 420; Buchanan 13 So. 365. She can ratify only in V. Hazzard, 95 Pa. St. 240 ; Watson the manner necessary to confer origi- V. Dunlap, 2 Cranch (U. S.) 14, Fed. nal authority. Shanks & March v. Cas. No. 17282. Michael, 4 Cal. App. 553, 88 Pac. 596. " Gilbert V. Brown, 29 Ky. L. 1248, "Newberry v. Slafter, 98 Mich. 97 S. W. 40, 7 L. R. A. (N. S.) 468, 57 N. W. 574. 1053. See also, Watters v. Wagley, " See post, ch. 15, Agency. 53 Ark. 509, 14 S. W. 774, 22 Am. "^National Granite Bank v. Tyn- St. 232; Graham v. Tucker, 56 Fla. dale, 176 Mass. 547, 57 N. E. 1022, 307, 47 So. 563, 19 L. R. A. (N. S.) 51 L. R. A. 477; Willock's Estate, 531n, 131 Am. St. 124n. It is ob- 165 Pa. St. 23, 30 Atl. 1043; Buck- vious she may disaffirm her unauthor- nor's Estate (sub nomine, Appeal of ized contract. Edwards v. Stacey, Starr), 136 Pa. St. 23, 19 Atl. 1069, 113 Tenn. 257, 82 S. W. 470, 106 Am. 20 Am. St. 891. St. 831. ""Pilcher v. Smith, 2 Head (Tenn.) "Lyell V. Walbach, 113 Md. 574, 208. 77 Atl. 1111, 33 L. R. A. (N. S.) "See, however, Silcock v. Baker, 741 ; Valentine v. Bell, 66 Vt. 280, 25 Tex. Civ. App. 508, 61 S. W. 939. 639 MARRIED WOMEN. § 424 where a feme covert had obtained money on her promissory note void at law no suit could be maintained thereon, but that she was liable in an action at law for money lent or money had and re- ceived.°° In either case the well-settled doctrine that one cannot accept the benefits and avoid the obligations of a contract ap- plies.^' On the other hand, it has been held that while she might disaffirm either her executory or executed contract to purchase real estate, she could not recover money paid by her under the agreement when it appears that the contract was fairly made."^ It is obvious that if the feme covert receives no consideration she is not bound to return any on avoiding her contract."^ Thus the fact that a married woman failed to offer to return her portion of the consideration, which was never paid her, but which went toward the payment of her father's debts, does not work an estop- pel."" § 424. Estoppel. — In so far as the contracts of a married woman are utterly void she is not estopped thereby.^ She is not estopped by a contract which she has no legal capacity to make.^ To this general rule, however, certain exceptions or qual- °° National Granite Bank v. Tyn- part with it in any manner she may dale, 176 Mass. 547, 57 N. E. 1022, desire, and when she does so, in the 51 L. R. A. 477. absence of fraud her action is ir- "" Kennedy v. Harris, 3 Ind. Ter. revocable." 487, 58 S. W. 567 ; Blantz v. Bain, 95 " McKinney v. Street, 107 Tenn. 526, Tenn. 87, 31 S. W. 159. 64 S. W. 482. In the above case the "'Jackson v. Rutledge, 3 Lea husband sold and received payment (Tenn.) 626, 31 Am. Rep. 655. In for property belonging to his wife, the above case the seller was per- It was held that she was not estopped mitted to foreclose a vendor's lien to recover the land when there was and the feme covert denied the right nothing to show that she had ever re- to recover her payments. Edwards ceived any of the proceeds of the V. Stacey, 113 Tenn. 257, 82 S. W. sale. 470, 106 Am. St. 831. In the above " Syck v. Hellier, 140 Ky. 388, 131 case it is said : "The disability of S. W. 30. As to the personal liability coverture, was never intended to en- of a feme covert on a void contract, able married women to do injustice see Smith v. Ingram, 130 N. C. 100, or wrong. It is the weapon of de- 40 S. E. 984, 61 L. R. A. 878. fense, not of offense. It is a protec- ' Colorado Cent. R. Co. v. Allen, 13 tion against all attempts to compel Colo. 229, 22 Pac. 605; Krathwohl v. them to complete their contracts, if Dawson, 140 Ind. 1, 38 N. E. 467, 39 they consider it to their interest to de- N. E. 496; Cook v. Walling, 117 Ind. cline to proceed further with them; 9, 19 N. E. 532, 2 L. R. A. 769, 10 but it does not give them the right Am. St. 17; Smith v. Ingram, 130 to recover money paid under an agree- N. Car. 100, 40 S. E. 987, 61 L. R. A. ment fairly made. The money of a 878; Crenshaw v. Julian, 26 S. Car. married woman is her absolute prop- 283, 2 S. E. 133, 4 Am. St. 719. «rty aside from the rights of her '^ Mattox v. Hightshue, 39 Ind. 95; hmsband, and she has the right to Parsons v. Rolfe, 66 N. H. 620, 27 § 425 CONTRACTS. 640 ifications exist as where she conveys property believing that she has been legally divorced, and she lives as an unmarried woman, is generally known as such, and is unquestionably free from the control of her husband,^ or where she thought her husband dead, or for some other reason assumed that the marriage relation had been terminated, or has for a long period of time passed herself off as an unmarried woman.* At the present time the common- law rule in regard to the contracts of married women need hardly be considered, since she has, by the statutes of the various states, been emancipated in whole or in part.^ § 425. May be estopped by agreement within limit of her capacity to contract. — Within the limits of her capacity to contract, a feme covert may be estopped by her agreement with reference to her equitable or statutory separate estate." She may be bound by estoppel in certain instances independent of statutes permitting her to contract as a feme sole.' Thus married women Atl. 172; Bishop v. Bourgeois, 58 N. J. Eq. 417, 43 Atl. 6S5 ; Sherwin v. Sternberg (N. J.), 74 Atl. SIO. 'Reis V. Lawrence, 63 Cal. 129, 49 Am. Rep. 83. See also, Keller v. Lindow (Tex. Civ. App.), 133 S. W. 304. 'Hand V. Hand, 68 Cal. 135, 58 Am. Rep. Sn; Rosenthal v. Mayhugh, 33 Ohio St. 155 ; Richeson v. Sim- mons, 47 Mo. 20. See, however. Cook V. Walling, 117 Ind. 9, 19 N. E. 532, 2 L. R. A. 769, 10 Am. St. 17; Keen v. Coleman, 39 Pa. St. 299, 80 Am. Dec. 524; Klein v. Caldwell, 91 Pa. St. 140. °"The tendency of modern author- ity is strongly toward the enforce- ment of the estoppel against married women as against persons sui juris." Engholm v. Ekrem. 18 N. Dak. 185, 119 N. W. 35. Under the statutes of Missouri the doctrine of estoppel obtains against her identically as it does against other persons not under disability with respect to persons other than her husband. Tennent v. Union Cent. Life Ins. Co., 133 Mo. App. 345, 112 S. W. 754. "Bein v. Heath, 6 How. (U. S.) 228, 12 L. ed. 416; Drake v. Glover, 30 Ala. 382; Lathrop v. Soldiers' L. & B. Assn., 45 Ga. 483; Hockett v. Bailey, 86 111. 74; Nixon v. Halley, 78 111. 611; Anderson v. Armstead, 69 111. 452; Spafford v. Warren, 47 Iowa 47; Frazier v. Gelston, 35 Md. 298; Shivers v. Simmons, 54 Miss. 520, 28 Am. Rep. 372n ; Levy v. Gray, 56 Miss. 318; Read v. Hall, 57 N. H. 482; Bodine v. Killeen, 53 N. Y. 93; Smyth V. Munroe, 84 N. Y. 354; Noel v. Kinney, 106 N. Y. 74, 12 N. E. 351, 60 Am. Rep. 423 ; Meiley v. But- ler, 26 Ohio St. 535"; Tone v. Colum- bus, 39 Ohio St. 281, 48 Am. St. 438; Fryer v. Rishell, 84 Pa. 521; White V. Goldsberg, 49 S. Car. 530, 27 S. Car. 517; Howell v. Hale, 5 Lea (Tenn.) 405; Cravens v. Booth, 8 Tex. 243, 58 Am. Dec. 112; O'Brien V. Hilburn, 9 Tex. 297. 'Ramboz v. Stowell, 103 Cal. 588, 37 Pac. 519; Birch v. Steppler, 11 Colo. 400, 18 Pac. 530. See National Feather-Duster Co. v. Hibbard, 9 Fed. 558, 11 Biss. (C. C.) 76; Patter- son v. Lawrence, 90 111. 174, 32 Am. Rep. 22; Catling v. Rodman, 6 Ind. 289; Wright v. Arnold, 14 B. Mon. (Ky.) 513; Rusk v. Fenton, 14 Bush. (Ky.) 490, 29 Am. Rep. 413; Snow v. Hutchins, 160 Mass. Ill, 35 N. E. 315; Norton v. Nichols, 35 Mich, 148; Robb v. Shephard, 50 Mich. 189, 15 N. W. 76; Dobbin v. Cordiner, 41 641 MARRIED WOMEN. 426 may be estopped by judgments in actions to which they are proper parties in the same manner as persons sui juris.' This is especially true where a married woman acquiesces in and ac- cepts the benefits of the decree.* § 426. Illustration of the rule. — ^The warranty deed of a feme covert which is executed in conformity to the statutory requirement is generally binding by way of estoppel upon her, and her subsequent grantee to the same extent as if she were un- married.'" If the married woman has power and capacity to make the contract or conveyance and it is entered into in the man- ner prescribed by law she may be estopped to deny the truth of recitals therein contained. Thus she has been held estopped to show there was no consideration for her conveyance when the deed recites a valuable consideration.^' She is not, however, estopped by her deed which she is induced to execute through fraud or which is not executed in the mode prescribed by statute." Minn. 16S, 42 N. W. 870, 4 L. R. A. 333, 16 Am. St. 683; Richardson v. Toliver, 71 Miss. 966, 16 So. 213; Rosenthal v. Mayhugh, 33 Ohio St. 155 ; Cooley v. Steele, 2 Head (Tenn.) 605 ; Galbraith v. Lunsford, 87 Tenn. 89, 9 S. W. 365, 1 L. R. A. 522 ; God- frey V. Thornton, 46 Wis. 677, 1 N. W. 362. See also, Engholm v. Ek- rem, 18 N. Dak. 185, 119 N. W. 35. 'Grantham v. Kennedy, 91 N. Car. 148. See also, Guthrie v. Howard, 32 Iowa 54; Van Metre v. Wolf, 27 Iowa 341. "Bingham's Appeal, 123 Pa. St. 262, 16 Atl. 613, 10 Am. St. 522; Baily V. Baily, 44 Pa. St. 274, 84 Am. Dec. 439. "Harden v. Darwin, 77 Ala. 472; St. Louis &c. R. Co. V. Foltz, 52 Fed. 627; Guertin v. Mombleau, 144 111. 32, 33 N. E. 49; Littell v. Hoagland, 106 Ind. 320, 6 N. E. 645 ; King v. Rea, 56 Ind. 1; Knight v. Thayer, 125 Mass. 25. She cannot set up an after- acquired title. Zimmerman v. Rob- inson, 114 N. Car. 39, 19 S. E. 102. "Married women cannot enjoy these enlarged rights of action and of prop- erty and remain irresponsible for the ordinary and legal and equitable re- sults of their conduct. Incident to this power of married women to deal 41 — Contracts, Vol. I with others is the capacity to be bound and to be estopped by their conduct, when the enforcement of the prin- ciple of estoppel is necessary for the protection of those with whom they deal, although there are without doubt, limitations upon the applica- tion of this doctrine." Dobbin v. Cor- diner, 41 Minn. 165, 16 Am. St. 683. "^Stacey v. Walter, 125 Ala. 291, 28 So. 89, 82 Am. St. 235. See also, Trimble v. State, 145 Ind. 154, 44 N. E. 260, 57 Am. St. 163 ; Hill v. West, 8 Ohio 222, 31 Am. Dec. 422; Dukes V. Spangler, 35 Ohio St. 119. See, however, in this connection. Cock- rill V. Hutchinson, 135 Mo. 67, 36 S. W. 375, 58 Am. St. 564. But if the statute is not complied with the con- veyance is void and cannot bind her for estoppel. Merriam v. Boston &c. R. Co., 117 Mass. 241. "Wood V. Terry, 30 Ark. 385; Louisville &c. R. Co. v. Stephens, 96 Ky. 401, 49 Am. St. 303 ; Merriam v. Boston &c. R. Co., 117 Mass. 241; Ray V. Wilcoxon, 107 N. Car. 514, 12 S. E. 443; Smith v. Ingram, 132 N. Car. 959, 44 S. E. 643, 95 Am. St. 680; Stone v. Sledge, 87 Tex. 49, 26 S. W. 1068, 47 Am. St. 65. See also, Francis v. Rose, 141 Ky. 645, 133 S. W. 550. § 4^6 CONTRACTS. '642 In case she joins her husband in a conveyance of his separate property she is not personally liable on the covenants of vi^arranty therein contained. ^^ And if she should join in the conveyance merely to release her dower and homestead rights, the covenants of warranty contained in the deed will not prevent her from setting up an after acquired title or an interest owned by her other than that of dower and homestead.^* Under statutes which re- quire the husband to join in a conveyance of the wife's property, it is held as a general rule that a feme covert is not estopped by her sole deed.^^ She may be estopped by a mortgage to which she is a party.^" And if she holds her husband out as her agent she may be estopped to deny his agency.^' "Moore v. Graves, 97 Iowa 4, 65 N. W. 1008. Under the statutes of the above state she will not be bound unless she expressly so states in the deed. See also, Rowley v. Shepard- son, 83 Vt. 167, 74 Atl. 1002, 138 Am. St. 1078. The last case cited lays down the rule that where the wife joins in the conveyance of real es- tate not lier separate property, her responsibility is measured, not by the statute enlarging the powers of mar- ried women, but by the common law. " Village of Western Springs v. Col- lins, 98 Fed. 933, 40 C. C. A. 33; Penny v. British & American Mort- gage Co., 132 Ala. 357, 31 So. 96._ In the case last cited the wife joined with the husband in the execution of a mortgage for the purpose of re- leasing her dower and homestead rights. The husband and wife were tenants in common and it was held that the mortgage did not convey her undivided moiety in the land. "A married woman cannot estop herself by her acts and declarations from as- serting dower and other claims to land, except in those cases where to permit her to do so would operate as a fraud." Syck v. Hellier, 140 Ky. 388, 131 S. W. 30. ''Vansandt v. Weir, 109 Ala. 104, 19 So. 424, 32 L. R. A. 201 ; Wood v. Terry, 30 Ark. 385; Morrison v. Wilson, 13 Cal. 494, li Am. Dec. 593; Ross v. Singleton, 1 Del. Ch. 149, 12 Am. Dec. 86; Oglesby Coal Co. v. Pasco, 79 III. 164; Behler v. Wey- burn, 59 Ind. 143; Unfried v. Heb- erer, 63 Ind. dl \ Suman v. Springate, 67 Ind. 115; Parke v. Barrowman, 83 Ind. 561 ; Rangeley v. Spring, 21 Maine 130; Lowell v. Daniels, 2 Gray (Mass.) 161, 61 Am. Dec. 448; Pierce v. Chace, 108 :Mass. 254; Todd V. Railroad Co., 19 Ohio St. 514; Innis V. Templeton, 95 Pa. St. 262, 40 Am. Rep. 643 ; Davison's Appeal, 95 Pa. St. 394; Glidden v. Strupler, 52 Pa. St. 400; Stivers v. Tucker, 126 Pa. St. 74, 17 Atl. 541; Mason V. Jordan, 13 R. I. 193; McLaurin v. Wilson, 16 S. Car. 402; Daniel v. Mason, 90 Tex. 240, 38 S. W. 161, 59 Am. St. 815; Drury v. Foster, 2 Wall. (U. S.) 24, 17 L. ed. 780. And see Merriam v. Boston &c. R. Co., 117 Mass. 241. See also, Collins v. Goldsmith, 71 Fed. 580. See fur- ther, ante, § 407, Statutes requiring Husband to Join or Consent. " Simmons v. Richardson, 107 Ala. 697, 18 So. 245; Jones v. Reese, 65 Ala. 134; Yerkes v. Hadley, 5 Dak. 324; Long v. Crossan, 119 Ind. 3, 21 N. E. 450, 4 L. R. A. 783; Kedy v. Kramer, 129 Ind. 478, 28 N. E. 1121 ; Lane v. Schlemmer, 114 Ind. 296, 15 N. E. 454, 5 Am. St. 621 ; McCuUough V. Wilson, 21 Pa. St. 436; Bailey v. Seymour, 42 S. Car. 322, 20 S. E. 62. " American Mortgage Co. v. Owens, 64 Fed. 249; Foster v. Jones, 78 Ga. 150, 1 S. E. 275; McNichols v. Kett- ner, 22 111. App. 493. 643 MARRIED WOMEN. § 427 § 427. Estoppel by silence or acquiescence. — She may also be estopped by silence or conduct which under the circumstances is intentionally wrong and fraudulent.^* Sould a feme covert stand by and knowingly permit her husband to use her money or property, real or personal, as his own, thereby incurring obli- gations and obtaining credit upon the faith of others that the property belongs to him, she may be estopped to set up the title as against her husband's creditors.^" Thus, where a married woman procured a sale of property to be made for her husband's benefit, it was held that she was estopped to subsequently claim that no title passed because the property was in fact hers.^° Even in those jurisdictions in which a feme covert is prohibited from entering into contracts of suretyship it is usually provided by such statutes, or held by the courts, that she may be bound by estoppel in pais as any other person.^^ But no estoppel in pais will exist where it appears that the creditor knew all the facts and participated in the evasion of the statute.^^ " Schweitzer v. Wagner, 94 Ky. mere presence at the time the transac- 458, 22 S. W. 883 ; Tracy v. Lincoln, tion is consummated does not bind 145 Mass. 357, 14 N. E. 122; Grim's her if she had no knowledge of its Appeal, 105 Pa. St. 375 ; Logan v. nature. Hoshkowitz v. Sargoy, 141 Gardener, 136 Pa. St. 588, 20 Atl. App. Div. (N. Y.) 839, 125 N. Y. S. 625, 20 Am. St. 939; Gwynn v. 913. Gwynn, 31 S. Car. 482, 10 S. E. 221; =" Overcast v. Lawrence, 141 Ky. Brown v. Thompson, 31 S. Car. 436, 25, 131 S. W. 1029. 10 S. E. 95, 17 Am. St. 40; Keller =1 Field v. Campbell, 164 Ind. 389, V. Lindow (Tex. Civ. App.), 133 S. 72 N. E. 260, 108 Am. St. 301; Trim- W. 304; Steed v. Petty, 65 Tex. 490; ble v. State, 145 Ind. 154, 44 N. E. Smith V. Weeks, 65 Vt. 566, 27 Atl. 260, 57 Am. St. 163n. 197 ; Mudgett v. Clay, 5 Wash. 103, "^ Weil v. Waterhouse, 46 Ind. App. 31 Pac. 424. See also, Louisville &c. 690, 91 N. E. 746; Indianapolis Brew- R. Co. v. Stephens, 96 Ky. 401, 49 ing Co. v. Behnke, 41 Ind. App. 288, Am St. 303; Johnson v. Bryan, 62 81 N. E. 119; Field v. Campbell, 164 Tex 623- Munk v. Weidner, 9 Tex. Ind. 389, 72 N. E. 260, 108 Am. St. Civ App. 491, 29 S. W. 409; Smith 301. See, however, Trimble v. State, V. Powell, 5 Tex. Civ. App. 27i, 23 145 Ind. 154, 44 N. E. 260, 57 Am. St. S. W. 1109. 163n. See also, White v. Stocker, 85 '°Driggs &c. Bank v. Norwood, SO Ga. 200, 11 S. E. 604; Johnson v. Ark. 42, 6 S. W. 323, 7 Am. St. 78; A. Leffler Co., 122 Ga. 670, 50 S. E. Warner v. Watson, 35 Fla. 402; Le- 488; Johnston v. Gulledge, 115 Ga. coil V. Armstrong-Landon-Hunt Co., 981, 42 S. E. 354. Before a feme 140 Ind. 256, 39 N. E. 922; Minich v. covert will be estopped to deny her Shaffer, 135 Ind. 634, 34 N. E. 987; suretyship it must appear (1) that Leete v. State Bank, 115 Mo. 184, 21 there was a misrepresentation or con- S. W. 788; Swartz v. McClelland, cealment of material facts; (2) that 31 Nebr. 646, 48 N. W. 461 ; Ham- the misrepresentation was made with len's Admr. v. Bennett, 52 N. J. Eq. knowledge of the facts; (3) that the 70, 27 Atl. 651; Hopkins v. Joyce, 78 party to whom it was made was ig- Wis. 443, 47 N. W. 722. But her norant of the truth of the matter; § 428 CONTRACTS. 644 § 428. Estoppel — When abandoned by husband. — It has been held by the Supreme Court of the state of Washington that if a husband separates from his wife and goes into that state and holds himself out and acquires property as a single man and the wife makes no effort and shows no desire to assert her rights as a spouse, she will be estopped to assert her interest in community property acquired by the husband and by him trans- ferred to another when the latter dealt with the vendor in the good faith belief and on the assumption that he was unmarried and was an innocent purchaser.^^ These decisions would seem to be wrong in theory, however, because under them a married woman might be estopped not because of any fraud or wrong on her part but solely by reason of the husband's wrong in abandon- ing her and securing another residence in a foreign state without leaving her with the means whereby she might follow him or otherwise making her wifeship and her rights in his property known. ^* § 429. Coverture a personal defense and must be pleaded. — Coverture is a personal defense and must be alleged and proved before it can be taken advantage of.^"^ It must be pleaded when it constitutes a defense to an action brought against the (4) that it was made with the inten- Daly v. Rizzutto, 59 Wasli. 62, 109 tion that the other party should act Pac. 276, 29 L. R. A. (N. S.) 467n. upon it; (S) that the other party was ^' See Mason v. Dierks Lumber and induced to act upon it to his injury. Coal Co., 94 Ark. 107, 125 S. W. 656, An estoppel can only be predicated 26 L. R. A. (N. S.) 574; Hilton v. upon a wrong. It cannot exist if Stewart, 15 Idaho 150, 96 Pac. 579, the person dealing with her knew 128 Am. St. 48; Stevens v. Wooder- the fact, or was ignorant from a son, 38 Ind. App. 617, 78 N. E. 681 ; failure to inquire, or was misled by Smith v. Fuller, 138 Iowa 91, 115 N. the representations of the wife. W. 912, 16 L. R. A. (N. S.) 98n; Neighbors v. Davis, 34 Ind. App. 441, Hall v. Marshall, 139 Mich. 123, 102 li N. E. 151, p. 153. See also, Day- N. W. 658, 111 Am. St. 404; Cazier ries V. Lindsly, 128 La. 259, 54 So. v. Hinchey, 143 Mo. 203, 44 S. W. 791. 1052; Hilton v. Sloan, 37 Utah 359, ""Nuhn V. Miller, 5 Wash. 405, 31 108 Pac. 689. The cases above cited Pac. 1031, 34 Pac. 152, 34 Am. Rep. have to do mainly with homestead 868; Sadler v. Niesz, 5 Wash. 182, and dower rights. 31 Pac. 630; Canadian &c. Co. v. =* Strauss v. Glass, 108 Ala. 546, B-loomer, 14 Wash. 491, 45 Pac. 34. 18 So. 526; Smoot v. Judd, 161 Mo. In the above case the conveyance 673, 61 S. W. 854, 84 Am. St. Rep. executed by the husband was a mort- 738; Meade v. Clarke, 159 Pa. St. gage. See also, Pickens v. Gillam, 159, 28 Atl. 214, 39 Am. St. 669, 23 43 La. Ann. 350, 8 So. 928; Wright v. L. R. A. 479. Hays, 10 Tex. 130, 60 Am. Dec. 200; 645 MARRIED WOMEN. § 429 feme covert, otherwise the judgment will be valid.^" And where coverture is pleaded the facts alleged must be sufficient to show that the contract is one which she could not enter into because of coverture.^^ On the other hand, in an action against a mar- ried woman it has been held that it must appear from the pleading and be proved by the evidence that the contract was one such as she was authorized to make, her liability not being presumed.''* Only the married woman or her privies in blood, representation or estate can set up coverture as a defense.^® No one else can do it for her or compel her to do it.'" The defense cannot be inter- posed by her husband or those claiming under hira.'^ Nor can the adverse party avoid the agreement because of her coverture, at least when the contract is not entirely executory and the feme covert is able and willing to perform.^^ She may enforce specific performance where she has performed her part of the contract and cannot be placed in statu quo.*® However, where her con- '" Landers v. Douglas, 46 Ind. 522; Van Metre v. Wolf, 27 Iowa 341; Smoot V. Judd, 161 Mo. 673, 61 S. W. 854, 84 Am. St. 738 ; Von Schrader v. Taylor, 7 Mo. App. 361 ; Vantilburg v. Black, 3 Mont. 459; Linton v. Jansen, 1 Nebr. (unof.) 352, 95 N. W. 675; Vosburgh v. Brown, 66 Barb. (N. Y.) 421; Rutherford v. Ray, 147 N. Car. 253, 61 S. E. 57 ; Smith v. Borden, 17 R. I. 220, 21 Atl. 351, 11 L. R. A. 585n, 33 Am. St. 867; Carter v. Kaiser (Tenn. Ch.), 48 S. W. 265; Woodfolk V. Lyon, 98 Tenn. 269, 39 S. W. 227; Phelps V. Brackett, 24 Tex. 236. See, however, Weathers v. Borders, 124 N. Car. 610, 32 S. E. 881, which holds that where it clearly appears through- out the proceedings that the defend- ant was a married woman, the de- fense of coverture will not be deemed waived. See also. Parsons v. Spen- cer, 83 Ky. 305, 7 Ky. L. 329; Howard V. Gibson (Ky.), 22 Ky. L. Rep. 1294, 60 S. W. 491 (holding that a statute passed subsequently to the giving of a note requiring a feme covert to plead coverture did not interfere vfith a vested right) ; Belcher v. Polly (Ky.), 106 S. W. 818. Compare, however with Turner v. Gill, 105 Ky. 414, 49 S. W. 311. " Strauss v. Glass, 108 Ala. 546, 18 So. 526. The above of course applies only when her disability is partial. =* Warner v. Hess, 66 Ark. 113, 49 S. W. 489; Emmett v. Yandes, 60 Ind. 548; Westervelt v. Baker, 56 Nebr. 63, 76 N. W. 440, citing and following Grand Island Banking Co. V. Wright, 53 Nebr. 574, 74 N. W. 82; Moore v. Wolfe, 122 N. Car. 711, 30 S. E. 120; Koechling v. Henkel, 144 Pa. St. 215, 22 Atl. 808; Hecker v. Haak, 88 Pa. St. 238 ; Duval v. Chef, 92 Va. 489, 23 S. E. 893. ■^ Jones v. Harrell, 110 Ga. 373, 35 S. E. 690; Hawes v. Favor, 161 III. 440, 43 N. E. 1076; Lackey v. Boruff, 152 Ind. 371, S3 N. E. 412; Slagle v. Hoover, 137 Ind. 314, 36 N. E. 1099. ="' Meade v. Clarke, 159 Pa. St. 159, 28 Atl. 214, 23 L. R. A. 479, 39 Am. St. 669. '" Slagle V. Hoover, 137 Ind. 314, 36 N. E. 1099. '^ Hawes v. Favor, 161 111. 440, 43 N. E. 1076; Carpenter v. Mitchell, 54 111. 126; Holmes v. Holmes, 107 Ky. 163, 21 Ky. L. 831, S3 S. W. 29, 92 Am. St. 342; O'Connell v. Storey (Tex. Civ. App.), 105 S. W. 1174. "It is true that the contract was entered into with a married woman, but the defendant cannot avoid it for that reason." Frazier v. Lambert, 53 Tex. Civ. App. 506, 115 S. W. 1174, '' Richards v. Doyle, 36 Ohio St. 37, 38 Am. Rep. 550; Heagy v. Kastner (Tex. Civ. App.), 138 S. W. 788. § 430 CONTRACTS. 646 tract is void and executory it has been held that there is no con- sideration for the adverse party's promise and he is not bound.^* § 430. Conflict of laws — Lex loci contractus.^The law that governs the capacity of married women to contract depends in the main upon the subject-matter of the agreement. Con- tracts in relation to real estate are almost universally governed by the law of the place where the land is located (lex rei sitae), irrespective of the place where the deed, mortgage or other agree- ment was executed or the married woman was domiciled.^' Thus the capacity of a married woman to convey land directly to her husband,*"* or to be the grantee in a conveyance directly from him,**^ is determined by the law of the place where the land is situated.'* By the great weight of authority, capacity on the part of married women to make personal contracts or contracts in relation to personal property is governed by the law of the place where the contract is executed, lex loci contractus, and not by the ■"Shirk V. Stafford, 31 Ind. App. 247, 67 N. E. 542. ""McDaniel v. Grace, IS Ark. 465; Thomson v. Kyle, 39 Fla. 582, 23 So. 12, 62, Am. St. 193 ; Walling v. Christ- ian & C. Grocery Co., 41 Fla. 479, 27 So. 46, 47 L. R. A. 608; Otis v. Greg- ory, 111 Ind. 504, 13 N. E. 39; Swank V. Hufnagle, 111 Ind. 453, 12 N. E. 303, 13 N. E. 105; Cochran v. Benton, 127 Ind. 58, 25 N. E. 870; Doyle v. McGuire, 38 Iowa 410 ; Sell v. Miller, 11 Ohio St. 331. =" Duffy V. White, 115 Mich. 264, 73 N. W. 363. "Rush V. Landers, 107 La. Ann. 549, 32 So. 95, 57 L, R. A. 353; Pol- son V. Stewart, 167 Mass. 211, 45 N. E. 737, 36 L. R. A. 771. "' See, however, the case of Brown V. Dalton, 20 Ky. L. 1484, 49 S. W. 443, in wiiich it appears that the hus- band resident in Kentucky bought land located in Virginia. Subsequent- ly he conveyed it to his wife and she assumed the payment of a note given by her husband in part payment. Suit was brought against the wife to re- cover on this note. The court held : "This transaction is clearly contrary to the public policy of this state, as defined in the statutes in force when it v/as made, and, if it could be en- lorced, the door might be opened for grave abuses." The court seemed to treat this transaction as in reality a contract of suretyship. See further Poison V. Stewart, 167 Mass. 211, 45 N. E. 7i7, i6 L. R. A. 771, which lays down the rule, "But it is said that the laws of the parties' domicil could not authorize a contract between them as to land in Massachusetts. Obviously, this is not true. It is true that the laws of other states cannot render valid conveyances of property within our borders which our laws say are void, for the plain reason that we have exclusive power over the res. * * * But the same reason inverted establishes that the lex rei sitae can- not control personal covenants not purporting to be conveyances, be- tween persons outside the jurisdiction, although concerning a thing within it. Whatever the covenant, the laws of North Carolina could subject the defendant's property to seizure on ex- ecution, and his person to imprison- ment, for a failure to perform it. Tiierefore, on principle, the law of North Carolina determines the valid- ity o{ the contract. Such precedents as there are, are on the same side." Auijusta Insurance & Banking Co. v. Morton, 3 La. Ann. 417. See Kelly 647 MARRIED WOMEN. § 431 law of the place where the property is situated or of the domicil of the parties.'"' § 431, Lex loci contractus — Exceptions. — To this general rule there are some few real and apparent exceptions. Thus the courts of some states qualify the general rule by adding "unless it can be fairly said that the parties at the time of its (the con- tract's) execution clearly manifested an intention that it should be governed by the laws of another state."'"' The Supreme Court of New Jersey has recently gone a step farther and held that the proper law of the contract is the law by which the parties thereto intended or may fairly be presumed to have intended the contract to be governed.*^ Other courts lay down the rule that where the contract is valid by the law of the place where it is made and in- valid by that of the place of performance, or vice versa, the agree- ment will be governed by the law of the jurisdiction that upholds it, on the theory that no contract must be held as intended to be made in violation of law, whenever by any reasonable construc- tion it can be made consistent with the law which it was compe- tent for the parties to adopt.*^ The Supreme Court of Louisiana adheres to the doctrine that a married woman's capacity to con- tract is to be determined by the law of her domicil and that if under the law of her domicil she has a right to enter into any given contract as if a feme sole, her capacity to do so accompanies V. Davis, 28 La. Ann. 773, which holds Am. St. 324 ; International Harvester that where the husband, a resident of Co. v. McAdam, 142 Wis. 114, 124 Louisiana, conveyed to his wife land N. W. 1042, 26 L. R. A. (N. S.) 774. located in Louisiana the capacity of See also, Griswold v. Golding, 8 Ky. the parties was to be determined by L. Ill, 3 S. W. 535. the law of the domicil. Freret v. '"Mayer v. Roche, n N. J. L. 681, Taylor, 119 La. 307, 44 So. 26, 121 75 Atl. 235, 26 L. R. A. (N. S.) 763. Am. St. 522. See also, Griswold v. Golding, 8 Ky. =» First Nat. Bank v. Mitchell, 92 L. W, 3 S. W. 535 ; Bank of Louisi- Fed. 565, 34 C. C. A. 542 (revd. 180 U. ana v. Williams, 46 Miss. 618, 12 S. 471, 21 Sup. Ct, 418, 45 L. ed. 627) ; Am. Rep. 319; Partee v. Silliman. 44 Nixon V. Halley, 78 111. 611; Garrigue Miss. 272; Shacklett v. Polk, 51 Miss. v. Kellar, 164 Ind. 676, 74 N. E. 523, 378; International Harvester Co. v. 69 L. R. A. 870, 108 Am. St. 324; McAdam, 142 Wis. 114, 124 N. W. Griswold v. Golding, 8 Ky. L. W, 3 1042, 26 L. R. A. (N. S.) 774; Brown S, W. 535 ; Young v. Bullen, 19 Ky. v. Gates, 120 Wis. 349, 97 N. W. 221, L. 1561, 43 S. W. 687; Hauck &c. 98 N. W. 205, 1 Am. & Eng. Ann. Co. V. Sharpe, 83 Mo. App. 385; Cas. 85. Union Nat. Bank v. Chapman, 169 N. ^Bell v. Packard, 69 Maine 105, 31 Y. 538, 57 L. R. A. 513. Am. Rep. 251. See also, Mayer v. "Garrigue v. Kellar, 164 Ind. Qd, Roche, 11 N. J. L. 681, 75 Atl. 235, 26 74 N. E. 523, 69 L. R. A. 870, 108 L. R. A. (N. S.) 763. S 432 CONTRACTS. 648 her wherever she may go and her Hability on such contract is not extinguished by the fact that she may have exercised her legal right in another state." § 432. Lex fori controls as to remedy. — Further confusion arises from those cases in which suit is brought on a married woman's contract in a forum other than that in which the contract was made. These cases are not necessarily in conflict with the rule that the law of the place determines the validity of a con- tract concerning personalty and that if valid there, it is valid everywhere. The court of the state or country in which suit is brought may consider the contract as contrary to its public policy and refuse to enforce the agreement. This usually happens where the law of the forum and that of the domicil coincide.** The state or country in which suit is brought may also refuse to enforce the contract because the law of the forum affords no rem- edy for the enforcement of such agreement. It is well settled that matters respecting remedies depend upon the law of the forum. *^ "The law of one state having, ex propria vigore, no validity in another state, the enforcement of a foreign contract which would not be valid by the law of the forum where its enforcement is judicially attempted, depends upon comity which is extended for that purpose, unless the agreement is contrary to the public policy of the state of the forum, in that it is contrary to good morals, or the state or its citizens would be injured by its enforcement, "Freret v. Taylor, 119 La. 307, 44 Am. St. 473; First Nat. Bank v. Shaw, So. 26, 121 Am. St. 522 ; Baer Bros. 109 Tenn. 237, 70 S. W. 807, 59 L. R. V. Terry, 105 La. 479, 29 So. 886, sec- A. 498, 97 Am. St. 840. See also, Gar- ond appeal, 108 La. 597, 32 So. 353, rigue v. Kellar, 164 Ind. 676, 74 N. 92 Am. St. 394 ; LeBreton v. Nouchet, E. 523, 69 L. R. A. 870, 108 Am. St. 3 Mart. (La.) (O. S.) 60, 5 Am. 324; Thompson v. Taylor, 65 N. J. L. Dec. 7i6 ; Gamier v. Poydras, 13 La. 107, 46 Atl. 567 ; Law v. Smith, 68 N. 177; Roberts v. Wilkinson, 5 La. Ann. J. Eq. 81, 59 Atl. 327; International 369. It should be borne in mind that Harvester Co. v. McAdam, 142 Wis. the law of Louisiana is founded on 114, 124 N. W. 1042, 26 L. R. A. (N. the civil law or code Napoleon. See S.) 774. also, Poison v. Stewart, 167 Mass. " Bank of Louisiana v. Williams, 46 211, 45 N. E. 7i7, 36 L. R. A. 771, 57 Miss. 618, 12 Am. St. Rep. 319; Hink- Am. St. 452. son v. Williams, 41 N. J. L. 35 ; Evans " Brown v. Dalton, 105 Ky. 669, 20 v. Cleary, 125 Pa. St. 204, 17 Atl. 440, Ky. L. 1484, 49 S. W. 443, 88 Am. 11 Am. St. 886; Dulin v. McCaw, 39 St. 325 ; Ruhe v. Buck, 124 Mo. 178, 27 W. Va. 721, 20 S. E. 681 ; Internation- S. W. 412, 25 L, R. A. 178, 46 Am. St. al Harvester Co. v. McAdam, 142 439; Armstrong v. Best. 112 N. Car. Wis. 114 124 N. W. 1042, 26 L. R. A. 59, 17 S. E. 14, 25 L. R. A. 188, 34 (N. S.) 774 649 MARRIED WOMEN. § 432 or it perniciously violates positive written or unwritten prohibi- tory law ; the extent to which comity will be extended being very much a matter of judicial policy to be determined within reason- able limitations by each state for itself."*" " International Harvester Co. v. McAdam, 142 Wis. 114, 124 N. W. 1042, 26 L. R. A. (N. S.) 774. In those states where the presumption that the common law prevails does not apply, a contract there executed but sued on in another state whose jurispru- dence is based on the common law, will be governed by the laws of the latter state when no proof is made as to the laws of the former. Krouse v. Krouse (Ind. App.), 9S N. E. 262. See also, United States Banking Co. V. Yeale, 114 Kans. 385, 114 Pac. 229; Tennent v. Union Cent. Life Ins. Co., 133 Mo. App. 345, 112 S. W. 754. As to a married woman's liability in tort see Graham v. Tucker, 56 Fla. 307, 47 So. 563, 19 L. R. A. (N. S.) 531n, 131 Am. St. 124n; Rowley v. Shepard- son, 83 Vt. 167, 74 Atl. 1002, 138 Am. St. 1078. CHAPTER XIV. DRUNKEN PERSONS. § 440. Effect of intoxication on con- § 443. Intoxication coupled with fraud tracts generally. 441. Extent or degree of intoxica- tion. 442. Contracts voidable when intox- ication is such as to render the party incapable of under- standing. and unfair conduct. 444. Ratification and disaffirmance. 445. Restoration of consideration. 446. Habitual drunkards — Effect of adjudication. 447. Contracts for necessities. 448. Drugs and drug habit. § 440. Effect of intoxication on contracts generally. — One so under the influence of intoxicating liquors as to be deprived of his reason has always been considered as a person non compos mentis, for the time being. The ancient rule of law, however, allowed him no indulgence on that account. Lord Coke says : "As for a drunkard who is voluntaris daemon, he hath (as has beene said) no privilege thereby, but what hurt or evil soever he doth, his drunkenness doth aggravate it."^ The rigor of this rule has been relaxed, however, and it is now well settled that an agreement other than for necessities, made by a person when so drunk as to be incapable of understanding its nature and effect, is voidable at the intoxicated person's option.^ The contracts of ^ Coke's Lit. 247 ; Beverly's Case, 4 Coke 124a ' Gore V.' Gibson, 13 M. & W. 623 ; Pitt V. Smith, 3 Campb. 33; Clifton V. Davis, 1 Pars. Sel. Eq. Cas. 31 ; Hawkin v. Bone, 4 Fost. & Fin. (N. P.) 311; Wright v. Waller, 127 Ala. SS7, 29 So. 57, 54 L. R. A, 440 and note; Donelson's Admr. v. Posey, 13 Ala. 752; Taylor v. Purcell, 60 Ark. 606, 31 S. W. 567; Hale v. Stery, 7 Colo. App. 165, 42 Pac. 598; Drum- mond v. Hopper, 4 Har. (Del.) 327; Watson v. Doyle, 130 HI. 415, 22 N. E. 613 ; Chicago &c. Rv. Co. v. Lewis, 109 111. 120 ; Shackelton v. Sebree, 86 111. 616; Bates v. Ball, 72 111. 108 Musselman v. Cravens, 47 Ind. 1 ; Cummings v. Henry, 10 Ind. 109; Hawley v. Howell, 60 Iowa 79, 14 N. W. 199; Johns v. Fritchey, 39 Md. 258; Longhead v. B. F. Combs &c Co., 64 Mo. App. 559; Burroughs v. Richman, 13 N. J. L. 233, 23 Am. Dec. 717; Waldron v. Angelman, 71 N. J. L. 166, 58 Atl. 568; Cameron- Barkley Co. v. Thornton &c. Power Co., 138 N. Car. 365, SO S. E. 695, 107 Am. St. 532; Bush v. Breinig, 113 Pa. 310, 6 Atl. 86, 57 Am. Rep. 469; Wade v. Colvert, 2 Mill. Const. (S. Car.) 27, 12 Am. Dec. 652; Birdsong v. Bird- song, 2 Head (Tenn.) 289; Foot v. 650 651 DRUNKEN PERSONS. § 441 an intoxicated person may be voidable under any one of the following circumstances ; first, when it appears that the drunken- ness was brought about by the opposite party; second, that a fraudulent advantage was taken of it ; and third, that the drunk- enness was so complete as to deprive the party of his reason and of an agreeing mind. Transactions rendered voidable because of one or more of the above reasons will be discussed in a suc- ceeding section of this chapter in the inverse order in which they are named. § 441. Extent or degree of intoxication. — The mere fact that one of the parties is drunk at the time the agreement is en- tered into is no ground for setting it aside unless one or more of the above-mentioned influences was or were operative at the time the minds o£ the parties met on the terms of the contract.^ Drunkenness which only clouds or darkens the reason does not render a contract entered into while in such a condition voidable unless procured under such circumstances as to justify the infer- ence that it was obtained by fraud or circumvention.* Intoxication which merely prevents the party from giving proper attention to what he is doing^ or from fully realizing the nature of his acts" Tewksbury, 2 Vt. 97 ; Barrett v. Bux- enough to know what he was doing) ; ton, 2 Aik. (Vt.) 167, 16 Am. Dec. Wright v. Fisher, 65 Mich. 275, 32 N. 691; Reynolds v. Waller's Heirs, 1 W. 60S, 8 Am. St. 886; Johnson v. Wash. (Va.) 164; Miller v. Sterring- Phifer, 6 Nebr. 401; Van Wyck v. er, 66 W. Va. 169, 66 S. E. 228, 25 Brasher, 81 N. W. 260; Hutchinson L. R. A. (N. S.) 596n; Bursinger v. v. Brown, Clark Ch. (N. Y.) 408 Bank of Watertown, 67 Wis. 75, 30 (considerably excited by drink) ; N. W. 290, 58 Am. Rep. 848. Birdsong v. Birdsong, 2 Head ^Miller V. Sterringer, 66 W. Va. 169, (Tenn.) 289; Morris v. Nixon, 7 66 S. E 228, 25 L. R. A. (N. S.) 596. Humph. (Tenn.) 579; Ralston v. Tur- 'Lightfoot V. Heron, 3 Younge & pin, 129 U. S. 663, 32 L. ed. 747, 9 C. 586 (The intoxicated person was Sup. Ct. 420; Conley v. Nailor, 118 U. considerably in liquor) ; Holland v. S. 127, 30 L. ed. 112, 6 Sup. Ct. 1001; Barnes, 53 Ala. 83, 25 Am. Rep. 595; Conant v. Jackson, 16 Vt. 335. See Caulkins v. Fry, 35 Conn. 170 ; Van post, note in section on Habitual Horn V. Keenan, 28 111. 445; Murray Drunkards, on the validity of a con- V. Carlin, 67 111. 286; Schramm v. tract entered into by one whose mind O'Connor, 98 111. 539; Henry v. Rite- has been permanently impaired by nour 31 Ind. 136; Nance v. Kemper, the long continued use of intoxicat- 35 Ind. App. 60S, 73 N. E. 937 ; Will- ing liquors. cox V Jackson, 51 Iowa 208, 1 N. " Wright v. Waller, 127 Ala. 557, 29 W 513- Kuhlman v. Wieben, 129 So. 57, 54 L. R, A. 440n. Iowa 188, 105 N. W. 445, 2 L. R. A. "Nance v. Kemper, 35 Ind. App. (N S) 666n- Ducker v. Franz, 7 605, 73 N. E. 937. See also, Dewitt v. Bush. '(Ky.) 273, 3 Am. Rep. 314 Bowers (Tex. Civ. App.), 138 S. W. (The intoxicated party was sober 1147. The following instruction has § 441 CONTRACTS. 652 is insufficient to invalidate a contract/ Mere intoxication unmixed with any inequitable conduct on the part of the other party to the agreement is insufficient to invahdate a contract entered into while in such condition unless the party so situated is so drunk as to be incapable of understanding the nature and effect of the agreement, or its consequences, that is to say, he must be rendered ^incapable of intelligent assent and deprived of the power to know what he is doing.' been held erroneous, "Plaintiff does N. W. 1042; J. I. Case Threshing not claim that he was so drunk as that Machine Co. v. Meyers, 78 Nebr. 685, he did not know what he was doing, 111 N. W. 602, 9 L. R, A. (N. S.) and he may be entitled to your ver- 970; Spoonheim v. Spoonheim, 14 N. diet without proving that he was so Dak. 380, 104 N. W. 845; Power v. drunk as not to know what he was King, 18 N. Dak. 600, 120 N. W. 543, doing." Sievertsen v. Paxton-Eck- 138 Am. St. 784; Fowler v. Meadow- man Chemical Co. (Iowa), 133 N. brook Water Co., 208 Pa. 473, 57 Atl. W. 744, 745. 959; Pagan v. Wiley, 49 Ore. 480, 90 ' Pickett V. Sutter, S Cal. 412 ; Wat- Pac. 910; Dewitt v. Bowers (Tex. son V. Doyle, 130 111. 415, 22 N. E. Civ. App.), 138 S. W. 1147. The fol- 613 ; Shackleton v. Sebree, 86 111. lowing instruction to the jury has 616; Bates v. Ball, 72 111. 108; Harbi- been held correct. "The mere fact son V. Lemon, 3 Blackf. (Ind.) 51, that the defendant's president was 23 Am. Dec. 376; Searles v. North- drinking was not sufficient, but the western &c. Ins. Co., 148 Iowa 65, 126 jury must find that he was so intox- N. W. 801, 29 L. R. A. (N. S.) 405; icated that he could not understand Johns v. Fritchey, 39 Md. 258; Wright the nature and scope of what he was V. Fisher, 6S Mich. 275, 32 N. W. 605, doing. If the jury find from the 8 Am. St. 886; Cavender v. Wad- greater weight of the testimony that dingham, 5 Mo. App. 457 ; Rodman v' the agent was drinking, it would not Zilley, 1 N. J. Eq. 320 ; Waldron v. be sufficient to invalidate the contract, Angleman, 71 N. J. L. 166, 58 Atl. but if the jury find that the defend- 568; Commonwealth v. McAnany, 3 ant president, at the time he signed Brewst. (Pa.) 292; Lee v. Ware, 1 the contract or order for the engine Hill L. (S. Car.) 313; Belcher v. was so drunk as to be incapable of Belcher, 10 Yerg. (Tenn.) 121; Wells knowing the effect of what he was V. Houston, 23 Tex. Civ. App. 629, 57 doing, then the contract or order S. W. 584; Reynolds v. Dechaums, 24 would not be binding upon the defend- Tex. 174, 16 Am. Dec. 101; Houston ant." Cameron &c. Co. v. Thornton & T. C. R. Co. V. Tierney, 72 Tex. &c. Co., 138 N. Car. 365, 50 S. E. 695, 312, 12 S. W. 586; Foot v. Tewksbury, 107 Am. St. 532. The above case and 2 Vt. 97. the succeeding case have to do with ° Morton v. Nichols, 12 B. C. 9; the degree of intoxication on the part Vivian v. Scoble, 1 Manitoba 125 ; of an agent that will excuse the prin- Bing V. Bank of Kingston, 5 Ga. App. cipal. Cook v. Babnell Timber Co., 578, 63 S. E. 652; Abbeville Trad- 78 Ark. 47, 94 S. W. 695, 8 Am. & ing Co. V. Butler, 3 Ga. App. 138, Eng. Ann. Cas. 251. By other author- 59 S. E. 450; Ryan v. Schutt, 135 ities it is stated that the contracting III. App. 554; Moetzel & Mutera v. party must be so drunk as to have Koch, 122 Iowa 196, 97 N. W. 1079; drowned reason, memory and judg- Drefahl v. Security Sav. Bank, 132 ment, the mental faculties being so Iowa 563, 107 N. W. 179; Girault v. impaired as to render the party non Feucht, 120 La. 1070, 46 So. 26; Ben- compos mentis for the time being, es- ton V. Sikyta, 84 Nebr. 808, 122 N. pecially where the adversary party W 61 24 L. R. A. (N. S.) 1057; has not aided or procured the intoxi- Hauber v. Leibold, 76 Nebr. 706, 107 cation. Bates v. Ball, 72 111. 108; 653 DRUNKEN PERSONS. § 44- § 442. Contracts voidable when intoxication is such as to render the party incapable of understanding. — The degree of mere intoxication necessary to deprive a person of his contractual capacity has been noted in the preceding section. Its effect on the agreement is now to be ascertained. With few exceptions, which will be mentioned later, the contracts of one so drunk as to be incapable of understanding the nature and effect of the transaction are voidable in his favor." In a proper case an in- toxicated person's conveyance of real estate is voidable the same as his general contract.^" One exception to the foregoing rule is that a drunken person's contract for necessities is binding upon him the same as with infants and insane persons and cannot be avoided. ^^ In this connection it may be said generally that the intoxicated person will be bound in any instance where the law will imply a liability." Nor does the rule have any application where it appears that all the terms of a valid contract were fully Martin v. Harsh, 231 111. 384, 83 N. E. 164, 13 L. R. A. (N. S.) 1000; Dahlmann v. Gaudente, 238 111. 224, 87 N. E. 287. To same effect, Oakley v. Shelley, 129 Ala. 467, 29 So. 385 ; Swan v. Talbot, 152 Cal. 142, 94 Pac. 238, 17 L. R. A. (N. S.) 1066n ; Nance v. Kemper, 35 Ind. App. 60S, Ti N. E. 937; Watts v. Vansant, 99 Md. 577, 58 Atl. 433; Wells v. Houston, 23 Tex. Civ. App. 629, 57 S. W. 584; Burnham v. Burnham, 119 Wis. 509, 91 N. W. 176, 100 Am. St. 895. See also, Jones v. Hughes (Iowa), 110 N. W. 900. See also cases cited in preceding note. "Matthews v. Baxter, L. R. 8 Ex. 132; Mattair v. Card, 18 Fla. 761; Strickland v. Parlin &c. Co., 118 Ga. 213, 44 S. E. 997; Menkins v. Light- ner, 18 111. 282 ; Joest v. Williams, 42 Ind. 565, 13 Am. Rep. ill ; Mansfield V. Watson, 2 Iowa 111; Lacy v. Mann, 59 Kans, 111, 'i'i Pac. 754; Carpenter V. Rodgers, 61 Mich. 384, 28 N. W. 156, 1 Am. St. 595; Broadwater v. Darne, 10 Mo. 277: Eaton's Adrar. v. Perry, 29 Mo. 96; Longhead v. B. F. Combs &c. Co., 64 Mo. App. 559; French v. Hickox, 8 Ohio 214, 31 Am. Dec. 441; Bush v. Breining, 113 Pa. St. 310, 6 Atl. 86, 57 Am. Rep. 469; Fowler v. Meadowbrook Water Co., 208 Pa. St. 473, 57 Atl. 959 ; Williams V. Inabnet, 1 Bail. (S. Car.) 343; Smith V. Williamson, 8 Utah 219, 30 Pac. 753; Barrett v. Buxton, 2 Aik. (Vt.) 167, 16 Am. Dec. 691; Wiggles- worth V. Steers, 1 Hen. & M. (Va.) 70, 3 Am. Dec. 602; Loftus v. Malony, 89 Va. 576, 16 S. E. 749. See also, ante, § 440, Effect of Intoxication. The agreement is voidable both in law and equity. Donelson's Admr. v. Posey, 13 Ala. 752. There is author- ity, however, to the effect that a con- tract entered into by one who is so voluntarily drunk as to not know what he is doing is void. Taylor v. Pur- cell, 60 Ark. 606, 31 S. W. 567; Drum- mond V. Hopper, 4 Harr. (Del.) 327; Cavendger v. Waddingham, 2 Mo. App. 551 ; Prentice v. Achorn, 2 Paige (N. Y.) 30; Hyman v. Moore, 3 Jones (N. Car.) 416; Berkley v. Cannon, 4 Rich. (S. Car.) 136. "Miller V. Sterringer, 66 W. Va. 169, 66 S. E. 228, 25 L. R. A. (N. S.) 596. See also cases cited, ante, in preceding note. " See post, § 447, Contracts for ne- cessities. "Gore V. Gibson, 13 M. & W. 623 ; Haneklau v. Felchin, 57 Mo. App. 602. § 443 CONTRACTS. 654 agreed upon when the party was not intoxicated, the formal exe- cution of the agreement alone being made during intoxication.^' It has been held that physical ability to sign his own name to the agreement in a smooth and even manner^* or haggling over the price and securing about one-third more than was originally of- fered^' showed that the degree of intoxication was not sufficient to incapacitate the party. Contracts entered into understand- ingly^^ or during a sober interval^' are binding.^* § 443. Intoxication coupled with fraud and unfair conduct. — Intoxication coupled with fraud, duress or unfair conduct may render a contract so induced voidable. It is well settled that if one party to a transaction procures the intoxication of the other and then takes advantage of his condition to obtain the contract or conveyance it will be voidable at the intoxicated person's op- tion, notwithstanding the degree of drunkenness may not have "Strickland v. Parlin &c. Co., 118 Ga. 213, 44 S. E. 997. The above case holds that intoxication is no defense to notes signed while drunk when their execution was merely the fulfil- ment of a prior valid agreement. Dre- fahl V. Security Sav. Bank, 132 Iowa 563, 107 N. W. 179. In the above case checks executed while intoxicat- ed but in fulfilment of a prior valid agreement were held good. Fagin v. Wiley, 49 Ore. 480, 90 Pac. 910. In the above case it appeared that there was no evidence of any drinking until after the minds of the parties had met. See, however, the case of Bush v. Breinig, 113 Pa. St. 310, 6 Atl. 86, 57 Am. Rep. 469, where it appears that an oral contract was entered into for the purchase of real estate. This was unenforcible because within the statute of frauds. A subsequent writ- ten agreement was entered into when one of the parties was drunk. It was held that he might disaffirm the con- tract when he became sober. See also, ante, § 373, in the chapter on Insanity, to the effect that a contract executed while the maker was insane is binding if its terms had been agreed upon while the party was sane. "Watts V. Vansant, 99 Md. 577, 58 Atl. 433. See also, O'Neill v. Nolan, 66 Hun (N. Y.) 631, 50 N. Y. St. 641, 21 N. Y. S. 222. " Oakley v. Shelley, 129 Ala. 467, 29 So. 385. " Coomb's Exr. v. Carthew, 59 N. J. Eq. 638, 43 Atl. 1057. "Girault v. Feucht, 120 La. 1070, 46 So. 26; Williams v. Williams, 133 Mich. 21, 94 N. W. 370; Behrns v. Oualman, 147 Mich. 635, 111 N. W. 198; Burnham v. Burnham, 119 Wis. 509, 79 N. 31. 176, 100 Am. St. 895. " Thus . intoxication on the night previous has been held not to avoid a contract entered into at ten o'clock the next morning when there is no evidence to show that such party had been drinking prior to the execution of the agreement on that day. Power V. King, 18 N. Dak. 600, 120 N. W. 543, 138 Am. St. 784. To same effect, Spoonheim v. Spoonheim, 14 N. Dak. 380, 104 N. W. 845. On the other hand the transaction has been held voidable where it appears that before the exe- cution of the agreement one of the parties thereto was so drunk he fell in the street and within three hours after the execution thereof collapsed and had to be put to bed [Swan v. Talbott, 152 Cal. 142, 94 Pac. 238, 17 L. R. A. (N. S.) 1066], or was bor- dering on delirium tremens (Jones v. Calkin, 16 N. B. 356 ; Hardy v. Dyas, 203 111. 211, 67 N. E. 8S2), or where it appears that the intoxicated party did an act which he did not intend to 655 DRUNKEN PERSONS. § 443 been excessive." Some authorities assert that contracts procured from a drunken person when his intoxication is caused or aggra- vated by the other party will be declared null and void either at law or in equity.^" This is not, however, supported by the weight of authority. It would seem that the only effect of connivance by one party at the intoxication of the other is to make it easier to defeat an attempted enforcement of the agreement than when the one seeking enforcement is not guilty of such conduct. The same principle applies, even though the liquor was not actually supplied by the other party, when it appears that he has taken advantage of the opportunity offered by the intoxicated party's condition to commit a fraud on him or to secure an undue ad- vantage for himself.^^ Undue influence coupled with extreme weakness, though falling short of incapacity arising from habit- ual drunkenness, will avoid a transaction.^^ It thus becomes apparent that the question of knowledge on the part of the sober party of the other's condition has an important bearing on the validity of the contract^' notwithstanding the fact do. More v. Finger, 128 Cal. 313, 60 Pac. 933. "Mansfield v. Watson, 2 Iowa 111. In the above case it appears that the intoxication was less than excessive. Matthis V. O'Brien, 137 Ky. 651, 126 S. W.1S6 (suit to cancel sale of inter- est in an estate. Purchaser was vendor's nephew) ; Curtis v. Hall, 4 N. J. L. 361 ; O'Connor v. Rempt, 29 N. J. Eg. 156; Whitesides v. Greenlee, 2 Dev. Eq. (N. Car.) 152; Miller v. Sterringer, 66 W. Va. 169, 66 S. E. 228, 25 L. R. A. (N. S.) 596. In the above case it appears that the one to whom the drunken party conveyed his property was the saloon keeper who sold him the liquor. The court said: "He continually sold him liquor, and then took advantage of the very weakness which that liquor produced. The very transaction itself shows that Sterringer obtained an unfair advan- tage from Miller's infirmity. A deed so obtained is promptly overthrown by the gracious court of equity." See also, Newell v. Fisher, 11 Sm. & M. (Miss.) 431, 49 Am. Dec. 66; Wood's Lessee v. Pindall, Wright (Ohio) 507. Notes which were obtained without consideration from a man weak in mind and fond of liquor by plying him with liquor, by playing on his fears as to the action of supposed creditors, and by threatening and cajoling him while intoxicated are unenforcible when in the hands of the original payee or subsequent hold- ers not bona fide purchasers. Knott v. Tidyman, 86 Wis. 164, 56 N. W. 632, See also, Kuelpkamp v. Hidding, 31 Wis. 503. '" See Willcox v. Jackson, 51 Iowa 208, 1 N. W. 513; Lacy v. Admr. of Garrard, 2 Ohio 7; White v. Cox, 3 Hayw. (Tenn.) 79. "" Holland v. Barnes, 53 Ala. 83, 25 Am. Rep. 595; Murray v. Carlin, 67 111, 286; Crane v. Conklin, 1 N, J. Eq. 346, 22 Am. Dec. 519; Maxwell v. Pittenger, 3 N, J. Eq. 156; O'Con- nor v, Rempt, 29 N. J, Eq. 156 ; Pren- tice V. Achorn, 2 Paige (N, Y.) 30; Calloway v. Witherspoon, 5 Ired. (40 N. Car,) 128; Baird v. Howard, 51 Ohio St, 57, 36 N, E, 732, 22 L, R. A. 846, 46 Am, St, 550 ; Hall v, Moreman, 3 McCord (S. Car,) 477; Jones v. McGruder, 87 Va. 360, 12 S. E. 792. ■^Shevlin v, Shevlin, 96 Minn, 398, 105 N, W, 257, ="See Warnock v. Campbell, 25 N. § 444 CONTRACTS. 656 that it is seldom raised because ordinarily the degree of intoxica- tion necessary to affect one's contractual capacity must be so great as to be perfectly apparent. Some authorities seem to hold that knowledge on the part of the adversary party is absolutely neces- sary,^* others that it is immaterial.^^ Some authorities hold that intoxication furnishes no ground for the avoidance of a contract unless produced or taken an unfair advantage of by the adversary party.^* § 444. Ratification and disaffirmance. — The voidable con- tracts of an intoxicated person may be ratified by him when he becomes sober, and, if so ratified, they become binding upon him and may be enforced.^^ This may be done by any act which clearly recognizes the contract as valid and shows an intention to be bound by it, or it may be done by a failure to disaffirm within a reasonable time. Thus if he exchanges^* or sells^" the property received under the contract after he becomes sober he thereby ratifies it. He may also ratify by fulfilling the conditions of the contract^" or by express words of ratification.^^ It is apparent that the intoxicated party can ratify only after he becomes and while he is sober.^^ Lapse of time may also amount to a rati- fication. If the intoxicated party fails to avoid the agreement J. Eq. 485 ; Baird v. Howard, 51 Ohio Eaton's Admr. v. Perry, 29 Mo. 97. St. 57, 36 N. E. 732, 22 L. R. A. 846, The above case holds the ratification 46 Am. St. 550 ; State Bank v. Mc- binding on him and his personal rep- Coy, 69 Pa. St. 204, 8 Am. Rep. 246; resentatives. Bush v. Breinig, 113 Pa. Thackrah v. Hass, 119 U. S. 49<», St. 310, 6 Atl. 86, 57 Am. Rep. 469; 30 L. ed. 486; Bowen v. Clark, 1 Lyon v. Phillips, 106 Pa. St. 57; Biss. (C. C.) 128. Smith v. Williamson, 8 Utah 219, 30 ^ Page V. Krekey, 137 N. Y. 307, Pac. 753 ; Loftus v. Maloney, 89 Va. 33 N. E. 311, 21 L. R. A. 409, 33 Am. 576, 16 S. E. 749. St. 731. ^ Smith V. Williamson, 8 Utah 219, == Hawkins v. Bone, 4 Post. & Fin. 30 Pac. 753. (N. P.) 311. ^Oakley v. Shelley, 129 Ala. 467, '" Rottenburgh v. Fowl (N. J. Eq.), 29 So. 385. To same effect, Hawley 26 Atl. 338; Burroughs v, Richraan, v. Howell, 60 Iowa 79, 14 N. W. 199. 13 N. J. L. 233, 23 Am. Dec. 717. " Moore v. Reed, 37 N. Car. 580. "Strickland v. Parlin &c. Co., 118 '"Reinicker v. Smith, 2 Har, & Ga. 213, 44 S. E. 997; Mansfield v. Johnson (Md.) 421; Arnold v. Hick- Watson, 2 Iowa 111; Hawley v. man, 6 Munf. (Va.) IS. For a gen- Howell, 60 Iowa 79, 14 N. W. 199; eral statement of the rule govern- Musselman v. Cravens, 47 Ind. 1 ; ing ratification, see Williams v. EngHsh V. Young, 10 B. Mon. (Ky.) Inabnet, 1 Bail. (S. Car.) 343. 141; Taylor v. Patrick, 1 Bibb (Ky.) ^ Reinskopf v. Rogge, 37 Ind. 207; 168; Carpenter v. Rodgers, 61 Mich. Johnson v. Harmon, 94 U. S. 371, 24 384, 28 N. W. 156, 1 Am. St. 595 ; L. ed. 271. 657 DRUNKEN PERSONS. § 445 within a reasonable time after he becomes sober, this may amount to a ratification/' Since the contract is vaUd until disaffirmed and may be ratified by failure to rescind within a reasonable time, it follows that some positive act must be performed that amounts to an avoidance. This act of disaffirmance has been held a condition precedent to maintaining a suit to recover what has been parted with.'* It is obvious that there can be no rati- fication in those jurisdictions in which the contracts of a drunken person are held void.'" Nor is it necessary in all cases that re- course be had to law. A court of equity will grant affirmative relief to the intoxicated person when the elements of fraud or imposition are also present.'® § 445. Restoration of consideration. — A return or ofifer to return the consideration received by the intoxicated person is, as a general rule, necessary before bringing suit on such disaffirm- ance." The foregoing proposition is qualified by the rule that if fraud was practiced or an unfair advantage taken of the intoxi- cated person, the latter may rescind without a tender back of the == See Kelly v. Louisville &c. R. Co., v. More, 133 Cal. 489, 65 Pac. 1044, 1S4 Ala. 573, 45 So. 906, in which it 66 Pac. 76; Benton v. Sikyka, 84 is said he must act "promptly and Nebr. 808, 122 N. W. 61, 24 L. R. unreservedly." Strickland v. Parlin A. (N. S.) 1057; Baird v. Howard, &c. Co., 118 Ga. 213, 44 S. E. 997 51 Ohio St. 57, 36 N. E. 732, 22 (delay of four years) ; J. I. Case L. R. A. 846, 46 Am. St. 550. Threshing Machine Co. v. Meyers, In the case last cited property 78 Nebr. 685, 111 N. W. 602, 9 L. worth sixteen hundred dollars was R. A. (N. S.) 970. In the above case sold for a thousand dollars while it appears the defendant signed a the owner was intoxicated. He re- note for the purchase-price of the tained the thousand dollars and sued machinery. The machinery was not for the difference of six hundred dol- delivered until after he had full lars. This was held not to be a knowledge of what he had done. It ratification but a disaffirmance., was held that permitting delivery °* Carpenter v. Rodgers, 61 Mich, without rescission amounted to a rati- 384, 28 N. W. 156, 1 Am. St. 595. fication. Shaw v. Delaware &c. R. °° Newell v. Fisher, 11 Sm. & M. Co., 126 App. Div. (N. Y.) 210, 110 (Miss.) 431, 49 Am. Dec. 66; Berk- N. Y. S. 362. In the above case a ley v. Cannon, 4 Rich. (S. C.) 136. delay of two years held to amount to ^ Swan v. Talbot, 152 Cal. 142, 94 a ratification. Spoonheim v. Spoon- Pac. 238, 17 L. R. A. (N. S.) 1066. heim, 14 N. Dak. 380, 104 N. W. 845. ^McGuire v. Callahan, 19 Ind. 128; In the above case a delay of several Joest v. Williams, 42 Ind. 565, 13 Am. years was held to bar his right to Rep. 377; Fowler v. Meadow Brook disaffirm. Fowler v. Meadow Brook Water Co., 208 Pa. St. 473, 57 Atl. Water Co., 208 Pa. 473, 57 Atl. 959. 959; Williams v. Inabnet, 1 Bail. (S. See also, Cummings v. Henry, 10 Ind. Car.) 343. To same effect, Kelly v. 109. For illustrations of what does Louisville &c. R. Co., 154 Ala. 573, not amount to a ratification, see More 45 So. 906; Birmingham Ry., Light 42 — Contracts, Vol. I 446 CONTRACTS. 658 consideration received by him/* Under all circumstances, how- ever, on disaffirmance, the consideration, or so much thereof as is still in his possession, may be recovered in assumpsit or other- Vi^ise from the drunken person/' § 446. Habitual drunkards — Effect of adjudication. — Be- fore office found the mere fact that one is an habitual drunkard does not of necessity render his contract either void or voidable. On the contrary, if the conveyance was made or the contract en- tered into at a time when the habitual drunkard was sober and no advantage was taken of his weakened condition, the transac- tion will be upheld." The effect of an inquisition and finding that one is an habitual drunkard is, as a general rule, practically the same as a finding of insanity, if followed by the appointment of a committee or guardian for such drunkard. He becomes incompetent to subsequently enter into a contract which will bind his estate, except for necessities.*^ The guardian or committee & Power Co. V. Hinton, 1S8 Ala. 470, 48 So. 546. See also, Mattair v. Card, 18 Fla. 761. "'Thackrah v. Haas, 119 U. S. 499, 30 L. ed. 486; Dunn v. Amos, 14 Wis. 106. In such case, however, pro- vision for the repayment of a fair amount may be made in the "final de- cree. Thackrah v. Haas, 119 U. S. 499, 30 L. ed. 486. The conditions may be such that no formal rescission or offer to return the consideration received is necessary before bringing an action to set aside the contract. Baird v. Howard, SI Ohio St. 57, 36 N. E. 732, 22 L. R. A. 846, 46 Am. St. 550. " Haneklau v. Felchlin, 57 Mo. App. 602. It would also seem on general principles that the drunken person would not be required to account for what he may have lost or wasted during the continuance of the same period of intoxication in which he made the contract. "Martin v. Harsh, 231 111. 384, 83 ; N. E. 164, 13 L. R. A. (N. S.) 1000; Watson V. Doyle, 130 111. 415, 22 N. E. 613 ; Schramm v. O'Connor, 98 111. 539 ; Keough v. Foreman, 33 La. Ann. 1434; Wright v. Fisher, 65 Mich. 275, 32 N. W. 605, 8 Am. St. 886; Wood's Lessee v. Pindall, Wright (Ohio) 507; Canant v. Jackson, 16 Vt. 335. In the above case the subject is thor- oughly reviewed. An habitual drunk- ard is not ipso facto incompetent to execute a deed. Van Wyck v. Brash- er, 81 N. Y. 260. However, if habitual drunkenness has destroyed his ca- pacity to contract, the agreement will he invalid, notwithstanding he may have been sober at the time. Men- kins v. Lightner, 18 111. 282 ; Searles V. Northwestern Mut. Life Ins. Co., 148 Iowa 65, 126 N. W. 801, 29 L. R. A. (N. S.) 405; Franks v. Jones, 39 Kans. 236, 17 Pac. 663; Wilson v. Bigger, 7 Watts. & S. (Pa.) Ill; McClure v. Mausell, 4 Brewst. (Pa.) 119. See also, Hale v. Brown, 11 Ala. 87. It has been Iield that where an habitual drunkard was cured of the liquor habit under a contract to pay therefor, he could not avoid pay- ment by a return to such habit with the dishonest purpose of evading the contract. Fiske v. Townsend, 7 Yerg. (Tenn.) 146. "CockriU V. Cockrill, 92 Fed. 811; McCormick v. Littler, 85 111. 62, 28 Am. Rep. 610 ; Rannells v. Gerner, 80 Mo. 474; L'Amoreux v. Crosbv. 2 Paige CN. Y.) 422, 22 Am. Dec. 655; Tozer v. Saturlee, 3 Grant Gas. (Pa.) 162; Noel v. Karper, 53 Pa. St. 97. 659 DRUNKEN PERSONS. § 446 thereafter has control of the drunkard's estate," and the latter's conveyances and contracts other than for necessities, while the guardianship continues, are usually void.*' An inquisition by which a person is adjudged an habitual drunkard is prima facie evidence of incompetency at any time covered by the finding. The burden is on the adversary party to show the drunkard was in fact competent at the time the con- . tract was executed.** There is authority to the effect that the contracts of an habitual drunkard made after office found, but before a confirmation or appointment of a guardian, are void.*° On the other hand, it has been held that one who had no knowl- edge of the inquisition might recover the price of goods sold be- fore the confirmation thereof where the drunkard appeared com- petent and transacted other business.*' Likewise, it has been held Thus it has been held in Alabataa that according to the statutes of that state a deed executed by an inebriate, notwithstanding it was made during a sober interval and with the assent of his trustee, was absolutely void. Pinkston v. Semple, 92 Ala. S64, 9 So. 329. See also in this connec- tion, Jones V. Semple, 91 Ala. 182, 8 So. 557, from which it appears that under the Alabama statute the ad- judication is solely for the preserva- tion of that part of the drunkard's property set out in the bill. He has full power over all other property. The case .of Ralph v. Taylor (R. I.), 82 Atl. 279, holds that under the Rhode Island statute an habitual drunkard's contract to render serv- ices is null and void and that he can- not maintain an action on the express contract, but must sue for the quan- tum meruit. •"Devin v. Scott, 34 Ind. 67. " See cases above cited in note 40. See also on the same subject, §375 et seq. See also, Anderson v. Hicks, 134 N. Y. S. 1018. "Yauger v. Skinner, 14 N. J. Eq. 389. In re Covenhoven's Case, 1 N. J. Eq. 19; Van Wyck v. Brasher, 81 N. Y. 260. (Compare Mutual Life Ins. Co. V. Hunt, 79 N. Y. 545) ; Hughes V. Jones, 116 N. Y. dJ, 22 N. E. 446, 5 L. R. A. 637, 15 Am. St. 386; Hirsch v. Trainer, 3 Abb. N. Cas. (N. Y.) 274; Demilt v. Leonard, 19 How. Prac. 140, 11 Abb. Pr. (N. Y.) 253; Griswold v. Miller, 15 Barb. (N. Y.) 520; Lewis v. Jones, 50 Barb. (N. Y.) 645; Jackson v. Gumaer, 2 Cow. (N. Y.) 552; Osterhout v. ShoemaUer, 3 Hill (N. Y.) 513; In re Patterson (Sup. Ct., Gen. T.), 4 How. Pr. (N. Y.) 34; Hicks v. Mar- shall, 8 Hun (N. Y.) 327; Jackson V. Burchin, 14 Johns. (N. Y.) 124; L'Amoreux v. Crosby, 2 Paige (N. Y.) 427, 22 Am. Dec. 655; Matter of Christie, 5 Paige (N. Y.) 242; In re Giles, 11 Paige /'N. Y.) 243; Hart V. Deamer. 6 Wend. (N. Y.) 497; Rogers v. "Walker, 6 Pa. St. 371, 47 Am. Dec. 470; Willis v. Willis, 12 Pa. St. 159; In re Gangwere, 14 Pa. St. 417, 53 Am. Dec. 554; Noel v. Karper, 53 Pa. St. 97; Klohs v. Klohs, 61 Pa. St. 245; Moore v. Hershey, 90 Pa. St. 196; Miskey's Appeal, 107 Pa. St. 611; In re Samp- son, 5 Pa. Dist. 717; Ruffner v. Luther, 6 Pa. Dist. 588; Koons v. Benscoter, 2 Kulp (Pa.) 451; Gresh v. Tamany, 2 Kulp (Pa.) 453; Hutch- inson v. Sandt, 4 Rawle (Pa.) 234, 26 Am. Dec. 127; Tozer v. Saturlee, 3 Grant Cas. (Pa.) 162; Sill v. M'Knight, 7 Watts & S. (Pa.) 244; Draper's Estate, 26 W. N. Cas. (Pa.) 218; Donehoo's Appeal (Pa. 1888), 15 Atl. 924. '' Qark v. Caldwell, 6 Watts (Pa.) 139. *°In re McGarvey, 64 How. Pr. (N. § 447 CONTRACTS. 66o that if the guardian or committee never acted nor has been aban- doned, the drunkard's agreement may be upheld.*^ Where the finding is not made to overreach or cover a period of time prior to the filing of the petition or adjudication, such decree does not raise a presumption that the party adjudged an habitual drunkard was incapacited at a time prior to such finding.** The termina- tion of the guardianship terminates the ward's contractual dis- ability.** § 447. Contracts for necessities. — A drunkard or drunken person is liable for necessities actually furnished him on substan- tially the same principle as infants and insane persons.^" And this is true, notwithstanding the necessities are supplied after the one to whom they are furnished has been adjudged an habit- ual drunkard"^ and a guardian appointed.^^ Food and cloth- ing, '^^ nursing,^* and the services of an attorney who resisted the adjudication^* have been held necessities.^® § 448. Drugs and drug habit. — Drunkenness, according to the generally accepted definition, refers to intoxication produced by alcoholic drinks." By the statutes of some states the term has Y.) 135. In the above case a saloon- Hallett v. Oakes, 1 Cush. (Mass.) keeper was permitted to recover the 296; Kendall v. May, 10 Allen price of liquor sold. (Mass.) 59; Darby v. Cabanne, 1 Mo. "Bixler v. Gilleland, 4 Pa. St. 156, App. 126; McCrillis v. Bartlett, 8 N. distinguishing Clark v. Coldwell, 6 H. 569; Van Horn v. Hann, 39 N. J. Watts (Pa.) 139; In re Estate of L. 207; Parker v. Davis, 53 N. Car. Black, 132 Pa. St. 134, 19 Atl. 31. 460; Richardson v. Strong, 35 N. "Van Wyck v. Brasher, 81 N. Y. Car. 106, 55 Am. Dec. 430; Bush v. 260. In the above case the contract Breinig, 113 Pa, St 310, 6 Atl. 86, was made fifteen days before the filing 57 Am. Rep. 469. of the petition. See also, the case of " Brockway v. Jewell, 52 Ohio St. Sill V. M'Knight, 7 Watts. & S. (Pa.) 187, 39 N. E. 470. 244, in which it is held that a person '"Devin v. Scott, 34 Ind. 67. adjudged an habitual drunkard may "^ Parker v. Davis, 53 N. Car. 460. act as administrator or an executor, "Brockway v. Jewell, 52 Ohio St. the court having the power to remove 187, 39 N. E. 470. that administrator or executor if he ""Hallett v. Oakes, 1 Cush. (Mass.) becomes an habitual drunkard. From 296. this it is presumed that the court will " See also. Darby v. Cabanne, 1 Mo. remove him if he becomes incapaci- App. 126, where an habitual drunkard tated to act. _ was held liable for the services of *" Cockrill V. Cockrill, 92 Fed. 811, an attorney who made application for 79 Fed. 143. the appointment of a guardian. The '"' Baxter v. Earl of Portsmouth, contract with the attorney was made 5 B. & C. 170; Gore v. Gibson, 13 M. on behalf of the drunkard by his 6 W. 623; Devin v. Scott, 34 Ind. 67; brother. "See Youngs v. Youngs, 130 111. 66 1 DRUNKEN PERSONS. § 44S been made to include the effects of opium, cocaine and similar drugs.^' There can be no question that drugs such as cocaine and morphine may have the same effect as ordinary drunkenness in destroying one's capacity to contract. It follows that the same principles govern contracts entered into while under the effects of morphine"'' or an anaesthetic"" as control contracts entered into while under the influence of alcoholic drinks ; thus a release executed by one when he was so under the influence of opiates or an anaesthetic as to be incapable of contracting is voidable."^ It follows that he may thereafter, at a time when not under the influence of the drug, avoid"^ or ratify"^ a release so executed. He may ratify the release by acquiescing in the agreement and re- taining the consideration received."* In the absence of fraud or other inequitable conduct the mere fact that one of the parties to a contract was under the influence of opiates and not in the pos- session of his full mental powers is not, in and of itself, sufficient to avoid such agreement."'^ A contract entered into during mental 230, 22 N. E. 806, 6 L. R. A. S48n, 17 Am. St. 313; Commonwealth v. Whit- ney, 11 Cush. (Mass.) 477; State v. Kelley, 47 Vt. 294. "^ In re Houst, 23 Colo. 87, 33 L. R. A. 832. See Revised Code, N. Dakota 1899, § 802; Revised Statutes, Okla- homa 1903, § 3167. °° Birmingham R., Light & Power Co. V. Hinton, 158 Ala. 470, 48 So. 546; Merchants' Nat. Bank v. Soesbe, 138 Iowa 354, 116 N. W. 123; T. M. Gilmore & Co. v. W. B. Samuels & Co., 135 Ky. 706, 123 S. W. 271. (In the above case the president of the defendant corporation was addicted to the use of morphine, and the corpora- tion sought to avoid the contract on the ground that the president was un- der the influence of morphine at the time the contract was made.) Swank V. Swank, 37 Ore. 439, 61 Pac. 846. «" Gibson v. Western &c. R. Co., 164 Pa. St. 142, 30 Atl. 308, 44 Am. St. 586. "Chicago &c. R. Co. v. Doyle, 18 Kans. 58; Buford v. Louisville & N. R. Co., 82 Ky. 286, 6 Ky. L. 263 ; Ala- bama & T. R. Co. V. Jones, 73 Miss. 110, 19 So. 105, 55 Am. St. 488; Gib- son v. Western &c. R. Co., 164 Pa, St. 142, 30 Atl. 308, 44 Am. St. 586 (ef- fect of chloroform and ether) ; Union Pac. R. Co. V. Harris, 158 U. S. 326, 39 L. ed. 1003 (effect of morphine and whiskey given for medicinal pur- poses). "'Alabama & T. R. Co. v. Jones, 73 Miss. 110, 19 So. 105, 55 Am. St. 488. "^ Birmingham R., Light & Power Co. V. Hinton, 158 Ala. 470, 48 So. 546; Gibson v. Western &c. R. Co., 164 Pa. St. 142, 30 Atl. 308, 44 Am. St. 586. "Gibson v. Western &c. R. Co., 164 Pa. St. 142, 30 Atl. 308, 44 Am. St. 586. See, however, Alabama & T. R. Co. v. Jones, 73 Miss. 110, 19 So. 105, 55 Am. St. 488, which holds that the ratification is not binding when the party ratifying does not know that he has the right in law to avoid it. In the above case it appears that the plaintiff was an old and ignorant man of whom an unconscionable ad- vantage had been taken. "'Merchants' Nat. Bank v. Loeshe, 138 Iowa 354, 116 N. W. 123 (In the above case the mortgagor was sick and suffering intense pain. For this reason he was being kept under the influence of opiates. The mortgagee was not allowed to see him until the § 448 CONTRACTS. 662 incapacity induced by drugs or opiates is merely voidable, and if it be fair and has been executed so far that the parties cannot be restored to their former position and if made with one who is ignorant of the other's condition, as affected by opiates, it is bind- ing."' effect of the opiate had worn off. The mortgagor seemed perfectly rational and signed the mortgage in the right place. The instrument was upheld) ; T. M. Gilmore & Co. v. W. B. Sam- uels & Co., 135 Ky. 706, 123 S. W. 271 ; Cooney v. Lincoln, 21 R. I. 246, 42 Atl. 867, 79 Am. St. 799. ■"Cooney v. Lincoln, 21 R. L 246, 42 Atl. 867, 79 Am. St. 799. As to effect of drugs on testamentary ca- pacity, see note in 39 L. R. A. 263. Davis V. Davis, 43 Iowa 687. See also, Martin v. Bowdern, 158 Mo. 379, 59 S. W. 227. CHAPTER XV. AGENTS. § 450. Introduction. _ § 462. Liability of principal. 451. Capacity to appoint or be an 463. Liability of agent. agent. 464. When personally liable. 452. Authority of agents — How con- 465. Rights and liabilities of parties ferred. where principal is named. 453. Authority of agents — Extent. 466. Rights and liabilities of parties 454. Estoppel. where principal is not dis- 455. Ratification. closed— Rights of principal. 456. Ratification — Who may ratify 467. Rights and liabilities of parties as principal. when principal not disclosed 457. Ratification — What acts may be — Liability of agent. ratified. 468. Rights and liabilities of parties 458. Ratification — ^What amounts to. when principal not disclosed 459. Implied ratification. — Rights of third persons. 460. Termination of agent's author- 469. Rights and remedies of princi- ity — By lapse of time. pal. 461. Revocation by act of the par- 470. Rights and remedies of agent. ties. § 450. Introduction. — Agents may be considered as inter- mediaries through whom one or both parties to an agreement form the contractual relation. It follows that it is necessary or at least proper in treating of parties to devote a brief chapter to contracts made by or through agents ; but agency may also be regarded as a special form or kind of contract of employment, and the general subject will be treated in another volume devoted to particular kinds or classes of contracts. § 451. Capacity to appoint or be an agent. — It is a well- known principle of law that one cannot accomplish by indirection that which he cannot do directly. It follows that one who, for any reason is without capacity to contract, cannot appoint an agent with power to contract for him, since by this means he would be permitted to do through indirection that which he can- not do directly. There is also another reason sufficient in itself to render an attempted appointment of an agent by one who has no capacity to contract of no effect; it is, the appointment of an 663 § 45 1 CONTRACTS. 664 agent is a special form of employment or contract of hiring. However, one without contractual capacity cannot enter into a valid agreement. Therefore he cannot appoint an agent. Because of want of capacity to contract it has been held that an insane person cannot appoint an agent. ^ The attempted appoint- ment of an agent by such a person and contracts entered into by the agent in behalf of his principal's behalf are by many authori- ties considered absolutely void.^ A drunken person who is there- by rendered incapable of comprehending the nature and effect of his act cannot appoint an agent.^ An infant cannot authorize an agent or attorney to act for him. Some authorities declare that the appointment of an agent by a minor is absolutely void.* At common law a married woman was incapable of entering into a contract, consequently she could not act through an agent.'' As applied to feme coverts, this principle has at the present time little application, since under modern statutes her disabilities have been largely removed." Alien enemies, convicts or any other person under a statutory disability to contract are, so far as they are in- capable of making contracts, incapable of being principals.'' As a result of the foregoing principles, it follows as a necessary sequence that any one who has the capacity to contract and who is competent to act in person in a given instance may, in the absence of any statutory prohibition act in that instance through his au- thorized agent. ^ It is obvious that any person who has capacity to act for himself may act as agent for another." However, one may be an agent even though he does not have capacity to act for himself. Thus an infant may act as agent although he cannot ' See ante, ch. 12, Insane Persons. 79, SS Am. Dec. 592 ; Dorrance v. "See ante, ch. 12, Insane Persons. Scott, 3 Whart. (Pa.) 309, 31 Am. "See ante, ch. 14, Drunkards. The Dec. 509; Weisbrod v. Chicago &c. general principles governing contracts R. Co., 18 Wis. 35, 86 Am. Dec. 743. of drunken persons generally govern " See ante, ch. 13, Married Women, appointments of agents by such per- ' As to alien enemies, see ante, sons. § 265, Alien Enemies. As to convicts, ■"See ante, ch. 11, Infants. see ante, § 266, Convicts. " Fairthorne v. Blaquire, 6 M. & S. ° The statutes of a number of states 1Z ; Lewis v. Lee, 3 B. & C. 291 ; provide that "Any person, having ca- Marshall v. Rutton, 8 T. R. 545; pacity to contract, may appoint an State V. Clay, 100 Mo. 571, 13 S. W. agent." 827; Caldwell v. Walters, 18 Pa. St. "Lea v. Bringier, 19 La. Ann. 197. 66s AGENTS. § 452 appoint one.^° The same is true of married women/^ slaves/^ monks, persons attainted or outlawed, or aliens." It would seem that any one except an insane person or a minor so young that he cannot understand the nature and obligation of the trust can act as an agent. ^* Even in these instances it would appear that the principal should be bound in those cases where the agent keeps within the scope of his authority, for the principal alone is to blame if he chooses an incompetent representative. ^° A corpora- tion" or partnership^' may, within the limits of their powers, act as an agent. § 452, Authority of agents — How conferred. — A principal may confer authority on his agent by express words written or spoken with that intent," although such express authorization "Lyon V. Kent, 45 Ala. 656; Talbot V. Bowen, 1 A. K. Marsh. (Ky.) 436, 10 Am. Dec. 747. "Whitworth V. Hart, 22 Ala. 343; Pullan V. State, 78 Ala. 31, 56 Am. Rep. 21 ; In re Succession of Brown (La.), Man. Unrep. Cas. 216; Butler V. Price, 110 Mass. 97; McKee v. Kent, 24 Miss. 131; Singleton v. Mann, 3 Mo. 464; Hopkins v. Molli- nieux, 4 Wend. (N. Y.) 465; Good- win V. Kelly, 42 Barb. (N. Y.) 194; White V. Oeland, 12 Rich. (S. Car.) 308; Gray v. Otis, 11 Vt. 628; Sawyer V. Cutting, 23 Vt. 486; Birdsall v. Dunn, 16 Wis. 235. She may act as a trustee. Springer v. Berry, 47 Maine 330; Schluter v. Bowery Sav. Bank, 117 N. Y. 125, 22 N. E. 572, 5 L. R. A. S41n; 15 Am. St. 494; Fullam V. Rose, 160 Pa. 47, 28 Atl. 497; Clarke v. Saxon, 1 Hill Eq. (S. Car.) 69. Under the common law she may act as executrix, her husband consenting. In re Stewart, 56 Maine 300. The statutes of many states provide that before she can act as executrix or administratrix she must first procure the consent of her hus- band. She may act as agent for her husband. This agency may be of two kinds. (1) An agency created by law as a result of the marriage relation, such as pledging his credit for necessities which he fails to fur- nish. (2) An apency arising from the authority oi :he husband ex- pressly or impliedly conferred. Me- chem on Agency, § 62. "Governor v. Dailey, 14 Ala. 469; Powell V. State, 27 Ala. 51; Stanley V. Nelson, 28 Ala. 514; Chastain v. Zach, 1 Hill (S. Car.) 271. "Coke Lit. 52a; Chitty on Con- tracts, 172; Mechem on Agency, § 57. "Lyon V. Kent, 45 Ala. 656. "See Lyon v. Kent, 45 Ala. 656; Talbot V. Bowen, 1 A. K. Marsh. (Ky.) 436, 10 Am. Dec. 747. A debtor may act as an agent for his creditor in obtaining an attachment for the latter on his property. Bayley V. Bryant, 24 Pick. (Mass.) 198. "McWilliams v. Detroit Central Mills Co., 31 Mich. 274; 3 Thomp. Corp. (2d ed.), § 2156. " Eggleston v. Boardman, Zl Mich. 14; Deakin v. Underwood, 2>1 Minn. 98, Zi N. W. 318, 5 Am. St. 827. " Graves v. Horton, 38 Minn. 66, 35 N. W. 568; Hermann v. Niagara &c. Ins. Co., 100 N. Y. 411, 3 N. E. 341, 53 Am. Rep. 197; Cribben v. Deal, 21 Ore. 211, 27 Pac. 1046, 28 Am. St. 746; Farmers' & Merchants' Nat. Bank v. Chester, 6 Humph. (Tenn.) 458, 44 Am. Dec. 318; Uniontown Grocery Co. v. Dawson, 68 W. Va. 332, 69 S. E. 845, Ann. Cas. 1912, B. 148 (holding that as a general rule a principal is not bound by the con- tracts of one who assumes without authority to represent him as agent). 452 CONTRACTS. 666 may be very informal in character/^ or by implication.^" The general rule applied is that the appointment must be of as high and solemn a character as the act to be done by the agent. Thus an agent cannot act under seal unless he derives his power from an instrument under seal,^^ except when he acts in the presence and to the knowledge of his principal.''^ In those instances in which authority can be conferred only in writing it need not be given by a formal or sealed writing, except when the instrument to be executed is under seal. The agent may be authorized to act by letter/' or telegram.^* In case the contract to be consum- mated by the agent is a simple agreement, any form of authority, in the absence of a specific statutory provision to the contrary, is sufficient. Thus an agent may be authorized by parol to make " Scheibeck v. Van Derbeck, 122 Mich. 29, 80 N. W. 880. ^ " 'Whether one is an agent for another is a question of mixed law and fact, depending on the authority given expressly or impliedly. The real fact, as it existed, cannot be hid- den in this manner ; much less can it be destroyed, and something that did not in reality exist be placed in its stead. The substance is superior to the mere drapery of words with which one- party wishes to bring into exist- ence and clothe an unreal author- ity.' " Minto V. Moore, 1 Ala. App. 556, 55 So. 542, 544, quoting from Supreme Lodge Knights of Pythias V. Josephine R. Withers, 177 U. S. 260, 44 L. ed. 762, 20 Sup. Ct. 611. Brier v. Mankey, 47 Ind. App. 7, 93 N. E. 672; Arnold v. Spurr, 130 Mass. 347; Matteson v. Blackner, 46 Mich. 393, 9 N. W. 445; Reeves v. Kelly, 30 Mich. 132; Neibles v. Min- neapolis &c. R. Co., il Minn. 151, 7,2, N. W. 332; Cline v. Stradlee (Tenn. Ch. App.), 48 S. W. 272; Sheanon V. Pacific Mut. &c. Ins. Co., 83 Wis. 507, 53 N. W. 878 ; Van Etta v. Even- son, 28 Wis. 33, 9 Am. Rep. 486. See also, Benjamin v. Dockham, 134 Mass. 418; Swindell v. Latham, 145 N. Car. 144, 58 S. E. 1010, 122 Am. St. 430. ^ Hartnett v. Baker, 4 Pennew. (Del.) 431, 56 Atl. 672; Overman v. Atkinson, 102 Ga. 750, 29 S. E. 758; Sigmund v. Newspaper Co., 82 111. App. 178; Watson v. Sherman, 84 111. 263; Jackson v. Murray, 5 T. B. Mon. (Ky.) 184, 17 Am. Dec. S3; Emerson v. Province Hat Mfg. Co., 12 Mass. 237, 7 Am. Dec. 66; Wor- rall v. Munn, 5 N. Y. 229, 55 Am. Dec. 330; Smith v. Dickinson, 6 Humph. (Tenn.) 261, 44 Am. Dec. 306. Oral authority may be given one to whom a deed is delivered to fill in the name of the grantee. Otis V. Browning, 59 Mo. App. 326. ^'Jansen v. McCahill, 22 Cal. 563, 83 Am. Dec. 84; Croy v. Busenbark, 72 Ind. 48; Gardner v. Gardner, 5 Cush. (Mass.) 483, 52 Am. Dec. 740. "It is not necessary that the authority of an agent to bind his principal by written agreement to convey shall be in writing proved and recorded." Tyrrell v. O'Connor, 56 N. J. Eq. 448, 41 Atl. 674. " Smith V. Allen, 86 Mo. 178 ; Lyon V. Pollock, 99 U. S. 668, 25 L. ed. 265. ^ Godwin V. Francis, L. R. S C. P. 295. 667 AGENTS. § 452 a valid executory agreement for the sale"" or leasing^" of real estate.^^ An appointment by implication may arise where one know- ingly and without dissent permits another to assume to act as his agent in a certain capacity/* or whenever a person holds out another as his agent with authority to act in a given ca- pacity.''® The law may also create an agency. Thus in those cases where the law authorizes a wife to pledge her husband's "^ Heard v. Pilley, 4 Ch. App. Cases 548 ; Morrow v. Higgins, 29 Ala. 448 ; Rutenberg v. Main, 47 Cal. 213 ; Wat- son V. Sherman, 84 111. 263 ; John- son V. Dodge, 17 111. 433; Taylor v. Merrill, 55 111. 52; Rottman v. Was- son, 5 Kans. 552; Talbot v. Bowen, 1 A. K. Marsh. (Ky.) 436, 10 Am. Dec. 747; Ulen v. Kittredge, 7 Mass. 233; Hawkins v. Chace, 19 Pick. (Mass.) 502; Brown v. Eaton, 21 Minn. 409; Dickerman v. Ashton, 21 Minn. 538; Curtis V. Blair, 26 Miss. 309, 59 Am. Dec. 257; Riley v. Minor, 29 Mo. 439; Cobban v. Hecklen, 27 Mont. 245, 70 Pac. 805 ; Lawrence v. Taylor, 5 Hill (N. Y.) 107; Champlin v. Parish, 11 Paige (N. Y.) 405; McWhorter v. McMahan, 10 Paige (N. Y.) 386; Newton v. Bronson, 13 N. Y. 587, 67 Am. Dec. 89; Worrall v. Munn, 5 N. Y. 229, 55 Am. Dec. 330; Moody V. Smith, 70 N. Y. 598: Smith v. Browne, 132 N. Car. 365, 43 S. E. 915; Brodhead v. Reinbold, 200 Pa. St. 618, SO Atl. 229, 86 Am. St. 735; Dodge V. Hopkins, 14 Wis. 630. =»Lake v. Campbell, 18 111. 106; McComb V. Wright, 4 Johns. Ch. (N. Y.) 667. "Authority to assign a claim against an insolvent need not be in writing. Dingley v. McDonald, 124 Cal. 90, 56 Pac. 790. The same is true of authority to sell mules and apply the proceeds. Hirsch & Co. V. Beverly, 125 Ga. 657, 54 S. E. 678. Bills of exchange etc. may be ex- ecuted under authority given by parol or inferred from circumstances. Har- rison V. Tiernans, 4 Rand. (Va.) 177. As to oral authority authorizing the signing of his name as surety see Commonwealth v. Magoffin, 15 Ky. L. 775, 25 S. W. 599; Banister v. Wallace, 14 Tex. Civ. App. 452, 27 S. W. 250. ^'Bank of Ukiah v. Mohr, 130 Cal. 268, 62 Pac. 511; Samnis v. Poole, 188 111. 396, 58 N. E. 934; Weaver v. Ogletree, 39 Ga. 586 ; Simon v. Brown, 38 Mich. 552; Dickinson v. Salmon, 36 Misc. (N. Y.) 169, 73 N. Y. S. 196; Valiquette v. Clark Bros. Coal Min. Co., 83 Vt. 538, 77 Atl. 869, 138 Am. St. 1104 (holding that where a principal pays three separate drafts drawn without authority by his agent in favor of a particular person he im- pliedly authorizes the agent to draw others and must notify the payee of a revocation of authority) ; Hooe v. Oxley, 1 Wash. (Va.) 19, 1 Am. Dec. 425. "•Plummer v. Knight (Mo. App.), 137 S. W. 1019; White v. Leighton, 15 Nebr. 424, 19 N. W. 478; Sloss Iron and Steel Co. v. Jackson &c. Iron Works, 103 App. Div. (N. Y.) 316, 92 N. Y. S. 1056; Northwest Thresher Co. v. Dahlgren, 50 Wash. 325, 97 Pac. 228, 19 L. R. A. (N. S.) 324n. A general agency may be im- plied from a course of dealing or from a number of acts of a par- ticular kind authorized or assented to. Valiquette v. Clark Brothers &c. Co., 83 Vt. 538, 77 Atl. 869, 138 Am. St. 1104. One may be bound as prin- cipal by the acts of another where he affirmatively or intentionally, or through lack of due care, permits such other to assume to act as his agent. Holt v. Schneider, 57 Nebr. 523, 77 N. W. 1086; Lebanon Sav. Bank v. Henry, 2 Nebr. (unof.) 403, 89 N. W. 169; Faulkner v. Simms, 68 Nebr. 295, 89 N. W. 171, 94 N. W. 113; Harrison Nat. Bank v. Will- iams, 2 Nebr. (unof.) 400, 89 N. W. 245. A principal is bound by the acts of his apparent agent, although in fact without authority, only so far as he has given rise to and caused 453 CONTRACTS. credit even against his will, it creates a compulsory agency, and her request is his request.^" § 453. Authority of agents — Extent. — Considered as to extent, agency may be either universal, general or special, the nature of the agency having an important bearing on its extent. Thus a universal agency can only be created by clear and express language and will not be raised by implication from any general expressions however broad. ^^ Universal agencies are of rare oc- currence, the principles governing the law concerning general agents applying a fortiori to those universal in character. A general agent may be defined as one who is either expressly or impliedly authorized to transact all of the principal's business of a particular kind.^^ A special agent is one employed to conduct a particular transaction or piece of business for his principal or authorized to perform a specified act.''^ In neither of the above instances can an agent bind his principal outside the scope of his authority.^* But authority may be either real or apparent. It is the appearance of authority. Figueira V. Lerner, 52 App. Div. (N. Y.) 216, 65 N. Y. S. 293. For an instance when circumstances were insufficient to imply authority see Hoffmaster v. Black, 78 Ohio St. 1, 84 N. E. 423, 21 L. R. A. (N. S.) 52n, 125 Am. St. 679. "Johnston v. Sumner, 3 Hurl. & Nor. 261; Benjamin v. Dockham, 134 Mass. 418. Some authorities base the husband's liability in such a case upon the principle of quasi contract. "'Gulick V. Grover, 33 N. J. L. 463, 97 Am. Dec. 728. "Great West. &c. Co. v. Woodmas &c. INIin. Co., 12 Colo. 46, 20 Pac. 771, 13 Am. St. 204; Loudon Sav. Fund Soc. V. Hagerstown Sav. Bank, 36 Pa. St. 498, 78 Am. Dec. 390; Bouv. L. Diet. (Rawle's Rev.), p. 114. '"Great West. Min. Co. v. Wood- mas &c. Co., 12 Colo. 46, 20 Pac. 771, 13 Am. St. 204; Union Stockyard &c. Co. V. Mallory, 157 111, 554, 41 N. E. 888, 48 Am. St. 341 ; Harber v. Hut- son, 13 Ky. L. 333. " 'An agent for a particular act or transaction is called a special agent. All others are gen- eral agents.' " Moore v. Skyles, 33 Mont. 135, 82 Pac. 799, 3 L. R. A. (N. S.) 136, 114 Am. St. 801; Black's L. Diet. (2 ed.), p. 50; Bouv. L. Diet. (Rawle's Rev.), p. 114. Several in- stances of one acting as special agent do not show that he is a general agent. Angle v. Mississippi &c. R. Co., 9 Iowa 487. To same effect, Hoffmaster v. Black, 78 Ohio St. 1, 84 N. E. 423, 21 L. R. A. (N. S.) 52n, 125 Am. St. 679. '^Whitehead v. Tuckett, 15 East 400; Smith v. James, 53 Ark. 135, 13 S. W. 701; St. Louis &c. R. Co. v. Bennett, 53 Ark. 208, 13 S. W. 742, 22 Am. St. 187n ; Vescelius v. Martin, 11 Colo. 391, 18 Pac. 338; Kearns v. Nickse, 80 Conn. 23, 66 Atl. 779, 10 L. R. A. (N. S.) 1118n; Ames v. Moir, 130 111. 582, 22 N. E. 535; Deatherage v. Henderson, 43 Kans. 684, 23 Pac. 1052; Kane v. Barstow, 42 Kans. 465, 22 Pac. 588, 16 Am. St. 490; Edwards ^^ Dooley, 120 N. Y. 540, 24 N. E. 827; Swindell v. Latham, 145 N. Car. 144. 58 S. E. 1010, 122 Am. St. 430; Ohio Pottery &c. Co. V. Talbert, 87 S. Car. 194, 69 S. E. 211; Day v. Snyder &c. Co. (Tex. Civ. App.). 130 S. W. 716; Booker-Jones Oil Co. v. National Ref. Co. (Tex. Civ. App.), 131 S. W. 623, 132 S. W. 815. "No agent can be 669 AGENTS. § 453 also equally well settled that all persons dealing with either a gen- eral or special agent do so at their peril, in that they are bound to use at least reasonable diligence to ascertain whether the agent acts within the scope of his powers.''* However, an agent's pow- ers are not to be determined by the authority intended to be con- ferred upon the agent, but what authority a third person dealing with him is justified, from the acts of the principal and circum- stances of the case, in believing were given him. A principal is bound by the apparent, and not merely the actual or express, authority given his agent, where third persons have in good faith relied thereon in ignorance of any limitations or restrictions thereto, whether the agency is a general or special one.'" permitted to assume duties and trusts incompatible with his agency after he has acquired an interest adverse to his principal." Langlois v. Gragnon, 123 La. 453, 49 So. 18, 22 L. R. A. (N. S.) 414. ^Whitehead v. Tuckett, IS East 400; Golding v. Merchant, 43 Ala. 70S; Wheeler v. McGuire, 86 Ala. 398, S So. 190, 2 L. R. A. 808n ; Blum V. Robertson, 24 Gal. 127; Lester v. Snyder, 12 Colo. App. 351, 55 Pac. 613; Mcintosh-Huntington Co. v. Rice, 13 Colo. App. 393, 58 Pac. 358; National Bank of Oshkosh v. Mun- ger, 95 Fed. 87, 36 C. C. A. 659; American Oil Co. v. Gurr, 114 Ga. 624, 40 S. E. 780; Jackson Paper Mfg. Co. V. Commercial Nat. Bank, 199 111. 151, 65 N. E. 136, 59 L. R. A. 657, 93 Am. St. 113; Schilling v. Rosenheim, 30 111. App. 81 ; Schneider V. Lebanon Dairy &.C. Co., 73 111. App. 612; Brier v. Mankey, 47 Ind. App. 7, 93 N. E. 672; Leu v. Mayer, 52 Kans. 419, 34 Pac. 969; Blood v. Herring, 22 Ky. L. 172S, 61 S. W. 273; Chaffe v. Stubbs, 37 La. Ann. 656; Johnson v. Wingate,, 29 Maine 404; Lister v. Allen, 31 Md. 543, 100 Am. Dec. 78; Mt. Morris Bank V. Gorham, 169 Mass. 519, 48 N. E. 341; Busch v. Wilcox, 82 Mich. 337, 47 N. W. 328, 21 Am. St. 563 ; John- son V. Hurley, 115 Mo. 513, 22 S. W. 492; Newland Hotel Co. v. Lowe Furniture Co., 73 Mo. App. 135; Cornish v. Woolverton, 32 Mont. 456, 81 Pac. 4, 108 Am. St. 598; Moore V. Skyles, 33 Mont. 135, 82 Pac. 799, 3 L. R. A. (N. S.) 136, 114 Am. St. 801 ; First Nat. Bank v. Hall, 8 Mont. 341, 20 Pac. 638; Hatch v. Taylor, 10 N. H. 538; Dowden v. Cryder, 55 N. J. L. 329, 26 Atl. 941; Mechanics' Bank V. New York &c. R. Co., 13 N. Y. 599, 11 N. Y. Super. Ct. 570; Edwards v. Dooley, 120 N. Y. 540, 24 N. E. 827; Ferguson v. Davis &c. Co., 118 N. Car. 946, 24 S. E. 710; Swindell v. Latham, 145 N. Car. 144, 58 S. E. 1010, 122 Am. St. 430; Ellis V. Wait, 4 S. Dak. 454, 57 N. W. 229; Schull v. New Birdsall Co. (S. Dak.), 86 N. W. 654; Fabian Mfg. Co. V. Newman (Tenn. Ch. App.), 62 S. W. 218; Taylor Mfg. Co. V. Brown (Tex.), 14 S. W. 1071; Buzard v. Jolly (Tex.), 6 S. W. 422; Schimmelpennich v. Bayard, 1 Pet. (U. S.) 264, 7 L. ed. 138; Cleveland V. Pearl, 63 Vt. 127, 21 Atl. 261, 25 Am. St. 748; Bowles Co. v. Charles Clark, 59 Wash. 336, 109 Pac. 812, 31 L. R. A. (N. S.) 613; Rosendorf V. Poling, 48 W. Va. 621, 37 S. E. 555. If an agent's authority is in writing the one with whom he deals is presumed to have read it. Union- town Grocery Co. v. Dawson, 68 W. Va. 332, 69 S. E. 845, Ann. Gas. 1912 B., 148. '"Antrim Iron Works v. Anderson, 140 Mich. 702, 104 N. W. 319, 112 Am. St. 434; Plummer v. Knight I (Mo. App.), 137 S. W. 1019; Har- rison Nat. Bank v. Austin, 65 Nebr. 632, 91 N. W. 540, 59 L. R. A. 294, 101 Am. St. 639; General Cartage &c. Co. V. Cox, 74 Ohio St. 284, 78 N. E. 453 CONTRACTS. 670 The foregoing might lead to the conclusion that the distinction between general and special agents is unimportant. This, how- ever, is not true. The powers of a general agent may be liberally construed according to the necessities of the occasion and the scope of his business and employment. He is unrestricted by other limitations than those which limit his acts to what is usual, proper and necessary under like circumstances."^ On the other hand, the powers of a special agent are limited by the terms in which they are conferred and he takes nothing by implication.^^ Such an agency is limited in its nature and implies limitations of power."" It may be said generally of an agent's powers that the creation of an agency carries with it the usual and appropriate means of accomplishing its object, and clothes the agent with such 371, 113 Am. St. 959; Howe v. Mar- tin, 23 Okla. 561, 102 Pac. 128, 138 Am. St. 840; Galbraith v. Weber, 58 Wash. 132, 107 Pac. 1050, 28 L. R. A. (N. S.) 341n; Bowles Co. v. Charles Clark, 59 Wash. 336, 109 Pac. 812, 31 L. R. A. (N. S.) 613; North- west Thresher Co. v. Dahlgren, SO Wash. 325, 97 Pac. 228, 19 L. R. A. (N. S.) 324n. See also, Hartford Fire Ins. Co. v. Brown, 60 Fla. 83, 53 So. 838. Thus where a principal clothes his agent with apparent au- thority he will be liable on a contract entered into by the agent with in- nocent third parties, notwithstanding the agent may have acted fraudulent- ly on the ground that where one of two innocent persons must suffer by the fraud or negligence of the third, whichever of the two has accredited him ought to bear the loss. Conklin V. Benson, 159 Cal. 785, 116 Pac. 34, 36 L. R. A. (N. S.) 537. See also, Howe V. Martin, 23 Okla. 561, 102 Pac. ^ 128, 138 Am. St. 840. "The liability of a principal for the act of his agent, which is beyond actual au- thority, can be based upon apparent authority only where such apparent authority has misled the other party." Brennan v. City of Albany, 143 App. Div. (N. Y.) 752, 128 N. Y. S. 334. ■"Great West. Min. Co. v. Wood- mas &c. Min. Co., 12 Colo. 46, 20 Pac. 771, 13 Am. St. 204. ""Great West Min. Co. v. Wood- mas &c. Min. Co., 12 Colo. 46, 20 Pac. 771, 13 Am. St. 204. '"Mechem on Agency, § 285. Thus authority to collect interest does not give rise to an implied agency to col- lect the principal or any part of it. Hoffmaster v. Black, 78 Ohio St. 1, 84 N. E. 423, 21 L. R. A. (N. S.) 52n, 125 Am. St. 679. For additional cases holding that special authority must be strictly pursued see Fenn v. Harrison, 3 T. R. 757, 4 T. R. 177; Wheeler v. McGuire, 86 Ala. 398, 5 So. 190, 2 L. R. A. 808n; Montgomery Furniture Co. v. Hardaway, 104 Ala. 100, 16 So. 29; Davidson v. Dallas, 8 Cal. 227; Sioux City &c. Seed Co. V. Magnes, 5 Colo. App. 172, 38 Pac. 330; Yates v. Yates, 24 Fla. 64, 3 So. 821 ; Phoenix Ins. Co. v. Gray, 107 Ga. 110, 32 S. E. 948; Reitz v. Martin, 12 Ind. 306, 74 Am. Dec. 215; Thomas v. Atkinson, 38 Ind. 248; Johnson v. Wingate, 29 Maine 404; Lister v. Allen, 31 Md. 543, 100 Am. Dec. 78; Brown v. Johnson, 20 Miss. 398, 51 Am. Dec. 118; Towk V. Leavitt, 23 N. H. 360, 55 Am. Dec. 195; Hatch v. Taylor, 10 N. H. 538; Dowden v. Cryder, 55 N. J. L. 329, 26 Atl. 941 ; Munn v. Commission Co., 15 Johns. (N. Y.) 44, 8 Am. Dec. 219; Joseph v. Struller, 25 Misc. (N. Y.) 173, 54 N. Y. S. 162 ; Pacific Bis- cuit Co. V. Dugger, 40 Ore. 362, 67 Pac. 32; Loudon &c. Soc. v. Hagers- town Sav. Bank, 36 Pa. St. 498, 78 Am. Dec. 390; Carmichael v. Buck, 10 Rich. (S. Car.) 332, 70 Am. Dec. 226; Ellis v. Wait, 4 S. Dak. 454, 57 N. W. 229; Morton v. Morris, 27 671 AGENTS. § 454 authority as is proper and necessary to effectuate its purpose.*" A principal may appoint a number of agents to act for him in the same matter, each to act separately, and in such cases they are to act severally.*^ No one can become the agent of another, however, except by the will of the principal, either express or implied from the particular circumstances, and the extent of the agent's authority depends upon the will of the principal, and any usage or custom pertaining to any particular business will not affect the principal if not known to him, unless it has existed for such a length of time and become so widely known as to warrant the presumption that the principal had it in view when he ap- pointed the agent/^ Agency cannot be shown by the mere decla- ration of one who claims to be agent/^ § 454. Estoppel. — The principles of estoppel find applica- tion in cases where contracts are made by an agent in excess of his real authority but within the scope of his apparent authority. As a general rule, one who holds out another as his representative Tex. Civ. App. 262, 66 S. W. 94; McFadden v. Follrath, 114 Minn. 85, Blane v. Proudfit, 3 Call (Va.) 207, 130 N. W. 542. 2 Am. Dec. 546. " Minto v. Moore, 1 Ala. App. 556, "Kearns v. Nickse, 80 Conn. 23, 55 So. 542. 66 Atl. 779, 10 Am. & Eng. Ann. Cas. " Plummer v. Knight (Mo. App.), 421, 10 L. R. A. (N. S.) 1118n; 137 S. W. 1019. See, however, ante, John Gund Brew. Co. v. Tourtellotte, §§ 419, 420, Agency of Wife to 108 Minn. 71, 121 N. W. 417, 29 L. Pledge Husband's Credit for Ne- R. A. (N. S.) 210n; Murphy v. cessities. Knights of Col. Bldg. Co., 155 Mo. "Johnson County Sav. Bank v. App. 649, 135 S. W. 446; Swindell Richardson & Son, 9 Ga. App. 466, V. Latham, 145 N. Car. 144, 58 S. E. 71 S. E. 757; Williams v. Kelsey, 6 1010, 122 Am. St. 430. See also, St. Ga. 365 ; Holland v. Van Beil, 89 Ga. Louis &c. R. Co. V. Jones, 96 Ark. 223, 15 S. E. 302; Abel v. Jarratt, 558, 132 S. W. 636. Thus where one 100 Ga. 732, 28 S. E. 453 ; Harris is appointed to sell a particular article Loan Co. v. Elliott & Hatch Book to a particular person, this confers &c. Co., 110 Ga. 302, 34 S. E. 1003 ; on the special agent authority to agree Winch v. Baldwin, 68 Iowa 764, 28 on the price. R. K. Hopkins & Co. N. W. 62 ; Bacon v. Johnson, 56 Mich. v. Armour & Co., 8 Ga. App. 442, 69 182, 22 N. W. 276. Before the declara- S. E. 580. See also, cases cited ante to tion of an agent can bind the prin- same effect. Authority to deliver an cipal, it must be shown that said article to a carrier carries with it declarations were made in and about the authority to put a valuation there- a matter over which the agent had on and enter into a contract of ship- authority from the principal to act, ment. Adams Express Co. v. Byers and that said agent was acting under (Ind.), 95 N. E. 513. But authority and by virtue of his authority of to collect bills gives no implied au- such agent. Chellis v. Coble, 37 thority to indorse negotiable paper. Kans. 558, 15 Pac. SOS. § 454 CONTRACTS. 672 authorized to act for him in a given capacity^* or has knowingly*' or negligently""^ permitted such other to act as his agent in a given capacity without dissent*' or when his acts and the circumstances of the case are such as to reasonably warrant the presumption that such other is his agent with authority to act in a given mat- ter*** will be held liable as principal. Whether it involves one or ** Union Stockyard &c. Co. v. Mal- lory, 157 111. SS4, 41 N. E. 888, 48 Am. St. 341; Rupp v. Stith, 33 Ind. 244; Thornburgh v. Madren, 33 Iowa 380; Gore v. Royse, 56 Kans. 771, 44 Pac. 1053; Heath v. Stoddard, 91 Maine 499, 40 Atl. 547; Hackett v. Van Frank, 105 Mo. App. 384, 79 S. W. 1013; Lambert v. Metropolitan &c. Assn., 65 N. J. L. 79, 46 Atl. 766; Bank of Genesee v. Patchin Bank, 13 N. Y. 309; Ferguson v. Hamilton, 35 Barb. (N. Y.) 427; General Cartage & Shortage Co. v. Cox, 74 Ohio St. 284, 78 N. E. 371, 113 Am. St. 959; Barker v. Troy &c. R. Co., 27 Vt. 766. The above prin- ciple finds frequent application in those cases where a principal seeks to limit the authority of his agent by secret instructions or limitations on his authority. But such instructions are uniformly held insufficient to de- feat the rights of third persons who have dealt with the agent in reliance on the apparent scope of his author- ity. "No man is at liberty to send an- other into the market, to buy or sell for him, as his agent, with secret in- structions as to manner in which he shall execute his agency, which are not to be communicated ' to those with whom he is to deal; and then, when his agent has deviated from those instructions, to say that he was a special agent — that the in- structions were limitations upon his authority — and that those with whom he dealt, in the matter of his agency, acted at their peril, because they were bound to inquire, where inquiry would have been fruitless, and to ascertain that, of which they were not to have knowledge. It would render deal- ing with a special agent a matter of great hazard. * * * Where private instructions are given to a special agent, respecting the mode and man- ner of executing his agency, intended to be kept secret, and not communi- cated to those with whom he may deal, such instructions are not to be regarded as limitations upon his au- thority; and notwithstanding he dis- regards them, his act, if otherwise within the scope of his agency, will be valid, and bind his employer." Hatch V. Taylor, 10 N. H. 538. And to the same effect, see Smith v. Mc- Guire, 3 Hurl. & N. 554; Browning V. McNear (Cal.), Ill Pac. 541; Beem v. Lockhart, 1 Ind. App. 202, 27 N. E. 239; Towle v. Leavitt, 23 N. H. ^360, 55 Am. Dec. 195; Me- chanics' Bank v. New York &c. R. Co., 13 N. Y. 599, 11 N. Y. Super. Ct. 570. The foregoing rule is so well settled as to render unnecessary the citation of additional authorities. " Graff Bros. v. Lena Lumber Co., 96 Ark. 350, 131 S. W. 697; Holt v. Schneider, 57 Nebr. 523, 77 N. W. 1086; De Witt v. De Witt, 202 Pa. St. 255, 51 Atl. 987; Telephone Co. V. Brown, 104 Tenn. 56, 55 S. W. 155, 50 L. R. A. 277, 78 Am. St. 906. "Blake v. Domestic Mfg. Co., 64 N. J. Eq. 480, 38 Atl. 241 ; Hanover Nat. Bank v. American &c. Co., 148 N. Y. 612, 43 N. E. 72, 51 Am. St. 721 ; Williams v. Southern R. Co., 155 N. Car. 260, 71 S. E. 346; Mar- tin V. Webb, 110 U. S. 7, 28 L. ed. 49, 3 Sup. Ct. 428. " Heath V. Stoddard, 91 Maine 499, 40 Atl. 547; Simon v. Brown, 38 Mich. 552; Hackett v. Van Frank, 105 Mo. App. 384, 79 S. W. 1013; Harrison Nat. Bank v. Austin, 65 Nebr. 632, 91 N. W. 540, 59 L. R. A. 294, 101 Am. St. 639; Cheshire Prov- ident Inst. V. Fuesner, 63 Nebr. 682, 88 N. W. 849; Knapp v. United States &c. Exp. Co., 55 N. H. 348; Rohrbough v. United States Exp. Co., 50 W. Va. 148, 40 S. E. 398, 88 Am. St. 849;. *" Slaughter v. Fay, 80 111. App. 105 ; William v. Pelley, 96 111. App. 346; Bloomer v. Denman, 12 111. 240 ; Mor- 673 AGENTS. § 454 more transactions, he will be conclusively presumed, so far as it is necessary to protect the rights of an innocent third person who, in the exercise of reasonable prudence, has dealt with such other in good faith, to have authorized such other to act for him and will be held as principal and not heard to deny that the other was his agent authorized to do the act performed so long as such act is within the scope of his apparent authority,*' This apparent au- thority is not, however, to be implied without reason or cause. Instead it must be based on facts. Mere convenience, utility or the propriety of its existence will not give rise to an implied au- ris V. Posner, 111 Iowa 335, 82 N. W. 755; Conner v. Hill, 6 La. Ann. 7; Pence v. Arbuckle, 22 Minn. 417; Harrison Nat Bank v. Austin, -65 Nebr. 632, 91 N. W. 540, 59 L. R. A. 294, 101 Am. St. 639; Holt v. Schneider, 57 Nebr. 523, 11 N. W. 1086; Lebanon Sav. Bank v. Henry, 2 Nebr. (unof.) 403, 89 N. W. 169; Faulkner v. Simms, 68 Nebr. 295, 89 N. W. 171, 94 N. W. 113; Harrison Nat. Bank v. Williams, 2 Nebr. (unof.) 400, 89 N. W. 245; Morris V. Joyce, 63 N. J. Eq. 549, 53 Atl. 139; Galbraith v. Weber, 58 Wash. 132, 107 Pac. 1050, 28 L. R. A. (N. S.) 341n. " Smith V. McGuire, 3 Hurl. & Nor. 554; Brocklesby v. Temperance Bldg. Soc. (1893), 3 Ch. 130; Golding v. Merchant, 43 Ala. 705 ; Rhodes Furni- ture Co. V. Weedon, 108 Ala. 252, 19 So. 318; Little Rock &c. R. Co. v. Wiggins, 65 Ark. 385, 46 S. W. 731; Heald v. Hendy, 89 Cal. 632, 27 Pac. SI; Little Pittsburgh &c. Co. v. Lit- tle Chief &c. Co., 11 Colo. 223, 17 Pac. 760, 7 Am. St. 236; Hagerman V. Bates, 24 Colo. 71, 49 Pac. 139; Lattomus v. Farmers' Mut. Fire Ins. Co., 3 Houst (Del.) 404; Warren- Scharf Asphalt Pav. Co. v. Com- mercial Nat. Bank, 79 Fed. 181, 38 C. C. A. 108; Louisville &c. R. Co. V. Tift, 100 Ga. 86, 27 S. E. 765 ; Cin- cinnati &c. R. Co. V. Davis, 126 Ind. 99, 25 N. E. 878, 9 L. R. A. 503 ; Bar- nett V. Glutting, 3 Ind. App. 415, 29 N. E. 154; German- American Bldg. Assn. V. Droge, 14 Ind. App. 691, 43 N, E. 475; Leu v. Mayer, 52 Kans. 419, 34 Pac. 969; Columbia Land &c. Co. V. Tinsley, 22 Ky. L. 1082, 60 S. W. 10; Blood V. Herring, 22 Ky. L. 1725, 61 S. W. 273; Caldwell v. Neill Bros., 21 La. Ann. 342, 99 Am. Dec. 738; McNeil v. Boston Cham- ber of Commerce, 154 Mass. 277, 28 N. E. 245, 13 L. R. A. 559; Tunison V. Detroit &c. Copper Co., 73 Mich. 452, 41 N. W. 502 ; Shipman v. Byles, 65 Mich. 690, 32 N. W. 898; Austrian v. Springer, 94 Mich. 343, 54 N. W. 50, 34 Am. St. 350 ; Verdine v. OIney, n Mich. 310, 43 N. W. 975; Mason v. Taylor, 38 Minn. 32, 35 N. W. 474; Planters' Compress &c. Co. v. Ireys (Miss.), 16 So. 386; Potter v. Spring- field Milling Co., 75 Miss. 532, 23 So. 259; Nicholson v. Golden, 27 Mo. App. 132; Harrison v. Kansas City &c. R. Co., 50 Mo. App. 332; Buckle V. Probasco, 58 Mo. App. 49; Web- ster V. Wray, 17 Nebr. 579, 24 N. W. 207; Lorton v. Russell, 27 Nebr. 372, 43 N. W. 112; Piano Mfg. Co. v. Nordstrom, 63 Nebr. 123, 88 N. W. 164; Hatch v. Taylor, 10 N. H. 538; Towle v. Leavitt, 23 N. H. 360, 55 Am. Dec. 195; Walsh v. Hartford Fire Ins. Co., 73 N. Y. 5 ; Fifth Ave. Bank v. Forty-second St. &c. R. Co., 137 N. Y. 231, 33 N. E. 378, 19 L. R. A. 331, 33 Am.St. 712; Hanover Nat. Bank v. American Dock &c. Co., 148 N. Y. 612, 43 N. E. 72, 51 Am. St. 721 ; Hardwick v. State Ins. Co., 23 Ore. 290, 31 Pac. 656; Hubbard v. Ten Brook, 124 Pa. St. 291, 16 Atl. 817, 2 L. R. A. 823, 10 Am. St. 585 ; Aldrich v. Willmarth, 3 S. Dak. 523, 54 N. W. 811 ; Galveston &c. R. Co. V. House, 4 Tex. Civ. App. 263, 23 S. W. 332 ; Garner v. A. Fisher Brew- ing Co., 6 Utah 332, 23 Pac. 755; Smith V. Droubay, 20 Utah 443, 58 43— Contracts, Vol. I § 454 CONTRACTS. 674 thority.^" Nor will implied authority be given a broader qon- struction than the necessities of the case require. If implied from concurrence on the part of the principal, in acts of a certain kind, its scope is to be limited to the performance of acts of that kind and will not warrant the agent to do a different thing.^^ Thus implied authority to collect interest does not, in the absence of any other element, authorize a collection of the principal. ^^ Nor is a husband's authority to act for his wife to be inferred from the marriage relation alone."^^ Nor does the delivery of a sub- scription list of itself confer authority upon the recipient to col- lect from and discharge the subscribers.^* The doctrine of implied authority has no application in those instances where the third party has actual knowledge of the nature and extent of the agency conferred by the principal on his representative. Any restrictions or limitations placed upon the agent will be binding on third persons who have notice of them, provided the principal does nothing to waive them.°° Nor does the doctrine of estoppel apply where the alleged agent made no representation nor claims to the third party in any way that would lead the latter to believe that he was acting in any respect as Pac. 1112; Griggs v. Selden, 58 Vt. 109 Pac. 812, 31 L. R. A. (N. S.) 561, 5 Atl. 504; Cushman v. Somers, 613. 62 Vt. 132, 20 Atl. 320, 22 Am. St. "'Graves v. Horton, 38 Minn. 66, 92; Winchell v. National Exp. Co., 35 N. W. 568; Baldwin v. Burrows, 64 Vt. 15, 23 Atl. 728; Graton &c. 47 N. Y. 199; McAlpin v. Cassidy, 17 Mfg. Co. V. Redelsheimer, 28 Wash. Tex. 449. 370, 68 Pac. 879; Cannon v. Henry, ""Hoffmaster v. Black, 78 Ohio St. 78 Wis. 167, 47 N. W. 186, 23 Am. 1, 84 N. E. 423, 21 L. R. A. (N. S.) St 399; Hoyer v. Ludington, 100 52, 125 Am. St. 679. Wis. 441, 76 N. W. 348. Trice v. Seydel, 46 Iowa 696; An- ™ See Nofsinger v. Golman, 122 Cal. derson v. Gregg, 44 Miss. 170 ; Craw- 609, 55 Pac. 425 ; Rodgers v. Peck- ford v. Redus, 54 Miss. 700. ham, 120 Cal. 238, 52 Pac. 483 ; Blass " Antram v. Thorndell, 74 Pa. St. V Terry, 156 N. Y. 122, 50 N. E. 442. To same effect, Dutcher v. Beck- 953 ; Bickford v. Menier, 107 N. Y. with, 45 111. 460, 92 Am. Dec. 232. 490, 14 N. E. 438; Fabian Mfg. Co. "* American Lead Pencil Co. v. V. Newman (Tenn. Ch. App.), 62 Wolfe, 30 Fla. 360, 11 So. 488; Long- S. W. 218. See also, Schlesinger v. worth v. Conwell, 2 Black. (Ind.) Forest Products Co. (N. J.), 76 Atl. 469; Russell v. Cox, 18 Ky. L. 1087, 1024, 30 L. R. A. (N. S.) 347. "The 38 S. W. 1087; Bryant v. Moore, 26 principal is liable only for that ap- Maine 84; 45 Am. Dec. 96; Leathers pearance of authority which is caused v. Springfield, 65 Mo. 504 ; Jewett v. by himself, and not for that appear- Chicago &c. R. Co., 45 Mo. App. 58; ance of conformity to the authority White v. Massey, 65 Mo. App. 260; which is caused by the agent." Walsh v. Hartford Fire Ins. Co., 73 Bowles Co. V. Clark, 59 Wash. 336, N. Y. 5. 675 AGENTS. § 455 agent for the one who was sought to be estopped. Where the agent does nothing to induce reHance and no reliance is shown the principal is not estopped.^' § 455. Ratification. — There are at least two ways in which a principal may be rendered liable for the unauthorized acts of his agent. One of these is by estoppel. This subject was dis- cussed in the preceding section and nothing further will be added here. The second method is by ratification. One ratifies the unauthorized contract of another made in his behalf and will be held as principal when, after knowledge thereof has been brought to his attention, he gives it his express sanction and adopts it as his own or so conducts himself that the law will imply a sanc- tion and adoption by the principal of such contract. Ratification is equivalent to antecedent authority and as between principal and agent relates back and has the same effect as if authority had been given in the first instance.^' It does not, however, de- feat the rights of third persons antagonistic to those of the prin- cipal acquired subsequently to the performance of the unauthor- ized act but prior to its ratification."* '"Plummer v. Knight (Mo. App.), 29 Am. Rep. 382; Gulich v. Grover, 137 S. W. 1019. "To bind the princi- 33 N. J. L. 463, 97 Am. Dec. 728; pal for an unauthorized act of the Hawley v. Keeler, 53 N. Y. 114; Gil- agent he must not only hold him out, more v. Wilbur, 12 Pick. (Mass.) 120, but the apparent authority must be 22 Am. Dec. 410; Vincent v. Rather, relied on in good faith, and in the 31 Tex. 77, 98 Am. Dec. 516; Camp- exercise of reasonable prudence, by bell v. Gowans (Utah) 100 Pac. 397; the party invoking the conclusive pre- Drakely v. Gregg, 8 Wall. (U. S.) 242, sumption of authority." Rail v. City 19 L. ed. 409; Burgess v. Harris, 47 Nat Bank, 3 Tex. Civ. App. 557, 22 Vt. 322; Ankeny v. Young Bros., 52 S. W. 865. Wash. 235, 100 Pac. 736; Keenan v. " Everett v. United States, 6 Porter Lauritzen Malt Co., 57 Wash. 367, (Ala.) 166, 30 Am. Dec. 584; Second 106 Pac. 1122. "One may ratify the Nat Bank v. Bank of Alma (Ark.), acts of another purportmg to be made 138 S W. 472; Grogan v. San Fran- on his behalf whether that other is Cisco 18 Cal. 590; McDowell v. Mc- an agent exceeding his authority or Kenz'ie, 65 Ga. 630; Wallace v. Law- no agent at all." Ramsey v. Miller, yer 90 Ind. 499; Welker v. Appleman, 202 N. Y. 72, 95 N. E. 35. Ratifica- 44 ind App 699 90 N. E. 35 ; Gorten tion is unnecessary where the agent V Tro'bridge, 80' Kans. 720, 104 Pac. acts within the scope of his authority. 1067- Goss V Stevens, 32 Minn. 472, Graham v. Edwards (Tex. Civ. 21 N W 549; Planters' Bank v. App.), 99 S. W. 436. Sharp, 4 Sm. & M. (Miss.) 75, 43 "Wood y McCain, 7 Ala. 800, 42 Am. Dec. 470; Davis v. Krum, 12 Mo. Am Dec 612; Dalton Buggy Co. y. J. App. 279; Plummer v. Knight (Mo.), H Wood s Sons & Bros., 7 Ga App. 137 S W 1019- Beagles v. Robertson, 477, 67 S. E. 121; Lewis v. Buttrick, 135 Mo. App. '306, 115 S W 1042; 102 Mass. 412. Rich V. State Nat. Bank. 7 Nebr. 201, §455 CONTRACTS. 676 A ratification must be in toto. When a principal elects to ratify an unauthorized act, he must ratify the whole of it. He cannot avail himself of such acts so far as beneficial to him, and repudiate its burdens, whether such ratification be express or implied.^' The principal must repudiate absolutely or be bound absolutely.**" Thus a principal cannot, after knowl- edge of all the facts, ratify only so far as to retain a renewal note taken by his agent and continue to insist on its collection, with whatever advantages it might give, and yet repudiate as unauthorized all the rest of the agent's acts in the same transaction in which the note was obtained.''^ A degree of caution must be exercised, however, in the application of this rule. Knowledge of all the material facts is essential to a rati- fication of the unauthorized acts of an agent,"^ unless the prin- ^Drennen v. Walker, 21 Ark. 539; Billings V. Morrow, 7 Cal. 171, 68 Am. Dec. 235; Mulford v. Rowland, 45 Colo. 172, 100 Pac. 603; Southern Exp. Co. V. Palmer, 48 Ga. 85 ; Coch- ran V. Chitwood, 59 111. 53; Babcock V. D. Deford, 14 Kans. 408; Western Mfg. Co. V. Cotton & Long, 126 Ky. 749, 104 S. W. 758, 12 L. R. A. (N. S.) 427; Odiorne v. Maxcy, 13 Mass. 178; Taylor v. Connor, 41 Miss. 722, 97 Am. Dec. 419 ; Menkins v. Watson, 27 Mo. 163; Laughlin v. Excelsior Powder Mfg. Co., 153 Mo. App. 508, 134 S. W. 116; Bennett v. Judson, 21 N. Y. 238; Crans v. Hunter, 28 N. Y. 389; Skinner v. Dayton, 19 Johns (N. Y.) 513, 10 Am. Dec. 286; Anderson V. American Suburban Corp., 155 N. Car. 131, 71 S. E. 221, 36 L. R. A. (N. S.) 896; McLeod v. Despain, 49 Ore. 536, 90 Pac. 492, 92 Pac. 1088, 124 Am. St. 1066; Schultheis v. Sel- lers, 223 Pa. 513, 72 Atl. 887, 22 L. R. A. (N. S.) 1210n; Mundorfif v. Wickersham, 63 Pa. St. 87, 3 Am. Rep. 531. °° Mulford V. Torrey Exploration Co.. 45 Colo. 81, 100 Pac. 596; Fort V. Coker, 11 Heisk. (Tenn.) 579. " Dolvin V. American Harrow Co., 125 Ga. 699, 54 S. E. 706, 28 L. R. A. (N. S.) 785. ^ Snow V. Grace, 29 Ark. 131 ; Dean V. Bassett, 57 Cal. 640; Billings v. Morrow, 7 Cal. 171, 68 Am. Dec. 235 ; Cljicago &c. R. Co. V. Chickasha Nat. Bank, 174 Fed. 923, 98 C. C. A. 535 ; Mapp V. Phillips, 32 Ga. 72; Foddrill V. Dooley, 131 Ga. 790, 63 S. E. 350; Reynolds v. Ferree, 86 111. 570; Sill v. Pate, 230 111. 39, 82 N. E. 356; Man- ning V. Gasharie, 27 Ind. 399; Wilke V. Wackershauser, 143 Iowa 107, 120 N. W. 77; Tidrick v. Rice, 13 Iowa 214; Bank of Owensboro v. Western Bank, 13 Bush. (Ky.) 526, 26 Am. Rep. 211 ; Walters v. Munroe, 17 Md. 154, 77 Am. Dec. 328; Steinman v. Baltimore &c. Laundry Co., 109 Md. 62, 71 Atl. 517, 21 L. R. A. (N. S.) 884n ; Foote v. Cotting, 195 Mass. 55, 80 N. E. 600, 15 L. R. A. (N. S.) 693; Day v. Holmes, 103 Mass. 306; John Gund Brew. Co. v. Tourtellotte, 108 Minn. 71, 121 N. W. 417, 29 L. R. A. (N. S.) 210n; Steunkle v. Chicago &c. R. Co., 42 Mo. App. 73 ; Watt v. Davison, 82 Nebr. 712, 118 N. W. 562; Hovey v. Brown, 59 N. H. 114; Mor- ris &c. R. R. Co. V. Green, 15 N. J. Eq. 469; Hankins v. Baker, 46 N. Y. 661 ; Ramsay v. Miller, 135 App. Div. (N. Y.) 503, 120 N. Y. S. 523; Daley V. Iselin, 218 Pa. 515, 67 Atl. 837 ; St. Louis &c. R. Co. V. Blocker (Tex. Civ. App.), 138 S. W. 156; Vincent v. Rather, 31 Tex. 77, 98 Am. Dec. 516; O wings V. Hull, 9 Pet. (U. S.) 607; ^tna Ins. Co. v. Northwestern Iron Co., 21 Wis. 458. "A ratification can- not take place without full knowledge of all material facts." Findlay v. Hil- denbrand, 17 Idaho 403, 105 Pac. 6/7 AGENTS. § 455 cipal intentionally and deliberately ratifies knowing he is without knowledge of all such facts."^ Consequently performance on the part of the principal of his part of a contract entered into in his behalf by his agent, when performance is made in ignorance of certain unauthorized provisions in the agreement, does not amount to a ratification of the unauthorized portion."* Nor will an acceptance of the benefits amount to a ratification when they are received without knowledge of the unauthorized acts of the agent, such as accepting money in payment of the purchase-price of land sold by an agent,®^ or accepting the proceeds from the sale of cattle unlawfully seized by the landlord's agents."!" It is even held in a number of jurisdictions that the principal does not ratify the act of his agent by a mere passive acceptance of the benefit derived therefrom. Thus these cases hold that the prin- cipal is not liable for, nor bound to repay, money obtained from a third person by the agent and by him expended for purposes beneficial to the principal when the agent was without authority to borrow or otherwise obtain the money so expended, it never actually having come into the principal's hands."^ 790, 29 L. R. A. (N. S.) 400. See "'Lester v. Kinne, 37 Conn. 9. also, cases cited ante, this note. " Lewis v. Read, 13 M. & W. 234. "Carlson v. Stone-Ordeau-Wells "Roberts v. Rumley, 58 Iowa 301, Co., 40 Mont. 434, 107 Pac. 419. 12 N. W. 323 ; Eggleston v. Mason, 84 " Lindow v. Cohn, 5 Cal. App. 388, Iowa 630, 51 N. W. 1 ; Arey v. Hall. 90 Pac. 485; Lester v. Kinne, 37 Conn. 81 Maine 17, 16 Atl. 302, 10 Am. St. 9; Davis v. Talbot, 137 Ind. 235, 36 232; Spooner v. Thompson, 48 Vt. N. E. 1098 ; John Gund Brew. Co. v. 259. "No one can make himself a Tourtellotte, 108 Minn. 71, 121 N. W. creditor of another by the unsolicited 417, 29 L. R. A. (N. S.) 210n; Bo- payment of his debt, and it is not han'an v. Boston & M. R. R. Co., 70 N. enough to create a liability that the H 526 49 Atl. 103 ; Taylor v. Hoey, defendant had the use of the money." 4 Tones & Sp. (N. C.) 402; Bier- Kelley v. Lindsey, 7 Gray (Mass.) man v. City Mills Co., 151 N. Y. 482, 287. To same effect, Foote v. Cot- 45 N E 856, il L. R. A. 799, 56 Am. ting, 195 Mass. 55, 80 N. E. 600, IS St. 635; Daley v. Iselin, 218 Pa. SIS, L. R. A. (N. S.) 693n; Agawam Nat. 67 Atl. 837 ; Suderman-Dolson Co. v. Bank v. South Hadley, 128 Mass. 503. Rodgers, 47 Tex. Civ. App. 67, 104 In the above case money was bor- 5 W 193 • Haynes v. Tacoma &c. R. rowed by a county official and applied Co., 7 Wash. 211, 34 Pac. 922. Thus, to the payment of town debts. It plaintiff authorized his agent to sell a was held that the town was not liable mare. The agent sold the mare and to refund the money so obtained, her mule colt. It was held that the Henry v. Wilkes, 37 N. Y. 562. See ratification of the sale of the mare also, Swindell v. Latham, 145 N. Car. did not ratify the sale of the colt, "In 144, 58 S. E. 1010, 122 Am. St. 430. In ratifying the authorized act of his the following cases it is held that the agent he did not thereby ratify his un- principal is not bound to refund authorized act" Crute v. Burch money borrowed m his name, but (Mo ) 135 S W 1004. without his knowledge or connivance. § 456 CONTRACTS. 678 § 456. Ratification — Who may ratify as principal. — The foregoing has to do with the nature of and general principles concerning ratification. More specific questions will now be taken up. The first one that naturally presents itself is, Who may ratify as principal? The question needs but brief mention here. It has already been seen that in those jurisdictions in ^^■hich an infant's appointment of an agent is held void the acts of such agent cannot be ratified even after majority.''^ In no event could the infant afiirm his agent's contract until after ma- jority. Under the common law in those jurisdictions in which it is still in force, the contracts of a married woman were void. This included the appointment of an agent. A fortiori, she could not ratify his acts, except when such appointment was made for her equitable separate estate."" The same is true of insane per- sons under guardianship. Their appointment of an agent is a void act.^* It is beyond the power of the agent to ratify an un- authorized act outside the scope of his powers and it is immate- rial whether such act was performed by himself or his sub- agent.^^ However, where one agent does an unauthorized act it may be ratified by a second agent who has power to perform the by his agent to cover up defalcations might recover the funds from the of the latter : Craft v. South Boston hands of those who held them. R. Co., ISO Mass. 207, 22 N. E. 920, S °= See ante, ch. 11, Infancy. L. R. A. 641 ; Railroad Nat. Bank v. " McFarland v. Heim, 127 Mo. 327, Lowell, 109 Mass. 214 ; Case v. Ham- 29 S. W. 1030, 48 Am. St. 629. mond Packing Co., lOS Mo. App. 168, '° See ante, ch. 12, Insane Persons, 79 S. W. 732. See, however, in this for a discussion of this subject. Weak- connection, First Nat. Bank v. Badger ness of mind alone is not sufficient to Lumber Co., 54 Mo. App. 327. There prevent ratification but the principal are some cases, however, which hold must be capable of exercising deliber- that the principal is liable to refund ate judgment on matters essential to money borrowed by his agent and ex- constitute ratification. Welke v. pended for the principal's benefit on M'ackershauser, 143 Iowa 107, 120 N. the theory that the latter cannot ac-. W. 11 . cept the benefit and repudiate the " Britt v. Gordon, 132 Iowa 431, 108 responsibilities of the contract. The N. W. 319; Trudo v. Anderson, 10 refusal to repay is deemed a ratifica- Mich. 357, 81 Am. Dec. 79S ; Hotchin tion. First Nat. Bank v. Oberne, 121 v. Kent, 8 Mich. 526; DriscoU v. Mod- 111. 25, 7 N. E. 85 ; Perkins v. Booth- em Brotherhood of America, 11 bv, 7 Maine 91; McDermott v. Jack- Nebr. 282, 109 N. W. 158; Horton v. son, 97 Wis. 64, 72 N. W. 375. See Thompson, 71 N. Y. 513. See also, also. Whitwell v. Warner, 20 Vt. 425, Turner v. Turner, 123 Ga. 5, 50 S. E. which holds that if the agent had no 969, 107 Am. St. 76. One of two joint authority to borrow, then the appli- agents cannot ratify the act of his cation of the funds so obtained to the co-agent. Penn v. Evans, 28 La. Ann. defendant's business was a misappli- 576. cation thereof and that the plaintiff 679 AGENTS. § 456 act done by the first." It is well settled that any person, natural or artificial, may ratify the unauthorized act of his agent in all cases where such person has capacity to appoint an agent and at the time of ratification capacity to bind himself by a contract such as that entered into by his agent on his behalf." Thus a corporation may ratify those acts of its agents not ultra vires in charactei-," and such ratification may be implied." The same is true of a partnership.'" " Thus A and B are agents of C. A is a special agent; he enters into a contract outside the scope of his authority. B is a general agent with power to bind his principal by such a contract as that entered into by A on behalf of C. B may ratify A's act. See Mound City Mutual L. Ins. Co. V. Huth, 49 Ala. 529; Whitehead V. Wells, 29 Ark. 99; Palmer v. Che- ney, 35 Iowa 281 ; Dorsey v. Abrams, 85 Pa. St. 299, 27 Am. Rep. 657. See also, Anglo-Californian Bank v. Ma- honey Mining Co., Fed. Cas. No. 392, 5 Sawy. (U. S.) (C. C.) 255, affd. 104 U. S. 192, 26 L. ed. 707; Union Mu- tual Life Ins. Co. v. Masten, 3 Fed. 881; Cairo & St. L. R. Co. v. Maho- ney, 82 111. li, 25 Am. Rep. 299 ; To- ledo Wab. & Wes. R. Co. v. Rodri- gues, 47 111. 188 ; Toledo &c. R. Co. v. Prince, 50 111. 26; Darst v. Gale, 83 111. 136; Wood v. Whelen, 92) 111. 153; Reichwald v. Commercial Hotel Co., 106 111. 439; Sherman v. Fitch, 98 Mass. 59; Burrill v. Nahant Bank, 2 Mete. (Mass.) 163, 35 Am. Dec. 395; Lyndeborough Glass Co. v. Massachu- setts Glass Co., Ill Mass. 315; Chou- teau V. Allen, 70 Mo. 290; Hoyt v. Thompson, 19 N. Y. 207; Olcott v. Tioga R. Co., 27 N. Y. 546, 84 Am. Dec. 298 ; First Nat. Bank v. Kimber- lands, 16 W. Va. 555; Ballston Spa Bank v. Marine Bank, 16 Wis. 120; Walworth Co. Bank v. Farmers' L. & T. Co., 16 Wis. 629. "Zoltman v. San Francisco, 20 Cal. 96, 81 Am. Dec. 96; Williams v. But- ler, 35 111. 544; Indianapolis &c. R. Co. V. Morris, 61 111. 295 ; Sentell v. Ken- nedy, 29 La. Ann. 679; Wilson v. Dame, 58 N. H. 392 ; Pollock v. Cohen, 32 Ohio St. 514. Only one who had power to act in the first instance can make a valid ratification. Cushman v. Cloverland Coal &c. Co., 170 Ind. 402, 84 N. E. 759, 16 L. R. A. (N. S.) 1078, 127 Am. St. 391; Bullard v. De Groff, 59 Nebr. 783, 82 N. W. 4; Sword V. Reformed Congregation &c., 29 Pa. Super. Ct. 626. If, since the doing of the act to be ratified, the principal has become incapable of do- ing the act himself or authorizing it to be done, he cannot ratify it. Cook V. Tullis, 18 Wall. (U. S.) 332, 21 L. ed. 933. Ratification can only be made when the principal possesses at the time the power to do the act ratified. He must be able at the time to make the contract to which, by his ratifica- tion, he gives validity. McCracken v. San Francisco, 16 Cal. 591. "Church v. Sterling, 16 Conn. 388; Bulkley v. Derby Fishing Co., 2 Conn. 252, 7 Am. Dec. 271 ; Baker v. Cotter, 45 Maine 236; Salem Bank v. Glou- cester Bank, 17 Mass. 1, 9 Am. Dec. Ill; City of Detroit v. Jackson, 1 Doug. (Mich.) 106; Planters' Bank V. Sharp, 4 Sm. & M. (Miss.) 75, 43 Am. Dec. 470 ; Despatch Line v. Bell- amy Mfg. Co., 12 N. H. 205, i1 Am. Dec. 203 ; Peterson v. New York, 17 N. Y. 449; Kelsev v. National Bank, 69 Pa. St. 426; Fleckner v. Bank of United States. 8 Wheat. (U. S.) 338, S L. ed. 631 ; Whitewell v. Warner, 20 Vt. 425. "Arlington v. Peirce, 122 Mass. 270; Brown v. Winnisiramet Co., 11 Allen- (Mass.) 326; Lyndeborough Glass Co. V. Massachusetts Glass Co., Ill Mass. 315; Sherman v. Fitch, 98 Mass. 59; Scott v. Methodist Church, 50 Mich. 528, 15 N. W. 891; Tay- mouth V. Koehler, 35 Mich. 22; Hoyt V. Thompson, 19 N. Y. 207; Scott v. Middletown &c. R. Co., 86 N. Y. 200 ; Gold Mining Co. v. National Bank, 96 U. S. 640, 24 L. ed, 648 ; Law v. Cross, 1 Black (U. S.) 533, 17 L. ed. 185. For a detailed discussion of ratifica- tion by corporations see 2 Thomp. Corp, (2d ed.) § 2000 et seq. "Forbes v. Hagman, 75 Va. 168. See also, Chouteau v. Goddin, 39 Mo. 457 CONTRACTS. 680 § 457. Ratification — What acts may be ratified. — The next question that presents itself is, What unauthorized acts may be ratified? If the act of an agent is for any reason absolutely void, if the principal or no one else could have lawfully done the act, no subsequent affirmation can give it force and effect.''^ This is especially true where the contract is contrary to law or against public policy. The performance of an illegal act cannot be dele- gated to another and then ratified.'* There is a conflict of au- thority as to Avhether a forged instrument may be ratified. By some authorities it is held that since forgery is a crime and op- posed to public policy it cannot, in the absence of estoppel in pais, be ratified so as to bind, as principal, the party whose name was forged.'" Other authorities hold that a forged signature may be ratified the same as any other unauthorized act.'" Moreover, the assumed agent must have entered into the contract as agent of or for and on behalf of the person who ratifies it.^^ When one con- 229, 90 Am, Dec. 462 ; Baldwin v. Leo- nard, 39 Vt. 260, 94 Am. Dec. 324. "Bird V. Brown, 4 Ex. 786; Cliap- man v. Lee, 47 Ala. 143 ; Harrison v. McHenry, 9 Ga. 164. 52 Am. Dec. 435 ; State V. State Bank, 5 Ind. 353 ; Decuir V. Lejeune, IS La. Ann. 569; Day v. AIcAllister, 15 Gray (Mass.) 433; Armitage v. Widoe, 36 Rlich. 124; Workman v. Wright, 33 Ohio St. 405, 31 Am. Rep. 546. ™ San Diego Water Co. v. San Diego, 59 Cal. 517; Fudickar v. East Riverside Irr. Dist., 109 Cal. 29, 41 Pac. 1024; Harrison v. McHenry, 9 Ga. 164, 52 Am. Dec. 435 ; Hinsey v. Supreme Lodge K. of P., 138 111. App. 248 ; Highway Comm'rs v. Van Dusan, 48 Mich, 429; Turner v. PhcenTx Ins. Co., 55 Mich. 236, 21 N. W. 326; Board &c, v. Arrighi, 54 Miss. 668; Smith V. Newburgh, 77 N. Y. 130; State V. Matthis, 1 Hill (S. Car,) 37. See also, Burbank v. Dennis, 101 Cal. 90 35 Pac 444 '"Brook V. Hook, L, R. 6 Exch. 89; Williams v. Bayley, L. R, 1 H. L. 200 ; Henry v. Heeb, 114 Ind. 575, 16 N. E. 606, 5 Am. St, 613 ; Woodruff v. Mun- roe, 33 Md. 146; Corser v. Paul, 41 N. H, 24, 77 Am, Dec. 753 ; Workman V. Wright, 33 Ohio St. 405, 31 Am. Rep, 546; Henry Christian &c. Assn. V. Walton, 181 Pa. St. 201, 37 Atl. 261, 59 Am. St. 636; McHugh v. County of Schuylkill, 67 Pa. St. 391, 5 Am. Rep. 445 ; Shisler v. Vandike, 92 Pa. St. 447, 37 Am. Rep. 702. =° Hefner v. Vandolah, 62 111, 483, 14 Am, Rep. 106 ; Livings v. Wiler, 32 111. 387; Forsyth v. Bonta, 5 Bush. (Ky.) 547; Harper v. Devene, 10 La. Ann. 724; Greenfield Bank v. Crafts, 4 Allen (Alass.) 447; Bartlett v. Tucker, 104 Mass. 336, 6 Am. Rep. 240; Wellington v. Jackson, 121 Mass. 157; Cravens v. GiUilan, 63 Mo. 28; First Nat. Bank v. Gay, 63 Mo. 33, 21 Am. Rep. 430; Commercial Bank v. Warren, 15 N. Y. 577; Howard v. Duncan, 3 Lans. (N. Y.) 174; Thorn V, Bell, Lalor's Supp. (N. Y,) 430. The one whose name is forged may also be held liable on the ground of estoppel. M'Kenzie v. British Linen Co,, 6 App, Cas. 82; Union Bank v. Middlebrook, 33 Conn. 95; Rudd v. Matthews, 79 Ky. 479, 3 Ky. L. 286, 42 Am, Rep. 231 ; Forsyth v. Day, 46 Maine 176 ; Casco Bank v. Keene, 53 Maine 103 ; Corser v, Paul, 41 N. H. 24, 77 Am. Dec. 753 ; Cohen v. Teller, 93 Pa. 123; Grout v. DeWolf, 1 R. L 393 "Grund V. Van Vleck, 69 III. 478; Richardson v. Payne, 114 Mass. 429; Herd & Son v. Bank of Buffalo, 66 Mo. App. 643; Alldred v. Bray, 41 68 1 AGENTS. § 458 tracts in his own name and for himself another cannot adopt the agreement and ratify it as principal.'^ A fortiori the principal must have been in existence at the time the contract ratified was entered into.** One apparent exception to this rule is in the case of a corporation subsequently coming into existence when the con- tracts were made in its behalf and when it is organized with knowledge of the facts, and appropriates and retains the benefits of contracts so made in its behalf.** § 458. Ratification — What amounts to. — It only remains to determine what amounts to a ratification. As was intimated at the beginning of the section a principal's ratification may be express or implied. Generally speaking, a ratification is equiva- lent to a prior authority to perform the act ; consequently, if the prior authority might have been either written or unwritten, ex- press or implied, a ratification may be accomplished in any one of these ways.*° It follows that when the adoption of any par- Mo. 484, 91 Am. Dec. 283 ; Condit v. Baldwin, 21 N. Y. 219, 78 Am. Dec. 137; Vanderbilt v. Richmond Turn- pike Co., 2 N. Y. 479, 51 Am. Dec. 315; Commercial &c. Bank v. Jones, 18 Tex. 811. There can be no ratifica- tion without an agency. Fish & Hunter Co. v. New England &c. Co., (S. Dak.), 130 S. W. 841; Minder & Jorgenson Land Co. v. Brustuen, 24 S. Dak. 537, 124 N. W. 723, 26 S. Dak. 38, 127 N. W. 546. ''Durant v. Roberts (1900), 1 Q. B. 629; Keighley v. Durant (1901), A. C. 240; Collins v. Waggoner, Breese (III.) 186; Beveridge v. Raw- son, 51 111. 504; Roby v. Cossitt, 78 111. 638; Harrison v. Mitchell, 13 La. Ann. 260 ; AUred v. Bray, 41 Mo. 484, 97 Am. Dec. 283 ; Schlesinger v. For- est Products Co. (N. J.), 76 Atl. 1024, 30 L. R. A. (N. S.) 347; Brainerd v. Dunning, 30 N. Y. 211; Collins v. Suau, 7 Robt. (N. Y.) 623; Hamlin v. Sears, 82 N. Y. 327; Rawlings v. Neal, 126 N. Car. 271, 35 S. E. 597; Pittsburgh &c. R. R. Co. v. Gazzam, 32 Pa. St. 340; Virginia &c. Coal Co. V. Lambert, 107 Va. 368, 58 S. E. 561, 122 Am. St. 860. In the above case the defendant held himself out as plaintiff's agent at the time he pur- chased certain coal fields. He was not their agent and in fact purchased for himself. Held, the plaintiff could not ratify his act and compel the de- fendant to convey to it the interest he acquired. See also, Bachhaus v. Buells, 43 Ore. 558, 73 Pac. 342, 72 Pac. 976. Ratification is "an agree- ment to adopt an act performed by another for us." Bouvier Law Diet., vol. 2, p. 411. "^ Watson V. Swann, 11 C. B. (N. S.) 756; Stonisby v. Frazier's Metallic Life Boat Co., 3 Daly (N. Y.) 98. "New York &c. R. R. Co. v. Ketchum, 27 Conn. 170; Western Screw Co. v. Cousley, 72 111. 531 ; Rockford &c. R. R. Co. v. Sage, 65 111. 328, 16 Am. Rep. 587; Paxton Cattle Co. V. First Nat. Bank, 21 Nebr. 621, ZZ N. W. 271, 59 Am. Rep. 852; Bell's Gap R. R. Co. v. Christy, 79 Pa. St. 54, 21 Am. Rep. 39. This is, in fact, more properly a new im- plied contract rather than the ratifica- tion of an old one. Mechem on Agency, § 125. See post, § 555, Pri- vate Corporations. "^ Goss V. Stevens, 32 Minn. 472, 21 N. W. 549; Taylor v. Conner, 41 Miss. 722, 97 Am. Dec. 419. § 458 CONTRACTS. 682 ticular form or mode is necessary to confer the authority in the first instance there can be no valid ratification except in the same manner.*" Thus, if authority to do the act could only be con- ferred by an instrument under seal, a sealed ratification must be shown.*^ The common-law rule has been greatly relaxed, how- ever, in its application to partnerships. It is generally true that one partner may, in the furtherance of the partnership business and for its benefit, execute a deed under seal which will be bind- ing on the other if he has foreknowledge or subsequently ratifies it, and this may be proved by acts and circumstances or by his verbal declarations and admissions.** In Massachusetts the exe- cution of an unauthorized instrument under seal may be ratified by parol.** If written authority is necessary the ratification must "^ Despatch Line of Packets v. Bell- any Mfg. Co., 12 N. H. 205, Z1 Am. Dec. 203. °' McCracken v. San Francisco, 16 Cal. S91 ; Taylor v. Robinson, 14 Cal. 396; Ingram v. Little, 14 Ga. 173, 58 Am. Dec. 549; Drumright v. Philpot, 16 Ga. 424, '60 Am. Dec. 738; Pollard V. Gibbs, 55 Ga. 45 ; Dalton Buggy Co. V. Wood, 7 Ga. App. 477, Q S. E. 121 ; Ingraham v. Edwards, 64 111. 526; Bragg V. Fessenden, 11 111. 544; Stet- son V. Patten, 2 Greenl. (Maine) 358, 11 Am. Dec. Ill; Spofford v. Hobbs, 29 Maine 148, 48 Am. Dec. 521 ; Heath V. Nutter, 50 Maine 378; Paine v. Tucker, 21 Maine 138, 38 Am. Dec. 255 ; Despatch Line of Packets v. Bellamy Mfg. Co., 12 N. H. 205, 2,1 Am. Dec. 203 ; Hanford v. McNair, 9 Wend. (N. Y.) 54; Blood v. Good- rich, 9 Wend. (N. Y.) 68, 24 Am. Dec. 121 ; Grove v. Hodges, 55 Pa. St. 504; McDowell v. Simpson, 3 Watts (Pa.) 129, 27 Am. Dec. 338; Bellas V. Hays, 5 Serg. & R. (Pa.) 427, 9 Am. Dec. 385 ; Smith v. Dickin- son, 6 Humph. (Tenn.) 261, 44 Am. Dec. 306. However, if a seal is at- tached to a contract not required to be so executed the seal will be dis- regarded as surplusage, and a sealed ratification need not be shown. Led- better v. Walker, 31 Ala. 175 ; Smyth V. Lynch, 7 Colo. App. 383, 43 Pac. 670, 25 Colo. 103, 54 Pac. 634; Bates V. Best, 13 B. Mon. (Ky.) 215; Ham- mond V. Hannin, 21 Mich. 374, 4 Am. Rep. 490; Adams v. Power, 52 Miss. 828; Shuetze v. Bailey, 40 Mo. 69; Klostermann v. Loos, 58 Mo. 290; State V. Spartanburg &c. R. Co., 8 S. Car. 129; Jenkins v. Mayer, Fed. Cas. No. 7272, 2 Biss. (U. S.) 303. Contra, Rowe v. M'are, 30 Ga. 278; Pollard v. Gibbs, 55 Ga. 45 ; Dalton Buggy Co. V. J. H. Wood, Son & Bro., 7 Ga. App. 477, 67 S. E. 121. 'A lease of real estate for less than two years is not required to be by deed, and such lease, though under seal, when made by an agent, may be rati- fied by parol." Goldring v. Reid, 61 Fla. 250, 54 So. 718. "* Peine v. Weber, 47 111. 41 ; Ken- dall v. Garland, 5 Gush. (Mass.) 74; Russell V. Annable, 109 Mass. 72, 12 Am. Rep. 665 ; Holbrook v. Chamber- lin, 116 Mass. 155, 17 Am, Rep. 146; Mclntyre v. Park, 11 Gray (Mass.) 102, 71 Am. Dec. 690; Cady v. Shep- herd, 11 Pick. (Mass.) 400, 22 Am. Dec. 379; Swan v. Stedman, 4 Mete, (45 Mass.) 48; Dillon v. Brown, 11 Gray (Mass.) 179, 71 Am. Dec. 700; Skinner v. Dayton, 19 Johns. (N. Y.) 513, 10 Am. Dec. 286. '" Holbrook v. Chamberlin, 116 Mass. 155, 17 Am. Rep. 146 ; Mclntyre V. Park, 11 Gray (Mass.) 102, 71 Am. Dec. 690. It must be borne in mind that a seal is not as important aa formerly. In many jurisdictions the distinctions between sealed and un- sealed instruments have been abol- ished. Where this is true the techni-i cal rule which requires a ratification under seal would no longer obtain. 683 AGENTS. § 459 be made in writing.'* In those instances in which an express ratification is given no formal words are essential. If it can be gathered from the words used that an express ratification was intended nothing further is required.** § 459. Implied ratification. — Except when declared neces- sary by some positive rule of law an express ratification is un- necessary; a subsequent assent to an agent's unauthorized act may be inferred from the circumstances and acts of the prin- cipal.*^ It is manifest that the various forms of ratification by implication may be as varied as are the facts in the several cases. This makes it impossible to state all of them. The various meth- ods of ratification by implication may, however, be grouped and general rules deduced therefrom. Thus it is a rule of general ap- plication that, whenever a principal accepts the benefits of his agent's unauthorized act, with knowledge of all the material facts, he ratifies the same.*^ Under this rule a principal ratifies an unauthorized loan procured by his agent, when, with knowl- edge of the facts, the money so obtained is placed in his hands and is retained by him.®* The same is true of an unauthorized ""McCalla v. American &c. Mortg. 279; Burch v. M. Schulz Co., 8 Ga. Co., 90 Ga. 113, IS S. E. 687; English App. 555, 69 S. E. 1087; Cobb v. V. Dyous, 8 Ky. L. 331; Palmer v. Sparr, 153 111. App. 92; Darst v. Gale, Williams, 24 Mich. 328; Judd v. Ar- 83 111. 136; Eadie v. Ashbaugh, 44 nold, 31 Minn. 430, 18 N. W. 151; Iowa 519; Alton Mfg. Co. v. Garrett Hawkins v. McGroarty, 110 Mo. 546, Biblical Inst., 243 111. 298, 90 N. E. 19 S. W. 830 ; Long v. Poth, 16 Misc. 704 ; Zeleuka v. Port Huron Mach. (N. Y.) 85, Ti N. Y. St. 251, 2>1 N. Co., 144 Iowa 592, 123 N. W. 332; Y. S. 670; Grove v. Hodges, 55 Pa. Worsley v. Ayres, 144 Iowa 676, 123 St. 504. N. W. 353; Gibson v. Norway Sav. " See Garrett v. Josey, 44 Tex. Civ. Bank, 69 Maine 579 ; Sartwell v. App. 1, 97 S. W. 139. Frost, 122 Mass. 184; Bacon v. John- °= Byrne v. Doughty, 13 Ga. 46; son, 56 Mich. 182, 22 N. W. 276; Joseph Wolf Co. V. Bank of Com- United States &c. Furniture Co. v. merce, 107 111. App. 58; Robinson v. School Dist., 56 Nebr. 645, 11 N. W. Nipp, 20 Ind. App. 156, 50 N. E. 408 ; 62 ; Gulick v. Grover, 33 N. J. L. 463, Szymanski v. Plassan, 20 La. Ann. 97 Am. Dec. 728; Mundorff v. Wick- 90 96 Am Dec. 382 ; Flower v. Jones, ersham, 63 Pa. St. 87, 3 Am. Rep. 531 ; 7 Mart. (N. S.) (La.) 140; City of De- Gold Mining Co. v. Nat. Bank, 96 U. troit V Jackson, 1 Doug. (Mich.) 106; S. 640, 24 L. ed. 649; Dewing v. Hut- Codwisev. Hacker, 1 Caines (N. Y.) ton, 48 W. Va. 576, 37 S. E. 670; 526- Evans v. Buckner, 1 Heisk. Brown v. Lacrosse City Gas &c. Co., (Tenn.) 291 ; Curry v. Hale, 15 W. 21 Wis. 51. Va 867. "Kirklin v. Atlas Savings &c »='pike V Douglass, 28 Ark. 59; Pat- Assn., 107 Ga. 313, li S. E. 83; Ros- terson v. Crowell, 15 Cal. App. 105, enthal v. Hasberg, 84 N. Y. S. 290; 113 Pac 700- Jefferson Hotel Co. v. Mundorff v: Wickersham, 63 Pa. 87, Brumbaugh, 168 Fed. 867. 94 C. C. A. 3 Am. Rep. 531. A receipt of the pro- § 459 CONTRACTS. 684 purchase or exchange of property. If the principal, with knowl- edge of the facts, accepts, retains or sells the goods so obtained he will be held to have ratified the transaction."^ The same prin- ciples apply to leases,"" representations or contracts of warranty," 74 Mich. 374, 41 N. W. 1084 ; Wright V. Vineyard &c. Church, 72 Minn. 78, 74 N. W. 1015 ; Carson v. Cummings, 69 Mo. 325; Watson v. Bigelow, 47 Mo. 413; Hobkirk v. Green, 26 Misc. (N. Y.) 18, 55 N. Y. S. 60S; Moss v. Rossie Lead Min. Co.. 5 Hill (N. Y.) 1S7; Smith v. Tracy, 36 N. Y. 79; Wheeler &c. Mfg. Co. v Elberson, 84 Hun (N. Y.) 501, 32 N. Y. S. 303; Johnson v. East Carolina Land &c. Co., 116 N. Car. 926, 21 S. E. 28; Williams v. Crosby Lumber Co., 118 N. Car. 928, 24 S. E. 800; Duzan v. Meserve, 24 Ore. 523, 34 Pac. 548; Hall V. White, 123 Pa. 95, 16 Atl. 521 ; Welch V. Clifton Mfg. Co., 55 S. Car. 568, 33 S. E. 739 ; Horst v. Lightfoot (Tex.), 132 S. W. 761; Bell v. Cun- ningham, 3 Pet. (U. S.) 69, 7 L. ed. 606; Aultman Co. v. McDonough, 110 Wis. 263, 85 N. W. 980; Fintel v. Cook, 88 Wis. 485, 60 N. W. 788. Seg also, Hansen v. Rolison, 156 Mich. 83, 120 N. W. 574 (Principal retaining order for goods and notes for price) ; Goldschmidt v. Wagner (Tex. Civ. App.), 99 S. W. 737 (accepting sale price). See, however, in this connec- tion, Schutz V. Jordan, 32 Fed. 55, affd., 141 U. S. 213, 35 L. ed. 705, 11 Sup. Ct. 906. But if the principal is forced to take the goods and pay the price this does not amount to a rati- fication. Chaffee v. Barataria Can- ning Co., 113 La. 215, 36 So. 943. A principal cannot ratify his agent's agreement to sell, after he himself has disposed of the subject-matter of such agreement. McDonald v. Mc- Coy, 121 Cal. 55, 53 Pac. 421. °°Burkhard v. Mitchell, 16 Colo. 376, 26 Pac. 657; Oregon R. Co. v. Oregon &c. Nav. Co., 28 Fed. 505; Bicknell v. Austin Min. Co., 62 Fed. 432; Chamberlairt v. Collinson, 45 lovifa 429. Compare Ehrmanntraut v. Robinson. 52 Minn. 333, 54 N. W. 188; Torrence v. Shedd, 112 TU. 466. "' Woodford v. McClenahan, 4 Gilm. (111.) 85; Du Souchet v. Dutcher, 113 Ind. 249, IS N. E. 459; Judd v. Walker, 114 Mo. App. 128, 89 S. W. SSS; Washburn v. Rainier, 130 App. ceeds and payment of interest [Fitch v. Lewiston Steam-Mill Co., 80 Maine 34, 12 Atl. 732; Episcopal Charitable Soc. V. Episcopal Church, 1 Pick. (Mass.) 372; Whitney v. Union Trust Co., 65 N. Y. 576], renewal by the principal of a note given by the agent (Ballston Spa Bank v. Marine Bank, 16 Wis. 120), ratifying mortgage given to secure the loan (McAdow v. Black, 4 Mont. 475, 1 Pac. 751), and part payment of the loan (Mohrfeld v. Second German &c. Bldg. Assn., 194 Pa. St. 488, 45 Atl. 335 ; Prentiss Tool &c. Co. V. Godchaux, 66 Fed. 234. 13 C. C. A. 420). have been held ratifica- tion by implication. See ante, § 455, however, where the agent both bor- rows and expends the money in the principal's business. "Southern R. Co. v. Raney, 117 Ala. 270, 23 So. 29; Pike v. Douglass, 28 Ark. 59 ; Blood v. La Serena Land &c. Co., 113 Cal. 221. 41 Pac. 1017, 45 Pac. 252; Moffit-West Drug Co. v. Lyneman, 10 Colo. App. 249, 50 Pac. 736; Duncan v. Kearney, 72 Conn. 585, 45 Atl. 358; Pope v. Meadow Spring Distilling Co., 20 Fed. 35; Haney School Furniture Co. v. High- tower Baptist Inst., 113 Ga. 289, 38 S. E. 761 ; Ketchum v. Verdell, 42 Ga. 534; McDowell v. McKenzie, 65 Ga. 630; Carlin v. Brown, 80 111. App. 541 ; Campbell v. Millar, 84 111. App. 208; Evans v. Chicago &c. R. Co., 26 111. 189; Hunt v. Listenberger, 14 Ind. App. 320, 42 N. E. 240; Fouch V. Wilson, 5^ Ind. 93 ; Palmer v. Che- ney, 35 Iowa 281 ; McKnistry v. Citi- zens' &c. Bank, 57 Kans. 279, 46 Pac. 302 ; Lathrop v. Commercial Bank, 8 Dana (Ky.) 114, 33 Am. Dec. 481; Logan County Nat. Bank v. Town- send, 8 Ky. L. 694, 3 S. W. 122; Georgetown Water Co. v. Central &c. Co., 16 Ky. L. 125 ; Slocomb v. Cage, 22 La. Ann. 165; Newhall v. Dunlap, 14 Maine 180, 31 Am. Dec. 45 ; Hast- ings v. Bangor House, 18 Maine 436; Swindell v. Gilbert, 100 Md. 399, 60 Atl. 102; Bearce v. Bowker, 115 Mass. 129; Moody v, Blake, 117 Mass. 23, 19 Am. Rep. 394; Cooper v. Mulder, 685 AGENTS. 8 8 459 accepting services under the contract, and"^ settlements and com- promise agreements."" A second method, and one of the most unequivocal means by vi^hich to show a ratification on his part, is for the principal to bring a suit based on his agent's unauthorized act.^ Silent acquiescence with knowledge of the facts may amount to a ratification^ if continued for an unreasonable length of time, and third persons or the assumed agent have acted in re- Div. (N. Y.) 42, 114 N. Y. S. 424; Lane v. Dudley, 6 N. Car. 119, S Am. Dec. 523; Schultheis v. Sellers, 223 Pa. 513, 72 Atl. 887, 22 L. R. A. (N. S.) 1210n; Rutherford v. Montgom- ery, 14 Tex. Civ. App. 319, il S. W. 625. ■" Stubbings v. World's Columbian Exposition Co., 110 111. App. 210; Ehrsam v. Mahan, 52 Kans. 245, 34 Pac. 800; Coggins v. Higbie, 83 Minn. 83, 85 N. W. 930 ; People's Nat. Bank V. Geisthardt,' 55 Nebr. 232, 75 N. W. 582 ; Lyle v. Addicks, 62 N. J. Eq. 123, 49 Atl. 1121; Budd v. Howard Thomas Co., 40 Misc. (N. Y.) 52, 81 N. Y. S. 152. Otherwise, where he accepts the services without knowl- edge of the facts, see Swayne v. Union Mut. Life Ins. Co. (Tex. Civ. App.), 49 S. W. 518. See also, Findlay V. Hildenbrand, 17 Idaho 403, 105 Pac. 790, 29 L. R. A. (N. S.) 400. ""Orvis V. Wells, 73 Fed. 110, 19 C. C. A. 382 (dispute submitted to arbi- tration) ; Murray v. Walker, 44 Ga. 58; Hauss v. Niblack, 80 Ind. 407; National Imp. &c. Co. v. Maiken, 103 Iowa 118, 72 N. W. 431; Payne v. Hackney, 84 Minn. 195, 87 N. W. 608 ; Houghton V. Dodge, 5 Bosw. (N. Y.) 326 ; Dowagiac Mfg. Co. v. Hellekson, 13 N. Dak. 257, 100 N. W. 717 ; Reid v. Hibbard, 6 Wis. 175; Miles v. Ogden, 54 Wis. 573, 12 N. W. 81. ^Gaines v. Acre, Minor (Ala.) 141; Bailey v. Pardridge, 134 111. 188, 27 N. E. 89; Cochran v. Chitwood, 59 111. S3 ; Moore v. Butler Univ., 83 Ind. 2>16; Aultman Thresh. &c. Co. v. Knoll, 71 Kans. 109, 79 Pac. 1074; Zino V. Verdelle, 9 La. 51; Partridge v. White, 59 Maine 564; Walker v. Mobile &c. R. Co., 34 Miss. 245; Daugherty v. Burgess, 118 Mo. App. 557, 94 S. W. 594 ; Osborn v. Jordan, 52 Nebr. 465. 72 N. W. 479; Corser v. Paul, 41 N. H. 24, 11 Am. Dec. 753 ; Henderhen v. Cook, 66 Barb. (N. Y.) 21; Smith v. Tracy, 36 N. Y. 79 ; Frank v. Jenkins, 22 Ohio St. 597 ; McLeod V. Despain, 49 Ore. 536, 90 Pac. 492, 92 Pac. 1088, 124 Am. St. 1066; La Grande Nat. Bank v. Blum, 27 Ore. 215, 41 Pac. 659; Piano Mfg. Co. V. MiUage, 14 S. Dak. 331, 85 N. W. 594; Franklin v. Ezell, 1 Sneed (Tenn.) 497; Germantown Farmers' Mut. Ins. Co. v. Dhein, 43 Wis. 420, 28 Am. Rep. 549. Defending an action arising out of a contract may also amount to a ratification. Lathrop v. Commercial Bank, 8 Dana (Ky.) 114, 33 Am. Dec. 481. See also, Donason V. Barbero, 230 111. 138, 82 N. E. 620. It has been held that a discontinuance of the suit before trial does not amount to a ratification. Peters v. Ballistier, 3 Pick. (Mass.) 495. Acts and conduct of a principal, evincing an assent to the act of the agent, are interpreted liberally in favor of the latter. Bishop v. Readsboro Chair Mfg. Co. (Vt.), 81 Atl. 454, 36 L. R. A. (N. S.) 1171. 'Market &c. R. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225; Tennis v. Barnes, 11 Colo. App. 196, 52 Pac. 1038; J. B. Owens Pottery Co. v. Turnbull Co., 75 Conn. 628, 54 Atl. 1122; Whitley v. James, 121 Ga. 521, 49 S. E. 600 (delay of fourteen years) ; Glucose Sugar Refining Co. V. Flinn, 184 111. 123, 56 N. E. 400, afifg. 85 111. App. 131; Singer Mfg. Co. V. Flynn, 63 Minn. 475, 65 N. W. 923 (acquiescence for two years) ; Lyle V. Addicks, 62 N. J. Eq. 123, 49 Atl. 1121; Ketchem v. Marsland, 18 Misc. (N. Y.) 450, 42 N. Y. S. 7 (delay of over three years) ; Hanover Nat. Bank v. American &c. Trust Co., 148 N. Y. 612, 43 N. E. 72, 51 Am. St. 721; Himes v. Herr, 3 Pa. Super. Ct. 124; Auge v. Darlington, 185 Pa. St. Ill, 39 Atl. 845 (delay of § 459 CONTRACTS. 686 liance on and been prejudiced by such acquiescence.' This would seem to be the rule, even though the party acting as agent was, in fact, a mere stranger without authority, though it is not so readily inferred from mere silence under ordinary circumstances in the latter case.* A valid ratification cannot be retracted.^ four years) ; Thompson v. Murphy, 60 W. Va. 42, S3 S. E. 908, 6 L. R. A. (N. S.) 311. Silence or nonaction after knowledge is evidence of a rati- fication, but is not conclusive except when the rights of the agent or a third person are prejudiced by such delay. Smith v. Fletcher, 75 Minn. 189, n N. W. 800. = Lynch V. Smith, 25 Colo. 103, 54 Pac. 634. The above case lays down the rule that mere silence without prejudice resulting may amount to a ratification. Heyn v. O'Hagen, 60 Mich. 150, 26 N. W. 861 ; Robbins v. Blanding, 87 Minn. 246, 91 N. W. 844; Lyle v. Addicks, 62 N. J. Eq. 123, 49 Atl. 1121; Russell v. Waterloo Threshing Co., 17 N. Dak. 248, 116 N. W. 611; Reid v. Alaska Packing Co., 47 Ore. 215, 83 Pac. 139; Dewing V. Hutton, 48 W. Va. 576, il S, E. 670 ; Roundy v. Erspamer, 112 Wis. 181, 87 N. W. 1087. "A failure to disavow the acts of a mere volunteer, who meddlingly assumes to act with- out authority, as the agent of another, will not constitute a ratification. But where a person in good faith assumes to act as the agent of another, but without authority in fact, in any par- ticular transaction, the latter, upon being fully informed thereof, must, in cases where his silence might prejudice the assumed agent or inno- cent third parties, disavow the act within a reasonable time, or he will be held to have ratified it." Robbins 'v. Blanding, 87 Minn. 246, 91 N. W. 844. See also, Ankeny v. Young, 52 Wash. 235, 100 Pac. 736. See, how- ever, Ilfeld V. Zeigler, 40 Colo. 401, 91 Pac. 825. "Union Gold Mining Co. v. Rocky Mt. Nat. Bank, 2 Colo. 248; South- ern Ex. Co. V. Palmer, 48 Ga. 85; Greenfield Bank v. Crafts, 4 Allen (Mass.) 447; Heyn v. O'Hagen, 60 Mich. 150, 26 N. W. 861. In this case Champlin, J., says : "Whether silence operates as presumptive proof of ratification of the act of a mere volunteer must depend upon the par- ticular circumstances of the case. If those circumstances are such that the inaction or silence of the party sought to be charged as principal would be likely to cause injury to the person giving credit to, and relying upon, such assumed agency, or to induce him to believe such agency did in fact exist, and to act upon such be- lief to his detriment, then such silence or inaction may be considered as a ratification of the agency." Ladd v. Hildebrant, 27 Wis. 135, 9 Am. Rep. 445 ; Saveland v. Green, 40 Wis. 431. But ratification by silence will not be as readily inferred where a mere stranger assumes to act for an- other as where a special agent has exceeded his authority. Uniontown Grocery Co. v. Dawson, 68 W. Va. 332, 69 S. E. 845, Ann. Gas. 1912B, 148, and note. See also, Ralphs v. Hensler, 97 Cal. 296, 32 Pac. 243; Britt V. Gordon, 132 Iowa 431, 108 N. W. 319, 11 Ann. Cas. 407; Light- foot V. Horst (Tex. Civ. App.), 122 S. W. 606. See also, cases cited, ante, this note. "^Whitfield V. Riddle, 78 Ala. 99; Russ V. Telfener, 57 Fed. 'yii ; Perry V. Hudson, 10 Ga. 362 ; Johnson v. Hoover, 72 Ind. 395 ; Coffin v. Gep- hart, 18 Iowa 256; Bell v. Byerson, 11 Iowa 233, n Am. Dec. 142; Hunter v. Cobe, 84 Minn. 187, 87 N. W. 612; Beall V. January, 62 Mo. 434; An- drews V. jEtna Life Ins. Co., 92 N. Y. 596; Glor v. Kelly, 49 App. Div. (N. Y.) 617, 63 N. Y. S. 339, affd. 166 N. Y. 589, 59 N. E. 1123; Hazel- ton V. Batchelder, 44 N. H. 40; Brock V. Jones, 16 Tex. 461 ; Richmond &c. R. Co. V. Richmond &c. R. Co., 96 Va. 670, 32 S. E. 787. The power of a principal to ratify the unauthorized contract of his agent and thus give rise to a cause of action in his own favor against the adverse party will not be gone into here. It is enough 687 AGENTS. § 460 § 460. Termination of agent's authority — By lapse of time. — There are many ways in which the relation of principal and agent may be terminated. For convenience they will be grouped under three heads, which are by the original agreement, by act of the parties and by operation of law. If by the terms of the original agreement the agency is to endure only for a specified time, the expiration of that time terminates the agency." Like- wise, the authority of an agent appointed to perform some spe- cific act or acts is necessarily ended the moment the transaction becomes complete.'' A special agent's authority may also be ter- minated by a settlement, before he has acted on the matter he was appointed to adjust, in another way.* § 461. Revocation by act of the parties. — The relation may be terminated by a revocation of the agency by the principal or its renunciation by the agent. Thus, as between the principal and agent, the authority may be revoked by the principal at any time before the act authorized by him to be done has been ac- complished unless the agent has acquired with such authority an interest in the subject-matter." This principle applies to a power to say that there is a division of au- Ga. 629, 33 S. E. 878; Short v. Mil- thority on the subject. For a review lard, 68 111. 292; Bragg v. Bamberger, of the subject, see Atlanta Buggy Co. 23 Ind. 198; Moore v. Stone, 40 Iowa V. Hess Spring &c. Co., 124 Ga. 338, 259; People v. Manistee, 40 Mich. 52 S. E. 613, 4 L. R. A. (N. S.) 431, 585; Greening v. Steele, 122 Mo. 287, and note ; Atlee v. Bartholomew, 69 26 S. W. 971 ; McLeod v. Despain, 49 Wis. 43, 33 N. W. 110, 5 Am. St. 103, Ore. 536, 90 Pac. 492, 92 Pac. 1088, and note. 124 Am. St. 1066; Denny v. Lyon, 38 • Danby v. Coutts, S4 L. J. Ch. 577, Pa. 98, 80 Am. Dec. 463. 29 Ch. Div. 500, 52 L. T. 401, 33 W. 'Benoit v. Conway, 10 Allen R. 559. In the above case it appears (Mass.) 528; Ahern v. Baker, 34 that an attorney was appointed to act Minn. 98, 24 N. W. 341. Thus in the during the principal's absence from above case two agents were appointed England. It was held that the phrase to sell a certain piece of real estate, "during my absence from England" It was held that a sale by one of limited the exercise of the powers of them terminated the agency of the the attornev to the period of the prin- other. See also, Clark v. Delano, 205 cipal's absence from England. Gund- Mass. 224, 91 N. E. 299, 29 L. R. A. lach V. Fischer, 59 111. 172. In the (N. S.) 595. above case it appears that the prin- ' Brown v. Pf orr, 38 Cal. 550 ; Phil- cipal agreed to furnish the agent "such lips v. Howell, 60 Ga. 411 ; Linder v. number of machines as he may be able Adams, 95 Ga. 668, 23 S. E. 687 ; At- to sell as their agent prior to October trill v. Patterson, 58 Md. 226 ; Ham- 1, 1867." This was held to create an ilton v. Frothingham, 59 Mich. 253, agency only until October 1, 1867. See 26 N. W. 486; Simonton v. First Na- also, Clements v. Macheboeuf, 92 U. tional Bank, 24 Minn. 216; Staroske S. 418, 23 L. ed. 504. v. Pulitzer Pub. Co., 235 Mo. 67, 138 ' Atlanta Sav. Bank v. Spencer, 107 S. W. 36 ; Kolb v. Bennett Land Co., 461 CONTRACTS. 688 of attorney^" and contracts with brokers/^ This is true even though the instrument expressly provides that the povi^er is ir- revocable/^ It is otherwise, however, where the agency is coupled with an interest or is given for a valuable considera- tion.^' The principal's revocation may be implied.^* An agent may himself terminate the relation by a renunciation of it on his part^^ or by his misconduct.^'' The agent may, however, render 74 Miss. S67, 21 So. 233; Woods v. Hart, 50 Nebr. 497, 70 N. W. 53; Hartshorne v. Thomas, 43 N. J. Eq. 419, 10 Atl. 843 ; Hitchcock v. Kelley, 18 Ohio C. C. 808, 4 Ohio Dec. 180; Wright V. Fidelity &c. Co., 1 Lack. Leg. N. Ill; Coffin v. Landis, 46 Pa. 426; McCallum v. Grier, 86 S. C. 162, 68 S. E. 466, 138 Am. St. 1037; Will- cox &c. Co. V. Ewing, 141 U. S. 627, 35 L. ed. 882, 12 Sup. Ct. 94. " Evans v. Fearne, Crenshaw & Co., 16 Ala. 689, SO Am. Dec. 197; Barr v. Schroeder, 32 Cal. 609 ; Darrow v. St. George, 8 Colo. 592, 9 Pac. 791; ^lansfield v. Mansfield, 6 Conn. 599, 16 Am. Dec. 76; Pickler v. State, 18 Ind. 266; Spear v. Gardner, 16 La. Ann. 383 ; Jacobs v. Warfield, 23 La. Ann. 395; Smith v. Dare, 89 Md. 47, 42 Atl. 909; Brookshire v. Von Can- non, 28 N. Car. 231 ; Blackstone v. Buttermore, 53 Pa. St. 266. "McCallum v. Grier, 86 S. C. 162, 68 S. E. 466, 138 Am. St. 1037. "Frink V. Roe, 70 Cal. 296, 11 Pac. 820; McGregor v. Gardener, 14 Iowa 326; Attrill v. Patterson, 58 Md. 226; Buffalo Land &c. Co. v. Strong, 91 Minn. 84, 97 N. W. 575. The com- mon law requires that the revocation of a power of attorney to sell real estate must be brought to the per- sonal notice of the agent. Best v. Gunther, 125 Wis. 518, 104 N. W. 82, 1 L. R. A. (N. S.) 577, 110 Am. St. 851. The power to revoke and the right to revoke do not necessarily mean the same thing, as the principal may render himself liable for dam- ages if he terminates the agency with- out cause prior to the time set for its expiration; Sibbald v. Bethlehem Iron Co., 83 N. Y. 378, 38 Am. Rep. 441 ; Rowan Co. v. Hull, 55 W. Va. 335, 47 S. E. 92. "Mansfield v. Mansfield, 6 Conn. 559, 16 Am. Dec. 76; Big Four Wil- mington Coal Co. V. Wren, 115 111. App. 331 ; Buffalo Land &c. Co. v. Strong, 91 Minn. 84, 97 N. W. 575, affd., 203 U. S. 582, 51 L. ed. 327, 27 Sup. Ct. 780; Glover v. Henderson, 120 Mo. 367, 25 S. W. 175, 41 Am. St. 695 ; Hunt v. Rousmanier's Admrs., 8 Wheat. (U. S.) 174, 5 L. ed. 589; Montague v. McCarroU, IS Utah 318, 49 Pac. 418. A contract is not, however, necessarily rendered immortal by the passing of a consid- eration for its creation, Staroske v. Pulitzer Pub. Co., 235 Mo. 67, 138 S. W. 36. See as to liability for dam- ages on revocation where the agency is for a fixed time and time and money are expended by the agent as contemplated by the contract, Cloe V. Rogers (Okla.), 121 Pac. 201, 38 L. R. A. (N. S.) 366 and note. " Rapier v. Louisiana Equitable Life Ins. Co., 57 Ala. 100; Reed v. Lathan, 40 Conn. 452; Wallace v. Goold, 91 111. 15; Torre v. Thiele, 25 La. Ann. 418; Copeland v. Mercantile Ins. Co., 6 Pick. (Mass.) 198; Potter v. Mer- chants' Bank, 28 N. Y. 641, 86 Am. Dec. 273. '^Barrows v. Cushway, 37 Mich. 481 ; Hitchcock v. Kelley, 18 Ohio C. C. 808, 4 Ohio Dec. 180; Case v. Jennings, 17 Tex. 661. "Walker v. John Hancock Mut. Life Ins. Co., 80 N. J. L. 342, 79 Atl. 354, 35 L. R. A. (N. S.) lS3n (prin- cipal discharged agent because of mis- conduct on the part of the latter) ; Stoddard v. Key, 62 How. Pr. (N. Y.) 137; Henderson v. Hydraulic Works, 9 Phila. (Pa.) 100; Case v. Jennings, 17 Tex. 661. See also, Bilz V. Powell, SO Colo. 482, 117 Pac. 344. See, however. Cotton v. Rand, 93 Tex. 7, 51 S. W. 838, S3 S. W. 343. 689 AGENTS. § 461 himself liable for damages suffered by the principal in case he abandoned the agency in violation of its terms." The relation of principal and agent uncoupled with an interest is terminated by operation of law, by the death of the principal," by the death of the agent," by the insanity of either the princi- paP" or agent," by the bankruptcy of the principal except as to property unaffected by such bankruptcy," or of the agent except "Gill V. Middleton, lOS Mass. 477, 7 Am. Rep. 548; Barrows v. Cushway, 37 Mich. 481; Benden v. Manning, 2 N. H. 289; White v. Smith, 6 Lans. (N. Y.) 5; Thorne v. Deas, 4 Johns. (N. Y.) 84. "Saltmarsh v. Smith, 32 Ala. 404; Green v. Tuttle, 5 Ariz. 179, 48 Pac. 1009; Travers v. Crane, IS Cal. 12; Frink v. Roe, 70 Cal. 296, 11 Pac. 820; Pacific Bank v. Hannah, 90 Fed. 72, 32 C. C. A. 522 ; Anderson v. Goodwin, 125 Ga. 663, 54 S. E. 679; Mecartney v. Carbine's Estate, 108 111. App. 282 ; Johnson v. Wilcox, 25 Ind. 182; Condon v. Barnum (Iowa), 106 N. W. 514; Seibert v. True, 8 Kans. 52; Lincoln v. Emerson, 108 Mass. 87; Brown v. Cushman, 173 Mass. 368, 15 N. E. 860; Clayton v. Mer- rett, 52 Miss. 353 ; Wash v. Wash, 189 Mo. 352, 87 S. W. 993, 107 Am. St. 353; Farmers' Loan &c. Co. v. Wil- son, 139 N. Y. 284, 34 N. E. 784, 36 Am. St. 696; Duckworth v. Orr, 126 N. Car. 674, 36 S. E. 150; Wain- right V. Massenberg, 129 N. Car. 46, 39 S. E. 725; Brown v. Skotland, 12 N. Dak. 445, 97 N. W. 543; In re Kern's Estate, 176 Pa. St. 373, 35 Atl. 231; Nehring v. McMurrain (Tex. Civ. App.), 45 S. W. 1032; Primm v. Stewart, 7 Tex. 178; Hunt V. Rousmanier's Admrs., 8 Wheat. (U. S.) 174, 5 L. ed. 589; Triplett v. Woodward's Admr., 98 Va. 187, 35 S. E. 455. Compare with Crowley v. McCambridge, 154 111. App. 135, in which the death of the principal was held not to revoke the agency since the agent possessed .more than a naked power. ^'Judson V. Love, 35 Cal. 463; Shiff V. Succession of Lesseps, 22 La. Ann. 185 ; Musson v. United States Bank, 6 Mart. (O. S.) (La.) 707; Tyson v. George's Creek Coal &c. Co., 115 Md. 564, 81 Atl. 41; Adriance v. Ruther- 44 — Contracts, Vol. I ford, 57 Mich. 170, 23 N. W. 718; People v. Bellando, 137 App. Div. (N. Y.) m, 122 N. Y. S. 543, affd., 199 N. Y. 533, 92 N. E. 1095; In re Merrick's Estate, 8 Watts. & S. (Pa.) 402; Gage v. Allison, 1 Brev. (S. Car.) 495, 2 Am. Dec. 682; Jackson Ins. Co. V. Partee, 9 Heisk. (Tenn.) 296. Where a joint agency is con- ferred upon two parties the death of one terminates the agency of the other. Hartford Fire Ins. Co. v. Wil- cox, 57 111. 180; Johnson v. Wilcox, 25 Ind. 182; Sample v. Lamb's Cur- ator, 2 La. 275 ; Martine v. Interna- tional &c. Ins. Soc, 62 Barb. (N. Y.) 181, 5 Lans. (N. Y.) 535, S3 N. Y. 339, 13 Am. Rep. 529 ; Gilman v. Kib- ler, 5 Humph. (Tenn.) 19. ^ Bunce v. Gallagher, Fed. Cas. No. 2133; Davis v. Lane, 10 N. H. 156; Matthiessen &c. Co. v. McMahon's Admr., 38 N. J. L. 536; Hill's Exr. V. Day, 34 N. J. Eq. 150; Wallis v. Manhattan Co., 2 N. Y. Super. Ct. 495; Renfro v. City of Waco (Tex.), 2>i S. W. 766. See also, Motley v. Head, 43 Vt. 633. In case the agent holds a written authority from the principal and innocent third parties deal with the agent without knowledge that the principal has become insane, the principal or those who claim un- der him may be precluded from set- ting up insanity as a revocation. Davis v. Lane, 10 N. H. 156. Of course, if the agency is coupled with an inter- est (Davis V. Lane, 10 N. H. 156), the agency is not revoked by the prin- cipal's insanity, or if the power is such that it could not have been revoked, if the principal had remained sane. Spencer v. Reynolds, 9 Pa. Co. Ct. 249. "^Lawson on Contracts (2d ed.) 245 ; Mechem on Agency, 168. ""Parker v. Smith, 16 East 382; Minett v. Forrester, 4 Taunt. 541n; § 462 CONTRACTS. 690 as to the execution of mere formal acts/^ by the marriage of the principal under certain circumstances/* by a war which renders the principal and agent alien enemies/^ by the dissolution^" or the admission of a new partner to the firm which the agent rep- resents/' and by the destruction of or the termination of the principal's authority over the subject-matter of the agency/' § 462. Liability of principal. — A principal is liable to third persons on all contracts made by his agent acting as such within the scope of his authority.^" This is based on the legal maxim that he who does an act through the medium of another party is in law considered as doing it himself. This is the foundation upon which rests the entire law of agency. Innumerable cases might be cited illustrating it, but it is considered unnecessary to go more in detail at this point. In re Daniels, 13 Nat. Bankruptcy Reg. 46. See also, Hall v. Bliss, 118 Mass. 554, 19 Am. Rep. 476. "^ Scott V. Surman, Willes 400; Hud- son V. Granger, 5 B. & Aid. 27 ; Dixon V. Ewart, 3 Mer. 327, Buck 94; Audenried v. Bettley, 8 Allen (90 Mass.) 302. '* Thus at common law the subse- quent marriage of a feme sole revokes a power of attorney previously ex- ecuted. Montague v. Carneal, 1 A. K. Marsh. (Ky.) 351 ; Brown v. Mil- ler, 46 Mo. App. 1 ; Walmbole v. Foote, 2 Dak. 1, 2 N. W. 239. See, however, Reynolds v. Rowley, 3 Rob. (La.) 201, 38 Am. Dec. 233. It has also been held that where a single man executed a power of attorney for the sale of his homestead and married before sale thereunder the wife acquired an interest upon mar- riage which could not be defeated by a subsequent sale under the power. Henderson v. Ford, 46 Tex. 627. See, however, Joseph v. Fisher, 122 Ind. 399, 23 N. E. 856. ^Howell V. Gordon, 40 Ga. 302; Simonton v. Clark, 65 N. Car. 525, 6 Am. Rep. 752; Blackwell v. Wil- lard, 65 N. Car. 555, 6 Am, Rep. 749; Conley v. Burson, 1 Heisk. (Tenn.) 145; New York Life Ins. Co. v. Davis, 95 U. S. 425. 24 L. ed. 453. See, however, Murrell v. Jones, 40 Miss. 565; Shelby v. Offutt, 51 Miss. 128; Robinson v. International Ins. Co., 42 N. Y. 54, 1 Am. Rep. 490; Maloney v. Stephens, 11 Heisk. (Tenn.) 738; Manhattan Life Ins. Co. V. Warwick, 20 Grat. (Va.) 614, 3 Am. Rep. 218. ""Schlater v. Winpenny, 75 Pa. St. 321. " Callanan & Ingham v. Van Vleck, 36 Barb. (N. Y.) 324. The agency is not terminated by a mere change in the firm's name, however ; Billings- ley V. Dawson, 47 Iowa 210. ^ Perkins v. Currier, Fed. Cas. No. 10985, 3 Wood & M. (U. S.) 69; Gilbert v. Holmes, 64 111. 548 ; Walker v. Denison, 86 111. 142; Barrett v. His Creditors, 12 Rob. (La.) 474; Ahern v. Baker, 34 Minn. 98, 24 N. W. 341 ; State V. Walker, 88 Mo. 279; Allen V. Clark, 65 Barb. (N. Y.) 563. '"Waring v. Henry, 30 Ala. 721; Herring v. Skaggs, 62 Ala. 180, 34 Am. Rep. 4; Russell v. Cady, IS Ark. 540; Jones v. Marks, 47 Cal. 242; Salmon v. Hoffman, 2 Cal. 138, 56 Am. Dec. 322; Frost v. Wood, 2 Conn. 23; Hudson v. Whiting, 17 Conn. 487; Kirkpatrick v. Adams, 20 Fed. 287; City Bank v. Kent, 57 Ga. 283; Wider v. Branch, 12 111. App. 358; Marckle v. Haskins, 27 111. 382; Evansville &c. R. Co. v. Spellbring, 1 Ind. App. 167, 27 N. E. 239; Black- well V. Ketcham, 53 Ind. 184; Whit- ing V. Western Stage Co., 20 Iowa 691 AGENTS. § 462 "Whenever a general agency has been established for any pur- pose, all persons who have dealt with the agent have a right to assume that his authority to deal with them in behalf of his prin- cipal continues, until notice, express or implied, has been con- veyed to them that the agency has been revoked."*" The princi- pal is also under an obligation to compensate the agent for the services rendered"^ unless he acts gratuitously.*'' The principal is also liable to indemnify the agent against loss and injury sus- 554 ; Markham v. Burlington Ins. Co., 69 Iowa 515, 29 N. W. 435; Lewis v. Bourbon, 12 Kans. 186; Vanada's Heirs v. Hopkins' Admrs., 1 J. J. Marsh. (Ky.) 285, 19 Am Dec. 92; Taylor's Heirs v. French, 1 Bibb (Ky.) 52; Pellerin v. Dungan, 2 La. Ann. 383; Mackey v. De Blanc, 12 La. Ann. HI; Dyer v. Burnham, 25 Maine 9; Bryant v. Moore, 26 Maine 84, 45 Am. Dec. 96; Keener v. Har- rod, 2 Md. dZ, 56 Am. Dec. 706; Swatara R. Co. v. Brune, 6 Gill (Md.) 41 ; Garfield &c. Coal Co v. Rockland- Rockport Lime Co., 184 Mass. 60, 67 N. E. 863, 61 L. R. A. 946, 100 Am. St. 543; Caswell v. Cross, 120 Mass. 545; Rich v. Crandall, 142 Mass. 117, 7 N. E. 547; Atlas Min. Co. v. John- ston, 23 Mich. 36; Thompson v. Clay, 60 Mich. 627, 27 N. W. 699; Adam- son V. Wiggins, 45 Minn. 448, 48 N. W. 185; Fox V. Fisk, 6 How. (Miss.) 328; Carter v. Taylor, 6 Sm. & M. (Miss.) 367; De Baun v. Atchison, 14 Mo. 543; Tate v. Evans, 7 Mo. 419; Home Fire Ins. Co. v. Kuhlman, 58 Nebr. 488, 78 N. W. 936. 76 Am. St. Ill; Clement v. Leverett, 12 N. H. 317; Boston Iron Co. v. Hale, 8 N. H. 363; Kirkpatrick v. Winans, 16 N. J. Eq. 407; Camden Safe Deposit &c. Co. V. Abbott, 44 N. J. L. 257; Mills V. Shult, 2 E. D. Smith (N. y.) 139; North River Bank v. Ay- mar, 3 Hill (N. Y.) 262; Lane v. Dudley, 6 N. Car. 119, 5 Am. Dec. 523; Williamson v. Canaday, 3 Ired. (N. Car.) 349; Lambert v. Carroll, Wright (Ohio) 108; ^Etna Ins. Co. V. Church, 21 Ohio St. 492; McKillip V. Mcllhenny, 2 Watts (Pa.) 466; Mundorff v. Wickersham, 63 Pa. St. 87, 3 Am. Rep. 531; Ezell v.' Frank- lin, 2 Sneed (Tenn.) 236; Gordon V. Buchanan, 5 Yerg. (Tenn.) 71 ; Bruce v. Washington, 80 Tex. 368, 15 S. W. 1104; Morgan v. Darragh, 39 Tex. 171; Lucas v. Brooks, 18 Wall. (U. S.) 436, 21 L. ed. 779; Post V. Pearson, 108 U. S. 418, 27 L. ed. 774, 2 Sup. Ct. 799; Alexander v. Bank of Rutland, 24 Vt. 222 ; Fris- bie v. Felton, 65 Vt. 138, 26 Atl. 325 ; Yerby v. Grigsby, 9 Leigh (Va.) 387; Hopkins v. Blane, 1 Call (Va.) 361 ; Spence v. Rose, 28 W. Va. 333 ; Nutter V. Brown, 51 W. Va. 598, 42 S. E. 661; Dodge v. McDonnell, 14 Wis. 553. The statement in the text, of course, assumes that the contract is one on which the principal would have been liable if made by him for himself. The knowledge of the agent is, as a general rule, imputed to his principal. Johnson v. .^tna Ins. Co., 123 Ga. 404, 51 S. E. 339, 107 Am. St. 92. '"Burch V. Americus Grocery Co., 125 Ga. 153, 53 S. E. 1008 ; Bazemore V. A. B. Small Co. (Ga.), 70 S. E. 261. See further on this subject ante, §§ 452, 453, Authority of Agents. ^Dexter v. Campbell, 137 Mass. 198; Mangum v. Ball, 43 Miss. 288, 5 Am. Rep. 488; Briggs v. Boyd, 56 N. Y. 289; Fuller v. Ellis, 39 Vt. 345, 94 Am. Dec. 327. It is held, however, as a general rule, that when an insurance agent is dismissed for good cause he is not entitled to com- missions on renewals. Walker v. John Hancock Mutual Life Ins. Co, 80 N. J. L. 342, 79 AU. 354, 35 L. R. A. (N. S.) 153n. "■^ Chadwick v. Knox, 31 N. H. 226, 64 Am. Dec. 329. See also, Barthol- omew V. Jackson, 20 Johns. (N. Y.) 28, 11 Am. Dec. 237. § 463 CONTRACTS. 692 tained for all acts lawfully done in the execution of his au- thority.^^ § 463, Liability of agent. — The liability of an agent is also twofold. He is under an obligation to the principal to be loyal to his trust, to obey instructions, not to be negligent and to ac- count for the money or property of the principal which comes into his possession. The agent's liability to his principal will not be further elaborated at this point. The agent is not personally liable to a third person on a con- tract entered into in behalf of a disclosed principal, when the terms of the agreement fail to show that he intended to bind himself personally.^* Under these circumstances he is not liable to a third person for the sale of a forged note,^' or for money received for which he has failed to account to his principal,^^ or for money which he has in fact paid over to the principal.^' Nor is the known agent of a corporation personally liable on a con- tract ultra vires as to the corporation when he was authorized by the corporation to make such contract.^^ Nor is the agent per- sonally liable to a third person on the contract where he makes known his want of authority, makes no misrepresentation and discloses the name of his principal.'" ''Moore v. Appleton, 26 Ala. 633, Hall v. Lauderdale, 46 N. Y. 70; 34 Ala. 147, IZ Am. Dec. 448; Haas Kurzawski v. Schneider, 179 Pa. St. V. Ruston, 14 Ind. App. 8, 42 N. E. 500, 36 Atl. 319; Baldwin v. Black, 298, 56 Am. St. 288; Drummond v. 119 U. S. 643, 30 L. ed. 530, 7 Sup. Humphreys, 39 Maine 347; Howe v. Ct. 326; Whitney v. Wyman, 101 U. Buffalo, N. Y. & E. R. Co., Z1 N. Y. S. 392, 25 L. ed. 1050; Wilson v. 297; White v. Miners' National Bank, Wold, 21 Wash. 398, 58 Pac. 223, 75 102 U. S. 658, 26 L. ed. 250. Am. St. 846; Johnson v. Welch, 42 "Gulf City Construction Co. v. W. Va. 18, 24 S. E. 585; Moody &c. Louisville & N. R. Co., 121 Ala. 621, Co. v. Trustees of M. E. Church, 99 25 So. 579; Anderson v. Timberlake, Wis. 49, 74 N. W. 572. 114 Ala. in, 22 So. 431, 62 Am. St. ""Bailey v. Galbreath, 100 Tenn. 105; Tevis v. Savage, 130 Cal. 411, 599, 47 S. W. 84. 62 Pac. 611; Merrill v. Williams, 63 ""Huffman v. Newman, 55 Nebr. Cal. 70; Monticello Bank v. Bost- 713, 76 N. W. 409. wick, 71 Fed. 641; Stevenson v. ^Wilson v. Wold, 21 Wash. 398. Mathers, 67 111. 123 ; Lewis v. Harris, 58 Pac. 223, 75 Am. St. 846. 4 Mete. (Ky.) 353; Worthington v. "» Thilmany v. Paper Bag Co., 108 Cowles, 112 Mass. 30; Huston v. Iowa 357, 79 N. W. 261, 75 Am. St. Tyler, 140 Mo. 252, 41 S. W. 795, 259. 36 S. W. 654; Sleeper v. Weymouth, "° Kansas Nat. Bank v. Bay, 62 Kans. 26 N. H. 34; American National 692, 64 Pac. 596, 54 L. R. A. 408. Bank v. Wheelock, 82 N. Y. 118; 84 Am. St. 417. 693 AGENTS. § 464 § 464. When personally liable, — On the other hand, a per< sonal liability attaches to the agent if the agreement is in excess of his powers and the other party thereto is led to believe in good faith that the agent possesses the requisite authority to make the contract.*" And this is generally held true, notwithstanding the agent may have acted in good faith and in the exercise of due care*^ on the ground that as between two innocent parties, the loss must be borne by him who caused it. This rule is not, how- ever, universal.*^ While there are many cases that have not drawn any distinction between those instances in which the agent con- tracts in his own name for an undisclosed principal, and those in which he either innocently or fraudulently enters into a contract in excess of his authority, and indiscriminately hold the agent bound as principal in either case, a distinction nevertheless exists. In the former case the agent is the only one known to the third party and in the absence of an express agreement to the contrary the agent is bound as principal. In the latter case, both the agent and the third party understand that the agent acts as agent. The third party does not accept the agent as principal but instead the one he purports to represent. Should the law under these cir- cumstances hold the agent as principal, it would in effect make a contract between parties that did not intend to contract.*^ The agent's liability rests on breach of warranty where he acts in " Frankland v. Johnson, 147 111. York, 10 Cush. (Mass.) 392, 4 Cush. 520, 35 N. E. 480, 37 Am. St. 234; (Mass.) 371, 50 Am. Dec. 791; Bank Terwilliger v. Murphy, 104 Ind. 32, of Hamburg v. Wray, 4 Strob. (S. 3 N. E. 404; Duffy v. Mallinkrodt, 81 Car.) 87, 51 Am. Dec. 659; Kroeger Mo. App. 449; Patterson v. Lippin- v. Pitcairn, 101 Pa. St. 311, 47 Am. cott, 47 N. J. L. 457, 1 Atl. 506, 54 Rep. 718; McCurdy v. Rogers, 21 Wis. Am. Rep. 178; Argersinger v. Mac- 197, 91 Am. Dec. 468. See also, Mc- Naughton, 114 N. Y. 535, 21 N. E. Donald v. Bond, 195 111. 122, 62 N. 1022, 11 Am. St. 687; Farmers' Co- E. 881. See also the cases cited in op. Trust Co. V. Floyd, 47 Ohio St. the preceding note. However, if the 525, 26 N. E. 110, 12 L. R. A. 346, agent's authority has been recently 21 Am. St. 846; Bliss v. Tidrick, revoked, as by the death of the prin- 25 S. Dak. 533, 127 N. W. 852 ; Rosen- cipal, without the agent's knowledge dorf V. Poling, 48 W. Va. 621, 37 S. and when he has not been negligent E. 555. in ascertaining such fact, he does *" Randell v. Trimen, 16 C. B. 786 ; not render himself personally liable. Collen V. Wright, 8 E. & B. 647; Jenkins v. Atkins, 1 Humph. (Tenn.) Richardson v. Williamson, L. R. 6 Q. 294, 34 Am. Dec. 648. B. 276 ; Weeks v. Propert, L. R. 8 C. *^ See Newman v. Sylvester, 42 Ind. P. 427 ; Seattle v. Lord Ebury, L. R. 106. 7 H. L. 102 ; Bartlett v. Tucker, 104 *= See White v. Madison, 26 N. Y. Mass. 336, 6 Am. Rep. 240; Jefts v. 117. § 464 CONTRACTS. 694 good faith,** and on fraud when he intentionally misrepresents his authority.*^ He also binds himself personally when he fails to disclose that he is acting as an agent.** The same is true where the agent fails to disclose the identity of his principal.*^ All that is necessary, however, is that the principal be disclosed before the "Collen V. Wright, 8 El. & Bl. 647, 27 L. J. Q B. 215, 4 Jur. (N. S.) 357, 6 W. R. 123; Lander v. Castro, 43 Cal. 497; Duncan v. Niks, 32 111. 532, 83 Am. Dec. 293 ; Harper v. Lit- tle, 2 Greenl. (Maine) 14, 11 Am. Dec. 25 ; Simpson v. Garland, 76 Maine 203; Jefts v. York, 4 Cush. (Mass.) 371, 50 Am. Dec. 791 ; Sheffield v. La- due, 16 Minn. 388, 10 Am. Rep. 145; White V. Madison, 26 N. Y. 117; Haupt V. Vint, 68 W. Va. 657, 70 S. E. 702. "Bird V. Daggett, 97 Mass. 494; White V. Madison, 26 N. Y. 117. See also, Garrett v. Sparks Bros., 61 Wash. 397, 112 Pac. 501. ""'An agent can make a valid con- tract without disclosing his principal, and, if he thus deals with a party who does not know that he is acting in a representative capacity, he can be held individually responsible for the performance of the contract thus made, and liable individually for its breach." Boynton v. Brannum (Ark.) 136 S. W. 979. Murphy v. Helmrich, 66 Cal. 69, 4 Pac. 958. "An agent contracting in his own name cannot avoid the consequences of his contract by pleading that he was acting as the agent of another." Stewart &c. Co. V. Postal Telegraph Cable Co., 131 Ga. 31, 61 S. E. 1045, 18 L. R. A. (N. S.) 692, 127 Am. St. 205; Mor- ris v. Malone, 200 111. 132, 65 N. E. 704, 93 Am. St. 180; Bickford V. Bank, 42 111. 238, 89 Am. Dec. 436; Scaling v. KnolHn, 94 111. App. 443; Fritz v. Kennedy, 119 Iowa 628, 93 N. W. 603 ; Thompson v. Investment Co., 114 Iowa 481, 87 N. W. 438; Lull v. Anamosa National Bank, 110 Iowa 537, 81 N. W. 784; Blackmore V. Fairbanks, 79 Iowa 282, 44 N. W. 548; Stevenson v. Polk, 71 Iowa 278, 32 N. W. 340; Jones v. Johnson, 86 Kv. 530, 6 S. W. 582 ; Tutt v. Brown, 5'Litt. (Ky.) 1, 15 Am. Dec. 33; Nolan V. Clark, 91 Maine 38, 39 Atl. 344; Brighan v. Herrick, 173 Mass. 460, 53 N. E. 906; Bartlett v. Ray- mond, 139 Mass. 275, 30 N. E. 91; Welch V. Goodwin, 123 Mass. 71, 25 Am. Rep. 24; Mitchell v. Beck, 88 Mich. 342, 50 N. W. 305; Araans v. Campbell, 70 Minn. 493, 12, N. W. 506, 68 Am. St. 547; William Lin- deke Land Co. v. Levy, 76 Minn. 364, 79 N. W. 314 (overruling Row- ell V. Olson, 32 Minn. 288, 20 N. W. 227; O'Neil Lumber Co. v. Greffet, 154 Mo. App. 33, 133 S. W. 113; Porter v. Merrill, 138 Mo. 555, 39 S. W. 798; Jackson v. McNatt, 4 Nebr. (unof.) 55, 93 N. W. 425; Elliott v. Bodine, 59 N. J. L. 567, 36 Atl. 1038; McClure v. Central Trust Co., 165 N. Y. 108, 58 N. E. m, S3 L. R. A. 153; DeRemer v. Brown, 165 N. Y. 410, 59 N. E. 129; Argersinger v. Macnaughton, 114 N. Y. 535, 21 N. E. 1022, 11 Am. St. 687; Keokuk Falls Imp. Co. v. Kingsland Mfg. Co., 5 Okla. 32, 47 Pac. 484; Lindsay v. Pettigrew, 5 S. Dak. 500, 59 N. W. 726; Royce v. Allen, 28 Vt. 234; Poole v. Rice, 9 W. Va. 73; Morris v. Clifton Forge Grocery Co., 46 W. Va. 197, 32 S. E. 997, The fact that the third party may suspect that the other acts as an agent is not sufficient to relieve the agent from liability as principal. There must be actual knowledge of the other's agency. Meyer v. Red- mond, 141 App. Div. (N. Y.) 123, 125 N. Y. S. 1052. "Horan v. Hughes, 129 Fed. 248, affd., 129 Fed. 1005, 64 C. C. A. 581 ; Lull V. Anamosa Nat. Bank, 110 Iowa 537, 81 N. W. 784; Hamlin v. Abell, 120 Mo. 188, 25 S. W. 516; Sheehy v. WoUman, 152 Mo. App. 506, 133 S. W. 852; Adamson v. El- well, 17 Jones & Spen. (N. Y.) 494; Long V. McKissick, SO S. Car. 218, 27 S. E. 636; Hughes v. Settle (Tenn. Ch. App.), 36 S. W. S77; Hoge v. Turner, 96 Va. 624, 32 S. E. 291. 695 AGENTS. § 465 contract is consummated. It is immaterial that the agent failed to make a disclosure at the first instance." An agent also renders himself liable in those cases where he assumes to represent a principal who has no legal existence nor status and no legal responsibility." Thus a committee appointed by a political meeting to provide a free public dinner for the party has been held personally liable for the bill. The court said : "Were they, the committee, to be viewed as the agent of a club we would have something palpable to deal with * * * |-,ut ^ club is a defi- nite association organized for indefinite existence, not an ephem- eral meeting, for a particular occasion to be lost in a crowd at its dissolution. It would be unreasonable to presume that the plaintiff agreed to trust to a responsibility so desperate or furnish a din- ner on the credit of a meeting which had vanished into nothing."^" In such instances the agent may, however, protect himself by an express provision against personal liability.''^ In cases where the principal is disclosed the contract must be one which the law would enforce against the principal if it had been authorized by him. When a breach of the contract itself, if it had been au- thorized, would have furnished no ground for an action against the principal, the agent is not bound.°^ This is merely equivalent to saying that a void contract entered into by an agent on behalf of his principal binds no one. § 465. Rights and liabilities of parties where principal is named. — In the absence of ratification by or estoppel on the ** Meyer v. Redmond, 141 App. Div. 107 ; Steele v. McElroy, 1 Sneed (N. Y.) 123, 12s N. Y. S. 1052; (33 Tenn.) 341. Brackenridge v. Claridge, 91 Tex. "Eichbaum v. Irons, 6 Watts & 527, 44 S. W. 819, 43 L. R. A. S93n. S. (Pa.) 67, 40 Am. Dec. 540. To But a disclosure after the agreement same effect, Blakery v. Benneck, 59 is entered into does not prevent the Mo. 193; Learn v. Upstill, 52 Nebr. agent from being held individually 271, 72 N. W. 213. liable. Lull v. Anamosa Nat. Bank, ""^ Comfort v. Graham, 87 Iowa 295, 110 Iowa 537, 81 N. W. 784. To 54 N. W. 242; Heath v. Goslin, 80 same effect, Hauser v. Layne & Bowl- Mo. 310, 50 Am. Rep. 505 ; Codding er (Tex. Civ. App.), 131 S. W. 1156. v. Munson, 52 Nebr. 580, 72 N. W. *" Blakery v. Benneck, 59 Mo. 193; 846, 56 Am. St. 524; Button v. Wins- Queen City Furniture &c. Co. v. low, 52 Vt. 430. Crawford, 127 Mo. 356, 30 S. W. 163 ; "' Thilmany v. Iowa Paper Bank Codding v. Munson, 52 Nebr. 580, 72 Co., 108 Iowa 357, 79 N. W. 261, 75 N. W. 846, 66 Am. St. 524; Lewis Am. St. 259. To same effect, Dung V. Tilton, 64 Ohio 220, 19 N. W. 911, v. Parker, 52 N. Y. 494; Baltzen v. 52 Am. Rep. 436; Winona Lumber Co. Nicolay, 53 N. Y. 467. V. Church, 6 S. Dak. 498, 62 N. W. § 465 CONTRACTS. 696 part of the principal, he is bound only in so far as the agent acts within the scope of his authority.^* It has also been seen that the agent binds himself only when he fails to disclose his prin- cipal, enters into contracts outside the scope of his authority, or is guilty of fraud or misrepresentation. By a prior discussion of these questions the rights and liabilities of parties where the principal is named has been reduced to a somewhat narrow com- pass and little more need be said at this point. The purpose which underlies the appointment of an agent is to enable him to act for and in behalf of the principal. It is the former's duty by con- tract to bind his principal to a third person and at the same time bind such third person to the principal. It follows that in those instances where the agent discloses his principal and does exactly what he is legally authorized to do he mutually binds his princi- pal"* and the third party,'*'' and does not render himself liable"" at least to the third party. In case the agent discloses his principal but exceeds his authority he may bind only himself."' An imma- terial variation from the authority conferred which does not sub- stantially exceed the limits iixed does not vitiate the agent's act."* Likewise, if the authorized and unauthorized portion of the agreement are separable, the authorized portion may be en- forced."'' "^ See ante, §§ 454, 455 et seq., Rati- not disclosed. Manker v. Western fication and Estoppel. Union Tel. Co., 137 Ala. 292, 34 So. " Main V. Aukam 12 App. D. C. 839 ; Powell v. Wade, 109 Ala. 95, 19 375 ; Harvey v. Miles, 16 111. App. 533 ; So. 500, 55 Am. St. 915 ; Central of Seery v. Socks, 29 111. 313; Michael v. Georgia R. Co. v. James 117 Ga. 832, Jones, 84 Mo. 578 ; Simonds v. Heard, 45 S. E. 223 ; Kelly v. Thuey, 143 Mo. 23 Pick. (Mass.) 120, 34 Am. Dec. 41; 422, 45 S. W. 300, revg. 37 S. W. 516; Davis V. Burnett, 4 Jones (Pa.) 71, Jones v. Western Mfg. Co., 32 Wash. 67 Am. Dec. 263 ; Rathbon v. Budlong, 375, 73 Pac. 359. 15 Johns. (N. Y.) 1; Oelricks V. Ford, " Hufifraan v. Newman, 55 Nebr. 23 How. (U. S.) 49, 16 L. ed. 534; 713, 76 N. W. 409. See ante, § 453. Whitney v. Wyman, 101 U. S. 392, 25 "See ante, §§ 452, 463, Authority L. ed. 1050; Hall v. Huntoon, 17 Vt. of Agent and Liability of Agent. 244, 44 Am. Dec. 332; Frazier v. "' Parker v. Kett, 1 Salk. 95 ; Hunt- Hendren, 80 Va. 265. ley v. Mathias, 90 N. Car. 101, 47 "This is true even though the name Am. Rep. 516. of the principal (Sullivan v. Shailor, "Drumright v. Philpot, 16 Ga. 424, 70 Conn. 7i3. 40 Atl. 1054; Sharp v. 60 Am. Dec. 738; Vanada's Heirs v. Jones, 18 Ind. 314, 81 Am. Dec. 359; Hopkins' Admrs., 1 J. J. Marsh. Donahoe v. McDonald, 92 Ky. 123, 13 (Ky.) 285, 19 Am. Dec. 92; Dicker- Ky. L. 413, 17 S. W. 195; Foster v. man v. Ashton, 21 Minn. 538; Smith Graham, 166 Mass. 202, 44 N. E. 129) v. Tracy, 36 N. Y. 79; Stowell v. or the fact that he is acting as agent is Eldred, 39 Wis. 614; Co. Litt. 2S8a. 697 AGENTS. § 466 § 466. Rights and liabilities of parties where principal is not disclosed — Rights of principal. — The questions to be dis- cussed under this sub-heading naturally divide themselves into three groups, w^hich are: First, the rights and HabiHties of the undisclosed principal; second, the rights and liabilities of the agent; third, the rights and liabilities of third persons. The rights and liabilities of the various persons mentioned vi^ill be discussed in the order in virhich they are named. As a general rule the principal, though undisclosed, is invested by the author- ized act of the agent for the benefit and advantage of the princi- pal, with every right and burdened with every liability arising out of or pertaining to the contract as perfectly as if the principal had in his own name and person made the contract.*" An undisclosed principal may sue on a contract made by an agent.*^ Likewise, when the agent buys property in his own name, his principal be- ing undisclosed, it immediately becomes the property of the prin- cipal and not that of the agent,°^ the agent being considered as a mere trustee.*^ The general rule first stated is said to be subject to an exception in that if the contract involves elements of per- sonal trust and confidence as a consideration moving from the agent of the undisclosed principal contracting in his own name to the other party of the contract, the principal, while the agree- ment remains executory cannot, against the resistance of the other party, enforce it, either to compel performance by the other party or in damages for a breach," or to state the same rule in other language an undisclosed principal who sues on a contract made by his agent in the latter's name with some person who ™ Birmingham Matinee Club v. Mc- ginia &c. Co. v. Atlantic Coast Line Carty, 1S2 Ala. 571, 44 So. 642, 13 R. R., 155 N. Car. 148, 71 S. E. 71; L. R. A. (N. S.) 156. Where the Nicholson v. Dover, 145 N. Car. 18, agent deals as principal the undis- 58 S. E. 444, 13 L. R. A. (N. S.) closed principal in accepting or rati- 167. See also, ante, § 465, Rights and fying the agent's agreement must Liabilities of Parties Where Princi- have given notice of any limitation on pal is named. the agent's authority of which he "^Kempner v. Dillard, 100 Tex. seeks to avail himself. Ohio Pottery 505, 101 S. W. 437, 123 Am. St. 822. &c. Co. V. Talbert, 87 S. Car. 194, "^ Virginia Pocahontas Coal Co. v 69 S. E. 211. Lambert, 107 Va. 368, 58 S. E. 561, ■^Western Union Telegraph Co. v. 122 Am. St. 860. Northcutt, 158 Ala. 539, 48 So. 553, ^ Birmingham Matinee Club v Mc- 132 Am. St. 38; Powell v. Wade, 109 Carty, 152 Ala. 571, 44 So. 642 13 Ala. 95, 19 So. 500, 55 Am. St. 915; L. R. A. (N. S.) 156. Oelrichs v. Ford, 21 Md. 489; Vir- § 467 CONTRACTS. 698 has no 'knowledge of an agency but supposes that the agent dealt for himself, such suit is subject to any defense or set-off acquired by the third party against the agent before he had. notice of the principal's rights.''^ This rule applies not only to the sale of goods, but as well to other contracts when the agent is authorized to collect money for his undisclosed principal."" Another excep- tion exists at common law to the effect that where an agent is contracted with by deed in his own name, his principal cannot sue upon it."^ § 467. Rights and liabilities of parties when principal not disclosed — Liability of agent. — The liability of the agent has already been mentioned"* and nothing further will be added at this point other than to say that if the agent is to avoid liability he must in the transaction distinctly describe himself as such. Thus in case an agent signs a promissory note and there is noth- ing on the face of the instrument to connect the undisclosed prin- cipal with the transaction or to suggest that the agent was acting as such he will be held personally liable, and the undisclosed prin- cipal cannot be held,"° and even where the agent signs his own °°Frazier v. Poindexter, 78 Ark. is dealing with is an agent, although 241, 95 S. W. 464, 115 Am. St. 33. he does not know who the principal See also, Eldridge v. Finninger, 25 is, he is not protected." Okla. 28, 105 Pac. 334, 28 L. R. A. " Portsmouth Cotton, Oil &c. Corp. (N. S.) 227, which holds "If the v. Oliver Refining Co., 109 Va. 513, purchaser of property does not know, 64 S. E. 56, 132 Am. St. 924. and has not good reason to know, "" See ante, § 463, Liability of that he is dealing with the agent of Agent. the owner, he is justified as treating ™ Pease v. Pease, 35 Conn. 131, 95 the agent as owner, and payment of Am. Dec. 225 ; Graham v. Campbell, the purchase-price to him is a good 56 Ga. 258; New York Life Ins. Co. defense to an action of the owner for v. Martindale, 75 Kans. 142, 88 Pac. the amount." 559, 21 L. R. A. (N. S.) 1045n, 121 ""Frazier v. Poindexter, 78 Ark. -Am. St. 362; Taber v. Cannon, 241, 95 S. W. 464, 115 Am. St. 33. 8 Mete. (49 Mass.) 456; May- The above case also contains this hew v. Prince, 11 Mass. 54; Web- statement; "But if the party who ster v. Wray, 19 Nebr. 558, 27 N. W. dealt with the agent, acting in his 644, 56 Am. Rep. 754, overruling on own name, knew or had reason to rehearing 17 Nebr. 579, 24 N. W. believe that he was dealing with one 207 ; Lewis v. First Nat. Bank, 1 who was an agent for some third Nebr. (unof.) 177, 95 N. W. 355; person, he cannot successfully plead Farrell v. Reed, 46 Nebr. 258, 64 N. such defense or set-ofif. He must, in W. 959 ; Chandler v. Coe, 54 N. H. order to be protected, be innocent of 561 ; Cortland Wagon Co. v. Lynch, any knowledge or of facts and cir- 82 Hun (N. Y.) 173, 63 N. Y. St. cumstances which would put a rea- 774, 31 N. Y. S. 325 ; Ranger v. Thal- sonably prudent person on inquiry mann, 84 App. Div. (N. Y.) 341, 82 "that he was dealing with an agent. N. Y. S. 846, revg., 39 Misc. (N. Y.) Where he knows that the party he 699 AGENTS. § 468 name followed by the word trustee, or agent, these latter words are considered as merely descriptive of the person and the note, prima facie, will be considered as his own individual transac- tion/" § 468. Rights and liabilities of parties when principal not disclosed — Rights of third persons. — The foregoing principles do not apply where the third party has knowledge of the other's agency and understands that it is the obligation of the principal." The third party may sue the undisclosed principal for the en- forcement of the contract when he learns that the agent was act- ing for another.^^ This is especially true where the undisclosed 420, 80 N. Y. S. 19, and affd. in 178 Manufacturers' & Traders' Bank v. N. Y. 574, 70 N. E. 1108; Tarver v. Love, 13 App. Div. (N. Y.) 561, 43 Garlington, 27 S. Car. 107, 2 S. E, N. Y. S. 812; Cortland Wagon Co. 846, 13 Am. St. 628; Cragin v. Low- v. Lynch, 82 Hun (N. Y.) 173, 63 N. ell, 109 U. S. 194, 27 L. ed. 903, 3 Y. St. 774, 31 N. Y. S. 325; New Sup. Ct. 132. York State Bank Co. v. Van Ant- "Rew V. Pettet, 1 Ad. & El. 196; werp, 23 Misc. (N. Y.) 38, 51 N. Y. Richmond Locomotive & Machine S. 653; Campbell v. Porter, 46 App. Works V. Moragne, 119 Ala. 80, 24 Div. (N. Y.) 628, 61 N. Y. S. 712; So. 834; Haskell v. Cornish, 13 Cal. Guthrie v. Imbrie, 12 Ore. 182, 6 Pac. 45; Conner v. Clark, 12 Cal. 168, 73 664, S3 Am. Rep. 331; Supply Co. v. Am. Dec. 529; San Bernardino Nat. Brewer, 14 Lane. L. Rev. (Pa.) 238; Bank v. Bank of Anderson (Cal.), 32 Metcalf v. Williams, 104 U. S. 93, 26 Pac. 168 ; Heaton v. Myers, 4 Colo. 59 ; L. ed. 665 ; Lyons v. Miller, 6 Grat. Pease v. Pease, 35 Conn. 131, 95 Am. (Va.) 427, 52 Am. Dec. 129; Rand v. Dec. 225; Burkhalter v. Perry, 127 Hale, 3 W. Va. 495, 100 Am. Dec. Ga. 438, 56 S. E. 631, 119 Am. St. 761. See, however, Alexander v. 343; Coaling &c. Co. v. Howard, 130 Sizer, L. R. 4 Exch. 102; Conro v. Ga. 807, 61 S. E. 987, 21 L. R. A. (N. Port Henry &c. Co., 12 Barb. (N. Y.) S.) 1051. See also the extended note 27; Hicks v. Hinde, 9 Barb. (N. Y.) in 21 L. R. A. (N. S.) 1046. Cahokia 528, 6 How. Pr. (N. Y.) 1; Green v. School Trustees v. Rautenberg, 88 111. Skeel, 2 Hun (N. Y.) 485; Weeks v. 219; Prescott v. Hixon, 22 Ind. App. Fox, 3 Thomp. & C. (N. Y.) 354. 139, 53 N. E. 391, 72 Am. St. 291; '^Lockwood v. Coley, 22 Fed. 192; New Y'ork Life Ins. Co. v. Martin- Bank of Genesee v. Patchin Bank, 19 dale, 75 Kans. 142, 88 Pac. 559, 21 N. Y. 312; Hicks v. Hinde, 9 Barb. L. R. A. (N. S.) 1045n, and note be- (N. Y.) 528, 6 How. Pr. (N. Y.) 1; ginning on page 1046, 121 Am. St. Traynham v. Jackson, 15 Tex. 170, 65 362- Burbank v. Posey, 7 Bush. Am. Dec. 152; Metcalf v. Williams, (Ky.) 372; Stackpole v. Arnold, 11 104 U. S. 93, 26 L. ed. 665. See, how- Mass. 27, 6 Am. Dec. 150; Bedford ever, Newhall v. Dunlap, 14 Maine Commercial Ins. Co. v. Covell, 49 180, 31 Am. Dec. 45; Arnold v. Mass. (8 Mete.) 442; Leach v. Blow, Sprague, 34 Vt. 402. 8 Smedes & M. (Miss.) 221; Farrell '"Pope v. Meadow Spring Distill- v Reed 46 Nebr. 258, 64 N. W. 959; ing Co., 20 Fed. 35; Allison v. Sutlive, Pentz V. Stanton, 10 Wend. (N. Y.) 99 Ga. 151, 25 S. E. 11; Edwards v. 271, 25 Am. Dec. 558; Chemung Gildemeister, 61 Kans. 141, 59 Pac. Canal Bank v. Chemung County, 5 259; Tutt v. Brown, 5 Litt. (Ky.) 1, Denio (NY) 517; Bank of Gene- 15 Am. Dec. 33; York County Bank see V. Patchin Bank, 19 N. Y. 312; v. Stein, 24 Md. 447; Smith v. Alex- 468 CONTRACTS. 700 principal seeks to take advantage of the contract/^ However, by the weight of authority an agent who executes a note on be- half of his principal without disclosing his agency, there being nothing on the face of the instrument to show that he is acting as agent, does not bind his undisclosed principal where he has done nothing to ratify or adopt the agent's act." This would seem to be true of written contracts generally.^^ A further ex- ception is recognized where the third party with full knowledge of the facts elects to hold the agent liable. After he has made this election he cannot hold the undisclosed principal.''^ Other ander, 31 Mo. 193; Higgins v. Dell- inger, 22 ]Mo. 397; Chandler v. Coe, 54 N. H. 561 ; Yates v. Repetto, 65 N. J. L. 294, 47 Atl. 632 ; Conro v. Port Henry Iron Co., 12 Barb. (N. Y.) 27; AIcGraw v. Godfrey, 14 Abb. Pr. (N. S.) (N. Y.) 397; Beebee v. Robert, 12 Wend. N. Y.) 413, 27 Am. Dec. 132; Inglehart v. Thousand Isle Hotel Co., 7 Hun (N. Y.) 547; Jessup v. Steurer, 75 N. Y. 613; Episcopal Church V. Wiley & Rowland, 2 Hill Eq. (S. Car.) 584, Riley Eq. (S. Car.) 156, 30 Am, Dec. 386 ; Kempner v. Dil- lard, 100 Tex. 505, 101 S. W. 437, 123 Am. St. 822; Strauss v. Jones' Exrs., 37 Tex. 313. " Great Lakes Towing Co. v. Mill Transportation Co., 155 Fed. 11, 83 C. C. A. 607, 22 L. R. A. (N. S.) 769n. " See ante, § 467. See, however, in connection with the cases last cited, Coaling &c. Co. v. Howard, 130 Ga. 807, 61 S. E. 987, 21 L. R. A. (N. S.) 1051. "In re Miley, 187 Fed. 177; Lenney V. Finley, 118 Ga. 718, 45 S. E. 593; Borcheling v. Katz, 37 N. J. Eq. (10 Stewart) 150; Furculi v. Bittner, 69 Misc. (N. Y.)_112, 125 N. Y. S. 36; Briggs V. Patridge, 7 Jones & Spen. (N. Y.) 339, affd. 64 N, Y. 357, 21 Am, Rep. 617; Bourne v, Campbell, 21 R, I, 490, 44 Atl, 806; Hardman v. Kelly, 19 S. Dak. 608, 104 N, W, 272. See, however, Kirshbon v. Bonzel, 67 Wis. 178, 29 N. W, 907. '"Thomson v. Davenport, 9 B, & C, 78; Horsfall v, Fauntleroy, 10 B, & C. 755 ; Smyth v, Anderson, 7 C, B. 21 ; Irvine v, Watson, L, R, S Q, B, Div, 102; Armstrong v. Stokes, L. R, 7 Q, B. 598; Heald v. Kenworthy, 10 Exch. 739; Kymer v. Suwercropp, 1 Camp. 109; Macfarlane v. Gianna- copulo, 3 Hurl. & Nor. 860; Paterson V. Gandasequi, IS East 62 ; Addison v. Gandassequi, 4 Taunt. 374; Clealand V, Walker, 11 Ala. 1058, 46 Am, Dec. 238; Bush v. Devine, 5 Har. (Del) 375; Hyde v. Wolfe, 4 La, 234, 23 Am, Dec, 484 ; Homans v, Lambard, 21 Maine 308 ; Brown v. Bankers &c, Tel. Co,, 30 Md. 39; Schepflin v. Dessar, 20 Mo. App. 569; Greenberg v. Pal- mieri, 71 N. J. L. 83, 58 Atl. 297; Cheever v. Smith, 15 Johns. (N. Y.) 276. See also, Provenchere v. Rei- fess, 62 Mo. App. 50; Yates v. Re- petto, 65 N. J. L. 394, 47 Atl. 632; Elliott v. Bodine, 59 N, J, L, 567, i6 Atl, 1038, But suing the agent with- out knowledge of the principal does not amount to an election, Steele- Smith &c. Co. V, Potthase, 109 Iowa 413, 80 N. W, 517 ; Greenberg v. Pal- mieri, 71 N, J, L, 83, 58 Atl. 297; Ranger v, Thalmann, 39 Misc. (N. Y.) 420, 80 N, Y, S, 19, _ Nor does an assignment of the claim against the agent, together with authority to sue any undisclosed principal, amount to an election to hold either the agent or the principal to the exclusion of the other. Berry v. Chase, 179 Fed. 426, 102 C. C. A. 572. If he elects to hold the principal he cannot thereafter sue the agent. E. J. Codd & Co, v. Par- ker, 97 Md, 319, 55 Atl. 623; Green- berg V. Palmieri, 71 N, J, L, 83, 58 Atl, 297 ; Pennsylvania Casualty Co, v. Washington &c. Cement Co,, 63 Wash. 689, 116 Pac. 284. See also, Pittsburg Plate Glass Co. v. Roquemore (Tex. Civ. App,), 88 S, W, 449: Weil v, Raymond, 142 Mass. 206, 7 N. E, 860. 7° I AGENTS. § 469 authorities recognize a further exception to the efifect that if the principal has paid the agent or if the state of accounts between the agent and principal would make it unjust that the seller should call on the principal the fact of payment or such state of accounts would be an answer to the action brought by the seller where he had looked to the responsibility of the agent. In other words, the undisclosed principal is not liable where he has fully paid and settled with the agent in good faith in regard to the transaction before the third party has intervened with his claim." § 469. Rights and remedies of principal. — This subject has been discussed in the preceding section and nothing further will be added at this point. Further consideration of the subject, however, especially with reference to the rights and remedies in particular cases and classes of agency will be found in the chap- ter on Agency in a subsequent volume. § 470. Rights and remedies of agent. — The agent has a right to sue on a contract made in his own name and ostensibly for himself even though it is in fact made for an undisclosed or unnamed principal.'* And this has been held true regardless of whether the other party knew of his agency or not." The agent may also sue in case he has some special right or interest in the contract. To enable an agent to sue in his own name, however, there must be something more than the mere powers of a naked agent.*" Thus the mere possession of land as agent does not entitle him to sue for damages sustained by the burning of grass and injury thereby to the land.*^ The agent may sue where he has any beneficial interest in the performance of the contract*^ "Thompson v. Davenport, 9 Barn. 132; Cochran v. Siegfried (Tex. Civ. & C. 78; Thomas v. Atkinson, 38 Ind. App.), 75 S. W. 542. 248 ; Rathbone v. Tucker, IS Wend. " Tustin &c. Assn. v. Earl Fruit Co., (N. Y.) 498; Hooper v. Robinson, 98 121 Cal. xviii, S3 Pac. 693. U S. 528, 25 L. ed. 219. '" Barkley v. Wolf skehl, 25 Misc. ™ Georgia South & F. R. Co. v. (N. Y.) 422, 54 N. Y. S. 934. Marchman, 121 Ga. 235, 48 S. E. 961 ; " Galveston, H. & S. A. R. Co. v. Beard v. Sloan, 38 Ind. 128; Sharp v. Stockton, 15 Tex. Civ. App. 145, 38 Tones 18 Ind. 314, 81 Am. Dec. 359; S. W. 647. To same effect, Chatfield Keown & Co. v. Vogpl, 25 Mo. App. v. Clark, 123 Ga. 867, 51 S. E. 743. 35; Ludwig v. Gillsspie, 105 N. Y. "'^Hearshy v. Hichox, 12 Ark. 125. 653, 11 N. E. 835; Beebee v. Robert, To same effect. Field v. Price, 50 Ga. 12 Wend. (N. Y.) 413, 27 Am. Dec. 135. § 470 CONTRACTS. 702 or where the legal title is in the agent/' It is also apparent that the agent's right to sue is exclusive, where the agent has dealt expressly for himself and the other party has recognized him alone." When the agent is employed for a special purpose, which agency is terminated by conditions beyond his control he may act for himself in the matter when such conduct is not incon- sistent with his former relation to the principal. '° The right of the agent to look to the principal for compensation has already been mentioned. ^Douglas V. Wolf. 6 Kans. 88; La Coste V. De Armas, 2 La. 263; Close V. Hodges, 44 Minn. 204, 46 N. W. 335; Routh v. Kostachek, IS Okla. 234, 81 Pac. 429. In the above case the agent purchased a note with the principal's money and had it indorsed to himself. Triplett v. Morris, 18 Tex. Civ. App. SO, 44 S. W. 684. In the above case it was held that the agent might bring an action for the value of goods converted while in his possession. "Winchester v. Howard, 97 Mass. 303, 93 Am. Dec. 93. '= Clark v. Delano, 205 Mass. 224, 91 N. E. 299, 29 L. R. A. (N. S.) 595. In the above case the defendant was employed to procure a loan on defendant's property to prevent its being sold at foreclosure sale. This the defendant failed to do. At the sale he bought the property himself and procured a loan on the same in his own name. In the absence of any evidence of bad faith on defendant's part the sale was upheld. An agent to whom is given the power to sell or convey certain property of his principal cannot make a valid sale to himself, either directly or indirectly. In re Acken's Estate, 144 Iowa 519, 123 N. W. 187, Ann. Cas. 1912A, 1166 and note, together with numerous cases therein cited. However a sale of property by a principal direct to his agent is not voidable in every case It will be upheld where the transac- tion is open, honest and fair. Crosby v. Dorward, 248 111. 471, 94 N. E, 78, 140 Am. St. 230. See post, ch. 17, Fiduciaries. CHAPTER XVI. PARTNERS. § 475. Introductory. § 482. Limited partnership. 476. Definition and nature of part- 483. WIio may be partners. nership. 484. How relation is formed. 477. Tests by which to determine 485. Illustrative cases of partner- existence of partnership — Mu- ship. tual agency and profit-shar- 486. Cases in which relation was not ing. created. 478. Profit-sharing abandoned as an 487. Scope of partnership — Purpose exclusive test. and subject-matter generally. 479. Modified statement of profit 488. Dealing in real estate — Verbal sharing test. agreement — Statute of frauds. 480. Question of law or fact — In- 489. Illegal purpose or business. tention. 490. Scope of partnership and au- 481. Profit sharing evidence of a thority of partners. partnership — Estoppel. § 475. Introductory. — The subject of partnership will be fully treated in another volume ; but, as in the case of agents, it seems desirable to consider the subject briefly in this connection in so far as 'it is necessary to show what a partnership is, the capacity of parties, and the mode of creating the relation. At- tention will also be called in this chapter to the subject-matter of partnerships, and the general scope of the ordinary partner- ship, and of particular contracts of partnership, so far, at least, as to show the relations of the parties thereto. § 476. Definition and nature of partnership. — A partner- ship is the relation which results from a contract whereby two or more competent persons, each of whom is thereby given power to act in the double capacity of principal for himself and agent for his associates within the scope of their agreement, combine their property, labor or skill in a lawful enterprise or business, as principals, to share as common owners in the resultant profits.^ ^The following are various defini- share as common owners the profits tions that have been given of a part- of a business carried on by all or any nership. "Partnership is the relation of them on behalf of all of them." subsisting between two or more per- Schumaker on Partnership (2 ed.) 2. sons who have contracted together to "Partnership is a contract of two oi § 476 CONTRACTS. 704 A partnership is created by a contract, express or implied.^ It never is formed by operation of law.' Thus the relation of father and son/ husband and wife/ attorney and client," or the joint prosecution of a law suit,' does not give rise to a partner- more competent persons to place their money, effects, labor, and skill, or some or all of them, in lawful com- merce or business, and to divide the profits and bear the loss in certain proportion." 3 Kent Coram. 23. The above definition is approved in the following cases : Goldsmith v. Eichold, 94 Ala. 116, 10 So. 80, 33 Am. St. 97; Omaha &c. Refining Co. v. Rucker, 6 Colo. App. 334, 40 Pac. 853; Ellison v. Stuart, 2 Pennew. (Del.) 179, 43 Atl. 836; Waggoner v. First Nat. Bank, 43 Nebr. 84, 64 N. W. 112. "Part- nership, often called co-partnership, is usually defined to be a voluntary contract between two or more com- petent persons to place their money, effects, labor, and skill, or some or all of them, in lawful commerce or business, with the understanding, that there shall be a communion of the profits thereof between them." Story on Partnership (6 ed.) § 2. The above definition has been substantially adopted in the following cases : Stone v. Boone, 24 Kans. 337; Post v. Kim- berlv, 9 Johns. (N. Y.) 470; Niagara County V. People, 7 Hill. (N. Y.) 504; Harvey v. Childs, 28 Ohio St. 319, 22 Am. Rep. 387 ; In re Gibb's Estate, 157 Pa. 59, 27 Atl. 383, 22 L. R. A. 276; Galveston &c. R. Co. v. Davis, 4 Tex. Civ. App. 468, 23 S. W. 301 ; Berthold V. Goldsmith, 24 How. (U. S.) 536, 16 L. ed. 762; Hunt v. Oliver, 118 U. S. 211, 30 L. ed 128, 6 Sup. Ct. 1083. In Steele v. Michigan Buggy Co. (Ind. App.) 95 N. E. 435, quoting from Breinig v. Sparrow, 39 Ind. App. 455, 80 N. E. 37, it is said : "The ulti- mate and conclusive test of a partner- ship is the co-ownership of the profits of the business. If there is commu- nity of profits, a partnership follows. Community of profits means a pro- prietorship in them, as distinguished from a persona! claim upon the other associate. In other words, a property right in them from the start in one associate as much as in the other." See also, the case of Webster v. Clark, 34 Fla. 637, 16 So. 601, 27 L. R. A. 126, 43 Am. St. 217n, for an ex- haustive review of the subject. T. R. Foley Co. v. McKinley, 114 Minn. 271, 131 N. W. 316. By the Civil Code of Louisiana, art. 2825, a commercial partnership is one formed for the buying and selling of personal prop- erty, and the carrying of such prop- erty for hire by ships or other vessels. Shreveport Ice &c. Co. v. Mandel, 128 La. 314, 54 So. 831. Many other defi- nitions might be given, but it is un- necessary, since they are all about the same. ' Dunham v. Loverock, 158 Pa. 197, 27 Atl. 990, 38 Am. St. 838; Bartelt V. Smith, 145 Wis. 31, 129 N. W. 782, Ann. Cas. 1912A, 1194. See also, Lapento v. Lettieri, 72 Conn. 377, 44 Atl. 730, 77 Am. St. 315 ; Mayfield v. Turner, 180 111. 332, 54 N. E. 418; Briggs V. James H. Rice Co., 83 111. App. 618; Jones v. Stever, 154 Mo. App. 640, 136 S. W. 16; Simmons v. Ingram, 78 Mo. App. 603; Martin v. Baird, 175 Pa. St. 540, 34 Atl. 809. 'Bishop v. Georgeson, 60 111. 484; Metcalf v. Redmon, 43 111. 264; Bush- nell V. Consolidated Ice Mach. Co., 138 111. 67, 27 N. E. 596; Phillips v. Phillips, 49 111. 437; Ingals v. Fergu- son, 59 i\Io. App. 299; Freeman v. Bloomfield, 43 Mo. 391; Wilson's Exrs. V. Cobb's Exrs., 28 N. J. Eq. 177 ; In re Hedge's Appeal, 63 Pa. St. 273; In re Gibb's Estate, 157 Pa. St. 59, 27 Atl. 383, 22 L. R. A, 276. The so-called partnership by estoppel is no exception to this rule. A partnership inter se is not formed by estoppel, but persons who have been held out as partners may be liable to third per- sons as if they were partners. * Phillips V. Phillips, 49 111. 437. "Ingals V. Ferguson, 59 Mo. App. 299. "Willis V. Crawford, 38 Ore. 522, 63 Pac. 985, 64 Pac. 866, S3 L. R. A. 904. 'Wilson's Exr. v. Cobb's Exr., 28 N. J. Eq. 177. 70S PARTNERS. § 477 ship relation between such parties, in the absence of any agree- ment to that effect. One cannot be made a member of a partner- ship without his consent, express or impHed.* The formation of a partnership makes the members thereof mutual agents in the conduct of the partnership business, and in many cases this mu- tual agency is made the test whereby to determine the existence of a partnership.' § 477. Tests by which to determine existence of partner- ship — Mutual agency and profit-sharing. — But, while mutual agency may be a useful test in many instances, it is not strictly logical nor entirely satisfactory, and it has been pointed out by some of the courts, both of this country and England, that the agency results from the partnership and not the partnership from the agency.^" In other words, agency is one of the attributes of the partnership and is not the partnership itself. Up until the year i860 there was one universal test applied by which to de- termine the existence of a partnership. That test was: if the parties share in the profits of a business or transaction they are partners, at least as to third persons.^^ 'Coolidge V. Taylor (Vt.), 80 Atl. 1038. °Cox V. Hickman, 8 H. L. Cas. 268; CuUey V. Edwards, 44 Ark. 423, 51 Am. Rep. 614 ; Lee v. Cravens, 9 Colo. App. 272, 48 Pac. 159; Smith v. Knight, 71 111. 148, 22 Am. Rep. 94; Hallet V. Desban, 14 La. Ann. 529; Dutcher v. Buck, 96 Mich. 160, 55 N. W. 676, 20 L. R. A. 776; Parchen V. Anderson, 5 Mont. 438, 5 Pac. 588, 51 Am. Rep. 65 : Gibson v. Smith, 31 Nebr. 354, 47 N. W. 1052; Eastman V. Clark, 53 N. H. 276, 16 Am. Rep. 192; Halenback v. Rogers, 57 N. J. Eq. 199, 40 Atl. 576 ; Jernee v. Simon- son, 58 N. J. Eq. 282, 43 Atl. 370; National Union Bank v. Landon, 66 Barb. (N. Y.) 189; Harvey v. Childs, 28 Ohio St. 319, 22 Am. Rep. 387; Hart V. Kelley, 83 Pa. St. 286 ; Boston &c. Smelting Co. v. Smith, 13 R. L 27, 43 Am. Rep. 3 ; Robinson v. Allen, 85 Va. 721, 8 S. E. 835. A mutual agency exists. Morgan v. Parrel, 58 Conn. 413, 20 Atl. 614, 18 Am. St. 282; Brotherton v. Gilchrist, 144 45 — Contracts, Vol. I Mich. 274, 107 N. W. 890, 115 Am. St. 397. " Pooley V. Driver, 5 Ch. Div. 458 ; Meehan v. Valentine, 145 U. S. 611, 36 L. ed. 835, 12 Sup. Ct. 972. •"Waugh V. Carver, 2 H. Bl. 235; Grace v. Smith, 2 W. Bl. 1000; Hey- hoe v. Burge, 9 C. B. 431 ; Hesketh V. Blanchard, 4 East 143 ; Haw^ley v. Dixon, 7 U. C. Q. B. 218; Bank of Nova Scotia v. Haliburton, 2 N. S. 350; Emanuel v. Draughn, 14 Ala. 303; Pitkin v. Pitkin, 7 Conn. 307, 18 Am. Dec. Ill; Parker v. Canfield, 27 Conn. 250, 9 Am. Rep. 320; Citizens' Nat. Bank v. Hine, 49 Conn. 236; Plunkett V. Dillon, 4 Houst. (Del.) 338; Oppenheimer v. Clemmons, 18 Fed. 886; In re Neasmith, 147 Fed. 160, 77 C. C. A. 402 ; Buckner v. Lee, 8 Ga. 285; Brandon v. Connor, 117 Ga. 759, 45 S. E. 371, 63 L. R. A. 260; Niehoff v. Dudley, 40 III. 406; Hubbell v. Woolf, 15 Ind. 204; Price v. Alexander, 2 G. Gr. (Iowa) 427, 52 Am. Dec. 526; Miller V. Hughes, 1 A. K. Marsh (Ky.) 181, § 478 CONTRACTS. 706 § 478. Profit-sharing abandoned as an exclusive test. — In the year i860 the House of Lords abandoned profit-sharing as the exclusive test, and substituted therefor mutual agency, as the means by which to determine the existence of a partnership. ^- It is now well recognized that merely because one shares in the profits of a business he is not necessarily a partner for that rea- son." Thus, it is well settled that the receipt by one of a share of the profits of a business or venture as compensation for his services in such business or enterprise does not ipso facto consti- tute him a partner therein." An agreement whereby a ship cap- 10 Am. Dec. 719; Craig v. Alverson, 6 J. J. Marsh (Ky.) 609; Robertson V. DeLizardi, 4 Rob. (La.) 300; Bank of Tennessee v. McKeage, 11 Rob. (La.) 130; New Orleans v. Gau- threaux, 32 La. Ann. 1126; Pratt v. Langdon, 97 Mass. 97, 93 Am. Dec. 61; Sager v. Tupper, 38 Mich. 258; Connolly v. Davidson, IS Gil. (Minn.) 428, 2 Am. Rep. 154; Tamblyn v. Scott, 111 Mo. App. 46, 85 S. W. 918; Mason v. Hackett, 4 Nev. 420; Brom- ley V. Elliot, 38 N. H. 287, 75 Am. Dec. 182; Sheridan v. Medara, 10 N. J. Eq. 469, 64 Am. Dec. 464 ; Jernee v. Simonson, 58 N. J. Eq. 282, 43 Atl. 370; Walden v. Sherburne, 15 Johns. (N. Y.) 409; Dob v. Halsey, 16 Johns. (N. Y.) 34, 8 Am. Dec. 293; Heira- street v. Howland, 5 Denio (N. Y.) 68; Hodgman v. Smith, 13 Barb. (N. Y.) 302; Leggett v. Hyde, 58 N. Y. 272, 47 How. Pr. (N. Y.) 524, 17 Am. Rep. 244; Hacliett v. Stanley, 115 N. Y. 625, 22 N. E. 745; Southern Fertilizer Co. v. Reams, lOS N. Car. 283, 11 S. E. 467 and note; Cossack v. Burgwyn, 112 N. Car. 304, 16 S. E. 900; Aspinwall v. Williams, 1 Ohio 84; Second Nat. Bank v. Second Nat. Bank, 13 Ohio C. C. 561; Wood v. Vallette, 7 Ohio St. 172; Harvey v. Childs, 28 Ohio St. 319, 22 Am. Rep. 387; Edwards v. Tracy, 62 Pa. St. 374; Bartlett v. Jones, 2 Strob. (S. Car.) 471, 49 Am. Dec. 606; Cothran V. Marmaduke, 60 Tex. 370; Winship V. Bank of United States, 5 Pet. (U. S.) 529, 8 L. ed. 216; Kellogg v. Gris- wold, 12 Vt. 291; Brigham v. Dana, 29 Vt. 1 ; Chapman v. Devereux, 32 Vt. 616; Brown's Exr. v. Higgin- botham, 5 Leigh (Va.) 583, 27 Am. Dec. 618. To same effect, see Cox V. Hickman, 8 H. L. Cas. 268; Bullen V. Sharp, L. R. 1 C. P. 86; Cox v. Delano, 14 N. Car. 89. " Cox V. Hickman. 8 H. L. Cas. 268; Burdick's Cas. 65, Mechera Cas. 70. As has already been pointed out the ruling in this case has been criti- cized. "LacoUs V. Pike, 91 Ark. 26, 120 S. W. 144, 134 Am. St. 48; T. E. Foley Co. v. McKinley (Minn.), 131 N. W. 316; Cudahy Packing Co. v. Hibou (Miss.), 46 So. 72, 18 L. R. A. (N. S.) 975. See also, cases cited, ante, note 11. "Moore v. Smith, 19 Ala. 774; Zuber v. Roberts (Ala.), 40 So. 319; Olmstead v. Hill, 2 Ark. 346 ; Garden- hire V. Smith, 39 Ark. 280; Harably V. Bancroft, 83 Fed. 444: Gentry v. Singleton, 128 Fed. 679, 63 C. C. A. 231; Dawson Nat. Bank v. Ward, 120 Ga. 861, 48 S. E. 313; Mayfield V. Turner, 180 111. 332, 54 N. E. 418; Smvthe's Estate v. Evans, 209 111. 376, 70 N. E. 906; Price v. Alexander, 2 G. Gr. (Iowa) 427, 52 Am. Dec. 526; Johnson v. Carter, 120 Iowa 355, 94 N. W. 850; Fuqua v. Massie, 95 Ky. 387, 15 Ky. L. 849, 25 S. W. 875; Cline V. Caldwell, 4 La. 137; McWil- liams V. Elder, 52 La. 995, 27 So. 352 ; Holden v. French, 68 Maine 241; Sangston v. Hack, 52 Md. 173 ; Blan- chard v. Coolidge, 22 Pick. (Mass.) 151; Harris v. Threefoot (Miss.), 12 So. 335; ^tna Ins. Co. v. Bank of Wilcox, 48 Nebr. 544, 67 N. W. 449; Agnew v. Montgomery (Nebr.), 99 N. W. 820; Whitney v. Gretna State Bank, 50 Nebr. 438, 69 N. W. 933 ; Atherton v. Tilton, 44 N. H. 452; Hargrave v. Conroy, 19 N. J. Eq. 281 ; Lewis v. Greider, 49 Barb. 707 PARTNERS. § 4/8 tain is to be compensated for his services by a share in the profits of the voyage does not make him a partner." Nor does an agreement to accept, for services rendered, part payment from the profits of the business constitute the employe a partner.^" These principles apply to third persons, as well as the parties to the agreement, when the employe has not been held out as a partner and is not estopped to deny a partnership liability.^' It must be borne in mind, however, that one who accepts a part of the profits in lieu of a salary may be a partner, and in many cases it is difficult to determine whether such a person is in fact an employe or partner. Each case must be determined by the facts and circumstances peculiar to it. A further exception to the rule that profit-sharing constitutes a partnership is found where parties agree to a division of fees and commissions. Thus an agreement whereby a real estate agent or broker contracts to divide his commission with another person who finds a purchaser for the property does not consti- (N. Y.) 606; Grapel v. Hodges, 112 N. Y. 419, 20 N. E. 542; Smith v. Dunn, 44 Misc. (N. Y.) 288, 89 N. Y. S. 881; Lance v. Butler, 135 N. Car. 419, 47 S. E. 488; Ryder v. Jacobs, 182 Pa. 624, 38 Atl. 471 ; Pot- ter V. Moses, 1 R. I. 430; State v. Hunt, 25 R. I. 69, 54 Atl. 773 ; Mann V. Taylor, 5 Heisk. (Tenn.) 267; Southworth v. Thompson. 10 Heisk. (Tenn.) 10; Heidenheimer's Exrs. v. Walthew, 2 Tex. Civ. 501, 21 S. W. 981 ; Altgelt v. Alamo Nat. Bank, 98 Tex. 252. 83 S. W. 6; Morgan v. Stearns, 41 Vt. 398 ; Wilkinson v. Jett, 7 Leigh (Va.) 115, 30 Am. Dec. 493; Sodiker v. Applegate, 24 W. Va. 411, 49 Am. Rep. 252; La Flex v. Burss, n Wis. 538, 46 N. W. 801 ; Sohns v. Sloteman, 85 Wis. 113, 55 N. W. 158. "Mair V. Glennie, 4 M. & S. 240. To same effect. Brown v. Hicks, 24 Fed. 811; Baxter v. Rodman, 3 Pick. (Mass.) 435; Groizer v. Atwood, 4 Pick. (Mass.) 234; Rice v. Austin, 17 Mass. 197; Coffin v. Jenkins, 3 Story (U. S.) 108, Fed. Cas. No. 2948; Chapline v. Conant, 3 W. Va. 507, 100 Am. Dec. 1(£. As to when a partner- ship may exist in such case, see Bul- finch V. Winchenbach, 3 Allen (Mass.) 161. " Porter v. Curtis, 96 Iowa 539, 65 N. W. 824; St. Victor v. Danbert, 9 La. 314, 29 Am. Dec. 447; Stockman V. Mitchell, 109 Mich. 348, 67 N. W, Ziii; Morrow v. Murphy, 120 Mich, 204, 79 N. W. 193, 80 N. W. 255 _ Breman Sav. Bank v. Branch-Crookes Saw Co., 104 Mo. 425, 16 S. W. 209 Glore V. Dawson, 106 Mo. App. 107, 80 S. W. 55 ; Nutting v. Colt, 7 N. J Eq. 539; Cornell v. Redrew, 60 N. J Eq. 251, 47 Atl. 56; Miller v. Bartlet, 15 Serg. & R. (Pa.) 137. "Hodges V. Dawes, 6 Ala. 215 Loomis V. Marshall, 12 Conn. 69, 30 Am. Dec. 596 ; Burton v. Goodspeed 69 111. 237; Bradley v. Ely, 24 Ind: App. 2, 56 N. E. 44, 79 Am. St. 251 Macy V. Combs, 15 Ind. 469, 11 Am, Dec. 103 ; Shepard v. Pratt, 16 Kans 209; Chaffraix v. Lafitte, 30 La. Ann, 631; Bradley v. White, 10 Met, (Mass.) 303, 43 Am. Dec. 435; Hall v. Edson, 40 Mich. 651 ; Carpenter v. Leunave, 166 Mich. 610, 132 N. W, 477; Wiggins v. Graham, 51 Mo. 17 Voorhees v. Jones, 29 N. J. L. 270 Fitch V. Hall, 25 Barb. (N. Y.) 13 Edwards v. Tracy, 62 Pa. St. 374. Polk V. Buchanan, 5 Sneed. (Tenn.) 721; Goode v. McCartney, 10 Tex. 193; Bowman v. Bailey, 10 Vt. 170. § 478 CONTRACTS 708 tute a partnership, but only an agency/^ Nor does an agreement whereby lawyers contract to divide their fees with certain per- sons who bring them business constitute them partners in the general practice of law." Nor does the mere fact that two or more parties undertake the joint performance of a contract with a division of the contract price necessarily constitute them part- ners.^" Likewise, the mere fact that one receives a part of the profits of a business or enterprise as compensation for property, real or personal, furnished for use in a prolit-producing busi- ness does not as a general rule make such party a partner or cre- ate a partnership liability.^^ Thus, if a landlord rents his real es- tate, his buildings or appurtenances to another, and in lieu of a cash rent agrees to accept a per cent, of the tenant's profit, a part- nership is not thereby formed unless the landlord has some direct interest as principal in the business conducted by the tenant. ^^ "Allen V. Hudson, 78 111. App. 2>1(>\ Co., 64 Misc. (N. Y.) 652, 120 N. Y. Wass V. Atwater, 33 Minn. 82, 22 N. S. 592; affd. 145 App. Div. (N. Y.) W. 8; Sain v. Rooney, 125 Mo. App. 950, 130 N. Y. S. 1104 (money ad- 176, 101 S. W. 1127; Brackenridge v. vanced) ; England v. England, 1 Baxt. Claridge (Tex. Civ. App.), 42 S. W. (Tenn.) 108. 1005; Jones v. Murphy, 93 Va. 214, "McDonnell v. Battle House Co 24 S. E. 825. 67 Ala. 90, 42 Am. Rep. 99; Randle " Heshion v. Julian, 82 Ind. 576. See v. Barnard, 81 Fed. 682, 26 C. C. A. generally, to same effect, Alabama 568, 53 U. S. App. ZJI ; May v. Inter- Fertilizer Co. V. Reynolds, 79 Ala. national Loan &c. Co., 92 Fed. 445, 497; Wheeler v. Lack, 37 Ore. 238, 34 C. C. A. 448, 63 U. S. App. Hi; 61 Pac. 849; Southworth v. Thorap- Webster v. Clark, 34 Fla. 637, 16 So. son, 10 Heisk. (Tenn.) 10; Logic v. 601, 27 L. R. A. 126, 43 Am. St. 217n; Black, 24 W. Va. 1. Keiser v. State, 58 Ind. 379; Reed v. ""Matthews v. J. H. Luers Drug Murphy, 2 G. Gr. (Iowa) 574; Ran- Cc, 110 Iowa 231, 81 N. W. 464; Her- dall v. Ditch, 123 Iowa 582, 99 N. W. bert V. Callahan, 35 Mo. App. 498; 190; Russell v. Gray, 4 Ky. L. 619; Hawkins v, Mclntyre, 45 Vt. 496. See, Fuqua v. Massie, 95 Ky. 387, 15 Ky. however, Brandon v. Connor, 117 Ga. L. 849, 25 S. W. 875; Holmes v. Old 759, 45 S. E. 371, 63 L. R. A. 260; Colony R. Corp., 5 Gray (Mass.) 58; Voorhees v. Jones, 29 N. J. L. 270. Beecher v. Bush, 45 Mich. 188, 7 N. See also. Burns v. Niagara &c. Power W. 785, 40 Am. Rep. 465 ; Thayer v. Co., 145 App. Div. (N. Y.) 280. 130 Augustine, 55 Mich. 187, 20 N. W. N. Y. S. 54. 898, 54 Am. Rep. 361 ; Perrine v. Han- "'Nelms V. McGraw, 93 Ala. 245, kinson, 11 N. J. L. 181 ; Austin v. Neil, 9 So. 719; Gulf City Shingle Mfg. 62 N. J. L. 462, 41 At!. 834, which fol- Co. V. Boyles, 129 Ala. 192, 29 So. lows Wild v. Davenport, 48 N, J. L. 800 ; Vanderhurst v. De Witt, 95 Cal. 129, 7 Atl. 295, 57 Am. Rep. 552, and 57, 30 Pac. 94, 20 L. R. A. 595 ; Foug- disapproves Sheridan v. Medara, 10 ner v. First Nat. Bank, 141 111. 124, N. J. Eq. 469, 64 Am. Dec. 464; Cat- 30 N. E. 442; Pierpont v. Lanphere, skill Bank v. Gray, 14 Barb. (N. Y.) 104 in. App. 232; Robbins v. Mc- 471; Dake v. Butler, 7 Misc. (N. Y.) Knight, 1 Hals. (N. J. Eq.) 642, 45 302, 58 N. Y. St. 550, 28 N. Y. S. Am. Dec. 406; American Seeding 134; Dunham v. Rogers, 1 Pa. St. 255 ; Mach. Co. V. John Conklin's Sons Meehan v. Valentine, 145 U. S. 611, 709 PARTNERS. § 479 The same principle applies where a ship/^ franchise/* live stock or other property'^ is hired or leased to another, payment to be made in profits. The lessor and lessee, or bailor and bailee, are not for that reason alone considered as partners. Even a par- ticipation in both losses and profits of a given business has been held not of necessity to make the participants partners.^® § 479. Modified statement of profit-sharing test. — A gen- eral realization of the many exceptions which exist to the profit- sharing test and its consequent untrustworthiness has led to its modification. In its modified form the rule is usually stated thus : "Two or more persons who contract together to carry on a business and share in the profits as common owners thereof are partners."^^ In other words, in order to constitute one a partner 36 L. ed. 835, 12 Sup. Ct. 972 ; Bigelow V. Elliot, 1 Clifif. (U. S.) 28, Fed. Cas. No. 1399; Ambler v. Bradley, 6 Vt. 119; Boyer v. Anderson, 2 Leigh (Va.) 550; Z. C. Miles Co. v. Gordon, 8 Wash. 442, 36 Pac. 265 ; Chapline v. Conant, 3 W. Va. 507. 100 Am. Dec. 766. ^Thompson v. Snow, 4 Greenl. (Maine) 264, 16 Am. Dec. 263; Bridges v. Sprague &c. Iron Co., 57 Maine 543, 99 Am. Dec. 788; Holden V. French, 68 Maine 241; Cutler v. Winsor, 6 Pick. (Mass.) 335, 17 Am. Dec. 385; Bowman v. Bailey, 10 Vt. 170; Tobias v. Blin, 21 Vt. 544. ^Heimstreet v. Howland, 5 Denio (N. Y.) 68; Hanthorn v. Quinn, 42 Ore. 1, 69 Pac. 817 ; Bowyer v. Ander- son, 2 Leigh (Va.) 550. ^Nofsinger v. Goldman, 122 Cal. 609, 55 Pac. 425; Rider v. Hammell, 63 Kans. 733, 66 Pac. 1026 ; A. N. Kel- logg &c. Co. V. Farrell, 88 Mo. 594; W. D. Wilson Printing &c. Co. v. Bowker, 27 Abb. New Cas. (N. Y.) 153, 15 N. Y. S. 293; Murray Ginn- ing System Co. v. Exchange Nat. Bank (Tex. Civ. App.), 61 S. W. 508; Emberson v. McKenna, 3 Wills. (Tex. Civ. App. Cas.) § 94. 16 S. W. 409. See, however, Green v. Beesby, 1 Hodges 199; Dalton City Co. v. Dalton Mfg. Co., 33 Ga. 243; Dalton City Co. v. Hawes, 37 Ga. 115 ; Brandon v. Conner, 117 Ga. 759, 45 S. E. 371, 63 L. R. A. 260; Buckner V. Lee, 8 Ga. 285 ; Wells v. Babcock, 56 Mich. 276, 22 N. W. 809, 27 N. W. 575; Clinton Bridge &c. Works v. First Nat. Bank, 103 Wis. 117. 79 N. W. 47. '°Lee v. Cravens, 9 Colo. App. 272, 48 Pac. 159; Dwinel v. Stone, 30 Maine 384; Musser v. Brink, 68 Mo. 242; McDonald v. Matney, 82 Mo. 358; A. N. Kellogg Newspaper Co. v. Farrell, 88 Mo. 594; Clifton v. How- ard, 89 Mo. 192, 1 S. W. 26, 58 Am. Rep. 97 ; Mackie v. Mott, 146 Mo. 230, 47 S. W. 897; State v. Finn, 11 Mo, App. 546; Newberger v. Friede, 23 Mo. App. 631 ; Rankin v. Fairley. 29 Mo. App. 587; Roper v. Schaefer, 35 Mo. App. 30; Bank of Osceola v. Outhwaite, 50 Mo. App. 124; Martin v. Cropp, 61 Mo. App. 607; Gille Hardw. &c. Co. v. Harrison, 89 Mo. App. 154; Sain v. Rooney, 125 Mo. App. 176, 101 S. W. 1127; Miller v. Simpson, 107 Va. 476, 59 S. E. 378, 18 L. R. A. (N. S.) 962n. In the above case it was held that an agreement to share the losses was not necessary to constitute a partnership. See, however, Haswell v. Standring, 152 Iowa 291, 132 N. W. 417, holding that in Iowa an essential element of a partnership relation is the obliga- tion to share losses also. " See McCrary v. Slaughter, 58 Ala. 230; McGill v. Dowdle, 33 Ark. 311; Wheeler v. Farmer, 38 Cal. 203: Hodgson V. Fowler, 24 Colo. 278, 50 Pac. 1034; Norwalk v. Ireland, 68 Conn. 1, 35 Atl. 804 ; Ellison v. Stuart, § 48o CONTRACTS. 710 his right to share in the profits must result from the fact that he is a part owner of them. If the per cent, of the profits due him is a mere personal obligation owed him by his associate such per- son is not a partner.^^ § 480. Question of law or fact — Intention. — Under the modern theory the existence of a partnership is treated largely as a question of fact.^" But when the terms of the agreement and 2 Pennew. (Del.) 179, 43 Atl. 836; Webster v. Clark, 34 Fla. 637, 16 So. 601, 27 L. R. A. 126, 43 Am. St. 217n ; Stubbs V. Fleming, 92 Ga. 354, 17 S. E. 935 ; State Nat. Bank v. Butler, 149 111. 575, 36 N. E. 1000; Bradley v. Ely, 24 Ind. App. 2, 56 N. E. 44, 79 Am. St 251; Steele v. Michigan Buggy Co. (Ind. App.), 95 N. E. 435; Price V. Alexander, 2 G. Gr. (Iowa) 427, 52 Am. Dec. 526; Heard v. Wilder, 81 Iowa 421, 46 N. W. 1075; Jones v. Davies, 60 Kans. 309, 56 Pac. 484, 72 Am. St. 354 ; Tanner v. Hughes (Ky.), SO S. W. 1099; Woodward v. Cowing, 41 Maine 9, 66 Am. Dec. 211 ; Staples V. Sprague, 75 Maine 458; ThiUman v. Benton, 82 Md. 64; 33 Atl. 485 ; Dwight v. Brewster, 1 Pick. (Mass.) 50, 11 Am. Dec. 133; Dutcher V. Buck, 96 Mich. 160, 55 N. W. 676. 20 L. R. A. 776 ; Bohrer v. Drake, 33 J.Iinn, 408, 23 N. W. 840; Herbert v. Callahan, 35 Mo. App. 498; Morrison V. Bennett, 20 Mont. 560, 52 Pac. 553, 40 L. R. A. 158; Gates v. Jolinson, So Nebr. 808, 77 N. W. 407 ; Eastman V. Clark, 53 N. H. 276, 16 Am. Rep. 192 ; Robbins v. McKnight, 5 N. J. Eq. G42, 45 Am. Dec. 406; Willey v. Ren- ner, 8 N. Mex. 641, 45 Pac. 1132; Mc- Govern v, Robertson, 116 X. Y. 61, 5 S. E. 467, 22 N. E. 398; Southern Fertilizer Co. v. Reams, 105 N. Car. 283, 11 S. E. 467; Braithwaite v. Aiken, 1 N. Dak. 475, 48 N. W. 361 ; Flower v. Barnekoff, 20 Ore. 132, 25 Pac. 370, 11 L. R. A. 149; Walker v. Tupper, 152 Pa. St. 1, 25 Atl. 172; Jones V. McMichael, 12 Rich. (S. Car.) 176; Spencer v. Jones (Tex. Civ. App.), 47 S. W. 29; Meehan v. Valentine, 145 U. S. 611, 36 L. ed. 835, 12 Sup, Ct. 972; Owen v. Oviatt, 4 Utah 95, 6 Pac. 527 ; Cook v. Carpen- ter, 34 Vt. 121, 80 Am. Dec. 670; Commercial Bank v. Miller, 96 Va. 357, 31 S. E. 812; Chapline v. Conant, 3 W. Va. 507, 100 Am. Dec. 766; Lathrop v. Knapp, 27 Wis. 214; Bar- telt V. Smith, 145 Wis. 31, 129 N. W. 782, Ann. Cas. 1912 A, 1195. ^Ellsworth V. Tartt, 26 Ala. 733, 62 Am. Dec. 749; Vanderhurst v. De Witt, 95 Cal. 57, 30 Pac. 94, 20 L. R. A. 595; Mason v. Sieglitz, 22 Colo. 320, 44 Pac. 588 ; Allen v. Hudson, 78 111. App. 376; Hallett v. Desvan, 14 La. Ann. 529; Thillman v. Benton, 82 Md. 64, 33 Atl. 485 ; Marsh v. Mueller, 96 Mich. 488, 56 N. W. 71; Fay v. Davidson, 13 Gil. (Minn.) 491; Bruen V. Kansas City &c. Fair Assn., 40 Mo. App. 425; Mason v. Hackett, 4 Nev. 420; Robbi-ns v. McKnight, 5 N. J. Eq. 642, 45 Am. Dec. 406; Wormser V. Lindauer, 9 N. Mex. 23, 49 Pac. 896; Walker v. Tupper, 152 Pa. St. 1, 25 Atl. 172; Stevens v. Gainesville Xat. Bank, 62 Tex. 499; Fish v. Thompson, 68 Vt. 273, 35 Atl. 174; Bowser v. Anderson, 2 Leigh (Va.) 550 ; Sodiker v. Applegate, 24 W. Va. 411, 49 Am. Rep. 252n; Cooper v. Tappan, 9 Wis. 361. In the case of Clark v. Emery, 58 W. Va. 637, 52 S. E. 770, 5 L. R. A. (N. S.) 503n, quoting from Sodiker v. Applegate, 24 W. Va. 411, 29 Am. Rep. 252, it is said : "To constitute a partnership be- tween parties who share in the profits, the interest in the profits must be mu- tual, — each person must have a spe- cific interest in them as a principal trader; he is not a partner merely be- cause he receives a part of the profits as compensation for his services." '"Robinson v. Green, 5 Har. (Del.) 115; Ruggles v. Buckley, 158 Fed. 950, Sfi C. C. A. 154; Adamson v. Guild. 177 Mass. 331, 58 N. E. 1081; Dens- more V. Mathews, 58 Mich. 616, 26 N. W. 146; McDonald v. Matney, 80 Mo. 358 (proved by the best attainable evi- dence) ; Seabury v. Belles, 51 N. J. L. 103, 16 Atl. 54, 11 L. R. A. 136; 711 PARTNERS § 480 the facts are all admitted the question as to whether or not a partnership exists is a question of law.^° In determining the existence of a partnership it is well settled that the true contract and intention of the parties is looked to at least as between them- selves, in order to establish the existence of such relation." This has led to a general statement that, as between the immediate par- ties, a partnership is formed and exists only by their intention to form such a relationship,'^^ but the law looks to the substance and not the form. It is not what the parties call their relation that determines but what they actually agree upon in their con- tract.^^ It is the intent to do those things which constitute a partnership that should usually determine whether or not that relation exists between the parties.^* But, on the other hand, if Spencer v. Jones, 92 Tex. 516, SO S. W. 118, 71 Am. St. 870. See also, Meagher v. Reed, 14 Colo. 335, 24 Pac. 681, 9 L. R. A. 455. "Morgan v. Farrel, 58 Conn. 413, 20 Atl. 614, 18 Am. St. 282; Schmidt V. Balling, 91 111. App. 388; Janney V. Springer, 78 Iowa €1 , 16 Am. St. 460, 43 N. W. 461; Kingsbury v. Tharp, 61 Mich. 216, 28 N. W. 74; Farmer's Ins. Co. v. Ross, 29 Ohio St. 429. " Cox V. Hickman, 8 H. L. Cas. 268 ; MoUwo V. Court of Wards, L. R. 4 P. C. 419; Badeley v. Consolidated Bank, 38 Ch. Div. 238; Earle v. Art Li- brary Pub. Co., 95 Fed. 544; Webster V. Clark, 34 Fla. 611, 16 So. 601, 27 L. R. A. 126, 43 Am. St. 217; Niehoff v. Dudley, 40 111. 406; National Surety Co. V. T. B. Townsend Brick & Con- tracting Co., 176 111. 156, 52 N. E. 938; Stevens v. Faucet, 24 111. 483; Lintner v. Millikin, 47 111. 178; Brad- ley V. Ely, 24 Ind. App. 2, 56 N. E. 44, 79 Am. St. 251 ; Cannon v. Brush Elec. Co., 96 Md. 446, 54 Atl. 121, 94 Am. St. 584; Beecher v. Bush, 45 Mich. 188, 7 N. W. 785, 40 Am. Rep. 465, Mechem's Cases, 86; Gray v. Gibson, 6 Mich. 300; A. N. Kellogg Newspaper Co. v. Far- rell, 88 Mo. 594; Jernee v. Simon- son, 58 N. J. Eq. 282, 43 Atl. 370; Central City Sav. Bank v. Walker, (>(> N. Y. 431; Hayward v. Barron, 19 N. Y. S. 383, 46 N. Y. St. 665; Salter v. Ham, 31 N, Y. 321 ; Boston &c. Smelting Co. v. Smith, 13 R. I. 27, 43 Am. Rep. 3; Polk V. Buchanan, S Sneed (Tenn.) 721, Burdick's Cases 62. See also. Ex parte Hamper, 17 Ves. 407; Culleyv. Edwards, 44 Ark. 423, 51 Am. Rep. 614; Kerr v. Potter, 6 Gill (Md.) 404; Wright v. Taylor, 9 Wend. (N. Y.) 538; Hazard v. Hazard, 1 Story (U. S.) 371, Fed. Cas. No. 6279. ""Walker v. Hirsch, L. R. 27 Ch. Div. 460 ; Chisholm v. Cowles, 42 Ala. 179 ; Randle v. State, 49 Ala. 14 ; Nelms V. McGraw, 93 Ala. 245, 9 So. 719; Gulf City Shingle Mfg. Co. v. Boyles, 129 Ala. 192, 29 So. 800; Wheeler v. Farmer, 38 Cal. 203 ; Morgan v. Far- rel, 58 Conn. 413, 20 Atl. 614, 18 Am. St. 282; Hazard v. Hazard, 1 Story (U. S.) 371, Fed. Cas. No. 6279; In re Pierson, 10 Nat. Bankr. Reg. 107, Fed. Cas. No. 11153; Ellsworth v. Pomeroy, 26 Ind. 158; T. E. Foley Co. v. McKinley (Minn.), 131 N. W. 316; Fairly v. Nash, 70 Miss. 193, 12 So. 149 ; Mackie v. Mott, 146 Mo. 230, 47 S. W. 897; Hughes v. Ewing, 162 Mo. 261, 62 S. W. 465 ; Smith v. Dunn, 44 Misc. (N. Y.) 288, 89 N. Y. S. 881 ; Willis v. Crawford, 38 Ore. 522, 63 Pac. 985, 64 Pac. 866, 53 L. R. A. 904; Cleveland v. Anderson, 2 Will- son Civ. Cas. Ct. App. (Tex.), § 146. "^ Martin v. Martin, 1 N. B. Eq. 515 ; Trustees &c. v. Oland, 35 N. S. 409. "^Bestor v. Barker, 106 Ala. 240, 17 So. 389; Chapman v. Hughes, 104 48o CONTRACTS 712 the terms of the contract or the facts are not such as to make the parties partners, or authorize that conclusion, they will not be declared to be partners even though they intended to form a part- nership and call themselves partners. ^'^ It is not necessary to adopt a firm name to constitute a partnership,**" nor it is necessary that the relation be called a partnership.^^ The law on this branch Cal. 302, 37 Pac. 1048, 38 Pac. 109; Mason v. Sieglitz, 22 Colo. 320, 44 Pac. 588; Parker v. Canfield, 37 Conn. 2S0, 9 Am. Rep. 317; Webster v. Clark, 34 Fla. 637, 16 So. 601, 43 Am. St, 217n, 27 L. R. A. 126; Pursley v. Ramsey, 31 Ga. 403 ; Fougner v. First Nat. Bank, 141 111. 124, 30 N. E. 442; Griffen v. Cooper, SO 111. App. 257; Hart V. Hiatt, 2 Ind. T. 245, 48 S. W. 1038; Cooley v. Broad, 29 La. Ann. 345, 29 Am. Rep. 332; Halliday v. Bridewell, 36 La. Ann. 238; Thillman V. Benton, 82 Md. 64, 33 Atl. 485; Gunnison v. Langley, 3 Allen (Mass.) 337; Beecher v. Bush, 45 Mich. 188, 7 N. W. 785, 40 Am. Rep. 465 ; Vaiden V. Hawkins (Miss.), 6 So. 227; Mul- hall V. Cheatham, 1 Mo. App. 476; Van Kuren v. Trenton Locomotive &c. :\Ifg. Co., 13 N. J. Eq. 302; Sheridan V. jNIedara, 10 N. J. Eq. (2 Stockton's Ch.) 469, 64 Am. Dec. 464; Mumford V. Nicoll, 20 Johns. (N. Y.) 611; Leggett V. Hyde, 58 N. Y. 272, 47 How. Prac. (N. Y.) 524, 17 Am. Rep. 244; Manhattan Brass & Mfg. Co. V. Sears, 45 N. Y. 797, 6 Am. Rep. 177; Ma- govern V. Robertson, 116 N. Y. 61, 22 N. E. 398, 5 L. R. A. 589 ; Kloster- man v. Hayes, 17 Ore. 325, 20 Pac. 426; Righter v. Farrell, 134 Pa. 482, 19 Atl. 687; Boston &c. Smelting Co. v. Smith, 13 R. I. 27, 43 Am. Rep. 3 ; Burnley v. Rice, 18 Tex. 481; Dur- yea v. Whitcomb, 31 Vt. 395 ; Rosen- field V. Haight, 53 Wis. 260, 10 N. W. 378, 40 Am. Rep. 770. '^ Oliver V. Gray. 4 Ark. 425 ; Sailors V. Nixon- Jones Printing Co., 20 111. App. 509; Dwinel v. Stone, 30 Maine 384; Rose v. Buscher, 80 Md. 225, 30 Atl. 637; Ryder v. Wilcox, 103 Mass. 24; McDonald v. Matney, 82 Mo. 358 ; Van Kuren v. Trenton Loco- motive &c. Co., 13 N. J. Eq. 302; Burnett v. Snyder, 76 N. Y. 344 ''"Meaherv. Cox, 37 Ala. 201; Howze V. Patterson, 53 Ala. 205, 25 Am. Rep. 607; Ruggles v. Buckley, 158 Fed. 950, 86 C. C. A. 154; Santiago v. Morgan, Fed. Cas. No. 12331 ; Iloffm. Ops. 447; Fleming v. Lay, 109 Fed. 952, 48 C. C. A. 748 ; Johnson v. Carter, 120 Iowa 355, 94 N. W. 850 ; Staples V. Sprague, 75 Maine 458; Wadsworth V. Manning, 4 Md. 59 ; McKasy v. Hu- ber, 65 Minn. 9, 67 N. W. 650 ; Tharp V. Marsh, 40 Miss. 158; Farnum v. Patch, 60_ N. H. 294, 49 Am. Rep. 313 ; Musier v. Trumphour, 5 Wend. (N. Y.) 274; Orvis v. Curtiss, 157 N. Y. 657, 52 N. E. 690, 68 Am. St. 810; Johnson v. Alexander, 46 App. Div. (N. Y.) 6, 61 N. Y. S. 351, affd. in 167 N. Y. 60S, 60 N. E. 1113; Jones V. Walker, 51 Misc. (N. Y.) 624, 101 N. Y. S. 22 ; Gregg Twp. v. Half-Moon Twp., 2 Watts. (Pa.) 342; Jones v. McMichael, 12 Rich. L. (S. Car.) 176; Griffiths v. Buffum, 22 Vt. 181, 54 Am. Dec. 64; Upham v. Hewitt, 42 Wis. 85; Smith v. Putnam, 107 Wis. 155, 82 N. W. 1077, 83 N. W. 288. "Northern R. Co. v. Patton, 15 U. C. C. P. 332 ; Martin v. Martin, 1 N. B. Eq. 515; Trustees & Co. v. Oland, 35 N. S. 409 ; Plunkett v. Dillon, 4 Houst. (Del.) 338; Fougner v. First Nat. Bank, 41 111. App. 202; Griffen v. Cooper, 50 111. App. 257; Johnson v. Carter, 120 Iowa 355, 94 N. W. 850; Cooley V. Broad, 29 La. Ann. 345, 29 Am. Rep. 332; Beecher v. Bush, 45 Mich. 188, 7 N. W. 785, 40 Am. Rep. 465; Webb v. Johnson, 95 Mich. 325, 54 N. W. 947 ; King v. Remington, 36 Minn. 15, 29 N. W. 352; Fairly v. Nash, 70 Miss. 193, 12 So. 149; Teas v. Woodruff (N. J. Ch.), 10 Atl. 392; Manhattan Brass & Mfg. Co. v. Sears, 45 N. Y. 797, 6 Am. Rep. 177; Clift V. Barrow, 108 N. Y. 187, IS N. E. 327; Hawkins v. Campbell, 48 App. Div. (N. Y.) 43, 62 N. Y. S. 678; Fay V. Waldron, 3 N. Y. S. 894 ; Pell V. Baur, 41 N. Y. St. 99, 16 N. Y. S. 713 PARTNERS. § 481 of the subject has been summarized as follows: "The question is one of intention, and a contract of partnership will no more be created by the court against the will of a party than will those of any other character. One may not make a contract of partner- ship, and, calling it an agency, have it treated as such by the court for when the facts are known the law fixes the legal consequences which flow from them. Neither may one secure the benefits of the relation of a partner and by contract secure immunity from its liabilities as against creditors. But when the contract is sus- ceptible of the construction put upon it by the parties at the time it was made, such construction will be accepted by the courts as the true one."^^ § 481. Profit-sharing evidence of a partnership — Estoppel. — Under the above rule participation in the profits of a business is evidence tending to prove the existence of a partnership.'*'' In many cases participation in the profits of a business is consid- ered as presumptive,*" or prima facie*^ evidence of a partner- 258, affd. 133 N. Y. ill, 31 N. E. 224; Wolf V. Lawrence, 33 Misc. (N. Y.) 481, 67 N. Y. S. 900; Webb v. Hicks, 123 N. Car. 244, 31 S. E. 479; Wood V. Vallette, 7 Ohio St. 172; First Nat Bank v. Ballard, 19 Ohio C. C. 63, 10 Ohio C. D. 298; Kelley V. Bourne, IS Ore. 476, 16 Pac. 40; Poundstone v. Hamburger, 139 Pa. 319, 20 Atl. 10S4; Price v. Middleton, 75 S. Car. 105, 55 S. E. 156; Board- man V. Keeler, 2 Vt. 65; Bartelt v. Smith, 145 Wis. 31, 129 N. W. 782; Spaulding v. Stubbings, 86 Wis. 255, 56 N, W. 469, 39 Am. St. 888. "'Fairly v. Nash, 70 Miss. 193, 12 So. 149. See also, Beecher v. Bush, 45 Mich. 188, 7 N. W. 785, 40 Am. Rep. 465, which holds that every doubt must be resolved in favor of the intent of the parties. ""Badeley v. Consolidated Bank, L. R. 38 Ch. Div. 238; Ross v. Parkyns, L. R. 20 Eq. 331 ; Ex parte Tennant L. R. 6 Ch. Div. 303 ; Rector v. Rob- ins, 74 Ark. 437, 86 S. W. 667: Buford V. Lewis, 87 Ark. 412, 112 S. W. 963; In re Nea- smith, 147 Fed. 160, 11 C. C. A. 402; Boreing v. Wilson, ii Ky. L. 14, 108 S. W. 914 ; Corey v. Caldwell, 86 Mich. 570, 49 N. W. 611; Beecher V. Bush, 45 Mich. 188, 7 N. W. 785, 40 Am. Rep. 465; McAlpine v. Mil- len, 104 Minn. 289, 116 N. W. 583; Martin v. Cropp, 61 Mo. App. 607; Gibson v. Smith, 31 Nebr. 354, 47 N. W. 1052; Wild v. Davenport, 48 N. J. L. 129, 7 Atl. 295, 57 Am. Rep. 552; Merchants' Nat. Bank v. Stand- ard Wagon Co., 6 Ohio (N. P.) 264; Walker v. Tupper, 152 Pa. 1, 25 Atl. 172; In re Gibb's Estate, 157 Pa. 59, 27 Atl. 383, 22 L. R. A. 276; In re Darling's Estate, 7 Kulp (Pa.) 323. *> Pooley V. Driver, L. R. 5 Ch. Div. 458; Buford v. Lewis, 87 Ark. 412, 112 S. W. 963; Torbert v. Jeffrey, 161 Mo. 645, 61 S. W. 823; Tamblyn v. Scott, 111 Mo. App. 46, 85 S. W. 918; Price v. Middleton, 75 S. Car. 105, 55 S. E. 156; Cothran v. Marmaduke, 60 Tex. 370 ; Meehan v. Valentine, 145 U. S. 611, 36 L. ed. 835, 12 Sup. Ct. 972; In re Francis, 2 Sawy. (U. S.) 286, Fed. Cas. No. 5031; Bentley v. Brossard, 33 Utah 396, 94 Pac. 736. *" Walker v. Hirsch, L. R. 27 Ch. Div. 460; Blair v. Shaeffer, 33 Fed. 218, revd. 149 U. S. 248, 2,1 L. ed § 48i CONTRACTS. 714 ship/^ A great deal of confusion has arisen on this branch of the subject through a careless use of language on the part of the courts. They frequently state that two or more persons may be partners as to third persons and not as to each other; this is in- correct. If not partners inter se they are not partners at all. What is meant is that they have made themselves liable as if they were partners. This happens when one holds himself out as a partner or is with his knowledge or consent held out as such to the knowledge of the one who seeks to take advantage of it. The liability of such a person rests upon the doctrine of estoppel.*^ 721, 13 Sup. Ct. 856; Philips v. Sam- uel, 76 Mo. 657; Fourth Nat. Bank, V. Altheimer, 91 Mo. 190, 3 S. W. 858; Torbert v. Jeffrey, 161 Mo. 645, 61 S. W. 823; Roper v. Schaefer, 35 Mo. App. 30; Goddard-Peck Grocery Co. V. Berry, 58 Mo. App. 665; Glore V. Dawson, 106 Mo. App. 107, 80 S. W. 55 ; Waggoner v. First Nat. Bank, 43 Nebr. 84, 61 N. W. 112; Lefevre v. Silo, 112 App. Div. (N. Y.) 464, 98 N. Y. S. 321;Kootzv. Tuvian, 118 N. Car. 393, 24 S. E. 776; Boston &c. Smelting Co. v. Smith, 13 R. I. 31, 43 Am. Rep. 3 ; In re Ward, 2 Flip. (U. S.) 462, Fed. Cas. No. 17144; Robinson v. Allen, 85 Va. 721, 8 S. E. 835. " When it is said that there must be a joint ownership of the profits of a business this must not be confused with a joint ownership of the capital used in the business. Thus joint ownership of the property may mere- ly create a tenancy in common but not a partnership. La Cotts v. Pike, 91 Ark. 26, 120 S. W. 144, 134 Am. St. 48. See also, Clark v. Sidway, 142 U. S. 682, 35 L. ed. 1157, 12 Sup. Ct. 327; Thorndike v. De Wolf, 6 Pick. (Mass.) 120; Murphy v. Craig, 76 Mich. 155, 42 N. W. 1097; Baldwin V. Burrows, 47 N. Y. 199; Park- hurst V. Kinsman, 1 Blatch. (U. S.) 488, Fed. Cas. No. 10757. One dis- tinction between joint tenants and partners is that as between the lat- ter there is no right of survivorship. Cowles V. Garrett, 30 Ala. 341 ; Brad- ley V. Harkness, 26 Cal. 69; La So- ciete Francaise v. Weidmann, 97 Cal. 507, 32 Pac. 583; Simms v. Dame, 113 Ind. 127, 15 N. E. 217; Goell v. Morse, 126 Mass. 480; Putnam v. Wise, 1 Hill. (N. Y.) 234, 37 Am. Dec. 309; Farrand v. Gleason, 56 Vt. 633 ; Hun- gerford v. Gushing, 8 Wis. 332. The difference between a co-tenancy and a partnership is found mainly in the teraination of their relation and the methods by which a partner and a co- tenant may dispose of their separate interests. " Alabama Fertilizer Co. v. Reyn- olds, 85 Ala. 19, 4 So. 639 ; Jowers v. Phelps, 33 Ark. 465; Omaha &c. Smelting & Ref. Co. v. Rucker, 6 Colo. App. 334, 40 Pac. 853; Morgan v. Farrel, 58 Conn. 413, 20 Atl. 614, 18 Am. St. Rep. 282; Ellison v. Stuart, 2 Pennew. (Del.) 179, 43 Atl. 836; Fechteler v. Palm, 133 Fed. 462, 66 C. C. A. 336; Webster v. Clark, 34 Fla. 637, 16 So. 601, 27 L. R. A. 126, 43 Am. St. 217n; Barnett Line Steam- ers V. Blackmar, 53 Ga. 98; Reynolds V. Radke, 112 111. App. 575; Strecker v. Conn, 90 Ind. 469 ; Sherrod v. Lang- don, 21 Iowa 518; Rider v. Hammell, 63 Kans. 733, 66 Pac. 1026; Green v. Tavlor, 98 Ky. 330, 17 Ky. L. 897, 32 S. W. 945, 56 Am. St. 375 ; Grieff v. Boudousquie, 18 La. Ann. 631, 89 Am. Dec. 698; Rice v. Barrett, 116 Mass. 312; Bissell v. Warde, 129 Mo. 439. 31 S. W. 928; Parchen v. Anderson, 5 Mont. 438, 5 Pac. 588, 51 Am. Rep. 65 ; Sargent v. Collins, 3 Nev. 260 ; Seabury v. Bolles, 51 N. J. L. 103, 16 Atl. 54, 52 N. J. L. 413, 21 Atl. 715 PARTNERS. § 4S2 § 482. Limited partnership. — In many states statutory pro- vision is made for the formation of hmited partnerships. A hmited partnership is one where the firm consists of one or more general partners and one or several special partners, the latter be- ing liable for the debts or losses of the firm only to the amount of their several contributions in cash to the firm capital.** Provision is made by such statutes for the method in which the limited part- nership must be formed and for the publication of notice of the limited liability of certain members. Should there be a failure to comply with these statutory regulations the resulting partnership will be general, and not limited.*^ In some jurisdictions it is pro- vided or held that substantial compliance with the statutory pro- vision is sufficient.*" Other cases hold that such statute must be strictly complied with.*' Thus, where there was an omission of a required publication giving notice of the formation of such lim- ited partnership** or where the affidavit which stated that the special partner's contribution to the firm capital has been actually paid in was false,*" it has been held that there was a general part- 952, 11 L. R. A. 136; Vibbard v. Rod- erick, 51 Barb. (N. Y.) 616; Heye V. Tilford, 2 App. Div. (N. Y.) 346, 73 N. Y. St. 428, 37 N. Y. S. 751; Clark V. Rumsey, 59 App. Div. (N. Y.) 435, 69 N. Y. S. 102, appeal dis- missed in 178 N. Y. 592, 70 N. E. 1097 ; W. D. Wilson Printing Ink Co. V. Bowker, 27 Abb. N. Cas. (N. Y.) 153, 39 N. Y. St. 690, 15 N. Y. S. 293 ; Shaf er v. Randolph, 99 Pa. 250 ; Polk V. Buchanan, 5 Sneed. (Tenn.) 721; Grabenheimer v. Rinkskoff, 64 Tex. 49; Cottrill v. Van Duzen, 2 Vt. 511. " Black's Law Dictionary, 874 ; Rob- bins Electric Co. v. Webber, 172 Pa. St. 635, 34 Atl. 116. ^Hutchins v. Page, 204 Mass. 284, 90 N. E. 565, 134 Am. St. 656; Van- horn V. Corcoran, 127 Pa. St. 255, 18 Atl. 16, 4 L. R. A. 386; Ussery v. Crusman (Tenn. Ch. App.), 47 S. W. 567. "A limited partnership that has not complied with the law of its crea- tion is not a limited partnership at all. It is, however, a partnership in which all the members are liable as at com- mon law." Blumenthal v. Whitaker, 170 Pa. St. 309, 33 Atl. 103. "Cummings v. Hayes, 100 111. App. 347; Manhattan Co. v. Laimbeer, 108 N. Y. 578, 15 N. E. 712 ; Spencer Op- tical Mfg. Co. V. Johnson, S3 S. Car. 533, 31 S. E. 392 ; Deckert v. Chesa- peake Western Co., 101 Va. 804, 45 S. E. 799. See also, Buckle v. Her, 40 Misc. (N. Y.) 214, 81 N. Y. S. 631; Patterson v. Youngs, 129 N. Y. S. 673. *' Holliday v. Union Bag & Paper Co., 3 Colo. 342; In re Thayer, 23 Fed. Cases No. 13867, 7 Am. L. Rev. 177; Pierce v. Bryant, 5 Allen (Mass.) 91; Haggerty v. Foster, 103 Mass. 17; Matter of Allen, 41 Minn. 430, 43 N. W. 382. ''Davis V. Sanderlin, 119 N. Car. 84, 25 S. E. 815. " Myers v. Edison General Electric Co., 59 N. J. L. 153, 35 Atl. 1069. In the above case the certificate .stated that the special partner had paid in his contribution, when it was not paid infact till about a week later. Held this rendered the special partner liable generally. To same effect, Patterson y. Youngs, 129 N. Y. S, 673. See in this connection Chick v. Robinson, 95 Fed. 619, 37 C. C. A. 205, 52 L. R. A. 833. In the above case the affidavit 4S- CONTRACTS. 716 nership. A limited partnership may also become general when upon renewal the assets of the firm are substantially less than they were at the time of its formation.^" A limited partnership also becomes general if it continues in business after the time for which it was created has expired.^ ^ The statutory provision for the renewal and continuance of a limited partnership must be complied with.^^ § 483. Who may be partners. — Any person who has ca- pacity to contract may make a valid contract of partnership. Alien friends may be partners, but if war breaks out between their respective countries they become alien enemies, and the partner- ship is dissolved or suspended. ^^ Since the contracts of an infant are voidable, and not void, he may enter into a partnership agree- ment," but he may usually rescind his contract and thus escape liability.'^" On the same principle it would seem that a partner- ship agreement entered into in good faith with an insane person, not under guardianship and in ignorance of such person's con- dition is valid until disaffirmed. "^ At common law the contracts was filed stating that the amount of the special partner's contribution to the capital stock had been paid in. The special partner's check for the amount had actually been received, but was not presented until after the affidavit was made. It was held that the receipt of the check justified the affidavit. For other cases in which it was held that there had not been a sufficient compliance with the statute see Spencer Optical Mfg. Co. v. John- son, S3 S. Car. 533, 31 S. E. 392; Blu- menthal v. Whitaker, 170 Pa. St. 305, 33 Atl. 103 ; First Nat. Bank v. Crev- line, 177 Pa. St. 270, 35 Atl. 595. ""Durgin V. Colburn, 176 Mass. 110, 57 N. E. 213. See also, Lee v. Burn- ley, 195 Pa. St. 58, 45 Atl. 668; Fourth Street Nat. Bank v. Whitaker, 170 Pa. St. 297, 33 Atl. 100. " Sarmiento v. The Catharine C, 110 Mich. 120, 67 N. W_. 1085; Colum- bia Bank v. Berolzheimer, 33 App. Div. (N. Y.) 235, S3 N. Y. S. 417. °" Strang v. Thomas, 114 Wis. 599, 91 N. W. 237. ^ McAdams v. Hawes, 9 Bush (Ky.) 15 ; Kershaw v. Kelsey, 100 Mass. S61, 97 Am. Dec. 124, 1 Am. Rep. 142; Woods V. Wilder, 43 N. Y. 164; New York Life Ins. Co. v. Statham, 93 U. S. 24, 23 L. ed. 789. " Mehlhop V. Rae, 90 Iowa 30, 57 N. W. 650; Vinsen v. Lockard, 7 Bush (70 Ky.) 458; Bush v. Linthicum, 59 Md. 344; Dana v. Stearns, 3 Cush. (Mass.) 372; Osborn v. Farr, 42 Mich. 134, 3 N. W. 299; Goodnow v. Em- pire Lumber Co., 31 Minn. 468, 18 N. W. 283, 47 Am. Rep. 798; Kerr v. Bell, 44 Mo. 120; Gay v. Johnson, 32 N. H. 167; Continental Nat. Bank V. Strauss, 137 N. Y. 148, 32 N. E. 1066; Bixler v. Kresge, 169 Pa. 405, 32 Atl. 414, 47 Am. St. Rep. 920 ; Mil- ler V. Sims, 2 Hill. (S. Car.) 479; Penn v. Whitehead, 17 Grat. (Va.) 503, 94 Am. Dec. 478. ■"See ante. Infants, ch. 11. "^•=See Menkins v. Lightner, 18 III. 282; Fay v. Burditt, 81 Ind. 433, 42 Am. Rep. 142; Behrens v. McKenzie, 23 Iowa 333, 92 Am. Dec. 428 (none of which are partnership cases). 717 PARTNERS. 4^53 of a feme covert were void,"' therefore she could not become the member of a partnership"* except perhaps in those instances where she could contract as a feme sole, as in reference to her separate estate, or where her husband was an alien enemy."° The disabilities of coverture have, in the main been removed, and where this is true married women may form a copartnership."" The disabilities of coverture may not be entirely removed, conse- quently in some jurisdictions it is held that she cannot enter into a partnership agreement with her husband."^ In other jurisdictions it is held she may."^ One firm of partners may form a partner- ship agreement with another firm. In other words two or more partnerships may form a partnership."^ Ordinarily a contract is considered as ultra vires"* where by it a corporation seeks to en- ter into a partnership with either another corporation or a natural " See ante, chap. 13, Married Women. "Brown v. Jewett, 18 N. H. 230; Carey & Co. v. Burrwess, 20 W. Va. 571, 43 Am. Rep. 790. " See ante, chap. 13, Married Women. "Abbott V. Jackson, 43 Ark. 212; Conant v. National State Bank, 121 Ind. 323, 22 N. E. 250; Dupuy v. Sheak, 57 Iowa 361, 10 N. W. 731; Plumer v. Lord, 5 Allen (Mass.) 460; Vail V. Winterstein, 94 Mich. 230, 53 N. W. 932, 18 L. R. A. 515, 34 Am. St. 334; Merritt v. Day, 38 N. J. L. 32, 20 Am. Rep. 362; Zimmerman v. Erhard, 8 Daly (N. Y.) 311; Little V. Hazlett, 197 Pa. 591, 47 Atl. 855. "'■ Gilkerson-Sloss Commission Co. V. Salinger, 56 Ark. 294, 19 S. W. 747, 16 L. R. A. 526, 35 Am. Rep. 105; Mayer v. Soyster, 30 Md. 402; Bowker v. Bradford, 140 Mass. 521, S N. E. 480 ; Board of Trade v. Hay- den, 4 Wash. 263, 30 Pac. 87, 32 Pac. 224, 16 L. R. A. 530, 31 Am. St. Rep. 919 ; Fuller v. McHenry, 83 Wis. 573, 53 N. W. 896, 18 L. R. A. 512. ""Dressel v. Lonsdale, 46 111. App. 454; Hoaglin v. Henderson, 119 Iowa 720, 94 N. W. 247, 61 L. R. A. 756, 97 Am. St. 335; Louisville &c. Co. V. Alexander, 16 Ky. L. 306, 27 S. W. 981 ; Zimmerman v. Erhard, 83 N. Y. 74, 38 Am. Rep. 396; Suau v. Caffe, 122 N. Y. 308, 25 N. E. 488, 9 L. R. A. S93n. "^ Mayrant v. Marston, 67 Ala. 453 ; Bullock V. Hubbard, 23 Cal. 495, 83 Am. Dec. 130; Butler v. American Toy Co., 46 Conn. 136; In re Hamil- ton, 1 Fed. 800; Wilson v. Morse, 117 Iowa 581, 91 N. W. 823; Meador v. Hughes, 14 Bush (Ky.) 652; Simon- ton V. McLain, 37 La. Ann. 663 ; Gage V. Rollins, 10 Mete. (Mass.) 348; Gulick V. Gulick, 14 N. J. L. 578; Willey V. Renner, 8 N. Mex. 641, 45 Pac. 1132; Commercial Bank v. Mil- ler, 96 Va. 357, 31 S. E. 812. "Central R. & B. Co. v. Smith, 76 Ala. 572, 52 Am. Rep. 353 ; Fechteler V. Palm Bros. & Co., 66 C. C. A. 336, 133 Fed. 462; Stephens v. Gall, 179 Fed. 938; Gunn v. Central R. Co., 74 Ga. 509; Ledsinger v. Central Line Steamers, 75 Ga. 567 ; Marine Bank v. Ogden, 29 111. 248; Mestier & Co. v. Chevalier P. Co., 108 La. Ann. 562, 32 So. 520; Conkling v. Washington University, 2 Md. Ch. 497; Common- wealth V. Smith, 10 Allen (Mass.) 448, 87 Am. Dec. 672; Hanson v. Paige, 3 Gray (Mass.) 239; Wittenton Mills V. Upton, 10 Gray (Mass.) 582, 71 Am. Dec. 681 ; French v. Dono- hue, 29 Minn. Ill, 12 N. W. 354; Au- rora Bank v. Oliver, 62 Mo. App. 390 ; Franz v. Barr Dry Goods Co. (Mo.), Ill S. W. 636; Burke v. Concord R. 484 CONTRACTS. 718 person. This power must be expressly given them,"^ although there are cases which lay down the rule that a corporation may, under certain circumstances be justified in entering into a part- nership arrangement for the purpose of better conserving its ob- jects and for the protection of its property."" The corporation may, in a proper case, be held liable as if it were a partner, where necessary to prevent injustice,"^ or the corporation itself be per- mitted to recover on a partnership agreement."^ Tenants in com- mon may be partners in conducting business on the land without affecting the legal status of the land."' § 484. How relation is formed. — As has already been pointed out a partnership is formed by a voluntary agreement of the parties, and not by operation of law.'" It is not essential to Co., 61 N. H. 160, 8 Am. & Eng. R. Cas. 552 ; Van Kuren v. Trenton L. 6 M. Mfg. Co., 13 N. J. Eq. 302 ; New York &c. Canal Co. v. Fulton Bank, 7 Wend. (N. y.) 412; Bissell v. Michigan &c. R. Co., 22 N. Y. 258; People V. North River &c. Co., 121 N. Y. 582, 24 N. E. 834, 18 Am. St. Rep. 843, 9 L. R. A. 33 ; State v. Standard Oil Co., 49 Ohio St. 137, 30 N. E. 279, IS L. R. A. 145, 34 Am. St. 541 ; Geurinck v. Alcott, 66 Ohio St. 94, 63 N. E. 714; Boyd v. American Carbon Blank Co., 182 Pa. St. 206, il Atl. 937; Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. 173; JNIallory v. Hananer Oil Works, 86 Tenn. 598, 88 S. W. 396; Sabine Tram Co. v. Ban- croft, 16 Tex. Civ. App. 170, 40 S. W. 837; Thomas v. West Jersey R. Co., 101 U. S. 71, 25 L. ed. 950 ; Lamoille V. R. Co. V. Bixby, 55 Vt. 235. "It is familiar law that a corporation can- not enter into a partnership." Will- iams V. Johnson, 208 Mass. 544, 95 N. E. 90. See, however, Catskill Bank V. Gray, 14 Barb. (N. Y.) 471. "'Fechteler v. Palm Bros. & Co., 66 C. C. A. 336, 133 Fed. 462 ; Butler v. American Toy Co., 46 Conn. 136; Sa- bine Tram Co. v. Bancroft, 16 Tex. Civ. App. 170, 40 S. W. 837. It can only exist by virtue of an express grant of power or from necessary im- plication from such a grant, so that it may be said that it must be expressly given in any event. Indeed, it is so inconsistent with the ordinary powers and duties of such bodies that it could very seldom, if ever, arise from mere implication in any sense. °° See, generally, Mullins v. ^lillcr, 1 Low. Can. Jur. 121 ; Alallon v. Craig, 3 Ont. 541; Bullock v. Hubbard, 23 Cal. 495, 83 Am. Dec. 130; In re Ham- ilton, 1 Fed. 800; In re Warner, 7 Nat. Bank Reg. 47 ; Raymond v. Put- nam, 44 N. H. 160; Smith v. Wright, 5 Sandf. (N. Y.) 113. " Cleveland Paper Co. v. Courier Co., €1 Mich. 152, 34 N. W. 556; French v. Donohue, 29 ]Minn. HI, 12 N. W. 354; Johnson v. Weed &c. .Mfg. Co., 103 Wis. 291, 79 N. W. 236. See also, Breinig v. Sparrow, 39 Ind. App. 455, 80 N. E. 37; Nims v. .Mt. Hermon Boys' School, 160 Mass. 177, 35 N. E. 776, 22 L. R. A. 364, 39 Am. St. 467 ; Manhattan Brass & Mfg. Co. V. Sears, 45 N. Y. 797, 6 Am. Rep. 177; Allen v. Woonsocket Co., 11 R. I. 288. "^ Cameron v. First Nat. Bank (Tex.), 34 S. W. 178. See also, Hackett v. Multnomah R. Co., 12 Ore. 124, 6 Pac. 659, 53 Am. Rep. 327 ; Wil- son v. Carter Oil Co., 46 W. Va. 469, 33 S. E. 249. °» Holton V. Guinn, 76 Fed. 96. ™See, ante, §§ 476, 480. See also, Causler v. Wharton, 62 Ala. 358; Haycock v. Williams, 54 Ark. 384, 16 S. W. 3; ^lor- gan V. Farrell, 58 Conn. 413, 20 719 PARTNERS. § 48s the existence of a partnership that such agreement should be in writing," and may be either express or impHed." The intent of the parties usually governs." As in the case of all contracts, there must be a consideration for the contract whereby the part- nership relation is formed. This element may, however, be sup- plied by the mutual promises of the respective parties or their contributions of either property, labor or skill toward the part- nership business.''* § 485. Illustrative cases of partnership. — As a general rule where two or more persons enter into a business arrangement whereby they have a community interest in the property used in such business, and also in the profits arising therefrom, they are regarded as partners.'^ Thus, where the parties agree that one Atl. 614, 18 Am. St. 282; Bushnell v. Consolidated Ice M. Co., 138 111. 67, 27 N. E. 596 ; Miller v. Hughes, 1 A. K. Marsh (Ky.) 181, 10 Am. Dec. 719; Halliday v. Bridewell, 36 La. Ann. 238; Ingals v. Ferguson, 59 Mo. App. 299; Groves v. Tallman, 8 Nev. 178; Wilson's Exrs. v. Cobb's Exrs., 28 N. J. Eq. 177; Dawson v. Pogue, 18 Ore. 94, 22 Pac. 637, 6 L. R. A. 176; In re Gibb's Estate, 157 Pa. 59, 27 Atl. 383, 22 L. R. A. 276; Cocke v. Evans' Heirs, 9 Yerg. (Tenn.) 287; Setzer v. Beale, 19 W. Va. 274 ; Hol- gate V. Downer, 8 Wyo. 334, 57 Pac. 918. It will not arise by operation of law. Central City Sav. Bank v. Walker, 66 N. Y. 424; Heye v. Til- ford, 2 App. Div. (N. Y.) 346, Ti N. Y. St. 428, 2,1 N. Y. S. 751 ; Dunham V. Loverock, 158 Pa. St. 197, 27 At!. 990, 38 Am. St. 838; Butler's Sav. Bank v. Osborne, 159 Pa. St. 10, 28 Atl. 163, 35 Am. St. 665. See also, cases cited, ante, §§ 476, 480. " Simmons v. Ingram, 78 Mo. App. 603; Bartelt v. Smith, 145 Wis. 31, 129 N. W. 782. See also, Ruggles v. Buckley, 153 Fed. 950, 86 C. C. A. 154; Huggins v. Huggins, 117 Ga. 151, 43 S. E. 759; Jones v. Davies, 60 Kans. 309, 56 Pac. 484, 72 Am. St. 354. "'Holme V. Hammond, L. R. 7 Ex. 218; Savannah Rail &c. Co. v. Sabel (Ala.), 40 So. 88 ; Plunkett v. Dillon, 4 Houst. (Del.) 338; Bowen v. Ruth- erford, 60 111. 41, 14 Am. Rep. 25; Phillips V. Phillips, 49 111. 437 ; Halli- day V. Bridewell, 36 La. Ann. 238 ; Sargent v. Collins, 3 Nev. 260; Chase V. Barrett, 4 Paige (N. Y.) 148; Cen- tral City Sav. Bank v. Walker, 66 N. Y. 424; In re Gibb's Estate, 157 Pa. St. 59, 27 Atl. 383, 22 L, R. A. 276; Dunham v. Loverock, 158 Pa. St. 197, 27 Atl. 990, 38 Am. St. 838; Provi- dence Mach. Co. V. Browning, 72 S. Car. 424, 52 S. E. 117. " See, ante, § 476, Nature of part- nership. " Alabama Fertilizer Co. v. Reynolds, 79 Ala. 497; Trayes v. Johns, 11 Colo. App. 219, 52 Pac. 1113; McKinnon v. McKinnon, 56 Fed. 409, 5 C. C. A. 530; Mitchell v. O'Neal, 4 Nev. 504; Coleman v. Eyre, 45 N. Y. 38; Emery v. Wilson, 79 N. Y. 78; Breslin v. Brown, 24 Ohio St. 565, IS Am. Rep. 627 ; Belcher v. Con- ner, 1 S. Car. 88; Kimmins v. Wil- son, 8 W. Va. 584; Holgate v. Downer, 8 Wyo. 334, 57 Pac. 918. '= Webster v. Clark, 34 Fla. 637, 16 So. 601, 27 L. R. A. 126, 43 Am. St. 217n ; Lockwood v. Doane, 107 III. 235; Ryder v. Wilcox, 103 Mass. 24; Southern Fertilizer Co. v. Reames, 105 N. Car. 283, 11 S. E. 467; Jones v. McMichael, 12 Rich. L. (S. Car.) 176; Cothran v. Marmaduke, 60 Tex. 370; Dow V. Dempsey, 21 Wash. 86, 57 Pac. 355. § 485 CONTRACTS. 720 shall furnish the capital and the building, the other manage the purchases and sales for a drug department, such department to be charged with rent and the other expenses of conducting it and the net profits or losses to be divided among the parties in certain proportions, this has been held to constitute a partnership.'" Acts whereby the parties seek to avoid partnership liability, such as concealing the fact that a partnership exists or obscuring the purposes for which the parties associate themselves together, are of no avail when the fact that a partnership does exist is once established. Thus, where parties associated themselves together to deal in lumber land, one to furnish the capital and the other to render services in conducting such business, the profits to be di- vided between them after paying interest on the money advanced by the first party, it was held that a partnership was created, not- withstanding the parties did not make public the fact of their business connection, but instead concealed it.'^ It has been held that an agreement between landowners to sell timber off their land,'' to sell land,'" or an agreement by one to furnish money necessary for the manufacture of an article patented by the other,*" an agreement whereby one party is to make estimates and furnish iron for bridges, and the other to supply additional material and work and solicit orders,'^ or an agreement whereby two attorneys take certain designated cases together, and agree to pay the costs and divide the profits,*^ constitutes a partnership when the essential elements are present. It has also been held that where the testimony showed that the defendant was to fur- nish money to buy mules, and that the plaintiff was to furnish the feed and care for them and help sell them, and that they were then to divide the profits, it was sufficient to uphold a finding that a partnership existed.^^ It must constantly be borne in mind that a "partnership is a fact — a fact sometimes made out like other "Leber V. Dietz, 22 Misc. (N. Y.) ™ Illinois Malleable Iron Co. v. 524, 49 N. Y. S. 1002. Reed, 102 Iowa 538, 71 N. W. 423. " Ruggles V. Buckley, 158 Fed. 950, " Clinton &c. Iron Works v. First 86 C C A 154. Nat. Bank, 103 Wis. 117, 79 N. W. "Tanner v. Hughes (Ky.), 50 S. W. 47. 1099 '"' Southworth v. People, 183 111. 621, ™ Cronkrite v. Trexler, 187 Pa. St. 56 N. E. 407. 100 41 Atl 22 "" Jones v. Stever, 154 Mo. App. 640, 136 S. W. 16. 721 PARTNERS. § 486 facts, from circumstances as well as by direct evidence."^* If it appears to have been the purpose of the parties to enter into the relation of partners, all subterfuges of either, resorted to in order to evade liability for possible losses vi^hile securing certainty of the advantages to be derived from the relation, must be disre- garded/° § 486, Cases in which relation was not created. — Since the existence of a partnership is a question of fact to be proven there must be evidence which establishes a partnership relation. In the absence of evidence to establish this fact the parties cannot be held as partners.*^ All the elements necessary to constitute a partnership contract must be present. Thus, where one merely hired the use of another hotel from day to day and agreed to pay therefor a sum equal to one-third of the gross receipts and gross earnings, it was held that no partnership existed since the parties were not mutual agents. The one who owned the build- ing had nothing whatever to do with the business conducted in it." It has also been held that where there is a total lack of evi- dence to show that there was an agreement between the parties by which they would share in the profits, or that there was any understanding as to the proportion in which such profits should be shared, and where the evidence of the party to the agreement who sought to establish the partnership indicated that he himself had no idea, much less an intention, of bearing any loss, no part- nership was shown.*' Neither does the fact that one looks to the profits of a business, in which he has no interest and under an- »*Fechteler v. Palm, 133 Fed. 462, 566, 106 N. W. 668, 110 N. W. 669, 66 C. C. A. 336; In re Neasmith, 147 7 L. R. A. (N. S.) 945, 121 Am. St. Fed. 160, n C. C. A. 402; Ruggles v. 822. See also, ante, § 476, Nature Buckley, 158 Fed. 950, 86 C. C. A. of partperships. 154. The foregoing has special ref- ^La Cotts v. Pike, 91 Ark. 26, 120 erence to those cases in which there is S. W. 144, 134 Am. St. 48. In the no agreed statement of facts. above case the instrument relied on to '^ Johnson v. Carter, 120 Iowa 355, show the partnership agreement was a 94 N. W. 850. deed. This deed was held to make the *° See Harris v. Sessler, €1 Tex. 383, parties tenants in common, and not 3 S. W. 316. partners. The case holds that there "Beecher v. Bush, 45 Mich. 188, 7 must be something more than a joint N. W. 785, 40 Am. Rep. 465. To the ownership of property to constitute effect that there must be a mutual a partnership, agency, see Norton v. Brink, 75 Nebr. ^ — Contracts, Vol. I 487 CONTRACTS. 722 other's management, for payment of a personal debt make the former a partner with the latter. The amount due is merely a personal debt, and remains such if not paid out of the profits.^" An agreement whereby two attorneys agree to conduct a certain litigation for a client, the client to pay the attorney's fees and other necessary costs, the attorneys to divide the fees, does not constitute the attorneys partners.*" Nor does an association of dredgers whereby they fix prices and divide up work constitute a partnership."^ It has also been held that no partnership was in fact formed, notwithstanding the parties agreed to purchase a tract of land "in partnership" when one of the parties did nothing on her part, contributed nothing, and risked nothing, since there was no consideration to support the contract."^ § 487. Scope of partnership — Purposes and subject-matter generally. — This subject may be considered in two aspects, which are : first, the purposes for which a partnership may be formed in general; and, second, the scope of a particular part- nership agreement. These two phases of the subject will be briefly treated in the order named. As is made apparent by the section in this chapter on the nature of a partnership the funda- mental idea of a partnership inter se is that it is formed for the purpose of trade or gain in business, and that each partner has the right of common ownership in the profits, and to participate in a division of them."'' As a result, associations, the objects of " Cudahy Packing Co. v. Hibou deny the partnership does not make (Miss.), 46 So. Ti, 18 L. R. A. (N. S.) him a partner inter se. 975. See, however, Webb v. Hicks, '^ See ante, § 476, Nature of 123 N. Car. 244, 31 S. E. 479. partnership. "A partnership is a °° Willis V. Crawford, 38 Ore. S22, 63 creature of the law merchant, Pac. 985, 64 Pac. 866, 53 L. R. A. 904. and its origin is founded in " Potter V. Morris &c. Dredging Co., that law which is the custom of 59 N. J. Eq. 422, 46 Atl. 537. merchants, recognized and enforced "^ Norton v. Brink, 75 Nebr. 566, 106 by the courts. One essential feature N. W. 668, 110 N. W. 669, 7 L. R. A. which must be always present to con- (N. S.) 945, 121 Am. St. 822. See stitute a partnership is that it is also, ante, on this subject, § 476, Na- formed for business purposes. It is a ture of partnership. It must be un- voluntary association, arising out of derstood that the two preceding sec- contract, for the purpose of carrying tions have nothing to do with estop- on a joint undertaking, with the ob- pel. One may be estopped to deny the ject of making a profit to be shared partnership and be held liable as if he among the partners. Every definition were a partner. See ante, § 481. The of a partnership includes the purpose mere fact that one is estopped to of business and profit. It is a com- 723 ''ARTNERS. § 487 which are social, literary or merely to further the public good or mental advancement of their members, and not for pecuniary gain, are not generally considered partnerships."* The same is true of a social and religious organization, the members of which put their property in common and live together as one family and have everything in common, there being no profit-sharing and no business."' An agreement whereby several persons keep house together in order to diminish expenses, one to pay certain des- ignated bills and the other to pay all other bills, has been held not to constitute a partnership.^^ Nor does a mere agreement to hold land in common constitute a partnership." On the other hand, voluntary associations for mutual relief in times of sickness or want, by means of funds raised by initiation fees, dues and the like, are often considered as partnerships."^ A partnership may exist merely for the consummation of a single transaction, venture or undertaking."" It may exist for the pur- pose of buying, dealing or speculating in land.^ Thus it has been bination of two or more persons of capital, or labor, or skill, or some or all of these, for the purpose of busi- ness for the common benefit." Teed V. Parsons, 202 111. 455, 66 N. E. 1044; Missouri Bottlers' Assn. v. Fennerty, 81 Mo. App. 525. "Lewis V. Tilton, 64 Iowa 220, 19 S. W. 911, 52 Am. Rep. 436; Burt v. Lathrop, 52 Mich. 106, 17 N. W. 716; McMahon v. Rauhr, 47 N. Y. €1 ; La- fond V. Deems, 81 N. Y. 507, 8 Abb. N. Cas. (N. Y.) 344; Ostrom v. Greene, 161 N. Y. 353, 55 N. E. 919; Ash V. Guie, 97 Pa. St. 493, 39 Am. Rep. 818; Winona Lumber Co. v. Church, 6 S. Dak. 498, 62 N. W. 107. "'Teed v. Parsons, 202 111. 455, 66 N. E. 1044 (where it was more in the nature of a tenancy in common). "Austin V. Thomson, 45 N. H. 113. "'Huckabee v. Nelson, 54 Ala. 12; Gilmore v. Black, 11 Maine 485; Trie- ber V. Lanahan, 23 Md. 116; Sikes V. Work, 6 Gray (Mass.) 433; Ballou V. Spencer, 4 Cow. (N. Y.) 163; White V. Fitzgerald, 19 Wis. 504. »' Pearce v. Piper, 17 Ves. 1 ; Beau- mont V. Meredith, 3 Ves. & B. 180; Gorman v. Russell, 14 Cal. 531 ; Babb V. Reed, 5 Rawle (Pa.) 151, 28 Am. Dec. 650. " Harris v. Umsted, 79 Ark. 499, 96 S. W. 146; Bates v. Babcock, 95 Cal. 479, 30 Pac. 605, 16 L. R. A. 60S, 29 Am. St. 133 ; Robinson v. Compher, 13 Colo. App. 343, 57 Pac. 754; Plunkett V. Dillon, 4 Houst. (Del.) 338; Win- stanley v. Gleyre, 146 111. 27, 34 N. E. 628; Jones v. Davies, 60 Kans. 309, 56 Pac. 484, 72 Am. St. 354; Cochran V. Anderson County Nat. Bank, 83 Ky. 36; Ripley v. Colby, 23 N. H. 438; Clark v. Rumsey, 59 App. Div. (N. Y.) 435, 69 N. Y. S. 102; Demar- est V. Koch, 129 N. Y. 218, 29 N. E. 296; Hulett v. Fairbanks, 40 Ohio St. 233; Yeoman v. Lasley, 40 Ohio St. 190 ; Flower v. Barnekoff, 20 Ore. 132, 25 Pac. 370, 11 L. R. A. 149; Pierson V. Steinmyer, 4 Rich. (S. Car.) 309; Spencer v. Jones, 92 Tex. 516, 50 S. W. 118, 71 Am. St. 870; Williamson V. Nigh, 58 W. Va. 629, 53 S. E. 124. ^ Bates V. Babcock, 95 Cal. 479, 30 Pac. 605, 16 L. R. A. 605, 29 Am. St. 133 ; Winstanley v. Gleyre, 146 111. 27, 34 N. E. 628; Holmes v. McCray, 51 Ind. 358, 19 Am. Rep. 735; Richards V. Grinnell, 63 Iowa 44, 18 N. W. 668, 50 Am. Rep. 727; Simpson v. Tenney, 41 Kans. 561, 21 Pac. 634; Jones v. Davies, 60 Kans. 309, 56 Pac. 484, 72 Am. St. 354; Dudley v. Littlefield, 21 § 488 CONTRACTS 724 held that an agreement whereby the parties are to co-operate in the sale of lands, on which one of them holds an option, and share in the profits, constitutes a partnership agreement.^ On the other hand it has been held that advance of money to purchase and erect buildings in consideration of interest on the money ad- vanced and one-half the profits of the sale, which profits are guaranteed to be equal at least to a certain sum, the advances and profits being secured by a mortgage, does not constitute the party advancing a partner with the other/ A partnership may be formed for the purpose of one transaction in real estate.* § 488. Dealing in real estate — Verbal agreement — Statute of frauds. — By the great weight of authority a parol part- nership agreement to deal in real estate is valid and not void as within the statute of frauds,^ although in a number of jurisdic- Maine 418; Winslow v. Young, 94 Maine 145, 47 Atl. 149; Morgan v. Smouse, 103 Md. 463, 63 Atl. 1070; Corey v. Cadwell, 86 Mich. 570, 49 N. W. 611; Menage v. Burke, 43 Minn. 211, 45 N. W. 155, 19 Am. St. 235; Hunter v. Whitehead, 42 Mo. 524 ; Chester v. Dickerson, 54 N. Y. 1, 13 Am. Rep. 550; Williams v. Gillies, 75 N. Y. 197 ; Mitchell v. Tonkin, 109 App. Div. (N. Y.) 165, 95 N. Y. S. 669 ; Ludlow v. Cooper, 4 Ohio St. 1 ; Hulett V. Fairbanks, 40 Ohio St. 233; Kelley v. Bourne, 15 Ore. 476, 16 Pac. 40; Flower v. Barnekoff, 20 Ore. 132, 25 Pac. 370, 11 L. R. A. 149; Spencer V. Jones, 92 Tex. 516, 50 S. W. 118, 71 Am. St. 870. = Frazer v. Linton, 183 Pa. St. 186, 38 Atl. 589. See also, Clark v. Emery, 58 W. Va. 637, 52 S. E. 770, 5 L. R. A. (N. S.) 503, for a case somewhat similar, in which it was held that no partnership was formed. "Curry v. Fowler, 87 N. Y. 33, 41 Am. Rep. 343. "Bates V. Babcock, 95 Cal. 479, 30 Pac. 605, 16 L. R. A. 745, 29 Am. St. 133 ; Jones v. Davies, 60 Kans. 309, 56 Pac. 484, 72 Am. St. 354 ; Yeoman V. Lasley, 40 Ohio St. 190; Spencer v. Jones, 92 Tex. 516, 50 S. W. 118, 71 Am. St. 870, revg. (Tex. Civ. App.), 47 S. W. 29. See also, Bank of Mon- roe V. Drew, 126 La. 1028, 53 So. 129, 32 L. R. A. (N. S.) 255; Clark v. Sidway, 142 U. S. 682, 35 L. ed. 1157, 12 Sup. Ct. 327. See, however, Gott- schalk V. Smith, 156 111. 377, 40 N. E. 937, affg. 54 111. App. 341, to the contrary. "Dale V. Hamilton, 5 Hare 369, 16 L. J. Ch. 126, 11 Jur. 163; Archibald V. McNerhanie, 29 Can. Sup. Ct. 564; Bates V. Babcock, 95 Cal. 479, 30 Pac. 605, 16 L. R. A. 745, 29 Am. St. 133 ; Meagher v. Reed, 14 Colo. 335, 24 Pac. 681, 9 L. R. A. 455; McElroy v. Swope, 47 Fed. 380; Speyer v. Des- jardins, 144 111. 641, 32 N. E. 283, 36 Am. St. 473; Van Housen v. Copeland, 180 111. 74, 54 N. E. 169, affg. 79 111. App. 139; Holmes v. McCray, 51 Ind. 358, 19 Am. Rep. 735 ; Richards v. Grinnell, 63 Iowa 44, 18 N. W. 668, 50 Am. Rep. 727 ; Jones v. Davies, 60 Kans. 309, 56 Pac. 484, 72 Am. St. 354; Garth v. Davis, 120 Ky. 106, 27 Ky. L. 505, 85 S. W. 692, 117 Am. St. 571; Fountain v. Menard, 53 Minn. 443, 55 N. W. 601, 39 Am. St. 617; Newell v. Cochran, 41 Minn. 374, 43 N. W. 84; Hirbour v. Reeding, 3 Mont. 15 ; Ches- ter V. Dickerson, 54 N. Y. 1, 13 Am. Rep. 550 ; Buckley v. Doig, 188 N. Y. 238, 80 N. E. 913, 11 Am. & Eng. Ann. Cas. 263; Babcock v. Read, 99 N. Y. 609, 1 N. E. 141 ; Traphagen v. Burt, 67 N. Y. 30; Larkin v. Martin, 46 Misc. (N. Y.) 179, 93 N. Y. S. 198; Ostrander v. Snyder, 73 Hun (N. Y.) 725 PARTNERS. § 488 tions such an agreement is held void under the statute of frauds.^ Many of the cases, including several of those cited in the first note to this section, hold or concede that an interest in the land itself cannot be established by parol,^ but that a right to share in the profits resulting from such transaction may be established by parol/ It is believed that these last cases give expression to the true rule, and that the conflict in the decisions holding that a parol partnership agreement can or cannot be entered into to deal in real estate is more apparent than real, for it may well be that an interest in the land itself cannot be established by parol ; and yet at the same time a partnership agreement relating to the profits or dealing in land for profit can be shown without violating this rule.® It is also held as a general rule that a contract whereby two or more persons agree to prospect for and locate mining claims to be held in joint ownership by the parties is not within the statute, and need not be in writing." 378, 57 N. Y. St. 289, 26 N. Y. S. 263; Bailey v. Weed, 36 App. Div. (N. Y.) 611, 55 N. Y. S. 253; Falkner v. Hunt, 7i N. Car. 571 ; Flower v. Barnekoff, 20 Ore. 132, 25 Pac. 370, 11 L. R. A. 149; Case v. Seger, 4 Wash. 492, 30 Pac. 646. See also, Floyd v. Duffy, 68 W. Va. 339, 69 S. E. 993, 33 L. R. A. (N. S.) 883. °Smithv. Burnham, 3 Sumn. (U.S.) 435, Fed. Cas. No. 13019. To same effect, Rowland v. Boozer, 10 Ala. 690 ; Gray v. Palmer, 9 Cal. 639, dis- approved in Bates v. Babcock, 95 Cal. 479 30 Pac. 605, 16 L. R. A. 745, 29 Am. St. 133; Young v. Wheeler, 34 Fed. 98, from C. C. Dist. Colo, (con- tra Meagher v. Reed, 14 Colo. 335, 24 Pac. 681, 9 L. R. A. 455) ; Roub v. Smith, 61 Mich. 543, 28 N. W. 676, 1 Am. St. 619; Nester v. Sullivan, 147 Mich. 493, 111 N. W. 85, 9 L. R. A. (N. S.) 1106 (modified in 147 Mich. 508, 111 N. W. 1033) ; Bird v. Morri- son, 12 Wis. 138 ; Scheuer v. Cochem, 126 Wis. 209, 105 N. W. 573, 4 L. R. A. (N. S.) 427: Langley v. Sanborn, 135 Wis. 178, 114 N. W. 787. Under the civil code of Louisiana such agreement must be in writing. Pecot V. Armelin, 21 La. Ann. 667. See also, Norton v. Brink, 75 Nebr. 566, 106 N. W. 668, 110 N. W. 669, 7 L. R. A. (N. S.) 945, 121 Am. St. 822 (with which compare, however. Rice v. Par- rott, 76 Nebr. 501, 107 N. W. 840, 111 N. W. 583). And see Dunphy v. Ryan, 116 U. S. 491, 29 L. ed. 703, 6 Sup. Ct. 486. 'Morton v. Nelson, 145 Fed. 586, 72 N. E. 916; McKinley v. Lloyd, 128 Fed. 519. ' Wright v. Smith, 105 Fed. 841, 45 C. C. A. 87; Jones v. Patrick, 140 Fed. 403; Eaton v. Graham, 104 111. App. 296; In re Everhart's Appeal, 106 Pa. St. 349. ° See Beebe v. Olentine, 97 Ark. 390, 134 S. W. 936; Coward v. Clauton, 79 Cal. 23, 21 Pac. 359; Meagher v. Reed, 14 Colo. 335, 24 Pac. 681, 9 L. R. A. (N. S.) 455; Norton v. Brink, 75 Nebr. 566, 106 N. W. 668, 110 N. W. 669, 7 L. R. A. (N. S.) 945, 121 Am. St. 822 ; Rice v. Parrott, 76 Nebr. 501, 107 N. W. 840, 76 Nebr. 505, 111 N. W. 583; note in 102 Am. St. 238, 239. "Gore V. McBrayer, 18 Cal. 582; Settenbre v. Putnam, 30 Cal. 490; Moritz V. Lavelle, 77 Cal. 10, 18 Pac. 803, 11 Am. St. 229; Murley v. Ennis, 2 Colo. 300; Meagher v. Reed, 14 Colo. 335^ 24 Pac. 681, 9 L. R. A. 455 ; Meylett v. Brennan, 20 Colo. 242, 38 Pac. 75 ; Shea v. Nilima, 133 Fed. 209, 66 C. C. A. 263 ; Doyle v. Burns, 123 Iowa 488, 99 N. W. 195; Hirbour v. § 489 CONTRACTS. 726 § 489. Illegal purpose or business. — A partnership which is formed for the purpose of carrying on an illegal business or one which is contrary to public policy is void.^^ Thus, where a partnership is formed for the purpose of illegally acquiring public coal lands, neither the partnership nor the party with whom it contracts can obtain relief under a contract made in furtherance of the original illegal agreement.^^ It must be made to plainly appear, however, that the purposes for which the parnership is formed are illegal/^ If a partnership is formed for several pur- poses, one or more of which is illegal, the partnership may be sustained as to the legal part if the legal may be separated from the illegal objects of the partnership agreement.^^ § 490. Scope of partnership and authority of partners. — The second aspect of the subject under consideration has to do with the duty of the partners to conform to the partnership arti- cles. It is well settled and definitely understood that partners sustain a relation of trust and confidence one to the other. Each must adhere to the partnership agreement and confine his acts within the scope of the partnership business. If any one of the partners fails to do this, and the other member or members of Reeding, 3 Mont. IS. See also, Cas- Y.) 665; Woodworth v. Bennett, 43 caden v. Dunbar, 157 Fed. 62, 84 C. C. N. Y. 273, 3 Am. Rep. 706; King v. A. 566; Jones v. Patrick, 140 Fed. 403. Winants, 71 N. Car. 469, 17 Am. Rep. Contra, Craw v. Wilson, 22 Nev. 385, 11; Dudley v. Little, 2 Ohio 504, 15 40 Pac. 1076. Am. Dec. 575; Davis v. Gelhaus, 44 "Powell V. Maguire, 43 Cal. 11; Ohio St. 69, 4 N. E. 593; Central Craft V. McConoughy, 79 111. 346, 22 Ohio Salt Co. v. Guthrie, 35 Ohio St. Am. Rep. 171; Tenney v. Foote, 95 666; Jackson v. Akron Brick Assn., 111. 99; Hunter v. Pfeiffer, 108 Ind. 53 Ohio St. 303, 41 N. E. 257, 35 L. 197, 9 N.E. 124; Spauldingv. Nathan, R. A. 287, S3 Am. St. 638; Morris 21 Ind. App. 122, 51 N. E. 742; Ander- Run Coal Co. v. Barclay Coal Co., 68 son's Admr. v. Whitlock, 2 Bush. Pa. St. 173, 8 Am. Rep. 159; Wiggins (Ky.) 398, 92 Am. Dec. 489; Stewart v. Bisso, 92 Tex. 219, 47 S. W. 637,71 V. M'Intosh, 4 Har. & J. (Md.) 233; Am. St. 837; Watson v. Fletcher, 7 Spies V. Rosenstock, 87 Md. 14, 39 Grat. (Va.) 1 ; Fairbank v. Newton, Atl. 268; Sampson v. Shaw, 101 Mass. 50 Wis. 628, 7 N. W. 543. 145, 3 Am. Rep. 327; Dunham v. "Kennedy v. Tonabaugh (Wyo.), Presby, 120 Mass. 285; McGunn v. 117 Pac. 1079. Hanlin, 29 Mich. 476; Durant v. "Thwaites v. Coulthwaite (1896), Rhenier, 26 Minn. 362, 4 N. W. 610; 1 Ch. 496; Delamour v. Roger, 7 La. Shriver v. McCloud, 20 Nebr. 474, 30 Ann. 152 ; Williams v. Connor, 14 S, N, W. 534: Gaston v. Drake, 14 Nev. Car. 621; Whitcher v. Morey, 39 Vt 175, 33 Am. Rep. 548; Tucker v. 459; Fairbank v. Leary, 40 Wis. 637, Adams, 63 N. H. 361 ; Watson v. " Northrup v. Phillips, 99 111. 449 Murray, 23 N. J. Eq. 257; Kellv v. Anderson v. Powell, 44 Iowa 20 Devlin, 58 How. Pr. (N. Y.) 487; Dunham v. Presby, 120 Mass. 285 Warner v. Griswold, 8 Wend. (N. Willson v. Owen, 30 Mich. 474; Todd 72? PARTNERS. § 490 the firm sustain a loss by reason of their copartner's default, he must indemnify them/'^ Thus, one member of a partnership has no implied authority to dispose of the property of the partnership in satisfaction of his individual debt or for his individual benefit." Nor can he as a general rule bind the partnership on a contract of guaranty or suretyship, the reason being that such contract is usually without the scope of the partnership business, and the partner who makes such a contract acts outside the scope of his implied authority as agent of the firm.^^ As a general rule one partner in a firm cannot take a new lease, or a renewal of an ex- V. Rafferty's Admr., 30 N. J. Eq. 254; Lane v. Thomas, 27 Tex. 157; Whitcher v. Morey, 39 Vt. 459. As to the right of persons to form a part- nership to carry on a business in which it is necessary that the person conducting that business be legally qualified to do so, see ante, § 267, note 65. Compare Hittson v. Brown, 3 Colo. 304. For a case holding that both partners need not possess the legal qualifications, in case one of them has such qualifications and the business is to be carried on by him, see Harland V. Lilienthal, 53 N. Y. 438. „ ^. , „ "= Campbell v. Campbell, 7 Clark & F. 116; Givens v. Berry, 21 Ky. L. 680, 52 S. W. 942 ; Murphy v. Crafts, 13 La. Ann. 519. 71 Am. Dec. 519; Mechera's Cases 227; Forney v. Adams, 74 Mo. 138; Marsh's Appeal, 69 Pa. St. 30. " Eady v. Newton Coal &c. Co., 123 Ga. 557, 51 S. E. 661, 1 L. R. A. (N. S.) 650; Davies v. Atkinson, 124 111. 474 16 N. E. 899, 7 Am. St. 373 ; Jan- ney' v. Springer, 78 Iowa 67, 43 N. W. 461, 16 Am. St. 460; Carter v. Gallo- way, 36 La. Ann. 473; Johnson v. Crichton, 56 Md. 108; Farwell v. St. Paul Trust Co., 45 Minn. 495, 48 N. W. 326, 22 Am. St. 742 ; Buck v. Mos- ley, 24 Miss. 170; Clift v. Moses, 112 N Y. 426, 20 N. E. 392 ; Hartness v. Wallace. 106 N. Car. 427, 11 S E 259; Pepper v. Peck, 17 R. I. 55, 20 Atl. 16 ; Rogers v. Betterton, 93 Tenn. 630, 27 S. W. 1017; Rogers v. Batche- lor, 12 Pet. (U. S.) 221, 9 L. ed. 1063 ; Wolson V. Fuller, 71 Vt. 335, 45 Atl. 753 ; Cotzhausen v. Judd, 43 Wis. 213, 28 Am. Rep. 539. "Each member of a firm is the general agent of the firm in relation to all the business of the firm, and can bind the firm in what he says and does in such business. But, when one partner has a transac- tion with a third person which is neither apparently nor really within the scope of the partnership business, the partnership is not bound by his declarations or acts in the transac- tion." Union Nat. Bank v. Underhill, 102 N. Y. 336, 7 N. E. 293. Negotia- ble paper made in the name of one partner, when his name is not also that of the firm, is not ordinarily binding upon the firm, and is prima facie the individual obligation of the maker; yet such paper, taken when the obligation was incurred by the partnership and upon its credit, will be regarded as merely collateral, and the other partner will be held liable on the original consideration. Mills V. Riggle, 83 Kans. 703, 112 Pac. 617, Ann. Cas. 1912A, 616, and note. "Hollister v. Bluthenthal, 9 Ga. App. 176, 70 S. E. 970. In the above case it is said : "A contract of this character although executed in the name of the firm, is prima facie the individual contract of the partner who made it, and the burden of proof is upon the holder of the contract to show that it is in fact a firm transac- tion. This can be done by evidence that the contract was in fact within the scope of the partnership business, or that it was authorized by the other members of the firm, or that it was entered into in the name of the firm by the individual member with the knowledge of all the other members, or was subsequently ratified by +1,^™ " See also, Seufert v. Gille, them.' 8 8 49° CONTRACTS. 728 isting one of the firm, in his own name or for his own benefit, and if he attempts to do so it inures to the benefit of the firm.^^ It is apparent, however, that contracts entered into by a member of a copartnership, within the scope of his authority, are binding upon all the partners as a firm." Not only this, but third persons have the right to place a good-faith reliance in the apparent scope of the partner's authority.^" Thus, a partnership formed to oper- ate a tobacco warehouse has been held liable for tobacco bought by one of the partners upon private speculation in the profits of which the firm is not to share, where the partners permitted him to enter into the speculation because it would increase the business of the warehouse to the benefit of the firm, and the transaction was within the apparent scope of the partner's authority.^^ Nor is a third person bound by a secret agreement between the part- ners whereby the authority of one or more of them is restricted, where such third person deals with the partner whose authority has been restricted without notice of such restriction.^^ It is not. 230 Mo. 453, 131 S. W. 102, 31 L. R. A. (N. S.) 471n. '" Clegg V. Edmondson, 22 Beav. 12s, 2 Jur. (N. S.) 824; Clegg v. Fishwick, 1 Macn. & G: 294, 1 Hall & Tw. 396, 19 L. J. Ch. 49, 13 Jur. 993 ; Featherstonbaugh v. Fenwick, 17 Ves. 298, 11 Revised Rep. 11; Alder v. Fouracre, 3 Swanst. 489, 19 Revised Rep. 256; Clements v. Hall, 2 DeG. & J. 173, revg. 24 Beav. 333 ; Hawkins V. Hawkins, 4 Jur. (N. S.) 1044; Sneed v. Deal, 53 Ark. 152, 13 S. W. 703 ; Knapp v. Reed, 88 Nebr. 754, 130 N. W. 430, 32 L. R. A. (N. S.) 869; Speiss V. Rosswog, 96 N. Y. 651; Struthers v. Pearce, 51 N. Y. 357; Mitchell V. Reed, 61 N. Y. 123, 19 Am. Rep. 252, revg. 61 Barb. (N. Y.) 310, later appeal, 84 N. Y. 556; Betts V. June, 51 N. Y. 274; Cham- berlin v. Chamberlin, 12 Jones & S. (N. Y.) 116; In re Johnson's Ap- peal, 115 Pa. St. 129, 8 Atl. 36, 2 Am. St. 539; Lacy v. Hall, 37 Pa. St. 360. See Keech v. Sandford, 1 White & T. Lead. Cas. in Eq. 44. However, if the lease is owned by one the partner solely to the exclusion of the firm he may renew for his beneiit. Phillips v. Reeder, 18 N. J. Eq. 95. " Clark v. Ball, 34 Colo. 223, 82 Pac. 529, 2 L. R. A. (N. S.) 100, 114 Am. St. 154. '° Green v. Ervin, 85 S. Car. 40, 67 S. E. 14, 27 L. R. A. (N. S.) 1015. See also, Irwin v. Wilier, 110 U. S. 499, 28 L. ed. 225, 4 Sup. Ct. 160; Winship v. Bank of United States, 5 Pet. (U. S.) 529, 8 L. ed. 216. See also. Woodruff v. Scaife, 83 Ala. 152, 3 So. 311; Crane Co. v. Tierney, 175 111. 79, 51 N. E. 715; Eastman v. Cooper, IS Pick. (Mass.) 276, 26 Am. Dec. 600 ; Banner Tobacco Co. v. Jen- ison, 48 Mich. 459, 12 N. W. 655; Hoskinson v. Eliot, 52 Pa. St. 393; Brooke v. Washington, S Grat. (Va.) 248, 56 Am. Dec. 142. ^ Green v. Ervin, 85 S. Car. 40, 67 S. E. 14, 27 L. R. A. (N. S.) 1015. See, however, Maurin v. Lyon, 69 Minn. 257, 72 N. W. 72, 65 Am. St. 568. ~ Cox V. Hickman, 8 H. L. Cas. 268, 9 C. B. (N. S.) 47, 30 L. J. C. P. 125, 7 Jur. (N. S.) 105, 3 L. T. 185, 8 W. R. 754 ; Leavitt v. Peck. 3 Conn. 124, 8 Am. Dec. 157; Crane Co. v. Tierney, 175 111. 79, 51 N. E. 715; Hotchin v. Kent, 8 Mich. 526; Vance v. Blair, 18 Ohio 532, 51 Am. Dec. 467; Hoskin- son V. Eliot, 62 Pa. St. 393 ; Edwards V. Tracy, 62 Pa. St. 374; Irwin v. WiUier, 110 U. S. 499, 28 L. ed. 225, 729 PARTNERS. § 490 and has not been, the purpose here, however, to consider the rights and habilities of partners as to third persons, nor even as between themselves, further than to show who may be partners, when and how they may form the contract, and the general nature of the relation created or resulting therefrom. Their rights, liabilities and the remedies, both as between themselves and as to third per- sons, will be treated in another volume. 4 Sup. Ct. 160 ; Winship v. Bank of to believe, that the partner who made United States, 5 Pet. (U. S.) 529, it, was improperly using his author- 8 L. ed. 216. "A mercantile instru- ity for his own benefit, to the preju- ment given in the partnership name dice, or in a way that might be to the binds all the partners, unless the per- prejudice of his associates." Cotton son who took it knew, or had reason v. Evans, 21 N. Car. 284. CHAPTER XVII. FIDUCIARIES. § 500. Introductory. 501. Trustees generally. 502. Creation of trusts. 503. When trust must be in writing. 504. Constructive implied trusts. 505. Resulting implied trusts. 506. Rights, powers and liabilities of trustees. 507. Rule against personal gain giv- en a strict construction. 508. Trustee entitled to recover money advanced and to a reasonable compensation. 509. Powers of trustee. 510. Personal liabilities of trustee. 510a. When trustee's contract binds estate or cestui que trust. 511. When trustee is personally lia- ble. 512. Executors and administrators — Authority generally. 513. Power to bind the estate by contract — Illustrative cases. 514. Order of court — When it adds nothing to power of adminis- trator. 515. Ratifications of administrators' acts — Duties of adminis- trator. 516. Statutory authority. 517. Powers given by will. § 518. Liability where estate is bene- fited. 519. Personal liability. 520. Joint liability of two or more executors or administrators. 521. When relieved from personal liability. 522. Guardians — ^Authority general- ly. 523. When and how guardians may bind estates. 524. Personal liability of guardian. 525. When not personally liable. 526. Statutory authority to bind es- tate. 527. Receivers — Authority general- ly.. 528. Receivers' contracts under or- der of court. 529. Receiver's certificates. 530. Personal liability of receiver. 531. Other persons occupying fidu- ciary relations, as parties to contracts, trustees in bank- ruptcy. 532. Other persons occupying fidu- ciary relations — Promoters. 533. Personal liability of promoter — Right to compensation. 534. Other persons occupying fidu- ciary relations — Directors of corporation. § 500. Fiduciaries — Introductory. — Where contracts are made by fiduciaries or persons occupying a relation of trust and confidence questions frequently arise not only as to their power or authority, but also as to the rights and liabilities growing out of the relation; and special rules or considerations sometimes obtain in such cases that would not be applied in the absence of such a relation. It follows, therefore, that, in treating of parties to contracts, fiduciaries constitute a class to which a chapter may well be devoted.^ ^ "In its technical sense, a trust is the right, enforcible solely in equity, 730 to the beneficial enjoyment of proper- ty, the legal title of which is vested in 731 FIDUCIARIES. § SOI § 501. Trustees generally. — A trustee is one in whom an interest, power or legal estate is vested under an express or im- plied agreement to administer or exercise it for the benefit or to the use of another.^ In other words, he is one who holds property in trust. § 502. Creation of trusts. — In order to create a valid trust there must concur sufficient words or acts to show an unequivo- cal intention to devote the subject-matter to the object of the trust; the subject-matter must be definite in character and so at the disposal of the settler as to enable him to devote it to the ob- ject of the trust; and this object must be one that is lawful, cer- tain, and ascertained.^ Considered as to the methods of its crea- another. It implies the separate co- existence of the legal and the equit- able title. In a sense, the perfect ownership is segregated into its con- stituent parts with the legal title and the equitable vested in different persons at the same time. Bisphara's Principles of Equity (6th ed.), p. 52, par. 49. In its more comprehensive sense it embraces every bailment, ev- ery transaction by an agent or factor, every deposit, and, indeed, every mat- ter in which the slightest trust or confidence is reposed." Bowes v. Cannon, 50 Colo. 262, 116 Pac. 336. ' Black's Law Dictionary 1192. "A trustee may be defined generally as a person in whom some estate, in- terest, or power in or affecting prop- erty is vested for the benefit of an- other." Ogden City St. R. Co. v. Wright, 31 Ore. 150, 49 Pac. 975. "A trust in technical sense is defined as 'an obligation upon a person arising out of confidence reposed in him to apply property faithfully and accord- ing to such confidence.' 1 Perry on Trust, § 2." Weltner v. Thurmond, 17 Wyo. 268, 98 Pac. 590, 99 Pac. 1128 129 Am. St. 1113. "Malim v. Keighley, 2 Ves. Jr. 529; Cruwys v. Colman, 9 Ves. Jr. 319; Knight V. Boughton, 11 CI. & F. 513; In re Brooke (1898), 1 Ch. 651; Lines v. Darden, 5 Fla. 51; Sinking Fund Comrs. v. Walker, 6 How. (Miss.) 143; In re Soulard, 141 Mo. 642, 43 S. W. 617; In re Smith's Estate, 144 Pa. St. 428, 22 Atl. 916, 27 Am. St. 641. A trust in real estate must be declared by a deed or conveyance in writing and must have existed at the time of the grant to the trustee. Ludlow v. Rec- tor &c. St. John's Church, 144 App. Div. (N. Y.) 207. 130 N. Y. S. 679. There must exist trust property, trust objects, and a trust term. Kahn v. Tierney, 135 App. Div. (N. Y.) 897, 120 N. Y. S. 663, affd. 94 N. E. 1095. The above case holds that a trust can- not survive the purpose of its crea- tion. "There are four essential ele- ments of a valid trust of personal property; (1) a designated benefic- iary; (2) a designated trustee, who must not be the beneficiary; (3) a fund or other property sufficiently designated or identified to enable title thereto to pass to the trustee; and, (4) the actual delivery of the fund or other property, or of a legal as- signment thereof to the trustee, with the intention of passing legal title thereto to him as trustee." Brown V. Spohr, 87 App. Div. (N. Y.) 522, 84 N. Y. S. 995, affd. 180 N. Y. 801, 73 N. E. 14. See also, Eldridge v. See Yup Co., 17 Cal. 44; Carter v. Gibson, 29 Nebr. 324, 45 N. W. 634, 26 Am. St, 381 ; Ludlow v. Rector &c. St. John's Church, 144 App. Div. (N. Y.) 207, 130 N. Y. S. 679, revg. 68 Misc. (N. Y.) 400, 124 N. Y. S. 75. § 503 CONTRACTS. 732 tion a trust may be either express or implied.* Express trusts are those created and manifested by a direct and positive agree- ment of the parties.'* An impHed trust is founded on the pre- sumable, though unexpressed intention of the party who creates it.° In the creation of a trust it is unnecessary to employ certain specific words or a prescribed form. It may be couched in any language which is sufficiently expressive of the intention to create the trust.' Even precatory words may be sufficient.* § 503. When trust must be in writing. — By the statutes of most states an express or direct trust in land must be in writing.' In certain jurisdictions this includes not only trusts concerning lands but also trusts in any manner relating to land.^° In a few *Rice V. Dougherty, 148 III. App. 368. "Black's Law Diet. 1191; Learned V. Tritch, 6 Colo. 432; Oberlender v. Butcher, 67 Nebr. 410, 93 N. W. 764. An express trust need not be in any- particular form of words. Fox v. Fox, 250 111. 384, 95 N. E. 498. In re Schwartz, 145 App. Div. (N. Y.) 285, 130 N. Y. S. 74. 'Black's Law Diet. 1191; 28 Am. & Eng. Ency. of Law 859; Lehrling v. Lehrling, 84 Kans. 766, 115 Pac. 556. ' McCarthy v. McCarthy, 74 Ala. 546; Carr v. Carr (Cal. App.), 115 Pac. 261 ; McCreary v. Gewinner, 103 Ga. 528, 29 S. E. 960; McCrary v. Clements, 95 Ga. 778, 22 S. E. 675; Colton V. Colton, 127 U. S. 300, 32 L. ed. 138, 8 Sup. Ct. 1164; Taber v. Zehner, 47 Ind. App. 167, 93 N. E. 1035. In the above case it is said : "Each case usually depends upon its own facts and circumstances from which the intention of the parties to create a trust is to be determined." Ruhe V. Ruhe, 113 Md. 595, 11 Atl. 797 ; Norman v. Burnett, 25 Miss. 183 ; Wadd V. Hazelton, 137 N. Y. 215, Zi N. E. 143, 21 L. R. A. 693n, 33 Am. St. 707; In re Schwartz, 145 App. Div. (N. Y.) 285, 130 N. Y. S. 74; In re Helfenstein's Estate, 11 Pa. St. 328, 18 Am. Rep. 449 ; In re Smith's Estate, 144 Pa. St. 428, 22 Atl. 916, 27 Am. St. 641. "If the writing makes dear the existence of a trust, the terms may be supplied aliunde." Fox v. Fox, 250 111. 384, 95 N. E. 498. 'Lines v. Darden, 5 Fla. 51; Max- well V. Hoppie, 70 Ga. 152; Mills v. Newberry, 112 111. 123, 1 N. E. 156, 54 Am. Rep. 213 ; Handley v. Wright- son, 60 Md. 198; Barrett v. Marsh, 126 Mass. 213. ° Oden V. Lockwood, 136 Ala. 514, 33 So. 895; Coleman v. Coleman (Ala.), 55 So. 827 ; Salyers v. Smith, 67 Ark. 526, 55 S. W. 936; Gray v. Walker, 157 Cal. 381, 108 Pac. 278; Kinley v. Kinley, il Colo. 35, 86 Pac. 105, 119 Am. St. 261 ; Von Trotha v. Bamber- ger, 15 Colo. 1, 24 Pac. 883; In re Wilson's Appeal, 84 Conn. 560, 80 Atl. 718; Hayden v. Denslow, 27 Conn. 335; Walker v. Brown, 104 Ga. 357, 30 S. E. 867 ; Potter v. Clapp, 203 111. 592, 68 N. E. 81, 96 Am. St. 322; Brown v. White, 32 Ind. App. 100, 67 N. E. 273; Gregory v. Bowlsby, 115 Iowa 327, 88 N. W. 822; Wright V. King, Har. Ch. (Mich.) 12; Wolf- skill v. Wells, 154 Mo. App. 302, 134 S. W. 51; Watson v. Payne, 143 Mo. App. 721, 128 S. W. 238; Cameron v. Nelson, 57 Nebr. 381, 11 N. W. 771; Elder V. Webber, 3 Nebr. (Unof.) 534, 92 N. W. 126 ; Eaton v. Eaton, 35 N. J. L. 290; Sturtevant v. Sturtevant, 20 N. Y. 39, 75 Am. Dec. 371 ; Wheeler V. Reynolds, 66 N. Y. 227. The rule that an express trust must be in writ- ing does not apply where the agree- ment has been executed. McKnight V. Kingsley (Ind. App.), 92 N. E. 743. "Shafter v. Huntington, S3 Mich. 310, 19 N. W. 11 ; Randall v. Constans, 733 FIDUCIARIES. § 504 states there is no statutory provision which requires a trust in land to be evidenced by a vi^riting. Where this is true an express simple trust in land may be created by an oral declaration of trust made at the time of the execution and delivery of a conveyance of real estate absolute on its face or when made in contemplation and anticipation of such conveyance, and will be enforced in equity aside from the rights of creditors of the original vendor or when the rights of an innocent purchaser from the transferee have not intervened." A parol agreement independent of a transfer of the legal title to the land, notwithstanding it is made for a valuable consideration, cannot create an express trust in land.^^ Thus an agreement to hold land in trust for another after the deal has been consummated cannot be enforced.^^ A trust in personal property may be created by parol and need not be expressly declared in writing.^* § 504. Constructive implied trusts. — Implied trusts are di- vided into two classes ; they are : constructive trusts and resulting trusts." A constructive trust is implied by equity for the purpose of working out right and justice. The essential element to create such a trust is that fraud either actual or constructive must have 33 Minn. 329, 23 N. W. 530; Pollard W. 781. In order to establish a trust V. McKenney, 68 Nebr. 742, 96 N. W. of this character, in contravention of 679, 101 N. W. 9; Ryan v. Dox, 34 the terms of a written deed, the evi- N. Y. 307, 90 Am. Dec. 696. dence must be clear, strong and con- " Cohn V. Chapman, 62 N. Car. 92, vincing. Hendren v. Hendren, 153 N. 93 Am. Dec. 600 ; Pittman v. Pittraan, Car. 505, 69 S. E. 506, 138 Am. St. 107 N. Car. 159, 12 S. E. 61, 11 L. R. 680. A. 456 ; Dover v. Rhea, 108 N. Car. " Frey v. Ramsour, 66 N. Car. 466 ; 88, 13 S. E. 614; Cobb v. Edwards, Blount v. Carroway, 67 N. Car. 396; 117 N. Car. 244, 23 S. E. 241; Owens Dover v. Rhea, 108 N. Car. 88, 13 S. V. Williams, 130 N. Car. 165, 41 S. E. E. 614; Hamilton v. Buchanan, 112 93; Sykes v. Boone, 132 N. Car. 19g, N. Car. 463, 17 S. E. 159; Cobb v. 43 S. E. 645, 95 Am. St. 619; Insur- Edwards, 117 N. Car. 244, 23 S. E. ance Co of Tennessee v. Waller, 116 241; Kelly v. McNeill, 118 N. Car. Tenn. 1, 95 S. W. 811, 115 Am. St. 349, 24 S. E. 738. 763; Haywood v. Ensley, 8 Humph. ^' Hamilton v. Buchanan, 112 N. Car. (Tenn.) 460; Thompson v. Thomp- 463, 17 S. E. 159; Kelly v. McNeill, son (Tenn Ch.), 54 S. W. 145; Wood- 118 N. Car. 349, 24 S. E. 738. fin V. Marks, 104 Tenn. 512, 58 S. W. "Taber v. Zehner, 47 Ind. App. 165, 227- Renshaw v. First Nat. Bank 93 N. E. 1035 ; Jones v. Nicholas, 151 (Tenn,), 63 S. W. 194; Smalley v. Iowa 362, 130 N. W. 125; Watson v. Paine (Tex. Civ. App.), 130 S. W. Payne, 143 Mo. App. 721, 128 S. W. 739; Tames v. Fulcrod, 5 Tex. 512, 55 238; In re Kaupper, 141 App. Div. (N. Am. Dec. 743 ; Mead v. Randolph, 8 Y.) 54, 125 N. Y. S. 878. Tex. 191; Bailey v. Harris, 19 Tex. '"Rice v. Dougherty, 148 III. App. 108; Leakey v. Gunter, 25 Tex. 400; 368. Gardner v. Randell, 70 Tex. 453, 7 S. § 504 CONTRACTS. 734 intervened. Such trusts are raised by courts of chancery only in cases where it becomes necessary to prevent a failure of jus- tice and in most cases where there is no intention or agreement of the parties to create such a relation.^' A constructive trust in real estate is excepted from the operation of the statute of frauds and need not be manifested by a writing.^^ " Yuster v. Keefe, 46 Ind. App. 460, 90 N. E. 920; Norris v. Kendall (Ind. App.), 93 N. E. 1087; Wright v. Moody, 116 Ind. 175, 18 N. E. 608; Alexander v. Spanlding, 160 Ind. 176, 66 N. E. 694; Acker v. Priest, 92 Iowa 610, 61 N. W. 235 ; Gebhard v. Sattler, 40 Iowa 152 ; Graham v. King, 96 Ky. 339, 16 Ky. L. 440, 24 S. W. 430 ; Bax- ter V. Moses, 77 Maine 465, 1 Atl. 350, 52 Am. Rep. 783 ; Pierce v. Pierce, 55 Mich. 629, 22 N. W. 81 ; Harmon v. Harmon (S. Car.), 71 S. E. 815; Ken- yan V. Trevino (Tex. Civ. App.) ,137 S. W. 458. If a testator is induced either to make a will or not to change one after it is made, by a promise, ex- 'press or implied, on the part of a legatee, that he will devote the legacy to a certain lawful purpose, a trust ex maleficio is created and equity will compel the legatee to apply the prop- erty thus obtained in accordance with his promise. Winder v. Scholey, 83 Ohio St. 204, 93 N. E. 1098, 33 L. R. A. (N._ S.) 995, and note. Whenever a fiduciary relation is shown to exist, either by actual averment or by the statement of relations, during the con- tinuance of which confidence is nec- essarily reposed by one or a corres- ponding influence possessed by the other, the person availing himself of his position to obtain an advantage be- comes in equity a trustee. Huffman V. Huffman. 35 Ind. App. 643, 73 N. E. 1096; Taber v. Zehner, 47 Ind. App. 165, 93 N. E. 1035. It has been held that the relation between brokers and their customers is, in the absence of special circumstances, merely that of debtor and creditor, and not a fiduciary relation and that a constructive trust did not arise by reason of the fact that the broker was financially embarrassed at the time he undertook the commission when it appeared that no real fraud was prac- ticed on the customer and it did not affirmatively appear that the broker knew he was insolvent at the time of the transaction. Furber v. Dane, 204 Mass. 412, 90 N. E. 859, 27 L. R. A. (N. S.) 808, and note. In connection with this case, see, however, Whit- comb V. Jacob, 1 Salk. 160; Taylor v. Plumer, 3 Maule & S. 562 ; Waters v. Marrin, 12 Daly (N. Y.) 445; Veil v. Mitchell, 4 Wash. C. C. 105, Fed. Cas. No. 16908. "Patton v. Beecher, 62 Ala. 579; White V. Farley, 81 Ala. 563, 8 So. 215 ; Brison v. Brison, 75 Cal. 525, 17 Pac. 689, 7 Am. St. Rep. 189; Hayne V. Hermann, 97 Cal. 259, 32 Pac. 171 ; Wittenbrock v. Cass, 110 Cal. 1, 42 Pac. 300 ; Church v. Sterling, 16 Conn. 388; Godschalk v. Fulmar, 176 111. 64, 51 N. E. 852; Peterson v. Boswell, 137 Ind. 211, 36 N. E. 845; Patterson V. Mills, 69 Iowa 755, 28 N. W. S3; Lehrling v. Lehrling, 84 Kans. 766, 115 Pac. 556; Ware v. Ben- nett, 143 Ky. 743, 137 S. W. 532; Dorsey v. Clarke, 4 Har. & J. (Md.) 551; Moran v. Somes, 154 Mass. 200, 28 N. E. 152; Shafter v. Huntington, 53 Mich. 310, 19 N. W. 11; Randall v. Constans, 33 Minn. 329, 23 N. W. 530; Pollard v. McKenney, 69 Nebr. 742, 96 N. W. 679, 101 N. W. 9; Graves v. Graves, 29 N. H. 129; Farrington v. Barr, 36 N. H. 86; Moore v. Moore, 38 N. H. 382; Ryan v. Dox, 34 N. Y. 307, 90 Am. Dec. 696 ; Salter v. Bird. 103 Pa. St. 436; Henyan V. Trevino (Tex. Civ. App.), 137 S. W. 458; Buckner v. Carter (Tex. Civ. App.), 137 S. W. 442. "It is not easy to ascertain from the adjudged cases the exact scope of the exception in the Stat. Car. H, of trusts arising by 'implication or con- struction of law,' or of the equivalent exception in our statute of trusts aris- ing by 'implication or operation of law.' It is not difficult to name trusts which unequivocally are trusts arising by implication or operation of law. Trusts arising from the presumed in- 735 FIDUCIARIES. § 505 § 505. Resulting implied trusts. — A resulting trust arises by implication of law, and does not grow out of a contract. It results from the conduct, relation and supposed intention of the parties independent of any agreement whatsoever between them.^* The term implied trusts also includes constructive trusts, which, though often treated as resulting trusts may be considered as a second class of implied trusts. | I § 506. Rights, powers and liabilities of trustees. — A trustee is not permitted to derive personal gain from his management of the trust estate. All profits made by him in its management must tention of the parties, indicated by their acts, although not expressly de- clared, and those arising from the application of some settled principle of equity to the situation, furnish many instances of implied or construc- tive trusts. Resulting trusts at com- mon law arising from the payment of purchase-money, or where the trust is not declared, or is declared only in part, or for any reason fails, are illus- trations of the former class, and those arising by equitable consiruction inde- pendently of intention from dealings by trustees or quasi trustees with trust property furnish many examples of the latter. But there is a large class of so-called constructive trusts, or trusts ex maleficio, where courts of equity treat the holder of the legal title to land as a trustee, and, through the medium of an assumed trust, makes that title subservient to the circumvention of fraud and the at- tainment of justice. Trusts of this character are not, I assume, within the exception in the statute. If they were so considered, then wherever a court of equity acting upon its own prin- ciples, would mdependently of the statute of frauds, separate the legal title and the beneficial interest, and fasten a trust upon the property to subserve the purposes of justice no question under the statute would arise, for the obvious reason that the case was by its terms excepted from its operation, and the statute would never be an obstacle to relief." Wood v. Rabe, 96 N. Y. 414, 48 Am. Rep. 640, 642. "Learned v. Tritch, 6 Colo. 432; Dean v. Dean, 6 Conn. 285 ; Fox v. Fox, 250 111. 384, 95 N. E. 498; Bruce V. Roney, 18 111. 67; Sheldon v. Hard- ing, 44 111. 68; Remington v. Camp- bell, 60 111. 516; Jacksonville Nat. Bank v. Beesley, 159 111. 120, 42 N. E. 164; Burkhardt v. Burkhardt, 107 Iowa 369, n N. W. 1069; Wright v. Yates, 140 Ky. 283, 130 S. W. 1111; Dime Sav. Bank v. Fletcher, 158 Mich. 162, 122 N. \V. 540, 35 L. R. A. (N. S.) 858, holding that under the cir- cumstances a corporation which sold stock in another corporation held the sale price for the use of the one who had loaned money to the purchaser with which to make the purchase. Knapp V. Reed 88 Nebr. 754, 130 N. W. 430, Ann. Cas. 1912B, 1095, and note, holding that where a partnership lease is renewed by one of the part- ners in his own name it inures to the benefit of both partners. "A result- ing trust in real estate may be proven by parol." Johnston v. Sherehouse, 61 Fla. 647, 54 So. 892. See also, Breit- enbucher v. Oppenheim, 160 Cal. 98, 116 Pac. 55; Potter v. Clapp, 203 111. 592, 68 N. E. 81, 94 Am. St. Rep. 322; Lehrling v. Lehrling, 84 Kans. 766, 115 Pac. 556. The evidence to establish it must be clear, strong, unequivocal and un- mistakable. Wells V. Messenger, 249 111. 72, 94 N. E. 87. To same effect, Eisenberg v. Goldsmith (Mont.), 113 Pac. 1127. The above case also con- tains definitions and a discussion of constructive and resulting trusts. Where there is an express trust, there cannot be a resulting or implied trust. Stevenson v. Grapnel!, 114 111. 19, 28 § 5o6 CONTRACTS. 7Z^ be accounted for to the trust estate." Moreover, all profits made in transactions in which a trust fund or property is used, notwith- standing such transaction is conducted with the individual name of the trustee, belong to the trust estate.^" His purchase or lease of the trust property is voidable and will generally be set aside at the instance of the cestui que trust or some one standing in his shoes.^^ N. E. 379. To same effect, Coleman V. Parran, 43 W. Va. W, 28 S. E. 769. A resulting trust cannot arise or spring into being when the transac- tions on which the supposed trust is bottomed appear to have had their origin in any fraudulent purpose. Sell V. West, 125 Mo. 621, 46 Am. St. 508, 28 S. W. 969. "■Crosskell v. Bower, 32 Beav. 86; Bowes V. Toronto, 11 Moo. P. C. 463; Bate V. Scales, 12 Ves. 402; Vande- bend v. Levingston, 3 Swanst. 625 ; Shallcross v. Oldham, 2 John. & H. 609; Green v. Folgham, 1 Sim. & St. 398; Anonymous, 1 P. Wms. 648; Hewson v. Smith, 17 Grant. Ch. (U. C.) 407; Robinson v. Coyne, 14 Grant Ch. (U. C.) 561; Smith v. McGehee, 14 Ala. 404; Williamson v. Krohn, 66 Fed. 655, 13 C. C. A. 668; De Chambrun v. Cox, 60 Fed. 471, 9 C. C. A. 86 ; Hazard v. Dillon, 34 Fed. 485 ; Mansfield v. Alwood, 84 111. 497 ; Lyon V. Taylor, 49 111. App. 639; Voorhees V. Stoothoff, 11 N. J. L. 171; Hayes v. Kerr, 40 App. Div. (N. Y.) 348, 57 N. Y. S. 1114; Penman v. Slocum, 41 N. Y. 53 ; New York Life Ins. Co. v. Cuthbert, 31 App. Div. (N. Y.) 191, 52 N. Y. S. 653 ; Averell v. Barber, 24 App. Div. (N. Y.) 53, 49 N. Y. S. 123; Forker v. Brown (C. PI. Gen. T.), 10 Misc. (N. Y.) 161, 62 N. Y. St. 480, 30 N. Y. S. 827 ; Johnstone v, O'Con- ner, (>e Hun (N. Y.) 632, 50 N. Y. St. 635, 21 N. Y. S. 487; People v. Mer- chants' Bank, 35 Hun (N, Y.) 97, affd. 99 N. Y. 642; In re Oakley, 2 Edw. (N.Y.) 478; Woodruff v. Bovden CN. Y. Super. Ct. Spec. T.), 3 Abb. N. C. (N. Y.) 29; Owens v. Wilhams, 130 N. Car. 165, 41 S. E. 93; In re Dickey's appeal, 73 Pa. St. 218; Mc- Fall V. McFall, 35 S. Car. 559, 14 S. E. 985; Whitman v. Bowden, 27 S. Car. 53, 2 S. E. 630; Ludington v. Patton, 111 Wis. 208, 86 N. W. 571. "One occupying a trust relation cannot place himself in a position which would subject him to conflicting duties or expose him to the temptation of acting contrary to the interests of the party to whom he owes a duty." City of Chicago V. Tribune Co. (111.), 9i N-, E. 757. °° Robinson v. Robinson, 11 Beav. 371; Stroud v. Gwyer, 28 Beav. 130 In re Norrington, 13 Ch. D. 654 Whitney v. Smith, L. R. 4 Ch. 513 Vyse V. Foster, L. R. 8 Ch. 309 Docker v. Somes, 2 Myl. & K. 655 Heathcote v. Hulme, 1 Jac. & W. 122 Robinson v. Robinson, 1 DeG. M. & G. 247 ; Robinson v. Coyne, 14 Grant Ch. (U. C.) 561; Mosely v. Lane, 27 Ala. 62, 62 Am. Dec. 752; In re Thompson, 101 Cal. 349, 35 Pac. 991 ; Hecksher v. Blanton, 111 Va. 648, 69 S. E. 1045. See Bermingham v. Wilcox, 120 Cal. 467, 52 Pac. 822; Pugh v. Pugh, 9 Ind. 132 ; Deegan v. Capner, 44 N. J. Eq. 339, 15 Atl. 819; Durling v. Hammar, 20 N. J. Eq. 220; In re Baker's Appeal, 120 Pa. St. 33; In re Frank's Appeal, 59 Pa. St. 190; In re Mueller's Estate, 8 Pa. Dis. Ct. 70, affd. 190 Pa. St. 601; Myers v. Myers, 2 McCord Eq. (S. Car.) 214, 16 Am. Dec. 648. ^Campbell v. Walker, 5 Ves. Jr. 678, 5 R. R. 135; Whichcote v. Lawrence, 3 Ves. Jr. 740; Fox V. Mackreth, 2 Brown Ch. 400, is a leading case on the sub- ject. Here it is said, "To show the universality and extent of the prin- ciple now contended for, there needs but to observe that particular law among the Romans by which magis- trates and others in the provinces were disabled from making purchases at sales under their own authority, and the heavy penalty inflicted if they at- tempted it." Lamont v. Lament, 7 Grant Ch. (U. C.) 258; Foster v. Mc- '72>7 FIDUCIARIES. § 507 § 507. Rule against personal gain given a strict construc- tion. — This rule is given a strict construction or application. In certain states, however, a trustee may purchase the trust property when it has passed out of his hands into the custody of the court and is sold at public auction under the orders of such court." Kinnon, S Grant Ch. (U. C.) 510; Charles v. Dubose, 29 Ala. 367; An- drews V. Hobson's Admr., 23 Ala. 219; McNeil v. Gates, 41 Ark. 264; Page V. Neglee, 6 Gal. 241; Bellamy V. Sheriff, 6 Fla. 62 ; Renew v. Butler, 30 Ga. 954; Sypher v. McHenry, 18 Iowa 232; Old Dominion Bank v. Dubuque &c. R. Co., 8 Iowa 277, 74 Am. Dec. 302; Faucett v. Faucett, 1 Bush (Ky.) 511, 89 Am. Dec. 639; Hoffman Steam Coal Co. v. Cum- berland Coal &c. Co., 16 Md. 456, 11 Am. Dec. 311; Davis v. Simpson, 5 Har. & J. (Md.) 147, 9 Am. Dec. 500; Michoud V. Girod, 4 How. (U. S.) 503, 11 L. ed. 1076. (The above case states that the above rule of equity "is in every code of jurisprudence with which we are acquainted.") Worm- ley v. Wormley, 8 Wheat. (U. S.) 421, S L. ed. 651 ; Lennox v. Notrebe, Hempst. (U. S.) 251, Fed. Gas. No. 8246c ; Piatt v. Oliver, 2 McLean (U. S.) 267, Fed. Gas. No. 11115; Price v. Morris, 5 McLean (U. S.) 4, Fed. Gas. 11414. See Kuykendall v. De- vecmon, 82 Md. 643, Z2, Atl. 717; St. Paul Trust Go. v. Strong, 85 Minn. 1, 88 N. W. 256; King v. Rem- ington, 36 Minn. IS, 29 N. W. 352; Schwarz v. Wendell, Walk. (Mich.) 267; Darling v. Potts, 118 Mo. 506, 24 S. W. 461; Tuggles v. Callison, 143 Mo. 527, 45 S. W. 291; Newton v. Rebenack, 90 Mo. App. 650; Shelby v. Greighton, 65 Nebr. 485, 91 N. W. 369; Bassett v. Shoemaker, 46 N. J. Eq. 538, 20 Atl. 52, 19 Am. St. 435 ; Blauvelt v. Acker- man, 20 N. J. Eq. 141; Colgate v. Colgate, 23 N. J. Eq. 372; Staats v. Bergen, 17 N. J. Eq. 554; Huston v. Gassedy, 13 N. J. Eq. 228; Scott v. Gamble, 9 N. J. Eq. 218; Conger v. Ring, 11 Barb. (N. Y.) 356; De Caters v. LeRay DeChaumont, 3 Paige (N. Y.) 178; Ames v. Downing, 1 Bradf. Surr. (N. Y.) 321 ; Brothers v. Broth- ers, 7 Ired Eq. (42 N. Car.) 150; Mathews v. Dragaud, 3 Desaus. (S. 47 — Contracts, Vol. I Car.) 25; Coffee v. Ruffin, 4 Goldw. (Tenn.) 487; Armstrong v. Campbell, 3 Yerg. (Tenn.) 201, 24 Am. Dec. 556; Collins v. Smith, 1 Head (Tenn.) 251; Hamilton v. Dooly, 15 Utah 280, 49 Pac. 769; Smith v. Miller, 98 Va. 535, Zl S. E. 10; Puzey v. Senier, 9 Wis. 370. See also. In re Acken, 144 Iowa 519, 123 N. W. 187, Ann. Gas. 1912A, 1166 and note. "The law will not permit a trustee to become a purchaser at his own sale, and if a resort to deceit was had to effect the sale, then the sale became fraudulent in fact, and in either case a court of equity will set aside the sale." Mett- ler V. Warner, 249 111. 341, 94 N. E. 522. "The purchase by a trustee of trust property is not void, but only voidable at the instance of the injured party or some one standing in his shoes." Guy V. Mayes, 235 Mo. 390, 138 S. W. 510. ^ Where the debt for which the property in such cases is taken in execution, is just, and the property liable to the payment of it, and the trustee without ' funds in his hands, or power to pay it, so as to relieve the property, what can he do? He is certainly not required to advance moneys out of his own pocket for the purpose of redeeming it; and it being taken out of his possession, as it were, and certainly out of his power, by the authority of the law, which is para- mount to any that he has as trustee, and placed in the hands of the officer of the law, to whom full power is given to sell and dispose of the same, it is perfectly manifest that he thereby becomes divested of his trusteeship in regard to it ; that all his power and control over it cease; so that he has no duty whatever to perform in re- spect to it in the slightest degree in- compatible with his buying at the lowest price for which it may be ob- tained; and as to the sale to be made by the sheriff, it is impossible to con- ceive how the trustee can exercise § 5o8 CONTRACTS. 738 After the relation of trustee and cestui que trust has been termi- nated the former trustee may purchase the trust property,^^ but even then a court will closely scrutinize such a transaction for evidence of fraud, bad faith or undue influence on the part of the former trustee, especially when such relation has been but re- cently terminated.^* A trustee before he attempts to purchase the trust property should obtain the consent of the proper court.^" § 508. Trustee entitled to recover money advanced and to a reasonable compensation. — As a general rule, he has the right to charge the trust estate with money advanced by him in any control or influence over it to the prejudice of those whose interest it is to have the property sold for the highest possible price, that any other individual disposed to buy may not exert." Fisk v. Sarber, 6 Watts & S. (Pa.) 18. See also, Clark v. Holland, 72 Iowa 34, 33 N. W. 350, 2 Am. St. 230; Barber v. Bowen, 47 Minn. 118, 49 N. W. 684; Dillinger v. Kelley, 84 Mo. 561 ; Glemser v. Glemser, 5 Ohio Dec. 267; English v. Monypeny, 3 Ohio Cir. Dec. 582, 6 Ohio C C. 554; Bruner v. Finley, 187 Pa. St. 389, 41 Atl. 334; Lusk's Appeal, 108 Pa. St. 152; Cherpenning's Appeal, 32 Pa. St. 315, 72 Am. Dec. 789; Meanor v. Hamilton, 27 Pa. St. 137; Hallman's Estate, 13 Phila. (Pa.) 562, 34 Leg. Int. (Pa.) 169; Fisk v. Sarber, 6 Watts & S. (Pa.) 18; Anderson v. Butler, 31 S. Car. 183, 9 S. E. 797, 5 L. R. A. 166; Allen v. Gillette, 127 U. S. 589, 32 L. ed. 271, 8 Sup. Ct. 1331; Twin-Lick Oil Co. v. Marbury, 91 U. S. 587, 23 L. ed. 328; Prevost V. Gratz, Pet. (U. S.) 364, Fed. Gas. 11406 (revd. 6 Wheat. (U. S.) 481, 5 L. ed. 311). But see Hopper v. Hopper, 79 Md. 400, 29 Atl. 611; Callis V. Ridout, 7 Gill & J. (Md.) 1; Bell V. Webb, 2 Gill (Md.) 163; Chapin v. Weed, Clarke (N. Y.) 464; Newcomb v. Brooks, 16 W. Va. 32, ==In re Boles (1902), 1 Ch. 244; Chatham Nat. Bank v McKeen, 24 Can. Sup. Ct. 348; In re Mabou Coal &c. Co., 27 N. S. 305; Wright v. Campbell, 27 Ark. 637 ; Bush v. Sher- man, 80 111. 160; Munn v. Burges, 70 111. 604; Boynton v. Brastow, S3 Maine 362; Wortman v. Skinner, 12 N. J. Eq. 358; Debevoise v. Sandford, 1 Hoffm. (N. Y.) 192; Bruner v. Finley, 187 Pa. St. 389, 41 Atl. 334; Painter v. Henderson, 7 Pa. St. 48; Hallman's Estate, 13 Phila. (Pa.) 562, 34 Leg. Int. (Pa.) 169; Britton V. Lewis, 8 Rich. Eq. (S. Car.) 271; Stephen v. Beall, 22 Wall. (U. S.) 329, 22 L. ed. 786. '* See ante, chapters 4 and 7, Fraud, and also Duress and Un- due Influence. See also, Bowes V. Toronto, 11 Moo. P. C. 463; Cook V. Collinridge, 27 Beav. 456n ; Bush V. Sherman, 80 111. 160; Munn v. Bur- ges, 70 111. 604; Walker v. Carring- ton, 74 111. 446; Boehlert v. McBride, 48 Mo. 505; Stephens v. Beall, 22 Wall. (U. S.) 329, 22 "L. ed. 786; Oberlin College v. Blair, 45 W. Va. 812, 32 S. E. 203. '"Campbell v. Walker, 5 Ves. Jr. 678, 5 R. R. 135. See Rice v. Cleg- horn, 21 Ind. 80; Frazier v. Jeakins, 64 Kans. 615, 68 Pac. 24, 57 L. R. A. 575 ; Prichard v. Farrar, 116 Mass. 213; Morse v. Hill, 136 Mass. 60; Scott V. Gamble, 9 N. J. Eq. 218; Scholle V. Scholle, 101 N. Y. 167, 4 N. E. 334; Corbin v. Baker, 56 App. Div. (N. Y.) 35, 67 N. Y. S. 249, 8 N. Y. Ann. Cas. 435, affd. 167 N. Y. 128, 60 N. E. 332; Patterson v. Lennig, 118 Pa. St. 571, 12 Atl. 679; Hallman's Estate, 13 Phila. (Pa.) 562; Felkner v. Dooly, 27 Utah 350, 75 Pac. 854. The cestui que trust may ratify the purchase by the trustee of the trust property if he is sui juris and is fully apprised of his rights and has knowledge of all the material facts relating to the transaction. 739 FIDUCIARIES. § So8 good faith for furtherance of the trust.^" Thus, he is entitled to be allowed attorney's fees, under proper circumstances, when it is necessary to protect the trust fund.^' It is also proper that he be reimbursed for whatever legitimate expenses he has incurred in executing the trust.^^ By a rule prevalent in the majority of the states a trustee who has faithfully performed his duties is allowed a reasonable compensation for his services, notwithstand- ing the instrument creating the trust makes no provision for com- pensation and there is no statute regulating or providing for it.^* Walker v. Symonds, 3 Swanst. 1 ; Newton v. Rebanack, 90 Mo. App. 650; Boerum v. Schenck, 41 N. Y. 182; Beeson v. Beeson, 9 Pa. St. 279. "^"In re Leslie, 23 Ch. Div. SS2; In re Pumf rey, 22 Ch. Div. 2SS ; Hughes- Hallett V. Indian Mammouth Gold Mines Co., 22 Ch. Div. 561; In re Winchilsea, 39 Ch. Div. 168; Re Ex- hall Coal Co., 35 Beav. 449; Darke V. Williamson, 25 Beav. 622; Balsh v. Hyham, 2 P. Wms. 453; Ellig v. Naglee, 9 Cal. 683; Stewart v. Lel- lows, 128 111. 480, 20 N. E. 657; Bradford v. Clayton, 18 Ky. L. 1043. 39 S. W. 40; McCall v. Burk, 76 S. W. 177, 25 Ky. L. 643; Winslow v. Young, 94 Maine 145, 47 Atl. 149; Pratt V. Thornton, 28 Maine 355, 48 Am. Dec. 492; Wilson v. Welles, 79 Minn. 53, 81 N. W. 549; Haydel v. Hurck, 72 Mo. 253; Olson v. Lamb, 56 Nebr. 104, 76 N. W. 433, 71 Am. St. 670; Mathews v. Draguad, 3 Desaus. (S. Car.) 25; Case v. Kelly, 133 U. S. 21, 33 L. ed. 513, 10 Sup. Ct. 216; Dickel v. Smith, 42 W. Va. 126, 24 S. E. 564; Fuller v. Abbe, 105 Wis. 235, 81 N. W. 401. " Fox v. Fox, 250 111. 384, 95 N. E. 498. ^ Jones V. Dawson, 19 Ala. 672; Woodard v. Wright, 82 Cal. 202, 22 Pac. 1118; Balloch v. Hooper, 6 Mackey (17 D. C.) 421, affd. 146 U. S. 363, 26 L. ed. 1008, 13 Sup. Ct. 128; Johnston v. Fletcher, 32 111. App. 589; State v. Windle, 156 Ind. 648, 59 N. E. 276; Adams v. La Rose, 75 Ind. 471 ; Smith v. Walker, 49 Iowa 289; Bradford v. Clayton, 18 Ky. L. 1043, 39 S. W. 40; Second Unitarian Society v. Woodbury, 14 Maine 281 ; Spindler v. Atkinson, 3 Md. 409, 56 Am. Dec. 755 ; Thomas v. Goodwin, 12 Mass. 140; Truesdale v. Philadelphia Trust &c. Co., 63 Minn. 49, 65 N. W. 133; Haydel v. Hurck, 72 Mo. 253; Fearn v. Mayers, 53 Miss. 458; Mul- ford V. Minch, 11 N. J. Eq. 16; Mat- ter of Nesmith, 140 N. Y. 609; New V. Nicoll, 73 N. Y. 127, 29 Am. Rep. Ill; Matthews v. McPherson, 65 N. Car. 189; Mannix v. Purcell,46 Ohio St. 102, 19 N. E. 572, 2 L. R. A. 753, 15 Am. St. Rep. 562; Harper's Ap- peal, 64 Pa. St. 315; Myers v. Myers, 2 McCord Eq. (S. Car.) 214, 16 Am. Dec. 648; Rensselear &c. R. Co. v. Miller, 47 Vt. 146; Harrison v. Man- son, 95 Va. 593, 29 S. E. 420. '° Harris v. Martin, 9 Ala. 895; Muscogee Lumber Co. v. Hyer, 18 Fla. 698, 43 Am. Rep. 332; Premier Steel Co. V. Yandes, 139 Ind. 307, 38 N. E. 849; Hendrix's Exrs. v. Hardin, 5 Ky. L. 333; Phillips' Admr. v. Bus- tard, 1 B. Mon. (Ky.) 348; Northern Cent. R. Co. v. Keighler, 29 Md. 572; Bentley v. Shreve, 2 Md. Ch. 215; Winder v. Difenderffer, 2 Bland (Md.) 166; Urann v. Coates, 117 Mass. 41; Longley v. Hall, 11 Pick. _ (Mass.) 120; Davis v. Swedish-American Nat. Bank, 78 Minn. 408, 80 N. W. 953, 81 N. W. 210, 79 Am. St. 400; Niolon V. McDonald, 71 Miss. 337, 13 So. 870, 42 Am. St. 466 ; Maginn v. Green, 67 Mo. App. 616; Olson v. Lamb, 56 Nebr. 104, 76 N. W. 433, 71 Am. St. 670; Warbass v. Armstrong, 10 N. J. Eq. 263; Ingram v. Kirkpatrick, 8 Ired. Eq. (43 N. Car.) 62; Sherrill v. Shuford, 6 Ired. Eq. (41 N. Car.) 228; Boyd v. Hawkins, 17 N. Car. 329; Hanna v. Clark, 204 Pa. St. 145, S3 Atl. 757; In re Dorrance, 186 Pa. St. 64, 40 Atl. 149; In re Heckert's Appeal, 24 Pa. St. 482; Barney v. § 509 CONTRACTS. 74O By the English rule, which has been adopted in some states of the Union, trustees can recover compensation for services rendered only when such compensation is provided for in the trust instru- ment or by special agreement."" § 509. Powers of trustee. — The powers of a trustee are either general or special. The general powers of a trustee are those such as are deemed by law incident to the office of trustee. Special powers are those conferred by the settler himself by the express provisions of the instrument whereby he creates such trust."^ A trustee is bound by the directions contained in the trust instrument. His powers do not depend on a rule of law but on the interpretation of the trust instrument with the settler's intention.'^ The power so conferred is strictly construed. Con- sequently a power to sell does not include a power to mortgage."' Generally speaking a trustee has such powers over the subject- matter of a trust as will enable him to carry out the legal pur- poses and intent of the settler as indicated by the directions, na- ture and purpose of the settlement."* Saunders, 16 How. (U. S.) 535, 14 Harvey, 71 111. 72; Heffron v. Gage, L. ed. 1047; Hubbard v. Fisher, 25 44 111. App. 147, affd. in 149 111. 182, Vt. 539; Miller v. Beverly, 4 Hen. 36 N. E. 569; Huggins v. Rider, 11 & M. (Va.) 415; Cranberry's Exr. 111. 360 ; Ringgold v. Ringgold, 1 Har. V. Cranberry, 1 Wash. (Va.) 246, 1 & C. (Md.) 11, 18 Am. Dec. 250; Am. Dec. 455. See also, In re Co- Warbass v. Armstrong, 10 N. J. Eq. bourg Town Trust, 22 Crant. Ch. (U. 263; State Bank v. Marsh, 1 N. J. C.) 377; Bald v. Thompson, 17 Crant Eq. 288; Cilbert v. Sutliff, 3 Ohio St. Ch. (U. C.) 154; In re Toronto Har- 129; Charleston College v. Willing- bour Comrs., 28 Crant Ch. (U. C.) ham, 13 Rich. Eq. (S. Car.) 195. 195 ; Southern R. Co. v. Glenn's " Am. & Eng. Ency. of Law, vol. 28, Admr, 98 Va. 309, 36 S. E. 395. p. 981. =°In re Ormsby, 1 Ball. & C. 189; ''Merchants' Loan &c. Co. v. Brocksopp v. Barnes, S Madd, 90; Northern Trust Co., 250 111. 86, 95 Robinson v. Rett, 3 P. Wms, 249; In N. E. 59. re Bignell (1892), 1 Ch. 59; Douglas ""Hamilton v. Hamilton, 149 Iowa v. Archbutt, 2 DeC. & J. 148 ; Nichol- 321, 128 N. W. 380. son V. Tutin, 3 Jur. (N. S.) 235; "* See Thomas v. Davis, 6 Ala. 113; Bainbridge v. Blair, 3 Beav. 421 ; Murphy v. Delano, 95 Maine 229, 49 Barney V. Saunders, 16 How. (U.S.) Atl. 1053, 55 L. R. A. 727; In re 535, 14 L. ed. 1047; Biscoe v. State, Reynolds, 2 Ohio Dec. 11. "Where 23 Ark. 592; Kendall v. New England a trustee conforms with the provisions Carpet Co., 13 Conn. 383; State v. of the trust in their true spirit and Piatt, 4 Harr. (Del.) 154; Fox v. meaning, he has authority 'to adopt Fox, 250 111. 384, 95 N. E. 498; Leh- measures and to do acts which, man v. Rothbarth, 159 III. 270, 42 N. though not specified in the instrument. E. 717; Buckingham v. Morrison, 136 are implied in its general directions, 111. 437, 27 N. E. 65 ; Cook v. Gilmore, and are reasonable and proper means 133 111. 139, 24 N. E. 524; Payson v. for making them effectual.'" Kipp v. Ross, 71 111. App. 635; Hough v. O'Melveny, 2 Cal. App. 142, 83 Pac. 741 FIDUCIARIES. § 510 § 510. Personal liability of trustee. — It may be said gen- erally of the trustee's personal liability that a trustee is not an insurer of trust funds against the possibility of loss. His under- taking is personal, requiring of him good faith and reasonable diligence, and if these requirements be met he is not liable for losses which may be sustained. The law requires a trustee to act with fidelity in relation to the trust and to exercise the same measure of diligence that a man of ordinary prudence may be expected to exercise in the care of his property under the same circumstances.^^ Numerous cases might be cited which in effect state the rule as above set out, but it is believed that it is so gen- eral in its nature as to be of little value when applied to the spe- cific case.^' 264. See further on this subject in the two succeeding sections of this chapter. =° Charitable Corp. v. Sutton, 2 Atk. 400; Bell v. Turner, 2 Ch. D. 409; Taylor v. Magrath, 10 Ont. 669; Stewart v. Snyder, 27 Ont. App. 423 ; Hill V. Jones, 65 Ala. 214; Campbell V. Miller, 38 Ga. 304, 95 Am. Dec. 389; Pettyjohn v. Liebscher, 92 Ga. 149, 17 S. E. 1007; Waterman v. Alden, 144 111. 90, 32 N. E. 972; Van Buskirk v. Van Buskirk, 148 111. 9, 35 N. E. 383; Morrow v. Saline County, 21 Kans. 484 ; Cromie v. Bull, 81 Ky. 646, 5 Ky. L. 735; Chase v. Lockerman, 11 Gill & J. (Md.) 185, 35 Am. Dec. 277; Norris v. Lantz, 18 Md. 260; Barrel! v. Joy, 16 Mass. 221; Parsons v. Winslow, 16 Mass. 361 ; Coffin V. Bramlitt, 42 Miss. 194, 97 Am. Dec. 449; Barr v. Lewis, 71 Miss. 727, 15 So. 796; State v. Meagher, 44 Mo. 356, 100 Am. Dec. 298; Sherwood V. Saxton, 63 Mo. 78; Kimball v. Reding, 31 N. H. 352, 64 Am. Dec. 333; Hamburgh Mfg. Co. v. Edsall, 12 N. J. Eq. 392; Childs v. Jones, 41 N. J. Eq. 74, 3 Atl. 86; Litchfield v. White, 7 N. Y. 438, 3 Sandf. Ch. (N. Y.) 545, 57 Am. Dec. 534; Hun v. Carey, 82 N. Y. 65, 59 How. Pr. (N. Y.) 439, 37 Am. Rep. 546; Purdy v. Lynch, 145 N. Y. 462, 40 N. E. 232; Whitford V. Foy, 65 N. Car. 265; Bason v. Harden, 72 N. Car. 287 ; In re Adam's Estate, 221 Pa. 77, 70 Atl. 436, 128 Am. St. 727; In re Old's Estate, 176 Pa. St. ISO, 34 Atl. 1022 ; In re Hart's Estate, 203 Pa. St. 488, 53 Atl. 367; Hodges V. New England Screw Co., 1 R. I. 312, 53 Am. Dec. 624; Brad- shaw V. Cruise, 4 Heisk. (Tenn.) 260; State v. McAuley, 4 Heisk. (Tenn.) 424; Finlay v. Merriman, 39 Tex. 56; Elliott v. Carter, 9 Gratt. (Va.) 541; Lovett v. Thomas, 81 Va. 245; Key v. Hughes' Exrs., 32 W. Va. 184, 9 S. E. 77; Dickel v. Smith, 42 W. Va. 126, 24 S. E. 564; Wilcox V. Bates, 45 Wis. 138; Williams v. Williams, 55 Wis. 300, 12 N. W. 465, 13 N. W. 274, 42 Am. Rep. 708. '""There is little authority to show that a trustee may excuse himself by showing that he has conducted the business of investing his trust funds in the same manner that an ordinar- ily prudent _ man of business might do with his own property. The trustee must conduct himself faith- fully_ and exercise a sound discretion. He is to observe how men of pru- dence, discretion, and intelligence manage their own affairs, not in re- gard to speculation, but in regard to the permanent _ disposition of their funds, considering the probable in- come, as well as the probable safety, of the capital invested. A business man of more than average caution may, and often does, assume inten- tional risks in the investment of his own property; for the sake of ob- taining a greater than an ordinary § 5ioa CONTRACTS. 742 § 5 10a. When trustee's contract binds estate or cestui que trust. — Unless such power is given him by the instrument creating tlie trust a trustee has no authority to bind the trust estate by his executory contract."^ Thus it has been held that a trustee has no authority to bind the estate or subject the property or assets thereon to execution by giving a judgment bond in a matter in which the trust estate is not interested. ^^ The general rule has its exception, however; thus it has been said that when a trustee is authorized to make an expenditure and he has no trust funds, and the expenditure is necessary for the protection, reparation or safety of the trust estate, and he is not willing to make himself personally liable, he may by express agreement, make the expenditure a charge upon the trust estate.^" It thus appears that when the agreement is for the benefit or the pres- ervation of the estate, it may be binding thereon.*" When the instrument for which the trust is created gives the trustee the power to bind the estate, his contracts made in conformity with such provision will be binding.*^ Thus, if he is given power to income, he will often invest in such a manner that the risk of ultimate loss is considerable, and such speculative use of his property will not be re- garded as illegitimate, nor as deserv- ing of any censure. No such risk is permitted to the trustee." Indiana Trust Co. V. Griffith (Ind.), 95 N. E. 573. See also, Merchants' Loan &c. Co. v. Northern Trust Co., 250 111. 86, 95 N. E. 59. It has been held that the direction of the testatrix to use "their best skill and discre- tion" did not enlarge the powers or discretion of the trustees. Michigan Home &c. Soc. v. Corning, 164 Mich. 395, 129 N. W. 686. See further as to the trustee's personal liability in the next section of this chapter. " Sanders v. Houston Guano & Warehouse Co., 107 Ga. 49, 32 S. E. 610; Johnson v. Leman, 131 111. 609, 23 N. E. 435, 7 L. R. A. 656, 19 Am. St. 63 ; Flournoy v. Johnson & Ting- ley, 7 B. Mon. (Ky.) 693; Hines v. Potts, 56 Miss. 346 ; Taylor v. Davis, 110 U. S. 330, 28 L. ed. 163. "The general rule undoubtedly is that a trustee cannot charge the trust estate by his executory contracts unless authorized to do so by the terms of the instrument creating the trust. Upon such contracts he is personally liable and the remedy is against him personallv." New v. NicoU, 73 N. Y. 127, 29 Am. Rep, 111. '""Williams v. Tozer, 185 Pa. St. 302, 39 Atl. 947, 64 Am. St. 650. ""New V. NicoU, 73 N. Y. 127, 29 Am. Rep. 111. See also, Johnson v. Leman, 30 111. App. 370, affd., 131 111. 609, 23 N. E. 435, 7 L. R. A. 656, 19 Am. St. 63. " See Sanders v. Houston Guano & Warehouse Co., 107 Ga. 49, 32 S. E. 610. "Whenever any law, statutory or other, imposes a personal duty upon a guardian, executor or trustee to pay money of his own for the bene- fit of the estate in his care, it follows under the general principles of juris- prudence, without special statutory provision, that the money so paid will be chargeable to the estate and that in equity, at least, reimbursement will be enforced." City of Bangor V. Peirce, 106 Maine 527, 76 Atl. 945, 138 Am. St. 363. *^ Wagnon v. Pease, 104 Ga. 417, 30 743 FIDUCIARIES. § 510a carry on a particular business he may bind the estate for the nec- essary debts incurred in the conduct of such business." It has also been held that the power to mortgage confers upon a trustee the right to bind the trust estate for a building and loan association contract.*' The contract executed cannot, however, exceed the power expressly or impliedly conferred upon the trustee. Thus he may be given authority to execute a lease, but in the absence of an express power from the instrument itself the trustee cannot lease the property for a period beyond the life of the trust estate.** The trustee does not have the power to impose a personal liability upon the cestui que trust," such as liability for the fees of an attorney employed by the trustee.*" Even when authorized to do so, if he borrows money and gives. a note as trustee, the note is his individual note.*' The cestui que trust may, however, be liable where he gives the trustees special au- thority to contract in his behalf.*^ This liabiHty rests, however, on the ground that the principal is liable for the acts of his agent and does not arise from the relation of trustee and cestui que trust, or on the ground that he has made a valid ratification of the trustee's unauthorized act.** S. E. 895 ; Riggins v. Adair, 105 Ga. that a trustee of real estate for a life 727, 31 S. E. 743; Bailie v. Carolina tenant and remainderman, with power &c. Loan Assn., 100 Ga. 20, 28 S. E. to manage, lease, and control it for 274 ; Judge v. Pfaff, 171 Mass. 195, the purpose of paying taxes, expenses SO N. E. 524; Packard v. Kingman, and necessary repairs and pay the 109 Mich. 497, 61 N. W. 551; United profits to the life tenant, was not States Trust Co. v. Roche, 116 N. Y. thereby authorized to grant the right 120, 22 N. E. 265. to take gas and oil from the property " Wadsworth, Holland & Co. v. where no wells were upon it at the Arnold, 24 R. I. 32, 51 Atl. 1041. See time the trust was created. Ohio Oil also, Sanders v. Houston Guano Co. v. Daughetee, 240 111. 361, 88 N. & Warehouse Co., 107 Ga. 49, 32 S. E. E. 818, 36 L. R. A. (N. S.) 1108. 610. ^ Hartley v. Phillips, 198 Pa. St. 9. *■ Cottingham v. Equitable &c. Loan 47 Atl. 929. Afesn,, 114 Ga. 944, 41 S. E. 72. ^Truesdale v. Philadelphia Trust. " Hubbell V. Hubbell, 135 Iowa 637, Safe &c. Co., 63 Minn. 49, 65 N. W. 113 N. W. 512, 13 L. R. A. (N. S.) 133. 496n. In the above case it was held "Dunham v. Blood (Mass.), 93 N. that the trustee did not have the E. 804. power to execute a lease for ninety- * Hanover Nat. Bank v. Cocke, 127 nine years. The above case is a valu- N. Car. 467, 47 S. E. 507. able one on the subject, reviewing "^ Newell v. Hadley, 206 Mass. 335, most of the authorities. Griffen v. 92 N. E. 507; Ungrich v. Ungrich, Ford, 14 N. Y. Super. Ct. 123; In 141 App. Div. (N. Y.) 485, 126 N. Y. re 110th Street, 81 App. Div. (N. Y.) S. 419. 27, 81 N. Y. S. 32. It has been held § 511 CONTRACTS. 744 §511. When trustee is personally liable, — It has already been seen that the law requires a trustee to exercise good faith and reasonable diligence, and the degree of diligence usually re- quired is that exercised by a man of ordinary prudence in the care of his own property under the same circumstances.'^" A trustee will not, however, be permitted to shield himself by pleach- ing that he acted in good faith when it appears that his mistake was due to gross ignorance and that it might have been avoided by the exercise of ordinary intelligence." A trustee is not surety for his cotrustee, and in the absence of negligence on his part will not be liable for trust funds received by his cotrustee.^^ He is, however, required to exercise a general superintendence and care over the trust, and if he learns of any facts tending to call to his attention the mismanagement or misapplication of the trust funds by his cotrustee it is his duty to intervene and prevent a devastavit." A trustee is also liable if he transcends the powers conferred upon him by the instrument creating the trust or those given him by law, notwithstanding he may have acted in perfect good faith. °* Thus should the trustee invest the trust funds in a manner prohibited by statute he will be liable for any loss which may result notwithstanding he may have acted in good faith. ^'^ It is necessary for a trustee to get an order from the court before investing the funds of the ward only when he is required to do so by statute.^" But when such investments are made without ™ See ante, § 506, Rights, Powers of such misconduct he should have and Liabilities of Trustees. taken steps to prevent loss. =' Hun V. Gary, 82 N. Y. 65, 59 " Wightwick v. Lord. 6 H. L. Cas. How. Pr. (N. Y.) 439, 37 Am. Rep. 217; Hogg v. Hoag, 107 Fed. 807; 546 ; Gilbert v. Sutliff, 3 Ohio St. 129. Green v. Putney, 1 Md. Ch. 262 ; Loud "'Bruen v. Gillet, 115 N. Y. 10, 21 v. Winchester, 64 Mich, 23, 30 N. W. N. E. 676, 4 L. R. A. 529, 12 Am. St. 896 ; Vernon v. Tippah County Board 764; Adams Estate, 221 Pa. 11, 70 of Police, 47 Miss. 181; Hun v. Gary, Atl. 436, 128 Am. St. Rep. 727; Es- 82 N. Y. 65, 59 How. Pr. (N. Y.) tate of Fesmire, 134 Pa. St. 67, 19 439, 37 Am. Rep. 546; Atkinson v. Atl. 502, 19 Am. St. 676. Beckett, 34 W. Va. 584, 12 S. E. 717. "'In re Adams' Estate, 221 Pa. See also, Atty-Gen. v. Greenfield 11. 70 Atl. 436, 128 Am. St. Library Assn., 135 Mass. 563. 727. The above case holds that the °° Robertson v. Robertson's Trus- innocent trustee is not excused by the tees, 130 Ky. 293, 113 S. W. 138, 132 fact that he informed the cestui que Am. St. 368n. trust of misconduct on the part of his "'' Indiana Trust Co. v. Griffith co-trustee; after acquiring knowledge (Ind.), 95 N. E. 573. 745 FIDUCIARIES. § 5" the sanction of a court of competent jurisdiction the risk is with the guardian." Unless a contrary intention is clearly manifested a trus- tee will render himself personally liable on contracts made in his own name. He is individually liable" notwithstanding he may refer to himself as trustee in the body of the agreement'* or adds the word "trustee" to his name.'" Thus he has been held liable on his contract of indorsement."^ Even though the instru- ment creating the trust provides that the trustee shall have power to bind the estate he will be held liable unless the contract pro- vides against such liability."^ Nor does the fact that the trust deed provides that the trustee shall be free from personal liability, " Indiana Trust Co. v. Griffith (Ind), 95 N. E. 573. In the above case the statute provided that the di- rectors of any corporation acting as trustee should have discretionary power to invest all moneys received in any such personal securities as are not hereinafter expressly prohibited. The court held that the use of "discre- tionary power" did not render the guardian any the less liable on fail- ure to properly invest and manage the trust, and said : "Indeed the care to be exercised must be com- mensurate with the freedom given." See also, the case of In re Hirsch's Estate, 116 App. Div. (N. Y.) 367, 101 N. Y. S. 893, in which the trustees were held liable for stock specula- tion, notwithstanding the instrument creating the trust gave them power to invest the trust funds in any se- curities or other form of investment which they might in their discretion deem proper and advisable, irrespect- ive of the law governing investments by executors and trustees. ''Bloom V. Wolfe, SO Iowa 286; Farmer's and Trader's Bank v. Fi- delity Deposit Co., 108 Ky. 384, 22 Ky. L. 22, 56 S. W. 671; Gill v. Carmine, 55 Md. 339; Odd Fellows' Hall Association v. McAllister, 153 Mass. 292, 26 N. E. 862, 11 L. R. A. 172; Mayo v. Moritz, 151 Mass. 481, 24 N. E. 1083; Mitchell v. Whitlock, 121 N. Car. 166, 28 S. E. 292 ; Wells- Stone Mercantile Co. v. Grover, 7 N. Dak. 460, 75 N. W. 911, 41 L. R. A. 252; Ogden City St. Ry. Co. v. Wright, 31 Ore. 150, 49 Pac. 975; Fehlinger v. Wood, 134 Pa. St. 517, 19 Atl. 746; McDowall v. Reed, 28 S. Car. 466, 6 S. E. 300; Taylor v. Davis, 110 U. S. 330, 28 L. ed. 163; Hewitt V. Phelps, 105 U. S. 393, 26 L. ed. 1072 ; Duvall v. Craig, 2 Wheat. (U. S.) 45, 4 L. ed. 180; Mclntyre v. Williamson, 72 Vt. 183, 47 Atl. 786, 82 Am. St. 929. "When a trustee con- tracts as such, unless he is bound no one else is bound, for he has no prin- cipal. The trust estate cannot prom- ise ; the contract is therefore the per- sonal undertaking of the trustee." Taylor v. Davis' Admrs., 110 U. S. 330, 335, 28 L. ed. 163, quoted Ger- mania Bank v. Michaud, (>2 Minn. 459, 65 N. W. 70, 30 L. R. A. 286, 54 Am. St. 653. °" Gibson v. Gray, 17 Tex. Civ. App. 646, 43 S. W. 922. °° Individually liable notwithstand- ing the note was signed, "Estate of William R. Clark, by William R. Clark, Jr., Trustee." Dunham v. Blood, 207 Mass. 512, 93 N. E. 804; Ogden City St. R. Co. v. Wright, 31 Ore. ISO, 49 Pac. 97S ; Mclntyre v. Williamson, 72 Vt. 183, 47 Atl. 786, 82 Am. St. 929. Contra, Printup v. Trammel, 25 Ga. 240. °' Tradesmen's Nat. Bank v. Looney, 99 Tenn. 278, 42 S. W. 149, 38 L. R. A. 837, 63 Am. St. 830. In the above case it appears that he indorsed as trustee negotiable paper payable to himself as trustee. "'Connally v. Lyons, 82 Tex. 664, 18 S. W. 799, 27 Am. St. 935. 511 CONTRACTS. 746 i. e. under the deed, limit such trustee's authority to contract per- sonally if he sees fit."^ This provision against immunity must be made at the time the contract was entered into. A subsequent agreement not to hold the trustee liable is unen forcible when without consideration.'^* A trustee is not, however, held per- sonally liable on obligations incurred by his predecessor for the benefit of the estate."^ Other cases hold that while the trustee cannot create a debt against the trust estate, yet the creditors have the right to subject the rents or profits of such estate to the payment of their claims to the extent that they were beneficial to the trust,"^ or be subrogated to the trustee's claim against the estate. °^ This latter is especially true where the trustee is insol- vent"' or a nonresident."" " American &c. Smelting Co. v. Converse, 175 Mass. 449, 56 N. E. 594. "New V. Nicoll, 73 N. Y. 127, 79 Am. Rep. 111. °° Baxter v. McDonnell, 155 N. Y. 83, 49 N. E. 667, 40 L. R. A. 670. "'Neal V. Bleckley, 51 S. Car. 506, 29 S. E. 249. To same effect, San- ders V. Warehouse Guano & Co., 107 Ga. 49, 32 S. E. 610; Kupferman v. McGehee, 63 Ga. 250. ""Mosely v. Norman, 74 Ala. 422; Steele v. Steele, 64 Ala. 438, 38 Am. Rep. 15. "Clapton V. Gholson, S3 Miss. 466. "Norton v. Phelps, 54 Miss. 467. In a note to Johnson v. Leman, 19 Am. St. 71, Mr. Freeman states the general rule in regard to the rights and duties of trustees in this class of cases as follows : "In addition to what has already been incidentally said, it may be stated as a well-estab- lished doctrine, universally applied, that a trustee has a right to make ad- vances or necessary repairs or im- provements for the benefit of the trust estate against which he has a lien for reimbursement of such advances, or costs and expenses, which he may enforce before he can be compelled to surrender the estate, unless pro- hibited either expressly or by neces- sary implication from incurring such expenses by the terms of the instru- ment creating the trust. * * * Trus- tees invested with general powers of control and management are not bound to strict limitations ; they are justified in making ordinary repairs and improvements and insuring the property, and are allowed to hold the estate until reimbursed; nor does the right of reimbursement depend upon the knowledge or consent of the cestui que trust." So in 2 Pomeroy's Equity Jurisprudence, § 1085, it is stated as the law, both in England and in this country, that a trustee will be allowed "all payments ex- pressly authorized by the instrument of trust, all reasonable expenses in carrying out the directions of the trust, and, in the absence of any such directions, all expenses reasonably necessary for the security, protection and preservation of the trust prop- erty, or for the prevention 'of a fail- ure of the trust. * * * Where a trustee properly advances money for any of the above mentioned objects, so that he is entitled to reimburse- ment, he also has a lien as security for the claim, either tipon the corpus of the trust property or upon the income, according as the advancement is for the benefit of the life tenant, or for both the life tenant and re- mainderman : Hill on Trustees 647, and notes ; 2 Perry on Trusts, § 913, and notes." Shirkey v. Kirby, 110 Va. 455, 56 S. E. 40, 135 Am. St. 949. As to the right of a trustee to a lien on trust property for expenditures made for him, see Johnson v. Leman, 30 111. 747 FIDUCIARIES. § 512 § 512. Executors and administrators — Authority gener- ally. — The definition given of a trustee at the beginning of the chapter would also include executors and administrators ; their rights, duties and obligations are very similar to those of a trustee. In all essential respects they are regarded in courts of equity as trustees and are frequently called trustees and held to the responsibilities and duties of trustees by the courts." Under the common-law rule the power and authority of an administrator or executor is confined within the jurisdiction of the sovereignty by virtue of whose law he is appointed.''^ An executor or admin- istrator is invested with the legal title to the personal property of the estate but he holds that title charged with the duty of man- aging and disposing of the same in accordance with the pro- visions of the will or the law. His duties are trust duties.'^" An administrator has only such powers as are conferred upon him by statutory enactment; an executor only such as are expressed in or implied from the will creating him executor. It is a gen- eral rule, however, subject to but few exceptions, that a personal representative cannot charge the estate by contracts originating with himself, although for the benefit and in the interest and on behalf of the estate, and that for such contracts and claims the remedy is against the executor or administrator in his private capacity.'^ App. 370; affd. in 131 111. 609, 23 "Brown v. Smith, 101 Maine S4S, N. E. 435, 7 L. R. A. 656, 19 Am. 64 Atl. 915, 115 Am. St. 339. The St. 63. statutes of the various states usually " McKeigue v. Chicago & N. W. R. provide for the granting of ancillary Co., 130 Wis. 543, 110 N. W. 384, 11 administration on the estate of a non- L. R. A. (N. S.) 148n, 118 Am. St. resident. See cases above cited and 1038. See also, Reeder v. Meredith, statutes of the various states. 78 Ark. Ill, 93 S. W. 558, 115 Am. "McKeigue v. Chicago &c. R. Co., St. 22; Flowers v. Flowers, 84 Ark. 130 Wis. 543, 110 N. W. 384, 11 L, 557, 106 S. W. 949, 120 Am. St. 84. R. A. (N. S.) 148n, 118 Am. St. "The purpose and object of requir- 1038. An executor does not take title ing administration to be had upon the to his decedent's real estate unless estates of persons dying intestate is expressly or impliedly given him by to provide for and insure, first, the the will. Emmerson v. Merritt (111.), conservation of all the personal assets 94 N. E. 955. To same effect, Coles' of the estate, including the collection Heirs v. Jamerson (Va.), 71 S. E. of all debts due the decedent; second, 618. See also, post, § 522, Guardians, the payment of all the debts of the "Thompson v. Mann, 65 W. Va. decedent; and, third, the proper dis- 648, 64 S. E. 920, 22 L. R. A. (N. tribution of the residue among heirs S.) 1094n, 131 Am. St. 987. "Aside at law, according to the statute of from the powers conferred by the descent." Cotterell v. Coen, 246 111. probate court, executors have such 410, 92 N. E. 911. powers only as are given by the will." § 513 CONTRACTS. 748 § 513. Power to bind the estate by contract — Illustrative cases. — Thus, they do not have the power to change the form or character of a valid and pre-existing liability or to incur any additional liability/* notwithstanding such contract might be beneficial to the estate. This rule prohibits the executor or ad- ministrator from giving'^ or indorsing notes of the estate'** to pay the debt of the estate. He cannot, it has been held, create a debt against the estate by accepting a draft" nor by giving a promis- sory note in payment of an obligation barred by the statute of lim- itation." Contracts of an executor or administrator to pay for services rendered by an attorney for the benefit of the estate are personal and do not bind the estate.'" Thus the estate is not bound ^^'isdom V. Wilson (Tex. Civ. App.), 127 S. W. 1128. A personal repre- sentative may, however, be required to perform a valid subsisting contract entered into by his decedent before his death. Macdonald v. O'Shea, 58 Wash. 169, 108 Pac. 436, Ann. Cas. 1912A, 417 and note. "Taylor v. Crook, 136 Ala. 354, 34 So. 905, 96 Am. St. 26; Pike v. Thomas, 62 Ark. 223, 35 S. W. 212, 54 Am. St. 292; Tucker v. Grace, 61 Ark. 410, 33 S. W. 530; Sterrett v. Barker, 119 Cal. 492, 51 Pac. 695; Schlicker v. Hemenway, 110 Cal. 579, 42 Pac. 1063, 52 Am. St. 116; Taylor v. Mygatt, 26 Conn. 184; Wilson v. Mason, 158 111. 304, 42 N. E. 134, 49 Am. St. 162; Clark v. Ross, 96 Iowa 402, 65 N. W. 340; Chicago Lumber Co. v. Tomilson, 54 Kans. 770, 39 Pac. 694; Baker v. Moor, 63 Maine 443 ; Davis v. French, 20 Maine 21, il Am. Dec. 36; Durkin v. Lang- ley, 167 Mass. 577, 46 N. E. 119; Kingman v. Soule, 132 Mass. 285; Luscomb v. Ballard, S Gray (Mass.) 403, 66 Am. Dec. 374 ; Smith v. Bren- nan, 62 Mich. 349, 28 N. W. 892, 4 Am. St. 867; Brown v. Farnham, 55 Minn. 27, 56 N. W. 352; Stirling v. Winter, 80 Mo. 141; Richardson v. Palmer, 24 Mo. App. 480; Doolittle v. Willet, 57 N. J. L. 398, 31 Atl. 385 ; Le Baron v. Barker, 143 App. Div. (N. Y.) 492, 127 N. Y. S. 979; Schmittler v. Simon, 101 N. Y. 554, 5 N. E. 452, 54 Am, Rep. 737; Austin V. Mimro, 47 N. Y. 360; Ferrin v. Mvrick, 41 N, Y. 315; Lucht v. Behrens, 28 Ohio St. 231, 22 Am. Rep. 378; Patterson v. Craig, 1 Baxt. (Tenn.) 291; Fine v. Freeman, 83 Tex. 529, 17 S. W. 783, 18 S. W. 963; Rich v. Sowles, 64 Vt. 408, 28 Atl. 723, 15 L. R. A. 850; Adams v. Adams, 16 Vt. 228; Fitzhugh v. Fitz- hugh, 11 Grat. (Va.) 300, 62 Am. Dec. 653. "Christian v. Morris, 50 Ala. 585; Sterrett v. Barker, 119 Cal. 492, 51 Pac. 695; Cornthwaite v. First Nat. Bank, 57 Ind. 268 ; Valley Nat. Bank V. Crosby, 108 Iowa 651, 79 N. W. 383 ; Rice v. Strange, 24 Ky. L. 1945, 72 S. W. 756; Ellis' Admr. v. Merri- man, 5 B. Mon. (Ky.) 296; Ritten- house V. Ammerman, 64 Mo. 197, 27 Am. Rep. 215; First National Bank V. Collins, 17 Mont. 433, 43 Pac. 499, 52 Am. St. 695; Morehead Banking Co. V. Morehead, 122 N. Car. 318, 30 S. E. 331; Smith v. Hayward, 5 Ohio N. P. 501; Boyd v. Johnston, 89 Tenn. 284, 14 S. W. 804; Greg- ory V. Leigh, ZZ Tex. 813; Robert- son V. Breckenridge's Admr., 98 Va. 569, 2n S. E. 8. ■"■ Johnston v. Union Bank, 37 Miss. 526. "Perry v. Cunningham, 40 Ark. 185. "In re Claghorn's Estate, 181 Pa. St. 600, 2,1 Atl. 918, 59 Am. St. 680. But see vol. 3, chapter on Statute of Limitations. "Tucker v. Grace, 61 Ark. 410, 33 S. W. 530; Bryan v. Craig, 64 Ark. 438, 44 S. W. 348; Pike v. Thomas, 65 Ark. 437, 47 S. W. 110; In re Page, 57 Cal. 238; Briggs v. Breen, 123 Cal. 657, 56 Pac. 633; McKee v. 749 FIDUCIARIES. § SI3 for the payment of a contingent fee out of its assets.'" Certain ex- ceptions have been recognized to the rule that an executor or ad- ministrator cannot bind the estate for the payment of attorney's fees, as where the personal representative is insolvent/^ has died*'' or resigned/^ coupled with the fact that such former representa- tive has failed to pay for such services, will entitle the attorney to proceed against the estate or the succeeding administrator. It has been held that the estate is not liable on the executor or ad- ministrator's contract to buy real estate,'* nor for the value of property bought for the estate,'^ nor on his contract of war- Soher, 138 Cal. 367, 71 Pac. 438; Lusk V. Patterson, 2 Colo. App. 306, 30 Pac. 253 ; Clark v. Sayre, 122 Iowa 591, 98 N. W. 484; Brown v. Quinton, 80 Kans. 44, 102 Pac. 242, 25 L. R. A. (N. S.) 71; Clopton V. Gholson, 53 Miss. 466; State v. Second Judicial District Ct., 25 Mont. 33, 63 Pac. 717 ; Wait V. Holt, 58 N. H. 467; Piatt v. Piatt, 105 N. Y. 488, 12 N. E. 22; Parker v. Day, 155 N. Y. 383, 49 N. E. 1046; In re Halsey, 13 Abb. N. Cas. (N. Y.) 353; Re O'Brien, 5 Misc. (N. Y.) 136, 25 N. Y. S. 704; Re Weisenbach, 3 Dem. Surr. (N. Y.) 145; Re McDonough, 132 App. Div. (N. Y.) 614, 117 N. Y. S. 258; Kessler V. Hall, 64 N. Car. 60; Lindsay v. Darden, 124 N. Car. 307, 32 S. E. 678; Thomas v. Moore, 52 Ohio St. 200, 39 N. E. 803 ; Mellen v. West, 5 Ohio C. C. 89; Waite v. Willis, 42 Ore. 288, 70 Pac. 1034; Besancom v. Wegner, 16 N. Dak. 240, 112 N. W. 965 ; In re Sullivan's Estate, 36 Wash. 217, 78 Pac. 945 ; Thompson v. Mann, 65 W. Va. 648, 64 S. E. 920, 22 L. R. A. (N. S.) 1094n, 131 Am. St. 987. See also, In re Bullion's Estate, 87 Nebr. 700, 128 N. W. 32, which holds the administrator as not en- titled to credit for attorney's fees or other expenses incurred in defending a suit to which there was no mer- itorious defense. See, however, Nave V. Salmon, 51 Ind. 159; Long v. Rod- man, 58 Ind. 58; Jackson v. Leech, 113 Mich. 391, 71 N. W. 846; Marx v. McMorran, 136 Mich. 406, 99 N. W. 396; Nichols v. Reyburn, 55 Mo. App. 1 ; State v. Walsh, 67 Mo. App. 348; Matson v. Pearson, 121 Mo. App. 120, 97 S. W. 983; In re Wil- son's Appeal, 3 Walk. (Pa.) 216; In re Cook's Estate, 1 Phila. (Pa.) 408; Portis V. Cole, 11 Tex. 157. «■ Tucker v. Grace, 61 Ark. 410, 33 S. W. 530; In re Page, 57 Cal. 238; Rickel V. Chicago, R. I. & P. R. Co., 112 Iowa 148, 83 N. W. 957; Piatt V. Piatt, 105 N. Y. 488, 12 N. E. 22; Thomas v. Moore, 52 Ohio St. 200, 39 N. E. 803. See, however, MacKie V. Howland, 3 App. (D. C.) 461; Stansell v. Lindsay, 50 Ga. 360; Lee V. Van Voorhis, 78 Hun (N. Y.) 575, 61 N. Y. St. 220, 29 N. Y. S. 571, afifd., 145 N. Y. 603, 40 N. E. 164; In re McCullough's Estate, 31 Ore. 86, 49 Pac. 886; Thompson v. Nowlin, 51 W. Va. 346, 41 S. E. 178. ''Clapp V. Clapp, 44 Hun (N. Y.) 451, 9 N. Y. St. 275; Sartorelli v. Ezagni, 64 Misc. (N. Y.) 115, 118 N. Y. S. 46; Miller v. Tracy, 86 Wis. 330, 56 N. W. 866. ''Williams v. Walker, 31 Ga. 195. Contra, Besancon v. Wegner, 16 N. Dak. 240, 112 N. W. 965. ^Marvin's Estate, Myrick Probate Court Rep. (Cal.) 163; Contra, Fitz- simmons v. Safe Deposit &c. Co., 189 Pa. St. 514, 42 Atl. 41. See also, Stevenson v. Bruce, 10 Ind. 397. "Wilson V. Mason, 158 111. 304, 42 N. E. 134, 49 Am. St. 162. ''Daily v. Daily, 66 Ala. 266 (food for stock of estate) ; Yarborough v. Ward, 34 Ark. 204; Wilson v. Mason, 158 111. 304, 42 N. E. 134, 49 Am. St. 162; Durkin v. Langley, 167 Mass. 577, 46 N. E. 119; West v. Dean, 15 Ohio C. C. 261. § 5^4 CONTRACTS. 75O ranty,^^ nor by his agreement to refund money received on the sale of certain property/' nor on his contract for services.^' § 514. Order of court — When it adds nothing to power of administrator. — Even an order of court does not confer the power to bind the estate by contract when the judge has no statu- tory authority to authorize such contract. The order of the judge in the absence of any statute adds nothing to the powers of the administrator.^" Thus it has been held that the court had no power to fax the amount to be paid by an administrator for legal services.®" The duties and powers of an administrator cannot be enlarged upon by a court of chancery and if it undertakes to confer upon him powers which are denied under the law, the de- cree of the court is a nullity.'^ § 515. Ratification of administrator's acts — Duties of ad- ministrator. — An administrator's unauthorized act may be ratified by the beneficiaries, but it is held that such ratification must be in toto, and when made is final."^ On the duties of an executor it may be said generally that both at common law and ^Bauerle v. Long, 187 111. 475, 58 39 S. W. 251; Hoke v. Hoke, 12 W. N. E. 458, 52 L. R. A. 643; Huff- Va. 427. man v. Hendry, 9 Ind. App. 324, 36 '^Alexander v. Herring (Miss.), 55 N. E. 727, S3 Am. St. 351; Dunlap So. 360. The above case holds that V. Robinson, 12 Ohio St. 530; Lock- the chancery court could not author- wood V. Gilson, 12 Ohio St. 526; Ar- ize the administrator to engage in nold V. Donaldson, 46 Ohio St. li, 18 business. N. E. 540. "'Wilson v. Stevens, 129 Ala. 630, " Hall V. Wilkinson, 35 W. Va. 167, 29 So. 678, 87 Am. St. 86. It has 12 S. E. 1118. been held that where an executor or ''In re Page, 57 Cal. 238; Dodson administrator in good faith and in V. Nevitt, 5 Mont. 518, 6 Pac. 358; the exercise of ordinary care for the Daingerfield v. Smith, 83 Va. 81, 1 good of the beneficiaries and with S. E. 599. The foregoing, of course, their consent, carries on his de- has reference to those cases in which cedent's business, the consenting there is no statutory authority nor beneficiaries cannot charge the rep- authority expressed in the will by resentative with any loss which may which the executor or administrator arise therefrom. Mathews v. Shee- was given the right to enter into any han, 76 Conn. 654, 57 Atl. 694, 100 of the foregoing contracts. Am. St. 1017. In re Sparrow's Suc- "' Valley Nat. Bank v. Crosby, 108 cession, 39 La. Ann. 696, 2 So. 501; Iowa 651, 79 N. W. 383. Poole v. Munday, 103 Mass. 174; °° State v. Second Judicial District Swaine v. Hemphill, 165 Mich. 561, Court, 25 Mont. 33. 63 Pac. 717. See, 131 N. W. 68; French v. Davis, 38 however. In re Hite, 155 Cal. 448, 101 Miss. 167; Hibberd v. Hubbard, 13 Pac. 448; In re Kasson, 119 Cal. 489, Pa. Dist. Ct. 12, revd. on other 51 Pac. 706; Scott v. Dailey, 89 Ind. grounds, 211 Pa. St. 331, 60 Atl. 911. 477; Jones v. Jones, 19 Ky. L. 129, 75^ FIDUCIARIES. § 516 under the statutes the executor succeeds to the possession of the testator and it is his duty to care for and preserve the property even before letters are issued to hira.°^ § 516. Statutory authority. — The powers of an executor or administrator are subject to statutory enlargement."* Stat- utory authority may be either express or implied, and the executor or administrator may contract within the limit of this express or implied authority. "^ Under such statutes it has been held that he might compromise claims,"" consent to judgment be- ing taken on a just claim," and extend the time for the payment of an obligation binding upon the estate,"* and it has been held that an executor might carry out a contract for the erection of a building, thus incurring expenses."" The statute may also give him power to employ an attorney^ with^ or without' leave of court. The legislative enactment may also empower the ex- ecutor to borrow money with the approval of a court of com- petent jurisdiction for the payment of debts, legacies, etc.* The foregoing cases but illustrate the general rule which governs executors to the efifect that if the thing promised is such as the executor is lawfully authorized or empowered to do or if he con- ■" Alerding v. Allison, 170 Ind. 252, """ Mulville v. Pacific &c. Ins. Co., 83 N. E. 1006, 127 Am. St. 363. 19 Mont. 95, 47 Pac. 650. "An exec- See In re Hincheon, 1S9 Cal. 755, utor or administrator has the power 116 Pac. 47, 36 L. R. A. (N. S.) 303, to settle or compromise claims for or holding that executors do not have against the estate, and a settlement the power to complete a building de- made by him can be set aside only vised in an unfinished condition out of upon proof of bad faith or fraud." the funds of the estate except so far Scully v. McGrath, 201 N. Y. 61, 94 as contracts have already been let N. E. 195. by the testator, but also stating that " Sheldon v. Estate of Warner, 59 executors have the right and it is Mich. 444, 26 N. W. 667. t'heir duty to make such expenditures °° Campbell v. Linder, 50 S. Car. as are necessary to preserve the prop- 169, 27 S.^ E. 648. erty left by the testator. ""Bambrick v. Church Assn.. S3 " See MacKie v. Howland, 3 App. Mo. App. 225. Compare with In re (D C.) 461; Scott v. Meadows, 16 Hincheon, 159 Cal. 755, 116 Pac. 47, Lea (Tenn.) 290; Jack v. Cassin, 9 36 L. R. A. (N. S.) 303 and note. Tex. Civ. App. 228, 28 S. W. 832; ^Fenner v. McCann, 49 La. Ann. Williams v. Howard, 10 Tex. Civ. 600, 21 So. 768. App. 527, 31 S. W. 835. ' Wassel v. Armstrong, 35 Ark. 247. " Wilburn v. McCalley, 63 Ala. 436 ; ' Baker v. Cauthorn, 23 Ind. App. Brown v. Eggleston, S3 Conn. 110, 2 611, 55 N. E. 963, 77 Am. St. Atl 321 • Brown v. Farnham, 55 Minn. 443; Jackson v. Leech's Estate, 113 27, 56 N. W. 352; Price v. Mclver, Mich. 391, 71 N. W. 846. 25 Tex. 769, 78 Am. Dec. 558. * Hart v. Allen, 166 Mass. 78, 44 N. E. 116. § 5^7 CONTRACTS. 752 tracts to do what he has a right or it is his duty to do in his offi- cial or representative capacity, then he is not personally bound, but instead his promise is enforcible against the estate/ § 517. Powers given by will. — The will may confer upon the executor power to bind the estate by contract. This power may be either expressed' or implied.' Thus authority to contract debts or borrow money is given where the testator authorizes his executor to carry on the deceased's business,' or raise money," or operate a mine," or manage a plantation.^^ By some author- ities it is held that under the power given an executor to borrow money to carry on the business of the deceased, the entire estate is bound for the repayment of money so borrowed.^^ The Supreme Court of Michigan has stated, however, "that where an administrator or executor, instead of closing out a business, con- tinues it, even when authorized by will to do so, the trade debts will reach only the trade assets" ; that is, property employed in the business or that resulted from doing the business.^* A power of sale, when not expressly given, will be implied from the °Ashby V. Ashby, 7 B. & C. 444; L. R. A. (N. S.) 67Sn, 134 Am. St. Haynes v. Forshaw, 11 Hare 93; Si7. Brown v. Farnham, SS Minn. 27, S6 ° Schlickman v. Citizen's Nat. Bank, N. W. 352. In considering statutory 139 Ky. 268, 129 S. W. 823, 29 L. R. power to bind the estate the distinc- A. (N. S.) 264. To same effect, lion between an administrator and an Primm v. Mensing, 14 Tex. Civ. App. executor must be borne in mind. The 395, 38 S. W. 382. former is appointed by a court of ° Fletcher v. American &c. Banking competent jurisdiction and his rights, Co., Ill Ga. 300, 36 S. E. 767, 78 duties and obligations are statutory. Am. St. 164. On the other hand, the executor is "In re Waddell's Estate, 196 Pa. appointed by the will of the deceased St. 294, 46 Atl. 304. and such executor is in the main gov- " Primm v. Mensing, 14 Tex. Civ. erned by the powers and restrictions App. 395, 38 S. W. 382. In the ab- which the testator has seen fit to im- sence of either statutory authority or pose upon him. authority in the will an administrator ° Smith V. Courtnay Exrs.. 27 Ky. or executor does not have authority L. 642, 85 S. W. 1101; Offutt v. to carry on the business in which the Hall's Executors, 27 Ky. L. 1072, 87 deceased was engaged at the time S. W. 785 ; Brown v. Doherty, 185 N. of his death. Western Newspaper Y. 383, 78 N. E. 147, 113 Am. St. Co. v. Thurmond, 27 Okla. 261, 111 915 ; In re Watts' Estate, 202 Pa. 85, Pac. 204, Ann. Cas. 1912 B, 727. 51 Atl. 588. " Schlickman v. Citizens' Nat. Bank, ' Ames V. Holderbaum, 44 Fed. 224 ; 139 Ky. 268, 129 S. W. 823, 29 L. R. Schlickman v. Citizen's Nat. Bank, A. (N. S.) 264; Furst v. Armstrong, 139 Ky. 268, 129 S. W. 823, 29 L. R. 202 Pa. St. 348, 51 Atl. 996, 90 Am. A. (N. S.) 264; Robinson v. Robin- St. 653. son, 105 Maine 68, 72 Atl. 883, 32 " Frey v. Eisenhardt, 116 Mich. 160, 74 N. W. 501. 753 FIDUCIARIES. § 518 fact that the trustee is charged with a duty which cannot be per- formed without a power of sale." It has been held, however, that a power to sell does not confer upon the executor the power to warrant^" or to mortgage" the property.^' § 518. Liability where estate is benefited. — As has already been mentioned, the contracts of an executor or administrator, even when made in behalf of the estate, are not binding upon it in the absence of any statutory authority, or express or implied power in the will itself. The contract of an administrator or executor is personal.^^ The object of this rule is to conserve and protect the estate. It is not, however, intended to operate un- justly against the executor or administrator. While personally liable, yet it is his right in a proper case that he be reimbursed and credited in his accounts with the amount to which the estate has been actually benefited by such contract.^* The executor has the right to charge the estate with the amount that he has prop- " Carlisle v. Cooke (1905), 1 I. R. 269; Wood v. White, 4 Myl. & C. 460, 2 Keen. 664, 8 L. J. Ch. (N. S.) 209, 3 Jur. 117; Cherry v. Greene, 115 111. 591, 4 N. E. 257; Gammon v. Gammon, 153 111. 41, 38 N. E. 890; Stoff V. McGinn, 178 111. 46, 52 N. E. 1048; Poulter v. Poulter, 193 111. 641, 61 N. E. 1056; Robinson v. Rob- inson, 105 Maine 68, 72 Atl. 883, 32 L. R. A. (N. S.) 675n, 134 Am. St. 537; Putnam Free School v. Fisher, 30 Maine 523; Going v. Emery, 16 Pick. (Mass.) 107, 26 Am. Dec. 645; Purdie v. Whitney, 20 Pick. (Mass.) 25; Gibbens v. Curtis, 8 Gray (Mass.) 392; Wood v. Lembcke, 72 N. J. Eq. 651, 66 Atl. 903; Asche v. Asche, 18 Abb. N. Cas. 82, affd. in 47 Hun (N. Y.) 285, which is affirmed in 113 N. Y. 232, 21 N. E. 70; Stewart v. Hamilton, Zl Hun (N. Y.) 19; Wood V. Nesbitt, 62 Hun (N. Y.) 445, 42 N. Y. St. 778, 16 N. Y. S. 918, decision vacated in 47 N. Y. St. 34, 19 N. Y. S. 423, for irregular pro- cedure; Meehan v. Brennan, 16 App. Div. (N. Y.) 395, 45 N. Y. S. 57; Reade v. Continental Trust Co., 49 App. Div. (N. Y.) 400, 63 N. Y. S. 395; Meakings v. Cromwell, 5 N. Y. 136; Salisbury v. Slade, 160 N. Y. 278, 54 N. E. 741 ; Cowan v. Cowan (Tenn.), 53 S. W. 1101; Martin v. Moore, 49 Wash. 288, 94 Pac. 1087; Wilhams v. Williams, 135 Wis. 60, 115 N. W. 342. For an exhaustive note as to when the power to sell will be implied, see 32 L. R. A. (N. S.) 676, 695. "Bauerle v. Long, 187 111. 475, 58 N. E. 458, 52 L. R. A. 643. "McMillan v. Cox, 109 Ga. 42, 34 S. E. 341. "A power of sale vests in the executor power to contract for the sale of the property. Owen v. Riddle (N. J.), 19 Atl. 886. "See ante, § 511. "City of Bangor v. Peirce, 106 Maine 527, Id Atl. 945, 138 Am. St. 363; Shirkey v. Kirby, 110 Va. 455, 66 S. E. 40, 135 Am. St. 949; Thomp- son V. Mann, 65 W. Va. 648, 64 S. E. 920, 22 L. R. A. 1094n, 131 Am. St. 987. See also. In re Hentges, 86 Nebr. 75, 124 N. W. 929, 26 L. R. A. (N. S.) 757, and note (right to an allowance for attorney's fees) ; In re Bullion, 87 Nebr. 700, 128 N. W 32, 31 L. R. A. (N. S.) 350 (right to al- lowance for attorney's fees). 48 — Contracts, Vol. I 8 5^9 CONTRACTS. 754 erly paid in settlement of debts against the estate.^" He has been held entitled to reimbursement out of the funds of the estate where he personally with his own money pays a judgment against deceased. ^^ In certain jurisdictions a creditor is allowed to pro- ceed directly against the estate where the services rendered or money advanced by him has been beneficial to the same on either statutory/^ or equitable^' grounds. The executor or adminis- trator is also entitled to reimbursement for all reasonable costs and expenses of administration.^* He is not, however, entitled to a credit for an unauthorized or unnecessary payment. Thus exec- utors have been refused a credit for the payment by them of the funeral expenses of a devisee under the will,^^ and a subscription paid to a railroad company for the purpose of assisting it in re- building a portion of its track when there was nothing in the will authorizing such payments.^" Nor can he, when authorized to carry on decedent's business temporarily, for the purpose of clos- ing it out, have implied power to borrow money on which to do business. ^^ § 519. Personal liability. — It has already been seen that an executor cannot ordinarily bind the estate. His engagements are =» Bolton V. Myers, 146 N. Y. 257, Ark. 312; Yarborough v. Ward, 34 40 N. E. in, affd. 83 Hun (N. Y.) Ark. 204; Ferrin v. Myrick, 41 N. Y. 259, 64 N. Y. St, 142, 31 N. Y. S. 315. 588; Peter v. Beverly, 10 Pet. (U. S.) "^ Mosely v. Norman, 74 Ala. 422; 532, 9 L. ed. 522. Pike v. Thomas, 65 Ark. 437, 47 S. ^Purcel V. Purcel, 14 N. J. Eq. W. 110; Norton v. Phelps, 54 ]\liss. 514. An executor is not, however, 467; Thompson v. Smith, 64 N. H. entitled to interest on money bor- 412, 13 Atl. 639; Laible v. Ferry, 32 rowed to pay an obligation binding N. J. Eq. 791; Willis v. Sharp, 113 on the estate when such obligation N. Y. 586,21 N. E. 705, 4 L. R. A. was not yet due and did not bear in- 493 ; Hewitt v. Phelps, 105 U. S. terest. Nicholson v. Whitlock, 57 393, 26 L. ed. 1072. S. Car. 36, 35 S. E. 412. "* City of Bangor v. Pierce, 106 ""By the statutes of Colorado ex- Maine 527, 76 Atl. 945, 138 Am. St. penses incurred in settlement of the 363; Benjamin v. Bush, 89 Nebr. 334, estate are claims against the estate. 131 N. W. 602; Thompson v. Mann, Gordon-Tiger &c. Co. v. Loomer 65 W. Va. 648, 64 S. E. 920, 131 Am. (Colo.), 115 Pac. 717; Long v. Rod- St. 987. man, 58 Ind. 58; Baker v. Cauthorn, ""Judson v. Bennett, 233 i\Io. 607, 23 Ind. App. 611, 55 N. E. 963, 11 136 S. W. 681. Compare with In re Am. St. Rep. 443. See also, In re Hincheon's Estate, 159 Cal. 755, 116 Kasson's Estate, 119 Cal. 489, 51 Pac. Pac. 47, id L. R. A. (N. S.) 303. 706; In re Hincheon, 159 Cal. 755, =°Judson v. Bennett, 233 Mo. 607, 116 Pac. 47, 36 L. R. A. (N. S.) 303. 136 S. W. 681. Contra, Pike v. Thomas, 62 Ark. "Gordon-Tiger &c. Co. v. Loomer, 223, 35 S. W. 212, 54 Am. St. 292; (Colo.), 115 Pac. 717. overruling Turner v. Tapscott, 30 755 FIDUCIARIES. 519 obligatory only on himself, except where power is given him to bind the estate or where he specifically contracts against personal liability. ^^ Administrators and executors have been held per- sonally liable on notes executed by them''' notwithstanding they may have signed as executor/" or administrator, as where the signature read as follows: "The estate of E. Langevin, by Achille Michaud, Administrator."'^ The executor has, however, been held not personally liable when he inserts in the note a pro- vision against personal Hability.*" It is also well settled that where an administrator mingles the funds of the estate with his own and uses them for his own benefit he is chargeable with in- terest.'^ At common law an executor or administrator is held liable for any loss that may be sustained by his attempted per- formance of a contract entered into by the deceased which he himself was not bound to do, while any profits realized belonged to the estate.'* The same is true of an executor or administrator =" Tucker v. Grace, 61 Ark. 410, 33 S. W. 530; Melone v. Ruffino, 129 Cal. 514, 62 Pac. 93, 79 Am. St. 127; In re Page, 57 Cal. 238; Mitchell v. Hazen, 4 Conn. 495, 10 Am. Dec. 169; DeCoudres v. Trust Co., 25 Ind. App. 271, 58 N. E. 90, 81 Am. St. 95; Mills V. Kuykendall, 2 Blackf. (Ind.) 47; Luscomb v. Ballard, 5 Gray (Mass.) 403, 66 Am. Dec. 374; Sum- ner V. Williams, 8 Mass. 162, S Am. Dec. 83 ; Germania Bank v. Michaud, 62 Minn. 459, 65 N. W. 70, 30 L. R. A. 286, 54 Am. St. 653; First Nat. Bank V. Collins, 17 Mont. 433, 43 Pac. 499, 52 Am. St. 695; Doolittle v. Willet, 57 N. J. L. 398, 31 Atl. 385; Parker V. Day, 155 N. Y. 383, 49 N. E. 1046; Morehead Banking Co. v. More- head, 122 N. Car. 318, 30 S. E. 331; Thomas v. Moore, 52 Ohio St. 200, 39 N. E. 803 ; West v. Dean, 15 Ohio C. C 261; Hall v. Wilkinson, 35 W. Va. 167, 12 S. E. 1118. See also, ante, §§ 511, 518. ^^^ Lynch v. Kirby, 65 Ga. 279; Dunne v. Deery, 40 Iowa251; Winter V. Hite, 3 Iowa 142 ; White v. Thomp- son, 79 Maine 207, 9 Atl. 118; Ger- mania Bank v. Michaud, 62 Minn. 459, 65 N. W. 70, 30 L. R. A. 286, 54 Am. St. 653; First Nat. Bank v. Collins, 17 Mont. 433, 43 Pac. 499, 52 Am. St. 695. "Hopson V. Johnson, 110 Ga. 283, 34 S. E. 848; Morehead Banking Co. V. Morehead, 116 N. Car. 410, 21 S. E. 190; In re Claghorn's Estate, 181 Pa. St. 600, 37 Atl. 918, 59 Am. St. 680; Boyd v. Johnston, 89 Tenn. 284, 14 S. W. 804. "' Germania Bank v. Michaud, 62 Minn. 459, 65 N. W. 70, 30 L. R. A. 286, 54 Am. St. 653. See also, Melone V. Ruffino, 129 Cal. 514, 62 Pac. 93, 79 Am. St. 127. "Morehead Banking Co. v. More- head, 116 N. Car. 413, 21 S. E. 191. An executor who indorsed a promis- sory note with these words, "Estate of Jona D. Wheeler, Henry F. Wing, Executor," did not bind the executor. If a man does not purport to be a party to a negotiable paper he is not a party to it. Grafton Nat. Bank v. Wing, 172 Mass. 513, 52 N. E. 1067, 43 L. R. A. 831, 70 Am. St. 303. See, however, Dunham v. Blood (Mass.), 93 N. E. 804. ™ Benjamin v. Bush, 89 Nebr. 334, 131 N. W. 602; Westover v. Carman's Estate, 49 Nebr. 397, 68 N. W. 501. "Smith V. Wilmington Coal Co., 83 111. 498; Mowry v. Adams, 14 Mass. 327. _ "While it is the duty of executors to perform valid and un- completed contracts which have been entered into by their testator, they § 5-0 CONTRACTS 756 who, without authority of law, carries on his decedent's busi- ness/° § 520. Joint liability of two or more executors or adminis- trators. — In case there are two or more executors or admin- istrators it has been said: "they are esteemed in law but as one person, representing the testator, and therefore the acts done by any one of them, which relates either to the delivery, gift, sale, payment, possession or release of the testator's goods, are deemed the acts of all, for they have a joint and entire authority over the whole."^® This is the common-law rule. It has been modi- fied by the statutes of some states.*' One administrator is not lia- ble, however, for the acts, defaults, or devastavit of his coexecu- tors or administrators unless he has aided, concurred in, or by his negligence contributed to, such acts by his coexecutors or admin- istrators.*^ § 521. When relieved from personal liability. — An execu- tor or administrator may be relieved from personal liability on a contract made on behalf of an estate by showing that the assets of the estate received were less than the indebtedness of the de- are not called on, nor have the right, ding v. Allison, 170 Ind. 252, 83 N. to expend the funds of the estate E. 1006, 127 Am. St. Rep. 363 ; Clark's for the doing of new work which the Exrs. v. Farrar, 3 Mart. (La.) (O. testator himself was not bound to do. S.) 247; Bodley v. McKinney, 9 Sm. Such expenditure, unless incurred for & M. (17 Miss.) 339; Bank of Port the preservation of the property of Gibson v. Baugh, 9 Sm. & M.' (17 the decedent, is not a charge upon Miss.) 390; Mutual Life Ins. Co. v. the estate." In re Hincheon's Estate, Sturges, 33 N. J. Eq. 328; Murray v. 1S9 Cal. 755, 116 Pac. 47, 36 L. R. A. Blatchford, 1 Wend. (N. Y.) 583. (N. S.) 303. See also, Ellis' Admr. 19 Am. Dec. 537; In re Bradley, 25 V. Merriman, 5 B. Mon. (Ky.) 296; Misc. (N. Y.) 261, 54 N. Y. S. 555, Davis v. French, 20 Maine 21, 37 Am. 2 Gibbons 597 (affd. 42 App. Div. Dec. 36. Compare with Macdonald (N. Y.), 301, 59 N. Y. S. 105, 2 Gib- V. O'Shea, 58 Wash. 169, 108 Pac. bons 597) ; Arkenburgh v. Arken- 436, Ann. Cas. 1912A, 417. burgh, 27 Misc. (N. Y.) 760, 59 '"Gilligan v. Daly (N. J. Eq.), 80 N. Y. S. 612; Chapman v. City Atl. 994; Western Newspaper Union Council of Charleston, 30 S. Car. V. Thurmond, 27 Okla. 261, 111 Pac. 549, 9 S. E. 591, 3 L. R. A. 311; 204, Ann. Cas. 1912B, 727 and note. Edmonds v. Crenshaw, 14 Pet. (U. "Owen V. Owen, 1 Atk. 495, 26 S.) 166, 10 L. ed. 402; 4 Bacon's Eng. Reprint 313; Ex parte Rigby, Abridgment 37 (D). 19 Ves. Jr. 463, 2 Rose 224, 34 Eng. " See statutes of Arizona, Califor- Reprint 588; Willis v. Farley, 24 Cal. nia, Idaho, Montana, North Dakota, 490; Boudereau v. Montgomery, Fed. Oklahoma, South Dakota, Utah, Cas. No. 1694, 4 Wash. C. C. 186; Wyoming. Wilkerson v. Wooten, 28 Ga. 568; ''Hargthorpe v. Milforth, Cro. Scruggs V. Gibson, 40 Ga. 511; Aler- Eliz., pt. 1, p. 318; Miller v. Coleman, 757 FIDUCIARIES. § 522 cedent.'* As in the case of the trustee in the limited sense, an ex- ecutor or administrator is not an insurer of his acts. The care, prudence and judgment which the man of average capacity and abihty exercises in the transaction of his own business furnishes the standard to govern an administrator or executor in the dis- charge of his trust duties.*" Under this principle it has been held proper to credit an administrator with money deposited in a sol- vent bank, subsequently lost by the bank's unexpected failure.*^ § 522. Guardians — Authority generally. — The powers and obligations of a guardian are very similar to those of a trustee or executor. The principal distinction between the former and the latter is that a trustee in the limited sense of the term holds the legal title to the trust estate whether it consists of personalty or realty, an executor or administrator holds only the legal title to his deceased's personal property, while the guardian does not have title to the ward's property at all but instead has only the 25 Low. Can. Jur. 196; King v. Hilton, 29 Grant Ch. (U. C.) 381; Turner's Exrs. v. Wilkins, 56 Ala. 173; State v. Belin, 5 Harr. (Del.) 400 ; Cameron v. Inferior Ct. Justices, 1 Ga. 2,6, 44 Am. Dec. 636; Davis v. Walford, 2 Ind. 88; Moore v. State, 49 Ind. 558; Insley v. Shire, 54 Kans. 793, 39 Pac. 713, 45 Am. St. 308; Moore v. Tandy, 3 Bibb. (Ky.) 97; Brazier v. Clark, 5 Pick. (Mass.) 96; Cheever v. Ellis, 144 Mich. 477, 108 N. W. 390, 11 L. R. A. (N. S.) 296; Sutherland v. Brush, 7 Johns. Ch. (N. Y.) 17, 11 Am. Dec. 383; Ormis- ton V. Olcott, 84 N. Y. 339 ; Douglass V. Satterlee, 11 Johns. (N. Y.) 16; In re Lamb, 10 Misc. (N. Y.) 638, 32 N. Y. S. 225, 65 N. Y. St. 460, 1 Gib- bons 190; Nanz v. Oakley, 120 N. Y. 84, 24 N. E. 306, 9 L. R. A. 223; In re Wilson's Appeal, 115 Pa. St. 95, 9 Atl. 473 ; In re Fesmire's Estate, 134 Pa. St. 67, 19 Atl. 502, 19 Am. St. 676; In re Swift's Estate, 6 Northampton Co. Rep. (Pa.) 105; Myer v. Myer, 187 Pa. 247, 41 Atl. 24; Knox v. Picket, 4 Desaus. Eq. (S. Car.) 199, 6 Am. Dec. 597; Gayden V. Gayden, McMul. Eq. (S. Car.) 435. See also, in this connection, Groover v. Ash, 132 Ga. 371, 64 S. E. 323, 22 L. R. A. (N. S.) 1119. ""Regardless of any personal con- sideration, the assets of the estate are a consideration supporting the prom- ise to pay. The fact of the execu- tion of such a note is prima facie evi- dence of assets, because they are the legal consideration upon which the law presumes the note to rest. There- fore it is not incumbent on the payee to prove assets. This presumption of a consideration may, however, be re- butted between the original parties, by the defendant showing that, in fact, there was a deficiency of assets, and therefore a failure of considera- tion to support the note. When such deficiency is shown, the liability will be diminished to the extent of such failure of consideration." Boyd v. Johnston, 89 Tenn. 284, 14 S. W. 804. See also, McGrath v. Barnes, 13 S. Car. 328, 36 Am. Rep. 687. "In re Chadbourne's Estate (Cal. App.), 114 Pac. 1012; Dundas v. Chrisman, 25 Nebr. 495, 41 N. W. 449; Benjamin v. Bush, 89 Nebr. 334, 131 N. W. 602. *^In re Succession of Bertrand (La.), 54 So. 127. § 522 CONTRACTS. 7^.S / D custody and management of such estate.*^ The term "guardian," without words of Hmitation, and in the absence of any statutory provision on the subject, describes one who is charged with the care and custody of the property and person of the ward/^ A guardian not only has the custody of his ward's estate, but it is also his duty to manage the same and in case any of his funds are idle or not properly invested, it is his duty to make a proper in- vestment of such funds, obtaining an order from a court of com- petent jurisdiction which permits such investment. Thus while a guardian is permitted to leave the funds of his ward temporarily on deposit in a reputable bank pending investment or other dis- position of the same,^* he is personally chargeable with the loss of money deposited with a bank for a fixed period of time without the order of a court of competent jurisdiction.*^ "Where the guardian without authority invests the money of his ward, the latter has the option to elect to claim the benefit of such invest- ■"Seilert v. McAnnally, 223 Mo. 505, 122 S. W. 1064, 135 Am. St. 522 ; Shirkey v. Kirby, 110 Va. 455, 66 S. E. 40, 135 Am. St. 949. See also, Hudson V. Helmes' Exrs., 23 Ala. 585; Lee v. Lee, 55 Ala. 590; Gentry V. Owen, 14 Ark. 396, 60 Am. Dec. 549; Baltimore &c. R. Co. v. Taylor, 6 App. (D. C) 259; Lang v. Whitney, 36 Maine 155; Conant v. Kendall, 21 Pick. (Mass.) 36; Mansur v. Pratt, 101 Mass. 60; Wallis v. Bardwell, 126 Mass. 366; Rollins v. Marsh, 128 Mass. 116; Grist v. Forehand, 36 Miss. 69; Jenkins v. Sherman, 77 Miss. 884, 28 So. 726 ; Cooper v. Wal- lace, 55 N. J. Eq. 192, 36 Atl. 575; Kent V. West, 33 App. Div. (N. Y.) 112, 53 N. Y. S. 244; Moore v. Hood, 9 Rich. Eq. (S. Car.) 311, 70 Am. Dec. 210. *^ Burger v. Frakes, 67 Iowa 460, 23 N. W. 746, 25 N. W. 735. As a general rule the custody of both the person and the estate is placed in the hands of one guardian, "From a separation of these duties, while very little benefit can be anticipated, many inconveniences and consider- able increase of expense may neces- sarily follow." Tenbrook v. Mc- Colm, 12 N. J. L. 97. See also, In re Ross, S3 N. J. Eq. 344, 35 Atl. 48. These duties may, how- ever, be separated. See 2 Kent's Comm. 227. "Guardian by nature at common law is the father, and on his death, the mother, and continues until the child is twenty-one years of age; but it extends only to the cus- tody of the person. * * * it gives the father no right or control over the infant's property, real or per- E(onal." Ferguson v. Phoenix Mut. Life Ins. Co., 84 Vt. 350, 79 Vt. 997, 35 L. R. A. (N. S.) 844. "Nelson v. Cowling, 89 Ark. 334, 116 S. W. 890; Corcoran v. Kostro- metinoff (C. C. A.), 164 Fed. 685, 21 L. R. A. (N. S.) 399; In re Guardian- ship of Corcoran, 3 Alaska 263 ; In re Grammel, 120 Mich. 487, 79 N. W. 706; In re Law's Estate, 144 Pa. St. 499, 22 Atl. 831, 14 L. R. A. 103n; Murph V. McCullough, 40 Tex. Civ. App. 403, 90 S. W. 69. " Corcoran v. Kostrometinoff, 164 Fed. 685, 91 C. C. A. 699, 21 L, R. A. (N. S.) 399; Murph v. McCullough, 40 Tex. Civ. App. 403, 90 S. W. 69. By the statutes of many states he is charged with interest on funds which he keeps uninvested for an unreason- able length of time without reason for not investing. 759 FIDUCIARIES. § 523 ment, or to disregard it and charge the guardian with interest. He cannot claim both profits and interest. But when a definite election is made to claim the profits, and the guardian refuses to account for the profits, then, in such event * * * the guardian is chargeable with interest on both principal and profits from the date of such election by the ward."** It has been held that a guardian has the right to pledge a life insurance policy payable to the ward as security for a loan the proceeds of which were to be used in sending the ward to dental college when the transaction was executed with due regard for the ward's interests.*' The degree of care which a guardian is required to exercise in the management of the estate is such as an ordinarily prudent man employs in his own affairs.** The above is the usual statement of the rule found in the decided cases. Its usefulness is, however, doubted.*^ § 523. When and how guardians may bind estates, — A guardian's contract for the benefit of the ward is, as a general rule, not binding on the ward's estate.^" There are, however, to this general rule two exceptions, one of which is perfectly appar- ent and well settled ; the outlines of the other are vague and in- definite. The first exception is to the effect that a guardian may bind his ward's estate by a contract when he acts in conformity with legal authority. Such contracts are, as a general rule, made under the direction of a court of competent jurisdiction."^ Thus "Meyers v. Martinez (Ala.), SS sideration running to himself sur- So. 498. rendered the policy. It was held "In this case it was held that the that, under a statute making the policy might be canceled in accord- father the natural guardian of his ance with its terms without notice minor children without defining his upon default in payment of the loan, rights did not give him the power to Clare v. Mutual Life Ins. Co., 201 surrender as guardian for his minor N. Y. 492, 94 N. E. 1075, 35 L. R. A. children the above policy. (N. S.) 1123 and note. The above **In re Wood's Estate, 159 Cal. case also holds that while the guard- 466, 114 Pac. 992; Hughes v. Peo- ian is accountable for her manage- pie, 111 111. 457; Slauter v. Favorite, ment, yet as to third persons her acts 107 Ind. 291, 4 N. E. 880, 57 Am. were' valid, if not affected by any Rep. 106n; Donaldson v. Allen, 182 collusion or fraud. Compare the fore- Mo. 626, 81 S. W. 1151. „ .^ . going case with that of Ferguson v. *" See Indiana Trust Co. v. GrifBth Phoenix Mut. Life Ins. Co., 84 Vt. dnd.), 95 N. E. 573. See ante, 350, 79 Atl. 997, 35 L. R. A. (N. S.) Trustees. 844, in which a father insured his °° See post, § 524. life making three of his children "Reading v. Wilson, 38 N. J. Eq. beneficiaries. Later he for a con- 446; Kent v. West, 33 App. Div. (N. § 523 CONTRACTS. 760 a county court has been held to have authority to empower the guardian of minor heirs to exercise an option held by the an- cestor." Even though the contract is authorized by a court it does not bind the estate unless such court had statutory authority to authorize the agreement. Neither the guardian nor the court having jurisdiction over the estate of an incompetent person, has power to bind the estate of such person unless expressly author- ized to do so by law.^* A court of chancery it seems, has no inherent power to make such an order." A second exception is recognized by certain authorities when they permit a creditor to hold the estate liable for a just and meritorious claim or debt contracted by the guardian. These de- cisions are based on equitable grounds. °° Thus it has been held that a person who furnishes maintenance to a ward under a con- tract with the guardian, but who does not give exclusive credit to the guardian, has a right, which a court of equity will recog- nize, to have the profits of the estate applied for his benefit. The creditor in such a case, in addition to his claim at law against the guardian, upon his personal contract has a direct and original Y.) 112, S3 N. Y. S. 244. See also, the guardian himself on the latter's Indiana Trust Co. v. Griffith (Ind.), individual note. Fidelity &c. Co. v. 95 N. E. 573; Sturgis v. Sturgis, 51 Freud, 115 Md. 29, 80 Atl. 603. Ore. 10, 93 Pac. 696, 15 L. R. A. (N. "Logan Planing Mill Co. v. Ald- S.) 1034n, 131 Am. St. 724; Logan redge, 63 W. Va. 660, 60 S. E. 783, Planing Mill Co. v. Aldredge, 63 W. IS L. R. A. (N. S.) 1159n, 129 Am. Va. 660, 60 S. E. 783, 15 L. R. A. St. 1035. (N. S.) 1159n, 129 Am. St. 1035. """As it is equitable that the "^Ankeny v. Richardson, 187 Fed. ward's property should be liable for SSO, 109 C. C. A. 316. an expense, which the guardian, in "'Andrus v. Blazzard, 23 Utah 233, the proper discharge of his duty, has 63 Pac. 888, 54 L. R. A. 354. The a right to incur, there is no incon- sanction of the court will not pro- sistency in our courts, possessing a tect the guardian unless it obtains blended jurisdiction both of law and jurisdiction. Thus if the statute pro- equity, in allowing a direct recourse vides a notice must be given to all upon the ward's property, on the other persons interested, an order ob- part of the attorney, upon his aver- tained without such notice does not ring and proving such facts as would protect the guardian. Corcoran v. compel the county court to allow his Kostrometinoff, 164 Fed. 685. 91 C. claim to the guardian, if paid and C. A. 699, 21 L. R. A. (N. S.) 399. presented for allowance, as an ex- Thus the power to direct investments pense incurred by the guardian." by guardians in such "good security" Caldwell v. Young, 21 Tex. 800. To as the court may approve does not same effect, Turner v. Flagg, 6 Ind. authorize the court to approve a loan App. 563, 33 N. E. 1104, reviewing of the guardianship funds directly to many authorities. 76 1 FIDUCIARIES. 524 'claim in equity and not merely a claim by substitution to the guardian, to be paid out of the profits of the ward's estate/" § 524. Personal liability of guardian. — In the absence of any statutory authority the guairdian has no power to bind either the person or the estate of this ward by contract. "It is his duty to see that his ward is maintained and educated in a manner suit- able to his means/and if, in the performance of this duty it be- comes necessary for him to enter into contracts, such contracts impose no duty on the ward, and do not bind his estate, but bind the guardian personally and alone. For any reasonable expendi- ture made by a guardian out of his own means, for the benefit of the ward, he is, of course, entitled to be reimbursed out of the ward's estate, but this is the limit of the ward's liability, whether measured by the rules of the law or rules of equity. "°^ The fact that the guardian enters into such agreement expressly as guardian is immaterial. If any liability attaches, it is one personal to the guardian and not to the ward or his estate."** The reasons under- °° Barnum v. Frost's Admr., 17 Grat. (Va.) 398. See, however, in connection with this last case the case of Reading v. Wilson, 38 N. J. Eq. 446, in which it is declared "radically unsound" and in addition says "there can be no doubt that if it is the duty of the guardian to maintain his ward, and to that end he may use so much of his ward's estate as may be nec- essary for that purpose, but this gives him no right whatever to charge or encumber his ward's estate." It is beHeved that this latter case criticiz- ing the Virginia case is sound in prin- ciple and its principles should be ad- hered to, notwithstanding its seeming harshness. "Reading v. Wilson, 38 N. J. Eq. 446. To same effect, see Simms v. Norris, S Ala. 42; St. Joseph's Acad- emy V. Augustini, 55 Ala. 493; Hunt V. Maldonado, 89 Cal. 636, 27 Pac. 56; Brown v. Eggleston, S3 Conn. 110, 2 Atl. 321; Poole v. Wilkinson, 42 Ga. 539; Nichols v. Sargent, 125 111. 309, 17 N. E. 475, 8 Am. St. 378; Steven- son V. Bruce, 10 Ind. 397; Raymond v. Sawyer, 37 Maine 406; Thacher v. Dinsmore, 5 Mass. 299, 4 Am. Dec. 61; Forster v. Fuller, 6 Mass. 58, 4 Am. Dec. 87; Jones v. Brewer, 1 Pick. (Mass.) 314; Bicknell v. Bick- nell, 111 Mass. 265; Wallis v. Bard- well, 126 Mass. 366; Rollins v. Marsh, 128 Mass. 116; Phelps v. Worcester, 11 N. H. 51; Tenney v. Evans, 14 N. H. 343, 40 Am. Dec. 194 ; Hardy v. Citizens' Nat. Bank, 61 N. H. 34; Kent v. West, 33 App. Div. (N. Y.) 112, 53 N. Y. S. 244; Fess- enden v. Jones, 52 N. Car. 14, 75 Am. Dec. 445 ; Shephard v. Hanson, 9 N. Dak. 249, 83 N. W. 20; Johnson v. Lines, 6 Watts & S. (Pa.) 80, 40 Am. Dec. 542; Andrus v. Blazzard, 23 Utah 233, 63 Pac. 888. 54 L. R. A. 354. "A guardian's liability upon his own contract for the benefit of the ward is personal, and the judgment of a court rendered for such a debt is against him personally and not against his ward's estate." Sturgis V. Sturgis, 51 Ore. 10, 93 Pac. 696, 15 L. R. A. (N. S.) 1034n, 131 Am. St. 724. See, however, the case of Robinson v. Hersey, 60 Maine 225, and In re Price's Appeal, 116 Pa. St. 410, 9 Atl. 856. ""Sparry v. Fanning, 80 111. 371; Thacher v. Dinsmore, 5 Mass. 299, 4 Am. Dec. 61 ; Forster v. Fuller, 6 § 5^5 CONTRACTS. 762 lying this rule have been thus expressed : "The contract should be made with the guardian, and hence the guardian ought to be looked to for payment. To allow departure from the above rule would, in the first place, have the effect to encourage in the youth of the country, appeals from the judgments of their guardians, and in the next, make the right to compensation on the part of the creditor depend upon a condition of things of which he has no means to judge, and therefore uncertain and precarious. * * * To turn persons, dealing with the guardian in relation to the ward's estate, over to the ward, would render it necessary, in every case, for such persons in order to guard themselves against loss, to enter into an account with the guardian as to the amount of the ward's estate — the income and expenditures, and the neces- sity for the expenditure then contemplated. Such requirements applied to the ordinary transactions of life. * * * are mani- festly absurd.'"*' § 525. When not personally liable. — The guardian may, however, contract against personal liability. This may be done by an express condition showing clearly that both parties agree to act upon the responsibility of the fund in his hand, alone, or upon some other responsibility, or there may appear some other circum- stances clearly indicating another party who is bound by the con- tract, and upon whose credit alone it is made."" But while, as a general rule, the ward is not bound by his guardian's contract, the converse of this is also true and the guardian is not bound nor liable on contracts entered into by his ward."^ Nor is this rule changed by the fact that the ward's contract is for necessi- ties.**^ Should the guardian fail to supply his ward with necessi- Mass. 558, 4 Am. Dec. 87; Hardy v. ™ Nichols v. Sargent, 125 111. 309, Citizens' Nat. Bank, 61 N. H. 34; 17 N. E. 475, 8 Am. St. 378. See also, Andrus v. Blazzard, 23 Utah 233, 63 Morse v. Hinckley, 124 Cal. 154, 56 Pac. 888, 54 L. R. A. 354. Pac. 896. " Fessenden v. Jones, 52 N. Car. "■ Overton v. Beavers, 19 Ark. 623, 14, 75 Am. Dec. 445. "In all ex- 70 Am. Dec. 610, penditures arising under such con- '" Overton v. Beavers, 19 Ark. 623, tracts, the ward should be liable only 70 Am. Dec. 610 ; Baird v. Steadman, to the guardian. He is then amen- 39 Fla. 40, 21 So. 572; McNabb v. able to but one individual, and then Clipp, 51 Ind. App. 204, 31 N. E. only on a decree of court on the 858; Spring v. Woodworth, 4 Allen settlement of his guardianship ac- (Mass.) 326; Pendexter v. Cole, 66 count." Phelps v. Worcester, 11 N. N. H. 556, 22 Atl. 560. H. 51. 7^1 FIDUCIARIES. § 526 ties the ward may purchase them himself, but in such cases he binds his estate and not the guardian."^ However, where the guardian expends money in satisfaction of an agreement properly made on behalf of his ward, he may be reimbursed out of the estate for such expense,*"* and he is ordinarily accorded a lien on the estate for such expense.°° Thus the guardian is entitled to all reasonable expenses incurred in making necessary repairs on his ward's estate."" § 526. Statutory authority to bind estate. — The foregoing has reference to those instances in which the guardian has no statutory authority, express or implied, to bind the estate by contract. The statute may make provision for his binding the estate by certain contracts and the procedure to be followed in so doing."' Thus power to manage and control the ward's estate carries with it the power to lease the real property of his ward for a term of years within the period of his guardianship."^ He °* Overton v. Beavers. 19 Ark. 623, 70 Am. Dec. 610; Creswell v. Mat- thews, 52 Ark. 87, 12 S. W. 158; Oliver V. McDuffie, 28 Ga. 522; Spring V. Woodvirorth, 4 Allen (Mass.) 326; Call v. Ward, 4 Watts & S. (Pa.) 118, 39 Am. Dec. 64; Edmunds v. Davis, 1 Hill. (S. Car.) 279; Tucker v. M'Kee, 1 Bail. (S. Car.) 344; Elrod v. Myers, 2 Head. (Tenn.) 33; Barnum v. Frost, 17 Grat. (Va.) 398. See also, Sturgis v. Sturgis, 51 Ore. 10, 93 Pac. 696, 15 L. R. A. (N. S.) 1034n, 131 Am. St. 724, in wrhich it is said an action can- not be maintained against a guardian upon the liability of the ward, but only against the ward, and the guard- ian, being a proper party, may appear and defend the action in the interest of the ward, but he is not a party for the purpose of establishing a per- sonal liability against himself. "Curran v. Abbott, 141 Ind. 492, 40 N. E. 1091, 50 Am. St. 337; Sims v. Billington, SO La. Ann. 968, 24 So. 637 (insurance) ; Sturgis v. Sturgis, 51 Ore. 10, 93 Pac. 696, 15 L. R. A. (N. S.) 1034n, 131 Am. St. 724; In re Merkel's Estate, 154 Pa. St. 285, 26 Atl. 428 (money). »=Curran v. Abbott, 141 Ind. 492, 40 S. E. 1091, SO Am. St. 337. "' Waldrip V. Tulley, 48 Ark. 297, 3 S. W. 192 ; McParland v. Larkin, 155 111. 84, 39 N. E. 609; Lane v. Taylor, 40 Ind. 495; M'Cracken's Heirs v. M'Cracken, 6 B. Mon. (Ky.) 342; Brodess v. Thompson, 2 Har. & G. (Md.) 120; Antonidas v. Walling, 4 N. J. Eq. 42, 31 Am. Dec. 248; Hag- gerty v. McCanna, 25 N. J. Eq. 48; Hassard v. Rowe, 11 Barb. (N. Y.) 22; Copley v. O'Neil, 57 Barb. (N. Y.) 299; In re Hind's Estate, 183 Pa. St. 260, 38 Atl. 599; Barrett v. Cocke, 12 Heisk. (Tenn.) 566; Hobbs v. Harlan, 10 Lea (Tenn.) 268, 43 Am. Rep. 309; Jackson's Heirs v. Jack- son's Admrs., 1 Grat. (Va.) 143. He has no power without leave of court to make improvements that are not necessary for the preservation of the estate. Waldrip v. Tulley, 48 Ark. 297, 3 S. W. 192 ; Brodess v. Thomp- son, 2 Har. & G. (Md.) 120; An- tonidas V. Walling. 4 N. J. Eq. 42, 31 Am. Dec. 248; Cooper v. Wallace, 55 N. J. Eq. 192, 36 Atl. 575 ; Green v. Winter, 1 Johns. Ch. (N. Y.) 26, 7 Am. Dec. 475; Nagle v. Robins, 9 Wyo. 211, 62 Pac. 154. "'United States Mortgage Co. v. Sperry, 138 U. S. 313, ""Shaw V. Shaw, Vern. & S. 607; Freeman v. Bradford, 5 Port. (Ala.) 527 CONTRACTS. 764 may also have implied statutory authority to borrow money with the consent of the probate court"" or to contract for the location of a land certificate without authority of the probate court.'" He may also pay off an encumbrance'^ but not encumber'^ the lands of his ward without an order of court. The court may be given authority to empower a guardian to exercise an option to purchase land and to purchase and pay for the land thereunder either in cash or by part payment in cash and giving a mortgage for the balance.'^ § 527. Receivers — Authority generally. — A receiver is an officer of the court who takes charge of designated funds or prop- erty for the common benefit of all parties in interest.'* Property 270; Young v. Lorain, 11 111, 624, 52 Am. Dec. 463; Clark v. Burnside, IS 111. 62; Muller v. Benner, 69 111. 108; Graham v. Chatoque Bank &c., S B. Mon. (Ky.) 45; Anderson v. Layton, 3 Bush (Ky.) 87; Hutchins v. Dress- er, 26 Maine 76; Palmer v. Oakley, 2 Doug. (Mich.) 433, 47 Am. Dec. 41 ; Richardson v. Richardson, 49 Mo. 29; Antonidas v. Walling, 4 N. J. Eq. 42, 31 Am. Dec. 248; Van Doren v. Everitt, 5 N. J. L. 460, 8 Am. Dec. 615; Snook v. Sutton, 10 N. J. L. 157; Jackson v. Todd, 25 N. J. L. 121 ; Emerson v. Spicer, 46 N. Y. 594; Low v. Purdy, 2 Lans. (N. Y.) 422; Pond v. Curtiss, 7 Wend. (N. Y.) 45; Holmes v. Seely, 17 Wend. (N. Y.) 75; Byrne v. Van Hoesen, 5 Johns. (N. Y.) 66; Field V. Schieffelin, 7 Johns. Ch. (N. Y.) ISO, 11 Am. Dec. 441; Coakley v. Mahar, 36 Hun (N. Y.) 157; Thacker v. Henderson, 63 Barb. (N. Y.) 271; State v. Hamilton Co., 39 Ohio St. 58; Carskadden v. McGhee, 7 Watts & S. (Pa.) 140; In re Stoughton's Appeal, 88 Pa. St. 198^ Ronald v. Barkley, 1 Brock. (U. S.) 356, Fed Cas. No. 12031; Ross v. Gill, 1 Wash. (Va.) 87; Truss v. Old, 6 Rand. (Va.) 556, 18 Am. Dec. 748; Windon v. Stewart, 43 W. Va. 711, 28 S. E. 1T6. See in this connection, Cooper V. Wallace, 55 N. J, Eq. 192, 36 Atl. 575. °»Ray V. McGinnis, 81 Ind. 451. ™ Ellis V. Stone, 4 Tex. Civ. App. 157, 23 S. W. 405. " Palmes v. Danby, 1 Eq. Cas. Abr. 261 ; Cheney v. Roodhouse, 135 111. 257, 25 N. E. 1019; Wright v. Cora- ley, 14 III. App. 551 ; Ray v. McGin- nis, 81 Ind. 451 ; Switzer v. Switzer, 57 N. J. Eq. 421, 41 Atl. 486; Ronald V. Barkley, 1 Brock. (U. S.) 356, Fed. Cas. No. 12031. "Los Angeles Co. v. Winans, 13 Cal. App. 234, 109 Pac. 640; Roscoe V. McDonald, 101 Mich. 313, 59 N. W. 603; Sample v. Lane, 45 Miss. 556; Johns v. Tiers, 114 Pa. St. 611, 7 Atl. 923. As to the inherent power of a court to mortgage an infant's real estate under guardianship, see Warren v. Union Bank, 157 N. Y. 259, 51 N. E. 1036, 43 L. R. A. 256, 68 Am. St. m. "Ankeny v. Richardson, 187 Fed. 550, 109 C. C. A. 316. Nebraska statute construed. " Davis V. Duke of Marlborough, 2 Swans. 108; Wilkinson v. Lehman- Durr Co., 136 Ala. 463, 34 So. 216; McGarrah v. Bank of Southwestern Ga., 117 Ga. 556, 43 S. E. 987; Hooper V. Winston, 24 111. 353; Baker v. Ad- ministrator of Backus, 32 111. 79; Kaiser v. Kellar, 21 Iowa 95; Wil- liamson v. Wilson, 1 Bland. (Md.) 418; Ellicott V. Warlord, 4 Md. 80; Shadewald v. White, 74 Minn. 208, 71 N. W. 42; Van Rensselaer v. Em- ery, 9 How. Pr. (N. Y.) 135; Osborn V. Heyer, 2 Paige (N. Y.) 342; Curtis V. Leavitt, 1 Ab. Pr. (N. Y.) 274, 10 How. Pr. (N. Y.) 481 ; Brown V. Northrup, 15 Ab. Pr. (N. S.) 333; 765 FIDUCIARIES. 527 in the hands of a receiver is considered as in custodia legis and he has no powers other than those derived from the statute and the order by which he is appointed or from the estabhshed practice of courts of equity." He is the agent of neither party in interest and cannot bind them, personally by his contracts.'® An act of ratification binds neither party when made without the consent of the court appointing the receiver.'^ However, the receiver of an insolvent nongoing corporation takes the property of the company for the creditors, subject to equities, liens or encum- brances, whether created by operation of law or by act of the corporation, which existed against the company at the time of his appointment.'* Corey v. Long, 43 How. Pr. (N. Y.) 492, 12 Ab. Pr. (N. S.) 427; Booth V. Clark, 17 How. (U. S.) 322, 15 L. ed. 164; Meier v. Kansas Pac. R. Co., S Dill. (U. S.) 476, Fed. Cas. No. 9394 ; King v. Cutts, 24 Wis. 627. In Louisiana it is held that the receiver of a partnership appointed by con- sent of the partners pending a suit for dissolution is the agent of the partners and not an officer of the court. Kellar v. Williams, 3 Rob. (La.) 321. As to the circumstances that will justify a court of equity in appointing a receiver, see Gray v. Council of Town of Newark (Del.), 79 Atl. 739. " And see Gayle v. Johnson, 80 Ala. 388 ; Ashurst v. Lehman, 86 Ala. 370, 5 So. 731 ; Coburn v. Ames, 57 Cal. 201 ; Carswell v. Farmers' L. & T. Co., 74 Fed. 88, 20 C. C. A. 282, 43 U. S. App. 300; Hooper v. Winston, 24 111. 353; Nevitt v. Woodburn, 190 III. 283, 60 N. E. 500; Kaiser v. Kel- lar, 21 Iowa 95; Howell v. Hough, 46 Kans. 152, 26 Pac. 436; Ellicot V. Warford, 4 Md. 80; Hunt v. Wolfe, 2 Daly (N. Y.) 298; Deven- dorf V. Dickinson, 21 How. Pr. (N. Y.) 275; Corey v. Long, 43 How. Pr. (N. Y.) 492, 12 Ab. Pr. (N. S.) 427; Skinner v. Maxwell, 66 N. Car. 45, 68 N. C. 400; Battle v. Davis, 66 N. Car. 252; Booth v. Clark, 17 How. (U. S.) 322, 15 L. ed. 164. "The receiver as an officer of the court which has taken control of the prop- erty, is for the purpose of the admin- istration of the assets thereof, invest- ed with the title to its property, and is the real party in interest in any litigation concerning it." Buchanan v. Hicks, 98 Ark. 370, 136 S. W. 177, 34 L. R. A. (N. S.) 1200. "It is the law that the title of the receiver and his right to possession vests by re- lation back to the date of the order appointing him." Saginaw Sav. Bank v. Duffield, 157 Mich. 522, 122 N. W. 186, 133 Am. St. 354. See also, Ran- dall V. Wagner Glass Co. (Ind. App.), 94 N. E. 739. "A receiver appointed to take charge of property, particu- larly real estate, should ordinarily be directed to hold, care for, and preserve the same until the issues in the receivership action are finally determined." Boothe v. Summit Coal Min. Co., 63 Wash. 630, 116 Pac. 269. '" Farmers' Loan & Trust Co. v. Oregon Pac. R. Co., 31 Ore. 237, 48 Pac. 706, 38 L. R. A. 424, 65 Am. St. 822. " Groveland Improvement Co. v. Farmers' Supply Co., 25 Wash. 344, 65 Pac. 529, 87 Am. St. 755. Such an act does not bind the receiver if made without knowledge of all material facts and circumstances essential to an effective ratification. Groveland Improvement Co. v. Farmers' Supply Co., 25 Wash. 344, 65 Pac. 529, 87 Am. St. 755. "Ardmore Nat. Bank v. Briggs Ma- chinery &c. Co., 20 Okla. 427, 94 Pac. 533, 23 L. R. A. (N. S.) 1074. As to the effect of the appointment of a § 52^ CONTRACTS. 766 § 528. Receiver's contracts under order of court. — A re- ceiver has no power to make contracts not authorized by the court appointing him and all persons that contract with him are charged with knowledge of his power in this regard and contract with him at their peril.'^ The court has power to ratify, vacate, or modify a contract which the receiver has made. This will not be done, however, without notice and a hearing.^" Ordinarily a receiver who acts under the order of the court appointing him is not personally bound by his contract but instead the obligation incurred will be a hen on the funds or property in his possession." Thus in a proper case the receivers may be authorized to borrow money*^ and make the debt incurred a lien on certain property.*' The receiver is entitled as a matter of right to the benefit of coun- sel when the nature of the trust requires it, and while he usually selects his own counsel he cannot make any contract of hiring or agreement for compensation that is binding upon the court for it is the function of the court to determine both the necessity for receiver for a corporation as consti- tuting a breach of contract for serv- ices of an officer or agent, see Law V. Waldron, 230 Pa. St. 458, 19 Atl. 647, Ann. Cas. 1912A, 467. "Hendrie & Bolthoff Mfg. Co. v. Parry, 37 Colo. 359, 86 Pac. 113 ; Tripp V. Boardman, 49 Iowa 410; Ellis v. Little, 27 Kans. 707, 41 Am. Rep. 434. °° Mooney v. British Columbia Life Ins. Co., 9 Abb. Pr. (N. S.) (N. Y._) 103. See also, Florence Gas, Electric Light &c. Co. V. Hanby, 101 Ala. IS, 13 So. 343; Lazear v. Ohio Valley Steel Foundry Co., 65 W. Va. 105, 63 S. E. 772. One who takes the assign- ment of a contract entered into with a receiver submits himself to the ju- risdiction of the court and the court may after proper notice and hearing vacate such contract. Pacific Lum- ber Co. V. Prescott, 40 Ore. 374, 67 Pac. 207. In the above case the as- signee failed to carry out the obliga- tion imposed upon him by the con- tract. "The contracts of a receiver made with express or implied author- ity cannot be annulled at the pleasure of the court." State Bank of Vir- ginia V. Domestic Sewing Machine Co., 99 Va. 411, 39 S. E. 141, 86 Am. St. 891. "^ Girard Life Ins. &c. Co. v. Cooper, 51 Fed. 332, 2 C. C. A. 245; John H. McGowan Co. v. Ingalls, 60 Fla. 116, 53 So. 932; Vanderbilt v. Central R. Co., 43 N. J. Eq. 669, 12 Atl. 188; State Bank v. Domestic &c. Machine Co., 99 Va. 411, 39 S. E. 141, 86 Am. St. 891. '"Clarke v. Central &c. Banking Co., 54 Fed. 556; State Bank v. Do- mestic Machine Co., 99 Va. 411, 39 S. E. 141, 86 Am. St. 891. "'American &c. Co. v. German, 126 Ala. 194, 20 So. 603, 85 Am. St. 21. In the above case a debt incurred by the receiver was made a lien on the product manufactured by him. The contracts made by a receiver in the operation of an insolvent railroad are sui generis. Such a receiver is not exempt from liability to answer for injuries inflicted by wrongdoing or negligence of those he employs in op- erating the railroad. Yet the liability is not a personal one but only falls on the receiver as the representative of the property and fund managed by the court. Vanderbilt v. Little, 43 N. J. Eq. 669, 12 Atl. 188. 767 FIDUCIARIES. § 529 counsel and the compensation to be allowed therefor." No per- sonal liability attaches to the receiver for attorney's fees when the contract of hiring was sanctioned by the court and the attor- ney's compensation fixed by it.*'' The order appointing a receiver is the authority under which he acts. Whenever this is reversed his authority is gone and it then becomes his duty immediately to render his final report and demand his formal discharge.*" § 529. Receiver's certificates. — The court in whose hands is placed, through the medium of a receivership proceeding, the property of a corporation may in a proper case authorize the issuance of a receiver's certificate which shall constitute a para- mount charge upon the franchise, property and earnings of the corporation.*^ The power to issue such certificate is ordinarily considered as largely discretionary with the court.** But the order by which the issuance of the certificate is authorized will be held void if in excess of the court's powers.*® Moreover since it is a power that is liable to abuse it should be sparingly exercised and then with caution, prudence and reserve and never without giving those whose interests are to be affected the opportunity to be heard."" It has been held that such certificates may be issued to pay the operating and like expenses of a public service corpora- ^ Hickey v. Parrot Silver & Cop- that its existence is no longer open to per Co., 32 Mont. 143, 79 Pac. 698, 108 question." Am. St. 510; Stuart v. Boulware, 133 "Town of Vandalia v. St. Louis &c. U. S. 78, 33 L. ed. 568. See also, R. Co., 209 III. 73, 70 N. E. 662. Bartelt v. Smith, 145 Wis. 31, 129 «" Knickerbocker Trust Co. v. One- N. W. 782. onta, C. & R. S. R. Co., 201 N. Y. *> Walsh V. Raymond, 58 Conn. 251, 379, 94 N. E. 871. 20 Atl 464, 18 Am. St. 264. " Illinois Steel Co. v. Ramsey, 176 " Hickey v. Parrot Silver & Copper Fed. 853, 100 C. C. A. 323 ; Bernard Co. 32 Mont. 143, 79 Pac. 698, 108 v. Union Trust Co., 159 Fed. 620, 86 Am. St. 510. C. C. A. 610, 16 L. R. A. (N. S.) ^' Vilas v. Page, 106 N. Y. 439, 13 1118; Lockport Felt Co. v. United N E 743 • Wallace v. Loomis, 97 U. Box Board & Paper Co., 74 N. J. Eq. S. 146, 24 L. ed. 895; Union Trust 686, 70 Atl. 980; Osborne v. Big Co V. Illinois Midland Railway Co., Stone Gap Colliery Co., 96 Va. 58, 117 U. S. 434, 29 L. ed. 963, 6 Sup. 30 S. E. 446. These liens cannot be Ct. 809. High in his work on made a lien on property outside the Receivers (4th ed.), p. 565, criticizes boundaries of the state, consequently this doctrine ; he says : "A power so application therefor must be made in dangerous because boundless cannot the jurisdiction where the property be sustained upon any just principles lies. Lockport Felt v. United Box of legal reasoning. * * * Neverthe- Board & Paper Co., 74 N. J. Eq. less this branch of the jurisdiction_ is 686, 70 Atl. 980; Pool v. Farmers' so well established upon authority Loan &c. Co., 7 Tex. Civ. App. 334, 27 S. W. 744. 529 CONTRACTS. 768 tion such as a railroad/' and in some instances to make necessary repairs and betterments'^ and to pay for reconstruction work.'' There is a wide distinction between quasi public and private corporations in that with the former the public is directly inter- ested in their maintenance and upkeep. The public is not consid- ered as having a vital interest in the continued operation of a private corporation, consequently it has been doubted or appar- ently denied that receivers' certificates can be issued by a court of chancery which will displace prior liens.'* It would seem, however, that the Supreme Court of New Jersey has given ex- pression to the proper rule on this subject. It says : "In the case of private corporations, the court may authorize its receiver to borrow money upon the faith and credit of all the property of the "Union Trust Co. v. Illinois Mid- land R. Co., 117 U. S. 434, 29 L. ed. 963, 6 Sup. Ct. 809 ; Taylor v. Phila- delphia & R. Co., 7 Fed. 377; Hum- phreys V. Allen, 101 111. 490; Metro- politan Trust Co. V. Tonawanda Val- ley &c. R. Co., 40 Hun (N. Y.) 80. See in connection with the above case Central Trust Co. v. Syracuse &c. R. Co., 53 Hun (N. Y.) 638, 25 N. Y. St. 635, 6 N. Y. S. 918 ; Crosby v. Morristown &c. Co. (Tenn.), 42 S. W. 507; International & G. N. R. Co. V. Coolidge, 26 Tex. Civ. App. 595, 62 S. W. 1097. See also. Cen- tral Trust &c. Co. V. Chester Coun- ty Electric Co. (Del.), 80 Atl. 801. "'Meyer v. Johnston, 53 Ala. 237; Kampmann v. Sullivan, 26 Tex. Civ. App. 308, 63 S. W. 173; Pennsyl- vania Steel Co. V. New York City R. Co., 165 Fed. 455; Credit Co. v. Ar- kansas Cent. R. Co., 5 McCrary (U. S.) 23, 15 Fed. 46; Union Trust Co. V. Illinois &c. R. Co., 117 U. S. 434, 29 L. ed. 963, 6 Sup. Ct. 809. The power should be sparingly ex- ercised. Credit Co. v. Arkansas &c. R. Co., S McCrary (U. S.) 23, 15 Fed. 46. "'First Nat. Bank v. Ewing, 103 Fed. 168, 43 C. C. A. 150 (writ of certiorari denied, 179 U. S. 686, 45 L. ed. 386, 21 Sup. Ct. 919) ; Bibber- White Co. V. White River &c. R. Co., 115 Fed. 786, 53 C. C. A. 282; Roch- ester &c. Co. V. Oneonta &c. R. Co., 122 App. Div. (N. Y.) 193, 107 N. Y. S. 237; Rutherford v. Pennsyl- vania &c. R. Co., 178 Pa. 38, 35 Atl. 926; Stanton v. Alabama &c. R. Co., 2 Woods (U. S.) 506, Fed. Cas. No. 13296; Shaw v. Little Rock &c. R. Co., 100 U. S. 605, 25 Law ed. 757. "The power to authorize the issuance of certificates is limited by, and is co- extensive with, its obligation to con- serve the property in its custody." Illinois Steel Co. v. Ramsey, 176 Fed. 853, 100 C. C. A. 323. "^ Lamar Land & Canal Co. v. Belknap Sav. Bank, 28 Colo. 344, 64 Pac. 210; International Trust Co. v. United Coal Co., 27 Colo. 246, 60 Pac. 621, 83 Am. St. 59; Doe v. North- western Coal &c. Co., 78 Fed. 62 ; Lehman v. Trust Co. of America, 57 Fla. 473, 49 So. 502 ; Hooper v. Cen- tral Trust Co., 81 Md. 559, 32 Atl. SOS, 29 L. R. A. 262; In re West- chester Co. Brewery, 73 Misc. (N. Y.) 352, 131 N. Y. S. 16; Merriara V. Victory Min. Co., 37 Ore. 321, 56 Pac. 75, 58 Pac. 37, 60 Pac. 997. "In the case of corporations engaged in a public service, like railroad, water and lighting companies, and which serv- ice cannot be interrupted without in- convenience and harm to the com- munity, courts of equity authorize its receivers of such corporations to is- sue certificates of indebtedness to raise money to do repairs or obtain supplies to keep the service going, and make such certificates prior liens to the mortgage indebtedness. 769 FIDUCIARIES. § 529 corporation, and authorize the issuing of securities which shall displace all prior liens and encumbrances, but only for one pur- pose, namely, the preservation of the property and the expenses of realizing upon it by a sale. This necessity should be impera- tive and paramount, and under no other circumstances can a court justify itself in attempting to undermine prior Hens. * * * In addition to the limitations thus set to the power of the court, it may be well to add that in every case the power now appealed to is an extraordinary one, and is liable to abuse unless exercised with the utmost caution."^^ A receiver's certificate of indebted- ness will be invalid unless based upon a consideration.®* The "But in the case of corporations not engaged in such a service, there is no such practice. It is justified only on the score of pubhc necessity, and even when so exercised has be- come a great abuse and wrong to mortgage bondholders in many in- stances, as we all know.'' Wiggins V. Neversink Light & Power Co., 93 N. Y. S. 853. "It is to be preserved for those entitled to it. This must be done by the hands of the court, through officers. The character of the property gives character to the particular species of preservation which it requires. Unimproved land may lie idle, with only payment of taxes. Improved property should be rented. Movable property that is not perishable may be locked up and kept; but, if perishable, it must be sold, by way of preservation. A rail- road, and its appurtenances, is a pe- culiar species of property. Not only will its structures deteriorate and de- cay and perish if not cared for and kept up, but its business and good-will will pass away if it is not run and kept in good order. Moreover, a railroad is a matter of public concern. The fran- chises and rights of the corpora- tion which constructed it were given not merely for private gain to the corporators, but to furnish a public highway; and all persons who deal with the corporation as creditors or holders of its obligations, must neces- sarily be held to do so in the view, that, if it falls into insolvency and its affairs come into a court of equity for adjustment, involving the transfer of its franchises and prop- 49 — Contracts, Vol. I erty, by a sale, into other hands, to have the purposes of its creation still carried out, the court, while in charge of the property, has the power, and, under some circumstances, it may be its duty, to make such repairs as are necessary to keep the road and its structures in a safe and proper condi- tion to serve the public. Its power to do this does not depend on con- sent, nor on prior notice." Union Trust Co. V. Illinois Midland Ry. Co., 117 U. S. 434, 29 L. ed. 963, 6 Sup. Ct. 809. ""Lockport Felt Co. v. United Box Board & Paper Co., 74 N. J. Eq. 686, 70 Atl. 980. See also, Farmers' Loan &c. Co. v. Grape Creek Coal Co., 50 Fed. 481, 16 L. R. A. 603; Fidelity Ins. Co. V. Roanoke Iron Co., 68 Fed. 623; International Trust Co. v. Decker Bros., 152 Fed. 78, 81 C. C. A. 302, 11 L. R. A. (N. S.) 152. See, however. Porch v. Agnew (N. J.), 57 Atl. 546, in which a receiver was al- lowed to issue certificates to pay in- surance on and for watchmen to look after certain hotel property. See contra to this case, Raht v. Attrill, 106 N. Y. 423, 13 N. E. 282, 60 Am. Rep. 456. See also, Dalliba v. Win- schell, 11 Idaho 364, 82 Pac. 107, 114 Am. St. 267; Karn v. Rorer Iron Co., 86 Va. 754, 11 S. E. 431. In the lat- ter case a receiver was authorized to repair a railroad operated in connec- tion with a mine, the expense to be covered by receivership certificates which were made a first lien on all the property of the company, the mine included. "Turner v. Peoria &c. R. Co., 95 530 CONTRACTS. 770 ordinary receiver's certificates are nonnegotiable, consequently if they are invalid in their inception they cannot be enforced even though in the hands of an innocent purchaser for value. A sub- sequent transfer to a bona fide purchaser does not cut ofif any equities that may have existed between the original parties.'^ § 530, Personal liability of receiver. — Receivers are re- quired to exercise good faith and reasonable diligence in the ad- ministration of the trust and this means that a receiver is re- quired at least to exercise the diligence vifhich an ordinarily pru- dent man would use with reference to his own afifairs."' But a receiver is not personally liable on contracts entered into by him. 111. 134, 35 Am. Rep. 144; Bank of Montreal v. Chicago &c. R. Co., 48 Iowa 518. In the latter case it was held that certificates issued for material contracted for but never de- livered were unenforcible. °' Union Trust Co. v. Chicago &c. R. Co., 7 Fed. 513; Stanton v. Ala- bama &c. R. Co., 31 Fed. S8S ; Gor- don v. Newman, 62 Fed. 686, 10 C. C. A. 587; Central Nat. Bank v. Haz- ard, 30 Fed. 484 ; McCarthy v. Craw- ford, 238 111. 38, 86 N. E. 750, 29 L. R. A. (N. S.) 252n, 128 Am. St. 95n ; Turner v. Peoria &c. R. Co., 95 111. 134, 35 Am. Rep. 144; New- bold V. Peoria &c. R. Co., 5 111. App. 367 ; McCurdy v. Bowes, 88 Ind. 583 ; Montreal Bank v. Chicago &c. R. Co., 48 Iowa 518; Knickerbocker Trust Co. V. Oneonta C. & R. S. R. Co., 201 N. Y. 379, 94 N. E. 871; Stanton v. Alabama &c. R. Co., 2 Woods (U. S.) 506, Fed. Cas. No. 13296. It would seem, however, that the receiver might be authorized to issue negotiable certificates. Meyer v. Johnston, S3 Ala. 237. But while the court may authorize the issuance of negotiable certificates it seems doubtful whether they are negotiable in any real sense for on this subject it has been said : "As to the claim of Bernard that he was an innocent pur- chaser without notice and for value," said the court in this case, "it is suffi- cient to say that although it be true that by the.terms of the order the re- ceiver was authorized and empow- ered to issue a negotiable receiver's certificate, he cannot claim to hold as an innocent purchaser without no- tice, in the sense which that phrase imports, for certificates of this kind have not the quality of negotiable in- struments under the law-merchant. They are not commercial paper, and the purchaser or assignee can recover upon them only to the extent of the rights of the first payee. He is put upon inquiry as to all that was done in the cause wherein the certificates are issued and chargeable with no- tice. As said by the court in Union Trust Co. V. Illinois Midland Co., 117 U. S. 456, 6 Sup. Ct. 809. 29 L. ed. 963, 'the receiver and those lending money to him on certificates issued and orders made without prior notice to the parties interested take the risk of the final action of the court in regard to the loans. The court always retains control of the matter; its records are accessible to lenders and subsequent holders, and the certificates are not negotiable in- .struments.' " Bernard v. Union Trust Co., 159 Fed. 620, 86 C. C. A. 610, 16 L. R. A. (N. S.) 1118. A mechanic's or other lien upon prop- erty is not, ipso facto, affected by the appointment of a receiver. Randall V. Wagner Glass Co. (Ind. App.), 94 N. E. 739. °° State V. Germania Bank, 106 Minn. 164, 118 N. W. 683, 130 Am. St. 599; In re Cornell, 110 N. Y. 351, 18 N. E. 142. The degree of care which he must exercise is the same as that which must be exercised TJI FIDUCIARIES. '' § 530 as such, in the exercise of reasonable diligence and within the authority, express or implied, conferred upon him. Thus a re- ceiver may, in his official capacity, deposit funds of the estate coming into his hands in a bank of good standing and repute and if he exercises that degree of care ordinarily exhibited by reason- ably cautious men in transacting their own business of like im- portance in selecting the bank he will not be personally liable for any loss due to a failure of the bank."' It has also been held that in those cases involving legal questions which make it necessary for a receiver to take the advice of counsel and competent coun- sel is employed and his advice is followed in good faith that a re- ceiver is not liable for loss resulting therefrom.^ Nor is he liable in his official capacity on executory contracts entered into by the owner of the trust estate prior to his appointment. Receivers be- come liable on such contracts solely by reason of their own acts.^ The receiver may, however, ratify and adopt such contract and if by equivocal acts he shows an intention so to do he will be held to have elected to be bound thereby and accordingly become sub- ject to the liabilities thereby created.* It has already been seen that unless properly authorized the receiver cannot make his agreement a lien on the trust fund.* It has been held, however, that the receiver may be individually by a guardian or administrator, or L. & T. Co., 79 Fed. 19; Scott v. other trustee. See, ante, § 510, also Rainier, P. & R. Co., 13 Wash. 108, 42 § 512 et seq.. Executor and Adminis- Pac. 531 ; Casey v. Northern Pac. R. trator. Co., IS Wash. 450, 48 Pac. 53. He '" State V. Corning State Sav. Bank, may with the approval of the court 128 Iowa 597, 105 N. W. 159; Ficener abandon such contract and not be V. Bott, 20 Ky. L. 632, 47 S. W. 251 ; liable to respond in damages for any Groesbeck Cotton Oil & Compress injury caused by such abandonment. Co. V. Oliver, 44 Tex. Civ. App. 303, Wells v. Hartford Manilla Co., 76 97 S. W. 1092. Compare, however, Conn. 27, 55 Atl. 599. Ricks V. Broyles, 78 Ga. 610, 3 S. E. ' Central Trust Co. v. East &c. 772, 6 Am. St. 280; State v. Gooch, Land Co., 79 Fed. 19; Spencer v. 97 N. Car. 186, 1 S. E. 653, 2 Am. World's Columbian Exposition, 163 St. 284. Otherwise where he de- 111. 117. 45 N. E. 250; De Wolf v. Royal posits the money in his own name, Trust Co., 173 111. 435, 50 N. E. 1049; mingles it with funds of his own Casey v. Northern Pacific R. Co., 15 and makes a profit from it. Schwartz Wash. 450, 48 Pac. 53. See also, V. Keystone Oil Co., 153 Pa. 283, 25 Kansas Pac. R. Co. v. Bayles, 19 Atl. 1018. Colo. 348, 35 Pac. 744. * State V. Germania Bank, 106 Minn. * Lehigh Coal & Navigation Co. v. 164, 118 N. W. 683, 130 Am. St. 599. Central R. Co., 35 N. J. Eq. 426; The above case reviews a number of Wyckoff v. Scofield, 103 N. Y. 630, authorities on this subject. 9 N. E. 498; Hand v. Savannah &c. ''Central Trust Co. v. East &c. R. Co., 17 S. Car. 219; Union Trust § 53^ CONTRACTS. ']'J2 liable. Thus where he has no authority to execute certain notes, it has been held that he had no responsible principal behind him for whom he might promise and that he alone was liable on contract. ° The receiver may, however, contract against personal liability." The receiver is entitled to reimbursement out of the trust prop- erty for his reasonable expenses incurred in the performance of his duties,' and the same is true of contract liabilities incurred on a fair and reasonable contract for the benefit of the estate.^ It would seem that the federal court. strictly limits a receiver's authority to the jurisdiction of the court appointing him, and denies that even comity gives him the right to sue in the courts of another jurisdiction. ° Other authorities hold that the recogni- tion of a foreign receiver is a matter of comity.^" § 531. Other persons occupying fiduciary relations, as par- ties to contracts, trustees in bankruptcy. — About the only difference existing between the powers and obligations of a trustee in bankruptcy and those of the ordinary receiver is that the latter cannot sue without direction of the court given gen- erally in the order of appointment or specially conferred while Co. V. Midland Co., 117 U. S. 434, 'Fowler v. Osgood, 141 Fed. 20, 29 L. ed. 963, 6 Sup. Ct. 809; Cow- 72 C. C. A. 276, 4 L. R. A. (N. S.) drey v. Galveston &c. R. R., 93 U. 824; Great Western Min. &c. Co. v. S. 352, 23 L. ed. 950. Harris, 198 U. S. 561, 49 L. ed. 1163, ° Peoria Steam Marble Works v. 25 Sup. Ct. 770. See also, Zacher Hickey, 110 Iowa 276, 81 N. W. 473, v. Fidelity Trust & Safety- Vault 80 Am. St. 296. Co., 106 Fed. 593, 45 C. C. A. 480; "Vilas V. Page, 106 N. Y. 439, 13 Edwards v. National Window Glass N. E. 743. Jobbers' Assn., 139 Fed. 795; Homer ' Knickerbocker v. McKindley Coal v. Barr Pumping Engine Co., 180 & Mining Co., 172 111. 535, 50 N. E. 'Mass. 163, 61 N. E. 883, 91 Am. St. 330, 64 Am. St. Rep. 54. However, as 269; Farmers' & M. Ins. Co. v. a general rule, a party to the cause of Needles, 52 Mo. 17 ; Commercial Nat. action who is appointed receiver in Bank v. Motherwell Iron & Steel the action is entitled to no compensa- Co., 95 Tenn. 172, 31 S. W. 1002, 29 tion for his services. Bartelt v. L. R. A. 164. Smith, 145 Wis. 31, 129 N. W, 782, ^° State v. Denton, 229 Mo. 187, Ann. Cas. 1912A, 1195 and note. He 129 S. W. 709, 138 Am. St. 417. See is ordinarily entitled to compensation also, Cooke v. Orange, 48 Conn. 401 ; for beneficial services rendered. Cen- Iglehart v. Bierce, 36 111. 133 ; Robert- tral Trust & Sav. Co. v. Chester son v. Staed, 135 Mo. 135, 36 S, W. County Electric Co. (Del.), 80 Atl. 610, 33 L. R. A. 203, 58 Am. St. 569; 801. Cagill V. Wooldridge, 8 Baxt. (Tenn.) 'Vanderbilt v. Little, 43 N. J. Eq. 580, 35 Am. Rep. 716. For a note on 669, 12 Atl. 188; Chicago Deposit this subject see 4 L. R. A. (N. S.) Vault Co. V. McNulta, 153 U. S. 554. 824, et seq. 38 L. ed. 819, 14 Sup. Ct. 915. 772> FIDUCIARIES. § 532 the former may.^^ It is not considered necessary to enter fur- ther into this subject at this point. § 532. Other persons occupying fiduciary relations — Pro- moters. — A number of cases state in a general way that a pro- moter is the agent of a corporation.^* This, however, is not an ac- curate statement as an agent must act for some one already in ex- istence.'* Consequently he cannot act for and bind corporations not yet in existence.'* It follows that a corporation is not bound by the contracts of its promoters entered into prior to the incor- poration of the company, unless, after it is chartered, it adopts such contracts as its own, in the absence of a provision in the articles of incorporation or in the statute under which the same is chartered that the corporation shall be liable on such contracts. In the absence of such adoption it is not liable for the contract's breach.'^ It may be adopted by the corporation expressly, or "Walsh V. Shanklin, 125 Ky. 715, 102 S. W. 295, 31 L. R. A. (N. S.) 36Sn. "Dickerman v. Northern Trust Co., 176 U. S. 181, 44 L. ed. 423, 20 Sup. Ct. 311; The Telegraph v. Loetscher, 127 Iowa 383, 101 N. W. 773, 4 Am. & Eng. Ann. Cas. 667; Fred Macey Co. v. Macey, 143 Mich. 138, 106 N. W. 722, 5 L. R. A. (N. S.) 1036; Richlands Oil Co. v. Mor- riss, 108 Va. 288, 61 S. E. 762. " See, ante, chap. IS, Agency. "A promoter is a person who brings about the incorporation and organi- zation of a company." Hinkley v. Sac Oil & Pipe Line Co., 132 Iowa 396, 107 N. W. 629, 119 Am. St. 564. "More &c. Co. v. Towers &c. Co., 87 Ala. 206, 6 So. 41, 13 Am. St. 23n; San Joaquin &c. Co. v. West, 94 Cal. 399, 29 Pac. 785 ; Ruby Chief Mining &c. Co. v. Gurley, 17 Colo. 199, 29 Pac. 668; New York &c. R. Co. V. Ketchum, 27 Conn. 170; Winters V. Hub Mining Co., 57 Fed. 287; Park V. Modern Woodmen of Amer- ica, 181 III. 214, 54 N. E. 932; West- ern &c. Mfg. Co. V. Cousley, 72 111. 531; Gent v. Manufacturers' & Mer- chants' Ins. Co., 107 111. 652; Smith V. Parker, 148 Ind. 127, 45 N. E. 770; Davis &c. Co. v. Hillsboro Creamery Co., 10 Ind. App. 42, TH N. E. 549; Carey v. Des Moines &c. Mining Co., 81 Iowa 674, 47 N. W. 882; Tryber V. Cold Storage Co., 67 Kans. 489, li Pac. 83; Holyoke Envelope Co. v. United States Envelope Co., 182 Mass. 171, 65 N. E. 54; Abbott v. Hapgood, ISO Mass. 248, 22 N. E. 907, S L. R. A. 586, 15 Am. St. Rep. 193 ; Penn Match Co. v. Hapgood, 141 Mass. 145, 7 N. E. 22; Cuba Colony Co. V. Kirby, 149 Mich. 453, 112 N. W. 1133; Durgin v. Smith, 133 Mich. 331, 94 N. W. 1044; Battelle v. North- western &c. Pavement Co., il Minn. 89, 33 N. W. 327 ; Hiil v. Gould, 129 Mo. 106, 30 S. W. 181 ; Davis v. Rav- enna Creamery Co., 48 Nebr. 471, 67 N. W. 436; Munson v. Syracuse &c. R. Co., 103 N. Y. 58, 8 N. E. 355; Tift V. Bank, 141 Pa. St. 550, 21 Atl. 660 ; Weatherford &c. Co. v. Granger, 86 Tex. 350, 24 S. W. 795, 40 Am. St. 837; Bash v. Culver Gold Mining Co., 7 Wash. 122, 34 Pac. 462 ; Buff- ington V. Bardon, 80 Wis. 635, SO N. W. Tld; Standard &c. Co. v. Pub- lishing Co., 87 Wis. 127, 58 N. W. 238. '^ Rideout v. Nat. Homestead Assn., 14 Cal. App. 349, 112 Pac. 192; Bank of Forest v. Orgill Bros. & Co., 82 Miss. 81, 34 So. 325; American Home Life Ins. Co. v. Jenkins (Tex. Civ. App.), 138 S. W. 424. § 532 CONTRACTS. 774 impliedly, by exercising riglits under it but otherwise it is not binding on the corporation/" It thus appears that it is not neces- sary that such adoption, ratification or acceptance be express, as it may be inferred from acts or acquiescence on the part of the cor- poration or by its authorized agents in its behalf as similar con- tracts may be established.^' The agreement must be one, how- ever, which the usual agents of the company have express or implied authority to make. But where, with full knowledge of all the facts, the corporation assumes the contract, and agrees to pay the consideration, or accepts and retains the benefits, and impliedly adopts it the corporation will be bound.^^ On the other hand, a promoter's contract cannot be enforced by the proposed corporation until it has been incorporated and or- ganized and the contract adopted before the other party thereto "Kelner v. Baxter, L. R. 2 C. P. 174; Melhado v. Porto Alegre &c. R. Co., L. R. 9 C. P. 503; Kerridge v. Hesse, 9 Car. & P. 200; Morrison v. Gold &c. Mining Co., 52 Cal. 306; Freeman Imp. Co. v. Osborn, 14 Colo. App. 488, 60 Pac. 730; New York &c. R. Co. V. Ketchum, 27 Conn. 170 ; Gent V. Manufacturers' & Merchants' IMut. Ins. Co., 107 111. 652; Rockford &c. R. Co. V. Sage, 65 III. 328; West- ern &c. Mfg. Co. V. Cousley, 72 111. 531 ; Munson v. Syracuse &c. R. Co., 103 N. Y. 58, 8 N. E. 355 ; Buffington V. Bardon, 80 Wis. 635, 50 N. W. 116. See also, Caledonia &c. R. Co. V. Magistrates of Helensburgh, 2 Macq. H. L. 391, 2 Jur. (N. S.) 695; Tift V. Quaker City Nat. Bank, 141 Pa. St. 550, 21 Atl. 660. "Stanton v. New York &c. R. Co., 59 Conn. 272, 21 Am. St. llOn; Bat- telle V. Northwestern Pavement Co., 37 Minn. 89, 33 N. W. 327 ; McArthur V. Times Printing Co., 48 Minn. 319, 51 N. W. 216, 31 Am. St. 653; Buff- ington V. Bardon, 80 Wis. 635, SO N. W. 776. " Edwards v. Grand Junction R. Co., 1 Mylne & C. 650; Stanley v. Birkenhead R. Co., 9 Simons 264; Moore &c. Co. v. Towers &c. Co., 87 Ala. 206, 6 So. 41, 13 Am. St. 23n ; Grand River Bridge Co. v. Rollins, 13 Colo. 4, 21 Pac. 897; Stanton v. New York &c. R. Co., 59 Conn. 272, 22 Atl. 300, 21 Am. St. llOn; Leonard V. Burlington &c. Mutual Loan Assn., 55 Iowa 594, 8 N. W. 463; Paxton Cattle Co. V. First Nat. Bank, 21 Nebr. 621, ii N. W. 271, 59 Am. Rep. 852; Bells Gap R. Co. V. Christy, 79 Pa. St. 59; Co- yote Gold &c. Co. V. Ruble, 8 Ore. 284; Schreyer v. Turner &c. Co., 29 Ore. 1, 43 Pac. 719; Buffington v. Bardon, 80 Wis. 635, 50 N. W. 776. In Schreyer v. Turner Mills Co., 29 Ore. 1, 43 Pac. 719, the court said: "It is alleged here, not only that the contract was made for and in behalf of the corporation, but that it had promised to pay the balance sued for; and it sufficiently appears that the parties contracting in its behalf were its promoters and organizers. It further appears, by the testimony, that it is highly probable the de- fendant received, accepted, and used the money to recover which this ac- tion was instituted. Under such cir- cumstances, the objection to the ac- tion of the court in overruling the de- murrer cannot be sustained." Conti- nental Trust Co. v. Toledo &c. Co., 86 Fed. 929; Frankfort & S. T. Co. V. Churchill, 6 T. B. Men. (Ky.) 427, 17 Am. Dec. 159; Battelle v. Northwestern &c. Co., 37 Minn. 89, 33 N. W. 327; Bank of Forest v. Orgill Bros. & Co., 82 Miss. 81, 34 So. 325 ; Seymour v. Spring Forest &c. Assn., 144 N. Y, 333, 39 N. E. 365, 26 L. R. A. 859; Bommer v. 775 FIDUCIARIES. § 532 has withdrawn his offer." An agreement entered into by a pro- moter, on behalf of a corporation subsequently to be formed, with a second party is equivalent to a continuing offer by the latter which becomes binding when the corporation is organized and as such accepts the offer prior to its revocation.^" The promoter does, however, stand in a position, in some re- spects at least, analagous to that of an agent to his principal.^^ American Spiral &c. Co., 81 N. Y. 468; Hall v. Vermont & M. R. Co., 28 Vt. 401. See also, Whitney v. Wyman, 101 U. S. 392, 25 L. ed. lOSO. The benefits must be accepted with knowledge of the facts before such action will amount to an adoption. "Ratification will not be presumed, even when the corporation has re- ceived benefits, unless actual knowl- edge of the specific contract out of which the benefits arose is made to appear and the same knowledge _ is essential in considering the question of estoppel." Rideout v. Nat. Home- stead Assn., 14 Cal. App. 349, 112 Pac- 192 ; Weatherford &c. R. Co. v. Gran- ger, 86 Tex. 350, 24 S. W. 195, 40 Am. St. 837. See also, American Home Life Ins. Co. v. Jenkins (Tex. Civ. App.), 138 S. W. 424. In some cases, however, it is denied that a corpora- tion can ratify a contract so as to make it relate back to its inception before the corporation came into ex- istence, Gunn V. London &c. Ins. Co., 12 C. B. (N. S.) 694; Melhado v. Porto Alegre &c. R. Co., L. R. 9 C. P. 503; In re Empress &c. Co., 16 Ch. Div. 125; Abbott v. Hapgood, 150 Mass. 248, 22 N. E. 907, 5 L. R. A. 586, IS Am. St. 193, citing Kelner V. Baxter, L. R. 2 C. P. 174. See also, Natal Land &c. Co. v. Paulme &c. Syndicate (1904), App. Cas. 120, 11 Manson 29. "It is true in prin- ciple that the adoption of such a con- tract (a contract made by promoters before the organization of the com- pany) made for its benefit by a cor- poration thereafter formed amounts to a new contract requiring a suffi- cient consideration, but, where such appears, it imposes an equally valid obligation as though made with the corporate entity in the first instance." Richard Brown &c. Co. v. Bambrick Bros. &c. Co., ISO Mo. App. SOS, 131 S. W. 134. But, as we understand these decisions, they do not decide that the corporation may not be held as upon a new contract from the time of its adoption. McArthur v. Times Printing Co., 48 Minn. 319, 51 N. W. 216, 31 Am. St. 653. "^ Ireland v. Gobe Milling & Re- duction Co., 20 R. I. 190, 38 Atl. 116, 38 L. R. A. 299. See also, McCand- less V. Inland Acid Co.. 112 Ga. 291, 37 S. E. 419; Plaquemines &c. Co. v. Buck, 52 N. J. Eq. 219, 47 Atl. 1094. ""Bridgeport &c. Co. v. Meader, 72 Fed. 115, 18 C. C. A. 451, affg. 69 Fed. 225, 15 C. C. A. 694; Old Colony Trust Co. V. Dubuque &c. Co., 89 Fed. 794; Davis v. Dexter &c. Co., 52 Kans. 693, 35 Pac. 776; Red Wing Hotel Co. V. Friedrich, 26 Minn. 112, 1_ N. W. 827 ; Pitts v. Steel Mercan- tile Co., 75 Mo. App. 221 ; Seymour v. Cemetery Assn., 144 N. Y. 333, 39 N. E. 365, 26 L. R. A. 859; Oakes V. Cattaraugus Water Co., 143 N. Y. 430, 38 N. E. 461, 26 L. R. A. 544; Rathbun v. Snow, 123 N. Y. 343, 25 N. E. 379, 10 L. R. A. 355; Schreyer V. Mills Co., 29 Ore. 1, 43 Pac. 719. "When the promoters of a corpora- tion have made a contract in its be- half, to be performed after it is or- ganized, it may be deemed a continu- ing offer on part of the other party to the agreement, unless withdrawn by him, and may be accepted and adopted by the corporation after such organization; and the exercise of any right inconsistent with the nonexist- ence of such _ contract might be deemed conclusive evidence of such adoption." Weatherford &c. R. Co. V. Granger, 86 Tex. 350, 40 Am. St. 837. ^ Yeiser v. United States &c. Paper Co., 107 Fed. 340, 46 C. C. A. 567, 52 L. R. A. 724; Cuba Colony Co. v. Kirby, 149 Mich. 453, 112 N. W. 1133. 533 CONTRACTS. 776 Promoters stand in a fiduciary relation to the company to be or- ganized,"- and all those whom they induce to subscribe for stock and to become members of the corporation.^' A promoter may act as such after the corporation is organized to do business. If a corporation has been organized and persons promoting it up to that time continue to act for it by inducing persons to come in and subscribe for its capital stock their rela- tions as promoters continue."* § 533. Personal liability of promoter — Right to compensa- tion. — Promoters are held personally liable on their contracts made for or in behalf of the projected corporation.^^ The for- mation of a company and its ratification of the promoter's con- tract does not relieve the latter from the liability unless it clearly appears that the liability of the promoter was intended to be re- ^''Lagunas Nitrate Co. v. Lagunas Syndicate (1899), 2 Ch. 392; A. J. Cranor Co. v. Miller, 147 Ala. 268, 41 So. 678; Tegarden Bros. v. Big Star Zinc Co., 71 Ark. 277, 72 S. W. 989; Hinkley v. Oil &c. Line Co., 132 Iowa 396, 107 N. W. 629, 119 Am. St. 564; Hayden v. Green, 66 Kans. 204, 71 Pac. 236; Camden Land Co. V. Lewis, 101 Maine 78, 63 Atl. 523; Old Dominion Copper Min. & Smelt- ing Co. V. Bigelow, 188 Mass. 315, 74 N. E. 653, 108 Am. St. 479; Fred Macey Co. v. Macey, 143 Mich. 138. 106 N. W. 722, 5 L. R. A. (N. S.) 1036; Plaque Mines &c. Co. v. Buck, 52 N. J. Eq. 219, 27 Atl. 1094 ; Arnold V. Searing, 78 N. J. Eq. 146, 78 Atl. 762; Second Nat. Bank v. Greenville Screw-Point Steel Fence Post Co., 23 Ohio C. C. 274; Shawnee Com- mercial & Sav. Bank Co. v. Miller, 24 Ohio C. C. 198; Wills v. Nehalem Coal Co., 52 Ore. 70, 96 Pac. 528; Dickerman v. Northern Trust Co., 176 U. S. 181, 44 L. ed. 423, 20 Sup. Ct. 311; Central Land Co. v. Oben- chain, 92 Va. 130, 22 S. E, 876; Rich- lands Oil Co. V. Morriss, 108 Va. 288, 61 S. E. 762. ■^ Lagunas Nitrate Co. v. Lagunas Syndicate (1899). 2 Ch. 392; A, J. Cranor Co. v. Miller, 147 Ala. 268, 41 So. 678; Yeiser v. United States &c. Paper Co.. 107 Fed. 340, 46 C. C. A. 567, 52 L. R. A. 724; Walker V. Pike County Land Co., 139 Fed. 609, 71 C. C. A. 593; Goodwin v. Wilbur, 104 111. App. 45 ; Hinkley v. Sac Oil Co. & Pipe Line Co., 132 Iowa 396, 107 N. W. 629, 119 Am. St. 564 ; Hayward v. Leeson, 176 Mass. 310, 57 N. E. 656, 49 L. R. A. 725 ; Fred Macey Co. v. Macey, 143 Mich. 138, 106 N. W. 722, 5 L. R. A. (N. S.) 1036; Colton Improv. Co. v. Pitcher, 26 Misc. (N. Y.) 26, 55 N. Y. S. 486 ; Wills v. Nehalem Coal Co., 52 Ore. 70, 96 Pac. 528. "•■ Pietsch V. Milbrath, 123 Wis. 647, 101 N. W. 388, 102 N. W. 342, 107 Am. St. 1017. "^Ryland v. Hollinger, 117 Fed. 218, 54 C. C. A. 248. The latter case states : "In Missouri it is held that, if persons who sign articles for in- corporation contract debts or incur liabilities in the name of the projected corporation before all acts necessary to bring the corporation into exist- ence have been performed, such per- sons may be held liable as partners. Mosier v. Parry, 60 Ohio St. 388, 54 N. E. 364. "The promoters them- selves are liable upon the contract, unless the person with whom they en- gage agrees to look to some other fund for payment." Weatherford &c. R. Co. V. Granger, 86 Tex. 350, 40 Am. St. Rep. 837. See also, Harrill V. Davis, 168 Fed. 187, 94 C. C. A. 47, 22 L. R. A. (N. S.) llS3n. 717 FIDUCIARIES. 533 leased when the liabiHty of the corporation began." Thus a per- son ordering goods for a corporation has been held liable there- for, notwithstanding the corporation was actually organized and the goods delivered to and received by it.^' The promoter is also liable to the corporation for any secret profits he may derive from the transaction. If he is guilty of any misrepresentation of facts or suppression of truth in relation to his personal interest in the supposed purchase the corporation is entitled to set aside the transaction or recover compensation for any loss it has suffered.^* '"Roberts Mfg. Co. v. Schlick, 62 Minn. 332, 64 N. W. 826; Queen City Furniture &c. Co. v. Crawford, 127 Mo. 356, 30 S. W. 163. "Upon the soundest reasoning the tendency of the courts in recent years is to an ad- herence to the doctrine that those dealing with promoters should be left with the double security of the pro- moter and the company when one is formed, unless it clearly appears that the liability of the promoter was not intended, or that it was intended to be released when the liability of the corporation began ; but where the evi- dence, as in this case, consisting of oral statements of witnesses as to facts and circumstances and a cor- respondence in writing, tends to show that it was not intended by the con- tracting parties that a person active in the promotion and organization of a corporation should be liable for goods or supplies furnished to the corporation, but that the party fur- nishing the goods or supplies under- stood and agreed that he was to look to, and did in fact look to, and receive payment in part from, the corporation, and was not to look to or demand payment from the promoter or organizer of the corporation, and, in fact, did not look to or demand payment from him until the insolvency of the cor- poration, an instruction which directs the attention of the jury to the writ- ten evidence only, ignoring the oral testimony, and authorizes a verdict on this evidence, singled out, is mis- leading and constitutes reversible error." Strause v. Richmond Wood- working Co., 109 Va. 724, 65 S. E. 659, 132 Am. St. 937, 940. ''Henderson Woollen Mills v. Ed- wards, 84 Mo. App. 448. But one who purchases stock in a corporation from a private individual who owns such stock cannot hold the directors and promoters of the corporation liable, notwithstanding he made the purchase in reliance on a fraudulent prospectus issued to induce purchases from the company. Cheney v. Dickinson, 172 Fed. 109, 96 C. C. A. 314, 28 L. R. A. (N. S.) 359. =^ In re Leeds & H. Theatres (1902), 2 Ch. 809; Gluckstein v. Barnes (1900), A. C. 240; In re Sale Hotel & Botanical Gardens, 78 L. T. (N. S.) 368; Tegarden Bros. v. Big Star Zinc Co., 71 Ark. 277, 72 S. W. 989; Lomita Land &c. Co. v. Robinson (Cal.), 91 Pac. 10, 18 L. R. A. (N. S.) 1106; Yale Gas Stove Co. v. Wil- cox (Conn.), 25 L. R. A. 90; Walker V. Pike County Land Co., 139 Fed. 609, 71 C. C. A. 593; The Telegraph V. Loetscher, 127 Iowa 383, 101 N. W. m, 4 Am. & Eng. Ann. Cas. 667; Cuba Colony Co. v. Kirby, 149 Mich. 453, 112 N. W. 1133; Cook v. Southern Columbian Climber Co., 75 Miss. 121, 21 So. 795; Arnold v. Searing, 78 N. J. Eq. 146, 78 Atl. 762; Groel v. United Electric Co., 70 N. J. Eq. 616, 61 Atl. 1061 ; Midwood Park Co. v. Baker, 128 N. Y. S. 954; Colton Improv. (To. v. Richter, 26 Misc. (N. Y.) 26, 55 N. Y. S. 486; Shawnee Commercial & Sav. Bank Co. V. Miller, 24 Ohio C. C. 198; Johnson v. Sheridan Lumber Co., 51 Ore. 35, 93 Pac. 470; Dickerman v. Northern Trust Co., 176 U. S. 181, 44 L. ed. 423, 20 Sup. Ct. 311; Pietsch V. Milbrath, 123 Wis. 647, 101 N. W. 388, 102 N. W. 342, 107 Am. St. Rep. 1017. "The wrong being a wrong done by promoters to the corpora- § 534 CONTRACTS. 778 Corporations and their organizers have a right to make contracts with promoters to pay them for their services and to purchase property from them^'' and it has been held that this promise to pay the promoter for his services may be imphed/" It would also seem that the promoters are entitled to be reimbursed for money necessarily or legitimately spent on behalf of the corporation.^^ § 534. Other persons occupying fiduciary relations — Di- rectors of corporations. — A director occupies a position of trust or agency for his company of such a character that all deal- ings between him and the company where his interest is opposed to that of the company will be regarded with jealousy and sus- picion and subjected to the closest scrutiny, and not sustained against the stockholders unless they are consistent with the ut- most good faith and fair dealing on the part of the directors.^^ tion whereby the promoters have de- rived in secret an advantage not dis- closed to existing members of the corporation, the corporation was the proper person to bring the suit to remedy the wrong." Hughes v. Ca- dena &c. Min. Co., 13 Ariz. 52, 108 Pac. 231. ^'' Touche V. Metropolitan &c. Ware- housing Co., L. R. 6 Ch. App. 671 ; Davis V. Montgomery &c. Chemical Co., 101 Ala. 127, 8 So. 496; Stanton v. New York &c. R. Co., 59 Conn. 272, 22 Atl. 300, 21 Am. St. llOn; Hayward v. Leeson, 176 Mass. 310, 57 N. E. 656, 49 L. R. A. 725; Bommer V. American &c. Mfg. Co., 81 N. Y. 468; Bell's Gap R. Co. v. Christy, 79 Pa. St. 54; Whitney v. Wyman, 101 U. S. 2B2, 25 L. ed. 1050. A cor- poration is liable for the expenses of its promoters in procuring a subscrip- tion, where, after its organization, it accepts the subscription with the knowledge of such expenses. Weath- erford &c. R. Co. v. Granger (Tex. Civ. App.), 22 S. W. 70. '" Farmers' Bank of Vine Grove v. Smith, 105 Ky. 816, 49 S. W. 810, 88 Am. St. 341. See also, Taussig V. St. Louis &c, R. Co., 166 Mo. 28, 65 S. W. 969, 89 Am. St. 674. For cases holding that there can be no implied promise to pay a promoter for his services, see Weatherford &c. R. Co. V. Granger, 86 Tex. 350, 40 Am. St. 837. See also. Bash v. Culver Gold Min. Co., 7 Wash. 122, 34 Pac. 462. A corporation after or- ganization cannot be compelled to pay for services rendered by its pro- moters with no view to compensation. Hinkley v. Sac Oil & Pipe Line Co., 132 Iowa 396, 107 N. W. 629, 119 Am. St. 564. "Morton v. Hamilton College, 100 Ky. 281, 18 Ky. L. 765, 38 S. W. 1, 35 L. R. A. 275 ; Hayward v. Leeson, 176 Mass. 310, 57 N. E. 656, 49 L. R. A. 725. '-Aberdeen R. Co. v. Blaikie, 1 Macq. H. L, 401; Pacific &c. Works V. Smith, 145 Cal. 352, 78 Pac. 550, 104 Am. St. Rep. 42; Hooker v. Midland Steel Co., 215 111. 444, 74 N. E. 445, 106 Am. St. 170; Hinkley v. Sac Oil &c. Line Co., 132 Iowa 396, 107 N. W. 629, 119 Am. St. 564; Livermore Falls &c. Co. V. Riley (Maine), 78 Atl. 980; Marr v. Marr, 73 N. J. Eq. 643, 70 Atl. 375, 133 Am. St. 742; People v. Powell, 201 N. Y. 194, 94 N. E. 634; Commonwealth Title Ins. Co. v. Selt- zer, 227 Pa. 410, 76 Atl. 11, 136 Am. St. 896; Scott v. Farmers' Nat. Bank, 97 Tex. 31, 75 S. W. 7, 104 Am. St. 835. Nor can the directors ratify a contract made in violation of their trust so as to bind the stockholders. Kenyan Realty Co. v. Nat. Deposit Bank, 140 Ky. 133, 130 S. W. 965, 779 FIDUCIARIES. § 534 But it is not the law that an officer of a corporation cannot deal with the corporation if his acts are open and fair and known to the directors and stockholders.'' Moreover, it has been held that a director does not sustain a fiduciary relation to an individual stockholder with respect to his stock over which he has no control whatever, but he may deal with an individual stockholder and purchase his stock practically on the same terms as a stranger and that in the absence of actual fraud such a purchase will not be set aside by a mere failure to disclose any information the director may have affecting the value of the stock.'* 31 L. R. A. (N. S.) 169. It is the v. Chandler, 209 Mass. 354, 95 N. E. duty of the board of directors to man- 791 ; Southern Kansas Ry. Co. v. age the corporate affairs solely in the Logue (Tex. Civ. App.), 139 S. W. interest of the corporation. Henry L. 11. Doherty & Co. v. Rice, 186 Fed. 204. ^Barnes v. Spencer & Barnes Co., "Where the trust duty of the directors 162 Mich. 509, 127 N. W. 752, 139 of a corporation and personal inter- Am. St. Rep. 587. See a note to the ests conflict the latter must give above case in 139 Am. St. 598, for an way." Young v. Columbia Land & exhaustive review of the right of a Investment Co., 53 Ore. 438, 99 Pac. director to contract with his corpora- 936, 101 Pac. 212, 133 Am. St. 844; tion. Port V. Russell, 36 Ind. 60, 10 Am. =* Hooker v. Midland Steel Co., 215 Rep. 5. (A good case illustrating 111. 444, 74 N. E. 445, 106 Am. St. the necessity for such principle). See 170. Sea further, as to promoters also, Maiden & Melrose Gaslight Co. and directors, post, ch. 18. CHAPTER XVIII. PRIVATE CORPORATIONS. i 540. Power of private corporations to contract generally. 541. Express power. 542. Incidental and implied powers. 543. Implied contracts. 544. Seal. 545. Power to take and hold land. 546. Power to take by a mortgage and to mortgage real estate. 547. Power to hold and convey per- sonal or real property. 548. Power of one corporation to purchase and hold stock in another corporation. 549. Power to appoint agents. 550. Power to appoint agent — Rati- fication. 551. Power to act as agent. 552. Power to make extra-territorial contracts. 553. Extraterritorial contracts — What law governs. §554. Foreign corporation subject to the laws of the state in which it seeks to do business. 555. Contracts made before incor- poration. 556. Ultra vires — Different mean- ing of term "ultra vires." 557. Recovery where ultra vires con- tract has been performed by parties. 558. Ultra vires contracts — Per- formance by one party. 559. Executed contracts — Rule criti- cized. 560. Contracts pel. 561. Contracts ultra vires — Estop- ultra vires — Cases discriminated. 562. Contracts ultra vires — Ratifica- tion. 563. Laches. 564. State as proper party to raise question of ultra vires. § 540. Power of private corporation to contract generally. — The charter of a corporation is the measure of its powers and the enumeration of these powers implies the exclusion of all others not fairly incidental to those enumerated.^ The power to "Williams v. Johnson, 208 Mass. 167, 78 Atl. 944; National Car Ad- 544, 95 N. E. 90; State v. Bankers' vertising Co. v. Louisville &c. R. Co., Trust Co., 157 Mo. App. 557, 138 S. 110 Va. 413, 66 S. E. 88, 24 L. R. A. W. 669; Allison v. Fidelity &c. Ins. (N. S.) lOlOn. See also, German Ins. Co., 81 Nebr. 494, 116 N. W. 274, 129 Co. v. Commonwealth, 141 Ky. 606, Am. St. 694; Somerville Water Co. 133 S. W. 793. It was formerly the v. Borough of Somerville, 78 N. J. custom to create a corporation by a Eq. 199, 78 At!. 793 ; Cook v. Amer- special act of the legislature ; this ican Tubing &c. Co., 23 R. I. 41, 65 special act created, determined and Atl. 641, 9 L. R. A. (N. S.) 193; limited the powers of the corporation. Victor v. Louise Cotton Mills, 148 N. As a general rule the various states Car. 107, 61 S. E. 648, 16 L. R. A. now provide for the incorporation of CM. S.) 1020n; Doty v. American artificial persons under general laws Tel. & Tel. Co. (Tenn.), 130 S. W. and where this is true the charter of 1053; Thomas v. West New Jersey a corporation signifies its articles of R. Co., 101 U. S. 781, 25 L. ed. 950; incorporation together with the gen- State V. Clement Nat Bank, 84 Vt. eral laws applicable to such corpora- 780 78i PRIVATE CORPORATIONS. § S40 mal^e such contracts as are reasonably necessary in order to carry out its legitimate purpose resides in every corporation, and is co-extensive with its corporate powers.^ Any agreement outside or beyond the scope of the powers so conferred is ultra vires and invalid.'' It has been held, for instance, that a railroad company is not authorized to practice medicine or surgery and that any contract it might make to do so would be ultra vires.* A good example of ultra vires contracts is found in contracts of guaranty or suretyship. A corporation does not have the power to become a guarantor or surety, or otherwise lend its credit to another, unless the power so to do is expressly conferred by its charter or unless such action is reasonably necessary or is usual in the conduct of its business. As a general rule the power to act as surety does not fall within the implied or incidental powers of a corporation." Thus, an accommodation indorsement will be ultra vires the corporation when not authorized by its tion and by which its powers are determined. See Danville v. Dan- ville Water Co., 178 111. 299, S3 N. E. 118, 69 Am. St. 304; McLeod v. Medical College, 69 Nebr. 550, 96 N. W. 265, 98 N. W. 672. See also, Marion Trust Co. v. Bennett, 169 Ind. 346, 82 N. E. 782, 124 Am. St. 228, for the construction to be put on a statute which provides that corpora- tions shall not be created by special act, as applied to a corporation al- ready created. "It is well settled that the charter of a corporation formed under a general law consists of its articles of incorporation and the laws governing such corporation." West- port Stone Co. v. Thomas (Ind.), 93 N. E. 406; Attorney-General v. Great Eastern R. Co., L. R. 5 App. Cas. 473. See also, Thomas v. West Jer- sey R. Co., 101 U. S. 78, 25 L. ed. 950; Davis v. Old Colony R. Co., 131 Mass. 258, 41 Am. Rep. 221; Okla- homa Portland Cement Co. v. An- derson, 28 Okla. 650, 115 Pac. 767; Green Bay & M. R. Co. v. Union Steam-Boat Co., 107 U. S. 98, 2 Sup. Ct 221 27 L. ed. 413; Supreme Lodge V. Weller, 93 Va. 605, 25 S. _E. 891. One who, in his dealings with a company which exercises the fran- chise of a corporation, has recognized it as a corporation and dealt with it as such will not as a general rule be permitted to question the corporate capacity of his debtor. Omaha Cattle Loan Co. v. Shelly, 89 Nebr. 502, 131 N. W. 926. The existence of a de facto corporation cannot be inquired into collaterally. Color Oil &c. Co. v. Franzell, 128 Ky. 715, 109 S. W. 328, 36 L. R. A. (N. S.) 456. ° McKiernan v. Lenzen, 56 Cal. 61 ; Choctaw &c. R. Co. v. Bond, 160 Fed. 403, 87 C. C. A. 355; Portland Lum- bering & Mfg. Co. V. East Portland, 18 Ore. 21, 22 Pac. 536, 6 L. R. A. 290n ; Forty-Acre Spring Live Stock Co. v. West Texas &c. Trust Co., (Tex. Civ. App.), Ill S. W. 417; Thomp. on Corp. (2d ed.), § 2137. " See, ante, § 272, Artificial Persons or Corporations in chapter on Par- ties and post, § 556 et seq.. Ultra Vires, this chapter. *Youngstown Park &c. St. R. Co. V. Kessler, 84 Ohio St. 74, 95 N. E. 509, Ann. Cas. 1912B, 933. " Spencer v. Alki Point Trans. Co., S3 Wash, n, 101 Pac. 509, 132 Am. St. 1058. See also, Richeson v. Nation- al Bank of Mena, 96 Ark. 556, 132 S. W. 913; W. C. Bowman Lumber Co. v. Pierson (Tex. Civ. App.), 139 S. W. 618. § 541 CONTRACTS. 7S2 charter.' It has been stated that a private corporation might, the directors and stockholders assenting, issue accommodation paper, provided corporate creditors are paid.' But if this is true why may not a corporation do any act or engage in any business, without regard to its charter, provided the stockholders and di- rectors assent and it does not interfere with creditors' rights? A corporation is an artificial person created by the state ; it cannot be given powers ultra its charter through the assent of its stock- holders and directors.® Of course, some corporations are ex- pressly given power to make and execute contracts of suretyship or the like and are organized for that very purpose. There is also one class of corporations generally held to have the incidental or implied right to enter into contracts of guaranty or suretyship of a certain character. They are such as are incorporated to manufacture and sell spirituous liquors. It is held that they may enter into contracts of guaranty or suretyship on behalf of their customers or prospective customers for the rea- son that such contracts enable them to carry out the purpose for which they are created." §541. Express power. — This rule that a corporation has only such powers as may be granted by its charter or those neces- sarily implied therefrom applies to every class of corporations." ° Simmons Nat. Bank v. Dilley C. A. 45 ; In re Prospect Worsted Foundry Co., 95 Ark. 368, 130 S. W. Mills, 126 Fed. 1011. 162 ; Park Hotel Co. v. Fourth Nat. ' See Cook v. American Tubing Co., Bank, 86 Fed. 742, 30 C. C. A. 409; 28 R. I. 41, 65 Atl. 641, 9 L. R. A. Johnson v. Johnson Bros. (Maine), (N. S.) 193. 80 Atl. 741 ; Carlaftes v. Goldmyer ° Timm v. Grand Rapids Brew. Co., Co, 72 Misc. (N.Y.) 75, 129 N. Y. S. 160 Mich. 371, 125 N. W. 357, 27 L. 396 ; Cook V.American Tubing &c. Co. R. A. (N. S.) 186n; Fuld v. Burr (R. I.), 65 Atl. 641, 9 L. R. A. (N. Brewing Co., 45 N. Y. St. 649, 18 S.) 193 and note; McCampbell v. N. Y. S. 456; Holm v. Claus Lipsius Fountain Head R. Co, 111 Tenn. 55, Brew. Co., 21 App. Div. (N. Y.) 77 S. W. 1070, 102 Am. St. 731; 204, 47 N. Y. S. 518; Koehler & Co. Haupt V. Vint, 68 W. Va. 657, 70 S. v. Reinheimer, 26 App. Div. (N. Y.) E. 702, 34 L. R. A. (N. S.) 518n. 1, 49 N. Y. S. 755; Munoz v. Brassel '1 Cook on Corp. (6th ed.), § 3; (Tex. Civ. App.), 108 S. W. 417. Murphy v. Arkansas & L. Land & Contra, Filon v. Miller Brew. Co., Imp. Co., 97 Fed. 723; Perkins v. 60 Hun (N. Y.) 582, 38 N. Y. St. Trinity Realty Co., 69 N. J. Eq. 723, 602, 15 N. Y. S. 57. See also. In re 61 Atl. 167; Martin v. Niagara Falls Liquor Dealers' Supply Co., 177 Fed. Paper Mfg. Co, 122 N. Y. 165, 25 N. 197, 101 C. C. A. 367. E. 303, See also, Lvon, Potter & Co. '° Gulf C. & S. F. R. Co. v. Mor- V. First Nat. Bank, 85 Fed. 120, 29 C. ris, 67 Tex. 692, 4 S. W. 156, 35 Am. & Eng. Railway Cases 94. 783 PRIVATE CORPORATIONS. § 542 A corporation's charter is its express grant of power and it can do no act nor make any contract either within or without the state which creates it except such are are authorized by its charter, and those acts must also be done by such officers or agent and in such manner as the charter may require." Nor can the express powers of a corporation be enlarged by implication.'* § 542. Incidental and implied powers, — This latter state- ment must not be misunderstood, however. The powers of a corporation cannot be enlarged by implication but it may never- theless have implied powers. The doctrine of implied powers arises not only naturally but from necessity. Consequently it is usually said that a corporation possesses only such powers as are expressly granted it by its charter or such powers as are necessarily implied therefrom to enable it to carry into effect the objects and purposes of its creation and the powers expressly granted.'^ In every express grant there is implied a power to do whatever is necessary or reasonably appropriate to the exercise of the authority expressly conferred. The difficulty in any par- ticular case is to determine whether the power of a corporation to do an act can be implied or not.'* An incidental power has " Talmadge v. North America Coal 56 Fla. SOS, 47 So. 2, 131 Am. St. &c. Co., 3 Head. (Tenn.) 337; Bank 160; Franklin Nat. Bank v. White- of Augusta V. Earle, 13 Pet. (U. S.) head, 149 Ind. 560, 49 N. E. 592, 39 519, 10 L. ed. 274; Runyan v. Coster's L. R. A. 725, 63 Am. St. 302; Mar- Lessee, 14 Pet. (U. S.) 122, 10 L. ed. shalltown Stone Co. v. Des Moines 382; Tombigbee R. Co. v. Kneeland, Brick Mfg. Co., 149 Iowa 141, 126 N. 4 How. (U. S.) 16, 11 L. ed. 855. W. 190; Bankers' Union &c. v. Craw- "A clear result of these decisions may ford, 67 Kans. 449, 73 Pac. 79, 100 be summed up thus: The charter of Am. St. 465; Leggett v. New Jersey a corporation, read in the light of any Mfg. & Banking Co., 1 N. J. Eq. general laws which are applicable, is 541, 23 Am. Dec. 728; Trenton Pot- the measure of its powers, and the teries Co. v. Oliphant, 58 N. J. Eq. enumeration of those powers implies 507, 43 Atl. 723, 46 L. R. A. 255, 78 the exclusion of all others not fairly Am. St. 612. "A corporation being incidental." Central Transportation the mere creature of law, possesses Co. V. Pullman's Palace-Car Co., 139 only those properties which the char- U. S. 24, 35 L. ed. 55, 11 Sup. Ct. ter of its creation confers upon it, 478. either expressly, or as incidental to ^ People V. Illinois Cent. R. Co., its very existence." Dartmouth Cnl- 233 111. 378, 84 N. E. 368, 16 L. R. lege v. Woodward, 4 Wheat. (U. S.) A. (N. S.) 604, 122 Am. St. 181; 518, 4 L. ed, 629. See also, Riche- Victor V. Louise Cotton Mills, 148 son v. National Bank of Mena, 96 N. Car. 107, 61 S. E. 648, 16 L. R. A. Ark, 556, 132 S. W. 913. See ante, (N. S.) 1020n. § 272, Parties under subtitle Artificial '' Rachels v. Stecher Cooperage Persons or Corporations, Works, 95 Ark, 6, 128 S, W. 348; "Wilwaukee Trust Co. v. Ger- McQuaig V. Gulf Naval Stores Co., mania Ins. Co., 106 La. Ann. 669, 31 § 542 CONTRACTS. 784 been defined as "one that is directly and immediately appropriate to the execution of the specific powers granted, and not one that has a slight or remote relation to it."^° The foregoing definition would indicate that the terms "incidental" and "implied" powers are used interchangeably and this is true, but it is believed that there is a valid distinction which should be drawn between the two. What are termed incidental powers may more properly be said to be matters that are incident to the existence of the cor- poration ; things that have to do with the body itself and have nothing to do with the execution of the corporate franchise or the conduct of the business in which the corporation is engaged. The term "implied powers," or the powers which the corporation takes by implication, on the other hand, has nothing to do with the corporate existence as such, but are concerned wholly with reference to the execution of its corporate franchise and are the powers necessary to be used by it in the execution of its corporate business.^" A corporation's implied power confers upon it the right to make all contracts requisite for the purpose for which it was created. ^^ A business corporation has implied power to do that which So. 298; North Side R. Co. v. Worth- death or by the transfer of shares, ington, 88 Tex. 562, 30 S. W. 1055, S3 and the continuation as a legal entity Am. St. 778; Moore v. Sun Printing notwithstanding such change of mem- & Publishing Assn., 183 U. S. 642, bership ; (b) to sue and be sued, 46 L. ed. 366, 22 Sup. Ct. 240. implead and be impleaded, grant and ^° Vandal! v. South San Francisco receive by its corporate name; (c) Dock Co., 40 Cal. 83 ; Hood v. New to purchase, hold and convey real and York & N. H. R. Co., 22 Conn. 1; personal property; (d) to have a People v. Chicago Gas Trust Co., 130 common seal and change the same 111. 268, 22 N. E. 798, 8 L. R. A. at pleasure; (e) to make by-laws. 497n, 17 Am. St. 319; State v. New- To these may be added another power man, 51 La. Ann. 833, 25 So. 408, incident to certain classes of corpora- 72 Am. St. 476; Franklin Co. v. tions, that of removing members." 3 Lewiston Inst. &c., 68 Maine 43, 28 Thomp. on Corp. (2d ed.), § 2104. Am. Rep. 9n ; Buffett v. Troy &c. R. " Deringer's Admr. v. Deringer's Co., 40 N. Y. 168. See also, West Admr., 5 Houst. (Del.) 416, 1 Am. Maryland R. Co. V. Blue Ridge Hotel St. ISO; McQuaig v. Gulf Naval Co., 102 Md. 307, 62 Atl. 351, 3 L. R. Stores Co., 56 Fla. 505, 47 So. 2. 131 A. (N. S.) 887n, 111 Am. St. 362. Am. St. 160; People v. Illinois Cent. "See 3 Thomp. Corp. (2d. ed.), R. Co., 233 111. 378, 84 N. E. 368, 16 § 2105. "The early text writers L. R. A. (N. S.) 604, 122 Am. St. and some of the older cases enu- 181; Allison v. Fidelity Mutual Fire merated at least five powers, as nee- Ins. Co., 81 Nebr. 494, 116 N. _W. 274, e1, 53 Am. Rep. 595; Carter v. Ridge Turnpike Co., 22 Pa. Super. Ct. 162; Page v. Heineberg, 40 Vt. 81, 94 Am. Dec. 378. See also, Union Canal Co. v. Young, 1 Whart. (Pa.) 410, 30 Am. Dec. 212. "^ See Dewitt v. San Francisco, 2 Cal. 289; Williams v. Jenkins, 11 Ga. 595 ; Haven v. Mehlgarten, 19 111. 91 ; Estell v. University of the South, 12 Lea (Tenn.) 476. ■^ Justice Windham's Case, 5 Coke 7a; Weston v. Keighley, Finch 82; Willion V. Berkley, 1 Plow. 223 ; Ben- net V. Holbech, 2 Saund. 317; De- witt V. San Francisco, 2 Cal. 289; Hackett v. Multnomah R. Co., 12 Ore. 124, 6 Pac. 659, 53 Am. Rep. 327; Telfair v. Howe, 3 Rich. Eq. (S. Car.) 235, 55 Am. Dec. (,11; Estell v. University of the South, 12 Lea (Tenn.) 476. "^ Green v. Rutherford, 1 Ves. Jr. 462 ; Attorney-General v. Clarendon, 17 Ves. Jr. 491 ; Attorney-General v. Launderfield, 9 Mod. 287; First Con- gregational Soc. V. Atwater, 23 Conn. 34; Crandall v. Lincoln, 52 Conn. 73, 52 Am. Rep. 560; Deringer's Admr. V. Deringer's Admr., 5 Houst. (Del.) 416, 1 Am. St. 150; Williams v. West- ern Star Lodge &c., 38 La. Ann. 620; Phillips Academy v. King, 12 Mass. 546 ; Winslow v. Cummings, 3 Cush. (Mass.) 358; Holland v. Cruft, 3 Gray (Mass.) 162; White v. Rice, 112 Mich. 403, 70 N. W. 1024; Minne- sota Land &c. Co. v. Beebe, 40 Minn. 7, 41 N. W. 232, 2 L. R. A. 418; Sinking Fund Commrs. v. Walker, 6 How. (Miss.) 143, 38 Am. Dec. 433; Wade V. American Colonization Soc, 7 Sm. & M. (Miss.) 663, 45 Am. Dec. 324; Attorney General v. Dublin, 38 N. H. 459; Mason's Exrs. v. Meth- odist Episcopal Church, 27 N. J. Eq. 47; In re Howe. 1 Paige (N. Y.) 214; Farmers' Loan &c. Co. v. Perry, 3 Sandf. Ch. (N. Y.) 339; Farmers' 799 PRIVATE CORPORATIONS. § 546 Statutory restrictions on the power of corporations in this re- spect/* Limitations of this character usually provide that corpo- rations shall have power "to acquire, by purchase or otherwise, and to hold, enjoy, improve, lease, incumber and convey all real and personal property necessary to the purposes of its organiza- tion, subject to the limitations hereafter declared.""" § 546. Power to take by a mortgage and to mortgage real estate. — Aside from corporations that are authorized by stat- ute to loan money and secure the same by mortgage it may be said that whenever a corporation has the power to become a creditor it has the incidental or implied power to take a mortgage on land to secure such debt except as such power may be limited by a statute. Thus, railroad corporations have been held to have power to take mortgages to secure payment of subscriptions to Loan &c. Co. v. Harmony &c. Ins. Co., 51 Barb. (N. Y.) 33, affd. 41 N. Y. 619; Sheldon v. Chappell, 47 Hun (N. Y.) 59; Wetmore v. Parker, 52 N. Y. 450; Liggett v. Ladd, 23 Ore. 26, 31 Pac. 81; Bethle- hem V. Perseverance Fire Co., 81 Pa. St. 445; Ex parte Greenville Acad- emies, 7 Rich. Eq. (S. Car.) 471; Lincoln Sav. Bank v. Ewing, 12 Lea (Tenn.) 598; Heiskell v. Chickasaw Lodge. 87 Tenn. 668, 11 S. W. 825, 4 L. R. A. 699n; Bell Co. v. Alexan- der, 22 Tex. 350, 73 Am. Dec. 268; Vidal V. Philadelphia, 2 How. (U. S.) 127, 11 L. ed. 205; Jones v. Habersham, 107 U. S. 174, 27 L. ed. 401, 2 Sup. Ct. 336, affg. 3 Woods (U. S.) 443 ; Protestant Episcopal &c. Soc. v. Churchman, 80 Va. 718. °* See Leggett v. New Jersey Mfg. & Banking Co., 1 N. J. Eq. 541, 23 Am. Dec. 728n; Gilbert v. Hole, 2 S. Dak. 164, 49 N. W. 1. °=Rev. Laws Minn. 1905, § 2852, subd. 4. See Burns Ind. Stat. 1908, § 4091 (relative to foreign corpora- tions doing business in the state) ; First M. E. Church v. Dixon, 178 111. 260, 52 N. E. 887 ; Belcher &c. Refin- ing Co. v. St. Louis &c. Elevator Co., 101 Mo. 192, 13 S. W. 822. 8 L. R. A. 801 (construing similar statute) ; Crawford v. Longstreet, 43 N. J. L. 325 (construing similar statute). The constitution of South Dakota provides "that no corporation shall engage in any business other than that expressly authorized in its char- ter nor shall it take or hold any real estate except such as may be neces- sary and proper for its legitimate business." Constitution of South Da- kota, art. 17, § 7. See also, German Ins. Co. v. Commonwealth, 141 Ky. 606, 133 S. W. 793, in which it is held that under a statute providing that a corporation cannot hold real estate for over five years except such as is proper and necessary for carry- ing on its business, a corporation may in good faith acquire real estate for a proper use in the transaction of its business and hold the same for more than five years. A transfer of real estate to a corporation with- out power under its charter to take title thereto is not void, but voidable only, and is valid until directly as- sailed by the state. Knowles v. Northern Texas Tract Co. (Tex. Civ. App.), 121 S. W. 231. See also, Ultra Vires. "It is undoubtedly well set- tled that no person except the state can raise the objection that a corpora- tion is holding real estate in excess of its corporate powers." Plummer V. Chesapeake &c. R. Co., 143 Ky. 102, 136 S. W. 162. See also, McQuaide V. Enterprise Brew. Co. (Cal. App.), Ill Pac.927;McKin!ey-Lanning Loan &c. Co. V. Gordon, 113 Iowa 481, 8S § 546 CONTRACTS. 800 their capital stock.*" The converse of this is also true as a gen- eral rule. Express power to mortgage their property is now in the majority of instances conferred upon corporations by stat- ute."^ A corporation may also have an implied power to mort- gage its property. The power to mortgage is implied if the right is the natural result of the power either to borrow money or incur indebtedness."* When not expressly denied to a corporation the N. W. 816; Southern Lumber Co. v. Holt, 129 La. 273, SS So. 986. See. however, In re McGraw's Estate, 111 N. Y. 66, 19 N. E. 233, 2 L. R. A. 387, affd. 136 U. S. 152, 34 L. ed. 427, 10 Sup. Ct. 775; Wood v. Hammond, 16 R. I. 98, 17 Atl. 324, 18 Atl. 198; Louisville Property Co. v. Nashville, 114 Tenn. 213, 84 S. VV. 810. °° Scott V. Farmers' &c. Nat. Bank (Tex. Civ. App.),66 S. W. 485 (street railway company) ; Clark v. Farring- ton, 11 Wis. 306; Blunt v. Walker, 11 Wis. 334, 78 Am. Dec. 709; Cornell V. Hichens, 11 Wis. 353; Andrews V. Hart, 17 Wis. 297. See also, State Security Bank v. Hoskins, 130 Iowa 339, 106 N. W. 764, 8 L. R. A. (N. S.) 376n. " Stagg V. Medway Navigation Co., SO Weekly Rep. 446; Farmers' Loan &c. Co. V. Chicago &c. R. Co., 68 Fed. 412; Wright v. First Nat. Bank, 52 N. J. Eq. 392, 28 Atl. 719; New Briton Nat. Bank v, Cleveland Co., 91 Hun (N. Y.) 447, 71 N. Y. St. 157, 36 N. Y. S. 387, affd. 158 N. Y. 722, S3 N. E. 1128; Central Gold :\lining Co. v. Piatt & Sons, 3 Daly (N. Y.) 263; Flynn v. Coney Island &c. R. Co., 26 App. Div. (N. Y.) 416, 50 N. Y. S. 74; Galveston &c. R. Co. v. Cowdrey, 11 Wall. (U. S.) 459, 20 L. ed. 199. The foregoing cases have to do with the construction of such statutes. "" First Nat. Bank v. Winchester, 119 Ala. 168, 24 So. 351, 72 Am. St. 904; Vaughn v. Alabama Nat. Bank, 143 Ala. 572, 42 So. 64; Hopson v. Aetna Axle & Spring Co., SO Conn. 597; Richmond Standard Steel &c. Co. V. Allen, 148 Fed. 657, 78 C. C. A. 389; Deepwater R. Co. v. Western Pocahontas Coal &c. Co., 152 Fed. 824; Ashley Wire Co. v. Illinois Steel Co., 164 111. 149, 45 N. E. 410, 56 Am. St. 187; Wright v. Hughes, 119 Ind. 324, 21 N. E. 907, 12 Am. St. 412; Reagan v. First Nat. Bank, 157 Ind. 623, 62 N. E. 701, 61 N. E. 575; Warfield v. Marshall County Can- ning Co., 72 Iowa 666, 34 N. W. 467, 2 Am. St. 263; Bell &c. Co. v. Ken- tucky &c. Co., 106 Ky. 7, SO S. W. 2, 1092, 51 S. W. 180, 20 Ky. L. 1684, 21 Ky. L. 133, modifying 20 Ky. L. 1089, 48 S. W. _ 440 ; Fidelity Trust Co. v. Louisville Gas Co., 118 Ky. 588, 81 S. W. 927, 111 Am. St. 302; Bramblet v. Commonwealth &c. Lumber Co., 26 Ky. L. 1176, 83 S. W. 599; Swift v. Smith, 65 Md. 428, S Atl. 534. 57 Am. Rep. 336; Evans v. Boston Heating Co., 157 Mass. Zl, 31 N. E. 698; Brooks V. West Springfield, 193 Mass. 190, 79 N. E. 337 ; Hoskins v. Roches- ter Sav. & Loan Assn., 133 Mich. SOS, 95 N. W. S66: Wood v. Meyer (Miss.), 7 So. 359; Richards v. Mer- rimack &c. R. Co., 44 N. H. 127; Rutherford &c. Elec. Co. v. Franklin Trust Co., 58 N. J. Eq. 584, 43 Atl. 1098; Brown v. Citizens' Ice &c. Stor- age Co. (N. J. L.), 66 Atl. 181; Tschetinian v. City Trust Co., 186 N. Y. 432, 79 N. E. 401; Antietam Paper Co. v. Chronicle Pub. Co., 115 N. Car. 143, 20 S. E. 366; Benbow v. Cook, 115 N. Car. 324, 20 S. E. 453, 44 Am. St. 454; Burt v. Rattle, 31 Ohio St. 116; Curtze v. Iron Dyke &c. Min. Co., 46 Ore. 601, 81 Pac. 815 ; Sprigg v. Commonwealth Title Ins. &c. Co., 206 Pa. 548, 56 Atl. 33; Waters-Pierce Oil Co. v. United States &c. Trust Co., 44 Tex. Civ. App. 397, 99 S. W. 212 ; Jones v. New York Guaranty & Indemnity Co., 101 U. S. 622, 25 L. ed. 1030, 1 Keeners' Cas. 656, 1 Cumming's Cas. 326; Murray V. Farmville &c, R. Co., 101 Va. 262, 43 S. E. 553; Virginia Passenger &c. Co. V. Fisher, 104 Va. 121, 51 S. E. 198; Kidder v. Beavers, 33 Wash. 635, 8oi PRIVATE CORPORATIONS. § 547 power to mortgage property as security for an indebtedness is regarded as incidental to its power to acquire and hold real estate and under the common-law rule such power may be exercised by the directors or other governing body in the same manner and to the same extent as an individual." § 547. Power to hold and convey personal and real prop- erty. — It is so well settled that corporations have the power to acquire and hold personal property for the legitimate purposes of their incorporation that this power is seldom if ever expressly conferred except where the object of the corporation is to deal in some particular species of personal property." This power in- cludes not only the power to purchase but also the power to take by gift or bequest.''^ Under this power it has been held that a corporation may become the assignee of a bond^^ and that a cor- poration authorized to manufacture and sell glass might have the power to buy from another manufacturer for the purpose of keeping up its stock and supplying customers while its factories were undergoing repairs." A purchase of bottles by a corpora- tion which is authorized to purchase all articles of merchandise 74 Pac. 819; Lehigh Valley Coal Co. Glass Co., Ill Mass. 315, 1 Keener's V. West Depere Agri. Works, 63 Wis. Cas. 477 ; Callaway Min. &c. Co. v. 45, 22 N. W. 831. Clark, 32 Mo. 305; Adams Min. Co. ™ Union Water Co. v. Murphy's v. Senter, 26 Mich. Ti ; Bennington Flat &c. Co., 22 Cal. 620; Bensiek v. Iron Co. v. Rutherford, 18 N. J. L. Thomas, 66 Fed. 104, 13 C. C. A. 457; 467; Rivanna Nav. Co. v. Dawsons, Aurora Agri. &c. Soc. v. Paddock, 3 Grat. (Va.) 19, 46 Am. Dec. 18. 80 111. 263 ; Thompson v. Lambert, 44 " Dickson v. United States, 125 Iowa 239; Bell &c. Co. v. Kentucky Mass. 311, 28 Am. Rep. 230; Phillips &c Co., 106 Ky. 7, 20 Ky. L. 1684, Academy v. King, 12 Mass. 540; 21 Ky. L. 133, 50 S. W. 2, 51 S. W. Wade v. American Colonization Soc, 180; Curtis v. Leavitt, 15 N. Y. 9; 7 Sm. & M. (Miss.) 663. 45 Am. Dec. Hunt V. Memphis Gaslight Co., 95 324; Chamberlain v. Chamberlain, 43 Tenn. 136, 31 S. W. 1006; White N. Y. 424; Theological Sera. &c. v. Water Valley &c. Co. v. Vallette, 21 Kellogg, 16 N. Y. 83 ; Perin v. Carey, How. (U. S.) 414, 16 L. ed. 154. For 24 How. (U. S.) 465, 16 L. ed. 701 ; a complete discussion of a corpora- Rivanna Nav. Co. v. Dawsons, 3 Grat. tion's power to take and hold land (Va.) 19, 46 Am. Dec. 18; Protestant see vol. 3, Thompson on Corporations &c. Soc. v. Churchman, 80 Va. 718; (2d ed.), § 236S et seq. Lewisburg Baptist University v. ™ See Blanchard's Gun-Stock &c. Tucker, 31 W. Va. 621, 8 S. E. 410. Factory V. Warner, 1 Blatchf. (U.S.) "Bennington Iron Co. v. Ruther- 258, Fed. Cas. 1521 ; Wheeler v. San ford, 18 N. J. L. 467. Francisco &c. R. Co., 31 Cal. 46, 89 " Lyndeborough Glass Co. v. Mas- Am. Dec. 147; Rosenbaum v. Horton, sachusetts Glass Co., Ill Mass. 315, 89 Iowa 692, 57 N. W. 609; Lynde- 1 Keener's Cas. 477. borough Glass Co. v. Massachusetts 51 — Contracts, Vol. I 547 CONTRACTS. 802 has been held not ultra vires.'* Corporations have also been held to have the right to purchase a patent where it was necessary and proper in the conduct of their business/^ or to purchase more raw material than might be required at any one time, and thus obtain the advantage of a low price'" but an ordinary corporation cannot purchase raw material for a resale or speculation." Cor- porations not expressly authorized cannot speculate by dealing in futures of stock exchange.'^ The power to sell and dispose of property for lawful purposes is necessarily attendant to a corpo- ration as an incident of ownership.'^ Thus it is well settled that a corporation, without special authority, may dispose of its lands, goods and chattels, or any interest in the same, as it deems ex- pedient, and, in the course of its legitimate business, may make a bond,*" notes and mortgage^^ or draft; and also may make com- position with creditors or an assignment for their benefit with preference, except when restrained by law.*^ So an assignment "Jebeles & Colias Confectionery Co. V. Hutchinson & Son, 171 Ala. 106, 54 feo. 618. "In re British &c. Cork Co., L. R. } Eq. 231 ; Blanchard's Gun-Stock &c. Factory v. Warner, 1 Blatchf. (U. S.) 2S8, Fed. Cas. 1521. '"National Shoe & Leather Bank's Appeal, 55 Conn. 469, 12 Atl. 646. " Chewacla Lime Works v. Dis- mukes, 87 Ala. 344, 6 So. 122, S L. R. A. 100; Day v. Spiral Springs Buggy Co., 57 Mich. 146, 23 N. W. 628, 58 Am. Rep. 352. "Jemison v. Citizens' Sav. Bank, 122 N. Y. 135, 25 N. E. 264, 9 L. R. A. 708, 19 Am. St. 482, 1 Smith's Cas. 500. ™ "As a general rule corporations may, I think, be said to have an in- cidental power to dispose of their property, real and personal, either by sale absolute, or by mortgage or other mode of security, for any debt which they may rightfully contract, to the same extent as natural persons, ex- cept so far as that power may be re- strained by their charter, by consid- erations connected with the purposes of their creation, or limited by express provision or just implication of some statute, or by the general policy of the state to be deduced from its legis- lation." Joy V. Jackson &c. Plank Road Co., 11 iVIich. 156. "It is well settled that a corporation, without special authority, may dispose of land, goods, and chattels, or of any inter- est in the same, as it deems expedient, and in the course of their legitimate business may make a bond, mortgage, note or draft ; and also may make compositions with creditors, or an as- signment for their benefit, with pref- erences, except when restrained by law." White Water &c. Canal Co. v. Vallette, 21 How. (U. S.) 414, 16 L. ed. 154. This applies to real estate. Knowles v. Northern Tex. Tract. Co. (Tex. Civ. App.), 121 S. W. 231. "" Central Trust Co. v. Western &c. R. Co., 89 Fed. 24. "'■ Farmers' Bank v. Ohio &c. Steamboat Co., 108 Ky. 447, 22 Ky. L, 132, 56 S. W. 719; Bishop v. Kent & S. Co., 20 R. I. 680, 41 Atl. 255. "'White V/ater Canal Co. v. Val- lette, 21 How. (U.S.) 414. This lan- guage is quoted with approval by the Tennessee court in Adams v. Rail- road Co., 2 Coldw. (Tenn.) 645-660. As was said in a subsequent case in respect to Adams v. Railroad Co., "The simple question presented was, 'Had the Mayor and Alderman of the City of Memphis the power, under 8o3 PRIVATE CORPORATIONS. § 547 made by a corporation is not open to collateral attack*' Numerous cases might be cited in support of the text but the rule is so well settled as to render it unnecessary. A private cor- poration generally has the power to sell and dispose of all its property, unless it be its franchise of existence, in the absence of legislative or charter restrictions,** except when it will be fraud- ulent as to creditors-^"* But it is held that the franchise, the right of being a corporation, cannot be sold in the absence of statutory authority even at an execution or judicial sale, so as to confer the same privilege upon the purchaser.*" So the sale or lease and the agreement made in connection therewith must not have for its purpose the furtherance of an unreasonable restraint of trade, the prevention of competition and the establishment of a monopoly.*^ In the United States it is held generally that in the absence of their charter, to mortgage their real property or estate, for corporation purposes ?' " And the court decided it had. McKinney v. Memphis &c. Hotel Co., 12 Heisk. (Tenn.) 104, 120. " In re The Prussia, 100 Fed. 484. " Metcalf V. American School Co., 122 Fed. 115; Central Trust Co. v. Western &c. R. Co., 89 Fed. 24; Benbow v. Cook, 115 N. Car. 324, 20 S. E. 453, 44 Am. St. 454; Cohen v. Big Stone Gap Iron Co., Ill Va. 468, 69 S. E. 359, Ann. Cas. 1912A, 203. "All corporations capable of taking and holding property have the jus disponendi as fully as natural per- sons, except so far as they are re- strained by statute. Under this gen- eral power a corporation may dispose of the whole of its. property for any lawful purpose." Tash v. Ludden (Nebr.), 129 N. W. 416. See also, Tanner v. Lindell R. Co., 180 Mo. 1, 79 S. W. 155, 103 Am. St. Rep. 534, and note at p. 548. The franchise to be a corporation cannot be alienated without the consent of the state. Jen- nings V. Dark (Ind.), 92 N. E. 778. "When a strictly private corporation finds it cannot profitably continue op- erations, * * * it may lawfully make a lease of its entire property for a term of years." Anderson v. Shawnee Compress Co., 17 Okla. 231, 87 Pac. 315, 15 L. R. A. (N. S.) 846. See, however, In re Timmis, 200 N. Y. 177, 93 N. E. 522. All of its property with the exception of its franchise may be sold at judicial sale. Stewart V. Jones, 40 Mo. 140; Overton Bridge Co. V. Meanes, 33 Nebr. 857, 51 N. W. 240, 29 Am. St. 514; Reynolds v. Reynolds Lumber Co., 169 Pa. 626, 32 Atl. 537, 47 Am. St. 935 ; Chautauqua County Nat. Bank's Appeal, 170 Pa. 1, 32 Atl. 539. ""A transaction whereby one cor- poration sells and transfers all its property and franchises, except the franchise to be a corporation, to an- other corporation, upon an agreement that the proceeds or consideration of the sale should be distributed to the stockholders of the selling corpora- tion, and where the proceeds are so distributed in accordance with such agreement entered into between the two corporations, is, as to creditors of the selling corporation, not only fraudulent, but unlawful." Cooper v. Utah Light & R. Co., 35 Utah 570, 102 Pac. 202. '=HaIl V. Sullivan R. Co., 21 Law. Rep. 138; Stewart v. Jones, 40 Mo. 140; Chautauqua County Nat. Bank's Appeal, 170 Pa. 1, 32 Atl. 539; City Water Co. v. State, 88 Tex. 600, 32 S. W. 1033. "Anderson v. Shawnee Compress Co., 17 Okla. 231, 15 L. R. A. (N. S.) 846n, 87 Pac. 315, affd. 209 U. S. 423, 52 L. ed. 865, 28 Sup. Ct. 572. See also. In re Timmis, 200 N. Y. 177, 93 N. E. 522. § 547 CONTRACTS. 804 a plain statutory prohibition or such prohibition in the articles of organization of the corporation, a corporation may, so long as it acts in good faith and without intent to injure creditors or stockholders, lawfully purchase its own stock either as to stock- holders or present or future creditors.*^ However, if the corpora- tion is insolvent the purchase will not be sustained,'* and the same is true if made with the intent to injure its creditors or defeat them in the collection of their claims, or if it has such effect."" A corporation may also be forbidden by a statute to purchase its own shares of stock."^ Thus banking corporations are frequently prohibited from purchasing their own shares of stock.'^ In Eng- land and in some states of this country it is held that in the ab- sence of special statutory authority a corporation does not have "^ Draper v. Blackwell, 138 Ala. 182, 35 So. 110 (but see contra Hall v. Alabama Terminal & Improv. Co., 143 Ala. 464, 39 So. 285, 2 L. R, A. (N. S.) 130, 5 Am. & Eng. Ann. Cas. 363) ; Copper Belle Min. Co. v. Cos- tello (Ariz.), 95 Pac. 94, rehearing in (Ariz.) 95 Pac. 803; American Al- kali Co. V. Campbell, 113 Fed. 398; Burnes v. Burnes, 137 Fed. 781, 70 C. C. A. 357, certiorari denied with- out opinion in 199 U. S. 60S, SO L. ed. 330, 26 Sup. Ct. 746; In re S. P. Smith Lumber Co., 132 Fed. 618, affd. without opinion in 140 Fed. 988, 72 C. C. A. 682; In re Castle Braid Co., 145 Fed. 224; Wis- consin Lumber Co. v. Greene & W. Tel. Co., 127 Iowa 350, 101 N. W. 742, 69 L, R. A. 968, 109 Am. St. 387 ; West V. Averill Grocery Co., 109 Iowa 488, 80 N. W. 555 ; Tierney v. Butler, 144 Iowa 553, 123 N. W. 213; Lind- say V. Arlington Co-op. Assn., 186 Mass. 371, 71 N. E. 797; Leonard v. Draper, 187 Mass. 536, Ti N. E. 644; Porter v. Plymouth Gold Min. Co., 29 Mont. 347, 74 Pac. 938, 101 Am. St. 569; Fremont Carriage Mfg. Co. V. Thompson, 65 Nebr. 370, 91 N. W. 376; Hartley v. Pioneer Iron Works, 181 N. Y. 73, Ti N. E. 576 (assumed to be true without discussion) ; Moses V. Soule, 63 Misc. (N. Y.) 203, 118 N. Y. S. 410; Adam v. New England Inv. Co.. 33 R. I. 193, 80 Atl. 426; Howe Grain & Mercantile Co. v. Jones, 21 Tex. Civ. App. 198, 51 S. W. 24 ; Rogers v. Ogden Bldg. & Sav. Assn., 30 Utah 188, 83 Pac. 754; United States Mineral Co. v. Camden, 106 Va. 663, 56 S. E. 561, 117 Am. St. 1028; Atlanta &c. Cheese Assn. v. Smith, 141 Wis. ill, 123 N. W. 106, 32 L. R. A. (N. S.) 137; Pabst v. Goodrich, 133 Wis. 43, 113 N. W. 398, 14 Am. & Eng. Ann. Cas. 824; Gilchrist v. Highfield, 140 Wis. 476, 123 N. W. 102. When the corpora- tion has this power it may borrow money on mortgage to pay for them. Mannington v. Hocking Valley R. Co., 183 Fed. 133. It cannot by pur- chases of its own stock reduce the amount thereof below the minimum fixed by its charter. Dalton Grocer Co. V. Blanton, 8 Ga. App. 809, 70 S. E. 183. ™ Tiger v. Rogers Cotton &c. Gin Co., 96 Ark. 1, 130 S. W. 585-, 30 L. R. A. (N. S.) 694n; McGregor v. Fitzpatrick, 133 Ga. 332, 65 S. E. 859, 25 L. R. A. (N. S.) 50n. ™Hall V. Henderson, 126 Ala. 449, 28 So. 531, 61 L. R. A. 621, 85 Am. St. 53. See also, cases cited ante, note 85. "Scham V. Brandt (Md.), 82 Atl. 551 ; Johnson v. Bush, 3 Barb. Ch. (N. Y.) 207; Gillet v. Moody, 3 N. Y. 479. ""McGregor v. Fitzpatrick, 133 Ga. 332, 65 S. E. 859, 25 L. R. A. (N. S.) 50n ; German Sav. Bank v. Wulfe- kuhler, 19 Kans. 60. 805 PRIVATE CORPORATIONS. § S48 the right to purchase shares of its own stock, either for the pur- pose of reissuing or retiring them.'* All authorities concede that a corporation may acquire its own stock to secure a debt due to the corporation from a stockholder.'* In sales of its own stock, a contract of a corporation limiting the liability of its stockholders to a portion of the par value of their stock is void both as to creditors and an assignee in bankruptcy. The relation of a stockholder who has not paid for his stock to the corpora- tion is the ordinary one of debtor.'^ § 548. Power of one corporation to purchase and hold stock in another corporation. — The prevailing doctrine of this country is that one corporation cannot, unless expressly au- thorized, make a valid subscription to, or purchase the capital stock of other corporations or otherwise become a stockholder therein except in payment of or as security for a debt, or unless the circumstances are such that the transaction is a necessary or reasonable means of carrying out or effectuating the object of the corporation acquiring such stock."" A corporation may, how- •' Trevor v. Whitworth, L. R. 12 ""Edwards v. Schillinger, 245 III. App. Cas. 409; Bellerby v. Rowland 231,' 91 N. E. 1048, 137 Am. St. 308; &c. Steamship Co. (1902), 2 Ch. 14; Upton v. Tribilcock, 91 U. S. 45, 23 Hall & Farley v. Alabama Terminal L. ed. 203. See 4 Thomp. on Corp. & Improvement Co. (Ala.), 56 So. (2d ed.), § 3911, citing many cases. 235; Hall & Farley v. Alabama Ter- It is held in Indiana that an agree- minal & Improvement Co., 143 Ala. ment to accept a certain per cent, as 464, 39 So. 285, 2 L. R. A. (N. S.) payment in full is binding on the cor- 130, 5 Am. & Eng. Ann. Cas. 363 ; poration and will be binding on a McGregor v. Fitzpatrick, 133 Ga, 332, creditor who has knowledge of such 65 S. E. 859, 25 L. R. A. (N. S.) agreement and if it is contained in SOn; Maryland Trust Co. v. National the recorded articles of incorporation Mechanics' Bank, 102 Md. 608, 63 this public record is notice to cred- Atl. 70; Scham v. Brandt (Md.), 82 itors. Bent v. Underdown, 156 Ind. Atl. 551; St. Louis Rawhide C(j. v. 516 60N. E. 307. Hill, 72 Mo. App. 142; Merchants' ■» Lanier Lumber Co. v. Rees, 103 Nat. Bank v. Overman Carriage Co., Ala. 622, 16 So. 637, 49 Am. St. 57; 17 Ohio C. C. 253, 9 Ohio C. D. 738. McAlester Mfg. Co. v. Florence Cot- See also, Clark v. E. C. Clark's Ma- ton &c. Co., 128 Ala. 240, 30 So. chine Co., 151 Mich. 416, 115 N. W. 632; Lester v. Bemis Lumber Co., 416, which lays down the rule that 71 Ark. 379, 74 S. W. 518; Knowles "the assets of a corporation cannot v. Sandercock, 107 Cal. 629, 40 Pac. be used by it in the purchase of its 1047; Glengary Consol. Min. Co. outstanding stock to the exclusion of v. Boehper, 28 Colo. 1, 62 Pac. 839; subsequent creditors." Mechanics' &c. Sav. Bank v. Meri- " Union Nat. Bank v. Hunt, 7 Mo. den Agency Co., 24 Conn. 159 ; Byrne App. 42- Taylor v. Exporting Co., 6 v. Schuyler Elec. Mfg. Co., 65 Conn. Ohio 176; Morgan v. Lewis, 46 Ohio 336, 31 Atl. 833, 28 L. R. A. 304; St 1, 17 N E. 558. See also, cases Rothchild v. Memphis &c. R Co., 113 cited ante, note 88. Fed. 476, 51 C. C. A. 310; Central R. § 548 CONTRACTS. 806 ever, have express"^ or implied"^ authority to subscribe for or to take and hold shares of stock in another corporation. Co. V. Collins, 40 Ga. 582; Military &c. Assn. V. Savannah &c. R. Co., 105 Ga. 420, 31 S. E. 200; People v. Chi- cago Gas Trust Co., 130 111. 268, 22 N. E. 798, 8 L. R. A. 497n, 17 Am. St. 319; Dunbar v. American Tel. &c. Co., 224 111. 9, 79 N. E. 423, 115 Am. St. 132; New Orleans &c. Steamship Co. V. Ocean Dry Dock Co., 28 La. Ann. 173, 26 Am. Rep. 90; Franklin Co. V. Lewiston Inst, for Savings, 68 Maine 43, 28 Am. Rep. 9n; Hunt v. Hauser Malting Co., 90 Minn. 282, 96 N. W. 85 ; Woodberry v. McCkirg, 78 Miss. 831, 29 So. 514; MacGinniss V. Boston &c. Min. Co., 29 Mont. 428, 75 Pac. 89; State v. People's &c. Bank, 197 Mo. 574, 94 S. W. 953; Bank of Commerce v. Hart, Zl Nebr. 197, 55 N. W. 631, 20 L. R. A. 780, 40 Am. St. 479; Pearson v. Con- cord R. Co., &1 N. H. 537, 13 Am. St. 590; Coler v. Tacoma R. &c. Co., 65 N. T. Eq. 347, 54 Atl. 413, 103 Am. St. 786; In re Delaware River &c. R. Co., lb N. J. L. 163, 68 Atl. 1104; Nassau Bank v. Jones, 95 N. Y. 115, 47 Am. Rep. 14; Holmes & Griggs Mfg. Co. V. Holmes & Wessell Metal Co., 127 N. Y. 252, 27 N. E. 831, 24 Am. St. 448; Franklin Bank v. Com- mercial Bank, 36 Ohio St. 350, 38 Am. Rep. 594; Valley R. Co. v. Lake Erie Iron Co., 46 Ohio St. 44, 18 N. E. 486, 1 L. R. A. 412; jNIc^Iillan v. Carson Hill &c. Min. Co., 12 Phila. (Pa.) 404, 35 Leg. Int. (Pa.) 163; Marble Co. v. Harvey, 92 Tenn. 115, 20 S. W. 427, 18 L. R. A. 252n, 36 Am. St. 71 ; McCampbell v. Fountain Head R. Co.. Ill Tenn. 55, 17 S. W. 1070, 102 Am. St. 731; Clark v. Mem- phis St. R. Co. (Tenn.), 130 S. W. 751; Pearce v. Madison &c. R. Co., 21 How. (U. S.) 441, 16 L. ed. 184; De La Vergne Refrigerating &c. Co. V. German Sav. Inst., 175 U. S. 40, 44 L. ed. 65, 20 Sup. Ct. 20; First Nat. Bank v. Converse, 200 U. S. 425, SO L. ed. 537, 26 Sup. Ct. 306; Denny Hotel Co. v. Gilmore, 6 Wash. 152, 32 Pac. 1004. "If a corporation can purchase any portion of the caj)- ital stock of another corporation it can purchase the whole, and invest all its funds in that way, and thus be enabled to engage exclusively in a business entirely foreign to the pur- poses for which it was created. A banking corporation could become a manufacturing corporation, and the manufacturing corporation could be- come a banking corporation. This the law will not allow." Franklin Co. V. Lewiston Inst, for Sav., 68 Maine 43, 28 Am. Rep. 9. This rule pro- hibits subscriptions for stock of an- other company. Merchants' &c. Co. V. Streuby, 91 Miss. 211, 44 So. 791, 124 Am. St. 651. Exceptions exist to the general rule. See Elliott Priv. Corp. (4th ed.), § 191. "Windmuller v. Standard Distil- ling Co., 114 Fed. 491; Ingrahara v. National Salt Co., 130 Fed. 676, 65 C. C. A. 54; Atchison &c. R. Co. v. Fletcher, 35 Kans. 236, 10 Pac. 596; Greene v. Middlesborough Town & Lands Co., 121 Ky. 355, 28 Ky. L. 303, 89 S. W. 228 ; Oil City Land &c. Co. V. Porter, 99 Ky. 254, 18 Ky. L. 151, 35 S. W. 643; MacGinniss v. Boston &c. Min. Co., 29 Mont. 428, 75 Pac. 89; Robotham v. Prudential Ins. Co., 64 N. J. Eq. 673, 53 Atl. 842 ; Rubino v. Pressed Steel Car Co. (N. J. Eq.), 53 Atl. 1050; Dittman v. Distilling Co., 64 N. J. Eq. 537, 54 Atl. 570 ; White v. Syracuse &c. R. Co., 14 Barb. (N. Y.) 559; In re Buffalo &c. R. Co., 74 N. Y. St. 345, Zl N. Y. S. 1048; Oelbermann v. New York & N. R. Co., n Hun (N. Y.) 332, 59 N. Y. St. 881, 60 N. Y. St. 876, 29 N. Y. S. 545, 7 Misc. (N. Y.) 352, 27 N. Y. S. 945; Motter v. Kennett Tp. Elec. Co., 212 Pa. 613, 62 Atl. 104 ; Zabris- kie v. Cleveland &c. R. Co., 23 How. (U. S.) 381, 16 L. ed. 488; Northern Securities Co. v. United States, 193 U. S. 197, 48 L. ed. 679, 24 Sup. Ct. 436. ""Miner's Ditch Co. v. Zellerbach, Z7 Cal. 543, 99 Am. Dec. 300n; Hill V. Nisbet, 100 Ind. 431; Calumet Paper Co. v. Scotts Investment Co., 96 Iowa 147, 64 N. W. 782, 59 Am. St. 362; Iowa Lumber Co. v. Foster, 49 Iowa 25, 31 Am. Rep. 140; Ryan V. Leavenworth &c. R. Co., 21 Kans. 365; Holmes & Griggs Mfg. Co. v. Holmes & Wessell Metal Co., 127 N. 8o7 PRIVATE CORPORATIONS. § 548 As exceptions to the general rule that a corporation cannot acquire stock in another corporation it is said that it may acquire stock in the usual course of its business as it may other prop- erty. Thus it may take the stock of another corporation in pay- ment or satisfaction of a debt/' or take such stock in payment of property sold to a corporation/ One corporation may also take the stock of another corporation as collateral security for a debt, or, what is equivalent, for the purpose of securing an existing indebtedness.^ The foregoing rule applies to national Y. 2S2, 27 N. E. 831, 24 Am. St. 448. The fact that one corporation owns a majority or all of the stock of another corporation does not va- cate or destroy the charter or corpo- rate rights of the latter corporation. It retains its separate corporate en- tity, and has all the powers and rights which it would otherwise have if its stock were in the hands of a num- ber of individual holders. Color Oil &c. Co. v. Franzell, 128 Ky. 715, 109 S. W. 328, 36 L. R. A, (N. S.) 456. The fact that one railroad controls another by owning a majority of its stock and has made it a part of a sys- tem, does not render it liable for the contracts of the controlled road if the latter is in fact a legally distinct and separate organization. Stone v. Cleveland &c. R. Co., 202 N. Y. 352, 95 N. E. 816, 35 L. R. A. (N. S.) 770, and note. " Morgan v. King, 27 Colo. 539, 63 Pac. 416; Taylor County Court v. Bal- timore &c. R. Co.. 35 Fed. 161; Citi- zens' State Bank v. Hawkins, 71 Fed. 3€9, 18 C. C. A. 78, 34 U. S. App. 423 ; White V. Marquardt (Iowa), 70 N. W. 193 ; Fidelity Ins. Co. v. German Sav. Bank, 127 Iowa 591, 103 N. W. 958; First National Bank v. National Exch. Bank, 39 Md. 600; Howe v Boston Carpet Co., 16 Gray (Mass.) 493; Hill v. Shilling. 69 Nebr. 152, 95 N. W. 24 ; Westminster Nat. Bank V. New England Elec. Works, 73 N. H. 465, 62 Atl. 971, 3 L. R. A. (N. S.) 551n, 111 Am. St. 637; Holmes & Griggs Mfg. Co. v. Holmes & Wessell Metal Co., 127 N. Y. 252, 27 N. E. 831, 24 Am. St. 448, 1 Keener's Cas. 730 ; Tourtelot v. Whithed, 9 N. Dak. 407, 84 N. W. 8; Franklin Bank v. Commercial Bank, 36 Ohio St. 350, 38 Am. Rep. 594; Hodges v. New England Screw Co., 1 R. I. 312, S3 Am. Dec. 624n. But see Buckeye Marble &c. Co. v. Harvey, 92 Tenn. 115, 20 S. W. 427, 18 L. R. A. 252n, 36 Am. St. 71; Fleckner v. Bank, 8 Wheat. (U. S.) 338, 5 L. ed. 631; First National Bank v. National Exch. Bank, 92 U. S. 122, 23 L. ed. 679, 51 How. Pr. (N. Y.) 320; Merchants' Nat. Bank v. Wehrmann, 202 U. S. 295, 50 L. ed. 1036, 26 Sup. Ct. 613. ^ Miner's Ditch Co. v. Zellerbach, 37 Cal. 543, 99 Am. Dec. 300n; Tay- lor v. North Star &c. Min. Co., 79 Cal. 285, 21 Pac. 753; Leathers v. Janney, 41 La. Ann. 1120, 6 So. 884, 6 L. R. A. 661 ; Hodges v. New England Screw Co., 1 R. I. 312, S3 Am. Dec. 624n; Hibernia Ins. Co. v. St. Louis & N. O. Transport Co., 4 McCrary (U. S.) 432, 13 Fed. 516. ' Asiatic Banking Corp., In re, L. R. 4 Ch. 252 ; Exchange Bank v. Fletcher, 19 Can. Sup. Ct. 278; Geddes v. La Banque Jacques Cartier, 24 Lower Can. Jurist 135 ; Montreal Bank v. Geddes, 3 Leg. News (Lower Can.) 146; Memphis &c. R. Co. v. Woods, 88 Ala. 630, 7 So. 108, 7 L. R. A. 605n, 16 Am. St. 81; Kennedy v. Califor- nia Sav. Bank, 101 Cal. 495, 35 Pac. 1039, 40 Am. St. 69; Knowles v. San- dercock, 107 Cal. 629, 40 Pac. 1047; Citizens' State Bank v. Hawkins, 7l Fed. 369, 18 C. C. A. 78, 34 U. S. App. 423 ; McCutcheon v. Merz Cap- sule Co., 71 Fed. 787, 19 C. C. A. 108, 3] L. R. A. 415 ; Metcalf v. American School Furn. Co., 122 Fed. 115; Calu- met Paper Co. v. Scotts Inv. Co., 96 Iowa 147, 64 N. W. 782, 59 Am. St. 362; United States Trust Co. v. Brady, 20 Barb. (N. Y.) 119; Milbank v. New York &c. R. Co., 64 How. Pr. 549 CONTRACTS. 808 banks/ The purpose of the general rule first stated would seem to be to prevent a deliberate and permanent investment of a cor- poration's assets in the stock of another corporation.* § 549. Power to appoint agents. — The very fact that a cor- poration is an artificial person makes it impossible for it to act except through agents. Corporations must have the power to make contracts appointing necessary agents as an incident to their existence. The board of directors and managing ofificers are themselves only agents of the corporation. ° The power to select or appoint the directors rests with the stockholders." The di- rectors and trustees have as a general rule the right to select man- aging officers and to appoint such agents as they may desire or delegate their power to a managing officer.'' No formalities are required in the appointment of agents unless provided for by charter.* Corporations have implied powers to employ agents (N. Y.) 20; Talmage v. Pell, 7 N. Y. 328; Hodges v. New England Screw Co., 1 R. I. 312, 53 Am. Dec. 624n; Germania Nat. Bank v. Case, 99 U. S. 628, 25 L. ed. 448 ; California Nat. Bank v. Kennedy, 167 U. S. 362, 42 L. ed. 198, 17 Sup. Ct. 831; Shoe- maker V. National Mechanics' Bank, 2 Abb. (U. S.) 416, 1 Hughes (U. S.) 101, 21 Fed. Cas. 12801. See, how- ever, Franklin Bank v. Commercial Bank, 36 Ohio St. 3S0, 38 Am. Rep. 594. ' Kennedy v. California Sav. Bank, 101 Cal. 495, 35 Pac. 1039, 40 Am. St. 69; Chemical Nat. Bank v. Haver- male, 120 Cal. 601, 52 Pac. 1071, 65 Am, St. 206; Westminster Nat. Bank V. New England Elec. Works, 73 N. H. 465, 62 Atl, 971, 3 L, R, A, (N, S,) 551n, 111 Am, St, 637; Fulton v. Na- tional Bank, 26 Tex. Civ. App. 115, 62 S. W. 84; First Nat. Bank v. Na- tional Exch. Bank, 92 U. S. 122, 23 L, ed, 679, ' See Elyton Land Co. v. Dowdell, 113 Ala, 177, 20 So. 981, 59 Am. St. 105 ; Howe v. Boston Carpet Co., 16 Gray (Mass.) 493. ° Including the president. Lloyd & Co. v. Matthews, 223 III. 477, 79 N. E. 172, 7 L. R. A. (N. S.) 376n, 114 Am. St. 346. See, however, Amer- ican Soda Fountain Co. v. Stolzen- bach, 75 N. J. L. 721, 68 Atl. 1078, 127 Am. St. 822, which lays down the rule that an officer exercises the corporate powers of the institution in the only way in which they can be exercised at all. " 'He acts directly and in chief, and not by delegation.' " "Moses v. Tompkins, 84 Ala. 613, 4 So. 763 ; Southern Electric Securi- ties Co, V, State, 91 Miss, 195, 44 So, 785, 124 Am. St. 638; State v. Mc- CoUough, 3 Nev. 202. ' See Moses v. Tompkins, 84 Ala. 613, 4 So. 763 ; Coleman v. West Vir- ginia Oil &c. Co., 25 W. Va. 148. The stockholders have no pov/er to make such selections where the charter vests it in the directors. Walsenburg Water Co. v. Moore, 5 Colo. App. 144, 38 Pac. 60; In re, St. Helen Mill Co., 3 Sawy. (U. S.) 88, 21 Fed. Cas. No. 12222, But in the absence of charter provision or by-law to the contrary, the regular officers must, as a general rule, be chosen by the body of the corporators. State v, Ancker, 2 Rich, L, (S, Car,) 245; Angell & Ames Corp,, § 277, "Sherman v. Fitch, 98 Mass. 59; Roberts v. Demens Woodworking Co,, 111 N, Car, 432, 16 S, E, 415; Bank of United States v, Dandridge, 12 Wheat. (U. S.) 64, 6 L. ed. 552. 8o9 PRIVATE CORPORATIONS. 549 for purposes expressly or impliedly conferred by charter.' Thus it has been held that a corporation can employ an, attorney to prosecute and defend actions for or against it, regardless of the nature of the transactions involved." It may also make valid agreements to compensate an agent for obtaining subscriptions for its stock.^^ A corporation cannot appoint an agent to accomplish a purpose expressly or impliedly foreign to the object of its incorporation.^^ If the corporation could not carry on a particular business it could not do it indirectly through the appointment of trustees or agents who should continue the business for its benefit.^^ An agent's authority to act for a corporation may be implied.^* But the fact that the stockholders in two corporations are the same, or that one corporation exercises a control over the other through ownership of its stock, or through the identity of the stock- holders, such corporations being separately organized under distinct charters, does not make either the agent of the other, ° Metropolitan Coal &c. Assn. v. Scrimgeour (1895), 2 Q. B. 604; Alabama &c. R. Co. v. Kidd, 29 Ala. 221 ; Arapahoe Cattle &c. Co. v. Stev- ens, 13 Colo. 534, 22 Pac. 823; Gar- rison V. Combs, 7 J. J. Marsh. (Ky.) 84, 22 Am. Dec. 120; Kitchen v. Cape Girardeau & S. L. R. Co., 59 Mo. 514; Sistare v. Best, 88 N. Y. 527. "Corporations act exclusively by agents." Cushman v. Cloverdale Coal &c. Co., 170 Ind. 402, 84 N. E. 759, 127 Am. St. 391. " Pixley V. Western Pacific R. Co., 33 Cal. 183, 91 Am. Dec. 623; Na- tional Bank v. Earl, 2 Okla. 617, 39 Pac. 391. " Cincinnati R. Co. v. Clarkson, 7 Ind. 595. See also, Chicago &c. R. Co. V. James, 24 Wis. 388. "In re Phoenix Life Assur. Co., 1 Hem. & M. 433; George v. Nevada Central R. Co., 22 Nev. 228, 38 Pac. 441. ^Williams v. Johnson, 208 Mass. 544, 95 N. E. 90. "The practice of law is not a lawful business for a cor- poration to engage in._ As it cannot practice law directly, it cannot indi- rectly by employing competent law- yers to practice for it, as that would be an evasion which the law will not tolerate." In re Co-Operative Law Co., 198 N. Y. 479, 92 N. E. 15, 139 Am. St. 839. To same effect. In re Certain Lands in City of New York, 128 N. Y. S. 999. "Metzger v. Southern Bank, 98 Miss. 108, 54 So. 241. See also. Pan- handle Tel. &c. Co. V. Kellogg Switchboard & Supply Co. (Tex. Civ. App.), 132 S. W. 963. A corporation is bound by the acts of its agent within the apparent scope of his au- thority. Curtis Land &c. Co. v. In- terior Land Co., 137 Wis. 341, 118 N. W. 853, 129 Am. St. 1068. To same effect, Winer v. Bank of Blytheville, 89 Ark. 435, 117 S. W. 232, 131 Am. St. 102; Stevens v. Selma Fruit Co. (Cal. App.), 123 Pac. 212. A person who contracts with a corporation is not bound to know of a by-law limit- ing the power of the agent to make the customary contracts appertaining to the business he is authorized to contract. Barber v. Stromberg-Carl- son Tel. Mfg. Co., 81 Nebr. 517, 116 N. W. 157, 129 Am. St. 703. § 55° CONTRACTS. 8lO nor merge them into one, so as to make the contract of one cor- poration binding upon the other.^^ § 550. Power to appoint agent — Ratification. — It is also well settled that when a corporation accepts or ratifies a contract, which is within the scope of its powers, made by an unauthorized person, it becomes the contract of the corporation.^" A corpo- ration, like a natural person, may ratify any act which it can per- form.^' The doctrine that one cannot ratify an agreement made by another who was not at the time acting, and did not profess or assume to be acting, on behalf of a princip^al, applies to a cor- poration.^' § 551. Power to act as agent. — A corporation may or may not have the power to act as an agent according to the nature and character of its business. Certain classes of corporations may be expressly empowered to act in the caf)acity of agents." The general rule has been stated as follows : "Within the scope of its corporate powers, unless there are express provisions in its charter, or constating instruments to the contrary, a corporation may act as agent, either for an individual, a partnership or an- other corporation. Many of the great corporations of the coun- try are organized for this express purpose under statutes or char- ters conferring and defining their powers and the methods of executing them; but even in other cases, authority so to act ^"Richmond &c. Co. v. Richmond (N. S.) 347. See also, Florida Coca &c. R. Co., 68 Fed. 105, IS C. C. A. Cola Bottling Co. v. Richer, 136 Ga. 289, 34 L. R. A. 625. 411, 71 S. E. 734. "A corporation is " Rowley v. Stack-Gibbs Lumber governed, like an individual, by the Co., 19 Idaho 107, 112 Pac. 1041. See same principles as to the ratification also, Stevens v. Knights of Modern of the acts of its agents and as to es- Maccabees (Mo.), 132 S, W. 757. toppel in pais." Metzger v. Southern *' Rowley v. Stack-Gibbs Lumber Bank, 98 Miss. 108, 54 So. 241. To Co., 19 Idaho 107, 112 Pac. 1041. same effect, Parsons Mfg. Co. v. "Ratification can only be made by one Hamilton Ice Mfg. Co. (N. J.), 73 who has power to make the contract Atl. 254; Knowles v. Northern Texas in the first instance." Cushman v. Tract. Co. (Tex. Civ. App.), 121 S. Cloverland Coal &c. Co., 170 Ind. 402, W. 232. For a good discussion of the 84 N. E. 759, 127 Am. St. 391. (The general principles governing _ ratifica- above case is one in which medical tion see Thompson v. Labouringman's services to be rendered an injured &c. Co., 60 W. Va. 42, 53 S. E. 908, employe were contracted for.) 6 L. R. A. (N. S.) 311. "■^ Schlesinger v. Forest Products '"Frostburg Mutual Bldg. Assn. v. Co. (N. J.), 76 Atl. 1024, 30 L. R. A. Lowdermilk, SO Md. 175. 8ll PRIVATE CORPORATIONS. § 552 might be implied as auxiliary to their main purposes."^'' Thus a bank has been held to have the power to enter into a contract of agency and to undertake to sell certain stock at a stated price within a given time.^^ A corporation cannot, however, act as an agent for another in transactions wholly outside the purposes of its charter.^^ But there are some apparent exceptions to the rule. Thus it has been held that a bank may, as an incident to its power to collect collaterals, act as the debtor's agent in making sale of the collaterals.^^ Nor does the rule apply to cor- porations organized for the express purpose of acting in the ca- pacity of agents.^* It has also been held that where a corporation acted as agent for an undisclosed principal it must be regarded as principal and liable as such, but that this did not defeat the right to set up the defense of ultra vires, and that the corporation could not be held liable as agent if the agreement was one it could not have entered into as principal.^^ At this point it might not be out of place to again mention that corporations as a gen- eral rule have no power to enter into partnership relations with individuals or other corporations, or to make agreements which will create a partnership.^* § 552. Power to make extra-territorial contracts. — The extra-territorial contracts of a corporation will be held valid if they are: first, within the scope of the powers conferred upon such corporation by the law of the state of its organization; sec- ondly, if permitted, or, rather, not prohibited, by the law of the state within which the contract is made or where it is to be ='°Mechem on Agency, § 64. See of Education &c., 6 Okla. 279, SO also. State v. Michel, 112 La. 4, 36 So. Pac. 236; First Nat. Bank v. Hoch, 869; Killingsworth v. Portland Trust 89 Pa. St. 324, 33 Am. Rep. 769. Co., 18 Ore. 351, 23 Pac. 66, 7 L. R. "^ Anderson v. First Nat. Bank. S A. 638, 17 Am. St. m ; McWilliams N. Dak. 451, 67 N. W. 821. V. Detroit &c. Mills Co., 31 Mich. 274. "^ Snow &c. Co. v. Hall, 19 Misc. ''Cause V. Commonwealth Trust (N. Y.) 655, 44 N. Y. S. 427. Co., 44 Misc. (N. Y.) 46, 89 N. Y. S. ="Jemison v. Citizens' Sav. Bank, 723 122 N. Y. 135, 25 N. E. 264, 9 L. R. ''Westinghouse Mach. Co. v. Wil- A. 708, 19 Am. St. 482, 1 Keener's kinson, 79 Ala. 312; Farmers' &c. Nat. Cases 819. Bank v. Smith, 11 Fed. 129, 23 C. C. _ '° "It is familiar law that a corpora- A. 80, 40 U. S. App. 690; Jemison v. tion cannot enter into a partnership." Citizens' Sav. Bank, 122 N. Y. 135, Williams v. Johnson, 208 Mass. 544, 25 N. E. 264, 9 L. R. A. 708. 19 Am. 95 N. E. 90. See ante, § 483, Part- St. 482, 1 Keener's Cas. 819; Peck- nership. Who May be Partners. , Williamson Heating &c. Co. v. Board I § 553 CONTRACTS. 8l2 performed.^^ It is well settled that on the principle of comity corporations may make contracts outside the state of their crea- tion. A corporation may generally make and take contracts in any other state unless prohibited by the laws of the latter com- monwealth.^* Thus a deed of land belonging to a Missouri cor- poration, executed by its directors, to a corporation organized under the laws of England, although executed and delivered in England, has been held valid.^' Where the validity of a contract of a foreign corporation is questioned it will not be presumed, in the absence of proof, that there is a restriction in its charter or in the laws of the state of its creation prohibiting it from mak- ing such contract.^" The contract of a foreign corporation will be presumed valid.^^ § 553. Extra-territorial contracts — What law governs. — As a general rule, the contract of a foreign corporation is gov- " See, generally, Mumford v. Amer- ican Life Ins. &c. Co., 4 N. Y. 463; Bard v. Poole, 12 N. Y. 495; New York &c. Derrick v. New Jersey Oil Co., 3 Duer. (N. Y.) 648; Bank v. Earle, 13 Pet. (U. S.) 519, 10 L. ed. 274; Connecticut &c. Ins. Co. v. Cross, 18 Wis. 109. "Natural persons, through the intervention of their agents, are continually making con- tracts in countries in which they do not reside, and where they are not personally present when the contract is made ; and nobody has ever doubted the validity of these agree- ments. And what greater objection can there be to the capacity of an ar- tificial person by its agents to make a contract within the scope of its lim- ited powers, in a sovereignty in which it does not reside, provided such con- tracts are permissible by the laws of the place?" Bank of Kentucky v. Schuylkill Bank, 1 Par. Eq. Cas. (Pa.) 180, 225. The above statement is, however, slightly misleading. A natural person with capacity to con- tract may enter into any agreement not prohibited by public policy or the laws of the state where it is made, while a corporation is created for a specific purpose and can only contract within the limits of its charter, as this is the law of its being and measures the extent of its capacity in this re- spect. Blair v. Perpetual Ins. Co., 10 Mo. 559, 47 Am. Dec. 129. '''Wood Hydraulic &c. Min. Co. v. King, 45 Ga. 34; Lathrop v. Com- mercial Bank, 8 Dana (Ky.) 114, 33 Am. Dec. 481 ; Frazier v. Willcox, 4 Rob. (La.) 517; Saltmarsh v. Spaul- ding, 147 Mass. 224, 17 N. E. 316; Williams v. Creswell, 51 Miss. 817; Blair v. Perpetual Ins. Co., 10 Mo. 559, 47 Am. Dec. 129; People v. Priest, 126 N. Y. S. 472; Stoney V. American Life Ins. Co., 11 Paige (N. Y.) 635; Bard v. Poole, 12 N. Y. 495 ; Milnor v. New York &c. R. Co., 53 N. Y. 363 ; Kerchner v. Gettys, 18 S. Car. 521; Ohio &c. Trust Co. v. Merchant's Ins. &c. Co., 11 Humph. (Tenn.) 1, 53 Am, Dec. 742; Tom- bigby R. Co. v. Kneeland, 4 How. (U. S.) 16, 11 L. ed. 855; Bank of Marietta v. Pindall, 2 Rand. (Va.) 465. "* Missouri Lead Min. & Smelting Co. v. Reinhard, 114 Mo. 218, 21 S. W. 488, 35 Am. St. 746. °° Boulware v. Davis, 90 Ala. 207, 8 So. 84, 9 L. R. A. 601 ; New York &c. Derrick Co, v. New Jersey Oil Co., 3 Duer. (N. Y.) 648. "Ames V. Kruzner, 1 Alaska 598; Southern Lumber Co. v. Holt, 129 La. 273, 55 So. 986. See also, Chicago &c. 8i3 PRIVATE CORPORATIONS. § 554 erned by the laws of the state where the contract is executed (lex- loci contractus), and its validity determined thereby/^ If a for- eign corporation is permitted to enter another state the validity of its contracts with citizens of that state must be determined by the rules that apply to like contracts between citizens and do- mestic corporations.^^ The law of the forum controls as to the remedy. § 554. Foreign corporation subject to the laws of the state in which it seeks to do business. — Moreover, the state may fix the terms on which a foreign corporation not engaged in inter- state commerce may enter to do business.^* Thus the statutes of some states declare the contracts of a foreign corporation made without having complied with the statutory provisions of such state to be absolutely void.^^ By the statutes of other states such Trust Co. V. Bashford, 120 Wis. 281, 97 N. W. 940. See cases cited, ante, note 30. '^ See, generally, Alleghany Co. v. Allen, 69 N. J. L. 270, 55 Atl. 724; Washington Nat. BIdg. &c. Assn. v. Stanley, 38 Ore. 319, 63 Pac. 489, 58 L. R. A. 816, 84 Am. St. 793; Com- monwealth V. Biddle, 139 Pa. St. 60S, 21 Atl. 134, 11 L. R. A. 561; National &c. Loan Assn. v. Brahan, 193 U. S. 635, 48 L. ed. 823, 24 Sup. Ct. 532. See also. Holder v. Aultman, Miller & Co., 169 U. S. 81, 42 L. ed. 669, 18 Sup. Ct. 269. ^Security &c. Assn. v. Elbret, 153 Ind. 198, 54 N. E. 753. '* Queen City Fire Ins. Co. v. Bas- ford (S. D.), 130 N. W. 44. Such statutory restrictions do not apply to transactions constituting interstate commerce. F. A. Patrick & Co. v. DesChamp (Wis.), 129 N. W. 1096. See also, Ulmer v. First Nat. Bank, 61 Fla. 460, 55 So. 405; Hannis Dis- tilling Co. V. City of Baltimore, 114 Md. 678, 80 Atl. 319. But it has been held that a foreign railroad company may be compelled to incorporate in the state before it will be permitted to "acquire the right of way for, or purchase or hold land for, its depots, tracks or other purposes." Plummer V. Chesapeake &c. R. Co., 143 Ky. 102, 136 S. W. 162. »' Electric Lighting Co. v. Rust, 117 Ala. 680, 23 So. 751; Hanchey v. Southern Home Building & Loan Assn., 140 Ala. 245, 37 So. 272 ; Rock- ford Ins. Co. V. Rogers, 9 Colo. App. 121, 47 Pac. 848; Pittsburgh Const. Co. V. West Side Belt R. Co., 154 Fed. 929, 83 C. C. A. 501, 11 L. R. A. (N. S.) 1145; McCanna &c. Co. v. Citizens' Trust &c. Co., 76 Fed. 420, 24 C. C. A. 11, 35 L. R. A. 236; Dia- mond Glue Co. V. United States Glue Co., 103 Fed. 838; Hoskins v. Roches- ter Sav. & Loan Assn., 133 Mich. 505, 95 N. W. 566; Tri-state Amusement Co. V. Forest Park &c. Amusement Co., 192 Mo. 404, 90 S. W. 1020, 4 L. R. A. (N. S.) 688n, 111 Am. St. 511; Chicago &c. Lumber Co. v. Sims, 197 Mo. 507, 95 S. W. 344; United Shoe Mach. Co. V. Ramlose, 210 Mo. 631, 109 S. W. 567 ; Amalgamated Zinc &c. Co. V. Bay State Zinc Min. Co., 221 Mo. 7, 120 S. W. 31; Blevins v. Fairly, 71 Mo. 259; Ehrhardt v. Rob- ertson Bros., 78 Mo. App. 404; First Nat. Bank v. Leeper, 121 Mo. App. 688, 97 S. W. 636; Pioneer Sav, &c. Co. V. Eyer, 62 Nebr. 810, 87 N. W. 1058; Allegheny Co. v. Allen, 69 N. J. L. 270, 55 Atl. 724; Meyers Mfg. Co. V. Wetzel (Tenn. Ch. App.), 35 S. W. 896; Booth & Co, v. Weigand, 30 Utah 135, 83 Pac. 734, 10 L. R. A. (N, S.) 693n; Ashland Lumber Co. v. Detroit Salt Co., 114 Wis. 66, 89 N. W. 904; Chicago &c. Trust Co. v. 54 CONTRACTS. 814 contracts are voidable."" Many other statutes merely impose a penalty on the corporation for failure to comply with the statutes ; such enactments do not as a general rule affect the validity of contracts." Still other statutes do not affect the validity of contracts made in the state by a foreign corporation which has not complied with its statutory provisions but merely suspend the remedy and prevent any action thereon until compliance.^* Bashford, 120 Wis. 281, 97 N. W. 940; Allen V. Milwaukee, 128 Wis. 678, 106 N. W. 1099, S L. R. A. (N. S.) 680n, 116 Am. St. 54; Hanna v. Kelsey Realty Co., 145 Wis. 276, 129 N. W. 1080, 140 Am. St. 1075. See United Shoe Machinery Co. v. Ramlose, 210 Mo. 631, 132 S. W. 1133. The above case holds that the court will lend its aid to the protection of the rights of the parties when it can do so without giving effect to the void contract. Emerich Co. v. Sloane, 46 Misc. (N. Y.) 513, 95 N. Y. S. 39. ^Ames V. Kruzner, 1 Alaska 598; Mutual Benefit &c. Ins. Co. v. Winne, 20 Mont. 20, 49 Pac. 446. "Sherwood v. Alvis, 83 Ala. 115, 3 So. 307, 3 Am. St. 695 ; State &c. Ins. Assn. V. Brinkley Stave &c. Ins. Assn., 61 Ark. 1, 31 S. W. 157, 54 Am. St. 191, 29 L. R. A. 712; Utley V. Clark-Gardner Lode Min. Co., 4 Colo. 369; Kindel v. Beck & Pauli Lith. Co., 19 Colo. 310, 35 Pac. 538, 24 L. R. A. 31 In; Pangborn v. West- lake, 36 Iowa 546; Penneypacker v. Capital Ins. Co., 80 Iowa 56, 45 N. W. 408, 8 L. R. A. 236n, 20 Am. St. 395 ; Rogers & Co. v. Simmons, 155 Mass. 259, 29 N. E. 580; Clark v. Middleton & Riley, 19 Mo. 53; Connecticut River &c. Ins. Co. v. Whipple, 61 N. H. 61; Washburn Mill Co. v. Bart- lett, 3 N. Dak. 138, 54 N. W. 544, 1 Smith's Cas. 515; Union &c. Ins. Co. V. McMillen, 24 Ohio St. 67; Wright V. Lee, 2 S. Dak. 596, 51 N. W. 706, 4 S. Dak. 237, 55 N. W. 931; Edison General Elec. Co. v. Canadian Pac. Nav. Co., 8 Wash. 370, 36 Pac. 260, 24 L. R. A. 315n, 40 Am. St. 910; Toledo &c. Lumber Co. v. Thomas, 33 W. Va. 566, 11 S. E. Z1, 25 Am. St. 925; Thompson v. National Mut. &c. Loan Assn., 57 W. Va. 551, 50 S. E. 756. See, however, Dudley v. Collier, 87 Ala. 431, 6 So. 304, 13 Am. St. 55 ; Dundee Mortgage &c. Co. v. Nixon, 95 Ala. 318, 10 So. 311; Pennsylvania Ins. Co. v. Baulere, 143 111. 459, 33 N. E. 166; Cassady v. American Ins. Co., 72 Ind. 95; State v. Briggs, 116 Ind. 55, 18 N. E. 395; Franklin Ins. Co. V. Louisville &c. Packet Co., 9 Bush (Ky.) 590; Buxton v. Hamblen, 32 Maine 448; Reliance &c. Ins. Co. v. Sawyer, 160 Mass. 413, 36 N. E. 59; Seamans v. Temple Co., 105 Mich. 400, 53 N. W. 408, 28 L. R. A. 430, 55 Am. St. 457; Seamans v. Christian &c. Mills Co., 66 Minn. 205, 68 N. W. 1065; American Ins. Co. v. Smith, Ti Mo. 368; Barbor v. Boehm, 21 Nebr. 450, 32 N. W. 221 ; Stewart v. North- ampton &c. Ins. Co., 38 N. J. L. 436; Pennington & Kean v. Townsend, 7 Wend. (N. Y.) 276; Manhattan Ins. Co. V. Ellis, 32 Ohio St. 388; Bank of British Columbia v. Page, 6 Ore. 431 ; Thorne v. Travelers' Ins. Co., 80 Pa. St. 15, 21 Am. Rep. 89; Law Guarantee &c. Co. v. Jones, 103 Tenn. 245, 58 S. W. 219; Lycoming &c. Ins. Co. V. Wright, 55 Vt. 526 ; ^tna &c. Ins. Co. V. Harvey, 11 Wis. 394. =' Crefeld Mills v. Goddard, 69 Fed. 141; Goddard v. Crefield Mills, 75 Fed. 818, 21 C. C. A. 530; Sullivan V. Beck, 79 Fed. 200; Caesar v. Ca- pell, 83 Fed. 403; Simplex Dairy Co. V. Cole, 86 Fed. 739; Eastern Bldg. &c. Assn. V. Bedford, 88 Fed. 7; Kir- ven V. Virginia-CaroUna Chemical Co., 145 Fed. 288, 16 C. C. A. 172; Wood Mowing &:c. Mach, Co. v. Caldwell, 54 Ind. 270, 23 Am. Rep. 641 ; Domestic Sewing Mach. Co. v. Hatfield, 58 Ind. 187; American Ins. Co. V. Petti] ohn, 62 Ind. 382; Daly v. National Life Ins. Co., 64 Ind. 1; Singer Mfg. Co. v. Brown, 64 Ind. 548; Johnson v. State, 65 Ind. 204; Behler v. German Mut. &c. Ins. Co., 68 Ind. 347; American &c. Ins. Co. v. Wellman, 69 Ind. 413; Singer Mfg. 8iS PRIVATE CORPORATIONS. 554 In some jurisdictions the decisions relative to the power of a corporation to make extra-territorial contracts are in great con- fusion. Thus the Supreme Court of Indiana has said : "There is one line of decisions which holds that a contract entered into by a citizen of the state with a foreign corporation which has not complied with the statute, by the terms of which the citizen has bound himself to the corporation, is void, while another line of decisions hold that such contract is not void, but that the right to enforce it is suspended until the corporation has complied with the statute."^" It is well settled, however, that a foreign corporation which has been sued upon its contract cannot plead as a defense, its failure to comply with the statutes.*" But while the corporation may not set this up as a defense, it is entitled to de- fend any action brought against it. To prevent it from so doing would be to deny it equal protection of the laws and to deprive it of its property without due process of law.*^ The Supreme Co. V. Effinger, 79 Ind. 264; Elston V. Piggott, 94 Ind. 14; Security &c. Assn. V. Elbert, 153 Ind. 198, 54 N. E. 753; National &c. Ins. Co. v. Pursell, 10 Allen (Mass.) 231; Carson-Rand Co. V. Stern, 129 Mo. 381, 31 S. W. 772, 32 L. R. A. 420; Neuchatel As- phalte Co. V. New York, 155 N. Y. 373, 49 N. E. 1043; Davis Provision Co. V. Fowler, 20 App. Div. (N. Y.) 626, 47 N. Y. S. 205, affd., 163 N. Y. 580, 57 N. E. 1108; Providence Steam &c. Co. V. Connell, 86 Hun (N. Y.) 319, 67 N. Y. St. 196, 33 N. Y. S. 482; Huttig Bros. Mfg. Co. v. Denny Ho- tel Co., 6 Wash. 122, 32 Pac. 1073. In Illinois a foreign corporation can- not sue notwithstanding there is a subsequent compliance. Erie &c. Nav. Co. V. Central R. Equipment Co., 152 111. App. 278. ^"Phenix Ins. Co. v. Pennsylvania Co., 134 Ind. 215, 33 N. E. 970, 20 L. R. A. 405. '° Brooklyn Life Ins. Co. v. Bledsoe, 52 Ala. 538; Berry v. Knights Tem- plars &c. Indemnity Co., 46 Fed. 439; Diamond Plate Glass Co. v. Minne- apolis &c. Ins. Co., 55 Fed. 27 ; Sparks V. National Masonic Ace. Assn., 73 Fed. 277 ; In re Naylor Mfg. Co., 135 Fed. 206; Ray v. Home &c. Invest- ment & Agency Co., 98 Ga. 122, 26 S. E. 56; Watertown Fire Ins. Co. v. Rust, 141 111. 85, 30 N. E. 772, affg., 40 111. App. 119; Pennypacker v. Capi- tal Ins. Co., 80 Iowa 56, 45 N. W. 408, 8 L. R. A. 236n, 20 Am. St. 395; Sparks v. National Masonic Ace. Assn., 100 Iowa 458, 69 N. W. 678; Clay Fire Ins. Co. v. Huron Salt & Lumber Mfg. Co., 31 Mich. 346; Ganser v. Fireman's Fund Ins. Co., 34 Minn. 372, 25 N. W. 943 ; Williams V. Bank, 71 Miss. 858, 16 So. 238, 42 Am. St. 503; Evans v. Lee, 11 Nev. 194 ; Marshall v. Reading &c. Ins. Co., 78 Hun (N. Y.) 83, 60 N. Y. St. 820, affd., 149 N. Y. 617, 44 N. E. 1125, 29 N. Y. S. 334; Franzen v. Zimmer, 90 Hun (N. Y.) 103, 70 N. Y. St. 407, 35 N. Y. S. 612; Union &c. Ins. Co. V. McMillen, 24 Ohio St. 67; New- burg Petroleum Co. v. Weare, 27 Ohio St. 343 ; Swan v. Watertown &c. Ins. Co., 96 Pa. St. 37; Watertown Fire Ins. Co. v. Simons, 96 Pa. St. 520; Kilgore v. Smith, 122 Pa. St. 48, 15 Atl. 698; Hoge v. Dwelling- House Ins. Co., 138 Pa. St. 66, 20 Atl. 939; Lasher v. Stimson, 145 Pa. St. 30, 23 Atl. 552; Ehrman v. Teutonia Ins. Co., 1 McCrary (U. S.) 123, 1 Fed. 471. " American De Forrest &c. Co. v. Superior Court, 153 Cal. 533, 96 Pac IS, 126 Am. St. 125. See also. Rib Falls Lumber Co. v. Lesh &c. Lum- 555 CONTRACTS. 8l6 Court of Alabama has in a number of cases laid down the rule that where a contract between a foreign corporation and a citizen of that state has been fully executed the court will not lend its aid to either party to be relieved of its effect, thus treating the contract as illegal because made in violation of the statutes and the parties as being in pari delicto.*^ § 555. Contracts made before incorporation. — A corpora- tion can do no act and make no contract until it is brought into existence as such either de jure or de facto. Consequently the promoters of a corporation rather than the corporation are per- sonally liable for the contracts made by them or by agents author- ized by them preliminary to its organization.^* They cannot bind the corporation by their contracts made before the organization of the company/* except so far as it adopts or ratifies their acts either directly,*'* or in some cases by accepting the benefits of con- ber Co., 144 Wis. 362, 129 N. W. 595. *- Sherwood v. Alvis, 83 Ala. 115, 3 So. 307, 3 Am. St. 695 ; Craddock v. American &c. Mortgage Co., 88 Ala. 281, 7 So. 196; Long v. Georgia Pa- cific R. Co., 91 Ala. 591, 8 So. 706, 24 Am. St. 931; Gamble v. Caldwell, 98 Ala. 577, 12 So. 424; Russell v. Jones, 101 Ala. 361, 13 So. 145; Sha- han V. Tethero, 114 Ala. 404, 21 So. 951 ; Kindred v. New England Mort- gage Sec. Co., 116 Ala. 192, 23 So. 56. As to what constitutes doing business in a state see Parsons-Willis Lumber Co. V. Stuart, 182 Fed. 779; Neyens v. Worthington, 150 Mich. 580, 114 N. W. 404, 18 L. R. A. (N. S.) 142; Saxony Mills v. Wagner, 94 Miss. 233, 47 So. 899, 23 L. R. A. (N. S.) 834n; Penn Collieries Co. v. Mc- Keever, 183 N. Y. 98, 75 N. E. 935, 2 L. R. A. (N. S.) 127; Sucker State Drill Co. V. Wirtz, 17 N. Dak. 313, 115 N. W. 844, 18 L. R. A. (N. S.) 134; Berger v. Pennsylvania R. Co., 27 R. I. 583, 65 Atl. 261, 9 L. R. A. (N. S.) 1214n; A. Booth & Co. v. Weigand, 30 Utah 135, 83 Pac. 734, 10 L. R. A. (N. S.) 693n; Southwest- ern Slate Co. V. Stevens, 109 Wis. 606, 120 N. W. 408, 29 L. R. A. (N. S.) 92, 131 Am. St. 1074. ^ Sandusky Coal Co. v. Walker, 27 Out. 677; Colorado Land &c. Co. v. Adams, 5 Colo. App. 190, 37 Pac, 39; Hersey v. Tully, 8 Colo. App. 110, 44 Pac. 854; Carmody v. Powers, 60 Mich. 26, 26 N. W. 801. See also, Weiss V. Arnold Print Works, 188 Fed. 688. " Caledonian Ry. v. Helensburgh, 2 Macq. H. L. Cas. 391; Little Rock & Ft. S. R. Co. V. Perry, 37 Ark. 164; Perry v. Little Rock &c. R. Co., 44 Ark. 383, 25 Am. & Eng. R. Cases 44 ; New York &c. R. Co. v. Ketchum, 27 Conn. 170; Rockford &c. R. Co. v. Sage, 65 111. 328, 16 Am. Rep. 587; Sellers v. Greer, 172 111. 549, 50 N. E. 246, 40 L. R. A. 589 ; Tuttle v. George A. Tuttle Co., 101 Me. 287, 64 Atl. 496; Abbott v. Hapgood, 150 Mass. 248, 22 N. E. 907, 5 L. R. A. 586, 15 Am. St. 193 ; Carmody v. Powers, 60 Mich. 26, 26 N. W. 801 ; Hill v. Gould, 129 Mo. 106, 30 S. W. 181; Munson V. Syracuse &c. R. Co., 103 N. Y. 58, 8 N. E. 355, 29 Am. & Eng. R. Cas. 377. A promoter cannot bind the cor- poration by contract made in obtairi- ing a subscription before the organi- zation of the corporation. Joy v. Manion, 28 Mo. App. 55. "Payne v. New South Wales &c. Navigation Co., 10 Exch. 283 ; Hutch- inson V. Surrey Consumers' &c. Assn., 11 C. B. 689; Bloom v. Home Ins. Agency, 91 Ark. 367, 121 S. W. 293; 8l7 PRIVATE CORPORATIONS. § 556 tracts made for it," and impliedly adopting it/^ for the reason that a corporation cannot be a party to a contract made before its organization.** And strictly speaking, it is probably true for this reason that it cannot in a technical sense ratify such a con- tract, so as to relate back to a time prior to its corporate existence, but should rather be regarded as binding itself by a new contracr as of the date of the alleged ratification or adoption." § 556. Ultra vires — Different meanings of term, "ultra vires." — This is a subject about which much confusion has arisen mainly because the term, "ultra vires", has been loosely applied and used in different senses. In its proper and strict sense a contract which is beyond the scope of the powers granted by the act of incorporation or outside the objects for which it was cre- ated as defined by the laws of its organization and limited by the Colorado Land &c. Co. v. Adams, S v. Christy, 79 Pa. St. 54. See also, Colo. App. 190, 37 Pac. 39; Stanton Continental Trust Co. v. Toledo &c. V. New York &c. R. Co., 59 Conn. Co., 86 Fed. 929; Frankfort &c. Co. 272, 22 Atl. 300, 21 Am. St. llOn; v. Churchill, 6 T. B. Mon. (Ky.) 427, Cotting V. Grant &c. R. Co., 65 Fed. 17 Am. Dec. 159; Battelle v. North- 545 ; Wood v. Whelen, 93 111. 153 ; western Cement &c. Co., 37 Minn. 89, Low V. Connecticut &c. R. Co., 45 33 N. W. 327; Seymour v. Spring N. H. 370, 46 N. H. 284 ; Oaks v. Cat- Forest &c. Assn., 144 N. Y. 333, 39 taraugus Water Co., 143 N. Y. 430, 38 N. E. 365, 26 L. R. A. 859 ; Bommer N. E. 461, 26 L. R. A. 544; Pratt v. v. American Spiral &c. Co., 81 N. Y. Oshkosh Match Co., 89 Wis. 406, 62 468; Whitney v. Wyman, 101 U. S. N. W. 84. See also, American Home 392, 25 L. ed. 1050; Hall v. Vermont Life Ins. Co. v. Jenkins (Tex. Civ. & M. R. Co., 28 Vt. 401. See, how- App.), 138 S. W. 424. It has been ever, Richard Brown &c. Co. v. Bara- held that the president and general brick &c. Co. (Mo. App.), 131 S. W. manager may adopt and ratify a con- 134. Compare McArthur v. Times tract made by himself for the corpo- Printing Co., 48 Minn. 319, 51 N. W. ration before it was legally created, 216, 31 Am. St. 653. for service for the company which he " See further on this subject ante, would have authority to engage if no § 532. previous contract existed. Oakes v. " Holyoke Envelope Co. v. United Cattaraugus Water Co., 143 N. Y. States Envelope Co., 182 Mass. 171, 430, 38 N. E. 461, 26 L. R. A. 544. 65 N. E. 54. See also, Arapahoe &c. Co. v. Piatt, " See Toledo & Ind. Trac. Co. v. 5 Colo. App. 515, 39 Pac. 584. Toledo & C. I. R. Co., 171 Ind. 213, *■ Edwards v. Grand Junction R. 86 N. E. 54 ; McArthur v. Times Print. Co., 1 Myl. & C. 650; Stanley v. Ches- Co., 48 Minn. 319, 51 N. W. 216, 31 ter &c. R. Co., 9 Sim. 264; Moore &c. Am. St. 653; New Brighton &c. R. Co. V. Towers &c. Co., 87 Ala. 206, Co. v. Pittsburg &c. R. Co., 105 Pa. 6 So. 41, 13 Am. St. 23; Stanton v. St. 13; Washington & I. R. Co. v. New York &c. R. Co., 59 Conn. 272, Coeur D'Alene R. &c. Co., 160 U. S. 22 Atl. 300, 21 Am. St. llOn; Coyote 77, 40 L. ed. 346, 16 Sup. Ct. 231, and Gold &c. Co. V. Ruble, 8 Ore. 284; Massachusetts cases cited in other Schreyer v. Turner &c. Co., 29 Ore. notes to this section. See ante, § 1, 43 Pac. 719; Bell's Gap &c. R. Co. 532. 52 — Contracts, Vol. I § 55^ CONTRACTS. 8l8 statutes authorizing its existence is ultra vires.^" That is to say, a corporation is an artificial person with limited and defined powers. A contract outside the limits of these powers is ultra vires . In many cases the term, "ultra vires," is used as if synony- mous with the word, "illegal.'"*^ But as the New York Court of Appeals has pointed out, "The words ultra vires and illegality represent totally dififerent and distinct ideas. It is true that a, contract may have both those defects, but it may also have one without the other. For example, a bank has no authority to engage, and usually does not engage, in benevolent enterprises. A subscription, made by authority of the board of directors and under the corporate seal, for the building of a church or college or an almshouse, would be clearly ultra vires, but it would not be illegal. If every corporator should expressly assent to such an application of the funds, it would still be ultra vires, but no wrong would be committed and no public interest violated."" The term ultra vires has also been used with reference to contracts of a class which the corporation had a right to execute but with respect to which there has been some irregularity or defect in the actual exercise of the power in some particular or through some undisclosed circumstance affecting the individual contract in issue. ^^ In other words the term ultra vires has been used to express either that the act of the directors or officers is in " See Great Eastern &c. R. Co. v. 157. See also, Oakland Electric Co. Turner, L. R. 8 Ch. 149; Citizens' v. Union Gas & Electric Co. (Me.), State Bank v. Hawkins, 71 Fed. 369, 78 Atl. 288, for a good discussion of 18 C. C. A. 78, 34 U. S. App. 423; the subject. Kadish v. Garden City &c. Assn., 151 "' People v. Chicago Gas Trust Co., III. 531, 38 N. E. 236, 42 Am. St. 256; 130 111. 268, 22 N. E. 798, 8 L. R. A. National &c. Bank v. Porter, 125 497n, 17 Am. St. 319. See also, Frank- Mass. 333, 28 Am. Rep. 235 ; Davis v. lin v. Lewiston Inst., 68 Maine 43 ; Old Colony R. Co., 131 Mass. 258, State v. Nebraska Distilling Co., 29 41 Am. Rep. 221; Monument Nat. Nebr. 700, 46 N. W. 155. Bank v. Globe Works, 101 Mass. 57, "'Bissell v. Michigan Southern &c. 3 Am. Rep. 322; Bell v. Kirkland, 102 R. Co., 22 N. Y. 258. To same effect, Minn. 213, 113 N. W. 271, 120 Am. Scham v. Brandt (Md.), 82 Atl. 551; St. 621 ; Matthews v. Skinker, 62 Mo. 1 Elliott on Railroads (2d ed.), §§ 368, 329, 21 Am. Rep. 425, revd. 98 U. S. 369; 3 Thompson on Corporations (2d 621, 25 L. ed. 188; Leslie v. Lorillard, ed.), § 2767; Whitney Arms Co. v. 110 N. Y. 519, 18 N. E, 363, 1 L. R. Barlow, 63 N. Y. 62, 20 Am. Rep. 504. A. 456; Jemison v. Citizens' Sav. ""Bell v. Kirkland, 102 Minn. 213, Bank, 122 N. Y. 135, 25 N. E. 264, 113 N. W. 271, 120 Am. St. 621; Min- 9 L. R. A. 708, 19 Am. St. 482 ; Pitts- nesota Thresher Mfg. Co. v. Lang- burgh &c, R. Co. V. Keokuk &c. don, 44 Minn. 37, 46 N. W. 310. Bridge Co., 131 U. S. 371, 33 L. ed. 8l9 PRIVATE CORPORATIONS. § 55^ excess of their authority as agents of the corporation or that the act of the majority of the stockholders is in violation of the rights of the minority or that the act has not been done in con- formity with the requirements of the charter, or that the act is one that the corporation itself has not been sanctioned to do as being in excess of the corporate powers. However, the mere fact that an agent of ^ corporation exceeds his authority does not make the contract ultra vires, as to the corporation. The agent may exceed his authority and yet the contract will not be outside the scope of the corporation's powers as defined in its charter.^* Because the term ultra vires has been used in these several different senses it has led to confusion and important differences in practical results. Thus, where the act done by the direc- tors or officers is simply beyond the powers of the executive de- partment of the corporation as the agency by which the corpora- tion exercises its functions, and not the corporation itself, it may be made valid and binding by the acts of the board of directors or by the approval of stockholders,^^ and on the other hand where a corporation obtains money or property under a contract that is not illegal the party from whom such money or property is ob- tained may be aided by the courts although the contract was ultra vires.^" It is held upon the same general principle that if the party " For an excellent discussion of the with corporations may vary, accord- subject see Camden &c. R. Co. v. ing as the act is ultra vires in one or May's Landing &c. R. Co., 48 N. J. the other of these senses. All these L. 530, 7 Atl. 523 (opinion of DePue, distinctions must be constantly borne J., dissenting from the result). "The in mind in considering a question term ultra vires, whether with strict arising out of dealings with a corpo- propriety or not, is also used in dif- ration." Miners' Ditch Co. v. Zeller- ferent senses. An act is said to be bach, 37 Cal. 543, 99 Am. Dec. 300n. ultra vires when it is not within the " Camden &c. R. Co. v. May's Land- scope of the powers of the corpora- ing &c. R. Co., 48 N. J. L. 530, 7 Atl. tion to perform it under any circum- 523 (opinion of Depue, J.), stances, or for any purpose. An act is "Argenti v. San Francisco, 16 Cal. also, sometimes, said to be ultra vires 255; Miners' &c. Co. v. Zellerbach, 37 with reference to the rights of cer- Cal. 543, 99 Am. Dec. 300n; Pullman tain parties, when the corporation is &c. Co. v. Central &c. Co., 65 Fed. not authorized to perform it without 158; New Castle &c. Railroad Co. v. their consent; or with reference to Simpson, 23 Fed. 214; Memphis &c. some specific purpose, when it is not R. Co. v. Dow, 19 Fed. 388; Hazle- authorized to perform it for that pur- hurst v. Savannah &c. R. Co., 43 Ga. pose, although fully within the scope 13; Bradley v. Ballard, 55 111. 413, of the general powers of the corpora- 8 Am. Rep. 656 ; State Board &c. v. tion, with the consent of the parties Citizens' &c. Co., 47 Ind. 407, 17 Am. interested, or for some other purpose. Rep. 702; Wapello v. Burlington &c. And the rights of strangers dealing R. Co., 44 Iowa 585 ; Franklin Co. v. 557 CONTRACTS. 820 contracting with the corporation retain the property obtained from the corporation, thus securing the benefit under the contract, he cannot escape payment of the value of the property so obtained on the ground that the contract was ultra vires. °' But where the contract is illegal, that is a contract condemned or prohibited by law, or is malum in se, it is not enforcible but is to be regarded as void, for in such cases the corporation does more than per- form an act in excess of its corporate powers.^* It thus appears that in its proper sense the term ultra vires means contracts such as are outside the object of its creation as defined in the law of its organization, and therefore beyond the powers conferred upon it by the legislature. § 557. Recovery where ultra vires contract has been per- formed by parties. — As has already been mentioned the doc- trine of ultra vires as applied to corporate contracts is given a strict meaning by the Supreme Court of the United States, the courts of England, and by many courts of last resort in the Lewiston &c. Bank, 68 Maine 43, 28 Am. Rep. 9; Dill v. Wareham, 7 Mete. (Mass.) 438; Morville v. Amer- ican &c. Soc., 123 Mass. 129, 25 Am. Rep. 40; Attleborough Nat. Bank v. Rogers, 125 Mass. 339; Manchester &c. Co. V. Concord &c. Co., 66 N. H. 100, 20 Atl. 383, 9 L. R. A. 689, 49 Am. St. 582 ; DeGroff v. American &c. Co., 21 N. Y. 124; Parish v. Wheeler, 22 N. Y. 494; Bissell v. Michigan &c. Co., 22 N. Y. 258 ; Hays v. Galion &c. Coal Co., 29 Ohio St. 330 ; Oil Creek &c. R. Co. V. Pennsylvania Transpor- tation Co., 83 Pa. St. 160; Wright v. Pipe Line Co., 101 Pa. St. 204, 47 Am. Rep. 701 ; Miller v. American &c. Ins. Co., 92 Tenn. 167, 21 S. W. 39, 20 L. R. A. 765 ; Pennsylvania &c. Co. v. St. Louis &c. Co., 118 U. S. 290, 30 L. ed. 83, 6 Sup. Ct. 1094; Union Trust Co. v. Illinois Midland &c. Co., 117 U. S. 434, 29 L. ed. 963, 6 Sup. Ct. 809; Central Transportation Co. V. Pullman's Palace Car Co., 139 U. S. 24, 11 Sup. Ct. 478, 35 L. ed. 55; Atlantic &c. Co. v. Union Pacific R Co., 1 McCrary (U. S.) 541, 1 Fed. 745; Rutland &c. R. Co. v. Proctor, 29 Vt. 93; Northwestern &c. Packet Co. V. Shaw, 37 Wis. 655, 19 Am. Rep. 781. In many jurisdictions, however, as shown in some of the decisions above cited, there can be no recovery upon the contract itself. "Visalia Gas &c. Co. v. Sims, 104 Cal. 326, i7 Pac. 1042, 43 Am. St. 105 ; Salmon &c. Co. v. Dunn, 2 Idaho 30, 3 Pac. 911 ; Baker v. Northwestern &c. Co., 36 Minn. 185, 30 N. W. 464. See Belcher &c. Refining Co. v. St. Louis &c. Elevator Co., 101 Mo. 192, 13 S. W. 822, 8 L. R. A. 801; Ash- enbroedel Club v. Finlay, 53 Mo. App. 256; Bath Gaslight Co. v. Clafify, 56 N. Y. 426, 26 N. Y. S. 287 ; Whitney Arms Co. v. Barlow, 63 N. Y. 62. See also, Buckhorn Plaster Co. v. Con- soHdated Plaster Co., 47 Colo. 516, 108 Pac. 27. ^ Philadelphia &c. Co. v. Towner, 13 Conn. 249. See also, McNulta V. Corn Belt Bank, 164 111. 427, 45 N. E. 954, 56 Am. St. 203; Cincin- nati &c. Co. v. Rosenthal, 55 111. 85, 8 Am. Rep. 626; In re Assignment Mutual &c. Ins. Co., 107 Iowa 143, 77 N. W. 868, 70 Am. St. 149, and elab- orate note; New York State &c. Co. V. Helmer, 77 N. Y. 64; Talmage v. Pell, 7 N. Y. 328; Root v. Godard, 3 McClean (U. S. ) 102, Fed. Cas. No. 821 PRIVATE CORPORATIONS. 557 United States. Where this is true contracts properly so termed are not voidable only but wholly void, and of no legal effect.^' The authorities discriminate, however, between executed and ex- ecutory contracts. The cases nearly all agree that a contract be- yond the powers of a corporation is not enforcible so long as it •remains clearly executory. In this situation neither an action for specific performance of a contract nor any damages for the failure to perform can be maintained."" Even where a contract with a corporation beyond its granted powers is fully executed by both parties, somes cases hold that neither of them can assert its invalidity as a ground of release against it. They apply the maxim in pari delicto potior est conditio def endentis, and will not aid either of the parties in setting aside the contract so as to permit a recovery of amounts lost through such contract."^ Thus it has been held that a corporation which has made a purchase 12037; Hayden v. Davis, 3 McClean (U. S.) 276, Fed. Cas. No. 6259; Root V. Wallace, 4 McClean (U. S.) 8, Fed. Cas. No. 12039; Davis v. Bank, 4 McClean (U. S.) 387, Fed. Cas. No. 3626; In re Jaycox, 12 Blatch (U. S.) 209. ™ See, ante, chapter on Parties, in § 276 entitled, Where Incapacity is such as to Make Contracts Void. ""Wilkes V. Georgia Pac. R. Co., 79 Ala. 180; Memphis &c. R. Co. v. Grayson, 88 Ala. 572, 7 So. 122, 16 Am. St. 69; First Nat. Bank v. Alex- ander (Ala.), 44 So. 866; Coleman V. San Rafael Tpk. Rd. Co., 49 Cal. 517; Anglo-American Land &c. Co. V. Lombard, 132 Fed. 721, 68 C. C. A. 89; Screven Hose Co. v. Philpot, 53 Ga. 625 ; Hazlehurst v. Savannah &c. R. Co., 43 Ga. 13 ; Leigh v. Amer- ican Brake Beam Co., 205 111. 147, 68 N. E. 713; Kadish v. Garden City Equitable Loan & Bldg. Assn., 151 111. 531, 38 N. E. 236, 42 Am. St. 256; Sellers v. Greer, 172 111. 549, SS N. E. 246, 40 L. R. A. 589; State Board of Agriculture v. Citizens' St. R. Co., 47 Ind. 407, 17 Am. Rep. 702; Wright V. Hughes, 119 Ind. 324, 21 N. E, 907, 12 Am. St. 412; Chicago &c. R. Co. V. Southern Ind. R. Co. 38 Ind. App. 234, 70 N. E. 843 Thompson v. Lambert, 44 Iowa 239. Lithgow Mfg. Co. V. Fitch, 5 Ky. L. 60S; Day v. Spiral Springs &c. Co., 57 Mich. 146, 23 N. W. 628, 58 Am. Rep. 352; Pacific R. Co. v. Seely, 45 Mo. 212, 100 Am. Dec. 369; Downing V. Mt. Washington &c. Co., 40 N. H. 230; Camden &c. R. Co., v. May's Landing &c. R. Co., 48 N. J. L. 530, 7 Atl. 523 ; Parish v. Wheeler, 22 N. Y. 494; Nassau Bank v. Jones, 95 N. Y. 115, 47 Am. Rep. 14; Jemison V. Citizens' Sav. Bank, 122 N. Y. 135, 25 N. E. 264, 9 L. R. A. 708, 19 Am. St. 482 ; Gause v. Commonwealth Trust Co., 44 Misc. (N. Y.) 46, 89 N. Y. S. 723 ; Coppin v. Greenlees, 38 Ohio St, 275, 43 Am. Rep. 425; Oil Creek &c. R. Co. v. Pennsylvania Transp. Co., 83 Pa. St. 160; Ten- nessee Ice Co. V. Raine, 107 Tenn. 151, 64 S. W. 29; Sabine Tram Co. v. Bancroft, 16 Tex. Civ. App. 170, 40 S. W. 837; Thomas v. West Jersey R. Co., 101 U. S. 71, 25 L. ed. 950. "'Bigbee &c. Packet Co. v. Moore, 121 Ala. 379, 25 So. 602; Long v. Georgia Pac. R. Co., 91 Ala. 519, 8 So. 706, 24 Am. St. 931; Anglo- Amercian Land &c. Co.- v. Lom- bard,_ 132 Fed. 721, 68 C. C. A. 89; Garrison Canning Co. v. Stanley, 133 Iowa 57, 110 N. W. 171; Thompson v. Lambert, 44 Iowa 239; Milbank v. New York &c. R. Co., 64 How. Pr. (N. Y.) 20; Holmes & Griggs Mfg. Co. v. Holmes & Wessell Metal Co., § 5S8 COXTRACTS. 822 I beyond its powers cannot recover the money paid for the goods received and appropriated by it."^ § 558. Ultra vires contracts — Performance by one party. — A somewhat similar doctrine is appUed where the contract has been executed by one of the parties, as by the party contracting with the corporation. In which case it has been said "an ultra vires contract, one not within the scope of the corporate authority to make under any circumstances, which is no longer executory and is not tainted by fraud or clearly prohibited by statute, or condemned by sound public policy, cannot be impeached by the corporation or any one representing it."*^ That is to say, a corporation which has received and retained the benefits of the contract in excess of its authority but not expressly forbidden by law or contrary to sound public policy, cannot set up such want of authority to defeat a recovery on the contract"* where the other 127 N. Y. 252, 27 N. E. 831, 24 Am. 282, 23 Pac. 569, 19 Am. St. 134; St. 448; Parish v. Wheeler, 22 N. Y. Ewing v. Composite Brake-Shoe Co., 494; Franklin Bank v. Commercial 169 Mass. 72, 47 N. E. 241; Dewey Bank, 36 Ohio St. 350, 38 Am. Rep. v. Toledo &c. R. Co., 91 Mich. 351, 594; Pannebaker v. Tuscarora Val- 51 N. W. 1063; Erb v. Yoerg, 64 ley R. Co., 219 Pa. 60, 67 Atl. 923; Minn. 463, 67 N. W. 355; Adams v. Leazure v. Hillegas, 7 Serg. & R. Farmers' &c. Ins. Co., 115 Mo. App. (Pa.) 313; First Nat. Bank v. Stew- 21, 90 S. W. 747; First Nat. Bank v. art, 107 U. S. 676, 27 L. ed. 592, 2 Guardian Trust Co., 187 Mo. 494, 86 Sup. Ct. 778; Favette Land Co. v. S. W. 109, 70 L. R. A. 79; Chapman Louisville &c. R. Co., 93 Va. 274, 24 v. Iron Clad Rheostat Co., 62 N. J. S. E. 1016; Graton & Knight .Mfg. L. 497, 41 Atl. 690; Vought v. East- Co. V. Redelsheimer, 28 Wash. 370, ern &c. Loan Assn., 172 N. Y. 508, 68 Pac. 879 ; Wilson v. Carter Oil 65 N. E. 496, 92 Am. St. 761 ; Ham- Co., 46 W. Va. 469, 33 S. E. 249. ilton Trust Co. v. Clemes, 163 N. Y. "■^ Graton & Knight Mfg. Co v. 423, 57 N. E. 614; Clowe v. Imperial Redlefheimer, 28 Wash. 870, 68 Pac. Pine Product Co., 114 N. Car. 304, 879. 19 S. E. 153; Wright v. Pipe Line "'Eastman v. Parkinson, 133 Wis. Co., 101 Pa. St. 204, 47 Am. Rep. 375, 113 N. W. 649, 13 L. R. A. (N. 701; Manhattan Hardw. Co. v. S.) 921n. Phalen, 128 Pa. St. 110, 18 Atl. 428; "' Barrett v. Pollak Co., 108 Ala. Pannebaker v. Tuscarora Valley R. 390, 18 So. 615, 54 Am. St. 172; Den- Co., 219 Pa. 60, 67 Atl. 923; Bishop ver Fire Ins. Co. v. McClelland, 9 v. Kent &c. Co., 20 R. I. 680, 41 Atl. Colo. 11, 9 Pac. 771, 59 Am. Rep. 134; 255; Lancaster v. Southern Life Ins. Witte V. Derby Fishing Co., 2 Conn. Co. (S. Car.), 71 S. E. 864; Des 260 ; Carrugi v. Atlantic Fire Ins. Co., Moines Mfg. &c. Co. v. Tilford Mill- 40 Ga. 135, 2 Am. Rep. 567; Gibson ing Co., 9 S. Dak. 542, 70 N. W. 839; V. O'Gara Coal Co., 151 111. App. 424; Guffey Petroleum Co. v. Jefif Chai- Thomas v. Citizens' Horse R. Co., son Townsite Co., 48 Tex. Civ. App. 104 111. 462; Louisville, N. A. &c. R. 555, 107 S. W. 609; Armstrong v. Co. V. Flanagan, 113 Ind. 488, 14 N. Cache Valley &c. Canal Co., 14 Utah E. 370, 3 Am. St. 674; Sherman Cen- 450, 48 Pac. 690; Bovce v. Montauk ter Town Co. v. Morris, 43 Kans. Gas Coal Co., 37 W. Va. 73, 16 S. E. 823 PRIVATE CORPORATIONS. § 551 ; California Bank v. Ken- nedy, 167 U. S. 362, 42 L. ed. 198, 7 Sup. Ct. 831; Central &c. Co. v. Pullman's Palace Car Co., 139 U. S. 24, 35 L. ed. 55 ; Pittsburgh &c. R. Co. V. Keokuk Bridge Co., 131 U. S. 371, 7s7> L. ed. 157. "Such a contract is ultra vires, void, and incapable of ratification." '" Webster v. Machine Co., 54 Conn. 394, 8 Atl. 482; Washington &c. Co. V. Lumber Co., 19 Wash. 165, 52 Pac. 1067. ™ McCutcheon v. Merz Capsule Co., 71 Fed. 787, 19 C. C. A. 108, 31 L. R. A. 415. But if merely irregular and not ultra vires in the true sense, there may usually be a ratification. Kessler v. Ensley Co., 123 Fed. 546; Graves v. Saline Co., 161 U. S. 359, 40 L. ed. 732, 16 Sup. Ct. 526; State V. Milling Co., 156 Mo. 620, 57 S. W. 1008; Seymour v. Spring Forest &c. Assn., 144 N. Y. 333, 39 N. E. 365, 26 L. R. A. 859; Bell v. Waynes- boro, 195 Pa. St. 299, 45 Atl. 930; North Point &c. Co. v. Utah &c. Co., 16 Utah 246, 52 Pac. 168, 40 L. R. A. 851, 67 Am. St. 607. § 5^4 CONTRACTS. 83O the contract may be ultra vires " The stockholders will be granted no relief in equity unless they proceed with diligence. Thus where there had been acquiescence for seventeen years it was held no stockholder could complain.*^ These decisions pro- ceed upon the general doctrine that a party guilty of laches can- not successfully invoke the assistance of the court. The courts in refusing to grant relief do not afifirm the validity of the con- tract but leave the parties where it found them because of the laches of the complainant. § 564. State as proper party to raise question of ultra vires. — It is held in an increasingly large number of cases that whether a corporation has acted in excess of its granted powers or in the face of an express or implied statutory prohibition is a question which cannot be raised in litigation between it and a private party or between private parties, but can only be raised by the state in a direct proceeding, either to forfeit the franchise of the corpo- ration or to subject it to punishment for the unlawful act.*^ The reason underlying this rule is that the doctrine of ultra vires had its inception in the desire for a restraining power on the actions of a corporation, but was not intended for the benefit of either party to the transaction.** The question is therefore declared to be one between the government and the corporation in a proceeding " St. Louis &c. R. Co. V. Terre and it probably is not invoked too Haute Co., 33 Fed. 440; Alexander v. often; but to place that power in the Searcy, 81 Ga. 536, 8 S. E. 630, 12 hands of the corporation itself or a Am. St. 337; St. Louis &c. Co. v. private individual, to be used by it Terre Haute Co., 145 U. S. 393, 36 or him as a means of obtaining or L. ed. 748, 12 Sup. Ct. 953. retaining something of value which '^ St. Louis &c. R. Co. v. Terre belongs to another, would turn an in- Haute &c. R. Co., 145 U. S. 393, 36 strument intended to effect justice be- L. ed. 748, 12 Sup. Ct. 953. See also, tween the state and corporations into Alexander v. Searcy, 81 Ga. 536, 8 S. one of fraud as between the latter and E. 630, 12 Am. St. 337; Boston &c. innocent parties." Zinc Carbonate Co. R. Co. V. New York R. Co., 13 R. v. Bank, 103 Wis. 125, 79 N. W. 229, L 260; Boyce v. Montauk Gas Coal 74 Am. St. 845. See also. Union Co., 37 W. Va. 73, 16 S. E. 501. Nat. Bank v. Matthews, 98 U. S. 621, " See 3 Thompson on Corpora- 25 L. ed. 188 ; Wood v. Corry Water tions (2d ed.), § 2840, and numerous Works Co., 44 Fed. 146, 12 L. R. A. cases there cited. 168n ; Prescott National Bank v, But- ""The doctrine of ultra vires is a ler, 157 Mass. 548, 32 N. E. 909; State most powerful weapon to keep pri- v. Thresher &c. Co., 40 Minn. 213, 41 vate corporations within their legiti- N. W. 1020, 3 L. R. A. 510n; Bar- mate spheres and to punish them for row v. Nashville &c. Tpk. Co., 9 violations of their corporate charters. Humph. (Tenn.) 304. 831 PRIVATE CORPORATIONS. § 564 by the former against the latter for a forfeiture of its charter. "A private person," it is said, "cannot directly or indirectly usurp this function of government."^" " Union Nat. Bank v. Matthews, 98 U. S. 621, 25 L. ed. 188. "That such doctrine cannot be resorted to as a weapon for attack and defense in the hands of mere private persons, and 'used as a ready means for embarrass- ing business operations by and with corporate bodies, which directly or in- directly touch and administer to hu- man desires at every turn of the indi- vidual in modern life, while its ef- fectiveness for all essential purposes of restraint and punishment is fully preserved, furnishes no cause for re- gret, but rather cause for gratifica- tion at the evidence how certainly principles, by natural growth and de- velopment, adapt the law and its ad- ministration to the ever changing need of advancing civilization, so as best to promote justice and the com- mon welfare." John V. Farwell Co. v. Wolf, 96 Wis. 10, 70 N. W. 289, 71 N. W. 109, Zl L. R. A. 138, 65 Am. St. 22. An act ultra vires the corporation can be questioned only by a person directly interested in such corporation or by the state. South- ern Lumber Co. v. Holt, 129 La. 273, 55 So. 986. "The rules of estop- pel and of the sole right of the state to complain obtain only in cases where the excessive act of the corporation is not absolutely void, but only void- able; not wrong per se, or against public policy and good morals, but wrong merely because the act is not within the scope of the powers con- ferred by law on the corporation. We know of no case in this state where the rules under consideration have been applied where the corporation has become a party to a contract, void for the reason that it was wrong in itself and a violation of sound public policy and good morals.'' State V. Bankers' Trust Co. (Mo.) 138 S. W. 669. CHAPTER XIX. PUBLIC SERVICE CORPORATIONS. i 570. Introductory. 571. Power to such corporations to contract generally. 572. Necessity for a consideration — Necessity for capacity to con- tract. 573. Parties bound to take notice of charter provision. 574. Knowledge of extraneous cir- cumstances. 575. Corporations cannot contract so as to escape public duties. 576. Attempt to transfer franchises. 577. Attempt to transfer franchises — Transfer of property essen- tial to operation. 578. Contracts suppressing competi- tion or monopoly. 579. Not required to undermine own business. § 580. Different methods of fixing rates — Discrimination in fa- vor of public. 581. Contracts as to location of sta- tions and route. 582. Ultra vires contracts. 583. Leases generally. 584. Mortgages generally. 585. Traffic agreements. 586. Right to engage in a collateral business. 587. When a carrier may refuse to perform its public duty. 588. Ultra vires contracts — Street railway companies. 589. Ultra vires contracts — Gas and water companies. 590. Illustrative cases of doctrine to telegraph and telephone com- panies. § 570. Introductory. — There is a class of corporations so "affected with a public interest" that they are often called quasi public corporations/ although they are private corporations rather than public in the true sense.' Railroad companies, street railway companies, canal companies and turnpike companies are ^ See Miners' Ditch Co. v. Zeller- bach, 37 Cal. 543, 99 Am. Dec. 30; Tippecanoe County v. Lafayette &c. R. Co., 50 Ind. 85 ; Hockett v. State, 105 Ind. 250, 5 N. E. 178, 55 Am. Rep. 201 ; Rushville v. Rushville Natural Gas Co., 132 Ind. 575,28 N. E. 853,15 L. R. A. 321 ; Zanesville v. Zanesville Gas Light Co., 47 Ohio St. 1, 23 N. E. 55 ; Chicago R. Co. v. Iowa, 94 U. S. 155, 25 L. ed. 94; Munn v. Illi- nois, 94 U, S. 113, 24 L. ed. 11; Chi- cago &c. R. Co. V. Nebraska, 170 U. S. 57, 42 L. ed. 948, 18 Sup, Ct. 513 ; Whiting V. Sheboygan &c. R. Co., 25 Wis. 167, 3 Am. Rep. 30, and au- thorities cited in the last two notes to this section. See also, Attorney- General V. Firemen's Ins. Co., 74 N. J. Eq. 372, 73 Atl. 80, 135 Am. St. 708. The above case seeks to de- termine just when a corporation will be considered as affected with a pub- lic interest, and reviews the subject at length. ' Cook V. North &c. R. Co., 46 Ga. 618; Lake Erie & W. R. Co. v. Whit- ham, 155 111. 514, 40 N. E. 1014, 28 L. R, A. 612, 46 Am. St. 355; Chicago Gen. R. Co. v. Chicago City R. Co., 62 in. App. 502 ; Board of Direct- ors v. Houston, 71 111. 318; Ohio &c. R. Co. V. Ridge, 5 Blackf. (Ind.) 78; Ten Eyck v. Delaware &c. Canal Co., 18 N. J. L. 200, 37 Am. Dec. 233; Logan V. North Carolina R. Co., 116 832 833 PUBLIC SERVICE CORPORATIONS. § 570 of this character. So are gas and water companies/ telegraph and telephone companies,* heating companies and the like.'^ The N. Car. 940, 21 S. E. 959; Pierce v. one and the same thing, whether a Commonwealth, 104 Pa. St. 150; Mc- corporation be created to subserve a Candless v. Richmond & D. R. Co., public interest, or whether such cor- 38 S. Car. 103, 16 S. E. 429, 18 L. R. poration achieve success of such a A. 440 ; Thorpe v. Rutland &c. R. Co., nature that the duty of regarding the 27 Vt. 140, 62 Am. Dec. 625, 1 Elliott interest of the public is thrust upon R. R. (2d ed.), § 2; 1 Thomp. Corp., it. * * * jf such business were still § 27. in the hands of individual under- ° State v. Birmingham Waterworks writers, unaffected by state regula- Co., 164 Ala. 586, 51 So. 354, 27 L. tion, and confined to the writing of R. A.^ (N. S.) 674n, 137 Am. St. 69; policies on the dwellings of prudent Danville v. Danville Water Co., 178 householders and on the stores of 111. 299, S3 N. E. 118, 69 Am. St. careful merchants, a great deal might 304; Portland Nat. Gas & Oil Co. v. be said in favor of the view that no State, 135 Ind. 54, 34 N. E. 818, 21 public interest had attached to the L. R. A. 639; Brunswick Gas &c. Co. making of these private contracts. V. United Gas &c. Co., 85 Maine 532, We cannot, however, close our eyes 27 Atl. 525, 35 Am. St. 385 and note; to the fact that, by enormous exten- State V. Butte City Water Co., 18 sion of this business, by its concentra- Mont. 199, 44 Pac. 966, 32 L. R. A. tion in the hands of immense corpo- 697, 56 Am. St. 574; Fenton v. Tri- rations, by the state regulations that State Land Co. (Nebr.), 131 N. W. amount to privileges, and by its prac- 1038 (irrigation company) ; Watauga tically universal employment as a col- Water Co. V. Wolfe, 99 Tenn. 429, lateral security for debts, the business 41 S. W. 1060, 63 Am. St. 841. has become one in which the inter- * Stewart-Morehead Co. v. Postal est of the public is directly involved, Tel. C. Co., 131 Ga. 31, 61 S. E. certainly as much so as it is in the 1045, 18 L. R. A. (N. S.) 692, 127 warehousing of grain. The collateral Am. St. 205 ; Hockett v. State, 105 security of mortgage debts would Ind. 250, 5 N. E. 178, 55 Am. Rep. alone suffice to attach a public interest 201 ; Nebraska Tel. Co. v. State, 55 to the business in question, since it Nebr. 627, 76 N. W. 171, 45 L. R. A. vitally concerns credit as a factor in 113; Western Union Tel. Co. v. Call modern business. Pub. Co., 44 Nebr. 326, 62 N. W. Whatever concerns business credit 506, 27 L. R. A. 622, 48 Am. St. ex necessitate touches a matter in 729 ; Railroad Commrs. v. Western which the public is directly interested." Union Tel. Co., 113 N. Car. 213, 18 In addition to those already men- S. E. 389, 22 L. R. A. 570 ; State v. tioned, the following businesses have. Citizens' Tel. Co., 61 S. Car. 83, 39 in proper cases, been held affected S. E. 257, 55 L. R. A. 139, 85 Am. with a public interest ; grain elevators St. 870; Chesapeake &c. R. Co. v. (Stewart v. Great Northern R., 65 Manning, 186 U. S. 238, 46 L. ed. Minn. 515, 68 N. W. 208, 33 L. R. A. 1144. 22 Sup. Ct. 881. 427); public warehouses (Nash v. " Seaton Mountain &c. Power Co. Page & Co., 80 Ky. 539, 4 Ky. L. 477, V. Idaho Springs Investment Co., 49 44 Am. Rep. 490; Brass v. North Colo. 122, 111 Pac. 834, 33 L. R. A. Dakota, 153 U. S. 391, 38 L. ed. 757, (N. S.) 1078; State v. Marion Light 14 Sup. Ct. 857); grist-mills (01m- & Heating Co., 174 Ind. 622, 92 N. E. stead v. Camp, 33 Conn. 532, 89 Am. 731. See also, the case of Attorney- Dec. 221; State v. Edwards, 86 Maine General v. Firemen's Ins. Co., 74 N. 102, 29 Atl. 947, 41 Am. St. 528; J. Eq. 372, 73 Atl. 80, 135 Am. St. Burlington v. Beasley, 94 U. S. 310, 708; in which the business of fire in- 24 L. ed. 161); hacks (Lindsay v. surance as conducted was said to be Mayor, 104 Ala. 257, S3 Am. St. 44; affected with a public interest. The Veneman v. Jones, 118 Ind. 41, 2() court said : "To the eye of the law N. E. 644, 10 Am. St. 100) ; pub- and in the interest of the public, it is lie wharves (Chicago Dock &c. Co. v. 53— Contracts, Vol. I g 571 CONTRACTS. S34 general principles of the law of contracts, already considered, apply in the main where such corporations are parties as well as in other cases ; but there are some distinctions and some pecu- liar applications of the rules to their contracts, which are more subject to legislative control, in some respects, than those of ordinary strictly private corporations ; and they have public duties to perform that may limit the power to contract, or even require them to contract, in effect at least, in certain instances. § 571. Power of such corporations to contract generally. — As with private corporations, so a corporation affected with a public interest has the implied or incidental power to enter into any and all contracts necessary to enable it to carry out the pur- poses of its organization, except so far as it is restrained by its charter or the general law. The presumption is in favor of the power of the corporation to make any contract which is reg- ular on its face and is not in conflict with any prohibition of law and is within the scope of the general powers conferred upon the corporation." Within the scope of the corporate powers the right Garrity, 115 111. 155, 3 N. E. 448; 10 C. B. (N. S.) 675; Mitchell v. Barrington v. Commercial Dock Co., Rome R. Co., 17 Ga. 574; Baltimore 15 Wash. 170, 45 Pac. 748, 33 L. R. A. v. Baltimore &c. R. Co., 21 Md. SO; 116) ; hotels (Bostick v. State, 47 Davis v. Old Colony R. Co., 131 Ark. 126, 14 S. W. 476) ; theaters and Mass. 258, 41 Am. Rep. 221; Stew- other public places of amusement art v. Erie &c. Trans. Co., 17 Minn. (People V. King, 110 N. Y. 418, 18 372; Morris & E. R. Co. v. Sussex R. N. E. 245, 1 L. R. A. 293, 6 Am. St. Co., 20 N. J. Eq. (5 C. E. Green) 389; Civil Rights Cases, 109 U. S. 3, 542; Rider Life Raft Co. v. Roach, 27 L. ed. 835, 3 Sup. Ct. 18); and 97 N. Y. 378; Shipper v. Pennsyl- stock yard companies (Cotting v. vania R. Co., 47 Pa. St. 338; Mc- Kansas City &c. Co., 82 Fed. 839). Claugherty v. Bluefield Waterworks It would seem that under the broad &c. Co., 67 W. Va. 285, 68 S. E. 28, 32 principle applicable this list might be L. R. A. (N. S.) 229. "It is a gen- indefinitely extended or contracted ac- eral principle of law that every cor- cording to circumstances ; thus in poration has by necessary implication primitive England when the number the power to do whatever is necessary of people engaged in the various call- to carry into effect the purposes of its ings were few, which condition creation, unless the doing of the par- caused a virtual monopoly, surgeons ticular thing is prohibited by law or (Y. B. 19 Hen. VI, 49 pi. S) ; tailors its charter." Oakland Electric Co. v. (Y. B. 22 Ed. IV, pi. IS) ; black- Union Gas &c. Co. (Maine), 78 Atl. smiths (Anon, Keilway, SO pi. 4) ; 288. To same effect, S. O. & C. Co. victualers (Y. B. 39 Hen. VI, 18 pi. v. Ansonia Water Co., 83 Conn. 611, 24) ; and bakers (Lib. Assis., 138 pi. 78 Atl. 432. See also. Richardson Gas 44; Mayor of Mobile v. Yuille, 3 Ala. &c. Co. v. Altoona, 79 Kans. 466, 100 137, 36 Am. Dec. 441), were bound Pac. SO, 21 L. R. A. (N. S.) 214n. to serve the public generally, without The burden of proof is generally discrimination. upon the person asserting the illegal- ° South Wales R. Co. v. Redmond, ity or ultra vires character of a con- §35 PUBLIC SERVICE CORPORATIONS. § 57I to contract is much the same as that of natural persons.' But as corporate powers are derivative and not inherent the authority of a corporation to contract is limited by the charter or act of in- corporation.* It is of course competent for the legislature to limit the power to contract and to designate the mode in which corporations may contract and where a limitation is imposed or a mode prescribed the corporation cannot rightfully make a con- tract beyond the limits fixed by the statute nor can it regularly contract in any other mode than that prescribed by law in cases where a specific mode is prescribed.® In general, a corporation af- fected with a public interest has all the attributes and incidents of a private corporation, and as a general rule is accorded the same measure of legal and constitutional protection for itself and its members as is given private corporations.*" But contracts entered into by a quasi public corporation in the discharge of its public tract made by a corporation. Ala- 11 Sup. Ct. 478, 45 Am. & Eng. R. bama Gold Life Ins. Co. v. Central Cas. 607; Pearce v. Madison & I. R. Agri. &c. Assn., 54 Ala. 73; Morris Co., 21 How. (U. S.) 441, 16 L. ed. & E. R. Co. V. Sussex R. Co., 20 N. 184; Zabriskie v. Cleveland &c. Co., J. Eq. (5 C. E. Green) 542; Ohio & 23 How. (U. S.) 381, 398, 16 L. ed. M. R. Co. V. McCarthy, 96 U. S. 488; Thomas v. West Jersey &c. R. 258, 24 L. ed. 693. Prima facie, it Co., 101 U. S. 71, 25 L. ed. 950; has been said, all its contracts are Branch v. Jesup, 106 U. S. 468, 27 valid, and it lies on those who would L. ed. 279, 1 Sup. Ct. 495; Pennsyl- impeach any contract to make out vania R. Co. v. St. Louis A. & T. H. that it is invalid. Scottish North R. Co., 118 U. S. 290, 30 L. ed. 83, 6 Eastern R. Co. v. Stewart, 3 Mac- Sup. Ct. 1094; Salt Lake City v. HoU- queen 382. ister, 118 U. S. 256, 30 L. ed. 176, ' Fitzgerald &c. Co. v. Fitzgerald, 6 Sup. Ct. 1055 ; Green Bay &c. R. 137 U. S. 98, 34 L. ed. 608, 11 Sup. Co. v. Union &c. R. Co., 107 U. S. Ct. 36; Tennessee &c. Co. v. Kava- 98, 27 L. ed. 413, 2 Sup. Ct. 221; naugh, 93 Ala. 324, 9 So. 395 ; Hall Pittsburg C. & St. L. R. Co. v. Keo- V. Tanner &c. Co., 91 Ala. 363, 8 So. kuk & H. Bridge Co., 131 U. S. 371, 348; Gloninger v. Pittsburgh R. Co., 33 L. ed. 157, 9 Sup. Ct. 770; Oregon 139 Pa. St. 13, 21 Atl. 211; Hand v. R. & Nav. Co. v. Oregonian R. Co., Clearfield &c. Co., 143 Pa. St. 408, 130 U. S. 1, 32 L. ed. 837, 9 Sup. Ct. 22 Atl. 709. See also, St. Joseph &c. 409; Perrine v. Chesapeake & D. C. R. Co. V. St. Louis &c. R. Co., 135 Co., 9 How. (U. S.) 172, 13 L. ed. Mo. 173, 36 S. W. 602, 33 L. R. A. 92. 607. "Miners' Ditch Co. v. Zellerbach, ° "Nothing passes by mere implica- 37 Cal. 543, 99 Am. Dec. 300n; Tins- tion against the public." Aurora v. man v. Belvidere &c. R. Co., 26 N. Elgin &c. Tract. Co., 227 111. 485, J. L. 148, 69 Am. Dec. 565 ; Louisville 81 N. E. 544, 118 Am. St. 284. See &c. R. Co. v. Commonwealth, 183 ante. chap. 18, Private Corporations. U. S. 503, 46 L. ed. 298, 22 Sup. ° New London v. Brainard, 22 Ct. 95 ; Cotting v. Stock Yards Co., Conn. 552 ; Commonwealth v. Erie 183 U. S. 79, 46 L. ed. 92, 22 Sup. Ct. &c. Co., 27 Pa. St. 339, 67 Am. Dec. 30; Thorpe v. Rutland &c. R. Co., 27 471 ; Central &c. Co. v. Pullman's &c. Vt. 140, 62 Am. Dec. 625. Car Co., 139 U. S. 24, 35 L. ed. 55, § 57- CONTRACTS. 836 duty may differ fundamentally from the ordinary contract and the rules which govern it. The relation between a public service corporation and its patrons is consensual. Offer and acceptance are present. But there is this difference; the corporation must accept the application of the would-be patron if it is one he is en- titled to make and if he complies with the reasonable rules of the company.^^ Thus, a public service corporation which furnishes two distinct kinds of service does not have the right to refuse one kind of service unless the other is also furnished when this power is not reserved to it by its charter, but must furnish one or both of such services upon proper application.^- § 572. Necessity for a consideration. — Necessity for ca- pacity to contract. — Moreover it would seem that a consid- eration is not always absolutely necessary. Thus, should the corporation gratuitously render a particular service and there be no understanding to the contrary the company will owe the one who accepts such services the same duty that he owes to one who pays there for. ^^ A railroad company has been held liable for negligently injuring one whom it accepted as a passenger not- "Danaher v. Southwestern Tel. &c. also, Mathieu v. North American Co. (Ark.), 127 S. W. 963, 30 L. R. Land &c. Co., 119 La. 896, 44 So. 721, A. (N. S.) 1027; Stewart, Morehead 121 Am. St. 548; Warner v. St. Louis & Co. V. Postal Tel. Co., 131 Ga. 31, &c. R. Co., 156 Mo. App. 523, 137 S. 61 S. E. 1045, 18 L. R. A. (N. S.) W. 275; State v. Bluefield &c. Imp. 692, 127 Am. St. 205 ; City of Chicago Co., 67 W, Va. 285, 68 S. E. 28, 32 V. Northwestern Mutual &c. Ins. Co., L. R. A. (N. S.) 229. But such regu- 218 111. 40, 75 N. E. 803, 1 L. R. A. lations must be just, reasonable, and (N. S.) 770; State v. Marion Light lawful, not capricious, arbitrary, op- & Heat Co., 174 Ind. 622, 92 N. E. pressive or unreasonable, neither can 731 ; Huffman v. Marcy Mutual Tele- they be discriminatory. Seaton phone Co. (Iowa), 121 N. W. 1033, Mountain &c. Power Co. v. Idaho 23 L. R. A. (N. S.) 1010; Robbins Springs Investment Co., 49 Colo. 122, V. Bangor R. & Electric Co., 100 111 Pac. 834, 33 L. R. A. (N. S.) Maine 496, 62 Atl. 136, 1 L. R. A. 1078. (N. S.) 963. See also, Cedar Rapids i^ Seaton Mountain &c. Co. v. Idaho &c. Co. V. Cedar Rapids, 144 Iowa Springs Invest. Co., 49 Colo. 122, 111 426 120 N. W. 966, 138 Am. St. Pac. 834, 33 L. R. A. (N. S.) 1078; 299; Buffalo County Tel. Co. v. State v. Butte Electric Co., 43 Turner, 82 Nebr. 841, 118 N. W. 1064, Mont. 118, 115 Pac. 44. See also, 130 Am St 699; Poole v. Paris Snell v. Clinton &c. Power Co., 196 Mountain Water Co., 81 S. Car. 438, 111. 626, 63 N. E. 1082, 58 L. R. A. 63 S. E. 874, 128 Am. St. 923. The 284, 89 Am. St. 341. company may adopt reasonable rules ^^ Little Rock & Ft. S. R. Co. v. and regulations for the conduct of its Miles, 40 Ark. 298, 48 Am. Rep. 10; business. Cedar Rapids Gas Light Waterbury v. New York Cent. &c. Co. V. Cedar Rapids, 144 Iowa 426, R. Co., 17 Fed. 671 ; Chicago M. & St. 120 N. W 966, 138 Am. St. 299. See P. R. Co. v. Carpenter, 56 Fed. 451, 837 PUBLIC SERVICE CORPORATIONS. § 573 withstanding such passenger claimed transportation under a pass or contract for gratuitous carriage which was illegal because con- trary to the provision of a statute or the state constitution." It would also seem that the applicant need not have the capacity to contract, for, as has been stated by one case, "It would be a le- gal absurdity to compel a man to make a contract, and, at the same time, permit the other party, who is the instrument of compulsion, to avoid such contract." Thus, it has been held that an inn keeper might charge an infant for entertainment and hold his baggage for the bill.^^ Nor will the public service company be permitted to excuse itself because of its own incompetency. Thus, it has been held that an inn keeper could not excuse himiself from liability to a guest by pleading that he was sick and of non-sane memory at the time the guest lodged with him.^® § 573. Parties bound to take notice of charter provision. — The constitution of a corporation and the powers which it pos- sesses under its constitution are presumed to be known as matters of law to its members and to all persons dealing with the corpo- ration.^' It logically follows that parties contracting with a 5 C. C. A. 551 ; Florida &c. Nav. Co. 135 N. Car. 682, 47 S. E. 76S, 67 L. V. Webster, 25 Fla. 394, 5 So. 714; R. A. 227; Bradburn v. Whatcom Union &c. Transit Co. v. Shacklet, County R. & Light Co., 45 Wash. 582, 119 111. 232, 10 N. E. 896; Missouri 88 Pac. 1020, 14 L. R. A. (N. S.) Pac. R. Co. V. Aiken, 71 Tex. 373, 526. Contra, Duncan v. Maine &c. 9 S. W. 437; Indianapolis & St. L. R. Co., 113 Fed. 508. R. Co. V. Horst, 93 U. S. 291, 23 L. ^Watson v. Cross, 2 Duv. (Ky.) ed. 898. "This duty does not result 147. See also, Vanderberg v. Kansas alone from the consideration paid for City &c. Gas Co., 126 Mo. App. 600, the service. It is imposed by the law, 105 S. W. 17. The above case is one even where the service is gratuitous." in which a married woman made ap- Philadelphia &c. R. Co. v. Derby, 14 plication to the defendant gas com- How. (U. S.) 468, 14 L. ed. 291. See pany for gas service. It was held also, Walling v. Potter, 35 Conn. 183. that in a proper case it could not re- in the above case an innkeeper was fuse. There was, however, at the held liable for the goods of a person time, a statute which permitted mar- lodging with him as guest, notwith- ried women to contract., standing the innkeeper was making ^° Cross v. Andrews, Cro. Eliz. 622. no charge. While the formation of "Spence v. Mobile &c. R. Co., 79 such relation is contractual in char- Ala. 576; Steele v. Fraternal Trib- acter, yet the duty is imposed by law unes &c., 215 111. 190, 74 N. E. 121, and sounds in tort rather than con- 106 Am. St. 160; Leonard v. Amer- tract. Bretherton v. Wood, 3 Brod. ican Ins. Co., 97 Ind. 299; Davis v. 6 Bing. 54; Coy v. Indianapolis Gas Old Colony R. Co., 131 Mass. 258, 41 Co., 146 Ind. 655, 46 N. E. 17, 36 Am. Rep. 221; Kraniger v. People's L. R. A. 535; Saltonstall v. Stock- Bldg. Soc, 60 Minn. 94, 61 N. W. ton, Taney (U. S.) 11. 904; Alexander v. Cauldwell, 83 N. "McNeill V. Durham &c R. Co., Y. 480; Hoyt v. Thompson, 19 N. Y. § 573 CONTRACTS. 838 railroad company or other corporation affected with a public interest, cannot successfully aver ignorance of the nature of the powers conferred upon it by the legislature, but, nevertheless, the courts do in some measure at least depart from this general doctrine since they do protect persons who contract with the com- pany. The doctrine, however, exerts an important influence on almost all cases. The general principle stated leads to the conclu- sion that the corporation is not bound by an act of the board of directors, or any other corporate agent, done in excess of the charter powers since the person dealing with the corporation is bound to know that no agent can exceed the powers of the corpo- ration itself.^* Nobody can hold a principal bound by a contract made with his agent in excess of that agent's known powers. Much less can a corporation be held on a contract where it is one which the corporation had no power to make. The same general rule holds as to ultra vires acts of a majority of the stockholders for the majority can bind absent or dissenting stockholders only by acts done under sanction of the charter." This same principle prevents a public service corporation from being com- pelled to furnish a service which it is not authorized to perform.^" Thus, it has been held that a company authorized to supply heat- ing gas could not be compelled to furnish gas for lighting pur- poses.^^ 207; Jemison v. Citizens' Sav. Bank, "Bird v. Bird's Patent &c. Sewage 122 N. Y. 135, 25 N. E. 264, 9 L. Co., L. R. 9 Ch. 358. R. A. 708, 19 Am. St. 482, 3 Am. R. ^ People v. St. Louis &c. Elec. R. & Corp. Cas. 285 ; Pearce v. Madison Co., 122 111. App. 422. & I. R. Co., 21 How. (U. S.) 441, 16 ^^ Narrin v. Kentucky Heating Co., L. ed. 184; Western Nat. Bank v. 27 Ky. L. 551, 86 S. W. 676. The Armstrong, 152 U. S. 346, 38 L. ed. court said : "Obviously, unless the de- 470, 14 Sup. Ct 572; Relfe v. Rundle, fendant be shown to be exercising a 103 U. S. 222, 26 L. ed. 337. See public franchise in the vending of gas also, Bent v. Underdown, 156 Ind. for lighting purposes, there is no 516, 60 N. E. 307. In Jenkins v. more ground for injunction shown Gastonia Cotton Mfg. Co., 115 N. here than if he had sought one to re- Car. 535, 20 S. E. 724, it is held that strain Peasle Gaulberg & Co. from where the statute requires the corpo- refusing to vend oil to him. But the rate contract to be in writing it can- petition on its face shows that as to not be ratified by silence. See also, the sale of gas for lighting purposes, Spence v. Wilmington &c. Mills, 115 the defendant was not only not exer- N. Car. 210, 20 S. E. 372. These cising a public franchise, but was, by cases seem to us to go very far. the ordinance which permitted it to do ^° Davis V. Old Colony R. Co., 131 business in Louisville at all, expressly Mass. 258, 41 Am. Rep. 221 ; Elevator forbidden to sell gas for any other Co. V. Memphis &c. R. Co., 85 Tenn. purpose than heating purposes. The 703, 5 S. W. 52, 4 Am. St. 798. plaintiff is therefore in the position 839 PUBLIC SERVICE CORPORATIONS. § 574 § 574. Knowledge of extraneous circumstances. — But while a person dealing with the corporation is held to be affected with notice of the corporate powers as indicated by the law of its incorporation, he is not, as a rule, bound to take notice of extraneous circumstances upon which the right to exercise these powers may depend.^^ There is a clearly marked distinction between cases where a party asserts he was ignorant of intrinsic facts or circumstances, and cases where he avers ignorance of the provisions of a charter or statute/* Although the purpose of a corporation be to do an illegal act, the person dealing with the corporation will not be affected by that act unless he has notice of it ; thus if a contract in the form of negotiable corporate security is issued by a corporation having authority to issue it and such paper gives no suggestion that it was issued as accommodation paper, an innocent holder will not be affected by the fact that it was issued for accommodation and without consideration.^* It would be otherwise, however, if the person who took the paper had actual knowledge of its character.^^ If it is within the scope of the power of the corporate agent to issue such securities, the purchaser may usually assume that they were properly issued.^" of asking an injunction requiring the Louis &c. Co., 2 Mo. App. 299; Na- defendant to violate an ordinance of tional Bank v. Young, 41 N. J. Eq. the city." S31, 7 Atl. 488; Farmers' &c. Bank v. ^" Eastern Counties R. v. Hawkes, Empire Stone Dressing Co., 5 Bosw. S H. L. C. 331, 24 L. J. Ch. 601, 3 W. (N. Y.) 27S; Bank of Genesee v. R. 609; Oxford Iron Co. v. Spradley, Patchin Bank, 19 N. Y. 312. 51 Ala. 171 ; Madison & I. R., Co. v. "= National Bank v. Wells, 79 N. Y. Norwich Sav. Soc, 24 Ind. 457; 498; West St. Louis &c. Bank v. Thompson v. Lambert, 44 Iowa 239; Shawnee &c. Bank, 95 U. S. 557, 24 Express Co. v. Railroad Co., 99 U. S. L. ed. 490. 191, 25 L. ed. 319; Galveston Railroad ""Eastern Counties R. Co. v. V. Cowdrey, 11 Wall. (U. S.) 459, Hawkes, 5 H. L. C. 331, 24 L. J. Ch. 20 L. ed. 199; Gano v. Chicago &c. R. 601, 3 W. R. 609; London &c. R. Co. Co., 60 Wis. 12, 17 N. W. IS. v. M'Michael, 5 Exch. 855; Hacken- ""See Kuser v. Wright, 52 N. J. sack Water Co. v. DeKay, 36 N. J. Eq. 825, 31 Atl. 397. Eq. 548; Ellsworth v. St. Louis &c. ^ Farmers' &c. Bank v. Sutton &c. R. Co., 98 N. Y. 553. A corporation Co., 52 Fed. 191, 3 C. C. A. 1, 17 having power to execute negotiable L. R. A. 595 ; Madison & I. R. Co. v. paper may bind itself by becoming an Norwich Sav. Soc, 24 Ind. 457 ; Bird indorser or guarantor of bonds re- v. Daggett, 97 Mass. 494; Monument ceived by it in the course of business, Nat. Bank v. Globe Works, 101 Mass. with a view to increasing the value 57, 3 Am. Rep. 322; Ex parte Esta- of such bonds. Tod v. Kentucky brook. 2 Lowell (C. S.) 547, Fed. Cas. Union Land Co., 57 Fed. 47; Rail- No. 4534. But see McLellan v. De- road Co. v. Howard, 7 Wall. (U. S.) troit File Works, 56 Mich. 579, 23 392, 19 L. ed. 117. N. W. 321 ; Lafayette &c. Bank v. St. § 575 CONTRACTS. 84O A person who sells to a corporation property which it has power to purchase will not be affected by the circumstance that it was purchased for an unauthorized purpose if he had no knowledge of such facts."' Likewise if the corporation had general authority to borrow money the lender is not bound to supervise its appli- cation.^* It must be borne in mind, however, that the rules respecting rights depending upon the ignorance of the party deal- ing with the corporation are subject to the further rule that he must have acted in good faith and as a reasonably prudent man or at least that his ignorance must not be due to his own fault or negligence.^" § 575. Corporations cannot contract so as to escape public duties. — As already intimated, corporations of the class here under consideration cannot make contracts unauthorized by the legislature, that would deprive themselves of the power to per- form their duties to the public. The foundation principle is, that where a corporation is granted by charter a franchise in a large measure intended to be exercised for the public good, the due performance of such functions being the consideration of the public grant, any contract which disables the corporation from performing those functions, or by which it undertakes, without the consent of the state, to transfer to others the rights and powers conferred by the charter, and to relieve the grantees of the burden which it imposes, is a violation of the contract with the state, and is void as against public policy.^" "See Eastern Counties R. Co. v. ™ Thomas v. West Jersey R. Co., Hawkes, 5 H. L. C. 331. 101 U. S. 71, 25 L. ed. 950, per Justice ^'Thompson v. Lambert, 44 Iowa Miller. For a general discussion of 239; Tracy v. Talmadge, 14 N. Y. the subject see, Sammons v. Kearney 162, (>1 Am. Dec. 132n. See also, Power &c. Co., 11 Nebr. 580, 110 N. Auerbach v. LeSueur Mill Co., 28 W. 312. In the course of the opinion Minn. 291, 9 N. W. 799, 41 Am, Rep. it is said: "In the case at bar we are 285 ; Ossipee Hosiery & Woolen Mfg. dealing with an irrigation company- Co. V. Canney, 54 N. H. 295 ; Cotton a quasi public corporation. It is also V. New Providence, 47 N. J. L. 401, a governmental agency, but its main 2 Atl. 253; Mutual Benefit Life Ins. purpose is the administration of a Co. V. Elizabeth, 42 N. J. L. 235; public utility. To the extent of its New Providence v. Halsey, 117 U. S. capacity it is bound to furnish water 336, 29 L. ed. 904, 6 Sup. Ct. 764. from its canal to persons desiring to See Coffin v. Indianapolis, 59 Fed. use it on equal terms and without dis- 221. crimination. In this respect it stands "Express Co. v. Railroad Co., 99 on the same footing as a railroad U. S. 191, 25 L. ed. 319. company. Neither has the right or 841 PUBLIC SERVICE CORPORATIONS. § 576 § 576. Attempt to transfer franchises. — It is a well set- tled and universally recognized principle that corporations which are created with special powers and privileges and charged with certain duties to the public are bound by considerations of public policy to refrain from doing any act whch may disable them from performing their duties to the public.*^ The application of this principle prevents a public service corporation from selling or transferring its franchise without authority from the state. Such corporations are not allowed to sell or lease their corporate powers and primary franchises without legislative authority for the reason that if they were able to do so they might thereby dis- able themselves from the performance of their public duties, and thus escape from the power of the court and of the legislature to enforce their performance.'^ In accordance with this general the power to place itself in a position where it cannot serve every person on equal terms with every other per- son. Neither has the right or power to bind itself by a contract which, if enforced, would render it unable to serve the public on those terms or to carry out its main purpose." To same effect, Munroe v. Thomas, 5 Cal. 470; Chicago Gas Light Co. v. People's Gas Light Co., 121 111. 530, 13 N. E. 169, 2 Am. St. 124; Evansville &c. R. Co. V. Evansville Electric R. Co. (Ind. App.), 98 N. E. 649; Kenton County Court v. Bank Lick Turnpike Co., 10 Bush (Ky.) 529; Brunswick Gas. Co. v. United Gas &c. Co., 85 Maine 532, 27 Atl. 525, 35 Am. St. 385 and note; Commonwealth v. Smith, 10 Allen (Mass.) 448, 87 Am. Dec. 672; Freeman v. Minneapolis &c. R. Co., 28 Minn. 443, 10 N. W. 594; Pierce v. Emery, 32 N. H. 484 ; Black v. Delaware &c. Canal Co,, 22 N. J. Eq. 130 ; Lakin v. Willamette &c. Co., 13 Ore. 436, 57 Am. Rep. 25 ; Lauman v. Lebanon Val. R. Co., 30 Pa. St. 42, 72 Am. Dec. 685 ; Central Transp. Co. V. Pullman Palace Car Co., 139 U. S. 24, 35 L. ed. 55, 11 Sup. Ct. 478; Gibbs v. Consolidated Gas Co., ■ 130 U. S. 396, 32 L. ed. 979, 9 Sup. Ct. 553; New York & Md. L. R. R. Co. V. Winans, 17 How, (U. S.) 30, 15 L. ed. 27; Railroad Co. v. Brown, 17 Wall. (U. S,) 445, 21 L. ed. 675 ; Roper v. McWhorter, 11 Va. 214; 1 Elliott R. R., §§ 70, 385. See also, Visalia Gas &c. Co. v. Sims, 104 Cal. 326, il Pac. 1042, 43 Am. St. 105; Eel River R. Co. v. State, 155 Ind. 433, 57 N. E. 388; State v. And- erson, 91 Wis. 114, 72 N. W. 386. As to the right of a public service corporation to entirely abandon its franchise, see East Ohio Gas Co. v. City of Akron, 81 Ohio St. 33, 90 N. E. 40, 26 L. R. A. (N. S.) 92. "■ See ante, § 575. See also, Daniels v. Hart, 118 Mass. 543; Abbott V. Johnstown &c. R. Co., 80 N. Y. 27, 36 Am. Rep. 572; West Virginia Transp. Co. v. Ohio River Pipe Line Co., 22 W. Va. 600, 46 Am. Rep. 527; Thomas V. West Jersey R. Co., 101 U. S. 71, 25 L. ed. 950; Central Transp. Co. v. Pullman Car Co., 139 U. S. 24, 35 L. ed. 55, 11 Sup. Ct. 478. And see Indiana- au- thorities collected and cited in Muncie Natural Gas Co. v. Muncie, 160 Ind. 97, 66 N. E. 436, 60 L. R. A. 822. A corporation cannot disable itself by contract from performing its pub- lic duties, or, by agreement, compel itself to make public accommodation subordinate to its private interests. Gibbs v. Consolidated Gas Co., 130 U. S. 396, 32 L. ed. 979, 9 Sup. Ct. 553. "^ Brunswick Gaslight Co. v. United Gas &c. Light Co., 85 Maine 532, 27 "Atl. 525, 35 Am. St. § 576 CONTRACTS. 842 principle it has been stated that a railroad company cannot mort- gage, lease, or sell its franchise nor any property essential to the operation of its railroad^^ in the absence of authority from the state/* The same has been held true of gas companies,^^ but 38S, and note on 390. "By some courts it has been held that the term 'franchise,' when applied to a corporation, technically speaking, means only the franchise to be a cor- poration, and does not include those rights and privileges, subsidiary in their nature, acquired by the corpora- tion, and to the existence of which corporate existence is not a prerequi- site. But it is quite generally rec- ognized by the courts that the term, when applied to corporations, has various significations, both in a legal and popular sense, and has especially two well-defined meanings ; one per- taining to what is sometimes called the 'primary franchise,' the right to exist as, a corporation, and the other to the different rights, privileges, and powers which are obtained and exer- cised by the corporation, and which are not a prerequisite to corporate ex- istence, such as, among others, the right or privilege to occupy and use streets and public places for the operation of a system of water or gasworks, electrical lighting plants, railroads, etc. 3 Words & Phrases; 19 Cyc. 1451. Such a meaning has been given the term by this court. Blackrock Copper M. & M. Co. v. Tingey (Utah), 98 Pac. 180. Unless the right is given the corporation by the power creating it, the corpora- tion may not sell the primary fran- chise; but, in the absence of constitu- tional or legislative restrictions, it may sell what has been denominated 'secondary franchises.' " Cooper v. Utah Light & Ry. Co. (Utah), 102 Pac. 202. '^ Singleton v. Southwestern R., 70 Ga. 464, 48 Am. Rep. 574n; Evans- ville &c. R. Co. V. Evansville &c. Electric Ry. (Ind. App.), 98 N. E. 649; Tippecanoe County v. Lafayette &c. R. Co., SO Ind. 8S; Middlesex R. Co. V. Boston & C. R. Co., 115 Mass. 347; Freeman v. Minnesota &c. R. Co., 28 Minn. 443, 10 N. W. 594; Pierce v. Emery, 32 N. H. 484; Abbott V. Johnstown &c. R. Co., 80 N. Y. 27, 36 Am. Rep. 572; 1 Elliott Railroads (2d ed.), §§ 70, 71, 385; Peters v. Lincoln & N. W. R. Co., 2 McCreary (U. S.) 275, 12 Fed. 513; Thomas v. West Jersey R. Co., 101 U. S. 71, 25 L. ed. 950; Pennsylvania R. Co. V. St. Louis A. & T. R. Co., 118 U. S. 290, 30 L. ed. 83, 6 Sup. Ct. 1094; Oregon Co. v. Oregonian R. Co., 130 U. S. 1, 32 L. ed. 837, 9 Sup. Ct. 409. See opinion of Chief Justice Ruger, in Woodruff v. Erie R. Co., 93 N. Y. 609; Brooker v. Mayesville &c. R. Co., 119 Ky. 137, 23 Ky. L. 1022, 83 S. W. 117. But it has been held that it may, under cer- tain circumstances, sell a terminal switch to the owner of the land on which it is laid. Oman v. Bedford- Bowling Green Stone Co., 134 Fed. 64, 67 C. C. A. 190, citing Jones v. Newport News & M. V. Co., 65 Fed. 736, 13 C. C. A. 95, and South Dakota V. North Carolina, 192 U. S. 286, 48 L. ed. 448, 24 Sup. Ct. 269. "* See, however, Kennebec &c. R. Co. V. Portland &c. R. Co., 59 Maine 9. See also. Woodruff v. Erie &c. R. Co., 93 N. Y. 609; United States V. Western Union Tel. Co., 50 Fed. 28. It has been held that a company organized for railroad purposes may borrow money to carry on the pur- poses of its organization notwith- standing its charter provides that its funds are to be raised by share sub- scriptions. Union Bank v. Jacobs, 6 Humph. (Tenn.) 515. It has also been held that a railroad corporation may borrow money to construct its road. Savannah &c. R. Co. v. Lan- caster, 62 Ala. 555. °° Brunswick Gaslight Co. v. United Gas &c. Light Co., 85 Maine 532, 27 Atl. 525, 35 Am. St. 385. In connec- tion with this latter case see, how- ever, the case of Fidelity Trust Co. V. Louisville Gas Co., 118 Ky. 588, 81 S. W. 927, 111 Am. St. 302; which in effect holds that such corporations can borrow money for the purpose of accomplishing the purpose of their organization, and that this power 843 PUBLIC SERVICE CORPORATIONS. 5/6 there is some difference of opinion in certain phases of this ques- tion.'^^^ Moreover a special statutory exemption or privilege, such as immunity from taxation, or a right to fix and deter- mine rates of fare, does not pass to a new corporation succeed- ing others by a consolidation or purchase, in the absence of exists although not expressly granted by their charters as fully as possessed by individuals, and that they may give the customary evidence of in- debtedness, in this case a mortgage. See also, in connection with this case. Merchants' National Bank v. Citizens Gas Light Co., 159 Mass. SOS, 34 N. E. 1083, 38 Am. St. 453, in which it was held that the treasurer of the de- fendant corporation by virtue of his office had authority to sign a note which would bind the corporation. The court said: "We do not disregard the fact that such corporations have peculiar duties to the public, and pe- culiar privileges, and that their opera- tions may be regulated by public au- thority, and their franchises and prop- erty taken over by the municipalities in which their works are located. * * * Such notes do not bind the franchises or the property of the com- pany any more than debts upon open account." '"aln Hunt V. Memphis Gas Light Co. (Tenn,), 31 S. W. 1006, it is said : "It is insisted by the complainants that corporations to which are given large powers and val- uable privileges, from the exercise of which it is expected the public will derive advantages, are impliedly re- strained in their power of alienation, railroad companies falling in this class ; and it is insisted that gas com- panies are quasi public corporations, and are governed by the same rules, and, in the absence of legislative au- thority, cannot execute a valid mort- gage. Many authorities are cited by counsel for complainants, and much reliance is placed upon the case of Portland Natural Gas & Oil Co. v. State, an opinion by the Supreme Court of Indiana, reported in 8 Am. R. & Corp. 640 (34 N. E. 818), and the note thereto. All of these author- ities have been carefully considered; and none of them support the con- tention of counsel for complainants to the extent claimed. They mainly discuss the question whether or not gas companies, water companies and the like are quasi public corporations, and some of the cases so hold. Some of them place the holding upon the ground that the right of eminent do- main had been conferred upon the corporation, which is not the case with regard to the Memphis Gas Light Company; and others, again, place the decision upon the ground of an exclusive privilege given the com- pany to occupy the streets, alleys, lanes, etc., of a city ; thus practically giving it, in such case, a monopoly of supplying the city with gas. In the case of Gas Co. v. Williamson, 9 Heisk. 314, it was held by this court, in 1872, that it was not the intention of the legislature, in the act incorpo- rating the Memphis Gas-light Com- pany, to confer the exclusive right to manufacture gas in that city. It thus appears that there are material differences between the case at bar and those relied upon by the com- plainants. None of the authorities, however, hold that a gas company is without power to execute a mort- Oragrg ♦ ♦ ^ "A municipal corporation is con- fessedly a public corporation; and, if the power to mortgage is enjoyed by a municipality, it is difficult to perceive upon what principle of pub- lic policy this power should be denied a gas company, even though it is a quasi 'public corporation. In 2 Cook, Stock, Stockholders and Corporation Law, § 779, at page 1261, it is said: 'A corporation, other than railroad corporations, may mortgage its real estate and personal property for the purpose of securing its bonds or other evidence of debt, unless there is some provision in its charter expressly pro- hibiting or regulating this right. The right to mortgage is the natural re- sult of the right to incur a debt.' Numerous cases are cited in the note ; § 576 CONTRACTS. 844 express direction to that effect in the statute.^* Thus where a corporation leased two other street railways both of which had a right to charge a five cent fare for each passen- ger carried and it was attempted to assign this right to the lessee it was held that the right to charge a specified fare was a privilege personal to the lessor and could not be as- signed, and that the lessor would be obliged to operate the road under such regulations and provisions as the general assembly might deem advisable.*' Not only is a public service corporation denied the right to sell its franchise in the absence of authority from the state but the corporate franchise cannot be seized and sold under execution or judicial sale except when legislative authority is given so to do.'*' and, further on, discussing the same subject, under the title, 'Gas Com- panies,' the same author says : 'A gas company may give a mortgage on its plant' § 927, p. 1262. Mr. Beach lays down the doctrine broadly that all corporations, unless restrained by their charter, have implied power to mortgage, 'the only exception being that of railroads.' 2 Beach Private Corporations, §§ 388, 389, 738, et seq. To the same effect, see Jones, Mort- gages, § 124; Morawetz on Private Corporations, § 346; Detroit v. Mu- tual Gaslight Co., 43 Mich. 594, 5 N. W. 1039; Hays v. Gas Co., 29 Ohio _ St. 330. Though the author- ities in other states agree in holding that a railroad corporation, owing to the peculiar relation which it bears to the public, should be denied the right tQ execute a mortgage, unless it has express legislative authority therefor, yet, as a matter of fact, this power is always conferred; and, in- deed, it is doubtful whether a rail- road could be successfully operated without the power to mortgage." It is not believed, however, that the cases on this subject are in conflict. It would seem that a quasi public cor- poration has the right to borrow money and give the customary evi- dences of indebtedness in order to enable it to accomplish the purposes of its creation. See Fidelity Trust Co. V. Louisville Gas Co., 118 Ky. 588, 81 S. W. 927, 111 Am. St. 302, but such obligations do not necessar- ily bind the franchise of the com- pany. See Merchants' Nat. Bank v. Citizens' Gas Light Co., 159 Mass. 505, 34 N. E. 1083, 38 Am. St. 453. The confusion might perhaps be ob- viated by the use of the terms pri- mary and secondary franchise. The primary franchise having reference to the right to exist as a corporation, and the secondary to the other to the different rights, privileges and powers which are obtained and exercised by the corporation and which are not a prerequisite to corporate existence. Unless the right is given the corpo- ration may not sell the primary fran- chise; but, in the absence of consti- tutional or legislative restrictions it may sell what has been denominated "secondary franchises." Cooper v. Utah Light & Ry. Co. (Utah), 102 Pac. 202. A further reason for deny- ing a public service corporation the right to transfer its franchise is that it might thus be able to create a monopoly. See, post, § 5^8, Contracts Suppressing Competition or Monop- oly. »»St. Louis &c. R. Co. V. Gill, 156 U. S. 649, 39 L. ed. 567, IS Sup. Ct 484; Covington &c. Turnpike Co. v. Sandford, 164 U. S. 578, 41 L. ed. 560, 17 Sup. Ct. 198; People's Gas Light & Coke Co. v. Chicago, 194 U. S. 1, 48 L. ed. 851, 24 Sup. Ct. 520. " Chicago Union Traction Co. v. City of Chicago, 199 III. 484, 65 N. E. 451, 59 L. R. A. 631. "Gregory v. Blanchard, 98 Cal. 311, 33 Pac. 199; Connor v. Tennes- 845 PUBLIC SERVICE CORPORATIONS. § 577 § 577. Attempt to transfer franchises — Transfer of property essential to operation. — By the great weight of authority a quasi pubhc corporation such as a raihoad company cannot trans- fer or sell any of its property or privileges which are essential to the performance of the duties which the corporation owes the public, or necessary for the exercise of its franchise, either by voluntary or forced sale without legislative authority."' Nor, it seems, can property necessary to the operation of a franchise granted to a corporation affected with a public interest be sold at judicial sale without such authority since the public is vitally in- see C. R. Co., 109 Fed. 931, 48 C. C. A. 730, 54 L. R. A. 687; State v. Turnpike Co., 65 N. J. L. 73, 46 Atl. 569; Smith v. Altoona & P. Connect- ing R. Co., 182 Pa. 139, 37 Atl. 930; City Water Co. v. State, 88 Tex. 600, 32 S. W. 1033. See, however, Leon- ard V. Baylen Street Wharf Co., 59 Fla. 547, 52 So. 718, 31 L. R. A. (N. S.) 636. The court said: "As be- tween the purchasers at an admin- istrator's sale of a franchise and the heirs of the deceased grantee of the franchise, where the granting power interposes no claim, and it does not appear that the rights of the pubhc have been injured by the sale of the franchise, the courts will not declare the sale illegal merely because it is of a franchise. So long as the fran- chise is properly used in the public interest, and no private rights are in- vaded, the use of the franchise by particular individuals or corporations is of concern only to the proper gov- ernmental authority." As to the right of a public service corporation to abandon its franchise see East Ohio Gas Co. v. City of Akron, 81 Ohio St. 33, 90 N. E. 40, 26 L. R. A. (N. S.) 92. See also, Asher v. Hutchinson Water &c. Co., 66 Kans. 496, 71 Pac. 813, 61 L. R. A. 52. "'Atlantic &c. R. Co. v. Union Pa- cific &c. R. Co., 1 Fed. 745, 1 Mc- Crary (U. S.) 541; Cumberland Tel. & T. Co. V. Evansville, 127 Fed. 187; Singleton v. Southwestern R. Co., 70 Ga. 464, 48 Am. Rep. 574n; Hays V. Ottawa &c. R. Co., 61 111. 422; State v. Dodge City &c. R. Co., S3 Kans. 377, 36 Pac. 747, 42 Am. St. 295; LouisviHe Water Co. v. Hamilton, 81 Ky. 517; Winchester &c. Turnpike Road Co. v. Vimont, 5 B. Mon. (Ky.) 1; Richardson v. Sibley, 11 Allen (Mass.) 65, 87 Am. Dec. 700; Commonwealth v. Smith, 10 Al- len (Mass.) 448, 87 Am. Dec. 672; Hendee v. Pinkerton, 14 Allen (Mass.) 381; Richards v. Merrimack &c. R. Co., 44 N. H. 127; Black v. Delaware &c. Canal Co., 22 N. J. Eq. 130; Logan v. North Carolina R. Co., 116 N. Car. 940, 21 S. E. 959; Coe v. Columbus &c. R. Co., 10 Ohio St. 372, 75 Am. Dec. 518; In re Stewart's Appeal, 56 Pa. St. 413 ; Susquehannah Canal Co. v. Donhan, 9 Watts. & S. (Pa.) 27, 42 Am. Dec. 315; Young- man V. Elmira &c. R. Co., 65 Pa. St. 278; Western &c. R. Co. v. Johnston, 59 Pa. St. 290; In re Steiner's Ap- peal, 27 Pa. St. 313; Pittsburg &c. Co. V. Allegheny County, 63 Pa. St. 126; Johnson Co. v. Miller, 174 Pa. St. 605, 34 Atl. 316, 52 Am. St. 833; Philadelphia v. Philadelphia & R. Co., 177 Pa. St. 292, 35 Atl. 610, 34 L. R. A. 564; Palestine v. Barnes, 50 Tex. 538; Thomas v. West Jersey &c. R. Co., 101 U. S. 71, 25 L. ed. 950; Pennsylvania R. Co. v. St. Louis &c. R. Co., 118 U. S. 290, 30 L. ed. 83, 6 Sup. Ct. 1094; Oregon v. Ore- gonian R. Co., 130 U. S. 1, 32 L. ed. 837, 9 Sup. Ct. 409; Cen'tral Trans- portation Co. V. Pullman &c. Co., 139 U. S. 24, 35 L. ed. 55, 11 Sup. Ct. 478; York &c. R. Co. v. Winans, 17 How. (U. S.) 30, 15 L. ed. 27; Pearce v. Madison & I. R. Co., 21 How. (U S.) 441, 16 L. ed. 184; Pullan v. Cin- cinnati & C. Air-Line R. Co., 4 Biss (U. S.) 35, Fed. Cas. No. 11461 Roper V. McWhorter, 11 Va. 214 •7 CONTRACTS. 846 terested in the continued performance by the corporation of its public duties.*" Property not essential to the operation of the franchise may, however, be sold on execution."*^ It has also been held that in a proper case courts of equity might order the sale of the franchises and property of corpora- tions affected with a public interest to satisfy their debts.*^ The test applied in the case of sales of property belonging to a quasi public corporation is whether or not the property in question is essential in any reasonable sense for the discharge of the corpo- rate duties. The power of a quasi public corporation, to alienate its property is now largely controlled, however, by statutory en- actment in the various states.*' Vermont &c. Co. v. Vermont &c. Co., 34 Vt. 1. The general doctrine was thus stated in Black v. Delaware &c. Canal Co., 22 N. J. Eq, 130: "It may be considered as settled that a cor- poration cannot lease or alien any franchise or any property necessary to perform its obligations and duties to the state, with legislative author- ity." " Connor v. Tennessee Cent. R. Co., 109 Fed. 931, 48 C. C. A. 730, 54 L. R. A. 687 ; Louisville Water Co. V. Hamilton, 81 Ky. 517; Brady v. Johnson, 75 Md. 445, 26 Atl. 49, 20 L. R. A. 1ZT\ McColgan v. Balti- more Belt R. Co., 85 Md. 519, 36 Atl. 1026; Sherman County Irrig. Water &c. Co. v. Drake, 65 Nebr. 699, 91 N. W. 512; Coe v. Peacock, 14 Ohio St. 187 ; Reynolds v. Reynolds Lumber Co., 169 Pa. 626, 32 Atl. 537, 47 Am. St. Rep. 935; Wall v. Nor- folk &c. R. Co., 52 W. Va. 485, 44 S. E. 294, 64 L. R. A. 501n, 94 Am. St. 948. Compare Gardner v. Mobile &c. R. Co., 102 Ala. 635, 15 So. 271, 48 Am, St. 84; Risdon Iron & Loco- motive Works V. Citizens' Trac. Co., 122 Cal. 94, 54 Pac. 529, 68 Am. St. 25; McNeal Pipe & Foundry Co. v. Rowland, 111 N. Car, 615, 16 S, E. 857, 20 L. R. A. 743; Campbell v. Western Electric Co,, 113 Mich. 333, 71 N. W. 644. " Lathrop v. Middleton, 23 Cal. 257, 83 Am. Dec. 112 (ferry boat in proc- ess of construction) ; Hauns v. Cen- tral Kentucky Lunatic Asylum, 103 Ky. 562, 45 S. W. 890 (farm stock and agricultural implements and part of the land of the corporation sold) ; Plymouth R. Co. v. Colwell, 39 Pa. St. Zil, 80 Am. Dec. 526 (real estate owned by railroad company not dedi- cated to corporate purposes) ; Sham- okin Valley R. Co. v. Livermore, 47 Pa. 465, 86 Am. Dec. 552 (real es- tate). See also. Hunt v. Bullock, 23 111. 320; Beardsley &c. v. Ontario Bank, 31 Barb. (N. Y.) 619; Coe v. Peacock, 14 Ohio St. 187; Coe v. Columbus &c. R. Co., 10 Ohio St. 372, 75 Am. Dec. 518. ■" Gunnison v. Chicago &c. R. Co., 117 Fed. 629; Stewart v. Wheeling &c. R. Co., 53 Ohio St. 151, 41 N. E. 247, 29 L. R. A. 438; Seymour V. Milf ord &c. Tpk. Co., 10 Ohio 476 ; Cleaves v. Davidson, 4 Baxt. (Tenn.) 83 ; Milwaukee & M, R. Co. v. James, 73 U. S. (6 Wall.) 750, 18 L. ed. 854. See also, Louisville &c. R. Co. v. State, 8 Ind, App. 2,11, 35 N. E. 916; Lake Erie &c. R. Co. v. Bowker, 9 Ind. App. 428, 36 N. E. 864; Louis- ville &c. R. Co. v. State, 122 Ind. 443, 24 N. E. 350 ; Louisville Water Co. v. Hamilton, 81 Ky. 517. ^ For examples of such statutes and the construction placed upon them, see Indianapolis & Cumberland Gravel road Co, v. State, 105 Ind. 37, 4 N. E. 316; Ripley v. Evans, 87 Mich, 217, 49 N. W. 504, 36 Am. & Eng. Corp. Cas. 188; Williams v. East Wareham &c. R. Co., 171 Mass. 61, 50 N. E. 646; Simmons v, Wor- thington, 170 Mass. 203, 49 N, E. 114; McKee v. Grand Rapids & R. 847 PUBLIC SERVICE CORPORATIONS. § 578 Should the directors sell all the assets of the company in a manner other than that prescribed by statute and thereby prac- tically work its dissolution, they may be held liable for the debts of such company, notwithstanding they may have acted in good faith.^^ § 578. Contracts suppressing competition or monopoly. — The policy of the law is to prevent the creation of monopolies and to foster fair competition.*" The suppression of competition may be accomplished in two ways : one is by the sale and transfer of the corporate franchise; the other is by a trade agreement for the suppression of competition. In the preceding sections of this chapter it has already been mentioned that generally speaking a public service corporation cannot transfer its franchise or prop- erty essential to its operation. One of the reasons assigned for this rule is that the transfer of franchises may sometimes be ille- gal as tending to establish monopolies.*' L. St. R. Co., 41 Mich. 274, 1 N. W. 873, SO N. W. 469; Randolph v. Lamed, 27 N. J. Eq. 557; McNeal Pipe & Foundry Co. v. Howland, 111 N. Car. 615, 16 S. E. 857, 20 L. R. A. 743; Mausel v. New York C. & St. L. R. Co., 171 Pa. St. 606, 33 Atl. 377; Vulcanite Paving Co. v. Phila- delphia Rapid Transit Co., 220 Pa. 603, 69 Atl. 1117, 17 L. R. A. (N. S.) 884; Bell v. Wood, 181 Pa. St. 175, 37 Atl. 201 ; Greensburg Fuel Co. V. Irwin Natural Gas. Co., 162 Pa. St. 78, 29 Atl. 274 ; In re Philadelphia &c. R. Co.'s Appeal, 70 Pa. 355; Campbell v. Pittsburgh & W. R. Co., 137 Pa. St. 574, 20 Atl. 949; Crouch V. Dakota &c. R. Co., 18 S. Dak. 540, 101 N. W. 722; San Antonio &c. R. Co. V. San Antonio &c. R. Co. (Tex. Civ. App.), 76 S. W. 782; Texas- Mexican R. Co. V. Wright, 88 Tex. 346, 31 S. W. 613, 31 L. R. A. 200n; Wall V Norfolk & W. R. Co., 52 W. Va. 485, 44 S. E. 294, 64 L. R. A. 501 n, 94 Am. St. 948. "Darcy v. Brooklyn & New York Ferry Co., 196 N. Y. 99, 89 N. E. 461, 134 Am. St. 827. « Chicago &c. R. Co. V. Southern Indiana R. Co., 38 Ind. App. 234, 70 N. E. 843, citing 1 Elliott on Rail- roads, § 359. "A contract between corporations charged with a public duty, such as that of common car- riers, providing for the formation of a combination, having no other pur- pose than that of stifling competi- tion, and providing means to accom- plish that object, is illegal. The pur- pose to break down competition pois- ons the whole contract, and there is no antidote which will rescue it from legal death." Cleveland &c. R. Co. V. Closser, 126 Ind. 348, 26 N. E. 159, 9 L. R. A. 75-1, 22 Am. St. 593. *° Dunbar v. American Telephone &c. Co., 224 111. 9, 79 N. E. 423, 115 Am. St. 132. Of the situation in this case the court said, "While a com- plete monopoly or a complete re- straint of competition would not nec- essarily result, the tendency would be in that direction which is sufficient to condemn the transaction as unlaw- ful." Brunswick Gas Light Co. v. United Gas Fuel & Light Co., 85 Maine 532, 27 Atl. 525, 35 Am. St. 385 ; Southern Electric Securities Co. V. State, 91 Miss. 195, 44 So. 785, 124 Am. St. 638. In the above case a holding company was organized to take over the stock of various public service corporations and thus con- trol prices. The holding company was enjoined from doing any act § 578 CONTRACTS. 848 But it is not alone by sale or transfer of the corporate fran- chise or property that a public service corporation stifles competi- tion and creates a monopoly. Such corporations may seek to accomplish this end by unfair competition as where railroads refuse to accept freight from a shipper because such patron; shipped over another line also. In other words a carrier cannot ' demand exclusive custom.*' Nor can a coach line refuse to re- ceive as passengers persons who have traveled part way to their destination on a rival line.*^ Nor can a telephone company re- fuse service to one unless he will agree not to install the phone of a rival company.*^ Such a contract when made is void as in restraint of trade and against public policy as tending to create a monopoly''" and a court of equity will not enjoin its breach. ^^ Likewise a contract entered into by a newspaper with the asso- ciated press which contained a provision to the effect that the newspaper should purchase news from no other source than the associated press has been held null and void.'^^ A court has re- fused to enforce a contract entered into by a landowner as against a subsequent purchaser by which he agrees that the prod- ucts of a stone quarry shall be transported to market exclu- sively over one line of railroad. The court held that this was a having relation to and in furtherance of the contract under which it was organized. " Chicago &c. R. Co. v. Suffern, 129 111. 274, 21 N. E. 824. " Bennett v. Button, 10 N. H. 481. " State V. Citizens' Telephone Co., 61 S. Car. 83, 39 S. E. 257, 55 L. R. A. 139, 85 Am. St. 870. °° Gwynn v. Citizens' Telephone Co., 69 S. Car. 434, 48 S. E. 460, 67 L. R. A. Ill, 104 Am. St. 819. "Central New York Tel. &c. Co. V. Averill, 199 N. Y. 128, 92 N. E. 211, 139 Am. St. 878. "' Inter Ocean Pub. Co. v. Asso- ciated Press, 184 111. 438, 56 N. E. 822, 48 L. R. A. 567, 75 Am. St. 184. In the above case an injunction was issued to restrain the Associated Press from refusing to furnish news to such newspaper where the ground for refusal was that it had violated the illegal provision in the contract that it would procure news from no antagonistic agencies. The court said : "The character of appellees' business is not to be determined by the contract which it made respecting the liabilities which would attend it, but by the nature of the business, its fixed legal character, growing out of the manner in which that business is conducted, and the purpose of its creation. The legal character of the corporation and its duties cannot be disregarded because of any stipula- tion incorporated in the contract that it should not be liable to discharge a public duty. Its obligation to serve the public is not one resting on con- tract, but grows out of the fact that it is in the discharge of a public duty, or a private duty which has been so conducted that a public interest has attached thereto." See, how- ever. State V. Associated Press, 159 Mo. 410, 60 S. W. 91, 51 L. R. A. 151, 81 Am. St. 368. 849 PUBLIC SERVICE CORPORATIONS. 578 covenant which did not run with the land.''' On the other hand, the Appellate Court of Indiana has assumed that a contract whereby a patron of an electric light company agreed to accept exclusive service from such company, is valid.°* And in Pennsyl- vania it has been held that a contract to give all the traffic of cer- tain mines, and furnaces, and of a railroad therefrom to another and connecting railroad which furnishes aid to develop the busi- ness is valid.'^'' An agreement between two or more public ser- vice corporations whereby each agrees not to accept applications for service made by customers of the other company is another form of contract by which a public service corporation may seek to avoid performance of its public duty. It has been suggested that such a contract is sufficient ground for the revocation of the corporation's franchise.^* The converse of the foregoing is also true. A public service corporation does not have the right or the power to enter into an agreement with its customer not to deal with other applicants." ■^Kettle River R. Co. v. Eastern R. Co., 41 Minn. 461, 43 N. W. 469, 6. L. R. A. 111. " Beck V. Indianapolis &c. Power Co., 36 Ind. App. 600, 76 N. E. 312. ^ Bald Eagle Valley R. Co. v. Nit- tany Valley R. Co., 171 Pa. 284, 33 Atl. 239, 29 L. R. A. 423, SO Am. St. 807. It would seem hard to reconcile the two foregoing cases with the great weight of authority, except perhaps that in them the com- pany offered its customer all the serv- ice he could possibly need, but it is believed that this does not _ furnish an adequate reason to sustain them. " "By the agreement in question, when carried into effect, the patrons of one company were excluded from being supplied with gas from the other company. Each company was, by the terms of the agreement, bound to abide by and maintain the prices fixed, and each was prohibited from furnishing gas to the customers of the other. That the people of that city who desired to become con- sumers of gas were, by the agree- ment in question, deprived of the benefits that might result to them from competition between the two companies, certainly can- not be successfully denied. The exclusion of competition, under the agreement, redounded solely to the benefit of appellee and the other com- pany, and the enforcement of the compact between them could be noth- ing less than detrimental to the pub- lic. By uniting in this agreement appellee disabled or at least professed to have disabled, itself from the per- formance of its implied duties to furnish gas impartially to all, and thereby made public accommodations subservient to its own private inter- ests." State V. Portland Natural Gas &c. Co., 153 Ind. 483, S3 N. E. 1089, 53 L. R. A. 413, 74 Am. St. 314. " Cumberland &c. Telegraph Co. v. Morgans &c. R. Co., 51 La. Ann. 29, 24 So. 803, 72 Am. St. 442; Sam- mons v. Kearney &c. Irrigation Co., 77 Nebr. 580, 110 N. W. 308, 8 L. R. A. (N. S.) 404n. But a railroad company may enter into a contract with an individual to develop and conduct a certain business over its line, giving such person full charge of such business and the exclusive privilege thereof "so far as permitted 54 — Contracts, Vol. I § 578 CONTRACTS. 8;o Nor can it enter into an agreement to give priority or preference to one customer over others^^ unless such preference is in favor of the public.^® Likewise it has been held that a telephone company that had granted the exclusive right to a telegraph company in the use of the telephone in handling messages could not refuse to install a telephone in the office of a rival telegraph company."" A covenant whereby a land owner granted an oil transportation company exclusive right of way for a pipe line for transporting oil has also been held invalid."^ A railroad company cannot give an undue or unreasonable preference to any person, firm, corpo- ration or locality."^ Thus it cannot refuse to give others the same service at the same time."* It may, however, refuse to to do so by law.'' Delaware &c. R. Co. V. Kutter, 147 Fed. 51, 11 C. C. A. 315. ■^Fairchance Window Glass Co. v. Star Gas Co., 66 Leg. Intelligencer 544; Leavell v. Western Union Tele- graph Co., 116 N. Car. 211, 21 S. E. 391, 27 L. R. A. 843, 47 Am. St. 798; Vaught V. East Tenn. Tel. Co., 123 Tenn. 318, 130 S. W. 1050, 31 L. R. A. (N. S.) 315 and note. See also, Western Union Telegraph Co. v. Rosentreter, 80 Tex. 406, 16 S. W. 25. Compare Conemaugh Gas Co. V. Jackson Farm Gas Co., 186 Pa. St. 443, 40 Atl. 1000, 65 Am. St. 865. ™New York Tel. Co. v. Siegel- Cooper Co., 202 N. Y. 502, 96 N. E. 109. °° State of Missouri v. Bell Tele- phone Co. (1885), 23 Fed. 539; Dela- ware & A. Telegraph & Telephone Co. V. Delaware, 50 Fed. 677, 2 C. C. A. 1 ; Chesapeake & P. Telephone Co. V. Baltimore & O. Telegraph Co., 66 Md. 399, 7 Atl. 809, 59 Am. Rep. 167; State v. Nebraska Telephone Co., 17 Nebr. 126, 22 N. W. 237, 52 Am. Rep. 404; State v. Bell Tele- phone Co., 26 Ohio St. 296, 38 Am. Rep. 583n; Bell Telephone Co. v. Commonwealth, 2 Sad. (Pa.) 299, 3 Atl. 825 ; Commercial Union Tel. Co. V. New England T. & T. Co., 61 Vt. 241, 17 Atl, 1071, 5 L. R. A. 161, 15 Am. St. 893; 22 Albany L. J, (N, Y.) 363. See 5 L. _R. A. 161, note. See also, Cincinnati &c, R. Co. v. Bowling Green, 57 Ohio St. 336, 49 N. E. 121, 41 L. R. A. 422; Cincin- nati H. & D. R. R. Co. V. Bowling Green, 57 Ohio St. 336, 49 N. E. 121, 41 L. R. A. 422. But see American Rapid Telegraph Co. v. Connecticut Tel. Co., 49 Conn. 352, 44 Am. Rep. 237. "' West Virginia Trans. Co. v. Ohio River Pipe Line Co., 22 W. Va. 600, 46 Am. Rep. 527. To same effect, Calor &c. Co. v. Franzell, 128 Ky. 715, 109 S. W. 328, Z(> L. R. A. (N. S.) 456 and note. In the latter case an exclusive right of way was granted to a gas company. The court said : "What would be thought, for instance, of the proposition that a railroad corporation could lease from the owners a belt of land surround- ing a municipality, and provide in the lease that it should have exclusive right to operate a railroad across the land in question?" °^ National Car Advertising Co. v. Louisville &c. R. Co., 110 Va. 413, 66 S. E. 88, 24 L. R. A. (N. S.) lOlOn. In the above case the railroad com- pany attempted to grant the exclusive right to use its box cars for adver- tising purposes. Galveston Cham- ber of Commerce v. Railroad Comm. of Tex. (Tex. Civ. App.), 137 S. W. 737 (discrimination in rates). See also, Louisville &c. R. Co. v. Mottley, 219 U, S. 467, 55 L. ed. 297, 31 Sup. Ct. 265, 34 L. R. A. (N, S.) 671. '" Memphis News Publishing Co. v. Southern R. Co., 110 Tenn. 684, 75 S. W. 941, eZ L, R. A. 150. In the above case an agreement had been entered into whereby the railroad 851 PUBLIC SERVICE CORPORATIONS. § 578 accept for transportation goods tendered in an unfit condition therefor."* As a general rule contracts entered into by a public service corporation for a division of territory"" are invalid and the same is generally true of most pooling arrangements."^ Courts of equity will not enjoin the breach of a traffic agreement between company agreed to carry on a special train only a paper published by a certain company. The court said : "It would hardly be contended that a railway making a special and exclu- sive contract to transport shoes man- ufactured by one party in a commun- ity, could strip itself of its common- law character, and decline, without any reason save the existence of said contract, to transport boxes of shoes for another manufacturer in the same community. If this be so, where is the controlling difference between such a case and the one now before us ? Packages of newspapers are as much property as shoes, and the principle which controls in the one case, it seems to us, must equally apply to the other. If this be not so, by parceling out its means of trans- portation to the full extent of its carrying capacity, it would be pos- sible for a railroad to build up a few in a community to the destruction of the many who equally seek ship- ment. This the law will not tolerate in one who holds himself out as a common carrier. As has been al- ready said, he must accord equal privileges to all who are in like con- dition. He cannot foster monopolies. He will not, by making special pref- erential agreements, be permitted to build up one set of shippers at the expense of another. He must carry for all alike." See also, Youghio- gheny &c. Coal Co. v. Erie R. Co., 24 Ohio Cir. Ct. 289. "Atlantic Coast Line R. Co. v. Rice, 169 Ala. 26S, 52 So. 918, 29 L. R. A. (N. S.) 1214n, Ann. Cas. 1912B 389. "'Wilmington City R. Co. v. Wil- mington &c. R. Co., 8 Del. Ch. 468, 46 Atl. 12: Chicago &c. Co. v. Peo- ples &c. Co., 121 111. 530, 13 N. E. 169, 2 Am. St. 124 ; South Chicago R. Co. V. Calumet R. Co., 171 III. 391, 49 N. E. 576 ; Chicago I. & L. R. R. Co. V. Southern Ind. R. Co.. 38 Ind. App. 234, 70 N E. 843; Keene Syndicate v. Wichita Gas, E. L. & P. Co., 69 Kans. 284, 76 Pac. 834, 67 L. R. A. 61, 105 Am. St. 164. See, however. Weld v. Gas & Electric Light Comrs., 197 Mass. 556, 84 N. E. 101; Ives v. Smith, 55 Hun (N. Y.) 606, 28 N. Y. St. 917, 8 N. Y. S. 46; also, Home Telephone Co. v. North Manchester Tel. Co., 47 Ind. App. 411, 92 N. E. 558, 93 N. E. 234. ■"In re Pooling Freight, 115 Fed. 588; Southern Pac. R. Co. v. Inter- state Commerce Commission, 200 U. S. 536, 50 L. ed. 585, 26 Sup. Ct. 330; United States v. Joint Traffic Assn., 171 U. S. 505, 23 L. ed. 259, 19 Sup. Ct. 25; United States v. Trans- Missouri Freight Assn., 166 U. S. 290, 41 L. ed. 1007, 17 Sup. Ct. 540. "A railroad company is a quasi-public corporation, and owes certain duties to the public, among which are the duties to afford reasonable facilities for the transportation of persons and property, and to charge only reason- able rates for such service. Any con- tract by which it disables itself from performing these duties, or which makes it to its interest not to per- form them, or removes all incentive to their performance, is contrary to public policy and void; and, the ob- vious purpose of this contract being to suppress or limit competition be- tween the contracting companies in respect to the traffic covered by the contract, and to establish rates with- out regard to the question of their reasonableness, it is contrary to pub- lic policy, and void." Citing many authorities Chicago M. & St. P. R. Co. V. Wabash St. L. P. R. Co., 61 Fed. 993. See, however. Hare v. London &c. R. Co., 2 Johns. & H. 80. "It is a mistaken notion, that the public is benefited by putting two railway com- panies against each other till one is ruined, the result being, at last, to § 579 CONTRACTS. 852 two railroad companies whereby one of them is restrained from competing with the other. "^ It is thus made apparent that every pubHc service corporation must grant every proper application for service."^ §579. Not required to undermine own business. — On the other hand it is not required to undermine its own business. "' Thus, as a general rule, a i-ailroad may'° or may not" at its dis- cretion, grant to another company trackage rights.''^ However, where a corporation is organized for the specific purpose of fur- nishing trackage for other railroads, such as a terminal company, it has no right to discriminate in favor of certain roads.^^ The raise the fares to the highest pos- sible standard." See also, Averill V. Southern R. Co., 75 Fed. 736; Manchester &c. R. Co. v. Con- cord R. Co., 66 N. H. 100, 20 Atl. 383, 9 L. R. A. 689, 49 Am. St. 582; Raritan River R. Co. v. Middlesex & S. Traction Co., 70 N. J. L. 732, 58 Atl. 332. And see generally 1 El- liott Railroads (2nd. ed.), §§ 365-367; 4 Elliott Railroads, § 1675, and post, ch. 23. "Wilmington City R. Co. v. Wil- mington &c. R. Co., 8 Del. Ch. 468, 46 Atl. 12. See also, Central New- York Tel. &c. Co. V. Averill, 199 N. Y. 128, 92 N. E. 211, 139 Am. St. 878. ™ See ante, § 575 et seq. See also, Rogers Locomotive & Machine Works V. Erie R. Co, 20 N. J. Eq. 379. ™ Lundquist v. Grand Trunk West- ern R. Co., 121 Fed. 915. "That a number of persons should combine to carry on a business in competition with the defendant, to take from it the most profitable parts of its busi- ness; to make use of its capital and facilities for its destruction, cannot be assumed to have been considered or provided for by the company in fixing its present tariff." Johnson v. Dominion Express Co., 28 Ont. 203. ' '"Boston &c. R. Corp. v. Nashua &c. R. Corp. 157 Mass. 258, 31 N. E. 1067, citing Nashua &c. R. Co. v. Boston &c. R. Co., 136 U. S. 356, 34 L. ed. 363, 10 Sup, Ct. 1004; Union Pac. R. Co. V. Chicago &c. R. Co., 163 U. S. 564, 41 L. ed. 265, 16 Sup. Ct. 1173. A contract granting right to use railroad and appurtenances is governed by ordinary rules of con- struction. Chicago &c. R. Co. v. Denver &c. R. Co., 143 U. S. 596, 36 L. ed. 277, 12 Sup. Ct. 479, 50 Am. & Eng. R. Cas. 60. See St. Paul &c. R. Co. V. St. Paul &c. Co., 44 Minn. 325, 46 N. W. 566. " Michigan Central R. Co. v. Pere Marquette R. Co., 128 Mich. 333, 87 N. W. 271. ''There would seem to be serious doubt as to whether or not a legis- lature may require one railroad to grant running rights to another rail- road over the former's rails. See Toledo Electric Street R. Co. v. Tol- edo Consolidated Steam R. Co., 26 Ohio Weekly Law 172, which would seem to hold that the legislature has this power when properly exercised. See, however. In re Philadelphia M. & S. St. R. Co. Petition, 203 Pa. St. 354, S3 Atl. 191. '° State V. Jacksonville Terminal Co., 41 Fla. 363, 27 So. 221; Union Railway of Baltimore v. Canton R. Co., 105 Md. 12, 65 Atl. 409: United States V. Terminal R. Assn. (U. S.), 32 Sup. Ct. 507 (decided under the Sherman anti-trust act). A railroad, however, which owns its own ter- minal facilities and which has not dedicated them to the use of rail- roads generally, is not required to permit such other roads to use its trackage. Terre Haute &c. R. Co. v. Peoria &c. R. Co., 167 111. 296, 47 N. E. 513; Commonwealth v. Norfolk &c. R. Co. (Va.), 68 S. E. 351. On 853 PUBLIC SERVICE CORPORATIONS. § 579 same principle would seem to apply to telephone companies.'* It has been held, however, that by statutory provision one tele- phone company could require another company to permit a con- nection with its switchboard and the use of its lines for receiving and forwarding messages through such connection from subscrib- ers of the former company substantially as it did messages ten- dered by its own local subscribers, in case compensation, as pro- iVided for by statute, was made.'° It has also been held that where one telephone company permits another to connect up with its exchange it cannot discriminate against other companies and refuse one company a privilege which it has granted to another. '" And, furthermore, it would seem that on having established a the same principle a railroad bridge company which owns a bridge could not be compelled to permit an elec- tric railroad to run and operate its cars across defendant's bridge. Evans- ville &c. Trac. Co. v. Henderson Bridge Co., 134 Fed. 973, citing El- liott Railroads, §§ 922, 974, 1084, the court said : "While fully recognizing the well-known doctrine that public service corporations are bound to render to the public certain services appropriate to the particular func- tions of the corporation, that doctrine has not been supposed to reach far enough to make the corporation serve the purposes or be subjected to the uses of a mere rival in business. One water company or one telephone com- pany or one telegraph company or one street railway company or one railroad company, while bound ap- propriately to serve the general pub- lic, cannot, unless under express statutory enactment and by due proc- ess of law thereunder, be compelled to give its property to the uses and benefits of a rival, except by some form of condemnation. The rival is not, ordinarily, to be included in the term "general public." See, espe- cially in this connection, Elliott, Rail- roads, §§ 922, 974, 1084, and cases cited. In short, it seems to me that the entire relief prayed for is beyond the power of the court to give to this complainant in its present situa- tion." It is otherwise, however, where the bridge has been dedicated not only to the use of ordinary travel but to its use by street railway com- panies in passing cars over it from one city to another. Covington &c. Bridge Co. v. South Covington &c. St. R. Co., 93 Ky. 136, 14 Ky. L. 52, 9 S. W. 403, IS L. R. A. 828. "Rural Home Tel. Co. v. Ken- tucky &c. Tel. Co., 32 Ky. L. 1068, 107 S. W. 787; In re Baldwinsville Tel. Co., 24 Misc. (N. Y.) 221, S3 N. Y. S. S74. '" Billings Mutual Tel. Co. v. Rocky Mountain Bell Tel. Co., 1S5 Fed. 207, construing Montana Statute. "United States Tel. Co. v. Central Union Tel. Co., 171 Fed. 130; Home Tel. Co. V. Granby & Neosho Tel. Co., 147 Mo. App. 216, 126 S. W. m. See, however. Home Tel. Co. v. Lar- coxie Light & Tel. Co., 236 Mo. 114, 139 S. W. 108, 36 L. R. A. (N. S.) 124, in which the Missouri Supreme Court States that in its opinion the dissenting opinion of Reynolds, P. J., expresses the law of the case. See also, Cumberland Tel. &c. Co. v. Cartright Tel. Co., 128 Ky. 395, 108 S. W. 875. See contra, when the agreement is for the best interest of the public and made in order to ex- tend the service. Home Tel. Co. V. North Manchester Tel. Co. (Ind. App.), 92 N. E. 558, 93 N. E. 234; Cumberland Tel. &. Tel. Co. v. State (Miss.), 54 So. 670; Home Tel. Co. V. Larcoxie Light & Tel. Co., 236 Mo. 114, 139 S. W. 108, id L. R. A. (N. S.) 124 and note; United States Tel. Co. V. Middlepoint Home Tel. Co., 7 Ohio N. P. (N. S.) 425. § 580 CONTRACTS. 854 switchboard connection, the service cannot be discontinued.^^ On the principle that a pubhc service corporation is not required to undermine its own business, it has been held that an irrigation company is not required to permit a rival company to utilize its work.'^ Nor under general legislation on the subject can one irrigation company require another to enlarge its ditches.'' It has also been held that a water company may refuse to supply a large consumer with water where he intends to act as an inter- mediary and distribute the supply furnished him to various build- ings, notwithstanding the buildings are owned by him.*" Like- wise, it has been held that a gas company is not required to fur- nish a rival company with gas.*^ § 580. Different methods of fixing rates — Discrimination in favor of public. — A public service corporation also has the right to employ different methods in fixing rates in the absence of statutory restriction. It may adopt either a flat rate or install meters^ ^ or give its customers choice between the two.*^ In the absence of any statutory restriction it has been held that the company is not guilty of discrimination when it requires the in- " State V. Cadwallader (Ind.), 87 water to another who intends to act N. E. 644. See also, Home Tel. Co. as intermediary. Milledgeville Water V. North Manchester Tel. Co., 47 Ind, Co. v. Edwards, 121 Ga. S55, 49 S. E. App. 411, 92 N. E. SS8, 93 N. E. 234. 621; Mulrooney v. Obear, 171 Mo. "Paxton & Hershey Irrigating 613, 71 S. W. 1019. Canal &c. Co. v. Farmers' & Mer- ^^ American Lighting Co. v. Public chants' Irrigation &c. Co., 45 Nebr. Service Corp., 132 Fed. 794; Public 884, 64 N. W. 343, 29 L. R. A. 853, Service Corporation v. American 50 Am. St. 585. Lighting Co., 67 N. J. Eq. 122, 57 " Junction Creek &c. Ditch Co. v. Atl. 482. Durango, 21 Colo. 194, 40 Pac. 356. ''^Robbins v. Bangor R. & Elec. Co., ™ United States v. American Water 100 Maine 496, 62 Atl. 136, 1 L. R. A. Works Co., 37 Fed. 747. In the above (N. S.) 963 (meter) ; Goebel v. case the United States wished water Grosse Point Waterworks, 126 Mich, for the Fort Omaha reservation, a 307, 85 N. W. 744 (flat rate), tract containing many acres on which *■ Sheward v. Citizen's Water Co., were located officers' quarters, hospi- 90 Cal. 635, 27 Pac. 439; Shaw Stock- tals, warehouses and barracks. It was ing Co. v. Lowell, 199 Mass. 118, 85 held that the reservation was not en- N. E. 90, 18 L. R. A. (N. S.) 746; titled to be supplied as a single con- Brass v. Rathbone, 8 App. Div. (N. sumer. But under proper circum- Y.) 78, 40 N. Y. S. 466; Exchange & stances, however, a water company Building Co. v. Roanoke &c. Water may voluntarily contract to furnish Co., 90 Va. 83, 17 S. E. 789. 855 PUBLIC SERVICE CORPORATIONS. § S8l stallation of a meter.** A gas'" or electric light company*" may perhaps have the right to supply gas or power at a lower cost to a manufacturer by day at a time when its equipment is largely idle and with the understanding that the supply may be curtailed in favor of other businesses when necessity demands it. Public serv- ice corporations may also charge a higher rate for more expen- sive service/' These cases merely illustrate the general principle that the law forbids all discrimination between two applicants who are similarly circumstanced and who demand the same ser- vice.** It must be borne in mind, however, that the law against unreasonable discrimination rests on public policy. It is for- bidden because it is opposed to the interest of the public, which requires that all should be treated alike under like circumstances. Discriminations in favor of the public it seems, are not opposed to public policy.** § 581. Contracts as to location of stations and route. — It has been held that contracts requiring a railroad company to establish its depot at a certain point are against public policy ^ Shaw V. San Diego Water Co. Providence Tel. Co., 23 R. I. 312, SO (Cal.), 50 Pac. 693; Sheward v. Citi- Atl. 1014, 55 L. R. A. 113. See also, zen's Water Co., 90 Cal. 635, 27 Pac. Tift v. Southern R. Co., 138 Fed. 753. 439; Robbins v. Bangor R. & Elec. ""See, however. State v. Birming- Co., 100 Maine 496, 62 Atl. 136, 1 L. ham Water Works Co., 164 Ala. 586, R. A. (N. S.) 963; Shaw Stocking 51 So. 354, 137 Am. St. 69, 27 Co. V. Lowell, 199 Mass. 118, 85 N. L. R. A. (N. S.) 674n. As to the E. 90, 18 L. R. A. (N. S.) 746; Pow- power of a municipality to regulate ell V. Duluth, 91 Minn. 53, 97 N. W. rates see Cedar Rapids Gas Light Co. 450 ; Horner v. Oxford Water & Elec. v. Cedar Rapids, 144 Iowa 426, 120 Co., 153 N. Car. 535, 69 S. E. 607, N. W. 966, 138 Am. St. 299. See also, 138 Am. St. 681 ; Exchange & B. Co. Twitchell v. Spokane, 55 Wash. 86, V. Roanoke G. & W. Co., 90 Va. 83, 104 Pac. 150, 24 L. R. A. (N. S.) 17 S. E. 789; State v. Gosnell, 116 290n, 133 Am. St. 1021. In the above Wis. 606, 93 N. W. 542, 61 L. R. A. case the water works were owned by 33n. But the imposition of a fiat rate the city. may not be reasonable. See Postal " New York Telephone Co. v. Sie- Cable Tel. Co. v. Cumberland Tel. gel-Cooper Co., 202 N. Y. 502, 96 N. Co., 177 Fed. 726. Compare Ladd v. E. 109. In the above case it was held Boston, 170 Mass. 332, 49 N. E. 627, that the telephone might properly give 40 L. R. A. 171. preachers and charitable institutions ^ Logansport &c. Gas Co. v. Ott, a cheaper rate and not be guilty of 30 Ind. App. 93, 65 N. E. 549. an unjust discrimination. The opin- °° Metropolitan Elec. Supply Co. v. ion contains a valuable discussion of Ginder (1901), 2 Ch. Div. 799. the subject of unjust discriminations " St. Louis &c. R. Co. V. Hardy, 55 and reviews a number of decisions Ark 134, 17 S. W. 711; Western on the subject. See also, Superior v. Union Tel. Co. v. Call Pub. Co., 44 Douglas County Tel. Co. (Wis.), 122 Nebr. 326, 62 N. W. 506, 48 Am. St. N. W. 1023, which is to the same ef- 729, 27 L. R. A. 622 ; Gardner v. feet and holds that there may be dis- 581 CONTRACTS. 856 and not enforcible.^" There is, however, conflict of authority upon this question. ''^ If the contract is made solely to promote private interests at the expense of public welfare the contract should be held to be illegal. But if the public interests are not prejudiced or the power of the company to do what the public welfare requires is not abridged, it is believed the contract should be regarded as valid in this respect, and enforcible so long as it does not conflict with public interests,"^ and it has been so held.°^ It is well settled, however, that an agreement not to crimination in favor of the state or other pubhc corporation. ™ Florida Cent. R. Co. v. State, 31 Fla. 482, 13 So. 103, 20 L. R. A. 419, 34 Am. St. 30 ; Pacific R. Co. v. Seely, 45 Wo. 212, 100 Am. Dec. 369; Enid Right of Ways &c. Co. v. Lile, IS Okla. 317, 82 Pac. 810 ; Ford v. Ore- gon Electric Ry. Co. (Ore.), 117 Pac. 809 (covenant by an electric railway to stop all regular trains at a private crossing). Such contracts generally void. McCowen v. Pew, 153 Cal. 735, 96 Pac. 893 ; Whalen v. Baltimore &c. R. Co., 108 Md. 11, 69Atl. 390, 17 L. R. A. (N. S.) 130n, 129 Am. St. 423. A contract made by the officer of a railroad company by which he derives a personal advantage from the loca- tion of a station at a particular place is invalid as against public pohcv. Peckham v. Lane, 81 Kans. 489, 106 Pac. 464, 25 L. R, A. (N. S.) 967. "Bestor v. Wathen, 60 111. 138; Marsh v. Fairbury, P. & N. W. R. Co., 64 111. 414, 16 Am. Rep. 564; Louisville &c. R. Co. v. Sumner, 106 Ind. 55, 5 N. E. 404, 55 Am. Rep. 719; Williamson v. Chicago &c. R. Co., 53 Iowa 126, 4 N. W. 870, 36 Am. Rep. 206n ; Cedar Rapids &c. R, Co. v. Spafford, 41 Iowa 292; Kansas Pac. R. Co. v. Hopkins, 18 Kans. 494; Vicksburgh &c. R. Co. v. Ragsdale, 54 Miss. 200; Missouri Pac. R. Co. V. Tygard, 84 Mo. 263, 54 Am. Rep. 97; Currier v. Concord R. Co., 48 N. H. 321 ; Chapman v. Mad River &c. R. Co., 6 Ohio St. 119; Texas &c. R. Co. V, Robards, 60 Tex. 545, 48 Am. Rep. 268; International &c. Co. v. Dawson, 62 Tex. 260. A provision in such a contract that another depot should not be established within cer- tain limits is illegal and void. St. Louis &c. R. Co. v. Mathers, 71 111. 592, 22 Am. Rep. 122; St. Louis &c. R. Co. v. Mathers, 104 111. 257; Will- iamson v. Chicago &c. R. Co., S3 Iowa 126, 4 N. W. 870, 36 Am. Rep. 206n ; St. Joseph &c. R. Co. v. Ryan, 11 Kans. 602, 15 Am. Rep. 357. See also, Mobile & O. R. Co. v. People, 132 III. 559, 24 N. E. 643, 22 Am. St. 556. "l Elhott on Railroads (2d_ed.), § 362. See also : "A railroad is re- quired, under all circumstances, to do what may be reasonably necessary and suitable for the accommodation of passengers and shippers ; but it is under no obligation to refrain from using its property to the best advan- tage of the public itself." Danville &c. R. Co. V. Lybrook (Va.), 69 S. E. 1066. ■" Taylor v. Florida East Coast Ry. Co., 54 Fla. 635, 45 So. 574, 16 L. R. A. (N. S.) 307n, 127 Am. St. 155; Atlanta &c. R. Co. v. Camp, 130 Ga. 1, 60 S. E. 177, IS L. R. A. (N, S.) 594n, 124 Am. St. 151, which quotes Elliott on Railroads, §§ 362, 386. The above case lays down the rule that the contract is made subject to the rights of the public and when the ex- igencies of the business of the com- pany are such that the rights of the public come in conflict with the rights of the contracting party under the contract * * * ^\-^^ private rights under the contract should yield to the public right. See also, St. Louis &c. R. Co. V. Crandell, 75 Ark. 89, 86 S. W. 855, 112 Am. St. 42; Louisville &c. R, Co. V. Sumner, 106 Ind. 55, 5 N. E. 404, 55 Am. Rep. 719; Griswold V. Minneapolis &c. R. Co., 12 N. Dak. 857 PUBLIC SERVICE CORPORATIONS. § 581 locate a station or depot within prescribed limits where it is needed for the business of the company and for the use of the public is illegal."* Closely allied to those contracts which have for their object the location of stations are agreements for the establishment of sidings and the location of the main line. There is a distinction [made, however, between covenants to establish and maintain sta- tions for the public convenience and those to establish and main- tain sidings, turh-outs, crossings and the like for private use merely. The validity of these latter contracts is governed by the circumstances of each particular case °° When the perform- ance of a contract of this character in no way interferes with the discharge by the railroad of its duty to the public and is not otherwise invalid it will be upheld."* As to the selection of the route over which the railroad is to run, there is ordinarily no law which requires a railroad corporation to select any particular route for the construction of the contemplated road. In the ab- sence of any law requiring a particular route to be selected discretion is vested in the corporation to make a selection between different routes and the railroad may for a consideration moving directly to itself, select the route running through one locality in preference to others."^ 43S, 97 N. W. 538, 102 Am. St. 572; ""Whalen v. Baltimore &c. R. Co., Texas &c. R. Co. v. Robards, 60 Tex. 108 Md. 11, 69 Atl. 390, 17 L. R. A. 545, 48 Am. Rep. 268. (N. S.) 130n, 129 Am. St. 423, and "McCowen v. Pew, 153 Cal. 735, cases cited. See also, Scholten v. 96 Pac. 893; Farrington v. Stucky, St. Louis &c. R. Co., 101 Mo. App. 91 C. C. A. 311, 165 Fed. 325; Florida 516, 73 S. W. 915. A contract by a Cent. R. Co. v. State, 31 Fla. 482, 13 section foreman of a railroad com- So. 103, 20 L. R. A. 419, 34 Am. St. pany to procure the construction of 30 ; Marsh v. Fairbury, P. & N. W. a switch track at a specified place and R. Co., 64 111. 414, 16 Am. Rep. 564; which would be beneficial both to the Mobile & O. R. Co. v. People, 132 111. railroad company and the public, has 559, 24 N. E. 643, 22 Am. St. 556; been held not against public policy. Louisville &c. R. Co. v. Sumner, 106 Wright v. Riley (Tex. Civ App ) Ind. 55, 5 N. E. 404, 55 Am. Rep. 719; 118 S. W. 1134. A stipulation in a St. Joseph &c. R. Co. v. Ryan, 11 contract that no side track shall be Kans. 602, 15 Am. Rep. 357; Currie built in a certain town renders the V. Natchez &c. R. Co., 61 Miss. 725. entire contract illegal. Pueblo &c. R As to the right to require a railroad Co. v. Rudd, 5 Colo. 270; Pueblo & company to establish and maintain a A. V. R. Co. v. Taylor, 6 Colo. 1 45 station that will not pay expenses. Am. Rep. 512. Chicago, Rock Island &c. R. Co. v. °°McKell v. Chesapeake & O R Nebraska State R. Com., 85 Nebr. 818, Co., 186 Fed. 39 108 C C A 141 124 N. W. 477, 26 L. R. A. (N. S.) ""In the absence of any 'agreement 444 and note. that the route selected, or the stations § 582 CONTRACTS. 8;8 , § 582. Ultra vires contracts. — In the chapter on Private Cor- porations, immediately preceding this, the subject of ultra vires contracts was given a rather thorough review and since the same general principles usually control the ultra vires contracts of a public service corporation the subject will not be treated at length here. In so far as the subject is here treated regard is had more particularly to contracts entered into by various kinds of corporations affected with a public interest. It must be borne in mind, however, that the defense of ultra vires will not neces- sarily be sustained merely because the contract is not within the express terms of the charter.®^ This does not mean, however, that it may, under its implied powers, engage in a business foreign to the purpose for which it was incorporated and which is not rea- sonably necessary to the proper conduct of its legitimate business. Thus, it has been held that a railroad company has no power to guarantee interest and dividends on stock and bonds necessary for located, shall be to the exclusion of other routes or stations, they are not contrary to public policy, and that rule applies equally to both classes of contracts." McCowen v. Pew, 1S3 Cal. 735, 96 Pac. 893. To same effect, Davis V. Williams, 121 Ala. 542, 25 So. 704; Farrington v. Stuckey (Ind. Terr.), 104 S. W. 647, affd., 91 C. C. A. 311, 165 Fed. 325; Berryman v. Trustees &c. So. R. Co., 14 Bush (Ky.) 755; Riley v. Louisville, H. & St. L. R. Co., 142 Ky. 67, 133 S. W. 971, 35 L. R. A. (N. S.) 636n (money to be advanced to build a spur track). See also, 1 Elliott on Railroads, § 386 and cases cited in note 179. See, how- ever, Enid Right of Way &c. Co. v. Lile, 15 Okla. 382, 82 Pac. 810. Com- pare Piper V. Choctaw &c. Imp. Co., 16 Okla. 436, 85 Pac. 965; Guss v. Federal Trust Co. (Okla.), 91 Pac. 1045. Contracts whereby some indi- vidual officer or agent of the railroad company under an assumption of in- fluence with that corporation has agreed for a consideration to secure from the corporation the location of stations or depots in a particular lo- cality, or to secure the building of its road by a particular route are void. They are a species of bribery of the officers of the company. McCowen v. Pew, 153 Cal. 735, 96 Pac. 893. To same effect, Peckham v. Lane, 81 Kans. 489, 106 Pac. 464, 25 L. R. A. (N. S.) 967; McGuffin v. Coyle & Guss, 16 Okla. 648, 85 Pac. 954, dis- senting opinion, 86 Pac. 962, 6 L. R. A. (N. S.) 524n. By the statutes of Texas a railroad company may con- tract to locate its general offices and shops at a particular place. Kan- sas &c. R. Co. V. Sweetwater (Tex. Civ. App.), 131 S. W. 251; City of Tyler v. St. Louis &c. R. Co. (Tex.), 91 S. W. 1, 93 S. W. 997. °° Oakland Electric Co. v. Union Gas &c. Co., 107 Maine 279, 78 Atl. 288. In the above case it was held that a corporation chartered to fur- nish gas and electricity, etc., to "Wa- terville and adjoining towns" had the right to supply electricity to the town of Oakland adjoining Waterville. The court used the following illus- tration : "Thus a contract by a bank for the construction of a railroad would clearly be foreign to the bank- ing business, while a contract by a railroad company to transport pas- sengers and freight beyond its own line would not be foreign to the rail- road business, and would be upheld though the power so to contract was not expressed in the charter." Ped- kins V. Portland S. & P. Co., 47 Maine 573, 74 Am. Dec. 507. 859 PUBLIC SERVICE CORPORATIONS. § 583 the construction of a summer hotel although the operation of the hotel may increase its business.®' Nor does a railroad company have the right, either directly or indirectly, to deal and speculate in land.^ § 583. Leases generally. — A railroad company when given authority to do so may lease its line to another railroad company.^ And when this power is given the right of the stockholders of a railway company to lease its road, under statutes authorizing stockholders of a railway company to lease its road to another company, is not affected by the fact that before the submission of a lease to the stockholders the directors of the company had agreed on the terms thereof.^ Under a statute which empowered railroad corporations there incorporated to make "contracts and arrangements with each other, and with railroad corporations of other states, for leasing or running their roads," it has been held that a railroad company so incorporated was authorized to make a lease of its road to a railroad corporation of another state, but "Western Md. R. Co. v. Blue Ridge Hotel Co., 102 Md. 307, 62 Atl. 351, 3 L. R. A. (N. S.) 887n, 111 Am. St. 362. But it has implied au- thority to maintain restaurants in its depots or the like for its passengers or employes in connection with its business. Flanagan v. Great West- ern R. Co., L. R. 7 Eq. Cas. 116; Jacksonville &c. R. Co. v. Hooper, 160 U. S. 514, 6 Sup. Ct. 379; Abra- ham &c. R. Co V. Oregon &c. R. Co., 37 Ore. 495, 60 Pac. 899, 64 L. R. A. 391, 82 Am. St. 779. See also, Green Bay &c. R. Co. v. Union Steamboat Co., 107 U. S. 98, 2 Sup. Ct. 221; Prospect Park &c. R. Co. v. Wil- liamson, 91 N. Y. 552; 1 Elliott Rail- roads (2d ed.), § 41. ^Williams v. Johnson, 208 Mass. 544, 95 N. E. 90. See also, Rens- selaer &c. R. Co. V. Davis, 43 N. Y. 137; Iron R. R. Co. v. Ironton, 19 Ohio St. 299; Vermont &c. R. Co. V. Vermont Cent, R. Co., 34 Vt. 1. And see generally as to the extent to which it may acquire real estate, 1 Elliott Railroads (2d ed.), §§ 391-407. See also, the case of Dela- ware &c. R. Co. V. Kutter, 11 C. C. A. 315, 147 Fed. 51, as to the validity of a contract entered into by a rail- road with a private individual for a term of years whereby the latter was to build up, develop and conduct the business of the transportation of milk on its lines. ^ Hampe v. Pittsburg Traction Co., 165 Pa. St. 468, 30 Atl. 931, Mitch- ell, J. : "As a passenger railway its power to lease to another passenger road, under the acts of 1861 and 1870, cannot be doubted, and such power was not taken away by the possession of the additional franchise of an in- clined railroad. To hold that it was would be to hold that a gift meant to be additional and cumulative in effect took away powers expressly granted in the first instance. If there were any doubt on this point, more- over, it would be conclusively settled by the express grant in the charter of 'all the powers and privileges * * * in constructing, locating and operat- ing any of the said planes or rail- ways,' contained in the general rail- road act of 1849." 'Jones V. Concord &c. R. Co., 67 N. H. 234, 30 Atl. 614, 68 Am. St. 650. § 583 CONTRACTS. 860 that no power was conferred upon a railroad corporation of a foreign state to make such a lease, if not authorized to do so by the laws of its own state.* It has also been held that a lease is authorized by a charter pro- vision which gives a railroad company the right to "farm out" the right of transportation.*" A lease of a railroad and franchise for nine hundred and ninety-nine years by one railroad corporation to another railroad corporation, which is ultra vires of one or both, will not be set aside by a court of equity at the suit of the lessor, when the lessee has been in possession, paying the stipulated rent, for seventeen years, and has taken no steps to repudiate or rescind the contract." A railroad company, which had equipped its road under an agreement with a car trust, leased the road and equipments to defendant railroad company, which, to induce the car trust to lease the equipments on the road, agreed to pay the balances unpaid at certain times, in consideration of which payments the car trust agreed to transfer all its interest to defendant. All the several states in which the lessor company was incorporated, except one, provided for the lease of railroads, and the laws of another state provided that the lease should not be binding until 'St. Louis &c. R. Co. V. Terre Ry. v. Simpson, 21 Fed. Rep. 533; Haute R. Co., 145 U. S. 393, 36 L. ed. Auburn Academy v. Strong, 1 Hop- 738, 12 Sup. Ct. 9S3. kins Ch. (N. Y.) 278; Union Bridge "^Hill V. Atlantic &c. R. Co., 143 N. Co. v. Troy &c. R. Co., 7 Lan. (N. Car. 539, 55 S. E. 854, 9 L. R. A. Y.) 240; Atlantic & Pacific Tele- (N. S.) 606. graph Co. v. Union Pacific R. Co., "St. Louis &c. R. Co. V. Terre 1 McCrary (U. S.) 541, 1 Fed. 745; Haute &c. R. Co., 145 U. S. 393, 36 Western Union Telegraph Co. v. St. L. ed. 748 : "It does not, however, Joseph & Western R. Co., 1 McCrary follow that this suit to set aside and (U. S.) 565. See also, the case of cancel the contract can be main- Hill v. Atlantic &c. R. Co., 143 N. tained. If it can, it is somewhat re- Car. 539, 55 S. E. 854, 9 L. R. A. mark-able that, in the repeated and (N. S.) 606, in which it is said that full discussions which the doctrine the above case "is directly in point of ultra vires has undergone in the and 'on all fours' with the case." It English courts within the last fifty also holds that the lease is not in- years, no attempt has been made to validated because it extends beyond bring a suit like this. The only cases the life of the corporation so long cited in the elaborate briefs for the as the corporation exists. See also, plaintiff, or which have come to our note in 9 L. R. A. (N. S.) 606 on notice, approaching this in their cir- the subject of laches or acquiescence cumstances, are in American courts by a stockholder as aflfecting his right not of last resort, and present no to complain of an act by which the sufficient reasons for maintaining corporation divests itself of the title this suit." Citing New Castle North or control of its entire property. 86 1 PUBLIC SERVICE CORPORATIONS. § 583 at a meeting of the stockholders, called for that purpose, a major- ity assented thereto, or until the holders of a majority of the stock assented thereto in writing, and a certificate, signed by the president and secretary, was filed. No meeting of defendant's stockholders was called, but a certificate was filed, signed by the president, who owned nearly all of the stock, and by the secretary, and the road was operated by defendant without any objection from its lessor. It was held, in an action by the car trust on its agreement, that the defendant could not plead ultra vires as to the lease.' It has been held that statutes which provide that any railroad may lease, consolidate or merge with any other railroad, do not authorize such lease by the directors against the dissent of a minority of stockholders, so far as to affect the latter's rights. That provision is merely a legislative authorization, a concession on the part of the legislature of the power to do that which could not be done lawfully without such authority.^ Nor does an act which provides that railroads incorporated under the laws of the forum and of adjoining states may merge and consolidate their franchises and other property, and also provides for compensa- tion to dissenting stockholders, authorize a lease by one company to another." Where a railroad company, by contract, express or implied, admits another company into the possession, use, and occupation, jointly with itself, of its depot, yards, yard tracks and other terminal facilities, the relation of landlord and tenant is established between the two companies, and continues, if no term be fixed by contract, so long as such joint possession, 'Humphreys v. St. Louis &c. Co., radically changed by the majority 37 Fed. Rep. 307. alone, and dissentient stockholders be ^ Mills V. Central Railroad Co., 41 compelled to engage in a new and to- N. J. Eq. 1, per Runyon, Ch. : "The tally different undertaking because legislature did not intend to affect such action would impair the obliga- the rights of stockholders inter tion of the dissenting stockholders' se, and the act does not do so, contract with their associates and the either expressly or by implication. It state. This was declared, by the was settled law when the act was highest tribunal of the state, to be passed that after shareholders had the law, and to be as well supported entered into a contract among them- by every consideration of justice and selves under legislative sanction and right as it was firmly imbedded in ju- expended their money in the execu- dicial decision. Black v. Del. & Rar. tion of the plan mutually agreed Can. Co., 24 N. J. Eq. 4SS." upon, the plan could not, even by vir- ° Mills v. Central Railroad of New tue of the legislative enactment, be Jersey, 41 N. J. Eq. 1, 2 Atl. 453. § 5^4 CONTRACTS. 862 use and occupation may last; and, if no amount of compensation be agreed upon, the law will imply an undertaking to pay such amount as may appear to be fair and reasonable. If, in the arrangement between the two companies, it was contemplated and understood that, as part of the means of enjoyment of the rented premises of some of the landlord's servants and rolling stock, whether continuously or only occasionally, and these were let with the premises in one and the same contract, the compensation for the whole in one gross sum — the realty element being the main consideration, and the other elements only incidental — may be treated as rent, and collected by distress warrant.^'* As already shown, the general rule is that in the absence of ex- press legislative authority a railroad company has no power to lease its franchise or road and property necessary to its operation. This rule is usually based upon public policy, but it is a power that could not well be implied in any event from the mere authority to construct and operate a railroad.^^ § 584. Mortgages generally. — A railroad company may be given power under the statutes to mortgage its railroad, and any subsequent accessions or accretions properly appurtenant thereto, acquired either by itself or by any successor in title, whether the road be then maintained and the property acquired by virtue of the original franchise, or of similar franchises granted by the same state." Where both constitution and the statute declare "Rome R. Co. v. Chattanooga R. by a pledge of their property and in- & C. R. Co., 94 Ga. 422, 21 S. E. 69. come. It was held by the Supreme See ante, § 576 et seq. Also, St. Louis Court of Ohio that the power to &c. R. Co. V. Terre Haute &c. R. mortgage property and income in- Co., 145 U. S. 393, 12 Sup. Ct. 953; eluded power to mortgage after-ac- Oregon R. &c. Co. v. Oregonian R. quired real and personal property. Co., 130 U. S. 1, 9 Sup. Ct. 409; Chi- 'The pledge is to be all the property cage &c. R. Co. V. Hart, 209 111. 414, and income. The income intended 70 N. E. 654, 66 L. R. A. 75, 79 (cit- must have been the future income, ing 2 Elliott Railroads, § 429). and was to be produced by property "^ See Evansville &c. Ry. Co. v. in possession, and to be acquired. If Evansville &c. Electric Ry. (Ind. the future product can be conveyed, App.), 98 N. E. 649. why not that by which it is credited?' "Compton V. Jessup (1895), 68 Coe v. Columbus &c. R. Co., 10 Ohio Fed. 263, Taft, J. : ''Section 3287 St. 372-393 ; Pennock v. Coe, 23 How. of the Revised Satutes of Ohio, in (U. S.) 117, 16 L. ed. 436. We have force at the time of the issuance of no doubt that under these two de- the divisional mortgages, permitted cisions a railroad company author- railroad companies of Ohio to issue ized by its charter to build and op- bonds and notes, and to secure them 863 PUBLIC SERVICE CORPORATIONS. § 584 the rolling stock of a railroad company to be personal property, a mortgage by the company on its road and rolling stock executed and recorded as a real estate mortgage, but not executed as re- quired by statute to make it good as a chattel mortgage, is void as to the rolling stock as between the mortgagee and the credit- ors of the company. ^^ A mortgage was made by a railroad erate a railroad between two named points would have the power to mort- gage its road then built, or to be built by itself or by any successor in title to the same railroad, whether exercising the mortgagor's fran- chises or similar franchises granted by the same sovereign. What is mortgaged is the property, and all accretions to the property pos- sible within the limitations of the then charter ; and it does not seem to us material whether the successor in title to the railroad acquired such accretions under the same franchises as those under which the road was first projected and constructed, or under new franchises of the same effect and character. It may be con- ceded that under the decision of Shields V. Ohio, 95 U. S. 319, 24 L. ed. 357, and other cases, the con- solidated corporation acquired its franchises anew from the state, and not from its predecessors in title ; but the acquisition of terminal prop- erty at Toledo was as much per- mitted under the franchises enjoyed by the divisional mortgagors as un- der those under which it was actually acquired, and such terminal property would have been as properly appurte- nant to the Ohio Division as to the consolidated line. The right to mort- gage after-acquired property is not necessarily dependent on the right to mortgage franchises. There is noth- ing in the case of Coe v. Columbus &c. R. Co., 10 Ohio St. 372, or of Pennock v. Coe, 23 How. (U. S.) 117, 16 L. ed. 436, to justify such a view. The Supreme Court of Ohio, as we have seen, based its decision that power existed to mortgage after- acquired property on the provision of the statute that property and in- come might be pledged. Indeed, un- der the Ohio statute, it is doubtful whether the company had any right to mortgage its franchises. The de- cision of the Supreme Court of the United States in Pennock v. Coe, 23 How. (U. S.) 117, 16 L. ed. 436, does not deal with the question of franchises, and does not make its conclusion in the case depend thereon. We are of opinion, therefore, that an Ohio rail- way corporation has the power to mortgage its railroad, and any sub- sequent accessions or accretions prop- erly appurtenant thereto, acquired either by itself or any successor in title, whether the road be then main- tained by virtue of the original fran- chises or the franchises newly ac- quired from the state." But as al- ready shown, a railroad company has no power to mortgage its franchise, nor, according to the weight of au- thority, its property essential thereto, unless so empowered by legislative authority. See also, 1 Elliott R. R. (2d ed.), § 488. " Radebaugh v. Tacoma &c. R. Co., 8 Wash. 570, 36 Pac. 461, per Hoyt, J.: "Our statute upon the subject is somewhat peculiar, and from the sec- tion which provides as to what prop- erty may be the subject of a mort- gage, if it stood alone, there would be some reason for holding that the roll- ing stock of a railroad company was not put upon the same basis as other kinds of personal property. The sec- tion referred to is as follows : 'Sec- tion 1646. _ Mortgages may be made upon all kinds of personal property, and upon rolling stock of railroad company, and upon all kinds of ma- chinery, and upon boats and vessels and on growing crops, and on portable mills and such like prop- erty.'_ But when the language therein used is interpreted in the light of the other sections of the chapter in which the section is found, it appears that there could have been but one intent on the part of the legislature, and that was to 584 CONTRACTS. 864 company covering property to be afterward acquired by it and was duly recorded. As to all stock acquired by the company after the recording of the mortgage it was held that the lien of the mortgage attached as soon as the rolling stock came into the company's possession within the county where the mortgage was recorded and was superior to the lien of one who had subse- quently leased land to the company for purposes of a depot within such county.^* put the rolling stock of a railroad upon the same footing as other per- sonal property. Such being the in- tent of the legislature, is there any- thing in the nature of property or of the transaction covering it with a mortgage which will warant the court in setting aside such apparent inten- tion? Counsel for appellant argue that there is, and cite the case of Hammock v. Loan & Trust Co., 105 U. S. n, 26 L. ed. 1111, to sustain their contention. This case, having been decided by the highest court in the land, and bearing evidence of careful consideration, is entitled to great weight; and, if the reasoning of the court in that case could be fully applied to this one, we should be content to follow it, and sustain the contention of appellant. In our opinion, however, the reasoning therein can have but little force in determining the question now under consideration. The contention there, that the mortgage which purported to cover the rolling stock was void for the reason that it was not ex- ecuted and recorded as a chattel mortgage, was founded entirely upon the provision contained in the consti- tution of the state of Illinois, which declared, as does our own constitu- tion, the rolling stock of railroad companies to be personal property; and the court held that that provision in itself had not so determined the fact that such rolling stock could only be mortgaged as personal prop- erty as to prevent the legislature from providing that it might be mort- gaged as a part of the franchise and real estate of the corporation, and that a statute which so provided was not void because of such constitu- tional provision. * * * When the legislation is such as to show clearly the intent of the legislature, the courts have no right to investigate as to whether or not public policy will be best subserved by a construc- tion of the statute in accordance with such intention. Under the provisions of the New York statute as to mort- gages of personal property there were at least as good grounds for con- tending that they did not apply to mortgages of the rolling stock of a railroad as under our statute, yet it has been uniformly held in the high- est court of that state that the fact of the manifest inconvenience and injustice of the application of the provisions of their statute as to chat- tel mortgages to such rolling stock was not sufficient to warrant the court in sustaining a mortgage upon such property not executed and re- corded as provided for in the stat- ute. See Hoyle v. Plattsburgh R. Co., 54 N. Y. 314; Vilas v. Page, 106 N. Y. 439, 13 N. E. 743. There are cases in other states to the same ef- fect, but, the appellant having cited only the cases above referred to, and that of Dow V. Memphis &c. R. Co., 20 Fed. 260, to sustain the contrary contention, and these cases, in our opinion, not being applicable to the question presented for our decision, we do not deem it necessary to enter into a further investigation of the authorities. It follows that the mortgage of appellant could not be enforced against the rights of the respondents so far as it purported to cover the rolling stock of the rail- roads." "Manhattan Trust Co. v. Sioux City Railroad Co. (1895), 68 Fed. 72, Shiras, J. : "The lien of this mort- gage, therefore, as between the mort- gagor and mortgagee, attached to the rolling stock as soon as the same was 865 PUBLIC SERVICE CORPORATIONS. 585 § 585. Traffic agreements. — Whether, as a general propo- sition, corporations may contract joint obligations, there is no acquired by the railway company. Thus it is said by the Supreme Court in Galveston R. Co. v. Cowdrey, 11 Wall. (U. S.) 459-481: 'Had there been but one deed of trust, and had that been given before a shovel had been put into the ground toward constructing the railroad, yet it as- sumed to convey and mortgage the railroad which the company was au- thorized by law to build, together with its superstructure, appurte- nances, fixtures, and rolling stock, these several items of property, as they came into existence, would be- come instafitly attached to and cov- ered by the deed, and would have fed the estoppel created thereby. No other rational or equitable rule can be adopted for such cases. To hold otherwise would render it necessary for a railroad company to borrow money in small parcels as sections of the road were completed, and trust deeds could be safely given thereon.' Pennock v. Coe, 23 How. (U. S.) 117; Jones on Mortgages, § 153. Thus it is made clear that the mortgage or trust deed executed to the Man- hattan Trust Company became a lien as between the parties thereto, from the date of delivery, upon the prop- erty then owned by the railway com- pany, and this lien attached to the after-acquired property as soon as the same passed into the possession of the grantor in the mortgage. The lien claimed on behalf of the Trust Company of North America is based upon a lease executed by the Sioux City Terminal Railroad and Ware- house Company to the Sioux City and Northern Railway Company of the certain premises in Sioux City, Iowa, which were used by the rail- way company for depot purposes. This lease bears date December 14, 1889, and was acknowledged by both parties thereto on January 21, 1890. It is provided for the payment of a rental of $90,000 per year, payable quarterly, and it is claimed that, un- der the provisions of section 3192 of McClain's Code of Iowa, a landlord's lien exists upon the rolling stock of the railway company which was used 55 — Contracts, Vol. I on the leased premises, and that such lien is prior to that created by the mortgage. The section in question reads as follows : 'A landlord shall have a lien for his rent upon all crops grown upon the demised prem- ises, and upon any other personal property of the tenant which has been used on the premises during the term, and not exempt from execution for the period of one year after a year's rent or the rent of a shorter period claimed falls due ; but such lien shall not in any case continue more than six months after the ex- piration of the term.' Under the provisions of this section of the stat- ute, it is the use of the personal property of the tenant upon the leased premises that creates the lien, and if the property, when such use begins, is then subject to another lien, as of a mortgage duly recorded, the latter is not displaced by, or sub- ordinated to, the lien of the land- lord. Jarchow v. Pickens, 51 Iowa 381, 1 N. W. 598; Perry v. Wag- goner, 68 Iowa 403, 27 N. W. 292." As to Hens in favor of those making advances for purchase of a rail- road, see Peninsular Iron Co. v. Eells, 68 Fed. 24, IS C. C. A. 189. As ■to the liens of a mortgage after a company has gone into the hands of a receiver, see Farmers' Loan &c. Co. V. Northern Pacific R. Co., 68 Fed. 36. A contract between a rail- road company and an iron company, under which the former furnishes funds for the development of the lat- ter, and transports the ores from its mines, in consideration of which the iron company agrees to give the rail- road company all its traffic, is not ultra vires nor against public policy as being in restraint of trade. Bald Eagle &c. R. Co. v. Nittany &c. R. Co., 171 Pa. St. 284, 33 Atl. 239, 29 L. R. A. 423, SO Am. St. 807. It would seem that the soundness of this last decision might be questioned. See ante, §§ 576-578, Contracts Suppres- sing Competition, etc. See also, ante, §§ 576-578, Power to dispose of Fran- chise or Property. § 58: CONTRACTS. 866 doubt of the power of two or more railway companies, whose roads form a continuous line, to enter into a joint arrangement for operating their roads as one line, and to become jointly liable for all money borrowed to be used in furtherance of the business of such continuous line.^° It has been held that a contract between two railroad companies, whose lines of road are parallel, by which certain naturally tributary territory is preserved to each, within which it shall prosecute the work of extending its branch lines without interference with or from the other, is designed to pre- '° Chicago &c. R. Co. v. Ayres, 140 111. 644. In North Side R. Co. v. Worthington (Texas 1895), 30 S. W. loss, Gaines, C. J., said : "A railroad company may establish and maintain refreshment houses along its line for the accommodation of its passengers. Flanagan v. Great Western R. Co., L. R. 7 Eq. 116. Such establishments are not unusual, are strictly sub- ordinate to the main purpose for which such companies are created, and tend immediately to increase their traffic. So it has been held that a railroad corporation has the power to contract with the owner of a steam vessel to maintain a through traffic, and carry beyond its hne and that it can recover of the owner of such vessel damages to goods result- ing from its unseaworthiness, for which the company had had to pay. South Wales R. Co. v. Redmond, 10 C. B. (N. S.) 675. It is now gen- erally recognized that a railway com- pany may contract to carry beyond its line, and it would seem to follow that a reasonable traffic arrangement with another carrier for through transportation is legitimate. On the other hand, in Colman v. Eastern Counties R. Co., 10 Beav. 1, the per- formance of a contract by which the company sought to establish a line of steamships between a terminus of one of its branches and a foreign port, and by which it attempted to guarantee a dividend on the venture, was enjoined. * * * "As illustrative of the principle which we have announced, we call attention to some cases in addition to those already cited. In Davis v. Old Colony R. Co., 131 Mass. 258, it is held that it is beyond the powers of a railway company, or of a cor- poration organized under the General Statutes of Massachusetts for the manufacture and sale of musical in- struments, to guarantee the payment of the expenses of a musical festival. The opinion in that case is by Chief Justice Gray, and is a very able and exhaustive discussion of the ques- tion. In Pearce v. Madison &c. R. Co., 21 How. (U. S.) 441, it was held that two railroad companies which had consolidated were not au- thorized to establish a steamboat line to run in connection with their rail- roads. In Plymouth R. Co. v. Col- well, 39 Pa. St. 337, it was decided that a railway company was not au- thorized by its charter to maintain a canal. In Tomkinson v. South Eastern R. Co., L. R. 35 Ch. Div. 675, it was held that a proposed subscrip- tion by the company to an institution known as the 'Imperial Institute' was not prevented from being ultra vires by the fact that the establishment of the institute might benefit the com- pany by causing an increase of pas- senger traffic over their line. To these cases others might be added, but they are sufficient to illustrate the doctrine that a corporation created for the purpose of carrying on a business, under a statute which merely states the nature of the busi- ness, and does not further define its powers, may exercise such powers as reasonably necessary to accomplish the purpose of its creation, and it may be such as are usually incidental in practice to the prosecution of the business, and no more. See Che- wacla Lime Works v. Dismukes, 87 Ala. 344, 6 So. 122; Searight v. Payne, 6 Lea (Tenn.) 283." 867 PUBLIC SERVICE CORPORATIONS. § 585 vent an unprofitable war of construction, and is not contrary to public policy, and the interstate commerce act, prohibiting rail- road companies from entering into agreements for pooling freights or dividing their earnings, does not invalidate such con- tract, although it may prevent certain pooling provisions therein from being operative/" When a railroad company is organized under a statute which gives it no authority to transfer its fran- jchises, except by sale and conveyance or lease made in accordance |with the statutes relating to the transfer of titles to such property, and the trustees, by a so-called "traffic agreement", in effect transfer to another railroad company the entire control and man- agement of the property, for practically the legal lifetime of the corporation, without the consent of the minority stockholders such contract is illegal and void.^^ Where a controlling inter- est in the stock of a railway company was purchased by another railway company, which thereby secured the election of the board of trustees, consisting of its own officers and employes, who owned no stock in their own right, and this board then executed an illegal traffic .agreement, whereby the entire control of the franchises and property of the former company was surrendered to the latter, it was held that the minority stockholders in the former company could maintain a bill to annul the contract with- out first applying to the board of trustees for protection.^* The breach of a contract between two railroad companies, by which they agree to establish a dispatch freight line, may be enjoined, although a contract could not be specifically enforced. And where one of two railroad companies had agreed to work the other's line and carry over it certain specified traffic, it was en- joined from making a wrongful diversion of such traffic.^® It thus appears that a railroad company has the right to enter into a traffic agreement which is in violation of no positive rule of law and not in contravention of public policy.^" Indeed, if it ""Ives V. Smith, SS Hun (N. Y.) York &c. R. Co., 24 Fed. 516. See 606 28 N Y St. 917, 8 N. Y. S. 46. also, Wolverhampton &c. R. Co. v. "Earle v. Seattle &c. R. Co., S6 London &c. R. Co., L. R. 16 Eq. 433; Fed 909 Western Union Tel. Co. v. Union ^* Earle v. Seattle &c. R. Co., 56 Pac. R. Co., 3 Fed. 423 ; Singer Sew- Fed. 909. '"S &c. Co. v. Union Button-Hole "Beach on Injunctions, § 446, &c. Co., 1 Holmes (U. S.) 253. citing Chicago & Alton R. Co. v. New "" See Kinner v. Lake Shore &c. R. § 585 COrCTEACTS. 868 is judicious to do so and of public benefit to have joint traffic arrangements in any given case it would seem that such arrange- ment may be compelled by statute.^^ Statutes authorizing rail- road companies to establish a tariff of joint through rates, a copy of which must be filed with the commissioners, have been held not to empower such commissioners to establish joint through rates. Under a remedial statute authorizing com- missioners to establish joint through rates, and providing that they shall be governed therein by the former act, which requires notice in the fixing of rates, a joint through rate, adopted without notice, is void. A rate fixed as to shipments passing over two or more roads is a joint rate, although the form of order pro- vides what each road shall receive for the service.^^ Such agree- Co., 69 Ohio St. 339, 69 N. E. 614. See also, to the effect that proper traffic arrangements may be made with other companies, Wheeler v. San Francisco &c. R. Co., 31 Cal. 46, 89 Am. Dec. 147; Georgia &c. R. Co. V, Maddox, 116 Ga, 64, 42 S. E. 315 (citing 1 Elliott R. R., § 42) ; Miller V. Green Bay &c. R. Co., S9 Minn. 169, 60 N. W. 1006, 26 L. R. A. 443 ; Manchester &c. R. Co. v. Concord &c. R. Co., 66 N. H. 100, 20 Atl. 383, 49 Am. St. 582. " State V. Minneapolis &c. R. Co., 80 Minn. 191, 83 N. W. 60, 89 Am. St. 514n. '= State V. Chicago &c. R. Co., 90 Iowa 594, 58 N. W. 1060, per Kinne, J. : "A rate fixed to govern two or more roads, as to a shipment which passes over all of them, while in one sense a separate rate as to each, in that it fixes the rate at a certain per cent, of what each might charge for a like shipment for the same distance wholly over its own line, is neverthe- less, in legal effect, a joint rate, and must be treated as such. It is said in Burlington &c. R. Co. v. Dey, 82 Iowa 312, 48 N. W. 98: 'And it is equally plain that the joint rates of charges cover all the charges for the transportation over two or more roads, as though they constituted one road, the rates fixed determining the whole charges. It is also plain that these joint rates consist of the sep- arate rates of each separate road.' Now, the rate fixed by the schedule in question was for a through ship- ment over two or more lines of road. That the form of the order provided that each road constituting the one line should only charge 80 per cent, of a certain other rate for the same kind of traffic did not make the rate any the less a joint rate, because the rate and schedule in question applied only to through joint shipments; and a rate applicable only to a continuous shipment over two or more lines of road must, of necessity, be a joint rate, no matter what the form or phraseology of the order fixing it may be. Any other holding would result in authorizing the railroad commissioners to establish, promul- gate, and have in effect, at the same time, and applicable to the same road, two different schedules of rates for the same identical service. Suppose two or more railroad companies mu- tually agreed that, for all through shipments over their respective lines each company should have, as its proportion of the entire charge, 80 per cent, of what it might lawfully charge for a like shipment for the same distance wholly over its own line. Could there be any question that a shipment made over such lines, and under such circumstances, would be a joint through shipment, and the rate a joint through rate, regardless of the plan by which division be- tween the several roads of the entire sum to be charged should be made? The law expressly provides for just 869 PUBLIC SERVICE CORPORATIONS. § 586 ments are not necessarily binding on a subsequent purchaser of the road. Thus where the plaintiff made an agreement with a railroad company, whereby, in consideration of the grant by him of a certain right of way upon which to build cer- tain spur tracks, and the exclusive use of a track belonging to him in connection therewith, he was to receive special rates, and thereafter a mortgage on the railroad antedating plain- tiff's contract was foreclosed, and the decree provided that the purchasers of the railroad might disclaim the agreement, which they did, and their disclaimer was approved by the court, it was held that defendant, claiming through the purchasers, was not bound by the agreement.''^ § 586. Right to engage in a collateral business. — Should a railroad attempt to engage in a collateral business, such business will usually be considered as ultra vires. Thus it has been held ultra vires for a railroad company to maintain a grain elevator.^* Nor does it have the right to absorb the coal business along its route.^^ It would also seem by the weight of authority that con- tracts for the use of a railroad's cars for advertising purposes are ultra vires. The business of advertising has no connection with the right to operate a railroad.^° § 587. When a carrier may refuse to perform its public duty. — A public service corporation such as a carrier will be excused from the performance of its public duty when in so doing such agreements. Then why is such Shaw, 37 Wis. 655, 19 Am. Rep. 781. a rate, if made by the commission- See, however, Danville &c. R. Co. v. ers, any the less a joint rate than it Lybrook, 111 Va. 623, 69 S. E. 1066, would have been if entered into vol- Ann. Cas. 1912B, 175. untarily by the interested com- ^Attorney-General v. Great North- panies?" em R. Co., 29 N. J. Eq. 794. "^ Chicago & E. R. Co. V. Towle, 10 * Fifth Ave. Coach Co. v. New Ind. App. 540, 37 N. E. 358 York, 58 Misc. (N. Y.) 401, 111 N. Y. ""People v. Illinois Central R. Co., S. 759; Pittsburg &c. Tract. Co. v. 233 111. 378, 84 N. E. 368, 16 L. R. A. Seidell, 6 Pa. Dist. 414 ; National Car (N. S.) 604, 122 Am. St. 181. See Adv. Co. v. Louisville & N. R. Co., also, Colman v. Eastern Counties R. 110 Va. 413, 66 S. E. 88, 24 L. R. A. Co, 10 Beav. 1; Attorney-General v. (N. S.) lOlOn. See, however. Burns Great Northern R. Co., 1 Dr. & Sm. v. St. Paul City R. Co., 101 Minn. 154; Munt v. Shrewsbury & Chester 363, 112 N. W. 412, 12 L. R. A. (N. R Co. 13 Beav. 1; Chicago v. Cam- S.) 757n; New York v. Interborough eron, 120 111. 447, 11 N. E. 899; Rapid &c. Co., 53 Misc. (N. Y.) 126, Northwestern Union Packet Co. v. 104 N. Y. S. 157. See post, ch. 23. 588 COXTRACTS. 870 it complies with governmental authority. Thus, military neces- sity may justify an order requiring a steamship line to tie up its boats and refuse further freight," or it may refuse to accept food stuffs for shipment unless accompanied with a transit permit from the military authorities.^* § 588. Ultra vires contracts — Street railway companies. — A street railway company acquires a right in the street by its license to occupy, which, it has been held, may be sold or trans- ferred.^^ It is the property of the company which, it is held may be mortgaged.^" A sale upon a decree of foreclosure of an authorized mortgage will vest the franchise in the pur- chaser.^^ This must be distinguished, however, from a sale of its franchise of being a corporation. As a general rule, a railroad company cannot voluntarily and without legislative authority sell or mortgage its franchise of being a corporation and operat- ing and maintaining a railroad.^^ Nor can a street railway com- ^' See Palmer v. Lxjrillard, 16 Johns. (N. Y.) 348. =' Illinois Central R. Co. v. Phelps, 4 111. App. 238, 94 111. 548. ^KnoxviUe v, Africa, 11 Fed. 501, 23 C. C. A. 252; Detroit Citizens' St. R. Co. V. Detroit, 64 Fed. 628, 12 C. C. A. 365, 26 L. R. A. 667. See also, Louisville Trust Co. v. Cincin- nati, 76 Fed. 296, 22 C. C. A. 334; Bardstown &c. R. Co. v. Metcalfe, 4 Mete. (Ky.) 199, 81 Am. Dec. 541. But compare Clemens Elec. J\Ifg. Co. V. Walton, 173 Mass. 286, 52 N. E. 132, 53 N. E. 820; Braslin v. Somer- ville &c. R, Co., 145 Mass. 64, 13 N. E. 65 ; State v. Bridgeton &c. Co., 62 N. J. L. 592, 43 Atl. 715, 45 L. R. A. 837. ™ Sixth Avenue R. Co. v. Kerr, 72 N. Y. 330; People v. Sturtevant, 9 N. Y. 263, 59 Am. Dec. IZ(>. Com- pare Richardson v. Sibley, 11 Allen (Mass.) 65, 87 Am. Dec. 700. " In the case of New Orleans &c. R. Co. V. Delamore, 114 U. S. 501, 29 L. ed. 245, 5 Sup. Ct. 1009, it was held that : "When there has been a judicial sale of railroad property un- der a mortgage authorized by law, covering its franchises, it is now well settled that the franchises necessary to the use and enjoyment of the rail- road passed to the purchasers.'' In another case it was said: "The fran- chise of being a corporation need not be implied as necessary to secure to the mortgage bondholders, or the purchaser at a foreclosure sale, the substantial rights intended to be se- cured. They acquire the ownership of the railroad and the property in- cident to it, and the franchise of maintaining and operating it as a road." Memphis &c. R. Co. v. Rail- road Comrs., 112 U. S. 609, 28 L. ed. 837, 5 Sup. Ct. 299. See also, Bards- town &c. R. Co. V. Metcalfe, 4 Mete. (Ky.) 199, 81 Am. Dec. 541; People V. Brooklyn F. & C. I. R. Co., 89 N. Y. 75; Brooklyn Central R. Co. v. Brooklyn City R. Co., 32 Barb. (N. Y.) 358; Shields v. Ohio, 95 U. S. 319, 24 L. ed. 357. Compare Abbott V. Johnstown &c. R. Co., 80 N. Y. 27, 36 Am. Rep. 572. '"Fietsam v. Hay, 122 111. 293, 13 N. E. 501, 3 Am. St. 492; Rollins v. Clay, 33 Maine 132; Commonwealth V. Smith, 10 Allen (Mass.) 448, 87 Am. Dec. 672 ; Black v. Delaware &c. Co., 22 N. J. Eq. 130; Coe v. Co- lumbus &c. R. Co., 10 Ohio St. 372, 75 Am. Dec. 518; Thomas v. West Jersey R. Co., 101 U. S. 71, 25 L. ed. 950; Oregon R. & Nav. Co. v. Ore- 871 PUBLIC SERVICE CORPORATIONS. § 588 pany, whose franchise authorizes it to operate cars and transport passengers within the streets of a city, confer its privileges upon an interurban railroad which has no authority to enter the city, by contracting with such interurban railroad to transport its cars through the city streets. The interurban company must seek and obtain a license from the city subject to the reasonable rules and regulations imposed upon it by the municipality.^^ And a sale of a street railway and its assets, fraudulent as to a minor- ity stockholder, is void or at least may be avoided."* The liability of a street railway company to repave a street is measured by statutory enactment in the absence of any contract with the mu- nicipality."° The city may contract with the street railway com- pany and bind itself by an agreement to repair and repave between the tracks^* or to construct a foundation for the tracks'^ and such contracts are not ultra vires the municipality. On the other hand, a street railway company has no power or authority to enter into an agreement with abutting property owners to pave the street through which its tracks run when the city council is vested with exclusive power to make such improvements."' Advertising con- tracts have also been held ultra vires the street railway company."^ A street railway company, after it has accepted and acted upon its gonian R. Co., 130 U. S. 1, 32 L. ed. 596, affg. 98 App. Div. (N. Y.) 29, 837, 9 Sup. Ct. 409. See also, ante, 90 N. Y. S. 714. § 576. Attempt to Transfer Fran- °° Mayor of New York v. Bleecker chises. See also, ante, § 547, in chap- St. & F. F. R. Co., 130 App. Div. (N. ter on Private Corporations entitled Y.) 830, 115 N. Y. S. 592. Power to Hold and Convey Personal ™ Detroit v. Detroit United Rail- or Real Property. way Co., 133 Mich. 608, 95 N. W. ll(>, "" Aurora v. Elgin &c. Tract. Co., 1 Street Railway Rep. 368. 227 111. 485, 81 N. E. 544, 118 Am. St. "Detroit v. Detroit United Ry. Co., 284 134 Mich. 11, 95 N. W. 992, 99 N. " Mulverhill v. Vicksburg R. Power W. 411, 104 Am. St. 600, 1 Street & Mfg. Co., 88 Miss. 689, 40 So. 647. Railway Rep. 372. But a stockholder who seeks to en- °'Farson v. Fogg, 205 III. 326, 68 join a street railway company from N. E. 755, 2 Street Railway Rep. 87. carrying out a lease and to have it "'Fifth Ave. Coach Co. v. New set aside has been held unable to York, 58 Misc. (N. Y.) 401, 111 N. maintain an action on his own behalf Y. S. 759; Pittsburg &c. Tract. Co. where his objection is that the lease v. Seidell, 6 Pa. Dist. 414. See, how- is ultra vires when it does not ap- ever. Burns v. St. Paul City R. Co., pear that it is either malum pro- 101 Minn. 363, 112 N. W. 412, 12 L. hibitum or malum in se and where he R. A. (N. S.) 757n; New York v. has acquired and accepted pecuniary Interborough Rapid Transit Co., S3 benefits thereunder. Wormser v. Misc. (N. Y.) 126, 104 N. Y. S. 157. Metropolitan Street R. Co., 184 N. See also, ante, § 578. Y. 83, 1(> N. E. 1036, 112 Am. St. § 5^9 CONTRACTS. 872 franchise, cannot defend that it was ultra vires the municipal council when resisti therein contained.*" council when resisting a suit for the enforcement of restrictions § 589. Ultra vires contracts — Gas and water companies. — It has been held that a gas company has implied power to con- tract debts, borrow money and give the customary evidences of debt and the customary securities therefor.*'^ But the same general rule which governs the power of public service corpora- tions generally to contract is applicable to gas and water com- panies. They cannot bind themselves by contracts which would prevent them from performing the duty which they owe the pub- lic generally.''" It is the duty of such a corporation to supply gas or water to all applicants at reasonable rates fairly and without discrimination.*^ It has been held that a gas company could not refuse to furnish gas to an assignee for the benefit of creditors, who was temporarily continuing the assignor's business for the benefit of creditors, notwithstanding the assignor's bill for gas furnished remained unpaid.** § 590. Illustrative cases of application of doctrine to tele- graph and telephone companies. — Some cases treat tele- graph*^ and telephone companies*" as common carriers. It would "Rutherford v. Hudson River R. A. (N. S.) 963. See also, cases Tract. Co., 73 N. J. L. 227, 63 Atl. cited in preceding note. See also, in 84, 4 Street Railway Rep. 719. connection with this subject, State v. " Fidelity Trust Co. v. Louisville Marion Light & Heating Co., 174 Gas Co., 118 Kv. S88, 26 Ky. L. 401, Ind. 622, 92 N. E. 731. See, how- 81 S. W. 927, ill Am. St. 302. See ever, State v. Birmingham &c. Co., also, Sammons v. Kearney Power &c. 164 Ala. 586, 51 So. 354, 137 Am. St. Co., 77 Nebr. 580, 110 N. W. 308, 8 69. L. R. A. (N. S.) 404n. "Cox v. Maiden &c. Gas Light " Chicago Gas Light &c. Co. v. Co., 199 Mass. 324, 85 N. E. 180, 127 People's Gas Light &c. Co., 121 111. Am. St. 503. See also, Phelan v. 530, 13 N. E. 169, 2 Am. St. 124; Boone Gas Co., 147 Iowa 626, 125 N. Sammons v. Kearney Power &c. Co., W. 208, 31 L. R. A. (N. S.) 319n. 77 Nebr. 580, 110 N. W. 308, 8 L. R. ■■= Parks v. Alta California Tel. Co., A. (N. S.) 404n. In the above case 13 Cal. 422, 73 Am. Dec. 589; West- the contract contained the clause for ern Union Tel. Co. v. Hamilton, 36 which the water company agreed not Tex. Civ. App, 300, 81 S. W. 1052. to sell water for power to any person See also, Western Union Tel. Co. v. ,or corporation v/ho intended to com- Call Pub. Co., 44 Nebr. 326, 62 N. I pete with the other party in the gen- W. 506, 48 Am. St. 729, 27 L. R. A. leration of electricity. This clause 622. was held illegal and void. "Mooreland Rural Telephone Co. "Rnbbins V. Bangor R. & Electric v. Mouch (Ind. App.), 96 N. E. Co., 100 Maine 496, 62 Atl. 136, 1 L. 193; McDaniel v. Faubush Telephone 873 PUBLIC SERVICE CORPORATIONS. § 59O seem that such decisions have adopted a rather artificial classifi- cation in order to impose upon such companies the liabilities of a public service corporation. Courts rendering such decisions seem to have mistaken a species for the genus. Carriers and telegraph and telephone companies all belong to a group of cor- porations that are bound to serve the public impartially and in good faith.*' This is true regardless of the purpose which may have prompted the incorporators to action. Thus, it has been held that in case a railroad company is authorized to construct, in connection vi^ith its road, a telegraph line, it cannot, in the absence of legislative authority, divest itself of the public duty thus incurred by transferring the right to construct such tele- graph to another, and any contract whereby it attempts so to do is ultra vires and void.*' It has been held, however, that a tele- graph or telephone company may, by legislative authority, be em- powered to alienate its franchise*® and that a telegraph company might lease its wires and property for a reasonable length of time.'" It has also been held that an agreement entered into between two telegraph companies to divide earnings and expenses is not ultra vires nor against public policy."^ "The law relating to the receiving and forwarding of tele- graphic messages to connecting lines is so nearly analogous to that in regard to common carriers that the estabhshed rules of law that govern the liability of the common carrier apply with equal force to telegraph companies. Each can restrict its liability to its own line, but each must receive and forward with diligence to the Co., 32 Ky. L. 572, 106 S. W. 825; Pac. R. Co., 3 Fed. 1; Atlantic &c. Gwynn v. Citizens' Tel. Co., 69 S. Tel. Co. v. Union Pac. R. Co., 1 Fed. Car. 434, 48 S. E. 460, 67 L. R. A. 745, 1 McCrary (U. S.) 541. Com- 111, 104 Am. St. 819. pare Western Union Tel. Co. v. Kan- " See, generally. Smith v. Western sas Pac. R. Co., 4 Fed. 284 ; Western Union Tel. Co., 83 Ky. 104, 4 Am. Union Tel. Co. v. St. Joseph &c. R. St. 126; Gillis v. Western Union Tel. Co., 3 Fed. 430; Western Union Tel. Co., 61 Vt. 461, 17 Atl. 736, 4 L. R. Co. v. Union Pac. R. Co., 3 Fed. 423. A. 611, SO Am. St. 917; Western "Michigan Tel. Co. v. St. Joseph, Union Tel. Co. v. Reynolds, 11 Va. 121 Mich. 502, 80 N. W. 383, 47 L. 173, 46 Am. Rep. 715n. The pre- R. A. 87, 80 Am. St. 520. ceding cases state the distinction ^ Western Union Tel. Co. v. Balti- that exists between telegraph and more &c. R. Co., 69 Md. 211, 14 Atl. telephone companies and carriers. 531 ; Philadelphia v. Western Union "Central Branch Union Pac. R. Tel. Co., 11 Phila. (Pa.) 327, 33 Leg. Co. V. Western Union Tel. Co., 3 Int. (Pa.) 129. Fed 417, 1 McCrary (U. S.) 551; "Benedict v. Western Union Tel. Western Union Tel. Co. v. Union Co., 9 Abb. New Cas. (N. Y.) 314. § 590 CONTRACTS. 874 connecting line, and each will be held liable for its failure or re- fusal to perform that duty."^^ A telegraph company has no right to refuse to accept or send a telegram complaining of the opera- tor." Nor can it refuse a telegram which will be unprofitable for it to handle/* or one which has attached to it a notice of probable damage in case the company is negligent in its transmission or delivery.^^ Nor can it refuse to transmit a telegram which it con- siders unwise or useless to send.^" The same principles apply to a telephone company. It cannot refuse an applicant service who also uses another system.^' Nor can it discriminate between applicants and patrons and charge new subscribers a higher rate than its old subscribers.^* A tele- graph company is not, however, required to send every message presented for transmission. It "should refuse to send libelous or obscene messages, or those which clearly indicate the furtherance of an illegal act or the perpetration of some crime.'"*^ A tele- phone company cannot be required to install a telephone when it might thereby render itself liable for aiding and abetting a violation of the law.*^" The use of improper language may also warrant the discontinuance of telephone service." A tele- " Western Union Tel. Co. v. Sim- 202 N. Y. 502, 96 N. E. 109. mons (Tex. Civ. App.), 93 S. W. '''Gray v. Western Union Tel. Co., 686. 87 Ga. 350, 13 S. E. 562, 14 L. R. A. °' Western Union Tel. Co. v. Lil- 95, 27 Am. St. 259. See also, Domin- lard, 86 Ark. 208, 110 S. W. 1035, 17 ion Tel. Co. v. Silver, 10 Can. Sup. L. R. A. (N. S.) 836n. Ct. 238; Archambault v. Great North- " Western Union Tel. Co. v. Mat- western Tel. Co., 14 Quebec 8 ; Cullen thews, 24 Ky. L. 3, 67 S. W. 849. v. N. Y. Tel. Co., 106 App. Div. (N. '''Vermilye v. Postal Tel.-Cable Y.) 250, 94 N. Y. S. 290. As to the Co., 205 Mass. 598, 91 N. E. 904, 30 care the company is required to exer- L. R. A. (N. S.) 472. cise to ascertain whether or not the °° Western Union Tel. Co. v. Hen- message is authorized, see Western derson, 89 Ala. 510, 7 So. 419, 18 Union Tel. Co. v. Totten, 141 Fed. Am. St. 148 ; Cordell v. Western 533, 72 C. C. A. 591 ; Bank of Have- Union Tel. Co., 149 N. Car. 402, 63 lock v. Western Union Tel. Co., 141 S. E. 71. Fed. 522, 52 C. C. A. 580, 4 L. R. A. "State V. Citizens' Tel. Co., 61 S. (N. S.) 181n; Wells v. Western Union Car. 83, 39 S. E. 257, 55 L. R. A. 139, Tel. Co., 144 Iowa 60S, 123 N. W. 85 Am. St. 870. 371, 24 L. R. A. (N. S.) 1045 and '° Bradford v. Citizens' Tel. Co., note, 138 Am. St. 317. 161 Mich. 385, 126 N. W. 444, 137 ™ Cullen v. New York Tel. Co., Am. St. 513. It may, however, give 106 App. Div. (N. Y.) 250, 94 N. Y. preachers and charitable institutions S. 290. a lower rate than that given the or- " Huffman v. Marcy &c. Tel. Co. dinary customer, on the theory that (Iowa), 121 N. W. 1033, 23 L. R. A. the public is benefited thereby. New (N. S.) 1010. In this case, however, York Tel. Co. v. Siegel-Cooper Co., it was held that the circumstances 875 PUBLIC SERVICE CORPORATIONS. § 59O phone company's contract for exclusive service has been held void as against public policy, and unenforcible.®^ It has also been held that a telephone company cannot refuse service in order to coerce payment for past services."^ But there is nothing which requires a telephone company to furnish its service to one who will not pay therefor, and regulations which provide that service will be denied to a patron in default are usually upheld/* did not warrant the removal of the " Rushville Co-op. Tel. Co. v. Ir- telephone. Pugh v. City &c. Tel. vin, 27 Ind. App. 62, 59 N. E. 327; Assn., 8 Ohio Dec. (Reprint) 644. Irvin v. Rushville Co-op. Tel. Co., °' Central &c. Tel. Co. v. AveriU, 161 Ind. 524, 69 N. E. 258; State v. 199 N. Y. 128, 92 N. E. 206, 32 L. R. Cadwallader, 172 Ind. 619, 87 N. E. A. (N. S.) 494. See also, Home 644, 89 N. E. 319; Malochee v. Great Tel. Co. v. Granby &c. Tel. Co. Southern Tel. &c. Co., 49 La. Ann. (Mo.), 126 S. W. ITi. 1690, 22 So. 922; Cumberland Tel. •^Danaher v. Southeastern Tel. &c. Co. v. Hobart, 89 Miss. 252, 42 Co. (Ark.), 127 S. W. 963, 30 L. R. So. 349, 119 Am. St. 702; Magruder A. (N. S.) 1027; Cumberland Tel. v, Cumberland Tel. &c. Co., 92 Miss. &c. Co. V. Hobart, 89 Miss. 252, 42 716, 46 So. 404, 16 L. R. A. (N. S.) So. 349, 119 Am. St. 702. The above 560; Cumberland Tel. &c. Co. V. case holds that the husband could Baker, 85 Miss. 486, 37 So. 1012; not be refused service because his Buffalo County Tel. Co. v. Turner, wife had failed to pay her bill. State 82 Nebr. 841, 118 N. W. 1064, 19 L. v. Kinloch Tel. Co., 93 Mo. App. 349, R. A. (N. S.) 693n, 130 Am. St. 699. 67 S. W. 684 ; State v. Nebraska Tel. It may require a given customer to Co., 17 Nebr. 126, 22 N. W. 237, 52 pay in advance. Vaught v. East Tenn. Am. Rep. 404; Southwestern Tel. &c. Tel. Co., 123 Tenn. 318, 130 S. W. Co. v. Luckett (Tex. Civ. App.), 127 1050, 31 L. R. A. (N. S.) 315, and S. W. 856. note. CHAPTER XX. MUNICIPAL AND OTHER PUBLIC CORPORATIONS. ! 600. Introductory. 601. Powers or municipal or other public corporation. 602. Municipal contracts — By whom made — Extent of power — Parties chargeable with no- tice. 603. Contracts extending beyond term of board. 604. What are municipal contracts. 605. Municipal contracts — Implied contracts. 606. When no implied liability arises. 607. Validity of contract generally. 608. Validity of contract generally ■ — Examples of valid con- tracts. 609. Validity of contract generally — Examples of invalid con- tracts. 610. Leasing public property for private purposes. 611. Leasing public property for private purposes — Enforce- ment of contract. 612. Ratification. 613. Rescission. 614. Ultra vires. 615. Estonpel. 616. The borowing of money and the issuance of negotiable papers. 617. No right of action on void bonds. 618. Defenses available against bona fide holders. § 619. Bona fide holder — Bond con- taining no recitals. 620. Limitation of indebtedness — Limitation on power to create municipal indebtedness. 621. Indebtedness depending on popular vote. 622. Indebtedness limited by a per cent, of valuation. 623. Preliminary provisions for a sinking fund. 624. Aggregate indebtedness — How determined — Refunding and sinking fund bonds. 625. Indebtedness payable annually or monthly. 626. Valid indebtedness only in- cluded. 627. Includes implied as well as ex- press liability. 628. Current expense not included. 629. Debts payable out of special fund — Special assessment — Optional debts. 630. Diverted money — License money — Miscellaneous. 631. Evasion of constitutional lim- itations. 632. Indebtedness in excess of limit not a defense when. 633. Construction of constitutional provisions. 634. Special statutory provisions. 635. Other special provisions. 636. Indebtedness for water and lights. 637. Effect of exceeding the limit. § 600. Introductory. — The general title of this chapter, namely, municipal and other public corporations, is broad enough to include a county^ or a schooP or drainage district,'' or other ' Central &c. Co. v. Wright, 164 U. Kendall School Dist., 121 Pa. St. 543, S. 327, 41 L. ed. 454, 17 Sup. Ct. 80. 15 Atl. 812. ' Curry v. District Tp,, 62 Iowa 102, ° People v. Spring Lake Drainage 17 N. W. 191. See also, Ford v. &c. Dist, 253 111. 479, 97 N. E. 1042. 876 877 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. 600 governmental subdivision/ Public corporations may be subdi- vided into municipal corporations and public quasi corporations. Municipal corporations embrace incorporated cities, villages and towns, which are full fledged corporations with all the powers, duties and liabilities incident to such a status, such as local gov- ernment, including the power to make local laws, while public quasi corporations such as counties, school districts and the like have limited powers of government or administration and do not have the right to enact local laws.^ A municipal corporation is generally asked for, or at least assented to, by the people it em- braces, while a public quasi corporation is superimposed by sovereign and paramount authority." *A public corporation is founded for public purposes and generally has for its object the government of a portion of the state, and is therefore endowed with a portion of political powers. Towns, cities and boroughs are familiar examples of this kind of corporations. Rhodes v. Love, 153 N. Car. 468, 69 S. E. 436. See also, Covington v. Kentucky, 173 U. S. 231, 43 L. ed. 979, 19 Sup. Ct. 383. "The term 'municipal corporation' im- plies the organization of a certain geographical district under authority of law, and that it includes within its jurisdiction and control a certain geographical area." Short v. Gouger (Tex. Civ. App.), 130 S. W. 267. " People V. Spring Lake Drainage &c. District, 253 111. 749, 97 N. E. 1042 ; Schweiss v. Court, 23 Nev. 226, 45 Pac. 289, 34 L. R. A. 602. See also, Askew V. Hale, 54 Ala. 641, 25 Am. Rep. 730; Valverde v. Shattuck, 19 Colo. 104, 34 Pac. 947, 41 Am. St. 208; People v. School Trus- tees, 78 111. 136; Freeland v. Stillman, 49 Kans. 197, 30 Pac. 235; Fry v. County of Albemarle, 86 Va. 195, 19 Am. St. 879. The above classification is one of convenience. Townships, school districts and the like are, in fact, but territorial sec- tions of counties, upon which for ap- propriate purposes, power is con- ferred to perform functions of gov- ernment of local application and in- terest. Wittkowsky v. Jackson County, ISO N. Car. 90, 63 S. E. 275. See also, as instances of the latter. Askew V. Hale, 54 Ala. 639, 25 Am. Rep. 730; Pulaski County v. Reeve, 42 Ark. 54; Adams v. Wiscasset Bank, 1 Maine 361 ; Talbot County v. Queen Anne's County, 50 Md. 245; Fourth School District v. Wood, 13 Mass. 193 ; Mower v. Leicester, 9 Mass. 247, 6 L. R. A. 63; Damon v. Granby, 2 Pick. (Mass.) 345; Riddle v. Proprietors &c., 7 Mass. 169, 5 Am. Dec. 35n ; Rouse v. Moore, 18 Johns. (N. Y.) 407; North Hemp- stead V. Hempstead, 2 Wend. (N. Y.) 109; Hamilton County v. Mighels, 7 Ohio St. 109. It must be borne in mind that public quasi-cor- porations and quasi-public corpora- tions are entirely distinct classes, the former being represented as we have said, by townships, counties and other governmental subdivisions of the state, the latter being represented by corporations, the property of which is devoted to a use in which the pub- lic has an interest, such as railroads, grain elevators, telegraph companies, and similar corporations. See, ante, ch. 19, Public Service Corporations. " Hammond v. Clark, 136 Ga. 313, 71 S. E. 479; People v. Harvey, 142 111. 573, 32 N. E. 295; Phillips v. Scale Mound, 195 111. 353, 63 N. E. 180; Hamihon County v. Mighels, 7 Ohio St. 109. See also, cases cited ante, note 5. S 6oi CONTRACTS. 878 § 601. Powers of municipal or other public corporations. — Municipal corporations, while having a twofold aspect as in- strumentalities of state government and local self government, are mere instrumentaHties of the state for the more convenient administration of local government and their powers are not only such as the legislature may confer, but may also, at least as to those granted as an agency of the state for public purposes, be enlarged, abridged or entirely withdrawn at its pleasure.'' Brief- ly stated, the powers of a municipal corporation are those granted in express words by its charter or the general statute under which it is incorporated ; the powers necessarily or fairly implied in or incident to the powers thus expressly granted ; and those powers essential to the declared purpose of the corporation and which are not only convenient but indispensable to the execution of this declared purpose.^ It thus is made to appear that the powers of 'Allen V. Board &c. of Bakersfield, 157 Cal. 720, 109 Pac. 486; People V. Niebruegge, 244 111. 82, 91 N. E. 115; People v. McBride, 234 111. 146, 84 N. E. 865, 123 Am. St. 82; Mix V. Nez Perce County, 18 Idaho 695, 112 Pac. 215, 32 L. R. A. (N. S.) 534; Barnes v. District of Columbia, 9l U. S. 540, 23 L. ed. 440. "A munici- pal corporation is but a branch of the state government, and is established for the purpose of aiding the legisla- ture in making provision for the wants and welfare of the public with- in the .territory for which it was or- ganized, and it is for the legislature to determine the extent to which it will confer upon such corporation any power to aid it in the discharge of the obligation which the constitution has imposed upon itself." Chico H. S. Board v. Supervisors, 118 Cal. 120, 50 Pac. 275. This is true as to coun- ties and their |;overnment. Santa Monica v. Los Angeles County (Cal.), 115 Pac. 945. Thus a lo- cal option law, general in its applica- tion, which is declarative of a state policy, divests a municipality of its powers to license and regulate the sale of intoxicating liquors. Minne- haha County V. Champion, 5 Da- kota 433, 41 N. W. 754; Tur- ner V. Forsyth, 78 Ga. 683, 3 S. E. 649; Mix v. County Commrs., 18 Idaho 695, 112 Pac. 215, 32 L. R. A. (N. S.) 534; Garrett v. Aby, 47 La. Ann. 618, 17 So. 238; Ex parte El- liott, 49 Tex. Cr. 108, 91 S. W. 570; Fox v. State, 53 Tex. Cr. 150, 109 S. W. 370. But such laws do not effect any material change in the existing municipal charters which authorize the licensing, or permit the prohibition of the sale of intoxicating liquors in any incorporated town or city until its provisions were made specially applicable to a particular locality by a majority vote of the electors thereunder in favor of pro- hibition. Sandys v. Williams, 46 Ore" 327, 80 Pac. 642; Renshaw v. Lane County Court, 49 Ore. 526, 89 Pac. 147. ' Eufaula v. McNab, 67 Ala. 588, 42 Am. Rep. 718; Long Beach v. Boyn- ton, 17 Cal. App. 290, 119 Pac. 677; Areata v. Green, 156 Cal. 759, 106 Pac. 86; Kelly v. Milan, 21 Fed. 842; Cook County v. McCrea, 93 111. 236; Delphi V. Hamlin, 172 Ind. 645, 89 N. E. 308; Voss v. Waterloo Water Co., 163 Ind. 69, 71 N. E. 208, 66 L. R. A. 95, 106 Am. St. 201 ; Richmond V. McGirr, 78 Ind. 192; Henke v. McCord, 55 Iowa 378, 7 N. W. 623; Parish of Ouachita v. Monroe, 42 La. Ann. 782, 7 So, 717; Somerville v. Dickerman, 127 Mass. 272; Peters v. St. Louis, 226 Mo. 62, 125 S. W. 879 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 6oi a municipal corporation are either express or implied. It pos- sesses not only the powers specifically conferred upon it by its charter, but also such as are necessarily incident to or may fairly be implied from those powers, including all that are essential to the declared object of its existence." The implied power resident in a municipal corporation is the power necessarily incident to the exercise of those powers expressly granted and directly and im- mediately appropriate to their exercise.^" Only such powers and rights can be exercised under municipal charters as are clearly comprehended within their words or derived therefrom by neces- 1134; St. Louis v. Bell Tel. Co., 96 Mo. 623, 10 S. W. 197, 2 L. R. A. 278n, 9 Am. St. 370; State v. Swift, 11 Nev. 128; Smith v. New- bern, 70 N. Car. 14, 16 Am. Rep. 766; Stern v. Fargo, 18 N. D. 289, 122 N. W. 403, 26 L. R. A. (N. S.) 665n ; In re Jones, 4 Okla. Cr. 74, 109 Pac. 570, 140 Am. St. 570; Nay- lor V. McCoUoch, 54 Ore. 305, 103 Pac. 68; Portland v. Schmidt, 13 Ore. 17, 6 Pac. 221; Blake v. Walker, 23 S. Car. 517; Brenham v. Brenham Water Co., 67 Tex. 542, 4 S. W. 143 ; Danville v. Shelton, 76 Va. 325 ; Blue- field Waterworks &c. Co. v. Blue- field, 69 W. Va. 1, 70 S. E. 772, 33 L. R. A. (N. S.) 759; Richards v. Clarksburg, 30 W. Va. 491, 4 S. E. 774; Parkersburg Gas Co. v. Parkers- burg, 30 W. Va. 435, 4 S. E. 650; Oilman v. Milwaukee, 61 Wis. 588, 21 N. W. 640. The court in Los An- geles &c. Co. V. Los Angeles, 88 Fed. 720, states the doctrine of the text as follows : The general proposition is that "a municipal corporation pos- sesses and can exercise the follow- ing powers, and no others : First, Those granted in express words; second, those necessarily or fairly im- plied in, or incident to, the powers expressly granted; third, those essen- tial to the declared objects and pur- poses of the corporation, — not sim- ply convenient, but indispensable. Any fair, reasonable doubt concern- ing" the existence of power is resolved by the courts against the corporation and the power is denied." To the same effect are, Von Schmidt v. Wid- ber, 105 Cal. 151, 38 Pac. 682; Jop- lin V. Leckie, 78 Mo. App. 8. Doubt- ful claims to power are resolved against the corporation. Pittsburg &c. R. Co. V. Anderson (Ind.), 95 N. E. 363. "Carthage v. Frederick, 122 N. Y. 268, 25 N. E. 480, 10 L. R. A. 178n, 19 Am. St. 490; Warner v. Berks County, 38 Pa. Super. Ct. 437. "The courts are conservative in implying powers not expressly given. One limitation imposed by law on these implications is that no power will be implied to belong to a public corpora- tion, unless it is cognate to the pur- pose for which the corporation was created." Blades v. Hawkins (Mo.), 112 S. W. 979. "A municipal corpora- tion possesses no power not derived from its charter, therefore the gen- eral terms 'full powers of self-gov- ernment' and 'all powers of munici- pal government not prohibited by this charter,' add nothing to the terms of the charter. We still must look to the charter for the authority to sus- tain an act done by the corporation." Southwestern Tel. & T. Co. v. Dal- las (Tex.), 134 S. W. 321. '° Gundling v. Chicago, 176 111. 340, 52 N. E. 44, 48 L. R. A. 230; People V. Chicago Gas Trust Co., 130 111. 268, 22 N. E. .798, 8 L. R. A. 497, 17 Am. St. 319; Chicago &c. R. Co. v. Chicago, 148 111. 141, 35 N. E. 881; Mather v. Ottawa, 114 111. 659, 3 N. E. 216. "The policy of the state is that municipal corporations are to exercise only such powers as are clearly embraced within the legis- lative grant or those derived there- from by necessary implication, and to this end municipal gfants of power are construed so as to confine the § 6oi CONTRACTS. 880 sary implication, regard being had to the object of the grant. The construction is strict rather than hberal, and the general rule is that ambiguity or reasonable doubt arising out of the words used in the charter must be resolved in favor of the public and against the corporation.^^ It has even been held that in "the absence of express authority a village board did not have the right to employ a private detective as an incident to "the corpor- ate functions which imposed on the village officers the duty of employing measures necessary to maintain security and good order and to enforce the law by the prosecution and punishment of offenders." Nor does a municipality, as a general rule, have implied authority to regulate by ordinance the rates to be charged by a public service corporation, unless such power is reserved to it by the franchise it grants the corporation." corporate authorities to the employ- ment of such means and measures as are necessary to effectually execute the powers conferred." Flannagan V. Buxton (Wis.), 129 N. W. 642, 32 L. R. A. (N. S.) 391. " Long Beach v. Bovnton, 17 Cal. App. 290, 119 Pac. 677. _ "Implica- tions of authority in bodies corpo- rate, more especially those created for municipal purposes, should be clear and undoubted. * * * Implications spring from the necessities of some power actually conferred, and not from notions of what would be con- venient or expedient under particular circumstances." Butler v. Milwau- kee, IS Wis. 493. "It is well settled, of course, that a municipal corpora- tion has such powers and such only as are, first, expressly granted, or second, such as are fairly or neces- sarily implied from those granted, or third, such as are essential to the de- clared objects and purposes of the incorporation. As to the third, it is not enough that they be convenient; it must appear that they are indis- pensable. In case of doubt the ex- istence of the power is denied by the courts." Brooks v. Brooklyn, 146 Iowa 136, 124 N. W. 868. See generally, Min- turn V. Larue, 23 How. (U. S.) 435, 16 L. ed. S74; Joplin v. Leckie, 78 Mo. App. 8. In re Unger, 22 Okla. 755, 98 Pac. 999, 132 Am. St, 670; Phila- delphia V. Madden, 8 Pa. Dis. 532; Quint V. Merrill, 105 Wis. 406, 81 N. W. 664. "The powers of a city to construct sewers and drains is also incident to the power to construct and maintain streets." Harter v. Barkley, 158 Cal. 742, 112 Pac. 556. "Municipal corporations possess only such powers as are granted in ex- press words, or those necessarily in- cident to or implied in the powers expressly granted." State v. Wil- son, 151 Mo. App. 723, 132 S. W. 625. But construction must not be un- reasonably strict. Kyle v. Malin, 8 Ind. 34; Orange & A. R. Co. v. Alex- andria, 17 Grat. (Va.) 176. See also, Crawfordsville v. Braden, 130 Ind. 149, 28 N. E. 849, 14 L. R. A. 268, 30 Am. St. 214; Spiegler v. Chicago, 216 111. 114, 74 N. E. 718; Goodrich v. Busse, 247 111. 366, 93 N. E. 292, 139 Am. St. 335. "Flannagan v. Buxton, 145 Wis. 81, 129 N. W. 642, 32 L. R. A. (N. S.) 391. See, however, Sargent v. Bristol, 2 Haskell (U. S.) 112, Fed. Cas. No. 12363. Under the statutes of Washington, however, it has been held that the county board might em- ploy an alienist to render services in connection with a homicide case. Williamson v. Snohomish Co., 64 Wash. 233, 116 Pac. 675. '=OId Colony Trust Co. v. Atlanta, 83 Fed. 39, affd. in 88 Fed. 859, 32 C. C. A. 125; Jacksonville v. South- ern Bell Tel. & T. Co., 57 Fla. 374, 88i MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 602 § 602. Municipal contracts — By whom made — Extent of power — Parties chargeable with notice. — As with all other corporations, a municipal corporation can act only through agents. Concerning the power of such agents to make contracts in behalf of the municipality, it may be stated that their power is special and limited and usually prescribed by the statute or charter. Outside of this scope of authority they have no power to act and, being special agents, the general law of agency applies, and all persons dealing with them in matter of contract must do so charged with knowledge of their authority to act and the scope of their power to bind the corporation under the law.^* More- 49 So. 509. In re Pryor, 55 Kans. 724, 29 L. R. A. 398, 41 Pac. 958. 49 Am. St. 280; State v. Missouri & K. Tel. Co., 189 Mo. 83, 88 S. W. 41; Wabaska Elec. Co. V. Wymore, 60 Nebr. 199, 82 N. W. 626; Ball v. Texarkana Water Corp. (Tex. Civ. App.), 127 S. W. 1068. "We think the city's power of regulation as to rates to be charged, and the forms of contract between the company and its patrons, both public and private, rests solely upon its right to make contracts, and not upon delegated legislative power. Its administrative powers, under its right to make such contracts, may be exer- cised in the form of ordinances; but its right to pass ordinances upon the subject does not include the right to enforce its contracts, either in favor of itself or the inhabitants, by the imposition of criminal penalties. It can enforce its contracts only in those modes allowed to individuals and private corporations. Not hav- ing the power to make violations of contracts criminal, it could not re- serve any such power to itself in the ordinance by which it granted the franchise. Nor could the water- works company, having no power to add anything to the capacity of the city, confer upon it such right or power. Two private persons cannot, by their contract, confer upon each other right to inflict fines and im- prisonment for violations of their contract. This power, if it exists at ■ all, is vested in the Legislature of the state, and has not been delegated to the city of Bluefield. It could not 56 — Contracts, Vol. I be obtained from any other source. Hence it is plain that the city does not possess it." Bluefield Water- works & I. Co. V. Bluefield (W. Va.), 70 S. E. nZ, Z2, L. R. A. (N. S.) 759. A city does not have implied power to create offices other than those provided for in its charter. State V. Mackie, 82 Conn. 398, 74 Atl. 759, 26 L. R. A. (N. S.) 660n. "New Albany v. New Albany St. R. Co., 172 Ind. 487, 87 N. E. 1084; Wurth V. Paducah, 116 Ky. 403, 1G S. W. 143, 105 Am. St. 225 ; Newport V. Schoolfield, 142 Ky. 287, 134 S. W. 503; Floyd County v. Owego Bridge Co., 143 Ky. 693, 137 S. W. 237; The Condran v. New Orleans, 43 La. Ann. 1202, 9 So. 31; Burchfield v. New Orleans, 42 La. Ann. 235, 7 So. 448; Fox V. Sloo, 10 La. Ann. 11; Ed- wards Hotel Co. V. Jackson, 96 Miss. 547, 51 So. 802; McDonald v. New York, 68 N. Y. 23, 23 Am. Rep. 144; Ross V. Philadelphia, 115 Pa. St. 222, 8 Atl. 398. "Municipalities can lawfully exercise only such rights, powers and authority and perform such duties as are conferred upon them, expressly or impliedly, by valid provisions of law; and such rights, powers, authority, and duties are ex- ercised or performed through officers, agents or employes; the municipali- ties being corporate entities existing only in contemplation of law." Scott V. Tampa (Fla.), 55 So. 983. One dealing with a municipal corporation is bound to know the extent of its powers and cannot hold it liable for a false representation made by its officers concerning matters not with- 6o2 CONTRACTS. 882 over, there is also the limitation upon the corporation itself that its corporate contracts must relate to corporate matters. Where the limitation on the power of the city council to contract appears in the statute or charter, the courts will presume that the parties had knowledge of such limitation. ^° All persons dealing with the corporation are bound to take notice of the statutes creating the corporation and conferring power upon it and those manda- tory provisions of the statute which prescribe the manner in which such power must be exercised.^" in its corporate powers, or for the breach of contract that such officers have no authority to make on its be- half. Hart V. Wyndmere, 21 N. Dak. 383, 131 N. W. 271. See also, ante, ch. IS, Agents. See also, ante, § 263 at seq. " Black V. Common Council &c., 119 Mich. 571, 78 N. W. 660. See also, Johnson v. Indianapolis, 16 Ind. 227; 1 Elliott Rds. & Sts. (3d ed.), § 629. In all cases where authority is conferred by statute upon an agent a person dealing with such agent is bound to ascertain the nature and ex- tent of his authority. Madison v. Newsome, 39 Fla. 149, 22 So. 270. And in dealing with a city treasurer parties are charged with notice that he has no power to issue city war- rants. Bardsley v. Sternberg, 17 Wash. 243, 49 Pac. 499. A contractor entering into a contract with a mu- nicipahty does so with knowledge of the limitations upon the power of the municipality. Santa Cruz Rock Pave- ment Co. V. Broderick, 113 Cal. 628, 45 Pac. 863; Osgood v. Boston, 165 Mass. 281, 43 N. E. 108; McAleer v. Angell, 19 R, I. 688, 36 Atl. 588. The rule is universal and general that per- sons contracting with a municipal corporation must inquire into the power of the corporation or its offi- cers to make the contract; Cf. Chi- cago v. Williams, 182 111. 135, 55 N. E. 123; State v. Minnesota &c. R. Co., 80 Minn. 108, 83 N. W. 32, 50 L. R. A. 656; Kerr v. Belief ontaine, 59 Ohio St. 446, 52 N. E. 1024. See also, ante, § 263 et seq.. Parties, Power of State to Contract. "Sutro V. Dunn, 74 Cal. 593, 16 Pac. SOS ; Smith &c. Co. v. Denver, 20 Colo. 84, 36 Pac. 844; National Bank of Commerce v. Granada, 54 Fed. 100, 4 C. C. A. 212; Coffin v. Kear- ney Co., 57 Fed. 137, 6 C. C. A. 288; Manhattan Co. v. Ironwood, 74 Fed. 535, 20 C. C. A. 642; Law v. People, 87 111. 385; McPherson v. Foster, 43 Iowa 48, 22 Am. Rep. 215; Cedar Rapids Water Co. v. Cedar Rapids, 117 Iowa 250, 90 N. W. 746; Murphy V. Louisville, 9 Bush (Ky.) 189; Ra- ton Water Works Co. v. Raton, 9 N. Mex. 70, 49 Pac. 898, reversed on another point, 174 U. S. 360, 43 L. ed. 1005, 19 Sup. Ct. 719; Wilkes Coun- ty v. Call, 123 N. Car. 308, 31 S. E. 481, 44 L. R. A. 252; McPeeters v. Blankenship, 123 N. Car. 651, 31 S. E. 876; Roberts v. Fargo, 10 N. Dak. 230, 86 N. W. 726; People's Bank v. School District, 3 N. Dak. 496, 57 N. W. 787, 28 L. R. A. 642; Wellston v. Morgan, 65 Ohio St. 219, 62 N. E. 127; Diggs V. Lobsitz, 4 Okla. 232, 43 Pac. 1069; Ecroyd v. Coggeshall, 21 R. I. 1, 41 Atl. 260, 79 Am. St. 741 ; Livingston v. School District No. 7, 9 S. Dak. 345, 69 N. W. 15; In re The Floyd Acceptances, 7 Wall. (U. S.) 666, 19 L. ed. 169; Marsh v. Fulton County, 10 Wall. (U. S.) 676, 19 L. ed. 1040; German Sav- ings Bank v. Franklin County, 128 U. S. 526, 32 L. ed. 519, 9 Sup. Ct. 159: Barnett v. Den- nison, 145 U. S. 135, 36 L. ed. 652, 12 Sup. Ct. 819 ; Nesbit v. River- side Independent District, 144 U. S. 610, 36 L, ed. 562, 12 Sup. Ct. 746. "It is put beyond question, un- der our decisions, that parties who are invited, or seek, to enter into contractual relations with a munici- 883 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 603 § 603. Contracts extending beyond term of board. — The power of a municipal board to appoint or attempt to appoint officers or to make contracts extending beyond its own term is a question that frequently arises. The power of a board to do this may be either express or implied. It is well settled that the legislature may authorize municipal boards to enter into con- tracts which will extend beyond their own official term.^' Whether such board has the implied power so to do depends largely upon the nature of the contract. The distinction has been thus expressed : "A city has two classes of powers, the one legislative or governmental, by virtue of which it controls its people as their sovereign, the other proprietary or business, by means of which it acts and contracts for the private advantage of the inhabitants of the city and of the city itself. In the exer- cise of powers which are strictly governmental or legislative the officers of a city are trustees for the public and they may make no grant or contract which will bind the municipality beyond the terms of their offices because they may not lawfully circumscribe the legislative powers of their successors. But in the exercise of the business powers of a city, the municipality and its officers are controlled by no such rule and they may lawfully exercise these powers in the same way and in their exercise the city will be governed by the same rules which control a private individual or a business corporation under like circumstances. In contract- ing for the construction or purchase of waterworks to supply itself and its inhabitants with water a city is not exercising its governmental or legislative, but is using its business or proprie- tary, powers. The purpose of such a contract is not to govern its inhabitants, but to obtain a private benefit for the city and for its denizens."^' pal corporation cannot, if the con- ledo, 20 Ohio C. C. 603, 11 Ohio C. tract is made, plead want of knowl- D. 56; Detroit v. Detroit Citizens' edge of such statutory limitations in St. R. Co., 184 U. S. 368, 4 L. ed. avoidance, and the plaintiff, having 592, 22 Sup. Ct. 410. been charged with notice of the in- " Omaha Water Co. v. Omaha, 147 validity of the lease, cannot recover Fed. 1, 11 C. C. A. 267, 12 L. R. A. on the covenant.'' Commercial (N. S.) 736; Horkan v. Moultrie, Wharf Corporation v. Boston, 136 Ga. 561, 71 S. E. 785. To same (Mass.), 94 N. E. 805. effect, Tuttle Bros. & Bruce v. Cedar " Taylor v. Northampton Co., SO Rapids, 176 Fed. 86, 99 C. C. A. 606. N. Car. 98; Kerlin Bros. Co. v. To- § 6o3 CONTRACTS. 884 In conformity with. the opinion above expressed as to the va- lidity of the second class of contracts it has been held that a city council might contract for a gas, vi^ater or electricity supply for a reasonable time extending beyond its term of office/" The saiTie doctrine has been applied to the leasing of municipal prop- erty to a private individual^" or by the municipality from a private individual.^^ It has also been held applicable to public printing contracts, in the absence of fraud or collusion or a prohibitive statute." But it has been said that a board of county commis- sioners does not have the power to bind their successors to for- ever support and maintain a hospital.^^ ^Illinois Trust &c. Bank v. Ar- kansas City, 76 Fed. 271, 22 C. C. A. 171, 34 L. R. A. 518; Pike's Peak Power Co. V. Colorado Springs, 105 Fed. 1, 44 C. C. A. 333; Valparaiso V. Gardner, 97 Ind. 1, 49 Am. Rep. 416; Vincennes v. Citizens' Gaslight Co., 132 Ind. 114, 31 N. E. 573, 16 L. R. A. 485 ; Blood v. Manchester Elec- tric Light Co., 68 N. H. 340, 39 Atl. 335 ; Tanner v. Auburn, 37 Wash. 38, 79 Pac. 494. See, however, West- minster Water Co. v. Westminster, 98 Md. 551, 56 Atl. 990, 64 L. R. A. 630, 103 Am. St. 424, in which a con- tract which required the city to levy a tax forever to pay for the water supply was held invalid since the levying of a tax was a governmental power. See also, Carlyle Water &c. Co. V. Carlyle, 31 111. App. 325, which holds such a contract voidable mere- ly as to the executory part. Also, Horkan v. Moultrie, 136 Ga. 561, 71 S, E. 785, which holds that the city council had no power to agree to furnish "free of charge" water to a private individual for an indefinite time, since to do so would be to permit the council to tie the hands of its successors. =°Biddleford v. Yates, 104 Maine 506, 72 Atl. 335, IS Am. & Eng. Ann. Cas. 1091. ^ Dubuque Female College v. Dis- trict Tp. Dubuque, 13 Iowa 555 ; Gale V. Kalamazoo, 23 Mich. 344, 9 Am. Rep. 80. '^ Liggett V. Kiowa, 6 Colo. App. 269, 40 Pac. 475; Picket Pub. Co. v. Carbon County, 36 Mont. 188, 92 Pac. 524, 13 L. R. A. (N. S.) 1115, 122 Am. St. 352, 12 Am. & Eng. Ann. Cas. 986. Statute permitted contracts for public printing for a term not ex- ceeding two years. This contract might be made the first or last week of board's existence, if the prior con- tract has expired. See, however, Sheldon v. Butler County, 48 Kans. 356, 29 Pac. 759, 16 L. R. A. 257 ; Such contract forbidden by statute; Rob- son V. Smith, 50 Kans. 350, 32 Pac. 30. ^'Robbins v. Hoover (Colo.), 115 Pac. 526. The court said: "Under our laws a board can expend money, except in designated emergencies, only when it has been previously appro- priated for the given purpose. Each year the board must make its various appropriations of money for the nec- essary public purposes, and levy the necessary taxes to meet them. With- in the statutory or constitutional lim- its each board must for itself deter- mine the tax levy and the amount of such appropriations, and it is beyond the power of any board, in any one year, to determine for its successor in any subsequent year how it shall perform such duties, or prescribe or limit its action in the exercise of gov- ernmental functions, all of which is equivalent to saying that, under our existing laws, it is legally impossible for a board of commissioners to bind the county forever to maintain and support a hospital which Mr. Macky was desirous of building, and, for that reason, his bequest is void as depending upon an impossible condi- tion." To same efifect, Edwards Hotel &c. R. Co. v. Jackson (Miss.), S8: MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 603 The "spoils system" quite frequently prompts municipal offi- cials to make official appointments which shall continue in efifect after their term of office has expired. Notwithstanding the motive which in many cases underlies the appointment it has been held that a board of county commissioners, the term of cer- tain members of which is about to expire, may employ an officer and enter into a contract with him to perform certain required services for a specified period of time beyond the life of the board as then constituted.^* The employment of superintendents and teachers in public schools for a longer period than the life of the board as then constituted, has been upheld by many cases''^ in the absence of fraud on the part of the board making the con- tract.^* On the other hand should the appointment be one which SI So. 802, in which it is said: "Each mayor and board of aldermen can- not exercise full jurisdiction if prede- cessors may tie their hands in the matter of requiring to be done any matter which is comprehended in the exercise of full jurisdiction; that is to say, each mayor and board of aldermen has a right, in their discre- tion, to say when paving is necessary. It is a discretion which vests in them at the time they choose to exercise it; that is to say, the right vests in the municipality to exercise it through the mayor and board of aldermen. It is a right in the municipality, be- longing to the inhabitants, and exer- cised through the constituted author- ities." "^The court said, quoting from Pulaski County v. Shields, 130 Ind. 6, 29 N. E. 385, "It is insisted, how- ever, that this contract is void upon other grounds, — that it is in contra- vention of public policy, for the rea- son that to uphold it would put it in the power of one of the board of commissioners to bind the hands of its successors, and that it operates as an unwarranted abridgment of the 'administrative, executive, and legis- lative' powers of the board. The first of the reasons assigned rests upon an erroneous conception of the con- stitution of the board of county com- missioners, — that that body consists of a series or succession of boards, one following the other. As we have heretofore said, the board of (county) commissioners is a corporation, rep- resenting the county. From a legal standpoint, it is the county. * * * It is a continuous body. While the personnel of its membership changes, the corporation continues unchanged. It has power to contract. Its con- tracts are the contracts of the board, and not of its members. An essen- tial characteristic of a valid contract is that it is mutually binding upon the parties to it. A contract by a board of commissioners, the duration of which extends beyond the term of service of its then members, is not, therefore, invalid for that reason." Mauley v. Scott, 108 Minn. 142, 121 N. W. 628, 29 L. R. A. (N. S.) 6S2. See also, Webb v. Spokane Co., 9 Wash. 103, Zl Pac. 282. '^ Caldwell v. School District No. 7, 55 Fed. 372; Reubelt v. School Town of Noblesville, 106 Ind. 478, 7 N. E. 206; Moon v. School City of South Bend (Ind. App.), 98 N. E. 153; Tappan v. School District No. 1, 44 Mich. 500, 7 N. W. Ti; Cleve- land V. Amy, 88 Mich. 374, 50 N. W. 293 ; Farrell v. School District No. 2, 98 Mich. 43, 56 N. W. 1053 ; Gillis V. Space, 63 Barb. (N. Y.) 177; Wait V. Ray, 67 N. Y. 36. "" Milford V. Zeigler, 1 Ind. App. 138, 27 N, E. 303. In the above case it was held valid notwithstanding the fact that the appointment was made § 6o4 CONTRACTS. 886 would deprive the succeeding board of its power to perform the duties which are imposed upon it by law, in other words interfere with its governmental or legislative functions, such con- tract of appointment cannot be extended beyond the life of the board making the appointment.^^ § 604. What are municipal contracts. — An ordinance whereby a franchise is granted which is accepted and acted upon by the grantee becomes an irrevocable contract except for breach of contract in some form by the company and cannot be violated by the city.''* And unless the ordinance reserves- such power to the municipality the franchise cannot be amended or diminished without the consent of the grantee.^' The grantee is also bound by the reasonable provisions of the franchise granted by the mu- nicipality.^" Thus the franchise of a street railway company may require it to carry free of charge or at reduced rate certain classes of persons and the person or corporation accepting such for the purpose of forestalling the new board, no fraud being alleged. Taylor v. School Dist. No. 7, 16 Wash. 365, 47 Pac. 758. The above decision is based on the ground that the appointment is that of the board and not of its members. To same effect, Splaine v. School Dist., 20 Wash. 74, 64 Pac. 766. See also, Webster v. School District No. 4, 16 Wis. 317. The following cases make good faith on the part of the appoint- ing board, the test : School District No. 6 V. Morse, 8 Cush. (Mass.) 191; Chittenden v. School District No. 1, 56 Vt. 551. See also, Stevenson v. School District No. 1, 87 111. 255; District No. 6 v. Hart, 4 111. App. 224. The power to make an appoint- ment extending beyond the life of the board may, however, be withheld by statute. Gates v. School District, 53 Ark. 468, 14 S. W. 656, 10 L. R. A. 186; School District No. 54 v. Gar- rison, 90 Ark. 335, 119 S. W. 275; Taylor v. Northampton County, 5 Jones L. (N. Car.) 98. See also, Da- vis V. School Directors, 92 111. 393 ; Cross V. School Directors, 24 111. App. 191; Fitch v. Smith, 57 N. J. L. 526, 34 Atl. 1058. "Millikin V Edgar County, 142 111. 528, 32 N. E. 493, 18 L. R. A. 447; State V. Platner, 43 Iowa 140; State V. Layton, 28 N. J. L. 244. See also. Jay County v. Taylor, 123 Ind. 148, 23 N. E. 752, 7 L. R. A. 160. Com- pare, however, with, Pulaski County V, Shields, 130 Ind. 6, 29 N. E. 385; Franklin v. Rauck, 9 Ohio C. C. 301, 6 Ohio C. D. 133. ''Western Union Tel. Co. v. Syra- cuse, 24 Misc. (N. Y.) 338, 53 N. Y. S. 690; Bluefield Waterworks &c. Co. V. Bluefield, 69 W. Va. 1, 70 S. E. 772, 33 L. R. A. (N. S.) 759; 2 Elliott Rds. & Sts. (3d ed.), § 938, and numerous authorities there cited. ^ Shreveport Tract. Co. v. Shreve- port, 122 La. 1, 47 So. 40, 129 Am. St. 345 ; New Orleans v. Great Southern Tel. & T. Co., 40 La. Ann. 41, 3 So. 533, 8 Am. St. 502; Texarkana Gas &c. Co. v. Texarkana (Tex. Civ. App.), 123 S. W. 213. But this does not mean that it may not be subject to police regulations. 2 Elliott Rds. & Sts. (3d ed.) §§ 939, 956. '° State V. Marion Light & Heating Co., 174 Ind. 622, 92 N. E. 731, citing many authorities. (Company agreed to furnish heat for library building free of charge.) Postal Tel. Cable Co. V. Chicopee, 207 Mass. 341. 93 N. E. 927, 32 L. R. A. (N. S.) 997n. In the above case the company was 88/ MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 604 franchise may be compelled to perform its conditions/^ Where a specification for a public improvement fully describes the work to be done, and a bid is made thereon for such work in writing and it is accepted and entered of record, it constitutes between the city and the contractor a valid contract.^^ But it is not absolutely essential, however desirable, that such a contract shall be in writing, and it has been held that the lack of a writing will not prevent a recovery where the contract has been per- formed, although the charter so requires. Thus where the con- tract was verbal and was fully performed on the part of the con- tractor, he was permitted to recover.'' And, it would seem, that in the absence of any positive statu- tory provision requiring the contract to be in writing, recovery may be had for the breach of an executory oral agreement.'* Neither the municipal charter, nor a statute purporting to regu- late the use of property held by a public corporation for govern- mental or public purposes, is a contract. '° A resolution by the required to carry on its poles the fire alarm and electric light wires of the city without compensation. ^Oklahoma City v. Oklahoma R. Co., 20 Okla. 1, 93 Pac. 48, 16 L. R. A. (N. S.) 651 and note. ^ Fort Madison v. Moore, 109 Iowa 476, 80 N. W. 527. ^ North River Elec. &c. Co. v. New York, 48 App. Div. (N. Y.) 14, 62 N. Y. S. 726. See also, Argenti v. San Francisco, 16 Cal. 255; Maher v. Chicago, 38 111. 266; Warner v. New Orleans, 87 Fed. 829, 31 C. C. A. 238 ; Chapman v. County of Douglass, 107 U. S. 348, 27 L. ed. 378. "It is the general rule that where the specification of a public improvement fully describes the work to be done, and a bid in writing is made to do such work and is accepted and entered of record, sufficient evidence of a contract exists to satisfy the statute of frauds. * * * And if, in such a case, the execution of a written con- tract is provided for, in terms, in the charter of a city, is not executed, and the materials are furnished and used, the neglect to execute the con- tract will not prevent the recovery of the reasonable value of whatever is furnished." Central Bitulithic Pav. Co. V. Highland Park, 164 Mich. 223, 129 N. W. 46, Ann. Cas. 1912B. 719. But if the provision for a written contract is mandatory it must be complied with, otherwise the contract will be void. Cook v. Cameron (Mo. App.), 128 S. W. 269. See also, Zottman v. San Francisco, 20 Cal. 96, 81 Am. Dec. 96, and note; Lo- gansport v. Blakemore, 17 Ind. 318; Crutchfield v. Warrensburg, 30 Mo. App. 456; McDonald v. New York, 68 N. Y. 23, 23 Am. Rep. 144; Arnott v. Spokane, 6 Wash. 442, 33 Pac. 1063. " Pearson v. School Dist. No. 8, 144 Wis. 620, 129 N. W. 940, 140 Am. St. 1043. In the above case a school- teacher was permitted to recover for the breach of an oral contract by which the school board hired plain- tiff to teach school. See also. Stivers V. Cherryvale, 86 Kans. 270, 120 Pac. 361 (bidder requested to proceed without waiting for contract to be signed). ■" Covington v. Kentucky, 173 U. S. 231, 43 L. ed. 679, 19 Sup. Ct. 383; State V. Noyes, 25 Nev. 31, 56 Pac. 946. § 605 CONTRACTS. 888 city council passed pending an injunction proceeding in which it is provided that a proposed draft of the contract be approved, and its execution agreed upon, to be performed as soon as the council shall be free to act, is not a contract.^^ A resolution of the council that the mayor be instructed to purchase certain prop- erty for a certain sum and on certain conditions is not on its face a contract of purchase/^ The principle applicable to con- tracts generally that a contract is not made so long as, in the contemplation of both parties thereto, something remains to be done to establish contract relations, apphes to contracts to which the municipality is a party.^^ But if the contract relates to a matter concerning which the municipality had a right to contract and is signed and sealed by the proper authorities, such contract is prima facie presumed to be valid.^" § 605. Municipal contracts — Implied contracts. — A munic- ipality may be liable on an implied contract if an express con- tract would be within the municipality's delegated powers,*" and the city had ratified the act of its officers.*^ Consequently, it is well settled that in a proper case a municipality may be liable on an implied contract for benefits received and appropriated by it." =» State V. Noyes, 25 Nev. 31, 56 "Wilson v. Mitchell, 17 S. Dak. Pac. 946. SIS, 97 N. W. 741, 65 L. R. A. 158, =' Carskaddon v. South Bend, 141 106 Am. St. 784. Ind. 596, 39 N. E. 667, 41 N. E. 1. ^'Argenti v. San Francisco, 16 Cal. But see as to when a resolution or 255 ; Zottman v. San Francisco, 20 ordinance is binding as a contract, Cal. 96, 81 Am. Dec. 96n; Brown v. People V. San Francisco, 27 Cal. 655 ; Board of Education, 103 Cal. 531, 37 Wade V. Newbern, 11 N. Car 460. Pac. 503 ; Warner v. New Orleans, "'■ Central BituHthic Pav . Co. v. 87 Fed, 829, 31 C. C. A. 238, 59 U. S. Highland Park, 164 Mich. 223, 129 App. 131 ; Austin v. Bartholomew, 107 N. W. 46, Ann. Cas. 1912B, 719. Fed. 349, 46 C. C. A. 327, writ of cer- ""New York S. & W. R. Co. v. tiorari denied in 183 U. S. 698, 46 Paterson, 81 N. J. L. 72, 80 Atl. 949. L. ed. 395, 22 Sup. Ct. 934 ; Sanitary " Buck V. Eureka, 124 Cal. 61, 56 District v. George F. Blake Mfg. Co., Pac. 612. See also, Brush Elec. Light 179 111. 167, 53 N. E. 627; Frankfort &c. Co. V. Montgomery, 114 Ala. 433, Bridge Co. v. Frankfort, 18 B. Mon. 21 So. 960. Both municipal and pub- (Ky.) 41 ; Messenger v. Buffalo, 21 lie quasi corporations have an implied N. Y. 196; Noel v. San Antonio, 11 power to make contracts necessary to Tex. Civ. App. 580, iZ S. W. 263; enable them to exercise the powers Ellis v. Cleburne (Tex. Civ. App.), 35 and perform the duties which are S. W. 495; Town School Dist. v. conferred upon them by law. People Town Dist. of Wolcott, 78 Vt. 23, 61 V. Spring Lake Drainage &c. Dist., Atl. 471. 253 111. 479, 97 N. E. 1042. 889 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 605 Liability attaches to a municipal or other public corporation upon an implied contract for the benefits received under an ex- press contract invalid for some irregularity in the execution thereof where the form or manner of letting or execution does not violate any mandatory statutory provision relative to the power of such corporation to contract and does not otherwise violate public policy.*^ In case the contract entered into is a valid exercise of the power vested in the city a mutual obligation will be implied and the construction of the contract will not al- ways be limited to the exact words used. Thus a contract en- tered into by the street cleaning department of a city by which it granted, for a valuable consideration, the right of picking over the city refuse, implied an obligation on the part of the city to deliver its refuse at the city dump.** *^ Montgomery County v. Barber, (asphalt plant, street repairing); 45 Ala. 237 (street improvement) ; Wentink v. Passaic County, 66 N. J. Brush Elec. Light & Power Co. v. L. 65, 48 Atl. 609 (construction of Montgomery, 114 Ala. 433, 21 So. bridge) ; Kramrath v. Albany, 127 N. 960 (electric lighting); San Fran- Y. S7S, 28 N. E. 400; McCloskey v. Cisco Gas Co. v. San Francisco, 9 Cal. Albany, 7 Hun (N. Y.) 472 (fuel) ; 453 (gas lighting) ; Higgins v. San Leonard v. Long Island City, 65 Hun Diego Water Co., 118 Cal. 524, 45 (N. Y.) 621, 47 N. Y. St. 761, 20 Pac. 824, 50 Pac. 670 (water sup- N. Y. S. 26 (goods for fire depart- ply) ; Contra Costa Water Co. v. ment) ; Port jervis Waterworks Co. Breed, 139 Cal. 432, IZ Pac. 189 v. Port Jervis, 71 Hun (N. Y.) (water supply) ; Kinsey v. Little 66, 24 N. Y. S. 497, 54 N. Y. River County, Fed. Cas. No. 7829 St. 84, affd. in 151 N. Y. Ill, (money properly used) ; Boyd v. 45 N. E. 388 (water supply) ; Black, 123 Ind. 1, 23 N. E. 862 (ar- Long v. Lemoyne Borough, 222 tides necessary for school district) ; Pa. 311, 71 Atl. 211, 21 L. R. A. Norway Tp. v. Clear Lake Tp., 11 (N. S.) 474 (money borrowed for Iowa 506 (money expended for le- legitimate purposes) ; Valley Falls gitimate township purposes) ; Mar- Co. v. Taft, 27 R. I. 136, 61 Atl. 41 tin-Strelan Co. v. Dubuque, 149 Iowa (money received for valid purposes) ; 1, 127 N. W. 1013 (coal purchased London & N. Y. Land Co. v. Jellico, and used but no appropriation made 103 Tenn. 320, 52 S. W. 995 (street to pay therefor) ; Howell Elec. Light improvement) ; Tyler v. Jester, 97 & P. Co. v. Howell, 132 Mich. 117, 92 Tex. 344, 78 S. W. 1058 (water sup- N. W. 940 (electric light) ; Currie v. ply) ; Thomson v. Elton, 109 Wis. School Dist. No. 26, 35 Minn. 163, 27 589, 85 N. W. 425 (money borrowed N. W. 922 (goods necessary for a and expended for legitimate pur- school district) ; Laird Norton Yards poses). See also, State v. Clark V. Rochester (Minn.), 134 N. W. 644 (Minn.), 134 N. W. 129. But com- (coal received and used) ; Methodist pare Schell City v. L. M. Rumsey Episcopal Church v. Vicksburg, SO Mfg. Co., 39 Mo. App. 264; Crutch- Miss. 601 (material) ; Crump v. Col- field v. Warrensburg, 30 Mo. App. fax County, 52 Miss. 107 (case of 456, and see McPherson v. Foster, 43 building) ; Lincoln Land Co. v. Grant, Iowa 48, 22 Am. Rep. 215. 57 Nebr. 70, 11 N. W. 349 (water " New York v, Paoli, 202 N. Y. 18, supply) ; Nebraska Bitulithic Co. v. 94 N. E. 1077. The court said : "It is Omaha, 84 Nebr. 375, 121 N. W. 443 insisted that the instrument sued upon CONTRACTS. 890 As a general rule, where a contractor is required by the munic- ipal representative, without collusion and against the contractor's opposition, to do something as covered by his contract, and the question whether the thing required is embraced within the con- tract is fairly debatable and its determination surrounded by doubt, he may comply with the demand under protest and sub- sequently recover for the extra expense thereby incurred if the thing required was not covered by the contractor's agreement; but, on the other hand, if the thing required is clearly beyond the limits of the contract, the contractor may not even under protest do it and subsequently recover for the extra expense thereby in- curred. *° A municipality may also be held liable in an action for money had and received, notwithstanding the fact that the resolution under which the loan was made was invalid." § 606. When no implied liability arises. — But no implied lia- bility arises where the contract, though within the scope of the statute, is violative of a mandatory provision thereof,*^ as where as the contract contains no covenant on the part of the city, and imposes no obligation upon it. Of course, if it is the fact that the city had not bound itself to do anything, which, as an obligation, was enforcible by Del- li PaoH, then the instrument lacked an essential element of a contract. Such a contract must be obligatory upon both parties, in the sense that their promises are concurrent and en- forcible by either. If in this instru- ment there existed but the promise on the part of Delli Paoli, and there was no agreement on the part of the city to deliver its refuse at the "dumps" for the contractor to pick over, then the appellants' objection would be sound. It is not true, however, that the city came under no obligation to Delli Paoli." " Borough Const. Co. v. New York, 200 N. Y. 149, 93 N. E. 480, 140 Am. St. 633. In the above case it was said there might be a recovery for an ex- tra grade of cement which he was compelled but not required bv his contract to use. but that he could not recover the expense incurred by con- structing an elevator by which to lower an automobile into the sewer and lighting it with candles when in- spected by city officials. "Long V. Lemoyne Borough, 222 Pa. 311, 71 Atl. 211, 21 L. R. A. (N. S.) 474. " Fountain v. Sacramento, 1 Cal. App. 461, 82 Pac. 637 (purchase of material invalid because not author- ized by vote of board of trustees) ; Richardson v. Grant County, 27 Fed. 495 (building contract invalid because not let on competitive bidding) ; Peck-Williamson Heating & Venti- lating Co. V. Steen School Tp., 30 Ind. App. 637, 66 N. E. 909 (contract for supplies not let on competitive bid- ding) ; Reichard v. Warren County, 31 Iowa 381 (contract for public building exceeded amount appro- priated by vote) ; Harrison County v. Ogden, 133 Iowa 9, 110 N. W. 32; Lovejoy v. Foxcroft, 91 Maine 367, 40 Atl. 141 ; Detroit v. Michigan Pav- ing Co., 36 Mich. 335 (contract for street improvement not let to lowest bidder as required by statute) ; De- troit V. Robinson, 38 Mich. 108. To same effect, Niles Water Works v. Niles, 59 Mich. 311, 26 N. W. 525 (contract for water- works creating a debt beyond statutory limit) ; Mc- 891 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 606 the contract is with an officer of the municipality it being expressly forbidden to make a contract with its officers.** In such a case it has been held that no recovery can be had not- withstanding the municipal corporation has received and made Curdy v. County of Shiawassee, 154 Mich. 5S0, 118 N. W. 625 (money borrowed for current expenses in ex- cess of constitutional power of coun- ty to create indebtedness, ex con- tractu without vote) ; Rumsey Mfg. Co. V. Schell City, 21 Mo. App. 175, reaffd. in 39 Mo. App. 264 (material contract invalid because not made by ordinance) ; Wolcott v. Lawrence County, 26 Mo. 272 (contract for county building not made in con- formity with statute) ; New Jersey Car Spring & Rubber Co. v. Jersey City, 64 N. J. L. 544, 46 Atl. 649 (goods purchased by one employe and accepted by another employe with- • out precedent authority) ; Atlantic City Water-works Co. v. Reed, 50 N. J. L. 665, 15 Atl. 10 (contract for water supply created an obligation in excess of statutory limitation) ; Mc- Donald v. New York, 68 N. Y. 23, 23 Am. Rep. 144 (contract for material not in writing and on record) ; La France Fire Engine Co. v. Syracuse, 33 Misc. (N. Y.) 516, 68 N. Y. S. 894 (violating provision of charter that all purchases of supplies be from the lowest bidder, etc.) ; Keane v. New York, 88 App. Div. (N. Y.) 542, 85 N. Y. S. 130 (facts similar to above case) ; Smith v. Newburg, 11 N. Y. 130 (contract for water supply in- valid; statutory requirements for let- ting contract not complied with) ; People V. Gleason, 121 N. Y. 631, 25 N. E. 4 (contract to improve streets invalid, no compliance with require- ments as to letting to lowest bidder) ; Dickinson v. Poughkeep- sie, 75 N. Y. 65 (failure to let to lowest bidder) ; Walton v. New York, 26 App. Div. (N. Y.) Id, 49 N. Y. S. 615 (invalid for failure to follow statutory requirement as to public letting thereof) ; Wellston v. Morgan, 65 Ohio St. 219, 62 N. E. 127 (contract for supply of gas in- valid; not provided for by ordinance or resolution) ; Buchanan Bridge Co. V. Walters, 3 Ohio N. P. 176, 4 Ohio S. & C. P. Dec. 134 (contract to con- struct bridge invalid; no competitive bidding) ; State v. Biddle, 4 Ohio Dec. 130 (same defect in contract) ; Perry Water, Light & Ice Co. v. City of Perry (Okla.), 120 Pac. 582 (pur- chase of supphes) ; Springfield Mill Co. V. Lane County, S Ore. 265 (con- tract for labor for bridge not let to lowest bidder) ; O'Rourke v. Phila- delphia, 211 Pa. 79, 60 Atl. 499; Mc- Gillivray v. Joint School District No. 1, 112 Wis. 354, 88 N. W. 310, 58 L. R. A. 100, 88 Am. St. 969 (materials for schoolhouse in excess of limit) ; Chippewa Bridge Co. v. Durand, 122 Wis. 85, 99 N. W. 603, 106 Am. St. 931 ; Martin v. Fond Du Lac County, 127 Wis. 586, 106 N. W. 1095 ; Apple- ton Water-works Co. v. Appleton, 132 Wis. 563, 113 N. W. 44. "The law is well settled that where, as in the cases between these parties here un- der consideration, the contract upon which suit is brought is forbidden by statute, the acceptance of benefits raises no implication of an obligation. The law is not properly chargeable with the absurdity of implying an ob- ligation to do that which it forbids." Edison Electric Co. v. City of Pasa- dena, 178 Fed. 425, 102 C. C. A. 40. ^'Berka v. Woodward, 125 Cal. 119, 57 Pac. in, 45 L. R. A. 420, 73 Am. St. 31; McNay v. Lowell, 41 Ind. App. 627, 84 N. E. 778; Brazil v. Mc- Bride, 69 Ind. 244; Macy v. Duluth, 68 Minn. 452, 71 N. W. 687. See also. State V. Cheney, 67 Wash. 151, 121 Pac. 48. See, however, Capital Gas Co. V. Young, 109 Cal. 140, 41 Pac. 869, 29 L. R. A. 463 ; Currie v. School District, 35 Minn. 163, 27 N. W. 922. "The principle that trustees of a mu- nicipal corporation have no right to enter into contracts with each other at the expense of those for whom they are acting and whose interests they are bound to guard and protect is fundamental in the law relating to trustees. Such illegality does not depend upon statutory enactments ; •the contracts are illegal at common law." In re Moran, 130 N. Y. S. 432. § 6o6 CONTRACTS. 892 use of the merchandise or other benefits received under the con- tract." And if payment for the merchandise recei^-ed has been made to the officer interested in the contract the money so paid may be recovered. ^^ There is no implied liabihty on the part of a municipality to repay money borrowed in its name, by a municipal officer, with- out the knowledge, consent or approval of the municipality, even if placed to his official credit, such official being at the time a defaulter." It has also been held that a contractor cannot re- cover from a municipal or other public corporation the value of a bridge built" or street improvement made'^ or extra services '"Bay V. Davidson, 133 Iowa 688, 111 N. W. 25, 9 L. R. A. (N. S.) 1014 and note. Compare, however, with above case, Diver v. Keokuk Sav. Bank, 126 Iowa 691, 102 N. W. 542. °° Independent School District v. Collins, IS Idaho 535, 98 Pac. 857, 128 Am. St. Id. In the above case it is said: "It is contended that the only penalty provided in said section is that no action can be maintained or recovery had against a district on such a contract ; that, as the district has received the benefit of the goods so purchased and has paid the money therefor, a recovery of the money cannot be had. There is nothing in this contention, as the statute pro- vides such contracts are absolutely void. If money is illegally paid on such void contract, the district may recover it back, and in case the dis- trict refuses to do so, any taxpayer of the district may, for and on behalf of the district maintain an action for recovery of money so illegally paid. However, the judgment in such cases should run in favor of the municipality whenever a recovery is adjudged. In case a taxpayer fails to recover judgment, the court should require hira to pay the costs of the suit. The rule contended for by appellant, to the effect that neither party to a transaction will be per- mitted to take advantage of its in- validity while retaining the benefits, applies only to voidable contracts, and not to a transaction that is ab- solutely void." McNav v. Town of Lowell, 41 Ind. App. 627, 84 N. E. 778. See also. Town of Buyck v. Buyck, 112 Minn. 94, 127 N. W. 452, 140 Am. St. 464. °' First Nat. Bank v. New Castle, 224 Pa. 285, 1i Atl. 331. '' Berlin I. B. Co. v. San Antonio, 62 Fed. 882. But while the builder cannot enforce payment he neverthe- less has the right to remove the bridge. Floyd Co. v. Owego Bridge Co., 143 Ky. 693, 137 S. W. 237. A town is relieved from liability on a contract assigned without its con- sent, though not annulled until after receiving the benefits, where the law prohibits the assignment of such con- tracts without the written consent of the town, and authorizes its revoca- tion on the ground of an assignment without consent. Suburban Elec. Light Co. V. Hempstead, 38 App. Div. (N. Y.) 355, 56 N. Y. S. 443. " In the case of City of Newport v. Schoolfield (Ky.), 134 S. W. 503, quoting from Murphy v. City of Louisville, 9 Bush. (Ky.) 194, it is said: "Nor is the corporation liable for the value of the work by reason of any implied promise to pay, upon the idea that the city derived a bene- fit from it. If so, as previously ar- gued, it would dispense with the ex- ercise of the power conferred by those in authority to execute con- tracts, and the contractor, or the party performing the work at the in- ^■'tance of any official of the corpora- tion or even inhabitant of the city, could make improvements beneficial to the corporation, and thereby create an implied contract on the part of the city to pay. If the alleged con- 893 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 607 rendered, under a void contract/* Nor is there any implied lia- bility when the contract is ultra vires the municipality/' It has been held that a contract will not be implied where goods have been ordered by one employe and accepted by another without authority and used by him/" Nor is the city liable to a person who volunteers services/^ Nor is it liable on an implied contract for the temporary use of a hose which belonged to an individual but was used under the supposition that it belonged to the city/* On the other hand where a person is compelled by a municipal officer to perform labor for the municipality under a judgment which is void it has been held that he may recover the value of his services/" § 607. Validity of contract generally, — It may be stated generally that the contract must relate to a subject-matter within the scope of the contractual powers of the municipal or other public corporation. It must not be in contravention of the con- tract is made otherwise than as re- quired by the ordinance, it is not binding; and if not obligatory as a contract, the law creates no promise to pay. The difference between the contract of a private person and that of an officer of a corporation is this: An individual has the right to make, alter or ratify a contract at his own free will and pleasure with the con- sent of the party contracting with him; or if he stands by and permits others to work for him, and accepts the work, the law implies a promise to pay its value; while an officer of a corporation has no power to make a contract except in the manner pointed out by the statute from which the power is derived. Zottman v. San Francisco, 20 Cal. 96, 81 Am. Dec. 96." Compare Nebraska Bitu- lithic Co. v. City of Omaha, 84 Nebr. 375, 121 N. W. 443. "W. W. Cook & Son v. Cam- eron, 144 Mo. App. 137, 128 S. W. 269. Compare the foregoing cases with the case of Hart v. New York (N. y.), 94 N. E. 219, which holds that recovery cannot be had under the void contract but contains a dictum statement to the effect that an action might be brought for the quantum meruit. The above case had to do with a sewage disposal plant. "Salt Creek Tp. v. King Iron Bridge & Mfg. Co., 51 Kans. 520, 33 Pac. 303; Hovey v. Wyandotte County, 56 Kans. 577, 44 Pac. 17; Hackettstown v. Swackhamer, 37 N. J. L. 191 ; Peterson v. New York, 17 N. Y. 449; Bloomsburg Land Im- prov. Co. v. Bloomsburg, 215 Pa. 452, 64 Atl. 602; Close v. Berks County, 2 Woodw. Dec. (Pa.) 453; Burrill v. Boston, 2 Clif. (U. S.) 590, Fed. Cas. No. 2198. See also, post, §§ 614, 615, Estoppel, and also Ultra Vires. ^ New Jersey Car Spring &c. Co. v. Jersey City, 64 N. J. L. 544, 46 Atl. 649. "Lydecker v. Nyack, 6 App. Div. (N. Y.) 90; 39 N. Y. S. 509. The mere rendition of a specified service is not sufficient to imply a promise to pay therefor. McCormick v. Niles; 81 Ohio St. 246, 90 N. E. 803. See also, Roemheld v. City of Chicago, 231 111. 457, 83 N. E. 291. •" Dolloff V. Ayer, 162 Mass. 569, 39 N. E. 191. ■^ Fox V. Richmond, 19 Ky. L. Rep. 326, 40 S. W. 251. § 6gS contracts. 894 stitution, general statutes or the municipal charter and not con- trary to public policy. When the charter or other law govern- ing the subject has prescribed certain preliminary steps in rela- tion to the making of contracts which are mandatory these con- ditions precedent are to be carefully observed. With these gen- eral principles in mind some examples of valid contracts entered into by a municipality will be given. § 608. Validity of contract generally — Examples of valid contracts. — Without classifying, generalizing or setting out the authority on which the city acted in each case, because it would unduly extend this division of the subject, attention is called to the following contracts as having been held valid, on various grounds. The purchase, erection or maintenance of an electric light plant by a municipality has been held valid under its inherent power to light its streets and public places."" It also has been held to have this power where it is given express power to light its streets."^ It may be given the power to lease"^ or con- struct"^ a water works system. Where the statute authorizes a city to provide for the health and welfare of the city it has power to contract for a water supply as a protection against "Heilbron v. Cuthbert, 96 Ga. 312, 30 L. R. A. 540, SI Am. St. 24; Mid- 23 S. E. 206; Crawfordsville v. Bra- dleton v. St. Augustine, 42 Fla. 287, den, 130 Ind. 149, 28 N. E. 849, 14 L. 29 So. 421, 89 Am. St. 227; Blanch- R. A. 268, 30 Am. St. 214; Overall v. ard v. Benton, 109 111. App. 569; Hay City of Madisonville, 31 Ky. L. 278, v. Springfield, 64 111. App. 671 ; Rush- 102 S. W. 278, 12 L. R. A. (N. S.) ville Gas Co. v. Rushville, 121 Ind. 433; Opinion of Justices, 150 Mass. 206, 23 N. E. 72, 6 L. R. A. 315, 16 592, 24 N. E. 1084, 8 L. R. A. 487; Am. St. 388; State v. Hiawatha, S3 Mauldin v. Greenville, 33 S. Car. 1, Kans. 477, 36 Pac. 1119; Overall v. 11 S. E. 434, 18 L. R. A. 291; Ellin- Madisonville, 31 Ky. L. 278, 102 S. wood v. Reedsburg, 91 Wis. 131, 64 W. 278, 12 L. R. A. (N. S.) 433; N. W. 885. See also. Lake Charles Christensen v. Fremont, 45 Nebr. 160, &c, Co. V. Lake Charles, 106 La. Ann. 63 N. W. 364. See, however, Spaul- 65, 30 So. 289; Contra, Posey v. North ding v. Peabody, 153 Mass. 129, 26 Birmingham (Ala.), 45 So. 663, IS N. E. 421, 10 L. R. A. 397; Howell L. R. A. (N. S.) 711. For a defini- v. Millville, 60 N. J. L. 95, 36 Atl. tion of the term public utility, see 691. Coleman v. Frame (Okla.), 109 Pac. °"Higgins v. San Diego Water Co., 928, 31 L. R. A. (N. S.) 556. 118 Cal. 524, 45 Pac. 824, SO Pac. 670. " Jacksonville Electric Light Co. v. "^ National Tube Works v. Cham- Jacksonville, 36 Fla. 229, 18 So. 677, berlain, S Dak. 54, 37 N. W. 761. 89: MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 6oS fire/* It may be given authority to construct wharves°° or erect an auditorium for public purposes."" Or a city may contract with individuals to furnish it with a market house."^ It has also been held that a municipal corporation may permit the use of or lease unused public property for a fixed and limited term in order to avoid loss of revenue and to lighten the general burden of taxation."^ An agreement to build and maintain certain roads, and repair the same, so far as damaged from flooding from a dam owned "Watson V. Town of New Mil- ford, 72 Conn. 561, 45 Atl. 167, 11 Am. St. 345. See also, Salina Water- works Co. V. Salina, 195 Fed. 142 (fire hydrants rented, with provision for extension in the case the city did not elect to purchase the plant). Little Falls &c. Water Co. v. Lit- tle Falls, 102 Fed. 663; Maine Water Co. V. Waterville, 93 Maine 586, 45 Atl. 830, 49 L. R. A. 294. °' JeffersonviUe v. The John Shall- cross Co., 35 Ind. 19; Waddington V. St. Louis, 14 Mo. 190; Matthews V. Alexandria, 68 Mo. 115, 30 Am. Rep. 776. "» Denver v. Hallett, 34 Colo. 393, 83 Pac. 1066; Wheelock v. Lowell, 196 Mass. 220, 81 N. E. 977, 12 A. & E. Ann. Cas. 1109, 124 Am. St. 543; Clarke v. Brookfield, 81 Mo. 503, 51 Am. Rep. 243. See also, Wheelock v. Lowell, 196 Mass. 220, 81 N. E. 977, 124 Am. St. 543. See, however. Brooks v. Incorporated Town of Brooklyn, 146 Iowa 136, 124 N. W. 868, 26 L. R. A. (N. S.) 425 and note. "State V. Perry, 151 N. Car. 661, 65 S. E. 915, 134 Am. St. 1002. The ability of a municipality to acquire public utilities is determined by its charter powers and is purely a question of local policy with each state. On this subject the Supreme Court of California has said : "We do not understand that it is seriously claimed that the state may not in- vest its municipalities with the power to acquire and operate any such nec- essary public utility as is generally owned and operated in a city by what is ordinarily known as a public service corporation, such as water- works, gas or electric light works, street railways, etc. The existence and proper conduct of such utilities in cities clearly constitute public af- fairs, one relating very closely to the well-being, safety, health, advantage, and convenience of all the inhab- itants thereof, and are well within the legitimate functions of govern- ment. If the state deems it condu- cive to the welfare of the inhabitants of a city that the municipahty shall have the power to itself acquire and operate for their benefit any such util- ity, in order that they may not be de- pendent solely on the establishment or operation thereof by some private corporation, or person, there can be no doubt of its right to confer such power on the municipahty. As to such utilities as water-works and artificial light works this power has long been exercised by municipalities in various sections of the United States under authorization from their respective states, and this is par- ticularly true in California. We do not understand that the right of a state to invest its municipahties with such power has ever been doubted. There is no difference material here between an artificial lighting plant to supply the inhabitants with light and a street railway. Both are mat- ters pertaining to the internal affairs of the state, as to which the state has absolute power. It is purely a ques- tion of local policy with each state what shall be the extent and char- acter of the powers which its various political organizations shall possess." Piatt v. City & County of San Fran- cisco (Cal.), 110 Pac. 304. °' Gottlieb-Knabe Co. v. Macklin, 109 Md. 429, 71 Atl. 949, 31 L. R. A. (N. S.). 580 and note. § 6o8 CONTRACTS. 896 by the promisor, has been held not void for noncompHance with the statute in relation to keeping in repair roads gen- erally."" A contract to pave a street and make repairs rendered necessary by indifferent work or the use of defective material has been held not to be invalid in the absence of proof that the agreement to repair increased the amount of the bid and imposed upon the abutting property-owners a burden properly resting on the general public.''" So, while in many jurisdictions, abutters cannot be assessed for repairs as distinguished from improve- ments and such a contract as that last mentioned might be invalid, it is generally held that a provision in a street improvement con- tract, merely guaranteeing the quality of the work for a reason- able period is not invalid.'^ And in Kentucky a guaranty to keep a street in repair for five years does not render the contract void, but the contractor cannot recover for the excess of the assessment caused by the guaranty which is presumed to be ten per cent, retained by the city to secure the repairs.'^ A charter prohibiting contracts for public improvements, unless recom- mended by the board of public works, has also been held not to prevent the council from contracting for repairs for a term of years in a paving contract, which contract was made in accord- ance with the charter.'^ " Levis V. Black River Imp. Co., cases reviewed in those above cited, 105 Wis. 391, 81 N. W. 669. hovyever, there is some conflict among "Cole v. People, 161 111. 16, 43 N. the decisions. E. 607 ; Allen v. Davenport, 107 Iowa " Louisville v. Selvage, 21 Ky. L. 90, 77 N. W. S32; Kansas City v. 349, 51 S. W. 447. Hanson, 60 Kans. 833, 58 Pac. 474; "Barber &c. Pav. Co. v. Hezel, 76 Barber &c. Pav. Co. v. Ullman, 137 Mo. App. 135. Where the contractor Mo. 543, 38 S. W. 458; Robertson v. has agreed to make repairs on no- Omaha, 55 Nebr. 718, 76 N. W. 442, tice such notice must be given, al- 44 L. R. A. 534; State v. Inhabitants though he has become insolvent and &c., 60 N. J. L. 394, 38 Atl. 635. has assigned his interest in the bal- " See 1 Elliott Rds. & Sts. (3d ed.), ance of the contract price. Southern § 647, and numerous cases there Pav. Co. v. Chattsfnooga (Tenn.), 48 cited, among which is Shank v. S. W. 92. A city council is not au- Smith, 157 Ind. 401, 61 N. E. 932, thorized to make provision for re- 55 L. R. A. 564, where most of the pairs before the necessity exists there- authorities are reviewed. See also, for. Kansas City v. Hanson, 8 Kansas City v. Hanson, 60 Kans. 833, Kans. App. 290, 55 Pac. 513. Where 58 Pac. 474; Barber Asphalt Pav. a railroad company has obligated it- Co. V. French, 158 Mo. 534, 58 S. W. self to keep a street in good order, 934, 54 L. R. A. 492 (affd. in 181 U. and by inaction on the part of the S. 324) ; People v. Featherstonhaugh, city the street becomes in such state 172 N. Y. 112, 64 N. E. 802, 60 L. R. of repair as to require an unusual A. 768. As will be seen from the expenditure, the proper construction 897 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 6o8 Where an ordinance required all garbage to be removed by a licensed person it was held not objectionable in that it was for a longer term than was permissible/* A contract is valid, notwithstanding the legislature may subsequently restrict the debt limits under which it would be invalid.'^ A contract of sale of a gas plant by a city in consideration that the purchaser would light the streets and the city pay the taxes against such purchaser has been held enforcible.'" A contract for water supply is not void for not stating the source of supply.'^ A contract for lighting may be within the discretion of the munic- ipality/* A contract with a turnpike company to remove its gate and keep its road in repair within the city limits is valid/" A city has been held to have power to bind itself to pay part of the expense of constructing a bridge over a railroad/" Under a statute authorizing a town to construct a town hall, necessary outbuildings and convenient accommodations for the same, it is authorized to construct a sewer for the service of the town halL" Where a city is authorized to contract for or otherwise provide for the disposal of its garbage and to purchase or lease land with- in its territory for the purpose of erecting crematories, it is not prevented from contracting with a rendering establishment out- side its limits to dispose of dead animals in a sanitary and inof- fensive manner/^ A charter granting power to provide for sup- plying a city with water has been held to give power to fix the rates to be charged to consumers/^ A joint committee created by law and which has control of the courthouse has authority to requires the city to restore the street ™Wade v. Borough of Oakmont, to good order and requires the rail- 165 Pa. St. 479, 30 Atl. 959. road company to keep it so. State '" Providence &c. Plank Road Co. V. New Orleans &c. R. Co., 52 La. v. Scranton, 1 Lack. Leg. N. (Pa.) Ann. 1570, 28 So. 111. 183. "Grand Rapids v. De Vries, 123 *° Argentine v. Atchison &c. R. Co., Mich. 570, 82 N. W. 269. A contract 55 Kans. 730, 41 Pac. 946, 30 L. R. A. for the disposition of sewage for five 255. But compare State v. St. Paul years has been held valid. McBean &c. R. Co., 98 Minn. 380, 108 N. W. V. Fresno, 112 Cal. 159, 44 Pac. 358, 261, 28 L. R. A. (N. S.) 298. 31 L. R. A. 794, 53 Am. St. 191. ''Watson v. New Milford, 72 "Ludington Water Supply Co. v. Conn. 561, 45 Atl. 167, 11 Am. St. Ludington, 119 Mich. 480, 78 N. W. 345. 558. '^Tiede v. Schneidt, 105 Wis. 470, " Frankfort v. Capital Gas &c. Co., 81 N. W. 826. 16 Ky. L, 780, 29 S. W. 855. "^ Los Angeles Water Co. v. Los " Brady v. Bayonne, 57 N. J. L. Angeles, 88 Fed. 720. 379, 30 Atl. 968. 57— Contracts, Vol. I § 609 CONTRACTS. 898 contract for heating and lighting the same.'* Irregularity in the payment for land by a municipality, as where no formal appro- priation had been made as required by the charter, will not affect the municipality's title to the land in a suit by a citizen to re- scind.'^ A license for a whole year is not a contract for that time within the provision of the constitution.'® Where a charter authorizes the city to provide for lighting the streets and for a water supply, by contract or otherwise, and to grant franchises for a term of years for such purposes, a franchise may be granted or contract entered into binding the city for the term of the fran- chise or contract." It has also been held that the statutory pro- vision which requires contracts to be let on competitive bidding does not prevent a municipality from contracting for a patented article.'' § 609. Validity of contract generally — Examples of invalid contracts. — It is a question of prime importance that the city shall be interested in the subject-matter of the contract. It is not sufficient that some of its citizens may be benefited thereby, or even a considerable number of them, nor its officers or em- ployes be parties. A contract by a corporation counsel for serv- ices of a stenographer in a suit to which the city is not a party and in no way interested is invalid.'" A contract entered into by a town just prior to consolidation with a city and not to take effect until thereafter and to run for " State V. McCardy, 62 Minn. S09, Wis. 590, 99 Am. Dec. 205. Compare 64 N, W. 1133. with Johnson V. Atlantic City (N. J.), ^ Ecroyd v. Coggeshall, 21 R. 1. 1, 81 Atl. 1105 (proposal so framed as 41 Atl. 260, 79 Am. St. 741. to deter rather than invite bona fide °° St. Charles v. Hackman, 133 Mo. competitive bidding). It will be 634, 34 S. W. 878. found from a reading of the pre- " Cunningham v. Cleveland, 39 C. ceding cases that a conflict of au- C. A. 211, 98 Fed. 657. thority exists on this subject, but it ''Tousey v. Indianapolis (Ind.), 94 seems that the doctrine stated in the N. E. 225; Hobart v. Detroit, 17 text is gradually winning its way to Mich. 246, 97 Am. Dec. 185; Union general application.' The doctrine Pav. Co. V. Schenectady, 74 Misc. upholding such contracts is known as (N. Y.) 646, 134 N. Y. S. 740; Reed the Michigan rule and the cases hold- V. Rockliff-Gibson Const. Co., 25 ing the contrary follow what is Okla. 633, 107 Pac. 168, 138 Am. St. known as the Wisconsin rule. See 937. See, however, Pollock v. Kan- also, 2 Elliott Rds. & Sts. (3d ed.), sas City (Kans,), 123 Pac. 985; Ter- §§ 710, 711. williger Land Co. v. Portland (Ore.), "Chicago v. Williams, 80 III. App. 123 Pac. 57; Dean v. Charlton, 23 33, revd. 182 111. 135, 55 N. E. 123. 899 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 609 ten years, and. not in good faith, is against public policy, and void."" The authorities of a city cannot by present agreement bind themselves to exercise their legislative powers in a particular manner at some future time."^ The reservation in a contract of power in the city engineer to annul the contract has been held an attempt to delegate legislative power, and, therefore, void."^ A contract entered into at a special meeting of the council of which several members had no notice and in which they did not partici- pate, is invalid."^ A contract by sinking-fund trustees for the sale of bonds resulting in adding interest to the funded public debt has been held invalid."* The failure to annex specifications to a con- tract referred to as part thereof has been held to render the con- tract invalid and the assessment based thereon void."' Power to make police, sanitary and other regulations, not in conflict with general law, has been held not to authorize the purchase of a site for a smallpox hospital."" Where by statute cities are authorized to contract for a water supply for a period not exceeding thirty years, it has been held that they may not fix a price for that pe- riod."^ Where the electors, at an election called for the purpose, have expressed themselves, in relation to street lighting, in favor of construction or purchase of an electric light plant, a subsequent contract with a corporation for street lighting for ten years is void."^ A contract unlawfully diverting public funds is void."" "Hendrickson v. New York, 160 ISl, 38 Pac. 682. Compare Summit N. Y. 144, 54 N. E. 680, affg. 38 App. Tp. v. Jackson, 154 Mich. 37, 117 N. Div. (N. Y.) 480, 56 N. Y. S. 580. W. 545, 18 L. R. A. (N. S.) 260 and "■•New York, N. H. & H. R. Co. cases there cited in note. V. New Rochelle, 29 Misc. (N. Y.) " Carlyle v. Carlyle Water &c. Co., 195, 60 N. Y. S. 904 52 III. App. 577, affd. on other " Neill V. Gates, 152 Mo. 585, 54 grounds, 140 111. 445, 29 N. E. 556. It S. W. 460. is beyond the power of a city to en- °° Harding v. Vandewater, 40 Cal. ter into a contract with a railroad 77; Stowe V. Wyse, 7 Conn. 214 i company binding itself to maintain Supervisors &c. v. Horton, 75 Iowa and keep in repair for all future time 271, 39 N. W. 394; Paola & F. R. R. a bridge which is the joint work of Co. V. Anderson, 16 Kans. 302; the city and railroad company, on a Beaver Creek &c. v. Hastings, 52 public highway and over tracks be- Mich. 528, 18 N. W. 250; Lord v. longing to the railroad company, and Anoka, 36 Minn. 176, 30 N. W. 550; agreeing to allow no grade crossings People V. Batchelor, 22 N. Y. 128 ; at such point. State v. Minnesota &c. London &c. Land Co. v. Jellico, 103 R. Co., 80 Minn. 108, 83 N. W. 32, SO Tenn. 320, 52 S. W. 995. L. R. A. 656. " Cincinnati v. Guckenberger, 60 "^ George v. Wyandotte &c. Light Ohio St. 353, 54 N. E. 376. Co., 105 Mich. 1, 62 N. W. 985. " Gray v. Richardson, 124 Cal. 460, " Kent v. Dithridge &c. Glass Co., 57 Pac. 385. 10 Ohio C. C. 629. "" Von Schmidt v. Widber, 105 Cal. 6o9 CONTRACTS. 900 The rule is universal that fraud in procuring the making of a contract vitiates the contract. Hence, bribery in obtaining a contract will render it void, although it is vi^ith the lowest bidder.^ A contract by what is neither a de facto nor de jure corporation is a nullity.^ An act changing the line of an improvement after a contract has been made so as to lessen the amount and cost of work has been held to render the contract inoperative and the assessment void.^ A contract may also be void for the reason that it exceeds the estimate of costs submitted with the plans and specifications to the city engineer.* A compromise of an illegal claim against the city is not legal, and creates no liability,^ and the same is true as to a contract in connection with an invalid franchise," and a contract based on a void ordinance.'' The municipal officials cannot surrender a liquidated claim in favor of the city under the guise of a compro- mise.' A contract with a water company to furnish the city with water for thirty years has been held unreasonable and beyond 'Herman v. Oconto, 100 Wis. 391, Td N. W. 364. An allegation in an an- swer that the contract sued on was obtained by bribery of the officers charged with its execution, the ones bribed and the amount paid being un- known, is sufficient where no applica- tion for a more specific statement is made. Herman v. Oconto, 100 Wis. 391, 16 N. W. 364. 'Guthrie v. Wylie, 6 Okla. 61, 55 Pac. 103. "Warren v. Chandos, 115 Cal. 382, 47 Pac. 132. * Bowles V. Neely, 28 Okla. 556, 115 Pac. 344. ° Village of Fort Edward v. Fish, 86 Hun (N. Y.) 548, 33 N.- Y. S. 784. See also, Zuelly v. Casper, H Ind. App. 186, 76 N. E. 646. ' Nicholasville W. Co. v. Council- men of Nicholasville, 18 Ky. L. 592, Z(^ S. W. 549, 38 S. W. 430 (the above case holds, however, that the mu- nicipality may be liable for the bene- fits received under the contract). 'Ellis V. Cleburne, (Tex. Civ. App.), 35 S. W. 495. 'Jefferson v. Lineberger, 3 Mont. 231, 35 Am. Rep. 462 (compromise with official from whom money had been stolen for less than amount due). To same effect. Common- wealth V. Tilton, 111 Ky. 341, 23 Ky. L. 753, 63 S. W. 602 (facts similar to above) ; Bland v. Orr, 90 Tex. 492, 39 S. W. 558 (case with similar facts) ; Famsworth v. Wil- bur, 49 Wash. 416, 95 Pac. 642, 19 L. R. A. (N. S.) 320. See, however, Hancock v. Bradley, 53 Ind. 422, As to the right to compromise a judg- ment, see, generally, Petersburg v. Mappin, 14 111. 193, 56 Am. Dec. 501 ; Agnew V. Brail, 124 111. 312, 16 N. E. 230; Mills County v. Burlington &c. R. Co., 47 Iowa 66 ; Collins v. Welch, 58 Iowa 72, 12 N. W. 121, 43 Am. Rep. Ill; St. Louis &c. R. Co. v. Anthony, 73 Mo. 431 ; Farnham v. Lincoln, 75 Nebr. 502, 106 N. W. 666 ; Kinsley v. Norris, 62 N. H. 652; Or- leans County V. Bowen, 4 Lans. (N. Y.) 24; Standart v. Burtis, 46 Hun (N. Y.) 82; Hagler v. Kelly, 14 N. Dak. 218, 103 N, W. 629; Multno- mah County V. Dekum, 51 Ore. 83, 93 Pac. 821; State v. Davis, 11 S. 90I MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 609 the power of the city to make," and so is an exclusive privilege for lighting for ninety-nine years." An agreement to pay a stip- ulated monthly rental for a water-works plant on condition that the lessor would construct a railroad between certain points, where the city has no right to expend funds to aid railroads, is void.^^ While a contract with specified persons may be void as granting an unauthorized exclusive franchise, yet it has been held that so long as the city accepts services under the contract it must pay the stipulated price/^ Where a contract is objectionable in itself on the ground of infringing on the police power of the state, or if it becomes so in its execution, the municipality may, in the exercise of its police power, regulate the manner in which it may be carried out, or may abrogate it entirely upon the principle that it cannot bind itself to any course of action which shall prove deleterious to the health or morals of its inhabitants/'' An illegal contract might be canceled at the suit of a lot owner in a suit brought before work had been done, and before the bonds had been sold, and an assess- ment made, and the fact that at the time of the trial the work had been completed and the bonds issued and sold would not cure the illegality." The city may recover the proceeds of bonds issued by it to a corporation under a void subscription to the cap- ital stock. ^'^ Where a duty rests upon a railway company to re- store a public highway to its former condition the city cannot Dak. Ill, 75 N. W. 897, 74 Am. St. not extend its aid to an association. 780; Washburn County v. Thomp- Park v. Modern Woodmen, 181 111. son, 99 Wis. 585, 75 N. W. 309; But- 214, 54 N. E. 932. The subscription ternut v. O'Malley, SO Wis. 329, 7 for corporate stock by a city being N. W. 246. unauthorized the acceptance of bonds ° Flynn v. Little Falls &c. Co., 74 by it does make it a stockholder. Minn. 180, 11 N. W. 38, 78 N. W. Geneseo v. Geneseo &c. Co., 55 Kans. 106. See also, Danville v. Danville 358, 40 Pac. 655. But if there was a Water Co., 178 111. 299, S3 N. E. 118, general power to contract for a water 69 Am. St. 304; Gaslight &c. Co. v. supply the city will be liable on a New Albany, 156 Ind, 406, 59 N. E. quantum valebat for the reasonable 176. But compare Walla Walla v. value of the use of the plant. Water Co., 172 U. S. 1, 19 Sup. Ct. '^Illinois Trust &c. Bank v. Ar- 11; Little Falls R. Co. v. Little Falls, kansas City W. Co., 67 Fed. 196. 102 Fed. 663 ; Monroe Water Co. v. '" Walla Walla City v. Walla Walla Heath, 115 Mich. 277, IZ N. W. 234. Water Co., 172 U. S. 1, 19 Sup. Ct. "Wellston v, Morgan, 59 Ohio St. IT. 147, 52 N. E. 127. "Allen v. Davenport, 107 Iowa 90, " Higgins V. San Diego Water Co., V N. W. 532. 118 Cal. 524, 45 Pac. 824, SO Pac. 670. ''^ Geneseo v. Geneseo &c. Co., 55 A city without special authority can- Kans. 358, 40 Pac. 655. § 609 CONTRACTS. 9O2 make a valid contract relieving the company from such perform- ance and waiving the power of the city to enforce performance, at least so far as this would amount to attempting to contract against future exercise of its police power.^* A contract with a city to furnish it for municipal use a fire-alarm telegraph sys- tem which is void for contravening constitutional limitations cannot be changed by a court of equity so as to give an implied franchise to the contracting company to operate the system for its own benefit and use, nor can the court authorize the delivery of possession of the plant as an entirety where part of the appara- tus and poles belong to the city.^^ Where the charter requires all contracts to be signed by the mayor, or some other person author- ized thereto, it has been held that a contract for a sewer signed only by the parties who agree to do the work is invalid and no action can be maintained thereon for damages for preventing its performance by the city, nor will equity grant relief, where no work has been done and there is no detriment except prospective profits.^^ A municipality in letting contracts for the performance of public work cannot discriminate in favor of union labor. There is some conflict upon this and similar questions, but the weight of authority and the better reason are both in accord on the proposition as above stated.^' Where the city holds land for the " State V. Minnesota Trans. R. Co., ment rendered by consent against 80 Minn. 108, 83 N. W. 32, SO L. R. town commissioners will not estop A. 656; (Cf. Flynn v. Little Falls &c. the town from setting up want of Co., 74 Minn. 180, 77 N. W. 38, 78 N. power to make such contract. Union W. 106) ; State v. St. Paul City R. Bank &c. v. Oxford, 119 N. Car. 214, Co., 78 Minn. 331, 81 N. W. 200; 25 S. E. 966, 34 L. R. A. 487. Nash V. Lowry, 37 Minn. 261, 33 N. •° Atlanta v. Stein, 111 Ga. 789, 36 W. 787. But see Hicks v. Chesa- S. E. 932, 51 L. R. A. 335 ; Adams v. peake & O. R. Co., 102 Va. 197, 45 Brenan, 177 111. 194, 52 N. E. 314, 42 S. E. 888. L. R. A. 718, 69 Am. St. 222; Fiske " Gamewell &c. Tel. Co. v. Laporte, v. People, 188 111. 206, 58 N. E. 985, 102 Fed. 417, 42 C. C. A. 405, affg. 52 L. R. A. 291; Miller v. City of 96 Fed. 664. Des Moines, 143 Iowa 409, 122 N. W. "Frick V. Los Angeles, 115 Cal. 226, 23 L. R. A. (N. S.) 815n; Lewis 512, 47 Pac. 250. See also, Kelley v. v. Board of Education, 139 Mich. 306, Torrington, 80 Conn. 378, 68 Atl. 855 ; 102 N. W. 756; State v. Toole, 26 Carskaddon v. South Bend, 141 Ind. Mont. 22, 66 Pac. 496, 55 L. R. A. 596, 39 N. E. 667. But compare 644, 91 Am. St. 386 ; Paterson Chron- Fehler v. Gosnell, 99 Ky. 380, 18 Ky. icle Co. v. Paterson, 66 N. J. L. 129. L. 238, 35 S. W. 1125; Philadelphia 48 Atl. 589; Davenport v. Walker, 57 V. Gergas, 180 Pa. St. 296, 36 Atl. App. Div. (N. Y.) 221, 68 N. Y. S. 868. And see, generally, 1 Elliott 161 ; John Single Paper Co. v. Edg- Rds. & Sts. (3d ed.), § 639. A judg- comb, 112 App. Div. (N. Y.) 604, 98 903 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. 6lO benefit of the public it has no right to make a long and exclusive lease of such land for private purposes.^" § 610. Leasing public property for private purposes. — This principle is rigidly enforced when applied to public streets. A city, in the absence of express authority has no power or right to grant the exclusive use of its streets or any part thereof to any private person or for any private purposes, but must, ordinarily at least, hold and control the possession solely for the public use. All public highways from side to side and from end to end are held for the use of the public.^^ Thus a municipality cannot lease a part of the sidewalk in front of business houses to be used N. Y. S. 965 ; Marshall & Bruce Co. V. Nashville, 109 Tenn. 495, 71 S. W. 815. See also, Inge v. Mobile, 135 Ala. 187, 33 So. 678, 93 Am. St. 20. But compare Givins v. People, 194 111. 150, 62 N. E. 534, 88 Am. St. 143 ; People v. Coles, 166 N. Y. 1, 59 N. E. 716, 52 L. R. A. 814, 82 Am. St. 605n; Chadwick v. Kelley, 187 U. S. 540, 47 L. ed. 293, 23 Sup. Ct. 175. And see generally, 2 Elliott Rds. & Sts. (3ded.), § 713. ""Weeks v. City of Galveston, 21 Tex. Civ. App. 102, 51 S. W. 544. A city cannot lease to one person all its wharf and water privileges. Corpus Christi v. Central W. & W. Co., 8 Tex. Civ. App. 94, 27 S. W. 803. A lease of franchises by a city after the repeal of an act granting them to the city is void. Central W. & W. Co. V. Corpus Christi, 23 Tex. Civ. App. 390, 57 S. W. 982. A city as lessor, is governed by the same obligations of law as are imposed upon other lessors, and if part of the leased premises are taken for puMic improvement there must^be a diminu- tion for rent. Hinrichs v. New Or- leans, 50 La. Ann. 1214, 24 So. 224. See, however. Hopper v. Willcox, 135 N. Y. S. 384, holding that a city may build a subway and then lease it. =' State V. Mobile, 5 Port. (Ala.) 279, 30 Am. Dec. 564; Costello v. State, 108 Ala. 45, 18 So. 820, 35 L. R. A. 303; Curry v. District of Columbia, 14 App. D. C. 423; Lut- terloh V. Cedar Keys, 15 Fla. 306; Columbus V. Jaques, 30 Ga. 506; Chicago V. Pooley, 112 111. App. 343; Snyder v. Mt. Pulaski, 176 111. 397, 52 N. E. 62, 44 L. R. A. 407, affg. 69 111. App. 474; Sears v. Chicago, 247 III. 204, 93 N. E. 158, 139 Am. St. 319; Pagames v. Chicago, 111 111. App. 590; Cordatos v. Chicago, 129 111. App. 471 ; Spencer v. Andrew, 82 Iowa 14, 47 N. W. 1007, 12 L. R. A. llSn; Labry v. Gilmour, 121 Ky. 367, 28 Ky. L. 311, 89 S. W. 231; Com- monwealth V. Morrison, 197 Mass. 199, 83 N. E. 415, 14 L. R. A. (N. S.) 194, 125 Am. St. 338n; Henkel V. Detroit, 49 Mich. 249, 13 N. W. 611, 43 Am. Rep. 464; State v. St. Louis, 161 Mo. 371, 61 S. W. 658; Galloso V. Sikeston, 124 Mo. App. 380, 101 S. W. 715 ; Chapman v. Lin- coln, 84 Nebr. 534, 121 N. W. 596, 25 L. R. A. (N. S.) 400; Cohen v. New York, 113 N. Y. 532, 21 N. E. 700, 4 L. R. A. 406, 10 Am. St. 506; Brana- han V. Cincinnati Hotel Co., 39 Ohio St. 333, 48 Am. Rep. 457; Kites v. Dayton, 8 Ohio Dec. 170, 6 W. L. Bui. 142; Spencer v. Mahon, 75 S. Car. 232, 55 S. E. 321 ; 2 Elliott Rds. & Sts. (3d ed.), § 828. In the case of Vandalia R. Co. v. State, 166 Ind. 219, 76 N. E. 980, 117 Am. St. 370, it is said: "In granting a franchise to use its streets, alleys or public places, the city exercises its dele- gated legislative powers, and for that purpose could not by contract barter away its future legislative control over such highways and places." § 6io CONTRACTS. 904 by produce dealers or other merchants. ^^ A city does not, as a general rule, have the power to erect or authorize the erection of a market-house in a public street.^^ Nor does it, as a general rule, have power to lease space in its streets for fruit or lunch stands,^^ lunch wagons,^^ hack stands when not justified by public necessity or convenience,^" nor for weighing scales.^' Nor does it have the power to grant or lease a public street on which is to be constructed a railroad depot. ^"^ It is thus made obvious that a municipality does not have the right to authorize the erection of any permanent obstruction of any kind in a public street.^" It ^ Chapman v. Lincoln, 84 Nebr. 534, 121 N. W. 596, 25 L. R. A. (N. S.) 400. == State V. Mobile, 5 Port. (Ala.) 279, 30 Am. Dec. 564; Lutterloh v. Cedar Keys, IS Fla. 306; Columbus V. Jaques, 30 Ga. 506; Savannah v. Wilson, 49 Ga. 476; Peters v. St. Louis, 226 Mo. 62, 125 S. W. 1134; St. John V. New York, 3 Bosw. (N. Y.) 483; Ely v. Campbell, 59 How. Pr. (N. Y.) 333; Pruden v. Cin- cinnati, 1 Ohio N. P. 340; Wilder v. Cincinnati, 1 Ohio N. P. 347; Kites V. Dayton, 8 Ohio Dec. 170, 6 W. L. Bull. 142. It cannot even grant the use of a part of the street as a. stand for huckster wagons. Schopp v. St. Louis, 117 Mo. 131, 22 S. W. 898, 20 L. R. A. 783. To same effect, McDon- ald V. Newark, 42 N, J. Eq. 136, 7 Atl. 855; In re Fiegle, 36 Misc. (N. Y.) 27, 72 N. Y. S. 438. Other au- thorities, however, lay down the rule that a municipality may grant the use of a street for a public market if the rights of the public and abutting owners are not materially interrupted. Denehev v. Harrisburg, 2 Pearson (Pa.) 330, To same effect, Henkel v. Detroit, 49 Mich. 249, 13 N, W. 611, 43 Am. Rep. 464; Tomlin v. Cape May, 63 N. J. L. 429, 44 Atl. 209. "* Costello V. State, 108 Ala, 45, 18 So, 820, 35 L, R, A, 303 ; Pagames v. Chicago, 111 111, App, 590; Galloso v, Sikeston, 124 Mo, App. 380, 101 S. W. 715; People v, WiUis, 9 App, Div. (N, Y.) 214, 75 N, Y. St, 619, 41 N. Y, S, 168; People v, Keating, 168 N. Y. 390, 61 N, E, 637. Such a stand, which interferes with the use of the sidewalk, is a nuisance. State v. Ber- detta, 73 Ind. 185, 38 Am, Rep. 117n. See, however, Barling v. West, 29 W|s. 307, 9 Am. Rep. 576. °^ Spencer v, Mahon, 75 S, Car. 232, 55 S. E. 321, See, however. Rex v. Bartholomew (1908), 1 K. B. 554. See also. Commonwealth v. Morrison, 197 Mass. 199, 83 N. E. 415, 14 L. R. A. (N. S,) 194, 123 Am. St. 338. '° Curry v. District of Columbia, 14 App. D. C. 423 ; Pennsylvania Co. v. Chicago, 181 111. 289, 34 N, E. 825, 53 L, R. A. 223 ; McCaffrey v. Smith, 41 Hun (N. Y.) 117, 4 N. Y. St. 11; Odell V. Bretney, 38 Misc. (N. Y.) 603, 78 N. Y. S. 67; Branahan v. Cincinnati Hotel Co., 39 Ohio St, 333, 48 Am, Rep, 457, See, however, Masterson v. Short, 7 Robt. (N. Y.) 299, 35 How. Pr. (N. Y.) 169. ='Tell City v. Bielefeld, 20 Ind, App. 1, 49 N. E. 1090; Berry-Horn Coal Co. v. Scruggs-McClure Coal Co., 62 Mo. App. 93; State v. Van- dalia, 119 :\Io, App. 406, 94 S. W. 1009. See, however, Spencer v, An- drew, 82 Iowa 14, 47 N. W. 1007, 12 L. R. A. 115n. ^ Chicago &c. R. Co. v. People, 222 111. 427, 78 N. E, 790; Cooper v, Alden, Harr, Ch, (Mich,) 72; Lack- land V, North Missouri R, Co,, 31 Mo. 180; State v, Jersey City, 52 N. J. L. 65, 18 Atl. 586. ™ See also. People v. Clean Street Co., 225 111, 470, 80 N. E. 298, 9 L, R. A, (N. S.) 455n, 116 Am, St, 156; Labry v. Gilmour, 121 Ky. 367, 28 Ky. L. 311, 89 S, W. 231 (coal office and barn) ; Caldwell v, George, 96 Miss, 484, 50 So. 631 (warehouse) ; State V. St. Louis, 161 Mo. 371, 61 S. 905 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 61I has also been held that a board of education cannot lease a school house lot for the production of oil and gas, for the reason that such board cannot engage in business Or make contracts outside its functions touching education."" § 611. Leasing public property for private purposes — En- forcement of contract. — While it is true as a general rule that mandamus will not lie to enforce the obligation of a contract, yet where a corporation accepts a public franchise imposing certain duties toward the public in return for the rights conferred upon it, the performance of the duties so imposed is a public one which may be compelled by mandamus.^^ It would also seem that one who contracts with the city cannot, in the perform- ance of that contract, commit acts destructive of the comfort of the people residing in the vicinity and injurious to the public health. The city itself could not lawfully commit such an W. 658 (waste paper boxes to be maintained by private individuals who are also to grant their use for ad- vertising purposes) ; State v. Frank- lin, 133 Mo. App. 486, 113 S. W. 652 (street not to be used for livery stable) ; People v. Ahearn, 124 App. Div. (N. Y.) 840, 109 N. Y. S. 249 (structure to be used in connection with a restaurant). For an exhaust- ive note on the grant by a city of the right to use streets and sidewalks for a private purpose, see note in 125 Am. St. 343-354. See also, 2 Elliott Rds. & Sts. (3d ed.), § 836. As to the power of the legislature to au- thorize the building of obstructions see In re Opinion of Justices (Mass.), 94 N. E. 849, in which it is held that the legislature represents the people and at any time may enlarge or limit public rights acquired in a highway, having due regard to private rights of property secured by the constitu- tion to all the people. "The Legis- lature, in consequence of its para- mount control of the highways of a state and as the representative of the public at large, may, in the absence of any constitutional inhibition, au- thorize legitimate obstructions in the streets of a municipality which, with- out such sanction, might become nui- sances, but enactments of that kind are strictly construed." Baker City Mut. Irr. Co. v. Baker City (Ore), 113 Pac. 9, 14. '"See also, Gottlieb-Knabe Co. v. Macklin, 109 Md. 429, 71 Atl. 949, 31 L. R. A. (N. S.) 580 and note. Her- ald V. Board of Education, 65 W. Va. 765, 65 S. E. 102, 31 L. R. A. (N. S.) 588 and note. A municipali- ty has been enjoined from permitting a school building to be used for the- atrical performances as a business. Sugar V. Monroe, 108 La. 677, 32 So. 961, 59 L. R. A. 723. Nor under a charter provision did the village council or board of education have power to deed or lease without rent a high school building to a private corporation for its own emolument. Sherlock v. Winnetka, 68 111. 530. See also. Brooks v. Brooklyn, 146 Iowa 136, 124 N. W. 868, 26 L. R. A. (N. S.) 425, which holds that a munici- pality does not have the right to erect a theater. See, however, Hop- per v. Willcox, 76 Misc. (N. Y.) 345, 135 N. Y. S. 384, holding that the city of New York may build a sub- way and then lease it. "See State v. Marion Light & Heating Co., 174 Ind. 622, 92 N. E. 731, citing many cases, and 2 Elliott Rds. & Sts. (3d ed.), §§ 986, 1011, 1013, 1056. § 6l2 CONTRACTS. 906 act or authorize others to do so, and in the exercise of its police power to protect life and health it is not estopped by its contract and it could not abandon its duty in that respect even if it willed to do so.^^ § 612. Ratification. — A contract which is within the scope of a municipal or other public corporation's powers, but 'which owing to some irregularity is not binding on the corporation may be ratified by it.'^ Thus, a contract which is irregular in that it was made by resolution instead of ordinance may be ratified by a subsequent ordinance without a new consideration.^* Likewise a municipal or other public corporation may ratify the unauthorized contracts of its officers and agents which are within the scope of its corporate powers.^" The same is true of a contract which has been improperly executed. It may be ratified by the departments which have general powers over such matters where the city has accepted with knowledge of the facts the benefit of the contract performed in good faith.^° But a city official who had no original authority to make certain contracts, cannot by his subsequent acts give them life by his official recognition.^' Nor can an official °^ State V. St. Louis, 207 Mo. 354, bers of the council or other board, 105 S. W. 748, 123 Am. St. 376. acquired by conversations on the '" People V. Spring Lake Drainage street, cannot be considered as &c. Dist., 253 111. 479, 97 N. E. 1042. knowledge of the principal. The mu- "If there is legal authority for the nicipality must act as a body, and contract, though it be illegal because cannot be bound by individual acts or of some irregularity or informality knowledge brought home to the in- in the manner or time of its execu- dividual members. Texarkana v. tion, and therefore incapable of en- Friedell, 82 Ark. 531, 102 S. W. 374. f orcement, it may be ratified by an "'' Ida Grove v. Ida Grove Armory acceptance of the benefits of the Co., 146 Iowa 690, 125 N. W. 866; contract by the corporation; but, if Johnson v. School Corporation, 117 there be no legal authority for the Iowa 319, 90 N. W. 713; St. Louis v. contract, that authority cannot be Ruecking, 232 Mo. 325, 134 S. W. created through the application of 657; North River Elec. &c. Co. v. any doctrine, or of principle of estop- New York, 48 App. Div. (N. Y.) 14, pel, acquiescence, or ratification." 62 N. Y. S. 726. See also, Taymouth Gallup v. Liberty County (Tex.), 122 v. Koehler, 35 Mich. 22; Darling v. S. W. 291. Manistee, 166 Mich. 35. 131 N. W. ^ State v. Cowgill &c. Co., 156 Mo. 450. Compare Port Jervis Water 620, 57 S. W. 1008 Works Co. v. Port Jervis, 151 N. Y. ^ Moore v. Hupp, 17 Idaho 232, 105 111, 45 N. E. 388. Pac. 209; Chicago v. Galpin, 183 III. "Commercial Wharf Corp. v. Bos- 399, 55 N. E. 731; Aspinwall-Dela- ton (Mass.), 94 N. E. 805. See also, field Co. V. Borough of Aspinwall, London Guarantee &c Co. v. Beau- 229 Pa. 1, 77 Atl. 1098. It must be mont (Tex. Civ. App.), 139 S. W. borne in mind, however, that mere 894. knowledge by the individual mem- 907 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 6l2 who had no power to make the contract in the first instance ratify an unauthorized agreement entered into by another official.^* It may be said generally that where a contract is invalid for any rea- son or irregularity that does not go to the subject-matter it may be the subject of ratification in so far as it has been executed/" In short, any merely voidable contract may be ratified/" But where a contract is utterly void, it is not within the power of the munic- ipality to give any validity to the agreement whatever, by any recognition it may give such contract as legal." Thus parol acts of ratification and acquiescence in the unauthorized and void con- veyance of the real property of a municipality can give no valid- ity to the transaction.*^ Nor can a contract which is truly ultra vires be ratified."^ It cannot ratify an act which it would be positively unlawful for it to do.** Neither does the attempted ^Bartlett v. Lowell, 201 Mass. ISl, 87 N. E. 195 ; In re Niland, 193 N. Y. 180, 85 N. E. 1012. In order to have ratification there must be some af- firmative action by proper officers, or some negative action, which of itself would amount to an approval of the matter in question. Acquiescence by officials in the continuance of a serv- ice not in the scope of their duties does not bring the municipality with- in the operation of that rule which requires corporations as well as indi- v'duals to pay for what they have re- ceived the benefit of when the offi- cers of the corporation having its management in charge have acqui- esced in the benefit received by it. Texarkana v. Friedill, 82 Ark. 531, 102 S. W. 374. ^Frederick v. People, 83 111. App. 89. "Aspinwall-Delafield Co. v. Bor- ough of Aspinwall, 229 Pa. 1, 11 Atl. 1098. '^ People V. Spring Lake Drainage &c. Co., 253 111. 479, 97 N. E. 1042; Chippewa Bridge Co. v. Durand, 122 Wis. 85, 99 N. W. 603, 106 Am. St. 931. To same effect, Indianapolis v. Wann, 144 Ind. 175, 42 N. E. 901, 31 L. R. A. 743. "Ratification is only effective where there is authority to do the act which is subsequently rati- fied." Smith v. Philadelphia, 227 Pa. 423, 76 Atl. 221. " Fudickar v. East Riverside Irr. Dist., 109 Cal. 29, 41 Pac. 1024. "Reed City v. Reed City &c. Works, 165 Mich. 599, 131 N. W. 385; In re Niland, 193 N. Y. 180, 85 N. E. 1012; Horton v. Thompson, 71 N. Y. 513; Ellis v. Cleburne (Tex. Civ. App), 35 S. W. 495. Being en- tirely outside of the authority of the corporation, it cannot by subsequent confirmation make legal what it had no authority to do. See 1 Elliott Rds. & Sts. (3d ed.), § 599, citing Rough- ton v. Atlanta, 113 Ga. 948, 39 S. E. 316; Murray v. Omaha, 66 Nebr. 279, 92 N. W. 299, 103 Am. St. 702; Hodges v. Buffalo, 2 Denio (N. Y.) 110, and other cases. See also, Berka v. Woodward, 125 Cal. 119, 57 Pac. m, 45 L. R. A. 420, IZ Am. St. 31 ; Sage v. Fargo Tp., 107 Fed. 383, 46 C. C. A. 361 ; Indianapolis v. Wann, 144 Ind. 175, 42 N. E. 901, 31 L. R. A. 743; Watterson v. Nashville, 106 Tenn. 410, 61 S. W. 782; State v. Pullman, 23 Wash. 583, 63 Pac. 265, 83 Am. St. 636; Balch v. Beach, 119 Wis. n, 95 N. W. 132. "■Highway Comrs. v. Van Dusan, 40 Mich. 429. The mandatory provi- sion of the statute must be strictly followed and when this is not done no subsequent act of the officers of the municipality can make the con- tract effective. San Diego Water Co. v. San Diego, 59 Cal. 517; Jefferson § 6l3 COXTRACTS. 908 ratification of a void contract work an estoppel against the city/^ The plea of ratification of a contract made in violation of a char- ter provision is of no avail unless the acts relied upon for a rat- ification would be sufficient to support a contract as an original matter." Thus if an ordinance is necessary to the validity of a specified contract, it can only be ratified by ordinance.*' It is not necessary, however, in all cases that there be a formal rati- fication, so where services are rendered at the request of the president of the board of trustees, if the corporation subsequently accepts and agrees to pay for such services, it will be bound.** An action of a city to enforce an assessment has been held a rati- fication of the contract upon which it is based*° and so has the bringing suit on the original agreement.^" § 613. Rescission. — Contracts entered into by a municipal corporation are as a general rule governed by the principles ap- plicable to other contracts, and when such a contract, within the scope of the corporation's authority is fairly made without fraud, bad faith or misconduct on the part of either the contractor or the city officials, and is not unreasonable, it cannot be repudiated by the city after performance or part performance by the con- County V. Arrighi, 54 Miss. 668; "Kent v. North Tarrytown, 50 Smith V. Newburgh, 11 N. Y. 130. App. Div. (N. Y.) 502, 64 N. Y. S. " Santa Cruz Rock Pavement Co. 178. V. Broderick, 113 Cal. 628, 45 Pac. "'Harrisburg v. Shepler, 190 Pa. 863 ; Chittenden v. Lansing, 120 St. 374, 42 Atl. 893. See also, May v. Mich. 539, 79 N. W. 797; Gallup v. Gloucester, 174 Mass. 583, 55 N. E. Liberty Co. (Tex. Civ. App.), 122 S. 465; Aurora Water Co. v. Aurora W. 291. "The rule contended for by City, 129 Mo. 540, 31 S. W. 946. This appellant, to the effect that neither latter is a case where a contract was party to a transaction will be per- ratified by acquiescence therein after mitted to take advantage of its in- knowledge of all material facts, validity while retaining the benefits, Since a contract to construct a levee applies only to voidable contracts is without the scope of corporate and not to a transaction that is ab- powers conferred upon incorporated solutely void." Independent School towns, such a contract cannot be Dist. V. Collins, IS Idaho 535, 98 Pac. ratified by the town's acceptance of 857, 128 Am. St. 76, citing a number the work done under it nor can the of authorities. town be estopped by permitting the *" Chippewa Bridge Co. v. Durand, work to be done and accepting the 122 Wis. 85, 99 N. W. 603, 106 Am. benefits thereof. Newport v. Bates- St. 931. villa & B. R. Co., 58 Ark. 270, 24 S. "MulHgan v. Lexington, 126 Mo. W. 427. App. 715, 105 S. W. 1104. See also, "' Worcester v. Worcester &c St. McCracken v. San Francisco, 16 Cal. Ry. Co., 194 Mass. 228, 80 N. E. 232. 591 ; Durango v. Pennington, 8 Colo. But see Root v. Topeka, 63 Kans. 257, 7 Pac. 14. 129, 65 Pac. 233. 909 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 614 tractor."^ After a contract has become binding it cannot be rescinded by one without the consent of the other party. "" § 614. Ultra vires. — The general subject of ultra vires contracts has already been treated in the chapters on Private and Public Corporations, and incidental reference thereto has been made in the present chapter on Municipal Corporations. Consequently but brief mention will be made of this subject at this point. It should be borne in mind that there are municipal contracts that are illegal and therefore void that cannot be clas- sified with ultra vires contracts. An ultra vires contract is one which concerns a subject-matter beyond the general power of the corporation to contract. Thus, ordinarily, a municipal cor- poration cannot engage in the buying and selling of real estate,^' the manufacture of bricks,^* the moving of houses for private individuals,^^ the operation of stone quarries,^^ the plumbing busi- ness,^^ nor agree to forever abdicate its police power ;^^ and when it attempts so to do in the absence of valid legislative authority its contracts in relation thereto would be ultra vires and void. A contract in violation of a statute or contrary to public policy would be equally void because illegal, though not ultra vires.°^ In case the contract is ultra vires in the strict sense of the term it is void, and cannot be ratified so as to create a lia- bility upon the contract itself."" In case the contract is not void on its face the authority of the municipal corporation to enter "'Little Falls Elec. &c. Co. v. Lit- "Wheeler v. Sault Ste. Marie, 164 tie Falls, 102 Fed. 663. Mich. 338, 129 N. W. 685, 35 L. R. A. ""Hudson Elec. Light Co. v. Hud- (N. S.) S47n. son, 163 Mass. 346, 40 N. E. 109. See " Donalbe v. Harrisonburg, 104 also, Sanitary Dist. v. Ricker, 91 Va. 533, 52 S. E. 174, 2 L. R. A. (N. Fed. 833, 34 C. C. A. 91 ; Stanley v. S.I 910, 113 Am. St. 1056. Board &c. of Passaic County, 60 N. "Keen v. Waycross, 101 Ga. 588, J. L. 392, 38 Atl. 181 ; 2 Elliott Rds. 29 S. E. 42. & Sts. (2d ed.), § 1050. "State v. St. Paul &c. R. Co., 98 " Hayward v. Red Cliff, 20 Colo. Minn. 380, 108 N. W. 261, 28 L. R. A. 33, 36 Pac. 795. See also, Hunnicutt (N. S.) 298. V. Atlanta, 104 Ga. 1, 30 S. E. 500; "Field v. Shawnee, 7 Okla. 73, 54 Bloomsburg Land Imp. Co. v. Pac. 318. For an example of a case Bloomsburg, 215 Pa. 452, 64 Atl. 602. that fails to draw this distinction, see See, however, Delaney v. Salina, 34 Bell v. Kirkland, 102 Minn. 213, 113 Kans. 532, 9 Pac. 271. N. W. 271, 120 Am. St. 621. " Attorney-General v. Detroit, ISO °° People v. Spring Lake Drainage Mich. 310, 113 N. W. 1107, 121 Am. Dist., 253 III, 479, 97 N. E. 1042; St. 625. Spitzer v. Blanchard, §2 Mich. 234, 6i^ CONTRACTS. 910 into it will be presumed, and the defense of ultra vires must be pleaded."^ § 615. Estoppel. — As a general rule municipal corpora- tions may be estopped by their own act in the exercise of their business powers much the same as any other person or corpora- tion.°^ A municipal corporation may be estopped to deny the validity of a contract as against an innocent party when it has retained the benefit of such contract, it being invalid not because of want of power on the part of the municipality but because such power was improperly exercised.** Thus, where a municipality had power to sell a certain tract of land for the price at which it was sold, and the only departure from the statute consisted in making a deed before all the purchase-money was paid, the mu- nicipality was held estopped to claim that it was authorized to sell for cash only where the contract had been executed by the 46 N. W. 400. See ante, § 612, Rati- fication, also, 1 Elliott Rds. & Sts. (3d ed.), § 599. " Brown v. Board of Education, 103 Cal. 531, 37 Pac. 503. The de- fense of ultra vires will not be up- held unless there is shown some pro- vision of the charter, absolutely or bv necessary implication prohibiting it from so contracting. Tone v. Til- lamook City, 58 Ore. 382, 114 Pac. 938. The following cases are a few illustrations of instances in which contracts were held ultra vires. Bee- be V. Little Rock, 68 Ark 39, 56 S. W. 791 (the giving away or exchange of the city's streets or other property) ; Fulton V. Northern 111. College, 158 111, 233, 42 N. E. 138 (making loans and donations to colleges) ; Myers v. Jeffersonville, 145 Ind. 431, 44 N. E. 452 (borrowing money to pay ex- penses of a contested election in re- gard to the removal of the county seat) ; Winchester v. Redmond, 93 Va. 711, 25 S. E. 1001, 57 Am. St. 822 (the offering of a reward). •"DCS Moines v. Welsbach Street Lighting Co., 110 C. C. A. 540, 188 Fed. 906; Marshall v. Schenck, 5 Wall (U. S.) 772, 18 L. ed. 556. For a statement of the rule in a slightly restricted form see Union Depot Co. V. St. Louis, 76 Mo. 393, which states that such corporation may be es- topped by a contract which it has authority to make. Colorado Springs V. Colorado City, 42 Colo. 75, 94 Pac. 316. It has been held that a munici- pal corporation is bound by payment made to one of its officers not au- thorized by law to receive the same, although he fails to turn the sum collected into the treasury, the city having permitted him to make such collections for a long term of years, since it had, in effect, made him agent for that purpose. Seattle v. Stirrat, 55 Wash. 560, 104 Pac. 834, 24 L. R. A. (N. S.) 1275. ""■Des Moines v. Welsbach Street Lighting Co., 110 C. C. A. 540, 188 Fed. 906; Chicago v. Norton Milling Co., 196 111. 580, 63 N. E. 1043 ; Chi- cago V. Pittsburg &c. R. Co., 244 111. 220, 91 N. E. 422, 135 Am. St. 316; Ashley v. Port Huron, 35 Mich. 296, 24 Am. Rep. 552; Ludington Water Supply Co. V. Ludington, 119 Mich. 480, 78 N. W. 558; Nebraska Bitu- lithic Co. V. Omaha, 84 Nebr. 375, 121 N. W. 443; Tiffin v. McCormack, 34 Ohio St. 638, 32 Am. Rep. 408; As- pinwall-Delafield Co. v. Borough of Aspinwall, 229 Pa. 1, 77 Atl. 1098; Robbins v. Chicago, 4 Wall. (U. S.) 657, 18 L._ed. 427. "The courts have not been inclined to favor defenses 911 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. §615 parties.** A municipal corporation may even be estopped to set up that the statute under which it acted is unconstitutional where it appears that the subject-matter of the contract is not ultra vires, illegal nor malum prohibitum.*" In the atsenee of collu- sion or fraud a city may also estop itself from alleging breach of contract after it has accepted and paid for the work performed thereunder with full knowledge of all the facts.** But, where the contract is for any reason absolutely void, complete perform- ance thereof on the part of the other party will not prevent the municipal corporation from pleading its lack of power to execute or the illegality of the contract ;*' nor will acceptance of the ben- efit by the municipality change the rule.*^ Nor will it be affected to honest demands based upon mere irregularities and informalities, and in meritorious cases the city has been estopped from avaiHng itself of its own irregularities in the exercise of its powers, where innocent parties have parted with their property and expended their money in absolute re- liance that all legal formalities had been observed. * * * But where the defense goes to the question of power a different situation is pre- sented than one of mere irregulari- ty." Moriarity v. New York, 59 Misc. (N. Y.) 204, 110 N. Y. S. 842. "" Book V. Polk, 81 Ark. 244, 98 S. W. 1049. In the above case it is said : "A municipal or other corporation may be estopped to avail itself of ul- tra vires contracts where the con- tracts are executed, and the contract itself is over a matter within the cor- porate power to contract." •"Mount Vernon v. State, 71 Ohio St. 428, 12, N. E. SIS, 104 Am. St. 783. See also, Martindale v. Rochester, 171 Ind. 2S0, 86 N. E. 321, and cases there cited; Busenbark v. Clements, 22 Ind. App. SS7, S3 N. E. 66S ; Lewis V. Albertson, 23 Ind. App. 147, S3 N. E. 1071; 2 Elliott Rds. & Sts. (3d ed), §§ 735, 1Z(>. ""St. Louis V. Ruecking, 232 Mo. 325, 134 S. W. 657. To same effect, Matheney v. El Dorado, 82 Kans. 720, 109 Pac. 166, 28 L. R. A. (N. S.) 980n. "' Dawson v. Dawson Water Works Co., 106 Ga. 693, 32 S. E. 907; Ed- wards Hotel &c. R. Co. V. City of Jacksonville, 96 Miss. 547, 51 So. 802; Unionville v. Martin, 95 Mo. App. 28, 68 S. W. 605; La France Fire Engine Co. v. Syracuse, 33 Misc. (N. Y.) 516, 68 N. Y. S. 894; Mc- Aleer v. Angell, 19 R. I. 688, 36 Atl. 588. •"Horkan v. Moultrie, 136 Ga. 561, 71 S. E. 785; Hope v. Alton, 214 III. 102, 73 N. E. 406; McNay v. Lowell, 41 Ind. App. 627, 84 N. E. 778; New- port v. Schoolfield (Ky.), 134 S. W. 503; Floyd County v. Owego Bridge Co., 143 Ky. 693, 137 S. W. 237; Mealey v. Hagerstown, 92 Md. 741, 48 Atl. 746; Hart v. New York, 201 N. Y. 45, 94 N. E. 219. The above case suggests that there might be a recov- ery on the quantum meruit. Perry Water &c. Co. v. Perry (Okla), 120 Pac. 582; Paul v. Seattle, 40 Wash. 294, 82 Pac. 601. "The appellant urges that, the defendants, having re- ceived the grant which they sought, are estopped to deny the validity of their undertaking which they gave in consideration of such grant. But we think the doctrine of estoppel has no just application here. A party con- tracting with a city regarding a sub- ject-matter within the scope of the city's powers may, where he has re- ceived the benefit of the contract, be precluded from asserting that the contract wasi not, on the part of the city, executed in the manner required by law. The doctrine, however, can- not be made to cover contracts en- 6i5 CONTRACTS. 912 by the fact that the contract repudiated has been acted on by the municipalty for a number of years, and was the result of a com- promise agreement.*" No estoppel can arise from an act of a municipal corporation when done in violation or without au- thority of law." It has also been held that a municipality is not liable for services rendered by employes where their appointments were void under the law," and that a county is not estopped by an illegal compromise of an action at law.''^ Nor will a county be estopped to recover illegal payments merely because they were made on the advice of the county attorney.''^ It would seem as a general rule that no estoppel can grow out of dealings with pub- lic officers of limited authority when the contract is in excess of the powers conferred upon them.'* On the other hand, it has been held that a county official who has expended money for a legal purpose, but in an illegal manner, will not be required to re- fund the same, the county being estopped to recover the money so expended, if the official made the expenditure in good faith, for an authorized purpose, and the county has received the benefit." tirely beyond the range of the mu- nicipal authority. 'If this doctrine be estabhshed, then corporations, no matter how Hmited their powers, may make themselves omnipotent. They have only to induce persons to contract with them beyond the scope of their powers, and their very usurpations have the effect of con- ferring powers on them which the legislature has withheld. A proposi- tion so erroneous can scarcely need argument to overturn it. * * * We cannot apply the doctrine of es- toppel to such a case as this.' City Council V. Montgomery &c. Co., 31 Ala. 76." In this case the party con- tracting with the municipality, and not the municipality, set up the in- validity of the contract. City of Ar- eata v.. Green (Cal.), 106 Pac. 86. See also, Edison Electric Co. v. City of Pasadena, 178 Fed. 425, 102 C. C. A. 401. °° State V. Minnesota Transfer R. Co,, 80 Minn. 108, 83 N. W. 32, SO L. R. A, 6S6. ™ Baker City Mut. Irr. Co. v. Baker City, 58 Ore. 306, 110 Pac. 392, 113 Pac. 9. " Shaw v. City and County of San Francisco (Cal.), 110 Pac. 149. "Tucker v. State, 163 Ind. 403, 71 N. E. 140. " Caldwell V. Boone County, 41 Ind. App. 40, 83 N. E. 355 ; Hennepin County v. Dickey, 86 Minn. 331, 90 N. W. 775. '* Moss v. Sugar Ridge Township, 161 Ind. 417, 68 N. E. 896; Lee v. York School Township, 163 Ind. 339, 71 N. E. 956; Daily v. Daviess Coun- ty, 165 Ind. 99, 74 N. E. 977 ; Hord v. State, 167 Ind. 622, 79 N. E. 916. "There seems to be little dissent from the view that an ultra vires contract made with the agents of the city cannot operate as an estoppel on the city." Edwards Hotel &c. R. Co. v. Jackson (Miss.), 51 So. 802. '"' Flowers v. Logan County, 138 Ky. 59, 127 S. W. 512, 137 Am. St 347. In the above case the court said : "If it is made to appear that the ex- penditure was in good faith, and the public has got that which it was en- titled to, good conscience forbids the recovery. The law therefore denies it." To same effect, Clark v. Logan County, 138 Ky. 676, 128 S. W. 1079. 913 MUNICIPAL AND OTPIER PUBLIC CORPORATIONS. § 616 1 The foregoing indicates that the principle that the state and its subdivision, the county, are immune from estoppel is giving way to the doctrine that they may be estopped when the act done is not prohibited by the charter or statute creating it, or is one which either the state or county had authority to perform, but in the performance thereof failed to follow the directory provisions of the statute, because of which the position of the other party has been changed to his detriment and the state or county has received the benefits of the act.''* § 616. The borrowing of money and the issuance of nego- tiable papers. — It is generally conceded that a private corpo- ration, constituted with a view to pecuniary profit, has, by impli- cation, when not in this respect particularly and especially re- stricted, the power to borrow money. There is a conflict of authority as to whether or not this power resides in a municipal corporation. The rule which seems to be supported by the weight of authority is that the power to borrow money does not neces- sarily belong to a municipal corporation as an incident of its crea- tion.'^ However, other cases either hold or assume that a munic- But if the money is illegally expend- advantage, and convenience of the ed, and nothing of value was re- locality and its people; a county or- ceived in return for the money so ex- ganization is created almost exclu- pended, it may be recovered. Buyck sively with a view to the policy of V. Buyck, 112 Minn. 94, 127 N. W. the state at large." Hamilton Coun- 452, 140 Am. St. 464. ty v. Mighels, 7 Ohio St. 109. It "The principles of estoppel, as ap- thus appears that the county is a plied to municipal corporations and subdivision of the state, while the to counties, may have a slightly dif- municipal corporation is not. For a farent application because of the dif- valuable note on this subject, see 137 ference existing between the two Am. St. 3S4, 376. corporations. "Municipal corpora- " "To be possessed it (the power to tions proper are called into existence, borrow money) must be conferred either at the direct solicitation or by by legislation, either express or im- the free consent of the people who plied. It does not belong, as a mere compose them. matter of course to local govern- "Counties are local subdivisions of ments to raise loans. Such govern- a state, created by the sovereign ments are not created for any such power of the state, of its own sov- purpose. Their powers are prescribed ereign will, without the particular by their charters, and those charters solicitation, consent, or concurrent provide the means for exercising the action of the people who inhabit powers; and the creation of specific them. The former organization is means excludes others. Indebted- asked for; * * * the latter is super- ness may be incurred to a limited ex- imposed by a sovereign and para- tent in carrying out the objects of mount authority. the incorporation. Evidence of such "A municipal corporation proper indebtedness may be given to the is created mainly for the interest, public creditors. But they must look 58 — Contracts, Vol. I § 6l6 CONTRACTS. 914 ipal corporation has the incidental or implied power to borrow money.''^ It is, of course, competent for the legislature to confer upon a municipal corporation the power to borrow money for any public purpose, whenever it may be deemed expedient so to do."* It has been held that a clause in the city charter which pro- vided that it "may do all other acts as natural persons" must be restrained to such other acts as are authorized by its charter or the statute of the state applicable to the city, and that it could not be construed to confer an express power to borrow money or issue commercial papers.^" The power to borrow money, incur indebt- edness, and the like, is essentially a legislative power to be exer- cised by the legislature, or to be delegated to municipal or quasi municipal corporations, to be exercised free from every restric- tion not expressly imposed by the constitution of the state or the inalienable rights of man.*^ It would also seem that municipal corporations, other than cities, such as counties or townships, are much more limited in their powers of borrowing money than cities.'^ The power to issue negotiable paper is closely connected with the power to borrow money. Consequently the same line of cleavage continues. There is an irreconcilable conflict among the authorities as to the power to issue bonds or other commercial papers.*^ It is admitted that the power to borrow money, to and rely on the legitimate mode 44, (£ N. E. 450 ; Corliss v. Highland of raising the funds for its payment Park, 132 Mich. 416, 93 N. W. 254, That mode is taxation." Nashville 610, 95 N. W. 416; Mitchell v. Bur- V. Ray, 19 Wall. (U. S.) 468, 22 L. lington, 4 Wall. (U. S.) 270, 18 L. ed. 164. Also Allen v. La Fayette, 89 ed. 350 ; Larned v. Burlington, 4 Ala. 641, 8 So. 30, 9 L. R. A. 497; Wall. (U. S.) 275, 18 L. ed. 353. See Coquard v. Oquawka, 192 111. 355, 61 also Charlotte v. American Trust Co. N. E. 660; Brown v. Newburyport, (N. Car.), 74 S. E. 1054. 209 Mass. 259, 95 N. E. 504; Hack- '"Cause v. Clarksville, 5 Dill. (U. ettstown V. Swackhamer, il N. J. L. S.) 165, approved in Merrill v. Mon- 191; Wells v. Salina, 119 N. Y. 280, ticello, 138 U. S. 673, 34 L. ed. 1069, 23 N. E. 870, 7 L. R. A, 759n. 11 Sup. Ct. 441. "Austin V. Colony Tp., 51 Iowa °^ Seward County v. Aetna Life 102, 49 N. W. 1051; State v. Bab- Ins. Co., 90 Fed. 222, 32 C. C. A. 585. cock, 22 Nebr. 614, 35 N. W. 941; *= Brown v. Board, 108 Ky. 783, 57 Bank of Chillicothe v. Chillicothe, 7 S. W. 612, 22 Ky. L. 483. Ohio (pt. 2) 31, 30 L. R. A. 185n; ^ It is settled in England that no Mills V. Gleason, 11 Wis. 470, 78 Am. corporation, whether municipal or Dec. 721, 8 Am. Law Reg. 693 ; Clark private, has the incidental right to V. Janesville, 10 Wis. 136. See also, make commercial paper. Queen v. Richmond v. McGirr, 78 Ind. 192. Lichfield, 4 Q. B. 893; Bateman v. "Heinl V. Terre Haute, 161 Ind. Mid- Wales R. Co., L. R. 1 C. P. 499; 915 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 6l6 whether express or implied, or to incur indebtedness, carries with it the power to issue the usual evidences of indebtedness by the corporation to the lender or other creditor, and that such evi- dences issued to the lender or creditor may be in the form of notes, warrants, and perhaps more generally in that of a bond/* But there would seem to be a marked legal distinction between the power to give a note to a lender for the amount of money bor- rowed, or to a creditor for the amount due, and the power to issue for sale in open market a bond, as a commercial security, with immunity in the hands of a bona fide holder for value from equitable defenses.*^ The power to issue evidences of indebted- Broughton v. Manchester &c. Water- works, 3 B. & Aid. 1;. Bramah v. Roberts, 3 Bing. N. C. 963; Peru- vian R. Co. V. Thames &c. Ins. Co., L. R. 2 Ch. 617. See also, the fol- lowing cases, denying that a munici- pality has the implied power to issue negotiable bonds. Cleveland School Furn. Co. v. Greenville, 146 Ala. SS9, 41 So. 862; Coquard v. Oquawka, 192 111. 3SS, 61 N. E. 660; Swanson v. Ottumwa, 131 Iowa 540, 106 N. W. 9, 5 L. R. A. (N. S.) 860n; State v. Lafayette, 49 La. Ann. 1748, 22 So. 756; Parsons v. Monmouth, 70 Maine 262; Brown v. City of Newburyport, 209 Mass. 259, 95 N. E. 504; Knapp V. Hoboken,39N.J. L.394; Robertson V. Breedlove, 61 Tex. 316; Brenham V. German-American Bank, 144 U. S. 173, 36 L. ed. 390, 12 Sup. Ct. 559. =* Merrill v. Monticello, 138 U. S. 673, 687, 34 L. ed. 1069, 11 Sup. Ct. 441 ; Nashville v. Ray, 19 Wall. (U. S.) 468, 22 L. ed. 164. A bond im- plies that an obligor is bound to do what is agreed shall be done. Char- lotte V. American Trust Co. (N. Car.), 74 S. E. 1054; State v. Madi- son, 7 Wis. 582; Mills v. Gleason, 11 Wis. 470, 78 Am. Dec. 721. == Merrill v. Monticello, 138 U. S. 673, 34 -. ed. 1069, 11 Sup. Ct. 441. The fundamental difference is illus- trated by Justice Bradley in deliver- ing the opinion of the Supreme Court of the United States in Po- lice Jury V. Britton, 15 Wall. (U. S.) 566, as follows : "That a municipal corporation which is expressly au- thorized to make expenditures for certain purposes may, unless prohib- ited by law, make contracts for the accomplishment of the authorized purposes, and thereby incur indebted- ness, and issue proper voucher^ therefor, is not disputed. This is a necessary incident to the express power granted. But such contracts as long as they remain executory, are always liable to any equitable con- siderations that may exist or arise between the parties, and to any modification, abatement or rescissiori in whole or in part, that may be just and proper in consequence of irregu- larities, or disregard or betrayal of the public interests. Such contracts are very different from those which are in controversy in this case (bonds issued for the purpose of funding a previous indebtedness). The bonds and coupons on which a recovery is now sought are commercial instru- ments payable at a future day and transferable from hand to hand. * * * The power to issue such pa- per has been the means in several cases which have recently been brought to our notice, of imposing upon counties and other local jurist dictions burdens of a most fraudu- lent and iniquitous character, and of which they would have been sum- marily relieved had not the obliga- tions been such as to protect them from question in the hands of bona fide holders. * * * it seems to us to be a power quite distinct from that of incurring indebtedness for improvements actually authorized and , undertaken, the justice and valid- § 6l7 CONTRACTS. 916 ness for money borrowed is one thing, and the power to make them of such character as to cut off equitable defenses is quite an- other. This is the view taken by the Supreme Court of the United States,'^ § 617. No right of action on void bonds. — When a munic- ipal corporation sells bonds which are void and receives the money, it may be compelled to restore it in an action for money had and received. So when it is authorized to purchase prop- erty for any purpose, or to contract for the erection of public buildings or for any other public work, and it enters into such authorized contract, but pays for the property acquired or work done in negotiable securities, which it has no express or implied power to issue, it may be compelled to pay for that which it has received in a suit brought for that purpose. But suit must be brought on the implied promise which the law raises to pay the value of that which the municipality has received, but has in fact not paid for, because the securities issued in pretended payment were void ; and if negotiable paper is uttered without authority of law a suit cannot be maintained thereon for any purpose.*' ity of which may always be inquired Clarke v. School Dist. No. 7, 3 R. I. into. It is a power which ought not 199. to be implied from the mere author- " Dodge v. Memphis, SI Fed. 165 ; ity to make such improvements." Mayor v. Ray, 19 Wall. (U. S.) 468, ™ Brenham v. German-American 22 L. ed, 164; Hitchcock v. Galves- Bank, 144 U. S. 173, 36 L. ed. 390, 12 ton, 96 U. S. 341, 24 L. ed. 659; Little Sup. Ct. 559, and cases cited, over- Rock v. Merchants' National Bank, ruling Mitchell v, Burlington, 4 Wall. 98 U. S. 308, 25 L. ed. 108; Wall v. (U. S.) 270, 18 L. ed. 350 and Rog- Monroe County, 103 U. S. 74, 26 L. ers v. Burlington, 3 Wall. (U. S.) ed. 430; Hill v. Memphis, 134 U. S. 654, 18 L. ed. 79. See also, 2 Elliott 198, 33 L. ed. 887, 10 Sup. Ct. 562; R. R. (2d ed.), §§ 839, 875. Other Merrill v. Monticello, 138 U. S. 673, cases hold that the express power to 34 L. ed. 1069, 11 Sup. Ct. 441. See, borrow money includes power to is- however, White v. City of Chatfield, sue negotiable bonds or other securi- 116 Minn. 371, 133 N. W. 962, in ties to the lender. Schmutz v. Little which it is said : "Conceding that Rock &c. School Dist., 78 Ark. the bonds were illegal, a court of 118, 95 S. W. 438; Griffin v. equity should not enjoin their pay- Inman, Swann & Co., 57 Ga. ment when the city has received and 370 ; Sheffield v. Andress, 56 Ind. retains the money paid by the hold- 157; Slack v. Maysville &c. R. Co., ers." If the municipality had power 13 B. Mon. (Ky.) 1; Commonwealth to borrow money or incur an indebt- V. Williamstown, 156 Mass. 70, 30 N. edness for the purposes for which E. 472 ; Douglass v. Virginia City, 5 the bonds were issued, an action for Nev. 147; Tucker v. Raleigh, 75 N. money had and received may be Car. 267; Commonwealth v. Pitts- maintained against the municipality, burg, 34 Pa. St. 496; Snyder v. Louisiana City v. Wood, 102 U. S. Kautner, 196 Pa. St. 440, 42 Atl. 884; 274. Marsh v. Fulton County, 10 Wall. 917 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. 6l8 § 618. Defenses available against bona fide holders. — An entire want of power to issue the bonds renders them invalid even in the hands of a bona fide holder.*^ The conditions under which a municipal corporation may issue bonds, and other evi- dences of indebtedness and the manner of issuing the same are generally prescribed by statute, and all persons taking the same are chargeable with knowledge of such express provisions of law, and it is generally obligatory upon them to see whether there has been a compliance with the same.*® § 619. Bona fide holder — Bond containing no recitals. — The bona fide holder for value of a bond containing no recitals, apparently one of a series issued under authority of an act of the legislature of the state but actually in excess of the number of bonds authorized by that act, and as security for the personal debt of a fiscal officer of the corporation to the holder, has been held not entitled to recover."" A municipal bond which on its face (U. S.) 676 (giving the reason for the rule). '?St. Joseph Tp. V. Rogers, 16 W^n. (U. S.) 644, 21 L. ed. 328; Merchants Exch. Nat. Bank v. Ber- gen Co., lis U. S. 384, 29 L. ed. 430, 6 Sup. Ct. 88. Where the act author- izing the issue of bonds imposes upon the officers signing them the duty to determine whether there has been a compliance with its' terms and provi- sions, and the recitals state such a compliance, the corporation is es- topped as against an innocent pur- chaser to claim that the bonds are in- valid on any other ground than that upon their face they appear to have been issued in violation of some con- stitutional or statutory restriction. Washington Tp. v. Coler, 51 Fed. 362, 2 C. C. A. 272, 4 U. S. App. 622. See also, 2 Elhott R. R. (2d ed.), §§ 897, 900; Presidio County v. Noel- Young Bond & Co., 212 U. S. 58, 53 L. ed. 402, 29 Sup. Ct. 237. But compare Brown v. Newburyport, 209 Mass. 259, 95 N. E. 504, Ann. Cas. 1912B, 495 ; Daviess County v. Dickinson, 117 U. S. 657, 664, 29 L. ed. 1026, 6 Sup. Ct. 897; 2 Elliott R. R., §§ 899, 900. '" National Bank &c. v. St. Joseph, 31 Fed. 216, 24 Blatchf. (U. S.) 436; Pana v. Lippincott, 2 111. App. 466; Bissell v. Kankakee, 64 111. 249, 21 Am. Rep. 554; Cagwin v. Hancock, 84 N. Y. 532; Barnett v. Denison, 145 U. S. 135, 36 L. ed. 652, 12 Sup. Ct. 819; McClure v. Oxford, 94 U. S. 429, 24 L. ed. 129. See also, Au- rora V. West, 22 Ind. 88, 85 Am. Dec. 413; George v. Oxford, 16 Kans. 72; Lewis V. Bourbon, 12 Kans. 186; Bates V. Winters, 97 U. S. 83, 24 L. ed. 933; LaMoille Valley R. Co. v. Fairfield, 51 Vt. 257; Veeder v. Lima, 19 Wis. 298. '"' Merchants' Exch. Nat. Bank v. Bergen Co., 115 U. S. 384, 29 L. ed. 430, 6 Sup. Ct. 88. See also. In re The Floyd Acceptances, 7 Wall. (U. S.) 666, 19 L. ed. 169, 7 Ct. CI. (U. S.) 65; Marsh v. Fulton, 10 Wall. _(U. S.) 676, 19 L. ed. 1040. Recitals in bonds protect by estoppel against such irregularities as the failure of the common council to declare by formal resolution the expediency of borrowing money and the conduct of the election bondholders who are innocent purchasers. White v. Chat- field, 116 Minn. 371, 133 N. W. 962. As to when recitals may work an estoppel against the municipality, see also. State v. School Dist. No. 50, 18 N. Dak. 616, 120 N. W. 555, 138 Am. § 620 CONTRACTS. 918 refers to the statute under which it purports to be issued, and is so numbered as to make it apparent, from an examination of the statute and proceedings thereunder, that it was issued without authority, is void ; nor can one holding it claim to be a bona fide purchaser for value."^ § 620. Limitation of indebtedness — Limitation on power to create municipal indebtedness. — There are limitations on the power to create municipal indebtedness growing out of the inherent limitations on the power of such corporations, and limi- tations placed upon such power in the constitution, or statutes made in pursuance thereof. The power to raise money by taxa- tion is conferred for the purpose of defraying public expendi- St. 787; Knox Co. v. Aspinwall, 21 How. (U. S.) 539. When officers who are invested with authority to determine whether precedent condi- tions have been performed declare the contingency to have happened on the occurrence of which the authority to issue the bonds was complete, their recitals are a decision beyond which a bona fide purchaser is not bound to look for evidence of the existence of things in pais. Steamboat Rock &c. Dist. V. Stone, 106 U. S. 183, 27 L. ed. 90, 1 Sup. Ct. 84; Coloraa v. Eaves, 92 U. S. 484, 23 L. ed. 579. See, however, Evans v. McFarland, 186 INIo. 703, 85 S. W. 873, holding that self-serving narration binds no one. See also, Starin v. Genoa, 23 N. Y. 439; Gould v. Sterling, 23 N. Y. 439; Brownell v. Greenwich, 114 N. Y. 518, 22 N. E. 24, 4 L.. R. A. 685, stating the New York rule as to recital. " Thompson v. Mamakating, 7:7 Hun (N. Y.) 400, See also, Buchan- an V. Litchfield, 102 U. S. 278, 26 L. ed. 138. Bonds which purport to have been issued in conformity with a specified act but which were in fact not issued until after its repeal and were antedated in order to make it appear that they were issued before its repeal have been held void even in the hands of an innocent pur- chaser. Lehman v. San Diego, 83 Fed. 669, 27 C. C. A. 668. The pur- chase of school-district bonds charges the purchaser with knowl- edge of the financial condition of the district in so far as it affects the con- stitutional power of the district to issue the bonds. Nesbit v. Independ- ent School Dist., 25 Fed. 635. The holder of municipal bonds who took them knowing that conditions had not been complied with by the rail- road company in whose favor they were issued is not a bona fide holder, and the fact of non-compliance with the conditions may be set up by the municipality in his suit against it. Mobile Sav. Bank v. Oktibbeha, 24 Fed. 110. Where a city has, by or- dinance, granted a franchise to S and his assigns for thirty years, to construct and maintain water-works, purchasers of bonds issued by the assigns of S, and secured by a mort- gage on the water-works, franchise, contracts, &c., though they purchase in good faith, acquire no rights, as against the city, which will deprive it of a right to rescission of the con- tract, to which it would have been entitled as against S or his assigns, since they purchased the bonds know- ing that the city was not a party to them, and that they were subject to a compliance with the terms of the ordinance, of which they were bound to take notice. Farmers' Loan & Trust Co. v. Galesburg, 133 U. S. 156, 33 L. ed. 573, 10 Sup. Ct. 316. In a suit on municipal bonds fraudulently issued, plaintiff must show himself a bona fide holder for value. Tracey v. Town of Phelps, 22 Fed. 634. 919 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 62O tures, and is to be exercised only for the purpose of meeting such expenditures, and the limitation on this power is effected by lim- iting the objects for which the money may be expended. The power of taxation is one of the highest attributes of sovereignty, and, as a municipality seeking to exercise it must find express authority from the legislature, so its power to disburse the public moneys, being correlative to the power of taxation, must equally find express authority for its exercise."^ A person dealing with a municipal corporation is chargeable with notice of the limita- tions placed upon its power to incur indebtedness,"' and where a city is indebted to the extent of its constitutional limit, such per- son is charged with notice of such fact and cannot maintain an action on commercial paper issued to him in contravention of its constitutional or statutory authority limit, even when a bona fide holder.®* Contracts creating an indebtedness in excess of the "Von Schmidt v. Widber, lOS Cal. 151, 38 Pac, 682. Where the consti- tution prohibits the incurring of any indebtedness by a municipality ex- cept for city purposes, the indebted- ness must be confined strictly to such purposes. In re Jensen, 28 Misc. (N. Y.) 378, 59 N. Y. S. 653. Thus where the expenses incurred by an official in successfully defending against a wrongful removal from office or malfeasance in office are audited and allowed it is an appro- priation of public funds for private uses. In re Fallon, 28 Misc. (N. Y.) 748, 59 N. Y. S. 849. This would be true independently of any constitu- tional provision. »' Smith V. Broderick, 107 Cal. 644, 40 Pac. 1033, 48 Am. St. 167; Jutte & Foley Co. v. Altoona, 94 Fed. 61, 36 C. C. A. 84. " See Brenham v. German Ameri- can Bank, 144 U. S. 173, 36 L. ed. 390, 12 Sup. Ct. 559 ; Young v. Clar- endon Tp., 132 U. S. 340, 33 L. ed. 356, 10 Sup. Ct. 107; Lake v. Gra- ham, 130 U. S. 674, 32 L. ed. 1065, 9 Sup. Ct. 654; Merchants' Exch. Nat. Bank v. Bergen Co., 115 U. S. 384, 29 L. ed. 430, 6 Sup. Ct. 88; Dixon County v. Field, 111 U. S. 83, 28 L. ed. 360, 4 Sup. Ct. 360; Hoff V. Jasper Co., 110 \J, S. 53, 28 L. ed. 68, 3 Sup. Ct. 476; Ogden v. Daviess County, 102 U. S. 634, 26 L. ed. 263 ; South Ottawa v. Perkins, 94 U. S. 260, 24 L. ed. 154; County of Bates v. Winters, 97 U. S. 83, 24 L. ed. 933; East Oakland v. Skinner, 94 U. S. 255, 24 L. ed. 125; Lehman v. San Diego, 83 Fed. 669, 27 C. C. A. 668; Chisholm v. Montgomery, 2 Woods C. C. 584, Fed. Cas. 2686; Cleve- land School Furn. Co. v. Green- ville, 146 Ala. 559, 41 So. 862; Lind- sey V. Rottaken, 32 Ark. 619; Han- cock v. Chicot, 32 Ark. 575 ; Dist. No. 3 V. Fogleman, 76 111. 189; Bissell v. Kankakee, 64 111. 249, 21 Am. Rep. 554; Williamson v. Keokuk, 44 Iowa 88; McPherson v. Foster Bros., 43 Iowa 48, 22 Am. Rep. 215; Clark v. Des Moines, 19 Iowa 199, 87 Am. Dec. 423 ; Cecil v. Board of Liquidation, 30 La. Ann. 34; Louisiana State Bank v. Orleans Nav. Co., 3 La. Ann. 294; Bailey v. Tompkins, 127 Mich. 74, 86 N. W. 400; Jefferson County v. Ar- righi, 54 Miss. 668; State v. Macon County Court, 68 Mo. 29; Cagwin v. Hancock, 84 N. Y. 532; Halstead v. New York, 3 N. Y. 430; Citizens' Sav. Bank v. Greenburgh, 60 App. Div. (N. Y.) 225, 70 N. Y. S. 68; Galbraith v. Knoxville, 105 Tenn. 453, 58 S. W. 643; Compare Evansville v. Dennett, 161 U. S. 434, 40 L. ed. 760, 16 Sup. Ct. 613; Block v. Com- missioners, 99 U. S. 686, 25 L. ed. 491 ; Grand Chute v. Winegar, 15 Wall. (U. S.) 355, 21 L. ed. 170; § 621 CONTRACTS. 920 constitutional limit are void/^ and cannot be rendered valid by a curative act."" Nor when void from the beginning because of lack of power in the municipality to issue them, is the municipal- ity estopped from asserting the invalidity by reason of any sub- sequent act of its officers or agents or by reason of any supposed ratification by them." Such limitations are mandatory and cannot be avoided.** By the ordinary rules of construction they are not retroactive.*" But a contract is not void by reason of limitation as to the amount which provides for payment of the contract price from money in the treasury and an assessment against prop- erty benefited although it is subsequently determined that the assessments cannot be enforced.^ § 621. Indebtedness depending on popular vote. — Where !a constitution limits the indebtedness of a municipality to a certain amount without the assent of its voters, a municipality has no power to become indebteded in excess of the amount fixed unless the electors give their assent thereto.^ And it has been held Slifer V. Howell's Admr., 9 W. Va. 391 ; Fisk v. Kenosha, 26 Wis. 23. A note by a city for property it is not authorized to purchase, is not binding. Cleveland School Furn. Co. V. Greenville, 146 Ala. 559, 41 So. 862. See also, Gamewell Fire Alarm Tel. Co. V. Laporte, 96 Fed. 664. '"' Indianapolis v. Wann, 144 Ind. 175, 42 N. E. 901, 31 L. R. A. 743. "Mitchell County v. City Nat. Bank, IS Tex. Civ. App. 172, 39 S. W. 628. See also, Long Beacli v. Boynton (Cal. App.), 119 Pac. 677 (holding that the legislature may not by curative act legalize bonds which are violative of the provisions of the city charter). " Sage v. Fargo Tp., 107 Fed. 383 ; Swanson v. Ottumwa, 131 Iowa 540, 106 N. W. 9, 5 L. R. A. (N. S.) 860. But see, where there is authority but mere irregularity. Bates County V. Winters, 97 U. S. 83, 24 L. ed. 933; Andes v. Ely, 158 U. S. 312, 15 Sup. Ct. 954, 39 L. ed. 996; 2 Elliott on Railroads (2d ed.), § 894. "' Dunbar v. Canyon County, 5 Idaho 407, 49 Pac. 409. °° Davenport Gas &c. Co. v. Daven- port, 13 Iowa 229; Scott v. Daven- port, 34 Iowa 208; Bound v. Wiscon- sin Cent. R. Co., 45 Wis. 543; Moul- trie V. Rockingham &c. Bank, 92 U. S. 631, 23 L. ed. 631. A constitu- tional amendment adopted pending the execution of a contract for a drainage system prohibiting the in- crease of a city's debt does not apply to a debt already incurred and put into judgment. New Orleans v. War- ner, 175 U. S. 120, 44 L. ed. 96, 20 Sup. Ct. 44. But it has been held that a constitutional limitation against indebtedness renders invalid a claim for services already rendered. Helena V. Mills, 94 Fed. 916, 36 C. C. A. 1. Compare Jonesboro City v. Cairo & St. L. R. R. Co., 110 U. S. 192, 28 L. ed. 116, 4 Sup. Ct. 67, with Williams V. People, 132 111. 574, 24 N. E. 647. ^Addyston Pipe &c. Co. v. Corry, 197 Pa. 41, 46 Atl. 1035, 80 Am. St. 812. ^Byrns v. Moscow (Idaho), 121 Pac. 1034 (assent of two-thirds re- quired) ; Brown v. Board of Educa- tion, 108 Ky. 783, 22 Ky. L. 483, 57 S. W. 612 (assent of two-thirds of the voters required) ; Perry Water &c. Co. v. Perry (Okla.). 120 Pac. 582; Keller v. Scranton, 200 Pa. St. 921 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. 622 that where an indebtedness beyond a fixed limit is made to depend upon the consent of two-thirds of the voters voting at an election held for that purpose it means two-thirds of the electors actually voting at the election and not two-thirds of those that vote on the question of indebtedness.^ But it has been held that a con- tract for water supply for twenty years without the assent of two-thirds of the legal voters, where payments are to be semi- annual, may be good as a contract from year to year so long as neither party repudiates it.* Where voters have given their con- sent to the creation of an indebtedness an ordinance authorizing the borrowing of the money for such purpose is legal although at the time there has been no ordinance specifically providing for the expenditure.^ Bonds issued by authority of a vote of the district are part of the indebtedness of the district.® An election to val- idate bonds relates to the time the bonds were issued.^ § 622. Indebtedness limited by a per cent, of valuation. — Very frequently there is a limit placed upon the power to create 130, 49 Atl. 781, 86 Am. St. 708. On the submission to the voters of the question of issuing bonds for three different purposes, the failure to in- dicate the amount to be used for each purpose and to submit the dif- ferent propositions separately ren- ders the election illegal and the bonds invalid. Ross v. Lipscomb, 83 S. Car. 136, 65 S. E. 451, 137 Am. St. 794. See also, Winston v. Wachovia Bank & Trust Co. (N. Car.), 74 S. E, 611. Compare, however, with Williamson v. Graham (Va.), 74 S. E. 393. As to the necessity of following the formalities prescribed for the holding of the election see Williamson v. Graham (Va.), 74 S. E. 393; Murphy V. Spokane, 64 Wash. 681, 117 Pac. 476. See also, Manhattan Co. v. Ironwood, 74 Fed. 535, 20 C. C. A. 642; Canandaigua v. Hayes, 90 App. Div. (N..Y.) 336, 85 N. Y. S. 488. ^ Long Beach v. Boynton (Cal. App.), 119 Pac. 677; Law v. San Francisco, 144 Cal. 384, 11 Pac. 1014; Belknap v. Louisville, 99 Ky. 474, 18 Ky L. 313, 36 S. W. 1118, 34 L. R. A. 256. To the same effect is McGoodwin V. Franklin, 18 Ky. L. 752, 38 S. W. 481; Bryan v. Lincoln, SO Nebr. 620, 70 N. W. 252, 35 L. R. A. 752; State V. Benton, 29 Nebr. 460, 45 N. W. 794. Contra, holding that such a pro- vision means two-thirds or the re- quired majority of those voting on the proposition in question. Murphy V. Long Branch (N. J.), 61 Atl. 593; Fox V. Seattle, 43 Wash. 74, 86 Pac. 379, 117 Am. St. 1037. * City Council v. Dawson Water- works Co., 106 Ga. 696, 32 S. E. 907. °Barr v. Philadelphia, 191 Pa. St. 438, 43 Atl. 335. See also, Slocum V. North Platte, 192 Fed. 252 (con- struing Nebraska statute). ° Stanley v. McGeorge, 17 Wash. 8, 48 Pac. 736. 'West v. Chehalis, 12 Wash. 369, 41 Pac. 171, 50 Am. St. 896. It has been held that warrants issued in payment of a city indebtedness were rendered valid by a vote of the peo- ple at a time the city was within its debt limit, even though that limit was unlawfully exceeded when such debts were originally attempted to be incurred. Pilling v. Everett, 67 Wash. 109, 120 Pac. 873. A general system of water-works in Michigan requires the consent of two-thirds of the electors (see laws of 1895). Sav- § 623 CONTRACTS. 922 an indebtedness in excess of a specified per cent, of the assessed valuation of the municipality's taxable property. Where the con- stitution or a valid statute so limits the indebtedness, an indebted- ness in violation of these restrictions is void.^ But where the annual taxation is limited to a certain per cent, of the valuation, it does not prohibit the incurring of an indebtedness maturing annually though the aggregate exceeds the limit, as in such case the indebtedness of each year is measured by the assessment for the year or preceding year, as the case may be.° In determining the amount on an assessment basis the assessment for state and county purposes is generally the basis,^° but it has been held that the valuation which governs is the valuation for city purposes," and when there is an assessment limitation, it means the assess- ment as equalized by the board of review.^^ § 623. Preliminary provisions for a sinking fund. — Other constitutional, and sometimes charter provisions, prohibit the creating of a municipal indebtedness without precedent provisions being made for a sinking fund to meet the interest, as it accrues and the principal at its maturity.^^ A provision for the payment for electric lights at an annual rental not exceeding the amount the city is authorized to collect and appropriate for such purpose each year, payment to be made only on the performance of the services provided for, is not in contravention of the constitutional inhibition against the creation of a debt without making provision idge V. Spring Lake, 112 Mich. 91, Gamewell &c. Co., 146 Ind. 466, 45 70 N. W. 425. N. E. 588, 35 L. R. A. 686, 58 Am. 'John Hancock &c. Ins. Co. v. St. 359; South Bend v. Reynolds, 155 Huron, 80 Fed. 652, affd. 100 Fed. Ind. 70, 57 N. E. 706; Valparaiso v. 1001, 40 C. C. A. 683; Lewis v. Brady, Gardner, 97 Ind. 1. 17 Idaho 251, 104 Pac. 900, 28 L. R. "Todd v. Laurens, 48 S. Car. 395, A. (N. S.) 149. (State debt.) See 26 S. E. 682. also, the above case and note in 28 " Dupont V. Pittsburg, 69 Fed. 13. L. R. A. 149 as to what time the as- " State v. Common Council &c. sessed valuation is to be taken. Peo- of Tomahawk, 96 Wis. Ti, 71 N. W. pie V. Chicago &c. R. Co., 253 111. 86. 191, 97 N. E. 310; Voss v. Waterloo "John Hancock &c. Ins. Co. v. Water Co., 163 Ind. 69, 71 N. E. 208, Huron, 80 Fed. 652, affd. 100 Fed. 66 L. R. A. 95, 106 Am. St. 201. 1001, 40 C. C. A. 683. Compare with "Ludington Water-Supply Co. v. Murphy v. Spokane (Wash.), 117 Ludington, 119 Mich. 480, 78 N. W. Pac. 476. 558. See also. City of Laporte v. 923 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 624 for the collection of a sum to pay interest and provide a sinking fund for the payment of the principal/* § 624. Aggregate indebtedness — How determined — Re- funding and sinking fund bonds. — The great difficulty is to determine when the aggregate municipal indebtedness is in excess of the constitutional limit. What indebtedness is to be included in ascertaining the aggregate? To classify and arrange the cases will be the purpose of this section. Bonds for the purpose of refunding existing indebtedness are not to be included in the lim- itation.^^ Municipal warrants issued for the ordinary, necessary and current expenses, which are within the limit of current reve- nue, and such special taxes as legally and in good faith might have been intended to be levied therefor, and the issue of bonds for the funding thereof, are not within the constitutional limita- tions, since such bonds would not increase the indebtedness.^* Negotiable refunding bonds, legally issued, under valid laws, in exchange for valid outstanding indebtedness, in the hands of pur- chasers for value, before maturing, will be presumed not to have increased the indebtedness.^' " Dallas Electric Co. v. Dallas, 23 v. Davenport, 36 Iowa 396 ; French v. Tex. Civ. App. 323, 58 S. W. 153. Burlington, 42 Iowa 614; Tuttle v. ^ Stone V. Chicago, 207 111. 492, 69 Polk, 92 Iowa 433, 60 N. W. 733 ; N. E. 970; Powell v. Madison, 107 Creston Waterworks Co. v. Creston, Ind. 106, 8 N. E. 31; Kelly v. Min- 101 Iowa 687, 70 N. W. 739; Sioux neapolis, 63 Minn. 125, 65 N. W. 115, City v. Weare, 59 Iowa 95, 12 N. W. 30 L. R. A. 281 ; Poughkeepsie v. 786 ; Edmundson v. Independent Quintard, 136 N. Y. 275, 32 N. E. School Dist., 98 Iowa 639, 67 N. W. 764; Bank of Savings v. Grace, 102 671, 60 Am. St. 639; Thompson v. N. Y. 313, 7 N. E. 162; Brooke v. Independent School Dist, 102 Iowa Philadelphia, 162 Pa. 123, 29 Atl. 387, 94, 70 N. W. 1093 ; Palmer v. Helena, 24 L. R. A. 781; Bruce v. Pittsburg, 19 Mont. 61, 47 Pac. 209; Morris v. 166 Pa. 152, 30 Atl. 831; National Taylor, 31 Ore. 62, 49 Pac. 660; Kelly Life Ins. Co. &c. v. Mead, 13 S. Dak. v. Minneapolis, 63 Minn. 125, 65 N. 37, 82 N. W. 78, 48 L. R. A. 785; In W. 115, 30 L. R. A. 281. re State Warrants, 6 S. Dak. 518, 62 "Los Angeles v. Teed, 112 Cal. N. W. 101, 55 Am. St. 852; Western 319, 44 Pac. 580; Lake County v. Town Lot Co. v. Lane, 7 S. Dak. Standley, 24 Colo. 1, 49 Pac. 23; 599, 65 N. W. 17; Mitchell v. Smith, Hamilton Co. v. Montpelier Saving 12 S. Dak. 241, 80 N. W. 1077; Bank &c. Co., 157 Fed. 19, 84 C. C. Huron v. Second Ward &c. Bank, 57 A. 523; Lyon County v. Keene &c. U. S. App. 593, 86 Fed. 272, 30 C. Bank, 100 Fed. 337, 46 C. C. A. 391 ; C. A. 38, 49 L. R. A. 534; Rice v. Kane v. Charleston, 161 111. 179, 43 Milwaukee, 100 Wis. 516, 76 N. W. N. E. 611; Powell v. Madison, 107 341. Ind. 106, 8 N. E. 31; Cedar Rapids "Stone V. Chicago, 207 III. 492, 69 v. Bechtel, 110 Iowa 196, 81 N. W. N. E. 970 ; Cedar Rapids v. Bechtel, 468 ; Marion v. Harvey, 26 Kans. 181 ; 110 Iowa 196, 81 N. W. 468; Grant Gaulbert v. Louisville, 30 Ky. L. SO, § 62 = CONTRACTS. 924 § 625. Indebtedness payable annually or monthly. — Where there is a limitation in the amount of indebtedness a city is au- thorized to incur, the weight of authority as well as reason favors the more liberal construction that a municipal corporation may contract for a supply of water or gas or like necessary for a term of years and inay stipulate for the payment of an annual or monthly rental for the gas or water furnished each year, notwith- standing the aggregate or rentals during the life of the contract may exceed the amount of the indebtedness limited by the charter, for the reason that the debt for each year or month does not come into existence until it is earned. ^^ If by reason of the lim- itation the city is unable to erect the necessary improvements of its own, and if it is debarred from contracting with another party who stands ready to incur the large expense necessary to the erec- 97 S. W. 342; Opinion of Justices, 81 Maine 602, 18 Atl. 291 ; Palmer v. Helena, 19 Mont. 61, 47 Pac. 209; Barnum v. Sullivan, 137 N. Y. 179, 33 N. E. 162; Blanton v. McDowell, 101 N. Car. 532, 8 S. E. 162; Morris V. Taylor, 31 Ore. 62; McCreight v. Camden, 49 S. Car. 78, 26 S. E. 16; Williamson v. Aldrich, 21 S. Dak. 13, 108 N. W. 1063; Tyler v. Jester (Tex. Civ. App.), 74 S. W. 359, affd. 97 Tex. 344, 78 S. W. 1058; Miller v. School Dist. No. 3, 5 Wyo. 217, 39 Pac. 879. Compare with Doon Town- ship V. Cummins, 142 U. S. 366, 35 L. ed. 1044, 12 Sup. Ct. 220. " Higgins V. San Diego Water Co., 118 Cal. 524, 45 Pac. 824, 50 Pac. 670; Denver v. Hubbard, 17 Colo. App. 346, 68 Pac. 993 ; Columbia Ave. Sav. &c. Co. v. Dawson, 130 Fed. 152; Val- paraiso V. Gardner, 97 Ind. 1, 49 Am. Rep. 416 ; Voss v. Waterloo Water Co., 163 Ind. 69, 71 N. E. 208, 66 L. R, A. 95, 106 Am. St. 201; Crowder v. Sullivan, 128 Ind. 486, 28 N. E. 94, 13 L. R. A. 647; Grant v. Davenport, 36 Iowa 396 ; Burling- ton Water Co. v. Woodward, 49 Iowa 58; Creston Water- Works Co. V. Creston, 101 Iowa 687, 70 N. W. 739; BlanRs v. Monroe, 110 La. 944, 34 So. 921; Smith v. Dedham, 144 Mass. 177, 10 N. E. 782; Ludington Water-Supply Co. v. Ludington, 119 Mich. 480. 78 N. W. 558; Saleno v. Neosho, 127 Mo. 627, 30 S. W. 190, 27 L. R. A. 769, 48 Am. St. 653 ; La- mar Water &c. Co. v. Lamar, 128 Mo. 188, 26 S. W. 1025, 31 S. W. 756, 32 L. R. A. 157 ; Weston v. Syracuse, 17 N. Y. 110; Territory v. Okla- homa, 2 Okla. 158, 37 Pac. 1094; Wade V. Oakmont, 165 Pa. St. 479, 30 Atl. 959; Brown v, Corry, 175 Pa. St. 528, 34 Atl. 854; Dallas Elec. Co. V. Dallas, 23 Tex. Civ. App. 323, 58 S. W. 153 ; Tyler v. Jester (Tex. Civ. App.), 74 S. W. 359, affd. 97 Tex. 344, 78 S. W. 1058; Walla Walla v. Walla Walla Water Co., 172 U. S. 1, 43 L. ed. 341, 19 Sup. Ct. 11; Merrill &c. Co. V. Merrill, 80 Wis. 358, 49 N. W. 965; Connor v. Marshfield, 128 Wis. 280, 107 N. W. 639. But see, contra, Chicago v. McDonald, 176 111. 404, 52 N. E. 982, explaining and qualifying East St. Louis v. East St. Louis Gas Light &c. Co., 98 111. 415, 38 Am. Rep. 97; Baltimore &c. R. Co. V. People, 200 111. 541, 66 N. E. 148; Ramsey v. Shelbyville, 119 Ky. 180, 83 S. W. 116, 1136, 26 Ky. L. 1102, 27 Ky. L. 141, 68 L. R. A. 300; Beard v. Hopkinsville, 95 Ky. 239, 15 Ky. L. 756, 24 S. W. 872, 23 L. R. A. 402, 44 Am. St. 222; Niles Water-Works v. Niles, 59 Mich. 311, 26 N. W. 525; Davenport v. Klein- schmidt, 6 Mont. 502, 13 Pac. 249; Humphreys v. Bavonne, 55 N. J. L. 241, 26 Atl. 81 ; Read v. Atlantic City, 49 N. J. L. 558, 9 Atl. 759; Salem Water Co. v. Salem, 5 Ore. 29. 925 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 626 tion and equipment of a plant relying upon annual payments, the maturity and payment of which are based upon services to be per- formed, it is readily seen that serious disaster might ensue. There would seem to be no doubt that if the city proposed to purchase outright, or establish a system of waterworks of its own, the lim- itation would apply even where the bonds issued therefor were payable in the future.^® An ordinance for the payment of an annual rental for water hydrants does not of itself create an in- debtedness. If it merely establishes a maximum rate, subject to review by the courts, it is a regulation.^" A contract by a city for water supply at a stipulated rental, together with such pre- ferred expenses as are provided for by statute and which do not in the aggregate exceed the total income of the city for each year the contract is in force, is valid. ^^ A contract payable in monthly rentals, based on the number of hydrants in good condition, cre- ates no present indebtedness.^^ And it has been held that a con- tract with annual payments extending over several years is legal.^* But in Wisconsin it has been held that a contract to pay for waterworks as rentals until paid for is void.^* § 626. Valid indebtedness only included. — The indebted- ness included in the limitation includes any indebtedness created by the legislature and indebtedness created by the munic- ipality, which is valid,^^ but does not include warrants illegal and nonenforcible,^'^ or illegal bonds. ^' In determining whether mu- nicipal bonds outstanding are to be included in the indebted- ness of the city at the time a subsequent issue is made, ^^ Culbertson v. Fulton, 127 111. 30, Water &c. Co. v. Lamar, 140 Mo. 18 N. E. 781 ; Beard v. Hopkinsville, 145, 39 S. W. 768. 95 Ky. 239, 15 Ky. L. 756, 24 S. W. '' Keihl v. South Bend, 76 Fed. 921, 872, 23 L. R. A. 402, 44 Am. St. 222 ; 44 U. S. App. 687, 36 L. R. A. 228. Read v. Atlantic City, 49 N. J. L. ^Higgins v. San Diego Water Co., 558, 9 Atl. 759; Buchanan v. Litch- 118 Cal. 524, 45 Pac. 824, SO Pac. 670. field, 102 U. S. 278, 26 L. ed. 138; '^Earles v. Wells, 94 Wis. 285, 68 Coulson V. Portland, Deady (U. S.) N. W. 964, 59 Am. St. 886. 481, Fed. Cas. No. 3275; Spilman v. "^ Martin v. Territory, 5 Okla. 188, Parkersburg, 35 W. Va. 60S, 14 S. E. 48 Pac. 106. 279. =^Keene &c. Sav. Bank v. Lyon, 90 ''° Danville v. Danville Water Co., Fed. 523, 97 Fed. 159, affg. 100 Fed. 180 111. 235, 54 N. E. 224. 337, 40 C. C. A. 391. "Webb City &c. Co. v. Carterville, "Ashuelot Nat. Bank v. Lyon, 81 153 Mo 128, 54 S. W. 557; Lamar Fed. 127, affd. in 87 Fed. 137, 30 C. C. A. 582. § 627 CONTRACTS. 926 the test of validity is whether they are legally enforcible and not whether they were recognized as valid by the officers, or were subsequently paid without their legality being questioned.^^ Warrants for current expenses after the limit has been reached, but in anticipation of a tax levied, are legal.^' Warrants are valid where the city has on hand or in prospect funds with which to meet them, although the funds may be there- after wrongfully applied to other purposes.'" The general rule is that the warrants outstanding which there is money in the treas- ury to meet do not constitute indebtedness within the meaning of the limitation.'^ § 627. Includes implied as well as express liability. — Where the constitution limits the incurring of indebtedness to the income and revenue for the current year it applies to implied lia- bility as well as express.'^ § 628. Current expenses not included. — It would seem that in estimating the indebtedness with a view of determining the limit, the ordinary warrants for money actually in the treas- ury, and contracts for ordinary current expenses, within the current revenue, should be excluded.'' It has been held, however, that a city having an indebtedness in excess of the constitutional limit is powerless to create an indebtedness even for its ordinary and current expenses.'* A municipal corporation indebted to ^' German Ins. Co. &c. v. Manning, '^ Dawson v. Dawson Water Works 9S Fed. 597. Co., 106 Ga. 696, 32 S. E. 907 ; South ^ Shannon v. City of Huron, 9 S. Bend v. Reynolds, 155 Ind. 70, 57 N. Dak. 356, 69 N. W. 598. E. 706, 49 L. R. A. 795 (rent of suit- " PhilHps V. Reed, 107 Iowa 331, 76 able city offices) ; McGrath v. Grout, N. W. 850, 77 N. W. 1031. 171 N. Y. 7, 63 N. E. 547 (salaries of " German Ins. Co. &c. v. Manning, sheriff, register and clerk) ; In re ap- 95 Fed. 597. peal of Erie, 91 Pa. St. 398 ; Addyston '^ Buck V. Eureka, 124 Cal. 61, 56 Pipe &c. Co. v. Corry, 197 Pa. St. 41, Pac. 612; Buck v. Eureka, 124 Cal. 46 Atl. 1035, 80 Am. St. 812; Tyler 61, 56 Pac. 612; People v. May, 9 v. Jester (Tex. Civ, App.), 74 S. W. Colo. 80, 10 Pac. 641 ; Eddy Valve 359, affd. 97 Tex. 344, 78 S. W. 1058 Co. V. Crown Point, 166 Ind. 613, 76 (salaries due aldermen) ; Hull v. N. E. 536, 3 L. R. A. (N. S) 684, and Ames, 26 Wash. 272, 66 Pac. 391, note; Windsor v. Des Moines, 110 90 Am. St. 743 (salaries of police- Iowa 175, 81 N. W. 476, 80 Am. St. men, city treasurer and marshal) ; 280; Litchfield v. Ballow, 114 U. S. State v. Common Council &c. of 190, 29 L. ed. 132, 5 Sup. Ct. 820. See Tomahawk, 96 Wis. 73, 71 N. W. 86. also, Spilman v. Parkersburg, 35 W. " Chicago v. McDonald, 176 111. 404, Va. 605, 14 S. E. 279. 52 N. E. 982. This decision is based 927 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 629 the limit fixed by the constitution is required to carry on its cor- porate operations while so indebteded upon a cash basis and not upon credit to any extent or purpose." § 629. Debts payable out of special fund — Special assess- ment — Optional debts. — Indebtedness payable out of a spe- cial fund is not to be included in estimating the amount of per- missible indebtedness.^" Claims under laws providing for special assessments on abutting owners or on property benefited by the improvement, payable in instalments are not to be deemed indebt- edness of the city.'^ But, although a municipality may have a right to levy a special assessment for maintaining and operating an electric light plant it may not, therefore, anticipate its future general revenues in order to erect such plant. ^* An option to upon the theory that the question is A. 439; McGilvery v. Lewiston, 13 one of indebtedness simply and not Idaho 338, 90 Pac. 348; Jacksonville of insolvency. See also Springfield R. Co. v. Jacksonville, 114 111. 562, 2 V. Edwards, 84 III. 626; Law v. Peo- N. E. 478;, Board &c. of Switzerland pie, 87 111. 385 ; Fuller v. Chicago, 89 County v. Reeves, 148 Ind. 467, 46 N. 111. 282 ; Prince v. Quincy, 128 111. 443, E. 995 ; Board &c. of Monroe County 21 N. E. 768; Beard v. HopkinsviUe, v. Harrell, 147 Ind. 500, 46 N. E. 124; 9.5 Ky. 239, IS Ky. L. 756, 24 S. W. Grunewald v. Cedar Rapids, 118 Iowa 872, 23 L. R. A. 402, 44 Am. St. 222; 222, 91 N. W. 1059; Corey v. Fort State v. Helena, 24 Mont. 521, 63 Dodge, 133 Iowa 666, 111 N. W. 6; Pac. 99 55 L. R. A. 336, 81 Am. St. Adams v. Ashland, 26 Ky. L. 453 184, 80 S. W. 1105; Lansing v. Van ^ Prince v Quincy, 128 111. 443, 21 Gorder, 24 Mich. 456 ; State v. Neo- N E 768; Voss v. Waterloo Water sho, 203 Mo. 40, 101 S. W. 99; At- Co., 163 Ind. 69, 71 N. E. 208, 66 L. R. kinson v. Great Falls, 16 Mont. 372, A 95 106 Am St 201 ; Butler v. An- 40 Pac. 877 ; Kronshein v. Rochester, drus,' 35 Mont. 575, 60 Pac. 785; 76 App. Div. (N. Y.) 494, 78 N. Y. Brooke v Philadelphia, 162 Pa. St. S. 813 ; Vallelly v. Grand Forks Park 123 29 Atl 387, 24 L. R. A. 781; Comrs., 16 N. Dak. 25, 111 N. W. Earles v. Wells, 94 Wis. 285, 68 N. 615, 15 L. R. A. (N. S.) 61n; Ladd W 964 59 Am. St. 886. v. Gambell, 35 Ore. 393, 59 Pac. 113; '" State V. Great Falls, 19 Mont. 518, Little v. Cogswell, 20 Ore. 345, 25 49 Pac. 15; Brockenbrough v. Char- Pac. 727; State v. Rogers, 22 Ore. lotte Water Comrs., 134 N. Car. 1, 348, 30 Pac. 74; Continental Ins. Co. 46 S E 28; Winston v. Spokane, 12 v. Riggen, 31 Ore. 336, 48 Pac. 476; Wash 524 41 Pac. 888. See also, Strickland v. Geide, 31 Ore. 373, 49 Strieb V Cox 111 Ind. 299, 12 N. E. Pac. 982; Addyston Pipe &c. Co. v. 481- Ouill V Indianapolis, 124 Ind. Corry, 197 Pa. 41, 46 Atl. 1035, 80 292 23 N E 788 7 L R. A. 681; Am. St. 812; Gable v. Altoona, 200 United States V. Mason, 99 U. S. 582, Pa. St. 15, 49 Atl. 367; Galveston v. 9=; T pd 331 But compare Fowler Heard, 54 Tex. 420; Faulkner v. Se- V Superior 85 Wis. 411, 54 N. W. attle, 19 Wash. 320, 53 Pac. 365. snn- c;tatp V Favette Co., 37 Ohio St. ''Windsor v. Des Moines, .110 Iowa WU, btate V. rayci ^^^^ ^^ ^^ ^^ ^^^^ ^^ ^^ ^^ ^gg. " Denny V Spokane, 79 Fed. 719, 2S Grant v. Davenport, 36 Iowa 396; r r A 164- Mankato v. Barber As- Spilman v. Parkersburg, 35 W. Va. phalt Pav! Co.: 142 Fed. 329. 73 C. C. 605, 14 S. E. 279; Earles v. Wells, 94 § 630 CONTRACTS. 928 purchase or a debt which it is entirely optional with the city to pay does not come within the constitutional limitation.** § 630. Diverted money — License money — Miscellaneous. — Among the miscellaneous decisions and rulings on various phases of the general subject are the following: An indebted- ness paid with money diverted from a fund raised for another purpose must be considered as still existing.*" Where a city diverts funds from a paving assessment and applies them in payment of other paving debts, it increases the indebtedness to that extent.*^ License money received during the year is not to be considered in determining the question of limitation. ^^ Park certificates which do not exceed the assessments for park pur- poses on which the city is liable only to the extent of money col- lected, do not create an indebtedness within the limitation,** nor does the bonded debt of a school district, though co-extensive with the city,** nor an assessment for damages for opening a highway payable from taxes levied for that purpose ;*° and so when a con- tractor accepts bonds payable from a special fund in satisfaction for work done, it is not within the limitation.*' Bonds in pay- ment of a judgment do not create a new indebtedness.*' The fact that a city had the necessary funds to pay when the indebtedness Wis. 285, 68 N. W. 964, 59 Am. St. eliminated. Overall v. Madisonville 886. It may, however, purchase the (Ky.), 102 S. W. 278, 12 L. R. A. plant by piecemeal. Overall v. Mad- (N. S.) 433. isonville (Ky.), 102 S. W. 278, 12 L. "Kansas City v. Ward, 134 Mo. R. A. (N. S.) 433, and note. 172, 35 S. W. 600. '" Centerville v. Fidelity &c. Co., 118 "Todd v. Laurens, 48 S. Car. 395, Fed. 332, 55 C. C. A. 348; Fidelity 26 S. E. 682. See also, Campbell v. Trust and Guaranty Co. v. Fowler Indianapolis, 155 Ind. 186, 57 N. E. Water Co., 113 Fed. 560; South Bend 920. But compare Wilcoxon v. Bluff- v. Reynolds, 155 Ind. 70, 57 N. E. ton, 153 Ind. 267, 54 N. E. 110. 706; Windsor v. Des Moines, 110 "'Commissioners of Highways v. Iowa 175, 81 N. W. 476, 80 Am. St. Jackson, 165 111. 17, 45 N. E. 1000. 296; Stedraan v. Berlin, 97 Wis. 505, "Clinton v. Walliker, 98 Iowa 655, 1Z N. W. 57. 68 N. W. 431 ; Thompson v. Inde- " Rice v. Milwaukee, 100 Wis. 516, pendent School Dist., 102 Iowa 94, 70 76 N. W. 341. N. W. 1093. " Allen v. Davenport, 107 Iowa 90, " Lake County v. Piatt, 79 Fed. 567, n \.^ W. 532. 25 C. C. A. 87. A vote of the people *^Rice V. Milwaukee, 100 Wis. 516, for free turnpikes is not an increase 76 N. W. 341. But when the licenses of indebtedness beyond constitutional are paid, and the fines assessed are limits. Maysville &c. Road Co. v. Wig- collected, the uncertainty which is gins, 104 Ky. 540, 20 Ky. L. 724, 47 the sole obstacle to carrying them into S. W. 434. the city's income for the year is 929 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 63I accrued does not render valid a contract which was made at a time when it was indebted exceeding' its Hmit.^^ The agreement of a water company to pay the debt of the city upon bonds does not extinguish the indebtedness as a municipal debt.*® Where bonds are to be delivered on the completion of a road the date for determining the indebtedness of the county is the time when the bonds are to be delivered — at the completion of the road."" A judgment creditor has a right to have his judgment included in the tax roll even if it increases the levy beyond the limit allowed where the right to have the judgment placed in the roll matured before the annual budget was made up, the city being required in such case to take notice of the judgment and limit its levy ac- cordingly.°^ The proof, it is said, in all cases of excess must be clearly shown.^'' § 631. Evasion of constitutional limitations. — There have been frequent attempts to evade the constitutional limitations im- posed upon municipal indebtedness, some of which have been sustained by the courts and some have not. There is considerable conflict among the authorities as to the limitations in municipal charters prohibiting the incurring of indebtedness in excess of a specified amount and where the bonds issued therefor are payable in the future. There can be no doubt that where a city proposes to purchase outright and establish a system of waterworks of its own the limitation applies, though bonds were issued therefor made payable in the future."' It has been held that the munici- "Laporte v. Gamewell &c. Co., 146 Conner v. Nevada, 188 Mo. 148, 86 Ind. 466, 45 N. E. 588, 35 L. R. A. S. W. 256, 107 Am. St. 314; McAleer 686, 58 Am. St 359; City of Valpa- v. Angell, 19 R. I. 688, 36 Atl. 588; raise v. Gardner, 97 Ind. 1. Torence v. Bean, 18 Wash. 36, 50 " Gold V. Peoria, 65 111. App. 602. Pac. 582. " State V. Common Council of " Roe v. Philippi, 45 W. Va. 785, 32 Tomaha\yk, 96 Wis. 73, 71 N. W. 86. S. E. 224. See also, Clark v. Los Angeles, 160 ■" Culbertson v. Fulton, 127 111. 30, Cal. 30, 116 Pac. 722. 18 N. E. 781 ; Beard v. HopkinsviUe, "State V. Wharton, 103 Wis. 307, 95 Ky. 239, IS Ky. L. 756, 24 S. W. 79 N. W. 253. A municipality cannot 872, 23 L. R. A. 402, 44 Am. St. 222 ; set up as a defense to an action ex Read v. Atlantic City, 49 N. J. L. 558, delicto that it has already reached its 9 Atl. 759; Coulson v. Portland, limit of indebtedness. People v. May, Deady (U. S.) 481, Fed. Cas. No. 9 Colo. 404, 12 Pac. 838; Blooming- 3275; Walla Walla v. Walla Walla ton V. Perdue, 99 111. 329; Chicago Water Co., 172 U. S. 1, 43 L. ed. 341, V. Sexton, 115 111. 230, 2 N. E. 263; 19 Sup. Ct. 77; Buchanan v. Litchfield Rice V. Des Moines, 40 Iowa 638; 102 U. S. 278, 26 L. ed. 138; Spilman 59 — Contracts, Vol. I § 631 CONTRACTS. 93O pality cannot evade the constitutional restriction by subscribing for stock in a corporation organized for the purpose of furnish- ing light and water. *** Nor by purchasing and taking over as its property the waterworks plant subject to a mortgage thereby creating against itself, at least, an implied liability or indebtedness within the intent of the constitution notwithstanding the fact that the municipal corporation did not personally obligate itself to pay said incumbrance.^^ Nor by consenting that judgment be taken against it on an open demand.^" There are also a number of respectable authorities to the effect that the limitation covers a case where the city agrees to pay a certain sum per annum if the aggregate amount payable under such agreement exceeds the amount limited by the charter.^' But the great weight of author- ity, as well as of reason, favors the more liberal construction that a municipal corporation may contract for a supply of water, or gas, or like necessity, for a term of years, and may stipulate for the payment of an annual rental for the gas or water furnished each year, notwithstanding the aggregate of its rentals during the life of the contract may exceed the amount of the indebtedness limited by the charter.^^ It has been held that a city may legally contract for a light plant in piecemeal; i. e., buying only what it could pay for, and as it could pay for it.^" Where a city is limited in its indebtedness by the constitution the fact that, by entering into a contract for the construction and maintenance of an electric light plant, it did not obligate itself to pay more than it had previously paid for lighting alone, is no justification for entering into the contract.'^" A city hall to be paid for in thirty V. Parkersburg, 35 W. Va. 60S, 14 ter Co.. 172 U. S. 1, 43 L. ed. 341, 19 S. E. 279. Sup. Ct. 11; Ante § 625. "Voss V. Waterloo Water Co., 163 "'Overall v. Madisonville (Ky.) Ind. 69, 71 N. E. 208, 66 L. R. A. 102 S. W. 278, 12 L. R. A. (N. S.) 95, 106 Am. St. 201. 433. See also Addyston Pipe &c. Co. " Eddy Valve Co. v. Crown Point, v. Corry, 197 Pa. 41, 46 Atl. 1035, 80 166 Ind. 613, 76 N. E. 536, 3 L. R. A. Am. St. 812. (N S.) 684, and note. ""Prince v. Quincy, 128 111. 443, 21 °° Smith V. Broderick, 107 Cal. 644, N. E.768; Windsor v. Des Moines, 110 40 Pac. 1033, 48 Am. St. 167. Iowa 175, 81 N. W. 476, 80 Am. St. "'Niles Water- Works v. Niles, 59 280; Davis v. Des Moines, 71 Iowa Mich. 311, 26 N. W. 525; Humphreys 500, Z2 N. W. 470; Clinton v. Walli- v. Bayonne, 55 N. J. L. 241, 26 Atl. ker, 98 Iowa 655, 68 N. W. 431 ; An- 81 ; Salem Water Co. v. Salem, 5 derson v. Orient Fire Ins. Co., 88 Ore. 29. Iowa 579, 55 N. W. 348; Tuttle v. " Walla Walla v. Walla Walla Wa- Polk, 92 Iowa 433, 60 N. W. 733 ; 931 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 632 years by assessments of taxes is an indebtedness, though it may have the semblance of a lease.*^ In some states it has been held that when a city has reached the limit of its permissible indebtedness it may anticipate the collection of its revenue by drawing warrants against the taxes levied, but not collected, which in effect is an assignment of the amount to the holder of the warrant."^ But in order to do so the tax not only must have been levied, but the warrant must be drawn payable out of a particular fund, and be such in legal effect as to discharge the municipality from all indebtedness thereon."''* A contract for an annual rental for a number of years is not obnox- ious to a statute prohibiting the creation of a debt of a specified amount without a vote of the electors."^ § 632. Indebtedness in excess of limit not a defense virhen. — It has been held that a city cannot defend against a contract creditor on the ground that it levies taxes to the full constitutional limit and has no surplus after paying government expenses to be applied on the debt under a statute which provides that a city may be compelled by mandamus to levy a tax for the payment of a judgment against it, and that the whole amount raised under it within the constitutional limit may be applied in satisfaction of such debt, except such amount as may be necessary to pay sal- Allen V. Davenport, 107 Iowa 90, 11 excess of the constitutional limit and N. W. S32; Phillips v. Reed, 107 Iowa the city may be enjoined from pay- 331, 76 N. W. 850, 11 N. W. 1031; ing the money. Chicago v. Galpin, Beard v. HopkinsviUe, 95 Ky. 239, 183 111. 399, 55 N. E. 731; Thompson 15 Ky. 756, 24 S. W. 872, 23 L. Houston Electric Co. v. Newton, 42 R. A. 402, 44 Am. St. 222; Read Fed. 723; Chicago v. McDonald, 176 V. Atlantic City, 49 N. J. L. 558, 111. 404, 52 N. E. 982; Lake v. Rol- 9 Atl. 759; State v. Fayette Coun- lins, 130 U. S. 662, 32 L. ed. 1060, 9 ty, 37 Ohio St. 526; Spilman v. Sup. Ct. 651. Parkersburg, 35 W. Va. 605, 14 S. E. "^ Reynolds v. Waterville, 92 Maine 279. The time of payment of debts 292, 42 Atl. 553. for the erection of an electric light "^Koppikus v. State Capitol Comrs., plant being extended or postponed to 16 Cal. 248; Law v. People, 87 111. a later date does not exclude such 385; Springfield v. Edwards, 84 111. debts from the constitutional limita- 626; French v. Burlington, 42 Iowa tions. Windsor v. Des Moines, 110 614. Iowa 175, 81 N. W. 476, 80 Am. St. ""a People v. May, 9 Colo. 404, 12 296. A contract by a city which had al- Pac. 838 ; Fuller v. Chicago, 89 111. ready reached its debt limit provid- 282 ; Voss v. Waterloo Water Co., 163 ing for the lighting and maintenance Ind. 69, 71 N. E. 208, 66 L. R. A. 95, of 7,000 street lamps at a definite 106 Am. St. 201. price per lamp per annum payable "^ Cunningham v. Cleveland, 98 Fed. monthly creates an indebtedness in 657, 39 C. C. A. 211. § 633 CONTRACTS. 932 aries allowed by law to specified officers, where it has expended money for other purposes than those enumerated/* And where it did not appear that if a contractor had examined the city treasury he would have found no money on hand and that the condition of the city's finances was such that the obligation ex- ceeded the limitation and he has complied with his contract and furnished an engine under the contract, it was held that the city will not be permitted to plead ultra vires and will be liable."^ § 633. Construction of constitutional provisions. — The rule for construing the provisions of constitutions limiting in- debtedness of municipal corporations has been stated as follows : If directed to the legislature, they do not operate as a repeal of the existing powers of those corporations. But if directed to the municipalities, they have, in themselves, the effect of repealing any inconsistent provisions contained in the charters. *" The con- stitutional provisions for submission to voters of questions as to indebtedness as well as those limiting the exercise of the taxing power of municipal corporations in North Carolina have refer- ence only to the contracting of debts, the pledging of municipal faith, the loan of municipal credit, and the levying and collecting of taxes after they became operative, and not to antecedent obli- gations or the use of the means necessary to their discharge." It has been held that if the municipal indebtedness has reached "Crebs v. Lebanon, 98 Fed. 549. of cities. Barr v. Philadelphia, 191 '= Arbuckle-Ryan Co. v. Grand Pa. St. 438, 43 Atl. 335. Ledge, 122 Mich. 491, 81 N. W. 358, "' List v. Wheeling, 7 W. Va. 501. Under Nebr. Stat., ch. 14, art. 2, "Street v. Craven County, 70 N. §§ 39-42, the payment for coal al- Car. 644. See also. Brothers v. Cur- leged to have been furnished the poor rituck, 70 N. Car. 726. As to the of a city cannot be recovered. Kear- rules for computing indebtedness, see ney v. Downing, 59 Nebr. 549, 81 N. Waxahachie v. Brown, 67 Tex. 519, 17 W. 509 ; Perry Water &c. Co. v. Am. & Eng. Corp. Cas. 348 ; Culbert- Perry, 29 Okla. 593, 120 Pac. 582 son v. Fulton, 127 111, 30, 18 N. E. (construing Oklahoma law recovery 781 ; People v. Hamill, 134 111. 666, 17 not permitted). Construction of Ore- N. E. 799, 29 N. E. 280, 23 Am. & gon laws of 1893 in regard to in- Eng. Corp. Cas. 39; Wilkinson v. Van debtedness of Klamath Falls. Kla- Orman, 70 Iowa 230, 30 N. W. 495; math Falls v. Sachs, 35 Ore. 325, 57 Potter v. Douglass County, 87 Mo. Pac. 329, 76 Am. St. 513. Construe- 239, 13 Am. & Eng. Corp. Cas. 656; tion of Pennsylvania constitution, art. Grant v. Lake, 17 Ore. 453, 21 Pac. 9, § 8, limiting taxation. Houston v. 447; Durant v. Iowa County, 1 Lancaster, 191 Pa. St. 143, 43 Atl. 83. Woolw. (U. S.) 69, Fed. Cas. No. Construction of Pennsylvania act of 4189. June 9, 1891, concerning indebtedness 933 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 633 the constitutional limit, a city cannot enter into an agreement to pay a stated sum as rent for a market-house if its annual rev- enues are insufficient, over and above the interest of its indebted- ness and the ordinary expenses of the city, to meet the rent pro- posed to be paid."^ Under the provision in the constitution of Missouri that "no county * * * shall be allowed to become in- debted in any manner, or for any purpose, to an amount exceed- ing in any year the income and revenue provided for such year," a county warrant issued in payment for books bought by a county clerk which he is required to provide by statute is void, if at the time of its issuance the revenue for that year has already been consumed."* In an action against a county on warrants given in satisfaction of a judgment, an answer which alleges that at the time the judgment was rendered the county debt exceeded the constitutional limit, without stating that such debt exceeded the limit at the time of making the contract on which the judgment was rendered, has been held demurrable.'" The constitution of Nebraska provides that county authorities shall never assess taxes, the aggregate of which shall exceed a certain limit, except for the payment of indebtedness existing at the adoption of the constitution, unless authorized by a vote, etc. It has been held tliat, in determining whether a proposed levy of taxes will exceed the constitutional limit, taxes to provide for bonded indebtedness contracted before the adoption of the constitution for internal improvements were not to be considered." Refunding bonds ™ In re appeal of Erie, 91 Pa. St. 398. pledged, and the city was not to be Where the limit of indebtedness has responsible for any deficit, to be the been reached, contracts have been incurring of a debt, held invalid as creating unauthor- °° Barnard & Co. v. Knox, 105 Mo. ized debts. French v. Burlington, 42 382, 16 S. W. 917, 13 L. R. A. 244, Iowa 614 (for grading streets) ; He- overruling Potter v. Douglas County, bard v. Ashland County, SS Wis. 145, 87 Mo. 239, 13 Am. & Eng. Corp. Cas. 12 N. W. 437 (by a county for the 656. The reason for this is that a debt building of a court-house) ; People v. of that kind is as much within the Johnson, 6 Cal. 499 (for the con- constitutional prohibition as a debt struction of a wagon road) ; Book v. contracted for any other purpose by Earl, 87 Mo. 246 (for remodeling and the county court, building additions to a court-house) ; ™ Wilder v. Rio Grande County, 41 In Baltimore v. Gill, 31 Md. 375, a Fed. 512. transaction by which the city pledged " Bonnell v. Nuckolls County, 32 railroad stock belonging to it as secur- Nebr. 189, 49 N. W. 225, affg. 28 ity for an advance was held, notwith- Nebr. 90, 43 N. W. 1145. See also, standing the lender stipulated to look Baird v. Todd, 27 Nebr. 782, 43 N. W. for its payment only to the stock 1143. § 634 CONTRACTS. 934 issued by a county for the purpose of taking up a prior valid in- debtedness of the county are not rendered invalid by the fact that they exceed the constitutional limitation on the indebtedness of counties and other municipalities/^ § 634. Special statutory provisions. — When the charter of a municipal corporation authorizes a contract to be made by the corporate body only in a certain mode its officers and agents cannot bind it in any other manner.'^ Where *a statute provides that no contract shall be binding on a city unless an appropriation sufficient to pay the same be previously made by the council, it has been held that, when an appropriation was made sufficient at the time to pay the contract in full, a subsequent diversion of the same to other objects by the city left it liable as though such diversion had not been made.''* Nor does such a provision repeal the obligation imposed upon councils to raise annually the amount required by commissioners for the erection of public buildings, and councils are bound to levy the tax or otherwise raise the amount." If an appropriation has been made under such a provision in the charter of a city for a specific purpose, and the proper department incurs liabilities sufficient to exhaust it, it can make no further contracts binding on the city for that pur- pose." A municipal corporation may be bound upon implied contracts made by its agents and to be deduced from corporate acts without a vote of the governing body, provided the contract is within the scope of the corporate powers and is not one which the charter or law governing the corporation requires to be made in a particular way or manner.'^ '"Aetna Life Ins. Co. v. Lyon, 44 "Perkins v. Slack, 86 Pa. St. 270. Fed. 329. See also, Donovan v. New York, 44 "Keeney v. Jersey City, 47 N. J. L. Barb. (N. Y.) 180; In re Tatham's 449, 1 Atl. 511, 11 Am. & Eng. Corp. Appeal, 80 Pa. St. 465. Cas. 309. "A township or other mu- " Kingsland v. New York, 5 Daly nicipalitv can only act by the mode (N. Y.) 448. See also People v. prescribed by law. Any other rule Kelly, 76 N. Y. 475, S Abb. N. C. (N. leaves the taxpayer at the mercy of Y.) 383, 468. the officers of the township and con- " Kramrath v. Albany, 127 N. Y. tractor, and would render all stat- 575, 28 N. E. 400. A corporation, like utory provisions of limitation of an individual, is liable on the quantum power nugatory." Perry Water &c. meruit when it has enjoyed the ben- Co. V. Perry (Okla.), 120 Pac. 582. efit of the work performed or goods " McGlue V. Philadelphia, 10 Phila. purchased, when no statute forbids or (Pa.) 348, 32 Leg. Int. (Pa.) 188. limits its power to make a contract 935 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 635 § 635. Other special provisions. — It has been held that the provisions of the charter of a city prohibiting it from entering into a contract for a work or improvement at a price exceeding $500, "until the assessment tlierefor has been confirmed," did not apply to the board of park commissioners, but only had reference to contracts made by. the regular officers of the municipal govern- ment, and not to those made by its separate independent depart- ments.'* Where the power of the commissioners of public works to incur liability for materials used in the construction of sewers was limited to $100,000, it was held that a contract for sewer materials exceeding that amount was not binding on the city, at least for the excess. But a contractor who had in good faith furnished the materials, which had been received by the city, could recover therefor where the legislature had subsequently validated the contract.''" It has been held that a statute, pro- hibiting municipal corporations from contracting any debt or pecuniary liability without adopting an ordinance and providing in it the means of paying the principal and interest of the debt contracted, was not applicable to a demand for gas supplied to a city.*" Under the Georgia act limiting the power of a city to levy taxes imposed for the purpose of defraying "ordinary current expenses," expenses incurred in erecting and fitting up necessary municipal offices, such as police headquarters, council chamber, courtroom, clerk's ofhce, town hall and engine-house, have been held to be included therein.*^ therefor. Peterson v. New York, 17 N. La. Ann. 47S, for the reason that this Y. 449; Harlem Gaslight Co. v. New demand was one of the current ex- York, 3 Robt (N. Y.) 100, affd. 33 penses of the city and payable out of N. Y. 309; Nelson v. New York, 63 the current revenues of the year in N. Y. 535 ; McCloskey v. Albany, 7 which the liability was contracted. Hun (N. Y.) 472. As to different rulings and raodifica- '" Bork V. Buffalo, 127 N. Y. 64, 27 tions, see Prince v. Quincy, 105 111. N. E. 355, 37 N. Y. St. 332. 138, 44 Am. Rep. 785, 2 Am. & Eng. "Nelson v. New York, 63 N. Y. Corp. Cas. 66; Springfield v. Ed- 535, revg. 5 Hun (N. Y.) 190, fol- wards, 84 111. 626; Sackett v. New lowed in People v. Denison, 19 Hun Albany, 88 Ind. 473. (N. Y.) 137, affd. 80 N. Y. 656, dis- ''Mayor &c. of Rome v. McWil- tinguished in Bigler v. Mayor, 5 Abb. Hams, 67 Ga. 106. But in Hud- N. C. (N. Y.) 51, hmited in McDon- son v. Marietta, 64 Ga. 286, it was aid V. New York, 68 N. Y. 23, 23 Am. held that an election under the law jiep, 144, affg. 1 Hun (N. Y.) 719, 4 was necessary to authorize a city to Thomp. & C. (N. Y.) 177; Smith v. incur a debt under the provisions of Newburgh, 77 N. Y. 130. the constitution of that state in ex- * So in Laycock v. Baton Rouge, 35 changing an old fire engine for a new § 636 CONTRACTS. 936 § 636. Indebtedness for water and lights. — The estabhsh- ment by the city of a water department for the supply of water to the city and its inhabitants is a "city purpose", within the meaning of a constitutional provision that "no county, city, town or village shall * * * be allowed to incur any indebtedness except for county, city, town or village purposes. "^^ A section of the act "to establish and maintain a water department in and for the city of Syracuse" provided for the issue of bonds by the city of Syracuse in aid of the establishment and maintenance of a water department, and made the bonds payable more than twenty years from the date of their issue, but provided for no sinking fund for their retirement at maturity. It was held that such section was not in violation of the constitution of New York, which proA'ides that "no county containing a city of over one hundred thousand inhabitants, or any such city, shall be allowed to become indebted * * * to an amount which, in- cluding existing indebtedness, shall exceed ten per centum of the assessed valuation of the real estate subject to taxation," and that such section "shall not be construed to prevent the issue of bonds to provide for the supply of water, but the terms of" such bonds "shall not exceed twenty years, and a sinking fund shall be created on the issuing of such bonds for their redemption," it not affirmatively appearing that Syracuse contained more than one hundred thousand inhabitants and that its existing indebted- ness exceeded ten per centum of the assessed valuation of its real estate subject to taxation. ^^ The construction and operation by a city of a plant for the supply of electric light to the city and its inhabitants is a city purpose, within the meaning of the constitution of New York, prohibiting cities from incurring in- debtedness except for city purposes.^* The act of a town in one. And in Spann v. Webster Coun- ^ Comstock v. Syracuse, S N. Y. ty, 64 Ga. 498, it was held that a vote 874, 25 N. Y. St. 611 (subnomine, of citizens was necessary to author- In re Comstock). ize the purchase of iron safes for the " Comstock v. Syracuse, 5 N. Y. county. The levy of a tax for ex- 874, 25 N. Y. St. 611 (sub nomine, penses of jails was, however, held to In re Comstock). be valid, being equivalent to a levy to *' Hequembourg v. Dunkirk, 49 Hun maintain and support prisoners, which (N. Y.) 550, 18 N. Y. St. 570, 2 N. Y. was in the power of the commission- S. 447. ers. 937 MUNICIPAL AND OTHER PUBLIC CORPORATIONS. § 637 authorizing its Selectmen to make a contract with a water com- pany for a supply of water, for fire and other purposes, for a term of years at a certain sum per year, to be paid annually, the payments to be made out of moneys annually granted by the town and raised by taxation, is not the incurring of a debt within the meaning the statute of Massachusetts relative to municipal in- debtedness, as the statute does not apply to contracts for current expenses payable out of current revenues.*" Where the mayor and council of a town have the power to contract an annual in- debtedness for lighting the town, they will not be enjoined, under the provision in the constitution of Georgia that a debt cannot be incurred by a town without the approval of two-thirds of the voters, from carrying out a ten-years' contract for light- ing, by the terms of which two thousand dollars is to be paid annually, so long as such payments are made as they become due.*° A debt arising from a breach of contract to pay cash is not within the constitutional provisions of the state of Georgia limiting indebtedness.*' § 637. Effect of exceeding the limit. — Where bonds are is- sued at different times to pay for improvements, under an act lim- iting the total amount to be issued, it is held that the fact that bonds are issued beyond the limit does not invalidate such bonds as were issued and sold before the limit was reached.** In an action on such bonds the petition need not allege that there was not an overissue, it being a matter of defense if there was.*® And even if it were necessary to allege that there was not an overissue, an allegation that the bonds were "duly" issued would be sufficient.®" Where a district voted to build a schoolhouse to cost not more than two thousand dollars, and the directors borrowed part of the money necessary and gave an order therefor, and in erecting the house paid more than the amount authorized, it was held, in an * Smith V. Dedhatn, 144 Mass. 177, L. ed. 1026, 6 Sup. Ct. 897 ; Columbus 10 N E 782. V. Woonsocket Inst., 114 Fed. 162, 52 "Lott V. Waycross, 84 Ga. 681, 11 C. C. A. 118; Schmitz v. Zeh, 91 S E 558. Minn. 290, 97 N. W. 1049. " Convers v. Kirk, 78 Ga. 480, 3 S. '" Catron v. La Fayette County, 106 E. 442. Mo. 659, 17 S. W. 577. "^ Catron v. Lafayette County, 106 '" Catron v. La Fayette County, 106 Mo. 659, 17 S. W. 577. See also, Da- Mo. 659, 17 S. W. 577. viess V. Dickinson, 117 U. S. 657, 29 § 637 CONTRACTS. 938 action upon the order, that where the money was used in paying an indebtedness incurred before the authorized limit was reached the district was Hable."^ It has been held that a contract, by which a city, in a territory whose assessed valuation was five million dollars, agreed to pay fifteen thousand dollars a year for twenty years, could not be considered as falling within an act of congress prohibiting municipal corporations in the territories be- coming indebted to an amount exceeding four per cent, of the valuation."^ Where the indebtedness of a city incurred under a contract already exceeds the constitutional limit, and the fund ap- propriated for the purpose of the contract is exhausted, damages cannot be recovered for a breach of the contract by the city." "Austin V. Colony Tp., 51 Iowa Mont. 502, 13 Pac. 249, 8 Mont. 467, 102, 49 N. W. 1051. 20 Pac. 823. ""Davenport v. Kleinschmidt, 6 •= Dhrew v. Altoona City, 121 Pa. St. 401. 15 Atl. 636.